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† HR 1 EAS 
the transferee a tax in an amount equal to the 
amount the transferee failed to withhold (plus interest 
under this title on such amount). 
‘‘(5) DEFINITIONS.—Any term used in this sub-
section which is also used under section 1445 shall 
have the same meaning as when used in such section. 
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry 
out the purposes of this subsection, including regula-
tions providing for exceptions from the provisions of 
this subsection.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to sales and exchanges on or after No-
vember 27, 2017. 
SEC. 13502. MODIFY DEFINITION OF SUBSTANTIAL BUILT-IN 
LOSS IN THE CASE OF TRANSFER OF PART-
NERSHIP INTEREST. 
(a) IN GENERAL.—Paragraph (1) of section 743(d) is 
to read as follows: 
‘‘(1) IN GENERAL.—For purposes of this section, 
a partnership has a substantial built-in loss with re-
spect to a transfer of an interest in the partnership 
if— 
‘‘(A) the partnership’s adjusted basis in the 
partnership property exceeds by more than
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† HR 1 EAS 
$250,000 the fair market value of such property, 
or 
‘‘(B) the transferee partner would be allo-
cated a loss of more than $250,000 if the part-
nership assets were sold for cash equal to their 
fair market value immediately after such trans-
fer.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to transfers of partnership interests after 
December 31, 2017. 
SEC. 13503. CHARITABLE CONTRIBUTIONS AND FOREIGN 
TAXES TAKEN INTO ACCOUNT IN DETER-
MINING 
LIMITATION 
ON 
ALLOWANCE 
OF 
PARTNER’S SHARE OF LOSS. 
(a) IN GENERAL.—Subsection (d) of section 704 is 
amended— 
(1) by striking ‘‘A partner’s distributive share’’ 
and inserting the following: 
‘‘(1) IN
GENERAL.—A partner’s distributive 
share’’, 
(2) by striking ‘‘Any excess of such loss’’ and in-
serting the following: 
‘‘(2) CARRYOVER.—Any excess of such loss’’, and 
(3) by adding at the end the following new para-
graph:
215 
† HR 1 EAS 
‘‘(3) SPECIAL RULES.— 
‘‘(A) IN
GENERAL.—In determining the 
amount of any loss under paragraph (1), there 
shall be taken into account the partner’s dis-
tributive share of amounts described in para-
graphs (4) and (6) of section 702(a). 
‘‘(B) EXCEPTION.—In the case of a chari-
table contribution of property whose fair market 
value exceeds its adjusted basis, subparagraph 
(A) shall not apply to the extent of the partner’s 
distributive share of such excess.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to partnership taxable years beginning 
after December 31, 2017. 
Subpart B—Insurance Reforms 
SEC. 13511. NET OPERATING LOSSES OF LIFE INSURANCE 
COMPANIES. 
(a) IN GENERAL.—Section 805(b) is amended by strik-
ing paragraph (4) and by redesignating paragraph (5) as 
paragraph (4). 
(b) CONFORMING AMENDMENTS.— 
(1) Part I of subchapter L of chapter 1 is 
amended by striking section 810 (and by striking the 
item relating to such section in the table of sections 
for such part).
216 
† HR 1 EAS 
(2)(A) Part III of subchapter L of chapter 1 is 
amended by striking section 844 (and by striking the 
item relating to such section in the table of sections 
for such part). 
(B) Section 831(b)(3) is amended by striking 
‘‘except as provided in section 844,’’ 
(3) Section 381 is amended by striking sub-
section (d). 
(4) Section 805(a)(4)(B)(ii) is amended to read 
as follows: 
‘‘(ii) the deduction allowed under sec-
tion 172,’’. 
(5) Section 805(a) is amended by striking para-
graph (5). 
(6) Section 805(b)(2)(A)(iv) is amended to read 
as follows: 
‘‘(iv) any net operating loss carryback 
to the taxable year under section 172, and’’. 
(7) Section 953(b)(1)(B) is amended to read as 
follows: 
‘‘(B) So much of section 805(a)(8) as relates 
to the deduction allowed under section 172.’’. 
(8) Section 1351(i)(3) is amended by striking 
‘‘or the operations loss deduction under section 810,’’.
217 
† HR 1 EAS 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to losses arising in taxable years begin-
ning after December 31, 2017. 
SEC. 13512. REPEAL OF SMALL LIFE INSURANCE COMPANY 
DEDUCTION. 
(a) IN GENERAL.—Part I of subchapter L of chapter 
1 is amended by striking section 806 (and by striking the 
item relating to such section in the table of sections for such 
part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 453B(e) is amended— 
(A) by striking ‘‘(as defined in section 
806(b)(3))’’ in paragraph (2)(B), and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) NONINSURANCE BUSINESS.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘noninsurance business’ 
means any activity which is not an insurance 
business. 
‘‘(B) CERTAIN ACTIVITIES TREATED AS IN-
SURANCE
BUSINESSES.—For purposes of sub-
paragraph (A), any activity which is not an in-
surance business shall be treated as an insurance 
business if—
218 
† HR 1 EAS 
‘‘(i) it is of a type traditionally car-
ried on by life insurance companies for in-
vestment purposes, but only if the carrying 
on of such activity (other than in the case 
of real estate) does not constitute the active 
conduct of a trade or business, or 
‘‘(ii) it involves the performance of ad-
ministrative services in connection with 
plans providing life insurance, pension, or 
accident and health benefits.’’. 
(2) Section 465(c)(7)(D)(v)(II) is amended by 
striking ‘‘section 806(b)(3)’’ and inserting ‘‘section 
453B(e)(3)’’. 
(3) Section 801(a)(2) is amended by striking 
subparagraph (C). 
(4) Section 804 is amended by striking 
‘‘means—’’ and all that follows and inserting ‘‘means 
the general deductions provided in section 805.’’. 
(5) Section 805(a)(4)(B), as amended by this 
Act, is amended by striking clause (i) and by redesig-
nating clauses (ii), (iii), and (iv) as clauses (i), (ii), 
and (iii), respectively. 
(6) Section 805(b)(2)(A), as amended by this 
Act, is amended by striking clause (iii) and by redes-
221 
† HR 1 EAS 
mined as of the close of such company’s last taxable year 
beginning before January 1, 2018) in an existing policy-
holders surplus account (as defined in section 815 of the 
Internal Revenue Code of 1986, as in effect before its re-
peal), the tax imposed by section 801 of such Code for the 
first 8 taxable years beginning after December 31, 2017, 
shall be the amount which would be imposed by such section 
for such year on the sum of— 
(1) life insurance company taxable income for 
such year (within the meaning of such section 801 but 
not less than zero), plus 
(2) 1⁄8 of such balance. 
SEC. 13515. MODIFICATION OF PRORATION RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) IN GENERAL.—Section 832(b)(5)(B) is amended— 
(1) by striking ‘‘15 percent’’ and inserting ‘‘the 
applicable percentage’’, and 
(2) by inserting at the end the following new sen-
tence: ‘‘For purposes of this subparagraph, the appli-
cable percentage is 5.25 percent divided by the highest 
rate in effect under section 11(b).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017.
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† HR 1 EAS 
SEC. 13516. REPEAL OF SPECIAL ESTIMATED TAX PAY-
MENTS. 
(a) IN GENERAL.—Part III of subchapter L of chapter 
1 is amended by striking section 847 (and by striking the 
item relating to such section in the table of sections for such 
part). 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13517. COMPUTATION OF LIFE INSURANCE TAX RE-
SERVES. 
(a) IN GENERAL.— 
(1) 
COMPUTATION
OF
RESERVES.—Section 
807(c) is amended to read as follows: 
‘‘(c) ITEMS TAKEN INTO ACCOUNT.—The items re-
ferred to in subsections (a) and (b) are as follows— 
‘‘(1) The life insurance reserves (as defined in 
section 816(b)). 
‘‘(2) The unearned premiums and unpaid losses 
included in total reserves under section 816(c)(2). 
‘‘(3) The amounts (discounted at the appropriate 
rate of interest) necessary to satisfy the obligations 
under insurance and annuity contracts, but only if 
such obligations do not involve (at the time with re-
spect to which the computation is made under this 
paragraph) life, accident, or health contingencies.
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† HR 1 EAS 
‘‘(4) 
Dividend 
accumulations, 
and 
other 
amounts, held at interest in connection with insur-
ance and annuity contracts. 
‘‘(5) Premiums received in advance, and liabil-
ities for premium deposit funds. 
‘‘(6) Reasonable special contingency reserves 
under contracts of group term life insurance or group 
accident and health insurance which are established 
and maintained for the provision of insurance on re-
tired lives, for premium stabilization, or a combina-
tion thereof. 
For purposes of paragraph (3), the appropriate rate of in-
terest is the highest rate or rates permitted to be used to 
discount the obligations by the National Association of In-
surance Commissioners as of the date the reserve is deter-
mined. In no case shall the amount determined under para-
graph (3) for any contract be less than the net surrender 
value of such contract. For purposes of paragraph (2) and 
section 805(a)(1), the amount of the unpaid losses (other 
than losses on life insurance contracts) shall be the amount 
of the discounted unpaid losses as defined in section 846.’’. 
(2) Section 807(d) is amended— 
(A) by striking paragraphs (1), (2), (4), 
and (5),
224 
† HR 1 EAS 
(B) by redesignating paragraph (6) as 
paragraph (4), 
(C) by inserting before paragraph (3) the 
following new paragraphs: 
‘‘(1) DETERMINATION OF RESERVE.— 
‘‘(A) IN
GENERAL.—For purposes of this 
part (other than section 816), the amount of the 
life insurance reserves for any contract (other 
than a contract to which subparagraph (B) ap-
plies) shall be the greater of— 
‘‘(i) the net surrender value of such 
contract, or 
‘‘(ii) 92.87 percent of the reserve deter-
mined under paragraph (2). 
‘‘(B) VARIABLE CONTRACTS.—For purposes 
of this part (other than section 816), the amount 
of the life insurance reserves for a variable con-
tract shall be equal to the sum of— 
‘‘(i) the greater of— 
‘‘(I) the net surrender value of 
such contract, or 
‘‘(II) the portion of the reserve 
that is separately accounted for under 
section 817, plus
225 
† HR 1 EAS 
‘‘(ii) 92.87 percent of the excess (if 
any) of the reserve determined under para-
graph (2) over the amount in clause (i). 
‘‘(C) STATUTORY CAP.—In no event shall 
the reserves determined under subparagraphs (A) 
or (B) for any contract as of any time exceed the 
amount which would be taken into account with 
respect to such contract as of such time in deter-
mining statutory reserves (as defined in para-
graph (4)). 
‘‘(2) AMOUNT OF RESERVE.—The amount of the 
reserve determined under this paragraph with respect 
to any contract shall be determined by using the tax 
reserve method applicable to such contract.’’, 
(D) by striking ‘‘(as of the date of 
issuance)’’ in paragraph (3)(A)(iv)(I) and in-
serting ‘‘(as of the date the reserve is deter-
mined)’’, 
(E) by striking ‘‘as of the date of the 
issuance of’’ in paragraph (3)(A)(iv)(II) and in-
serting ‘‘as of the date the reserve is determined 
for’’, 
(F) by striking ‘‘in effect on the date of the 
issuance of the contract’’ in paragraph (3)(B)(i) 
and inserting ‘‘applicable to the contract and in
226 
† HR 1 EAS 
effect as of the date the reserve is determined’’, 
and 
(G) by striking ‘‘in effect on the date of the 
issuance of the contract’’ in paragraph (3)(B)(ii) 
and inserting ‘‘applicable to the contract and in 
effect as of the date the reserve is determined’’. 
(3) Section 807(e) is amended— 
(A) by striking paragraphs (2) and (5), 
(B) by redesignating paragraphs (3), (4), 
(6), and (7) as paragraphs (2), (3), (4), and (5), 
respectively, 
(C) by amending paragraph (2) (as so re-
designated) to read as follows: 
‘‘(2) QUALIFIED SUPPLEMENTAL BENEFITS.— 
‘‘(A) QUALIFIED SUPPLEMENTAL BENEFITS 
TREATED
SEPARATELY.—For purposes of this 
part, the amount of the life insurance reserve for 
any qualified supplemental benefit shall be com-
puted separately as though such benefit were 
under a separate contract. 
‘‘(B) 
QUALIFIED
SUPPLEMENTAL
BEN-
EFIT.—For purposes of this paragraph, the term 
‘qualified supplemental benefit’ means any sup-
plemental benefit described in subparagraph (C) 
if—
227 
† HR 1 EAS 
‘‘(i) there is a separately identified 
premium or charge for such benefit, and 
‘‘(ii) any net surrender value under the 
contract attributable to any other benefit is 
not available to fund such benefit. 
‘‘(C) SUPPLEMENTAL BENEFITS.—For pur-
poses of this paragraph, the supplemental bene-
fits described in this subparagraph are any— 
‘‘(i) guaranteed insurability, 
‘‘(ii) accidental death or disability 
benefit, 
‘‘(iii) convertibility, 
‘‘(iv) disability waiver benefit, or 
‘‘(v) other benefit prescribed by regula-
tions, 
which is supplemental to a contract for which 
there is a reserve described in subsection (c).’’, 
and 
(D) by adding at the end the following new 
paragraph: 
‘‘(6) REPORTING
RULES.—The Secretary shall 
require reporting (at such time and in such manner 
as the Secretary shall prescribe) with respect to the 
opening balance and closing balance of reserves and
228 
† HR 1 EAS 
with respect to the method of computing reserves for 
purposes of determining income.’’. 
(4) Section 7702 is amended— 
(A) by striking clause (i) of subsection 
(c)(3)(B) and inserting the following: 
‘‘(i) 
reasonable 
mortality 
charges 
which meet the requirements prescribed in 
regulations to be promulgated by the Sec-
retary or that do not exceed the mortality 
charges specified in the prevailing commis-
sioners’ standard tables as defined in sub-
section (f)(10),’’ and 
(B) by adding at the end of subsection (f) 
the following new paragraph: 
‘‘(10) PREVAILING
COMMISSIONERS’ STANDARD 
TABLES.—For purposes of subsection (c)(3)(B)(i), the 
term ‘prevailing commissioners’ standard tables’ 
means the most recent commissioners’ standard tables 
prescribed by the National Association of Insurance 
Commissioners which are permitted to be used in 
computing reserves for that type of contract under the 
insurance laws of at least 26 States when the contract 
was issued. If the prevailing commissioners’ standard 
tables as of the beginning of any calendar year (here-
inafter in this paragraph referred to as the ‘year of
229 
† HR 1 EAS 
change’) are different from the prevailing commis-
sioners’ standard tables as of the beginning of the pre-
ceding calendar year, the issuer may use the pre-
vailing commissioners’ standard tables as of the be-
ginning of the preceding calendar year with respect to 
any contract issued after the change and before the 
close of the 3-year period beginning on the first day 
of the year of change.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 808 is amended by adding at the end 
the following new subsection: 
‘‘(g) PREVAILING STATE ASSUMED INTEREST RATE.— 
For purposes of this subchapter— 
‘‘(1) IN GENERAL.—The term ‘prevailing State 
assumed interest rate’ means, with respect to any con-
tract, the highest assumed interest rate permitted to 
be used in computing life insurance reserves for in-
surance contracts or annuity contracts (as the case 
may be) under the insurance laws of at least 26 
States. For purposes of the preceding sentence, the ef-
fect of nonforfeiture laws of a State on interest rates 
for reserves shall not be taken into account. 
‘‘(2) WHEN RATE DETERMINED.—The prevailing 
State assumed interest rate with respect to any con-
230 
† HR 1 EAS 
tract shall be determined as of the beginning of the 
calendar year in which the contract was issued.’’. 
(2) Paragraph (1) of section 811(d) is amended 
by striking ‘‘the greater of the prevailing State as-
sumed interest rate or applicable Federal interest rate 
in effect under section 807’’ and inserting ‘‘the inter-
est rate in effect under section 808(g)’’. 
(3) Subparagraph (A) of section 846(f)(6) is 
amended by striking ‘‘except that’’ and all that fol-
lows and inserting ‘‘except that the limitation of sub-
section (a)(3) shall apply, and’’. 
(4) Subparagraph (B) of section 954(i)(5) is 
amended by striking ‘‘shall apply, and’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) TRANSITION
RULE.—For the first taxable 
year beginning after December 31, 2017, the reserve 
with respect to any contract (as determined under 
section 807(d)(2) of the Internal Revenue Code of 
1986) at the end of the preceding taxable year shall 
be determined as if the amendments made by this sec-
tion had applied to such reserve in such preceding 
taxable year.
231 
† HR 1 EAS 
(3) TRANSITION RELIEF.— 
(A) IN GENERAL.—If— 
(i) the reserve determined under section 
807(d)(2) of the Internal Revenue Code of 
1986 (determined without regard to the 
amendments made by this section) with re-
spect to any contract as of the close of the 
year preceding the first taxable year begin-
ning after December 31, 2017, differs from 
(ii) the reserve which would have been 
determined with respect to such contract as 
of the close of such taxable year under such 
section determined without regard to para-
graph (2), 
then the difference between the amount of the re-
serve described in clause (i) and the amount of 
the reserve described in clause (ii) shall be taken 
into account under the method provided in sub-
paragraph (B). 
(B) METHOD.—The method provided in this 
subparagraph is as follows: 
(i) If the amount determined under 
subparagraph (A)(i) exceeds the amount de-
termined under subparagraph (A)(ii), 1/8 of 
such excess shall be taken into account, for
233 
† HR 1 EAS 
to any taxable year beginning after December 31, 2017, 30 
percent.’’. 
(b) CONFORMING AMENDMENT.—Section 817A(e)(2) is 
amended by striking ‘‘, 807(d)(2)(B), and 812’’ and insert-
ing ‘‘and 807(d)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13519. CAPITALIZATION OF CERTAIN POLICY ACQUISI-
TION EXPENSES. 
(a) IN GENERAL.— 
(1) Section 848(a)(2) is amended by striking 
‘‘120-month’’ and inserting ‘‘180-month’’. 
(2) Section 848(c)(1) is amended by striking 
‘‘1.75 percent’’ and inserting ‘‘2.1 percent’’. 
(3) Section 848(c)(2) is amended by striking 
‘‘2.05 percent’’ and inserting ‘‘2.46 percent’’. 
(4) Section 848(c)(3) is amended by striking 
‘‘7.7 percent’’ and inserting ‘‘9.24 percent’’. 
(b) CONFORMING AMENDMENTS.—Section 848(b)(1) is 
amended by striking ‘‘120-month’’ and inserting ‘‘180- 
month’’. 
(c) EFFECTIVE DATE.—
234 
† HR 1 EAS 
(1) IN
GENERAL.—The amendments made by 
this section shall apply to net premiums for taxable 
years beginning after December 31, 2017. 
(2) TRANSITION RULE.—Specified policy acqui-
sition expenses first required to be capitalized in a 
taxable year beginning before January 1, 2018, will 
continue to be allowed as a deduction ratably over the 
120-month period beginning with the first month in 
the second half of such taxable year. 
SEC. 13520. TAX REPORTING FOR LIFE SETTLEMENT TRANS-
ACTIONS. 
(a) IN GENERAL.—Subpart B of part III of subchapter 
A of chapter 61, as amended by section 13306, is amended 
by adding at the end the following new section: 
‘‘SEC. 6050Y. RETURNS RELATING TO CERTAIN LIFE INSUR-
ANCE CONTRACT TRANSACTIONS. 
‘‘(a) REQUIREMENT OF REPORTING OF CERTAIN PAY-
MENTS.— 
‘‘(1) IN GENERAL.—Every person who acquires a 
life insurance contract or any interest in a life insur-
ance contract in a reportable policy sale during any 
taxable year shall make a return for such taxable year 
(at such time and in such manner as the Secretary 
shall prescribe) setting forth—
235 
† HR 1 EAS 
‘‘(A) the name, address, and TIN of such 
person, 
‘‘(B) the name, address, and TIN of each re-
cipient of payment in the reportable policy sale, 
‘‘(C) the date of such sale, 
‘‘(D) the name of the issuer of the life insur-
ance contract sold and the policy number of such 
contract, and 
‘‘(E) the amount of each payment. 
‘‘(2) STATEMENT TO BE FURNISHED TO PERSONS 
WITH
RESPECT
TO
WHOM
INFORMATION
IS
RE-
QUIRED.—Every person required to make a return 
under this subsection shall furnish to each person 
whose name is required to be set forth in such return 
a written statement showing— 
‘‘(A) the name, address, and phone number 
of the information contact of the person required 
to make such return, and 
‘‘(B) the information required to be shown 
on such return with respect to such person, ex-
cept that in the case of an issuer of a life insur-
ance contract, such statement is not required to 
include the information specified in paragraph 
(1)(E).
236 
† HR 1 EAS 
‘‘(b) REQUIREMENT
OF REPORTING
OF SELLER’S 
BASIS IN LIFE INSURANCE CONTRACTS.— 
‘‘(1) IN GENERAL.—Upon receipt of the state-
ment required under subsection (a)(2) or upon notice 
of a transfer of a life insurance contract to a foreign 
person, each issuer of a life insurance contract shall 
make a return (at such time and in such manner as 
the Secretary shall prescribe) setting forth— 
‘‘(A) the name, address, and TIN of the sell-
er who transfers any interest in such contract in 
such sale, 
‘‘(B) the investment in the contract (as de-
fined in section 72(e)(6)) with respect to such 
seller, and 
‘‘(C) the policy number of such contract. 
‘‘(2) STATEMENT TO BE FURNISHED TO PERSONS 
WITH
RESPECT
TO
WHOM
INFORMATION
IS
RE-
QUIRED.—Every person required to make a return 
under this subsection shall furnish to each person 
whose name is required to be set forth in such return 
a written statement showing— 
‘‘(A) the name, address, and phone number 
of the information contact of the person required 
to make such return, and
237 
† HR 1 EAS 
‘‘(B) the information required to be shown 
on such return with respect to each seller whose 
name is required to be set forth in such return. 
‘‘(c) REQUIREMENT OF REPORTING WITH RESPECT TO 
REPORTABLE DEATH BENEFITS.— 
‘‘(1) IN GENERAL.—Every person who makes a 
payment of reportable death benefits during any tax-
able year shall make a return for such taxable year 
(at such time and in such manner as the Secretary 
shall prescribe) setting forth— 
‘‘(A) the name, address, and TIN of the per-
son making such payment, 
‘‘(B) the name, address, and TIN of each re-
cipient of such payment, 
‘‘(C) the date of each such payment, 
‘‘(D) the gross amount of each such pay-
ment, and 
‘‘(E) such person’s estimate of the invest-
ment in the contract (as defined in section 
72(e)(6)) with respect to the buyer. 
‘‘(2) STATEMENT TO BE FURNISHED TO PERSONS 
WITH
RESPECT
TO
WHOM
INFORMATION
IS
RE-
QUIRED.—Every person required to make a return 
under this subsection shall furnish to each person
238 
† HR 1 EAS 
whose name is required to be set forth in such return 
a written statement showing— 
‘‘(A) the name, address, and phone number 
of the information contact of the person required 
to make such return, and 
‘‘(B) the information required to be shown 
on such return with respect to each recipient of 
payment whose name is required to be set forth 
in such return. 
‘‘(d) DEFINITIONS.—For purposes of this section: 
‘‘(1) PAYMENT.—The term ‘payment’ means, 
with respect to any reportable policy sale, the amount 
of cash and the fair market value of any consider-
ation transferred in the sale. 
‘‘(2) REPORTABLE POLICY SALE.—The term ‘re-
portable policy sale’ has the meaning given such term 
in section 101(a)(3)(B). 
‘‘(3) ISSUER.—The term ‘issuer’ means any life 
insurance company that bears the risk with respect to 
a life insurance contract on the date any return or 
statement is required to be made under this section. 
‘‘(4) REPORTABLE DEATH BENEFITS.—The term 
‘reportable death benefits’ means amounts paid by 
reason of the death of the insured under a life insur-
239 
† HR 1 EAS 
ance contract that has been transferred in a report-
able policy sale.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
subpart B of part III of subchapter A of chapter 61, as 
amended by section 13306, is amended by inserting after 
the item relating to section 6050X the following new item: 
‘‘Sec. 6050Y. Returns relating to certain life insurance contract transactions.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Subsection (d) of section 6724 is amended— 
(A) by striking ‘‘or’’ at the end of clause 
(xxiv) of paragraph (1)(B), by striking ‘‘and’’ at 
the end of clause (xxv) of such paragraph and 
inserting ‘‘or’’, and by inserting after such clause 
(xxv) the following new clause: 
‘‘(xxvi) section 6050Y (relating to re-
turns relating to certain life insurance con-
tract transactions), and’’, and 
(B) by striking ‘‘or’’ at the end of subpara-
graph (HH) of paragraph (2), by striking the 
period at the end of subparagraph (II) of such 
paragraph and inserting ‘‘, or’’, and by insert-
ing after such subparagraph (II) the following 
new subparagraph: 
‘‘(JJ) subsection (a)(2), (b)(2), or (c)(2) of 
section 6050Y (relating to returns relating to 
certain life insurance contract transactions).’’.
240 
† HR 1 EAS 
(2) Section 6047 is amended— 
(A) by redesignating subsection (g) as sub-
section (h), 
(B) by inserting after subsection (f) the fol-
lowing new subsection: 
‘‘(g) INFORMATION RELATING
TO LIFE INSURANCE 
CONTRACT TRANSACTIONS.—This section shall not apply to 
any information which is required to be reported under sec-
tion 6050Y.’’, and 
(C) by adding at the end of subsection (h), 
as so redesignated, the following new paragraph: 
‘‘(4) For provisions requiring reporting of infor-
mation relating to certain life insurance contract 
transactions, see section 6050Y.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to— 
(1) reportable policy sales (as defined in section 
6050Y(d)(2) of the Internal Revenue Code of 1986 (as 
added by subsection (a)) after December 31, 2017, 
and 
(2) reportable death benefits (as defined in sec-
tion 6050Y(d)(4) of such Code (as added by subsection 
(a)) paid after December 31, 2017.
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SEC. 13521. CLARIFICATION OF TAX BASIS OF LIFE INSUR-
ANCE CONTRACTS. 
(a) CLARIFICATION
WITH
RESPECT
TO
ADJUST-
MENTS.—Paragraph (1) of section 1016(a) is amended by 
striking subparagraph (A) and all that follows and insert-
ing the following: 
‘‘(A) for— 
‘‘(i) taxes or other carrying charges de-
scribed in section 266; or 
‘‘(ii) expenditures described in section 
173 (relating to circulation expenditures), 
for which deductions have been taken by the tax-
payer in determining taxable income for the tax-
able year or prior taxable years; or 
‘‘(B) for mortality, expense, or other reason-
able charges incurred under an annuity or life 
insurance contract;’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to transactions entered into after August 
25, 2009. 
SEC. 13522. EXCEPTION TO TRANSFER FOR VALUABLE CON-
SIDERATION RULES. 
(a) IN GENERAL.—Subsection (a) of section 101 is 
amended by inserting after paragraph (2) the following new 
paragraph:
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† HR 1 EAS 
‘‘(3) EXCEPTION TO VALUABLE CONSIDERATION 
RULES FOR COMMERCIAL TRANSFERS.— 
‘‘(A) IN GENERAL.—The second sentence of 
paragraph (2) shall not apply in the case of a 
transfer of a life insurance contract, or any in-
terest therein, which is a reportable policy sale. 
‘‘(B) REPORTABLE POLICY SALE.—For pur-
poses of this paragraph, the term ‘reportable pol-
icy sale’ means the acquisition of an interest in 
a life insurance contract, directly or indirectly, 
if the acquirer has no substantial family, busi-
ness, or financial relationship with the insured 
apart from the acquirer’s interest in such life in-
surance contract. For purposes of the preceding 
sentence, the term ‘indirectly’ applies to the ac-
quisition of an interest in a partnership, trust, 
or other entity that holds an interest in the life 
insurance contract.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (1) of sec-
tion 101(a) is amended by striking ‘‘paragraph (2)’’ and 
inserting ‘‘paragraphs (2) and (3)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to transfers after December 31, 2017.
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† HR 1 EAS 
Subpart C—Banks and Financial Instruments 
SEC. 13531. LIMITATION ON DEDUCTION FOR FDIC PRE-
MIUMS. 
(a) IN GENERAL.—Section 162, as amended by sec-
tions 13307 and 13308, is amended by redesignating sub-
section (s) as subsection (t) and by inserting after sub-
section (r) the following new subsection: 
‘‘(s) DISALLOWANCE OF FDIC PREMIUMS PAID BY 
CERTAIN LARGE FINANCIAL INSTITUTIONS.— 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for the applicable percentage of any FDIC pre-
mium paid or incurred by the taxpayer. 
‘‘(2) EXCEPTION
FOR
SMALL
INSTITUTIONS.— 
Paragraph (1) shall not apply to any taxpayer for 
any taxable year if the total consolidated assets of 
such taxpayer (determined as of the close of such tax-
able year) do not exceed $10,000,000,000. 
‘‘(3) APPLICABLE
PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxpayer for any taxable 
year, the ratio (expressed as a percentage but not 
greater than 100 percent) which— 
‘‘(A) the excess of— 
‘‘(i) the total consolidated assets of 
such taxpayer (determined as of the close of 
such taxable year), over
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† HR 1 EAS 
‘‘(ii) $10,000,000,000, bears to 
‘‘(B) $40,000,000,000. 
‘‘(4) FDIC PREMIUMS.—For purposes of this 
subsection, the term ‘FDIC premium’ means any as-
sessment imposed under section 7(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)). 
‘‘(5) TOTAL CONSOLIDATED ASSETS.—For pur-
poses of this subsection, the term ‘total consolidated 
assets’ has the meaning given such term under section 
165 of the Dodd-Frank Wall Street Reform and Con-
sumer Protection Act (12 U.S.C. 5365). 
‘‘(6) AGGREGATION RULE.— 
‘‘(A) IN
GENERAL.—Members of an ex-
panded affiliated group shall be treated as a sin-
gle taxpayer for purposes of applying this sub-
section. 
‘‘(B) EXPANDED AFFILIATED GROUP.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘expanded affili-
ated group’ means an affiliated group as 
defined in section 1504(a), determined— 
‘‘(I) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each 
place it appears, and
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† HR 1 EAS 
‘‘(II) without regard to para-
graphs (2) and (3) of section 1504(b). 
‘‘(ii) CONTROL OF NON-CORPORATE EN-
TITIES.—A partnership or any other entity 
(other than a corporation) shall be treated 
as a member of an expanded 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 rea-
son of this clause).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13532. REPEAL OF ADVANCE REFUNDING BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 149(d) is 
amended by striking ‘‘as part of an issue described in para-
graph (2), (3), or (4).’’ and inserting ‘‘to advance refund 
another bond.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 149(d) is amended by striking para-
graphs (2), (3), (4), and (6) and by redesignating 
paragraphs (5) and (7) as paragraphs (2) and (3).
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† HR 1 EAS 
(2) Section 148(f)(4)(C) is amended by striking 
clause (xiv) and by redesignating clauses (xv) to 
(xvii) as clauses (xiv) to (xvi). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to advance refunding bonds issued after 
December 31, 2017. 
SEC. 13533. COST BASIS OF SPECIFIED SECURITIES DETER-
MINED WITHOUT REGARD TO IDENTIFICA-
TION. 
(a) IN GENERAL.—Section 1012 is amended by adding 
at the end the following new subsection: 
‘‘(e) COST BASIS OF SPECIFIED SECURITIES DETER-
MINED WITHOUT REGARD TO IDENTIFICATION.— 
‘‘(1) IN GENERAL.—Unless the Secretary permits 
the use of an average basis method for determining 
cost, in the case of the sale, exchange, or other disposi-
tion of a specified security (within the meaning of 
section 6045(g)(3)(B)), the basis (and holding period) 
of such security shall be determined on a first-in first- 
out basis. 
‘‘(2) EXCEPTION.—In the case of a sale, ex-
change, or other disposition of a specified security by 
a regulated investment company (as defined in sec-
tion 851(a)), paragraph (1) shall not apply.’’. 
(b) CONFORMING AMENDMENTS.—
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† HR 1 EAS 
(1) Section 1012(c)(1) is amended by striking 
‘‘the conventions prescribed by regulations under this 
section’’ and inserting ‘‘the method applicable for de-
termining the cost of such security’’. 
(2) Section 1012(c)(2)(A) is amended by insert-
ing ‘‘(as in effect prior to the enactment of the Tax 
Cuts and Jobs Act)’’ after ‘‘this section’’. 
(3) Section 6045(g)(2)(B)(i)(I) is amended by 
striking ‘‘unless the customer notifies the broker by 
means of making an adequate identification of the 
stock sold or transferred’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to sales, exchanges, and other disposi-
tions after December 31, 2017. 
Subpart D—S Corporations 
SEC. 13541. EXPANSION OF QUALIFYING BENEFICIARIES OF 
AN ELECTING SMALL BUSINESS TRUST. 
(a) NO
LOOK-THROUGH
FOR
ELIGIBILITY
PUR-
POSES.—Section 1361(c)(2)(B)(v) is amended by adding at 
the end the following new sentence: ‘‘This clause shall not 
apply for purposes of subsection (b)(1)(C).’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall take effect on January 1, 2018.
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† HR 1 EAS 
SEC. 13542. CHARITABLE CONTRIBUTION DEDUCTION FOR 
ELECTING SMALL BUSINESS TRUSTS. 
(a) IN GENERAL.—Section 641(c)(2) is amended by 
inserting after subparagraph (D) the following new sub-
paragraph: 
‘‘(E)(i) Section 642(c) shall not apply. 
‘‘(ii) For purposes of section 170(b)(1)(G), 
adjusted gross income shall be computed in the 
same manner as in the case of an individual, ex-
cept that the deductions for costs which are paid 
or incurred in connection with the administra-
tion of the trust and which would not have been 
incurred if the property were not held in such 
trust shall be treated as allowable in arriving at 
adjusted gross income.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13543. MODIFICATION OF TREATMENT OF S CORPORA-
TION CONVERSIONS TO C CORPORATIONS. 
(a) ADJUSTMENTS ATTRIBUTABLE
TO CONVERSION 
FROM S CORPORATION TO C CORPORATION.—Section 481 
is amended by adding at the end the following new sub- 
section: 
‘‘(d) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION 
FROM S CORPORATION TO C CORPORATION.—(1) IN GEN-
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† HR 1 EAS 
ERAL.—In the case of an eligible terminated S corpora-
tion, any increase in tax under this chapter by reason of 
an adjustment required by subsection (a)(2), and which is 
attributable to such corporation’s revocation described in 
paragraph (2)(A)(ii), shall be taken into account ratably 
during the 6-taxable year period beginning with the year 
of change.’’. 
(b) IN GENERAL.—Section 1371 is amended by adding 
at the end the following new subsection: 
‘‘(f) CASH DISTRIBUTIONS FOLLOWING POST-TERMI-
NATION TRANSITION PERIOD.— 
‘‘(1) IN GENERAL.—In the case of a distribution 
of money by an eligible terminated S corporation 
after the post-termination transition period, the accu-
mulated adjustments account shall be allocated to 
such distribution, and the distribution shall be 
chargeable to accumulated earnings and profits, in 
the same ratio as the amount of such accumulated ad-
justments account bears to the amount of such accu-
mulated earnings and profits. 
‘‘(2) ELIGIBLE TERMINATED S CORPORATION.— 
For purposes of this subsection, the term ‘eligible ter-
minated S corporation’ means any C corporation— 
‘‘(A) which—
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† HR 1 EAS 
‘‘(i) was an S corporation on the day 
before the date of the enactment of the Tax 
Cuts and Jobs Act, and 
‘‘(ii) during the 2-year period begin-
ning on the date of such enactment makes 
a revocation of its election under section 
1362(a), and 
‘‘(B) the owners of the stock of which, deter-
mined on the date such revocation is made, are 
the same owners (and in identical proportions) 
as on the date of such enactment.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions after the date of the en-
actment of this Act. 
PART VII—EMPLOYMENT 
Subpart A—Compensation 
SEC. 13601. MODIFICATION OF LIMITATION ON EXCESSIVE 
EMPLOYEE REMUNERATION. 
(a) REPEAL OF PERFORMANCE-BASED COMPENSATION 
AND COMMISSION EXCEPTIONS FOR LIMITATION ON EXCES-
SIVE EMPLOYEE REMUNERATION.— 
(1) IN
GENERAL.—Paragraph (4) of section 
162(m) is amended by striking subparagraphs (B) 
and (C) and by redesignating subparagraphs (D),