251 
rangement for which is established after December 
31, 2014.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 1612. TERMINATION FOR NEW SIMPLE 401(k)s. 
(a) 
AMENDMENTS
RELATING
TO
SIMPLE 
401(k)S.—Section 401(k)(11) is amended by adding at 
the end the following new subparagraph: 
‘‘(E) 
TERMINATION.—This 
paragraph 
shall apply to a cash or deferred arrangement 
for any plan year beginning after December 31, 
2014, only if such arrangement meets the re-
quirements of this paragraph for the last plan 
year beginning before January 1, 2015, and for 
each plan year thereafter.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years beginning after De-
cember 31, 2014. 
SEC. 1613. RULES RELATED TO DESIGNATED ROTH CON-
TRIBUTIONS. 
(a) APPLICABLE RETIREMENT PLANS WHICH PER-
MIT ELECTIVE DEFERRALS REQUIRED TO ACCEPT DES-
IGNATED ROTH CONTRIBUTIONS.— 
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(1) IN GENERAL.—Paragraph (30) of section 
401(a) is amended— 
(A) by striking ‘‘DEFERRALS.—’’ and all 
that follows through ‘‘In the case of a trust’’ 
and inserting the following: ‘‘DEFERRALS.— 
‘‘(A) IN
GENERAL.—In the case of a 
trust’’, 
(B) by striking ‘‘unless the plan provides 
that’’ and inserting the following: ‘‘unless the 
plan— 
‘‘(i) provides that’’, 
(C) by striking the period at the end and 
inserting ‘‘, and’’, and 
(D) by adding at the end the following: 
‘‘(ii) except as provided in subpara-
graph (B), includes a qualified Roth con-
tribution program (as defined in section 
402A(b)). 
‘‘(B) EXCEPTION
FOR
CERTAIN
SMALL 
PLANS.—Subparagraph (A)(ii) shall not apply 
to any plan of an eligible employer (as defined 
in section 408(p)(2)(C)).’’. 
(2) CONFORMING AMENDMENTS.— 
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(A) Section 402A(b)(1) is amended by 
striking all that follows ‘‘designated Roth con-
tributions’’ and inserting a period. 
(B) The heading of section 402A (and the 
item relating to such section in the table of sec-
tions for part I of subchapter D of chapter 1) 
is amended by striking ‘‘OPTIONAL TREAT-
MENT OF ELECTIVE DEFERRALS AS ROTH 
CONTRIBUTIONS’’ 
and 
inserting 
‘‘DES-
IGNATED ROTH CONTRIBUTIONS’’. 
(b) RESTRICTION ON PORTION OF ELECTIVE DEFER-
RAL LIMITATION WHICH MAY APPLY TO TRADITIONAL 
ELECTIVE DEFERRALS.— 
(1) IN GENERAL.—Subparagraph (A) of section 
402(g)(1) is amended by striking ‘‘the applicable 
dollar amount’’ and inserting ‘‘50 percent (100 per-
cent in the case of elective deferrals with respect to 
any plan of an eligible employer (as defined in sec-
tion 408(p)(2)(C)) of the applicable dollar amount’’. 
(2) GOVERNMENT 457(b) PLANS.— 
(A) IN GENERAL.—Subsection (b) of sec-
tion 457 is amended by striking ‘‘and’’ at the 
end of paragraph (5), by redesignating para-
graph (6) as paragraph (7), and by inserting 
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after paragraph (5) the following new para-
graph: 
‘‘(6) which, in the case of a plan maintained by 
an employer described in subsection (e)(1)(A), meets 
requirements similar to the requirements of section 
401(a)(30), and’’. 
(B) CONFORMING
AMENDMENT.—Section 
402(g)(1)(A) is amended by inserting ‘‘and sec-
tion 457(a)(1)’’ after ‘‘(h)(1)(B)’’. 
(C) CROSS-REFERENCE.—For treatment of 
amounts deferred under an eligible compensa-
tion plan of a governmental employer as elective 
deferrals, see section 1618(b)(1) of this Act. 
(3) ROTH
ELECTIVE
DEFERRALS
PERMITTED 
TO EXTENT OF FULL LIMITATION AMOUNT.— 
(A) IN GENERAL.—Section 402A(c)(2)(A) 
is amended to read as follows: 
‘‘(A) the applicable dollar amount in effect 
under section 402(g)(1)(B) with respect to the 
employee for the taxable year, over’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Section 401(a)(30) is amended— 
(I) by inserting ‘‘(including con-
tributions treated as elective deferrals 
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under 
section 
402A(a)(1))’’ 
after 
‘‘section 402(g)(3)’’, and 
(II) 
by 
striking 
‘‘section 
402(g)(1)(A)’’ and inserting ‘‘section 
402(g)(1)(B), and that the amount of 
elective deferrals not included in gross 
income may not exceed the amount of 
the limitation in effect under section 
402(g)(1)(A),’’. 
(ii) Section 402(g)(1)(C) is amend-
ed— 
(I) by striking ‘‘In addition to 
subparagraph 
(A)’’ 
and 
inserting 
‘‘For purposes of subparagraph (A)’’. 
(II) by striking ‘‘gross income 
shall not include’’ and all that follows 
through ‘‘does not exceed’’ and insert-
ing ‘‘the applicable dollar amount in 
effect for the taxable year under sub-
paragraph (B) shall be increased by’’. 
(iii)(I) 
So 
much 
of 
section 
402(g)(2)(A) as precedes clause (i) is 
amended to read as follows: 
‘‘(A) IN GENERAL.—If an individual’s ag-
gregate elective deferrals for a taxable year ex-
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ceed the applicable dollar amount under para-
graph (1) (hereinafter in this paragraph re-
ferred to as ‘excess total deferrals’) or if an in-
dividual’s aggregate elective deferrals (dis-
regarding designated Roth contributions and 
simple Roth contributions) exceed the amount 
excludable under paragraph (1)(A) (hereinafter 
in this paragraph referred to as ‘excess non- 
Roth deferrals’)—’’. 
(II) Section 402(g)(2)(A)(i) is amend-
ed by striking ‘‘such excess deferrals’’ and 
inserting ‘‘such excess total deferrals or ex-
cess non-Roth deferrals’’. 
(III) 
Section 
402(g)(2)(C)(ii) 
is 
amended by striking ‘‘the excess deferral’’ 
and inserting ‘‘the excess total deferral or 
excess non-Roth deferral’’. 
(IV) Section 402A(d)(2)(C) is amend-
ed by striking ‘‘excess deferral’’ and insert-
ing ‘‘excess total deferral’’. 
(V) Section 402A(d)(3) is amended by 
striking ‘‘excess deferral’’ each place it ap-
pears and inserting ‘‘excess total deferral’’. 
(VI) Section 402(g)(1)(A) is amended 
by striking the second sentence. 
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(iv) Section 402A(c)(1)(A) is amended 
by striking ‘‘without regard to this sec-
tion’’ and inserting ‘‘(determined without 
regard 
to 
this 
section 
and 
section 
402(g))’’. 
(4) 
REPORTING
BY
EMPLOYERS.—Section 
6051(a)(8) is amended by inserting after ‘‘(as de-
fined in section 402A)’’ the following: ‘‘, and the 
type of plan under which amounts are deferred or 
contributed’’. 
(c) SIMPLE ROTH RETIREMENT ACCOUNTS PER-
MITTED.— 
(1) IN
GENERAL.—Subsection (p) of section 
408 is amended by adding at the end the following 
new paragraph: 
‘‘(11) ROTH CONTRIBUTIONS.—For purposes of 
this section— 
‘‘(A) IN GENERAL.—If a qualified salary 
reduction arrangement with respect to a simple 
retirement account includes a simple Roth con-
tribution program, any simple Roth contribu-
tion made by an employer pursuant to such 
program shall be treated as an elective em-
ployer contribution, except that such contribu-
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258 
tion shall be paid to a Roth IRA and shall not 
be excludable from gross income. 
‘‘(B) SIMPLE
ROTH
CONTRIBUTION
PRO-
GRAM.—The term ‘simple Roth contribution 
program’ means a program under which an em-
ployee may elect to make simple Roth contribu-
tions. 
‘‘(C) SIMPLE ROTH CONTRIBUTION.—The 
term ‘simple Roth contribution’ means any elec-
tive employer contribution which— 
‘‘(i) is excludable from gross income 
of an employee without regard to this 
paragraph, and 
‘‘(ii) the employee designates (at such 
time and in such manner as the Secretary 
may prescribe) as not being so excludable. 
‘‘(D) LIMITATION.—In the case of an eligi-
ble employer which elects the application of this 
subparagraph with respect to the simple retire-
ment accounts established pursuant to a quali-
fied salary reduction arrangement of such em-
ployer, notwithstanding paragraph (2)(E), the 
applicable dollar amount for purposes of para-
graph (2)(A)(ii), shall be equal to— 
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‘‘(i) in the case of any such account 
which is not designated as a Roth IRA, 50 
percent of the applicable dollar amount in 
effect under section 402(g)(1)(B) for the 
taxable year, and 
‘‘(ii) in the case of any such account 
which is designated as a Roth IRA, the ex-
cess (if any) of— 
‘‘(I) the applicable dollar amount 
in effect under section 402(g)(1)(B) 
for the taxable year, over 
‘‘(II) the aggregate amount of 
elective employer contributions to any 
account described in clause (i). 
In the case of a simple retirement account with 
respect to which the application of this subpara-
graph is elected, the employer shall not be 
treated as an eligible employer for purposes of 
section 402(g)(1)(A), and the applicable dollar 
amount with respect to any eligible participant 
(as defined in section 414(v)) shall, notwith-
standing section 414(v)(2)(B)(ii), be deter-
mined by reference to section 402(g)(1)(C).’’. 
(2) COORDINATION WITH MAXIMUM ROTH LIMI-
TATION.—Subsection (c) of section 408A, as amend-
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260 
ed by this Act, is amended by adding at the end the 
following new paragraph: 
‘‘(12) INCREASE IN MAXIMUM LIMITATION FOR 
SIMPLE ROTH.—In the case of any simple retirement 
account, subparagraphs (A)(i) and (B) of paragraph 
(1) shall be applied by disregarding any contribu-
tions made to a simple retirement account and any 
qualified rollover contributions.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 408A(f)(1) is amended by 
striking ‘‘or a simple retirement account’’. 
(B) Section 6051(a)(8), as amended by 
this Act, is amended by inserting after ‘‘(as de-
fined in section 402A)’’ the following: ‘‘and 
simple Roth contributions (as defined in section 
408(p)(11)(C))’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to plan years and taxable years begin-
ning after December 31, 2014. 
(2) SUBSECTION (c).—The amendments made 
by subsection (c) shall apply to calendar years begin-
ning after December 31, 2014. 
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SEC. 1614. MODIFICATIONS OF REQUIRED DISTRIBUTION 
RULES FOR PENSION PLANS. 
(a) IN GENERAL.—Section 401(a)(9)(B) of the Inter-
nal Revenue Code of 1986 is amended to read as follows: 
‘‘(B) REQUIRED
DISTRIBUTIONS
WHERE 
EMPLOYEE DIES BEFORE ENTIRE INTEREST IS 
DISTRIBUTED.— 
‘‘(i) 5-YEAR GENERAL RULE.—A trust 
shall not constitute a qualified trust under 
this section unless the plan provides that, 
if an employee dies before the distribution 
of the employee’s interest (whether or not 
such distribution has begun in accordance 
with subparagraph (A)), the entire interest 
of the employee will be distributed within 
5 years after the death of such employee. 
‘‘(ii) EXCEPTION FOR ELIGIBLE DES-
IGNATED BENEFICIARIES.—If— 
‘‘(I) any portion of the employ-
ee’s interest is payable to (or for the 
benefit of) an eligible designated bene-
ficiary, 
‘‘(II) such portion will be distrib-
uted (in accordance with regulations) 
over the life of such eligible des-
ignated beneficiary (or over a period 
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not extending beyond the life expect-
ancy of such beneficiary), and 
‘‘(III) such distributions begin 
not later than 1 year after the date of 
the employee’s death or such later 
date as the Secretary may by regula-
tions prescribe, 
then, for purposes of clause (i) and except 
as provided in clause (iv) or subparagraph 
(E)(iii), the portion referred to in sub-
clause (I) shall be treated as distributed on 
the date on which such distributions begin. 
‘‘(iii) SPECIAL RULE FOR SURVIVING 
SPOUSE
OF
EMPLOYEE.—If the eligible 
designated beneficiary referred to in clause 
(ii)(I) is the surviving spouse of the em-
ployee— 
‘‘(I) the date on which the dis-
tributions are required to begin under 
clause (ii)(III) shall not be earlier 
than the date on which the employee 
would have attained age 701⁄2, and 
‘‘(II) if the surviving spouse dies 
before the distributions to such spouse 
begin, this subparagraph shall be ap-
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263 
plied as if the surviving spouse were 
the employee. 
‘‘(iv) RULES UPON DEATH OF ELIGI-
BLE DESIGNATED BENEFICIARY.—If an el-
igible designated beneficiary dies before the 
portion of an employee’s interest described 
in clause (ii) is entirely distributed, clause 
(ii) shall not apply to any beneficiary of 
such eligible designated beneficiary and the 
remainder of such portion shall be distrib-
uted within 5 years after the death of such 
beneficiary.’’. 
(b) DEFINITION OF ELIGIBLE DESIGNATED BENE-
FICIARY.—Section 401(a)(9)(E) of such Code is amended 
to read as follows: 
‘‘(E) DEFINITIONS AND RULES RELATING 
TO DESIGNATED BENEFICIARY.—For purposes 
of this paragraph— 
‘‘(i) DESIGNATED BENEFICIARY.—The 
term ‘designated beneficiary’ means any 
individual designated as a beneficiary by 
the employee. 
‘‘(ii) ELIGIBLE
DESIGNATED
BENE-
FICIARY.—The term ‘eligible designated 
beneficiary’ means, with respect to any em-
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264 
ployee, any designated beneficiary who, as 
of the date of death of the employee, is— 
‘‘(I) the surviving spouse of the 
employee, 
‘‘(II) subject to clause (iii), a 
child of the employee who has not at-
tained age 22, 
‘‘(III) disabled (within the mean-
ing of section 72(m)(7)), 
‘‘(IV) a chronically ill individual 
(within 
the 
meaning 
of 
section 
7702B(c)(2), except that the require-
ments of subparagraph (A)(i) thereof 
shall only be treated as met if there is 
a certification that, as of such date, 
the period of inability described in 
such subparagraph with respect to the 
individual is an indefinite one that is 
reasonably expected to be lengthy in 
nature), or 
‘‘(V) an individual not described 
in any of the preceding subparagraphs 
who is not more than 10 years young-
er than the employee. 
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‘‘(iii) 
SPECIAL
RULE
FOR
CHIL-
DREN.—Subject to subparagraph (F), an 
individual described in clause (ii)(II) shall 
cease to be an eligible designated bene-
ficiary as of the date the individual attains 
age 22 and the requirement of subpara-
graph (B)(i) shall not be treated as met 
with respect to any remaining portion of 
an employee’s interest payable to the indi-
vidual unless such portion is distributed 
within 5 years after such date.’’. 
(c) 
REQUIRED
BEGINNING
DATE.—Section 
401(a)(9)(C) of such Code is amended by adding at the 
end the following new clause: 
‘‘(v) EMPLOYEES
BECOMING
5-PER-
CENT
OWNERS
AFTER
AGE
701⁄2.—If an 
employee becomes a 5-percent owner (as 
defined in section 416) with respect to a 
plan year ending in a calendar year after 
the calendar year in which the employee 
attains age 701⁄2, then clause (i)(II) shall 
be applied by substituting the calendar 
year in which the employee became such 
an owner for the calendar year in which 
the employee retires.’’. 
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(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in this 
subsection, the amendments made by this section 
shall apply to distributions with respect to employees 
who die after December 31, 2014. 
(2) REQUIRED BEGINNING DATE.—The amend-
ment made by subsection (c) shall apply to employ-
ees becoming a 5-percent owner with respect to plan 
years ending in calendar years beginning before, on, 
or after the date of the enactment of this Act, except 
that— 
(A) if, without regard to such amendment, 
an employee’s required beginning date occurs 
before April 1, 2015, such amendment shall not 
result in an earlier required beginning date for 
such employee, and 
(B) if, solely by reason of such amend-
ment, an employee’s required beginning date 
would occur before April 1, 2015, such employ-
ee’s required beginning date shall occur on 
April 1, 2015. 
(3) 
EXCEPTION
FOR
CERTAIN
BENE-
FICIARIES.—If a designated beneficiary of an em-
ployee who dies before January 1, 2015, dies after 
December 31, 2014— 
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(A) the amendments made by this section 
shall apply to any beneficiary of such des-
ignated beneficiary, and 
(B) the designated beneficiary shall be 
treated as an eligible designated beneficiary for 
purposes of applying section 401(a)(9)(B)(iv) of 
such Code (as in effect after the amendments 
made by this section). 
(4) EXCEPTION FOR CERTAIN EXISTING ANNU-
ITY CONTRACTS.— 
(A) IN GENERAL.—The amendments made 
by this section shall not apply to a qualified an-
nuity which is a binding annuity contract in ef-
fect on the date of the enactment of this Act 
and at all times thereafter. 
(B) QUALIFIED ANNUITY CONTRACT.—For 
purposes of this paragraph, the term ‘‘qualified 
annuity’’ means, with respect to an employee, 
an annuity— 
(i) which is a commercial annuity (as 
defined in section 3405(e)(6) of such 
Code) or payable by a defined benefit plan, 
(ii) under which the annuity payments 
are substantially equal periodic payments 
(not less frequently than annually) over the 
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lives of such employee and a designated 
beneficiary (or over a period not extending 
beyond the life expectancy of such em-
ployee or the life expectancy of such em-
ployee and a designated beneficiary) in ac-
cordance with the regulations described in 
section 401(a)(9)(A)(ii) of such Code (as 
in effect before such amendments) and 
which meets the other requirements of this 
section 401(a)(9) of such Code (as so in 
effect) with respect to such payments, and 
(iii) with respect to which— 
(I) annuity payments to the em-
ployee have begun before January 1, 
2015, and the employee has made an 
irrevocable election before such date 
as to the method and amount of the 
annuity payments to the employee or 
any designated beneficiaries, or 
(II) if subclause (I) does not 
apply, the employee has made an ir-
revocable election before the date of 
the enactment of this Act as to the 
method and amount of the annuity 
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payments to the employee or any des-
ignated beneficiaries. 
SEC. 1615. REDUCTION IN MINIMUM AGE FOR ALLOWABLE 
IN-SERVICE DISTRIBUTIONS. 
(a) IN GENERAL.—Section 401(a)(36) is amended by 
striking ‘‘age 62’’ and inserting ‘‘age 591⁄2’’. 
(b) APPLICATION
TO
GOVERNMENTAL
SECTION 
457(b) PLANS.—Clause (i) of section 457(d)(1)(A) is 
amended by inserting ‘‘(in the case of a plan maintained 
by an employer described in subsection (e)(1)(A), age 
591⁄2)’’ before the comma at the end. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after Decem-
ber 31, 2014. 
SEC. 1616. MODIFICATION OF RULES GOVERNING HARD-
SHIP DISTRIBUTIONS. 
(a) IN GENERAL.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of the 
Treasury shall modify Treasury Regulation section 
1.401(k)–1(d)(3)(iv)(E) to— 
(1) delete the 6-month prohibition on contribu-
tions imposed by paragraph (2) thereof, and 
(2) to make any other modifications necessary 
to 
carry 
out 
the 
purposes 
of 
section 
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401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
1986. 
(b) EFFECTIVE
DATE.—The revised regulations 
under this section shall apply to plan years beginning after 
December 31, 2014. 
SEC. 1617. EXTENDED ROLLOVER PERIOD FOR THE ROLL-
OVER OF PLAN LOAN OFFSET AMOUNTS IN 
CERTAIN CASES. 
(a) IN GENERAL.—Paragraph (3) of section 402(c) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(C) ROLLOVER OF CERTAIN PLAN LOAN 
OFFSET AMOUNTS.— 
‘‘(i) IN GENERAL.—In the case of a 
qualified plan loan offset amount, para-
graph (1) shall not apply to any transfer 
of such amount made after the due date 
(including extensions) for filing the return 
of tax for the taxable year in which such 
amount is treated as distributed from a 
qualified employer plan. 
‘‘(ii) QUALIFIED PLAN LOAN OFFSET 
AMOUNT.—For purposes of this subpara-
graph, the term ‘qualified plan loan offset 
amount’ means a plan loan offset amount 
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which is treated as distributed from a 
qualified employer plan to a participant or 
beneficiary solely by reason of— 
‘‘(I) the termination of the quali-
fied employer plan, or 
‘‘(II) the failure to meet the re-
payment terms of the loan from such 
plan because of the separation from 
service of the participant (whether 
due to layoff, cessation of business, 
termination of employment, or other-
wise). 
‘‘(iii) PLAN LOAN OFFSET AMOUNT.— 
For purposes of clause (ii), the term ‘plan 
loan offset amount’ means the amount by 
which the participant’s accrued benefit 
under the plan is reduced in order to repay 
a loan from the plan. 
‘‘(iv) 
LIMITATION.—This 
subpara-
graph shall not apply to any plan loan off-
set amount unless such plan loan offset 
amount relates to a loan to which section 
72(p)(1) does not apply by reason of sec-
tion 72(p)(2). 
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‘‘(v) QUALIFIED EMPLOYER PLAN.— 
For purposes of this subsection, the term 
‘qualified employer plan’ has the meaning 
given such term by section 72(p)(4).’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 402(c)(3) is amended by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 1618. COORDINATION OF CONTRIBUTION LIMITA-
TIONS 
FOR 
403(b) 
PLANS 
AND 
GOVERN-
MENTAL 457(b) PLANS. 
(a) 403(b) PLANS.— 
(1) 
ELIMINATION
OF
SPECIAL
CATCH-UP 
RULE.—Subsection (g) of section 402 is amended by 
striking paragraph (7) and by redesignating para-
graph (8) as paragraph (7). 
(2) ELIMINATION OF POST TERMINATION NON- 
ELECTIVE CONTRIBUTIONS.—Subsection (b) of sec-
tion 403 is amended— 
(A) in paragraph (3), by striking ‘‘for the 
most recent period’’ and all that follows 
through ‘‘more than five years’’, and 
(B) by striking paragraph (4). 
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(3) ELIMINATION
OF
INCREASED
CONTRIBU-
TION LIMIT FOR CHURCH PLANS.—Subsection (c) of 
section 415 is amended by striking paragraph (7). 
(4) ELIMINATION
OF
SEPARATE 415(c) LIM-
ITS.—Paragraph (4) of section 415(k) is amended 
by striking ‘‘each employer with respect to which the 
participant has the control required’’ and inserting 
‘‘the employer and each employer which is part of a 
controlled group or under common control’’. 
(b) 457(b) PLANS.— 
(1) ELIMINATION
OF
SEPARATE
DEFERRAL 
LIMIT.—Paragraph (3) of section 402(g) is amended 
by striking ‘‘and’’ at the end of subparagraph (C), 
by striking the period at the end of subparagraph 
(D) and inserting ‘‘, and’’, and by inserting after 
subparagraph (D) the following new subparagraph: 
‘‘(E) any amount deferred under an eligi-
ble deferred compensation plan (as defined in 
section 457(b)) of an eligible employer de-
scribed in section 457(e)(1)(A).’’. 
(2) TAKEN INTO ACCOUNT UNDER LIMITATION 
FOR DEFINED CONTRIBUTION PLANS.— 
(A) IN GENERAL.—Paragraph (2) of sec-
tion 415(a) is amended by striking ‘‘or’’ at the 
end of subparagraph (B), by inserting ‘‘or’’ at 
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the end of subparagraph (C), and by inserting 
after subparagraph (C) the following new sub-
paragraph: 
‘‘(D) an eligible deferred compensation 
plan (as defined in section 457(b)) of an eligible 
employer described in section 457(e)(1)(A),’’. 
(B) DEFINITION.—Paragraph (1) of sec-
tion 415(k) is amended by striking ‘‘or’’ at the 
end of subparagraph (C), by striking the period 
at the end of subparagraph (D) and inserting 
‘‘, or’’, and by adding at the end the following 
new subparagraph: 
‘‘(E) an eligible deferred compensation 
plan (as defined in section 457(b)) of an eligible 
employer described in section 457(e)(1)(A).’’. 
(3) 
ELIMINATION
OF
SPECIAL
CATCH-UP 
RULE.—Paragraph (3) of section 457(b) is amended 
by inserting ‘‘, in the case of an eligible employer de-
scribed in subsection (e)(1)(B),’’ after ‘‘which’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 25B(d)(1)(B) is amended— 
(A) by striking clause (ii), and 
(B) by striking ‘‘the amount of—’’ and all 
that follows through ‘‘any elective deferrals’’ 
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and inserting the following: ‘‘the amount of any 
elective deferrals’’. 
(2) Section 402A(e)(2) is amended— 
(A) by striking ‘‘, and’’ and all that follows 
and inserting a period, and 
(B) by striking ‘‘means—’’ and all that 
follows through ‘‘any elective deferral described 
in subparagraph (A) or (C)’’ and inserting the 
following: ‘‘means any elective deferral de-
scribed in (A), (C), or (E)’’. 
(3) Section 457(e) is amended by striking para-
graph (18). 
(4) Section 414(u)(2)(C) is amended by insert-
ing ‘‘by an eligible employer described in section 
457(e)(1)(B)’’ 
after 
‘‘(as 
defined 
in 
section 
457(b))’’. 
(5) Section 414(v)(2)(D) is amended— 
(A) by striking ‘‘clauses (i), (ii), and (iv) 
of’’, and 
(B) by striking ‘‘, and plans described in 
clause (iii)’’ and all that follows through the 
end and inserting a period. 
(6) Section 414(v)(3)(A)(i) is amended by strik-
ing 
‘‘(determined 
without 
regard 
to 
section 
457(b)(3))’’. 
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(7) Section 414(v)(6)(B) is amended by striking 
‘‘subsection 
(u)(2)(C)’’ 
and 
inserting 
‘‘section 
402(g)(3)’’. 
(8) Section 414(v)(6) is amended by striking 
subparagraph (C). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years and taxable years 
beginning after December 31, 2014. 
SEC. 1619. APPLICATION OF 10-PERCENT EARLY DISTRIBU-
TION TAX TO GOVERNMENTAL 457 PLANS. 
(a) IN GENERAL.—Paragraph (1) of section 72(t) is 
amended by inserting ‘‘or an eligible deferred compensa-
tion plan (as defined in section 457(b)) of an eligible em-
ployer described in section 457(e)(1)(A),’’ after ‘‘section 
4974(c)),’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to withdrawals on or after Feb-
ruary 26, 2014. 
SEC. 1620. INFLATION ADJUSTMENTS FOR QUALIFIED PLAN 
BENEFIT AND CONTRIBUTION LIMITATIONS. 
(a) DEFINED BENEFIT PLANS.— 
(1) CURRENT
LIMIT.—Subparagraph (A) of 
section 
415(b)(1) 
is 
amended 
by 
striking 
‘‘$160,000’’ and inserting ‘‘$210,000’’. 
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(2) INFLATION ADJUSTMENT.—Section 415(d) 
is amended— 
(A) in paragraph (1)(A)— 
(i) by striking ‘‘$160,000’’ and insert-
ing ‘‘$210,000’’, and 
(ii) by inserting ‘‘for calendar years 
beginning after 2023’’ after ‘‘subsection 
(b)(1)(A)’’, 
(B) paragraph (3)(A), by striking ‘‘July 1, 
2001’’ and inserting ‘‘July 1, 2022’’. 
(b) DEFINED CONTRIBUTION PLANS.— 
(1) CURRENT
LIMIT.—Subparagraph (A) of 
section 415(c)(1) is amended by striking ‘‘$40,000’’ 
and inserting ‘‘$52,000’’. 
(2) INFLATION ADJUSTMENT.—Subsection (d) 
of section 415 is amended— 
(A) in paragraph (1)(C)— 
(i) by striking ‘‘$40,000’’ and insert-
ing ‘‘$52,000’’, 
(ii) by inserting ‘‘for calendar years 
beginning after 2023’’ after ‘‘subsection 
(c)(1)(A)’’, 
(B) in paragraph (3)(D), by striking ‘‘July 
1, 2001’’ and inserting ‘‘July 1, 2022’’. 
(c) CONFORMING AMENDMENTS.— 
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(1) Section 415(b)(2) is amended by striking 
‘‘$160,000’’ each place it appears in subparagraphs 
(C) and (D) and inserting ‘‘$210,000’’. 
(2) Section 415(b) is amended by striking 
‘‘$160,000’’ in the fourth sentence of paragraph (7) 
and inserting ‘‘$210,000’’. 
(3) The headings for subparagraphs (C) and 
(D) of section 415(b)(2) are each amended by strik-
ing ‘‘$160,000’’ and inserting ‘‘$210,000’’. 
(4) The heading for subparagraph (A) of sec-
tion 415(d)(3) is amended by striking ‘‘$160,000’’ 
and inserting ‘‘$210,000’’. 
(5) The heading for subparagraph (D) of sec-
tion 415(d)(3) is amended by striking ‘‘$40,000’’ and 
inserting ‘‘$52,000’’. 
(6) The heading for subparagraph (A) of sec-
tion 415(d)(4) is amended by striking ‘‘$160,000’’ 
and inserting ‘‘$210,000’’. 
(7) The heading for subparagraph (B) of sec-
tion 415(d)(4) is amended by striking ‘‘$40,000’’ and 
inserting ‘‘$52,000’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years ending with or within a 
calendar year beginning after 2014. 
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SEC. 1621. INFLATION ADJUSTMENTS FOR QUALIFIED PLAN 
ELECTIVE DEFERRAL LIMITATIONS. 
(a) CURRENT LIMIT.—Subparagraph (B) of section 
402(g)(1) is amended by striking ‘‘shall be’’ and all that 
follows and inserting ‘‘is $17,500.’’ 
(b) INFLATION ADJUSTMENT.—Paragraph (4) of sec-
tion 402(g) is amended— 
(1) by striking ‘‘December 31, 2006’’ and in-
serting ‘‘December 31, 2023’’, 
(2) by striking ‘‘$15,000’’ and inserting 
‘‘$17,500’’, and 
(3) by striking ‘‘2005’’ and inserting ‘‘2022’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years and taxable years 
beginning after December 31, 2014. 
SEC. 1622. INFLATION ADJUSTMENTS FOR SIMPLE RETIRE-
MENT ACCOUNTS. 
(a) 
CURRENT
LIMIT.—Clause 
(i) 
of 
section 
408(p)(2)(E) is amended by striking ‘‘shall be’’ and all 
that follows and inserting ‘‘shall be $12,000’’. 
(b) INFLATION ADJUSTMENT.—Clause (ii) of section 
408(p)(2)(E) is amended— 
(1) by striking ‘‘December 31, 2005’’ and in-
serting ‘‘December 31, 2023’’, 
(2) by striking ‘‘$10,000’’ and inserting 
‘‘$12,000’’, 
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(3) by striking ‘‘2004’’ and inserting ‘‘2022’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
2014. 
SEC. 1623. INFLATION ADJUSTMENTS FOR CATCH-UP CON-
TRIBUTIONS 
FOR 
CERTAIN 
EMPLOYER 
PLANS. 
(a) CURRENT LIMIT.— 
(1) PLANS OTHER THAN SIMPLE 401(k) AND 
SIMPLE RETIREMENT ACCOUNTS.—Clause (i) of sec-
tion 414(v)(2)(B) is amended by striking ‘‘deter-
mined in accordance with the following table’’ and 
all that follows through the period at the end and 
inserting ‘‘$5,500.’’. 
(2) SIMPLE 401(k) AND SIMPLE RETIREMENT 
ACCOUNTS.—Clause (ii) of section 414(v)(2)(B) is 
amended by striking ‘‘determined in accordance with 
the following table’’ and all that follows through the 
period at the end and inserting ‘‘$2,500.’’. 
(b) INFLATION ADJUSTMENT.—Subparagraph (C) of 
section 414(v)(2) is amended— 
(1) by striking ‘‘December 31, 2006’’ and in-
serting ‘‘December 31, 2023’’, 
(2) 
by 
striking 
‘‘$5,000’’ 
and 
inserting 
‘‘$5,500’’, and 
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(3) by striking ‘‘2005’’ and inserting ‘‘2022’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 1624. INFLATION ADJUSTMENTS FOR GOVERNMENTAL 
AND TAX-EXEMPT ORGANIZATION PLANS. 
(a) CURRENT LIMIT.—Subparagraph (A) of section 
457(b)(2) is amended by striking ‘‘the applicable dollar 
amount’’ and inserting ‘‘$17,500’’. 
(b) INFLATION ADJUSTMENT.—Paragraph (15) of 
section 457(e) is amended— 
(1) 
by 
striking 
‘‘APPLICABLE
DOLLAR 
AMOUNT.—’’ and all that follows through ‘‘COST-OF- 
LIVING ADJUSTMENTS.—In the case of taxable years 
beginning after December 31, 2006’’ and inserting 
the following: ‘‘COST-OF-LIVING ADJUSTMENTS.—In 
the case of taxable years beginning after December 
31, 2023’’, 
(2) by striking ‘‘the $15,000 amount under 
subparagraph (A)’’ and inserting ‘‘the $17,500 
amount under subsection (b)(2)(A)’’, and 
(3) by striking ‘‘2005’’ and inserting ‘‘2022’’. 
(c) 
CONFORMING
AMENDMENT.—Section 
457(f)(4)(A) is amended by striking ‘‘twice the applicable 
dollar limit determined under subsection (e)(15)’’ and in-
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serting ‘‘twice the amount in effect under subsection 
(b)(2)(A)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
Subtitle H—Certain Provisions Re-
lated to Members of Indian 
Tribes 
SEC. 1701. INDIAN GENERAL WELFARE BENEFITS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 is amended by inserting before section 140 the fol-
lowing new section: 
‘‘SEC. 139E. INDIAN GENERAL WELFARE BENEFITS. 
‘‘(a) IN GENERAL.—Gross income does not include 
the value of any Indian general welfare benefit. 
‘‘(b) INDIAN GENERAL WELFARE BENEFIT.—For 
purposes of this section, the term ‘Indian general welfare 
benefit’ includes any payment made or services provided 
to or on behalf of a member of an Indian tribe (or any 
spouse or dependent of such a member) pursuant to an 
Indian tribal government program, but only if— 
‘‘(1) the program is administered under speci-
fied written guidelines and does not discriminate in 
favor of members of the governing body of the tribe, 
and 
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‘‘(2) the benefits provided under such pro-
gram— 
‘‘(A) are available to any tribal member 
who meets such guidelines, 
‘‘(B) are for the promotion of general wel-
fare, 
‘‘(C) are not lavish or extravagant, and 
‘‘(D) are not compensation for services. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) INDIAN TRIBAL GOVERNMENT.—For pur-
poses of this section, the term ‘Indian tribal govern-
ment’ includes any agencies or instrumentalities of 
an Indian tribal government and any Alaska Native 
regional or village corporation, as defined in, or es-
tablished pursuant to, the Alaska Native Claims Set-
tlement Act (43 U.S.C. 1601, et seq.). 
‘‘(2) DEPENDENT.—The term ‘dependent’ has 
the meaning given such term by section 7705, deter-
mined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B). 
‘‘(3) LAVISH
OR
EXTRAVAGANT.—The Sec-
retary shall, in consultation with the Tribal Advisory 
Committee (as established under section 1702 of the 
Tax Reform Act of 2014), establish guidelines for 
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what constitutes lavish or extravagant benefits with 
respect to Indian tribal government programs. 
‘‘(4) ESTABLISHMENT OF TRIBAL GOVERNMENT 
PROGRAM.—A program shall not fail to be treated as 
an Indian tribal government program solely by rea-
son of the program being established by tribal cus-
tom or government practice.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for part III of subchapter B of chapter 1 is amended 
by inserting before the item relating to section 140 the 
following new item: 
‘‘Sec. 139E. Indian general welfare benefits.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years for which 
the period of limitation on refund or credit under 
section 6511 of the Internal Revenue Code of 1986 
has not expired. 
(2) ONE-YEAR WAIVER OF STATUTE OF LIMITA-
TIONS.—If the period of limitation on a credit or re-
fund resulting from the amendments made by sub-
section (a) expires before the end of the 1-year pe-
riod beginning on the date of the enactment of this 
Act, refund or credit of such overpayment (to the ex-
tent attributable to such amendments) may, never-
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theless, be made or allowed if claim therefor is filed 
before the close of such 1-year period. 
SEC. 1702. TRIBAL ADVISORY COMMITTEE. 
(a) ESTABLISHMENT.—The Secretary of the Treas-
ury shall establish a Tribal Advisory Committee (herein-
after in this subsection referred to as the ‘‘Committee’’). 
(b) DUTIES.— 
(1) IMPLEMENTATION.—The Committee shall 
advise the Secretary on matters relating to the tax-
ation of Indians. 
(2) EDUCATION AND TRAINING.—The Secretary 
shall, in consultation with the Committee, establish 
and require— 
(A) training and education for internal rev-
enue field agents who administer and enforce 
internal revenue laws with respect to Indian 
tribes on Federal Indian law and the Federal 
Government’s unique legal treaty and trust re-
lationship with Indian tribal governments, and 
(B) training of such internal revenue field 
agents, and provision of training and technical 
assistance to tribal financial officers, about im-
plementation of this Act and the amendments 
made thereby. 
(c) MEMBERSHIP.— 
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(1) IN
GENERAL.—The Committee shall be 
composed of 7 members appointed as follows: 
(A) Three members appointed by the Sec-
retary of the Treasury. 
(B) One member appointed by the Chair-
man, and one member appointed by the Rank-
ing Member, of the Committee on Ways and 
Means of the House of Representatives. 
(C) One member appointed by the Chair-
man, and one member appointed by the Rank-
ing Member, of the Committee on Finance of 
the Senate. 
(2) TERM.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), each member’s term shall be 
4 years. 
(B) INITIAL STAGGERING.—The first ap-
pointments made by the Secretary under para-
graph (1)(A) shall be for a term of 2 years. 
SEC. 1703. OTHER RELIEF FOR INDIAN TRIBES. 
(a) WAIVER OF PENALTIES AND INTEREST.—The 
Secretary of the Treasury may waive any interest and pen-
alties imposed under the Internal Revenue Code of 1986 
on any Indian tribal government or member of an Indian 
tribe (or any spouse or dependent of such a member) to 
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the extent such interest and penalties relate to excluding 
a payment or benefit from gross income under the general 
welfare exclusion. 
(b) DEFINITIONS.—For purposes of this section— 
(1) INDIAN TRIBAL GOVERNMENT.—The term 
‘‘Indian tribal government’’ shall have the meaning 
given such term by section 139E of such Code, as 
added by this Act. 
(2) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 
shall have the meaning given such term by section 
139D(c)(1) of such Code, as amended by this Act. 
TITLE II—ALTERNATIVE 
MINIMUM TAX REPEAL 
SEC. 2001. REPEAL OF ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subchapter A of chapter 1 is 
amended by striking part VI (and by striking the item 
relating to such part in the table of parts for subchapter 
A). 
(b) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABIL-
ITY.— 
(1) LIMITATION.—Subsection (c) of section 53 
is amended to read as follows: 
‘‘(c) LIMITATION.—The credit allowed under sub-
section (a) shall not exceed the regular tax liability of the 
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taxpayer reduced by the sum of the credits allowed under 
subparts A, B, and D.’’. 
(2) CREDITS TREATED AS REFUNDABLE.—Sub-
section (e) of section 53 is amended to read as fol-
lows: 
‘‘(e) PORTION OF CREDIT TREATED AS REFUND-
ABLE.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in 2016, 2017, 2018, or 2019, the 
limitation under subsection (c) shall be increased by 
the AMT refundable credit amount for such year. 
‘‘(2) AMT REFUNDABLE
CREDIT
AMOUNT.— 
For purposes of paragraph (1), the AMT refundable 
credit amount is an amount equal to 50 percent 
(100 percent in the case of a taxable year beginning 
in 2019) of the excess (if any) of— 
‘‘(A) the minimum tax credit determined 
under subsection (b) for the taxable year, over 
‘‘(B) the minimum tax credit allowed 
under subsection (a) for such year (before the 
application of this subsection for such year). 
‘‘(3) CREDIT REFUNDABLE.—For purposes of 
this title (other than this section), the credit allowed 
by reason of this subsection shall be treated as a 
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credit allowed under subpart C (and not this sub-
part). 
‘‘(4) SHORT TAXABLE YEARS.—In the case of 
any taxable year of less than 365 days, the AMT re-
fundable credit amount determined under paragraph 
(2) with respect to such taxable year shall be the 
amount which bears the same ratio to such amount 
determined without regard to this paragraph as the 
number of days in such taxable year bears to 365.’’. 
(3) TREATMENT
OF
REFERENCES.—Section 
53(d) is amended by adding at the end the following 
new paragraph: 
‘‘(3) AMT TERM REFERENCES.—Any references 
in this subsection to section 55, 56, or 57 shall be 
treated as a reference to such section as in effect be-
fore its repeal by the Tax Reform Act of 2014.’’. 
(4) REPEAL OF SPECIAL RULES WITH RESPECT 
TO TREATMENT OF INCENTIVE STOCK OPTIONS.— 
Section 53 is amended by striking subsection (f). 
(c) CONFORMING AMENDMENTS RELATED TO AMT 
REPEAL.— 
(1) Section 2(e), as redesignated by section 
1001, is amended by striking ‘‘sections 1 and 55’’ 
and inserting ‘‘section 1’’. 
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(2) Section 5(a) is amended by striking para-
graph (4). 
(3) Section 11(d) is amended by striking ‘‘the 
taxes imposed by subsection (a) and section 55’’ and 
inserting ‘‘the tax imposed by subsection (a)’’. 
(4) Section 13, as redesignated by title I, is 
amended by striking paragraph (7). 
(5) Section 26(a) is amended to read as follows: 
‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The 
aggregate amount of credits allowed by this subpart for 
the taxable year shall not exceed the taxpayer’s regular 
tax liability for the taxable year.’’. 
(6) Section 26(b)(2) is amended by striking 
subparagraph (A). 
(7) Section 26 is amended by striking sub-
section (c). 
(8) Section 38(c) is amended— 
(A) by striking paragraphs (1) through 
(5), 
(B) by redesignating paragraph (6) as 
paragraph (2), 
(C) by inserting before paragraph (2) (as 
so redesignated) the following new paragraph: 
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‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of— 
‘‘(i) so much of the regular tax liabil-
ity as does not exceed $25,000, plus 
‘‘(ii) 75 percent of so much of the reg-
ular tax liability as exceeds $25,000, over 
‘‘(B) the sum of the credits allowable 
under subparts A and B of this part.’’, and 
(D) by striking ‘‘subparagraph (B) of 
paragraph (1)’’ each place it appears in para-
graph (2) (as so redesignated) and inserting 
‘‘clauses (i) and (ii) of paragraph (1)(A)’’. 
(9) Section 45D(g)(4)(B) is amended by strik-
ing ‘‘or for purposes of section 55’’. 
(10) Section 54(c)(1) is amended to read as fol-
lows: 
‘‘(1) regular tax liability (as defined in section 
26(b)), over’’. 
(11) Section 54A(c)(1)(A) is amended to read 
as follows: 
‘‘(A) regular tax liability (as defined in 
section 26(b)), over’’. 
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(12)(A) Section 108(b)(2) is amended by strik-
ing subparagraph (C) and by redesignating subpara-
graphs (D) through (G) as subparagraphs (C) 
through (F), respectively. 
(B) Section 108(b)(3)(B) is amended— 
(i) by striking ‘‘subparagraphs (B), (C), 
and (G)’’ and inserting ‘‘subparagraphs (B) 
and (F) of paragraph (2)’’, and 
(ii) by striking ‘‘subparagraph (F)’’ and 
inserting ‘‘paragraph (2)(E)’’. 
(C) Section 108(b)(4)(B) is amended by strik-
ing ‘‘subparagraph (A) or (D)’’ in the heading and 
text thereof and inserting ‘‘subparagraph (A) or 
(C)’’. 
(D) Section 108(b)(4)(C) is amended by strik-
ing ‘‘subparagraphs (B) and (G)’’ in the heading 
and text thereof and inserting ‘‘subparagraphs (B) 
and (F)’’. 
(13) Section 168(k)(2) is amended by striking 
subparagraph (G). 
(14) Section 173 is amended by striking sub-
section (b). 
(15) Section 174(f) is amended to read as fol-
lows: 
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‘‘(f) CROSS REFERENCE.—For adjustments to basis 
of property for amounts allowed as deductions as deferred 
expenses under subsection (b), see section 1016(a)(14).’’. 
(16) Section 263A(c) is amended by striking 
paragraph (6). 
(17) Section 382(l) is amended by striking 
paragraph (7) and by redesignating paragraph (8) 
as paragraph (7). 
(18) Section 443 (relating to returns for a pe-
riod of less than 12 months) adjustment in com-
puting minimum tax and tax preferences) is amend-
ed by striking subsection (d) and by redesignating 
subsection (e) as subsection (d). 
(19) Section 641(c) is amended— 
(A) in paragraph (2) by striking subpara-
graph (B) and by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) and (C), re-
spectively, and 
(B) in paragraph (3), by striking ‘‘para-
graph 
(2)(C)’’ 
and 
inserting 
‘‘paragraph 
(2)(B)’’. 
(20) Subsections (b) and (c) of section 666 are 
each amended by striking ‘‘(other than the tax im-
posed by section 55)’’. 
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(21) Section 815(c)(2) is amended by striking 
the last sentence. 
(22) Section 847 is amended— 
(A) by striking the last sentence of para-
graph (9), and 
(B) in paragraph (10), by inserting ‘‘and’’ 
at the end of subparagraph (A), by striking 
subparagraph (B), and by redesignating sub-
paragraph (C) as subparagraph (B). 
(23) Section 848 is amended by striking sub-
section (i) and by redesignating subsection (j) as 
subsection (i). 
(24) Section 860E(a) is amended by striking 
paragraph (4). 
(25) Section 871(b)(1) is amended by striking 
‘‘or 55’’. 
(26) Section 882(a)(1) is amended by striking 
‘‘55,’’. 
(27) Section 897(a) is amended to read as fol-
lows: 
‘‘(a) TREATMENT
AS EFFECTIVELY CONNECTED 
WITH UNITED STATES TRADE OR BUSINESS.—For pur-
poses of this title, gain or loss of a nonresident alien indi-
vidual or a foreign corporation from the disposition of a 
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United States real property interest shall be taken into 
account— 
‘‘(1) in the case of a nonresident alien indi-
vidual, under section 871(b)(1), or 
‘‘(2) in the case of a foreign corporation, under 
section 882(a)(1), as if the taxpayer were engaged 
in a trade or business within the United States dur-
ing the taxable year and as if such gain or loss were 
effectively connected with such trade or business.’’. 
(28) Section 904(k) is amended to read as fol-
lows: 
‘‘(k) CROSS REFERENCE.—For increase of limitation 
under subsection (a) for taxes paid with respect to 
amounts received which were included in the gross income 
of the taxpayer for a prior taxable year as a United States 
shareholder with respect to a controlled foreign corpora-
tion, see section 960(b).’’. 
(29) Section 911(f) is amended to read as fol-
lows: 
‘‘(f) DETERMINATION OF TAX LIABILITY.—If, for 
any taxable year, any amount is excluded from gross in-
come of a taxpayer under subsection (a), then, notwith-
standing section 1, if such taxpayer has taxable income 
for such taxable year, the tax imposed by section 1 for 
such taxable year shall be equal to the excess (if any) of— 
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(B) by striking clause (iii). 
(40) Section 6655(g)(1)(A) is amended— 
(A) by striking clause (ii), and 
(B) by redesignating clauses (iii) and (iv) 
as clauses (ii) and (iii), respectively. 
(41) Section 6662(e)(3)(C) is amended by strik-
ing ‘‘the regular tax (as defined in section 55(c))’’ 
and inserting ‘‘the regular tax liability (as defined in 
section 26(b))’’. 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2014. 
(2) PRIOR ELECTIONS WITH RESPECT TO CER-
TAIN TAX PREFERENCES.—So much of the amend-
ment made by subsection (a) as relates to the repeal 
of section 59(e) of the Internal Revenue Code of 
1986 shall apply to amounts paid or incurred after 
December 31, 2014. 
(3) TREATMENT
OF
NET
OPERATING
LOSS 
CARRYBACKS.—For purposes of section 56(d) of the 
Internal Revenue Code of 1986 (as in effect before 
its repeal), the amount of any net operating loss 
which may be carried back from a taxable year be-
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ginning after December 31, 2014, to taxable years 
beginning before January 1, 2015, shall be deter-
mined without regard to any adjustments under sec-
tion 56(d)(2)(A) of such Code (as so in effect). 
TITLE III—BUSINESS TAX 
REFORM 
Subtitle A—Tax Rates 
SEC. 3001. 25-PERCENT CORPORATE TAX RATE. 
(a) IN GENERAL.—Subsection (b) of section 11 is 
amended to read as follows: 
‘‘(b) AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of the tax imposed by sub-
section (a) shall be 25 percent of taxable income. 
‘‘(2) PHASE-IN
FOR
TAXABLE
YEARS
BEGIN-
NING BEFORE 2019.— 
‘‘(A) IN GENERAL.—In the case of taxable 
years beginning before 2019, the amount of tax 
imposed by subsection (a) shall be the sum of— 
‘‘(i) 25 percent of so much of the tax-
able income as does not exceed $75,000, 
and 
‘‘(ii) the applicable percentage of so 
much 
of 
taxable 
income 
as 
exceeds 
$75,000. 
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‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of this paragraph, the applicable per-
centage shall be determined in accordance with 
the following table: 
‘‘In the case of taxable years be-
ginning during calendar year 
The applicable percentage 
is: 
2015 .............................................................................................
33%
2016 .............................................................................................
31%
2017 .............................................................................................
29%
2018 .............................................................................................
27%’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraphs (2)(B) and (6)(A)(ii) of section 
860E(e) are each amended by striking ‘‘section 
11(b)(1)’’ and inserting ‘‘section 11(b)’’. 
(2)(A) Part I of subchapter P of chapter 1 is 
amended by striking section 1201 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(B) Section 13, as amended and redesignated 
by the preceding provisions of this Act, is amended 
by striking paragraphs (4) and (6), and by redesig-
nating paragraph (5) as paragraph (4). 
(C) Section 527(b) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby 
imposed’’ and inserting: 
‘‘(b) TAX IMPOSED.—A tax’’. 
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(D) Sections 594(a) is amended by striking 
‘‘taxes imposed by section 11 or 1201(a)’’ and in-
serting ‘‘tax imposed by section 11’’. 
(E) Section 691(c)(4) is amended by striking 
‘‘1201,’’. 
(F) Section 801(a) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby 
imposed’’ and inserting: 
‘‘(a) TAX IMPOSED.—A tax’’. 
(G) Section 831(d) is amended by striking 
paragraph (1) and by redesignating paragraphs (2) 
and (3) as paragraphs (1) and (2), respectively. 
(H) Sections 832(c)(5) and 834(b)(1)(D) are 
each amended by striking ‘‘sec. 1201 and fol-
lowing,’’. 
(I) Section 852(b)(3)(A) is amended by striking 
‘‘section 1201(a)’’ and inserting ‘‘section 11(b)’’. 
(J) Section 857(b)(3) is amended— 
(i) by striking subparagraph (A) and re-
designating subparagraphs (B) through (F) as 
subparagraphs (A) through (E), respectively, 
(ii) in subparagraph (C), as so redesig-
nated— 
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(I) by striking ‘‘subparagraph (A)(ii)’’ 
in clause (i) thereof and inserting ‘‘para-
graph (1)’’, 
(II) by striking ‘‘the tax imposed by 
subparagraph (A)(ii)’’ in clauses (ii) and 
(iv) thereof and inserting ‘‘the tax imposed 
by paragraph (1) on undistributed capital 
gain’’, 
(iii) in subparagraph (E), as so redesig-
nated, by striking ‘‘subparagraph (B) or (D)’’ 
and inserting ‘‘subparagraph (A) or (C)’’, and 
(iv) by adding at the end the following new 
subparagraph: 
‘‘(F) UNDISTRIBUTED
CAPITAL
GAIN.— 
For purposes of this paragraph, the term ‘un-
distributed capital gain’ means the excess of the 
net capital gain over the deduction for divi-
dends paid (as defined in section 561) deter-
mined with reference to capital gain dividends 
only.’’. 
(K) Section 882(a)(1) is amended by striking ‘‘, 
or 1201(a)’’. 
(L) Section 1374(b) is amended by striking 
paragraph (4). 
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(M) Section 1381(b) is amended by striking 
‘‘taxes imposed by section 11 or 1201’’ and inserting 
‘‘tax imposed by section 11’’. 
(N) 
Sections 
6425(c)(1)(A)(i) 
and 
6655(g)(1)(A)(i) are each amended by striking ‘‘or 
1201(a),’’. 
(3)(A) Section 1445(e)(1) is amended— 
(i) by striking ‘‘35 percent’’ and inserting 
‘‘the highest rate of tax in effect for the taxable 
year under section 11(b)’’, and 
(ii) by striking ‘‘of the gain’’ and inserting 
‘‘multiplied by the gain’’. 
(B) Section 1445(e)(2) is amended by striking 
‘‘35 percent of the amount’’ and inserting ‘‘the high-
est rate of tax in effect for the taxable year under 
section 11(b) multiplied by the amount’’. 
(C) Section 1445(e)(6) is amended— 
(i) by striking ‘‘35 percent’’ and inserting 
‘‘the highest rate of tax in effect for the taxable 
year under section 11(b)’’, and 
(ii) by striking ‘‘of the amount’’ and in-
serting ‘‘multiplied by the amount’’. 
(D) Section 1446(b)(2)(B) is amended by strik-
ing ‘‘section 11(b)(1)’’ and inserting ‘‘section 
11(b)’’. 
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(4) Section 852(b)(1) is amended by striking 
the last sentence. 
(5)(A) Part I of subchapter B of chapter 5 is 
amended by striking section 1551 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(B) Section 535(c)(5) is amended to read as 
follows: 
‘‘(5) CROSS
REFERENCE.—For limitation on 
credit provided in paragraph (2) or (3) in the case 
of certain controlled corporations, see section 
1561.’’. 
(6)(A) Section 1561, as amended by the pre-
ceding provisions of this Act, is amended to read as 
follows: 
‘‘SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS 
CREDIT IN THE CASE OF CERTAIN CON-
TROLLED CORPORATIONS. 
‘‘(a) IN GENERAL.—The component members of a 
controlled group of corporations on a December 31 shall, 
for their taxable years which include such December 31, 
be limited for purposes of this subtitle to one $250,000 
($150,000 if any component member is a corporation de-
scribed in section 535(c)(2)(B)) amount for purposes of 
computing the accumulated earnings credit under section 
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535(c)(2) and (3). Such amount shall be divided equally 
among the component members of such group on such De-
cember 31 unless the Secretary prescribes regulations per-
mitting an unequal allocation of such amount. 
‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a cor-
poration has a short taxable year which does not include 
a December 31 and is a component member of a controlled 
group of corporations with respect to such taxable year, 
then for purposes of this subtitle, the amount to be used 
in computing the accumulated earnings credit under sec-
tion 535(c)(2) and (3) of such corporation for such taxable 
year shall be the amount specified in subsection (a) with 
respect to such group, divided by the number of corpora-
tions which are component members of such group on the 
last day of such taxable year. For purposes of the pre-
ceding sentence, section 1563(b) shall be applied as if such 
last day were substituted for December 31.’’. 
(B) The table of sections for part II of sub-
chapter B of chapter 5 is amended by striking the 
item relating to section 1561 and inserting the fol-
lowing new item: 
‘‘Sec. 1561. Limitation on accumulated earnings credit in the case of certain 
controlled corporations.’’. 
(7) Section 7874(e)(1)(B) is amended by strik-
ing ‘‘section 11(b)(1)’’ and inserting ‘‘section 
11(b)’’. 
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(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2014. 
(2) WITHHOLDING.—The amendments made by 
subsection (b)(3) shall apply to distributions made 
after December 31, 2014. 
(3) CERTAIN
TRANSFERS.—The amendments 
made by subsection (b)(5) shall apply to transfers 
made after December 31, 2018. 
(4) CERTAIN
OTHER
AMENDMENTS
RELATED 
TO SINGLE RATE OF TAX.—The amendments made 
by paragraphs (4) and (6) of subsection (b) shall 
apply to taxable years beginning after December 31, 
2018. 
Subtitle B—Reform of Business- 
Related Exclusions and Deductions 
SEC. 3101. REVISION OF TREATMENT OF CONTRIBUTIONS 
TO CAPITAL. 
(a) INCLUSION OF CONTRIBUTIONS TO CAPITAL.— 
Part II of subchapter B of chapter 1 is amended by insert-
ing after section 75 the following new section: 
‘‘SEC. 76. CONTRIBUTIONS TO CAPITAL. 
‘‘(a) IN GENERAL.—Gross income includes— 
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‘‘(1) any contribution to the capital of any enti-
ty, and 
‘‘(2) any premium received by such entity with 
respect to any option on any interest in such entity. 
‘‘(b) TREATMENT OF CONTRIBUTIONS IN EXCHANGE 
FOR STOCK, ETC.— 
‘‘(1) IN GENERAL.—In the case of any con-
tribution of money or other property to a corpora-
tion in exchange for stock of such corporation— 
‘‘(A) such contribution shall not be treated 
for purposes of subsection (a) as a contribution 
to the capital of such corporation (and shall not 
be includible in the gross income of such cor-
poration), and 
‘‘(B) no gain or loss shall be recognized to 
such corporation upon the issuance of such 
stock. 
‘‘(2) TREATMENT
LIMITED
TO
VALUE
OF 
STOCK.—For purposes of this subsection, a contribu-
tion of money or other property to a corporation 
shall be treated as being in exchange for stock of 
such corporation only to the extent that the fair 
market value of such money and other property does 
not exceed the fair market value of such stock. 
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‘‘(3) APPLICATION TO ENTITIES OTHER THAN 
CORPORATIONS.—In the case of any entity other 
than a corporation, rules similar to the rules of 
paragraphs (1) and (2) shall apply in the case of 
any contribution of money or other property to such 
entity in exchange for any interest in such entity. 
‘‘(c) TREASURY STOCK TREATED AS STOCK.—Any 
reference in this section to stock shall be treated as includ-
ing a reference to treasury stock.’’. 
(b) BASIS OF CORPORATION IN CONTRIBUTED PROP-
ERTY.— 
(1) CONTRIBUTIONS TO CAPITAL.—Subsection 
(c) of section 362 is amended to read as follows: 
‘‘(c) CONTRIBUTIONS
TO
CAPITAL.—If property 
other than money is transferred to a corporation as a con-
tribution to the capital of such corporation (within the 
meaning of section 76) then the basis of such property 
shall be the greater of— 
‘‘(1) the basis determined in the hands of the 
transferor, increased by the amount of gain recog-
nized to the transferor on such transfer, or 
‘‘(2) the amount included in gross income by 
such corporation under section 76 with respect to 
such contribution.’’. 
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(2) 
CONTRIBUTIONS
IN
EXCHANGE
FOR 
STOCK.—Paragraph (2) of section 362(a) is amend-
ed by striking ‘‘contribution to capital’’ and insert-
ing ‘‘contribution in exchange for stock of such cor-
poration (determined under rules similar to the rules 
of paragraphs (2) and (3) of section 76(b))’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 108(e) is amended by striking para-
graph (6). 
(2) Part III of subchapter B of chapter 1 is 
amended by striking section 118 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(3) The table of sections for part II of sub-
chapter B of chapter 1 is amended by inserting after 
the item relating to section 75 the following new 
item: 
‘‘Sec. 76. Contributions to capital.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made, and trans-
actions entered into, after the date of the enactment of 
this Act. 
SEC. 3102. REPEAL OF DEDUCTION FOR LOCAL LOBBYING 
EXPENSES. 
(a) IN GENERAL.—Section 162(e) is amended by 
striking paragraphs (2) and (7) and by redesignating 
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paragraphs (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 after 
December 31, 2014. 
SEC. 3103. EXPENDITURES FOR REPAIRS IN CONNECTION 
WITH CASUALTY LOSSES. 
(a) IN GENERAL.—Section 165, as amended by the 
preceding provisions of this Act, is amended by inserting 
after subsection (g) the following new subsection: 
‘‘(h) SPECIAL RULE FOR CASUALTY LOSSES.— 
‘‘(1) EXPENDITURES FOR REPAIRS IN CONNEC-
TION WITH CASUALTY LOSSES.—If a deduction is al-
lowable under this section for any casualty loss with 
respect to any property, any expenditure made for 
any repair of damage to such property in connection 
with such casualty loss shall be treated as a perma-
nent improvement made to increase the value of 
such property for purposes of section 263(a)(1). 
‘‘(2) ELECTION TO EXPENSE REPAIR IN LIEU 
OF DEDUCTING CASUALTY LOSS.—If the taxpayer 
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elects the application of this paragraph with respect 
to any property with respect to which there is a cas-
ualty loss, no deduction shall be allowable under this 
section for the casualty loss with respect to such 
property and paragraph (1) shall not apply to ex-
penditures made for repair of damage to such prop-
erty in connection with such casualty loss. Any elec-
tion under this paragraph shall be made not later 
than the due date for the return of tax (including 
extensions) for the taxable year in which the cas-
ualty loss occurs and, once made, may be revoked 
only with the consent of the Secretary.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to losses sustained after December 
31, 2014. 
SEC. 3104. REFORM OF ACCELERATED COST RECOVERY 
SYSTEM. 
(a) APPLICABLE
DEPRECIATION
METHOD.—Sub-
section (b) of section 168 is amended to read as follows: 
‘‘(b) APPLICABLE DEPRECIATION METHOD.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The applicable depreciation 
method is the straight line method. 
‘‘(2) SALVAGE VALUE TREATED AS ZERO.—Sal-
vage value shall be treated as zero.’’. 
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(b) APPLICABLE RECOVERY PERIOD.—Subsection (c) 
of section 168 is amended to read as follows: 
‘‘(c) APPLICABLE RECOVERY PERIOD.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the applicable recovery period for any 
property is the class life of such property. 
‘‘(2) SPECIAL RULES FOR DETERMINING CLASS 
LIFE OF CERTAIN PROPERTY.— 
‘‘(A) PROPERTY WITH NO CLASS LIFE.—In 
the case of personal property with no class life, 
the recovery period is 12 years. 
‘‘(B) CERTAIN
HORSES.—In the case of 
any race horse, and any horse other than a race 
horse which is more than 12 years old at the 
time it is placed in service, 3 years. 
‘‘(C) SEMI-CONDUCTOR
MANUFACTURING 
EQUIPMENT.—In the case of any semi-con-
ductor manufacturing equipment, the recovery 
period is 5 years. 
‘‘(D) QUALIFIED TECHNOLOGICAL EQUIP-
MENT.—In the case of any qualified techno-
logical equipment, the recovery period is 5 
years. 
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‘‘(E) AUTOMOBILE
OR
LIGHT
GENERAL 
PURPOSE
TRUCK.—In the case of any auto-
mobile or light general purpose truck, the recov-
ery period is 5 years. 
‘‘(F) 
QUALIFIED
RENT-TO-OWN
PROP-
ERTY.—In the case of any qualified rent-to-own 
property, the recovery period is 9 years. 
‘‘(G) CERTAIN
TELEPHONE
SWITCHING 
EQUIPMENT.—In the case of any computer- 
based telephone central office switching equip-
ment, the recovery period is 9.5 years. 
‘‘(H) RAILROAD TRACK.—In the case of 
any railroad track, the recovery period is 10 
years. 
‘‘(I) 
SMART
ELECTRIC
DISTRIBUTION 
PROPERTY.—In the case of qualified smart elec-
tric meters and qualified smart electric grid sys-
tems, the recovery period is 10 years. 
‘‘(J) AIRPLANES.—In the case of any 
fixed-wing aircraft (including any fixed-wing 
airframe or engine), the recovery period is 12 
years. 
‘‘(K) NATURAL GAS GATHERING LINE.—In 
the case of any natural gas gathering line, the 
recovery period is 14 years. 
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‘‘(L) TREE OR VINE BEARING FRUIT OR 
NUTS.—In the case of any tree or vine bearing 
fruit or nuts, the recovery period is 20 years. 
‘‘(M) 
TELEPHONE
DISTRIBUTION 
PLANT.—In the case of any telephone distribu-
tion plant and comparable equipment used for 
2-way exchange of voice and data communica-
tions by cable, the recovery period is 24 years. 
‘‘(N) REAL
PROPERTY.—In the case of 
nonresidential real property, residential rental 
property, and any section 1245 property (as de-
fined in section 1245(a)(3)) which is real prop-
erty with no class life, the recovery period is 40 
years. 
‘‘(O) WATER
TREATMENT
AND
UTILITY 
PROPERTY.—In the case of any municipal 
wastewater treatment plant or water utility 
property, the recovery period is 50 years. 
‘‘(P) CLEARING AND GRADING IMPROVE-
MENTS; TUNNEL
BORE.—In the case of any 
clearing and grading land improvements or tun-
nel bore, the recovery period is 50 years. 
‘‘(Q) TAX-EXEMPT
USE
PROPERTY
SUB-
JECT TO LEASE.—In the case of any tax-exempt 
use property subject to a lease, the recovery pe-
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riod used for purposes of paragraph (2) shall 
(notwithstanding any other subparagraph of 
this paragraph) in no event be less than 125 
percent of the lease term.’’. 
(c) NEUTRAL COST RECOVERY SYSTEM.—Section 
168, as amended by subsection (f), is amended by adding 
at the end the following new subsection: 
‘‘(i) NEUTRAL COST RECOVERY SYSTEM.— 
‘‘(1) IN GENERAL.—In the case of any property 
(to which this section applies) placed in service by 
the taxpayer in a taxable year for which such tax-
payer has elected the application of this subsection, 
the deduction determined under subsection (a) with 
respect to such property for any taxable year shall 
be increased by an amount equal to the product of— 
‘‘(A) the modified adjusted basis of such 
property determined as of the close of such tax-
able year (determined without regard to this 
subsection but after taking all other adjust-
ments for such taxable year into account), mul-
tiplied by 
‘‘(B) the inflation adjustment percentage 
for the calendar year in which such taxable year 
begins. 
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‘‘(2) MODIFIED
ADJUSTED
BASIS.—For pur-
poses of this subsection, the term ‘modified adjusted 
basis’ means, with respect to any property, the ad-
justed basis which would be determined with respect 
to such property if this subsection never applied to 
such property. 
‘‘(3) INFLATION ADJUSTMENT PERCENTAGE.— 
For purposes of this subsection, the term ‘inflation 
adjustment percentage’ means, with respect to any 
calendar year, the cost-of-living adjustment which 
would be determined under section 1(c)(2)(A) for 
such calendar year if clause (ii) thereof were applied 
by substituting ‘the C-CPI-U for the calendar year 
preceding the calendar year referred to in clause (i)’ 
for ‘the normalized CPI for calendar year 2012’. 
‘‘(4) INCREASE FOR FIRST TAXABLE YEAR RE-
DUCED TO TAKE INTO ACCOUNT PLACED IN SERVICE 
CONVENTION.—In the case of the taxable year in 
which any property is placed in service, the increase 
determined under paragraph (1) with respect to 
such property shall be equal to— 
‘‘(A) in the case of any property to which 
subsection (d)(3) applies, 1⁄8 of the amount of 
such increase determined without regard to this 
paragraph, and 
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‘‘(B) in the case of any other property, 1⁄2 
of the amount of such increase determined 
without regard to this paragraph. 
‘‘(5) OVERALL DEPRECIATION ALLOWANCE NOT 
TO
EXCEED
BASIS.—The deduction determined 
under subsection (a) (after any increase determined 
under this subsection) with respect to any property 
for any taxable year shall not exceed the adjusted 
basis of such property determined as of the begin-
ning of such taxable year. 
‘‘(6) CERTAIN
PROPERTY
EXCLUDED.—Para-
graph (1) shall not apply to any specified property 
used outside the United States or to any property 
described in subsection (d)(2). 
‘‘(7) ELECTION.— 
‘‘(A) IN
GENERAL.—An election under 
paragraph (1) for any taxable year shall be 
made not later than the due date (including ex-
tensions) for the return of tax for such taxable 
year. Such election, once made, shall be irrev-
ocable. Such election shall apply with respect to 
all property placed in service during the taxable 
for which made (and shall apply for subsequent 
taxable years but only with respect to such 
property). 
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‘‘(B) TAXPAYER ENGAGED IN MORE THAN 
ONE BUSINESS.—A taxpayer engaged in more 
than one trade or business may make separate 
elections under paragraph (1) with respect to 
each such trade or business.’’. 
(d) APPLICATION OF MID-MONTH CONVENTION.— 
(1) IN GENERAL.—Subparagraphs (A), (B) and 
(C) of section 168(d)(2) are amended to read as fol-
lows: 
‘‘(A) real property, 
‘‘(B) water treatment and utility property, 
and 
‘‘(C) any clearing and grading land im-
provements or tunnel bore,’’. 
(2) CONFORMING AMENDMENT.—Clause (i) of 
section 168(d)(3)(B) is amended to read as follows: 
‘‘(i) any property described in para-
graph (2),’’. 
(e) DEFINITIONS.—Subsection (e) of section 168 is 
amended to read as follows: 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) CLASS LIFE.— 
‘‘(A) IN GENERAL.—Except as provided in 
this section, the term ‘class life’ means the class 
life (if any) which would be applicable with re-
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spect to any property as of January 1, 1986, 
under subsection (m) of section 167 (deter-
mined without regard to paragraph (4) and as 
if the taxpayer had made an election under 
such subsection). The reference in this para-
graph to subsection (m) of section 167 shall be 
treated as a reference to such subsection as in 
effect on the day before the date of the enact-
ment of the Revenue Reconciliation Act of 
1990. 
‘‘(B) SECRETARIAL AUTHORITY TO MODIFY 
REV. PROC. 87–56.— 
‘‘(i) IN
GENERAL.—The Secretary, 
through the Office of Tax Analysis and in 
consultation with the Bureau of Economic 
Analysis of the Department of Commerce, 
shall— 
‘‘(I) determine, and develop a 
schedule of, the economic depreciation 
of the major categories of depreciable 
property (other than property with a 
specified class life under subsection 
(c)(2)) 
to 
approximate 
constant 
straight-line depreciation, and 
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‘‘(II) develop recommendations 
regarding the proper economic depre-
ciation for property with a specified 
class life under subsection (c)(2). 
‘‘(ii) REPORT.—Not later than De-
cember 31, 2017, the Secretary shall sub-
mit to the Committee on Ways and Means 
of the House of Representatives and the 
Committee on Finance of the Senate— 
‘‘(I) the schedule developed under 
clause (i)(I), and 
‘‘(II) the recommendations devel-
oped under clause (i)(II). 
The schedule developed under clause (i)(I) 
shall take effect with respect to property 
placed in service after the later of Decem-
ber 31, 2017, or the end of the first cal-
endar year ending after the calendar year 
during which such schedule is submitted. 
‘‘(2) RESIDENTIAL RENTAL PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘residential 
rental property’ means any building or struc-
ture if 80 percent or more of the gross rental 
income from such building or structure for the 
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taxable year is rental income from dwelling 
units. 
‘‘(B) DWELLING UNIT.—For purposes of 
subparagraph (A)— 
‘‘(i) the term ‘dwelling unit’ means a 
house or apartment used to provide living 
accommodations in a building or structure, 
but does not include a unit in a hotel, 
motel, or other establishment more than 
one-half of the units in which are used on 
a transient basis, and 
‘‘(ii) if any portion of the building or 
structure is occupied by the taxpayer, the 
gross rental income from such building or 
structure shall include the rental value of 
the portion so occupied. 
‘‘(3) NONRESIDENTIAL REAL PROPERTY.—The 
term ‘nonresidential real property’ means section 
1250 property which is not— 
‘‘(A) residential rental property, or 
‘‘(B) property with a class life of less than 
27.5 years. 
‘‘(4) WATER
UTILITY
PROPERTY.—The term 
‘water utility property’ means property— 
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‘‘(A) which is an integral part of the gath-
ering, treatment, or commercial distribution of 
water, and 
‘‘(B) any municipal sewer. 
‘‘(5) QUALIFIED RENT-TO-OWN PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rent-to-own property’ means any property held 
by a rent-to-own dealer for purposes of being 
subject to a rent-to-own contract. 
‘‘(B) RENT-TO-OWN
DEALER.—The term 
‘rent-to-own dealer’ means a person that, in the 
ordinary course of business, regularly enters 
into rent-to-own contracts with customers for 
the use of consumer property, if a substantial 
portion of those contracts terminate and the 
property is returned to such person before the 
receipt of all payments required to transfer 
ownership of the property from such person to 
the customer. 
‘‘(C) CONSUMER
PROPERTY.—The term 
‘consumer property’ means tangible personal 
property of a type generally used within the 
home for personal use. 
‘‘(D) 
RENT-TO-OWN
CONTRACT.—The 
term ‘rent-to-own contract’ means any lease for 
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the use of consumer property between a rent-to- 
own dealer and a customer who is an individual 
which— 
‘‘(i) is titled ‘Rent-to-Own Agreement’ 
or ‘Lease Agreement with Ownership Op-
tion’, or uses other similar language, 
‘‘(ii) provides for level (or decreasing 
where no payment is less than 40 percent 
of the largest payment), regular periodic 
payments (for a payment period which is a 
week or month), 
‘‘(iii) provides that legal title to such 
property remains with the rent-to-own 
dealer until the customer makes all the 
payments described in clause (ii) or early 
purchase payments required under the con-
tract to acquire legal title to the item of 
property, 
‘‘(iv) provides a beginning date and a 
maximum period of time for which the con-
tract may be in effect that does not exceed 
156 weeks or 36 months from such begin-
ning date (including renewals or options to 
extend), 
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‘‘(v) provides for payments within the 
156-week or 36-month period that, in the 
aggregate, generally exceed the normal re-
tail price of the consumer property plus in-
terest, 
‘‘(vi) provides for payments under the 
contract that, in the aggregate, do not ex-
ceed $10,000 per item of consumer prop-
erty, 
‘‘(vii) provides that the customer does 
not have any legal obligation to make all 
the payments referred to in clause (ii) set 
forth under the contract, and that at the 
end of each payment period the customer 
may either continue to use the consumer 
property by making the payment for the 
next payment period or return such prop-
erty to the rent-to-own dealer in good 
working order, in which case the customer 
does not incur any further obligations 
under the contract and is not entitled to a 
return of any payments previously made 
under the contract, and 
‘‘(viii) provides that the customer has 
no right to sell, sublease, mortgage, pawn, 
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pledge, encumber, or otherwise dispose of 
the consumer property until all the pay-
ments stated in the contract have been 
made. 
‘‘(6) 
QUALIFIED
TECHNOLOGICAL
EQUIP-
MENT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
technological equipment’ means— 
‘‘(i) any computer or peripheral equip-
ment, 
‘‘(ii) any high technology telephone 
station equipment installed on the cus-
tomer’s premises, and 
‘‘(iii) any high technology medical 
equipment. 
‘‘(B) COMPUTER OR PERIPHERAL EQUIP-
MENT DEFINED.—For purposes of this para-
graph— 
‘‘(i) IN
GENERAL.—The term ‘com-
puter or peripheral equipment’ means— 
‘‘(I) any computer, and 
‘‘(II) 
any 
related 
peripheral 
equipment. 
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‘‘(ii) COMPUTER.—The term ‘com-
puter’ means a programmable electroni-
cally activated device which— 
‘‘(I) is capable of accepting infor-
mation, applying prescribed processes 
to the information, and supplying the 
results of these processes with or 
without human intervention, and 
‘‘(II) consists of a central proc-
essing unit containing extensive stor-
age, logic, arithmetic, and control ca-
pabilities. 
‘‘(C) HIGH TECHNOLOGY MEDICAL EQUIP-
MENT.—For purposes of this paragraph, the 
term ‘high technology medical equipment’ 
means any electronic, electromechanical, or 
computer-based high technology equipment used 
in the screening, monitoring, observation, diag-
nosis, or treatment of patients in a laboratory, 
medical, or hospital environment. 
‘‘(7) NATURAL
GAS
GATHERING
LINE.—The 
term ‘natural gas gathering line’ means— 
‘‘(A) the pipe, equipment, and appur-
tenances determined to be a gathering line by 
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the Federal Energy Regulatory Commission, 
and 
‘‘(B) the pipe, equipment, and appur-
tenances used to deliver natural gas from the 
wellhead or a commonpoint to the point at 
which such gas first reaches— 
‘‘(i) a gas processing plant, 
‘‘(ii) an interconnection with a trans-
mission pipeline for which a certificate as 
an interstate transmission pipeline has 
been issued by the Federal Energy Regu-
latory Commission, 
‘‘(iii) an interconnection with an 
intrastate transmission pipeline, or 
‘‘(iv) a direct interconnection with a 
local distribution company, a gas storage 
facility, or an industrial consumer. 
‘‘(8) QUALIFIED SMART ELECTRIC METERS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
smart electric meter’ means any smart electric 
meter which— 
‘‘(i) is placed in service by a taxpayer 
that is a supplier of electric energy or a 
provider of electric energy services, and 
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(B) by adding at the end the following new 
subparagraph: 
‘‘(B) SPECIAL
PARTNERSHIP
RULE.—In 
the case of a partnership, subparagraph (A) 
shall be applied at the partnership level.’’. 
(3) Section 195(b) is amended by striking para-
graph (3). 
(4)(A) Part VIII of subchapter B of chapter 1 
is amended by striking section 248 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(B) Section 170(b)(2)(C)(ii) is amended by 
striking ‘‘(except section 248)’’. 
(C) Section 312(n)(3) is amended by striking 
‘‘Sections 173 and 248’’ and inserting ‘‘Section 
173’’. 
(D) Section 535(b)(3) is amended by striking 
‘‘(except section 248)’’. 
(E) Section 545(b)(3) is amended by striking 
‘‘(except section 248)’’. 
(F) Section 834(c)(7) is amended by striking 
‘‘(except section 248)’’. 
(G) Section 852(b)(2)(C) is amended by strik-
ing ‘‘(except section 248)’’. 
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