I 
110TH CONGRESS 
2D SESSION 
H. R. 6165 
To amend the Internal Revenue Code of 1986 to assist individuals confronting 
high gasoline and diesel fuel costs in commuting to work by allowing 
a refundable credit against income tax based on the business standard 
mileage rate for commuting miles, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 22, 2008 
Mr. WHITFIELD of Kentucky introduced the following bill; which was referred 
to the Committee on Ways and Means, and in addition to the Committees 
on Natural Resources, Oversight and Government Reform, Armed Serv-
ices, and Science and Technology, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to assist 
individuals confronting high gasoline and diesel fuel costs 
in commuting to work by allowing a refundable credit 
against income tax based on the business standard mile-
age rate for commuting miles, 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. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘End the Pain at the Pump Act of 2008’’. 
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(b) TABLE OF CONTENTS.— 
Sec. 1. Short title. 
TITLE I—CREDIT TO REDUCE COST OF COMMUTING 
Sec. 101. Standard mileage rate credit for individuals commuting in gasoline or 
diesel-powered vehicles. 
TITLE II—REVENUE PROVISIONS 
Subtitle A—Income of Partners for Performing Investment Management 
Services 
Sec. 201. Income of partners for performing investment management services 
treated as ordinary income received for performance of serv-
ices. 
Subtitle B—Nonqualified Deferred Compensation From Certain Tax 
Indifferent Parties 
Sec. 211. Nonqualified deferred compensation from certain tax indifferent par-
ties. 
Subtitle C—Provisions Related to Certain Investment Partnerships 
Sec. 221. Income of partners for performing investment management services 
treated as ordinary income received for performance of serv-
ices. 
Sec. 222. Indebtedness incurred by a partnership in acquiring securities and 
commodities not treated as acquisition indebtedness for organi-
zations which are partners with limited liability. 
Sec. 223. Application to partnership interests and tax sharing agreements of 
rule treating certain gain on sales between related persons as 
ordinary income. 
TITLE III—INCREASE OUR ENERGY CAPACITY 
Subtitle A—Refineries 
Sec. 301. Short title. 
Sec. 302. Definitions. 
Sec. 303. State assistance. 
Sec. 304. Refinery process coordination and procedures. 
Sec. 305. Designation of closed military bases or other facilities. 
Sec. 306. Savings clause. 
Sec. 307. Refinery revitalization repeal. 
Subtitle B—Oil and Gas Development on the Coastal Plain of Alaska 
Sec. 311. Definitions. 
Sec. 312. Leasing program for lands within the Coastal Plain. 
Sec. 313. Lease sales. 
Sec. 314. Grant of leases by the Secretary. 
Sec. 315. Lease terms and conditions. 
Sec. 316. Coastal plain environmental protection. 
Sec. 317. Expedited judicial review. 
Sec. 318. Federal and State distribution of revenues. 
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Sec. 319. Rights-of-way across the Coastal Plain. 
Sec. 320. Conveyance. 
Sec. 321. Local government impact aid and community service assistance. 
Subtitle C—Opening of Outer Continental Shelf 
Sec. 331. Short title. 
Sec. 332. Policy. 
Sec. 333. Definitions under the Outer Continental Shelf Lands Act. 
Sec. 334. Determination of Adjacent Zones and planning areas. 
Sec. 335. Administration of leasing. 
Sec. 336. Grant of leases by Secretary. 
Sec. 337. Reservation of lands and rights. 
Sec. 338. Outer Continental Shelf Leasing Program. 
Sec. 339. Coordination with Adjacent States. 
Sec. 340. Environmental studies. 
Sec. 341. Federal Energy Natural Resources Enhancement Act of 2008. 
Sec. 342. Termination of effect of laws prohibiting the spending of appro-
priated funds for certain purposes. 
Sec. 343. Outer Continental Shelf incompatible use. 
Sec. 344. Repurchase of certain leases. 
Sec. 345. Offsite environmental mitigation. 
Sec. 346. Minerals Management Service. 
Sec. 347. Authority to use decommissioned offshore oil and gas platforms and 
other facilities for artificial reef, scientific research, or other 
uses. 
Sec. 348. Repeal of requirement to conduct comprehensive inventory of OCS oil 
and natural gas resources. 
Sec. 349. Leases for areas located within 100 miles of California or Florida. 
Sec. 350. Coastal impact assistance. 
Sec. 351. Oil shale and tar sands amendments. 
TITLE IV—REPEAL OF REQUIREMENT WITH RESPECT TO THE 
PROCUREMENT AND ACQUISITION OF ALTERNATIVE FUELS 
Sec. 401. Repeal of requirement with respect to the procurement and acquisi-
tion of alternative fuels. 
TITLE I—CREDIT TO REDUCE 
COST OF COMMUTING 
SEC. 101. STANDARD MILEAGE RATE CREDIT FOR INDIVID-
UALS COMMUTING IN GASOLINE OR DIESEL- 
POWERED VEHICLES. 
(a) IN GENERAL.—Subchapter B of chapter 65 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
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‘‘SEC. 6431. STANDARD MILEAGE RATE CREDIT FOR INDI-
VIDUALS COMMUTING IN GASOLINE OR DIE-
SEL-POWERED VEHICLES. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle an amount equal to 35 percent of the prod-
uct of— 
‘‘(1) the applicable standard mileage rate, and 
‘‘(2) the number of the qualified commuting 
miles of the taxpayer, the taxpayer’s spouse, and 
any individual described in subsection (f) with re-
spect to the taxpayer during the credit period. 
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—The amount of the credit allowed by subsection 
(a) (determined without regard to this subsection) shall 
be reduced (but not below zero) by 5 percent of so much 
of the taxpayer’s adjusted gross income as exceeds 
$75,000 ($150,000 in the case of a joint return). 
‘‘(c) APPLICABLE STANDARD MILEAGE RATE.—For 
purposes of this section, the term ‘applicable standard 
mileage rate’ means the standard mileage rate in effect 
under section 162(a) as of the date of the enactment of 
this section. 
‘‘(d) QUALIFIED COMMUTING MILES.—For purposes 
of this section— 
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‘‘(1) IN GENERAL.—The term ‘qualified com-
muting miles’ means, with respect to an individual, 
the miles driven between the individual’s residence 
and place of employment if— 
‘‘(A) the vehicle used to transport the indi-
vidual is a highway vehicle fueled primarily by 
gasoline or diesel fuel, 
‘‘(B) the vehicle is registered (under the 
laws of the State in which such vehicle is re-
quired to be registered) to the taxpayer, and 
‘‘(C) the taxpayer pays the entire cost of 
the fuel used in such transportation. 
‘‘(2) EXCLUSION
FOR
BUSINESS
USE.—Such 
term shall not include any use of a vehicle in a trade 
or business unless— 
‘‘(A) the taxpayer is allowed (but for sub-
paragraph (B)) to use the standard mileage 
rate under section 162(a) for such use, and 
‘‘(B) elects not to use such rate for such 
use. 
‘‘(3) EXCLUSION
FOR
MILES
OUTSIDE
THE 
UNITED STATES.—Such term shall not include any 
mile outside the United States. 
‘‘(e) CREDIT PERIOD.—For purposes of this section, 
the term ‘credit period’ means the period— 
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‘‘(1) beginning on June 1, 2008, and 
‘‘(2) ending on May 30, 2011. 
‘‘(f) DENIAL OF CREDIT TO DEPENDENTS.—In the 
case of an individual with respect to whom a deduction 
under section 151 is allowable to another taxpayer for a 
taxable year beginning in the calendar year in which the 
individual’s taxable year begins— 
‘‘(1) no credit shall be allowed under this sec-
tion to such individual for such individual’s taxable 
year, but 
‘‘(2) the qualified commuting miles of such in-
dividual for such year may be taken into account by 
such other taxpayer.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘, 
35A,’’ after ‘‘section 35’’. 
(2) The table of sections for subchapter B of 
chapter 65 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6431. Standard mileage rate credit for individuals commuting in gasoline 
or diesel-powered vehicles.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to miles commuted after June 30, 
2008, in taxable years ending after such date. 
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TITLE II—REVENUE PROVISIONS 
Subtitle A—Income of Partners for 
Performing Investment Manage-
ment Services 
SEC. 201. INCOME OF PARTNERS FOR PERFORMING IN-
VESTMENT MANAGEMENT SERVICES TREAT-
ED AS ORDINARY INCOME RECEIVED FOR 
PERFORMANCE OF SERVICES. 
(a) IN GENERAL.—Part I of subchapter K of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN-
VESTMENT 
MANAGEMENT 
SERVICES 
TO 
PARTNERSHIP. 
‘‘(a) TREATMENT
OF
DISTRIBUTIVE
SHARE
OF 
PARTNERSHIP ITEMS.—For purposes of this title, in the 
case of an investment services partnership interest— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
702(b)— 
‘‘(A) any net income with respect to such 
interest for any partnership taxable year shall 
be treated as ordinary income for the perform-
ance of services, and 
‘‘(B) any net loss with respect to such in-
terest for such year, to the extent not dis-
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‘‘(B) the aggregate net loss with respect to 
such interest allowed under subsection (a)(2) 
for all partnership taxable years. 
‘‘(3) DISPOSITION OF PORTION OF INTEREST.— 
In the case of any disposition of an investment serv-
ices partnership interest, the amount of net loss 
which otherwise would have (but for subsection 
(a)(2)(C)) applied to reduce the basis of such inter-
est shall be disregarded for purposes of this section 
for all succeeding partnership taxable years. 
‘‘(4) DISTRIBUTIONS OF PARTNERSHIP PROP-
ERTY.—In the case of any distribution of appre-
ciated property by a partnership with respect to any 
investment services partnership interest, gain shall 
be recognized by the partnership in the same man-
ner as if the partnership sold such property at fair 
market value at the time of the distribution. For 
purposes of this paragraph, the term ‘appreciated 
property’ means any property with respect to which 
gain would be determined if sold as described in the 
preceding sentence. 
‘‘(5) APPLICATION OF SECTION 751.—In apply-
ing section 751(a), an investment services partner-
ship interest shall be treated as an inventory item. 
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‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER-
EST.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘investment serv-
ices partnership interest’ means any interest in a 
partnership which is held by any person if such per-
son provides (directly or indirectly) a substantial 
quantity of any of the following services with respect 
to the assets of the partnership in the conduct of the 
trade or business of providing such services: 
‘‘(A) Advising as to the advisability of in-
vesting in, purchasing, or selling any specified 
asset. 
‘‘(B) Managing, acquiring, or disposing of 
any specified asset. 
‘‘(C) Arranging financing with respect to 
acquiring specified assets. 
‘‘(D) Any activity in support of any service 
described in subparagraphs (A) through (C). 
For purposes of this paragraph, the term ‘specified 
asset’ means securities (as defined in section 
475(c)(2) without regard to the last sentence there-
of), real estate, commodities (as defined in section 
475(e)(2))), or options or derivative contracts with 
respect to securities (as so defined), real estate, or 
commodities (as so defined). 
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‘‘(2) EXCEPTION FOR CERTAIN CAPITAL INTER-
ESTS.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) a portion of an investment serv-
ices partnership interest is acquired on ac-
count of a contribution of invested capital, 
and 
‘‘(ii) the partnership makes a reason-
able allocation of partnership items be-
tween the portion of the distributive share 
that is with respect to invested capital and 
the portion of such distributive share that 
is not with respect to invested capital, 
then subsection (a) shall not apply to the por-
tion of the distributive share that is with re-
spect to invested capital. An allocation will not 
be treated as reasonable for purposes of this 
subparagraph if such allocation would result in 
the partnership allocating a greater portion of 
income to invested capital than any other part-
ner not providing services would have been allo-
cated with respect to the same amount of in-
vested capital. 
‘‘(B) SPECIAL RULE FOR DISPOSITIONS.— 
In any case to which subparagraph (A) applies, 
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subsection (b) shall not apply to any gain or 
loss allocable to invested capital. The portion of 
any gain or loss attributable to invested capital 
is the proportion of such gain or loss which is 
based on the distributive share of gain or loss 
that would have been allocable to invested cap-
ital under subparagraph (A) if the partnership 
sold all of its assets immediately before the dis-
position. 
‘‘(C) INVESTED
CAPITAL.—For purposes 
of this paragraph, the term ‘invested capital’ 
means, the fair market value at the time of con-
tribution of any money or other property con-
tributed to the partnership. 
‘‘(D) TREATMENT OF CERTAIN LOANS.— 
‘‘(i) 
PROCEEDS
OF
PARTNERSHIP 
LOANS NOT TREATED AS INVESTED CAP-
ITAL OF SERVICE PROVIDING PARTNERS.— 
For purposes of this paragraph, an invest-
ment services partnership interest shall not 
be treated as acquired on account of a con-
tribution of invested capital to the extent 
that such capital is attributable to the pro-
ceeds of any loan or other advance made or 
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guaranteed, directly or indirectly, by any 
partner or the partnership. 
‘‘(ii) LOANS FROM NONSERVICE PRO-
VIDING PARTNERS TO THE PARTNERSHIP 
TREATED
AS
INVESTED
CAPITAL.—For 
purposes of this paragraph, any loan or 
other advance to the partnership made or 
guaranteed, directly or indirectly, by a 
partner not providing services to the part-
nership shall be treated as invested capital 
of such partner and amounts of income 
and loss treated as allocable to invested 
capital shall be adjusted accordingly. 
‘‘(d) OTHER INCOME
AND GAIN
IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) a person performs (directly or indi-
rectly) investment management services for any 
entity, 
‘‘(B) such person holds a disqualified in-
terest with respect to such entity, and 
‘‘(C) the value of such interest (or pay-
ments thereunder) is substantially related to 
the amount of income or gain (whether or not 
realized) from the assets with respect to which 
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the investment management services are per-
formed, 
any income or gain with respect to such interest 
shall be treated as ordinary income for the perform-
ance of services. Rules similar to the rules of sub-
section (c)(2) shall apply where such interest was ac-
quired on account of invested capital in such entity. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) DISQUALIFIED INTEREST.—The term 
‘disqualified interest’ means, with respect to 
any entity— 
‘‘(i) any interest in such entity other 
than indebtedness, 
‘‘(ii) convertible or contingent debt of 
such entity, 
‘‘(iii) any option or other right to ac-
quire property described in clause (i) or 
(ii), and 
‘‘(iv) any derivative instrument en-
tered into (directly or indirectly) with such 
entity or any investor in such entity. 
Such term shall not include a partnership inter-
est and shall not include stock in a taxable cor-
poration. 
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‘‘(B) TAXABLE CORPORATION.—The term 
‘taxable corporation’ means— 
‘‘(i) a domestic C corporation, or 
‘‘(ii) a foreign corporation subject to a 
comprehensive foreign income tax (as de-
fined in section 457A(d)(4)). 
‘‘(C) INVESTMENT
MANAGEMENT
SERV-
ICES.—The term ‘investment management serv-
ices’ means a substantial quantity of any of the 
services described in subsection (c)(1) which are 
provided in the conduct of the trade or business 
of providing such services. 
‘‘(e) EXCEPTION.—This section shall not apply to an 
investment services partnership interest for a taxable year 
unless the aggregate net income from all such interests 
for such year of the partner holding such interest exceeds 
$5,000,000. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as are necessary or appropriate to carry 
out the purposes of this section, including regulations to— 
‘‘(1) prevent the avoidance of the purposes of 
this section, and 
‘‘(2) coordinate this section with the other pro-
visions of this subchapter. 
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‘‘(g) CROSS REFERENCE.—For 40 percent no fault 
penalty on certain underpayments due to the avoidance 
of this section, see section 6662.’’. 
(b) APPLICATION
TO REAL ESTATE INVESTMENT 
TRUSTS.—Subsection (c) of section 856 of such Code is 
amended by adding at the end the following new para-
graph: 
‘‘(8) EXCEPTION FROM RECHARACTERIZATION 
OF INCOME FROM INVESTMENT SERVICES PARTNER-
SHIP INTERESTS.— 
‘‘(A) IN GENERAL.—Paragraphs (2), (3), 
and (4) shall be applied without regard to sec-
tion 710 (relating to special rules for partners 
providing investment management services to 
partnership). 
‘‘(B) SPECIAL RULE FOR PARTNERSHIPS 
OWNED BY REITS.—Section 7704 shall be ap-
plied without regard to section 710 in the case 
of a partnership which meets each of the fol-
lowing requirements: 
‘‘(i) Such partnership is treated as 
publicly traded under section 7704 solely 
by reason of interests in such partnership 
being convertible into interests in a real es-
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tate investment trust which is publicly 
traded. 
‘‘(ii) 50 percent or more of the capital 
and profits interests of such partnership 
are owned, directly or indirectly, at all 
times during the taxable year by such real 
estate investment trust (determined with 
the application of section 267(c)). 
‘‘(iii) Such partnership meets the re-
quirements of paragraphs (2), (3), and (4) 
(applied without regard to section 710).’’. 
(c) IMPOSITION
OF
PENALTY
ON
UNDERPAY-
MENTS.— 
(1) IN
GENERAL.—Subsection (b) of section 
6662 of such Code is amended by inserting after 
paragraph (5) the following new paragraph: 
‘‘(6) The application of subsection (d) of section 
710 or the regulations prescribed under section 
710(e) to prevent the avoidance of the purposes of 
section 710.’’. 
(2) AMOUNT OF PENALTY.— 
(A) IN GENERAL.—Section 6662 of such 
Code is amended by adding at the end the fol-
lowing new subsection: 
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‘‘(i) INCREASE IN PENALTY IN CASE OF PROPERTY 
TRANSFERRED FOR INVESTMENT MANAGEMENT SERV-
ICES.—In the case of any portion of an underpayment to 
which this section applies by reason of subsection (b)(6), 
subsection (a) shall be applied with respect to such portion 
by substituting ‘40 percent’ for ‘20 percent’.’’. 
(B) CONFORMING
AMENDMENTS.—Sub-
paragraph (B) of section 6662A(e)(2) of such 
Code is amended— 
(i) by striking ‘‘section 6662(h)’’ and 
inserting ‘‘subsection (h) or (i) of section 
6662’’, and 
(ii) by striking ‘‘GROSS
VALUATION 
MISSTATEMENT PENALTY’’ in the heading 
and inserting ‘‘CERTAIN
INCREASED
UN-
DERPAYMENT PENALTIES’’. 
(3) REASONABLE CAUSE EXCEPTION NOT AP-
PLICABLE.—Subsection (c) of section 6664 of such 
Code is amended— 
(A) by redesignating paragraphs (2) and 
(3) as paragraphs (3) and (4), respectively, 
(B) by striking ‘‘paragraph (2)’’ in para-
graph (4), as so redesignated, and inserting 
‘‘paragraph (3)’’, and 
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(C) by inserting after paragraph (1) the 
following new paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to any portion of an underpayment to which 
this section applies by reason of subsection (b)(6).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Subsection (d) of section 731 of such Code 
is amended by inserting ‘‘section 710(b)(4) (relating 
to distributions of partnership property),’’ before 
‘‘section 736’’. 
(2) Section 741 of such Code is amended by in-
serting ‘‘or section 710 (relating to special rules for 
partners providing investment management services 
to partnership)’’ before the period at the end. 
(3) Paragraph (13) of section 1402(a) of such 
Code is amended— 
(A) by striking ‘‘other than guaranteed’’ 
and inserting ‘‘other than— 
‘‘(A) guaranteed’’, 
(B) by striking the semi-colon at the end 
and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) any income treated as ordinary in-
come under section 710 received by an indi-
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vidual who provides investment management 
services (as defined in section 710(d)(2));’’. 
(4) Paragraph (12) of section 211(a) of the So-
cial Security Act is amended— 
(A) by striking ‘‘other than guaranteed’’ 
and inserting ‘‘other than— 
‘‘(A) guaranteed’’, 
(B) by striking the semi-colon at the end 
and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) any income treated as ordinary in-
come under section 710 of the Internal Revenue 
Code of 1986 received by an individual who 
provides investment management services (as 
defined in section 710(d)(2) of such Code);’’. 
(5) The table of sections for part I of sub-
chapter K of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘Sec. 710. Special rules for partners providing investment management services 
to partnership.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years ending after 
the date of the enactment of this Act. 
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(2) PARTNERSHIP TAXABLE YEARS WHICH IN-
CLUDE
EFFECTIVE
DATE.—In applying section 
710(a) of the Internal Revenue Code of 1986 (as 
added by this section) in the case of any partnership 
taxable year which includes the date of the enact-
ment of this Act, the amount of the net income re-
ferred to in such section shall be treated as being 
the lesser of the net income for the entire partner-
ship taxable year or the net income determined by 
only taking into account items attributable to the 
portion of the partnership taxable year which is 
after such date. 
(3) DISPOSITIONS
OF
PARTNERSHIP
INTER-
ESTS.—Except as provided in paragraph (3), section 
710(b) of the Internal Revenue Code of 1986 (as 
added by this section) shall apply to dispositions and 
distributions after the date of the enactment of this 
Act. 
(4) OTHER INCOME AND GAIN IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.—Sec-
tion 710(d) of such Code (as added by this section) 
shall take effect on the date of the enactment of this 
Act. 
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Subtitle B—Nonqualified Deferred 
Compensation 
From 
Certain 
Tax Indifferent Parties 
SEC. 
211. 
NONQUALIFIED 
DEFERRED 
COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter E of chapter 1 of the Internal Revenue Code of 
1986 (relating to taxable year for which items of gross 
income included) is amended by inserting after section 457 
the following new section: 
‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES. 
‘‘(a) IN GENERAL.—Any compensation which is de-
ferred under a nonqualified deferred compensation plan of 
a nonqualified entity shall be taken into account for pur-
poses of this chapter when there is no substantial risk of 
forfeiture of the rights to such compensation. 
‘‘(b) NONQUALIFIED ENTITY.—For purposes of this 
section, the term ‘nonqualified entity’ means— 
‘‘(1) any foreign corporation unless substan-
tially all of such income is— 
‘‘(A) effectively connected with the conduct 
of a trade or business in the United States, or 
‘‘(B) subject to a comprehensive foreign in-
come tax, and 
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‘‘(2) any partnership unless substantially all of 
such income is allocated to persons other than— 
‘‘(A) foreign persons with respect to whom 
such income is not subject to a comprehensive 
foreign income tax, and 
‘‘(B) organizations which are exempt from 
tax under this title. 
‘‘(c) ASCERTAINABILITY
OF AMOUNTS
OF COM-
PENSATION.— 
‘‘(1) IN GENERAL.—If the amount of any com-
pensation is not ascertainable at the time that such 
compensation is otherwise to be taken into account 
under subsection (a)— 
‘‘(A) such amount shall be so taken into 
account when ascertainable, and 
‘‘(B) the tax imposed under this chapter 
for the taxable year in which such compensation 
is taken into account under subparagraph (A) 
shall be increased by the sum of— 
‘‘(i) the amount of interest determined 
under paragraph (2), and 
‘‘(ii) an amount equal to 20 percent of 
the amount of such compensation. 
‘‘(2) INTEREST.—For purposes of paragraph 
(1)(B)(i), the interest determined under this para-
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graph for any taxable year is the amount of interest 
at the underpayment rate under section 6621 plus 
1 percentage point on the underpayments that would 
have occurred had the deferred compensation been 
includible in gross income for the taxable year in 
which first deferred or, if later, the first taxable year 
in which such deferred compensation is not subject 
to a substantial risk of forfeiture. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.—The 
rights of a person to compensation shall be treated 
as subject to a substantial risk of forfeiture only if 
such person’s rights to such compensation are condi-
tioned upon the future performance of substantial 
services by any individual. 
‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.— 
The term ‘comprehensive foreign income tax’ means, 
with respect to any foreign person, the income tax 
of a foreign country if— 
‘‘(A) such person is eligible for the benefits 
of a comprehensive income tax treaty between 
such foreign country and the United States, or 
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‘‘(B) such person demonstrates to the sat-
isfaction of the Secretary that such foreign 
country has a comprehensive income tax. 
Such term shall not include any tax unless such tax 
includes rules for the deductibility of deferred com-
pensation which are similar to the rules of this title. 
‘‘(3) NONQUALIFIED
DEFERRED
COMPENSA-
TION PLAN.—The term ‘nonqualified deferred com-
pensation plan’ has the meaning given such term 
under section 409A(d), except that such term shall 
include any plan that provides a right to compensa-
tion based on the appreciation in value of a specified 
number of equity units of the service recipient. 
‘‘(4) APPLICATION OF RULES.—Rules similar to 
the rules of paragraphs (5) and (6) of section 
409A(d) shall apply. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including regula-
tions disregarding a substantial risk of forfeiture in cases 
where necessary to carry out the purposes of this sec-
tion.’’. 
(b) CONFORMING AMENDMENT.—Section 26(b)(2) of 
such Code is amended by striking ‘‘and’’ at the end of 
subparagraph (S), by striking the period at the end of sub-
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paragraph (T) and inserting ‘‘, and’’, and by adding at 
the end the following new subparagraph: 
‘‘(U) section 457A(c)(1)(B) (relating to as-
certainability of amounts of compensation).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
of subpart B of part II of subchapter E of chapter 1 of 
such Code is amended by inserting after the item relating 
to section 457 the following new item: 
‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent 
parties.’’. 
(d) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to amounts deferred which 
are attributable to services performed after Decem-
ber 31, 2007. 
(2) APPLICATION TO EXISTING DEFERRALS.— 
In the case of any amount deferred to which the 
amendments made by this section do not apply solely 
by reason of the fact that the amount is attributable 
to services performed before January 1, 2008, to the 
extent such amount is not includible in gross income 
in a taxable year beginning before 2017, such 
amounts shall be includible in gross income in the 
later of— 
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(A) the last taxable year beginning before 
2017, or 
(B) the taxable year in which there is no 
substantial risk of forfeiture of the rights to 
such compensation (determined in the same 
manner as determined for purposes of section 
457A of the Internal Revenue Code of 1986, as 
added by this section). 
(3) ACCELERATED PAYMENTS.—No later than 
60 days after the date of the enactment of this Act, 
the Secretary shall issue guidance providing a lim-
ited period of time during which a nonqualified de-
ferred compensation arrangement attributable to 
services performed on or before December 31, 2007, 
may, without violating the requirements of section 
409A(a) of the Internal Revenue Code of 1986, be 
amended to conform the date of distribution to the 
date the amounts are required to be included in in-
come. 
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Subtitle C—Provisions Related to 
Certain Investment Partnerships 
SEC. 221. INCOME OF PARTNERS FOR PERFORMING IN-
VESTMENT MANAGEMENT SERVICES TREAT-
ED AS ORDINARY INCOME RECEIVED FOR 
PERFORMANCE OF SERVICES. 
(a) IN GENERAL.—Part I of subchapter K of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN-
VESTMENT 
MANAGEMENT 
SERVICES 
TO 
PARTNERSHIP. 
‘‘(a) TREATMENT
OF
DISTRIBUTIVE
SHARE
OF 
PARTNERSHIP ITEMS.—For purposes of this title, in the 
case of an investment services partnership interest— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
702(b)— 
‘‘(A) any net income with respect to such 
interest for any partnership taxable year shall 
be treated as ordinary income for the perform-
ance of services, and 
‘‘(B) any net loss with respect to such in-
terest for such year, to the extent not dis-
allowed under paragraph (2) for such year, 
shall be treated as an ordinary loss. 
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‘‘(2) TREATMENT OF LOSSES.— 
‘‘(A) LIMITATION.—Any net loss with re-
spect to such interest shall be allowed for any 
partnership taxable year only to the extent that 
such loss does not exceed the excess (if any) 
of— 
‘‘(i) the aggregate net income with re-
spect to such interest for all prior partner-
ship taxable years, over 
‘‘(ii) the aggregate net loss with re-
spect to such interest not disallowed under 
this subparagraph for all prior partnership 
taxable years. 
‘‘(B) CARRYFORWARD.—Any net loss for 
any partnership taxable year which is not al-
lowed by reason of subparagraph (A) shall be 
treated as an item of loss with respect to such 
partnership interest for the succeeding partner-
ship taxable year. 
‘‘(C) BASIS ADJUSTMENT.—No adjustment 
to the basis of a partnership interest shall be 
made on account of any net loss which is not 
allowed by reason of subparagraph (A). 
‘‘(D) EXCEPTION
FOR
BASIS
ATTRIB-
UTABLE TO PURCHASE OF A PARTNERSHIP IN-
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TEREST.—In the case of an investment services 
partnership interest acquired by purchase, para-
graph (1)(B) shall not apply to so much of any 
net loss with respect to such interest for any 
taxable year as does not exceed the excess of— 
‘‘(i) the basis of such interest imme-
diately after such purchase, over 
‘‘(ii) the aggregate net loss with re-
spect to such interest to which paragraph 
(1)(B) did not apply by reason of this sub-
paragraph for all prior taxable years. 
Any net loss to which paragraph (1)(B) does 
not apply by reason of this subparagraph shall 
not be taken into account under subparagraph 
(A). 
‘‘(E) PRIOR
PARTNERSHIP
YEARS.—Any 
reference in this paragraph to prior partnership 
taxable years shall only include prior partner-
ship taxable years to which this section applies. 
‘‘(3) NET INCOME AND LOSS.—For purposes of 
this section— 
‘‘(A) NET
INCOME.—The term ‘net in-
come’ means, with respect to any investment 
services partnership interest, for any partner-
ship taxable year, the excess (if any) of— 
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‘‘(i) all items of income and gain 
taken into account by the holder of such 
interest under section 702 with respect to 
such interest for such year, over 
‘‘(ii) all items of deduction and loss so 
taken into account. 
‘‘(B) NET
LOSS.—The term ‘net loss’ 
means with respect to such interest for such 
year, the excess (if any) of the amount de-
scribed in subparagraph (A)(ii) over the amount 
described in subparagraph (A)(i). 
‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— 
‘‘(1) GAIN.—Any gain on the disposition of an 
investment services partnership interest shall be 
treated as ordinary income for the performance of 
services. 
‘‘(2) LOSS.—Any loss on the disposition of an 
investment services partnership interest shall be 
treated as an ordinary loss to the extent of the ex-
cess (if any) of— 
‘‘(A) the aggregate net income with respect 
to such interest for all partnership taxable 
years, over 
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‘‘(B) the aggregate net loss with respect to 
such interest allowed under subsection (a)(2) 
for all partnership taxable years. 
‘‘(3) DISPOSITION OF PORTION OF INTEREST.— 
In the case of any disposition of an investment serv-
ices partnership interest, the amount of net loss 
which otherwise would have (but for subsection 
(a)(2)(C)) applied to reduce the basis of such inter-
est shall be disregarded for purposes of this section 
for all succeeding partnership taxable years. 
‘‘(4) DISTRIBUTIONS OF PARTNERSHIP PROP-
ERTY.—In the case of any distribution of appre-
ciated property by a partnership with respect to any 
investment services partnership interest, gain shall 
be recognized by the partnership in the same man-
ner as if the partnership sold such property at fair 
market value at the time of the distribution. For 
purposes of this paragraph, the term ‘appreciated 
property’ means any property with respect to which 
gain would be determined if sold as described in the 
preceding sentence. 
‘‘(5) APPLICATION OF SECTION 751.—In apply-
ing section 751(a), an investment services partner-
ship interest shall be treated as an inventory item. 
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‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER-
EST.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘investment serv-
ices partnership interest’ means any interest in a 
partnership which is held by any person if such per-
son provides (directly or indirectly) a substantial 
quantity of any of the following services with respect 
to the assets of the partnership in the conduct of the 
trade or business of providing such services: 
‘‘(A) Advising as to the advisability of in-
vesting in, purchasing, or selling any specified 
asset. 
‘‘(B) Managing, acquiring, or disposing of 
any specified asset. 
‘‘(C) Arranging financing with respect to 
acquiring specified assets. 
‘‘(D) Any activity in support of any service 
described in subparagraphs (A) through (C). 
For purposes of this paragraph, the term ‘specified 
asset’ means securities (as defined in section 
475(c)(2) without regard to the last sentence there-
of), real estate, commodities (as defined in section 
475(e)(2))), or options or derivative contracts with 
respect to securities (as so defined), real estate, or 
commodities (as so defined). 
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‘‘(2) EXCEPTION FOR CERTAIN CAPITAL INTER-
ESTS.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) a portion of an investment serv-
ices partnership interest is acquired on ac-
count of a contribution of invested capital, 
and 
‘‘(ii) the partnership makes a reason-
able allocation of partnership items be-
tween the portion of the distributive share 
that is with respect to invested capital and 
the portion of such distributive share that 
is not with respect to invested capital, 
then subsection (a) shall not apply to the por-
tion of the distributive share that is with re-
spect to invested capital. An allocation will not 
be treated as reasonable for purposes of this 
subparagraph if such allocation would result in 
the partnership allocating a greater portion of 
income to invested capital than any other part-
ner not providing services would have been allo-
cated with respect to the same amount of in-
vested capital. 
‘‘(B) SPECIAL RULE FOR DISPOSITIONS.— 
In any case to which subparagraph (A) applies, 
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subsection (b) shall not apply to any gain or 
loss allocable to invested capital. The portion of 
any gain or loss attributable to invested capital 
is the proportion of such gain or loss which is 
based on the distributive share of gain or loss 
that would have been allocable to invested cap-
ital under subparagraph (A) if the partnership 
sold all of its assets immediately before the dis-
position. 
‘‘(C) INVESTED
CAPITAL.—For purposes 
of this paragraph, the term ‘invested capital’ 
means, the fair market value at the time of con-
tribution of any money or other property con-
tributed to the partnership. 
‘‘(D) TREATMENT OF CERTAIN LOANS.— 
‘‘(i) 
PROCEEDS
OF
PARTNERSHIP 
LOANS NOT TREATED AS INVESTED CAP-
ITAL OF SERVICE PROVIDING PARTNERS.— 
For purposes of this paragraph, an invest-
ment services partnership interest shall not 
be treated as acquired on account of a con-
tribution of invested capital to the extent 
that such capital is attributable to the pro-
ceeds of any loan or other advance made or 
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guaranteed, directly or indirectly, by any 
partner or the partnership. 
‘‘(ii) LOANS FROM NONSERVICE PRO-
VIDING PARTNERS TO THE PARTNERSHIP 
TREATED
AS
INVESTED
CAPITAL.—For 
purposes of this paragraph, any loan or 
other advance to the partnership made or 
guaranteed, directly or indirectly, by a 
partner not providing services to the part-
nership shall be treated as invested capital 
of such partner and amounts of income 
and loss treated as allocable to invested 
capital shall be adjusted accordingly. 
‘‘(d) OTHER INCOME
AND GAIN
IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) a person performs (directly or indi-
rectly) investment management services for any 
entity, 
‘‘(B) such person holds a disqualified in-
terest with respect to such entity, and 
‘‘(C) the value of such interest (or pay-
ments thereunder) is substantially related to 
the amount of income or gain (whether or not 
realized) from the assets with respect to which 
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the investment management services are per-
formed, 
any income or gain with respect to such interest 
shall be treated as ordinary income for the perform-
ance of services. Rules similar to the rules of sub-
section (c)(2) shall apply where such interest was ac-
quired on account of invested capital in such entity. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) DISQUALIFIED INTEREST.—The term 
‘disqualified interest’ means, with respect to 
any entity— 
‘‘(i) any interest in such entity other 
than indebtedness, 
‘‘(ii) convertible or contingent debt of 
such entity, 
‘‘(iii) any option or other right to ac-
quire property described in clause (i) or 
(ii), and 
‘‘(iv) any derivative instrument en-
tered into (directly or indirectly) with such 
entity or any investor in such entity. 
Such term shall not include a partnership inter-
est and shall not include stock in a taxable cor-
poration. 
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‘‘(B) TAXABLE CORPORATION.—The term 
‘taxable corporation’ means— 
‘‘(i) a domestic C corporation, or 
‘‘(ii) a foreign corporation subject to a 
comprehensive foreign income tax (as de-
fined in section 457A(d)(4)). 
‘‘(C) INVESTMENT
MANAGEMENT
SERV-
ICES.—The term ‘investment management serv-
ices’ means a substantial quantity of any of the 
services described in subsection (c)(1) which are 
provided in the conduct of the trade or business 
of providing such services. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as are necessary or appropriate to carry 
out the purposes of this section, including regulations to— 
‘‘(1) prevent the avoidance of the purposes of 
this section, and 
‘‘(2) coordinate this section with the other pro-
visions of this subchapter. 
‘‘(f) CROSS REFERENCE.—For 40 percent no fault 
penalty on certain underpayments due to the avoidance 
of this section, see section 6662.’’. 
(b) APPLICATION
TO REAL ESTATE INVESTMENT 
TRUSTS.—Subsection (c) of section 856 of such Code is 
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amended by adding at the end the following new para-
graph: 
‘‘(8) EXCEPTION FROM RECHARACTERIZATION 
OF INCOME FROM INVESTMENT SERVICES PARTNER-
SHIP INTERESTS.— 
‘‘(A) IN GENERAL.—Paragraphs (2), (3), 
and (4) shall be applied without regard to sec-
tion 710 (relating to special rules for partners 
providing investment management services to 
partnership). 
‘‘(B) SPECIAL RULE FOR PARTNERSHIPS 
OWNED BY REITS.—Section 7704 shall be ap-
plied without regard to section 710 in the case 
of a partnership which meets each of the fol-
lowing requirements: 
‘‘(i) Such partnership is treated as 
publicly traded under section 7704 solely 
by reason of interests in such partnership 
being convertible into interests in a real es-
tate investment trust which is publicly 
traded. 
‘‘(ii) 50 percent or more of the capital 
and profits interests of such partnership 
are owned, directly or indirectly, at all 
times during the taxable year by such real 
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estate investment trust (determined with 
the application of section 267(c)). 
‘‘(iii) Such partnership meets the re-
quirements of paragraphs (2), (3), and (4) 
(applied without regard to section 710).’’. 
(c) IMPOSITION
OF
PENALTY
ON
UNDERPAY-
MENTS.— 
(1) IN
GENERAL.—Subsection (b) of section 
6662 of such Code is amended by inserting after 
paragraph (5) the following new paragraph: 
‘‘(6) The application of subsection (d) of section 
710 or the regulations prescribed under section 
710(e) to prevent the avoidance of the purposes of 
section 710.’’. 
(2) AMOUNT OF PENALTY.— 
(A) IN GENERAL.—Section 6662 of such 
Code is amended by adding at the end the fol-
lowing new subsection: 
‘‘(i) INCREASE IN PENALTY IN CASE OF PROPERTY 
TRANSFERRED FOR INVESTMENT MANAGEMENT SERV-
ICES.—In the case of any portion of an underpayment to 
which this section applies by reason of subsection (b)(6), 
subsection (a) shall be applied with respect to such portion 
by substituting ‘40 percent’ for ‘20 percent’.’’. 
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(B) CONFORMING
AMENDMENTS.—Sub-
paragraph (B) of section 6662A(e)(2) of such 
Code is amended— 
(i) by striking ‘‘section 6662(h)’’ and 
inserting ‘‘subsection (h) or (i) of section 
6662’’, and 
(ii) by striking ‘‘GROSS
VALUATION 
MISSTATEMENT PENALTY’’ in the heading 
and inserting ‘‘CERTAIN
INCREASED
UN-
DERPAYMENT PENALTIES’’. 
(3) REASONABLE CAUSE EXCEPTION NOT AP-
PLICABLE.—Subsection (c) of section 6664 of such 
Code is amended— 
(A) by redesignating paragraphs (2) and 
(3) as paragraphs (3) and (4), respectively, 
(B) by striking ‘‘paragraph (2)’’ in para-
graph (4), as so redesignated, and inserting 
‘‘paragraph (3)’’, and 
(C) by inserting after paragraph (1) the 
following new paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to any portion of an underpayment to which 
this section applies by reason of subsection (b)(6).’’. 
(d) CONFORMING AMENDMENTS.— 
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‘‘(A) guaranteed’’, 
(B) by striking the semi-colon at the end 
and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) any income treated as ordinary in-
come under section 710 of the Internal Revenue 
Code of 1986 received by an individual who 
provides investment management services (as 
defined in section 710(d)(2) of such Code);’’. 
(5) The table of sections for part I of sub-
chapter K of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘Sec. 710. Special rules for partners providing investment management services 
to partnership.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years ending after 
November 1, 2007. 
(2) PARTNERSHIP TAXABLE YEARS WHICH IN-
CLUDE
EFFECTIVE
DATE.—In applying section 
710(a) of the Internal Revenue Code of 1986 (as 
added by this section) in the case of any partnership 
taxable year which includes November 1, 2007, the 
amount of the net income referred to in such section 
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shall be treated as being the lesser of the net income 
for the entire partnership taxable year or the net in-
come determined by only taking into account items 
attributable to the portion of the partnership taxable 
year which is after such date. 
(3) DISPOSITIONS
OF
PARTNERSHIP
INTER-
ESTS.—Section 710(b) of the Internal Revenue Code 
of 1986 (as added by this section) shall apply to dis-
positions and distributions after November 1, 2007. 
(4) OTHER INCOME AND GAIN IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.—Sec-
tion 710(d) of such Code (as added by this section) 
shall take effect on November 1, 2007. 
(5) PUBLICLY
TRADED
PARTNERSHIPS.—For 
purposes of applying section 7704, the amendments 
made by this section shall apply to taxable years be-
ginning after December 31, 2009. 
SEC. 222. INDEBTEDNESS INCURRED BY A PARTNERSHIP IN 
ACQUIRING SECURITIES AND COMMODITIES 
NOT TREATED AS ACQUISITION INDEBTED-
NESS 
FOR 
ORGANIZATIONS 
WHICH 
ARE 
PARTNERS WITH LIMITED LIABILITY. 
(a) IN GENERAL.—Subsection (c) of section 514 of 
the Internal Revenue Code of 1986 (relating to acquisition 
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indebtedness) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(10) SECURITIES
AND
COMMODITIES
AC-
QUIRED BY PARTNERSHIPS IN WHICH AN ORGANIZA-
TION IS A PARTNER WITH LIMITED LIABILITY.— 
‘‘(A) IN GENERAL.—In the case of any or-
ganization which is a partner with limited liabil-
ity in a partnership, the term ‘acquisition in-
debtedness’ does not, for purposes of this sec-
tion, include indebtedness incurred or continued 
by such partnership in purchasing or carrying 
any qualified security or commodity. 
‘‘(B) QUALIFIED
SECURITY
OR
COM-
MODITY.—For purposes of this paragraph, the 
term ‘qualified security or commodity’ means 
any security (as defined in section 475(c)(2) 
without regard to the last sentence thereof), 
any 
commodity 
(as 
defined 
in 
section 
475(e)(2)), or any option or derivative contract 
with respect to such a security or commodity. 
‘‘(C) APPLICATION TO TIERED PARTNER-
SHIPS
AND
OTHER
PASS-THRU
ENTITIES.— 
Rules similar to the rules of subparagraph (A) 
shall apply in the case of tiered partnerships 
and other pass-thru entities. 
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‘‘(D) REGULATIONS.—The Secretary may 
prescribe such regulations as may be necessary 
or appropriate to carry out the purposes of this 
paragraph, including regulations to prevent the 
abuse of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 223. APPLICATION TO PARTNERSHIP INTERESTS AND 
TAX SHARING AGREEMENTS OF RULE TREAT-
ING CERTAIN GAIN ON SALES BETWEEN RE-
LATED PERSONS AS ORDINARY INCOME. 
(a) PARTNERSHIP INTERESTS.—Subsection (a) of 
section 1239 of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(a) TREATMENT OF GAIN AS ORDINARY INCOME.— 
In the case of a sale or exchange of property, directly or 
indirectly, between related persons, any gain recognized to 
the transferor shall be treated as ordinary income if— 
‘‘(1) such property is, in the hands of the trans-
feree, of a character which is subject to the allow-
ance for depreciation provided in section 167, or 
‘‘(2) such property is an interest in a partner-
ship, but only to the extent of gain attributable to 
unrealized appreciation in property which is of a 
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character subject to the allowance for depreciation 
provided in section 167.’’. 
(b) TAX SHARING AGREEMENTS.—Section 1239 of 
such Code (relating to gain from sale of depreciable prop-
erty between certain related taxpayers) is amended by 
adding at the end the following new subsection: 
‘‘(f) APPLICATION
TO
TAX
SHARING
AGREE-
MENTS.— 
‘‘(1) IN GENERAL.—If there is a tax sharing 
agreement with respect to any sale or exchange, the 
transferee and the transferor shall be treated as re-
lated persons for purposes of this section. 
‘‘(2) TAX SHARING AGREEMENT.—For purposes 
of this subsection, the term ‘tax sharing agreement’ 
means any agreement which provides for the pay-
ment to the transferor of any amount which is deter-
mined by reference to any portion of the tax benefit 
realized by the transferee with respect to the depre-
ciation (or amortization) of the property trans-
ferred.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to sales and exchanges after the date of 
the enactment of this Act. 
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(2) EXCEPTION
FOR
BINDING
CONTRACTS.— 
The amendment made by subsection (b) shall not 
apply to any sale or exchange pursuant to a written 
binding contract which includes a tax sharing agree-
ment and which is in effect on November 1, 2007, 
and not modified thereafter in any material respect. 
TITLE III—INCREASE OUR 
ENERGY CAPACITY 
Subtitle A—Refineries 
SEC. 301. SHORT TITLE. 
This subtitle may be cited as the ‘‘Refinery Permit 
Process Schedule Act’’. 
SEC. 302. DEFINITIONS. 
For purposes of this subtitle— 
(1) the term ‘‘Administrator’’ means the Ad-
ministrator of the Environmental Protection Agency; 
(2) the term ‘‘applicant’’ means a person who 
is seeking a Federal refinery authorization; 
(3) the term ‘‘biomass’’ has the meaning given 
that term in section 932(a)(1) of the Energy Policy 
Act of 2005; 
(4) the term ‘‘Federal refinery authorization’’— 
(A) means any authorization required 
under Federal law, whether administered by a 
Federal or State administrative agency or offi-
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cial, with respect to siting, construction, expan-
sion, or operation of a refinery; and 
(B) includes any permits, licenses, special 
use authorizations, certifications, opinions, or 
other approvals required under Federal law 
with respect to siting, construction, expansion, 
or operation of a refinery; 
(5) the term ‘‘refinery’’ means— 
(A) a facility designed and operated to re-
ceive, load, unload, store, transport, process, 
and refine crude oil by any chemical or physical 
process, including distillation, fluid catalytic 
cracking, hydrocracking, coking, alkylation, 
etherification, polymerization, catalytic reform-
ing, isomerization, hydrotreating, blending, and 
any combination thereof, in order to produce 
gasoline or distillate; 
(B) a facility designed and operated to re-
ceive, load, unload, store, transport, process, 
and refine coal by any chemical or physical 
process, including liquefaction, in order to 
produce gasoline or diesel as its primary out-
put; or 
(C) a facility designed and operated to re-
ceive, load, unload, store, transport, process (in-
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cluding biochemical, photochemical, and bio-
technology processes), and refine biomass in 
order to produce biofuel; and 
(6) the term ‘‘State’’ means a State, the Dis-
trict of Columbia, the Commonwealth of Puerto 
Rico, and any other territory or possession of the 
United States. 
SEC. 303. STATE ASSISTANCE. 
(a) STATE ASSISTANCE.—At the request of a gov-
ernor of a State, the Administrator is authorized to pro-
vide financial assistance to that State to facilitate the hir-
ing of additional personnel to assist the State with exper-
tise in fields relevant to consideration of Federal refinery 
authorizations. 
(b) OTHER ASSISTANCE.—At the request of a gov-
ernor of a State, a Federal agency responsible for a Fed-
eral refinery authorization shall provide technical, legal, 
or other nonfinancial assistance to that State to facilitate 
its consideration of Federal refinery authorizations. 
SEC. 304. REFINERY PROCESS COORDINATION AND PROCE-
DURES. 
(a) APPOINTMENT OF FEDERAL COORDINATOR.— 
(1) IN GENERAL.—The President shall appoint 
a Federal coordinator to perform the responsibilities 
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assigned to the Federal coordinator under this sub-
title. 
(2) OTHER
AGENCIES.—Each Federal and 
State agency or official required to provide a Fed-
eral refinery authorization shall cooperate with the 
Federal coordinator. 
(b) FEDERAL REFINERY AUTHORIZATIONS.— 
(1) MEETING PARTICIPANTS.—Not later than 
30 days after receiving a notification from an appli-
cant that the applicant is seeking a Federal refinery 
authorization pursuant to Federal law, the Federal 
coordinator appointed under subsection (a) shall 
convene a meeting of representatives from all Fed-
eral and State agencies responsible for a Federal re-
finery authorization with respect to the refinery. The 
governor of a State shall identify each agency of 
that State that is responsible for a Federal refinery 
authorization with respect to that refinery. 
(2) MEMORANDUM OF AGREEMENT.—(A) Not 
later than 90 days after receipt of a notification de-
scribed in paragraph (1), the Federal coordinator 
and the other participants at a meeting convened 
under paragraph (1) shall establish a memorandum 
of agreement setting forth the most expeditious co-
ordinated schedule possible for completion of all 
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Federal refinery authorizations with respect to the 
refinery, consistent with the full substantive and 
procedural review required by Federal law. If a Fed-
eral or State agency responsible for a Federal refin-
ery authorization with respect to the refinery is not 
represented at such meeting, the Federal coordinator 
shall ensure that the schedule accommodates those 
Federal refinery authorizations, consistent with Fed-
eral law. In the event of conflict among Federal re-
finery authorization scheduling requirements, the re-
quirements of the Environmental Protection Agency 
shall be given priority. 
(B) Not later than 15 days after completing the 
memorandum of agreement, the Federal coordinator 
shall publish the memorandum of agreement in the 
Federal Register. 
(C) The Federal coordinator shall ensure that 
all parties to the memorandum of agreement are 
working in good faith to carry out the memorandum 
of agreement, and shall facilitate the maintenance of 
the schedule established therein. 
(c) CONSOLIDATED RECORD.—The Federal coordi-
nator shall, with the cooperation of Federal and State ad-
ministrative agencies and officials, maintain a complete 
consolidated record of all decisions made or actions taken 
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by the Federal coordinator or by a Federal administrative 
agency or officer (or State administrative agency or officer 
acting under delegated Federal authority) with respect to 
any Federal refinery authorization. Such record shall be 
the record for judicial review under subsection (d) of deci-
sions made or actions taken by Federal and State adminis-
trative agencies and officials, except that, if the Court de-
termines that the record does not contain sufficient infor-
mation, the Court may remand the proceeding to the Fed-
eral coordinator for further development of the consoli-
dated record. 
(d) REMEDIES.— 
(1) IN GENERAL.—The United States District 
Court for the district in which the proposed refinery 
is located shall have exclusive jurisdiction over any 
civil action for the review of the failure of an agency 
or official to act on a Federal refinery authorization 
in accordance with the schedule established pursuant 
to the memorandum of agreement. 
(2) STANDING.—If an applicant or a party to 
a memorandum of agreement alleges that a failure 
to act described in paragraph (1) has occurred and 
that such failure to act would jeopardize timely com-
pletion of the entire schedule as established in the 
memorandum of agreement, such applicant or other 
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(42 U.S.C. 4332(2)(C)) is deemed to satisfy the re-
quirements under the National Environmental Policy 
Act of 1969 that apply with respect to prelease ac-
tivities, including actions authorized to be taken by 
the Secretary to develop and promulgate the regula-
tions for the establishment of a leasing program au-
thorized by this subtitle before the conduct of the 
first lease sale. 
(3) COMPLIANCE WITH NEPA FOR OTHER AC-
TIONS.—Before conducting the first lease sale under 
this subtitle, the Secretary shall prepare an environ-
mental impact statement under the National Envi-
ronmental Policy Act of 1969 with respect to the ac-
tions authorized by this subtitle that are not re-
ferred to in paragraph (2). Notwithstanding any 
other law, the Secretary is not required to identify 
nonleasing alternative courses of action or to analyze 
the environmental effects of such courses of action. 
The Secretary shall only identify a preferred action 
for such leasing and a single leasing alternative, and 
analyze the environmental effects and potential miti-
gation measures for those two alternatives. The 
identification of the preferred action and related 
analysis for the first lease sale under this subtitle 
shall be completed within 18 months after the date 
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