IB 
Union Calendar No. 2 
111TH CONGRESS 
1ST SESSION 
H. R. 598 
[Report No. 111–8, Part I] 
To provide for a portion of the economic recovery package relating to revenue 
measures, unemployment, and health. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 16, 2009 
Mr. RANGEL (for himself, Mr. STARK, and Mr. MCDERMOTT) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committees on Energy and Commerce, Science and 
Technology, Education and Labor, and Financial Services, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
JANUARY 27, 2009 
Reported from the Committee on Ways and Means with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
JANUARY 27, 2009 
Committees on Energy and Commerce, Science and Technology, Education 
and Labor, and Financial Services discharged; committed to the Com-
mittee of the Whole House on the State of the Union and ordered to be 
printed 
[For text of introduced bill, see copy of bill as introduced on January 16, 2009] 
A BILL 
To provide for a portion of the economic recovery package 
relating to revenue measures, unemployment, and health. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
TITLE I—TAX PROVISIONS 
SECTION 1000. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This title may be cited as the 
‘‘American Recovery and Reinvestment Tax Act of 2009’’. 
(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this title an amendment or repeal is ex-
pressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue 
Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this title is as follows: 
Sec. 1000. Short title, etc. 
Subtitle A—Making Work Pay 
Sec. 1001. Making work pay credit. 
Subtitle B—Additional Tax Relief for Families With Children 
Sec. 1101. Increase in earned income tax credit. 
Sec. 1102. Increase of refundable portion of child credit. 
Subtitle C—American Opportunity Tax Credit 
Sec. 1201. American opportunity tax credit. 
Subtitle D—Housing Incentives 
Sec. 1301. Waiver of requirement to repay first-time homebuyer credit. 
Sec. 1302. Coordination of low-income housing credit and low-income housing 
grants. 
Subtitle E—Tax Incentives for Business 
PART I—TEMPORARY INVESTMENT INCENTIVES 
Sec. 1401. Special allowance for certain property acquired during 2009. 
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Sec. 1402. Temporary increase in limitations on expensing of certain depreciable 
business assets. 
PART II—5-YEAR CARRYBACK OF OPERATING LOSSES 
Sec. 1411. 5-year carryback of operating losses. 
Sec. 1412. Exception for TARP recipients. 
PART III—INCENTIVES FOR NEW JOBS 
Sec. 1421. Incentives to hire unemployed veterans and disconnected youth. 
PART IV—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON 
CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE 
Sec. 1431. Clarification of regulations related to limitations on certain built-in 
losses following an ownership change. 
Subtitle F—Fiscal Relief for State and Local Governments 
PART I—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS 
Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of fi-
nancial institutions. 
Sec. 1502. Modification of small issuer exception to tax-exempt interest expense 
allocation rules for financial institutions. 
Sec. 1503. Temporary modification of alternative minimum tax limitations on 
tax-exempt bonds. 
PART II—TAX CREDIT BONDS FOR SCHOOLS 
Sec. 1511. Qualified school construction bonds. 
Sec. 1512. Extension and expansion of qualified zone academy bonds. 
PART III—TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS 
Sec. 1521. Taxable bond option for governmental bonds. 
PART IV—RECOVERY ZONE BONDS 
Sec. 1531. Recovery zone bonds. 
Sec. 1532. Tribal economic development bonds. 
PART V—REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS 
Sec. 1541. Repeal of withholding tax on government contractors. 
Subtitle G—Energy Incentives 
PART I—RENEWABLE ENERGY INCENTIVES 
Sec. 1601. Extension of credit for electricity produced from certain renewable re-
sources. 
Sec. 1602. Election of investment credit in lieu of production credit. 
Sec. 1603. Repeal of certain limitations on credit for renewable energy property. 
Sec. 1604. Coordination with renewable energy grants. 
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PART II—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY 
BONDS AND QUALIFIED ENERGY CONSERVATION BONDS 
Sec. 1611. Increased limitation on issuance of new clean renewable energy bonds. 
Sec. 1612. Increased limitation and expansion of qualified energy conservation 
bonds. 
PART III—ENERGY CONSERVATION INCENTIVES 
Sec. 1621. Extension and modification of credit for nonbusiness energy property. 
Sec. 1622. Modification of credit for residential energy efficient property. 
Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling 
property. 
PART IV—ENERGY RESEARCH INCENTIVES 
Sec. 1631. Increased research credit for energy research. 
Subtitle H—Other Provisions 
PART I—APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS 
FINANCED WITH CERTAIN TAX-FAVORED BONDS 
Sec. 1701. Application of certain labor standards to projects financed with cer-
tain tax-favored bonds. 
PART II—GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING 
Sec. 1711. Grants to States for low-income housing projects in lieu of low-income 
housing credit allocations for 2009. 
PART III—GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX 
CREDITS 
Sec. 1721. Grants for specified energy property in lieu of tax credits. 
PART IV—STUDY OF ECONOMIC, EMPLOYMENT, AND RELATED EFFECTS OF 
THIS ACT 
Sec. 1731. Study of economic, employment, and related effects of this Act. 
Subtitle A—Making Work Pay 
SEC. 1001. MAKING WORK PAY CREDIT. 
(a) IN GENERAL.—Subpart C of part IV of subchapter 
A of chapter 1 is amended by inserting after section 36 the 
following new section: 
‘‘SEC. 36A. MAKING WORK PAY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eligi-
ble individual, there shall be allowed as a credit against 
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‘‘(B) any individual with respect to whom 
a deduction under section 151 is allowable to an-
other taxpayer for a taxable year beginning in 
the calendar year in which the individual’s tax-
able year begins, and 
‘‘(C) an estate or trust. 
Such term shall not include any individual unless the 
requirements of section 32(c)(1)(E) are met with re-
spect to such individual. 
‘‘(2) EARNED
INCOME.—The term ‘earned in-
come’ has the meaning given such term by section 
32(c)(2), except that such term shall not include net 
earnings from self-employment which are not taken 
into account in computing taxable income. For pur-
poses of the preceding sentence, any amount excluded 
from gross income by reason of section 112 shall be 
treated as earned income which is taken into account 
in computing taxable income for the taxable year. 
‘‘(d) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2010.’’. 
(b) TREATMENT OF POSSESSIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR CODE POSSESSION.—The Sec-
retary of the Treasury shall pay to each posses-
sion of the United States with a mirror code tax 
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system amounts equal to the loss to that posses-
sion by reason of the amendments made by this 
section with respect to taxable years beginning 
in 2009 and 2010. Such amounts shall be deter-
mined by the Secretary of the Treasury based on 
information provided by the government of the 
respective possession. 
(B) OTHER
POSSESSIONS.—The Secretary 
of the Treasury shall pay to each possession of 
the United States which does not have a mirror 
code tax system amounts estimated by the Sec-
retary of the Treasury as being equal to the ag-
gregate benefits that would have been provided to 
residents of such possession by reason of the 
amendments made by this section for taxable 
years beginning in 2009 and 2010 if a mirror 
code tax system had been in effect in such posses-
sion. The preceding sentence shall not apply with 
respect to any possession of the United States 
unless such possession has a plan, which has 
been approved by the Secretary of the Treasury, 
under which such possession will promptly dis-
tribute such payments to the residents of such 
possession. 
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(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No credit 
shall be allowed against United States income taxes 
for any taxable year under section 36A of the Internal 
Revenue Code of 1986 (as added by this section) to 
any person— 
(A) to whom a credit is allowed against 
taxes imposed by the possession by reason of the 
amendments made by this section for such tax-
able year, or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B) with respect 
to such taxable year. 
(3) DEFINITIONS AND SPECIAL RULES.— 
(A) POSSESSION OF THE UNITED STATES.— 
For purposes of this subsection, the term ‘‘posses-
sion of the United States’’ includes the Common-
wealth of Puerto Rico and the Commonwealth of 
the Northern Mariana Islands. 
(B) MIRROR CODE TAX SYSTEM.—For pur-
poses of this subsection, the term ‘‘mirror code 
tax system’’ means, with respect to any posses-
sion of the United States, the income tax system 
of such possession if the income tax liability of 
the residents of such possession under such sys-
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tem is determined by reference to the income tax 
laws of the United States as if such possession 
were the United States. 
(C) TREATMENT OF PAYMENTS.—For pur-
poses of section 1324(b)(2) of title 31, United 
States Code, the payments under this subsection 
shall be treated in the same manner as a refund 
due from the credit allowed under section 36A of 
the Internal Revenue Code of 1986 (as added by 
this section). 
(c) REFUNDS DISREGARDED IN THE ADMINISTRATION 
OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED PRO-
GRAMS.—Any credit or refund allowed or made to any indi-
vidual by reason of section 36A of the Internal Revenue 
Code of 1986 (as added by this section) or by reason of sub-
section (b) of this section shall not be taken into account 
as income and shall not be taken into account as resources 
for the month of receipt and the following 2 months, for 
purposes of determining the eligibility of such individual 
or any other individual for benefits or assistance, or the 
amount or extent of benefits or assistance, under any Fed-
eral program or under any State or local program financed 
in whole or in part with Federal funds. 
(d) CONFORMING AMENDMENTS.— 
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(1) Section 6211(b)(4)(A) is amended by insert-
ing ‘‘36A,’’ after ‘‘36,’’. 
(2) Section 1324(b)(2) of title 31, United States 
Code, is amended by inserting ‘‘36A,’’ after ‘‘36,’’. 
(3) The table of sections for subpart C of part IV 
of subchapter A of chapter 1 is amended by inserting 
after the item relating to section 36 the following new 
item: 
‘‘Sec. 36A. Making work pay credit.’’. 
(e) EFFECTIVE DATE.—This section shall apply to tax-
able years beginning after December 31, 2008. 
Subtitle B—Additional Tax Relief 
for Families With Children 
SEC. 1101. INCREASE IN EARNED INCOME TAX CREDIT. 
(a) IN GENERAL.—Subsection (b) of section 32 is 
amended by adding at the end the following new paragraph: 
‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In the 
case of any taxable year beginning in 2009 or 2010— 
‘‘(A) INCREASED CREDIT PERCENTAGE FOR 
3 OR MORE QUALIFYING CHILDREN.—In the case 
of a taxpayer with 3 or more qualifying chil-
dren, the credit percentage is 45 percent. 
‘‘(B) REDUCTION OF MARRIAGE PENALTY.— 
‘‘(i) IN GENERAL.—The dollar amount 
in effect under paragraph (2)(B) shall be 
$5,000. 
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‘‘(ii) INFLATION ADJUSTMENT.—In the 
case of any taxable year beginning in 2010, 
the $5,000 amount in clause (i) shall be in-
creased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost of living adjustment 
determined under section 1(f)(3) for 
the calendar year in which the taxable 
year begins determined by substituting 
‘calendar year 2008’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
‘‘(iii) ROUNDING.—Subparagraph (A) 
of subsection (j)(2) shall apply after taking 
into account any increase under clause 
(ii).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 1102. INCREASE OF REFUNDABLE PORTION OF CHILD 
CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 24(d) is 
amended to read as follows: 
‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not-
withstanding paragraph (3), in the case of any tax-
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able year beginning in 2009 or 2010, the dollar 
amount in effect for such taxable year under para-
graph (1)(B)(i) shall be zero.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
Subtitle C—American Opportunity 
Tax Credit 
SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Section 25A (relating to Hope 
scholarship credit) is amended by redesignating subsection 
(i) as subsection (j) and by inserting after subsection (h) 
the following new subsection: 
‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 
case of any taxable year beginning in 2009 or 2010— 
‘‘(1) INCREASE IN CREDIT.—The Hope Scholar-
ship Credit shall be an amount equal to the sum of— 
‘‘(A) 100 percent of so much of the qualified 
tuition and related expenses paid by the tax-
payer during the taxable year (for education fur-
nished to the eligible student during any aca-
demic period beginning in such taxable year) as 
does not exceed $2,000, plus 
‘‘(B) 25 percent of such expenses so paid as 
exceeds $2,000 but does not exceed $4,000. 
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‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF 
POST-SECONDARY
EDUCATION.—Subparagraphs (A) 
and (C) of subsection (b)(2) shall be applied by sub-
stituting ‘4’ for ‘2’. 
‘‘(3) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES
TO
INCLUDE
REQUIRED
COURSE
MATE-
RIALS.—Subsection (f)(1)(A) shall be applied by sub-
stituting ‘tuition, fees, and course materials’ for ‘tui-
tion and fees’. 
‘‘(4) INCREASE IN AGI LIMITS FOR HOPE SCHOL-
ARSHIP CREDIT.—In lieu of applying subsection (d) 
with respect to the Hope Scholarship Credit, such 
credit (determined without regard to this paragraph) 
shall be reduced (but not below zero) by the amount 
which bears the same ratio to such credit (as so deter-
mined) as— 
‘‘(A) the excess of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income (as defined in subsection 
(d)(3)) for such taxable year, over 
‘‘(ii) $80,000 ($160,000 in the case of 
a joint return), bears to 
‘‘(B) $10,000 ($20,000 in the case of a joint 
return). 
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‘‘(5) CREDIT
ALLOWED
AGAINST
ALTERNATIVE 
MINIMUM TAX.—In the case of a taxable year to which 
section 26(a)(2) does not apply, so much of the credit 
allowed under subsection (a) as is attributable to the 
Hope Scholarship Credit shall not exceed the excess 
of— 
‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed by 
section 55, over 
‘‘(B) the sum of the credits allowable under 
this subpart (other than this subsection and sec-
tions 23, 25D, and 30D) and section 27 for the 
taxable year. 
Any reference in this section or section 24, 25, 26, 
25B, 904, or 1400C to a credit allowable under this 
subsection shall be treated as a reference to so much 
of the credit allowable under subsection (a) as is at-
tributable to the Hope Scholarship Credit. 
‘‘(6) PORTION OF CREDIT MADE REFUNDABLE.— 
40 percent of so much of the credit allowed under sub-
section (a) as is attributable to the Hope Scholarship 
Credit (determined after application of paragraph (4) 
and without regard to this paragraph and section 
26(a)(2) or paragraph (5), as the case may be) shall 
be treated as a credit allowable under subpart C (and 
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not allowed under subsection (a)). The preceding sen-
tence shall not apply to any taxpayer for any taxable 
year if such taxpayer is a child to whom subsection 
(g) of section 1 applies for such taxable year. 
‘‘(7) COORDINATION
WITH
MIDWESTERN
DIS-
ASTER AREA BENEFITS.—In the case of a taxpayer 
with respect to whom section 702(a)(1)(B) of the 
Heartland Disaster Tax Relief Act of 2008 applies for 
any taxable year, such taxpayer may elect to waive 
the application of this subsection to such taxpayer for 
such taxable year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 24(b)(3)(B) is amended by inserting 
‘‘25A(i),’’ after ‘‘23,’’. 
(2) Section 25(e)(1)(C)(ii) is amended by insert-
ing ‘‘25A(i),’’ after ‘‘24,’’. 
(3) Section 26(a)(1) is amended by inserting 
‘‘25A(i),’’ after ‘‘24,’’. 
(4) Section 25B(g)(2) is amended by inserting 
‘‘25A(i),’’ after ‘‘23,’’. 
(5) Section 904(i) is amended by inserting 
‘‘25A(i),’’ after ‘‘24,’’. 
(6) Section 1400C(d)(2) is amended by inserting 
‘‘25A(i),’’ after ‘‘24,’’. 
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(7) Section 1324(b)(2) of title 31, United States 
Code, is amended by inserting ‘‘25A,’’ before ‘‘35’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
(d) APPLICATION OF EGTRRA SUNSET.—The amend-
ment made by subsection (b)(1) shall be subject to title IX 
of the Economic Growth and Tax Relief Reconciliation Act 
of 2001 in the same manner as the provision of such Act 
to which such amendment relates. 
(e) TREASURY STUDIES REGARDING EDUCATION IN-
CENTIVES.— 
(1) STUDY
REGARDING
COORDINATION
WITH 
NON-TAX EDUCATIONAL INCENTIVES.—The Secretary 
of the Treasury, or the Secretary’s delegate, shall 
study how to coordinate the credit allowed under sec-
tion 25A of the Internal Revenue Code of 1986 with 
the Federal Pell Grant program under section 401 of 
the Higher Education Act of 1965. 
(2) STUDY REGARDING IMPOSITION OF COMMU-
NITY SERVICE REQUIREMENTS.—The Secretary of the 
Treasury, or the Secretary’s delegate, shall study the 
feasibility of requiring students to perform commu-
nity service as a condition of taking their tuition and 
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related expenses into account under section 25A of the 
Internal Revenue Code of 1986. 
(3) REPORT.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of the 
Treasury, or the Secretary’s delegate, shall report to 
Congress on the results of the studies conducted under 
this paragraph. 
Subtitle D—Housing Incentives 
SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST-TIME 
HOMEBUYER CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 36(f) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(D) WAIVER
OF
RECAPTURE
FOR
PUR-
CHASES IN 2009.—In the case of any credit al-
lowed with respect to the purchase of a principal 
residence after December 31, 2008, and before 
July 1, 2009— 
‘‘(i) paragraph (1) shall not apply, 
and 
‘‘(ii) paragraph (2) shall apply only if 
the disposition or cessation described in 
paragraph (2) with respect to such residence 
occurs during the 36-month period begin-
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ning on the date of the purchase of such res-
idence by the taxpayer.’’. 
(b) CONFORMING AMENDMENT.—Subsection (g) of sec-
tion 36 is amended by striking ‘‘subsection (c)’’ and insert-
ing ‘‘subsections (c) and (f)(4)(D)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to residences purchased after December 
31, 2008. 
SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 
CREDIT AND LOW-INCOME HOUSING GRANTS. 
Subsection (i) of section 42 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following 
new paragraph: 
‘‘(9) COORDINATION WITH LOW-INCOME HOUSING 
GRANTS.— 
‘‘(A) REDUCTION IN STATE HOUSING CRED-
IT CEILING FOR LOW-INCOME HOUSING GRANTS 
RECEIVED IN 2009.—For purposes of this section, 
the amounts described in clauses (i) through (iv) 
of subsection (h)(3)(C) with respect to any State 
for 2009 shall each be reduced by so much of 
such amount as is taken into account in deter-
mining the amount of any grant to such State 
under section 1711 of the American Recovery 
and Reinvestment Tax Act of 2009. 
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‘‘(B) SPECIAL RULE FOR BASIS.—Basis of a 
qualified low-income building shall not be re-
duced by the amount of any grant described in 
subparagraph (A).’’. 
Subtitle E—Tax Incentives for 
Business 
PART I—TEMPORARY INVESTMENT INCENTIVES 
SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 
ACQUIRED DURING 2009. 
(a) IN GENERAL.—Paragraph (2) of section 168(k) is 
amended— 
(1) by striking ‘‘January 1, 2010’’ and inserting 
‘‘January 1, 2011’’, and 
(2) by striking ‘‘January 1, 2009’’ each place it 
appears and inserting ‘‘January 1, 2010’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for subsection (k) of section 168 
is amended by striking ‘‘JANUARY 1, 2009’’ and in-
serting ‘‘JANUARY 1, 2010’’. 
(2) The heading for clause (ii) of section 
168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY 1, 
2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 
(3) Subparagraph (D) of section 168(k)(4) is 
amended— 
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(A) by striking ‘‘and’’ at the end of clause 
(i), 
(B) by redesignating clause (ii) as clause 
(v), and 
(C) by inserting after clause (i) the fol-
lowing new clauses: 
‘‘(ii) ‘April 1, 2008’ shall be sub-
stituted for ‘January 1, 2008’ in subpara-
graph (A)(iii)(I) thereof, 
‘‘(iii) ‘January 1, 2009’ shall be sub-
stituted for ‘January 1, 2010’ each place it 
appears, 
‘‘(iv) ‘January 1, 2010’ shall be sub-
stituted for ‘January 1, 2011’ in subpara-
graph (A)(iv) thereof, and’’. 
(4) Subparagraph (B) of section 168(l)(5) is 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2010’’. 
(5) Clause (ii) of section 168(n)(2)(C) is amend-
ed by striking ‘‘January 1, 2009’’ and inserting 
‘‘January 1, 2010’’. 
(6) Subparagraph (B) of section 1400N(d)(3) is 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2010’’. 
(c) EFFECTIVE DATES.— 
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to property placed in service after December 
31, 2008, in taxable years ending after such date. 
(2) 
TECHNICAL
AMENDMENT.—Section 
168(k)(4)(D)(ii) of the Internal Revenue Code of 
1986, as added by subsection (b)(3)(C), shall apply to 
taxable years ending after March 31, 2008. 
SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX-
PENSING OF CERTAIN DEPRECIABLE BUSI-
NESS ASSETS. 
(a) IN GENERAL.—Paragraph (7) of section 179(b) is 
amended— 
(1) by striking ‘‘2008’’ and inserting ‘‘2008, or 
2009’’, and 
(2) by striking ‘‘2008’’ in the heading thereof and 
inserting ‘‘2008, AND 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
PART II—5-YEAR CARRYBACK OF OPERATING 
LOSSES 
SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES. 
(a) IN
GENERAL.—Subparagraph (H) of section 
172(b)(1) is amended to read as follows: 
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‘‘(H) CARRYBACK FOR 2008 AND 2009 NET 
OPERATING LOSSES.— 
‘‘(i) IN GENERAL.—In the case of an 
applicable 2008 or 2009 net operating loss 
with respect to which the taxpayer has elect-
ed the application of this subparagraph— 
‘‘(I) such net operating loss shall 
be reduced by 10 percent of such loss 
(determined without regard to this sub-
paragraph), 
‘‘(II) subparagraph (A)(i) shall be 
applied by substituting any whole 
number elected by the taxpayer which 
is more than 2 and less than 6 for ‘2’, 
‘‘(III) subparagraph (E)(ii) shall 
be applied by substituting the whole 
number which is one less than the 
whole number substituted under sub-
clause (II) for ‘2’, and 
‘‘(IV) subparagraph (F) shall not 
apply. 
‘‘(ii) APPLICABLE 2008 OR 2009 NET OP-
ERATING LOSS.—For purposes of this sub-
paragraph, the term ‘applicable 2008 or 
2009 net operating loss’ means— 
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‘‘(I) the taxpayer’s net operating 
loss for any taxable year ending in 
2008 or 2009, or 
‘‘(II) if the taxpayer elects to have 
this subclause apply in lieu of sub-
clause (I), the taxpayer’s net operating 
loss for any taxable year beginning in 
2008 or 2009. 
‘‘(iii) ELECTION.—Any election under 
this subparagraph shall be made in such 
manner as may be prescribed by the Sec-
retary, and shall be made by the due date 
(including extension of time) for filing the 
taxpayer’s return for the taxable year of the 
net operating loss. Any such election, once 
made, shall be irrevocable. 
‘‘(iv) COORDINATION
WITH
ALTER-
NATIVE TAX NET OPERATING LOSS DEDUC-
TION.—In the case of a taxpayer who elects 
to have clause (ii)(II) apply, section 
56(d)(1)(A)(ii) shall be applied by sub-
stituting ‘ending during 2001 or 2002 or 
beginning during 2008 or 2009’ for ‘ending 
during 2001, 2002, 2008, or 2009’.’’. 
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(b) ALTERNATIVE TAX NET OPERATING LOSS DEDUC-
TION.—Subclause (I) of section 56(d)(1)(A)(ii) is amended 
to read as follows: 
‘‘(I) the amount of such deduction 
attributable to the sum of carrybacks of 
net operating losses from taxable years 
ending during 2001, 2002, 2008, or 
2009 and carryovers of net operating 
losses to such taxable years, or’’. 
(c) LOSS FROM OPERATIONS
OF LIFE INSURANCE 
COMPANIES.—Subsection (b) of section 810 is amended by 
adding at the end the following new paragraph: 
‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 
‘‘(A) IN GENERAL.—In the case of an appli-
cable 2008 or 2009 loss from operations with re-
spect to which the taxpayer has elected the appli-
cation of this paragraph— 
‘‘(i) such loss from operations shall be 
reduced by 10 percent of such loss (deter-
mined without regard to this paragraph), 
and 
‘‘(ii) paragraph (1)(A) shall be ap-
plied, at the election of the taxpayer, by 
substituting ‘5’ or ‘4’ for ‘3’. 
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SMARTINEZ on PROD1PC64 with BILLS
‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM 
OPERATIONS.—For purposes of this paragraph, 
the term ‘applicable 2008 or 2009 loss from oper-
ations’ means— 
‘‘(i) the taxpayer’s loss from operations 
for any taxable year ending in 2008 or 
2009, or 
‘‘(ii) if the taxpayer elects to have this 
clause apply in lieu of clause (i), the tax-
payer’s loss from operations for any taxable 
year beginning in 2008 or 2009. 
‘‘(C) ELECTION.—Any election under this 
paragraph shall be made in such manner as may 
be prescribed by the Secretary, and shall be made 
by the due date (including extension of time) for 
filing the taxpayer’s return for the taxable year 
of the loss from operations. Any such election, 
once made, shall be irrevocable. 
‘‘(D) COORDINATION
WITH
ALTERNATIVE 
TAX NET OPERATING LOSS DEDUCTION.—In the 
case of a taxpayer who elects to have subpara-
graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 
be applied by substituting ‘ending during 2001 
or 2002 or beginning during 2008 or 2009’ for 
‘ending during 2001, 2002, 2008, or 2009’.’’. 
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SMARTINEZ on PROD1PC64 with BILLS
(d) CONFORMING
AMENDMENT.—Section 172 is 
amended by striking subsection (k). 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to net operating losses arising in tax-
able years ending after December 31, 2007. 
(2) ALTERNATIVE TAX NET OPERATING LOSS DE-
DUCTION.—The amendment made by subsection (b) 
shall apply to taxable years ending after 1997. 
(3) LOSS FROM OPERATIONS OF LIFE INSURANCE 
COMPANIES.—The amendment made by subsection (d) 
shall apply to losses from operations arising in tax-
able years ending after December 31, 2007. 
(4) TRANSITIONAL RULE.—In the case of a net 
operating loss (or, in the case of a life insurance com-
pany, a loss from operations) for a taxable year end-
ing before the date of the enactment of this Act— 
(A) any election made under section 
172(b)(3) or 810(b)(3) of the Internal Revenue 
Code of 1986 with respect to such loss may (not-
withstanding such section) be revoked before the 
applicable date, 
(B) any election made under section 
172(b)(1)(H) or 810(b)(4) of such Code with re-
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SMARTINEZ on PROD1PC64 with BILLS
spect to such loss shall (notwithstanding such 
section) be treated as timely made if made before 
the applicable date, and 
(C) any application under section 6411(a) 
of such Code with respect to such loss shall be 
treated as timely filed if filed before the applica-
ble date. 
For purposes of this paragraph, the term ‘‘applicable 
date’’ means the date which is 60 days after the date 
of the enactment of this Act. 
SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 
The amendments made by this part shall not apply 
to— 
(1) any taxpayer if— 
(A) the Federal Government acquires, at 
any time, an equity interest in the taxpayer 
pursuant to the Emergency Economic Stabiliza-
tion Act of 2008, or 
(B) the Federal Government acquires, at 
any time, any warrant (or other right) to ac-
quire any equity interest with respect to the tax-
payer pursuant to such Act, 
(2) the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation, 
and 
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SMARTINEZ on PROD1PC64 with BILLS
(3) any taxpayer which at any time in 2008 or 
2009 is a member of the same affiliated group (as de-
fined in section 1504 of the Internal Revenue Code of 
1986, determined without regard to subsection (b) 
thereof) as a taxpayer described in paragraph (1) or 
(2). 
PART III—INCENTIVES FOR NEW JOBS 
SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 
AND DISCONNECTED YOUTH. 
(a) IN GENERAL.—Subsection (d) of section 51 is 
amended by adding at the end the following new paragraph: 
‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED VET-
ERANS AND DISCONNECTED YOUTH HIRED IN 2009 OR 
2010.— 
‘‘(A) IN GENERAL.—Any unemployed vet-
eran or disconnected youth who begins work for 
the employer during 2009 or 2010 shall be treat-
ed as a member of a targeted group for purposes 
of this subpart. 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) 
UNEMPLOYED
VETERAN.—The 
term ‘unemployed veteran’ means any vet-
eran (as defined in paragraph (3)(B), deter-
mined without regard to clause (ii) thereof) 
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SMARTINEZ on PROD1PC64 with BILLS
who is certified by the designated local 
agency as— 
‘‘(I) having been discharged or re-
leased from active duty in the Armed 
Forces during 2008, 2009, or 2010, 
and 
‘‘(II) being in receipt of unem-
ployment compensation under State or 
Federal law for not less than 4 weeks 
during the 1-year period ending on the 
hiring date. 
‘‘(ii) 
DISCONNECTED
YOUTH.—The 
term ‘disconnected youth’ means any indi-
vidual who is certified by the designated 
local agency— 
‘‘(I) as having attained age 16 
but not age 25 on the hiring date, 
‘‘(II) as not regularly attending 
any secondary, technical, or post-sec-
ondary school during the 6-month pe-
riod preceding the hiring date, 
‘‘(III) as not regularly employed 
during such 6-month period, and 
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