SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small Business and Infrastructure Jobs Tax Act of 
2010’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed 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 provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; etc. 
TITLE I—SMALL BUSINESS TAX INCENTIVES 
Subtitle A—General Provisions 
Sec. 101. Temporary exclusion of 100 percent of gain on certain small business 
stock. 
Subtitle B—Limitations and Reporting on Certain Penalties 
Sec. 111. Limitation on penalty for failure to disclose certain information. 
Sec. 112. Annual reports on penalties and certain other enforcement actions. 
Subtitle C—Other Provisions 
Sec. 121. Nonrecourse small business investment company loans from the Small 
Business Administration treated as amounts at risk. 
Sec. 122. Increase in amount allowed as deduction for start-up expenditures. 
TITLE II—INFRASTRUCTURE INCENTIVES 
Sec. 201. Extension of Build America Bonds. 
Sec. 202. Exempt-facility bonds for sewage and water supply facilities. 
Sec. 203. Extension of exemption from alternative minimum tax treatment for 
certain tax-exempt bonds. 
Sec. 204. Elective payments in lieu of low-income housing credits. 
Sec. 205. Extension and additional allocations of recovery zone bond authority. 
Sec. 206. Allowance of new markets tax credit against alternative minimum 
tax. 
TITLE III—REVENUE PROVISIONS 
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Sec. 301. Limitation on treaty benefits for certain deductible payments. 
Sec. 302. Treatment of securities of a controlled corporation exchanged for as-
sets in certain reorganizations. 
Sec. 303. Repeal of special rules for interest and dividends received from per-
sons meeting the 80-percent foreign business requirements. 
Sec. 304. Information reporting for rental property expense payments. 
Sec. 305. Application of levy to payments to Federal vendors relating to prop-
erty. 
Sec. 306. Application of continuous levy to employment tax liability of certain 
Federal contractors. 
Sec. 307. Required minimum 10-year term, etc., for grantor retained annuity 
trusts. 
Sec. 308. Increase in information return penalties. 
TITLE I—SMALL BUSINESS TAX 
INCENTIVES 
Subtitle A—General Provisions 
SEC. 101. TEMPORARY EXCLUSION OF 100 PERCENT OF 
GAIN ON CERTAIN SMALL BUSINESS STOCK. 
(a) IN GENERAL.—Subsection (a) of section 1202 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) SPECIAL
100
PERCENT
EXCLUSION.—In 
the case of qualified small business stock acquired 
after March 15, 2010, and before January 1, 
2012— 
‘‘(A) paragraph (1) shall be applied by 
substituting ‘100 percent’ for ‘50 percent’, 
‘‘(B) paragraph (2) shall not apply, and 
‘‘(C) paragraph (7) of section 57(a) shall 
not apply.’’. 
(b) CONFORMING AMENDMENTS.—Paragraph (3) of 
section 1202(a) is amended— 
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(1) by striking ‘‘after the date of the enactment 
of this paragraph and before January 1, 2011’’ and 
inserting ‘‘after February 17, 2009, and before 
March 16, 2010’’, and 
(2) by striking ‘‘SPECIAL RULE FOR 2009 AND 
2010’’ in the heading and inserting ‘‘SPECIAL
PERCENT EXCLUSION’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to stock acquired after March 15, 
2010. 
Subtitle B—Limitations and 
Reporting on Certain Penalties 
SEC. 111. LIMITATION ON PENALTY FOR FAILURE TO DIS-
CLOSE CERTAIN INFORMATION. 
(a) IN GENERAL.—Subsection (b) of section 6707A 
is amended to read as follows: 
‘‘(b) AMOUNT OF PENALTY.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amount of the penalty 
under subsection (a) with respect to any reportable 
transaction shall be 75 percent of the decrease in 
tax shown on the return as a result of such trans-
action (or which would have resulted from such 
transaction if such transaction were respected for 
Federal tax purposes). 
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‘‘(2) MAXIMUM PENALTY.—The amount of the 
penalty under subsection (a) with respect to any re-
portable transaction for any taxable year shall not 
exceed— 
‘‘(A) in the case of a listed transaction, 
$200,000 ($100,000 in the case of a natural 
person), or 
‘‘(B) in the case of any other reportable 
transaction, $50,000 ($10,000 in the case of a 
natural person). 
‘‘(3) MINIMUM PENALTY.—The amount of the 
penalty under subsection (a) with respect to any 
transaction for any taxable year shall not be less 
than $10,000 ($5,000 in the case of a natural per-
son).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to penalties assessed after Decem-
ber 31, 2006. 
SEC. 112. ANNUAL REPORTS ON PENALTIES AND CERTAIN 
OTHER ENFORCEMENT ACTIONS. 
(a) IN GENERAL.—The Commissioner of Internal 
Revenue, in consultation with the Secretary of the Treas-
ury, shall submit to the Committee on Ways and Means 
of the House of Representatives and the Committee on 
Finance of the Senate an annual report on the penalties 
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assessed by the Internal Revenue Service during the pre-
ceding year under each of the following provisions of the 
Internal Revenue Code of 1986: 
(1) Section 6662A (relating to accuracy-related 
penalty on understatements with respect to report-
able transactions). 
(2) Section 6700(a) (relating to promoting abu-
sive tax shelters). 
(3) Section 6707 (relating to failure to furnish 
information regarding reportable transactions). 
(4) Section 6707A (relating to failure to include 
reportable transaction information with return). 
(5) Section 6708 (relating to failure to main-
tain lists of advisees with respect to reportable 
transactions). 
(b) ADDITIONAL
INFORMATION.—The report re-
quired under subsection (a) shall also include information 
on the following with respect to each year: 
(1) Any action taken under section 330(b) of 
title 31, United States Code, with respect to any re-
portable transaction (as defined in section 6707A(c) 
of the Internal Revenue Code of 1986). 
(2) Any extension of the time for assessment of 
tax enforced, or assessment of any amount under 
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such an extension, under paragraph (10) of section 
6501(c) of the Internal Revenue Code of 1986. 
(c) DATE OF REPORT.—The first report required 
under subsection (a) shall be submitted not later than De-
cember 31, 2010. 
Subtitle C—Other Provisions 
SEC. 121. NONRECOURSE SMALL BUSINESS INVESTMENT 
COMPANY LOANS FROM THE SMALL BUSI-
NESS 
ADMINISTRATION 
TREATED 
AS 
AMOUNTS AT RISK. 
(a) IN GENERAL.—Subparagraph (B) of section 
465(b)(6) is amended to read as follows: 
‘‘(B) QUALIFIED
NONRECOURSE
FINANC-
ING.—For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied nonrecourse financing’ means any fi-
nancing— 
‘‘(I) which is qualified real prop-
erty financing or qualified SBIC fi-
nancing, 
‘‘(II) except to the extent pro-
vided in regulations, with respect to 
which no person is personally liable 
for repayment, and 
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Business Investment Act of 1958), 
and 
‘‘(II) is borrowed from, or guar-
anteed by, the Small Business Admin-
istration under the authority of sec-
tion 303(b) of such Act.’’. 
(b) CONFORMING AMENDMENTS.—Subparagraph (A) 
of section 465(b)(6) is amended— 
(1) by striking ‘‘in the case of an activity of 
holding real property,’’, and 
(2) by striking ‘‘which is secured by real prop-
erty used in such activity’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to loans and guarantees made after 
the date of the enactment of this Act. 
SEC. 122. INCREASE IN AMOUNT ALLOWED AS DEDUCTION 
FOR START-UP EXPENDITURES. 
(a) IN GENERAL.—Subsection (b) of section 195 is 
amended by adding at the end the following new para-
graph: 
‘‘(3) INCREASED
LIMITATION
FOR
TAXABLE 
YEARS BEGINNING IN 2010 OR 2011.—In the case of 
any taxable year beginning in 2010 or 2011, para-
graph (1)(A)(ii) shall be applied— 
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‘‘(A) 
by 
substituting 
‘$20,000’ 
for 
‘$5,000’, and 
‘‘(B) 
by 
substituting 
‘$75,000’ 
for 
‘$50,000’.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
TITLE II—INFRASTRUCTURE 
INCENTIVES 
SEC. 201. EXTENSION OF BUILD AMERICA BONDS. 
(a) IN GENERAL.—Subparagraph (B) of section 
54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ 
and inserting ‘‘July 1, 2013’’. 
(b) EXTENSION OF PAYMENTS TO ISSUERS.— 
(1) IN
GENERAL.—Subsection (a) of section 
6431 is amended by striking ‘‘January 1, 2011’’ and 
inserting ‘‘July 1, 2013’’. 
(2) CONFORMING
AMENDMENTS.—Subsection 
(g) of section 54AA is amended— 
(A) by striking ‘‘January 1, 2011’’ and in-
serting ‘‘July 1, 2013’’, and 
(B) 
by 
striking 
‘‘QUALIFIED
BONDS 
ISSUED BEFORE 2011’’ in the heading and in-
serting ‘‘CERTAIN QUALIFIED BONDS’’. 
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(c) REDUCTION IN PERCENTAGE OF PAYMENTS TO 
ISSUERS.—Subsection (b) of section 6431 is amended— 
(1) by striking ‘‘The Secretary’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—The Secretary’’, 
(2) by striking ‘‘35 percent’’ and inserting ‘‘the 
applicable percentage’’, and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means the percentage determined in accordance with 
the following table: 
‘‘In the case of a qualified bond issued 
during calendar year: 
The applicable 
percentage is: 
2009 or 2010 ..................................................................
35 percent
2011 ................................................................................
33 percent
2012 ................................................................................
31 percent
2013 ................................................................................
30 percent’’. 
(d) CURRENT
REFUNDINGS
PERMITTED.—Sub-
section (g) of section 54AA is amended by adding at the 
end the following new paragraph: 
‘‘(3) TREATMENT
OF
CURRENT
REFUNDING 
BONDS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘qualified build America 
bond’ includes any bond (or series of bonds) 
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issued to refund a qualified build America bond 
if— 
‘‘(i) the average maturity date of the 
issue of which the refunding bond is a part 
is not later than the average maturity date 
of the bonds to be refunded by such issue, 
‘‘(ii) the amount of the refunding 
bond does not exceed the outstanding 
amount of the refunded bond, and 
‘‘(iii) the refunded bond is redeemed 
not later than 90 days after the date of the 
issuance of the refunding bond. 
‘‘(B) APPLICABLE
PERCENTAGE.—In the 
case of a refunding bond referred to in subpara-
graph (A), the applicable percentage with re-
spect to such bond under section 6431(b) shall 
be the lowest percentage specified in paragraph 
(2) of such section. 
‘‘(C) DETERMINATION OF AVERAGE MATU-
RITY.—For purposes of subparagraph (A)(i), 
average maturity shall be determined in accord-
ance with section 147(b)(2)(A).’’. 
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SEC. 202. EXEMPT-FACILITY BONDS FOR SEWAGE AND 
WATER SUPPLY FACILITIES. 
(a) BONDS FOR WATER AND SEWAGE FACILITIES 
EXEMPT FROM VOLUME CAP
ON PRIVATE ACTIVITY 
BONDS.—Paragraph (3) of section 146(g) is amended by 
inserting ‘‘(4), (5),’’ after ‘‘(2),’’. 
(b) CONFORMING CHANGE.—Paragraphs (2) and 
(3)(B) of section 146(k) are both amended by striking 
‘‘(4), (5), (6),’’ and inserting ‘‘(6)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 203. EXTENSION OF EXEMPTION FROM ALTERNATIVE 
MINIMUM TAX TREATMENT FOR CERTAIN 
TAX-EXEMPT BONDS. 
(a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) 
is amended— 
(1) by striking ‘‘January 1, 2011’’ in subclause 
(I) and inserting ‘‘January 1, 2012’’, and 
(2) by striking ‘‘AND 2010’’ in the heading and 
inserting ‘‘, 2010, AND 2011’’. 
(b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of 
section 56(g)(4)(B) is amended— 
(1) by striking ‘‘January 1, 2011’’ in subclause 
(I) and inserting ‘‘January 1, 2012’’, and 
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(2) by striking ‘‘AND 2010’’ in the heading and 
inserting ‘‘, 2010, AND 2011’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2010. 
SEC. 204. ELECTIVE PAYMENTS IN LIEU OF LOW-INCOME 
HOUSING CREDITS. 
(a) IN GENERAL.—Chapter 65 (relating to abate-
ments, credits, and refunds) is amended by adding at the 
end the following new subchapter: 
‘‘Subchapter C—Direct Payment Provisions 
‘‘Sec. 6451. Elective payments in lieu of low-income housing credit for bond- 
financed buildings. 
‘‘SEC. 6451. ELECTIVE PAYMENTS IN LIEU OF LOW-INCOME 
HOUSING 
CREDIT 
FOR 
BOND-FINANCED 
BUILDINGS. 
‘‘(a) IN GENERAL.—Any person making an election 
under this section with respect to any qualified bond-fi-
nanced low-income building originally placed in service by 
such person during the taxable year shall be treated as 
making a payment, against the tax imposed by subtitle 
A for the taxable year, equal to the direct payment amount 
with respect to such building. Such payment shall be treat-
ed as made on the later of the due date of the return of 
such tax or the date on which such return is filed. 
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‘‘(b) QUALIFIED
BOND-FINANCED
LOW-INCOME 
BUILDING.—For purposes of this section, the term ‘quali-
fied bond-financed low-income building’ means any quali-
fied low-income building to which paragraph (1) of section 
42(h) does not apply by reason of paragraph (4)(B) of 
such section. 
‘‘(c) DIRECT PAYMENT AMOUNT.—For purposes of 
this section, the term ‘direct payment amount’ means, 
with respect to any building, 25.5 percent of the qualified 
basis of such building. 
‘‘(d) SPECIAL
RULES
FOR
CERTAIN
NON-TAX-
PAYERS.— 
‘‘(1) DENIAL
OF
PAYMENT.—Subsection (a) 
shall not apply with respect to any building placed 
in service by— 
‘‘(A) any governmental entity, or 
‘‘(B) any organization described in section 
501(c) or 401(a) and exempt from tax under 
section 501(a). 
‘‘(2) SPECIAL RULES FOR PARTNERSHIPS AND 
S CORPORATIONS.—In the case of property originally 
placed in service by a partnership or an S corpora-
tion— 
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‘‘(1) OTHER DEFINITIONS.—Terms used in this 
section which are also used in section 42 shall have 
the same meaning for purposes of this section as 
when used in such section. 
‘‘(2) APPLICATION
OF
RECAPTURE
RULES, 
ETC.—Except as otherwise provided by the Sec-
retary, rules similar to the rules of section 42 shall 
apply, including the recapture rules of section 42(j). 
‘‘(3) PROVISION OF INFORMATION.—A person 
shall not be treated as having elected the application 
of this section unless the taxpayer provides such in-
formation as the Secretary may require for purposes 
of verifying the proper amount to be treated as a 
payment under subsection (a) and evaluating the ef-
fectiveness of this section. 
‘‘(4) EXCLUSION FROM GROSS INCOME.—Any 
credit or refund allowed or made by reason of this 
section shall not be includible in gross income or al-
ternative minimum taxable income. 
‘‘(g) TERMINATION.—Subsection (a) shall not apply 
with respect to any building placed in service during a tax-
able year beginning after December 31, 2010.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 6211(b)(4)(A) 
is amended by inserting ‘‘and subchapter C of chap-
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ter 65 (including any payment treated as made 
under such subchapter)’’ after ‘‘6431’’. 
(2) Subparagraph (B) of section 6425(c)(1) is 
amended— 
(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(i) the credits’’, 
(B) by striking the period at the end of 
clause (i) thereof (as amended by this para-
graph) and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) the credits allowed (and pay-
ments treated as made) under subchapter 
C of chapter 65.’’. 
(3) Paragraph (3) of section 6654(f) is amend-
ed— 
(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(A) the credits’’, 
(B) by striking the period at the end of 
subparagraph (A) thereof (as amended by this 
paragraph) and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
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‘‘(B) the credits allowed (and payments 
treated as made) under subchapter C of chapter 
65.’’. 
(4) Subparagraph (B) of section 6655(g)(1) is 
amended— 
(A) by striking ‘‘the credits’’ and inserting 
‘‘the sum of— 
‘‘(i) the credits’’, 
(B) by striking the period at the end of 
clause (i) thereof (as amended by this para-
graph) and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) the credits allowed (and pay-
ments treated as made) under subchapter 
C of chapter 65.’’. 
(5) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘, 
or from the provisions of subchapter C of chapter 65 
of such Code’’ before the period at the end. 
(6) The table of subchapters for chapter 65 is 
amended by adding at the end the following new 
item: 
SUBCHAPTER C. DIRECT PAYMENT PROVISIONS. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to buildings placed in service after 
the date of the enactment of this Act. 
SEC. 205. EXTENSION AND ADDITIONAL ALLOCATIONS OF 
RECOVERY ZONE BOND AUTHORITY. 
(a) EXTENSION OF RECOVERY ZONE BOND AUTHOR-
ITY.—Section 
1400U–2(b)(1) 
and 
section 
1400U– 
3(b)(1)(B) are each amended by striking ‘‘January 1, 
2011’’ and inserting ‘‘January 1, 2012’’. 
(b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE 
BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 
1400U–1 is amended by adding at the end the following 
new subsection: 
‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND 
LIMITATIONS BASED ON UNEMPLOYMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall allo-
cate the 2010 national recovery zone economic devel-
opment bond limitation and the 2010 national recov-
ery zone facility bond limitation among the States in 
the proportion that each such State’s 2009 unem-
ployment number bears to the aggregate of the 2009 
unemployment numbers for all of the States. 
‘‘(2) MINIMUM
ALLOCATION.—The Secretary 
shall adjust the allocations under paragraph (1) for 
each State to the extent necessary to ensure that no 
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State (prior to any reduction under paragraph (3)) 
receives less than 0.9 percent of the 2010 national 
recovery zone economic development bond limitation 
and 0.9 percent of the 2010 national recovery zone 
facility bond limitation. 
‘‘(3) ALLOCATIONS BY STATES.— 
‘‘(A) IN GENERAL.—Each State with re-
spect to which an allocation is made under 
paragraph (1) shall reallocate such allocation 
among the counties and large municipalities (as 
defined in subsection (a)(3)(B)) in such State 
in the proportion that each such county’s or 
municipality’s 2009 unemployment number 
bears to the aggregate of the 2009 unemploy-
ment numbers for all the counties and large 
municipalities (as so defined) in such State. 
‘‘(B) 2010 
ALLOCATION
REDUCED
BY 
AMOUNT
OF
PREVIOUS
ALLOCATION.—Each 
State shall reduce (but not below zero)— 
‘‘(i) the amount of the 2010 national 
recovery zone economic development bond 
limitation allocated to each county or large 
municipality (as so defined) in such State 
by the amount of the national recovery 
zone economic development bond limitation 
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allocated to such county or large munici-
pality under subsection (a)(3)(A) (deter-
mined without regard to any waiver there-
of), and 
‘‘(ii) the amount of the 2010 national 
recovery zone facility bond limitation allo-
cated to each county or large municipality 
(as so defined) in such State by the 
amount of the national recovery zone facil-
ity bond limitation allocated to such county 
or large municipality under subsection 
(a)(3)(A) (determined without regard to 
any waiver thereof). 
‘‘(C) WAIVER
OF
SUBALLOCATIONS.—A 
county or municipality may waive any portion 
of an allocation made under this paragraph. A 
State may by law treat a county or municipality 
as waiving any portion of an allocation made 
under this paragraph if there is a reasonable 
expectation that such allocation would not oth-
erwise be used. 
‘‘(D) SPECIAL RULE FOR A MUNICIPALITY 
IN A COUNTY.—In the case of any large munici-
pality any portion of which is in a county, such 
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(c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 
ALLOCATIONS.—Subparagraph (A) of section 1400U– 
1(a)(3) is amended by adding at the end the following: 
‘‘A State may by law treat a county or municipality as 
waiving any portion of an allocation made under this sub-
paragraph if there is a reasonable expectation that such 
allocation would not otherwise be used.’’. 
SEC. 206. ALLOWANCE OF NEW MARKETS TAX CREDIT 
AGAINST ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subparagraph (B) of section 
38(c)(4) is amended by designating clauses (v) through 
(viii) as clauses (vi) through (ix), respectively, and by in-
serting after clause (iv) the following new clause: 
‘‘(v) the credit determined under sec-
tion 45D, but only with respect to credits 
determined with respect to qualified equity 
investments (as defined in section 45D(b)) 
initially made before January 1, 2012,’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified equity investments (as 
defined in section 45D(b) of the Internal Revenue Code 
of 1986) initially made after March 15, 2010. 
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TITLE III—REVENUE 
PROVISIONS 
SEC. 301. LIMITATION ON TREATY BENEFITS FOR CERTAIN 
DEDUCTIBLE PAYMENTS. 
(a) IN GENERAL.—Section 894 (relating to income 
affected by treaty) is amended by adding at the end the 
following new subsection: 
‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER-
TAIN DEDUCTIBLE PAYMENTS.— 
‘‘(1) IN GENERAL.—In the case of any deduct-
ible related-party payment, any withholding tax im-
posed under chapter 3 (and any tax imposed under 
subpart A or B of this part) with respect to such 
payment may not be reduced under any treaty of the 
United States unless any such withholding tax would 
be reduced under a treaty of the United States if 
such payment were made directly to the foreign par-
ent corporation. 
‘‘(2) 
DEDUCTIBLE
RELATED-PARTY
PAY-
MENT.—For purposes of this subsection, the term 
‘deductible related-party payment’ means any pay-
ment made, directly or indirectly, by any person to 
any other person if the payment is allowable as a de-
duction under this chapter and both persons are 
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members of the same foreign controlled group of en-
tities. 
‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI-
TIES.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘foreign 
controlled group of entities’ means a controlled 
group of entities the common parent of which 
is a foreign corporation. 
‘‘(B) CONTROLLED GROUP OF ENTITIES.— 
The term ‘controlled group of entities’ means a 
controlled group of corporations as defined in 
section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(ii) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
controlled group of entities if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence). 
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‘‘(4) FOREIGN
PARENT
CORPORATION.—For 
purposes of this subsection, the term ‘foreign parent 
corporation’ means, with respect to any deductible 
related-party payment, the common parent of the 
foreign controlled group of entities referred to in 
paragraph (3)(A). 
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as are nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance which provide for— 
‘‘(A) the treatment of two or more persons 
as members of a foreign controlled group of en-
tities if such persons would be the common par-
ent of such group if treated as one corporation, 
and 
‘‘(B) the treatment of any member of a 
foreign controlled group of entities as the com-
mon parent of such group if such treatment is 
appropriate taking into account the economic 
relationships among such entities.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
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SEC. 302. TREATMENT OF SECURITIES OF A CONTROLLED 
CORPORATION EXCHANGED FOR ASSETS IN 
CERTAIN REORGANIZATIONS. 
(a) IN GENERAL.—Section 361 (relating to non-
recognition of gain or loss to corporations; treatment of 
distributions) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING 
SECTION 355 DISTRIBUTIONS.—In the case of a reorga-
nization described in section 368(a)(1)(D) with respect to 
which stock or securities of the corporation to which the 
assets are transferred are distributed in a transaction 
which qualifies under section 355— 
‘‘(1) this section shall be applied by substituting 
‘stock other than nonqualified preferred stock (as 
defined in section 351(g)(2))’ for ‘stock or securities’ 
in subsections (a) and (b)(1), and 
‘‘(2) the first sentence of subsection (b)(3) shall 
apply only to the extent that the sum of the money 
and the fair market value of the other property 
transferred to such creditors does not exceed the ad-
justed bases of such assets transferred (reduced by 
the amount of the liabilities assumed (within the 
meaning of section 357(c))).’’. 
(b) CONFORMING AMENDMENT.—Paragraph (3) of 
section 361(b) is amended by striking the last sentence. 
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(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to exchanges after the date of the enact-
ment of this Act. 
(2) 
TRANSITION
RULE.—The 
amendments 
made by this section shall not apply to any exchange 
pursuant to a transaction which is— 
(A) made pursuant to an agreement which 
was binding on March 15, 2010, and at all 
times thereafter, 
(B) described in a ruling request submitted 
to the Internal Revenue Service on or before 
such date, or 
(C) described on or before such date in a 
public announcement or in a filing with the Se-
curities and Exchange Commission. 
SEC. 303. REPEAL OF SPECIAL RULES FOR INTEREST AND 
DIVIDENDS RECEIVED FROM PERSONS MEET-
ING THE 80-PERCENT FOREIGN BUSINESS RE-
QUIREMENTS. 
(a) REPEAL OF SPECIAL RULE TREATING INTEREST 
AS UNITED STATES SOURCE.—Paragraph (1) of section 
861(a) is amended by striking subparagraph (A) and by 
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2010. 
(2) GRANDFATHER
RULE
FOR
OUTSTANDING 
DEBT OBLIGATIONS.— 
(A) IN GENERAL.—The amendments made 
by this section shall not apply to payments of 
interest on obligations issued before the date of 
the enactment of this Act. 
(B) EXCEPTION
FOR
RELATED
PARTY 
DEBT.—Subparagraph (A) shall not apply to 
any interest which is payable to a related per-
son (determined under rules similar to the rules 
of section 954(d)(3)). 
(C) SIGNIFICANT MODIFICATIONS TREAT-
ED AS NEW ISSUES.—For purposes of subpara-
graph (A), a significant modification of the 
terms of any obligation (including any extension 
of the term of such obligation) shall be treated 
as a new issue. 
SEC. 304. INFORMATION REPORTING FOR RENTAL PROP-
ERTY EXPENSE PAYMENTS. 
(a) IN GENERAL.—Section 6041 is amended by add-
ing at the end the following new subsection: 
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‘‘(h) TREATMENT OF RENTAL PROPERTY EXPENSE 
PAYMENTS.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), a person receiving rental income from real es-
tate (other than a qualified residence) shall be con-
sidered to be engaged in a trade or business of rent-
ing property. 
‘‘(2) QUALIFIED RESIDENCE.—For purposes of 
paragraph (1), the term ‘qualified residence’ 
means— 
‘‘(A) the principal residence (within the 
meaning of section 121) of the taxpayer, and 
‘‘(B) 1 other residence of the taxpayer 
which is selected by the taxpayer for purposes 
of this subsection for the taxable year and 
which is used by the taxpayer as a residence 
(within the meaning of section 280A(d)(1)).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after December 
31, 2010. 
SEC. 305. APPLICATION OF LEVY TO PAYMENTS TO FED-
ERAL VENDORS RELATING TO PROPERTY. 
(a) IN GENERAL.—Section 6331(h)(3) is amended by 
striking ‘‘goods or services’’ and inserting ‘‘property, 
goods, or services’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to levies approved after the date 
of the enactment of this Act. 
SEC. 306. APPLICATION OF CONTINUOUS LEVY TO EMPLOY-
MENT TAX LIABILITY OF CERTAIN FEDERAL 
CONTRACTORS. 
(a) IN GENERAL.—Section 6330(h) is amended by 
inserting ‘‘or if the person subject to the levy (or any pred-
ecessor thereof) is a Federal contractor that was identified 
as owing such employment taxes through the Federal Pay-
ment Levy Program’’ before the period at the end of the 
first sentence. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to levies issued after December 31, 
2010. 
SEC. 307. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 
GRANTOR RETAINED ANNUITY TRUSTS. 
(a) IN GENERAL.—Subsection (b) of section 2702 is 
amended— 
(1) by redesignating paragraphs (1), (2) and 
(3) as subparagraphs (A), (B), and (C), respectively, 
and by moving such subparagraphs (as so redesig-
nated) 2 ems to the right, 
(2) by striking ‘‘For purposes of’’ and inserting 
the following: 
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‘‘(1) IN GENERAL.—For purposes of’’, and 
(3) by striking ‘‘paragraph (1) or (2)’’ in para-
graph (1)(C) (as so redesignated) and inserting 
‘‘subparagraph (A) or (B)’’, and 
(4) by adding at the end the following new 
paragraph: 
‘‘(2) ADDITIONAL
REQUIREMENTS
WITH
RE-
SPECT
TO
GRANTOR
RETAINED
ANNUITIES.—For 
purposes of subsection (a), in the case of an interest 
described in paragraph (1)(A) (determined without 
regard to this paragraph) which is retained by the 
transferor, such interest shall be treated as de-
scribed in such paragraph only if— 
‘‘(A) the right to receive the fixed amounts 
referred to in such paragraph is for a term of 
not less than 10 years, 
‘‘(B) such fixed amounts, when determined 
on an annual basis, do not decrease relative to 
any prior year during the first 10 years of the 
term referred to in subparagraph (A), and 
‘‘(C) the remainder interest has a value 
greater than zero determined as of the time of 
the transfer.’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers made after the date 
of the enactment of this Act. 
SEC. 308. INCREASE IN INFORMATION RETURN PENALTIES. 
(a) FAILURE TO FILE CORRECT INFORMATION RE-
TURNS.— 
(1) 
IN
GENERAL.—Subsections 
(a)(1), 
(b)(1)(A), and (b)(2)(A) of section 6721 are each 
amended by striking ‘‘$50’’ and inserting ‘‘$100’’. 
(2) AGGREGATE
ANNUAL
LIMITATION.—Sub-
sections (a)(1), (d)(1)(A), and (e)(3)(A) of section 
6721 are each amended by striking ‘‘$250,000’’ and 
inserting ‘‘$1,500,000’’. 
(b) REDUCTION WHERE CORRECTION WITHIN 30 
DAYS.— 
(1) IN GENERAL.—Subparagraph (A) of section 
6721(b)(1) is amended by striking ‘‘$15’’ and insert-
ing ‘‘$30’’. 
(2) AGGREGATE
ANNUAL
LIMITATION.—Sub-
sections (b)(1)(B) and (d)(1)(B) of section 6721 are 
each amended by striking ‘‘$75,000’’ and inserting 
‘‘$250,000’’. 
(c) REDUCTION WHERE CORRECTION ON OR BE-
FORE AUGUST 1.— 
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(1) IN GENERAL.—Subparagraph (A) of section 
6721(b)(2) is amended by striking ‘‘$30’’ and insert-
ing ‘‘$60’’. 
(2) AGGREGATE
ANNUAL
LIMITATION.—Sub-
sections (b)(2)(B) and (d)(1)(C) of section 6721 are 
each amended by striking ‘‘$150,000’’ and inserting 
‘‘$500,000’’. 
(d) AGGREGATE ANNUAL LIMITATIONS FOR PER-
SONS WITH GROSS RECEIPTS
OF NOT MORE THAN 
$5,000,000.—Paragraph (1) of section 6721(d) is amend-
ed— 
(1) by striking ‘‘$100,000’’ in subparagraph 
(A) and inserting ‘‘$500,000’’, 
(2) by striking ‘‘$25,000’’ in subparagraph (B) 
and inserting ‘‘$75,000’’, and 
(3) by striking ‘‘$50,000’’ in subparagraph (C) 
and inserting ‘‘$200,000’’. 
(e) PENALTY
IN
CASE
OF
INTENTIONAL
DIS-
REGARD.—Paragraph (2) of section 6721(e) is amended 
by striking ‘‘$100’’ and inserting ‘‘$250’’. 
(f) ADJUSTMENT FOR INFLATION.—Section 6721 is 
amended by adding at the end the following new sub-
section: 
‘‘(f) ADJUSTMENT FOR INFLATION.— 
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