I 
111TH CONGRESS 
1ST SESSION 
H. R. 470 
To amend the Internal Revenue Code of 1986 to provide for permanent 
tax incentives for economic growth. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 13, 2009 
Mr. GARRETT of New Jersey (for himself, Mr. PRICE of Georgia, and Mr. 
JORDAN of Ohio) introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on Ap-
propriations, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
for permanent tax incentives for economic growth. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Economic Recovery and Middle-Class Tax Relief Act of 
2009’’. 
(b) TABLE OF CONTENTS.— 
Sec. 1. Short title. 
TITLE I—INCENTIVES FOR ECONOMIC GROWTH 
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Subtitle A—Income Tax Reductions 
Sec. 101. 2003 tax reductions made permanent. 
Sec. 102. 5 percent reduction in individual income tax rates. 
Sec. 103. Repeal of alternative minimum tax on individuals. 
Sec. 104. Reduction in corporate marginal income tax rates. 
Subtitle B—Reduction of Income Taxes on Capital Assets 
Sec. 111. Indexing of certain assets for purposes of determining gain or loss. 
Sec. 112. Reduced capital gains rate for corporations. 
Subtitle C—Other Provisions Related to Businesses 
Sec. 121. Repeal of certain limitations on the expensing of section 179 prop-
erty. 
Sec. 122. Research credit made permanent. 
Sec. 123. 7-year carryback of net operating losses. 
Subtitle D—Other Provisions Relating to Individuals 
Sec. 131. Child tax credit increased and made permanent. 
Sec. 132. Distributions not required from individual retirement plans at age 
701⁄2. 
Sec. 133. No IRA distribution during 2009 included in gross income. 
TITLE II—ACROSS-THE-BOARD RESCISSIONS IN NON-DEFENSE 
DISCRETIONARY SPENDING FOR FISCAL YEAR 2009 
Sec. 201. Across-the-board rescissions in non-defense discretionary spending for 
fiscal year 2009. 
TITLE III—INCREASED INCENTIVES FOR EDUCATION 
Sec. 301. Increased deduction for qualified higher education expenses. 
Sec. 302. Increased deduction for interest on student loans. 
TITLE I—INCENTIVES FOR 
ECONOMIC GROWTH 
Subtitle A—Income Tax Reductions 
SEC. 101. 2003 TAX REDUCTIONS MADE PERMANENT. 
Section 303 of the Jobs and Growth Tax Relief Rec-
onciliation Act of 2003 is hereby repealed. 
SEC. 102. 5 PERCENT REDUCTION IN INDIVIDUAL INCOME 
TAX RATES. 
(a) IN GENERAL.—Section 1 of the Internal Revenue 
Code of 1986 (relating to tax imposed on individuals) is 
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amended by adding at the end the following new sub-
section: 
‘‘(j) RATE REDUCTIONS AFTER 2007.— 
‘‘(1) IN GENERAL.—In the case of taxable years 
beginning in a calendar year after 2007, the reduced 
percentage specified in the following table shall be 
substituted for the otherwise applicable tax rate in 
the tables under subsections (a), (b), (c), (d), and 
(e). 
‘‘Otherwise applicable tax rate 
Reduced percent-
age 
10 ...........................................................................
9.5 
15 ...........................................................................
14.25 
25 ...........................................................................
23.75 
28 ...........................................................................
26.6 
33 ...........................................................................
31.35 
35 ...........................................................................
33.25 
‘‘(2) ADJUSTMENT OF TABLES.—The Secretary 
shall adjust the tables prescribed under subsection 
(f) to carry out this subsection.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to taxable years beginning after 
December 31, 2007. 
(c) REPEAL OF EGTRRA SUNSET OF RATE REDUC-
TIONS.—Title IX of the Economic Growth and Tax Relief 
Reconciliation Act of 2001 shall not apply to the amend-
ments made by section 101 of such Act. 
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SEC. 103. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDI-
VIDUALS. 
(a) IN GENERAL.—Section 55(a) of the Internal Rev-
enue Code of 1986 (relating to alternative minimum tax 
imposed) is amended by adding at the end the following 
new flush sentence: 
‘‘For purposes of this title, the tentative minimum tax on 
any taxpayer other than a corporation for any taxable year 
beginning after December 31, 2008, shall be zero.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 104. REDUCTION IN CORPORATE MARGINAL INCOME 
TAX RATES. 
(a) GENERAL RULE.—Paragraph (1) of section 11(b) 
of the Internal Revenue Code of 1986 is amended— 
(1) by inserting ‘‘and’’ at the end of subpara-
graph (A), 
(2) by striking ‘‘but does not exceed $75,000,’’ 
in subparagraph (B) and inserting a period, 
(3) by striking subparagraphs (C) and (D), and 
(4) by striking the last 2 sentences. 
(b) PERSONAL
SERVICE
CORPORATIONS.—Para-
graph (2) of section 11(b) of such Code is amended by 
striking ‘‘35 percent’’ and inserting ‘‘25 percent’’. 
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(c) CONFORMING AMENDMENTS.—Paragraphs (1) 
and (2) of section 1445(e) of such Code are each amended 
by striking ‘‘35 percent’’ and inserting ‘‘25 percent’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008, except that the amendments made 
by subsection (c) shall take effect on the date of the enact-
ment of this Act. 
Subtitle B—Reduction of Income 
Taxes on Capital Assets 
SEC. 111. INDEXING OF CERTAIN ASSETS FOR PURPOSES 
OF DETERMINING GAIN OR LOSS. 
(a) IN GENERAL.—Part II of subchapter O of chap-
ter 1 (relating to basis rules of general application) is 
amended by redesignating section 1023 as section 1024 
and by inserting after section 1022 the following new sec-
tion: 
‘‘SEC. 1023. INDEXING OF CERTAIN ASSETS FOR PURPOSES 
OF DETERMINING GAIN OR LOSS. 
‘‘(a) GENERAL RULE.— 
‘‘(1) INDEXED
BASIS
SUBSTITUTED
FOR
AD-
JUSTED BASIS.—Solely for purposes of determining 
gain or loss on the sale or other disposition by a tax-
payer (other than a corporation) of an indexed asset 
which has been held for more than 3 years, the in-
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dexed basis of the asset shall be substituted for its 
adjusted basis. 
‘‘(2) EXCEPTION
FOR
DEPRECIATION, ETC.— 
The deductions for depreciation, depletion, and am-
ortization shall be determined without regard to the 
application of paragraph (1) to the taxpayer or any 
other person. 
‘‘(3) WRITTEN
DOCUMENTATION
REQUIRE-
MENT.—Paragraph (1) shall apply only with respect 
to indexed assets for which the taxpayer has written 
documentation of the original purchase price paid or 
incurred by the taxpayer to acquire such asset. 
‘‘(b) INDEXED ASSET.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘indexed asset’ means— 
‘‘(A) common stock in a C corporation 
(other than a foreign corporation), or 
‘‘(B) tangible property, 
which is a capital asset or property used in the trade 
or business (as defined in section 1231(b)). 
‘‘(2) STOCK
IN
CERTAIN
FOREIGN
CORPORA-
TIONS INCLUDED.—For purposes of this section— 
‘‘(A) IN
GENERAL.—The term ‘indexed 
asset’ includes common stock in a foreign cor-
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poration which is regularly traded on an estab-
lished securities market. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to— 
‘‘(i) stock of a foreign investment 
company, 
‘‘(ii) stock in a passive foreign invest-
ment company (as defined in section 
1296), 
‘‘(iii) stock in a foreign corporation 
held by a United States person who meets 
the requirements of section 1248(a)(2), 
and 
‘‘(iv) stock in a foreign personal hold-
ing company. 
‘‘(C) TREATMENT OF AMERICAN DEPOSI-
TORY RECEIPTS.—An American depository re-
ceipt for common stock in a foreign corporation 
shall be treated as common stock in such cor-
poration. 
‘‘(c) INDEXED BASIS.—For purposes of this sec-
tion— 
‘‘(1) GENERAL RULE.—The indexed basis for 
any asset is— 
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‘‘(A) the adjusted basis of the asset, in-
creased by 
‘‘(B) the applicable inflation adjustment. 
‘‘(2) APPLICABLE INFLATION ADJUSTMENT.— 
The applicable inflation adjustment for any asset is 
an amount equal to— 
‘‘(A) the adjusted basis of the asset, multi-
plied by 
‘‘(B) the percentage (if any) by which— 
‘‘(i) 
the 
gross 
domestic 
product 
deflator for the last calendar quarter end-
ing before the asset is disposed of, exceeds 
‘‘(ii) the gross domestic product 
deflator for the last calendar quarter end-
ing before the asset was acquired by the 
taxpayer. 
The percentage under subparagraph (B) shall be 
rounded to the nearest 1⁄10 of 1 percentage point. 
‘‘(3) GROSS DOMESTIC PRODUCT DEFLATOR.— 
The gross domestic product deflator for any cal-
endar quarter is the implicit price deflator for the 
gross domestic product for such quarter (as shown 
in the last revision thereof released by the Secretary 
of Commerce before the close of the following cal-
endar quarter). 
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‘‘(d) SUSPENSION OF HOLDING PERIOD WHERE DI-
MINISHED
RISK
OF
LOSS; TREATMENT
OF
SHORT 
SALES.— 
‘‘(1) IN GENERAL.—If the taxpayer (or a re-
lated person) enters into any transaction which sub-
stantially reduces the risk of loss from holding any 
asset, such asset shall not be treated as an indexed 
asset for the period of such reduced risk. 
‘‘(2) SHORT SALES.— 
‘‘(A) IN GENERAL.—In the case of a short 
sale of an indexed asset with a short sale period 
in excess of 3 years, for purposes of this title, 
the amount realized shall be an amount equal 
to the amount realized (determined without re-
gard to this paragraph) increased by the appli-
cable inflation adjustment. In applying sub-
section (c)(2) for purposes of the preceding sen-
tence, the date on which the property is sold 
short shall be treated as the date of acquisition 
and the closing date for the sale shall be treat-
ed as the date of disposition. 
‘‘(B) SHORT SALE PERIOD.—For purposes 
of subparagraph (A), the short sale period be-
gins on the day that the property is sold and 
ends on the closing date for the sale. 
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‘‘(e) TREATMENT
OF
REGULATED
INVESTMENT 
COMPANIES AND REAL ESTATE INVESTMENT TRUSTS.— 
‘‘(1) ADJUSTMENTS AT ENTITY LEVEL.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the adjustment 
under subsection (a) shall be allowed to any 
qualified investment entity (including for pur-
poses of determining the earnings and profits of 
such entity). 
‘‘(B) EXCEPTION FOR CORPORATE SHARE-
HOLDERS.—Under regulations— 
‘‘(i) in the case of a distribution by a 
qualified investment entity (directly or in-
directly) to a corporation— 
‘‘(I) the determination of whether 
such distribution is a dividend shall be 
made without regard to this section, 
and 
‘‘(II) the amount treated as gain 
by reason of the receipt of any capital 
gain dividend shall be increased by the 
percentage by which the entity’s net 
capital gain for the taxable year (de-
termined without regard to this sec-
tion) exceeds the entity’s net capital 
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gain for such year determined with re-
gard to this section, and 
‘‘(ii) there shall be other appropriate 
adjustments (including deemed distribu-
tions) so as to ensure that the benefits of 
this section are not allowed (directly or in-
directly) to corporate shareholders of quali-
fied investment entities. 
For purposes of the preceding sentence, any 
amount includible in gross income under section 
852(b)(3)(D) shall be treated as a capital gain 
dividend and an S corporation shall not be 
treated as a corporation. 
‘‘(C) 
EXCEPTION
FOR
QUALIFICATION 
PURPOSES.—This section shall not apply for 
purposes of sections 851(b) and 856(c). 
‘‘(D) EXCEPTION FOR CERTAIN TAXES IM-
POSED AT ENTITY LEVEL.— 
‘‘(i) TAX ON FAILURE TO DISTRIBUTE 
ENTIRE GAIN.—If any amount is subject to 
tax under section 852(b)(3)(A) for any 
taxable year, the amount on which tax is 
imposed under such section shall be in-
creased by the percentage determined 
under subparagraph (B)(i)(II). A similar 
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rule shall apply in the case of any amount 
subject to tax under paragraph (2) or (3) 
of section 857(b) to the extent attributable 
to the excess of the net capital gain over 
the deduction for dividends paid deter-
mined with reference to capital gain divi-
dends only. The first sentence of this 
clause shall not apply to so much of the 
amount subject to tax under section 
852(b)(3)(A) as is designated by the com-
pany under section 852(b)(3)(D). 
‘‘(ii) OTHER
TAXES.—This section 
shall not apply for purposes of determining 
the amount of any tax imposed by para-
graph (4), (5), or (6) of section 857(b). 
‘‘(2) ADJUSTMENTS
TO
INTERESTS
HELD
IN 
ENTITY.— 
‘‘(A) REGULATED
INVESTMENT
COMPA-
NIES.—Stock in a regulated investment com-
pany (within the meaning of section 851) shall 
be an indexed asset for any calendar quarter in 
the same ratio as— 
‘‘(i) the average of the fair market 
values of the indexed assets held by such 
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company at the close of each month during 
such quarter, bears to 
‘‘(ii) the average of the fair market 
values of all assets held by such company 
at the close of each such month. 
‘‘(B) 
REAL
ESTATE
INVESTMENT 
TRUSTS.—Stock in a real estate investment 
trust (within the meaning of section 856) shall 
be an indexed asset for any calendar quarter in 
the same ratio as— 
‘‘(i) the fair market value of the in-
dexed assets held by such trust at the close 
of such quarter, bears to 
‘‘(ii) the fair market value of all as-
sets held by such trust at the close of such 
quarter. 
‘‘(C) RATIO OF 80 PERCENT OR MORE.—If 
the ratio for any calendar quarter determined 
under subparagraph (A) or (B) would (but for 
this subparagraph) be 80 percent or more, such 
ratio for such quarter shall be 100 percent. 
‘‘(D) RATIO OF 20 PERCENT OR LESS.—If 
the ratio for any calendar quarter determined 
under subparagraph (A) or (B) would (but for 
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this subparagraph) be 20 percent or less, such 
ratio for such quarter shall be zero. 
‘‘(E) LOOK-THRU OF PARTNERSHIPS.—For 
purposes of this paragraph, a qualified invest-
ment entity which holds a partnership interest 
shall be treated (in lieu of holding a partnership 
interest) as holding its proportionate share of 
the assets held by the partnership. 
‘‘(3) TREATMENT OF RETURN OF CAPITAL DIS-
TRIBUTIONS.—Except as otherwise provided by the 
Secretary, a distribution with respect to stock in a 
qualified investment entity which is not a dividend 
and which results in a reduction in the adjusted 
basis of such stock shall be treated as allocable to 
stock acquired by the taxpayer in the order in which 
such stock was acquired. 
‘‘(4) QUALIFIED
INVESTMENT
ENTITY.—For 
purposes of this subsection, the term ‘qualified in-
vestment entity’ means— 
‘‘(A) a regulated investment company 
(within the meaning of section 851), and 
‘‘(B) a real estate investment trust (within 
the meaning of section 856). 
‘‘(f) OTHER PASS-THRU ENTITIES.— 
‘‘(1) PARTNERSHIPS.— 
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‘‘(A) IN GENERAL.—In the case of a part-
nership, the adjustment made under subsection 
(a) at the partnership level shall be passed 
through to the partners. 
‘‘(B) SPECIAL RULE IN THE CASE OF SEC-
TION 754 ELECTIONS.—In the case of a transfer 
of an interest in a partnership with respect to 
which the election provided in section 754 is in 
effect— 
‘‘(i) the adjustment under section 
743(b)(1) shall, with respect to the trans-
feror partner, be treated as a sale of the 
partnership assets for purposes of applying 
this section, and 
‘‘(ii) with respect to the transferee 
partner, the partnership’s holding period 
for purposes of this section in such assets 
shall be treated as beginning on the date 
of such adjustment. 
‘‘(2) S CORPORATIONS.—In the case of an S 
corporation, the adjustment made under subsection 
(a) at the corporate level shall be passed through to 
the shareholders. This section shall not apply for 
purposes of determining the amount of any tax im-
posed by section 1374 or 1375. 
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‘‘(3) COMMON TRUST FUNDS.—In the case of a 
common trust fund, the adjustment made under sub-
section (a) at the trust level shall be passed through 
to the participants. 
‘‘(4) INDEXING ADJUSTMENT DISREGARDED IN 
DETERMINING LOSS ON SALE OF INTEREST IN ENTI-
TY.—Notwithstanding the preceding provisions of 
this subsection, for purposes of determining the 
amount of any loss on a sale or exchange of an in-
terest in a partnership, S corporation, or common 
trust fund, the adjustment made under subsection 
(a) shall not be taken into account in determining 
the adjusted basis of such interest. 
‘‘(g) DISPOSITIONS BETWEEN RELATED PERSONS.— 
‘‘(1) IN GENERAL.—This section shall not apply 
to any sale or other disposition of property between 
related persons except to the extent that the basis 
of such property in the hands of the transferee is a 
substituted basis. 
‘‘(2) RELATED PERSONS DEFINED.—For pur-
poses of this section, the term ‘related persons’ 
means— 
‘‘(A) persons bearing a relationship set 
forth in section 267(b), and 
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‘‘(B) persons treated as single employer 
under subsection (b) or (c) of section 414. 
‘‘(h) TRANSFERS TO INCREASE INDEXING ADJUST-
MENT.—If any person transfers cash, debt, or any other 
property to another person and the principal purpose of 
such transfer is to secure or increase an adjustment under 
subsection (a), the Secretary may disallow part or all of 
such adjustment or increase. 
‘‘(i) SPECIAL RULES.—For purposes of this section— 
‘‘(1) TREATMENT OF IMPROVEMENTS, ETC.—If 
there is an addition to the adjusted basis of any tan-
gible property or of any stock in a corporation dur-
ing the taxable year by reason of an improvement to 
such property or a contribution to capital of such 
corporation— 
‘‘(A) such addition shall never be taken 
into account under subsection (c)(1)(A) if the 
aggregate amount thereof during the taxable 
year with respect to such property or stock is 
less than $1,000, and 
‘‘(B) such addition shall be treated as a 
separate asset acquired at the close of such tax-
able year if the aggregate amount thereof dur-
ing the taxable year with respect to such prop-
erty or stock is $1,000 or more. 
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A rule similar to the rule of the preceding sentence 
shall apply to any other portion of an asset to the 
extent that separate treatment of such portion is ap-
propriate to carry out the purposes of this section. 
‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS 
THROUGHOUT HOLDING PERIOD.—The applicable in-
flation adjustment shall be appropriately reduced for 
periods during which the asset was not an indexed 
asset. 
‘‘(3) TREATMENT
OF
CERTAIN
DISTRIBU-
TIONS.—A distribution with respect to stock in a 
corporation which is not a dividend shall be treated 
as a disposition. 
‘‘(4) SECTION
CANNOT
INCREASE
ORDINARY 
LOSS.—To the extent that (but for this paragraph) 
this section would create or increase a net ordinary 
loss to which section 1231(a)(2) applies or an ordi-
nary loss to which any other provision of this title 
applies, such provision shall not apply. The taxpayer 
shall be treated as having a long-term capital loss in 
an amount equal to the amount of the ordinary loss 
to which the preceding sentence applies. 
‘‘(5) ACQUISITION
DATE
WHERE
THERE
HAS 
BEEN
PRIOR
APPLICATION
OF
SUBSECTION (a)(1) 
WITH RESPECT TO THE TAXPAYER.—If there has 
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been a prior application of subsection (a)(1) to an 
asset while such asset was held by the taxpayer, the 
date of acquisition of such asset by the taxpayer 
shall be treated as not earlier than the date of the 
most recent such prior application. 
‘‘(j) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section. 
‘‘(k) TERMINATION.—For purposes of this section, 
the term ‘indexed asset’ shall not include any asset ac-
quired after December 31, 2009.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part II of subchapter O of chapter 1 is amended by 
striking the item relating to section 1023 and by inserting 
after the item relating to section 1022 the following new 
items: 
‘‘Sec. 1022. Indexing of certain assets for purposes of determining gain or loss. 
‘‘Sec. 1023. Cross references.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales and other dispositions of 
indexed assets after the date of the enactment of this Act, 
in taxable years ending after such date. 
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SEC. 112. REDUCED CAPITAL GAINS RATE FOR CORPORA-
TIONS. 
(a) IN GENERAL.—Section 1201 of the Internal Rev-
enue Code of 1986 is amended by striking ‘‘35 percent’’ 
both places it appears and inserting ‘‘15 percent’’. 
(b) ALTERNATIVE MINIMUM TAX.—Section 55(b) of 
such Code is amended by adding at the end the following 
new paragraph: 
‘‘(5) MAXIMUM RATE OF TAX ON NET CAPITAL 
GAIN OF CORPORATIONS.—The amount determined 
under paragraph (1)(B)(i) shall not exceed the sum 
of— 
‘‘(A) the amount determined under such 
paragraph computed at the rates and in the 
same manner as if this paragraph had not been 
enacted on the taxable excess reduced by the 
net capital gain, plus 
‘‘(B) the amount determined under section 
1201.’’. 
(c) TECHNICAL AMENDMENTS.— 
(1) Section 1445(e)(1) of such Code, as amend-
ed by section 104, is amended by striking ‘‘25 per-
cent (or, to the extent provided in regulations, 15 
percent)’’ and inserting ‘‘15 percent’’. 
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(2) Section 1445(e)(2) of such Code, as so 
amended, is amended by striking ‘‘25 percent’’ and 
inserting ‘‘15 percent’’. 
(3) Section 7518(g)(6)(A) of such Code is 
amended by striking ‘‘(34 percent in the case of a 
corporation)’’. 
(4) Section 607(h)(6)(A) of the Merchant Ma-
rine Act, 1936 is amended by striking ‘‘(34 percent 
in the case of a corporation)’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2008. 
(2) WITHHOLDING.—The amendment made by 
subsection (c)(2) shall apply to amounts paid after 
the date of the enactment of this Act. 
Subtitle C—Other Provisions 
Related to Businesses 
SEC. 121. REPEAL OF CERTAIN LIMITATIONS ON THE EX-
PENSING OF SECTION 179 PROPERTY. 
(a) IN GENERAL.—Section 179 of the Internal Rev-
enue Code of 1986 is amended by striking subsection (b) 
and by redesignating subsections (c), (d), and (e) as sub-
sections (b), (c), and (d), respectively. 
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(b) EXPENSING OF SECTION 1250 PROPERTY.—Sub-
paragraph (B) of section 179(c)(1) of such Code, as redes-
ignated by subsection (a), is amended by inserting ‘‘or sec-
tion 1250 property (as defined in section 1250(c))’’ after 
‘‘section 
1245 
property 
(as 
defined 
in 
section 
1245(a)(3))’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 179 of such Code, 
as redesignated by subsection (a), is amended by 
striking paragraphs (6) and (8), and by redesig-
nating paragraphs (7), (9), and (10) as paragraphs 
(6), (7), and (8), respectively. 
(2) Paragraph (6) of section 179(c) of such 
Code, as redesignated by paragraph (1) and sub-
section (a), is amended by striking ‘‘paragraphs (2) 
and (6)’’ and inserting ‘‘paragraph (2)’’. 
(3) Section 179 of such Code, as amended by 
subsection (a), is amended by striking subsection 
(d). 
(4) 
Sections 
42(d)(2)(B)(i), 
1397D(d)(1), 
1400B(b)(4)(A)(i), and 1400F(b)(4)(A)(i) of such 
Code are each amended by striking ‘‘section 
179(d)(2)’’ and inserting ‘‘section 179(c)(2)’’. 
(5) Subclause (I) of section 42(d)(2)(D)(iii) of 
such Code is amended— 
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(A) by striking ‘‘section 179(d)’’ and in-
serting ‘‘section 179(c)’’, and 
(B) by striking ‘‘section 179(d)(7)’’ and 
inserting ‘‘section 179(c)(6)’’. 
(6)(A) Subpart B of part III of subchapter U 
of chapter 1 of such Code is hereby repealed. 
(B) The table of subparts for such part III is 
amended by striking the item relating to subpart B. 
(7)(A) Part III of subchapter X of chapter 1 of 
such Code is amended by striking section 1400J. 
(B) The table of sections for such part is 
amended by striking the item relating to section 
1400J. 
(C) Paragraph (3) of section 1400E(b) of such 
Code is amended by striking ‘‘sections 1400F and 
1400J’’ and inserting ‘‘section 1400F’’. 
(8) Clause (iv) of section 1400L(b)(2)(A) of 
such Code is amended by striking ‘‘section 179(d)’’ 
and inserting ‘‘section 179(c)’’. 
(9) Section 1400L of such Code is amended by 
striking subsection (f). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service in 
taxable years beginning after December 31, 2008. 
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SEC. 122. RESEARCH CREDIT MADE PERMANENT. 
(a) IN GENERAL.—Section 41 of the Internal Rev-
enue Code of 1986 (relating to credit for increasing re-
search activities) is amended by striking subsection (h). 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 45C(b) of such Code is amended by striking sub-
paragraph (D). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2009. 
SEC. 123. 7-YEAR CARRYBACK OF NET OPERATING LOSSES. 
(a) IN GENERAL.—Clause (i) section 172(b)(1)(A) of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘2 taxable years’’ and inserting ‘‘7 taxable years’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 172(b) of such 
Code is amended by striking subparagraphs (F), 
(G), (H), (I), and (J). 
(2) Section 172 of such Code is amended by 
striking subsections (i), (j), and (k) and by redesig-
nating subsection (l) as subsection (i). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to net operating losses for taxable years 
ending after December 31, 2007. 
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(2) ELECTION.—In the case of a net operating 
loss for a taxable year ending during 2008, any elec-
tion made under section 172(b)(3) of the Internal 
Revenue Code of 1986 may (notwithstanding such 
section) be revoked before January 1, 2010. 
Subtitle D—Other Provisions 
Relating to Individuals 
SEC. 131. CHILD TAX CREDIT INCREASED AND MADE PER-
MANENT. 
(a) INCREASED CREDIT.—Subsection (a) of section 
24 of the Internal Revenue Code of 1986 is amended by 
striking ‘‘$1,000’’ and inserting ‘‘$5,000’’. 
(b) INCREASED CREDIT NOT REFUNDABLE.—Sub-
paragraph (A) of section 24(d)(1) of such Code is amend-
ed to read as follows: 
‘‘(A) the credit which would be allowed 
under this section— 
‘‘(i) without regard to this subsection 
and the limitation under section 26(a)(2) 
or subsection (b)(3), as the case may be, 
and 
‘‘(ii) if subsection (a) were applied by 
substituting ‘$1,000’ for ‘$5,000’, or’’. 
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