328 
‘‘(ii) does not have a class life (deter-
mined without regard to subsection (c)) of 
less than 10 years. 
‘‘(B) SMART ELECTRIC METER.—For pur-
poses of subparagraph (A), the term ‘smart 
electric meter’ means any time-based meter and 
related communication equipment which is ca-
pable of being used by the taxpayer as part of 
a system that— 
‘‘(i) measures and records electricity 
usage data on a time-differentiated basis 
in at least 24 separate time segments per 
day, 
‘‘(ii) provides for the exchange of in-
formation between supplier or provider and 
the customer’s electric meter in support of 
time-based rates or other forms of demand 
response, 
‘‘(iii) provides data to such supplier or 
provider so that the supplier or provider 
can provide energy usage information to 
customers electronically, and 
‘‘(iv) provides net metering. 
‘‘(9) QUALIFIED SMART ELECTRIC GRID SYS-
TEMS.— 
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‘‘(A) IN
GENERAL.—The term ‘qualified 
smart electric grid system’ means any smart 
grid property which— 
‘‘(i) is used as part of a system for 
electric distribution grid communications, 
monitoring, and management placed in 
service by a taxpayer who is a supplier of 
electric energy or a provider of electric en-
ergy services, and 
‘‘(ii) does not have a class life (deter-
mined without regard to subsection (c)) of 
less than 10 years. 
‘‘(B) SMART
GRID
PROPERTY.—For the 
purposes of subparagraph (A), the term ‘smart 
grid property’ means electronics and related 
equipment that is capable of— 
‘‘(i) sensing, collecting, and moni-
toring data of or from all portions of a 
utility’s electric distribution grid, 
‘‘(ii) providing real-time, two-way 
communications to monitor or manage 
such grid, and 
‘‘(iii) providing real time analysis of 
and event prediction based upon collected 
data that can be used to improve electric 
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distribution system reliability, quality, and 
performance. 
‘‘(10) SPECIFIED
PROPERTY
USED
OUTSIDE 
THE UNITED STATES.— 
‘‘(A) IN
GENERAL.—The term ‘specified 
property used outside the United States’ 
means— 
‘‘(i) any aircraft which is registered 
by the Administrator of the Federal Avia-
tion Agency and which is operated to and 
from the United States or is operated 
under contract with the United States, 
‘‘(ii) rolling stock which is used within 
and without the United States and which 
is— 
‘‘(I) of a rail carrier subject to 
part A of subtitle IV of title 49, or 
‘‘(II) of a United States person 
(other than a corporation described in 
subclause (I)) but only if the rolling 
stock is not leased to one or more for-
eign persons for periods aggregating 
more than 12 months in any 24- 
month period, 
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‘‘(iii) any vessel documented under the 
laws of the United States which is oper-
ated in the foreign or domestic commerce 
of the United States, 
‘‘(iv) any motor vehicle of a United 
States person (as defined in section 
7701(a)(30)) which is operated to and 
from the United States, 
‘‘(v) any container of a United States 
person which is used in the transportation 
of property to and from the United States, 
‘‘(vi) any property (other than a vessel 
or an aircraft) of a United States person 
which is used for the purpose of exploring 
for, developing, removing, or transporting 
resources from the outer Continental Shelf 
(within the meaning of section 2 of the 
Outer Continental Shelf Lands Act, as 
amended and supplemented (43 U.S.C. 
1331)), 
‘‘(vii) any property which is owned by 
a domestic corporation or by a United 
States citizen (other than a citizen entitled 
to the benefits of section 931 or 933) and 
which is used predominantly in a posses-
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sion of the United States by such a cor-
poration, or such a citizen, or by a cor-
poration created or organized in, or under 
the law of, a possession of the United 
States, 
‘‘(viii) any communications satellite 
(as defined in section 103(3) of the Com-
munications Satellite Act of 1962, 47 
U.S.C. 702(3)), or any interest therein, of 
a United States person, 
‘‘(ix) any cable, or any interest there-
in, of a domestic corporation engaged in 
furnishing telephone service to which sec-
tion 168(e)(10)(C) applies (or of a wholly 
owned domestic subsidiary of such a cor-
poration), if such cable is part of a sub-
marine cable system which constitutes part 
of a communication link exclusively be-
tween the United States and one or more 
foreign countries, 
‘‘(x) any property (other than a vessel 
or an aircraft) of a United States person 
which is used in international or territorial 
waters within the northern portion of the 
Western Hemisphere for the purpose of ex-
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ploring for, developing, removing, or trans-
porting resources from ocean waters or de-
posits under such waters, 
‘‘(xi) any property described in section 
48(l)(3)(A)(ix) (as in effect on the day be-
fore the date of the enactment of the Rev-
enue Reconciliation Act of 1990) which is 
owned by a United States person and 
which is used in international or territorial 
waters to generate energy for use in the 
United States, and 
‘‘(xii) any satellite (not described in 
clause (viii)) or other spacecraft (or any in-
terest therein) held by a United States per-
son if such satellite or other spacecraft was 
launched from within the United States. 
‘‘(B) NORTHERN PORTION OF THE WEST-
ERN HEMISPHERE.—For purposes of subpara-
graph (A)(x), the term ‘northern portion of the 
Western Hemisphere’ means the area lying west 
of the 30th meridian west of Greenwich, east of 
the international dateline, and north of the 
Equator, but not including any foreign country 
which is a country of South America.’’. 
(f) CONFORMING AMENDMENTS.— 
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(1) AMENDMENTS TO SECTION 168.— 
(A) Section 168 is amended by striking 
subsections (g), (j), (k), (l), (m), and (n), and 
by redesignating subsections (h) and (i) as sub-
sections (g) and (h), respectively. 
(B) Section 168(h), as redesignated by 
subparagraph (A), is amended— 
(i) by striking paragraphs (1), (2), 
(11), (12), (13), (14), (15), (16), (17), 
(18), and (19) and by redesignating para-
graphs (3) through (10) as paragraphs (1) 
through (8), respectively, and 
(ii) by striking ‘‘DEFINITIONS AND’’ 
in the heading thereof. 
(C) Section 168(h)(8), as redesignated by 
subparagraphs (A) and (B), is moved to the 
end of section 168(e) (as amended by sub-
section (e)) and redesignated as paragraph 
(11). 
(2) OTHER CONFORMING AMENDMENTS.— 
(A) Section 50(b)(4) is amended— 
(i) in subparagraph (A)(ii)— 
(I) 
by 
striking 
‘‘section 
168(h)(2)(C)’’ and inserting ‘‘section 
168(g)(2)(C)’’, 
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(II) 
by 
striking 
‘‘section 
168(h)(2)(A)(iii)’’ and inserting ‘‘sec-
tion 168(g)(2)(A)(iii)’’, and 
(III) 
by 
striking 
‘‘section 
168(h)(2)(B)’’ and inserting ‘‘section 
168(g)(2)(B)’’, 
(ii) in subparagraph (B), by striking 
‘‘section 168(i)(3)’’ and inserting ‘‘section 
168(h)(1)’’, and 
(iii) in subparagraphs (D) and (E), by 
striking ‘‘section 168(h)’’ each place it ap-
pears and inserting ‘‘section 168(g)’’. 
(B)(i) Section 50(b)(1)(B) is amended by 
striking ‘‘any property described in section 
168(g)(4)’’ and inserting ‘‘any specified prop-
erty used outside the United States (as defined 
in section 168(e)(10)’’. 
(ii) Section 865(c)(3)(B) is amended by 
striking ‘‘property of a kind described in section 
168(g)(4)’’ and inserting ‘‘specified property 
used outside the United States (as defined in 
section 168(e)(10)’’. 
(C) Section 179(e)(2) is amended by in-
serting ‘‘as in effect before its repeal by the 
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Tax Reform Act of 2014’’ after ‘‘section 
168(n)(2)’’. 
(D) Section 179(f), as amended by section 
3111, is amended— 
(i) by striking paragraph (2), and 
(ii) by inserting after paragraph (1) 
the following new paragraphs: 
‘‘(2) QUALIFIED
REAL
PROPERTY.—For pur-
poses of this subsection, the term ‘qualified real 
property’ means qualified leasehold improvement 
property, qualified restaurant property, and qualified 
retail improvement property. 
‘‘(3) QUALIFIED
LEASEHOLD
IMPROVEMENT 
PROPERTY.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
leasehold improvement property’ means any im-
provement to an interior portion of a building 
which is nonresidential real property if— 
‘‘(i) such improvement is made under 
or pursuant to a lease (as defined in sec-
tion 168(g)(7))— 
‘‘(I) by the lessee (or any subles-
see) of such portion, or 
‘‘(II) by the lessor of such por-
tion, 
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‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of 
such portion, and 
‘‘(iii) such improvement is placed in 
service more than 3 years after the date 
the building was first placed in service. 
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, 
‘‘(iii) any structural component bene-
fitting a common area, and 
‘‘(iv) the internal structural frame-
work of the building. 
‘‘(C) DEFINITIONS AND SPECIAL RULES.— 
For purposes of this paragraph— 
‘‘(i) COMMITMENT TO LEASE TREAT-
ED
AS
LEASE.—A commitment to enter 
into a lease shall be treated as a lease, and 
the parties to such commitment shall be 
treated as lessor and lessee, respectively. 
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be consid-
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ered a lease. For purposes of the preceding 
sentence, 
the 
term 
‘related 
persons’ 
means— 
‘‘(I) members of an affiliated 
group (as defined in section 1504), 
and 
‘‘(II) persons having a relation-
ship described in subsection (b) of 
section 267; except that, for purposes 
of this subclause, the phrase ‘80 per-
cent or more’ shall be substituted for 
the phrase ‘more than 50 percent’ 
each place it appears in such sub-
section. 
‘‘(D) IMPROVEMENTS MADE BY LESSOR.— 
In the case of an improvement made by the per-
son who was the lessor of such improvement 
when such improvement was placed in service, 
such improvement shall be qualified leasehold 
improvement property (if at all) only so long as 
such improvement is held by such person. 
‘‘(E) EXCEPTION FOR CHANGES IN FORM 
OF BUSINESS.—Property shall not cease to be 
qualified leasehold improvement property by 
reason of— 
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‘‘(i) death, 
‘‘(ii) a transaction to which section 
381(a) applies, 
‘‘(iii) a mere change in the form of 
conducting the trade or business so long as 
the property is retained in such trade or 
business as qualified leasehold improve-
ment property and the taxpayer retains a 
substantial interest in such trade or busi-
ness, 
‘‘(iv) the acquisition of such property 
in an exchange described in section 1031 
(as in effect before its repeal by the Tax 
Reform Act of 2014), 1033, or 1038 to the 
extent that the basis of such property in-
cludes an amount representing the ad-
justed basis of other property owned by the 
taxpayer or a related person, or 
‘‘(v) the acquisition of such property 
by the taxpayer in a transaction described 
in section 332, 351, 361, 721, or 731 (or 
the acquisition of such property by the tax-
payer from the transferee or acquiring cor-
poration in a transaction described in such 
section), to the extent that the basis of the 
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property in the hands of the taxpayer is 
determined by reference to its basis in the 
hands of the transferor or distributor. 
‘‘(4) QUALIFIED RESTAURANT PROPERTY.—For 
purposes of this subsection, the term ‘qualified res-
taurant property’ means any section 1250 property 
which is— 
‘‘(A) a building, or 
‘‘(B) an improvement to a building, 
if more than 50 percent of the building’s square 
footage is devoted to preparation of, and seating for 
on-premises consumption of, prepared meals. 
‘‘(5) QUALIFIED RETAIL IMPROVEMENT PROP-
ERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
retail improvement property’ means any im-
provement to an interior portion of a building 
which is nonresidential real property if— 
‘‘(i) such portion is open to the gen-
eral public and is used in the retail trade 
or business of selling tangible personal 
property to the general public, and 
‘‘(ii) such improvement is placed in 
service more than 3 years after the date 
the building was first placed in service. 
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‘‘(B) IMPROVEMENTS MADE BY OWNER.— 
In the case of an improvement made by the 
owner of such improvement, such improvement 
shall be qualified retail improvement property 
(if at all) only so long as such improvement is 
held by such owner. Rules similar to the rules 
under paragraph (3)(E) shall apply for pur-
poses of the preceding sentence. 
‘‘(C) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, 
‘‘(iii) any structural component bene-
fitting a common area, or 
‘‘(iv) the internal structural frame-
work of the building.’’. 
(E) Section 280F(b) is amended— 
(i) by striking paragraph (1) and by 
redesignating paragraphs (2) and (3) as 
paragraphs (1) and (2), respectively, and 
(ii) by striking ‘‘, and the depreciation 
deduction’’ and all that follows through 
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‘‘alternative depreciation system)’’ in para-
graph (1) (as redesignated by clause (i)). 
(F) Section 280F(d)(4)(A)(iv) is amended 
by striking ‘‘section 168(i)(2)(B)’’ and inserting 
‘‘section 168(e)(6)(B)’’. 
(G) Section 312(k)(3) is amended by strik-
ing ‘‘EXCEPTION
FOR
TANGIBLE
PROPERTY’’ 
and all that follows through ‘‘For purposes of 
computing the earnings and profits’’ and insert-
ing ‘‘EXCEPTION
FOR
CERTAIN
TANGIBLE 
PROPERTY.—For purposes of computing the 
earnings and profits’’. 
(H) Section 460(c) is amended by striking 
paragraph (6). 
(I) Section 460(d)(2) is amended by strik-
ing ‘‘section 168(h)(2)(D)’’ and inserting ‘‘sec-
tion 168(g)(2)(D)’’. 
(J) Section 460(e)(6) is amended by strik-
ing ‘‘section 168(e)(2)(A)(ii)’’ each place it ap-
pears and inserting ‘‘section 168(e)(2)(B)’’. 
(K)(i) Subparagraphs (A) and (C) of sec-
tion 470(c)(2) are each amended by striking 
‘‘section 
168(h)’’ 
and 
inserting 
‘‘section 
168(g).’’ 
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(ii) Section 470(c)(2)(B) is amended by 
striking ‘‘section 168(h)(6)’’ and inserting ‘‘sec-
tion 168(g)(6)’’. 
(L) Section 512(b)(17)(B)(ii)(I) is amend-
ed by striking ‘‘section 168(h)(4)(B)’’ and in-
serting ‘‘section 168(g)(4)(B)’’. 
(M) Section 514(c)(9)(B)(vi)(II) is amend-
ed by striking ‘‘section 168(h)(6)’’ and insert-
ing ‘‘section 168(g)(6)’’. 
(N) Section 527(i)(3)(D) is amended by 
striking ‘‘section 168(h)(4)’’ and inserting ‘‘sec-
tion 168(g)(4)’’. 
(O) The second sentence of section 
860E(e)(5) is amended by striking ‘‘section 
168(h)(2)(D)’’ 
and 
inserting 
‘‘section 
168(g)(2)(D)’’. 
(P) Section 1245(a) is amended— 
(i) in paragraph (3)(D), by striking 
‘‘section 168(i)(13)’’ and inserting ‘‘para-
graph (4)’’, and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(4) SINGLE PURPOSE AGRICULTURAL OR HOR-
TICULTURAL
STRUCTURE.—For purposes of this 
subsection— 
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‘‘(A) IN GENERAL.—The term ‘single pur-
pose agricultural or horticultural structure’ 
means— 
‘‘(i) a single purpose livestock struc-
ture, and 
‘‘(ii) a single purpose horticultural 
structure. 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) SINGLE
PURPOSE
LIVESTOCK 
STRUCTURE.—The term ‘single purpose 
livestock structure’ means any enclosure or 
structure specifically designed, constructed, 
and used— 
‘‘(I) for housing, raising, and 
feeding a particular type of livestock 
and their produce, and 
‘‘(II) for housing the equipment 
(including any replacements) nec-
essary for the housing, raising, and 
feeding referred to in subclause (I). 
‘‘(ii) 
SINGLE
PURPOSE
HORTI-
CULTURAL STRUCTURE.—The term ‘single 
purpose horticultural structure’ means— 
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‘‘(I) a greenhouse specifically de-
signed, constructed, and used for the 
commercial production of plants, and 
‘‘(II) a structure specifically de-
signed, constructed, and used for the 
commercial production of mushrooms. 
‘‘(iii) STRUCTURES
WHICH
INCLUDE 
WORK SPACE.—An enclosure or structure 
which provides work space shall be treated 
as a single purpose agricultural or horti-
cultural structure only if such work space 
is solely for— 
‘‘(I) the stocking, caring for, or 
collecting of livestock or plants (as the 
case may be) or their produce, 
‘‘(II) the maintenance of the en-
closure or structure, and 
‘‘(III) the maintenance or re-
placement of the equipment or stock 
enclosed or housed therein. 
‘‘(iv) LIVESTOCK.—The term ‘‘live-
stock’’ includes poultry.’’. 
(Q) Section 1245(a)(3)(F) is amended to 
read as follows: 
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‘‘(F) any clearing and grading land im-
provements or tunnel bore (within the meaning 
of section 168(c)(2)(P)).’’. 
(R) Section 6050V(d)(3) is amended by 
striking ‘‘section 168(h)(2)(A)(iv)’’ and insert-
ing ‘‘section 168(g)(2)(A)(iv)’’. 
(S) Section 6211(b)(4)(A) is amended by 
striking ‘‘168(k)(4),’’. 
(T) The second sentence of section 
7701(e)(4)(A) is amended by striking ‘‘section 
168(h)’’ and inserting ‘‘section 168(g)’’. 
(U) Section 7871(f)(3) is amended— 
(i) by striking ‘‘(as defined in section 
168(j)(6))’’ in subparagraph (B)(ii), and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(D) INDIAN
RESERVATION.—For pur-
poses of this paragraph, the term ‘Indian res-
ervation’ means a reservation, as defined in— 
‘‘(i) section 3(d) of the Indian Financ-
ing Act of 1974 (25 U.S.C. 1452(d)), or 
‘‘(ii) section 4(10) of the Indian Child 
Welfare 
Act 
of 
1978 
(25 
U.S.C. 
1903(10)). 
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For purposes of the preceding sentence, such 
section 3(d) shall be applied by treating the 
term ‘former Indian reservations in Oklahoma’ 
as including only lands which are within the ju-
risdictional area of an Oklahoma Indian tribe 
(as determined by the Secretary of the Interior) 
and are recognized by such Secretary as eligible 
for trust land status under 25 CFR Part 151 
(as in effect on August 5, 1997).’’. 
(g) NORMALIZATION REQUIREMENTS.— 
(1) IN GENERAL.—A normalization method of 
accounting shall not be treated as being used with 
respect to any public utility property for purposes of 
section 167 or 168 of the Internal Revenue Code of 
1986 if the taxpayer, in computing its cost of service 
for ratemaking purposes and reflecting operating re-
sults in its regulated books of account, reduces the 
excess tax reserve more rapidly or to a greater ex-
tent than such reserve would be reduced under the 
average rate assumption method. 
(2) ALTERNATIVE METHOD FOR CERTAIN TAX-
PAYERS.—If, as of the first day of the taxable year 
that includes the date of enactment of this Act— 
(A) the taxpayer was required by a regu-
latory agency to compute depreciation for public 
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utility property on the basis of an average life 
or composite rate method, and 
(B) the taxpayer’s books and underlying 
records did not contain the vintage account 
data necessary to apply the average rate as-
sumption method, 
the taxpayer will be treated as using a normalization 
method of accounting if, with respect to such juris-
diction, the taxpayer uses the alternative method for 
public utility property that is subject to the regu-
latory authority of that jurisdiction. 
(3) DEFINITIONS.—For purposes of this sub-
section— 
(A) EXCESS
TAX
RESERVE.—The term 
‘‘excess tax reserve’’ means the excess of— 
(i) the reserve for deferred taxes (as 
described in section 168(i)(9)(A)(ii) of the 
Internal Revenue Code of 1986 as in effect 
on the day before the date of the enact-
ment of this Act), over 
(ii) the amount which would be the 
balance in such reserve if the amount of 
such reserve were determined by assuming 
that the corporate rate reductions provided 
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in this Act were in effect for all prior peri-
ods. 
(B) AVERAGE
RATE
ASSUMPTION
METH-
OD.—The average rate assumption method is 
the method under which the excess in the re-
serve for deferred taxes is reduced over the re-
maining lives of the property as used in its reg-
ulated books of account which gave rise to the 
reserve for deferred taxes. Under such method, 
if timing differences for the property reverse, 
the amount of the adjustment to the reserve for 
the deferred taxes is calculated by multi-
plying— 
(i) the ratio of the aggregate deferred 
taxes for the property to the aggregate 
timing differences for the property as of 
the beginning of the period in question, by 
(ii) the amount of the timing dif-
ferences which reverse during such period. 
(C) ALTERNATIVE METHOD.—The ‘‘alter-
native method’’ is the method in which the tax-
payer— 
(i) computes the excess tax reserve on 
all public utility property included in the 
plant account on the basis of the weighted 
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average life or composite rate used to com-
pute depreciation for regulatory purposes, 
and 
(ii) reduces the excess tax reserve rat-
ably over the remaining regulatory life of 
the property. 
(4) TAX INCREASED FOR NORMALIZATION VIO-
LATION.—If, for any taxable year ending after the 
date of the enactment of this Act, the taxpayer does 
not use a normalization method of accounting, the 
taxpayer’s tax for the taxable year shall be increased 
by the amount by which it reduces its excess tax re-
serve more rapidly than permitted under a normal-
ization method of accounting. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2016. 
SEC. 3105. REPEAL OF AMORTIZATION OF POLLUTION CON-
TROL FACILITIES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 169 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
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(1) Section 642(f) is amended by striking ‘‘the 
deductions for amortization provided by sections 169 
and 197’’ and inserting ‘‘the deduction for amortiza-
tion provided by section 197’’. 
(2) Section 1250(b)(3) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Reform 
Act of 2014)’’ after ‘‘169’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to facilities placed in service after 
December 31, 2014. 
SEC. 3106. NET OPERATING LOSS DEDUCTION. 
(a) LIMITATION
ON NET OPERATING LOSSES
OF 
CORPORATIONS.— 
(1) IN GENERAL.—Section 172(a) is amended 
to read as follows: 
‘‘(a) DEDUCTION ALLOWED.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
deduction for the taxable year an amount equal to 
the aggregate of— 
‘‘(A) the net operating loss carryovers to 
such year, plus 
‘‘(B) the net operating loss carrybacks to 
such year. 
‘‘(2) LIMITATION IN CASE OF CORPORATIONS.— 
In the case of a corporation— 
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‘‘(A) the deduction allowed under para-
graph (1) for the taxable year shall not exceed 
90 percent of the taxable income for such year 
computed without regard to the deduction al-
lowable under this section, and 
‘‘(B) appropriate adjustments in the appli-
cation of subsection (b)(2) shall be made to 
take into account the limitation of subpara-
graph (A). 
‘‘(3) NET
OPERATING
LOSS
DEDUCTION
DE-
FINED.—For purposes of this subtitle, the term ‘net 
operating loss deduction’ means the deduction al-
lowed by this subsection.’’. 
(2) COORDINATION WITH LIMITATION ON DE-
DUCTION FOR CHARITABLE CONTRIBUTIONS.— 
(A) IN GENERAL.—Section 170(b)(2)(C) is 
amended by redesignating clauses (iv) and (v) 
as clauses (v) and (vi), respectively, and by in-
serting after clause (iii) the following new 
clause: 
‘‘(iv) the limitation imposed under 
section 172(a)(2)(A),’’. 
(B) LIFE
INSURANCE
COMPANIES.—Sec-
tion 805(b)(2)(A) is amended by redesignating 
clauses (ii) through (v) as clauses (iii) through 
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(vi), respectively, and by inserting after clause 
(i) the following new clause: 
‘‘(ii) the limitation imposed under sec-
tion 172(a)(2)(A),’’. 
(b) REPEAL OF SPECIAL CARRYBACK PROVISIONS.— 
(1) IN GENERAL.—Section 172(b)(1) is amend-
ed by striking subparagraphs (C), (D), (E), (G), 
(H), (I), and (J) and by redesignating subparagraph 
(F) as subparagraph (C). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 172(b)(1)(C), as redesignated 
by paragraph (1), is amended— 
(i) in clause (ii), by striking the last 
sentence, and 
(ii) in clause (iv), by striking ‘‘in a 
manner similar to the manner in which a 
specified liability loss is treated’’ and in-
serting ‘‘as a separate net operating loss 
for such taxable year to be taken into ac-
count after the remaining portion of the 
net operating loss for such taxable year’’. 
(B) Section 172 is amended by striking 
subsections (f), (g), (h), (i), and (j) and by re-
designating subsection (k) as subsection (f). 
(c) EFFECTIVE DATES.— 
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(1) LIMITATION ON NOLS OF CORPORATIONS.— 
The amendments made by subsection (a) shall apply 
to— 
(A) taxable years beginning after Decem-
ber 31, 2014, and 
(B) to carrybacks of losses arising in tax-
able years beginning after December 31, 2014, 
to taxable years beginning on or before such 
date. 
(2) REPEAL OF SPECIAL CARRYBACKS.— 
(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, the amendments 
made by subsection (b) shall apply to losses 
arising in taxable years beginning after Decem-
ber 31, 2014. 
(B) EXPIRED
PROVISIONS.—So much of 
the amendments made by subsection (b) as re-
late to striking subparagraphs (D), (H), (I), 
and (J) of section 172(b)(1) of the Internal 
Revenue Code of 1986 shall take effect on the 
date of the enactment of this Act. 
SEC. 3107. CIRCULATION EXPENDITURES. 
(a) IN GENERAL.—Section 173 is amended to read 
as follows: 
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‘‘SEC. 173. CIRCULATION EXPENDITURES. 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s speci-
fied circulation expenditures— 
‘‘(1) except as provided in paragraph (2), no 
deduction shall be allowed for such expenditures, 
and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 36-month 
period beginning with the midpoint of the 
month in which such expenditures are paid or 
incurred. 
‘‘(b) SPECIFIED CIRCULATION EXPENDITURES.—For 
purposes of this section, the term ‘specified circulation ex-
penditures’ means all expenditures (other than expendi-
tures for the purchase of land or depreciable property or 
for the acquisition of circulation through the purchase of 
any part of the business of another publisher of a news-
paper, magazine, or other periodical) to establish, main-
tain, or increase the circulation of a newspaper, magazine, 
or other periodical. 
‘‘(c) TREATMENT UPON ABANDONMENT.—If any 
property with respect to which specified circulation ex-
penditures are paid or incurred is disposed, retired, or 
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abandoned during the period during which such expendi-
tures are allowed as an amortization deduction under this 
section, no deduction shall be allowed with respect to such 
expenditures on account of such disposition, retirement, 
or abandonment and such amortization deduction shall 
continue with respect to such expenditures. 
‘‘(d) PHASE-IN FOR TAXABLE YEARS BEGINNING 
BEFORE 2019.— 
‘‘(1) IN GENERAL.—In the case of specified cir-
culation expenditures paid or incurred in taxable 
years beginning before 2019— 
‘‘(A) notwithstanding subsection (a), the 
applicable percentage of such expenditures shall 
be allowed as a deduction for the taxable year 
in which paid or incurred, and 
‘‘(B) subsection (a) shall apply to the re-
mainder of such expenditures. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage shall be 
determined in accordance with the following table: 
‘‘In the case of taxable years be-
ginning in: 
The applicable percentage 
is: 
2016 .............................................................................................
75% 
2017 .............................................................................................
50% 
2018 .............................................................................................
25% 
‘‘(3) ELECTION OUT OF PHASE-IN.—The tax-
payer may elect, at such time and in such form and 
manner as the Secretary shall prescribe, for para-
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graph (1) not to apply for all taxable years begin-
ning before 2019. Such election, once made, shall be 
irrevocable.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2015. 
SEC. 3108. AMORTIZATION OF RESEARCH AND EXPERI-
MENTAL EXPENDITURES. 
(a) IN GENERAL.—Section 174 is amended to read 
as follows: 
‘‘SEC. 174. AMORTIZATION OF RESEARCH AND EXPERI-
MENTAL EXPENDITURES. 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s speci-
fied research or experimental expenditures for any taxable 
year— 
‘‘(1) except as provided in paragraph (2), no 
deduction shall be allowed for such expenditures, 
and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 5-year pe-
riod (15-year period in the case of any specified 
research or experimental expenditures which are 
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attributable to foreign research (within the 
meaning of section 41(d)(4)(F))) beginning 
with the midpoint of the taxable year in which 
such expenditures are paid or incurred. 
‘‘(b) SPECIFIED RESEARCH OR EXPERIMENTAL EX-
PENDITURES.—For purposes of this section, the term 
‘specified research or experimental expenditures’ means, 
with respect to any taxable year, research or experimental 
expenditures which are paid or incurred by the taxpayer 
during such taxable year in connection with the taxpayer’s 
trade or business. 
‘‘(c) SPECIAL RULES.— 
‘‘(1) LAND AND OTHER PROPERTY.—This sec-
tion shall not apply to any expenditure for the acqui-
sition or improvement of land, or for the acquisition 
or improvement of property to be used in connection 
with the research or experimentation and of a char-
acter which is subject to the allowance under section 
167 (relating to allowance for depreciation, etc.) or 
section 611 (relating to allowance for depletion); but 
for purposes of this section allowances under section 
167, and allowances under section 611, shall be con-
sidered as expenditures. 
‘‘(2) EXPLORATION EXPENDITURES.—This sec-
tion shall not apply to any expenditure paid or in-
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curred for the purpose of ascertaining the existence, 
location, extent, or quality of any deposit of ore or 
other mineral (including oil and gas). 
‘‘(3) SOFTWARE DEVELOPMENT.—For purposes 
of this section, any amount paid or incurred in con-
nection with the development of any software shall 
be treated as a research or experimental expendi-
ture. 
‘‘(d) TREATMENT UPON DISPOSITION, RETIREMENT, 
OR ABANDONMENT.—If any property with respect to 
which specified research or experimental expenditures are 
paid or incurred is disposed, retired, or abandoned during 
the period during which such expenditures are allowed as 
an amortization deduction under this section, no deduction 
shall be allowed with respect to such expenditures on ac-
count of such disposition, retirement, or abandonment and 
such amortization deduction shall continue with respect to 
such expenditures. 
‘‘(e) SPECIAL RULES FOR EXPENDITURES FOR DO-
MESTIC RESEARCH DURING TAXABLE YEARS BEGINNING 
BEFORE 2021.— 
‘‘(1) IN GENERAL.—In the case of domestic re-
search or experimental expenditures paid or incurred 
during any taxable year beginning before 2021— 
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‘‘(A) notwithstanding subsection (a), the 
applicable percentage of such expenditures shall 
be allowed as a deduction in the taxable year in 
which paid or incurred, and 
‘‘(B) subsection (a) shall apply to the re-
mainder of such expenditures by substituting 
the applicable period for ‘the 5-year period’. 
‘‘(2) DOMESTIC RESEARCH OR EXPERIMENTAL 
EXPENDITURES.—For purposes of this subsection, 
the term ‘domestic research or experimental expendi-
tures’ means any expenditures— 
‘‘(A) to which subsection (a) applies (de-
termined without regard to this subsection), 
and 
‘‘(B) which are not attributable to foreign 
research 
(within 
the 
meaning 
of 
section 
41(d)(4)(F)). 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the applicable percentage shall be 
determined in accordance with the following table: 
‘‘In the case of taxable years be-
ginning in: 
The applicable percentage 
is: 
2015 .............................................................................................
60% 
2016 or 2017 ...............................................................................
40% 
2018, 2019, or 2020 ....................................................................
20% 
‘‘(4) APPLICABLE
PERIOD.—For purposes of 
this subsection, the applicable period shall be deter-
mined in accordance with the following table: 
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‘‘In the case of taxable years be-
ginning in: 
The applicable period is 
the: 
2015 .............................................................................................2-year period 
2016 or 2017 ...............................................................................3-year period 
2018, 2019, or 2020 ....................................................................4-year period 
‘‘(5) ELECTION OUT OF PHASE-IN.—The tax-
payer may elect, at such time and in such form and 
manner as the Secretary shall prescribe, for para-
graph (1) not to apply to all domestic research or 
experimental expenditures of the taxpayer for any 
taxable years beginning before 2021. Such election, 
once made, shall be irrevocable.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 is amended by 
striking the item relating to section 174 and inserting the 
following new item: 
‘‘Sec. 174. Amortization of research and experimental expenditures.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2014. 
SEC. 3109. REPEAL OF DEDUCTIONS FOR SOIL AND WATER 
CONSERVATION EXPENDITURES AND ENDAN-
GERED SPECIES RECOVERY EXPENDITURES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 175 (and by striking 
the item relating to such section in the table of sections 
for such part). 
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(b) 
CONFORMING
AMENDMENTS.—Paragraphs 
(1)(A) and (2) of section 1252(a) are each amended by 
striking ‘‘relating to soil and water conservation expendi-
tures’’ and inserting ‘‘as in effect before its repeal by the 
Tax Reform Act of 2014’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to amounts paid or incurred 
after December 31, 2014. 
(2) ASSESSMENTS
TREATED
AS
PAID
OR
IN-
CURRED.—In the case of any amount paid or in-
curred before December 31, 2014, and treated as 
paid or incurred in any succeeding taxable year by 
reason of section 175(f) of the Internal Revenue 
Code of 1986 (as in effect on the day before the 
date of the enactment of this Act), paragraph (1) 
shall not apply. 
SEC. 3110. AMORTIZATION OF CERTAIN ADVERTISING EX-
PENSES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by inserting after section 176 the fol-
lowing new section: 
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‘‘SEC. 177. AMORTIZATION OF CERTAIN ADVERTISING EX-
PENSES. 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s amor-
tizable advertising expenses for any taxable year— 
‘‘(1) except as provided in paragraph (2), no 
deduction shall be allowed for such expenses, and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenses to capital ac-
count, and 
‘‘(B) be allowed an amortization deduction 
of such expenses ratably over the 10-year period 
beginning with the midpoint of the taxable year 
in which such expenses are paid or incurred. 
‘‘(b) EXEMPTION.— 
‘‘(1) IN GENERAL.—So much of the taxpayer’s 
otherwise deductible advertising expenses for any 
taxable year as do not exceed $1,000,000 shall not 
be taken into account in determining such taxpayer’s 
amortizable advertising expenses for such taxable 
year. 
‘‘(2) PHASEOUT OF EXEMPTION.—In the case 
of a taxpayer whose otherwise deductible advertising 
expenses for any taxable year exceed $1,500,000, 
the dollar amount in effect under paragraph (1) with 
respect to such taxpayer for such taxable year shall 
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be reduced (but not below zero) by twice such ex-
cess. 
‘‘(3) AGGREGATION; SHORT TAXABLE YEARS.— 
For purposes of this subsection, rules similar to the 
rules of paragraphs (2) and (3)(B) of section 448(b) 
shall apply. 
‘‘(c) AMORTIZABLE ADVERTISING EXPENSES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘amortizable advertising expenses’ 
means, with respect to any taxpayer for any taxable 
year, the applicable percentage of the taxpayer’s oth-
erwise deductible advertising expenses for such tax-
able year. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means (with respect to the taxpayer’s otherwise de-
ductible advertising expenses for any taxable year) 
the percentage determined in accordance with the 
following table: 
‘‘For taxable years beginning in: 
The applicable percentage is: 
2015 .....................................................
20 percent 
2016 .....................................................
30 percent 
2017 .....................................................
40 percent 
2018 or thereafter ................................
50 percent. 
‘‘(3) ELECTION OUT OF PHASE-IN.—The tax-
payer may elect, at such time and in such form and 
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manner as the Secretary shall prescribe, to treat the 
applicable percentage as being equal to 50 percent 
for all taxable years beginning before 2018. Such 
election, once made, shall be irrevocable. 
‘‘(d) OTHERWISE DEDUCTIBLE ADVERTISING EX-
PENSES.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘otherwise de-
ductible advertising expenses’ means, with respect to 
any taxpayer for any taxable year, the deductions 
which would (but for this section) be allowable to the 
taxpayer for such taxable year with respect to speci-
fied advertising expenses. 
‘‘(2) SPECIFIED ADVERTISING EXPENSES.—The 
term ‘specified advertising expenses’ means any 
amount paid or incurred for the development, pro-
duction, or placement (including any form of trans-
mission, broadcast, publication, display, or distribu-
tion) of any communication to the general public (or 
portions thereof) which is intended to promote the 
taxpayer or a trade or business of the taxpayer (or 
any service, facility, or product provided pursuant to 
such trade or business). 
‘‘(3) EXCEPTIONS.—The term ‘specified adver-
tising expenses’ shall not include— 
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‘‘(A) CERTAIN WAGES.—Wages paid or in-
curred to any employee unless the services ren-
dered by such employee are primarily related 
to— 
‘‘(i) an activity described in paragraph 
(2) (other than the direct sale of goods or 
services to customers of the taxpayer), or 
‘‘(ii) the direct supervision of employ-
ees rendering services primarily related to 
such an activity. 
‘‘(B) DEPRECIATION OF TANGIBLE PROP-
ERTY.—In the case of any tangible property, 
any amount for which a deduction is allowed for 
depreciation under section 167. 
‘‘(C) AMORTIZABLE SECTION 197 INTANGI-
BLES.—Any amount for which a deduction is 
allowed for amortization under section 197. 
‘‘(D) DISCOUNTS, 
ETC.—Any discount, 
coupon, rebate, slotting allowance, sample, 
prize, loyalty reward point, or any item deter-
mined by the Secretary to be similar to any of 
the foregoing (other than any amount paid or 
incurred to promote any of the foregoing). 
‘‘(E) CERTAIN COMMUNICATIONS ON TAX-
PAYER’S PROPERTY.—Any amount paid or in-
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curred with respect to any communication ap-
pearing on tangible property of the taxpayer 
which— 
‘‘(i) is of a character subject to the al-
lowance for depreciation, or 
‘‘(ii) is properly treated as inventory 
for purposes of section 471. 
‘‘(F) CREATION OF LOGOS, TRADE NAMES, 
ETC.—Any amount paid or incurred for the cre-
ation of any logo, trademark, or trade name. 
‘‘(G) PACKAGE DESIGN.—Any amount to 
which section 263A(i) applies. 
‘‘(H) 
MARKETING
RESEARCH.—Any 
amount paid or incurred for marketing re-
search. 
‘‘(I) BUSINESS MEALS.—Any amount paid 
or incurred for meals. 
‘‘(J) 
QUALIFIED
SPONSORSHIP
PAY-
MENTS.—Any amount paid or incurred as a 
qualified sponsorship payment (as defined in 
section 513(i)(2)) with respect to an organiza-
tion subject to the tax imposed by section 511. 
‘‘(e) TREATMENT UPON ABANDONMENT.—If any 
property with respect to which specified advertising ex-
penses are paid or incurred is disposed, retired, or aban-
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doned during the period during which such expenses are 
allowed as an amortization deduction under this section, 
no deduction shall be allowed with respect such expenses 
on account of such disposition, retirement, or abandon-
ment and such amortization deduction shall continue with 
respect to such expenses. 
‘‘(f) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2015, each of the dollar 
amounts in subsection (b) shall be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(c)(2)(A) for such cal-
endar year, determined by substituting ‘cal-
endar year 2014’ for ‘calendar year 2012’ in 
clause (ii) thereof. 
‘‘(2) ROUNDING.—The amount of any increase 
under paragraph (1) shall be rounded to the nearest 
multiple of $10,000.’’. 
(b) CAPITALIZATION
OF
PACKAGE
DESIGN
EX-
PENSES.—Section 263A is amended by redesignating sub-
section (i) as subsection (j) and by inserting after sub-
section (h) the following new subsection: 
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‘‘(i) CAPITALIZATION
OF PACKAGE DESIGN EX-
PENSES.—For purposes of this section, in the case of any 
amount paid or incurred for package design, such amounts 
shall be treated as an indirect cost described in subsection 
(a)(2)(B) with respect to packages which utilize such de-
sign.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 is amended by 
inserting after the item relating to section 176 the fol-
lowing new item: 
‘‘Sec. 177. Amortization of certain advertising expenses.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2014. 
SEC. 3111. EXPENSING CERTAIN DEPRECIABLE BUSINESS 
ASSETS FOR SMALL BUSINESS. 
(a) IN GENERAL.— 
(1) DOLLAR
LIMITATION.—Paragraph (1) of 
section 179(b) is amended by striking ‘‘shall not ex-
ceed—’’ and all that follows and inserting ‘‘shall not 
exceed $250,000.’’. 
(2) REDUCTION
IN
LIMITATION.—Paragraph 
(2) of section 179(b) is amended by striking ‘‘ex-
ceeds—’’ and all that follows and inserting ‘‘exceeds 
$800,000.’’. 
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(b) COMPUTER SOFTWARE.—Clause (ii) of section 
179(d)(1)(A) is amended by striking ‘‘to which section 
167 applies, and which is placed in service in a taxable 
year beginning after 2002 and before 2014’’ and inserting 
‘‘and to which section 167 applies’’. 
(c) ELECTION.—Paragraph (2) of section 179(c) is 
amended— 
(1) by striking ‘‘may not be revoked’’ and all 
that follows through ‘‘and before 2014’’, and 
(2) by striking ‘‘IRREVOCABLE’’ in the heading 
thereof. 
(d) AIR CONDITIONING
AND HEATING UNITS.— 
Paragraph (1) of section 179(d) is amended by striking 
‘‘and shall not include air conditioning or heating units’’. 
(e) QUALIFIED REAL PROPERTY.—Section 179(f) is 
amended— 
(1) by striking ‘‘beginning in 2010, 2011, 2012, 
or 2013’’ in paragraph (1), and 
(2) by striking paragraphs (3) and (4). 
(f) INFLATION ADJUSTMENT.—Subsection (b) of sec-
tion 179 is amended by adding at the end the following 
new paragraph: 
‘‘(6) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning after 2014, the dollar 
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amounts in paragraphs (1) and (2) shall each 
be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(c)(2)(A) for such 
calendar year, determined by substituting 
‘calendar year 2013’ for ‘calendar year 
2012’ in clause (ii) thereof. 
‘‘(B) ROUNDING.—The amount of any in-
crease under subparagraph (A) shall be round-
ed to the nearest multiple of $10,000.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
SEC. 3112. REPEAL OF ELECTION TO EXPENSE CERTAIN RE-
FINERIES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 179C (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENT.—Section 312(k)(3), 
as amended by the preceding provisions of this Act, is 
amended by striking ‘‘, 179C’’ each place it appears. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2013. 
SEC. 3113. REPEAL OF DEDUCTION FOR ENERGY EFFI-
CIENT COMMERCIAL BUILDINGS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 179D (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENT.— 
(1) Section 1016(a) is amended by striking 
paragraph (31). 
(2) Section 312(k)(3), as amended by the pre-
ceding provisions of this Act, is amended by striking 
‘‘, 179D’’ each place it appears. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2013. 
SEC. 3114. REPEAL OF ELECTION TO EXPENSE ADVANCED 
MINE SAFETY EQUIPMENT. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 179E (and by striking 
the item relating to such section in the table of sections 
for such part). 
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(b) CONFORMING AMENDMENT.—Section 312(k)(3), 
as amended by the preceding provisions of this Act, is 
amended— 
(1) by striking ‘‘, or 179E, as the case may 
be’’, and 
(2) by striking ‘‘, or 179E’’ each place it ap-
pears. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2013. 
SEC. 3115. REPEAL OF DEDUCTION FOR EXPENDITURES BY 
FARMERS FOR FERTILIZER, ETC. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 180 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid or incurred in 
taxable years beginning after December 31, 2014. 
SEC. 3116. REPEAL OF SPECIAL TREATMENT OF CERTAIN 
QUALIFIED FILM AND TELEVISION PRODUC-
TIONS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 181 (and by striking 
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the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to productions commencing after 
December 31, 2013. 
SEC. 3117. REPEAL OF SPECIAL RULES FOR RECOVERIES 
OF DAMAGES OF ANTITRUST VIOLATIONS, 
ETC. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 186 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3118. TREATMENT OF REFORESTATION EXPENDI-
TURES. 
(a) ELIMINATION OF EXPENSING ELECTION.—Sec-
tion 194 is amended by striking subsections (a) and (b), 
by redesignating subsection (c) and (d) as subsections (b) 
and (c), respectively, and by inserting before subsection 
(b) (as so redesignated) the following new subsection: 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s quali-
fied reforestation expenditures for any taxable year— 
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‘‘(1) except as provided in paragraph (2), no 
deduction shall be allowed for such expenditures, 
and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 7-year pe-
riod beginning with the midpoint of the taxable 
year in which such expenditures are paid or in-
curred.’’. 
(b) QUALIFIED REFORESTATION EXPENDITURES.— 
Section 194(b), as redesignated by subsection (a), is 
amended by striking paragraph (2), by redesignating 
paragraph (1) as paragraph (2), and by inserting before 
paragraph (2) (as so redesignated the following new para-
graph: 
‘‘(1) QUALIFIED
REFORESTATION
EXPENDI-
TURES.—The term ‘qualified reforestation expendi-
tures’ means, with respect to any taxable year, the 
reforestation expenditures paid or incurred by the 
taxpayer during such taxable year with respect to 
qualified timber property.’’. 
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(c) QUALIFIED TIMBER PROPERTY LIMITED TO OR-
NAMENTAL TREES.—Section 194(b)(2), as redesignated 
by subsections (a) and (b), is amended to read as follows: 
‘‘(2) QUALIFIED TIMBER PROPERTY.—The term 
‘qualified timber property’ means a woodlot or other 
site located in the United States which— 
‘‘(A) will contain evergreen trees in signifi-
cant commercial quantities which are reason-
ably expected to be more than 6 years old at 
the time severed from the roots, and 
‘‘(B) is held by the taxpayer for the plant-
ing, cultivating, caring for, and cutting of such 
trees for sale for ornamental purposes.’’. 
(d) DETERMINATION OF RECOMPUTED BASIS.—Sec-
tion 1245(b) is amended by striking paragraph (7). 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
in taxable years beginning after December 31, 2014. 
SEC. 3119. 20-YEAR AMORTIZATION OF GOODWILL AND CER-
TAIN OTHER INTANGIBLES. 
(a) IN GENERAL.—Subsection (a) of section 197 is 
amended by striking ‘‘15-year period’’ and inserting ‘‘20- 
year period’’. 
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(b) MORTGAGE SERVICING RIGHTS.—Subsection (e) 
of section 197 is amended by striking paragraph (6) and 
by redesignating paragraph (7) as paragraph (6). 
(c) CONFORMING AMENDMENTS.— 
(1) Clause (i) of section 197(e)(4)(D) is amend-
ed by striking ‘‘15 years’’ and inserting ‘‘20 years’’. 
(2) Section 167(f) is amended by striking para-
graph (3). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property acquired after Decem-
ber 31, 2014. 
SEC. 3120. TREATMENT OF ENVIRONMENTAL REMEDIATION 
COSTS. 
(a) IN GENERAL.—Subsection (a) of section 198 is 
amended to read as follows: 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s quali-
fied environmental remediation expenditures for any tax-
able year— 
‘‘(1) except as provided in paragraph (2), no 
deduction shall be allowed for such expenditures, 
and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital 
account, and 
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‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 40-year 
period beginning with the midpoint of the tax-
able year in which such expenditures are paid 
or incurred.’’. 
(b) MADE PERMANENT.—Section 198 is amended by 
striking subsection (h). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 198, as amended by subsection (b), 
is amended by striking subsection (f) and by redesig-
nating subsection (g) as subsection (f). 
(2) Section 198 (and the item relating to such 
section in the table of sections for part VI of sub-
chapter B of chapter 1) is amended by striking ‘‘EX-
PENSING’’ in the heading thereof and inserting 
‘‘AMORTIZATION’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
after December 31, 2014. 
SEC. 3121. REPEAL OF EXPENSING OF QUALIFIED DIS-
ASTER EXPENSES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 198A (and by striking 
the item relating to such section in the table of sections 
for such part). 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2014. 
SEC. 3122. PHASEOUT AND REPEAL OF DEDUCTION FOR IN-
COME ATTRIBUTABLE TO DOMESTIC PRO-
DUCTION ACTIVITIES. 
(a) PHASEOUT.— 
(1) IN
GENERAL.—Subsection (a) of section 
199 is amended by adding at the end the following 
new paragraph: 
‘‘(3) PHASEOUT.—In the case of any taxable 
year beginning after 2014, paragraph (1) shall be 
applied by substituting for the percentage contained 
therein the phaseout percentage determined under 
the following table: 
‘‘For taxable years beginning in: 
The phaseout percentage 
is: 
2015 .............................................................................................
6%
2016 .............................................................................................
3%’’. 
(2) COORDINATION WITH OIL RELATED QUALI-
FIED
PRODUCTION
ACTIVITIES
INCOME.—Section 
199(d) is amended by striking paragraph (9). 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2014. 
(b) REPEAL.— 
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(1) IN GENERAL.—Part VI of subchapter B of 
chapter 1 is amended by striking section 199 (and 
by striking the item relating to such section in the 
table of sections for such part). 
(2) CONFORMING AMENDMENTS.— 
(A) Sections 86(b)(2)(A), 137(b)(3)(A), 
246(b)(1), 
and 
469(i)(3)(F)(iii) 
are 
each 
amended by striking ‘‘199,’’. 
(B) Section 163(j)(6)(A)(i), as amended by 
the preceding provisions of this Act, is amended 
by striking subclause (III) and by redesignating 
subclauses (IV) and (V) as subclauses (III) and 
(IV), respectively. 
(C) Section 170(b)(2)(C), as amended by 
the preceding provisions of this Act, is amended 
by striking clause (v), by redesignating clause 
(vi) as clause (v), and by inserting ‘‘and’’ at the 
end of clause (iv). 
(D) Section 172(d) is amended by striking 
paragraph (7). 
(E) Section 1402(a) is amended by adding 
‘‘and’’ at the end of paragraph (15) and by 
striking paragraph (16). 
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(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2016. 
SEC. 3123. UNIFICATION OF DEDUCTION FOR ORGANIZA-
TIONAL EXPENDITURES. 
(a) IN GENERAL.—Subsections (a) and (b) of section 
195 is amended by inserting ‘‘and organizational’’ after 
‘‘start-up’’ each place it appears. 
(b) ORGANIZATIONAL EXPENDITURES.—Subsection 
(c) of section 195 is amended by adding at the end the 
following new paragraph: 
‘‘(3) ORGANIZATIONAL
EXPENDITURES.—The 
term ‘organizational expenditures’ means any ex-
penditure which— 
‘‘(A) is incident to the creation of a cor-
poration or a partnership, 
‘‘(B) is chargeable to capital account, and 
‘‘(C) is of a character which, if expended 
incident to the creation of a corporation or a 
partnership having a limited life, would be am-
ortizable over such life.’’. 
(c) DOLLAR
AMOUNTS.—Clause (ii) of section 
195(b)(1)(A) is amended— 
(1) 
by 
striking 
‘‘$5,000’’ 
and 
inserting 
‘‘$10,000’’, and 
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(2) by striking ‘‘$50,000’’ and inserting 
‘‘$60,000’’. 
(d) MID-YEAR CONVENTION.—Subparagraph (B) of 
section 195(b)(1), as amended by subsection (a), is 
amended to read as follows: 
‘‘(B) the remainder of such start-up and 
organizational expenditures shall be charged to 
capital account and allowed as an amortization 
deduction determined by amortizing such ex-
penditures ratably over the 15-year period be-
ginning with the midpoint of the taxable year in 
which the active trade or business begins.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 195(b)(1) is amended— 
(A) by inserting ‘‘(or, in the case of a part-
nership, the partnership elects)’’ after ‘‘If a tax-
payer elects’’, and 
(B) by inserting ‘‘(or the partnership, as 
the case may be)’’ after ‘‘the taxpayer’’ in sub-
paragraph (A). 
(2) Section 195(b)(2) is amended— 
(A) by striking ‘‘AMORTIZATION PERIOD.— 
In any case’’ and inserting the following: ‘‘AM-
ORTIZATION PERIOD.— 
‘‘(A) IN GENERAL.—In any case’’, and 
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SEC. 3124. PREVENTION OF ARBITRAGE OF DEDUCTIBLE 
INTEREST EXPENSE AND TAX-EXEMPT INTER-
EST INCOME. 
(a) PRO RATA ALLOCATION RULES APPLICABLE TO 
FINANCIAL INSTITUTIONS MODIFIED AND MADE APPLI-
CABLE TO ALL C CORPORATIONS.— 
(1) APPLICATION TO CORPORATIONS.—So much 
of section 265(b) as precedes paragraph (3) is 
amended to read as follows: 
‘‘(b) PRO RATA ALLOCATION OF INTEREST EXPENSE 
OF CORPORATIONS
AND FINANCIAL INSTITUTIONS
TO 
TAX-EXEMPT INTEREST.— 
‘‘(1) IN GENERAL.—In the case of a C corpora-
tion or a financial institution, no deduction shall be 
allowed for that portion of the taxpayer’s interest ex-
pense which is allocable to tax-exempt interest. 
‘‘(2) ALLOCATION.—For purposes of paragraph 
(1), the portion of the taxpayer’s interest expense 
which is allocable to tax-exempt interest is an 
amount which bears the same ratio to such interest 
expense as— 
‘‘(A) the taxpayer’s average adjusted bases 
(within the meaning of section 1016) of tax-ex-
empt obligations acquired on or after February 
26, 2014 (August 7, 1986, in the case of a fi-
nancial institution), bears to 
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‘‘(B) such average adjusted bases for all 
assets of the taxpayer.’’. 
(2) REPEAL OF EXCEPTIONS.—Section 265(b) 
is amended by striking paragraphs (3) and (7). 
(b) LIMITATION ON INVESTMENT INTEREST.— 
(1) IN GENERAL.—Section 163(d)(1) is amend-
ed to read as follows: 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
other than a corporation, the amount allowed as a 
deduction under this chapter for investment interest 
for any taxable year— 
‘‘(A) shall be reduced by the amount of 
tax-exempt interest received by the taxpayer 
during such taxable year, and 
‘‘(B) shall not (after any reduction under 
subparagraph (A)) exceed the net investment 
income of the taxpayer for such taxable year.’’. 
(2) REDUCTIONS FOR TAX-EXEMPT INTEREST 
NOT
CARRIED
FORWARD.—Section 163(d)(2) is 
amended by striking ‘‘paragraph (1)’’ and inserting 
‘‘paragraph (1)(B)’’. 
(3) CLARIFICATION THAT PROPERTY HELD FOR 
INVESTMENT INCLUDES PROPERTY PRODUCING TAX- 
EXEMPT
INTEREST.—Section 
163(d)(5)(A) 
is 
amended by striking ‘‘and’’ at the end of clause (i), 
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by striking the period at the end of clause (ii)(II) 
and inserting ‘‘, and’’, and by adding at the end the 
following new clause: 
‘‘(iii) any property held for the pro-
duction of tax-exempt interest (including 
any shares of stock of a regulated invest-
ment company which during the taxable 
year of the holder thereof distributes ex-
empt-interest dividends).’’. 
(4) COORDINATION WITH SECTION 265.— 
(A) IN
GENERAL.—Section 265(a) is 
amended by— 
(i) striking paragraph (2) and insert-
ing the following new paragraph: 
‘‘(2) INTEREST.— 
‘‘(A) CORPORATIONS AND FINANCIAL IN-
STITUTIONS.—For pro rata allocation rules in 
the case of corporations and financial institu-
tions, see subsection (b). 
‘‘(B) OTHER TAXPAYERS.—For limitation 
on investment interest in the case of other tax-
payers, see section 163(d).’’, and 
(ii) by striking paragraphs (4) and (5) 
and by redesignating paragraph (6) as 
paragraph (4). 
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(B) CONFORMING AMENDMENTS.— 
(i) Section 265(b), as amended by 
subsection (a), is amended by inserting 
after paragraph (2) the following new 
paragraph: 
‘‘(3) SPECIAL RULES FOR SHORT SALES.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, interest includes any amount paid 
or incurred— 
‘‘(i) by any person making a short 
sale in connection with personal property 
used in such short sale, or 
‘‘(ii) by any other person for the use 
of any collateral with respect to such short 
sale. 
‘‘(B) EXCEPTION WHERE NO RETURN ON 
CASH COLLATERAL .—If— 
‘‘(i) the taxpayer provides cash as col-
lateral for any short sale, and 
‘‘(ii) the taxpayer receives no material 
earnings on such cash during the period of 
the sale, 
subparagraph (A)(i) shall not apply to such 
short sale.’’. 
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(ii) Section 265(b)(6) is amended to 
read as follows: 
‘‘(6) COORDINATION WITH SECTION 263A.—This 
section shall be applied before the application of sec-
tion 263A (relating to capitalization of certain ex-
penses where taxpayer produces property).’’. 
(iii) Section 163(n)(2) is amended to 
read as follows: 
‘‘(2) For disallowance of deduction for interest 
relating to tax-exempt income, see sections 163(d) 
and 265(b)’’. 
(c) EFFECTIVE DATES.— 
(1) APPLICATION
OF
PRO
RATA
ALLOCATION 
RULES.— 
(A) APPLICATION TO C CORPORATIONS.— 
The amendments made by subsection (a)(1) 
shall apply to taxable years ending on or after 
February 26, 2014. 
(B) 
REPEAL
OF
EXCEPTIONS.—The 
amendments made by subsection (a)(2) shall 
apply to obligations issued on or after February 
26, 2014. 
(2) LIMITATION ON INVESTMENT INTEREST.— 
The amendments made by subsection (b) shall apply 
to taxable years beginning after December 31, 2014. 
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SEC. 3125. PREVENTION OF TRANSFER OF CERTAIN LOSSES 
FROM TAX INDIFFERENT PARTIES. 
(a) IN GENERAL.—Section 267(d) is amended to 
read as follows: 
‘‘(d) AMOUNT OF GAIN WHERE LOSS PREVIOUSLY 
DISALLOWED.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) in the case of a sale or exchange of 
property to the taxpayer a loss sustained by the 
transferor is not allowable to the transferor as 
a deduction by reason of subsection (a)(1), and 
‘‘(B) the taxpayer sells or otherwise dis-
poses of such property (or of other property the 
basis of which in the taxpayer’s hands is deter-
mined directly or indirectly by reference to such 
property) at a gain, 
then such gain shall be recognized only to the extent 
that it exceeds so much of such loss as is properly 
allocable to the property sold or otherwise disposed 
of by the taxpayer. 
‘‘(2) EXCEPTION
FOR
WASH
SALES.—Para-
graph (1) shall not apply if the loss sustained by the 
transferor is not allowable to the transferor as a de-
duction by reason of section 1091 (relating to wash 
sales). 
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‘‘(3) EXCEPTION FOR TRANSFERS FROM TAX 
INDIFFERENT
PARTIES.—Paragraph (1) shall not 
apply to the extent any loss sustained by the trans-
feror (if allowed) would not be taken into account in 
determining a tax imposed under section 1 or 11 or 
a tax computed as provided by either of such sec-
tions.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to sales and exchanges after De-
cember 31, 2014. 
SEC. 3126. ENTERTAINMENT, ETC. EXPENSES. 
(a) DENIAL OF DEDUCTION.—Subsection (a) of sec-
tion 274 is amended to read as follows: 
‘‘(a) ENTERTAINMENT, AMUSEMENT, OR RECRE-
ATION.— 
‘‘(1) IN GENERAL.—No deduction otherwise al-
lowable under this chapter shall be allowed for 
amounts paid or incurred for any of the following 
items: 
‘‘(A) ACTIVITY.—With respect to an activ-
ity which is of a type generally considered to 
constitute entertainment, amusement, or recre-
ation. 
‘‘(B) MEMBERSHIP
DUES.—With respect 
to membership in any club organized for busi-
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ness, pleasure, recreation or other social pur-
poses. 
‘‘(C) AMENITY.—With respect to a de 
minimis fringe (as defined in section 132(e)(1)) 
that is primarily personal in nature and involv-
ing property or services that are not directly re-
lated to the taxpayer’s trade or business. 
‘‘(D) FACILITY.—With respect to a facility 
or portion thereof used in connection with an 
activity referred to in subparagraph (A), mem-
bership dues or similar amounts referred to in 
subparagraph (B), or an amenity referred to in 
subparagraph (C). 
‘‘(E) 
QUALIFIED
TRANSPORTATION 
FRINGE AND PARKING FACILITY.—Which is a 
qualified transportation fringe (as defined in 
section 132(f)) or which is a parking facility 
used in connection with qualified parking (as 
defined in section 132(f)(5)(C)). 
‘‘(2) SPECIAL RULES.—For purposes of apply-
ing paragraph (1), an activity described in section 
212 shall be treated as a trade or business. 
‘‘(3) REGULATIONS.—Under the regulations 
prescribed to carry out this section, the Secretary 
shall include regulations— 
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‘‘(A) defining entertainment, amenities, 
recreation, amusement, and facilities for pur-
poses of this subsection, 
‘‘(B) providing for the appropriate alloca-
tion of depreciation and other costs with respect 
to facilities used for parking, and 
‘‘(C) specifying arrangements a primary 
purpose of which is the avoidance of this sub-
section.’’. 
(b) EXCEPTION FOR CERTAIN EXPENSES INCLUD-
IBLE IN INCOME OF RECIPIENT.— 
(1) EXPENSES TREATED AS COMPENSATION.— 
Paragraph (2) of section 274(e) is amended to read 
as follows: 
‘‘(2) EXPENSES TREATED AS COMPENSATION.— 
Expenses for goods, services, and facilities, to the 
extent that the expenses do not exceed the amount 
of the expenses which are treated by the taxpayer, 
with respect to the recipient of the entertainment, 
amusement, or recreation, as compensation to an 
employee on the taxpayer’s return of tax under this 
chapter and as wages to such employee for purposes 
of chapter 24 (relating to withholding of income tax 
at source on wages).’’. 
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(2) EXPENSES INCLUDIBLE IN INCOME OF PER-
SONS WHO ARE NOT EMPLOYEES.—Paragraph (9) of 
section 274(e) is amended by striking ‘‘to the extent 
that the expenses’’ and inserting ‘‘to the extent that 
the expenses do not exceed the amount of the ex-
penses that’’. 
(c) EXCEPTIONS
FOR REIMBURSED EXPENSES.— 
Paragraph (3) of section 274(e) is amended to read as 
follows: 
‘‘(3) REIMBURSED EXPENSES.— 
‘‘(A) IN GENERAL.—Expenses paid or in-
curred by the taxpayer, in connection with the 
performance by him of services for another per-
son (whether or not such other person is the 
taxpayer’s employer), under a reimbursement or 
other expense allowance arrangement with such 
other person, but this paragraph shall apply— 
‘‘(i) where the services are performed 
for an employer, only if the employer has 
not treated such expenses in the manner 
provided in paragraph (2), or 
‘‘(ii) where the services are performed 
for a person other than an employer, only 
if the taxpayer accounts (to the extent pro-
vided by subsection (d)) to such person. 
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‘‘(B) EXCEPTION.—Except as provided by 
the Secretary, subparagraph (A) shall not 
apply— 
‘‘(i) in the case of an arrangement in 
which the person other than the employer 
is 
an 
entity 
described 
in 
section 
168(g)(2)(A), or 
‘‘(ii) to any other arrangement des-
ignated by the Secretary as having the ef-
fect of avoiding the limitation under sub-
paragraph (A).’’. 
(d) 50-PERCENT LIMITATION ON MEALS AND EN-
TERTAINMENT EXPENSES.—Subsection (n) of section 274 
is amended to read as follows: 
‘‘(n) LIMITATION ON CERTAIN EXPENSES.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under this chapter for any expense for 
food or beverages (pursuant to subsection (e)(1)) or 
business meals (pursuant to subsection (k)(1)) shall 
not exceed 50 percent of the amount of such expense 
or item which would (but for this paragraph) be al-
lowable as a deduction under this chapter. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to any expense if— 
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‘‘(A) such expense is described in para-
graph (2), (3), (6), (7), or (8) of subsection (e), 
‘‘(B) in the case of an expense for food or 
beverages, such expense is excludable from the 
gross income of the recipient under section 132 
by reason of subsection (e) thereof (relating to 
de minimis fringes) or under section 119 (relat-
ing to meals and lodging furnished for conven-
ience of employer), or 
‘‘(C) in the case of an employer who pays 
or reimburses moving expenses of an employee, 
such expenses are includible in the income of 
the employee under section 82. 
‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT 
TO FEDERAL HOURS OF SERVICE.—In the case of 
any expenses for food or beverages consumed while 
away from home (within the meaning of section 
162(a)(2)) by an individual during, or incident to, 
the period of duty subject to the hours of service 
limitations of the Department of Transportation, 
paragraph (1) shall be applied by substituting ‘80 
percent’ for ‘50 percent’.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 274(d) is amended— 
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(5) Section 274(m)(1)(B)(ii) is amended by 
striking ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), 
(7), or (8)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2014. 
SEC. 3127. REPEAL OF LIMITATION ON CORPORATE ACQUI-
SITION INDEBTEDNESS. 
(a) IN GENERAL.—Part IX of subchapter B of chap-
ter 1 is amended by striking section 279 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to interest paid or incurred with 
respect to indebtedness incurred after December 31, 2014. 
SEC. 3128. DENIAL OF DEDUCTIONS AND CREDITS FOR EX-
PENDITURES IN ILLEGAL BUSINESSES. 
(a) IN GENERAL.—Section 280E is amended to read 
as follows: 
‘‘SEC. 280E. EXPENDITURES IN CONNECTION WITH ILLEGAL 
BUSINESSES. 
‘‘No deduction or credit shall be allowed for any 
amount paid or incurred during the taxable year in car-
rying on any trade or business if— 
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‘‘(1) such trade or business (or the activities 
which comprise such trade or business) consists of 
trafficking in controlled substances (within the 
meaning of schedule I and II of the Controlled Sub-
stances Act) which is prohibited by Federal law or 
the law of any State in which such trade or business 
is conducted, or 
‘‘(2) the carrying out of such trade or business 
is a felony under Federal law or the law of any State 
in which such trade or business is conducted.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part IX of subchapter B of chapter 1 is amended by 
striking the item relating to section 280E and inserting 
the following new item: 
‘‘Sec. 280E. Expenditures in connection with illegal businesses.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act in taxable years end-
ing after the date of the enactment of this Act. 
SEC. 3129. LIMITATION ON DEDUCTION FOR FDIC PRE-
MIUMS. 
(a) IN GENERAL.—Section 162 is amended by redes-
ignating subsection (q) as subsection (r) and by inserting 
after subsection (p) the following new subsection: 
‘‘(q) DISALLOWANCE OF FDIC PREMIUMS PAID BY 
CERTAIN LARGE FINANCIAL INSTITUTIONS.— 
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‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for the applicable percentage of any FDIC 
premium paid or incurred by the taxpayer. 
‘‘(2) EXCEPTION FOR SMALL INSTITUTIONS.— 
Paragraph (1) shall not apply to any taxpayer for 
any taxable year if the total consolidated assets of 
such taxpayer (determined as of the close of such 
taxable year) do not exceed $10,000,000,000. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxpayer for any taxable 
year, the ratio (expressed as a percentage but not 
greater than 100 percent) which— 
‘‘(A) the excess of— 
‘‘(i) the total consolidated assets of 
such taxpayer (determined as of the close 
of such taxable year), over 
‘‘(ii) $10,000,000,000, bears to 
‘‘(B) $40,000,000,000. 
‘‘(4) FDIC PREMIUMS.—For purposes of this 
subsection, the term ‘FDIC premium’ means any as-
sessment imposed under section 7(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)). 
‘‘(5) TOTAL CONSOLIDATED ASSETS.—For pur-
poses of this subsection, the term ‘total consolidated 
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assets’ has the meaning given such term under sec-
tion 165 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5365). 
‘‘(6) AGGREGATION RULE.— 
‘‘(A) IN
GENERAL.—Members of an ex-
panded affiliated group shall be treated as a 
single taxpayer for purposes of applying this 
subsection. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this paragraph, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (3) of section 1504(b). 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of an 
expanded affiliated group if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence).’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3130. REPEAL OF PERCENTAGE DEPLETION. 
(a) IN GENERAL.—Part I of subchapter I of chapter 
1 is amended by striking sections 613 and 613A (and by 
striking the items relating to such sections in the table 
of sections for such part). 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Such part is amended by redesignating 
section 614 as section 613 (and, in the table of sec-
tions for such part, by redesignating the item relat-
ing to section 614 as an item relating to section 
613). 
(B) Clauses (iv) and (v) of section 465(c)(2)(A) 
are each amended by striking ‘‘section 614’’ and in-
serting ‘‘section 613’’. 
(C) Section 1016(e) is amended by striking 
‘‘section 614’’ and inserting ‘‘section 613’’. 
(D) Section 1254(a)(3) is amended by striking 
‘‘section 614’’ and inserting ‘‘section 613’’. 
(2) Section 45(c)(4) is amended to read as fol-
lows: 
‘‘(4) GEOTHERMAL ENERGY.— 
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‘‘(A) IN GENERAL.—The term ‘geothermal 
energy’ means energy derived from a geo-
thermal deposit. 
‘‘(B) GEOTHERMAL
DEPOSIT.—The term 
‘geothermal deposit’ means a geothermal res-
ervoir consisting of natural heat which is stored 
in rocks or in an aqueous liquid or vapor 
(whether or not under pressure).’’. 
(3) Section 48(a)(3)(A)(iii) is amended by 
striking ‘‘section 613(e)(2)’’ and inserting ‘‘section 
45(c)(4)(B)’’ 
(4) Section 381(c) is amended by striking para-
graph (18). 
(5) Section 465(c)(1)(E) is amended by striking 
‘‘section 
613(e)(2)’’ 
and 
inserting 
‘‘section 
45(c)(4)(B)’’. 
(6) Section 468(d)(3) is amended by striking 
‘‘section 614’’ and inserting ‘‘section 613’’. 
(7) Section 611(a) is amended by striking the 
second sentence. 
(8) Section 613(d), as redesignated by para-
graph (1), is amended by striking ‘‘includes only’’ 
and all that follows and inserting ‘‘includes only an 
interest burdened by the costs of production.’’. 
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(9) Section 636(a) is amended by striking ‘‘(for 
purposes of section 613)’’. 
(10) Section 636(d) is amended by striking 
‘‘section 614(a)’’ and inserting ‘‘section 613(a)’’. 
(11) Section 705(a) is amended— 
(A) in paragraph (1), by adding ‘‘and’’ at 
the end of subparagraph (A), by striking ‘‘; 
and’’ at the end of subparagraph (B) and in-
serting a period, and by striking subparagraph 
(C), 
(B) in paragraph (2), by striking ‘‘; and’’ 
at the end of subparagraph (B) and inserting a 
period, and 
(C) by striking paragraph (3). 
(12) Section 901(e)(1)(A) is amended by strik-
ing ‘‘(or, if smaller’’ and all that follows through 
‘‘under section 613)’’. 
(13) Section 993(c)(2)(C) is amended by insert-
ing ‘‘(as each such section was in effect before its 
repeal by the Tax Reform Act of 2014)’’ after ‘‘sec-
tion 613 or 613A’’. 
(14) Section 1202(e)(3)(D) is amended by in-
serting ‘‘(as each such section was in effect before 
its repeal by the Tax Reform Act of 2014)’’ after 
‘‘section 613 or 613A’’. 
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(15) Section 1367(a) is amended— 
(A) in paragraph (1), by adding ‘‘and’’ at 
the end of subparagraph (A), by striking ‘‘, 
and’’ at the end of subparagraph (B) and in-
serting a period, and by striking subparagraph 
(C), and 
(B) in paragraph (2), by adding ‘‘and’’ at 
the end of subparagraph (C), by striking ‘‘, 
and’’ at the end of subparagraph (D) and in-
serting a period, and by striking subparagraph 
(E). 
(16) Section 1446(c) is amended by striking 
paragraph (2) and by redesignating paragraph (3) 
as paragraph (2). 
(17) Section 4612(a)(7) is amended by insert-
ing ‘‘(as in effect before its repeal by the Tax Re-
form Act of 2014)’’ after ‘‘section 613’’. 
(18) Section 4940(c)(3)(B) is amended— 
(A) by striking clause (ii), and 
(B) by striking all that precedes ‘‘The de-
duction provided’’ and inserting the following: 
‘‘(B) MODIFICATIONS.—For purposes of 
subparagraph (A), the deduction provided’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3131. REPEAL OF PASSIVE ACTIVITY EXCEPTION FOR 
WORKING INTERESTS IN OIL AND GAS PROP-
ERTY. 
(a) IN GENERAL.—Subsection (c) of section 469 is 
amended by striking paragraph (3). 
(b) CONFORMING AMENDMENTS.—Section 469 is 
amended— 
(1) by striking paragraph (4) and by redesig-
nating paragraphs (5), (6), and (7) as paragraphs 
(3), (4), and (5), respectively, and 
(2) in paragraph (2)— 
(A) by striking ‘‘paragraph (7)’’ and in-
serting ‘‘paragraph (5)’’, and 
(B) by inserting ‘‘, without regard to 
whether or not the taxpayer materially partici-
pates in the activity’’ before the period at the 
end. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
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SEC. 3132. REPEAL OF SPECIAL RULES FOR GAIN OR LOSS 
ON TIMBER, COAL, OR DOMESTIC IRON ORE. 
(a) IN GENERAL.—Subchapter I of chapter 1 is 
amended by striking part III (and by striking the item 
relating to such part in the table of parts for such sub-
chapter). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 512(b)(5) is amended by striking 
the last sentence. 
(2) Section 871(a)(1)(B) is amended by strik-
ing ‘‘gains described in section 631(b) or (c), and’’. 
(3) Section 871(d)(1)(A) is amended— 
(A) by striking ‘‘, (ii) rents’’ and inserting 
‘‘and (ii) rents’’, and 
(B) by striking ‘‘, and (iii) gains described 
in section 631(b) or (c)’’. 
(4)(A) Section 881(a) is amended by striking 
paragraph (2) and by redesignating paragraphs (3) 
and (4) as paragraphs (2) and (3), respectively. 
(B) Section 1442(a) is amended— 
(i) by striking ‘‘881(a)(3) and (4)’’ and in-
serting ‘‘881(a)(2) and (3)’’, 
(ii) by striking ‘‘881(a)(3),’’ and inserting 
‘‘881(a)(2),’’, and 
(iii) by striking ‘‘881(a)(4)’’ and inserting 
‘‘881(a)(3)’’. 
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(5) Section 882(d)(1)(A) is amended— 
(A) by striking ‘‘, (ii) rents’’ and inserting 
‘‘and (ii) rents’’, and 
(B) by striking ‘‘, and (iii) gains described 
in section 631(b) or (c)’’. 
(6) Section 1231(b) is amended by striking 
paragraph (2). 
(7) Section 1402(a)(3) is amended by inserting 
‘‘or’’ at the end of subparagraph (A) and by striking 
subparagraph (B) and redesignating subparagraph 
(C) as subparagraph (B). 
(8) Section 1441 is amended— 
(A) in subsection (b), by striking ‘‘, gains 
described in section 631(b) or (c)’’, and 
(B) in subsection (c)(5), by striking ‘‘gains 
described in section 631(b) or (c), gains subject 
to tax under section 871(a)(1)(D),’’ and insert-
ing ‘‘gains subject to tax under section 
871(a)(1)(D)’’. 
(9)(A) Part IX of subchapter B of chapter 1 is 
amended by striking section 272 (and by striking 
the item relating to such section in the table of sec-
tions for such subpart). 
(B) Section 1016(a) is amended by striking 
paragraph (15). 
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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) BASIS
ADJUSTMENTS.—The amendment 
made by subsection (b)(9)(B) shall apply to deduc-
tions determined for taxable years beginning after 
December 31, 2014. 
SEC. 3133. REPEAL OF LIKE-KIND EXCHANGES. 
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 is amended by striking section 1031 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 121(d)(10) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Reform 
Act of 2014)’’ after ‘‘section 1031’’. 
(2) Section 197(f)(2)(B)(i) is amended by in-
serting ‘‘(as in effect before its repeal by the Tax 
Reform Act of 2014)’’ after ‘‘1031’’. 
(3) Section 453(f) is amended by striking para-
graph (6). 
(4) Section 470(e)(4) is amended— 
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(A) by striking ‘‘Sections 1031(a) and’’ in 
subparagraph (A) and inserting ‘‘Section’’, 
(i) by striking ‘‘1031 or’’ in subparagraph 
(B), and 
(ii) by striking ‘‘SECTIONS 1031 AND’’ in 
the heading thereof and inserting ‘‘SECTION’’. 
(5)(A) Section 501(c)(12)(C)(v) is amended by 
striking ‘‘asset exchange or conversion transaction’’ 
and inserting ‘‘specified involuntary conversion’’. 
(B) Section 501(c)(12)(G) is amended— 
(i) by striking ‘‘asset exchange or conver-
sion transaction’’ and inserting ‘‘specified invol-
untary conversion’’, 
(ii) by striking ‘‘voluntary exchange or’’, 
and 
(iii) by striking ‘‘1031 or’’. 
(6)(A) Section 704(c) is amended by striking 
paragraph (2) and by redesignating paragraph (3) 
as paragraph (2). 
(B) Section 704(c)(2), as so redesignated, is 
amended by striking ‘‘or (2)’’. 
(7) Section 857(e)(2) is amended by striking 
subparagraph (B) and by redesignating subpara-
graphs (C) and (D) as subparagraphs (B) and (C), 
respectively. 
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(8)(A) Section 1035 is amended by striking 
subsection (d) and inserting the following new sub-
sections: 
‘‘(d) GAIN FROM EXCHANGES NOT SOLELY
IN 
KIND.—If an exchange would be within the provisions of 
subsection (a), of section 1036(a), or of section 1037(a), 
if it were not for the fact that the property received in 
exchange consists not only of property permitted by such 
provisions to be received without the recognition of gain, 
but also of other property or money, then the gain, if any, 
to the recipient shall be recognized, but in an amount not 
in excess of the sum of such money and the fair market 
value of such other property. 
‘‘(e) LOSS FROM EXCHANGES NOT SOLELY
IN 
KIND.—If an exchange would be within the provisions of 
subsection (a), of section 1036(a), or of section 1037(a), 
if it were not for the fact that the property received in 
exchange consists not only of property permitted by such 
provisions to be received without the recognition of gain 
or loss, but also of other property or money, then no loss 
from the exchange shall be recognized. 
‘‘(f) BASIS.—If property was acquired on an ex-
change described in this section, section 1036(a), or sec-
tion 1037(a), then the basis shall be the same as that of 
the property exchanged, decreased in the amount of any 
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money received by the taxpayer and increased in the 
amount of gain or decreased in the amount of loss to the 
taxpayer that was recognized on such exchange. If the 
property so acquired consisted in part of the type of prop-
erty permitted by this section, section 1036(a), or section 
1037(a), to be received without the recognition of gain or 
loss, and in part of other property, the basis provided in 
this subsection shall be allocated between the properties 
(other than money) received, and for the purpose of the 
allocation there shall be assigned to such other property 
an amount equivalent to its fair market value at the date 
of the exchange. For purposes of this section and section 
1036(a), where as part of the consideration to the tax-
payer another party to the exchange assumed (as deter-
mined under section 357(d)) a liability of the taxpayer, 
such assumption shall be considered as money received by 
the taxpayer on the exchange.’’. 
(B) Section 1036(c) is amended— 
(i) in paragraph (1), by striking ‘‘sub-
sections (b) and (c) of section 1031’’ and in-
serting ‘‘subsections (d) and (e) of section 
1035’’, and 
(ii) in paragraph (2), by striking ‘‘sub-
section (d) of section 1031’’ and inserting ‘‘sub-
section (f) of section 1035’’. 
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(C) Section 1037(c) is amended— 
(i) in paragraph (1), by striking ‘‘sub-
sections (b) and (c) of section 1031’’ and in-
serting ‘‘subsections (d) and (e) of section 
1035’’, and 
(ii) in paragraph (2), by striking ‘‘sub-
section (d) of section 1031’’ and inserting ‘‘sub-
section (f) of section 1035’’. 
(D) Section 83(g) is amended by striking ‘‘sec-
tion 1031’’ and inserting ‘‘section 1035’’. 
(E) Section 424(b) is amended by striking ‘‘sec-
tion 1031’’ and inserting ‘‘section 1035’’. 
(F) Section 424(c)(1)(B) is amended by strik-
ing ‘‘section 1031’’ and inserting ‘‘section 1035’’. 
(9) Section 1060(c) is amended by striking the 
second sentence thereof. 
(10) Section 1245(b)(4) is amended— 
(A) by striking ‘‘LIKE KIND EXCHANGES; 
INVOLUNTARY’’ and inserting ‘‘INVOLUNTARY’’, 
and 
(B) by striking ‘‘1031 or’’. 
(11) Section 1250(d)(4) is amended— 
(A) by striking ‘‘LIKE KIND EXCHANGES; 
INVOLUNTARY’’ and inserting ‘‘INVOLUNTARY’’, 
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(B) by striking ‘‘1031 or’’ in subparagraph 
(A), and 
(C) by striking ‘‘1031 or’’ in subparagraph 
(E). 
(12) Section 2032A(e)(14)(C) is amended— 
(A) in clause (i)(I), by inserting ‘‘(as in ef-
fect before its repeal by the Tax Reform Act of 
2014)’’ after ‘‘section 1031’’, and 
(B) in clause (ii)(I), by inserting ‘‘(as so in 
effect)’’ after ‘‘section 1031’’. 
(13) Section 4940(c)(4) is amended by striking 
subparagraph (D). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to transfers after December 
31, 2014. 
(2) EXCEPTION FOR TRANSFERS PURSUANT TO 
BINDING
CONTRACTS.—Notwithstanding paragraph 
(1), the amendments made by this section shall not 
apply to any transfer if— 
(A) such transfer is pursuant to a written 
binding contract entered into before January 1, 
2015, and 
(B) the exchange of which such transfer is 
a part is completed before January 1, 2017. 
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SEC. 3134. RESTRICTION ON TRADE OR BUSINESS PROP-
ERTY TREATED AS SIMILAR OR RELATED IN 
SERVICE TO INVOLUNTARILY CONVERTED 
PROPERTY IN DISASTER AREAS. 
(a) CLASS LIFE OF REPLACEMENT PROPERTY NOT 
TO
EXCEED
CONVERTED
PROPERTY.—Section 
1033(h)(2) is amended by inserting ‘‘if the class life of 
such tangible property does not exceed the class life of 
the property so converted’’ before the period at the end. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to disasters declared after Decem-
ber 31, 2014. 
SEC. 3135. REPEAL OF ROLLOVER OF PUBLICLY TRADED 
SECURITIES GAIN INTO SPECIALIZED SMALL 
BUSINESS INVESTMENT COMPANIES. 
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 is amended by striking section 1044 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 45D(c)(2)(A) is amended to read as 
follows: 
‘‘(A) any partnership or corporation which 
is licensed by the Small Business Administra-
tion under section 301(d) of the Small Business 
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Investment Act of 1958 (as in effect on May 
13, 1993), and’’. 
(2) Section 1016(a)(23) is amended— 
(A) by striking ‘‘1044,’’, and 
(B) by striking ‘‘1044(d),’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales after December 31, 2014. 
SEC. 3136. TERMINATION OF SPECIAL RULES FOR GAIN 
FROM CERTAIN SMALL BUSINESS STOCK. 
(a) TERMINATION OF PARTIAL EXCLUSION.—Section 
1202 is amended— 
(1) by inserting ‘‘and before the date of the en-
actment of the Tax Reform Act of 2014’’ after 
‘‘Revenue Reconciliation Act of 1993’’ in subsection 
(c)(1), and 
(2) by adding at the end the following new sub-
section: 
‘‘(l) TERMINATION.—For termination with respect to 
qualified small business stock issued after the date of the 
enactment of the Tax Reform Act of 2014, see subsection 
(c)(1).’’. 
(b) REPEAL OF ROLLOVER RULES.— 
(1) IN GENERAL.—Part III of subchapter O of 
chapter 1 is amended by striking section 1045 (and 
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by striking the item relating to such section in the 
table of sections of such part). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1016(a)(23) is amended— 
(i) by striking ‘‘1045,’’, and 
(ii) by striking ‘‘1045(b)(3),’’. 
(B) Section 1223 is amended by striking 
paragraph (13). 
(c) EFFECTIVE DATES.— 
(1) TERMINATION OF PARTIAL EXCLUSION.— 
The amendments made by subsection (a) shall apply 
to sales and exchanges after the date of the enact-
ment of this Act. 
(2) REPEAL OF ROLLOVER RULES.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
subsection (b) shall apply to sales after the date 
of the enactment of this Act. 
(B) SAVINGS
PROVISION.—The amend-
ments made by subsection (b)(2) shall not apply 
with respect to property the acquisition of 
which was before the date of the enactment of 
this Act. 
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SEC. 3137. CERTAIN SELF-CREATED PROPERTY NOT TREAT-
ED AS A CAPITAL ASSET. 
(a) PATENTS, ETC.—Section 1221(a)(3) is amended 
by inserting ‘‘a patent, invention, model or design (wheth-
er or not patented), a secret formula or process,’’ before 
‘‘a copyright’’. 
(b) 
SELF-CREATED
MUSICAL
WORKS.—Section 
1221(b) is amended by striking paragraph (3). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2014. 
SEC. 3138. REPEAL OF SPECIAL RULE FOR SALE OR EX-
CHANGE OF PATENTS. 
(a) IN GENERAL.—Part IV of subchapter P of chap-
ter 1 is amended by striking section 1235 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 483(d) is amended by striking para-
graph (4). 
(2)(A) Section 871(a)(1), as amended by the 
preceding provisions of this Act, is amended by 
striking subparagraph (B) and by redesignating sub-
paragraphs (C) and (D) as subparagraphs (B) and 
(C), respectively. 
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(B) Section 871(g)(3) is amended by striking 
‘‘(a)(1)(C)’’ and inserting ‘‘(a)(1)(B)’’. 
(C) Subsections (h)(1) and (i)(1) of section 871 
are each amended by striking ‘‘(1)(C)’’ and inserting 
‘‘(1)(B)’’. 
(D) Section 1441, as amended by the preceding 
provisions of this Act, is amended— 
(i) in subsections (b) and (c)(8), by strik-
ing 
‘‘871(a)(1)(C)’’ 
and 
inserting 
‘‘871(a)(1)(B)’’, and 
(ii) in subsections (b) and (c)(5), by strik-
ing 
‘‘871(a)(1)(D)’’ 
and 
inserting 
‘‘871(a)(1)(C)’’. 
(E) Section 1442(a), as amended by the pre-
ceding provisions of this Act, is amended— 
(i) by striking ‘‘871(a)(1)(C) and (D)’’ and 
inserting ‘‘871(a)(1)(B) and (C)’’, and 
(ii) by striking ‘‘871(a)(1)(D)’’ and insert-
ing ‘‘871(a)(1)(C)’’. 
(3) Section 901(l)(5) is amended by striking 
‘‘without regard to section 1235 or any similar rule’’ 
and inserting ‘‘without regard to any provision 
which treats a disposition as a sale or exchange of 
a capital asset held for more than 1 year or any 
similar provision’’. 
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(4) Section 1274(c)(3) is amended by striking 
subparagraph (E) and redesignating subparagraph 
(F) as subparagraph (E). 
(5) Subsections (b) and (c)(5) of section 1441, 
as amended by the preceding provisions of this Act, 
are each amended by striking ‘‘gains subject to tax 
under section 871(a)(1)(C), and gains on transfers 
described in section 1235 made on or before October 
4, 1966’’ and inserting ‘‘and gains subject to tax 
under section 871(a)(1)(C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2014. 
SEC. 3139. DEPRECIATION RECAPTURE ON GAIN FROM DIS-
POSITION OF CERTAIN DEPRECIABLE REAL-
TY. 
(a) IN GENERAL.—Subsection (a) of section 1250 is 
amended to read as follows: 
‘‘(a) IN GENERAL.—Except as otherwise provided in 
this section, if section 1250 property is disposed of after 
December 31, 2014, the amount of gain with respect to 
such property which is treated as ordinary income shall 
be an amount equal to the lesser of— 
‘‘(1) the sum of— 
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‘‘(A) the amount of additional depreciation 
attributable to periods before January 1, 2015, 
in respect of such property, and 
‘‘(B) the amount of depreciation adjust-
ments attributable to periods after December 
31, 2014, in respect of such property, or 
‘‘(2) the excess of the amount realized (or, in 
the case of a disposition other than a sale, exchange, 
or involuntary conversion, the fair market value of 
such property), over the adjusted basis of such prop-
erty.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 267(e)(5)(D)(i) is amended to read 
as follows: 
‘‘(i) any interest in— 
‘‘(I) any section 1250 property 
with respect to which a mortgage is 
insured under section 221(d)(3) or 
236 of the National Housing Act, or 
housing financed or assisted by direct 
loan or tax abatement under similar 
provisions of State or local laws and 
with respect to which the owner is 
subject to the restrictions described in 
section 1039(b)(1)(B) (as in effect on 
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the day before the date of the enact-
ment of the Revenue Reconciliation 
Act of 1990), 
‘‘(II) dwelling units which, on the 
average, were held for occupancy by 
families or individuals eligible to re-
ceive subsidies under section 8 of the 
United States Housing Act of 1937, 
as amended, or under the provisions 
of State or local law authorizing simi-
lar levels of subsidy for lower-income 
families, 
‘‘(III) any section 1250 property 
with respect to which a depreciation 
deduction for rehabilitation expendi-
tures was allowed under section 
167(k), or 
‘‘(IV) any section 1250 property 
with respect to which a loan is made 
or insured under title V of the Hous-
ing Act of 1949, and’’. 
(2) Section 1250(b) is amended by striking 
paragraph (4) and by redesignating paragraph (5) 
as paragraph (4). 
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(3) Section 1250(c) is amended by striking 
‘‘For purposes of this section’’ and inserting ‘‘For 
purposes of this title’’ 
(4)(A) Section 1250(d)(5)(B)(i) is amended by 
striking ‘‘and the applicable percentage for the prop-
erty had been 100 percent’’. 
(B) Section 1250(d)(5)(B)(ii) is amended to 
read as follows: 
‘‘(ii) the amount of such gain (if any) 
to which section 751(b) applied.’’. 
(5) Section 1250(d) is amended by striking 
paragraph (7). 
(6) Section 1250 is amended by striking sub-
sections (e) and (f) and by redesignating subsections 
(g) and (h) as subsections (e) and (f), respectively. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2014. 
SEC. 3140. COMMON DEDUCTION CONFORMING AMEND-
MENTS. 
(a) IN GENERAL.— 
(1) Section 1245(a)(2)(C) is amended by strik-
ing ‘‘section 179,’’ and all that follows through ‘‘or 
194’’ and inserting ‘‘section 179 or (as in effect be-
fore repeal by the Tax Reform Act of 2014) section 
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179A, 179B, 179C, 179D, 179E, 181, 190, 193, or 
194,’’ 
(2) Section 1245(a)(3)(C) is amended by strik-
ing ‘‘section 169’’ and all that follows through ‘‘or 
194’’ and inserting ‘‘section 179, 185, 188 (as in ef-
fect before its repeal by the Revenue Reconciliation 
Act of 1990), or (as in effect before repeal by the 
Tax Reform Act of 2014) section 169, 179A, 179B, 
179C, 179D, 179E, 190, 193, or 194’’. 
(3) Section 263(a)(1) is amended by striking 
subparagraphs (C), (D), (F), (H), (I), (J), (K), and 
(L) and by redesignating subparagraphs (E) and 
(G) as subparagraphs (C) and (D), respectively. 
(4) Section 280C, as amended by the preceding 
provisions of this Act, is amended by redesignating 
subsections (c) and (g) as subsections (b) and (c), 
respectively. 
(b) EFFECTIVE DATE.—Each portion of each amend-
ment made by this section shall take effect as if included 
in the provision of this subtitle to which such portion re-
lates. 
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Subtitle C—Reform of Business 
Credits 
SEC. 3201. REPEAL OF CREDIT FOR ALCOHOL, ETC., USED 
AS FUEL. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 40 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) REPEAL OF CORRESPONDING EXCISE TAX CRED-
ITS.— 
(1) CREDIT.—Subchapter B of chapter 65 is 
amended by striking section 6426 (and by striking 
the item relating to such section in the table of sec-
tions for such subchapter). 
(2) PAYMENT.—Section 6427 is amended by 
striking subsection (e). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (3). 
(2) Section 6416(a)(4)(C) is amended— 
(A) by striking ‘‘section 6427(i)(4)’’ and 
inserting ‘‘section 6427(i)(3)’’, and 
(B) by striking ‘‘section 6427(i)(3)(B)’’ 
and inserting ‘‘subparagraph (B) thereof’’. 
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(3) Section 6427(i) is amended by striking 
paragraph (3) and by redesignating paragraph (4) 
as paragraph (3). 
(4) Section 6427(i)(3), as redesignated by para-
graph (2), is amended— 
(A) by striking the sentence at the end of 
subparagraph (A), 
(B) by redesignating subparagraph (B) as 
subparagraph (C), and 
(C) by inserting after subparagraph (A) 
the following new subparagraph: 
‘‘(B) 
PAYMENT
OF
CLAIM.—Notwith-
standing subsection (l)(1), if the Secretary has 
not paid pursuant to a claim filed under sub-
section (b)(4), (l)(4)(C)(ii), or (l)(5) within 45 
days of the date of the filing of such claim (20 
days in the case of an electronic claim), the 
claim shall be paid with interest from such date 
determined by using the overpayment rate and 
method under section 6621.’’. 
(5) Subpart B of part III of subchapter A of 
chapter 32 is amended by striking section 4104 (and 
by striking the item relating to such section in the 
table of sections for such subpart). 
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(6) Section 6501(m) is amended by striking 
‘‘40(f),’’. 
(7) Section 9503(b)(1) is amended by striking 
the second sentence. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuels sold or used after Decem-
ber 31, 2013. 
SEC. 3202. REPEAL OF CREDIT FOR BIODIESEL AND RE-
NEWABLE DIESEL USED AS FUEL. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 40A 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (17). 
(2) Part II of subchapter B of chapter 1 is 
amended by striking section 87 (and by striking the 
item relating to such section in the table of sections 
for such subpart). 
(3) Section 4101(a)(1) is amended by striking 
‘‘, every person producing’’ and all that follows 
through ‘‘section 40(b)(6)(E))’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuels sold or used after Decem-
ber 31, 2013. 
SEC. 3203. RESEARCH CREDIT MODIFIED AND MADE PER-
MANENT. 
(a) PERMANENT SIMPLIFICATION OF INCREMENTAL 
RESEARCH CREDIT AND ELIMINATION OF CREDIT FOR 
ENERGY RESEARCH CONSORTIUM PAYMENTS.— 
(1) IN GENERAL.—Subsection (a) of section 41 
is amended to read as follows: 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
research credit determined under this section for the tax-
able year shall be an amount equal to the sum of— 
‘‘(1) 15 percent of so much of the qualified re-
search expenses for the taxable year as exceeds 50 
percent of the average qualified research expenses 
for the 3 taxable years preceding the taxable year 
for which the credit is being determined, plus 
‘‘(2) 15 percent of so much of the basic re-
search payments for the taxable year as exceeds 50 
percent of the average basic research payments for 
the 3 taxable years preceding the taxable year for 
which the credit is being determined.’’. 
(2) REPEAL OF TERMINATION.—Section 41 is 
amended by striking subsection (h). 
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(3) CONFORMING AMENDMENTS.— 
(A) Subsection (c) of section 41 is amend-
ed to read as follows: 
‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX-
PENSES FOR PRIOR YEARS.— 
‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED 
RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING 
TAXABLE YEARS.—In any case in which the taxpayer 
has no qualified research expenses in any one of the 
3 taxable years preceding the taxable year for which 
the credit is being determined, the amount deter-
mined under subsection (a)(1) for such taxable year 
shall be equal to 10 percent of the qualified research 
expenses for the taxable year. 
‘‘(2) 
CONSISTENT
TREATMENT
OF
EX-
PENSES.— 
‘‘(A) 
IN
GENERAL.—Notwithstanding 
whether the period for filing a claim for credit 
or refund has expired for any taxable year 
taken into account in determining the average 
qualified research expenses, or average basic re-
search payments, taken into account under sub-
section (a), the qualified research expenses and 
basic research payments taken into account in 
determining such averages shall be determined 
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on a basis consistent with the determination of 
qualified research expenses and basic research 
payments, respectively, for the credit year. 
‘‘(B) PREVENTION OF DISTORTIONS.—The 
Secretary may prescribe regulations to prevent 
distortions in calculating a taxpayer’s qualified 
research expenses or basic research payments 
caused by a change in accounting methods used 
by such taxpayer between the current year and 
a year taken into account in determining the 
average qualified research expenses or average 
basic research payments taken into account 
under subsection (a).’’. 
(B) Section 41(e) is amended— 
(i) by striking all that precedes para-
graph (6) and inserting the following: 
‘‘(e) BASIC RESEARCH PAYMENTS.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘basic research 
payment’ means, with respect to any taxable year, 
any amount paid in cash during such taxable year 
by a corporation to any qualified organization for 
basic research but only if— 
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‘‘(A) such payment is pursuant to a writ-
ten agreement between such corporation and 
such qualified organization, and 
‘‘(B) such basic research is to be per-
formed by such qualified organization. 
‘‘(2) EXCEPTION TO REQUIREMENT THAT RE-
SEARCH BE PERFORMED BY THE ORGANIZATION.— 
In the case of a qualified organization described in 
subparagraph (C) or (D) of paragraph (3), subpara-
graph (B) of paragraph (1) shall not apply.’’, 
(ii) by redesignating paragraphs (6) 
and (7) as paragraphs (3) and (4), respec-
tively, and 
(iii) in paragraph (4) as so redesig-
nated, by striking subparagraphs (B) and 
(C) and by redesignating subparagraphs 
(D) and (E) as subparagraphs (B) and 
(C), respectively. 
(C)(i) Section 41(f)(1) is amended by 
striking ‘‘, basic research payments, and 
amounts paid or incurred to energy research 
consortiums,’’ in subparagraphs (A)(ii) and 
(B)(ii) and inserting ‘‘and basic research pay-
ments’’. 
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(ii) Section 41(f) is amended by striking 
paragraph (6). 
(4) EFFECTIVE DATE.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
this subsection shall apply to taxable years be-
ginning after December 31, 2013. 
(B) PARAGRAPH
(2).—The amendment 
made by paragraph (2) shall apply to amounts 
paid or incurred after December 31, 2013. 
(b) OTHER REFORMS.— 
(1) ELIMINATION OF CREDIT FOR COMPUTER 
SOFTWARE.—Subparagraph (E) of section 41(d)(4) 
is amended— 
(A) by striking ‘‘Except to the extent pro-
vided in regulations, any research’’ and insert-
ing ‘‘Any research’’, and 
(B) by striking ‘‘which is developed by’’ 
and all that follows through the end and insert-
ing a period. 
(2) ELIMINATION OF INCREASED CREDIT FOR 
AMOUNTS PAID TO CERTAIN ENTITIES.—Paragraph 
(3) of section 41(b) is amended by striking subpara-
graphs (C) and (D). 
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(3) ELIMINATION OF CREDIT FOR SUPPLIES.— 
Subparagraph (A) of section 41(b)(2) is amended by 
inserting ‘‘and’’ at the end of clause (i), by striking 
clause (ii), and by redesignating clause (iii) as clause 
(ii). 
(4) ELIMINATION OF ELECTION OF REDUCED 
CREDIT.—Section 280C(c) is amended by striking 
paragraphs (3) and (4). 
(5) CONFORMING AMENDMENTS.— 
(A) The second sentence of section 
41(b)(2)(A) is amended by striking ‘‘Clause 
(iii)’’ and inserting ‘‘Clause (ii)’’. 
(B) Section 41(b)(2) is amended by strik-
ing subparagraph (C) and by redesignating sub-
paragraph (D) as subparagraph (C). 
(C) Section 41(d)(2)(B) is amended by 
striking ‘‘, computer software’’. 
(6) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2013. 
SEC. 3204. LOW-INCOME HOUSING TAX CREDIT. 
(a) REFORM
OF
LIMITATION
AND
ALLOCATION 
RULES.— 
(1) ALLOCATIONS OF ELIGIBLE BASIS AMOUNTS 
RATHER THAN CREDIT AMOUNTS; ELIMINATION OF 
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NATIONAL REALLOCATIONS.—Subsection (h) of sec-
tion 42 is amended to read as follows: 
‘‘(h) LIMITATION ON QUALIFIED BASIS WITH RE-
SPECT TO PROJECTS LOCATED IN A STATE.— 
‘‘(1) QUALIFIED BASIS MAY NOT EXCEED LIMI-
TATION AMOUNT ALLOCATED TO BUILDING.— 
‘‘(A) IN GENERAL.—The qualified basis of 
any building which is taken into account under 
subsection (a) for any taxable year shall not ex-
ceed the limitation amount allocated to such 
building under this subsection. 
‘‘(B) TIME
FOR
MAKING
ALLOCATION.— 
Except in the case of an allocation which meets 
the requirements of subparagraph (C), (D), 
(E), or (F), an allocation shall be taken into ac-
count under subparagraph (A) only if it is 
made not later than the close of the calendar 
year in which the building is placed in service. 
‘‘(C) EXCEPTION
WHERE
BINDING
COM-
MITMENT.—An allocation meets the require-
ments of this subparagraph if there is a binding 
commitment (not later than the close of the cal-
endar year in which the building is placed in 
service) by the housing credit agency to allocate 
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a specified limitation amount to such building 
beginning in a specified later taxable year. 
‘‘(D) EXCEPTION
WHERE
INCREASE
IN 
QUALIFIED BASIS.— 
‘‘(i) 
IN
GENERAL.—An 
allocation 
meets the requirements of this subpara-
graph if such allocation is made not later 
than the close of the calendar year in 
which ends the taxable year to which it will 
1st apply but only to the extent the 
amount of such allocation does not exceed 
the limitation under clause (ii). 
‘‘(ii) 
LIMITATION.—The 
limitation 
under this clause is the excess of— 
‘‘(I) the qualified basis of such 
building as of the close of the 1st tax-
able year to which such allocation will 
apply, over 
‘‘(II) the qualified basis of such 
building as of the close of the 1st tax-
able year to which the most recent 
prior allocation with respect to such 
building applied. 
‘‘(iii) HOUSING CREDIT BASIS LIMITA-
TION REDUCED BY FULL ALLOCATION.— 
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Notwithstanding clause (i), the full amount 
of the allocation shall be taken into ac-
count under paragraph (2). 
‘‘(E) EXCEPTION WHERE 10 PERCENT OF 
COST INCURRED.— 
‘‘(i) 
IN
GENERAL.—An 
allocation 
meets the requirements of this subpara-
graph if such allocation is made with re-
spect to a qualified building which is 
placed in service not later than the close of 
the second calendar year following the cal-
endar year in which the allocation is made. 
‘‘(ii) QUALIFIED BUILDING.—For pur-
poses of clause (i), the term ‘qualified 
building’ means any building which is part 
of a project if the taxpayer’s basis in such 
project (as of the date which is 1 year 
after the date that the allocation was 
made) is more than 10 percent of the tax-
payer’s reasonably expected basis in such 
project (as of the close of the second cal-
endar year referred to in clause (i)). Such 
term does not include any existing building 
unless a credit is allowable under sub-
section (e) for rehabilitation expenditures 
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paid or incurred by the taxpayer with re-
spect to such building for a taxable year 
ending during the second calendar year re-
ferred to in clause (i) or the prior taxable 
year. 
‘‘(F) ALLOCATION
OF
CREDIT
ON
A 
PROJECT BASIS.— 
‘‘(i) IN GENERAL.—In the case of a 
project which includes (or will include) 
more than 1 building, an allocation meets 
the requirements of this subparagraph if— 
‘‘(I) the allocation is made to the 
project for a calendar year during the 
project period, 
‘‘(II) the allocation only applies 
to buildings placed in service during 
or after the calendar year for which 
the allocation is made, and 
‘‘(III) the portion of such alloca-
tion which is allocated to any building 
in such project is specified not later 
than the close of the calendar year in 
which the building is placed in service. 
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‘‘(ii) PROJECT
PERIOD.—For pur-
poses of clause (i), the term ‘project pe-
riod’ means the period— 
‘‘(I) beginning with the 1st cal-
endar year for which an allocation 
may be made for the 1st building 
placed in service as part of such 
project, and 
‘‘(II) ending with the calendar 
year the last building is placed in 
service as part of such project. 
‘‘(2) ALLOCATED
LIMITATION
AMOUNT
TO 
APPLY TO ALL TAXABLE YEARS ENDING DURING OR 
AFTER ALLOCATION YEAR.—Any limitation amount 
allocated to any building for any calendar year— 
‘‘(A) shall apply to such building for all 
taxable years in the compliance period ending 
during or after such calendar year, and 
‘‘(B) shall reduce the aggregate limitation 
amount of the allocating agency only for such 
calendar year. 
‘‘(3) LIMITATION AMOUNT FOR AGENCIES.— 
‘‘(A) IN GENERAL.—The limitation amount 
which a housing credit agency may allocate for 
any calendar year is the portion of the State 
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limitation allocated under this paragraph for 
such calendar year to such agency. 
‘‘(B) STATE LIMITATION INITIALLY ALLO-
CATED
TO
STATE
HOUSING
CREDIT
AGEN-
CIES.—Except as provided in subparagraph 
(F), the State limitation for each calendar year 
shall be allocated to the housing credit agency 
of such State. If there is more than 1 housing 
credit agency of a State, all such agencies shall 
be treated as a single agency. 
‘‘(C) STATE LIMITATION.—The State limi-
tation applicable to any State for any calendar 
year shall be an amount equal to the sum of— 
‘‘(i) the unused State limitation (if 
any) of such State for the preceding cal-
endar year, 
‘‘(ii) the greater of— 
‘‘(I) $31.20 multiplied by the 
State population, or 
‘‘(II) $36,300,000, plus 
‘‘(iii) the amount of State limitation 
returned in the calendar year. 
‘‘(D) UNUSED
STATE
LIMITATION.—For 
purposes of subparagraph (C)(i), the unused 
State limitation for any calendar year is the ex-
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cess (if any) of the sum of the amounts de-
scribed in clauses (ii) and (iii) of subparagraph 
(C) over the aggregate limitation amount allo-
cated for such year. 
‘‘(E) STATE
LIMITATION
RETURNED
IN 
THE CALENDAR YEAR.—For purposes of sub-
paragraph (C)(iii), the amount of State limita-
tion returned in the calendar year equals the 
limitation amount previously allocated within 
the State to any project— 
‘‘(i) which fails to meet the 10 percent 
test under paragraph (1)(E)(ii) on a date 
after the close of the calendar year in 
which the allocation was made, 
‘‘(ii) which does not become a quali-
fied low-income housing project within the 
period required by this section or the terms 
of the allocation, or 
‘‘(iii) with respect to which an alloca-
tion is cancelled by mutual consent of the 
housing credit agency and the allocation 
recipient. 
‘‘(F) STATE
MAY
PROVIDE
FOR
DIF-
FERENT
ALLOCATION.—For purposes of this 
paragraph, a State may by law provide (or a 
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Governor of a State may proclaim) a different 
formula for allocating the State limitation 
among the State housing credit agencies in 
such State. 
‘‘(G) POPULATION.—For purposes of this 
paragraph, determinations of the population of 
any State shall be made with respect to any cal-
endar year on the basis of the most recent cen-
sus estimate of the resident population of such 
State released by the Bureau of Census before 
the beginning of such calendar year. 
‘‘(H) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of a 
calendar year after 2015, the dollar 
amounts in subparagraph (C)(ii) shall each 
be increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment 
determined 
under 
section 
1(c)(2)(A) for such calendar year, de-
termined by substituting ‘calendar 
year 2014’ for ‘calendar year 2012’ in 
clause (ii) thereof. 
‘‘(ii) ROUNDING.— 
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‘‘(I) In the case of the dollar 
amount in subparagraph (C)(ii)(I), 
any increase under clause (i) which is 
not a multiple of 20 cents shall be 
rounded to the next lowest multiple of 
20 cents. 
‘‘(II) In the case of the dollar 
amount in subparagraph (C)(ii)(II), 
any increase under clause (i) which is 
not a multiple of $100,000 shall be 
rounded to the next lowest multiple of 
$100,000. 
‘‘(4) PORTION
OF
STATE
LIMITATION
SET- 
ASIDE FOR CERTAIN PROJECTS INVOLVING QUALI-
FIED NONPROFIT ORGANIZATIONS.— 
‘‘(A) IN
GENERAL.—Not more than 90 
percent of the State limitation for any State for 
any calendar year shall be allocated to projects 
other 
than 
qualified 
low-income 
housing 
projects described in subparagraph (B). 
‘‘(B) PROJECTS
INVOLVING
QUALIFIED 
NONPROFIT ORGANIZATIONS.—For purposes of 
subparagraph (A), a qualified low-income hous-
ing project is described in this subparagraph if 
a qualified nonprofit organization is to own an 
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interest in the project (directly or through a 
partnership) and materially participate (within 
the meaning of section 469(h)) in the develop-
ment and operation of the project throughout 
the credit period. 
‘‘(C) QUALIFIED
NONPROFIT
ORGANIZA-
TION.—For purposes of this paragraph, the 
term ‘qualified nonprofit organization’ means 
any organization if— 
‘‘(i) such organization is described in 
paragraph (3) or (4) of section 501(c) and 
is exempt from tax under section 501(a), 
‘‘(ii) such organization is determined 
by the State housing credit agency not to 
be affiliated with or controlled by a for- 
profit organization; and 
‘‘(iii) 1 of the exempt purposes of 
such organization includes the fostering of 
low-income housing. 
‘‘(D) TREATMENT
OF
CERTAIN
SUBSIDI-
ARIES.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, a qualified nonprofit orga-
nization shall be treated as satisfying the 
ownership and material participation test 
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of subparagraph (B) if any qualified cor-
poration in which such organization holds 
stock satisfies such test. 
‘‘(ii) QUALIFIED CORPORATION.—For 
purposes of clause (i), the term ‘qualified 
corporation’ means any corporation if 100 
percent of the stock of such corporation is 
held by 1 or more qualified nonprofit orga-
nizations at all times during the period 
such corporation is in existence. 
‘‘(E) STATE
MAY
NOT
OVERRIDE
SET- 
ASIDE.—Nothing in subparagraph (F) of para-
graph (3) shall be construed to permit a State 
not to comply with subparagraph (A) of this 
paragraph. 
‘‘(5) BUILDINGS ELIGIBLE FOR CREDIT ONLY 
IF MINIMUM LONG-TERM COMMITMENT TO LOW-IN-
COME HOUSING.— 
‘‘(A) IN GENERAL.—No credit shall be al-
lowed by reason of this section with respect to 
any building for the taxable year unless an ex-
tended low-income housing commitment is in ef-
fect as of the end of such taxable year. 
‘‘(B) EXTENDED
LOW-INCOME
HOUSING 
COMMITMENT.—For purposes of this para-
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graph, the term ‘extended low-income housing 
commitment’ means any agreement between the 
taxpayer and the housing credit agency— 
‘‘(i) which requires that the applicable 
fraction (as defined in subsection (c)(1)) 
for the building for each taxable year in 
the extended use period will not be less 
than the applicable fraction specified in 
such agreement and which prohibits the 
actions described in subclauses (I) and (II) 
of subparagraph (E)(ii), 
‘‘(ii) which allows individuals who 
meet the income limitation applicable to 
the building under subsection (g) (whether 
prospective, present, or former occupants 
of the building) the right to enforce in any 
State court the requirement and prohibi-
tions of clause (i), 
‘‘(iii) which prohibits the disposition 
to any person of any portion of the build-
ing to which such agreement applies unless 
all of the building to which such agreement 
applies is disposed of to such person, 
‘‘(iv) which prohibits the refusal to 
lease to a holder of a voucher or certificate 
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of eligibility under section 8 of the United 
States Housing Act of 1937 because of the 
status of the prospective tenant as such a 
holder, 
‘‘(v) which is binding on all successors 
of the taxpayer, and 
‘‘(vi) which, with respect to the prop-
erty, is recorded pursuant to State law as 
a restrictive covenant. 
‘‘(C) ALLOCATION OF LIMITATION AMOUNT 
MAY NOT EXCEED AMOUNT NECESSARY TO SUP-
PORT
COMMITMENT.—The limitation amount 
allocated to any building may not exceed the 
amount necessary to support the applicable 
fraction specified in the extended low-income 
housing commitment for such building. 
‘‘(D) EXTENDED USE PERIOD.—For pur-
poses of this paragraph, the term ‘extended use 
period’ means the period— 
‘‘(i) beginning on the 1st day in the 
credit period on which such building is 
part of a qualified low-income housing 
project, and 
‘‘(ii) ending on the later of— 
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‘‘(I) the date specified by such 
agency in such agreement, or 
‘‘(II) the date which is 15 years 
after the close of the credit period. 
‘‘(E) EXCEPTIONS IF FORECLOSURE OR IF 
NO BUYER WILLING TO MAINTAIN LOW-INCOME 
STATUS.— 
‘‘(i) IN GENERAL.—The extended use 
period for any building shall terminate— 
‘‘(I) on the date the building is 
acquired by foreclosure (or instrument 
in lieu of foreclosure) unless the Sec-
retary determines that such acquisi-
tion is part of an arrangement with 
the taxpayer a purpose of which is to 
terminate such period, or 
‘‘(II) on the last day of the pe-
riod specified in subparagraph (I) if 
the housing credit agency is unable to 
present during such period a qualified 
contract for the acquisition of the low- 
income portion of the building by any 
person who will continue to operate 
such portion as a qualified low-income 
building. 
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Subclause (II) shall not apply to the extent 
more stringent requirements are provided 
in the agreement or in State law. 
‘‘(ii) EVICTION, ETC., OF
EXISTING 
LOW-INCOME TENANTS NOT PERMITTED.— 
The termination of an extended use period 
under clause (i) shall not be construed to 
permit before the close of the 3-year period 
following such termination— 
‘‘(I) the eviction or the termi-
nation of tenancy (other than for good 
cause) of an existing tenant of any 
low-income unit, or 
‘‘(II) any increase in the gross 
rent with respect to such unit not oth-
erwise permitted under this section. 
‘‘(F) QUALIFIED
CONTRACT.—For pur-
poses of subparagraph (E), the term ‘qualified 
contract’ means a bona fide contract to acquire 
(within a reasonable period after the contract is 
entered into) the nonlow-income portion of the 
building for fair market value and the low-in-
come portion of the building for an amount not 
less than the applicable fraction (specified in 
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the extended low-income housing commitment) 
of— 
‘‘(i) the sum of— 
‘‘(I) the outstanding indebtedness 
secured by, or with respect to, the 
building, 
‘‘(II) the adjusted investor equity 
in the building, plus 
‘‘(III) other capital contributions 
not reflected in the amounts described 
in subclause (I) or (II), reduced by 
‘‘(ii) cash distributions from (or avail-
able for distribution from) the project. 
The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out 
this paragraph, including regulations to prevent 
the manipulation of the amount determined 
under the preceding sentence. 
‘‘(G) ADJUSTED INVESTOR EQUITY.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (F), the term ‘adjusted in-
vestor equity’ means, with respect to any 
calendar year, the aggregate amount of 
cash taxpayers invested with respect to the 
project increased by the amount equal to— 
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‘‘(I) such amount, multiplied by 
‘‘(II) the cost-of-living adjust-
ment for such calendar year, deter-
mined under section 1(c)(2)(A) by 
substituting the base calendar year 
for ‘calendar year 2012’ in clause (ii) 
thereof. 
An amount shall be taken into account as 
an investment in the project only to the ex-
tent there was an obligation to invest such 
amount as of the beginning of the credit 
period and to the extent such amount is 
reflected in the adjusted basis of the 
project. 
‘‘(ii) COST-OF-LIVING
INCREASES
IN 
EXCESS OF 5 PERCENT NOT TAKEN INTO 
ACCOUNT.—Under regulations prescribed 
by the Secretary, if the C-CPI-U for any 
calendar year (within the meaning of sec-
tion 1(c)) exceeds the C-CPI-U for the pre-
ceding calendar year by more than 5 per-
cent, the C-CPI-U for the base calendar 
year shall be increased such that such ex-
cess shall never be taken into account 
under clause (i). 
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‘‘(iii) BASE
CALENDAR
YEAR.—For 
purposes of this subparagraph, the term 
‘base calendar year’ means the calendar 
year with or within which the 1st taxable 
year of the credit period ends. 
‘‘(H) LOW-INCOME
PORTION.—For pur-
poses of this paragraph, the low-income portion 
of a building is the portion of such building 
equal to the applicable fraction specified in the 
extended low-income housing commitment for 
the building. 
‘‘(I) PERIOD FOR FINDING BUYER.—The 
period referred to in this subparagraph is the 1- 
year period beginning on the date (after the 
14th year of the credit period) the taxpayer 
submits a written request to the housing credit 
agency to find a person to acquire the tax-
payer’s interest in the low-income portion of the 
building. 
‘‘(J) EFFECT
OF
NONCOMPLIANCE.—If, 
during a taxable year, there is a determination 
that an extended low-income housing agreement 
was not in effect as of the beginning of such 
year, such determination shall not apply to any 
period before such year and subparagraph (A) 
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shall be applied without regard to such deter-
mination if the failure is corrected within 1 
year from the date of the determination. 
‘‘(K) PROJECTS WHICH CONSIST OF MORE 
THAN
BUILDING.—The application of this 
paragraph to projects which consist of more 
than 1 building shall be made under regulations 
prescribed by the Secretary. 
‘‘(6) SPECIAL RULES.— 
‘‘(A) BUILDING MUST BE LOCATED WITH-
IN JURISDICTION OF CREDIT AGENCY.—A hous-
ing credit agency may allocate its limitation 
amount only to buildings located in the jurisdic-
tion of the governmental unit of which such 
agency is a part. 
‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF 
LIMIT.—If the limitation amounts allocated by 
a housing credit agency for any calendar year 
exceed the portion of the State limitation allo-
cated to such agency for such calendar year, the 
limitation amounts so allocated shall be reduced 
(to the extent of such excess) for buildings in 
the reverse of the order in which the allocations 
of such amounts were made. 
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‘‘(C) CREDIT REDUCED IF CREDIT IS LESS 
THAN CREDIT WHICH WOULD BE ALLOWABLE 
WITHOUT REGARD TO PLACED IN SERVICE CON-
VENTION, ETC.— 
‘‘(i) IN
GENERAL.—The amount of 
the credit determined under this section 
with respect to any building shall not ex-
ceed the clause (ii) percentage of the 
amount of the credit which would (but for 
this subparagraph) be determined under 
this section with respect to such building. 
‘‘(ii) DETERMINATION
OF
PERCENT-
AGE.—For purposes of clause (i), the 
clause (ii) percentage with respect to any 
building is the percentage which— 
‘‘(I) the credit amount which 
would be determined under this sec-
tion with respect to the building if the 
limitation amount allocated to such 
building were equal to the qualified 
basis of such building, bears to 
‘‘(II) the credit amount deter-
mined in accordance with clause (iii). 
‘‘(iii) DETERMINATION
OF
CREDIT 
AMOUNT.—The credit amount determined 
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in accordance with this clause is the 
amount of the credit which would (but for 
this subparagraph) be determined under 
this section with respect to the building if 
this section were applied without regard to 
subsection (f)(2)(A). 
‘‘(7) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) HOUSING
CREDIT
AGENCY.—The 
term ‘housing credit agency’ means any agency 
authorized to carry out this subsection. 
‘‘(B) POSSESSIONS TREATED AS STATES.— 
The term ‘State’ includes a possession of the 
United States.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 42(f) is amended by striking 
paragraph (3). 
(B) Section 42(i)(3)(B)(iii)(II) is amended 
by striking ‘‘subsection (h)(5)’’ and inserting 
‘‘subsection (h)(4)’’. 
(C) Section 42(i)(7)(A) is amended by 
striking ‘‘subsection (h)(5)(C)’’ and inserting 
‘‘subsection (h)(4)(C)’’. 
(D) Section 42(i)(8) is amended by strik-
ing the last sentence. 
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(E) Section 42(i) is amended by striking 
paragraph (9). 
(F) Section 42(k)(2)(A) is amended by 
striking ‘‘subsection (h)(5)’’ and inserting ‘‘sub-
section (h)(4)’’. 
(G) Section 42(l)(3) is amended by strik-
ing ‘‘housing credit amount’’ both places it ap-
pears and inserting ‘‘limitation amount’’. 
(H) Section 42(m)(1)(A) is amended by 
striking ‘‘housing credit dollar amount’’ both 
places it appears and inserting ‘‘limitation 
amount’’. 
(I) Section 42(m)(1)(B)(ii) is amended by 
striking ‘‘housing credit dollar amounts’’ and 
inserting ‘‘limitation amounts’’. 
(J) Section 42(m)(1) is amended by strik-
ing subparagraph (D). 
(K) Subparagraphs (A), (B)(iii), (C)(i)(I), 
and (C)(i)(II) of section 42(m)(2) are each 
amended by striking ‘‘housing credit dollar 
amount’’ and inserting ‘‘limitation amount’’. 
(L) Section 42(m)(2) is amended by strik-
ing subparagraph (D). 
(b) 15-YEAR CREDIT PERIOD.— 
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(1) IN GENERAL.—Section 42(f)(1) is amended 
by striking ‘‘10 taxable years’’ and inserting ‘‘15 
taxable years’’. 
(2) REPEAL
OF
RECAPTURE.—Section 42 is 
amended by striking subsection (j). 
(3) CONFORMING AMENDMENTS.— 
(A) Section 42(d)(7) is amended— 
(i) by striking ‘‘COMPLIANCE PERIOD’’ 
in the heading thereof and inserting 
‘‘CREDIT PERIOD’’, and 
(ii) by striking ‘‘compliance period’’ in 
subparagraph (B)(ii) and inserting ‘‘credit 
period’’. 
(B) Section 42(f)(4) is amended by strik-
ing the last sentence thereof. 
(C) Section 42(i) is amended by striking 
paragraph (1). 
(D) Section 42(i)(6) is amended by strik-
ing ‘‘and any increase in tax under subsection 
(j)’’. 
(E) Section 42(k)(4)(C) is amended to 
read as follows: 
‘‘(C) SPECIAL RULES.— 
‘‘(i) TAX
BENEFIT
RULE.—The tax 
for the taxable year shall be increased 
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under subparagraph (A) only with respect 
to credits allowed by reason of this section 
which were used to reduce tax liability. In 
the case of credits not so used to reduce 
tax 
liability, 
the 
carryforwards 
and 
carrybacks under section 39 shall be ap-
propriately adjusted. 
‘‘(ii) NO CREDITS AGAINST TAX.—Any 
increase in tax under this paragraph shall 
not be treated as a tax imposed by this 
chapter for purposes of determining the 
amount of any credit under this chapter.’’. 
(c) DETERMINATION
OF
APPLICABLE
PERCENT-
AGE.— 
(1) ELIMINATION
OF
PERCENT
CREDIT; 
MODIFICATION OF DISCOUNT RATE.—Subsection (b) 
of section 42 is amended to read as follows: 
‘‘(b) APPLICABLE PERCENTAGE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘applicable percentage’ means with re-
spect to any building, the appropriate percentage 
prescribed by the Secretary for the earlier of— 
‘‘(A) the month in which such building is 
placed in service, or 
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‘‘(B) at the election of the taxpayer, the 
month in which the taxpayer and the housing 
credit agency enter into an agreement with re-
spect to such building (which is binding on such 
agency, the taxpayer, and all successors in in-
terest) as to the limitation amount to be allo-
cated to such building. 
A month may be elected under subparagraph (B) 
only if the election is made not later than the 5th 
day after the close of such month. Such an election, 
once made, shall be irrevocable. 
‘‘(2) METHOD
OF
PRESCRIBING
PERCENT-
AGES.—The percentages prescribed by the Secretary 
for any month shall be percentages which will yield 
over a 15-year period amounts of credit under sub-
section (a) which have a present value equal to 70 
percent of the qualified basis of the building. 
‘‘(3) METHOD OF DISCOUNTING.— 
‘‘(A) IN
GENERAL.—The present value 
under paragraph (2) shall be determined— 
‘‘(i) as of the last day of the 1st year 
of the 15-year period referred to in para-
graph (2), 
‘‘(ii) by using a discount rate equal to 
the applicable discount percentage of the 
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average of the annual Federal mid-term 
rate and the annual Federal long-term rate 
applicable under section 1274(d)(1) to the 
month applicable under subparagraph (A) 
or (B) of paragraph (1) and compounded 
annually, and 
‘‘(iii) by assuming that the credit al-
lowable under this section for any year is 
received on the last day of such year. 
‘‘(B) APPLICABLE
DISCOUNT
PERCENT-
AGE.—For purposes of this paragraph, the term 
‘applicable discount percentage’ means, with re-
spect to any month referred to in subparagraph 
(A)(ii) the number of percentage points by 
which 100 percent exceeds the highest rate of 
tax in effect under section 11 for a taxable year 
which begins in such month. 
‘‘(4) CROSS
REFERENCE.—For treatment of 
certain rehabilitation expenditures as separate new 
buildings, see subsection (e).’’. 
(2) EXISTING
AND
FEDERALLY
SUBSIDIZED 
BUILDINGS INELIGIBLE FOR CREDIT.—Section 42(d) 
is amended— 
(A) by striking paragraphs (1), (2), and 
(6), and redesignating paragraphs (3), (4), (5), 
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and (7) as paragraphs (2), (3), (4), and (5), re-
spectively, and 
(B) by inserting before paragraph (2) (as 
so redesignated) the following new paragraph: 
‘‘(1) IN GENERAL.—The eligible basis of any 
building is— 
‘‘(A) in the case a new building which is 
not Federally subsidized for the taxable year, 
its adjusted basis as of the close of the 1st tax-
able year of the credit period, and 
‘‘(B) zero in any other case.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 42(e) is amended— 
(i) in paragraph (2)(B), by striking 
‘‘paragraph (3) or (4)’’ and inserting 
‘‘paragraph (2) or (3)’’. 
(ii) in paragraph (3), by striking sub-
paragraph (B) and redesignating subpara-
graphs (C) and (D) as subparagraphs (B) 
and (C), respectively, 
(iii) in paragraph (4), by striking the 
last sentence thereof, and 
(iv) by striking paragraph (5) and re-
designating paragraph (6) as paragraph 
(5). 
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(B) Section 42(f) is amended by striking 
paragraph (5). 
(C) Section 42(i)(2)(A) is amended by 
striking ‘‘for purposes of subsection (b)(1),’’. 
(D) Section 42(i)(3) is amended— 
(i) by striking ‘‘(as defined in sub-
section (d)(2)(D)(iii))’’ in subparagraph 
(C)(ii) and inserting ‘‘(within the meaning 
of subparagraph (F))’’, and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(F) RELATED PERSON.—For purposes of 
subparagraph (C), a person (hereinafter in this 
subparagraph referred to as the ‘related per-
son’) is related to any person if the related per-
son bears a relationship to such person speci-
fied in section 267(b) or 707(b)(1), or the re-
lated person and such person are engaged in 
trades or businesses under common control 
(within the meaning of subsections (a) and (b) 
of section 52).’’. 
(E) Section 42(i) is amended by striking 
paragraph (5). 
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(F) Section 42(k)(2)(B) is amended by 
striking ‘‘, except that’’ and all that follows and 
inserting a period. 
(d) REPEAL OF SPECIAL RULES FOR BUILDINGS IN 
HIGH COST AND DIFFICULT DEVELOPMENT AREAS.— 
(1) IN
GENERAL.—Paragraph (4) of section 
42(d), as redesignated by subsection (c)(2), is 
amended to read as follows: 
‘‘(4) FEDERAL GRANTS NOT TAKEN INTO AC-
COUNT IN DETERMINING ELIGIBLE BASIS.—The eli-
gible basis of a building shall not include any costs 
financed with the proceeds of a federally funded 
grant.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (3) of section 42(d), as re-
designated by subsection (c)(2), is amended— 
(i) by striking ‘‘(as defined in para-
graph (5)(C))’’ in subparagraph (C)(i), 
and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(E) QUALIFIED
CENSUS
TRACT.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied census tract’ means any census tract 
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which is designated by the Secretary of 
Housing and Urban Development and, for 
the most recent year for which census data 
are available on household income in such 
tract, either in which 50 percent or more 
of the households have an income which is 
less than 60 percent of the area median 
gross income for such year or which has a 
poverty rate of at least 25 percent. If the 
Secretary of Housing and Urban Develop-
ment determines that sufficient data for 
any period are not available to apply this 
subparagraph on the basis of census tracts, 
such Secretary shall apply this subpara-
graph for such period on the basis of enu-
meration districts. 
‘‘(ii) LIMIT ON MSA’S DESIGNATED.— 
The portion of a metropolitan statistical 
area which may be designated for purposes 
of this subparagraph shall not exceed an 
area having 20 percent of the population of 
such metropolitan statistical area. 
‘‘(iii) DETERMINATION
OF
AREAS.— 
For purposes of this subparagraph, each 
metropolitan statistical area shall be treat-
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ed as a separate area and all nonmetropoli-
tan areas in a State shall be treated as 1 
area.’’. 
(B) Clause (i) of section 42(d)(5)(A), as 
redesignated by subsection (c)(2), is amended 
to read as follows: 
‘‘(i) such building shall be treated as 
a new building, but’’. 
(e) REPEAL OF CERTAIN EXCEPTIONS TO RULES 
AGAINST PREFERENTIAL TREATMENT.—Section 42(g)(9) 
is amended— 
(1) by adding ‘‘or’’ at the end of subparagraph 
(A), and 
(2) by striking subparagraphs (B) and (C) and 
inserting the following new subparagraph: 
‘‘(B) who are veterans (as defined in sec-
tion 101 of title 38, United States Code).’’. 
(f) MODIFICATION OF SELECTION CRITERIA.—Sec-
tion 42(m)(1)(C) is amended— 
(1) by adding ‘‘and’’ at the end of clause (vii), 
(2) by striking the comma at the end of clause 
(viii) and inserting a period, and 
(3) by striking clauses (ix) and (x). 
(g) EFFECTIVE DATE.— 
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(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to State limita-
tion amounts determined for calendar years after 
2014 (and to determinations with respect to alloca-
tions of such limitation amounts). 
(2) TRANSITION RULE.—For purposes of deter-
mining the State limitation amount for calendar 
year 2015 under section 42(h)(3)(C) of the Internal 
Revenue Code of 1986, as amended by this section, 
the amount described in clause (i) of such section 
shall be treated as being equal to the quotient of— 
(A) the amount which would be described 
in section 42(h)(3)(C)(i) of such Code (deter-
mined without regard to the amendments made 
by this section), divided by 
(B) the applicable percentage determined 
under section 42(b)(1)(B)(i) for December 
2014 (determined without regard to the amend-
ments made by this section). 
SEC. 3205. REPEAL OF ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 43 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
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(1) Section 38(b) is amended by striking para-
graph (6). 
(2) Section 6501(m) is amended by striking 
‘‘43,’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 3206. PHASEOUT AND REPEAL OF CREDIT FOR ELEC-
TRICITY PRODUCED FROM CERTAIN RENEW-
ABLE RESOURCES. 
(a) 
REDUCTION
OF
CREDIT
AND
PHASEOUT 
AMOUNTS.— 
(1) IN GENERAL.—Section 45(b) is amended by 
striking paragraph (2). 
(2) 
CONFORMING
AMENDMENTS.—Section 
45(e)(2) is amended— 
(A) by striking ‘‘the inflation adjustment 
factor and’’ in subparagraph (A), and 
(B) by striking subparagraph (B) and re-
designating subparagraph (C) as subparagraph 
(B). 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to electricity, and re-
fined coal, produced and sold after December 31, 
2014. 
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(b) SPECIAL RULE FOR DETERMINING BEGINNING 
OF CONSTRUCTION.— 
(1) IN GENERAL.—Section 45(e) is amended by 
adding at the end the following new paragraph: 
‘‘(12) SPECIAL RULE FOR DETERMINING BE-
GINNING OF CONSTRUCTION.—For purposes of sub-
section (d) and section 48(a)(5), the construction of 
any facility, modification, improvement, addition, or 
other property shall not be treated as beginning be-
fore any date unless there is a continuous program 
of construction which begins before such date and 
ends on the date that such property is placed in 
service.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years begin-
ning before, on, or after the date of the enactment 
of this Act. 
(c) REPEAL OF CREDIT.— 
(1) IN GENERAL.—Subpart D of part IV of 
subchapter A of chapter 1 is amended by striking 
section 45 (and by striking the item relating to such 
section in the table of sections for such subpart). 
(2) CONFORMING AMENDMENT.—Section 38(b) 
is amended by striking paragraph (8). 
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(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to electricity, and re-
fined coal, produced and sold after December 31, 
2024. 
SEC. 3207. REPEAL OF INDIAN EMPLOYMENT CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45A 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.— 
(1) Section 38(b) is amended by striking para-
graph (10). 
(2) Section 139D(c)(1) is amended to read as 
follows: 
‘‘(1) INDIAN TRIBE.—The term ‘Indian tribe’ 
means any Indian tribe, band, nation, pueblo, or 
other organized group or community, including any 
Alaska Native village or regional or village corpora-
tion, as defined in, or established pursuant to, the 
Alaska Native Claims Settlement Act (43 U.S.C. 
1601 et seq.) which is recognized as eligible for the 
special programs and services provided by the 
United States to Indians because of their status as 
Indians.’’. 
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(3) Section 280C(a) is amended by striking 
‘‘45A,’’. 
(4) Section 5000A(e)(3) is amended by striking 
‘‘section 
45A(c)(6)’’ 
and 
inserting 
‘‘section 
139D(c)(1)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
SEC. 3208. REPEAL OF CREDIT FOR PORTION OF EM-
PLOYER SOCIAL SECURITY TAXES PAID WITH 
RESPECT TO EMPLOYEE CASH TIPS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45B 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (11). 
(2) Section 6501(m) is amended by striking 
‘‘45B,’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to tips received for 
services performed after December 31, 2014. 
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SEC. 3209. REPEAL OF CREDIT FOR CLINICAL TESTING EX-
PENSES FOR CERTAIN DRUGS FOR RARE DIS-
EASES OR CONDITIONS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45C 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (12). 
(2) Section 280C is amended by striking sub-
section (b). 
(3) Section 6501(m) is amended by striking 
‘‘45C(d)(4),’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2014. 
SEC. 3210. REPEAL OF CREDIT FOR SMALL EMPLOYER PEN-
SION PLAN STARTUP COSTS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45E 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.—Section 38(b) is 
amended by striking paragraph (14). 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to costs paid or incurred after De-
cember 31, 2014, with respect to qualified employer plans 
first effective after such date. 
SEC. 3211. REPEAL OF EMPLOYER-PROVIDED CHILD CARE 
CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45F 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (15). 
(2) Section 1016(a) is amended by striking 
paragraph (28). 
(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) BASIS
ADJUSTMENTS.—The amendment 
made by subsection (b)(2) shall apply to credits de-
termined for taxable years beginning after December 
31, 2014. 
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SEC. 3212. REPEAL OF RAILROAD TRACK MAINTENANCE 
CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45G 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (16). 
(2) Section 1016(a) is amended by striking 
paragraph (29). 
(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, 2013. 
(2) BASIS
ADJUSTMENTS.—The amendment 
made by subsection (b)(2) shall apply to credits de-
termined for taxable years beginning after December 
31, 2013. 
SEC. 3213. REPEAL OF CREDIT FOR PRODUCTION OF LOW 
SULFUR DIESEL FUEL. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45H 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
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(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (18). 
(2) Section 280C is amended by striking sub-
section (d). 
(3) Section 6501(m) is amended by striking 
‘‘45H(g),’’. 
(4) Section 6720A is amended— 
(A) by striking ‘‘(as defined in section 
45H(c)(3))’’ in subsection (a), and 
(B) by adding at the end the following new 
subsection: 
‘‘(c) APPLICABLE EPA REGULATIONS.—The term 
‘applicable EPA regulations’ means the Highway Diesel 
Fuel Sulfur Control Requirements of the Environmental 
Protection Agency.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid or incurred in 
taxable years beginning after December 31, 2014. 
SEC. 3214. REPEAL OF CREDIT FOR PRODUCING OIL AND 
GAS FROM MARGINAL WELLS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45I 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
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(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (19). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3215. REPEAL OF CREDIT FOR PRODUCTION FROM AD-
VANCED NUCLEAR POWER FACILITIES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45J 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (21). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity produced and sold 
after December 31, 2014. 
SEC. 3216. REPEAL OF CREDIT FOR PRODUCING FUEL 
FROM A NONCONVENTIONAL SOURCE. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45K 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (22). 
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(3) Section 6055(b)(2) is amended by inserting 
‘‘and’’ at the end of subparagraph (A), by striking 
‘‘, and’’ at the end of subparagraph (B) and insert-
ing a period, and by striking subparagraph (C). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred for 
taxable years beginning after December 31, 2014. 
SEC. 3223. REPEAL OF REHABILITATION CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 47 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 170(f)(14)(A) is amended by insert-
ing ‘‘(as in effect before its repeal by the Tax Re-
form Act of 2014)’’ after ‘‘section 47’’. 
(2) Section 170(h)(4) is amended— 
(A) by striking ‘‘(as defined in section 
47(c)(3)(B))’’ in subparagraph (C)(ii), and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) REGISTERED HISTORIC DISTRICT.— 
The term ‘registered historic district’ means— 
‘‘(i) any district listed in the National 
Register, and 
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‘‘(ii) any district— 
‘‘(I) which is designated under a 
statute of the appropriate State or 
local government, if such statute is 
certified by the Secretary of the Inte-
rior to the Secretary as containing cri-
teria which will substantially achieve 
the purpose of preserving and reha-
bilitating buildings of historic signifi-
cance to the district, and 
‘‘(II) which is certified by the 
Secretary of the Interior to the Sec-
retary as meeting substantially all of 
the requirements for the listing of dis-
tricts in the National Register.’’. 
(3) Section 469(i)(3) is amended by striking 
subparagraph (B). 
(4) Section 469(i)(6)(B) is amended— 
(A) by striking ‘‘in the case of—’’ and all 
that follows and inserting ‘‘in the case of any 
credit determined under section 42 for any tax-
able year.’’, and 
(B) by striking ‘‘, REHABILITATION CRED-
IT,’’ in the heading thereof. 
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(5) Section 469(k)(1) is amended by striking ‘‘, 
or any rehabilitation credit determined under section 
47,’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to amounts paid after December 31, 
2014. 
(2) TRANSITION RULE.—In the case of quali-
fied rehabilitation expenditures (within the meaning 
of section 47 of the Internal Revenue Code of 1986 
as in effect before its repeal) with respect to any 
building— 
(A) acquired by the taxpayer before Janu-
ary 1, 2015, and 
(B) with respect to which the 24-month 
period selected by the taxpayer under section 
47(c)(1)(C) of such Code begins not later than 
January 1, 2015, 
the amendments made by this section shall apply to 
amounts paid after December 31, 2016. 
SEC. 3224. REPEAL OF ENERGY CREDIT. 
(a) TERMINATION.—Section 48 is amended by adding 
at the end the following new subsection: 
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‘‘(e) APPLICATION OF SECTION.—This section shall 
not apply to any energy property placed in service after 
December 31, 2016.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2)(A)(i)(II), and clauses (ii) 
and (vii) of paragraph (3)(A), of section 48(a) are 
each amended by striking ‘‘but only with respect to 
periods ending before January 1, 2017’’. 
(2) Paragraph (1) of section 48(c) is amended 
by striking subparagraph (D). 
(3) Paragraph (2) of section 48(c) is amended 
by striking subparagraph (D). 
(4) Subparagraph (A) of section 48(c)(3) is 
amended by inserting ‘‘and’’ at the end of clause 
(ii), by striking ‘‘, and’’ at the end of clause (iii) and 
inserting a period, and by striking clause (iv). 
(5) Paragraph (4) of section 48(c) is amended 
by striking subparagraph (C). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2016. 
SEC. 3225. REPEAL OF QUALIFYING ADVANCED COAL 
PROJECT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 48A 
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(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to allocations and reallocations 
after December 31, 2014. 
SEC. 
3226. 
REPEAL 
OF 
QUALIFYING 
GASIFICATION 
PROJECT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 48B 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to allocations and reallocations 
after December 31, 2014. 
SEC. 3227. REPEAL OF QUALIFYING ADVANCED ENERGY 
PROJECT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 48C 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to allocations and reallocations 
after December 31, 2014. 
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SEC. 3228. REPEAL OF QUALIFYING THERAPEUTIC DIS-
COVERY PROJECT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 48D 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.—Section 280C is 
amended by striking the second subsection (g) (as added 
by the Patient Protection and Affordable Care Act). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to allocations and reallocations 
after December 31, 2014. 
SEC. 3229. REPEAL OF WORK OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Subpart F of part IV of sub-
chapter A of chapter 1 is amended by striking section 51 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CLERICAL AMENDMENT.—The heading of such 
subpart F (and the item relating to such subpart in the 
table of subparts for part IV of subchapter A of chapter 
1) are each amended by striking ‘‘Rules for Computing 
Work Opportunity Credit’’ and inserting ‘‘Special Rules’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred to 
individuals who begin work for the employer after Decem-
ber 31, 2013. 
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SEC. 3230. REPEAL OF DEDUCTION FOR CERTAIN UNUSED 
BUSINESS CREDITS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 196 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
Subtitle D—Accounting Methods 
SEC. 3301. LIMITATION ON USE OF CASH METHOD OF AC-
COUNTING. 
(a) IN GENERAL.—Section 448 is amended to read 
as follows: 
‘‘SEC. 448. LIMITATION ON USE OF CASH METHOD OF AC-
COUNTING. 
‘‘(a) IN GENERAL.—The cash receipts and disburse-
ments method of accounting may only be used by— 
‘‘(1) a natural person, 
‘‘(2) a farming business, and 
‘‘(3) any other entity which meets the gross re-
ceipts test of subsection (b) for the taxable year. 
Such method may not be used by a tax shelter (as defined 
in subsection (d)). 
‘‘(b) GROSS RECEIPTS TEST.—For purposes of this 
section— 
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‘‘(1) IN GENERAL.—An entity meets the gross 
receipts test of this subsection for any taxable year 
if the average annual gross receipts of such entity 
for the 3-taxable-year period ending with the taxable 
year which precedes such taxable year does not ex-
ceed $10,000,000. 
‘‘(2) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b) 
of section 52 or subsection (m) or (o) of section 414 
shall be treated as one entity for purposes of para-
graph (1). 
‘‘(3) SPECIAL
RULES.—For purposes of this 
subsection— 
‘‘(A) NOT IN EXISTENCE FOR ENTIRE 3- 
YEAR PERIOD.—If the entity was not in exist-
ence for the entire 3-year period referred to in 
paragraph (1), such paragraph shall be applied 
on the basis of the period during which such 
entity (or trade or business) was in existence. 
‘‘(B) SHORT TAXABLE YEARS.—Gross re-
ceipts for any taxable year of less than 12 
months shall be annualized by multiplying the 
gross receipts for the short period by 12 and di-
viding the result by the number of months in 
the short period. 
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‘‘(C) GROSS RECEIPTS.—Gross receipts for 
any taxable year shall be reduced by returns 
and allowances made during such year. 
‘‘(D) TREATMENT
OF
PREDECESSORS.— 
Any reference in this subsection to an entity 
shall include a reference to any predecessor of 
such entity. 
‘‘(c) FARMING BUSINESS.—For purposes of this sec-
tion— 
‘‘(1) IN
GENERAL.—The term ‘farming busi-
ness’ means the trade or business of farming. 
‘‘(2) CERTAIN
TRADES
AND
BUSINESSES
IN-
CLUDED.— 
‘‘(A) IN
GENERAL.—The term ‘farming 
business’ shall include the trade or business 
of— 
‘‘(i) operating a nursery or sod farm, 
or 
‘‘(ii) the raising or harvesting of trees 
bearing fruit, nuts, or other crops, or orna-
mental trees. 
‘‘(B) CERTAIN
EVERGREEN
TREES
NOT 
TREATED AS ORNAMENTAL.—For purposes of 
subparagraph (A)(ii), an evergreen tree which is 
more than 6 years old at the time severed from 
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the roots shall not be treated as an ornamental 
tree. 
‘‘(d) TAX SHELTER DEFINED.—For purposes of this 
section, the term ‘tax shelter’ has the meaning given such 
term by section 461(i)(2) (determined after application of 
paragraph (3) thereof). An S corporation shall not be 
treated as a tax shelter for purposes of this section merely 
by reason of being required to file a notice of exemption 
from registration with a State agency described in section 
461(i)(2)(A), but only if there is a requirement applicable 
to all corporations offering securities for sale in the State 
that to be exempt from such registration the corporation 
must file such a notice. 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) COORDINATION
WITH
SECTION
481.—In 
the case of any person required by this section to 
change its method of accounting for any taxable 
year— 
‘‘(A) such change shall be treated as initi-
ated by such person, and 
‘‘(B) such change shall be treated as made 
with the consent of the Secretary. 
‘‘(2) USE
OF
RELATED
PARTIES, ETC.—The 
Secretary shall prescribe such regulations as may be 
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necessary to prevent the use of related parties, pass- 
thru entities, or intermediaries to avoid the applica-
tion of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 446(c)(1) is amended by inserting 
‘‘to the extent provided in section 448,’’ before ‘‘the 
cash receipts’’. 
(2) Section 451 is amended by adding at the 
end the following new subsection: 
‘‘(j) SPECIAL RULE FOR LOSSES OF CERTAIN SERV-
ICE PROVIDERS
ON ACCRUAL METHOD
OF ACCOUNT-
ING.— 
‘‘(1) IN GENERAL.—In the case of any person 
using an accrual method of accounting with respect 
to amounts to be received for the performance of 
services by such person, such person shall not be re-
quired to accrue any portion of such amounts which 
(on the basis of such person’s experience) will not be 
collected if such services are in the fields of health, 
law, engineering, architecture, accounting, actuarial 
science, performing arts, consulting, or any other 
field identified by the Secretary for purposes of this 
subsection. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to any amount if interest is required to be 
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paid on such amount or there is any penalty for fail-
ure to timely pay such amount. 
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe regulations to permit taxpayers to determine 
amounts referred to in paragraph (1) using com-
putations or formulas which, based on experience, 
accurately reflect the amount of income that will not 
be collected by such person. A taxpayer may adopt, 
or request consent of the Secretary to change to, a 
computation or formula that clearly reflects the tax-
payer’s experience. A request under the preceding 
sentence shall be approved if such computation or 
formula clearly reflects the taxpayer’s experience.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
(d) CHANGE IN METHOD OF ACCOUNTING.— 
(1) IN GENERAL.—In the case of any qualified 
change in method of accounting for the taxpayer’s 
first taxable year beginning after December 31, 
2014— 
(A) such change shall be treated as initi-
ated by the taxpayer, 
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(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury, and 
(C) if the net amount of the adjustments 
required to be taken into account by the tax-
payer under section 481 of the Internal Rev-
enue Code of 1986 by reason of such change is 
positive— 
(i) such amount shall be taken into 
account during the 4-taxable year period 
beginning with the earlier of the taxpayer’s 
elected taxable year or the taxpayer’s first 
taxable year beginning after December 31, 
2018, as follows: 
(I) 10 percent of such amount in 
the first taxable year in such period, 
(II) 15 percent of such amount 
in the second taxable year in such pe-
riod, 
(III) 25 percent of such amount 
in the third taxable year in such pe-
riod, and 
(IV) 50 percent of such amount 
in the fourth taxable year in such pe-
riod, and 
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(ii) for purposes of applying the regu-
lations and other guidance issued under 
such section (including any provisions 
which require accelerated inclusion), the 
period beginning with the taxpayer’s first 
taxable year beginning after December 31 
2014, and ending with the taxable year be-
fore the first taxable year referred to in 
clause (i) shall not fail to be taken into ac-
count as part of the period of the adjust-
ment merely because such amount is not 
otherwise taken into account under clause 
(i) during such period. 
(2) QUALIFIED
CHANGE
IN
METHOD
OF
AC-
COUNTING.—For purposes of this subsection, the 
term ‘‘qualified change in method of accounting’’ 
means any change in method of accounting which— 
(A) is required by the amendments made 
by this section, or 
(B) was prohibited under the Internal Rev-
enue Code of 1986 prior to such amendments 
and is permitted under such Code after such 
amendments. 
(3) ELECTED TAXABLE YEAR.—For purposes of 
this subsection, the term ‘‘elected taxable year’’ 
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493 
means such taxable year as the taxpayer may elect 
(at such time and in such form and manner as the 
Secretary may provide) which begins after December 
31, 2014, and is before the taxpayer’s second tax-
able year beginning after December 31, 2018. 
SEC. 3302. RULES FOR DETERMINING WHETHER TAXPAYER 
HAS ADOPTED A METHOD OF ACCOUNTING. 
(a) IN GENERAL.—Section 446 is amended by adding 
at the end the following new subsection: 
‘‘(g) RULES FOR TREATING ACCOUNTING METHOD 
AS ADOPTED
BY TAXPAYER.—If the taxpayer uses a 
method of accounting with respect to any item on any re-
turn of tax— 
‘‘(1) in the case of any method of accounting 
which the taxpayer is permitted to use with respect 
to such item, such method shall be treated as having 
been adopted by the taxpayer with respect to such 
item, and 
‘‘(2) in the case of any method of accounting 
which the taxpayer is not permitted to use with re-
spect to such item, such method shall be treated as 
having been adopted by the taxpayer with respect to 
such item if the taxpayer used the same method with 
respect to such item on the return of tax for the pre-
ceding taxable year.’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3303. CERTAIN SPECIAL RULES FOR TAXABLE YEAR 
OF INCLUSION. 
(a) INCLUSION NOT LATER THAN FOR FINANCIAL 
ACCOUNTING PURPOSES.—Section 451 is amended by re-
designating subsections (b) through (j) as subsection (c) 
through (k), respectively, and by inserting after subsection 
(a) the following new subsection: 
‘‘(b) INCLUSION NOT LATER THAN FOR FINANCIAL 
ACCOUNTING PURPOSES.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
the taxable income of which is computed under the 
accrual method of accounting, the amount of any 
portion of any item of income shall be included in 
gross income not later than the taxable year with re-
spect to which such amount is taken into account as 
income in— 
‘‘(A) an audited financial statement of the 
taxpayer described in section 1221(b)(3)(B), or 
‘‘(B) such other financial statement as the 
Secretary may specify for purposes of this sub-
section. 
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495 
‘‘(2) COORDINATION WITH SPECIAL RULES FOR 
LONG-TERM CONTRACTS.—Paragraph (1) shall not 
apply with respect to any item of income to which 
section 460 applies.’’. 
(b) TREATMENT OF ADVANCE PAYMENTS.—Section 
451, as amended by subsection (a), is amended by redesig-
nating subsections (c) through (k) as subsections (d) 
through (l), respectively, and by inserting after subsection 
(b) the following new subsection: 
‘‘(c) TREATMENT OF ADVANCE PAYMENTS.— 
‘‘(1) IN GENERAL.—A taxpayer which computes 
taxable income under the accrual method of account-
ing, and receives any advance payment during the 
taxable year, shall— 
‘‘(A) except as provided in subparagraph 
(B), include such advance payment in gross in-
come for such taxable year, or 
‘‘(B) if the taxpayer elects the application 
of this subparagraph with respect to the cat-
egory of advance payments to which such ad-
vance payment belongs, the taxpayer shall— 
‘‘(i) to the extent that any portion of 
such advance payment is required under 
subsection (b) to be included in gross in-
come in the taxable year in which such 
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payment is received, so include such por-
tion, and 
‘‘(ii) include the remaining portion of 
such advance payment in gross income in 
the taxable year following the taxable year 
in which such payment is received. 
‘‘(2) ELECTION.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the election under 
paragraph (1)(B) shall be made at such time, 
in such form and manner, and with respect to 
such categories of advance payments, as the 
Secretary may provide. 
‘‘(B) PERIOD
TO
WHICH
ELECTION
AP-
PLIES.—An election under paragraph (1)(B) 
shall be effective for the taxable year with re-
spect to which it is first made and for all subse-
quent taxable years, unless the taxpayer secures 
the consent of the Secretary to revoke such 
election. For purposes of this title, the com-
putation of taxable income under an election 
made under paragraph (1)(B) shall be treated 
as a method of accounting. 
‘‘(3) ADVANCE PAYMENT.—For purposes of this 
subsection— 
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‘‘(A) IN
GENERAL.—The term ‘advance 
payment’ means any payment— 
‘‘(i) the full inclusion of which in the 
gross income of the taxpayer for the tax-
able year of receipt is a permissible method 
of accounting under this section (deter-
mined without regard to this subsection), 
and 
‘‘(ii) which is for goods, services, or 
such other items as may be identified by 
the Secretary for purposes of this clause. 
‘‘(B) EXCLUSIONS.—Except as otherwise 
provided by the Secretary, such term shall not 
include— 
‘‘(i) rent, 
‘‘(ii) insurance premiums, 
‘‘(iii) payments with respect to finan-
cial instruments, 
‘‘(iv) payments with respect to war-
ranty or guarantee contracts under which 
a third party is the primary obligor, 
‘‘(v) payments subject to section 
871(a), 881, 1441, or 1442, 
‘‘(vi) payments in property to which 
section 83 applies, and 
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‘‘(vii) any other payment identified by 
the Secretary for purposes of this subpara-
graph.’’. 
(c) CROP INSURANCE PROCEEDS
AND DISASTER 
PAYMENTS.—Section 451, as amended by subsections (a) 
and (b), is amended by striking subsection (f). 
(d) LIVESTOCK SOLD ON ACCOUNT OF DROUGHT, 
FLOOD, AND OTHER WEATHER-RELATED CONDITIONS.— 
Section 451, as amended by subsections (a) and (b), is 
amended by striking subsection (g). 
(e) SALES OR DISPOSITIONS TO IMPLEMENT FED-
ERAL ENERGY REGULATORY COMMISSION
OR STATE 
ELECTRIC RESTRUCTURING POLICY.—Section 451, as 
amended by subsections (a) and (b), is amended by strik-
ing subsection (k). 
(f) CONFORMING AMENDMENTS.—Section 451, as 
amended by subsections (a), (b), (c), (d), and (e), is 
amended by redesignating subsections (h), (i), (j), and (l) 
as subsections (f), (g), (h), and (i), respectively. 
(g) 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. 
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(2) CROP INSURANCE PROCEEDS AND DISASTER 
PAYMENTS.—— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
subsection (c) shall apply to destruction and 
damage of crops occurring after December 31, 
2014. 
(B) INABILITY TO PLANT.—In the case of 
inability to plant crops because of a natural dis-
aster, the amendments made by subsection (c) 
shall apply to natural disasters occurring after 
December 31, 2014. 
(3) LIVESTOCK.—The amendments made by 
subsection (d) shall apply to sales and exchanges 
after December 31, 2014. 
(4) SALES
OR
DISPOSITIONS
TO
IMPLEMENT 
ELECTRIC
RESTRUCTURING
POLICY.—The amend-
ments made by subsection (e) shall apply to sales 
and dispositions after December 31, 2013. 
(5) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer required by the amend-
ments made by subsections (a) and (b) to change its 
method of accounting for its first taxable year begin-
ning after December 31, 2014— 
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(A) such change shall be treated as initi-
ated by the taxpayer, and 
(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury. 
SEC. 3304. INSTALLMENT SALES. 
(a) REPEAL
OF EXCEPTIONS
TO TREATMENT
AS 
DEALER DISPOSITIONS.—Section 453(l) is amended to 
read as follows: 
‘‘(l) DEALER DISPOSITIONS.—For purposes of sub-
section (b)(2)(A), the term ‘dealer disposition’ means any 
of the following dispositions: 
‘‘(1) PERSONAL PROPERTY.—Any disposition of 
personal property by a person who regularly sells or 
otherwise disposes of personal property of the same 
type on the installment plan. 
‘‘(2) REAL PROPERTY.—Any disposition of real 
property which is held by the taxpayer for sale to 
customers in the ordinary course of the taxpayer’s 
trade or business.’’. 
(b) MODIFICATION OF RULES FOR NONDEALERS.— 
(1) REPEAL OF SPECIAL RULE FOR INTEREST 
PAYMENTS.—Section 453A(b)(2) is amended to read 
as follows: 
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‘‘(2) INTEREST PAYMENT EXCEPTION FOR OB-
LIGATIONS NOT OUTSTANDING AT CLOSE OF TAX-
ABLE YEAR.—Subsection (a)(1) shall apply to an ob-
ligation described in paragraph (1) arising during 
any taxable year only if such obligation is out-
standing as of the close of such taxable year.’’. 
(2) REPEAL OF EXCEPTION FOR FARM PROP-
ERTY.—Section 453A(b)(3) is amended— 
(A) by striking ‘‘from the disposition—’’ 
and all that follows and inserting ‘‘from the dis-
position by an individual of personal use prop-
erty 
(within 
the 
meaning 
of 
section 
1275(b)(3)).’’, and 
(B) by striking ‘‘AND FARM’’ in the head-
ing. 
(3) 
REPEAL
OF
SPECIAL
RULE
FOR 
TIMESHARES
AND
RESIDENTIAL
LOTS.—Section 
453A(b) is amended by striking paragraph (4) and 
by redesignating paragraph (5) as paragraph (4). 
(4) 
CONFORMING
AMENDMENT.—Section 
453A(c) is amended— 
(A) by striking ‘‘the applicable percentage 
of’’ in paragraph (2)(A), and 
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(B) by striking paragraph (4) and by re-
designating paragraphs (5) and (6) as para-
graphs (4) and (5), respectively. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales and other dispositions 
after December 31, 2014. 
SEC. 3305. REPEAL OF SPECIAL RULE FOR PREPAID SUB-
SCRIPTION INCOME. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter E of chapter 1 is amended by striking section 455 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments received after Decem-
ber 31, 2014. 
SEC. 3306. REPEAL OF SPECIAL RULE FOR PREPAID DUES 
INCOME OF CERTAIN MEMBERSHIP ORGANI-
ZATIONS. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter E of chapter 1 is amended by striking section 456 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 277(b)(2) 
is amended by inserting ‘‘(as in effect before its repeal)’’ 
after ‘‘section 456(c)’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments received after Decem-
ber 31, 2014. 
SEC. 3307. REPEAL OF SPECIAL RULE FOR MAGAZINES, PA-
PERBACKS, AND RECORDS RETURNED AFTER 
CLOSE OF THE TAXABLE YEAR. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter E of chapter 1 is amended by striking section 458 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2014. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer required by the amend-
ments made by this section to change its method of 
accounting for its first taxable year beginning after 
December 31, 2014— 
(A) such change shall be treated as initi-
ated by the taxpayer, and 
(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury. 
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SEC. 3308. MODIFICATION OF RULES FOR LONG-TERM CON-
TRACTS. 
(a) REPEAL OF EXCEPTION FOR HOME CONSTRUC-
TION CONTRACTS.—Paragraph (1) of section 460(e) is 
amended to read as follows: 
‘‘(1) EXCEPTION FOR CERTAIN CONSTRUCTION 
CONTRACTS.—Subsections (a), (b), and (c)(1) and 
(2) shall not apply to any construction contract en-
tered into by a taxpayer— 
‘‘(A) who estimates (at the time such con-
tract is entered into) that such contract will be 
completed within the 2-year period beginning on 
the contract commencement date of such con-
tract, and 
‘‘(B) whose average annual gross receipts 
for the 3 taxable years preceding the taxable 
year in which such contract is entered into do 
not exceed $10,000,000. 
For purposes of this paragraph, rules similar to the 
rules of paragraphs (2) and (3) of section 448(b) 
shall apply.’’. 
(b) REPEAL OF SPECIAL RULE FOR OTHER RESI-
DENTIAL CONSTRUCTION CONTRACTS.—Section 460(e) is 
amended by striking paragraphs (5) and (6). 
(c) REPEAL
OF SPECIAL RULES
FOR QUALIFIED 
SHIP CONTRACTS.— 
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(1) IN
GENERAL.—Section 10203(b) of the 
Revenue Act of 1987 is amended by striking para-
graph (2). 
(2) QUALIFIED NAVAL SHIP CONTRACTS.—The 
American Jobs Creation Act of 2004 is amended by 
striking section 708. 
(d) CONFORMING AMENDMENTS.—Section 460(e) is 
amended by striking paragraphs (2) and (3) and by redes-
ignating paragraph (4) as paragraph (2). 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contracts entered into after De-
cember 31, 2014. 
SEC. 3309. NUCLEAR DECOMMISSIONING RESERVE FUNDS. 
(a) GROSS INCOME ON NUCLEAR DECOMMISSIONING 
RESERVE FUNDS TAXED AT CORPORATE RATE.—Section 
468A(e)(2) is amended by striking ‘‘at the rate of 20 per-
cent’’ and inserting ‘‘at a rate equal to the maximum rate 
in effect for such taxable year under section 11’’. 
(b) INCOME INCLUSION UPON DISQUALIFIED DIS-
TRIBUTION.—Section 468A(c)(1) is amended by striking 
‘‘and’’ at the end of subparagraph (A), by striking the 
period at the end of subparagraph (B) and inserting ‘‘, 
and’’, and by adding at the end the following new subpara-
graph: 
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‘‘(C) if any distribution is made from the 
Fund during such taxable year which is not 
used as provided in subsection (e)(4), the bal-
ance of the Fund determined immediately be-
fore such distribution.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
SEC. 3310. REPEAL OF LAST-IN, FIRST-OUT METHOD OF IN-
VENTORY. 
(a) IN GENERAL.—Section 471 is amended by redes-
ignating subsection (c) as subsection (d) and by inserting 
after subsection (b) the following new subsection: 
‘‘(c) LAST-IN, FIRST-OUT METHOD NOT PERMIS-
SIBLE.—The last-in, first-out method of determining in-
ventories shall in no event be treated as clearly reflecting 
income.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subpart D of part II of subchapter E of 
chapter 1 is amended by striking sections 472, 473, 
and 474 (and by striking the items relating to such 
sections in the table of sections for such subpart). 
(2)(A) Section 312(n), as amended by the pre-
ceding provisions of this Act, is amended by striking 
paragraph (3) and by redesignating paragraphs (4) 
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through (7) as paragraphs (3) through (6), respec-
tively. 
(B) Section 312(n)(6), as amended by the pre-
ceding provisions of this Act, is amended— 
(i) by striking ‘‘paragraphs (4) and (6)’’ in 
subparagraph (A) and inserting ‘‘paragraph 
(4)’’, and 
(ii) by striking ‘‘paragraph (5)’’ in sub-
paragraph (B) and inserting ‘‘paragraph (3)’’. 
(C) Section 301(e)(3), as amended by the pre-
ceding provisions of this Act, is amended— 
(i) by striking ‘‘paragraph (6)’’ and insert-
ing ‘‘paragraph (5)’’, and 
(ii) by striking ‘‘SECTION 312(n)(6)’’ in 
the 
heading 
and 
inserting 
‘‘SECTION 
312(n)(5)’’. 
(D) Section 952(c)(3), as amended by the pre-
ceding provisions of this Act, is amended by striking 
‘‘paragraphs (3), (4), and (5)’’ and inserting ‘‘para-
graphs (2), (3), and (4)’’. 
(E) Section 1293(e)(3), as amended by the pre-
ceding provisions of this Act, is amended by striking 
‘‘paragraphs (3), (4), and (5)’’ and inserting ‘‘para-
graphs (2), (3), and (4)’’. 
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