Gulf Opportunity Zone Act of 2005
PL 109-135 (H.R.4440), enacted 12/22/2005

119 STAT. 2577
PUBLIC LAW 109–135—DEC. 21, 2005
Public Law 109–135
109th Congress
An Act
To amend the Internal Revenue Code of 1986 to provide tax benefits for the
Gulf Opportunity Zone and certain areas affected by Hurricanes Rita and Wilma,
and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Gulf Oppor-
tunity Zone Act of 2005’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed
in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section
or other provision of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents of this Act
is as follows:
Sec. 1. Short title; etc.
TITLE I—ESTABLISHMENT OF GULF OPPORTUNITY ZONE
Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Expansion of Hope Scholarship and Lifetime Learning Credit for students
in the Gulf Opportunity Zone.
Sec. 103. Housing relief for individuals affected by Hurricane Katrina.
Sec. 104. Extension of special rules for mortgage revenue bonds.
Sec. 105. Special extension of bonus depreciation placed in service date for tax-
payers affected by Hurricanes Katrina, Rita, and Wilma.
TITLE II—TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA
Sec. 201. Extension of certain emergency tax relief for Hurricane Katrina to Hurri-
canes Rita and Wilma.
TITLE III—OTHER PROVISIONS
Sec. 301. Gulf Coast Recovery Bonds.
Sec. 302. Election to include combat pay as earned income for purposes of earned
income credit.
Sec. 303. Modification of effective date of exception from suspension rules for cer-
tain listed and reportable transactions.
Sec. 304. Authority for undercover operations.
Sec. 305. Disclosures of certain tax return information.
TITLE IV—TECHNICALS
Subtitle A—Tax Technicals
Sec. 401. Short title.
Sec. 402. Amendments related to Energy Policy Act of 2005.
Sec. 403. Amendments related to the American Jobs Creation Act of 2004.
Sec. 404. Amendments related to the Working Families Tax Relief Act of 2004.
Sec. 405. Amendments related to the Jobs and Growth Tax Relief Reconciliation
Act of 2003.
Sec. 406. Amendment related to the Victims of Terrorism Tax Relief Act of 2001.
26 USC 1 note.
Gulf Opportunity
Zone Act of 2005.
Dec. 21, 2005
[H.R. 4440]
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119 STAT. 2578
PUBLIC LAW 109–135—DEC. 21, 2005
Sec. 407. Amendments related to the Economic Growth and Tax Relief Reconcili-
ation Act of 2001.
Sec. 408. Amendments related to the Internal Revenue Service Restructuring and
Reform Act of 1998.
Sec. 409. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 410. Amendment related to the Omnibus Budget Reconciliation Act of 1990.
Sec. 411. Amendment related to the Omnibus Budget Reconciliation Act of 1987.
Sec. 412. Clerical corrections.
Sec. 413. Other corrections related to the American Jobs Creation Act of 2004.
Subtitle B—Trade Technicals
Sec. 421. Technical corrections to regional value content methods for rules of origin
under Public Law 109–53.
TITLE V—EMERGENCY REQUIREMENT
Sec. 501. Emergency requirement.
TITLE I—ESTABLISHMENT OF GULF
OPPORTUNITY ZONE
SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
(a) IN GENERAL.—Subchapter Y of chapter 1 is amended by
adding at the end the following new part:
‘‘PART II—TAX BENEFITS FOR GO ZONES
‘‘Sec. 1400M. Definitions.
‘‘Sec. 1400N. Tax benefits for Gulf Opportunity Zone.
‘‘SEC. 1400M. DEFINITIONS.
‘‘For purposes of this part—
‘‘(1) GULF
OPPORTUNITY
ZONE.—The terms ‘Gulf Oppor-
tunity Zone’ and ‘GO Zone’ mean that portion of the Hurricane
Katrina disaster area determined by the President to warrant
individual or individual and public assistance from the Federal
Government under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act by reason of Hurricane Katrina.
‘‘(2) HURRICANE KATRINA DISASTER AREA.—The term ‘Hurri-
cane Katrina disaster area’ means an area with respect to
which a major disaster has been declared by the President
before September 14, 2005, under section 401 of such Act by
reason of Hurricane Katrina.
‘‘(3) RITA GO ZONE.—The term ‘Rita GO Zone’ means that
portion of the Hurricane Rita disaster area determined by
the President to warrant individual or individual and public
assistance from the Federal Government under such Act by
reason of Hurricane Rita.
‘‘(4) HURRICANE RITA DISASTER AREA.—The term ‘Hurricane
Rita disaster area’ means an area with respect to which a
major disaster has been declared by the President before
October 6, 2005, under section 401 of such Act by reason
of Hurricane Rita.
‘‘(5) WILMA GO ZONE.—The term ‘Wilma GO Zone’ means
that portion of the Hurricane Wilma disaster area determined
by the President to warrant individual or individual and public
assistance from the Federal Government under such Act by
reason of Hurricane Wilma.
‘‘(6) HURRICANE WILMA DISASTER AREA.—The term ‘Hurri-
cane Wilma disaster area’ means an area with respect to which
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119 STAT. 2579
PUBLIC LAW 109–135—DEC. 21, 2005
a major disaster has been declared by the President before
November 14, 2005, under section 401 of such Act by reason
of Hurricane Wilma.
‘‘SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
‘‘(a) TAX-EXEMPT BOND FINANCING.—
‘‘(1) IN GENERAL.—For purposes of this title—
‘‘(A) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(i) shall be treated as an
exempt facility bond, and
‘‘(B) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(ii) shall be treated as a quali-
fied mortgage bond.
‘‘(2) QUALIFIED GULF OPPORTUNITY ZONE BOND.—For pur-
poses of this subsection, the term ‘qualified Gulf Opportunity
Zone Bond’ means any bond issued as part of an issue if—
‘‘(A)(i) 95 percent or more of the net proceeds (as
defined in section 150(a)(3)) of such issue are to be used
for qualified project costs, or
‘‘(ii) such issue meets the requirements of a qualified
mortgage issue, except as otherwise provided in this sub-
section,
‘‘(B) such bond is issued by the State of Alabama,
Louisiana, or Mississippi, or any political subdivision
thereof,
‘‘(C) such bond is designated for purposes of this section
by—
‘‘(i) in the case of a bond which is required under
State law to be approved by the bond commission
of such State, such bond commission, and
‘‘(ii) in the case of any other bond, the Governor
of such State,
‘‘(D) such bond is issued after the date of the enactment
of this section and before January 1, 2011, and
‘‘(E) no portion of the proceeds of such issue is to
be used to provide any property described in section
144(c)(6)(B).
‘‘(3) LIMITATIONS ON BONDS.—
‘‘(A) AGGREGATE AMOUNT DESIGNATED.—The maximum
aggregate face amount of bonds which may be designated
under this subsection with respect to any State shall not
exceed the product of $2,500 multiplied by the portion
of the State population which is in the Gulf Opportunity
Zone (as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before August 28, 2005).
‘‘(B) MOVABLE PROPERTY.—No bonds shall be issued
which are to be used for movable fixtures and equipment.
‘‘(4) QUALIFIED PROJECT COSTS.—For purposes of this sub-
section, the term ‘qualified project costs’ means—
‘‘(A) the cost of any qualified residential rental project
(as defined in section 142(d)) located in the Gulf Oppor-
tunity Zone, and
‘‘(B) the cost of acquisition, construction, reconstruc-
tion, and renovation of—
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119 STAT. 2580
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(i) nonresidential real property (including fixed
improvements associated with such property) located
in the Gulf Opportunity Zone, and
‘‘(ii) public utility property (as defined in section
168(i)(10)) located in the Gulf Opportunity Zone.
‘‘(5) SPECIAL RULES.—In applying this title to any qualified
Gulf Opportunity Zone Bond, the following modifications shall
apply:
‘‘(A) Section 142(d)(1) (defining qualified residential
rental project) shall be applied—
‘‘(i) by substituting ‘60 percent’ for ‘50 percent’
in subparagraph (A) thereof, and
‘‘(ii) by substituting ‘70 percent’ for ‘60 percent’
in subparagraph (B) thereof.
‘‘(B) Section 143 (relating to mortgage revenue bonds:
qualified mortgage bond and qualified veterans’ mortgage
bond) shall be applied—
‘‘(i) only with respect to owner-occupied residences
in the Gulf Opportunity Zone,
‘‘(ii) by treating any such residence in the Gulf
Opportunity Zone as a targeted area residence,
‘‘(iii) by applying subsection (f)(3) thereof without
regard to subparagraph (A) thereof, and
‘‘(iv) by substituting ‘$150,000’ for ‘$15,000’ in sub-
section (k)(4) thereof.
‘‘(C) Except as provided in section 143, repayments
of principal on financing provided by the issue of which
such bond is a part may not be used to provide financing.
‘‘(D) Section 146 (relating to volume cap) shall not
apply.
‘‘(E) Section 147(d)(2) (relating to acquisition of existing
property not permitted) shall be applied by substituting
‘50 percent’ for ‘15 percent’ each place it appears.
‘‘(F) Section 148(f)(4)(C) (relating to exception from
rebate for certain proceeds to be used to finance construc-
tion expenditures) shall apply to the available construction
proceeds of bonds which are part of an issue described
in paragraph (2)(A)(i).
‘‘(G) Section 57(a)(5) (relating to tax-exempt interest)
shall not apply.
‘‘(6) SEPARATE
ISSUE
TREATMENT
OF
PORTIONS
OF
AN
ISSUE.—This subsection shall not apply to the portion of an
issue which (if issued as a separate issue) would be treated
as a qualified bond or as a bond that is not a private activity
bond (determined without regard to paragraph (1)), if the issuer
elects to so treat such portion.
‘‘(b) ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.—
‘‘(1) IN
GENERAL.—With respect to a bond described in
paragraph (3), one additional advance refunding after the date
of the enactment of this section and before January 1, 2011,
shall be allowed under the applicable rules of section 149(d)
if—
‘‘(A) the Governor of the State designates the advance
refunding bond for purposes of this subsection, and
‘‘(B) the requirements of paragraph (5) are met.
‘‘(2) CERTAIN PRIVATE ACTIVITY BONDS.—With respect to
a bond described in paragraph (3) which is an exempt facility
Applicability.
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119 STAT. 2581
PUBLIC LAW 109–135—DEC. 21, 2005
bond described in paragraph (1) or (2) of section 142(a), one
advance refunding after the date of the enactment of this
section and before January 1, 2011, shall be allowed under
the applicable rules of section 149(d) (notwithstanding para-
graph (2) thereof) if the requirements of subparagraphs (A)
and (B) of paragraph (1) are met.
‘‘(3) BONDS DESCRIBED.—A bond is described in this para-
graph if such bond was outstanding on August 28, 2005, and
is issued by the State of Alabama, Louisiana, or Mississippi,
or a political subdivision thereof.
‘‘(4) AGGREGATE
LIMIT.—The maximum aggregate face
amount of bonds which may be designated under this subsection
by the Governor of a State shall not exceed—
‘‘(A) $4,500,000,000 in the case of the State of Lou-
isiana,
‘‘(B) $2,250,000,000 in the case of the State of Mis-
sissippi, and
‘‘(C) $1,125,000,000 in the case of the State of Alabama.
‘‘(5) ADDITIONAL REQUIREMENTS.—The requirements of this
paragraph are met with respect to any advance refunding of
a bond described in paragraph (3) if—
‘‘(A) no advance refundings of such bond would be
allowed under this title on or after August 28, 2005,
‘‘(B) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
‘‘(C) the requirements of section 148 are met with
respect to all bonds issued under this subsection.
‘‘(6) USE OF PROCEEDS REQUIREMENT.—This subsection shall
not apply to any advance refunding of a bond which is issued
as part of an issue if any portion of the proceeds of such
issue (or any prior issue) was (or is to be) used to provide
any property described in section 144(c)(6)(B).
‘‘(c) LOW-INCOME HOUSING CREDIT.—
‘‘(1) ADDITIONAL HOUSING CREDIT DOLLAR AMOUNT FOR GULF
OPPORTUNITY ZONE.—
‘‘(A) IN GENERAL.—For purposes of section 42, in the
case of calendar years 2006, 2007, and 2008, the State
housing credit ceiling of each State, any portion of which
is located in the Gulf Opportunity Zone, shall be increased
by the lesser of—
‘‘(i) the aggregate housing credit dollar amount
allocated by the State housing credit agency of such
State to buildings located in the Gulf Opportunity Zone
for such calendar year, or
‘‘(ii) the Gulf Opportunity housing amount for such
State for such calendar year.
‘‘(B) GULF OPPORTUNITY HOUSING AMOUNT.—For pur-
poses of subparagraph (A), the term ‘Gulf Opportunity
housing amount’ means, for any calendar year, the amount
equal to the product of $18.00 multiplied by the portion
of the State population which is in the Gulf Opportunity
Zone (as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before August 28, 2005).
‘‘(C) ALLOCATIONS TREATED AS MADE FIRST FROM ADDI-
TIONAL
ALLOCATION
AMOUNT
FOR
PURPOSES
OF
DETER-
MINING
CARRYOVER.—For purposes of determining the
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119 STAT. 2582
PUBLIC LAW 109–135—DEC. 21, 2005
unused 
State 
housing 
credit 
ceiling 
under 
section
42(h)(3)(C) for any calendar year, any increase in the State
housing credit ceiling under subparagraph (A) shall be
treated as an amount described in clause (ii) of such section.
‘‘(2) ADDITIONAL
HOUSING
CREDIT
DOLLAR
AMOUNT
FOR
TEXAS AND FLORIDA.—For purposes of section 42, in the case
of calendar year 2006, the State housing credit ceiling of Texas
and Florida shall each be increased by $3,500,000.
‘‘(3) DIFFICULT DEVELOPMENT AREA.—
‘‘(A) IN GENERAL.—For purposes of section 42, in the
case of property placed in service during 2006, 2007, or
2008, the Gulf Opportunity Zone, the Rita GO Zone, and
the Wilma GO Zone—
‘‘(i) shall be treated as difficult development areas
designated 
under 
subclause 
(I) 
of 
section
42(d)(5)(C)(iii), and
‘‘(ii) shall not be taken into account for purposes
of applying the limitation under subclause (II) of such
section.
‘‘(B) APPLICATION.—Subparagraph (A) shall apply only
to—
‘‘(i) housing credit dollar amounts allocated during
the period beginning on January 1, 2006, and ending
on December 31, 2008, and
‘‘(ii) buildings placed in service during such period
to the extent that paragraph (1) of section 42(h) does
not apply to any building by reason of paragraph (4)
thereof, but only with respect to bonds issued after
December 31, 2005.
‘‘(4) SPECIAL RULE FOR APPLYING INCOME TESTS.—In the
case of property placed in service—
‘‘(A) during 2006, 2007, or 2008,
‘‘(B) in the Gulf Opportunity Zone, and
‘‘(C) in a nonmetropolitan area (as defined in section
42(d)(5)(C)(iv)(IV)),
section 42 shall be applied by substituting ‘national nonmetro-
politan median gross income (determined under rules similar
to the rules of section 142(d)(2)(B))’ for ‘area median gross
income’ in subparagraphs (A) and (B) of section 42(g)(1).
‘‘(5) DEFINITIONS.—Any term used in this subsection which
is also used in section 42 shall have the same meaning as
when used in such section.
‘‘(d) SPECIAL ALLOWANCE
FOR CERTAIN PROPERTY ACQUIRED
ON OR AFTER AUGUST 28, 2005.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of any qualified
Gulf Opportunity Zone property—
‘‘(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is placed
in service shall include an allowance equal to 50 percent
of the adjusted basis of such property, and
‘‘(B) the adjusted basis of the qualified Gulf Oppor-
tunity Zone property shall be reduced by the amount of
such deduction before computing the amount otherwise
allowable as a depreciation deduction under this chapter
for such taxable year and any subsequent taxable year.
‘‘(2) QUALIFIED GULF OPPORTUNITY ZONE PROPERTY.—For
purposes of this subsection—
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119 STAT. 2583
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) IN
GENERAL.—The term ‘qualified Gulf Oppor-
tunity Zone property’ means property—
‘‘(i)(I) which is described in section 168(k)(2)(A)(i),
or
‘‘(II) which is nonresidential real property or resi-
dential rental property,
‘‘(ii) substantially all of the use of which is in
the Gulf Opportunity Zone and is in the active conduct
of a trade or business by the taxpayer in such Zone,
‘‘(iii) the original use of which in the Gulf Oppor-
tunity Zone commences with the taxpayer on or after
August 28, 2005,
‘‘(iv) which is acquired by the taxpayer by purchase
(as defined in section 179(d)) on or after August 28,
2005, but only if no written binding contract for the
acquisition was in effect before August 28, 2005, and
‘‘(v) which is placed in service by the taxpayer
on or before December 31, 2007 (December 31, 2008,
in the case of nonresidential real property and residen-
tial rental property).
‘‘(B) EXCEPTIONS.—
‘‘(i) ALTERNATIVE DEPRECIATION PROPERTY.—Such
term shall not include any property described in section
168(k)(2)(D)(i).
‘‘(ii) TAX-EXEMPT BOND-FINANCED PROPERTY.—Such
term shall not include any property any portion of
which is financed with the proceeds of any obligation
the interest on which is exempt from tax under section
103.
‘‘(iii) QUALIFIED REVITALIZATION BUILDINGS.—Such
term shall not include any qualified revitalization
building with respect to which the taxpayer has elected
the application of paragraph (1) or (2) of section
1400I(a).
‘‘(iv) ELECTION OUT.—If a taxpayer makes an elec-
tion under this clause with respect to any class of
property for any taxable year, this subsection shall
not apply to all property in such class placed in service
during such taxable year.
‘‘(3) SPECIAL RULES.—For purposes of this subsection, rules
similar to the rules of subparagraph (E) of section 168(k)(2)
shall apply, except that such subparagraph shall be applied—
‘‘(A) by substituting ‘August 27, 2005’ for ‘September
10, 2001’ each place it appears therein,
‘‘(B) by substituting ‘January 1, 2008’ for ‘January
1, 2005’ in clause (i) thereof, and
‘‘(C) by substituting ‘qualified Gulf Opportunity Zone
property’ for ‘qualified property’ in clause (iv) thereof.
‘‘(4) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX.—For
purposes of this subsection, rules similar to the rules of section
168(k)(2)(G) shall apply.
‘‘(5) RECAPTURE.—For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified Gulf Opportunity Zone property which
ceases to be qualified Gulf Opportunity Zone property.
‘‘(e) INCREASE IN EXPENSING UNDER SECTION 179.—
‘‘(1) IN GENERAL.—For purposes of section 179—
Applicability.
Applicability.
Applicability.
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119 STAT. 2584
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) the dollar amount in effect under section 179(b)(1)
for the taxable year shall be increased by the lesser of—
‘‘(i) $100,000, or
‘‘(ii) the cost of qualified section 179 Gulf Oppor-
tunity Zone property placed in service during the tax-
able year, and
‘‘(B) the dollar amount in effect under section 179(b)(2)
for the taxable year shall be increased by the lesser of—
‘‘(i) $600,000, or
‘‘(ii) the cost of qualified section 179 Gulf Oppor-
tunity Zone property placed in service during the tax-
able year.
‘‘(2) QUALIFIED SECTION 179 GULF OPPORTUNITY ZONE PROP-
ERTY.—For purposes of this subsection, the term ‘qualified sec-
tion 179 Gulf Opportunity Zone property’ means section 179
property (as defined in section 179(d)) which is qualified Gulf
Opportunity Zone property (as defined in subsection (d)(2)).
‘‘(3) COORDINATION
WITH
EMPOWERMENT
ZONES
AND
RENEWAL COMMUNITIES.—For purposes of sections 1397A and
1400J, qualified section 179 Gulf Opportunity Zone property
shall not be treated as qualified zone property or qualified
renewal property, unless the taxpayer elects not to take such
qualified section 179 Gulf Opportunity Zone property into
account for purposes of this subsection.
‘‘(4) RECAPTURE.—For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified section 179 Gulf Opportunity Zone
property which ceases to be qualified section 179 Gulf Oppor-
tunity Zone property.
‘‘(f) EXPENSING
FOR
CERTAIN
DEMOLITION
AND
CLEAN-UP
COSTS.—
‘‘(1) IN GENERAL.—A taxpayer may elect to treat 50 percent
of any qualified Gulf Opportunity Zone clean-up cost as an
expense which is not chargeable to capital account. Any cost
so treated shall be allowed as a deduction for the taxable
year in which such cost is paid or incurred.
‘‘(2) QUALIFIED GULF OPPORTUNITY ZONE CLEAN-UP COST.—
For purposes of this subsection, the term ‘qualified Gulf Oppor-
tunity Zone clean-up cost’ means any amount paid or incurred
during the period beginning on August 28, 2005, and ending
on December 31, 2007, for the removal of debris from, or
the demolition of structures on, real property which is located
in the Gulf Opportunity Zone and which is—
‘‘(A) held by the taxpayer for use in a trade or business
or for the production of income, or
‘‘(B) property described in section 1221(a)(1) in the
hands of the taxpayer.
For purposes of the preceding sentence, amounts paid or
incurred shall be taken into account only to the extent that
such amount would (but for paragraph (1)) be chargeable to
capital account.
‘‘(g) EXTENSION OF EXPENSING FOR ENVIRONMENTAL REMEDI-
ATION COSTS.—With respect to any qualified environmental remedi-
ation expenditure (as defined in section 198(b)) paid or incurred
on or after August 28, 2005, in connection with a qualified contami-
nated site located in the Gulf Opportunity Zone, section 198
Applicability.
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119 STAT. 2585
PUBLIC LAW 109–135—DEC. 21, 2005
(relating to expensing of environmental remediation costs) shall
be applied—
‘‘(1) in the case of expenditures paid or incurred on or
after August 28, 2005, and before January 1, 2008, by sub-
stituting ‘December 31, 2007’ for the date contained in section
198(h), and
‘‘(2) except as provided in section 198(d)(2), by treating
petroleum products (as defined in section 4612(a)(3)) as a haz-
ardous substance.
‘‘(h) INCREASE IN REHABILITATION CREDIT.—In the case of quali-
fied rehabilitation expenditures (as defined in section 47(c)) paid
or incurred during the period beginning on August 28, 2005, and
ending on December 31, 2008, with respect to any qualified rehabili-
tated building or certified historic structure (as defined in section
47(c)) located in the Gulf Opportunity Zone, subsection (a) of section
47 (relating to rehabilitation credit) shall be applied—
‘‘(1) by substituting ‘13 percent’ for ‘10 percent’ in para-
graph (1) thereof, and
‘‘(2) by substituting ‘26 percent’ for ‘20 percent’ in para-
graph (2) thereof.
‘‘(i) SPECIAL RULES FOR SMALL TIMBER PRODUCERS.—
‘‘(1) INCREASED EXPENSING FOR QUALIFIED TIMBER PROP-
ERTY.—In the case of qualified timber property any portion
of which is located in the Gulf Opportunity Zone, in that
portion of the Rita GO Zone which is not part of the Gulf
Opportunity Zone, or in the Wilma GO Zone, the limitation
under subparagraph (B) of section 194(b)(1) shall be increased
by the lesser of—
‘‘(A) the limitation which would (but for this subsection)
apply under such subparagraph, or
‘‘(B) the amount of reforestation expenditures (as
defined in section 194(c)(3)) paid or incurred by the tax-
payer with respect to such qualified timber property during
the specified portion of the taxable year.
‘‘(2) 5 YEAR NOL CARRYBACK OF CERTAIN TIMBER LOSSES.—
For purposes of determining any farming loss under section
172(i), income and deductions which are allocable to the speci-
fied portion of the taxable year and which are attributable
to qualified timber property any portion of which is located
in the Gulf Opportunity Zone, in that portion of the Rita
GO Zone which is not part of the Gulf Opportunity Zone,
or in the Wilma GO Zone shall be treated as attributable
to farming businesses.
‘‘(3) RULES NOT APPLICABLE TO CERTAIN ENTITIES.—Para-
graphs (1) and (2) shall not apply to any taxpayer which—
‘‘(A) is a corporation the stock of which is publicly
traded on an established securities market, or
‘‘(B) is a real estate investment trust.
‘‘(4) RULES NOT APPLICABLE TO LARGE TIMBER PRODUCERS.—
‘‘(A) EXPENSING.—Paragraph (1) shall not apply to any
taxpayer if such taxpayer holds more than 500 acres of
qualified timber property at any time during the taxable
year.
‘‘(B) NOL CARRYBACK.—Paragraph (2) shall not apply
with respect to any qualified timber property unless—
‘‘(i) such property was held by the taxpayer—
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119 STAT. 2586
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(I) on August 28, 2005, in the case of qualified
timber property any portion of which is located
in the Gulf Opportunity Zone,
‘‘(II) on September 23, 2005, in the case of
qualified timber property (other than property
described in subclause (I)) any portion of which
is located in that portion of the Rita GO Zone
which is not part of the Gulf Opportunity Zone,
or
‘‘(III) on October 23, 2005, in the case of quali-
fied timber property (other than property described
in subclause (I) or (II)) any portion of which is
located in the Wilma GO Zone, and
‘‘(ii) such taxpayer held not more than 500 acres
of qualified timber property on such date.
‘‘(5) DEFINITIONS.—For purposes of this subsection—
‘‘(A) SPECIFIED PORTION.—
‘‘(i) IN
GENERAL.—The term ‘specified portion’
means—
‘‘(I) in the case of qualified timber property
any portion of which is located in the Gulf Oppor-
tunity Zone, that portion of the taxable year which
is on or after August 28, 2005, and before the
termination date,
‘‘(II) in the case of qualified timber property
(other than property described in clause (i)) any
portion of which is located in the Rita GO Zone,
that portion of the taxable year which is on or
after September 23, 2005, and before the termi-
nation date, or
‘‘(III) in the case of qualified timber property
(other than property described in clause (i) or (ii))
any portion of which is located in the Wilma GO
Zone, that portion of the taxable year which is
on or after October 23, 2005, and before the termi-
nation date.
‘‘(ii) TERMINATION
DATE.—The term ‘termination
date’ means—
‘‘(I) for purposes of paragraph (1), January
1, 2008, and
‘‘(II) for purposes of paragraph (2), January
1, 2007.
‘‘(B) QUALIFIED TIMBER PROPERTY.—The term ‘qualified
timber property’ has the meaning given such term in sec-
tion 194(c)(1).
‘‘(j) SPECIAL RULE FOR GULF OPPORTUNITY ZONE PUBLIC UTILITY
CASUALTY LOSSES.—
‘‘(1) IN
GENERAL.—The amount described in section
172(f)(1)(A) for any taxable year shall be increased by the
Gulf Opportunity Zone public utility casualty loss for such
taxable year.
‘‘(2) GULF
OPPORTUNITY
ZONE
PUBLIC
UTILITY
CASUALTY
LOSS.—For purposes of this subsection, the term ‘Gulf Oppor-
tunity Zone public utility casualty loss’ means any casualty
loss of public utility property (as defined in section 168(i)(10))
located in the Gulf Opportunity Zone if—
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) such loss is allowed as a deduction under section
165 for the taxable year,
‘‘(B) such loss is by reason of Hurricane Katrina, and
‘‘(C) the taxpayer elects the application of this sub-
section with respect to such loss.
‘‘(3) REDUCTION
FOR
GAINS
FROM
INVOLUNTARY
CONVER-
SION.—The amount of any Gulf Opportunity Zone public utility
casualty loss which would (but for this paragraph) be taken
into account under paragraph (1) for any taxable year shall
be reduced by the amount of any gain recognized by the tax-
payer for such year from the involuntary conversion by reason
of Hurricane Katrina of public utility property (as so defined)
located in the Gulf Opportunity Zone.
‘‘(4) COORDINATION WITH GENERAL DISASTER LOSS RULES.—
Subsection (k) and section 165(i) shall not apply to any Gulf
Opportunity Zone public utility casualty loss to the extent
such loss is taken into account under paragraph (1).
‘‘(5) ELECTION.—Any election under paragraph (2)(C) shall
be made in such manner as may be prescribed by the Secretary
and shall be made by the due date (including extensions of
time) for filing the taxpayer’s return for the taxable year of
the loss. Such election, once made for any taxable year, shall
be irrevocable for such taxable year.
‘‘(k) TREATMENT OF NET OPERATING LOSSES ATTRIBUTABLE TO
GULF OPPORTUNITY ZONE LOSSES.—
‘‘(1) IN GENERAL.—If a portion of any net operating loss
of the taxpayer for any taxable year is a qualified Gulf Oppor-
tunity Zone loss, the following rules shall apply:
‘‘(A) 
EXTENSION
OF
CARRYBACK
PERIOD.—Section
172(b)(1) shall be applied with respect to such portion—
‘‘(i) by substituting ‘5 taxable years’ for ‘2 taxable
years’ in subparagraph (A)(i), and
‘‘(ii) by not taking such portion into account in
determining any eligible loss of the taxpayer under
subparagraph (F) thereof for the taxable year.
‘‘(B) SUSPENSION
OF
90
PERCENT
AMT
LIMITATION.—
Section 56(d)(1) shall be applied by increasing the amount
determined under subparagraph (A)(ii)(I) thereof by the
sum of the carrybacks and carryovers of any net operating
loss attributable to such portion.
‘‘(2) QUALIFIED GULF OPPORTUNITY ZONE LOSS.—For pur-
poses of paragraph (1), the term ‘qualified Gulf Opportunity
Zone loss’ means the lesser of—
‘‘(A) the excess of—
‘‘(i) the net operating loss for such taxable year,
over
‘‘(ii) the specified liability loss for such taxable
year to which a 10-year carryback applies under section
172(b)(1)(C), or
‘‘(B) the aggregate amount of the following deductions
to the extent taken into account in computing the net
operating loss for such taxable year:
‘‘(i) Any deduction for any qualified Gulf Oppor-
tunity Zone casualty loss.
‘‘(ii) Any deduction for moving expenses paid or
incurred after August 27, 2005, and before January
Applicability.
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119 STAT. 2588
PUBLIC LAW 109–135—DEC. 21, 2005
1, 2008, and allowable under this chapter to any tax-
payer in connection with the employment of any
individual—
‘‘(I) whose principal place of abode was located
in the Gulf Opportunity Zone before August 28,
2005,
‘‘(II) who was unable to remain in such abode
as the result of Hurricane Katrina, and
‘‘(III) whose principal place of employment
with the taxpayer after such expense is located
in the Gulf Opportunity Zone.
For purposes of this clause, the term ‘moving expenses’
has the meaning given such term by section 217(b),
except that the taxpayer’s former residence and new
residence may be the same residence if the initial
vacating of the residence was as the result of Hurricane
Katrina.
‘‘(iii) Any deduction allowable under this chapter
for expenses paid or incurred after August 27, 2005,
and before January 1, 2008, to temporarily house any
employee of the taxpayer whose principal place of
employment is in the Gulf Opportunity Zone.
‘‘(iv) Any deduction for depreciation (or amortiza-
tion in lieu of depreciation) allowable under this
chapter with respect to any qualified Gulf Opportunity
Zone property (as defined in subsection (d)(2), but with-
out regard to subparagraph (B)(iv) thereof)) for the
taxable year such property is placed in service.
‘‘(v) Any deduction allowable under this chapter
for repair expenses (including expenses for removal
of debris) paid or incurred after August 27, 2005, and
before January 1, 2008, with respect to any damage
attributable to Hurricane Katrina and in connection
with property which is located in the Gulf Opportunity
Zone.
‘‘(3) QUALIFIED GULF OPPORTUNITY ZONE CASUALTY LOSS.—
‘‘(A) IN GENERAL.—For purposes of paragraph (2)(B)(i),
the term ‘qualified Gulf Opportunity Zone casualty loss’
means any uncompensated section 1231 loss (as defined
in section 1231(a)(3)(B)) of property located in the Gulf
Opportunity Zone if—
‘‘(i) such loss is allowed as a deduction under sec-
tion 165 for the taxable year, and
‘‘(ii) such loss is by reason of Hurricane Katrina.
‘‘(B) 
REDUCTION
FOR
GAINS
FROM
INVOLUNTARY
CONVERSION.—The amount of qualified Gulf Opportunity
Zone casualty loss which would (but for this subparagraph)
be taken into account under subparagraph (A) for any
taxable year shall be reduced by the amount of any gain
recognized by the taxpayer for such year from the involun-
tary conversion by reason of Hurricane Katrina of property
located in the Gulf Opportunity Zone.
‘‘(C) COORDINATION
WITH
GENERAL
DISASTER
LOSS
RULES.—Section 165(i) shall not apply to any qualified Gulf
Opportunity Zone casualty loss to the extent such loss
is taken into account under this subsection.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(4) SPECIAL RULES.—For purposes of paragraph (1), rules
similar to the rules of paragraphs (2) and (3) of section 172(i)
shall apply with respect to such portion.
‘‘(l) CREDIT TO HOLDERS OF GULF TAX CREDIT BONDS.—
‘‘(1) ALLOWANCE OF CREDIT.—If a taxpayer holds a Gulf
tax credit bond on one or more credit allowance dates of the
bond occurring during any taxable year, there shall be allowed
as a credit against the tax imposed by this chapter for the
taxable year an amount equal to the sum of the credits deter-
mined under paragraph (2) with respect to such dates.
‘‘(2) AMOUNT OF CREDIT.—
‘‘(A) IN GENERAL.—The amount of the credit determined
under this paragraph with respect to any credit allowance
date for a Gulf tax credit bond is 25 percent of the annual
credit determined with respect to such bond.
‘‘(B) ANNUAL CREDIT.—The annual credit determined
with respect to any Gulf tax credit bond is the product
of—
‘‘(i) the credit rate determined by the Secretary
under subparagraph (C) for the day on which such
bond was sold, multiplied by
‘‘(ii) the outstanding face amount of the bond.
‘‘(C) DETERMINATION.—For purposes of subparagraph
(B), with respect to any Gulf tax credit bond, the Secretary
shall determine daily or cause to be determined daily a
credit rate which shall apply to the first day on which
there is a binding, written contract for the sale or exchange
of the bond. The credit rate for any day is the credit
rate which the Secretary or the Secretary’s designee esti-
mates will permit the issuance of Gulf tax credit bonds
with a specified maturity or redemption date without dis-
count and without interest cost to the issuer.
‘‘(D) CREDIT ALLOWANCE DATE.—For purposes of this
subsection, the term ‘credit allowance date’ means March
15, June 15, September 15, and December 15. Such term
also includes the last day on which the bond is outstanding.
‘‘(E) SPECIAL RULE FOR ISSUANCE AND REDEMPTION.—
In the case of a bond which is issued during the 3-month
period ending on a credit allowance date, the amount of
the credit determined under this paragraph with respect
to such credit allowance date shall be a ratable portion
of the credit otherwise determined based on the portion
of the 3-month period during which the bond is outstanding.
A similar rule shall apply when the bond is redeemed
or matures.
‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.—The credit
allowed under paragraph (1) for any taxable year shall not
exceed the excess of—
‘‘(A) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55, over
‘‘(B) the sum of the credits allowable under part IV
of subchapter A (other than subpart C and this subsection).
‘‘(4) GULF
TAX
CREDIT
BOND.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘Gulf tax credit bond’
means any bond issued as part of an issue if—
Applicability.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(i) the bond is issued by the State of Alabama,
Louisiana, or Mississippi,
‘‘(ii) 95 percent or more of the proceeds of such
issue are to be used to—
‘‘(I) pay principal, interest, or premiums on
qualified bonds issued by such State or any polit-
ical subdivision of such State, or
‘‘(II) make a loan to any political subdivision
of such State to pay principal, interest, or pre-
miums on qualified bonds issued by such political
subdivision,
‘‘(iii) the Governor of such State designates such
bond for purposes of this subsection,
‘‘(iv) the bond is a general obligation of such State
and is in registered form (within the meaning of section
149(a)),
‘‘(v) the maturity of such bond does not exceed
2 years, and
‘‘(vi) the bond is issued after December 31, 2005,
and before January 1, 2007.
‘‘(B) STATE MATCHING REQUIREMENT.—A bond shall not
be treated as a Gulf tax credit bond unless—
‘‘(i) the issuer of such bond pledges as of the date
of the issuance of the issue an amount equal to the
face amount of such bond to be used for payments
described in subclause (I) of subparagraph (A)(ii), or
loans described in subclause (II) of such subparagraph,
as the case may be, with respect to the issue of which
such bond is a part, and
‘‘(ii) any such payment or loan is made in equal
amounts from the proceeds of such issue and from
the amount pledged under clause (i).
The requirement of clause (ii) shall be treated as met
with respect to any such payment or loan made during
the 1-year period beginning on the date of the issuance
(or any successor 1-year period) if such requirement is
met when applied with respect to the aggregate amount
of such payments and loans made during such period.
‘‘(C) AGGREGATE LIMIT ON BOND DESIGNATIONS.—The
maximum aggregate face amount of bonds which may be
designated under this subsection by the Governor of a
State shall not exceed—
‘‘(i) $200,000,000 in the case of the State of Lou-
isiana,
‘‘(ii) $100,000,000 in the case of the State of Mis-
sissippi, and
‘‘(iii) $50,000,000 in the case of the State of Ala-
bama.
‘‘(D) SPECIAL RULES RELATING TO ARBITRAGE.—A bond
which is part of an issue shall not be treated as a Gulf
tax credit bond unless, with respect to the issue of which
the bond is a part, the issuer satisfies the arbitrage require-
ments of section 148 with respect to proceeds of the issue
and any loans made with such proceeds.
‘‘(5) QUALIFIED BOND.—For purposes of this subsection—
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119 STAT. 2591
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) IN
GENERAL.—The term ‘qualified bond’ means
any obligation of a State or political subdivision thereof
which was outstanding on August 28, 2005.
‘‘(B) EXCEPTION FOR PRIVATE ACTIVITY BONDS.—Such
term shall not include any private activity bond.
‘‘(C) EXCEPTION FOR ADVANCE REFUNDINGS.—Such term
shall not include any bond with respect to which there
is any outstanding refunded or refunding bond during the
period in which a Gulf tax credit bond is outstanding
with respect to such bond.
‘‘(D) USE OF PROCEEDS REQUIREMENT.—Such term shall
not include any bond issued as part of an issue if any
portion of the proceeds of such issue was (or is to be)
used to provide any property described in section
144(c)(6)(B).
‘‘(6) CREDIT INCLUDED IN GROSS INCOME.—Gross income
includes the amount of the credit allowed to the taxpayer
under this subsection (determined without regard to paragraph
(3)) and the amount so included shall be treated as interest
income.
‘‘(7) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes
of this subsection—
‘‘(A) BOND.—The term ‘bond’ includes any obligation.
‘‘(B) PARTNERSHIP; S CORPORATION; AND OTHER PASS-
THRU ENTITIES.—
‘‘(i) IN GENERAL.—Under regulations prescribed by
the Secretary, in the case of a partnership, trust, S
corporation, or other pass-thru entity, rules similar
to the rules of section 41(g) shall apply with respect
to the credit allowable under paragraph (1).
‘‘(ii) NO BASIS ADJUSTMENT.—In the case of a bond
held by a partnership or an S corporation, rules similar
to the rules under section 1397E(i) shall apply.
‘‘(C) BONDS HELD BY REGULATED INVESTMENT COMPA-
NIES.—If any Gulf tax credit bond is held by a regulated
investment company, the credit determined under para-
graph (1) shall be allowed to shareholders of such company
under procedures prescribed by the Secretary.
‘‘(D) REPORTING.—Issuers of Gulf tax credit bonds shall
submit reports similar to the reports required under section
149(e).
‘‘(E) CREDIT TREATED AS NONREFUNDABLE BONDHOLDER
CREDIT.—For purposes of this title, the credit allowed by
this subsection shall be treated as a credit allowable under
subpart H of part IV of subchapter A of this chapter.
‘‘(m) APPLICATION OF NEW MARKETS TAX CREDIT TO INVEST-
MENTS
IN
COMMUNITY
DEVELOPMENT
ENTITIES
SERVING
GULF
OPPORTUNITY ZONE.—For purposes of section 45D—
‘‘(1) a qualified community development entity shall be
eligible for an allocation under subsection (f)(2) thereof of the
increase in the new markets tax credit limitation described
in paragraph (2) only if a significant mission of such entity
is the recovery and redevelopment of the Gulf Opportunity
Zone,
‘‘(2) the new markets tax credit limitation otherwise deter-
mined under subsection (f)(1) thereof shall be increased by
an amount equal to—
Procedures.
Regulations.
Applicability.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) $300,000,000 for 2005 and 2006, to be allocated
among qualified community development entities to make
qualified low-income community investments within the
Gulf Opportunity Zone, and
‘‘(B) $400,000,000 for 2007, to be so allocated, and
‘‘(3) subsection (f)(3) thereof shall be applied separately
with respect to the amount of the increase under paragraph
(2).
‘‘(n) TREATMENT
OF
REPRESENTATIONS
REGARDING
INCOME
ELIGIBILITY
FOR PURPOSES
OF QUALIFIED RESIDENTIAL RENTAL
PROJECT REQUIREMENTS.—For purposes of determining if any resi-
dential rental project meets the requirements of section 142(d)(1)
and if any certification with respect to such project meets the
requirements under section 142(d)(7), the operator of the project
may rely on the representations of any individual applying for
tenancy in such project that such individual’s income will not exceed
the applicable income limits of section 142(d)(1) upon commence-
ment of the individual’s tenancy if such tenancy begins during
the 6-month period beginning on and after the date such individual
was displaced by reason of Hurricane Katrina.
‘‘(o) TREATMENT
OF
PUBLIC
UTILITY
PROPERTY
DISASTER
LOSSES.—
‘‘(1) IN GENERAL.—Upon the election of the taxpayer, in
the case of any eligible public utility property loss—
‘‘(A) section 165(i) shall be applied by substituting ‘the
fifth taxable year immediately preceding’ for ‘the taxable
year immediately preceding’,
‘‘(B) an application for a tentative carryback adjust-
ment of the tax for any prior taxable year affected by
the application of subparagraph (A) may be made under
section 6411, and
‘‘(C) section 6611 shall not apply to any overpayment
attributable to such loss.
‘‘(2) ELIGIBLE PUBLIC UTILITY PROPERTY LOSS.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—The term ‘eligible public utility
property loss’ means any loss with respect to public utility
property located in the Gulf Opportunity Zone and attrib-
utable to Hurricane Katrina.
‘‘(B) PUBLIC
UTILITY
PROPERTY.—The term ‘public
utility property’ has the meaning given such term by sec-
tion 168(i)(10) without regard to the matter following
subparagraph (D) thereof.
‘‘(3) WAIVER OF LIMITATIONS.—If refund or credit of any
overpayment of tax resulting from the application of paragraph
(1) is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this section
by the operation of any law or rule of law (including res judi-
cata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such period.
‘‘(p) TAX BENEFITS NOT AVAILABLE WITH RESPECT TO CERTAIN
PROPERTY.—
‘‘(1) QUALIFIED GULF OPPORTUNITY ZONE PROPERTY.—For
purposes of subsections (d), (e), and (k)(2)(B)(iv), the term ‘quali-
fied Gulf Opportunity Zone property’ shall not include any
property described in paragraph (3).
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119 STAT. 2593
PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(2) 
QUALIFIED
GULF
OPPORTUNITY
ZONE
CASUALTY
LOSSES.—For purposes of subsection (k)(2)(B)(i), the term ‘quali-
fied Gulf Opportunity Zone casualty loss’ shall not include
any loss with respect to any property described in paragraph
(3).
‘‘(3) PROPERTY DESCRIBED.—
‘‘(A) IN
GENERAL.—For purposes of this subsection,
property is described in this paragraph if such property
is—
‘‘(i) any property used in connection with any pri-
vate or commercial golf course, country club, massage
parlor, hot tub facility, suntan facility, or any store
the principal business of which is the sale of alcoholic
beverages for consumption off premises, or
‘‘(ii) any gambling or animal racing property.
‘‘(B) GAMBLING OR ANIMAL RACING PROPERTY.—For pur-
poses of subparagraph (A)(ii)—
‘‘(i) IN GENERAL.—The term ‘gambling or animal
racing property’ means—
‘‘(I) any equipment, furniture, software, or
other property used directly in connection with
gambling, the racing of animals, or the on-site
viewing of such racing, and
‘‘(II) the portion of any real property (deter-
mined by square footage) which is dedicated to
gambling, the racing of animals, or the on-site
viewing of such racing.
‘‘(ii) DE MINIMIS PORTION.—Clause (i)(II) shall not
apply to any real property if the portion so dedicated
is less than 100 square feet.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 54(c) is amended by inserting
‘‘, section 1400N(l),’’ after ‘‘subpart C’’.
(2) Subparagraph (A) of section 6049(d)(8) is amended—
(A) by inserting ‘‘or 1400N(l)(6)’’ after ‘‘section 54(g)’’,
and
(B) by inserting ‘‘or 1400N(l)(2)(D), as the case may
be’’ after ‘‘section 54(b)(4)’’.
(3) So much of subchapter Y of chapter 1 as precedes
section 1400L is amended to read as follows:
‘‘Subchapter Y—Short-Term Regional Benefits
‘‘PART I—TAX BENEFITS FOR NEW YORK LIBERTY ZONE
‘‘PART II—TAX BENEFITS FOR GO ZONES
‘‘PART I—TAX BENEFITS FOR NEW YORK
LIBERTY ZONE
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.’’.
(4) The item relating to subchapter Y in the table of sub-
chapters for chapter 1 is amended to read as follows:
‘‘SUBCHAPTER Y—SHORT-TERM REGIONAL BENEFITS’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending on or after August 28, 2005.
26 USC 1400N
note.
26 USC 54.
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119 STAT. 2594
PUBLIC LAW 109–135—DEC. 21, 2005
(2) CARRYBACKS.—Subsections (i)(2), (j), and (k) of section
1400N of the Internal Revenue Code of 1986 (as added by
this section) shall apply to losses arising in such taxable years.
SEC. 
102. 
EXPANSION 
OF 
HOPE 
SCHOLARSHIP 
AND 
LIFETIME
LEARNING CREDIT FOR STUDENTS IN THE GULF OPPOR-
TUNITY ZONE.
(a) IN GENERAL.—Part II of subchapter Y of chapter 1 (as
added by this Act) is amended by adding at the end the following
new section:
‘‘SEC. 1400O. EDUCATION TAX BENEFITS.
‘‘In the case of an individual who attends an eligible educational
institution (as defined in section 25A(f)(2)) located in the Gulf
Opportunity Zone for any taxable year beginning during 2005 or
2006—
‘‘(1) in applying section 25A, the term ‘qualified tuition
and related expenses’ shall include any costs which are qualified
higher education expenses (as defined in section 529(e)(3)),
‘‘(2) each of the dollar amounts in effect under of subpara-
graphs (A) and (B) of section 25A(b)(1) shall be twice the
amount otherwise in effect before the application of this sub-
section, and
‘‘(3) section 25A(c)(1) shall be applied by substituting ‘40
percent’ for ‘20 percent’.’’.
(b) CONFORMING AMENDMENT.—The table of sections for part
II of subchapter Y of chapter 1 is amended by adding at the
end the following new item:
‘‘Sec. 1400O. Education tax benefits.’’.
SEC. 103. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY HURRI-
CANE KATRINA.
(a) IN GENERAL.—Part II of subchapter Y of chapter 1 (as
added by this Act) is amended by adding at the end the following
new section:
‘‘SEC. 1400P. HOUSING TAX BENEFITS .
‘‘(a) EXCLUSION OF EMPLOYER PROVIDED HOUSING FOR INDI-
VIDUAL AFFECTED BY HURRICANE KATRINA.—
‘‘(1) IN GENERAL.—Gross income of a qualified employee
shall not include the value of any lodging furnished in-kind
to such employee (and such employee’s spouse or any of such
employee’s dependents) by or on behalf of a qualified employer
for any month during the taxable year.
‘‘(2) LIMITATION.—The amount which may be excluded
under paragraph (1) for any month for which lodging is fur-
nished during the taxable year shall not exceed $600.
‘‘(3) TREATMENT OF EXCLUSION.—The exclusion under para-
graph (1) shall be treated as an exclusion under section 119
(other 
than 
for 
purposes 
of 
sections 
3121(a)(19) 
and
3306(b)(14)).
‘‘(b) EMPLOYER CREDIT
FOR HOUSING EMPLOYEES AFFECTED
BY HURRICANE KATRINA.—For purposes of section 38, in the case
of a qualified employer, the Hurricane Katrina housing credit for
any month during the taxable year is an amount equal to 30
percent of any amount which is excludable from the gross income
of a qualified employee of such employer under subsection (a) and
not otherwise excludable under section 119.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this section, the
term ‘qualified employee’ means, with respect to any month, an
individual—
‘‘(1) who had a principal residence (as defined in section
121) in the Gulf Opportunity Zone on August 28, 2005, and
‘‘(2) who performs substantially all employment services—
‘‘(A) in the Gulf Opportunity Zone, and
‘‘(B) for the qualified employer which furnishes lodging
to such individual.
‘‘(d) QUALIFIED EMPLOYER.—For purposes of this section, the
term ‘qualified employer’ means any employer with a trade or
business located in the Gulf Opportunity Zone.
‘‘(e) CERTAIN RULES TO APPLY.—For purposes of this subsection,
rules similar to the rules of sections 51(i)(1) and 52 shall apply.
‘‘(f) APPLICATION
OF SECTION.—This section shall apply to
lodging furnished during the period—
‘‘(1) beginning on the first day of the first month beginning
after the date of the enactment of this section, and
‘‘(2) ending on the date which is 6 months after the first
day described in paragraph (1).’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (b) of section 38 is amended by striking
‘‘and’’ at the end of paragraph (25), by striking the period
at the end of paragraph (26) and inserting ‘‘, and’’, and by
adding at the end the following new paragraph:
‘‘(27) the Hurricane Katrina housing credit determined
under section 1400P(b).’’.
(2) Section 280C(a) is amended by striking ‘‘and 1396(a)’’
and inserting ‘‘1396(a), and 1400P(b)’’.
(3) The table of sections for part II of subchapter Y of
chapter 1 is amended by adding at the end the following new
item:
‘‘Sec. 1400P. Housing tax benefits.’’.
SEC. 104. EXTENSION OF SPECIAL RULES FOR MORTGAGE REVENUE
BONDS.
Section 404(d) of the Katrina Emergency Tax Relief Act of
2005 is amended by striking ‘‘December 31, 2007’’ and inserting
‘‘December 31, 2010’’.
SEC. 105. SPECIAL EXTENSION OF BONUS DEPRECIATION PLACED IN
SERVICE DATE FOR TAXPAYERS AFFECTED BY HURRI-
CANES KATRINA, RITA, AND WILMA.
In applying the rule under section 168(k)(2)(A)(iv) of the
Internal Revenue Code of 1986 to any property described in
subparagraph (B) or (C) of section 168(k)(2) of such Code—
(1) the placement in service of which—
(A) is to be located in the GO Zone (as defined in
section 1400M(1) of such Code), the Rita GO Zone (as
defined in section 1400M(3) of such Code), or the Wilma
GO Zone (as defined in section 1400M(5) of such Code),
and
(B) is to be made by any taxpayer affected by Hurricane
Katrina, Rita, or Wilma, or
(2) which is manufactured in such Zone by any person
affected by Hurricane Katrina, Rita, or Wilma,
Ante, p. 2027.
26 USC 38.
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the Secretary of the Treasury may, on a taxpayer by taxpayer
basis, extend the required date of the placement in service of
such property under such section by such period of time as is
determined necessary by the Secretary but not to exceed 1 year.
For purposes of the preceding sentence, the determination shall
be made by only taking into account the effect of one or more
hurricanes on the date of such placement by the taxpayer.
TITLE II—TAX BENEFITS RELATED TO
HURRICANES RITA AND WILMA
SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR
HURRICANE KATRINA TO HURRICANES RITA AND WILMA.
(a) IN GENERAL.—Part II of subchapter Y of chapter 1 (as
added by this Act) is amended by adding at the end the following
new sections:
‘‘SEC. 1400Q. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.
‘‘(a) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.—
‘‘(1) IN
GENERAL.—Section 72(t) shall not apply to any
qualified hurricane distribution.
‘‘(2) AGGREGATE DOLLAR LIMITATION.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
aggregate amount of distributions received by an individual
which may be treated as qualified hurricane distributions
for any taxable year shall not exceed the excess (if any)
of—
‘‘(i) $100,000, over
‘‘(ii) the aggregate amounts treated as qualified
hurricane distributions received by such individual for
all prior taxable years.
‘‘(B) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribu-
tion to an individual would (without regard to subpara-
graph (A)) be a qualified hurricane distribution, a plan
shall not be treated as violating any requirement of this
title merely because the plan treats such distribution as
a qualified hurricane distribution, unless the aggregate
amount of such distributions from all plans maintained
by the employer (and any member of any controlled group
which includes the employer) to such individual exceeds
$100,000.
‘‘(C) CONTROLLED GROUP.—For purposes of subpara-
graph (B), the term ‘controlled group’ means any group
treated as a single employer under subsection (b), (c), (m),
or (o) of section 414.
‘‘(3) AMOUNT DISTRIBUTED MAY BE REPAID.—
‘‘(A) IN GENERAL.—Any individual who receives a quali-
fied hurricane distribution may, at any time during the
3-year period beginning on the day after the date on which
such distribution was received, make one or more contribu-
tions in an aggregate amount not to exceed the amount
of such distribution to an eligible retirement plan of which
such individual is a beneficiary and to which a rollover
contribution of such distribution could be made under sec-
tion 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16),
as the case may be.
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‘‘(B) TREATMENT
OF
REPAYMENTS
OF
DISTRIBUTIONS
FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.—For
purposes of this title, if a contribution is made pursuant
to subparagraph (A) with respect to a qualified hurricane
distribution from an eligible retirement plan other than
an individual retirement plan, then the taxpayer shall,
to the extent of the amount of the contribution, be treated
as having received the qualified hurricane distribution in
an eligible rollover distribution (as defined in section
402(c)(4)) and as having transferred the amount to the
eligible retirement plan in a direct trustee to trustee
transfer within 60 days of the distribution.
‘‘(C) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS
FROM IRAS.—For purposes of this title, if a contribution
is made pursuant to subparagraph (A) with respect to
a qualified hurricane distribution from an individual retire-
ment plan (as defined by section 7701(a)(37)), then, to
the extent of the amount of the contribution, the qualified
hurricane distribution shall be treated as a distribution
described in section 408(d)(3) and as having been trans-
ferred to the eligible retirement plan in a direct trustee
to trustee transfer within 60 days of the distribution.
‘‘(4) DEFINITIONS.—For purposes of this subsection—
‘‘(A) QUALIFIED HURRICANE DISTRIBUTION.—Except as
provided in paragraph (2), the term ‘qualified hurricane
distribution’ means—
‘‘(i) any distribution from an eligible retirement
plan made on or after August 25, 2005, and before
January 1, 2007, to an individual whose principal place
of abode on August 28, 2005, is located in the Hurri-
cane Katrina disaster area and who has sustained
an economic loss by reason of Hurricane Katrina,
‘‘(ii) any distribution (which is not described in
clause (i)) from an eligible retirement plan made on
or after September 23, 2005, and before January 1,
2007, to an individual whose principal place of abode
on September 23, 2005, is located in the Hurricane
Rita disaster area and who has sustained an economic
loss by reason of Hurricane Rita, and
‘‘(iii) any distribution (which is not described in
clause (i) or (ii)) from an eligible retirement plan made
on or after October 23, 2005, and before January 1,
2007, to an individual whose principal place of abode
on October 23, 2005, is located in the Hurricane Wilma
disaster area and who has sustained an economic loss
by reason of Hurricane Wilma.
‘‘(B) ELIGIBLE RETIREMENT PLAN.—The term ‘eligible
retirement plan’ shall have the meaning given such term
by section 402(c)(8)(B).
‘‘(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.—
‘‘(A) IN GENERAL.—In the case of any qualified hurri-
cane distribution, unless the taxpayer elects not to have
this paragraph apply for any taxable year, any amount
required to be included in gross income for such taxable
year shall be so included ratably over the 3-taxable year
period beginning with such taxable year.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(B) SPECIAL RULE.—For purposes of subparagraph (A),
rules similar to the rules of subparagraph (E) of section
408A(d)(3) shall apply.
‘‘(6) SPECIAL RULES.—
‘‘(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO
TRUSTEE
TRANSFER
AND
WITHHOLDING
RULES.—For pur-
poses of sections 401(a)(31), 402(f), and 3405, qualified
hurricane distributions shall not be treated as eligible roll-
over distributions.
‘‘(B) QUALIFIED HURRICANE DISTRIBUTIONS TREATED AS
MEETING PLAN DISTRIBUTION REQUIREMENTS.—For purposes
this title, a qualified hurricane distribution shall be treated
as meeting the requirements of sections 401(k)(2)(B)(i),
403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A).
‘‘(b) RECONTRIBUTIONS
OF
WITHDRAWALS
FOR
HOME
PUR-
CHASES.—
‘‘(1) RECONTRIBUTIONS.—
‘‘(A) IN GENERAL.—Any individual who received a quali-
fied distribution may, during the applicable period, make
one or more contributions in an aggregate amount not
to exceed the amount of such qualified distribution to an
eligible retirement plan (as defined in section 402(c)(8)(B))
of which such individual is a beneficiary and to which
a rollover contribution of such distribution could be made
under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as
the case may be.
‘‘(B) TREATMENT OF REPAYMENTS.—Rules similar to the
rules of subparagraphs (B) and (C) of subsection (a)(3)
shall apply for purposes of this subsection.
‘‘(2) QUALIFIED
DISTRIBUTION.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified distribution’
means any qualified Katrina distribution, any qualified
Rita distribution, and any qualified Wilma distribution.
‘‘(B) QUALIFIED
KATRINA
DISTRIBUTION.—The term
‘qualified Katrina distribution’ means any distribution—
‘‘(i) 
described 
in 
section 
401(k)(2)(B)(i)(IV),
403(b)(7)(A)(ii) (but only to the extent such distribution
relates 
to 
financial 
hardship), 
403(b)(11)(B), 
or
72(t)(2)(F),
‘‘(ii) received after February 28, 2005, and before
August 29, 2005, and
‘‘(iii) which was to be used to purchase or construct
a principal residence in the Hurricane Katrina disaster
area, but which was not so purchased or constructed
on account of Hurricane Katrina.
‘‘(C) QUALIFIED RITA DISTRIBUTION.—The term ‘quali-
fied Rita distribution’ means any distribution (other than
a qualified Katrina distribution)—
‘‘(i) 
described 
in 
section 
401(k)(2)(B)(i)(IV),
403(b)(7)(A)(ii) (but only to the extent such distribution
relates 
to 
financial 
hardship), 
403(b)(11)(B), 
or
72(t)(2)(F),
‘‘(ii) received after February 28, 2005, and before
September 24, 2005, and
‘‘(iii) which was to be used to purchase or construct
a principal residence in the Hurricane Rita disaster
Applicability.
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area, but which was not so purchased or constructed
on account of Hurricane Rita.
‘‘(D) QUALIFIED WILMA DISTRIBUTION.—The term ‘quali-
fied Wilma distribution’ means any distribution (other than
a qualified Katrina distribution or a qualified Rita distribu-
tion)—
‘‘(i) 
described 
in 
section 
401(k)(2)(B)(i)(IV),
403(b)(7)(A)(ii) (but only to the extent such distribution
relates 
to 
financial 
hardship), 
403(b)(11)(B), 
or
72(t)(2)(F),
‘‘(ii) received after February 28, 2005, and before
October 24, 2005, and
‘‘(iii) which was to be used to purchase or construct
a principal residence in the Hurricane Wilma disaster
area, but which was not so purchased or constructed
on account of Hurricane Wilma.
‘‘(3) APPLICABLE PERIOD.—For purposes of this subsection,
the term ‘applicable period’ means—
‘‘(A) with respect to any qualified Katrina distribution,
the period beginning on August 25, 2005, and ending on
February 28, 2006,
‘‘(B) with respect to any qualified Rita distribution,
the period beginning on September 23, 2005, and ending
on February 28, 2006, and
‘‘(C) with respect to any qualified Wilma distribution,
the period beginning on October 23, 2005, and ending on
February 28, 2006.
‘‘(c) LOANS FROM QUALIFIED PLANS.—
‘‘(1) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBU-
TIONS.—In the case of any loan from a qualified employer
plan (as defined under section 72(p)(4)) to a qualified individual
made during the applicable period—
‘‘(A) clause (i) of section 72(p)(2)(A) shall be applied
by substituting ‘$100,000’ for ‘$50,000’, and
‘‘(B) clause (ii) of such section shall be applied by
substituting ‘the present value of the nonforfeitable accrued
benefit of the employee under the plan’ for ‘one-half of
the present value of the nonforfeitable accrued benefit of
the employee under the plan’.
‘‘(2) DELAY OF REPAYMENT.—In the case of a qualified indi-
vidual with an outstanding loan on or after the qualified begin-
ning date from a qualified employer plan (as defined in section
72(p)(4))—
‘‘(A) if the due date pursuant to subparagraph (B)
or (C) of section 72(p)(2) for any repayment with respect
to such loan occurs during the period beginning on the
qualified beginning date and ending on December 31, 2006,
such due date shall be delayed for 1 year,
‘‘(B) any subsequent repayments with respect to any
such loan shall be appropriately adjusted to reflect the
delay in the due date under paragraph (1) and any interest
accruing during such delay, and
‘‘(C) in determining the 5-year period and the term
of a loan under subparagraph (B) or (C) of section 72(p)(2),
the period described in subparagraph (A) shall be dis-
regarded.
Applicability.
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‘‘(3) QUALIFIED
INDIVIDUAL.—For purposes of this sub-
section—
‘‘(A) IN
GENERAL.—The term ‘qualified individual’
means any qualified Hurricane Katrina individual, any
qualified Hurricane Rita individual, and any qualified
Hurricane Wilma individual.
‘‘(B) QUALIFIED HURRICANE KATRINA INDIVIDUAL.—The
term ‘qualified Hurricane Katrina individual’ means an
individual whose principal place of abode on August 28,
2005, is located in the Hurricane Katrina disaster area
and who has sustained an economic loss by reason of Hurri-
cane Katrina.
‘‘(C) QUALIFIED HURRICANE RITA INDIVIDUAL.—The term
‘qualified Hurricane Rita individual’ means an individual
(other than a qualified Hurricane Katrina individual)
whose principal place of abode on September 23, 2005,
is located in the Hurricane Rita disaster area and who
has sustained an economic loss by reason of Hurricane
Rita.
‘‘(D) QUALIFIED
HURRICANE
WILMA
INDIVIDUAL.—The
term ‘qualified Hurricane Wilma individual’ means an indi-
vidual (other than a qualified Hurricane Katrina individual
or a qualified Hurricane Rita individual) whose principal
place of abode on October 23, 2005, is located in the Hurri-
cane Wilma disaster area and who has sustained an eco-
nomic loss by reason of Hurricane Wilma.
‘‘(4) APPLICABLE PERIOD; QUALIFIED BEGINNING DATE.—For
purposes of this subsection—
‘‘(A) HURRICANE KATRINA.—In the case of any qualified
Hurricane Katrina individual—
‘‘(i) the applicable period is the period beginning
on September 24, 2005, and ending on December 31,
2006, and
‘‘(ii) the qualified beginning date is August 25,
2005.
‘‘(B) HURRICANE RITA.—In the case of any qualified
Hurricane Rita individual—
‘‘(i) the applicable period is the period beginning
on the date of the enactment of this subsection and
ending on December 31, 2006, and
‘‘(ii) the qualified beginning date is September 23,
2005.
‘‘(C) HURRICANE WILMA.—In the case of any qualified
Hurricane Wilma individual—
‘‘(i) the applicable period is the period beginning
on the date of the enactment of this subparagraph
and ending on December 31, 2006, and
‘‘(ii) the qualified beginning date is October 23,
2005.
‘‘(d) PROVISIONS RELATING TO PLAN AMENDMENTS.—
‘‘(1) IN GENERAL.—If this subsection applies to any amend-
ment to any plan or annuity contract, such plan or contract
shall be treated as being operated in accordance with the terms
of the plan during the period described in paragraph (2)(B)(i).
‘‘(2) AMENDMENTS TO WHICH SUBSECTION APPLIES.—
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(A) IN GENERAL.—This subsection shall apply to any
amendment to any plan or annuity contract which is
made—
‘‘(i) pursuant to any provision of this section, or
pursuant to any regulation issued by the Secretary
or the Secretary of Labor under any provision of this
section, and
‘‘(ii) on or before the last day of the first plan
year beginning on or after January 1, 2007, or such
later date as the Secretary may prescribe.
In the case of a governmental plan (as defined in section
414(d)), clause (ii) shall be applied by substituting the
date which is 2 years after the date otherwise applied
under clause (ii).
‘‘(B) CONDITIONS.—This subsection shall not apply to
any amendment unless—
‘‘(i) during the period—
‘‘(I) beginning on the date that this section
or the regulation described in subparagraph (A)(i)
takes effect (or in the case of a plan or contract
amendment not required by this section or such
regulation, the effective date specified by the plan),
and
‘‘(II) ending on the date described in subpara-
graph (A)(ii) (or, if earlier, the date the plan or
contract amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect; and
‘‘(ii) such plan or contract amendment applies
retroactively for such period.
‘‘SEC. 1400R. EMPLOYMENT RELIEF.
‘‘(a) EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED
BY HURRICANE KATRINA.—
‘‘(1) IN GENERAL.—For purposes of section 38, in the case
of an eligible employer, the Hurricane Katrina employee reten-
tion credit for any taxable year is an amount equal to 40
percent of the qualified wages with respect to each eligible
employee of such employer for such taxable year. For purposes
of the preceding sentence, the amount of qualified wages which
may be taken into account with respect to any individual shall
not exceed $6,000.
‘‘(2) DEFINITIONS.—For purposes of this subsection—
‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eligible employer’
means any employer—
‘‘(i) which conducted an active trade or business
on August 28, 2005, in the GO Zone, and
‘‘(ii) with respect to whom the trade or business
described in clause (i) is inoperable on any day after
August 28, 2005, and before January 1, 2006, as a
result of damage sustained by reason of Hurricane
Katrina.
‘‘(B) ELIGIBLE EMPLOYEE.—The term ‘eligible employee’
means with respect to an eligible employer an employee
whose principal place of employment on August 28, 2005,
with such eligible employer was in the GO Zone.
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‘‘(C) QUALIFIED
WAGES.—The term ‘qualified wages’
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee on
any day after August 28, 2005, and before January 1,
2006, which occurs during the period—
‘‘(i) beginning on the date on which the trade or
business described in subparagraph (A) first became
inoperable at the principal place of employment of
the employee immediately before Hurricane Katrina,
and
‘‘(ii) ending on the date on which such trade or
business has resumed significant operations at such
principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs serv-
ices at a different place of employment than such principal
place of employment, or performs services at such principal
place of employment before significant operations have
resumed.
‘‘(3) CERTAIN RULES TO APPLY.—For purposes of this sub-
section, rules similar to the rules of sections 51(i)(1) and 52
shall apply.
‘‘(4) EMPLOYEE
NOT
TAKEN
INTO
ACCOUNT
MORE
THAN
ONCE.—An employee shall not be treated as an eligible
employee for purposes of this subsection for any period with
respect to any employer if such employer is allowed a credit
under section 51 with respect to such employee for such period.
‘‘(b) EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED
BY HURRICANE RITA.—
‘‘(1) IN GENERAL.—For purposes of section 38, in the case
of an eligible employer, the Hurricane Rita employee retention
credit for any taxable year is an amount equal to 40 percent
of the qualified wages with respect to each eligible employee
of such employer for such taxable year. For purposes of the
preceding sentence, the amount of qualified wages which may
be taken into account with respect to any individual shall
not exceed $6,000.
‘‘(2) DEFINITIONS.—For purposes of this subsection—
‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eligible employer’
means any employer—
‘‘(i) which conducted an active trade or business
on September 23, 2005, in the Rita GO Zone, and
‘‘(ii) with respect to whom the trade or business
described in clause (i) is inoperable on any day after
September 23, 2005, and before January 1, 2006, as
a result of damage sustained by reason of Hurricane
Rita.
‘‘(B) ELIGIBLE EMPLOYEE.—The term ‘eligible employee’
means with respect to an eligible employer an employee
whose principal place of employment on September 23,
2005, with such eligible employer was in the Rita GO
Zone.
‘‘(C) QUALIFIED
WAGES.—The term ‘qualified wages’
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee on
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any day after September 23, 2005, and before January
1, 2006, which occurs during the period—
‘‘(i) beginning on the date on which the trade or
business described in subparagraph (A) first became
inoperable at the principal place of employment of
the employee immediately before Hurricane Rita, and
‘‘(ii) ending on the date on which such trade or
business has resumed significant operations at such
principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs serv-
ices at a different place of employment than such principal
place of employment, or performs services at such principal
place of employment before significant operations have
resumed.
‘‘(3) CERTAIN RULES TO APPLY.—For purposes of this sub-
section, rules similar to the rules of sections 51(i)(1) and 52
shall apply.
‘‘(4) EMPLOYEE
NOT
TAKEN
INTO
ACCOUNT
MORE
THAN
ONCE.—An employee shall not be treated as an eligible
employee for purposes of this subsection for any period with
respect to any employer if such employer is allowed a credit
under subsection (a) or section 51 with respect to such employee
for such period.
‘‘(c) EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED
BY HURRICANE WILMA.—
‘‘(1) IN GENERAL.—For purposes of section 38, in the case
of an eligible employer, the Hurricane Wilma employee reten-
tion credit for any taxable year is an amount equal to 40
percent of the qualified wages with respect to each eligible
employee of such employer for such taxable year. For purposes
of the preceding sentence, the amount of qualified wages which
may be taken into account with respect to any individual shall
not exceed $6,000.
‘‘(2) DEFINITIONS.—For purposes of this subsection—
‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eligible employer’
means any employer—
‘‘(i) which conducted an active trade or business
on October 23, 2005, in the Wilma GO Zone, and
‘‘(ii) with respect to whom the trade or business
described in clause (i) is inoperable on any day after
October 23, 2005, and before January 1, 2006, as a
result of damage sustained by reason of Hurricane
Wilma.
‘‘(B) ELIGIBLE EMPLOYEE.—The term ‘eligible employee’
means with respect to an eligible employer an employee
whose principal place of employment on October 23, 2005,
with such eligible employer was in the Wilma GO Zone.
‘‘(C) QUALIFIED
WAGES.—The term ‘qualified wages’
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee on
any day after October 23, 2005, and before January 1,
2006, which occurs during the period—
‘‘(i) beginning on the date on which the trade or
business described in subparagraph (A) first became
inoperable at the principal place of employment of
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the employee immediately before Hurricane Wilma,
and
‘‘(ii) ending on the date on which such trade or
business has resumed significant operations at such
principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs serv-
ices at a different place of employment than such principal
place of employment, or performs services at such principal
place of employment before significant operations have
resumed.
‘‘(3) CERTAIN RULES TO APPLY.—For purposes of this sub-
section, rules similar to the rules of sections 51(i)(1) and 52
shall apply.
‘‘(4) EMPLOYEE
NOT
TAKEN
INTO
ACCOUNT
MORE
THAN
ONCE.—An employee shall not be treated as an eligible
employee for purposes of this subsection for any period with
respect to any employer if such employer is allowed a credit
under subsection (a) or (b) or section 51 with respect to such
employee for such period.
‘‘SEC. 1400S. ADDITIONAL TAX RELIEF PROVISIONS.
‘‘(a) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE
CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as otherwise provided in para-
graph (2), section 170(b) shall not apply to qualified contribu-
tions and such contributions shall not be taken into account
for purposes of applying subsections (b) and (d) of section 170
to other contributions.
‘‘(2) TREATMENT OF EXCESS CONTRIBUTIONS.—For purposes
of section 170—
‘‘(A) INDIVIDUALS.—In the case of an individual—
‘‘(i) LIMITATION.—Any qualified contribution shall
be allowed only to the extent that the aggregate of
such contributions does not exceed the excess of the
taxpayer’s contribution base (as defined in subpara-
graph (F) of section 170(b)(1)) over the amount of all
other charitable contributions allowed under section
170(b)(1).
‘‘(ii) CARRYOVER.—If the aggregate amount of
qualified contributions made in the contribution year
(within the meaning of section 170(d)(1)) exceeds the
limitation of clause (i), such excess shall be added
to the excess described in the portion of subparagraph
(A) of such section which precedes clause (i) thereof
for purposes of applying such section.
‘‘(B) CORPORATIONS.—In the case of a corporation—
‘‘(i) LIMITATION.—Any qualified contribution shall
be allowed only to the extent that the aggregate of
such contributions does not exceed the excess of the
taxpayer’s taxable income (as determined under para-
graph (2) of section 170(b)) over the amount of all
other charitable contributions allowed under such para-
graph.
‘‘(ii) CARRYOVER.—Rules similar to the rules of
subparagraph (A)(ii) shall apply for purposes of this
subparagraph.
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‘‘(3) EXCEPTION
TO
OVERALL
LIMITATION
ON
ITEMIZED
DEDUCTIONS.—So much of any deduction allowed under section
170 as does not exceed the qualified contributions paid during
the taxable year shall not be treated as an itemized deduction
for purposes of section 68.
‘‘(4) QUALIFIED CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
term ‘qualified contribution’ means any charitable contribu-
tion (as defined in section 170(c)) if—
‘‘(i) such contribution is paid during the period
beginning on August 28, 2005, and ending on December
31, 2005, in cash to an organization described in section
170(b)(1)(A) (other than an organization described in
section 509(a)(3)),
‘‘(ii) in the case of a contribution paid by a corpora-
tion, such contribution is for relief efforts related to
Hurricane Katrina, Hurricane Rita, or Hurricane
Wilma, and
‘‘(iii) the taxpayer has elected the application of
this subsection with respect to such contribution.
‘‘(B) EXCEPTION.—Such term shall not include a con-
tribution if the contribution is for establishment of a new,
or maintenance in an existing, segregated fund or account
with respect to which the donor (or any person appointed
or designated by such donor) has, or reasonably expects
to have, advisory privileges with respect to distributions
or investments by reason of the donor’s status as a donor.
‘‘(C) APPLICATION OF ELECTION TO PARTNERSHIPS AND
S CORPORATIONS.—In the case of a partnership or S corpora-
tion, the election under subparagraph (A)(iii) shall be made
separately by each partner or shareholder.
‘‘(b) SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CAS-
UALTY LOSSES.—Paragraphs (1) and (2)(A) of section 165(h) shall
not apply to losses described in section 165(c)(3)—
‘‘(1) which arise in the Hurricane Katrina disaster area
on or after August 25, 2005, and which are attributable to
Hurricane Katrina,
‘‘(2) which arise in the Hurricane Rita disaster area on
or after September 23, 2005, and which are attributable to
Hurricane Rita, or
‘‘(3) which arise in the Hurricane Wilma disaster area
on or after October 23, 2005, and which are attributable to
Hurricane Wilma.
In the case of any other losses, section 165(h)(2)(A) shall be applied
without regard to the losses referred to in the preceding sentence.
‘‘(c) REQUIRED
EXERCISE
OF
AUTHORITY
UNDER
SECTION
7508A.—In the case of any taxpayer determined by the Secretary
to be affected by the Presidentially declared disaster relating to
Hurricane Katrina, Hurricane Rita, or Hurricane Wilma, any relief
provided by the Secretary under section 7508A shall be for a period
ending not earlier than February 28, 2006.
‘‘(d) SPECIAL RULE FOR DETERMINING EARNED INCOME.—
‘‘(1) IN GENERAL.—In the case of a qualified individual,
if the earned income of the taxpayer for the taxable year
which includes the applicable date is less than the earned
income of the taxpayer for the preceding taxable year, the
Termination
date.
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PUBLIC LAW 109–135—DEC. 21, 2005
credits allowed under sections 24(d) and 32 may, at the election
of the taxpayer, be determined by substituting—
‘‘(A) such earned income for the preceding taxable year,
for
‘‘(B) such earned income for the taxable year which
includes the applicable date.
‘‘(2) 
QUALIFIED
INDIVIDUAL.—For 
purposes 
of 
this
subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified individual’
means any qualified Hurricane Katrina individual, any
qualified Hurricane Rita individual, and any qualified
Hurricane Wilma individual.
‘‘(B) QUALIFIED HURRICANE KATRINA INDIVIDUAL.—The
term ‘qualified Hurricane Katrina individual’ means any
individual whose principal place of abode on August 25,
2005, was located—
‘‘(i) in the GO Zone, or
‘‘(ii) in the Hurricane Katrina disaster area (but
outside the GO Zone) and such individual was dis-
placed from such principal place of abode by reason
of Hurricane Katrina.
‘‘(C) QUALIFIED HURRICANE RITA INDIVIDUAL.—The term
‘qualified Hurricane Rita individual’ means any individual
(other than a qualified Hurricane Katrina individual)
whose principal place of abode on September 23, 2005,
was located—
‘‘(i) in the Rita GO Zone, or
‘‘(ii) in the Hurricane Rita disaster area (but out-
side the Rita GO Zone) and such individual was dis-
placed from such principal place of abode by reason
of Hurricane Rita.
‘‘(D) QUALIFIED
HURRICANE
WILMA
INDIVIDUAL.—The
term ‘qualified Hurricane Wilma individual’ means any
individual whose principal place of abode on October 23,
2005, was located—
‘‘(i) in the Wilma GO Zone, or
‘‘(ii) in the Hurricane Wilma disaster area (but
outside the Wilma GO Zone) and such individual was
displaced from such principal place of abode by reason
of Hurricane Wilma.
‘‘(3) APPLICABLE DATE.—For purposes of this subsection,
the term ‘applicable date’ means—
‘‘(A) in the case of a qualified Hurricane Katrina indi-
vidual, August 25, 2005,
‘‘(B) in the case of a qualified Hurricane Rita indi-
vidual, September 23, 2005, and
‘‘(C) in the case of a qualified Hurricane Wilma indi-
vidual, October 23, 2005.
‘‘(4) EARNED INCOME.—For purposes of this subsection, the
term ‘earned income’ has the meaning given such term under
section 32(c).
‘‘(5) SPECIAL RULES.—
‘‘(A) APPLICATION
TO
JOINT
RETURNS.—For purposes
of paragraph (1), in the case of a joint return for a taxable
year which includes the applicable date—
‘‘(i) such paragraph shall apply if either spouse
is a qualified individual, and
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(ii) the earned income of the taxpayer for the
preceding taxable year shall be the sum of the earned
income of each spouse for such preceding taxable year.
‘‘(B) UNIFORM APPLICATION OF ELECTION.—Any election
made under paragraph (1) shall apply with respect to both
sections 24(d) and section 32.
‘‘(C) ERRORS TREATED AS MATHEMATICAL ERROR.—For
purposes of section 6213, an incorrect use on a return
of earned income pursuant to paragraph (1) shall be treated
as a mathematical or clerical error.
‘‘(D) NO EFFECT ON DETERMINATION OF GROSS INCOME,
ETC.—Except as otherwise provided in this subsection, this
title shall be applied without regard to any substitution
under paragraph (1).
‘‘(e) 
SECRETARIAL
AUTHORITY
TO
MAKE
ADJUSTMENTS
REGARDING TAXPAYER AND DEPENDENCY STATUS.—With respect to
taxable years beginning in 2005 or 2006, the Secretary may make
such adjustments in the application of the internal revenue laws
as may be necessary to ensure that taxpayers do not lose any
deduction or credit or experience a change of filing status by reason
of temporary relocations by reason of Hurricane Katrina, Hurricane
Rita, or Hurricane Wilma. Any adjustments made under the pre-
ceding sentence shall ensure that an individual is not taken into
account by more than one taxpayer with respect to the same tax
benefit.
‘‘SEC. 1400T. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
‘‘(a) IN GENERAL.—In the case of financing provided with respect
to owner-occupied residences in the GO Zone, the Rita GO Zone,
or the Wilma GO Zone, section 143 shall be applied—
‘‘(1) by treating any such residence in the Rita GO Zone
or the Wilma GO Zone as a targeted area residence,
‘‘(2) by applying subsection (f)(3) thereof without regard
to subparagraph (A) thereof, and
‘‘(3) by substituting ‘$150,000’ for ‘$15,000’ in subsection
(k)(4) thereof.
‘‘(b) APPLICATION.—Subsection (a) shall not apply to financing
provided after December 31, 2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (b) of section 38, as amended by this Act,
is amended by striking ‘‘and’’ at the end of paragraph (26),
by striking the period at the end of paragraph (27) and inserting
a comma, and by adding at the end the following new para-
graphs:
‘‘(28) the Hurricane Katrina employee retention credit
determined under section 1400R(a),
‘‘(29) the Hurricane Rita employee retention credit deter-
mined under section 1400R(b), and
‘‘(30) the Hurricane Wilma employee retention credit deter-
mined under section 1400R(c).’’.
(2) Section 280C(a), as amended by this Act, is amended
by striking ‘‘and 1400P(b)’’ and inserting ‘‘1400P(b), and 1400R’’.
(3) The table of sections for part II of subchapter Y of
chapter 1 is amended by adding at the end the following new
items:
‘‘Sec. 1400Q. Special rules for use of retirement funds.
‘‘Sec. 1400R. Employment relief.
‘‘Sec. 1400S. Additional tax relief provisions.’’.
26 USC 38.
Applicability.
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PUBLIC LAW 109–135—DEC. 21, 2005
(4) The following provisions of the Katrina Emergency Tax
Relief Act of 2005 are hereby repealed:
(A) Title I.
(B) Sections 202, 301, 402, 403(b), 406, and 407.
TITLE III—OTHER PROVISIONS
SEC. 301. GULF COAST RECOVERY BONDS.
It is the sense of the Congress that the Secretary of the
Treasury, or the Secretary’s delegate, should designate one or more
series of bonds or certificates (or any portion thereof) issued under
section 3105 of title 31, United States Code, as ‘‘Gulf Coast Recovery
Bonds’’ in response to Hurricanes Katrina, Rita, and Wilma.
SEC. 302. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME
FOR PURPOSES OF EARNED INCOME CREDIT.
(a) IN GENERAL.—Subclause (II) of section 32(c)(2)(B)(vi) is
amended by striking ‘‘January 1, 2006’’ and inserting ‘‘January
1, 2007’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2005.
SEC. 303. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM
SUSPENSION RULES FOR CERTAIN LISTED AND REPORT-
ABLE TRANSACTIONS.
(a) EFFECTIVE DATE MODIFICATION.—
(1) IN GENERAL.—Paragraph (2) of section 903(d) of the
American Jobs Creation Act of 2004 is amended to read as
follows:
‘‘(2) EXCEPTION
FOR
REPORTABLE
OR
LISTED
TRANS-
ACTIONS.—
‘‘(A) IN
GENERAL.—The amendments made by sub-
section (c) shall apply with respect to interest accruing
after October 3, 2004.
‘‘(B) SPECIAL RULE FOR CERTAIN LISTED AND REPORT-
ABLE TRANSACTIONS.—
‘‘(i) IN GENERAL.—Except as provided in clauses
(ii), (iii), and (iv), the amendments made by subsection
(c) shall also apply with respect to interest accruing
on or before October 3, 2004.
‘‘(ii) PARTICIPANTS IN SETTLEMENT INITIATIVES.—
Clause (i) shall not apply to any transaction if, as
of January 23, 2006—
‘‘(I) the taxpayer is participating in a settle-
ment initiative described in Internal Revenue
Service Announcement 2005–80 with respect to
such transaction, or
‘‘(II) the taxpayer has entered into a settle-
ment agreement pursuant to such an initiative.
Subclause (I) shall not apply to any taxpayer if, after
January 23, 2006, the taxpayer withdraws from, or
terminates, participation in the initiative or the Sec-
retary of the Treasury or the Secretary’s delegate deter-
mines that a settlement agreement will not be reached
pursuant to the initiative within a reasonable period
of time.
26 USC 6404
note.
26 USC 32 note.
Ante, pp. 2021,
2022, 2027–2029.
Ante, p. 2017.
Repeal.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(iii) TAXPAYERS ACTING IN GOOD FAITH.—The Sec-
retary of the Treasury may except from the application
of clause (i) any transaction in which the taxpayer
has acted reasonably and in good faith.
‘‘(iv) CLOSED TRANSACTIONS.—Clause (i) shall not
apply to a transaction if, as of December 14, 2005—
‘‘(I) the assessment of all Federal income taxes
for the taxable year in which the tax liability to
which the interest relates arose is prevented by
the operation of any law or rule of law, or
‘‘(II) a closing agreement under section 7121
has been entered into with respect to the tax
liability arising in connection with the trans-
action.’’.
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall take effect as if included in the provisions of
the American Jobs Creation Act of 2004 to which it relates.
(b) TREATMENT
OF AMENDED RETURNS
AND OTHER SIMILAR
NOTICES OF ADDITIONAL TAX OWED.—
(1) IN GENERAL.—Section 6404(g)(1) (relating to suspension)
is amended by adding at the end the following new sentence:
‘‘If, after the return for a taxable year is filed, the taxpayer
provides to the Secretary 1 or more signed written documents
showing that the taxpayer owes an additional amount of tax
for the taxable year, clause (i) shall be applied by substituting
the date the last of the documents was provided for the date
on which the return is filed.’’.
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to documents provided on or after the date
of the enactment of this Act.
SEC. 304. AUTHORITY FOR UNDERCOVER OPERATIONS.
Paragraph (6) of section 7608(c) (relating to application of sec-
tion) is amended by striking ‘‘January 1, 2006’’ both places is
appears and inserting ‘‘January 1, 2007’’.
SEC. 305. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.
(a) DISCLOSURES TO FACILITATE COMBINED EMPLOYMENT TAX
REPORTING.—
(1) IN GENERAL.—Subparagraph (B) of section 6103(d)(5)
(relating to termination) is amended by striking ‘‘December
31, 2005’’ and inserting ‘‘December 31, 2006’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to disclosures after December 31, 2005.
(b) DISCLOSURES RELATING TO TERRORIST ACTIVITIES.—
(1) IN GENERAL.—Clause (iv) of section 6103(i)(3)(C) and
subparagraph (E) of section 6103(i)(7) are each amended by
striking ‘‘December 31, 2005’’ and inserting ‘‘December 31,
2006’’.
(2) EFFECTIVE DATE.—The amendments made by paragraph
(1) shall apply to disclosures after December 31, 2005.
(c) DISCLOSURES RELATING TO STUDENT LOANS.—
(1) IN GENERAL.—Subparagraph (D) of section 6103(l)(13)
(relating to termination) is amended by striking ‘‘December
31, 2005’’ and inserting ‘‘December 31, 2006’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to requests made after December 31, 2005.
26 USC 6103
note.
26 USC 6103
note.
26 USC 6103
note.
26 USC 6404
note.
26 USC 6404.
26 USC 6404
note.
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PUBLIC LAW 109–135—DEC. 21, 2005
TITLE IV—TECHNICALS
Subtitle A—Tax Technicals
SEC. 401. SHORT TITLE.
This subtitle may be cited as the ‘‘Tax Technical Corrections
Act of 2005’’.
SEC. 402. AMENDMENTS RELATED TO ENERGY POLICY ACT OF 2005.
(a) AMENDMENTS RELATED TO SECTION 1263.—
(1) Part VI of subchapter O of chapter 1 is repealed.
(2) Section 1223 is amended by striking paragraph (3)
and by redesignating paragraphs (4) through (16) as paragraphs
(3) through (15), respectively.
(3) Section 121(g) is amended by striking ‘‘1223(7)’’ and
inserting ‘‘1223(6)’’.
(4) Section 246(c)(3)(B) is amended by striking ‘‘paragraph
(4) of section 1223’’ and inserting ‘‘paragraph (3) of section
1223’’.
(5) Section 247(b)(2)(D) is amended by inserting ‘‘as in
effect before its repeal’’ after ‘‘part VI of subchapter O’’.
(6)(A) Section 1245(b) is amended by striking paragraph
(5) and redesignating paragraphs (6) through (9) as paragraphs
(5) through (8), respectively.
(B) Section 1245(b)(3) is amended by striking ‘‘paragraph
(7)’’ and inserting ‘‘paragraph (6)’’.
(7)(A) Section 1250(d) is amended by striking paragraph
(5) and redesignating paragraphs (6) through (8) as paragraphs
(5) through (7), respectively.
(B) Section 1250(e)(2) is amended by striking ‘‘(3), or (5)’’
and inserting ‘‘or (3)’’.
(b) AMENDMENT RELATED TO SECTION 1301.—Clause (ii) of sec-
tion 45(c)(3)(A) is amended by striking ‘‘nonhazardous lignin waste
material’’ and inserting ‘‘lignin material’’.
(c) AMENDMENTS RELATED TO SECTION 1303.—
(1) Subsection (l) of section 54 is amended by striking
paragraph (5), and by redesignating paragraphs (6) and (7)
as paragraphs (5) and (6), respectively.
(2) Subsection (e) of section 1303 of the Energy Policy
Act of 2005 is amended to read as follows:
‘‘(e) EFFECTIVE DATES.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the amendments made by this section shall apply to bonds
issued after December 31, 2005.
‘‘(2) SUBSECTION (C).—The amendments made by subsection
(c) shall apply to taxable years beginning after December 31,
2005.’’.
(d) AMENDMENTS RELATED TO SECTION 1306.—
(1) Paragraph (2) of section 45J(c) is amended to read
as follows:
‘‘(2) PHASEOUT OF CREDIT.—
‘‘(A) IN GENERAL.—The amount of the credit determined
under subsection (a) shall be reduced by an amount which
bears the same ratio to the amount of the credit (deter-
mined without regard to this paragraph) as—
Ante, p. 991.
Repeal.
26 USC
1081–1083.
26 USC 1 note.
Tax Technical
Corrections Act
of 2005.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(i) the amount by which the reference price (as
defined in section 45(e)(2)(C)) for the calendar year
in which the sale occurs exceeds 8 cents, bears to
‘‘(ii) 3 cents.
‘‘(B) PHASEOUT
ADJUSTMENT
BASED
ON
INFLATION.—
The 8 cent amount in subparagraph (A) shall be adjusted
by multiplying such amount by the inflation adjustment
factor (as defined in section 45(e)(2)(B)) for the calendar
year in which the sale occurs. If any amount as increased
under the preceding sentence is not a multiple of 0.1 cent,
such amount shall be rounded to the nearest multiple
of 0.1 cent.’’.
(2) Subsection (e) of section 45J is amended by striking
‘‘(2),’’.
(e) AMENDMENT RELATED TO SECTION 1309.—Subparagraph (B)
of section 169(d)(5) is amended by adding at beginning thereof
‘‘in the case of facility placed in service in connection with a plant
or other property placed in operation after December 31, 1975,’’.
(f) AMENDMENTS RELATED TO SECTION 1311.—
(1) Clause (i) of section 172(b)(1)(I) is amended to read
as follows:
‘‘(i) IN GENERAL.—At the election of the taxpayer
for any taxable year ending after December 31, 2005,
and before January 1, 2009, in the case of a net oper-
ating loss for a taxable year ending after December
31, 2002, and before January 1, 2006, there shall be
a net operating loss carryback to each of the 5 taxable
years preceding the taxable year of such loss to the
extent that such loss does not exceed 20 percent of
the sum of the electric transmission property capital
expenditures and the pollution control facility capital
expenditures of the taxpayer for the taxable year pre-
ceding the taxable year for which such election is
made.’’.
(2) Clause (ii) of section 172(b)(1)(I) is amended by striking
‘‘in a taxable year’’ and inserting ‘‘for a taxable year’’.
(3) Subparagraph (I) of section 172(b)(1) is amended by
striking clause (iv) and (v), by redesignating clause (vi) as
clause (v), and by inserting after clause (iii) the following:
‘‘(iv) SPECIAL
RULES
RELATING
TO
CREDIT
OR
REFUND.—In the case of the portion of the loss which
is carried back 5 years by reason of clause (i)—
‘‘(I) an application under section 6411(a) with
respect to such portion shall not fail to be treated
as timely filed if filed within 24 months after the
due date specified under such section, and
‘‘(II) 
references 
in 
sections 
6501(h),
6511(d)(2)(A), and 6611(f)(1) to the taxable year
in which such net operating loss arises or results
in a net operating loss carryback shall be treated
as references to the taxable year for which such
election is made.’’.
(g) AMENDMENT RELATED
TO SECTION 1322.—Subsection (a)
of section 45K is amended by striking ‘‘if the taxpayer elects to
have this section apply,’’.
(h) AMENDMENT RELATED
TO SECTION 1331.—Paragraph (3)
of section 1250(b) is amended by striking ‘‘or by section 179D’’.
26 USC 45J.
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(i) AMENDMENTS RELATED TO SECTION 1335.—
(1) Paragraph (1) of section 25D(b) is amended by inserting
‘‘(determined without regard to subsection (c))’’ after ‘‘subsection
(a)’’.
(2) Subparagraphs (A) and (B) of section 25D(e)(4) are
amended to read as follows:
‘‘(A) MAXIMUM EXPENDITURES.—The maximum amount
of expenditures which may be taken into account under
subsection (a) by all such individuals with respect to such
dwelling unit during such calendar year shall be—
‘‘(i) $6,667 in the case of any qualified photovoltaic
property expenditures,
‘‘(ii) $6,667 in the case of any qualified solar water
heating property expenditures, and
‘‘(iii) $1,667 in the case of each half kilowatt of
capacity of qualified fuel cell property (as defined in
section 48(c)(1)) for which qualified fuel cell property
expenditures are made.
‘‘(B) ALLOCATION OF EXPENDITURES.—The expenditures
allocated to any individual for the taxable year in which
such calendar year ends shall be an amount equal to the
lesser of—
‘‘(i) the amount of expenditures made by such indi-
vidual with respect to such dwelling during such cal-
endar year, or
‘‘(ii) the maximum amount of such expenditures
set forth in subparagraph (A) multiplied by a fraction—
‘‘(I) the numerator of which is the amount
of such expenditures with respect to such dwelling
made by such individual during such calendar
year, and
‘‘(II) the denominator of which is the total
expenditures made by all such individuals with
respect to such dwelling during such calendar
year.’’.
(3)(A)(i) The matter preceding subparagraph (A) of section
23(b)(4) is amended by striking ‘‘The credit’’ and inserting ‘‘In
the case of a taxable year to which section 26(a)(2) does not
apply, the credit’’.
(ii) Subsection (c) of section 23 is amended to read as
follows:
‘‘(c) CARRYFORWARDS OF UNUSED CREDIT.—
‘‘(1) RULE
FOR
YEARS
IN
WHICH
ALL
PERSONAL
CREDITS
ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX.—
In the case of a taxable year to which section 26(a)(2) applies,
if the credit allowable under subsection (a) for any taxable
year exceeds the limitation imposed by section 26(a)(2) for
such taxable year reduced by the sum of the credits allowable
under this subpart (other than this section and sections 25D
and 1400C), such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection
(a) for such taxable year.
‘‘(2) RULE FOR OTHER YEARS.—In the case of a taxable
year to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) for any taxable year exceeds
the limitation imposed by subsection (b)(4) for such taxable
year, such excess shall be carried to the succeeding taxable
26 USC 25D.
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year and added to the credit allowable under subsection (a)
for such taxable year.
‘‘(3) LIMITATION.—No credit may be carried forward under
this subsection to any taxable year following the fifth taxable
year after the taxable year in which the credit arose. For
purposes of the preceding sentence, credits shall be treated
as used on a first-in first-out basis.’’.
(B)(i) The matter preceding subparagraph (A) of section
24(b)(3) is amended by striking ‘‘The credit’’ and inserting ‘‘In
the case of a taxable year to which section 26(a)(2) does not
apply, the credit’’.
(ii) Paragraph (1) of section 24(d) is amended to read as
follows:
‘‘(1) IN GENERAL.—The aggregate credits allowed to a tax-
payer under subpart C shall be increased by the lesser of—
‘‘(A) the credit which would be allowed under this
section without regard to this subsection and the limitation
under section 26(a)(2) or subsection (b)(3), as the case may
be, or
‘‘(B) the amount by which the aggregate amount of
credits allowed by this subpart (determined without regard
to this subsection) would increase if the limitation imposed
by section 26(a)(2) or subsection (b)(3), as the case may
be, were increased by the excess (if any) of—
‘‘(i) 15 percent of so much of the taxpayer’s earned
income (within the meaning of section 32) which is
taken into account in computing taxable income for
the taxable year as exceeds $10,000, or
‘‘(ii) in the case of a taxpayer with 3 or more
qualifying children, the excess (if any) of—
‘‘(I) the taxpayer’s social security taxes for the
taxable year, over
‘‘(II) the credit allowed under section for the
taxable year.
The amount of the credit allowed under this subsection shall
not be treated as a credit allowed under this subpart and
shall reduce the amount of credit otherwise allowable under
subsection (a) without regard to section 26(a)(2) or subsection
(b)(3), as the case may be. For purposes of subparagraph (B),
any amount excluded from gross income by reason of section
112 shall be treated as earned income which is taken into
account in computing taxable income for the taxable year.’’.
(C) Subparagraph (C) of section 25(e)(1) is amended to
read as follows:
‘‘(C) APPLICABLE TAX LIMIT.—For purposes of this para-
graph, the term ‘applicable tax limit’ means—
‘‘(i) in the case of a taxable year to which section
26(a)(2) applies, the limitation imposed by section
26(a)(2) for the taxable year reduced by the sum of
the credits allowable under this subpart (other than
this section and sections 23, 25D, and 1400C), and
‘‘(ii) in the case of a taxable year to which section
26(a)(2) does not apply, the limitation imposed by sec-
tion 26(a)(1) for the taxable year reduced by the sum
of the credits allowable under this subpart (other than
this section and sections 23, 24, 25B, 25D, and
1400C).’’.
26 USC 24.
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(D) The matter preceding paragraph (1) of section 25B(g)
is amended by striking ‘‘The credit’’ and inserting ‘‘In the case
of a taxable year to which section 26(a)(2) does not apply,
the credit’’.
(E) Subsection (c) of section 25D is amended to read as
follows:
‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—
‘‘(1) RULE
FOR
YEARS
IN
WHICH
ALL
PERSONAL
CREDITS
ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX.—
In the case of a taxable year to which section 26(a)(2) applies,
if the credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a)(2) for such taxable year reduced
by the sum of the credits allowable under this subpart (other
than this section), such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection
(a) for such succeeding taxable year.
‘‘(2) RULE FOR OTHER YEARS.—In the case of a taxable
year to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a)(1) for such taxable year reduced by the sum
of the credits allowable under this subpart (other than this
section and sections 23, 24, and 25B), such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable
year.’’.
(F) Subsection (d) of section 1400C is amended to read
as follows:
‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—
‘‘(1) RULE
FOR
YEARS
IN
WHICH
ALL
PERSONAL
CREDITS
ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX.—
In the case of a taxable year to which section 26(a)(2) applies,
if the credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a)(2) for such taxable year reduced
by the sum of the credits allowable under subpart A of part
IV of subchapter A (other than this section and section 25D),
such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a) for
such taxable year.
‘‘(2) RULE FOR OTHER YEARS.—In the case of a taxable
year to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a)(1) for such taxable year reduced by the sum
of the credits allowable under subpart A of part IV of sub-
chapter A (other than this section and sections 23, 24, 25B,
and 25D), such excess shall be carried to the succeeding taxable
year and added to the credit allowable under subsection (a)
for such taxable year.’’.
(G) Subsection (i) of section 904 is amended to read as
follows:
‘‘(i) 
COORDINATION
WITH
NONREFUNDABLE
PERSONAL
CREDITS.—In the case of any taxable year of an individual to
which section 26(a)(2) does not apply, for purposes of subsection
(a), the tax against which the credit is taken is such tax reduced
by the sum of the credits allowable under subpart A of part IV
of subchapter A of this chapter (other than sections 23, 24, and
25B).’’.
26 USC 25B.
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(H) APPLICATION
OF
EGTRRA
SUNSET.—The amendments
made by this paragraph (and each part thereof) shall be subject
to title IX of the Economic Growth and Tax Relief Reconciliation
Act of 2001 in the same manner as the provisions of such
Act to which such amendment (or part thereof) relates.
(4) Subsection (b) of section 1335 of the Energy Policy
Act of 2005 is amended by striking paragraphs (1), (2), and
(3). The Internal Revenue Code of 1986 shall be applied and
administered as if the amendments made such paragraphs
had never been enacted.
(j) AMENDMENT RELATED TO SECTION 1341.—Paragraph (6) of
section 30B(h) is amended by adding at the end the following
sentence: ‘‘For purposes of subsection (g), property to which this
paragraph applies shall be treated as of a character subject to
an allowance for depreciation.’’.
(k) AMENDMENT RELATED
TO SECTION 1342.—Paragraph (2)
of section 30C(e) is amended by adding at the end the following
sentence: ‘‘For purposes of subsection (d), property to which this
paragraph applies shall be treated as of a character subject to
an allowance for depreciation.’’.
(l) AMENDMENTS RELATED TO SECTION 1351.—
(1) Paragraph (6) of section 41(f) (relating to special rules)
is amended by adding at the end the following:
‘‘(C) FOREIGN RESEARCH.—For purposes of subsection
(a)(3), amounts paid or incurred for any energy research
conducted outside the United States, the Commonwealth
of Puerto Rico, or any possession of the United States
shall not be taken into account.
‘‘(D) DENIAL OF DOUBLE BENEFIT.—Any amount taken
into account under subsection (a)(3) shall not be taken
into account under paragraph (1) or (2) of subsection (a).’’.
(2) Clause (ii) of section 41(b)(3)(C) is amended by striking
‘‘(other than an energy research consortium)’’.
(m) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as provided in paragraphs (2)
and (3), the amendments made by this section shall take effect
as if included in the provisions of the Energy Policy Act of
2005 to which they relate.
(2) REPEAL OF PUBLIC UTILITY HOLDING COMPANY ACT OF
1935.—The amendments made by subsection (a) shall not apply
with respect to any transaction ordered in compliance with
the Public Utility Holding Company Act of 1935 before its
repeal.
(3) COORDINATION
OF
PERSONAL
CREDITS.—The amend-
ments made by subsection (i)(3) shall apply to taxable years
beginning after December 31, 2005.
SEC. 403. AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION
ACT OF 2004.
(a) AMENDMENTS RELATED TO SECTION 102 OF THE ACT.—
(1) Paragraph (1) of section 199(b) is amended by striking
‘‘the employer’’ and inserting ‘‘the taxpayer’’.
(2) Paragraph (2) of section 199(b) is amended to read
as follows:
‘‘(2) W–2 WAGES.—For purposes of this section, the term
‘W–2 wages’ means, with respect to any person for any taxable
year of such person, the sum of the amounts described in
26 USC 23 note.
26 USC 30B.
Applicability.
Ante, p. 1033.
26 USC 23 note.
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paragraphs (3) and (8) of section 6051(a) paid by such person
with respect to employment of employees by such person during
the calendar year ending during such taxable year. Such term
shall not include any amount which is not properly included
in a return filed with the Social Security Administration on
or before the 60th day after the due date (including extensions)
for such return.’’.
(3) Subparagraph (B) of section 199(c)(1) is amended by
inserting ‘‘and’’ at the end of clause (i), by striking clauses
(ii) and (iii), and by inserting after clause (i) the following:
‘‘(ii) other expenses, losses, or deductions (other
than the deduction allowed under this section), which
are properly allocable to such receipts.’’.
(4) Paragraph (2) of section 199(c) is amended to read
as follows:
‘‘(2) ALLOCATION METHOD.—The Secretary shall prescribe
rules for the proper allocation of items described in paragraph
(1) for purposes of determining qualified production activities
income. Such rules shall provide for the proper allocation of
items whether or not such items are directly allocable to
domestic production gross receipts.’’.
(5) Subparagraph (A) of section 199(c)(4) is amended by
striking clauses (ii) and (iii) and inserting the following new
clauses:
‘‘(ii) in the case of a taxpayer engaged in the active
conduct of a construction trade or business, construc-
tion of real property performed in the United States
by the taxpayer in the ordinary course of such trade
or business, or
‘‘(iii) in the case of a taxpayer engaged in the
active conduct of an engineering or architectural serv-
ices trade or business, engineering or architectural
services performed in the United States by the tax-
payer in the ordinary course of such trade or business
with respect to the construction of real property in
the United States.’’.
(6) Subparagraph (B) of section 199(c)(4) is amended by
striking ‘‘and’’ at the end of clause (i), by striking the period
at the end of clause (ii) and inserting ‘‘, or’’, and by adding
at the end the following:
‘‘(iii) the lease, rental, license, sale, exchange, or
other disposition of land.’’.
(7) Paragraph (4) of section 199(c) is amended by adding
at the end the following new subparagraphs:
‘‘(C) SPECIAL
RULE
FOR
CERTAIN
GOVERNMENT
CON-
TRACTS.—Gross receipts derived from the manufacture or
production of any property described in subparagraph
(A)(i)(I) shall be treated as meeting the requirements of
subparagraph (A)(i) if—
‘‘(i) such property is manufactured or produced
by the taxpayer pursuant to a contract with the Federal
Government, and
‘‘(ii) the Federal Acquisition Regulation requires
that title or risk of loss with respect to such property
be transferred to the Federal Government before the
manufacture or production of such property is com-
plete.
Regulations.
26 USC 199.
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‘‘(D) PARTNERSHIPS OWNED BY EXPANDED AFFILIATED
GROUPS.—For purposes of this paragraph, if all of the
interests in the capital and profits of a partnership are
owned by members of a single expanded affiliated group
at all times during the taxable year of such partnership,
the partnership and all members of such group shall be
treated as a single taxpayer during such period.’’.
(8) Paragraph (1) of section 199(d) is amended to read
as follows:
‘‘(1) APPLICATION
OF
SECTION
TO
PASS-THRU
ENTITIES.—
‘‘(A) PARTNERSHIPS AND S CORPORATIONS.—In the case
of a partnership or S corporation—
‘‘(i) this section shall be applied at the partner
or shareholder level,
‘‘(ii) each partner or shareholder shall take into
account such person’s allocable share of each item
described in subparagraph (A) or (B) of subsection
(c)(1) (determined without regard to whether the items
described in such subparagraph (A) exceed the items
described in such subparagraph (B)), and
‘‘(iii) each partner or shareholder shall be treated
for purposes of subsection (b) as having W–2 wages
for the taxable year in an amount equal to the lesser
of—
‘‘(I) such person’s allocable share of the W–
2 wages of the partnership or S corporation for
the taxable year (as determined under regulations
prescribed by the Secretary), or
‘‘(II) 2 times 9 percent of so much of such
person’s qualified production activities income as
is attributable to items allocated under clause (ii)
for the taxable year.
‘‘(B) TRUSTS AND ESTATES.—In the case of a trust or
estate—
‘‘(i) the items referred to in subparagraph (A)(ii)
(as determined therein) and the W–2 wages of the
trust or estate for the taxable year, shall be appor-
tioned between the beneficiaries and the fiduciary (and
among the beneficiaries) under regulations prescribed
by the Secretary, and
‘‘(ii) for purposes of paragraph (2), adjusted gross
income of the trust or estate shall be determined as
provided in section 67(e) with the adjustments
described in such paragraph.
‘‘(C) REGULATIONS.—The Secretary may prescribe rules
requiring or restricting the allocation of items and wages
under this paragraph and may prescribe such reporting
requirements as the Secretary determines appropriate.’’.
(9) Paragraph (3) of section 199(d) is amended to read
as follows:
‘‘(3) AGRICULTURAL AND HORTICULTURAL COOPERATIVES.—
‘‘(A) DEDUCTION ALLOWED TO PATRONS.—Any person
who receives a qualified payment from a specified agricul-
tural or horticultural cooperative shall be allowed for the
taxable year in which such payment is received a deduction
under subsection (a) equal to the portion of the deduction
26 USC 199.
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allowed under subsection (a) to such cooperative which
is—
‘‘(i) allowed with respect to the portion of the quali-
fied production activities income to which such pay-
ment is attributable, and
‘‘(ii) identified by such cooperative in a written
notice mailed to such person during the payment period
described in section 1382(d).
‘‘(B) COOPERATIVE DENIED DEDUCTION FOR PORTION OF
QUALIFIED PAYMENTS.—The taxable income of a specified
agricultural or horticultural cooperative shall not be
reduced under section 1382 by reason of that portion of
any qualified payment as does not exceed the deduction
allowable under subparagraph (A) with respect to such
payment.
‘‘(C) TAXABLE INCOME OF COOPERATIVES DETERMINED
WITHOUT REGARD TO CERTAIN DEDUCTIONS.—For purposes
of this section, the taxable income of a specified agricultural
or horticultural cooperative shall be computed without
regard to any deduction allowable under subsection (b)
or (c) of section 1382 (relating to patronage dividends,
per-unit retain allocations, and nonpatronage distribu-
tions).
‘‘(D) SPECIAL RULE FOR MARKETING COOPERATIVES.—
For purposes of this section, a specified agricultural or
horticultural cooperative described in subparagraph (F)(ii)
shall be treated as having manufactured, produced, grown,
or extracted in whole or significant part any qualifying
production property marketed by the organization which
its patrons have so manufactured, produced, grown, or
extracted.
‘‘(E) QUALIFIED PAYMENT.—For purposes of this para-
graph, the term ‘qualified payment’ means, with respect
to any person, any amount which—
‘‘(i) is described in paragraph (1) or (3) of section
1385(a),
‘‘(ii) is received by such person from a specified
agricultural or horticultural cooperative, and
‘‘(iii) is attributable to qualified production activi-
ties income with respect to which a deduction is
allowed to such cooperative under subsection (a).
‘‘(F) SPECIFIED
AGRICULTURAL
OR
HORTICULTURAL
COOPERATIVE.—For purposes of this paragraph, the term
‘specified agricultural or horticultural cooperative’ means
an organization to which part I of subchapter T applies
which is engaged—
‘‘(i) in the manufacturing, production, growth, or
extraction in whole or significant part of any agricul-
tural or horticultural product, or
‘‘(ii) in the marketing of agricultural or horti-
cultural products.’’.
(10) Clause (i) of section 199(d)(4)(B) is amended—
(A) by striking ‘‘50 percent’’ and inserting ‘‘more than
50 percent’’, and
(B) by striking ‘‘80 percent’’ and inserting ‘‘at least
80 percent’’.
26 USC 199.
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(11)(A) Paragraph (6) of section 199(d) is amended to read
as follows:
‘‘(6) COORDINATION WITH MINIMUM TAX.—For purposes of
determining alternative minimum taxable income under section
55—
‘‘(A) qualified production activities income shall be
determined without regard to any adjustments under sec-
tions 56 through 59, and
‘‘(B) in the case of a corporation, subsection (a)(1)(B)
shall be applied by substituting ‘alternative minimum tax-
able income’ for ‘taxable income’.’’.
(B) Paragraph (2) of section 199(a) is amended by striking
‘‘subsections (d)(1) and (d)(6)’’ and inserting ‘‘subsection (d)(1)’’.
(12) Subsection (d) of section 199 is amended by redesig-
nating paragraph (7) as paragraph (8) and by inserting after
paragraph (6) the following new paragraph:
‘‘(7) UNRELATED BUSINESS TAXABLE INCOME.—For purposes
of determining the tax imposed by section 511, subsection
(a)(1)(B) shall be applied by substituting ‘unrelated business
taxable income’ for ‘taxable income’.’’.
(13) Paragraph (8) of section 199(d), as redesignated by
paragraph (12), is amended by inserting ‘‘, including regulations
which prevent more than 1 taxpayer from being allowed a
deduction under this section with respect to any activity
described in subsection (c)(4)(A)(i)’’ before the period at the
end.
(14) Clauses (i)(II) and (ii)(II) of section 56(d)(1)(A) are
each amended by striking ‘‘such deduction’’ and inserting ‘‘such
deduction and the deduction under section 199’’.
(15) Clause (i) of section 163(j)(6)(A) is amended by striking
‘‘and’’ at the end of subclause (II), by redesignating subclause
(III) as subclause (IV), and by inserting after subclause (II)
the following new subclause:
‘‘(III) any deduction allowable under section
199, and’’.
(16) Paragraph (2) of section 170(b) is amended by redesig-
nating subparagraphs (C) and (D) as subparagraphs (D) and
(E), respectively, and by inserting after subparagraph (B) the
following new subparagraph:
‘‘(C) section 199,’’.
(17) Subsection (d) of section 172 is amended by adding
at the end the following new paragraph:
‘‘(7) MANUFACTURING
DEDUCTION.—The deduction under
section 199 shall not be allowed.’’.
(18) Paragraph (1) of section 613A(d) is amended by
redesignating subparagraphs (B), (C), and (D) as subparagraphs
(C), (D), and (E), respectively, and by inserting after subpara-
graph (A) the following new subparagraph:
‘‘(B) any deduction allowable under section 199,’’.
(19) Subsection (e) of section 102 of the American Jobs
Creation Act of 2004 is amended to read as follows:
‘‘(e) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2004.
‘‘(2) APPLICATION TO PASS-THRU ENTITIES, ETC.—In deter-
mining the deduction under section 199 of the Internal Revenue
Code of 1986 (as added by this section), items arising from
26 USC 56 note.
Applicability.
26 USC 199.
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a taxable year of a partnership, S corporation, estate, or trust
beginning before January 1, 2005, shall not be taken into
account for purposes of subsection (d)(1) of such section.’’.
(b) AMENDMENT RELATED TO SECTION 231 OF THE ACT.—Para-
graph (1) of section 1361(c) is amended to read as follows:
‘‘(1) MEMBERS OF A FAMILY TREATED AS 1 SHAREHOLDER.—
‘‘(A) IN GENERAL.—For purposes of subsection (b)(1)(A),
there shall be treated as one shareholder—
‘‘(i) a husband and wife (and their estates), and
‘‘(ii) all members of a family (and their estates).
‘‘(B) MEMBERS
OF
A
FAMILY.—For purposes of this
paragraph—
‘‘(i) IN GENERAL.—The term ‘members of a family’
means a common ancestor, any lineal descendant of
such common ancestor, and any spouse or former
spouse of such common ancestor or any such lineal
descendant.
‘‘(ii) COMMON ANCESTOR.—An individual shall not
be considered to be a common ancestor if, on the
applicable date, the individual is more than 6 genera-
tions removed from the youngest generation of share-
holders who would (but for this subparagraph) be mem-
bers of the family. For purposes of the preceding sen-
tence, a spouse (or former spouse) shall be treated
as being of the same generation as the individual to
whom such spouse is (or was) married.
‘‘(iii) APPLICABLE DATE.—The term ‘applicable date’
means the latest of—
‘‘(I) the date the election under section 1362(a)
is made,
‘‘(II) the earliest date that an individual
described in clause (i) holds stock in the S corpora-
tion, or
‘‘(III) October 22, 2004.
‘‘(C) EFFECT OF ADOPTION, ETC.—Any legally adopted
child of an individual, any child who is lawfully placed
with an individual for legal adoption by the individual,
and any eligible foster child of an individual (within the
meaning of section 152(f)(1)(C)), shall be treated as a child
of such individual by blood.’’.
(c) AMENDMENT RELATED TO SECTION 235 OF THE ACT.—Sub-
section (b) of section 235 of the American Jobs Creation Act of
2004 is amended by striking ‘‘taxable years beginning’’ and inserting
‘‘transfers’’.
(d) AMENDMENTS RELATED
TO SECTION 243 OF
THE ACT.—
(1) Paragraph (7) of section 856(c) is amended to read
as follows:
‘‘(7) RULES OF APPLICATION FOR FAILURE TO SATISFY PARA-
GRAPH (4).—
‘‘(A) IN GENERAL.—A corporation, trust, or association
that fails to meet the requirements of paragraph (4) (other
than a failure to meet the requirements of paragraph
(4)(B)(iii) which is described in subparagraph (B)(i) of this
paragraph) for a particular quarter shall nevertheless be
considered to have satisfied the requirements of such para-
graph for such quarter if—
26 USC 1366
note.
26 USC 1361.
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‘‘(i) following the corporation, trust, or association’s
identification of the failure to satisfy the requirements
of such paragraph for a particular quarter, a descrip-
tion of each asset that causes the corporation, trust,
or association to fail to satisfy the requirements of
such paragraph at the close of such quarter of any
taxable year is set forth in a schedule for such quarter
filed in accordance with regulations prescribed by the
Secretary,
‘‘(ii) the failure to meet the requirements of such
paragraph for a particular quarter is due to reasonable
cause and not due to willful neglect, and
‘‘(iii)(I) the corporation, trust, or association dis-
poses of the assets set forth on the schedule specified
in clause (i) within 6 months after the last day of
the quarter in which the corporation, trust or associa-
tion’s identification of the failure to satisfy the require-
ments of such paragraph occurred or such other time
period prescribed by the Secretary and in the manner
prescribed by the Secretary, or
‘‘(II) the requirements of such paragraph are other-
wise met within the time period specified in subclause
(I).
‘‘(B) RULE FOR CERTAIN DE MINIMIS FAILURES.—A cor-
poration, trust, or association that fails to meet the require-
ments of paragraph (4)(B)(iii) for a particular quarter shall
nevertheless be considered to have satisfied the require-
ments of such paragraph for such quarter if—
‘‘(i) such failure is due to the ownership of assets
the total value of which does not exceed the lesser
of—
‘‘(I) 1 percent of the total value of the trust’s
assets at the end of the quarter for which such
measurement is done, and
‘‘(II) $10,000,000, and
‘‘(ii)(I) the corporation, trust, or association, fol-
lowing the identification of such failure, disposes of
assets in order to meet the requirements of such para-
graph within 6 months after the last day of the quarter
in which the corporation, trust or association’s identi-
fication of the failure to satisfy the requirements of
such paragraph occurred or such other time period
prescribed by the Secretary and in the manner pre-
scribed by the Secretary, or
‘‘(II) the requirements of such paragraph are other-
wise met within the time period specified in subclause
(I).
‘‘(C) TAX.—
‘‘(i) TAX IMPOSED.—If subparagraph (A) applies to
a corporation, trust, or association for any taxable year,
there is hereby imposed on such corporation, trust,
or association a tax in an amount equal to the greater
of—
‘‘(I) $50,000, or
‘‘(II) the amount determined (pursuant to regu-
lations promulgated by the Secretary) by multi-
plying the net income generated by the assets
Regulations.
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described in the schedule specified in subpara-
graph (A)(i) for the period specified in clause (ii)
by the highest rate of tax specified in section 11.
‘‘(ii) PERIOD.—For purposes of clause (i)(II), the
period described in this clause is the period beginning
on the first date that the failure to satisfy the require-
ments of such paragraph (4) occurs as a result of
the ownership of such assets and ending on the earlier
of the date on which the trust disposes of such assets
or the end of the first quarter when there is no longer
a failure to satisfy such paragraph (4).
‘‘(iii) ADMINISTRATIVE
PROVISIONS.—For purposes
of subtitle F, the taxes imposed by this subparagraph
shall be treated as excise taxes with respect to which
the deficiency procedures of such subtitle apply.’’.
(2) Subsection (m) of section 856 is amended by adding
at the end the following new paragraph:
‘‘(6) TRANSITION RULE.—
‘‘(A) IN GENERAL.—Notwithstanding paragraph (2)(C),
securities held by a trust shall not be considered securities
held by the trust for purposes of subsection (c)(4)(B)(iii)(III)
during any period beginning on or before October 22, 2004,
if such securities—
‘‘(i) are held by such trust continuously during
such period, and
‘‘(ii) would not be taken into account for purposes
of such subsection by reason of paragraph (7)(C) of
subsection (c) (as in effect on October 22, 2004) if
the amendments made by section 243 of the American
Jobs Creation Act of 2004 had never been enacted.
‘‘(B) RULE NOT TO APPLY TO SECURITIES HELD AFTER
MATURITY DATE.—Subparagraph (A) shall not apply with
respect to any security after the later of October 22, 2004,
or the latest maturity date under the contract (as in effect
on October 22, 2004) taking into account any renewal or
extension permitted under the contract if such renewal
or extension does not significantly modify any other terms
of the contract.
‘‘(C) SUCCESSORS.—If the successor of a trust to which
this paragraph applies acquires securities in a transaction
to which section 381 applies, such trusts shall be treated
as a single entity for purposes of determining the holding
period of such securities under subparagraph (A).’’.
(3) Subparagraph (E) of section 857(b)(2) is amended by
striking ‘‘section 856(c)(7)(B)(iii), and section 856(g)(1).’’ and
inserting ‘‘section 856(c)(7)(C), and section 856(g)(5)’’.
(4) Subsection (g) of section 243 of the American Jobs
Creation Act of 2004 is amended to read as follows:
‘‘(g) EFFECTIVE DATES.—
‘‘(1) SUBSECTIONS (a) AND (b).—The amendments made by
subsections (a) and (b) shall apply to taxable years beginning
after December 31, 2000.
‘‘(2) SUBSECTIONS (c) AND (e).—The amendments made by
subsections (c) and (e) shall apply to taxable years beginning
after the date of the enactment of this Act.
26 USC 856 note.
26 USC 856.
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‘‘(3) SUBSECTION (d).—The amendment made by subsection
(d) shall apply to transactions entered into after December
31, 2004.
‘‘(4) SUBSECTION (f).—
‘‘(A) The amendment made by paragraph (1) of sub-
section (f) shall apply to failures with respect to which
the requirements of subparagraph (A) or (B) of section
856(c)(7) of the Internal Revenue Code of 1986 (as added
by such paragraph) are satisfied after the date of the
enactment of this Act.
‘‘(B) The amendment made by paragraph (2) of sub-
section (f) shall apply to failures with respect to which
the requirements of paragraph (6) of section 856(c) of the
Internal Revenue Code of 1986 (as amended by such para-
graph) are satisfied after the date of the enactment of
this Act.
‘‘(C) The amendments made by paragraph (3) of sub-
section (f) shall apply to failures with respect to which
the requirements of paragraph (5) of section 856(g) of the
Internal Revenue Code of 1986 (as added by such para-
graph) are satisfied after the date of the enactment of
this Act.
‘‘(D) The amendment made by paragraph (4) of sub-
section (f) shall apply to taxable years ending after the
date of the enactment of this Act.
‘‘(E) The amendments made by paragraph (5) of sub-
section (f) shall apply to statements filed after the date
of the enactment of this Act.’’.
(e) AMENDMENTS RELATED TO SECTION 244 OF THE ACT.—
(1) Paragraph (2) of section 181(d) is amended by striking
the last sentence in subparagraph (A), by redesignating
subparagraph (B) as subparagraph (C), and by inserting after
subparagraph (A) the following new subparagraph:
‘‘(B) SPECIAL RULES FOR TELEVISION SERIES.—In the
case of a television series—
‘‘(i) each episode of such series shall be treated
as a separate production, and
‘‘(ii) only the first 44 episodes of such series shall
be taken into account.’’.
(2) Subparagraph (C) of section 1245(a)(2) is amended by
inserting ‘‘181,’’ after ‘‘179B,’’.
(f) AMENDMENTS RELATED TO SECTION 245 OF THE ACT.—
(1) Subsection (b) of section 45G is amended to read as
follows:
‘‘(b) LIMITATION.—
‘‘(1) IN GENERAL.—The credit allowed under subsection (a)
for any taxable year shall not exceed the product of—
‘‘(A) $3,500, multiplied by
‘‘(B) the sum of—
‘‘(i) the number of miles of railroad track owned
or leased by the eligible taxpayer as of the close of
the taxable year, and
‘‘(ii) the number of miles of railroad track assigned
for purposes of this subsection to the eligible taxpayer
by a Class II or Class III railroad which owns or
leases such railroad track as of the close of the taxable
year.
26 USC 181.
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‘‘(2) ASSIGNMENTS.—With respect to any assignment of a
mile of railroad track under paragraph (1)(B)(ii)—
‘‘(A) such assignment may be made only once per tax-
able year of the Class II or Class III railroad and shall
be treated as made as of the close of such taxable year,
‘‘(B) such mile may not be taken into account under
this section by such railroad for such taxable year, and
‘‘(C) such assignment shall be taken into account for
the taxable year of the assignee which includes the date
that such assignment is treated as effective.’’.
(2) Paragraph (2) of section 45G(c) is amended to read
as follows:
‘‘(2) any person who transports property using the rail
facilities of a Class II or Class III railroad or who furnishes
railroad-related property or services to a Class II or Class
III railroad, but only with respect to miles of railroad track
assigned to such person by such Class II or Class III railroad
for purposes of subsection (b).’’.
(g) AMENDMENTS RELATED TO SECTION 248 OF THE ACT.—
(1)(A) Subsection (d) of section 1353 is amended by striking
‘‘ownership and charter interests’’ and inserting ‘‘ownership,
charter, and operating agreement interests’’.
(B) Subsection (a) of section 1355 is amended by striking
paragraph (8).
(C) Paragraph (1) of section 1355(b) is amended to read
as follows:
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
a person is treated as operating any vessel during any period
if—
‘‘(A)(i) such vessel is owned by, or chartered (including
a time charter) to, the person, or
‘‘(ii) the person provides services for such vessel pursu-
ant to an operating agreement, and
‘‘(B) such vessel is in use as a qualifying vessel during
such period.’’.
(D) Paragraph (3) of section 1355(d) is amended to read
as follows:
‘‘(3) the extent of a partner’s ownership, charter, or oper-
ating agreement interest in any vessel operated by the partner-
ship shall be determined on the basis of the partner’s interest
in the partnership.’’.
(2) Paragraph (3) of section 1355(c) is amended by striking
‘‘determined—’’ and all that follows and inserting ‘‘determined
by treating all members of such group as 1 person.’’.
(3) Subsection (c) of section 1356 is amended—
(A) by striking paragraph (3), and
(B) by adding at the end of paragraph (2) the following
new flush sentence:
‘‘Such term shall not include any core qualifying activities.’’.
(4) The last sentence of section 1354(b) is amended by
inserting ‘‘on or’’ after ‘‘only if made’’.
(h) AMENDMENT RELATED TO SECTION 314 OF THE ACT.—Para-
graph (2) of section 55(c) is amended by striking ‘‘regular tax’’
and inserting ‘‘regular tax liability’’.
(i) AMENDMENTS RELATED TO SECTION 322 OF THE ACT.—
(1)(A) Subparagraph (B) of section 194(b)(1) is amended
to read as follows:
26 USC 45G.
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‘‘(B) DOLLAR
LIMITATION.—The aggregate amount of
reforestation expenditures which may be taken into account
under subparagraph (A) with respect to each qualified
timber property for any taxable year shall not exceed—
‘‘(i) except as provided in clause (ii) or (iii), $10,000,
‘‘(ii) in the case of a separate return by a married
individual (as defined in section 7703), $5,000, and
‘‘(iii) in the case of a trust, zero.’’.
(B) Paragraph (4) of section 194(c) is amended to read
as follows:
‘‘(4) TREATMENT OF TRUSTS AND ESTATES.—The aggregate
amount of reforestation expenditures incurred by any trust
or estate shall be apportioned between the income beneficiaries
and the fiduciary under regulations prescribed by the Secretary.
Any amount so apportioned to a beneficiary shall be taken
into account as expenditures incurred by such beneficiary in
applying this section to such beneficiary.’’.
(2) Subparagraph (C) of section 1245(a)(2) is amended by
striking ‘‘or 193’’ and inserting ‘‘193, or 194’’.
(j) AMENDMENTS RELATED TO SECTION 336 OF THE ACT.—
(1) Clause (iv) of section 168(k)(2)(A) is amended by striking
‘‘subparagraphs (B) and (C)’’ and inserting ‘‘subparagraph (B)
or (C)’’.
(2) Clause (iii) of section 168(k)(4)(B) is amended by striking
‘‘and paragraph (2)(C)’’ and inserting ‘‘or paragraph (2)(C) (as
so modified)’’.
(k) AMENDMENT RELATED TO SECTION 402 OF THE ACT.—Para-
graph (2) of section 904(g) is amended to read as follows:
‘‘(2) OVERALL
DOMESTIC
LOSS.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘overall domestic loss’
means—
‘‘(i) with respect to any qualified taxable year,
the domestic loss for such taxable year to the extent
such loss offsets taxable income from sources without
the United States for the taxable year or for any pre-
ceding qualified taxable year by reason of a carryback,
and
‘‘(ii) with respect to any other taxable year, the
domestic loss for such taxable year to the extent such
loss offsets taxable income from sources without the
United States for any preceding qualified taxable year
by reason of a carryback.
‘‘(B) DOMESTIC LOSS.—For purposes of subparagraph
(A), the term ‘domestic loss’ means the amount by which
the gross income for the taxable year from sources within
the United States is exceeded by the sum of the deductions
properly apportioned or allocated thereto (determined with-
out regard to any carryback from a subsequent taxable
year).
‘‘(C) QUALIFIED
TAXABLE
YEAR.—For purposes of
subparagraph (A), the term ‘qualified taxable year’ means
any taxable year for which the taxpayer chose the benefits
of this subpart.’’.
(l) AMENDMENT RELATED TO SECTION 403 OF THE ACT.—Section
403 of the American Jobs Creation Act of 2004 is amended by
adding at the end the following new subsection:
26 USC 864 note.
26 USC 194.
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‘‘(d) TRANSITION RULE.—If the taxpayer elects (at such time
and in such form and manner as the Secretary of the Treasury
may prescribe) to have the rules of this subsection apply—
‘‘(1) the amendments made by this section shall not apply
to taxable years beginning after December 31, 2002, and before
January 1, 2005, and
‘‘(2) in the case of taxable years beginning after December
31, 2004, clause (iv) of section 904(d)(4)(C) of the Internal
Revenue Code of 1986 (as amended by this section) shall be
applied by substituting ‘January 1, 2005’ for ‘January 1, 2003’
both places it appears.’’.
(m) AMENDMENT RELATED
TO SECTION 412 OF
THE ACT.—
Subparagraph (B) of section 954(c)(4) is amended by adding at
the end the following: ‘‘If a controlled foreign corporation is treated
as owning a capital or profits interest in a partnership under
constructive ownership rules similar to the rules of section 958(b),
the controlled foreign corporation shall be treated as owning such
interest directly for purposes of this subparagraph.’’.
(n) AMENDMENTS RELATED
TO SECTION 413 OF
THE ACT.—
(1) Subsection (b) of section 532 is amended by striking
paragraph (2) and redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively.
(2) Subsection (b) of section 535 is amended by adding
at the end the following new paragraph:
‘‘(10) CONTROLLED FOREIGN CORPORATIONS.—There shall be
allowed as a deduction the amount of the corporation’s income
for the taxable year which is included in the gross income
of a United States shareholder under section 951(a). In the
case of any corporation the accumulated taxable income of
which would (but for this sentence) be determined without
allowance of any deductions, the deduction under this para-
graph shall be allowed and shall be appropriately adjusted
to take into account any deductions which reduced such inclu-
sion.’’.
(3)(A) Section 6683 is repealed.
(B) The table of sections for part I of subchapter B of
chapter 68 is amended by striking the item relating to section
6683.
(o) AMENDMENT RELATED
TO SECTION 415 OF
THE ACT.—
Subparagraph (D) of section 904(d)(2) is amended by inserting
‘‘as in effect before its repeal’’ after ‘‘section 954(f)’’.
(p) AMENDMENTS RELATED
TO SECTION 418 OF
THE ACT.—
(1) The second sentence of section 897(h)(1) is amended—
(A) by striking ‘‘any distribution’’ and all that follows
through ‘‘any class of stock’’ and inserting ‘‘any distribution
by a real estate investment trust with respect to any class
of stock’’, and
(B) by striking ‘‘the taxable year’’ and inserting ‘‘the
1-year period ending on the date of the distribution’’.
(2) Subsection (c) of section 418 of the American Jobs
Creation Act of 2004 is amended to read as follows:
‘‘(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to—
‘‘(1) any distribution by a real estate investment trust
which is treated as a deduction for a taxable year of such
trust beginning after the date of the enactment of this Act,
and
26 USC 857 note.
26 USC 954.
Applicability.
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‘‘(2) any distribution by a real estate investment trust
made after such date which is treated as a deduction under
section 860 for a taxable year of such trust beginning on or
before such date.’’.
(q) AMENDMENTS RELATED TO SECTION 422 OF THE ACT.—
(1) Subparagraph (B) of section 965(a)(2) is amended by
inserting ‘‘from another controlled foreign corporation in such
chain of ownership’’ before ‘‘, but only to the extent’’.
(2) Subparagraph (A) of section 965(b)(2) is amended by
inserting ‘‘cash’’ before ‘‘dividends’’.
(3) Paragraph (3) of section 965(b) is amended by adding
at the end the following: ‘‘The Secretary may prescribe such
regulations as may be necessary or appropriate to prevent
the avoidance of the purposes of this paragraph, including
regulations which provide that cash dividends shall not be
taken into account under subsection (a) to the extent such
dividends are attributable to the direct or indirect transfer
(including through the use of intervening entities or capital
contributions) of cash or other property from a related person
(as so defined) to a controlled foreign corporation.’’.
(4) Paragraph (1) of section 965(c) is amended to read
as follows:
‘‘(1) 
APPLICABLE
FINANCIAL
STATEMENT.—The 
term
‘applicable financial statement’ means—
‘‘(A) with respect to a United States shareholder which
is required to file a financial statement with the Securities
and Exchange Commission (or which is included in such
a statement so filed by another person), the most recent
audited annual financial statement (including the notes
which form an integral part of such statement) of such
shareholder (or which includes such shareholder)—
‘‘(i) which was so filed on or before June 30, 2003,
and
‘‘(ii) which was certified on or before June 30,
2003, as being prepared in accordance with generally
accepted accounting principles, and
‘‘(B) with respect to any other United States share-
holder, the most recent audited financial statement
(including the notes which form an integral part of such
statement) of such shareholder (or which includes such
shareholder)—
‘‘(i) which was certified on or before June 30, 2003,
as being prepared in accordance with generally
accepted accounting principles, and
‘‘(ii) which is used for the purposes of a statement
or report—
‘‘(I) to creditors,
‘‘(II) to shareholders, or
‘‘(III) for any other substantial nontax pur-
pose.’’.
(5) Paragraph (2) of section 965(d) is amended by striking
‘‘properly allocated and apportioned’’ and inserting ‘‘directly
allocable’’.
(6) Subsection (d) of section 965 is amended by adding
at the end the following new paragraph:
26 USC 965.
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‘‘(4) COORDINATION WITH SECTION 78.—Section 78 shall not
apply to any tax which is not allowable as a credit under
section 901 by reason of this subsection.’’.
(7) The last sentence of section 965(e)(1) is amended by
inserting ‘‘which are imposed by foreign countries and posses-
sions of the United States and are’’ after ‘‘taxes’’.
(8) Subsection (f) of section 965 is amended by inserting
‘‘on or’’ before ‘‘before the due date’’.
(r) AMENDMENTS RELATED TO SECTION 501 OF THE ACT.—
(1) Subparagraph (A) of section 164(b)(5) is amended to
read as follows:
‘‘(A) ELECTION
TO
DEDUCT
STATE
AND
LOCAL
SALES
TAXES IN LIEU OF STATE AND LOCAL INCOME TAXES.—At
the election of the taxpayer for the taxable year, subsection
(a) shall be applied—
‘‘(i) without regard to the reference to State and
local income taxes, and
‘‘(ii) as if State and local general sales taxes were
referred to in a paragraph thereof.’’.
(2) Clause (ii) of section 56(b)(1)(A) is amended by inserting
‘‘or clause (ii) of section 164(b)(5)(A)’’ before the period at the
end.
(s) AMENDMENTS RELATED TO SECTION 708 OF THE ACT.—Sec-
tion 708 of the American Jobs Creation Act of 2004 is amended—
(1) in subsection (a), by striking ‘‘contract commencement
date’’ and inserting ‘‘construction commencement date’’, and
(2) by redesignating subsection (d) as subsection (e) and
inserting after subsection (c) the following new subsection:
‘‘(d) CERTAIN ADJUSTMENTS NOT
TO APPLY.—Section 481 of
the Internal Revenue Code of 1986 shall not apply with respect
to any change in the method of accounting which is required by
this section.’’.
(t) AMENDMENT RELATED TO SECTION 710 OF THE ACT.—Clause
(i) of section 45(c)(7)(A) is amended by striking ‘‘synthetic’’.
(u) AMENDMENT RELATED TO SECTION 801 OF THE ACT.—Para-
graph (3) of section 7874(a) is amended to read as follows:
‘‘(3) COORDINATION WITH SUBSECTION (b).—A corporation
which is treated as a domestic corporation under subsection
(b) shall not be treated as a surrogate foreign corporation
for purposes of paragraph (2)(A).’’.
(v) AMENDMENTS RELATED TO SECTION 804 OF THE ACT.—
(1) Subparagraph (C) of section 877(g)(2) is amended by
striking ‘‘section 7701(b)(3)(D)(ii)’’ and inserting ‘‘section
7701(b)(3)(D)’’.
(2) Subsection (n) of section 7701 is amended to read as
follows:
‘‘(n) SPECIAL RULES FOR DETERMINING WHEN AN INDIVIDUAL
IS NO LONGER A UNITED STATES CITIZEN OR LONG-TERM RESI-
DENT.—For purposes of this chapter—
‘‘(1) UNITED STATES CITIZENS.—An individual who would
(but for this paragraph) cease to be treated as a citizen of
the United States shall continue to be treated as a citizen
of the United States until such individual—
‘‘(A) gives notice of an expatriating act (with the req-
uisite intent to relinquish citizenship) to the Secretary
of State, and
26 USC 460 note.
Applicability.
26 USC 965.
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‘‘(B) provides a statement in accordance with section
6039G (if such a statement is otherwise required).
‘‘(2) LONG-TERM
RESIDENTS.—A long-term resident (as
defined in section 877(e)(2)) who would (but for this paragraph)
be described in section 877(e)(1) shall be treated as a lawful
permanent resident of the United States and as not described
in section 877(e)(1) until such individual—
‘‘(A) gives notice of termination of residency (with the
requisite intent to terminate residency) to the Secretary
of Homeland Security, and
‘‘(B) provides a statement in accordance with section
6039G (if such a statement is otherwise required).’’.
(w) AMENDMENT RELATED TO SECTION 811 OF THE ACT.—Sub-
section (c) of section 811 of the American Jobs Creation Act of
2004 is amended by inserting ‘‘and which were not filed before
such date’’ before the period at the end.
(x) AMENDMENTS RELATED TO SECTION 812 OF THE ACT.—
(1) Subsection (b) of section 6662 is amended by adding
at the end the following new sentence: ‘‘Except as provided
in paragraph (1) or (2)(B) of section 6662A(e), this section
shall not apply to the portion of any underpayment which
is attributable to a reportable transaction understatement on
which a penalty is imposed under section 6662A.’’.
(2) Paragraph (2) of section 6662A(e) is amended to read
as follows:
‘‘(2) COORDINATION WITH OTHER PENALTIES.—
‘‘(A) COORDINATION WITH FRAUD PENALTY.—This sec-
tion shall not apply to any portion of an understatement
on which a penalty is imposed under section 6663.
‘‘(B) 
COORDINATION
WITH
GROSS
VALUATION
MISSTATEMENT PENALTY.—This section shall not apply to
any portion of an understatement on which a penalty is
imposed under section 6662 if the rate of the penalty is
determined under section 6662(h).’’.
(3) Subsection (f) of section 812 of the American Jobs Cre-
ation Act of 2004 is amended to read as follows:
‘‘(f) EFFECTIVE DATES.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the amendments made by this section shall apply to taxable
years ending after the date of the enactment of this Act.
‘‘(2) DISQUALIFIED OPINIONS.—Section 6664(d)(3)(B) of the
Internal Revenue Code of 1986 (as added by subsection (c))
shall not apply to the opinion of a tax advisor if—
‘‘(A) the opinion was provided to the taxpayer before
the date of the enactment of this Act,
‘‘(B) the opinion relates to one or more transactions
all of which were entered into before such date, and
‘‘(C) the tax treatment of items relating to each such
transaction was included on a return or statement filed
by the taxpayer before such date.’’.
(y) AMENDMENT RELATED
TO SECTION 814 OF
THE ACT.—
Subparagraph (B) of section 6501(c)(10) is amended by striking
‘‘(as defined in section 6111)’’.
(z) AMENDMENT RELATED TO SECTION 815 OF THE ACT.—Para-
graph (1) of section 6112(b) is amended by inserting ‘‘(or was
required to maintain a list under subsection (a) as in effect before
26 USC 6662
note.
26 USC 6662.
26 USC 6707A
note.
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the enactment of the American Jobs Creation Act of 2004)’’ after
‘‘a list under subsection (a)’’.
(aa) AMENDMENTS RELATED TO SECTION 832 OF THE ACT.—
(1) Subsection (e) of section 853 is amended to read as
follows:
‘‘(e) TREATMENT OF CERTAIN TAXES NOT ALLOWED AS A CREDIT
UNDER SECTION 901.—This section shall not apply to any tax with
respect to which the regulated investment company is not allowed
a credit under section 901 by reason of subsection (k) or (l) of
such section.’’.
(2) Clause (i) of section 901(l)(2)(C) is amended by striking
‘‘if such security were stock’’.
(bb) AMENDMENTS RELATED TO SECTION 833 OF THE ACT.—
(1) Subsection (a) of section 734 is amended by inserting
‘‘with respect to such distribution’’ before the period at the
end.
(2) So much of subsection (b) of section 734 as precedes
paragraph (1) is amended to read as follows:
‘‘(b) METHOD OF ADJUSTMENT.—In the case of a distribution
of property to a partner by a partnership with respect to which
the election provided in section 754 is in effect or with respect
to which there is a substantial basis reduction, the partnership
shall—’’.
(cc) AMENDMENT RELATED TO SECTION 835 OF THE ACT.—Para-
graph (3) of section 860G(a) is amended—
(1) in subparagraph (A)(iii)(I), by striking ‘‘the obligation’’
and inserting ‘‘a reverse mortgage loan or other obligation’’,
and
(2) by striking all that follows subparagraph (C) and
inserting the following:
‘‘For purposes of subparagraph (A), any obligation secured by
stock held by a person as a tenant-stockholder (as defined
in section 216) in a cooperative housing corporation (as so
defined) shall be treated as secured by an interest in real
property. For purposes of subparagraph (A), any obligation
originated by the United States or any State (or any political
subdivision, agency, or instrumentality of the United States
or any State) shall be treated as principally secured by an
interest in real property if more than 50 percent of such obliga-
tions which are transferred to, or purchased by, the REMIC
are principally secured by an interest in real property (deter-
mined without regard to this sentence).’’.
(dd) AMENDMENTS RELATED TO SECTION 836 OF THE ACT.—
(1) Paragraph (1) of section 334(b) is amended by striking
‘‘except that’’ and all that follows and inserting ‘‘except that,
in the hands of such distributee—
‘‘(A) the basis of such property shall be the fair market
value of the property at the time of the distribution in
any case in which gain or loss is recognized by the liqui-
dating corporation with respect to such property, and
‘‘(B) the basis of any property described in section
362(e)(1)(B) shall be the fair market value of the property
at the time of the distribution in any case in which such
distributee’s aggregate adjusted basis of such property
would (but for this subparagraph) exceed the fair market
value of such property immediately after such liquidation.’’.
26 USC 853.
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(2) Clause (ii) of section 362(e)(2)(C) is amended to read
as follows:
‘‘(ii) ELECTION.—Any election under clause (i) shall
be made at such time and in such form and manner
as the Secretary may prescribe, and, once made, shall
be irrevocable.’’.
(ee) AMENDMENT RELATED TO SECTION 840 OF THE ACT.—Sub-
section (d) of section 121 is amended—
(1) by redesignating the paragraph (10) relating to property
acquired from a decedent as paragraph (11) and by moving
such paragraph to the end of such subsection, and
(2) by amending the paragraph (10) relating to property
acquired in like-kind exchange to read as follows:
‘‘(10) PROPERTY ACQUIRED IN LIKE-KIND EXCHANGE.—If a
taxpayer acquires property in an exchange with respect to
which gain is not recognized (in whole or in part) to the tax-
payer under subsection (a) or (b) of section 1031, subsection
(a) shall not apply to the sale or exchange of such property
by such taxpayer (or by any person whose basis in such property
is determined, in whole or in part, by reference to the basis
in the hands of such taxpayer) during the 5-year period begin-
ning with the date of such acquisition.’’.
(ff) AMENDMENT RELATED TO SECTION 849 OF THE ACT.—Sub-
section (a) of section 849 of the American Jobs Creation Act of
2004 is amended by inserting ‘‘, and in the case of property treated
as tax-exempt use property other than by reason of a lease, to
property acquired after March 12, 2004’’ before the period at the
end.
(gg) AMENDMENT RELATED
TO SECTION 884 OF
THE ACT.—
Subparagraph (B) of section 170(f)(12) is amended by adding at
the end the following new clauses:
‘‘(v) Whether the donee organization provided any
goods or services in consideration, in whole or in part,
for the qualified vehicle.
‘‘(vi) A description and good faith estimate of the
value of any goods or services referred to in clause
(v) or, if such goods or services consist solely of intan-
gible religious benefits (as defined in paragraph (8)(B)),
a statement to that effect.’’.
(hh) AMENDMENTS RELATED TO SECTION 885 OF THE ACT.—
(1) Paragraph (2) of section 26(b) is amended by striking
‘‘and’’ at the end of subparagraph (R), by striking the period
at the end of subparagraph (S) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(T) subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A
(relating to interest and additional tax with respect to
certain deferred compensation).’’.
(2) Clause (ii) of section 409A(a)(4)(C) is amended by
striking ‘‘first’’.
(3)(A) Notwithstanding section 885(d)(1) of the American
Jobs Creation Act of 2004, subsection (b) of section 409A of
the Internal Revenue Code of 1986 shall take effect on January
1, 2005.
(B) Not later than 90 days after the date of the enactment
of this Act, the Secretary of the Treasury shall issue guidance
under which a nonqualified deferred compensation plan which
is in violation of the requirements of section 409A(b) of such
Deadline.
Guidance.
Effective date.
26 USC 409A
note.
26 USC 470 note.
26 USC 362.
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Code shall be treated as not having violated such requirements
if such plan comes into conformance with such requirements
during such limited period as the Secretary may specify in
such guidance.
(4) Subsection (f) of section 885 of the American Jobs Cre-
ation Act of 2004 is amended by striking ‘‘December 31, 2004’’
the first place it appears and inserting ‘‘January 1, 2005’’.
(ii) AMENDMENT RELATED TO SECTION 888 OF THE ACT.—Para-
graph (2) of section 1092(a) is amended by striking the last sentence
and adding at the end the following new subparagraph:
‘‘(C) REGULATIONS.—The Secretary shall prescribe such
regulations or other guidance as may be necessary or appro-
priate to carry out the purposes of this paragraph. Such
regulations or other guidance may specify the proper
methods for clearly identifying a straddle as an identified
straddle (and for identifying the positions comprising such
straddle), the rules for the application of this section to
a taxpayer which fails to comply with those identification
requirements, and the ordering rules in cases where a
taxpayer disposes (or otherwise ceases to be the holder)
of any part of any position which is part of an identified
straddle.’’.
(jj) AMENDMENTS RELATED
TO SECTION 898 OF
THE ACT.—
(1) Paragraph (3) of section 361(b) is amended by inserting
‘‘(reduced by the amount of the liabilities assumed (within
the meaning of section 357(c)))’’ before the period at the end.
(2) Paragraph (1) of section 357(d) is amended by inserting
‘‘section 361(b)(3),’’ after ‘‘section 358(h),’’.
(kk) AMENDMENT RELATED
TO SECTION 899 OF
THE ACT.—
Subparagraph (A) of section 351(g)(3) is amended by adding at
the end the following: ‘‘If there is not a real and meaningful likeli-
hood that dividends beyond any limitation or preference will actu-
ally be paid, the possibility of such payments will be disregarded
in determining whether stock is limited and preferred as to divi-
dends.’’.
(ll) AMENDMENT RELATED TO SECTION 902 OF THE ACT.—Para-
graph (1) of section 709(b) is amended by striking ‘‘taxpayer’’ both
places it appears and inserting ‘‘partnership’’.
(mm) AMENDMENTS RELATED TO SECTION 907 OF THE ACT.—
Clause (ii) of section 274(e)(2)(B) is amended—
(1) in subclause (I), by inserting ‘‘or a related party to
the taxpayer’’ after ‘‘the taxpayer’’,
(2) in subclause (II), by inserting ‘‘(or such related party)’’
after ‘‘the taxpayer’’, and
(3) by adding at the end the following new flush sentence:
‘‘For purposes of this clause, a person is a related
party with respect to another person if such person
bears a relationship to such other person described
in section 267(b) or 707(b).’’.
(nn) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the American
Jobs Creation Act of 2004 to which they relate.
SEC. 404. AMENDMENTS RELATED TO THE WORKING FAMILIES TAX
RELIEF ACT OF 2004.
(a) AMENDMENT RELATED TO SECTION 201 OF THE ACT.—Sub-
section (e) of section 152 is amended to read as follows:
26 USC 26 note.
26 USC 1092.
26 USC 409A
note.
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‘‘(e) SPECIAL RULE FOR DIVORCED PARENTS, ETC.—
‘‘(1) IN
GENERAL.—Notwithstanding subsection (c)(1)(B),
(c)(4), or (d)(1)(C), if—
‘‘(A) a child receives over one-half of the child’s support
during the calendar year from the child’s parents—
‘‘(i) who are divorced or legally separated under
a decree of divorce or separate maintenance,
‘‘(ii) who are separated under a written separation
agreement, or
‘‘(iii) who live apart at all times during the last
6 months of the calendar year, and—
‘‘(B) such child is in the custody of 1 or both of the
child’s parents for more than one-half of the calendar year,
such child shall be treated as being the qualifying child
or qualifying relative of the noncustodial parent for a cal-
endar year if the requirements described in paragraph
(2) or (3) are met.
‘‘(2) EXCEPTION WHERE CUSTODIAL PARENT RELEASES CLAIM
TO EXEMPTION FOR THE YEAR.—For purposes of paragraph (1),
the requirements described in this paragraph are met with
respect to any calendar year if—
‘‘(A) the custodial parent signs a written declaration
(in such manner and form as the Secretary may by regula-
tions prescribe) that such custodial parent will not claim
such child as a dependent for any taxable year beginning
in such calendar year, and
‘‘(B) the noncustodial parent attaches such written dec-
laration to the noncustodial parent’s return for the taxable
year beginning during such calendar year.
‘‘(3) EXCEPTION FOR CERTAIN PRE-1985 INSTRUMENTS.—
‘‘(A) IN GENERAL .—For purposes of paragraph (1), the
requirements described in this paragraph are met with
respect to any calendar year if—
‘‘(i) a qualified pre-1985 instrument between the
parents applicable to the taxable year beginning in
such calendar year provides that the noncustodial
parent shall be entitled to any deduction allowable
under section 151 for such child, and
‘‘(ii) the noncustodial parent provides at least $600
for the support of such child during such calendar
year.
For purposes of this subparagraph, amounts expended for
the support of a child or children shall be treated as
received from the noncustodial parent to the extent that
such parent provided amounts for such support.
‘‘(B) QUALIFIED PRE-1985 INSTRUMENT.—For purposes
of this paragraph, the term ‘qualified pre-1985 instrument’
means any decree of divorce or separate maintenance or
written agreement—
‘‘(i) which is executed before January 1, 1985,
‘‘(ii) which on such date contains the provision
described in subparagraph (A)(i), and
‘‘(iii) which is not modified on or after such date
in a modification which expressly provides that this
paragraph shall not apply to such decree or agreement.
‘‘(4) CUSTODIAL PARENT AND NONCUSTODIAL PARENT.—For
purposes of this subsection—
Regulations.
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‘‘(A) CUSTODIAL PARENT.—The term ‘custodial parent’
means the parent having custody for the greater portion
of the calendar year.
‘‘(B) NONCUSTODIAL PARENT.—The term ‘noncustodial
parent’ means the parent who is not the custodial parent.
‘‘(5) EXCEPTION FOR MULTIPLE-SUPPORT AGREEMENT.—This
subsection shall not apply in any case where over one-half
of the support of the child is treated as having been received
from a taxpayer under the provision of subsection (d)(3).
‘‘(6) SPECIAL
RULE
FOR
SUPPORT
RECEIVED
FROM
NEW
SPOUSE OF PARENT.—For purposes of this subsection, in the
case of the remarriage of a parent, support of a child received
from the parent’s spouse shall be treated as received from
the parent.’’.
(b) AMENDMENT RELATED
TO SECTION 203 OF
THE ACT.—
Subparagraph (B) of section 21(b)(1) is amended by inserting ‘‘(as
defined in section 152, determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B))’’ after ‘‘dependent of the taxpayer’’.
(c) AMENDMENT RELATED
TO SECTION 207 OF
THE ACT.—
Subparagraph (A) of section 223(d)(2) is amended by inserting ‘‘,
determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)
thereof’’ after ‘‘section 152’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Working
Families Tax Relief Act of 2004 to which they relate.
SEC. 405. AMENDMENTS RELATED TO THE JOBS AND GROWTH TAX
RELIEF RECONCILIATION ACT OF 2003.
(a) AMENDMENTS RELATED TO SECTION 201 OF THE ACT.—
(1) Clause (ii) of section 168(k)(4)(B) is amended to read
as follows:
‘‘(ii) which is—
‘‘(I) acquired by the taxpayer after May 5,
2003, and before January 1, 2005, but only if no
written binding contract for the acquisition was
in effect before May 6, 2003, or
‘‘(II) acquired by the taxpayer pursuant to a
written binding contract which was entered into
after May 5, 2003, and before January 1, 2005,
and’’.
(2) Subparagraph (D) of section 1400L(b)(2) is amended
by striking ‘‘September 11, 2004’’ and inserting ‘‘January 1,
2005’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in section 201 of the Jobs and
Growth Tax Relief and Reconciliation Act of 2003.
SEC. 406. AMENDMENT RELATED TO THE VICTIMS OF TERRORISM TAX
RELIEF ACT OF 2001.
(a) AMENDMENT RELATED TO SECTION 201 OF THE ACT.—Para-
graph (17) of section 6103(l) is amended by striking ‘‘subsection
(f), (i)(7), or (p)’’ and inserting ‘‘subsection (f), (i)(8), or (p)’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in section 201 of the Victims of
Terrorism Tax Relief Act of 2001.
26 USC 6103
note.
26 USC 168 note.
26 USC 21 note.
26 USC 21.
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SEC. 407. AMENDMENTS RELATED TO THE ECONOMIC GROWTH AND
TAX RELIEF RECONCILIATION ACT OF 2001.
(a) AMENDMENTS RELATED TO SECTION 617 OF THE ACT.—
(1) Clause (ii) of section 402(g)(7)(A) is amended to read
as follows:
‘‘(ii) $15,000 reduced by the sum of—
‘‘(I) the amounts not included in gross income
for prior taxable years by reason of this paragraph,
plus
‘‘(II) the aggregate amount of designated Roth
contributions (as defined in section 402A(c)) for
prior taxable years, or’’.
(2) Subparagraph (A) of section 402(g)(1) is amended by
inserting ‘‘to’’ after ‘‘shall not apply’’.
(b) AMENDMENT RELATED
TO SECTION 632 OF
THE ACT.—
Subparagraph (C) of section 415(c)(7) is amended by striking ‘‘the
greater of $3,000’’ and all that follows and inserting ‘‘$3,000. This
subparagraph shall not apply with respect to any taxable year
to any individual whose adjusted gross income for such taxable
year (determined separately and without regard to community prop-
erty laws) exceeds $17,000.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001 to which they
relate.
SEC. 408. AMENDMENTS RELATED TO THE INTERNAL REVENUE
SERVICE RESTRUCTURING AND REFORM ACT OF 1998.
(a) AMENDMENTS RELATED TO SECTION 3415 OF THE ACT.—
(1) Paragraph (2) of section 7609(c) is amended by inserting
‘‘or’’ at the end of subparagraph (D), by striking ‘‘; or’’ at
the end of subparagraph (E) and inserting a period, and by
striking subparagraph (F).
(2) Subsection (c) of section 7609 is amended by redesig-
nating paragraph (3) as paragraph (4) and by inserting after
paragraph (2) the following new paragraph:
‘‘(3) JOHN
DOE
AND
CERTAIN
OTHER
SUMMONSES.—Sub-
section (a) shall not apply to any summons described in sub-
section (f) or (g).’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in section 3415 of the Internal
Revenue Service Restructuring and Reform Act of 1998.
SEC. 409. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF
1997.
(a) AMENDMENTS RELATED TO SECTION 1055 OF THE ACT.—
(1) The last sentence of section 6411(a) is amended by
striking ‘‘6611(f)(3)(B)’’ and inserting ‘‘6611(f)(4)(B)’’.
(2) Paragraph (4) of section 6601(d) is amended by striking
‘‘6611(f)(3)(A)’’ and inserting ‘‘6611(f)(4)(A)’’.
(b) AMENDMENT RELATED
TO SECTION 1112 OF
THE ACT.—
Subsection (c) of section 961 is amended to read as follows:
‘‘(c) BASIS ADJUSTMENTS IN STOCK HELD BY FOREIGN CORPORA-
TIONS.—Under regulations prescribed by the Secretary, if a United
States shareholder is treated under section 958(a)(2) as owning
stock in a controlled foreign corporation which is owned by another
controlled foreign corporation, then adjustments similar to the
Regulations.
26 USC 7609
note.
26 USC 402 note.
26 USC 402.
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adjustments provided by subsections (a) and (b) shall be made
to—
‘‘(1) the basis of such stock, and
‘‘(2) the basis of stock in any other controlled foreign cor-
poration by reason of which the United States shareholder
is considered under section 958(a)(2) as owning the stock
described in paragraph (1),
but only for the purposes of determining the amount included
under section 951 in the gross income of such United States share-
holder (or any other United States shareholder who acquires from
any person any portion of the interest of such United States share-
holder by reason of which such shareholder was treated as owning
such stock, but only to the extent of such portion, and subject
to such proof of identity of such interest as the Secretary may
prescribe by regulations). The preceding sentence shall not apply
with respect to any stock to which a basis adjustment applies
under subsection (a) or (b).’’.
(c) AMENDMENT RELATED
TO SECTION 1144 OF
THE ACT.—
Subparagraph (B) of section 6038B(a)(1) is amended by inserting
‘‘or’’ at the end.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Taxpayer
Relief Act of 1997 to which they relate.
SEC. 410. AMENDMENT RELATED TO THE OMNIBUS BUDGET REC-
ONCILIATION ACT OF 1990.
(a) AMENDMENT RELATED TO SECTION 11813 OF THE ACT.—
Subclause (I) of section 168(e)(3)(B)(vi) is amended by striking ‘‘if
‘solar and wind’ were substituted for ‘solar’ in clause (i) thereof’’
and inserting ‘‘if ‘solar or wind energy’ were substituted for ‘solar
energy’ in clause (i) thereof’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in section 11813 of the Omnibus
Budget Reconciliation Act of 1990.
SEC. 411. AMENDMENT RELATED TO THE OMNIBUS BUDGET REC-
ONCILIATION ACT OF 1987.
(a) AMENDMENT RELATED TO SECTION 10227 OF THE ACT.—
Section 1363(d) is amended by adding at the end the following
new paragraph:
‘‘(5) SPECIAL RULE.—Sections 1367(a)(2)(D) and 1371(c)(1)
shall not apply with respect to any increase in the tax imposed
by reason of this subsection.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in section 10227 of the Omnibus
Budget Reconciliation Act of 1987.
SEC. 412. CLERICAL CORRECTIONS.
(a) Subparagraph (C) of section 2(b)(2) is amended by striking
‘‘subparagraph (C)’’ and inserting ‘‘subparagraph (B)’’.
(b) Paragraph (2) of section 25C(b) is amended by striking
‘‘subsection (c)(3)(B)’’ and inserting ‘‘subsection (c)(2)(B)’’.
(c) Subparagraph (E) of section 26(b)(2) is amended by striking
‘‘section 530(d)(3)’’ and inserting ‘‘section 530(d)(4)’’.
(d) Subparagraph (A) of section 30B(g)(2) and subparagraph
(A) of section 30C(d)(2) are each amended by striking ‘‘regular
tax’’ and inserting ‘‘regular tax liability (as defined in section 26(b))’’.
26 USC 1363
note.
26 USC 168 note.
26 USC 961 note.
26 USC 6038B.
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(e) The table of sections for subpart B of part IV of subchapter
A of chapter 1 is amended by striking the item relating to section
30C and inserting the following new item:
‘‘Sec. 30C. Alternative fuel vehicle refueling property credit.’’.
(f)(1) Subclause (II) of section 38(c)(2)(A)(ii) is amended by
striking ‘‘or the New York Liberty Zone business employee credit
or the specified credits’’ and inserting ‘‘, the New York Liberty
Zone business employee credit, and the specified credits’’.
(2) Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking
‘‘or the specified credits’’ and inserting ‘‘and the specified credits’’.
(3) Subparagraph (B) of section 38(c)(4) is amended—
(A) by striking ‘‘includes’’ and inserting ‘‘means’’, and
(B) by inserting ‘‘and’’ at the end of clause (i).
(g)(1) Subparagraph (A) of section 39(a)(1) is amended by
striking ‘‘each of the 1 taxable years’’ and inserting ‘‘the taxable
year’’.
(2) Subparagraph (B) of section 39(a)(3) is amended to read
as follows:
‘‘(B) paragraph (1) shall be applied by substituting
‘each of the 5 taxable years’ for ‘the taxable year’ in
subparagraph (A) thereof, and’’.
(h) Subparagraph (B) of section 40A(b)(5) is amended by
striking ‘‘(determined without regard to the last sentence of sub-
section (d)(2))’’.
(i) Paragraph (5) of section 43(c) is amended to read as follows:
‘‘(5) ALASKA
NATURAL
GAS.—For purposes of paragraph
(1)(D)—
‘‘(A) IN
GENERAL.—The term ‘Alaska natural gas’
means natural gas entering the Alaska natural gas pipeline
(as defined in section 168(i)(16) (determined without regard
to subparagraph (B) thereof)) which is produced from a
well—
‘‘(i) located in the area of the State of Alaska
lying north of 64 degrees North latitude, determined
by excluding the area of the Alaska National Wildlife
Refuge (including the continental shelf thereof within
the meaning of section 638(1)), and
‘‘(ii) pursuant to the applicable State and Federal
pollution prevention, control, and permit requirements
from such area (including the continental shelf thereof
within the meaning of section 638(1)).
‘‘(B) NATURAL GAS.—The term ‘natural gas’ has the
meaning given such term by section 613A(e)(2).’’.
(j) Subsection (d) of section 45 is amended—
(1) in paragraph (8) by striking ‘‘The term’’ and inserting
‘‘In the case of a facility that produces refined coal, the term’’,
and
(2) in paragraph (10) by striking ‘‘The term’’ and inserting
‘‘In the case of a facility that produces Indian coal, the term’’.
(k) Paragraph (2) of section 45I(a) is amended by striking
‘‘qualified credit oil production’’ and inserting ‘‘qualified crude oil
production’’.
(l) Subsection (g) of section 45K, as redesignated by section
1322 of the Energy Policy Act of 2005, is amended—
(1) in the matter preceding paragraph (1), by striking ‘‘sub-
section (f)’’ and inserting ‘‘subsection (e)’’, and
Ante, p. 1011.
Applicability.
26 USC 38.
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(2) in paragraph (2)(C), by striking ‘‘subsection (g)’’ and
inserting ‘‘subsection (f)’’.
(m) Paragraph (1) of section 48(a), as amended by section
1336 of the Energy Policy Act of 2005, is amended by striking
‘‘paragraph (1)(B) or (2)(B) of subsection (d)’’ and inserting ‘‘para-
graphs (1)(B) and (2)(B) of subsection (c)’’.
(n) Subparagraph (A) of section 48(a)(3) is amended—
(1) by redesignating clause (iii) (relating to qualified fuel
cell property or qualified microturbine property), as added by
section 1336 of the Energy Policy Act of 2005, as clause (iv)
and by moving such clause to the end of such subparagraph,
and
(2) by striking ‘‘or’’ at the end of clause (ii).
(o) Subparagraph (E) of section 50(a)(2) is amended by striking
‘‘section 48(a)(5)’’ and inserting ‘‘section 48(b)’’.
(p)(1) Paragraph (3) of section 55(c) is amended by inserting
‘‘30B(g)(2), 30C(d)(2),’’ after ‘‘30(b)(3),’’.
(2) Section 1341(b)(3) of the Energy Policy Act of 2005 is
repealed.
(3) Section 1342(b)(3) of the Energy Policy Act of 2005 is
repealed.
(q)(1) Subsection (a) of section 62 is amended—
(A) by redesignating paragraph (19) (relating to costs
involving discrimination suits, etc.), as added by section 703
of the American Jobs Creation Act of 2004, as paragraph (20),
and
(B) by moving such paragraph after paragraph (19)
(relating to health savings accounts).
(2) Subsection (e) of section 62 is amended by striking ‘‘sub-
section (a)(19)’’ and inserting ‘‘subsection (a)(20)’’.
(r) Paragraph (3) of section 167(f) is amended by striking ‘‘sec-
tion 197(e)(7)’’ and inserting ‘‘section 197(e)(6)’’.
(s) Subparagraph (D) of section 168(i)(15) is amended by
striking ‘‘This paragraph shall not apply to’’ and inserting ‘‘Such
term shall not include’’.
(t) Paragraph (2) of section 221(d) is amended by striking
‘‘this Act’’ and inserting ‘‘the Taxpayer Relief Act of 1997’’.
(u) Paragraph (8) of section 318(b) is amended by striking
‘‘section 6038(d)(2)’’ and inserting ‘‘section 6038(e)(2)’’.
(v) Subparagraph (B) of section 332(d)(1) is amended by striking
‘‘distribution to which section 301 applies’’ and inserting ‘‘distribu-
tion of property to which section 301 applies’’.
(w) Subparagraph (B) of section 403(b)(9) is amended by
inserting ‘‘or’’ before ‘‘a convention’’.
(x)(1) Clause (i) of section 412(m)(4)(B) is amended by striking
‘‘subsection (c)’’ and inserting ‘‘subsection (d)’’.
(2) Clause (i) of section 302(e)(4)(B) of the Employee Retirement
Income Security Act of 1974 is amended by striking ‘‘subsection
(c)’’ and inserting ‘‘subsection (d)’’.
(y) Paragraph (1) of section 415(l) is amended by striking ‘‘indi-
vidual medical account’’ and inserting ‘‘individual medical benefit
account’’.
(z) The matter following clause (iv) of section 415(n)(3)(C) is
amended by striking ‘‘clauses’’ and inserting ‘‘clause’’.
(aa) Subparagraph (C) of section 461(i)(3) is amended by
striking 
‘‘section 
6662(d)(2)(C)(iii)’’ 
and 
inserting 
‘‘section
6662(d)(2)(C)(ii)’’.
29 USC 1082.
Repeal.
Ante, p. 1049.
Repeal.
Ante, p. 1038.
26 USC 50.
Ante, p. 1036.
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PUBLIC LAW 109–135—DEC. 21, 2005
(bb) Paragraph (12) of section 501(c) is amended—
(1) by striking ‘‘subparagraph (C)(iii)’’ in subparagraph (F)
and inserting ‘‘subparagraph (C)(iv)’’, and
(2) by striking ‘‘subparagraph (C)(iv)’’ in subparagraph (G)
and inserting ‘‘subparagraph (C)(v)’’.
(cc) Clause (ii) of section 501(c)(22)(B) is amended by striking
‘‘clause (ii) of paragraph (21)(B)’’ and inserting ‘‘clause (ii) of para-
graph (21)(D)’’.
(dd) Paragraph (1) of section 512(b) is amended by striking
‘‘section 512(a)(5)’’ and inserting ‘‘subsection (a)(5)’’.
(ee)(1) Subsection (b) of section 512 is amended—
(A) by redesignating paragraph (18) (relating to the treat-
ment of gain or loss on sale or exchange of certain brownfield
sites), as added by section 702 of the American Jobs Creation
Act of 2004, as paragraph (19), and
(B) by moving such paragraph to the end of such subsection.
(2) Subparagraph (E) of section 514(b)(1) is amended by striking
‘‘section 512(b)(18)’’ and inserting ‘‘section 512(b)(19)’’.
(3) Paragraph (6) of section 529(c) is amended by striking
‘‘education individual retirement account’’ and inserting ‘‘Coverdell
education savings account’’.
(ff)(1) Subsection (b) of section 530 is amended by striking
paragraph (3) and by redesignating paragraphs (4) and (5) as para-
graphs (3) and (4), respectively.
(2) Clause (ii) of section 530(b)(2)(A) is amended by striking
‘‘paragraph (4)’’ and inserting ‘‘paragraph (3)’’.
(gg) Subparagraph (H) of section 613(c)(4) is amended by
inserting ‘‘(including in situ retorting)’’ after ‘‘and retorting’’.
(hh) Subparagraph (A) of section 856(g)(5) is amended by
striking ‘‘subsection (c)(6) or (c)(7) of section 856’’ and inserting
‘‘paragraph (2), (3), or (4) of subsection (c)’’.
(ii) Paragraph (6) of section 857(b) is amended—
(1) in subparagraph (E), by striking ‘‘subparagraph (C)’’
and inserting ‘‘subparagraphs (C) and (D)’’, and
(2) in subparagraph (F)—
(A) by striking ‘‘subparagraph (C) of this paragraph’’
and inserting ‘‘subparagraph (C) or (D)’’, and
(B) by striking ‘‘subparagraphs (C) and (D)’’ and
inserting ‘‘subparagraphs (C), (D), and (E)’’.
(jj) Subparagraph (C) of section 881(e)(1) is amended by
inserting ‘‘interest-related dividend received by a controlled foreign
corporation’’ after ‘‘shall apply to any’’.
(kk) Clause (ii) of section 952(c)(1)(B) is amended—
(1) by striking ‘‘clause (iii)(III) or (IV)’’ and inserting ‘‘sub-
clause (II) or (III) of clause (iii)’’, and
(2) by striking ‘‘clause (iii)(II)’’ and inserting ‘‘clause (iii)(I)’’.
(ll) Clause (i) of section 954(c)(1)(C) is amended by striking
‘‘paragraph (4)(A)’’ and inserting ‘‘paragraph (5)(A)’’.
(mm) Subparagraph (F) of section 954(c)(1) is amended by
striking ‘‘Net income from notional principal contracts.’’ after
‘‘Income from notional principal contracts.—’’.
(nn) Paragraph (23) of section 1016(a) is amended by striking
‘‘1045(b)(4)’’ and inserting ‘‘1045(b)(3)’’.
(oo) Paragraph (1) of section 1256(f) is amended by striking
‘‘subsection (e)(2)(C)’’ and inserting ‘‘subsection (e)(2)’’.
26 USC 501.
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PUBLIC LAW 109–135—DEC. 21, 2005
(pp) The matter preceding clause (i) of section 1031(h)(2)(B)
is amended by striking ‘‘subparagraph’’ and inserting ‘‘subpara-
graphs’’.
(qq) Paragraphs (1) and (2) of section 1375(d) are each amended
by striking ‘‘subchapter C’’ and inserting ‘‘accumulated’’.
(rr) Each of the following provisions are amended by striking
‘‘General Accounting Office’’ each place it appears therein and
inserting ‘‘Government Accountability Office’’:
(1) Clause (ii) of section 1400E(c)(4)(A).
(2) Paragraph (1) of section 6050M(b).
(3) Subparagraphs (A), (B)(i), and (B)(ii) of section
6103(i)(8).
(4) Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section
6103(p).
(5) Subsection (e) of section 8021.
(ss)(1) Clause (ii) of section 1400L(b)(2)(C) is amended by
striking 
‘‘section 
168(k)(2)(C)(i)’’ 
and 
inserting 
‘‘section
168(k)(2)(D)(i)’’.
(2) Clause (iv) of section 1400L(b)(2)(C) is amended by striking
‘‘section 168(k)(2)(C)(iii)’’ and inserting ‘‘section 168(k)(2)(D)(iii)’’.
(3) Subparagraph (D) of section 1400L(b)(2) is amended by
striking ‘‘section 168(k)(2)(D)’’ and inserting ‘‘section 168(k)(2)(E)’’.
(4) Subparagraph (E) of section 1400L(b)(2) is amended by
striking ‘‘section 168(k)(2)(F)’’ and inserting ‘‘section 168(k)(2)(G)’’.
(5) Paragraph (5) of section 1400L(c) is amended by striking
‘‘section 168(k)(2)(C)(iii)’’ and inserting ‘‘section 168(k)(2)(D)(iii)’’.
(tt) Section 3401 is amended by redesignating subsection (h)
as subsection (g).
(uu) Paragraph (2) of section 4161(a) is amended to read as
follows:
‘‘(2) 3 PERCENT
RATE
OF
TAX
FOR
ELECTRIC
OUTBOARD
MOTORS.—In the case of an electric outboard motor, paragraph
(1) shall be applied by substituting ‘3 percent’ for ‘10 percent’.’’.
(vv) Subparagraph (C) of section 4261(e)(4) is amended by
striking ‘‘imposed subsection (b)’’ and inserting ‘‘imposed by sub-
section (b)’’.
(ww) Subsection (a) of section 4980D is amended by striking
‘‘plans’’ and inserting ‘‘plan’’.
(xx) The matter following clause (iii) of section 6045(e)(5)(A)
is amended by striking ‘‘for ‘$250,000’.’’ and all that follows through
‘‘to the Treasury.’’ and inserting ‘‘for ‘$250,000’. The Secretary may
by regulation increase the dollar amounts under this subparagraph
if the Secretary determines that such an increase will not materially
reduce revenues to the Treasury.’’.
(yy) Subsection (p) of section 6103 is amended—
(1) by striking so much of paragraph (4) as precedes
subparagraph (A) and inserting the following:
‘‘(4) SAFEGUARDS.—Any Federal agency described in sub-
section (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7), (j)(1), (2), or
(5), (k)(8), (l)(1), (2), (3), (5), (10), (11), (13), (14), or (17) or
(o)(1), the Government Accountability Office, the Congressional
Budget Office, or any agency, body, or commission described
in subsection (d), (i)(3)(B)(i) or 7(A)(ii), or (l)(6), (7), (8), (9),
(12), (15), or (16) or any other person described in subsection
(l)(16), (18), (19), or (20) shall, as a condition for receiving
returns or return information—’’,
(2) by amending paragraph (4)(F)(i) to read as follows:
Applicability.
26 USC 1031.
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PUBLIC LAW 109–135—DEC. 21, 2005
‘‘(i) in the case of an agency, body, or commission
described in subsection (d), (i)(3)(B)(i), or (l)(6), (7),
(8), (9), or (16), or any other person described in sub-
section (l)(16), (18), (19), or (20) return to the Secretary
such returns or return information (along with any
copies made therefrom) or make such returns or return
information undisclosable in any manner and furnish
a written report to the Secretary describing such
manner,’’, and
(3) by striking the first full sentence in the matter following
subparagraph (F) of paragraph (4) and inserting the following:
‘‘If the Secretary determines that any such agency, body, or
commission, including an agency or any other person described
in subsection (l)(16), (18), (19), or (20), or the Government
Accountability Office or the Congressional Budget Office, has
failed to, or does not, meet the requirements of this paragraph,
he may, after any proceedings for review established under
paragraph (7), take such actions as are necessary to ensure
such requirements are met, including refusing to disclose
returns or return information to such agency, body, or commis-
sion, including an agency or any other person described in
subsection (l)(16), (18), (19), or (20), or the Government Account-
ability Office or the Congressional Budget Office, until he deter-
mines that such requirements have been or will be met.’’.
(zz) Clause (ii) of section 6111(b)(1)(A) is amended by striking
‘‘advice or assistance’’ and inserting ‘‘aid, assistance, or advice’’.
(aaa) Paragraph (3) of section 6662(d) is amended by striking
‘‘the’’ before ‘‘1 or more’’.
SEC. 413. OTHER CORRECTIONS RELATED TO THE AMERICAN JOBS
CREATION ACT OF 2004.
(a) AMENDMENTS RELATED TO SECTION 233 OF THE ACT.—
(1) Clause (vi) of section 1361(c)(2)(A) is amended—
(A) by inserting ‘‘or a depository institution holding
company (as defined in section 3(w)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(w)(1))’’ after ‘‘a bank
(as defined in section 581)’’, and
(B) by inserting ‘‘or company’’ after ‘‘such bank’’.
(2) Paragraph (16) of section 4975(d) is amended—
(A) in subparagraph (A), by inserting ‘‘or a depository
institution holding company (as defined in section 3(w)(1)
of 
the 
Federal 
Deposit 
Insurance 
Act 
(12 
U.S.C.
1813(w)(1))’’ after ‘‘a bank (as defined in section 581)’’,
and
(B) in subparagraph (C), by inserting ‘‘or company’’
after ‘‘such bank’’.
(b) AMENDMENT RELATED
TO SECTION 237 OF
THE ACT.—
Subparagraph (F) of section 1362(d)(3) is amended by striking ‘‘a
bank holding company’’ and all that follows through ‘‘section 2(p)
of such Act)’’ and inserting ‘‘a depository institution holding com-
pany (as defined in section 3(w)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(w)(1))’’.
(c) AMENDMENTS RELATED TO SECTION 239 OF THE ACT.—Para-
graph (3) of section 1361(b) is amended—
(1) in subparagraph (A), by striking ‘‘and in the case of
information returns required under part III of subchapter A
of chapter 61’’, and
26 USC 6111.
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PUBLIC LAW 109–135—DEC. 21, 2005
LEGISLATIVE HISTORY—H.R. 4440:
CONGRESSIONAL RECORD, Vol. 151 (2005):
Dec. 7, considered and passed House.
Dec. 16, considered and passed Senate, amended. House concurred in Senate
amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 41 (2005):
Dec. 21, Presidential remarks.
(2) by adding at the end the following new subparagraph:
‘‘(E) INFORMATION RETURNS.—Except to the extent pro-
vided by the Secretary, this paragraph shall not apply
to part III of subchapter A of chapter 61 (relating to
information returns).’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the American
Jobs Creation Act of 2004 to which they relate.
Subtitle B—Trade Technicals
SEC. 421. TECHNICAL CORRECTIONS TO REGIONAL VALUE-CONTENT
METHODS FOR RULES OF ORIGIN UNDER PUBLIC LAW
109–53.
Section 203(c) of the Dominican Republic-Central America-
United States Free Trade Agreement Implementation Act (Public
Law 109–53; 19 U.S.C. 4033(c)) is amended as follows:
(1) In paragraph (2)(A), by striking all that follows ‘‘the
following build-down method:’’ and inserting the following:
AV–VNM
‘‘RVC = ———— × 100’’.
AV
(2) In paragraph (3)(A), by striking all that follows ‘‘the
following build-up method:’’ and inserting the following:
VOM
‘‘RVC = ———— × 100’’.
AV
(3) In paragraph (4)(A), by striking all that follows ‘‘the
following net cost method:’’ and inserting the following:
NC–VNM
‘‘RVC = ———— × 100’’.
NC
TITLE V—EMERGENCY REQUIREMENT
SEC. 501. EMERGENCY REQUIREMENT.
Any provision of this Act causing an effect on receipts, budget
authority, or outlays is designated as an emergency requirement
pursuant to section 402 of H. Con. Res. 95 (109th Congress).
Approved December 21, 2005.
26 USC 1361
note.
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