I 
111TH CONGRESS 
1ST SESSION H. R. 4213 
To amend the Internal Revenue Code of 1986 to extend certain expiring 
provisions, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 7, 2009 
Mr. RANGEL introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to extend 
certain expiring provisions, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Tax Extenders Act of 2009’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise 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 
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shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—GENERAL PROVISIONS 
Subtitle A—Individual Tax Relief 
Sec. 101. Deduction of State and local sales taxes. 
Sec. 102. Additional standard deduction for State and local real property taxes. 
Sec. 103. Above-the-line deduction for qualified tuition and related expenses. 
Sec. 104. Deduction for certain expenses of elementary and secondary school 
teachers. 
Subtitle B—Business Tax Relief 
Sec. 111. Research credit. 
Sec. 112. Exceptions for active financing income. 
Sec. 113. Look-thru treatment of payments between related controlled foreign 
corporations under foreign personal holding company rules. 
Sec. 114. 15-year straight-line cost recovery for qualified leasehold improve-
ments, qualified restaurant buildings and improvements, and 
qualified retail improvements. 
Sec. 115. 7-year recovery period for motorsports entertainment complexes. 
Sec. 116. Railroad track maintenance credit. 
Sec. 117. Special expensing rules for certain film and television productions. 
Sec. 118. Expensing of environmental remediation costs. 
Sec. 119. Mine rescue team training credit. 
Sec. 120. Election to expense advanced mine safety equipment. 
Sec. 121. Employer wage credit for employees who are active duty members of 
the uniformed services. 
Sec. 122. 5-year depreciation for farming business machinery and equipment. 
Sec. 123. Treatment of certain dividends and assets of regulated investment 
companies. 
Sec. 124. Look-thru of certain regulated investment company stock in deter-
mining gross estate of nonresidents. 
Sec. 125. RIC qualified investment entity treatment under FIRPTA. 
Sec. 126. Suspension of limitation on percentage depletion for oil and gas from 
marginal wells. 
Subtitle C—Charitable Provisions 
Sec. 131. Contributions of capital gain real property made for conservation pur-
poses. 
Sec. 132. Enhanced charitable deduction for contributions of food inventory. 
Sec. 133. Enhanced charitable deduction for contributions of book inventories 
to public schools. 
Sec. 134. Enhanced charitable deduction for corporate contributions of com-
puter technology and equipment for educational purposes. 
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Sec. 135. Tax-free distributions from individual retirement plans for charitable 
purposes. 
Sec. 136. Modification of tax treatment of certain payments to controlling ex-
empt organizations. 
Sec. 137. Exclusion of gain or loss on sale or exchange of certain brownfield 
sites from unrelated business taxable income. 
Sec. 138. Basis adjustment to stock of S corporations making charitable con-
tributions of property. 
Subtitle D—Miscellaneous Provisions 
Sec. 141. Indian employment tax credit. 
Sec. 142. Accelerated depreciation for business property on an Indian reserva-
tion. 
Sec. 143. Deduction allowable with respect to income attributable to domestic 
production activities in Puerto Rico. 
Sec. 144. Temporary increase in limit on cover over of rum excise taxes to 
Puerto Rico and the Virgin Islands. 
Sec. 145. American Samoa economic development credit. 
TITLE II—COMMUNITY ASSISTANCE PROVISIONS 
Sec. 201. Empowerment zone tax incentives. 
Sec. 202. Renewal community tax incentives. 
Sec. 203. New markets tax credit. 
Sec. 204. Tax incentives for investment in the District of Columbia. 
Sec. 205. Tax incentives for New York Liberty Zone. 
Sec. 206. Tax incentives for the Gulf Opportunity Zone. 
Sec. 207. Election for refundable low-income housing credit for 2010. 
TITLE III—DISASTER RELIEF PROVISIONS 
Sec. 301. Deductibility of personal casualty losses attributable to federally de-
clared disasters. 
Sec. 302. Expensing of certain qualified disaster expenses. 
Sec. 303. 5-year carryback of net operating losses attributable to Federally de-
clared disasters. 
Sec. 304. Waiver of certain mortgage revenue bond requirements for residences 
located in Federally declared disaster areas. 
Sec. 305. Expensing and special depreciation allowance for qualified disaster 
assistance property. 
TITLE IV—ENERGY PROVISIONS 
Sec. 401. Incentives for biodiesel and renewable diesel. 
Sec. 402. Alternative motor vehicle credit for heavy hybrids. 
Sec. 403. Alternative fuel credit for natural gas and liquified petroleum gas. 
Sec. 404. Special rule for sales or dispositions to implement FERC or State 
electric restructuring policy for qualified electric utilities. 
TITLE V—FOREIGN ACCOUNT TAX COMPLIANCE 
Subtitle A—Increased Disclosure of Beneficial Owners 
Sec. 501. Reporting on certain foreign accounts. 
Sec. 502. Repeal of certain foreign exceptions to registered bond requirements. 
Subtitle B—Under Reporting With Respect to Foreign Assets 
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Sec. 511. Disclosure of information with respect to foreign financial assets. 
Sec. 512. Penalties for underpayments attributable to undisclosed foreign fi-
nancial assets. 
Sec. 513. Modification of statute of limitations for significant omission of in-
come in connection with foreign assets. 
Subtitle C—Other Disclosure Provisions 
Sec. 521. Reporting of activities with respect to passive foreign investment com-
panies. 
Sec. 522. Secretary permitted to require financial institutions to file certain re-
turns related to withholding on foreign transfers electronically. 
Subtitle D—Provisions Related to Foreign Trusts 
Sec. 531. Clarifications with respect to foreign trusts which are treated as hav-
ing a United States beneficiary. 
Sec. 532. Presumption that foreign trust has United States beneficiary. 
Sec. 533. Uncompensated use of trust property. 
Sec. 534. Reporting requirement of United States owners of foreign trusts. 
Sec. 535. Minimum penalty with respect to failure to report on certain foreign 
trusts. 
Subtitle E—Substitute Dividends and Dividend Equivalent Payments Received 
by Foreign Persons Treated as Dividends 
Sec. 541. Substitute dividends and dividend equivalent payments received by 
foreign persons treated as dividends. 
TITLE VI—OTHER REVENUE PROVISIONS 
Subtitle A—Partnership Interests Held by Partners Providing Services 
Sec. 601. Partnership interests transferred in connection with performance of 
services. 
Sec. 602. Income of partners for performing investment management services 
treated as ordinary income received for performance of serv-
ices. 
Subtitle B—Time for Payment of Corporate Estimated Taxes 
Sec. 611. Time for payment of corporate estimated taxes. 
Subtitle C—Tax Expenditure Study 
Sec. 621. Findings. 
Sec. 622. Study of extended tax expenditures. 
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SEC. 137. EXCLUSION OF GAIN OR LOSS ON SALE OR EX-
CHANGE OF CERTAIN BROWNFIELD SITES 
FROM UNRELATED BUSINESS TAXABLE IN-
COME. 
(a) IN GENERAL.—Subparagraph (K) of section 
512(b)(19) is amended by striking ‘‘December 31, 2009’’ 
and inserting ‘‘December 31, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property acquired after Decem-
ber 31, 2009. 
SEC. 138. BASIS ADJUSTMENT TO STOCK OF S CORPORA-
TIONS 
MAKING 
CHARITABLE 
CONTRIBU-
TIONS OF PROPERTY. 
(a) IN GENERAL.—Paragraph (2) of section 1367(a) 
is amended by striking ‘‘December 31, 2009’’ and insert-
ing ‘‘December 31, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made in taxable 
years beginning after December 31, 2009. 
Subtitle D—Miscellaneous 
Provisions 
SEC. 141. INDIAN EMPLOYMENT TAX CREDIT. 
(a) IN GENERAL.—Subsection (f) of section 45A is 
amended by striking ‘‘December 31, 2009’’ and inserting 
‘‘December 31, 2010’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 142. ACCELERATED DEPRECIATION FOR BUSINESS 
PROPERTY ON AN INDIAN RESERVATION. 
(a) IN GENERAL.—Paragraph (8) of section 168(j) 
is amended by striking ‘‘December 31, 2009’’ and insert-
ing ‘‘December 31, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2009. 
SEC. 143. DEDUCTION ALLOWABLE WITH RESPECT TO IN-
COME ATTRIBUTABLE TO DOMESTIC PRO-
DUCTION ACTIVITIES IN PUERTO RICO. 
(a) IN GENERAL.—Subparagraph (C) of section 
199(d)(8) is amended— 
(1) by striking ‘‘first 4 taxable years’’ and in-
serting ‘‘first 5 taxable years’’, and 
(2) by striking ‘‘January 1, 2010’’ and insert-
ing ‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
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SEC. 144. TEMPORARY INCREASE IN LIMIT ON COVER OVER 
OF RUM EXCISE TAXES TO PUERTO RICO AND 
THE VIRGIN ISLANDS. 
(a) IN GENERAL.—Paragraph (1) of section 7652(f) 
is amended by striking ‘‘January 1, 2010’’ and inserting 
‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distilled spirits brought into the 
United States after December 31, 2009. 
SEC. 145. AMERICAN SAMOA ECONOMIC DEVELOPMENT 
CREDIT. 
(a) IN GENERAL.—Subsection (d) of section 119 of 
division A of the Tax Relief and Health Care Act of 2006 
is amended— 
(1) by striking ‘‘first 4 taxable years’’ and in-
serting ‘‘first 5 taxable years’’, and 
(2) by striking ‘‘January 1, 2010’’ and insert-
ing ‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
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TITLE II—COMMUNITY 
ASSISTANCE PROVISIONS 
SEC. 201. EMPOWERMENT ZONE TAX INCENTIVES. 
(a) 
IN
GENERAL.—Clause 
(i) 
of 
section 
1391(d)(1)(A) is amended by striking ‘‘December 31, 
2009’’ and inserting ‘‘December 31, 2010’’. 
(b) INCREASED EXCLUSION OF GAIN ON STOCK OF 
EMPOWERMENT ZONE BUSINESSES.—Subparagraph (C) 
of section 1202(a)(2) is amended— 
(1) by striking ‘‘December 31, 2014’’ and in-
serting ‘‘December 31, 2015’’, and 
(2) by striking ‘‘2014’’ in the heading and in-
serting ‘‘2015’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after December 31, 
2009. 
SEC. 202. RENEWAL COMMUNITY TAX INCENTIVES. 
(a) IN GENERAL.—Subsection (b) of section 1400E 
is amended— 
(1) by striking ‘‘December 31, 2009’’ in para-
graphs (1)(A) and (3) and inserting ‘‘December 31, 
2010’’, and 
(2) by striking ‘‘January 1, 2010’’ in paragraph 
(3) and inserting ‘‘January 1, 2011’’. 
(b) ZERO-PERCENT CAPITAL GAINS RATE.— 
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(1) 
ACQUISITION
DATES.—Paragraphs 
(2)(A)(i), (3)(A), (4)(A)(i), and (4)(B)(i) of section 
1400F(b) are each amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2011’’. 
(2) LIMITATION ON PERIOD OF GAINS.—Para-
graph (2) of section 1400F(c) is amended— 
(A) by striking ‘‘December 31, 2014’’ and 
inserting ‘‘December 31, 2015’’, and 
(B) by striking ‘‘2014’’ in the heading and 
inserting ‘‘2015’’. 
(3) CLERICAL AMENDMENT.—Subsection (d) of 
section 1400F is amended by striking ‘‘and ‘Decem-
ber 31, 2014’ for ‘December 31, 2014’ ’’. 
(c) COMMERCIAL REVITALIZATION DEDUCTION.— 
Subsection (g) of section 1400I is amended by striking 
‘‘December 31, 2009’’ and inserting ‘‘December 31, 
2010’’. 
(d) INCREASED EXPENSING UNDER SECTION 179.— 
Subparagraph (A) of section 1400J(b)(1) is amended by 
striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 
2011’’. 
(e) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
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this section shall apply to periods after December 
31, 2009. 
(2) ACQUISITIONS.—The amendments made by 
subsection (b)(1) and (d) shall apply to acquisitions 
after December 31, 2009. 
(3) 
COMMERCIAL
REVITALIZATION
DEDUC-
TION.—The amendment made by subsection (c) shall 
apply to building placed in service after December 
31, 2009. 
SEC. 203. NEW MARKETS TAX CREDIT. 
(a) IN GENERAL.—Subparagraph (F) of section 
45D(f)(1) is amended by inserting ‘‘and 2010’’ after 
‘‘2009’’. 
(b) CARRYOVER
OF UNUSED LIMITATION.—Para-
graph (3) of section 45D(f) is amended by striking 
‘‘2014’’ and inserting ‘‘2015’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
2009. 
SEC. 204. TAX INCENTIVES FOR INVESTMENT IN THE DIS-
TRICT OF COLUMBIA. 
(a) IN GENERAL.—Subsection (f) of section 1400 is 
amended by striking ‘‘December 31, 2009’’ each place it 
appears and inserting ‘‘December 31, 2010’’. 
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(b) 
TAX-EXEMPT
DC 
EMPOWERMENT
ZONE 
BONDS.—Subsection (b) of section 1400A is amended by 
striking ‘‘December 31, 2009’’ and inserting ‘‘December 
31, 2010’’. 
(c) ZERO-PERCENT CAPITAL GAINS RATE.— 
(1) 
ACQUISITION
DATES.—Paragraphs 
(2)(A)(i), (3)(A), (4)(A)(i), and (4)(B)(i)(I) of sec-
tion 1400B(b) are each amended by striking ‘‘Janu-
ary 1, 2010’’ and inserting ‘‘January 1, 2011’’. 
(2) LIMITATION ON PERIOD OF ZERO-PERCENT 
CAPITAL GAINS.— 
(A) IN GENERAL.—Paragraph (2) of sec-
tion 1400B(e) is amended— 
(i) by striking ‘‘December 31, 2014’’ 
and inserting ‘‘December 31, 2015’’, and 
(ii) by striking ‘‘2014’’ in the heading 
and inserting ‘‘2015’’. 
(B) INTERESTS IN PARTNERSHIP AND S 
CORPORATIONS.—Paragraph 
(2) 
of 
section 
1400B(g) is amended by striking ‘‘December 
31, 2014’’ and inserting ‘‘December 31, 2015’’. 
(d) FIRST-TIME HOMEBUYER CREDIT.—Subsection 
(i) of section 1400C is amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2011’’. 
(e) EFFECTIVE DATES.— 
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(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to periods after December 
31, 2009. 
(2) TAX-EXEMPT
DC
EMPOWERMENT
ZONE 
BONDS.—The amendment made by subsection (b) 
shall apply to bonds issued after December 31, 
2009. 
(3) ACQUISITION
DATES
FOR
ZERO-PERCENT 
CAPITAL GAINS RATE.—The amendments made by 
subsection (c)(1) shall apply to property acquired or 
substantially improved after December 31, 2009. 
(4) FIRST-TIME
HOMEBUYER
CREDIT.—The 
amendment made by subsection (d) shall apply to 
property purchased after December 31, 2009. 
SEC. 205. TAX INCENTIVES FOR NEW YORK LIBERTY ZONE. 
(a) BONUS DEPRECIATION
FOR NONRESIDENTIAL 
REAL PROPERTY
AND RESIDENTIAL RENTAL PROP-
ERTY.—Subparagraph (A) of section 1400L(b)(2) is 
amended by striking ‘‘December 31, 2009’’ in the last sen-
tence and inserting ‘‘December 31, 2010’’. 
(b) TAX-EXEMPT BOND FINANCING.—Subparagraph 
(D) of section 1400L(d)(2) is amended by striking ‘‘Janu-
ary 1, 2010’’ and inserting ‘‘January 1, 2011’’. 
(c) EFFECTIVE DATES.— 
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(1) BONUS
DEPRECIATION.—The amendment 
made by subsection (a) shall apply to property 
placed in service after December 31, 2009. 
(2) 
TAX-EXEMPT
BOND
FINANCING.—The 
amendment made by subsection (b) shall apply to 
bonds issued after December 31, 2009. 
SEC. 206. TAX INCENTIVES FOR THE GULF OPPORTUNITY 
ZONE. 
(a) WORK OPPORTUNITY TAX CREDIT FOR CORE 
DISASTER AREA.—Paragraph (1) of section 201(b) of the 
Katrina Emergency Tax Relief Act of 2005 is amended 
by striking ‘‘4-year’’ and inserting ‘‘5-year’’. 
(b) INCREASE IN REHABILITATION CREDIT.—Sub-
section (h) of section 1400N is amended by striking ‘‘De-
cember 31, 2009’’ and inserting ‘‘December 31, 2010’’. 
(c) EFFECTIVE DATES.— 
(1) WORK
OPPORTUNITY
TAX
CREDIT.—The 
amendment made by subsection (a) shall apply to in-
dividuals hired on or after August 28, 2009. 
(2) REHABILITATION
CREDIT.—The amend-
ment made by subsection (b) shall apply to amounts 
paid or incurred after December 31, 2009. 
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SEC. 207. ELECTION FOR REFUNDABLE LOW-INCOME HOUS-
ING CREDIT FOR 2010. 
(a) IN GENERAL.—Section 42 is amended by redesig-
nating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) ELECTION FOR REFUNDABLE CREDITS.— 
‘‘(1) IN GENERAL.—The housing credit agency 
of each State shall be allowed a credit in an amount 
equal to such State’s 2010 low-income housing re-
fundable credit election amount which shall be pay-
able by the Secretary as provided in paragraph (5). 
‘‘(2) 2010 LOW-INCOME HOUSING REFUNDABLE 
CREDIT ELECTION AMOUNT.—For purposes of this 
subsection, the term ‘2010 low-income housing re-
fundable credit election amount’ means, with respect 
to any State, such amount as the State may elect 
which does not exceed 85 percent of the product 
of— 
‘‘(A) the sum of— 
‘‘(i) 100 percent of the State housing 
credit ceiling for 2010 which is attrib-
utable to amounts described in clauses (i) 
and (iii) of subsection (h)(3)(C), and 
‘‘(ii) 40 percent of the State housing 
credit ceiling for 2010 which is attrib-
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utable to amounts described in clauses (ii) 
and (iv) of such subsection, multiplied by 
‘‘(B) 10. 
‘‘(3) COORDINATION
WITH
NON-REFUNDABLE 
CREDIT.—For purposes of this section, the amounts 
described in clauses (i) through (iv) of subsection 
(h)(3)(C) with respect to any State for 2010 shall 
each be reduced by so much of such amount as is 
taken into account in determining the amount of the 
credit allowed with respect to such State under para-
graph (1). 
‘‘(4) SPECIAL
RULE
FOR
BASIS.—Basis of a 
qualified low-income building shall not be reduced by 
the amount of any payment made under this sub-
section. 
‘‘(5) PAYMENT OF CREDIT; USE TO FINANCE 
LOW-INCOME BUILDINGS.—The Secretary shall pay 
to the housing credit agency of each State an 
amount equal to the credit allowed under paragraph 
(1). Rules similar to the rules of subsections (c) and 
(d) of section 1602 of the American Recovery and 
Reinvestment Tax Act of 2009 shall apply with re-
spect to any payment made under this paragraph, 
except that such subsection (d) shall be applied by 
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substituting ‘January 1, 2012’ for ‘January 1, 
2011’.’’. 
(b) CONFORMING AMENDMENT.—Section 1324(b)(2) 
of title 31, United States Code, is amended by inserting 
‘‘42(n),’’ after ‘‘36A,’’. 
TITLE III—DISASTER RELIEF 
PROVISIONS 
SEC. 301. DEDUCTIBILITY OF PERSONAL CASUALTY LOSSES 
ATTRIBUTABLE TO FEDERALLY DECLARED 
DISASTERS. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
165(h)(3)(B)(i) is amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2011’’. 
(b) EXTENSION OF $500 LIMITATION.—Paragraph 
(1) of section 165(h) is amended by striking ‘‘December 
31, 2009’’ and inserting ‘‘December 31, 2010’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to losses attributable to dis-
asters occurring after December 31, 2009. 
(2) EXTENSION
OF
$500
LIMITATION.—The 
amendment made by subsection (b) shall apply to 
taxable years beginning after December 31, 2009. 
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SEC. 302. EXPENSING OF CERTAIN QUALIFIED DISASTER 
EXPENSES. 
(a) IN GENERAL.—Subparagraph (A) of section 
198A(b)(2) is amended by striking ‘‘January 1, 2010’’ 
and inserting ‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures on account of dis-
asters occurring after December 31, 2009. 
SEC. 303. 5-YEAR CARRYBACK OF NET OPERATING LOSSES 
ATTRIBUTABLE TO FEDERALLY DECLARED 
DISASTERS. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
172(j)(1)(A)(i) is amended by striking ‘‘January 1, 2010’’ 
and inserting ‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to losses attributable to disasters 
occurring after December 31, 2009. 
SEC. 304. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 
REQUIREMENTS FOR RESIDENCES LOCATED 
IN FEDERALLY DECLARED DISASTER AREAS. 
(a) IN GENERAL.—Paragraph (11) of section 143(k) 
is amended by striking ‘‘January 1, 2010’’ and inserting 
‘‘January 1, 2011’’. 
(b) SPECIAL RULE FOR RESIDENCES DESTROYED IN 
FEDERALLY DECLARED DISASTER AREAS.—Paragraph 
(13) of section 143(k), as redesignated under subsection 
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(c), is amended by striking ‘‘January 1, 2010’’ in subpara-
graphs (A)(i) and (B)(i) and inserting ‘‘January 1, 2011’’. 
(c) TECHNICAL AMENDMENT.—Subsection (k) of sec-
tion 143 is amended by redesignating the second para-
graph (12) (relating to special rules for residences de-
stroyed in Federally declared disasters) as paragraph 
(13). 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to bonds issued after Decem-
ber 31, 2009. 
(2) RESIDENCES
DESTROYED
IN
FEDERALLY 
DECLARED
DISASTER
AREAS.—The amendments 
made by subsection (b) shall apply with respect to 
disasters occurring after December 31, 2009. 
(3) TECHNICAL AMENDMENT.—The amendment 
made by subsection (c) shall take effect as if in-
cluded in section 709 of the Tax Extenders and Al-
ternative Minimum Tax Relief Act of 2008. 
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SEC. 305. EXPENSING AND SPECIAL DEPRECIATION ALLOW-
ANCE FOR QUALIFIED DISASTER ASSISTANCE 
PROPERTY. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
168(n)(2)(A)(ii) is amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to disasters occurring after Decem-
ber 31, 2009. 
TITLE IV—ENERGY PROVISIONS 
SEC. 401. INCENTIVES FOR BIODIESEL AND RENEWABLE 
DIESEL. 
(a) CREDITS FOR BIODIESEL AND RENEWABLE DIE-
SEL USED AS FUEL.—Subsection (g) of section 40A is 
amended by striking ‘‘December 31, 2009’’ and inserting 
‘‘December 31, 2010’’. 
(b) EXCISE TAX CREDITS AND PAYMENTS FOR BIO-
DIESEL AND RENEWABLE DIESEL FUEL MIXTURES.— 
(1) Paragraph (6) of section 6426(c) is amend-
ed by striking ‘‘December 31, 2009’’ and inserting 
‘‘December 31, 2010’’. 
(2) Subparagraph (B) of section 6427(e)(6) is 
amended by striking ‘‘December 31, 2009’’ and in-
serting ‘‘December 31, 2010’’. 
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(b) PAYMENT AUTHORITY.—Paragraph (6) of section 
6427(e) is amended by striking ‘‘and’’ at the end of sub-
paragraph (C), by striking the period at the end of sub-
paragraph (D) and inserting a comma and by adding at 
the end the following new subparagraphs: 
‘‘(E) any alternative fuel (as so defined) 
involving compressed or liquified natural gas 
sold or used after December 31, 2010, and 
‘‘(F) any alternative fuel (as so defined) 
involving liquified petroleum gas (other than for 
use as fuel in a forklift) sold or used after De-
cember 31, 2010.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (C) 
of section 6427(e)(6) is amended by inserting ‘‘(E), or 
(F)’’ after ‘‘subparagraph (D)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel sold or used after December 
31, 2009. 
SEC. 404. SPECIAL RULE FOR SALES OR DISPOSITIONS TO 
IMPLEMENT FERC OR STATE ELECTRIC RE-
STRUCTURING POLICY FOR QUALIFIED ELEC-
TRIC UTILITIES. 
(a) IN GENERAL.—Paragraph (3) of section 451(i) 
is amended by striking ‘‘January 1, 2010’’ and inserting 
‘‘January 1, 2011’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to dispositions after December 31, 
2009. 
TITLE V—FOREIGN ACCOUNT 
TAX COMPLIANCE 
Subtitle A—Increased Disclosure of 
Beneficial Owners 
SEC. 501. REPORTING ON CERTAIN FOREIGN ACCOUNTS. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by inserting after chapter 3 the following 
new chapter: 
‘‘CHAPTER 4—TAXES TO ENFORCE RE-
PORTING ON CERTAIN FOREIGN AC-
COUNTS 
‘‘Sec. 1471. Withholdable payments to foreign financial institutions. 
‘‘Sec. 1472. Withholdable payments to other foreign entities. 
‘‘Sec. 1473. Definitions. 
‘‘Sec. 1474. Special rules. 
‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FI-
NANCIAL INSTITUTIONS. 
‘‘(a) IN GENERAL.—In the case of any withholdable 
payment to a foreign financial institution which does not 
meet the requirements of subsection (b), the withholding 
agent with respect to such payment shall deduct and with-
hold from such payment a tax equal to 30 percent of the 
amount of such payment. 
‘‘(b) REPORTING REQUIREMENTS, ETC.— 
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‘‘(1) IN GENERAL.—The requirements of this 
subsection are met with respect to any foreign finan-
cial institution if an agreement is in effect between 
such institution and the Secretary under which such 
institution agrees— 
‘‘(A) to obtain such information regarding 
each holder of each account maintained by such 
institution as is necessary to determine which 
(if any) of such accounts are United States ac-
counts, 
‘‘(B) to comply with such verification and 
due diligence procedures as the Secretary may 
require with respect to the identification of 
United States accounts, 
‘‘(C) in the case of any United States ac-
count maintained by such institution, to report 
on an annual basis the information described in 
subsection (c) with respect to such account, 
‘‘(D) to deduct and withhold a tax equal to 
30 percent of— 
‘‘(i) any passthru payment which is 
made by such institution to a recalcitrant 
account holder or another foreign financial 
institution which does not meet the re-
quirements of this subsection, and 
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‘‘(ii) in the case of any passthru pay-
ment which is made by such institution to 
a foreign financial institution which has in 
effect an election under paragraph (3) with 
respect to such payment, so much of such 
payment as is allocable to accounts held by 
recalcitrant account holders or foreign fi-
nancial institutions which do not meet the 
requirements of this subsection, 
‘‘(E) to comply with requests by the Sec-
retary for additional information with respect to 
any United States account maintained by such 
institution, and 
‘‘(F) in any case in which any foreign law 
would (but for a waiver described in clause (i)) 
prevent the reporting of any information re-
ferred to in this subsection or subsection (c) 
with respect to any United States account 
maintained by such institution— 
‘‘(i) to attempt to obtain a valid and 
effective waiver of such law from each 
holder of such account, and 
‘‘(ii) if a waiver described in clause (i) 
is not obtained from each such holder 
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within a reasonable period of time, to close 
such account. 
Any agreement entered into under this subsection 
may be terminated by the Secretary upon a deter-
mination by the Secretary that the foreign financial 
institution is out of compliance with such agreement. 
‘‘(2) FINANCIAL
INSTITUTIONS
DEEMED
TO 
MEET REQUIREMENTS IN CERTAIN CASES.—A for-
eign financial institution may be treated by the Sec-
retary as meeting the requirements of this sub-
section if— 
‘‘(A) such institution— 
‘‘(i) complies with such procedures as 
the Secretary may prescribe to ensure that 
such institution does not maintain United 
States accounts, and 
‘‘(ii) meets such other requirements as 
the Secretary may prescribe with respect 
to accounts of other foreign financial insti-
tutions maintained by such institution, or 
‘‘(B) such institution is a member of a 
class of institutions with respect to which the 
Secretary has determined that the application 
of this section is not necessary to carry out the 
purposes of this section. 
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‘‘(3) ELECTION TO BE WITHHELD UPON RATH-
ER
THAN
WITHHOLD
ON
PAYMENTS
TO
RECAL-
CITRANT
ACCOUNT
HOLDERS
AND
NONPARTICI-
PATING FOREIGN FINANCIAL INSTITUTIONS.—In the 
case of a foreign financial institution which meets 
the requirements of this subsection and such other 
requirements as the Secretary may provide and 
which elects the application of this paragraph— 
‘‘(A) the requirements of paragraph (1)(D) 
shall not apply, 
‘‘(B) the withholding tax imposed under 
subsection (a) shall apply with respect to any 
withholdable payment to such institution to the 
extent such payment is allocable to accounts 
held by recalcitrant account holders or foreign 
financial institutions which do not meet the re-
quirements of this subsection, and 
‘‘(C) the agreement described in paragraph 
(1) shall— 
‘‘(i) require such institution to notify 
the withholding agent with respect to each 
such payment of the institution’s election 
under this paragraph and such other infor-
mation as may be necessary for the with-
holding agent to determine the appropriate 
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amount to deduct and withhold from such 
payment, and 
‘‘(ii) include a waiver of any right 
under any treaty of the United States with 
respect to any amount deducted and with-
held pursuant to an election under this 
paragraph. 
To the extent provided by the Secretary, the election 
under this paragraph may be made with respect to 
certain classes or types of accounts of the foreign fi-
nancial institution. 
‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON 
UNITED STATES ACCOUNTS.— 
‘‘(1) IN GENERAL.—The agreement described in 
subsection (b) shall require the foreign financial in-
stitution to report the following with respect to each 
United States account maintained by such institu-
tion: 
‘‘(A) The name, address, and TIN of each 
account holder which is a specified United 
States person and, in the case of any account 
holder which is a United States owned foreign 
entity, the name, address, and TIN of each sub-
stantial United States owner of such entity. 
‘‘(B) The account number. 
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‘‘(C) The account balance or value (deter-
mined at such time and in such manner as the 
Secretary may provide). 
‘‘(D) The gross receipts and gross with-
drawals or payments from the account (deter-
mined for such period and in such manner as 
the Secretary may provide). 
‘‘(2) ELECTION TO BE SUBJECT TO SAME RE-
PORTING AS UNITED STATES FINANCIAL INSTITU-
TIONS.—In the case of a foreign financial institution 
which elects the application of this paragraph— 
‘‘(A) subparagraphs (C) and (D) of para-
graph (1) shall not apply, and 
‘‘(B) the agreement described in subsection 
(b) shall require such foreign financial institu-
tion to report such information with respect to 
each United States account maintained by such 
institution as such institution would be required 
to report under sections 6041, 6042, 6045, and 
6049 if— 
‘‘(i) such institution were a United 
States person, and 
‘‘(ii) each holder of such account 
which is a specified United States person 
or United States owned foreign entity were 
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a natural person and citizen of the United 
States. 
An election under this paragraph shall be made 
at such time, in such manner, and subject to 
such conditions as the Secretary may provide. 
‘‘(3) SEPARATE
REQUIREMENTS
FOR
QUALI-
FIED INTERMEDIARIES.—In the case of a foreign fi-
nancial institution which is treated as a qualified 
intermediary by the Secretary for purposes of sec-
tion 1441 and the regulations issued thereunder, the 
requirements of this section shall be in addition to 
any reporting or other requirements imposed by the 
Secretary for purposes of such treatment. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) UNITED STATES ACCOUNT.— 
‘‘(A) IN
GENERAL.—The term ‘United 
States account’ means any financial account 
which is held by one or more specified United 
States persons or United States owned foreign 
entities. 
‘‘(B) EXCEPTION FOR CERTAIN ACCOUNTS 
HELD BY INDIVIDUALS.—Unless the foreign fi-
nancial institution elects to not have this sub-
paragraph apply, such term shall not include 
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any depository account maintained by such fi-
nancial institution if— 
‘‘(i) each holder of such account is a 
natural person, and 
‘‘(ii) with respect to each holder of 
such account, the aggregate value of all de-
pository accounts held (in whole or in part) 
by such holder and maintained by the 
same financial institution which maintains 
such account does not exceed $50,000. 
To the extent provided by the Secretary, finan-
cial institutions which are members of the same 
expanded affiliated group shall be treated for 
purposes of clause (ii) as a single financial in-
stitution. 
‘‘(C) ELIMINATION
OF
DUPLICATIVE
RE-
PORTING REQUIREMENTS.—Such term shall not 
include any financial account in a foreign finan-
cial institution if— 
‘‘(i) such account is held by another 
financial institution which meets the re-
quirements of subsection (b), or 
‘‘(ii) the holder of such account is oth-
erwise subject to information reporting re-
quirements which the Secretary determines 
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would make the reporting required by this 
section with respect to United States ac-
counts duplicative. 
‘‘(2) FINANCIAL ACCOUNT.—The term ‘finan-
cial account’ means, with respect to any financial in-
stitution— 
‘‘(A) any depository account maintained by 
such financial institution, 
‘‘(B) any custodial account maintained by 
such financial institution, and 
‘‘(C) except as otherwise provided by the 
Secretary, any equity or debt interest in such 
financial institution (other than interests which 
are regularly traded on an established securities 
market). 
Any equity or debt interest which constitutes a fi-
nancial account under subparagraph (C) with re-
spect to any financial institution shall be treated for 
purposes of this section as maintained by such fi-
nancial institution. 
‘‘(3) UNITED STATES OWNED FOREIGN ENTI-
TY.—The term ‘United States owned foreign entity’ 
means any foreign entity which has one or more sub-
stantial United States owners. 
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‘‘(4) FOREIGN FINANCIAL INSTITUTION.—The 
term ‘foreign financial institution’ means any finan-
cial institution which is a foreign entity. Except as 
otherwise provided by the Secretary, such term shall 
not include a financial institution which is organized 
under the laws of any possession of the United 
States. 
‘‘(5) FINANCIAL INSTITUTION.—Except as oth-
erwise provided by the Secretary, the term ‘financial 
institution’ means any entity that— 
‘‘(A) accepts deposits in the ordinary 
course of a banking or similar business, 
‘‘(B) is engaged in the business of holding 
financial assets for the account of others, or 
‘‘(C) is engaged (or holding itself out as 
being engaged) primarily in the business of in-
vesting, reinvesting, or trading in securities (as 
defined in section 475(c)(2) without regard to 
the last sentence thereof), partnership interests, 
commodities (as defined in section 475(e)(2)), 
or any interest (including a futures or forward 
contract or option) in such securities, partner-
ship interests, or commodities. 
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‘‘(6) RECALCITRANT ACCOUNT HOLDER.—The 
term ‘recalcitrant account holder’ means any ac-
count holder which— 
‘‘(A) fails to comply with reasonable re-
quests for the information referred to in sub-
section (b)(1)(A) or (c)(1)(A), or 
‘‘(B) fails to provide a waiver described in 
subsection (b)(1)(F) upon request. 
‘‘(7) PASSTHRU PAYMENT.—The term ‘passthru 
payment’ means any withholdable payment or other 
payment which is attributable to a withholdable pay-
ment. 
‘‘(e) AFFILIATED GROUPS.— 
‘‘(1) IN GENERAL.—The requirements of sub-
sections (b) and (c)(1) shall apply— 
‘‘(A) with respect to United States ac-
counts maintained by the foreign financial insti-
tution, and 
‘‘(B) except as otherwise provided by the 
Secretary, with respect to United States ac-
counts maintained by each other foreign finan-
cial institution (other than any foreign financial 
institution which meets the requirements of 
subsection (b)) which is a member of the same 
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expanded affiliated group as such foreign finan-
cial institution. 
‘‘(2) EXPANDED AFFILIATED GROUP.—For pur-
poses of this section, the term ‘expanded affiliated 
group’ means an affiliated group as defined in sec-
tion 1504(a), determined— 
‘‘(A) by substituting ‘more than 50 per-
cent’ for ‘at least 80 percent’ each place it ap-
pears, and 
‘‘(B) without regard to paragraphs (2) and 
(3) of section 1504(b). 
A partnership or any other entity (other than a cor-
poration) shall be treated as a member of an ex-
panded affiliated group if such entity is controlled 
(within the meaning of section 954(d)(3)) by mem-
bers of such group (including any entity treated as 
a member of such group by reason of this sentence). 
‘‘(f) EXCEPTION
FOR CERTAIN PAYMENTS.—Sub-
section (a) shall not apply to any payment if the beneficial 
owner of such payment is— 
‘‘(1) any foreign government, any political sub-
division of a foreign government, or any wholly 
owned agency or instrumentality of any one or more 
of the foregoing, 
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‘‘(2) any international organization or any 
wholly owned agency or instrumentality thereof, 
‘‘(3) any foreign central bank of issue, or 
‘‘(4) any other class of persons identified by the 
Secretary for purposes of this subsection as posing 
a low risk of tax evasion. 
‘‘SEC. 1472. WITHHOLDABLE PAYMENTS TO OTHER FOR-
EIGN ENTITIES. 
‘‘(a) IN GENERAL.—In the case of any withholdable 
payment to a non-financial foreign entity, if— 
‘‘(1) the beneficial owner of such payment is 
such entity or any other non-financial foreign entity, 
and 
‘‘(2) the requirements of subsection (b) are not 
met with respect to such beneficial owner, 
then the withholding agent with respect to such payment 
shall deduct and withhold from such payment a tax equal 
to 30 percent of the amount of such payment. 
‘‘(b) REQUIREMENTS
FOR
WAIVER
OF
WITH-
HOLDING.—The requirements of this subsection are met 
with respect to the beneficial owner of a payment if— 
‘‘(1) such beneficial owner or the payee provides 
the withholding agent with either— 
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‘‘(A) a certification that such beneficial 
owner does not have any substantial United 
States owners, or 
‘‘(B) the name, address, and TIN of each 
substantial United States owner of such bene-
ficial owner, 
‘‘(2) the withholding agent does not know, or 
have reason to know, that any information provided 
under paragraph (1) is incorrect, and 
‘‘(3) the withholding agent reports the informa-
tion provided under paragraph (1)(B) to the Sec-
retary in such manner as the Secretary may provide. 
‘‘(c) EXCEPTIONS.—Subsection (a) shall not apply 
to— 
‘‘(1) except as otherwise provided by the Sec-
retary, any payment beneficially owned by— 
‘‘(A) any corporation the stock of which is 
regularly traded on an established securities 
market, 
‘‘(B) any corporation which is a member of 
the same expanded affiliated group (as defined 
in section 1471(e)(2) without regard to the last 
sentence thereof) as a corporation described in 
subparagraph (A), 
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‘‘(C) any entity which is organized under 
the laws of a possession of the United States 
and which is wholly owned by one or more bona 
fide residents (as defined in section 937(a)) of 
such possession, 
‘‘(D) any foreign government, any political 
subdivision of a foreign government, or any 
wholly owned agency or instrumentality of any 
one or more of the foregoing, 
‘‘(E) any international organization or any 
wholly owned agency or instrumentality thereof, 
‘‘(F) any foreign central bank of issue, or 
‘‘(G) any other class of persons identified 
by the Secretary for purposes of this subsection, 
and 
‘‘(2) any class of payments identified by the 
Secretary for purposes of this subsection as posing 
a low risk of tax evasion. 
‘‘(d) NON-FINANCIAL FOREIGN ENTITY.—For pur-
poses of this section, the term ‘non-financial foreign enti-
ty’ means any foreign entity which is not a financial insti-
tution (as defined in section 1471(d)(5)). 
‘‘SEC. 1473. DEFINITIONS. 
‘‘For purposes of this chapter— 
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‘‘(1) WITHHOLDABLE
PAYMENT.—Except as 
otherwise provided by the Secretary— 
‘‘(A) 
IN
GENERAL.—The 
term 
‘withholdable payment’ means— 
‘‘(i) any payment of interest (includ-
ing any original issue discount), dividends, 
rents, salaries, wages, premiums, annuities, 
compensations, 
remunerations, 
emolu-
ments, and other fixed or determinable an-
nual or periodical gains, profits, and in-
come, if such payment is from sources 
within the United States, and 
‘‘(ii) any gross proceeds from the sale 
or other disposition of any property of a 
type which can produce interest or divi-
dends from sources within the United 
States. 
‘‘(B) EXCEPTION FOR INCOME CONNECTED 
WITH UNITED STATES BUSINESS.—Such term 
shall not include any item of income which is 
taken into account under section 871(b)(1) or 
882(a)(1) for the taxable year. 
‘‘(C) SPECIAL RULE FOR SOURCING INTER-
EST PAID BY FOREIGN BRANCHES OF DOMESTIC 
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FINANCIAL
INSTITUTIONS.—Subparagraph (B) 
of section 861(a)(1) shall not apply. 
‘‘(2) SUBSTANTIAL UNITED STATES OWNER.— 
‘‘(A) IN GENERAL.—The term ‘substantial 
United States owner’ means— 
‘‘(i) with respect to any corporation, 
any specified United States person which 
owns, directly or indirectly, more than 10 
percent of the stock of such corporation 
(by vote or value), 
‘‘(ii) with respect to any partnership, 
any specified United States person which 
owns, directly or indirectly, more than 10 
percent of the profits interests or capital 
interests in such partnership, and 
‘‘(iii) in the case of a trust— 
‘‘(I) any specified United States 
person treated as an owner of any 
portion of such trust under subpart E 
of part I of subchapter J of chapter 
1, and 
‘‘(II) to the extent provided by 
the Secretary in regulations or other 
guidance, any specified United States 
person which holds, directly or indi-
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rectly, more than 10 percent of the 
beneficial interests of such trust. 
‘‘(B) SPECIAL RULE FOR INVESTMENT VE-
HICLES.—In the case of any financial institu-
tion described in section 1471(d)(5)(C), clauses 
(i), (ii), and (iii) of subparagraph (A) shall be 
applied by substituting ‘0 percent’ for ‘10 per-
cent’. 
‘‘(3) SPECIFIED UNITED STATES PERSON.—Ex-
cept as otherwise provided by the Secretary, the 
term ‘specified United States person’ means any 
United States person other than— 
‘‘(A) any corporation the stock of which is 
regularly traded on an established securities 
market, 
‘‘(B) any corporation which is a member of 
the same expanded affiliated group (as defined 
in section 1471(e)(2) without regard to the last 
sentence thereof) as a corporation the stock of 
which is regularly traded on an established se-
curities market, 
‘‘(C) any organization exempt from tax-
ation under section 501(a) or an individual re-
tirement plan, 
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‘‘(D) the United States or any wholly 
owned agency or instrumentality thereof, 
‘‘(E) any State, the District of Columbia, 
any possession of the United States, any polit-
ical subdivision of any of the foregoing, or any 
wholly owned agency or instrumentality of any 
one or more of the foregoing, 
‘‘(F) any bank (as defined in section 581), 
‘‘(G) any real estate investment trust (as 
defined in section 856), 
‘‘(H) any regulated investment company 
(as defined in section 851), 
‘‘(I) any common trust fund (as defined in 
section 584(a)), and 
‘‘(J) any trust which— 
‘‘(i) is exempt from tax under section 
664(c), or 
‘‘(ii) 
is 
described 
in 
section 
4947(a)(1). 
‘‘(4) WITHHOLDING AGENT.—The term ‘with-
holding agent’ means all persons, in whatever capac-
ity acting, having the control, receipt, custody, dis-
posal, or payment of any withholdable payment. 
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‘‘(5) FOREIGN ENTITY.—The term ‘foreign en-
tity’ means any entity which is not a United States 
person. 
‘‘SEC. 1474. SPECIAL RULES. 
‘‘(a) LIABILITY FOR WITHHELD TAX.—Every person 
required to deduct and withhold any tax under this chap-
ter is hereby made liable for such tax and is hereby indem-
nified against the claims and demands of any person for 
the amount of any payments made in accordance with the 
provisions of this chapter. 
‘‘(b) CREDITS AND REFUNDS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the determination of whether any tax de-
ducted and withheld under this chapter results in an 
overpayment by the beneficial owner of the payment 
to which such tax is attributable shall be made as 
if such tax had been deducted and withheld under 
subchapter A of chapter 3. 
‘‘(2) SPECIAL RULE WHERE FOREIGN FINAN-
CIAL INSTITUTION IS BENEFICIAL OWNER OF PAY-
MENT.— 
‘‘(A) IN GENERAL.—In the case of any tax 
properly deducted and withheld under section 
1471 from a specified financial institution pay-
ment— 
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‘‘(i) if the foreign financial institution 
referred to in subparagraph (B) with re-
spect to such payment is entitled to a re-
duced rate of tax with respect to such pay-
ment by reason of any treaty obligation of 
the United States— 
‘‘(I) the amount of any credit or 
refund with respect to such tax shall 
not exceed the amount of credit or re-
fund attributable to such reduction in 
rate, and 
‘‘(II) no interest shall be allowed 
or paid with respect to such credit or 
refund, and 
‘‘(ii) if such foreign financial institu-
tion is not so entitled, no credit or refund 
shall be allowed or paid with respect to 
such tax. 
‘‘(B) SPECIFIED FINANCIAL INSTITUTION 
PAYMENT.—The term ‘specified financial insti-
tution payment’ means any payment if the ben-
eficial owner of such payment is a foreign fi-
nancial institution. 
‘‘(3) REQUIREMENT TO IDENTIFY SUBSTANTIAL 
UNITED STATES OWNERS.—No credit or refund shall 
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be allowed or paid with respect to any tax properly 
deducted and withheld under this chapter unless the 
beneficial owner of the payment provides the Sec-
retary such information as the Secretary may re-
quire to determine whether such beneficial owner is 
a United States owned foreign entity (as defined in 
section 1471(d)(3)) and the identity of any substan-
tial United States owners of such entity. 
‘‘(c) CONFIDENTIALITY OF INFORMATION.— 
‘‘(1) IN GENERAL.—For purposes of this chap-
ter, rules similar to the rules of section 3406(f) shall 
apply. 
‘‘(2) DISCLOSURE OF LIST OF PARTICIPATING 
FOREIGN
FINANCIAL
INSTITUTIONS
PERMITTED.— 
The identity of a foreign financial institution which 
meets the requirements of section 1471(b) shall not 
be treated as return information for purposes of sec-
tion 6103. 
‘‘(d) COORDINATION WITH OTHER WITHHOLDING 
PROVISIONS.—The Secretary shall provide for the coordi-
nation of this chapter with other withholding provisions 
under this title, including providing for the proper cred-
iting of amounts deducted and withheld under this chapter 
against amounts required to be deducted and withheld 
under such other provisions. 
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‘‘(e) TREATMENT OF WITHHOLDING UNDER AGREE-
MENTS.—Any tax deducted and withheld pursuant to an 
agreement described in section 1471(b) shall be treated 
for purposes of this title as a tax deducted and withheld 
by a withholding agent under section 1471(a). 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this chapter.’’. 
(b) SPECIAL RULE
FOR INTEREST
ON OVERPAY-
MENTS.—Subsection (e) of section 6611 is amended by 
adding at the end the following new paragraph: 
‘‘(4) CERTAIN WITHHOLDING TAXES.—In the 
case of any overpayment resulting from tax deducted 
and withheld under chapter 3 or 4, paragraphs (1), 
(2), and (3) shall be applied by substituting ‘180 
days’ for ‘45 days’ each place it appears.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 6414 is amended by inserting ‘‘or 
4’’ after ‘‘chapter 3’’. 
(2) Paragraph (1) of section 6501(b) is amend-
ed by inserting ‘‘4,’’ after ‘‘chapter 3,’’. 
(3) Paragraph (2) of section 6501(b) is amend-
ed— 
(A) by inserting ‘‘4,’’ after ‘‘chapter 3,’’ in 
the text thereof, and 
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(B) by striking ‘‘TAXES AND TAX IMPOSED 
BY CHAPTER 3’’ in the heading thereof and in-
serting ‘‘AND WITHHOLDING TAXES’’. 
(4) Paragraph (3) of section 6513(b) is amend-
ed— 
(A) by inserting ‘‘or 4’’ after ‘‘chapter 3’’, 
and 
(B) by inserting ‘‘or 1474(b)’’ after ‘‘sec-
tion 1462’’. 
(5) Subsection (c) of section 6513 is amended 
by inserting ‘‘4,’’ after ‘‘chapter 3,’’. 
(6) Paragraph (1) of section 6724(d) is amend-
ed by inserting ‘‘under chapter 4 or’’ after ‘‘filed 
with the Secretary’’ in the last sentence thereof. 
(7) Paragraph (2) of section 6724(d) is amend-
ed by inserting ‘‘or 4’’ after ‘‘chapter 3’’. 
(8) The table of chapters of the Internal Rev-
enue Code of 1986 is amended by adding at the end 
the following new item: 
‘‘CHAPTER 4. TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN 
ACCOUNTS.’’. 
(d) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to payments made after De-
cember 31, 2012. 
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(2) GRANDFATHERED
TREATMENT
OF
OUT-
STANDING
OBLIGATIONS.—The amendments made 
by this section shall not require any amount to be 
deducted or withheld from any payment under any 
obligation outstanding on the date which is 2 years 
after the date of the enactment of this Act. 
(3) 
INTEREST
ON
OVERPAYMENTS.—The 
amendment made by subsection (b) shall apply— 
(A) in the case of such amendment’s appli-
cation to paragraph (1) of section 6611(e) of 
the Internal Revenue Code of 1986, to returns 
the due date for which (determined without re-
gard to extensions) is after the date of the en-
actment of this Act, 
(B) in the case of such amendment’s appli-
cation to paragraph (2) of such section, to 
claims for credit or refund of any overpayment 
filed after the date of the enactment of this Act 
(regardless of the taxable period to which such 
refund relates), and 
(C) in the case of such amendment’s appli-
cation to paragraph (3) of such section, to re-
funds paid after the date of the enactment of 
this Act (regardless of the taxable period to 
which such refund relates). 
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SEC. 502. REPEAL OF CERTAIN FOREIGN EXCEPTIONS TO 
REGISTERED BOND REQUIREMENTS. 
(a) REPEAL OF EXCEPTION TO DENIAL OF DEDUC-
TION FOR INTEREST ON NON-REGISTERED BONDS.— 
(1) IN
GENERAL.—Paragraph (2) of section 
163(f) is amended by striking subparagraph (B) and 
by redesignating subparagraph (C) as subparagraph 
(B). 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (A) of section 163(f)(2) 
is amended by inserting ‘‘or’’ at the end of 
clause (ii), by striking ‘‘, or’’ at the end of 
clause (iii) and inserting a period, and by strik-
ing clause (iv). 
(B) 
Subparagraph 
(B) 
of 
section 
163(f)(2), as redesignated by paragraph (1), is 
amended— 
(i) by striking ‘‘, and subparagraph 
(B),’’ in the matter preceding clause (i), 
and 
(ii) by amending clause (i) to read as 
follows: 
‘‘(i) such obligation is of a type which 
the Secretary has determined by regula-
tions to be used frequently in avoiding 
Federal taxes, and’’. 
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(C) Sections 165(j)(2)(A) and 1287(b)(1) 
are each amended by striking ‘‘except that 
clause (iv) of subparagraph (A), and subpara-
graph (B), of such section shall not apply’’. 
(b) REPEAL OF TREATMENT AS PORTFOLIO DEBT.— 
(1) IN
GENERAL.—Paragraph (2) of section 
871(h) is amended to read as follows: 
‘‘(2) PORTFOLIO INTEREST.—For purposes of 
this subsection, the term ‘portfolio interest’ means 
any interest (including original issue discount) 
which— 
‘‘(A) would be subject to tax under sub-
section (a) but for this subsection, and 
‘‘(B) is paid on an obligation— 
‘‘(i) which is in registered form, and 
‘‘(ii) with respect to which— 
‘‘(I) the United States person 
who would otherwise be required to 
deduct and withhold tax from such in-
terest under section 1441(a) receives 
a statement (which meets the require-
ments of paragraph (5)) that the ben-
eficial owner of the obligation is not a 
United States person, or 
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‘‘(II) the Secretary has deter-
mined that such a statement is not re-
quired in order to carry out the pur-
poses of this subsection.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 871(h)(3)(A) is amended by 
striking ‘‘subparagraph (A) or (B) of’’. 
(B) Paragraph (2) of section 881(c) is 
amended to read as follows: 
‘‘(2) PORTFOLIO INTEREST.—For purposes of 
this subsection, the term ‘portfolio interest’ means 
any interest (including original issue discount) 
which— 
‘‘(A) would be subject to tax under sub-
section (a) but for this subsection, and 
‘‘(B) is paid on an obligation— 
‘‘(i) which is in registered form, and 
‘‘(ii) with respect to which— 
‘‘(I) the person who would other-
wise be required to deduct and with-
hold tax from such interest under sec-
tion 1442(a) receives a statement 
which meets the requirements of sec-
tion 871(h)(5) that the beneficial 
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owner of the obligation is not a 
United States person, or 
‘‘(II) the Secretary has deter-
mined that such a statement is not re-
quired in order to carry out the pur-
poses of this subsection.’’. 
(c) 
DEMATERIALIZED
BOOK
ENTRY
SYSTEMS 
TREATED AS REGISTERED FORM.—Paragraph (3) of sec-
tion 163(f) is amended by inserting ‘‘, except that a dema-
terialized book entry system shall be treated as a book 
entry system described in such section’’ before the period 
at the end. 
(d) REPEAL OF EXCEPTION TO REQUIREMENT THAT 
TREASURY OBLIGATIONS BE IN REGISTERED FORM.— 
(1) IN
GENERAL.—Subsection (g) of section 
3121 of title 31, United States Code, is amended by 
striking paragraph (2) and by redesignating para-
graphs (3) and (4) as paragraphs (2) and (3), re-
spectively. 
(2) CONFORMING
AMENDMENTS.—Paragraph 
(1) of section 3121(g) of such title is amended— 
(A) by adding ‘‘or’’ at the end of subpara-
graph (A), 
(B) by striking ‘‘; or’’ at the end of sub-
paragraph (B) and inserting a period, and 
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(C) by striking subparagraph (C). 
(e) PRESERVATION OF EXCEPTION FOR EXCISE TAX 
PURPOSES.—Paragraph (1) of section 4701(b) is amend-
ed to read as follows: 
‘‘(1) REGISTRATION-REQUIRED OBLIGATION.— 
‘‘(A) IN
GENERAL.—The term ‘registra-
tion-required obligation’ has the same meaning 
as when used in section 163(f), except that 
such term shall not include any obligation 
which— 
‘‘(i) is required to be registered under 
section 149(a), or 
‘‘(ii) is described in subparagraph (B). 
‘‘(B) CERTAIN
OBLIGATIONS
NOT
IN-
CLUDED.—An obligation is described in this 
subparagraph if— 
‘‘(i) there are arrangements reason-
ably designed to ensure that such obliga-
tion will be sold (or resold in connection 
with the original issue) only to a person 
who is not a United States person, 
‘‘(ii) interest on such obligation is 
payable only outside the United States and 
its possessions, and 
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‘‘(iii) on the face of such obligation 
there is a statement that any United 
States person who holds such obligation 
will be subject to limitations under the 
United States income tax laws.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
which is 2 years after the date of the enactment of this 
Act. 
Subtitle B—Under Reporting With 
Respect to Foreign Assets 
SEC. 511. DISCLOSURE OF INFORMATION WITH RESPECT 
TO FOREIGN FINANCIAL ASSETS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter A of chapter 61 is amended by inserting after sec-
tion 6038C the following new section: 
‘‘SEC. 6038D. INFORMATION WITH RESPECT TO FOREIGN FI-
NANCIAL ASSETS. 
‘‘(a) IN GENERAL.—Any individual who, during any 
taxable year, holds any interest in a specified foreign fi-
nancial asset shall attach to such person’s return of tax 
imposed by subtitle A for such taxable year the informa-
tion described in subsection (c) with respect to each such 
asset if the aggregate value of all such assets exceeds 
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srobinson on DSKHWCL6B1PROD with BILLS
$50,000 (or such higher dollar amount as the Secretary 
may prescribe). 
‘‘(b) SPECIFIED FOREIGN FINANCIAL ASSETS.—For 
purposes of this section, the term ‘specified foreign finan-
cial asset’ means— 
‘‘(1) any financial account (as defined in section 
1471(d)(2)) maintained by a foreign financial insti-
tution (as defined in section 1471(d)(4)), and 
‘‘(2) any of the following assets which are not 
held in an account maintained by a financial institu-
tion (as defined in section 1471(d)(5))— 
‘‘(A) any stock or security issued by a per-
son other than a United States person, 
‘‘(B) any financial instrument or contract 
held for investment that has an issuer or 
counterparty which is other than a United 
States person, and 
‘‘(C) any interest in a foreign entity (as 
defined in section 1473). 
‘‘(c) REQUIRED INFORMATION.—The information de-
scribed in this subsection with respect to any asset is: 
‘‘(1) In the case of any account, the name and 
address of the financial institution in which such ac-
count is maintained and the number of such ac-
count. 
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‘‘(2) In the case of any stock or security, the 
name and address of the issuer and such informa-
tion as is necessary to identify the class or issue of 
which such stock or security is a part. 
‘‘(3) In the case of any other instrument, con-
tract, or interest— 
‘‘(A) such information as is necessary to 
identify such instrument, contract, or interest, 
and 
‘‘(B) the names and addresses of all 
issuers and counterparties with respect to such 
instrument, contract, or interest. 
‘‘(4) The maximum value of the asset during 
the taxable year. 
‘‘(d) PENALTY FOR FAILURE TO DISCLOSE.— 
‘‘(1) IN GENERAL.—If any individual fails to 
furnish the information described in subsection (c) 
with respect to any taxable year at the time and in 
the manner described in subsection (a), such person 
shall pay a penalty of $10,000. 
‘‘(2) INCREASE IN PENALTY WHERE FAILURE 
CONTINUES
AFTER
NOTIFICATION.—If any failure 
described in paragraph (1) continues for more than 
90 days after the day on which the Secretary mails 
notice of such failure to the individual, such indi-
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vidual shall pay a penalty (in addition to the pen-
alties under paragraph (1)) of $10,000 for each 30- 
day period (or fraction thereof) during which such 
failure continues after the expiration of such 90-day 
period. The penalty imposed under this paragraph 
with respect to any failure shall not exceed $50,000. 
‘‘(e) PRESUMPTION THAT VALUE
OF SPECIFIED 
FOREIGN
FINANCIAL
ASSETS
EXCEEDS
DOLLAR 
THRESHOLD.—If— 
‘‘(1) the Secretary determines that an indi-
vidual has an interest in one or more specified for-
eign financial assets, and 
‘‘(2) such individual does not provide sufficient 
information to demonstrate the aggregate value of 
such assets, 
then the aggregate value of such assets shall be treated 
as being in excess of $50,000 (or such higher dollar 
amount as the Secretary prescribes for purposes of sub-
section (a)) for purposes of assessing the penalties im-
posed under this section. 
‘‘(f) APPLICATION TO CERTAIN ENTITIES.—To the 
extent provided by the Secretary in regulations or other 
guidance, the provisions of this section shall apply to any 
domestic entity which is formed or availed of for purposes 
of holding, directly or indirectly, specified foreign financial 
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assets, in the same manner as if such entity were an indi-
vidual. 
‘‘(g) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed by this section on any failure which is 
shown to be due to reasonable cause and not due to willful 
neglect. The fact that a foreign jurisdiction would impose 
a civil or criminal penalty on the taxpayer (or any other 
person) for disclosing the required information is not rea-
sonable cause. 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this section, 
including regulations or other guidance which provide ap-
propriate exceptions from the application of this section 
in the case of— 
‘‘(1) classes of assets identified by the Sec-
retary, including any assets with respect to which 
the Secretary determines that disclosure under this 
section would be duplicative of other disclosures, 
‘‘(2) nonresident aliens, and 
‘‘(3) bona fide residents of any possession of 
the United States.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter A of chapter 61 
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srobinson on DSKHWCL6B1PROD with BILLS
is amended by inserting after the item relating to section 
6038C the following new item: 
‘‘Sec. 6038D. Information with respect to foreign financial assets.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 
512. 
PENALTIES 
FOR 
UNDERPAYMENTS 
ATTRIB-
UTABLE TO UNDISCLOSED FOREIGN FINAN-
CIAL ASSETS. 
(a) IN GENERAL.—Section 6662 is amended— 
(1) in subsection (b), by inserting after para-
graph (5) the following new paragraph: 
‘‘(6) Any undisclosed foreign financial asset un-
derstatement.’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(i) UNDISCLOSED FOREIGN FINANCIAL ASSET UN-
DERSTATEMENT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘undisclosed foreign financial asset 
understatement’ means, for any taxable year, the 
portion of the understatement for such taxable year 
which is attributable to any transaction involving an 
undisclosed foreign financial asset. 
‘‘(2) 
UNDISCLOSED
FOREIGN
FINANCIAL 
ASSET.—For purposes of this subsection, the term 
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‘undisclosed foreign financial asset’ means, with re-
spect to any taxable year, any asset with respect to 
which information was required to be provided under 
section 6038, 6038B, 6038D, 6046A, or 6048 for 
such taxable year but was not provided by the tax-
payer as required under the provisions of those sec-
tions. 
‘‘(3) INCREASE IN PENALTY FOR UNDISCLOSED 
FOREIGN FINANCIAL ASSET UNDERSTATEMENTS.— 
In the case of any portion of an underpayment 
which is attributable to any undisclosed foreign fi-
nancial asset understatement, subsection (a) shall be 
applied with respect to such portion by substituting 
‘40 percent’ for ‘20 percent’.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 513. MODIFICATION OF STATUTE OF LIMITATIONS 
FOR SIGNIFICANT OMISSION OF INCOME IN 
CONNECTION WITH FOREIGN ASSETS. 
(a) EXTENSION OF STATUTE OF LIMITATIONS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
6501(e) is amended by redesignating subparagraphs 
(A) and (B) as subparagraphs (B) and (C), respec-
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tively, and by inserting before subparagraph (B) (as 
so redesignated) the following new subparagraph: 
‘‘(A) GENERAL
RULE.—If the taxpayer 
omits from gross income an amount properly 
includible therein and— 
‘‘(i) such amount is in excess of 25 
percent of the amount of gross income 
stated in the return, or 
‘‘(ii) such amount— 
‘‘(I) is attributable to one or 
more assets with respect to which in-
formation is required to be reported 
under section 6038D (or would be so 
required if such section were applied 
without regard to the dollar threshold 
specified in subsection (a) thereof and 
without regard to any exceptions pro-
vided pursuant to subsection (h)(1) 
thereof), and 
‘‘(II) is in excess of $5,000, 
the tax may be assessed, or a proceeding in 
court for collection of such tax may be begun 
without assessment, at any time within 6 years 
after the return was filed.’’. 
(2) CONFORMING AMENDMENTS.— 
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srobinson on DSKHWCL6B1PROD with BILLS
(A) 
Subparagraph 
(B) 
of 
section 
6501(e)(1), as redesignated by paragraph (1), 
is amended by striking all that precedes clause 
(i) and inserting the following: 
‘‘(B) DETERMINATION
OF
GROSS
IN-
COME.—For purposes of subparagraph (A)—’’. 
(B) Paragraph (2) of section 6229(c) is 
amended by striking ‘‘which is in excess of 25 
percent of the amount of gross income stated in 
its return’’ and inserting ‘‘and such amount is 
described in clause (i) or (ii) of section 
6501(e)(1)(A)’’. 
(b) ADDITIONAL REPORTS SUBJECT TO EXTENDED 
PERIOD.—Paragraph (8) of section 6501(c) is amended— 
(1) by inserting ‘‘pursuant to an election under 
section 1295(b) or’’ before ‘‘under section 6038’’, 
(2) by inserting ‘‘1298(f),’’ before ‘‘6038’’, and 
(3) by inserting ‘‘6038D,’’ after ‘‘6038B,’’. 
(c) CLARIFICATIONS RELATED TO FAILURE TO DIS-
CLOSE FOREIGN TRANSFERS.—Paragraph (8) of section 
6501(c) is amended by striking ‘‘event’’ and inserting ‘‘tax 
return, event,’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
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(1) returns filed after the date of the enactment 
of this Act; and 
(2) returns filed on or before such date if the 
period specified in section 6501 of the Internal Rev-
enue Code of 1986 (determined without regard to 
such amendments) for assessment of such taxes has 
not expired as of such date. 
Subtitle C—Other Disclosure 
Provisions 
SEC. 521. REPORTING OF ACTIVITIES WITH RESPECT TO 
PASSIVE FOREIGN INVESTMENT COMPANIES. 
(a) IN GENERAL.—Section 1298 is amended by re-
designating subsection (f) as subsection (g) and by insert-
ing after subsection (e) the following new subsection: 
‘‘(f) REPORTING REQUIREMENT.—Except as other-
wise provided by the Secretary, each United States person 
who is a shareholder of a passive foreign investment com-
pany shall file an annual report containing such informa-
tion as the Secretary may require.’’. 
(b) CONFORMING AMENDMENT.—Subsection (e) of 
section 1291 is amended by striking ‘‘, (d), and (f)’’ and 
inserting ‘‘and (d)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section take effect on the date of the enactment of 
this Act. 
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SEC. 522. SECRETARY PERMITTED TO REQUIRE FINANCIAL 
INSTITUTIONS TO FILE CERTAIN RETURNS 
RELATED TO WITHHOLDING ON FOREIGN 
TRANSFERS ELECTRONICALLY. 
(a) IN GENERAL.—Subsection (e) of section 6011 is 
amended by adding at the end the following new para-
graph: 
‘‘(3) SPECIAL RULE FOR RETURNS FILED BY 
FINANCIAL INSTITUTIONS WITH RESPECT TO WITH-
HOLDING
ON
FOREIGN
TRANSFERS.—Paragraph 
(2)(A) shall not apply to any return filed by a finan-
cial institution (as defined in section 1471(d)(5)) 
with respect to tax for which such institution is 
made liable under section 1461 or 1474(a).’’. 
(b) CONFORMING AMENDMENT.—Subsection (c) of 
section 6724 is amended by inserting ‘‘or with respect to 
a return described in section 6011(e)(3)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns the due date for which 
(determined without regard to extensions) is after the date 
of the enactment of this Act. 
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Subtitle D—Provisions Related to 
Foreign Trusts 
SEC. 531. CLARIFICATIONS WITH RESPECT TO FOREIGN 
TRUSTS WHICH ARE TREATED AS HAVING A 
UNITED STATES BENEFICIARY. 
(a) IN GENERAL.—Paragraph (1) of section 679(c) 
is amended by adding at the end the following: 
‘‘For purposes of subparagraph (A), an amount 
shall be treated as accumulated for the benefit of a 
United States person even if the United States per-
son’s interest in the trust is contingent on a future 
event.’’. 
(b) CLARIFICATION REGARDING DISCRETION TO 
IDENTIFY BENEFICIARIES.—Subsection (c) of section 679 
is amended by adding at the end the following new para-
graph: 
‘‘(4) SPECIAL RULE IN CASE OF DISCRETION TO 
IDENTIFY BENEFICIARIES.—For purposes of para-
graph (1)(A), if any person has the discretion (by 
authority given in the trust agreement, by power of 
appointment, or otherwise) of making a distribution 
from the trust to, or for the benefit of, any person, 
such trust shall be treated as having a beneficiary 
who is a United States person unless— 
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‘‘(A) the terms of the trust specifically 
identify the class of persons to whom such dis-
tributions may be made, and 
‘‘(B) none of those persons are United 
States persons during the taxable year.’’. 
(c) CLARIFICATION THAT CERTAIN AGREEMENTS 
AND UNDERSTANDINGS ARE TERMS OF THE TRUST.— 
Subsection (c) of section 679, as amended by subsection 
(b), is amended by adding at the end the following new 
paragraph: 
‘‘(5) CERTAIN
AGREEMENTS
AND
UNDER-
STANDINGS TREATED AS TERMS OF THE TRUST.— 
For purposes of paragraph (1)(A), if any United 
States person who directly or indirectly transfers 
property to the trust is directly or indirectly involved 
in any agreement or understanding (whether writ-
ten, oral, or otherwise) that may result in the in-
come or corpus of the trust being paid or accumu-
lated to or for the benefit of a United States person, 
such agreement or understanding shall be treated as 
a term of the trust.’’. 
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SEC. 532. PRESUMPTION THAT FOREIGN TRUST HAS 
UNITED STATES BENEFICIARY. 
(a) IN GENERAL.—Section 679 is amended by redes-
ignating subsection (d) as subsection (e) and inserting 
after subsection (c) the following new subsection: 
‘‘(d) PRESUMPTION THAT FOREIGN TRUST HAS 
UNITED STATES BENEFICIARY.—If a United States per-
son directly or indirectly transfers property to a foreign 
trust 
(other 
than 
a 
trust 
described 
in 
section 
6048(a)(3)(B)(ii)), the Secretary may treat such trust as 
having a United States beneficiary for purposes of apply-
ing this section to such transfer unless such person— 
‘‘(1) submits such information to the Secretary 
as the Secretary may require with respect to such 
transfer, and 
‘‘(2) demonstrates to the satisfaction of the 
Secretary that such trust satisfies the requirements 
of subparagraphs (A) and (B) of subsection (c)(1).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers of property after the 
date of the enactment of this Act. 
SEC. 533. UNCOMPENSATED USE OF TRUST PROPERTY. 
(a) IN GENERAL.—Paragraph (1) of section 643(i) 
is amended— 
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(1) by striking ‘‘directly or indirectly to’’ and 
inserting ‘‘(or permits the use of any other trust 
property) directly or indirectly to or by’’, and 
(2) by inserting ‘‘(or the fair market value of 
the use of such property)’’ after ‘‘the amount of 
such loan’’. 
(b) EXCEPTION
FOR COMPENSATED USE.—Para-
graph (2) of section 643(i) is amended by adding at the 
end the following new subparagraph: 
‘‘(E) EXCEPTION FOR COMPENSATED USE 
OF PROPERTY.—In the case of the use of any 
trust property other than a loan of cash or 
marketable securities, paragraph (1) shall not 
apply to the extent that the trust is paid the 
fair market value of such use within a reason-
able period of time of such use.’’. 
(c) APPLICATION TO GRANTOR TRUSTS.—Subsection 
(c) of section 679, as amended by section 531, is amended 
by adding at the end the following new paragraph: 
‘‘(6) UNCOMPENSATED USE OF TRUST PROP-
ERTY TREATED AS A PAYMENT.—For purposes of 
this subsection, a loan of cash or marketable securi-
ties (or the use of any other trust property) directly 
or indirectly to or by any United States person 
(whether or not a beneficiary under the terms of the 
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trust) shall be treated as paid or accumulated for 
the benefit of a United States person. The preceding 
sentence shall not apply to the extent that the 
United States person repays the loan at a market 
rate of interest (or pays the fair market value of the 
use of such property) within a reasonable period of 
time.’’. 
(d) CONFORMING AMENDMENTS.—Paragraph (3) of 
section 643(i) is amended— 
(1) by inserting ‘‘(or use of property)’’ after ‘‘If 
any loan’’, 
(2) by inserting ‘‘or the return of such prop-
erty’’ before ‘‘shall be disregarded’’, and 
(3) by striking ‘‘REGARDING LOAN PRINCIPAL’’ 
in the heading thereof. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to loans made, and uses of prop-
erty, after the date of the enactment of this Act. 
SEC. 534. REPORTING REQUIREMENT OF UNITED STATES 
OWNERS OF FOREIGN TRUSTS. 
(a) IN GENERAL.—Paragraph (1) of section 6048(b) 
is amended by inserting ‘‘shall submit such information 
as the Secretary may prescribe with respect to such trust 
for such year and’’ before ‘‘shall be responsible to ensure’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 535. MINIMUM PENALTY WITH RESPECT TO FAILURE 
TO REPORT ON CERTAIN FOREIGN TRUSTS. 
(a) IN GENERAL.—Subsection (a) of section 6677 is 
amended— 
(1) by inserting ‘‘the greater of $10,000 or’’ be-
fore ‘‘35 percent’’, and 
(2) by striking the last sentence and inserting 
the following: ‘‘At such time as the gross reportable 
amount with respect to any failure can be deter-
mined by the Secretary, any subsequent penalty im-
posed under this subsection with respect to such fail-
ure shall be reduced as necessary to assure that the 
aggregate amount of such penalties do not exceed 
the gross reportable amount (and to the extent that 
such aggregate amount already exceeds the gross re-
portable amount the Secretary shall refund such ex-
cess to the taxpayer).’’ 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to notices and returns required to 
be filed after December 31, 2009. 
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Subtitle E—Substitute Dividends 
and Dividend Equivalent Pay-
ments Received by Foreign Per-
sons Treated as Dividends 
SEC. 541. SUBSTITUTE DIVIDENDS AND DIVIDEND EQUIVA-
LENT PAYMENTS RECEIVED BY FOREIGN 
PERSONS TREATED AS DIVIDENDS. 
(a) IN GENERAL.—Section 871 is amended by redes-
ignating subsection (l) as subsection (m) and by inserting 
after subsection (k) the following new subsection: 
‘‘(l) TREATMENT OF DIVIDEND EQUIVALENT PAY-
MENTS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, sections 881 and 4948(a), and chapters 3 and 
4, a dividend equivalent shall be treated as a divi-
dend from sources within the United States. 
‘‘(2) DIVIDEND EQUIVALENT.—For purposes of 
this subsection, the term ‘dividend equivalent’ 
means— 
‘‘(A) any substitute dividend, 
‘‘(B) any payment made pursuant to a 
specified notional principal contract that (di-
rectly or indirectly) is contingent upon, or de-
termined by reference to, the payment of a divi-
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dend from sources within the United States, 
and 
‘‘(C) any other payment determined by the 
Secretary to be substantially similar to a pay-
ment described in subparagraph (A) or (B). 
‘‘(3) SPECIFIED
NOTIONAL
PRINCIPAL
CON-
TRACT.—For purposes of this subsection, the term 
‘specified notional principal contract’ means— 
‘‘(A) any notional principal contract if— 
‘‘(i) in connection with entering into 
such contract, any long party transfers the 
underlying security, 
‘‘(ii) in connection with the termi-
nation of such contract, any short party 
transfers the underlying security to any 
long party, 
‘‘(iii) the underlying security is not 
readily tradable on an established securi-
ties market, 
‘‘(iv) in connection with entering into 
such contract, the underlying security is 
posted as collateral by any short party to 
the contract, or 
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‘‘(v) such contract is identified by the 
Secretary as a specified notional principal 
contract, 
‘‘(B) in the case of payments made after 
the date which is 2 years after the date of the 
enactment of this subsection, any notional prin-
cipal contract unless the Secretary determines 
that such contract is of a type which does not 
have the potential for tax avoidance. 
‘‘(4) DEFINITIONS.—For purposes of paragraph 
(3)(A)— 
‘‘(A) LONG PARTY.—The term ‘long party’ 
means, with respect to any underlying security 
of any notional principal contract, any party to 
the contract which is entitled to receive any 
payment pursuant to such contract which is 
contingent upon, or determined by reference to, 
the payment of a dividend from sources within 
the United States with respect to such under-
lying security. 
‘‘(B) SHORT
PARTY.—The term ‘short 
party’ means, with respect to any underlying se-
curity of any notional principal contract, any 
party to the contract which is not a long party 
with respect to such underlying security. 
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‘‘(C) UNDERLYING SECURITY.—The term 
‘underlying security’ means, with respect to any 
notional principal contract, the security with re-
spect to which the dividend referred to in para-
graph (2)(B) is paid. For purposes of this para-
graph, any index or fixed basket of securities 
shall be treated as a single security. 
‘‘(5) 
PAYMENTS
DETERMINED
ON
GROSS 
BASIS.—For purposes of this subsection, the term 
‘payment’ includes any gross amount which is used 
in computing any net amount which is transferred to 
or from the taxpayer. 
‘‘(6) PREVENTION OF OVER-WITHHOLDING.—In 
the case of any chain of dividend equivalents one or 
more of which is subject to tax under this section or 
section 881, the Secretary may reduce such tax, but 
only to the extent that the taxpayer can establish 
that such tax has been paid with respect to another 
dividend equivalent in such chain. For purposes of 
this paragraph, a dividend shall be treated as a divi-
dend equivalent. 
‘‘(7) COORDINATION
WITH
CHAPTERS
AND 
4.—For purposes of chapters 3 and 4, each person 
that is a party to any contract or other arrangement 
that provides for the payment of a dividend equiva-
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lent shall be treated as having control of such pay-
ment.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made on or after the 
date that is 90 days after the date of the enactment of 
this Act. 
TITLE VI—OTHER REVENUE 
PROVISIONS 
Subtitle A—Partnership Interests 
Held 
by 
Partners 
Providing 
Services 
SEC. 601. PARTNERSHIP INTERESTS TRANSFERRED IN 
CONNECTION WITH PERFORMANCE OF SERV-
ICES. 
(a) MODIFICATION TO ELECTION TO INCLUDE PART-
NERSHIP INTEREST
IN GROSS INCOME
IN YEAR
OF 
TRANSFER.—Subsection (c) of section 83 is amended by 
redesignating paragraph (4) as paragraph (5) and by in-
serting after paragraph (3) the following new paragraph: 
‘‘(4) PARTNERSHIP
INTERESTS.—Except as 
provided by the Secretary, in the case of any trans-
fer of an interest in a partnership in connection with 
the provision of services to (or for the benefit of) 
such partnership— 
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‘‘(A) the fair market value of such interest 
shall be treated for purposes of this section as 
being equal to the amount of the distribution 
which the partner would receive if the partner-
ship sold (at the time of the transfer) all of its 
assets at fair market value and distributed the 
proceeds of such sale (reduced by the liabilities 
of the partnership) to its partners in liquidation 
of the partnership, and 
‘‘(B) the person receiving such interest 
shall be treated as having made the election 
under subsection (b)(1) unless such person 
makes an election under this paragraph to have 
such subsection not apply.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (2) of 
section 83(b) is amended by inserting ‘‘or subsection 
(c)(4)(B)’’ after ‘‘paragraph (1)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to interests in partnerships trans-
ferred after the date of the enactment of this Act. 
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SEC. 602. INCOME OF PARTNERS FOR PERFORMING IN-
VESTMENT MANAGEMENT SERVICES TREAT-
ED AS ORDINARY INCOME RECEIVED FOR 
PERFORMANCE OF SERVICES. 
(a) IN GENERAL.—Part I of subchapter K of chapter 
1 is amended by adding at the end the following new sec-
tion: 
‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN-
VESTMENT 
MANAGEMENT 
SERVICES 
TO 
PARTNERSHIP. 
‘‘(a) TREATMENT
OF
DISTRIBUTIVE
SHARE
OF 
PARTNERSHIP ITEMS.—For purposes of this title, in the 
case of an investment services partnership interest— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
702(b)— 
‘‘(A) any net income with respect to such 
interest for any partnership taxable year shall 
be treated as ordinary income, and 
‘‘(B) any net loss with respect to such in-
terest for such year, to the extent not dis-
allowed under paragraph (2) for such year, 
shall be treated as an ordinary loss. 
All items of income, gain, deduction, and loss which 
are taken into account in computing net income or 
net loss shall be treated as ordinary income or ordi-
nary loss (as the case may be). 
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‘‘(2) TREATMENT OF LOSSES.— 
‘‘(A) LIMITATION.—Any net loss with re-
spect to such interest shall be allowed for any 
partnership taxable year only to the extent that 
such loss does not exceed the excess (if any) 
of— 
‘‘(i) the aggregate net income with re-
spect to such interest for all prior partner-
ship taxable years, over 
‘‘(ii) the aggregate net loss with re-
spect to such interest not disallowed under 
this subparagraph for all prior partnership 
taxable years. 
‘‘(B) CARRYFORWARD.—Any net loss for 
any partnership taxable year which is not al-
lowed by reason of subparagraph (A) shall be 
treated as an item of loss with respect to such 
partnership interest for the succeeding partner-
ship taxable year. 
‘‘(C) BASIS ADJUSTMENT.—No adjustment 
to the basis of a partnership interest shall be 
made on account of any net loss which is not 
allowed by reason of subparagraph (A). 
‘‘(D) PRIOR
PARTNERSHIP
YEARS.—Any 
reference in this paragraph to prior partnership 
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taxable years shall only include prior partner-
ship taxable years to which this section applies. 
‘‘(3) NET INCOME AND LOSS.—For purposes of 
this section— 
‘‘(A) NET
INCOME.—The term ‘net in-
come’ means, with respect to any investment 
services partnership interest for any partner-
ship taxable year, the excess (if any) of— 
‘‘(i) all items of income and gain 
taken into account by the holder of such 
interest under section 702 with respect to 
such interest for such year, over 
‘‘(ii) all items of deduction and loss so 
taken into account. 
‘‘(B) NET
LOSS.—The term ‘net loss’ 
means, with respect to such interest for such 
year, the excess (if any) of the amount de-
scribed in subparagraph (A)(ii) over the amount 
described in subparagraph (A)(i). 
‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— 
‘‘(1) GAIN.—Any gain on the disposition of an 
investment services partnership interest shall be 
treated as ordinary income and shall be recognized 
notwithstanding any other provision of this subtitle. 
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‘‘(2) LOSS.—Any loss on the disposition of an 
investment services partnership interest shall be 
treated as an ordinary loss to the extent of the ex-
cess (if any) of— 
‘‘(A) the aggregate net income with respect 
to such interest for all partnership taxable 
years, over 
‘‘(B) the aggregate net loss with respect to 
such interest allowed under subsection (a)(2) 
for all partnership taxable years. 
‘‘(3) DISPOSITION OF PORTION OF INTEREST.— 
In the case of any disposition of an investment serv-
ices partnership interest, the amount of net loss 
which otherwise would have (but for subsection 
(a)(2)(C)) applied to reduce the basis of such inter-
est shall be disregarded for purposes of this section 
for all succeeding partnership taxable years. 
‘‘(4) DISTRIBUTIONS OF PARTNERSHIP PROP-
ERTY.—In the case of any distribution of property 
by a partnership with respect to any investment 
services partnership interest held by a partner— 
‘‘(A) the excess (if any) of— 
‘‘(i) the fair market value of such 
property at the time of such distribution, 
over 
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‘‘(ii) the adjusted basis of such prop-
erty in the hands of the partnership, 
shall be taken into account as an increase in 
such partner’s distributive share of the taxable 
income of the partnership (except to the extent 
such excess is otherwise taken into account in 
determining the taxable income of the partner-
ship), 
‘‘(B) such property shall be treated for 
purposes of subpart B of part II as money dis-
tributed to such partner in an amount equal to 
such fair market value, and 
‘‘(C) the basis of such property in the 
hands of such partner shall be such fair market 
value. 
Subsection (b) of section 734 shall be applied with-
out regard to the preceding sentence. 
‘‘(5) APPLICATION OF SECTION 751.—In apply-
ing section 751(a), an investment services partner-
ship interest shall be treated as an inventory item. 
‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER-
EST.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘investment serv-
ices partnership interest’ means any interest in a 
partnership which is held (directly or indirectly) by 
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any person if it was reasonably expected (at the time 
that such person acquired such interest) that such 
person (or any person related to such person) would 
provide (directly or indirectly) a substantial quantity 
of any of the following services with respect to assets 
held (directly or indirectly) by the partnership: 
‘‘(A) Advising as to the advisability of in-
vesting in, purchasing, or selling any specified 
asset. 
‘‘(B) Managing, acquiring, or disposing of 
any specified asset. 
‘‘(C) Arranging financing with respect to 
acquiring specified assets. 
‘‘(D) Any activity in support of any service 
described in subparagraphs (A) through (C). 
For purposes of this paragraph, the term ‘specified 
asset’ means securities (as defined in section 
475(c)(2) without regard to the last sentence there-
of), real estate held for rental or investment, inter-
ests in partnerships, commodities (as defined in sec-
tion 475(e)(2)), or options or derivative contracts 
with respect to any of the foregoing. 
‘‘(2) EXCEPTION FOR CERTAIN CAPITAL INTER-
ESTS.— 
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‘‘(A) IN
GENERAL.—In the case of any 
portion of an investment services partnership 
interest which is a qualified capital interest, all 
items of income, gain, loss, and deduction which 
are allocated to such qualified capital interest 
shall not be taken into account under sub-
section (a) if— 
‘‘(i) allocations of items are made by 
the partnership to such qualified capital 
interest in the same manner as such allo-
cations are made to other qualified capital 
interests held by partners who do not pro-
vide any services described in paragraph 
(1) and who are not related to the partner 
holding the qualified capital interest, and 
‘‘(ii) the allocations made to such 
other interests are significant compared to 
the allocations made to such qualified cap-
ital interest. 
‘‘(B) SPECIAL RULE FOR NO OR INSIGNIFI-
CANT
ALLOCATIONS
TO
NONSERVICE
PRO-
VIDERS.—To the extent provided by the Sec-
retary in regulations or other guidance, in any 
case in which the requirements of subparagraph 
(A)(ii) are not satisfied, items of income, gain, 
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loss, and deduction shall not be taken into ac-
count under subsection (a) to the extent that 
such items are properly allocable under such 
regulations or other guidance to qualified cap-
ital interests. 
‘‘(C) SPECIAL RULE FOR DISPOSITIONS.— 
In the case of any investment services partner-
ship interest any portion of which is a qualified 
capital interest, subsection (b) shall not apply 
to so much of any gain or loss as bears the 
same proportion to the entire amount of such 
gain or loss as— 
‘‘(i) the distributive share of gain or 
loss that would have been allocable to the 
qualified capital interest under subpara-
graph (A) if the partnership sold all of its 
assets immediately before the disposition, 
bears to 
‘‘(ii) the distributive share of gain or 
loss that would have been so allocable to 
the investment services partnership inter-
est of which such qualified capital interest 
is a part. 
‘‘(D) QUALIFIED CAPITAL INTEREST.—For 
purposes of this paragraph, the term ‘qualified 
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capital interest’ means so much of a partner’s 
interest in the capital of the partnership as is 
attributable to— 
‘‘(i) the fair market value of any 
money or other property contributed to the 
partnership in exchange for such interest 
(determined without regard to section 
752(a)) , 
‘‘(ii) any amounts which have been in-
cluded in gross income under section 83 
with respect to the transfer of such inter-
est, and 
‘‘(iii) the excess (if any) of— 
‘‘(I) any items of income and 
gain taken into account under section 
702 with respect to such interest for 
taxable years to which this section ap-
plies, over 
‘‘(II) any items of deduction and 
loss so taken into account. 
The qualified capital interest shall be reduced 
by distributions from the partnership with re-
spect to such interest for taxable years to which 
this section applies and by the excess (if any) 
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of the amount described in clause (iii)(II) over 
the amount described in clause (iii)(I). 
‘‘(E) TREATMENT OF CERTAIN LOANS.— 
‘‘(i) 
PROCEEDS
OF
PARTNERSHIP 
LOANS NOT TREATED AS QUALIFIED CAP-
ITAL
INTEREST
OF
SERVICE
PROVIDING 
PARTNERS.—For purposes of this para-
graph, an investment services partnership 
interest shall not be treated as a qualified 
capital interest to the extent that such in-
terest is acquired in connection with the 
proceeds of any loan or other advance 
made or guaranteed, directly or indirectly, 
by any other partner or the partnership (or 
any person related to any such other part-
ner or the partnership). 
‘‘(ii) REDUCTION IN ALLOCATIONS TO 
QUALIFIED
CAPITAL
INTERESTS
FOR 
LOANS
FROM
NONSERVICE
PROVIDING 
PARTNERS
TO
THE
PARTNERSHIP.—For 
purposes of this paragraph, any loan or 
other advance to the partnership made or 
guaranteed, directly or indirectly, by a 
partner not providing services described in 
paragraph (1) to the partnership (or any 
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person related to such partner) shall be 
taken into account in determining the 
qualified capital interests of the partners 
in the partnership. 
‘‘(3) RELATED
PERSONS.—A person shall be 
treated as related to another person if the relation-
ship between such persons would result in a dis-
allowance of losses under section 267 or 707(b). 
‘‘(d) OTHER INCOME
AND GAIN
IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) a person performs (directly or indi-
rectly) investment management services for any 
entity, 
‘‘(B) such person holds (directly or indi-
rectly) a disqualified interest with respect to 
such entity, and 
‘‘(C) the value of such interest (or pay-
ments thereunder) is substantially related to 
the amount of income or gain (whether or not 
realized) from the assets with respect to which 
the investment management services are per-
formed, 
any income or gain with respect to such interest 
shall be treated as ordinary income. Rules similar to 
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the rules of subsection (c)(2) shall apply for pur-
poses of this subsection. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) DISQUALIFIED INTEREST.— 
‘‘(i) IN
GENERAL.—The term ‘dis-
qualified interest’ means, with respect to 
any entity— 
‘‘(I) any interest in such entity 
other than indebtedness, 
‘‘(II) convertible or contingent 
debt of such entity, 
‘‘(III) any option or other right 
to acquire property described in sub-
clause (I) or (II), and 
‘‘(IV) any derivative instrument 
entered into (directly or indirectly) 
with such entity or any investor in 
such entity. 
‘‘(ii) EXCEPTIONS.—Such term shall 
not include— 
‘‘(I) a partnership interest, 
‘‘(II) except as provided by the 
Secretary, any interest in a taxable 
corporation, and 
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‘‘(III) except as provided by the 
Secretary, stock in an S corporation. 
‘‘(B) TAXABLE CORPORATION.—The term 
‘taxable corporation’ means— 
‘‘(i) a domestic C corporation, or 
‘‘(ii) a foreign corporation substan-
tially all of the income of which is— 
‘‘(I) effectively connected with 
the conduct of a trade or business in 
the United States, or 
‘‘(II) subject to a comprehensive 
foreign income tax (as defined in sec-
tion 457A(d)(2)). 
‘‘(C) INVESTMENT
MANAGEMENT
SERV-
ICES.—The term ‘investment management serv-
ices’ means a substantial quantity of any of the 
services described in subsection (c)(1). 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as is necessary or ap-
propriate to carry out the purposes of this section, includ-
ing regulations or other guidance to— 
‘‘(1) provide modifications to the application of 
this section (including treating related persons as 
not related to one another) to the extent such modi-
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fication is consistent with the purposes of this sec-
tion, 
‘‘(2) prevent the avoidance of the purposes of 
this section, and 
‘‘(3) coordinate this section with the other pro-
visions of this title. 
‘‘(f) CROSS REFERENCE.—For 40 percent penalty on 
certain underpayments due to the avoidance of this sec-
tion, see section 6662.’’. 
(b) INCOME FROM INVESTMENT SERVICES PART-
NERSHIP INTERESTS NOT TREATED AS QUALIFYING IN-
COME
OF
PUBLICLY
TRADED
PARTNERSHIPS.—Sub-
section (d) of section 7704 is amended by adding at the 
end the following new paragraph: 
‘‘(6) INCOME
FROM
INVESTMENT
SERVICES 
PARTNERSHIP INTERESTS NOT QUALIFIED.— 
‘‘(A) IN GENERAL.—Items of income and 
gain shall not be treated as qualifying income 
if such items are treated as ordinary income by 
reason of the application of section 710 (relat-
ing to special rules for partners providing in-
vestment management services to partnership). 
‘‘(B) SPECIAL RULES FOR CERTAIN PART-
NERSHIPS.— 
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100 
‘‘(i) CERTAIN PARTNERSHIPS OWNED 
BY REAL ESTATE INVESTMENT TRUSTS.— 
Subparagraph (A) shall not apply in the 
case of a partnership which meets each of 
the following requirements: 
‘‘(I) Such partnership is treated 
as publicly traded under this section 
solely by reason of interests in such 
partnership being convertible into in-
terests in a real estate investment 
trust which is publicly traded. 
‘‘(II) 50 percent or more of the 
capital and profits interests of such 
partnership are owned, directly or in-
directly, at all times during the tax-
able year by such real estate invest-
ment trust (determined with the ap-
plication of section 267(c)). 
‘‘(III) Such partnership meets 
the requirements of paragraphs (2), 
(3), and (4) of section 856(c). 
‘‘(ii) CERTAIN
PARTNERSHIPS
OWN-
ING OTHER PUBLICLY TRADED PARTNER-
SHIPS.—Subparagraph (A) shall not apply 
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101 
in the case of a partnership which meets 
each of the following requirements: 
‘‘(I) Substantially all of the as-
sets of such partnership consist of in-
terests in one or more publicly traded 
partnerships (determined without re-
gard to subsection (b)(2)). 
‘‘(II) Substantially all of the in-
come of such partnership is ordinary 
income or section 1231 gain (as de-
fined in section 1231(a)(3)). 
‘‘(C) TRANSITIONAL RULE.—In the case of 
a partnership which is a publicly traded part-
nership on the date of the enactment of this 
paragraph, subparagraph (A) shall not apply to 
any taxable year of the partnership beginning 
before the date which is 10 years after the date 
of the enactment of this paragraph.’’. 
(c) IMPOSITION
OF
PENALTY
ON
UNDERPAY-
MENTS.— 
(1) IN
GENERAL.—Subsection (b) of section 
6662, as amended by section 512, is amended by in-
serting after paragraph (6) the following new para-
graph: 
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102 
‘‘(7) The application of subsection (d) of section 
710 or the regulations prescribed under section 
710(e) to prevent the avoidance of the purposes of 
section 710.’’. 
(2) AMOUNT OF PENALTY.— 
(A) 
IN
GENERAL.—Section 
6662, 
as 
amended by section 512, is amended by adding 
at the end the following new subsection: 
‘‘(j) INCREASE IN PENALTY IN CASE OF PROPERTY 
TRANSFERRED FOR INVESTMENT MANAGEMENT SERV-
ICES.—In the case of any portion of an underpayment to 
which this section applies by reason of subsection (b)(7), 
subsection (a) shall be applied with respect to such portion 
by substituting ‘40 percent’ for ‘20 percent’.’’. 
(B) CONFORMING
AMENDMENTS.—Sub-
paragraph (B) of section 6662A(e)(2) is 
amended— 
(i) by striking ‘‘section 6662(h)’’ and 
inserting ‘‘subsection (h) or (i) of section 
6662’’, and 
(ii) by striking ‘‘GROSS
VALUATION 
MISSTATEMENT PENALTY’’ in the heading 
and inserting ‘‘CERTAIN
INCREASED
UN-
DERPAYMENT PENALTIES’’. 
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103 
(3) SPECIAL RULES FOR APPLICATION OF REA-
SONABLE CAUSE EXCEPTION.—Subsection (c) of sec-
tion 6664 is amended— 
(A) by redesignating paragraphs (2) and 
(3) as paragraphs (3) and (4), respectively, 
(B) by striking ‘‘paragraph (2)’’ in para-
graph (4), as so redesignated, and inserting 
‘‘paragraph (3)’’, and 
(C) by inserting after paragraph (1) the 
following new paragraph: 
‘‘(2) SPECIAL RULE FOR UNDERPAYMENTS AT-
TRIBUTABLE TO INVESTMENT MANAGEMENT SERV-
ICES.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to any portion of an underpayment to 
which this section applies by reason of sub-
section (b)(7) unless— 
‘‘(i) the relevant facts affecting the 
tax treatment of the item are adequately 
disclosed, 
‘‘(ii) there is or was substantial au-
thority for such treatment, and 
‘‘(iii) the taxpayer reasonably believed 
that such treatment was more likely than 
not the proper treatment. 
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104 
‘‘(B) RULES
RELATING
TO
REASONABLE 
BELIEF.—Rules similar to the rules of sub-
section (d)(3) shall apply for purposes of sub-
paragraph (A)(iii).’’. 
(d) INCOME AND LOSS FROM INVESTMENT SERVICES 
PARTNERSHIP INTERESTS TAKEN INTO ACCOUNT IN DE-
TERMINING NET EARNINGS FROM SELF-EMPLOYMENT.— 
(1) 
INTERNAL
REVENUE
CODE.—Section 
1402(a) is amended by striking ‘‘and’’ at the end of 
paragraph (16), by striking the period at the end of 
paragraph (17) and inserting ‘‘; and’’, and by insert-
ing after paragraph (17) the following new para-
graph: 
‘‘(18) notwithstanding the preceding provisions 
of this subsection, in the case of any individual en-
gaged in the trade or business of providing services 
described in section 710(c)(1) with respect to any 
entity, any amount treated as ordinary income or or-
dinary loss of such individual under section 710 with 
respect to such entity shall be taken into account in 
determining the net earnings from self-employment 
of such individual.’’. 
(2) SOCIAL SECURITY ACT.—Section 211(a) of 
the Social Security Act is amended by inserting after 
paragraph (16) the following new paragraph: 
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105 
‘‘(17) Notwithstanding the preceding provisions 
of this subsection, in the case of any individual en-
gaged in the trade or business of providing services 
described in section 710(c)(1) of the Internal Rev-
enue Code of 1986 with respect to any entity, any 
amount treated as ordinary income or ordinary loss 
of such individual under section 710 of such Code 
with respect to such entity shall be taken into ac-
count in determining the net earnings from self-em-
ployment of such individual.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Subsection (d) of section 731 is amended by 
inserting ‘‘section 710(b)(4) (relating to distribu-
tions of partnership property),’’ after ‘‘to the extent 
otherwise provided by’’. 
(2) Section 741 is amended by inserting ‘‘or 
section 710 (relating to special rules for partners 
providing investment management services to part-
nership)’’ before the period at the end. 
(3) The table of sections for part I of sub-
chapter K of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Sec. 710. Special rules for partners providing investment management services 
to partnership.’’. 
(f) EFFECTIVE DATE.— 
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106 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years ending after 
December 31, 2009. 
(2) PARTNERSHIP TAXABLE YEARS WHICH IN-
CLUDE
EFFECTIVE
DATE.—In applying section 
710(a) of the Internal Revenue Code of 1986 (as 
added by this section) in the case of any partnership 
taxable year which includes December 31, 2009, the 
amount of the net income referred to in such section 
shall be treated as being the lesser of the net income 
for the entire partnership taxable year or the net in-
come determined by only taking into account items 
attributable to the portion of the partnership taxable 
year which is after such date. 
(3) DISPOSITIONS
OF
PARTNERSHIP
INTER-
ESTS.—Section 710(b) of the Internal Revenue Code 
of 1986 (as added by this section) shall apply to dis-
positions and distributions after December 31, 2009. 
(4) OTHER INCOME AND GAIN IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.—Sec-
tion 710(d) of such Code (as added by this section) 
shall take effect on January 1, 2010. 
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107 
(5) PUBLICLY
TRADED
PARTNERSHIPS.—The 
amendment made by subsection (b) shall apply to 
taxable years beginning after December 31, 2009. 
Subtitle B—Time for Payment of 
Corporate Estimated Taxes 
SEC. 611. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
The percentage under paragraph (1) of section 
202(b) of the Corporate Estimated Tax Shift Act of 2009 
in effect on the date of the enactment of this Act is in-
creased by 26.5 percentage points. 
Subtitle C—Tax Expenditure Study 
SEC. 621. FINDINGS. 
Congress finds the following: 
(1) Currently, the aggregate cost of Federal tax 
expenditures rivals, or even exceeds, the amount of 
total Federal discretionary spending. 
(2) Given the escalating public debt, a critical 
examination of this use of taxpayer dollars is essen-
tial. 
(3) Additionally, tax expenditures can com-
plicate the Internal Revenue Code of 1986 for tax-
payers and complicate tax administration for the In-
ternal Revenue Service. 
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108 
(4) To facilitate a better understanding of tax 
expenditures in the future, it is constructive for leg-
islation extending these provisions to include a study 
of such provisions.
SEC. 622. STUDY OF EXTENDED TAX EXPENDITURES. 
(a) IN GENERAL.—Not later than November 30, 
2010, the Chief of Staff of the Joint Committee on Tax-
ation, in consultation with the Comptroller General of the 
United States, shall submit to the Committee on Ways 
and Means of the House of Representatives and the Com-
mittee on Finance of the Senate a report on each tax ex-
penditure (as defined in section 3(3) of the Congressional 
Budget Impoundment Control Act of 1974 (2 U.S.C. 
622(3)) extended by this Act. 
(b) ROLLING SUBMISSION OF REPORTS.—The Chief 
of Staff of the Joint Committee on Taxation shall initially 
submit the reports for each such tax expenditure enacted 
in subtitle B of title I (relating to business tax relief) and 
title IV (relating to energy provisions) in order of the tax 
expenditure incurring the least aggregate cost to the 
greatest aggregate cost (determined by reference to the 
cost estimate of this Act by the Joint Committee on Tax-
ation). Thereafter, such reports may be submitted in such 
order as the Chief of Staff determines appropriate. 
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109 
(c) CONTENTS OF REPORT.—Such reports shall con-
tain the following: 
(1) An explanation of the tax expenditure and 
any relevant economic, social, or other context under 
which it was first enacted. 
(2) A description of the intended purpose of the 
tax expenditure. 
(3) An analysis of the overall success of the tax 
expenditure in achieving such purpose, and evidence 
supporting such analysis. 
(4) An analysis of the extent to which further 
extending the tax expenditure, or making it perma-
nent, would contribute to achieving such purpose. 
(5) A description of the direct and indirect 
beneficiaries of the tax expenditure, including identi-
fying any unintended beneficiaries. 
(6) An analysis of whether the tax expenditure 
is the most cost-effective method for achieving the 
purpose for which it was intended, and a description 
of any more cost-effective methods through which 
such purpose could be accomplished. 
(7) A description of any unintended effects of 
the tax expenditure that are useful in understanding 
the tax expenditure’s overall value. 
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110 
(8) An analysis of how the tax expenditure 
could be modified to better achieve its original pur-
pose. 
(9) A brief description of any interactions (ac-
tual or potential) with other tax expenditures or di-
rect spending programs in the same or related budg-
et function worthy of further study. 
(10) A description of any unavailable informa-
tion the staff of the Joint Committee on Taxation 
may need to complete a more thorough examination 
and analysis of the tax expenditure, and what must 
be done to make such information available. 
(d) MINIMUM ANALYSIS BY DEADLINE.—In the event 
the Chief of Staff of the Joint Committee on Taxation 
concludes it will not be feasible to complete all reports by 
the date specified in subsection (a), at a minimum, the 
reports for each tax expenditure enacted in subtitle B of 
title I (relating to business tax relief) and title IV (relating 
to energy provisions) shall be completed by such date. 
Æ 
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