(2) Paragraphs (1), (2), and (5) of section
1361(c) (as so redesignated) are each amended by
striking ‘‘subsection (b)(1)(B)’’ each place it appears
and inserting ‘‘subsection (b)(1)(A)’’.
(3) Paragraphs (3) and (4) of section 1361(c)
(as so redesignated) are each amended by striking
‘‘subsection (b)(1)(D)’’ both places it appears and
inserting ‘‘subsection (b)(1)(C)’’.
(4) Subparagraph (A) of section 1361(d)(1) is
amended by striking ‘‘subsection (c)(2)(A)(i)’’ and
inserting ‘‘subsection (c)(1)(A)(i)’’.
(5) Clause (i) of section 280G(b)(5)(A) is
amended by striking ‘‘paragraph (1)(C)’’ and insert-
ing ‘‘paragraph (1)(B)’’.
(6) Paragraph (1) of section 512(e) is amended
by striking ‘‘section 1361(c)(6)’’ and inserting ‘‘sec-
tion 1361(c)(5)’’.
SEC. 312. ISSUANCE OF PREFERRED STOCK BY S CORPORA-
TIONS PERMITTED.
(a) IN GENERAL.—Section 1361 (defining S corpora-
tion) is amended by adding at the end the following new
subsection:
‘‘(f) 
TREATMENT
OF
QUALIFIED
PREFERRED
STOCK.—
‘‘(1) IN
GENERAL.—For purposes of this
subchapter—
‘‘(A) qualified preferred stock shall not be
treated as a second class of stock, and
‘‘(B) no person shall be treated as a share-
holder of the corporation by reason of holding
qualified preferred stock.
‘‘(2) 
QUALIFIED
PREFERRED
STOCK
DE-
FINED.—For purposes of this subsection, the term
‘qualified preferred stock’ means stock which meets
the requirements of subparagraphs (A), (B), and (C)
of section 1504(a)(4). Stock shall not fail to be
treated as qualified preferred stock merely because
it is convertible into other stock.
‘‘(3) DISTRIBUTIONS.—A distribution (not in
part or full payment in exchange for stock) made by
the corporation with respect to qualified preferred
stock shall be includible as ordinary income of the
holder and deductible to the corporation as an ex-
pense in computing taxable income under section
1363(b) in the year such distribution is received.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 1361(b) is amend-
ed by inserting ’’, except as provided in subsection
(f),’’ before ‘‘which does not’’.
(2) Subsection (a) of section 1366 is amended
by adding at the end the following new paragraph:
‘‘(3) ALLOCATION
WITH
RESPECT
TO
QUALI-
FIED PREFERRED STOCK.—The holders of qualified
preferred stock (as defined in section 1361(f)) shall
not, with respect to such stock, be allocated any of
the items described in paragraph (1).’’.
(3) So much of clause (ii) of section
354(a)(2)(C) as precedes subclause (II) is amended
to read as follows:
‘‘(ii) RECAPITALIZATION OF FAMILY-
OWNED
CORPORATIONS
AND
S
CORPORA-
TIONS.—
‘‘(I) IN
GENERAL.—Clause (i)
shall not apply in the case of a recapi-
talization under section 368(a)(I)(E)
of a family-owned corporation or S
corporation.’’.
(4) Subsection (a) of section 1373 is amended
by striking ‘‘and’’ at the end of paragraph (1), by
striking the period at the end of paragraph (2) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(3) no amount of an expense deductible under
this subchapter by reason of section 1361(f)(3) shall
be apportioned or allocated to such income.’’.
SEC. 313. ELECTION TO BECOME S CORPORATION EX-
TENDED TO DATE RETURN IS FILED.
(a) IN GENERAL.—Subsection (b) of section 1362
(relating to when election made) is amended to read as
follows:
‘‘(b) WHEN MADE.—An election under subsection (a)
may be made by a small business corporation for any tax-
able year on or before the due date (including extensions)
for filing the return of tax for such taxable year.’’.
(b) CONFORMING AMENDMENT.—Subparagraph (A)
of section 1362(f)(1) is amended by striking ‘‘(determined
without regard to subsection (b)(2))’’.
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to elections for taxable
years beginning after December 31, 1999.
TITLE IV—PROVISIONS RELAT-
ING 
TO 
INFORMATION 
RE-
PORTING AND FILING
SEC. 401. INCREASE IN REPORTING THRESHOLD FOR DIVI-
DEND AND INTEREST PAYMENTS.
(a) DIVIDEND PAYMENTS.—Subsection (a) of section
6042 (relating to requirements for reporting) is amended
by striking ‘‘$10’’ each place it appears and inserting
‘‘$25’’.
(b) INTEREST
PAYMENTS.—Subsections (a) and
(d)(5)(C) of section 6049 (relating to requirements for re-
porting) are each amended by striking ‘‘$10’’ each place
it appears in the text and headings and inserting ‘‘$25’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made after December
31, 1999.
SEC. 402. POSTMARK DATE TREATED AS FILING DATE FOR
PURPOSES OF ALL FILINGS.
(a) IN GENERAL.—Paragraph (2) of section 7502(a)
(relating to mailing requirements with respect to date of
delivery) is amended to read as follows:
‘‘(2) 
MAILING
REQUIREMENTS.—This 
sub-
section shall apply only if the return, claim, state-
ment, or other document, or payment was deposited
in the mail in the United States in an envelope or
other appropriate wrapper, postage prepaid, properly
addressed to the agency, officer, or office with which
the return, claim, statement, or other document is
required to be filed, or to which such payment is re-
quired to be made.’’.
(b) MAILING OF DEPOSITS.—Paragraph (2) of sec-
tion 7502(e) (relating to mailing requirements with re-
spect to mailing of deposits) is amended to read as follows:
‘‘(2) MAILING REQUIREMENTS.—Paragraph (1)
shall apply only if the person required to make the
deposit establishes that the deposit was mailed in
the United States in an envelope or other appro-
priate wrapper, postage prepaid, properly addressed
to the bank, trust company, domestic building and
loan association, or credit union authorized to re-
ceive such deposit. In applying subsection (c) for
purposes of this subsection, the term ‘payment’ in-
cludes ‘deposit’, and the reference to the postmark
date refers to the date of mailing.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to returns, claims, statements, and
other documents required to be filed and payments and
deposits required to be made after the date of the enact-
ment of this Act.
SEC. 403. REDUCTION OF RECORDKEEPING BURDEN.
(a) IN GENERAL.—Section 6001 (relating to notice
or regulations requiring records, statements, and special
returns) is amended—
(1) by striking ‘‘Every’’ and inserting ‘‘(a) IN
GENERAL.—Every’’, and
(2) by adding at the end the following new sub-
section:
‘‘(b) PERIOD FOR WHICH RECORDS MUST BE
KEPT.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), in the case of a trade or busi-
ness, records required to be kept under subsection
(a) for a taxable year need not be kept after the 6th
year after the return of tax is filed for such taxable
year.
‘‘(2) EXCEPTION FOR TYPES OF RECORDS.—
Paragraph (1) shall not apply to—
‘‘(A) records which are general ledgers,
journals or books of original entry, financial
statements, and year-end adjustments to gen-
eral ledgers, whether in paper or electronic
form,
‘‘(B) records from which the records de-
scribed in subparagraph (A) are derived if the
records described in subparagraph (A) are not
prepared in accordance with generally accepted
accounting principles, and
‘‘(C) records which are unique to the in-
dustry in which the taxpayer is engaged.
‘‘(3) OTHER EXCEPTIONS.—Paragraph (1) shall
not apply to—
‘‘(A) records relating to a taxable year
with respect to which section 6501(c) applies,
‘‘(B) records relating to a taxable year
with respect to which the period of limitations
is suspended for as long as such period is sus-
pended,
‘‘(C) records relating to a taxable year of
a taxpayer with respect to which the Secretary
is conducting an audit or other investigation,
and
‘‘(D) records relating to a taxable year
with respect to which a case is pending in Fed-
eral or State court.
‘‘(4) FAILURE TO KEEP RECORDS NOT A DE-
FENSE IN CERTAIN CASES.—Paragraph (1) shall not
be a defense in the case of failure to keep records
for a year in connection with—
‘‘(A) a false or fraudulent return with the
intent to evade tax,
‘‘(B) a willful attempt in any manner to
defeat or evade tax imposed by this title, or
‘‘(C) failure to file a return.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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