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nation of the holder’s status as a director at
the same price as the individual acquired
such shares of stock.
‘‘(3) DISTRIBUTIONS.—A distribution (not in
part or full payment in exchange for stock) made by
the corporation with respect to qualifying director
shares shall be includible as ordinary income of the
holder and deductible to the corporation as an expense
in computing taxable income under section 1363(b) in
the year such distribution is received.’’.
(b) CONFORMING AMENDMENT.—Section 1366(a) is
amended by adding at the end the following new paragraph:
‘‘(3) ALLOCATION WITH RESPECT TO QUALIFYING
DIRECTOR SHARES.—The holders of qualifying direc-
tor shares (as defined in section 1361(f)) shall not,
with respect to such shares of stock, be allocated any
of the items described in paragraph (1).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
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PART V—QUALIFIED SUBCHAPTER S
SUBSIDIARIES
SEC. 592. RELIEF FROM INADVERTENTLY INVALID QUALI-
FIED SUBCHAPTER S SUBSIDIARY ELECTIONS
AND TERMINATIONS.
(a) IN GENERAL.—Section 1362(f) (relating to inad-
vertent invalid elections or terminations) is amended—
(1) 
by 
inserting 
‘‘or 
under 
section
1361(b)(3)(B)(ii)’’ after ‘‘subsection (a)’’in paragraph
(1),
(2) 
by 
inserting 
‘‘or 
under 
section
1361(b)(3)(C)’’ after ‘‘subsection (d)’’ in paragraph
(1)(B),
(3) by inserting ‘‘or a qualified subchapter S
subsidiary, as the case may be’’ after ‘‘small business
corporation’’ in paragraph (3)(A),
(4) by inserting ‘‘or a qualified subchapter S
subsidiary, as the case may be’’ after ‘‘S corporation’’
in paragraph (4), and
(5) by inserting ‘‘or a qualified subchapter S
subsidiary, as the case may be’’ after ‘‘S corporation’’
in the matter following paragraph (4).
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
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SEC. 593. INFORMATION RETURNS FOR QUALIFIED SUB-
CHAPTER S SUBSIDIARIES.
(a) IN GENERAL.—Section 1361(b)(3)(A) (relating to
treatment of certain wholly owned subsidiaries) is amended
by inserting ‘‘and in the case of information returns re-
quired under part III of subchapter A of chapter 61’’ after
‘‘Secretary’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
PART VI—ADDITIONAL PROVISIONS
SEC. 594. ELIMINATION OF ALL EARNINGS AND PROFITS AT-
TRIBUTABLE TO PRE-1983 YEARS.
(a) IN GENERAL.—Subsection (a) of section 1311 of
the Small Business Job Protection Act of 1996 is amended
to read as follows:
‘‘(a) IN GENERAL.—If a corporation was an electing
small business corporation under subchapter S of chapter
1 of the Internal Revenue Code of 1986 for any taxable year
beginning before January 1, 1983, the amount of such cor-
poration’s accumulated earnings and profits (as of the be-
ginning of the first taxable year beginning after December
31, 2003) shall be reduced by an amount equal to the por-
tion (if any) of such accumulated earnings and profits
which were accumulated in any taxable year beginning be-
fore January 1, 1983, for which such corporation was an
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electing small business corporation under such subchapter
S.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
TITLE VI—BLUE RIBBON COM-
MISSION 
ON 
COMPREHEN-
SIVE TAX REFORM
SEC. 601. SHORT TITLE.
This Act may be cited as the ‘‘Fundamental Tax Re-
form Commission Act of 2003’’.
SEC. 602. ESTABLISHMENT OF COMMISSION.
(a) ESTABLISHMENT.—There is established the ‘‘Blue
Ribbon Commission on Comprehensive Tax Reform’’ (in
this Act referred to as the ‘‘Commission’’).
(b) MEMBERSHIP.—
(1) COMPOSITION.—The Commission shall be
composed of 12 members of whom—
(A) 1 shall be the Chairman of the Board
of Governors of the Federal Reserve System;
(B) 2 shall be appointed by the majority
leader of the Senate;
(C) 2 shall be appointed by the minority
leader of the Senate;
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(D) 2 shall be appointed by the Speaker of
the House of Representatives;
(E) 2 shall be appointed by the minority
leader of the House of Representatives; and
(F) 3 shall be appointed by the President,
of which no more than 2 shall be of the same
party as the President.
(2) FEDERAL EMPLOYEES.—The members of the
Commission may be employees or former employees of
the Federal Government.
(3) DATE.—The appointments of the members of
the Commission shall be made not later than July 30,
2003.
(c) PERIOD OF APPOINTMENT; VACANCIES.—Members
shall be appointed for the life of the Commission. Any va-
cancy in the Commission shall not affect its powers, but
shall be filled in the same manner as the original appoint-
ment.
(d) INITIAL MEETING.—Not later than 30 days after
the date on which all members of the Commission have been
appointed, the Commission shall hold its first meeting.
(e) MEETINGS.—The Commission shall meet at the call
of the Chairman.