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† HR 1 EAS 
‘‘(q) PAYMENTS RELATED TO SEXUAL HARASSMENT 
AND SEXUAL ABUSE.—No deduction shall be allowed under 
this chapter for— 
‘‘(1) any settlement or payment related to sexual 
harassment or sexual abuse if such settlement or pay-
ment is subject to a nondisclosure agreement, or 
‘‘(2) attorney’s fees related to such a settlement 
or payment.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred after the 
date of the enactment of this Act. 
SEC. 13308. REPEAL OF DEDUCTION FOR LOCAL LOBBYING 
EXPENSES. 
(a) IN GENERAL.—Section 162(e) is amended by strik-
ing paragraphs (2) and (7) and by redesignating para-
graphs (3), (4), (5), (6), and (8) as paragraphs (2), (3), 
(4), (5), and (6), respectively. 
(b) 
CONFORMING
AMENDMENT.—Section 
6033(e)(1)(B)(ii) 
is 
amended 
by 
striking 
‘‘section 
162(e)(5)(B)(ii)’’ and inserting ‘‘section 162(e)(4)(B)(ii)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred on or after 
the date of the enactment of this Act.
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† HR 1 EAS 
SEC. 13309. RECHARACTERIZATION OF CERTAIN GAINS IN 
THE CASE OF PARTNERSHIP PROFITS INTER-
ESTS HELD IN CONNECTION WITH PERFORM-
ANCE OF INVESTMENT SERVICES. 
(a) IN GENERAL.—Part IV of subchapter O of chapter 
1 is amended— 
(1) by redesignating section 1061 as section 
1062, and 
(2) by inserting after section 1060 the following 
new section: 
‘‘SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNEC-
TION WITH PERFORMANCE OF SERVICES. 
‘‘(a) IN GENERAL.—If one or more applicable partner-
ship interests are held by a taxpayer at any time during 
the taxable year, the excess (if any) of— 
‘‘(1) the taxpayer’s net long-term capital gain 
with respect to such interests for such taxable year, 
over 
‘‘(2) the taxpayer’s net long-term capital gain 
with respect to such interests for such taxable year 
computed by applying paragraphs (3) and (4) of sec-
tions 1222 by substituting ‘3 years’ for ‘1 year’, 
shall be treated as short-term capital gain, notwithstanding 
section 83 or any election in effect under section 83(b). 
‘‘(b) SPECIAL RULE.—To the extent provided by the 
Secretary, subsection (a) shall not apply to income or gain
185 
† HR 1 EAS 
attributable to any asset not held for portfolio investment 
on behalf of third party investors. 
‘‘(c) APPLICABLE PARTNERSHIP INTEREST.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—Except as provided in this 
paragraph or paragraph (4), the term ‘applicable 
partnership interest’ means any interest in a partner-
ship which, directly or indirectly, is transferred to (or 
is held by) the taxpayer in connection with the per-
formance of substantial services by the taxpayer, or 
any other related person, in any applicable trade or 
business. The previous sentence shall not apply to an 
interest held by a person who is employed by another 
entity that is conducting a trade or business (other 
than an applicable trade or business) and only pro-
vides services to such other entity. 
‘‘(2) APPLICABLE
TRADE
OR
BUSINESS.—The 
term ‘applicable trade or business’ means any activ-
ity conducted on a regular, continuous, and substan-
tial basis which, regardless of whether the activity is 
conducted in one or more entities, consists, in whole 
or in part, of— 
‘‘(A) raising or returning capital, and 
‘‘(B) either—
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† HR 1 EAS 
‘‘(i) investing in (or disposing of) spec-
ified assets (or identifying specified assets 
for such investing or disposition), or 
‘‘(ii) developing specified assets. 
‘‘(3) SPECIFIED
ASSET.—The term ‘specified 
asset’ means securities (as defined in section 475(c)(2) 
without regard to the last sentence thereof), commod-
ities (as defined in section 475(e)(2)), real estate held 
for rental or investment, cash or cash equivalents, op-
tions or derivative contracts with respect to any of the 
foregoing, and an interest in a partnership to the ex-
tent of the partnership’s proportionate interest in any 
of the foregoing. 
‘‘(4) EXCEPTIONS.—The term ‘applicable part-
nership interest’ shall not include— 
‘‘(A) any interest in a partnership directly 
or indirectly held by a corporation, or 
‘‘(B) any capital interest in the partnership 
which provides the taxpayer with a right to 
share in partnership capital commensurate 
with— 
‘‘(i) the amount of capital contributed 
(determined at the time of receipt of such 
partnership interest), or
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† HR 1 EAS 
‘‘(ii) the value of such interest subject 
to tax under section 83 upon the receipt or 
vesting of such interest. 
‘‘(5) THIRD PARTY INVESTOR.—The term ‘third 
party investor’ means a person who— 
‘‘(A) holds an interest in the partnership 
which does not constitute property held in con-
nection with an applicable trade or business; 
and 
‘‘(B) is not (and has not been) actively en-
gaged, and is (and was) not related to a person 
so engaged, in (directly or indirectly) providing 
substantial services described in paragraph (1) 
for such partnership or any applicable trade or 
business. 
‘‘(d) TRANSFER OF APPLICABLE PARTNERSHIP INTER-
EST TO RELATED PERSON.— 
‘‘(1) IN GENERAL.—If a taxpayer transfers any 
applicable partnership interest, directly or indirectly, 
to a person related to the taxpayer, the taxpayer shall 
include in gross income (as short term capital gain) 
the excess (if any) of— 
‘‘(A) so much of the taxpayer’s long-term 
capital gains with respect to such interest for 
such taxable year attributable to the sale or ex-
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† HR 1 EAS 
change of any asset held for not more than 3 
years as is allocable to such interest, over 
‘‘(B) any amount treated as short term cap-
ital gain under subsection (a) with respect to the 
transfer of such interest. 
‘‘(2) RELATED PERSON.—For purposes of this 
paragraph, a person is related to the taxpayer if— 
‘‘(A) the person is a member of the tax-
payer’s family within the meaning of section 
318(a)(1), or 
‘‘(B) the person performed a service within 
the current calendar year or the preceding three 
calendar years in any applicable trade or busi-
ness in which or for which the taxpayer per-
formed a service. 
‘‘(e) REPORTING.—The Secretary shall require such re-
porting (at the time and in the manner prescribed by the 
Secretary) as is necessary to carry out the purposes of this 
section. 
‘‘(f) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as is necessary or appropriate 
to carry out the purposes of this section’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
part IV of subchapter O of chapter 1 is amended by striking
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† HR 1 EAS 
the item relating to 1061 and inserting the following new 
items: 
‘‘Sec. 1061. Partnership interests held in connection with performance of services. 
‘‘Sec. 1062. Cross references.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13310. PROHIBITION ON CASH, GIFT CARDS, AND 
OTHER NON-TANGIBLE PERSONAL PROPERTY 
AS EMPLOYEE ACHIEVEMENT AWARDS. 
(a) IN
GENERAL.—Subparagraph (A) of section 
274(j)(3) is amended— 
(1) by striking ‘‘The term’’ and inserting the fol-
lowing: 
‘‘(i) IN GENERAL.—The term’’. 
(2) by redesignating clauses (i), (ii), and (iii) as 
subclauses (I), (II), and (III), respectively, and con-
forming the margins accordingly, and 
(3) by adding at the end the following new 
clause: 
‘‘(ii) 
TANGIBLE
PERSONAL
PROP-
ERTY.—For purposes of clause (i), the term 
‘tangible personal property’ shall not in-
clude— 
‘‘(I) cash, cash equivalents, gift 
cards, gift coupons, or gift certificates
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† HR 1 EAS 
(other than arrangements conferring 
only the right to select and receive tan-
gible personal property from a limited 
array of such items pre-selected or pre- 
approved by the employer), or 
‘‘(II) vacations, meals, lodging, 
tickets to theater or sporting events, 
stocks, bonds, other securities, and 
other similar items.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred after De-
cember 31, 2017. 
SEC. 13311. FLOOR PLAN FINANCING. 
(a) APPLICATION OF INTEREST LIMITATION.— 
(1) IN GENERAL.—Section 163(j), as amended by 
section 13301, is amended— 
(A) in paragraph (1), by striking ‘‘plus’’ at 
the end of subparagraph (A), by striking the pe-
riod at the end of subparagraph (B) and insert-
ing ‘‘, plus’’, and by inserting after subpara-
graph (B) the following new subparagraph: 
‘‘(C) the floor plan financing interest of 
such taxpayer for such taxable year.’’, and
191 
† HR 1 EAS 
(B) in paragraph (4)(C)(i)(II), by inserting 
‘‘, reduced by the floor plan financing interest,’’ 
after ‘‘business interest of the partnership’’, and 
(C) by redesignating paragraph (9) as 
paragraph (10) and inserting after paragraph 
(8) the following new paragraph: 
‘‘(9) FLOOR
PLAN
FINANCING
INTEREST
DE-
FINED.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘floor plan fi-
nancing interest’ means interest paid or accrued 
on floor plan financing indebtedness. 
‘‘(B) FLOOR
PLAN
FINANCING
INDEBTED-
NESS.—The term ‘floor plan financing indebted-
ness’ means indebtedness— 
‘‘(i) used to finance the acquisition of 
motor vehicles held for sale or lease, and 
‘‘(ii) secured by the inventory so ac-
quired. 
‘‘(C) MOTOR
VEHICLE.—The term ‘motor 
vehicle’ means a motor vehicle that is any of the 
following: 
‘‘(i) An automobile. 
‘‘(ii) A truck. 
‘‘(iii) A recreational vehicle. 
‘‘(iv) A motorcycle.
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† HR 1 EAS 
‘‘(v) Any self-propelled vehicle designed 
for transporting persons or property on a 
public street, highway, or road. 
‘‘(vi) A boat. 
‘‘(vii) Farm machinery or equip-
ment.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2017. 
(b) EXCEPTION FROM 100 PERCENT EXPENSING.— 
(1) IN
GENERAL.—Paragraph (6) of section 
168(k), as added by section 13201(a)(4), is amend-
ed— 
(A) by striking ‘‘shall not include any prop-
erty’’ and inserting ‘‘shall not include— 
‘‘(A) any property’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(B) any property used in a trade or busi-
ness that has had floor plan financing indebted-
ness (as defined in paragraph (9) of section 
163(j)), if the floor plan financing interest re-
lated to such indebtedness was taken into ac-
count under paragraph (1)(C) of such section.’’.
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† HR 1 EAS 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to property placed in 
service after September 27, 2017, in taxable years 
ending after such date. 
SEC. 13312. ELIMINATION OF DEDUCTION FOR LIVING EX-
PENSES INCURRED BY MEMBERS OF CON-
GRESS. 
(a) IN GENERAL.—Subsection (a) of section 162 is 
amended in the matter following paragraph (3) by striking 
‘‘in excess of $3,000’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after the date 
of the enactment of this Act. 
PART V—BUSINESS CREDITS 
Subpart A—General Provisions 
SEC. 13401. MODIFICATION OF ORPHAN DRUG CREDIT. 
(a) CREDIT RATE.—Subsection (a) of section 45C is 
amended by striking ‘‘50 percent’’ and inserting ‘‘27.5 per-
cent’’. 
(b) ELECTION OF REDUCED CREDIT.—Subsection (b) 
of section 280C is amended by redesignating paragraph (3) 
as paragraph (4) and by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) ELECTION OF REDUCED CREDIT.—
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† HR 1 EAS 
‘‘(A) IN GENERAL.—In the case of any tax-
able year for which an election is made under 
this paragraph— 
‘‘(i) paragraphs (1) and (2) shall not 
apply, and 
‘‘(ii) the amount of the credit under 
section 45C(a) shall be the amount deter-
mined under subparagraph (B). 
‘‘(B) AMOUNT OF REDUCED CREDIT.—The 
amount of credit determined under this subpara-
graph for any taxable year shall be the amount 
equal to the excess of— 
‘‘(i) the amount of credit determined 
under section 45C(a) without regard to this 
paragraph, over 
‘‘(ii) the product of— 
‘‘(I) the amount described in 
clause (i), and 
‘‘(II) the maximum rate of tax 
under section 11(b). 
‘‘(C) ELECTION.—An election under this 
paragraph for any taxable year shall be made 
not later than the time for filing the return of 
tax for such year (including extensions), shall be 
made on such return, and shall be made in such
196 
† HR 1 EAS 
(A) in paragraph (1)— 
(i) in subparagraph (A), by amending 
clause (iii) to read as follows: 
‘‘(iii) such building is a certified his-
toric structure, and’’, 
(ii) by striking subparagraph (B), and 
(iii) by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) and (C), 
respectively, and 
(B) in paragraph (2)(B), by amending 
clause (iv) to read as follows: 
‘‘(iv) CERTIFIED
HISTORIC
STRUC-
TURE.—Any expenditure attributable to the 
rehabilitation of a qualified rehabilitated 
building unless the rehabilitation is a cer-
tified rehabilitation (within the meaning of 
subparagraph (C)).’’. 
(2) Paragraph (4) of section 145(d) is amend-
ed— 
(A) by striking ‘‘of section 47(c)(1)(C)’’ each 
place it appears and inserting ‘‘of section 
47(c)(1)(B)’’, and 
(B) by striking ‘‘section 47(c)(1)(C)(i)’’ and 
inserting ‘‘section 47(c)(1)(B)(i)’’. 
(c) EFFECTIVE DATE.—
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† HR 1 EAS 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to amounts paid or incurred after December 
31, 2017. 
(2) TRANSITION RULE.—In the case of qualified 
rehabilitation expenditures with respect to any build-
ing— 
(A) owned or leased by the taxpayer during 
the entirety of the period after December 31, 
2017, and 
(B) with respect to which the 24-month pe-
riod selected by the taxpayer under section 
47(c)(1)(B) of the Internal Revenue Code of 1986 
(as amended by subsection (b)) begins not later 
than 180 days after the date of the enactment of 
this Act, 
the amendments made by this section shall apply to 
such expenditures paid or incurred after the end of 
the taxable year in which the 24-month period re-
ferred to in subparagraph (B) ends. 
SEC. 13403. EMPLOYER CREDIT FOR PAID FAMILY AND MED-
ICAL LEAVE. 
(a) IN GENERAL.—
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† HR 1 EAS 
(1) ALLOWANCE OF CREDIT.—Subpart D of part 
IV of subchapter A of chapter 1 is amended by adding 
at the end the following new section: 
‘‘SEC. 45S. EMPLOYER CREDIT FOR PAID FAMILY AND MED-
ICAL LEAVE. 
‘‘(a) ESTABLISHMENT OF CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of section 38, 
in the case of an eligible employer, the paid family 
and medical leave credit is an amount equal to the 
applicable percentage of the amount of wages paid to 
qualifying employees during any period in which 
such employees are on family and medical leave. 
‘‘(2) APPLICABLE
PERCENTAGE.—For purposes 
of paragraph (1), the term ‘applicable percentage’ 
means 12.5 percent increased (but not above 25 per-
cent) by 0.25 percentage points for each percentage 
point by which the rate of payment (as described 
under subsection (c)(1)(B)) exceeds 50 percent. 
‘‘(b) LIMITATION.— 
‘‘(1) IN
GENERAL.—The credit allowed under 
subsection (a) with respect to any employee for any 
taxable year shall not exceed an amount equal to the 
product of the normal hourly wage rate of such em-
ployee for each hour (or fraction thereof) of actual 
services performed for the employer and the number
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† HR 1 EAS 
of hours (or fraction thereof) for which family and 
medical leave is taken. 
‘‘(2) NON-HOURLY WAGE RATE.—For purposes of 
paragraph (1), in the case of any employee who is not 
paid on an hourly wage rate, the wages of such em-
ployee shall be prorated to an hourly wage rate under 
regulations established by the Secretary. 
‘‘(3) MAXIMUM AMOUNT OF LEAVE SUBJECT TO 
CREDIT.—The amount of family and medical leave 
that may be taken into account with respect to any 
employee under subsection (a) for any taxable year 
shall not exceed 12 weeks. 
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘eligible employer’ 
means any employer who has in place a policy that 
meets the following requirements: 
‘‘(A) The policy provides— 
‘‘(i) in the case of a qualifying em-
ployee who is not a part-time employee (as 
defined in section 4980E(d)(4)(B)), not less 
than 2 weeks of annual paid family and 
medical leave, and 
‘‘(ii) in the case of a qualifying em-
ployee who is a part-time employee, an
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† HR 1 EAS 
amount of annual paid family and medical 
leave that is not less than an amount which 
bears the same ratio to the amount of an-
nual paid family and medical leave that is 
provided to a qualifying employee described 
in clause (i) as— 
‘‘(I) the number of hours the em-
ployee is expected to work during any 
week, bears to 
‘‘(II) the number of hours an 
equivalent qualifying employee de-
scribed in clause (i) is expected to work 
during the week. 
‘‘(B) The policy requires that the rate of 
payment under the program is not less than 50 
percent of the wages normally paid to such em-
ployee for services performed for the employer. 
‘‘(2) SPECIAL RULE FOR CERTAIN EMPLOYERS.— 
‘‘(A) IN
GENERAL.—An added employer 
shall not be treated as an eligible employer un-
less such employer provides paid family and 
medical leave in compliance with a policy which 
ensures that the employer— 
‘‘(i) will not interfere with, restrain, or 
deny the exercise of or the attempt to exer-
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† HR 1 EAS 
cise, any right provided under the policy, 
and 
‘‘(ii) will not discharge or in any other 
manner discriminate against any indi-
vidual for opposing any practice prohibited 
by the policy. 
‘‘(B) 
ADDED
EMPLOYER; 
ADDED
EM-
PLOYEE.—For purposes of this paragraph— 
‘‘(i) ADDED
EMPLOYEE.—The term 
‘added employee’ means a qualifying em-
ployee who is not covered by title I of the 
Family and Medical Leave Act of 1993, as 
amended. 
‘‘(ii) ADDED
EMPLOYER.—The term 
‘added employer’ means an eligible em-
ployer (determined without regard to this 
paragraph), whether or not covered by that 
title I, who offers paid family and medical 
leave to added employees. 
‘‘(3) AGGREGATION
RULE.—All persons which 
are treated as a single employer under subsections (a) 
and (b) of section 52 shall be treated as a single tax-
payer. 
‘‘(4) TREATMENT OF BENEFITS MANDATED OR 
PAID FOR BY STATE OR LOCAL GOVERNMENTS.—For
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† HR 1 EAS 
purposes of this section, any leave which is paid by 
a State or local government or required by State or 
local law shall not be taken into account in deter-
mining the amount of paid family and medical leave 
provided by the employer. 
‘‘(5) NO INFERENCE.—Nothing in this subsection 
shall be construed as subjecting an employer to any 
penalty, liability, or other consequence (other than in-
eligibility for the credit allowed by reason of sub-
section (a) or recapturing the benefit of such credit) 
for failure to comply with the requirements of this 
subsection. 
‘‘(d) QUALIFYING EMPLOYEES.—For purposes of this 
section, the term ‘qualifying employee’ means any employee 
(as defined in section 3(e) of the Fair Labor Standards Act 
of 1938, as amended) who— 
‘‘(1) has been employed by the employer for 1 
year or more, and 
‘‘(2) for the preceding year, had compensation 
not in excess of an amount equal to 60 percent of the 
amount applicable for such year under clause (i) of 
section 414(q)(1)(B). 
‘‘(e) FAMILY AND MEDICAL LEAVE.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), for purposes of this section, the term ‘fam-
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† HR 1 EAS 
ily and medical leave’ means leave for any 1 or more 
of the purposes described under subparagraph (A), 
(B), (C), (D), or (E) of paragraph (1), or paragraph 
(3), of section 102(a) of the Family and Medical 
Leave Act of 1993, as amended, whether the leave is 
provided under that Act or by a policy of the em-
ployer. 
‘‘(2) EXCLUSION.—If an employer provides paid 
leave as vacation leave, personal leave, or medical or 
sick leave (other than leave specifically for 1 or more 
of the purposes referred to in paragraph (1)), that 
paid leave shall not be considered to be family and 
medical leave under paragraph (1). 
‘‘(3) DEFINITIONS.—In this subsection, the terms 
‘vacation leave’, ‘personal leave’, and ‘medical or sick 
leave’ mean those 3 types of leave, within the meaning 
of section 102(d)(2) of that Act. 
‘‘(f) DETERMINATIONS
MADE
BY
SECRETARY
OF 
TREASURY.—For purposes of this section, any determina-
tion as to whether an employer or an employee satisfies the 
applicable requirements for an eligible employer (as de-
scribed in subsection (c)) or qualifying employee (as de-
scribed in subsection (d)), respectively, shall be made by the 
Secretary based on such information, to be provided by the
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† HR 1 EAS 
employer, as the Secretary determines to be necessary or 
appropriate. 
‘‘(g) WAGES.—For purposes of this section, the term 
‘wages’ has the meaning given such term by subsection (b) 
of section 3306 (determined without regard to any dollar 
limitation contained in such section). Such term shall not 
include any amount taken into account for purposes of de-
termining any other credit allowed under this subpart. 
‘‘(h) ELECTION TO HAVE CREDIT NOT APPLY.— 
‘‘(1) IN
GENERAL.—A taxpayer may elect to 
have this section not apply for any taxable year. 
‘‘(2) OTHER RULES.—Rules similar to the rules 
of paragraphs (2) and (3) of section 51(j) shall apply 
for purposes of this subsection. 
‘‘(i) TERMINATION.—This section shall not apply to 
wages paid in taxable years beginning after December 31, 
2019.’’. 
(b) CREDIT PART OF GENERAL BUSINESS CREDIT.— 
Section 38(b) is amended by striking ‘‘plus’’ at the end of 
paragraph (35), by striking the period at the end of para-
graph (36) and inserting ‘‘, plus’’, and by adding at the 
end the following new paragraph: 
‘‘(37) in the case of an eligible employer (as de-
fined in section 45S(c)), the paid family and medical 
leave credit determined under section 45S(a).’’.
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† HR 1 EAS 
(c) CREDIT ALLOWED AGAINST AMT.—Subparagraph 
(B) of section 38(c)(4) is amended by redesignating clauses 
(ix) through (xi) as clauses (x) through (xii), respectively, 
and by inserting after clause (viii) the following new clause: 
‘‘(ix) the credit determined under sec-
tion 45S,’’. 
(d) CONFORMING AMENDMENTS.— 
(1) DENIAL
OF
DOUBLE
BENEFIT.—Section 
280C(a) is amended by inserting ‘‘45S(a),’’ after 
‘‘45P(a),’’. 
(2) ELECTION TO HAVE CREDIT NOT APPLY.— 
Section 6501(m) is amended by inserting ‘‘45S(h),’’ 
after ‘‘45H(g),’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of 
chapter 1 is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45S. Employer credit for paid family and medical leave.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to wages paid in taxable years begin-
ning after December 31, 2017.
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† HR 1 EAS 
Subpart B—Provisions Relating to Low-income 
Housing Credit 
SEC. 13411. TREATMENT OF VETERANS’ PREFERENCE AS 
NOT VIOLATING GENERAL PUBLIC USE RE-
QUIREMENTS. 
(a) IN
GENERAL.—Subparagraph (C) of section 
42(g)(9) is amended to read as follows: 
‘‘(C) who are veterans of the Armed 
Forces.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to buildings placed in service before, on, 
or after the date of the enactment of this Act. 
SEC. 13412. INCREASE IN CREDIT FOR CERTAIN RURAL 
HOUSING. 
(a) IN GENERAL.—Section 42(d)(5)(B) is amended by 
adding at the end the following new clause: 
‘‘(vi) CERTAIN
NEW
BUILDINGS
IN 
RURAL AREAS.—For purposes of clause (i), 
a 
building 
described 
in 
subsection 
(b)(1)(B)(i) which is located in a rural area 
(as defined in section 520 of the Housing 
Act of 1949) shall be treated in the same 
manner as a new building located in a dif-
ficult development area which is designated 
for purposes of this subparagraph.’’.
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† HR 1 EAS 
(b) OFFSET.—Section 42(d)(5)(B)(i) is amended by 
striking ‘‘130 percent’’ both places it appears in subclauses 
(I) and (II) and inserting ‘‘125 percent’’. 
(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. 
PART VI—PROVISIONS RELATED TO SPECIFIC 
ENTITIES AND INDUSTRIES 
Subpart A—Partnership Provisions 
SEC. 13501. TREATMENT OF GAIN OR LOSS OF FOREIGN 
PERSONS FROM SALE OR EXCHANGE OF IN-
TERESTS IN PARTNERSHIPS ENGAGED IN 
TRADE OR BUSINESS WITHIN THE UNITED 
STATES. 
(a) IN GENERAL.—Section 864(c) is amended by add-
ing at the end the following: 
‘‘(8) GAIN OR LOSS OF FOREIGN PERSONS FROM 
SALE OR EXCHANGE OF CERTAIN PARTNERSHIP IN-
TERESTS.— 
‘‘(A) IN
GENERAL.—Notwithstanding any 
other provision of this subtitle, if a nonresident 
alien individual or foreign corporation owns, di-
rectly or indirectly, an interest in a partnership 
which is engaged in any trade or business within 
the United States, gain or loss on the sale or ex-
208 
† HR 1 EAS 
change of all (or any portion of) such interest 
shall be treated as effectively connected with the 
conduct of such trade or business to the extent 
such gain or loss does not exceed the amount de-
termined under subparagraph (B). 
‘‘(B) AMOUNT
TREATED
AS
EFFECTIVELY 
CONNECTED.—The amount determined under 
this subparagraph with respect to any partner-
ship interest sold or exchanged— 
‘‘(i) in the case of any gain on the sale 
or exchange of the partnership interest, is— 
‘‘(I) the portion of the partner’s 
distributive share of the amount of 
gain which would have been effectively 
connected with the conduct of a trade 
or business within the United States if 
the partnership had sold all of its as-
sets at their fair market value as of the 
date of the sale or exchange of such in-
terest, or 
‘‘(II) zero if no gain on such 
deemed sale would have been so effec-
tively connected, and 
‘‘(ii) in the case of any loss on the sale 
or exchange of the partnership interest, is—
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† HR 1 EAS 
‘‘(I) the portion of the partner’s 
distributive share of the amount of loss 
on the deemed sale described in clause 
(i)(I) which would have been so effec-
tively connected, or 
‘‘(II) zero if no loss on such 
deemed sale would be have been so ef-
fectively connected. 
For purposes of this subparagraph, a part-
ner’s distributive share of gain or loss on 
the deemed sale shall be determined in the 
same manner as such partner’s distributive 
share of the non-separately stated taxable 
income or loss of such partnership. 
‘‘(C) COORDINATION WITH UNITED STATES 
REAL PROPERTY INTERESTS.—If a partnership 
described in subparagraph (A) holds any United 
States real property interest (as defined in sec-
tion 897(c)) at the time of the sale or exchange 
of the partnership interest, then the gain or loss 
treated as effectively connected income under 
subparagraph (A) shall be reduced by the 
amount so treated with respect to such United 
States real property interest under section 897.
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‘‘(D) SALE OR EXCHANGE.—For purposes of 
this paragraph, an individual or corporation 
shall be treated as having sold or exchanged any 
interest in a partnership if, under any provision 
of this subtitle, gain or loss is realized from the 
sale or exchange of such interest. 
‘‘(E) SECRETARIAL AUTHORITY.—The Sec-
retary shall prescribe such regulations as the 
Secretary determines appropriate for the appli-
cation of this paragraph, including regulations 
which provide that, notwithstanding subpara-
graph (D), this paragraph applies in a case even 
if gain or loss from a sale or exchange would not 
be realized under any other provision of this sub-
title.’’. 
(b) WITHHOLDING REQUIREMENTS.—Section 1446 is 
amended by redesignating subsection (f) as subsection (g) 
and by inserting after subsection (e) the following: 
‘‘(f) SPECIAL RULES FOR WITHHOLDING ON SALES OF 
PARTNERSHIP INTERESTS.— 
‘‘(1) IN GENERAL.—Except as provided in this 
subsection, if any portion of the gain (if any) on any 
disposition of an interest in a partnership would be 
treated under section 864(c)(8) as effectively con-
nected with the conduct of a trade or business within
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the United States, the transferee shall be required to 
deduct and withhold a tax equal to 10 percent of the 
amount realized on the disposition. 
‘‘(2) EXCEPTION IF NONFOREIGN AFFIDAVIT FUR-
NISHED.— 
‘‘(A) IN GENERAL.—No person shall be re-
quired to deduct and withhold any amount 
under paragraph (1) with respect to any disposi-
tion if the transferor furnishes to the transferee 
an affidavit by the transferor stating, under pen-
alty of perjury, the transferor’s United States 
taxpayer identification number and that the 
transferor is not a foreign person. 
‘‘(B) FALSE AFFIDAVIT.—Subparagraph (A) 
shall not apply to any disposition if— 
‘‘(i) the transferee has actual knowl-
edge that the affidavit is false, or the trans-
feree receives a notice (as described in sec-
tion 1445(d)) from a transferor’s agent or 
transferee’s agent that such affidavit or 
statement is false, or 
‘‘(ii) the Secretary by regulations re-
quires the transferee to furnish a copy of 
such affidavit or statement to the Secretary 
and the transferee fails to furnish a copy of
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† HR 1 EAS 
each of the 8 succeeding taxable years, as a 
deduction 
under 
section 
805(a)(2) 
or 
832(c)(4) of such Code, as applicable. 
(ii) If the amount determined under 
subparagraph (A)(ii) exceeds the amount 
determined under subparagraph (A)(i), 1/8 
of such excess shall be included in gross in-
come, for each of the 8 succeeding taxable 
years, 
under 
section 
803(a)(2) 
or 
832(b)(1)(C) of such Code, as applicable. 
SEC. 13518. MODIFICATION OF RULES FOR LIFE INSURANCE 
PRORATION 
FOR 
PURPOSES 
OF 
DETER-
MINING THE DIVIDENDS RECEIVED DEDUC-
TION. 
(a) IN GENERAL.—Section 812 is amended to read as 
follows: 
‘‘SEC. 812. DEFINITION OF COMPANY’S SHARE AND POLICY-
HOLDER’S SHARE. 
‘‘(a) COMPANY’S SHARE.—For purposes of section 
805(a)(4), the term ‘company’s share’ means, with respect 
to any taxable year beginning after December 31, 2017, 70 
percent. 
‘‘(b) POLICYHOLDER’S SHARE.—For purposes of sec-
tion 807, the term ‘policyholder’s share’ means, with respect