100 
(3) TIME FOR FILING CLAIMS.—No claim shall 
be allowed under paragraph (1) unless the ultimate 
purchaser files such claim before the date that is 3 
months after the date of the enactment of this Act. 
(4) NO DOUBLE BENEFIT.—No amount shall be 
paid under paragraph (1) or section 6427(l) of the 
Internal Revenue Code of 1986 with respect to any 
kerosene described in paragraph (1) to the extent 
that such amount is in excess of the tax imposed on 
such kerosene under section 4041 or 4081 of such 
Code, as the case may be. 
(5) APPLICABLE LAWS.—For purposes of this 
subsection, rules similar to the rules of section 
6427(j) of the Internal Revenue Code of 1986 shall 
apply. 
SEC. 252. DEDUCTION FOR QUALIFIED TIMBER GAIN. 
(a) IN GENERAL.—Part I of subchapter P of chapter 
1 is amended by adding at the end the following new sec-
tion: 
‘‘SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN. 
‘‘(a) IN GENERAL.—In the case of a taxpayer which 
elects the application of this section for a taxable year, 
there shall be allowed a deduction against gross income 
equal to 60 percent of the lesser of— 
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‘‘(1) the taxpayer’s qualified timber gain for 
such year, or 
‘‘(2) the taxpayer’s net capital gain for such 
year. 
‘‘(b) QUALIFIED TIMBER GAIN.—For purposes of 
this section, the term ‘qualified timber gain’ means, with 
respect to any taxpayer for any taxable year, the excess 
(if any) of— 
‘‘(1) the sum of the taxpayer’s gains described 
in subsections (a) and (b) of section 631 for such 
year, over 
‘‘(2) the sum of the taxpayer’s losses described 
in such subsections for such year. 
‘‘(c) SPECIAL RULES FOR PASS-THRU ENTITIES.— 
In the case of any qualified timber gain of a pass-thru 
entity (as defined in section 1(h)(10))— 
‘‘(1) the election under this section shall be 
made separately by each taxpayer subject to tax on 
such gain, and 
‘‘(2) the Secretary may prescribe such regula-
tions as are appropriate to apply this section to such 
gain. 
‘‘(d) TERMINATION.—No disposition of timber after 
December 31, 2007, shall be taken into account under 
subsection (b).’’. 
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(b) COORDINATION WITH MAXIMUM CAPITAL GAINS 
RATES.— 
(1) 
TAXPAYERS
OTHER
THAN
CORPORA-
TIONS.—Paragraph (2) of section 1(h) is amended 
to read as follows: 
‘‘(2) REDUCTION OF NET CAPITAL GAIN.—For 
purposes of this subsection, the net capital gain for 
any taxable year shall be reduced (but not below 
zero) by the sum of— 
‘‘(A) the amount which the taxpayer takes 
into account as investment income under sec-
tion 163(d)(4)(B)(iii), and 
‘‘(B) in the case of a taxable year with re-
spect to which an election is in effect under sec-
tion 1203, the lesser of— 
‘‘(i) the amount described in para-
graph (1) of section 1203(a), or 
‘‘(ii) the amount described in para-
graph (2) of such section.’’. 
(2) CORPORATIONS.—Section 1201 is amended 
by redesignating subsection (b) as subsection (c) and 
inserting after subsection (a) the following new sub-
section: 
‘‘(b) QUALIFIED TIMBER GAIN NOT TAKEN INTO 
ACCOUNT.—For purposes of this section, in the case of 
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