255 
table of subparts for part IV of subchapter A of chapter 
1) are each amended by striking ‘‘Rules for Computing 
Work Opportunity Credit’’ and inserting ‘‘Special Rules’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred to 
individuals who begin work for the employer after Decem-
ber 31, 2017. 
SEC. 3405. REPEAL OF DEDUCTION FOR CERTAIN UNUSED 
BUSINESS CREDITS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 196 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3406. TERMINATION OF NEW MARKETS TAX CREDIT. 
(a) IN GENERAL.—Section 45D(f) is amended— 
(1) by striking ‘‘2019’’ in paragraph (1)(G) and 
inserting ‘‘2017’’, and 
(2) by striking ‘‘2024’’ in paragraph (3) and in-
serting ‘‘2022’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
December 31, 2017. 
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SEC. 3407. REPEAL OF CREDIT FOR EXPENDITURES TO 
PROVIDE ACCESS TO DISABLED INDIVID-
UALS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 44 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (7). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3408. MODIFICATION OF CREDIT FOR PORTION OF EM-
PLOYER SOCIAL SECURITY TAXES PAID WITH 
RESPECT TO EMPLOYEE TIPS. 
(a) CREDIT DETERMINED WITH RESPECT TO MIN-
IMUM WAGE AS IN EFFECT.—Section 45B(b)(1)(B) is 
amended by striking ‘‘as in effect on January 1, 2007, 
and’’. 
(b) INFORMATION RETURN REQUIREMENT.—Section 
45B is amended by redesignating subsections (c) and (d) 
as subsections (d) and (e), respectively, and by inserting 
after subsection (b) the following new subsection: 
‘‘(c) INFORMATION RETURN REQUIREMENT.— 
‘‘(1) IN GENERAL.—No credit shall be deter-
mined under subsection (a) with respect to any food 
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257 
or beverage establishment of any taxpayer for any 
taxable year unless such taxpayer has, with respect 
to the calendar year which ends in or with such tax-
able year— 
‘‘(A) made a report to the Secretary show-
ing the information described in section 
6053(c)(1) with respect to such food or bev-
erage establishment, and 
‘‘(B) furnished written statements to each 
employee of such food or beverage establish-
ment showing the information described in sec-
tion 6053(c)(2). 
‘‘(2) ALLOCATION OF 10 PERCENT OF GROSS 
RECEIPTS.—For purposes of determining the infor-
mation referred to in subparagraphs (A) and (B), 
section 6053(c)(3)(A)(i) shall be applied by sub-
stituting ‘10 percent’ for ‘8 percent’. For purposes 
of section 6053(c)(5), any reference to section 
6053(c)(3)(B) contained therein shall be treated as 
including a reference to this paragraph. 
‘‘(3) FOOD OR BEVERAGE ESTABLISHMENT.— 
For purposes of this subsection, the term ‘food or 
beverage establishment’ means any trade or business 
(or portion thereof) which would be a large food or 
beverage establishment (as defined in section 
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258 
6053(c)(4)) if such section were applied without re-
gard to subparagraph (C) thereof.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle F—Energy Credits 
SEC. 3501. MODIFICATIONS TO CREDIT FOR ELECTRICITY 
PRODUCED FROM CERTAIN RENEWABLE RE-
SOURCES. 
(a) TERMINATION OF INFLATION ADJUSTMENT.— 
Section 45(b)(2) is amended— 
(1) by striking ‘‘The 1.5 cent amount’’ and in-
serting the following: 
‘‘(A) 
IN
GENERAL.—The 
1.5 
cent 
amount’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) TERMINATION.—Subparagraph (A) 
shall not apply with respect to any electricity or 
refined coal produced at a facility the construc-
tion of which begins after the date of the enact-
ment of this subparagraph.’’. 
(b) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 45(e) is amended by 
adding at the end the following new paragraph: 
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‘‘(12) SPECIAL RULE FOR DETERMINING BE-
GINNING OF CONSTRUCTION.—For purposes of sub-
section (d), the construction of any facility, modi-
fication, improvement, addition, or other property 
shall not be treated as beginning before any date un-
less there is a continuous program of construction 
which begins before such date and ends on the date 
that such property is placed in service.’’. 
(c) EFFECTIVE DATES.— 
(1) TERMINATION
OF
INFLATION
ADJUST-
MENT.—The amendments made by subsection (a) 
shall apply to taxable years ending after the date of 
the enactment of this Act. 
(2) SPECIAL
RULE
FOR
DETERMINATION
OF 
BEGINNING
OF
CONSTRUCTION.—The amendment 
made by subsection (b) shall apply to taxable years 
beginning before, on, or after the date of the enact-
ment of this Act. 
SEC. 3502. MODIFICATION OF THE ENERGY INVESTMENT 
TAX CREDIT. 
(a) EXTENSION OF SOLAR ENERGY PROPERTY.— 
Section 48(a)(3)(A)(ii) is amended by striking ‘‘periods 
ending before January 1, 2017’’ and inserting ‘‘property 
the construction of which begins before January 1, 2022’’. 
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(b) EXTENSION OF QUALIFIED FUEL CELL PROP-
ERTY.—Section 48(c)(1)(D) is amended by striking ‘‘for 
any period after December 31, 2016’’ and inserting ‘‘the 
construction of which does not begin before January 1, 
2022’’. 
(c) EXTENSION
OF
QUALIFIED
MICROTURBINE 
PROPERTY.—Section 48(c)(2)(D) is amended by striking 
‘‘for any period after December 31, 2016’’ and inserting 
‘‘the construction of which does not begin before January 
1, 2022’’. 
(d) EXTENSION OF COMBINED HEAT AND POWER 
SYSTEM PROPERTY.—Section 48(c)(3)(A)(iv) is amended 
by striking ‘‘which is placed in service before January 1, 
2017’’ and inserting ‘‘the construction of which begins be-
fore January 1, 2022’’. 
(e) EXTENSION OF QUALIFIED SMALL WIND EN-
ERGY PROPERTY.—Section 48(c)(4)(C) is amended by 
striking ‘‘for any period after December 31, 2016’’ and 
inserting ‘‘the construction of which does not begin before 
January 1, 2022’’. 
(f) EXTENSION OF THERMAL ENERGY PROPERTY.— 
Section 48(a)(3)(A)(vii) is amended by striking ‘‘periods 
ending before January 1, 2017’’ and inserting ‘‘property 
the construction of which begins before January 1, 2022’’. 
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261 
(g) PHASEOUT OF 30 PERCENT CREDIT RATE FOR 
FUEL CELL AND SMALL WIND ENERGY PROPERTY.— 
Section 48(a) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(7) PHASEOUT
FOR
QUALIFIED
FUEL
CELL 
PROPERTY
AND
QUALIFIED
SMALL
WIND
ENERGY 
PROPERTY.— 
‘‘(A) IN GENERAL.—In the case of quali-
fied fuel cell property or qualified small wind 
energy property, the construction of which be-
gins before January 1, 2022, the energy per-
centage determined under paragraph (2) shall 
be equal to— 
‘‘(i) in the case of any property the 
construction of which begins after Decem-
ber 31, 2019, and before January 1, 2021, 
26 percent, and 
‘‘(ii) in the case of any property the 
construction of which begins after Decem-
ber 31, 2020, and before January 1, 2022, 
22 percent. 
‘‘(B) PLACED IN SERVICE DEADLINE.—In 
the case of any qualified fuel cell property or 
qualified small wind energy property, the con-
struction of which begins before January 1, 
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262 
2022, and which is not placed in service before 
January 1, 2024, the energy percentage deter-
mined under paragraph (2) shall be equal to 10 
percent.’’. 
(h) PHASEOUT FOR FIBER-OPTIC SOLAR ENERGY 
PROPERTY.—Subparagraphs (A) and (B) of section 
48(a)(6) are each amended by inserting ‘‘or (3)(A)(ii)’’ 
after ‘‘paragraph (3)(A)(i)’’. 
(i) TERMINATION OF SOLAR ENERGY PROPERTY.— 
Section 48(a)(3)(A)(i) is amended by inserting ‘‘, the con-
struction of which begins before January 1, 2028, and’’ 
after ‘‘equipment’’. 
(j) TERMINATION OF GEOTHERMAL ENERGY PROP-
ERTY.—Section 48(a)(3)(A)(iii) is amended by inserting 
‘‘, the construction of which begins before January 1, 
2028, and’’ after ‘‘equipment’’. 
(k) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 48(c) is amended by 
adding at the end the following new paragraph: 
‘‘(5) SPECIAL RULE FOR DETERMINING BEGIN-
NING OF CONSTRUCTION.—The construction of any 
facility, modification, improvement, addition, or 
other property shall not be treated as beginning be-
fore any date unless there is a continuous program 
of construction which begins before such date and 
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263 
ends on the date that such property is placed in 
service.’’. 
(l) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to periods after December 
31, 2016, under rules similar to the rules of section 
48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990). 
(2) EXTENSION
OF
COMBINED
HEAT
AND 
POWER SYSTEM PROPERTY.—The amendment made 
by subsection (d) shall apply to property placed in 
service after December 31, 2016. 
(3) PHASEOUTS
AND
TERMINATIONS.—The 
amendments made by subsections (g), (h), (i), and 
(j) shall take effect on the date of the enactment of 
this Act. 
(4) SPECIAL
RULE
FOR
DETERMINATION
OF 
BEGINNING
OF
CONSTRUCTION.—The amendment 
made by subsection (k) shall apply to taxable years 
beginning before, on, or after the date of the enact-
ment of this Act. 
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264 
SEC. 3503. EXTENSION AND PHASEOUT OF RESIDENTIAL 
ENERGY EFFICIENT PROPERTY. 
(a) EXTENSION.—Section 25D(h) is amended by 
striking ‘‘December 31, 2016 (December 31, 2021, in the 
case of any qualified solar electric property expenditures 
and qualified solar water heating property expenditures)’’ 
and inserting ‘‘December 31, 2021’’. 
(b) PHASEOUT.— 
(1) IN GENERAL.—Paragraphs (3), (4), and (5) 
of section 25D(a) are amended by striking ‘‘30 per-
cent’’ each place it appears and inserting ‘‘the appli-
cable percentage’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
25D(g) of such Code is amended by striking ‘‘para-
graphs (1) and (2) of’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2016. 
SEC. 3504. REPEAL OF ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 43 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (6). 
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265 
(2) Section 6501(m) is amended by striking 
‘‘43,’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3505. REPEAL OF CREDIT FOR PRODUCING OIL AND 
GAS FROM MARGINAL WELLS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45I 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (19). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3506. MODIFICATIONS OF CREDIT FOR PRODUCTION 
FROM ADVANCED NUCLEAR POWER FACILI-
TIES. 
(a) 
TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—Section 45J(b) is amended— 
(1) in paragraph (4), by inserting ‘‘or any 
amendment to’’ after ‘‘enactment of’’; and 
(2) by adding at the end the following new 
paragraph: 
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266 
‘‘(5) ALLOCATION
OF
UNUTILIZED
LIMITA-
TION.— 
‘‘(A) IN
GENERAL.—Any unutilized na-
tional megawatt capacity limitation shall be al-
located by the Secretary under paragraph (3) 
as rapidly as is practicable after December 31, 
2020— 
‘‘(i) first to facilities placed in service 
on or before such date to the extent that 
such facilities did not receive an allocation 
equal to their full nameplate capacity; and 
‘‘(ii) then to facilities placed in service 
after such date in the order in which such 
facilities are placed in service. 
‘‘(B) UNUTILIZED
NATIONAL
MEGAWATT 
CAPACITY
LIMITATION.—The term ‘unutilized 
national megawatt capacity limitation’ means 
the excess (if any) of— 
‘‘(i) 6,000 megawatts, over 
‘‘(ii) the aggregate amount of national 
megawatt capacity limitation allocated by 
the Secretary before January 1, 2021, re-
duced by any amount of such limitation 
which was allocated to a facility which was 
not placed in service before such date. 
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267 
‘‘(C) COORDINATION WITH OTHER PROVI-
SIONS.—In the case of any unutilized national 
megawatt capacity limitation allocated by the 
Secretary pursuant to this paragraph— 
‘‘(i) such allocation shall be treated 
for purposes of this section in the same 
manner as an allocation of national mega-
watt capacity limitation; and 
‘‘(ii) subsection (d)(1)(B) shall not 
apply to any facility which receives such al-
location.’’. 
(b) TRANSFER OF CREDIT BY CERTAIN PUBLIC EN-
TITIES.— 
(1) IN GENERAL.—Section 45J is amended— 
(A) by redesignating subsection (e) as sub-
section (f); and 
(B) by inserting after subsection (d) the 
following new subsection: 
‘‘(e) TRANSFER OF CREDIT BY CERTAIN PUBLIC EN-
TITIES.— 
‘‘(1) IN GENERAL.—If, with respect to a credit 
under subsection (a) for any taxable year— 
‘‘(A) the taxpayer would be a qualified 
public entity; and 
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‘‘(B) such entity elects the application of 
this paragraph for such taxable year with re-
spect to all (or any portion specified in such 
election) of such credit, 
the eligible project partner specified in such election 
(and not the qualified public entity) shall be treated 
as the taxpayer for purposes of this title with re-
spect to such credit (or such portion thereof). 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) QUALIFIED
PUBLIC
ENTITY.—The 
term ‘qualified public entity’ means— 
‘‘(i) a Federal, State, or local govern-
ment entity, or any political subdivision, 
agency, or instrumentality thereof; 
‘‘(ii) a mutual or cooperative electric 
company described in section 501(c)(12) or 
section 1381(a)(2); or 
‘‘(iii) a not-for-profit electric utility 
which has or had received a loan or loan 
guarantee under the Rural Electrification 
Act of 1936. 
‘‘(B) ELIGIBLE PROJECT PARTNER.—The 
term ‘eligible project partner’ means— 
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269 
‘‘(i) any person responsible for, or 
participating in, the design or construction 
of the advanced nuclear power facility to 
which the credit under subsection (a) re-
lates; 
‘‘(ii) any person who participates in 
the provision of the nuclear steam supply 
system to the advanced nuclear power fa-
cility to which the credit under subsection 
(a) relates; 
‘‘(iii) any person who participates in 
the provision of nuclear fuel to the ad-
vanced nuclear power facility to which the 
credit under subsection (a) relates; or 
‘‘(iv) any person who has an owner-
ship interest in such facility. 
‘‘(3) SPECIAL RULES.— 
‘‘(A) APPLICATION TO PARTNERSHIPS.—In 
the case of a credit under subsection (a) which 
is determined at the partnership level— 
‘‘(i) for purposes of paragraph (1)(A), 
a qualified public entity shall be treated as 
the taxpayer with respect to such entity’s 
distributive share of such credit; and 
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270 
‘‘(ii) the term ‘eligible project partner’ 
shall include any partner of the partner-
ship. 
‘‘(B) TAXABLE
YEAR
IN
WHICH
CREDIT 
TAKEN
INTO
ACCOUNT.—In the case of any 
credit (or portion thereof) with respect to which 
an election is made under paragraph (1), such 
credit shall be taken into account in the first 
taxable year of the eligible project partner end-
ing with, or after, the qualified public entity’s 
taxable year with respect to which the credit 
was determined. 
‘‘(C) TREATMENT
OF
TRANSFER
UNDER 
PRIVATE USE RULES.—For purposes of section 
141(b)(1), any benefit derived by an eligible 
project partner in connection with an election 
under this subsection shall not be taken into ac-
count as a private business use.’’. 
(2) SPECIAL RULE FOR PROCEEDS OF TRANS-
FERS
FOR
MUTUAL
OR
COOPERATIVE
ELECTRIC 
COMPANIES.—Section 501(c)(12) of such Code is 
amended by adding at the end the following new 
subparagraph: 
‘‘(I) In the case of a mutual or cooperative 
electric company described in this paragraph or 
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271 
an organization described in section 1381(a)(2), 
income received or accrued in connection with 
an election under section 45J(e)(1) shall be 
treated as an amount collected from members 
for the sole purpose of meeting losses and ex-
penses.’’. 
(c) EFFECTIVE DATES.— 
(1) TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—The amendment made by subsection (a) 
shall take effect on the date of the enactment of this 
Act. 
(2) TRANSFER OF CREDIT BY CERTAIN PUBLIC 
ENTITIES.—The amendments made by subsection 
(b) shall apply to taxable years beginning after the 
date of the enactment of this Act. 
Subtitle G—Bond Reforms 
SEC. 3601. TERMINATION OF PRIVATE ACTIVITY BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 103(b) 
is amended— 
(1) by striking ‘‘which is not a qualified bond 
(within the meaning of section 141)’’, and 
(2) by striking ‘‘WHICH IS NOT A QUALIFIED 
BOND’’ in the heading thereof. 
(b) CONFORMING AMENDMENTS.— 
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272 
(1) Subpart A of part IV of subchapter B of 
chapter 1 is amended by striking sections 142, 143, 
144, 145, 146, and 147 (and by striking each of the 
items relating to such sections in the table of sec-
tions for such subpart). 
(2) Section 25 is amended by adding at the end 
the following new subsection: 
‘‘(j) COORDINATION WITH REPEAL OF PRIVATE AC-
TIVITY BONDS.—Any reference to section 143, 144, or 
146 shall be treated as a reference to such section as in 
effect before its repeal by the Tax Cuts and Jobs Act.’’. 
(3) Section 26(b)(2) is amended by striking 
subparagraph (D). 
(4) Section 141(b) is amended by striking para-
graphs (5) and (9). 
(5) Section 141(d) is amended by striking para-
graph (5). 
(6) Section 141 is amended by striking sub-
section (e). 
(7) Section 148(f)(4) is amended— 
(A) by striking ‘‘(determined in accordance 
with section 147(b)(2)(A))’’ in the flush matter 
following subparagraph (A)(ii) and inserting 
‘‘(determined by taking into account the respec-
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273 
tive issue prices of the bonds issued as part of 
the issue)’’, and 
(B) by striking the last sentence of sub-
paragraph (D)(v). 
(8) Clause (iv) of section 148(f)(4)(C) is 
amended to read as follows: 
‘‘(iv) 
CONSTRUCTION
ISSUE.—For 
purposes of this subparagraph— 
‘‘(I) IN
GENERAL.—The term 
‘construction issue’ means any issue if 
at least 75 percent of the available 
construction proceeds of such issue 
are to be used for construction ex-
penditures. 
‘‘(II) CONSTRUCTION.—The term 
‘construction’ includes reconstruction 
and rehabilitation’’. 
(9) Section 149(b)(3) is amended by striking 
subparagraph (C). 
(10) Section 149(e)(2) is amended— 
(A) by striking subparagraphs (C), (D), 
and (F) and by redesignating subparagraphs 
(E) and (G) as subparagraphs (C) and (D), re-
spectively, and 
(B) by striking the second sentence. 
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(11) Section 149(f)(6) is amended— 
(A) by striking subparagraph (B), and 
(B) by striking ‘‘For purposes of this sub-
section’’ and all that follows through ‘‘The 
term’’ and inserting the following: ‘‘For pur-
poses of this subsection, the term’’. 
(12) Section 150(e)(3) is amended to read as 
follows: 
‘‘(3) PUBLIC
APPROVAL
REQUIREMENT.—A 
bond shall not be treated as part of an issue which 
meets the requirements of paragraph (1) unless such 
bond satisfies the requirements of section 147(f)(2) 
(as in effect before its repeal by the Tax Cuts and 
Jobs Act).’’. 
(13) Section 269A(b)(3) is amended by striking 
‘‘144(a)(3)’’ and inserting ‘‘414(n)(6)(A)’’. 
(14) Section 414(m)(5) is amended by striking 
‘‘section 
144(a)(3)’’ 
and 
inserting 
‘‘subsection 
(n)(6)(A)’’. 
(15) Section 414(n)(6)(A) is amended to read 
as follows: 
‘‘(A) RELATED PERSONS.—A person is a 
related person to another person if— 
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‘‘(i) the relationship between such per-
sons would result in a disallowance of 
losses under section 267 or 707(b), or 
‘‘(ii) such persons are members of the 
same controlled group of corporations (as 
defined in section 1563(a), except that 
‘more than 50 percent’ shall be substituted 
for ‘at least 80 percent’ each place it ap-
pears therein).’’. 
(16) Section 6045(e)(4)(B) is amended by in-
serting ‘‘(as in effect before its repeal by the Tax 
Cuts and Jobs Act)’’ after ‘‘section 143(m)(3)’’. 
(17) Section 6654(f)(1) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 143(m)’’. 
(18) Section 7871(c) is amended— 
(A) by striking paragraphs (2) and (3), 
and 
(B) by striking ‘‘TAX-EXEMPT BONDS.—’’ 
and all that follows through ‘‘Subsection (a) of 
section 103’’ and inserting the following: ‘‘TAX- 
EXEMPT
BONDS.—Subsection (a) of section 
103’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after December 
31, 2017. 
SEC. 3602. REPEAL OF ADVANCE REFUNDING BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 149(d) 
is amended by striking ‘‘as part of an issue described in 
paragraph (2), (3), or (4).’’ and inserting ‘‘to advance re-
fund another bond.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 149(d) is amended by striking para-
graphs (2), (3), (4), and (6) and by redesignating 
paragraphs (5) and (7) as paragraphs (2) and (3). 
(2) Section 148(f)(4)(C) is amended by striking 
clause (xiv) and by redesignating clauses (xv) to 
(xvii) as clauses (xiv) to (xvi). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to advance refunding bonds issued 
after December 31, 2017. 
SEC. 3603. REPEAL OF TAX CREDIT BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 is amended by striking subparts H, I, and J (and 
by striking the items relating to such subparts in the table 
of subparts for such part). 
(b) PAYMENTS TO ISSUERS.—Subchapter B of chap-
ter 65 is amended by striking section 6431 (and by strik-
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ing the item relating to such section in the table of sec-
tions for such subchapter). 
(c) CONFORMING AMENDMENTS.— 
(1) Part IV of subchapter U of chapter 1 is 
amended by striking section 1397E (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(2) Section 54(l)(3)(B) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 1397E(I)’’. 
(3) Section 6211(b)(4)(A) is amended by strik-
ing ‘‘, and 6431’’ and inserting ‘‘and’’ before 
‘‘36B’’. 
(4) Section 6401(b)(1) is amended by striking 
‘‘G, H, I, and J’’ and inserting ‘‘and G’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after December 
31, 2017. 
SEC. 3604. NO TAX EXEMPT BONDS FOR PROFESSIONAL 
STADIUMS. 
(a) IN GENERAL.—Section 103(b), as amended by 
this Act, is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) PROFESSIONAL STADIUM BOND.—Any pro-
fessional stadium bond.’’. 
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(b) PROFESSIONAL STADIUM BOND DEFINED.—Sub-
section (c) of section 103 is amended by adding at the 
end the following new paragraph: 
‘‘(3) PROFESSIONAL
STADIUM
BOND.—The 
term ‘professional stadium bond’ means any bond 
issued as part of an issue any proceeds of which are 
used to finance or refinance capital expenditures al-
locable to a facility (or appurtenant real property) 
which, during at least 5 days during any calendar 
year, is used as a stadium or arena for professional 
sports exhibitions, games, or training.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after November 
2, 2017. 
Subtitle H—Insurance 
SEC. 3701. NET OPERATING LOSSES OF LIFE INSURANCE 
COMPANIES. 
(a) IN GENERAL.—Section 805(b) is amended by 
striking paragraph (4) and by redesignating paragraph 
(5) as paragraph (4). 
(b) CONFORMING AMENDMENTS.— 
(1) Part I of subchapter L of chapter 1 is 
amended by striking section 810 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
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(2) Part III of subchapter L of chapter 1 is 
amended by striking section 844 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(3) Section 381 is amended by striking sub-
section (d). 
(4) Section 805(a)(4)(B)(ii) is amended to read 
as follows: 
‘‘(ii) the deduction allowed under sec-
tion 172,’’. 
(5) Section 805(a) is amended by striking para-
graph (5). 
(6) Section 953(b)(1)(B) is amended to read as 
follows: 
‘‘(B) So much of section 805(a)(8) as re-
lates to the deduction allowed under section 
172.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses arising in taxable years 
beginning after December 31, 2017. 
SEC. 3702. REPEAL OF SMALL LIFE INSURANCE COMPANY 
DEDUCTION. 
(a) IN GENERAL.—Part I of subchapter L of chapter 
1 is amended by striking section 806 (and by striking the 
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item relating to such section in the table of sections for 
such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 453B(e) is amended— 
(A) by striking ‘‘(as defined in section 
806(b)(3))’’ in paragraph (2)(B), and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) NONINSURANCE BUSINESS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘noninsurance business’ 
means any activity which is not an insurance 
business. 
‘‘(B) CERTAIN ACTIVITIES TREATED AS IN-
SURANCE BUSINESSES.—For purposes of sub-
paragraph (A), any activity which is not an in-
surance business shall be treated as an insur-
ance business if— 
‘‘(i) it is of a type traditionally carried 
on by life insurance companies for invest-
ment purposes, but only if the carrying on 
of such activity (other than in the case of 
real estate) does not constitute the active 
conduct of a trade or business, or 
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‘‘(ii) it involves the performance of ad-
ministrative services in connection with 
plans providing life insurance, pension, or 
accident and health benefits.’’. 
(2) Section 465(c)(7)(D)(v)(II) is amended by 
striking ‘‘section 806(b)(3)’’ and inserting ‘‘section 
453B(e)(3)’’. 
(3) Section 801(a)(2) is amended by striking 
subparagraph (C). 
(4) Section 804 is amended by striking 
‘‘means—’’ and all that follows and inserting 
‘‘means the general deductions provided in section 
805.’’. 
(5) Section 805(a)(4)(B), as amended by sec-
tion 3701, is amended by striking clause (i) and by 
redesignating clauses (ii), (iii), and (iv) as clauses 
(i), (ii), and (iii), respectively. 
(6) Section 805(b)(2)(A) is amended by strik-
ing clause (iii) and by redesignating clauses (iv) and 
(v) as clauses (iii) and (iv), respectively. 
(7) Section 842(c) is amended by striking para-
graph (1) and by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively. 
(8) Section 953(b)(1), as amended by section 
3701, is amended by striking subparagraph (A) and 
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by redesignating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3703. COMPUTATION OF LIFE INSURANCE TAX RE-
SERVES. 
(a) IN GENERAL.—Section 807 is amended by strik-
ing subsections (c), (d), and (e) and inserting the following 
new subsections: 
‘‘(c) ITEMS DESCRIBED.—The items described in this 
subsection are the reserves for future unaccrued claims 
defined in subsection (e) as determined by applying the 
method of computing the reserves in subsection (d). 
‘‘(d) METHOD OF COMPUTING RESERVES FOR PUR-
POSES OF DETERMINING INCOME.—For purposes of this 
part (other than section 816), the amount of the reserves 
for future unaccrued claims shall be 76.5 percent of the 
amount of such reserves as defined in subsection (e). 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) RESERVES
FOR
FUTURE
UNACCRUED 
CLAIMS.—The term ‘reserves for future unaccrued 
claims’ means— 
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‘‘(A) life insurance reserves (as defined in 
section 816(b)) determined in accordance with 
the method prescribed by the National Associa-
tion of Insurance Commissioners and reported 
by the taxpayer on its annual statement for the 
calendar year that is the taxable year, 
‘‘(B) unpaid losses included in total re-
serves under section 816(c)(2), and 
‘‘(C) the amount (not included in subpara-
graph (A) or (B)) of reserves solely for claims 
with respect to insurance risks which are deter-
mined in accordance with the method prescribed 
by the National Association of Insurance Com-
missioners and reported by the taxpayer on its 
annual statement for the calendar year that is 
the taxable year, 
but not including any amount of asset adequacy re-
serves, contingency reserves, unearned premium re-
serves, or any other amount not constituting re-
serves for future unaccrued claims as provided in 
guidance by the Secretary. For purposes of subpara-
graph (B) and section 805(a)(1), the amount of the 
unpaid losses (other than losses on life insurance 
contracts) shall be the amount of the discounted un-
paid losses as defined in section 846. 
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‘‘(2) REPORTING RULES.—The Secretary shall 
require reporting (at such time and in such manner 
as the Secretary shall prescribe) with respect to the 
opening balance and closing balance of reserves and 
with respect to the method of computing reserves for 
purposes of determining income.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 808 is amended by adding at the 
end the following new subsection: 
‘‘(g) 
PREVAILING
STATE
ASSUMED
INTEREST 
RATE.—For purposes of this subchapter— 
‘‘(1) IN GENERAL.—The term ‘prevailing State 
assumed interest rate’ means, with respect to any 
contract, the highest assumed interest rate per-
mitted to be used in computing life insurance re-
serves for insurance contracts or annuity contracts 
(as the case may be) under the insurance laws of at 
least 26 States. For purposes of the preceding sen-
tence, the effect of nonforfeiture laws of a State on 
interest rates for reserves shall not be taken into ac-
count. 
‘‘(2) WHEN
RATE
DETERMINED.—The pre-
vailing State assumed interest rate with respect to 
any contract shall be determined as of the beginning 
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of the calendar year in which the contract was 
issued.’’. 
(2) Paragraph (1) of section 811(d) is amended 
by striking ‘‘the greater of the prevailing State as-
sumed interest rate or applicable Federal interest 
rate in effect under section 807’’ and inserting ‘‘the 
interest rate in effect under section 808(g)’’. 
(3) Subparagraph (A) of section 846(f)(6) is 
amended by striking ‘‘except that’’ and all that fol-
lows and inserting ‘‘except that the limitation of 
subsection (a)(3) shall apply, and’’. 
(4) Subparagraph (B) of section 954(i)(5) is 
amended by striking ‘‘shall apply, and’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) TRANSITION RULE.—For the first taxable 
year beginning after December 31, 2017, the reserve 
with respect to any contract (as determined under 
section 807(d)(2) of the Internal Revenue Code of 
1986) at the end of the preceding taxable year shall 
be determined as if the amendments made by this 
section had applied to such reserve in such preceding 
taxable year. 
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(3) TRANSITION RELIEF.— 
(A) IN GENERAL.—If— 
(i) the reserve determined under sec-
tion 807(d)(2) of the Internal Revenue 
Code of 1986 (determined without regard 
to the amendments made by this section) 
with respect to any contract as of the close 
of the year preceding the first taxable year 
beginning after December 31, 2017, differs 
from 
(ii) the reserve which would have been 
determined with respect to such contract 
as of the close of such taxable year under 
such section determined without regard to 
paragraph (2), 
then the difference between the amount of the 
reserve described in clause (i) and the amount 
of the reserve described in clause (ii) shall be 
taken into account under the method provided 
in subparagraph (B). 
(B) METHOD.—The method provided in 
this subparagraph is as follows: 
(i) if the amount determined under 
subparagraph (A)(i) exceeds the amount 
determined under subparagraph (A)(ii), 1⁄8 
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of such excess shall be taken into account, 
for each of the 8 succeeding taxable years, 
as a deduction under section 805(a)(2) of 
such Code, or 
(ii) if the amount determined under 
subparagraph (A)(ii) exceeds the amount 
determined under subparagraph (A)(i), 1⁄8 
of such excess shall be included in gross in-
come, for each of the 8 succeeding taxable 
years, under section 803(a)(2) of such 
Code. 
SEC. 3704. ADJUSTMENT FOR CHANGE IN COMPUTING RE-
SERVES. 
(a) IN GENERAL.—Paragraph (1) of section 807(f) 
is amended to read as follows: 
‘‘(1) TREATMENT AS CHANGE IN METHOD OF 
ACCOUNTING.—If the basis for determining any item 
referred to in subsection (c) as of the close of any 
taxable year differs from the basis for such deter-
mination as of the close of the preceding taxable 
year, then so much of the difference between— 
‘‘(A) the amount of the item at the close 
of the taxable year, computed on the new basis, 
and 
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‘‘(B) the amount of the item at the close 
of the taxable year, computed on the old basis, 
as is attributable to contracts issued before the tax-
able year shall be taken into account under section 
481 as adjustments attributable to a change in 
method of accounting initiated by the taxpayer and 
made with the consent of the Secretary.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3705. MODIFICATION OF RULES FOR LIFE INSURANCE 
PRORATION 
FOR 
PURPOSES 
OF 
DETER-
MINING THE DIVIDENDS RECEIVED DEDUC-
TION. 
(a) IN GENERAL.—Section 812 is amended to read 
as follows: 
‘‘SEC. 812. DEFINITION OF COMPANY’S SHARE AND POLICY-
HOLDER’S SHARE. 
‘‘(a) COMPANY’S SHARE.—For purposes of section 
805(a)(4), the term ‘company’s share’ means, with respect 
to any taxable year beginning after December 31, 2017, 
40 percent. 
‘‘(b) POLICYHOLDER’S SHARE.—For purposes of sec-
tion 807, the term ‘policyholder’s share’ means, with re-
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spect to any taxable year beginning after December 31, 
2017, 60 percent.’’. 
(b) CONFORMING AMENDMENT.—Section 817A(e)(2) 
is amended by striking ‘‘, 807(d)(2)(B), and 812’’ and in-
serting ‘‘and 807(d)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3706. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS 
TO SHAREHOLDERS FROM PRE-1984 POLICY-
HOLDERS SURPLUS ACCOUNT. 
(a) IN GENERAL.—Subpart D of part I of subchapter 
L is amended by striking section 815 (and by striking the 
item relating to such section in the table of sections for 
such subpart). 
(b) CONFORMING
AMENDMENT.—Section 801 is 
amended by striking subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
(d) PHASED INCLUSION OF REMAINING BALANCE OF 
POLICYHOLDERS SURPLUS ACCOUNTS.—In the case of 
any stock life insurance company which has a balance (de-
termined as of the close of such company’s last taxable 
year beginning before January 1, 2018) in an existing pol-
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icyholders surplus account (as defined in section 815 of 
the Internal Revenue Code of 1986, as in effect before 
its repeal), the tax imposed by section 801 of such Code 
for the first 8 taxable years beginning after December 31, 
2017, shall be the amount which would be imposed by 
such section for such year on the sum of— 
(1) life insurance company taxable income for 
such year (within the meaning of such section 801 
but not less than zero), plus 
(2) 1⁄8 of such balance. 
SEC. 3707. MODIFICATION OF PRORATION RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) IN GENERAL.—Section 832(b)(5)(B) is amended 
by striking ‘‘15 percent’’ and inserting ‘‘26.25 percent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3708. MODIFICATION OF DISCOUNTING RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) MODIFICATION OF RATE OF INTEREST USED TO 
DISCOUNT UNPAID LOSSES.—Paragraph (2) of section 
846(c) is amended to read as follows: 
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‘‘(2) DETERMINATION OF ANNUAL RATE.—The 
annual rate determined by the Secretary under this 
paragraph for any calendar year shall be a rate de-
termined on the basis of the corporate bond yield 
curve (as defined in section 430(h)(2)(D)(i)).’’. 
(b) MODIFICATION OF COMPUTATIONAL RULES FOR 
LOSS PAYMENT PATTERNS.—Section 846(d)(3) is amend-
ed by striking subparagraphs (B) through (G) and insert-
ing the following new subparagraphs: 
‘‘(B) TREATMENT OF CERTAIN LOSSES.— 
Losses which would have been treated as paid 
in the last year of the period applicable under 
subparagraph (A)(i) or (A)(ii) shall be treated 
as paid in the following manner: 
‘‘(i) 3-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(i) shall be extended to the 
extent required under subclause (II). 
‘‘(II) COMPUTATION OF EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the 
3d year after the accident year shall 
be treated as paid in such 3d year 
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and each subsequent year in an 
amount equal to the average of the 
losses treated as paid in the 1st and 
2d years after the accident year (or, if 
lesser, the portion of the unpaid losses 
not theretofore taken into account). 
To the extent such unpaid losses have 
not been treated as paid before the 
18th year after the accident year, they 
shall be treated as paid in such 18th 
year. 
‘‘(ii) 10-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(ii) shall be extended to the 
extent required under subclause (II). 
‘‘(II) COMPUTATION OF EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the 
10th year after the accident year shall 
be treated as paid in such 10th year 
and each subsequent year in an 
amount equal to the amount of the 
average of the losses treated as paid 
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in the 7th, 8th, and 9th years after 
the accident year (or, if lesser, the 
portion of the unpaid losses not there-
tofore taken into account). To the ex-
tent such unpaid losses have not been 
treated as paid before the 25th year 
after the accident year, they shall be 
treated as paid in such 25th year.’’. 
(c) REPEAL
OF HISTORICAL PAYMENT PATTERN 
ELECTION.—Section 846 is amended by striking sub-
section (e) and by redesignating subsections (f) and (g) 
as subsections (e) and (f), respectively. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
(e) TRANSITIONAL RULE.—For the first taxable year 
beginning after December 31, 2017— 
(1) the unpaid losses and the expenses unpaid 
(as defined in paragraphs (5)(B) and (6) of section 
832(b) of the Internal Revenue Code of 1986) at the 
end of the preceding taxable year, and 
(2) the unpaid losses as defined in sections 
807(c)(2) and 805(a)(1) of such Code at the end of 
the preceding taxable year, 
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shall be determined as if the amendments made by this 
section had applied to such unpaid losses and expenses 
unpaid in the preceding taxable year and by using the in-
terest rate and loss payment patterns applicable to acci-
dent years ending with calendar year 2018, and any ad-
justment shall be taken into account ratably in such first 
taxable year and the 7 succeeding taxable years. For sub-
sequent taxable years, such amendments shall be applied 
with respect to such unpaid losses and expenses unpaid 
by using the interest rate and loss payment patterns appli-
cable to accident years ending with calendar year 2018. 
SEC. 3709. REPEAL OF SPECIAL ESTIMATED TAX PAY-
MENTS. 
(a) IN GENERAL.—Part III of subchapter L of chap-
ter 1 is amended by striking section 847 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3710. CAPITALIZATION OF CERTAIN POLICY ACQUISI-
TION EXPENSES. 
(a) IN GENERAL.—Paragraph (1) of section 848(c) 
is amended by striking subparagraphs (A), (B), and (C) 
and inserting the following new subparagraphs: 
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‘‘(A) 4 percent of the net premiums for 
such taxable year on specified insurance con-
tracts which are group contracts, and 
‘‘(B) 11 percent of the net premiums for 
such taxable year on specified insurance con-
tracts not described in subparagraph (A).’’. 
(b) GROUP CONTRACTS.—So much of paragraph (2) 
of section 848(e) as precedes subparagraph (A) thereof is 
amended to read as follows: 
‘‘(2) GROUP CONTRACT.—The term ‘group con-
tract’ means any specified insurance contract—’’. 
(c) CONFORMING AMENDMENTS.—Section 848(e) is 
amended by striking paragraphs (3) and (6) and by redes-
ignating paragraphs (4) and (5) as paragraphs (3) and 
(4), respectively. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle I—Compensation 
SEC. 3801. NONQUALIFIED DEFERRED COMPENSATION. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 is amended by adding at the end the fol-
lowing new section: 
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296 
‘‘SEC. 409B. NONQUALIFIED DEFERRED COMPENSATION. 
‘‘(a) IN GENERAL.—Any compensation which is de-
ferred under a nonqualified deferred compensation plan 
shall be includible in the gross income of the person who 
performed the services to which such compensation relates 
when there is no substantial risk of forfeiture of the rights 
of such person to such compensation. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.—The 
rights of a person to compensation shall be treated 
as subject to a substantial risk of forfeiture only if 
such person’s rights to such compensation are condi-
tioned upon the future performance of substantial 
services by any person. Such rights shall not be 
treated as subject to a substantial risk of forfeiture 
solely by reason of a covenant not to compete or the 
occurrence of a condition related to a purpose of the 
compensation other than the future performance of 
services. 
‘‘(2) NONQUALIFIED
DEFERRED
COMPENSA-
TION PLAN.—For purposes of this section: 
‘‘(A) NONQUALIFIED
DEFERRED
COM-
PENSATION PLAN.—The term ‘nonqualified de-
ferred compensation plan’ means any plan that 
provides for the deferral of compensation, other 
than— 
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297 
‘‘(i) a qualified employer plan, 
‘‘(ii) any bona fide vacation leave, sick 
leave, compensatory time, disability pay, or 
death benefit plan, and 
‘‘(iii) any other plan or arrangement 
designated by the Secretary consistent with 
the purposes of this section. 
‘‘(B) 
EQUITY-BASED
COMPENSATION.— 
The term ‘nonqualified deferred compensation 
plan’ shall include any plan that provides— 
‘‘(i) a right to compensation based on 
the value of, or appreciation in value of, a 
specified number of equity units of the 
service recipient, whether paid in cash or 
equity, or 
‘‘(ii) stock appreciation rights or stock 
options. 
Such term shall not include that portion of any 
plan which consists of a transfer of property de-
scribed in section 83 (other than stock options) 
or which consists of a trust to which section 
402(b) applies. 
‘‘(3) QUALIFIED EMPLOYER PLAN.—The term 
‘qualified employer plan’ means any plan, contract, 
pension, account, or trust described in section 
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298 
408(p)(2)(D)(ii) or a simple retirement account 
(within the meaning of section 408(p)). 
‘‘(4) PLAN INCLUDES ARRANGEMENTS, ETC.— 
The term ‘plan’ includes any agreement or arrange-
ment, including an agreement or arrangement that 
includes one person. 
‘‘(5) EXCEPTION.—Compensation shall not be 
treated as deferred for purposes of this section if the 
service provider receives payment of such compensa-
tion not later than 2 1⁄2 months after the end of the 
taxable year of the service recipient during which the 
right to the payment of such compensation is no 
longer subject to a substantial risk of forfeiture. 
‘‘(6) TREATMENT OF EARNINGS.—References to 
deferred compensation shall be treated as including 
references to income (whether actual or notional) at-
tributable to such compensation or such income. 
‘‘(7) AGGREGATION
RULES.—Except as pro-
vided by the Secretary, rules similar to the rules of 
subsections (b) and (c) of section 414 shall apply. 
‘‘(c) NO INFERENCE ON EARLIER INCOME INCLU-
SION OR REQUIREMENT OF LATER INCLUSION.—Nothing 
in this section shall be construed to prevent the inclusion 
of amounts in gross income under any other provision of 
this chapter or any other rule of law earlier than the time 
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299 
provided in this section. Any amount included in gross in-
come under this section shall not be required to be in-
cluded in gross income under any other provision of this 
chapter or any other rule of law later than the time pro-
vided in this section. 
‘‘(d) APPLICATION TO EXISTING DEFERRALS.—In 
the case of any amount deferred to which this section does 
not otherwise apply solely by reason of the fact that the 
amount is attributable to services performed before Janu-
ary 1, 2018, to the extent such amount is not includible 
in gross income in a taxable year beginning before 2026, 
such amounts shall be includible in gross income in the 
later of— 
‘‘(1) the last taxable year beginning before 
2026, or 
‘‘(2) the taxable year in which there is no sub-
stantial risk of forfeiture of the rights to such com-
pensation. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including regula-
tions disregarding a substantial risk of forfeiture in cases 
where necessary to carry out the purposes of this sec-
tion.’’. 
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300 
(b) REPORTING
AND
WITHHOLDING
REQUIRE-
MENTS.— 
(1) WAGE WITHHOLDING.—The flush sentence 
at the end of section 3401(a) is amended by insert-
ing ‘‘or 409B’’ after ‘‘409A’’. 
(2) WITHHOLDING OF TAX ON NONRESIDENT 
ALIENS.—Section 1441(c)(4) is amended by insert-
ing ‘‘(other than under a nonqualified deferred com-
pensation plan (within the meaning of section 
409B(b))’’ after ‘‘compensation for personal serv-
ices’’. 
(3) 
INFORMATION
REPORTING.—Section 
6041(g) is amended— 
(A) by inserting ‘‘or 409B(b)’’ after 
‘‘409A(d)’’ in paragraph (1), and 
(B) by inserting ‘‘or 409B’’ after ‘‘409A’’ 
in paragraph (2). 
(4) 
RECEIPTS
FOR
EMPLOYEES.—Section 
6051(a)(13), as amended by the preceding provi-
sions of this Act, is amended by inserting ‘‘or 
409B(b)’’ after ‘‘409A(d)’’. 
(c) TERMINATION
OF
CERTAIN
OTHER
NON-
QUALIFIED DEFERRED COMPENSATION RULES.— 
(1) NONQUALIFIED
DEFERRED
COMPENSA-
TION.— 
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301 
(A) IN GENERAL.—Subpart A of part I of 
subchapter D of chapter 1 is amended by strik-
ing section 409A (and by striking the item re-
lating to such section in the table of sections 
for such subpart). 
(B) CONFORMING
AMENDMENT.—Section 
26(b)(2) is amended by striking subparagraph 
(V). 
(2) 457(b) PLANS OF TAX EXEMPT ORGANIZA-
TIONS.—Section 457 is amended by adding at the 
end the following new subsection: 
‘‘(h) TERMINATION OF CERTAIN PLANS.— 
‘‘(1) TAX-EXEMPT
ORGANIZATION
PLANS.— 
This section shall not apply to amounts deferred 
which are attributable to services performed after 
December 31, 2017, under a plan maintained by an 
employer described in subsection (e)(1)(B). 
‘‘(2) INELIGIBLE
DEFERRED
COMPENSATION 
PLANS.—Subsection (f) shall not apply to amounts 
deferred which are attributable to services performed 
after December 31, 2017.’’. 
(3) NONQUALIFIED DEFERRED COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES.— 
(A) IN GENERAL.—Subpart B of part II of 
subchapter E of chapter 1 is amended by strik-
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302 
ing section 457A (and by striking the item re-
lating to such section in the table of sections 
for such subpart). 
(B) CONFORMING
AMENDMENT.—Section 
26(b)(2) is amended by striking subparagraph 
(X). 
(d) CLERICAL AMENDMENT.—The table of sections 
for part I of subchapter D of chapter 1 is amended by 
adding at the end the following new item: 
‘‘Sec. 409B. Nonqualified deferred compensation.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection and section 409B(d) of the 
Internal Revenue Code of 1986 (as added by this 
Act), the amendments made by this section shall 
apply to amounts which are attributable to services 
performed after December 31, 2017. 
(2) ACCELERATED PAYMENTS.—No later than 
120 days after the date of the enactment of this Act, 
the Secretary shall issue guidance providing a lim-
ited period of time during which a nonqualified de-
ferred compensation arrangement attributable to 
services performed on or before December 31, 2017, 
may, without violating the requirements of section 
409A of the Internal Revenue Code of 1986, be 
amended to conform the date of distribution to the 
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303 
date the amounts are required to be included in in-
come. 
(3) CERTAIN BACK-TO-BACK ARRANGEMENTS.— 
If the taxpayer is also a service recipient and main-
tains one or more nonqualified deferred compensa-
tion arrangements for its service providers under 
which any amount is attributable to services per-
formed on or before December 31, 2017, the guid-
ance issued under paragraph (3) shall permit such 
arrangements to be amended to conform the dates of 
distribution under such arrangement to the date 
amounts are required to be included in the income 
of such taxpayer under this subsection. 
(4) ACCELERATED PAYMENT NOT TREATED AS 
MATERIAL
MODIFICATION.—Any amendment to a 
nonqualified deferred compensation arrangement 
made pursuant to paragraph (3) or (4) shall not be 
treated as a material modification of the arrange-
ment for purposes of section 409A of the Internal 
Revenue Code of 1986. 
SEC. 3802. MODIFICATION OF LIMITATION ON EXCESSIVE 
EMPLOYEE REMUNERATION. 
(a) REPEAL OF PERFORMANCE-BASED COMPENSA-
TION AND COMMISSION EXCEPTIONS FOR LIMITATION ON 
EXCESSIVE EMPLOYEE REMUNERATION.— 
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304 
(1) IN GENERAL.—Section 162(m)(4) is amend-
ed by striking subparagraphs (B) and (C) and by re-
designating subparagraphs (D), (E), (F), and (G) as 
subparagraphs (B), (C), (D), and (E), respectively. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraphs (5)(E) and (6)(D) of sec-
tion 162(m) are each amended by striking 
‘‘subparagraphs (B), (C), and (D)’’ and insert-
ing ‘‘subparagraph (B)’’. 
(B) Paragraphs (5)(G) and (6)(G) of sec-
tion 162(m) are each amended by striking ‘‘(F) 
and (G)’’ and inserting ‘‘(D) and (E)’’. 
(b) EXPANSION OF APPLICABLE EMPLOYER.—Sec-
tion 162(m)(2) is amended to read as follows: 
‘‘(2) PUBLICLY HELD CORPORATION.—For pur-
poses of this subsection, the term ‘publicly held cor-
poration’ means any corporation which is an issuer 
(as defined in section 3 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c))— 
‘‘(A) the securities of which are required to 
be registered under section 12 of such Act (15 
U.S.C. 78l), or 
‘‘(B) that is required to file reports under 
section 15(d) of such Act (15 U.S.C. 78o(d)).’’. 
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305 
(c) MODIFICATION OF DEFINITION OF COVERED EM-
PLOYEES.—Section 162(m)(3) is amended— 
(1) in subparagraph (A), by striking ‘‘as of the 
close of the taxable year, such employee is the chief 
executive officer of the taxpayer or is’’ and inserting 
‘‘such employee is the principal executive officer or 
principal financial officer of the taxpayer at any 
time during the taxable year, or was’’, 
(2) in subparagraph (B)— 
(A) by striking ‘‘4’’ and inserting ‘‘3’’, and 
(B) by striking ‘‘(other than the chief exec-
utive officer)’’ and inserting ‘‘(other than the 
principal executive officer)’’, and 
(3) by striking ‘‘or’’ at the end of subparagraph 
(A), by striking the period at the end of subpara-
graph (B) and inserting ‘‘, or’’, and by adding at the 
end the following: 
‘‘(C) was a covered employee of the tax-
payer (or any predecessor) for any preceding 
taxable year beginning after December 31, 
2016. 
Such term shall include any employee who would be 
described in subparagraph (B) if the reporting de-
scribed in such subparagraph were required as so 
described.’’. 
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306 
(d) SPECIAL RULE FOR REMUNERATION PAID TO 
BENEFICIARIES, ETC.—Section 162(m)(4), as amended by 
subsection (a), is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) SPECIAL RULE FOR REMUNERATION 
PAID TO BENEFICIARIES, ETC.—Remuneration 
shall not fail to be applicable employee remu-
neration merely because it is includible in the 
income of, or paid to, a person other than the 
covered employee, including after the death of 
the covered employee.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3803. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZA-
TION EXECUTIVE COMPENSATION. 
(a) IN GENERAL.—Subchapter D of chapter 42 is 
amended by adding at the end the following new section: 
‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
EXECUTIVE COMPENSATION. 
‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 
equal to 20 percent of the sum of— 
‘‘(1) so much of the remuneration paid (other 
than any excess parachute payment) by an applica-
ble tax-exempt organization for the taxable year with 
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307 
respect to employment of any covered employee in 
excess of $1,000,000, plus 
‘‘(2) any excess parachute payment paid by 
such an organization to any covered employee. 
‘‘(b) LIABILITY FOR TAX.—The employer shall be lia-
ble for the tax imposed under subsection (a). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) 
APPLICABLE
TAX-EXEMPT
ORGANIZA-
TION.—The term ‘applicable tax-exempt organiza-
tion’ means any organization that for the taxable 
year— 
‘‘(A) is exempt from taxation under section 
501(a), 
‘‘(B) is a farmers’ cooperative organization 
described in section 521(b)(1), 
‘‘(C) has income excluded from taxation 
under section 115(1), or 
‘‘(D) is a political organization described in 
section 527(e)(1). 
‘‘(2) COVERED
EMPLOYEE.—For purposes of 
this section, the term ‘covered employee’ means any 
employee (including any former employee) of an ap-
plicable tax-exempt organization if the employee— 
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308 
‘‘(A) is one of the 5 highest compensated 
employees of the organization for the taxable 
year, or 
‘‘(B) was a covered employee of the organi-
zation (or any predecessor) for any preceding 
taxable year beginning after December 31, 
2016. 
‘‘(3) REMUNERATION.—For purposes of this 
section, the term ‘remuneration’ means wages (as 
defined in section 3401(a)), except that such term 
shall not include any designated Roth contribution 
(as defined in section 402A(c)). 
‘‘(4) REMUNERATION FROM RELATED ORGANI-
ZATIONS.— 
‘‘(A) IN
GENERAL.—Remuneration of a 
covered employee paid by an applicable tax-ex-
empt organization shall include any remunera-
tion paid with respect to employment of such 
employee by any related person or governmental 
entity. 
‘‘(B) RELATED
ORGANIZATIONS.—A per-
son or governmental entity shall be treated as 
related to an applicable tax-exempt organization 
if such person or governmental entity— 
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309 
‘‘(i) controls, or is controlled by, the 
organization, 
‘‘(ii) is controlled by one or more per-
sons that control the organization, 
‘‘(iii) is a supported organization (as 
defined in section 509(f)(2)) during the 
taxable year with respect to the organiza-
tion, 
‘‘(iv) is a supporting organization de-
scribed in section 509(a)(3) during the 
taxable year with respect to the organiza-
tion, or 
‘‘(v) in the case of an organization 
that is a voluntary employees’ beneficiary 
association described in section 501(a)(9), 
establishes, maintains, or makes contribu-
tions to such voluntary employees’ bene-
ficiary association. 
‘‘(C) LIABILITY FOR TAX.—In any case in 
which remuneration from more than one em-
ployer is taken into account under this para-
graph in determining the tax imposed by sub-
section (a), each such employer shall be liable 
for such tax in an amount which bears the 
same ratio to the total tax determined under 
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310 
subsection (a) with respect to such remunera-
tion as— 
‘‘(i) the amount of remuneration paid 
by such employer with respect to such em-
ployee, bears to 
‘‘(ii) the amount of remuneration paid 
by all such employers to such employee. 
‘‘(5) EXCESS PARACHUTE PAYMENT.—For pur-
poses determining the tax imposed by subsection 
(a)(2)— 
‘‘(A) IN
GENERAL.—The term ‘excess 
parachute payment’ means an amount equal to 
the excess of any parachute payment over the 
portion of the base amount allocated to such 
payment. 
‘‘(B) PARACHUTE
PAYMENT.—The term 
‘parachute payment’ means any payment in the 
nature of compensation to (or for the benefit 
of) a covered employee if— 
‘‘(i) such payment is contingent on 
such employee’s separation from employ-
ment with the employer, and 
‘‘(ii) the aggregate present value of 
the payments in the nature of compensa-
tion to (or for the benefit of) such indi-
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311 
vidual which are contingent on such sepa-
ration equals or exceeds an amount equal 
to 3 times the base amount. 
Such term does not include any payment de-
scribed in section 280G(b)(6) (relating to ex-
emption for payments under qualified plans) or 
any payment made under or to an annuity con-
tract described in section 403(b) or a plan de-
scribed in section 457(b). 
‘‘(C) BASE AMOUNT.—Rules similar to the 
rules of 280G(b)(3) shall apply for purposes of 
determining the base amount. 
‘‘(D) PROPERTY
TRANSFERS; 
PRESENT 
VALUE.—Rules similar to the rules of para-
graphs (3) and (4) of section 280G(d) shall 
apply. 
‘‘(6) COORDINATION WITH DEDUCTION LIMITA-
TION.—Remuneration the deduction for which is not 
allowed by reason of section 162(m) shall not be 
taken into account for purposes of this section. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to prevent avoidance 
of the purposes of this section through the performance 
of services other than as an employee.’’. 
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312 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter D of chapter 42 is amended by adding at 
the end the following new item: 
‘‘Sec. 4960. Tax on excess exempt organization executive compensation.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
TITLE IV—TAXATION OF FOR-
EIGN INCOME AND FOREIGN 
PERSONS 
Subtitle A—Establishment of Par-
ticipation Exemption System for 
Taxation of Foreign Income 
SEC. 4001. DEDUCTION FOR FOREIGN-SOURCE PORTION OF 
DIVIDENDS RECEIVED BY DOMESTIC COR-
PORATIONS FROM SPECIFIED 10-PERCENT 
OWNED FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Part VIII of subchapter B of 
chapter 1 is amended by inserting after section 245 the 
following new section: 
‘‘SEC. 245A. DEDUCTION FOR FOREIGN-SOURCE PORTION 
OF DIVIDENDS RECEIVED BY DOMESTIC COR-
PORATIONS FROM SPECIFIED 10-PERCENT 
OWNED FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—In the case of any dividend re-
ceived from a specified 10-percent owned foreign corpora-
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313 
tion by a domestic corporation which is a United States 
shareholder with respect to such foreign corporation, there 
shall be allowed as a deduction an amount equal to the 
foreign-source portion of such dividend. 
‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN COR-
PORATION.—For purposes of this section, the term ‘speci-
fied 10-percent owned foreign corporation’ means any for-
eign corporation with respect to which any domestic cor-
poration is a United States shareholder. Such term shall 
not include any passive foreign investment company (with-
in the meaning of subpart D of part VI of subchapter P) 
that is not a controlled foreign corporation. 
‘‘(c) FOREIGN-SOURCE PORTION.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The foreign-source portion 
of any dividend is an amount which bears the same 
ratio to such dividend as— 
‘‘(A) the post-1986 undistributed foreign 
earnings of the specified 10-percent owned for-
eign corporation, bears to 
‘‘(B) the total post-1986 undistributed 
earnings of such foreign corporation. 
‘‘(2) POST-1986
UNDISTRIBUTED
EARNINGS.— 
The term ‘post-1986 undistributed earnings’ means 
the amount of the earnings and profits of the speci-
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314 
fied 10-percent owned foreign corporation (computed 
in accordance with sections 964(a) and 986) accu-
mulated in taxable years beginning after December 
31, 1986— 
‘‘(A) as of the close of the taxable year of 
the specified 10-percent owned foreign corpora-
tion in which the dividend is distributed, and 
‘‘(B) without diminution by reason of divi-
dends distributed during such taxable year. 
‘‘(3) 
POST-1986
UNDISTRIBUTED
FOREIGN 
EARNINGS.—The term ‘post-1986 undistributed for-
eign earnings’ means the portion of the post-1986 
undistributed earnings which is attributable to nei-
ther— 
‘‘(A) income described in subparagraph (A) 
of section 245(a)(5), nor 
‘‘(B) dividends described in subparagraph 
(B) of such section (determined without regard 
to section 245(a)(12)). 
‘‘(4) TREATMENT
OF
DISTRIBUTIONS
FROM 
EARNINGS BEFORE 1987.— 
‘‘(A) IN GENERAL.—In the case of any div-
idend paid out of earnings and profits of the 
specified 10-percent owned foreign corporation 
(computed in accordance with sections 964(a) 
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315 
and 986) accumulated in taxable years begin-
ning before January 1, 1987— 
‘‘(i) paragraphs (1), (2), and (3) shall 
be applied without regard to the phrase 
‘post-1986’ each place it appears, and 
‘‘(ii) paragraph (2) shall be applied by 
substituting ‘after the date specified in sec-
tion 316(a)(1)’ for ‘in taxable years begin-
ning after December 31, 1986’. 
‘‘(B) DIVIDENDS
PAID
FIRST
OUT
OF 
POST-1986 EARNINGS.—Dividends shall be treat-
ed as paid out of post-1986 undistributed earn-
ings to the extent thereof. 
‘‘(5) TREATMENT OF CERTAIN DIVIDENDS IN 
EXCESS OF UNDISTRIBUTED EARNINGS.—In the case 
of any dividend from the specified 10-percent owned 
foreign corporation which is in excess of undistrib-
uted earnings (as determined under paragraph (2) 
after taking into account the modifications described 
in clauses (i) and (ii) of paragraph (4)(A)), the for-
eign-source portion of such dividend is an amount 
which bears the same ratio to such dividend as— 
‘‘(A) the portion of the earnings and prof-
its described in subparagraph (B) which is at-
tributable to neither income described in para-
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316 
graph (3)(A) nor dividends described in para-
graph (3)(B), bears to 
‘‘(B) the earnings and profits of such cor-
poration for the taxable year in which such dis-
tribution is made (computed as of the close of 
the taxable year without diminution by reason 
of any distributions made during the taxable 
year). 
‘‘(d) DISALLOWANCE
OF FOREIGN TAX CREDIT, 
ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for any taxes paid or accrued (or 
treated as paid or accrued) with respect to any divi-
dend for which a deduction is allowed under this sec-
tion. 
‘‘(2) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under this chapter for any tax for 
which credit is not allowable under section 901 by 
reason of paragraph (1) (determined by treating the 
taxpayer as having elected the benefits of subpart A 
of part III of subchapter N). 
‘‘(e) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the provisions of this section.’’. 
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317 
(b) APPLICATION OF HOLDING PERIOD REQUIRE-
MENT.—Section 246(c) is amended— 
(1) by striking ‘‘or 245’’ in paragraph (1) and 
inserting ‘‘245, or 245A’’, and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) SPECIAL
RULES
FOR
FOREIGN
SOURCE 
PORTION OF DIVIDENDS RECEIVED FROM SPECIFIED 
10-PERCENT OWNED FOREIGN CORPORATIONS.— 
‘‘(A) 6-MONTH HOLDING PERIOD REQUIRE-
MENT.—For purposes of section 245A— 
‘‘(i) paragraph (1)(A) shall be ap-
plied— 
‘‘(I) by substituting ‘180 days’ 
for ‘45 days’each place it appears, and 
‘‘(II) by substituting ‘361-day pe-
riod’ for ‘91-day period’, and 
‘‘(ii) paragraph (2) shall not apply. 
‘‘(B) STATUS MUST BE MAINTAINED DUR-
ING HOLDING PERIOD.—For purposes of apply-
ing paragraph (1) with respect to section 245A, 
the taxpayer shall be treated as holding the 
stock referred to in paragraph (1) for any pe-
riod only if— 
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318 
‘‘(i) the specified 10-percent owned 
foreign corporation referred to in section 
245A(a) is a specified 10-percent owned 
foreign corporation for such period, and 
‘‘(ii) the taxpayer is a United States 
shareholder with respect to such specified 
10-percent owned foreign corporation for 
such period.’’. 
(c) APPLICATION OF RULES GENERALLY APPLICA-
BLE TO DEDUCTIONS FOR DIVIDENDS RECEIVED.— 
(1) TREATMENT OF DIVIDENDS FROM CERTAIN 
CORPORATIONS.—Section 246(a)(1) is amended by 
striking ‘‘and 245’’ and inserting ‘‘245, and 245A’’. 
(2) COORDINATION WITH SECTION 1059.—Sec-
tion 1059(b)(2)(B) is amended by striking ‘‘or 245’’ 
and inserting ‘‘245, or 245A’’. 
(d) COORDINATION WITH FOREIGN TAX CREDIT 
LIMITATION.—Section 904(b) is amended by adding at 
the end the following new paragraph: 
‘‘(5) TREATMENT OF DIVIDENDS FOR WHICH 
DEDUCTION IS ALLOWED UNDER SECTION 245A.— 
For purposes of subsection (a), in the case of a 
United States shareholder with respect to a specified 
10-percent owned foreign corporation, such share-
holder’s taxable income from sources without the 
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319 
United States (and entire taxable income) shall be 
determined without regard to— 
‘‘(A) the foreign-source portion of any divi-
dend received from such foreign corporation, 
and 
‘‘(B) any deductions properly allocable or 
apportioned to— 
‘‘(i) income (other than subpart F in-
come (as defined in section 952) and for-
eign high return amounts (as defined in 
section 951A(b)) with respect to stock of 
such specified 10-percent owned foreign 
corporation, or 
‘‘(ii) such stock (to the extent income 
with respect to such stock is other than 
subpart F income (as so defined) or for-
eign high return amounts (as so defined)). 
Any term which is used in section 245A and in this 
paragraph shall have the same meaning for purposes 
of this paragraph as when used in such section.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 245(a)(4) is amended by striking 
‘‘section 
902(c)(1)’’ 
and 
inserting 
‘‘section 
245A(c)(2) applied by substituting ‘qualified 10-per-
cent owned foreign corporation’ for ‘specified 10-per-
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320 
cent owned foreign corporation’ each place it ap-
pears’’. 
(2) Section 951(b) is amended by striking ‘‘sub-
part’’ and inserting ‘‘title’’. 
(3) Section 957(a) is amended by striking ‘‘sub-
part’’ in the matter preceding paragraph (1) and in-
serting ‘‘title’’. 
(4) The table of sections for part VIII of sub-
chapter B of chapter 1 is amended by inserting after 
section 245 the following new item: 
‘‘Sec. 245A. Deduction for foreign-source portion of dividends received by do-
mestic corporations from specified 10-percent owned foreign 
corporations.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after (and, 
in the case of the amendments made by subsection (d), 
deductions with respect to taxable years ending after) De-
cember 31, 2017. 
SEC. 4002. APPLICATION OF PARTICIPATION EXEMPTION 
TO INVESTMENTS IN UNITED STATES PROP-
ERTY. 
(a) IN GENERAL.—Section 956(a) is amended in the 
matter preceding paragraph (1) by inserting ‘‘(other than 
a corporation)’’ after ‘‘United States shareholder’’. 
(b) 
REGULATORY
AUTHORITY
TO
PREVENT 
ABUSE.—Section 956(e) is amended by striking ‘‘includ-
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321 
ing regulations to prevent’’ and inserting ‘‘including regu-
lations— 
‘‘(1) to address United States shareholders that 
are partnerships with corporate partners, and 
‘‘(2) to prevent’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of foreign corpora-
tions beginning after December 31, 2017. 
SEC. 4003. LIMITATION ON LOSSES WITH RESPECT TO 
SPECIFIED 
10-PERCENT 
OWNED 
FOREIGN 
CORPORATIONS. 
(a) BASIS IN SPECIFIED 10-PERCENT OWNED FOR-
EIGN CORPORATION REDUCED BY NONTAXED PORTION 
OF DIVIDEND FOR PURPOSES OF DETERMINING LOSS.— 
(1) IN GENERAL.—Section 961 is amended by 
adding at the end the following new subsection: 
‘‘(d) BASIS IN SPECIFIED 10-PERCENT OWNED FOR-
EIGN CORPORATION REDUCED BY NONTAXED PORTION 
OF DIVIDEND FOR PURPOSES OF DETERMINING LOSS.— 
If a domestic corporation received a dividend from a speci-
fied 10-percent owned foreign corporation (as defined in 
section 245A) in any taxable year, solely for purposes of 
determining loss on any disposition of stock of such for-
eign corporation in such taxable year or any subsequent 
taxable year, the basis of such domestic corporation in 
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322 
such stock shall be reduced (but not below zero) by the 
amount of any deduction allowable to such domestic cor-
poration under section 245A with respect to such stock 
except to the extent such basis was reduced under section 
1059 by reason of a dividend for which such a deduction 
was allowable.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to distributions made 
after December 31, 2017. 
(b) TREATMENT
OF
FOREIGN
BRANCH
LOSSES 
TRANSFERRED TO SPECIFIED 10-PERCENT OWNED FOR-
EIGN CORPORATIONS.— 
(1) IN GENERAL.—Part II of subchapter B of 
chapter 1 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 91. CERTAIN FOREIGN BRANCH LOSSES TRANS-
FERRED TO SPECIFIED 10-PERCENT OWNED 
FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—If a domestic corporation trans-
fers substantially all of the assets of a foreign branch 
(within the meaning of section 367(a)(3)(C)) to a specified 
10-percent owned foreign corporation (as defined in sec-
tion 245A) with respect to which it is a United States 
shareholder after such transfer, such domestic corporation 
shall include in gross income for the taxable year which 
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