268 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (15). 
(2) Section 1016(a) is amended by striking 
paragraph (28). 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) BASIS
ADJUSTMENTS.—The amendment 
made by subsection (b)(2) shall apply to credits de-
termined for taxable years beginning after December 
31, 2017. 
SEC. 3403. REPEAL OF REHABILITATION CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by striking section 47 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 170(f)(14)(A) is amended by insert-
ing ‘‘(as in effect before its repeal by the Tax Cuts 
and Jobs Act)’’ after ‘‘section 47’’.
269 
(2) Section 170(h)(4) is amended— 
(A) by striking ‘‘(as defined in section 
47(c)(3)(B))’’ in subparagraph (C)(ii), and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) REGISTERED HISTORIC DISTRICT.— 
The term ‘registered historic district’ means— 
‘‘(i) any district listed in the National 
Register, and 
‘‘(ii) any district— 
‘‘(I) which is designated under a 
statute of the appropriate State or 
local government, if such statute is 
certified by the Secretary of the Inte-
rior to the Secretary as containing cri-
teria which will substantially achieve 
the purpose of preserving and reha-
bilitating buildings of historic signifi-
cance to the district, and 
‘‘(II) which is certified by the 
Secretary of the Interior to the Sec-
retary as meeting substantially all of 
the requirements for the listing of dis-
tricts in the National Register.’’.
270 
(3) Section 469(i)(3) is amended by striking 
subparagraph (B). 
(4) Section 469(i)(6)(B) is amended— 
(A) by striking ‘‘in the case of—’’ and all 
that follows and inserting ‘‘in the case of any 
credit determined under section 42 for any tax-
able year.’’, and 
(B) by striking ‘‘, REHABILITATION CRED-
IT,’’ in the heading thereof. 
(5) Section 469(k)(1) is amended by striking ‘‘, 
or any rehabilitation credit determined under section 
47,’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to amounts paid or incurred after De-
cember 31, 2017. 
(2) TRANSITION RULE.—In the case of quali-
fied rehabilitation expenditures (within the meaning 
of section 47 of the Internal Revenue Code of 1986 
as in effect before its repeal) with respect to any 
building— 
(A) owned or leased (as permitted by sec-
tion 47 of the Internal Revenue Code of 1986
271 
as in effect before its repeal) by the taxpayer at 
all times after December 31, 2017, and 
(B) with respect to which the 24-month 
period selected by the taxpayer under section 
47(c)(1)(C) of such Code begins not later than 
the end of the 180-day period beginning on the 
date of the enactment of this Act, 
the amendments made by this section shall apply to 
such expenditures paid or incurred after the end of 
the taxable year in which the 24-month period re-
ferred to in subparagraph (B) ends. 
SEC. 3404. REPEAL OF WORK OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Subpart F of part IV of sub-
chapter A of chapter 1 is amended by striking section 51 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CLERICAL AMENDMENT.—The heading of such 
subpart F (and the item relating to such subpart in the 
table of subparts for part IV of subchapter A of chapter 
1) are each amended by striking ‘‘Rules for Computing 
Work Opportunity Credit’’ and inserting ‘‘Special Rules’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred to 
individuals who begin work for the employer after Decem-
ber 31, 2017.
272 
SEC. 3405. REPEAL OF DEDUCTION FOR CERTAIN UNUSED 
BUSINESS CREDITS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 196 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3406. TERMINATION OF NEW MARKETS TAX CREDIT. 
(a) IN GENERAL.—Section 45D(f) is amended— 
(1) by striking ‘‘2019’’ in paragraph (1)(G) and 
inserting ‘‘2017’’, and 
(2) by striking ‘‘2024’’ in paragraph (3) and in-
serting ‘‘2022’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
December 31, 2017. 
SEC. 3407. REPEAL OF CREDIT FOR EXPENDITURES TO 
PROVIDE ACCESS TO DISABLED INDIVID-
UALS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 44 
(and by striking the item relating to such section in the 
table of sections for such subpart).
273 
(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (7). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3408. MODIFICATION OF CREDIT FOR PORTION OF EM-
PLOYER SOCIAL SECURITY TAXES PAID WITH 
RESPECT TO EMPLOYEE TIPS. 
(a) CREDIT DETERMINED WITH RESPECT TO MIN-
IMUM WAGE AS IN EFFECT.—Section 45B(b)(1)(B) is 
amended by striking ‘‘as in effect on January 1, 2007, 
and’’. 
(b) INFORMATION RETURN REQUIREMENT.—Section 
45B is amended by redesignating subsections (c) and (d) 
as subsections (d) and (e), respectively, and by inserting 
after subsection (b) the following new subsection: 
‘‘(c) INFORMATION RETURN REQUIREMENT.— 
‘‘(1) IN GENERAL.—No credit shall be deter-
mined under subsection (a) with respect to any food 
or beverage establishment of any taxpayer for any 
taxable year unless such taxpayer has, with respect 
to the calendar year which ends in or with such tax-
able year— 
‘‘(A) made a report to the Secretary show-
ing the information described in section
274 
6053(c)(1) with respect to such food or bev-
erage establishment, and 
‘‘(B) furnished written statements to each 
employee of such food or beverage establish-
ment showing the information described in sec-
tion 6053(c)(2). 
‘‘(2) ALLOCATION OF 10 PERCENT OF GROSS 
RECEIPTS.—For purposes of determining the infor-
mation referred to in subparagraphs (A) and (B), 
section 6053(c)(3)(A)(i) shall be applied by sub-
stituting ‘10 percent’ for ‘8 percent’. For purposes 
of section 6053(c)(5), any reference to section 
6053(c)(3)(B) contained therein shall be treated as 
including a reference to this paragraph. 
‘‘(3) FOOD OR BEVERAGE ESTABLISHMENT.— 
For purposes of this subsection, the term ‘food or 
beverage establishment’ means any trade or business 
(or portion thereof) which would be a large food or 
beverage establishment (as defined in section 
6053(c)(4)) if such section were applied without re-
gard to subparagraph (C) thereof.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
275 
Subtitle F—Energy Credits 
SEC. 3501. MODIFICATIONS TO CREDIT FOR ELECTRICITY 
PRODUCED FROM CERTAIN RENEWABLE RE-
SOURCES. 
(a) TERMINATION OF INFLATION ADJUSTMENT.— 
Section 45(b)(2) is amended— 
(1) by striking ‘‘The 1.5 cent amount’’ and in-
serting the following: 
‘‘(A) 
IN
GENERAL.—The 
1.5 
cent 
amount’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) TERMINATION.—Subparagraph (A) 
shall not apply with respect to any electricity or 
refined coal produced at a facility the construc-
tion of which begins after the date of the enact-
ment of this subparagraph.’’. 
(b) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 45(e) is amended by 
adding at the end the following new paragraph: 
‘‘(12) SPECIAL RULE FOR DETERMINING BE-
GINNING OF CONSTRUCTION.—For purposes of sub-
section (d), the construction of any facility, modi-
fication, improvement, addition, or other property 
shall not be treated as beginning before any date un-
276 
less there is a continuous program of construction 
which begins before such date and ends on the date 
that such property is placed in service.’’. 
(c) EFFECTIVE DATES.— 
(1) TERMINATION
OF
INFLATION
ADJUST-
MENT.—The amendments made by subsection (a) 
shall apply to taxable years ending after the date of 
the enactment of this Act. 
(2) SPECIAL
RULE
FOR
DETERMINATION
OF 
BEGINNING
OF
CONSTRUCTION.—The amendment 
made by subsection (b) shall apply to taxable years 
beginning before, on, or after the date of the enact-
ment of this Act. 
SEC. 3502. MODIFICATION OF THE ENERGY INVESTMENT 
TAX CREDIT. 
(a) EXTENSION OF SOLAR ENERGY PROPERTY.— 
Section 48(a)(3)(A)(ii) is amended by striking ‘‘periods 
ending before January 1, 2017’’ and inserting ‘‘property 
the construction of which begins before January 1, 2022’’. 
(b) EXTENSION OF QUALIFIED FUEL CELL PROP-
ERTY.—Section 48(c)(1)(D) is amended by striking ‘‘for 
any period after December 31, 2016’’ and inserting ‘‘the 
construction of which does not begin before January 1, 
2022’’.
277 
(c) EXTENSION
OF
QUALIFIED
MICROTURBINE 
PROPERTY.—Section 48(c)(2)(D) is amended by striking 
‘‘for any period after December 31, 2016’’ and inserting 
‘‘the construction of which does not begin before January 
1, 2022’’. 
(d) EXTENSION OF COMBINED HEAT AND POWER 
SYSTEM PROPERTY.—Section 48(c)(3)(A)(iv) is amended 
by striking ‘‘which is placed in service before January 1, 
2017’’ and inserting ‘‘the construction of which begins be-
fore January 1, 2022’’. 
(e) EXTENSION OF QUALIFIED SMALL WIND EN-
ERGY PROPERTY.—Section 48(c)(4)(C) is amended by 
striking ‘‘for any period after December 31, 2016’’ and 
inserting ‘‘the construction of which does not begin before 
January 1, 2022’’. 
(f) EXTENSION OF THERMAL ENERGY PROPERTY.— 
Section 48(a)(3)(A)(vii) is amended by striking ‘‘periods 
ending before January 1, 2017’’ and inserting ‘‘property 
the construction of which begins before January 1, 2022’’. 
(g) PHASEOUT OF 30 PERCENT CREDIT RATE FOR 
FUEL CELL AND SMALL WIND ENERGY PROPERTY.— 
Section 48(a) is amended by adding at the end the fol-
lowing new paragraph:
278 
‘‘(7) PHASEOUT
FOR
QUALIFIED
FUEL
CELL 
PROPERTY
AND
QUALIFIED
SMALL
WIND
ENERGY 
PROPERTY.— 
‘‘(A) IN GENERAL.—In the case of quali-
fied fuel cell property or qualified small wind 
energy property, the construction of which be-
gins before January 1, 2022, the energy per-
centage determined under paragraph (2) shall 
be equal to— 
‘‘(i) in the case of any property the 
construction of which begins after Decem-
ber 31, 2019, and before January 1, 2021, 
26 percent, and 
‘‘(ii) in the case of any property the 
construction of which begins after Decem-
ber 31, 2020, and before January 1, 2022, 
22 percent. 
‘‘(B) PLACED IN SERVICE DEADLINE.—In 
the case of any qualified fuel cell property or 
qualified small wind energy property, the con-
struction of which begins before January 1, 
2022, and which is not placed in service before 
January 1, 2024, the energy percentage deter-
mined under paragraph (2) shall be equal to 10 
percent.’’.
279 
(h) PHASEOUT FOR FIBER-OPTIC SOLAR ENERGY 
PROPERTY.—Subparagraphs (A) and (B) of section 
48(a)(6) are each amended by inserting ‘‘or (3)(A)(ii)’’ 
after ‘‘paragraph (3)(A)(i)’’. 
(i) TERMINATION OF SOLAR ENERGY PROPERTY.— 
Section 48(a)(3)(A)(i) is amended by inserting ‘‘, the con-
struction of which begins before January 1, 2028, and’’ 
after ‘‘equipment’’. 
(j) TERMINATION OF GEOTHERMAL ENERGY PROP-
ERTY.—Section 48(a)(3)(A)(iii) is amended by inserting 
‘‘, the construction of which begins before January 1, 
2028, and’’ after ‘‘equipment’’. 
(k) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 48(c) is amended by 
adding at the end the following new paragraph: 
‘‘(5) SPECIAL RULE FOR DETERMINING BEGIN-
NING OF CONSTRUCTION.—The construction of any 
facility, modification, improvement, addition, or 
other property shall not be treated as beginning be-
fore any date unless there is a continuous program 
of construction which begins before such date and 
ends on the date that such property is placed in 
service.’’. 
(l) EFFECTIVE DATE.—
280 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to periods after December 
31, 2016, under rules similar to the rules of section 
48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990). 
(2) EXTENSION
OF
COMBINED
HEAT
AND 
POWER SYSTEM PROPERTY.—The amendment made 
by subsection (d) shall apply to property placed in 
service after December 31, 2016. 
(3) PHASEOUTS
AND
TERMINATIONS.—The 
amendments made by subsections (g), (h), (i), and 
(j) shall take effect on the date of the enactment of 
this Act. 
(4) SPECIAL
RULE
FOR
DETERMINATION
OF 
BEGINNING
OF
CONSTRUCTION.—The amendment 
made by subsection (k) shall apply to taxable years 
beginning before, on, or after the date of the enact-
ment of this Act. 
SEC. 3503. EXTENSION AND PHASEOUT OF RESIDENTIAL 
ENERGY EFFICIENT PROPERTY. 
(a) EXTENSION.—Section 25D(h) is amended by 
striking ‘‘December 31, 2016 (December 31, 2021, in the 
case of any qualified solar electric property expenditures
281 
and qualified solar water heating property expenditures)’’ 
and inserting ‘‘December 31, 2021’’. 
(b) PHASEOUT.— 
(1) IN GENERAL.—Paragraphs (3), (4), and (5) 
of section 25D(a) are amended by striking ‘‘30 per-
cent’’ each place it appears and inserting ‘‘the appli-
cable percentage’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
25D(g) of such Code is amended by striking ‘‘para-
graphs (1) and (2) of’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2016. 
SEC. 3504. REPEAL OF ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 43 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (6). 
(2) Section 6501(m) is amended by striking 
‘‘43,’’.
282 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3505. REPEAL OF CREDIT FOR PRODUCING OIL AND 
GAS FROM MARGINAL WELLS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45I 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 38(b) is 
amended by striking paragraph (19). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3506. MODIFICATIONS OF CREDIT FOR PRODUCTION 
FROM ADVANCED NUCLEAR POWER FACILI-
TIES. 
(a) 
TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—Section 45J(b) is amended— 
(1) in paragraph (4), by inserting ‘‘or any 
amendment to’’ after ‘‘enactment of’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) ALLOCATION
OF
UNUTILIZED
LIMITA-
TION.—
283 
‘‘(A) IN
GENERAL.—Any unutilized na-
tional megawatt capacity limitation shall be al-
located by the Secretary under paragraph (3) 
as rapidly as is practicable after December 31, 
2020— 
‘‘(i) first to facilities placed in service 
on or before such date to the extent that 
such facilities did not receive an allocation 
equal to their full nameplate capacity; and 
‘‘(ii) then to facilities placed in service 
after such date in the order in which such 
facilities are placed in service. 
‘‘(B) UNUTILIZED
NATIONAL
MEGAWATT 
CAPACITY
LIMITATION.—The term ‘unutilized 
national megawatt capacity limitation’ means 
the excess (if any) of— 
‘‘(i) 6,000 megawatts, over 
‘‘(ii) the aggregate amount of national 
megawatt capacity limitation allocated by 
the Secretary before January 1, 2021, re-
duced by any amount of such limitation 
which was allocated to a facility which was 
not placed in service before such date. 
‘‘(C) COORDINATION WITH OTHER PROVI-
SIONS.—In the case of any unutilized national
284 
megawatt capacity limitation allocated by the 
Secretary pursuant to this paragraph— 
‘‘(i) such allocation shall be treated 
for purposes of this section in the same 
manner as an allocation of national mega-
watt capacity limitation; and 
‘‘(ii) subsection (d)(1)(B) shall not 
apply to any facility which receives such al-
location.’’. 
(b) TRANSFER OF CREDIT BY CERTAIN PUBLIC EN-
TITIES.— 
(1) IN GENERAL.—Section 45J is amended— 
(A) by redesignating subsection (e) as sub-
section (f); and 
(B) by inserting after subsection (d) the 
following new subsection: 
‘‘(e) TRANSFER OF CREDIT BY CERTAIN PUBLIC EN-
TITIES.— 
‘‘(1) IN GENERAL.—If, with respect to a credit 
under subsection (a) for any taxable year— 
‘‘(A) the taxpayer would be a qualified 
public entity; and 
‘‘(B) such entity elects the application of 
this paragraph for such taxable year with re-
285 
spect to all (or any portion specified in such 
election) of such credit, 
the eligible project partner specified in such election 
(and not the qualified public entity) shall be treated 
as the taxpayer for purposes of this title with re-
spect to such credit (or such portion thereof). 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) QUALIFIED
PUBLIC
ENTITY.—The 
term ‘qualified public entity’ means— 
‘‘(i) a Federal, State, or local govern-
ment entity, or any political subdivision, 
agency, or instrumentality thereof; 
‘‘(ii) a mutual or cooperative electric 
company described in section 501(c)(12) or 
section 1381(a)(2); or 
‘‘(iii) a not-for-profit electric utility 
which has or had received a loan or loan 
guarantee under the Rural Electrification 
Act of 1936. 
‘‘(B) ELIGIBLE PROJECT PARTNER.—The 
term ‘eligible project partner’ means— 
‘‘(i) any person responsible for, or 
participating in, the design or construction 
of the advanced nuclear power facility to
286 
which the credit under subsection (a) re-
lates; 
‘‘(ii) any person who participates in 
the provision of the nuclear steam supply 
system to the advanced nuclear power fa-
cility to which the credit under subsection 
(a) relates; 
‘‘(iii) any person who participates in 
the provision of nuclear fuel to the ad-
vanced nuclear power facility to which the 
credit under subsection (a) relates; or 
‘‘(iv) any person who has an owner-
ship interest in such facility. 
‘‘(3) SPECIAL RULES.— 
‘‘(A) APPLICATION TO PARTNERSHIPS.—In 
the case of a credit under subsection (a) which 
is determined at the partnership level— 
‘‘(i) for purposes of paragraph (1)(A), 
a qualified public entity shall be treated as 
the taxpayer with respect to such entity’s 
distributive share of such credit; and 
‘‘(ii) the term ‘eligible project partner’ 
shall include any partner of the partner-
ship.
287 
‘‘(B) TAXABLE
YEAR
IN
WHICH
CREDIT 
TAKEN
INTO
ACCOUNT.—In the case of any 
credit (or portion thereof) with respect to which 
an election is made under paragraph (1), such 
credit shall be taken into account in the first 
taxable year of the eligible project partner end-
ing with, or after, the qualified public entity’s 
taxable year with respect to which the credit 
was determined. 
‘‘(C) TREATMENT
OF
TRANSFER
UNDER 
PRIVATE USE RULES.—For purposes of section 
141(b)(1), any benefit derived by an eligible 
project partner in connection with an election 
under this subsection shall not be taken into ac-
count as a private business use.’’. 
(2) SPECIAL RULE FOR PROCEEDS OF TRANS-
FERS
FOR
MUTUAL
OR
COOPERATIVE
ELECTRIC 
COMPANIES.—Section 501(c)(12) of such Code is 
amended by adding at the end the following new 
subparagraph: 
‘‘(I) In the case of a mutual or cooperative 
electric company described in this paragraph or 
an organization described in section 1381(a)(2), 
income received or accrued in connection with 
an election under section 45J(e)(1) shall be
288 
treated as an amount collected from members 
for the sole purpose of meeting losses and ex-
penses.’’. 
(c) EFFECTIVE DATES.— 
(1) TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—The amendment made by subsection (a) 
shall take effect on the date of the enactment of this 
Act. 
(2) TRANSFER OF CREDIT BY CERTAIN PUBLIC 
ENTITIES.—The amendments made by subsection 
(b) shall apply to taxable years beginning after the 
date of the enactment of this Act. 
Subtitle G—Bond Reforms 
SEC. 3601. TERMINATION OF PRIVATE ACTIVITY BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 103(b) 
is amended— 
(1) by striking ‘‘which is not a qualified bond 
(within the meaning of section 141)’’, and 
(2) by striking ‘‘WHICH IS NOT A QUALIFIED 
BOND’’ in the heading thereof. 
(b) CONFORMING AMENDMENTS.— 
(1) Subpart A of part IV of subchapter B of 
chapter 1 is amended by striking sections 142, 143, 
144, 145, 146, and 147 (and by striking each of the
289 
items relating to such sections in the table of sec-
tions for such subpart). 
(2) Section 25 is amended by adding at the end 
the following new subsection: 
‘‘(j) COORDINATION WITH REPEAL OF PRIVATE AC-
TIVITY BONDS.—Any reference to section 143, 144, or 
146 shall be treated as a reference to such section as in 
effect before its repeal by the Tax Cuts and Jobs Act.’’. 
(3) Section 26(b)(2) is amended by striking 
subparagraph (D). 
(4) Section 141(b) is amended by striking para-
graphs (5) and (9). 
(5) Section 141(d) is amended by striking para-
graph (5). 
(6) Section 141 is amended by striking sub-
section (e). 
(7) Section 148(f)(4) is amended— 
(A) by striking ‘‘(determined in accordance 
with section 147(b)(2)(A))’’ in the flush matter 
following subparagraph (A)(ii) and inserting 
‘‘(determined by taking into account the respec-
tive issue prices of the bonds issued as part of 
the issue)’’, and 
(B) by striking the last sentence of sub-
paragraph (D)(v).
290 
(8) Clause (iv) of section 148(f)(4)(C) is 
amended to read as follows: 
‘‘(iv) 
CONSTRUCTION
ISSUE.—For 
purposes of this subparagraph— 
‘‘(I) IN
GENERAL.—The term 
‘construction issue’ means any issue if 
at least 75 percent of the available 
construction proceeds of such issue 
are to be used for construction ex-
penditures. 
‘‘(II) CONSTRUCTION.—The term 
‘construction’ includes reconstruction 
and rehabilitation.’’. 
(9) Section 149(b)(3) is amended by striking 
subparagraph (C). 
(10) Section 149(e)(2) is amended— 
(A) by striking subparagraphs (C), (D), 
and (F) and by redesignating subparagraphs 
(E) and (G) as subparagraphs (C) and (D), re-
spectively, and 
(B) by striking the second sentence. 
(11) Section 149(f)(6) is amended— 
(A) by striking subparagraph (B), and 
(B) by striking ‘‘For purposes of this sub-
section’’ and all that follows through ‘‘The
291 
term’’ and inserting the following: ‘‘For pur-
poses of this subsection, the term’’. 
(12) Section 150(e)(3) is amended to read as 
follows: 
‘‘(3) PUBLIC
APPROVAL
REQUIREMENT.—A 
bond shall not be treated as part of an issue which 
meets the requirements of paragraph (1) unless such 
bond satisfies the requirements of section 147(f)(2) 
(as in effect before its repeal by the Tax Cuts and 
Jobs Act).’’. 
(13) Section 269A(b)(3) is amended by striking 
‘‘144(a)(3)’’ and inserting ‘‘414(n)(6)(A)’’. 
(14) Section 414(m)(5) is amended by striking 
‘‘section 
144(a)(3)’’ 
and 
inserting 
‘‘subsection 
(n)(6)(A)’’. 
(15) Section 414(n)(6)(A) is amended to read 
as follows: 
‘‘(A) RELATED PERSONS.—A person is a 
related person to another person if— 
‘‘(i) the relationship between such per-
sons would result in a disallowance of 
losses under section 267 or 707(b), or 
‘‘(ii) such persons are members of the 
same controlled group of corporations (as 
defined in section 1563(a), except that
292 
‘more than 50 percent’ shall be substituted 
for ‘at least 80 percent’ each place it ap-
pears therein).’’. 
(16) Section 6045(e)(4)(B) is amended by in-
serting ‘‘(as in effect before its repeal by the Tax 
Cuts and Jobs Act)’’ after ‘‘section 143(m)(3)’’. 
(17) Section 6654(f)(1) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 143(m)’’. 
(18) Section 7871(c) is amended— 
(A) by striking paragraphs (2) and (3), 
and 
(B) by striking ‘‘TAX-EXEMPT BONDS.—’’ 
and all that follows through ‘‘Subsection (a) of 
section 103’’ and inserting the following: ‘‘TAX- 
EXEMPT
BONDS.—Subsection (a) of section 
103’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after December 
31, 2017. 
SEC. 3602. REPEAL OF ADVANCE REFUNDING BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 149(d) 
is amended by striking ‘‘as part of an issue described in 
paragraph (2), (3), or (4).’’ and inserting ‘‘to advance re-
fund another bond.’’.
293 
(b) CONFORMING AMENDMENTS.— 
(1) Section 149(d) is amended by striking para-
graphs (2), (3), (4), and (6) and by redesignating 
paragraphs (5) and (7) as paragraphs (2) and (3). 
(2) Section 148(f)(4)(C) is amended by striking 
clause (xiv) and by redesignating clauses (xv) to 
(xvii) as clauses (xiv) to (xvi). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to advance refunding bonds issued 
after December 31, 2017. 
SEC. 3603. REPEAL OF TAX CREDIT BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 is amended by striking subparts H, I, and J (and 
by striking the items relating to such subparts in the table 
of subparts for such part). 
(b) PAYMENTS TO ISSUERS.—Subchapter B of chap-
ter 65 is amended by striking section 6431 (and by strik-
ing the item relating to such section in the table of sec-
tions for such subchapter). 
(c) CONFORMING AMENDMENTS.— 
(1) Part IV of subchapter U of chapter 1 is 
amended by striking section 1397E (and by striking 
the item relating to such section in the table of sec-
tions for such part).
294 
(2) Section 54(l)(3)(B) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 1397E(I)’’. 
(3) Section 6211(b)(4)(A) is amended by strik-
ing ‘‘, and 6431’’ and inserting ‘‘and’’ before 
‘‘36B’’. 
(4) Section 6401(b)(1) is amended by striking 
‘‘G, H, I, and J’’ and inserting ‘‘and G’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after December 
31, 2017. 
SEC. 3604. NO TAX EXEMPT BONDS FOR PROFESSIONAL 
STADIUMS. 
(a) IN GENERAL.—Section 103(b), as amended by 
this Act, is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) PROFESSIONAL STADIUM BOND.—Any pro-
fessional stadium bond.’’. 
(b) PROFESSIONAL STADIUM BOND DEFINED.—Sub-
section (c) of section 103 is amended by adding at the 
end the following new paragraph: 
‘‘(3) PROFESSIONAL
STADIUM
BOND.—The 
term ‘professional stadium bond’ means any bond 
issued as part of an issue any proceeds of which are 
used to finance or refinance capital expenditures al-
295 
locable to a facility (or appurtenant real property) 
which, during at least 5 days during any calendar 
year, is used as a stadium or arena for professional 
sports exhibitions, games, or training.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after November 
2, 2017. 
Subtitle H—Insurance 
SEC. 3701. NET OPERATING LOSSES OF LIFE INSURANCE 
COMPANIES. 
(a) IN GENERAL.—Section 805(b) is amended by 
striking paragraph (4) and by redesignating paragraph 
(5) as paragraph (4). 
(b) CONFORMING AMENDMENTS.— 
(1) Part I of subchapter L of chapter 1 is 
amended by striking section 810 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(2) Part III of subchapter L of chapter 1 is 
amended by striking section 844 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(3) Section 381 is amended by striking sub-
section (d).
296 
(4) Section 805(a)(4)(B)(ii) is amended to read 
as follows: 
‘‘(ii) the deduction allowed under sec-
tion 172,’’. 
(5) Section 805(a) is amended by striking para-
graph (5). 
(6) Section 953(b)(1)(B) is amended to read as 
follows: 
‘‘(B) So much of section 805(a)(8) as re-
lates to the deduction allowed under section 
172.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses arising in taxable years 
beginning after December 31, 2017. 
SEC. 3702. REPEAL OF SMALL LIFE INSURANCE COMPANY 
DEDUCTION. 
(a) IN GENERAL.—Part I of subchapter L of chapter 
1 is amended by striking section 806 (and by striking the 
item relating to such section in the table of sections for 
such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 453B(e) is amended— 
(A) by striking ‘‘(as defined in section 
806(b)(3))’’ in paragraph (2)(B), and
297 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) NONINSURANCE BUSINESS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘noninsurance business’ 
means any activity which is not an insurance 
business. 
‘‘(B) CERTAIN ACTIVITIES TREATED AS IN-
SURANCE BUSINESSES.—For purposes of sub-
paragraph (A), any activity which is not an in-
surance business shall be treated as an insur-
ance business if— 
‘‘(i) it is of a type traditionally carried 
on by life insurance companies for invest-
ment purposes, but only if the carrying on 
of such activity (other than in the case of 
real estate) does not constitute the active 
conduct of a trade or business, or 
‘‘(ii) it involves the performance of ad-
ministrative services in connection with 
plans providing life insurance, pension, or 
accident and health benefits.’’. 
(2) Section 465(c)(7)(D)(v)(II) is amended by 
striking ‘‘section 806(b)(3)’’ and inserting ‘‘section 
453B(e)(3)’’.
298 
(3) Section 801(a)(2) is amended by striking 
subparagraph (C). 
(4) Section 804 is amended by striking 
‘‘means—’’ and all that follows and inserting 
‘‘means the general deductions provided in section 
805.’’. 
(5) Section 805(a)(4)(B), as amended by sec-
tion 3701, is amended by striking clause (i) and by 
redesignating clauses (ii), (iii), and (iv) as clauses 
(i), (ii), and (iii), respectively. 
(6) Section 805(b)(2)(A) is amended by strik-
ing clause (iii) and by redesignating clauses (iv) and 
(v) as clauses (iii) and (iv), respectively. 
(7) Section 842(c) is amended by striking para-
graph (1) and by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively. 
(8) Section 953(b)(1), as amended by section 
3701, is amended by striking subparagraph (A) and 
by redesignating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
299 
SEC. 3703. SURTAX ON LIFE INSURANCE COMPANY TAX-
ABLE INCOME. 
(a) IN GENERAL.—Section 801(a)(1) is amended— 
(1) by striking ‘‘consist of a tax’’ and insert 
‘‘consist of the sum of— 
‘‘(A) a tax’’, and 
(2) by striking the period at the end and insert-
ing ‘‘, and’’, and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) a tax equal to 8 percent of the life in-
surance company taxable income.’’. 
SEC. 3704. ADJUSTMENT FOR CHANGE IN COMPUTING RE-
SERVES. 
(a) IN GENERAL.—Paragraph (1) of section 807(f) 
is amended to read as follows: 
‘‘(1) TREATMENT AS CHANGE IN METHOD OF 
ACCOUNTING.—If the basis for determining any item 
referred to in subsection (c) as of the close of any 
taxable year differs from the basis for such deter-
mination as of the close of the preceding taxable 
year, then so much of the difference between— 
‘‘(A) the amount of the item at the close 
of the taxable year, computed on the new basis, 
and
300 
‘‘(B) the amount of the item at the close 
of the taxable year, computed on the old basis, 
as is attributable to contracts issued before the tax-
able year shall be taken into account under section 
481 as adjustments attributable to a change in 
method of accounting initiated by the taxpayer and 
made with the consent of the Secretary.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3705. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS 
TO SHAREHOLDERS FROM PRE-1984 POLICY-
HOLDERS SURPLUS ACCOUNT. 
(a) IN GENERAL.—Subpart D of part I of subchapter 
L is amended by striking section 815 (and by striking the 
item relating to such section in the table of sections for 
such subpart). 
(b) CONFORMING
AMENDMENT.—Section 801 is 
amended by striking subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
(d) PHASED INCLUSION OF REMAINING BALANCE OF 
POLICYHOLDERS SURPLUS ACCOUNTS.—In the case of 
any stock life insurance company which has a balance (de-
301 
termined as of the close of such company’s last taxable 
year beginning before January 1, 2018) in an existing pol-
icyholders surplus account (as defined in section 815 of 
the Internal Revenue Code of 1986, as in effect before 
its repeal), the tax imposed by section 801 of such Code 
for the first 8 taxable years beginning after December 31, 
2017, shall be the amount which would be imposed by 
such section for such year on the sum of— 
(1) life insurance company taxable income for 
such year (within the meaning of such section 801 
but not less than zero), plus 
(2) 1⁄8 of such balance. 
SEC. 3706. MODIFICATION OF PRORATION RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) IN GENERAL.—Section 832(b)(5)(B) is amended 
by striking ‘‘15 percent’’ and inserting ‘‘26.25 percent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
302 
SEC. 3707. MODIFICATION OF DISCOUNTING RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) MODIFICATION OF RATE OF INTEREST USED TO 
DISCOUNT UNPAID LOSSES.—Paragraph (2) of section 
846(c) is amended to read as follows: 
‘‘(2) DETERMINATION OF ANNUAL RATE.—The 
annual rate determined by the Secretary under this 
paragraph for any calendar year shall be a rate de-
termined on the basis of the corporate bond yield 
curve (as defined in section 430(h)(2)(D)(i)).’’. 
(b) MODIFICATION OF COMPUTATIONAL RULES FOR 
LOSS PAYMENT PATTERNS.—Section 846(d)(3) is amend-
ed by striking subparagraphs (B) through (G) and insert-
ing the following new subparagraphs: 
‘‘(B) TREATMENT OF CERTAIN LOSSES.— 
Losses which would have been treated as paid 
in the last year of the period applicable under 
subparagraph (A)(i) or (A)(ii) shall be treated 
as paid in the following manner: 
‘‘(i) 3-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(i) shall be extended to the 
extent required under subclause (II).
303 
‘‘(II) COMPUTATION OF EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the 
3d year after the accident year shall 
be treated as paid in such 3d year 
and each subsequent year in an 
amount equal to the average of the 
losses treated as paid in the 1st and 
2d years after the accident year (or, if 
lesser, the portion of the unpaid losses 
not theretofore taken into account). 
To the extent such unpaid losses have 
not been treated as paid before the 
18th year after the accident year, they 
shall be treated as paid in such 18th 
year. 
‘‘(ii) 10-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(ii) shall be extended to the 
extent required under subclause (II). 
‘‘(II) COMPUTATION OF EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the
304 
10th year after the accident year shall 
be treated as paid in such 10th year 
and each subsequent year in an 
amount equal to the amount of the 
average of the losses treated as paid 
in the 7th, 8th, and 9th years after 
the accident year (or, if lesser, the 
portion of the unpaid losses not there-
tofore taken into account). To the ex-
tent such unpaid losses have not been 
treated as paid before the 25th year 
after the accident year, they shall be 
treated as paid in such 25th year.’’. 
(c) REPEAL
OF HISTORICAL PAYMENT PATTERN 
ELECTION.—Section 846 is amended by striking sub-
section (e) and by redesignating subsections (f) and (g) 
as subsections (e) and (f), respectively. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
(e) TRANSITIONAL RULE.—For the first taxable year 
beginning after December 31, 2017— 
(1) the unpaid losses and the expenses unpaid 
(as defined in paragraphs (5)(B) and (6) of section
305 
832(b) of the Internal Revenue Code of 1986) at the 
end of the preceding taxable year, and 
(2) the unpaid losses as defined in sections 
807(c)(2) and 805(a)(1) of such Code at the end of 
the preceding taxable year, 
shall be determined as if the amendments made by this 
section had applied to such unpaid losses and expenses 
unpaid in the preceding taxable year and by using the in-
terest rate and loss payment patterns applicable to acci-
dent years ending with calendar year 2018, and any ad-
justment shall be taken into account ratably in such first 
taxable year and the 7 succeeding taxable years. For sub-
sequent taxable years, such amendments shall be applied 
with respect to such unpaid losses and expenses unpaid 
by using the interest rate and loss payment patterns appli-
cable to accident years ending with calendar year 2018. 
SEC. 3708. REPEAL OF SPECIAL ESTIMATED TAX PAY-
MENTS. 
(a) IN GENERAL.—Part III of subchapter L of chap-
ter 1 is amended by striking section 847 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
306 
Subtitle I—Compensation 
SEC. 3801. MODIFICATION OF LIMITATION ON EXCESSIVE 
EMPLOYEE REMUNERATION. 
(a) REPEAL OF PERFORMANCE-BASED COMPENSA-
TION AND COMMISSION EXCEPTIONS FOR LIMITATION ON 
EXCESSIVE EMPLOYEE REMUNERATION.— 
(1) IN GENERAL.—Section 162(m)(4) is amend-
ed by striking subparagraphs (B) and (C) and by re-
designating subparagraphs (D), (E), (F), and (G) as 
subparagraphs (B), (C), (D), and (E), respectively. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraphs (5)(E) and (6)(D) of sec-
tion 162(m) are each amended by striking 
‘‘subparagraphs (B), (C), and (D)’’ and insert-
ing ‘‘subparagraph (B)’’. 
(B) Paragraphs (5)(G) and (6)(G) of sec-
tion 162(m) are each amended by striking ‘‘(F) 
and (G)’’ and inserting ‘‘(D) and (E)’’. 
(b) EXPANSION OF APPLICABLE EMPLOYER.—Sec-
tion 162(m)(2) is amended to read as follows: 
‘‘(2) PUBLICLY HELD CORPORATION.—For pur-
poses of this subsection, the term ‘publicly held cor-
poration’ means any corporation which is an issuer 
(as defined in section 3 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c))—
307 
‘‘(A) the securities of which are required to 
be registered under section 12 of such Act (15 
U.S.C. 78l), or 
‘‘(B) that is required to file reports under 
section 15(d) of such Act (15 U.S.C. 78o(d)).’’. 
(c) MODIFICATION OF DEFINITION OF COVERED EM-
PLOYEES.—Section 162(m)(3) is amended— 
(1) in subparagraph (A), by striking ‘‘as of the 
close of the taxable year, such employee is the chief 
executive officer of the taxpayer or is’’ and inserting 
‘‘such employee is the principal executive officer or 
principal financial officer of the taxpayer at any 
time during the taxable year, or was’’, 
(2) in subparagraph (B)— 
(A) by striking ‘‘4’’ and inserting ‘‘3’’, and 
(B) by striking ‘‘(other than the chief exec-
utive officer)’’ and inserting ‘‘(other than the 
principal executive officer or principal financial 
officer)’’, and 
(3) by striking ‘‘or’’ at the end of subparagraph 
(A), by striking the period at the end of subpara-
graph (B) and inserting ‘‘, or’’, and by adding at the 
end the following: 
‘‘(C) was a covered employee of the tax-
payer (or any predecessor) for any preceding
308 
taxable year beginning after December 31, 
2016. 
Such term shall include any employee who would be 
described in subparagraph (B) if the reporting de-
scribed in such subparagraph were required as so 
described.’’. 
(d) SPECIAL RULE FOR REMUNERATION PAID TO 
BENEFICIARIES, ETC.—Section 162(m)(4), as amended by 
subsection (a), is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) SPECIAL RULE FOR REMUNERATION 
PAID TO BENEFICIARIES, ETC.—Remuneration 
shall not fail to be applicable employee remu-
neration merely because it is includible in the 
income of, or paid to, a person other than the 
covered employee, including after the death of 
the covered employee.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3802. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZA-
TION EXECUTIVE COMPENSATION. 
(a) IN GENERAL.—Subchapter D of chapter 42 is 
amended by adding at the end the following new section:
309 
‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
EXECUTIVE COMPENSATION. 
‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 
equal to 20 percent of the sum of— 
‘‘(1) so much of the remuneration paid (other 
than any excess parachute payment) by an applica-
ble tax-exempt organization for the taxable year with 
respect to employment of any covered employee in 
excess of $1,000,000, plus 
‘‘(2) any excess parachute payment paid by 
such an organization to any covered employee. 
‘‘(b) LIABILITY FOR TAX.—The employer shall be lia-
ble for the tax imposed under subsection (a). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) 
APPLICABLE
TAX-EXEMPT
ORGANIZA-
TION.—The term ‘applicable tax-exempt organiza-
tion’ means any organization that for the taxable 
year— 
‘‘(A) is exempt from taxation under section 
501(a), 
‘‘(B) is a farmers’ cooperative organization 
described in section 521(b)(1), 
‘‘(C) has income excluded from taxation 
under section 115(1), or
310 
‘‘(D) is a political organization described in 
section 527(e)(1). 
‘‘(2) COVERED
EMPLOYEE.—For purposes of 
this section, the term ‘covered employee’ means any 
employee (including any former employee) of an ap-
plicable tax-exempt organization if the employee— 
‘‘(A) is one of the 5 highest compensated 
employees of the organization for the taxable 
year, or 
‘‘(B) was a covered employee of the organi-
zation (or any predecessor) for any preceding 
taxable year beginning after December 31, 
2016. 
‘‘(3) REMUNERATION.—For purposes of this 
section, the term ‘remuneration’ means wages (as 
defined in section 3401(a)), except that such term 
shall not include any designated Roth contribution 
(as defined in section 402A(c)). 
‘‘(4) REMUNERATION FROM RELATED ORGANI-
ZATIONS.— 
‘‘(A) IN
GENERAL.—Remuneration of a 
covered employee paid by an applicable tax-ex-
empt organization shall include any remunera-
tion paid with respect to employment of such
311 
employee by any related person or governmental 
entity. 
‘‘(B) RELATED
ORGANIZATIONS.—A per-
son or governmental entity shall be treated as 
related to an applicable tax-exempt organization 
if such person or governmental entity— 
‘‘(i) controls, or is controlled by, the 
organization, 
‘‘(ii) is controlled by one or more per-
sons that control the organization, 
‘‘(iii) is a supported organization (as 
defined in section 509(f)(2)) during the 
taxable year with respect to the organiza-
tion, 
‘‘(iv) is a supporting organization de-
scribed in section 509(a)(3) during the 
taxable year with respect to the organiza-
tion, or 
‘‘(v) in the case of an organization 
that is a voluntary employees’ beneficiary 
association described in section 501(a)(9), 
establishes, maintains, or makes contribu-
tions to such voluntary employees’ bene-
ficiary association.
312 
‘‘(C) LIABILITY FOR TAX.—In any case in 
which remuneration from more than one em-
ployer is taken into account under this para-
graph in determining the tax imposed by sub-
section (a), each such employer shall be liable 
for such tax in an amount which bears the 
same ratio to the total tax determined under 
subsection (a) with respect to such remunera-
tion as— 
‘‘(i) the amount of remuneration paid 
by such employer with respect to such em-
ployee, bears to 
‘‘(ii) the amount of remuneration paid 
by all such employers to such employee. 
‘‘(5) EXCESS PARACHUTE PAYMENT.—For pur-
poses determining the tax imposed by subsection 
(a)(2)— 
‘‘(A) IN
GENERAL.—The term ‘excess 
parachute payment’ means an amount equal to 
the excess of any parachute payment over the 
portion of the base amount allocated to such 
payment. 
‘‘(B) PARACHUTE
PAYMENT.—The term 
‘parachute payment’ means any payment in the
313 
nature of compensation to (or for the benefit 
of) a covered employee if— 
‘‘(i) such payment is contingent on 
such employee’s separation from employ-
ment with the employer, and 
‘‘(ii) the aggregate present value of 
the payments in the nature of compensa-
tion to (or for the benefit of) such indi-
vidual which are contingent on such sepa-
ration equals or exceeds an amount equal 
to 3 times the base amount. 
Such term does not include any payment de-
scribed in section 280G(b)(6) (relating to ex-
emption for payments under qualified plans) or 
any payment made under or to an annuity con-
tract described in section 403(b) or a plan de-
scribed in section 457(b). 
‘‘(C) BASE AMOUNT.—Rules similar to the 
rules of 280G(b)(3) shall apply for purposes of 
determining the base amount. 
‘‘(D) PROPERTY
TRANSFERS; 
PRESENT 
VALUE.—Rules similar to the rules of para-
graphs (3) and (4) of section 280G(d) shall 
apply.
314 
‘‘(6) COORDINATION WITH DEDUCTION LIMITA-
TION.—Remuneration the deduction for which is not 
allowed by reason of section 162(m) shall not be 
taken into account for purposes of this section. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to prevent avoidance 
of the purposes of this section through the performance 
of services other than as an employee.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter D of chapter 42 is amended by adding at 
the end the following new item: 
‘‘Sec. 4960. Tax on excess exempt organization executive compensation.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3803. TREATMENT OF QUALIFIED EQUITY GRANTS. 
(a) IN GENERAL.— 
(1) ELECTION TO DEFER INCOME.—Section 83 
is amended by adding at the end the following new 
subsection: 
‘‘(i) QUALIFIED EQUITY GRANTS.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
title, if qualified stock is transferred to a qualified 
employee who makes an election with respect to such 
stock under this subsection—
315 
‘‘(A) except as provided in subparagraph 
(B), no amount shall be included in income 
under subsection (a) for the first taxable year 
in which the rights of the employee in such 
stock are transferable or are not subject to a 
substantial risk of forfeiture, whichever is appli-
cable, and 
‘‘(B) an amount equal to the amount 
which would be included in income of the em-
ployee under subsection (a) (determined without 
regard to this subsection) shall be included in 
income for the taxable year of the employee 
which includes the earliest of— 
‘‘(i) the first date such qualified stock 
becomes transferable (including transfer-
able to the employer), 
‘‘(ii) the date the employee first be-
comes an excluded employee, 
‘‘(iii) the first date on which any stock 
of the corporation which issued the quali-
fied stock becomes readily tradable on an 
established securities market (as deter-
mined by the Secretary, but not including 
any market unless such market is recog-
nized as an established securities market
316 
by the Secretary for purposes of a provi-
sion of this title other than this sub-
section), 
‘‘(iv) the date that is 5 years after the 
first date the rights of the employee in 
such stock are transferable or are not sub-
ject to a substantial risk of forfeiture, 
whichever occurs earlier, or 
‘‘(v) the date on which the employee 
revokes (at such time and in such manner 
as the Secretary may provide) the election 
under this subsection with respect to such 
stock. 
‘‘(2) QUALIFIED STOCK.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘qualified stock’ means, 
with respect to any qualified employee, any 
stock in a corporation which is the employer of 
such employee, if— 
‘‘(i) such stock is received— 
‘‘(I) in connection with the exer-
cise of an option, or 
‘‘(II) in settlement of a restricted 
stock unit, and
317 
‘‘(ii) such option or restricted stock 
unit was provided by the corporation— 
‘‘(I) in connection with the per-
formance of services as an employee, 
and 
‘‘(II) during a calendar year in 
which such corporation was an eligible 
corporation. 
‘‘(B) LIMITATION.—The term ‘qualified 
stock’ shall not include any stock if the em-
ployee may sell such stock to, or otherwise re-
ceive cash in lieu of stock from, the corporation 
at the time that the rights of the employee in 
such stock first become transferable or not sub-
ject to a substantial risk of forfeiture. 
‘‘(C) ELIGIBLE CORPORATION.—For pur-
poses of subparagraph (A)(ii)(II)— 
‘‘(i) IN GENERAL.—The term ‘eligible 
corporation’ means, with respect to any 
calendar year, any corporation if— 
‘‘(I) no stock of such corporation 
(or any predecessor of such corpora-
tion) is readily tradable on an estab-
lished securities market (as deter-
mined under paragraph (1)(B)(iii))
318 
during any preceding calendar year, 
and 
‘‘(II) such corporation has a writ-
ten plan under which, in such cal-
endar year, not less than 80 percent 
of all employees who provide services 
to such corporation in the United 
States (or any possession of the 
United States) are granted stock op-
tions, or restricted stock units, with 
the same rights and privileges to re-
ceive qualified stock. 
‘‘(ii) 
SAME
RIGHTS
AND
PRIVI-
LEGES.—For purposes of clause (i)(II)— 
‘‘(I) except as provided in sub-
clauses (II) and (III), the determina-
tion of rights and privileges with re-
spect to stock shall be determined in 
a similar manner as provided under 
section 423(b)(5), 
‘‘(II) employees shall not fail to 
be treated as having the same rights 
and privileges to receive qualified 
stock solely because the number of 
shares available to all employees is not
319 
equal in amount, so long as the num-
ber of shares available to each em-
ployee is more than a de minimis 
amount, and 
‘‘(III) rights and privileges with 
respect to the exercise of an option 
shall not be treated as the same as 
rights and privileges with respect to 
the settlement of a restricted stock 
unit. 
‘‘(iii) EMPLOYEE.—For purposes of 
clause (i)(II), the term ‘employee’ shall not 
include any employee described in section 
4980E(d)(4) or any excluded employee. 
‘‘(iv) SPECIAL RULE FOR CALENDAR 
YEARS BEFORE 2018.—In the case of any 
calendar year beginning before January 1, 
2018, clause (i)(II) shall be applied with-
out regard to whether the rights and privi-
leges with respect to the qualified stock are 
the same. 
‘‘(3) QUALIFIED
EMPLOYEE; EXCLUDED
EM-
PLOYEE.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
employee’ means any individual who—