sentence of section 1367(a)(2) applies, paragraph (1) 
shall not apply to the extent of the excess (if any) 
of— 
‘‘(A) the shareholder’s pro rata share of such 
contribution, over 
‘‘(B) the shareholder’s pro rata share of the 
adjusted basis of such property.’’. 
(c) AMENDMENT RELATED TO SECTION 1215 OF THE 
ACT.—Subclause (I) of section 170(e)(7)(D)(i) is amended 
by striking ‘‘related’’ and inserting ‘‘substantial and re-
lated’’. 
(d) AMENDMENTS RELATED TO SECTION 1218 OF THE 
ACT.— 
(1) Section 2055 is amended by striking sub-
section (g) and by redesignating subsection (h) as sub-
section (g). 
(2) Subsection (e) of section 2522 is amended— 
(A) by striking paragraphs (2) and (4), 
(B) by redesignating paragraph (3) as 
paragraph (2), and 
(C) by adding at the end of paragraph (2), 
as so redesignated, the following new subpara-
graph: 
‘‘(C) INITIAL FRACTIONAL CONTRIBUTION.— 
For purposes of this paragraph, the term ‘initial
fractional contribution’ means, with respect to 
any donor, the first gift of an undivided portion 
of the donor’s entire interest in any tangible per-
sonal property for which a deduction is allowed 
under subsection (a) or (b).’’. 
(e) AMENDMENTS RELATED TO SECTION 1219 OF THE 
ACT.— 
(1) Paragraph (2) of section 6695A(a) is amend-
ed by inserting ‘‘a substantial estate or gift tax valu-
ation understatement (within the meaning of section 
6662(g)),’’ before ‘‘or a gross valuation misstatement’’. 
(2) Paragraph (1) of section 6696(d) is amended 
by striking ‘‘or under section 6695’’ and inserting ‘‘, 
section 6695, or 6695A’’. 
(f) AMENDMENT RELATED TO SECTION 1221 OF THE 
ACT.—Subparagraph (A) of section 4940(c)(4) is amended 
to read as follows: 
‘‘(A) There shall not be taken into account 
any gain or loss from the sale or other disposi-
tion of property to the extent that such gain or 
loss is taken into account for purposes of com-
puting the tax imposed by section 511.’’. 
(g) AMENDMENT RELATED TO SECTION 1225 OF THE 
ACT.— 
(1) Subsection (b) of section 6104 is amended—
(A) by striking ‘‘INFORMATION’’ in the 
heading, and 
(B) by adding at the end the following: 
‘‘Any annual return which is filed under section 
6011 by an organization described in section 
501(c)(3) and which relates to any tax imposed 
by section 511 (relating to imposition of tax on 
unrelated business income of charitable, etc., or-
ganizations) shall be treated for purposes of this 
subsection in the same manner as if furnished 
under section 6033.’’. 
(2) Clause (ii) of section 6104(d)(1)(A) is 
amended to read as follows: 
‘‘(ii) any annual return which is filed 
under section 6011 by an organization de-
scribed in section 501(c)(3) and which re-
lates to any tax imposed by section 511 (re-
lating to imposition of tax on unrelated 
business income of charitable, etc., organiza-
tions),’’. 
(3) Paragraph (2) of section 6104(d) is amended 
by striking ‘‘section 6033’’ and inserting ‘‘section 
6011 or 6033’’.
(h) AMENDMENT RELATED TO SECTION 1231 OF THE 
ACT.—Subsection (b) of section 4962 is amended by strik-
ing ‘‘or D’’ and inserting ‘‘D, or G’’. 
(i) AMENDMENT RELATED TO SECTION 1242 OF THE 
ACT.— 
(1) Subclause (II) of section 4958(c)(3)(A)(i) is 
amended by striking ‘‘paragraph (1), (2), or (4) of 
section 
509(a)’’ 
and 
inserting 
‘‘subparagraph 
(C)(ii)’’. 
(2) Clause (ii) of section 4958(c)(3)(C) is amend-
ed to read as follows: 
‘‘(ii) EXCEPTION.—Such term shall not 
include— 
‘‘(I) any organization described in 
paragraph (1), (2), or (4) of section 
509(a), and 
‘‘(II) any organization which is 
treated as described in such paragraph 
(2) by reason of the last sentence of sec-
tion 509(a) and which is a supported 
organization (as defined in section 
509(f)(3)) of the organization to which 
subparagraph (A) applies.’’.
(j) EFFECTIVE DATE.—The amendments made by this 
section shall take effect as if included in the provisions of 
the Pension Protection Act of 2006 to which they relate. 
SEC. 404. AMENDMENTS RELATED TO THE TAX INCREASE 
PREVENTION AND RECONCILIATION ACT OF 
2005. 
(a) AMENDMENTS RELATED TO SECTION 103 OF THE 
ACT.—Paragraph (6) of section 954(c) is amended by redes-
ignating subparagraph (B) as subparagraph (C) and in-
serting after subparagraph (A) the following new subpara-
graph: 
‘‘(B) EXCEPTION.—Subparagraph (A) shall 
not apply in the case of any interest, rent, or 
royalty to the extent such interest, rent, or roy-
alty creates (or increases) a deficit which under 
section 952(c) may reduce the subpart F income 
of the payor or another controlled foreign cor-
poration.’’. 
(b) AMENDMENTS RELATED TO SECTION 202 OF THE 
ACT.— 
(1) Subparagraph (A) of section 355(b)(2) is 
amended to read as follows: 
‘‘(A) it is engaged in the active conduct of 
a trade or business,’’.
(2) Paragraph (3) of section 355(b) is amended 
to read as follows: 
‘‘(3) SPECIAL RULES FOR DETERMINING ACTIVE 
CONDUCT IN THE CASE OF AFFILIATED GROUPS.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining whether a corporation meets the require-
ments of paragraph (2)(A), all members of such 
corporation’s separate affiliated group shall be 
treated as one corporation. 
‘‘(B) SEPARATE AFFILIATED GROUP.—For 
purposes of this paragraph, the term ‘separate 
affiliated group’ means, with respect to any cor-
poration, the affiliated group which would be de-
termined under section 1504(a) if such corpora-
tion were the common parent and section 
1504(b) did not apply. 
‘‘(C) TREATMENT OF TRADE OR BUSINESS 
CONDUCTED BY ACQUIRED MEMBER.—If a cor-
poration became a member of a separate affili-
ated group as a result of one or more trans-
actions in which gain or loss was recognized in 
whole or in part, any trade or business con-
ducted by such corporation (at the time that 
such corporation became such a member) shall be 
treated for purposes of paragraph (2) as ac-
quired in a transaction in which gain or loss 
was recognized in whole or in part. 
‘‘(D) REGULATIONS.—The Secretary shall 
prescribe such regulations as are necessary or 
appropriate to carry out the purposes of this 
paragraph, including regulations which provide 
for the proper application of subparagraphs (B), 
(C), and (D) of paragraph (2), and modify the 
application of subsection (a)(3)(B), in connec-
tion with the application of this paragraph.’’. 
(3) The Internal Revenue Code of 1986 shall be 
applied and administered as if the amendments made 
by section 202 of the Tax Increase Prevention and 
Reconciliation Act of 2005 and by section 410 of divi-
sion A of the Tax Relief and Health Care Act of 2006 
had never been enacted. 
(c) AMENDMENT RELATED TO SECTION 515 OF THE 
ACT.—Subsection (f) of section 911 is amended to read as 
follows: 
‘‘(f) DETERMINATION OF TAX LIABILITY.— 
‘‘(1) IN GENERAL.—If, for any taxable year, any 
amount is excluded from gross income of a taxpayer 
under subsection (a), then, notwithstanding sections 1 
and 55—
‘‘(A) if such taxpayer has taxable income 
for such taxable year, the tax imposed by section 
1 for such taxable year shall be equal to the ex-
cess (if any) of— 
‘‘(i) the tax which would be imposed by 
section 1 for such taxable year if the tax-
payer’s taxable income were increased by 
the amount excluded under subsection (a) 
for such taxable year, over 
‘‘(ii) the tax which would be imposed 
by section 1 for such taxable year if the tax-
payer’s taxable income were equal to the 
amount excluded under subsection (a) for 
such taxable year, and 
‘‘(B) if such taxpayer has a taxable excess 
(as defined in section 55(b)(1)(A)(ii)) for such 
taxable year, the amount determined under the 
first sentence of section 55(b)(1)(A)(i) for such 
taxable year shall be equal to the excess (if any) 
of— 
‘‘(i) the amount which would be deter-
mined under such sentence for such taxable 
year (subject to the limitation of section 
55(b)(3)) if the taxpayer’s taxable excess (as 
so defined) were increased by the amount
excluded under subsection (a) for such tax-
able year, over 
‘‘(ii) the amount which would be deter-
mined under such sentence for such taxable 
year if the taxpayer’s taxable excess (as so 
defined) were equal to the amount excluded 
under subsection (a) for such taxable year. 
‘‘(2) SPECIAL RULES.— 
‘‘(A) REGULAR TAX.—In applying section 
1(h) for purposes of determining the tax under 
paragraph (1)(A)(i) for any taxable year in 
which, without regard to this subsection, the tax-
payer’s net capital gain exceeds taxable income 
(hereafter in this subparagraph referred to as the 
capital gain excess)— 
‘‘(i) the taxpayer’s net capital gain 
(determined without regard to section 
1(h)(11)) shall be reduced (but not below 
zero) by such capital gain excess, 
‘‘(ii) the taxpayer’s qualified dividend 
income shall be reduced by so much of such 
capital gain excess as exceeds the taxpayer’s 
net capital gain (determined without regard 
to section 1(h)(11) and the reduction under 
clause (i)), and
‘‘(iii) 
adjusted 
net 
capital 
gain, 
unrecaptured section 1250 gain, and 28- 
percent rate gain shall each be determined 
after increasing the amount described in 
section 1(h)(4)(B) by such capital gain ex-
cess. 
‘‘(B) ALTERNATIVE MINIMUM TAX.—In ap-
plying section 55(b)(3) for purposes of deter-
mining the tax under paragraph (1)(B)(i) for 
any taxable year in which, without regard to 
this subsection, the taxpayer’s net capital gain 
exceeds the taxable excess (as defined in section 
55(b)(1)(A)(ii))— 
‘‘(i) the rules of subparagraph (A) 
shall apply, except that such subparagraph 
shall be applied by substituting ‘the taxable 
excess 
(as 
defined 
in 
section 
55(b)(1)(A)(ii))’ for ‘taxable income’, and 
‘‘(ii) 
the 
reference 
in 
section 
55(b)(3)(B) to the excess described in section 
1(h)(1)(B) shall be treated as a reference to 
such excess as determined under the rules of 
subparagraph (A) for purposes of deter-
mining the tax under paragraph (1)(A)(i).
(ii) described in a ruling request sub-
mitted to the Internal Revenue Service on 
or before such date, or 
(iii) described on or before such date in 
a public announcement or in a filing with 
the Securities and Exchange Commission. 
(C) ELECTION OUT OF TRANSITION RULE.— 
Subparagraph (B) shall not apply if the distrib-
uting corporation elects not to have such sub-
paragraph apply to distributions of such cor-
poration. Any such election, once made, shall be 
irrevocable. 
(D) SPECIAL RULE FOR CERTAIN PRE-EN-
ACTMENT DISTRIBUTIONS.—For purposes of de-
termining the continued qualification under sec-
tion 355(b)(2)(A) of the Internal Revenue Code 
of 1986 of distributions made on or before May 
17, 2006, as a result of an acquisition, disposi-
tion, or other restructuring after such date, such 
distribution shall be treated as made on the date 
of such acquisition, disposition, or restructuring 
for purposes of applying subparagraphs (A) 
through (C) of this paragraph. The preceding 
sentence shall only apply with respect to the cor-
poration that undertakes such acquisition, dis-
position, or other restructuring, and only if such 
application results in continued qualification 
under section 355(b)(2)(A) of such Code. 
(3) AMENDMENT RELATED TO SECTION 515 OF 
THE ACT.—The amendment made by subsection (c) 
shall apply to taxable years beginning after December 
31, 2006. 
SEC. 405. AMENDMENTS RELATED TO THE SAFE, ACCOUNT-
ABLE, 
FLEXIBLE, 
EFFICIENT 
TRANSPOR-
TATION EQUITY ACT: A LEGACY FOR USERS. 
(a) AMENDMENTS RELATED TO SECTION 11113 OF 
THE ACT.— 
(1) Paragraph (3) of section 6427(i) is amend-
ed— 
(A) by inserting ‘‘or under subsection (e)(2) 
by any person with respect to an alternative fuel 
(as defined in section 6426(d)(2))’’ after ‘‘section 
6426’’ in subparagraph (A), 
(B) by inserting ‘‘or (e)(2)’’ after ‘‘sub-
section (e)(1)’’ in subparagraphs (A)(i) and (B), 
and 
(C) by striking ‘‘ALCOHOL FUEL AND BIO-
DIESEL MIXTURE CREDIT’’ and inserting ‘‘MIX-
TURE
CREDITS
AND
THE
ALTERNATIVE
FUEL 
CREDIT’’ in the heading thereof.
(2) Subparagraph (F) of section 6426(d)(2) is 
amended by striking ‘‘hydrocarbons’’ and inserting 
‘‘fuel’’. 
(3) Section 6426 is amended by adding at the 
end the following new subsection: 
‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit shall 
be determined under subsection (d) or (e) with respect to 
any fuel with respect to which credit may be determined 
under subsection (b) or (c) or under section 40 or 40A.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect as if included in the provisions of 
the SAFETEA–LU to which they relate. 
SEC. 406. AMENDMENTS RELATED TO THE ENERGY POLICY 
ACT OF 2005. 
(a) AMENDMENT RELATED TO SECTION 1306 OF THE 
ACT.—Paragraph (2) of section 45J(b) is amended to read 
as follows: 
‘‘(2) AMOUNT
OF
NATIONAL
LIMITATION.—The 
aggregate amount of national megawatt capacity lim-
itation allocated by the Secretary under paragraph 
(3) shall not exceed 6,000 megawatts.’’. 
(b) AMENDMENTS RELATED TO SECTION 1342 OF THE 
ACT.—
(1) So much of subsection (b) of section 30C as 
precedes paragraph (1) thereof is amended to read as 
follows: 
‘‘(b) LIMITATION.—The credit allowed under sub-
section (a) with respect to all qualified alternative fuel vehi-
cle refueling property placed in service by the taxpayer dur-
ing 
the 
taxable 
year 
at 
a 
location 
shall 
not 
exceed—’’. 
(2) Subsection (c) of section 30C is amended to 
read as follows: 
‘‘(c) QUALIFIED ALTERNATIVE FUEL VEHICLE RE-
FUELING PROPERTY.—For purposes of this section, the term 
‘qualified alternative fuel vehicle refueling property’ has the 
same meaning as the term ‘qualified clean-fuel vehicle re-
fueling property’ would have under section 179A if— 
‘‘(1) paragraph (1) of section 179A(d) did not 
apply to property installed on property which is used 
as the principal residence (within the meaning of sec-
tion 121) of the taxpayer, and 
‘‘(2) only the following were treated as clean- 
burning fuels for purposes of section 179A(d): 
‘‘(A) Any fuel at least 85 percent of the vol-
ume of which consists of one or more of the fol-
lowing: ethanol, natural gas, compressed natural
gas, liquified natural gas, liquefied petroleum 
gas, or hydrogen. 
‘‘(B) Any mixture— 
‘‘(i) which consists of two or more of 
the following: biodiesel (as defined in section 
40A(d)(1)), diesel fuel (as defined in section 
4083(a)(3)), or kerosene, and 
‘‘(ii) at least 20 percent of the volume 
of which consists of biodiesel (as so defined) 
determined without regard to any kerosene 
in such mixture.’’. 
(c) AMENDMENTS RELATED TO SECTION 1351 OF THE 
ACT.— 
(1) Paragraph (3) of section 41(a) is amended 
by inserting ‘‘for energy research’’ before the period at 
the end. 
(2) Paragraph (6) of section 41(f) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) ENERGY
RESEARCH.—The term ‘en-
ergy research’ does not include any research 
which is not qualified research.’’. 
(d) AMENDMENTS RELATED TO SECTION 1362 OF THE 
ACT.— 
(1)(A) Paragraph (1) of section 4041(d) is 
amended by adding at the end the following new sen-
tence: ‘‘No tax shall be imposed under the preceding 
sentence on the sale or use of any liquid if tax was 
imposed with respect to such liquid under section 
4081 at the Leaking Underground Storage Tank 
Trust Fund financing rate.’’. 
(B) Paragraph (3) of section 4042(b) is amended 
to read as follows: 
‘‘(3) EXCEPTION FOR FUEL ON WHICH LEAKING 
UNDERGROUND STORAGE TANK TRUST FUND FINANC-
ING RATE SEPARATELY IMPOSED.—The Leaking Un-
derground Storage Tank Trust Fund financing rate 
under paragraph (2)(B) shall not apply to the use of 
any fuel if tax was imposed with respect to such fuel 
under section 4041(d) or 4081 at the Leaking Under-
ground Storage Tank Trust Fund financing rate.’’. 
(C) Notwithstanding section 6430 of the Internal 
Revenue Code of 1986, a refund, credit, or payment 
may be made under subchapter B of chapter 65 of 
such Code for taxes imposed with respect to any liq-
uid after September 30, 2005, and before the date of 
the enactment of this Act under section 4041(d)(1) or 
4042 of such Code at the Leaking Underground Stor-
age Tank Trust Fund financing rate to the extent 
that tax was imposed with respect to such liquid
under section 4081 at the Leaking Underground Stor-
age Tank Trust Fund financing rate. 
(2)(A) Paragraph (5) of section 4041(d) is 
amended— 
(i) by striking ‘‘(other than with respect to 
any sale for export under paragraph (3) there-
of)’’, and 
(ii) by adding at the end the following new 
sentence: ‘‘The preceding sentence shall not apply 
with respect to subsection (g)(3) and so much of 
subsection (g)(1) as relates to vessels (within the 
meaning of section 4221(d)(3)) employed in for-
eign trade or trade between the United States 
and any of its possessions.’’. 
(B) Section 4082 is amended— 
(i) by striking ‘‘(other than such tax at the 
Leaking Underground Storage Tank Trust Fund 
financing rate imposed in all cases other than 
for export)’’ in subsection (a), and 
(ii) by redesignating subsections (f) and (g) 
as subsections (g) and (h), respectively, and by 
inserting after subsection (e) the following new 
subsection: 
‘‘(f) EXCEPTION FOR LEAKING UNDERGROUND STOR-
AGE TANK TRUST FUND FINANCING RATE.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to the tax imposed under section 4081 at the 
Leaking Underground Storage Tank Trust Fund fi-
nancing rate. 
‘‘(2) EXCEPTION FOR EXPORT, ETC.—Paragraph 
(1) shall not apply with respect to any fuel if the Sec-
retary determines that such fuel is destined for export 
or for use by the purchaser as supplies for vessels 
(within the meaning of section 4221(d)(3)) employed 
in foreign trade or trade between the United States 
and any of its possessions.’’. 
(C) Subsection (e) of section 4082 is amended— 
(i) by striking ‘‘an aircraft, the rate of tax 
under section 4081(a)(2)(A)(iii) shall be zero.’’ 
and inserting ‘‘an aircraft— 
‘‘(1) 
the 
rate 
of 
tax 
under 
section 
4081(a)(2)(A)(iii) shall be zero, and 
‘‘(2) if such aircraft is employed in foreign trade 
or trade between the United States and any of its pos-
sessions, the increase in such rate under section 
4081(a)(2)(B) shall be zero.’’; and 
(ii) by moving the last sentence flush with 
the margin of such subsection (following the 
paragraph (2) added by clause (i)). 
(D) Section 6430 is amended to read as follows:
‘‘SEC. 6430. TREATMENT OF TAX IMPOSED AT LEAKING UN-
DERGROUND STORAGE TANK TRUST FUND FI-
NANCING RATE. 
‘‘No refunds, credits, or payments shall be made under 
this subchapter for any tax imposed at the Leaking Under-
ground Storage Tank Trust Fund financing rate, except in 
the case of fuels— 
‘‘(1) which are exempt from tax under section 
4081(a) by reason of section 4082(f)(2), 
‘‘(2) which are exempt from tax under section 
4041(d) by reason of the last sentence of paragraph 
(5) thereof, or 
‘‘(3) with respect to which the rate increase 
under section 4081(a)(2)(B) is zero by reason of sec-
tion 4082(e)(2).’’. 
(3) Paragraph (5) of section 4041(d) is amended 
by inserting ‘‘(b)(1)(A),’’ after ‘‘subsections’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall take effect as if included in the provisions 
of the Energy Policy Act of 2005 to which they relate. 
(2) NONAPPLICATION OF EXEMPTION FOR OFF- 
HIGHWAY BUSINESS USE.—The amendment made by 
subsection (d)(3) shall apply to fuel sold for use or 
used after the date of the enactment of this Act.
(3) AMENDMENT MADE BY THE SAFETEA–LU.— 
The amendment made by subsection (d)(2)(C)(ii) 
shall take effect as if included in section 11161 of the 
SAFETEA–LU. 
SEC. 407. AMENDMENTS RELATED TO THE AMERICAN JOBS 
CREATION ACT OF 2004. 
(a) AMENDMENTS RELATED TO SECTION 339 OF THE 
ACT.— 
(1)(A) Section 45H is amended by striking sub-
section (d) and by redesignating subsections (e), (f), 
and (g) as subsections (d), (e), and (f), respectively. 
(B) Subsection (d) of section 280C is amended to 
read as follows: 
‘‘(d) CREDIT FOR LOW SULFUR DIESEL FUEL PRO-
DUCTION.—The deductions otherwise allowed under this 
chapter for the taxable year shall be reduced by the amount 
of the credit determined for the taxable year under section 
45H(a).’’. 
(C) Subsection (a) of section 1016 is amended by 
striking paragraph (31) and by redesignating para-
graphs (32) through (37) as paragraphs (31) through 
(36), respectively. 
(2)(A) Section 45H, as amended by paragraph 
(1), is amended by adding at the end the following 
new subsection:
‘‘(g) ELECTION TO NOT TAKE CREDIT.—No credit 
shall be determined under subsection (a) for the taxable year 
if the taxpayer elects not to have subsection (a) apply to 
such taxable year.’’. 
(B) Subsection (m) of section 6501 is amended 
by inserting ‘‘45H(g),’’ after ‘‘45C(d)(4),’’. 
(3)(A) Subsections (b)(1)(A), (c)(2), (e)(1), and 
(e)(2) of section 45H (as amended by paragraph (1)) 
and section 179B(a) are each amended by striking 
‘‘qualified capital costs’’ and inserting ‘‘qualified 
costs’’. 
(B) The heading of paragraph (2) of section 
45H(c) is amended by striking ‘‘CAPITAL’’. 
(C) Subsection (a) of section 179B is amended 
by inserting ‘‘and which are properly chargeable to 
capital account’’ before the period at the end. 
(b) AMENDMENTS RELATED TO SECTION 710 OF THE 
ACT.— 
(1) Clause (ii) of section 45(c)(3)(A) is amended 
by striking ‘‘which is segregated from other waste ma-
terials and’’. 
(2) Subparagraph (B) of section 45(d)(2) is 
amended by inserting ‘‘and’’ at the end of clause (i), 
by striking clause (ii), and by redesignating clause 
(iii) as clause (ii).