and by treating the entity as holding directly its
ratable share of the assets of the other entity.
This subparagraph shall be applied successively
to any 10-percent interest of such other entity
in any other entity.
‘‘(B) 10-PERCENT
INTEREST.—The term
‘10-percent interest’ means—
‘‘(i) in the case of an interest in a cor-
poration, ownership of at least 10 percent
(by vote or value) of the stock in such cor-
poration,
‘‘(ii) in the case of an interest in a
partnership, ownership of at least 10 per-
cent of the capital or profits interest in the
partnership, and
‘‘(iii) in any other case, ownership of
at least 10 percent of the beneficial inter-
ests in the entity.
‘‘(5) COORDINATION WITH SUBSECTION (b).—
Subsection (b) shall apply after the application of
this subsection.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to transfers after the date of the
enactment of this Act.
SEC. 277. CORRECTION OF TECHNICAL ERROR AFFECTING
LARGEST ESTATES.
(a) IN GENERAL.—Paragraph (2) of section 2001(c)
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘$10,000,000’’ and all that follows and inserting
‘‘$10,000,000. The amount of the increase under the pre-
ceding sentence shall not exceed the sum of the applicable
credit amount under section 2010(c) (as increased by sec-
tion 2010A) and $359,200.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to estates of decedents dying, and
gifts made, after December 31, 2000.
PART IV—OTHER OFFSETS
SEC. 281. CONSISTENT AMORTIZATION PERIODS FOR IN-
TANGIBLES.
(a) START-UP EXPENDITURES.—
(1) ALLOWANCE
OF
DEDUCTION.—Paragraph
(1) of section 195(b) of the Internal Revenue Code
of 1986 (relating to start-up expenditures) is amend-
ed to read as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax-
payer elects the application of this subsection with
respect to any start-up expenditures—
‘‘(A) the taxpayer shall be allowed a deduc-
tion for the taxable year in which the active
trade or business begins in an amount equal to
the lesser of—
‘‘(i) the amount of start-up expendi-
tures with respect to the active trade or
business, or
‘‘(ii) $5,000, reduced (but not below
zero) by the amount by which such start-
up expenditures exceed $50,000, and
‘‘(B) the remainder of such start-up ex-
penditures shall be allowed as a deduction rat-
ably over the 180-month period beginning with
the month in which the active trade or business
begins.’’
(2) CONFORMING AMENDMENT.—Subsection (b)
of section 195 is amended by striking ‘‘AMORTIZE’’
and inserting ‘‘DEDUCT’’ in the heading.
(b) ORGANIZATIONAL EXPENDITURES.—Subsection
(a) of section 248 of such Code (relating to organizational
expenditures) is amended to read as follows:
‘‘(a) ELECTION TO DEDUCT.—If a corporation elects
the application of this subsection (in accordance with reg-
ulations prescribed by the Secretary) with respect to any
organizational expenditures—
‘‘(1) the corporation shall be allowed a deduc-
tion for the taxable year in which the corporation be-
gins business in an amount equal to the lesser of—
‘‘(A) the amount of organizational expendi-
tures with respect to the taxpayer, or
‘‘(B) $5,000, reduced (but not below zero)
by the amount by which such organizational ex-
penditures exceed $50,000, and
‘‘(2) the remainder of such organizational ex-
penditures shall be allowed as a deduction ratably
over the 180-month period beginning with the month
in which the corporation begins business.’’
(c) TREATMENT OF ORGANIZATIONAL AND SYNDICA-
TION FEES OR PARTNERSHIPS.—Section 709(b) of such
Code (relating to amortization of organization fees) is
amended by redesignating paragraph (2) as paragraph (4)
and by amending paragraph (1) to read as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax-
payer elects the application of this subsection (in ac-
cordance with regulations prescribed by the Sec-
retary) 
with 
respect 
to 
any 
organizational
expenses—
‘‘(A) the taxpayer shall be allowed a deduc-
tion for the taxable year in which the partner-
ship begins business in an amount equal to the
lesser of—
‘‘(i) the amount of organizational ex-
penses with respect to the partnership, or
‘‘(ii) $5,000, reduced (but not below
zero) by the amount by which such organi-
zational expenses exceed $50,000, and
‘‘(B) the remainder of such organizational
expenses shall be allowed as a deduction ratably
over the 180-month period beginning with the
month in which the partnership begins busi-
ness.
‘‘(2) DISPOSITIONS BEFORE CLOSE OF AMORTI-
ZATION PERIOD.—In any case in which a partner-
ship is liquidated before the end of the period to
which paragraph (1)(B) applies, any deferred ex-
penses attributable to the partnership which were
not allowed as a deduction by reason of this section
may be deducted to the extent allowable under sec-
tion 165.’’
(d) CONFORMING AMENDMENT.—Subsection (b) of
section 709 of such Code is amended by striking ‘‘AMORTI-
ZATION’’ and inserting ‘‘DEDUCTION’’ in the heading.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
the date of the enactment of this Act.
SEC. 282. MODIFICATION OF FOREIGN TAX CREDIT CARRY-
OVER RULES.
(a) IN GENERAL.—Section 904(c) of the Internal
Revenue Code of 1986 (relating to limitation on credit)
is amended—
(1) by striking ‘‘in the second preceding taxable
year,’’, and
(2) by striking ‘‘or fifth’’ and inserting ‘‘fifth,
sixth, or seventh’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to credits arising in taxable
years beginning after December 31, 2000.
SEC. 283. RECOGNITION OF GAIN ON TRANSFERS TO SWAP
FUNDS.
(a) INTERESTS SIMILAR
TO PREFERRED STOCK
TREATED AS STOCK.—Clause (vi) of section 351(e)(1)(B)
of the Internal Revenue Code of 1986 (relating to transfer
of property to an investment company) is amended to read
as follows:
‘‘(vi) except as otherwise provided in
regulations prescribed by the Secretary—
in such corporation are offered to qualified
purchasers within the meaning of section
2(a)(51) of such Act, or
‘‘(ii) is formed or availed of for pur-
poses of allowing persons who have signifi-
cant blocks of marketable securities with
unrealized appreciation to diversify those
holdings without recognition of gain, and
‘‘(C) the transfer results, directly or indi-
rectly, in diversification of the transferor’s in-
terest.’’
(c) TRANSFERS TO PARTNERSHIPS.—Subsection (b)
of section 721 of such Code is amended to read as follows:
‘‘(b) SPECIAL RULE.—Subsection (a) shall not apply
to gain realized on a transfer of property to a partnership
if, were the partnership incorporated—
‘‘(1) such partnership would be treated as an
investment company (within the meaning of section
351), or
‘‘(2) section 351 would not apply to such trans-
fer by reason of section 351(e)(3).’’
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to transfers after March 8,
2000.
(2) BINDING
CONTRACTS.—The amendments
made by this section shall not apply to any transfer
pursuant to a written binding contract in effect on
August 4, 1999, and at all times thereafter before
such transfer if such contract provides for the trans-
fer of a fixed amount of property.
Æ