I
106TH CONGRESS
2D SESSION
H. R. 5662
To amend the Internal Revenue Code of 1986 to provide for community
revitalization and a 2-year extension of medical saving accounts, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 14, 2000
Mr. ARCHER (for himself and Mr. ARMEY) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
for community revitalization and a 2-year extension of
medical saving accounts, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Renewal Tax Relief Act of 2000’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; amendment of 1986 Code.
TITLE I—COMMUNITY RENEWAL AND NEW MARKETS
Subtitle A—Tax Incentives for Renewal Communities
Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Work opportunity credit for hiring youth residing in renewal commu-
nities.
Subtitle B—Extension and Expansion of Empowerment Zone Incentives
Sec. 111. Authority to designate nine additional empowerment zones.
Sec. 112. Extension of empowerment zone treatment through 2009.
Sec. 113. Twenty percent employment credit for all empowerment zones.
Sec. 114. Increased expensing under section 179.
Sec. 115. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 116. Nonrecognition of gain on rollover of empowerment zone investments.
Sec. 117. Increased exclusion of gain on sale of empowerment zone stock.
Subtitle C—New Markets Tax Credit
Sec. 121. New markets tax credit.
Subtitle D—Improvements in Low-Income Housing Credit
Sec. 131. Modification of State ceiling on low-income housing credit.
Sec. 132. Modification of criteria for allocating housing credits among projects.
Sec. 133. Additional responsibilities of housing credit agencies.
Sec. 134. Modifications to rules relating to basis of building which is eligible
for credit.
Sec. 135. Other modifications.
Sec. 136. Carryforward rules.
Sec. 137. Effective date.
Subtitle E—Other Community Renewal and New Markets Assistance
PART I—PROVISIONS RELATING TO HOUSING AND SUBSTANCE ABUSE
PREVENTION AND TREATMENT
Sec. 141. Transfer of unoccupied and substandard HUD-held housing to local
governments and community development corporations.
Sec. 142. Transfer of HUD assets in revitalization areas.
Sec. 143. Risk-sharing demonstration.
Sec. 144. Prevention and treatment of substance abuse; services provided
through religious organizations.
PART II—ADVISORY COUNCIL ON COMMUNITY RENEWAL
Sec. 151. Short title.
Sec. 152. Establishment.
Sec. 153. Duties of Advisory Council.
Sec. 154. Membership.
Sec. 155. Powers of Advisory Council.
Sec. 156. Reports.
Sec. 157. Termination.
Sec. 158. Applicability of Federal Advisory Committee Act.
Sec. 159. Resources.
Sec. 160. Effective date.
Subtitle F—Other Provisions
Sec. 161. Acceleration of phase-in of increase in volume cap on private activity
bonds.
Sec. 162. Modifications to expensing of environmental remediation costs.
Sec. 163. Extension of DC homebuyer tax credit.
Sec. 164. Extension of DC Zone through 2003.
Sec. 165. Extension of enhanced deduction for corporate donations of computer
technology.
Sec. 166. Treatment of Indian tribal governments under Federal Unemploy-
ment Tax Act.
TITLE II—TWO-YEAR EXTENSION OF AVAILABILITY OF MEDICAL
SAVINGS ACCOUNTS
Sec. 201. Two-year extension of availability of medical savings accounts.
Sec. 202. Medical savings accounts renamed as Archer MSAs.
TITLE III—ADMINISTRATIVE AND TECHNICAL PROVISIONS
Subtitle A—Administrative Provisions
Sec. 301. Exemption of certain reporting requirements.
Sec. 302. Extension of deadlines for IRS compliance with certain notice re-
quirements.
Sec. 303. Extension of authority for undercover operations.
Sec. 304. Confidentiality of certain documents relating to closing and similar
agreements and to agreements with foreign governments.
Sec. 305. Increase in threshold for Joint Committee reports on refunds and
credits.
Sec. 306. Treatment of missing children with respect to certain tax benefits.
Sec. 307. Amendments to statutes referencing yield on 52-week Treasury bills.
Sec. 308. Adjustments for Consumer Price Index error.
Sec. 309. Prevention of duplication of loss through assumption of liabilities giv-
ing rise to a deduction.
Sec. 310. Disclosure of certain information to Congressional Budget Office.
Subtitle B—Technical Corrections
Sec. 311. Amendments related to Ticket to Work and Work Incentives Im-
provement Act of 1999.
Sec. 312. Amendments related to Tax and Trade Relief Extension Act of 1998.
Sec. 313. Amendments related to Internal Revenue Service Restructuring and
Reform Act of 1998.
Sec. 314. Amendments related to Taxpayer Relief Act of 1997.
Sec. 315. Amendments related to Balanced Budget Act of 1997.
Sec. 316. Amendments related to Small Business Job Protection Act of 1996.
Sec. 317. Amendment related to Revenue Reconciliation Act of 1990.
Sec. 318. Other technical corrections.
Sec. 319. Clerical changes.
TITLE IV—TAX TREATMENT OF SECURITIES FUTURES
CONTRACTS
Sec. 401. Tax treatment of securities futures contracts.
TITLE I—COMMUNITY RENEWAL
AND NEW MARKETS
Subtitle A—Tax Incentives for
Renewal Communities
SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RE-
NEWAL COMMUNITIES.
(a) IN GENERAL.—Chapter 1 is amended by adding
at the end the following new subchapter:
‘‘Subchapter X—Renewal Communities
‘‘Part 
I. Designation.
‘‘Part II. Renewal community capital gain; renewal community
business.
‘‘Part III. Additional incentives.
‘‘PART I—DESIGNATION
‘‘Sec. 1400E. Designation of renewal communities.
‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
‘‘(a) DESIGNATION.—
‘‘(1) DEFINITIONS.—For purposes of this title,
the term ‘renewal community’ means any area—
‘‘(A) which is nominated by 1 or more
local governments and the State or States in
which it is located for designation as a renewal
community (hereafter in this section referred to
as a ‘nominated area’), and
‘‘(B) which the Secretary of Housing and
Urban Development designates as a renewal
community, after consultation with—
‘‘(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury; the
Director of the Office of Management and
Budget, and the Administrator of the
Small Business Administration, and
‘‘(ii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior.
‘‘(2) NUMBER OF DESIGNATIONS.—
‘‘(A) IN
GENERAL.—Not more than 40
nominated areas may be designated as renewal
communities.
‘‘(B) MINIMUM
DESIGNATION
IN
RURAL
AREAS.—Of the areas designated under para-
graph (1), at least 12 must be areas—
‘‘(i) which are within a local govern-
ment jurisdiction or jurisdictions with a
population of less than 50,000,
‘‘(ii) which are outside of a metropoli-
tan statistical area (within the meaning of
section 143(k)(2)(B)), or
‘‘(iii) which are determined by the
Secretary of Housing and Urban Develop-
ment, after consultation with the Secretary
of Commerce, to be rural areas.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE
OF POVERTY, ETC.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this section, the nominated areas
designated as renewal communities under this
subsection shall be those nominated areas with
the highest average ranking with respect to the
criteria described in subparagraphs (B), (C),
and (D) of subsection (c)(3). For purposes of
the preceding sentence, an area shall be ranked
within each such criterion on the basis of the
amount by which the area exceeds such cri-
terion, with the area which exceeds such cri-
terion by the greatest amount given the highest
ranking.
‘‘(B) EXCEPTION
WHERE
INADEQUATE
COURSE OF ACTION, ETC.—An area shall not be
designated under subparagraph (A) if the Sec-
retary of Housing and Urban Development de-
termines that the course of action described in
subsection (d)(2) with respect to such area is
inadequate.
‘‘(C) PREFERENCE FOR ENTERPRISE COM-
MUNITIES AND EMPOWERMENT ZONES.—With
respect to the first 20 designations made under
this section, a preference shall be provided to
those nominated areas which are enterprise
communities or empowerment zones (and are
otherwise eligible for designation under this sec-
tion).
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretary of Housing and Urban Develop-
ment shall prescribe by regulation no later than
4 months after the date of the enactment of
this section, after consultation with the officials
described in paragraph (1)(B)—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the
size and population characteristics of a re-
newal community, and
‘‘(iii) the manner in which nominated
areas will be evaluated based on the cri-
teria specified in subsection (d).
‘‘(B) TIME LIMITATIONS.—The Secretary
of Housing and Urban Development may des-
ignate nominated areas as renewal communities
only during the period beginning on the first
day of the first month following the month in
which the regulations described in subpara-
graph (A) are prescribed and ending on Decem-
ber 31, 2001.
‘‘(C) PROCEDURAL RULES.—The Secretary
of Housing and Urban Development shall not
make any designation of a nominated area as a
renewal 
community 
under 
paragraph 
(2)
unless—
‘‘(i) the local governments and the
States in which the nominated area is lo-
cated have the authority—
‘‘(I) to nominate such area for
designation as a renewal community,
‘‘(II) to make the State and local
commitments described in subsection
(d), and
‘‘(III) to provide assurances sat-
isfactory to the Secretary of Housing
and Urban Development that such
commitments will be fulfilled,
‘‘(ii) a nomination regarding such
area is submitted in such a manner and in
such form, and contains such information,
as the Secretary of Housing and Urban
Development shall by regulation prescribe,
and
‘‘(iii) the Secretary of Housing and
Urban Development determines that any
information furnished is reasonably accu-
rate.
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in
the case of a nominated area on an Indian reserva-
tion, the reservation governing body (as determined
by the Secretary of the Interior) shall be treated as
being both the State and local governments with re-
spect to such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation of an area
as a renewal community shall remain in effect dur-
ing the period beginning on January 1, 2002, and
ending on the earliest of—
‘‘(A) December 31, 2009,
‘‘(B) the termination date designated by
the State and local governments in their nomi-
nation, or
‘‘(C) the date the Secretary of Housing
and Urban Development revokes such designa-
tion.
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Housing and Urban Development may re-
voke the designation under this section of an area if
such Secretary determines that the local government
or the State in which the area is located—
‘‘(A) has modified the boundaries of the
area, or
‘‘(B) is not complying substantially with,
or fails to make progress in achieving, the State
or local commitments, respectively, described in
subsection (d).
‘‘(3) EARLIER TERMINATION OF CERTAIN BEN-
EFITS
IF
EARLIER
TERMINATION
OF
DESIGNA-
TION.—If the designation of an area as a renewal
community terminates before December 31, 2009,
the day after the date of such termination shall be
substituted for ‘January 1, 2010’ each place it ap-
pears in sections 1400F and 1400J with respect to
such area.
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate a nominated
area as a renewal community under subsection (a)
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—A nominated area
meets the requirements of this paragraph if—
‘‘(A) the area is within the jurisdiction of
one or more local governments,
‘‘(B) the boundary of the area is contin-
uous, and
‘‘(C) the area—
‘‘(i) has a population of not more than
200,000 and at least—
‘‘(I) 4,000 if any portion of such
area (other than a rural area de-
scribed in subsection (a)(2)(B)(i)) is
located within a metropolitan statis-
tical area (within the meaning of sec-
tion 143(k)(2)(B)) which has a popu-
lation of 50,000 or greater, or
‘‘(II) 1,000 in any other case, or
‘‘(ii) is entirely within an Indian res-
ervation (as determined by the Secretary of
the Interior).
‘‘(3) ELIGIBILITY
REQUIREMENTS.—A nomi-
nated area meets the requirements of this paragraph
if the State and the local governments in which it
is located certify in writing (and the Secretary of
Housing and Urban Development, after such review
of supporting data as he deems appropriate, accepts
such certification) that—
‘‘(A) the area is one of pervasive poverty,
unemployment, and general distress,
‘‘(B) the unemployment rate in the area,
as determined by the most recent available
data, was at least 11⁄2 times the national unem-
ployment rate for the period to which such data
relate,
‘‘(C) the poverty rate for each population
census tract within the nominated area is at
least 20 percent, and
‘‘(D) in the case of an urban area, at least
70 percent of the households living in the area
have incomes below 80 percent of the median
income of households within the jurisdiction of
the local government (determined in the same
manner as under section 119(b)(2) of the
Housing and Community Development Act of
1974).
‘‘(4) CONSIDERATION
OF
OTHER
FACTORS.—
The Secretary of Housing and Urban Development,
in selecting any nominated area for designation as
a renewal community under this section—
‘‘(A) shall take into account—
‘‘(i) the extent to which such area has
a high incidence of crime, or
‘‘(ii) if such area has census tracts
identified in the May 12, 1998, report of
the General Accounting Office regarding
the identification of economically distressed
areas, and
‘‘(B) with respect to 1 of the areas to be
designated under subsection (a)(2)(B), may, in
lieu of any criteria described in paragraph (3),
take into account the existence of outmigration
from the area.
‘‘(d) REQUIRED
STATE
AND
LOCAL
COMMIT-
MENTS.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development may designate any nomi-
nated area as a renewal community under subsection
(a) only if—
‘‘(A) the local government and the State in
which the area is located agree in writing that,
during any period during which the area is a
renewal community, such governments will fol-
low a specified course of action which meets the
requirements of paragraph (2) and is designed
to reduce the various burdens borne by employ-
ers or employees in such area, and
‘‘(B) the economic growth promotion re-
quirements of paragraph (3) are met.
‘‘(2) COURSE OF ACTION.—
‘‘(A) IN
GENERAL.—A course of action
meets the requirements of this paragraph if
such course of action is a written document,
signed by a State (or local government) and
neighborhood organizations, which evidences a
partnership between such State or government
and community-based organizations and which
commits each signatory to specific and measur-
able goals, actions, and timetables. Such course
of action shall include at least 4 of the fol-
lowing:
‘‘(i) A reduction of tax rates or fees
applying within the renewal community.
‘‘(ii) An increase in the level of effi-
ciency of local services within the renewal
community.
‘‘(iii) Crime reduction strategies, such
as crime prevention (including the provi-
sion of crime prevention services by non-
governmental entities).
‘‘(iv) Actions to reduce, remove, sim-
plify, or streamline governmental require-
ments applying within the renewal commu-
nity.
‘‘(v) Involvement in the program by
private entities, organizations, neighbor-
hood 
organizations, 
and 
community
groups, particularly those in the renewal
community, including a commitment from
such private entities to provide jobs and
job training for, and technical, financial, or
other assistance to, employers, employees,
and residents from the renewal community.
‘‘(vi) The gift (or sale at below fair
market value) of surplus real property
(such as land, homes, and commercial or
industrial structures) in the renewal com-
munity to neighborhood organizations,
community development corporations, or
private companies.
‘‘(B) RECOGNITION OF PAST EFFORTS.—
For purposes of this section, in evaluating the
course of action agreed to by any State or local
government, the Secretary of Housing and
Urban Development shall take into account the
past efforts of such State or local government
in reducing the various burdens borne by em-
ployers and employees in the area involved.
‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE-
MENTS.—The economic growth promotion require-
ments of this paragraph are met with respect to a
nominated area if the local government and the
State in which such area is located certify in writing
that such government and State (respectively) have
repealed or reduced, will not enforce, or will reduce
within the nominated area at least 4 of the fol-
lowing:
‘‘(A) Licensing requirements for occupa-
tions that do not ordinarily require a profes-
sional degree.
‘‘(B) Zoning restrictions on home-based
businesses which do not create a public nui-
sance.
‘‘(C) Permit requirements for street ven-
dors who do not create a public nuisance.
‘‘(D) Zoning or other restrictions that im-
pede the formation of schools or child care cen-
ters.
‘‘(E) Franchises or other restrictions on
competition for businesses providing public
services, including taxicabs, jitneys, cable tele-
vision, or trash hauling.
This paragraph shall not apply to the extent that
such regulation of businesses and occupations is nec-
essary for and well-tailored to the protection of
health and safety.
‘‘(e) COORDINATION WITH TREATMENT
OF EM-
POWERMENT ZONES AND ENTERPRISE COMMUNITIES.—
For purposes of this title, the designation under section
1391 of any area as an empowerment zone or enterprise
community shall cease to be in effect as of the date that
the designation of any portion of such area as a renewal
community takes effect.
‘‘(f ) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter—
‘‘(1) GOVERNMENTS.—If more than one govern-
ment seeks to nominate an area as a renewal com-
munity, any reference to, or requirement of, this sec-
tion shall apply to all such governments.
‘‘(2) LOCAL
GOVERNMENT.—The term ‘local
government’ means—
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State, and
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the Secretary of Housing and Urban Devel-
opment.
‘‘(3) APPLICATION
OF
RULES
RELATING
TO
CENSUS TRACTS.—The rules of section 1392(b)(4)
shall apply.
‘‘(4) CENSUS
DATA.—Population and poverty
rate shall be determined by using 1990 census data.
‘‘PART II—RENEWAL COMMUNITY CAPITAL GAIN;
RENEWAL COMMUNITY BUSINESS
‘‘Sec. 1400F. Renewal community capital gain.
‘‘Sec. 1400G. Renewal community business defined.
‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
‘‘(a) GENERAL RULE.—Gross income does not in-
clude any qualified capital gain from the sale or exchange
of a qualified community asset held for more than 5 years.
‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes
of this section—
‘‘(1) IN GENERAL.—The term ‘qualified com-
munity asset’ means—
‘‘(A) any qualified community stock,
‘‘(B) any qualified community partnership
interest, and
‘‘(C) any qualified community business
property.
‘‘(2) QUALIFIED COMMUNITY STOCK.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘qualified commu-
nity stock’ means any stock in a domestic cor-
poration if—
‘‘(i) such stock is acquired by the tax-
payer after December 31, 2001, and before
January 1, 2010, at its original issue (di-
rectly or through an underwriter) from the
corporation solely in exchange for cash,
‘‘(ii) as of the time such stock was
issued, such corporation was a renewal
community business (or, in the case of a
new corporation, such corporation was
being organized for purposes of being a re-
newal community business), and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such stock,
such corporation qualified as a renewal
community business.
‘‘(B) REDEMPTIONS.—A rule similar to
the rule of section 1202(c)(3) shall apply for
purposes of this paragraph.
‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN-
TEREST.—The term ‘qualified community partner-
ship interest’ means any capital or profits interest in
a domestic partnership if—
‘‘(A) such interest is acquired by the tax-
payer after December 31, 2001, and before
January 1, 2010, from the partnership solely in
exchange for cash,
‘‘(B) as of the time such interest was ac-
quired, such partnership was a renewal commu-
nity business (or, in the case of a new partner-
ship, such partnership was being organized for
purposes of being a renewal community busi-
ness), and
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such
partnership qualified as a renewal community
business.
A rule similar to the rule of paragraph (2)(B) shall
apply for purposes of this paragraph.
‘‘(4) QUALIFIED COMMUNITY BUSINESS PROP-
ERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
community business property’ means tangible
property if—
‘‘(i) such property was acquired by
the taxpayer by purchase (as defined in
section 179(d)(2)) after December 31,
2001, and before January 1, 2010,
‘‘(ii) the original use of such property
in the renewal community commences with
the taxpayer, and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such prop-
erty, substantially all of the use of such
property was in a renewal community busi-
ness of the taxpayer.
‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-
PROVEMENTS.—The requirements of clauses (i)
and (ii) of subparagraph (A) shall be treated as
satisfied with respect to—
‘‘(i) property which is substantially
improved by the taxpayer before January
1, 2010, and
‘‘(ii) any land on which such property
is located.
The determination of whether a property is sub-
stantially improved shall be made under clause
(ii) of section 1400B(b)(4)(B), except that ‘De-
cember 31, 2001’ shall be substituted for ‘De-
cember 31, 1997’ in such clause.
‘‘(c) QUALIFIED CAPITAL GAIN.—For purposes of
this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified capital
gain’ means any gain recognized on the sale or ex-
change of—
‘‘(A) a capital asset, or
‘‘(B) property used in the trade or busi-
ness (as defined in section 1231(b)).
‘‘(2) GAIN BEFORE 2002 OR AFTER 2014 NOT
QUALIFIED.—The term ‘qualified capital gain’ shall
not include any gain attributable to periods before
January 1, 2002, or after December 31, 2014.
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar
to the rules of paragraphs (3), (4), and (5) of sec-
tion 1400B(e) shall apply for purposes of this sub-
section.
‘‘(d) CERTAIN RULES TO APPLY.—For purposes of
this section, rules similar to the rules of paragraphs (5),
(6), and (7) of subsection (b), and subsections (f ) and
(g), of section 1400B shall apply; except that for such pur-
poses section 1400B(g)(2) shall be applied by substituting
‘January 1, 2002’ for ‘January 1, 1998’ and ‘December
31, 2014’ for ‘December 31, 2008’.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including regulations to prevent
the abuse of the purposes of this section.
‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
‘‘For purposes of this subchapter, the term ‘renewal
community business’ means any entity or proprietorship
which would be a qualified business entity or qualified pro-
prietorship under section 1397C if references to renewal
communities were substituted for references to empower-
ment zones in such section.
‘‘PART III—ADDITIONAL INCENTIVES
‘‘Sec. 1400H. Renewal community employment credit.
‘‘Sec. 1400I. Commercial revitalization deduction.
‘‘Sec. 1400J. Increase in expensing under section 179.
‘‘SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.
‘‘(a) IN GENERAL.—Subject to the modification in
subsection (b), a renewal community shall be treated as
an empowerment zone for purposes of section 1396 with
respect to wages paid or incurred after December 31,
2001.
‘‘(b) MODIFICATION.—In applying section 1396 with
respect to renewal communities—
‘‘(1) the applicable percentage shall be 15 per-
cent, and
‘‘(2) subsection (c) thereof shall be applied by
substituting ‘$10,000’ for ‘$15,000’ each place it ap-
pears.
‘‘SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.
‘‘(a) GENERAL RULE.—At the election of the tax-
payer, either—
‘‘(1) one-half of any qualified revitalization ex-
penditures chargeable to capital account with respect
to any qualified revitalization building shall be allow-
able as a deduction for the taxable year in which the
building is placed in service, or
‘‘(2) a deduction for all such expenditures shall
be allowable ratably over the 120-month period be-
ginning with the month in which the building is
placed in service.
‘‘(b) QUALIFIED REVITALIZATION BUILDINGS AND
EXPENDITURES.—For purposes of this section—
‘‘(1) QUALIFIED REVITALIZATION BUILDING.—
The term ‘qualified revitalization building’ means
any building (and its structural components) if—
‘‘(A) the building is placed in service by
the taxpayer in a renewal community and the
original use of the building begins with the tax-
payer, or
‘‘(B) in the case of such building not de-
scribed in subparagraph (A), such building—
‘‘(i) 
is 
substantially 
rehabilitated
(within 
the 
meaning 
of 
section
47(c)(1)(C)) by the taxpayer, and
‘‘(ii) is placed in service by the tax-
payer after the rehabilitation in a renewal
community.
‘‘(2) QUALIFIED
REVITALIZATION
EXPENDI-
TURE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
revitalization expenditure’ means any amount
properly chargeable to capital account for prop-
erty for which depreciation is allowable under
section 168 (without regard to this section) and
which is—
‘‘(i) nonresidential real property (as
defined in section 168(e)), or
‘‘(ii) section 1250 property (as defined
in section 1250(c)) which is functionally
related and subordinate to property de-
scribed in clause (i).
‘‘(B) CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—
‘‘(i) ACQUISITION COST.—In the case
of a building described in paragraph
(1)(B), the cost of acquiring the building
or interest therein shall be treated as a
qualified revitalization expenditure only to
the extent that such cost does not exceed
30 percent of the aggregate qualified revi-
talization expenditures (determined with-
out regard to such cost) with respect to
such building.
‘‘(ii) CREDITS.—The term ‘qualified
revitalization expenditure’ does not include
any expenditure which the taxpayer may
take into account in computing any credit
allowable under this title unless the tax-
payer elects to take the expenditure into
account only for purposes of this section.
‘‘(c) DOLLAR LIMITATION.—The aggregate amount
which may be treated as qualified revitalization expendi-
tures with respect to any qualified revitalization building
shall not exceed the lesser of—
‘‘(1) $10,000,000, or
‘‘(2) the commercial revitalization expenditure
amount allocated to such building under this section
by the commercial revitalization agency for the State
in which the building is located.
‘‘(d) COMMERCIAL REVITALIZATION EXPENDITURE
AMOUNT.—
‘‘(1) IN GENERAL.—The aggregate commercial
revitalization expenditure amount which a commer-
cial revitalization agency may allocate for any cal-
endar year is the amount of the State commercial
revitalization expenditure ceiling determined under
this paragraph for such calendar year for such agen-
cy.
‘‘(2) STATE COMMERCIAL REVITALIZATION EX-
PENDITURE CEILING.—The State commercial revi-
talization expenditure ceiling applicable to any
State—
‘‘(A) for each calendar year after 2001 and
before 2010 is $12,000,000 for each renewal
community in the State, and
‘‘(B) for each calendar year thereafter is
zero.
‘‘(3) COMMERCIAL REVITALIZATION AGENCY.—
For purposes of this section, the term ‘commercial
revitalization agency’ means any agency authorized
by a State to carry out this section.
‘‘(4) TIME AND MANNER OF ALLOCATIONS.—
Allocations under this section shall be made at the
same time and in the same manner as under para-
graphs (1) and (7) of section 42(h).
‘‘(e) RESPONSIBILITIES OF COMMERCIAL REVITAL-
IZATION AGENCIES.—
‘‘(1) 
PLANS
FOR
ALLOCATION.—Notwith-
standing any other provision of this section, the
commercial revitalization expenditure amount with
respect to any building shall be zero unless—
‘‘(A) such amount was allocated pursuant
to a qualified allocation plan of the commercial
revitalization agency which is approved (in ac-
cordance with rules similar to the rules of sec-
tion 147(f )(2) (other than subparagraph (B)(ii)
thereof )) by the governmental unit of which
such agency is a part, and
‘‘(B) such agency notifies the chief execu-
tive officer (or its equivalent) of the local juris-
diction within which the building is located of
such allocation and provides such individual a
reasonable opportunity to comment on the allo-
cation.
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified alloca-
tion plan’ means any plan—
‘‘(A) which sets forth selection criteria to
be used to determine priorities of the commer-
cial revitalization agency which are appropriate
to local conditions,
‘‘(B) which considers—
‘‘(i) the degree to which a project con-
tributes to the implementation of a stra-
tegic plan that is devised for a renewal
community through a citizen participation
process,
‘‘(ii) the amount of any increase in
permanent, full-time employment by reason
of any project, and
‘‘(iii) the active involvement of resi-
dents and nonprofit groups within the re-
newal community, and
‘‘(C) which provides a procedure that the
agency (or its agent) will follow in monitoring
compliance with this section.
‘‘(f ) SPECIAL RULES.—
‘‘(1) DEDUCTION IN LIEU OF DEPRECIATION.—
The deduction provided by this section for qualified
revitalization expenditures shall—
‘‘(A) with respect to the deduction deter-
mined under subsection (a)(1), be in lieu of any
depreciation deduction otherwise allowable on
account of one-half of such expenditures, and
‘‘(B) with respect to the deduction deter-
mined under subsection (a)(2), be in lieu of any
depreciation deduction otherwise allowable on
account of all of such expenditures.
‘‘(2) BASIS ADJUSTMENT, ETC.—For purposes
of sections 1016 and 1250, the deduction under this
section shall be treated in the same manner as a de-
preciation deduction. For purposes of section
1250(b)(5), the straight line method of adjustment
shall be determined without regard to this section.
‘‘(3) SUBSTANTIAL REHABILITATIONS TREATED
AS SEPARATE BUILDINGS.—A substantial rehabilita-
tion (within the meaning of section 47(c)(1)(C)) of
a building shall be treated as a separate building for
purposes of subsection (a).
‘‘(4) CLARIFICATION
OF
ALLOWANCE
OF
DE-
DUCTION
UNDER
MINIMUM
TAX.—Notwithstanding
section 56(a)(1), the deduction under this section
shall be allowed in determining alternative minimum
taxable income under section 55.
‘‘(g) TERMINATION.—This section shall not apply to
any building placed in service after December 31, 2009.
‘‘SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section
1397A—
‘‘(1) a renewal community shall be treated as
an empowerment zone,
‘‘(2) a renewal community business shall be
treated as an enterprise zone business, and
‘‘(3) qualified renewal property shall be treated
as qualified zone property.
‘‘(b) QUALIFIED RENEWAL PROPERTY.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified renewal
property’ means any property to which section 168
applies (or would apply but for section 179) if—
‘‘(A) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after December 31, 2001, and be-
fore January 1, 2010, and
‘‘(B) such property would be qualified zone
property (as defined in section 1397D) if ref-
erences to renewal communities were sub-
stituted for references to empowerment zones in
section 1397D.
‘‘(2) CERTAIN RULES TO APPLY.—The rules of
subsections (a)(2) and (b) of section 1397D shall
apply for purposes of this section.’’.
(b) EXCEPTION FOR COMMERCIAL REVITALIZATION
DEDUCTION FROM PASSIVE LOSS RULES.—
(1) Paragraph (3) of section 469(i) is amended
by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and
by inserting after subparagraph (B) the following
new subparagraph:
‘‘(C) EXCEPTION FOR COMMERCIAL REVI-
TALIZATION
DEDUCTION.—Subparagraph (A)
shall not apply to any portion of the passive ac-
tivity loss for any taxable year which is attrib-
utable to the commercial revitalization deduc-
tion under section 1400I.’’.
(2) Subparagraph (E) of section 469(i)(3), as
redesignated by subparagraph (A), is amended to
read as follows:
‘‘(E) ORDERING RULES TO REFLECT EX-
CEPTIONS
AND
SEPARATE
PHASE-OUTS.—If
subparagraph (B), (C), or (D) applies for a tax-
able year, paragraph (1) shall be applied—
‘‘(i) first to the portion of the passive
activity loss to which subparagraph (C)
does not apply,
‘‘(ii) second to the portion of the pas-
sive activity credit to which subparagraph
(B) or (D) does not apply,
‘‘(iii) third to the portion of such
credit to which subparagraph (B) applies,
‘‘(iv) fourth to the portion of such loss
to which subparagraph (C) applies, and
‘‘(v) then to the portion of such credit
to which subparagraph (D) applies.’’.
(3)(A) Subparagraph (B) of section 469(i)(6) is
amended by striking ‘‘or’’ at the end of clause (i),
by striking the period at the end of clause (ii) and
inserting ‘‘, or’’, and by adding at the end the fol-
lowing new clause:
‘‘(iii) any deduction under section
1400I (relating to commercial revitaliza-
tion deduction).’’.
(B) The heading for such subparagraph (B) is
amended by striking ‘‘OR REHABILITATION CREDIT’’
and inserting ‘‘, REHABILITATION CREDIT, OR COM-
MERCIAL REVITALIZATION DEDUCTION’’.
(c) AUDIT AND REPORT.—Not later than January 31
of 2004, 2007, and 2010, the Comptroller General of the
United States shall, pursuant to an audit of the renewal
community program established under section 1400E of
the Internal Revenue Code of 1986 (as added by sub-
section (a)) and the empowerment zone and enterprise
community program under subchapter U of chapter 1 of
such Code, report to Congress on such program and its
effect on poverty, unemployment, and economic growth
within the designated renewal communities, empowerment
zones, and enterprise communities.
(d) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by adding at the end
the following new item:
‘‘Subchapter X. Renewal Communities.’’.
SEC. 102. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH
RESIDING IN RENEWAL COMMUNITIES.
(a) HIGH-RISK YOUTH.—Subparagraphs (A)(ii) and
(B) of section 51(d)(5) are each amended by striking ‘‘em-
powerment zone or enterprise community’’ and inserting
‘‘empowerment zone, enterprise community, or renewal
community’’.
(b) QUALIFIED
SUMMER
YOUTH
EMPLOYEE.—
Clause (iv) of section 51(d)(7)(A) is amended by striking
‘‘empowerment zone or enterprise community’’ and insert-
ing ‘‘empowerment zone, enterprise community, or re-
newal community’’.
(c) HEADINGS.—Paragraphs (5)(B) and (7)(C) of
section 51(d) are each amended by inserting ‘‘OR COMMU-
NITY’’ in the heading after ‘‘ZONE’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to individuals who begin work for
the employer after December 31, 2001.
Subtitle B—Extension and Expan-
sion of Empowerment Zone In-
centives
SEC. 111. AUTHORITY TO DESIGNATE NINE ADDITIONAL
EMPOWERMENT ZONES.
Section 1391 is amended by adding at the end the
following new subsection:
‘‘(h) ADDITIONAL DESIGNATIONS PERMITTED.—
‘‘(1) IN GENERAL.—In addition to the areas
designated under subsections (a) and (g), the appro-
priate Secretaries may designate in the aggregate an
additional 9 nominated areas as empowerment zones
under this section, subject to the availability of eligi-
ble nominated areas. Of that number, not more than
seven may be designated in urban areas and not
more than 2 may be designated in rural areas.
‘‘(2) PERIOD DESIGNATIONS MAY BE MADE AND
TAKE EFFECT.—A designation may be made under
this subsection after the date of the enactment of
this subsection and before January 1, 2002. Subject
to subparagraphs (B) and (C) of subsection (d)(1),
such designations shall remain in effect during the
period beginning on January 1, 2002, and ending on
December 31, 2009.
‘‘(3) MODIFICATIONS TO ELIGIBILITY CRITERIA,
ETC.—The rules of subsection (g)(3) shall apply to
designations under this subsection.
‘‘(4) EMPOWERMENT
ZONES
WHICH
BECOME
RENEWAL
COMMUNITIES.—The number of areas
which may be designated as empowerment zones
under this subsection shall be increased by 1 for
each area which ceases to be an empowerment zone
by reason of section 1400E(e). Each additional area
designated by reason of the preceding sentence shall
have the same urban or rural character as the area
it is replacing.’’.
ment credit) shall be applied by substituting ‘the District
of Columbia’ for ‘such empowerment zone’.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to wages paid or incurred after
December 31, 2001.
SEC. 114. INCREASED EXPENSING UNDER SECTION 179.
(a) IN GENERAL.—Subparagraph (A) of section
1397A(a)(1) is amended by striking ‘‘$20,000’’ and in-
serting ‘‘$35,000’’.
(b) EXPENSING FOR PROPERTY USED IN DEVELOP-
ABLE SITES.—Section 1397A is amended by striking sub-
section (c).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 115. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT
ZONE FACILITY BONDS.
(a) IN GENERAL.—Paragraph (3) of section 1394(f )
(relating to bonds for empowerment zones designated
under section 1391(g)) is amended to read as follows:
‘‘(3) EMPOWERMENT ZONE FACILITY BOND.—
For purposes of this subsection, the term ‘empower-
ment zone facility bond’ means any bond which
would be described in subsection (a) if—
‘‘(A) in the case of obligations issued be-
fore January 1, 2002, only empowerment zones
designated under section 1391(g) were taken
into account under sections 1397C and 1397D,
and
‘‘(B) in the case of obligations issued after
December 31, 2001, all empowerment zones
(other than the District of Columbia Enterprise
Zone) were taken into account under sections
1397C and 1397D.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to obligations issued after Decem-
ber 31, 2001.
SEC. 116. NONRECOGNITION OF GAIN ON ROLLOVER OF
EMPOWERMENT ZONE INVESTMENTS.
(a) IN GENERAL.—Part III of subchapter U of chap-
ter 1 is amended—
(1) by redesignating subpart C as subpart D,
(2) by redesignating sections 1397B and 1397C
as sections 1397C and 1397D, respectively, and
(3) by inserting after subpart B the following
new subpart:
‘‘Subpart C—Nonrecognition of Gain on Rollover of
Empowerment Zone Investments
‘‘Sec. 1397B. Nonrecognition of gain on rollover of empowerment
zone investments.
‘‘SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF
EMPOWERMENT ZONE INVESTMENTS.
‘‘(a) NONRECOGNITION OF GAIN.—In the case of any
sale of a qualified empowerment zone asset held by the
taxpayer for more than 1 year and with respect to which
such taxpayer elects the application of this section, gain
from such sale shall be recognized only to the extent that
the amount realized on such sale exceeds—
‘‘(1) the cost of any qualified empowerment
zone asset (with respect to the same zone as the
asset sold) purchased by the taxpayer during the 60-
day period beginning on the date of such sale, re-
duced by
‘‘(2) any portion of such cost previously taken
into account under this section.
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) 
QUALIFIED
EMPOWERMENT
ZONE
ASSET.—
‘‘(A) IN
GENERAL.—The term ‘qualified
empowerment zone asset’ means any property
which would be a qualified community asset (as
defined in section 1400F) if in section 1400F—
‘‘(i) references to empowerment zones
were substituted for references to renewal
communities,
‘‘(ii) references to enterprise zone
businesses (as defined in section 1397C)
were substituted for references to renewal
community businesses, and
‘‘(iii) the date of the enactment of this
paragraph were substituted for ‘December
31, 2001’ each place it appears.
‘‘(B) TREATMENT OF DC ZONE.—The Dis-
trict of Columbia Enterprise Zone shall not be
treated as an empowerment zone for purposes
of this section.
‘‘(2) CERTAIN GAIN NOT ELIGIBLE FOR ROLL-
OVER.—This section shall not apply to—
‘‘(A) any gain which is treated as ordinary
income for purposes of this subtitle, and
‘‘(B) any gain which is attributable to real
property, or an intangible asset, which is not an
integral part of an enterprise zone business.
‘‘(3) PURCHASE.—A taxpayer shall be treated
as having purchased any property if, but for para-
graph (4), the unadjusted basis of such property in
the hands of the taxpayer would be its cost (within
the meaning of section 1012).
‘‘(4) BASIS ADJUSTMENTS.—If gain from any
sale is not recognized by reason of subsection (a),
such gain shall be applied to reduce (in the order ac-
quired) the basis for determining gain or loss of any
qualified empowerment zone asset which is pur-
chased by the taxpayer during the 60-day period de-
scribed in subsection (a). This paragraph shall not
apply for purposes of section 1202.
‘‘(5) HOLDING PERIOD.—For purposes of deter-
mining whether the nonrecognition of gain under
subsection (a) applies to any qualified empowerment
zone asset which is sold—
‘‘(A) the taxpayer’s holding period for such
asset and the asset referred to in subsection
(a)(1) shall be determined without regard to
section 1223, and
‘‘(B) only the first year of the taxpayer’s
holding period for the asset referred to in sub-
section (a)(1) shall be taken into account for
purposes of paragraphs (2)(A)(iii), (3)(C), and
(4)(A)(iii) of section 1400F(b).’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (23) of section 1016(a) is
amended—
(A) by striking ‘‘or 1045’’ and inserting
‘‘1045, or 1397B’’, and
(B) by striking ‘‘or 1045(b)(4)’’ and in-
serting ‘‘1045(b)(4), or 1397B(b)(4)’’.
(2) Paragraph (15) of section 1223 is amended
to read as follows:
‘‘(15) 
Except 
for 
purposes 
of 
sections
1202(a)(2), 
1202(c)(2)(A), 
1400B(b), 
and
1400F(b), in determining the period for which the
taxpayer has held property the acquisition of which
resulted under section 1045 or 1397B in the non-
recognition of any part of the gain realized on the
sale of other property, there shall be included the pe-
riod for which such other property has been held as
of the date of such sale.’’.
(3) Paragraph (2) of section 1394(b) is
amended—
(A) by striking ‘‘section 1397C’’ and in-
serting ‘‘section 1397D’’, and
(B) by striking ‘‘section 1397C(a)(2)’’ and
inserting ‘‘section 1397D(a)(2)’’.
(4) Paragraph (3) of section 1394(b) is
amended—
(A) by striking ‘‘section 1397B’’ each place
it appears and inserting ‘‘section 1397C’’, and
(B) by striking ‘‘section 1397B(d)’’ and in-
serting ‘‘section 1397C(d)’’.
(5) Sections 1400(e) and 1400B(c) are each
amended by striking ‘‘section 1397B’’ each place it
appears and inserting ‘‘section 1397C’’.
(6) The table of subparts for part III of sub-
chapter U of chapter 1 is amended by striking the
last item and inserting the following new items:
‘‘Subpart C. Nonrecognition of gain on rollover of empowerment
zone investments.
‘‘Subpart D. General provisions.’’.
(7) The table of sections for subpart D of such
part III is amended to read as follows:
‘‘Sec. 1397C. Enterprise zone business defined.
‘‘Sec. 1397D. Qualified zone property defined.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to qualified empowerment zone as-
sets acquired after the date of the enactment of this Act.
SEC. 117. INCREASED EXCLUSION OF GAIN ON SALE OF EM-
POWERMENT ZONE STOCK.
(a) IN GENERAL.—Subsection (a) of section 1202 is
amended to read as follows:
‘‘(a) EXCLUSION.—
‘‘(1) IN GENERAL.—In the case of a taxpayer
other than a corporation, gross income shall not in-
clude 50 percent of any gain from the sale or ex-
change of qualified small business stock held for
more than 5 years.
‘‘(2) EMPOWERMENT ZONE BUSINESSES.—
‘‘(A) IN GENERAL.—In the case of quali-
fied small business stock acquired after the date
of the enactment of this paragraph in a cor-
poration which is a qualified business entity (as
defined in section 1397C(b)) during substan-
tially all of the taxpayer’s holding period for
such stock, paragraph (1) shall be applied by
substituting ‘60 percent’ for ‘50 percent’.
‘‘(B) CERTAIN RULES TO APPLY.—Rules
similar to the rules of paragraphs (5) and (7)
of section 1400B(b) shall apply for purposes of
this paragraph.
‘‘(C) GAIN AFTER 2014 NOT QUALIFIED.—
Subparagraph (A) shall not apply to gain at-
tributable to periods after December 31, 2014.
‘‘(D) TREATMENT OF DC ZONE.—The Dis-
trict of Columbia Enterprise Zone shall not be
treated as an empowerment zone for purposes
of this paragraph.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (8) of section 1(h) is amended
by striking ‘‘means’’ and all that follows and insert-
ing ‘‘means the excess of—
‘‘(A) the gain which would be excluded
from gross income under section 1202 but for
the percentage limitation in section 1202(a),
over
‘‘(B) the gain excluded from gross income
under section 1202.’’.
(2) The section heading for section 1202 is
amended by striking ‘‘50-percent’’ and inserting
‘‘partial’’.
(3) The table of sections for part I of sub-
chapter P of chapter 1 is amended by striking ‘‘50-
percent’’ and inserting ‘‘Partial’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to stock acquired after the date
of the enactment of this Act.
Subtitle C—New Markets Tax
Credit
SEC. 121. NEW MARKETS TAX CREDIT.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its) is amended by adding at the end the following new
section:
‘‘SEC. 45D. NEW MARKETS TAX CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
in the case of a taxpayer who holds a qualified eq-
uity investment on a credit allowance date of such
investment which occurs during the taxable year, the
new markets tax credit determined under this sec-
tion for such taxable year is an amount equal to the
applicable percentage of the amount paid to the
qualified community development entity for such in-
vestment at its original issue.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage is—
‘‘(A) 5 percent with respect to the first 3
credit allowance dates, and
‘‘(B) 6 percent with respect to the remain-
der of the credit allowance dates.
‘‘(3) CREDIT ALLOWANCE DATE.—For purposes
of paragraph (1), the term ‘credit allowance date’
means, with respect to any qualified equity
investment—
‘‘(A) the date on which such investment is
initially made, and
‘‘(B) each of the 6 anniversary dates of
such date thereafter.
‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified equity
investment’ means any equity investment in a quali-
fied community development entity if—
‘‘(A) such investment is acquired by the
taxpayer at its original issue (directly or
through an underwriter) solely in exchange for
cash,
‘‘(B) substantially all of such cash is used
by the qualified community development entity
to make qualified low-income community invest-
ments, and
‘‘(C) such investment is designated for
purposes of this section by the qualified com-
munity development entity.
Such term shall not include any equity investment
issued by a qualified community development entity
more than 5 years after the date that such entity re-
ceives an allocation under subsection (f ). Any alloca-
tion not used within such 5-year period may be re-
allocated by the Secretary under subsection (f ).
‘‘(2) LIMITATION.—The maximum amount of
equity investments issued by a qualified community
development entity which may be designated under
paragraph (1)(C) by such entity shall not exceed the
portion of the limitation amount allocated under
subsection (f ) to such entity.
‘‘(3) SAFE HARBOR FOR DETERMINING USE OF
CASH.—The requirement of paragraph (1)(B) shall
be treated as met if at least 85 percent of the aggre-
gate gross assets of the qualified community devel-
opment entity are invested in qualified low-income
community investments.
‘‘(4) 
TREATMENT
OF
SUBSEQUENT
PUR-
CHASERS.—The term ‘qualified equity investment’
includes any equity investment which would (but for
paragraph (1)(A)) be a qualified equity investment
in the hands of the taxpayer if such investment was
a qualified equity investment in the hands of a prior
holder.
‘‘(5) REDEMPTIONS.—A rule similar to the rule
of section 1202(c)(3) shall apply for purposes of this
subsection.
‘‘(6) EQUITY INVESTMENT.—The term ‘equity
investment’ means—
‘‘(A) any stock (other than nonqualified
preferred stock as defined in section 351(g)(2))
in an entity which is a corporation, and
‘‘(B) any capital interest in an entity
which is a partnership.
‘‘(c) QUALIFIED COMMUNITY DEVELOPMENT ENTI-
TY.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified com-
munity development entity’ means any domestic cor-
poration or partnership if—
‘‘(A) the primary mission of the entity is
serving, or providing investment capital for,
low-income communities or low-income persons,
‘‘(B) the entity maintains accountability to
residents of low-income communities through
their representation on any governing board of
the entity or on any advisory board to the enti-
ty, and
‘‘(C) the entity is certified by the Secretary
for purposes of this section as being a qualified
community development entity.
‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA-
TIONS.—The requirements of paragraph (1) shall be
treated as met by—
‘‘(A) any specialized small business invest-
ment 
company 
(as 
defined 
in 
section
1044(c)(3)), and
‘‘(B) any community development financial
institution (as defined in section 103 of the
Community Development Banking and Finan-
cial Institutions Act of 1994 (12 U.S.C. 4702)).
‘‘(d) QUALIFIED LOW-INCOME COMMUNITY INVEST-
MENTS.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified low-in-
come community investment’ means—
‘‘(A) any capital or equity investment in,
or loan to, any qualified active low-income com-
munity business,
‘‘(B) the purchase from another qualified
community development entity of any loan
made by such entity which is a qualified low-in-
come community investment,
‘‘(C) financial counseling and other serv-
ices specified in regulations prescribed by the
Secretary to businesses located in, and resi-
dents of, low-income communities, and
‘‘(D) any equity investment in, or loan to,
any qualified community development entity.
‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU-
NITY BUSINESS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘qualified active low-income
community business’ means, with respect to any
taxable year, any corporation (including a non-
profit corporation) or partnership if for such
year—
‘‘(i) at least 50 percent of the total
gross income of such entity is derived from
the active conduct of a qualified business
within any low-income community,
‘‘(ii) a substantial portion of the use
of the tangible property of such entity
(whether owned or leased) is within any
low-income community,
‘‘(iii) a substantial portion of the serv-
ices performed for such entity by its em-
ployees are performed in any low-income
community,
‘‘(iv) less than 5 percent of the aver-
age of the aggregate unadjusted bases of
the property of such entity is attributable
to collectibles (as defined in section
408(m)(2)) other than collectibles that are
held primarily for sale to customers in the
ordinary course of such business, and
‘‘(v) less than 5 percent of the aver-
age of the aggregate unadjusted bases of
the property of such entity is attributable
to nonqualified financial property (as de-
fined in section 1397C(e)).
‘‘(B) PROPRIETORSHIP.—Such term shall
include any business carried on by an individual
as a proprietor if such business would meet the
requirements of subparagraph (A) were it incor-
porated.
‘‘(C) PORTIONS
OF
BUSINESS
MAY
BE
QUALIFIED
ACTIVE
LOW-INCOME
COMMUNITY
BUSINESS.—The term ‘qualified active low-in-
come community business’ includes any trades
or businesses which would qualify as a qualified
active low-income community business if such
trades or businesses were separately incor-
porated.
‘‘(3) QUALIFIED BUSINESS.—For purposes of
this subsection, the term ‘qualified business’ has the
meaning given to such term by section 1397C(d); ex-
cept that—
‘‘(A) in lieu of applying paragraph (2)(B)
thereof, the rental to others of real property lo-
cated in any low-income community shall be
treated as a qualified business if there are sub-
stantial improvements located on such property,
and
‘‘(B) paragraph (3) thereof shall not apply.
‘‘(e) LOW-INCOME COMMUNITY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘low-income com-
munity’ means any population census tract if—
‘‘(A) the poverty rate for such tract is at
least 20 percent, or
‘‘(B)(i) in the case of a tract not located
within a metropolitan area, the median family
income for such tract does not exceed 80 per-
cent of statewide median family income, or
‘‘(ii) in the case of a tract located within
a metropolitan area, the median family income
for such tract does not exceed 80 percent of the
greater of statewide median family income or
the metropolitan area median family income.
Subparagraph 
(B) 
shall 
be 
applied 
using
possessionwide median family income in the case of
census tracts located within a possession of the
United States.
‘‘(2) TARGETED
AREAS.—The Secretary may
designate any area within any census tract as a low-
income community if—
‘‘(A) the boundary of such area is contin-
uous,
‘‘(B) the area would satisfy the require-
ments of paragraph (1) if it were a census
tract, and
‘‘(C) an inadequate access to investment
capital exists in such area.
‘‘(3) AREAS NOT WITHIN CENSUS TRACTS.—In
the case of an area which is not tracted for popu-
lation census tracts, the equivalent county divisions
(as defined by the Bureau of the Census for pur-
poses of defining poverty areas) shall be used for
purposes of determining poverty rates and median
family income.
‘‘(f ) NATIONAL LIMITATION ON AMOUNT OF INVEST-
MENTS DESIGNATED.—
‘‘(1) IN GENERAL.—There is a new markets tax
credit limitation for each calendar year. Such limita-
tion is—
‘‘(A) $1,000,000,000 for 2001,
‘‘(B) $1,500,000,000 for 2002 and 2003,
‘‘(C) $2,000,000,000 for 2004 and 2005,
and
‘‘(D) $3,500,000,000 for 2006 and 2007.
‘‘(2) ALLOCATION OF LIMITATION.—The limita-
tion under paragraph (1) shall be allocated by the
Secretary among qualified community development
entities selected by the Secretary. In making alloca-
tions under the preceding sentence, the Secretary
shall give priority to any entity—
‘‘(A) with a record of having successfully
provided capital or technical assistance to dis-
advantaged businesses or communities, or
‘‘(B) which intends to satisfy the require-
ment under subsection (b)(1)(B) by making
qualified low-income community investments in
1 or more businesses in which persons unre-
lated to such entity (within the meaning of sec-
tion 267(b) or 707(b)(1)) hold the majority eq-
uity interest.
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
the new markets tax credit limitation for any cal-
endar year exceeds the aggregate amount allocated
under paragraph (2) for such year, such limitation
for the succeeding calendar year shall be increased
by the amount of such excess. No amount may be
carried under the preceding sentence to any calendar
year after 2014.
‘‘(g) RECAPTURE OF CREDIT IN CERTAIN CASES.—
‘‘(1) IN GENERAL.—If, at any time during the
7-year period beginning on the date of the original
issue of a qualified equity investment in a qualified
community development entity, there is a recapture
event with respect to such investment, then the tax
imposed by this chapter for the taxable year in
which such event occurs shall be increased by the
credit recapture amount.
‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-
poses of paragraph (1), the credit recapture amount
is an amount equal to the sum of—
‘‘(A) the aggregate decrease in the credits
allowed to the taxpayer under section 38 for all
prior taxable years which would have resulted if
no credit had been determined under this sec-
tion with respect to such investment, plus
‘‘(B) interest at the underpayment rate es-
tablished under section 6621 on the amount de-
termined under subparagraph (A) for each
prior taxable year for the period beginning on
the due date for filing the return for the prior
taxable year involved.
No deduction shall be allowed under this chapter for
interest described in subparagraph (B).
‘‘(3) RECAPTURE
EVENT.—For purposes of
paragraph (1), there is a recapture event with re-
spect to an equity investment in a qualified commu-
nity development entity if—
‘‘(A) such entity ceases to be a qualified
community development entity,
‘‘(B) the proceeds of the investment cease
to be used as required of subsection (b)(1)(B),
or
‘‘(C) such investment is redeemed by such
entity.
‘‘(4) SPECIAL RULES.—
‘‘(A) TAX
BENEFIT
RULE.—The tax for
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed
by reason of this section which were used to re-
duce tax liability. In the case of credits not so
used to reduce tax liability, the carryforwards
and carrybacks under section 39 shall be appro-
priately adjusted.
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be
treated as a tax imposed by this chapter for
purposes of determining the amount of any
credit under this chapter or for purposes of sec-
tion 55.
‘‘(h) BASIS REDUCTION.—The basis of any qualified
equity investment shall be reduced by the amount of any
credit determined under this section with respect to such
investment. This subsection shall not apply for purposes
of sections 1202, 1400B, and 1400F.
‘‘(i) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section, including regulations—
‘‘(1) which limit the credit for investments
which are directly or indirectly subsidized by other
Federal tax benefits (including the credit under sec-
tion 42 and the exclusion from gross income under
section 103),
‘‘(2) which prevent the abuse of the purposes of
this section,
‘‘(3) which provide rules for determining wheth-
er the requirement of subsection (b)(1)(B) is treated
as met,
‘‘(4) which impose appropriate reporting re-
quirements, and
‘‘(5) which apply the provisions of this section
to newly formed entities.’’.
(b) CREDIT MADE PART OF GENERAL BUSINESS
CREDIT.—
(1) IN GENERAL.—Subsection (b) of section 38
is amended by striking ‘‘plus’’ at the end of para-
graph (11), by striking the period at the end of
paragraph (12) and inserting ‘‘, plus’’, and by add-
ing at the end the following new paragraph:
‘‘(13) the new markets tax credit determined
under section 45D(a).’’.
(2) LIMITATION
ON
CARRYBACK.—Subsection
(d) of section 39 is amended by adding at the end
the following new paragraph:
‘‘(9) NO CARRYBACK OF NEW MARKETS TAX
CREDIT BEFORE JANUARY 1, 2001.—No portion of
the unused business credit for any taxable year
which is attributable to the credit under section 45D
may be carried back to a taxable year ending before
January 1, 2001.’’.
(c) DEDUCTION FOR UNUSED CREDIT.—Subsection
(c) of section 196 is amended by striking ‘‘and’’ at the
end of paragraph (7), by striking the period at the end
of paragraph (8) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(9) the new markets tax credit determined
under section 45D(a).’’.
(d) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
is amended by adding at the end the following new item:
‘‘Sec. 45D. New markets tax credit.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to investments made after Decem-
ber 31, 2000.
(f ) GUIDANCE ON ALLOCATION OF NATIONAL LIMI-
TATION.—Not later than 120 days after the date of the
enactment of this Act, the Secretary of the Treasury or
the Secretary’s delegate shall issue guidance which
specifies—
(1) how entities shall apply for an allocation
under section 45D(f )(2) of the Internal Revenue
Code of 1986, as added by this section;
(2) the competitive procedure through which
such allocations are made; and
(3) the actions that such Secretary or delegate
shall take to ensure that such allocations are prop-
erly made to appropriate entities.
(g) AUDIT AND REPORT.—Not later than January 31
of 2004, 2007, and 2010, the Comptroller General of the
United States shall, pursuant to an audit of the new mar-
kets tax credit program established under section 45D of
the Internal Revenue Code of 1986 (as added by sub-
section (a)), report to Congress on such program, includ-
ing all qualified community development entities that re-
ceive an allocation under the new markets credit under
such section.
Subtitle D—Improvements in Low-
Income Housing Credit
SEC. 131. MODIFICATION OF STATE CEILING ON LOW-IN-
COME HOUSING CREDIT.
(a) IN GENERAL.—Clauses (i) and (ii) of section
42(h)(3)(C) (relating to State housing credit ceiling) are
amended to read as follows:
‘‘(i) the unused State housing credit
ceiling (if any) of such State for the pre-
ceding calendar year,
‘‘(ii) the greater of—
‘‘(I) $1.75 ($1.50 for 2001) mul-
tiplied by the State population, or
‘‘(II) $2,000,000,’’.
(b) ADJUSTMENT
OF
STATE
CEILING
FOR
IN-
CREASES IN COST-OF-LIVING.—Paragraph (3) of section
42(h) (relating to housing credit dollar amount for agen-
cies) is amended by adding at the end the following new
subparagraph:
‘‘(H) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of a
calendar year after 2002, the $2,000,000
and $1.75 amounts in subparagraph (C)
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(f )(3) for such calendar year by sub-
stituting ‘calendar year 2001’ for ‘cal-
endar year 1992’ in subparagraph (B)
thereof.
‘‘(ii) ROUNDING.—
‘‘(I) 
In 
the 
case 
of 
the
$2,000,000 
amount, 
any 
increase
under clause (i) which is not a mul-
tiple of $5,000 shall be rounded to the
next lowest multiple of $5,000.
‘‘(II) In the case of the $1.75
amount, any increase under clause (i)
which is not a multiple of 5 cents
shall be rounded to the next lowest
multiple of 5 cents.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 42(h)(3)(C), as amended by sub-
section (a), is amended—
(A) by striking ‘‘clause (ii)’’ in the matter
following clause (iv) and inserting ‘‘clause (i)’’;
and
‘‘(vii) tenant populations of individ-
uals with children, and
‘‘(viii) projects intended for eventual
tenant ownership.’’.
(b) PREFERENCE FOR COMMUNITY REVITALIZATION
PROJECTS LOCATED IN QUALIFIED CENSUS TRACTS.—
Clause (ii) of section 42(m)(1)(B) is amended by striking
‘‘and’’ at the end of subclause (I), by adding ‘‘and’’ at
the end of subclause (II), and by inserting after subclause
(II) the following new subclause:
‘‘(III) projects which are located
in qualified census tracts (as defined
in subsection (d)(5)(C)) and the devel-
opment of which contributes to a con-
certed 
community 
revitalization
plan,’’.
SEC. 133. ADDITIONAL RESPONSIBILITIES OF HOUSING
CREDIT AGENCIES.
(a) MARKET STUDY; PUBLIC DISCLOSURE OF RA-
TIONALE
FOR NOT FOLLOWING CREDIT ALLOCATION
PRIORITIES.—Subparagraph (A) of section 42(m)(1) (re-
lating to responsibilities of housing credit agencies) is
amended by striking ‘‘and’’ at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
a comma, and by adding at the end the following new
clauses:
‘‘(iii) a comprehensive market study
of the housing needs of low-income individ-
uals in the area to be served by the project
is conducted before the credit allocation is
made and at the developer’s expense by a
disinterested party who is approved by
such agency, and
‘‘(iv) a written explanation is available
to the general public for any allocation of
a housing credit dollar amount which is
not made in accordance with established
priorities and selection criteria of the hous-
ing credit agency.’’.
(b) SITE VISITS.—Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by insert-
ing before the period ‘‘and in monitoring for noncompli-
ance with habitability standards through regular site vis-
its’’.
SEC. 134. MODIFICATIONS TO RULES RELATING TO BASIS
OF BUILDING WHICH IS ELIGIBLE FOR CRED-
IT.
(a) ADJUSTED BASIS TO INCLUDE PORTION OF CER-
TAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS
WHO ARE NOT TENANTS AND BY PROJECT EMPLOY-
EES.—Paragraph (4) of section 42(d) (relating to special
rules relating to determination of adjusted basis) is
amended—
(1) by striking ‘‘subparagraph (B)’’ in subpara-
graph (A) and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraph (C) as sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) INCLUSION OF BASIS OF PROPERTY
USED
TO
PROVIDE
SERVICES
FOR
CERTAIN
NONTENANTS.—
‘‘(i) 
IN
GENERAL.—The 
adjusted
basis of any building located in a qualified
census tract (as defined in paragraph
(5)(C)) shall be determined by taking into
account the adjusted basis of property (of
a character subject to the allowance for de-
preciation and not otherwise taken into ac-
count) used throughout the taxable year in
providing any community service facility.
‘‘(ii) LIMITATION.—The increase in
the adjusted basis of any building which is
taken into account by reason of clause (i)
shall not exceed 10 percent of the eligible
basis of the qualified low-income housing
project of which it is a part. For purposes
of the preceding sentence, all community
service facilities which are part of the same
qualified low-income housing project shall
be treated as one facility.
‘‘(iii) COMMUNITY
SERVICE
FACIL-
ITY.—For purposes of this subparagraph,
the term ‘community service facility’
means any facility designed to serve pri-
marily individuals whose income is 60 per-
cent or less of area median income (within
the meaning of subsection (g)(1)(B)).’’.
(b) CERTAIN NATIVE AMERICAN HOUSING ASSIST-
ANCE DISREGARDED IN DETERMINING WHETHER BUILD-
ING IS FEDERALLY SUBSIDIZED FOR PURPOSES OF THE
LOW-INCOME HOUSING CREDIT.—Subparagraph (E) of
section 42(i)(2) (relating to determination of whether
building is federally subsidized) is amended—
(1) in clause (i), by inserting ‘‘or the Native
American Housing Assistance and Self-Determina-
tion Act of 1996 (25 U.S.C. 4101 et seq.) (as in ef-
fect on October 1, 1997)’’ after ‘‘this subpara-
graph)’’; and
(2) in the subparagraph heading, by inserting
‘‘OR NATIVE AMERICAN HOUSING ASSISTANCE’’ after
‘‘HOME ASSISTANCE’’.
SEC. 135. OTHER MODIFICATIONS.
(a) ALLOCATION
OF CREDIT LIMIT
TO CERTAIN
BUILDINGS.—
(1) The first sentence of section 42(h)(1)(E)(ii)
is amended by striking ‘‘(as of’’ the first place it ap-
pears and inserting ‘‘(as of the later of the date
which is 6 months after the date that the allocation
was made or’’.
(2) The last sentence of section 42(h)(3)(C) is
amended by striking ‘‘project which’’ and inserting
‘‘project 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 or which’’.
(b) DETERMINATION OF WHETHER BUILDINGS ARE
LOCATED IN HIGH COST AREAS.—The first sentence of
section 42(d)(5)(C)(ii)(I) is amended—
(1) by inserting ‘‘either’’ before ‘‘in which 50
percent’’; and
(2) by inserting before the period ‘‘or which has
a poverty rate of at least 25 percent’’.
SEC. 136. CARRYFORWARD RULES.
(a) IN GENERAL.—Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated
among certain States) is amended by striking ‘‘the excess’’
and all that follows and inserting ‘‘the excess (if any) of—
‘‘(I) the unused State housing
credit ceiling for the year preceding
such year, over
‘‘(II) the aggregate housing cred-
it dollar amount allocated for such
year.’’.
(b) CONFORMING AMENDMENT.—The second sen-
tence of section 42(h)(3)(C) (relating to State housing
credit ceiling) is amended by striking ‘‘clauses (i) and
(iii)’’ and inserting ‘‘clauses (i) through (iv)’’.
SEC. 137. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to—
(1) housing credit dollar amounts allocated
after December 31, 2000; and
(2) buildings placed in service after such date
to the extent paragraph (1) of section 42(h) of the
Internal Revenue Code of 1986 does not apply to
any building by reason of paragraph (4) thereof, but
only with respect to bonds issued after such date.
Subtitle E—Other Community Re-
newal and New Markets Assist-
ance
PART I—PROVISIONS RELATING TO HOUSING
AND SUBSTANCE ABUSE PREVENTION AND
TREATMENT
SEC. 141. TRANSFER OF UNOCCUPIED AND SUBSTANDARD
HUD-HELD HOUSING TO LOCAL GOVERN-
MENTS 
AND 
COMMUNITY 
DEVELOPMENT
CORPORATIONS.
Section 204 of the Departments of Veterans Affairs
and Housing and Urban Development, and Independent
Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–
11a) is amended—
(1) by striking ‘‘FLEXIBLE AUTHORITY.—’’ and
inserting ‘‘DISPOSITION
OF HUD-OWNED PROP-
ERTIES. (a) FLEXIBLE AUTHORITY
FOR MULTI-
FAMILY PROJECTS.—’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD
HOUSING
TO LOCAL GOVERNMENTS
AND COMMUNITY
DEVELOPMENT CORPORATIONS.—
‘‘(1) TRANSFER AUTHORITY.—Notwithstanding
the authority under subsection (a) and the last sen-
tence of section 204(g) of the National Housing Act
(12 U.S.C. 1710(g)), the Secretary of Housing and
Urban Development shall transfer ownership of any
qualified HUD property, subject to the requirements
of this section, to a unit of general local government
having jurisdiction for the area in which the prop-
erty is located or to a community development cor-
poration which operates within such a unit of gen-
eral local government in accordance with this sub-
section, but only to the extent that units of general
local government and community development cor-
porations consent to transfer and the Secretary de-
termines that such transfer is practicable.
‘‘(2) QUALIFIED HUD PROPERTIES.—For pur-
poses of this subsection, the term ‘qualified HUD
property’ means any property for which, as of the
date that notification of the property is first made
under paragraph (3)(B), not less than 6 months
have elapsed since the later of the date that the
property was acquired by the Secretary or the date
that the property was determined to be unoccupied
or substandard, that is owned by the Secretary and
is—
‘‘(A) an unoccupied multifamily housing
project;
‘‘(B) a substandard multifamily housing
project; or
‘‘(C) an unoccupied single family property
that—
‘‘(i) has been determined by the Sec-
retary not to be an eligible asset under sec-
tion 204(h) of the National Housing Act
(12 U.S.C. 1710(h)); or
‘‘(ii) is an eligible asset under such
section 204(h), but—
‘‘(I) is not subject to a specific
sale agreement under such section;
and
‘‘(II) has been determined by the
Secretary to be inappropriate for con-
tinued inclusion in the program under
such section 204(h) pursuant to para-
graph (10) of such section.
‘‘(3) TIMING.—The Secretary shall establish
procedures that provide for—
‘‘(A) time deadlines for transfers under
this subsection;
‘‘(B) notification to units of general local
government and community development cor-
porations of qualified HUD properties in their
jurisdictions;
‘‘(C) such units and corporations to ex-
press interest in the transfer under this sub-
section of such properties;
‘‘(D) a right of first refusal for transfer of
qualified HUD properties to units of general
local government and community development
corporations, under which—
‘‘(i) the Secretary shall establish a pe-
riod during which the Secretary may not
transfer such properties except to such
units and corporations;
‘‘(ii) the Secretary shall offer qualified
HUD properties that are single family
properties for purchase by units of general
local government at a cost of $1 for each
property, but only to the extent that the
costs to the Federal Government of dis-
posal at such price do not exceed the costs
to the Federal Government of disposing of
property subject to the procedures for sin-
gle family property established by the Sec-
retary pursuant to the authority under the
last sentence of section 204(g) of the Na-
tional Housing Act (12 U.S.C. 1710(g));
‘‘(iii) the Secretary may accept an
offer to purchase a property made by a
community development corporation only if
the offer provides for purchase on a cost
recovery basis; and
‘‘(iv) the Secretary shall accept an
offer to purchase such a property that is
made during such period by such a unit or
corporation and that complies with the re-
quirements of this paragraph; and
‘‘(E) a written explanation, to any unit of
general local government or community develop-
ment corporation making an offer to purchase
a qualified HUD property under this subsection
that is not accepted, of the reason that such
offer was not acceptable.
‘‘(4) OTHER
DISPOSITION.—With respect to
any qualified HUD property, if the Secretary does
not receive an acceptable offer to purchase the prop-
erty pursuant to the procedure established under
paragraph (3), the Secretary shall dispose of the
property to the unit of general local government in
which property is located or to community develop-
ment corporations located in such unit of general
local government on a negotiated, competitive bid, or
other basis, on such terms as the Secretary deems
appropriate.
‘‘(5) SATISFACTION
OF
INDEBTEDNESS.—Be-
fore transferring ownership of any qualified HUD
property pursuant to this subsection, the Secretary
shall satisfy any indebtedness incurred in connection
with the property to be transferred, by canceling the
indebtedness.
‘‘(6) DETERMINATION
OF
STATUS
OF
PROP-
ERTIES.—To ensure compliance with the require-
ments of this subsection, the Secretary shall take the
following actions:
‘‘(A) UPON ENACTMENT.—Upon the enact-
ment of this subsection, the Secretary shall
promptly assess each residential property owned
by the Secretary to determine whether such
property is a qualified HUD property.
‘‘(B) UPON ACQUISITION.—Upon acquiring
any residential property, the Secretary shall
promptly determine whether the property is a
qualified HUD property.
‘‘(C) UPDATES.—The Secretary shall peri-
odically reassess the residential properties
owned by the Secretary to determine whether
any such properties have become qualified
HUD properties.
‘‘(7) TENANT LEASES.—This subsection shall
not affect the terms or the enforceability of any con-
tract or lease entered into with respect to any resi-
dential property before the date that such property
becomes a qualified HUD property.
‘‘(8) USE OF PROPERTY.—Property transferred
under this subsection shall be used only for appro-
priate neighborhood revitalization efforts, including
homeownership, rental units, commercial space, and
parks, consistent with local zoning regulations, local
building codes, and subdivision regulations and re-
strictions of record.
‘‘(9) INAPPLICABILITY
TO
PROPERTIES
MADE
AVAILABLE FOR HOMELESS.—Notwithstanding any
other provision of this subsection, this subsection
shall not apply to any properties that the Secretary
determines are to be made available for use by the
homeless pursuant to subpart E of part 291 of title
24, Code of Federal Regulations, during the period
that the properties are so available.
‘‘(10) PROTECTION OF EXISTING CONTRACTS.—
This subsection may not be construed to alter, af-
fect, or annul any legally binding obligations entered
into with respect to a qualified HUD property before
the property becomes a qualified HUD property.
‘‘(11) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) COMMUNITY
DEVELOPMENT
COR-
PORATION.—The term ‘community development
corporation’ means a nonprofit organization
whose primary purpose is to promote commu-
nity development by providing housing opportu-
nities for low-income families.
‘‘(B) COST RECOVERY BASIS.—The term
‘cost recovery basis’ means, with respect to any
sale of a residential property by the Secretary,
that the purchase price paid by the purchaser
is equal to or greater than the sum of: (i) the
appraised value of the property, as determined
in accordance with such requirements as the
Secretary shall establish; and (ii) the costs in-
curred by the Secretary in connection with such
property during the period beginning on the
date on which the Secretary acquires title to the
property and ending on the date on which the
sale is consummated.
‘‘(C) MULTIFAMILY HOUSING PROJECT.—
The term ‘multifamily housing project’ has the
meaning given the term in section 203 of the
Housing and Community Development Amend-
ments of 1978.
‘‘(D) RESIDENTIAL PROPERTY.—The term
‘residential property’ means a property that is
a multifamily housing project or a single family
property.
‘‘(E) SECRETARY.—The term ‘Secretary’
means the Secretary of Housing and Urban De-
velopment.
‘‘(F) SEVERE PHYSICAL PROBLEMS.—The
term ‘severe physical problems’ means, with re-
spect to a dwelling unit, that the unit—
‘‘(i) lacks hot or cold piped water, a
flush toilet, or both a bathtub and a show-
er in the unit, for the exclusive use of that
unit;
‘‘(ii) on not less than three separate
occasions during the preceding winter
months, was uncomfortably cold for a pe-
riod of more than 6 consecutive hours due
to a malfunction of the heating system for
the unit;
‘‘(iii) has no functioning electrical
service, exposed wiring, any room in which
there is not a functioning electrical outlet,
or has experienced three or more blown
fuses or tripped circuit breakers during the
preceding 90-day period;
‘‘(iv) is accessible through a public
hallway in which there are no working
light fixtures, loose or missing steps or
railings, and no elevator; or
‘‘(v) has severe maintenance problems,
including water leaks involving the roof,
windows, doors, basement, or pipes or
plumbing fixtures, holes or open cracks in
walls or ceilings, severe paint peeling or
broken plaster, and signs of rodent infesta-
tion.
‘‘(G) SINGLE
FAMILY
PROPERTY.—The
term ‘single family property’ means a 1- to 4-
family residence.
‘‘(H) SUBSTANDARD.—The term ‘sub-
standard’ means, with respect to a multifamily
housing project, that 25 percent or more of the
dwelling units in the project have severe phys-
ical problems.
‘‘(I) UNIT OF GENERAL LOCAL GOVERN-
MENT.—The term ‘unit of general local govern-
ment’ has the meaning given such term in sec-
tion 102(a) of the Housing and Community De-
velopment Act of 1974.
‘‘(J) UNOCCUPIED.—The term ‘unoccu-
pied’ means, with respect to a residential prop-
erty, that the unit of general local government
having jurisdiction over the area in which the
project is located has certified in writing that
the property is not inhabited.
‘‘(12) REGULATIONS.—
‘‘(A) INTERIM.—Not later than 30 days
after the date of the enactment of this sub-
section, the Secretary shall issue such interim
regulations as are necessary to carry out this
subsection.
‘‘(B) FINAL.—Not later than 60 days after
the date of the enactment of this subsection,
the Secretary shall issue such final regulations
as are necessary to carry out this subsection.’’.
SEC. 142. TRANSFER OF HUD ASSETS IN REVITALIZATION
AREAS.
In carrying out the program under section 204(h) of
the National Housing Act (12 U.S.C. 1710(h)), upon the
request of the chief executive officer of a county or the
government of appropriate jurisdiction and not later than
60 days after such request is made, the Secretary of Hous-
ing and Urban Development shall designate as a revital-
ization area all portions of such county that meet the cri-
teria for such designation under paragraph (3) of such
section.
SEC. 143. RISK-SHARING DEMONSTRATION.
Section 249 of the National Housing Act (12 U.S.C.
1715z–14) is amended—
(1) by striking the section heading and insert-
ing the following:
‘‘RISK-SHARING DEMONSTRATION’’;
(2) by striking ‘‘reinsurance’’ each place such
term appears and insert ‘‘risk-sharing’’;
(3) in subsection (a)—
(A) in the first sentence, by inserting ‘‘and
with insured community development financial
institutions’’ after ‘‘private mortgage insurers’’;
(B) in the second sentence—
(i) by striking ‘‘two’’ and inserting
‘‘four’’; and
(ii) by striking ‘‘March 15, 1988’’ and
inserting ‘‘the expiration of the 5-year pe-
riod beginning on the date of the enact-
ment of the Community Renewal Tax Re-
lief Act of 2000’’; and
(C) in the third sentence—
(i) by striking ‘‘insured’’ and inserting
‘‘for which risk of nonpayment is shared’’;
and
(ii) by striking ‘‘10 percent’’ and in-
serting ‘‘20 percent’’;
(4) in subsection (b)—
(A) in the first sentence—
(i) by striking ‘‘to provide’’ and in-
serting ‘‘, in providing’’;
(ii) by striking ‘‘through’’ and insert-
ing ‘‘, to enter into’’; and
(iii) by inserting ‘‘and with insured
community development financial institu-
tions’’ before the period at the end;
(B) in the second sentence, by inserting
‘‘and insured community development financial
institutions’’ after ‘‘private mortgage insurance
companies’’;
(C) by striking paragraph (1) and insert-
ing the following new paragraph:
‘‘(1) assume a secondary percentage of loss on
any mortgage insured pursuant to section 203(b),
234, or 245 covering a one- to four-family dwelling,
which percentage of loss shall be set forth in the
risk-sharing contract, with the first percentage of
loss to be borne by the Secretary;’’; and
(D) in paragraph (2)—
(i) by striking ‘‘carry out (under ap-
propriate delegation) such’’ and inserting
‘‘perform or delegate underwriting,’’;
(ii) by striking ‘‘function as the Sec-
retary pursuant to regulations,’’ and in-
serting ‘‘functions as the Secretary’’; and
(iii) by inserting before the period at
the end the following: ‘‘and shall set forth
in the risk-sharing contract’’;
(5) in subsection (c)—
(A) in the first sentence—
(i) by striking ‘‘of’’ the first place it
appears and inserting ‘‘for’’;
(ii) by inserting ‘‘received by the Sec-
retary with a private mortgage insurer or
insured community development financial
institution’’ after ‘‘sharing of premiums’’;
(iii) by striking ‘‘insurance reserves’’
and inserting ‘‘loss reserves’’;
(iv) by striking ‘‘such insurance’’ and
inserting ‘‘such risk-sharing contract’’; and
(v) by striking ‘‘right’’ and inserting
‘‘rights’’; and
(B) in the second sentence—
(i) by inserting ‘‘or insured commu-
nity development financial institution’’
after ‘‘private mortgage insurance com-
pany’’; and
(ii) by striking ‘‘for insurance’’ and
inserting ‘‘for risk-sharing’’;
(6) in subsection (d), by inserting ‘‘or insured
community development financial institution’’ after
‘‘private mortgage insurance company’’; and
(7) by adding at the end the following new sub-
section:
‘‘(e) INSURED COMMUNITY DEVELOPMENT FINAN-
CIAL INSTITUTION.—For purposes of this section, the
term ‘insured community development financial institu-
tion’ means a community development financial institu-
tion, as such term is defined in section 103 of Reigle Com-
munity Development and Regulatory Improvement Act of
1994 (12 U.S.C. 4702) that is an insured depository insti-
tution (as such term is defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813)) or an insured
credit union (as such term is defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752)).’’.
SEC. 144. PREVENTION AND TREATMENT OF SUBSTANCE
ABUSE; SERVICES PROVIDED THROUGH RELI-
GIOUS ORGANIZATIONS.
Title V of the Public Health Service Act (42 U.S.C.
290aa et seq.) is amended by adding at the end the fol-
lowing part:
‘‘PART G—SERVICES PROVIDED THROUGH RELIGIOUS
ORGANIZATIONS
‘‘SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.
‘‘(a) DESIGNATED
PROGRAMS.—Subject to sub-
section (b), this part applies to discretionary and formula
grant programs administered by the Substance Abuse and
Mental Health Services Administration that make awards
of financial assistance to public or private entities for the
purpose of carrying out activities to prevent or treat sub-
stance abuse (in this part referred to as a ‘designated pro-
gram’). Designated programs include the program under
subpart II of part B of title XIX (relating to formula
grants to the States).
‘‘(b) LIMITATION.—This part does not apply to any
award of financial assistance under a designated program
for a purpose other than the purpose specified in sub-
section (a).
‘‘(c) DEFINITIONS.—For purposes of this part (and
subject to subsection (b)):
‘‘(1) The term ‘designated program’ has the
meaning given such term in subsection (a).
‘‘(2) The term ‘financial assistance’ means a
grant, cooperative agreement, or contract.
‘‘(3) The term ‘program beneficiary’ means an
individual who receives program services.
‘‘(4) The term ‘program participant’ means a
public or private entity that has received financial
assistance under a designated program.
‘‘(5) The term ‘program services’ means treat-
ment for substance abuse, or preventive services re-
garding such abuse, provided pursuant to an award
of financial assistance under a designated program.
‘‘(6) The term ‘religious organization’ means a
nonprofit religious organization.
‘‘SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PAR-
TICIPANTS.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, a religious organization, on the same basis
as any other nonprofit private provider—
‘‘(1) may receive financial assistance under a
designated program; and
‘‘(2) may be a provider of services under a des-
ignated program.
‘‘(b) RELIGIOUS ORGANIZATIONS.—The purpose of
this section is to allow religious organizations to be pro-
gram participants on the same basis as any other non-
profit private provider without impairing the religious
character of such organizations, and without diminishing
the religious freedom of program beneficiaries.
‘‘(c) NONDISCRIMINATION AGAINST RELIGIOUS OR-
GANIZATIONS.—
‘‘(1) 
ELIGIBILITY
AS
PROGRAM
PARTICI-
PANTS.—Religious organizations are eligible to be
program participants on the same basis as any other
nonprofit private organization as long as the pro-
grams are implemented consistent with the Estab-
lishment Clause and Free Exercise Clause of the
First Amendment to the United States Constitution.
Nothing in this Act shall be construed to restrict the
ability of the Federal Government, or a State or
local government receiving funds under such pro-
grams, to apply to religious organizations the same
eligibility conditions in designated programs as are
applied to any other nonprofit private organization.
‘‘(2) NONDISCRIMINATION.—Neither the Fed-
eral Government nor a State or local government re-
ceiving funds under designated programs shall dis-
criminate against an organization that is or applies
to be a program participant on the basis that the or-
ganization has a religious character.
‘‘(d) RELIGIOUS CHARACTER AND FREEDOM.—
‘‘(1) RELIGIOUS
ORGANIZATIONS.—Except as
provided in this section, any religious organization
that is a program participant shall retain its inde-
pendence from Federal, State, and local government,
including such organization’s control over the defini-
tion, development, practice, and expression of its re-
ligious beliefs.
‘‘(2) ADDITIONAL
SAFEGUARDS.—Neither the
Federal Government nor a State shall require a reli-
gious organization to—
‘‘(A) alter its form of internal governance;
or
‘‘(B) remove religious art, icons, scripture,
or other symbols,
in order to be a program participant.
‘‘(e) EMPLOYMENT PRACTICES.—Nothing in this sec-
tion shall be construed to modify or affect the provisions
of any other Federal or State law or regulation that re-
lates to discrimination in employment. A religious organi-
zation’s exemption provided under section 702 of the Civil
Rights Act of 1964 regarding employment practices shall
not be affected by its participation in, or receipt of funds
from, a designated program.
‘‘(f ) RIGHTS OF PROGRAM BENEFICIARIES.—
‘‘(1) IN GENERAL.—If an individual who is a
program beneficiary or a prospective program bene-
ficiary objects to the religious character of a pro-
gram participant, within a reasonable period of time
after the date of such objection such program partic-
ipant shall refer such individual to, and the appro-
priate Federal, State, or local government that ad-
ministers a designated program or is a program par-
ticipant shall provide to such individual (if otherwise
eligible for such services), program services that—
‘‘(A) are from an alternative provider that
is accessible to, and has the capacity to provide
such services to, such individual; and
‘‘(B) have a value that is not less than the
value of the services that the individual would
have received from the program participant to
which the individual had such objection.
Upon referring a program beneficiary to an alter-
native provider, the program participant shall notify
the appropriate Federal, State, or local government
agency that administers the program of such refer-
ral.
‘‘(2) NOTICES.—Program participants, public
agencies that refer individuals to designated pro-
grams, and the appropriate Federal, State, or local
governments that administer designated programs or
are program participants shall ensure that notice is
provided to program beneficiaries or prospective pro-
gram beneficiaries of their rights under this section.
‘‘(3) ADDITIONAL REQUIREMENTS.—A program
participant making a referral pursuant to paragraph
(1) shall—
‘‘(A) prior to making such referral, con-
sider any list that the State or local government
makes available of entities in the geographic
area that provide program services; and
‘‘(B) ensure that the individual makes con-
tact with the alternative provider to which the
individual is referred.
‘‘(4) NONDISCRIMINATION.—A religious organi-
zation that is a program participant shall not in pro-
viding program services or engaging in outreach ac-
tivities under designated programs discriminate
against a program beneficiary or prospective pro-
gram beneficiary on the basis of religion or religious
belief.
‘‘(g) FISCAL ACCOUNTABILITY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any religious organization that is a pro-
gram participant shall be subject to the same regula-
tions as other recipients of awards of Federal finan-
cial assistance to account, in accordance with gen-
erally accepted auditing principles, for the use of the
funds provided under such awards.
‘‘(2) LIMITED
AUDIT.—With respect to the
award involved, a religious organization that is a
program 
participant 
shall 
segregate 
Federal
amounts provided under award into a separate ac-
count from non-Federal funds. Only the award funds
shall be subject to audit by the government.
‘‘(h) COMPLIANCE.—With respect to compliance with
this section by an agency, a religious organization may
obtain judicial review of agency action in accordance with
chapter 7 of title 5, United States Code.
‘‘SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN
PURPOSES.
‘‘No funds provided under a designated program shall
be expended for sectarian worship, instruction, or pros-
elytization.
‘‘SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL
IN DRUG TREATMENT PROGRAMS.
‘‘(a) FINDINGS.—The Congress finds that—
‘‘(1) establishing unduly rigid or uniform edu-
cational qualification for counselors and other per-
sonnel in drug treatment programs may undermine
the effectiveness of such programs; and
‘‘(2) such educational requirements for coun-
selors and other personnel may hinder or prevent the
provision of needed drug treatment services.
‘‘(b) NONDISCRIMINATION.—In determining whether
personnel of a program participant that has a record of
successful drug treatment for the preceding three years
have satisfied State or local requirements for education
and training, a State or local government shall not dis-
criminate against education and training provided to such
personnel by a religious organization, so long as such edu-
cation and training includes basic content substantially
equivalent to the content provided by nonreligious organi-
zations that the State or local government would credit
for purposes of determining whether the relevant require-
ments have been satisfied.’’.
PART II—ADVISORY COUNCIL ON COMMUNITY
RENEWAL
SEC. 151. SHORT TITLE.
This part may be cited as the ‘‘Advisory Council on
Community Renewal Act’’.
SEC. 152. ESTABLISHMENT.
There is established an advisory council to be known
as the ‘‘Advisory Council on Community Renewal’’ (in this
part referred to as the ‘‘Advisory Council’’).
SEC. 153. DUTIES OF ADVISORY COUNCIL.
The Advisory Council shall advise the Secretary of
Housing and Urban Development (in this part referred to
as the ‘‘Secretary’’) on the designation of renewal commu-
nities pursuant to the amendment made by section 101
and on the exercise of any other authority granted to the
Secretary pursuant to the amendments made by this title.
SEC. 154. MEMBERSHIP.
(a) NUMBER
AND APPOINTMENT.—The Advisory
Council shall be composed of 7 members appointed by the
Secretary.
(b) CHAIRPERSON.—The Chairperson of the Advisory
Council (in this part referred to as the ‘‘Chairperson’’)
shall be designated by the Secretary at the time of the
appointment.
(c) TERMS.—Each member shall be appointed for the
life of the Advisory Council.
(d) BASIC PAY.—
(1) CHAIRPERSON.—The Chairperson shall be
paid at a rate equal to the daily rate of basic pay
for level III of the Executive Schedule for each day
(including travel time) during which the Chairperson
is engaged in the actual performance of duties vest-
ed in the Advisory Council.
(2) OTHER
MEMBERS.—Members other than
the Chairperson shall each be paid at a rate equal
to the daily rate of basic pay for level IV of the Ex-
ecutive Schedule for each day (including travel time)
during which they are engaged in the actual per-
formance of duties vested in the Advisory Council.
(e) TRAVEL EXPENSES.—Each member shall receive
travel expenses, including per diem in lieu of subsistence,
in accordance with applicable provisions under subchapter
I of chapter 57 of title 5, United States Code.
(f ) QUORUM.—Four members of the Advisory Coun-
cil shall constitute a quorum but a lesser number may hold
hearings.
(g) MEETINGS.—The Advisory Council shall meet at
the call of the Secretary or the Chairperson.
SEC. 155. POWERS OF ADVISORY COUNCIL.
(a) HEARINGS AND SESSIONS.—The Advisory Coun-
cil may, for the purpose of carrying out this part, hold
hearings, sit and act at times and places, take testimony,
and receive evidence as the Advisory Council considers ap-
propriate. The Advisory Council may administer oaths or
affirmations to witnesses appearing before it.
(b) POWERS OF MEMBERS AND AGENTS.—Any mem-
ber or agent of the Advisory Council may, if authorized
by the Advisory Council, take any action which the Advi-
sory Council is authorized to take by this section.
(c) OBTAINING
OFFICIAL
DATA.—The Advisory
Council may secure directly from any department or agen-
cy of the United States information necessary to enable
it to carry out this part. Upon request of the Chairperson
of the Advisory Council, the head of that department or
agency shall furnish that information to the Advisory
Council.
SEC. 156. REPORTS.
(a) ANNUAL REPORTS.—The Advisory Council shall
submit to the Secretary an annual report for each fiscal
year.
(b) INTERIM REPORTS.—The Advisory Council may
submit to the Secretary such interim reports as the Advi-
sory Council considers appropriate.
(c) FINAL REPORT.—The Advisory Council shall
transmit a final report to the Secretary not later Sep-
tember 30, 2003. The final report shall contain a detailed
statement of the findings and conclusions of the Advisory
Council, together with any recommendations for legislative
or administrative action that the Advisory Council con-
siders appropriate.
SEC. 157. TERMINATION.
(a) IN GENERAL.—The Advisory Council shall termi-
nate 30 days after submitting its final report under sec-
tion 156(c).
(b) EXTENSION.—Notwithstanding subsection (a),
the Secretary may postpone the termination of the Advi-
sory Council for a period not to exceed 3 years after the
Advisory Council submits its final report under section
156(c).
SEC. 158. APPLICABILITY OF FEDERAL ADVISORY COM-
MITTEE ACT.
The Federal Advisory Committee Act (5 U.S.C. App.)
shall not apply to the Advisory Council.
SEC. 159. RESOURCES.
The Secretary shall provide to the Advisory Council
appropriate resources so that the Advisory Council may
carry out its duties and fuctions under this part.
SEC. 160. EFFECTIVE DATE.
This part shall be effective 30 days after the date
of its enactment.
Subtitle F—Other Provisions
SEC. 161. ACCELERATION OF PHASE-IN OF INCREASE IN
VOLUME CAP ON PRIVATE ACTIVITY BONDS.
(a) IN GENERAL.—Paragraphs (1) and (2) of section
146(d) (relating to State ceiling) are amended to read as
follows:
‘‘(1) IN GENERAL.—The State ceiling applicable
to any State for any calendar year shall be the
greater of—
‘‘(A) an amount equal to $75 ($62.50 in
the case of calendar year 2001) multiplied by
the State population, or
‘‘(B) $225,000,000 ($187,500,000 in the
case of calendar year 2001).
‘‘(2) COST-OF-LIVING
ADJUSTMENT.—In the
case of a calendar year after 2002, each of the dollar
amounts contained in paragraph (1) shall be in-
creased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f )(3) for such calendar
year by substituting ‘calendar year 2001’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
If any increase determined under the preceding sen-
tence is not a multiple of $5 ($5,000 in the case of
the dollar amount in paragraph (1)(B)), such in-
crease shall be rounded to the nearest multiple
thereof.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to calendar years after 2000.
SEC. 162. MODIFICATIONS TO EXPENSING OF ENVIRON-
MENTAL REMEDIATION COSTS.
(a) EXPENSING NOT LIMITED TO SITES IN TAR-
GETED AREAS.—Subsection (c) of section 198 is amended
to read as follows:
‘‘(c) QUALIFIED CONTAMINATED SITE.—For pur-
poses of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified con-
taminated site’ means any area—
‘‘(A) which is held by the taxpayer for use
in a trade or business or for the production of
income, or which is property described in sec-
100
tion 1221(a)(1) in the hands of the taxpayer,
and
‘‘(B) at or on which there has been a re-
lease (or threat of release) or disposal of any
hazardous substance.
‘‘(2) NATIONAL PRIORITIES LISTED SITES NOT
INCLUDED.—Such term shall not include any site
which is on, or proposed for, the national priorities
list under section 105(a)(8)(B) of the Comprehen-
sive Environmental Response, Compensation, and
Liability Act of 1980 (as in effect on the date of the
enactment of this section).
‘‘(3) TAXPAYER
MUST
RECEIVE
STATEMENT
FROM
STATE
ENVIRONMENTAL
AGENCY.—An area
shall be treated as a qualified contaminated site with
respect to expenditures paid or incurred during any
taxable year only if the taxpayer receives a state-
ment from the appropriate agency of the State in
which such area is located that such area meets the
requirement of paragraph (1)(B).
‘‘(4) APPROPRIATE STATE AGENCY.—For pur-
poses of paragraph (3), the chief executive officer of
each State may, in consultation with the Adminis-
trator of the Environmental Protection Agency, des-
ignate the appropriate State environmental agency
101
within 60 days of the date of the enactment of this
section. If the chief executive officer of a State has
not designated an appropriate environmental agency
within such 60-day period, the appropriate environ-
mental agency for such State shall be designated by
the Administrator of the Environmental Protection
Agency.’’.
(b) EXTENSION
OF
TERMINATION
DATE.—Sub-
section (h) of section 198 is amended by striking ‘‘2001’’
and inserting ‘‘2003’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures paid or incurred
after the date of the enactment of this Act.
SEC. 163. EXTENSION OF DC HOMEBUYER TAX CREDIT.
Section 1400C(i) (relating to application of section)
is amended by striking ‘‘2002’’ and inserting ‘‘2004’’.
SEC. 164. EXTENSION OF DC ZONE THROUGH 2003.
(a) IN GENERAL.—The following provisions are
amended by striking ‘‘2002’’ each place it appears and
inserting ‘‘2003’’:
(1) Section 1400(f ).
(2) Section 1400A(b).
(b) ZERO CAPITAL GAINS RATE.—Section 1400B
(relating to zero percent capital gains rate) is amended—
102
(1) by striking ‘‘2003’’ each place it appears
and inserting ‘‘2004’’, and
(2) by striking ‘‘2007’’ each place it appears
and inserting ‘‘2008’’.
SEC. 165. EXTENSION OF ENHANCED DEDUCTION FOR COR-
PORATE DONATIONS OF COMPUTER TECH-
NOLOGY.
(a) EXPANSION OF COMPUTER TECHNOLOGY DONA-
TIONS TO PUBLIC LIBRARIES.—
(1) IN
GENERAL.—Paragraph (6) of section
170(e) (relating to special rule for contributions of
computer technology and equipment for elementary
or secondary school purposes) is amended by strik-
ing ‘‘qualified elementary or secondary educational
contribution’’ each place it occurs in the headings
and text and inserting ‘‘qualified computer contribu-
tion’’.
(2) EXPANSION OF ELIGIBLE DONEES.—Clause
(i) of section 170(e)(6)(B) (relating to qualified ele-
mentary or secondary educational contribution) is
amended by striking ‘‘or’’ at the end of subclause
(I), by adding ‘‘or’’ at the end of subclause (II), and
by inserting after subclause (II) the following new
subclause:
103
‘‘(III) a public library (within the
meaning of section 213(2)(A) of the
Library Services and Technology Act
(20 U.S.C. 9122(2)(A)), as in effect
on the date of the enactment of the
Community Renewal Tax Relief Act of
2000, established and maintained by
an entity described in subsection
(c)(1),’’.
(3) EXTENSION OF DONATION PERIOD.—Clause
(ii) of section 170(e)(6)(B) is amended by striking
‘‘2 years’’ and inserting ‘‘3 years’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 170(e)(6)(B)(iv) is amended by
striking ‘‘in any grades of the K–12’’.
(2) The heading of paragraph (6) of section
170(e) is amended by striking ‘‘ELEMENTARY OR
SECONDARY
SCHOOL
PURPOSES’’ and inserting
‘‘EDUCATIONAL PURPOSES’’.
(c) 
EXTENSION
OF
DEDUCTION.—Section
170(e)(6)(F) (relating to termination) is amended by
striking ‘‘December 31, 2000’’ and inserting ‘‘December
31, 2003’’.
(d) STANDARDS AS TO FUNCTIONALITY AND SUIT-
ABILITY.—Subparagraph (B) of section 170(e)(6) is
104
amended by striking ‘‘and’’ at the end of clause (vi), by
striking the period at the end of clause (vii) and inserting
‘‘, and’’, and by adding at the end the following new
clause:
‘‘(viii) the property meets such stand-
ards, if any, as the Secretary may pre-
scribe by regulation to assure that the
property meets minimum functionality and
suitability standards for educational pur-
poses.’’.
(e) DONATIONS
OF COMPUTERS REACQUIRED
BY
MANUFACTURER.—Paragraph (6) of section 170(e) is fur-
ther amended by redesignating subparagraphs (D), (E),
and (F) as subparagraphs (E), (F), and (G), respectively,
and by inserting after subparagraph (C) the following new
subparagraph:
‘‘(D) DONATIONS
OF
PROPERTY
REAC-
QUIRED BY MANUFACTURER.—In the case of
property which is reacquired by the person who
constructed the property—
‘‘(i) subparagraph (B)(ii) shall be ap-
plied to a contribution of such property by
such person by taking into account the
date that the original construction of the
property was substantially completed, and
105
‘‘(ii) subparagraph (B)(iii) shall not
apply to such contribution.’’.
(f ) EFFECTIVE DATE.—The amendments made by
this section shall apply to contributions made after De-
cember 31, 2000.
SEC. 166. TREATMENT OF INDIAN TRIBAL GOVERNMENTS
UNDER FEDERAL UNEMPLOYMENT TAX ACT.
(a) IN GENERAL.—Section 3306(c)(7) (defining em-
ployment) is amended—
(1) by inserting ‘‘or in the employ of an Indian
tribe,’’ after ‘‘service performed in the employ of a
State, or any political subdivision thereof,’’; and
(2) by inserting ‘‘or Indian tribes’’ after ‘‘whol-
ly owned by one or more States or political subdivi-
sions’’.
(b) PAYMENTS IN LIEU OF CONTRIBUTIONS.—Sec-
tion 3309 (relating to State law coverage of services per-
formed for nonprofit organizations or governmental enti-
ties) is amended—
(1) in subsection (a)(2) by inserting ‘‘, includ-
ing an Indian tribe,’’ after ‘‘the State law shall pro-
vide that a governmental entity’’;
(2) in subsection (b)(3)(B) by inserting ‘‘, or of
an Indian tribe’’ after ‘‘of a State or political sub-
division thereof’’;
106
(3) in subsection (b)(3)(E) by inserting ‘‘or
tribal’’ after ‘‘the State’’; and
(4) in subsection (b)(5) by inserting ‘‘or of an
Indian tribe’’ after ‘‘an agency of a State or political
subdivision thereof’’.
(c) STATE LAW COVERAGE.—Section 3309 (relating
to State law coverage of services performed for nonprofit
organizations or governmental entities) is amended by
adding at the end the following new subsection:
‘‘(d) ELECTION BY INDIAN TRIBE.—The State law
shall provide that an Indian tribe may make contributions
for employment as if the employment is within the mean-
ing of section 3306 or make payments in lieu of contribu-
tions under this section, and shall provide that an Indian
tribe may make separate elections for itself and each sub-
division, subsidiary, or business enterprise wholly owned
by such Indian tribe. State law may require a tribe to post
a payment bond or take other reasonable measures to as-
sure the making of payments in lieu of contributions under
this section. Notwithstanding the requirements of section
3306(a)(6), if, within 90 days of having received a notice
of delinquency, a tribe fails to make contributions, pay-
ments in lieu of contributions, or payment of penalties or
interest (at amounts or rates comparable to those applied
to all other employers covered under the State law) as-
107
sessed with respect to such failure, or if the tribe fails
to post a required payment bond, then service for the tribe
shall not be excepted from employment under section
3306(c)(7) until any such failure is corrected. This sub-
section shall apply to an Indian tribe within the meaning
of section 4(e) of the Indian Self-Determination and Edu-
cation Assistance Act (25 U.S.C. 450b(e)).’’.
(d) DEFINITIONS.—Section 3306 (relating to defini-
tions) is amended by adding at the end the following new
subsection:
‘‘(u) INDIAN TRIBE.—For purposes of this chapter,
the term ‘Indian tribe’ has the meaning given to such term
by section 4(e) of the Indian Self-Determination and Edu-
cation Assistance Act (25 U.S.C. 450b(e)), and includes
any subdivision, subsidiary, or business enterprise wholly
owned by such an Indian tribe.’’.
(e) EFFECTIVE DATE; TRANSITION RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to service performed on
or after the date of the enactment of this Act.
(2) TRANSITION RULE.—For purposes of the
Federal Unemployment Tax Act, service performed
in the employ of an Indian tribe (as defined in sec-
tion 3306(u) of the Internal Revenue Code of 1986
(as added by this section)) shall not be treated as
108
employment (within the meaning of section 3306 of
such Code) if—
(A) it is service which is performed before
the date of the enactment of this Act and with
respect to which the tax imposed under the
Federal Unemployment Tax Act has not been
paid, and
(B) such Indian tribe reimburses a State
unemployment fund for unemployment benefits
paid for service attributable to such tribe for
such period.
TITLE II—TWO-YEAR EXTENSION
OF AVAILABILITY OF MED-
ICAL SAVINGS ACCOUNTS
SEC. 201. TWO-YEAR EXTENSION OF AVAILABILITY OF MED-
ICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec-
tion 220(i) (defining cut-off year) are each amended by
striking ‘‘2000’’ each place it appears and inserting
‘‘2002’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 220( j) is
amended—
109
(A) by striking ‘‘1998 or 1999’’ each place
it appears and inserting ‘‘1998, 1999, or
2001’’,
(B) by striking ‘‘600,000 (750,000 in the
case 
of 
1999)’’ 
and 
inserting 
‘‘750,000
(600,000 in the case of 1998)’’, and
(C) by inserting after subparagraph (B)
the following new subparagraph:
‘‘(C) NO LIMITATION FOR 2000.—The nu-
merical limitation shall not apply for 2000.’’.
(2) Subparagraph (A) of section 220( j)(4) is
amended by striking ‘‘and 1999’’ and inserting
‘‘1999, and 2001’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 202. MEDICAL SAVINGS ACCOUNTS RENAMED AS AR-
CHER MSAS.
(a) IN GENERAL.—The following provisions are
amended by striking ‘‘medical savings account’’ each place
it appears in the text and inserting ‘‘Archer MSA’’:
(1) Section 26(b)(2)(Q).
(2) Section 106(b).
(3) Section 138(b).
(4) Section 220.
110
(5) Section 848(e)(1)(B)(iv).
(6) Subsections (a)(2) and (d) of section 4973.
(7) Subsections (c)(4) and (e)(1)(D) of section
4975.
(8) Subsections (a) and (d)(2)(B) of section
4980E.
(9) Section 6051(a)(11).
(b) OTHER AMENDMENTS.—
(1) Paragraph (16) of section 62(a) is amended
to read as follows:
‘‘(16) ARCHER MSAS.—The deduction allowed
by section 220.’’.
(2) The following provisions are each amended
by striking ‘‘medical savings accounts’’ each place it
appears in the text and inserting ‘‘Archer MSAs’’:
(A) Paragraphs (4) and (7) of section
106(b).
(B) 
Subsections 
(c)(1)(D), 
(e)(2),
(f )(3)(A), (i)(4)(B), and ( j) of section 220.
(C) Section 4973(d).
(D) Subsections (b) and (d)(1) of section
4980E.
(E) Section 6693(a)(2)(B).
111
(3) Paragraph (1) of section 220(d) is amended
by inserting ‘‘as a medical savings account’’ after
‘‘United States’’.
(4) The heading for section 220(d) is amended
by striking ‘‘MEDICAL SAVINGS ACCOUNT’’ and in-
serting ‘‘ARCHER MSA’’.
(5) The headings for sections 220(d)(1) and
3231(e)(10) are each amended by striking ‘‘MED-
ICAL
SAVINGS
ACCOUNT’’ and inserting ‘‘ARCHER
MSA’’.
(6) The headings for sections 106(b), 138(f ),
220(i), and 4973(d) are each amended by striking
‘‘MEDICAL SAVINGS ACCOUNTS’’ and inserting ‘‘AR-
CHER MSAS’’.
(7) The headings for section 220(c)(1)(C) and
4975(c)(4) are each amended by striking ‘‘MEDICAL
SAVINGS ACCOUNTS’’ and inserting ‘‘ARCHER MSAS’’.
(8) The section heading for section 220 is
amended to read as follows:
‘‘SEC. 220. ARCHER MSAS.’’.
(9) The item relating to section 220 in the table
of sections for part VII of subchapter B of chapter
1 is amended to read as follows:
‘‘Sec. 220. Archer MSAs.’’.
(10) The provisions amended by the preceding
provisions of this section are further amended by
112
striking ‘‘a Archer’’ each place it appears and insert-
ing ‘‘an Archer’’.
(11) Section 220(e)(1) is further amended by
striking ‘‘A Archer’’ and inserting ‘‘An Archer’’.
TITLE III—ADMINISTRATIVE
AND TECHNICAL PROVISIONS
Subtitle A—Administrative
Provisions
SEC. 301. EXEMPTION OF CERTAIN REPORTING REQUIRE-
MENTS.
Section 3003(a)(1) of the Federal Reports Elimi-
nation and Sunset Act of 1995 (31 U.S.C. 1113 note)
shall not apply to any report required to be submitted
under any of the following provisions of law:
(1) Section 13031(f ) of the Consolidated Omni-
bus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(f )).
(2) Section 16(c) of the Foreign Trade Zones
Act (19 U.S.C. 81p(c)).
(3) The following provisions of the Tariff Act of
1930:
(A) 
Section 
330(c)(1) 
(19 
U.S.C.
1330(c)(1)).
(B) Section 607(c) (19 U.S.C. 1607(c)).
113
(4) Section 5 of the International Coffee Agree-
ment Act of 1980 (19 U.S.C. 1356n).
(5) Section 351(a)(2) of the Trade Expansion
Act of 1962 (19 U.S.C. 1981(a)(2)).
(6) Section 502 of the Automotive Products
Trade Act of 1965 (19 U.S.C. 2032).
(7) Section 3131 of the Customs Enforcement
Act of 1986 (19 U.S.C. 2081).
(8) The following provisions of the Trade Act of
1974 (19 U.S.C. 2101 et seq.):
(A) Section 102(b)(4)(A)(ii)(I) (19 U.S.C.
2112(b)(4)(A)(ii)(I)).
(B) 
Section 
102(e)(1) 
(19 
U.S.C.
2112(e)(1)).
(C) 
Section 
102(e)(2) 
(19 
U.S.C.
2112(e)(2)).
(D) Section 104(d) (19 U.S.C. 2114(d)).
(E) Section 125(e) (19 U.S.C. 2135(e)).
(F) 
Section 
135(e)(1) 
(19 
U.S.C.
2155(e)(1)).
(G) Section 141(c) (19 U.S.C. 2171(c)).
(H) Section 162 (19 U.S.C. 2212).
(I) Section 163(b) (19 U.S.C. 2213(b)).
(J) Section 163(c) (19 U.S.C. 2213(c)).
(K) Section 203(b) (19 U.S.C. 2253(b)).
114
(L) Section 302(b)(2)(C) (19 U.S.C.
2412(b)(2)(C)).
(M) Section 303 (19 U.S.C. 2413).
(N) Section 309 (19 U.S.C. 2419).
(O) Section 407(a) (19 U.S.C. 2437(a)).
(P) Section 502(f ) (19 U.S.C. 2462(f )).
(Q) Section 504 (19 U.S.C. 2464).
(9) The following provisions of the Trade
Agreements Act of 1979 (19 U.S.C. 2501 et seq.):
(A) Section 2(b) (19 U.S.C. 2503(b)).
(B) Section 3(c) (19 U.S.C. 2504(c)).
(C) Section 305(c) (19 U.S.C. 2515(c)).
(10) Section 303(g)(1) of the Convention on
Cultural Property Implementation Act (19 U.S.C.
2602(g)(1)).
(11) The following provisions of the Caribbean
Basin Economic Recovery Act (19 U.S.C. 2701 et
seq.):
(A) Section 212(a)(1)(A) (19 U.S.C.
2702(a)(1)(A)).
(B) 
Section 
212(a)(2) 
(19 
U.S.C.
2702(a)(2)).
(12) The following provisions of the Omnibus
Trade and Competitiveness Act of 1988 (19 U.S.C.
2901 et seq.):
115
(A) Section 1102 (19 U.S.C. 2902).
(B) Section 1103 (19 U.S.C. 2903).
(C) Section 1206(b) (19 U.S.C. 3006(b)).
(13) Section 123(a) of the Customs and Trade
Act of 1990 (Public Law 101–382) (19 U.S.C.
2083).
(14) Section 243(b)(2) of the Caribbean Basin
Economic Recovery Expansion Act of 1990 (Public
Law 101–382).
(15) The following provisions of the Internal
Revenue Code of 1986:
(A) Section 6103(p)(5).
(B) Section 7608.
(C) Section 7802(f )(3).
(D) Section 8022(3).
(E) Section 9602(a).
(16) The following provisions relating to the
revenue laws of the United States:
(A) Section 1552(c) of the Tax Reform
Act of 1986 (100 Stat. 2753).
(B) Section 231 of the Deficit Reduction
Act of 1984 (26 U.S.C. 801 note).
(C) Section 208 of the Tax Treatment Ex-
tension Act of 1977 (26 U.S.C. 911 note).
116
(D) Section 7105 of the Technical and
Miscellaneous Revenue Act of 1988 (45 U.S.C.
369).
(17) Section 4008 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1308).
(18) Section 426 of the Black Lung Benefits
Act (30 U.S.C. 936(b)).
(19) Section 7502(g) of title 31, United States
Code.
(20) The following provisions of the Social Se-
curity Act:
(A) Section 215(i)(2)(C)(i) (42 U.S.C.
415(i)(2)(C)(i)).
(B) 
Section 
221(i)(2) 
(42 
U.S.C.
421(i)(2)).
(C) 
Section 
221(i)(3) 
(42 
U.S.C.
421(i)(3)).
(D) 
Section 
233(e)(1) 
(42 
U.S.C.
433(e)(1)).
(E) 
Section 
452(a)(10) 
(42 
U.S.C.
652(a)(10)).
(F) Section 452(g)(3)(B) (42 U.S.C.
652(g)(3)(B)).
(G) Section 506(a)(1) (42 U.S.C. 706(a)).
(H) Section 908 (42 U.S.C. 1108).
117
(I) Section 1114(f ) (42 U.S.C. 1314(f )).
(J) Section 1120 (42 U.S.C. 1320).
(K) Section 1161 (42 U.S.C. 1320c–10).
(L) Section 1875(b) (42 U.S.C. 1395ll(b)).
(M) Section 1881 (42 U.S.C. 1395rr).
(N) 
Section 
1882 
(42 
U.S.C.
1395ss(f )(2)).
(21) Section 104(b) of the Social Security Inde-
pendence and Program Improvements Act of 1994
(42 USC 904 note).
(22) Section 10 of the Railroad Retirement Act
of 1937 (45 U.S.C. 231f ).
(23) The following provisions of the Railroad
Retirement Act of 1974:
(A) 
Section 
22(a)(1) 
(45 
U.S.C.
231u(a)(1)).
(B) 
Section 
22(b)(1) 
(45 
U.S.C.
231u(b)(1)).
(24) Section 502 of the Railroad Retirement
Solvency Act of 1983 (45 U.S.C. 231f-1).
(25) Section 47121(c) of title 49, United States
Code.
(26) The following provisions of the Omnibus
Budget Reconciliation Act of 1987 (Public Law
100–203; 101 Stat. 1330-182):
118
(A) Section 4007(c)(4) (42 U.S.C. 1395ww
note).
(B) Section 4079 (42 U.S.C. 1395mm
note).
(C) Section 4205 (42 U.S.C. 1395i–3
note).
(D) Section 4215 (42 U.S.C. 1396r note).
(27) The following provisions of the Inspector
General Act of 1978 (Public Law 95–452):
(A) Section 5(b).
(B) Section 5(d).
(28) The following provisions of the Public
Health Service Act:
(A) 
In 
section 
308(a) 
(42 
U.S.C.
242m(a)), subparagraphs (A), (B), (C), and
(D) of paragraph (1).
(B) Section 403 (42 U.S.C. 283).
(29) Section 404 of the Health Services and
Centers Amendments of 1978 (42 U.S.C. 242p)
(Public Law 95–626).
(30) The following provisions of the Older
Americans Act of 1965:
(A) Section 206(d) (42 U.S.C. 3017(d)).
(B) Section 207 (42 U.S.C. 3018).
119
(31) Section 308 of the Age Discrimination Act
of 1975 (42 U.S.C. 6106a(b)).
(32) Section 509(c)(3) of the Americans with
Disabilities Act 0f 1990 (42 U.S.C. 12209(c)(3)).
(33) Section 4207(f ) of the Omnibus Budget
Reconciliation Act of 1990 (42 U.S.C. 1395b–1
note).
SEC. 302. EXTENSION OF DEADLINES FOR IRS COMPLIANCE
WITH CERTAIN NOTICE REQUIREMENTS.
(a) ANNUAL INSTALLMENT AGREEMENT NOTICE.—
Section 3506 of the Internal Revenue Service Restruc-
turing and Reform Act of 1998 is amended by striking
‘‘July 1, 2000’’ and inserting ‘‘September 1, 2001’’.
(b) NOTICE REQUIREMENTS RELATING
TO COM-
PUTATION OF PENALTY.—Subsection (c) of section 3306
of the Internal Revenue Service Restructuring and Reform
Act of 1998 is amended—
(1) by striking ‘‘December 31, 2000’’ and in-
serting ‘‘June 30, 2001’’, and
(2) by adding at the end the following: ‘‘In the
case of any notice of penalty issued after June 30,
2001, and before July 1, 2003, the requirements of
section 6751(a) of the Internal Revenue Code of
1986 shall be treated as met if such notice contains
a telephone number at which the taxpayer can re-
120
quest a copy of the taxpayer’s assessment and pay-
ment history with respect to such penalty.’’.
(c) NOTICE REQUIREMENTS RELATING TO INTEREST
IMPOSED.—Subsection (c) of section 3308 of the Internal
Revenue Service Restructuring and Reform Act of 1998
is amended—
(1) by striking ‘‘December 31, 2000’’ and in-
serting ‘‘June 30, 2001’’, and
(2) by adding at the end the following: ‘‘In the
case of any notice issued after June 30, 2001, and
before July 1, 2003, to which section 6631 of the
Internal Revenue Code of 1986 applies, the require-
ments of section 6631 of such Code shall be treated
as met if such notice contains a telephone number
at which the taxpayer can request a copy of the tax-
payer’s payment history relating to interest amounts
included in such notice.’’.
SEC. 303. EXTENSION OF AUTHORITY FOR UNDERCOVER
OPERATIONS.
Paragraph (6), and the last sentence, of section
7608(c) are each amended by striking ‘‘January 1, 2001’’
and inserting ‘‘January 1, 2006’’.
124
(c) EXCEPTION FROM PUBLIC INSPECTION AS WRIT-
TEN DETERMINATION.—
(1) CLOSING
AND
SIMILAR
AGREEMENTS.—
Paragraph (1) of section 6110(b) is amended to
read as follows:
‘‘(1) WRITTEN DETERMINATION.—
‘‘(A) IN GENERAL.—The term ‘written de-
termination’ means a ruling, determination let-
ter, technical advice memorandum, or Chief
Counsel advice.
‘‘(B) EXCEPTIONS.—Such term shall not
include any matter referred to in subparagraph
(C) or (D) of section 6103(b)(2).’’.
(2) AGREEMENTS
WITH
FOREIGN
GOVERN-
MENTS.—Paragraph (1) of section 6110(l) is amend-
ed by inserting ‘‘or 6105’’ after ‘‘6104’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 305. INCREASE IN THRESHOLD FOR JOINT COM-
MITTEE REPORTS ON REFUNDS AND CRED-
ITS.
(a) GENERAL RULE.—Subsections (a) and (b) of sec-
tion 6405 are each amended by striking ‘‘$1,000,000’’ and
inserting ‘‘$2,000,000’’.
125
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act, except that such amendment shall not
apply with respect to any refund or credit with respect
to a report that has been made before such date of the
enactment under section 6405 of the Internal Revenue
Code of 1986.
SEC. 306. TREATMENT OF MISSING CHILDREN WITH RE-
SPECT TO CERTAIN TAX BENEFITS.
(a) IN GENERAL.—Subsection (c) of section 151 (re-
lating to additional exemption for dependents) is amended
by adding at the end the following new paragraph:
‘‘(6) TREATMENT OF MISSING CHILDREN.—
‘‘(A) IN
GENERAL.—Solely for the pur-
poses referred to in subparagraph (B), a child
of the taxpayer—
‘‘(i) who is presumed by law enforce-
ment authorities to have been kidnapped
by someone who is not a member of the
family of such child or the taxpayer, and
‘‘(ii) who was (without regard to this
paragraph) the dependent of the taxpayer
for the portion of the taxable year before
the date of the kidnapping,
126
shall be treated as a dependent of the taxpayer
for all taxable years ending during the period
that the child is kidnapped.
‘‘(B) PURPOSES.—Subparagraph (A) shall
apply solely for purposes of determining—
‘‘(i) the deduction under this section,
‘‘(ii) the credit under section 24 (re-
lating to child tax credit), and
‘‘(iii) whether an individual is a sur-
viving spouse or a head of a household
(such terms are defined in section 2).
‘‘(C) 
COMPARABLE
TREATMENT
FOR
EARNED INCOME CREDIT.—For purposes of sec-
tion 32, an individual—
‘‘(i) who is presumed by law enforce-
ment authorities to have been kidnapped
by someone who is not a member of the
family of such individual or the taxpayer,
and
‘‘(ii) who had, for the taxable year in
which the kidnapping occurred, the same
principal place of abode as the taxpayer for
more than one-half of the portion of such
year before the date of the kidnapping,
127
shall be treated as meeting the requirement of
section 32(c)(3)(A)(ii) with respect to a tax-
payer for all taxable years ending during the
period that the individual is kidnapped.
‘‘(D) TERMINATION
OF
TREATMENT.—
Subparagraphs (A) and (C) shall cease to apply
as of the first taxable year of the taxpayer be-
ginning after the calendar year in which there
is a determination that the child is dead (or, if
earlier, in which the child would have attained
age 18).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 307. AMENDMENTS TO STATUTES REFERENCING
YIELD ON 52-WEEK TREASURY BILLS.
(a) AMENDMENT TO THE ACT OF FEBRUARY 26,
1931.—Section 6 of the Act of February 26, 1931 (40
U.S.C. 258e–1) (relating to the interest rate on compensa-
tion owed for takings of property) is amended—
(1) in paragraph (1), by striking ‘‘the coupon
issue yield equivalent (as determined by the Sec-
retary of the Treasury) of the average accepted auc-
tion price for the last auction of 52 week United
States Treasury bills settled immediately before’’
128
and inserting ‘‘the weekly average 1-year constant
maturity Treasury yield, as published by the Board
of Governors of the Federal Reserve System, for the
calendar week preceding’’; and
(2) in paragraph (2), by striking ‘‘the coupon
issue yield equivalent (as determined by the Sec-
retary of the Treasury) of the average accepted auc-
tion price for the last auction of 52 week United
States Treasury bills settled immediately before’’
and inserting ‘‘the weekly average 1-year constant
maturity Treasury yield, as published by the Board
of Governors of the Federal Reserve System, for the
calendar week preceding’’.
(b) AMENDMENT
TO TITLE 18, UNITED STATES
CODE.—Section 3612(f )(2)(B) of title 18, United States
Code (relating to the interest rate on unpaid criminal fines
and penalties of more than $2,500) is amended by striking
‘‘the coupon issue yield equivalent (as determined by the
Secretary of the Treasury) of the average accepted auction
price for the last auction of fifty-two week United States
Treasury bills settled before’’ and inserting ‘the weekly av-
erage 1-year constant maturity Treasury yield, as pub-
lished by the Board of Governors of the Federal Reserve
System, for the calendar week preceding.’’.
129
(c) AMENDMENT
TO
THE
INTERNAL
REVENUE
CODE.—Section 995(f )(4) (relating to the interest rate on
tax-deferred liability of shareholders of domestic inter-
national sales corporations) is amended by striking ‘‘the
average investment yield of United States Treasury bills
with maturities of 52 weeks which were auctioned during
the 1-year period’’ and inserting ‘‘the average of the 1-
year constant maturity Treasury yields, as published by
the Board of Governors of the Federal Reserve System,
for the 1-year period’’.
(d) AMENDMENTS TO TITLE 28, UNITED STATES
CODE.—
(1) AMENDMENT
TO
SECTION
1961.—Section
1961(a) of title 28, United States Code (relating to
the interest rate on money judgments in civil cases
recovered in Federal district court) is amended by
striking ‘‘the coupon issue yield equivalent (as deter-
mined by the Secretary of the Treasury) of the aver-
age accepted auction price for the last auction of
fifty-two week United States Treasury bills settled
immediately prior to’’ and inserting ‘‘the weekly av-
erage 1-year constant maturity Treasury yield, as
published by the Board of Governors of the Federal
Reserve System, for the calendar week preceding.’’.
130
(2) AMENDMENT
TO
SECTION
2516.—Section
2516(b) of title 28, United States Code (relating to
the interest rate on a judgment against the United
States affirmed by the Supreme Court after review
on petition of the United States) is amended by
striking ‘‘the coupon issue yield equivalent (as deter-
mined by the Secretary of the Treasury) of the aver-
age accepted auction price for the last auction of
fifty-two week United States Treasury bills settled
immediately before’’ and inserting ‘‘the weekly aver-
age 1-year constant maturity Treasury yield, as pub-
lished by the Board of Governors of the Federal Re-
serve System, for the calendar week preceding’’.
SEC. 308. ADJUSTMENTS FOR CONSUMER PRICE INDEX
ERROR.
(a) DETERMINATIONS BY OMB.—As soon as prac-
ticable after the date of the enactment of this Act, the
Director of the Office of Management and Budget shall
determine with respect to each applicable Federal benefit
program whether the CPI computation error for 1999 has
or will result in a shortfall in payments to beneficiaries
under such program (as compared to payments that would
have been made if the error had not occurred). As soon
as practicable after the date of the enactment of this Act,
but not later than 60 days after such date, the Director
131
shall direct the head of the Federal agency which admin-
isters such program to make a payment or payments that,
insofar as the Director finds practicable and feasible—
(1) are targeted to the amount of the shortfall
experienced by individual beneficiaries, and
(2) compensate for the shortfall.
(b) COORDINATION WITH FEDERAL AGENCIES.—As
soon as practicable after the date of the enactment of this
Act, each Federal agency that administers an applicable
Federal benefit program shall, in accordance with such
guidelines as are issued by the Director pursuant to this
section, make an initial determination of whether, and the
extent to which, the CPI computation error for 1999 has
or will result in a shortfall in payments to beneficiaries
of an applicable Federal benefit program administered by
such agency. Not later than 30 days after such date, the
head of such agency shall submit a report to the Director
and to each House of the Congress of such determination,
together with a complete description of the nature of the
shortfall.
(c) IMPLEMENTATION PURSUANT TO AGENCY RE-
PORTS.—Upon receipt of the report submitted by a Fed-
eral agency pursuant to subsection (b), the Director shall
review the initial determination of the agency, the agency’s
description of the nature of the shortfall, and the com-
132
pensation payments proposed by the agency. Prior to di-
recting payment of such payments pursuant to subsection
(a), the Director shall make appropriate adjustments (if
any) in the compensation payments proposed by the agen-
cy that the Director determines are necessary to comply
with the requirements of subsection (a) and transmit to
the agency a summary report of the review, indicating any
adjustments made by the Director. The agency shall make
the compensation payments as directed by the Director
pursuant to subsection (a) in accordance with the Direc-
tor’s summary report.
(d) INCOME DISREGARD UNDER FEDERAL MEANS-
TESTED BENEFIT PROGRAMS.—A payment made under
this section to compensate for a shortfall in benefits shall,
in accordance with guidelines issued by the Director pur-
suant to this section, be disregarded in determining in-
come under title VIII of the Social Security Act or any
applicable Federal benefit program that is means-tested.
(e) FUNDING.—Funds otherwise available under each
applicable Federal benefit program for making benefit
payments under such program are hereby made available
for making compensation payments under this section in
connection with such program.
(f ) NO JUDICIAL REVIEW.—No action taken pursu-
ant to this section shall be subject to judicial review.
133
(g) DIRECTOR’S REPORT.—Not later than April 1,
2001, the Director shall submit to each House of the Con-
gress a report on the activities performed by the Director
pursuant to this section.
(h) DEFINITIONS.—For purposes of this section:
(1) APPLICABLE
FEDERAL
BENEFIT
PRO-
GRAM.—The term ‘‘applicable Federal benefit pro-
gram’’ means any program of the Government of the
United States providing for regular or periodic pay-
ments or cash assistance paid directly to individual
beneficiaries, as determined by the Director of the
Office of Management and Budget.
(2) FEDERAL
AGENCY.—The term ‘‘Federal
agency’’ means a department, agency, or instrumen-
tality of the Government of the United States.
(3) CPI COMPUTATION ERROR FOR 1999.—The
term ‘‘CPI computation error for 1999’’ means the
error in the computation of the Consumer Price
Index announced by the Bureau of Labor Statistics
on September 28, 2000.
(i) TAX PROVISIONS.—In the case of taxable years
(and other periods) beginning after December 31, 2000,
if any Consumer Price Index (as defined in section 1(f )(5)
of the Internal Revenue Code of 1986) reflects the CPI
computation error for 1999—
134
(1) the correct amount of such Index shall (in
such manner and to such extent as the Secretary of
the Treasury determines to be appropriate) be taken
into account for purposes of such Code, and
(2) tables prescribed under section 1(f ) of such
Code to reflect such correct amount shall apply in
lieu of any tables that were prescribed based on the
erroneous amount.
SEC. 
309. 
PREVENTION 
OF 
DUPLICATION 
OF 
LOSS
THROUGH ASSUMPTION OF LIABILITIES GIV-
ING RISE TO A DEDUCTION.
(a) IN GENERAL.—Section 358 (relating to basis to
distributees) is amended by adding at the end the fol-
lowing new subsection:
‘‘(h) SPECIAL RULES FOR ASSUMPTION OF LIABIL-
ITIES TO WHICH SUBSECTION (d) DOES NOT APPLY.—
‘‘(1) IN GENERAL.—If, after application of the
other provisions of this section to an exchange or se-
ries of exchanges, the basis of property to which
subsection (a)(1) applies exceeds the fair market
value of such property, then such basis shall be re-
duced (but not below such fair market value) by the
amount (determined as of the date of the exchange)
of any liability—
135
‘‘(A) which is assumed in exchange for
such property, and
‘‘(B) with respect to which subsection
(d)(1) does not apply to the assumption.
‘‘(2) EXCEPTIONS.—Except as provided by the
Secretary, paragraph (1) shall not apply to any li-
ability if—
‘‘(A) the trade or business with which the
liability is associated is transferred to the per-
son assuming the liability as part of the ex-
change, or
‘‘(B) substantially all of the assets with
which the liability is associated are transferred
to the person assuming the liability as part of
the exchange.
‘‘(3) LIABILITY.—For purposes of this sub-
section, the term ‘liability’ shall include any fixed or
contingent obligation to make payment, without re-
gard to whether the obligation is otherwise taken
into account for purposes of this title.’’.
(b) DETERMINATION OF AMOUNT OF LIABILITY AS-
SUMED.—Section 357(d)(1) is amended by inserting ‘‘sec-
tion 358(h),’’ after ‘‘section 358(d),’’.
136
(c) APPLICATION OF COMPARABLE RULES TO PART-
NERSHIPS AND S CORPORATIONS.—The Secretary of the
Treasury or his delegate—
(1) shall prescribe rules which provide appro-
priate adjustments under subchapter K of chapter 1
of the Internal Revenue Code of 1986 to prevent the
acceleration or duplication of losses through the as-
sumption of (or transfer of assets subject to) liabil-
ities described in section 358(h)(3) of such Code (as
added by subsection (a)) in transactions involving
partnerships, and
(2) may prescribe rules which provide appro-
priate adjustments under subchapter S of chapter 1
of such Code in transactions described in paragraph
(1) involving S corporations rather than partner-
ships.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply to assumptions of liability
after October 18, 1999.
(2) RULES.—The rules prescribed under sub-
section (c) shall apply to assumptions of liability
after October 18, 1999, or such later date as may
be prescribed in such rules.
137
SEC. 310. DISCLOSURE OF CERTAIN INFORMATION TO CON-
GRESSIONAL BUDGET OFFICE.
(a) DISCLOSURE OF CERTAIN TAX INFORMATION.—
(1) IN
GENERAL.—Subsection ( j) of section
6103 (relating to statistical use) is amended by add-
ing at the end the following new paragraph:
‘‘(6) CONGRESSIONAL BUDGET OFFICE.—Upon
written request by the Director of the Congressional
Budget Office, the Secretary shall furnish to officers
and employees of the Congressional Budget Office
return information for the purpose of, but only to
the extent necessary for, long-term models of the so-
cial security and medicare programs.’’.
(2) RECORDKEEPING
SAFEGUARDS.—Section
6103(p) is amended—
(A) in paragraph (4)—
(i) in the matter preceding subpara-
graph (A), by inserting ‘‘the Congressional
Budget Office,’’ after ‘‘General Accounting
Office,’’,
(ii) in subparagraph (E), by striking
‘‘commission or the General Accounting
Office’’ and inserting ‘‘commission, the
General Accounting Office, or the Congres-
sional Budget Office’’,
138
(iii) in subparagraph (F)(ii), by strik-
ing ‘‘or the General Accounting Office,’’
and inserting ‘‘the General Accounting Of-
fice, or the Congressional Budget Office,’’,
and
(iv) in the matter following subpara-
graph (F), by inserting ‘‘or the Congres-
sional Budget Office’’ after ‘‘General Ac-
counting Office’’ both places it appears,
(B) in paragraph (5), by striking ‘‘commis-
sions and the General Accounting Office’’ and
inserting ‘‘commissions, the General Accounting
Office, and the Congressional Budget Office’’,
and
(C) in paragraph (6)(A), by inserting ‘‘and
the Congressional Budget Office’’ after ‘‘com-
missions’’.
(b) CONFIDENTIALITY OF RECORDS.—
(1) IN GENERAL.—Section 203 of the Congres-
sional Budget Act of 1974 (2 U.S.C. 603) is amend-
ed by adding at the end the following:
‘‘(e) LEVEL OF CONFIDENTIALITY.—With respect to
information, data, estimates, and statistics obtained under
sections 201(d) and 201(e), the Director shall maintain
the same level of confidentiality as is required by law of
139
the department, agency, establishment, or regulatory
agency or commission from which it is obtained. Officers
and employees of the Congressional Budget Office shall
be subject to the same statutory penalties for unauthor-
ized disclosure or use as officers or employees of the de-
partment, agency, establishment, or regulatory agency or
commission from which it is obtained.’’.
(2) CONFORMING AMENDMENT.—Subsection (a)
of section 203 of such Act is amended by striking
‘‘subsections (c) and (d)’’ and inserting ‘‘subsections
(c), (d), and (e)’’.
Subtitle B—Technical Corrections
SEC. 311. AMENDMENTS RELATED TO TICKET TO WORK
AND WORK INCENTIVES IMPROVEMENT ACT
OF 1999.
(a) AMENDMENTS RELATED TO SECTION 502 OF
THE ACT.—
(1) Section 280C(c)(1) is amended by striking
‘‘or credit’’ after ‘‘deduction’’ each place it appears.
(2) Section 30A is amended by redesignating
subsections (f ) and (g) as subsections (g) and (h),
respectively, and by inserting after subsection (e) the
following new subsection:
‘‘(f ) DENIAL OF DOUBLE BENEFIT.—Any wages or
other expenses taken into account in determining the cred-
140
it under this section may not be taken into account in de-
termining the credit under section 41.’’.
(b) AMENDMENT RELATED TO SECTION 545 OF THE
ACT.—Clause (ii) of section 857(b)(7)(B) is amended to
read as follows:
‘‘(ii) 
EXCEPTION
FOR
CERTAIN
AMOUNTS.—Clause (i) shall not apply to
amounts received directly or indirectly by a
real estate investment trust—
‘‘(I) for services furnished or ren-
dered by a taxable REIT subsidiary
that are described in paragraph
(1)(B) of section 856(d), or
‘‘(II) from a taxable REIT sub-
sidiary that are described in para-
graph (7)(C)(ii) of such section.’’.
(c) CLARIFICATION RELATED TO SECTION 538 OF
THE ACT.—The reference to section 332(b)(1) of the In-
ternal Revenue Code of 1986 in Treasury Regulation sec-
tion 1.1502-34 shall be deemed to include a reference to
section 732(f ) of such Code.
(d) EFFECTIVE
DATE.—Subsection (c) and the
amendments made by this section shall take effect as if
included in the provisions of the Ticket to Work and Work
Incentives Improvement Act of 1999 to which they relate.
141
SEC. 312. AMENDMENTS RELATED TO TAX AND TRADE RE-
LIEF EXTENSION ACT OF 1998.
(a) AMENDMENT RELATED TO SECTION 1004(b) OF
THE ACT.—Subsection (d) of section 6104 is amended by
adding at the end the following new paragraph:
‘‘(6) APPLICATION
TO
NONEXEMPT
CHARI-
TABLE TRUSTS AND NONEXEMPT PRIVATE FOUNDA-
TIONS.—The organizations referred to in paragraphs
(1) and (2) of section 6033(d) shall comply with the
requirements of this subsection relating to annual
returns filed under section 6033 in the same manner
as the organizations referred to in paragraph (1).’’.
(b) AMENDMENT RELATED TO SECTION 4003 OF
THE ACT.—Subsection (b) of section 4003 of the Tax and
Trade Relief Extension Act of 1998 is amended by insert-
ing ‘‘(7)(A)(i)(II),’’ after ‘‘(5)(A)(ii)(I),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Tax and Trade Relief Extension Act of 1998 to
which they relate.
SEC. 313. AMENDMENTS RELATED TO INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT
OF 1998.
(a) AMENDMENTS RELATED TO INNOCENT SPOUSE
RELIEF.—
142
(1) ELECTION MAY BE MADE ANY TIME AFTER
DEFICIENCY ASSERTED.—Subparagraph (B) of sec-
tion 6015(c)(3) is amended by striking ‘‘shall be
made’’ and inserting ‘‘may be made at any time
after a deficiency for such year is asserted but’’.
(2) CLARIFICATION REGARDING DISALLOWANCE
OF
REFUNDS
AND
CREDITS
UNDER
SECTION
6015(c).—
(A) IN GENERAL.—Section 6015 is amend-
ed by redesignating subsection (g) as subsection
(h) and by inserting after subsection (f ) the fol-
lowing new subsection:
‘‘(g) CREDITS AND REFUNDS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), notwithstanding any other law
or rule of law (other than section 6511, 6512(b),
7121, or 7122), credit or refund shall be allowed or
made to the extent attributable to the application of
this section.
‘‘(2) RES JUDICATA.—In the case of any elec-
tion under subsection (b) or (c), if a decision of a
court in any prior proceeding for the same taxable
year has become final, such decision shall be conclu-
sive except with respect to the qualification of the
individual for relief which was not an issue in such
143
proceeding. The exception contained in the preceding
sentence shall not apply if the court determines that
the individual participated meaningfully in such
prior proceeding.
‘‘(3) CREDIT
AND
REFUND
NOT
ALLOWED
UNDER SUBSECTION (c).—No credit or refund shall
be allowed as a result of an election under sub-
section (c).’’.
(B) 
CONFORMING
AMENDMENT.—Para-
graph (3) of section 6015(e) is amended to read
as follows:
‘‘(3) LIMITATION
ON
TAX
COURT
JURISDIC-
TION.—If a suit for refund is begun by either indi-
vidual filing the joint return pursuant to section
6532—
‘‘(A) the Tax Court shall lose jurisdiction
of the individual’s action under this section to
whatever extent jurisdiction is acquired by the
district court or the United States Court of
Federal Claims over the taxable years that are
the subject of the suit for refund, and
‘‘(B) the court acquiring jurisdiction shall
have jurisdiction over the petition filed under
this subsection.’’.
144
(3) CLARIFICATIONS
REGARDING
REVIEW
BY
TAX COURT.—
(A) Paragraph (1) of section 6015(e) is
amended in the matter preceding subparagraph
(A) by inserting after ‘‘individual’’ the fol-
lowing: ‘‘against whom a deficiency has been as-
serted and’’.
(B) 
Subparagraph 
(A) 
of 
section
6015(e)(1) is amended to read as follows:
‘‘(A) IN
GENERAL.—In addition to any
other remedy provided by law, the individual
may petition the Tax Court (and the Tax Court
shall have jurisdiction) to determine the appro-
priate relief available to the individual under
this section if such petition is filed—
‘‘(i) at any time after the earlier of—
‘‘(I) the date the Secretary mails,
by certified or registered mail to the
taxpayer’s last known address, notice
of the Secretary’s final determination
of relief available to the individual, or
‘‘(II) the date which is 6 months
after the date such election is filed
with the Secretary, and
145
‘‘(ii) not later than the close of the
90th day after the date described in clause
(i)(I).’’.
(C) 
Subparagraph 
(B)(i) 
of 
section
6015(e)(1) is amended—
(i) by striking ‘‘until the expiration of
the 90-day period described in subpara-
graph (A)’’ and inserting ‘‘until the close
of the 90th day referred to in subpara-
graph (A)(ii)’’, and
(ii) by inserting ‘‘under subparagraph
(A)’’ after ‘‘filed with the Tax Court’’.
(D)(i) Subsection (e) of section 6015 is
amended by adding at the end the following
new paragraph:
‘‘(5) WAIVER.—An individual who elects the ap-
plication of subsection (b) or (c) (and who agrees
with the Secretary’s determination of relief ) may
waive in writing at any time the restrictions in para-
graph (1)(B) with respect to collection of the out-
standing assessment (whether or not a notice of the
Secretary’s final determination of relief has been
mailed).’’.
(ii) Paragraph (2) of section 6015(e) is
amended to read as follows:
146
‘‘(2) SUSPENSION OF RUNNING OF PERIOD OF
LIMITATIONS.—The running of the period of limita-
tions in section 6502 on the collection of the assess-
ment to which the petition under paragraph (1)(A)
relates shall be suspended—
‘‘(A) for the period during which the Sec-
retary is prohibited by paragraph (1)(B) from
collecting by levy or a proceeding in court and
for 60 days thereafter, and
‘‘(B) if a waiver under paragraph (5) is
made, from the date the claim for relief was
filed until 60 days after the waiver is filed with
the Secretary.’’.
(b) AMENDMENTS RELATED TO PROCEDURE AND
ADMINISTRATION.—
(1) DISPUTES INVOLVING $50,000 OR LESS.—
Section 7463 is amended by adding at the end the
following new subsection:
‘‘(f ) ADDITIONAL CASES IN WHICH PROCEEDINGS
MAY BE CONDUCTED UNDER THIS SECTION.—At the op-
tion of the taxpayer concurred in by the Tax Court or a
division thereof before the hearing of the case, proceedings
may be conducted under this section (in the same manner
as a case described in subsection (a)) in the case of—
147
‘‘(1) a petition to the Tax Court under section
6015(e) in which the amount of relief sought does
not exceed $50,000, and
‘‘(2) an appeal under section 6330(d)(1)(A) to
the Tax Court of a determination in which the un-
paid tax does not exceed $50,000.’’.
(2) AUTHORITY
TO
ENJOIN
COLLECTION
AC-
TIONS.—
(A) Section 6330(e)(1) is amended by add-
ing at the end the following: ‘‘Notwithstanding
the provisions of section 7421(a), the beginning
of a levy or proceeding during the time the sus-
pension under this paragraph is in force may be
enjoined by a proceeding in the proper court,
including the Tax Court. The Tax Court shall
have no jurisdiction under this paragraph to en-
join any action or proceeding unless a timely
appeal has been filed under subsection (d)(1)
and then only in respect of the unpaid tax or
proposed levy to which the determination being
appealed relates.’’.
(B) Section 7421(a) is amended by insert-
ing ‘‘6330(e)(1),’’ after ‘‘6246(b),’’.
148
(3) CLARIFICATION.—Paragraph (3) of section
6331(k) is amended by striking ‘‘(3), (4), and (5)’’
and inserting ‘‘(3) and (4)’’.
(c) AMENDMENT RELATED TO SECTION 1103 OF
THE
ACT.—Paragraph (6) of section 6103(k) is
amended—
(1) by inserting ‘‘and an officer or employee of
the Office of Treasury Inspector General for Tax
Administration’’ after ‘‘internal revenue officer or
employee’’, and
(2) by striking ‘‘INTERNAL REVENUE’’ in the
heading and inserting ‘‘CERTAIN’’.
(d) AMENDMENT RELATED TO SECTION 3401 OF
THE ACT.—Section 6330(d)(1)(A) is amended by striking
‘‘to hear’’ and inserting ‘‘with respect to’’.
(e) AMENDMENT RELATED TO SECTION 3509 OF
THE ACT.—Subparagraph (A) of section 6110(g)(5) is
amended by inserting ‘‘, any Chief Counsel advice,’’ after
‘‘technical advice memorandum’’.
(f ) EFFECTIVE DATES.—The amendments made by
subsections (a) and (b) shall take effect on the date of
the enactment of this Act. The amendments made by sub-
sections (c), (d), and (e) shall take effect as if included
in the provisions of the Internal Revenue Service Restruc-
turing and Reform Act of 1998 to which they relate.
149
SEC. 314. AMENDMENTS RELATED TO TAXPAYER RELIEF
ACT OF 1997.
(a) AMENDMENT RELATED TO SECTION 101 OF THE
ACT.—Paragraph (4) of section 6211(b) is amended by
striking ‘‘sections 32 and 34’’ and inserting ‘‘sections
24(d), 32, and 34’’.
(b) AMENDMENT RELATED TO SECTION 302 OF THE
ACT.—The last sentence of section 3405(e)(1)(B) is
amended by inserting ‘‘(other than a Roth IRA)’’ after
‘‘individual retirement plan’’.
(c) AMENDMENT TO SECTION 311 OF THE ACT.—
Paragraph (3) of section 311(e) of the Taxpayer Relief
Act of 1997 (relating to election to recognize gain on as-
sets held on January 1, 2001) is amended by adding at
the end the following new sentence: ‘‘Such an election shall
not apply to any asset which is disposed of (in a trans-
action in which gain or loss is recognized in whole or in
part) before the close of the 1-year period beginning on
the date that the asset would have been treated as sold
under such election.’’.
(d) AMENDMENT RELATED TO SECTION 402 OF THE
ACT.—The flush sentence at the end of clause (ii) of sec-
tion 56(a)(1)(A) is amended by inserting before ‘‘or to any
other property’’ the following: ‘‘(and the straight line
method shall be used for such 1250 property)’’.
150
(e) AMENDMENTS RELATED TO SECTION 1072 OF
THE ACT.—
(1) Clause (ii) of section 415(c)(3)(D) and sub-
paragraph (B) of section 403(b)(3) are each amend-
ed by striking ‘‘section 125 or’’ and inserting ‘‘sec-
tion 125, 132(f )(4), or’’.
(2) Paragraph (2) of section 414(s) is amended
by striking ‘‘section 125, 402(e)(3)’’ and inserting
‘‘section 125, 132(f )(4), 402(e)(3)’’.
(f ) AMENDMENT RELATED TO SECTION 1454 OF
THE ACT.—Subsection (a) of section 7436 is amended by
inserting before the period at the end of the first sentence
‘‘and the proper amount of employment tax under such
determination’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Taxpayer Relief of 1997 to which they relate.
SEC. 315. AMENDMENTS RELATED TO BALANCED BUDGET
ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 9302 OF
THE ACT.—
(1) Paragraph (1) of section 9302( j) of the
Balanced Budget Act of 1997 is amended by strik-
ing ‘‘tobacco products and cigarette papers and
tubes’’ and inserting ‘‘cigarettes’’.
151
(2)(A) Subsection (h) of section 5702 is amend-
ed to read as follows:
‘‘(h) MANUFACTURER OF CIGARETTE PAPERS AND
TUBES.—‘Manufacturer of cigarette papers and tubes’
means any person who manufactures cigarette paper, or
makes up cigarette paper into tubes, except for his own
personal use or consumption.’’.
(B) Section 5702, as amended by subparagraph
(A), is amended by striking subsection (f ) and by
redesignating subsections (g) through (p) as sub-
sections (f ) through (o), respectively.
(3) Subsection (c) of section 5761 is amended
by adding at the end the following: ‘‘This subsection
and section 5754 shall not apply to any person who
relands or receives tobacco products in the quantity
allowed entry free of tax and duty under chapter 98
of the Harmonized Tariff Schedule of the United
States, and such person may voluntarily relinquish
to the Secretary at the time of entry any excess of
such quantity without incurring the penalty under
this subsection. No quantity of tobacco products
other than the quantity referred to in the preceding
sentence may be relanded or received as a personal
use quantity.’’.
152
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section 9302
of the Balanced Budget Act of 1997.
SEC. 316. AMENDMENTS RELATED TO SMALL BUSINESS JOB
PROTECTION ACT OF 1996.
(a) AMENDMENT RELATED TO SECTION 1201 OF
THE ACT.—Subparagraph (B) of section 51(d)(2) is
amended—
(1) by striking ‘‘plan approved’’ and inserting
‘‘program funded’’, and
(2) by striking ‘‘(relating to assistance for
needy families with minor children)’’.
(b) AMENDMENT RELATED TO SECTION 1302 OF
THE ACT.—Clause (i) of section 1361(e)(1)(A) is amended
by striking ‘‘or’’ before ‘‘(III)’’ and by adding at the end
the following: ‘‘or (IV) an organization described in section
170(c)(1) which holds a contingent interest in such trust
and is not a potential current beneficiary,’’.
(c) AMENDMENT RELATED TO SECTION 1401 OF
THE ACT.—Clause (ii) of section 401(k)(10)(B) is amend-
ed by adding at the end the following new sentence: ‘‘Such
term includes a distribution of an annuity contract from—
‘‘(I) a trust which forms a part
of a plan described in section 401(a)
153
and which is exempt from tax under
section 501(a), or
‘‘(II) an annuity plan described
in section 403(a).’’.
(d) AMENDMENT RELATED TO SECTION 1427 OF
THE ACT.—Clause (ii) of section 219(c)(1)(B) is amended
by striking ‘‘and’’ at the end of subclause (I), by redesig-
nating subclause (II) as subclause (III), and by inserting
after subclause (I) the following new subclause:
‘‘(II) the amount of any des-
ignated nondeductible contribution (as
defined in section 408(o)) on behalf of
such spouse for such taxable year,
and’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Small Business Job Protection Act of 1996 to which
they relate.
SEC. 317. AMENDMENT RELATED TO REVENUE RECONCILI-
ATION ACT OF 1990.
(a) AMENDMENT RELATED TO SECTION 11511 OF
THE ACT.—Subparagraph (C) of section 43(c)(1) is
amended—
(1) by inserting ‘‘(as defined in section
193(b))’’ after ‘‘expenses’’, and
154
(2) by striking ‘‘under section 193’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect as if included in section
11511 of the Revenue Reconciliation Act of 1990.
SEC. 318. OTHER TECHNICAL CORRECTIONS.
(a) MODIFIED ENDOWMENT CONTRACTS.—
(1) Paragraph (2) of section 7702A(a) is
amended by inserting ‘‘or this paragraph’’ before the
period.
(2) Clause (ii) of section 7702A(c)(3)(A) is
amended by striking ‘‘under the contract’’ and in-
serting ‘‘under the old contract’’.
(3) The amendments made by this subsection
shall take effect as if included in the amendments
made by section 5012 of the Technical and Miscella-
neous Revenue Act of 1988.
(b) AFFILIATED CORPORATIONS
IN CONTEXT
OF
WORTHLESS SECURITIES.—
(1) Subparagraph (A) of section 165(g)(3) is
amended to read as follows:
‘‘(A) the taxpayer owns directly stock in
such corporation meeting the requirements of
section 1504(a)(2), and’’.
(2) Paragraph (3) of section 165(g) is amended
by striking the last sentence.
155
(3) The amendments made by this subsection
shall apply to taxable years beginning after Decem-
ber 31, 1984.
(c) CERTAIN ANNUITIES ISSUED BY TAX-EXEMPT
ORGANIZATIONS NOT TREATED AS DEBT INSTRUMENTS
UNDER ORIGINAL ISSUE DISCOUNT RULES.—
(1) Clause (ii) of section 1275(a)(1)(B) is
amended by striking ‘‘subchapter L’’ and inserting
‘‘subchapter L (or by an entity described in section
501(c) and exempt from tax under section 501(a)
which would be subject to tax under subchapter L
were it not so exempt)’’.
(2) The amendment made by this subsection
shall take effect as if included in the amendments
made by section 41 of the Tax Reform Act of 1984.
(d) TENTATIVE
CARRYBACK
ADJUSTMENTS
OF
LOSSES FROM SECTION 1256 CONTRACTS.—
(1) Subsection (a) of section 6411 is amended
by striking ‘‘section 1212(a)(1)’’ and inserting ‘‘sub-
section (a)(1) or (c) of section 1212’’.
(2) The amendment made by paragraph (1)
shall take effect as if included in the amendments
made by section 504 of the Economic Recovery Tax
Act of 1981.
156
(e) CORRECTION OF CALCULATION OF AMOUNTS TO
BE DEPOSITED IN HIGHWAY TRUST FUND.—
(1) Subsection (b) of section 9503 is amended
by striking paragraph (5) and redesignating para-
graph (6) as paragraph (5).
(2) The amendment made by paragraph (1)
shall apply with respect to taxes received in the
Treasury after the date of the enactment of this Act.
(f ) EXPENDITURES FROM VACCINE INJURY COM-
PENSATION
TRUST
FUND.—Section 9510(c)(1)(A) is
amended by striking ‘‘December 31, 1999’’ and inserting
‘‘October 18, 2000’’.
SEC. 319. CLERICAL CHANGES.
(1) Clause (i) of section 45(d)(7)(A) is amended
by striking ‘‘paragraph (3)(A)’’ and inserting ‘‘sub-
section (c)(3)(A)’’.
(2) Subsection (f ) of section 67 is amended by
striking ‘‘the last sentence’’ and inserting ‘‘the sec-
ond sentence’’.
(3) The heading for paragraph (5) of section
408(d) is amended to read as follows:
‘‘(5) DISTRIBUTIONS
OF
EXCESS
CONTRIBU-
TIONS AFTER DUE DATE FOR TAXABLE YEAR AND
CERTAIN EXCESS ROLLOVER CONTRIBUTIONS.—’’.
157
(4) Paragraph (3) of section 475(g) is amended
by striking ‘‘267(b) of’’ and inserting ‘‘267(b) or’’.
(5) The heading for subparagraph (B) of sec-
tion 529(e)(3) is amended by striking ‘‘UNDER
GUARANTEED PLANS’’.
(6) Clause (iii) of section 530(d)(4)(B) is
amended by striking ‘‘; or’’ at the end and inserting
‘‘, or’’.
(7) Paragraphs (1)(C) and (2)(C) of section
664(d) are each amended by striking the period
after ‘‘subsection (g))’’.
(8)(A) Subsection (e) of section 678 is amended
by striking ‘‘an electing small business corporation’’
and inserting ‘‘an S corporation’’.
(B) Clause (v) of section 6103(e)(1)(D) is
amended to read as follows:
‘‘(v) if the corporation was an S cor-
poration, any person who was a share-
holder during any part of the period cov-
ered by such return during which an elec-
tion under section 1362(a) was in effect,
or’’.
(9) Paragraph (7) of section 856(c) is amended
by striking ‘‘paragraph (4)(B)(ii)(III)’’ and inserting
‘‘paragraph (4)(B)(iii)(III)’’
158
(10) Subparagraph (A) of section 856(l)(4) is
amended by striking ‘‘paragraph (9)(D)(ii)’’ and in-
serting ‘‘subsection (d)(9)(D)(ii)’’.
(11) Subparagraph (B) of section 871(f )(2) is
amended by striking ‘‘19 U.S.C.’’ and inserting ‘‘(19
U.S.C.’’.
(12) Subparagraph (B) of section 995(b)(3) is
amended by striking ‘‘the Military Security Act of
1954 (22 U.S.C. 1934)’’ and inserting ‘‘section 38
of the International Security Assistance and Arms
Export Control Act of 1976 (22 U.S.C. 2778)’’.
(13) Section 1391(g)(3)(C) is amended by
striking ‘‘paragraph (1)(B)’’ and inserting ‘‘para-
graph (1)’’.
(14)(A) Paragraph (2) of section 2035(c) is
amended by striking ‘‘paragraph (1)’’ and inserting
‘‘subsection (a)’’.
(B) Subsection (d) of section 2035 is amended
by inserting ‘‘and paragraph (1) of subsection (c)’’
after ‘‘Subsection (a)’’.
(15) Paragraph (5) of section 3121(a) is
amended by striking the semicolon at the end of
subparagraph (G) and inserting a comma.
(16) Subparagraph (B) of section 4946(c)(3) is
amended by striking ‘‘the lowest rate of compensa-
159
tion prescribed for GS–16 of the General Schedule
under section 5332’’ and inserting ‘‘the lowest rate
of basic pay for the Senior Executive Service under
section 5382’’.
(17) Subsection (p) of section 6103 is
amended—
(A) in paragraph (4), in the matter pre-
ceding subparagraph (A)—
(i) by striking the second comma after
‘‘(13)’’, and
(ii) by striking ‘‘(7)’’ and all that fol-
lows through ‘‘shall, as a condition’’ and
inserting ‘‘(7), (8), (9), (12), (15), or (16)
or any other person described in subsection
(l)(16) shall, as a condition’’, and
(B) in paragraph (4)(F)(ii), by striking the
second comma after ‘‘(14)’’.
(18) Paragraph (5) of section 6166(k) is
amended by striking ‘‘2035(d)(4)’’ and inserting
‘‘2035(c)(2)’’.
(19) Subsection (a) of section 6512 is amended
by striking ‘‘; and’’ at the end of paragraphs (1),
(2), and (5) and inserting ‘‘, and’’.
(20) Paragraph (1) of section 6611(g) is
amended by striking the comma after ‘‘(b)(3)’’.
160
(21) Subparagraphs (A) and (B) of section
6655(e)(5) are amended by striking ‘‘subsections
(d)(5) and (l)(3)(B)’’ and inserting ‘‘subsection
(d)(5)’’.
(22) The subchapter heading for subchapter D
of chapter 67 is amended by capitalizing the first
letter of the second word.
(23)(A) Section 6724(d)(1)(B) is amended by
striking clauses (xiv) through (xvii) and inserting
the following:
‘‘(xiv) subparagraph (A) or (C) of
subsection (c)(4) of section 4093 (relating
to information reporting with respect to
tax on diesel and aviation fuels),
‘‘(xv) section 4101(d) (relating to in-
formation reporting with respect to fuels
taxes),
‘‘(xvi) subparagraph (C) of section
338(h)(10) (relating to information re-
quired to be furnished to the Secretary in
case of elective recognition of gain or loss),
or
‘‘(xvii) section 264(f )(5)(A)(iv) (relat-
ing to reporting with respect to certain life
insurance and annuity contracts), and’’.
161
(B) Section 6010(o)(4)(C) of the Internal Rev-
enue Service Restructuring and Reform Act of 1998
is amended by striking ‘‘inserting ‘or’, and by add-
ing at the end’’ and inserting ‘‘inserting ‘, or’, and
by adding after subparagraph (Z)’’.
(24) Subsection (a) of section 7421 is amended
by striking ‘‘6672(b)’’ and inserting ‘‘6672(c)’’.
(25) Paragraph (3) of section 7430(c) is
amended—
(A) in the paragraph heading, by striking
‘‘ATTORNEYS’’ and inserting ‘‘ATTORNEYS’ ’’,
and
(B) in subparagraph (B), by striking ‘‘at-
torneys fees’’ each place it appears and insert-
ing ‘‘attorneys’ fees’’.
(26) Paragraph (2) of section 7603(b) is
amended by striking the semicolon at the end of
subparagraphs (A), (B), (C), (D), (E), (F), and (G)
and inserting a comma.
(27) Clause (ii) of section 7802(b)(2)(B) is
amended by striking ‘‘; and’’ at the end and insert-
ing ‘‘, and’’.
(28) Paragraph (3) of section 7811(a) is
amended by striking ‘‘taxpayer assistance order’’
and inserting ‘‘Taxpayer Assistance Order’’.
162
(29) Paragraph (1) of section 7811(d) is
amended by striking ‘‘Ombudsman’s’’ and inserting
‘‘National Taxpayer Advocate’s’’.
(30) Paragraph (3) of section 7872(f ) is
amended by striking ‘‘foregoing’’ and inserting
‘‘forgoing’’.
TITLE IV—TAX TREATMENT OF
SECURITIES FUTURES CON-
TRACTS
SEC. 401. TAX TREATMENT OF SECURITIES FUTURES CON-
TRACTS.
(a) IN GENERAL.—Subpart IV of subchapter P of
chapter 1 (relating to special rules for determining gains
and losses) is amended by inserting after section 1234A
the following new section:
‘‘SEC. 1234B. GAINS OR LOSSES FROM SECURITIES FU-
TURES CONTRACTS.
‘‘(a) TREATMENT OF GAIN OR LOSS.—
‘‘(1) IN GENERAL.—Gain or loss attributable to
the sale or exchange of a securities futures contract
shall be considered gain or loss from the sale or ex-
change of property which has the same character as
the property to which the contract relates has in the
hands of the taxpayer (or would have in the hands
of the taxpayer if acquired by the taxpayer).
163
‘‘(2) NONAPPLICATION OF SUBSECTION.—This
subsection shall not apply to—
‘‘(A) a contract which constitutes property
described in paragraph (1) or (7) of section
1221(a), and
‘‘(B) any income derived in connection
with a contract which, without regard to this
subsection, is treated as other than gain from
the sale or exchange of a capital asset.
‘‘(b) SHORT-TERM GAINS AND LOSSES.—Except as
provided in the regulations under section 1092(b) or this
section, if gain or loss on the sale or exchange of a securi-
ties futures contract to sell property is considered as gain
or loss from the sale or exchange of a capital asset, such
gain or loss shall be treated as short-term capital gain or
loss.
‘‘(c) SECURITIES FUTURES CONTRACT.—For pur-
poses of this section, the term ‘securities futures contract’
means any security future (as defined in section
3(a)(55)(A) of the Securities Exchange Act of 1934, as
in effect on the date of the enactment of this section).
‘‘(d) CONTRACTS NOT TREATED AS COMMODITY FU-
TURES CONTRACTS.—For purposes of this title, a securi-
ties futures contract shall not be treated as a commodity
futures contract.
164
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to provide for the
proper treatment of securities futures contracts under this
title.’’.
(b) 
TERMINATIONS, 
ETC.—Section 
1234A 
is
amended—
(1) by inserting ‘‘(other than a securities fu-
tures contract, as defined in section 1234B)’’ after
‘‘right or obligation’’ in paragraph (1),
(2) by striking ‘‘or’’ at the end of paragraph
(1),
(3) by adding ‘‘or’’ at the end of paragraph (2),
and
(4) by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) a securities futures contract (as so de-
fined) which is a capital asset in the hands of the
taxpayer,’’.
(c) NONRECOGNITION UNDER SECTION 1032.—The
second sentence of section 1032(a) is amended by insert-
ing ‘‘, or with respect to a securities futures contract (as
defined in section 1234B),’’ after ‘‘an option’’.
(d) TREATMENT UNDER WASH SALES RULES.—Sec-
tion 1091 is amended by adding at the end the following
new subsection:
165
‘‘(f ) CASH SETTLEMENT.—This section shall not fail
to apply to a contract or option to acquire or sell stock
or securities solely by reason of the fact that the contract
or option settles in (or could be settled in) cash or property
other than such stock or securities.’’.
(e) TREATMENT UNDER STRADDLE RULES.—Clause
(i) of section 1092(d)(3)(B) is amended by striking ‘‘or’’
at the end of subclause (I), by redesignating subclause (II)
as subclause (III), and by inserting after subclause (I) the
following new subclause:
‘‘(II) a securities futures contract
(as defined in section 1234B) with re-
spect to such stock or substantially
identical stock or securities, or’’.
(f ) TREATMENT UNDER SHORT SALES RULES.—
Paragraph (2) of section 1233(e) is amended by striking
‘‘and’’ at the end of subparagraph (B), by striking the
period at the end of subparagraph (C) and inserting ‘‘;
and’’, and by adding at the end the following:
‘‘(D) a securities futures contract (as de-
fined in section 1234B) to acquire substantially
identical property shall be treated as substan-
tially identical property.’’.
(g) TREATMENT UNDER SECTION 1256.—
166
(1)(A) Subsection (b) of section 1256 is amend-
ed by striking ‘‘and’’ at the end of paragraph (3),
by striking the period at the end of paragraph (4)
and inserting ‘‘, and’’, and by adding at the end the
following:
‘‘(5) any dealer securities futures contract.
The term ‘section 1256 contract’ shall not include any se-
curities futures contract or option on such a contract un-
less such contract or option is a dealer securities futures
contract.’’.
(B) Subsection (g) of section 1256 is amended
by adding at the end the following new paragraph:
‘‘(9) DEALER
SECURITIES
FUTURES
CON-
TRACT.—
‘‘(A) IN GENERAL.—The term ‘dealer secu-
rities futures contract’ means, with respect to
any dealer, any securities futures contract, and
any option on such a contract, which—
‘‘(i) is entered into by such dealer (or,
in the case of an option, is purchased or
granted by such dealer) in the normal
course of his activity of dealing in such
contracts or options, as the case may be,
and
167
‘‘(ii) is traded on a qualified board or
exchange.
‘‘(B) DEALER.—For purposes of subpara-
graph (A), a person shall be treated as a dealer
in securities futures contracts or options on
such contracts if the Secretary determines that
such person performs, with respect to such con-
tracts or options, as the case may be, functions
similar to the functions performed by persons
described in paragraph (8)(A). Such determina-
tion shall be made to the extent appropriate to
carry out the purposes of this section.
‘‘(C) SECURITIES FUTURES CONTRACT.—
The term ‘securities futures contract’ has the
meaning given to such term by section
1234B.’’.
(2) Paragraph (4) of section 1256(f ) is
amended—
(A) by inserting ‘‘, or dealer securities fu-
tures contracts,’’ after ‘‘dealer equity options’’
in the text, and
(B) by inserting ‘‘AND
DEALER
SECURI-
TIES FUTURES CONTRACTS’’ after ‘‘DEALER EQ-
UITY OPTIONS’’ in the heading.
168
(3) Paragraph (6) of section 1256(g) is amend-
ed to read as follows:
‘‘(6) EQUITY
OPTION.—The term ‘equity op-
tion’ means any option—
‘‘(A) to buy or sell stock, or
‘‘(B) the value of which is determined di-
rectly or indirectly by reference to any stock or
any narrow-based security index (as defined in
section 3(a)(55) of the Securities Exchange Act
of 1934, as in effect on the date of the enact-
ment of this paragraph).
The term ‘equity option’ includes such an option on
a group of stocks only if such group meets the re-
quirements for a narrow-based security index (as so
defined).’’.
(4) The Secretary of the Treasury or his dele-
gate shall make the determinations under section
1256(g)(9)(B) of the Internal Revenue Code of
1986, as added by this Act, not later than July 1,
2001.
(h) CONFORMING AMENDMENTS.—
(1) Section 1223 is amended by redesignating
paragraph (16) as paragraph (17) and by inserting
after paragraph (15) the following new paragraph:
169
‘‘(16) If the security to which a securities fu-
tures contract (as defined in section 1234B) relates
(other than a contract to which section 1256 ap-
plies) is acquired in satisfaction of such contract, in
determining the period for which the taxpayer has
held such security, there shall be included the period
for which the taxpayer held such contract if such
contract was a capital asset in the hands of the tax-
payer.’’.
(2) The table of sections for subpart IV of sub-
chapter P of chapter 1 is amended by inserting after
the item relating to section 1234A the following new
item:
‘‘Sec. 1234B. Securities futures contracts.’’.
(i) DESIGNATION OF CONTRACT MARKETS.—Section
7701 is amended by redesignating subsection (m) as sub-
section (n) and by inserting after subsection (l) the fol-
lowing new subsection:
‘‘(m) DESIGNATION OF CONTRACT MARKETS.—Any
designation by the Commodity Futures Trading Commis-
sion of a contract market which could not have been made
under the law in effect on the day before the date of the
enactment of the Commodity Futures Modernization Act
of 2000 shall apply for purposes of this title except to the
extent provided in regulations prescribed by the Sec-
retary.’’.
170
( j) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
Æ