I 
108TH CONGRESS 
2D SESSION 
H. R. 5395 
To amend the Internal Revenue Code of 1986 to make technical corrections, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 19, 2004 
Mr. THOMAS 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 make 
technical corrections, 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. 
This Act may be cited as the ‘‘Tax Technical Correc-
tions Act of 2004’’. 
SEC. 2. TECHNICAL CORRECTIONS. 
(a) AMENDMENTS RELATED
TO
THE AMERICAN 
JOBS CREATION ACT OF 2004.— 
(1) AMENDMENTS RELATED TO SECTION 102 OF 
THE ACT.—
(A) Paragraph (2) of section 199(c) of the 
Internal Revenue Code of 1986 is amended to 
read as follows: 
‘‘(2) ALLOCATION
METHOD.—The Secretary 
shall prescribe rules for the proper allocation of 
items described in paragraph (1) for purposes of de-
termining qualified production activities income.’’. 
(B) Clause (i) of section 199(d)(4)(B) of 
such Code is amended— 
(i) by striking ‘‘50 percent’’ and in-
serting ‘‘more than 50 percent’’, and 
(ii) by striking ‘‘80 percent’’ and in-
serting ‘‘at least 80 percent’’. 
(2) AMENDMENT RELATED TO SECTION 231 OF 
THE ACT.—Subparagraph (C) of section 1361(c)(1) 
of such Code is amended to read as follows: 
‘‘(C) EFFECT
OF
ADOPTION, ETC.—For 
purposes of this paragraph, any legally adopted 
child of an individual, any child who is lawfully 
placed with an individual for legal adoption by 
the individual, and any eligible foster child of 
an individual (within the meaning of section 
152(f)(1)(C)), shall be treated as a child of 
such individual by blood.’’.
(3) AMENDMENT RELATED TO SECTION 248 OF 
THE ACT.—Subsection (c) of section 1356 of such 
Code is amended— 
(A) by striking paragraph (3), and 
(B) by adding at the end of paragraph (2) 
the following new flush sentence: 
‘‘Such term shall not include any core qualifying ac-
tivities.’’. 
(4) AMENDMENT RELATED TO SECTION 314 OF 
THE ACT.—Paragraph (2) of section 55(c) of such 
Code is amended by striking ‘‘regular tax’’ and in-
serting ‘‘regular tax liability’’. 
(5) AMENDMENT RELATED TO SECTION 415 OF 
THE ACT.—Subparagraph (D) of section 904(d)(2) 
of such Code is amended by inserting ‘‘as in effect 
before its repeal’’ after ‘‘section 954(f)’’. 
(6) AMENDMENTS RELATED TO SECTION 418 OF 
THE ACT.— 
(A) The second sentence of section 
897(h)(1) of such Code is amended by striking 
‘‘any distribution’’ and all that follows through 
‘‘any class of stock’’ and inserting ‘‘any dis-
tribution by a real estate investment trust with 
respect to any class of stock’’.
(B) Subsection (c) of section 418 of the 
American Jobs Creation Act of 2004 is amend-
ed by striking ‘‘taxable years beginning after 
the date of the enactment of this Act’’ and in-
serting ‘‘any distribution by a real estate invest-
ment trust which is treated as a deduction for 
a taxable year of such trust beginning after the 
date of the enactment of this Act’’. 
(7) AMENDMENTS RELATED TO SECTION 422 OF 
THE ACT.— 
(A) Subparagraph (A) of section 965(b)(2) 
of such Code is amended by inserting ‘‘cash’’ 
before ‘‘dividends’’. 
(B) Paragraph (3) of section 965(b) of 
such Code is amended by adding at the end the 
following: ‘‘The Secretary may prescribe such 
regulations as may be necessary or appropriate 
to prevent the avoidance of the purposes of this 
paragraph, including regulations which provide 
that cash dividends shall not be taken into ac-
count under subsection (a) to the extent such 
dividends are attributable to the direct or indi-
rect transfer (including through the use of in-
tervening entities or capital contributions) of 
cash or other property from a related person
(as so defined) to a controlled foreign corpora-
tion.’’. 
(C) Paragraph (1) of section 965(c) of 
such Code is amended to read as follows: 
‘‘(1) APPLICABLE
FINANCIAL
STATEMENT.— 
The term ‘applicable financial statement’ means— 
‘‘(A) with respect to a United States 
shareholder which is required to file a financial 
statement with the Securities and Exchange 
Commission (or which is included in such a 
statement so filed by another person), the most 
recent audited annual financial statement (in-
cluding the notes which form an integral part 
of such statement) of such shareholder (or 
which includes such shareholder)— 
‘‘(i) which was so filed on or before 
June 30, 2003, and 
‘‘(ii) which was certified on or before 
June 30, 2003, as being prepared in ac-
cordance with generally accepted account-
ing principles, and 
‘‘(B) with respect to any other United 
States shareholder, the most recent audited fi-
nancial statement (including the notes which 
form an integral part of such statement) of such
shareholder (or which includes such share-
holder)— 
‘‘(i) which was certified on or before 
June 30, 2003, as being prepared in ac-
cordance with generally accepted account-
ing principles, and 
‘‘(ii) which is used for the purposes of 
a statement or report— 
‘‘(I) to creditors, 
‘‘(II) to shareholders, or 
‘‘(III) for any other substantial 
nontax purpose.’’. 
(D) Paragraph (2) of section 965(d) of 
such Code is amended by striking ‘‘properly al-
located and apportioned’’ and inserting ‘‘di-
rectly allocable’’. 
(E) Subsection (d) of section 965 of such 
Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) COORDINATION WITH SECTION 78.—Sec-
tion 78 shall not apply to any tax which is not allow-
able as a credit under section 901 by reason of this 
subsection.’’. 
(F) The last sentence of section 965(e)(1) 
of such Code is amended by inserting ‘‘which
are imposed by foreign countries and posses-
sions of the United States and are’’ after 
‘‘taxes’’. 
(8) AMENDMENTS RELATED TO SECTION 501 OF 
THE ACT.— 
(A) Subparagraph (A) of section 164(b)(5) 
of such Code is amended to read as follows: 
‘‘(A) ELECTION TO DEDUCT STATE AND 
LOCAL SALES TAXES IN LIEU OF STATE AND 
LOCAL INCOME TAXES.—At the election of the 
taxpayer for the taxable year, subsection (a) 
shall be applied— 
‘‘(i) without regard to the reference to 
State and local income taxes, and 
‘‘(ii) as if State and local general sales 
taxes were referred to in a paragraph 
thereof.’’. 
(B) Clause (ii) of section 56(b)(1)(A) of 
such Code is amended by inserting ‘‘or clause 
(ii) of section 164(b)(5)(A)’’ before the period 
at the end. 
(9) AMENDMENT RELATED TO SECTION 835 OF 
THE ACT.—The last sentence of paragraph (3) of 
section 860G(a) of such Code is amended by striking
‘‘treated as secured’’ and inserting ‘‘treated as prin-
cipally secured’’. 
(10) AMENDMENTS RELATED TO SECTION 885 
OF THE ACT.— 
(A) Paragraph (2) of section 26(b) of such 
Code is amended by striking ‘‘and’’ at the end 
of subparagraph (R), by striking the period at 
the end of subparagraph (S) and inserting ‘‘, 
and’’, and by adding at the end the following 
new subparagraph: 
‘‘(T) 
subsections 
(a)(1)(B)(i) 
and 
(b)(4)(A) of section 409A (relating to interest 
and additional tax with respect to certain de-
ferred compensation).’’. 
(B) Clause (ii) of section 409A(a)(4)(C) of 
such Code is amended by striking ‘‘first’’. 
(C)(i) Notwithstanding section 885(d)(1) 
of the American Jobs Creation Act of 2004, 
subsection (b) of section 409A of such Code 
shall take effect on January 1, 2005. 
(ii) Not later than 90 days after the date 
of the enactment of this Act, the Secretary of 
the Treasury shall issue guidance under which 
a nonqualified deferred compensation plan 
which is in violation of the requirements of sec-
without regard to subsections (b)(1), (b)(2), and 
(d)(1)(B) thereof’’ after ‘‘section 152’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect as if included in 
the provisions of the Working Families Tax Relief 
Act of 2004 to which they relate. 
(c) AMENDMENT RELATED
TO
THE JOBS
AND 
GROWTH TAX RELIEF RECONCILIATION ACT OF 2003.— 
(1) AMENDMENT RELATED TO SECTION 201 OF 
THE
ACT.—Subparagraph 
(D) 
of 
section 
1400L(b)(2) of the Internal Revenue Code of 1986 
is amended by striking ‘‘September 11, 2004’’ and 
inserting ‘‘January 1, 2005’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall take effect as if included in 
section 201 of the Jobs and Growth Tax Relief and 
Reconciliation Act of 2003. 
(d) AMENDMENTS RELATED TO THE TRADE ACT OF 
2002.— 
(1) Paragraph (4) of section 6103(p) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘(l)(16), (17), (19), or (20)’’ each place it appears 
and inserting ‘‘(l)(16), (18), (19), or (20)’’. 
(2) The Internal Revenue Code of 1986 shall be 
applied and administered as if the amendments
made by section 408(a)(24) of the Working Families 
Tax Relief Act of 2004 had never been enacted. 
(e) AMENDMENT RELATED TO THE VICTIMS OF TER-
RORISM TAX RELIEF ACT OF 2001.— 
(1) AMENDMENT RELATED TO SECTION 201 OF 
THE ACT.—Paragraph (17) of section 6103(l) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘subsection (f), (i)(7), or (p)’’ and inserting 
‘‘subsection (f), (i)(8), or (p)’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall take effect as if included in 
section 201 of the Victims of Terrorism Tax Relief 
Act of 2001. 
(f) AMENDMENTS RELATED TO THE TAXPAYER RE-
LIEF ACT OF 1997.— 
(1) AMENDMENTS RELATED TO SECTION 1055 
OF THE ACT.— 
(A) The last sentence of section 6411(a) of 
the Internal Revenue Code of 1986 is amended 
by striking ‘‘6611(f)(3)(B)’’ and inserting 
‘‘6611(f)(4)(B)’’. 
(B) Paragraph (4) of section 6601(d) of 
such 
Code 
is 
amended 
by 
striking 
‘‘6611(f)(3)(A)’’ and inserting ‘‘6611(f)(4)(A)’’.
(2) AMENDMENT RELATED TO SECTION 1144 OF 
THE
ACT.—Subparagraph 
(B) 
of 
section 
6038B(a)(1) of such Code is amended by inserting 
‘‘or’’ at the end. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect as if included in 
the provisions of the Taxpayer Relief Act of 1997 to 
which they relate. 
(g) CLERICAL CORRECTIONS.— 
(1) Subparagraph (E) of section 26(b)(2) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘section 530(d)(3)’’ and inserting ‘‘section 
530(d)(4)’’. 
(2)(A) Subclause (II) of section 38(c)(2)(A)(ii) 
of such Code is amended by striking ‘‘or the New 
York Liberty Zone business employee credit or the 
specified credits’’ and inserting ‘‘, the New York 
Liberty Zone business employee credit, and the spec-
ified credits’’. 
(B) Subclause (II) of section 38(c)(3)(A)(ii) of 
such Code is amended by striking ‘‘or the specified 
credits’’ and inserting ‘‘and the specified credits’’. 
(3) Subparagraph (A) of section 39(a)(1) of 
such Code is amended by striking ‘‘each of the 1 
taxable years’’ and by inserting ‘‘the taxable year’’.
(4)(A) Subsection (a) of section 62 of such 
Code is amended— 
(i) by redesignating paragraph (19) (relat-
ing to costs involving discrimination suits, etc.), 
as added by section 703 of the American Jobs 
Creation Act of 2004, as paragraph (20), and 
(ii) by moving such paragraph after para-
graph (19) (relating to health savings ac-
counts). 
(B) Subsection (e) of section 62 of such Code 
is amended by striking ‘‘subsection (a)(19)’’ and in-
serting ‘‘subsection (a)(20)’’. 
(5) Subsection (d) of section 121 of such Code 
is amended by redesignating paragraph (10) (relat-
ing to property acquired in like-kind exchange), as 
added by section 840 of the American Jobs Creation 
Act of 2004, as paragraph (11). 
(6) Paragraph (2) of section 221(d) of such 
Code is amended by striking ‘‘this Act’’ and insert-
ing ‘‘the Taxpayer Relief Act of 1997’’. 
(7) Subparagraph (B) of section 332(d)(1) of 
such Code is amended by striking ‘‘distribution to 
which section 301 applies’’ and inserting ‘‘distribu-
tion of property to which section 301 applies’’.
(8) The matter following clause (iv) of section 
415(n)(3)(C) of such Code is amended by striking 
‘‘clauses’’ and inserting ‘‘clause’’. 
(9) Paragraph (1) of section 512(b) of such 
Code is amended by striking ‘‘section 512(a)(5)’’ 
and inserting ‘‘subsection (a)(5)’’. 
(10)(A) Subsection (b) of section 512 of such 
Code is amended— 
(i) by redesignating paragraph (18) (relat-
ing to the treatment of gain or loss on sale or 
exchange of certain brownfield sites), as added 
by section 702 of the American Jobs Creation 
Act of 2004, as paragraph (19), and 
(ii) by moving such paragraph to the end 
of such subsection. 
(B) Subparagraph (E) of section 514(b)(1) of 
such 
Code 
is 
amended 
by 
striking 
‘‘section 
512(b)(18)’’ and inserting ‘‘section 512(b)(19)’’. 
(11)(A) Subsection (b) of section 530 of such 
Code is amended by striking paragraph (3) and by 
redesignating paragraphs (4) and (5) as paragraphs 
(3) and (4), respectively. 
(B) Clause (ii) of section 530(b)(2)(A) of such 
Code is amended by striking ‘‘paragraph (4)’’ and 
inserting ‘‘paragraph (3)’’.
(12) Clause (i) of section 954(c)(1)(C) of such 
Code is amended by striking ‘‘paragraph (4)(A)’’ 
and inserting ‘‘paragraph (5)(A)’’. 
(13) Subparagraph (F) of section 954(c)(1) of 
such Code is amended by striking ‘‘Net income from 
notional principal contracts.’’ after ‘‘INCOME FROM 
NOTIONAL PRINCIPAL CONTRACTS.—’’. 
(14) The matter preceding clause (i) of section 
1031(h)(2)(B) of such Code is amended by striking 
‘‘subparagraph’’ and inserting ‘‘subparagraphs’’. 
(15) Paragraphs (1) and (2) of section 1375(d) 
of such Code are each amended by striking ‘‘sub-
chapter C’’ and inserting ‘‘accumulated’’. 
(16) Each of the following provisions of such 
Code are amended by striking ‘‘General Accounting 
Office’’ each place it appears therein and inserting 
‘‘Government Accountability Office’’: 
(A) Clause (ii) of section 1400E(c)(4)(A). 
(B) Paragraph (1) of section 6050M(b). 
(C) Subparagraphs (A), (B)(i), and (B)(ii) 
of section 6103(i)(8). 
(D) Paragraphs (3)(C)(i), (4), (5), and 
(6)(B) of section 6103(p). 
(E) Subsection (e) of section 8021.
(17) Section 3401 of such Code is amended by 
redesignating subsection (h) as subsection (g). 
(18) Paragraph (2) of section 4161(a) of such 
Code is amended to read as follows: 
‘‘(2) 3 PERCENT RATE OF TAX FOR ELECTRIC 
OUTBOARD MOTORS.—In the case of an electric out-
board motor, paragraph (1) shall be applied by sub-
stituting ‘3 percent’ for ‘10 percent’.’’. 
(19) Subparagraph (C) of section 4261(e)(4) of 
such Code is amended by striking ‘‘imposed sub-
section (b)’’ and inserting ‘‘imposed by subsection 
(b)’’. 
(20) Section 6427 of such Code is amended by 
striking subsection (o) and redesignating subsection 
(p) as subsection (o). 
(21) Subsection (a) of section 4980D of such 
Code is amended by striking ‘‘plans’’ and inserting 
‘‘plan’’. 
(22) The matter following clause (iii) of section 
6045(e)(5)(A) of such Code is amended by striking 
‘‘for ‘$250,000’.’’ and all that follows through ‘‘to 
the Treasury.’’ and inserting ‘‘for ‘$250,000’. The 
Secretary may by regulation increase the dollar 
amounts under this subparagraph if the Secretary
determines that such an increase will not materially 
reduce revenues to the Treasury.’’. 
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