American Jobs Creation Act of 2004

Bill: 108-hr-4520
Sponsor: Rep. Thomas, William M. [R-CA-22]
Introduced: 2004-06-04 in the House
Policy area: Taxation
Subjects: Accounting
Administrative procedure
Administrative remedies
Advertising
Age
Age discrimination
Agricultural colleges
Agricultural cooperatives
Agricultural diversification
Agricultural innovations
Agricultural machinery
Agricultural subsidies
Agriculture and Food
Agriculture in foreign trade
Air conditioning
Aircraft
Alabama
Alaska
Alcohol as fuel
Alcohol tax
Alcoholic beverages
Aliens
Alternative crops
Americans in foreign countries
Animals
Annuities
Architecture
Arkansas
Armed Forces and National Security
Armed forces reserves
Arts, Culture, Religion
Attorney-client privilege
Automobile tires
Automobiles
Aviation fuels
Bank employees
Barges
Beer
Biomass energy
Boats and boating
Bonds
Broadband
Brownfields
Building construction
Business records
Canada
Cancer
Capital gains tax
Carcinogens
Casualty insurance
Census
Charitable contributions
Charities
Chief executive officers
Churches
Cigarettes
Citizenship
Civil Rights and Liberties, Minority Issues
Civil actions and liability
Civil rights enforcement
Clergy
Clinical trials
Coal
Cogeneration of electric power and heat
Collection of accounts
Commerce
Commodity tax straddles
Compressed natural gas
Computer software
Confidential communications
Conflict of interests
Congress
Congressional employees
Congressional investigations
Congressional joint committees
Congressional reporting requirements
Construction costs
Construction industries
Consumer credit
Contracts
Cooperative societies
Copyright
Corporate finance
Corporate mergers
Corporate reorganizations
Corporation taxes
Cost effectiveness
Counterfeiting
Credit cards
Crime and Law Enforcement
Crop insurance
Customs administration
Deaf
Debtor and creditor
Deceptive advertising
Defective products
Defense contracts
Defense procurement
Department of Agriculture
Department of Health and Human Services
Department of Homeland Security
Department of Labor
Department of the Treasury
Depletion allowances
Depreciation and amortization
Depressed areas
Diesel motor
Disabled
Disaster relief
Discrimination against the disabled
Discrimination in education
Discrimination in employment
Discrimination in insurance
Discrimination in medical care
District of Columbia
Dividends
Divorce
Droughts
Drug adulteration
Drug approvals
Drug industry
Drugs and youth
Dyes and dyeing
Economics and Public Finance
Education
Educational facilities
Electric appliances
Electric batteries
Electric power distribution
Electric power production
Electric power transmission
Electric utilities
Electric vehicles
Electronic data interchange
Elementary and secondary education
Emergency Management
Emergency medicine
Employee health benefits
Employee ownership
Employee stock options
Energy
Energy conservation
Energy facilities
Engineering
Enterprise zones
Environmental Protection
Environmental technology
Equipment and supplies
Ex-offenders
Excise tax
Executive reorganization
Expatriation
Families
Farm manure
Farm production quotas
Farmers
Federal advisory bodies
Federal aid to education
Federal aid to housing
Federal-state relations
Finance and Financial Sector
Financial services
Fines (Penalties)
Fire fighters
Fishing
Fishing boats
Floods
Florida
Food and Drug Administration (FDA)
Food stamps
Foreign Trade and International Finance
Foreign banks and banking
Foreign corporations
Foreign exchange
Foreign investments
Foreign tax credit
Forest conservation
Fraud
Free ports and zones
Freight
Fuel cells
Fuel consumption
Futures trading
Gambling
Gas industry
Gas pipelines
Gasoline
Geology
Geophysical prediction
Georgia
Geothermal resources
Government Operations and Politics
Government corporations
Government paperwork
Government procurement
Government publications
Government publicity
Government service contracts
Government trust funds
Governmental investigations
Health
Health insurance
Hearing disorders
Heating
Hepatitis
Higher education
Highway finance
Highway use tax
Historic sites
History
Holding companies
Home ownership
Horses
Horticulture
Hours of labor
Housing and Community Development
Housing discrimination
Housing finance
Housing for the aged
Hunting
Hydrogen
Identification devices
Identification of criminals
Immigration
Imports
Income tax
Indian economic development
Indian education
Indian lands
Indiana
Individual retirement accounts
Industrial buildings
Influenza
Infrastructure
Injunctions
Inland water transportation
Insurance companies
Insurance premiums
Intangible property
Intellectual property
Interest
Internal Revenue Service (IRS)
Internal revenue law
International Affairs
Internet
Investment advisers
Investment tax credit
Investments
Investors

Summary:
action_date: 2004-06-04
text: 
American Jobs Creation Act of 2004 - Amends the Internal Revenue Code to repeal the tax exclusion for extraterritorial income. Reduces corporate tax rates on domestic production activities income and on certain small businesses. 
 
Extends until 2008 provisions allowing expensing of small business assets and revises rules for the depreciation of certain leasehold improvements, restaurant property, aircraft, and bonus depreciation property.
 
Revises tax rules for S corporations and rules relating to the foreign source income of U.S. businesses and individuals. Reduces the alternative minimum tax for certain corporations and farmers. 
 
Repeals excise tax reductions for certain alcohol fuel mixtures and allows the tax credit for alcohol products used as fuel to reduce excise tax liabilities. Adds tax reporting requirements to regulate the payment of certain fuel excise taxes. 
 
Extends certain expiring tax credits and deductions and authorities for the issuance of certain tax-exempt bonds.
 
Permits a taxpayer election to deduct State and local general sales taxes in lieu of State and local income taxes. 
 
Sets forth rules relating to the tax treatment of expatriated individuals and corporations. Adds or increases penalties for abusive tax shelter activities. Revises tax rules for the treatment of certain transactions made primarily for the avoidance of U.S. taxation. 
 
Revises rules for the tax treatment of certain leases made with tax-exempt entities.
 
Authorizes the Secretary of the Treasury to enter into contracts with private collection agencies for the collection of unpaid taxes.
 
Sets forth rules for the tax deduction for charitable contributions of patents and other similar intellectual properties and for motor vehicles, boats, and aircraft.
 
Fair and Equitable Tobacco Reform Act of 2004 - Eliminates tobacco quota and price support programs and provides for transitional payments to tobacco quota holders and active producers of quota tobacco.

action_date: 2004-06-16
text: 
American Jobs Creation Act of 2004 - 
Title I: End Sanctions and Reduce Corporate Tax Rates for Domestic Manufacturing and Small Corporations - 
(Sec. 101)Amends the Internal Revenue Code (Code) to repeal the tax exclusion for extraterritorial income. Provides transitional relief for taxpayers subject to the repeal by allowing a tax exclusion for extraterritorial income of 80 percent in 2005 and 60 percent in 2006. 
 
Permits foreign corporations to revoke elections to be treated as U.S. corporations for purposes of the extraterritorial income tax exclusion without recognition of gain or loss. Authorizes the Secretary of the Treasury to prescribe regulations to prevent abuse resulting from revoked elections.
 
Exempts from the repeal transactions in the ordinary course of a trade or business pursuant to certain binding contracts in effect on January 14, 2002, and at all times thereafter.
 
(Sec. 102) Reduces to 32 percent (34 percent for taxable years beginning before 2007) corporate income tax rates for qualified production activities income. Includes within the definition of such income gross receipts derived from construction, engineering, or architectural services performed in the United States and certain films. Treats as qualifying production property: (1) tangible personal property; (2) any computer software; and (3) certain sound recordings.
 
Permits a corporate taxpayer to revoke a prior election to treat the cutting of timber as a sale or exchange.
 
(Sec. 103) Phases in through 2012 reductions in corporate income tax rates for corporations with taxable incomes of less than $20 million.
 

Title II: Job Creation Tax Incentives for Manufacturers, Small Businesses, and Farmers - Subtitle A: Small Business Expensing - 
(Sec. 201) Extends for two additional years, for taxable years beginning before 2008, the increased expensing (up to $100,000) of small business assets.
 

Subtitle B: Depreciation
 - (Sec. 211) Allows a 15-year recovery period for the depreciation of certain leasehold improvements and restaurant property placed in service before 2006.
 
 (Sec. 212) Revises depreciation rules for certain non-commercial aircraft placed in service prior to January 1, 2006, to allow additional depreciation allowances.
 
 (Sec. 213) Modifies the placed-in-service rules for certain bonus depreciation property. 
 

Subtitle C: S Corporation Reform and Simplification - 
(Sec. 221) Treats members of a family as one shareholder for purposes of determining the number of shareholders in a subchapter S corporation.
 
 (Sec. 222) Increases the allowable number of S corporation shareholders from 75 to 100.
 
 (Sec. 223) Allows an individual retirement plan (IRA), including a Roth IRA, to be a shareholder of a bank that is a subchapter S corporation.
 
 (Sec. 224) Permits a disregard of unexercised powers of appointment for determining potential current beneficiaries of an electing small business trust (ESBT). Extends from 60 days to one year the period during which an ESBT can dispose of S corporation stock after an ineligible shareholder becomes a potential current beneficiary.
 
 (Sec. 225) Allows a carryover of disallowed losses on subchapter S corporation stock resulting from transfers of such stock incident to divorce.
 
 (Sec. 226) Allows beneficiaries of a qualified subchapter S trust to deduct certain losses under the at-risk and passive loss rules when such trust sells S corporation stock.
 
 (Sec. 227) Excludes certain interest and dividend income on assets held by a bank S corporation from passive investment income for purposes of applying the excess net passive income rules.
 
(Sec. 228) Provides that restricted bank director stock shall not be counted as outstanding S corporation stock for purposes of applying certain subchapter S tax rules.
 
 (Sec. 229) Allows the waiver of inadvertent invalid qualified subchapter S subsidiary elections and terminations.
 
 (Sec. 230) Expands the authority of the Secretary to require informational returns for qualified subchapter S subsidiaries.
 
 (Sec. 231) Permits an employee stock ownership plan (ESOP) maintained by an S corporation to make distributions for repayments of loans used to purchase employer securities without incurring tax penalties.
 

Subtitle D: Alternative Minimum Tax Relief - 
Makes changes to the alternative minimum tax, including: (1) repealing the 90 percent limitation on the utilization of the alternative minimum tax foreign tax credit; (2) increasing the exemption from the alternative minimum tax for corporations from $7.5 million to $20 million; and (3) excluding income averaging for farmers from the calculation of the alternative minimum tax. 
 

Subtitle E: Restructuring of Incentives for Alcohol Fuels, Etc. - 
(Sec. 251) Repeals certain reductions in the excise tax on alcohol fuel mixtures. Allows a tax credit for alcohol products used as fuel against excise tax liabilities or provides for payments directly to a taxpayer to the extent that the amount of the tax credit exceeds excise tax liabilities.
 
Eliminates requirements that certain amounts of excise fuel taxes be retained in the General Fund, thus allowing direct payment of such amounts into the Highway Trust Fund.
 

Subtitle F: Stock Options and Employee Stock Purchase Plan Stock Options 
- (Sec. 261) Excludes from social security, unemployment, and railroad retirement taxes income resulting from the exercise of certain stock options. Eliminates certain withholding of tax requirements relating to the exercise of stock options. 
 

Subtitle G: Incentives to Reinvest Foreign Earnings in United States 
- (Sec. 271) Allows certain U.S. corporations to deduct up to 85 percent of dividends received during a specified period from a controlled foreign corporation. Limits the amount of such deduction to the greatest of $500 million, the amount of certain reinvestment outside the United States, or an amount prescribed by the Secretary. Requires dividends to be reinvested in the United States pursuant to an approved plan.
 

Subtitle H: Other Incentive Provisions - 
(Sec. 281) Modifies involuntary conversion rules to extend from two to four years the replacement period for livestock sold due to drought, flood, or other weather-related conditions. Allows the Secretary to extend the replacement period on a regional basis if weather-related conditions continue for more than three years.
 
(Sec. 282) Provides that dividends on the capital stock or other proprietary capital interests of certain tax-exempt cooperatives shall not reduce the net earnings of such cooperatives. 
 
(Sec. 283) Qualifies the outright sale of timber for capital gains tax treatment. 
 
(Sec. 284) Revises the 90 percent income test for a regulated investment company (RIC) to include income derived from an interest in a publicly traded partnership.
 
(Sec. 285) Revises real estate investment trust rules, including by: (1) revising the definition of straight debt; (2) revising the limited rental exception; (3) removing the customary services exception; (4) revising provisions concerning the treatment of certain hedging instruments; and (5) revising from 90 to 95 the percentage of gross income test used to impose a tax for failure to meet certain requirements. 
 
(Sec. 286) Allows an exemption from tax for certain interest-related dividends of RIC's. Sets forth rules for the tax exemption, including exemptions from withholding of tax requirements for RIC interest-related dividends. 
 
(Sec. 287) Exempts from tax certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. 
 
(Sec. 288) Expands the 50 percent orphan drug tax credit for expenses related to human clinical testing of drugs for the treatment of certain rare diseases and conditions to include those expenses related to human clinical testing incurred after the date on which an application is filed with the Food and Drug Administration for designation of the drug as a potential treatment for a rare disease or disorder. 
 
(Sec. 289) Modifies excise tax provisions on bows, arrows, and other archery equipment, including an increase in the minimum draw weight for a taxable bow from 10 to 30 pounds. 
 
(Sec. 290) Repeals the excise tax on fishing tackle boxes and on sonar devices suitable for finding fish.
 
(Sec. 292) Allows wholesalers of distilled spirits a business tax credit for the financing costs of the Federal excise tax on such spirits. 
 
(Sec. 293) Suspends, from July 1, 2004 until June 30, 2007, the occupational tax relating to distilled spirits, wine, and beer. 
 
(Sec. 294) Excludes from treatment as acquisition indebtedness for purposes of determining unrelated business taxable income certain indebtedness incurred by a small business investment company licensed under the Small Business Investment Act of 1958. 
 
(Sec. 295) Allows certain corporations engaged in international shipping activities to elect an alternate system of taxation using a per ton rate.
 
(Sec. 296) Allows whaling captains recognized by the Alaska Eskimo Whaling Commission to claim a charitable income tax deduction up to $10,000 for certain expenses incurred in support of Native Alaskan subsistence whaling.
 

Title III: Tax Reform and Simplification for United States Businesses 
- (Sec. 301) Permits a worldwide affiliated group to have the taxable income of each domestic corporation in such group determined by allocating and apportioning the interest expense of each member as if all members of such group were a single corporation. Provides that if a group makes this election, the taxable income of the domestic members of the worldwide affiliated group from sources outside the United States will be determined by allocating and apportioning the interest expenses of domestic members to foreign source income in accordance with a specified formula. Provides that non-interest expenses which are not directly allocable or apportioned to any specific income producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation. 
 
(Sec. 302) Treats as income from sources outside the United States, in the case of any taxpayer who sustains an overall domestic loss for any taxable year beginning after December 31, 2006, that portion of the taxpayer's taxable income from sources within the United States for each succeeding taxable year which is equal to the lesser of: (1) the amount of such loss (to the extent not used in prior taxable years); or (2) 50 percent of the taxpayer's taxable income from sources within the United States for such succeeding taxable year. 
 
(Sec. 303) Reduces the limitation on the foreign tax credit to two basic categories: (1) passive category income; and (2) general category income. 
 
(Sec. 304) Revises rules for the tax treatment of dividends paid by a section 902 corporation (a foreign corporation in which the taxpayer owns at least ten percent of the stock by vote and which is not a controlled foreign corporation). 
 
(Sec. 305) Modifies attribution rules for stock ownership through partnerships to provide that stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its partners, for purposes of determining deemed-paid foreign tax credits of domestic corporations that own ten percent or more of the voting stock of a foreign corporation.
 
(Sec. 306) Specifies that certain deemed payments relating to the transfer of intangibles are treated as royalties for purposes of applying the separate limitation categories of the foreign tax credit. 
 
(Sec. 307) Adds exceptions from the definition of U.S. property relating to securities acquired and held by a controlled foreign corporation and certain bonds for determining current income inclusion by a U.S. ten percent shareholder with respect to an investment in U.S. property by a controlled foreign corporation. 
 
(Sec. 308) Permits taxpayers required to translate foreign income tax payments at the average exchange rate to elect to translate such taxes into U.S. dollar amounts using the exchange rates as of the time such taxes are paid, provided the foreign income taxes are denominated in a currency other than the taxpayer's functional currency.
 
(Sec. 309) Exempts from withholding of tax requirements certain dividends paid by a foreign corporation.
 
(Sec. 310) Treats interest paid by foreign partnerships in a manner similar to the way interest paid by foreign corporations is treated, but only with respect to foreign partnerships that are principally owned by foreign persons (partnerships of which U.S. citizens and residents do not own 20 percent or more of the capital or profits interests). 
 
(Sec. 311) Exempts from treatment as foreign personal holding company income certain dividends, interest, rents, and royalties received by one controlled foreign corporation from a related controlled foreign corporation to the extent attributable or properly allocable to non-subpart F income of the payer.
 
(Sec. 312) Treats the sale by a controlled foreign corporation of a partnership interest as a sale of the proportionate share of partnership assets attributable to such interest for purposes of determining subpart F foreign personal holding company income.
 
(Sec. 313) Repeals rules relating to foreign personal holding companies and foreign investment companies. Excludes foreign corporations from the application of the personal holding company rules. Includes as subpart F foreign personal holding company income personal services company income that is subject to the present law foreign personal holding company rules. 
 
(Sec. 314) Modifies the definition of subpart F (Controlled Foreign Corporations) foreign personal holding company income with respect to gains or losses from a commodities hedging transaction. 
 
(Sec. 315) Repeals subpart F rules relating to foreign base company shipping income. Establishes a safe harbor rule for the exclusion from foreign personal holding company income of rents derived from leasing an aircraft or vesselwhen active leasing expenses are not less than ten percent of the profit on the lease.
 
(Sec. 316) Modifies certain exceptions from subpart F foreign personal holding company income and foreign base company services income for income derived in the active conduct of a bank, financing, or similar business.
 

Title IV: Extension of Certain Expiring Provisions - 
Extends through 2005 the following expiring tax provisions: (1) the allowance of certain nonrefundable tax credits against income and alternative minimum tax liabilities; (2) the tax credit for increasing research activities; (3) the placed in service dates relating to certain facilities (i.e. wind and closed-loop biomass facilities) for purposes of the tax credit for producing electricity from certain renewable resources; (4) the Indian employment tax credit; (5) the work opportunity and welfare-to-work tax credit; (6) the tax credit for certain expenses of elementary and secondary school teachers; (6) accelerated depreciation for certain property on Indian Reservations; (7) the charitable deduction for donations of computer technology and equipment used for educational purposes; (8) expensing of environmental remediation costs; (9) the suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties; (10) authority for issuance of qualified zone academy bonds; (11) the designation of a District of Columbia enterprise zone, the authority to issue tax-exempt economic development bonds within a District of Columbia Enterprise Zone, the exclusion of gain from the sale or exchange of a District of Columbia Enterprise Zone asset held for more than five years, and the tax credit for first-time District of Columbia home buyers; (12) the authority of the Secretary to disclose taxpayer return information that may be related to terrorism (specifies that a taxpayer's identity shall not be treated as taxpayer return information for purposes of disclosures related to terrorism); (13) the authority for disclosing certain tax return information to the Department of Education for taxpayers seeking student loan repayment plans based on income; (14) the authority for the demonstration project for combined Federal and State employment tax reporting; and (15) the suspension of the reduction of the tax credit for clean fuel vehicles. 
 
(Sec. 411) Extends through 2004 eligibility provisions for Archer medical savings accounts.
 
 (Sec. 415) Extends through 2009 authority to issue New York Liberty Bonds.
 
(Sec. 418) Extends until January 1, 2006, the increased amount ($13.25 instead of $10.50) of excise tax on distilled spirits required to be paid back (covered) to the Treasuries of Puerto Rico and the Virgin Islands.
 
(Sec. 419) Extends for an additional year the Joint Committee on Taxation annual review of the strategic plans and budget for the IRS
 
(Sec. 420) Extends through December 31, 2005, provisions of the Code, the Employee Retirement Income Security Act of 1974, and the Public Health Service Act requiring parity in the application of group health plan limits to mental health benefits.
 

Title V: Deduction of State and Local General Sales Taxes - 
Allows a taxpayer election to deduct State and local sales taxes in lieu of State and local income taxes.
 

Title VI: Revenue Provisions - Subtitle A: Provisions to Reduce Tax Avoidance Through Individual and Corporate Expatriation 
- (Sec. 601) Provides that the taxable income of an expatriated entity shall not be less than the inversion gain of such entity for the taxable year. Defines &quot;expatriated entity&quot; as a domestic corporation, partnership, or U.S. person: (1) which is acquired in an inversion transaction by a foreign corporation after March 4, 2003; (2) whose shareholders or owners own at least 60 percent of the stock or value of the foreign corporation after such transaction; and (3) which does not have substantial business activities in the foreign jurisdiction under whose law it was created compared to the worldwide business activities of its affiliated group. Defines &quot;inversion gain&quot; as income or gain resulting from a transfer of stock or other properties by an expatriated entity to a foreign corporation. 
 
(Sec. 602) Imposes an excise tax equal to 15 percent of the value of stock compensation held by certain shareholders or family members in an expatriated entity at any time during the 12-month period beginning on the date which is six months before the date of expatriation.
 
(Sec. 603) Revises provisions relating to the authority of the Secretary to allocate tax incidents between the parties to a reinsurance agreement involving tax avoidance or evasion.
 
(Sec. 604) Revises the tax rules on expatriation of individuals. Provides that expatriated individuals shall be subject to alternative taxes for former U.S. citizens and residents for a ten year period following expatriation unless such individuals show: (1) an average annual net income tax not exceeding $124,000; (2) a net worth of not more than $2 million; and (3) compliance with applicable tax requirements for the five preceding taxable years. Exempts taxpayers with dual citizenship in the United States and another country and with no substantial contacts with the United States from the net income tax and net worth requirements. Sets forth rules for determining when a U.S. citizen or resident becomes expatriated.
 
Requires expatriated individuals to file annual returns, even if no tax is due, disclosing the individual's country of residence, the number of days the individual was present in the United States, and information on the individual's income and assets. Imposes a $10,000 penalty for failure to provide required information, but allows a waiver of such penalty if such failure is due to reasonable cause and not to willful neglect. 
 
(Sec. 605) Imposes certain reporting requirements upon the acquiring corporation in a taxable acquisition of another corporation. Imposes a penalty for failure to report required information. 
 
(Sec. 606) Requires the Secretary to conduct a study of the following matters and to report findings to the Congress: (1) the effectiveness of current transfer pricing rules and compliance efforts in ensuring that cross-border transfers and other related-party transactions cannot be used improperly to shift income out of the United States; (2) U.S. income tax treaties to identify any inappropriate reductions in U.S. withholding tax that provide opportunities for shifting income outside the United States; and (3) the impact of this Title on corporate expatriation.
 

Subtitle B: Provisions Relating to Tax Shelters - Part I: Taxpayer-Related Provisions 
- (Sec. 611) Imposes a new penalty for failing to report tax shelter transactions that have a potential for tax avoidance or evasion (reportable transactions) and transactions specifically identified as tax avoidance transactions (listed transactions). Allows the Commissioner of Internal Revenue discretion to rescind all or a portion of the penalty under certain conditions.
 
 (Sec. 612) Imposes a 20 percent penalty for understatements of tax resulting from tax shelter activities and increases such penalty to 30 percent for undisclosed tax shelter transactions. Allows a wavier of such penalty if the taxpayer shows reasonable cause for the understatement of tax and has acted in good faith. 
 
(Sec. 613) Expands the denial of privilege for communications between a tax practitioner and a corporate client to include any individual engaged in tax shelter activity. 
 
(Sec. 614) Extends the statute of limitation for assessing underpayments of tax resulting from undisclosed tax shelter transactions to one year after the required disclosures are made. 
 
(Sec. 615) Requires material advisers of tax shelters to file informational returns identifying certain tax shelter transactions and the potential tax benefits expected to result from the transactions. Requires such material advisors to maintain a client list of investors. Denies a claim of privilege with respect to the identity of any individual investor on a client list.
 
(Sec. 616) Revises provisions for registration of tax shelters to impose a penalty for failure to file an informational return or for filing false or incomplete information with respect to tax shelter activities.
 
(Sec. 617) Imposes a daily penalty of $10,000 on material advisers of tax shelters who fail to disclose lists of tax shelter investors. Allows an exemption from the penalty for reasonable cause. 
 
(Sec. 618) Imposes an additional penalty on promoters of abusive tax shelters equal to 50 percent of the gross income derived from the tax shelter activity.
 
(Sec. 619) Modifies the definition of substantial understatement of tax for corporations other than an S corporation or a personal holding company to mean the lesser of ten percent of the tax required to be shown or $10 million.
 
(Sec. 620) Expands the authority of the Secretary to seek an injunction against participants in abusive tax shelter activities. 
 
(Sec. 621) Increases the penalty for failure to report interests in foreign financial accounts. Allows an exemption from the penalty if the violation was due to reasonable cause and was not willful.
 
(Sec. 622) Authorizes the Secretary to censure and fine an incompetent or disreputable tax advisor who practices before the Department of the Treasury.
 

Part II: Other Provision: 
(Sec. 631) Permits the application of stripped preferred stock rules and stripped bond rules in the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof. 
 
(Sec. 632) Establishes a minimum holding period for withholding taxes on gain and income other than dividends in order to claim the foreign tax credit.
 
(Sec. 633) Revises rules relating to contributions of property with built-in losses to a partnership to limit recognition of losses to the contributing partner.
 
(Sec. 634) Prohibits an allocation of any decrease in the adjusted basis of partnership property to stock in a corporation which is a partner in the partnership. 
 
(Sec. 635) Repeals Part V (Financial Asset Securitization Investment Trusts - FASITS) of subchapter M (Regulated Investment Companies and Real Estate Investment Trusts). 
 
(Sec. 636) Limits to fair market value the adjusted basis of a transferred residual interest in a real estate mortgage investment conduit.
 
(Sec. 637) Expands the definition of &quot;banking business&quot; for purposes of the exemption of investment of earnings in U.S. property to include financial services providers.
 
(Sec. 638) Increases from $1.2 million to $1.89 million the limit on the amount of premiums which a tax-exempt small property and casualty insurance company may receive without forfeiting its election to be taxed only on investment income. Adjust the limitation amount for inflation after 2004.
 
(Sec. 639) Denies a tax deduction for interest paid on an underpayment of tax resulting from a tax shelter transaction that was not reported. 
 
(Sec. 640) Applies estimated tax requirements to certain stock sales between certain target corporations and a consolidated group of corporations.
 
(Sec. 641) Makes the exclusion for gain on the sale of a principal residence inapplicable if the principal residence was acquired in a like-kind exchange in which the gain was not recognized within the required five-year period. 
 
(Sec. 642) Limits original issue discount and other deductions to the extent that amounts are includible in the income of the payor who is a related foreign entity. 
 
(Sec. 643) Excludes from gross income interest paid on certain overpayments of tax.
 
(Sec. 644) Permits taxpayers to make a cash deposit to suspend the running of interest on potential underpayments of tax. 
 
(Sec. 645) Authorizes the IRS to enter into partial payment installment agreements with taxpayers (current law requires agreements to include the entire liability). Requires review of such agreements at least every two years. 
 
(Sec. 646) Authorizes the Secretary to issue consolidated return regulations that treat corporations filing consolidated returns differently than corporations filing separate returns. 
 

Part III: Leasing 
- (Sec. 647) Establishes a depreciation recovery period for computer software classified as tax-exempt use property subject to a lease of not less than 125 percent of the lease term. 
 
(Sec. 648) Disallows losses from the leasing of property to tax-exempt organizations (tax-exempt use losses). Allows a carryover of a disallowed loss to the next taxable year. 
 
Allows tax-exempt use losses with respect to property: (1) that is not financed with tax-exempt bonds or Federal funds; (2) in which the lessor makes an equity investment of at least 20 percent of the lessor's adjusted basis; (3) in which the lessee does not bear more than a minimal risk of loss; and (4) that grants the lessee a fair market purchase option (applies only to property with more than a seven-year class life). 
 
Applies the amendments made by this section to leases entered into after March 12, 2004. Exempts from the amendments made by this section qualified transportation property. Defines &quot;qualified transportation property&quot; as domestic property subject to a lease for which a formal application: (1) was submitted for approval to the Federal Transit Administration after June 30, 2003, and before March 13, 2004; (2) is approved by the Federal Transit Administration before January 1, 2005, and (3) includes a description of such property and the value of such property. 
 

Subtitle C: Reduction of Fuel Tax Evasion 
- (Sec. 651) Exempts mobile machinery from the excise tax on heavy trucks sold at retail, the use tax on highway vehicles, and the tax on tires. Establishes a design-based test and a use-based test (less than 7,500 miles use on public highways per year) to determine whether certain equipment qualifies as mobile machinery for purposes of the tax exemption. Allows refunds of taxes paid on mobile machinery on an annual basis only.
 
(Sec. 652) Revises rules for the taxation of aviation-grade kerosene. Retains current tax rates on such fuel, but allows a reduced rate of 4.3 percent (as under current law) for fuel which is removed from any refinery or terminal directly into the fuel tank of a commercial aircraft. 
 
(Sec. 653) Changes the dyeing process for the diesel fuel and kerosene tax exemption from manual to mechanical injection. Requires the Secretary to issue regulations on mechanical dye injection systems, including making such systems tamper resistant. Imposes a penalty of the greater of $25,000 or $10 for each gallon of fuel involved for tampering with a mechanical dye injection system. Imposes a penalty upon the operator of a mechanical dye injection system of $1,000 for each failure to maintain security standards and $1,000 for each day such operator fails to correct a violation. 
 
(Sec. 654) Authorizes the Secretary to inspect any books, records, and shipping papers pertaining to taxable fuels (i.e. gasoline, diesel fuel, and kerosene) at locations where such fuels are produced or stored. 
 
(Sec. 655) Extends the bulk transfer exemption from taxable fuels to registered pipeline or vessel operators. 
 
(Sec. 656) Requires every operator of a vessel who is required to register for the bulk transfer exemption to display proof of registration through a prescribed electronic identification device on each vessel used by such operator to transport taxable fuels. Imposes a penalty for $500 for each failure to display proof of registration, with increased penalties for multiple violations. Allows penalties to be waived upon a showing that failure to register was due to reasonable cause. 
 
(Sec. 657) Increases to $10,000 certain civil and criminal penalties for failure to register or for falsely representing registration status with respect to a taxable fuel. 
 
(Sec. 658) Imputes liability to a registered importer of record for unpaid excise tax owed by an unregistered importer. Authorizes the Secretary to collect any unpaid tax from the custom bond posted by the registered importer. 
 
(Sec. 659) Provides for the proration of the use tax on heavy vehicles (weighing more than 55,000 pounds) that are sold before the end of the taxable period. Repeals provisions allowing installment payments of such use tax. Requires a taxpayer with 25 or more heavy vehicles to file tax returns electronically. Repeals the reduced tax rate for Canadian and Mexican heavy vehicles. 
 
(Sec. 660) Limits ultimate vendor claims for tax refunds for sales of diesel fuel or kerosene used on a farm for farming purposes to amounts not exceeding 250 gallons.
 
(Sec. 661) Appropriates amounts equivalent to specified penalties added or increased by this Subtitle to the Highway Trust Fund. 
 
(Sec. 662) Provides that a registered vendor of taxable fuels on which excise tax has been paid shall be treated as the ultimate vendor for purposes of claiming credits and refunds of tax. Grants ultimate vendor status to credit card lenders for credit card purchases of diesel fuel or kerosene, including credit card purchases by State and local governments.
 
(Sec. 663) Exempts the delivering person from liability for fuel excise tax in two-party exchanges (as defined in this section). 
 
(Sec. 664) Revises the excise tax on tires to impose a tax at the rate of 9.4 cents (4.7 cents in the case of a biasply tire) for each ten pounds of tire load capacity in excess of 3,500 pounds. Exempts from such tax tires sold for the exclusive use of the Department of Defense or the Coast Guard. 
 

Subtitle D: Nonqualified Deferred Compensation Plans 
- (Sec. 671) Sets forth rules for determining the includibility in gross income of deferred compensation under nonqualified deferred compensation plans when such compensation is no longer subject to a substantial risk of forfeiture. Sets forth criteria for determining whether plan compensation is subject to a substantial risk of forfeiture. 
 

Subtitle E: Other Revenue Provisions 
- (Sec. 681) Authorizes the Secretary to enter into contracts with private collection agencies to perform certain services related to the collection of unpaid tax. Provides that the United States shall not be liable for any act or omission of any such collection agency. Permits a civil action against a collection agency, but not against the United States, for unauthorized collection actions. 
 
(Sec. 682) Sets forth rules for the tax deduction for charitable contributions of patents and similar intellectual properties. Revises requirements for informational returns relating to such contributions. Authorizes the Secretary to prescribe regulations to prevent abuse of the tax deduction. 
 
(Sec. 683) Revises reporting requirements for noncash charitable contributions exceeding $500, $5,000, and $500,000. Requires appraisals of such contributions in accordance with regulations promulgated by the Secretary. 
 
(Sec. 684) Requires qualified appraisals for certain motor vehicles, boats, and aircraft for which a charitable contribution deduction is claimed. Directs the Secretary to issue regulations defining qualified appraisals.
 
(Sec. 685) Permits (current law prohibits) the amortization of intangibles by sport franchises.
 
(Sec. 686) Increases from 15 to 100 percent the allowable amount of the continuing levy on Federal vendor payments for unpaid taxes. 
 
(Sec. 687) Modifies straddle rules to: (1) permit taxpayers to identify offseting positions of a straddle; (2) revise the tax treatment of certain physically settled positions of a straddle; and (3) repeal the stock and qualified covered call exceptions from the straddle rules.
 
(Sec. 688) Includes any vaccine against hepatitis A and any trivalent vaccine against influenza under the 75 cents-per-dose manufacturer's excise tax. 
 
(Sec. 690) Extends the authority for certain IRS user fees until September 30, 2014. 
 
(Sec. 691) Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to extend the passenger and conveyance customs fees and the merchandise processing customs fees through September 30, 2014. Expresses the sense of the Congress with respect to the reasonableness of certain custom fees. Directs the Secretary of the Treasury to study all fees collected by the Department of Homeland Security and report to the Congress by September 30, 2005, on what fees should be eliminated, what the rate of fees retained should be, and other appropriate recommendations.
 

Title VII: Market Reform for Tobacco Growers - 
(Sec. 701) Fair and Equitable Tobacco Reform Act of 2004 - 
Subtitle A: Termination of Federal Tobacco Quota and Price Support Programs - 
(Sec. 711) Amends and repeals specified agricultural Acts to eliminate tobacco quota and price support programs. Amends the Agricultural Act of 1949 to eliminate tobacco from the definition of &quot;basic agricultural commodity.&quot;
 

Subtitle B: Transitional Payments to Tobacco Quota Holders and Active Producers of Tobacco - 
(Sec. 721) Defines &quot;active tobacco producer&quot; and &quot;tobacco quota holder.&quot; Directs the Secretary of Agriculture to make transitional payments based on the 2002 marketing year to tobacco quota holders and active producers of quota tobacco. Appropriates up to $9.6 billion for such payments. Provides for: (1) county committee resolution of payment disputes; and (2) inheritance of the right to receive such payments.
 

Title VIII: Trade Provisions 
- (Sec. 801) Amends the Harmonized Tariff Schedule of the United States to: (1) suspend duties on ceiling fans through December 31, 2006; (2) extend duty-free entry of nuclear steam generators through December 31, 2008; and (3) suspend duties on nuclear reactor vessel heads through December 31, 2008.

action_date: 2004-06-17
text: 
American Jobs Creation Act of 2004 - 
Title I: End Sanctions and Reduce Corporate Tax Rates for Domestic Manufacturing and Small Corporations
 - (Sec. 101) Amends the Internal Revenue Code (Code) to repeal the tax exclusion for extraterritorial income. Provides transitional relief for taxpayers subject to the repeal by allowing a tax exclusion for extraterritorial income of 80 percent in 2005 and 60 percent in 2006. 
 
Permits foreign corporations to revoke elections to be treated as U.S. corporations for purposes of the extraterritorial income tax exclusion without recognition of gain or loss. Authorizes the Secretary of the Treasury to prescribe regulations to prevent abuse resulting from revoked elections.
 
Exempts from the repeal transactions in the ordinary course of a trade or business pursuant to certain binding contracts in effect on January 14, 2002, and at all times thereafter.
 
(Sec. 102) Reduces to 32 percent (34 percent for taxable years beginning before 2007) corporate income tax rates for qualified production activities income. Includes within the definition of such income gross receipts derived from construction, engineering, or architectural services performed in the United States and certain films. Treats as qualifying production property: (1) tangible personal property; (2) any computer software; and (3) certain sound recordings.
 
Permits a corporate taxpayer to revoke a prior election to treat the cutting of timber as a sale or exchange.
 
(Sec. 103) Phases in through 2012 reductions in corporate income tax rates for corporations with taxable incomes of less than $20 million.
 

Title II: Job Creation Tax Incentives for Manufacturers, Small Businesses, and Farmers - Subtitle A: Small Business Expensing
 - (Sec. 201) Extends for two additional years, for taxable years beginning before 2008, the increased expensing (up to $100,000) of small business assets.
 

Subtitle B: Depreciation
 - (Sec. 211) Allows a 15-year recovery period for the depreciation of certain leasehold improvements and restaurant property placed in service before 2006.
 
(Sec. 212) Revises depreciation rules for certain non-commercial aircraft placed in service prior to January 1, 2006, to allow additional depreciation allowances.
 
(Sec. 213) Modifies the placed-in-service rules for certain bonus depreciation property. 
 

Subtitle C: S Corporation Reform and Simplification
 - (Sec. 221) Treats members of a family as one shareholder for purposes of determining the number of shareholders in a subchapter S corporation.
 
(Sec. 222) Increases the allowable number of S corporation shareholders from 75 to 100.
 
(Sec. 223) Allows an individual retirement plan (IRA), including a Roth IRA, to be a shareholder of a bank that is a subchapter S corporation.
 
(Sec. 224) Permits a disregard of unexercised powers of appointment for determining potential current beneficiaries of an electing small business trust (ESBT). Extends from 60 days to one year the period during which an ESBT can dispose of S corporation stock after an ineligible shareholder becomes a potential current beneficiary.
 
(Sec. 225) Allows a carryover of disallowed losses on subchapter S corporation stock resulting from transfers of such stock incident to divorce.
 
(Sec. 226) Allows beneficiaries of a qualified subchapter S trust to deduct certain losses under the at-risk and passive loss rules when such trust sells S corporation stock.
 
(Sec. 227) Excludes certain interest and dividend income on assets held by a bank S corporation from passive investment income for purposes of applying the excess net passive income rules.
 
(Sec. 228) Provides that restricted bank director stock shall not be counted as outstanding S corporation stock for purposes of applying certain subchapter S tax rules.
 
(Sec. 229) Allows the waiver of inadvertent invalid qualified subchapter S subsidiary elections and terminations.
 
(Sec. 230) Expands the authority of the Secretary to require informational returns for qualified subchapter S subsidiaries.
 
(Sec. 231) Permits an employee stock ownership plan (ESOP) maintained by an S corporation to make distributions for repayments of loans used to purchase employer securities without incurring tax penalties.
 

Subtitle D: Alternative Minimum Tax Relief
 - Makes changes to the alternative minimum tax, including: (1) repealing the 90 percent limitation on the utilization of the alternative minimum tax foreign tax credit; (2) increasing the exemption from the alternative minimum tax for corporations from $7.5 million to $20 million; and (3) excluding income averaging for farmers from the calculation of the alternative minimum tax. 
 

Subtitle E: Restructuring of Incentives for Alcohol Fuels, Etc. 
- (Sec. 251) Repeals certain reductions in the excise tax on alcohol fuel mixtures. Allows a tax credit for alcohol products used as fuel against excise tax liabilities or provides for payments directly to a taxpayer to the extent that the amount of the tax credit exceeds excise tax liabilities.
 
Eliminates requirements that certain amounts of excise fuel taxes be retained in the General Fund, thus allowing direct payment of such amounts into the Highway Trust Fund.
 

Subtitle F: Stock Options and Employee Stock Purchase Plan Stock Options
 - (Sec. 261) Excludes from social security, unemployment, and railroad retirement taxes income resulting from the exercise of certain stock options. Eliminates certain withholding of tax requirements relating to the exercise of stock options. 
 

Subtitle G: Incentives to Reinvest Foreign Earnings in United States
 - (Sec. 271) Allows certain U.S. corporations to deduct up to 85 percent of dividends received during a specified period from a controlled foreign corporation. Limits the amount of such deduction to the greatest of $500 million, the amount of certain reinvestment outside the United States, or an amount prescribed by the Secretary. Requires dividends to be reinvested in the United States pursuant to an approved plan.
 

Subtitle H: Other Incentive Provisions
 - (Sec. 281) Modifies involuntary conversion rules to extend from two to four years the replacement period for livestock sold due to drought, flood, or other weather-related conditions. Allows the Secretary to extend the replacement period on a regional basis if weather-related conditions continue for more than three years.
 
(Sec. 282) Provides that dividends on the capital stock or other proprietary capital interests of certain tax-exempt cooperatives shall not reduce the net earnings of such cooperatives. 
 
(Sec. 283) Qualifies the outright sale of timber for capital gains tax treatment. 
 
(Sec. 284) Revises the 90 percent income test for a regulated investment company (RIC) to include income derived from an interest in a publicly traded partnership.
 
(Sec. 285) Revises real estate investment trust rules, including by: (1) revising the definition of straight debt; (2) revising the limited rental exception; (3) removing the customary services exception; (4) revising provisions concerning the treatment of certain hedging instruments; and (5) revising from 90 to 95 the percentage of gross income test used to impose a tax for failure to meet certain requirements. 
 
(Sec. 286) Allows an exemption from tax for certain interest-related dividends of RIC's. Sets forth rules for the tax exemption, including exemptions from withholding of tax requirements for RIC interest-related dividends. 
 
(Sec. 287) Exempts from tax certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. 
 
(Sec. 288) Expands the 50 percent orphan drug tax credit for expenses related to human clinical testing of drugs for the treatment of certain rare diseases and conditions to include those expenses related to human clinical testing incurred after the date on which an application is filed with the Food and Drug Administration for designation of the drug as a potential treatment for a rare disease or disorder. 
 
(Sec. 289) Modifies excise tax provisions on bows, arrows, and other archery equipment, including an increase in the minimum draw weight for a taxable bow from 10 to 30 pounds. 
 
(Sec. 290) Repeals the excise tax on fishing tackle boxes and on sonar devices suitable for finding fish.
 
(Sec. 292) Allows wholesalers of distilled spirits a business tax credit for the financing costs of the Federal excise tax on such spirits. 
 
(Sec. 293) Suspends, from July 1, 2004, until June 30, 2007, the occupational tax relating to distilled spirits, wine, and beer. 
 
(Sec. 294) Excludes from treatment as acquisition indebtedness for purposes of determining unrelated business taxable income certain indebtedness incurred by a small business investment company licensed under the Small Business Investment Act of 1958. 
 
(Sec. 295) Allows certain corporations engaged in international shipping activities to elect an alternate system of taxation using a per ton rate.
 
(Sec. 296) Allows whaling captains recognized by the Alaska Eskimo Whaling Commission to claim a charitable income tax deduction up to $10,000 for certain expenses incurred in support of Native Alaskan subsistence whaling.
 

Title III: Tax Reform and Simplification for United States Businesses
 - (Sec. 301) Permits a worldwide affiliated group to have the taxable income of each domestic corporation in such group determined by allocating and apportioning the interest expense of each member as if all members of such group were a single corporation. Provides that if a group makes this election, the taxable income of the domestic members of the worldwide affiliated group from sources outside the United States will be determined by allocating and apportioning the interest expenses of domestic members to foreign source income in accordance with a specified formula. Provides that non-interest expenses which are not directly allocable or apportioned to any specific income producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation. 
 
(Sec. 302) Treats as income from sources outside the United States, in the case of any taxpayer who sustains an overall domestic loss for any taxable year beginning after December 31, 2006, that portion of the taxpayer's taxable income from sources within the United States for each succeeding taxable year which is equal to the lesser of: (1) the amount of such loss (to the extent not used in prior taxable years); or (2) 50 percent of the taxpayer's taxable income from sources within the United States for such succeeding taxable year. 
 
(Sec. 303) Reduces the limitation on the foreign tax credit to two basic categories: (1) passive category income; and (2) general category income. 
 
(Sec. 304) Revises rules for the tax treatment of dividends paid by a section 902 corporation (a foreign corporation in which the taxpayer owns at least ten percent of the stock by vote and which is not a controlled foreign corporation). 
 
(Sec. 305) Modifies attribution rules for stock ownership through partnerships to provide that stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its partners, for purposes of determining deemed-paid foreign tax credits of domestic corporations that own ten percent or more of the voting stock of a foreign corporation.
 
(Sec. 306) Specifies that certain deemed payments relating to the transfer of intangibles are treated as royalties for purposes of applying the separate limitation categories of the foreign tax credit. 
 
(Sec. 307) Adds exceptions from the definition of U.S. property relating to securities acquired and held by a controlled foreign corporation and certain bonds for determining current income inclusion by a U.S. ten percent shareholder with respect to an investment in U.S. property by a controlled foreign corporation. 
 
(Sec. 308) Permits taxpayers required to translate foreign income tax payments at the average exchange rate to elect to translate such taxes into U.S. dollar amounts using the exchange rates as of the time such taxes are paid, provided the foreign income taxes are denominated in a currency other than the taxpayer's functional currency.
 
(Sec. 309) Exempts from withholding of tax requirements certain dividends paid by a foreign corporation.
 
(Sec. 310) Treats interest paid by foreign partnerships in a manner similar to the way interest paid by foreign corporations is treated, but only with respect to foreign partnerships that are principally owned by foreign persons (partnerships of which U.S. citizens and residents do not own 20 percent or more of the capital or profits interests). 
 
(Sec. 311) Exempts from treatment as foreign personal holding company income certain dividends, interest, rents, and royalties received by one controlled foreign corporation from a related controlled foreign corporation to the extent attributable or properly allocable to non-subpart F income of the payer.
 
(Sec. 312) Treats the sale by a controlled foreign corporation of a partnership interest as a sale of the proportionate share of partnership assets attributable to such interest for purposes of determining subpart F foreign personal holding company income.
 
(Sec. 313) Repeals rules relating to foreign personal holding companies and foreign investment companies. Excludes foreign corporations from the application of the personal holding company rules. Includes as subpart F foreign personal holding company income personal services company income that is subject to the present law foreign personal holding company rules. 
 
(Sec. 314) Modifies the definition of subpart F (Controlled Foreign Corporations) foreign personal holding company income with respect to gains or losses from a commodities hedging transaction. 
 
(Sec. 315) Repeals subpart F rules relating to foreign base company shipping income. Establishes a safe harbor rule for the exclusion from foreign personal holding company income of rents derived from leasing an aircraft or vessel when active leasing expenses are not less than ten percent of the profit on the lease.
 
(Sec. 316) Modifies certain exceptions from subpart F foreign personal holding company income and foreign base company services income for income derived in the active conduct of a bank, financing, or similar business.
 

Title IV: Extension of Certain Expiring Provisions
 - Extends through 2005 the following expiring tax provisions: (1) the allowance of certain nonrefundable tax credits against income and alternative minimum tax liabilities; (2) the tax credit for increasing research activities; (3) the placed in service dates relating to certain facilities (i.e. wind and closed-loop biomass facilities) for purposes of the tax credit for producing electricity from certain renewable resources; (4) the Indian employment tax credit; (5) the work opportunity and welfare-to-work tax credit; (6) the tax credit for certain expenses of elementary and secondary school teachers; (6) accelerated depreciation for certain property on Indian Reservations; (7) the charitable deduction for donations of computer technology and equipment used for educational purposes; (8) expensing of environmental remediation costs; (9) the suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties; (10) authority for issuance of qualified zone academy bonds; (11) the designation of a District of Columbia enterprise zone, the authority to issue tax-exempt economic development bonds within a District of Columbia Enterprise Zone, the exclusion of gain from the sale or exchange of a District of Columbia Enterprise Zone asset held for more than five years, and the tax credit for first-time District of Columbia home buyers; (12) the authority of the Secretary to disclose taxpayer return information that may be related to terrorism (specifies that a taxpayer's identity shall not be treated as taxpayer return information for purposes of disclosures related to terrorism); (13) the authority for disclosing certain tax return information to the Department of Education for taxpayers seeking student loan repayment plans based on income; (14) the authority for the demonstration project for combined Federal and State employment tax reporting; and (15) the suspension of the reduction of the tax credit for clean fuel vehicles. 
 
(Sec. 411) Extends through 2004 eligibility provisions for Archer medical savings accounts.
 
(Sec. 415) Extends through 2009 authority to issue New York Liberty Bonds.
 
(Sec. 418) Extends until January 1, 2006, the increased amount ($13.25 instead of $10.50) of excise tax on distilled spirits required to be paid back (covered) to the Treasuries of Puerto Rico and the Virgin Islands.
 
(Sec. 419) Extends for an additional year the Joint Committee on Taxation annual review of the strategic plans and budget for the IRS.
 
(Sec. 420) Extends through December 31, 2005, provisions of the Code, the Employee Retirement Income Security Act of 1974, and the Public Health Service Act requiring parity in the application of group health plan limits to mental health benefits.
 

Title V: Deduction of State and Local General Sales Taxes
 - Allows a taxpayer election to deduct State and local sales taxes in lieu of State and local income taxes.
 

Title VI: Revenue Provisions - Subtitle A: Provisions to Reduce Tax Avoidance Through Individual and Corporate Expatriation
 - (Sec. 601) Provides that the taxable income of an expatriated entity shall not be less than the inversion gain of such entity for the taxable year. Defines &quot;expatriated entity&quot; as a domestic corporation, partnership, or U.S. person: (1) which is acquired in an inversion transaction by a foreign corporation after March 4, 2003; (2) whose shareholders or owners own at least 60 percent of the stock or value of the foreign corporation after such transaction; and (3) which does not have substantial business activities in the foreign jurisdiction under whose law it was created compared to the worldwide business activities of its affiliated group. Defines &quot;inversion gain&quot; as income or gain resulting from a transfer of stock or other properties by an expatriated entity to a foreign corporation. 
 
(Sec. 602) Imposes an excise tax equal to 15 percent of the value of stock compensation held by certain shareholders or family members in an expatriated entity at any time during the 12-month period beginning on the date which is six months before the date of expatriation.
 
(Sec. 603) Revises provisions relating to the authority of the Secretary to allocate tax incidents between the parties to a reinsurance agreement involving tax avoidance or evasion.
 
(Sec. 604) Revises the tax rules on expatriation of individuals. Provides that expatriated individuals shall be subject to alternative taxes for former U.S. citizens and residents for a ten year period following expatriation unless such individuals show: (1) an average annual net income tax not exceeding $124,000; (2) a net worth of not more than $2 million; and (3) compliance with applicable tax requirements for the five preceding taxable years. Exempts taxpayers with dual citizenship in the United States and another country and with no substantial contacts with the United States from the net income tax and net worth requirements. Sets forth rules for determining when a U.S. citizen or resident becomes expatriated.
 
Requires expatriated individuals to file annual returns, even if no tax is due, disclosing the individual's country of residence, the number of days the individual was present in the United States, and information on the individual's income and assets. Imposes a $10,000 penalty for failure to provide required information, but allows a waiver of such penalty if such failure is due to reasonable cause and not to willful neglect. 
 
(Sec. 605) Imposes certain reporting requirements upon the acquiring corporation in a taxable acquisition of another corporation. Imposes a penalty for failure to report required information. 
 
(Sec. 606) Requires the Secretary to conduct a study of the following matters and to report findings to Congress: (1) the effectiveness of current transfer pricing rules and compliance efforts in ensuring that cross-border transfers and other related-party transactions cannot be used improperly to shift income out of the United States; (2) U.S. income tax treaties to identify any inappropriate reductions in U.S. withholding tax that provide opportunities for shifting income outside the United States; and (3) the impact of this title on corporate expatriation.
 

Subtitle B: Provisions Relating to Tax Shelters - Part I: Taxpayer-Related Provisions
 - (Sec. 611) Imposes a new penalty for failing to report tax shelter transactions that have a potential for tax avoidance or evasion (reportable transactions) and transactions specifically identified as tax avoidance transactions (listed transactions). Allows the Commissioner of Internal Revenue discretion to rescind all or a portion of the penalty under certain conditions.
 
(Sec. 612) Imposes a 20 percent penalty for understatements of tax resulting from tax shelter activities and increases such penalty to 30 percent for undisclosed tax shelter transactions. Allows a waiver of such penalty if the taxpayer shows reasonable cause for the understatement of tax and has acted in good faith. 
 
(Sec. 613) Expands the denial of privilege for communications between a tax practitioner and a corporate client to include any individual engaged in tax shelter activity. 
 
(Sec. 614) Extends the statute of limitations for assessing underpayments of tax resulting from undisclosed tax shelter transactions to one year after the required disclosures are made. 
 
(Sec. 615) Requires material advisors of tax shelters to file informational returns identifying certain tax shelter transactions and the potential tax benefits expected to result from the transactions. Requires such material advisors to maintain a client list of investors.
 
(Sec. 616) Revises provisions for registration of tax shelters to impose a penalty for failure to file an informational return or for filing false or incomplete information with respect to tax shelter activities.
 
(Sec. 617) Imposes a daily penalty of $10,000 on material advisors of tax shelters who fail to disclose lists of tax shelter investors. Allows an exemption from the penalty for reasonable cause. 
 
(Sec. 618) Imposes an additional penalty on promoters of abusive tax shelters equal to 50 percent of the gross income derived from the tax shelter activity.
 
(Sec. 619) Modifies the definition of substantial understatement of tax for corporations other than an S corporation or a personal holding company to mean the lesser of ten percent of the tax required to be shown or $10 million.
 
(Sec. 620) Expands the authority of the Secretary to seek an injunction against participants in abusive tax shelter activities. 
 
(Sec. 621) Increases the penalty for failure to report interests in foreign financial accounts. Allows an exemption from the penalty if the violation was due to reasonable cause and was not willful.
 
(Sec. 622) Authorizes the Secretary to censure and fine an incompetent or disreputable tax advisor who practices before the Department of the Treasury.
 

Part II: Other Provision:
 (Sec. 631) Permits the application of stripped preferred stock rules and stripped bond rules in the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof. 
 
(Sec. 632) Establishes a minimum holding period for withholding taxes on gain and income other than dividends in order to claim the foreign tax credit.
 
(Sec. 633) Revises rules relating to contributions of property with built-in losses to a partnership to limit recognition of losses to the contributing partner.
 
(Sec. 634) Prohibits an allocation of any decrease in the adjusted basis of partnership property to stock in a corporation which is a partner in the partnership. 
 
(Sec. 635) Repeals Part V (Financial Asset Securitization Investment Trusts - FASITS) of subchapter M (Regulated Investment Companies and Real Estate Investment Trusts). 
 
(Sec. 636) Limits to fair market value the adjusted basis of a transferred residual interest in a real estate mortgage investment conduit.
 
(Sec. 637) Expands the definition of &quot;banking business&quot; for purposes of the exemption of investment of earnings in U.S. property to include financial services providers.
 
(Sec. 638) Increases from $1.2 million to $1.89 million the limit on the amount of premiums which a tax-exempt small property and casualty insurance company may receive without forfeiting its election to be taxed only on investment income. Adjusts the limitation amount for inflation after 2004.
 
(Sec. 639) Denies a tax deduction for interest paid on an underpayment of tax resulting from a tax shelter transaction that was not reported. 
 
(Sec. 640) Applies estimated tax requirements to certain stock sales between certain target corporations and a consolidated group of corporations.
 
(Sec. 641) Makes the exclusion for gain on the sale of a principal residence inapplicable if the principal residence was acquired in a like-kind exchange in which the gain was not recognized within the required five-year period. 
 
(Sec. 642) Limits original issue discount and other deductions to the extent that amounts are includible in the income of the payor who is a related foreign entity. 
 
(Sec. 643) Excludes from gross income interest paid on certain overpayments of tax.
 
(Sec. 644) Permits taxpayers to make a cash deposit to suspend the running of interest on potential underpayments of tax. 
 
(Sec. 645) Authorizes the IRS to enter into partial payment installment agreements with taxpayers (current law requires agreements to include the entire liability). Requires review of such agreements at least every two years. 
 
(Sec. 646) Authorizes the Secretary to issue consolidated return regulations that treat corporations filing consolidated returns differently than corporations filing separate returns. 
 

Part III: Leasing
 - (Sec. 647) Establishes a depreciation recovery period for computer software classified as tax-exempt use property subject to a lease of not less than 125 percent of the lease term. 
 
(Sec. 648) Disallows losses from the leasing of property to tax-exempt organizations (tax-exempt use losses). Allows a carryover of a disallowed loss to the next taxable year. 
 
Allows tax-exempt use losses with respect to property: (1) that is not financed with tax-exempt bonds or Federal funds; (2) in which the lessor makes an equity investment of at least 20 percent of the lessor's adjusted basis; (3) in which the lessee does not bear more than a minimal risk of loss; and (4) that grants the lessee a fair market purchase option (applies only to property with more than a seven-year class life). 
 
Applies the amendments made by this section to leases entered into after March 12, 2004. Exempts from the amendments made by this section qualified transportation property. Defines &quot;qualified transportation property&quot; as domestic property subject to a lease for which a formal application: (1) was submitted for approval to the Federal Transit Administration after June 30, 2003, and before March 13, 2004; (2) is approved by the Federal Transit Administration before January 1, 2005, and (3) includes a description of such property and the value of such property. 
 

Subtitle C: Reduction of Fuel Tax Evasion
 - (Sec. 651) Exempts mobile machinery from the excise tax on heavy trucks sold at retail, the use tax on highway vehicles, and the tax on tires. Establishes a design-based test and a use-based test (less than 7,500 miles use on public highways per year) to determine whether certain equipment qualifies as mobile machinery for purposes of the tax exemption. Allows refunds of taxes paid on mobile machinery on an annual basis only.
 
(Sec. 652) Revises rules for the taxation of aviation-grade kerosene. Retains current tax rates on such fuel, but allows a reduced rate of 4.3 percent (as under current law) for fuel which is removed from any refinery or terminal directly into the fuel tank of a commercial aircraft. 
 
(Sec. 653) Changes the dyeing process for the diesel fuel and kerosene tax exemption from manual to mechanical injection. Requires the Secretary to issue regulations on mechanical dye injection systems, including making such systems tamper resistant. Imposes a penalty of the greater of $25,000 or $10 for each gallon of fuel involved for tampering with a mechanical dye injection system. Imposes a penalty upon the operator of a mechanical dye injection system of $1,000 for each failure to maintain security standards and $1,000 for each day such operator fails to correct a violation. 
 
(Sec. 654) Authorizes the Secretary to inspect any books, records, and shipping papers pertaining to taxable fuels (i.e. gasoline, diesel fuel, and kerosene) at locations where such fuels are produced or stored. 
 
(Sec. 655) Extends the bulk transfer exemption from taxable fuels to registered pipeline or vessel operators. 
 
(Sec. 656) Requires every operator of a vessel who is required to register for the bulk transfer exemption to display proof of registration through a prescribed electronic identification device on each vessel used by such operator to transport taxable fuels. Imposes a penalty for $500 for each failure to display proof of registration, with increased penalties for multiple violations. Allows penalties to be waived upon a showing that failure to register was due to reasonable cause. 
 
(Sec. 657) Increases to $10,000 certain civil and criminal penalties for failure to register or for falsely representing registration status with respect to a taxable fuel. 
 
(Sec. 658) Imputes liability to a registered importer of record for unpaid excise tax owed by an unregistered importer. Authorizes the Secretary to collect any unpaid tax from the custom bond posted by the registered importer. 
 
(Sec. 659) Provides for the proration of the use tax on heavy vehicles (weighing more than 55,000 pounds) that are sold before the end of the taxable period. Repeals provisions allowing installment payments of such use tax. Requires a taxpayer with 25 or more heavy vehicles to file tax returns electronically. Repeals the reduced tax rate for Canadian and Mexican heavy vehicles. 
 
(Sec. 660) Limits ultimate vendor claims for tax refunds for sales of diesel fuel or kerosene used on a farm for farming purposes to amounts not exceeding 250 gallons.
 
(Sec. 661) Appropriates amounts equivalent to specified penalties added or increased by this subtitle to the Highway Trust Fund. 
 
(Sec. 662) Provides that a registered vendor of taxable fuels on which excise tax has been paid shall be treated as the ultimate vendor for purposes of claiming credits and refunds of tax. Grants ultimate vendor status to credit card lenders for credit card purchases of diesel fuel or kerosene, including credit card purchases by State and local governments.
 
(Sec. 663) Exempts the delivering person from liability for fuel excise tax in two-party exchanges (as defined in this section). 
 
(Sec. 664) Revises the excise tax on tires to impose a tax at the rate of 9.4 cents (4.7 cents in the case of a biasply tire) for each ten pounds of tire load capacity in excess of 3,500 pounds. Exempts from such tax tires sold for the exclusive use of the Department of Defense or the Coast Guard. 
 

Subtitle D: Nonqualified Deferred Compensation Plans
 - (Sec. 671) Sets forth rules for determining the includibility in gross income of deferred compensation under nonqualified deferred compensation plans when such compensation is no longer subject to a substantial risk of forfeiture. Sets forth criteria for determining whether plan compensation is subject to a substantial risk of forfeiture. 
 

Subtitle E: Other Revenue Provisions
 - (Sec. 681) Authorizes the Secretary to enter into contracts with private collection agencies to perform certain services related to the collection of unpaid tax. Provides that the United States shall not be liable for any act or omission of any such collection agency. Permits a civil action against a collection agency, but not against the United States, for unauthorized collection actions. 
 
(Sec. 682) Sets forth rules for the tax deduction for charitable contributions of patents and similar intellectual properties. Revises requirements for informational returns relating to such contributions. Authorizes the Secretary to prescribe regulations to prevent abuse of the tax deduction. 
 
(Sec. 683) Revises reporting requirements for noncash charitable contributions exceeding $500, $5,000, and $500,000. Requires appraisals of such contributions in accordance with regulations promulgated by the Secretary. 
 
(Sec. 684) Requires qualified appraisals for certain motor vehicles, boats, and aircraft for which a charitable contribution deduction is claimed. Directs the Secretary to issue regulations defining qualified appraisals.
 
(Sec. 685) Permits (current law prohibits) the amortization of intangibles by sport franchises.
 
(Sec. 686) Increases from 15 to 100 percent the allowable amount of the continuing levy on Federal vendor payments for unpaid taxes. 
 
(Sec. 687) Modifies straddle rules to: (1) permit taxpayers to identify offseting positions of a straddle; (2) revise the tax treatment of certain physically settled positions of a straddle; and (3) repeal the stock and qualified covered call exceptions from the straddle rules.
 
(Sec. 688) Includes any vaccine against hepatitis A and any trivalent vaccine against influenza under the 75 cents-per-dose manufacturer's excise tax.
 
(Sec. 690) Extends the authority for certain IRS user fees until September 30, 2014. 
 
(Sec. 691) Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to extend the passenger and conveyance customs fees and the merchandise processing customs fees through September 30, 2014. Expresses the sense of Congress with respect to the reasonableness of certain customs fees. Directs the Secretary of the Treasury to study all fees collected by the Department of Homeland Security and report to Congress by September 30, 2005, on what fees should be eliminated, what the rate of fees retained should be, and other appropriate recommendations. 
 

Title VII: Market Reform for Tobacco Growers
 - (Sec. 701) Fair and Equitable Tobacco Reform Act of 2004 - 
Subtitle A: Termination of Federal Tobacco Quota and Price Support Programs 
- (Sec. 711) Amends and repeals specified agricultural Acts to eliminate tobacco quota and price support programs. Amends the Agricultural Act of 1949 to eliminate tobacco from the definition of "basic agricultural commodity." 
 
(Sec. 713) Directs the Commodity Credit Corporation to collect assessments on 2005 and subsequent tobacco crops and on tobacco imports in order to cover outstanding price support loan costs.
 

Subtitle B: Transitional Payments to Tobacco Quota Holders and Active Producers of Tobacco 
- (Sec. 721) Defines "active tobacco producer" and "tobacco quota holder." Directs the Secretary of Agriculture to make transitional payments based on the 2002 marketing year to tobacco quota holders and active producers of quota tobacco. Appropriates up to $9.6 billion for such payments. Provides for: (1) county committee resolution of payment disputes; and (2) inheritance of the right to receive such payments.
 

Title VIII: Trade Provisions
 - (Sec. 801) Amends the Harmonized Tariff Schedule of the United States to: (1) suspend duties on ceiling fans through December 31, 2006; (2) extend duty-free entry of nuclear steam generators through December 31, 2008; and (3) suspend duties on nuclear reactor vessel heads through December 31, 2008. 

action_date: 2004-07-15
text: 
Jumpstart Our Business Strength (JOBS) Act - 
Title I: Provisions Relating to Repeal of Exclusion for Extraterritorial Income
 - (Sec. 101) Amends the Internal Revenue Code (Code) to repeal the tax exclusion for extraterritorial income. Exempts from the repeal transactions in the ordinary course of a trade or business pursuant to certain preexisting binding contracts.
 
Permits foreign corporations to revoke elections to be treated as U.S. corporations for purposes of the extraterritorial income tax exclusion. Sets forth rules for the treatment of gain or loss resulting from the revocation of an election.
 
Provides for a three-year period of transitional relief for taxpayers who were eligible for the exclusion for extraterritorial income by allowing a tax deduction based upon such taxpayers' average benefit amount between 2000 and 2002. Phases out such transitional relief in 2005 and 2006.
 
(Sec. 102) Phases in, between 2004 and 2009, a tax deduction for qualified domestic production activities income. Provides that the percentage amount of the deduction shall be nine percent of domestic production activities income for taxable years beginning in 2009. Limits the amount of the deduction to 50 percent of the W-2 wages of an employer for a taxable year. Allows the deduction for purposes of computing alternative minimum tax liability.
 
Provides special rules for the calculation of the deduction for agricultural and horticultural cooperatives, affiliated groups, and gross receipts derived from the use of films and videotapes.
 
(Sec. 103) Treats income from certain architectural and engineering services as qualified domestic production activity income for purposes of the tax deduction.
 
 Limits the tax deduction allowed employers for the entertainment expenses of certain covered employees (i.e., corporate Chief Executive Officers (CEOs)).
 

Title II: International Tax Provisions
 - 
Subtitle A: International Tax Reform
 - (Sec. 201) Extends the excess foreign tax credit carry forward period to 20 years and limits the carry back period to one year.
 
(Sec. 202) Revises rules for the tax treatment of dividends paid by a section 902 corporation (a foreign corporation in which the taxpayer owns at least 10 percent of the stock by vote and which is not a controlled foreign corporation).
 
(Sec. 203) Repeals the 90-percent limitation on the utilization of the alternative minimum tax foreign tax credit.
 
(Sec. 204) Treats as income from sources without the United States, in the case of any taxpayer who sustains an overall domestic loss for any taxable year beginning after December 31, 2006, that portion of the taxpayer's taxable income from sources within the United States for each succeeding taxable year which is equal to the lesser of: (1) the amount of such loss (to the extent not used in prior taxable years); or (2) 50 percent of the taxpayer's taxable income from sources within the United States for such succeeding taxable year.
 
(Sec. 205) Permits, in general, a worldwide affiliated group to have the taxable income of each domestic corporation which is a member of such group determined by allocating and apportioning interest expense of each member as if all members of such group were a single corporation. Provides that if a group makes this election, the taxable income of the domestic members of a worldwide affiliated group from sources outside the United States will be determined by allocating and apportioning the interest expense of domestic members to foreign-source income in accordance with a specified formula. Provides that non-interest expenses which are not directly allocable or apportioned to any specific income producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation.
 
(Sec. 206) Modifies the definition of subpart F (Controlled Foreign Corporations) foreign personal holding company income with respect to gains or losses from a commodities hedging transaction.
 

Subtitle B: International Tax Simplification
 - (Sec. 211) Repeals the following provisions of the Code: (1) Part III (Foreign Personal Holding Companies) of Subchapter G (Corporations Used to Avoid Income Tax on Shareholders) of Chapter 1 (Normal Taxes and Surtaxes); (2) Section 1246 (Gain on Foreign Investment Company Stock); and (3) Section 1247 (Election by Foreign Investment Companies to Distribute Income Currently).
 
(Sec. 212) Revises the subpart F de minimis rule to provide that, if the gross amount of a controlled foreign corporation's foreign base company income and insurance income for a taxable year is less than the lesser of five percent of the controlled foreign corporation's gross income or $5 million (currently, $1 million), then no part of the controlled foreign corporation's gross income is treated as foreign base company income or insurance income.
 
(Sec. 213) Modifies attribution rules for stock ownership through partnerships to provide that stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its partners, for purposes of determining deemed-paid foreign tax credits of domestic corporations that own ten percent or more of the voting stock of a foreign corporation.
 
(Sec. 214) Provides that, subject to stated exceptions, rules concerning capitalization and inclusion in inventory costs of certain expenses shall not apply to any non-U.S. taxpayer if such taxpayer capitalizes costs of produced property or property acquired for resale by applying the method used to ascertain the income, profit, or loss for purposes of reports or statements to shareholders, partners, other proprietors, or beneficiaries, or for credit purposes.
 
(Sec. 215) . Exempts from the 30 percent tax on U.S. source income of nonresident aliens, dividends paid by certain foreign corporations.
 
(Sec. 216) Repeals the 30 percent special tax on the capital gains of aliens present in the United States 183 days or more.
 

Subtitle C: Additional International Tax Provisions
 - (Sec. 221) Excludes &quot;qualified leasing income&quot; derived from or in connection with the leasing or rental of any aircraft or vessel from treatment as foreign personal holding company income or foreign base company shipping income of a controlled foreign corporation.
 
(Sec. 222) Excludes dividends, interest, rents, and royalties received or accrued from a controlled foreign corporation which is a related person from treatment as foreign personal holding company income to the extent attributable or properly allocable to income of the related person which is not subpart F income.
 
(Sec. 223) Treats the sale by a controlled foreign corporation of a partnership interest as a sale of the proportionate share of partnership assets attributable to such interest for purposes of determining subpart F foreign personal holding company income, but only with respect to partners with at least a 25 percent interest in the partnership.
 
(Sec. 224) Permits taxpayers required to translate foreign income tax payments at the average exchange rate to elect to translate such taxes into U.S.-dollar amounts using the exchange rates as of the time such taxes are paid, provided the foreign income taxes are denominated in a currency other than the taxpayer's functional currency.
 
(Sec. 225) Permits a taxpayer to elect to treat a tax imposed under the law of a foreign country or a U.S. possession on an amount which does not constitute income under U.S. tax principles as a tax imposed on general limitation income or on financial services income.
 
(Sec. 226) Modifies exceptions from subpart F foreign personal holding company income and foreign base company services income for income derived in the active conduct of a banking, financing, or similar business.
 
(Sec. 227) Adds exceptions from the definition of U.S. property for determining current income inclusion by a U.S. ten-percent shareholder with respect to certain investments in U.S. property by a controlled foreign corporation.
 
(Sec. 228) Treats interest paid by foreign partnerships in a manner similar to the treatment of interest paid by foreign corporations, but only with respect to foreign partnerships that are principally owned by foreign persons (a partnership in which U.S. citizens and residents do not own, directly or indirectly, 20 percent or more of the capital or profits interests in the partnership).
 
(Sec. 229) Specifies that deemed payments, under provisions concerning the transfer of intangibles being treated as transferred pursuant to the sale of contingent payments, are treated as royalties for purposes of applying the separate limitation categories of the foreign tax credit.
 
(Sec. 230) Removes from treatment as effectively connected income for a foreign investor a capital gain distribution from a real estate investment trust (REIT), if: (1) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States; and (2) the foreign investor does not own more than five percent of the class of stock at any time during the taxable year within which the distribution is received.
 
(Sec. 231) Permits certain dividends received by a U.S. corporation from a controlled foreign corporation to be taxed at 5.25 percent.
 
(Sec. 232) Excludes from gross income winnings paid to a nonresident alien resulting from a legal wager initiated outside the United States in a pari-mutuel pool on a live horse or dog race in the United States.
 
(Sec. 233) Lowers the withholding income tax rate on U.S. source dividends paid to a corporation created or organized in Puerto Rico from 30 percent to 10 percent.
 
(Sec. 234) Directs the Secretary of Commerce to transmit a report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives, regarding whether dispute settlement panels and the Appellate Body of the World Trade Organization have: (1) added to or diminished the rights of the United States by imposing obligations and restrictions on the use of antidumping, countervailing, or safeguard measures not agreed to under the World Trade Organization Antidumping Agreement, the Agreement on Subsidies and Countervailing Measures, or the Agreement on Safeguards; (2) appropriately applied the standard of review contained in Article 17.6 of the Antidumping Agreement; or (3) exceeded its authority or terms of reference.
 
(Sec. 235) Directs the Secretary of the Treasury to conduct a study of the impact of Federal international tax rules on taxpayers other than large corporations, including the burdens placed on such taxpayers in complying with such rules.
 
(Sec. 236) Postpones the effective date of final regulations issued by the Secretary of the Treasury relating to income derived by foreign corporations from the international operation of ships or aircraft (Treasury Regulations 1.883-1 through 1.883-5).
 
(Sec. 237) Allows a tax deduction for interest on a loan guaranteed by a foreign entity that is deemed a &quot;disqualified guarantee&quot; if the taxpayer can establish that a loan was available from an unrelated person without the guarantee.
 

Title III: Domestic Manufacturing and Business Provisions
 - 
Subtitle A: General Provisions
 - (Sec. 301) Increases the maximum allowable amount of total capital expenditures for tax-exempt qualified State and local government small-issue bonds.
 
(Sec. 302) Permits a taxpayer to expense (deduct in a current taxable year), rather than capitalize, certain broadband expenditures. Allows a tax-exempt mutual or cooperative telephone company to deduct its broadband expenditures against unrelated business taxable income.
 
(Sec. 303) Excludes from the determination of the production period for distilled spirits any period allocated to the natural aging process for purposes of determining whether a taxpayer can expense, rather than capitalize, interest costs paid or incurred during the production period.
 
(Sec. 304) Modifies the active business test used to determine nonrecognition of gain from corporate distributions to an affiliated group. 
 
(Sec. 305) Modifies excise tax provisions for the importation of archery products (including, increasing draw weight from 10 or more to 30 or more pounds).
 
(Sec. 306) Revises the rule for marketing activities by tax-exempt farmer cooperatives to provide that the marketing of products of cooperative members and other producers shall include the feeding of such products to cattle, hogs, fish, chickens, or other animals and selling the resulting animals or animal product. 
(Sec. 307) Permits farmers' cooperative organizations to seek declaratory judgments with respect to their initial or continuing qualification as tax-exempt organizations.
 
(Sec. 308) Suspends until 2009 the tax on personal holding company income.
 
(Sec. 309) Increases the amount of depreciable business assets that may be expensed by decreasing (by 50 percent) the reduction in the limitation on the deduction for such assets.
 
(Sec. 310) Provides for a five-year carry back of net operating losses that occurred between 2001 and 2003.
 
(Sec. 311) Extends the tax credit for increasing research activities through December 31, 2005. Increases the rates of the alternative incremental research credit. Allows certain taxpayers to elect an alternative credit for research expenses in lieu of the credit for increasing research expenses. 
 
(Sec. 312) Allows a tax credit for 20 percent of amounts paid to a tax-exempt research consortium organized and operated to conduct research in the public interest. Allows a tax credit for the full amount paid to certain small businesses, universities, and Federal laboratories for contract research.
 
(Sec. 313) Establishes as a general business tax credit a manufacturer's jobs credit equal to a certain percentage of wages paid to the employees (including employees eligible for a trade readjustment allowance) of a taxpayer that has a certain level of domestic production gross receipts in the current and preceding taxable year and is not disqualified as an inverted domestic corporation (a foreign corporation that manipulates its structure to evade U.S. taxes). Terminates the credit after 2005.
 
(Sec. 314) Authorizes the issuance of tax-exempt facility bonds for certain green building and sustainable design projects (projects) designated by the Secretary. Limits the amount of bonds that may be issued to $2 billion. Requires designated projects to: (1) register at least 75 percent of the square footage of the structures included in a project for certification by the U.S. Green Building Council's Leadership in Energy and Environmental Design; (2) include a brownfield site; (3) identify other State or local financial contributions that will be provided to support a project; (4) include at least one million square feet of building or 20 acres of land; and (5) provide at least 1,500 full time jobs (150 jobs in rural States) when completed and at least 1,000 full time jobs (100 jobs in rural States) during construction. Prohibits more than one project in a single State and requires at least one project in an empowerment zone and one project in a rural State. Terminates the authority for issuing bonds after September 30, 2009.
 

Subtitle B: Manufacturing Relating to Films
 - (Sec. 321) Allows: (1) a tax deduction in the current taxable year for the entire cost of certain film and television production costs, up to $15 million ($20 million for costs incurred in a low-income community or a distressed county); and (2) the amortization of remaining costs over a three-year period.
 
(Sec. 322) Allows the inclusion of participations and residuals in the adjusted basis of property for the taxable year in which the property is placed in service for the purposes of computing the allowable deduction for property under the income forecast method of depreciation, but only if such participations and residuals relate to income estimated to be earned in connection with the property before the close of the tenth taxable year following the year the property is placed in service.
 

Subtitle C: Manufacturing Relating to Timber
 - (Sec. 331) Allows a tax deduction in the current taxable year for the entire cost of certain reforestation expenditures, up to $10,000. Repeals the investment tax credit for reforestation expenditures. 
 
(Sec. 332) Permits a taxpayer to revoke a prior election to treat the cutting of timber as a sale or exchange. 
 
(Sec. 333) Qualifies the outright sale of timber for capital gains tax treatment.
 
(Sec. 334) Modifies safe harbor rules for timber REITs to provide that the sale of a real estate asset will not be a prohibited transaction if specified requirements are met.
 

Title IV: Additional Provisions - Subtitle A: Provisions Designed to Curtail Tax Shelters
 - (Sec. 401) Sets forth general rules for the application of the economic substance doctrine, including special rules for transactions with tax-indifferent parties.
 
(Sec. 402) Imposes a new penalty for failure to report a transaction that has a potential for tax avoidance or evasion (reportable transaction) or has been specifically identified as a tax avoidance transaction (listed transaction). Doubles the penalty for noncompliance by a large entity (gross receipts in excess of $10 million) or a high net worth individual. Grants the Commissioner of Internal Revenue discretion to rescind all or a portion of the penalty under certain conditions. 
 
(Sec. 403) Imposes a 20 percent penalty for understatements of tax resulting from certain tax shelter transactions and an increased penalty (30 percent) for failure to adequately disclose such transactions.
 
(Sec. 404) Imposes a penalty of 40 percent (20 percent, if there has been adequate disclosure) of the understatement of tax attributable to transactions lacking economic substance. 
 
(Sec. 405) Modifies the definition of substantial understatement of tax for corporations other than S corporations or personal holding companies to mean the lesser of ten percent of the tax required to be shown or $10 million.
 
(Sec. 406) Expands the denial of privilege for communications between a tax practitioner and a corporate client to include any individual involved in tax shelter activity.
 
(Sec. 407) Revises the requirements for registration of tax shelters to require material advisers of tax shelter activities to disclose information identifying and describing the tax shelter transaction and the potential tax benefits from such transaction. Requires material advisers to keep lists of taxpayers to whom they have provided tax shelter advice. Denies a claim of privilege as to the identity of any person on such lists.
 
(Sec. 408) Revises provisions for registration of tax shelters to impose a penalty for failure to file an informational return or for filing false or incomplete information with respect to tax shelter activities. 
 
(Sec. 409) Imposes a daily penalty of $10,000 on material advisers who fail to disclose lists of tax shelter investors. Allows an exemption from such penalty for reasonable cause. 
 
(Sec. 410) Expands the authority of the Secretary to seek an injunction against material advisors who fail to comply with requirements for the registration of tax shelters and the maintenance of lists of tax shelter investors.
 
(Sec. 411) Revises the standards for determining the liability of a taxpayer for an understatement of tax by an income tax return preparer. Increases the penalties for such understatements.
 
(Sec. 412) Increases the penalty for failure to report interests in foreign financial accounts. Allows an exemption from the penalty if the violation was due to reasonable cause and was not willful. 
 
(Sec. 413) Increases the penalty for frivolous tax returns and makes the penalty applicable to certain frivolous submissions to the IRS (e.g., requests for hearings, installment agreements, or offers in compromise). Allows a taxpayer to withdraw a frivolous submission within 30 days without penalty.
 
(Sec. 414) Authorizes the Secretary to censure and fine an incompetent or disreputable tax advisor who practices before the Department of the Treasury.
 
(Sec. 415) Increases the penalty for promoting abusive tax shelters to not to exceed 100 percent of the gross income derived from the tax shelter activity. Denies a tax deduction for such penalty.
 
(Sec. 416) Extends the limitation on the period for assessment of tax in cases where a taxpayer fails to disclose required information about a tax shelter transaction to one year after required disclosures are made.
 
(Sec. 417) Prohibits a tax deduction for interest paid on any underpayment of tax attributable to nondisclosed reportable transactions and noneconomic substance transactions. 
 
(Sec. 418) Authorizes appropriations for the purpose of carrying out tax law enforcement to combat tax avoidance transactions and other tax shelters, including the use of offshore financial accounts to conceal taxable income.
 
(Sec. 419) Increases the penalty for aiding and abetting the understatement of tax liability. 
 
(Sec. 420) Directs the Secretary, jointly with the Attorney General and other Federal agencies, to study the effectiveness of, and ways to improve, the sharing of information related to the promotion of prohibited tax shelters or tax avoidance schemes and other potential violations of Federal law and to report the findings to Congress.
 

Subtitle B: Other Corporate Governance Provisions
 - (Sec. 421) Authorizes the Secretary to issue regulations that treat corporations filing consolidated returns differently than corporations filing separate returns.
 
(Sec. 422) Requires corporate tax returns to include a declaration by the chief executive officer (CEO), under penalty of perjury, that the return complies with the Internal Revenue Code and that the CEO was provided reasonable assurance of the accuracy of all material aspects of the return.
 
(Sec. 423) Confirms the nondeductibility of fines for violations of law or costs incurred in an investigation of a potential violation of law. Allows a tax deduction for restitution payments, for court-ordered payments to certain nongovernmental regulatory agencies, and for amounts paid or incurred as taxes due.
 
(Sec. 424) Prohibits a deduction for amounts paid as punitive damages, with exceptions for a wrongful death action and certain other cases. Includes in gross income amounts paid by insurance as punitive damages.
 
(Sec. 425) Increases the criminal penalties for attempts to evade or defeat tax, for willful failure to file tax returns or pay tax, and for fraud and making false statements on tax returns. 
 

Subtitle C: Enron-Related Tax Shelter Provisions
 - (Sec. 431) Limits the basis of certain corporate property acquired by the issuance of stock or as paid-in surplus and for which there is the importation of net built-in loss to the property's fair market value immediately after the transfer of such property.
 
(Sec. 432) Prohibits an allocation of any decrease in the adjusted basis of partnership property to stock in a corporation which is a partner in the partnership.
 
(Sec. 433) Repeals part V (Financial Asset Securitization Investment Trusts - FASITS) of subchapter M (Regulated Investment Companies and Real Estate Investment Trusts).
 
(Sec. 434) Expands the disallowance of tax deductions for interest paid on disqualified debt instruments of corporations to provide that if such instruments are payable in equity held by the issuer (or any related party) in any other person (other than a related party), the basis of such equity shall be increased by the amount disallowed as a deduction to include interest paid on corporate debt that is payable in, or by reference to, the value of any equity held by the issuer of the debt instrument or any related party. 
 
(Sec. 435) Expands the authority of the Secretary to disallow tax benefits obtained through certain acquisitions of corporate assets made for the principal purpose of evading or avoiding Federal income tax.
 
(Sec. 436) Amends provisions affecting passive foreign investment companies to state that the term "qualified portion" (of a shareholder's holding period) does not include any period if the earning of subpart F (Controlled Foreign Income) income by such corporation during such period would only result in a remote likelihood of an inclusion in gross income.
 

Subtitle D: Provisions to Discourage Expatriation
 - (Sec. 441) Sets forth rules for the tax treatment of foreign corporations that acquire substantially all of the stock or assets of a domestic corporation or partnership (inverted domestic corporation) for the purpose avoiding U.S. taxation. Treats a foreign corporation deemed to be an inverted corporation as a domestic corporation for U.S. tax purposes. 
 
Requires U.S. corporations to disclose to shareholders five days prior to a shareholder vote relating to a corporate inversion: (1) the number of employees to be relocated due to the inversion transaction; (2) how the rights of shareholders would be impacted by the inversion; and (3) any tax consequences resulting from the inversion.
 
(Sec. 442) Sets forth tax rules for U.S. citizens and permanent resident aliens (expatriates) who terminate their citizenship or residency for the purpose of avoiding U.S. taxation. Subjects expatriates to a tax on the net unrealized gain of property sold or transferred based upon the fair market value of such property as of the day before expatriation. Exempts from this tax the first $600,000 of the value of such property ($1.2 million for joint returns). Provides for an inflation adjustment of the exemption amount. 
 
Permits expatriates to elect to continue to be taxed as U.S. citizens. Allows deferral of tax owed, but requires the posting of adequate security for payment of any tax deferred. Sets forth rules for determining the date a U.S. citizen terminated citizenship. 
 
Sets forth rules for the tax treatment of retirement plans, interests in trusts, gifts, and inheritances of expatriates. 
 
Amends the Immigration and Nationality Act to deny expatriates who fail to comply with tax obligations reentry into the United States. (Current law denies reentry of U.S. citizens who terminate citizenship to avoid U.S. taxation.)
 
(Sec. 443) Imposes on an individual who is a disqualified individual with respect to any inverted corporation a tax equal to 20 percent of the value of the specified stock compensation held (directly or indirectly) by or for the benefit of such individual or a member of such individual's family at any time during the 12-month period beginning on the date which is 6 months before the inversion date.
 
(Sec. 444) Revises provisions relating to the authority of the Secretary to allocate tax incidents between the parties to a reinsurance agreement involving tax avoidance or evasion.
 
(Sec. 445) Imposes certain reporting requirements upon the acquiring corporation in a taxable acquisition of another corporation. Provides for a penalty for failure to report required information.
 

Subtitle E: International Tax
 - (Sec. 451) Expands the definition of &quot;banking business&quot; for purposes of the exemption of investment of earnings in U.S. property to include financial services providers.
 
(Sec. 452) Provides for treatment as a dividend any distribution by a U.S. holding company to a foreign corporation of earnings in a complete liquidation, if the U.S. holding company was in existence for less than five years.
 
(Sec. 453) Provides that in the case of any: (1) debt instrument having original issue discount which is held by a related foreign person which is a foreign personal holding company, a controlled foreign corporation, or a passive foreign investment company, a deduction shall be allowable to the issuer with respect to such original issue discount for any taxable year only to the extent such original issue discount is included during such taxable year in the gross income of a U.S. person who owns stock in such corporation; and (2) amount payable to a foreign personal holding company, a controlled foreign corporation, or a passive foreign investment company, a deduction shall be allowable to the payer with respect to such amount for any taxable year only to the extent such amount is included during such taxable year in the gross income of a U.S. person who owns stock in such corporation.
 
(Sec. 454) Includes certain economic equivalents of foreign source income as income effectively connected with a U.S. trade or business.
 
(Sec. 455) Sets forth a rule concerning the recapture of overall foreign losses on the sale of controlled foreign corporation stock.
 
(Sec. 456) Establishes a minimum holding period for withholding taxes on gain and income other than dividends in order to claim the foreign tax credit.
 

Subtitle F: Other Revenue Provisions - Part I: Financial Instruments
 - (Sec. 461) Permits the application of stripped preferred stock rules and stripped bond rules in the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or combination thereof.
 
(Sec. 462) Subjects to disallowance under the earnings stripping rules the deduction for interest paid or accrued by partnerships if the partnership meets certain tests that would apply to a C corporation.
 
(Sec. 463) Provides that: (1) for purposes of determining income of a debtor from discharge of indebtedness, if a debtor corporation transfers stock, or a debtor partnership transfers a capital or profits interest in such partnership, to a creditor in satisfaction of its recourse or nonrecourse indebtedness, such corporation or partnership shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock or interest; and (2) in the case of any partnership, any discharge of indebtedness income so recognized shall be included in the distributive shares of taxpayers who were the partners in the partnership immediately before such discharge.
 
(Sec. 464) Modifies straddle rules to: (1) permit taxpayers to identify offsetting positions of a straddle; (2) revise the tax treatment of certain physically settled positions of a straddle; and (3) repeal the stock and qualified covered call exceptions from the straddle rules.
 
(Sec. 465) Denies installment sales treatment with respect to all debt instruments that are readily tradeable.
 

Part II: Corporations and Partnerships
 - (Sec. 466) Limits the amount of assets that a distributing corporation can distribute to its creditors without recognition of gain to the amount of the basis of the assets contributed to a controlled corporation in a divisive reorganization.
 
(Sec. 467) Modifies the definition of nonqualified preferred stock to add provisions stating that stock shall not be treated as participating in corporate growth to any significant extent unless there is a real and meaningful likelihood of the shareholder actually participating in the earnings and growth of the corporation. 
 
(Sec. 468) Modifies the definition of a brother-sister controlled group of corporations.
 
(Sec. 469) Repeals section 754 of the Code (Manner of Electing Optional Adjustment to Basis of Partnership Property) and requires basis adjustments in connection with partnership distributions and transfers of partnership interests, but permits elective basis adjustments where there is a transfer of partnership interest upon a partner's death.
 

Part III: Depreciation and Amortization
 - (Sec. 471) Permits (currently, prohibits) the amortization of intangibles by sports franchises.
 
(Sec. 472) Classifies as 15-year property, for purposes of the tax deduction for depreciation, the initial clearing and grading land improvements with respect to gas utility property. Classifies as 20-year property the initial clearing and grading land improvements with respect to any electric utility transmission and distribution plant.
 
(Sec. 473) Limits to $25,000 the cost of a sport utility vehicle of 14,000 pounds or less that is not subject to the limitation on depreciation for luxury automobiles that may be expensed.
 
(Sec. 474) Revises rules for the first year deduction and amortization of startup and organizational expenditures.
 
(Sec. 475) Establishes a depreciation recovery period for tax-exempt use property subject to a lease of 125 percent of the lease term.
 
(Sec. 476) Disallows losses from the leasing of property to tax-exempt organizations (tax-exempt use losses). Allows a carryover of a disallowed loss to the next taxable year. 
 
Allows tax-exempt use losses with respect to property: (1) that is not financed with tax-exempt bonds or Federal funds; (2) in which the lessor makes an equity investment of at least 20 percent of the lessor's adjusted basis; (3) in which the lessee does not bear more than a minimal risk of loss; and (4) that grants the lessee a fair market purchase option (applies only to property with more than a seven-year class life).
 
Applies the changes made by this section to leases entered into after November 18, 2003. Establishes a separate effective date for leases to foreign entities (taxable years beginning after January 31, 2004, for leases entered into on or before November 18, 2003). 
 

Part IV: Administrative Provisions
 - (Sec. 481) Requires payment of estimated tax on elective recognition of gain or loss from stock sales between target corporations and a consolidated group. 
 
(Sec. 482) Extends, until September 30, 2013, the authority of the IRS to charge certain user fees.
 
(Sec. 483) Doubles civil penalties and interest for taxpayers who were eligible for either the Department of the Treasury Offshore Voluntary Compliance Initiative or the voluntary disclosure program for reporting underpayment of tax from certain offshore financial arrangements, but who did not participate in either program.
 
(Sec. 484) Authorizes the IRS to enter into partial payment installment agreements with taxpayers. Requires review of such agreements at least every two years.
 
(Sec. 485) Extends the authority for customs user fees through September 30, 2013.
 
(Sec. 486) Permits taxpayers to make a cash deposit to suspend the running of interest on potential underpayments of tax.
 
(Sec. 487) Authorizes the Secretary to enter into qualified tax collection contracts with private collection agencies to perform certain services related to the collection of unpaid tax. Provides that the United States shall not be liable for any act or omission of any such collection agency. Permits a civil action against a collection agency, but not against the United States, for unauthorized collection actions.
 
Limits the term of any qualified tax collection contract to five years from the date of enactment of this Act. Requires the Secretary to submit a report to Congress biennially on qualified tax collection contracts, including a complete cost benefit analysis, the amounts collected, and the collection costs incurred (directly and indirectly).
 
(Sec. 488) Authorizes awards to individuals who provide information to the Secretary that results in administrative or judicial actions against taxpayers whose gross income exceeds $200,000 or whose tax exceeds $20,000 for the payment of tax in dispute. Provides for awards of ten to 30 percent depending upon the value of the information provided.
 
Establishes a Whistleblower Office in the IRS to process information received from whistleblowers and to determine appropriate awards.
 
(Sec. 489) Prohibits the Secretary of Labor from promulgating any rule under the Fair Labor Standards Act that: (1) exempts from the overtime pay provisions of that Act any employee who earns less than $23,660 per year; and (2) is not at least as protective of overtime pay rights of employees in certain specified occupations as regulations in effect on March 31, 2003.
 
(Sec. 490) Invalidates final regulations promulgated under the Fair Labor Standards Act on April 23, 2004, that exempt certain employees from overtime pay protections.
 

Part V: Miscellaneous Provisions
 - (Sec. 491) Includes any vaccine against hepatitis A under the 75-cents-per-dose manufacturer's excise tax.
 
(Sec. 492) Makes the exclusion for gain on the sale of a principal residence inapplicable if the principal residence was acquired in a like-kind exchange in which the gain was not recognized within the required five year period.
 
(Sec. 493) Increases: (1) from an amount equal to 50 to 60 percent of gross receipts the amount of premiums a tax-exempt small property and casualty insurance company may receive; and (2) from $1.2 million to $1.89 million (adjusted for inflation after 2005) the amount of premiums such an insurance company may receive without forfeiting its election to be taxed only on investment income.
 
(Sec. 494) Sets forth rules for the tax deduction for charitable contributions of patents and similar intellectual properties. Revises requirements for informational returns relating to certain donated property to include rules for the contribution of patents and similar intellectual property. Authorizes the Secretary to prescribe regulations to prevent abuse of the tax deduction.
 
(Sec. 495) Increases from under 14 to under 18 the age of minor children whose unearned income is taxed at the parent's tax rate.
 
(Sec. 496) Revises the holding periods for determining the deductibility of certain preferred stock dividends.
 
(Sec. 497) Adopts a substantial presence test for purposes of determining bona fide residence in U.S. possessions for tax purposes. Requires Virgin Island residents to file an income tax return with the United States (current law requires filing only with the Virgin Islands). Imposes a penalty for failure to file a required return and increases such penalty for willful violations.
 

 Title V: Protection of United States Workers From Competition of Foreign Workforces
 - (Sec. 501) Amends the Office of Federal Procurement Policy Act to prohibit: (1) outsourced Federal Government work from being performed by a contractor outside the United States unless Federal employees previously performed such work outside the United States; (2) Federal contracts from being performed outside the United States except to meet a requirement of an executive agency for the contract to be performed specifically at a location outside the United States; and (3) Federal funds from being disbursed to a State unless the Governor of the State has transmitted written certification that none of the funds will be spent on work performed outside the United States (this provision does not apply to States for the fiscal year of the enactment of this Act and the next fiscal year).
 
 Exempts executive agency contracts from limitations on outsourcing if the President determines that it is in the national security interests for such contract to be performed outside the United States, or the head of such executive agency determines that property or services needed by the agency are available only outside the United States and that no property or services available inside the United States would satisfy the agency's needs.
 
Excludes from limitations on outsourcing of Federal and State resources, procurement covered by the World Trade Organization Government Procurement Agreement. Excludes from limitations on outsourcing of Federal work: (1) the Departments of Defense Army, Navy, or Air Force or any of their agencies or entities; (2) the Department of Homeland Security; (3) the Department of Energy with respect to national security programs; or (4) any element of the intelligence community.
 
Requires the Director of the Office of Management and Budget to track waivers and notifications of exemptions from outsourcing limitations and to report to Congress. Requires the Comptroller General to review annually waivers of outsourcing limitations and disbursements to States subject to outsourcing limitations and to report to Congress. 
 
(Sec. 502) Repeals provisions of the Transportation, Treasury, and Independent Agencies Appropriations Act, 2004 relating to outsourcing limitations that are superseded by this Act. 
 
(Sec. 503) Provides that this title shall be effective 30 days after the Secretary of Commerce certifies that it will not result in the loss of more jobs than it will protect and will not harm the U.S. economy. Renders the provisions of this title inapplicable to the extent that they may be inconsistent with obligations under international agreements.
 

Title VI: Other Provisions - Subtitle A: Provisions Relating to Housing 
- (Sec. 601) Amends the Internal Revenue Code to: (1) repeal, for mortgage revenue bonds issued after enactment of this Act, the requirement that payments received on such bonds within ten years after the date of issuance must be applied for payment of outstanding bonds; (2) treat mortgage insurance premiums that are paid for a principal residence as deductible mortgage interest (phases out the deductible amount of mortgage insurance premiums for a taxpayer with an adjusted gross income exceeding $100,000); and (3) increase the tax credit for historic rehabilitation expenditures from 20 to 25 percent of expenditures for historic structures that provide low-income housing for tenants age 65 or older.
 

Subtitle B: Provisions Relating to Bonds 
- (Sec. 611) Extends tax-exempt bond financing for New York Liberty Bonds through 2009 and for advance refundings of such bonds through 2005.
 
 (Sec. 612) Expands the allowable uses of qualified zone academy bond proceeds to include construction and land acquisition.
 
 (Sec. 613) Treats Indian Tribal Governments as States for purposes of the rules relating to tax-exempt bonds issued before January 1, 2006.
 
 (Sec. 614) Revises the definition of &quot;manufacturing facility&quot; for purposes of qualified small issue bonds to include the manufacture of tangible personal property, software products, biobased products, and bioenergy production.
 
 (Sec. 615) Treats certain qualified forest conservation bonds issued prior to December 31, 2006, as tax-exempt facility bonds.
 
 (Sec. 616) Authorizes the Secretary to establish a pilot program to allow Indian tribes to issue tribal school modernization bonds for the construction, rehabilitation, or repair of tribal schools. Allows a tax credit for holders of qualified tribal school modernization bonds.
 

Subtitle C: Provisions Relating to Depreciation 
- (Sec. 621) Sets forth a special rule for determining the date certain bonus depreciation property, including certain noncommercial aircraft, is placed in service.
 
 (Sec. 623) Establishes a seven-year depreciation recovery period for any motorsports entertainment complex.
 
 (Sec. 624) Allows corporations a refundable credit against the alternative minimum tax in lieu of claiming certain bonus depreciation.
 

Subtitle D: Expansion of Business Credit
 - (Sec. 631) Allows an increased new markets tax credit for investment in Native American reservations with a poverty rate of at least 40 percent.
 
 (Sec. 632) Allows a business tax credit for wages paid to a Ready Reserve-National Guard employee called to active duty. Limits the credit to 50 percent of the lesser of actual compensation paid or $30,000. Allows an increased refundable credit for wages paid to first responders, defined as law enforcement officials, firefighters, paramedics, and Ready Reserve-National Guard employees.
 
Allows a tax credit for employers who hire replacement employees for Ready Reserve-National Guard employees for the period that such Reservists or Guardsmen are called to active duty. 
 
Limits the amount of the tax exclusion for employer-provided housing for individuals employed in foreign countries. 
 
(Sec. 633) Establishes a business tax credit for investment in certain rural buildings and in certain rural small businesses.
 
(Sec. 635) Establishes a business tax credit for expenditures for railroad track maintenance and a credit for expenditures for railroad revitalization, including the costs of: (1) environmental review, track and track structure rehabilitation; (3) safety and security improvements; and (4) intercity passenger rail equipment acquisition.
 
Allows a business tax credit for rail infrastructure projects in the New York Liberty Zone (an area in New York City designated for the issuance of tax-exempt facility bonds).
 
(Sec. 637) Directs the Secretary to issue new regulations for the designation of targeted areas for the new markets tax credit.
 
(Sec. 638) Modifies income requirements pertaining to families in low-income communities within high migration rural counties for purposes of the new markets tax credit. 
 
 (Sec. 639) Establishes a business tax credit for expenditures to provide access to motion pictures for the deaf and hard of hearing.
 

Subtitle E: Miscellaneous Provisions - 
(Sec. 641) Excludes from the unrelated business taxable income of tax-exempt organizations income from investments for the cleanup and remediation of certain brownfield sites.
 
 (Sec. 642) Excludes certain debt incurred by a small business investment company and guaranteed by the Small Business Administration from the tax on unrelated debt-financed income of tax-exempt organizations.
 
 (Sec. 643) Allows a tax deduction from gross income for attorney fees and court costs paid for legal actions involving a claim of unlawful discrimination.
 
 (Sec. 644) Excludes from gross income payments under the National Health Service Corps loan repayment program and certain State repayment programs.
 
 (Sec. 645) Increases the tax deduction for the expenses of rural letter carriers. 
 
(Sec. 646) Specifies a method of accounting for certain naval ship contracts.
 
 (Sec. 647) Suspends the application of rules imposing income tax on distributions to shareholders from the policyholder's surplus account of a life insurance company for taxable years beginning in 2004 and 2005.
 
 (Sec. 648) Provides that dividends on the capital stock or other proprietary capital interests of certain tax-exempt cooperatives shall not reduce the net earnings of such cooperatives.
 
(Sec. 649) Modifies involuntary conversion rules to extend from two to four years the replacement period for livestock sold due to drought, flood, or other weather-related conditions. Allows the Secretary to extend the replacement period on a regional basis if weather related conditions continue for more than three years.
 
(Sec. 650) Exempts from tax certain termination payments received by a motor vehicle dealer from a manufacturer of a discontinued vehicle if the dealer reinvests the payment in property used in the dealership within two years after the dealer returns the discontinued vehicles.
 
(Sec. 651) Authorizes the Secretary of Housing and Urban Development to expand an area designated as a renewal community to include certain census tracts of general distress or with increased poverty rates based on 2000 census data. 
 
 (Sec. 652) Reduces from 24 to 12 months the holding period for horses used in a trade or business for purposes of the capital gains tax.
 
 (Sec. 653) Establishes a Blue Ribbon Commission on Comprehensive Tax Reform to study comprehensive reform of the Federal tax system and to report its findings to the President and to Congress.
 
(Sec. 654) Allows distributions from an employee stock benefit plan (ESOP) held by an S corporation for the purposes of repaying a loan used to purchase employer securities without loosing ESOP qualification or violating rules against prohibited transactions.
 
(Sec. 655) Revises the definition of &quot;reasonably anticipated needs of a business&quot; for purposes of the accumulated earnings tax to include working capital for a business that includes operating expenses, taxes, and interest expenses.
 
(Sec. 656) Permits a State-owned railroad corporation that is held by a REIT to be converted into a State-owned tax-exempt corporation, without the recognition of gain upon conversion. Allows such corporations to issue tax-exempt bonds.
 
(Sec. 657) Revises the definition of &quot;contributions in aid of construction&quot; for purposes of the tax exclusion for such contributions to include customer connection fees for water and sewerage disposal utilities.
 
(Sec. 658) Establishes a business tax credit for the purchase and installation of agricultural water conservation systems.
 
(Sec. 659) Modifies involuntary conversion rules for certain corporations filing consolidated returns that were affected by the September 11, 2001, terrorist attacks in New York City.
 
(Sec. 660) Repeals the application of below-market loan rules for loans to certain continuing care facilities under a continuing care contract.
 
(Sec. 661) Revises the capital gains tax treatment of certain collectibles.
 
(Sec. 662) Amends title XIX (Medicaid) of the Social Security Act to include as an optional Medicaid benefit primary and secondary medical strategies and treatment for individuals with sickle cell anemia.
 

Subtitle F: Revenue Provisions - Part I: General Revenue Provisions
 - (Sec. 661A) Authorizes the Secretary to issue regulations for denying a foreign tax credit for certain applications of the credit.
 
(Sec. 662B) Makes permanent the 18-month period for IRS notification of tax liabilities before interest and penalties can be assessed, except for liabilities resulting from gross misstatements or from certain tax shelter transactions.
 

Part II: Pension and Deferred Compensation 
- (Sec. 671) Sets forth rules for determining the includibility in gross income of deferred compensation under nonqualified deferred compensation plans when such compensation is no longer subject to a substantial risk of forefeiture. Sets forth criteria for determining whether plan compensation is subject to a substantial risk of forfeiture. 
 
(Sec. 672) Prohibits deferral of gain from the exercise of stock options and restricted stock gains through deferred compensation arrangements.
 
(Sec. 673) Requires a withholding of tax rate of 28 percent for supplemental wage payments exceeding $1 million.
 
(Sec. 674) Provides that the exercise of a stock option shall comply with specified conflict-of-interest requirements if sold pursuant to a certificate of divestiture. 
 
(Sec. 675) Provides that investments in annuity contracts shall not include any nontaxable contributions for purposes of determining the portion of any distribution which is includible in the gross income of a citizen or resident of the United States.
 

Title VII: Extensions of Certain Expiring Provisions
 - 
Subtitle A: Extensions 
- (Sec. 701) Extends through December 31, 2005, provisions of the Code, the Employee Retirement Income Security Act of 1974 (ERISA) and the Public Health Service Act requiring parity in the application of group health plan limits to mental health benefits. 
 
(Sec. 702) Consolidates and modifies provisions of the work opportunity credit and the welfare-to-work credit and makes the combined credit permanent. Expands eligibility for the credit by: (1) determining eligibility of ex-felons without regard to family income; and (2) raising the age ceiling of food stamp recipients from 25 to 40. Includes &quot;designated community resident&quot; (in lieu of &quot;high risk youth&quot;) as a member of a targeted group for purposes of the credit.
 
 Repeals the separate welfare-to-work tax credit.
 
Extends through 2005 the following expiring tax provisions: (1) the authorization for States to issue up to $400 million of qualified zone academy bonds; (2) the tax deduction for certain corporate donations of scientific research property and computer technology and equipment used for educational purposes; (3) the tax deduction from gross income for certain expenses of elementary and secondary school teachers; (4) expensing provisions for environmental remediation costs; (5) the authority for issuance of tax-exempt New York Liberty Bonds; (6) the designation of a District of Columbia enterprise zone, the authority to issue tax-exempt economic development bonds within a District of Columbia Enterprise Zone, the exclusion of gain from the sale or exchange of a District of Columbia Enterprise Zone asset held for more than five years, and the tax credit for first-time District of Columbia home buyers; (7) the Indian employment tax credit; (8) accelerated depreciation for business property on Indian Reservations; and (9) the authority for disclosing certain tax return information to the Department of Education for taxpayers seeking student loan repayment plans based on income.
 
(Sec. 705) Extends until January 1, 2006, the increased amount ($13.25 instead of $10.50) of excise tax on distilled spirits required to be paid back (covered) to the Treasuries of Puerto Rico and the Virgin Islands.
 
Extends through 2004 the following expiring tax provisions: (1) the tax credit for electricity produced from wind, closed-loop biomass, and poultry waste facilities; (2) the taxable income limit on percentage depletion for oil and natural gas produced from marginal facilities; and (3) the allowance of nonrefundable tax credits against income and alternative minimum tax liabilities.
 
(Sec. 710) Repeals provisions that provided for a reduction in certain deductions of mutual life insurance companies (previously repealed by the Pension Funding Equity Act of 2004).
 
(Sec. 712) Makes permanent the combined Federal and state employment tax reporting program. 
 
(Sec. 719) Amends the Employee Retirement Income Security Act (ERISA) of 1974 with respect to transfers of excess pension assets to retiree health accounts.
 
(Sec. 720) Eliminates the phase-out of the tax credit for qualified electric vehicles.
 
(Sec. 721) Eliminates the phase-out in 2004 to 2006 of the tax deduction for clean-fuel vehicle property.
 

Subtitle B: Revenue Provisions
 - (Sec. 731) Revises rules for claiming tax deductions for charitable donations of motor vehicles, boats, and airplanes valued over $500. Limits the allowable amount of such deductions to the gross proceeds received by the donee charitable organization from the sale of the donated vehicle. Requires the donee organization to provide donors with a written acknowledgment of the contribution within 30 days of the donation. Imposes a penalty upon donee organizations for providing false or fraudulent acknowledgments.
 
(Sec. 732) Adds the trivalent vaccine against influenza as a taxable vaccine for purposes of the excise tax on certain vaccines.
 
(Sec. 733) Specifies standards for regulations governing contingent payment convertible debt instruments.
 
(Sec. 734) Increases from 15 to 100 percent the allowable amount of the continuing levy on Federal vendor payments for unpaid taxes.
 

Title VIII: Energy Tax Incentives 
- (Sec. 800) Energy Tax Incentives Act - 
Subtitle A: Renewable Electricity Production Tax Credit 
- Modifies the tax credit for electricity produced from certain renewable resources to extend placed-in-service dates for certain energy resources eligible for the credit and to include the following energy resources: (1) open-loop biomass; (2) geothermal energy; (3) solar energy; (4) small irrigation power; (5) biosolids and sludge; and (6) municipal solid waste. Permits certain tax-exempt organizations, public utilities, and governmental entitles (including the Tennessee Valley Authority (TVA)) eligible for the credit to assign unused credit amounts to other entities or individuals.
 

Subtitle B: Alternative Motor Vehicles and Fuels Incentives
 - (Sec. 811) Allows a tax credit for alternative motor vehicles, including a fuel cell motor vehicle credit, a hybrid motor vehicle credit, and an alternative fuel motor vehicle credit. Sets forth formulae for determining the allowable amount of such credits based upon size of the vehicle and fuel efficiency ratings. Terminates the credit after 2011 for fuel cell motor vehicles and after 2006 for the other vehicles. 
 
(Sec. 812) Increases the tax credit for qualified electric vehicles and makes certain battery-operated vehicles eligible for the credit.
 
(Sec. 813) Allows a tax credit for up to 50 percent of the cost of installing a clean-fuel vehicle refueling property, up to $30,000 for a retail property and $1,000 for a residential property. Terminates the credit for: (1) a property relating to hydrogen after 2011; and (2) any other property after 2007.
 
(Sec. 814) Allows a tax credit for the retail sale of alternative fuels as motor vehicle fuel. Defines &quot; alternative fuel&quot; as compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, or any liquid at least 85 percent of the volume of which consists of methanol or ethanol. Terminates the credit after 2006. 
 
(Sec. 815) Modifies the small ethanol producer tax credit to allow the allocation of credit amounts to patrons of a tax-exempt cooperative organization. Changes the definition of a small ethanol producer to increase from 30 to 60 million gallons the required capacity of a producer to qualify for the credit. Allows a small ethanol producer to apply credit amounts against alternative minimum tax liability.
 

Subtitle C: Conservation and Energy Efficiency Provisions - 
(Sec. 821) Allows a tax credit for the cost of certain energy efficient property installed in a principal residence built or manufactured after 2004. Limits the amount of the credit based upon the projected savings in heating and cooling energy consumption.
 
(Sec. 822) Allows a tax credit for certain energy efficient home appliances.
 
(Sec. 823) Allows a tax credit for the cost of certain residential energy efficient properties, including photovoltaic and solar water heating properties. Terminates the credit after 2007. Allows the application of the credit against income and alternative minimum tax liability. 
 
(Sec. 824) Allows an energy tax credit for the cost of qualified fuel cell property or microturbine property.
 
(Sec. 825) Allows a tax deduction for the cost of energy conserving properties installed in a new or renovated commercial building. Terminates the credit for buildings uncompleted as of December 31, 2009. 
 
(Sec. 826) Provides for an accelerated three-year recovery period for the depreciation of a qualified energy management device (a device that measures electricity consumption). 
 
(Sec. 827) Provides for an accelerated three-year recovery period for the depreciation of a qualified water submetering device (a device used to measure water consumption). 
 
(Sec. 828) Allows a tax credit for combined heat and power system property. 
 
(Sec. 829) Allows a tax credit for ten percent of the costs of energy efficient improvements made to an existing home up to $300, reduced by energy credits received for all preceding taxable years. 
 

Subtitle D: Clean Coal Incentives - Part I: Credit for Emission Reductions and Efficiency Improvements in Existing Coal-Based Electricity Generation Facilities
 - (Sec. 831) Allows a business tax credit for a certain amount of clean coal technology production within a ten-year period after the clean coal technology unit was returned to service.
 

Part II: Incentives for Early Commercial Applications of Advanced Clean Coal Technologies
 - (Sec. 832) Allows a tax credit for ten percent of the cost of investing in an advanced clean coal technology unit. 
 
(Sec. 833) Allows a tax credit for certain levels of production from an advanced clean coal technology unit. 
 

Part III: Treatment of Persons Not Able to Use Entire Credit
 - (Sec. 834) Permits certain tax-exempt organizations, utilities, and governmental entities (including the TVA) to assign amounts of unused tax credits for clean coal technology production to other entities or individuals. 
 

Subtitle E: Oil and Gas Provisions
 - (Sec. 841) Allows a tax credit for producing oil and gas from marginal wells.
 
(Sec. 842) Provides for a seven-year recovery period for the depreciation of any natural gas gathering line.
 
(Sec. 843) Allows a current year tax deduction for up to 75 percent of the capital costs incurred in complying with Environmental Protection Agency (EPA) sulfur regulations.
 
(Sec. 844) Allows a business tax credit for the production of low sulfur diesel fuel. 
 
(Sec. 845) Modifies the definition of small refiners for purposes of the percentage depletion allowance to require an average daily run of less than 60,000 barrels (current law requires less than 50,000 barrels). 
 
(Sec. 846) Extends through 2006 the suspension of the 100 percent of net income limit on percentage depletion for oil and natural gas produced from marginal properties.
 
(Sec. 847) Permits the amortization of delay rental payments (payments by oil and gas producers under production contracts with mineral owners when the producer delays mineral production to delay payments of royalties under the contract) over a two-year period.
 
(Sec. 848) Permits the amortization of geological and geophysical expenditures in connection with oil and gas exploration in the United States over a two-year period.
 
(Sec. 849) Revises the tax credit for producing fuel from a nonconventional source to extend placed-in-service dates for certain fuel producing facilities and to add facilities producing fuels from agricultural and animal waste, viscous oil, refined coal, and coal mine gas as fuel sources eligible for the credit. Directs the Secretary to study the effect of this tax credit on the production of coal bed methane.
 
(Sec. 850) Allows a 15-year recovery period for the depreciation of natural gas distribution lines.
 
(Sec. 851) Allows a tax credit for production of Alaska natural gas equal to $0.52 per 1 million British thermal units of Alaska natural gas, adjusted for inflation. Allows application of the credit amount against income and alternative minimum tax liabilities. 
 
Allows a seven-year recovery period for the depreciation of any Alaska natural gas pipeline. 
 
(Sec. 854) Creates an exception to arbitrage bond rules by excluding from the term &quot;investment-type property&quot; a prepayment under a qualified natural gas contract.
 

Subtitle F: Electric Utility Restructuring Provisions
 - (Sec. 855) Revises rules for nuclear decommissioning costs.
 
(Sec. (856) Allows tax-exempt cooperatives to receive income from nonmembers and to participate in open access transactions without losing their tax-exempt status. 
 
(Sec. 857) Permits the recognition of gain from an electric transmission transaction ratably over an eight-year period. 
 

Subtitle G: Volumetric Ethanol Excise Tax Credit
 - (Sec. 860) Volumetric Ethanol Excise Tax Credit (VEETC) Act of 2004 - Allows a credit against the gasoline excise tax for alcohol fuel and biodiesel mixtures. 
 
(Sec. 862) Allows an income tax credit for biodiesel used as fuel. 
 

Subtitle H: Fuel Fraud Prevention
 - (Sec. 870) Fuel Fraud Prevention Act of 2004 - 
Part I: Aviation Jet Fuel
 - Revises rules for the taxation of aviation-grade kerosene. Retains current tax rates on such fuel, but allows a reduced rate of 4.4 percent (as under current law) for fuel which is removed from any refinery or terminal directly into the fuel tank of a commercial aircraft.
 
(Sec. 872) Requires annual payments from the Airport and Airway Trust Fund into the Highway Trust Fund of amounts attributable to fuel used primarily for highway transportation purposes. 
 

Part II: Dyed Fuel
 - (Sec. 873) Changes the dyeing process for the diesel fuel and kerosene tax exemption from manual to mechanical injection. Requires the Secretary to issue regulations on mechanical dye injection systems, including making such systems tamper resistant. Imposes a penalty for tampering with a mechanical dye injection system of the greater of $25,000 or $10 for each gallon of fuel involved. Imposes a penalty upon the operator of a mechanical dye injection system of $1,000 for each failure to maintain security standards and $1,000 for each day such operator fails to correct a violation.
 
(Sec. 874) Denies an administrative appeal for taxpayers who have two prior violations for selling dyed fuel for a taxable use.
 
(Sec. 875) Imposes a penalty for the sale, for a taxable use, of dyed fuel that has been altered.
 
(Sec. 876) Exempts school and intracity passenger buses from certain dyeing requirements relating to the excise tax on diesel fuel and special motor fuels.
 

Part III: Modification of Inspection of Records Provisions
 - (Sec. 877) Authorizes the Secretary to inspect any books, records, and shipping papers pertaining to taxable fuels (i.e., gasoline, diesel fuel, and kerosene) at locations where such fuels are produced or stored. Imposes a penalty for refusing IRS agents entry for inspection.
 

Part IV: Registration and Reporting Requirements
 - (Sec. 879) Extends the bulk transfer exemption from taxable fuels to registered pipeline or vessel operators. Imposes a penalty for the intentional transfer of any taxable fuel in bulk to an unregistered individual.
 
(Sec. 880) Requires every operator of a vessel who is required to register for the bulk transfer exemption to display proof of registration through a prescribed electronic identification device on each vessel used by such operator to transport any taxable fuel. Imposes a penalty on an operator for $500 for each failure to display proof of registration with increased penalties for multiple violations. Allows penalties to be waived upon a showing that failure to register was due to reasonable cause.
 
(Sec. 881) Requires registration of certain operators of terminals or refineries within a foreign trade zone or within a customs bonded storage facility.
 
(Sec. 882) Increases to $10,000 certain civil and criminal penalties for failure to register or for falsely representing registration status with respect to a taxable fuel. Imposes penalties for failure to register and to report required information with respect to the excise taxes on special fuels, petroleum products, and aviation fuels.
 
(Sec. 883) Directs the Secretary to require taxpayers claiming certain tax benefits with respect to taxable fuels to file informational returns.
 

Part V: Imports 
- (Sec. 884) Imposes fuel excise taxes at the point of entry for unregistered importers of taxable fuels.
 
(Sec. 885) Amends the Trade Act of 2002 to direct the Secretaries of Homeland Security and the Treasury to promulgate regulations for sending to the IRS, through an electronic data interchange system, information pertaining to cargo of taxable fuels destined for importation into the United States prior to such importation.
 

Part VI: Miscellaneous Provisions
 - (Sec. 886) Redefines &quot;diesel fuel&quot; to include any liquid which is sold as or offered for sale as a fuel in a diesel-powered highway vehicle or a diesel-powered train.
 
(Sec. 887) Limits ultimate vendor claims for tax refunds for sales of diesel fuel or kerosene used on a farm for farming purposes to amounts of not more than 500 gallons.
 
(Sec. 888) Provides that a registered vendor of taxable fuels on which excise tax has been paid shall be treated as the ultimate vendor for purposes of claiming credits and refunds of tax. Grants ultimate vendor status to credit card lenders for credit card purchases of diesel fuel or kerosene, including credit and purchases by State and local governments.
 
(Sec. 889) Exempts the delivering person from liability for fuel excise tax in two-party exchanges (as defined in this section).
 
(Sec. 890) Allows for the proration of the use tax on heavy vehicles (weighing more than 55,000 pounds) that are sold before the end of the taxable period. Repeals provisions allowing installment payments of such use tax. Requires a taxpayer with 25 or more heavy vehicles to file returns electronically. Repeals the reduced tax rate for Canadian and Mexican heavy vehicles.
 
(Sec. 891) Appropriates amounts equivalent to specified penalties created or increased by this Act to the Highway Trust Fund.
 
(Sec. 892) Excludes from the export exemption for certain excise taxes the delivery of a taxable fuel into a fuel tank of a motor vehicle shipped or driven out of the United States. 
 

Part VII: Total Accountability
 - (Sec. 893) Imposes a gasoline excise tax on reportable liquids. Defines &quot;reportable liquids&quot; as any petroleum-based liquid other than a taxable fuel.
 
(Sec. 894) Directs the Secretary to require monthly tax returns for taxpayers liable for certain fuel taxes. Requires electronic filing of such returns after 2005.
 
(Sec. 895) Directs the Secretary to require reporting with respect to taxable fuels removed, entered, or transferred from any registered refinery, pipeline, or vessel. Requires electronic reporting for taxpayers with 25 or more reportable transactions a month.
 

Subtitle I: Mobile Machinery
 - (Sec. 896) Exempts certain mobile machinery from the excise tax on heavy trucks sold at retail, the use tax on heavy vehicles, and the tax on tires. Establishes a design-based test and a use-based test (less than 5,000 miles use on public highways per year) to determine whether certain equipment qualifies as mobile machinery for purposes of the tax exemption. Allows refunds of fuel taxes paid on mobile machinery on an annual basis only.
 

Subtitle J: Additional Provisions
 - (Sec. 897) Directs the Comptroller General to undertake an ongoing analysis of the effectiveness of the tax provisions relating to alternative motor vehicles and fuels and conservation and energy efficiency enacted by this Act and to make annual reports to Congress.
 
(Sec. 898) Repeals the 4.3-cents-per-gallon General Fund excise tax on diesel fuel used in trains and fuels used in barges operating on the designated inland waterways system.
 
(Sec. 899) Modifies the 90 percent of gross income test for income of a regulated investment company to include distributions or other income derived from an interest in a publicly traded partnership.
 
(Sec. 899A) Allows the tax credits for alcohol fuels and for the production of electricity to be applied against income tax and alternative minimum tax liabilities.
 
(Sec. 899B) Allows an investment tax credit for 15 percent of the cost of qualifying pollution control equipment.
 
(Sec. 899C) Provides for a 15-year depreciation recovery period for certain electric transmission property (transmitting 69 or more kilovolts of electricity).
 

Title IX: Homestead Preservation Act
 - (Sec. 901) Homestead Preservation Act - Directs the Secretary of Housing and Urban Development to establish a mortgage payment assistance program to award low-interest loans to enable an eligible individual to continue to make mortgage payments on a principal residence. Establishes eligibility requirements for obtaining a loan, including that the program beneficiary be a worker adversely affected by international economic activity and that such beneficiary be enrolled in a training or assistance program. Sets forth requirements for such loans, including repayment requirements.
 
Authorizes appropriations for the mortgage assistance payment program for FY 2005 through 2009.
 

Title X: Office of Federal Procurement Policy Act Improvements - 
Amends the Office of Federal Procurement Policy Act to require the head of each executive agency to report to Congress on agency acquisitions of articles, materials, or supplies manufactured outside the United States and to make such report publicly available on the Internet. Exempts from such reporting requirement any procurement for national security purposes entered into by the: (1) Department of Defense; (2) Departments of the Army, Navy, or Air Force or any agency or entity of the military departments; (3) Department of Homeland Security; (4) Department of Energy or any of its agencies or entities with respect to the national security programs of that Department; or (5) any element of the intelligence community.
 
Directs the Secretary of Commerce to report to Congress (and make such report publicly available on the Internet) on acquisitions by foreign governments of articles, materials, or supplies that were manufactured or extracted in the United States and to indicate the dollar value of such items.
 

Title XI: Provisions Relating to Tobacco - Subtitle A: Family Smoking Prevention and Tobacco Control
 - Family Smoking Prevention and Tobacco Control Act - 
Chapter 1: Authority of the Food and Drug Administration
 - (Sec. 1111) Amends the Federal Food, Drug, and Cosmetic Act (FFDCA) to provide for the regulation of tobacco products by the Secretary of Health and Human Services through the Food and Drug Administration (FDA).
 
 Defines a tobacco product as any product made or derived from tobacco that is intended for human consumption. Prohibits a tobacco product from being marketed in combination with any other article or product regulated under FFDCA. Requires the Secretary to regulate tobacco products. Excludes from FDA authority: (1) the tobacco leaf that is not in the possession of a tobacco product manufacturer; (2) the producers of the tobacco leaf, unless the producer is also a manufacturer; and (3) tobacco farms.
 
Deems a tobacco product to be adulterated if: (1) it contains any filthy, putrid, or decomposed substance, or is contaminated by any added poisonous or deleterious substance that may render the product injurious to health; (2) it has been prepared, packed, or held under unsanitary conditions; (3) its package is composed of any poisonous or deleterious substance; (4) it fails to meet specified tobacco product standards; (5) it does not have required pre-market approval or violates the order approving the application; (6) it fails to meet other applicable requirements or conditions on manufacturing, packing, or storage; or (7) it fails to conform to requirements for modified risk tobacco products. 
 
Deems a tobacco product to be misbranded if: (1) its labeling, packaging, or advertising contains any false or misleading information; (2) its label or advertising fails to contain all required information displayed prominently and conspicuously, including its established name, manufacturer, and contents and adequate directions and warnings; (3) it was manufactured, prepared, or processed in an establishment not registered with the Secretary; or (4) there is any failure to submit the required information or notices to the Secretary.
 
Allows the Secretary to require prior approval of all label statements on tobacco products and all advertising for modified risk tobacco products.
 
Requires tobacco product manufacturers or importers to submit to the FDA: (1) a list of all ingredients, including ingredients added by the manufacturer to the tobacco, paper, or filter, by brand and quantity; (2) a description of the content, delivery, and form of nicotine in each tobacco product; (3) a listing of all constituents, including smoke constituents, identified by the Secretary as harmful or potentially harmful to health in each tobacco product; and (4) all documents developed that relate to the health, toxicological, behavioral, or physiologic effects of tobacco products and their constituents, ingredients, components, and additives.
 
Allows the Secretary to request additional information from a tobacco product manufacturer or importer relating to: (1) research activities or findings on the health, toxicological, behavioral, or physiologic effects of tobacco products and their constituents; (2) research activities or findings relating to whether the health risk can be reduced if the manufacturer employs known or available technology; and (3) marketing research or practices and the effectiveness of such practices used by manufacturers or distributors.
 
Requires a manufacturer to: (1) submit required documents to the Secretary 90 days prior to the delivery for introduction into interstate commerce of a new tobacco product; (2) notify the Secretary 90 days prior to adding or increasing the quantity of a tobacco additive; and (3) notify the Secretary 60 days after eliminating or decreasing an additive or adding or increasing an additive that is not a carcinogen or harmful to health under intended conditions of use.
 
Requires the Secretary to publicly display and annually publish a list (that is understandable and not misleading to a lay person) of harmful or potentially harmful constituents in each tobacco product by brand and quantity.
 
Requires owners and operators of establishments in the United States engaged in the manufacture, preparation, compounding, or processing of a tobacco product to register annually with the Secretary. Allows the Secretary to prescribe a uniform system for the identification of tobacco products, which registrants must use. Requires the Secretary to make such registration information available to the public and to inspect registered establishments every two years.
 
Requires foreign establishments to register and provides that adequate and effective means must be available to enable the Secretary to determine whether tobacco products manufactured, prepared, compounded, or processed at such establishments conform with FFDCA requirements.
 
Requires registrants to: (1) include a complete product list, including labeling and a sampling of advertising, and provide updates twice a year; and (2) report to the Secretary on all new tobacco products 90 days prior to introducing such products into interstate commerce, including any basis for determination that the product is substantially equivalent to an existing product and actions taken to comply with the tobacco product standards. (Requires such a report on all tobacco products introduced for commercial distribution after June 1, 2003, within 15 months of enactment of this Act.)
 
Prohibits the disclosure of privileged or confidential trade secrets and commercial financial information that is obtained by the Secretary.
 
Allows the Secretary to restrict: (1) the sale or distribution of tobacco products if appropriate for the protection of the public health; and (2) the advertising and promotion of tobacco products consistent with and to the full extent permitted by the First Amendment. Prohibits restrictions that: (1) limit the sale or distribution of a tobacco product to written or oral authorization by a practitioner licensed to prescribe medicine; (2) prohibit the sale of a tobacco product in face-to-face transactions by a specific category of retail outlets; or (3) establish a minimum age of sale of tobacco products to any person older than 18 years of age.
 
Allows the Secretary to prescribe regulations governing good manufacturing practices to protect the public health and assure that tobacco products are in compliance with this Act, which may include the testing of raw tobacco for pesticide chemical residues regardless of whether a tolerance for such residues has been established. Requires the Secretary to: (1) afford the Tobacco Products Scientific Advisory Committee an opportunity to submit recommendations on such regulations; (2) afford an opportunity for an oral hearing on such regulations; (3) allow the Advisory Committee a reasonable time to make recommendations; and (4) provide a reasonable period for manufacturers to conform to good manufacturing practices. Allows the Secretary to grant exemptions and variances from such regulations under certain circumstances and to submit petitions for such exemptions or variances to the Committee for recommendations.
 
Allows the Secretary to enter into contracts for research, testing, and demonstrations respecting tobacco products and to obtain tobacco products for such purposes.
 
 Establishes as a tobacco product standard a prohibition against a cigarette or any of its components containing as a constituent or additive any artificial or natural flavor (other than tobacco or menthol) or any herb or spice (including strawberry, grape, orange, clove, cinnamon, and vanilla) that is a characterizing flavor of the tobacco product or tobacco smoke. Allows the Secretary to adopt additional tobacco product standards the Secretary finds are appropriate to protect the public health determined with respect to the risks and benefits to the population as a whole and taking into account: (1) the increased or decreased likelihood that existing users of tobacco products will stop using such products; and (2) the increased or decreased likelihood that those who do not use tobacco products will start using such products. Provides that such tobacco product standards shall include provisions to protect the public health, including provisions, where appropriate, for: (1) reducing nicotine yields; (2) reducing or eliminating other constituents or harmful components; (3) the construction, components, ingredients, additives, constituents, and properties of tobacco product; (4) product testing; (5) measuring product characteristics; (6) requiring that the test results show that the product is in conformity with the standards; (7) restricting product sale and distribution to the extent allowable; and (8) requiring the use of, and prescribing the form and content of, labeling for the proper product use. Requires the Secretary to: (1) periodically evaluate such standards to determine whether they should be changed to reflect new medical, scientific, or other technological data; (2) consider all information submitted in connection with a proposed standard, including the effects such a standard would have on the health of tobacco users and nonusers and the creation of a significant demand for contraband; and (3) issue the standard if it would be appropriate to protect the public health. Reserves to Congress the power to ban any tobacco product or reduce the nicotine level to zero. Allows the Secretary to amend or revoke a tobacco product standard.
 
Allows the Secretary to notify the public if a tobacco product poses an unreasonable risk of substantial harm or to prohibit the sale of or recall a tobacco product if there is a reasonable probability that it contains a defect not ordinarily contained in tobacco products that would cause serious, adverse health consequences or death.
 
Requires manufacturers and importers to comply with record keeping and reporting requirements established by the Secretary, such as: (1) informing the Secretary of any information that reasonably suggests that a marketed tobacco product may have caused or contributed to a serious unexpected adverse experience; and (2) reporting any significant increase in the frequency of a serious, unexpected adverse product experience. Prohibits the Secretary from: (1) imposing unduly burdensome requirements, taking into account the cost of complying and the need for protection of the public health; or (2) requiring that the identity of any patient or user be disclosed unless required for the medical welfare of an individual, to determine risks to the public health, or to verify information. Requires the Secretary to have due regard for the professional ethics of the medical profession.
 
Requires the Secretary to require prompt notification by manufacturers and importers of any corrective action taken or any removal from the market of a tobacco product to reduce the risk to health posed by the product or to remedy a violation of this Act that may present a health risk.
 
Requires pre-market approval of all new tobacco products (products not substantially equivalent to an existing tobacco product) commercially marketed after June 1, 2003. Defines &quot;substantially equivalent&quot; as having the same characteristics or having different characteristics but not raising different questions of public health. 
 
Requires the Secretary to deny an application for pre-market approval and include a statement of corrective action necessary for approval if: (1) there is a lack of a showing that permitting the marketing of the tobacco product would be appropriate to protect the public health; (2) the product does not conform to applicable manufacturing, processing, or packing requirements; (3) the proposed labeling is false or misleading; or (4) the product does not conform to tobacco product standards. Sets forth requirements for the Secretary to withdrawal approval, including if: (1) the continued marketing of a product is no longer appropriate for the protection of the public health; (2) the application contained an untrue statement of material fact; and (3) the applicant has refused access to its records. Allows the Secretary to temporarily suspend an application if there is a reasonable probability that continuing the distribution of a tobacco product under an approved application would cause serious, adverse health consequences or death that is greater than ordinarily caused by tobacco products on the market.
 
Prohibits the sale of any modified risk tobacco product without prior approval of an application by the Secretary. Defines a &quot;modified risk tobacco product&quot; as any tobacco product that is sold or distributed for use to reduce harm or the risk of tobacco-related diseases associated with commercially marketed tobacco products, specifically products where: (1) the labeling or advertising represents that the product presents a lower risk of tobacco-related disease or is less harmful than other tobacco products, contains a reduced level of or presents a reduced exposure to a substance, or is free of a substance; (2) the labeling or advertising uses descriptors such as &quot;light,&quot; &quot;mild,&quot; or &quot;low&quot;; or (3) the product manufacturer has taken action reasonably expected to result in consumers believing that the product or its smoke presents a lower risk of disease, is less harmful, presents a reduced exposure, or is free of a substance. Requires that such applications include a product description, the proposed advertising, the formulations of the product, sample product labels, documents relating to research findings of the product's effects on tobacco related diseases and health-related conditions, and data and information on how consumers actually use the product. Requires the Secretary to: (1) make such applications public; (2) request comments by interested persons on such applications; (3) refer such applications to the Advisory Committee for recommendations; and (4) approve such an application if a product, as it is actually used by consumers, will significantly reduce harm and the risk of tobacco-related disease to individual tobacco users and benefit the health of the population as a whole.
 
Allows the Secretary to approve tobacco products that are not approved as modified risk tobacco products for five years if: (1) the approval of the application is appropriate to promote public health; (2) the labeling or advertising that would cause the tobacco product to be considered a modified risk tobacco product is limited to a representation that the tobacco product is free of a substance, contains a reduced level, or presents a reduced exposure; (3) scientific evidence is not available and cannot be made available without conducting long-term epidemiological studies; (4) the available scientific evidence demonstrates that a measurable and substantial reduction in morbidity among individual tobacco users is anticipated in subsequent studies; (5) the magnitude of the overall reductions in exposure to the substance is substantial, such substance is harmful, and the product as actually used exposes consumers to the specified reduced level of the substance; (6) the product as actually used by consumers will not expose them to higher levels of other harmful substances compared to similar tobacco products unless such increases are minimal and the anticipated overall impact of the use of the product remains a substantial and measurable reduction in overall morbidity and mortality among tobacco users; (7) testing of actual consumer perception shows that consumers will not be misled into believing that the product has been demonstrated to be less harmful or presents less of a risk of disease than other tobacco products; and (8) approval of the application is expected to benefit the health of the population as a whole.
 
Requires the Secretary to require that advertising and labeling concerning modified risk products enable the public to understand the information and its significance in the context of total health and in relation to all of the diseases and health-related conditions associated with the use of tobacco products. 
 
Allows the Secretary to require: (1) that comparative claims compare the product to another tobacco product representative of that type on the market; (2) that quantitative comparisons identify in immediate proximity to the most prominent claim the change, the identity of the reference tobacco product, and a quantitative comparison of the amount of the substance claimed to be reduced; and (3) the disclosure on the label of other substances in the tobacco product that may affect a disease or health-related condition. 
 
Requires the Secretary to require applicants to annually submit the results of post-market surveillance and studies to determine the impact of the approval on consumer perceptions, behavior, and health, and studies to enable the Secretary to review the accuracy of the scientific evidence upon which the approval was based.
 
Requires the Secretary to withdraw approval of an application if: (1) the applicant can no longer make the demonstrations required; (2) the Secretary can no longer make the determinations required; (3) the application failed to include material information or contained an untrue statement of material fact; (4) a representation that the product reduces risk or exposure is no longer valid; (5) the applicant failed to conduct or submit the required post-market surveillance and studies; or (6) the applicant failed to meet an advertising or labeling condition.
 
Requires the Secretary to issue regulations or guidance on the scientific evidence required for assessment and review of modified risk tobacco products, including: (1) minimum standards for scientific studies needed prior to approval to show that a substantial reduction in morbidity or mortality among users is likely; (2) feasible outcome measures; (3) minimum standards for post-market studies and surveillance.
 
Prohibits distributors from taking any action that would reasonably be expected to result in consumers believing that a tobacco product or its smoke may present a lower risk of disease or is less harmful than other tobacco products.
 
Sets forth provisions regarding the judicial review of regulations and denied applications for new tobacco products.
 
Requires the Secretary to require retail establishments for which the predominant business is the sale of tobacco products to comply with advertising restrictions applicable to retail establishments accessible to individuals under the age of 18.
 
States that any violation of regulations required to be promulgated by the Secretary under this Act concerning the sale, distribution, and use of cigarettes and smokeless tobacco is an unfair or deceptive act or practice under the Federal Trade Commission (FTC) Act. Requires the Chairman of the FTC to coordinate with the Secretary concerning enforcement of the FTC Act for the advertisement of cigarettes or smokeless tobacco. Requires the Secretary to consult with the Chairman in revising the label statements and requirements for tobacco products under the FTC Act.
 
Requires Congress to review, and allows Congress to disapprove, economically significant regulations.
 
Requires the Secretary, acting through the Commissioner of the FDA, to promulgate regulations under this Act within two years that require the testing and reporting of tobacco product constituents, ingredients, and additives that the Secretary determines should be tested to protect the public health. Gives the FDA the authority to conduct or require the testing, reporting, or disclosure of tobacco product constituents.
 
Declares that this Act does not: (1) prohibit Federal agencies, States, political subdivisions, or Indian tribes from enacting additional measures more stringent measures, except requirements relating to tobacco product standards, pre-market approval, adulteration, misbranding, labeling, registration, good manufacturing practices, or reduced risk products; (2) prohibit State, tribal or local taxation of tobacco products; and (3) modify or affect the liability of any person under the product liability laws of any State.
 
Requires the Secretary to establish a Tobacco Products Scientific Advisory Committee to provide advice, information, and recommendations to the Secretary, including on the effects of altering nicotine yields from tobacco products and whether there is a threshold level below which nicotine yields do not produce dependence on the tobacco product involved.
 
Requires the Secretary to consider: (1) designating nicotine replacement products as fast track research and approval products; (2) directing the Commissioner to approve the extended use of nicotine replacement products for the treatment of tobacco dependence; (3) evidence for additional indications for such products, including products for craving relief or relapse prevention; (4) relieving companies of pre-market burdens if the requirement is redundant considering other nicotine replacement therapies on the market; and (5) the time and extent applications for nicotine replacement therapies approved and marketed in foreign countries.
 
Requires the Secretary to assess a quarterly user fee on manufacturers and importers of tobacco products based on the class of tobacco product and the company market share to pay for the costs of activities of the FDA related to the regulation of tobacco products.
 
(Sec. 1112) Requires the Secretary to publish an interim final rule regarding cigarettes and smokeless tobacco that is identical to regulations promulgated by the Secretary on August 28, 1996, that set out restrictions under FFDCA on the sale, distribution, and use of cigarettes and smokeless tobacco that contain nicotine, except for labeling requirements. Limits the effect of specified advisory opinions and prohibits the Secretary and the FDA from citing them as binding precedent.
 
(Sec. 1113) Adds tobacco related violations to the list of prohibited acts under the FFDCA, including prohibiting the charitable distribution of tobacco products.
 
Allows the Secretary to impose a no-tobacco-sale order on retail outlets to prohibit the sale of tobacco products at an outlet for repeated violations of restrictions on the sale of tobacco products, including the sale to individuals under the age of 18.
 
Requires the Secretary to submit a report to the relevant committees on: (1) the nature, extent, and destination of U.S. tobacco product exports that do not conform to tobacco product standards established under this Act; (2) the public health implications of such exports; and (3) recommendations or assessments of policy alternatives available to reduce any negative public health impact.
 

Chapter 2: Tobacco Product Warnings; Constituent and Smoke Constituent Disclosure
 - (Sec. 1121) Amends the Federal Cigarette Labeling and Advertising Act to prohibit any person from manufacturing, packaging, selling, offering to sell, distributing, or importing for sale or distribution within the United States any cigarettes the packages of which fail to bear specified warning labels. Specifies location, size, type size, and color of such labeling.
 
Prohibits tobacco product manufacturers, importers, distributors, or retailers of cigarettes to advertise without specified labeling. Specifies location, size, type size, color, and border of warning labels for different types of advertisement.
 
Does not relieve retailers from liability for selling or distributing tobacco products not properly labeled.
 
(Sec. 1122) Allows the Secretary to alter label requirements if the Secretary finds that such a change would promote greater public understanding of the risks associated with the use of tobacco products.
 
(Sec. 1123) Allows States or localities to impose specific bans or restrictions on the time, place, and manner, but not content, of the advertising or promotion of any cigarettes or smokeless tobacco.
 
(Sec. 1124) Amends the Comprehensive Smokeless Tobacco Health Education Act of 1986 to apply the same restrictions on labeling and advertising to smokeless tobacco products.
 
(Sec. 1126) Requires the Secretary to determine whether manufacturers should be required to include on the label and advertisements the tar and nicotine yields of the product. Allows the Secretary to require disclosure of the level of constituents in a tobacco product if such disclosures would benefit the public health or increase consumer awareness of the health consequences of the use of tobacco products.
 

Chapter 3: Prevention of Illicit Trade in Tobacco Products
 - (Sec. 1131) Sets forth labeling, inspection, and record keeping requirements to prevent the illicit trade, smuggling, or counterfeiting of tobacco products.
 
Requires a manufacturer or distributor to notify the Attorney General promptly of any knowledge which reasonably supports the conclusion that a tobacco product manufactured or distributed has left its control and may be or has been: (1) imported, exported, distributed, or sold without paying duties or taxes; or (2) diverted for possible illicit marketing.
 
(Sec. 1132) Requires the Comptroller General to conduct a study of cross-border trade and cross-border advertising in tobacco products to collect data on such trades and advertisements and make recommendations on the monitoring of such trades and how to prevent or eliminate such advertising.
 

Subtitle B: Tobacco Market Transition - 
Tobacco Market Transition Act of 2004 - 
Chapter 1: Termination of Current Tobacco Programs - 
(Sec. 1141) Amends and repeals specified agricultural Acts to eliminate tobacco quota and price support programs, including no net cost provisions. 
 
Amends the Agricultural Act of 1949 to eliminate tobacco from the definition of "basic agricultural commodity."
 

Chapter 2: Tobacco Assistance - 
(Sec. 1151) Adds a new subtitle, Subtitle E: Tobacco Assistance, to title III of the Agricultural Adjustment Act of 1938 which directs the Secretary of Agriculture to make transition payments to each tobacco quota holder (generally, an owner of a farm, as of July 1, 2002, for which a basic tobacco marketing or farm acreage allotment for quota tobacco was established for the 2002 tobacco marketing year under a marketing quota program). 
 
Establishes the payment rate for each of FY 2004 through 2013 at 80 cents per pound multiplied by the quota holder's base quota level. 
 
Directs the Secretary to make direct payments to a traditional producer of tobacco (a person that, for at least one of the 2000, 2001, or 2002 tobacco marketing years, was actively engaged in the production of tobacco marketed, or considered planted, under a marketing quota and shared in the risk of producing the tobacco). 
 
Establishes base quota levels for: (1) flue-cured and Burley tobacco; and (2) other tobacco.
 
Establishes the payment rate for each of FY 2004 through 2013 at 40 cents per pound multiplied by the producer's base quota level.
 
Provides for initial payment eligibility and amount appeals to county committees and a further appeal to the National Appeals Division.
 
Directs the Secretary to establish: (1) a permanent advisory board, the Tobacco Quality Board; (2) a permanent advisory board for each kind of tobacco, a Production Board; and (3) an acreage limitation or poundage limitation program for each crop of each kind of tobacco. 
 
Sets forth acreage and poundage limitation program provisions, including: (1) crop acreage and crop poundage base determinations; (2) sale, lease, or transfer prohibitions; (3) county and State pool reallocation of unused acreage and poundage bases, with new-producer set-asides; (4) criminal and civil penalties; and (5) conservation compliance.
 
Directs the Secretary to make grants to Maryland, Pennsylvania, South Carolina, and North Carolina for the Federal share of carrying out economic development initiatives in impacted counties (counties in which tobacco producers have sustained a reduction in gross receipts from the sale of tobacco for a base period). Allocates: (1) $20 million to Maryland; (2) $14 million to Pennsylvania; (3) $50 million to South Carolina; and (4) $50 million to North Carolina. Terminates program authority on September 30, 2008.
 
Authorizes the Secretary to make grants to colleges and universities in Alabama, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Minnesota, Missouri, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin to conduct research to assist tobacco producers to diversify so as to reduce or eliminate reliance on tobacco production (or to promote alternative uses of tobacco or enhance the quality of tobacco produced) and to foster development of economically viable new agricultural technologies and enterprises for rural communities. Terminates program authority on September 30, 2008.
 
Establishes in the Commodity Credit Corporation (CCC) a revolving Tobacco Trust Fund to carry out this subtitle. Deposits into the Fund an annual assessment (imposed by this Act) on each tobacco product manufacturer and tobacco product importer that sells tobacco products in domestic U.S. commerce. Sets forth assessment provisions. Terminates Fund provisions on September 30, 2013.
 
 Sets forth transition provisions for: (1) tobacco stocks; (2) no net cost funds; and (3) CCC reimbursement.
 
(Sec. 1152) Amends the Federal Crop Insurance Act to: (1) include tobacco production risk among the tobacco insurance policy criteria required for research and development reimbursement; and (2) require tobacco producer and purchaser assessments to the Insurance Fund. (Authorizes the Secretary to terminate such assessments beginning with the 2010 crop.)
 

Chapter 3: Implementation 
- Authorizes the Secretary to promulgate implementing regulations.

action_date: 2004-10-07
text: 
American Jobs Creation Act of 2004 - 
Title I: Provisions Relating to Repeal of Exclusion for Extraterritorial Income
 - (Sec. 101) Amends the Internal Revenue Code to repeal the tax exclusion for extraterritorial income. Provides transitional relief for taxpayers subject to the repeal by allowing a tax exclusion for extraterritorial income of 80 percent in 2005 and 60 percent in 2006.
 
Permits foreign corporations to revoke elections to be treated as U.S. corporations for purposes of the extraterritorial income tax exclusion without recognition of gain or loss. Authorizes the Secretary of the Treasury to prescribe regulations to prevent abuse resulting from revoked elections.
 
Exempts from the repeal transactions in the ordinary course of a trade or business pursuant to certain binding contracts (including purchase, renewal, or replacement options) in effect on September 17, 2003, and thereafter. 
 
(Sec. 102) Allows a tax deduction of nine percent of the lesser of a taxpayer's qualified production activities income or taxable income for the taxable year, beginning in 2010. Phases in the deduction at the rate of three percent in 2005 and 2006 and six percent for 2007, 2008, and 2009. Limits the amount of the deduction to 50 percent of W-2 wages (reportable gross employee wages) paid in a taxable year. 
 
Defines &quot;qualified production activities income&quot; as the excess (if any) of domestic production gross receipts over the sum of the cost of goods sold allocable to such receipts, other deductions, expenses, or losses directly allocable to such receipts, and a ratable portion of other deductions, expenses, and losses that are not directly allocable to such receipts or another class of income. Includes within the definition of domestic production gross receipts qualifying production property (i.e., tangible personal property, any computer software, and certain sound recordings), any qualified film produced by the taxpayer, electricity, natural gas, or potable water produced by the taxpayer in the United States, construction performed in the United States, or engineering or architectural services for projects in the United States, but excludes the sale of certain food and beverages sold at retail and the transmission or distribution of electricity, natural gas, or potable water.
 
Sets forth special rules and definitions for qualified production activities income of passthrough entities and agricultural and horticultural cooperatives.
 
Allows the tax deduction for qualified production activities income for purposes of computing alternative minimum taxable income
 
Permits the revocation of a prior election to treat the cutting of timber as a sale or exchange.
 

Title II: Business Tax Incentives - Subtitle A: Small Business Expensing - 
(Sec. 201) Extends for two additional years (until 2008): (1) the increased expensing (full deduction of expenses in the taxable year in which the expenses are incurred) of small business assets (up to $100,000); (2) the increase (to $400,000) in the cost limitation for small business assets eligible for expensing; (3) the inflation adjustments for the increased expensing amount and the cost limitation amount; and (4) the eligibility period for the expensing of certain computer software. 
 

Subtitle B: Depreciation - 
(Sec. 211) Allows a 15-year recovery period for the depreciation of certain leasehold improvements and restaurant property placed in service before January 1, 2006. 
 

Subtitle C: Community Revitalization
 - (Sec. 221) Directs the Secretary of the Treasury to prescribe regulations designating certain targeted populations as low-income communities for purposes of the new markets tax credit. Treats a population census tract with a population of less than 2,000 as a low-income community if such tract is within an empowerment zone and is contiguous to one or more low-income communities.
 
(Sec. 222) Authorizes the Secretary of Housing and Urban Development to expand an area designated as a renewal community, for purposes of the tax incentives available to such communities, using specified criteria, including increased poverty rates based on 2000 census data.
 
(Sec. 223) Modifies the low-income test (85 percent, rather than 80 percent, of statewide median family income) for families in high migration (out-migration of at least ten percent of the population) rural counties, for purposes of the new markets tax credit.
 

Subtitle D: S Corporation Reform and Simplification
 - (Sec. 231) Allows a taxpayer election to treat members of a family as one shareholder for purposes of determining the number of shareholders in an S corporation.
 
(Sec. 232) Increases the allowable number of S corporation shareholders from 75 to 100. 
 
(Sec. 233) Allows an individual retirement account (IRA), including a Roth IRA, to be a shareholder of a bank that is an S corporation. Exempts, under certain circumstances, the sale of bank stock held by an IRA from rules against prohibited retirement plan transactions. 
 
(Sec. 234) Permits a disregard of unexercised powers of appointment for determining potential current beneficiaries of an electing small business trust (ESBT). Extends from 60 days to one year the period during which an ESBT can dispose of S corporation stock after an ineligible shareholder becomes a potential current beneficiary. 
 
(Sec. 235) Allows a carryover of disallowed losses on S corporation stock resulting from transfers of such stock to a spouse incident to divorce. 
 
(Sec. 236) Allows beneficiaries of a qualified subchapter S trust to deduct certain losses under the at-risk and passive loss rules when such trust sells S corporation stock. 
 
(Sec. 237) Excludes certain interest and dividend income on assets held by a bank S corporation from passive investment income for purposes of applying the excess net passive income rules. 
 
(Sec. 238) Allows the waiver of inadvertent invalid qualified subchapter S subsidiary elections and terminations made after December 31, 2004.
 
(Sec. 239) Expands the authority of the Secretary of the Treasury to require informational returns for qualified subchapter S subsidiaries. 
 
(Sec. 240) Permits an employee stock ownership plan (ESOP) maintained by an S corporation to make distributions for repayments of loans used to purchase employer securities without incurring tax penalties. Makes this change effective for distributions made after December 31, 1997.
 

Subtitle E: Other Business Incentives 
- (Sec. 241) Phases out between 2005 and 2007 and repeals, effective January 1, 2007, the 4.3-cents-per-gallon General Fund excise tax on diesel fuel used in trains and fuels used in barges operating on the designated inland waterways system. 
 
(Sec. 242) Allows the inclusion of participations and residuals in the adjusted basis of property for the taxable year in which such property is placed in service, for purposes of computing the allowable depreciation deduction for such property under the forecast method of depreciation. Requires such participations and residuals to relate to income estimated to be earned in connection with the property before the close of the tenth taxable year after the property is placed in service. Defines &quot;participations and residuals&quot; as costs the amount of which by contract varies with the amount of income earned in connection with such property. 
 
(Sec. 243) Revises or repeals certain real estate investment trust (REIT) provisions relating to: (1) straight debt securities; (2) the limited rental exception; (3) the customary services exception; and (4) the treatment of certain hedging instruments. Increases from 90 to 95 the percentage of gross income test used to impose an additional tax for failure to meet certain REIT requirements.
 
(Sec. 244) Allows an election until 2009 to expense qualified film or television production costs up to $15 million ($20 million for costs incurred in certain low-income or distressed areas). 
 
(Sec. 245) Allows a tax credit after 2004 and before 2008 for 50 percent of expenditures for railroad track maintenance. Limits the amount of such credit to the product of $3,500 and the number of miles of railroad track owned or leased by a taxpayer. 
 
(Sec. 246) Suspends from July 1, 2005, until June 30, 2008, the occupational tax on distilled spirits, wine, and beer.
 
(Sec. 247) Excludes from treatment as acquisition indebtedness, for purposes of determining unrelated business taxable income, certain indebtedness incurred by a small business investment company licensed under the Small Business Investment Act of 1958.
 
(Sec. 248) Allows certain corporations engaged in international shipping activities to elect an alternative system of corporate income taxation based upon the net tonnage of the corporation's vessels.
 

Subtitle F: Stock Options and Employee Stock Purchase Plan Stock Options
 - (Sec. 251) Excludes from social security, unemployment, and railroad retirement taxes wages earned from the transfer of stock pursuant to the exercise of an incentive stock option or under an employee stock purchase plan or from any disposition of such stock. Eliminates withholding of tax requirements for certain dispositions of stock options.
 

Title III: Tax Relief for Agriculture and Small Manufacturers - Subtitle A: Volumetric Ethanol Excise Tax Credit - 
(Sec. 301) Eliminates reduced rates of excise tax for gasoline and certain alcohol-blended fuels. Allows a refundable credit against the gasoline excise tax for the sum of the alcohol fuel mixture credit and the biodiesel mixture credit. Defines &quot;alcohol&quot; to include methanol and ethanol, but not alcohol produced from petroleum, natural gas or coal (including peat), or alcohol with a proof of less than 190. Terminates the credit for the alcohol fuel mixture credit after 2010 and the biodiesel mixture credit after 2006.
 
Requires the Secretary of the Treasury to make refunds to taxpayers whose alcohol fuel mixture credit exceeds their gasoline excise tax liability within 45 days or pay interest on refund amounts. Allows electronic filing for certain refund claims.
 
Provides for the direct payment of excise tax receipts to the Highway Trust Fund (current law requires the retention of certain amounts of excise tax in the General Fund of the Treasury).
 
Requires the registration of taxpayers producing or importing biodiesel or alcohol. 
 
Extends through 2010 the tax credit for alcohol used as fuel.
 
(Sec. 302) Allows a business tax credit for biodiesel used as fuel in the trade or business of a taxpayer. Terminates such credit after 2006.
 
(Sec. 303) Directs the Secretary to require any individual claiming benefits under the tax credits for alcohol and biodiesel used as fuel to file informational returns.
 

Subtitle B: Agricultural Incentives - 
(Sec. 311) Modifies involuntary conversion tax rules to extend from two to four years the replacement period for livestock sold due to drought, flood, or other weather-related conditions. Allows the Secretary to extend the replacement period on a regional basis if weather-related conditions continue for more than three years.
 
(Sec. 312) Provides that dividends on the capital stock or other proprietary capital interests of certain tax-exempt cooperatives shall not reduce the net earnings of such cooperatives. 
 
(Sec. 313) Allows the apportionment of the small ethanol producer tax credit among patrons of a tax-exempt cooperative. 
 
(Sec. 314) Revises rules for the computation of the regular tax liability of farmers and fishermen to exclude income averaging in computing alternative minimum tax liability.
 
(Sec. 315) Qualifies the outright sale of timber by landowners for capital gains treatment. 
 
(Sec. 316) Revises the rule for marketing activities by tax-exempt farmer cooperatives to provide that the marketing of products of cooperative members and other producers shall include the feeding of such products to cattle, hogs, fish, chickens, or other animals and the sale of the resulting animal or animal products.
 
(Sec. 317) Permits farmers' cooperative organizations to seek declaratory judgments with respect to their initial or continuing qualification as tax-exempt organizations. 
 
(Sec. 318) Allows rural letter carriers a miscellaneous tax deduction (subject to the two percent threshold) for their actual employment-related expenses in excess of their employer's reimbursement.
 
(Sec. 319) Excludes income received by a mutual or cooperative rural electric company from any open access transaction, any nuclear decommissioning transaction, or any asset exchange or conversion transaction, for purposes of determining whether such cooperative meets the income test for tax-exempt status (i.e., 85 percent of income collected from members of cooperatives for sole purpose of meeting losses and expenses of providing services to members). Includes in the income of such cooperatives income from load loss transactions for purposes of meeting the income test for tax-exempt status. Terminates these provisions for taxable years beginning after December 31, 2006.
 
(Sec. 320) Excludes from gross income and social security taxes payments under the National Health Service Corps loan repayment program and certain State repayment programs. 
 
(Sec. 321) Modifies safe harbor rules relating to timber real estate investment trusts to provide that the sale of a real estate asset shall not be deemed a prohibited transaction if specified requirements are met. 
 
(Sec. 322) Allows for the expensing of certain reforestation expenditures up to $10,000 and the amortization of expenditures over $10,000. Repeals the investment tax credit for reforestation.
 

Subtitle C: Incentives for Small Manufacturers - 
(Sec. 331) Modifies the 90 percent of gross income test for income of a regulated investment company (RIC) to include distributions or other income derived from an interest in a publicly traded partnership. 
 
(Sec. 332) Increases the draw weight for a taxable bow from ten to 30 pounds or more for purposes of the 11 percent excise tax on bows and arrows. Reduces to 11 percent the excise tax on archery equipment, including quivers or broadheads. Imposes an excise tax of 12 percent on arrows. 
 
(Sec. 333) Reduces the excise tax on fishing tackle boxes from ten to three percent. 
 
(Sec. 334) Repeals the excise tax on sonar devices suitable for finding fish. 
 
(Sec. 335) Allows whaling captains recognized by the Alaska Eskimo Whaling Commission to claim a charitable income tax deduction up to $10,000 for certain expenses incurred in support of Native Alaskan subsistence whaling. Directs the Secretary to issue guidance for the substantiation of this tax deduction.
 
(Sec. 336) Qualifies certain noncommercial aircraft for the 50 percent bonus depreciation allowance.
 
(Sec. 337) Sets forth a special placed-in-service rule for certain bonus depreciation property. 
 
(Sec. 338) Allows small business refiners: (1) a current year tax deduction for up to 75 percent of the capital costs incurred in complying with Environmental Protection Agency sulfur regulations; and (2) a business tax credit (five cents per gallon) for the production of low sulfur diesel fuel. 
 
(Sec. 340) Allows an additional $10 million in capital expenditures under the qualified small-issue bond program for bonds issued after September 30, 2009.
 
(Sec. 341) Allows a business tax credit for producing oil and gas from marginal wells.
 

Title IV: Tax Reform and Simplification for United States Businesses 
- (Sec. 401) Permits, in general, a worldwide affiliated group to elect to have the taxable income of each domestic corporation in such group determined by allocating and apportioning the interest expense of each member as if all members of such group were a single corporation. Provides that if a group makes this election, the taxable income of the domestic members of the worldwide affiliated group from sources outside the Untied States will be determined by allocating and apportioning the interest expenses of domestic members to foreign source income in accordance with a specified formula. Provides that non-interest expenses which are not directly allocable or apportioned to any specific income-producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation. 
 
(Sec. 402) Treats as income from sources without the United States, in the case of any taxpayer who sustains an overall domestic loss for any taxable year beginning after December 31, 2006, that portion of the taxpayer's taxable income from sources within the United States for each succeeding taxable year which is equal to the lesser of: (1) the amount of such loss (to the extent not used in prior taxable years); or (2) 50 percent of the taxpayer's taxable income from sources within the United States for such succeeding taxable year. 
 
(Sec. 403) Revises rules for the tax treatment of dividends paid by a section 902 corporation (a foreign corporation in which the taxpayer owns at least ten percent of the stock by vote and which is not a controlled foreign corporation). 
 
(Sec. 404) Reduces the limitation on the foreign tax credit to two basic categories: (1) passive category income; and (2) general category income. 
 
(Sec. 405) Modifies attribution rules for stock ownership through partnerships to provide that stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its partners, for purposes of determining deemed-paid foreign tax credits of domestic corporations that own ten percent or more of the voting stock of a foreign corporation. 
 
(Sec. 406) Specifies that certain deemed payments relating to the transfer of intangibles shall be treated as royalties for purposes of applying the separate limitation categories of the foreign tax credit. 
 
(Sec. 407) Adds certain exceptions from the definition of U.S. property relating to securities acquired and held by a controlled foreign corporation and certain bonds, for determining current income inclusion by a U.S. ten percent shareholder with respect to an investment in U.S. property by a controlled foreign corporation. 
 
(Sec. 408) Permits taxpayers required to translate foreign income tax payments at the average exchange rate to elect to translate such taxes into U.S. dollar amounts using the exchange rates as of the time such taxes are paid, provided the foreign income taxes are denominated in a currency other than the taxpayer's functional currency. Denies such election to regulated investment companies that account for income on an accrual basis.
 
(Sec. 409) Exempts from withholding of tax requirements certain dividends paid by a foreign corporation. 
 
(Sec. 410) Excludes from U.S. source income certain interest paid by a foreign partnership that is predominantly engaged in the active conduct of a trade of business outside the United States.
 
(Sec. 411) Allows a tax exemption for certain interest-related dividends of regulated investment companies (RICs) that are paid after 2005 and before 2008.
 
(Sec. 412) Treats the sale by a controlled foreign corporation of a partnership interest (in which the corporation has a 25 percent ownership interest) as a sale of the proportionate share of partnership assets attributable to such interest for purposes of determining subpart F foreign personal holding company income. 
 
(Sec. 413) Repeals rules relating to foreign personal holding companies and foreign investment companies. Excludes foreign corporations from the application of the personal holding company rules. Includes as subpart F foreign personal holding company income personal services company income that is subject to the present law foreign personal holding company rules. 
 
(Sec. 414) Modifies the definition of subpart F (Controlled Foreign Corporations) foreign personal holding company income with respect to gains or losses from a commodities hedging transaction. 
 
(Sec. 415) Repeals subpart F rules relating to foreign base company shipping income. Establishes a safe harbor rule for the exclusion of rents derived from leasing an aircraft or vessel from foreign personal holding income (i.e., active leasing expenses must comprise at least ten percent of the profit on the lease). 
 
(Sec. 416) Modifies certain exceptions from subpart F foreign personal holding company income and foreign base company services income for income derived in the active conduct of a bank, financing, or similar business. 
 
(Sec. 417) Extends the excess foreign tax credit carry forward period to ten years and limits the carry back period to one year. 
 
(Sec. 418) Removes from treatment as effectively connected income for a foreign investor a capital gain distribution from a real estate investment trust (REIT), if: (1) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States; and (2) the foreign investor does not own more than five percent of the class of stock at any time during the taxable year within which the distribution is received. 
 
(Sec. 419) Excludes from gross income winnings paid to a nonresident alien resulting from a legal wager initiated outside the United States in a pari-mutuel pool on a live horse or dog race in the United States. 
 
(Sec. 420) Lowers the withholding income tax rate on U.S. source dividends paid to a corporation created or organized in Puerto Rico from 30 percent to ten percent as long as Puerto Rico does not increase its ten percent tax rate.
 
(Sec. 421) Repeals the 90 percent limitation on the utilization of the alternative minimum tax foreign tax credit.
 
(Sec. 422) Allows certain U.S. corporations to deduct up to 85 percent of cash dividends received during a specified period from a controlled foreign corporation. Sets forth limitations on such deduction, including a dollar limit of the greater of $500 million or a specified amount of earnings permanently reinvested outside the United States. Requires dividends received to be reinvested in the United States pursuant to an approved domestic reinvestment plan. 
 
(Sec. 423) Provides that final Treasury regulations relating to income derived by certain foreign corporations from the international operation of ships or aircraft shall apply to taxable years of a foreign corporation beginning after September 24, 2004.
 
(Sec. 424) Directs the Secretary of the Treasury to study and report to Congress by June 30, 2005, on the effectiveness of earnings stripping rules.
 

Title V: Deduction of State and Local General Sales Taxes 
- (Sec. 501) Allows taxpayers to elect to deduct State and local sales taxes in lieu of State and local income taxes for taxable years beginning in 2004 and 2005. Permits taxpayers to elect to base their sales tax deduction on their own sales tax receipts or upon sales tax tables published by the Internal Revenue Service (IRS). 
 

Title VI: Fair and Equitable Tobacco Reform - 
Fair and Equitable Tobacco Reform Act of 2004 - 
Subtitle A: Termination of Federal Tobacco Quota and Price Support Programs - 
(Sec. 611) Amends and repeals specified agricultural Acts to eliminate tobacco quota and price support programs, including no net cost provisions.
 
(Sec. 612) Amends the Agricultural Act of 1949 to eliminate tobacco from the definition of "basic agricultural commodity."
 
(Sec. 614) Provides for the continuation of liability for 2004 and earlier tobacco crop years.
 

Subtitle B: Transitional Payments to Tobacco Quota Holders and Producers of Tobacco - 
(Sec. 622) Authorizes the Secretary of Agriculture to make transitional FY 2005 through 2014 payments to: (1) eligible tobacco quota holders at $7 per pound; and (2) eligible quota tobacco producers at $3 per pound. (Provides a right of survivorship for such payments upon a quota holder's or producer's death.)
 
(Sec. 624) Provides for county committee resolution of eligibility and payment disputes.
 
(Sec. 625) Imposes a quarterly assessment on each tobacco product manufacturer and tobacco product importer that sells tobacco products in domestic U.S. commerce. Sets forth assessment provisions. Terminates assessment authority on September 30, 2014. 
 
(Sec. 626) Establishes in the Commodity Credit Corporation a revolving Tobacco Trust Fund to carry out this title. Caps total Fund expenditures.
 

Subtitle C: Implementation and Transition - 
(Sec. 641) Sets forth tobacco stocks and no net cost provisions.
 
(Sec. 643) Applies the provisions of this title to the 2005 and subsequent tobacco crops.
 

Title VII: Miscellaneous Provisions
 - (Sec. 701) Authorizes the issuance of tax-exempt facility bonds for certain green building and sustainable design projects (projects) designated by the Secretary of the Treasury. Limits the amount of bonds that may be issued to $2 billion. Requires designated projects to: (1) register at least 75 percent of the square footage of the structures included in a project for certification by the U.S. Green Building Council's Leadership in Energy and Environmental Design; (2) include a brownfield site; (3) identify other State or local financial contributions that will be provided to support a project; (4) include at least one million square feet of building or 20 acres of land; and (5) provide at least 1,500 full time jobs (150 in rural States) when completed and at least 1,000 full time jobs (100 in rural States) during construction. Prohibits more than one project in a single State and requires at least one project in an empowerment zone and one project in a rural State. Terminates the authority for issuing bonds after FY 2009. 
 
(Sec. 702) Excludes from the unrelated business taxable income of certain tax-exempt organizations gain or loss on the sale or exchange of certain brownfield sites acquired, remediated, and sold by such organizations. Terminates this exclusion after 2009.
 
(Sec. 703) Allows a tax deduction from gross income (whether or not the taxpayer itemizes deductions) for attorney fees and court costs paid in connection with a claim of unlawful discrimination under specified Federal, State or local statutes.
 
(Sec. 704) Allows a seven-year recovery period for the depreciation of any motorsports entertainment complex placed in service before January 1, 2008. Defines &quot;motorsports entertainment complex&quot; as a racing track facility which is permanently situated on land and which hosts one or more automobile racing events open to the general public in a specified 36-month period.
 
(Sec. 705) Suspends for the taxable years of a stock life insurance company beginning in 2005 and 2006 the application of rules imposing income tax on distributions to shareholders from the policyholders' surplus account of a life insurance company.
 
(Sec. 706) Allows a seven-year recovery period for the depreciation of any Alaska natural gas pipeline that has a capacity of more than 500 billion British thermal units of natural gas per day and that is placed in service after December 31, 2013.
 
(Sec. 707) Allows a tax credit for enhanced oil recovery for expenses to construct a natural gas treatment plant located in U.S. territory (lying north of 64 degrees north latitude) that prepares Alaska natural gas for transportation through a pipeline with a capacity of at least $2 trillion British thermal units of natural gas on a daily basis and that produces carbon dioxide which is injected into hydrocarbon-bearing geological formations.
 
(Sec. 708) Allows shipbuilders holding a contract to build a ship or submarine for the Federal Government to use a certain method of accounting authorized by the Revenue Act of 1987 to report taxable income.
 
(Sec. 709) Amends the Employee Retirement Income Security Act of 1974 (ERISA) to permit employers with current retiree health liabilities of at least five percent of gross receipts to make certain cost reductions in retiree health coverage.
 
(Sec. 710) Modifies the tax credit for electricity produced from certain renewable resources to include the following resources as eligible for the credit until January 1, 2006: (1) open-loop biomass; (2) geothermal energy; (3) solar energy; (4) small irrigation power; and (5) municipal solid waste. 
 
(Sec. 711) Provides for the refundability of the tax credits for alcohol fuels and for the production of electricity. 
 
(Sec. 712) Amends title XIX (Medicaid) of the Social Security Act to include as an optional Medicaid benefit primary and secondary medical strategies, treatment, and services for individuals with sickle cell disease.
 
Includes as Federal reimbursement to States 50 percent of costs for services to identify and educate eligible Medicaid recipients who have sickle cell disease or who are carriers of the sickle cell gene, and for education regarding the risks of stroke and other medical complications.
 
Directs the Administrator of the Health Resources and Services Administration to: (1) conduct a demonstration program by making grants to up to 40 federally-qualified and nonprofit health care providers for the development and establishment of systemic mechanisms to improve the prevention and treatment of sickle cell disease; and (2) contract with an entity to serve as the National Coordinating Center for the demonstration program. Sets forth requirements for awarding grants to establish the demonstration program. Authorizes appropriations for FY 2005 through 2009.
 
(Sec. 713) Amends the Harmonized Tariff Schedule of the United States to: (1) suspend duties on ceiling fans through December 31, 2006; (2) extend duty free entry of nuclear steam generators through December 31, 2008; and (3) and suspend duties on nuclear reactor vessel heads and pressurizers through December 31, 2008.
 

Title VIII: Revenue Provisions - Subtitle A: Provisions to Reduce Tax Avoidance Through Individual and Corporation Expatriation 
- (Sec. 801) Sets forth rules for the tax treatment of expatriated entities and foreign corporations acquiring such entities through inversion transactions (corporate stock transactions structured to avoid or evade U.S. taxation).
 
Defines &quot;expatriated entity&quot; as a domestic corporation which is acquired in an inversion transaction by a surrogate foreign corporation after March 4, 2003, and after such acquisition, the shareholders or owners of which own at least 60 percent of the stock or value of the foreign corporation, where the expanded affiliated group that includes the domestic corporation does not have substantial business activities in the foreign jurisdiction under whose laws it was created compared to the total business activities of its affiliated group. Sets forth a similar definition for domestic partnerships. 
 
Provides that the taxable income of an expatriated entity shall not be less than its inversion gain for any taxable year. Defines &quot;inversion gain&quot; as income or gain resulting from a transfer of stock or other property by an expatriated entity to a foreign corporation. Denies certain tax credits and loss deductions to expatriated entities.
 
Treats a foreign corporation engaged in an inversion transaction as a domestic corporation for U.S. tax purposes, if at least 80 percent of the stock of such foreign corporation was purchased in the inversion transaction.
 
Direct the Secretary of the Treasury to issue regulations to define foreign surrogate corporations and to prevent tax avoidance through individual and corporate expatriation.
 
(Sec. 802) Imposes an excise tax on certain holders of stock options and other stock-based compensation (i.e., disqualified individuals) equal to 15 percent (20 percent after 2008) of the value of such compensation held, directly or indirectly, by or for the benefit of the holders of such stock or their family members at any time during the 12-month period beginning on the date which is six months before an corporate inversion transaction.
 
(Sec. 803) Modifies the authority of the Secretary of the Treasury to allocate tax incidents between the parties to a reinsurance agreement involving tax avoidance or evasion. 
 
(Sec. 804) Revises tax rules on the expatriation of individuals. Provides that expatriated individuals shall be subject to an alternative tax for a ten-year period following expatriation unless such individuals show: (1) an average annual net income not exceeding $124,000; (2) a net worth of less than $2 million; and (3) compliance with applicable tax requirements for the five preceding taxable years. Exempts taxpayers with dual citizenship in the United States and another country with no substantial contact with the United States from the net income and net worth requirements. Sets forth rules for determining when a U.S. citizen or resident becomes expatriated. 
 
Requires an expatriated individual to file an annual informational return, disclosing such individual's country of residence, the number of days such individual was present in the United States, and information on such individual's income, assets, and liabilities. Imposes a $10,000 penalty for failure to provide required information, but allows a waiver of such penalty if failure to comply is due to reasonable cause and not to willful neglect.
 
(Sec. 805) Imposes certain reporting requirements on an acquiring corporation in a taxable acquisition of another corporation. Imposes a penalty for failure to report required information.
 
(Sec. 806) Requires the Secretary to conduct studies and report to Congress on: (1) the effectiveness of current transfer pricing rules and compliance efforts in ensuring that cross-border transfers and other related-party transactions cannot be used improperly to shift income out of the United States; (2) any inappropriate reductions in U.S. withholding tax, as a result of U.S. income tax treaties, that provide opportunities for shifting income outside the United States; and (3) the effectiveness of the provisions of this title on corporate expatriation.
 

Subtitle B: Provisions Relating to Tax Shelters - Part I: Taxpayer-Related Provisions
 - (Sec. 811) Imposes new penalties for failing to report tax shelter transactions that have a potential for tax avoidance or evasion (reportable transaction) and transactions specifically identified as tax avoidance transactions (listed transactions). Authorizes the Commissioner of Internal Revenue to rescind all or a portion of such penalties, but requires the Commissioner to enter on record a statement of the the facts and circumstances relating to the violations, the reasons for the rescission, and the amount of the penalty rescinded. Requires taxpayers subject to certain Securities and Exchange Commission reporting requirements to report tax shelter penalties. Requires the Commissioner to report to the House Ways and Means Committee and the Senate Finance Committee a summary of the total number and aggregate amount of tax shelter penalties imposed and a description of penalties rescinded.
 
(Sec. 812) Imposes a 20 percent penalty for understatements of tax resulting from tax shelter activities reported by the taxpayer and increases such penalty to 30 percent for undisclosed tax shelter transactions. Allows a waiver of the 20 percent penalty if the taxpayer shows reasonable cause for the understatement of tax and has acted in good faith.
 
(Sec. 813) Expands the denial of privilege for communications between a tax practitioner and a corporate client pertaining to tax shelter activity to include any individual engaged in tax shelter activity. 
 
(Sec. 814) Extends the statute of limitations for assessing underpayments of tax resulting from undisclosed tax shelter transactions to one year after required disclosures are made. 
 
(Sec. 815) Requires material advisors of reportable tax shelter transactions to file informational returns identifying and describing such transactions and the potential tax benefit expected to result from such transactions. Defines &quot;material advisor&quot; as any person who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable tax shelter transaction, and who directly or indirectly derives certain levels of compensation for such advice or assistance. Requires material advisors to maintain lists identifying tax shelter clients. 
 
(Sec. 816) Revises provisions for registration of tax shelters to impose a penalty on material advisors for failure to file required informational returns or for filing false or incomplete information.
 
(Sec. 817) Imposes a daily penalty of $10,000 on material advisors who fail to disclose lists of tax shelter clients. Allows a waiver of such penalty for reasonable cause.
 
(Sec. 818) Imposes an additional penalty on promoters of abusive tax shelters of 50 percent of the gross income derived from such tax shelter activity.
 
(Sec. 819) Modifies the definition of substantial understatement of tax for corporations, other than an S corporation or a personal holding company, to mean the lesser of ten percent of the tax required to be shown (or, if greater, $10,000) or $10 million.
 
(Sec. 820) Expands the authority of the Secretary of the Treasury to seek an injunction against participants in abusive tax shelter activities. 
 
(Sec. 821) Increases the penalty for failure to report interests in foreign financial accounts. Allows a waiver of the penalty if the failure to report was due to reasonable cause and the amount of the transaction was properly reported.
 
(Sec. 822) Authorizes the Secretary to: (1) censure and fine an incompetent or disreputable tax advisor who practices before the Department of the Treasury; and (2) impose standards applicable to the rendering of written advice for tax transactions having a potential for tax avoidance or evasion.
 

Part II: Other Provisions
 - (Sec. 831) Permits the application of stripped preferred stock rules and stripped bond rules in the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof. 
 
(Sec. 832) Expands the disallowance of the foreign tax credit to deny a credit for certain foreign withholding tax relating to an item of income or gain from property unless such property is held by the taxpayer for a specified period.
 
(Sec. 833) Revises rules relating to contributions of property with built-in losses to a partnership to limit recognition of losses to the contributing partner. 
 
(Sec. 834) Prohibits an allocation of any decrease in the adjusted basis of partnership property to stock in a corporation that is a partner in a partnership. 
 
(Sec. 835) Repeals part V (Financial Asset Securitization Investment Trusts - FASITS) of subchapter M (Regulated Investment Companies and Real Estate Investment Trusts).
 
(Sec. 836) Limits the basis of certain corporate property acquired by the issuance of stock or as paid-in surplus and for which there is the importation of net-built-in loss to the property's fair market value immediately after the transfer of such property. 
 
(Sec. 837) Revises the definition of &quot;banking business&quot; for purposes of the exemption of investment of earnings in U.S. property.
 
(Sec. 838) Denies a tax deduction for interest paid on an underpayment of tax resulting from an unreported tax shelter transaction.
 
(Sec. 839) Applies estimated tax requirements to deemed asset sales between certain U.S. corporations and consolidated groups.
 
(Sec. 840) Denies a tax exclusion of the gain from the sale or exchange of a principal residence acquired in a like-kind exchange if no gain was recognized during the five-year period beginning with the date of acquisition.
 
(Sec. 841) Allows a tax deduction for a debt instrument having original issue discount which is held by a controlled foreign corporation or passive foreign investment company only to the extent such original issue discount is includible in the gross income of the U.S. owners of the foreign corporation or investment company. 
 
(Sec. 842) Permits taxpayers to make a cash deposit to suspend the running of interest on potential underpayments of tax. 
 
(Sec. 843) Authorizes the IRS to enter into partial payment installment agreements with taxpayers (current law requires agreements to provide for the entire liability). Requires a review of such agreements at least every two years. 
 
(Sec. 844) Authorizes the Secretary to issue consolidated return regulations that treat corporations filing consolidated returns differently than corporations filing separate returns.
 
(Sec. 845) Expands the disallowance of tax deductions for interest paid on disqualified debt instruments of corporations to provide that if such instruments are payable in equity held by the issuer (or any related party) in any other person (other than a related party), the basis of such equity shall be increased by the amount disallowed as a deduction. 
 

Part III: Leasing
 - (Sec. 847) Modifies the depreciation recovery period for qualified technological equipment and computer software leased to a tax-exempt organization.
 
(Sec. 848) Disallows losses from the leasing of property to tax-exempt organizations, including Indian tribal governments (tax-exempt use losses). Allows a carryover of a disallowed loss to the next taxable year. 
 
Allows tax-exempt use losses with respect to property: (1) that is not financed with tax-exempt bonds or Federal funds; (2) in which the lessor makes an equity investment of at least 20 percent of the lessor's adjusted basis; (3) in which the lessee does not bear more than a minimal risk of loss; and (4) that grants the lessee a fair market purchase option (applicable only to property with a seven-year class life). 
 
(Sec. 849) Applies the amendments made by this part to leases entered into after March 12, 2004. Exempts from such amendments qualified transportation property. Defines &quot;qualified transportation property&quot; as domestic property subject to a lease for which a formal application: (1) was submitted for approval to the Federal Transit Administration after June 30, 2003, and before March 13, 2004; (2) is approved by the Federal Transit Administration before January 1, 2006, and (3) includes a description of such property and the value of such property.
 

Subtitle C: Reduction of Fuel Tax Evasion 
- (Sec. 851) Exempts mobile machinery from the excise tax on heavy trucks sold at retail, the use tax on highway vehicles, and the tax on tires. Establishes a design-based test and a use-based test (less than 7,500 miles use on public highways per year) to determine whether certain equipment qualifies as mobile machinery for purposes of the tax exemption. Allows refunds for taxes paid on mobile machinery on an annual basis only.
 
(Sec. 852) Defines &quot;off-highway vehicles&quot; for excise tax purposes. 
 
(Sec. 853) Revises rules for the taxation of aviation-grade kerosene to impose a tax on such fuel upon its removal from a refinery or terminal or its entry into the United States (current law imposes the tax upon the sale of aviation fuel). 
 
(Sec. 854) Changes the dyeing process for the diesel fuel and kerosene tax exemption from manual to mechanical injection. Requires the Secretary to issue regulations on mechanical dye injection systems, including rules for making such systems tamper-resistant. Imposes a penalty for: (1) tampering with a mechanical dye injection system (the greater of $25,000 or $10 for each gallon of fuel involved); and (2) failure by an operator of a mechanical dye injection system to maintain security standards ($1,000 for each failure and $1,000 for each day such operator fails to correct a violation). 
 
(Sec. 855) Denies an administrative appeal for taxpayers who have two prior violations for selling dyed fuel for a taxable use. 
 
(Sec. 856) Imposes a penalty for the sale, for a taxable use, of dyed fuel that has been altered. 
 
(Sec. 857) Revises excise tax exemptions and refund procedures for intercity buses using dyed fuel. 
 
(Sec. 858) Authorizes IRS agents to inspect any books, records, and shipping papers pertaining to taxable fuels at locations where such fuels are produced or stored. Imposes a penalty for refusing IRS agents entry for inspection.
 
(Sec. 860) Extends the bulk transfer exemption from taxable fuels to registered pipeline or vessel operators. Directs the Secretary of the Treasury to periodically publish a current list of persons who are registered.
 
(Sec. 861) Requires every operator of a vessel who is required to register for the bulk transfer exemption to display proof of registration through a prescribed electronic identification device on each vessel used to transport any taxable fuel. Imposes a $500 penalty on an operator for each failure to display proof of registration, with increased penalties for multiple violations. Allows penalties to be waived upon a showing that failure to register was due to reasonable cause. 
 
(Sec. 862) Requires registration of operators of terminals or refineries within a foreign trade zone or within a customs bonded storage facility.
 
(Sec. 863) Increases to $10,000 certain civil and criminal penalties for failure to register or for falsely representing registration status with respect to a taxable fuel (i.e., gasoline, diesel fuel, and kerosene). Imposes additional penalties for failure to register and to report required information with respect to the excise tax on special fuels, petroleum products, and aviation fuels.
 
(Sec. 864) Requires taxpayers with 25 or more reportable transactions in a month relating to gasoline excise taxes to file reports in an electronic format. 
 
(Sec. 865) Provides that a registered ultimate vendor of taxable fuels on which excise tax has been paid shall be treated as the ultimate vendor for purposes of claiming credits and refunds of tax.
 
(Sec. 866) Exempts the delivering person from liability for fuel excise tax in two-party exchanges. Defines &quot;two-party exchanges&quot; for purposes of such exemption. 
 
(Sec. 867) Allows for the proration of the use tax on heavy vehicles (weighing more than 55,000 pounds) that are sold before the end of the taxable period. Repeals provisions allowing installment payments of such use tax. Requires a taxpayer with 25 or more heavy vehicles to file tax returns electronically. Repeals the reduced tax rate for Canadian and Mexican heavy vehicles.
 
(Sec. 868) Dedicates penalties added or increased by this Act to the Highway Trust Fund.
 
(Sec. 869) Revises the excise tax on tires to impose a 9.45 cents (4.725 cents in the case of a biasply tire or super single tire) for each ten pounds of tire load capacity in excess of 3,500 pounds. Exempts from such tax tires sold for the exclusive use of the Department of Defense or Coast Guard. 
 
(Sec. 870) Treats transmix and diesel fuel blend stocks as diesel fuel for excise tax purposes. 
 
(Sec. 871) Directs the Secretary to report to the House Committee on Ways and Means and the Senate Committee on Finance not later than January 31, 2005, on compliance with the excise tax on special fuels and petroleum products. Requires the report to identify taxable fuel blendstocks and include a discussion of waste products added to taxable fuels and erroneous claims of fuel tax exemption.
 

Subtitle D: Other Revenue Provisions - 
(Sec. 881) Authorizes the Secretary of the Treasury to: (1) enter into qualified tax collection contracts with private collection agencies to locate and contact taxpayers owing Federal taxes, to request full payment of taxes owed by such taxpayers, and to obtain financial information from such taxpayers; and (2) retain and use up to 25 percent of any amounts collected to pay for collection services and IRS collection enforcement activities.
 
Exempts the United States from liability for any act or omission of any person performing services under a qualified tax collection contract. Applies the Fair Debt Collection Practices Act to such qualified tax collection contracts, with specified exceptions. Permits a civil action against a collection agency performing services under a qualified tax collection contract, but not against the United States, for unauthorized collection actions.
 
Subjects any collection agency performing services under a qualified tax collection contract to orders of the National Taxpayer Advocate. Disqualifies collection agencies which are guilty of misconduct from receiving a qualified tax collection contract. 
 
Requires the Secretary to report biennially (beginning in 2005) to the House Ways and Means Committee and the Senate Finance Committee on qualified tax collection contracts.
 
(Sec. 882) Applies tax rules for the charitable contribution of ordinary income and capital gain property to patents and similar intellectual property. Allows donors of patents and similar intellectual property an additional tax deduction for a percentage of income received by the donees of such property, with specified limitations. Revises rules for reporting donee income and authorizes the Secretary to prescribe regulations to prevent abuse of the tax deduction of patents or similar intellectual property.
 
(Sec. 883) Revises reporting requirements for noncash charitable contributions in excess of $500. Requires a qualified appraisal for noncash charitable contributions in excess of $5,000. Requires charitable organizations receiving contributions of used motor vehicles, boats, and airplanes valued at more than $500 to provide donors with a contemporaneous acknowledgment of a donation that includes the name and taxpayer identification number of the donor and the vehicle identification number. Limits the amount of any charitable deduction of a used motor vehicle, boat, or airplane to the gross proceeds which the charitable organization receives from the sale of such vehicle. Imposes a penalty upon charitable organizations that provide donors with false or fraudulent acknowledgments.
 
(Sec. 885) Sets forth rules for determining the includibility in gross income of deferred compensation under nonqualified deferred compensation plans based on whether such compensation is subject to a substantial risk of forfeiture and was previously included in gross income. Allows distributions from nonqualified deferred compensation plans for certain reasons, including separation from service, death, change in control of a corporation, occurrence of an unforeseeable emergency, or disability of a plan participant. Directs the Secretary to prescribe regulations and issue guidance for compliance with nonqualified deferred compensation plan requirements. 
 
(Sec. 886) Permits (current law prohibits) the amortization of intangibles by sport franchises.
 
(Sec. 887) Increases from 15 to 100 percent the allowable amount of the continuing levy on payments to Federal vendors for unpaid taxes. 
 
(Sec. 888) Modifies straddle rules to: (1) permit taxpayers to identify offsetting positions of a straddle; (2) revise the tax treatment of certain physically settled positions of a straddle; and (3) repeal the stock and qualified covered call exceptions from the straddle rules. 
 
(Sec. 889) Includes any vaccine against hepatitis A and any trivalent vaccine against influenza under the 75 cents-per-dose manufacturer's excise tax. 
 
(Sec. 891) Extends the authority for certain IRS user fees until September 30, 2014.
 
(Sec. 892) Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to extend the passenger and conveyance processing fees and the merchandise processing fees through September 30, 2014.
 
 Expresses the sense of Congress that certain custom fees have been reasonably related to the costs of providing customs services.
 
Directs the Secretary to: (1) charge fees in FY 2006 and succeeding fiscal years in amounts that are reasonably related to the costs of providing customs services in connection with the activity or item for which the fee is charged; and (2) study all fees collected by the Department of Homeland Security and report to Congress by September 30, 2005, on what fees should be eliminated, what the rate of fees retained should be, and on other appropriate recommendations.
 
 (Sec. 893) Treats as a dividend any distribution of earnings by a U.S. holding company to a foreign corporation of earnings in a complete liquidation, if the U.S. holding company was in existence for less than five years. 
 
(Sec. 894) Includes certain economic equivalents of foreign source income as income effectively connected with a U.S. trade or business.
 
(Sec. 895) Requires the recapture of overall foreign losses upon the sale of controlled foreign corporation stock, with exceptions for certain corporate reorganizations and liquidations.
 
(Sec. 896) Revises the tax rules for recognition of income from cancellation of indebtedness to provide that partnerships that transfer a capital or profits interest in the partnership to a creditor in satisfaction of partnership recourse or nonrecourse indebtedness must recognize cancellation of indebtedness income in the amount that would be recognized if the debt were satisfied with money equal to the fair market value of the partnership interest. Includes a discharge of indebtedness in the distributive shares of taxpayers who were partners in a partnership immediately before the discharge.
 
(Sec. 897) Denies installment sales treatment for all debt instruments that are readily tradable.
 
(Sec. 898) Limits the amount of assets that a corporation can distribute to its creditors without recognition of gain to the amount of the basis of the assets contributed to a controlled corporation in a divisive reorganization.
 
(Sec. 899) Modifies the definition of nonqualified preferred stock to add a provision stating that stock shall not be treated as participating in corporate growth to any significant extent unless there is a real and meaningful likelihood of the shareholder actually participating in the earnings and growth of the corporation.
 
(Sec. 900) Modifies the definition of a brother-sister controlled group of corporations for certain tax purposes. 
 
(Sec. 901) Allows a 15-year recovery period for the depreciation of initial clearing and grading land improvements for gas utility property and a 20-year period for any electric utility transmission and distribution plant.
 
(Sec. 902) Revises rules for the deductibility of startup expenditures to allow a tax deduction for up to $5,000 of the startup expenditures for an active trade or business and for the organizational expenditures of a corporation or partnership in the year such businesses begin. Provides for the amortization over a 180-month period of expenditures exceeding the $5,000 limit.
 
(Sec. 903) Makes permanent provisions suspending interest and penalties on unpaid tax where the Secretary fails to send a notice of taxpayer liability within 18 months of a timely-filed tax return. Renders the suspension inapplicable to gross misstatements of tax liability and to certain listed and reportable tax shelter transactions.
 
(Sec. 904) Requires a withholding of tax rate of 35 percent for supplemental wage payments exceeding $1 million made after 2004.
 
(Sec. 905) Provides for capital gains tax treatment of stock acquired by the exercise of stock options made to comply with Federal conflict of interest requirements. 
 
(Sec. 906) Sets forth basis rules applicable to nonresident aliens for purposes of determining the tax treatment of contributions and earnings for tax-exempt pension or retirement plans. 
 
(Sec. 907) Allows a tax deduction for the entertainment expenses of certain directors, officers, or owners of companies to the extent that compensation for such expenses is includible in the gross income of such individuals.
 
(Sec. 908) Defines &quot;bona fide resident&quot; for purposes of determining income tax liability of residents of U.S. possessions to mean a person who: (1) is present for at least 183 days in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands; and (2) does not have a tax home outside such U.S. possession and does not have a closer connection with the United States or a foreign country. Requires taxpayers to file a notice with the Secretary in the first year in which residence in a U.S. possession is claimed. Imposes a $1,000 penalty for failure to file a notice and increases from $100 to $1,000 the penalty for failure to file required information relating to the coordination of U.S. and U.S. possessions income tax.
 
(Sec. 909) Sets forth a special rule for the recognition of gain from the sale of a qualifying electric transmission transaction. Allows a taxpayer election to recognize gain from such sale ratably over an eight-year period if gain from the sale is reinvested in certain exempt utility property. Defines &quot;qualifying electric transmission transaction&quot; as the sale or other disposition before January 1, 2007, to an independent transmission company of: (1) property used in the trade or business of providing electric transmission services, or (2) any stock or partnership interest in such a trade or business.
 
(Sec. 910) Limits the cost basis of sport utility vehicles that may be taken into account for depreciation purposes to $25,000. Defines &quot;sport utility vehicle&quot; to mean any 4-wheeled vehicle which is primarily designed to carry passengers, is not subject to the limitation on depreciation for luxury automobiles, and is rated at not more than 14,000 pounds gross vehicle weight, but excludes certain large vehicles, including vehicles designed to have a seating capacity of more than nine persons behind the driver's seat and a cargo area of at least six feet in interior length.

action_date: 2004-10-22
text: 

(This measure has not been amended since the Conference Report was filed in the House on October 7, 2004. The summary of that version is repeated here.)

 
American Jobs Creation Act of 2004 - 
Title I: Provisions Relating to Repeal of Exclusion for Extraterritorial Income
 - (Sec. 101) Amends the Internal Revenue Code to repeal the tax exclusion for extraterritorial income. Provides transitional relief for taxpayers subject to the repeal by allowing a tax exclusion for extraterritorial income of 80 percent in 2005 and 60 percent in 2006.
 
Permits foreign corporations to revoke elections to be treated as U.S. corporations for purposes of the extraterritorial income tax exclusion without recognition of gain or loss. Authorizes the Secretary of the Treasury to prescribe regulations to prevent abuse resulting from revoked elections.
 
Exempts from the repeal transactions in the ordinary course of a trade or business pursuant to certain binding contracts (including purchase, renewal, or replacement options) in effect on September 17, 2003, and thereafter. 
 
(Sec. 102) Allows a tax deduction of nine percent of the lesser of a taxpayer's qualified production activities income or taxable income for the taxable year, beginning in 2010. Phases in the deduction at the rate of three percent in 2005 and 2006 and six percent for 2007, 2008, and 2009. Limits the amount of the deduction to 50 percent of W-2 wages (reportable gross employee wages) paid in a taxable year. 
 
Defines &quot;qualified production activities income&quot; as the excess (if any) of domestic production gross receipts over the sum of the cost of goods sold allocable to such receipts, other deductions, expenses, or losses directly allocable to such receipts, and a ratable portion of other deductions, expenses, and losses that are not directly allocable to such receipts or another class of income. Includes within the definition of domestic production gross receipts qualifying production property (i.e., tangible personal property, any computer software, and certain sound recordings), any qualified film produced by the taxpayer, electricity, natural gas, or potable water produced by the taxpayer in the United States, construction performed in the United States, or engineering or architectural services for projects in the United States, but excludes the sale of certain food and beverages sold at retail and the transmission or distribution of electricity, natural gas, or potable water.
 
Sets forth special rules and definitions for qualified production activities income of passthrough entities and agricultural and horticultural cooperatives.
 
Allows the tax deduction for qualified production activities income for purposes of computing alternative minimum taxable income
 
Permits the revocation of a prior election to treat the cutting of timber as a sale or exchange.
 

Title II: Business Tax Incentives - Subtitle A: Small Business Expensing - 
(Sec. 201) Extends for two additional years (until 2008): (1) the increased expensing (full deduction of expenses in the taxable year in which the expenses are incurred) of small business assets (up to $100,000); (2) the increase (to $400,000) in the cost limitation for small business assets eligible for expensing; (3) the inflation adjustments for the increased expensing amount and the cost limitation amount; and (4) the eligibility period for the expensing of certain computer software. 
 

Subtitle B: Depreciation - 
(Sec. 211) Allows a 15-year recovery period for the depreciation of certain leasehold improvements and restaurant property placed in service before January 1, 2006. 
 

Subtitle C: Community Revitalization
 - (Sec. 221) Directs the Secretary of the Treasury to prescribe regulations designating certain targeted populations as low-income communities for purposes of the new markets tax credit. Treats a population census tract with a population of less than 2,000 as a low-income community if such tract is within an empowerment zone and is contiguous to one or more low-income communities.
 
(Sec. 222) Authorizes the Secretary of Housing and Urban Development to expand an area designated as a renewal community, for purposes of the tax incentives available to such communities, using specified criteria, including increased poverty rates based on 2000 census data.
 
(Sec. 223) Modifies the low-income test (85 percent, rather than 80 percent, of statewide median family income) for families in high migration (out-migration of at least ten percent of the population) rural counties, for purposes of the new markets tax credit.
 

Subtitle D: S Corporation Reform and Simplification
 - (Sec. 231) Allows a taxpayer election to treat members of a family as one shareholder for purposes of determining the number of shareholders in an S corporation.
 
(Sec. 232) Increases the allowable number of S corporation shareholders from 75 to 100. 
 
(Sec. 233) Allows an individual retirement account (IRA), including a Roth IRA, to be a shareholder of a bank that is an S corporation. Exempts, under certain circumstances, the sale of bank stock held by an IRA from rules against prohibited retirement plan transactions. 
 
(Sec. 234) Permits a disregard of unexercised powers of appointment for determining potential current beneficiaries of an electing small business trust (ESBT). Extends from 60 days to one year the period during which an ESBT can dispose of S corporation stock after an ineligible shareholder becomes a potential current beneficiary. 
 
(Sec. 235) Allows a carryover of disallowed losses on S corporation stock resulting from transfers of such stock to a spouse incident to divorce. 
 
(Sec. 236) Allows beneficiaries of a qualified subchapter S trust to deduct certain losses under the at-risk and passive loss rules when such trust sells S corporation stock. 
 
(Sec. 237) Excludes certain interest and dividend income on assets held by a bank S corporation from passive investment income for purposes of applying the excess net passive income rules. 
 
(Sec. 238) Allows the waiver of inadvertent invalid qualified subchapter S subsidiary elections and terminations made after December 31, 2004.
 
(Sec. 239) Expands the authority of the Secretary of the Treasury to require informational returns for qualified subchapter S subsidiaries. 
 
(Sec. 240) Permits an employee stock ownership plan (ESOP) maintained by an S corporation to make distributions for repayments of loans used to purchase employer securities without incurring tax penalties. Makes this change effective for distributions made after December 31, 1997.
 

Subtitle E: Other Business Incentives 
- (Sec. 241) Phases out between 2005 and 2007 and repeals, effective January 1, 2007, the 4.3-cents-per-gallon General Fund excise tax on diesel fuel used in trains and fuels used in barges operating on the designated inland waterways system. 
 
(Sec. 242) Allows the inclusion of participations and residuals in the adjusted basis of property for the taxable year in which such property is placed in service, for purposes of computing the allowable depreciation deduction for such property under the forecast method of depreciation. Requires such participations and residuals to relate to income estimated to be earned in connection with the property before the close of the tenth taxable year after the property is placed in service. Defines &quot;participations and residuals&quot; as costs the amount of which by contract varies with the amount of income earned in connection with such property. 
 
(Sec. 243) Revises or repeals certain real estate investment trust (REIT) provisions relating to: (1) straight debt securities; (2) the limited rental exception; (3) the customary services exception; and (4) the treatment of certain hedging instruments. Increases from 90 to 95 the percentage of gross income test used to impose an additional tax for failure to meet certain REIT requirements.
 
(Sec. 244) Allows an election until 2009 to expense qualified film or television production costs up to $15 million ($20 million for costs incurred in certain low-income or distressed areas). 
 
(Sec. 245) Allows a tax credit after 2004 and before 2008 for 50 percent of expenditures for railroad track maintenance. Limits the amount of such credit to the product of $3,500 and the number of miles of railroad track owned or leased by a taxpayer. 
 
(Sec. 246) Suspends from July 1, 2005, until June 30, 2008, the occupational tax on distilled spirits, wine, and beer.
 
(Sec. 247) Excludes from treatment as acquisition indebtedness, for purposes of determining unrelated business taxable income, certain indebtedness incurred by a small business investment company licensed under the Small Business Investment Act of 1958.
 
(Sec. 248) Allows certain corporations engaged in international shipping activities to elect an alternative system of corporate income taxation based upon the net tonnage of the corporation's vessels.
 

Subtitle F: Stock Options and Employee Stock Purchase Plan Stock Options
 - (Sec. 251) Excludes from social security, unemployment, and railroad retirement taxes wages earned from the transfer of stock pursuant to the exercise of an incentive stock option or under an employee stock purchase plan or from any disposition of such stock. Eliminates withholding of tax requirements for certain dispositions of stock options.
 

Title III: Tax Relief for Agriculture and Small Manufacturers - Subtitle A: Volumetric Ethanol Excise Tax Credit - 
(Sec. 301) Eliminates reduced rates of excise tax for gasoline and certain alcohol-blended fuels. Allows a refundable credit against the gasoline excise tax for the sum of the alcohol fuel mixture credit and the biodiesel mixture credit. Defines &quot;alcohol&quot; to include methanol and ethanol, but not alcohol produced from petroleum, natural gas or coal (including peat), or alcohol with a proof of less than 190. Terminates the credit for the alcohol fuel mixture credit after 2010 and the biodiesel mixture credit after 2006.
 
Requires the Secretary of the Treasury to make refunds to taxpayers whose alcohol fuel mixture credit exceeds their gasoline excise tax liability within 45 days or pay interest on refund amounts. Allows electronic filing for certain refund claims.
 
Provides for the direct payment of excise tax receipts to the Highway Trust Fund (current law requires the retention of certain amounts of excise tax in the General Fund of the Treasury).
 
Requires the registration of taxpayers producing or importing biodiesel or alcohol. 
 
Extends through 2010 the tax credit for alcohol used as fuel.
 
(Sec. 302) Allows a business tax credit for biodiesel used as fuel in the trade or business of a taxpayer. Terminates such credit after 2006.
 
(Sec. 303) Directs the Secretary to require any individual claiming benefits under the tax credits for alcohol and biodiesel used as fuel to file informational returns.
 

Subtitle B: Agricultural Incentives - 
(Sec. 311) Modifies involuntary conversion tax rules to extend from two to four years the replacement period for livestock sold due to drought, flood, or other weather-related conditions. Allows the Secretary to extend the replacement period on a regional basis if weather-related conditions continue for more than three years.
 
(Sec. 312) Provides that dividends on the capital stock or other proprietary capital interests of certain tax-exempt cooperatives shall not reduce the net earnings of such cooperatives. 
 
(Sec. 313) Allows the apportionment of the small ethanol producer tax credit among patrons of a tax-exempt cooperative. 
 
(Sec. 314) Revises rules for the computation of the regular tax liability of farmers and fishermen to exclude income averaging in computing alternative minimum tax liability.
 
(Sec. 315) Qualifies the outright sale of timber by landowners for capital gains treatment. 
 
(Sec. 316) Revises the rule for marketing activities by tax-exempt farmer cooperatives to provide that the marketing of products of cooperative members and other producers shall include the feeding of such products to cattle, hogs, fish, chickens, or other animals and the sale of the resulting animal or animal products.
 
(Sec. 317) Permits farmers' cooperative organizations to seek declaratory judgments with respect to their initial or continuing qualification as tax-exempt organizations. 
 
(Sec. 318) Allows rural letter carriers a miscellaneous tax deduction (subject to the two percent threshold) for their actual employment-related expenses in excess of their employer's reimbursement.
 
(Sec. 319) Excludes income received by a mutual or cooperative rural electric company from any open access transaction, any nuclear decommissioning transaction, or any asset exchange or conversion transaction, for purposes of determining whether such cooperative meets the income test for tax-exempt status (i.e., 85 percent of income collected from members of cooperatives for sole purpose of meeting losses and expenses of providing services to members). Includes in the income of such cooperatives income from load loss transactions for purposes of meeting the income test for tax-exempt status. Terminates these provisions for taxable years beginning after December 31, 2006.
 
(Sec. 320) Excludes from gross income and social security taxes payments under the National Health Service Corps loan repayment program and certain State repayment programs. 
 
(Sec. 321) Modifies safe harbor rules relating to timber real estate investment trusts to provide that the sale of a real estate asset shall not be deemed a prohibited transaction if specified requirements are met. 
 
(Sec. 322) Allows for the expensing of certain reforestation expenditures up to $10,000 and the amortization of expenditures over $10,000. Repeals the investment tax credit for reforestation.
 

Subtitle C: Incentives for Small Manufacturers - 
(Sec. 331) Modifies the 90 percent of gross income test for income of a regulated investment company (RIC) to include distributions or other income derived from an interest in a publicly traded partnership. 
 
(Sec. 332) Increases the draw weight for a taxable bow from ten to 30 pounds or more for purposes of the 11 percent excise tax on bows and arrows. Reduces to 11 percent the excise tax on archery equipment, including quivers or broadheads. Imposes an excise tax of 12 percent on arrows. 
 
(Sec. 333) Reduces the excise tax on fishing tackle boxes from ten to three percent. 
 
(Sec. 334) Repeals the excise tax on sonar devices suitable for finding fish. 
 
(Sec. 335) Allows whaling captains recognized by the Alaska Eskimo Whaling Commission to claim a charitable income tax deduction up to $10,000 for certain expenses incurred in support of Native Alaskan subsistence whaling. Directs the Secretary to issue guidance for the substantiation of this tax deduction.
 
(Sec. 336) Qualifies certain noncommercial aircraft for the 50 percent bonus depreciation allowance.
 
(Sec. 337) Sets forth a special placed-in-service rule for certain bonus depreciation property. 
 
(Sec. 338) Allows small business refiners: (1) a current year tax deduction for up to 75 percent of the capital costs incurred in complying with Environmental Protection Agency sulfur regulations; and (2) a business tax credit (five cents per gallon) for the production of low sulfur diesel fuel. 
 
(Sec. 340) Allows an additional $10 million in capital expenditures under the qualified small-issue bond program for bonds issued after September 30, 2009.
 
(Sec. 341) Allows a business tax credit for producing oil and gas from marginal wells.
 

Title IV: Tax Reform and Simplification for United States Businesses 
- (Sec. 401) Permits, in general, a worldwide affiliated group to elect to have the taxable income of each domestic corporation in such group determined by allocating and apportioning the interest expense of each member as if all members of such group were a single corporation. Provides that if a group makes this election, the taxable income of the domestic members of the worldwide affiliated group from sources outside the Untied States will be determined by allocating and apportioning the interest expenses of domestic members to foreign source income in accordance with a specified formula. Provides that non-interest expenses which are not directly allocable or apportioned to any specific income-producing activity shall be allocated and apportioned as if all members of the affiliated group were a single corporation. 
 
(Sec. 402) Treats as income from sources without the United States, in the case of any taxpayer who sustains an overall domestic loss for any taxable year beginning after December 31, 2006, that portion of the taxpayer's taxable income from sources within the United States for each succeeding taxable year which is equal to the lesser of: (1) the amount of such loss (to the extent not used in prior taxable years); or (2) 50 percent of the taxpayer's taxable income from sources within the United States for such succeeding taxable year. 
 
(Sec. 403) Revises rules for the tax treatment of dividends paid by a section 902 corporation (a foreign corporation in which the taxpayer owns at least ten percent of the stock by vote and which is not a controlled foreign corporation). 
 
(Sec. 404) Reduces the limitation on the foreign tax credit to two basic categories: (1) passive category income; and (2) general category income. 
 
(Sec. 405) Modifies attribution rules for stock ownership through partnerships to provide that stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its partners, for purposes of determining deemed-paid foreign tax credits of domestic corporations that own ten percent or more of the voting stock of a foreign corporation. 
 
(Sec. 406) Specifies that certain deemed payments relating to the transfer of intangibles shall be treated as royalties for purposes of applying the separate limitation categories of the foreign tax credit. 
 
(Sec. 407) Adds certain exceptions from the definition of U.S. property relating to securities acquired and held by a controlled foreign corporation and certain bonds, for determining current income inclusion by a U.S. ten percent shareholder with respect to an investment in U.S. property by a controlled foreign corporation. 
 
(Sec. 408) Permits taxpayers required to translate foreign income tax payments at the average exchange rate to elect to translate such taxes into U.S. dollar amounts using the exchange rates as of the time such taxes are paid, provided the foreign income taxes are denominated in a currency other than the taxpayer's functional currency. Denies such election to regulated investment companies that account for income on an accrual basis.
 
(Sec. 409) Exempts from withholding of tax requirements certain dividends paid by a foreign corporation. 
 
(Sec. 410) Excludes from U.S. source income certain interest paid by a foreign partnership that is predominantly engaged in the active conduct of a trade of business outside the United States.
 
(Sec. 411) Allows a tax exemption for certain interest-related dividends of regulated investment companies (RICs) that are paid after 2005 and before 2008.
 
(Sec. 412) Treats the sale by a controlled foreign corporation of a partnership interest (in which the corporation has a 25 percent ownership interest) as a sale of the proportionate share of partnership assets attributable to such interest for purposes of determining subpart F foreign personal holding company income. 
 
(Sec. 413) Repeals rules relating to foreign personal holding companies and foreign investment companies. Excludes foreign corporations from the application of the personal holding company rules. Includes as subpart F foreign personal holding company income personal services company income that is subject to the present law foreign personal holding company rules. 
 
(Sec. 414) Modifies the definition of subpart F (Controlled Foreign Corporations) foreign personal holding company income with respect to gains or losses from a commodities hedging transaction. 
 
(Sec. 415) Repeals subpart F rules relating to foreign base company shipping income. Establishes a safe harbor rule for the exclusion of rents derived from leasing an aircraft or vessel from foreign personal holding income (i.e., active leasing expenses must comprise at least ten percent of the profit on the lease). 
 
(Sec. 416) Modifies certain exceptions from subpart F foreign personal holding company income and foreign base company services income for income derived in the active conduct of a bank, financing, or similar business. 
 
(Sec. 417) Extends the excess foreign tax credit carry forward period to ten years and limits the carry back period to one year. 
 
(Sec. 418) Removes from treatment as effectively connected income for a foreign investor a capital gain distribution from a real estate investment trust (REIT), if: (1) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States; and (2) the foreign investor does not own more than five percent of the class of stock at any time during the taxable year within which the distribution is received. 
 
(Sec. 419) Excludes from gross income winnings paid to a nonresident alien resulting from a legal wager initiated outside the United States in a pari-mutuel pool on a live horse or dog race in the United States. 
 
(Sec. 420) Lowers the withholding income tax rate on U.S. source dividends paid to a corporation created or organized in Puerto Rico from 30 percent to ten percent as long as Puerto Rico does not increase its ten percent tax rate.
 
(Sec. 421) Repeals the 90 percent limitation on the utilization of the alternative minimum tax foreign tax credit.
 
(Sec. 422) Allows certain U.S. corporations to deduct up to 85 percent of cash dividends received during a specified period from a controlled foreign corporation. Sets forth limitations on such deduction, including a dollar limit of the greater of $500 million or a specified amount of earnings permanently reinvested outside the United States. Requires dividends received to be reinvested in the United States pursuant to an approved domestic reinvestment plan. 
 
(Sec. 423) Provides that final Treasury regulations relating to income derived by certain foreign corporations from the international operation of ships or aircraft shall apply to taxable years of a foreign corporation beginning after September 24, 2004.
 
(Sec. 424) Directs the Secretary of the Treasury to study and report to Congress by June 30, 2005, on the effectiveness of earnings stripping rules.
 

Title V: Deduction of State and Local General Sales Taxes 
- (Sec. 501) Allows taxpayers to elect to deduct State and local sales taxes in lieu of State and local income taxes for taxable years beginning in 2004 and 2005. Permits taxpayers to elect to base their sales tax deduction on their own sales tax receipts or upon sales tax tables published by the Internal Revenue Service (IRS). 
 

Title VI: Fair and Equitable Tobacco Reform - 
Fair and Equitable Tobacco Reform Act of 2004 - 
Subtitle A: Termination of Federal Tobacco Quota and Price Support Programs - 
(Sec. 611) Amends and repeals specified agricultural Acts to eliminate tobacco quota and price support programs, including no net cost provisions.
 
(Sec. 612) Amends the Agricultural Act of 1949 to eliminate tobacco from the definition of "basic agricultural commodity."
 
(Sec. 614) Provides for the continuation of liability for 2004 and earlier tobacco crop years.
 

Subtitle B: Transitional Payments to Tobacco Quota Holders and Producers of Tobacco - 
(Sec. 622) Authorizes the Secretary of Agriculture to make transitional FY 2005 through 2014 payments to: (1) eligible tobacco quota holders at $7 per pound; and (2) eligible quota tobacco producers at $3 per pound. (Provides a right of survivorship for such payments upon a quota holder's or producer's death.)
 
(Sec. 624) Provides for county committee resolution of eligibility and payment disputes.
 
(Sec. 625) Imposes a quarterly assessment on each tobacco product manufacturer and tobacco product importer that sells tobacco products in domestic U.S. commerce. Sets forth assessment provisions. Terminates assessment authority on September 30, 2014. 
 
(Sec. 626) Establishes in the Commodity Credit Corporation a revolving Tobacco Trust Fund to carry out this title. Caps total Fund expenditures.
 

Subtitle C: Implementation and Transition - 
(Sec. 641) Sets forth tobacco stocks and no net cost provisions.
 
(Sec. 643) Applies the provisions of this title to the 2005 and subsequent tobacco crops.
 

Title VII: Miscellaneous Provisions
 - (Sec. 701) Authorizes the issuance of tax-exempt facility bonds for certain green building and sustainable design projects (projects) designated by the Secretary of the Treasury. Limits the amount of bonds that may be issued to $2 billion. Requires designated projects to: (1) register at least 75 percent of the square footage of the structures included in a project for certification by the U.S. Green Building Council's Leadership in Energy and Environmental Design; (2) include a brownfield site; (3) identify other State or local financial contributions that will be provided to support a project; (4) include at least one million square feet of building or 20 acres of land; and (5) provide at least 1,500 full time jobs (150 in rural States) when completed and at least 1,000 full time jobs (100 in rural States) during construction. Prohibits more than one project in a single State and requires at least one project in an empowerment zone and one project in a rural State. Terminates the authority for issuing bonds after FY 2009. 
 
(Sec. 702) Excludes from the unrelated business taxable income of certain tax-exempt organizations gain or loss on the sale or exchange of certain brownfield sites acquired, remediated, and sold by such organizations. Terminates this exclusion after 2009.
 
(Sec. 703) Allows a tax deduction from gross income (whether or not the taxpayer itemizes deductions) for attorney fees and court costs paid in connection with a claim of unlawful discrimination under specified Federal, State or local statutes.
 
(Sec. 704) Allows a seven-year recovery period for the depreciation of any motorsports entertainment complex placed in service before January 1, 2008. Defines &quot;motorsports entertainment complex&quot; as a racing track facility which is permanently situated on land and which hosts one or more automobile racing events open to the general public in a specified 36-month period.
 
(Sec. 705) Suspends for the taxable years of a stock life insurance company beginning in 2005 and 2006 the application of rules imposing income tax on distributions to shareholders from the policyholders' surplus account of a life insurance company.
 
(Sec. 706) Allows a seven-year recovery period for the depreciation of any Alaska natural gas pipeline that has a capacity of more than 500 billion British thermal units of natural gas per day and that is placed in service after December 31, 2013.
 
(Sec. 707) Allows a tax credit for enhanced oil recovery for expenses to construct a natural gas treatment plant located in U.S. territory (lying north of 64 degrees north latitude) that prepares Alaska natural gas for transportation through a pipeline with a capacity of at least $2 trillion British thermal units of natural gas on a daily basis and that produces carbon dioxide which is injected into hydrocarbon-bearing geological formations.
 
(Sec. 708) Allows shipbuilders holding a contract to build a ship or submarine for the Federal Government to use a certain method of accounting authorized by the Revenue Act of 1987 to report taxable income.
 
(Sec. 709) Amends the Employee Retirement Income Security Act of 1974 (ERISA) to permit employers with current retiree health liabilities of at least five percent of gross receipts to make certain cost reductions in retiree health coverage.
 
(Sec. 710) Modifies the tax credit for electricity produced from certain renewable resources to include the following resources as eligible for the credit until January 1, 2006: (1) open-loop biomass; (2) geothermal energy; (3) solar energy; (4) small irrigation power; and (5) municipal solid waste. 
 
(Sec. 711) Provides for the refundability of the tax credits for alcohol fuels and for the production of electricity. 
 
(Sec. 712) Amends title XIX (Medicaid) of the Social Security Act to include as an optional Medicaid benefit primary and secondary medical strategies, treatment, and services for individuals with sickle cell disease.
 
Includes as Federal reimbursement to States 50 percent of costs for services to identify and educate eligible Medicaid recipients who have sickle cell disease or who are carriers of the sickle cell gene, and for education regarding the risks of stroke and other medical complications.
 
Directs the Administrator of the Health Resources and Services Administration to: (1) conduct a demonstration program by making grants to up to 40 federally-qualified and nonprofit health care providers for the development and establishment of systemic mechanisms to improve the prevention and treatment of sickle cell disease; and (2) contract with an entity to serve as the National Coordinating Center for the demonstration program. Sets forth requirements for awarding grants to establish the demonstration program. Authorizes appropriations for FY 2005 through 2009.
 
(Sec. 713) Amends the Harmonized Tariff Schedule of the United States to: (1) suspend duties on ceiling fans through December 31, 2006; (2) extend duty free entry of nuclear steam generators through December 31, 2008; and (3) and suspend duties on nuclear reactor vessel heads and pressurizers through December 31, 2008.
 

Title VIII: Revenue Provisions - Subtitle A: Provisions to Reduce Tax Avoidance Through Individual and Corporation Expatriation 
- (Sec. 801) Sets forth rules for the tax treatment of expatriated entities and foreign corporations acquiring such entities through inversion transactions (corporate stock transactions structured to avoid or evade U.S. taxation).
 
Defines &quot;expatriated entity&quot; as a domestic corporation which is acquired in an inversion transaction by a surrogate foreign corporation after March 4, 2003, and after such acquisition, the shareholders or owners of which own at least 60 percent of the stock or value of the foreign corporation, where the expanded affiliated group that includes the domestic corporation does not have substantial business activities in the foreign jurisdiction under whose laws it was created compared to the total business activities of its affiliated group. Sets forth a similar definition for domestic partnerships. 
 
Provides that the taxable income of an expatriated entity shall not be less than its inversion gain for any taxable year. Defines &quot;inversion gain&quot; as income or gain resulting from a transfer of stock or other property by an expatriated entity to a foreign corporation. Denies certain tax credits and loss deductions to expatriated entities.
 
Treats a foreign corporation engaged in an inversion transaction as a domestic corporation for U.S. tax purposes, if at least 80 percent of the stock of such foreign corporation was purchased in the inversion transaction.
 
Direct the Secretary of the Treasury to issue regulations to define foreign surrogate corporations and to prevent tax avoidance through individual and corporate expatriation.
 
(Sec. 802) Imposes an excise tax on certain holders of stock options and other stock-based compensation (i.e., disqualified individuals) equal to 15 percent (20 percent after 2008) of the value of such compensation held, directly or indirectly, by or for the benefit of the holders of such stock or their family members at any time during the 12-month period beginning on the date which is six months before an corporate inversion transaction.
 
(Sec. 803) Modifies the authority of the Secretary of the Treasury to allocate tax incidents between the parties to a reinsurance agreement involving tax avoidance or evasion. 
 
(Sec. 804) Revises tax rules on the expatriation of individuals. Provides that expatriated individuals shall be subject to an alternative tax for a ten-year period following expatriation unless such individuals show: (1) an average annual net income not exceeding $124,000; (2) a net worth of less than $2 million; and (3) compliance with applicable tax requirements for the five preceding taxable years. Exempts taxpayers with dual citizenship in the United States and another country with no substantial contact with the United States from the net income and net worth requirements. Sets forth rules for determining when a U.S. citizen or resident becomes expatriated. 
 
Requires an expatriated individual to file an annual informational return, disclosing such individual's country of residence, the number of days such individual was present in the United States, and information on such individual's income, assets, and liabilities. Imposes a $10,000 penalty for failure to provide required information, but allows a waiver of such penalty if failure to comply is due to reasonable cause and not to willful neglect.
 
(Sec. 805) Imposes certain reporting requirements on an acquiring corporation in a taxable acquisition of another corporation. Imposes a penalty for failure to report required information.
 
(Sec. 806) Requires the Secretary to conduct studies and report to Congress on: (1) the effectiveness of current transfer pricing rules and compliance efforts in ensuring that cross-border transfers and other related-party transactions cannot be used improperly to shift income out of the United States; (2) any inappropriate reductions in U.S. withholding tax, as a result of U.S. income tax treaties, that provide opportunities for shifting income outside the United States; and (3) the effectiveness of the provisions of this title on corporate expatriation.
 

Subtitle B: Provisions Relating to Tax Shelters - Part I: Taxpayer-Related Provisions
 - (Sec. 811) Imposes new penalties for failing to report tax shelter transactions that have a potential for tax avoidance or evasion (reportable transaction) and transactions specifically identified as tax avoidance transactions (listed transactions). Authorizes the Commissioner of Internal Revenue to rescind all or a portion of such penalties, but requires the Commissioner to enter on record a statement of the the facts and circumstances relating to the violations, the reasons for the rescission, and the amount of the penalty rescinded. Requires taxpayers subject to certain Securities and Exchange Commission reporting requirements to report tax shelter penalties. Requires the Commissioner to report to the House Ways and Means Committee and the Senate Finance Committee a summary of the total number and aggregate amount of tax shelter penalties imposed and a description of penalties rescinded.
 
(Sec. 812) Imposes a 20 percent penalty for understatements of tax resulting from tax shelter activities reported by the taxpayer and increases such penalty to 30 percent for undisclosed tax shelter transactions. Allows a waiver of the 20 percent penalty if the taxpayer shows reasonable cause for the understatement of tax and has acted in good faith.
 
(Sec. 813) Expands the denial of privilege for communications between a tax practitioner and a corporate client pertaining to tax shelter activity to include any individual engaged in tax shelter activity. 
 
(Sec. 814) Extends the statute of limitations for assessing underpayments of tax resulting from undisclosed tax shelter transactions to one year after required disclosures are made. 
 
(Sec. 815) Requires material advisors of reportable tax shelter transactions to file informational returns identifying and describing such transactions and the potential tax benefit expected to result from such transactions. Defines &quot;material advisor&quot; as any person who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable tax shelter transaction, and who directly or indirectly derives certain levels of compensation for such advice or assistance. Requires material advisors to maintain lists identifying tax shelter clients. 
 
(Sec. 816) Revises provisions for registration of tax shelters to impose a penalty on material advisors for failure to file required informational returns or for filing false or incomplete information.
 
(Sec. 817) Imposes a daily penalty of $10,000 on material advisors who fail to disclose lists of tax shelter clients. Allows a waiver of such penalty for reasonable cause.
 
(Sec. 818) Imposes an additional penalty on promoters of abusive tax shelters of 50 percent of the gross income derived from such tax shelter activity.
 
(Sec. 819) Modifies the definition of substantial understatement of tax for corporations, other than an S corporation or a personal holding company, to mean the lesser of ten percent of the tax required to be shown (or, if greater, $10,000) or $10 million.
 
(Sec. 820) Expands the authority of the Secretary of the Treasury to seek an injunction against participants in abusive tax shelter activities. 
 
(Sec. 821) Increases the penalty for failure to report interests in foreign financial accounts. Allows a waiver of the penalty if the failure to report was due to reasonable cause and the amount of the transaction was properly reported.
 
(Sec. 822) Authorizes the Secretary to: (1) censure and fine an incompetent or disreputable tax advisor who practices before the Department of the Treasury; and (2) impose standards applicable to the rendering of written advice for tax transactions having a potential for tax avoidance or evasion.
 

Part II: Other Provisions
 - (Sec. 831) Permits the application of stripped preferred stock rules and stripped bond rules in the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof. 
 
(Sec. 832) Expands the disallowance of the foreign tax credit to deny a credit for certain foreign withholding tax relating to an item of income or gain from property unless such property is held by the taxpayer for a specified period.
 
(Sec. 833) Revises rules relating to contributions of property with built-in losses to a partnership to limit recognition of losses to the contributing partner. 
 
(Sec. 834) Prohibits an allocation of any decrease in the adjusted basis of partnership property to stock in a corporation that is a partner in a partnership. 
 
(Sec. 835) Repeals part V (Financial Asset Securitization Investment Trusts - FASITS) of subchapter M (Regulated Investment Companies and Real Estate Investment Trusts).
 
(Sec. 836) Limits the basis of certain corporate property acquired by the issuance of stock or as paid-in surplus and for which there is the importation of net-built-in loss to the property's fair market value immediately after the transfer of such property. 
 
(Sec. 837) Revises the definition of &quot;banking business&quot; for purposes of the exemption of investment of earnings in U.S. property.
 
(Sec. 838) Denies a tax deduction for interest paid on an underpayment of tax resulting from an unreported tax shelter transaction.
 
(Sec. 839) Applies estimated tax requirements to deemed asset sales between certain U.S. corporations and consolidated groups.
 
(Sec. 840) Denies a tax exclusion of the gain from the sale or exchange of a principal residence acquired in a like-kind exchange if no gain was recognized during the five-year period beginning with the date of acquisition.
 
(Sec. 841) Allows a tax deduction for a debt instrument having original issue discount which is held by a controlled foreign corporation or passive foreign investment company only to the extent such original issue discount is includible in the gross income of the U.S. owners of the foreign corporation or investment company. 
 
(Sec. 842) Permits taxpayers to make a cash deposit to suspend the running of interest on potential underpayments of tax. 
 
(Sec. 843) Authorizes the IRS to enter into partial payment installment agreements with taxpayers (current law requires agreements to provide for the entire liability). Requires a review of such agreements at least every two years. 
 
(Sec. 844) Authorizes the Secretary to issue consolidated return regulations that treat corporations filing consolidated returns differently than corporations filing separate returns.
 
(Sec. 845) Expands the disallowance of tax deductions for interest paid on disqualified debt instruments of corporations to provide that if such instruments are payable in equity held by the issuer (or any related party) in any other person (other than a related party), the basis of such equity shall be increased by the amount disallowed as a deduction. 
 

Part III: Leasing
 - (Sec. 847) Modifies the depreciation recovery period for qualified technological equipment and computer software leased to a tax-exempt organization.
 
(Sec. 848) Disallows losses from the leasing of property to tax-exempt organizations, including Indian tribal governments (tax-exempt use losses). Allows a carryover of a disallowed loss to the next taxable year. 
 
Allows tax-exempt use losses with respect to property: (1) that is not financed with tax-exempt bonds or Federal funds; (2) in which the lessor makes an equity investment of at least 20 percent of the lessor's adjusted basis; (3) in which the lessee does not bear more than a minimal risk of loss; and (4) that grants the lessee a fair market purchase option (applicable only to property with a seven-year class life). 
 
(Sec. 849) Applies the amendments made by this part to leases entered into after March 12, 2004. Exempts from such amendments qualified transportation property. Defines &quot;qualified transportation property&quot; as domestic property subject to a lease for which a formal application: (1) was submitted for approval to the Federal Transit Administration after June 30, 2003, and before March 13, 2004; (2) is approved by the Federal Transit Administration before January 1, 2006, and (3) includes a description of such property and the value of such property.
 

Subtitle C: Reduction of Fuel Tax Evasion 
- (Sec. 851) Exempts mobile machinery from the excise tax on heavy trucks sold at retail, the use tax on highway vehicles, and the tax on tires. Establishes a design-based test and a use-based test (less than 7,500 miles use on public highways per year) to determine whether certain equipment qualifies as mobile machinery for purposes of the tax exemption. Allows refunds for taxes paid on mobile machinery on an annual basis only.
 
(Sec. 852) Defines &quot;off-highway vehicles&quot; for excise tax purposes. 
 
(Sec. 853) Revises rules for the taxation of aviation-grade kerosene to impose a tax on such fuel upon its removal from a refinery or terminal or its entry into the United States (current law imposes the tax upon the sale of aviation fuel). 
 
(Sec. 854) Changes the dyeing process for the diesel fuel and kerosene tax exemption from manual to mechanical injection. Requires the Secretary to issue regulations on mechanical dye injection systems, including rules for making such systems tamper-resistant. Imposes a penalty for: (1) tampering with a mechanical dye injection system (the greater of $25,000 or $10 for each gallon of fuel involved); and (2) failure by an operator of a mechanical dye injection system to maintain security standards ($1,000 for each failure and $1,000 for each day such operator fails to correct a violation). 
 
(Sec. 855) Denies an administrative appeal for taxpayers who have two prior violations for selling dyed fuel for a taxable use. 
 
(Sec. 856) Imposes a penalty for the sale, for a taxable use, of dyed fuel that has been altered. 
 
(Sec. 857) Revises excise tax exemptions and refund procedures for intercity buses using dyed fuel. 
 
(Sec. 858) Authorizes IRS agents to inspect any books, records, and shipping papers pertaining to taxable fuels at locations where such fuels are produced or stored. Imposes a penalty for refusing IRS agents entry for inspection.
 
(Sec. 860) Extends the bulk transfer exemption from taxable fuels to registered pipeline or vessel operators. Directs the Secretary of the Treasury to periodically publish a current list of persons who are registered.
 
(Sec. 861) Requires every operator of a vessel who is required to register for the bulk transfer exemption to display proof of registration through a prescribed electronic identification device on each vessel used to transport any taxable fuel. Imposes a $500 penalty on an operator for each failure to display proof of registration, with increased penalties for multiple violations. Allows penalties to be waived upon a showing that failure to register was due to reasonable cause. 
 
(Sec. 862) Requires registration of operators of terminals or refineries within a foreign trade zone or within a customs bonded storage facility.
 
(Sec. 863) Increases to $10,000 certain civil and criminal penalties for failure to register or for falsely representing registration status with respect to a taxable fuel (i.e., gasoline, diesel fuel, and kerosene). Imposes additional penalties for failure to register and to report required information with respect to the excise tax on special fuels, petroleum products, and aviation fuels.
 
(Sec. 864) Requires taxpayers with 25 or more reportable transactions in a month relating to gasoline excise taxes to file reports in an electronic format. 
 
(Sec. 865) Provides that a registered ultimate vendor of taxable fuels on which excise tax has been paid shall be treated as the ultimate vendor for purposes of claiming credits and refunds of tax.
 
(Sec. 866) Exempts the delivering person from liability for fuel excise tax in two-party exchanges. Defines &quot;two-party exchanges&quot; for purposes of such exemption. 
 
(Sec. 867) Allows for the proration of the use tax on heavy vehicles (weighing more than 55,000 pounds) that are sold before the end of the taxable period. Repeals provisions allowing installment payments of such use tax. Requires a taxpayer with 25 or more heavy vehicles to file tax returns electronically. Repeals the reduced tax rate for Canadian and Mexican heavy vehicles.
 
(Sec. 868) Dedicates penalties added or increased by this Act to the Highway Trust Fund.
 
(Sec. 869) Revises the excise tax on tires to impose a 9.45 cents (4.725 cents in the case of a biasply tire or super single tire) for each ten pounds of tire load capacity in excess of 3,500 pounds. Exempts from such tax tires sold for the exclusive use of the Department of Defense or Coast Guard. 
 
(Sec. 870) Treats transmix and diesel fuel blend stocks as diesel fuel for excise tax purposes. 
 
(Sec. 871) Directs the Secretary to report to the House Committee on Ways and Means and the Senate Committee on Finance not later than January 31, 2005, on compliance with the excise tax on special fuels and petroleum products. Requires the report to identify taxable fuel blendstocks and include a discussion of waste products added to taxable fuels and erroneous claims of fuel tax exemption.
 

Subtitle D: Other Revenue Provisions - 
(Sec. 881) Authorizes the Secretary of the Treasury to: (1) enter into qualified tax collection contracts with private collection agencies to locate and contact taxpayers owing Federal taxes, to request full payment of taxes owed by such taxpayers, and to obtain financial information from such taxpayers; and (2) retain and use up to 25 percent of any amounts collected to pay for collection services and IRS collection enforcement activities.
 
Exempts the United States from liability for any act or omission of any person performing services under a qualified tax collection contract. Applies the Fair Debt Collection Practices Act to such qualified tax collection contracts, with specified exceptions. Permits a civil action against a collection agency performing services under a qualified tax collection contract, but not against the United States, for unauthorized collection actions.
 
Subjects any collection agency performing services under a qualified tax collection contract to orders of the National Taxpayer Advocate. Disqualifies collection agencies which are guilty of misconduct from receiving a qualified tax collection contract. 
 
Requires the Secretary to report biennially (beginning in 2005) to the House Ways and Means Committee and the Senate Finance Committee on qualified tax collection contracts.
 
(Sec. 882) Applies tax rules for the charitable contribution of ordinary income and capital gain property to patents and similar intellectual property. Allows donors of patents and similar intellectual property an additional tax deduction for a percentage of income received by the donees of such property, with specified limitations. Revises rules for reporting donee income and authorizes the Secretary to prescribe regulations to prevent abuse of the tax deduction of patents or similar intellectual property.
 
(Sec. 883) Revises reporting requirements for noncash charitable contributions in excess of $500. Requires a qualified appraisal for noncash charitable contributions in excess of $5,000. Requires charitable organizations receiving contributions of used motor vehicles, boats, and airplanes valued at more than $500 to provide donors with a contemporaneous acknowledgment of a donation that includes the name and taxpayer identification number of the donor and the vehicle identification number. Limits the amount of any charitable deduction of a used motor vehicle, boat, or airplane to the gross proceeds which the charitable organization receives from the sale of such vehicle. Imposes a penalty upon charitable organizations that provide donors with false or fraudulent acknowledgments.
 
(Sec. 885) Sets forth rules for determining the includibility in gross income of deferred compensation under nonqualified deferred compensation plans based on whether such compensation is subject to a substantial risk of forfeiture and was previously included in gross income. Allows distributions from nonqualified deferred compensation plans for certain reasons, including separation from service, death, change in control of a corporation, occurrence of an unforeseeable emergency, or disability of a plan participant. Directs the Secretary to prescribe regulations and issue guidance for compliance with nonqualified deferred compensation plan requirements. 
 
(Sec. 886) Permits (current law prohibits) the amortization of intangibles by sport franchises.
 
(Sec. 887) Increases from 15 to 100 percent the allowable amount of the continuing levy on payments to Federal vendors for unpaid taxes. 
 
(Sec. 888) Modifies straddle rules to: (1) permit taxpayers to identify offsetting positions of a straddle; (2) revise the tax treatment of certain physically settled positions of a straddle; and (3) repeal the stock and qualified covered call exceptions from the straddle rules. 
 
(Sec. 889) Includes any vaccine against hepatitis A and any trivalent vaccine against influenza under the 75 cents-per-dose manufacturer's excise tax. 
 
(Sec. 891) Extends the authority for certain IRS user fees until September 30, 2014.
 
(Sec. 892) Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to extend the passenger and conveyance processing fees and the merchandise processing fees through September 30, 2014.
 
 Expresses the sense of Congress that certain custom fees have been reasonably related to the costs of providing customs services.
 
Directs the Secretary to: (1) charge fees in FY 2006 and succeeding fiscal years in amounts that are reasonably related to the costs of providing customs services in connection with the activity or item for which the fee is charged; and (2) study all fees collected by the Department of Homeland Security and report to Congress by September 30, 2005, on what fees should be eliminated, what the rate of fees retained should be, and on other appropriate recommendations.
 
 (Sec. 893) Treats as a dividend any distribution of earnings by a U.S. holding company to a foreign corporation of earnings in a complete liquidation, if the U.S. holding company was in existence for less than five years. 
 
(Sec. 894) Includes certain economic equivalents of foreign source income as income effectively connected with a U.S. trade or business.
 
(Sec. 895) Requires the recapture of overall foreign losses upon the sale of controlled foreign corporation stock, with exceptions for certain corporate reorganizations and liquidations.
 
(Sec. 896) Revises the tax rules for recognition of income from cancellation of indebtedness to provide that partnerships that transfer a capital or profits interest in the partnership to a creditor in satisfaction of partnership recourse or nonrecourse indebtedness must recognize cancellation of indebtedness income in the amount that would be recognized if the debt were satisfied with money equal to the fair market value of the partnership interest. Includes a discharge of indebtedness in the distributive shares of taxpayers who were partners in a partnership immediately before the discharge.
 
(Sec. 897) Denies installment sales treatment for all debt instruments that are readily tradable.
 
(Sec. 898) Limits the amount of assets that a corporation can distribute to its creditors without recognition of gain to the amount of the basis of the assets contributed to a controlled corporation in a divisive reorganization.
 
(Sec. 899) Modifies the definition of nonqualified preferred stock to add a provision stating that stock shall not be treated as participating in corporate growth to any significant extent unless there is a real and meaningful likelihood of the shareholder actually participating in the earnings and growth of the corporation.
 
(Sec. 900) Modifies the definition of a brother-sister controlled group of corporations for certain tax purposes. 
 
(Sec. 901) Allows a 15-year recovery period for the depreciation of initial clearing and grading land improvements for gas utility property and a 20-year period for any electric utility transmission and distribution plant.
 
(Sec. 902) Revises rules for the deductibility of startup expenditures to allow a tax deduction for up to $5,000 of the startup expenditures for an active trade or business and for the organizational expenditures of a corporation or partnership in the year such businesses begin. Provides for the amortization over a 180-month period of expenditures exceeding the $5,000 limit.
 
(Sec. 903) Makes permanent provisions suspending interest and penalties on unpaid tax where the Secretary fails to send a notice of taxpayer liability within 18 months of a timely-filed tax return. Renders the suspension inapplicable to gross misstatements of tax liability and to certain listed and reportable tax shelter transactions.
 
(Sec. 904) Requires a withholding of tax rate of 35 percent for supplemental wage payments exceeding $1 million made after 2004.
 
(Sec. 905) Provides for capital gains tax treatment of stock acquired by the exercise of stock options made to comply with Federal conflict of interest requirements. 
 
(Sec. 906) Sets forth basis rules applicable to nonresident aliens for purposes of determining the tax treatment of contributions and earnings for tax-exempt pension or retirement plans. 
 
(Sec. 907) Allows a tax deduction for the entertainment expenses of certain directors, officers, or owners of companies to the extent that compensation for such expenses is includible in the gross income of such individuals.
 
(Sec. 908) Defines &quot;bona fide resident&quot; for purposes of determining income tax liability of residents of U.S. possessions to mean a person who: (1) is present for at least 183 days in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands; and (2) does not have a tax home outside such U.S. possession and does not have a closer connection with the United States or a foreign country. Requires taxpayers to file a notice with the Secretary in the first year in which residence in a U.S. possession is claimed. Imposes a $1,000 penalty for failure to file a notice and increases from $100 to $1,000 the penalty for failure to file required information relating to the coordination of U.S. and U.S. possessions income tax.
 
(Sec. 909) Sets forth a special rule for the recognition of gain from the sale of a qualifying electric transmission transaction. Allows a taxpayer election to recognize gain from such sale ratably over an eight-year period if gain from the sale is reinvested in certain exempt utility property. Defines &quot;qualifying electric transmission transaction&quot; as the sale or other disposition before January 1, 2007, to an independent transmission company of: (1) property used in the trade or business of providing electric transmission services, or (2) any stock or partnership interest in such a trade or business.
 
(Sec. 910) Limits the cost basis of sport utility vehicles that may be taken into account for depreciation purposes to $25,000. Defines &quot;sport utility vehicle&quot; to mean any 4-wheeled vehicle which is primarily designed to carry passengers, is not subject to the limitation on depreciation for luxury automobiles, and is rated at not more than 14,000 pounds gross vehicle weight, but excludes certain large vehicles, including vehicles designed to have a seating capacity of more than nine persons behind the driver's seat and a cargo area of at least six feet in interior length.


Legislative actions:
action_date: 2004-10-22
text: Became Public Law No: 108-357.
action_date: 2004-10-22
text: Became Public Law No: 108-357.
action_date: 2004-10-22
text: Signed by President.
action_date: 2004-10-22
text: Signed by President.
action_date: 2004-10-21
text: Presented to President.
action_date: 2004-10-21
text: Presented to President.
action_date: 2004-10-12
text: Message on Senate action sent to the House.
action_date: 2004-10-11
text: Senate agreed to conference report by Yea-Nay Vote. 69 - 17. Record Vote Number: 211.
action_date: 2004-10-11
text: Conference report agreed to in Senate: Senate agreed to conference report by Yea-Nay Vote. 69 - 17. Record Vote Number: 211.
action_date: 2004-10-11
text: Conference report considered in Senate. (consideration: CR S11191-11222)
action_date: 2004-10-10
text: Cloture invoked in Senate by Yea-Nay Vote. 66 - 14. Record Vote Number: 210. (consideration: CR S11038; text: S11038)
action_date: 2004-10-10
text: Conference report considered in Senate. (consideration: CR S11019-11068)
action_date: 2004-10-09
text: Conference report considered in Senate. (consideration: CR S10928-10945)
action_date: 2004-10-08
text: Conference report considered in Senate. (consideration: CR S10764)
action_date: 2004-10-08
text: Cloture motion on the conference report to accompany H.R. 4520 presented in Senate. (consideration: CR S10764)
action_date: 2004-10-07
text: Conference papers: Senate report and manager's statement and message on House action held at the desk in Senate.
action_date: 2004-10-07
text: On agreeing to the conference report Agreed to by the Yeas and Nays: 280 - 141 (Roll no. 509).
action_date: 2004-10-07
text: Motions to reconsider laid on the table Agreed to without objection.
action_date: 2004-10-07
text: Conference report agreed to in House: On agreeing to the conference report Agreed to by the Yeas and Nays: 280 - 141 (Roll no. 509).
action_date: 2004-10-07
text: The previous question was ordered without objection. (consideration: CR H8725)
action_date: 2004-10-07
text: DEBATE - The House proceeded with one hour of debate on the conference report to accompany H.R. 4520.
action_date: 2004-10-07
text: Mr. Thomas brought up conference report H. Rept. 108-755 for consideration under the provisions of H. Res. 830. (consideration: CR H8711-8726)
action_date: 2004-10-07
text: Rule H. Res. 830 passed House.
action_date: 2004-10-07
text: Rules Committee Resolution H. Res. 830 Reported to House. Rule provides for consideration of the conference report to H.R. 4520. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read.
action_date: 2004-10-07
text: Conference report H. Rept. 108-755 filed. (text of conference report: CR H8411-8640)
action_date: 2004-10-07
text: Conference report filed: Conference report H. Rept. 108-755 filed.(text of conference report: CR H8411-8640)
action_date: 2004-10-07
text: Conferees agreed to file conference report.
action_date: 2004-10-07
text: Conference committee actions: Conferees agreed to file conference report.
action_date: 2004-10-06
text: Conference held.
action_date: 2004-10-06
text: Conference committee actions: Conference held.
action_date: 2004-10-05
text: Conference held.
action_date: 2004-10-05
text: Conference committee actions: Conference held.
action_date: 2004-10-04
text: Conference held.
action_date: 2004-10-04
text: Conference committee actions: Conference held.
action_date: 2004-09-29
text: Conference held.
action_date: 2004-09-29
text: Conference committee actions: Conference held.
action_date: 2004-09-29
text: The Speaker appointed conferees - from the Committee on the Judiciary for consideration of secs. 422, 442, 1111, 1151, and 1161 of the Senate amendment, and modifications committed to conference: Sensenbrenner, Smith (TX), and Conyers.
action_date: 2004-09-29
text: The Speaker appointed a conferee for consideration of the House bill and Senate amendment, and modifications committed to conference: DeLay.
action_date: 2004-09-29
text: The Speaker appointed conferees - from the Committee on Energy and Commerce for consideration of sec. 662 and subtitle A of Title XI of the Senate amendment, and modifications committed to conference: Barton (TX), Burr, and Waxman.
action_date: 2004-09-29
text: The Speaker appointed conferees - from the Committee on Education and the Workforce for consideration of secs. 489, 490, 616, 701, and 719 of the Senate amendment, and modifications committed to conference: Boehner, Johnson, Sam, and Miller, George.
action_date: 2004-09-29
text: The Speaker appointed conferees - from the Committee on Agriculture for consideration of Title VII of the House bill, and subtitle B of Title XI of the Senate amendment, and modifications committed to conference: Goodlatte, Boehner, and Stenholm.
action_date: 2004-09-29
text: The Speaker appointed conferees - from the Committee on Ways and Means for consideration of the House bill and the Senate amendment, and modifications committed to conference: Thomas, Crane, McCrery, Rangel, and Levin.
action_date: 2004-09-29
text: Motion to reconsider laid on the table Agreed to without objection.
action_date: 2004-09-29
text: On motion that the House instruct conferees Failed by recorded vote: 205 - 215 (Roll no. 476).
action_date: 2004-09-29
text: POSTPONED ROLL CALL VOTE - The Chair put the question on adoption of the Neal motion to instruct conferees and by voice vote, announced that the noes had prevailed. Mr. Levin demanded the yeas and nays and the Chair postponed further proceedings on the question of adoption of the motion until a time later in the legislative day.
action_date: 2004-09-29
text: The previous question was ordered without objection.
action_date: 2004-09-29
text: DEBATE - The House proceeded with one hour of debate on the motion to instruct conferees on H.R. 4520. The instructions contained in the motion seek to require the managers on the part of the House to include in the conference report an effective rate reduction for income from production activities in the United States; to the maximimum extent possible within the scope of conference, to not include any increase in tax benefits for the overseas operations of multinationals; to develop a conference report that will not increase the federal deficit in either the short or long term; as soon as practicable after the adoption of this motion, to meet in open session with the Senate conferees, and file a conference report consistent with the preceding provisions of this instruction at a time permitting passage before the adjournment before the election.
action_date: 2004-09-29
text: Mr. Neal (MA) moved that the House instruct conferees. (text: CR H7749)
action_date: 2004-09-29
text: On motion that the House disagree to the Senate amendment, and agree to a conference Agreed to by voice vote. (consideration: CR H7776)
action_date: 2004-09-29
text: Mr. Thomas moved that the House disagree to the Senate amendment, and agree to a conference. (consideration: CR H7749-7757, H7776)
action_date: 2004-07-19
text: Message on Senate action sent to the House.
action_date: 2004-07-15
text: Senate appointed conferee(s) Grassley; Hatch; Nickles; Lott; Snowe; Kyl; Thomas; Santorum; Smith; Bunning; McConnell; Gregg; Baucus; Rockefeller; Daschle; Breaux; Conrad; Graham FL; Jeffords; Bingaman; Lincoln; Kennedy; Harkin.
action_date: 2004-07-15
text: See also S. 1637, as passed.
action_date: 2004-07-15
text: Senate insisted on its amendment, requested a conference.
action_date: 2004-07-15
text: Passed Senate with an amendment by Voice Vote. (text: CR 7/16/2004 S8281-8399)
action_date: 2004-07-15
text: Passed/agreed to in Senate: Passed Senate with an amendment by Voice Vote.(text: CR 7/16/2004 S8281-8399)
action_date: 2004-07-15
text: Measure laid before Senate by motion. (consideration: CR S8150-8178, S8217-8218)
action_date: 2004-07-15
text: Motion to proceed to consideration of measure agreed to in Senate. (consideration: CR S8150)
action_date: 2004-06-21
text: Read twice. Placed on Senate Legislative Calendar under General Orders. Calendar No. 591.
action_date: 2004-06-18
text: Received in the Senate.
action_date: 2004-06-17
text: Motion to reconsider laid on the table Agreed to without objection.
action_date: 2004-06-17
text: On passage Passed by recorded vote: 251 - 178 (Roll no. 259).
action_date: 2004-06-17
text: Passed/agreed to in House: On passage Passed by recorded vote: 251 - 178 (Roll no. 259).
action_date: 2004-06-17
text: On motion to recommit with instructions Failed by the Yeas and Nays: 193 - 235 (Roll no. 258). (text: CR 6/18/2004 H4408-4431)
action_date: 2004-06-17
text: The previous question on the motion to recommit with instructions was ordered without objection. (consideration: CR 6/18/2004 H4432)
action_date: 2004-06-17
text: DEBATE - The House proceeded with 10 minutes of debate on the Rangel motion to recommit with instructions. The instructions contained in the motion seek to replace titles I-VI and to retain title VII of the existing bill.
action_date: 2004-06-17
text: Mr. Rangel moved to recommit with instructions to Ways and Means. (consideration: CR 6/18/2004 H4408-4433)
action_date: 2004-06-17
text: The previous question was ordered pursuant to the rule.
action_date: 2004-06-17
text: DEBATE - The House proceeded with one hour of debate on H.R. 4520.
action_date: 2004-06-17
text: Rule provides for consideration of H.R. 4520 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. Measure will be considered read. Bill is closed to amendments.
action_date: 2004-06-17
text: Considered under the provisions of rule H. Res. 681. (consideration: CR H4305-4388, CR 6/18/2004 H4393-4433; text of measure as reported in House: CR H4306-4347)
action_date: 2004-06-17
text: Rule H. Res. 681 passed House.
action_date: 2004-06-17
text: Rules Committee Resolution H. Res. 681 Reported to House. Rule provides for consideration of H.R. 4520 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. Measure will be considered read. Bill is closed to amendments.
action_date: 2004-06-16
text: Placed on the Union Calendar, Calendar No. 317.
action_date: 2004-06-16
text: Committee on Agriculture discharged.
action_date: 2004-06-16
text: Committee on Agriculture discharged.
action_date: 2004-06-16
text: House Committee on Agriculture Granted an extension for further consideration ending not later than June 16, 2004.
action_date: 2004-06-16
text: Reported (Amended) by the Committee on Ways and Means. H. Rept. 108-548, Part I.
action_date: 2004-06-16
text: Reported (Amended) by the Committee on Ways and Means. H. Rept. 108-548, Part I.
action_date: 2004-06-14
text: Ordered to be Reported (Amended) by the Yeas and Nays: 27 - 9.
action_date: 2004-06-14
text: Committee Consideration and Mark-up Session Held.
action_date: 2004-06-04
text: Referred to the Committee on Ways and Means, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
action_date: 2004-06-04
text: Referred to the Committee on Ways and Means, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
action_date: 2004-06-04
text: Referred to the Committee on Ways and Means, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
action_date: 2004-06-04
text: Introduced in House
action_date: 2004-06-04
text: Introduced in House

Enacted as: number: 108-357