I 
111TH CONGRESS 
1ST SESSION 
H. R. 598 
To provide for a portion of the economic recovery package relating to revenue 
measures, unemployment, and health. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 16, 2009 
Mr. RANGEL (for himself, Mr. STARK, and Mr. MCDERMOTT) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committees on Energy and Commerce, Science and 
Technology, Education and Labor, and Financial Services, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To provide for a portion of the economic recovery package 
relating to revenue measures, unemployment, and health. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
TITLE I—TAX PROVISIONS 
SECTION 1000. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This title may be cited as the 
‘‘American Recovery and Reinvestment Tax Act of 2009’’. 
(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this title an amendment or repeal is 
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expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the In-
ternal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this title is as follows: 
Sec. 1000. Short title, etc. 
Subtitle A—Making Work Pay 
Sec. 1001. Making work pay credit. 
Subtitle B—Additional Tax Relief for Families With Children 
Sec. 1101. Temporary increase in earned income tax credit. 
Sec. 1102. Temporary increase of refundable portion of child credit. 
Subtitle C—American Opportunity Tax Credit 
Sec. 1201. American opportunity tax credit. 
Subtitle D—Housing Incentives 
Sec. 1301. Waiver of requirement to repay first-time homebuyer credit. 
Sec. 1302. Coordination of low-income housing credit and low-income housing 
grants. 
Subtitle E—Tax Incentives for Business 
PART I—TEMPORARY INVESTMENT INCENTIVES 
Sec. 1401. Special allowance for certain property acquired during 2009. 
Sec. 1402. Temporary increase in limitations on expensing of certain depre-
ciable business assets. 
PART II—5-YEAR CARRYBACK OF OPERATING LOSSES 
Sec. 1411. 5-year carryback of operating losses. 
Sec. 1412. Exception for TARP recipients. 
PART III—INCENTIVES FOR NEW JOBS 
Sec. 1421. Incentives to hire unemployed veterans and disconnected youth. 
PART IV—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON 
CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE 
Sec. 1431. Clarification of regulations related to limitations on certain built-in 
losses following an ownership change. 
Subtitle F—Fiscal Relief for State and Local Governments 
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PART I—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS 
Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of 
financial institutions. 
Sec. 1502. Modification of small issuer exception to tax-exempt interest expense 
allocation rules for financial institutions. 
Sec. 1503. Temporary modification of alternative minimum tax limitations on 
tax-exempt bonds. 
PART II—TAX CREDIT BONDS FOR SCHOOLS 
Sec. 1511. Qualified school construction bonds. 
Sec. 1512. Extension and expansion of qualified zone academy bonds. 
PART III—TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS 
Sec. 1521. Taxable bond option for governmental bonds. 
PART IV—RECOVERY ZONE BONDS 
Sec. 1531. Recovery zone bonds. 
Sec. 1532. Tribal economic development bonds. 
PART V—REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS 
Sec. 1541. Repeal of withholding tax on government contractors. 
Subtitle G—Energy Incentives 
PART I—RENEWABLE ENERGY INCENTIVES 
Sec. 1601. Extension of credit for electricity produced from certain renewable 
resources. 
Sec. 1602. Election of investment credit in lieu of production credit. 
Sec. 1603. Repeal of certain limitations on credit for renewable energy prop-
erty. 
Sec. 1604. Coordination with renewable energy grants. 
PART II—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY 
BONDS AND QUALIFIED ENERGY CONSERVATION BONDS 
Sec. 1611. Increased limitation on issuance of new clean renewable energy 
bonds. 
Sec. 1612. Increased limitation on issuance of qualified energy conservation 
bonds. 
PART III—ENERGY CONSERVATION INCENTIVES 
Sec. 1621. Extension and modification of credit for nonbusiness energy prop-
erty. 
Sec. 1622. Modification of credit for residential energy efficient property. 
Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling 
property. 
PART IV—ENERGY RESEARCH INCENTIVES 
Sec. 1631. Increased research credit for energy research. 
Subtitle H—Other Provisions 
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PART I—APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS 
FINANCED WITH CERTAIN TAX-FAVORED BONDS 
Sec. 1701. Application of certain labor standards to projects financed with cer-
tain tax-favored bonds. 
PART II—GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING 
Sec. 1711. Grants to States for low-income housing projects in lieu of low-in-
come housing credit allocations for 2009. 
PART III—GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX 
CREDITS 
Sec. 1721. Grants for specified energy property in lieu of tax credits. 
Subtitle A—Making Work Pay 
SEC. 1001. MAKING WORK PAY CREDIT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 36 the following new section: 
‘‘SEC. 36A. MAKING WORK PAY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible individual, there shall be allowed as a credit against 
the tax imposed by this subtitle for the taxable year an 
amount equal to the lesser of— 
‘‘(1) 6.2 percent of earned income of the tax-
payer, or 
‘‘(2) $500 ($1,000 in the case of a joint re-
turn). 
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) (determined without re-
gard to this paragraph) for the taxable year shall be 
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reduced (but not below zero) by 2 percent of so 
much of the taxpayer’s modified adjusted gross in-
come as exceeds $75,000 ($150,000 in the case of 
a joint return). 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of subparagraph (A), the term ‘modi-
fied adjusted gross income’ means the adjusted 
gross income of the taxpayer for the taxable year in-
creased by any amount excluded from gross income 
under section 911, 931, or 933. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means any individual other than— 
‘‘(A) any nonresident alien individual, 
‘‘(B) any individual with respect to whom 
a deduction under section 151 is allowable to 
another taxpayer for a taxable year beginning 
in the calendar year in which the individual’s 
taxable year begins, and 
‘‘(C) an estate or trust. 
‘‘(2) EARNED INCOME.—The term ‘earned in-
come’ has the meaning given such term by section 
32(c)(2), except that such term shall not include net 
earnings from self-employment which are not taken 
into account in computing taxable income. For pur-
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poses of the preceding sentence, any amount ex-
cluded from gross income by reason of section 112 
shall be treated as earned income which is taken 
into account in computing taxable income for the 
taxable year. 
‘‘(d) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2010.’’. 
(b) TREATMENT OF POSSESSIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR CODE POSSESSION.—The Sec-
retary of the Treasury shall pay to each posses-
sion of the United States with a mirror code 
tax system amounts equal to the loss to that 
possession by reason of the amendments made 
by this section with respect to taxable years be-
ginning in 2009 and 2010. Such amounts shall 
be determined by the Secretary of the Treasury 
based on information provided by the govern-
ment of the respective possession. 
(B) OTHER POSSESSIONS.—The Secretary 
of the Treasury shall pay to each possession of 
the United States which does not have a mirror 
code tax system amounts estimated by the Sec-
retary of the Treasury as being equal to the ag-
gregate benefits that would have been provided 
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to residents of such possession by reason of the 
amendments made by this section for taxable 
years beginning in 2009 and 2010 if a mirror 
code tax system had been in effect in such pos-
session. The preceding sentence shall not apply 
with respect to any possession of the United 
States unless such possession has a plan, which 
has been approved by the Secretary of the 
Treasury, under which such possession will 
promptly distribute such payments to the resi-
dents of such possession. 
(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No cred-
it shall be allowed against United States income 
taxes for any taxable year under section 36A of the 
Internal Revenue Code of 1986 (as added by this 
section) to any person— 
(A) to whom a credit is allowed against 
taxes imposed by the possession by reason of 
the amendments made by this section for such 
taxable year, or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B) with respect 
to such taxable year. 
(3) DEFINITIONS AND SPECIAL RULES.— 
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(A) 
POSSESSION
OF
THE
UNITED 
STATES.—For purposes of this subsection, the 
term ‘‘possession of the United States’’ includes 
the Commonwealth of Puerto Rico and the 
Commonwealth of the Northern Mariana Is-
lands. 
(B) MIRROR CODE TAX SYSTEM.—For pur-
poses of this subsection, the term ‘‘mirror code 
tax system’’ means, with respect to any posses-
sion of the United States, the income tax sys-
tem of such possession if the income tax liabil-
ity of the residents of such possession under 
such system is determined by reference to the 
income tax laws of the United States as if such 
possession were the United States. 
(C) TREATMENT OF PAYMENTS.—For pur-
poses of section 1324(b)(2) of title 31, United 
States Code, the payments under this sub-
section shall be treated in the same manner as 
a refund due from the credit allowed under sec-
tion 36A of the Internal Revenue Code of 1986 
(as added by this section). 
(c) REFUNDS DISREGARDED IN THE ADMINISTRA-
TION
OF FEDERAL PROGRAMS
AND FEDERALLY AS-
SISTED PROGRAMS.—Any credit or refund allowed or 
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made to any individual by reason of section 36A of the 
Internal Revenue Code of 1986 (as added by this section) 
or by reason of subsection (b) of this section shall not be 
taken into account as income and shall not be taken into 
account as resources for the month of receipt and the fol-
lowing 2 months, for purposes of determining the eligi-
bility of such individual or any other individual for benefits 
or assistance, or the amount or extent of benefits or assist-
ance, under any Federal program or under any State or 
local program financed in whole or in part with Federal 
funds. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 6211(b)(4)(A) is amended by insert-
ing ‘‘36A,’’ after ‘‘36,’’. 
(2) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36A,’’ after 
‘‘36,’’. 
(3) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 36 the fol-
lowing new item: 
‘‘Sec. 36A. Making work pay credit.’’. 
(e) EFFECTIVE DATE.—This section shall apply to 
taxable years beginning after December 31, 2008. 
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‘‘(II) the cost of living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which the tax-
able year begins determined by sub-
stituting ‘calendar year 2008’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
‘‘(iii) ROUNDING.—Subparagraph (A) 
of subsection (j)(2) shall apply after taking 
into account any increase under clause 
(ii).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 1102. TEMPORARY INCREASE OF REFUNDABLE POR-
TION OF CHILD CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 24(d) is 
amended to read as follows: 
‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not-
withstanding paragraph (3), in the case of any tax-
able year beginning in 2009 or 2010, the dollar 
amount in effect for such taxable year under para-
graph (1)(B)(i) shall be zero.’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Subtitle C—American Opportunity 
Tax Credit 
SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Section 25A (relating to Hope 
scholarship credit) is amended by redesignating subsection 
(i) as subsection (j) and by inserting after subsection (h) 
the following new subsection: 
‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 
case of any taxable year beginning in 2009 or 2010— 
‘‘(1) INCREASE IN CREDIT.—The Hope Scholar-
ship Credit shall be an amount equal to the sum 
of— 
‘‘(A) 100 percent of so much of the quali-
fied tuition and related expenses paid by the 
taxpayer during the taxable year (for education 
furnished to the eligible student during any 
academic period beginning in such taxable year) 
as does not exceed $2,000, plus 
‘‘(B) 25 percent of such expenses so paid 
as exceeds $2,000 but does not exceed $4,000. 
‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF 
POST-SECONDARY EDUCATION.—Subparagraphs (A) 
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and (C) of subsection (b)(2) shall be applied by sub-
stituting ‘4’ for ‘2’. 
‘‘(3) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES
TO
INCLUDE
REQUIRED
COURSE
MATE-
RIALS.—Subsection (f)(1)(A) shall be applied by 
substituting ‘tuition, fees, and course materials’ for 
‘tuition and fees’. 
‘‘(4) INCREASE
IN
AGI
LIMITS
FOR
HOPE 
SCHOLARSHIP
CREDIT.—In lieu of applying sub-
section (d) with respect to the Hope Scholarship 
Credit, such credit (determined without regard to 
this paragraph) shall be reduced (but not below 
zero) by the amount which bears the same ratio to 
such credit (as so determined) as— 
‘‘(A) the excess of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income (as defined in subsection 
(d)(3)) for such taxable year, over 
‘‘(ii) $80,000 ($160,000 in the case of 
a joint return), bears to 
‘‘(B) $10,000 ($20,000 in the case of a 
joint return). 
‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE 
MINIMUM TAX.—In the case of a taxable year to 
which section 26(a)(2) does not apply, so much of 
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the credit allowed under subsection (a) as is attrib-
utable to the Hope Scholarship Credit shall not ex-
ceed the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section and 
sections 23, 25D, and 30D) and section 27 for 
the taxable year. 
Any reference in section 24, 25, 26, 25B, 904, or 
1400C to a credit allowed under this subsection shall 
be treated as a reference to so much of the credit 
allowed under subsection (a) as is attributable to the 
Hope Scholarship Credit. 
‘‘(6) PORTION
OF
CREDIT
MADE
REFUND-
ABLE.—40 percent of so much of the credit allowed 
under subsection (a) as is attributable to the Hope 
Scholarship Credit (determined after application of 
paragraph (4) and without regard to this paragraph 
and section 26(a)(2) or paragraph (5), as the case 
may be) shall be treated as a credit allowable under 
subpart C (and not allowed under subsection (a)). 
The preceding sentence shall not apply to any tax-
payer for any taxable year if such taxpayer is a child 
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to whom subsection (g) of section 1 applies for such 
taxable year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 24(b)(3)(B) is amended by inserting 
‘‘25A(i),’’ after ‘‘23,’’. 
(2) Section 25(e)(1)(C)(ii) is amended by in-
serting ‘‘25A(i),’’ after ‘‘24,’’. 
(3) Section 26(a)(1) is amended by inserting 
‘‘25A(i),’’ after ‘‘24,’’. 
(4) Section 25B(g)(2) is amended by inserting 
‘‘25A(i),’’ after ‘‘23,’’. 
(5) Section 904(i) is amended by inserting 
‘‘25A(i),’’ after ‘‘24,’’. 
(6) Section 1400C(d)(2) is amended by insert-
ing ‘‘25A(i),’’ after ‘‘24,’’. 
(7) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘25A,’’ before 
‘‘35’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
(d) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by subsection (b)(1) shall be subject to 
title IX of the Economic Growth and Tax Relief Reconcili-
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ation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates. 
(e) TREASURY STUDIES REGARDING EDUCATION IN-
CENTIVES.— 
(1) STUDY
REGARDING
COORDINATION
WITH 
NON-TAX
EDUCATIONAL
INCENTIVES.—The Sec-
retary of the Treasury, or the Secretary’s delegate, 
shall study how to coordinate the credit allowed 
under section 25A of the Internal Revenue Code of 
1986 with the Federal Pell Grant program under 
section 401 of the Higher Education Act of 1965. 
(2) STUDY REGARDING IMPOSITION OF COMMU-
NITY
SERVICE
REQUIREMENTS.—The Secretary of 
the Treasury, or the Secretary’s delegate, shall study 
the feasibility of requiring students to perform com-
munity service as a condition of taking their tuition 
and related expenses into account under section 25A 
of the Internal Revenue Code of 1986. 
(3) REPORT.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of 
the Treasury, or the Secretary’s delegate, shall re-
port to Congress on the results of the studies con-
ducted under this paragraph. 
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Subtitle D—Housing Incentives 
SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST- 
TIME HOMEBUYER CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 36(f) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(D) WAIVER OF RECAPTURE FOR PUR-
CHASES IN 2009.—In the case of any credit al-
lowed with respect to the purchase of a prin-
cipal residence after December 31, 2008, and 
before July 1, 2009— 
‘‘(i) paragraph (1) shall not apply, 
and 
‘‘(ii) paragraph (2) shall apply only if 
the disposition or cessation described in 
paragraph (2) with respect to such resi-
dence occurs during the 36-month period 
beginning on the date of the purchase of 
such residence by the taxpayer.’’. 
(b) CONFORMING AMENDMENT.—Subsection (g) of 
section 36 is amended by striking ‘‘subsection (c)’’ and 
inserting ‘‘subsections (c) and (f)(4)(D)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to residences purchased after De-
cember 31, 2008. 
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SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 
CREDIT AND LOW-INCOME HOUSING GRANTS. 
Subsection (i) of section 42 of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(9) COORDINATION WITH LOW-INCOME HOUS-
ING GRANTS.— 
‘‘(A) REDUCTION
IN
STATE
HOUSING 
CREDIT
CEILING
FOR
LOW-INCOME
HOUSING 
GRANTS RECEIVED IN 2009.—For purposes of 
this section, the amounts described in clauses 
(i) through (iv) of subsection (h)(3)(C) with re-
spect to any State for 2009 shall each be re-
duced by so much of such amount as is taken 
into account in determining the amount of any 
grant to such State under section 1711 of the 
American Recovery and Reinvestment Tax Act 
of 2009. 
‘‘(B) SPECIAL RULE FOR BASIS.—Basis of 
a qualified low-income building shall not be re-
duced by the amount of any grant described in 
subparagraph (A).’’. 
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Subtitle E—Tax Incentives for 
Business 
PART I—TEMPORARY INVESTMENT INCENTIVES 
SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 
ACQUIRED DURING 2009. 
(a) IN GENERAL.—Paragraph (2) of section 168(k) 
is amended— 
(1) by striking ‘‘January 1, 2010’’ and insert-
ing ‘‘January 1, 2011’’, and 
(2) by striking ‘‘January 1, 2009’’ each place 
it appears and inserting ‘‘January 1, 2010’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for subsection (k) of section 
168 is amended by striking ‘‘JANUARY 1, 2009’’ and 
inserting ‘‘JANUARY 1, 2010’’. 
(2) The heading for clause (ii) of section 
168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY 
1, 2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 
(3) Subparagraph (D) of section 168(k)(4) is 
amended— 
(A) by striking ‘‘and’’ at the end of clause 
(i), 
(B) by redesignating clause (ii) as clause 
(v), and 
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(C) by inserting after clause (i) the fol-
lowing new clauses: 
‘‘(ii) ‘April 1, 2008’ shall be sub-
stituted for ‘January 1, 2008’ in subpara-
graph (A)(iii)(I) thereof, 
‘‘(iii) ‘January 1, 2009’ shall be sub-
stituted for ‘January 1, 2010’ each place it 
appears, 
‘‘(iv) ‘January 1, 2010’ shall be sub-
stituted for ‘January 1, 2011’ in subpara-
graph (A)(iv) thereof, and’’. 
(4) Subparagraph (B) of section 168(l)(5) is 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2010’’. 
(5) Subparagraph (B) of section 1400N(d)(3) 
is amended by striking ‘‘January 1, 2009’’ and in-
serting ‘‘January 1, 2010’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to property placed in service after De-
cember 31, 2008, in taxable years ending after such 
date. 
(2) 
TECHNICAL
AMENDMENT.—Section 
168(k)(4)(D)(ii) of the Internal Revenue Code of 
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1986, as added by subsection (b)(3)(C), shall apply 
to taxable years ending after March 31, 2008. 
SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX-
PENSING OF CERTAIN DEPRECIABLE BUSI-
NESS ASSETS. 
(a) IN GENERAL.—Paragraph (7) of section 179(b) 
is amended— 
(1) by striking ‘‘2008’’ and inserting ‘‘2008, or 
2009’’, and 
(2) by striking ‘‘2008’’ in the heading thereof 
and inserting ‘‘2008, AND 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
PART II—5-YEAR CARRYBACK OF OPERATING 
LOSSES 
SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES. 
(a) IN GENERAL.—Subparagraph (H) of section 
172(b)(1) is amended to read as follows: 
‘‘(H) CARRYBACK FOR 2008 AND 2009 NET 
OPERATING LOSSES.—In the case of a net oper-
ating loss for any taxable year ending during 
2008 or 2009— 
‘‘(i) subparagraph (A)(i) shall be ap-
plied by substituting ‘5’ for ‘2’, 
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‘‘(ii) subparagraph (E)(ii) shall be ap-
plied by substituting ‘4’ for ‘2’, and 
‘‘(iii) subparagraph (F) shall not 
apply.’’. 
(b) ALTERNATIVE TAX NET OPERATING LOSS DE-
DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 
amended to read as follows: 
‘‘(I) the amount of such deduc-
tion attributable to the sum of 
carrybacks of net operating losses 
from taxable years ending during 
2001, 2002, 2008, or 2009 and 
carryovers of net operating losses to 
taxable years ending during such cal-
endar years, or’’. 
(c) ELECTION TO CARRY BACK A FEWER NUMBER 
OF YEARS.—Subsection (k) of section 172 is amended by 
inserting ‘‘or may elect to apply such subsection by sub-
stituting a whole number less than 5 for ‘5’ in such sub-
section’’ before the period at the end of the first sentence. 
(d) LOSS FROM OPERATIONS OF LIFE INSURANCE 
COMPANIES.—Subsection (b) of section 810 is amended 
by adding at the end the following new paragraph: 
‘‘(4) CARRYBACK
FOR
2008
AND
2009
LOSS 
YEARS.—In the case of a loss from operations for 
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any taxable year ending during 2008 or 2009, the 
taxpayer may elect to apply paragraph (1)(A) by 
substituting any whole number less than 6 for ‘3’. 
Such election shall be made in such manner as may 
be prescribed by the Secretary and shall be made by 
the due date (including extensions of time) for filing 
the taxpayer’s return for the taxable year of the loss 
from operations. Such election, once made for any 
taxable year, shall be irrevocable for such taxable 
year.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to net operating losses aris-
ing in taxable years ending after December 31, 
2007. 
(2) ALTERNATIVE TAX NET OPERATING LOSS 
DEDUCTION.—The amendment made by subsection 
(b) shall apply to taxable years ending after 1997. 
(3) LOSS FROM OPERATIONS OF LIFE INSUR-
ANCE COMPANIES.—The amendment made by sub-
section (d) shall apply to losses from operations aris-
ing in taxable years ending after December 31, 
2007. 
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(4) TRANSITIONAL RULE.—In the case of a net 
operating loss (or, in the case of a life insurance 
company, a loss from operations) for a taxable year 
ending during 2008— 
(A) any election made under section 
172(b)(3) or 810(b)(3) of the Internal Revenue 
Code of 1986 with respect to such loss may 
(notwithstanding such section) be revoked be-
fore the applicable date, 
(B) any election made under section 
172(k) or 810(b)(4) of such Code with respect 
to such loss shall (notwithstanding such sec-
tion) be treated as timely made if made before 
the applicable date, and 
(C) any application under section 6411(a) 
of such Code with respect to such loss shall be 
treated as timely filed if filed before the appli-
cable date. 
For purposes of this paragraph, the term ‘‘applica-
ble date’’ means the date which is 60 days after the 
date of the enactment of this Act. 
SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 
The amendments made by this part shall not apply 
to— 
(1) any taxpayer if— 
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(A) the Federal Government acquires, at 
any time, an equity interest in the taxpayer 
pursuant to the Emergency Economic Stabiliza-
tion Act of 2008, or 
(B) the Federal Government acquires, at 
any time, any warrant (or other right) to ac-
quire any equity interest with respect to the 
taxpayer pursuant to such Act, 
(2) the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation, 
and 
(3) any taxpayer which at any time in 2008 or 
2009 is a member of the same affiliated group (as 
defined in section 1504 of the Internal Revenue 
Code of 1986, determined without regard to sub-
section (b) thereof) as a taxpayer described in para-
graph (1) or (2). 
PART III—INCENTIVES FOR NEW JOBS 
SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 
AND DISCONNECTED YOUTH. 
(a) IN GENERAL.—Subsection (d) of section 51 is 
amended by adding at the end the following new para-
graph: 
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‘‘(14) CREDIT
ALLOWED
FOR
UNEMPLOYED 
VETERANS
AND
DISCONNECTED
YOUTH
HIRED
IN 
2009 OR 2010.— 
‘‘(A) IN GENERAL.—Any unemployed vet-
eran or disconnected youth who begins work for 
the employer during 2009 or 2010 shall be 
treated as a member of a targeted group for 
purposes of this subpart. 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) UNEMPLOYED
VETERAN.—The 
term ‘unemployed veteran’ means any vet-
eran (as defined in paragraph (3)(B), de-
termined without regard to clause (ii) 
thereof) who is certified by the designated 
local agency as— 
‘‘(I) having been discharged or 
released from active duty in the 
Armed Forces during 2008, 2009, or 
2010, and 
‘‘(II) being in receipt of unem-
ployment compensation under State or 
Federal law for not less than 4 weeks 
during the 1-year period ending on 
the hiring date. 
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‘‘(ii) DISCONNECTED
YOUTH.—The 
term ‘disconnected youth’ means any indi-
vidual who is certified by the designated 
local agency— 
‘‘(I) as having attained age 16 
but not age 25 on the hiring date, 
‘‘(II) as not regularly attending 
any secondary, technical, or post-sec-
ondary school during the 6-month pe-
riod preceding the hiring date, 
‘‘(III) as not regularly employed 
during such 6-month period, and 
‘‘(IV) as not readily employable 
by reason of lacking a sufficient num-
ber of basic skills.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to individuals who begin work for 
the employer after December 31, 2008. 
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PART IV—CLARIFICATION OF REGULATIONS RE-
LATED TO LIMITATIONS ON CERTAIN BUILT- 
IN 
LOSSES 
FOLLOWING 
AN 
OWNERSHIP 
CHANGE 
SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO 
LIMITATIONS ON CERTAIN BUILT-IN LOSSES 
FOLLOWING AN OWNERSHIP CHANGE. 
(a) FINDINGS.—Congress finds as follows: 
(1) The delegation of authority to the Secretary 
of the Treasury under section 382(m) of the Inter-
nal Revenue Code of 1986 does not authorize the 
Secretary to provide exemptions or special rules that 
are restricted to particular industries or classes of 
taxpayers. 
(2) Internal Revenue Service Notice 2008–83 is 
inconsistent with the congressional intent in enact-
ing such section 382(m). 
(3) The legal authority to prescribe Internal 
Revenue Service Notice 2008–83 is doubtful. 
(4) However, as taxpayers should generally be 
able to rely on guidance issued by the Secretary of 
the Treasury legislation is necessary to clarify the 
force and effect of Internal Revenue Service Notice 
2008–83 and restore the proper application under 
the Internal Revenue Code of 1986 of the limitation 
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on built-in losses following an ownership change of 
a bank. 
(b) DETERMINATION OF FORCE AND EFFECT OF IN-
TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPT-
ING BANKS FROM LIMITATION ON CERTAIN BUILT–IN 
LOSSES FOLLOWING OWNERSHIP CHANGE.— 
(1) IN
GENERAL.—Internal Revenue Service 
Notice 2008–83— 
(A) shall be deemed to have the force and 
effect of law with respect to any ownership 
change (as defined in section 382(g) of the In-
ternal Revenue Code of 1986) occurring on or 
before January 16, 2009, and 
(B) shall have no force or effect with re-
spect to any ownership change after such date. 
(2) 
BINDING
CONTRACTS.—Notwithstanding 
paragraph (1), Internal Revenue Service Notice 
2008–83 shall have the force and effect of law with 
respect to any ownership change (as so defined) 
which occurs after January 16, 2009 if such 
change— 
(A) is pursuant to a written binding con-
tract entered into on or before such date, or 
(B) was described on or before such date 
in a public announcement or in a filing with the 
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Securities and Exchange Commision required 
by reason of such ownership change. 
Subtitle F—Fiscal Relief for State 
and Local Governments 
PART I—IMPROVED MARKETABILITY FOR TAX- 
EXEMPT BONDS 
SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX- 
EXEMPT INTEREST EXPENSE OF FINANCIAL 
INSTITUTIONS. 
(a) IN GENERAL.—Subsection (b) of section 265 is 
amended by adding at the end the following new para-
graph: 
‘‘(7) DE
MINIMIS
EXCEPTION
FOR
BONDS 
ISSUED DURING 2009 OR 2010.— 
‘‘(A) IN GENERAL.—In applying paragraph 
(2)(A), there shall not be taken into account 
tax-exempt obligations issued during 2009 or 
2010. 
‘‘(B) LIMITATION.—The amount of tax-ex-
empt obligations not taken into account by rea-
son of subparagraph (A) shall not exceed 2 per-
cent of the amount determined under para-
graph (2)(B). 
‘‘(C) REFUNDINGS.—For purposes of this 
paragraph, a refunding bond (whether a current 
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or advance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
bond (or in the case of a series of refundings, 
the original bond).’’. 
(b) TREATMENT AS FINANCIAL INSTITUTION PREF-
ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 
amended by adding at the end the following: ‘‘That por-
tion of any obligation not taken into account under para-
graph (2)(A) of section 265(b) by reason of paragraph (7) 
of such section shall be treated for purposes of this section 
as having been acquired on August 7, 1986.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION 
TO TAX-EXEMPT INTEREST EXPENSE ALLOCA-
TION RULES FOR FINANCIAL INSTITUTIONS. 
(a) IN GENERAL.—Paragraph (3) of section 265(b) 
(relating to exception for certain tax-exempt obligations) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(G) SPECIAL
RULES
FOR
OBLIGATIONS 
ISSUED DURING 2009 AND 2010.— 
‘‘(i) INCREASE
IN
LIMITATION.—In 
the case of obligations issued during 2009 
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or 2010, subparagraphs (C)(i), (D)(i), and 
(D)(iii)(II) shall each be applied by sub-
stituting ‘$30,000,000’ for ‘$10,000,000’. 
‘‘(ii) SPECIAL
RULE
FOR
POOLED 
FINANCINGS.—In the case of a pooled fi-
nancing issue issued during 2009 or 
2010— 
‘‘(I) subparagraph (F) shall not 
apply, and 
‘‘(II) any obligation issued as a 
part of such issue shall be treated as 
a qualified tax-exempt obligation if 
the requirements of this paragraph 
are met with respect to each qualified 
portion of the issue (determined by 
treating each qualified portion as a 
separate issue). 
‘‘(iii) POOLED
FINANCING
ISSUE.— 
For purposes of this subparagraph, the 
term ‘pooled financing issue’ means any 
issue the proceeds of which are used di-
rectly or indirectly to make or finance 
loans to 2 or more ultimate borrowers all 
of whom are qualified borrowers. 
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‘‘(iv) QUALIFIED PORTION.—For pur-
poses of this subparagraph, the term 
‘qualified portion’ means that portion of 
the proceeds which are used with respect 
to each qualified borrower under the issue. 
‘‘(v) 
QUALIFIED
BORROWER.—For 
purposes of this subparagraph, the term 
‘qualified borrower’ means a borrower 
which is a State or political subdivision 
thereof or an organization described in sec-
tion 501(c)(3) and exempt from taxation 
under section 501(a).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 
MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 
BONDS. 
(a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED 
DURING 2009 AND 2010 NOT TREATED AS TAX PREF-
ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 
amended by adding at the end a new clause: 
‘‘(vi) EXCEPTION FOR BONDS ISSUED 
IN 2009 AND 2010.—For purposes of clause 
(i), the term ‘private activity bond’ shall 
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not include any bond issued after Decem-
ber 31, 2008, and before January 1, 2011. 
For purposes of the preceding sentence, a 
refunding bond (whether a current or ad-
vance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
bond (or in the case of a series of 
refundings, the original bond).’’. 
(b) NO
ADJUSTMENT
TO
ADJUSTED
CURRENT 
EARNINGS
FOR
INTEREST
ON
TAX-EXEMPT
BONDS 
ISSUED AFTER 2008.—Subparagraph (B) of section 
56(g)(4) is amended by adding at the end the following 
new clause: 
‘‘(iv) TAX
EXEMPT
INTEREST
ON 
BONDS ISSUED IN 2009 AND 2010.—Clause 
(i) shall not apply in the case of any inter-
est on a bond issued after December 31, 
2008, and before January 1, 2011. For 
purposes of the preceding sentence, a re-
funding bond (whether a current or ad-
vance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
bond (or in the case of a series of 
refundings, the original bond).’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
PART II—TAX CREDIT BONDS FOR SCHOOLS 
SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS. 
(a) IN GENERAL.—Subpart I of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
‘‘SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS. 
‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 
For purposes of this subchapter, the term ‘qualified school 
construction bond’ means any bond issued as part of an 
issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for the construc-
tion, rehabilitation, or repair of a public school facil-
ity or for the acquisition of land on which such a fa-
cility is to be constructed with part of the proceeds 
of such issue, 
‘‘(2) the bond is issued by a State or local gov-
ernment within the jurisdiction of which such school 
is located, and 
‘‘(3) the issuer designates such bond for pur-
poses of this section. 
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‘‘(b) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be des-
ignated under subsection (a) by any issuer shall not exceed 
the sum of— 
‘‘(1) the limitation amount allocated under sub-
section (d) for such calendar year to such issuer, 
and 
‘‘(2) if such issuer is a large local educational 
agency (as defined in subsection (e)(4)) or is issuing 
on behalf of such an agency, the limitation amount 
allocated under subsection (e) for such calendar year 
to such agency. 
‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—There is a national qualified school con-
struction bond limitation for each calendar year. Such lim-
itation is— 
‘‘(1) $10,000,000,000 for 2009, 
‘‘(2) $10,000,000,000 for 2010, and 
‘‘(3) except as provided in subsection (f), zero 
after 2010. 
‘‘(d) 60 PERCENT
OF
LIMITATION
ALLOCATED 
AMONG STATES.— 
‘‘(1) IN GENERAL.—60 percent of the limitation 
applicable under subsection (c) for any calendar year 
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the same manner as a credit allowed under sub-
section (a).’’. 
PART II—INCREASED ALLOCATIONS OF NEW 
CLEAN RENEWABLE ENERGY BONDS AND 
QUALIFIED ENERGY CONSERVATION BONDS 
SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW 
CLEAN RENEWABLE ENERGY BONDS. 
Subsection (c) of section 54C is amended by adding 
at the end the following new paragraph: 
‘‘(4) ADDITIONAL
LIMITATION.—The national 
new clean renewable energy bond limitation shall be 
increased by $1,600,000,000. Such increase shall be 
allocated by the Secretary consistent with the rules 
of paragraphs (2) and (3).’’. 
SEC. 1612. INCREASED LIMITATION ON ISSUANCE OF 
QUALIFIED ENERGY CONSERVATION BONDS. 
Subsection (e) of section 54D is amended by adding 
at the end the following new paragraph: 
‘‘(4) ADDITIONAL
LIMITATION.—The national 
qualified energy conservation bond limitation shall 
be increased by $2,400,000,000. Such increase shall 
be allocated by the Secretary consistent with the 
rules of paragraphs (1), (2), and (3).’’. 
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