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SECTION 1. ALEXANDER CREEK VILLAGE RECOGNITION.

    The Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) is 
amended by adding at the end the following:

``SEC. 43. ALEXANDER CREEK VILLAGE RECOGNITION.

    ``(a) Recognition of the Village of Alexander Creek.--Subject to 
the limitations of this section and notwithstanding section 1432(d) of 
the Alaska National Interest Lands Conservation Act (Public Law 96-487) 
to the contrary, Alexander Creek, located within Township 15N, Range 
7W, Seward Meridian, Alaska, is and shall be recognized as an eligible 
Native village under section 11(b)(3) of this Act.
    ``(b) Definitions.--For the purposes of this section, the following 
terms apply:
            ``(1) The term `agency' includes--
                    ``(A) any instrumentality of the United States;
                    ``(B) any element of an agency; and
                    ``(C) any wholly owned or mixed-owned corporation 
                of the United States Government identified in chapter 
                91 of title 31, United States Code.
            ``(2) The term `conservation system unit' has the meaning 
        given that term in the Alaska National Interest Lands 
        Conservation Act.
            ``(3) The term `Alexander Creek' means Alexander Creek 
        Incorporated, an Alaska Native Group corporation, organized 
        pursuant to this Act.
            ``(4) The term `property' has the meaning given that term 
        in Public Law 94-204 (43 U.S.C. 1611 note).
            ``(5) The term `Region' means Cook Inlet Region 
        Incorporated, an Alaska Native Regional Corporation, which is 
        the appropriate Regional Corporation for Alexander Creek under 
        section 1613(h) of this Act.
            ``(6) The term `CIRI Property Account' means the account in 
        the Treasury established by the Secretary of the Treasury 
        pursuant to section 12(b) of Public Law 94-204 (43 U.S.C. 1611 
        note), referred to in that section as the `Cook Inlet Region, 
        Incorporated property account'.
    ``(c) Establishment.--(1) The Secretary of the Treasury, in 
consultation with the Secretary of the Interior, shall establish an 
account in the Treasury to be known as the `Alexander Creek account' 
which shall be funded in the full amount provided for by this section 
within 24 months of the date of enactment of this section
    ``(2) Funds in the Alexander Creek account shall--
            ``(A) be available to Alexander Creek for bidding on and 
        purchasing property sold at public sale, subject to paragraph 
        (3); and
            ``(B) remain available until expended.
    ``(3)(A) Alexander Creek may use funds in the Alexander Creek 
account to bid as any other bidder for property in Alaska at any public 
sale by an agency and may purchase such property in accordance with 
applicable laws and regulations of the agency offering the property for 
sale.
    ``(B) In conducting a transaction described in subparagraph (A), an 
agency shall accept, in the same manner as cash, any amount tendered 
from the Alexander Creek account. The Secretary of the Treasury shall 
adjust the balance of the Alexander Creek account to reflect the 
transaction.
    ``(C) The Secretary of the Treasury, in consultation with the 
Secretary of the Interior, shall establish procedures for the following 
transactions related to the Alexander Creek account:
            ``(i) Receipt of deposits.
            ``(ii) Receipt of deposits into escrow when an escrow is 
        required for the sale of property.
            ``(iii) Reinstatement to the Alexander Creek account of any 
        unused escrow deposits in the event that a sale of property is 
        not consummated.
    ``(d) Amount.--(1) The initial balance of the Alexander Creek 
account shall be the fair market value as determined by the appraisal 
conducted under subsection (g) of the surface estate of the 
approximately 61,440 acres of deficiency selections previously made by 
Alexander Creek, which comprise the following parcels of land:
                    ``T. 2 T., R. 19 W., secs. 3 and 4.
                    ``T. 2 T., R. 19 W., sec. 10.
                    ``T. 2 T., R. 19 W., secs. 14 and 15.
                    ``T. 3 T., R. 19 W., sec. 30.
                    ``T. 2 T., R. 20 W., secs. 20 through 23.
                    ``T. 3 T., R. 20 W., sec. 10.
                    ``T. 3 T., R. 20 W., sec. 14.
                    ``T. 3 T., R. 20 W., secs. 24 and 25.
                    ``T. 1 T., R. 26 W., sec. 31.
                    ``T. 2 T., R. 27 W., secs. 3 and 4.
                    ``T. 2 T., R. 29 W., secs. 3 through 5.
                    ``T. 2 S., R. 19 W., sec. 18.
                    ``T. 2 S., R. 20 W., secs. 12 and 13.
                    ``T. 2 S., R. 20 W., sec. 24.
                    ``T. 2 S., R. 20 W., secs. 26 and 27.
                    ``T. 2 S., R. 20 W., secs. 33 and 34.
                    ``T. 3 S., R. 23 W., sec. 25.
                    ``T. 6 S., R. 24 W., secs. 1 and 2.
                    ``T. 6 S., R. 24 W., sec. 11.
                    ``T. 6 S., R. 24 W., secs. 18 through 20.
                    ``T. 9 S., R. 27 W., secs. 6 and 7.
                    ``T. 7 S., R. 28 W., sec. 2.
                    ``T. 7 S., R. 28 W., sec. 21.
                    ``T. 7 S., R. 28 W., secs. 28 and 29.
                    ``T. 7 S., R. 28 W., secs. 31 through 33.
                    ``T. 8 S., R. 28 W., secs. 5 through 7.
                    ``T. 9 S., R. 28 W., sec. 1.
                    ``T. 9 S., R. 28 W., sec. 12.
                    ``T. 7 S., R. 29 W., sec. 12.
                    ``T. 8 S., R. 29 W., sec. 1.
                    ``T. 8 S., R. 29 W., secs. 3 and 4.
                    ``T. 8 S., R. 29 W., secs. 8 through 20.
                    ``T. 2 N., R. 20 W., sec. 13.
                    ``T. 1 N., R. 27 W., sec. 8.
                    ``T. 1 N., R. 27 W., sec. 16.
                    ``T. 1 N., R. 27 W., secs. 20 through 23.
                    ``T. 1 N., R. 27 W., sec. 25.
                    ``T. 1 N., R. 27 W., sec. 36.
                    ``T. 1 N., R. 28 W., secs. 1 and 2.
                    ``T. 1 N., R. 28 W., secs. 8 through 11.
                    ``T. 1 N., R. 28 W., secs. 16 through 18.
                    ``T. 3 S., R. 23 W., sec. 8.
                    ``T. 3 S., R. 23 W., sec. 26.
                    ``T. 3 S., R. 23 W., sec. 33.
                    ``T. 6 S., R. 24 W., secs. 27 and 28.
                    ``T. 7 S., R. 28 W., secs. 4 through 7.
                    ``T. 7 S., R. 28 W., secs. 10 and 11.
                    ``T. 7 S., R. 28 W., secs. 14 and 15.
                    ``T. 7 S., R. 28 W., sec. 22.
                    ``T. 8 S., R. 29 W., sec. 5.
                    ``T. 2 N., R. 20 W., sec. 30.
                    ``T. 3 N., R. 20 W., sec. 2.
                    ``T. 3 N., R. 20 W., sec. 13.
                    ``T. 4 N., R. 20 W., sec. 33.
                    ``T. 2 N., R. 27 W., secs. 10 through 12.
                    ``T. 11 N., R. 28 W., secs. 16 through 27.
                    ``T. 2 N., R. 30 W., sec. 12.
                    ``T. 1 S., R. 20 W., sec. 4.
                    ``T. 3 S., R. 23 W., sec. 17.
                    ``T. 3 S., R. 23 W., sec. 28.
                    ``T. 6 S., R. 24 W., sec. 14.
                    ``T. 6 S., R. 24 W., sec. 21.
                    ``T. 6 S., R. 24 W., sec. 26.
                    ``T. 5 S., R. 26 W., secs. 29 and 30.
                    ``T. 7 S., R. 28 W., sec. 1.
                    ``T. 7 S., R. 29 W., sec. 1.
                    ``T. 7 S., R. 29 W., sec. 11.
                    ``T. 7 S., R. 29 W., secs. 14 through 16.
                    ``T. 7 S., R. 29 W., secs. 21 and 22.
                    ``T. 2 N., R. 19 W., sec. 7.
                    ``T. 2 N., R. 19 W., sec. 18.
    ``(2) The balance of the CIRI Property Account shall be increased 
by an amount equal to the fair market value of the subsurface estate of 
the approximately 61,440 acres of deficiency selections made by 
Alexander Creek, as described in paragraph (1): Provided, That the 
value of such subsurface estate shall not be less than 61,440 
multiplied by the acre equivalent value of the Region's entitlement 
lands under paragraph (2) of the second section of 12(b)(7)(iv) of the 
Act of January 2, 1976 (Public Law 94-204). The funds added to the CIRI 
Property Account pursuant to this subsection shall be segregated from 
all other funds therein by a method to be mutually agreed by CIRI and 
the Secretary of the Treasury.
    ``(e) Land Exchange.--The Secretary of the Interior shall enter 
into negotiations with Alexander Creek, no later than 180 days after 
the date of the enactment of this Act, to attempt to conclude, under 
the authority of section 22(f), a land exchange to acquire lands not 
within any conservation system unit from the State of Alaska or the 
Matanuska-Susitna Borough under the same procedures set forth in 
section 22(f) to enable Alexander Creek to obtain additional public 
lands within Alexander Creek's original withdrawal area in Alaska, as 
identified by Alexander Creek. The subsurface to lands conveyed to 
Alexander Creek under subsection (d) shall be conveyed, without 
consideration, to the Region and shall be treated for all purposes as 
subsurface land conveyed to the Region under section 14(f). Any land 
exchange to be undertaken pursuant to this subsection must be approved 
by Alexander Creek, and must be completed no later than 36 months after 
the date of the enactment of this Act.
    ``(f) Adjustment in Account.--If a conveyance of surface estate is 
made to Alexander Creek pursuant to subsection (e), the Alexander Creek 
account shall be reduced by the amount of the actual acres conveyed 
multiplied by the average value per acre of the surface acres appraised 
under subsection (g). If a conveyance of subsurface estate is made to 
the Region pursuant to subsection (d), the CIRI Property Account shall 
be reduced by the amount of the actual acres conveyed multiplied by the 
average value per acre of the subsurface acres appraised under 
subsection (g).
    ``(g) Appraisal.--(1)(A) Subject to subsection (d)(2), the 
Secretary shall determine the amount to be deposited into the Alexander 
Creek and CIRI Property accounts by separately appraising, on a 
reasonable basis, based on all available evidence, the fair market 
value, as of the date of the enactment of this section, of the surface 
and subsurface of each section selected as a separate parcel and 
considering that `public interest' use may be the highest and best use 
of such parcels.
    ``(B) Alexander Creek and the Region shall each have the 
opportunity to present evidence of value to the Secretary solely with 
respect to the respective estates involved, comprising surface estate 
for Alexander Creek and subsurface estate for the Region. The Secretary 
shall provide Alexander Creek and the Region with a preliminary draft 
of the appraisal. Alexander Creek and the Region shall have a 
reasonable and sufficient opportunity to comment on the appraisal.
    ``(2) The Secretary shall forward a certified copy of the appraisal 
of their separate and respective estates each to Alexander Creek, and 
the Region.
    ``(h) Implementation.--(1) Alexander Creek may assign to any person 
or corporation without restriction any or all of the Alexander Creek 
account upon written notification to the Secretary of the Treasury and 
the Secretary of the Interior. In the event that such an assignment is 
made to the Region, on notice from Alexander Creek to the Secretary of 
the Treasury and the Secretary of the Interior, and subject to the 
written consent of the Region in its sole and absolute discretion, the 
amount of such assignment shall be added to or made a part of the CIRI 
Property Account, and may be used in the same manner as other funds in 
that account.
    ``(2) Except for such lands as Alexander Creek has received prior 
to enactment of this section, and such lands it is entitled to recover 
as a Group Corporation, upon completion by the Secretary of the 
Interior of the appraisal process pursuant to subsection (g), and 
notification to the Secretary from Alexander Creek that Alexander Creek 
accepts the results of the appraisal process, Alexander Creek shall be 
deemed to have accepted the terms of this section in lieu of any other 
land entitlement it could have received as a village pursuant to this 
Act, including, without limitation, any lands it would have received 
pursuant to section 12(b). Such acceptance shall satisfy all claims 
Alexander Creek had or may have had against the United States on the 
date of the enactment of this section.
    ``(3) Any land acquired by Alexander Creek with funds from the 
Alexander Creek account shall be deemed to be a conveyance pursuant to 
this Act.
    ``(i) Treatment of Amounts From the Alexander Creek Account.--The 
Secretary of the Treasury and the heads of agencies shall administer 
sales pursuant to this section in the same manner as is provided for 
any other Native village authorized by law as of the date of the 
enactment of this section (including the use of similar accounts for 
bidding on and purchasing property sold for public sale).
    ``(j) Limitation on Agents' and Attorneys' Fees.--No more than 2.5 
percent of payments received by or on behalf of Alexander Creek under 
this section may be paid to or received by any agent or attorney for 
services rendered in connection with obtaining such payment, any 
contract to the contrary notwithstanding. Any person who violates this 
subsection shall be guilty of a misdemeanor and shall be subject to a 
fine in the amount provided in title 18, United States Code.
    ``(k) Shareholder Participation.--Alexander Creek shall notify each 
member of the Native village recognized under this section that, upon 
the effective date of this provision, such members shall cease to 
receive benefits from the Region as at-large shareholders pursuant to 
section 7(m), and that all future resource payments from the Region 
shall be made to the Village Corporation pursuant to section 7(j). The 
Region shall not be liable under any State, Federal or local law, or 
under State or Federal common law, for damages arising out of or 
related to the cessation of payments to such individuals under section 
7(m) pursuant to this section.
    ``(l) Statutory Construction.--Nothing in this section shall be 
construed to--
            ``(1) limit, alter, violate, breach, or otherwise affect 
        the rights of any party under a contract, settlement agreement, 
        or land exchange entered into prior to enactment of this 
        section between Alexander Creek and any party, or one or more 
        parties to any contract, settlement, agreement, or land 
        exchange predicated upon Alexander Creek's Native village 
        status under this Act; or
            ``(2) diminish, reduce, or modify the acreage entitlement 
        to which Alexander Creek became entitled to as a Group 
        Corporation.''.
Amends the Alaska Native Claims Settlement Act (ANCSA) to recognize the village of Alexander Creek, Alaska, as eligible for land and benefits under the Act, notwithstanding specified provisions of the Alaska National Interest Lands Conservation Act.

Establishes in the Treasury the Alexander Creek account and makes the account's funds available to Alexander Creek Incorporated for purchasing property sold at public sale. Increases the existing CIRI Property Account's balance by the subsurface value of Alexander Creek's selections.

Directs the Secretary of the Interior to negotiate for a land exchange to acquire the surface estate in lands not in any conservation system unit from Alaska or the Mantanuska-Susitna Borough to enable Alexander Creek to obtain additional public lands in Alexander Creek's original withdrawal area in Alaska.

Requires the subsurface estate to the lands conveyed to Alexander Creek to be conveyed to CIRI.

Deems Alexander Creek, on completion (and acceptance by Alexander Creek) of an appraisal, to have accepted the terms of this Act in lieu of any other land entitlement it could have received as a village under ANCSA. Requires that such acceptance satisfy all claims of Alexander Creek against the United States.

Requires Alexander Creek to notify each Alexander Creek member that the members will cease to receive benefits from CIRI as at-large shareholders and that all future resource payments from the Region will be made to the Village Corporation. Relieves CIRI from liability under any state, federal, or local law for damages related to that payment cessation.

SECTION 1. PROGRAM ON PROVISION OF READJUSTMENT AND MENTAL HEALTH CARE 
              SERVICES TO VETERANS WHO SERVED IN OPERATION IRAQI 
              FREEDOM AND OPERATION ENDURING FREEDOM.

    (a) Program Required.--Not later than 180 days after the date of 
the enactment of this Act, the Secretary of Veterans Affairs shall 
establish a program to provide--
            (1) to veterans of Operation Iraqi Freedom and Operation 
        Enduring Freedom, particularly veterans who served in such 
        operations while in the National Guard and the Reserves--
                    (A) peer outreach services;
                    (B) peer support services;
                    (C) readjustment counseling and services described 
                in section 1712A of title 38, United States Code; and
                    (D) mental health services; and
            (2) to members of the immediate family of such a veteran, 
        during the three-year period beginning on the date of the 
        return of such veteran from deployment in Operation Iraqi 
        Freedom and Operation Enduring Freedom, education, support, 
        counseling, and mental health services to assist in--
                    (A) the readjustment of such veteran to civilian 
                life;
                    (B) in the case such veteran has an injury or 
                illness incurred during such deployment, the recovery 
                of such veteran; and
                    (C) the readjustment of the family following the 
                return of such veteran.
    (b) Contracts With Community Mental Health Centers and Qualified 
Entities for Provision of Services.--In carrying out the program 
required by subsection (a), the Secretary shall contract with community 
mental health centers and other qualified entities to provide the 
services required by such subsection in areas the Secretary determines 
are not adequately served by other health care facilities of the 
Department of Veterans Affairs. Such contracts shall require each 
contracting community health center or entity--
            (1) to the extent practicable, to employ veterans trained 
        under subsection (c);
            (2) to the extent practicable, to use telehealth services 
        for the delivery of services required by subsection (a);
            (3) to participate in the training program conducted in 
        accordance with subsection (d);
            (4) to comply with applicable protocols of the Department 
        of Veterans Affairs before incurring any liability on behalf of 
        the Department for the provision of the services required by 
        subsection (a);
            (5) to submit annual reports to the Secretary containing, 
        with respect to the program required by subsection (a) and for 
        the last full calendar year ending before the submission of 
        such report--
                    (A) the number of the veterans served, veterans 
                diagnosed, and courses of treatment provided to 
                veterans as part of the program required by subsection 
                (a); and
                    (B) demographic information for such services, 
                diagnoses, and courses of treatment;
            (6) for each veteran for whom a community mental health 
        center or other qualified entity provides mental health 
        services under such contract, to provide the Department of 
        Veterans Affairs with such clinical summary information as the 
        Secretary shall require; and
            (7) to meet such other requirements as the Secretary shall 
        require.
    (c) Training of Veterans for the Provision of Peer-Outreach and 
Peer-Support Services.--In carrying out the program required by 
subsection (a), the Secretary shall contract with a national not-for-
profit mental health organization to carry out a national program of 
training for veterans described in subsection (a) to provide the 
services described in subparagraphs (A) and (B) of paragraph (1) of 
such subsection.
    (d) Training of Clinicians for Provision of Services.--The 
Secretary shall conduct a training program for clinicians of community 
mental health centers or entities that have contracts with the 
Secretary under subsection (b) to ensure that such clinicians can 
provide the services required by subsection (a) in a manner that--
            (1) recognizes factors that are unique to the experience of 
        veterans who served on active duty in Operation Iraqi Freedom 
        or Operation Enduring Freedom (including their combat and 
        military training experiences); and
            (2) utilizes best practices and technologies.
    (e) Reports Required.--
            (1) Initial report on plan for implementation.--Not later 
        than 45 days after the date of the enactment of this Act, the 
        Secretary shall submit to the Committee on Veterans' Affairs of 
        the Senate and the Committee on Veterans' Affairs of the House 
        of Representatives a report containing the plans of the 
        Secretary to implement the program required by subsection (a).
            (2) Status report.--Not later than one year after the date 
        of the enactment of this Act, the Secretary shall submit to the 
        Committee on Veterans' Affairs of the Senate and the Committee 
        on Veterans' Affairs of the House of Representatives a report 
        on the implementation of the program. Such report shall include 
        the following:
                    (A) Information on the number of veterans who 
                received services as part of the program and the type 
                of services received during the last full calendar year 
                completed before the submission of such report.
                    (B) An evaluation of the provision of services 
                under paragraph (2) of subsection (a) and a 
                recommendation as to whether the period described in 
                such paragraph should be extended to a five-year 
                period.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Veterans Affairs such sums as may be 
necessary to carry out this section.

SEC. 2. EXTENSION OF ELIGIBILITY FOR HEALTH CARE SERVICES FROM 
              DEPARTMENT OF VETERANS AFFAIRS FOR VETERANS OF SERVICE IN 
              COMBAT THEATER.

    Section 1710(e)(3)(C) of title 38, United States Code, is amended 
by striking ``2 years'' and inserting ``5 years''.
Directs the Secretary of Veterans Affairs to establish a program to provide to veterans of Operations Iraqi Freedom and Enduring Freedom, particularly veterans who served in such Operations while in the National Guard and reserves: (1) peer outreach and support services; (2) readjustment counseling and related services; and (3) mental health services. Directs the Secretary to also provide to immediate family members of such veterans, during the three-year period following the return of the veterans from such a deployment, education, support, counseling, and mental health services to assist in: (1) readjustment to civilian life; (2) recovery from an injury or illness incurred during such deployment; and (3) readjustment of the family following the veteran's return.

Authorizes the Secretary to contract with community health centers and other qualified entities to provide such services in areas not adequately served by health care facilities of the Department of Veterans Affairs (VA).

Requires the Secretary to: (1) contract for a program to train veterans to provide the peer outreach and support services; and (2) conduct a training program for clinicians of community health centers and entities contracted to provide such services.

Extends the eligibility for hospital care, medical services, and nursing home care for veterans who served on active duty in a theater of combat operations from two to five years after their discharge or release from such duty.

SECTION 1. SHORT TITLE.

    This Act may be cited as ``State Business Law Conformity Act of 
2004''.

SEC. 2. REFERENCES TO GENERAL PARTNERS.

    (a) Exclusion of Certain Active Businesses From at Risk Rules.--
Subclause (I) of section 465(c)(7)(D)(ii) of the Internal Revenue Code 
of 1986 (defining qualified corporate partner) is amended to read as 
follows:
                                    ``(I) such corporation is not 
                                prohibited or limited under State law 
                                from participation in the management or 
                                business of the partnership.''.
    (b) Payments to Retiring Partners.--Subparagraph (B) of section 
736(b)(3) of such Code (relating to limitation on application of 
paragraph (2)) is amended to read as follows:
                    ``(B) any portion of the retiring or deceased 
                partner's distributive share of partnership income was 
                subject to tax under section 1401.''.
    (c) Foreign Currency Transactions.--Subclause (I) of section 
988(c)(1)(E)(v) of such Code is amended to read as follows:
                                    ``(I) Certain general partners.--
                                The interest of a partner in the 
                                partnership shall not be treated as 
                                failing to meet the 20-percent 
                                ownership requirements of clause 
                                (iii)(I) for any taxable year of the 
                                partnership if for the taxable year of 
                                the partner in which such partnership 
                                taxable year ends--
                                            ``(aa) the partner is not 
                                        limited as to participation in 
                                        the management or activity of 
                                        the qualified fund, and
                                            ``(bb) such partner (and 
                                        each corporation filing a 
                                        consolidated return with such 
                                        partner) had no ordinary income 
                                        or loss from a section 988 
                                        transaction which is foreign 
                                        currency gain or loss (as the 
                                        case may be).''.
    (d) Special Valuation Rules for Generation-Skipping Tax.--Clause 
(ii) of section 2701(b)(2)(B) of such Code (relating to partnerships) 
is amended to read as follows:
                            ``(ii) in the case of a limited 
                        partnership, the holding of any interest as a 
                        partner who is not limited as to participation 
                        in management or activity of the 
                        partnership.''.
    (e) Tax Matters Partner.--Paragraph (7) of section 6231(a) of such 
Code (defining tax matters partner) is amended to read as follows:
            ``(7) Tax matters partner.--
                    ``(A) In general.--The tax matters partner of any 
                partnership is--
                            ``(i) the partner designated as the tax 
                        matters partner as provided in regulations, or
                            ``(ii) if there is no partner who has been 
                        so designated, the partner having the largest 
                        profits interest in the partnership at the 
                        close of the taxable year involved (or, where 
                        there is more than 1 such partner, the 1 of 
                        such partners whose name would appear first in 
                        an alphabetical listing).
                    ``(B) Selection by secretary.--If there is no 
                partner designated under subparagraph (A)(i) and the 
                Secretary determines that it is impracticable to apply 
                subparagraph (A)(ii), the partner selected by the 
                Secretary shall be treated as the tax matters partner. 
                The Secretary shall, within 30 days of selecting a tax 
                matters partner under the preceding sentence, notify 
                all partners required to receive notice under section 
                6223(a) of the name and address of the person selected.
                    ``(C) Restriction on designation of partner.--A 
                partner may not be designated as a tax matters partner 
                under subparagraph (A)(i) unless such partner is not 
                limited as to participation in management or activity 
                of the partnership.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 3. REFERENCES TO LIMITED PARTNERS.

    (a) Limited Entrepreneur.--
            (1) In general.--Subparagraph (A) of section 464(e)(2) of 
        the Internal Revenue Code of 1986 (defining limited 
        entrepreneur) is amended by striking ``other than as a limited 
        partner''.
            (2) Conforming amendments.--
                    (A) Section 464(c) of such Code is amended--
                            (i) by striking ``limited partners or'' in 
                        paragraph (1)(B),
                            (ii) by striking ``a limited partner or'' 
                        in paragraph (2).
                    (B) Section 1256 of such Code is amended--
                            (i) by striking ``limited partners or'' 
                        each place it appears in subsections (e)(3)(B) 
                        and (f)(4),
                            (ii) by striking ``a limited partner or'' 
                        in subsection (e)(3)(C), and
                            (iii) by striking ``limited partner or'' 
                        both places it appears in the heading and text 
                        of subsection (e)(4)(A)(i).
                    (C) Section 1258(d)(5)(C) of such Code is amended--
                            (i) by striking ``limited partner or'' in 
                        the matter preceding subclause (i),
                            (ii) by striking ``limited partner's (or 
                        limited entrepreneur's) in subclause (i) and 
                        inserting ``limited entrepreneur's'', and
                            (iii) by striking ``partners and limited'' 
                        in the heading.
    (b) Passive Loss Rules.--
            (1) Subsection (h) of section 469 of such Code is amended 
        by striking paragraph (2) and by redesignating paragraphs (3), 
        (4), and (5) as paragraphs (2), (3), and (4), respectively.
            (2) Subparagraph (A) of section 469(c)(7) of such Code is 
        amended by striking the last sentence.
            (3) Paragraph (6) of section 469(i) of such Code is amended 
        by striking subparagraph (C) and by redesignating subparagraph 
        (D) as subparagraph (C).
            (4) Subsection (f) of section 772 of such Code (relating to 
        special rules for applying passive loss limitations) is amended 
        to read as follows:
    ``(f) Special Rules for Applying Passive Loss Limitations.--
            ``(1) In general.--If any person holds an interest in an 
        electing large partnership other than as a partner described in 
        paragraph (3)--
                    ``(A) paragraph (2) of subsection (c) shall not 
                apply to such partner, and
                    ``(B) such partner's distributive share of the 
                partnership items allocable to passive loss limitation 
                activities shall be taken into account separately to 
                the extent necessary to comply with the provisions of 
                section 469.
            ``(2) Exception.--Paragraph (1) shall not apply to any 
        items allocable to an interest held as a partner described in 
        paragraph (3).
            ``(3) Partner described.--For purposes of this subsection, 
        a partner is described in this paragraph if the partner is a 
        person whose participation in the management or business 
        activity of the partnership is limited under applicable State 
        law.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 4. PARTNERSHIP INCOME ATTRIBUTABLE TO CAPITAL EXCLUDED FROM NET 
              EARNINGS FROM SELF-EMPLOYMENT.

    (a) In General.--Paragraph (13) of section 1402(a) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(13) there shall be excluded the distributive share of 
        net income of a partner attributable to capital;''.
    (b) Partnership Income Attributable to Capital.--Section 1402 of 
such Code is amended by adding at the end the following new subsection:
    ``(l) Partnership Income Attributable to Capital.--
            ``(1) In general.--For purposes of subsection (a)(13), the 
        following amounts shall be treated as income attributable to 
        capital--
                    ``(A) the amount, if any, in excess of what would 
                constitute reasonable compensation for services 
                rendered by such partner to the partnership, and
                    ``(B) an amount equal to a reasonable rate of 
                return on unreturned capital of the partner determined 
                as of the beginning of the taxable year.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Unreturned capital.--The term `unreturned 
                capital' means the excess of the aggregate amount of 
                money and the fair market value as of the date of 
                contribution of other consideration (net of 
                liabilities) contributed by the partner over the 
                aggregate amount of money and the fair market value as 
                of the date of distribution of other consideration (net 
                of liabilities) distributed by the partnership to the 
                partner, increased or decreased for the partner's 
                distributive share of all reportable items as 
                determined in section 702. If the partner acquires a 
                partnership interest and the partnership makes an 
                election under section 754, the partner's unreturned 
                capital shall take into account appropriate adjustments 
                under section 743.
                    ``(B) Reasonable rate of return.--A reasonable rate 
                of return on unreturned capital shall equal 150 percent 
                (or such higher rate as is established in regulations) 
                of the highest applicable Federal rate, as determined 
                under section 1274(d)(1), at the beginning of the 
                partnership's taxable year.
            ``(3) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to services performed in taxable years beginning 
after December 31, 2004.

SEC. 5. REPEAL OF ABILITY TO ELECT LARGE PARTNERSHIP REPORTING RULES.

    (a) In General.--Paragraph (2) of section 775(a) of the Internal 
Revenue Code of 1986 (relating to election) is amended by adding at the 
end the following: ``No election under this subsection shall be made 
after December 31, 2004.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to partnership taxable years beginning after December 31, 2004.

State Business Law Conformity Act of 2004 - Amends the Internal Revenue Code to: (1) revise certain partnership tax definitions and rules relating to general and limited partners; (2) exclude from net earnings from self-employment partnership income attributable to capital; and (3) repeal, after 2004, the election to apply large partnership (100 partners or more) tax rules.