‘‘(C) QUALIFIED
OFFICIAL
EXTENDED 
DUTY.—For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied official extended duty’ means any ex-
tended duty while serving at a duty station 
which is at least 150 miles from such prop-
erty or while residing under Government 
orders in Government quarters. 
‘‘(ii) 
UNIFORMED
SERVICES.—The 
term ‘uniformed services’ has the meaning 
given such term by section 101(a)(5) of 
title 10, United States Code, as in effect 
on the date of the enactment of this para-
graph. 
‘‘(iii) FOREIGN
SERVICE.—The term 
‘member of the Foreign Service’ has the 
meaning given the term ‘member of the 
Service’ by paragraph (1), (2), (3), (4), or 
(5) of section 103 of the Foreign Service 
Act of 1980, as in effect on the date of the 
enactment of this paragraph. 
‘‘(iv) EXTENDED
DUTY.—The term 
‘extended duty’ means any period of active 
duty pursuant to a call or order to such
duty for a period in excess of 180 days or 
for an indefinite period. 
‘‘(D) SPECIAL RULES RELATING TO ELEC-
TION.—
‘‘(i) ELECTION LIMITED TO 1 PROP-
ERTY AT A TIME.—An election under sub-
paragraph (A) with respect to any property 
may not be made if such an election is in 
effect with respect to any other property. 
‘‘(ii) REVOCATION OF ELECTION.—An 
election under subparagraph (A) may be 
revoked at any time.’’. 
(b) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendment made 
by this section shall take effect as if included in the 
amendments made by section 312 of the Taxpayer 
Relief Act of 1997. 
(2) WAIVER
OF
LIMITATIONS.—If refund or 
credit of any overpayment of tax resulting from the 
amendment made by this section is prevented at any 
time before the close of the 1-year period beginning 
on the date of the enactment of this Act by the oper-
ation of any law or rule of law (including res judi-
cata), such refund or credit may nevertheless be
made or allowed if claim therefor is filed before the 
close of such period.
SEC. 3. RESTORATION OF FULL EXCLUSION FROM GROSS 
INCOME OF DEATH GRATUITY PAYMENT. 
(a) IN GENERAL.—Subsection (b)(3) of section 134 
of the Internal Revenue Code of 1986 (relating to certain 
military benefits) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) EXCEPTION
FOR
DEATH
GRATUITY 
ADJUSTMENTS MADE BY LAW.—Subparagraph 
(A) shall not apply to any adjustment to the 
amount of death gratuity payable under chapter 
75 of title 10, United States Code, which is 
pursuant to a provision of law enacted before 
December 31, 1991.’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 134(b)(3) of such Code is amended by striking 
‘‘subparagraph (B)’’ and inserting ‘‘subparagraphs (B) 
and (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to deaths occurring 
after September 10, 2001.
SEC. 4. EXCLUSION FOR AMOUNTS RECEIVED UNDER DE-
PARTMENT OF DEFENSE HOMEOWNERS AS-
SISTANCE PROGRAM. 
(a) IN GENERAL.—Section 132(a) of the Internal 
Revenue Code of 1986 (relating to the exclusion from 
gross income of certain fringe benefits) is amended by 
striking ‘‘or’’ at the end of paragraph (6), by striking the 
period at the end of paragraph (7) and inserting ‘‘, or’’ 
and by adding at the end the following new paragraph: 
‘‘(8) qualified military base realignment and 
closure fringe.’’. 
(b) QUALIFIED MILITARY BASE REALIGNMENT AND 
CLOSURE FRINGE.—Section 132 of such Code is amended 
by redesignating subsection (n) as subsection (o) and by 
inserting after subsection (m) the following new sub-
section: 
‘‘(n) QUALIFIED MILITARY BASE REALIGNMENT AND 
CLOSURE FRINGE.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified military base realignment 
and closure fringe’ means 1 or more payments under 
the authority of section 1013 of the Demonstration 
Cities and Metropolitan Development Act of 1966 
(42 U.S.C. 3374) (as in effect on the date of the en-
actment of this subsection).
‘‘(2) LIMITATION.—With respect to any prop-
erty, such term shall not include any payment re-
ferred to in paragraph (1) to the extent that the 
sum of all such payments related to such property 
exceeds the amount described in subsection (c)(1) of 
such section (as in effect on such date).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
SEC. 5. EXPANSION OF COMBAT ZONE FILING RULES TO 
CONTINGENCY OPERATIONS. 
(a) IN GENERAL.—Section 7508(a) of the Internal 
Revenue Code of 1986 (relating to time for performing 
certain acts postponed by reason of service in combat 
zone) is amended—
(1) by inserting ‘‘or when deployed outside the 
United States away from the individual’s permanent 
duty station while participating in an operation des-
ignated by the Secretary of Defense as a contin-
gency operation (as defined in section 101(a)(13) of 
title 10, United States Code) or which became such 
a contingency operation by operation of law’’ after 
‘‘section 112’’,
(2) by inserting in the first sentence ‘‘or at any 
time during the period of such contingency oper-
ation’’ after ‘‘for purposes of such section’’, 
(3) by inserting ‘‘or operation’’ after ‘‘such an 
area’’, and 
(4) by inserting ‘‘or operation’’ after ‘‘such 
area’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 7508(d) of such Code is amended 
by inserting ‘‘or contingency operation’’ after 
‘‘area’’. 
(2) The heading for section 7508 of such Code 
is amended by inserting ‘‘OR CONTINGENCY OP-
ERATION’’ after ‘‘COMBAT ZONE’’. 
(3) The item relating to section 7508 of such 
Code in the table of sections for chapter 77 is 
amended by inserting ‘‘or contingency operation’’ 
after ‘‘combat zone’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any period for performing an 
act which has not expired before the date of the enactment 
of this Act.
SEC. 6. MODIFICATION OF MEMBERSHIP REQUIREMENT 
FOR EXEMPTION FROM TAX FOR CERTAIN 
VETERANS’ ORGANIZATIONS. 
(a) IN GENERAL.—Subparagraph (B) of section 
501(c)(19) of the Internal Revenue Code of 1986 (relating 
to list of exempt organizations) is amended by striking ‘‘or 
widowers’’ and inserting ‘‘, widowers, ancestors, or lineal 
descendants’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 7. CLARIFICATION OF THE TREATMENT OF CERTAIN 
DEPENDENT CARE ASSISTANCE PROGRAMS. 
(a) IN GENERAL.—Section 134(b) of the Internal 
Revenue Code of 1986 (defining qualified military benefit) 
is amended by adding at the end the following new para-
graph: 
‘‘(4) CLARIFICATION OF CERTAIN BENEFITS.—
For purposes of paragraph (1), such term includes 
any dependent care assistance program (as in effect 
on the date of the enactment of this paragraph) for 
any individual described in paragraph (1)(A).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 134(b)(3)(A) of such Code (as 
amended by section 3) is further amended by insert-
ing ‘‘and paragraph (4)’’ after ‘‘subparagraphs (B) 
and (C)’’. 
(2) Section 3121(a)(18) of such Code is amend-
ed by striking ‘‘or 129’’ and inserting ‘‘, 129, or 
134(b)(4)’’. 
(3) Section 3306(b)(13) of such Code is amend-
ed by striking ‘‘or 129’’ and inserting ‘‘, 129, or 
134(b)(4)’’. 
(4) Section 3401(a)(18) of such Code is amend-
ed by striking ‘‘or 129’’ and inserting ‘‘, 129, or 
134(b)(4)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 8. CLARIFICATION RELATING TO EXCEPTION FROM 
ADDITIONAL TAX ON CERTAIN DISTRIBU-
TIONS 
FROM 
QUALIFIED 
TUITION 
PRO-
GRAMS, ETC., ON ACCOUNT OF ATTENDANCE 
AT MILITARY ACADEMY. 
(a) IN GENERAL.—Subparagraph (B) of section 
530(d)(4) of the Internal Revenue Code of 1986 (relating 
to exceptions from additional tax for distributions not 
used for educational purposes) is amended by striking 
‘‘or’’ at the end of clause (iii), by redesignating clause (iv)
as clause (v), and by inserting after clause (iii) the fol-
lowing new clause: 
‘‘(iv) made on account of the attend-
ance of the account holder at the United 
States Military Academy, the United 
States Naval Academy, the United States 
Air Force Academy, the United States 
Coast Guard Academy, or the United 
States Merchant Marine Academy, to the 
extent that the amount of the payment or 
distribution does not exceed the costs of 
advanced education (as defined by section 
2005(e)(3) of title 10, United States Code, 
as in effect on the date of the enactment 
of this section) attributable to such attend-
ance, or’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect for taxable years beginning 
after December 31, 2002. 
SEC. 9. SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS. 
(a) IN GENERAL.—Section 501 of the Internal Rev-
enue Code of 1986 (relating to exemption from tax on cor-
porations, certain trusts, etc.) is amended by redesig-
nating subsection (p) as subsection (q) and by inserting 
after subsection (o) the following new subsection: 
‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—The exemption from tax 
under subsection (a) with respect to any organiza-
tion described in paragraph (2), and the eligibility of 
any organization described in paragraph (2) to apply 
for recognition of exemption under subsection (a), 
shall be suspended during the period described in 
paragraph (3). 
‘‘(2) TERRORIST ORGANIZATIONS.—An organi-
zation is described in this paragraph if such organi-
zation is designated or otherwise individually identi-
fied— 
‘‘(A) under section 212(a)(3)(B)(vi)(II) or 
219 of the Immigration and Nationality Act as 
a terrorist organization or foreign terrorist or-
ganization, 
‘‘(B) in or pursuant to an Executive order 
which is related to terrorism and issued under 
the authority of the International Emergency 
Economic Powers Act or section 5 of the 
United Nations Participation Act of 1945 for
the purpose of imposing on such organization 
an economic or other sanction, or 
‘‘(C) in or pursuant to an Executive order 
issued under the authority of any Federal law 
if—
‘‘(i) the organization is designated or 
otherwise individually identified in or pur-
suant to such Executive order as sup-
porting or engaging in terrorist activity (as 
defined in section 212(a)(3)(B) of the Im-
migration and Nationality Act) or sup-
porting terrorism (as defined in section 
140(d)(2) of the Foreign Relations Author-
ization Act, Fiscal Years 1988 and 1989); 
and 
‘‘(ii) such Executive order refers to 
this subsection. 
‘‘(3) PERIOD OF SUSPENSION.—With respect to 
any organization described in paragraph (2), the pe-
riod of suspension—
‘‘(A) begins on the later of—
‘‘(i) the date of the first publication of 
a designation or identification described in 
paragraph (2) with respect to such organi-
zation, or
‘‘(ii) the date of the enactment of this 
subsection, and 
‘‘(B) ends on the first date that all des-
ignations and identifications described in para-
graph (2) with respect to such organization are 
rescinded pursuant to the law or Executive 
order under which such designation or identi-
fication was made. 
‘‘(4) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under section 170, 545(b)(2), 
556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for 
any contribution to an organization described in 
paragraph (2) during the period described in para-
graph (3). 
‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL 
CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC-
TION.—Notwithstanding section 7428 or any other 
provision of law, no organization or other person 
may challenge a suspension under paragraph (1), a 
designation or identification described in paragraph 
(2), the period of suspension described in paragraph 
(3), or a denial of a deduction under paragraph (4) 
in any administrative or judicial proceeding relating 
to the Federal tax liability of such organization or 
other person.
‘‘(6) ERRONEOUS DESIGNATION.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the tax exemption of any organi-
zation described in paragraph (2) is sus-
pended under paragraph (1), 
‘‘(ii) each designation and identifica-
tion described in paragraph (2) which has 
been made with respect to such organiza-
tion is determined to be erroneous pursu-
ant to the law or Executive order under 
which such designation or identification 
was made, and 
‘‘(iii) the erroneous designations and 
identifications result in an overpayment of 
income tax for any taxable year by such 
organization, 
credit or refund (with interest) with respect to 
such overpayment shall be made. 
‘‘(B) WAIVER
OF
LIMITATIONS.—If the 
credit or refund of any overpayment of tax de-
scribed in subparagraph (A)(iii) is prevented at 
any time by the operation of any law or rule of 
law (including res judicata), such credit or re-
fund may nevertheless be allowed or made if the 
claim therefor is filed before the close of the 1-
year period beginning on the date of the last 
determination 
described 
in 
subparagraph 
(A)(ii). 
‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex-
emption of any organization is suspended under this 
subsection, the Internal Revenue Service shall up-
date the listings of tax-exempt organizations and 
shall publish appropriate notice to taxpayers of such 
suspension and of the fact that contributions to such 
organization are not deductible during the period of 
such suspension.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to designations made before, on, 
or after the date of the enactment of this Act. 
SEC. 10. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT 
TRAVEL EXPENSES OF NATIONAL GUARD 
AND RESERVE MEMBERS. 
(a) DEDUCTION ALLOWED.—Section 162 of the In-
ternal Revenue Code of 1986 (relating to certain trade or 
business expenses) is amended by redesignating subsection 
(p) as subsection (q) and inserting after subsection (o) the 
following new subsection: 
‘‘(p) TREATMENT OF EXPENSES OF MEMBERS OF 
RESERVE COMPONENT
OF ARMED FORCES
OF
THE 
UNITED STATES.—For purposes of subsection (a)(2), in
the case of an individual who performs services as a mem-
ber of a reserve component of the Armed Forces of the 
United States at any time during the taxable year, such 
individual shall be deemed to be away from home in the 
pursuit of a trade or business for any period during which 
such individual is away from home in connection with such 
services.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ELECTS TO ITEMIZE.—Section 62(a)(2) of such 
Code (relating to certain trade and business deductions 
of employees) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(E) CERTAIN EXPENSES OF MEMBERS OF 
RESERVE COMPONENTS OF THE ARMED FORCES 
OF THE UNITED STATES.—The deductions al-
lowed by section 162 which consist of expenses, 
not in excess of $500, paid or incurred by the 
taxpayer in connection with the performance of 
services by such taxpayer as a member of a re-
serve component of the Armed Forces of the 
United States for any period during which such 
individual is more than 100 miles away from 
home in connection with such services.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2002. 
SEC. 11. PROTECTION OF SOCIAL SECURITY. 
The amounts transferred to any trust fund under 
title II of the Social Security Act shall be determined as 
if this Act had not been enacted.
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