(b) EXEMPT
ORGANIZATIONS
AND
UNRELATED 
BUSINESS INCOME.—Sections 512 and 514 are both 
amended by striking ‘‘gross income’’ each place it appears 
and inserting ‘‘net business income’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after January 1, 2015, except to the extent otherwise spe-
cifically provided in the text of such amendments. 
SEC. 5. ALLOWANCE OF TRANSITION BASIS DEDUCTION. 
In the case of any property held by the taxpayer on 
December 31, 2014, and used in a trade or business of 
the taxpayer on such date, the following rules shall apply: 
(1) BASIS.—The basis of such property shall be 
zero. 
(2) DEDUCTION.— 
(A) IN GENERAL.—There shall be allowed 
to the taxpayer a deduction with respect to such 
property, other than land. 
(B) AMOUNT OF DEDUCTION.—Except as 
provided in subparagraph (D), such deduction 
shall be determined for a taxable year by amor-
tizing the basis of such property on the same 
schedule and method that applied to such prop-
erty before the enactment of this Act. 
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(C) DISPOSAL
OF
PROPERTY.—Subpara-
graph (A) shall apply with respect to property 
held by the taxpayer on December 31, 2014, 
whether or not the taxpayer disposes of such 
property after December 31, 2014. 
(D) INVENTORY.—In the case of inventory, 
the deduction allowed by subparagraph (A) 
shall be allowed in the taxable year of the tax-
payer which includes January 1, 2015. 
SEC. 6. INTEREST INCOME OF INDIVIDUALS TAXED IN 
SAME MANNER AS DIVIDEND INCOME; RE-
DUCED BY INTEREST EXPENSE. 
(a) IN GENERAL.—Subparagraph (A) of section 
1(h)(11) is amended by striking ‘‘qualified dividend in-
come’’ and inserting ‘‘the sum of qualified dividend income 
and qualified interest income and reduced by interest ex-
pense’’. 
(b) QUALIFIED INTEREST INCOME.—Paragraph (11) 
of section 1(h) is amended by adding at the end the fol-
lowing: 
‘‘(E) QUALIFIED INTEREST INCOME.—For 
purposes of this paragraph, the term ‘qualified 
interest income’ means— 
‘‘(i) interest on deposits with a bank 
(as defined in section 581), 
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‘‘(ii) amounts (whether or not des-
ignated as interest) paid, in respect of de-
posits, 
investment 
certificates, 
or 
withdrawable 
or 
repurchasable 
shares, 
by— 
‘‘(I) a mutual savings bank, co-
operative bank, domestic building and 
loan association, industrial loan asso-
ciation or bank, or credit union, or 
‘‘(II) any other savings or thrift 
institution which is chartered and su-
pervised under Federal or State law, 
the deposits or accounts in which are 
insured under Federal or State law or 
which are protected and guaranteed 
under State law, 
‘‘(iii) interest on— 
‘‘(I) evidences of indebtedness 
(including bonds, debentures, notes, 
and certificates) issued by a domestic 
corporation in registered form, and 
‘‘(II) to the extent provided in 
regulations prescribed by the Sec-
retary, other evidences of indebtedness 
issued by a domestic corporation of a 
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type offered by corporations to the 
public, 
‘‘(iv) interest on obligations of the 
United States, a State, or a political sub-
division of a State (not excluded from 
gross income of the taxpayer under any 
other provision of law), and 
‘‘(v) interest attributable to participa-
tion shares in a trust established and 
maintained by a corporation established 
pursuant to Federal law.’’. 
(c) INTEREST EXPENSE.—Paragraph (11) of section 
1(h), as amended by subsection (b), is amended by insert-
ing at the end the following: 
‘‘(F) INTEREST EXPENSE.—The term ‘in-
terest expense’ means interest paid by the tax-
payer other than qualified residence interest.’’. 
(d) CONFORMING AMENDMENT.—The heading for 
section 1(h)(11) is amended by inserting ‘‘AND INTEREST’’ 
after ‘‘DIVIDENDS’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
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SEC. 7. REPEAL OF DEPRECIATION, INTERNATIONAL, AND 
OTHER TAX PROVISIONS. 
(a) DEPRECIATION
AND COST RECOVERY PROVI-
SIONS.—The following sections of the Internal Revenue 
Code of 1986 are hereby repealed: 
(1) Section 167 (relating to depreciation). 
(2) Section 168 (relating to accelerated cost re-
covery system). 
(3) Section 169 (relating to amortization of pol-
lution control facilities). 
(4) Section 173 (relating to circulation expendi-
tures). 
(5) Section 174 (relating to research and exper-
imental expenditures). 
(6) Section 175 (relating to soil and water con-
servation expenditures; endangered species recovery 
expenditures). 
(7) Section 176 (relating to payments with re-
spect to employees of certain foreign corporations). 
(8) Section 178 (relating to amortization of cost 
of acquiring a lease). 
(9) Section 179 (relating to election to expense 
certain depreciable business assets). 
(10) Section 179A (relating to deduction for 
clean-fuel vehicles and certain refueling property). 
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(11) Section 179B (relating to deduction for 
capital costs incurred in complying with Environ-
mental Protection Agency sulfur regulations). 
(12) Section 179C (relating to election to ex-
pense certain refineries). 
(13) Section 179D (relating to energy efficient 
commercial buildings deduction). 
(14) Section 179E (relating to election to ex-
pense advanced mine safety equipment). 
(15) Section 180 (relating to expenditures by 
farmers for fertilizer, etc.). 
(16) Section 181 (relating to treatment of cer-
tain qualified film and television productions). 
(17) Section 190 (relating to expenditures to 
remove architectural and transportation barriers to 
the handicapped and elderly). 
(18) Section 192 (relating to contributions to 
black lung benefit trust). 
(19) 
Section 
193 
(relating 
to 
tertiary 
injectants). 
(20) Section 194 (relating to treatment of re-
forestation expenditures). 
(21) Section 195 (relating to start-up expendi-
tures). 
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(6) Section 246A (relating to dividends received 
deduction reduced where portfolio stock is debt fi-
nanced). 
(7) Section 247 (relating to dividends paid on 
certain preferred stock of public utilities). 
(8) Section 248 (relating to organizational ex-
penditures). 
(9) Section 249 (relating to limitation on de-
duction of bond premium on repurchase). 
(c) RECOGNITION OF REVENUE AND TIMING OF DE-
DUCTION PROVISIONS.—The following provisions of the 
Internal Revenue Code of 1986 are hereby repealed: 
(1) Part X of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to terminal 
railroad corporations and their shareholders). 
(2) Section 456 (relating to prepaid dues in-
come of certain membership organizations). 
(3) Section 458 (relating to magazines, paper-
backs, and records returned after the close of the 
taxable year). 
(4) Section 460 (relating to special rules for 
long-term contracts). 
(5) Section 467 (relating to certain payments 
for the use of property or services). 
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(6) Section 468 (relating to special rules for 
mining and solid waste reclamation and closing 
costs). 
(d) INTERNATIONAL
PROVISIONS.—The following 
provisions of the Internal Revenue Code of 1986 are here-
by repealed: 
(1) Section 902 (relating to deemed paid credit 
where domestic corporation owns 10 percent or more 
of voting stock of foreign corporation). 
(2) Section 907 (relating to special rules in case 
of foreign oil and gas income). 
(3) Subpart F of part III of subchapter N of 
chapter 1 (relating to controlled foreign corpora-
tions) other than section 965. 
(4) Subpart G of part III of subchapter N of 
chapter 1 (relating to export trade corporations). 
(5) Part IV of part III of subchapter N of 
chapter 1 (relating to domestic international sales 
corporations). 
(e) EFFECTIVE DATE.— 
(1) SUBSECTION (a).—The amendments made 
by subsection (a) shall apply to property placed in 
service after December 31, 2014, in taxable years 
ending after that date. 
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(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply with respect to divi-
dends received or accrued after December 31, 2014, 
in taxable years ending after such date. 
(3) SUBSECTIONS (c) AND (d).—The amend-
ments made by subsections (c) and (d) shall apply 
to taxable years beginning on or after January 1, 
2015. 
SEC. 8. EXPANDED RELIEF FOR NET OPERATING LOSSES. 
(a) 
EXTENDED
CARRYBACK; 
UNLIMITED 
CARRYFORWARD WITH INTEREST.—Paragraph (1) of sec-
tion 172(b) is amended to read as follows: 
‘‘(1) YEARS
TO
WHICH
LOSS
MAY
BE
CAR-
RIED.— 
‘‘(A) IN GENERAL.—A net operating loss 
for any taxable year— 
‘‘(i) shall be a net operating loss 
carryback to each of the 5 taxable years 
preceding the taxable year of such loss, 
and 
‘‘(ii) shall be a net operating loss car-
ryover to the succeeding taxable year and 
added to the deduction allowable under 
subsection (a) for such taxable year. 
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‘‘(B) LIMITATION.—A net operating loss 
may not be carried back to any taxable year 
ending before January 1, 2015, except that a 
loss arising in a taxable year beginning in cal-
endar year 2015 or calendar year 2016 may be 
carried back to the two preceding taxable 
years.’’. 
(b) INTEREST ON CARRYFORWARD.—Section 172(b) 
is amended by adding at the end the following new para-
graph: 
‘‘(4) 
INTEREST
ON
CARRYFORWARD.—The 
amount of any net operating loss carryover shall, 
prior to being carried to a succeeding taxable year, 
be increased by an amount equal to such carryover 
multiplied by the Federal short-term rate (as defined 
in section 1274(d)) for the month in which or with 
which the taxable year ends.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 172(d)(1) is amended by inserting 
‘‘(other than by reason of subsection (b)(1)(B))’’ 
after ‘‘deduction’’. 
(2) Section 172 is amended by striking sub-
sections (f), (i), and (j) and redesignating sub-
sections (g), (h), and (k) as subsections (f), (g), and 
(h), respectively. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to net operating losses arising in 
taxable years beginning after December 31, 2014. 
SEC. 9. REPEAL OF CORPORATE AMT AND INDIVIDUAL AMT 
PREFERENCES 
AND 
ADJUSTMENTS 
THAT 
PERTAIN TO CAPITAL COST RECOVERY. 
(a) CORPORATE
AMT.—Section 55(a)(1)(B) is 
amended by adding at the end the following flush sen-
tence: 
‘‘For purposes of this title, the tentative min-
imum tax of any corporation for any taxable 
year ending after December 31, 2014, shall be 
zero.’’. 
(b) INDIVIDUAL AMT.— 
(1) Section 56 is amended— 
(A) by striking paragraphs (1), (2), (3), 
(5), and (6) of subsection (a); and 
(B) by striking subsection (b)(2). 
(2) Section 57 is amended— 
(A) by striking paragraphs (1), (2), (6), 
and (7) of subsection (a); and 
(B) by striking subsection (b). 
(c) EFFECTIVE DATE.— 
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(1) CORPORATE AMT.—The amendments made 
by subsection (a) shall apply to taxable years ending 
after December 31, 2014. 
(2) INDIVIDUAL AMT.—The amendments made 
by subsection (b) shall apply to amounts paid or in-
curred after December 31, 2014. 
SEC. 10. REPEAL OF BUSINESS TAX CREDITS. 
(a) IN GENERAL.—Subparts D and E of part IV of 
subchapter A of chapter 1 are hereby repealed. 
(b) 
SPECIAL
RULE
FOR
CARRYBACK
AND 
CARRYFORWARD OF UNUSED CREDITS.—Any carryback 
or carryforward that arose under section 39 of the Inter-
nal Revenue Code of 1986 (as in effect before the repeal 
of such section by subsection (a)) shall be allowed under 
section 38 of such Code (as in effect before the repeal of 
such section by subsection (a)), in accordance with the 
terms of such sections (as so in effect). 
(c) EFFECTIVE DATE.—The repeals made by this 
section shall apply with respect to amounts paid or in-
curred, and property placed in service, in taxable years 
beginning after December 31, 2014. 
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SEC. 11. DISALLOWANCE OF INTEREST EXPENSE DEDUC-
TION, EXCEPT QUALIFIED RESIDENCE INTER-
EST. 
(a) IN GENERAL.—Section 163 is amended by adding 
at the end the following: 
(1) in subsection (a) by striking ‘‘There’’ and 
inserting ‘‘Except as provided by subsection (n), 
there’’, 
(2) by redesignating subsection (n) as sub-
section (o), and 
(3) by inserting after subsection (m) the fol-
lowing new subsection: 
‘‘(n) TERMINATION.— 
‘‘(1) IN GENERAL.—Except as provided by sub-
section (h)(2)(D) and paragraph (2), this section 
shall not apply to interest paid or accrued after De-
cember 31, 2014. 
‘‘(2) TRANSITION INTEREST DEDUCTION.— 
‘‘(A) IN GENERAL.—In the case of a tax-
payer who is a corporation, there shall be al-
lowed as a deduction for a taxable year the sum 
of the monthly transition interest deductions for 
the taxable year. 
‘‘(B) MONTHLY TRANSITION INTEREST DE-
DUCTION.—For 
purposes 
of 
subparagraph 
(A)— 
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‘‘(i) IN GENERAL.—The monthly tran-
sition interest deduction for any month is 
the transition interest amount multiplied 
by the applicable percentage for such 
month. 
‘‘(ii) APPLICABLE
PERCENTAGE
DE-
FINED.—The term ‘applicable percentage’ 
means, with respect to a month, 100 per-
cent reduced (but not below zero) by .833 
for each month of the transition period oc-
curring before the month for which such 
percentage is determined. 
‘‘(iii) 
TRANSITION
INTEREST 
AMOUNT.—The transition interest amount 
is the deduction allowed to the taxpayer 
under this section for the last full taxable 
year ending before January 1, 2015. 
‘‘(iv) TRANSITION PERIOD.—The term 
‘transition period’ means the 120-month 
period beginning with January 2015.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to interest paid or accrued on 
or after January 1, 2015. 
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SEC. 12. CASH METHOD OF ACCOUNTING. 
(a) IN GENERAL.—Subsection (a) of section 446 is 
amended to read as follows: 
‘‘(a) GENERAL RULE.—Taxable income shall be com-
puted under the cash receipts and disbursements method 
of accounting.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 446 is amended by striking sub-
sections (b), (c), and (e). 
(2) The following sections of the Internal Rev-
enue Code of 1986 are repealed: 
(A) Section 447 (relating to method of ac-
counting for corporations engaged in farming). 
(B) Section 448 (relating to limitation on 
use of cash method of accounting). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2014. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer required by an amendment 
made by this section to change its method of ac-
counting for its first taxable year beginning after the 
date of the enactment of this Act— 
(A) such change shall be treated as initi-
ated by the taxpayer; 
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(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury; and 
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer 
under section 481 of the Internal Revenue Code 
of 1986 shall be taken into account ratably over 
a period (not greater than 8 taxable years) be-
ginning with such first taxable year. 
Æ 
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