‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) for any taxable year shall 
be reduced (but not below zero) by an amount which 
bears the same ratio to the amount so allowable (de-
termined without regard to this subsection and sub-
section (b) but after application of all other provi-
sions of this section) as— 
‘‘(A) the excess of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income for such taxable year, over 
‘‘(ii) $80,000 (twice such amount in 
the case of a joint return), bears to 
‘‘(B) $10,000 (twice such amount in the 
case of a joint return). 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of this subsection, the term ‘modified 
adjusted gross income’ means the adjusted gross in-
come of the taxpayer for the taxable year increased 
by any amount excluded from gross income under 
section 911, 931, or 933. 
‘‘(d) OTHER LIMITATIONS.— 
‘‘(1) CREDIT ALLOWED ONLY FOR 5 TAXABLE 
YEARS.—An election to have this section apply may 
not be made for any taxable year if such an election 
(by the taxpayer or any other individual) is in effect 
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with respect to such student for any 5 prior taxable 
years. 
‘‘(2) CREDIT
ALLOWED
ONLY
FOR
FIRST
YEARS OF POSTSECONDARY EDUCATION.— 
‘‘(A) IN GENERAL.—No credit shall be al-
lowed under subsection (a) for a taxable year 
with respect to the qualified tuition and related 
expenses of an eligible student if the student 
has completed (before the beginning of such 
taxable year) the first 5 years of postsecondary 
education at an eligible educational institution. 
‘‘(B) FIFTH YEAR LIMITATIONS.—In the 
case of an eligible student with respect to whom 
an election has been in effect for 4 preceding 
taxable years for purposes of the fifth taxable 
year— 
‘‘(i) the amount of the credit allowed 
under this section for the taxable year 
shall not exceed an amount equal to 50 
percent of the credit otherwise determined 
with respect to such student under this 
section (without regard to this subpara-
graph), and 
‘‘(ii) the amount of the credit deter-
mined under subsection (b) and allowable 
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under subpart C shall not exceed an 
amount equal to 40 percent of the amount 
determined with respect to such student 
under clause (i). 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE STUDENT.—The term ‘eligible 
student’ means, with respect to any academic period, 
a student who— 
‘‘(A) meets the requirements of section 
484(a)(1) of the Higher Education Act of 1965 
(20 U.S.C. 1091(a)(1)), as in effect on August 
5, 1997, and 
‘‘(B) is carrying at least 1⁄2 the normal 
full-time work load for the course of study the 
student is pursuing. 
‘‘(2) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
tuition and related expenses’ means tuition, 
fees, and course materials, required for enroll-
ment or attendance of— 
‘‘(i) the taxpayer, 
‘‘(ii) the taxpayer’s spouse, or 
‘‘(iii) any dependent of the taxpayer, 
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at an eligible educational institution for courses 
of instruction of such individual at such institu-
tion. 
‘‘(B) EXCEPTION FOR EDUCATION INVOLV-
ING SPORTS, ETC.—Such term does not include 
expenses with respect to any course or other 
education involving sports, games, or hobbies, 
unless such course or other education is part of 
the individual’s degree program. 
‘‘(C) 
EXCEPTION
FOR
NONACADEMIC 
FEES.—Such term does not include student ac-
tivity fees, athletic fees, insurance expenses, or 
other expenses unrelated to an individual’s aca-
demic course of instruction. 
‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 
The term ‘eligible educational institution’ means an 
institution— 
‘‘(A) which is described in section 481 of 
the Higher Education Act of 1965 (20 U.S.C. 
1088), as in effect on August 5, 1997, and 
‘‘(B) which is eligible to participate in a 
program under title IV of such Act. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) IDENTIFICATION REQUIREMENTS.— 
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‘‘(A) STUDENT.—No credit shall be al-
lowed under subsection (a) to a taxpayer with 
respect to the qualified tuition and related ex-
penses of an individual unless the taxpayer in-
cludes the name and taxpayer identification 
number of such individual on the return of tax 
for the taxable year, and such taxpayer identi-
fication number was issued on or before the due 
date for filing such return. 
‘‘(B) TAXPAYER.—No credit shall be al-
lowed under this section if the identifying num-
ber of the taxpayer was issued after the due 
date for filing the return for the taxable year. 
‘‘(C) INSTITUTION.—No credit shall be al-
lowed under this section unless the taxpayer in-
cludes the employer identification number of 
any institution to which qualified tuition and 
related expenses were paid with respect to the 
individual. 
‘‘(2) ADJUSTMENT
FOR
CERTAIN
SCHOLAR-
SHIPS, ETC.—The amount of qualified tuition and 
related expenses otherwise taken into account under 
subsection (a) with respect to an individual for an 
academic period shall be reduced (before the applica-
tion of subsection (c)) by the sum of any amounts 
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paid for the benefit of such individual which are allo-
cable to such period as— 
‘‘(A) a qualified scholarship which is ex-
cludable from gross income under section 117, 
‘‘(B) an educational assistance allowance 
under chapter 30, 31, 32, 34, or 35 of title 38, 
United States Code, or under chapter 1606 of 
title 10, United States Code, and 
‘‘(C) a payment (other than a gift, be-
quest, devise, or inheritance within the meaning 
of section 102(a)) for such individual’s edu-
cational expenses, or attributable to such indi-
vidual’s enrollment at an eligible educational in-
stitution, which is excludable from gross income 
under any law of the United States. 
‘‘(3) TREATMENT OF EXPENSES PAID BY DE-
PENDENT.—If an individual is a dependent of an-
other taxpayer for a taxable year beginning in the 
calendar year in which such individuals taxable year 
begins— 
‘‘(A) no credit shall be allowed under sub-
section (a) to such individual for such individ-
ual’s taxable year, and 
‘‘(B) qualified tuition and related expenses 
paid by such individual during such individual’s 
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taxable year shall be treated for purposes of 
this section as paid by such other taxpayer. 
‘‘(4) 
TREATMENT
OF
CERTAIN
PREPAY-
MENTS.—If qualified tuition and related expenses 
are paid by the taxpayer during a taxable year for 
an academic period which begins during the first 3 
months following such taxable year, such academic 
period shall be treated for purposes of this section 
as beginning during such taxable year. 
‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under this section for any amount 
for which a deduction is allowed under any other 
provision of this chapter. 
‘‘(6) NO
CREDIT
FOR
MARRIED
INDIVIDUALS 
FILING SEPARATE RETURNS.—If the taxpayer is a 
married individual (within the meaning of section 
7703), this section shall apply only if the taxpayer 
and the taxpayer’s spouse file a joint return for the 
taxable year. 
‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is 
a nonresident alien individual for any portion of the 
taxable year, this section shall apply only if such in-
dividual is treated as a resident alien of the United 
States for purposes of this chapter by reason of an 
election under subsection (g) or (h) of section 6013. 
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‘‘(8) RESTRICTIONS ON TAXPAYERS WHO IM-
PROPERLY CLAIMED CREDIT IN PRIOR YEAR.— 
‘‘(A) TAXPAYERS MAKING PRIOR FRAUDU-
LENT OR RECKLESS CLAIMS.— 
‘‘(i) IN GENERAL.—No credit shall be 
allowed under this section for any taxable 
year in the disallowance period. 
‘‘(ii) DISALLOWANCE
PERIOD.—For 
purposes of clause (i), the disallowance pe-
riod is— 
‘‘(I) the period of 10 taxable 
years after the most recent taxable 
year for which there was a final deter-
mination that the taxpayer’s claim of 
credit under this section was due to 
fraud, and 
‘‘(II) the period of 2 taxable 
years after the most recent taxable 
year for which there was a final deter-
mination that the taxpayer’s claim of 
credit under this section was due to 
reckless or intentional disregard of 
rules and regulations (but not due to 
fraud). 
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‘‘(B) 
TAXPAYERS
MAKING
IMPROPER 
PRIOR CLAIMS.—In the case of a taxpayer who 
is denied credit under this section for any tax-
able year as a result of the deficiency proce-
dures under subchapter B of chapter 63, no 
credit shall be allowed under this section for 
any subsequent taxable year unless the taxpayer 
provides such information as the Secretary may 
require to demonstrate eligibility for such cred-
it. 
‘‘(g) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of a taxable 
year beginning after 2018, the $80,000 amount in 
subsection (c)(1)(A)(ii) shall each be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(c)(2)(A) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2017’ for 
‘calendar year 2016’ in clause (ii) thereof. 
‘‘(2) ROUNDING.—If any amount as adjusted 
under paragraph (1) is not a multiple of $1,000, 
such amount shall be rounded to the next lowest 
multiple of $1,000. 
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‘‘(h) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out this section, including regula-
tions providing for a recapture of the credit allowed under 
this section in cases where there is a refund in a subse-
quent taxable year of any amount which was taken into 
account in determining the amount of such credit.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 72(t)(7)(B) is amended by striking 
‘‘section 
25A(g)(2)’’ 
and 
inserting 
‘‘section 
25A(f)(2)’’. 
(2) Section 529(c)(3)(B)(v)(I) is amended by 
striking ‘‘section 25A(g)(2)’’ and inserting ‘‘section 
25A(f)(2)’’. 
(3) Section 529(e)(3)(B)(i) is amended by strik-
ing ‘‘section 25A(b)(3)’’ and inserting ‘‘section 
25A(d)’’. 
(4) Section 530(d)(2)(C) is amended— 
(A) by striking ‘‘section 25A(g)(2)’’ in 
clause (i)(I) and inserting ‘‘section 25A(f)(2)’’, 
and 
(B) by striking ‘‘HOPE
AND
LIFETIME 
LEARNING CREDITS’’ in the heading and insert-
ing ‘‘AMERICAN OPPORTUNITY TAX CREDIT’’. 
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(5) Section 530(d)(4)(B)(iii) is amended by 
striking ‘‘section 25A(g)(2)’’ and inserting ‘‘section 
25A(d)(4)(B)’’. 
(6) Section 6050S(e) is amended by striking 
‘‘subsection 
(g)(2)’’ 
and 
inserting 
‘‘subsection 
(f)(2)’’. 
(7) Section 6211(b)(4)(A) is amended by strik-
ing ‘‘subsection (i)(6)’’ and inserting ‘‘subsection 
(b)’’. 
(8) Section 6213(g)(2)(J) is amended by strik-
ing ‘‘TIN required under section 25A(g)(1)’’ and in-
serting ‘‘TIN, and employer identification number, 
required under section 25A(f)(1)’’. 
(9) Section 6213(g)(2)(Q) is amended to read 
as follows: 
‘‘(Q) an omission of information required 
by section 25A(f)(8)(B) or an entry on the re-
turn claiming the credit determined under sec-
tion 25A(a) for a taxable year for which the 
credit 
is 
disallowed 
under 
section 
25A(f)(8)(A).’’. 
(10) Section 1004(c) of division B of the Amer-
ican Recovery and Reinvestment Tax Act of 2009 is 
amended— 
(A) in paragraph (1)— 
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lotter on DSKBCFDHB2PROD with BILLS
(i) by striking ‘‘section 25A(i)(6)’’ 
each place it appears and inserting ‘‘sec-
tion 25A(b)’’, and 
(ii) by striking ‘‘with respect to tax-
able years beginning after 2008 and before 
2018’’ each place it appears and inserting 
‘‘with respect to each taxable year’’, 
(B) in paragraph (2), by striking ‘‘Section 
25A(i)(6)’’ and inserting ‘‘Section 25A(b)’’, and 
(C) in paragraph (3)(C), by striking ‘‘sub-
section (i)(6)’’ and inserting ‘‘subsection (b)’’. 
(11) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 is amended by 
striking the item relating to section 25A and insert-
ing the following new item: 
‘‘Sec. 25A. American opportunity tax credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 
1202. 
CONSOLIDATION 
OF 
EDUCATION 
SAVINGS 
RULES. 
(a) NO NEW CONTRIBUTIONS TO COVERDELL EDU-
CATION SAVINGS ACCOUNT.—Section 530(b)(1)(A) is 
amended to read as follows: 
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‘‘(A) Except in the case of rollover con-
tributions, no contribution will be accepted after 
December 31, 2017.’’. 
(b) LIMITED DISTRIBUTION ALLOWED FOR ELEMEN-
TARY AND SECONDARY TUITION.— 
(1) IN GENERAL.—Section 529(c) is amended 
by adding at the end the following new paragraph: 
‘‘(7) TREATMENT OF ELEMENTARY AND SEC-
ONDARY TUITION.—Any reference in this subsection 
to the term ‘qualified higher education expense’ shall 
include a reference to expenses for tuition in connec-
tion with enrollment at an elementary or secondary 
school.’’. 
(2) 
LIMITATION.—Section 
529(e)(3)(A) 
is 
amended by adding at the end the following: ‘‘The 
amount of cash distributions from all qualified tui-
tion programs described in subsection (b)(1)(A)(ii) 
with respect to a beneficiary during any taxable 
year, shall, in the aggregate, include not more than 
$10,000 in expenses for tuition incurred during the 
taxable year in connection with the enrollment or at-
tendance of the beneficiary as an elementary or sec-
ondary school student at a public, private, or reli-
gious school.’’. 
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(c) ROLLOVERS TO QUALIFIED TUITION PROGRAMS 
PERMITTED.—Section 530(d)(5) is amended by inserting 
‘‘, or into (by purchase or contribution) a qualified tuition 
program (as defined in section 529),’’ after ‘‘into another 
Coverdell education savings account’’. 
(d) DISTRIBUTIONS FROM QUALIFIED TUITION PRO-
GRAMS FOR CERTAIN EXPENSES ASSOCIATED WITH REG-
ISTERED
APPRENTICESHIP
PROGRAMS.—Section 
529(e)(3) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) CERTAIN
EXPENSES
ASSOCIATED 
WITH
REGISTERED
APPRENTICESHIP
PRO-
GRAMS.—The term ‘qualified higher education 
expenses’ shall include books, supplies, and 
equipment required for the enrollment or at-
tendance of a designated beneficiary in an ap-
prenticeship program registered and certified 
with the Secretary of Labor under section 1 of 
the National Apprenticeship Act (29 U.S.C. 
50).’’. 
(e) UNBORN CHILDREN ALLOWED
AS ACCOUNT 
BENEFICIARIES.—Section 529(e) is amended by adding at 
the end the following new paragraph: 
‘‘(6) TREATMENT OF UNBORN CHILDREN.— 
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‘‘(A) IN GENERAL.—Nothing shall prevent 
an unborn child from being treated as a des-
ignated beneficiary or an individual under this 
section. 
‘‘(B) UNBORN
CHILD.—For purposes of 
this paragraph— 
‘‘(i) IN GENERAL.—The term ‘unborn 
child’ means a child in utero. 
‘‘(ii) CHILD
IN
UTERO.—The term 
‘child in utero’ means a member of the 
species homo sapiens, at any stage of de-
velopment, who is carried in the womb.’’. 
(f) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to contributions made after 
December 31, 2017. 
(2) ROLLOVERS TO QUALIFIED TUITION PRO-
GRAMS.—The amendments made by subsection (b) 
shall apply to distributions after December 31, 
2017. 
SEC. 1203. REFORMS TO DISCHARGE OF CERTAIN STUDENT 
LOAN INDEBTEDNESS. 
(a) TREATMENT OF STUDENT LOANS DISCHARGED 
ON ACCOUNT OF DEATH OR DISABILITY.—Section 108(f) 
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is amended by adding at the end the following new para-
graph: 
‘‘(5) DISCHARGES ON ACCOUNT OF DEATH OR 
DISABILITY.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual, gross income does not include any 
amount which (but for this subsection) would 
be includible in gross income by reasons of the 
discharge (in whole or in part) of any loan de-
scribed in subparagraph (B) if such discharge 
was— 
‘‘(i) pursuant to subsection (a) or (d) 
of section 437 of the Higher Education 
Act of 1965 or the parallel benefit under 
part D of title IV of such Act (relating to 
the repayment of loan liability), 
‘‘(ii) pursuant to section 464(c)(1)(F) 
of such Act, or 
‘‘(iii) otherwise discharged on account 
of the death or total and permanent dis-
ability of the student. 
‘‘(B) LOANS DESCRIBED.—A loan is de-
scribed in this subparagraph if such loan is— 
‘‘(i) a student loan (as defined in 
paragraph (2)), or 
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‘‘(ii) a private education loan (as de-
fined in section 140(7) of the Consumer 
Credit 
Protection 
Act 
(15 
U.S.C. 
1650(7))).’’. 
(b) EXCLUSION FROM GROSS INCOME
FOR PAY-
MENTS MADE UNDER INDIAN HEALTH SERVICE LOAN 
REPAYMENT PROGRAM.— 
(1) IN GENERAL.—Section 108(f)(4) is amend-
ed by inserting ‘‘under section 108 of the Indian 
Health Care Improvement Act,’’ after ‘‘338I of such 
Act,’’. 
(2) CLERICAL AMENDMENT.—The heading for 
section 108(f)(4) is amended by striking ‘‘AND CER-
TAIN’’ and inserting ‘‘, INDIAN
HEALTH
SERVICE 
LOAN REPAYMENT PROGRAM, AND CERTAIN’’. 
(c) EFFECTIVE DATES.— 
(1) SUBSECTION (a).—The amendment made 
by subsection (a)(1) shall apply to discharges of in-
debtedness after December 31, 2017. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply to amounts received in 
taxable years beginning after December 31, 2017. 
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SEC. 1204. REPEAL OF OTHER PROVISIONS RELATING TO 
EDUCATION. 
(a) IN GENERAL.—Subchapter B of chapter 1 is 
amended— 
(1) in part VII by striking sections 221 and 
222 (and by striking the items relating to such sec-
tions in the table of sections for such part), 
(2) in part VII by striking sections 135 and 
127 (and by striking the items relating to such sec-
tions in the table of sections for such part), and 
(3) by striking subsection (d) of section 117. 
(b) CONFORMING AMENDMENT RELATING TO SEC-
TION 221.— 
(1) Section 62(a) is amended by striking para-
graph (17). 
(2) Section 163(h)(2) is amended by striking 
subparagraph (F). 
(3) Section 6050S(a) is amended— 
(A) by inserting ‘‘or’’ at the end of para-
graph (1), 
(B) by striking ‘‘or’’ at the end of para-
graph (2), and 
(C) by striking paragraph (3). 
(4) Section 6050S(e) is amended by striking all 
that follows ‘‘thereof)’’ and inserting a period. 
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(c) CONFORMING AMENDMENT RELATING TO SEC-
TION 222.—Section 62(a) is amended by striking para-
graph (18). 
(d) CONFORMING AMENDMENTS RELATING TO SEC-
TION 127.— 
(1) Section 125(f)(1) is amended by striking 
‘‘127,’’. 
(2) Section 132(j)(8) is amended by striking 
‘‘which are not excludable from gross income under 
section 127’’. 
(3) Section 414(n)(3)(C) is amended by strik-
ing ‘‘127,’’. 
(4) Section 414(t)(2) is amended by striking 
‘‘127,’’. 
(5) Section 3121(a)(18) is amended by striking 
‘‘127,’’. 
(6) Section 3231(e) is amended by striking 
paragraph (6). 
(7) Section 3306(b)(13) is amended by ‘‘127,’’. 
(8) Section 3401(a)(18) is amended by striking 
‘‘127,’’. 
(9) Section 6039D(d)(1) is amended by striking 
‘‘, 127’’. 
(e) CONFORMING AMENDMENTS RELATING TO SEC-
TION 117(d).— 
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(1) Section 117(c)(1) is amended— 
(A) by striking ‘‘subsections (a) and (d)’’ 
and inserting ‘‘subsection (a)’’, and 
(B) by striking ‘‘or qualified tuition reduc-
tion’’. 
(2) Section 414(n)(3)(C) is amended by strik-
ing ‘‘117(d),’’. 
(3) Section 414(t)(2) is amended by striking 
‘‘117(d),’’. 
(f) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) AMENDMENTS
RELATING
TO
SECTION 
117(d).—The amendments made by subsections 
(a)(3) and (e) shall apply to amounts paid or in-
curred after December 31, 2017. 
Subtitle D—Simplification and 
Reform of Deductions 
SEC. 1301. REPEAL OF OVERALL LIMITATION ON ITEMIZED 
DEDUCTIONS. 
(a) IN GENERAL.—Part 1 of subchapter B of chapter 
1 is amended by striking section 68 (and the item relating 
to such section in the table of sections for such part). 
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100 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1302. MORTGAGE INTEREST. 
(a) MODIFICATION OF LIMITATIONS.— 
(1) IN GENERAL.—Section 163(h)(3) is amend-
ed to read as follows: 
‘‘(3) QUALIFIED
RESIDENCE
INTEREST.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
residence interest’ means any interest which is 
paid or accrued during the taxable year on in-
debtedness which— 
‘‘(i) is incurred in acquiring, con-
structing, or substantially improving any 
qualified residence (determined as of the 
time the interest is accrued) of the tax-
payer, and 
‘‘(ii) is secured by such residence. 
Such term also includes interest on any indebt-
edness secured by such residence resulting from 
the refinancing of indebtedness meeting the re-
quirements of the preceding sentence (or this 
sentence); but only to the extent the amount of 
the indebtedness resulting from such refi-
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nancing does not exceed the amount of the refi-
nanced indebtedness. 
‘‘(B) LIMITATION.— 
‘‘(i) IN
GENERAL.—The aggregate 
amount of indebtedness taken into account 
under subparagraph (A) for any period 
shall not exceed $500,000 (half of such 
amount in the case of a married individual 
filing a separate return). 
‘‘(C) TREATMENT OF INDEBTEDNESS IN-
CURRED ON OR BEFORE NOVEMBER 2, 2017.— 
‘‘(i) IN GENERAL.—In the case of any 
pre-November 2, 2017, indebtedness, this 
paragraph shall apply as in effect imme-
diately before the enactment of the Tax 
Cuts and Jobs Act. 
‘‘(ii) PRE-NOVEMBER 2, 2017, INDEBT-
EDNESS.—For purposes of this subpara-
graph, the term ‘pre-November 2, 2017, 
indebtedness’ means— 
‘‘(I) any principal residence ac-
quisition indebtedness which was in-
curred on or before November 2, 
2017, or 
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‘‘(II) any principal residence ac-
quisition indebtedness which is in-
curred after November 2, 2017, to re-
finance 
indebtedness 
described 
in 
clause (i) (or refinanced indebtedness 
meeting the requirements of this 
clause) to the extent (immediately 
after the refinancing) the principal 
amount of the indebtedness resulting 
from the refinancing does not exceed 
the principal amount of the refinanced 
indebtedness (immediately before the 
refinancing). 
‘‘(iii) LIMITATION ON PERIOD OF RE-
FINANCING.—clause (ii)(II) shall not apply 
to any indebtedness after— 
‘‘(I) the expiration of the term of 
the original indebtedness, or 
‘‘(II) if the principal of such 
original indebtedness is not amortized 
over its term, the expiration of the 
term of the 1st refinancing of such in-
debtedness (or if earlier, the date 
which is 30 years after the date of 
such 1st refinancing). 
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‘‘(iv) BINDING
CONTRACT
EXCEP-
TION.—In the case of a taxpayer who en-
ters into a written binding contract before 
November 2, 2017, to close on the pur-
chase of a principal residence before Janu-
ary 1, 2018, and who purchases such resi-
dence before April 1, 2018, subparagraphs 
(A) and (B) shall be applied by sub-
stituting ‘April 1, 2018’ for ‘November 2, 
2017’.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 108(h)(2) is by striking ‘‘for 
‘$1,000,000 ($500,000’ in clause (ii) thereof’’ 
and inserting ‘‘for ‘$500,000 ($250,000’ in 
paragraph 
(2)(A), 
and 
‘$1,000,000’ 
for 
‘$500,000’ in paragraph (2)(B), thereof’’ 
(B) Section 163(h) is amended— 
(i) by striking subparagraphs (E) and 
(F) in paragraph (4), and 
(ii) by striking paragraph (5). 
(b) TAXPAYERS LIMITED TO 1 QUALIFIED RESI-
DENCE.—Section 163(h)(4)(A)(i) is amended to read as 
follows: 
‘‘(i) IN GENERAL.—The term ‘quali-
fied residence’ means the principal resi-
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104 
dence (within the meaning of section 121) 
of the taxpayer. Rules similar to the rules 
of paragraph (3)(C) shall apply for pur-
poses of the preceding sentence.’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to interest paid or accrued 
in taxable years beginning after December 31, 2017, 
with respect to indebtedness incurred before, on, or 
after such date. 
(2) TREATMENT OF GRANDFATHERED INDEBT-
EDNESS.—For application of the amendments made 
by this section to grandfathered indebtedness, see 
paragraph (3)(C), and the second sentence of para-
graph (4)(A)(i), of section 163(h) of the Internal 
Revenue Code of 1986, as amended by this section. 
SEC. 1303. REPEAL OF DEDUCTION FOR CERTAIN TAXES 
NOT PAID OR ACCRUED IN A TRADE OR BUSI-
NESS. 
(a) IN GENERAL.—Section 164(b)(5) is amended to 
read as follows: 
‘‘(5) LIMITATION IN CASE OF INDIVIDUALS.—In 
the case of a taxpayer other than a corporation— 
‘‘(A) foreign real property taxes (other 
than taxes which are paid or accrued in car-
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rying on a trade or business or an activity de-
scribed in section 212) shall not be taken into 
account under subsection (a)(1), 
‘‘(B) the aggregate amount of taxes (other 
than taxes which are paid or accrued in car-
rying on a trade or business or an activity de-
scribed in section 212) taken into account 
under subsection (a)(1) and for any taxable 
year shall not exceed $10,000 ($5,000 in the 
case of a married individual filing a separate re-
turn), 
‘‘(C) subsection (a)(2) shall only apply to 
taxes which are paid or accrued in carrying on 
a trade or business or an activity described in 
section 212, and 
‘‘(D) subsection (a)(3) shall not apply to 
State and local taxes.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1304. REPEAL OF DEDUCTION FOR PERSONAL CAS-
UALTY LOSSES. 
(a) IN GENERAL.—Section 165(c) is amended by in-
serting ‘‘and’’ at the end of paragraph (1), by striking 
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‘‘; and’’ at the end of paragraph (2) and inserting a pe-
riod, and by striking paragraph (3). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 165(h) is amended to read as fol-
lows: 
‘‘(h) SPECIAL RULE WHERE PERSONAL CASUALTY 
GAINS EXCEED PERSONAL CASUALTY LOSSES.— 
‘‘(1) IN
GENERAL.—If the personal casualty 
gains for any taxable year exceed the personal cas-
ualty losses for such taxable year— 
‘‘(A) all such gains shall be treated as 
gains from sales or exchanges of capital assets, 
and 
‘‘(B) all such losses shall be treated as 
losses from sales or exchanges of capital assets. 
‘‘(2) DEFINITIONS
OF
PERSONAL
CASUALTY 
GAIN
AND
PERSONAL
CASUALTY
LOSS.—For pur-
poses of this subsection— 
‘‘(A) PERSONAL
CASUALTY
LOSS.—The 
term ‘personal casualty loss’ means any loss of 
property not connected with a trade or business 
or a transaction entered into for profit, if such 
loss arises from fire, storm, shipwreck, or other 
casualty, or from theft. 
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‘‘(B) PERSONAL
CASUALTY
GAIN.—The 
term ‘personal casualty gain’ means the recog-
nized gain from any involuntary conversion of 
property which is described in subparagraph 
(A) arising from fire, storm, shipwreck, or other 
casualty, or from theft.’’. 
(2) Subsection (i) of section 165 is amended— 
(A) in paragraph (1)— 
(i) by striking ‘‘(as defined by clause 
(ii) of subsection (h)(3)(C))’’, and 
(ii) by striking ‘‘(as defined by clause 
(i) of such subsection)’’, 
(B) by striking ‘‘(as defined by subsection 
(h)(3)(C)(i)’’ in paragraph (4), and 
(C) by adding at the end the following new 
paragraph: 
‘‘(5) FEDERALLY
DECLARED
DISASTER.—For 
purposes of this subsection— 
‘‘(A) FEDERALLY DECLARED DISASTER.— 
The term ‘federally declared disaster’ means 
any disaster subsequently determined by the 
President of the United States to warrant as-
sistance by the Federal Government under the 
Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act. 
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‘‘(B) DISASTER AREA.—The term ‘disaster 
area’ means the area so determined to warrant 
such assistance.’’. 
(3) Section 165 is amended by striking sub-
section (k). 
(4)(A) Section 165(l)(1) is amended by striking 
‘‘a loss described in subsection (c)(3)’’ and inserting 
‘‘an ordinary loss described in subsection (c)(2)’’. 
(B) Section 165(l) is amended— 
(i) by striking paragraph (5), 
(ii) by redesignating paragraphs (2), (3), 
and (4) as paragraphs (3), (4), and (5), respec-
tively, and 
(iii) by inserting after paragraph (1) the 
following new paragraph: 
‘‘(2) LIMITATIONS.— 
‘‘(A) DEPOSIT MAY NOT BE FEDERALLY 
INSURED.—No election may be made under 
paragraph (1) with respect to any loss on a de-
posit in a qualified financial institution if part 
or all of such deposit is insured under Federal 
law. 
‘‘(B) DOLLAR LIMITATION.—With respect 
to each financial institution, the aggregate 
amount of losses attributable to deposits in 
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such financial institution to which an election 
under paragraph (1) may be made by the tax-
payer for any taxable year shall not exceed 
$20,000 ($10,000 in the case of a separate re-
turn by a married individual). The limitation of 
the preceding sentence shall be reduced by the 
amount of any insurance proceeds under any 
State law which can reasonably be expected to 
be received with respect to losses on deposits in 
such institution.’’. 
(5) Section 172(b)(1)(E)(ii), prior to amend-
ment under title III, is amended by striking sub-
clause (I) and by redesignating subclauses (II) and 
(III) as subclauses (I) and (II), respectively 
(6) Section 172(d)(4)(C) is amended by strik-
ing ‘‘paragraph (2) or (3) of section 165(c)’’ and in-
serting ‘‘section 165(c)(2)’’. 
(7) Section 274(f) is amended by striking 
‘‘CASUALTY LOSSES,’’ in the heading thereof. 
(8) Section 280A(b) is amended by striking 
‘‘CASUALTY LOSSES,’’ in the heading thereof. 
(9) Section 873(b), as amended by the pre-
ceding provisions of this Act, is amended by striking 
paragraph (1) and by redesignating paragraphs (2) 
and (3) as paragraphs (1) and (2), respectively. 
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110 
(10) Section 504(b) of the Disaster Tax Relief 
and Airport and Airway Extension Act of 2017 is 
amended by adding at the end the following new 
paragraph: 
‘‘(4) COORDINATION WITH TAX REFORM.—This 
subsection shall be applied without regard to the 
amendments made by section 1306 of the Tax Cuts 
and Jobs Act.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1305. LIMITATION ON WAGERING LOSSES. 
(a) IN GENERAL.—Section 165(d) is amended by 
adding at the end the following: ‘‘For purposes of the pre-
ceding sentence, the term ‘losses from wagering trans-
actions’ includes any deduction otherwise allowable under 
this chapter incurred in carrying on any wagering trans-
action.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1306. CHARITABLE CONTRIBUTIONS. 
(a) INCREASED LIMITATION FOR CASH CONTRIBU-
TIONS.— 
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(1) IN GENERAL.—Section 170(b)(1) is amend-
ed by redesignating subparagraph (G) as subpara-
graph (H) and by inserting after subparagraph (F) 
the following new subparagraph: 
‘‘(G) INCREASED
LIMITATION
FOR
CASH 
CONTRIBUTIONS.— 
‘‘(i) IN GENERAL.—In the case of any 
contribution of cash to an organization de-
scribed in subparagraph (A), the total 
amount of such contributions which may 
be taken into account under subsection (a) 
for any taxable year shall not exceed 60 
percent of the taxpayer’s contribution base 
for such year. 
‘‘(ii) CARRYOVER.—If the aggregate 
amount of contributions described in clause 
(i) exceeds the applicable limitation under 
clause (i), such excess shall be treated (in 
a manner consistent with the rules of sub-
section (d)(1)) as a charitable contribution 
to which clause (i) applies in each of the 
5 succeeding years in order of time. 
‘‘(iii) COORDINATION WITH SUBPARA-
GRAPHS (A) AND (B).— 
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112 
‘‘(I) 
IN
GENERAL.—Contribu-
tions taken into account under this 
subparagraph shall not be taken into 
account under subparagraph (A). 
‘‘(II) LIMITATION REDUCTION.— 
Subparagraphs (A) and (B) shall be 
applied by reducing (but not below 
zero) the aggregate contribution limi-
tation allowed for the taxable year 
under each such subparagraph by the 
aggregate contributions allowed under 
this subparagraph for such taxable 
year.’’. 
(b) DENIAL
OF DEDUCTION
FOR COLLEGE ATH-
LETIC EVENT SEATING RIGHTS.—Section 170(l)(1) is 
amended to read as follows: 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed under this section for any amount described in 
paragraph (2).’’. 
(c) CHARITABLE MILEAGE RATE ADJUSTED FOR IN-
FLATION.—Section 170(i) is amended by striking ‘‘shall 
be 14 cents per mile’’ and inserting ‘‘shall be a rate which 
takes into account the variable cost of operating an auto-
mobile’’. 
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(d) REPEAL
OF SUBSTANTIATION EXCEPTION
IN 
CASE OF CONTRIBUTIONS REPORTED BY DONEE.—Sec-
tion 170(f)(8) is amended by striking subparagraph (D) 
and by redesignating subparagraph (E) as subparagraph 
(D). 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made in taxable 
years beginning after December 31, 2017. 
SEC. 1307. REPEAL OF DEDUCTION FOR TAX PREPARATION 
EXPENSES. 
(a) IN GENERAL.—Section 212 is amended by adding 
‘‘or’’ at the end of paragraph (1), by striking ‘‘; or’’ at 
the end of paragraph (2) and inserting a period, and by 
striking paragraph (3). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1308. REPEAL OF MEDICAL EXPENSE DEDUCTION. 
(a) IN GENERAL.—Part VII of subchapter B is 
amended by striking by striking section 213 (and by strik-
ing the item relating to such section in the table of section 
for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 105(f) is amended to read as fol-
lows: 
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‘‘(f) MEDICAL CARE.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘medical care’ 
means amounts paid— 
‘‘(A) for the diagnosis, cure, mitigation, 
treatment, or prevention of disease, or for the 
purpose of affecting any structure or function 
of the body, 
‘‘(B) for transportation primarily for and 
essential to medical care referred to in subpara-
graph (A), 
‘‘(C) for qualified long-term care services 
(as defined in section 7702B(c)), or 
‘‘(D) for insurance (including amounts 
paid as premiums under part B of title XVIII 
of the Social Security Act, relating to supple-
mentary medical insurance for the aged) cov-
ering medical care referred to in subparagraphs 
(A) and (B) or for any qualified long-term care 
insurance contract (as defined in section 
7702B(b)). 
In the case of a qualified long-term care insurance 
contract (as defined in section 7702B(b)), only eligi-
ble long-term care premiums (as defined in para-
graph (7)) shall be taken into account under sub-
paragraph (D). 
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‘‘(2) AMOUNTS
PAID
FOR
CERTAIN
LODGING 
AWAY FROM HOME TREATED AS PAID FOR MEDICAL 
CARE.—Amounts paid for lodging (not lavish or ex-
travagant under the circumstances) while away from 
home primarily for and essential to medical care re-
ferred to in paragraph (1)(A) shall be treated as 
amounts paid for medical care if— 
‘‘(A) the medical care referred to in para-
graph (1)(A) is provided by a physician in a li-
censed hospital (or in a medical care facility 
which is related to, or the equivalent of, a li-
censed hospital), and 
‘‘(B) there is no significant element of per-
sonal pleasure, recreation, or vacation in the 
travel away from home. 
The amount taken into account under the preceding 
sentence shall not exceed $50 for each night for each 
individual. 
‘‘(3) PHYSICIAN.—The term ‘physician’ has the 
meaning given to such term by section 1861(r) of 
the Social Security Act (42 U.S.C. 1395x(r)). 
‘‘(4) CONTRACTS COVERING OTHER THAN MED-
ICAL CARE.—In the case of an insurance contract 
under which amounts are payable for other than 
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116 
medical care referred to in subparagraphs (A), (B) 
and (C) of paragraph (1)— 
‘‘(A) no amount shall be treated as paid 
for insurance to which paragraph (1)(D) applies 
unless the charge for such insurance is either 
separately stated in the contract, or furnished 
to the policyholder by the insurance company in 
a separate statement, 
‘‘(B) the amount taken into account as the 
amount paid for such insurance shall not exceed 
such charge, and 
‘‘(C) no amount shall be treated as paid 
for such insurance if the amount specified in 
the contract (or furnished to the policyholder by 
the insurance company in a separate statement) 
as the charge for such insurance is unreason-
ably large in relation to the total charges under 
the contract. 
‘‘(5) CERTAIN PRE-PAID CONTRACTS.—Subject 
to the limitations of paragraph (4), premiums paid 
during the taxable year by a taxpayer before he at-
tains the age of 65 for insurance covering medical 
care (within the meaning of subparagraphs (A), (B), 
and (C) of paragraph (1)) for the taxpayer, his 
spouse, or a dependent after the taxpayer attains the 
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117 
age of 65 shall be treated as expenses paid during 
the taxable year for insurance which constitutes 
medical care if premiums for such insurance are 
payable (on a level payment basis) under the con-
tract for a period of 10 years or more or until the 
year in which the taxpayer attains the age of 65 
(but in no case for a period of less than 5 years). 
‘‘(6) COSMETIC SURGERY.— 
‘‘(A) IN
GENERAL.—The term ‘medical 
care’ does not include cosmetic surgery or other 
similar procedures, unless the surgery or proce-
dure is necessary to ameliorate a deformity 
arising from, or directly related to, a congenital 
abnormality, a personal injury resulting from 
an accident or trauma, or disfiguring disease. 
‘‘(B) COSMETIC SURGERY DEFINED .—For 
purposes of this paragraph, the term ‘cosmetic 
surgery’ means any procedure which is directed 
at improving the patient’s appearance and does 
not meaningfully promote the proper function 
of the body or prevent or treat illness or dis-
ease. 
‘‘(7) ELIGIBLE LONG-TERM CARE PREMIUMS.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘eligible long-term care pre-
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118 
miums’ means the amount paid during a tax-
able year for any qualified long-term care insur-
ance contract (as defined in section 7702B(b)) 
covering an individual, to the extent such 
amount does not exceed the limitation deter-
mined under the following table: 
‘‘In the case of an individual with an 
attained age before the close of the 
taxable year of: 
The limitation is: 
40 or less 
$200 
More than 40 but not more than 50 
$375 
More than 50 but not more than 60 
$750 
More than 60 but not more than 70 
$2,000 
More than 70 
$2,500 
‘‘(B) INDEXING.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning after 1997, each 
dollar amount in subparagraph (A) shall 
be increased by the medical care cost ad-
justment of such amount for such calendar 
year. Any increase determined under the 
preceding sentence shall be rounded to the 
nearest multiple of $10. 
‘‘(ii) MEDICAL
CARE
COST
ADJUST-
MENT.—For purposes of clause (i), the 
medical care cost adjustment for any cal-
endar year is the adjustment prescribed by 
the Secretary, in consultation with the Sec-
retary of Health and Human Services, for 
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119 
purposes of such clause. To the extent that 
CPI (as defined section 1(c)), or any com-
ponent thereof, is taken into account in de-
termining such adjustment, such adjust-
ment shall be determined by taking into 
account C-CPI-U (as so defined), or the 
corresponding component thereof, in lieu of 
such CPI (or component thereof), but only 
with respect to the portion of such adjust-
ment which relates to periods after Decem-
ber 31, 2017. 
‘‘(8) 
CERTAIN
PAYMENTS
TO
RELATIVES 
TREATED AS NOT PAID FOR MEDICAL CARE.—An 
amount paid for a qualified long-term care service 
(as defined in section 7702B(c)) provided to an indi-
vidual shall be treated as not paid for medical care 
if such service is provided— 
‘‘(A) by the spouse of the individual or by 
a relative (directly or through a partnership, 
corporation, or other entity) unless the service 
is provided by a licensed professional with re-
spect to such service, or 
‘‘(B) by a corporation or partnership which 
is related (within the meaning of section 267(b) 
or 707(b)) to the individual. 
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120 
For purposes of this paragraph, the term ‘relative’ 
means an individual bearing a relationship to the in-
dividual which is described in any of subparagraphs 
(A) through (G) of section 7706(d)(2). This para-
graph shall not apply for purposes of subsection (b) 
with respect to reimbursements through insurance.’’. 
(B) Section 72(t)(2)(D)(i)(III) is amended by 
striking ‘‘section 213(d)(1)(D)’’ and inserting ‘‘sec-
tion 105(f)(1)(D)’’. 
(C) Section 104(a) is amended by striking ‘‘sec-
tion 213(d)(1)’’ in the last sentence and inserting 
‘‘section 105(f)(1)’’. 
(D) Section 105(b) is amended by striking 
‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(E) Section 139D is amended by striking ‘‘sec-
tion 213’’ and inserting ‘‘section 223’’. 
(F) Section 162(l)(2) is amended by striking 
‘‘section 
213(d)(10)’’ 
and 
inserting 
‘‘section 
105(f)(7)’’. 
(G) Section 220(d)(2)(A) is amended by strik-
ing ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(H) Section 223(d)(2)(A) is amended by strik-
ing ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(I) Section 419A(f)(2) is amended by striking 
‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
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121 
(J) Section 501(c)(26)(A) is amended by strik-
ing ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(K) Section 2503(e) is amended by striking 
‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(L) Section 4980B(c)(4)(B)(i)(I) is amended by 
striking ‘‘section 213(d)’’ and inserting ‘‘section 
105(f)’’. 
(M) Section 6041(f) is amended by striking 
‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(N) Section 7702B(a)(2) is amended by strik-
ing ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(O) Section 7702B(a)(4) is amended by strik-
ing ‘‘section 213(d)(1)(D)’’ and inserting ‘‘section 
105(f)(1)(D)’’. 
(P) Section 7702B(d)(5) is amended by striking 
‘‘section 
213(d)(10)’’ 
and 
inserting 
‘‘section 
105(f)(7)’’. 
(Q) Section 9832(d)(3) is amended by striking 
‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. 
(2) Section 72(t)(2)(B) is amended to read as 
follows: 
‘‘(B) MEDICAL
EXPENSES.—Distributions 
made to an individual (other than distributions 
described in subparagraph (A), (C), or (D) to 
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122 
the extent such distributions do not exceed the 
excess of— 
‘‘(i) the expenses paid by the taxpayer 
during the taxable year, not compensated 
for by insurance or otherwise, for medical 
care (as defined in 105(f)) of the taxpayer, 
his spouse, or a dependent (as defined in 
section 7706, determined without regard to 
subsections (b)(1), (b)(2), and (d)(1)(B) 
thereof), over 
‘‘(ii) 10 percent of the taxpayer’s ad-
justed gross income.’’. 
(3) Section 162(l) is amended by striking para-
graph (3). 
(4) Section 402(l) is amended by striking para-
graph (7) and redesignating paragraph (8) as para-
graph (7). 
(5) Section 220(f) is amended by striking para-
graph (6). 
(6) Section 223(f) is amended by striking para-
graph (6). 
(7) Section 7702B(e) is amended by striking 
paragraph (2). 
(8) Section 7706(f)(7), as redesignated by this 
Act, is amended by striking ‘‘sections 105(b), 
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123 
132(h)(2)(B), and 213(d)(5)’’ and inserting ‘‘sec-
tions 105(b) and 132(h)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1309. REPEAL OF DEDUCTION FOR ALIMONY PAY-
MENTS. 
(a) IN GENERAL.—Part VII of subchapter B is 
amended by striking by striking section 215 (and by strik-
ing the item relating to such section in the table of section 
for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS
RELATING
TO
SECTION 
215.— 
(A) CORRESPONDING
REPEAL
OF
PROVI-
SIONS PROVIDING FOR INCLUSION OF ALIMONY 
IN GROSS INCOME.— 
(i) Subsection (a) of section 61 is 
amended by striking paragraph (8) and by 
redesignating paragraphs (9) through (15) 
as paragraphs (8) through (14), respec-
tively. 
(ii) Part II of subchapter B of chapter 
1 is amended by striking section 71 (and 
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124 
by striking the item relating to such sec-
tion in the table of sections for such part). 
(iii) Subpart F of part I of subchapter 
J of chapter 1 is amended by striking sec-
tion 682 (and by striking the item relating 
to such section in the table of sections for 
such subpart). 
(B) RELATED
TO
REPEAL
OF
SECTION 
215.— 
(i) Section 62(a) is amended by strik-
ing paragraph (10). 
(ii) Section 3402(m)(1) is amended by 
striking ‘‘(other than paragraph (10) 
thereof)’’. 
(C) RELATED
TO
REPEAL
OF
SECTION 
71.— 
(i) Section 121(d)(3) is amended— 
(I) by striking ‘‘(as defined in 
section 71(b)(2))’’ in subparagraph 
(B), and 
(II) by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) DIVORCE
OR
SEPARATION
INSTRU-
MENT.—For purposes of this paragraph, the 
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term 
‘divorce 
or 
separation 
instrument’ 
means— 
‘‘(i) a decree of divorce or separate 
maintenance or a written instrument inci-
dent to such a decree, 
‘‘(ii) a written separation agreement, 
or 
‘‘(iii) a decree (not described in clause 
(i)) requiring a spouse to make payments 
for the support or maintenance of the 
other spouse.’’. 
(ii) Section 220(f)(7) is amended by 
striking ‘‘subparagraph (A) of section 
71(b)(2)’’ and inserting ‘‘clause (i) of sec-
tion 121(d)(3)(C)’’. 
(iii) Section 223(f)(7) is amended by 
striking ‘‘subparagraph (A) of section 
71(b)(2)’’ and inserting ‘‘clause (i) of sec-
tion 121(d)(3)(C)’’. 
(iv) 
Section 
382(l)(3)(B)(iii) 
is 
amended by striking ‘‘section 71(b)(2)’’ 
and inserting ‘‘section 121(d)(3)(C)’’. 
(v) Section 408(d)(6) is amended by 
striking ‘‘subparagraph (A) of section 
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126 
71(b)(2)’’ and inserting ‘‘clause (i) of sec-
tion 121(d)(3)(C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
(1) any divorce or separation instrument (as de-
fined in section 71(b)(2) of the Internal Revenue 
Code of 1986 as in effect before the date of the en-
actment of this Act) executed after December 31, 
2017, and 
(2) any divorce or separation instrument (as so 
defined) executed on or before such date and modi-
fied after such date if the modification expressly 
provides that the amendments made by this section 
apply to such modification. 
SEC. 1310. REPEAL OF DEDUCTION FOR MOVING EX-
PENSES. 
(a) IN GENERAL.—Part VII of subchapter B is 
amended by striking by striking section 217 (and by strik-
ing the item relating to such section in the table of section 
for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 62(a) is amended by striking para-
graph (15). 
(2) Section 274(m)(3) is amended by striking 
‘‘(other than section 217)’’. 
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(3) Section 3121(a) is amended by striking 
paragraph (11). 
(4) Section 3306(b) is amended by striking 
paragraph (9). 
(5) Section 3401(a) is amended by striking 
paragraph (15). 
(6) Section 7872(f) is amended by striking 
paragraph (11). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1311. TERMINATION OF DEDUCTION AND EXCLUSIONS 
FOR CONTRIBUTIONS TO MEDICAL SAVINGS 
ACCOUNTS. 
(a) TERMINATION OF INCOME TAX DEDUCTION.— 
Section 220 is amended by adding at the end the following 
new subsection: 
‘‘(k) TERMINATION.—No deduction shall be allowed 
under subsection (a) with respect to any taxable year be-
ginning after December 31, 2017.’’. 
(b) TERMINATION OF EXCLUSION FOR EMPLOYER- 
PROVIDED CONTRIBUTIONS.—Section 106 is amended by 
striking subsection (b). 
(c) CONFORMING AMENDMENTS.— 
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128 
(1) Section 62(a) is amended by striking para-
graph (16). 
(2) Section 106(d) is amended by striking para-
graph (2), by redesignating paragraph (3) as para-
graph (6), and by inserting after paragraph (1) the 
following new paragraphs: 
‘‘(2) NO CONSTRUCTIVE RECEIPT.—No amount 
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween the contributions referred to in paragraph (1) 
and employer contributions to another health plan of 
the employer. 
‘‘(3) SPECIAL RULE FOR DEDUCTION OF EM-
PLOYER CONTRIBUTIONS.—Any employer contribu-
tion to a health savings account (as so defined), if 
otherwise allowable as a deduction under this chap-
ter, shall be allowed only for the taxable year in 
which paid. 
‘‘(4) EMPLOYER
HEALTH
SAVINGS
ACCOUNT 
CONTRIBUTION
REQUIRED
TO
BE
SHOWN
ON
RE-
TURN.—Every individual required to file a return 
under section 6012 for the taxable year shall include 
on such return the aggregate amount contributed by 
employers to the health savings accounts (as so de-
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129 
fined) of such individual or such individual’s spouse 
for such taxable year. 
‘‘(5) HEALTH
SAVINGS
ACCOUNT
CONTRIBU-
TIONS NOT PART OF COBRA COVERAGE.—Paragraph 
(1) shall not apply for purposes of section 4980B.’’. 
(3) Section 223(b)(4) is amended by striking 
subparagraph (A), by redesignating subparagraphs 
(B) and (C) as subparagraphs (A) and (B), respec-
tively, and by striking the second sentence thereof. 
(4) Section 223(b)(5) is amended by striking 
‘‘under paragraph (3))’’ and all that follows through 
‘‘shall be divided equally between them’’ and insert-
ing the following: ‘‘under paragraph (3)) shall be di-
vided equally between the spouses’’. 
(5) Section 223(c) is amended by striking para-
graph (5). 
(6) Section 3231(e) is amended by striking 
paragraph (10). 
(7) Section 3306(b) is amended by striking 
paragraph (17). 
(8) Section 3401(a) is amended by striking 
paragraph (21). 
(9) Chapter 43 is amended by striking section 
4980E (and by striking the item relating to such 
section in the table of sections for such chapter). 
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130 
(10) Section 4980G is amended to read as fol-
lows: 
‘‘SEC. 4980G. FAILURE OF EMPLOYER TO MAKE COM-
PARABLE HEALTH SAVINGS ACCOUNT CON-
TRIBUTIONS. 
‘‘(a) IN GENERAL.—In the case of an employer who 
makes a contribution to the health savings account of any 
employee during a calendar year, there is hereby imposed 
a tax on the failure of such employer to meet the require-
ments of subsection (d) for such calendar year. 
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) on any failure for any calendar 
year is the amount equal to 35 percent of the aggregate 
amount contributed by the employer to health savings ac-
counts of employees for taxable years of such employees 
ending with or within such calendar year. 
‘‘(c) WAIVER BY SECRETARY.—In the case of a fail-
ure which is due to reasonable cause and not to willful 
neglect, the Secretary may waive part or all of the tax 
imposed by subsection (a) to the extent that the payment 
of such tax would be excessive relative to the failure in-
volved. 
‘‘(d) EMPLOYER REQUIRED TO MAKE COMPARABLE 
HEALTH SAVINGS ACCOUNT CONTRIBUTIONS FOR ALL 
PARTICIPATING EMPLOYEES.— 
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131 
‘‘(1) IN GENERAL.—An employer meets the re-
quirements of this subsection for any calendar year 
if the employer makes available comparable con-
tributions to the health savings accounts of all com-
parable participating employees for each coverage 
period during such calendar year. 
‘‘(2) COMPARABLE CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘comparable contributions’ 
means contributions— 
‘‘(i) which are the same amount, or 
‘‘(ii) which are the same percentage of 
the annual deductible limit under the high 
deductible health plan covering the employ-
ees. 
‘‘(B) PART-YEAR
EMPLOYEES.—In the 
case of an employee who is employed by the em-
ployer for only a portion of the calendar year, 
a contribution to the health savings account of 
such employee shall be treated as comparable if 
it is an amount which bears the same ratio to 
the comparable amount (determined without re-
gard to this subparagraph) as such portion 
bears to the entire calendar year. 
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132 
‘‘(3) COMPARABLE
PARTICIPATING
EMPLOY-
EES.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘comparable participating 
employees’ means all employees— 
‘‘(i) who are eligible individuals cov-
ered under any high deductible health plan 
of the employer, and 
‘‘(ii) who have the same category of 
coverage. 
‘‘(B) CATEGORIES
OF
COVERAGE.—For 
purposes of subparagraph (B), the categories of 
coverage are self-only and family coverage. 
‘‘(4) PART-TIME EMPLOYEES.— 
‘‘(A) IN GENERAL .—Paragraph (3) shall 
be applied separately with respect to part-time 
employees and other employees. 
‘‘(B) PART-TIME
EMPLOYEE.—For pur-
poses of subparagraph (A), the term ‘part-time 
employee’ means any employee who is custom-
arily employed for fewer than 30 hours per 
week. 
‘‘(5) SPECIAL
RULE
FOR
NON-HIGHLY
COM-
PENSATED EMPLOYEES.—For purposes of applying 
this section to a contribution to a health savings ac-
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133 
count of an employee who is not a highly com-
pensated employee (as defined in section 414(q)), 
highly compensated employees shall not be treated 
as comparable participating employees. 
‘‘(e) CONTROLLED GROUPS.—For purposes of this 
section, all persons treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 shall be treated 
as 1 employer. 
‘‘(f) DEFINITIONS.—Terms used in this section which 
are also used in section 223 have the respective meanings 
given such terms in section 223. 
‘‘(g) REGULATIONS.—The Secretary shall issue regu-
lations to carry out the purposes of this section.’’. 
(11) Section 6051(a) is amended by striking 
paragraph (11). 
(12) Section 6051(a)(14)(A) is amended by 
striking ‘‘paragraphs (11) and (12)’’ and inserting 
‘‘paragraph (12)’’. 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
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134 
SEC. 1312. DENIAL OF DEDUCTION FOR EXPENSES ATTRIB-
UTABLE TO THE TRADE OR BUSINESS OF 
BEING AN EMPLOYEE. 
(a) IN GENERAL.—Part IX of subchapter B of chap-
ter 1 is amended by inserting after the item relating to 
section 262 the following new item: 
‘‘SEC. 262A. EXPENSES ATTRIBUTABLE TO BEING AN EM-
PLOYEE. 
‘‘(a) IN GENERAL.—Except as otherwise provided in 
this section, no deduction shall be allowed with respect to 
any trade or business of the taxpayer which consists of 
the performance of services by the taxpayer as an em-
ployee. 
‘‘(b) EXCEPTION
FOR ABOVE-THE-LINE DEDUC-
TIONS.—Subsection (a) shall not apply to any deduction 
allowable (determined without regard to subsection (a)) in 
determining adjusted gross income.’’. 
(b) REPEAL OF CERTAIN ABOVE-THE-LINE TRADE 
AND BUSINESS DEDUCTIONS OF EMPLOYEES.— 
(1) IN GENERAL.—Section 62(a)(2) is amend-
ed— 
(A) by striking subparagraphs (B), (C), 
and (D), and 
(B) by redesignating subparagraph (E) as 
subparagraph (B). 
(2) CONFORMING AMENDMENTS.— 
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135 
(A) Section 62 is amended by striking sub-
sections (b) and (d) and by redesignating sub-
sections (c) and (e) as subsections (b) and (c), 
respectively. 
(B) Section 62(a)(20) is amended by strik-
ing ‘‘subsection (e)’’ and inserting ‘‘subsection 
(c)’’. 
(c) CONTINUED EXCLUSION OF WORKING CONDI-
TION FRINGE BENEFITS.—Section 132(d) is amended by 
inserting ‘‘(determined without regard to section 262A)’’ 
after ‘‘section 162’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle E—Simplification and Re-
form of Exclusions and Taxable 
Compensation 
SEC. 1401. LIMITATION ON EXCLUSION FOR EMPLOYER- 
PROVIDED HOUSING. 
(a) IN GENERAL.—Section 119 is amended by adding 
at the end the following new subsection: 
‘‘(e) LIMITATION ON EXCLUSION OF LODGING.— 
‘‘(1) IN GENERAL.—The aggregate amount ex-
cluded from gross income of the taxpayer under sub-
sections (a) and (d) with respect to lodging for any 
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136 
taxable year shall not exceed $50,000 (half such 
amount in the case of a married individual filing a 
separate return). 
‘‘(2) LIMITATION TO 1 HOME.—Subsections (a) 
and (d) (separately and in combination) shall not 
apply with respect to more than 1 residence of the 
taxpayer at any given time. In the case of a joint re-
turn, the preceding sentence shall apply separately 
to each spouse for any period during which each 
spouse resides separate from the other spouse in a 
residence which is provided in connection with the 
employment of each spouse, respectively. 
‘‘(3) LIMITATION FOR HIGHLY COMPENSATED 
EMPLOYEES.— 
‘‘(A) REDUCED
FOR
EXCESS
COMPENSA-
TION.—In the case of an individual whose com-
pensation for the taxable year exceeds the 
amount in effect under section 414(q)(1)(B)(i) 
for the calendar in which such taxable year be-
gins, the $50,000 amount under paragraph (1) 
shall be reduced (but not below zero) by an 
amount equal to 50 percent of such excess. For 
purposes of the preceding sentence, the term 
‘compensation’ means wages (as defined in sec-
tion 3121(a) (without regard to the contribu-
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137 
tion and benefit base limitation in section 
3121(a)(1)). 
‘‘(B) EXCLUSION DENIED FOR 5-PERCENT 
OWNERS.—In the case of an individual who is 
a 5-percent owner (as defined in section 
416(i)(1)(B)(i)) of the employer at any time 
during the taxable year, the amount under 
paragraph (1) shall be zero.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1402. EXCLUSION OF GAIN FROM SALE OF A PRIN-
CIPAL RESIDENCE. 
(a) REQUIREMENT THAT RESIDENCE BE PRINCIPAL 
RESIDENCE FOR 5 YEARS DURING 8-YEAR PERIOD.— 
Subsection (a) of section 121 is amended— 
(1) by striking ‘‘5-year period’’ and inserting 
‘‘8-year period’’, and 
(2) by striking ‘‘2 years’’ and inserting ‘‘5 
years’’. 
(b) APPLICATION TO ONLY 1 SALE OR EXCHANGE 
EVERY 5 YEARS.—Paragraph (3) of section 121(b) is 
amended to read as follows: 
‘‘(3) APPLICATION
TO
ONLY
SALE
OR
EX-
CHANGE EVERY 5 YEARS.—Subsection (a) shall not 
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138 
apply to any sale or exchange by the taxpayer if, 
during the 5-year period ending on the date of such 
sale or exchange, there was any other sale or ex-
change by the taxpayer to which subsection (a) ap-
plied.’’. 
(c) PHASEOUT BASED
ON MODIFIED ADJUSTED 
GROSS INCOME.—Section 121 is amended by adding at 
the end the following new subsection: 
‘‘(h) PHASEOUT BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(1) IN GENERAL.—If the average modified ad-
justed gross income of the taxpayer for the taxable 
year and the 2 preceding taxable years exceeds 
$250,000 (twice such amount in the case of a joint 
return), the amount which would (but for this sub-
section) be excluded from gross income under sub-
section (a) for such taxable year shall be reduced 
(but not below zero) by the amount of such excess. 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of this subsection, the term ‘modified 
adjusted gross income’ means, with respect to any 
taxable year, adjusted gross income determined after 
application of this section (but without regard to 
subsection (b)(1) and this subsection). 
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139 
‘‘(3) SPECIAL RULE FOR JOINT RETURNS.—In 
the case of a joint return, the average modified ad-
justed gross income of the taxpayer shall be deter-
mined without regard to any taxable year with re-
spect to which the taxpayer did not file a joint re-
turn.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) The last paragraph of section 121(b) (relat-
ing to exclusion of gain allocated to nonqualified 
use) is redesignated as paragraph (5). 
(2) The following provisions of section 121 are 
each amended by striking ‘‘5-year period’’ each place 
it appears therein and inserting ‘‘8-year period’’: 
(A) Subsection (b)(5)(C)(ii)(I) (as redesig-
nated by paragraph (1)). 
(B) Subsection (c)(1)(B)(i)(I). 
(C) Subsection (d)(7)(B). 
(D) Subparagraphs (A) and (B) of sub-
section (d)(9). 
(E) Subsection (d)(10) 
(F) Subsection (d)(12)(A). 
(3) Section 121(c)(1)(B)(ii) is amended by 
striking ‘‘2 years’’ and inserting ‘‘5 years’’: 
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140 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales and exchanges after De-
cember 31, 2017. 
SEC. 1403. REPEAL OF EXCLUSION, ETC., FOR EMPLOYEE 
ACHIEVEMENT AWARDS. 
(a) IN GENERAL.—Section 74 is amended by striking 
subsection (c). 
(b) REPEAL OF LIMITATION ON DEDUCTION.—Sec-
tion 274 is amended by striking subsection (j). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 102(c)(2) is amended by striking 
the first sentence. 
(2) Section 414(n)(3)(C) is amended by strik-
ing ‘‘274(j),’’. 
(3) Section 414(t)(2) is amended by striking 
‘‘274(j),’’. 
(4) Section 3121(a)(20) is amended by striking 
‘‘74(c)’’. 
(5) Section 3231(e)(5) is amended by striking 
‘‘74(c),’’. 
(6) Section 3306(b)(16) is amended by striking 
‘‘74(c),’’. 
(7) Section 3401(a)(19) is amended by striking 
‘‘74(c),’’. 
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141 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1404. REPEAL OF EXCLUSION FOR DEPENDENT CARE 
ASSISTANCE PROGRAMS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 is amended by striking section 129 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 414(n)(3)(C) is amended by strik-
ing ‘‘, 129’’. 
(2) Section 414(r)(1) is amended by striking 
‘‘sections 129(d)(8) and’’ and inserting ‘‘section’’. 
(3) Section 414(t)(2) is amended by striking ‘‘, 
129’’. 
(4) Section 125(j)(6) is amended— 
(A) by inserting ‘‘or’’ before ‘‘section 
105(h)’’, and 
(B) by striking ‘‘, or paragraph (2), (3), 
(4), or (8) of section 129(d)’’. 
(5) Section 3121(a)(18) is amended by striking 
‘‘129,’’. 
(6) Section 3306(b)(13) is amended by striking 
‘‘129,’’. 
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142 
(7) Section 3401(a)(18) is amended by striking 
‘‘129,’’. 
(8) Section 6039D(d)(1) is amended by striking 
‘‘, 129’’. 
(9) Section 6051(a) is amended by striking 
paragraph (9). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1405. REPEAL OF EXCLUSION FOR QUALIFIED MOVING 
EXPENSE REIMBURSEMENT. 
(a) IN GENERAL.—Section 132(a) is amended by 
striking paragraph (6). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 82 is amended by striking ‘‘Except 
as provided in section 132(a)(6), there’’ and insert-
ing ‘‘There’’. 
(2) Section 132 is amended by striking sub-
section (g). 
(3) Section 132(l) is amended by striking by 
striking ‘‘subsections (e) and (g)’’ and inserting 
‘‘subsection (e)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
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143 
SEC. 1406. REPEAL OF EXCLUSION FOR ADOPTION ASSIST-
ANCE PROGRAMS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 is amended by striking section 137 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) 
Sections 
414(n)(3)(C), 
414(t)(2), 
74(d)(2)(B), 86(b)(2)(A), 219(g)(3)(A)(ii) are each 
amended by striking ‘‘, 137’’. 
(2) Section 1016(a), as amended by the pre-
ceding provision of this Act, is amended by striking 
paragraph (26). 
(3) Section 6039D(d)(1), as amended by the 
preceding provisions of this Act, is amended— 
(A) by striking ‘‘, or 137’’, and 
(B) by inserting ‘‘or’’ before ‘‘125’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
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144 
Subtitle F—Simplification and Re-
form of Savings, Pensions, Re-
tirement 
SEC. 1501. REPEAL OF SPECIAL RULE PERMITTING RE-
CHARACTERIZATION 
OF 
ROTH 
IRA 
CON-
TRIBUTIONS 
AS 
TRADITIONAL 
IRA 
CON-
TRIBUTIONS. 
(a) IN GENERAL.—Section 408A(d) is amended by 
striking paragraph (6) and by redesignating paragraph 
(7) as paragraph (6). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1502. REDUCTION IN MINIMUM AGE FOR ALLOWABLE 
IN-SERVICE DISTRIBUTIONS. 
(a) IN GENERAL.—Section 401(a)(36) is amended by 
striking ‘‘age 62’’ and inserting ‘‘age 59 1⁄2’’. 
(b) APPLICATION
TO
GOVERNMENTAL
SECTION 
457(b) PLANS.—Clause (i) of section 457(d)(1)(A) is 
amended by inserting ‘‘(in the case of a plan maintained 
by an employer described in subsection (e)(1)(A), age 59 
1⁄2)’’ before the comma at the end. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2017. 
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145 
SEC. 1503. MODIFICATION OF RULES GOVERNING HARD-
SHIP DISTRIBUTIONS. 
(a) IN GENERAL.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of the 
Treasury shall modify Treasury Regulation section 
1.401(k)–1(d)(3)(iv)(E) to— 
(1) delete the 6-month prohibition on contribu-
tions imposed by paragraph (2) thereof, and 
(2) make any other modifications necessary to 
carry 
out 
the 
purposes 
of 
section 
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
1986. 
(b) EFFECTIVE
DATE.—The revised regulations 
under this section shall apply to plan years beginning after 
December 31, 2017. 
SEC. 1504. MODIFICATION OF RULES RELATING TO HARD-
SHIP WITHDRAWALS FROM CASH OR DE-
FERRED ARRANGEMENTS. 
(a) IN GENERAL.—Section 401(k) is amended by 
adding at the end the following: 
‘‘(14) SPECIAL RULES RELATING TO HARDSHIP 
WITHDRAWALS.—For 
purposes 
of 
paragraph 
(2)(B)(i)(IV)— 
‘‘(A) AMOUNTS
WHICH
MAY
BE
WITH-
DRAWN.—The following amounts may be dis-
tributed upon hardship of the employee: 
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‘‘(i) Contributions to a profit-sharing 
or stock bonus plan to which section 
402(e)(3) applies. 
‘‘(ii) Qualified nonelective contribu-
tions (as defined in subsection (m)(4)(C)). 
‘‘(iii) Qualified matching contributions 
described in paragraph (3)(D)(ii)(I). 
‘‘(iv) Earnings on any contributions 
described in clause (i), (ii), or (iii). 
‘‘(B) NO REQUIREMENT TO TAKE AVAIL-
ABLE LOAN.—A distribution shall not be treat-
ed as failing to be made upon the hardship of 
an employee solely because the employee does 
not take any available loan under the plan.″.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
401(k)(2)(B)(i)(IV) is amended to read as follows: 
‘‘(IV) subject to the provisions of 
paragraph (14), upon hardship of the 
employee, or″.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2017. 
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147 
SEC. 1505. EXTENDED ROLLOVER PERIOD FOR THE ROLL-
OVER OF PLAN LOAN OFFSET AMOUNTS IN 
CERTAIN CASES. 
(a) IN GENERAL.—Paragraph (3) of section 402(c) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(C) ROLLOVER OF CERTAIN PLAN LOAN 
OFFSET AMOUNTS.— 
‘‘(i) IN GENERAL.—In the case of a 
qualified plan loan offset amount, para-
graph (1) shall not apply to any transfer 
of such amount made after the due date 
(including extensions) for filing the return 
of tax for the taxable year in which such 
amount is treated as distributed from a 
qualified employer plan. 
‘‘(ii) QUALIFIED PLAN LOAN OFFSET 
AMOUNT.—For purposes of this subpara-
graph, the term ‘qualified plan loan offset 
amount’ means a plan loan offset amount 
which is treated as distributed from a 
qualified employer plan to a participant or 
beneficiary solely by reason of— 
‘‘(I) the termination of the quali-
fied employer plan, or 
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148 
‘‘(II) the failure to meet the re-
payment terms of the loan from such 
plan because of the separation from 
service of the participant (whether 
due to layoff, cessation of business, 
termination of employment, or other-
wise). 
‘‘(iii) PLAN LOAN OFFSET AMOUNT.— 
For purposes of clause (ii), the term ‘plan 
loan offset amount’ means the amount by 
which the participant’s accrued benefit 
under the plan is reduced in order to repay 
a loan from the plan. 
‘‘(iv) 
LIMITATION.—This 
subpara-
graph shall not apply to any plan loan off-
set amount unless such plan loan offset 
amount relates to a loan to which section 
72(p)(1) does not apply by reason of sec-
tion 72(p)(2). 
‘‘(v) QUALIFIED EMPLOYER PLAN.— 
For purposes of this subsection, the term 
‘qualified employer plan’ has the meaning 
given such term by section 72(p)(4).’’. 
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149 
(b) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 402(c)(3) is amended by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 1506. MODIFICATION OF NONDISCRIMINATION RULES 
TO PROTECT OLDER, LONGER SERVICE PAR-
TICIPANTS. 
(a) IN GENERAL.—Section 401 is amended— 
(1) by redesignating subsection (o) as sub-
section (p), and 
(2) by inserting after subsection (n) the fol-
lowing new subsection: 
‘‘(o) 
SPECIAL
RULES
FOR
APPLYING
NON-
DISCRIMINATION RULES TO PROTECT OLDER, LONGER 
SERVICE AND GRANDFATHERED PARTICIPANTS.— 
‘‘(1) TESTING
OF
DEFINED
BENEFIT
PLANS 
WITH CLOSED CLASSES OF PARTICIPANTS.— 
‘‘(A) BENEFITS, RIGHTS, OR
FEATURES 
PROVIDED
TO
CLOSED
CLASSES.—A defined 
benefit plan which provides benefits, rights, or 
features to a closed class of participants shall 
not fail to satisfy the requirements of sub-
section (a)(4) by reason of the composition of 
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150 
such closed class or the benefits, rights, or fea-
tures provided to such closed class, if— 
‘‘(i) for the plan year as of which the 
class closes and the 2 succeeding plan 
years, such benefits, rights, and features 
satisfy the requirements of subsection 
(a)(4) (without regard to this subpara-
graph but taking into account the rules of 
subparagraph (I)), 
‘‘(ii) after the date as of which the 
class was closed, any plan amendment 
which modifies the closed class or the ben-
efits, rights, and features provided to such 
closed class does not discriminate signifi-
cantly in favor of highly compensated em-
ployees, and 
‘‘(iii) the class was closed before April 
5, 2017, or the plan is described in sub-
paragraph (C). 
‘‘(B) AGGREGATE TESTING WITH DEFINED 
CONTRIBUTION PLANS PERMITTED ON A BENE-
FITS BASIS.— 
‘‘(i) IN
GENERAL.—For purposes of 
determining compliance with subsection 
(a)(4) and section 410(b), a defined benefit 
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151 
plan described in clause (iii) may be aggre-
gated and tested on a benefits basis with 
1 or more defined contribution plans, in-
cluding with the portion of 1 or more de-
fined contribution plans which— 
‘‘(I) provides matching contribu-
tions 
(as 
defined 
in 
subsection 
(m)(4)(A)), 
‘‘(II) provides annuity contracts 
described in section 403(b) which are 
purchased with matching contribu-
tions or nonelective contributions, or 
‘‘(III) consists of an employee 
stock ownership plan (within the 
meaning of section 4975(e)(7)) or a 
tax credit employee stock ownership 
plan (within the meaning of section 
409(a)). 
‘‘(ii) SPECIAL RULES FOR MATCHING 
CONTRIBUTIONS.—For purposes of clause 
(i), if a defined benefit plan is aggregated 
with a portion of a defined contribution 
plan providing matching contributions— 
‘‘(I) such defined benefit plan 
must also be aggregated with any por-
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152 
tion of such defined contribution plan 
which provides elective deferrals de-
scribed in subparagraph (A) or (C) of 
section 402(g)(3), and 
‘‘(II) such matching contribu-
tions shall be treated in the same 
manner as nonelective contributions, 
including for purposes of applying the 
rules of subsection (l). 
‘‘(iii) PLANS DESCRIBED.—A defined 
benefit plan is described in this clause if— 
‘‘(I) the plan provides benefits to 
a closed class of participants, 
‘‘(II) for the plan year as of 
which the class closes and the 2 suc-
ceeding plan years, the plan satisfies 
the requirements of section 410(b) 
and subsection (a)(4) (without regard 
to this subparagraph but taking into 
account the rules of subparagraph 
(I)), 
‘‘(III) after the date as of which 
the class was closed, any plan amend-
ment which modifies the closed class 
or the benefits provided to such closed 
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153 
class does not discriminate signifi-
cantly in favor of highly compensated 
employees, and 
‘‘(IV) the class was closed before 
April 5, 2017, or the plan is described 
in subparagraph (C). 
‘‘(C) PLANS DESCRIBED.—A plan is de-
scribed in this subparagraph if, taking into ac-
count any predecessor plan— 
‘‘(i) such plan has been in effect for 
at least 5 years as of the date the class is 
closed, and 
‘‘(ii) during the 5-year period pre-
ceding the date the class is closed, there 
has not been a substantial increase in the 
coverage or value of the benefits, rights, or 
features described in subparagraph (A) or 
in the coverage or benefits under the plan 
described in subparagraph (B)(iii) (which-
ever is applicable). 
‘‘(D) DETERMINATION
OF
SUBSTANTIAL 
INCREASE FOR BENEFITS, RIGHTS, AND FEA-
TURES.—In applying subparagraph (C)(ii) for 
purposes of subparagraph (A)(iii), a plan shall 
be treated as having had a substantial increase 
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154 
in coverage or value of the benefits, rights, or 
features described in subparagraph (A) during 
the applicable 5-year period only if, during such 
period— 
‘‘(i) the number of participants cov-
ered by such benefits, rights, or features 
on the date such period ends is more than 
50 percent greater than the number of 
such participants on the first day of the 
plan year in which such period began, or 
‘‘(ii) such benefits, rights, and fea-
tures have been modified by 1 or more 
plan amendments in such a way that, as of 
the date the class is closed, the value of 
such benefits, rights, and features to the 
closed class as a whole is substantially 
greater than the value as of the first day 
of such 5-year period, solely as a result of 
such amendments. 
‘‘(E) DETERMINATION
OF
SUBSTANTIAL 
INCREASE FOR AGGREGATE TESTING ON BENE-
FITS BASIS.—In applying subparagraph (C)(ii) 
for purposes of subparagraph (B)(iii)(IV), a 
plan shall be treated as having had a substan-
tial increase in coverage or benefits during the 
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155 
applicable 5-year period only if, during such pe-
riod— 
‘‘(i) the number of participants bene-
fitting under the plan on the date such pe-
riod ends is more than 50 percent greater 
than the number of such participants on 
the first day of the plan year in which such 
period began, or 
‘‘(ii) the average benefit provided to 
such participants on the date such period 
ends is more than 50 percent greater than 
the average benefit provided on the first 
day of the plan year in which such period 
began. 
‘‘(F) 
CERTAIN
EMPLOYEES
DIS-
REGARDED.—For purposes of subparagraphs 
(D) and (E), any increase in coverage or value 
or in coverage or benefits, whichever is applica-
ble, which is attributable to such coverage and 
value or coverage and benefits provided to em-
ployees— 
‘‘(i) who became participants as a re-
sult of a merger, acquisition, or similar 
event which occurred during the 7-year pe-
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156 
riod preceding the date the class is closed, 
or 
‘‘(ii) who became participants by rea-
son of a merger of the plan with another 
plan which had been in effect for at least 
5 years as of the date of the merger, 
shall be disregarded, except that clause (ii) 
shall apply for purposes of subparagraph (D) 
only if, under the merger, the benefits, rights, 
or features under 1 plan are conformed to the 
benefits, rights, or features of the other plan 
prospectively. 
‘‘(G) RULES RELATING TO AVERAGE BEN-
EFIT.—For purposes of subparagraph (E)— 
‘‘(i) the average benefit provided to 
participants under the plan will be treated 
as having remained the same between the 
2 dates described in subparagraph (E)(ii) 
if the benefit formula applicable to such 
participants has not changed between such 
dates, and 
‘‘(ii) if the benefit formula applicable 
to 1 or more participants under the plan 
has changed between such 2 dates, then 
the average benefit under the plan shall be 
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157 
considered to have increased by more than 
50 percent only if— 
‘‘(I) the total amount determined 
under section 430(b)(1)(A)(i) for all 
participants benefitting under the 
plan for the plan year in which the 5- 
year period described in subparagraph 
(E) ends, exceeds 
‘‘(II) the total amount deter-
mined under section 430(b)(1)(A)(i) 
for all such participants for such plan 
year, by using the benefit formula in 
effect for each such participant for 
the first plan year in such 5-year pe-
riod, by more than 50 percent. 
In the case of a CSEC plan (as defined in 
section 414(y)), the normal cost of the 
plan 
(as 
determined 
under 
section 
433(j)(1)(B)) shall be used in lieu of the 
amount 
determined 
under 
section 
430(b)(1)(A)(i). 
‘‘(H) TREATMENT AS SINGLE PLAN.—For 
purposes of subparagraphs (E) and (G), a plan 
described in section 413(c) shall be treated as 
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158 
a single plan rather than as separate plans 
maintained by each participating employer. 
‘‘(I) SPECIAL
RULES.—For purposes of 
subparagraphs (A)(i) and (B)(iii)(II), the fol-
lowing rules shall apply: 
‘‘(i) In applying section 410(b)(6)(C), 
the closing of the class of participants shall 
not be treated as a significant change in 
coverage under section 410(b)(6)(C)(i)(II). 
‘‘(ii) 2 or more plans shall not fail to 
be eligible to be aggregated and treated as 
a single plan solely by reason of having dif-
ferent plan years. 
‘‘(iii) Changes in the employee popu-
lation shall be disregarded to the extent at-
tributable to individuals who become em-
ployees or cease to be employees, after the 
date the class is closed, by reason of a 
merger, acquisition, divestiture, or similar 
event. 
‘‘(iv) Aggregation and all other testing 
methodologies otherwise applicable under 
subsection (a)(4) and section 410(b) may 
be taken into account. 
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159 
The rule of clause (ii) shall also apply for pur-
poses of determining whether plans to which 
subparagraph (B)(i) applies may be aggregated 
and treated as 1 plan for purposes of deter-
mining whether such plans meet the require-
ments of subsection (a)(4) and section 410(b). 
‘‘(J) SPUN-OFF PLANS.—For purposes of 
this paragraph, if a portion of a defined benefit 
plan described in subparagraph (A) or (B)(iii) 
is spun off to another employer and the spun- 
off plan continues to satisfy the requirements 
of— 
‘‘(i) 
subparagraph 
(A)(i) 
or 
(B)(iii)(II), whichever is applicable, if the 
original plan was still within the 3-year pe-
riod described in such subparagraph at the 
time of the spin off, and 
‘‘(ii) 
subparagraph 
(A)(ii) 
or 
(B)(iii)(III), whichever is applicable, 
the treatment under subparagraph (A) or (B) 
of the spun-off plan shall continue with respect 
to such other employer. 
‘‘(2) TESTING
OF
DEFINED
CONTRIBUTION 
PLANS.— 
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160 
‘‘(A) TESTING ON A BENEFITS BASIS.—A 
defined contribution plan shall be permitted to 
be tested on a benefits basis if— 
‘‘(i) such defined contribution plan 
provides make-whole contributions to a 
closed class of participants whose accruals 
under a defined benefit plan have been re-
duced or eliminated, 
‘‘(ii) for the plan year of the defined 
contribution plan as of which the class eli-
gible to receive such make-whole contribu-
tions closes and the 2 succeeding plan 
years, such closed class of participants sat-
isfies 
the 
requirements 
of 
section 
410(b)(2)(A)(i) (determined by applying 
the rules of paragraph (1)(I)), 
‘‘(iii) after the date as of which the 
class was closed, any plan amendment to 
the defined contribution plan which modi-
fies the closed class or the allocations, ben-
efits, rights, and features provided to such 
closed class does not discriminate signifi-
cantly in favor of highly compensated em-
ployees, and 
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161 
‘‘(iv) the class was closed before April 
5, 2017, or the defined benefit plan under 
clause (i) is described in paragraph (1)(C) 
(as applied for purposes of paragraph 
(1)(B)(iii)(IV)). 
‘‘(B) AGGREGATION WITH PLANS INCLUD-
ING MATCHING CONTRIBUTIONS.— 
‘‘(i) IN GENERAL.—With respect to 1 
or more defined contribution plans de-
scribed in subparagraph (A), for purposes 
of determining compliance with subsection 
(a)(4) and section 410(b), the portion of 
such plans which provides make-whole con-
tributions or other nonelective contribu-
tions may be aggregated and tested on a 
benefits basis with the portion of 1 or 
more other defined contribution plans 
which— 
‘‘(I) provides matching contribu-
tions 
(as 
defined 
in 
subsection 
(m)(4)(A)), 
‘‘(II) provides annuity contracts 
described in section 403(b) which are 
purchased with matching contribu-
tions or nonelective contributions, or 
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162 
‘‘(III) consists of an employee 
stock ownership plan (within the 
meaning of section 4975(e)(7)) or a 
tax credit employee stock ownership 
plan (within the meaning of section 
409(a)). 
‘‘(ii) SPECIAL RULES FOR MATCHING 
CONTRIBUTIONS.—Rules similar to the 
rules of paragraph (1)(B)(ii) shall apply 
for purposes of clause (i). 
‘‘(C) SPECIAL
RULES
FOR
TESTING
DE-
FINED
CONTRIBUTION
PLAN
FEATURES
PRO-
VIDING MATCHING CONTRIBUTIONS TO CERTAIN 
OLDER, LONGER
SERVICE
PARTICIPANTS.—In 
the case of a defined contribution plan which 
provides benefits, rights, or features to a closed 
class of participants whose accruals under a de-
fined benefit plan have been reduced or elimi-
nated, the plan shall not fail to satisfy the re-
quirements of subsection (a)(4) solely by reason 
of the composition of the closed class or the 
benefits, rights, or features provided to such 
closed class if the defined contribution plan and 
defined benefit plan otherwise meet the require-
ments of subparagraph (A) but for the fact that 
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163 
the make-whole contributions under the defined 
contribution plan are made in whole or in part 
through matching contributions. 
‘‘(D) SPUN-OFF PLANS.—For purposes of 
this paragraph, if a portion of a defined con-
tribution plan described in subparagraph (A) or 
(C) is spun off to another employer, the treat-
ment under subparagraph (A) or (C) of the 
spun-off plan shall continue with respect to the 
other employer if such plan continues to comply 
with the requirements of clauses (ii) (if the 
original plan was still within the 3-year period 
described in such clause at the time of the spin 
off) and (iii) of subparagraph (A), as deter-
mined for purposes of subparagraph (A) or (C), 
whichever is applicable. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) MAKE-WHOLE CONTRIBUTIONS.—Ex-
cept as otherwise provided in paragraph (2)(C), 
the term ‘make-whole contributions’ means non-
elective allocations for each employee in the 
class which are reasonably calculated, in a con-
sistent manner, to replace some or all of the re-
tirement benefits which the employee would 
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164 
have received under the defined benefit plan 
and any other plan or qualified cash or deferred 
arrangement under subsection (k)(2) if no 
change had been made to such defined benefit 
plan and such other plan or arrangement. For 
purposes of the preceding sentence, consistency 
shall not be required with respect to employees 
who were subject to different benefit formulas 
under the defined benefit plan. 
‘‘(B) REFERENCES TO CLOSED CLASS OF 
PARTICIPANTS.—References to a closed class of 
participants and similar references to a closed 
class shall include arrangements under which 1 
or more classes of participants are closed, ex-
cept that 1 or more classes of participants 
closed on different dates shall not be aggre-
gated for purposes of determining the date any 
such class was closed. 
‘‘(C) HIGHLY COMPENSATED EMPLOYEE.— 
The term ‘highly compensated employee’ has 
the meaning given such term in section 
414(q).″.’’. 
(b) 
PARTICIPATION
REQUIREMENTS.—Paragraph 
(26) of section 401(a) is amended by adding at the end 
the following new subparagraph: 
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165 
‘‘(I) PROTECTED PARTICIPANTS.— 
‘‘(i) IN
GENERAL.—A plan shall be 
deemed to satisfy the requirements of sub-
paragraph (A) if— 
‘‘(I) the plan is amended— 
‘‘(aa) to cease all benefit ac-
cruals, or 
‘‘(bb) to provide future ben-
efit accruals only to a closed 
class of participants, 
‘‘(II) the plan satisfies subpara-
graph (A) (without regard to this sub-
paragraph) as of the effective date of 
the amendment, and 
‘‘(III) the amendment was adopt-
ed before April 5, 2017, or the plan is 
described in clause (ii). 
‘‘(ii) PLANS DESCRIBED.—A plan is 
described in this clause if the plan would 
be described in subsection (o)(1)(C), as ap-
plied 
for 
purposes 
of 
subsection 
(o)(1)(B)(iii)(IV) and by treating the effec-
tive date of the amendment as the date the 
class was closed for purposes of subsection 
(o)(1)(C). 
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166 
‘‘(iii) SPECIAL RULES.—For purposes 
of clause (i)(II), in applying section 
410(b)(6)(C), the amendments described in 
clause (i) shall not be treated as a signifi-
cant change in coverage under section 
410(b)(6)(C)(i)(II). 
‘‘(iv) SPUN-OFF
PLANS.—For pur-
poses of this subparagraph, if a portion of 
a plan described in clause (i) is spun off to 
another employer, the treatment under 
clause (i) of the spun-off plan shall con-
tinue with respect to the other employer.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall take effect on the date of the enactment of this 
Act, without regard to whether any plan modifica-
tions referred to in such amendments are adopted or 
effective before, on, or after such date of enactment. 
(2) SPECIAL RULES.— 
(A) ELECTION
OF
EARLIER
APPLICA-
TION.—At the election of the plan sponsor, the 
amendments made by this section shall apply to 
plan years beginning after December 31, 2013. 
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167 
(B) CLOSED CLASSES OF PARTICIPANTS.— 
For 
purposes 
of 
paragraphs 
(1)(A)(iii), 
(1)(B)(iii)(IV), and (2)(A)(iv) of section 401(o) 
of the Internal Revenue Code of 1986 (as added 
by this section), a closed class of participants 
shall be treated as being closed before April 5, 
2017, if the plan sponsor’s intention to create 
such closed class is reflected in formal written 
documents and communicated to participants 
before such date. 
(C) 
CERTAIN
POST-ENACTMENT
PLAN 
AMENDMENTS.—A plan shall not be treated as 
failing to be eligible for the application of sec-
tion 
401(o)(1)(A), 
401(o)(1)(B)(iii), 
or 
401(a)(26) of such Code (as added by this sec-
tion) to such plan solely because in the case 
of— 
(i) such section 401(o)(1)(A), the plan 
was amended before the date of the enact-
ment of this Act to eliminate 1 or more 
benefits, rights, or features, and is further 
amended after such date of enactment to 
provide such previously eliminated benefits, 
rights, or features to a closed class of par-
ticipants, or 
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168 
(ii) such section 401(o)(1)(B)(iii) or 
section 401(a)(26), the plan was amended 
before the date of the enactment of this 
Act to cease all benefit accruals, and is 
further amended after such date of enact-
ment to provide benefit accruals to a closed 
class of participants. Any such section 
shall only apply if the plan otherwise meets 
the requirements of such section and in ap-
plying such section, the date the class of 
participants is closed shall be the effective 
date of the later amendment. 
Subtitle G—Estate, Gift, and Gen-
eration-skipping Transfer Taxes 
SEC. 1601. INCREASE IN CREDIT AGAINST ESTATE, GIFT, 
AND GENERATION-SKIPPING TRANSFER TAX. 
(a) IN GENERAL.—Section 2010(c)(3) is amended by 
striking ‘‘$5,000,000’’ and inserting ‘‘$10,000,000’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, gen-
eration-skipping transfers, and gifts made, after Decem-
ber 31, 2017. 
SEC. 1602. REPEAL OF ESTATE AND GENERATION-SKIPPING 
TRANSFER TAXES. 
(a) ESTATE TAX REPEAL.— 
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169 
(1) IN GENERAL.—Subchapter C of chapter 11 
is amended by adding at the end the following new 
section: 
‘‘SEC. 2210. TERMINATION. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), this chapter shall not apply to the estates of decedents 
dying after December 31, 2023. 
‘‘(b) CERTAIN DISTRIBUTIONS FROM QUALIFIED 
DOMESTIC TRUSTS.—In applying section 2056A with re-
spect to the surviving spouse of a decedent dying on or 
before December 31, 2023— 
‘‘(1) section 2056A(b)(1)(A) shall not apply to 
distributions made after the 10-year period begin-
ning on such date, and 
‘‘(2) section 2056A(b)(1)(B) shall not apply 
after such date.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
1014(b) is amended— 
(A) in paragraph (6), by striking ‘‘was in-
cludible in determining’’ and all that follows 
through the end and inserting ‘‘was includible 
(or would have been includible without regard 
to section 2210) in determining the value of the 
decedent’s gross estate under chapter 11 of 
subtitle B’’, 
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170 
(B) in paragraph (9), by striking ‘‘required 
to be included’’ through ‘‘Code of 1939’’ and 
inserting ‘‘required to be included (or would 
have been required to be included without re-
gard to section 2210) in determining the value 
of the decedent’s gross estate under chapter 11 
of subtitle B’’, and 
(C) in paragraph (10), by striking ‘‘Prop-
erty includible in the gross estate’’ and insert-
ing ‘‘Property includible (or which would have 
been includible without regard to section 2210) 
in the gross estate’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter C of chapter 11 is amended by 
adding at the end the following new item: 
‘‘Sec. 2210. Termination.’’. 
(b) GENERATION-SKIPPING
TRANSFER
TAX
RE-
PEAL.— 
(1) IN GENERAL.—Subchapter G of chapter 13 
of subtitle B of such Code is amended by adding at 
the end the following new section: 
‘‘SEC. 2664. TERMINATION. 
‘‘This chapter shall not apply to generation-skipping 
transfers after December 31, 2023.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter G of chapter 13 of such Code 
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171 
is amended by adding at the end the following new 
item: 
‘‘Sec. 2664. Termination.’’. 
(c) CONFORMING AMENDMENTS RELATED TO GIFT 
TAX.— 
(1) COMPUTATION OF GIFT TAX.—Section 2502 
is amended by adding at the end the following new 
subsection: 
‘‘(d) GIFTS MADE AFTER 2023.— 
‘‘(1) IN GENERAL.—In the case of a gift made 
after December 31, 2023, subsection (a) shall be ap-
plied by substituting ‘subsection (d)(2)’ for ‘section 
2001(c)’ and ‘such subsection’ for ‘such section’. 
‘‘(2) RATE SCHEDULE.— 
‘‘If the amount with respect to which the 
tentative tax to be computed is:.
The tentative tax 
is: 
Not over $10,000 ...........................................................
18% of such amount. 
Over $10,000 but not over $20,000 ..............................
$1,800, plus 20% of 
the excess over 
$10,000. 
Over $20,000 but not over $40,000 ..............................
$3,800, plus 22% of 
the excess over 
$20,000. 
Over $40,000 but not over $60,000 ..............................
$8,200, plus 24% of 
the excess over 
$40,000. 
Over $60,000 but not over $80,000 ..............................
$13,000, plus 26% of 
the excess over 
$60,000. 
Over $80,000 but not over $100,000 ............................
$18,200, plus 28% of 
the excess over 
$80,000. 
Over $100,000 but not over $150,000 ..........................
$23,800, plus 30% of 
the excess over 
$100,000. 
Over $150,000 but not over $250,000 ..........................
$38,800, plus 32% of 
the excess of 
$150,000. 
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172 
Over $250,000 but not over $500,000 ..........................
$70,800, plus 34% of 
the excess over 
$250,000. 
Over $500,000 ...............................................................
$155,800, plus 35% of 
the excess of 
$500,000.’’. 
(2) LIFETIME GIFT EXEMPTION.—Section 2505 
is amended by adding at the end the following new 
subsection: 
‘‘(d) GIFTS MADE AFTER 2023.— 
‘‘(1) IN GENERAL.—In the case of a gift made 
after December 31, 2023, subsection (a)(1) shall be 
applied by substituting ‘the amount of the tentative 
tax which would be determined under the rate sched-
ule set forth in section 2502(a)(2) if the amount 
with respect to which such tentative tax is to be 
computed were $10,000,000’ for ‘the applicable 
credit amount in effect under section 2010(c) which 
would apply if the donor died as of the end of the 
calendar year’. 
‘‘(2) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of any cal-
endar year after 2023, the dollar amount in 
subsection (a)(1) (after application of this sub-
section) shall be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
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173 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year by substituting ‘calendar 
year 2011’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
‘‘(B) ROUNDING.—If any amount as ad-
justed under paragraph (1) is not a multiple of 
$10,000, such amount shall be rounded to the 
nearest multiple of $10,000.’’. 
(3) OTHER
CONFORMING
AMENDMENTS
RE-
LATED TO GIFT TAX.—Section 2801 is amended by 
adding at the end the following new subsection: 
striking and inserting ‘‘section 2502(a)(2)’’ 
‘‘(g) GIFTS RECEIVED AFTER 2023.—In the case of 
a gift received after December 31, 2023, subsection (a)(1) 
shall be applied by substituting ‘section 2502(a)(2)’ for 
‘section 2001(c) as in effect on the date of such receipt’.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, gen-
eration-skipping transfers, and gifts made, after Decem-
ber 31, 2023. 
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174 
TITLE II—ALTERNATIVE 
MINIMUM TAX REPEAL 
SEC. 2001. REPEAL OF ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subchapter A of chapter 1 is 
amended by striking part VI (and by striking the item 
relating to such part in the table of parts for subchapter 
A). 
(b) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABIL-
ITY.— 
(1) LIMITATION.—Subsection (c) of section 53 
is amended to read as follows: 
‘‘(c) LIMITATION.—The credit allowable under sub-
section (a) shall not exceed the regular tax liability of the 
taxpayer reduced by the sum of the credits allowed under 
subparts A, B, and D.’’. 
(2) CREDITS TREATED AS REFUNDABLE.—Sec-
tion 53 is amended by adding at the end the fol-
lowing new subsection: 
‘‘(e) PORTION OF CREDIT TREATED AS REFUND-
ABLE.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in 2019, 2020, 2021, or 2022, the 
limitation under subsection (c) shall be increased by 
the AMT refundable credit amount for such year. 
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175 
‘‘(2) AMT REFUNDABLE
CREDIT
AMOUNT.— 
For purposes of paragraph (1), the AMT refundable 
credit amount is an amount equal to 50 percent 
(100 percent in the case of a taxable year beginning 
in 2022) of the excess (if any) of— 
‘‘(A) the minimum tax credit determined 
under subsection (b) for the taxable year, over 
‘‘(B) the minimum tax credit allowed 
under subsection (a) for such year (before the 
application of this subsection for such year). 
‘‘(3) CREDIT REFUNDABLE.—For purposes of 
this title (other than this section), the credit allowed 
by reason of this subsection shall be treated as a 
credit allowed under subpart C (and not this sub-
part). 
‘‘(4) SHORT TAXABLE YEARS.—In the case of 
any taxable year of less than 365 days, the AMT re-
fundable credit amount determined under paragraph 
(2) with respect to such taxable year shall be the 
amount which bears the same ratio to such amount 
determined without regard to this paragraph as the 
number of days in such taxable year bears to 365.’’. 
(3) TREATMENT
OF
REFERENCES.—Section 
53(d) is amended by adding at the end the following 
new paragraph: 
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176 
‘‘(3) AMT TERM REFERENCES.—Any references 
in this subsection to section 55, 56, or 57 shall be 
treated as a reference to such section as in effect be-
fore its repeal by the Tax Cuts and Jobs Act.’’. 
(c) CONFORMING AMENDMENTS RELATED TO AMT 
REPEAL.— 
(1) Section 2(d) is amended by striking ‘‘sec-
tions 1 and 55’’ and inserting ‘‘section 1’’. 
(2) Section 5(a) is amended by striking para-
graph (4). 
(3) Section 11(d) is amended by striking ‘‘the 
taxes imposed by subsection (a) and section 55’’ and 
inserting ‘‘the tax imposed by subsection (a)’’. 
(4) Section 12 is amended by striking para-
graph (7). 
(5) Section 26(a) is amended to read as follows: 
‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The 
aggregate amount of credits allowed by this subpart for 
the taxable year shall not exceed the taxpayer’s regular 
tax liability for the taxable year.’’. 
(6) Section 26(b)(2) is amended by striking 
subparagraph (A). 
(7) Section 26 is amended by striking sub-
section (c). 
(8) Section 38(c) is amended— 
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177 
(A) by striking paragraphs (1) through 
(5), 
(B) by redesignating paragraph (6) as 
paragraph (2), 
(C) by inserting before paragraph (2) (as 
so redesignated) the following new paragraph: 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess (if any) of— 
‘‘(A) the sum of— 
‘‘(i) so much of the regular tax liabil-
ity as does not exceed $25,000, plus 
‘‘(ii) 75 percent of so much of the reg-
ular tax liability as exceeds $25,000, over 
‘‘(B) the sum of the credits allowable 
under subparts A and B of this part.’’, and 
(D) by striking ‘‘subparagraph (B) of 
paragraph (1)’’ each place it appears in para-
graph (2) (as so redesignated) and inserting 
‘‘clauses (i) and (ii) of paragraph (1)(A)’’. 
(9) Section 39(a) is amended— 
(A) by striking ‘‘or the eligible small busi-
ness credits’’ in paragraph (3)(A), and 
(B) by striking paragraph (4). 
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178 
(10) Section 45D(g)(4)(B) is amended by strik-
ing ‘‘or for purposes of section 55’’. 
(11) Section 54(c)(1) is amended to read as fol-
lows: 
‘‘(1) regular tax liability (as defined in section 
26(b)), over’’. 
(12) Section 54A(c)(1)(A) is amended to read 
as follows: 
‘‘(A) regular tax liability (as defined in 
section 26(b)), over’’. 
(13) Section 148(b)(3) is amended to read as 
follows: 
‘‘(3) TAX-EXEMPT BONDS NOT TREATED AS IN-
VESTMENT PROPERTY.—The term ‘investment prop-
erty’ does not include any tax-exempt bond.’’. 
(14) Section 168(k)(2) is amended by striking 
subparagraph (G). 
(15) Section 168(k) is amended by striking 
paragraph (4). 
(16) Section 168(k)(5) is amended by striking 
subparagraph (E). 
(17) Section 168(m)(2)(B)(i) is amended by 
striking ‘‘(determined without regard to paragraph 
(4) thereof)’’. 
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179 
(18) Section 168(m)(2) is amended by striking 
subparagraph (D). 
(19) Section 173 is amended by striking sub-
section (b). 
(20) Section 174(f) is amended to read as fol-
lows: 
‘‘(f) CROSS REFERENCE.—For adjustments to basis 
of property for amounts allowed as deductions as deferred 
expenses under subsection (b), see section 1016(a)(14).’’. 
(21) Section 263(c) is amended by striking 
‘‘section 59(e) or 291’’ and inserting ‘‘section 291’’. 
(22) Section 263A(c) is amended by striking 
paragraph (6) and by redesignating paragraph (7) 
(as amended) as paragraph (6). 
(23) Section 382(l) is amended by striking 
paragraph (7) and by redesignating paragraph (8) 
as paragraph (7). 
(24) Section 443 is amended by striking sub-
section (d) and by redesignating subsection (e) as 
subsection (d). 
(25) Section 616 is amended by striking sub-
section (e). 
(26) Section 617 is amended by striking sub-
section (i). 
(27) Section 641(c) is amended— 
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180 
(A) in paragraph (2) by striking subpara-
graph (B) and by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) and (C), re-
spectively, and 
(B) in paragraph (3), by striking ‘‘para-
graph 
(2)(C)’’ 
and 
inserting 
‘‘paragraph 
(2)(B)’’. 
(28) Subsections (b) and (c) of section 666 are 
each amended by striking ‘‘(other than the tax im-
posed by section 55)’’. 
(29) Section 848 is amended by striking sub-
section (i). 
(30) Section 860E(a) is amended by striking 
paragraph (4). 
(31) Section 871(b)(1) is amended by striking 
‘‘or 55’’. 
(32) Section 882(a)(1) is amended by striking 
‘‘55,’’. 
(33) Section 897(a) is amended to read as fol-
lows: 
‘‘(a) TREATMENT
AS EFFECTIVELY CONNECTED 
WITH UNITED STATES TRADE OR BUSINESS.—For pur-
poses of this title, gain or loss of a nonresident alien indi-
vidual or a foreign corporation from the disposition of a 
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181 
United States real property interest shall be taken into 
account— 
‘‘(1) in the case of a nonresident alien indi-
vidual, under section 871(b)(1), or 
‘‘(2) in the case of a foreign corporation, under 
section 882(a)(1), 
as if the taxpayer were engaged in a trade or business 
within the United States during the taxable year and as 
if such gain or loss were effectively connected with such 
trade or business.’’. 
(34) Section 904(k) is amended to read as fol-
lows: 
‘‘(k) CROSS REFERENCE.—For increase of limitation 
under subsection (a) for taxes paid with respect to 
amounts received which were included in the gross income 
of the taxpayer for a prior taxable year as a United States 
shareholder with respect to a controlled foreign corpora-
tion, see section 960(b).’’. 
(35) Section 911(f) is amended to read as fol-
lows: 
‘‘(f) DETERMINATION OF TAX LIABILITY.— 
‘‘(1) IN GENERAL.—If, for any taxable year, 
any amount is excluded from gross income of a tax-
payer under subsection (a), then, notwithstanding 
section 1, if such taxpayer has taxable income for 
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182 
such taxable year, the tax imposed by section 1 for 
such taxable year shall be equal to the excess (if 
any) of— 
‘‘(A) the tax which would be imposed by 
section 1 for such taxable year if the taxpayer’s 
taxable income were increased by the amount 
excluded under subsection (a) for such taxable 
year, over 
‘‘(B) the tax which would be imposed by 
section 1 for such taxable year if the taxpayer’s 
taxable income were equal to the amount ex-
cluded under subsection (a) for such taxable 
year. 
For purposes of this paragraph, the amount ex-
cluded under subsection (a) shall be reduced by the 
aggregate amount of any deductions or exclusions 
disallowed under subsection (d)(6) with respect to 
such excluded amount. 
‘‘(2) TREATMENT OF CAPITAL GAIN EXCESS.— 
‘‘(A) IN
GENERAL.—In applying section 
1(h) for purposes of determining the tax under 
paragraph (1)(A) for any taxable year in which, 
without regard to this subsection, the tax-
payer’s net capital gain exceeds taxable income 
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183 
(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 tax-
payer’s net capital gain (determined with-
out regard to section 1(h)(11) and the re-
duction 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) DEFINITIONS.—Terms used in this 
paragraph which are also used in section 1(h) 
shall have the respective meanings given such 
terms by section 1(h).’’. 
(36) Section 962(a)(1) is amended— 
(A) by striking ‘‘sections 1 and 55’’ and 
inserting ‘‘section 1’’, and 
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(B) by striking ‘‘sections 11 and 55’’ and 
inserting ‘‘section 11’’. 
(37) Section 1016(a) is amended by striking 
paragraph (20). 
(38) Section 1202(a)(4) is amended by insert-
ing ‘‘and’’ at the end of subparagraph (A), by strik-
ing ‘‘, and’’ and inserting a period at the end of sub-
paragraph (B), and by striking subparagraph (C). 
(39) Section 1374(b)(3)(B) is amended by 
striking the last sentence thereof. 
(40) Section 1561(a) is amended— 
(A) by inserting ‘‘and’’ at the end of para-
graph (1), by striking ‘‘, and’’ at the end of 
paragraph (2) and inserting a period, and by 
striking paragraph (3), and 
(B) by striking the last sentence. 
(41) Section 6015(d)(2)(B) is amended by 
striking ‘‘or 55’’. 
(42) Section 6211(b)(4)(A) is amended by 
striking‘‘, 168(k)(4)’’. 
(43) Section 6425(c)(1)(A) is amended to read 
as follows: 
‘‘(A) the tax imposed under section 11 or 
subchapter L of chapter 1, whichever is applica-
ble, over’’. 
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185 
(44) Section 6654(d)(2) is amended— 
(A) in clause (i) of subparagraph (B), by 
striking ‘‘, alternative minimum taxable in-
come,’’, and 
(B) in clause (i) of subparagraph (C), by 
striking ‘‘, alternative minimum taxable in-
come,’’. 
(45) Section 6655(e)(2)(B)(i) is amended by 
striking ‘‘The taxable income and alternative min-
imum taxable income shall’’ and inserting ‘‘Taxable 
income shall’’. 
(46) Section 6655(g)(1)(A) is amended by add-
ing ‘‘plus’’ at the end of clause (i), by striking clause 
(ii), and by redesignating clause (iii) as clause (ii). 
(47) Section 6662(e)(3)(C) is amended by strik-
ing ‘‘the regular tax (as defined in section 55(c))’’ 
and inserting ‘‘the regular tax liability (as defined in 
section 26(b))’’. 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) PRIOR ELECTIONS WITH RESPECT TO CER-
TAIN TAX PREFERENCES.—So much of the amend-
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186 
ment made by subsection (a) as relates to the repeal 
of section 59(e) of the Internal Revenue Code of 
1986 shall apply to amounts paid or incurred after 
December 31, 2017. 
(3) TREATMENT
OF
NET
OPERATING
LOSS 
CARRYBACKS.—For purposes of section 56(d) of the 
Internal Revenue Code of 1986 (as in effect before 
its repeal), the amount of any net operating loss 
which may be carried back from a taxable year be-
ginning after December 31, 2017, to taxable years 
beginning before January 1, 2018, shall be deter-
mined without regard to any adjustments under sec-
tion 56(d)(2)(A) of such Code (as so in effect). 
TITLE III—BUSINESS TAX 
REFORM 
Subtitle A—Tax Rates 
SEC. 3001. REDUCTION IN CORPORATE TAX RATE. 
(a) IN GENERAL.—Section 11(b) is amended to read 
as follows: 
‘‘(b) AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amount of the tax im-
posed by subsection (a) shall be 20 percent of tax-
able income. 
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‘‘(2) SPECIAL RULE FOR PERSONAL SERVICE 
CORPORATIONS.— 
‘‘(A) IN GENERAL.—In the case of a per-
sonal service corporation (as defined in section 
448(d)(2)), the amount of the tax imposed by 
subsection (a) shall be 25 percent of taxable in-
come. 
‘‘(B) 
REFERENCES
TO
CORPORATE 
RATE.—Any reference to the rate imposed 
under this section or to the highest rate in ef-
fect under this section (or any similar ref-
erence) shall be determined without regard to 
the rate imposed with respect to personal serv-
ice corporations (as so defined).’’. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Part I of subchapter P of chapter 1 is 
amended by striking section 1201 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(B) Section 12 is amended by striking para-
graph (4). 
(C) Section 527(b) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby 
imposed’’ and inserting: 
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‘‘(b) TAX IMPOSED.—A tax’’. 
(D) Section 594(a) is amended by striking 
‘‘taxes imposed by section 11 or 1201(a)’’ and in-
serting ‘‘tax imposed by section 11’’. 
(E) Section 691(c)(4) is amended by striking 
‘‘1201,’’. 
(F) Section 801(a) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby 
imposed’’ and inserting: 
‘‘(a) TAX IMPOSED.—A tax’’. 
(G) Section 831(e) is amended by striking para-
graph (1) and by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively. 
(H) Sections 832(c)(5) and 834(b)(1)(D) are 
each amended by striking ‘‘sec. 1201 and fol-
lowing,’’. 
(I) Section 852(b)(3)(A) is amended by striking 
‘‘section 1201(a)’’ and inserting ‘‘section 11(b)(1)’’. 
(J) Section 857(b)(3) is amended— 
(i) by striking subparagraph (A) and re-
designating subparagraphs (B) through (F) as 
subparagraphs (A) through (E), respectively, 
(ii) in subparagraph (C), as so redesig-
nated— 
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189 
(I) by striking ‘‘subparagraph (A)(ii)’’ 
in clause (i) thereof and inserting ‘‘para-
graph (1)’’, 
(II) by striking ‘‘the tax imposed by 
subparagraph (A)(ii)’’ in clauses (ii) and 
(iv) thereof and inserting ‘‘the tax imposed 
by paragraph (1) on undistributed capital 
gain’’, 
(iii) in subparagraph (E), as so redesig-
nated, by striking ‘‘subparagraph (B) or (D)’’ 
and inserting ‘‘subparagraph (A) or (C)’’, and 
(iv) by adding at the end the following new 
subparagraph: 
‘‘(F) UNDISTRIBUTED
CAPITAL
GAIN.— 
For purposes of this paragraph, the term ‘un-
distributed capital gain’ means the excess of the 
net capital gain over the deduction for divi-
dends paid (as defined in section 561) deter-
mined with reference to capital gain dividends 
only.’’. 
(K) Section 882(a)(1) is amended by striking ‘‘, 
or 1201(a)’’. 
(L) Section 1374(b) is amended by striking 
paragraph (4). 
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190 
(M) Section 1381(b) is amended by striking 
‘‘taxes imposed by section 11 or 1201’’ and inserting 
‘‘tax imposed by section 11’’. 
(N) Section 6655(g)(1)(A)(i) is amended by 
striking ‘‘or 1201(a),’’. 
(O) Section 7518(g)(6)(A) is amended by strik-
ing ‘‘or 1201(a)’’. 
(2) Section 1445(e)(1) is amended by striking 
‘‘35 percent (or, to the extent provided in regula-
tions, 20 percent)’’ and inserting ‘‘20 percent’’. 
(3) Section 1445(e)(2) is amended by striking 
‘‘35 percent’’ and inserting ‘‘20 percent’’. 
(4) Section 1445(e)(6) is amended by striking 
‘‘35 percent (or, to the extent provided in regula-
tions, 20 percent)’’ and inserting ‘‘20 percent’’. 
(5)(A) Part I of subchapter B of chapter 5 is 
amended by striking section 1551 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(B) Section 12 is amended by striking para-
graph (6). 
(C) Section 535(c)(5) is amended to read as 
follows: 
‘‘(5) CROSS
REFERENCE.—For limitation on 
credit provided in paragraph (2) or (3) in the case 
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191 
of certain controlled corporations, see section 
1561.’’. 
(6)(A) Section 1561, as amended by the pre-
ceding provisions of this Act, is amended to read as 
follows: 
‘‘SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS 
CREDIT IN THE CASE OF CERTAIN CON-
TROLLED CORPORATIONS. 
‘‘(a) IN GENERAL.—The component members of a 
controlled group of corporations on a December 31 shall, 
for their taxable years which include such December 31, 
be limited for purposes of this subtitle to one $250,000 
($150,000 if any component member is a corporation de-
scribed in section 535(c)(2)(B)) amount for purposes of 
computing the accumulated earnings credit under section 
535(c)(2) and (3). Such amount shall be divided equally 
among the component members of such group on such De-
cember 31 unless the Secretary prescribes regulations per-
mitting an unequal allocation of such amount. 
‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a cor-
poration has a short taxable year which does not include 
a December 31 and is a component member of a controlled 
group of corporations with respect to such taxable year, 
then for purposes of this subtitle, the amount to be used 
in computing the accumulated earnings credit under sec-
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192 
tion 535(c)(2) and (3) of such corporation for such taxable 
year shall be the amount specified in subsection (a) with 
respect to such group, divided by the number of corpora-
tions which are component members of such group on the 
last day of such taxable year. For purposes of the pre-
ceding sentence, section 1563(b) shall be applied as if such 
last day were substituted for December 31.’’. 
(B) The table of sections for part II of sub-
chapter B of chapter 5 is amended by striking the 
item relating to section 1561 and inserting the fol-
lowing new item: 
‘‘Sec. 1561. Limitation on accumulated earnings credit in the case of certain 
controlled corporations.’’. 
(7) Section 7518(g)(6)(A) is amended— 
(A) by striking ‘‘With respect to the por-
tion’’ and inserting ‘‘In the case of a taxpayer 
other than a corporation, with respect to the 
portion’’, and 
(B) by striking ‘‘(34 percent in the case of 
a corporation)’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
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(2) CERTAIN CONFORMING AMENDMENTS.—The 
amendments made by paragraphs (2), (3), and (4) 
of subsection (b) shall apply to distributions after 
December 31, 2017. 
(d) NORMALIZATION REQUIREMENTS.— 
(1) IN GENERAL.—A normalization method of 
accounting shall not be treated as being used with 
respect to any public utility property for purposes of 
section 167 or 168 of the Internal Revenue Code of 
1986 if the taxpayer, in computing its cost of service 
for ratemaking purposes and reflecting operating re-
sults in its regulated books of account, reduces the 
excess tax reserve more rapidly or to a greater ex-
tent than such reserve would be reduced under the 
average rate assumption method. 
(2) ALTERNATIVE METHOD FOR CERTAIN TAX-
PAYERS.—If, as of the first day of the taxable year 
that includes the date of enactment of this Act— 
(A) the taxpayer was required by a regu-
latory agency to compute depreciation for public 
utility property on the basis of an average life 
or composite rate method, and 
(B) the taxpayer’s books and underlying 
records did not contain the vintage account 
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194 
data necessary to apply the average rate as-
sumption method, 
the taxpayer will be treated as using a normalization 
method of accounting if, with respect to such juris-
diction, the taxpayer uses the alternative method for 
public utility property that is subject to the regu-
latory authority of that jurisdiction. 
(3) DEFINITIONS.—For purposes of this sub-
section— 
(A) EXCESS
TAX
RESERVE.—The term 
‘‘excess tax reserve’’ means the excess of— 
(i) the reserve for deferred taxes (as 
described in section 168(i)(9)(A)(ii) of the 
Internal Revenue Code of 1986 as in effect 
on the day before the date of the enact-
ment of this Act), over 
(ii) the amount which would be the 
balance in such reserve if the amount of 
such reserve were determined by assuming 
that the corporate rate reductions provided 
in this Act were in effect for all prior peri-
ods. 
(B) AVERAGE
RATE
ASSUMPTION
METH-
OD.—The average rate assumption method is 
the method under which the excess in the re-
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195 
serve for deferred taxes is reduced over the re-
maining lives of the property as used in its reg-
ulated books of account which gave rise to the 
reserve for deferred taxes. Under such method, 
if timing differences for the property reverse, 
the amount of the adjustment to the reserve for 
the deferred taxes is calculated by multi-
plying— 
(i) the ratio of the aggregate deferred 
taxes for the property to the aggregate 
timing differences for the property as of 
the beginning of the period in question, by 
(ii) the amount of the timing dif-
ferences which reverse during such period. 
(C) ALTERNATIVE METHOD.—The ‘‘alter-
native method’’ is the method in which the tax-
payer— 
(i) computes the excess tax reserve on 
all public utility property included in the 
plant account on the basis of the weighted 
average life or composite rate used to com-
pute depreciation for regulatory purposes, 
and 
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196 
(ii) reduces the excess tax reserve rat-
ably over the remaining regulatory life of 
the property. 
(4) TAX INCREASED FOR NORMALIZATION VIO-
LATION.—If, for any taxable year ending after the 
date of the enactment of this Act, the taxpayer does 
not use a normalization method of accounting, the 
taxpayer’s tax for the taxable year shall be increased 
by the amount by which it reduces its excess tax re-
serve more rapidly than permitted under a normal-
ization method of accounting. 
Subtitle B—Cost Recovery 
SEC. 3101. INCREASED EXPENSING. 
(a) 
100 
PERCENT
EXPENSING.—Section 
168(k)(1)(A) is amended by striking ‘‘50 percent’’ and in-
serting ‘‘100 percent’’. 
(b) EXTENSION THROUGH JANUARY 1, 2023.—Sec-
tion 168(k)(2) is amended— 
(1) in subparagraph (A)(iii), by striking ‘‘Janu-
ary 1, 2020’’ and inserting ‘‘January 1, 2023’’, 
(2) in subparagraph (B)(i)(II), by striking 
‘‘January 1, 2021’’ and inserting ‘‘January 1, 
2024’’, 
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197 
(3) in subparagraph (B)(i)(III), by striking 
‘‘January 1, 2020’’ and inserting ‘‘January 1, 
2023’’, 
(4) in subparagraph (B)(ii), by striking ‘‘Janu-
ary 1, 2020’’ in each place it appears and inserting 
‘‘January 1, 2023’’, and 
(5) in subparagraph (E)(i), by striking ‘‘Janu-
ary 1, 2020’’ and replacing it with ‘‘January 1, 
2023’’. 
(c) APPLICATION TO USED PROPERTY.— 
(1) IN GENERAL.—Section 168(k)(2)(A)(ii) is 
amended to read as follows: 
‘‘(ii) the original use of which begins 
with the taxpayer or the acquisition of 
which by the taxpayer meets the require-
ments of clause (ii) of subparagraph (E), 
and’’. 
(2) 
ACQUISITION
REQUIREMENTS.—Section 
168(k)(2)(E)(ii) is amended to read as follows: 
‘‘(ii) ACQUISITION REQUIREMENTS.— 
An acquisition of property meets the re-
quirements of this clause if— 
‘‘(I) such property was not used 
by the taxpayer at any time prior to 
such acquisition, and 
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198 
‘‘(II) the acquisition of such 
property meets the requirements of 
paragraphs (2)(A), (2)(B), (2)(C), 
and (3) of section 179(d).’’, 
(3) ANTI-ABUSE RULES.—Section 168(k)(2)(E) 
is further amended by amending clause (iii)(I) to 
read as follows: 
‘‘(I) property is used by a lessor 
of such property and such use is the 
lessor’s first use of such property,’’. 
(d) EXCEPTION FOR CERTAIN TRADES AND BUSI-
NESSES NOT SUBJECT TO LIMITATION ON INTEREST EX-
PENSE.—Section 168(k)(2), as amended by section 2001, 
is amended by inserting after subparagraph (F) the fol-
lowing new subparagraph: 
‘‘(G) EXCEPTION FOR CERTAIN PROPERTY 
OF
REAL
PROPERTY
BUSINESSES
AND
REGU-
LATED UTILITIES.—The term ‘qualified prop-
erty’ shall not include any property used in a 
trade or business described in subparagraph 
(B) or (C) of section 163(j)(7).’’. 
(e) COORDINATION WITH SECTION 280F.—Section 
168(k)(2)(F) is amended— 
(1) by striking ‘‘$8,000’’ in clauses (i) and (iii) 
and inserting ‘‘$16,000’’, and 
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199 
(2) in clause (iii)— 
(A) by striking ‘‘placed in service by the 
taxpayer after December 31, 2017’’ and insert-
ing ‘‘acquired by the taxpayer before September 
28, 2017, and placed in service by the taxpayer 
after September 27, 2017’’, and 
(B) by redesignating subclauses (I) and 
(II) as subclauses (II) and (III) respectively, 
and inserting before clause (II), as so redesig-
nated, the following new subclause: 
‘‘(I) in the case of a passenger 
automobile placed in service before 
January 1, 2018, ‘$8,000’,’’. 
(f) CONFORMING AMENDMENTS.— 
(1) Section (k)(2)(B)(i)(III), as amended, is 
amended by inserting ‘‘binding’’ before ‘‘contract’’. 
(2) Section 168(k)(5) is amended by— 
(A) by striking ‘‘January 1, 2020’’ in sub-
paragraph (A) and inserting ‘‘January 1, 
2023’’, 
(B) by striking ‘‘50 percent’’ in subpara-
graph (A)(i) and inserting ‘‘100 percent’’, and 
(C) by striking subparagraph (F). 
(3) Section 168(k)(6) is amended to read as fol-
lows: 
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‘‘(6) PHASE DOWN.—In the case of qualified 
property acquired by the taxpayer before September 
28, 2017, and placed in service by the taxpayer after 
September 27, 2017, paragraph (1)(A) shall be ap-
plied by substituting for ‘100 percent’— 
‘‘(A) ‘50 percent’ in the case of— 
‘‘(i) property placed in service before 
January 1, 2018, and 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2018, 
‘‘(B) ‘40 percent’ in the case of— 
‘‘(i) property placed in service in 2018 
(other than property described in subpara-
graph (B) or (C) of paragraph (2)), and 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2019, and 
‘‘(C) ‘30 percent’ in the case of— 
‘‘(i) property placed in service in 2019 
(other than property described in subpara-
graph (B) or (C) of paragraph (2)), and 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2020.’’. 
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201 
(4) The heading of section 168(k) is amended 
by striking ‘‘SPECIAL ALLOWANCE
FOR CERTAIN 
PROPERTY ACQUIRED AFTER DECEMBER 31, 2007, 
AND BEFORE JANUARY 1, 2020’’ and inserting 
‘‘FULL EXPENSING OF CERTAIN PROPERTY’’. 
(5) Section 460(c)(6)(B)(ii) is amended by 
striking ‘‘January 1, 2020 (January 1, 2021 in the 
case of property described in section 168(k)(2)(B))’’ 
and inserting ‘‘January 1, 2023 (January 1, 2024 in 
the 
case 
of 
property 
described 
in 
section 
168(k)(2)(B))’’. 
(g) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except at provided by para-
graph (2), the amendments made by this section 
shall apply to property which— 
(A) is acquired after September 27, 2017, 
and 
(B) is placed in service after such date. 
For purposes of the preceding sentence, property 
shall not be treated as acquired after the date on 
which a written binding contract is entered into for 
such acquisition. 
(2) SPECIFIED
PLANTS.—The amendments 
made by subsection (f)(2) shall apply to specified 
plants planted or grafted after September 27, 2017. 
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(3) TRANSITION RULE.—In the case of any tax-
payer’s first taxable year ending after September 27, 
2017, the taxpayer may elect (at such time and in 
such form and manner as the Secretary of the 
Treasury, or his designee, may provide) to apply sec-
tion 168 of the Internal Revenue Code of 1986 with-
out regard to the amendments made by this section. 
(4) LIMITATION
ON
NET
OPERATING
LOSS 
CARRYBACKS
ATTRIBUTABLE
TO
FULL
EXPENS-
ING.—In the case of any taxable year which includes 
any portion of the period beginning on September 
28, 2017, and ending on December 31, 2017, the 
amount of any net operating loss for such taxable 
year which may be treated as a net operating loss 
carryback (including any such carryback attributable 
to 
any 
specified 
liability 
loss 
under 
section 
172(b)(1)(C), any corporate equity reduction inter-
est loss under section 172(b)(1)(D), any eligible loss 
under section 172(b)(1)(E), and any farming loss 
under section 172(b)(1)(F)) shall be determined 
without regard to the amendments made by this sec-
tion. For purposes of this paragraph, terms which 
are used in section 172 of the Internal Revenue 
Code of 1986 (determined without regard to the 
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203 
amendments made by section 3302) shall have the 
same meaning as when used in such section. 
Subtitle C—Small Business 
Reforms 
SEC. 3201. EXPANSION OF SECTION 179 EXPENSING. 
(a) INCREASED DOLLAR LIMITATIONS.— 
(1) IN
GENERAL.—Section 179(b) is amend-
ed— 
(A) by inserting ‘‘($5,000,000, in the case 
of taxable years beginning before January 1, 
2023)’’ after ‘‘$500,000’’ in paragraph (1), and 
(B) by inserting ‘‘($20,000,000, in the 
case of taxable years beginning before January 
1, 2023)’’ after ‘‘$2,000,000’’ in paragraph (2). 
(2) 
INFLATION
ADJUSTMENT.—Section 
179(b)(6) is amended to read as follows: 
‘‘(6) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2015 (2018 in the 
case of the $5,000,000 and $20,000,000 
amounts in subsection (b)), each dollar amount 
in subsection (b) shall be increased by an 
amount equal to such dollar amount multiplied 
by— 
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‘‘(i) in the case of the $500,000 and 
$2,000,000 amounts in subsection (b), the 
cost-of-living adjustment determined under 
section 1(c)(2) for the calendar year in 
which the taxable year begins, determined 
by substituting ‘calendar year 2014’ for 
‘calendar year 2016’ in subparagraph 
(A)(ii) thereof, and 
‘‘(ii) in the case of the $5,000,000 
and $20,000,000 amounts in subsection 
(b), the cost-of-living adjustment deter-
mined under section 1(c)(2) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2017’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(B) ROUNDING.—The amount of any in-
crease under subparagraph (A) shall be round-
ed 
to 
the 
nearest 
multiple 
of 
$10,000 
($100,000 in the case of the $5,000,000 and 
$20,000,000 amounts in subsection (b)).’’. 
(b) APPLICATION TO QUALIFIED ENERGY EFFICIENT 
HEATING AND AIR-CONDITIONING PROPERTY.— 
(1) IN GENERAL.—Section 179(f)(2) is amend-
ed by striking ‘‘and’’ at the end of subparagraph 
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205 
(B), by striking the period at the end of subpara-
graph (C) and inserting ‘‘, and’’, and by adding at 
the end the following new subparagraph: 
‘‘(D) qualified energy efficient heating and 
air-conditioning property.’’. 
(2) QUALIFIED
ENERGY
EFFICIENT
HEATING 
AND AIR-CONDITIONING PROPERTY.—Section 179(f) 
is amended by adding at the end the following new 
paragraph: 
‘‘(3) QUALIFIED ENERGY EFFICIENT HEATING 
AND
AIR-CONDITIONING
PROPERTY.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
energy efficient heating and air-conditioning 
property’ means any section 1250 property— 
‘‘(i) with respect to which depreciation 
(or amortization in lieu of depreciation) is 
allowable, 
‘‘(ii) which is installed as part of a 
building’s heating, cooling, ventilation, or 
hot water system, and 
‘‘(iii) which is within the scope of 
Standard 90.1–2007 or any successor 
standard. 
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‘‘(B) STANDARD
90.1–2007.—The term 
‘Standard 90.1–2007’ means Standard 90.1– 
2007 of the American Society of Heating, Re-
frigerating and Air-Conditioning Engineers and 
the Illuminating Engineering Society of North 
America (as in effect on the day before the date 
of the adoption of Standard 90.1–2010 of such 
Societies).’’. 
(c) EFFECTIVE DATE.— 
(1) INCREASED
DOLLAR
LIMITATIONS.—The 
amendments made by subsection (a) shall apply to 
taxable years beginning after December 31, 2017. 
(2) APPLICATION TO QUALIFIED ENERGY EFFI-
CIENT
HEATING
AND
AIR-CONDITIONING
PROP-
ERTY.—The amendments made by subsection (b) 
shall apply to property acquired and placed in serv-
ice after November 2, 2017. For purposes of the 
preceding sentence, property shall not be treated as 
acquired after the date on which a written binding 
contract is entered into for such acquisition. 
SEC. 3202. SMALL BUSINESS ACCOUNTING METHOD RE-
FORM AND SIMPLIFICATION. 
(a) MODIFICATION OF LIMITATION ON CASH METH-
OD OF ACCOUNTING.— 
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(1) INCREASED LIMITATION.—So much of sec-
tion 448(c) as precedes paragraph (2) is amended to 
read as follows: 
‘‘(c) GROSS RECEIPTS TEST.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—A corporation or partner-
ship meets the gross receipts test of this subsection 
for any taxable year if the average annual gross re-
ceipts of such entity for the 3-taxable-year period 
ending with the taxable year which precedes such 
taxable year does not exceed $25,000,000.’’. 
(2) APPLICATION OF EXCEPTION ON ANNUAL 
BASIS.—Section 448(b)(3) is amended to read as fol-
lows: 
‘‘(3) ENTITIES WHICH MEET GROSS RECEIPTS 
TEST.—Paragraphs (1) and (2) of subsection (a) 
shall not apply to any corporation or partnership for 
any taxable year if such entity (or any predecessor) 
meets the gross receipts test of subsection (c) for 
such taxable year.’’. 
(3) INFLATION ADJUSTMENT.—Section 448(c) 
is amended by adding at the end the following new 
paragraph: 
‘‘(4) ADJUSTMENT
FOR
INFLATION.—In the 
case of any taxable year beginning after December 
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208 
31, 2018, the dollar amount in paragraph (1) shall 
be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(c)(2) for the calendar 
year in which the taxable year begins, by sub-
stituting ‘calendar year 2017’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
If any amount as increased under the preceding sen-
tence is not a multiple of $1,000,000, such amount 
shall be rounded to the nearest multiple of 
$1,000,000.’’. 
(4) COORDINATION
WITH
SECTION
481.—Sec-
tion 448(d)(7) is amended to read as follows: 
‘‘(7) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this section shall be treated for purposes of section 
481 as initiated by the taxpayer and made with the 
consent of the Secretary.’’. 
(5) APPLICATION OF EXCEPTION TO CORPORA-
TIONS ENGAGED IN FARMING.— 
(A) IN
GENERAL.—Section 447(c) is 
amended— 
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209 
(i) by inserting ‘‘for any taxable year’’ 
after ‘‘not being a corporation’’ in the mat-
ter preceding paragraph (1), and 
(ii) by amending paragraph (2) to 
read as follows: 
‘‘(2) a corporation which meets the gross re-
ceipts test of section 448(c) for such taxable year.’’. 
(B) COORDINATION WITH SECTION 481.— 
Section 447(f) is amended to read as follows: 
‘‘(f) COORDINATION
WITH
SECTION
481.—Any 
change in method of accounting made pursuant to this 
section shall be treated for purposes of section 481 as ini-
tiated by the taxpayer and made with the consent of the 
Secretary.’’. 
(C) CONFORMING AMENDMENTS.—Section 
447 is amended— 
(i) by striking subsections (d), (e), 
(h), and (i), and 
(ii) by redesignating subsections (f) 
and (g) (as amended by subparagraph (B)) 
as subsections (d) and (e), respectively. 
(b) EXEMPTION FROM UNICAP REQUIREMENTS.— 
(1) IN GENERAL.—Section 263A is amended by 
redesignating subsection (i) as subsection (j) and by 
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210 
inserting after subsection (h) the following new sub-
section: 
‘‘(i) EXEMPTION
FOR
CERTAIN
SMALL
BUSI-
NESSES.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
(other than a tax shelter prohibited from using the 
cash receipts and disbursements method of account-
ing under section 448(a)(3)) which meets the gross 
receipts test of section 448(c) for any taxable year, 
this section shall not apply with respect to such tax-
payer for such taxable year. 
‘‘(2) APPLICATION OF GROSS RECEIPTS TEST 
TO INDIVIDUALS, ETC.—In the case of any taxpayer 
which is not a corporation or a partnership, the 
gross receipts test of section 448(c) shall be applied 
in the same manner as if each trade or business of 
such taxpayer were a corporation or partnership. 
‘‘(3) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this subsection shall be treated for purposes of sec-
tion 481 as initiated by the taxpayer and made with 
the consent of the Secretary.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
263A(b)(2) is amended to read as follows: 
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211 
‘‘(2) PROPERTY ACQUIRED FOR RESALE.—Real 
or personal property described in section 1221(a)(1) 
which is acquired by the taxpayer for resale.’’. 
(c) EXEMPTION FROM INVENTORIES.—Section 471 
is amended by redesignating subsection (c) as subsection 
(d) and by inserting after subsection (b) the following new 
subsection: 
‘‘(c) EXEMPTION
FOR
CERTAIN
SMALL
BUSI-
NESSES.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
(other than a tax shelter prohibited from using the 
cash receipts and disbursements method of account-
ing under section 448(a)(3)) which meets the gross 
receipts test of section 448(c) for any taxable year— 
‘‘(A) subsection (a) shall not apply with re-
spect to such taxpayer for such taxable year, 
and 
‘‘(B) the taxpayer’s method of accounting 
for inventory for such taxable year shall not be 
treated as failing to clearly reflect income if 
such method either— 
‘‘(i) treats inventory as non-incidental 
materials and supplies, or 
‘‘(ii) conforms to such taxpayer’s 
method of accounting reflected in an appli-
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212 
cable financial statement of the taxpayer 
with respect to such taxable year or, if the 
taxpayer does not have any applicable fi-
nancial statement with respect to such tax-
able year, the books and records of the 
taxpayer prepared in accordance with the 
taxpayer’s accounting procedures. 
‘‘(2) APPLICABLE
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘applicable 
financial statement’ means— 
‘‘(A) a financial statement which is cer-
tified as being prepared in accordance with gen-
erally accepted accounting principles and which 
is— 
‘‘(i) a 10-K (or successor form), or 
annual statement to shareholders, required 
to be filed by the taxpayer with the United 
States Securities and Exchange Commis-
sion, 
‘‘(ii) an audited financial statement of 
the taxpayer which is used for— 
‘‘(I) credit purposes, 
‘‘(II) reporting to shareholders, 
partners, or other proprietors, or to 
beneficiaries, or 
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213 
‘‘(III) 
any 
other 
substantial 
nontax purpose, 
but only if there is no statement of the 
taxpayer described in clause (i), or 
‘‘(iii) filed by the taxpayer with any 
other Federal or State agency for nontax 
purposes, but only if there is no statement 
of the taxpayer described in clause (i) or 
(ii), or 
‘‘(B) a financial statement of the taxpayer 
which— 
‘‘(i) is used for a purpose described in 
subclause (I), (II), or (III) of subpara-
graph (A)(ii), or 
‘‘(ii) filed by the taxpayer with any 
regulatory or governmental body (whether 
domestic or foreign) specified by the Sec-
retary, 
but only if there is no statement of the taxpayer 
described in subparagraph (A). 
‘‘(3) APPLICATION OF GROSS RECEIPTS TEST 
TO INDIVIDUALS, ETC.—In the case of any taxpayer 
which is not a corporation or a partnership, the 
gross receipts test of section 448(c) shall be applied 
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214 
in the same manner as if each trade or business of 
such taxpayer were a corporation or partnership. 
‘‘(4) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this subsection shall be treated for purposes of sec-
tion 481 as initiated by the taxpayer and made with 
the consent of the Secretary.’’. 
(d) EXEMPTION FROM PERCENTAGE COMPLETION 
FOR LONG-TERM CONTRACTS.— 
(1) IN
GENERAL.—Section 460(e)(1)(B) is 
amended— 
(A) by inserting ‘‘(other than a tax shelter 
prohibited from using the cash receipts and dis-
bursements method of accounting under section 
448(a)(3))’’ after ‘‘taxpayer’’ in the matter pre-
ceding clause (i), and 
(B) by amending clause (ii) to read as fol-
lows: 
‘‘(ii) who meets the gross receipts test 
of section 448(c) for the taxable year in 
which such contract is entered into.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
460(e) is amended by striking paragraphs (2) and 
(3), by redesignating paragraphs (4), (5), and (6) as 
paragraphs (3), (4), and (5), respectively, and by in-
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215 
serting after paragraph (1) the following new para-
graph: 
‘‘(2) RULES
RELATED
TO
GROSS
RECEIPTS 
TEST.— 
‘‘(A) APPLICATION
OF
GROSS
RECEIPTS 
TEST TO INDIVIDUALS, ETC.—For purposes of 
paragraph (1)(B)(ii), in the case of any tax-
payer which is not a corporation or a partner-
ship, the gross receipts test of section 448(c) 
shall be applied in the same manner as if each 
trade or business of such taxpayer were a cor-
poration or partnership. 
‘‘(B) COORDINATION WITH SECTION 481.— 
Any change in method of accounting made pur-
suant to paragraph (1)(B)(ii) shall be treated 
as initiated by the taxpayer and made with the 
consent of the Secretary. Such change shall be 
effected on a cut-off basis for all similarly clas-
sified contracts entered into on or after the 
year of change.’’. 
(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 beginning 
after December 31, 2017. 
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216 
(2) PRESERVATION
OF
SUSPENSE
ACCOUNT 
RULES WITH RESPECT TO ANY EXISTING SUSPENSE 
ACCOUNTS.—So much of the amendments made by 
subsection (a)(5)(C) as relate to section 447(i) of 
the Internal Revenue Code of 1986 shall not apply 
with respect to any suspense account established 
under such section before the date of the enactment 
of this Act. 
(3) EXEMPTION FROM PERCENTAGE COMPLE-
TION
FOR
LONG-TERM
CONTRACTS.—The amend-
ments made by subsection (d) shall apply to con-
tracts entered into after December 31, 2017, in tax-
able years ending after such date. 
SEC. 3203. SMALL BUSINESS EXCEPTION FROM LIMITATION 
ON DEDUCTION OF BUSINESS INTEREST. 
(a) IN GENERAL.—Section 163(j)(2), as amended by 
section 3301, is amended to read as follows: 
‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI-
NESSES.—In the case of any taxpayer (other than a 
tax shelter prohibited from using the cash receipts 
and disbursements method of accounting under sec-
tion 448(a)(3)) which meets the gross receipts test 
of section 448(c) for any taxable year, paragraph (1) 
shall not apply to such taxpayer for such taxable 
year. In the case of any taxpayer which is not a cor-
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217 
poration or a partnership, the gross receipts test of 
section 448(c) shall be applied in the same manner 
as if such taxpayer were a corporation or partner-
ship.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle D—Reform of Business- 
related Exclusions, Deductions, etc. 
SEC. 3301. INTEREST. 
(a) IN GENERAL.—Section 163(j) is amended to read 
as follows: 
‘‘(j) LIMITATION ON BUSINESS INTEREST.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
for any taxable year, the amount allowed as a deduc-
tion under this chapter for business interest shall 
not exceed the sum of— 
‘‘(A) the business interest income of such 
taxpayer for such taxable year, plus 
‘‘(B) 30 percent of the adjusted taxable in-
come of such taxpayer for such taxable year. 
The amount determined under subparagraph (B) 
(after any increases in such amount under para-
graph (3)(A)(iii)) shall not be less than zero. 
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‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI-
NESSES.—For exemption for certain small busi-
nesses, see the amendment made by section 3204 of 
the Tax Cuts and Jobs Act. 
‘‘(3) APPLICATION TO PARTNERSHIPS, ETC.— 
‘‘(A) IN
GENERAL.—In the case of any 
partnership— 
‘‘(i) this subsection shall be applied at 
the partnership level and any deduction for 
business interest shall be taken into ac-
count in determining the non-separately 
stated taxable income or loss of the part-
nership, 
‘‘(ii) the adjusted taxable income of 
each partner of such partnership shall be 
determined without regard to such part-
ner’s distributive share of the non-sepa-
rately stated taxable income or loss of such 
partnership, and 
‘‘(iii) the amount determined under 
paragraph (1)(B) with respect to each 
partner of such partnership shall be in-
creased by such partner’s distributive 
share of such partnership’s excess amount. 
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‘‘(B) EXCESS AMOUNT.—The term ‘excess 
amount’ means, with respect to any partner-
ship, the excess (if any) of— 
‘‘(i) 30 percent of the adjusted taxable 
income of the partnership, over 
‘‘(ii) the amount (if any) by which the 
business interest of the partnership ex-
ceeds the business interest income of the 
partnership. 
‘‘(C) APPLICATION TO S CORPORATIONS.— 
Rules similar to the rules of subparagraphs (A) 
and (B) shall apply with respect to any S cor-
poration and its shareholders. 
‘‘(4) BUSINESS
INTEREST.—For purposes of 
this subsection, the term ‘business interest’ means 
any interest paid or accrued on indebtedness prop-
erly allocable to a trade or business. Such term shall 
not include investment interest (within the meaning 
of subsection (d)). 
‘‘(5) BUSINESS INTEREST INCOME.—For pur-
poses of this subsection, the term ‘business interest 
income’ means the amount of interest includible in 
the gross income of the taxpayer for the taxable year 
which is properly allocable to a trade or business. 
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220 
Such term shall not include investment income 
(within the meaning of subsection (d)). 
‘‘(6) ADJUSTED TAXABLE INCOME.—For pur-
poses of this subsection, the term ‘adjusted taxable 
income’ means the taxable income of the taxpayer— 
‘‘(A) computed without regard to— 
‘‘(i) any item of income, gain, deduc-
tion, or loss which is not properly allocable 
to a trade or business, 
‘‘(ii) any business interest or business 
interest income, 
‘‘(iii) the amount of any net operating 
loss deduction under section 172, and 
‘‘(iv) any deduction allowable for de-
preciation, amortization, or depletion, and 
‘‘(B) computed with such other adjust-
ments as the Secretary may provide. 
‘‘(7) TRADE OR BUSINESS.—For purposes of 
this subsection, the term ‘trade or business’ shall not 
include— 
‘‘(A) the trade or business of performing 
services as an employee, 
‘‘(B) a real property trade or business (as 
such term is defined in section 469(c)(7)(C)), 
or 
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221 
‘‘(C) the trade or business of the fur-
nishing or sale of— 
‘‘(i) electrical energy, water, or sewage 
disposal services, 
‘‘(ii) gas or steam through a local dis-
tribution system, or 
‘‘(iii) transportation of gas or steam 
by pipeline, or 
if the rates for such furnishing or sale, as the 
case may be, have been established or approved 
by a State or political subdivision thereof, by 
any agency or instrumentality of the United 
States, or by a public service or public utility 
commission or other similar body of any State 
or political subdivision thereof. 
‘‘(8) CARRYFORWARD OF DISALLOWED INTER-
EST.—For carryforward of interest disallowed under 
paragraph (1), see subsection (o).’’. 
(b) CARRYFORWARD OF DISALLOWED BUSINESS IN-
TEREST.—Section 163, after amendment by section 
4302(a) and before amendment by section 4302(b), is 
amended by inserting after subsection (n) the following 
new subsection: 
‘‘(o) CARRYFORWARD OF DISALLOWED BUSINESS IN-
TEREST.—The amount of any business interest not al-
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222 
lowed as a deduction for any taxable year by reason of 
subsection (j) shall be treated as business interest paid 
or accrued in the succeeding taxable year. Business inter-
est paid or accrued in any taxable year (determined with-
out regard to the preceding sentence) shall not be carried 
past the 5th taxable year following such taxable year, de-
termined by treating business interest as allowed as a de-
duction on a first-in, first-out basis.’’. 
(c) TREATMENT
OF
CARRYFORWARD
OF
DIS-
ALLOWED BUSINESS INTEREST IN CERTAIN CORPORATE 
ACQUISITIONS.— 
(1) IN GENERAL.—Section 381(c) is amended 
by inserting after paragraph (19) the following new 
paragraph: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(2) APPLICATION
OF
LIMITATION.—Section 
382(d) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
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scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
382(k)(1) is amended by inserting after the first 
sentence the following: ‘‘Such term shall include any 
corporation entitled to use a carryforward of dis-
allowed interest described in section 381(c)(20).’’ 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3302. MODIFICATION OF NET OPERATING LOSS DE-
DUCTION. 
(a) INDEFINITE CARRYFORWARD
OF NET OPER-
ATING LOSSES.—Section 172(b)(1)(A)(ii) is amended by 
striking ‘‘to each of the 20 taxable years’’ and inserting 
‘‘to each taxable year’’. 
(b) REPEAL OF NET OPERATING LOSS CARRYBACKS 
OTHER THAN 1-YEAR CARRYBACK OF ELIGIBLE DIS-
ASTER LOSSES.— 
(1) IN
GENERAL.—Section 172(b)(1)(A)(i) is 
amended to read as follows: 
‘‘(i) in the case of any portion of a net 
operating loss for the taxable year which is 
an eligible disaster loss with respect to the 
taxpayer, shall be a net operating loss 
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carryback to the taxable year preceding the 
taxable year of such loss, and’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 172(b)(1) is amended by strik-
ing subparagraphs (B) through (F) and insert-
ing the following: 
‘‘(B) ELIGIBLE DISASTER LOSS.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i), the term ‘eligible dis-
aster loss’ means— 
‘‘(I) in the case of a taxpayer 
which is a small business, net oper-
ating losses attributable to federally 
declared disasters (as defined by sec-
tion 165(i)(5)), and 
‘‘(II) in the case of a taxpayer 
engaged in the trade or business of 
farming, net operating losses attrib-
utable to such federally declared dis-
asters. 
‘‘(ii) SMALL BUSINESS.—For purposes 
of this subparagraph, the term ‘small busi-
ness’ means a corporation or partnership 
which meets the gross receipts test of sec-
tion 448(c) (determined by substituting 
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‘$5,000,000’ for ‘$25,000,000’ each place 
it appears therein) for the taxable year in 
which the loss arose (or, in the case of a 
sole proprietorship, which would meet such 
test if such proprietorship were a corpora-
tion). 
‘‘(iii) TRADE OR BUSINESS OF FARM-
ING.—For purposes of this subparagraph, 
the trade or business of farming shall in-
clude the trade or business of— 
‘‘(I) operating a nursery or sod 
farm, or 
‘‘(II) the raising or harvesting of 
trees bearing fruit, nuts, or other 
crops, or ornamental trees. 
For purposes of subclause (II), an ever-
green tree which is more than 6 years old 
at the time severed from the roots shall 
not be treated as an ornamental tree.’’. 
(B) Section 172 is amended by striking 
subsections (f), (g), and (h). 
(c) LIMITATION OF NET OPERATING LOSS TO 90 
PERCENT OF TAXABLE INCOME.— 
(1) IN GENERAL.—Section 172(a) is amended 
to read as follows: 
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‘‘(a) DEDUCTION ALLOWED.—There shall be allowed 
as a deduction for the taxable year an amount equal to 
the lesser of— 
‘‘(1) the aggregate of the net operating loss 
carryovers to such year, plus the net operating loss 
carrybacks to such year, or 
‘‘(2) 90 percent of taxable income computed 
without regard to the deduction allowable under this 
section. 
For purposes of this subtitle, the term ‘net operating loss 
deduction’ means the deduction allowed by this sub-
section.’’. 
(2) 
COORDINATION
OF
LIMITATION
WITH 
CARRYBACKS AND CARRYOVERS.—Section 172(b)(2) 
is amended by striking ‘‘shall be computed—’’ and 
all that follows and inserting ‘‘shall— 
‘‘(A) be computed with the modifications 
specified in subsection (d) other than para-
graphs (1), (4), and (5) thereof, and by deter-
mining the amount of the net operating loss de-
duction without regard to the net operating loss 
for the loss year or for any taxable year there-
after, 
‘‘(B) not be considered to be less than 
zero, and 
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‘‘(C) not exceed the amount determined 
under subsection (a)(2) for such prior taxable 
year.’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
172(d)(6) is amended by striking ‘‘and’’ at the end 
of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ‘‘; and’’, and 
by adding at the end the following new subpara-
graph: 
‘‘(C) subsection (a)(2) shall be applied by 
substituting ‘real estate investment trust tax-
able income (as defined in section 857(b)(2) but 
without regard to the deduction for dividends 
paid (as defined in section 561))’ for ‘taxable 
income’.’’. 
(d) ANNUAL INCREASE OF INDEFINITE CARRYOVER 
AMOUNTS.—Section 172(b) is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after 
paragraph (2) the following new paragraph: 
‘‘(3) ANNUAL INCREASE OF INDEFINITE CARRY-
OVER AMOUNTS.—For purposes of paragraph (2)— 
‘‘(A) the amount of any indefinite net op-
erating loss which is carried to the next suc-
ceeding taxable year after the loss year (within 
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228 
the meaning of paragraph (2)) shall be in-
creased by an amount equal to— 
‘‘(i) the amount of the loss which may 
be so carried over to such succeeding tax-
able year (determined without regard to 
this paragraph), multiplied by 
‘‘(ii) the sum of— 
‘‘(I) the annual Federal short- 
term rate (determined under section 
1274(d)) for the last month ending 
before the beginning of such taxable 
year, plus 
‘‘(II) 4 percentage points, and 
‘‘(B) the amount of any indefinite net op-
erating loss which is carried to any succeeding 
taxable year (after such next succeeding taxable 
year) shall be an amount equal to— 
‘‘(i) the excess of— 
‘‘(I) the amount of the loss car-
ried to the prior taxable year (after 
any increase under this paragraph 
with respect to such amount), over 
‘‘(II) the amount by which such 
loss was reduced under paragraph (2) 
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by reason of the taxable income for 
such prior taxable year, multiplied by 
‘‘(ii) a percentage equal to 100 per-
cent plus the percentage determined under 
subparagraph (A)(ii) with respect to such 
succeeding taxable year. 
For purposes of the preceding sentence, the 
term ‘indefinite net operating loss’ means any 
net operating loss arising in a taxable year be-
ginning after December 31, 2017.’’. 
(e) EFFECTIVE DATE.— 
(1) CARRYFORWARDS AND CARRYBACKS.—The 
amendments made by subsections (a) and (b) shall 
apply to net operating losses arising in taxable years 
beginning after December 31, 2017. 
(2) NET OPERATING LOSS LIMITED TO 90 PER-
CENT
OF
TAXABLE
INCOME.—The amendments 
made by subsection (c) shall apply to taxable years 
beginning after December 31, 2017. 
(3) 
ANNUAL
INCREASE
IN
CARRYOVER 
AMOUNTS.—The amendments made by subsection 
(d) shall apply to amounts carried to taxable years 
beginning after December 31, 2017. 
(4) 
SPECIAL
RULE
FOR
NET
DISASTER 
LOSSES.—Notwithstanding 
paragraph 
(1), 
the 
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amendments made by subsection (b) shall not apply 
to the portion of the net operating loss for any tax-
able year which is a net disaster loss to which sec-
tion 504(b) of the Disaster Tax Relief and Airport 
and Airway Extension Act of 2017 applies. 
SEC. 3303. LIKE-KIND EXCHANGES OF REAL PROPERTY. 
(a) IN GENERAL.—Section 1031(a)(1) is amended by 
striking ‘‘property’’ each place it appears and inserting 
‘‘real property’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1031(a) is amend-
ed to read as follows: 
‘‘(2) EXCEPTION FOR REAL PROPERTY HELD 
FOR SALE.—This subsection shall not apply to any 
exchange of real property held primarily for sale.’’. 
(2) Section 1031 is amended by striking sub-
sections (e) and (i). 
(3) Section 1031, as amended by paragraph 
(2), is amended by inserting after subsection (d) the 
following new subsection: 
‘‘(e) APPLICATION TO CERTAIN PARTNERSHIPS.— 
For purposes of this section, an interest in a partnership 
which has in effect a valid election under section 761(a) 
to be excluded from the application of all of subchapter 
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K shall be treated as an interest in each of the assets of 
such partnership and not as an interest in a partnership.’’. 
(4) Section 1031(h) is amended to read as fol-
lows: 
‘‘(h) SPECIAL RULES FOR FOREIGN REAL PROP-
ERTY.—Real property located in the United States and 
real property located outside the United States are not 
property of a like kind.’’. 
(5) The heading of section 1031 is amended by 
striking ‘‘PROPERTY’’ and inserting ‘‘REAL PROP-
ERTY’’. 
(6) The table of sections for part III of sub-
chapter O of chapter 1 is amended by striking the 
item relating to section 1031 and inserting the fol-
lowing new item: 
‘‘Sec. 1031. Exchange of real property held for productive use or investment.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to exchanges completed after 
December 31, 2017. 
(2) 
TRANSITION
RULE.—The 
amendments 
made by this section shall not apply to any exchange 
if— 
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232 
(A) the property disposed of by the tax-
payer in the exchange is disposed of on or be-
fore December 31 2017, or 
(B) the property received by the taxpayer 
in the exchange is received on or before Decem-
ber 31, 2017. 
SEC. 3304. REVISION OF TREATMENT OF CONTRIBUTIONS 
TO CAPITAL. 
(a) INCLUSION OF CONTRIBUTIONS TO CAPITAL.— 
Part II of subchapter B of chapter 1 is amended by insert-
ing after section 75 the following new section: 
‘‘SEC. 76. CONTRIBUTIONS TO CAPITAL. 
‘‘(a) IN GENERAL.—Gross income includes any con-
tribution to the capital of any entity. 
‘‘(b) TREATMENT OF CONTRIBUTIONS IN EXCHANGE 
FOR STOCK, ETC.— 
‘‘(1) IN GENERAL.—In the case of any con-
tribution of money or other property to a corpora-
tion in exchange for stock of such corporation— 
‘‘(A) such contribution shall not be treated 
for purposes of subsection (a) as a contribution 
to the capital of such corporation (and shall not 
be includible in the gross income of such cor-
poration), and 
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‘‘(B) no gain or loss shall be recognized to 
such corporation upon the issuance of such 
stock. 
‘‘(2) TREATMENT
LIMITED
TO
VALUE
OF 
STOCK.—For purposes of this subsection, a contribu-
tion of money or other property to a corporation 
shall be treated as being in exchange for stock of 
such corporation only to the extent that the fair 
market value of such money and other property does 
not exceed the fair market value of such stock. 
‘‘(3) APPLICATION TO ENTITIES OTHER THAN 
CORPORATIONS.—In the case of any entity other 
than a corporation, rules similar to the rules of 
paragraphs (1) and (2) shall apply in the case of 
any contribution of money or other property to such 
entity in exchange for any interest in such entity. 
‘‘(c) TREASURY STOCK TREATED AS STOCK.—Any 
reference in this section to stock shall be treated as includ-
ing a reference to treasury stock.’’. 
(b) BASIS OF CORPORATION IN CONTRIBUTED PROP-
ERTY.— 
(1) CONTRIBUTIONS TO CAPITAL.—Subsection 
(c) of section 362 is amended to read as follows: 
‘‘(c) CONTRIBUTIONS
TO
CAPITAL.—If property 
other than money is transferred to a corporation as a con-
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234 
tribution to the capital of such corporation (within the 
meaning of section 76) then the basis of such property 
shall be the greater of— 
‘‘(1) the basis determined in the hands of the 
transferor, increased by the amount of gain recog-
nized to the transferor on such transfer, or 
‘‘(2) the amount included in gross income by 
such corporation under section 76 with respect to 
such contribution.’’. 
(2) 
CONTRIBUTIONS
IN
EXCHANGE
FOR 
STOCK.—Paragraph (2) of section 362(a) is amend-
ed by striking ‘‘contribution to capital’’ and insert-
ing ‘‘contribution in exchange for stock of such cor-
poration (determined under rules similar to the rules 
of paragraphs (2) and (3) of section 76(b))’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 108(e) is amended by striking para-
graph (6). 
(2) Part III of subchapter B of chapter 1 is 
amended by striking section 118 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(3) The table of sections for part II of sub-
chapter B of chapter 1 is amended by inserting after 
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the item relating to section 75 the following new 
item: 
‘‘Sec. 76. Contributions to capital.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made, and trans-
actions entered into, after the date of the enactment of 
this Act. 
SEC. 3305. REPEAL OF DEDUCTION FOR LOCAL LOBBYING 
EXPENSES. 
(a) IN GENERAL.—Section 162(e) is amended by 
striking paragraphs (2) and (7) and by redesignating 
paragraphs (3), (4), (5), (6), and (8) as paragraphs (2), 
(3), (4), (5), and (6), respectively. 
(b) 
CONFORMING
AMENDMENT.—Section 
6033(e)(1)(B)(ii) is amended by striking ‘‘section 
162(e)(5)(B)(ii)’’ 
and 
inserting 
‘‘section 
162(e)(4)(B)(ii)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017. 
SEC. 3306. REPEAL OF DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION ACTIVI-
TIES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 199 (and by striking 
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236 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) 
Sections 
74(d)(2)(B), 
86(b)(2)(A), 
137(b)(3)(A), and 246(b)(1) are each amended by 
striking ‘‘199,’’. 
(2) Section 170(b)(2)(D), as amended by the 
preceding provisions of this Act, is amended by 
striking clause (iv), by redesignating clause (v) as 
clause (iv), and by inserting ‘‘and’’ at the end of 
clause (iii). 
(3) Section 172(d) is amended by striking para-
graph (7). 
(4) Section 613(a) is amended by striking ‘‘and 
without the deduction under section 199’’. 
(5) Section 613A(d)(1) is amended by striking 
subparagraph (B) and by redesignating subpara-
graphs (C), (D), and (E) as subparagraphs (B), (C), 
and (D), respectively. 
(6) Section 1402(a) is amended by adding 
‘‘and’’ at the end of paragraph (15) and by striking 
paragraph (16). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
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SEC. 3307. ENTERTAINMENT, ETC. EXPENSES. 
(a) DENIAL OF DEDUCTION.—Subsection (a) of sec-
tion 274 is amended to read as follows: 
‘‘(a) ENTERTAINMENT, AMUSEMENT, RECREATION, 
AND OTHER FRINGE BENEFITS .— 
‘‘(1) IN GENERAL.—No deduction otherwise al-
lowable under this chapter shall be allowed for 
amounts paid or incurred for any of the following 
items: 
‘‘(A) ACTIVITY.—With respect to an activ-
ity which is of a type generally considered to 
constitute entertainment, amusement, or recre-
ation. 
‘‘(B) MEMBERSHIP
DUES.—With respect 
to membership in any club organized for busi-
ness, pleasure, recreation or other social pur-
poses. 
‘‘(C) AMENITY.—With respect to a de 
minimis fringe (as defined in section 132(e)(1)) 
that is primarily personal in nature and involv-
ing property or services that are not directly re-
lated to the taxpayer’s trade or business. 
‘‘(D) FACILITY.—With respect to a facility 
or portion thereof used in connection with an 
activity referred to in subparagraph (A), mem-
bership dues or similar amounts referred to in 
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subparagraph (B), or an amenity referred to in 
subparagraph (C). 
‘‘(E) 
QUALIFIED
TRANSPORTATION 
FRINGE AND PARKING FACILITY.—Which is a 
qualified transportation fringe (as defined in 
section 132(f)) or which is a parking facility 
used in connection with qualified parking (as 
defined in section 132(f)(5)(C)). 
‘‘(F) ON-PREMISES ATHLETIC FACILITY.— 
Which is an on-premises athletic facility as de-
fined in section 132(j)(4)(B). 
‘‘(2) SPECIAL RULES.—For purposes of apply-
ing paragraph (1), an activity described in section 
212 shall be treated as a trade or business. 
‘‘(3) REGULATIONS.—Under the regulations 
prescribed to carry out this section, the Secretary 
shall include regulations— 
‘‘(A) defining entertainment, amenities, 
recreation, amusement, and facilities for pur-
poses of this subsection, 
‘‘(B) providing for the appropriate alloca-
tion of depreciation and other costs with respect 
to facilities used for parking or for on-premises 
athletic facilities, and 
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‘‘(C) specifying arrangements a primary 
purpose of which is the avoidance of this sub-
section.’’. 
(b) EXCEPTION FOR CERTAIN EXPENSES INCLUD-
IBLE IN INCOME OF RECIPIENT.— 
(1) EXPENSES TREATED AS COMPENSATION.— 
Paragraph (2) of section 274(e) is amended to read 
as follows: 
‘‘(2) EXPENSES TREATED AS COMPENSATION.— 
Expenses for goods, services, and facilities, to the 
extent that the expenses do not exceed the amount 
of the expenses which are treated by the taxpayer, 
with respect to the recipient of the entertainment, 
amusement, or recreation, as compensation to an 
employee on the taxpayer’s return of tax under this 
chapter and as wages to such employee for purposes 
of chapter 24 (relating to withholding of income tax 
at source on wages).’’. 
(2) EXPENSES INCLUDIBLE IN INCOME OF PER-
SONS WHO ARE NOT EMPLOYEES.—Paragraph (9) of 
section 274(e) is amended by striking ‘‘to the extent 
that the expenses’’ and inserting ‘‘to the extent that 
the expenses do not exceed the amount of the ex-
penses that’’. 
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(c) EXCEPTIONS
FOR REIMBURSED EXPENSES.— 
Paragraph (3) of section 274(e) is amended to read as 
follows: 
‘‘(3) REIMBURSED EXPENSES.— 
‘‘(A) IN GENERAL.—Expenses paid or in-
curred by the taxpayer, in connection with the 
performance by him of services for another per-
son (whether or not such other person is the 
taxpayer’s employer), under a reimbursement or 
other expense allowance arrangement with such 
other person, but this paragraph shall apply— 
‘‘(i) where the services are performed 
for an employer, only if the employer has 
not treated such expenses in the manner 
provided in paragraph (2), or 
‘‘(ii) where the services are performed 
for a person other than an employer, only 
if the taxpayer accounts (to the extent pro-
vided by subsection (d)) to such person. 
‘‘(B) EXCEPTION.—Except as provided by 
the Secretary, subparagraph (A) shall not 
apply— 
‘‘(i) in the case of an arrangement in 
which the person other than the employer 
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is 
an 
entity 
described 
in 
section 
168(h)(2)(A), or 
‘‘(ii) to any other arrangement des-
ignated by the Secretary as having the ef-
fect of avoiding the limitation under sub-
paragraph (A).’’. 
(d) 50 PERCENT LIMITATION ON MEALS AND EN-
TERTAINMENT EXPENSES.—Subsection (n) of section 274 
is amended to read as follows: 
‘‘(n) LIMITATION ON CERTAIN EXPENSES.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under this chapter for any expense for 
food or beverages (pursuant to subsection (e)(1)) or 
business meals (pursuant to subsection (k)(1)) shall 
not exceed 50 percent of the amount of such expense 
or item which would (but for this paragraph) be al-
lowable as a deduction under this chapter. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to any expense if— 
‘‘(A) such expense is described in para-
graph (2), (3), (6), (7), or (8) of subsection (e), 
‘‘(B) in the case of an expense for food or 
beverages, such expense is excludable from the 
gross income of the recipient under section 132 
by reason of subsection (e) thereof (relating to 
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242 
de minimis fringes) or under section 119 (relat-
ing to meals and lodging furnished for conven-
ience of employer), or 
‘‘(C) in the case of an employer who pays 
or reimburses moving expenses of an employee, 
such expenses are includible in the income of 
the employee under section 82. 
‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT 
TO FEDERAL HOURS OF SERVICE.—In the case of 
any expenses for food or beverages consumed while 
away from home (within the meaning of section 
162(a)(2)) by an individual during, or incident to, 
the period of duty subject to the hours of service 
limitations of the Department of Transportation, 
paragraph (1) shall be applied by substituting ‘80 
percent’ for ‘50 percent’.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 274(d) is amended— 
(A) by striking paragraph (2) and redesig-
nating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively, and 
(B) in the flush material following para-
graph (3) (as so redesignated)— 
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(i) by striking ‘‘, entertainment, 
amusement, recreation, or’’ in item (B), 
and 
(ii) by striking ‘‘(D) the business rela-
tionship to the taxpayer of persons enter-
tained, using the facility or property, or re-
ceiving the gift’’ and inserting ‘‘(D) the 
business relationship to the taxpayer of the 
person receiving the benefit’’. 
(2) Section 274(e) is amended by striking para-
graph (4) and redesignating paragraphs (5), (6), 
(7), (8), and (9) as paragraphs (4), (5), (6), (7), 
and (8), respectively. 
(3) Section 274(k)(2)(A) is amended by strik-
ing ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), (7), or 
(8)’’. 
(4) Section 274 is amended by striking sub-
section (l). 
(5) Section 274(m)(1)(B)(ii) is amended by 
striking ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), 
(7), or (8)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017. 
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SEC. 3308. UNRELATED BUSINESS TAXABLE INCOME IN-
CREASED BY AMOUNT OF CERTAIN FRINGE 
BENEFIT EXPENSES FOR WHICH DEDUCTION 
IS DISALLOWED. 
(a) IN GENERAL.—Section 512(a) is amended by 
adding at the end the following new paragraph: 
‘‘(6) INCREASE IN UNRELATED BUSINESS TAX-
ABLE INCOME BY DISALLOWED FRINGE.—Unrelated 
business taxable income of an organization shall be 
increased by any amount for which a deduction is 
not allowable under this chapter by reason of section 
274 and which is paid or incurred by such organiza-
tion for any qualified transportation fringe (as de-
fined in section 132(f)), any parking facility used in 
connection with qualified parking (as defined in sec-
tion 132(f)(5)(C)), or any on-premises athletic facil-
ity (as defined in section 132(j)(4)(B)). The pre-
ceding sentence shall not apply to the extent the 
amount paid or incurred is directly connected with 
an unrelated trade or business which is regularly 
carried on by the organization. The Secretary may 
issue such regulations or other guidance as may be 
necessary or appropriate to carry out the purposes 
of this paragraph, including regulations or other 
guidance providing for the appropriate allocation of 
depreciation and other costs with respect to facilities 
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used for parking or for on-premises athletic facili-
ties.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017. 
SEC. 3309. LIMITATION ON DEDUCTION FOR FDIC PRE-
MIUMS. 
(a) IN GENERAL.—Section 162 is amended by redes-
ignating subsection (q) as subsection (r) and by inserting 
after subsection (p) the following new subsection: 
‘‘(q) DISALLOWANCE OF FDIC PREMIUMS PAID BY 
CERTAIN LARGE FINANCIAL INSTITUTIONS.— 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for the applicable percentage of any FDIC 
premium paid or incurred by the taxpayer. 
‘‘(2) EXCEPTION FOR SMALL INSTITUTIONS.— 
Paragraph (1) shall not apply to any taxpayer for 
any taxable year if the total consolidated assets of 
such taxpayer (determined as of the close of such 
taxable year) do not exceed $10,000,000,000. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxpayer for any taxable 
year, the ratio (expressed as a percentage but not 
greater than 100 percent) which— 
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‘‘(A) the excess of— 
‘‘(i) the total consolidated assets of 
such taxpayer (determined as of the close 
of such taxable year), over 
‘‘(ii) $10,000,000,000, bears to 
‘‘(B) $40,000,000,000. 
‘‘(4) FDIC PREMIUMS.—For purposes of this 
subsection, the term ‘FDIC premium’ means any as-
sessment imposed under section 7(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)). 
‘‘(5) TOTAL CONSOLIDATED ASSETS.—For pur-
poses of this subsection, the term ‘total consolidated 
assets’ has the meaning given such term under sec-
tion 165 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5365). 
‘‘(6) AGGREGATION RULE.— 
‘‘(A) IN
GENERAL.—Members of an ex-
panded affiliated group shall be treated as a 
single taxpayer for purposes of applying this 
subsection. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this paragraph, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
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‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (3) of section 1504(b). 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of an 
expanded affiliated group if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3310. REPEAL OF ROLLOVER OF PUBLICLY TRADED 
SECURITIES GAIN INTO SPECIALIZED SMALL 
BUSINESS INVESTMENT COMPANIES. 
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 is amended by striking section 1044 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) 
CONFORMING
AMENDMENTS.—Section 
1016(a)(23) is amended— 
(1) by striking ‘‘1044,’’, and 
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(2) by striking ‘‘1044(d),’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales after December 31, 2017. 
SEC. 3311. CERTAIN SELF-CREATED PROPERTY NOT TREAT-
ED AS A CAPITAL ASSET. 
(a) PATENTS, ETC.—Section 1221(a)(3) is amended 
by inserting ‘‘a patent, invention, model or design (wheth-
er or not patented), a secret formula or process,’’ before 
‘‘a copyright’’. 
(b) 
SELF-CREATED
MUSICAL
WORKS.—Section 
1221(b) is amended by striking paragraph (3) and redes-
ignating paragraph (4) as paragraph (3). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 170(e)(1)(A) is amended by striking 
‘‘(determined 
without 
regard 
to 
section 
1221(b)(3))’’. 
(2) Section 1231(b)(1)(C) is amended by insert-
ing ‘‘a patent, invention, model or design (whether 
or not patented), a secret formula or process,’’ be-
fore ‘‘a copyright’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2017. 
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SEC. 3312. REPEAL OF SPECIAL RULE FOR SALE OR EX-
CHANGE OF PATENTS. 
(a) IN GENERAL.—Part IV of subchapter P of chap-
ter 1 is amended by striking section 1235 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 483(d) is amended by striking para-
graph (4). 
(2) Section 901(l)(5) is amended by striking 
‘‘without regard to section 1235 or any similar rule’’ 
and inserting ‘‘without regard to any provision 
which treats a disposition as a sale or exchange of 
a capital asset held for more than 1 year or any 
similar provision’’. 
(3) Section 1274(c)(3) is amended by striking 
subparagraph (E) and redesignating subparagraph 
(F) as subparagraph (E). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2017. 
SEC. 3313. REPEAL OF TECHNICAL TERMINATION OF PART-
NERSHIPS. 
(a) IN GENERAL.—Paragraph (1) of section 708(b) 
is amended— 
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(1) by striking ‘‘, or’’ at the end of subpara-
graph (A) and all that follows and inserting a pe-
riod, and 
(2) by striking ‘‘only if—’’ and all that follows 
through ‘‘no part of any business’’ and inserting the 
following: ‘‘only if no part of any business’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to partnership taxable years begin-
ning after December 31, 2017. 
Subtitle E—Reform of Business 
Credits 
SEC. 3401. REPEAL OF CREDIT FOR CLINICAL TESTING EX-
PENSES FOR CERTAIN DRUGS FOR RARE DIS-
EASES OR CONDITIONS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45C 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (12). 
(2) Section 280C is amended by striking sub-
section (b). 
(3) Section 6501(m) is amended by striking 
‘‘45C(d)(4),’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2017. 
SEC. 3402. REPEAL OF EMPLOYER-PROVIDED CHILD CARE 
CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45F 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (15). 
(2) Section 1016(a) is amended by striking 
paragraph (28). 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) BASIS
ADJUSTMENTS.—The amendment 
made by subsection (b)(2) shall apply to credits de-
termined for taxable years beginning after December 
31, 2017. 
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SEC. 3403. REPEAL OF REHABILITATION CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 47 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 170(f)(14)(A) is amended by insert-
ing ‘‘(as in effect before its repeal by the Tax Cuts 
and Jobs Act)’’ after ‘‘section 47’’. 
(2) Section 170(h)(4) is amended— 
(A) by striking ‘‘(as defined in section 
47(c)(3)(B))’’ in subparagraph (C)(ii), and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) REGISTERED HISTORIC DISTRICT.— 
The term ‘registered historic district’ means— 
‘‘(i) any district listed in the National 
Register, and 
‘‘(ii) any district— 
‘‘(I) which is designated under a 
statute of the appropriate State or 
local government, if such statute is 
certified by the Secretary of the Inte-
rior to the Secretary as containing cri-
teria which will substantially achieve 
the purpose of preserving and reha-
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bilitating buildings of historic signifi-
cance to the district, and 
‘‘(II) which is certified by the 
Secretary of the Interior to the Sec-
retary as meeting substantially all of 
the requirements for the listing of dis-
tricts in the National Register.’’. 
(3) Section 469(i)(3) is amended by striking 
subparagraph (B). 
(4) Section 469(i)(6)(B) is amended— 
(A) by striking ‘‘in the case of—’’ and all 
that follows and inserting ‘‘in the case of any 
credit determined under section 42 for any tax-
able year.’’, and 
(B) by striking ‘‘, REHABILITATION CRED-
IT,’’ in the heading thereof. 
(5) Section 469(k)(1) is amended by striking ‘‘, 
or any rehabilitation credit determined under section 
47,’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to amounts paid or incurred after De-
cember 31, 2017. 
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(2) TRANSITION RULE.—In the case of quali-
fied rehabilitation expenditures (within the meaning 
of section 47 of the Internal Revenue Code of 1986 
as in effect before its repeal) with respect to any 
building— 
(A) owned or leased (as permitted by sec-
tion 47 of the Internal Revenue Code of 1986 
as in effect before its repeal) by the taxpayer at 
all times after December 31, 2017, and 
(B) with respect to which the 24-month 
period selected by the taxpayer under section 
47(c)(1)(C) of such Code begins not later than 
the end of the 180-day period beginning on the 
date of the enactment of this Act, 
the amendments made by this section shall apply to 
such expenditures paid or incurred after the end of 
the taxable year in which the 24-month period re-
ferred to in subparagraph (B) ends. 
SEC. 3404. REPEAL OF WORK OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Subpart F of part IV of sub-
chapter A of chapter 1 is amended by striking section 51 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CLERICAL AMENDMENT.—The heading of such 
subpart F (and the item relating to such subpart in the 
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