H. R. 3090
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the twenty-third day of January, two thousand and two
An Act
To provide tax incentives for economic recovery.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Job Creation
and Worker Assistance Act of 2002’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF 1986.—Except
as otherwise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired after
September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 years; temporary
suspension of 90 percent AMT limit.
TITLE II—UNEMPLOYMENT ASSISTANCE
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of temporary
extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.
TITLE III—TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
Sec. 301. Tax benefits for area of New York City damaged in terrorist attacks on
September 11, 2001.
TITLE IV—MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A—General Miscellaneous Provisions
Sec. 401. Allowance of electronic 1099’s.
Sec. 402. Excluded cancellation of indebtedness income of S corporation not to
result in adjustment to basis of stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by qualified
placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account certain
expenses of elementary and secondary school teachers.
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Subtitle B—Technical Corrections
Sec. 411. Amendments related to Economic Growth and Tax Relief Reconciliation
Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of 2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.
TITLE V—SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT
OF ACT
Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.
TITLE VI—EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Sec. 601. Allowance of nonrefundable personal credits against regular and min-
imum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 607. Taxable income limit on percentage depletion for oil and natural gas pro-
duced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health benefits.
Sec. 611. Temporary special rules for taxation of life insurance companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population increases
for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.
TITLE I—BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROP-
ERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND
BEFORE SEPTEMBER 11, 2004.
(a) IN GENERAL.—Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the following
new subsection:
‘‘(k) SPECIAL ALLOWANCE
FOR CERTAIN PROPERTY ACQUIRED
AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of any qualified
property—
‘‘(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is placed
in service shall include an allowance equal to 30 percent
of the adjusted basis of the qualified property, and
‘‘(B) the adjusted basis of the qualified property shall
be reduced by the amount of such deduction before com-
puting the amount otherwise allowable as a depreciation
deduction under this chapter for such taxable year and
any subsequent taxable year.
‘‘(2) 
QUALIFIED
PROPERTY.—For 
purposes 
of 
this
subsection—
‘‘(A) IN GENERAL.—The term ‘qualified property’ means
property—
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‘‘(i)(I) to which this section applies which has a
recovery period of 20 years or less,
‘‘(II) which is computer software (as defined in
section 167(f)(1)(B)) for which a deduction is allowable
under section 167(a) without regard to this subsection,
‘‘(III) which is water utility property, or
‘‘(IV) which is qualified leasehold improvement
property,
‘‘(ii) the original use of which commences with
the taxpayer after September 10, 2001,
‘‘(iii) which is—
‘‘(I) acquired by the taxpayer after September
10, 2001, and before September 11, 2004, but only
if no written binding contract for the acquisition
was in effect before September 11, 2001, or
‘‘(II) acquired by the taxpayer pursuant to a
written binding contract which was entered into
after September 10, 2001, and before September
11, 2004, and
‘‘(iv) which is placed in service by the taxpayer
before January 1, 2005, or, in the case of property
described in subparagraph (B), before January 1, 2006.
‘‘(B) CERTAIN PROPERTY HAVING LONGER PRODUCTION
PERIODS TREATED AS QUALIFIED PROPERTY.—
‘‘(i) IN
GENERAL.—The term ‘qualified property’
includes property—
‘‘(I) which meets the requirements of clauses
(i), (ii), and (iii) of subparagraph (A),
‘‘(II) which has a recovery period of at least
10 years or is transportation property, and
‘‘(III) which is subject to section 263A by rea-
son of clause (ii) or (iii) of subsection (f)(1)(B)
thereof.
‘‘(ii) ONLY PRE-SEPTEMBER 11, 2004, BASIS ELIGIBLE
FOR ADDITIONAL ALLOWANCE.—In the case of property
which is qualified property solely by reason of clause
(i), paragraph (1) shall apply only to the extent of
the adjusted basis thereof attributable to manufacture,
construction, or production before September 11, 2004.
‘‘(iii) TRANSPORTATION PROPERTY.—For purposes of
this subparagraph, the term ‘transportation property’
means tangible personal property used in the trade
or business of transporting persons or property.
‘‘(C) EXCEPTIONS.—
‘‘(i) ALTERNATIVE
DEPRECIATION
PROPERTY.—The
term ‘qualified property’ shall not include any property
to which the alternative depreciation system under
subsection (g) applies, determined—
‘‘(I) without regard to paragraph (7) of sub-
section (g) (relating to election to have system
apply), and
‘‘(II) after application of section 280F(b)
(relating to listed property with limited business
use).
‘‘(ii) QUALIFIED NEW YORK LIBERTY ZONE LEASE-
HOLD
IMPROVEMENT
PROPERTY.—The term ‘qualified
property’ shall not include any qualified New York
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Liberty Zone leasehold improvement property (as
defined in section 1400L(c)(2)).
‘‘(iii) ELECTION OUT.—If a taxpayer makes an elec-
tion under this clause with respect to any class of
property for any taxable year, this subsection shall
not apply to all property in such class placed in service
during such taxable year.
‘‘(D) SPECIAL RULES.—
‘‘(i) SELF-CONSTRUCTED PROPERTY.—In the case of
a taxpayer manufacturing, constructing, or producing
property for the taxpayer’s own use, the requirements
of clause (iii) of subparagraph (A) shall be treated
as met if the taxpayer begins manufacturing, con-
structing, or producing the property after September
10, 2001, and before September 11, 2004.
‘‘(ii) SALE-LEASEBACKS.—For purposes of subpara-
graph (A)(ii), if property—
‘‘(I) is originally placed in service after Sep-
tember 10, 2001, by a person, and
‘‘(II) sold and leased back by such person
within 3 months after the date such property was
originally placed in service,
such property shall be treated as originally placed
in service not earlier than the date on which such
property is used under the leaseback referred to in
subclause (II).
‘‘(E) COORDINATION WITH SECTION 280F.—For purposes
of section 280F—
‘‘(i) AUTOMOBILES.—In the case of a passenger
automobile (as defined in section 280F(d)(5)) which
is qualified property, the Secretary shall increase the
limitation under section 280F(a)(1)(A)(i) by $4,600.
‘‘(ii) LISTED PROPERTY.—The deduction allowable
under paragraph (1) shall be taken into account in
computing any recapture amount under section
280F(b)(2).
‘‘(F) DEDUCTION
ALLOWED
IN
COMPUTING
MINIUMUM
TAX.—For purposes of determining alternative minimum
taxable income under section 55, the deduction under sub-
section (a) for qualified property shall be determined under
this section without regard to any adjustment under section
56.
‘‘(3) QUALIFIED LEASEHOLD IMPROVEMENT PROPERTY.—For
purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified leasehold
improvement property’ means any improvement to an
interior portion of a building which is nonresidential real
property if—
‘‘(i) such improvement is made under or pursuant
to a lease (as defined in subsection (h)(7))—
‘‘(I) by the lessee (or any sublessee) of such
portion, or
‘‘(II) by the lessor of such portion,
‘‘(ii) such portion is to be occupied exclusively by
the lessee (or any sublessee) of such portion, and
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‘‘(iii) such improvement is placed in service more
than 3 years after the date the building was first
placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
INCLUDED.—Such
term shall not include any improvement for which the
expenditure is attributable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component benefiting a
common area, and
‘‘(iv) the internal structural framework of the
building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—For purposes
of this paragraph—
‘‘(i) COMMITMENT TO LEASE TREATED AS LEASE.—
A commitment to enter into a lease shall be treated
as a lease, and the parties to such commitment shall
be treated as lessor and lessee, respectively.
‘‘(ii) RELATED PERSONS.—A lease between related
persons shall not be considered a lease. For purposes
of the preceding sentence, the term ‘related persons’
means—
‘‘(I) members of an affiliated group (as defined
in section 1504), and
‘‘(II) persons having a relationship described
in subsection (b) of section 267; except that, for
purposes of this clause, the phrase ‘80 percent
or more’ shall be substituted for the phrase ‘more
than 50 percent’ each place it appears in such
subsection.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after September 10, 2001,
in taxable years ending after such date.
SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED
FOR 5 YEARS; TEMPORARY SUSPENSION OF 90 PERCENT
AMT LIMIT.
(a) IN GENERAL.—Paragraph (1) of section 172(b) (relating to
years to which loss may be carried) is amended by adding at
the end the following new subparagraph:
‘‘(H) In the case of a taxpayer which has a net operating
loss for any taxable year ending during 2001 or 2002,
subparagraph (A)(i) shall be applied by substituting ‘5’
for ‘2’ and subparagraph (F) shall not apply.’’.
(b) ELECTION TO DISREGARD 5-YEAR CARRYBACK.—Section 172
(relating to net operating loss deduction) is amended by redesig-
nating subsection (j) as subsection (k) and by inserting after subjec-
tion (i) the following new subsection:
‘‘(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK FOR CERTAIN
NET
OPERATING
LOSSES.—Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(H) from any loss year may elect
to have the carryback period with respect to such loss year deter-
mined without regard to subsection (b)(1)(H). Such election shall
be made in such manner as may be prescribed by the Secretary
and shall be made by the due date (including extensions of time)
for filing the taxpayer’s return for the taxable year of the net
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operating loss. Such election, once made for any taxable year,
shall be irrevocable for such taxable year.’’.
(c) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT ON CERTAIN
NOL CARRYOVERS.—
(1) IN
GENERAL.—Subparagraph (A) of section 56(d)(1)
(relating to general rule defining alternative tax net operating
loss deduction) is amended to read as follows:
‘‘(A) the amount of such deduction shall not exceed
the sum of—
‘‘(i) the lesser of—
‘‘(I) the amount of such deduction attributable
to net operating losses (other than the deduction
attributable to carryovers described in clause
(ii)(I)), or
‘‘(II) 90 percent of alternative minimum tax-
able income determined without regard to such
deduction, plus
‘‘(ii) the lesser of—
‘‘(I) the amount of such deduction attributable
to the sum of carrybacks of net operating losses
for taxable years ending during 2001 or 2002 and
carryforwards of net operating losses to taxable
years ending during 2001 and 2002, or
‘‘(II) alternative minimum taxable income
determined without regard to such deduction
reduced by the amount determined under clause
(i), and’’.
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to taxable years ending before January
1, 2003.
(d) EFFECTIVE DATE.—Except as provided in subsection (c),
the amendments made by this section shall apply to net operating
losses for taxable years ending after December 31, 2000.
TITLE II—UNEMPLOYMENT ASSISTANCE
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Temporary Extended Unemploy-
ment Compensation Act of 2002’’.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.—Any State which desires to do so may enter
into and participate in an agreement under this title with the
Secretary of Labor (in this title referred to as the ‘‘Secretary’’).
Any State which is a party to an agreement under this title may,
upon providing 30 days’ written notice to the Secretary, terminate
such agreement.
(b) PROVISIONS OF AGREEMENT.—Any agreement under sub-
section (a) shall provide that the State agency of the State will
make payments of temporary extended unemployment compensa-
tion to individuals who—
(1) have exhausted all rights to regular compensation under
the State law or under Federal law with respect to a benefit
year (excluding any benefit year that ended before March 15,
2001);
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(2) have no rights to regular compensation or extended
compensation with respect to a week under such law or any
other State unemployment compensation law or to compensa-
tion under any other Federal law;
(3) are not receiving compensation with respect to such
week under the unemployment compensation law of Canada;
and
(4) filed an initial claim for regular compensation on or
after March 15, 2001.
(c) EXHAUSTION
OF BENEFITS.—For purposes of subsection
(b)(1), an individual shall be deemed to have exhausted such individ-
ual’s rights to regular compensation under a State law when—
(1) no payments of regular compensation can be made
under such law because such individual has received all regular
compensation available to such individual based on employment
or wages during such individual’s base period; or
(2) such individual’s rights to such compensation have been
terminated by reason of the expiration of the benefit year
with respect to which such rights existed.
(d) WEEKLY BENEFIT AMOUNT, ETC.—For purposes of any agree-
ment under this title—
(1) the amount of temporary extended unemployment com-
pensation which shall be payable to any individual for any
week of total unemployment shall be equal to the amount
of the regular compensation (including dependents’ allowances)
payable to such individual during such individual’s benefit year
under the State law for a week of total unemployment;
(2) the terms and conditions of the State law which apply
to claims for regular compensation and to the payment thereof
shall apply to claims for temporary extended unemployment
compensation and the payment thereof, except—
(A) that an individual shall not be eligible for tem-
porary extended unemployment compensation under this
title unless, in the base period with respect to which the
individual exhausted all rights to regular compensation
under the State law, the individual had 20 weeks of full-
time insured employment or the equivalent in insured
wages, as determined under the provisions of the State
law implementing section 202(a)(5) of the Federal-State
Extended Unemployment Compensation Act of 1970 (26
U.S.C. 3304 note); and
(B) where otherwise inconsistent with the provisions
of this title or with the regulations or operating instructions
of the Secretary promulgated to carry out this title; and
(3) the maximum amount of temporary extended unemploy-
ment compensation payable to any individual for whom a tem-
porary extended unemployment compensation account is estab-
lished under section 203 shall not exceed the amount estab-
lished in such account for such individual.
(e) ELECTION BY STATES.—Notwithstanding any other provision
of Federal law (and if State law permits), the Governor of a State
that is in an extended benefit period may provide for the payment
of temporary extended unemployment compensation in lieu of
extended compensation to individuals who otherwise meet the
requirements of this section. Such an election shall not require
a State to trigger off an extended benefit period.
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SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION
ACCOUNT.
(a) IN GENERAL.—Any agreement under this title shall provide
that the State will establish, for each eligible individual who files
an application for temporary extended unemployment compensa-
tion, a temporary extended unemployment compensation account
with respect to such individual’s benefit year.
(b) AMOUNT IN ACCOUNT.—
(1) IN GENERAL.—The amount established in an account
under subsection (a) shall be equal to the lesser of—
(A) 50 percent of the total amount of regular compensa-
tion (including dependents’ allowances) payable to the indi-
vidual during the individual’s benefit year under such law,
or
(B) 13 times the individual’s average weekly benefit
amount for the benefit year.
(2) WEEKLY BENEFIT AMOUNT.—For purposes of this sub-
section, an individual’s weekly benefit amount for any week
is the amount of regular compensation (including dependents’
allowances) under the State law payable to such individual
for such week for total unemployment.
(c) SPECIAL RULE.—
(1) IN GENERAL.—Notwithstanding any other provision of
this section, if, at the time that the individual’s account is
exhausted, such individual’s State is in an extended benefit
period (as determined under paragraph (2)), then, such account
shall be augmented by an amount equal to the amount origi-
nally established in such account (as determined under sub-
section (b)(1)).
(2) EXTENDED BENEFIT PERIOD.—For purposes of paragraph
(1), a State shall be considered to be in an extended benefit
period if, at the time of exhaustion (as described in paragraph
(1))—
(A) such a period is then in effect for such State under
the Federal-State Extended Unemployment Compensation
Act of 1970; or
(B) such a period would then be in effect for such
State under such Act if section 203(d) of such Act were
applied as if it had been amended by striking ‘‘5’’ each
place it appears and inserting ‘‘4’’.
SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAY-
MENT OF TEMPORARY EXTENDED UNEMPLOYMENT COM-
PENSATION.
(a) GENERAL RULE.—There shall be paid to each State that
has entered into an agreement under this title an amount equal
to 100 percent of the temporary extended unemployment compensa-
tion paid to individuals by the State pursuant to such agreement.
(b) TREATMENT
OF REIMBURSABLE COMPENSATION.—No pay-
ment shall be made to any State under this section in respect
of any compensation to the extent the State is entitled to reimburse-
ment in respect of such compensation under the provisions of any
Federal law other than this title or chapter 85 of title 5, United
States Code. A State shall not be entitled to any reimbursement
under such chapter 85 in respect of any compensation to the extent
the State is entitled to reimbursement under this title in respect
of such compensation.
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(c) DETERMINATION OF AMOUNT.—Sums payable to any State
by reason of such State having an agreement under this title
shall be payable, either in advance or by way of reimbursement
(as may be determined by the Secretary), in such amounts as
the Secretary estimates the State will be entitled to receive under
this title for each calendar month, reduced or increased, as the
case may be, by any amount by which the Secretary finds that
the Secretary’s estimates for any prior calendar month were greater
or less than the amounts which should have been paid to the
State. Such estimates may be made on the basis of such statistical,
sampling, or other method as may be agreed upon by the Secretary
and the State agency of the State involved.
SEC. 205. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemployment com-
pensation account (as established by section 905(a) of the Social
Security Act (42 U.S.C. 1105(a)) of the Unemployment Trust Fund
(as established by section 904(a) of such Act (42 U.S.C. 1104(a))
shall be used for the making of payments to States having agree-
ments entered into under this title.
(b) CERTIFICATION.—The Secretary shall from time to time cer-
tify to the Secretary of the Treasury for payment to each State
the sums payable to such State under this title. The Secretary
of the Treasury, prior to audit or settlement by the General
Accounting Office, shall make payments to the State in accordance
with such certification, by transfers from the extended unemploy-
ment compensation account (as so established) to the account of
such State in the Unemployment Trust Fund (as so established).
(c) ASSISTANCE TO STATES.—There are appropriated out of the
employment security administration account (as established by sec-
tion 901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the
Unemployment Trust Fund, without fiscal year limitation, such
funds as may be necessary for purposes of assisting States (as
provided in title III of the Social Security Act (42 U.S.C. 501
et seq.)) in meeting the costs of administration of agreements under
this title.
(d) APPROPRIATIONS FOR CERTAIN PAYMENTS.—There are appro-
priated from the general fund of the Treasury, without fiscal year
limitation, to the extended unemployment compensation account
(as so established) of the Unemployment Trust Fund (as so estab-
lished) such sums as the Secretary estimates to be necessary to
make the payments under this section in respect of—
(1) compensation payable under chapter 85 of title 5, United
States Code; and
(2) compensation payable on the basis of services to which
section 3309(a)(1) of the Internal Revenue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall
not be required to be repaid.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has made, or
caused to be made by another, a false statement or representation
of a material fact, or knowingly has failed, or caused another
to fail, to disclose a material fact, and as a result of such false
statement or representation or of such nondisclosure such individual
has received an amount of temporary extended unemployment com-
pensation under this title to which he was not entitled, such
individual—
H. R. 3090—10
(1) shall be ineligible for further temporary extended
unemployment compensation under this title in accordance with
the provisions of the applicable State unemployment compensa-
tion law relating to fraud in connection with a claim for
unemployment compensation; and
(2) shall be subject to prosecution under section 1001 of
title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who have received
amounts of temporary extended unemployment compensation under
this title to which they were not entitled, the State shall require
such individuals to repay the amounts of such temporary extended
unemployment compensation to the State agency, except that the
State agency may waive such repayment if it determines that—
(1) the payment of such temporary extended unemployment
compensation was without fault on the part of any such indi-
vidual; and
(2) such repayment would be contrary to equity and good
conscience.
(c) RECOVERY BY STATE AGENCY.—
(1) IN GENERAL.—The State agency may recover the amount
to be repaid, or any part thereof, by deductions from any
temporary extended unemployment compensation payable to
such individual under this title or from any unemployment
compensation payable to such individual under any Federal
unemployment compensation law administered by the State
agency or under any other Federal law administered by the
State agency which provides for the payment of any assistance
or allowance with respect to any week of unemployment, during
the 3-year period after the date such individuals received the
payment of the temporary extended unemployment compensa-
tion to which they were not entitled, except that no single
deduction may exceed 50 percent of the weekly benefit amount
from which such deduction is made.
(2) OPPORTUNITY FOR HEARING.—No repayment shall be
required, and no deduction shall be made, until a determination
has been made, notice thereof and an opportunity for a fair
hearing has been given to the individual, and the determination
has become final.
(d) REVIEW.—Any determination by a State agency under this
section shall be subject to review in the same manner and to
the same extent as determinations under the State unemployment
compensation law, and only in that manner and to that extent.
SEC. 207. DEFINITIONS.
In this title, the terms ‘‘compensation’’, ‘‘regular compensation’’,
‘‘extended compensation’’, ‘‘additional compensation’’, ‘‘benefit year’’,
‘‘base period’’, ‘‘State’’, ‘‘State agency’’, ‘‘State law’’, and ‘‘week’’ have
the respective meanings given such terms under section 205 of
the Federal-State Extended Unemployment Compensation Act of
1970 (26 U.S.C. 3304 note).
SEC. 208. APPLICABILITY.
An agreement entered into under this title shall apply to weeks
of unemployment—
(1) beginning after the date on which such agreement is
entered into; and
(2) ending before January 1, 2003.
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SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY THE BALANCED
BUDGET ACT OF 1997.—
(1) IN GENERAL.—The following provisions of section 903
of the Social Security Act (42 U.S.C. 1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.—Any amounts transferred before
the date of enactment of this Act under the provision repealed
by paragraph (1)(A) shall remain subject to section 903 of
the Social Security Act, as last in effect before such date of
enactment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.—Section 903 of
the Social Security Act is amended by adding at the end the
following:
‘‘Special Transfer in Fiscal Year 2002
‘‘(d)(1) The Secretary of the Treasury shall transfer (as of the
date determined under paragraph (5)) from the Federal unemploy-
ment account to the account of each State in the Unemployment
Trust Fund the amount determined with respect to such State
under paragraph (2).
‘‘(2)(A) The amount to be transferred under this subsection
to a State account shall (as determined by the Secretary of Labor
and certified by such Secretary to the Secretary of the Treasury)
be equal to—
‘‘(i) the amount which would have been required to have
been transferred under this section to such account at the
beginning of fiscal year 2002 if—
‘‘(I) section 209(a)(1) of the Temporary Extended
Unemployment Compensation Act of 2002 had been enacted
before the close of fiscal year 2001, and
‘‘(II) section 5402 of Public Law 105–33 (relating to
increase in Federal unemployment account ceiling) had
not been enacted,
minus
‘‘(ii) the amount which was in fact transferred under this
section to such account at the beginning of fiscal year 2002.
‘‘(B) Notwithstanding the provisions of subparagraph (A)—
‘‘(i) the aggregate amount transferred to the States under
this subsection may not exceed a total of $8,000,000,000; and
‘‘(ii) all amounts determined under subparagraph (A) shall
be reduced ratably, if and to the extent necessary in order
to comply with the limitation under clause (i).
‘‘(3)(A) Except as provided in paragraph (4), amounts trans-
ferred to a State account pursuant to this subsection may be used
only in the payment of cash benefits—
‘‘(i) to individuals with respect to their unemployment,
and
‘‘(ii) which are allowable under subparagraph (B) or (C).
‘‘(B)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable as—
‘‘(I) regular compensation, or
‘‘(II) additional compensation, upon the exhaustion of any
temporary extended unemployment compensation (if such State
has entered into an agreement under the Temporary Extended
H. R. 3090—12
Unemployment Compensation Act of 2002), for individuals
eligible for regular compensation under the unemployment com-
pensation law of such State.
‘‘(ii) Any additional compensation under clause (i) may not
be taken into account for purposes of any determination relating
to the amount of any extended compensation for which an individual
might be eligible.
‘‘(C)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable to 1 or
more categories of individuals not otherwise eligible for regular
compensation under the unemployment compensation law of such
State, including those described in clause (iii).
‘‘(ii) The benefits paid under this subparagraph to any indi-
vidual may not, for any period of unemployment, exceed the max-
imum amount of regular compensation authorized under the
unemployment compensation law of such State for that same period,
plus any additional compensation (described in subparagraph (B)(i))
which could have been paid with respect to that amount.
‘‘(iii) The categories of individuals described in this clause
include the following:
‘‘(I) Individuals who are seeking, or available for, only
part-time (and not full-time) work.
‘‘(II) Individuals who would be eligible for regular com-
pensation under the unemployment compensation law of such
State under an alternative base period.
‘‘(D) Amounts transferred to a State account under this sub-
section may be used in the payment of cash benefits to individuals
only for weeks of unemployment beginning after the date of enact-
ment of this subsection.
‘‘(4) Amounts transferred to a State account under this sub-
section may be used for the administration of its unemployment
compensation law and public employment offices (including in
connection with benefits described in paragraph (3) and any recipi-
ents thereof), subject to the same conditions as set forth in sub-
section (c)(2) (excluding subparagraph (B) thereof, and deeming
the reference to ‘subsections (a) and (b)’ in subparagraph (D) thereof
to include this subsection).
‘‘(5) Transfers under this subsection shall be made within 10
days after the date of enactment of this paragraph.’’.
(c) LIMITATIONS ON TRANSFERS.—Section 903(b) of the Social
Security Act shall apply to transfers under section 903(d) of such
Act (as amended by this section). For purposes of the preceding
sentence, such section 903(b) shall be deemed to be amended as
follows:
(1) By substituting ‘‘the transfer date described in sub-
section (d)(5)’’ for ‘‘October 1 of any fiscal year’’.
(2) By substituting ‘‘remain in the Federal unemployment
account’’ for ‘‘be transferred to the Federal unemployment
account as of the beginning of such October 1’’.
(3) By substituting ‘‘fiscal year 2002 (after the transfer
date described in subsection (d)(5))’’ for ‘‘the fiscal year begin-
ning on such October 1’’.
(4) By substituting ‘‘under subsection (d)’’ for ‘‘as of October
1 of such fiscal year’’.
(5) By substituting ‘‘(as of the close of fiscal year 2002)’’
for ‘‘(as of the close of such fiscal year)’’.
H. R. 3090—13
(d) TECHNICAL AMENDMENTS.—(1) Sections 3304(a)(4)(B) and
3306(f)(2) of the Internal Revenue Code of 1986 are amended by
inserting ‘‘or 903(d)(4)’’ before ‘‘of the Social Security Act’’.
(2) Section 303(a)(5) of the Social Security Act is amended
in the second proviso by inserting ‘‘or 903(d)(4)’’ after ‘‘903(c)(2)’’.
(e) REGULATIONS.—The Secretary of Labor may prescribe any
operating instructions or regulations necessary to carry out this
section and the amendments made by this section.
TITLE III—TAX INCENTIVES FOR NEW
YORK CITY AND DISTRESSED AREAS
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED
IN TERRORIST ATTACKS ON SEPTEMBER 11, 2001.
(a) IN GENERAL.—Chapter 1 is amended by adding at the
end the following new subchapter:
‘‘Subchapter Y—New York Liberty Zone Benefits
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.
‘‘SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
‘‘(a) EXPANSION OF WORK OPPORTUNITY TAX CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 51, a New York
Liberty Zone business employee shall be treated as a member
of a targeted group.
‘‘(2) NEW YORK LIBERTY ZONE BUSINESS EMPLOYEE.—For
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘New York Liberty Zone
business employee’ means, with respect to any period, any
employee of a New York Liberty Zone business if substan-
tially all the services performed during such period by
such employee for such business are performed in the New
York Liberty Zone.
‘‘(B) INCLUSION OF CERTAIN EMPLOYEES OUTSIDE THE
NEW YORK LIBERTY ZONE.—
‘‘(i) IN GENERAL.—In the case of a New York Lib-
erty Zone business described in subclause (II) of
subparagraph (C)(i), the term ‘New York Liberty Zone
business employee’ includes any employee of such busi-
ness (not described in subparagraph (A)) if substan-
tially all the services performed during such period
by such employee for such business are performed in
the City of New York, New York.
‘‘(ii) LIMITATION.—The number of employees of
such a business that are treated as New York Liberty
Zone business employees on any day by reason of
clause (i) shall not exceed the excess of—
‘‘(I) the number of employees of such business
on September 11, 2001, in the New York Liberty
Zone, over
‘‘(II) the number of New York Liberty Zone
business employees (determined without regard to
this subparagraph) of such business on the day
to which the limitation is being applied.
H. R. 3090—14
The Secretary may require any trade or business to
have the number determined under subclause (I)
verified by the New York State Department of Labor.
‘‘(C) NEW YORK LIBERTY ZONE BUSINESS.—
‘‘(i) IN
GENERAL.—The term ‘New York Liberty
Zone business’ means any trade or business which
is—
‘‘(I) located in the New York Liberty Zone,
or
‘‘(II) located in the City of New York, New
York, outside the New York Liberty Zone, as a
result of the physical destruction or damage of
such place of business by the September 11, 2001,
terrorist attack.
‘‘(ii) 
CREDIT
NOT
ALLOWED
FOR
LARGE
BUSINESSES.—The term ‘New York Liberty Zone busi-
ness’ shall not include any trade or business for any
taxable year if such trade or business employed an
average of more than 200 employees on business days
during the taxable year.
‘‘(D) SPECIAL
RULES
FOR
DETERMINING
AMOUNT
OF
CREDIT.—For purposes of applying subpart F of part IV
of subchapter B of this chapter to wages paid or incurred
to any New York Liberty Zone business employee—
‘‘(i) section 51(a) shall be applied by substituting
‘qualified wages’ for ‘qualified first-year wages’,
‘‘(ii) the rules of section 52 shall apply for purposes
of determining the number of employees under
subparagraph (B),
‘‘(iii) subsections (c)(4) and (i)(2) of section 51 shall
not apply, and
‘‘(iv) in determining qualified wages, the following
shall apply in lieu of section 51(b):
‘‘(I) QUALIFIED
WAGES.—The term ‘qualified
wages’ means wages paid or incurred by the
employer to individuals who are New York Liberty
Zone business employees of such employer for work
performed during calendar year 2002 or 2003.
‘‘(II) ONLY
FIRST
$6,000
OF
WAGES
PER
CAL-
ENDAR YEAR TAKEN INTO ACCOUNT.—The amount
of the qualified wages which may be taken into
account with respect to any individual shall not
exceed $6,000 per calendar year.
‘‘(b) SPECIAL ALLOWANCE
FOR CERTAIN PROPERTY ACQUIRED
AFTER SEPTEMBER 10, 2001.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of any qualified
New York Liberty Zone property—
‘‘(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is placed
in service shall include an allowance equal to 30 percent
of the adjusted basis of such property, and
‘‘(B) the adjusted basis of the qualified New York Lib-
erty Zone property shall be reduced by the amount of
such deduction before computing the amount otherwise
allowable as a depreciation deduction under this chapter
for such taxable year and any subsequent taxable year.
H. R. 3090—15
‘‘(2) QUALIFIED NEW YORK LIBERTY ZONE PROPERTY.—For
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘qualified New York Lib-
erty Zone property’ means property—
‘‘(i)(I) which is described in section 168(k)(2)(A)(i),
or
‘‘(II) which is nonresidential real property, or resi-
dential rental property, which is described in subpara-
graph (B),
‘‘(ii) substantially all of the use of which is in
the New York Liberty Zone and is in the active conduct
of a trade or business by the taxpayer in such Zone,
‘‘(iii) the original use of which in the New York
Liberty Zone commences with the taxpayer after Sep-
tember 10, 2001,
‘‘(iv) which is acquired by the taxpayer by purchase
(as defined in section 179(d)) after September 10, 2001,
but only if no written binding contract for the acquisi-
tion was in effect before September 11, 2001, and
‘‘(v) which is placed in service by the taxpayer
on or before the termination date.
The term ‘termination date’ means December 31, 2006
(December 31, 2009, in the case of nonresidential real
property and residential rental property).
‘‘(B) ELIGIBLE
REAL
PROPERTY.—Nonresidential real
property or residential rental property is described in this
subparagraph only to the extent it rehabilitates real prop-
erty damaged, or replaces real property destroyed or con-
demned, as a result of the September 11, 2001, terrorist
attack. For purposes of the preceding sentence, property
shall be treated as replacing real property destroyed or
condemned if, as part of an integrated plan, such property
replaces real property which is included in a continuous
area which includes real property destroyed or condemned.
‘‘(C) EXCEPTIONS.—
‘‘(i) 30 PERCENT
ADDITIONAL
ALLOWANCE
PROP-
ERTY.—Such term shall not include property to which
section 168(k) applies.
‘‘(ii) ALTERNATIVE DEPRECIATION PROPERTY.—The
term ‘qualified New York Liberty Zone property’ shall
not 
include 
any 
property 
described 
in 
section
168(k)(2)(C)(i).
‘‘(iii) QUALIFIED NEW YORK LIBERTY ZONE LEASE-
HOLD IMPROVEMENT PROPERTY.—Such term shall not
include any qualified New York Liberty Zone leasehold
improvement property.
‘‘(iv) ELECTION
OUT.—For purposes of this sub-
section, 
rules 
similar 
to 
the 
rules 
of 
section
168(k)(2)(C)(iii) shall apply.
‘‘(D) SPECIAL RULES.—For purposes of this subsection,
rules similar to the rules of section 168(k)(2)(D) shall apply,
except that clause (i) thereof shall be applied without
regard to ‘and before September 11, 2004’.
‘‘(E) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX.—
For purposes of this subsection, rules similar to the rules
of section 168(k)(2)(F) shall apply.
H. R. 3090—16
‘‘(c) 5-YEAR RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN
LEASEHOLD IMPROVEMENTS.—
‘‘(1) IN GENERAL.—For purposes of section 168, the term
‘5-year property’ includes any qualified New York Liberty Zone
leasehold improvement property.
‘‘(2) QUALIFIED
NEW
YORK
LIBERTY
ZONE
LEASEHOLD
IMPROVEMENT PROPERTY.—For purposes of this section, the term
‘qualified New York Liberty Zone leasehold improvement prop-
erty’ means qualified leasehold improvement property (as
defined in section 168(k)(3)) if—
‘‘(A) such building is located in the New York Liberty
Zone,
‘‘(B) such improvement is placed in service after Sep-
tember 10, 2001, and before January 1, 2007, and
‘‘(C) no written binding contract for such improvement
was in effect before September 11, 2001.
‘‘(3) REQUIREMENT TO USE STRAIGHT LINE METHOD.—The
applicable depreciation method under section 168 shall be the
straight line method in the case of qualified New York Liberty
Zone leasehold improvement property.
‘‘(4) 
9-YEAR
RECOVERY
PERIOD
UNDER
ALTERNATIVE
SYSTEM.—For purposes of section 168(g), the class life of quali-
fied New York Liberty Zone leasehold improvement property
shall be 9 years.
‘‘(d) TAX-EXEMPT BOND FINANCING.—
‘‘(1) IN GENERAL.—For purposes of this title, any qualified
New York Liberty Bond shall be treated as an exempt facility
bond.
‘‘(2) QUALIFIED NEW YORK LIBERTY BOND.—For purposes
of this subsection, the term ‘qualified New York Liberty Bond’
means any bond issued as part of an issue if—
‘‘(A) 95 percent or more of the net proceeds (as defined
in section 150(a)(3)) of such issue are to be used for quali-
fied project costs,
‘‘(B) such bond is issued by the State of New York
or any political subdivision thereof,
‘‘(C) the Governor or the Mayor designates such bond
for purposes of this section, and
‘‘(D) such bond is issued after the date of the enactment
of this section and before January 1, 2005.
‘‘(3) LIMITATIONS ON AMOUNT OF BONDS.—
‘‘(A) AGGREGATE AMOUNT DESIGNATED.—The maximum
aggregate face amount of bonds which may be designated
under this subsection shall not exceed $8,000,000,000, of
which not to exceed $4,000,000,000 may be designated
by the Governor and not to exceed $4,000,000,000 may
be designated by the Mayor.
‘‘(B) 
SPECIFIC
LIMITATIONS.—The 
aggregate 
face
amount of bonds issued which are to be used for—
‘‘(i) costs for property located outside the New York
Liberty Zone shall not exceed $2,000,000,000,
‘‘(ii) residential rental property shall not exceed
$1,600,000,000, and
‘‘(iii) costs with respect to property used for retail
sales of tangible property and functionally related and
subordinate property shall not exceed $800,000,000.
H. R. 3090—17
The limitations under clauses (i), (ii), and (iii) shall be
allocated proportionately between the bonds designated by
the Governor and the bonds designated by the Mayor in
proportion to the respective amounts of bonds designated
by each.
‘‘(C) MOVABLE PROPERTY.—No bonds shall be issued
which are to be used for movable fixtures and equipment.
‘‘(4) QUALIFIED
PROJECT
COSTS.—For purposes of this
subsection—
‘‘(A) IN GENERAL.—The term ‘qualified project costs’
means the cost of acquisition, construction, reconstruction,
and renovation of—
‘‘(i) nonresidential real property and residential
rental property (including fixed tenant improvements
associated with such property) located in the New York
Liberty Zone, and
‘‘(ii) public utility property (as defined in section
168(i)(10)) located in the New York Liberty Zone.
‘‘(B) COSTS
FOR
CERTAIN
PROPERTY
OUTSIDE
ZONE
INCLUDED.—Such term includes the cost of acquisition,
construction, reconstruction, and renovation of nonresiden-
tial real property (including fixed tenant improvements
associated with such property) located outside the New
York Liberty Zone but within the City of New York, New
York, if such property is part of a project which consists
of at least 100,000 square feet of usable office or other
commercial space located in a single building or multiple
adjacent buildings.
‘‘(5) SPECIAL RULES.—In applying this title to any qualified
New York Liberty Bond, the following modifications shall apply:
‘‘(A) Section 146 (relating to volume cap) shall not
apply.
‘‘(B) Section 147(d) (relating to acquisition of existing
property not permitted) shall be applied by substituting
‘50 percent’ for ‘15 percent’ each place it appears.
‘‘(C) Section 148(f)(4)(C) (relating to exception from
rebate for certain proceeds to be used to finance construc-
tion expenditures) shall apply to the available construction
proceeds of bonds issued under this section.
‘‘(D) Repayments of principal on financing provided
by the issue—
‘‘(i) may not be used to provide financing, and
‘‘(ii) must be used not later than the close of the
1st semiannual period beginning after the date of the
repayment to redeem bonds which are part of such
issue.
The requirement of clause (ii) shall be treated as met
with respect to amounts received within 10 years after
the date of issuance of the issue (or, in the case of a
refunding bond, the date of issuance of the original bond)
if such amounts are used by the close of such 10 years
to redeem bonds which are part of such issue.
‘‘(E) Section 57(a)(5) shall not apply.
‘‘(6) SEPARATE
ISSUE
TREATMENT
OF
PORTIONS
OF
AN
ISSUE.—This subsection shall not apply to the portion of an
issue which (if issued as a separate issue) would be treated
as a qualified bond or as a bond that is not a private activity
H. R. 3090—18
bond (determined without regard to paragraph (1)), if the issuer
elects to so treat such portion.
‘‘(e) ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.—
‘‘(1) IN
GENERAL.—With respect to a bond described in
paragraph (2) issued as part of an issue 90 percent (95 percent
in the case of a bond described in paragraph (2)(C)) or more
of the net proceeds (as defined in section 150(a)(3)) of which
were used to finance facilities located within the City of New
York, New York (or property which is functionally related and
subordinate to facilities located within the City of New York
for the furnishing of water), one additional advanced refunding
after the date of the enactment of this section and before
January 1, 2005, shall be allowed under the applicable rules
of section 149(d) if—
‘‘(A) the Governor or the Mayor designates the advance
refunding bond for purposes of this subsection, and
‘‘(B) the requirements of paragraph (4) are met.
‘‘(2) BONDS DESCRIBED.—A bond is described in this para-
graph if such bond was outstanding on September 11, 2001,
and is—
‘‘(A) a State or local bond (as defined in section
103(c)(1)) which is a general obligation of the City of New
York, New York,
‘‘(B) a State or local bond (as so defined) other than
a private activity bond (as defined in section 141(a)) issued
by the New York Municipal Water Finance Authority or
the Metropolitan Transportation Authority of the State
of New York, or
‘‘(C) a qualified 501(c)(3) bond (as defined in section
145(a)) which is a qualified hospital bond (as defined in
section 145(c)) issued by or on behalf of the State of New
York or the City of New York, New York.
‘‘(3) AGGREGATE LIMIT.—For purposes of paragraph (1), the
maximum aggregate face amount of bonds which may be des-
ignated under this subsection by the Governor shall not exceed
$4,500,000,000 and the maximum aggregate face amount of
bonds which may be designated under this subsection by the
Mayor shall not exceed $4,500,000,000.
‘‘(4) ADDITIONAL REQUIREMENTS.—The requirements of this
paragraph are met with respect to any advance refunding of
a bond described in paragraph (2) if—
‘‘(A) no advance refundings of such bond would be
allowed under any provision of law after September 11,
2001,
‘‘(B) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
‘‘(C) the requirements of section 148 are met with
respect to all bonds issued under this subsection.
‘‘(f) INCREASE IN EXPENSING UNDER SECTION 179.—
‘‘(1) IN GENERAL.—For purposes of section 179—
‘‘(A) the limitation under section 179(b)(1) shall be
increased by the lesser of—
‘‘(i) $35,000, or
‘‘(ii) the cost of section 179 property which is quali-
fied New York Liberty Zone property placed in service
during the taxable year, and
H. R. 3090—19
‘‘(B) the amount taken into account under section
179(b)(2) with respect to any section 179 property which
is qualified New York Liberty Zone property shall be 50
percent of the cost thereof.
‘‘(2) QUALIFIED NEW YORK LIBERTY ZONE PROPERTY.—For
purposes of this subsection, the term ‘qualified New York Lib-
erty Zone property’ has the meaning given such term by sub-
section (b)(2).
‘‘(3) RECAPTURE.—Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified New York
Liberty Zone property which ceases to be used in the New
York Liberty Zone.
‘‘(g) EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION
OF GAIN.—Notwithstanding subsections (g) and (h) of section 1033,
clause (i) of section 1033(a)(2)(B) shall be applied by substituting
‘5 years’ for ‘2 years’ with respect to property which is compulsorily
or involuntarily converted as a result of the terrorist attacks on
September 11, 2001, in the New York Liberty Zone but only if
substantially all of the use of the replacement property is in the
City of New York, New York.
‘‘(h) NEW YORK LIBERTY ZONE.—For purposes of this section,
the term ‘New York Liberty Zone’ means the area located on or
south of Canal Street, East Broadway (east of its intersection with
Canal Street), or Grand Street (east of its intersection with East
Broadway) in the Borough of Manhattan in the City of New York,
New York.
‘‘(i) REFERENCES TO GOVERNOR AND MAYOR.—For purposes of
this section, the terms ‘Governor’ and ‘Mayor’ mean the Governor
of the State of New York and the Mayor of the City of New
York, New York, respectively.’’.
(b) CREDIT ALLOWED AGAINST REGULAR AND MINIMUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 38 (relating to
limitation based on amount of tax) is amended by redesignating
paragraph (3) as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) SPECIAL RULES FOR NEW YORK LIBERTY ZONE BUSINESS
EMPLOYEE CREDIT.—
‘‘(A) IN GENERAL.—In the case of the New York Liberty
Zone business employee credit—
‘‘(i) this section and section 39 shall be applied
separately with respect to such credit, and
‘‘(ii) in applying paragraph (1) to such credit—
‘‘(I) the tentative minimum tax shall be treated
as being zero, and
‘‘(II) the limitation under paragraph (1) (as
modified by subclause (I)) shall be reduced by the
credit allowed under subsection (a) for the taxable
year (other than the New York Liberty Zone busi-
ness employee credit).
‘‘(B) NEW
YORK
LIBERTY
ZONE
BUSINESS
EMPLOYEE
CREDIT.—For purposes of this subsection, the term ‘New
York Liberty Zone business employee credit’ means the
portion of work opportunity credit under section 51 deter-
mined under section 1400L(a).’’.
(2) CONFORMING
AMENDMENT.—Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ‘‘or the New York Liberty
Zone business employee credit’’ after ‘‘employment credit’’.
H. R. 3090—20
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years ending after December
31, 2001.
(c) CLERICAL
AMENDMENT.—The table of subchapters for
chapter 1 is amended by adding at the end the following new
item:
‘‘Subchapter Y—New York Liberty Zone Benefits.’’.
TITLE IV—MISCELLANEOUS AND
TECHNICAL PROVISIONS
Subtitle A—General Miscellaneous
Provisions
SEC. 401. ALLOWANCE OF ELECTRONIC 1099’S.
Any person required to furnish a statement under any section
of subpart B of part III of subchapter A of chapter 61 of the
Internal Revenue Code of 1986 for any taxable year ending after
the date of the enactment of this Act, may electronically furnish
such statement (without regard to any first class mailing require-
ment) to any recipient who has consented to the electronic provision
of the statement in a manner similar to the one permitted under
regulations issued under section 6051 of such Code or in such
other manner as provided by the Secretary.
SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF
S CORPORATION NOT TO RESULT IN ADJUSTMENT TO
BASIS OF STOCK OF SHAREHOLDERS.
(a) IN
GENERAL.—Subparagraph (A) of section 108(d)(7)
(relating to certain provisions to be applied at corporate level)
is amended by inserting before the period ‘‘, including by not taking
into account under section 1366(a) any amount excluded under
subsection (a) of this section’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendment made by this section shall apply to discharges
of indebtedness after October 11, 2001, in taxable years ending
after such date.
(2) EXCEPTION.—The amendment made by this section shall
not apply to any discharge of indebtedness before March 1,
2002, pursuant to a plan of reorganization filed with a bank-
ruptcy court on or before October 11, 2001.
SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD
OF ACCOUNTING.
(a) IN GENERAL.—Paragraph (5) of section 448(d) is amended
to read as follows:
‘‘(5) SPECIAL RULE FOR CERTAIN SERVICES.—
‘‘(A) IN GENERAL.—In the case of any person using
an accrual method of accounting with respect to amounts
to be received for the performance of services by such
person, such person shall not be required to accrue any
portion of such amounts which (on the basis of such per-
son’s experience) will not be collected if—
H. R. 3090—21
‘‘(i) such services are in fields referred to in para-
graph (2)(A), or
‘‘(ii) such person meets the gross receipts test of
subsection (c) for all prior taxable years.
‘‘(B) EXCEPTION.—This paragraph shall not apply to
any amount if interest is required to be paid on such
amount or there is any penalty for failure to timely pay
such amount.
‘‘(C) REGULATIONS.—The Secretary shall prescribe
regulations to permit taxpayers to determine amounts
referred to in subparagraph (A) using computations or for-
mulas which, based on experience, accurately reflect the
amount of income that will not be collected by such person.
A taxpayer may adopt, or request consent of the Secretary
to change to, a computation or formula that clearly reflects
the taxpayer’s experience. A request under the preceding
sentence shall be approved if such computation or formula
clearly reflects the taxpayer’s experience.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply to taxable years ending after the date of the enact-
ment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In the case of
any taxpayer required by the amendments made by this section
to change its method of accounting for its first taxable year
ending after the date of the enactment of this Act—
(A) such change shall be treated as initiated by the
taxpayer,
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury, and
(C) the net amount of the adjustments required to
be taken into account by the taxpayer under section 481
of the Internal Revenue Code of 1986 shall be taken into
account over a period of 4 years (or if less, the number
of taxable years that the taxpayer used the method per-
mitted under section 448(d)(5) of such Code as in effect
before the date of the enactment of this Act) beginning
with such first taxable year.
SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO
PAYMENTS BY QUALIFIED PLACEMENT AGENCIES.
(a) IN GENERAL.—The matter preceding subparagraph (B) of
section 131(b)(1) (defining qualified foster care payment) is amended
to read as follows:
‘‘(1) IN GENERAL.—The term ‘qualified foster care payment’
means any payment made pursuant to a foster care program
of a State or political subdivision thereof—
‘‘(A) which is paid by—
‘‘(i) a State or political subdivision thereof, or
‘‘(ii) a qualified foster care placement agency, and’’.
(b) QUALIFIED FOSTER INDIVIDUALS TO INCLUDE INDIVIDUALS
PLACED BY QUALIFIED PLACEMENT AGENCIES.—Subparagraph (B)
of section 131(b)(2) (defining qualified foster individual) is amended
to read as follows:
‘‘(B) a qualified foster care placement agency.’’.
(c) QUALIFIED FOSTER CARE PLACEMENT AGENCY DEFINED.—
Subsection (b) of section 131 is amended by redesignating paragraph
H. R. 3090—22
(3) as paragraph (4) and by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) QUALIFIED
FOSTER
CARE
PLACEMENT
AGENCY.—The
term ‘qualified foster care placement agency’ means any place-
ment agency which is licensed or certified by—
‘‘(A) a State or political subdivision thereof, or
‘‘(B) an entity designated by a State or political subdivi-
sion thereof,
for the foster care program of such State or political subdivision
to make foster care payments to providers of foster care.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 
405. 
INTEREST 
RATE 
RANGE 
FOR 
ADDITIONAL 
FUNDING
REQUIREMENTS.
(a) AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.—
(1) SPECIAL
RULE.—Clause (i) of section 412(l)(7)(C)
(relating to interest rate) is amended by adding at the end
the following new subclause:
‘‘(III) SPECIAL RULE FOR 2002 AND 2003.—For
a plan year beginning in 2002 or 2003, notwith-
standing subclause (I), in the case that the rate
of interest used under subsection (b)(5) exceeds
the highest rate permitted under subclause (I),
the rate of interest used to determine current
liability under this subsection may exceed the rate
of interest otherwise permitted under subclause
(I); except that such rate of interest shall not
exceed 120 percent of the weighted average
referred to in subsection (b)(5)(B)(ii).’’.
(2) QUARTERLY CONTRIBUTIONS.—Subsection (m) of section
412 is amended by adding at the end the following new para-
graph:
‘‘(7) SPECIAL RULES FOR 2002 AND 2004.—In any case in
which the interest rate used to determine current liability
is determined under subsection (l)(7)(C)(i)(III)—
‘‘(A) 2002.—For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2002, the current
liability for the preceding plan year shall be redetermined
using 120 percent as the specified percentage determined
under subsection (l)(7)(C)(i)(II).
‘‘(B) 2004.—For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2004, the current
liability for the preceding plan year shall be redetermined
using 105 percent as the specified percentage determined
under subsection (l)(7)(C)(i)(II).’’.
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECU-
RITY ACT OF 1974.—
(1) SPECIAL RULE.—Clause (i) of section 302(d)(7)(C) of such
Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the
end the following new subclause:
‘‘(III) SPECIAL RULE FOR 2002 AND 2003.—For
a plan year beginning in 2002 or 2003, notwith-
standing subclause (I), in the case that the rate
of interest used under subsection (b)(5) exceeds
the highest rate permitted under subclause (I),
the rate of interest used to determine current
H. R. 3090—23
liability under this subsection may exceed the rate
of interest otherwise permitted under subclause
(I); except that such rate of interest shall not
exceed 120 percent of the weighted average
referred to in subsection (b)(5)(B)(ii).’’.
(2) QUARTERLY CONTRIBUTIONS.—Subsection (e) of section
302 of such Act (29 U.S.C. 1082) is amended by adding at
the end the following new paragraph:
‘‘(7) SPECIAL RULES FOR 2002 AND 2004.—In any case in
which the interest rate used to determine current liability
is determined under subsection (d)(7)(C)(i)(III)—
‘‘(A) 2002.—For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2002, the current
liability for the preceding plan year shall be redetermined
using 120 percent as the specified percentage determined
under subsection (d)(7)(C)(i)(II).
‘‘(B) 2004.—For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2004, the current
liability for the preceding plan year shall be redetermined
using 105 percent as the specified percentage determined
under subsection (d)(7)(C)(i)(II).’’.
(c) PBGC.—Clause (iii) of section 4006(a)(3)(E) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E))
is amended by adding at the end the following new subclause:
‘‘(IV) In the case of plan years beginning after December 31,
2001, and before January 1, 2004, subclause (II) shall be applied
by substituting ‘100 percent’ for ‘85 percent’. Subclause (III) shall
be applied for such years without regard to the preceding sentence.
Any reference to this clause by any other sections or subsections
shall be treated as a reference to this clause without regard to
this subclause.’’.
SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO
ACCOUNT CERTAIN EXPENSES OF ELEMENTARY AND
SECONDARY SCHOOL TEACHERS.
(a) IN GENERAL.—Section 62(a)(2) (relating to certain trade
and business deductions of employees) is amended by adding at
the end the following:
‘‘(D) CERTAIN
EXPENSES
OF
ELEMENTARY
AND
SEC-
ONDARY SCHOOL TEACHERS.—In the case of taxable years
beginning during 2002 or 2003, the deductions allowed
by section 162 which consist of expenses, not in excess
of $250, paid or incurred by an eligible educator in connec-
tion with books, supplies (other than nonathletic supplies
for courses of instruction in health or physical education),
computer equipment (including related software and serv-
ices) and other equipment, and supplementary materials
used by the eligible educator in the classroom.’’.
(b) ELIGIBLE EDUCATOR.—Section 62 is amended by adding
at the end the following:
‘‘(d) DEFINITION; SPECIAL RULES.—
‘‘(1) ELIGIBLE EDUCATOR.—
‘‘(A) IN GENERAL.—For purposes of subsection (a)(2)(D),
the term ‘eligible educator’ means, with respect to any
taxable year, an individual who is a kindergarten through
grade 12 teacher, instructor, counselor, principal, or aide
in a school for at least 900 hours during a school year.
H. R. 3090—24
‘‘(B) SCHOOL.—The term ‘school’ means any school
which provides elementary education or secondary edu-
cation (kindergarten through grade 12), as determined
under State law.
‘‘(2) COORDINATION WITH EXCLUSIONS.—A deduction shall
be allowed under subsection (a)(2)(D) for expenses only to the
extent the amount of such expenses exceeds the amount exclud-
able under section 135, 529(c)(1), or 530(d)(2) for the taxable
year.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
Subtitle B—Technical Corrections
SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX
RELIEF RECONCILIATION ACT OF 2001.
(a) AMENDMENTS RELATED TO SECTION 101 OF THE ACT.—
(1) IN GENERAL.—Subsection (b) of section 6428 is amended
to read as follows:
‘‘(b) CREDIT TREATED AS NONREFUNDABLE PERSONAL CREDIT.—
For purposes of this title, the credit allowed under this section
shall be treated as a credit allowable under subpart A of part
IV of subchapter A of chapter 1.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (d) of section 6428 is amended to read
as follows:
‘‘(d) COORDINATION WITH ADVANCE REFUNDS OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of credit which would (but
for this paragraph) be allowable under this section shall be
reduced (but not below zero) by the aggregate refunds and
credits made or allowed to the taxpayer under subsection (e).
Any failure to so reduce the credit shall be treated as arising
out of a mathematical or clerical error and assessed according
to section 6213(b)(1).
‘‘(2) JOINT RETURNS.—In the case of a refund or credit
made or allowed under subsection (e) with respect to a joint
return, half of such refund or credit shall be treated as having
been made or allowed to each individual filing such return.’’.
(B) Paragraph (2) of section 6428(e) is amended to
read as follows:
‘‘(2) ADVANCE REFUND AMOUNT.—For purposes of paragraph
(1), the advance refund amount is the amount that would
have been allowed as a credit under this section for such
first taxable year if—
‘‘(A) this section (other than subsections (b) and (d)
and this subsection) had applied to such taxable year,
and
‘‘(B) the credit for such taxable year were not allowed
to exceed the excess (if any) of—
‘‘(i) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55,
over
‘‘(ii) the sum of the credits allowable under part
IV of subchapter A of chapter 1 (other than the credits
allowable under subpart C thereof, relating to refund-
able credits).’’.
H. R. 3090—25
(b) AMENDMENT RELATED
TO SECTION 201 OF
THE ACT.—
Subparagraph (B) of section 24(d)(1) is amended by striking
‘‘amount of credit allowed by this section’’ and inserting ‘‘aggregate
amount of credits allowed by this subpart’’.
(c) AMENDMENTS RELATED TO SECTION 202 OF THE ACT.—
(1) CORRECTIONS
TO
CREDIT
FOR
ADOPTION
EXPENSES.—
(A) Paragraph (1) of section 23(a) is amended to read
as follows:
‘‘(1) IN GENERAL.—In the case of an individual, there shall
be allowed as a credit against the tax imposed by this chapter
the amount of the qualified adoption expenses paid or incurred
by the taxpayer.’’.
(B) Subsection (a) of section 23 is amended by adding
at the end the following new paragraph:
‘‘(3) $10,000 CREDIT FOR ADOPTION OF CHILD WITH SPECIAL
NEEDS REGARDLESS OF EXPENSES.—In the case of an adoption
of a child with special needs which becomes final during a
taxable year, the taxpayer shall be treated as having paid
during such year qualified adoption expenses with respect to
such adoption in an amount equal to the excess (if any) of
$10,000 over the aggregate qualified adoption expenses actually
paid or incurred by the taxpayer with respect to such adoption
during such taxable year and all prior taxable years.’’.
(C) Paragraph (2) of section 23(a) is amended by
striking the last sentence.
(D) Paragraph (1) of section 23(b) is amended by
striking ‘‘subsection (a)(1)(A)’’ and inserting ‘‘subsection
(a)’’.
(E) Subsection (i) of section 23 is amended by striking
‘‘the dollar limitation in subsection (b)(1)’’ and inserting
‘‘the dollar amounts in subsections (a)(3) and (b)(1)’’.
(F) Expenses paid or incurred during any taxable year
beginning before January 1, 2002, may be taken into
account in determining the credit under section 23 of the
Internal Revenue Code of 1986 only to the extent the
aggregate of such expenses does not exceed the applicable
limitation under section 23(b)(1) of such Code as in effect
on the day before the date of the enactment of the Economic
Growth and Tax Relief Reconciliation Act of 2001.
(2) CORRECTIONS TO EXCLUSION FOR EMPLOYER-PROVIDED
ADOPTION ASSISTANCE.—
(A) Subsection (a) of section 137 is amended to read
as follows:
‘‘(a) EXCLUSION.—
‘‘(1) IN GENERAL.—Gross income of an employee does not
include amounts paid or expenses incurred by the employer
for qualified adoption expenses in connection with the adoption
of a child by an employee if such amounts are furnished pursu-
ant to an adoption assistance program.
‘‘(2) $10,000 EXCLUSION FOR ADOPTION OF CHILD WITH SPE-
CIAL NEEDS REGARDLESS OF EXPENSES.—In the case of an adop-
tion of a child with special needs which becomes final during
a taxable year, the qualified adoption expenses with respect
to such adoption for such year shall be increased by an amount
equal to the excess (if any) of $10,000 over the actual aggregate
qualified adoption expenses with respect to such adoption
during such taxable year and all prior taxable years.’’.
H. R. 3090—26
(B) Paragraph (2) of section 137(b) is amended by
striking ‘‘subsection (a)(1)’’ and inserting ‘‘subsection (a)’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years beginning after December
31, 2002; except that the amendments made by paragraphs
(1)(C), (1)(D), and (2)(B) shall apply to taxable years beginning
after December 31, 2001.
(d) AMENDMENTS RELATED
TO SECTION 205 OF
THE ACT.—
(1) Section 45F(d)(4)(B) is amended by striking ‘‘subpart
A, B, or D of this part’’ and inserting ‘‘this chapter or for
purposes of section 55’’.
(2) Section 38(b)(15) is amended by striking ‘‘45F’’ and
inserting ‘‘45F(a)’’.
(e) AMENDMENTS RELATED TO SECTION 301 OF THE ACT.—
(1) Section 63(c)(2) is amended—
(A) in subparagraph (A), by striking ‘‘subparagraph
(C)’’ and inserting ‘‘subparagraph (D)’’,
(B) by striking ‘‘or’’ at the end of subparagraph (B),
(C) by redesignating subparagraph (C) as subpara-
graph (D),
(D) by inserting after subparagraph (B) the following
new subparagraph:
‘‘(C) one-half of the amount in effect under subpara-
graph (A) in the case of a married individual filing a
separate return, or’’, and
(E) by inserting the following flush sentence at the
end:
‘‘If any amount determined under subparagraph (A) is not
a multiple of $50, such amount shall be rounded to the
next lowest multiple of $50.’’.
(2)(A) Section 63(c)(4) is amended by striking ‘‘paragraph
(2) or (5)’’ and inserting ‘‘paragraph (2)(B), (2)(D), or (5)’’.
(B) Section 63(c)(4)(B)(i) is amended by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraph (2)(B), (2)(D),’’.
(C) Section 63(c)(4) is amended by striking the flush sen-
tence at the end (as added by section 301(c)(2) of Public Law
107–17).
(f) AMENDMENT RELATED TO SECTION 401 OF THE ACT.—Section
530(d)(4)(B)(iv) is amended by striking ‘‘because the taxpayer
elected under paragraph (2)(C) to waive the application of paragraph
(2)’’ and inserting ‘‘by application of paragraph (2)(C)(i)(II)’’.
(g) AMENDMENTS RELATED TO SECTION 511 OF THE ACT.—
(1) Section 2511(c) is amended by striking ‘‘taxable gift
under section 2503,’’ and inserting ‘‘transfer of property by
gift,’’.
(2) Section 2101(b) is amended by striking the last sentence.
(h) AMENDMENT RELATED TO SECTION 532 OF THE ACT.—Section
2016 is amended by striking ‘‘any State, any possession of the
United States, or the District of Columbia,’’.
(i) AMENDMENTS RELATING
TO SECTION 602 OF
THE ACT.—
(1) Subparagraph (A) of section 408(q)(3) is amended to
read as follows:
‘‘(A) QUALIFIED EMPLOYER PLAN.—The term ‘qualified
employer plan’ has the meaning given such term by section
72(p)(4)(A)(i); except that such term shall also include an
eligible deferred compensation plan (as defined in section
H. R. 3090—27
457(b)) of an eligible employer described in section
457(e)(1)(A).’’.
(2) Section 4(c) of Employee Retirement Income Security
Act of 1974 is amended—
(A) by inserting ‘‘and part 5 (relating to administration
and enforcement)’’ before the period at the end, and
(B) by adding at the end the following new sentence:
‘‘Such provisions shall apply to such accounts and annuities
in a manner similar to their application to a simplified
employee pension under section 408(k) of the Internal Rev-
enue Code of 1986.’’.
(j) AMENDMENTS RELATING
TO SECTION 611 OF
THE ACT.—
(1) Section 408(k) is amended—
(A) in paragraph (2)(C) by striking ‘‘$300’’ and inserting
‘‘$450’’, and
(B) in paragraph (8) by striking ‘‘$300’’ both places
it appears and inserting ‘‘$450’’.
(2) Section 409(o)(1)(C)(ii) is amended—
(A) by striking ‘‘$500,000’’ both places it appears and
inserting ‘‘$800,000’’, and
(B) by striking ‘‘$100,000’’ and inserting ‘‘$160,000’’.
(3) Section 611(i) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by adding at the end
the following new paragraph:
‘‘(3) SPECIAL
RULE.—In the case of plan that, on June
7, 2001, incorporated by reference the limitation of section
415(b)(1)(A) of the Internal Revenue Code of 1986, section
411(d)(6) of such Code and section 204(g)(1) of the Employee
Retirement Income Security Act of 1974 do not apply to a
plan amendment that—
‘‘(A) is adopted on or before June 30, 2002,
‘‘(B) reduces benefits to the level that would have
applied without regard to the amendments made by sub-
section (a) of this section, and
‘‘(C) is effective no earlier than the years described
in paragraph (2).’’.
(k) AMENDMENTS RELATING TO SECTION 613 OF THE ACT.—
(1) Section 416(c)(1)(C)(iii) is amended by striking ‘‘EXCEP-
TION FOR FROZEN PLAN’’ and inserting ‘‘EXCEPTION FOR PLAN
UNDER WHICH NO KEY EMPLOYEE (OR FORMER KEY EMPLOYEE)
BENEFITS FOR PLAN YEAR’’.
(2) Section 416(g)(3)(B) is amended by striking ‘‘separation
from service’’ and inserting ‘‘severance from employment’’.
(l) AMENDMENTS RELATING TO SECTIONS 614 and 616 OF THE
ACT.—
(1) Section 404(a)(12) is amended by striking ‘‘(9),’’ and
inserting ‘‘(9) and subsection (h)(1)(C),’’.
(2) Section 404(n) is amended by striking ‘‘subsection (a),’’
and inserting ‘‘subsection (a) or paragraph (1)(C) of subsection
(h)’’.
(3) Section 402(h)(2)(A) is amended by striking ‘‘15 percent’’
and inserting ‘‘25 percent’’.
(4) Section 404(a)(7)(C) is amended to read as follows:
‘‘(C) PARAGRAPH NOT TO APPLY IN CERTAIN CASES.—
‘‘(i) BENEFICIARY TEST.—This paragraph shall not
have the effect of reducing the amount otherwise
deductible under paragraphs (1), (2), and (3), if no
H. R. 3090—28
employee is a beneficiary under more than 1 trust
or under a trust and an annuity plan.
‘‘(ii) ELECTIVE DEFERRALS.—If, in connection with
1 or more defined contribution plans and 1 or more
defined benefit plans, no amounts (other than elective
deferrals (as defined in section 402(g)(3))) are contrib-
uted to any of the defined contribution plans for the
taxable year, then subparagraph (A) shall not apply
with respect to any of such defined contribution plans
and defined benefit plans.’’.
(m) AMENDMENT RELATING
TO SECTION 618 OF
THE ACT.—
Section 25B(d)(2)(A) is amended to read as follows:
‘‘(A) IN
GENERAL.—The qualified retirement savings
contributions determined under paragraph (1) shall be
reduced (but not below zero) by the aggregate distributions
received by the individual during the testing period from
any entity of a type to which contributions under paragraph
(1) may be made. The preceding sentence shall not apply
to the portion of any distribution which is not includible
in gross income by reason of a trustee-to-trustee transfer
or a rollover distribution.’’.
(n) AMENDMENTS RELATING TO SECTION 619 OF THE ACT.—
(1) Section 45E(e)(1) is amended by striking ‘‘(n)’’ and
inserting ‘‘(m)’’.
(2) Section 619(d) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by striking ‘‘established’’
and inserting ‘‘first effective’’.
(o) AMENDMENTS RELATING TO SECTION 631 OF THE ACT.—
(1) Section 402(g)(1) is amended by adding at the end
the following:
‘‘(C) 
CATCH-UP
CONTRIBUTIONS.—In 
addition 
to
subparagraph (A), in the case of an eligible participant
(as defined in section 414(v)), gross income shall not include
elective deferrals in excess of the applicable dollar amount
under subparagraph (B) to the extent that the amount
of such elective deferrals does not exceed the applicable
dollar amount under section 414(v)(2)(B)(i) for the taxable
year (without regard to the treatment of the elective defer-
rals by an applicable employer plan under section 414(v)).’’.
(2) Section 401(a)(30) is amended by striking ‘‘402(g)(1)’’
and inserting ‘‘402(g)(1)(A)’’.
(3) Section 414(v)(2) is amended by adding at the end
the following:
‘‘(D) AGGREGATION
OF
PLANS.—For purposes of this
paragraph, plans described in clauses (i), (ii), and (iv) of
paragraph (6)(A) that are maintained by the same employer
(as determined under subsection (b), (c), (m) or (o)) shall
be treated as a single plan, and plans described in clause
(iii) of paragraph (6)(A) that are maintained by the same
employer shall be treated as a single plan.’’.
(4) Section 414(v)(3)(A)(i) is amended by striking ‘‘section
402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 408(p), 415, or
457’’ and inserting ‘‘sections 401(a)(30), 402(h), 403(b), 408,
415(c), and 457(b)(2) (determined without regard to section
457(b)(3))’’.
(5) Section 414(v)(3)(B) is amended by striking ‘‘section
401(a)(4), 
401(a)(26), 
401(k)(3), 
401(k)(11), 
401(k)(12),
H. R. 3090—29
403(b)(12), 408(k), 408(p), 408B, 410(b), or 416’’ and inserting
‘‘section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k),
410(b), or 416’’.
(6) Section 414(v)(4)(B) is amended by inserting before
the period at the end the following: ‘‘, except that a plan
described in clause (i) of section 410(b)(6)(C) shall not be treated
as a plan of the employer until the expiration of the transition
period with respect to such plan (as determined under clause
(ii) of such section)’’.
(7) Section 414(v)(5) is amended—
(A) by striking ‘‘, with respect to any plan year,’’ in
the matter preceding subparagraph (A),
(B) by amending subparagraph (A) to read as follows:
‘‘(A) who would attain age 50 by the end of the taxable
year,’’, and
(C) in subparagraph (B) by striking ‘‘plan year’’ and
inserting ‘‘plan (or other applicable) year’’.
(8) Section 414(v)(6)(C) is amended to read as follows:
‘‘(C) EXCEPTION
FOR
SECTION
457
PLANS.—This sub-
section shall not apply to a participant for any year for
which a higher limitation applies to the participant under
section 457(b)(3).’’.
(9) Section 457(e) is amended by adding at the end the
following new paragraph:
‘‘(18) COORDINATION WITH CATCH-UP CONTRIBUTIONS FOR
INDIVIDUALS AGE 50 OR OLDER.—In the case of an individual
who is an eligible participant (as defined by section 414(v))
and who is a participant in an eligible deferred compensation
plan of an employer described in paragraph (1)(A), subsections
(b)(3) and (c) shall be applied by substituting for the amount
otherwise determined under the applicable subsection the
greater of—
‘‘(A) the sum of—
‘‘(i) the plan ceiling established for purposes of
subsection (b)(2) (without regard to subsection (b)(3)),
plus
‘‘(ii) the applicable dollar amount for the taxable
year determined under section 414(v)(2)(B)(i), or
‘‘(B) the amount determined under the applicable sub-
section (without regard to this paragraph).’’.
(p) AMENDMENTS RELATING TO SECTION 632 OF THE ACT.—
(1) Section 403(b)(1) is amended in the matter following
subparagraph (E) by striking ‘‘then amounts contributed’’ and
all that follows and inserting the following:
‘‘then contributions and other additions by such employer
for such annuity contract shall be excluded from the gross
income of the employee for the taxable year to the extent
that the aggregate of such contributions and additions (when
expressed as an annual addition (within the meaning of section
415(c)(2))) does not exceed the applicable limit under section
415. The amount actually distributed to any distributee under
such contract shall be taxable to the distributee (in the year
in which so distributed) under section 72 (relating to annuities).
For purposes of applying the rules of this subsection to contribu-
tions and other additions by an employer for a taxable year,
amounts transferred to a contract described in this paragraph
by reason of a rollover contribution described in paragraph
H. R. 3090—30
(8) of this subsection or section 408(d)(3)(A)(ii) shall not be
considered contributed by such employer.’’.
(2) Section 403(b) is amended by striking paragraph (6).
(3) Section 403(b)(3) is amended—
(A) in the first sentence by inserting the following
before the period at the end: ‘‘, and which precedes the
taxable year by no more than five years’’, and
(B) in the second sentence by striking ‘‘or any amount
received by a former employee after the fifth taxable year
following the taxable year in which such employee was
terminated’’.
(4) Section 415(c)(7) is amended to read as follows:
‘‘(7) SPECIAL RULES RELATING TO CHURCH PLANS.—
‘‘(A) ALTERNATIVE CONTRIBUTION LIMITATION.—
‘‘(i) IN
GENERAL.—Notwithstanding any other
provision of this subsection, at the election of a partici-
pant who is an employee of a church or a convention
or association of churches, including an organization
described in section 414(e)(3)(B)(ii), contributions and
other additions for an annuity contract or retirement
income account described in section 403(b) with respect
to such participant, when expressed as an annual addi-
tion to such participant’s account, shall be treated as
not exceeding the limitation of paragraph (1) if such
annual addition is not in excess of $10,000.
‘‘(ii) $40,000 AGGREGATE
LIMITATION.—The total
amount of additions with respect to any participant
which may be taken into account for purposes of this
subparagraph for all years may not exceed $40,000.
‘‘(B) NUMBER OF YEARS OF SERVICE FOR DULY ORDAINED,
COMMISSIONED, 
OR
LICENSED
MINISTERS
OR
LAY
EMPLOYEES.—For purposes of this paragraph—
‘‘(i) all years of service by—
‘‘(I) a duly ordained, commissioned, or licensed
minister of a church, or
‘‘(II) a lay person,
as an employee of a church, a convention or association
of churches, including an organization described in
section 414(e)(3)(B)(ii), shall be considered as years
of service for 1 employer, and
‘‘(ii) all amounts contributed for annuity contracts
by each such church (or convention or association of
churches) or such organization during such years for
such minister or lay person shall be considered to
have been contributed by 1 employer.
‘‘(C) FOREIGN MISSIONARIES.—In the case of any indi-
vidual described in subparagraph (D) performing services
outside the United States, contributions and other addi-
tions for an annuity contract or retirement income account
described in section 403(b) with respect to such employee,
when expressed as an annual addition to such employee’s
account, shall not be treated as exceeding the limitation
of paragraph (1) if such annual addition is not in excess
of the greater of $3,000 or the employee’s includible com-
pensation determined under section 403(b)(3).
H. R. 3090—31
‘‘(D) ANNUAL
ADDITION.—For purposes of this para-
graph, the term ‘annual addition’ has the meaning given
such term by paragraph (2).
‘‘(E) 
CHURCH, 
CONVENTION
OR
ASSOCIATION
OF
CHURCHES.—For purposes of this paragraph, the terms
‘church’ and ‘convention or association of churches’ have
the same meaning as when used in section 414(e).’’.
(5) Section 457(e)(5) is amended to read as follows:
‘‘(5) INCLUDIBLE COMPENSATION.—The term ‘includible com-
pensation’ has the meaning given to the term ‘participant’s
compensation’ by section 415(c)(3).’’.
(6) Section 402(g)(7)(B) is amended by striking ‘‘2001.’’ and
inserting ‘‘2001).’’.
(q) AMENDMENTS RELATING TO SECTION 643 OF THE ACT.—
(1) Section 401(a)(31)(C)(i) is amended by inserting ‘‘is a
qualified trust which is part of a plan which is a defined
contribution plan and’’ before ‘‘agrees’’.
(2) Section 402(c)(2) is amended by adding at the end
the following flush sentence:
‘‘In the case of a transfer described in subparagraph (A) or
(B), the amount transferred shall be treated as consisting first
of the portion of such distribution that is includible in gross
income (determined without regard to paragraph (1)).’’.
(r) AMENDMENTS RELATING TO SECTION 648 OF THE ACT.—
(1) Section 417(e) is amended—
(A) in paragraph (1) by striking ‘‘exceed the dollar
limit under section 411(a)(11)(A)’’ and inserting ‘‘exceed
the amount that can be distributed without the partici-
pant’s consent under section 411(a)(11)’’, and
(B) in paragraph (2)(A) by striking ‘‘exceeds the dollar
limit under section 411(a)(11)(A)’’ and inserting ‘‘exceeds
the amount that can be distributed without the partici-
pant’s consent under section 411(a)(11)’’.
(2) Section 205(g) of the Employee Retirement Income Secu-
rity Act of 1974 is amended—
(A) in paragraph (1) by striking ‘‘exceed the dollar
limit under section 203(e)(1)’’ and inserting ‘‘exceed the
amount that can be distributed without the participant’s
consent under section 203(e)’’, and
(B) in paragraph (2)(A) by striking ‘‘exceeds the dollar
limit under section 203(e)(1)’’ and inserting ‘‘exceeds the
amount that can be distributed without the participant’s
consent under section 203(e)’’.
(s) AMENDMENT RELATING TO SECTION 652 OF THE ACT.—Sec-
tion 404(a)(1)(D)(iv) is amended by striking ‘‘PLANS MAINTAINED
BY PROFESSIONAL SERVICE EMPLOYERS’’ and inserting ‘‘SPECIAL RULE
FOR TERMINATING PLANS’’.
(t) AMENDMENTS RELATING
TO SECTION 657 OF
THE ACT.—
Section 404(c)(3) of the Employee Retirement Income Security Act
of 1974 is amended—
(1) by striking ‘‘the earlier of’’ in subparagraph (A) the
second place it appears, and
(2) by striking ‘‘if the transfer’’ and inserting ‘‘a transfer
that’’.
(u) AMENDMENTS RELATING TO SECTION 659 OF THE ACT.—
(1) Section 4980F is amended—
H. R. 3090—32
(A) in subsection (e)(1) by striking ‘‘written notice’’
and inserting ‘‘the notice described in paragraph (2)’’,
(B) by amending subsection (f)(2)(A) to read as follows:
‘‘(A) any defined benefit plan described in section 401(a)
which includes a trust exempt from tax under section
501(a), or’’, and
(C) in subsection (f)(3) by striking ‘‘significantly’’ both
places it appears.
(2) Section 204(h)(9) of the Employee Retirement Income
Security Act of 1974 is amended by striking ‘‘significantly’’
both places it appears.
(3) Section 659(c)(3)(B) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 is amended by striking ‘‘(or’’
and inserting ‘‘(and’’.
(v) AMENDMENTS RELATING TO SECTION 661 OF THE ACT.—
(1) Section 412(c)(9)(B) is amended—
(A) in clause (ii) by striking ‘‘125 percent’’ and inserting
‘‘100 percent’’, and
(B) by adding at the end the following new clause:
‘‘(iv) LIMITATION.—A change in funding method to
use a prior year valuation, as provided in clause (ii),
may not be made unless as of the valuation date within
the prior plan year, the value of the assets of the
plan are not less than 125 percent of the plan’s current
liability (as defined in paragraph (7)(B)).’’.
(2) Section 302(c)(9)(B) of the Employee Retirement Income
Security Act of 1974 is amended—
(A) in clause (ii) by striking ‘‘125 percent’’ and inserting
‘‘100 percent’’, and
(B) by adding at the end the following new clause:
‘‘(iv) A change in funding method to use a prior year valuation,
as provided in clause (ii), may not be made unless as of the valuation
date within the prior plan year, the value of the assets of the
plan are not less than 125 percent of the plan’s current liability
(as defined in paragraph (7)(B)).’’.
(w) AMENDMENTS RELATING TO SECTION 662 OF THE ACT.—
(1) Section 404(k) is amended—
(A) in paragraph (1) by striking ‘‘during the taxable
year’’,
(B) in paragraph (2)(B) by striking ‘‘(A)(iii)’’ and
inserting ‘‘(A)(iv)’’,
(C) in paragraph (4)(B) by striking ‘‘(iii)’’ and inserting
‘‘(iv)’’, and
(D) by redesignating subparagraph (B) of paragraph
(4) (as amended by subparagraph (C)) as subparagraph
(C) of paragraph (4) and by inserting after subparagraph
(A) the following new subparagraph:
‘‘(B) 
REINVESTMENT
DIVIDENDS.—For 
purposes 
of
subparagraph (A), an applicable dividend reinvested pursu-
ant to clause (iii)(II) of paragraph (2)(A) shall be treated
as paid in the taxable year of the corporation in which
such dividend is reinvested in qualifying employer securi-
ties or in which the election under clause (iii) of paragraph
(2)(A) is made, whichever is later.’’.
(2) Section 404(k) is amended by adding at the end the
following new paragraph:
H. R. 3090—33
‘‘(7) FULL VESTING.—In accordance with section 411, an
applicable dividend described in clause (iii)(II) of paragraph
(2)(A) shall be subject to the requirements of section 411(a)(1).’’.
(x) EFFECTIVE DATE.—Except as provided in subsection (c),
the amendments made by this section shall take effect as if included
in the provisions of the Economic Growth and Tax Relief Reconcili-
ation Act of 2001 to which they relate.
SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX
RELIEF ACT OF 2000.
(a) AMENDMENT RELATED TO SECTION 101 OF THE ACT.—Section
469(i)(3)(E) is amended by striking clauses (ii), (iii), and (iv) and
inserting the following:
‘‘(ii) second to the portion of such loss to which
subparagraph (C) applies,
‘‘(iii) third to the portion of the passive activity
credit to which subparagraph (B) or (D) does not apply,
‘‘(iv) fourth to the portion of such credit to which
subparagraph (B) applies, and’’.
(b) AMENDMENT RELATED TO SECTION 306 OF THE ACT.—Section
151(c)(6)(C) is amended—
(1) by striking ‘‘FOR EARNED INCOME CREDIT.—For purposes
of section 32, an’’ and inserting ‘‘FOR PRINCIPAL PLACE OF ABODE
REQUIREMENTS.—An’’, and
(2) by striking ‘‘requirement of section 32(c)(3)(A)(ii)’’ and
inserting ‘‘principal place of abode requirements of section
2(a)(1)(B), section 2(b)(1)(A), and section 32(c)(3)(A)(ii)’’.
(c) AMENDMENT RELATED
TO SECTION 309 OF
THE ACT.—
Subparagraph (A) of section 358(h)(1) is amended to read as follows:
‘‘(A) which is assumed by another person as part of
the exchange, and’’.
(d) AMENDMENTS RELATED
TO SECTION 401 OF
THE ACT.—
(1)(A) Section 1234A is amended by inserting ‘‘or’’ after
the comma at the end of paragraph (1), by striking ‘‘or’’ at
the end of paragraph (2), and by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection (a)(1) and
in subsection (b) by striking ‘‘sale or exchange’’ the first place
it appears in each subsection and inserting ‘‘sale, exchange,
or termination’’.
(ii) Section 1234B is amended by adding at the end the
following new subsection:
‘‘(f) CROSS REFERENCE.—
‘‘For special rules relating to dealer securities futures contracts,
see section 1256.’’.
(2) Section 1091(e) is amended—
(A) in the heading, by striking ‘‘SECURITIES.—’’ and
inserting ‘‘SECURITIES
AND
SECURITIES
FUTURES
CON-
TRACTS TO SELL.—’’,
(B) by inserting after ‘‘closing of a short sale of’’ the
following: ‘‘(or the sale, exchange, or termination of a securi-
ties futures contract to sell)’’,
(C) in paragraph (2), by inserting after ‘‘short sale
of’’ the following: ‘‘(or securities futures contracts to sell)’’,
and
(D) by adding at the end the following:
‘‘For purposes of this subsection, the term ‘securities futures con-
tract’ has the meaning provided by section 1234B(c).’’.
H. R. 3090—34
(3)(A) Section 1233(e)(2) is amended by striking ‘‘and’’ at
the end of subparagraph (C), by striking the period and
inserting ‘‘; and’’ at the end of subparagraph (D), and inserting
after subparagraph (D) the following:
‘‘(E) entering into a securities futures contract (as so
defined) to sell shall be considered to be a short sale,
and the settlement of such contract shall be considered
to be the closing of such short sale.’’.
(B) Section 1234B(b) is amended by inserting after ‘‘or
this section,’’ the following: ‘‘or in section 1233,’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Community
Renewal Tax Relief Act of 2000 to which they relate.
SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION
ACT OF 1999.
(a) AMENDMENTS RELATED TO SECTION 545 OF THE ACT.—Sec-
tion 857(b)(7) is amended—
(1) in clause (i) of subparagraph (B), by striking ‘‘the
amount of which’’ and inserting ‘‘to the extent the amount
of the rents’’, and
(2) in subparagraph (C), by striking ‘‘if the amount’’ and
inserting ‘‘to the extent the amount’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in section 545 of the Tax Relief
Extension Act of 1999.
SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF
1997.
(a) AMENDMENTS RELATED TO SECTION 311 OF THE ACT.—Sec-
tion 311(e) of the Taxpayer Relief Act of 1997 (Public Law 105–
34; 111 Stat. 836) is amended—
(1) in paragraph (2)(A), by striking ‘‘recognized’’ and
inserting ‘‘included in gross income’’, and
(2) by adding at the end the following new paragraph:
‘‘(5) DISPOSITION OF INTEREST IN PASSIVE ACTIVITY.—Section
469(g)(1)(A) of the Internal Revenue Code of 1986 shall not
apply by reason of an election made under paragraph (1).’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in section 311 of the Taxpayer
Relief Act of 1997.
SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF
1997.
(a) AMENDMENT RELATED
TO SECTION 4006 OF
THE ACT.—
Section 26(b)(2) is amended by striking ‘‘and’’ at the end of subpara-
graph (P), by striking the period and inserting ‘‘, and’’ at the
end of subparagraph (Q), and by adding at the end the following
new subparagraph:
‘‘(R) section 138(c)(2) (relating to penalty for distribu-
tions from Medicare+Choice MSA not used for qualified
medical expenses if minimum balance not maintained).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in section 4006 of the Balanced
Budget Act of 1997.
H. R. 3090—35
SEC. 416. OTHER TECHNICAL CORRECTIONS.
(a) COORDINATION OF ADVANCED PAYMENTS OF EARNED INCOME
CREDIT.—
(1) Section 32(g)(2) is amended by striking ‘‘subpart’’ and
inserting ‘‘part’’.
(2) The amendment made by this subsection shall take
effect as if included in section 474 of the Tax Reform Act
of 1984.
(b) SPECIAL RULE RELATED TO WASH SALE LOSSES.—
(1) Section 1256(f) is amended by adding at the end the
following new paragraph:
‘‘(5) SPECIAL RULE RELATED TO LOSSES.—Section 1091
(relating to loss from wash sales of stock or securities)
shall not apply to any loss taken into account by reason
of paragraph (1) of subsection (a).’’.
(2) The amendment made by this subsection shall take
effect as if included in section 5075 of the Technical and Mis-
cellaneous Revenue Act of 1988.
(c) DISCLOSURE BY SOCIAL SECURITY ADMINISTRATION TO FED-
ERAL CHILD SUPPORT AGENCIES.—
(1) Section 6103(l)(8) is amended—
(A) in the heading, by striking ‘‘STATE AND LOCAL’’
and inserting ‘‘FEDERAL, STATE, AND LOCAL’’, and
(B) in subparagraph (A), by inserting ‘‘Federal or’’
before ‘‘State or local’’.
(2) The amendments made by this subsection shall take
effect on the date of the enactment of this Act.
(d) TREATMENT OF SETTLEMENTS UNDER PARTNERSHIP AUDIT
RULES.—
(1) The following provisions are each amended by inserting
‘‘or the Attorney General (or his delegate)’’ after ‘‘Secretary’’
each place it appears:
(A) Paragraphs (1) and (2) of section 6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
(2) The amendments made by this subsection shall apply
with respect to settlement agreements entered into after the
date of the enactment of this Act.
(e) AMENDMENT RELATED
TO PROCEDURE
AND ADMINISTRA-
TION.—
(1) Section 6331(k)(3) (relating to no levy while certain
offers pending or installment agreement pending or in effect)
is amended to read as follows:
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar to the rules
of—
‘‘(A) paragraphs (3) and (4) of subsection (i), and
‘‘(B) except in the case of paragraph (2)(C), paragraph
(5) of subsection (i),
shall apply for purposes of this subsection.’’.
(2) The amendment made by this subsection shall take
effect on the date of the enactment of this Act.
(f) MODIFIED ENDOWMENT CONTRACTS.—Paragraph (2) of sec-
tion 318(a) of the Community Renewal Tax Relief Act of 2000
(114 Stat. 2763A–645) is repealed, and clause (ii) of section
7702A(c)(3)(A) shall read and be applied as if the amendment
made by such paragraph had not been enacted.
H. R. 3090—36
SEC. 417. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B that relates to termi-
nation is redesignated as subsection (h).
(2) The second sentence of section 42(h)(3)(C) is amended
by striking ‘‘the amounts described in’’ and all that follows
through the period and inserting ‘‘the amounts described in
clauses (ii) through (iv) over the aggregate housing credit dollar
amount allocated for such year.’’.
(3) Clause (ii) of section 42(m)(1)(B) is amended by striking
the second ‘‘and’’ at the end of subclause (II) and by inserting
‘‘and’’ at the end of subclause (III).
(4) Section 51A(c)(1) is amended by striking ‘‘51(d)(10)’’
and inserting ‘‘51(d)(11)’’.
(5) The flush sentence at the end of clause (ii) of section
56(a)(1)(A) is amended by striking ‘‘such 1250’’ and inserting
‘‘such section 1250’’.
(6) Section 151(c)(6)(B)(iii) is amended by inserting ‘‘as’’
before ‘‘such terms’’.
(7) Section 170(e)(6)(B)(i)(III) is amended by striking
‘‘2000,’’ and inserting ‘‘2000),’’.
(8) Section 172(b)(1)(F)(i) is amended—
(A) by striking ‘‘3 years’’ and inserting ‘‘3 taxable
years’’, and
(B) by striking ‘‘2 years’’ and inserting ‘‘2 taxable
years’’.
(9) Section 351(h)(1) is amended by inserting a comma
after ‘‘liability’’.
(10) Section 475(g)(3) is amended by striking ‘‘sections’’
and inserting ‘‘section’’.
(11) Section 529(e)(3)(B)(i) is amended by striking ‘‘sub-
section (b)(7)’’ and inserting ‘‘subsection (b)(6)’’.
(12) Section 741 is amended by striking ‘‘which have appre-
ciated substantially in value’’.
(13) Section 857(b)(7)(B)(i) is amended by striking ‘‘sub-
section 856(d)’’ and inserting ‘‘section 856(d)’’.
(14) Subparagraph (B) of section 943(e)(4) is amended by
aligning the left margin of the flush language with subpara-
graph (A).
(15) Subparagraph (B) of section 995(b)(3) is amended by
striking ‘‘International Security Assistance and Arms Export
Control Act of 1976’’ and inserting ‘‘Arms Export Control Act’’.
(16) Section 1394(c)(2) is amended by striking ‘‘subpara-
graph (A)’’ and inserting ‘‘paragraph (1)’’.
(17)(A) The section heading for section 4980E is amended
to read as follows:
‘‘SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER
MSA CONTRIBUTIONS.’’.
(B) The item relating to section 4980E in the table of
sections for chapter 43 is amended to read as follows:
‘‘Sec. 4980E. Failure of employer to make comparable Archer MSA contribu-
tions.’’.
(18) Section 6105(c)(1) is amended by striking ‘‘any’’ in
subparagraphs (C) and (E).
(19)(A) Section 6227(d) is amended by striking ‘‘subsection
(b)’’ and inserting ‘‘subsection (c)’’.
(B) Section 6228 is amended—
H. R. 3090—37
(i) in subsection (a)(1), by striking ‘‘subsection (b) of
section 6227’’ and inserting ‘‘subsection (c) of section 6227’’,
(ii) in subsection (a)(3)(A), by striking ‘‘subsection (b)
of’’, and
(iii) in subsections (b)(1) and (b)(2)(A), by striking ‘‘sub-
section (c) of section 6227’’ and inserting ‘‘subsection (d)
of section 6227’’.
(C) Section 6231(b)(2)(B)(i) is amended by striking ‘‘section
6227(c)’’ and inserting ‘‘section 6227(d)’’.
(20) Section 1221(b)(1)(B)(i) is amended by striking
‘‘1256(b))’’ and inserting ‘‘1256(b)))’’.
(21) Section 159 of the Community Renewal Tax Relief
Act of 2000 (114 Stat. 2763A–624) is amended by striking
‘‘fuctions’’ and inserting ‘‘functions’’.
(22) The amendment to section 170(e)(6)(B)(iv) made by
section 165(b)(1) of the Community Renewal Tax Relief Act
of 2000 (114 Stat. 2763A–626) shall be applied as if it struck
‘‘in any of the grades K–12’’.
(23) Section 618(b)(2) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 (Public Law 107–16; 115 Stat.
108) is amended—
(A) in subparagraph (A) by striking ‘‘203(d)’’ and
inserting ‘‘202(f)’’, and
(B) in subparagraphs (C), (D), and (E) by striking
‘‘203’’ and inserting ‘‘202(f)’’.
(24)(A) Section 525 of the Ticket to Work and Work Incen-
tives Improvement Act of 1999 (Public Law 106–170; 113 Stat.
1928) is amended by striking ‘‘7200’’ and inserting ‘‘7201’’.
(B) Section 532(c)(2) of such Act (113 Stat. 1930) is
amended—
(i) in subparagraph (D), by striking ‘‘341(d)(3)’’ and
inserting ‘‘341(d)’’, and
(ii) in subparagraph (Q), by striking ‘‘954(c)(1)(B)(iii)
and inserting ‘‘954(c)(1)(B)’’.
SEC. 418. ADDITIONAL CORRECTIONS.
(a) AMENDMENTS RELATED TO SECTION 202 OF THE ECONOMIC
GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.—
(1) Subsection (h) of section 23 is amended—
(A) by striking ‘‘subsection (a)(1)(B)’’ and inserting
‘‘subsection (a)(3)’’, and
(B) by adding at the end the following new flush sen-
tence:
‘‘If any amount as increased under the preceding sentence is not
a multiple of $10, such amount shall be rounded to the nearest
multiple of $10.’’.
(2) Subsection (f) of section 137 is amended by adding
at the end the following new flush sentence:
‘‘If any amount as increased under the preceding sentence is not
a multiple of $10, such amount shall be rounded to the nearest
multiple of $10.’’.
(b) AMENDMENTS RELATED TO SECTION 204 OF THE ECONOMIC
GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.—Section
21(d)(2) is amended—
(1) in subparagraph (A) by striking ‘‘$200’’ and inserting
‘‘$250’’, and
H. R. 3090—38
(2) in subparagraph (B) by striking ‘‘$400’’ and inserting
‘‘$500’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001 to which they
relate.
TITLE 
V—SOCIAL 
SECURITY 
HELD
HARMLESS; BUDGETARY TREATMENT
OF ACT
SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.—Nothing in this Act (or an amendment made
by this Act) shall be construed to alter or amend title II of the
Social Security Act (or any regulation promulgated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE
OF
SECRETARY.—The Secretary of the
Treasury shall annually estimate the impact that the enactment
of this Act has on the income and balances of the trust funds
established under section 201 of the Social Security Act (42
U.S.C. 401).
(2) TRANSFER OF FUNDS.—If, under paragraph (1), the Sec-
retary of the Treasury estimates that the enactment of this
Act has a negative impact on the income and balances of
the trust funds established under section 201 of the Social
Security Act (42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general revenues of
the Federal Government an amount sufficient so as to ensure
that the income and balances of such trust funds are not
reduced as a result of the enactment of this Act.
SEC. 502. EMERGENCY DESIGNATION.
Congress designates as emergency requirements pursuant to
section 252(e) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985 the following amounts:
(1) An amount equal to the amount by which revenues
are reduced by this Act below the recommended levels of Fed-
eral revenues for fiscal year 2002, the total of fiscal years
2002 through 2006, and the total of fiscal years 2002 through
2011, provided in the conference report accompanying H. Con.
Res. 83, the concurrent resolution on the budget for fiscal
year 2002.
(2) Amounts equal to the amounts of new budget authority
and outlays provided in this Act in excess of the allocations
under section 302(a) of the Congressional Budget Act of 1974
to the Committee on Finance of the Senate for fiscal year
2002, the total of fiscal years 2002 through 2006, and the
total of fiscal years 2002 through 2011.
H. R. 3090—39
TITLE VI—EXTENSIONS OF CERTAIN
EXPIRING PROVISIONS
SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS
AGAINST REGULAR AND MINIMUM TAX LIABILITY.
(a) IN GENERAL.—Paragraph (2) of section 26(a) is amended—
(1) by striking ‘‘RULE FOR 2000 AND 2001.—’’ and inserting
‘‘RULE FOR 2000, 2001, 2002, AND 2003.—’’, and
(2) by striking ‘‘during 2000 or 2001,’’ and inserting ‘‘during
2000, 2001, 2002, or 2003,’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 904(h) is amended by striking ‘‘during 2000
or 2001’’ and inserting ‘‘during 2000, 2001, 2002, or 2003’’.
(2) The amendments made by sections 201(b), 202(f), and
618(b) of the Economic Growth and Tax Relief Reconciliation
Act of 2001 shall not apply to taxable years beginning during
2002 and 2003.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30 is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘December 31, 2001,’’ and inserting
‘‘December 31, 2003,’’, and
(B) in subparagraphs (A), (B), and (C), by striking
‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and inserting
‘‘2004’’, ‘‘2005’’, and ‘‘2006’’, respectively, and
(2) in subsection (e), by striking ‘‘December 31, 2004’’ and
inserting ‘‘December 31, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 280F(a)(1) is amended by
adding at the end the following new clause:
‘‘(iii) 
APPLICATION
OF
SUBPARAGRAPH.—This
subparagraph shall apply to property placed in service
after August 5, 1997, and before January 1, 2007.’’.
(2) Subsection (b) of section 971 of the Taxpayer Relief
Act of 1997 is amended by striking ‘‘and before January 1,
2005’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after December 31, 2001.
SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN
RENEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C) of section
45(c)(3) are both amended by striking ‘‘2002’’ and inserting ‘‘2004’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to facilities placed in service after December 31,
2001.
SEC. 604. WORK OPPORTUNITY CREDIT.
(a) IN
GENERAL.—Subparagraph (B) of section 51(c)(4) is
amended by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to individuals who begin work for the employer after
December 31, 2001.
H. R. 3090—40
SEC. 605. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Subsection (f) of section 51A is amended
by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to individuals who begin work for the employer after
December 31, 2001.
SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN
REFUELING PROPERTY.
(a) IN GENERAL.—Section 179A is amended—
(1) in subsection (b)(1)(B)—
(A) by striking ‘‘December 31, 2001,’’ and inserting
‘‘December 31, 2003,’’, and
(B) in clauses (i), (ii), and (iii), by striking ‘‘2002’’,
‘‘2003’’, and ‘‘2004’’, respectively, and inserting ‘‘2004’’,
‘‘2005’’, and ‘‘2006’’, respectively, and
(2) in subsection (f), by striking ‘‘December 31, 2004’’ and
inserting ‘‘December 31, 2006’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to property placed in service after December 31,
2001.
SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR
OIL AND NATURAL GAS PRODUCED FROM MARGINAL
PROPERTIES.
(a) IN GENERAL.—Subparagraph (H) of section 613A(c)(6) is
amended by striking ‘‘2002’’ and inserting ‘‘2004’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2001.
SEC. 608. QUALIFIED ZONE ACADEMY BONDS.
(a) IN GENERAL.—Paragraph (1) of section 1397E(e) is amended
by striking ‘‘2000, and 2001’’ and inserting ‘‘2000, 2001, 2002,
and 2003’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to obligations issued after the date of the enactment
of this Act.
SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f) is amended
by striking ‘‘January 1, 2002’’ and inserting ‘‘January 1, 2004’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to articles brought into the United States after December
31, 2001.
SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.
(a) IN GENERAL.—Subsection (f) of section 9812, as amended
by the Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, 2002, is
amended to read as follows:
‘‘(f) APPLICATION
OF SECTION.—This section shall not apply
to benefits for services furnished—
‘‘(1) on or after September 30, 2001, and before January
10, 2002, and
‘‘(2) after December 31, 2003.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to plan years beginning after December 31, 2000.
H. R. 3090—41
SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSUR-
ANCE COMPANIES.
(a) REDUCTION IN MUTUAL LIFE INSURANCE COMPANY DEDUC-
TIONS NOT TO APPLY IN CERTAIN YEARS.—Section 809 (relating
to reduction in certain deductions of material life insurance compa-
nies) is amended by adding at the end the following:
‘‘(j) DIFFERENTIAL EARNINGS RATE TREATED AS ZERO FOR CER-
TAIN YEARS.—Notwithstanding subsection (c) or (f), the differential
earnings rate shall be treated as zero for purposes of computing
both the differential earnings amount and the recomputed differen-
tial earnings amount for a mutual life insurance company’s taxable
years beginning in 2001, 2002, or 2003.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2000.
SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of section 220(i)
(defining cut-off year) are each amended by striking ‘‘2002’’ each
place it appears and inserting ‘‘2003’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 220(j) is amended by striking
‘‘1998, 1999, or 2001’’ each place it appears and inserting ‘‘1998,
1999, 2001, or 2002’’.
(2) Subparagraph (A) of section 220(j)(4) is amended by
striking ‘‘and 2001’’ and inserting ‘‘2001, and 2002’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 2002.
SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON
INDIAN RESERVATIONS.
(a) EMPLOYMENT.—Subsection (f) of section 45A is amended
by striking ‘‘December 31, 2003’’ and inserting ‘‘December 31, 2004’’.
(b) PROPERTY.—Paragraph (8) of section 168(j) is amended by
striking ‘‘December 31, 2003’’ and inserting ‘‘December 31, 2004’’.
SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.—
(1) Section 953(e)(10) is amended—
(A) by striking ‘‘January 1, 2002’’ and inserting
‘‘January 1, 2007’’, and
(B) by striking ‘‘December 31, 2001’’ and inserting
‘‘December 31, 2006’’.
(2) Section 954(h)(9) is amended by striking ‘‘January 1,
2002’’ and inserting ‘‘January 1, 2007’’.
(b) LIFE INSURANCE AND ANNUITY CONTRACTS.—
(1) IN GENERAL.—Subparagraph (B) of section 954(i)(4) is
amended to read as follows:
‘‘(B) LIFE INSURANCE AND ANNUITY CONTRACTS.—
‘‘(i) IN
GENERAL.—Except as provided in clause
(ii), the amount of the reserve of a qualifying insurance
company or qualifying insurance company branch for
any life insurance or annuity contract shall be equal
to the greater of—
‘‘(I) the net surrender value of such contract
(as defined in section 807(e)(1)(A)), or
‘‘(II) the reserve determined under paragraph
(5).
H. R. 3090—42
‘‘(ii) RULING REQUEST, ETC.—The amount of the
reserve under clause (i) shall be the foreign statement
reserve for the contract (less any catastrophe, defi-
ciency, equalization, or similar reserves), if, pursuant
to a ruling request submitted by the taxpayer or as
provided in published guidance, the Secretary deter-
mines that the factors taken into account in deter-
mining the foreign statement reserve provide an appro-
priate means of measuring income.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KER-
OSENE TERMINALS.
(a) IN GENERAL.—Subsection (e) of section 4101 is hereby
repealed.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on January 1, 2002.
SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR
POPULATION INCREASES FOR FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3))
is amended by adding at the end the following:
‘‘(H) REAUTHORIZATION OF GRANTS FOR FISCAL YEAR
2002.—Notwithstanding 
any 
other 
provision 
of 
this
paragraph—
‘‘(i) any State that was a qualifying State under
this paragraph for fiscal year 2001 or any prior fiscal
year shall be entitled to receive from the Secretary
for fiscal year 2002 a grant in an amount equal to
the amount required to be paid to the State under
this paragraph for the most recent fiscal year in which
the State was a qualifying State;
‘‘(ii) subparagraph (G) shall be applied as if ‘2002’
were substituted for ‘2001’; and
‘‘(iii) out of any money in the Treasury of the
United States not otherwise appropriated, there are
appropriated for fiscal year 2002 such sums as are
necessary for grants under this subparagraph.’’.
SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE
TANF PROGRAM.
Section 403(b) of the Social Security Act (42 U.S.C. 603(b))
is amended—
(1) in paragraph (2), by striking ‘‘and 2001’’ and inserting
‘‘2001, and 2002’’; and
H. R. 3090—43
(2) in paragraph (3)(C)(ii), by striking ‘‘2001’’ and inserting
‘‘2002’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.