In the Senate of the United States,
May 15, 2003.
Resolved, That the bill from the House of Representa-
tives (H.R. 2) entitled ‘‘An Act to provide for reconciliation
pursuant to section 201 of the concurrent resolution on the
budget for fiscal year 2004.’’, do pass with the following
AMENDMENT:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CON-
TENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Jobs
and Growth Tax Relief Reconciliation Act of 2003’’.
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(b) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents of this
Act is as follows:
Sec. 1. Short title; references; table of contents.
TITLE I—ACCELERATION OF CERTAIN PREVIOUSLY ENACTED TAX
REDUCTIONS; INCREASED EXPENSING FOR SMALL BUSINESSES
Sec. 101. Acceleration of 10-percent individual income tax rate bracket expan-
sion.
Sec. 102. Acceleration of reduction in individual income tax rates.
Sec. 103. Minimum tax relief to individuals.
Sec. 104. Acceleration of increase in standard deduction for married taxpayers
filing joint returns.
Sec. 105. Acceleration of 15-percent individual income tax rate bracket expansion
for married taxpayers filing joint returns.
Sec. 106. Acceleration of increase in, and refundability of, child tax credit.
Sec. 107. Increased expensing for small business.
Sec. 108. Application of EGTRRA sunset to this title.
TITLE II—PARTIAL EXCLUSION OF DIVIDENDS
Sec. 201. Partial exclusion of dividends received by individuals.
TITLE III—REVENUE PROVISIONS
Subtitle A—Provisions Designed To Curtail Tax Shelters
Sec. 301. Clarification of economic substance doctrine.
Sec. 302. Penalty for failing to disclose reportable transaction.
Sec. 303. Accuracy-related penalty for listed transactions and other reportable
transactions having a significant tax avoidance purpose.
Sec. 304. Penalty for understatements attributable to transactions lacking eco-
nomic substance, etc.
Sec. 305. Modifications of substantial understatement penalty for nonreportable
transactions.
Sec. 306. Tax shelter exception to confidentiality privileges relating to taxpayer
communications.
Sec. 307. Disclosure of reportable transactions.
Sec. 308. Modifications to penalty for failure to register tax shelters.
Sec. 309. Modification of penalty for failure to maintain lists of investors.
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Sec. 310. Modification of actions to enjoin certain conduct related to tax shelters
and reportable transactions.
Sec. 311. Understatement of taxpayer’s liability by income tax return preparer.
Sec. 312. Penalty on failure to report interests in foreign financial accounts.
Sec. 313. Frivolous tax submissions.
Sec. 314. Penalty on promoters of tax shelters.
Sec. 315. Statute of limitations for taxable years for which listed transactions not
reported.
Sec. 316. Denial of deduction for interest on underpayments attributable to non-
disclosed reportable and noneconomic substance transactions.
Subtitle B—Enron-Related Tax Shelter Provisions
Sec. 321. Limitation on transfer or importation of built-in losses.
Sec. 322. No reduction of basis under section 734 in stock held by partnership
in corporate partner.
Sec. 323. Repeal of special rules for FASITs.
Sec. 324. Expanded disallowance of deduction for interest on convertible debt.
Sec. 325. Expanded authority to disallow tax benefits under section 269.
Sec. 326. Modifications of certain rules relating to controlled foreign corporations.
Sec. 327. Controlled entities ineligible for REIT status.
Subtitle C—Other Corporate Governance Provisions
PART I—GENERAL PROVISIONS
Sec. 331. Affirmation of consolidated return regulation authority.
Sec. 332. Signing of corporate tax returns by chief executive officer.
Sec. 333. Denial of deduction for certain fines, penalties, and other amounts.
Sec. 334. Disallowance of deduction for punitive damages.
Sec. 335. Increase in criminal monetary penalty limitation for the underpayment
or overpayment of tax due to fraud.
PART II—EXECUTIVE COMPENSATION REFORM
Sec. 336. Treatment of nonqualified deferred compensation funded with assets lo-
cated outside the United States.
Sec. 337. Inclusion in gross income of funded deferred compensation of corporate
insiders.
Sec. 338. Prohibition on deferral of gain from the exercise of stock options and
restricted stock gains through deferred compensation arrange-
ments.
Sec. 339. Increase in withholding from supplemental wage payments in excess of
$1,000,000.
Subtitle D—International Provisions
PART I—PROVISIONS TO DISCOURAGE EXPATRIATION
Sec. 340. Revision of tax rules on expatriation.
Sec. 341. Tax treatment of inverted corporate entities.
Sec. 342. Excise tax on stock compensation of insiders in inverted corporations.
Sec. 343. Reinsurance of United States risks in foreign jurisdictions.
PART II—OTHER PROVISIONS
Sec. 344. Doubling of certain penalties, fines, and interest on underpayments re-
lated to certain offshore financial arrangement.
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Sec. 345. Effectively connected income to include certain foreign source income.
Sec. 346. Determination of basis of amounts paid from foreign pension plans.
Sec. 347. Recapture of overall foreign losses on sale of controlled foreign corpora-
tion.
Sec. 348. Prevention of mismatching of interest and original issue discount de-
ductions and income inclusions in transactions with related for-
eign persons.
Sec. 349. Sale of gasoline and diesel fuel at duty-free sales enterprises.
Sec. 350. Repeal of earned income exclusion of citizens or residents living abroad.
Subtitle E—Other Revenue Provisions
Sec. 351. Extension of Internal Revenue Service user fees.
Sec. 352. Addition of vaccines against hepatitis A to list of taxable vaccines.
Sec. 353. Disallowance of certain partnership loss transfers.
Sec. 354. Treatment of stripped interests in bond and preferred stock funds, etc.
Sec. 355. Reporting of taxable mergers and acquisitions.
Sec. 356. Minimum holding period for foreign tax credit on withholding taxes on
income other than dividends.
Sec. 357. Qualified tax collection contracts.
Sec. 358. Extension of customs user fees.
Sec. 359. Clarification of exemption from tax for small property and casualty in-
surance companies.
Sec. 360. Partial payment of tax liability in installment agreements.
Sec. 361. Extension of amortization of intangibles to sports franchises.
Sec. 362. Deposits made to suspend running of interest on potential underpay-
ments.
Sec. 363. Clarification of rules for payment of estimated tax for certain deemed
asset sales.
Sec. 364. Limitation on deduction for charitable contributions of patents and
similar property.
Sec. 365. Extension of transfers of excess pension assets to retiree health accounts.
Sec. 366. Proration rules for life insurance business of property and casualty in-
surance companies.
Sec. 367. Modification of treatment of transfers to creditors in divisive reorga-
nizations.
Sec. 368. Increase in age of minor children whose unearned income is taxed as
if parent’s income.
Sec. 369. Consistent amortization of periods for intangibles.
Sec. 370. Clarification of definition of nonqualified preferred stock.
Sec. 371. Class lives for utility grading costs.
Sec. 372. Prohibition on nonrecognition of gain through complete liquidation of
holding company.
Sec. 373. Lease term to include certain service contracts.
Sec. 374. Recognition of gain from the sale of a principal residence acquired in
a like-kind exchange within 5 years of sale.
Subtitle F—Other Provisions
Sec. 381. Temporary State and local fiscal relief.
Sec. 382. Review of State agency blindness and disability determinations.
Sec. 383. Prohibition on use of SCHIP funds to provide coverage for childless
adults.
Sec. 384. Medicaid DSH allotments.
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TITLE IV—SMALL BUSINESS AND AGRICULTURAL PROVISIONS
Subtitle A—Small Business Provisions
Sec. 401. Exclusion of certain indebtedness of small business investment compa-
nies from acquisition indebtedness.
Sec. 402. Repeal of occupational taxes relating to distilled spirits, wine, and beer.
Sec. 403. Custom gunsmiths.
Sec. 404. Simplification of excise tax imposed on bows and arrows.
Subtitle B—Agricultural Provisions
Sec. 411. Capital gain treatment under section 631(b) to apply to outright sales
by landowners.
Sec. 412. Special rules for livestock sold on account of weather-related conditions.
Sec. 413. Exclusion for loan payments under national health service corps loan
repayment program.
Sec. 414. Payment of dividends on stock of cooperatives without reducing patron-
age dividends.
TITLE V—SIMPLIFICATION AND OTHER PROVISIONS
Subtitle A—Uniform Definition of Child
Sec. 501. Uniform definition of child, etc.
Sec. 502. Modifications of definition of head of household.
Sec. 503. Modifications of dependent care credit.
Sec. 504. Modifications of child tax credit.
Sec. 505. Modifications of earned income credit.
Sec. 506. Modifications of deduction for personal exemption for dependents.
Sec. 507. Technical and conforming amendments.
Sec. 508. Effective date.
Subtitle B—Simplification
Sec. 511. Consolidation of life and non-life company returns.
Sec. 512. Special rules for taxation of life insurance companies.
Sec. 513. Modification of active business definition under section 355.
Subtitle C—Other Provisions
Sec. 521. Civil rights tax relief.
Sec. 522. Increase in section 382 limitation for companies emerging from bank-
ruptcy.
Sec. 523. Increase in historic rehabilitation credit for certain low-income housing
for the elderly.
Sec. 524. Modification of application of income forecast method of depreciation.
Sec. 525. Additional advance refundings of certain governmental bonds.
Sec. 526. Exclusion of income derived from certain wagers on horse races from
gross income of nonresident alien individuals.
Sec. 527. Federal reimbursement of emergency health services furnished to un-
documented aliens.
Sec. 528. Premiums for mortgage insurance.
Sec. 529. Sense of the Senate on repealing the 1993 tax hike on social security
benefits section.
Sec. 530. Flat tax.
Sec. 531. Toll tax on excess qualified foreign distribution amount.
Sec. 532. Child support enforcement.
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Sec. 533. Low-income housing tax credit.
Sec. 534. Expensing of broadband internet access expenditures.
Sec. 535. Income tax credit for distilled spirits wholesalers and for distilled spir-
its in control state bailment warehouses for costs of carrying
Federal excise taxes on bottled distilled spirits.
Sec. 536. Clarification of contribution in aid of construction for water and sewer-
age disposal utilities.
Sec. 537. Restoration of deduction for travel expenses of spouse, etc. accom-
panying taxpayer on business travel.
Sec. 538. Certain sightseeing flights exempt from taxes on air transportation.
Sec. 539. Conforming the Internal Revenue Code of 1986 to requirements imposed
by the Women’s Health and Cancer Rights Act of 1998.
Sec. 540. Expansion of designated renewal community area based on 2000 census
data.
Sec. 541. Renewal community employers may qualify for employment credit by
employing residents of certain other renewal communities.
Sec. 542. Expansion of income tax exclusion for combat zone service.
Sec. 543. Availability of certain tax benefits for members of the armed forces per-
forming services at Guantanamo Bay Naval Station, Cuba, and
on the island of Diego Garcia.
Sec. 544. Citrus canker tree relief.
Sec. 545. Exclusion of certain punitive damage awards.
Sec. 546. Reatment of certain imported recycled halons.
Sec. 547. Modification of involuntary conversion rules for businesses affected by
the September 11th terrorist attacks.
Subtitle D—Medicare Provisions.
Sec. 561. Equalizing urban and rural standardized payment amounts under the
medicare inpatient hospital prospective payment system.
Sec. 562. Fairness in the Medicare Disproportionate Share Hospital (DSH) ad-
justment for rural hospitals.
Sec. 563. Medicare inpatient hospital payment adjustment for low-volume hos-
pitals.
Sec. 564. Adjustment to the medicare inpatient hospital PPS wage index to revise
the labor-related share of such index.
Sec. 565. One-year extension of hold harmless provisions for small rural hospitals
and temporary treatment of certain sole community hospitals to
limit decline in payment under the OPD PPS.
Sec. 566. Critical access hospital (CAH) improvements.
Sec. 567. Temporary increase for home health services furnished in a rural area.
Sec. 568. Temporary increase in payments for certain services furnished by small
rural hospitals under medicare prospective payment system for
hospital outpatient department services.
Sec. 569. Temporary increase for ground ambulance services furnished in a rural
area.
Sec. 570. Exclusion of certain rural health clinic and federally qualified health
center services from the medicare pps for skilled nursing facili-
ties.
Sec. 571. Medicare incentive payment program improvements.
Sec. 572. Two-year treatment of certain clinical diagnostic laboratory tests fur-
nished by a sole community hospital.
Sec. 573. Establishment of floor on geographic adjustments of payments for physi-
cians’ services.
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Sec. 574. Freeze in payments for items of durable medical equipment and
orthotics and prosthetics.
Sec. 575. Application of coinsurance and deductible for clinical diagnostic labora-
tory tests.
Sec. 576. Revision in payments for covered outpatient drugs.
Sec. 577. Inapplicability of sunset.
Subtitle E—Provisions Relating To S Corporation Reform and Simplification
PART I—MAXIMUM NUMBER OF SHAREHOLDERS OF AN S CORPORATION
Sec. 581. Members of family treated as 1 shareholder.
Sec. 582. Increase in number of eligible shareholders to 100.
Sec. 583. Nonresident aliens allowed as beneficiaries of an electing small business
trust.
PART II—TERMINATION OF ELECTION AND ADDITIONS TO TAX DUE TO
PASSIVE INVESTMENT INCOME
Sec. 584. Modifications to passive income rules.
PART III—TREATMENT OF S CORPORATION SHAREHOLDERS
Sec. 585. Transfer of suspended losses incident to divorce.
Sec. 586. Use of passive activity loss and at-risk amounts by qualified subchapter
S trust income beneficiaries.
Sec. 587. Disregard of unexercised powers of appointment in determining poten-
tial current beneficiaries of ESBT.
Sec. 588. Clarification of electing small business trust distribution rules.
PART IV—PROVISIONS RELATING TO BANKS
Sec. 589. Sale of stock in IRA relating to S corporation election exempt from pro-
hibited transaction rules.
Sec. 590. Exclusion of investment securities income from passive income test for
bank S corporations.
Sec. 591. Treatment of qualifying director shares.
PART V—QUALIFIED SUBCHAPTER S SUBSIDIARIES
Sec. 592. Relief from inadvertently invalid qualified subchapter S subsidiary elec-
tions and terminations.
Sec. 593. Information returns for qualified subchapter S subsidiaries.
PART VI—ADDITIONAL PROVISIONS
Sec. 594. Elimination of all earnings and profits attributable to pre-1983 years.
TITLE VI—BLUE RIBBON COMMISSION ON COMPREHENSIVE TAX
REFORM
Sec. 601. Short title.
Sec. 602. Establishmment of Commission.
Sec. 603. Duties of the Commission.
Sec. 604. Powers of the Commission.
Sec. 605. Commission personnel matters.
Sec. 606. Termination of the Commission.
Sec. 607. Authorization of appropriations.
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TITLE VII—REAL ESTATE INVESTMENT TRUSTS
Subtitle A—REIT Corrections
Sec. 701. Revisions to REIT asset test.
Sec. 702. Clarification of application of limited rental exception.
Sec. 703. Deletion of customary services exception.
Sec. 704. Conformity with general hedging definition.
Sec. 705. Conformity with regulated investment company rules.
Sec. 706. Prohibited transactions provisions.
Sec. 707. Effective dates.
Subtitle B—REIT Savings Provisions
Sec. 711. Revisions to REIT provisions.
TITLE VIII—EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Extensions of Expiring Provisions
Sec. 801. Parity in the application of certain limits to mental health benefits.
Sec. 802. Allowance of nonrefundable personal credits against regular and min-
imum tax liability.
Sec. 803. Credit for electricity produced from certain renewable resources.
Sec. 804. Work opportunity credit.
Sec. 805. Welfare-to-work credit.
Sec. 806. Taxable income limit on percentage depletion for oil and natural gas
produced from marginal properties.
Sec. 807. Qualified zone academy bonds.
Sec. 808. Cover over of tax on distilled spirits.
Sec. 809. Deduction for corporate donations of computer technology.
Sec. 810. Credit for qualified electric vehicles.
Sec. 811. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 812. Deduction for certain expenses of school teachers.
Sec. 813. Availability of medical savings accounts.
Sec. 814. Expensing of environmental remediation costs.
TITLE IX—IMPROVING TAX EQUITY FOR MILITARY PERSONNEL
Sec. 900. Short title.
Sec. 901. Exclusion of gain from sale of a principal residence by a member of
the uniformed services or the foreign service.
Sec. 902. Exclusion from gross income of certain death gratuity payments.
Sec. 903. Exclusion for amounts received under Department of Defense Home-
owners Assistance Program.
Sec. 904. Expansion of combat zone filing rules to contingency operations.
Sec. 905. Modification of membership requirement for exemption from tax for cer-
tain veterans’ organizations.
Sec. 906. Clarification of the treatment of certain dependent care assistance pro-
grams.
Sec. 907. Clarification relating to exception from additional tax on certain dis-
tributions from qualified tuition programs, etc. on account of at-
tendance at military academy.
Sec. 908. Suspension of tax-exempt status of terrorist organizations.
Sec. 909. Above-the-line deduction for overnight travel expenses of national guard
and reserve members.
Sec. 910. Tax relief and assistance for families of Space Shuttle Columbia heroes.
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TITLE X—SUNSET
Sec. 1001. Sunset.
TITLE 
I—ACCELERATION 
OF
CERTAIN 
PREVIOUSLY 
EN-
ACTED TAX REDUCTIONS; IN-
CREASED 
EXPENSING 
FOR
SMALL BUSINESSES
SEC. 101. ACCELERATION OF 10-PERCENT INDIVIDUAL IN-
COME TAX RATE BRACKET EXPANSION.
(a) IN GENERAL.—Clause (i) of section 1(i)(1)(B) (re-
lating to the initial bracket amount) is amended by striking
‘‘($12,000 in the case of taxable years beginning before Jan-
uary 1, 2008)’’.
(b) INFLATION ADJUSTMENT BEGINNING IN 2004.—
Subparagraph (C) of section 1(i)(1) (relating to inflation
adjustment) is amended to read as follows:
‘‘(C) INFLATION
ADJUSTMENT.—In pre-
scribing the tables under subsection (f) which
apply with respect to taxable years beginning in
calendar years after 2003—
‘‘(i) the cost-of-living adjustment used
in making adjustments to the initial bracket
amount shall be determined under sub-
section (f)(3) by substituting ‘2002’ for
‘1992’ in subparagraph (B) thereof, and
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‘‘(ii) such adjustment shall not apply
to the amount referred to in subparagraph
(B)(iii).
If any amount after adjustment under the pre-
ceding sentence is not a multiple of $50, such
amount shall be rounded to the next lowest mul-
tiple of $50.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made by
subsection (a) shall apply to taxable years beginning
after December 31, 2002.
(2) SUBSECTION (b).—The amendment made by
subsection (b) shall apply to taxable years beginning
after December 31, 2003.
(3) TABLES
FOR
2003.—The Secretary of the
Treasury shall modify each table which has been pre-
scribed for taxable years beginning in 2003 and
which relates to the amendment made by subsection
(a), section 102, or section 103 to reflect each such
amendment.
SEC. 102. ACCELERATION OF REDUCTION IN INDIVIDUAL
INCOME TAX RATES.
(a) IN GENERAL.—The table in paragraph (2) of sec-
tion 1(i) (relating to reductions in rates after June 30,
2001) is amended to read as follows:
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‘‘In the case of taxable years
beginning during calendar year:
The corresponding percentages
shall be substituted for
the following percentages:
28%
31%
36%
39.6%
2001 ....................................................................................
27.5%
30.5%
35.5%
39.1%
2002 ....................................................................................
27.0%
30.0%
35.0%
38.6%
2003 and thereafter ...........................................................
25.0%
28.0%
33.0%
35.0%’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
SEC. 103. MINIMUM TAX RELIEF TO INDIVIDUALS.
(a) IN GENERAL.—So much of paragraph (1) of sec-
tion 55(d) (relating to exemption amount for taxpayers
other than corporations) as precedes subparagraph (C)
thereof is amended to read as follows:
‘‘(1) 
EXEMPTION
AMOUNT
FOR
TAXPAYERS
OTHER THAN CORPORATIONS.—In the case of a tax-
payer other than a corporation, the term ‘exemption
amount’ means as follows:
‘‘(A) 
JOINT
RETURN
AND
SURVIVING
SPOUSE.—In the case of a joint return or a sur-
viving spouse, the amount under the following
table:
‘‘In the case of taxable years
The exemption
beginning:
amount is:
Before 2001 .........................................................................................
$45,000
In 2001 and 2002 ..............................................................................
$49,000
In 2003 ...............................................................................................
$60,500
In 2004 ...............................................................................................
$60,500
In 2005 ...............................................................................................
$60,500
After 2005 ...........................................................................................
$45,000.
‘‘(B) INDIVIDUAL NOT MARRIED AND NOT A
SURVIVING
SPOUSE.—In the case of an indi-
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vidual who is not a married individual and is
not a surviving spouse, the amount under the fol-
lowing table:
‘‘In the case of taxable years
The exemption
beginning:
amount is:
Before 2001 .........................................................................................
$33,750
In 2001 and 2002 ..............................................................................
$35,750
In 2003 ...............................................................................................
$41,500
In 2004 ...............................................................................................
$41,500
In 2005 ...............................................................................................
$41,500
After 2005 ...........................................................................................
$33,750.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 55(d)(1)(C) is amended—
(A) by striking ‘‘, and’’ and inserting a pe-
riod, and
(B) by striking ‘‘50 percent’’ and inserting
‘‘MARRIED INDIVIDUAL FILING A SEPARATE RE-
TURN.—50 percent’’.
(2) Section 55(d)(1)(D) is amended by striking
‘‘$22,500’’ and inserting ‘‘ESTATE
AND
TRUST.—
$22,500’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
SEC. 104. ACCELERATION OF INCREASE IN STANDARD DE-
DUCTION FOR MARRIED TAXPAYERS FILING
JOINT RETURNS.
(a) IN GENERAL.—Paragraph (7) of section 63(c) (re-
lating to standard deduction) is amended to read as follows:
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‘‘(7) APPLICABLE
PERCENTAGE.—For purposes
of paragraph (2), the applicable percentage shall be
determined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2003 ....................................................................................
195
2004 ....................................................................................
200
2005 ....................................................................................
174
2006 ....................................................................................
184
2007 ....................................................................................
187
2008 ....................................................................................
190
2009 and thereafter ...........................................................
200.’’.
(b) CONFORMING AMENDMENT.—Section 301(d) of the
Economic Growth and Tax Relief Reconciliation Act of
2001 is amended by striking ‘‘2004’’ and inserting ‘‘2002’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
SEC. 105. ACCELERATION OF 15-PERCENT INDIVIDUAL IN-
COME TAX RATE BRACKET EXPANSION FOR
MARRIED 
TAXPAYERS 
FILING 
JOINT 
RE-
TURNS.
(a) IN
GENERAL.—Subparagraph (B) of section
1(f )(8) (relating to phaseout of marriage penalty in 15-
percent bracket) is amended to read as follows:
‘‘(B) APPLICABLE PERCENTAGE.—For pur-
poses of subparagraph (A), the applicable per-
centage shall be determined in accordance with
the following table:
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‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2003 ....................................................................................
195
2004 ....................................................................................
200
2005 ....................................................................................
180
2006 ....................................................................................
187
2007 ....................................................................................
193
2008 and thereafter ...........................................................
200.’’.
(b) CONFORMING AMENDMENT.—Section 302(c) of the
Economic Growth and Tax Relief Reconciliation Act of
2001 is amended by striking ‘‘2004’’ and inserting ‘‘2002’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
SEC. 
106. 
ACCELERATION 
OF 
INCREASE 
IN, 
AND
REFUNDABILITY OF, CHILD TAX CREDIT.
(a) ACCELERATION OF INCREASE IN CREDIT.—Sub-
section (a) of section 24 (relating to child tax credit) is
amended to read as follows:
‘‘(a) ALLOWANCE OF CREDIT.—There shall be allowed
as a credit against the tax imposed by this chapter for the
taxable year with respect to each qualifying child of the tax-
payer an amount equal to $1,000.’’.
(b) EXPANSION OF CREDIT REFUNDABILITY.—Section
24(d)(1)(B)(i) (relating to portion of credit refundable) is
amended by striking ‘‘(10 percent in the case of taxable
years beginning before January 1, 2005)’’.
(c) ADVANCE PAYMENT OF PORTION OF INCREASED
CREDIT IN 2003.—