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to the earnings and profits of such C corporation
derived from the active conduct of a trade or
business.
‘‘(E) EXCEPTION FOR BANKS, ETC.—In the
case of a bank (as defined in section 581) or a
depository institution holding company (as de-
fined in section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)), the term
‘passive investment income’ shall not include—
‘‘(i) interest income earned by such
bank or company, or
‘‘(ii) dividends on assets required to be
held by such bank or company, including
stock in the Federal Reserve Bank, the Fed-
eral Home Loan Bank, or the Federal Agri-
cultural Mortgage Bank or participation
certificates issued by a Federal Intermediate
Credit Bank.
‘‘(F) COORDINATION WITH SECTION 1374.—
The amount of passive investment income shall
be determined by not taking into account any
recognized built-in gain or loss of the S corpora-
tion for any taxable year in the recognition pe-
riod. Terms used in the preceding sentence shall
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have the same respective meanings as when used
in section 1374.’’.
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (J) of section 26(b)(2) is
amended by striking ‘‘25 percent’’ and inserting ‘‘60
percent’’.
(2) Clause (i) of section 1042(c)(4)(A) is amend-
ed by striking ‘‘section 1362(d)(3)(C)’’ and inserting
‘‘section 1375(b)(3)’’.
(3) Subparagraph (B) of section 1362(f)(1) is
amended by striking ‘‘or (3)’’.
(4) Clause (i) of section 1375(b)(1)(A) is amend-
ed by striking ‘‘25 percent’’ and inserting ‘‘60 per-
cent’’.
(5) The heading for section 1375 is amended by
striking ‘‘25
PERCENT’’ and inserting ‘‘60
PER-
CENT’’.
(6) The item relating to section 1375 in the table
of sections for part III of subchapter S of chapter 1
is amended by striking ‘‘25 percent’’ and inserting
‘‘60 percent’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2006 and before October 1, 2009.
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SEC. 303. MODIFICATION OF EFFECTIVE DATE OF DIS-
REGARD 
OF 
CERTAIN 
CAPITAL 
EXPENDI-
TURES FOR PURPOSES OF QUALIFIED SMALL
ISSUE BONDS.
(a) IN GENERAL.—Section 144(a)(4)(G) is amended
by striking ‘‘September 30, 2009’’ and inserting ‘‘December
31, 2006’’.
(b) CONFORMING AMENDMENT.—Section 144(a)(4)(F)
is amended by striking ‘‘September 30, 2009’’ and inserting
‘‘December 31, 2006’’.
SEC. 304. PREMIUMS FOR MORTGAGE INSURANCE.
(a) IN GENERAL.—Section 163(h)(3) (relating to
qualified residence interest) is amended by adding at the
end the following new subparagraph:
‘‘(E) MORTGAGE
INSURANCE
PREMIUMS
TREATED AS INTEREST.—
‘‘(i) IN GENERAL.—Premiums paid or
accrued for qualified mortgage insurance by
a taxpayer during the taxable year in con-
nection with acquisition indebtedness with
respect to a qualified residence of the tax-
payer shall be treated for purposes of this
section as interest which is qualified resi-
dence interest.
‘‘(ii) PHASEOUT.—The amount other-
wise treated as interest under clause (i)
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shall be reduced (but not below zero) by 10
percent of such amount for each $1,000
($500 in the case of a married individual
filing a separate return) (or fraction there-
of) that the taxpayer’s adjusted gross in-
come for the taxable year exceeds $100,000
($50,000 in the case of a married indi-
vidual filing a separate return).’’.
(b) DEFINITION
AND
SPECIAL
RULES.—Section
163(h)(4) (relating to other definitions and special rules)
is amended by adding at the end the following new subpara-
graphs:
‘‘(E) QUALIFIED MORTGAGE INSURANCE.—
The 
term 
‘qualified 
mortgage 
insurance’
means—
‘‘(i) mortgage insurance provided by
the Veterans Administration, the Federal
Housing Administration, or the Rural
Housing Administration, and
‘‘(ii) private mortgage insurance (as
defined by section 2 of the Homeowners
Protection Act of 1998 (12 U.S.C. 4901), as
in effect on the date of the enactment of this
subparagraph).
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‘‘(F) SPECIAL RULES FOR PREPAID QUALI-
FIED MORTGAGE INSURANCE.—Any amount paid
by the taxpayer for qualified mortgage insurance
that is properly allocable to any mortgage the
payment of which extends to periods that are
after the close of the taxable year in which such
amount is paid shall be chargeable to capital ac-
count and shall be treated as paid in such peri-
ods to which so allocated. No deduction shall be
allowed for the unamortized balance of such ac-
count if such mortgage is satisfied before the end
of its term. The preceding sentences shall not
apply to amounts paid for qualified mortgage
insurance provided by the Veterans Administra-
tion or the Rural Housing Administration.’’.
(c) INFORMATION RETURNS RELATING TO MORTGAGE
INSURANCE.—Section 6050H (relating to returns relating
to mortgage interest received in trade or business from indi-
viduals) is amended by adding at the end the following new
subsection:
‘‘(h) RETURNS RELATING TO MORTGAGE INSURANCE
PREMIUMS.—
‘‘(1) IN
GENERAL.—The Secretary may pre-
scribe, by regulations, that any person who, in the
course of a trade or business, receives from any indi-
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vidual premiums for mortgage insurance aggregating
$600 or more for any calendar year, shall make a re-
turn with respect to each such individual. Such re-
turn shall be in such form, shall be made at such
time, and shall contain such information as the Sec-
retary may prescribe.
‘‘(2) STATEMENT TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return
under paragraph (1) shall furnish to each individual
with respect to whom a return is made a written
statement showing such information as the Secretary
may prescribe. Such written statement shall be fur-
nished on or before January 31 of the year following
the calendar year for which the return under para-
graph (1) was required to be made.
‘‘(3) SPECIAL
RULES.—For purposes of this
subsection—
‘‘(A) rules similar to the rules of subsection
(c) shall apply, and
‘‘(B) 
the 
term 
‘mortgage 
insurance’
means—
‘‘(i) mortgage insurance provided by
the Veterans Administration, the Federal
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Housing Administration, or the Rural
Housing Administration, and
‘‘(ii) private mortgage insurance (as
defined by section 2 of the Homeowners
Protection Act of 1998 (12 U.S.C. 4901), as
in effect on the date of the enactment of this
subsection).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or accrued during the
period beginning after December 31, 2006, and before Janu-
ary 1, 2008, and properly allocable to such period, with
respect to mortgage insurance contracts issued after Decem-
ber 31, 2006.
SEC. 305. SENSE OF THE SENATE ON USE OF NO-BID CON-
TRACTING BY FEDERAL EMERGENCY MAN-
AGEMENT AGENCY.
(a) FINDINGS.—The Senate finds that—
(1) on September 8, 2005, the Federal Emer-
gency Management Agency announced that it had
awarded 4 contracts for emergency housing relief fol-
lowing Hurricane Katrina to The Shaw Group of
Baton Rouge, Louisiana, Fluor Corporation of Aliso
Viejo, California, Bechtel National of San Francisco,
California, and CH2M Hill of Denver, Colorado;
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(2) these contracts were awarded with no com-
petition from other capable firms, and up to
$100,000,000 in taxpayer funds were authorized for
each of these contracts;
(3) in the midst of concerns about abusive and
irresponsible spending of taxpayer funds, the Federal
Emergency Management Agency pledged to re-bid
these noncompetitive contracts, with Acting Under
Secretary of Emergency Preparedness and Response,
R. David Paulison, stating before the Committee on
Homeland Security and Government Affairs of the
Senate that ‘‘[a]ll of these no-bid contracts, we are
going to go back and re-bid’’;
(4) the Federal Emergency Management Agency
has yet to reopen these 4 contracts to competitive bid-
ding, and declared on November 11, 2005, that these
contracts would not be reopened for bidding until
February 2006;
(5) by February 2006, the majority of the con-
tracts will have been completed and the majority of
taxpayer funds will have been spent;
(6) large and politically-connected firms con-
tinue to benefit from no-bid and limited-competition
contracts, and contracts are not being awarded to ca-
pable, local companies;
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(7) according to an analysis in the Washington
Post, companies outside the States most affected by
Hurricane Katrina have received more than 90 per-
cent of the Federal contracts for recovery and recon-
struction;
(8) the monitoring of Federal contracting prac-
tices remains difficult, with a report by the San Jose
Mercury News stating ‘‘The database of contracts is
incomplete. Information released by Federal agencies
is spotty and sporadic. And disclosure of many no-
bid contracts isn’t required by law’’; and
(9)(A) there is currently no Chief Financial Offi-
cer charged with monitoring the flow of all funds to
the affected areas; and
(B) the task of financial management is spread
across disparate Federal departments and agencies
with inadequate oversight of taxpayer funds.
(b) SENSE OF THE SENATE.—It is the sense of the Sen-
ate that the Federal Emergency Management Agency
should—
(1) immediately rebid noncompetitive contracts
entered into following Hurricane Katrina, consistent
with the commitment of the Agency made on October
6, 2005, before millions of taxpayer dollars are wasted
on irresponsible and inefficient spending;
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(2)(A) immediately implement the planned com-
petitive contracting strategy of the Agency for recov-
ery work in all current and future reconstruction ef-
forts; and
(B) in carrying out that strategy, should
prioritize local and small disadvantaged businesses in
the contracting and subcontracting process; and
(3) immediately after the awarding of a con-
tract, publicly disclose the amount and competitive or
noncompetitive nature of the contract.
SEC. 306. SENSE OF CONGRESS REGARDING DOHA ROUND.
(a) FINDINGS.—The Congress makes the following
findings:
(1) Members of the World Trade Organization
(WTO) are currently engaged in a round of trade ne-
gotiations known as the Doha Development Agenda
(Doha Round).
(2) The Doha Round includes negotiations aimed
at clarifying and improving disciplines under the
Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 (Anti-
dumping Agreement) and the Agreement on Subsidies
and Countervailing Measures (Subsidies Agreement).
(3) The WTO Ministerial Declaration adopted
on November 14, 2001 (WTO Paper No. WT/MIN(01)/
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DEC/1) specifically provides that the Doha Round ne-
gotiations are to preserve the ‘‘basic concepts, prin-
ciples and effectiveness’’ of the Antidumping Agree-
ment and the Subsidies Agreement.
(4) In section 2102(b)(14)(A) of the Bipartisan
Trade Promotion Authority Act of 2002, the Congress
mandated that the principal negotiating objective of
the United States with respect to trade remedy laws
was to ‘‘preserve the ability of the United States to
enforce rigorously its trade laws . . . and avoid agree-
ments that lessen the effectiveness of domestic and
international disciplines on unfair trade, especially
dumping and subsidies’’.
(5) The countries that have been the most per-
sistent and egregious violators of international fair
trade rules are engaged in an aggressive effort to sig-
nificantly weaken the disciplines provided in the
Antidumping Agreement and the Subsidies Agreement
and undermine the ability of the United States to ef-
fectively enforce its trade remedy laws.
(6) Chronic violators of fair trade disciplines
have put forward proposals that would substantially
weaken United States trade remedy laws and prac-
tices, including mandating that unfair trade orders
terminate after a set number of years even if unfair
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trade and injury are likely to recur, mandating that
trade remedy duties reflect less than the full margin
of dumping or subsidization, mandating higher de
minimis levels of unfair trade, making cumulation of
the effects of imports from multiple countries more
difficult in unfair trade investigations, outlawing the
critical practice of ‘‘zeroing’’ in antidumping inves-
tigations, mandating the weighing of causes, and
mandating other provisions that make it more dif-
ficult to prove injury.
(7) United States trade remedy laws have al-
ready been significantly weakened by numerous un-
just and activist WTO dispute settlement decisions
which have created new obligations to which the
United States never agreed.
(8) Trade remedy laws remain a critical re-
source for American manufacturers, agricultural pro-
ducers, and aquacultural producers in responding to
closed foreign markets, subsidized imports, and other
forms of unfair trade, particularly in the context of
the challenges currently faced by these vital sectors of
the United States economy.
(9) The United States had a current account
trade deficit of approximately $668,000,000,000 in
2004, 
including 
a 
trade 
deficit 
of 
almost
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$162,000,000,000 with China alone, as well as a
trade deficit of $40,000,000,000 in advanced tech-
nology.
(10) United States manufacturers have lost over
3,000,000 jobs since June 2000, and United States
manufacturing employment is currently at its lowest
level since 1950.
(11) Many industries critical to United States
national security are at severe risk from unfair for-
eign competition.
(12) The Congress strongly believes that the pro-
posals put forward by countries seeking to undermine
trade remedy disciplines in the Doha Round would
result in serious harm to the United States economy,
including significant job losses and trade disadvan-
tages.
(b) SENSE OF CONGRESS.—It is the sense of Congress
that—
(1) the United States should not be a signatory
to any agreement or protocol with respect to the Doha
Development Round of the World Trade Organization
negotiations, or any other bilateral or multilateral
trade negotiations, that—
(A) adopts any proposal to lessen the effec-
tiveness of domestic and international disciplines
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on unfair trade or safeguard provisions, includ-
ing proposals—
(i) mandating that unfair trade orders
terminate after a set number of years even
if unfair trade and injury are likely to
recur;
(ii) mandating that trade remedy du-
ties reflect less than the full margin of
dumping or subsidization;
(iii) mandating higher de minimis lev-
els of unfair trade;
(iv) making cumulation of the effects of
imports from multiple countries more dif-
ficult in unfair trade investigations;
(v) outlawing the critical practice of
‘‘zeroing’’ in antidumping investigations; or
(vi) mandating the weighing of causes
or other provisions making it more difficult
to prove injury in unfair trade cases; and
(B) would lessen in any manner the ability
of the United States to enforce rigorously its
trade laws, including the antidumping, counter-
vailing duty, and safeguard laws;
(2) the United States trade laws and inter-
national rules appropriately serve the public interest
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by offsetting injurious unfair trade, and that further
‘‘balancing modifications’’ or other similar provisions
are unnecessary and would add to the complexity and
difficulty of achieving relief against injurious unfair
trade practices; and
(3) the United States should ensure that any new
agreement relating to international disciplines on un-
fair trade or safeguard provisions fully rectifies and
corrects decisions by WTO dispute settlement panels
or the Appellate Body that have unjustifiably and
negatively impacted, or threaten to negatively impact,
United States law or practice, including a law or
practice with respect to foreign dumping or subsidiza-
tion.
SEC. 307. MODIFICATION OF BOND RULE.
In the case of bonds issued after the date of the enact-
ment of this Act and before August 31, 2009—
(1) the requirement of paragraph (1) of section
648 of the Deficit Reduction Act of 1984 (98 Stat.
941) shall be treated as met with respect to the securi-
ties or obligations referred to in such section if such
securities or obligations are held in a fund the annual
distributions from which cannot exceed 7 percent of
the average fair market value of the assets held in
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such fund except to the extent distributions are nec-
essary to pay debt service on the bond issue,
(2) paragraph (3) of such section shall be ap-
plied by substituting ‘‘distributions from’’ for ‘‘the in-
vestment earnings of’’ both places it appears, and
(3) paragraph (4) of such section shall be ap-
plied by substituting ‘‘March 1, 1985’’ for ‘‘October 9,
1969’’.
SEC. 308. TREATMENT OF CERTAIN STOCK OPTION PLANS
UNDER 
NONQUALIFIED 
DEFERRED 
COM-
PENSATION RULES.
(a) IN GENERAL.—The Secretary of the Treasury shall
modify the regulations under section 409A of the Internal
Revenue Code of 1986 to extend to applicable foreign option
plans the exception under such section for incentive stock
options under section 422 of such Code and options granted
under an employee stock purchase plan meeting the require-
ments of section 423 of such Code. Such extension shall be
subject to such terms and conditions as may be prescribed
in such regulations.
(b) APPLICABLE FOREIGN OPTION PLANS.—For pur-
poses of subsection (a)—
(1) IN GENERAL.—The term ‘‘applicable foreign
option plan’’ means a plan providing for the issuance
of employee stock options—
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(A) which is established under the laws of
a foreign jurisdiction, and
(B) which, under such laws or the terms of
the plan (or both), is subject to requirements sub-
stantially similar to the requirements under sec-
tion 422 or 423 of such Code.
(2) SUBSTANTIALLY SIMILAR.—A plan shall not
be treated as subject to substantially similar require-
ments under paragraph (1)(B) unless—
(A) the plan is required to cover substan-
tially all employees,
(B) in the case of an option under an em-
ployee stock purchase plan, the plan is required
to provide an option price which is not less than
the amount specified in section 423(b)(6) of such
Code, except that such section shall be applied by
substituting ‘‘80 percent’’ for ‘‘85 percent’’ each
place it appears,
(C) the plan is required to provide coverage
of individuals who, but for the exception of the
application of section 409A of such Code by rea-
son of this section, would be subject to tax under
such section with respect to the plan, and
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(D) the plan meets such other requirements
as the Secretary of the Treasury prescribes in the
regulations under subsection (a).
SEC. 309. SENSE OF THE SENATE REGARDING THE DEDICA-
TION OF EXCESS FUNDS.
It is the sense of the Senate that any increases in reve-
nues to the Treasury as a result of this Act and the amend-
ments made by this Act that exceed the amounts specified
in the reconciliation instructions shall be dedicated to the
Low-Income Home Energy Assistance Program, in an
amount not to exceed the amount which is $2,900,000,000
more than the funding levels established for such Program
for fiscal year 2005.
SEC. 310. MODIFICATION OF TREATMENT OF LOANS TO
QUALIFIED CONTINUING CARE FACILITIES.
(a) IN GENERAL.—Subsection (g) of section 7872 is
amended to read as follows:
‘‘(g) EXCEPTION
FOR LOANS
TO QUALIFIED CON-
TINUING CARE FACILITIES.—
‘‘(1) IN GENERAL.—This section shall not apply
for any calendar year to any below-market loan owed
by a facility which on the last day of such year is
a continuing care facility, if such loan was made
pursuant to a continuing care contract and if the
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lender (or the lender’s spouse) attains age 62 before
the close of such year.
‘‘(2) CONTINUING
CARE
CONTRACT.—For pur-
poses of this section, the term ‘continuing care con-
tract’ means a written contract between an individual
and a qualified continuing care facility under
which—
‘‘(A) the individual or individual’s spouse
may use a qualified continuing care facility for
their life or lives,
‘‘(B) the individual or individual’s spouse
will be provided with housing in an independent
living unit (which has additional available fa-
cilities outside such unit for the provision of
meals and other personal care), an assisted liv-
ing facility or a nursing facility, as is available
in the continuing care facility, as appropriate
for the health of such individual or individual’s
spouse, and
‘‘(C) the individual or individual’s spouse
will be provided assisted living or nursing care
as the health of such individual or individual’s
spouse requires, and as is available in the con-
tinuing care facility.
‘‘(3) QUALIFIED CONTINUING CARE FACILITY.—
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‘‘(A) IN
GENERAL.—For purposes of this
section, the term ‘qualified continuing care facil-
ity’ means 1 or more facilities—
‘‘(i) which are designed to provide
services under continuing care contracts,
‘‘(ii) that include an independent liv-
ing unit, plus an assisted living or nursing
facility, or both, and
‘‘(iii) substantially all of the inde-
pendent living unit residents of which are
covered by continuing care contracts.
‘‘(B) NURSING
HOMES
EXCLUDED.—The
term ‘qualified continuing care facility’ shall not
include any facility which is of a type which is
traditionally considered a nursing home.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to loans made after December 31, 2005.
SEC. 311. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL
RESIDENCE BY CERTAIN EMPLOYEES OF THE
INTELLIGENCE COMMUNITY.
(a) IN
GENERAL.—Subparagraph (A) of section
121(d)(9) (relating to exclusion of gain from sale of prin-
cipal residence) is amended by striking ‘‘duty’’ and all that
follows and inserting ‘‘duty—
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‘‘(i) as a member of the uniformed
services,
‘‘(ii) as a member of the Foreign Serv-
ice of the United States, or
‘‘(iii) as an employee of the intelligence
community.’’.
(b) EMPLOYEE OF INTELLIGENCE COMMUNITY DE-
FINED.—Subparagraph (C) of section 121(d)(9) is amended
by redesignating clause (iv) as clause (v) and by inserting
after clause (iii) the following new clause:
‘‘(iv) EMPLOYEE
OF
INTELLIGENCE
COMMUNITY.—The term ‘employee of the in-
telligence community’ means an employee
(as defined by section 2105 of title 5,
United States Code) of—
‘‘(I) the Office of the Director of
National Intelligence,
‘‘(II) 
the 
Central 
Intelligence
Agency,
‘‘(III) 
the 
National 
Security
Agency,
‘‘(IV) 
the 
Defense 
Intelligence
Agency,
‘‘(V) the National Geospatial-In-
telligence Agency,
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‘‘(VI) the National Reconnais-
sance Office,
‘‘(VII) any other office within the
Department of Defense for the collec-
tion of specialized national intelligence
through reconnaissance programs,
‘‘(VIII) any of the intelligence ele-
ments of the Army, the Navy, the Air
Force, the Marine Corps, the Federal
Bureau of Investigation, the Depart-
ment of Treasury, the Department of
Energy, and the Coast Guard,
‘‘(IX) the Bureau of Intelligence
and Research of the Department of
State, or
‘‘(X) any of the elements of the
Department of Homeland Security
concerned with the analyses of foreign
intelligence information.’’.
(c) SPECIAL RULE.—Subparagraph (C) of section
121(d)(9), as amended by subsection (b), is amended by
adding at the end the following new clause:
‘‘(vi) SPECIAL RULE RELATING TO IN-
TELLIGENCE COMMUNITY.—An employee of
the intelligence community shall not be
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treated as serving on qualified extended
duty unless—
‘‘(I) for purposes of such duty
such employee has moved from 1 duty
station to another, and
‘‘(II) at least 1 of such duty sta-
tions is located outside of the Wash-
ington, District of Columbia, and Bal-
timore metropolitan statistical areas
(as defined by the Secretary of Com-
merce).’’.
(d) CONFORMING AMENDMENT.—The heading for sec-
tion 121(d)(9) is amended by striking ‘‘MEMBERS OF UNI-
FORMED SERVICES AND FOREIGN SERVICE’’ and inserting
‘‘UNIFORMED SERVICES, FOREIGN SERVICE, AND INTEL-
LIGENCE COMMUNITY’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales or exchanges after the date of
the enactment of this Act.
SEC. 312. SENSE OF THE SENATE REGARDING THE PERMA-
NENT EXTENSION OF EGTRRA AND JGTRRA
PROVISIONS RELATING TO CHILD TAX CRED-
IT.
It is the sense of the Senate that the conferees for the
Tax Relief Act of 2006 should strive to permanently extend
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the amendments to the child tax credit under section 24
of the Internal Revenue Code of 1986 made by the Economic
Growth and Tax Relief Reconciliation Act of 2001 and the
Jobs and Growth Tax Relief Reconciliation Act of 2003.
SEC. 313. PARTIAL EXPENSING FOR ADVANCED MINE SAFE-
TY EQUIPMENT.
(a) IN GENERAL.—Part VI of subchapter B of chapter
1 is amended by inserting after section 179D the following
new section:
‘‘SEC. 179E. ELECTION TO EXPENSE ADVANCED MINE SAFE-
TY EQUIPMENT.
‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may
elect to treat 50 percent of the cost of any qualified ad-
vanced mine safety equipment property as an expense
which is not chargeable to capital account. Any cost so
treated shall be allowed as a deduction for the taxable year
in which the qualified advanced mine safety equipment
property is placed in service.
‘‘(b) ELECTION.—
‘‘(1) IN GENERAL.—An election under this sec-
tion for any taxable year shall be made on the tax-
payer’s return of the tax imposed by this chapter for
the taxable year. Such election shall specify the ad-
vanced mine safety equipment property to which the
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election applies and shall be made in such manner as
the Secretary may by regulations prescribe.
‘‘(2) ELECTION
IRREVOCABLE.—Any election
made under this section may not be revoked except
with the consent of the Secretary.
‘‘(c) QUALIFIED ADVANCED MINE SAFETY EQUIPMENT
PROPERTY.—For purposes of this section, the term ‘quali-
fied advanced mine safety equipment property’ means any
advanced mine safety equipment property for use in any
underground mine located in the United States—
‘‘(1) the original use of which commences with
the taxpayer, and
‘‘(2) which is placed in service by the taxpayer
after the date of the enactment of this section.
‘‘(d) ADVANCED MINE SAFETY EQUIPMENT PROP-
ERTY.—For purposes of this section, the term ‘advanced
mine safety equipment property’ means any of the fol-
lowing:
‘‘(1) Emergency communication technology or
device which is used to allow a miner to maintain
constant communication with an individual who is
not in the mine.
‘‘(2) Electronic identification and location device
which allows an individual who is not in the mine
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to track at all times the movements and location of
miners working in or at the mine.
‘‘(3) Emergency oxygen-generating, self-rescue
device which provides oxygen for at least 90 minutes.
‘‘(4) Pre-positioned supplies of oxygen which (in
combination with self-rescue devices) can be used to
provide each miner on a shift, in the event of an acci-
dent or other event which traps the miner in the mine
or otherwise necessitates the use of such a self-rescue
device, the ability to survive for at least 48 hours.
‘‘(5) Comprehensive atmospheric monitoring sys-
tem which monitors the levels of carbon monoxide,
methane, and oxygen that are present in all areas of
the mine and which can detect smoke in the case of
a fire in a mine.
‘‘(e) SPECIAL RULES.—
‘‘(1) COORDINATION WITH SECTION 179.—No ex-
penditures shall be taken into account under sub-
section (a) with respect to the portion of the cost of
any property specified in an election under section
179.
‘‘(2) BASIS REDUCTION.—For purposes of this
title, the basis of any property shall be reduced by the
portion of the cost of such property taken into account
under subsection (a).
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‘‘(f) REPORTING.—No deduction shall be allowed under
subsection (a) to any taxpayer for any taxable year unless
such taxpayer files with the Secretary a report containing
such information with respect to the operation of the mines
of the taxpayer as the Secretary shall require.
‘‘(g) TERMINATION.—This section shall not apply to
property placed in service after the date which is 3 years
after the date of the enactment of this section.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 263(a)(1) is amended by striking
‘‘or’’ at the end of subparagraph (J), by striking the
period at the end of subparagraph (K) and inserting
‘‘, or’’, and by inserting after subparagraph (K) the
following new subparagraph:
‘‘(L) expenditures for which a deduction is
allowed under section 179E.’’.
(2) Section 312(k)(3)(B) is amended by striking
‘‘or 179D’’ each place it appears in the heading and
text thereof and inserting ‘‘179D, or 179E’’.
(3) Section 1016(a) is amended by striking
‘‘and’’ at the end of paragraph (36), by striking the
period at the end of paragraph (37) and inserting ‘‘,
and’’, and by adding at the end the following new
paragraph:
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‘‘(38) 
to 
the 
extent 
provided 
in 
section
179E(e)(2).’’.
(4) Section 1245(a)(2)(C) is amended by insert-
ing ‘‘179E,’’ after ‘‘179D,’’.
(5) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by inserting after
the item relating to section 179D the following new
item:
‘‘Sec. 179E. Election to expense advanced mine safety equipment.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to costs paid or incurred after the date
of the enactment of this Act.
SEC. 314. MINE RESCUE TEAM TRAINING TAX CREDIT.
(a) IN GENERAL.—Subpart D of part IV of subchapter
A of chapter 1 (relating to business related credits) is
amended by adding at the end the following new section:
‘‘SEC. 45N. MINE RESCUE TEAM TRAINING CREDIT.
‘‘(a) AMOUNT OF CREDIT.—For purposes of section 38,
the mine rescue team training credit determined under this
section with respect to any eligible employer for any taxable
year is an amount equal to the lesser of—
‘‘(1) 20 percent of the amount paid or incurred
by the taxpayer during the taxable year with respect
to the training program costs of each qualified mine
rescue team employee (including wages of such em-
ployee while attending such program), or
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‘‘(2) $10,000.
‘‘(b) QUALIFIED MINE RESCUE TEAM EMPLOYEE.—
For purposes of this section, the term ‘qualified mine rescue
team employee’ means with respect to any taxable year any
full-time employee of the taxpayer who is—
‘‘(1) a miner eligible for more than 6 months of
such taxable year to serve as a mine rescue team
member as a result of completing, at a minimum, an
initial 20-hour course of instruction as prescribed by
the Mine Safety and Health Administration’s Office
of Educational Policy and Development, or
‘‘(2) a miner eligible for more than 6 months of
such taxable year to serve as a mine rescue team
member by virtue of receiving at least 40 hours of re-
fresher training in such instruction.
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this sec-
tion, the term ‘eligible employer’ means any taxpayer which
employs individuals as miners in underground mines in
the United States.
‘‘(d) WAGES.—For purposes of this section, the term
‘wages’ has the meaning given to such term by subsection
(b) of section 3306 (determined without regard to any dollar
limitation contained in such section).
‘‘(e) TERMINATION.—This section shall not apply to
taxable years beginning after December 31, 2008.’’.
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(b) CREDIT MADE PART
OF GENERAL BUSINESS
CREDIT.—Section 38(b) is amended by striking ‘‘and’’ at
the end of paragraph (25), by striking the period at the
end of paragraph (26) and inserting ‘‘, and’’, and by add-
ing at the end the following new paragraph:
‘‘(27) the mine rescue team training credit deter-
mined under section 45N(a).’’.
(c) NO DOUBLE BENEFIT.—Section 280C is amended
by adding at the end the following new subsection:
‘‘(e) MINE RESCUE TEAM TRAINING CREDIT.—No de-
duction shall be allowed for that portion of the expenses oth-
erwise allowable as a deduction for the taxable year which
is equal to the amount of the credit determined for the tax-
able year under section 45N(a).’’.
(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by adding at the end the following new item:
‘‘Sec. 45N. Mine rescue team training credit.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2005.
SEC. 315. FUNDING FOR VETERANS HEALTH CARE AND DIS-
ABILITY COMPENSATION AND HOSPITAL IN-
FRASTRUCTURE FOR VETERANS.
(a) FUNDING FOR MEDICAL SERVICES.—
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(1) AUTHORIZATION
OF
APPROPRIATIONS.—
There is hereby authorized to be appropriated for
the Department of Veterans Affairs for the Veterans
Health Administration for Medical Care amounts as
follows:
(A) $900,000,000 for fiscal year 2006.
(B) $1,300,000,000 for fiscal year 2007.
(C) $1,500,000,000 for fiscal year 2008.
(D) $1,600,000,000 for fiscal year 2009.
(E) $1,600,000,000 for fiscal year 2010.
(2) 
SUPPLEMENT
NOT
SUPPLANT.—The
amounts authorized to be appropriated by this sub-
section are in addition to any other amounts author-
ized to be appropriated for the Veterans Health Ad-
ministration for Medical Care under any other provi-
sions of law.
(b) FUNDING FOR DISABILITY COMPENSATION BEN-
EFITS.—
(1) AUTHORIZATION
OF
APPROPRIATIONS.—
There is hereby authorized to be appropriated for
the Department of Veterans Affairs for the Veterans
Benefits Administration for Compensation and Pen-
sions amounts as follows:
(A) $2,300,000,000 for fiscal year 2006.
(B) $2,700,000,000 for fiscal year 2007.
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(C) $3,000,000,000 for fiscal year 2008.
(D) $3,000,000,000 for fiscal year 2009.
(E) $3,000,000,000 for fiscal year 2010.
(2) 
SUPPLEMENT
NOT
SUPPLANT.—The
amounts authorized to be appropriated by this sub-
section are in addition to any other amounts author-
ized to be appropriated for the Veterans Benefits
Administration for Compensation and Pensions
under any other provisions of law.
(c) FUNDING FOR INFRASTRUCTURE IMPROVEMENTS
FOR HOSPITALS PROVIDING HEALTH CARE AND SERV-
ICES TO VETERANS.—
(1) ESTABLISHMENT OF FUND.—There is here-
by established on the books of the Treasury an ac-
count to be known as the ‘‘Veterans Hospital Im-
provement Fund’’ (in this subsection referred to as
the ‘‘Fund’’).
(2) ELEMENTS.—The Fund shall consist of the
following:
(A) $1,000,000,000, which shall be depos-
ited in the Fund upon the enactment of this
subsection.
(B) Any other amounts authorized for
transfer to or deposit in the Fund by law.
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(3) ADMINISTRATION.—The Funds shall be ad-
ministered by the Secretary of Veterans Affairs.
(4) USE OF FUNDS.—
(A) IN GENERAL.—Amounts in the Fund
shall be available expenditures for improve-
ments of health facilities treating veterans, in-
cluding military medical treatment facilities,
medical centers and other facilities administered
by the Secretary of Veterans Affairs for the
provision of medical care and services to vet-
erans, and other State, local, and private facili-
ties providing medical care and services to vet-
erans.
(B) APPLICATION
FOR
FUNDS.—A non-
Federal health facility seeking amounts from
the Fund shall submit to the Secretary of Vet-
erans Affairs an application therefor setting
forth such information as the Secretary shall
require.
(C) AVAILABILITY.—Amounts in the Fund
shall remain available until expended.
SEC. 316. SENSE OF THE SENATE REGARDING PROTECTING
MIDDLE-CLASS FAMILIES FROM THE ALTER-
NATIVE MINIMUM TAX.
(a) FINDINGS.—The Senate finds that—
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(1) the alternative minimum tax was originally
enacted in 1969 as a supplemental tax on wealthy
tax evaders, but has evolved into a tax on millions
of middle-class working families, particularly fami-
lies in which both parents work, and families with 2
or more children;
(2) by the end of the decade, the alternative
minimum tax will ensnare more than 30,000,000
taxpayers, the majority of which will have adjusted
gross incomes below $100,000, and the National
Taxpayer Advocate has thus identified it as the most
serious problem facing individual taxpayers;
(3) the alternative minimum tax is often por-
trayed as a tax that is most problematic for resi-
dents of States such as New York, California, Mas-
sachusetts, and New Jersey, but the truth is that
many other States have a significant percentage of
taxpayers affected by the alternative minimum tax,
including Oregon, Maryland, Virginia, Minnesota,
Ohio, Maine, Georgia, North Carolina, and Pennsyl-
vania, so the problem is of national importance;
(4) a family with 2 children will become subject
to the alternative minimum tax at about $67,500 of
income in 2006, and a family with 5 children will
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start owing the alternative minimum tax at about
$54,000 of income, if Congress fails to act;
(5) the year 2006 is the ‘‘tipping point’’ for the
alternative minimum tax, as the number of tax-
payers 
affected 
nationally 
will 
explode 
from
3,600,000 to 19,000,000 if Congress fails to act;
(6) in 2004, only 6.2 percent of families earn-
ing $100,000 to $200,000 a year were subject to the
alternative minimum tax, and that number will ex-
plode to nearly 50 percent if Congress fails to act;
(7) if alternative minimum tax relief is extended
through 2006, about two-thirds of the benefits will
be realized by families earning under $200,000, with
more than half of the total benefits going to families
with incomes between $100,000 and $200,000;
(8) starting in 2008, the average married cou-
ple with 2 children earning $75,000 or more will
find that more than half of the tax cuts they have
been expecting from the various laws passed since
2001 will be ‘‘taken back’’ via the alternative min-
imum tax; and
(9) the temporary relief from the alternative
minimum tax (provided in 2001 and extended twice
in 2003 and 2004) expired at the end of 2005, but
the tax reductions on dividends and capital gains do
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not expire until the end of 2008, making immediate
action on those provisions a less urgent matter.
(b) SENSE OF THE SENATE.—It is the sense of the
Senate that protecting middle-class families from the al-
ternative minimum tax should be a higher priority for
Congress in 2006 than extending a tax cut that does not
expire until the end of 2008.
TITLE IV—REVENUE OFFSET
PROVISIONS
Subtitle A—Provisions Designed to
Curtail Tax Shelters
SEC. 401. UNDERSTATEMENT OF TAXPAYER’S LIABILITY BY
INCOME TAX RETURN PREPARER.
(a) STANDARDS CONFORMED TO TAXPAYER STAND-
ARDS.—Section 6694(a) (relating to understatements due
to unrealistic positions) is amended—
(1) by striking ‘‘realistic possibility of being
sustained on its merits’’ in paragraph (1) and in-
serting ‘‘reasonable belief that the tax treatment in
such position was more likely than not the proper
treatment’’,
(2) by striking ‘‘or was frivolous’’ in paragraph
(3) and inserting ‘‘or there was no reasonable basis
for the tax treatment of such position’’, and
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(3) by striking ‘‘UNREALISTIC’’ in the heading
thereof and inserting ‘‘IMPROPER’’.
(b) AMOUNT
OF
PENALTY.—Section 6694 is
amended—
(1) by striking ‘‘$250’’ in subsection (a) and in-
serting ‘‘$1,000’’, and
(2) by striking ‘‘$1,000’’ in subsection (b) and
inserting ‘‘$5,000’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to documents prepared after the
date of the enactment of this Act.
SEC. 402. FRIVOLOUS TAX SUBMISSIONS.
(a) CIVIL PENALTIES.—Section 6702 is amended to
read as follows:
‘‘SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
‘‘(a) CIVIL PENALTY
FOR FRIVOLOUS TAX RE-
TURNS.—A person shall pay a penalty of $5,000 if—
‘‘(1) such person files what purports to be a re-
turn of a tax imposed by this title but which—
‘‘(A) does not contain information on
which the substantial correctness of the self-as-
sessment may be judged, or
‘‘(B) contains information that on its face
indicates that the self-assessment is substan-
tially incorrect; and
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‘‘(2) the conduct referred to in paragraph (1)—
‘‘(A) is based on a position which the Sec-
retary has identified as frivolous under sub-
section (c), or
‘‘(B) reflects a desire to delay or impede
the administration of Federal tax laws.
‘‘(b) CIVIL PENALTY
FOR SPECIFIED FRIVOLOUS
SUBMISSIONS.—
‘‘(1) IMPOSITION OF PENALTY.—Except as pro-
vided in paragraph (3), any person who submits a
specified frivolous submission shall pay a penalty of
$5,000.
‘‘(2) SPECIFIED FRIVOLOUS SUBMISSION.—For
purposes of this section—
‘‘(A) 
SPECIFIED
FRIVOLOUS
SUBMIS-
SION.—The term ‘specified frivolous submis-
sion’ means a specified submission if any por-
tion of such submission—
‘‘(i) is based on a position which the
Secretary has identified as frivolous under
subsection (c), or
‘‘(ii) reflects a desire to delay or im-
pede the administration of Federal tax
laws.
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‘‘(B) SPECIFIED SUBMISSION.—The term
‘specified submission’ means—
‘‘(i) a request for a hearing under—
‘‘(I) section 6320 (relating to no-
tice and opportunity for hearing upon
filing of notice of lien), or
‘‘(II) section 6330 (relating to
notice and opportunity for hearing be-
fore levy), and
‘‘(ii) an application under—
‘‘(I) section 6159 (relating to
agreements for payment of tax liabil-
ity in installments),
‘‘(II) section 7122 (relating to
compromises), or
‘‘(III) section 7811 (relating to
taxpayer assistance orders).
‘‘(3) OPPORTUNITY
TO
WITHDRAW
SUBMIS-
SION.—If the Secretary provides a person with no-
tice that a submission is a specified frivolous sub-
mission and such person withdraws such submission
within 30 days after such notice, the penalty im-
posed under paragraph (1) shall not apply with re-
spect to such submission.
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‘‘(c) LISTING OF FRIVOLOUS POSITIONS.—The Sec-
retary shall prescribe (and periodically revise) a list of po-
sitions which the Secretary has identified as being frivo-
lous for purposes of this subsection. The Secretary shall
not include in such list any position that the Secretary
determines 
meets 
the 
requirement 
of 
section
6662(d)(2)(B)(ii)(II).
‘‘(d) REDUCTION OF PENALTY.—The Secretary may
reduce the amount of any penalty imposed under this sec-
tion if the Secretary determines that such reduction would
promote compliance with and administration of the Fed-
eral tax laws.
‘‘(e) PENALTIES
IN ADDITION
TO OTHER PEN-
ALTIES.—The penalties imposed by this section shall be
in addition to any other penalty provided by law.’’.
(b) TREATMENT
OF FRIVOLOUS REQUESTS
FOR
HEARINGS BEFORE LEVY.—
(1) FRIVOLOUS
REQUESTS
DISREGARDED.—
Section 6330 (relating to notice and opportunity for
hearing before levy) is amended by adding at the
end the following new subsection:
‘‘(g) FRIVOLOUS REQUESTS FOR HEARING, ETC.—
Notwithstanding any other provision of this section, if the
Secretary determines that any portion of a request for a
hearing under this section or section 6320 meets the re-
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quirement of clause (i) or (ii) of section 6702(b)(2)(A),
then the Secretary may treat such portion as if it were
never submitted and such portion shall not be subject to
any further administrative or judicial review.’’.
(2) PRECLUSION
FROM
RAISING
FRIVOLOUS
ISSUES
AT
HEARING.—Section 
6330(c)(4) 
is
amended—
(A) by striking ‘‘(A)’’ and inserting
‘‘(A)(i)’’;
(B) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’;
(C) by striking the period at the end of the
first sentence and inserting ‘‘; or’’; and
(D) by inserting after subparagraph (A)(ii)
(as so redesignated) the following:
‘‘(B) the issue meets the requirement of
clause (i) or (ii) of section 6702(b)(2)(A).’’.
(3) 
STATEMENT
OF
GROUNDS.—Section
6330(b)(1) is amended by striking ‘‘under sub-
section (a)(3)(B)’’ and inserting ‘‘in writing under
subsection (a)(3)(B) and states the grounds for the
requested hearing’’.
(c) TREATMENT
OF FRIVOLOUS REQUESTS
FOR
HEARINGS UPON FILING OF NOTICE OF LIEN.—Section
6320 is amended—
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(1) in subsection (b)(1), by striking ‘‘under sub-
section (a)(3)(B)’’ and inserting ‘‘in writing under
subsection (a)(3)(B) and states the grounds for the
requested hearing’’, and
(2) in subsection (c), by striking ‘‘and (e)’’ and
inserting ‘‘(e), and (g)’’.
(d) TREATMENT OF FRIVOLOUS APPLICATIONS FOR
OFFERS-IN-COMPROMISE
AND
INSTALLMENT
AGREE-
MENTS.—Section 7122 is amended by adding at the end
the following new subsection:
‘‘(e) FRIVOLOUS
SUBMISSIONS, ETC.—Notwith-
standing any other provision of this section, if the Sec-
retary determines that any portion of an application for
an offer-in-compromise or installment agreement sub-
mitted under this section or section 6159 meets the re-
quirement of clause (i) or (ii) of section 6702(b)(2)(A),
then the Secretary may treat such portion as if it were
never submitted and such portion shall not be subject to
any further administrative or judicial review.’’.
(e) CLERICAL AMENDMENT.—The table of sections
for part I of subchapter B of chapter 68 is amended by
striking the item relating to section 6702 and inserting
the following new item:
‘‘Sec. 6702. Frivolous tax submissions.’’.
(f) EFFECTIVE DATE.—The amendments made by this
section shall apply to submissions made and issues raised
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after the date on which the Secretary first prescribes a list
under section 6702(c) of the Internal Revenue Code of 1986,
as amended by subsection (a).
SEC. 403. PENALTY FOR PROMOTING ABUSIVE TAX SHEL-
TERS.
(a) PENALTY FOR PROMOTING ABUSIVE TAX SHEL-
TERS.—Section 6700 (relating to promoting abusive tax
shelters, etc.) is amended—
(1) by redesignating subsections (b) and (c) as
subsections (d) and (e), respectively,
(2) by striking ‘‘a penalty’’ and all that follows
through the period in the first sentence of subsection
(a) and inserting ‘‘a penalty determined under sub-
section (b)’’, and
(3) by inserting after subsection (a) the following
new subsections:
‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN-
ALTY; LIABILITY FOR PENALTY.—
‘‘(1) AMOUNT OF PENALTY.—The amount of the
penalty imposed by subsection (a) shall be 100 per-
cent of the gross income derived (or to be derived)
from such activity by the person or persons subject to
such penalty.
‘‘(2) CALCULATION OF PENALTY.—The penalty
amount determined under paragraph (1) shall be cal-
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culated with respect to each instance of an activity
described in subsection (a), each instance in which in-
come was derived by the person or persons subject to
such penalty, and each person who participated in
such an activity.
‘‘(3) LIABILITY FOR PENALTY.—If more than 1
person is liable under subsection (a) with respect to
such activity, all such persons shall be jointly and
severally liable for the penalty under such subsection.
‘‘(c) PENALTY NOT DEDUCTIBLE.—The payment of
any penalty imposed under this section or the payment of
any amount to settle or avoid the imposition of such pen-
alty shall not be considered an ordinary and necessary ex-
pense in carrying on a trade or business for purposes of
this title and shall not be deductible by the person who is
subject to such penalty or who makes such payment.’’.
(b) CONFORMING AMENDMENT.—Section 6700(a) is
amended by striking the last sentence.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to the activities described in paragraphs
(1) and (2) of section 6700(a) of the Internal Revenue Code
of 1986 and after the date of the enactment of this Act.
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SEC. 404. PENALTY FOR AIDING AND ABETTING THE UN-
DERSTATEMENT OF TAX LIABILITY.
(a) IN GENERAL.—Section 6701(a) (relating to impo-
sition of penalty) is amended—
(1) by inserting ‘‘, or tax liability reflected in,’’
after ‘‘the preparation or presentation of’’ in para-
graph (1),
(2) by inserting ‘‘aid, assistance, procurement,
or advice with respect to such’’ before ‘‘portion’’ both
places it appears in paragraphs (2) and (3), and
(3) by inserting ‘‘instance of aid, assistance, pro-
curement, or advice or each such’’ before ‘‘document’’
in the matter following paragraph (3).
(b) AMOUNT OF PENALTY.—Subsection (b) of section
6701 (relating to penalties for aiding and abetting under-
statement of tax liability) is amended to read as follows:
‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN-
ALTY; LIABILITY FOR PENALTY.—
‘‘(1) AMOUNT OF PENALTY.—The amount of the
penalty imposed by subsection (a) shall be 100 per-
cent of the gross income derived (or to be derived)
from such aid, assistance, procurement, or advice pro-
vided by the person or persons subject to such penalty.
‘‘(2) CALCULATION OF PENALTY.—The penalty
amount determined under paragraph (1) shall be cal-
culated with respect to each instance of aid, assist-
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ance, procurement, or advice described in subsection
(a), each instance in which income was derived by the
person or persons subject to such penalty, and each
person who made such an understatement of the li-
ability for tax.
‘‘(3) LIABILITY FOR PENALTY.—If more than 1
person is liable under subsection (a) with respect to
providing such aid, assistance, procurement, or ad-
vice, all such persons shall be jointly and severally
liable for the penalty under such subsection.’’.
(c) PENALTY NOT DEDUCTIBLE.—Section 6701 is
amended by adding at the end the following new subsection:
‘‘(g) PENALTY NOT DEDUCTIBLE.—The payment of
any penalty imposed under this section or the payment of
any amount to settle or avoid the imposition of such pen-
alty shall not be considered an ordinary and necessary ex-
pense in carrying on a trade or business for purposes of
this title and shall not be deductible by the person who is
subject to such penalty or who makes such payment.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to the activities described in section
6701(a) of the Internal Revenue Code of 1986 after the date
of the enactment of this Act.
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Subtitle B—Economic Substance
Doctrine
SEC. 411. CLARIFICATION OF ECONOMIC SUBSTANCE DOC-
TRINE.
(a) IN GENERAL.—Section 7701 is amended by redes-
ignating subsection (o) as subsection (p) and by inserting
after subsection (n) the following new subsection:
‘‘(o) CLARIFICATION OF ECONOMIC SUBSTANCE DOC-
TRINE; ETC.—
‘‘(1) GENERAL RULES.—
‘‘(A) IN GENERAL.—In any case in which a
court determines that the economic substance
doctrine is relevant for purposes of this title to
a transaction (or series of transactions), such
transaction (or series of transactions) shall have
economic substance only if the requirements of
this paragraph are met.
‘‘(B) 
DEFINITION
OF
ECONOMIC
SUB-
STANCE.—For purposes of subparagraph (A)—
‘‘(i) IN GENERAL.—A transaction has
economic substance only if—
‘‘(I) the transaction changes in a
meaningful way (apart from Federal
tax effects) the taxpayer’s economic po-
sition, and