‘‘(B) persons treated as single employer 
under subsection (b) or (c) of section 414. 
‘‘(h) TRANSFERS TO INCREASE INDEXING ADJUST-
MENT.—If any person transfers cash, debt, or any other 
property to another person and the principal purpose of 
such transfer is to secure or increase an adjustment under 
subsection (a), the Secretary may disallow part or all of 
such adjustment or increase. 
‘‘(i) SPECIAL RULES.—For purposes of this section— 
‘‘(1) TREATMENT OF IMPROVEMENTS, ETC.—If 
there is an addition to the adjusted basis of any tan-
gible property or of any stock in a corporation dur-
ing the taxable year by reason of an improvement to 
such property or a contribution to capital of such 
corporation— 
‘‘(A) such addition shall never be taken 
into account under subsection (c)(1)(A) if the 
aggregate amount thereof during the taxable 
year with respect to such property or stock is 
less than $1,000, and 
‘‘(B) such addition shall be treated as a 
separate asset acquired at the close of such tax-
able year if the aggregate amount thereof dur-
ing the taxable year with respect to such prop-
erty or stock is $1,000 or more. 
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A rule similar to the rule of the preceding sentence 
shall apply to any other portion of an asset to the 
extent that separate treatment of such portion is ap-
propriate to carry out the purposes of this section. 
‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS 
THROUGHOUT HOLDING PERIOD.—The applicable in-
flation adjustment shall be appropriately reduced for 
periods during which the asset was not an indexed 
asset. 
‘‘(3) TREATMENT
OF
CERTAIN
DISTRIBU-
TIONS.—A distribution with respect to stock in a 
corporation which is not a dividend shall be treated 
as a disposition. 
‘‘(4) SECTION
CANNOT
INCREASE
ORDINARY 
LOSS.—To the extent that (but for this paragraph) 
this section would create or increase a net ordinary 
loss to which section 1231(a)(2) applies or an ordi-
nary loss to which any other provision of this title 
applies, such provision shall not apply. The taxpayer 
shall be treated as having a long-term capital loss in 
an amount equal to the amount of the ordinary loss 
to which the preceding sentence applies. 
‘‘(5) ACQUISITION
DATE
WHERE
THERE
HAS 
BEEN
PRIOR
APPLICATION
OF
SUBSECTION (a)(1) 
WITH RESPECT TO THE TAXPAYER.—If there has 
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been a prior application of subsection (a)(1) to an 
asset while such asset was held by the taxpayer, the 
date of acquisition of such asset by the taxpayer 
shall be treated as not earlier than the date of the 
most recent such prior application. 
‘‘(j) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part II of subchapter O of chapter 1 is amended by 
striking the item relating to section 1023 and inserting 
after the item relating to section 1022 the following new 
items: 
‘‘Sec. 1023. Indexing of certain assets for purposes of determining gain or loss. 
‘‘Sec. 1024. Cross references.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2010, in taxable years ending after such date. 
SEC. 8. RETIREMENT SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 (relating to pension, profit-sharing, stock 
bonus plans, etc.) is amended by inserting after section 
408A the following new section: 
‘‘SEC. 408B. RETIREMENT SAVINGS ACCOUNTS. 
‘‘(a) GENERAL RULE.—Except as provided in this 
section, a Retirement Savings Account shall be treated for 
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purposes of this title in the same manner as an individual 
retirement plan. 
‘‘(b) RETIREMENT SAVINGS ACCOUNT.—For pur-
poses of this title, the term ‘Retirement Savings Account’ 
means an individual retirement plan (as defined in section 
7701(a)(37)) which is designated at the time of establish-
ment of the plan as a Retirement Savings Account. Such 
designation shall be made in such manner as the Secretary 
may prescribe. 
‘‘(c) TREATMENT OF CONTRIBUTIONS.— 
‘‘(1) NO DEDUCTION ALLOWED.—No deduction 
shall be allowed under section 219 for a contribution 
to a Retirement Savings Account. 
‘‘(2) CONTRIBUTION
LIMIT.—The aggregate 
amount of contributions for any taxable year to all 
Retirement Savings Accounts maintained for the 
benefit of an individual shall not exceed $5,000. 
‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE 
701⁄2.—Contributions to a Retirement Savings Ac-
count may be made even after the individual for 
whom the account is maintained has attained age 
701⁄2. 
‘‘(4) MANDATORY
DISTRIBUTION
RULES
NOT 
TO APPLY BEFORE DEATH.—Notwithstanding sub-
sections (a)(6) and (b)(3) of section 408 (relating to 
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required distributions), the following provisions shall 
not apply to any Retirement Savings Account: 
‘‘(A) Section 401(a)(9)(A). 
‘‘(B) The incidental death benefit require-
ments of section 401(a). 
‘‘(5) ROLLOVER CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—No rollover contribu-
tion may be made to or from a Retirement Sav-
ings Account except from or to another such 
Account, as the case may be. 
‘‘(B) COORDINATION
WITH
LIMIT.—Any 
rollover permitted under subparagraph (A) shall 
not be taken into account for purposes of para-
graph (2). 
‘‘(6) TIME WHEN CONTRIBUTIONS MADE.—For 
purposes of this section, the rule of section 219(f)(3) 
shall apply. 
‘‘(d) DISTRIBUTION RULES.—Any qualified distribu-
tion (as defined in section 408A(d)(2)) from a Retirement 
Savings Account shall not be includible in gross income.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (vi) of section 1361(c)(2)(A) is 
amended by inserting ‘‘or a Retirement Savings Ac-
count under section 408B’’ after ‘‘Roth IRA under 
section 408A’’. 
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(2) Section 4973 (relating to tax on excess con-
tributions to certain tax-favored accounts and annu-
ities) is amended by inserting after subsection (g) 
the following new subsection: 
‘‘(h) EXCESS CONTRIBUTIONS TO RETIREMENT SAV-
INGS ACCOUNTS.—For purposes of this section, in the 
case of contributions to a Retirement Savings Account 
(within the meaning of section 408B(b)), the term ‘excess 
contributions’ means the sum of— 
‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed for the tax-
able year to Retirement Savings Accounts 
(other than a rollover contribution from another 
such Account), over 
‘‘(B) $5,000, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the Accounts 
for the taxable year, and 
‘‘(B) the excess (if any) of $5,000 over the 
amount contributed by the individual to all Re-
tirement Savings Accounts for the taxable year. 
For purposes of this subsection, any contribution 
which is distributed from a Retirement Savings Ac-
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count in a distribution described in section 
408(d)(4) shall be treated as an amount not contrib-
uted.’’. 
(3) The table of sections for subpart A of part 
I of subchapter D of chapter 1 is amended by insert-
ing after the item relating to section 408A the fol-
lowing new item: 
‘‘Sec. 408B. Retirement Savings Accounts.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts contributed for taxable 
years beginning after December 31, 2010. 
SEC. 9. LIFETIME SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Subchapter F of chapter 1 (relat-
ing to exempt organizations) is amended by adding at the 
end the following new part: 
‘‘PART IX—LIFETIME SAVINGS ACCOUNTS. 
‘‘Sec. 530B. Lifetime Savings Accounts. 
‘‘SEC. 530B. LIFETIME SAVINGS ACCOUNTS. 
‘‘(a) IN GENERAL.—A Lifetime Savings Account 
shall be exempt from taxation under this subtitle. Not-
withstanding the preceding sentence, the Lifetime Savings 
Account shall be subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated business 
income of charitable organizations). 
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
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‘‘(1) LIFETIME SAVINGS ACCOUNT.—The term 
‘Lifetime Savings Account’ means a trust created or 
organized in the United States exclusively for the 
benefit of an individual who is the designated bene-
ficiary of the trust (and designated as a Lifetime 
Savings Account at the time created or organized), 
but only if the written governing instrument creating 
the trust meets the following requirements: 
‘‘(A) No contribution will be accepted— 
‘‘(i) unless it is in cash, and 
‘‘(ii) except in the case of rollover con-
tributions from another Lifetime Savings 
Account, if such contribution would result 
in aggregate contributions for the taxable 
year exceeding $5,000. 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which that person will ad-
minister the trust will be consistent with the re-
quirements of this section or who has so dem-
onstrated with respect to any individual retire-
ment plan. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
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‘‘(D) The assets of the trust shall not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(2) TIME
WHEN
CONTRIBUTIONS
DEEMED 
MADE.—An individual shall be deemed to have made 
a contribution to a Lifetime Savings Account on the 
last day of the preceding taxable year if the con-
tribution is made on account of such taxable year 
and is made not later than the time prescribed by 
law for filing the return for such taxable year (not 
including extensions thereof). 
‘‘(3) CONTRIBUTIONS RETURNED BEFORE DUE 
DATE OF RETURN.—A rule similar to the rule of sec-
tion 408(d)(4) shall apply for purposes of this sec-
tion. 
‘‘(c) DISTRIBUTION NOT INCLUDIBLE.—Distribu-
tions from a Lifetime Savings Account shall not be includ-
ible in gross income. 
‘‘(d) TAX TREATMENT OF ACCOUNTS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 408(e) 
shall apply to any Lifetime Savings Account. 
‘‘(e) COMMUNITY PROPERTY LAWS.—This section 
shall be applied without regard to any community property 
laws. 
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‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 
section, a custodial account shall be treated as a trust if 
the assets of such account are held by a bank (as defined 
in section 408(n) or another person who demonstrates, to 
the satisfaction of the Secretary, that the manner in which 
he will administer the account will be consistent with the 
requirements of this section, and if the custodial account 
would, except for the fact that it is not a trust, constitute 
an account described in subsection (b)(1)). For purposes 
of this title, in the case of a custodial account treated as 
a trust by reason of the preceding sentence, the custodian 
of such account shall be treated as the trustee thereof. 
‘‘(g) REPORTS.—The trustee of a Lifetime Savings 
Account shall make such reports regarding such Account 
to the Secretary and to the beneficiary of the Account with 
respect to contributions, distributions, and such other 
matters as the Secretary may require. The reports re-
quired by this subsection shall be filed at such time and 
in such manner and furnished to such individuals at such 
time and in such manner as may be required.’’. 
(b) TAX OF EXCESS CONTRIBUTIONS.— 
(1) Subsection (a) of section 4973 (relating to 
tax on excess contributions to certain tax-favored ac-
counts and annuities) is amended by striking ‘‘or’’ 
at the end of paragraph (4), by adding ‘‘or’’ at the 
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end of paragraph (5), and by inserting after para-
graph (5) the following new paragraph: 
‘‘(6) a Lifetime Savings Account (as defined by 
section 530B(b)),’’. 
(2) Section 4973 is amended by inserting after 
subsection (h) the following new subsection: 
‘‘(i) EXCESS CONTRIBUTIONS TO LIFETIME SAVINGS 
ACCOUNTS.—For purposes of this section, in the case of 
contributions to a Lifetime Savings Account (within the 
meaning of section 530B(b)), the term ‘excess contribu-
tions’ means the sum of— 
‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed for the tax-
able year to Lifetime Savings Accounts (other 
than a rollover contribution from another such 
Account), over 
‘‘(B) $5,000, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of such Accounts 
for the taxable year, and 
‘‘(B) the excess (if any) of $5,000 over the 
amount contributed by the individual to all such 
Accounts for the taxable year. 
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For purposes of this subsection, any contribution 
which is distributed from a Lifetime Savings Ac-
count in a distribution described in section 
530B(b)(3) shall be treated as an amount not con-
tributed.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
4975(e) (relating to prohibited transactions) is 
amended by striking ‘‘or’’ at the end of subpara-
graph (F), by redesignating subparagraph (G) as 
subparagraph (H), and by inserting after subpara-
graph (F) the following new subparagraph: 
‘‘(G) a Lifetime Savings Account described 
in section 530B, or’’. 
(2) SPECIAL RULE.—Subsection (c) of section 
4975 is amended by inserting after paragraph (6) 
the following new paragraph: 
‘‘(7) SPECIAL RULES FOR LIFETIME SAVINGS 
ACCOUNTS.—An individual for whose benefit a Life-
time Savings Account is established and any contrib-
utor to such account shall be exempt from the tax 
imposed by this section with respect to any trans-
action concerning such account (which would other-
wise be taxable under this section) if section 
530B(d) applies with respect to such transaction.’’. 
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(d) FAILURE TO PROVIDE REPORTS.—Paragraph 
(2) of section 6693(a) (relating to failure to provide re-
ports on certain tax-favored accounts or annuities; pen-
alties relating to designated nondeductible contributions) 
is amended by striking ‘‘and’’ at the end of subparagraph 
(D), by striking the period at the end of subparagraph 
(E) and inserting ‘‘, and’’, and by inserting after subpara-
graph (E) the end the following new subparagraph: 
‘‘(F) section 530B(g) (relating to Lifetime 
Savings Accounts).’’. 
(e) CLERICAL AMENDMENT.—The table of parts for 
subchapter F of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Part IX. Lifetime Savings Accounts.’’. 
SEC. 10. LIFETIME SKILLS ACCOUNTS. 
(a) IN GENERAL.—Part VIII of subchapter F of 
chapter 1 (relating to higher education savings entities) 
is amended by adding at the end the following new section: 
‘‘SEC. 530A. LIFETIME SKILLS ACCOUNTS. 
‘‘(a) IN GENERAL.—A Lifetime Skills Account shall 
be exempt from taxation under this subtitle. Notwith-
standing the preceding sentence, the Lifetime Skills Ac-
count shall be subject to the taxes imposed by section 511 
(relating to imposition of tax on unrelated business income 
of charitable organizations). 
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‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) LIFETIME
SKILLS
ACCOUNT.—The term 
‘Lifetime Skills Account’ means a trust created or 
organized in the United States exclusively for the 
purpose of paying the qualified life skills expenses of 
an individual who is the designated beneficiary of 
the trust (and designated as a Lifetime Skills Ac-
count at the time created or organized), but only if 
the written governing instrument creating the trust 
meets the following requirements: 
‘‘(A) No contribution will be accepted— 
‘‘(i) unless it is in cash, and 
‘‘(ii) except in the case of rollover con-
tributions from another such Account, if 
such contribution would result in aggregate 
contributions for the taxable year exceed-
ing $1,000. 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which that person will ad-
minister the trust will be consistent with the re-
quirements of this section or who has so dem-
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onstrated with respect to any individual retire-
ment plan. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust shall not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(2) QUALIFIED LIFE SKILLS EXPENSES.—The 
term ‘qualified life skills expenses’ means expenses 
for any of the following services: 
‘‘(A) Comprehensive and specialized as-
sessments of the skill levels and service needs of 
adults and dislocated workers, which may in-
clude— 
‘‘(i) diagnostic testing and use of 
other assessment tools, and 
‘‘(ii) in-depth interviewing and evalua-
tion to identify employment barriers and 
appropriate employment goals. 
‘‘(B) Development of an individual employ-
ment plan, to identify the employment goals, 
appropriate achievement objectives, and appro-
priate combination of services for the partici-
pant to achieve the employment goals. 
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‘‘(C) Individual counseling and career 
planning. 
‘‘(D) Short-term prevocational services, in-
cluding development of learning skills, commu-
nication skills, interviewing skills, punctuality, 
personal maintenance skills, and professional 
conduct, to prepare individuals for unsubsidized 
employment or training. 
‘‘(E) Occupational skills training, including 
training for nontraditional employment. 
‘‘(F) On-the-job training. 
‘‘(G) Programs that combine workplace 
training with related instruction, which may in-
clude cooperative education programs. 
‘‘(H) Training programs operated by the 
private sector. 
‘‘(I) Skill upgrading and retraining. 
‘‘(J) Entrepreneurial training. 
‘‘(K) Job readiness training. 
‘‘(L) Adult education and literacy activities 
provided in combination with services described 
in any of subparagraphs (E) through (K). 
‘‘(M) Customized training conducted with 
a commitment by an employer or group of em-
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ployers to employ an individual upon successful 
completion of the training. 
‘‘(3) TIME
WHEN
CONTRIBUTIONS
DEEMED 
MADE.—An individual shall be deemed to have made 
a contribution to a Lifetime Skills Account on the 
last day of the preceding taxable year if the con-
tribution is made on account of such taxable year 
and is made not later than the time prescribed by 
law for filing the return for such taxable year (not 
including extensions thereof). 
‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) IN
GENERAL.—Any distribution from a 
Lifetime Skills Account shall be includible in the 
gross income of the distributee in the manner pro-
vided in section 72. 
‘‘(2) DISTRIBUTIONS
FOR
QUALIFIED
LIFE 
SKILLS EXPENSES.— 
‘‘(A) IN GENERAL.—No amount shall be 
includible in gross income under paragraph (1) 
if the qualified life skills expenses of the des-
ignated beneficiary during the taxable year are 
not less than the aggregate distributions during 
the taxable year. 
‘‘(B) DISTRIBUTIONS IN EXCESS OF EX-
PENSES.—If such aggregate distributions ex-
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ceed such expenses during the taxable year, the 
amount otherwise includible in gross income 
under paragraph (1) shall be reduced by the 
amount which bears the same ratio to the 
amount which would be includible in gross in-
come under paragraph (1) (without regard to 
this subparagraph) as the qualified life skills 
expenses bear to such aggregate distributions. 
‘‘(C) COORDINATION
WITH
OTHER
EDU-
CATION SAVINGS INCENTIVES.—For purposes of 
subparagraph (A), rules similar to the rules of 
subparagraph (C) of section 530(d)(2) shall 
apply. 
‘‘(D) 
DISALLOWANCE
OF
EXCLUDED 
AMOUNTS AS DEDUCTION, CREDIT, OR EXCLU-
SION.—No deduction, credit, or exclusion shall 
be allowed to the taxpayer under any other sec-
tion of this chapter for any qualified life skills 
expenses to the extent taken into account in de-
termining the amount of the exclusion under 
this paragraph. 
‘‘(3) SPECIAL
RULES
FOR
APPLYING
ESTATE 
AND GIFT TAXES WITH RESPECT TO ACCOUNT.— 
Rules similar to the rules of paragraphs (2), (4), 
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and (5) of section 529(c) shall apply for purposes of 
this section. 
‘‘(4) ADDITIONAL TAX FOR DISTRIBUTIONS NOT 
USED FOR LIFE SKILLS EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter for any taxable year on any tax-
payer who receives a payment or distribution 
from a Lifetime Skills Account which is includ-
ible in gross income shall be increased by 10 
percent of the amount which is so includible. 
‘‘(B) EXCEPTIONS.—Rules similar to the 
following rules shall apply for purposes of this 
subsection: 
‘‘(i) Subparagraphs (B) and (C) of 
section 530(d)(4). 
‘‘(ii) Paragraphs (5), (6), (7), and (8) 
of section 530(d). 
‘‘(d) TAX TREATMENT OF ACCOUNTS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 408(e) 
shall apply to any Lifetime Skills Account. 
‘‘(e) COMMUNITY PROPERTY LAWS.—This section 
shall be applied without regard to any community property 
laws. 
‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 
section, a custodial account shall be treated as a trust if 
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the assets of such account are held by a bank (as defined 
in section 408(n) or another person who demonstrates, to 
the satisfaction of the Secretary, that the manner in which 
he will administer the account will be consistent with the 
requirements of this section, and if the custodial account 
would, except for the fact that it is not a trust, constitute 
an account described in subsection (b)(1)). For purposes 
of this title, in the case of a custodial account treated as 
a trust by reason of the preceding sentence, the custodian 
of such account shall be treated as the trustee thereof. 
‘‘(g) REPORTS.—The trustee of a Lifetime Skills Ac-
count shall make such reports regarding such account to 
the Secretary and to the beneficiary of the Account with 
respect to contributions, distributions, and such other 
matters as the Secretary may require. The reports re-
quired by this subsection shall be filed at such time and 
in such manner and furnished to such individuals at such 
time and in such manner as may be required.’’. 
(b) TAX ON EXCESS CONTRIBUTIONS.— 
(1) IN
GENERAL.—Subsection (a) of section 
4973, as amended by section 9 of this Act, is 
amended by striking ‘‘or’’ at the end of paragraph 
(5), by adding ‘‘or’’ at the end of paragraph (6), and 
by inserting after paragraph (6) the following new 
paragraph: 
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‘‘(7) a Lifetime Skills Account (as defined in 
section 530A(b)),’’. 
(2) EXCESS CONTRIBUTION DEFINED.—Section 
4973, as amended by section 9 of this Act, is 
amended by inserting after subsection (i) the fol-
lowing new subsection: 
‘‘(j) EXCESS CONTRIBUTIONS TO LIFETIME SKILLS 
ACCOUNTS.—For purposes of this section, in the case of 
contributions to a Lifetime Skills Account (within the 
meaning of section 530A(b)), the term ‘excess contribu-
tions’ means the sum of— 
‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed for the tax-
able year to Lifetime Skills Accounts (other 
than a rollover contribution from another such 
Account), over 
‘‘(B) $1,000, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of such Accounts 
for the taxable year, and 
‘‘(B) the excess (if any) of $1,000 over the 
amount contributed by the individual to all such 
Accounts for the taxable year. 
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For purposes of this subsection, any contribution 
which is distributed from a Lifetime Skills Account 
in a distribution to which rules similar to the rules 
of 
section 
530(d)(4)(C) 
apply 
under 
section 
530B(c)(4)(B)(i) shall be treated as an amount not 
contributed.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
4975(e) (relating to prohibited transactions), as 
amended by section 9 of this Act, is amended by 
striking ‘‘or’’ at the end of subparagraph (G), by re-
designating subparagraph (H) as subparagraph (I), 
and by inserting after subparagraph (G) the fol-
lowing new subparagraph: 
‘‘(H) a Lifetime Skills Account described 
in section 530A, or’’. 
(2) SPECIAL RULE.—Subsection (c) of section 
4975, as amended by section 9 of this Act, is 
amended by adding at the end the following new 
paragraph: 
‘‘(8) SPECIAL RULES FOR LIFETIME SKILLS AC-
COUNTS.—An individual for whose benefit a Life-
time Skills Account is established and any contrib-
utor to such account shall be exempt from the tax 
imposed by this section with respect to any trans-
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action concerning such account (which would other-
wise be taxable under this section) if section 
530A(d) applies with respect to such transaction.’’. 
(d) FAILURE TO PROVIDE REPORTS.—Paragraph 
(2) of section 6693(a) (relating to failure to provide re-
ports on certain tax-favored accounts or annuities; pen-
alties relating to designated nondeductible contributions), 
as amended by section 9 of this Act, is amended by strik-
ing ‘‘and’’ at the end of subparagraph (E), by striking 
the period at the end of subparagraph (F) and inserting 
‘‘, and’’, and by adding at the end the following new sub-
paragraph: 
‘‘(G) section 530A(g) (relating to Lifetime 
Skills Accounts).’’. 
(e) TECHNICAL AMENDMENTS.— 
(1) Section 26(b)(2) is amended by striking 
‘‘and’’ at the end of subparagraph (W), by striking 
the period at the end of subparagraph (X) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph: 
‘‘(Y) section 530A(c)(4) (relating to Life-
time Skills Accounts).’’. 
(2) Paragraph (9) of section 72(e) is amend-
ed— 
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(A) by striking ‘‘COVERDELL’’ in the head-
ing, 
(B) by striking ‘‘or under a Coverdell’’ and 
inserting ‘‘, under a Coverdell’’, and 
(C) by inserting ‘‘, or under a Lifetime 
Skills Account (as defined in section 530A(b))’’ 
after ‘‘530(b))’’. 
(3) Subparagraph (C) of section 135(c)(2) is 
amended— 
(A) in the heading by striking ‘‘AND’’ and 
by adding at the end ‘‘, AND LIFETIME SKILLS 
ACCOUNTS’’, 
(B) by striking ‘‘or to a Coverdell’’ and in-
serting ‘‘to a Coverdell’’, and 
(C) by inserting ‘‘, or to a Lifetime Skills 
Account (as defined in section 530A(b))’’ after 
‘‘530)’’. 
(4) Subparagraph (A) of section 221(d)(2) is 
amended by striking ‘‘or 530’’ and inserting ‘‘530, 
or 530A’’. 
(5) Subparagraph (B) of section 222(c)(2) is 
amended by striking ‘‘or 530(d)(2)’’ and inserting 
‘‘530(d)(2), or 530A(c)(2)’’. 
(6) Clause (vi) of section 529(c)(3)(B) is 
amended— 
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(A) by adding at the end of the heading 
‘‘AND LIFETIME SKILLS ACCOUNTS’’, and 
(B) by striking ‘‘and section 530(d)(2)(A) 
apply’’ each place it appears and inserting ‘‘, 
section 
530(d)(2)(A), 
and 
530A(c)(2)(A) 
apply’’. 
(7) The table of sections for part VIII of sub-
chapter F of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Sec. 530A. Lifetime Skills Accounts.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
SEC. 11. EXPANDED DEDUCTION FOR MEDICAL CARE EX-
PENSES; EXPANSION OF INDIVIDUALS TO 
WHOM HEALTH SAVINGS ACCOUNTS MAY BE 
PASSED ON DEATH. 
(a) IN GENERAL.—Subsection (a) of section 213 (re-
lating to medical, dental, etc., expenses) is amended to 
read as follows: 
‘‘(a) ALLOWANCE OF DEDUCTION.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
deduction the expenses paid during the taxable year, 
not compensated for by insurance or otherwise, for 
medical care of the taxpayer, his spouse, or a de-
pendent (as defined in section 152, determined with-
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out regard to subsections (b)(1), (b)(2), and 
(d)(1)(B) thereof), to the extent that such expenses 
exceed 7.5 percent of adjusted gross income. 
‘‘(2) INDIVIDUALS WHO HAVE NOT ATTAINED 
AGE
AND
ARE
NOT
COVERED
UNDER
AN
EM-
PLOYER PLAN.— 
‘‘(A) IN GENERAL.—The expenses for med-
ical care of an individual which are incurred 
while the individual is an eligible individual may 
be taken into account under paragraph (1) 
without regard to the adjusted gross income 
threshold. 
‘‘(B) ELIGIBLE
INDIVIDUAL.—For pur-
poses of this paragraph, the term ‘eligible indi-
vidual’ means any individual— 
‘‘(i) who has not attained age 65 as of 
the close of the taxable year, and 
‘‘(ii) who is not covered by any plan 
sponsored by an employer of such indi-
vidual, such individual’s spouse, or of any 
other individual with respect to whom such 
individual is a dependent (within the 
meaning of paragraph (1)). 
‘‘(C) LIMITATIONS.— 
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‘‘(i) PER
INDIVIDUAL.—The amount 
of each individual’s expenses which may be 
taken into account by reason of subpara-
graph (A) for the taxable year shall not ex-
ceed $7,500. 
‘‘(ii) PER TAXPAYER.—If expenses for 
the medical care of more than 1 eligible in-
dividual are paid by the taxpayer, clause 
(i) shall not apply and the aggregate ex-
penses which may be taken into account by 
reason of subparagraph (A) for the taxable 
year shall not exceed $15,000. 
‘‘(D) UNUSED LIMITATION MAY BE DEPOS-
ITED INTO HEALTH SAVINGS ACCOUNT.— 
‘‘(i) IN GENERAL.—Except as other-
wise provided in this subparagraph, if the 
limitation under subparagraph (C) applica-
ble to an individual exceeds the expenses 
taken into account by reason of subpara-
graph (A), then, for purposes of section 
223 (relating to health savings accounts)— 
‘‘(I) such individual shall be 
treated as an eligible individual for 
purposes of such section, and 
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‘‘(II) the limitation otherwise ap-
plicable under section 223(b) shall be 
increased by an amount equal to such 
excess. 
‘‘(ii) ALLOCATION OF PER TAXPAYER 
LIMITATION.—For purposes of clause (i), 
the limitation under subparagraph (C)(ii) 
shall be allocated among the individuals 
whose expenses are paid in proportion to 
their respective shares of such expenses. 
‘‘(iii) 
TREATMENT
OF
DEPEND-
ENTS.—Clause (i) shall not apply to a de-
pendent (within the meaning of paragraph 
(1)) of the taxpayer, and any excess deter-
mined under clause (i) for such dependent 
shall be allowed to the taxpayer. In the 
case of a joint return, any excess allowed 
to the taxpayer under the preceding sen-
tence shall be divided equally between the 
husband and wife.’’. 
(b) HEATH SAVINGS ACCOUNTS MAY BE PASSED TO 
OTHER THAN SPOUSE.—Paragraph (8) of section 223(f) 
(relating to treatment after death of account beneficiary) 
is amended to read as follows: 
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‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If an individual acquires the account 
beneficiary’s interest in a health savings account by 
reason of being the designated beneficiary of such 
account at the death of the account beneficiary, such 
health savings account shall be treated as if the indi-
vidual were the account beneficiary.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
SEC. 12. RESEARCH CREDIT MADE PERMANENT. 
(a) IN GENERAL.—Section 41 (relating to credit for 
increasing research activities) is amended by striking sub-
section (h). 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 45C(b) is amended by striking subparagraph (D). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2010. 
SEC. 13. TAX PROVISIONS OF PRIOR LAWS MADE PERMA-
NENT. 
(a) ECONOMIC GROWTH
AND TAX RELIEF REC-
ONCILIATION ACT OF 2001.—Title IX of the Economic 
Growth and Tax Relief Reconciliation Act of 2001 (relat-
ing to sunset of provisions of Act) is hereby repealed. 
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(b) JOBS AND GROWTH TAX RELIEF RECONCILI-
ATION ACT OF 2003.— 
(1) Section 107 of the Jobs and Growth Tax 
Relief Reconciliation Act of 2003 (relating to appli-
cation of EGTRRA sunset to this title) is hereby re-
pealed. 
(2) Section 303 of the Jobs and Growth Tax 
Relief Reconciliation Act of 2003 is hereby repealed. 
Æ 
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