An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.
PL 115-97 (H.R.1), enacted 12/22/2017

131 STAT. 2054 
PUBLIC LAW 115–97—DEC. 22, 2017 
Public Law 115–97 
115th Congress 
An Act 
To provide for reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
TITLE I 
SECTION 11000. SHORT TITLE, ETC. 
(a) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 
provided, whenever in this title 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. 
Subtitle A—Individual Tax Reform 
PART I—TAX RATE REFORM 
SEC. 11001. MODIFICATION OF RATES. 
(a) IN GENERAL.—Section 1 is amended by adding at the end 
the following new subsection: 
‘‘(j) MODIFICATIONS FOR TAXABLE YEARS 2018 THROUGH 2025.— 
‘‘(1) IN GENERAL.—In the case of a taxable year beginning 
after December 31, 2017, and before January 1, 2026— 
‘‘(A) subsection (i) shall not apply, and 
‘‘(B) this section (other than subsection (i)) shall be 
applied as provided in paragraphs (2) through (6). 
‘‘(2) RATE TABLES.— 
‘‘(A) MARRIED INDIVIDUALS FILING JOINT RETURNS AND 
SURVIVING SPOUSES.—The following table shall be applied 
in lieu of the table contained in subsection (a): 
‘‘If taxable income is: 
The tax is: 
Not over $19,050 .............................................
10% of taxable income. 
Over $19,050 but not over $77,400 ................
$1,905, plus 12% of the excess over 
$19,050. 
Over $77,400 but not over $165,000 ..............
$8,907, plus 22% of the excess over 
$77,400. 
Over $165,000 but not over $315,000 ............
$28,179, plus 24% of the excess over 
$165,000. 
Over $315,000 but not over $400,000 ............
$64,179, plus 32% of the excess over 
$315,000. 
26 USC 1. 
Dec. 22, 2017 
[H.R. 1] 
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PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘If taxable income is: 
The tax is: 
Over $400,000 but not over $600,000 ............
$91,379, plus 35% of the excess over 
$400,000. 
Over $600,000 .................................................
$161,379, plus 37% of the excess over 
$600,000. 
‘‘(B) HEADS OF HOUSEHOLDS.—The following table shall 
be applied in lieu of the table contained in subsection 
(b): 
‘‘If taxable income is: 
The tax is: 
Not over $13,600 .............................................
10% of taxable income. 
Over $13,600 but not over $51,800 ................
$1,360, plus 12% of the excess over 
$13,600. 
Over $51,800 but not over $82,500 ................
$5,944, plus 22% of the excess over 
$51,800. 
Over $82,500 but not over $157,500 ..............
$12,698, plus 24% of the excess over 
$82,500. 
Over $157,500 but not over $200,000 ............
$30,698, plus 32% of the excess over 
$157,500. 
Over $200,000 but not over $500,000 ............
$44,298, plus 35% of the excess over 
$200,000. 
Over $500,000 .................................................
$149,298, plus 37% of the excess over 
$500,000. 
‘‘(C) UNMARRIED INDIVIDUALS OTHER THAN SURVIVING 
SPOUSES AND HEADS OF HOUSEHOLDS.—The following table 
shall be applied in lieu of the table contained in subsection 
(c): 
‘‘If taxable income is: 
The tax is: 
Not over $9,525 ...............................................
10% of taxable income. 
Over $9,525 but not over $38,700 ..................
$952.50, plus 12% of the excess over 
$9,525. 
Over $38,700 but not over $82,500 ................
$4,453.50, plus 22% of the excess 
over $38,700. 
Over $82,500 but not over $157,500 ..............
$14,089.50, plus 24% of the excess 
over $82,500. 
Over $157,500 but not over $200,000 ............
$32,089.50, plus 32% of the excess 
over $157,500. 
Over $200,000 but not over $500,000 ............
$45,689.50, plus 35% of the excess 
over $200,000. 
Over $500,000 .................................................
$150,689.50, plus 37% of the excess 
over $500,000. 
‘‘(D) 
MARRIED
INDIVIDUALS
FILING
SEPARATE 
RETURNS.—The following table shall be applied in lieu of 
the table contained in subsection (d): 
‘‘If taxable income is: 
The tax is: 
Not over $9,525 ...............................................
10% of taxable income. 
Over $9,525 but not over $38,700 ..................
$952.50, plus 12% of the excess over 
$9,525. 
Over $38,700 but not over $82,500 ................
$4,453.50, plus 22% of the excess 
over $38,700. 
Over $82,500 but not over $157,500 ..............
$14,089.50, plus 24% of the excess 
over $82,500. 
Over $157,500 but not over $200,000 ............
$32,089.50, plus 32% of the excess 
over $157,500. 
Over $200,000 but not over $300,000 ............
$45,689.50, plus 35% of the excess 
over $200,000. 
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131 STAT. 2056 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘If taxable income is: 
The tax is: 
Over $300,000 .................................................
$80,689.50, plus 37% of the excess 
over $300,000. 
‘‘(E) ESTATES AND TRUSTS.—The following table shall 
be applied in lieu of the table contained in subsection 
(e): 
‘‘If taxable income is: 
The tax is: 
Not over $2,550 ...............................................
10% of taxable income. 
Over $2,550 but not over $9,150 ....................
$255, plus 24% of the excess over 
$2,550. 
Over $9,150 but not over $12,500 ..................
$1,839, plus 35% of the excess over 
$9,150. 
Over $12,500 ...................................................
$3,011.50, plus 37% of the excess 
over $12,500. 
‘‘(F) REFERENCES TO RATE TABLES.—Any reference in 
this title to a rate of tax under subsection (c) shall be 
treated as a reference to the corresponding rate bracket 
under subparagraph (C) of this paragraph, except that 
the reference in section 3402(q)(1) to the third lowest rate 
of tax applicable under subsection (c) shall be treated as 
a reference to the fourth lowest rate of tax under subpara-
graph (C). 
‘‘(3) ADJUSTMENTS.— 
‘‘(A) NO ADJUSTMENT IN 2018.—The tables contained 
in paragraph (2) shall apply without adjustment for taxable 
years beginning after December 31, 2017, and before 
January 1, 2019. 
‘‘(B) SUBSEQUENT YEARS.—For taxable years beginning 
after December 31, 2018, the Secretary shall prescribe 
tables which shall apply in lieu of the tables contained 
in paragraph (2) in the same manner as under paragraphs 
(1) and (2) of subsection (f) (applied without regard to 
clauses (i) and (ii) of subsection (f)(2)(A)), except that in 
prescribing such tables— 
‘‘(i) subsection (f)(3) shall be applied by sub-
stituting ‘calendar year 2017’ for ‘calendar year 2016’ 
in subparagraph (A)(ii) thereof, 
‘‘(ii) subsection (f)(7)(B) shall apply to any 
unmarried individual other than a surviving spouse 
or head of household, and 
‘‘(iii) subsection (f)(8) shall not apply. 
‘‘(4) SPECIAL RULES FOR CERTAIN CHILDREN WITH UNEARNED 
INCOME.— 
‘‘(A) IN
GENERAL.—In the case of a child to whom 
subsection (g) applies for the taxable year, the rules of 
subparagraphs (B) and (C) shall apply in lieu of the rule 
under subsection (g)(1). 
‘‘(B) MODIFICATIONS TO APPLICABLE RATE BRACKETS.— 
In determining the amount of tax imposed by this section 
for the taxable year on a child described in subparagraph 
(A), the income tax table otherwise applicable under this 
subsection to the child shall be applied with the following 
modifications: 
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131 STAT. 2057 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) 24-PERCENT BRACKET.—The maximum taxable 
income which is taxed at a rate below 24 percent 
shall not be more than the sum of— 
‘‘(I) the earned taxable income of such child, 
plus 
‘‘(II) the minimum taxable income for the 24- 
percent bracket in the table under paragraph 
(2)(E) (as adjusted under paragraph (3)) for the 
taxable year. 
‘‘(ii) 35-PERCENT BRACKET.—The maximum taxable 
income which is taxed at a rate below 35 percent 
shall not be more than the sum of— 
‘‘(I) the earned taxable income of such child, 
plus 
‘‘(II) the minimum taxable income for the 35- 
percent bracket in the table under paragraph 
(2)(E) (as adjusted under paragraph (3)) for the 
taxable year. 
‘‘(iii) 37-PERCENT BRACKET.—The maximum taxable 
income which is taxed at a rate below 37 percent 
shall not be more than the sum of— 
‘‘(I) the earned taxable income of such child, 
plus 
‘‘(II) the minimum taxable income for the 37- 
percent bracket in the table under paragraph 
(2)(E) (as adjusted under paragraph (3)) for the 
taxable year. 
‘‘(C) COORDINATION WITH CAPITAL GAINS RATES.—For 
purposes of applying section 1(h) (after the modifications 
under paragraph (5)(A))— 
‘‘(i) the maximum zero rate amount shall not be 
more than the sum of— 
‘‘(I) the earned taxable income of such child, 
plus 
‘‘(II) the amount in effect under paragraph 
(5)(B)(i)(IV) for the taxable year, and 
‘‘(ii) the maximum 15-percent rate amount shall 
not be more than the sum of— 
‘‘(I) the earned taxable income of such child, 
plus 
‘‘(II) the amount in effect under paragraph 
(5)(B)(ii)(IV) for the taxable year. 
‘‘(D) EARNED TAXABLE INCOME.—For purposes of this 
paragraph, the term ‘earned taxable income’ means, with 
respect to any child for any taxable year, the taxable income 
of such child reduced (but not below zero) by the net 
unearned income (as defined in subsection (g)(4)) of such 
child. 
‘‘(5) APPLICATION OF CURRENT INCOME TAX BRACKETS TO 
CAPITAL GAINS BRACKETS.— 
‘‘(A) IN GENERAL.—Section 1(h)(1) shall be applied— 
‘‘(i) by substituting ‘below the maximum zero rate 
amount’ for ‘which would (without regard to this para-
graph) be taxed at a rate below 25 percent’ in subpara-
graph (B)(i), and 
‘‘(ii) by substituting ‘below the maximum 15-per-
cent rate amount’ for ‘which would (without regard 
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131 STAT. 2058 
PUBLIC LAW 115–97—DEC. 22, 2017 
to this paragraph) be taxed at a rate below 39.6 per-
cent’ in subparagraph (C)(ii)(I). 
‘‘(B) MAXIMUM
AMOUNTS
DEFINED.—For purposes of 
applying section 1(h) with the modifications described in 
subparagraph (A)— 
‘‘(i) MAXIMUM ZERO RATE AMOUNT.—The maximum 
zero rate amount shall be— 
‘‘(I) in the case of a joint return or surviving 
spouse, $77,200, 
‘‘(II) in the case of an individual who is a 
head of household (as defined in section 2(b)), 
$51,700, 
‘‘(III) in the case of any other individual (other 
than an estate or trust), an amount equal to 1⁄2 
of the amount in effect for the taxable year under 
subclause (I), and 
‘‘(IV) in the case of an estate or trust, $2,600. 
‘‘(ii) MAXIMUM
15-PERCENT
RATE
AMOUNT.—The 
maximum 15-percent rate amount shall be— 
‘‘(I) in the case of a joint return or surviving 
spouse, $479,000 (1⁄2 such amount in the case of 
a married individual filing a separate return), 
‘‘(II) in the case of an individual who is the 
head of a household (as defined in section 2(b)), 
$452,400, 
‘‘(III) in the case of any other individual (other 
than an estate or trust), $425,800, and 
‘‘(IV) in the case of an estate or trust, $12,700. 
‘‘(C) INFLATION ADJUSTMENT.—In the case of any tax-
able year beginning after 2018, each of the dollar amounts 
in clauses (i) and (ii) of subparagraph (B) shall be increased 
by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under subsection (f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
‘calendar year 2017’ for ‘calendar year 2016’ in 
subparagraph (A)(ii) thereof. 
If any increase under this subparagraph is not a multiple 
of $50, such increase shall be rounded to the next lowest 
multiple of $50. 
‘‘(6) SECTION 15 NOT TO APPLY.—Section 15 shall not apply 
to any change in a rate of tax by reason of this subsection.’’. 
(b) DUE DILIGENCE TAX PREPARER REQUIREMENT WITH RESPECT 
TO HEAD OF HOUSEHOLD FILING STATUS.—Subsection (g) of section 
6695 is amended to read as follows: 
‘‘(g) FAILURE TO BE DILIGENT IN DETERMINING ELIGIBILITY FOR 
CERTAIN TAX BENEFITS.—Any person who is a tax return preparer 
with respect to any return or claim for refund who fails to comply 
with due diligence requirements imposed by the Secretary by regu-
lations with respect to determining— 
‘‘(1) eligibility to file as a head of household (as defined 
in section 2(b)) on the return, or 
‘‘(2) eligibility for, or the amount of, the credit allowable 
by section 24, 25A(a)(1), or 32, 
shall pay a penalty of $500 for each such failure.’’. 
26 USC 6695. 
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131 STAT. 2059 
PUBLIC LAW 115–97—DEC. 22, 2017 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11002. INFLATION ADJUSTMENTS BASED ON CHAINED CPI. 
(a) IN GENERAL.—Subsection (f) of section 1 is amended by 
striking paragraph (3) and by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) COST-OF-LIVING
ADJUSTMENT.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The cost-of-living adjustment for 
any calendar year is the percentage (if any) by which— 
‘‘(i) the C-CPI-U for the preceding calendar year, 
exceeds 
‘‘(ii) the CPI for calendar year 2016, multiplied 
by the amount determined under subparagraph (B). 
‘‘(B) AMOUNT DETERMINED.—The amount determined 
under this clause is the amount obtained by dividing— 
‘‘(i) the C-CPI-U for calendar year 2016, by 
‘‘(ii) the CPI for calendar year 2016. 
‘‘(C) SPECIAL RULE FOR ADJUSTMENTS WITH A BASE YEAR 
AFTER 2016.—For purposes of any provision of this title 
which provides for the substitution of a year after 2016 
for ‘2016’ in subparagraph (A)(ii), subparagraph (A) shall 
be applied by substituting ‘the C-CPI-U for calendar year 
2016’ for ‘the CPI for calendar year 2016’ and all that 
follows in clause (ii) thereof.’’. 
(b) C-CPI-U.—Subsection (f) of section 1 is amended by striking 
paragraph (7), by redesignating paragraph (6) as paragraph (7), 
and by inserting after paragraph (5) the following new paragraph: 
‘‘(6) C-CPI-U.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘C-CPI-U’ means the 
Chained Consumer Price Index for All Urban Consumers 
(as published by the Bureau of Labor Statistics of the 
Department of Labor). The values of the Chained Consumer 
Price Index for All Urban Consumers taken into account 
for purposes of determining the cost-of-living adjustment 
for any calendar year under this subsection shall be the 
latest values so published as of the date on which such 
Bureau publishes the initial value of the Chained Con-
sumer Price Index for All Urban Consumers for the month 
of August for the preceding calendar year. 
‘‘(B) DETERMINATION FOR CALENDAR YEAR.—The C-CPI- 
U for any calendar year is the average of the C-CPI- 
U as of the close of the 12-month period ending on August 
31 of such calendar year.’’. 
(c) APPLICATION TO PERMANENT TAX TABLES.— 
(1) IN GENERAL.—Section 1(f)(2)(A) is amended to read as 
follows: 
‘‘(A) except as provided in paragraph (8), by increasing 
the minimum and maximum dollar amounts for each 
bracket for which a tax is imposed under such table by 
the cost-of-living adjustment for such calendar year, deter-
mined— 
‘‘(i) except as provided in clause (ii), by substituting 
‘1992’ for ‘2016’ in paragraph (3)(A)(ii), and 
‘‘(ii) in the case of adjustments to the dollar 
amounts at which the 36 percent rate bracket begins 
26 USC 1. 
26 USC 1 note. 
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131 STAT. 2060 
PUBLIC LAW 115–97—DEC. 22, 2017 
or at which the 39.6 percent rate bracket begins, by 
substituting ‘1993’ for ‘2016’ in paragraph (3)(A)(ii),’’. 
(2) CONFORMING AMENDMENTS.—Section 1(i) is amended— 
(A) by striking ‘‘for ‘1992’ in subparagraph (B)’’ in 
paragraph (1)(C) and inserting ‘‘for ‘2016’ in subparagraph 
(A)(ii)’’, and 
(B) by striking ‘‘subsection (f)(3)(B) shall be applied 
by substituting ‘2012’ for ‘1992’ ’’ in paragraph (3)(C) and 
inserting ‘‘subsection (f)(3)(A)(ii) shall be applied by sub-
stituting ‘2012’ for ‘2016’ ’’. 
(d) APPLICATION TO OTHER INTERNAL REVENUE CODE OF 1986 
PROVISIONS.— 
(1) The following sections are each amended by striking 
‘‘for ‘calendar year 1992’ in subparagraph (B)’’ and inserting 
‘‘for ‘calendar year 2016’ in subparagraph (A)(ii)’’: 
(A) Section 23(h)(2). 
(B) Paragraphs (1)(A)(ii) and (2)(A)(ii) of section 25A(h). 
(C) Section 25B(b)(3)(B). 
(D) Subsection (b)(2)(B)(ii)(II), and clauses (i) and (ii) 
of subsection (j)(1)(B), of section 32. 
(E) Section 36B(f)(2)(B)(ii)(II). 
(F) Section 41(e)(5)(C)(i). 
(G) Subsections (e)(3)(D)(ii) and (h)(3)(H)(i)(II) of sec-
tion 42. 
(H) Section 45R(d)(3)(B)(ii). 
(I) Section 55(d)(4)(A)(ii). 
(J) Section 62(d)(3)(B). 
(K) Section 63(c)(4)(B). 
(L) Section 125(i)(2)(B). 
(M) Section 135(b)(2)(B)(ii). 
(N) Section 137(f)(2). 
(O) Section 146(d)(2)(B). 
(P) Section 147(c)(2)(H)(ii). 
(Q) Section 151(d)(4)(B). 
(R) Section 179(b)(6)(A)(ii). 
(S) Subsections (b)(5)(C)(i)(II) and (g)(8)(B) of section 
219. 
(T) Section 220(g)(2). 
(U) Section 221(f)(1)(B). 
(V) Section 223(g)(1)(B). 
(W) Section 408A(c)(3)(D)(ii). 
(X) Section 430(c)(7)(D)(vii)(II). 
(Y) Section 512(d)(2)(B). 
(Z) Section 513(h)(2)(C)(ii). 
(AA) Section 831(b)(2)(D)(ii). 
(BB) Section 877A(a)(3)(B)(i)(II). 
(CC) Section 2010(c)(3)(B)(ii). 
(DD) Section 2032A(a)(3)(B). 
(EE) Section 2503(b)(2)(B). 
(FF) Section 4261(e)(4)(A)(ii). 
(GG) Section 5000A(c)(3)(D)(ii). 
(HH) Section 6323(i)(4)(B). 
(II) Section 6334(g)(1)(B). 
(JJ) Section 6601(j)(3)(B). 
(KK) Section 6651(i)(1). 
(LL) Section 6652(c)(7)(A). 
(MM) Section 6695(h)(1). 
26 USC 1. 
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131 STAT. 2061 
PUBLIC LAW 115–97—DEC. 22, 2017 
(NN) Section 6698(e)(1). 
(OO) Section 6699(e)(1). 
(PP) Section 6721(f)(1). 
(QQ) Section 6722(f)(1). 
(RR) Section 7345(f)(2). 
(SS) Section 7430(c)(1). 
(TT) Section 9831(d)(2)(D)(ii)(II). 
(2) Sections 41(e)(5)(C)(ii) and 68(b)(2)(B) are each 
amended— 
(A) by striking ‘‘1(f)(3)(B)’’ and inserting ‘‘1(f)(3)(A)(ii)’’, 
and 
(B) by striking ‘‘1992’’ and inserting ‘‘2016’’. 
(3) Section 42(h)(6)(G) is amended— 
(A) by striking ‘‘for ‘calendar year 1987’ ’’ in clause 
(i)(II) and inserting ‘‘for ‘calendar year 2016’ in subpara-
graph (A)(ii) thereof’’, and 
(B) by striking ‘‘if the CPI for any calendar year’’ 
and all that follows in clause (ii) and inserting ‘‘if the 
C-CPI-U for any calendar year (as defined in section 1(f)(6)) 
exceeds the C-CPI-U for the preceding calendar year by 
more than 5 percent, the C-CPI-U for the base calendar 
year shall be increased such that such excess shall never 
be taken into account under clause (i). In the case of 
a base calendar year before 2017, the C-CPI-U for such 
year shall be determined by multiplying the CPI for such 
year by the amount determined under section 1(f)(3)(B).’’. 
(4) Section 59(j)(2)(B) is amended by striking ‘‘for ‘1992’ 
in subparagraph (B)’’ and inserting ‘‘for ‘2016’ in subparagraph 
(A)(ii)’’. 
(5) Section 132(f)(6)(A)(ii) is amended by striking ‘‘for ‘cal-
endar year 1992’ ’’ and inserting ‘‘for ‘calendar year 2016’ in 
subparagraph (A)(ii) thereof’’. 
(6) Section 162(o)(3) is amended by striking ‘‘adjusted for 
changes in the Consumer Price Index (as defined in section 
1(f)(5)) since 1991’’ and inserting ‘‘adjusted by increasing any 
such amount under the 1991 agreement by an amount equal 
to— 
‘‘(A) such amount, multiplied by 
‘‘(B) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the taxable 
year begins, by substituting ‘calendar year 1990’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof’’. 
(7) So much of clause (ii) of section 213(d)(10)(B) as pre-
cedes the last sentence is amended to read as follows: 
‘‘(ii) MEDICAL CARE COST ADJUSTMENT.—For pur-
poses of clause (i), the medical care cost adjustment 
for any calendar year is the percentage (if any) by 
which— 
‘‘(I) the medical care component of the C-CPI- 
U (as defined in section 1(f)(6)) for August of the 
preceding calendar year, exceeds 
‘‘(II) such component of the CPI (as defined 
in section 1(f)(4)) for August of 1996, multiplied 
by 
the 
amount 
determined 
under 
section 
1(f)(3)(B).’’. 
(8) Subparagraph (B) of section 280F(d)(7) is amended to 
read as follows: 
26 USC 41, 68. 
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131 STAT. 2062 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) AUTOMOBILE PRICE INFLATION ADJUSTMENT.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The automobile price inflation 
adjustment for any calendar year is the percentage 
(if any) by which— 
‘‘(I) the C-CPI-U automobile component for 
October of the preceding calendar year, exceeds 
‘‘(II) the automobile component of the CPI (as 
defined in section 1(f)(4)) for October of 1987, 
multiplied by the amount determined under 
1(f)(3)(B). 
‘‘(ii) C-CPI-U AUTOMOBILE COMPONENT.—The term 
‘C-CPI-U automobile component’ means the automobile 
component of the Chained Consumer Price Index for 
All Urban Consumers (as described in section 1(f)(6)).’’. 
(9) Section 911(b)(2)(D)(ii)(II) is amended by striking ‘‘for 
‘1992’ in subparagraph (B)’’ and inserting ‘‘for ‘2016’ in subpara-
graph (A)(ii)’’. 
(10) Paragraph (2) of section 1274A(d) is amended to read 
as follows: 
‘‘(2) ADJUSTMENT FOR INFLATION.—In the case of any debt 
instrument arising out of a sale or exchange during any cal-
endar year after 1989, each dollar amount contained in the 
preceding provisions of this section shall be increased by an 
amount equal to— 
‘‘(A) such amount, multiplied by 
‘‘(B) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the taxable 
year begins, by substituting ‘calendar year 1988’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
Any increase under the preceding sentence shall be rounded 
to the nearest multiple of $100 (or, if such increase is a multiple 
of $50, such increase shall be increased to the nearest multiple 
of $100).’’. 
(11) Section 4161(b)(2)(C)(i)(II) is amended by striking ‘‘for 
‘1992’ in subparagraph (B)’’ and inserting ‘‘for ‘2016’ in subpara-
graph (A)(ii)’’. 
(12) Section 4980I(b)(3)(C)(v)(II) is amended by striking 
‘‘for ‘1992’ in subparagraph (B)’’ and inserting ‘‘for ‘2016’ in 
subparagraph (A)(ii)’’. 
(13) Section 6039F(d) is amended by striking ‘‘subpara-
graph (B) thereof shall be applied by substituting ‘1995’ for 
‘1992’ ’’ and inserting ‘‘subparagraph (A)(ii) thereof shall be 
applied by substituting ‘1995’ for ‘2016’ ’’. 
(14) Section 7872(g)(5) is amended to read as follows: 
‘‘(5) ADJUSTMENT OF LIMIT FOR INFLATION.—In the case 
of any loan made during any calendar year after 1986, the 
dollar amount in paragraph (2) shall be increased by an amount 
equal to— 
‘‘(A) such amount, multiplied by 
‘‘(B) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the taxable 
year begins, by substituting ‘calendar year 1985’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
Any increase under the preceding sentence shall be rounded 
to the nearest multiple of $100 (or, if such increase is a multiple 
26 USC 911. 
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131 STAT. 2063 
PUBLIC LAW 115–97—DEC. 22, 2017 
of $50, such increase shall be increased to the nearest multiple 
of $100).’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
PART II—DEDUCTION FOR QUALIFIED 
BUSINESS INCOME OF PASS-THRU ENTITIES 
SEC. 11011. DEDUCTION FOR QUALIFIED BUSINESS INCOME. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 1 is 
amended by adding at the end the following new section: 
‘‘SEC. 199A. QUALIFIED BUSINESS INCOME. 
‘‘(a) IN GENERAL.—In the case of a taxpayer other than a 
corporation, there shall be allowed as a deduction for any taxable 
year an amount equal to the sum of— 
‘‘(1) the lesser of— 
‘‘(A) the combined qualified business income amount 
of the taxpayer, or 
‘‘(B) an amount equal to 20 percent of the excess (if 
any) of— 
‘‘(i) the taxable income of the taxpayer for the 
taxable year, over 
‘‘(ii) the sum of any net capital gain (as defined 
in section 1(h)), plus the aggregate amount of the quali-
fied cooperative dividends, of the taxpayer for the tax-
able year, plus 
‘‘(2) the lesser of— 
‘‘(A) 20 percent of the aggregate amount of the qualified 
cooperative dividends of the taxpayer for the taxable year, 
or 
‘‘(B) taxable income (reduced by the net capital gain 
(as so defined)) of the taxpayer for the taxable year. 
The amount determined under the preceding sentence shall not 
exceed the taxable income (reduced by the net capital gain (as 
so defined)) of the taxpayer for the taxable year. 
‘‘(b) COMBINED QUALIFIED BUSINESS INCOME AMOUNT.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘combined qualified business 
income amount’ means, with respect to any taxable year, an 
amount equal to— 
‘‘(A) the sum of the amounts determined under para-
graph (2) for each qualified trade or business carried on 
by the taxpayer, plus 
‘‘(B) 20 percent of the aggregate amount of the qualified 
REIT dividends and qualified publicly traded partnership 
income of the taxpayer for the taxable year. 
‘‘(2) DETERMINATION
OF
DEDUCTIBLE
AMOUNT
FOR
EACH 
TRADE OR BUSINESS.—The amount determined under this para-
graph with respect to any qualified trade or business is the 
lesser of— 
‘‘(A) 20 percent of the taxpayer’s qualified business 
income with respect to the qualified trade or business, 
or 
‘‘(B) the greater of— 
‘‘(i) 50 percent of the W–2 wages with respect 
to the qualified trade or business, or 
26 USC 199A. 
26 USC 1 note. 
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131 STAT. 2064 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) the sum of 25 percent of the W–2 wages with 
respect to the qualified trade or business, plus 2.5 
percent of the unadjusted basis immediately after 
acquisition of all qualified property. 
‘‘(3) MODIFICATIONS TO LIMIT BASED ON TAXABLE INCOME.— 
‘‘(A) EXCEPTION FROM LIMIT.—In the case of any tax-
payer whose taxable income for the taxable year does not 
exceed the threshold amount, paragraph (2) shall be applied 
without regard to subparagraph (B). 
‘‘(B) PHASE-IN OF LIMIT FOR CERTAIN TAXPAYERS.— 
‘‘(i) IN GENERAL.—If— 
‘‘(I) the taxable income of a taxpayer for any 
taxable year exceeds the threshold amount, but 
does not exceed the sum of the threshold amount 
plus $50,000 ($100,000 in the case of a joint 
return), and 
‘‘(II) the amount determined under paragraph 
(2)(B) (determined without regard to this subpara-
graph) with respect to any qualified trade or busi-
ness carried on by the taxpayer is less than the 
amount determined under paragraph (2)(A) with 
respect such trade or business, 
then paragraph (2) shall be applied with respect to 
such trade or business without regard to subparagraph 
(B) thereof and by reducing the amount determined 
under subparagraph (A) thereof by the amount deter-
mined under clause (ii). 
‘‘(ii) AMOUNT OF REDUCTION.—The amount deter-
mined under this subparagraph is the amount which 
bears the same ratio to the excess amount as— 
‘‘(I) the amount by which the taxpayer’s tax-
able income for the taxable year exceeds the 
threshold amount, bears to 
‘‘(II) $50,000 ($100,000 in the case of a joint 
return). 
‘‘(iii) EXCESS AMOUNT.—For purposes of clause (ii), 
the excess amount is the excess of— 
‘‘(I) the amount determined under paragraph 
(2)(A) (determined without regard to this para-
graph), over 
‘‘(II) the amount determined under paragraph 
(2)(B) (determined without regard to this para-
graph). 
‘‘(4) WAGES, ETC.— 
‘‘(A) IN GENERAL.—The term ‘W–2 wages’ means, with 
respect to any person for any taxable year of such person, 
the amounts described in 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. 
‘‘(B) LIMITATION TO WAGES ATTRIBUTABLE TO QUALIFIED 
BUSINESS
INCOME.—Such term shall not include any 
amount which is not properly allocable to qualified business 
income for purposes of subsection (c)(1). 
‘‘(C) RETURN
REQUIREMENT.—Such term shall not 
include any amount which is not properly included in a 
return filed with the Social Security Administration on 
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131 STAT. 2065 
PUBLIC LAW 115–97—DEC. 22, 2017 
or before the 60th day after the due date (including exten-
sions) for such return. 
‘‘(5) ACQUISITIONS, DISPOSITIONS, AND
SHORT
TAXABLE 
YEARS.—The Secretary shall provide for the application of this 
subsection in cases of a short taxable year or where the tax-
payer acquires, or disposes of, the major portion of a trade 
or business or the major portion of a separate unit of a trade 
or business during the taxable year. 
‘‘(6) QUALIFIED PROPERTY.—For purposes of this section: 
‘‘(A) IN GENERAL.—The term ‘qualified property’ means, 
with respect to any qualified trade or business for a taxable 
year, tangible property of a character subject to the allow-
ance for depreciation under section 167— 
‘‘(i) which is held by, and available for use in, 
the qualified trade or business at the close of the 
taxable year, 
‘‘(ii) which is used at any point during the taxable 
year in the production of qualified business income, 
and 
‘‘(iii) the depreciable period for which has not 
ended before the close of the taxable year. 
‘‘(B) DEPRECIABLE
PERIOD.—The term ‘depreciable 
period’ means, with respect to qualified property of a tax-
payer, the period beginning on the date the property was 
first placed in service by the taxpayer and ending on the 
later of— 
‘‘(i) the date that is 10 years after such date, 
or 
‘‘(ii) the last day of the last full year in the 
applicable recovery period that would apply to the 
property under section 168 (determined without regard 
to subsection (g) thereof). 
‘‘(c) QUALIFIED BUSINESS INCOME.—For purposes of this sec-
tion— 
‘‘(1) IN
GENERAL.—The term ‘qualified business income’ 
means, for any taxable year, the net amount of qualified items 
of income, gain, deduction, and loss with respect to any qualified 
trade or business of the taxpayer. Such term shall not include 
any qualified REIT dividends, qualified cooperative dividends, 
or qualified publicly traded partnership income. 
‘‘(2) CARRYOVER OF LOSSES.—If the net amount of qualified 
income, gain, deduction, and loss with respect to qualified 
trades or businesses of the taxpayer for any taxable year is 
less than zero, such amount shall be treated as a loss from 
a qualified trade or business in the succeeding taxable year. 
‘‘(3) QUALIFIED ITEMS OF INCOME, GAIN, DEDUCTION, AND 
LOSS.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘qualified items of income, 
gain, deduction, and loss’ means items of income, gain, 
deduction, and loss to the extent such items are— 
‘‘(i) effectively connected with the conduct of a 
trade or business within the United States (within 
the meaning of section 864(c), determined by sub-
stituting ‘qualified trade or business (within the 
meaning of section 199A)’ for ‘nonresident alien indi-
vidual or a foreign corporation’ or for ‘a foreign corpora-
tion’ each place it appears), and 
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131 STAT. 2066 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) included or allowed in determining taxable 
income for the taxable year. 
‘‘(B) EXCEPTIONS.—The following investment items 
shall not be taken into account as a qualified item of 
income, gain, deduction, or loss: 
‘‘(i) Any item of short-term capital gain, short- 
term capital loss, long-term capital gain, or long-term 
capital loss. 
‘‘(ii) Any dividend, income equivalent to a dividend, 
or payment in lieu of dividends described in section 
954(c)(1)(G). 
‘‘(iii) Any interest income other than interest 
income which is properly allocable to a trade or busi-
ness. 
‘‘(iv) Any item of gain or loss described in subpara-
graph (C) or (D) of section 954(c)(1) (applied by sub-
stituting ‘qualified trade or business’ for ‘controlled 
foreign corporation’). 
‘‘(v) Any item of income, gain, deduction, or loss 
taken into account under section 954(c)(1)(F) (deter-
mined without regard to clause (ii) thereof and other 
than items attributable to notional principal contracts 
entered into in transactions qualifying under section 
1221(a)(7)). 
‘‘(vi) Any amount received from an annuity which 
is not received in connection with the trade or business. 
‘‘(vii) Any item of deduction or loss properly allo-
cable to an amount described in any of the preceding 
clauses. 
‘‘(4) TREATMENT
OF
REASONABLE
COMPENSATION
AND 
GUARANTEED PAYMENTS.—Qualified business income shall not 
include— 
‘‘(A) reasonable compensation paid to the taxpayer by 
any qualified trade or business of the taxpayer for services 
rendered with respect to the trade or business, 
‘‘(B) any guaranteed payment described in section 
707(c) paid to a partner for services rendered with respect 
to the trade or business, and 
‘‘(C) to the extent provided in regulations, any payment 
described in section 707(a) to a partner for services ren-
dered with respect to the trade or business. 
‘‘(d) QUALIFIED TRADE OR BUSINESS.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified trade or business’ 
means any trade or business other than— 
‘‘(A) a specified service trade or business, or 
‘‘(B) the trade or business of performing services as 
an employee. 
‘‘(2) SPECIFIED
SERVICE
TRADE
OR
BUSINESS.—The term 
‘specified service trade or business’ means any trade or busi-
ness— 
‘‘(A) which is described in section 1202(e)(3)(A) (applied 
without regard to the words ‘engineering, architecture,’) 
or which would be so described if the term ‘employees 
or owners’ were substituted for ‘employees’ therein, or 
‘‘(B) which involves the performance of services that 
consist of investing and investment management, trading, 
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131 STAT. 2067 
PUBLIC LAW 115–97—DEC. 22, 2017 
or dealing in securities (as defined in section 475(c)(2)), 
partnership interests, or commodities (as defined in section 
475(e)(2)). 
‘‘(3) EXCEPTION FOR SPECIFIED SERVICE BUSINESSES BASED 
ON TAXPAYER’S INCOME.— 
‘‘(A) IN GENERAL.—If, for any taxable year, the taxable 
income of any taxpayer is less than the sum of the threshold 
amount plus $50,000 ($100,000 in the case of a joint 
return), then— 
‘‘(i) any specified service trade or business of the 
taxpayer shall not fail to be treated as a qualified 
trade or business due to paragraph (1)(A), but 
‘‘(ii) only the applicable percentage of qualified 
items of income, gain, deduction, or loss, and the W– 
2 wages and the unadjusted basis immediately after 
acquisition of qualified property, of the taxpayer allo-
cable to such specified service trade or business shall 
be taken into account in computing the qualified busi-
ness income, W–2 wages, and the unadjusted basis 
immediately after acquisition of qualified property of 
the taxpayer for the taxable year for purposes of 
applying this section. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes 
of 
subparagraph (A), the term ‘applicable percentage’ means, 
with respect to any taxable year, 100 percent reduced (not 
below zero) by the percentage equal to the ratio of— 
‘‘(i) the taxable income of the taxpayer for the 
taxable year in excess of the threshold amount, bears 
to 
‘‘(ii) $50,000 ($100,000 in the case of a joint return). 
‘‘(e) OTHER DEFINITIONS.—For purposes of this section— 
‘‘(1) TAXABLE INCOME.—Taxable income shall be computed 
without regard to the deduction allowable under this section. 
‘‘(2) THRESHOLD AMOUNT.— 
‘‘(A) IN GENERAL.—The term ‘threshold amount’ means 
$157,500 (200 percent of such amount in the case of a 
joint return). 
‘‘(B) INFLATION ADJUSTMENT.—In the case of any tax-
able year beginning after 2018, the dollar amount in 
subparagraph (A) shall be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
‘calendar year 2017’ for ‘calendar year 2016’ in 
subparagraph (A)(ii) thereof. 
The amount of any increase under the preceding sentence 
shall be rounded as provided in section 1(f)(7). 
‘‘(3) QUALIFIED REIT DIVIDEND.—The term ‘qualified REIT 
dividend’ means any dividend from a real estate investment 
trust received during the taxable year which— 
‘‘(A) is not a capital gain dividend, as defined in section 
857(b)(3), and 
‘‘(B) is not qualified dividend income, as defined in 
section 1(h)(11). 
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131 STAT. 2068 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(4) QUALIFIED COOPERATIVE DIVIDEND.—The term ‘quali-
fied cooperative dividend’ means any patronage dividend (as 
defined in section 1388(a)), any per-unit retain allocation (as 
defined in section 1388(f)), and any qualified written notice 
of allocation (as defined in section 1388(c)), or any similar 
amount received from an organization described in subpara-
graph (B)(ii), which— 
‘‘(A) is includible in gross income, and 
‘‘(B) is received from— 
‘‘(i) an organization or corporation described in 
section 501(c)(12) or 1381(a), or 
‘‘(ii) an organization which is governed under this 
title by the rules applicable to cooperatives under this 
title before the enactment of subchapter T. 
‘‘(5) QUALIFIED PUBLICLY TRADED PARTNERSHIP INCOME.— 
The term ‘qualified publicly traded partnership income’ means, 
with respect to any qualified trade or business of a taxpayer, 
the sum of— 
‘‘(A) the net amount of such taxpayer’s allocable share 
of each qualified item of income, gain, deduction, and loss 
(as defined in subsection (c)(3) and determined after the 
application of subsection (c)(4)) from a publicly traded part-
nership (as defined in section 7704(a)) which is not treated 
as a corporation under section 7704(c), plus 
‘‘(B) any gain recognized by such taxpayer upon disposi-
tion of its interest in such partnership to the extent such 
gain is treated as an amount realized from the sale or 
exchange of property other than a capital asset under sec-
tion 751(a). 
‘‘(f) SPECIAL RULES.— 
‘‘(1) APPLICATION TO PARTNERSHIPS AND S CORPORATIONS.— 
‘‘(A) IN
GENERAL.—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 qualified 
item of income, gain, deduction, and loss, and 
‘‘(iii) each partner or shareholder shall be treated 
for purposes of subsection (b) as having W–2 wages 
and unadjusted basis immediately after acquisition of 
qualified property for the taxable year in an amount 
equal to such person’s allocable share of the W–2 wages 
and the unadjusted basis immediately after acquisition 
of qualified property of the partnership or S corporation 
for the taxable year (as determined under regulations 
prescribed by the Secretary). 
For purposes of clause (iii), a partner’s or shareholder’s 
allocable share of W–2 wages shall be determined in the 
same manner as the partner’s or shareholder’s allocable 
share of wage expenses. For purposes of such clause, part-
ner’s or shareholder’s allocable share of the unadjusted 
basis immediately after acquisition of qualified property 
shall be determined in the same manner as the partner’s 
or shareholder’s allocable share of depreciation. For pur-
poses of this subparagraph, in the case of an S corporation, 
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131 STAT. 2069 
PUBLIC LAW 115–97—DEC. 22, 2017 
an allocable share shall be the shareholder’s pro rata share 
of an item. 
‘‘(B) APPLICATION
TO
TRUSTS
AND
ESTATES.—Rules 
similar to the rules under section 199(d)(1)(B)(i) (as in 
effect on December 1, 2017) for the apportionment of W– 
2 wages shall apply to the apportionment of W–2 wages 
and the apportionment of unadjusted basis immediately 
after acquisition of qualified property under this section. 
‘‘(C) TREATMENT OF TRADES OR BUSINESS IN PUERTO 
RICO.— 
‘‘(i) IN GENERAL.—In the case of any taxpayer with 
qualified business income from sources within the 
commonwealth of Puerto Rico, if all such income is 
taxable under section 1 for such taxable year, then 
for purposes of determining the qualified business 
income of such taxpayer for such taxable year, the 
term ‘United States’ shall include the Commonwealth 
of Puerto Rico. 
‘‘(ii) SPECIAL RULE FOR APPLYING LIMIT.—In the 
case of any taxpayer described in clause (i), the deter-
mination of W–2 wages of such taxpayer with respect 
to any qualified trade or business conducted in Puerto 
Rico shall be made without regard to any exclusion 
under section 3401(a)(8) for remuneration paid for serv-
ices in Puerto Rico. 
‘‘(2) COORDINATION WITH MINIMUM TAX.—For purposes of 
determining alternative minimum taxable income under section 
55, qualified business income shall be determined without 
regard to any adjustments under sections 56 through 59. 
‘‘(3) DEDUCTION LIMITED TO INCOME TAXES.—The deduction 
under subsection (a) shall only be allowed for purposes of 
this chapter. 
‘‘(4) REGULATIONS.—The Secretary shall prescribe such 
regulations as are necessary to carry out the purposes of this 
section, including regulations— 
‘‘(A) for requiring or restricting the allocation of items 
and wages under this section and such reporting require-
ments as the Secretary determines appropriate, and 
‘‘(B) for the application of this section in the case 
of tiered entities. 
‘‘(g) DEDUCTION ALLOWED
TO SPECIFIED AGRICULTURAL
OR 
HORTICULTURAL COOPERATIVES.— 
‘‘(1) IN GENERAL.—In the case of any taxable year of a 
specified agricultural or horticultural cooperative beginning 
after December 31, 2017, there shall be allowed a deduction 
in an amount equal to the lesser of— 
‘‘(A) 20 percent of the excess (if any) of— 
‘‘(i) the gross income of a specified agricultural 
or horticultural cooperative, over 
‘‘(ii) the qualified cooperative dividends (as defined 
in subsection (e)(4)) paid during the taxable year for 
the taxable year, or 
‘‘(B) the greater of— 
‘‘(i) 50 percent of the W–2 wages of the cooperative 
with respect to its trade or business, or 
‘‘(ii) the sum of 25 percent of the W–2 wages of 
the cooperative with respect to its trade or business, 
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131 STAT. 2070 
PUBLIC LAW 115–97—DEC. 22, 2017 
plus 2.5 percent of the unadjusted basis immediately 
after acquisition of all qualified property of the coopera-
tive. 
‘‘(2) LIMITATION.—The amount determined under para-
graph (1) shall not exceed the taxable income of the specified 
agricultural or horticultural for the taxable year. 
‘‘(3) SPECIFIED AGRICULTURAL OR HORTICULTURAL COOPERA-
TIVE.—For purposes of this subsection, the term ‘specified agri-
cultural or horticultural cooperative’ means an organization 
to which part I of subchapter T applies which is engaged 
in— 
‘‘(A) the manufacturing, production, growth, or extrac-
tion in whole or significant part of any agricultural or 
horticultural product, 
‘‘(B) the marketing of agricultural or horticultural prod-
ucts which its patrons have so manufactured, produced, 
grown, or extracted, or 
‘‘(C) the provision of supplies, equipment, or services 
to farmers or to organizations described in subparagraph 
(A) or (B). 
‘‘(h) ANTI-ABUSE RULES.—The Secretary shall— 
‘‘(1) apply rules similar to the rules under section 179(d)(2) 
in order to prevent the manipulation of the depreciable period 
of qualified property using transactions between related parties, 
and 
‘‘(2) prescribe rules for determining the unadjusted basis 
immediately after acquisition of qualified property acquired 
in like-kind exchanges or involuntary conversions. 
‘‘(i) TERMINATION.—This section shall not apply to taxable years 
beginning after December 31, 2025.’’. 
(b) TREATMENT OF DEDUCTION IN COMPUTING ADJUSTED GROSS 
AND TAXABLE INCOME.— 
(1) DEDUCTION
NOT
ALLOWED
IN
COMPUTING
ADJUSTED 
GROSS INCOME.—Section 62(a) is amended by adding at the 
end the following new sentence: ‘‘The deduction allowed by 
section 199A shall not be treated as a deduction described 
in any of the preceding paragraphs of this subsection.’’. 
(2) DEDUCTION ALLOWED TO NONITEMIZERS.—Section 63(b) 
is amended by striking ‘‘and’’ at the end of paragraph (1), 
by striking the period at the end of paragraph (2) and inserting 
‘‘, and’’, and by adding at the end the following new paragraph: 
‘‘(3) the deduction provided in section 199A.’’. 
(3) DEDUCTION ALLOWED TO ITEMIZERS WITHOUT LIMITS ON 
ITEMIZED DEDUCTIONS.—Section 63(d) is amended by striking 
‘‘and’’ at the end of paragraph (1), by striking the period at 
the end of paragraph (2) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(3) the deduction provided in section 199A.’’. 
(4) 
CONFORMING
AMENDMENT.—Section 
3402(m)(1) 
is 
amended by inserting ‘‘and the estimated deduction allowed 
under section 199A’’ after ‘‘chapter 1’’. 
(c) ACCURACY-RELATED
PENALTY
ON
DETERMINATION
OF 
APPLICABLE
PERCENTAGE.—Section 6662(d)(1) is amended by 
inserting at the end the following new subparagraph: 
‘‘(C) SPECIAL RULE FOR TAXPAYERS CLAIMING SECTION 
199A DEDUCTION.—In the case of any taxpayer who claims 
the deduction allowed under section 199A for the taxable 
26 USC 62. 
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131 STAT. 2071 
PUBLIC LAW 115–97—DEC. 22, 2017 
year, subparagraph (A) shall be applied by substituting 
‘5 percent’ for ‘10 percent’.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 172(d) is amended by adding at the end the 
following new paragraph: 
‘‘(8) QUALIFIED BUSINESS INCOME DEDUCTION.—The deduc-
tion under section 199A shall not be allowed.’’. 
(2) Section 246(b)(1) is amended by inserting ‘‘199A,’’ before 
‘‘243(a)(1)’’. 
(3) Section 613(a) is amended by inserting ‘‘and without 
the deduction under section 199A’’ after ‘‘and without the deduc-
tion under section 199’’. 
(4) Section 613A(d)(1) is amended by redesignating sub-
paragraphs (C), (D), and (E) as subparagraphs (D), (E), and 
(F), respectively, and by inserting after subparagraph (B), the 
following new subparagraph: 
‘‘(C) any deduction allowable under section 199A,’’. 
(5) Section 170(b)(2)(D) is amended by striking ‘‘and’’ in 
clause (iv), by striking the period at the end of clause (v), 
and by adding at the end the following new clause: 
‘‘(vi) section 199A(g).’’. 
(6) The table of sections for part VI of subchapter B of 
chapter 1 is amended by inserting at the end the following 
new item: 
‘‘Sec. 199A. Qualified business income.’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11012. LIMITATION ON LOSSES FOR TAXPAYERS OTHER THAN 
CORPORATIONS. 
(a) IN GENERAL.—Section 461 is amended by adding at the 
end the following new subsection: 
‘‘(l) LIMITATION ON EXCESS BUSINESS LOSSES OF NONCORPORATE 
TAXPAYERS.— 
‘‘(1) LIMITATION.—In the case of taxable year of a taxpayer 
other than a corporation beginning after December 31, 2017, 
and before January 1, 2026— 
‘‘(A) subsection (j) (relating to limitation on excess farm 
losses of certain taxpayers) shall not apply, and 
‘‘(B) any excess business loss of the taxpayer for the 
taxable year shall not be allowed. 
‘‘(2) DISALLOWED LOSS CARRYOVER.—Any loss which is dis-
allowed under paragraph (1) shall be treated as a net operating 
loss carryover to the following taxable year under section 172. 
‘‘(3) EXCESS
BUSINESS
LOSS.—For purposes of this sub-
section— 
‘‘(A) IN
GENERAL.—The term ‘excess business loss’ 
means the excess (if any) of— 
‘‘(i) the aggregate deductions of the taxpayer for 
the taxable year which are attributable to trades or 
businesses of such taxpayer (determined without 
regard to whether or not such deductions are dis-
allowed for such taxable year under paragraph (1)), 
over 
‘‘(ii) the sum of— 
26 USC 62 note. 
26 USC 
prec. 161. 
26 USC 172. 
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‘‘(I) the aggregate gross income or gain of such 
taxpayer for the taxable year which is attributable 
to such trades or businesses, plus 
‘‘(II) $250,000 (200 percent of such amount 
in the case of a joint return). 
‘‘(B) ADJUSTMENT FOR INFLATION.—In the case of any 
taxable year beginning after December 31, 2018, the 
$250,000 amount in subparagraph (A)(ii)(II) shall be 
increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof. 
If any amount as increased under the preceding sen-
tence is not a multiple of $1,000, such amount shall 
be rounded to the nearest multiple of $1,000. 
‘‘(4) APPLICATION OF SUBSECTION IN CASE OF PARTNERSHIPS 
AND S CORPORATIONS.—In the case of a partnership or S cor-
poration— 
‘‘(A) this subsection shall be applied at the partner 
or shareholder level, and 
‘‘(B) each partner’s or shareholder’s allocable share 
of the items of income, gain, deduction, or loss of the 
partnership or S corporation for any taxable year from 
trades or businesses attributable to the partnership or 
S corporation shall be taken into account by the partner 
or shareholder in applying this subsection to the taxable 
year of such partner or shareholder with or within which 
the taxable year of the partnership or S corporation ends. 
For purposes of this paragraph, in the case of an S corporation, 
an allocable share shall be the shareholder’s pro rata share 
of an item. 
‘‘(5) ADDITIONAL REPORTING.—The Secretary shall prescribe 
such additional reporting requirements as the Secretary deter-
mines necessary to carry out the purposes of this subsection. 
‘‘(6) COORDINATION
WITH
SECTION
469.—This subsection 
shall be applied after the application of section 469.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
PART III—TAX BENEFITS FOR FAMILIES AND 
INDIVIDUALS 
SEC. 11021. INCREASE IN STANDARD DEDUCTION. 
(a) IN GENERAL.—Subsection (c) of section 63 is amended by 
adding at the end the following new paragraph: 
‘‘(7) SPECIAL
RULES
FOR
TAXABLE
YEARS
2018
THROUGH 
2025.—In the case of a taxable year beginning after December 
31, 2017, and before January 1, 2026— 
‘‘(A) INCREASE IN STANDARD DEDUCTION.—Paragraph 
(2) shall be applied— 
‘‘(i) by substituting ‘$18,000’ for ‘$4,400’ in 
subparagraph (B), and 
‘‘(ii) by substituting ‘$12,000’ for ‘$3,000’ in 
subparagraph (C). 
‘‘(B) ADJUSTMENT FOR INFLATION.— 
26 USC 63. 
26 USC 461 note. 
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131 STAT. 2073 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) IN GENERAL.—Paragraph (4) shall not apply 
to the dollar amounts contained in paragraphs (2)(B) 
and (2)(C). 
‘‘(ii) ADJUSTMENT OF INCREASED AMOUNTS.—In the 
case of a taxable year beginning after 2018, the $18,000 
and $12,000 amounts in subparagraph (A) shall each 
be increased by an amount equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by sub-
stituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) 
thereof. 
If any increase under this clause is not a multiple 
of $50, such increase shall be rounded to the next 
lowest multiple of $50.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT. 
(a) IN GENERAL.—Section 24 is amended by adding at the 
end the following new subsection: 
‘‘(h) SPECIAL RULES FOR TAXABLE YEARS 2018 THROUGH 2025.— 
‘‘(1) IN GENERAL.—In the case of a taxable year beginning 
after December 31, 2017, and before January 1, 2026, this 
section shall be applied as provided in paragraphs (2) through 
(7). 
‘‘(2) CREDIT AMOUNT.—Subsection (a) shall be applied by 
substituting ‘$2,000’ for ‘$1,000’. 
‘‘(3) LIMITATION.—In lieu of the amount determined under 
subsection (b)(2), the threshold amount shall be $400,000 in 
the case of a joint return ($200,000 in any other case). 
‘‘(4) PARTIAL CREDIT ALLOWED FOR CERTAIN OTHER DEPEND-
ENTS.— 
‘‘(A) IN GENERAL.—The credit determined under sub-
section (a) (after the application of paragraph (2)) shall 
be increased by $500 for each dependent of the taxpayer 
(as defined in section 152) other than a qualifying child 
described in subsection (c). 
‘‘(B) EXCEPTION FOR CERTAIN NONCITIZENS.—Subpara-
graph (A) shall not apply with respect to any individual 
who would not be a dependent if subparagraph (A) of 
section 152(b)(3) were applied without regard to all that 
follows ‘resident of the United States’. 
‘‘(C) CERTAIN QUALIFYING CHILDREN.—In the case of 
any qualifying child with respect to whom a credit is not 
allowed under this section by reason of paragraph (7), 
such child shall be treated as a dependent to whom 
subparagraph (A) applies. 
‘‘(5) MAXIMUM AMOUNT OF REFUNDABLE CREDIT.— 
‘‘(A) IN GENERAL.—The amount determined under sub-
section (d)(1)(A) with respect to any qualifying child shall 
not exceed $1,400, and such subsection shall be applied 
without regard to paragraph (4) of this subsection. 
‘‘(B) ADJUSTMENT FOR INFLATION.—In the case of a 
taxable year beginning after 2018, the $1,400 amount in 
26 USC 24. 
26 USC 63 note. 
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131 STAT. 2074 
PUBLIC LAW 115–97—DEC. 22, 2017 
subparagraph (A) shall be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof. 
If any increase under this clause is not a multiple of 
$100, such increase shall be rounded to the next lowest 
multiple of $100. 
‘‘(6) 
EARNED
INCOME
THRESHOLD
FOR
REFUNDABLE 
CREDIT.—Subsection (d)(1)(B)(i) shall be applied by substituting 
‘$2,500’ for ‘$3,000’. 
‘‘(7) SOCIAL SECURITY NUMBER REQUIRED.—No credit shall 
be allowed under this section to a taxpayer with respect to 
any qualifying child unless the taxpayer includes the social 
security number of such child on the return of tax for the 
taxable year. For purposes of the preceding sentence, the term 
‘social security number’ means a social security number issued 
to an individual by the Social Security Administration, but 
only if the social security number is issued— 
‘‘(A) to a citizen of the United States or pursuant 
to subclause (I) (or that portion of subclause (III) that 
relates to subclause (I)) of section 205(c)(2)(B)(i) of the 
Social Security Act, and 
‘‘(B) before the due date for such return.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11023. INCREASED LIMITATION FOR CERTAIN CHARITABLE CON-
TRIBUTIONS. 
(a) IN GENERAL.—Section 170(b)(1) is amended by redesignating 
subparagraph (G) as subparagraph (H) and by inserting after 
subparagraph (F) the following new subparagraph: 
‘‘(G) INCREASED
LIMITATION
FOR
CASH
CONTRIBU-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of any contribution 
of cash to an organization described in subparagraph 
(A), the total amount of such contributions which may 
be taken into account under subsection (a) for any 
taxable year beginning after December 31, 2017, and 
before January 1, 2026, shall not exceed 60 percent 
of the taxpayer’s contribution base for such year. 
‘‘(ii) CARRYOVER.—If the aggregate amount of con-
tributions described in clause (i) exceeds the applicable 
limitation under clause (i) for any taxable year 
described in such clause, such excess shall be treated 
(in a manner consistent with the rules of subsection 
(d)(1)) as a charitable contribution to which clause 
(i) applies in each of the 5 succeeding years in order 
of time. 
‘‘(iii) COORDINATION WITH SUBPARAGRAPHS (A) AND 
(B).— 
‘‘(I) IN
GENERAL.—Contributions taken into 
account under this subparagraph shall not be 
taken into account under subparagraph (A). 
26 USC 170. 
26 USC 24 note. 
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131 STAT. 2075 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(II) LIMITATION
REDUCTION.—For each tax-
able year described in clause (i), and each taxable 
year to which any contribution under this subpara-
graph is carried over under clause (ii), subpara-
graph (A) shall be applied by reducing (but not 
below zero) the contribution limitation allowed for 
the taxable year under such subparagraph by the 
aggregate 
contributions 
allowed 
under 
this 
subparagraph for such taxable year, and subpara-
graph (B) shall be applied by treating any ref-
erence to subparagraph (A) as a reference to both 
subparagraph (A) and this subparagraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions in taxable years beginning after 
December 31, 2017. 
SEC. 11024. INCREASED CONTRIBUTIONS TO ABLE ACCOUNTS. 
(a) INCREASE IN LIMITATION FOR CONTRIBUTIONS FROM COM-
PENSATION OF INDIVIDUALS WITH DISABILITIES.— 
(1) IN GENERAL.—Section 529A(b)(2)(B) is amended to read 
as follows: 
‘‘(B) except in the case of contributions under sub-
section (c)(1)(C), if such contribution to an ABLE account 
would result in aggregate contributions from all contribu-
tors to the ABLE account for the taxable year exceeding 
the sum of— 
‘‘(i) the amount in effect under section 2503(b) 
for the calendar year in which the taxable year begins, 
plus 
‘‘(ii) in the case of any contribution by a designated 
beneficiary described in paragraph (7) before January 
1, 2026, the lesser of— 
‘‘(I) compensation (as defined by section 
219(f)(1)) includible in the designated beneficiary’s 
gross income for the taxable year, or 
‘‘(II) an amount equal to the poverty line for 
a one-person household, as determined for the cal-
endar year preceding the calendar year in which 
the taxable year begins.’’. 
(2) RESPONSIBILITY FOR CONTRIBUTION LIMITATION.—Para-
graph (2) of section 529A(b) is amended by adding at the 
end the following: ‘‘A designated beneficiary (or a person acting 
on behalf of such beneficiary) shall maintain adequate records 
for purposes of ensuring, and shall be responsible for ensuring, 
that the requirements of subparagraph (B)(ii) are met.’’ 
(3) ELIGIBLE
DESIGNATED
BENEFICIARY.—Section 529A(b) 
is amended by adding at the end the following: 
‘‘(7) SPECIAL RULES RELATED TO CONTRIBUTION LIMIT.—For 
purposes of paragraph (2)(B)(ii)— 
‘‘(A) DESIGNATED
BENEFICIARY.—A designated bene-
ficiary described in this paragraph is an employee 
(including an employee within the meaning of section 
401(c)) with respect to whom— 
‘‘(i) no contribution is made for the taxable year 
to a defined contribution plan (within the meaning 
of section 414(i)) with respect to which the require-
ments of section 401(a) or 403(a) are met, 
26 USC 529A. 
26 USC 170 note. 
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131 STAT. 2076 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) no contribution is made for the taxable year 
to an annuity contract described in section 403(b), and 
‘‘(iii) no contribution is made for the taxable year 
to an eligible deferred compensation plan described 
in section 457(b). 
‘‘(B) POVERTY LINE.—The term ‘poverty line’ has the 
meaning given such term by section 673 of the Community 
Services Block Grant Act (42 U.S.C. 9902).’’. 
(b) ALLOWANCE OF SAVER’S CREDIT FOR ABLE CONTRIBUTIONS 
BY ACCOUNT HOLDER.—Section 25B(d)(1) is amended by striking 
‘‘and’’ at the end of subparagraph (B)(ii), by striking the period 
at the end of subparagraph (C) and inserting ‘‘, and’’, and by 
inserting at the end the following: 
‘‘(D) the amount of contributions made before January 
1, 2026, by such individual to the ABLE account (within 
the meaning of section 529A) of which such individual 
is the designated beneficiary.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 11025. ROLLOVERS TO ABLE PROGRAMS FROM 529 PROGRAMS. 
(a) IN GENERAL.—Clause (i) of section 529(c)(3)(C) is amended 
by striking ‘‘or’’ at the end of subclause (I), by striking the period 
at the end of subclause (II) and inserting ‘‘, or’’, and by adding 
at the end the following: 
‘‘(III) before January 1, 2026, to an ABLE 
account (as defined in section 529A(e)(6)) of the 
designated beneficiary or a member of the family 
of the designated beneficiary. 
Subclause (III) shall not apply to so much of a distribu-
tion which, when added to all other contributions made 
to the ABLE account for the taxable year, exceeds 
the limitation under section 529A(b)(2)(B)(i).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after the date of the enactment of 
this Act. 
SEC. 11026. TREATMENT OF CERTAIN INDIVIDUALS PERFORMING 
SERVICES IN THE SINAI PENINSULA OF EGYPT. 
(a) IN GENERAL.—For purposes of the following provisions of 
the Internal Revenue Code of 1986, with respect to the applicable 
period, a qualified hazardous duty area shall be treated in the 
same manner as if it were a combat zone (as determined under 
section 112 of such Code): 
(1) Section 2(a)(3) (relating to special rule where deceased 
spouse was in missing status). 
(2) Section 112 (relating to the exclusion of certain combat 
pay of members of the Armed Forces). 
(3) Section 692 (relating to income taxes of members of 
Armed Forces on death). 
(4) Section 2201 (relating to members of the Armed Forces 
dying in combat zone or by reason of combat-zone-incurred 
wounds, etc.). 
(5) Section 3401(a)(1) (defining wages relating to combat 
pay for members of the Armed Forces). 
26 USC 112 note. 
26 USC 529 note. 
26 USC 529. 
26 USC 25B note. 
26 USC 25B. 
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131 STAT. 2077 
PUBLIC LAW 115–97—DEC. 22, 2017 
(6) Section 4253(d) (relating to the taxation of phone service 
originating from a combat zone from members of the Armed 
Forces). 
(7) Section 6013(f)(1) (relating to joint return where indi-
vidual is in missing status). 
(8) Section 7508 (relating to time for performing certain 
acts postponed by reason of service in combat zone). 
(b) QUALIFIED HAZARDOUS DUTY AREA.—For purposes of this 
section, the term ‘‘qualified hazardous duty area’’ means the Sinai 
Peninsula of Egypt, if as of the date of the enactment of this 
section any member of the Armed Forces of the United States 
is entitled to special pay under section 310 of title 37, United 
States Code (relating to special pay; duty subject to hostile fire 
or imminent danger), for services performed in such location. Such 
term includes such location only during the period such entitlement 
is in effect. 
(c) APPLICABLE PERIOD.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
applicable period is— 
(A) the portion of the first taxable year ending after 
June 9, 2015, which begins on such date, and 
(B) any subsequent taxable year beginning before 
January 1, 2026. 
(2) WITHHOLDING.—In the case of subsection (a)(5), the 
applicable period is— 
(A) the portion of the first taxable year ending after 
the date of the enactment of this Act which begins on 
such date, and 
(B) any subsequent taxable year beginning before 
January 1, 2026. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
provisions of this section shall take effect on June 9, 2015. 
(2) WITHHOLDING.—Subsection (a)(5) shall apply to remu-
neration paid after the date of the enactment of this Act. 
SEC. 11027. TEMPORARY REDUCTION IN MEDICAL EXPENSE DEDUC-
TION FLOOR. 
(a) IN GENERAL.—Subsection (f) of section 213 is amended 
to read as follows: 
‘‘(f) SPECIAL RULES
FOR 2013 THROUGH 2018.—In the case 
of any taxable year— 
‘‘(1) beginning after December 31, 2012, and ending before 
January 1, 2017, in the case of a taxpayer if such taxpayer 
or such taxpayer’s spouse has attained age 65 before the close 
of such taxable year, and 
‘‘(2) beginning after December 31, 2016, and ending before 
January 1, 2019, in the case of any taxpayer, 
subsection (a) shall be applied with respect to a taxpayer by sub-
stituting ‘7.5 percent’ for ‘10 percent’.’’. 
(b) MINIMUM
TAX
PREFERENCE
NOT
TO
APPLY.—Section 
56(b)(1)(B) is amended by adding at the end the following new 
sentence: ‘‘This subparagraph shall not apply to taxable years begin-
ning after December 31, 2016, and ending before January 1, 2019’’. 
(c) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2016. 
26 USC 56 note. 
26 USC 213. 
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131 STAT. 2078 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 11028. RELIEF FOR 2016 DISASTER AREAS. 
(a) IN GENERAL.—For purposes of this section, the term ‘‘2016 
disaster area’’ means any area with respect to which a major 
disaster has been declared by the President under section 401 
of the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act during calendar year 2016. 
(b) SPECIAL RULES
FOR USE
OF RETIREMENT FUNDS WITH 
RESPECT TO AREAS DAMAGED BY 2016 DISASTERS.— 
(1) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.— 
(A) IN GENERAL.—Section 72(t) of the Internal Revenue 
Code of 1986 shall not apply to any qualified 2016 disaster 
distribution. 
(B) AGGREGATE DOLLAR LIMITATION.— 
(i) IN GENERAL.—For purposes of this subsection, 
the aggregate amount of distributions received by an 
individual which may be treated as qualified 2016 
disaster distributions for any taxable year shall not 
exceed the excess (if any) of— 
(I) $100,000, over 
(II) the aggregate amounts treated as qualified 
2016 disaster distributions received by such indi-
vidual for all prior taxable years. 
(ii) TREATMENT OF PLAN DISTRIBUTIONS.—If a dis-
tribution to an individual would (without regard to 
clause (i)) be a qualified 2016 disaster distribution, 
a plan shall not be treated as violating any requirement 
of this title merely because the plan treats such dis-
tribution as a qualified 2016 disaster 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. 
(iii) CONTROLLED GROUP.—For purposes of clause 
(ii), the term ‘‘controlled group’’ means any group 
treated as a single employer under subsection (b), (c), 
(m), or (o) of section 414 of the Internal Revenue Code 
of 1986. 
(C) AMOUNT DISTRIBUTED MAY BE REPAID.— 
(i) IN GENERAL.—Any individual who receives a 
qualified 2016 disaster 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 contributions 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 section 402(c), 
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the 
Internal Revenue Code of 1986, as the case may be. 
(ii) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS 
FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.— 
For purposes of the Internal Revenue Code of 1986, 
if a contribution is made pursuant to clause (i) with 
respect to a qualified 2016 disaster 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 
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131 STAT. 2079 
PUBLIC LAW 115–97—DEC. 22, 2017 
received the qualified 2016 disaster distribution in an 
eligible rollover distribution (as defined in section 
402(c)(4) of the Internal Revenue Code of 1986) and 
as having transferred the amount to the eligible retire-
ment plan in a direct trustee to trustee transfer within 
60 days of the distribution. 
(iii) TREATMENT
OF
REPAYMENTS
FOR
DISTRIBU-
TIONS FROM IRAS.—For purposes of the Internal Rev-
enue Code of 1986, if a contribution is made pursuant 
to clause (i) with respect to a qualified 2016 disaster 
distribution from an individual retirement plan (as 
defined by section 7701(a)(37) of the Internal Revenue 
Code of 1986), then, to the extent of the amount of 
the contribution, the qualified 2016 disaster distribu-
tion shall be treated as a distribution described in 
section 408(d)(3) of such Code and as having been 
transferred to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days of the dis-
tribution. 
(D) DEFINITIONS.—For purposes of this paragraph— 
(i) QUALIFIED 2016 DISASTER DISTRIBUTION.—Except 
as provided in subparagraph (B), the term ‘‘qualified 
2016 disaster distribution’’ means any distribution 
from an eligible retirement plan made on or after 
January 1, 2016, and before January 1, 2018, to an 
individual whose principal place of abode at any time 
during calendar year 2016 was located in a disaster 
area described in subsection (a) and who has sustained 
an economic loss by reason of the events giving rise 
to the Presidential declaration described in subsection 
(a) which was applicable to such area. 
(ii) 
ELIGIBLE
RETIREMENT
PLAN.—The 
term 
‘‘eligible retirement plan’’ shall have the meaning given 
such term by section 402(c)(8)(B) of the Internal Rev-
enue Code of 1986. 
(E) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.— 
(i) IN GENERAL.—In the case of any qualified 2016 
disaster distribution, unless the taxpayer elects not 
to have this subparagraph 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. 
(ii) SPECIAL RULE.—For purposes of clause (i), rules 
similar to the rules of subparagraph (E) of section 
408A(d)(3) of the Internal Revenue Code of 1986 shall 
apply. 
(F) SPECIAL RULES.— 
(i) EXEMPTION
OF
DISTRIBUTIONS
FROM
TRUSTEE 
TO TRUSTEE TRANSFER AND WITHHOLDING RULES.—For 
purposes of sections 401(a)(31), 402(f), and 3405 of 
the Internal Revenue Code of 1986, qualified 2016 
disaster distribution shall not be treated as eligible 
rollover distributions. 
(ii) 
QUALIFIED
2016
DISASTER
DISTRIBUTIONS 
TREATED
AS
MEETING
PLAN
DISTRIBUTION
REQUIRE-
MENTS.—For purposes of the Internal Revenue Code 
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131 STAT. 2080 
PUBLIC LAW 115–97—DEC. 22, 2017 
of 1986, a qualified 2016 disaster 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) of the Internal Revenue Code of 1986. 
(2) PROVISIONS RELATING TO PLAN AMENDMENTS.— 
(A) IN
GENERAL.—If this paragraph applies to any 
amendment 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 subparagraph (B)(ii)(I). 
(B) AMENDMENTS TO WHICH SUBSECTION APPLIES.— 
(i) IN GENERAL.—This paragraph 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 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, 2018, or 
such later date as the Secretary prescribes. 
In the case of a governmental plan (as defined in 
section 414(d) of the Internal Revenue Code of 1986), 
subclause (II) shall be applied by substituting the date 
which is 2 years after the date otherwise applied under 
subclause (II). 
(ii) CONDITIONS.—This paragraph shall not apply 
to any amendment to a plan or contract unless such 
amendment applies retroactively for such period, and 
shall not apply to any such amendment unless the 
plan or contract is operated as if such amendment 
were in effect during the period— 
(I) beginning on the date that this section 
or the regulation described in clause (i)(I) takes 
effect (or in the case of a plan or contract amend-
ment not required by this section or such regula-
tion, the effective date specified by the plan), and 
(II) ending on the date described in clause 
(i)(II) (or, if earlier, the date the plan or contract 
amendment is adopted). 
(c) SPECIAL RULES FOR PERSONAL CASUALTY LOSSES RELATED 
TO 2016 MAJOR DISASTER.— 
(1) IN GENERAL.—If an individual has a net disaster loss 
for any taxable year beginning after December 31, 2015, and 
before January 1, 2018— 
(A) 
the 
amount 
determined 
under 
section 
165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall 
be equal to the sum of— 
(i) such net disaster loss, and 
(ii) so much of the excess referred to in the matter 
preceding clause (i) of section 165(h)(2)(A) of such Code 
(reduced by the amount in clause (i) of this subpara-
graph) as exceeds 10 percent of the adjusted gross 
income of the individual, 
(B) section 165(h)(1) of such Code shall be applied 
by substituting ‘‘$500’’ for ‘‘$500 ($100 for taxable years 
beginning after December 31, 2009)’’, 
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131 STAT. 2081 
PUBLIC LAW 115–97—DEC. 22, 2017 
(C) the standard deduction determined under section 
63(c) of such Code shall be increased by the net disaster 
loss, and 
(D) section 56(b)(1)(E) of such Code shall not apply 
to so much of the standard deduction as is attributable 
to the increase under subparagraph (C) of this paragraph. 
(2) NET DISASTER LOSS.—For purposes of this subsection, 
the term ‘‘net disaster loss’’ means the excess of qualified dis-
aster-related personal casualty losses over personal casualty 
gains (as defined in section 165(h)(3)(A) of the Internal Revenue 
Code of 1986). 
(3) QUALIFIED
DISASTER-RELATED
PERSONAL
CASUALTY 
LOSSES.—For purposes of this paragraph, the term ‘‘qualified 
disaster-related 
personal 
casualty 
losses’’ 
means 
losses 
described in section 165(c)(3) of the Internal Revenue Code 
of 1986 which arise in a disaster area described in subsection 
(a) on or after January 1, 2016, and which are attributable 
to the events giving rise to the Presidential declaration 
described in subsection (a) which was applicable to such area. 
PART IV—EDUCATION 
SEC. 11031. TREATMENT OF STUDENT LOANS DISCHARGED ON 
ACCOUNT OF DEATH OR DISABILITY. 
(a) IN GENERAL.—Section 108(f) is amended by adding at the 
end the following new paragraph: 
‘‘(5) DISCHARGES ON ACCOUNT OF DEATH OR DISABILITY.— 
‘‘(A) IN GENERAL.—In the case of an individual, gross 
income does not include any amount which (but for this 
subsection) would be includible in gross income for such 
taxable year by reasons of the discharge (in whole or in 
part) of any loan described in subparagraph (B) after 
December 31, 2017, and before January 1, 2026, if such 
discharge was— 
‘‘(i) pursuant to subsection (a) or (d) of section 
437 of the Higher Education Act of 1965 or the parallel 
benefit under part D of title IV of such Act (relating 
to the repayment of loan liability), 
‘‘(ii) pursuant to section 464(c)(1)(F) of such Act, 
or 
‘‘(iii) otherwise discharged on account of the death 
or total and permanent disability of the student. 
‘‘(B) LOANS DESCRIBED.—A loan is described in this 
subparagraph if such loan is— 
‘‘(i) a student loan (as defined in paragraph (2)), 
or 
‘‘(ii) a private education loan (as defined in section 
140(7) of the Consumer Credit Protection Act (15 
U.S.C. 1650(7))).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to discharges of indebtedness after December 31, 2017. 
SEC. 11032. 529 ACCOUNT FUNDING FOR ELEMENTARY AND SEC-
ONDARY EDUCATION. 
(a) IN GENERAL.— 
(1) IN GENERAL.—Section 529(c) is amended by adding at 
the end the following new paragraph: 
26 USC 108 note. 
26 USC 108. 
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131 STAT. 2082 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(7) TREATMENT
OF
ELEMENTARY
AND
SECONDARY
TUI-
TION.—Any reference in this subsection to the term ‘qualified 
higher education expense’ shall include a reference to expenses 
for tuition in connection with enrollment or attendance at an 
elementary or secondary public, private, or religious school.’’. 
(2) LIMITATION.—Section 529(e)(3)(A) is amended by adding 
at the end the following: ‘‘The amount of cash distributions 
from all qualified tuition programs described in subsection 
(b)(1)(A)(ii) with respect to a beneficiary during any taxable 
year shall, in the aggregate, include not more than $10,000 
in expenses described in subsection (c)(7) incurred during the 
taxable year.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions made after December 31, 2017. 
PART V—DEDUCTIONS AND EXCLUSIONS 
SEC. 11041. SUSPENSION OF DEDUCTION FOR PERSONAL EXEMPTIONS. 
(a) IN GENERAL.—Subsection (d) of section 151 is amended— 
(1) by striking ‘‘In the case of’’ in paragraph (4) and 
inserting ‘‘Except as provided in paragraph (5), in the case 
of’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(5) SPECIAL
RULES
FOR
TAXABLE
YEARS
2018
THROUGH 
2025.—In the case of a taxable year beginning after December 
31, 2017, and before January 1, 2026— 
‘‘(A) 
EXEMPTION
AMOUNT.—The 
term 
‘exemption 
amount’ means zero. 
‘‘(B) REFERENCES.—For purposes of any other provision 
of this title, the reduction of the exemption amount to 
zero under subparagraph (A) shall not be taken into 
account in determining whether a deduction is allowed 
or allowable, or whether a taxpayer is entitled to a deduc-
tion, under this section.’’. 
(b) APPLICATION TO ESTATES AND TRUSTS.—Section 642(b)(2)(C) 
is amended by adding at the end the following new clause: 
‘‘(iii) YEARS WHEN PERSONAL EXEMPTION AMOUNT 
IS ZERO.— 
‘‘(I) IN GENERAL.—In the case of any taxable 
year in which the exemption amount under section 
151(d) is zero, clause (i) shall be applied by sub-
stituting ‘$4,150’ for ‘the exemption amount under 
section 151(d)’. 
‘‘(II) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year 
after 2018, the $4,150 amount in subparagraph 
(A) shall be increased in the same manner as 
provided in section 6334(d)(4)(C).’’. 
(c) MODIFICATION OF WAGE WITHHOLDING RULES.— 
(1) IN GENERAL.—Section 3402(a)(2) is amended by striking 
‘‘means the amount’’ and all that follows and inserting ‘‘means 
the amount by which the wages exceed the taxpayer’s with-
holding allowance, prorated to the payroll period.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 3401 is amended by striking subsection 
(e). 
26 USC 529 note. 
26 USC 529. 
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131 STAT. 2083 
PUBLIC LAW 115–97—DEC. 22, 2017 
(B) Paragraphs (1) and (2) of section 3402(f) are 
amended to read as follows: 
‘‘(1) IN
GENERAL.—Under rules determined by the Sec-
retary, an employee receiving wages shall on any day be entitled 
to a withholding allowance determined based on— 
‘‘(A) whether the employee is an individual for whom 
a deduction is allowable with respect to another taxpayer 
under section 151; 
‘‘(B) if the employee is married, whether the employee’s 
spouse is entitled to an allowance, or would be so entitled 
if such spouse were an employee receiving wages, under 
subparagraph (A) or (D), but only if such spouse does 
not have in effect a withholding allowance certificate 
claiming such allowance; 
‘‘(C) the number of individuals with respect to whom, 
on the basis of facts existing at the beginning of such 
day, there may reasonably be expected to be allowable 
a credit under section 24(a) for the taxable year under 
subtitle A in respect of which amounts deducted and with-
held under this chapter in the calendar year in which 
such day falls are allowed as a credit; 
‘‘(D) any additional amounts to which the employee 
elects to take into account under subsection (m), but only 
if the employee’s spouse does not have in effect a with-
holding allowance certificate making such an election; 
‘‘(E) the standard deduction allowable to such employee 
(one-half of such standard deduction in the case of an 
employee who is married (as determined under section 
7703) and whose spouse is an employee receiving wages 
subject to withholding); and 
‘‘(F) whether the employee has withholding allowance 
certificates in effect with respect to more than 1 employer. 
‘‘(2) ALLOWANCE CERTIFICATES.— 
‘‘(A) ON
COMMENCEMENT
OF
EMPLOYMENT.—On or 
before the date of the commencement of employment with 
an employer, the employee shall furnish the employer with 
a signed withholding allowance certificate relating to the 
withholding allowance claimed by the employee, which 
shall in no event exceed the amount to which the employee 
is entitled. 
‘‘(B) CHANGE OF STATUS.—If, on any day during the 
calendar year, an employee’s withholding allowance is in 
excess of the withholding allowance to which the employee 
would be entitled had the employee submitted a true and 
accurate withholding allowance certificate to the employer 
on that day, the employee shall within 10 days thereafter 
furnish the employer with a new withholding allowance 
certificate. If, on any day during the calendar year, an 
employee’s withholding allowance is greater than the with-
holding allowance claimed, the employee may furnish the 
employer with a new withholding allowance certificate 
relating to the withholding allowance to which the 
employee is so entitled, which shall in no event exceed 
the amount to which the employee is entitled on such 
day. 
‘‘(C) CHANGE
OF
STATUS
WHICH
AFFECTS
NEXT
CAL-
ENDAR YEAR.—If on any day during the calendar year the 
26 USC 3402. 
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131 STAT. 2084 
PUBLIC LAW 115–97—DEC. 22, 2017 
withholding allowance to which the employee will be, or 
may reasonably be expected to be, entitled at the beginning 
of the employee’s next taxable year under subtitle A is 
different from the allowance to which the employee is enti-
tled on such day, the employee shall, in such cases and 
at such times as the Secretary shall by regulations pre-
scribe, furnish the employer with a withholding allowance 
certificate relating to the withholding allowance which the 
employee claims with respect to such next taxable year, 
which shall in no event exceed the withholding allowance 
to which the employee will be, or may reasonably be 
expected to be, so entitled.’’. 
(C) Subsections (b)(1), (b)(2), (f)(3), (f)(4), (f)(5), (f)(7) 
(including the heading thereof), (g)(4), (l)(1), (l)(2), and (n) 
of section 3402 are each amended by striking ‘‘exemption’’ 
each place it appears and inserting ‘‘allowance’’. 
(D) The heading of section 3402(f) is amended by 
striking ‘‘EXEMPTIONS’’ and inserting ‘‘ALLOWANCE’’. 
(E) Section 3402(m) is amended by striking ‘‘additional 
withholding allowances or additional reductions in with-
holding under this subsection. In determining the number 
of additional withholding allowances’’ and inserting ‘‘an 
additional withholding allowance or additional reductions 
in withholding under this subsection. In determining the 
additional withholding allowance’’. 
(F) Paragraphs (3) and (4) of section 3405(a) (and the 
heading for such paragraph (4)) are each amended by 
striking ‘‘exemption’’ each place it appears and inserting 
‘‘allowance’’. 
(G) Section 3405(a)(4) is amended by striking ‘‘shall 
be determined’’ and all that follows through ‘‘3 withholding 
exemptions’’ and inserting ‘‘shall be determined under rules 
prescribed by the Secretary’’. 
(d) EXCEPTION
FOR DETERMINING PROPERTY EXEMPT FROM 
LEVY.—Section 6334(d) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) YEARS WHEN PERSONAL EXEMPTION AMOUNT IS ZERO.— 
‘‘(A) IN
GENERAL.—In the case of any taxable year 
in which the exemption amount under section 151(d) is 
zero, paragraph (2) shall not apply and for purposes of 
paragraph (1) the term ‘exempt amount’ means an amount 
equal to— 
‘‘(i) the sum of the amount determined under 
subparagraph (B) and the standard deduction, divided 
by 
‘‘(ii) 52. 
‘‘(B) AMOUNT DETERMINED.—For purposes of subpara-
graph (A), the amount determined under this subparagraph 
is $4,150 multiplied by the number of the taxpayer’s 
dependents for the taxable year in which the levy occurs. 
‘‘(C) INFLATION ADJUSTMENT.—In the case of any tax-
able year beginning in a calendar year after 2018, the 
$4,150 amount in subparagraph (B) shall be increased by 
an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
26 USC 3405. 
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131 STAT. 2085 
PUBLIC LAW 115–97—DEC. 22, 2017 
the taxable year begins, determined by substituting 
‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof. 
If any increase determined under the preceding sentence 
is not a multiple of $100, such increase shall be rounded 
to the next lowest multiple of $100. 
‘‘(D) VERIFIED STATEMENT.—Unless the taxpayer sub-
mits to the Secretary a written and properly verified state-
ment specifying the facts necessary to determine the proper 
amount under subparagraph (A), subparagraph (A) shall 
be applied as if the taxpayer were a married individual 
filing a separate return with no dependents.’’. 
(e) PERSONS REQUIRED TO MAKE RETURNS OF INCOME.—Section 
6012 is amended by adding at the end the following new subsection: 
‘‘(f) SPECIAL RULE FOR TAXABLE YEARS 2018 THROUGH 2025.— 
In the case of a taxable year beginning after December 31, 2017, 
and before January 1, 2026, subsection (a)(1) shall not apply, and 
every individual who has gross income for the taxable year shall 
be required to make returns with respect to income taxes under 
subtitle A, except that a return shall not be required of— 
‘‘(1) an individual who is not married (determined by 
applying section 7703) and who has gross income for the taxable 
year which does not exceed the standard deduction applicable 
to such individual for such taxable year under section 63, 
or 
‘‘(2) an individual entitled to make a joint return if— 
‘‘(A) the gross income of such individual, when com-
bined with the gross income of such individual’s spouse, 
for the taxable year does not exceed the standard deduction 
which would be applicable to the taxpayer for such taxable 
year under section 63 if such individual and such individ-
ual’s spouse made a joint return, 
‘‘(B) such individual and such individual’s spouse have 
the same household as their home at the close of the 
taxable year, 
‘‘(C) such individual’s spouse does not make a separate 
return, and 
‘‘(D) neither such individual nor such individual’s 
spouse is an individual described in section 63(c)(5) who 
has income (other than earned income) in excess of the 
amount in effect under section 63(c)(5)(A).’’. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after December 31, 2017. 
(2) WAGE WITHHOLDING.—The Secretary of the Treasury 
may administer section 3402 for taxable years beginning before 
January 1, 2019, without regard to the amendments made 
by subsections (a) and (c). 
SEC. 11042. LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. 
TAXES. 
(a) IN GENERAL.—Subsection (b) of section 164 is amended 
by adding at the end the following new paragraph: 
‘‘(6) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR TAXABLE 
YEARS 2018 THROUGH 2025.—In the case of an individual and 
a taxable year beginning after December 31, 2017, and before 
January 1, 2026— 
26 USC 151 note. 
26 USC 6012. 
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131 STAT. 2086 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) foreign real property taxes shall not be taken 
into account under subsection (a)(1), and 
‘‘(B) the aggregate amount of taxes taken into account 
under paragraphs (1), (2), and (3) of subsection (a) and 
paragraph (5) of this subsection for any taxable year shall 
not exceed $10,000 ($5,000 in the case of a married indi-
vidual filing a separate return). 
The preceding sentence shall not apply to any foreign taxes 
described in subsection (a)(3) or to any taxes described in 
paragraph (1) and (2) of subsection (a) which are paid or accrued 
in carrying on a trade or business or an activity described 
in section 212. For purposes of subparagraph (B), an amount 
paid in a taxable year beginning before January 1, 2018, with 
respect to a State or local income tax imposed for a taxable 
year beginning after December 31, 2017, shall be treated as 
paid on the last day of the taxable year for which such tax 
is so imposed.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2016. 
SEC. 11043. LIMITATION ON DEDUCTION FOR QUALIFIED RESIDENCE 
INTEREST. 
(a) IN GENERAL.—Section 163(h)(3) is amended by adding at 
the end the following new subparagraph: 
‘‘(F) SPECIAL RULES FOR TAXABLE YEARS 2018 THROUGH 
2025.— 
‘‘(i) IN
GENERAL.—In the case of taxable years 
beginning after December 31, 2017, and before January 
1, 2026— 
‘‘(I) DISALLOWANCE OF HOME EQUITY INDEBTED-
NESS
INTEREST.—Subparagraph (A)(ii) shall not 
apply. 
‘‘(II) LIMITATION
ON
ACQUISITION
INDEBTED-
NESS.—Subparagraph (B)(ii) shall be applied by 
substituting ‘$750,000 ($375,000’ for ‘$1,000,000 
($500,000’. 
‘‘(III) TREATMENT OF INDEBTEDNESS INCURRED 
ON OR BEFORE DECEMBER 15, 2017.—Subclause (II) 
shall not apply to any indebtedness incurred on 
or before December 15, 2017, and, in applying 
such subclause to any indebtedness incurred after 
such date, the limitation under such subclause 
shall be reduced (but not below zero) by the 
amount of any indebtedness incurred on or before 
December 15, 2017, which is treated as acquisition 
indebtedness for purposes of this subsection for 
the taxable year. 
‘‘(IV) BINDING CONTRACT EXCEPTION.—In the 
case of a taxpayer who enters into a written 
binding contract before December 15, 2017, to close 
on the purchase of a principal residence before 
January 1, 2018, and who purchases such resi-
dence before April 1, 2018, subclause (III) shall 
be applied by substituting ‘April 1, 2018’ for 
‘December 15, 2017’. 
‘‘(ii) TREATMENT OF LIMITATION IN TAXABLE YEARS 
AFTER DECEMBER 31, 2025.—In the case of taxable years 
26 USC 163. 
26 USC 164 note. 
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131 STAT. 2087 
PUBLIC LAW 115–97—DEC. 22, 2017 
beginning after December 31, 2025, the limitation 
under subparagraph (B)(ii) shall be applied to the 
aggregate amount of indebtedness of the taxpayer 
described in subparagraph (B)(i) without regard to the 
taxable year in which the indebtedness was incurred. 
‘‘(iii) TREATMENT OF REFINANCINGS OF INDEBTED-
NESS.— 
‘‘(I) IN GENERAL.—In the case of any indebted-
ness which is incurred to refinance indebtedness, 
such refinanced indebtedness shall be treated for 
purposes of clause (i)(III) as incurred on the date 
that the original indebtedness was incurred to the 
extent the amount of the indebtedness resulting 
from such refinancing does not exceed the amount 
of the refinanced indebtedness. 
‘‘(II) LIMITATION ON PERIOD OF REFINANCING.— 
Subclause (I) shall not apply to any indebtedness 
after the expiration of the term of the original 
indebtedness or, if the principal of such original 
indebtedness is not amortized over its term, the 
expiration of the term of the 1st refinancing of 
such indebtedness (or if earlier, the date which 
is 30 years after the date of such 1st refinancing). 
‘‘(iv) COORDINATION WITH EXCLUSION OF INCOME 
FROM DISCHARGE OF INDEBTEDNESS.—Section 108(h)(2) 
shall be applied without regard to this subparagraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11044. MODIFICATION OF DEDUCTION FOR PERSONAL CASUALTY 
LOSSES. 
(a) IN GENERAL.—Subsection (h) of section 165 is amended 
by adding at the end the following new paragraph: 
‘‘(5) LIMITATION FOR TAXABLE YEARS 2018 THROUGH 2025.— 
‘‘(A) IN GENERAL.—In the case of an individual, except 
as provided in subparagraph (B), any personal casualty 
loss which (but for this paragraph) would be deductible 
in a taxable year beginning after December 31, 2017, and 
before January 1, 2026, shall be allowed as a deduction 
under subsection (a) only to the extent it is attributable 
to a Federally declared disaster (as defined in subsection 
(i)(5)). 
‘‘(B) EXCEPTION
RELATED
TO
PERSONAL
CASUALTY 
GAINS.—If a taxpayer has personal casualty gains for any 
taxable year to which subparagraph (A) applies— 
‘‘(i) subparagraph (A) shall not apply to the portion 
of the personal casualty loss not attributable to a Fed-
erally declared disaster (as so defined) to the extent 
such loss does not exceed such gains, and 
‘‘(ii) in applying paragraph (2) for purposes of 
subparagraph (A) to the portion of personal casualty 
loss which is so attributable to such a disaster, the 
amount of personal casualty gains taken into account 
under paragraph (2)(A) shall be reduced by the portion 
of such gains taken into account under clause (i).’’. 
26 USC 165. 
26 USC 163 note. 
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131 STAT. 2088 
PUBLIC LAW 115–97—DEC. 22, 2017 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to losses incurred in taxable years beginning after 
December 31, 2017. 
SEC. 11045. SUSPENSION OF MISCELLANEOUS ITEMIZED DEDUCTIONS. 
(a) IN GENERAL.—Section 67 is amended by adding at the 
end the following new subsection: 
‘‘(g) SUSPENSION FOR TAXABLE YEARS 2018 THROUGH 2025.— 
Notwithstanding subsection (a), no miscellaneous itemized deduc-
tion shall be allowed for any taxable year beginning after December 
31, 2017, and before January 1, 2026.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11046. SUSPENSION OF OVERALL LIMITATION ON ITEMIZED 
DEDUCTIONS. 
(a) IN GENERAL.—Section 68 is amended by adding at the 
end the following new subsection: 
‘‘(f) SECTION NOT TO APPLY.—This section shall not apply to 
any taxable year beginning after December 31, 2017, and before 
January 1, 2026.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11047. SUSPENSION OF EXCLUSION FOR QUALIFIED BICYCLE 
COMMUTING REIMBURSEMENT. 
(a) IN GENERAL.—Section 132(f) is amended by adding at the 
end the following new paragraph: 
‘‘(8) SUSPENSION
OF
QUALIFIED
BICYCLE
COMMUTING 
REIMBURSEMENT EXCLUSION.—Paragraph (1)(D) shall not apply 
to any taxable year beginning after December 31, 2017, and 
before January 1, 2026.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11048. SUSPENSION OF EXCLUSION FOR QUALIFIED MOVING 
EXPENSE REIMBURSEMENT. 
(a) IN GENERAL.—Section 132(g) is amended— 
(1) by striking ‘‘For purposes of this section, the term’’ 
and inserting ‘‘For purposes of this section— 
‘‘(1) IN GENERAL.—The term’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(2) SUSPENSION FOR TAXABLE YEARS 2018 THROUGH 2025.— 
Except in the case of a member of the Armed Forces of the 
United States on active duty who moves pursuant to a military 
order and incident to a permanent change of station, subsection 
(a)(6) shall not apply to any taxable year beginning after 
December 31, 2017, and before January 1, 2026.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11049. SUSPENSION OF DEDUCTION FOR MOVING EXPENSES. 
(a) IN GENERAL.—Section 217 is amended by adding at the 
end the following new subsection: 
‘‘(k) SUSPENSION
OF DEDUCTION
FOR TAXABLE YEARS 2018 
THROUGH 2025.—Except in the case of an individual to whom 
subsection (g) applies, this section shall not apply to any taxable 
26 USC 132 note. 
26 USC 132 note. 
26 USC 68 note. 
26 USC 67 note. 
26 USC 67. 
26 USC 165 note. 
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131 STAT. 2089 
PUBLIC LAW 115–97—DEC. 22, 2017 
year beginning after December 31, 2017, and before January 1, 
2026.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11050. LIMITATION ON WAGERING LOSSES. 
(a) IN GENERAL.—Section 165(d) is amended by adding at the 
end the following: ‘‘For purposes of the preceding sentence, in 
the case of taxable years beginning after December 31, 2017, and 
before January 1, 2026, the term ‘losses from wagering transactions’ 
includes any deduction otherwise allowable under this chapter 
incurred in carrying on any wagering transaction.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 11051. REPEAL OF DEDUCTION FOR ALIMONY PAYMENTS. 
(a) IN GENERAL.—Part VII of subchapter B is amended by 
striking section 215 (and by striking the item relating to such 
section in the table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) CORRESPONDING REPEAL OF PROVISIONS PROVIDING FOR 
INCLUSION OF ALIMONY IN GROSS INCOME.— 
(A) Subsection (a) of section 61 is amended by striking 
paragraph (8) and by redesignating paragraphs (9) through 
(15) as paragraphs (8) through (14), respectively. 
(B) Part II of subchapter B of chapter 1 is amended 
by striking section 71 (and by striking the item relating 
to such section in the table of sections for such part). 
(C) Subpart F of part I of subchapter J of chapter 
1 is amended by striking section 682 (and by striking 
the item relating to such section in the table of sections 
for such subpart). 
(2) RELATED TO REPEAL OF SECTION 215.— 
(A) Section 62(a) is amended by striking paragraph 
(10). 
(B) Section 3402(m)(1) is amended by striking ‘‘(other 
than paragraph (10) thereof)’’. 
(C) Section 6724(d)(3) is amended by striking subpara-
graph (C) and by redesignating subparagraph (D) as 
subparagraph (C). 
(3) RELATED TO REPEAL OF SECTION 71.— 
(A) Section 121(d)(3) is amended— 
(i) by striking ‘‘(as defined in section 71(b)(2))’’ 
in subparagraph (B), and 
(ii) by adding at the end the following new 
subparagraph: 
‘‘(C) DIVORCE OR SEPARATION INSTRUMENT.—For pur-
poses of this paragraph, the term ‘divorce or separation 
instrument’ means— 
‘‘(i) a decree of divorce or separate maintenance 
or a written instrument incident to such a decree, 
‘‘(ii) a written separation agreement, or 
‘‘(iii) a decree (not described in clause (i)) requiring 
a spouse to make payments for the support or mainte-
nance of the other spouse.’’. 
(B) Section 152(d)(5) is amended to read as follows: 
‘‘(5) SPECIAL RULES FOR SUPPORT.— 
‘‘(A) IN GENERAL.—For purposes of this subsection— 
26 USC 
prec. 681. 
26 USC 
prec. 71. 
26 USC 
prec. 211. 
26 USC 165 note. 
26 USC 165. 
26 USC 217 note. 
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131 STAT. 2090 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) payments to a spouse of alimony or separate 
maintenance payments shall not be treated as a pay-
ment by the payor spouse for the support of any 
dependent, and 
‘‘(ii) 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) ALIMONY OR SEPARATE MAINTENANCE PAYMENT.— 
For purposes of subparagraph (A), the term ‘alimony or 
separate maintenance payment’ means any payment in 
cash if— 
‘‘(i) such payment is received by (or on behalf of) 
a spouse under a divorce or separation instrument 
(as defined in section 121(d)(3)(C)), 
‘‘(ii) in the case of an individual legally separated 
from the individual’s spouse under a decree of divorce 
or of separate maintenance, the payee spouse and the 
payor spouse are not members of the same household 
at the time such payment is made, and 
‘‘(iii) there is no liability to make any such payment 
for any period after the death of the payee spouse 
and there is no liability to make any payment (in 
cash or property) as a substitute for such payments 
after the death of the payee spouse.’’. 
(C) Section 219(f)(1) is amended by striking the third 
sentence. 
(D) Section 220(f)(7) is amended by striking ‘‘subpara-
graph (A) of section 71(b)(2)’’ and inserting ‘‘clause (i) of 
section 121(d)(3)(C)’’. 
(E) Section 223(f)(7) is amended by striking ‘‘subpara-
graph (A) of section 71(b)(2)’’ and inserting ‘‘clause (i) of 
section 121(d)(3)(C)’’. 
(F) Section 382(l)(3)(B)(iii) is amended by striking ‘‘sec-
tion 71(b)(2)’’ and inserting ‘‘section 121(d)(3)(C)’’. 
(G) Section 408(d)(6) is amended by striking ‘‘subpara-
graph (A) of section 71(b)(2)’’ and inserting ‘‘clause (i) of 
section 121(d)(3)(C)’’. 
(4) 
ADDITIONAL
CONFORMING
AMENDMENTS.—Section 
7701(a)(17) is amended— 
(A) by striking ‘‘sections 682 and 2516’’ and inserting 
‘‘section 2516’’, and 
(B) by striking ‘‘such sections’’ each place it appears 
and inserting ‘‘such section’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to— 
(1) any divorce or separation instrument (as defined in 
section 71(b)(2) of the Internal Revenue Code of 1986 as in 
effect before the date of the enactment of this Act) executed 
after December 31, 2018, and 
(2) any divorce or separation instrument (as so defined) 
executed on or before such date and modified after such date 
if the modification expressly provides that the amendments 
made by this section apply to such modification. 
26 USC 61 note. 
26 USC 219. 
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131 STAT. 2091 
PUBLIC LAW 115–97—DEC. 22, 2017 
PART VI—INCREASE IN ESTATE AND GIFT TAX 
EXEMPTION 
SEC. 11061. INCREASE IN ESTATE AND GIFT TAX EXEMPTION. 
(a) IN GENERAL.—Section 2010(c)(3) is amended by adding at 
the end the following new subparagraph: 
‘‘(C) INCREASE IN BASIC EXCLUSION AMOUNT.—In the 
case of estates of decedents dying or gifts made after 
December 31, 2017, and before January 1, 2026, subpara-
graph (A) shall be applied by substituting ‘$10,000,000’ 
for ‘$5,000,000’.’’. 
(b) CONFORMING AMENDMENT.—Subsection (g) of section 2001 
is amended to read as follows: 
‘‘(g) MODIFICATIONS TO TAX PAYABLE.— 
‘‘(1) MODIFICATIONS TO GIFT TAX PAYABLE TO REFLECT DIF-
FERENT TAX RATES.—For purposes of applying subsection (b)(2) 
with respect to 1 or more gifts, the rates of tax under subsection 
(c) in effect at the decedent’s death shall, in lieu of the rates 
of tax in effect at the time of such gifts, be used both to 
compute— 
‘‘(A) the tax imposed by chapter 12 with respect to 
such gifts, and 
‘‘(B) the credit allowed against such tax under section 
2505, including in computing— 
‘‘(i) the applicable credit amount under section 
2505(a)(1), and 
‘‘(ii) the sum of the amounts allowed as a credit 
for all preceding periods under section 2505(a)(2). 
‘‘(2) MODIFICATIONS TO ESTATE TAX PAYABLE TO REFLECT 
DIFFERENT
BASIC
EXCLUSION
AMOUNTS.—The Secretary shall 
prescribe such regulations as may be necessary or appropriate 
to carry out this section with respect to any difference 
between— 
‘‘(A) the basic exclusion amount under section 
2010(c)(3) applicable at the time of the decedent’s death, 
and 
‘‘(B) the basic exclusion amount under such section 
applicable with respect to any gifts made by the decedent.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to estates of decedents dying and gifts made after 
December 31, 2017. 
PART VII—EXTENSION OF TIME LIMIT FOR 
CONTESTING IRS LEVY 
SEC. 11071. EXTENSION OF TIME LIMIT FOR CONTESTING IRS LEVY. 
(a) EXTENSION OF TIME FOR RETURN OF PROPERTY SUBJECT 
TO LEVY.—Subsection (b) of section 6343 is amended by striking 
‘‘9 months’’ and inserting ‘‘2 years’’. 
(b) PERIOD OF LIMITATION ON SUITS.—Subsection (c) of section 
6532 is amended— 
(1) by striking ‘‘9 months’’ in paragraph (1) and inserting 
‘‘2 years’’, and 
(2) by striking ‘‘9-month’’ in paragraph (2) and inserting 
‘‘2-year’’. 
26 USC 2001 
note. 
26 USC 2010. 
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131 STAT. 2092 
PUBLIC LAW 115–97—DEC. 22, 2017 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to— 
(1) levies made after the date of the enactment of this 
Act, and 
(2) levies made on or before such date if the 9-month 
period has not expired under section 6343(b) of the Internal 
Revenue Code of 1986 (without regard to this section) as of 
such date. 
PART VIII—INDIVIDUAL MANDATE 
SEC. 11081. ELIMINATION OF SHARED RESPONSIBILITY PAYMENT FOR 
INDIVIDUALS FAILING TO MAINTAIN MINIMUM ESSEN-
TIAL COVERAGE. 
(a) IN GENERAL.—Section 5000A(c) is amended— 
(1) in paragraph (2)(B)(iii), by striking ‘‘2.5 percent’’ and 
inserting ‘‘Zero percent’’, and 
(2) in paragraph (3)— 
(A) by striking ‘‘$695’’ in subparagraph (A) and 
inserting ‘‘$0’’, and 
(B) by striking subparagraph (D). 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to months beginning after December 31, 2018. 
Subtitle B—Alternative Minimum Tax 
SEC. 12001. REPEAL OF TAX FOR CORPORATIONS. 
(a) IN GENERAL.—Section 55(a) is amended by striking ‘‘There’’ 
and inserting ‘‘In the case of a taxpayer other than a corporation, 
there’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(6) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) CORPORATIONS.—In the case of a corporation, this 
subsection shall be applied by treating the corporation 
as having a tentative minimum tax of zero.’’. 
(2) Section 53(d)(2) is amended by inserting ‘‘, except that 
in the case of a corporation, the tentative minimum tax shall 
be treated as zero’’ before the period at the end. 
(3)(A) Section 55(b)(1) is amended to read as follows: 
‘‘(1) AMOUNT OF TENTATIVE TAX.— 
‘‘(A) IN GENERAL.—The tentative minimum tax for the 
taxable year is the sum of— 
‘‘(i) 26 percent of so much of the taxable excess 
as does not exceed $175,000, plus 
‘‘(ii) 28 percent of so much of the taxable excess 
as exceeds $175,000. 
The amount determined under the preceding sentence shall 
be reduced by the alternative minimum tax foreign tax 
credit for the taxable year. 
‘‘(B) TAXABLE EXCESS.—For purposes of this subsection, 
the term ‘taxable excess’ means so much of the alternative 
minimum taxable income for the taxable year as exceeds 
the exemption amount. 
‘‘(C) MARRIED INDIVIDUAL FILING SEPARATE RETURN.— 
In the case of a married individual filing a separate return, 
26 USC 5000A 
note. 
26 USC 5000A. 
26 USC 6343 
note. 
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131 STAT. 2093 
PUBLIC LAW 115–97—DEC. 22, 2017 
subparagraph (A) shall be applied by substituting 50 per-
cent of the dollar amount otherwise applicable under clause 
(i) and clause (ii) thereof. For purposes of the preceding 
sentence, marital status shall be determined under section 
7703.’’. 
(B) Section 55(b)(3) is amended by striking ‘‘paragraph 
(1)(A)(i)’’ and inserting ‘‘paragraph (1)(A)’’. 
(C) Section 59(a) is amended— 
(i) by striking ‘‘subparagraph (A)(i) or (B)(i) of section 
55(b)(1) (whichever applies) in lieu of the highest rate 
of tax specified in section 1 or 11 (whichever applies)’’ 
in paragraph (1)(C) and inserting ‘‘section 55(b)(1) in lieu 
of the highest rate of tax specified in section 1’’, and 
(ii) in paragraph (2), by striking ‘‘means’’ and all that 
follows and inserting ‘‘means the amount determined under 
the first sentence of section 55(b)(1)(A).’’. 
(D) Section 897(a)(2)(A) is amended by striking ‘‘section 
55(b)(1)(A)’’ and inserting ‘‘section 55(b)(1)’’. 
(E) Section 911(f) is amended— 
(i) in paragraph (1)(B)— 
(I) by striking ‘‘section 55(b)(1)(A)(ii)’’ and inserting 
‘‘section 55(b)(1)(B)’’, and 
(II) by striking ‘‘section 55(b)(1)(A)(i)’’ and inserting 
‘‘section 55(b)(1)(A)’’, and 
(ii) 
in 
paragraph 
(2)(B), 
by 
striking 
‘‘section 
55(b)(1)(A)(ii)’’ each place it appears and inserting ‘‘section 
55(b)(1)(B)’’. 
(4) Section 55(c)(1) is amended by striking ‘‘, the section 
936 credit allowable under section 27(b), and the Puerto Rico 
economic activity credit under section 30A’’. 
(5) Section 55(d), as amended by section 11002, is 
amended— 
(A) by striking paragraph (2) and redesignating para-
graphs (3) and (4) as paragraphs (2) and (3), respectively, 
(B) in paragraph (2) (as so redesignated), by inserting 
‘‘and’’ at the end of subparagraph (B), by striking ‘‘, and’’ 
at the end of subparagraph (C) and inserting a period, 
and by striking subparagraph (D), and 
(C) in paragraph (3) (as so redesignated)— 
(i) by striking ‘‘(b)(1)(A)(i)’’ in subparagraph (B)(i) 
and inserting ‘‘(b)(1)(A)’’, and 
(ii) by striking ‘‘paragraph (3)’’ in subparagraph 
(B)(iii) and inserting ‘‘paragraph (2)’’. 
(6) Section 55 is amended by striking subsection (e). 
(7) Section 56(b)(2) is amended by striking subparagraph 
(C) and by redesignating subparagraph (D) as subparagraph 
(C). 
(8)(A) Section 56 is amended by striking subsections (c) 
and (g). 
(B) Section 847 is amended by striking the last sentence 
of paragraph (9). 
(C) Section 848 is amended by striking subsection (i). 
(9) Section 58(a) is amended by striking paragraph (3) 
and redesignating paragraph (4) as paragraph (3). 
(10) Section 59 is amended by striking subsections (b) 
and (f). 
26 USC 55. 
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PUBLIC LAW 115–97—DEC. 22, 2017 
(11) Section 11(d) is amended by striking ‘‘the taxes 
imposed by subsection (a) and section 55’’ and inserting ‘‘the 
tax imposed by subsection (a)’’. 
(12) Section 12 is amended by striking paragraph (7). 
(13) Section 168(k) is amended by striking paragraph (4). 
(14) Section 882(a)(1) is amended by striking ‘‘, 55,’’. 
(15) Section 962(a)(1) is amended by striking ‘‘sections 11 
and 55’’ and inserting ‘‘section 11’’. 
(16) Section 1561(a) is amended— 
(A) by inserting ‘‘and’’ at the end of paragraph (1), 
by striking ‘‘, and’’ at the end of paragraph (2) and inserting 
a period, and by striking paragraph (3), and 
(B) by striking the last sentence. 
(17) Section 6425(c)(1)(A) is amended to read as follows: 
‘‘(A) the tax imposed by section 11 or 1201(a), or sub-
chapter L of chapter 1, whichever is applicable, over’’. 
(18) Section 6655(e)(2) is amended by striking ‘‘and alter-
native minimum taxable income’’ each place it appears in sub-
paragraphs (A) and (B)(i). 
(19) Section 6655(g)(1)(A) is amended by inserting ‘‘plus’’ 
at the end of clause (i), by striking clause (ii), and by redesig-
nating clause (iii) as clause (ii). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 12002. CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY OF 
CORPORATIONS. 
(a) CREDITS TREATED AS REFUNDABLE.—Section 53 is amended 
by adding at the end the following new subsection: 
‘‘(e) PORTION OF CREDIT TREATED AS REFUNDABLE.— 
‘‘(1) IN GENERAL.—In the case of any taxable year of a 
corporation beginning in 2018, 2019, 2020, or 2021, the limita-
tion under subsection (c) shall be increased by the AMT refund-
able credit amount for such year. 
‘‘(2) AMT REFUNDABLE CREDIT AMOUNT.—For purposes of 
paragraph (1), the AMT refundable credit amount is an amount 
equal to 50 percent (100 percent in the case of a taxable 
year beginning in 2021) of the excess (if any) of— 
‘‘(A) the minimum tax credit determined under sub-
section (b) for the taxable year, over 
‘‘(B) the minimum tax credit allowed under subsection 
(a) for such year (before the application of this subsection 
for such year). 
‘‘(3) CREDIT REFUNDABLE.—For purposes of this title (other 
than this section), the credit allowed by reason of this sub-
section shall be treated as a credit allowed under subpart 
C (and not this subpart). 
‘‘(4) SHORT TAXABLE YEARS.—In the case of any taxable 
year of less than 365 days, the AMT refundable credit amount 
determined under paragraph (2) with respect to such taxable 
year shall be the amount which bears the same ratio to such 
amount determined without regard to this paragraph as the 
number of days in such taxable year bears to 365.’’. 
(b) TREATMENT OF REFERENCES.—Section 53(d) is amended by 
adding at the end the following new paragraph: 
‘‘(3) AMT TERM REFERENCES.—In the case of a corporation, 
any references in this subsection to section 55, 56, or 57 shall 
26 USC 11 note. 
26 USC 11. 
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131 STAT. 2095 
PUBLIC LAW 115–97—DEC. 22, 2017 
be treated as a reference to such section as in effect before 
the amendments made by Tax Cuts and Jobs Act.’’. 
(c) 
CONFORMING
AMENDMENT.—Section 
1374(b)(3)(B) 
is 
amended by striking the last sentence thereof. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
(2) CONFORMING AMENDMENT.—The amendment made by 
subsection (c) shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 12003. INCREASED EXEMPTION FOR INDIVIDUALS. 
(a) IN GENERAL.—Section 55(d), as amended by the preceding 
provisions of this Act, is amended by adding at the end the following 
new paragraph: 
‘‘(4) SPECIAL RULE FOR TAXABLE YEARS BEGINNING AFTER 
2017 AND BEFORE 2026.— 
‘‘(A) IN
GENERAL.—In the case of any taxable year 
beginning after December 31, 2017, and before January 
1, 2026— 
‘‘(i) paragraph (1) shall be applied— 
‘‘(I) by substituting ‘$109,400’ for ‘$78,750’ in 
subparagraph (A), and 
‘‘(II) by substituting ‘$70,300’ for ‘$50,600’ in 
subparagraph (B), and 
‘‘(ii) paragraph (2) shall be applied— 
‘‘(I) by substituting ‘$1,000,000’ for ‘$150,000’ 
in subparagraph (A), 
‘‘(II) by substituting ‘50 percent of the dollar 
amount applicable under subparagraph (A)’ for 
‘$112,500’ in subparagraph (B), and 
‘‘(III) in the case of a taxpayer described in 
paragraph (1)(D), without regard to the substi-
tution under subclause (I). 
‘‘(B) INFLATION ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of any taxable year 
beginning in a calendar year after 2018, the amounts 
described in clause (ii) shall each be increased by an 
amount equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by sub-
stituting ‘calendar year 2017’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
‘‘(ii) AMOUNTS DESCRIBED.—The amounts described 
in this clause are the $109,400 amount in subpara-
graph (A)(i)(I), the $70,300 amount in subparagraph 
(A)(i)(II), and the $1,000,000 amount in subparagraph 
(A)(ii)(I). 
‘‘(iii) ROUNDING.—Any increased amount deter-
mined under clause (i) shall be rounded to the nearest 
multiple of $100. 
‘‘(iv) 
COORDINATION
WITH
CURRENT
ADJUST-
MENTS.—In the case of any taxable year to which 
subparagraph (A) applies, no adjustment shall be made 
under paragraph (3) to any of the numbers which 
26 USC 53 note. 
26 USC 1374. 
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PUBLIC LAW 115–97—DEC. 22, 2017 
are substituted under subparagraph (A) and adjusted 
under this subparagraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
Subtitle C—Business-related Provisions 
PART I—CORPORATE PROVISIONS 
SEC. 13001. 21-PERCENT CORPORATE TAX RATE. 
(a) IN GENERAL.—Subsection (b) of section 11 is amended to 
read as follows: 
‘‘(b) AMOUNT
OF TAX.—The amount of the tax imposed by 
subsection (a) shall be 21 percent of taxable income.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The following sections are each amended by striking 
‘‘section 11(b)(1)’’ and inserting ‘‘section 11(b)’’: 
(A) Section 280C(c)(3)(B)(ii)(II). 
(B) Paragraphs (2)(B) and (6)(A)(ii) of section 860E(e). 
(C) Section 7874(e)(1)(B). 
(2)(A) Part I of subchapter P of chapter 1 is amended 
by striking section 1201 (and by striking the item relating 
to such section in the table of sections for such part). 
(B) Section 12 is amended by striking paragraphs (4) and 
(6), and by redesignating paragraph (5) as paragraph (4). 
(C) Section 453A(c)(3) is amended by striking ‘‘or 1201 
(whichever is appropriate)’’. 
(D) Section 527(b) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby imposed’’ 
and inserting: 
‘‘(b) TAX IMPOSED.—A tax’’. 
(E) Sections 594(a) is amended by striking ‘‘taxes imposed 
by section 11 or 1201(a)’’ and inserting ‘‘tax imposed by section 
11’’. 
(F) Section 691(c)(4) is amended by striking ‘‘1201,’’. 
(G) Section 801(a) is amended— 
(i) by striking paragraph (2), and 
(ii) by striking all that precedes ‘‘is hereby imposed’’ 
and inserting: 
‘‘(a) TAX IMPOSED.—A tax’’. 
(H) Section 831(e) is amended by striking paragraph (1) 
and by redesignating paragraphs (2) and (3) as paragraphs 
(1) and (2), respectively. 
(I) Sections 832(c)(5) and 834(b)(1)(D) are each amended 
by striking ‘‘sec. 1201 and following,’’. 
(J) Section 852(b)(3)(A) is amended by striking ‘‘section 
1201(a)’’ and inserting ‘‘section 11(b)’’. 
(K) Section 857(b)(3) is amended— 
(i) by striking subparagraph (A) and redesignating sub-
paragraphs (B) through (F) as subparagraphs (A) through 
(E), respectively, 
(ii) in subparagraph (C), as so redesignated— 
(I) by striking ‘‘subparagraph (A)(ii)’’ in clause (i) 
thereof and inserting ‘‘paragraph (1)’’, 
26 USC 
prec. 1201. 
26 USC 11. 
26 USC 55 note. 
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PUBLIC LAW 115–97—DEC. 22, 2017 
(II) by striking ‘‘the tax imposed by subparagraph 
(A)(ii)’’ in clauses (ii) and (iv) thereof and inserting 
‘‘the tax imposed by paragraph (1) on undistributed 
capital gain’’, 
(iii) in subparagraph (E), as so redesignated, by 
striking ‘‘subparagraph (B) or (D)’’ and inserting ‘‘subpara-
graph (A) or (C)’’, and 
(iv) by adding at the end the following new subpara-
graph: 
‘‘(F) UNDISTRIBUTED CAPITAL GAIN.—For purposes of 
this paragraph, the term ‘undistributed capital gain’ means 
the excess of the net capital gain over the deduction for 
dividends paid (as defined in section 561) determined with 
reference to capital gain dividends only.’’. 
(L) Section 882(a)(1), as amended by section 12001, is fur-
ther amended by striking ‘‘or 1201(a)’’. 
(M) Section 904(b) is amended— 
(i) by striking ‘‘or 1201(a)’’ in paragraph (2)(C), 
(ii) by striking paragraph (3)(D) and inserting the fol-
lowing: 
‘‘(D) CAPITAL GAIN RATE DIFFERENTIAL.—There is a cap-
ital gain rate differential for any year if subsection (h) 
of section 1 applies to such taxable year.’’, and 
(iii) by striking paragraph (3)(E) and inserting the 
following: 
‘‘(E) RATE DIFFERENTIAL PORTION.—The rate differen-
tial portion of foreign source net capital gain, net capital 
gain, or the excess of net capital gain from sources within 
the United States over net capital gain, as the case may 
be, is the same proportion of such amount as— 
‘‘(i) the excess of— 
‘‘(I) the highest rate of tax set forth in sub-
section (a), (b), (c), (d), or (e) of section 1 (whichever 
applies), over 
‘‘(II) the alternative rate of tax determined 
under section 1(h), bears to 
‘‘(ii) that rate referred to in subclause (I).’’. 
(N) Section 1374(b) is amended by striking paragraph (4). 
(O) Section 1381(b) is amended by striking ‘‘taxes imposed 
by section 11 or 1201’’ and inserting ‘‘tax imposed by section 
11’’. 
(P) Sections 6425(c)(1)(A), as amended by section 12001, 
and 6655(g)(1)(A)(i) are each amended by striking ‘‘or 1201(a),’’. 
(Q) Section 7518(g)(6)(A) is amended by striking ‘‘or 
1201(a)’’. 
(3)(A) Section 1445(e)(1) is amended— 
(i) by striking ‘‘35 percent’’ and inserting ‘‘the highest 
rate of tax in effect for the taxable year under section 
11(b)’’, and 
(ii) by striking ‘‘of the gain’’ and inserting ‘‘multiplied 
by the gain’’. 
(B) Section 1445(e)(2) is amended by striking ‘‘35 percent 
of the amount’’ and inserting ‘‘the highest rate of tax in effect 
for the taxable year under section 11(b) multiplied by the 
amount’’. 
(C) Section 1445(e)(6) is amended— 
26 USC 882. 
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131 STAT. 2098 
PUBLIC LAW 115–97—DEC. 22, 2017 
(i) by striking ‘‘35 percent’’ and inserting ‘‘the highest 
rate of tax in effect for the taxable year under section 
11(b)’’, and 
(ii) by striking ‘‘of the amount’’ and inserting ‘‘multi-
plied by the amount’’. 
(D) Section 1446(b)(2)(B) is amended by striking ‘‘section 
11(b)(1)’’ and inserting ‘‘section 11(b)’’. 
(4) Section 852(b)(1) is amended by striking the last sen-
tence. 
(5)(A) Part I of subchapter B of chapter 5 is amended 
by striking section 1551 (and by striking the item relating 
to such section in the table of sections for such part). 
(B) Section 535(c)(5) is amended to read as follows: 
‘‘(5) CROSS REFERENCE.—For limitation on credit provided 
in paragraph (2) or (3) in the case of certain controlled corpora-
tions, see section 1561.’’. 
(6)(A) Section 1561, as amended by section 12001, is 
amended to read as follows: 
‘‘SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS CREDIT IN THE 
CASE OF CERTAIN CONTROLLED CORPORATIONS. 
‘‘(a) IN GENERAL.—The component members of a controlled 
group of corporations on a December 31 shall, for their taxable 
years which include such December 31, be limited for purposes 
of this subtitle to one $250,000 ($150,000 if any component member 
is a corporation described in section 535(c)(2)(B)) amount for pur-
poses of computing the accumulated earnings credit under section 
535(c)(2) and (3). Such amount shall be divided equally among 
the component members of such group on such December 31 unless 
the Secretary prescribes regulations permitting an unequal alloca-
tion of such amount. 
‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a corporation has a 
short taxable year which does not include a December 31 and 
is a component member of a controlled group of corporations with 
respect to such taxable year, then for purposes of this subtitle, 
the amount to be used in computing the accumulated earnings 
credit under section 535(c)(2) and (3) of such corporation for such 
taxable year shall be the amount specified in subsection (a) with 
respect to such group, divided by the number of corporations which 
are component members of such group on the last day of such 
taxable year. For purposes of the preceding sentence, section 1563(b) 
shall be applied as if such last day were substituted for December 
31.’’. 
(B) The table of sections for part II of subchapter 
B of chapter 5 is amended by striking the item relating 
to section 1561 and inserting the following new item: 
‘‘Sec. 1561. Limitation on accumulated earnings credit in the case of certain con-
trolled corporations.’’. 
(7) Section 7518(g)(6)(A) is amended— 
(A) by striking ‘‘With respect to the portion’’ and 
inserting ‘‘In the case of a taxpayer other than a corpora-
tion, with respect to the portion’’, and 
(B) by striking ‘‘(34 percent in the case of a corpora-
tion)’’. 
(c) EFFECTIVE DATE.— 
28 USC 11 note. 
26 USC 
prec. 1561. 
26 USC 
prec. 1551. 
26 USC 1446. 
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131 STAT. 2099 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by subsections (a) and (b) shall 
apply to taxable years beginning after December 31, 2017. 
(2) WITHHOLDING.—The amendments made by subsection 
(b)(3) shall apply to distributions made after December 31, 
2017. 
(3) CERTAIN TRANSFERS.—The amendments made by sub-
section (b)(6) shall apply to transfers made after December 
31, 2017. 
(d) NORMALIZATION REQUIREMENTS.— 
(1) IN GENERAL.—A normalization method of accounting 
shall not be treated as being used with respect to any public 
utility property for purposes of section 167 or 168 of the Internal 
Revenue Code of 1986 if the taxpayer, in computing its cost 
of service for ratemaking purposes and reflecting operating 
results in its regulated books of account, reduces the excess 
tax reserve more rapidly or to a greater extent than such 
reserve would be reduced under the average rate assumption 
method. 
(2) ALTERNATIVE METHOD FOR CERTAIN TAXPAYERS.—If, as 
of the first day of the taxable year that includes the date 
of enactment of this Act— 
(A) the taxpayer was required by a regulatory agency 
to compute depreciation for public utility property on the 
basis of an average life or composite rate method, and 
(B) the taxpayer’s books and underlying records did 
not contain the vintage account data necessary to apply 
the average rate assumption method, 
the taxpayer will be treated as using a normalization method 
of accounting if, with respect to such jurisdiction, the taxpayer 
uses the alternative method for public utility property that 
is subject to the regulatory authority of that jurisdiction. 
(3) DEFINITIONS.—For purposes of this subsection— 
(A) EXCESS
TAX
RESERVE.—The term ‘‘excess tax 
reserve’’ means the excess of— 
(i) the reserve for deferred taxes (as described in 
section 168(i)(9)(A)(ii) of the Internal Revenue Code 
of 1986) as of the day before the corporate rate reduc-
tions provided in the amendments made by this section 
take effect, over 
(ii) the amount which would be the balance in 
such reserve if the amount of such reserve were deter-
mined by assuming that the corporate rate reductions 
provided in this Act were in effect for all prior periods. 
(B) AVERAGE RATE ASSUMPTION METHOD.—The average 
rate assumption method is the method under which the 
excess in the reserve for deferred taxes is reduced over 
the remaining lives of the property as used in its regulated 
books of account which gave rise to the reserve for deferred 
taxes. Under such method, during the time period in which 
the timing differences for the property reverse, the amount 
of the adjustment to the reserve for the deferred taxes 
is calculated by multiplying— 
(i) the ratio of the aggregate deferred taxes for 
the property to the aggregate timing differences for 
the property as of the beginning of the period in ques-
tion, by 
26 USC 168 note. 
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131 STAT. 2100 
PUBLIC LAW 115–97—DEC. 22, 2017 
(ii) the amount of the timing differences which 
reverse during such period. 
(C) ALTERNATIVE METHOD.—The ‘‘alternative method’’ 
is the method in which the taxpayer— 
(i) computes the excess tax reserve on all public 
utility property included in the plant account on the 
basis of the weighted average life or composite rate 
used to compute depreciation for regulatory purposes, 
and 
(ii) reduces the excess tax reserve ratably over 
the remaining regulatory life of the property. 
(4) TAX INCREASED FOR NORMALIZATION VIOLATION.—If, for 
any taxable year ending after the date of the enactment of 
this Act, the taxpayer does not use a normalization method 
of accounting for the corporate rate reductions provided in 
the amendments made by this section— 
(A) the taxpayer’s tax for the taxable year shall be 
increased by the amount by which it reduces its excess 
tax reserve more rapidly than permitted under a normaliza-
tion method of accounting, and 
(B) such taxpayer shall not be treated as using a 
normalization method of accounting for purposes of sub-
sections (f)(2) and (i)(9)(C) of section 168 of the Internal 
Revenue Code of 1986. 
SEC. 13002. REDUCTION IN DIVIDEND RECEIVED DEDUCTIONS TO 
REFLECT LOWER CORPORATE INCOME TAX RATES. 
(a) DIVIDENDS RECEIVED BY CORPORATIONS.— 
(1) IN GENERAL.—Section 243(a)(1) is amended by striking 
‘‘70 percent’’ and inserting ‘‘50 percent’’. 
(2) DIVIDENDS FROM 20-PERCENT OWNED CORPORATIONS.— 
Section 243(c)(1) is amended— 
(A) by striking ‘‘80 percent’’ and inserting ‘‘65 percent’’, 
and 
(B) by striking ‘‘70 percent’’ and inserting ‘‘50 percent’’. 
(3) CONFORMING
AMENDMENT.—The heading for section 
243(c) is amended by striking ‘‘RETENTION OF 80-PERCENT DIVI-
DEND
RECEIVED
DEDUCTION’’ 
and 
inserting 
‘‘INCREASED 
PERCENTAGE’’. 
(b) DIVIDENDS RECEIVED FROM FSC.—Section 245(c)(1)(B) is 
amended— 
(1) by striking ‘‘70 percent’’ and inserting ‘‘50 percent’’, 
and 
(2) by striking ‘‘80 percent’’ and inserting ‘‘65 percent’’. 
(c) LIMITATION ON AGGREGATE AMOUNT OF DEDUCTIONS.—Sec-
tion 246(b)(3) is amended— 
(1) by striking ‘‘80 percent’’ in subparagraph (A) and 
inserting ‘‘65 percent’’, and 
(2) by striking ‘‘70 percent’’ in subparagraph (B) and 
inserting ‘‘50 percent’’. 
(d) REDUCTION
IN DEDUCTION WHERE PORTFOLIO STOCK IS 
DEBT-FINANCED.—Section 246A(a)(1) is amended— 
(1) by striking ‘‘70 percent’’ and inserting ‘‘50 percent’’, 
and 
(2) by striking ‘‘80 percent’’ and inserting ‘‘65 percent’’. 
(e) INCOME FROM SOURCES WITHIN THE UNITED STATES.—Sec-
tion 861(a)(2) is amended— 
26 USC 243. 
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131 STAT. 2101 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) by striking ‘‘100/70th’’ and inserting ‘‘100/50th’’ in 
subparagraph (B), and 
(2) in the flush sentence at the end— 
(A) by striking ‘‘100/80th’’ and inserting ‘‘100/65th’’, 
and 
(B) by striking ‘‘100/70th’’ and inserting ‘‘100/50th’’. 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
PART II—SMALL BUSINESS REFORMS 
SEC. 13101. MODIFICATIONS OF RULES FOR EXPENSING DEPRECIABLE 
BUSINESS ASSETS. 
(a) INCREASE IN LIMITATION.— 
(1) DOLLAR LIMITATION.—Section 179(b)(1) is amended by 
striking ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(2) 
REDUCTION
IN
LIMITATION.—Section 
179(b)(2) 
is 
amended by striking ‘‘$2,000,000’’ and inserting ‘‘$2,500,000’’. 
(3) INFLATION ADJUSTMENTS.— 
(A) 
IN
GENERAL.—Subparagraph 
(A) 
of 
section 
179(b)(6), as amended by section 11002(d), is amended— 
(i) by striking ‘‘2015’’ and inserting ‘‘2018’’, and 
(ii) in clause (ii), by striking ‘‘calendar year 2014’’ 
and inserting ‘‘calendar year 2017’’. 
(B) SPORT
UTILITY
VEHICLES.—Section 179(b)(6) is 
amended— 
(i) in subparagraph (A), by striking ‘‘paragraphs 
(1) and (2)’’ and inserting ‘‘paragraphs (1), (2), and 
(5)(A)’’, and 
(ii) in subparagraph (B), by inserting ‘‘($100 in 
the case of any increase in the amount under para-
graph (5)(A))’’ after ‘‘$10,000’’. 
(b) SECTION 179 PROPERTY TO INCLUDE QUALIFIED REAL PROP-
ERTY.— 
(1) IN
GENERAL.—Subparagraph (B) of section 179(d)(1) 
is amended to read as follows: 
‘‘(B) which is— 
‘‘(i) section 1245 property (as defined in section 
1245(a)(3)), or 
‘‘(ii) at the election of the taxpayer, qualified real 
property (as defined in subsection (f)), and’’. 
(2) QUALIFIED REAL PROPERTY DEFINED.—Subsection (f) of 
section 179 is amended to read as follows: 
‘‘(f) QUALIFIED REAL PROPERTY.—For purposes of this section, 
the term ‘qualified real property’ means— 
‘‘(1) any qualified improvement property described in sec-
tion 168(e)(6), and 
‘‘(2) any of the following improvements to nonresidential 
real property placed in service after the date such property 
was first placed in service: 
‘‘(A) Roofs. 
‘‘(B) Heating, ventilation, and air-conditioning prop-
erty. 
‘‘(C) Fire protection and alarm systems. 
‘‘(D) Security systems.’’. 
26 USC 179. 
26 USC 243 note. 
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131 STAT. 2102 
PUBLIC LAW 115–97—DEC. 22, 2017 
(c) REPEAL OF EXCLUSION FOR CERTAIN PROPERTY.—The last 
sentence of section 179(d)(1) is amended by inserting ‘‘(other than 
paragraph (2) thereof)’’ after ‘‘section 50(b)’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to property placed in service in taxable years beginning 
after December 31, 2017. 
SEC. 13102. SMALL BUSINESS ACCOUNTING METHOD REFORM AND SIM-
PLIFICATION. 
(a) MODIFICATION
OF
LIMITATION
ON
CASH
METHOD
OF 
ACCOUNTING.— 
(1) INCREASED LIMITATION.—So much of section 448(c) as 
precedes paragraph (2) is amended to read as follows: 
‘‘(c) GROSS RECEIPTS TEST.—For purposes of this section— 
‘‘(1) IN GENERAL.—A corporation or partnership meets the 
gross receipts test of this subsection for any taxable year if 
the average annual gross receipts of such entity for the 3- 
taxable-year period ending with the taxable year which pre-
cedes such taxable year does not exceed $25,000,000.’’. 
(2) APPLICATION OF EXCEPTION ON ANNUAL BASIS.—Section 
448(b)(3) is amended to read as follows: 
‘‘(3) ENTITIES WHICH MEET GROSS RECEIPTS TEST.—Para-
graphs (1) and (2) of subsection (a) shall not apply to any 
corporation or partnership for any taxable year if such entity 
(or any predecessor) meets the gross receipts test of subsection 
(c) for such taxable year.’’. 
(3) INFLATION ADJUSTMENT.—Section 448(c) is amended by 
adding at the end the following new paragraph: 
‘‘(4) ADJUSTMENT FOR INFLATION.—In the case of any tax-
able year beginning after December 31, 2018, the dollar amount 
in paragraph (1) shall be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the taxable 
year begins, by substituting ‘calendar year 2017’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
If any amount as increased under the preceding sentence is 
not a multiple of $1,000,000, such amount shall be rounded 
to the nearest multiple of $1,000,000.’’. 
(4) COORDINATION WITH SECTION 481.—Section 448(d)(7) is 
amended to read as follows: 
‘‘(7) COORDINATION
WITH
SECTION
481.—Any change in 
method of accounting made pursuant to this section shall be 
treated for purposes of section 481 as initiated by the taxpayer 
and made with the consent of the Secretary.’’. 
(5) APPLICATION OF EXCEPTION TO CORPORATIONS ENGAGED 
IN FARMING.— 
(A) IN GENERAL.—Section 447(c) is amended— 
(i) by inserting ‘‘for any taxable year’’ after ‘‘not 
being a corporation’’ in the matter preceding paragraph 
(1), and 
(ii) by amending paragraph (2) to read as follows: 
‘‘(2) a corporation which meets the gross receipts test of 
section 448(c) for such taxable year.’’. 
(B) COORDINATION WITH SECTION 481.—Section 447(f) 
is amended to read as follows: 
26 USC 179 note. 
26 USC 179. 
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131 STAT. 2103 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(f) COORDINATION WITH SECTION 481.—Any change in method 
of accounting made pursuant to this section shall be treated for 
purposes of section 481 as initiated by the taxpayer and made 
with the consent of the Secretary.’’. 
(C) 
CONFORMING
AMENDMENTS.—Section 
447 
is 
amended— 
(i) by striking subsections (d), (e), (h), and (i), 
and 
(ii) by redesignating subsections (f) and (g) (as 
amended by subparagraph (B)) as subsections (d) and 
(e), respectively. 
(b) EXEMPTION FROM UNICAP REQUIREMENTS.— 
(1) IN GENERAL.—Section 263A is amended by redesignating 
subsection (i) as subsection (j) and by inserting after subsection 
(h) the following new subsection: 
‘‘(i) EXEMPTION FOR CERTAIN SMALL BUSINESSES.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer (other than 
a tax shelter prohibited from using the cash receipts and 
disbursements method of accounting under section 448(a)(3)) 
which meets the gross receipts test of section 448(c) for any 
taxable year, this section shall not apply with respect to such 
taxpayer for such taxable year. 
‘‘(2) APPLICATION OF GROSS RECEIPTS TEST TO INDIVIDUALS, 
ETC.— In the case of any taxpayer which is not a corporation 
or a partnership, the gross receipts test of section 448(c) shall 
be applied in the same manner as if each trade or business 
of such taxpayer were a corporation or partnership. 
‘‘(3) COORDINATION
WITH
SECTION
481.—Any change in 
method of accounting made pursuant to this subsection shall 
be treated for purposes of section 481 as initiated by the tax-
payer and made with the consent of the Secretary.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
263A(b)(2) 
is 
amended to read as follows: 
‘‘(2) PROPERTY ACQUIRED FOR RESALE.—Real or personal 
property described in section 1221(a)(1) which is acquired by 
the taxpayer for resale.’’. 
(c) EXEMPTION FROM INVENTORIES.—Section 471 is amended 
by redesignating subsection (c) as subsection (d) and by inserting 
after subsection (b) the following new subsection: 
‘‘(c) EXEMPTION FOR CERTAIN SMALL BUSINESSES.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer (other than 
a tax shelter prohibited from using the cash receipts and 
disbursements method of accounting under section 448(a)(3)) 
which meets the gross receipts test of section 448(c) for any 
taxable year— 
‘‘(A) subsection (a) shall not apply with respect to such 
taxpayer for such taxable year, and 
‘‘(B) the taxpayer’s method of accounting for inventory 
for such taxable year shall not be treated as failing to 
clearly reflect income if such method either— 
‘‘(i) treats inventory as non-incidental materials 
and supplies, or 
‘‘(ii) conforms to such taxpayer’s method of 
accounting reflected in an applicable financial state-
ment of the taxpayer with respect to such taxable 
year or, if the taxpayer does not have any applicable 
financial statement with respect to such taxable year, 
26 USC 447. 
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131 STAT. 2104 
PUBLIC LAW 115–97—DEC. 22, 2017 
the books and records of the taxpayer prepared in 
accordance with the taxpayer’s accounting procedures. 
‘‘(2) APPLICABLE FINANCIAL STATEMENT.—For purposes of 
this subsection, the term ‘applicable financial statement’ has 
the meaning given the term in section 451(b)(3). 
‘‘(3) APPLICATION OF GROSS RECEIPTS TEST TO INDIVIDUALS, 
ETC.—In the case of any taxpayer which is not a corporation 
or a partnership, the gross receipts test of section 448(c) shall 
be applied in the same manner as if each trade or business 
of such taxpayer were a corporation or partnership. 
‘‘(4) COORDINATION
WITH
SECTION
481.—Any change in 
method of accounting made pursuant to this subsection shall 
be treated for purposes of section 481 as initiated by the tax-
payer and made with the consent of the Secretary.’’. 
(d) EXEMPTION FROM PERCENTAGE COMPLETION FOR LONG-TERM 
CONTRACTS.— 
(1) IN GENERAL.—Section 460(e)(1)(B) is amended— 
(A) by inserting ‘‘(other than a tax shelter prohibited 
from using the cash receipts and disbursements method 
of accounting under section 448(a)(3))’’ after ‘‘taxpayer’’ in 
the matter preceding clause (i), and 
(B) by amending clause (ii) to read as follows: 
‘‘(ii) who meets the gross receipts test of section 
448(c) for the taxable year in which such contract 
is entered into.’’. 
(2) CONFORMING AMENDMENTS.—Section 460(e) is amended 
by striking paragraphs (2) and (3), by redesignating paragraphs 
(4), (5), and (6) as paragraphs (3), (4), and (5), respectively, 
and by inserting after paragraph (1) the following new para-
graph: 
‘‘(2) RULES RELATED TO GROSS RECEIPTS TEST.— 
‘‘(A) APPLICATION OF GROSS RECEIPTS TEST TO INDIVID-
UALS, ETC.— For purposes of paragraph (1)(B)(ii), in the 
case of any taxpayer which is not a corporation or a part-
nership, the gross receipts test of section 448(c) shall be 
applied in the same manner as if each trade or business 
of such taxpayer were a corporation or partnership. 
‘‘(B) COORDINATION WITH SECTION 481.—Any change in 
method of accounting made pursuant to paragraph (1)(B)(ii) 
shall be treated as initiated by the taxpayer and made 
with the consent of the Secretary. Such change shall be 
effected on a cut-off basis for all similarly classified con-
tracts entered into on or after the year of change.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to 
taxable years beginning after December 31, 2017. 
(2) PRESERVATION
OF
SUSPENSE
ACCOUNT
RULES
WITH 
RESPECT TO ANY EXISTING SUSPENSE ACCOUNTS.—So much of 
the amendments made by subsection (a)(5)(C) as relate to sec-
tion 447(i) of the Internal Revenue Code of 1986 shall not 
apply with respect to any suspense account established under 
such section before the date of the enactment of this Act. 
(3) EXEMPTION FROM PERCENTAGE COMPLETION FOR LONG- 
TERM CONTRACTS.—The amendments made by subsection (d) 
shall apply to contracts entered into after December 31, 2017, 
in taxable years ending after such date. 
26 USC 263A 
note. 
26 USC 460. 
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131 STAT. 2105 
PUBLIC LAW 115–97—DEC. 22, 2017 
PART III—COST RECOVERY AND ACCOUNTING 
METHODS 
Subpart A—Cost Recovery 
SEC. 13201. TEMPORARY 100-PERCENT EXPENSING FOR CERTAIN BUSI-
NESS ASSETS. 
(a) INCREASED EXPENSING.— 
(1) IN GENERAL.—Section 168(k) is amended— 
(A) in paragraph (1)(A), by striking ‘‘50 percent’’ and 
inserting ‘‘the applicable percentage’’, and 
(B) in paragraph (5)(A)(i), by striking ‘‘50 percent’’ 
and inserting ‘‘the applicable percentage’’. 
(2) APPLICABLE
PERCENTAGE.—Paragraph (6) of section 
168(k) is amended to read as follows: 
‘‘(6) APPLICABLE PERCENTAGE.—For purposes of this sub-
section— 
‘‘(A) IN
GENERAL.—Except as otherwise provided in 
this paragraph, the term ‘applicable percentage’ means— 
‘‘(i) in the case of property placed in service after 
September 27, 2017, and before January 1, 2023, 100 
percent, 
‘‘(ii) in the case of property placed in service after 
December 31, 2022, and before January 1, 2024, 80 
percent, 
‘‘(iii) in the case of property placed in service after 
December 31, 2023, and before January 1, 2025, 60 
percent, 
‘‘(iv) in the case of property placed in service after 
December 31, 2024, and before January 1, 2026, 40 
percent, and 
‘‘(v) in the case of property placed in service after 
December 31, 2025, and before January 1, 2027, 20 
percent. 
‘‘(B) RULE FOR PROPERTY WITH LONGER PRODUCTION 
PERIODS.—In the case of property described in subpara-
graph (B) or (C) of paragraph (2), the term ‘applicable 
percentage’ means— 
‘‘(i) in the case of property placed in service after 
September 27, 2017, and before January 1, 2024, 100 
percent, 
‘‘(ii) in the case of property placed in service after 
December 31, 2023, and before January 1, 2025, 80 
percent, 
‘‘(iii) in the case of property placed in service after 
December 31, 2024, and before January 1, 2026, 60 
percent, 
‘‘(iv) in the case of property placed in service after 
December 31, 2025, and before January 1, 2027, 40 
percent, and 
‘‘(v) in the case of property placed in service after 
December 31, 2026, and before January 1, 2028, 20 
percent. 
‘‘(C) RULE FOR PLANTS BEARING FRUITS AND NUTS.— 
In the case of a specified plant described in paragraph 
(5), the term ‘applicable percentage’ means— 
26 USC 168. 
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131 STAT. 2106 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) in the case of a plant which is planted or 
grafted after September 27, 2017, and before January 
1, 2023, 100 percent, 
‘‘(ii) in the case of a plant which is planted or 
grafted after December 31, 2022, and before January 
1, 2024, 80 percent, 
‘‘(iii) in the case of a plant which is planted or 
grafted after December 31, 2023, and before January 
1, 2025, 60 percent, 
‘‘(iv) in the case of a plant which is planted or 
grafted after December 31, 2024, and before January 
1, 2026, 40 percent, and 
‘‘(v) in the case of a plant which is planted or 
grafted after December 31, 2025, and before January 
1, 2027, 20 percent.’’. 
(3) CONFORMING AMENDMENT.— 
(A) Paragraph (5) of section 168(k) is amended by 
striking subparagraph (F). 
(B) Section 168(k) is amended by adding at the end 
the following new paragraph: 
‘‘(8) PHASE
DOWN.—In the case of qualified property 
acquired by the taxpayer before September 28, 2017, and placed 
in service by the taxpayer after September 27, 2017, paragraph 
(6) shall be applied by substituting for each percentage 
therein— 
‘‘(A) ‘50 percent’ in the case of— 
‘‘(i) property placed in service before January 1, 
2018, and 
‘‘(ii) property described in subparagraph (B) or (C) 
of paragraph (2) which is placed in service in 2018, 
‘‘(B) ‘40 percent’ in the case of— 
‘‘(i) property placed in service in 2018 (other than 
property described in subparagraph (B) or (C) of para-
graph (2)), and 
‘‘(ii) property described in subparagraph (B) or (C) 
of paragraph (2) which is placed in service in 2019, 
‘‘(C) ‘30 percent’ in the case of— 
‘‘(i) property placed in service in 2019 (other than 
property described in subparagraph (B) or (C) of para-
graph (2)), and 
‘‘(ii) property described in subparagraph (B) or (C) 
of paragraph (2) which is placed in service in 2020, 
and 
‘‘(D) ‘0 percent’ in the case of— 
‘‘(i) property placed in service after 2019 (other 
than property described in subparagraph (B) or (C) 
of paragraph (2)), and 
‘‘(ii) property described in subparagraph (B) or (C) 
of paragraph (2) which is placed in service after 2020.’’. 
(b) EXTENSION.— 
(1) IN GENERAL.—Section 168(k) is amended— 
(A) in paragraph (2)— 
(i) in subparagraph (A)(iii), clauses (i)(III) and (ii) 
of subparagraph (B), and subparagraph (E)(i), by 
striking ‘‘January 1, 2020’’ each place it appears and 
inserting ‘‘January 1, 2027’’, and 
(ii) in subparagraph (B)— 
26 USC 168. 
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131 STAT. 2107 
PUBLIC LAW 115–97—DEC. 22, 2017 
(I) in clause (i)(II), by striking ‘‘January 1, 
2021’’ and inserting ‘‘January 1, 2028’’, and 
(II) in the heading of clause (ii), by striking 
‘‘PRE-JANUARY 1, 2020’’ and inserting ‘‘PRE-JANUARY 
1, 2027’’, and 
(B) in paragraph (5)(A), by striking ‘‘January 1, 2020’’ 
and inserting ‘‘January 1, 2027’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Clause (ii) of section 460(c)(6)(B) is amended by 
striking ‘‘January 1, 2020 (January 1, 2021’’ and inserting 
‘‘January 1, 2027 (January 1, 2028’’. 
(B) The heading of section 168(k) is amended by 
striking ‘‘ACQUIRED
AFTER
DECEMBER
31, 2007, AND 
BEFORE JANUARY 1, 2020’’. 
(c) APPLICATION TO USED PROPERTY.— 
(1) IN GENERAL.—Section 168(k)(2)(A)(ii) is amended to read 
as follows: 
‘‘(ii) the original use of which begins with the 
taxpayer or the acquisition of which by the taxpayer 
meets the requirements of clause (ii) of subparagraph 
(E), and’’. 
(2) ACQUISITION REQUIREMENTS.—Section 168(k)(2)(E)(ii) is 
amended to read as follows: 
‘‘(ii) ACQUISITION REQUIREMENTS.—An acquisition 
of property meets the requirements of this clause if— 
‘‘(I) such property was not used by the tax-
payer at any time prior to such acquisition, and 
‘‘(II) the acquisition of such property meets 
the requirements of paragraphs (2)(A), (2)(B), 
(2)(C), and (3) of section 179(d).’’, 
(3) ANTI-ABUSE
RULES.—Section 168(k)(2)(E) is further 
amended by amending clause (iii)(I) to read as follows: 
‘‘(I) property is used by a lessor of such prop-
erty and such use is the lessor’s first use of such 
property,’’. 
(d) EXCEPTION
FOR CERTAIN PROPERTY.—Section 168(k), as 
amended by this section, is amended by adding at the end the 
following new paragraph: 
‘‘(9) EXCEPTION FOR CERTAIN PROPERTY.—The term ‘quali-
fied property’ shall not include— 
‘‘(A) any property which is primarily used in a trade 
or business described in clause (iv) of section 163(j)(7)(A), 
or 
‘‘(B) any property used in a trade or business that 
has had floor plan financing indebtedness (as defined in 
paragraph (9) of section 163(j)), if the floor plan financing 
interest related to such indebtedness was taken into 
account under paragraph (1)(C) of such section.’’. 
(e) SPECIAL RULE.—Section 168(k), as amended by this section, 
is amended by adding at the end the following new paragraph: 
‘‘(10) SPECIAL
RULE
FOR
PROPERTY
PLACED
IN
SERVICE 
DURING CERTAIN PERIODS.— 
‘‘(A) IN GENERAL.—In the case of qualified property 
placed in service by the taxpayer during the first taxable 
year ending after September 27, 2017, if the taxpayer 
elects to have this paragraph apply for such taxable year, 
26 USC 460. 
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131 STAT. 2108 
PUBLIC LAW 115–97—DEC. 22, 2017 
paragraphs (1)(A) and (5)(A)(i) shall be applied by sub-
stituting ‘50 percent’ for ‘the applicable percentage’. 
‘‘(B) FORM OF ELECTION.—Any election under this para-
graph shall be made at such time and in such form and 
manner as the Secretary may prescribe.’’. 
(f) COORDINATION WITH SECTION 280F.—Clause (iii) of section 
168(k)(2)(F) is amended by striking ‘‘placed in service by the tax-
payer after December 31, 2017’’ and inserting ‘‘acquired by the 
taxpayer before September 28, 2017, and placed in service by the 
taxpayer after September 27, 2017’’. 
(g) QUALIFIED FILM
AND TELEVISION
AND LIVE THEATRICAL 
PRODUCTIONS.— 
(1) IN
GENERAL.—Clause (i) of section 168(k)(2)(A), as 
amended by section 13204, is amended— 
(A) in subclause (II), by striking ‘‘or’’, 
(B) in subclause (III), by adding ‘‘or’’ after the comma, 
and 
(C) by adding at the end the following: 
‘‘(IV) which is a qualified film or television produc-
tion (as defined in subsection (d) of section 181) for 
which a deduction would have been allowable under 
section 181 without regard to subsections (a)(2) and 
(g) of such section or this subsection, or 
‘‘(V) which is a qualified live theatrical production 
(as defined in subsection (e) of section 181) for which 
a deduction would have been allowable under section 
181 without regard to subsections (a)(2) and (g) of 
such section or this subsection,’’. 
(2) PRODUCTION PLACED IN SERVICE.—Paragraph (2) of sec-
tion 168(k) is amended by adding at the end the following: 
‘‘(H) PRODUCTION PLACED IN SERVICE.—For purposes 
of subparagraph (A)— 
‘‘(i) a qualified film or television production shall 
be considered to be placed in service at the time of 
initial release or broadcast, and 
‘‘(ii) a qualified live theatrical production shall be 
considered to be placed in service at the time of the 
initial live staged performance.’’. 
(h) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as provided by paragraph (2), 
the amendments made by this section shall apply to property 
which— 
(A) is acquired after September 27, 2017, and 
(B) is placed in service after such date. 
For purposes of the preceding sentence, property shall not 
be treated as acquired after the date on which a written binding 
contract is entered into for such acquisition. 
(2) SPECIFIED PLANTS.—The amendments made by this sec-
tion shall apply to specified plants planted or grafted after 
September 27, 2017. 
SEC. 13202. MODIFICATIONS TO DEPRECIATION LIMITATIONS ON 
LUXURY AUTOMOBILES AND PERSONAL USE PROPERTY. 
(a) LUXURY AUTOMOBILES.— 
(1) IN GENERAL.—280F(a)(1)(A) is amended— 
(A) in clause (i), by striking ‘‘$2,560’’ and inserting 
‘‘$10,000’’, 
26 USC 168 note. 
26 USC 168. 
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131 STAT. 2109 
PUBLIC LAW 115–97—DEC. 22, 2017 
(B) in clause (ii), by striking ‘‘$4,100’’ and inserting 
‘‘$16,000’’, 
(C) in clause (iii), by striking ‘‘$2,450’’ and inserting 
‘‘$9,600’’, and 
(D) in clause (iv), by striking ‘‘$1,475’’ and inserting 
‘‘$5,760’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Clause (ii) of section 280F(a)(1)(B) is amended by 
striking ‘‘$1,475’’ in the text and heading and inserting 
‘‘$5,760’’. 
(B) Paragraph (7) of section 280F(d) is amended— 
(i) in subparagraph (A), by striking ‘‘1988’’ and 
inserting ‘‘2018’’, and 
(ii) in subparagraph (B)(i)(II), by striking ‘‘1987’’ 
and inserting ‘‘2017’’. 
(b) REMOVAL OF COMPUTER EQUIPMENT FROM LISTED PROP-
ERTY.— 
(1) IN GENERAL.—Section 280F(d)(4)(A) is amended— 
(A) by inserting ‘‘and’’ at the end of clause (iii), 
(B) by striking clause (iv), and 
(C) by redesignating clause (v) as clause (iv). 
(2) 
CONFORMING
AMENDMENT.—Section 
280F(d)(4) 
is 
amended by striking subparagraph (B) and by redesignating 
subparagraph (C) as subparagraph (B). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to property placed in service after December 31, 2017, 
in taxable years ending after such date. 
SEC. 13203. MODIFICATIONS OF TREATMENT OF CERTAIN FARM PROP-
ERTY. 
(a) TREATMENT OF CERTAIN FARM PROPERTY AS 5-YEAR PROP-
ERTY.—Clause (vii) of section 168(e)(3)(B) is amended by striking 
‘‘after December 31, 2008, and which is placed in service before 
January 1, 2010’’ and inserting ‘‘after December 31, 2017’’. 
(b) REPEAL OF REQUIRED USE OF 150-PERCENT DECLINING BAL-
ANCE METHOD.—Section 168(b)(2) is amended by striking subpara-
graph (B) and by redesignating subparagraphs (C) and (D) as sub-
paragraphs (B) and (C), respectively. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to property placed in service after December 31, 2017, 
in taxable years ending after such date. 
SEC. 13204. APPLICABLE RECOVERY PERIOD FOR REAL PROPERTY. 
(a) IMPROVEMENTS TO REAL PROPERTY.— 
(1) ELIMINATION OF QUALIFIED LEASEHOLD IMPROVEMENT, 
QUALIFIED RESTAURANT, AND QUALIFIED RETAIL IMPROVEMENT 
PROPERTY.—Subsection (e) of section 168 is amended— 
(A) in subparagraph (E) of paragraph (3)— 
(i) by striking clauses (iv), (v), and (ix), 
(ii) in clause (vii), by inserting ‘‘and’’ at the end, 
(iii) in clause (viii), by striking ‘‘, and’’ and 
inserting a period, and 
(iv) by redesignating clauses (vi), (vii), and (viii), 
as so amended, as clauses (iv), (v), and (vi), respec-
tively, and 
(B) by striking paragraphs (6), (7), and (8). 
26 USC 168 note. 
26 USC 280F 
note. 
26 USC 280F. 
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131 STAT. 2110 
PUBLIC LAW 115–97—DEC. 22, 2017 
(2) APPLICATION OF STRAIGHT LINE METHOD TO QUALIFIED 
IMPROVEMENT PROPERTY.—Paragraph (3) of section 168(b) is 
amended— 
(A) by striking subparagraphs (G), (H), and (I), and 
(B) by inserting after subparagraph (F) the following 
new subparagraph: 
‘‘(G) Qualified improvement property described in sub-
section (e)(6).’’. 
(3) ALTERNATIVE DEPRECIATION SYSTEM.— 
(A) ELECTING REAL PROPERTY TRADE OR BUSINESS.— 
Subsection (g) of section 168 is amended— 
(i) in paragraph (1)— 
(I) in subparagraph (D), by striking ‘‘and’’ at 
the end, 
(II) in subparagraph (E), by inserting ‘‘and’’ 
at the end, and 
(III) by inserting after subparagraph (E) the 
following new subparagraph: 
‘‘(F) any property described in paragraph (8),’’, and 
(ii) by adding at the end the following new para-
graph: 
‘‘(8) ELECTING REAL PROPERTY TRADE OR BUSINESS.—The 
property described in this paragraph shall consist of any non-
residential real property, residential rental property, and quali-
fied improvement property held by an electing real property 
trade or business (as defined in 163(j)(7)(B)).’’. 
(B) QUALIFIED
IMPROVEMENT
PROPERTY.—The table 
contained in subparagraph (B) of section 168(g)(3) is 
amended— 
(i) by inserting after the item relating to subpara-
graph (D)(ii) the following new item: 
‘‘(D)(v) ........................................................................................................
20’’ 
, and 
(ii) by striking the item relating to subparagraph 
(E)(iv) and all that follows through the item relating 
to subparagraph (E)(ix) and inserting the following: 
‘‘(E)(iv) .......................................................................................................
20
(E)(v) ..........................................................................................................
30
(E)(vi) .........................................................................................................
35’’. 
(C) APPLICABLE
RECOVERY
PERIOD
FOR
RESIDENTIAL 
RENTAL PROPERTY.—The table contained in subparagraph 
(C) of section 168(g)(2) is amended by striking clauses 
(iii) and (iv) and inserting the following: 
‘‘(iii) Residential rental property ............................................................. 30 years
(iv) Nonresidential real property ............................................................. 40 years
(v) Any railroad grading or tunnel bore or water utility property ....... 50 years’’. 
(4) CONFORMING AMENDMENTS.— 
(A) Clause (i) of section 168(k)(2)(A) is amended— 
(i) in subclause (II), by inserting ‘‘or’’ after the 
comma, 
(ii) in subclause (III), by striking ‘‘or’’ at the end, 
and 
(iii) by striking subclause (IV). 
(B) Section 168 is amended— 
(i) in subsection (e), as amended by paragraph 
(1)(B), by adding at the end the following: 
‘‘(6) QUALIFIED IMPROVEMENT PROPERTY.— 
26 USC 168. 
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131 STAT. 2111 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) IN GENERAL.—The term ‘qualified improvement 
property’ means any improvement to an interior portion 
of a building which is nonresidential real property if such 
improvement is placed in service after the date such 
building was first placed in service. 
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
INCLUDED.—Such 
term shall not include any improvement for which the 
expenditure is attributable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, or 
‘‘(iii) the internal structural framework of the 
building.’’, and 
(ii) in subsection (k), by striking paragraph (3). 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to property placed 
in service after December 31, 2017. 
(2) AMENDMENTS
RELATED
TO
ELECTING
REAL
PROPERTY 
TRADE
OR
BUSINESS.—The amendments made by subsection 
(a)(3)(A) shall apply to taxable years beginning after December 
31, 2017. 
SEC. 13205. USE OF ALTERNATIVE DEPRECIATION SYSTEM FOR 
ELECTING FARMING BUSINESSES. 
(a) IN GENERAL.—Section 168(g)(1), as amended by section 
13204, is amended by striking ‘‘and’’ at the end of subparagraph 
(E), by inserting ‘‘and’’ at the end of subparagraph (F), and by 
inserting after subparagraph (F) the following new subparagraph: 
‘‘(G) any property with a recovery period of 10 years 
or more which is held by an electing farming business 
(as defined in section 163(j)(7)(C)),’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13206. AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
EXPENDITURES. 
(a) IN GENERAL.—Section 174 is amended to read as follows: 
‘‘SEC. 
174. 
AMORTIZATION 
OF 
RESEARCH 
AND 
EXPERIMENTAL 
EXPENDITURES. 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s specified research 
or experimental expenditures for any taxable year— 
‘‘(1) except as provided in paragraph (2), no deduction shall 
be allowed for such expenditures, and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital account, and 
‘‘(B) be allowed an amortization deduction of such 
expenditures ratably over the 5-year period (15-year period 
in the case of any specified research or experimental 
expenditures which are attributable to foreign research 
(within the meaning of section 41(d)(4)(F))) beginning with 
the midpoint of the taxable year in which such expenditures 
are paid or incurred. 
‘‘(b) SPECIFIED RESEARCH OR EXPERIMENTAL EXPENDITURES.— 
For purposes of this section, the term ‘specified research or experi-
mental expenditures’ means, with respect to any taxable year, 
research or experimental expenditures which are paid or incurred 
26 USC 168 note. 
26 USC 168. 
26 USC 168 note. 
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131 STAT. 2112 
PUBLIC LAW 115–97—DEC. 22, 2017 
by the taxpayer during such taxable year in connection with the 
taxpayer’s trade or business. 
‘‘(c) SPECIAL RULES.— 
‘‘(1) LAND AND OTHER PROPERTY.—This section shall not 
apply to any expenditure for the acquisition or improvement 
of land, or for the acquisition or improvement of property to 
be used in connection with the research or experimentation 
and of a character which is subject to the allowance under 
section 167 (relating to allowance for depreciation, etc.) or sec-
tion 611 (relating to allowance for depletion); but for purposes 
of this section allowances under section 167, and allowances 
under section 611, shall be considered as expenditures. 
‘‘(2) EXPLORATION EXPENDITURES.—This section shall not 
apply to any expenditure paid or incurred for the purpose 
of ascertaining the existence, location, extent, or quality of 
any deposit of ore or other mineral (including oil and gas). 
‘‘(3) SOFTWARE DEVELOPMENT.—For purposes of this sec-
tion, any amount paid or incurred in connection with the 
development of any software shall be treated as a research 
or experimental expenditure. 
‘‘(d) TREATMENT UPON DISPOSITION, RETIREMENT, OR ABANDON-
MENT.—If any property with respect to which specified research 
or experimental expenditures are paid or incurred is disposed, 
retired, or abandoned during the period during which such expendi-
tures are allowed as an amortization deduction under this section, 
no deduction shall be allowed with respect to such expenditures 
on account of such disposition, retirement, or abandonment and 
such amortization deduction shall continue with respect to such 
expenditures.’’. 
(b) CHANGE IN METHOD OF ACCOUNTING.—The amendments 
made by subsection (a) shall be treated as a change in method 
of accounting for purposes of section 481 of the Internal Revenue 
Code of 1986 and— 
(1) such change shall be treated as initiated by the tax-
payer, 
(2) such change shall be treated as made with the consent 
of the Secretary, and 
(3) such change shall be applied only on a cut-off basis 
for any research or experimental expenditures paid or incurred 
in taxable years beginning after December 31, 2021, and no 
adjustments under section 481(a) shall be made. 
(c) CLERICAL AMENDMENT.—The table of sections for part VI 
of subchapter B of chapter 1 is amended by striking the item 
relating to section 174 and inserting the following new item: 
‘‘Sec. 174. Amortization of research and experimental expenditures.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 41(d)(1)(A) is amended by striking ‘‘expenses 
under section 174’’ and inserting ‘‘specified research or experi-
mental expenditures under section 174’’. 
(2) Subsection (c) of section 280C is amended— 
(A) by striking paragraph (1) and inserting the fol-
lowing: 
‘‘(1) IN GENERAL.—If— 
‘‘(A) the amount of the credit determined for the taxable 
year under section 41(a)(1), exceeds 
26 USC 
prec. 161. 
26 USC 174 note. 
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131 STAT. 2113 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) the amount allowable as a deduction for such 
taxable year for qualified research expenses or basic 
research expenses, 
the amount chargeable to capital account for the taxable year 
for such expenses shall be reduced by the amount of such 
excess.’’, 
(B) by striking paragraph (2), 
(C) by redesignating paragraphs (3) (as amended by 
this Act) and (4) as paragraphs (2) and (3), respectively, 
and 
(D) in paragraph (2), as redesignated by subparagraph 
(C), by striking ‘‘paragraphs (1) and (2)’’ and inserting 
‘‘paragraph (1)’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred in taxable years beginning 
after December 31, 2021. 
SEC. 13207. EXPENSING OF CERTAIN COSTS OF REPLANTING CITRUS 
PLANTS LOST BY REASON OF CASUALTY. 
(a) IN GENERAL.—Section 263A(d)(2) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) SPECIAL TEMPORARY RULE FOR CITRUS PLANTS LOST 
BY REASON OF CASUALTY.— 
‘‘(i) IN GENERAL.—In the case of the replanting 
of citrus plants, subparagraph (A) shall apply to 
amounts paid or incurred by a person (other than 
the taxpayer described in subparagraph (A)) if— 
‘‘(I) the taxpayer described in subparagraph 
(A) has an equity interest of not less than 50 
percent in the replanted citrus plants at all times 
during the taxable year in which such amounts 
were paid or incurred and such other person holds 
any part of the remaining equity interest, or 
‘‘(II) such other person acquired the entirety 
of such taxpayer’s equity interest in the land on 
which the lost or damaged citrus plants were 
located at the time of such loss or damage, and 
the replanting is on such land. 
‘‘(ii) TERMINATION.—Clause (i) shall not apply to 
any cost paid or incurred after the date which is 10 
years after the date of the enactment of the Tax Cuts 
and Jobs Act.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to costs paid or incurred after the date of the enactment 
of this Act. 
Subpart B—Accounting Methods 
SEC. 13221. CERTAIN SPECIAL RULES FOR TAXABLE YEAR OF INCLU-
SION. 
(a) INCLUSION NOT LATER THAN FOR FINANCIAL ACCOUNTING 
PURPOSES.—Section 451 is amended by redesignating subsections 
(b) through (i) as subsections (c) through (j), respectively, and by 
inserting after subsection (a) the following new subsection: 
‘‘(b) INCLUSION NOT LATER THAN FOR FINANCIAL ACCOUNTING 
PURPOSES.— 
26 USC 263A 
note. 
26 USC 263A. 
26 USC 41 note. 
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131 STAT. 2114 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(1) INCOME
TAKEN
INTO
ACCOUNT
IN
FINANCIAL
STATE-
MENT.— 
‘‘(A) IN GENERAL.—In the case of a taxpayer the taxable 
income of which is computed under an accrual method 
of accounting, the all events test with respect to any item 
of gross income (or portion thereof) shall not be treated 
as met any later than when such item (or portion thereof) 
is taken into account as revenue in— 
‘‘(i) an applicable financial statement of the tax-
payer, or 
‘‘(ii) such other financial statement as the Sec-
retary may specify for purposes of this subsection. 
‘‘(B) EXCEPTION.—This paragraph shall not apply to— 
‘‘(i) a taxpayer which does not have a financial 
statement described in clause (i) or (ii) of subparagraph 
(A) for a taxable year, or 
‘‘(ii) any item of gross income in connection with 
a mortgage servicing contract. 
‘‘(C) ALL EVENTS TEST.—For purposes of this section, 
the all events test is met with respect to any item of 
gross income if all the events have occurred which fix 
the right to receive such income and the amount of such 
income can be determined with reasonable accuracy. 
‘‘(2) 
COORDINATION
WITH
SPECIAL
METHODS
OF 
ACCOUNTING.—Paragraph (1) shall not apply with respect to 
any item of gross income for which the taxpayer uses a special 
method of accounting provided under any other provision of 
this chapter, other than any provision of part V of subchapter 
P (except as provided in clause (ii) of paragraph (1)(B)). 
‘‘(3) APPLICABLE FINANCIAL STATEMENT.—For purposes of 
this subsection, the term ‘applicable financial statement’ 
means— 
‘‘(A) a financial statement which is certified as being 
prepared in accordance with generally accepted accounting 
principles and which is— 
‘‘(i) a 10–K (or successor form), or annual state-
ment to shareholders, required to be filed by the tax-
payer with the United States Securities and Exchange 
Commission, 
‘‘(ii) an audited financial statement of the taxpayer 
which is used for— 
‘‘(I) credit purposes, 
‘‘(II) reporting to shareholders, partners, or 
other proprietors, or to beneficiaries, or 
‘‘(III) any other substantial nontax purpose, 
but only if there is no statement of the taxpayer 
described in clause (i), or 
‘‘(iii) filed by the taxpayer with any other Federal 
agency for purposes other than Federal tax purposes, 
but only if there is no statement of the taxpayer 
described in clause (i) or (ii), 
‘‘(B) a financial statement which is made on the basis 
of international financial reporting standards and is filed 
by the taxpayer with an agency of a foreign government 
which is equivalent to the United States Securities and 
Exchange Commission and which has reporting standards 
not less stringent than the standards required by such 
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131 STAT. 2115 
PUBLIC LAW 115–97—DEC. 22, 2017 
Commission, but only if there is no statement of the tax-
payer described in subparagraph (A), or 
‘‘(C) a financial statement filed by the taxpayer with 
any other regulatory or governmental body specified by 
the Secretary, but only if there is no statement of the 
taxpayer described in subparagraph (A) or (B). 
‘‘(4) ALLOCATION OF TRANSACTION PRICE.—For purposes of 
this subsection, in the case of a contract which contains multiple 
performance obligations, the allocation of the transaction price 
to each performance obligation shall be equal to the amount 
allocated to each performance obligation for purposes of 
including such item in revenue in the applicable financial state-
ment of the taxpayer. 
‘‘(5) GROUP OF ENTITIES.—For purposes of paragraph (1), 
if the financial results of a taxpayer are reported on the 
applicable financial statement (as defined in paragraph (3)) 
for a group of entities, such statement shall be treated as 
the applicable financial statement of the taxpayer.’’. 
(b) TREATMENT
OF
ADVANCE
PAYMENTS.—Section 451, as 
amended by subsection (a), is amended by redesignating subsections 
(c) through (j) as subsections (d) through (k), respectively, and 
by inserting after subsection (b) the following new subsection: 
‘‘(c) TREATMENT OF ADVANCE PAYMENTS.— 
‘‘(1) IN
GENERAL.—A taxpayer which computes taxable 
income under the accrual method of accounting, and receives 
any advance payment during the taxable year, shall— 
‘‘(A) except as provided in subparagraph (B), include 
such advance payment in gross income for such taxable 
year, or 
‘‘(B) if the taxpayer elects the application of this 
subparagraph with respect to the category of advance pay-
ments to which such advance payment belongs, the tax-
payer shall— 
‘‘(i) to the extent that any portion of such advance 
payment is required under subsection (b) to be included 
in gross income in the taxable year in which such 
payment is received, so include such portion, and 
‘‘(ii) include the remaining portion of such advance 
payment in gross income in the taxable year following 
the taxable year in which such payment is received. 
‘‘(2) ELECTION.— 
‘‘(A) IN
GENERAL.—Except as otherwise provided in 
this paragraph, the election under paragraph (1)(B) shall 
be made at such time, in such form and manner, and 
with respect to such categories of advance payments, as 
the Secretary may provide. 
‘‘(B) PERIOD TO WHICH ELECTION APPLIES.—An election 
under paragraph (1)(B) shall be effective for the taxable 
year with respect to which it is first made and for all 
subsequent taxable years, unless the taxpayer secures the 
consent of the Secretary to revoke such election. For pur-
poses of this title, the computation of taxable income under 
an election made under paragraph (1)(B) shall be treated 
as a method of accounting. 
‘‘(3) TAXPAYERS CEASING TO EXIST.—Except as otherwise 
provided by the Secretary, the election under paragraph (1)(B) 
shall not apply with respect to advance payments received 
26 USC 451. 
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131 STAT. 2116 
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by the taxpayer during a taxable year if such taxpayer ceases 
to exist during (or with the close of) such taxable year. 
‘‘(4) ADVANCE PAYMENT.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘advance payment’ means 
any payment— 
‘‘(i) the full inclusion of which in the gross income 
of the taxpayer for the taxable year of receipt is a 
permissible method of accounting under this section 
(determined without regard to this subsection), 
‘‘(ii) any portion of which is included in revenue 
by the taxpayer in a financial statement described 
in clause (i) or (ii) of subsection (b)(1)(A) for a subse-
quent taxable year, and 
‘‘(iii) which is for goods, services, or such other 
items as may be identified by the Secretary for pur-
poses of this clause. 
‘‘(B) EXCLUSIONS.—Except as otherwise provided by 
the Secretary, such term shall not include— 
‘‘(i) rent, 
‘‘(ii) insurance premiums governed by subchapter 
L, 
‘‘(iii) 
payments 
with 
respect 
to 
financial 
instruments, 
‘‘(iv) payments with respect to warranty or guar-
antee contracts under which a third party is the pri-
mary obligor, 
‘‘(v) payments subject to section 871(a), 881, 1441, 
or 1442, 
‘‘(vi) payments in property to which section 83 
applies, and 
‘‘(vii) any other payment identified by the Sec-
retary for purposes of this subparagraph. 
‘‘(C) RECEIPT.—For purposes of this subsection, an item 
of gross income is received by the taxpayer if it is actually 
or constructively received, or if it is due and payable to 
the taxpayer. 
‘‘(D) ALLOCATION
OF
TRANSACTION
PRICE.—For pur-
poses of this subsection, rules similar to subsection (b)(4) 
shall apply.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
(d) COORDINATION WITH SECTION 481.— 
(1) IN GENERAL.—In the case of any qualified change in 
method of accounting for the taxpayer’s first taxable year begin-
ning after December 31, 2017— 
(A) such change shall be treated as initiated by the 
taxpayer, and 
(B) such change shall be treated as made with the 
consent of the Secretary of the Treasury. 
(2) QUALIFIED CHANGE IN METHOD OF ACCOUNTING.—For 
purposes of this subsection, the term ‘‘qualified change in 
method of accounting’’ means any change in method of 
accounting which— 
(A) is required by the amendments made by this sec-
tion, or 
26 USC 451 note. 
26 USC 451 note. 
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131 STAT. 2117 
PUBLIC LAW 115–97—DEC. 22, 2017 
(B) was prohibited under the Internal Revenue Code 
of 1986 prior to such amendments and is permitted under 
such Code after such amendments. 
(e) SPECIAL RULES FOR ORIGINAL ISSUE DISCOUNT.—Notwith-
standing subsection (c), in the case of income from a debt instrument 
having original issue discount— 
(1) the amendments made by this section shall apply to 
taxable years beginning after December 31, 2018, and 
(2) the period for taking into account any adjustments 
under section 481 by reason of a qualified change in method 
of accounting (as defined in subsection (d)) shall be 6 years. 
PART IV—BUSINESS-RELATED EXCLUSIONS 
AND DEDUCTIONS 
SEC. 13301. LIMITATION ON DEDUCTION FOR INTEREST. 
(a) IN GENERAL.—Section 163(j) is amended to read as follows: 
‘‘(j) LIMITATION ON BUSINESS INTEREST.— 
‘‘(1) IN
GENERAL.—The amount allowed as a deduction 
under this chapter for any taxable year for business interest 
shall not exceed the sum of— 
‘‘(A) the business interest income of such taxpayer 
for such taxable year, 
‘‘(B) 30 percent of the adjusted taxable income of such 
taxpayer for such taxable year, plus 
‘‘(C) the floor plan financing interest of such taxpayer 
for such taxable year. 
The amount determined under subparagraph (B) shall not be 
less than zero. 
‘‘(2) CARRYFORWARD OF DISALLOWED BUSINESS INTEREST.— 
The amount of any business interest not allowed as a deduction 
for any taxable year by reason of paragraph (1) shall be treated 
as business interest paid or accrued in the succeeding taxable 
year. 
‘‘(3) EXEMPTION FOR CERTAIN SMALL BUSINESSES.—In the 
case of any taxpayer (other than a tax shelter prohibited from 
using the cash receipts and disbursements method of accounting 
under section 448(a)(3)) which meets the gross receipts test 
of section 448(c) for any taxable year, paragraph (1) shall 
not apply to such taxpayer for such taxable year. In the case 
of any taxpayer which is not a corporation or a partnership, 
the gross receipts test of section 448(c) shall be applied in 
the same manner as if such taxpayer were a corporation or 
partnership. 
‘‘(4) APPLICATION TO PARTNERSHIPS, ETC.— 
‘‘(A) IN GENERAL.—In the case of any partnership— 
‘‘(i) this subsection shall be applied at the partner-
ship level and any deduction for business interest shall 
be taken into account in determining the non-sepa-
rately stated taxable income or loss of the partnership, 
and 
‘‘(ii) the adjusted taxable income of each partner 
of such partnership— 
‘‘(I) shall be determined without regard to such 
partner’s distributive share of any items of income, 
gain, deduction, or loss of such partnership, and 
26 USC 163. 
26 USC 451 note. 
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131 STAT. 2118 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(II) shall be increased by such partner’s 
distributive share of such partnership’s excess tax-
able income. 
For purposes of clause (ii)(II), a partner’s distributive 
share of partnership excess taxable income shall be 
determined in the same manner as the partner’s 
distributive share of nonseparately stated taxable 
income or loss of the partnership. 
‘‘(B) SPECIAL RULES FOR CARRYFORWARDS.— 
‘‘(i) IN
GENERAL.—The amount of any business 
interest not allowed as a deduction to a partnership 
for any taxable year by reason of paragraph (1) for 
any taxable year— 
‘‘(I) shall not be treated under paragraph (2) 
as business interest paid or accrued by the partner-
ship in the succeeding taxable year, and 
‘‘(II) shall, subject to clause (ii), be treated 
as excess business interest which is allocated to 
each partner in the same manner as the non- 
separately stated taxable income or loss of the 
partnership. 
‘‘(ii) TREATMENT
OF
EXCESS
BUSINESS
INTEREST 
ALLOCATED
TO
PARTNERS.—If a partner is allocated 
any excess business interest from a partnership under 
clause (i) for any taxable year— 
‘‘(I) such excess business interest shall be 
treated as business interest paid or accrued by 
the partner in the next succeeding taxable year 
in which the partner is allocated excess taxable 
income from such partnership, but only to the 
extent of such excess taxable income, and 
‘‘(II) any portion of such excess business 
interest remaining after the application of sub-
clause (I) shall, subject to the limitations of sub-
clause (I), be treated as business interest paid 
or accrued in succeeding taxable years. 
For purposes of applying this paragraph, excess taxable 
income allocated to a partner from a partnership for 
any taxable year shall not be taken into account under 
paragraph (1)(A) with respect to any business interest 
other than excess business interest from the partner-
ship until all such excess business interest for such 
taxable year and all preceding taxable years has been 
treated as paid or accrued under clause (ii). 
‘‘(iii) BASIS ADJUSTMENTS.— 
‘‘(I) IN
GENERAL.—The adjusted basis of a 
partner in a partnership interest shall be reduced 
(but not below zero) by the amount of excess busi-
ness interest allocated to the partner under clause 
(i)(II). 
‘‘(II) SPECIAL
RULE
FOR
DISPOSITIONS.—If a 
partner disposes of a partnership interest, the 
adjusted basis of the partner in the partnership 
interest shall be increased immediately before the 
disposition by the amount of the excess (if any) 
of the amount of the basis reduction under sub-
clause (I) over the portion of any excess business 
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131 STAT. 2119 
PUBLIC LAW 115–97—DEC. 22, 2017 
interest allocated to the partner under clause (i)(II) 
which has previously been treated under clause 
(ii) as business interest paid or accrued by the 
partner. The preceding sentence shall also apply 
to transfers of the partnership interest (including 
by reason of death) in a transaction in which gain 
is not recognized in whole or in part. No deduction 
shall be allowed to the transferor or transferee 
under this chapter for any excess business interest 
resulting in a basis increase under this subclause. 
‘‘(C) EXCESS TAXABLE INCOME.—The term ‘excess tax-
able income’ means, with respect to any partnership, the 
amount which bears the same ratio to the partnership’s 
adjusted taxable income as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the amount determined for the partnership 
under paragraph (1)(B), over 
‘‘(II) the amount (if any) by which the business 
interest of the partnership, reduced by the floor 
plan financing interest, exceeds the business 
interest income of the partnership, bears to 
‘‘(ii) the amount determined for the partnership 
under paragraph (1)(B). 
‘‘(D) APPLICATION TO S CORPORATIONS.—Rules similar 
to the rules of subparagraphs (A) and (C) shall apply with 
respect to any S corporation and its shareholders. 
‘‘(5) BUSINESS INTEREST.—For purposes of this subsection, 
the term ‘business interest’ means any interest paid or accrued 
on indebtedness properly allocable to a trade or business. Such 
term shall not include investment interest (within the meaning 
of subsection (d)). 
‘‘(6) BUSINESS INTEREST INCOME.—For purposes of this sub-
section, the term ‘business interest income’ means the amount 
of interest includible in the gross income of the taxpayer for 
the taxable year which is properly allocable to a trade or 
business. Such term shall not include investment income 
(within the meaning of subsection (d)). 
‘‘(7) TRADE OR BUSINESS.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘trade or business’ shall 
not include— 
‘‘(i) the trade or business of performing services 
as an employee, 
‘‘(ii) any electing real property trade or business, 
‘‘(iii) any electing farming business, or 
‘‘(iv) the trade or business of the furnishing or 
sale of— 
‘‘(I) electrical energy, water, or sewage disposal 
services, 
‘‘(II) gas or steam through a local distribution 
system, or 
‘‘(III) transportation of gas or steam by pipe-
line, 
if the rates for such furnishing or sale, as the case 
may be, have been established or approved by a State 
or political subdivision thereof, by any agency or 
instrumentality of the United States, by a public 
service or public utility commission or other similar 
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131 STAT. 2120 
PUBLIC LAW 115–97—DEC. 22, 2017 
body of any State or political subdivision thereof, or 
by the governing or ratemaking body of an electric 
cooperative. 
‘‘(B) ELECTING REAL PROPERTY TRADE OR BUSINESS.— 
For purposes of this paragraph, the term ‘electing real 
property trade or business’ means any trade or business 
which is described in section 469(c)(7)(C) and which makes 
an election under this subparagraph. Any such election 
shall be made at such time and in such manner as the 
Secretary shall prescribe, and, once made, shall be irrev-
ocable. 
‘‘(C) ELECTING
FARMING
BUSINESS.—For purposes of 
this paragraph, the term ‘electing farming business’ 
means— 
‘‘(i) a farming business (as defined in section 
263A(e)(4)) which makes an election under this 
subparagraph, or 
‘‘(ii) any trade or business of a specified agricul-
tural or horticultural cooperative (as defined in section 
199A(g)(2)) with respect to which the cooperative 
makes an election under this subparagraph. 
Any such election shall be made at such time and in 
such manner as the Secretary shall prescribe, and, once 
made, shall be irrevocable. 
‘‘(8) ADJUSTED TAXABLE INCOME.—For purposes of this sub-
section, the term ‘adjusted taxable income’ means the taxable 
income of the taxpayer— 
‘‘(A) computed without regard to— 
‘‘(i) any item of income, gain, deduction, or loss 
which is not properly allocable to a trade or business, 
‘‘(ii) any business interest or business interest 
income, 
‘‘(iii) the amount of any net operating loss deduc-
tion under section 172, 
‘‘(iv) the amount of any deduction allowed under 
section 199A, and 
‘‘(v) in the case of taxable years beginning before 
January 1, 2022, any deduction allowable for deprecia-
tion, amortization, or depletion, and 
‘‘(B) computed with such other adjustments as provided 
by the Secretary. 
‘‘(9) FLOOR PLAN FINANCING INTEREST DEFINED.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘floor plan financing 
interest’ means interest paid or accrued on floor plan 
financing indebtedness. 
‘‘(B) FLOOR PLAN FINANCING INDEBTEDNESS.—The term 
‘floor plan financing indebtedness’ means indebtedness— 
‘‘(i) used to finance the acquisition of motor vehicles 
held for sale or lease, and 
‘‘(ii) secured by the inventory so acquired. 
‘‘(C) MOTOR VEHICLE.—The term ‘motor vehicle’ means 
a motor vehicle that is any of the following: 
‘‘(i) Any self-propelled vehicle designed for trans-
porting persons or property on a public street, highway, 
or road. 
‘‘(ii) A boat. 
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131 STAT. 2121 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(iii) Farm machinery or equipment. 
‘‘(10) CROSS REFERENCES.— 
‘‘(A) For requirement that an electing real property 
trade or business use the alternative depreciation system, 
see section 168(g)(1)(F). 
‘‘(B) For requirement that an electing farming business 
use the alternative depreciation system, see section 
168(g)(1)(G).’’. 
(b) TREATMENT OF CARRYFORWARD OF DISALLOWED BUSINESS 
INTEREST IN CERTAIN CORPORATE ACQUISITIONS.— 
(1) IN GENERAL.—Section 381(c) is amended by inserting 
after paragraph (19) the following new paragraph: 
‘‘(20) CARRYFORWARD OF DISALLOWED BUSINESS INTEREST.— 
The carryover of disallowed business interest described in sec-
tion 163(j)(2) to taxable years ending after the date of distribu-
tion or transfer.’’. 
(2) APPLICATION OF LIMITATION.—Section 382(d) is amended 
by adding at the end the following new paragraph: 
‘‘(3) APPLICATION
TO
CARRYFORWARD
OF
DISALLOWED 
INTEREST.—The term ‘pre-change loss’ shall include any carry-
over of disallowed interest described in section 163(j)(2) under 
rules similar to the rules of paragraph (1).’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
382(k)(1) 
is 
amended by inserting after the first sentence the following: 
‘‘Such term shall include any corporation entitled to use a 
carryforward of disallowed interest described in section 
381(c)(20).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13302. MODIFICATION OF NET OPERATING LOSS DEDUCTION. 
(a) LIMITATION ON DEDUCTION.— 
(1) IN GENERAL.—Section 172(a) is amended to read as 
follows: 
‘‘(a) DEDUCTION ALLOWED.—There shall be allowed as a deduc-
tion for the taxable year an amount equal to the lesser of— 
‘‘(1) the aggregate of the net operating loss carryovers 
to such year, plus the net operating loss carrybacks to such 
year, or 
‘‘(2) 80 percent of taxable income computed without regard 
to the deduction allowable under this section. 
For purposes of this subtitle, the term ‘net operating loss deduction’ 
means the deduction allowed by this subsection.’’. 
(2) COORDINATION OF LIMITATION WITH CARRYBACKS AND 
CARRYOVERS.—Section 172(b)(2) is amended by striking ‘‘shall 
be computed—’’ and all that follows and inserting ‘‘shall— 
‘‘(A) be computed with the modifications specified in 
subsection (d) other than paragraphs (1), (4), and (5) 
thereof, and by determining the amount of the net oper-
ating loss deduction without regard to the net operating 
loss for the loss year or for any taxable year thereafter, 
‘‘(B) not be considered to be less than zero, and 
‘‘(C) not exceed the amount determined under sub-
section (a)(2) for such prior taxable year.’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
172(d)(6) 
is 
amended by striking ‘‘and’’ at the end of subparagraph (A), 
by striking the period at the end of subparagraph (B) and 
26 USC 163 note. 
26 USC 381. 
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131 STAT. 2122 
PUBLIC LAW 115–97—DEC. 22, 2017 
inserting ‘‘; and’’, and by adding at the end the following new 
subparagraph: 
‘‘(C) subsection (a)(2) shall be applied by substituting 
‘real estate investment trust taxable income (as defined 
in section 857(b)(2) but without regard to the deduction 
for dividends paid (as defined in section 561))’ for ‘taxable 
income’.’’. 
(b) REPEAL OF NET OPERATING LOSS CARRYBACK; INDEFINITE 
CARRYFORWARD.— 
(1) IN GENERAL.—Section 172(b)(1)(A) is amended— 
(A) by striking ‘‘shall be a net operating loss carryback 
to each of the 2 taxable years’’ in clause (i) and inserting 
‘‘except as otherwise provided in this paragraph, shall not 
be a net operating loss carryback to any taxable year’’, 
and 
(B) by striking ‘‘to each of the 20 taxable years’’ in 
clause (ii) and inserting ‘‘to each taxable year’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
172(b)(1) 
is 
amended by striking subparagraphs (B) through (F). 
(c) TREATMENT OF FARMING LOSSES.— 
(1) ALLOWANCE
OF
CARRYBACKS.—Section 172(b)(1), as 
amended by subsection (b)(2), is amended by adding at the 
end the following new subparagraph: 
‘‘(B) FARMING LOSSES.— 
‘‘(i) IN GENERAL.—In the case of any portion of 
a net operating loss for the taxable year which is 
a farming loss with respect to the taxpayer, such loss 
shall be a net operating loss carryback to each of 
the 2 taxable years preceding the taxable year of such 
loss. 
‘‘(ii) FARMING LOSS.—For purposes of this section, 
the term ‘farming loss’ means the lesser of— 
‘‘(I) the amount which would be the net oper-
ating loss for the taxable year if only income and 
deductions attributable to farming businesses (as 
defined in section 263A(e)(4)) are taken into 
account, or 
‘‘(II) the amount of the net operating loss for 
such taxable year. 
‘‘(iii) COORDINATION WITH PARAGRAPH (2).—For pur-
poses of applying paragraph (2), a farming loss for 
any taxable year shall be treated as a separate net 
operating loss for such taxable year to be taken into 
account after the remaining portion of the net oper-
ating loss for such taxable year. 
‘‘(iv) ELECTION.—Any taxpayer entitled to a 2-year 
carryback under clause (i) from any loss year may 
elect not to have such clause apply to such loss year. 
Such election shall be made in such manner as pre-
scribed 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 net oper-
ating loss. Such election, once made for any taxable 
year, shall be irrevocable for such taxable year.’’. 
(2) CONFORMING AMENDMENTS.— 
26 USC 172. 
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131 STAT. 2123 
PUBLIC LAW 115–97—DEC. 22, 2017 
(A) Section 172 is amended by striking subsections 
(f), (g), and (h), and by redesignating subsection (i) as 
subsection (f). 
(B) Section 537(b)(4) is amended by inserting ‘‘(as in 
effect before the date of enactment of the Tax Cuts and 
Jobs Act)’’ after ‘‘as defined in section 172(f)’’. 
(d) TREATMENT OF CERTAIN INSURANCE LOSSES.— 
(1) TREATMENT OF CARRYFORWARDS AND CARRYBACKS.—Sec-
tion 172(b)(1), as amended by subsections (b)(2) and (c)(1), 
is amended by adding at the end the following new subpara-
graph: 
‘‘(C) INSURANCE COMPANIES.—In the case of an insur-
ance company (as defined in section 816(a)) other than 
a life insurance company, the net operating loss for any 
taxable year— 
‘‘(i) shall be a net operating loss carryback to each 
of the 2 taxable years preceding the taxable year of 
such loss, and 
‘‘(ii) shall be a net operating loss carryover to 
each of the 20 taxable years following the taxable 
year of the loss.’’. 
(2) EXEMPTION FROM LIMITATION.—Section 172, as amended 
by subsection (c)(2)(A), is amended by redesignating subsection 
(f) as subsection (g) and inserting after subsection (e) the fol-
lowing new subsection: 
‘‘(f) SPECIAL RULE FOR INSURANCE COMPANIES.—In the case 
of an insurance company (as defined in section 816(a)) other than 
a life insurance company— 
‘‘(1) the amount of the deduction allowed under subsection 
(a) shall be the aggregate of the net operating loss carryovers 
to such year, plus the net operating loss carrybacks to such 
year, and 
‘‘(2) subparagraph (C) of subsection (b)(2) shall not apply.’’. 
(e) EFFECTIVE DATE.— 
(1) NET
OPERATING
LOSS
LIMITATION.—The amendments 
made by subsections (a) and (d)(2) shall apply to losses arising 
in taxable years beginning after December 31, 2017. 
(2) CARRYFORWARDS AND CARRYBACKS.—The amendments 
made by subsections (b), (c), and (d)(1) shall apply to net 
operating losses arising in taxable years ending after December 
31, 2017. 
SEC. 13303. LIKE-KIND EXCHANGES OF REAL PROPERTY. 
(a) IN GENERAL.—Section 1031(a)(1) is amended by striking 
‘‘property’’ each place it appears and inserting ‘‘real property’’. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Paragraph (2) of section 1031(a) is amended to read 
as follows: 
‘‘(2) EXCEPTION FOR REAL PROPERTY HELD FOR SALE.—This 
subsection shall not apply to any exchange of real property 
held primarily for sale.’’. 
(B) Section 1031 is amended by striking subsection (i). 
(2) Section 1031 is amended by striking subsection (e). 
(3) Section 1031, as amended by paragraph (2), is amended 
by inserting after subsection (d) the following new subsection: 
‘‘(e) APPLICATION TO CERTAIN PARTNERSHIPS.—For purposes of 
this section, an interest in a partnership which has in effect a 
26 USC 172 note. 
26 USC 172. 
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131 STAT. 2124 
PUBLIC LAW 115–97—DEC. 22, 2017 
valid election under section 761(a) to be excluded from the applica-
tion of all of subchapter K shall be treated as an interest in 
each of the assets of such partnership and not as an interest 
in a partnership.’’. 
(4) Section 1031(h) is amended to read as follows: 
‘‘(h) SPECIAL RULES FOR FOREIGN REAL PROPERTY.—Real prop-
erty located in the United States and real property located outside 
the United States are not property of a like kind.’’. 
(5) The heading of section 1031 is amended by striking 
‘‘PROPERTY’’ and inserting ‘‘REAL PROPERTY’’. 
(6) The table of sections for part III of subchapter O of 
chapter 1 is amended by striking the item relating to section 
1031 and inserting the following new item: 
‘‘Sec. 1031. Exchange of real property held for productive use or investment.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to 
exchanges completed after December 31, 2017. 
(2) TRANSITION RULE.—The amendments made by this sec-
tion shall not apply to any exchange if— 
(A) the property disposed of by the taxpayer in the 
exchange is disposed of on or before December 31, 2017, 
or 
(B) the property received by the taxpayer in the 
exchange is received on or before December 31, 2017. 
SEC. 13304. LIMITATION ON DEDUCTION BY EMPLOYERS OF EXPENSES 
FOR FRINGE BENEFITS. 
(a) NO DEDUCTION ALLOWED FOR ENTERTAINMENT EXPENSES.— 
(1) IN GENERAL.—Section 274(a) is amended— 
(A) in paragraph (1)(A), by striking ‘‘unless’’ and all 
that follows through ‘‘trade or business,’’, 
(B) by striking the flush sentence at the end of para-
graph (1), and 
(C) by striking paragraph (2)(C). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 274(d) is amended— 
(i) by striking paragraph (2) and redesignating 
paragraphs (3) and (4) as paragraphs (2) and (3), 
respectively, and 
(ii) in the flush text following paragraph (3) (as 
so redesignated)— 
(I) by striking ‘‘, entertainment, amusement, 
recreation, or use of the facility or property,’’ in 
item (B), and 
(II) by striking ‘‘(D) the business relationship 
to the taxpayer of persons entertained, using the 
facility or property, or receiving the gift’’ and 
inserting ‘‘(D) the business relationship to the tax-
payer of the person receiving the benefit’’, 
(B) Section 274 is amended by striking subsection (l). 
(C) Section 274(n) is amended by striking ‘‘AND ENTER-
TAINMENT’’ in the heading. 
(D) Section 274(n)(1) is amended to read as follows: 
‘‘(1) IN GENERAL.—The amount allowable as a deduction 
under this chapter for any expense for food or beverages shall 
26 USC 1031 
note. 
26 USC 
prec. 1031. 
26 USC 1031. 
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131 STAT. 2125 
PUBLIC LAW 115–97—DEC. 22, 2017 
not exceed 50 percent of the amount of such expense which 
would (but for this paragraph) be allowable as a deduction 
under this chapter.’’. 
(E) Section 274(n)(2) is amended— 
(i) in subparagraph (B), by striking ‘‘in the case 
of an expense for food or beverages,’’, 
(ii) by striking subparagraph (C) and redesignating 
subparagraphs (D) and (E) as subparagraphs (C) and 
(D), respectively, 
(iii) by striking ‘‘of subparagraph (E)’’ the last sen-
tence and inserting ‘‘of subparagraph (D)’’, and 
(iv) by striking ‘‘in subparagraph (D)’’ in the last 
sentence and inserting ‘‘in subparagraph (C)’’. 
(F) Clause (iv) of section 7701(b)(5)(A) is amended to 
read as follows: 
‘‘(iv) a professional athlete who is temporarily in 
the United States to compete in a sports event— 
‘‘(I) which is organized for the primary purpose 
of benefiting an organization which is described 
in section 501(c)(3) and exempt from tax under 
section 501(a), 
‘‘(II) all of the net proceeds of which are 
contributed to such organization, and, 
‘‘(III) which utilizes volunteers for substan-
tially all of the work performed in carrying out 
such event.’’. 
(b) ONLY 50 PERCENT OF EXPENSES FOR MEALS PROVIDED ON 
OR NEAR BUSINESS PREMISES ALLOWED AS DEDUCTION.—Paragraph 
(2) of section 274(n), as amended by subsection (a), is amended— 
(1) by striking subparagraph (B), 
(2) by redesignating subparagraphs (C) and (D) as subpara-
graphs (B) and (C), respectively, 
(3) by striking ‘‘of subparagraph (D)’’ in the last sentence 
and inserting ‘‘of subparagraph (C)’’, and 
(4) by striking ‘‘in subparagraph (C)’’ in the last sentence 
and inserting ‘‘in subparagraph (B)’’. 
(c) TREATMENT OF TRANSPORTATION BENEFITS.—Section 274, 
as amended by subsection (a), is amended— 
(1) in subsection (a)— 
(A) in the heading, by striking ‘‘OR RECREATION’’ and 
inserting ‘‘RECREATION, OR QUALIFIED TRANSPORTATION 
FRINGES’’, and 
(B) by adding at the end the following new paragraph: 
‘‘(4) QUALIFIED
TRANSPORTATION
FRINGES.—No deduction 
shall be allowed under this chapter for the expense of any 
qualified transportation fringe (as defined in section 132(f)) 
provided to an employee of the taxpayer.’’, and 
(2) by inserting after subsection (k) the following new sub-
section: 
‘‘(l) TRANSPORTATION AND COMMUTING BENEFITS.— 
‘‘(1) IN GENERAL.—No deduction shall be allowed under 
this chapter for any expense incurred for providing any 
transportation, or any payment or reimbursement, to an 
employee of the taxpayer in connection with travel between 
the employee’s residence and place of employment, except as 
necessary for ensuring the safety of the employee. 
26 USC 274. 
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131 STAT. 2126 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(2) EXCEPTION.—In the case of any qualified bicycle com-
muting reimbursement (as described in section 132(f)(5)(F)), 
this subsection shall not apply for any amounts paid or incurred 
after December 31, 2017, and before January 1, 2026.’’. 
(d) ELIMINATION OF DEDUCTION FOR MEALS PROVIDED AT CON-
VENIENCE OF EMPLOYER.—Section 274, as amended by subsection 
(c), is amended— 
(1) by redesignating subsection (o) as subsection (p), and 
(2) by inserting after subsection (n) the following new sub-
section: 
‘‘(o) MEALS PROVIDED
AT CONVENIENCE
OF EMPLOYER.—No 
deduction shall be allowed under this chapter for— 
‘‘(1) any expense for the operation of a facility described 
in section 132(e)(2), and any expense for food or beverages, 
including under section 132(e)(1), associated with such facility, 
or 
‘‘(2) any expense for meals described in section 119(a).’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to amounts 
incurred or paid after December 31, 2017. 
(2) EFFECTIVE DATE FOR ELIMINATION OF DEDUCTION FOR 
MEALS PROVIDED AT CONVENIENCE OF EMPLOYER.—The amend-
ments made by subsection (d) shall apply to amounts incurred 
or paid after December 31, 2025. 
SEC. 13305. REPEAL OF DEDUCTION FOR INCOME ATTRIBUTABLE TO 
DOMESTIC PRODUCTION ACTIVITIES. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 1 is 
amended by striking section 199 (and by striking the item relating 
to such section in the table of sections for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) 
Sections 
74(d)(2)(B), 
86(b)(2)(A), 
135(c)(4)(A), 
137(b)(3)(A), 
219(g)(3)(A)(ii), 
221(b)(2)(C), 
222(b)(2)(C), 
246(b)(1), and 469(i)(3)(F)(iii) are each amended by striking 
‘‘199,’’. 
(2) Section 170(b)(2)(D), as amended by subtitle A, is 
amended by striking clause (iv), and by redesignating clauses 
(v) and (vi) as clauses (iv) and (v). 
(3) Section 172(d) is amended by striking paragraph (7). 
(4) Section 613(a), as amended by section 11011, is 
amended by striking ‘‘and without the deduction under section 
199’’. 
(5) Section 613A(d)(1), as amended by section 11011, is 
amended by striking subparagraph (B) and by redesignating 
subparagraphs (C), (D), (E), and (F) as subparagraphs (B), 
(C), (D), and (E), respectively. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13306. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
AND OTHER AMOUNTS. 
(a) DENIAL OF DEDUCTION.— 
(1) IN GENERAL.—Subsection (f) of section 162 is amended 
to read as follows: 
‘‘(f) FINES, PENALTIES, AND OTHER AMOUNTS.— 
‘‘(1) IN GENERAL.—Except as provided in the following para-
graphs of this subsection, no deduction otherwise allowable 
26 USC 74 note. 
26 USC 
prec. 161. 
26 USC 274 note. 
26 USC 274. 
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131 STAT. 2127 
PUBLIC LAW 115–97—DEC. 22, 2017 
shall be allowed under this chapter for any amount paid or 
incurred (whether by suit, agreement, or otherwise) to, or at 
the direction of, a government or governmental entity in rela-
tion to the violation of any law or the investigation or inquiry 
by such government or entity into the potential violation of 
any law. 
‘‘(2) EXCEPTION FOR AMOUNTS CONSTITUTING RESTITUTION 
OR PAID TO COME INTO COMPLIANCE WITH LAW.— 
‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to 
any amount that— 
‘‘(i) the taxpayer establishes— 
‘‘(I) constitutes restitution (including remedi-
ation of property) for damage or harm which was 
or may be caused by the violation of any law 
or the potential violation of any law, or 
‘‘(II) is paid to come into compliance with any 
law which was violated or otherwise involved in 
the investigation or inquiry described in paragraph 
(1), 
‘‘(ii) is identified as restitution or as an amount 
paid to come into compliance with such law, as the 
case may be, in the court order or settlement agree-
ment, and 
‘‘(iii) in the case of any amount of restitution for 
failure to pay any tax imposed under this title in 
the same manner as if such amount were such tax, 
would have been allowed as a deduction under this 
chapter if it had been timely paid. 
The identification under clause (ii) alone shall not be suffi-
cient to make the establishment required under clause 
(i). 
‘‘(B) LIMITATION.—Subparagraph (A) shall not apply 
to any amount paid or incurred as reimbursement to the 
government or entity for the costs of any investigation 
or litigation. 
‘‘(3) EXCEPTION FOR AMOUNTS PAID OR INCURRED AS THE 
RESULT OF CERTAIN COURT ORDERS.—Paragraph (1) shall not 
apply to any amount paid or incurred by reason of any order 
of a court in a suit in which no government or governmental 
entity is a party. 
‘‘(4) EXCEPTION FOR TAXES DUE.—Paragraph (1) shall not 
apply to any amount paid or incurred as taxes due. 
‘‘(5) TREATMENT
OF
CERTAIN
NONGOVERNMENTAL
REGU-
LATORY
ENTITIES.—For purposes of this subsection, the fol-
lowing nongovernmental entities shall be treated as govern-
mental entities: 
‘‘(A) Any nongovernmental entity which exercises self- 
regulatory powers (including imposing sanctions) in connec-
tion with a qualified board or exchange (as defined in 
section 1256(g)(7)). 
‘‘(B) To the extent provided in regulations, any non-
governmental entity which exercises self-regulatory powers 
(including imposing sanctions) as part of performing an 
essential governmental function.’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to amounts paid or incurred on or after 
26 USC 162 note. 
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131 STAT. 2128 
PUBLIC LAW 115–97—DEC. 22, 2017 
the date of the enactment of this Act, except that such amend-
ments shall not apply to amounts paid or incurred under any 
binding order or agreement entered into before such date. Such 
exception shall not apply to an order or agreement requiring 
court approval unless the approval was obtained before such 
date. 
(b) REPORTING OF DEDUCTIBLE AMOUNTS.— 
(1) IN GENERAL.—Subpart B of part III of subchapter A 
of chapter 61 is amended by inserting after section 6050W 
the following new section: 
‘‘SEC. 6050X. INFORMATION WITH RESPECT TO CERTAIN FINES, PEN-
ALTIES, AND OTHER AMOUNTS. 
‘‘(a) REQUIREMENT OF REPORTING.— 
‘‘(1) IN GENERAL.—The appropriate official of any govern-
ment or any entity described in section 162(f)(5) which is 
involved in a suit or agreement described in paragraph (2) 
shall make a return in such form as determined by the Sec-
retary setting forth— 
‘‘(A) the amount required to be paid as a result of 
the suit or agreement to which paragraph (1) of section 
162(f) applies, 
‘‘(B) any amount required to be paid as a result of 
the suit or agreement which constitutes restitution or 
remediation of property, and 
‘‘(C) any amount required to be paid as a result of 
the suit or agreement for the purpose of coming into compli-
ance with any law which was violated or involved in the 
investigation or inquiry. 
‘‘(2) SUIT OR AGREEMENT DESCRIBED.— 
‘‘(A) IN GENERAL.—A suit or agreement is described 
in this paragraph if— 
‘‘(i) it is— 
‘‘(I) a suit with respect to a violation of any 
law over which the government or entity has 
authority and with respect to which there has 
been a court order, or 
‘‘(II) an agreement which is entered into with 
respect to a violation of any law over which the 
government or entity has authority, or with respect 
to an investigation or inquiry by the government 
or entity into the potential violation of any law 
over which such government or entity has 
authority, and 
‘‘(ii) the aggregate amount involved in all court 
orders and agreements with respect to the violation, 
investigation, or inquiry is $600 or more. 
‘‘(B) ADJUSTMENT OF REPORTING THRESHOLD.—The Sec-
retary shall adjust the $600 amount in subparagraph (A)(ii) 
as necessary in order to ensure the efficient administration 
of the internal revenue laws. 
‘‘(3) TIME OF FILING.—The return required under this sub-
section shall be filed at the time the agreement is entered 
into, as determined by the Secretary. 
‘‘(b) STATEMENTS TO BE FURNISHED TO INDIVIDUALS INVOLVED 
IN
THE SETTLEMENT.—Every person required to make a return 
26 USC 6050X. 
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131 STAT. 2129 
PUBLIC LAW 115–97—DEC. 22, 2017 
under subsection (a) shall furnish to each person who is a party 
to the suit or agreement a written statement showing— 
‘‘(1) the name of the government or entity, and 
‘‘(2) the information supplied to the Secretary under sub-
section (a)(1). 
The written statement required under the preceding sentence shall 
be furnished to the person at the same time the government or 
entity provides the Secretary with the information required under 
subsection (a). 
‘‘(c) APPROPRIATE OFFICIAL DEFINED.—For purposes of this sec-
tion, the term ‘appropriate official’ means the officer or employee 
having control of the suit, investigation, or inquiry or the person 
appropriately designated for purposes of this section.’’. 
(2) CONFORMING AMENDMENT.—The table of sections for 
subpart B of part III of subchapter A of chapter 61 is amended 
by inserting after the item relating to section 6050W the fol-
lowing new item: 
‘‘Sec. 6050X. Information with respect to certain fines, penalties, and other 
amounts.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to amounts paid or incurred on or after 
the date of the enactment of this Act, except that such amend-
ments shall not apply to amounts paid or incurred under any 
binding order or agreement entered into before such date. Such 
exception shall not apply to an order or agreement requiring 
court approval unless the approval was obtained before such 
date. 
SEC. 13307. DENIAL OF DEDUCTION FOR SETTLEMENTS SUBJECT TO 
NONDISCLOSURE AGREEMENTS PAID IN CONNECTION 
WITH SEXUAL HARASSMENT OR SEXUAL ABUSE. 
(a) DENIAL OF DEDUCTION.—Section 162 is amended by redesig-
nating subsection (q) as subsection (r) and by inserting after sub-
section (p) the following new subsection: 
‘‘(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL 
ABUSE.—No deduction shall be allowed under this chapter for— 
‘‘(1) any settlement or payment related to sexual harass-
ment or sexual abuse if such settlement or payment is subject 
to a nondisclosure agreement, or 
‘‘(2) attorney’s fees related to such a settlement or pay-
ment.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred after the date of the 
enactment of this Act. 
SEC. 13308. REPEAL OF DEDUCTION FOR LOCAL LOBBYING EXPENSES. 
(a) IN GENERAL.—Section 162(e) is amended by striking para-
graphs (2) and (7) and by redesignating paragraphs (3), (4), (5), 
(6), and (8) as paragraphs (2), (3), (4), (5), and (6), respectively. 
(b) CONFORMING
AMENDMENT.—Section 6033(e)(1)(B)(ii) is 
amended by striking ‘‘section 162(e)(5)(B)(ii)’’ and inserting ‘‘section 
162(e)(4)(B)(ii)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred on or after the date of 
the enactment of this Act. 
26 USC 162 note. 
26 USC 162 note. 
26 USC 6050X 
note. 
26 USC 
prec. 6041. 
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131 STAT. 2130 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13309. RECHARACTERIZATION OF CERTAIN GAINS IN THE CASE 
OF 
PARTNERSHIP 
PROFITS 
INTERESTS 
HELD 
IN 
CONNECTION WITH PERFORMANCE OF INVESTMENT 
SERVICES. 
(a) IN GENERAL.—Part IV of subchapter O of chapter 1 is 
amended— 
(1) by redesignating section 1061 as section 1062, and 
(2) by inserting after section 1060 the following new section: 
‘‘SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNECTION WITH 
PERFORMANCE OF SERVICES. 
‘‘(a) IN
GENERAL.—If one or more applicable partnership 
interests are held by a taxpayer at any time during the taxable 
year, the excess (if any) of— 
‘‘(1) the taxpayer’s net long-term capital gain with respect 
to such interests for such taxable year, over 
‘‘(2) the taxpayer’s net long-term capital gain with respect 
to such interests for such taxable year computed by applying 
paragraphs (3) and (4) of sections 1222 by substituting ‘3 years’ 
for ‘1 year’, 
shall be treated as short-term capital gain, notwithstanding section 
83 or any election in effect under section 83(b). 
‘‘(b) SPECIAL RULE.—To the extent provided by the Secretary, 
subsection (a) shall not apply to income or gain attributable to 
any asset not held for portfolio investment on behalf of third party 
investors. 
‘‘(c) APPLICABLE PARTNERSHIP INTEREST.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—Except as provided in this paragraph 
or paragraph (4), the term ‘applicable partnership interest’ 
means any interest in a partnership which, directly or 
indirectly, is transferred to (or is held by) the taxpayer in 
connection with the performance of substantial services by the 
taxpayer, or any other related person, in any applicable trade 
or business. The previous sentence shall not apply to an interest 
held by a person who is employed by another entity that is 
conducting a trade or business (other than an applicable trade 
or business) and only provides services to such other entity. 
‘‘(2) APPLICABLE TRADE OR BUSINESS.—The term ‘applicable 
trade or business’ means any activity conducted on a regular, 
continuous, and substantial basis which, regardless of whether 
the activity is conducted in one or more entities, consists, 
in whole or in part, of— 
‘‘(A) raising or returning capital, and 
‘‘(B) either— 
‘‘(i) investing in (or disposing of) specified assets 
(or identifying specified assets for such investing or 
disposition), or 
‘‘(ii) developing specified assets. 
‘‘(3) SPECIFIED ASSET.—The term ‘specified asset’ means 
securities (as defined in section 475(c)(2) without regard to 
the last sentence thereof), commodities (as defined in section 
475(e)(2)), real estate held for rental or investment, cash or 
cash equivalents, options or derivative contracts with respect 
to any of the foregoing, and an interest in a partnership to 
the extent of the partnership’s proportionate interest in any 
of the foregoing. 
26 USC 1061. 
26 USC 1061, 
1062. 
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131 STAT. 2131 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(4) 
EXCEPTIONS.—The 
term 
‘applicable 
partnership 
interest’ shall not include— 
‘‘(A) any interest in a partnership directly or indirectly 
held by a corporation, or 
‘‘(B) any capital interest in the partnership which pro-
vides the taxpayer with a right to share in partnership 
capital commensurate with— 
‘‘(i) the amount of capital contributed (determined 
at the time of receipt of such partnership interest), 
or 
‘‘(ii) the value of such interest subject to tax under 
section 83 upon the receipt or vesting of such interest. 
‘‘(5) THIRD
PARTY
INVESTOR.—The term ‘third party 
investor’ means a person who— 
‘‘(A) holds an interest in the partnership which does 
not constitute property held in connection with an 
applicable trade or business; and 
‘‘(B) is not (and has not been) actively engaged, and 
is (and was) not related to a person so engaged, in (directly 
or indirectly) providing substantial services described in 
paragraph (1) for such partnership or any applicable trade 
or business. 
‘‘(d) TRANSFER
OF
APPLICABLE
PARTNERSHIP
INTEREST
TO 
RELATED PERSON.— 
‘‘(1) IN GENERAL.—If a taxpayer transfers any applicable 
partnership interest, directly or indirectly, to a person related 
to the taxpayer, the taxpayer shall include in gross income 
(as short term capital gain) the excess (if any) of— 
‘‘(A) so much of the taxpayer’s long-term capital gains 
with respect to such interest for such taxable year attrib-
utable to the sale or exchange of any asset held for not 
more than 3 years as is allocable to such interest, over 
‘‘(B) any amount treated as short term capital gain 
under subsection (a) with respect to the transfer of such 
interest. 
‘‘(2) RELATED
PERSON.—For purposes of this paragraph, 
a person is related to the taxpayer if— 
‘‘(A) the person is a member of the taxpayer’s family 
within the meaning of section 318(a)(1), or 
‘‘(B) the person performed a service within the current 
calendar year or the preceding three calendar years in 
any applicable trade or business in which or for which 
the taxpayer performed a service. 
‘‘(e) REPORTING.—The Secretary shall require such reporting 
(at the time and in the manner prescribed by the Secretary) as 
is necessary to carry out the purposes of this section. 
‘‘(f) REGULATIONS.—The Secretary shall issue such regulations 
or other guidance as is necessary or appropriate to carry out the 
purposes of this section’’. 
(b) CLERICAL AMENDMENT.—The table of sections for part IV 
of subchapter O of chapter 1 is amended by striking the item 
relating to 1061 and inserting the following new items: 
‘‘Sec. 1061. Partnership interests held in connection with performance of services. 
‘‘Sec. 1062. Cross references.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
26 USC 1061 
note. 
16 USC 
prec. 1051. 
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131 STAT. 2132 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13310. PROHIBITION ON CASH, GIFT CARDS, AND OTHER NON- 
TANGIBLE 
PERSONAL 
PROPERTY 
AS 
EMPLOYEE 
ACHIEVEMENT AWARDS. 
(a) IN GENERAL.—Subparagraph (A) of section 274(j)(3) is 
amended— 
(1) by striking ‘‘The term’’ and inserting the following: 
‘‘(i) IN GENERAL.—The term’’. 
(2) by redesignating clauses (i), (ii), and (iii) as subclauses 
(I), (II), and (III), respectively, and conforming the margins 
accordingly, and 
(3) by adding at the end the following new clause: 
‘‘(ii) TANGIBLE PERSONAL PROPERTY.—For purposes 
of clause (i), the term ‘tangible personal property’ shall 
not include— 
‘‘(I) cash, cash equivalents, gift cards, gift cou-
pons, or gift certificates (other than arrangements 
conferring only the right to select and receive tan-
gible personal property from a limited array of 
such items pre-selected or pre-approved by the 
employer), or 
‘‘(II) vacations, meals, lodging, tickets to the-
ater or sporting events, stocks, bonds, other securi-
ties, and other similar items.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred after December 31, 2017. 
SEC. 13311. ELIMINATION OF DEDUCTION FOR LIVING EXPENSES 
INCURRED BY MEMBERS OF CONGRESS. 
(a) IN GENERAL.—Subsection (a) of section 162 is amended 
in the matter following paragraph (3) by striking ‘‘in excess of 
$3,000’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 13312. CERTAIN CONTRIBUTIONS BY GOVERNMENTAL ENTITIES 
NOT TREATED AS CONTRIBUTIONS TO CAPITAL. 
(a) IN GENERAL.—Section 118 is amended— 
(1) by striking subsections (b), (c), and (d), 
(2) by redesignating subsection (e) as subsection (d), and 
(3) by inserting after subsection (a) the following new sub-
sections: 
‘‘(b) EXCEPTIONS.—For purposes of subsection (a), the term ‘con-
tribution to the capital of the taxpayer’ does not include— 
‘‘(1) any contribution in aid of construction or any other 
contribution as a customer or potential customer, and 
‘‘(2) any contribution by any governmental entity or civic 
group (other than a contribution made by a shareholder as 
such). 
‘‘(c) REGULATIONS.—The Secretary shall issue such regulations 
or other guidance as may be necessary or appropriate to carry 
out this section, including regulations or other guidance for deter-
mining whether any contribution constitutes a contribution in aid 
of construction.’’. 
(b) EFFECTIVE DATE.— 
26 USC 118 note. 
26 USC 162 note. 
26 USC 274 note. 
26 USC 274. 
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131 STAT. 2133 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to contributions 
made after the date of enactment of this Act. 
(2) EXCEPTION.—The amendments made by this section 
shall not apply to any contribution, made after the date of 
enactment of this Act by a governmental entity, which is made 
pursuant to a master development plan that has been approved 
prior to such date by a governmental entity. 
SEC. 13313. REPEAL OF ROLLOVER OF PUBLICLY TRADED SECURITIES 
GAIN INTO SPECIALIZED SMALL BUSINESS INVESTMENT 
COMPANIES. 
(a) IN GENERAL.—Part III of subchapter O of chapter 1 is 
amended by striking section 1044 (and by striking the item relating 
to such section in the table of sections of such part). 
(b) 
CONFORMING
AMENDMENTS.—Section 
1016(a)(23) 
is 
amended— 
(1) by striking ‘‘1044,’’, and 
(2) by striking ‘‘1044(d),’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to sales after December 31, 2017. 
SEC. 13314. CERTAIN SELF-CREATED PROPERTY NOT TREATED AS A 
CAPITAL ASSET. 
(a) PATENTS, ETC.—Section 1221(a)(3) is amended by inserting 
‘‘a patent, invention, model or design (whether or not patented), 
a secret formula or process,’’ before ‘‘a copyright’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1231(b)(1)(C) 
is 
amended by inserting ‘‘a patent, invention, model or design (whether 
or not patented), a secret formula or process,’’ before ‘‘a copyright’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to dispositions after December 31, 2017. 
PART V—BUSINESS CREDITS 
SEC. 13401. MODIFICATION OF ORPHAN DRUG CREDIT. 
(a) CREDIT RATE.—Subsection (a) of section 45C is amended 
by striking ‘‘50 percent’’ and inserting ‘‘25 percent’’. 
(b) ELECTION OF REDUCED CREDIT.—Subsection (b) of section 
280C is amended by redesignating paragraph (3) as paragraph 
(4) and by inserting after paragraph (2) the following new para-
graph: 
‘‘(3) ELECTION OF REDUCED CREDIT.— 
‘‘(A) IN
GENERAL.—In the case of any taxable year 
for which an election is made under this paragraph— 
‘‘(i) paragraphs (1) and (2) shall not apply, and 
‘‘(ii) the amount of the credit under section 45C(a) 
shall be the amount determined under subparagraph 
(B). 
‘‘(B) AMOUNT
OF
REDUCED
CREDIT.—The amount of 
credit determined under this subparagraph for any taxable 
year shall be the amount equal to the excess of— 
‘‘(i) the amount of credit determined under section 
45C(a) without regard to this paragraph, over 
‘‘(ii) the product of— 
‘‘(I) the amount described in clause (i), and 
‘‘(II) the maximum rate of tax under section 
11(b). 
26 USC 1221 
note. 
26 USC 1016 
note. 
26 USC 
prec. 1031. 
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131 STAT. 2134 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(C) ELECTION.—An election under this paragraph for 
any taxable year shall be made not later than the time 
for filing the return of tax for such year (including exten-
sions), shall be made on such return, and shall be made 
in such manner as the Secretary shall prescribe. Such 
an election, once made, shall be irrevocable.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13402. REHABILITATION CREDIT LIMITED TO CERTIFIED HIS-
TORIC STRUCTURES. 
(a) IN GENERAL.—Subsection (a) of section 47 is amended to 
read as follows: 
‘‘(a) GENERAL RULE.— 
‘‘(1) IN GENERAL.—For purposes of section 46, for any tax-
able year during the 5-year period beginning in the taxable 
year in which a qualified rehabilitated building is placed in 
service, the rehabilitation credit for such year is an amount 
equal to the ratable share for such year. 
‘‘(2) RATABLE SHARE.—For purposes of paragraph (1), the 
ratable share for any taxable year during the period described 
in such paragraph is the amount equal to 20 percent of the 
qualified rehabilitation expenditures with respect to the quali-
fied rehabilitated building, as allocated ratably to each year 
during such period.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 47(c) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (A), by amending clause (iii) 
to read as follows: 
‘‘(iii) such building is a certified historic structure, 
and’’, 
(ii) by striking subparagraph (B), and 
(iii) by redesignating subparagraphs (C) and (D) 
as subparagraphs (B) and (C), respectively, and 
(B) in paragraph (2)(B), by amending clause (iv) to 
read as follows: 
‘‘(iv) 
CERTIFIED
HISTORIC
STRUCTURE.—Any 
expenditure attributable to the rehabilitation of a 
qualified rehabilitated building unless the rehabilita-
tion is a certified rehabilitation (within the meaning 
of subparagraph (C)).’’. 
(2) Paragraph (4) of section 145(d) is amended— 
(A) by striking ‘‘of section 47(c)(1)(C)’’ each place it 
appears and inserting ‘‘of section 47(c)(1)(B)’’, and 
(B) by striking ‘‘section 47(c)(1)(C)(i)’’ and inserting 
‘‘section 47(c)(1)(B)(i)’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to amounts paid 
or incurred after December 31, 2017. 
(2) TRANSITION RULE.—In the case of qualified rehabilita-
tion expenditures with respect to any building— 
(A) owned or leased by the taxpayer during the entirety 
of the period after December 31, 2017, and 
(B) with respect to which the 24-month period selected 
by the taxpayer under clause (i) of section 47(c)(1)(B) of 
26 USC 47 note. 
26 USC 47. 
26 USC 45C note. 
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131 STAT. 2135 
PUBLIC LAW 115–97—DEC. 22, 2017 
the Internal Revenue Code (as amended by subsection (b)), 
or the 60-month period applicable under clause (ii) of such 
section, begins not later than 180 days after the date 
of the enactment of this Act, 
the amendments made by this section shall apply to such 
expenditures paid or incurred after the end of the taxable 
year in which the 24-month period, or the 60-month period, 
referred to in subparagraph (B) ends. 
SEC. 13403. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL 
LEAVE. 
(a) IN GENERAL.— 
(1) ALLOWANCE OF CREDIT.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end the 
following new section: 
‘‘SEC. 45S. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL LEAVE. 
‘‘(a) ESTABLISHMENT OF CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of section 38, in the case 
of an eligible employer, the paid family and medical leave 
credit is an amount equal to the applicable percentage of the 
amount of wages paid to qualifying employees during any period 
in which such employees are on family and medical leave. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of paragraph 
(1), the term ‘applicable percentage’ means 12.5 percent 
increased (but not above 25 percent) by 0.25 percentage points 
for each percentage point by which the rate of payment (as 
described under subsection (c)(1)(B)) exceeds 50 percent. 
‘‘(b) LIMITATION.— 
‘‘(1) IN GENERAL.—The credit allowed under subsection (a) 
with respect to any employee for any taxable year shall not 
exceed an amount equal to the product of the normal hourly 
wage rate of such employee for each hour (or fraction thereof) 
of actual services performed for the employer and the number 
of hours (or fraction thereof) for which family and medical 
leave is taken. 
‘‘(2) NON-HOURLY WAGE RATE.—For purposes of paragraph 
(1), in the case of any employee who is not paid on an hourly 
wage rate, the wages of such employee shall be prorated to 
an hourly wage rate under regulations established by the Sec-
retary. 
‘‘(3) MAXIMUM AMOUNT OF LEAVE SUBJECT TO CREDIT.— 
The amount of family and medical leave that may be taken 
into account with respect to any employee under subsection 
(a) for any taxable year shall not exceed 12 weeks. 
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘eligible employer’ means any 
employer who has in place a written policy that meets the 
following requirements: 
‘‘(A) The policy provides— 
‘‘(i) in the case of a qualifying employee who is 
not a part-time employee (as defined in section 
4980E(d)(4)(B)), not less than 2 weeks of annual paid 
family and medical leave, and 
‘‘(ii) in the case of a qualifying employee who is 
a part-time employee, an amount of annual paid family 
and medical leave that is not less than an amount 
which bears the same ratio to the amount of annual 
26 USC 45S. 
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131 STAT. 2136 
PUBLIC LAW 115–97—DEC. 22, 2017 
paid family and medical leave that is provided to a 
qualifying employee described in clause (i) as— 
‘‘(I) the number of hours the employee is 
expected to work during any week, bears to 
‘‘(II) the number of hours an equivalent quali-
fying employee described in clause (i) is expected 
to work during the week. 
‘‘(B) The policy requires that the rate of payment under 
the program is not less than 50 percent of the wages 
normally paid to such employee for services performed 
for the employer. 
‘‘(2) SPECIAL RULE FOR CERTAIN EMPLOYERS.— 
‘‘(A) IN GENERAL.—An added employer shall not be 
treated as an eligible employer unless such employer pro-
vides paid family and medical leave in compliance with 
a written policy which ensures that the employer— 
‘‘(i) will not interfere with, restrain, or deny the 
exercise of or the attempt to exercise, any right pro-
vided under the policy, and 
‘‘(ii) will not discharge or in any other manner 
discriminate against any individual for opposing any 
practice prohibited by the policy. 
‘‘(B) ADDED
EMPLOYER; ADDED
EMPLOYEE.—For pur-
poses of this paragraph— 
‘‘(i) ADDED EMPLOYEE.—The term ‘added employee’ 
means a qualifying employee who is not covered by 
title I of the Family and Medical Leave Act of 1993, 
as amended. 
‘‘(ii) ADDED EMPLOYER.—The term ‘added employer’ 
means an eligible employer (determined without regard 
to this paragraph), whether or not covered by that 
title I, who offers paid family and medical leave to 
added employees. 
‘‘(3) AGGREGATION RULE.—All persons which are treated 
as a single employer under subsections (a) and (b) of section 
52 shall be treated as a single taxpayer. 
‘‘(4) TREATMENT OF BENEFITS MANDATED OR PAID FOR BY 
STATE OR LOCAL GOVERNMENTS.—For purposes of this section, 
any leave which is paid by a State or local government or 
required by State or local law shall not be taken into account 
in determining the amount of paid family and medical leave 
provided by the employer. 
‘‘(5) NO INFERENCE.—Nothing in this subsection shall be 
construed as subjecting an employer to any penalty, liability, 
or other consequence (other than ineligibility for the credit 
allowed by reason of subsection (a) or recapturing the benefit 
of such credit) for failure to comply with the requirements 
of this subsection. 
‘‘(d) QUALIFYING EMPLOYEES.—For purposes of this section, the 
term ‘qualifying employee’ means any employee (as defined in sec-
tion 3(e) of the Fair Labor Standards Act of 1938, as amended) 
who— 
‘‘(1) has been employed by the employer for 1 year or 
more, and 
‘‘(2) for the preceding year, had compensation not in excess 
of an amount equal to 60 percent of the amount applicable 
for such year under clause (i) of section 414(q)(1)(B). 
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131 STAT. 2137 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(e) FAMILY AND MEDICAL LEAVE.— 
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 
for purposes of this section, the term ‘family and medical leave’ 
means leave for any 1 or more of the purposes described under 
subparagraph (A), (B), (C), (D), or (E) of paragraph (1), or 
paragraph (3), of section 102(a) of the Family and Medical 
Leave Act of 1993, as amended, whether the leave is provided 
under that Act or by a policy of the employer. 
‘‘(2) EXCLUSION.—If an employer provides paid leave as 
vacation leave, personal leave, or medical or sick leave (other 
than leave specifically for 1 or more of the purposes referred 
to in paragraph (1)), that paid leave shall not be considered 
to be family and medical leave under paragraph (1). 
‘‘(3) DEFINITIONS.—In this subsection, the terms ‘vacation 
leave’, ‘personal leave’, and ‘medical or sick leave’ mean those 
3 types of leave, within the meaning of section 102(d)(2) of 
that Act. 
‘‘(f) DETERMINATIONS MADE BY SECRETARY OF TREASURY.—For 
purposes of this section, any determination as to whether an 
employer or an employee satisfies the applicable requirements for 
an eligible employer (as described in subsection (c)) or qualifying 
employee (as described in subsection (d)), respectively, shall be 
made by the Secretary based on such information, to be provided 
by the employer, as the Secretary determines to be necessary or 
appropriate. 
‘‘(g) WAGES.—For purposes of this section, the term ‘wages’ 
has the meaning given such term by subsection (b) of section 
3306 (determined without regard to any dollar limitation contained 
in such section). Such term shall not include any amount taken 
into account for purposes of determining any other credit allowed 
under this subpart. 
‘‘(h) ELECTION TO HAVE CREDIT NOT APPLY.— 
‘‘(1) IN GENERAL.—A taxpayer may elect to have this section 
not apply for any taxable year. 
‘‘(2) OTHER RULES.—Rules similar to the rules of para-
graphs (2) and (3) of section 51(j) shall apply for purposes 
of this subsection. 
‘‘(i) TERMINATION.—This section shall not apply to wages paid 
in taxable years beginning after December 31, 2019.’’. 
(b) CREDIT PART OF GENERAL BUSINESS CREDIT.—Section 38(b) 
is amended by striking ‘‘plus’’ at the end of paragraph (35), by 
striking the period at the end of paragraph (36) and inserting 
‘‘, plus’’, and by adding at the end the following new paragraph: 
‘‘(37) in the case of an eligible employer (as defined in 
section 45S(c)), the paid family and medical leave credit deter-
mined under section 45S(a).’’. 
(c) CREDIT ALLOWED AGAINST AMT.—Subparagraph (B) of sec-
tion 38(c)(4) is amended by redesignating clauses (ix) through (xi) 
as clauses (x) through (xii), respectively, and by inserting after 
clause (viii) the following new clause: 
‘‘(ix) the credit determined under section 45S,’’. 
(d) CONFORMING AMENDMENTS.— 
(1) DENIAL
OF
DOUBLE
BENEFIT.—Section 280C(a) is 
amended by inserting ‘‘45S(a),’’ after ‘‘45P(a),’’. 
(2) ELECTION TO HAVE CREDIT NOT APPLY.—Section 6501(m) 
is amended by inserting ‘‘45S(h),’’ after ‘‘45H(g),’’. 
26 USC 38. 
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131 STAT. 2138 
PUBLIC LAW 115–97—DEC. 22, 2017 
(3) CLERICAL AMENDMENT.—The table of sections for sub-
part D of part IV of subchapter A of chapter 1 is amended 
by adding at the end the following new item: 
‘‘Sec. 45S. Employer credit for paid family and medical leave.’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to wages paid in taxable years beginning after December 
31, 2017. 
SEC. 13404. REPEAL OF TAX CREDIT BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chapter 1 is 
amended by striking subparts H, I, and J (and by striking the 
items relating to such subparts in the table of subparts for such 
part). 
(b) PAYMENTS
TO ISSUERS.—Subchapter B of chapter 65 is 
amended by striking section 6431 (and by striking the item relating 
to such section in the table of sections for such subchapter). 
(c) CONFORMING AMENDMENTS.— 
(1) Part IV of subchapter U of chapter 1 is amended by 
striking section 1397E (and by striking the item relating to 
such section in the table of sections for such part). 
(2) Section 54(l)(3)(B) is amended by inserting ‘‘(as in effect 
before its repeal by the Tax Cuts and Jobs Act)’’ after ‘‘section 
1397E(I)’’. 
(3) Section 6211(b)(4)(A) is amended by striking ‘‘, and 
6431’’ and inserting ‘‘and’’ before ‘‘36B’’. 
(4) Section 6401(b)(1) is amended by striking ‘‘G, H, I, 
and J’’ and inserting ‘‘and G’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to bonds issued after December 31, 2017. 
PART VI—PROVISIONS RELATED TO SPECIFIC 
ENTITIES AND INDUSTRIES 
Subpart A—Partnership Provisions 
SEC. 13501. TREATMENT OF GAIN OR LOSS OF FOREIGN PERSONS 
FROM SALE OR EXCHANGE OF INTERESTS IN PARTNER-
SHIPS ENGAGED IN TRADE OR BUSINESS WITHIN THE 
UNITED STATES. 
(a) AMOUNT TREATED AS EFFECTIVELY CONNECTED.— 
(1) IN GENERAL.—Section 864(c) is amended by adding at 
the end the following: 
‘‘(8) GAIN OR LOSS OF FOREIGN PERSONS FROM SALE OR 
EXCHANGE OF CERTAIN PARTNERSHIP INTERESTS.— 
‘‘(A) IN GENERAL.—Notwithstanding any other provi-
sion of this subtitle, if a nonresident alien individual or 
foreign corporation owns, directly or indirectly, an interest 
in a partnership which is engaged in any trade or business 
within the United States, gain or loss on the sale or 
exchange of all (or any portion of) such interest shall be 
treated as effectively connected with the conduct of such 
trade or business to the extent such gain or loss does 
not exceed the amount determined under subparagraph 
(B). 
26 USC 54 note. 
26 USC 
prec. 1397E. 
26 USC 
prec. 6411. 
26 USC prec. 21, 
prec. 54, 54, 
prec. 54A, 
54A–54F, 
prec. 54AA, 
54AA. 
26 USC 38 note. 
26 USC prec. 38. 
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131 STAT. 2139 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) AMOUNT TREATED AS EFFECTIVELY CONNECTED.— 
The amount determined under this subparagraph with 
respect to any partnership interest sold or exchanged— 
‘‘(i) in the case of any gain on the sale or exchange 
of the partnership interest, is— 
‘‘(I) the portion of the partner’s distributive 
share of the amount of gain which would have 
been effectively connected with the conduct of a 
trade or business within the United States if the 
partnership had sold all of its assets at their fair 
market value as of the date of the sale or exchange 
of such interest, or 
‘‘(II) zero if no gain on such deemed sale would 
have been so effectively connected, and 
‘‘(ii) in the case of any loss on the sale or exchange 
of the partnership interest, is— 
‘‘(I) the portion of the partner’s distributive 
share of the amount of loss on the deemed sale 
described in clause (i)(I) which would have been 
so effectively connected, or 
‘‘(II) zero if no loss on such deemed sale would 
be have been so effectively connected. 
For purposes of this subparagraph, a partner’s distribu-
tive share of gain or loss on the deemed sale shall 
be determined in the same manner as such partner’s 
distributive share of the non-separately stated taxable 
income or loss of such partnership. 
‘‘(C) COORDINATION WITH UNITED STATES REAL PROP-
ERTY INTERESTS.—If a partnership described in subpara-
graph (A) holds any United States real property interest 
(as defined in section 897(c)) at the time of the sale or 
exchange of the partnership interest, then the gain or 
loss treated as effectively connected income under subpara-
graph (A) shall be reduced by the amount so treated with 
respect to such United States real property interest under 
section 897. 
‘‘(D) SALE OR EXCHANGE.—For purposes of this para-
graph, the term ‘sale or exchange’ means any sale, 
exchange, or other disposition. 
‘‘(E) SECRETARIAL
AUTHORITY.—The Secretary shall 
prescribe such regulations or other guidance as the Sec-
retary determines appropriate for the application of this 
paragraph, including with respect to exchanges described 
in section 332, 351, 354, 355, 356, or 361.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
864(c)(1) 
is 
amended— 
(A) by striking ‘‘and (7)’’ in subparagraph (A), and 
inserting ‘‘(7), and (8)’’, and 
(B) by striking ‘‘or (7)’’ in subparagraph (B), and 
inserting ‘‘(7), or (8)’’. 
(b) WITHHOLDING REQUIREMENTS.—Section 1446 is amended 
by redesignating subsection (f) as subsection (g) and by inserting 
after subsection (e) the following: 
‘‘(f) SPECIAL RULES
FOR WITHHOLDING
ON DISPOSITIONS
OF 
PARTNERSHIP INTERESTS.— 
‘‘(1) IN GENERAL.—Except as provided in this subsection, 
if any portion of the gain (if any) on any disposition of an 
26 USC 864. 
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131 STAT. 2140 
PUBLIC LAW 115–97—DEC. 22, 2017 
interest in a partnership would be treated under section 
864(c)(8) as effectively connected with the conduct of a trade 
or business within the United States, the transferee shall be 
required to deduct and withhold a tax equal to 10 percent 
of the amount realized on the disposition. 
‘‘(2) EXCEPTION IF NONFOREIGN AFFIDAVIT FURNISHED.— 
‘‘(A) IN
GENERAL.—No person shall be required to 
deduct and withhold any amount under paragraph (1) with 
respect to any disposition if the transferor furnishes to 
the transferee an affidavit by the transferor stating, under 
penalty of perjury, the transferor’s United States taxpayer 
identification number and that the transferor is not a for-
eign person. 
‘‘(B) FALSE
AFFIDAVIT.—Subparagraph (A) shall not 
apply to any disposition if— 
‘‘(i) the transferee has actual knowledge that the 
affidavit is false, or the transferee receives a notice 
(as described in section 1445(d)) from a transferor’s 
agent or transferee’s agent that such affidavit or state-
ment is false, or 
‘‘(ii) the Secretary by regulations requires the 
transferee to furnish a copy of such affidavit or state-
ment to the Secretary and the transferee fails to fur-
nish a copy of such affidavit or statement to the Sec-
retary at such time and in such manner as required 
by such regulations. 
‘‘(C) RULES FOR AGENTS.—The rules of section 1445(d) 
shall apply to a transferor’s agent or transferee’s agent 
with respect to any affidavit described in subparagraph 
(A) in the same manner as such rules apply with respect 
to the disposition of a United States real property interest 
under such section. 
‘‘(3) AUTHORITY
OF
SECRETARY
TO
PRESCRIBE
REDUCED 
AMOUNT.—At the request of the transferor or transferee, the 
Secretary may prescribe a reduced amount to be withheld under 
this section if the Secretary determines that to substitute such 
reduced amount will not jeopardize the collection of the tax 
imposed under this title with respect to gain treated under 
section 864(c)(8) as effectively connected with the conduct of 
a trade or business with in the United States. 
‘‘(4) PARTNERSHIP TO WITHHOLD AMOUNTS NOT WITHHELD 
BY
THE
TRANSFEREE.—If a transferee fails to withhold any 
amount required to be withheld under paragraph (1), the part-
nership shall be required to deduct and withhold from distribu-
tions to the transferee a tax in an amount equal to the amount 
the transferee failed to withhold (plus interest under this title 
on such amount). 
‘‘(5) DEFINITIONS.—Any term used in this subsection which 
is also used under section 1445 shall have the same meaning 
as when used in such section. 
‘‘(6) REGULATIONS.—The Secretary shall prescribe such 
regulations or other guidance as may be necessary to carry 
out the purposes of this subsection, including regulations pro-
viding for exceptions from the provisions of this subsection.’’. 
(c) EFFECTIVE DATES.— 
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131 STAT. 2141 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) SUBSECTION (a).—The amendments made by subsection 
(a) shall apply to sales, exchanges, and dispositions on or after 
November 27, 2017. 
(2) SUBSECTION (b).—The amendment made by subsection 
(b) shall apply to sales, exchanges, and dispositions after 
December 31, 2017. 
SEC. 13502. MODIFY DEFINITION OF SUBSTANTIAL BUILT-IN LOSS IN 
THE CASE OF TRANSFER OF PARTNERSHIP INTEREST. 
(a) IN GENERAL.—Paragraph (1) of section 743(d) is to read 
as follows: 
‘‘(1) IN GENERAL.—For purposes of this section, a partner-
ship has a substantial built-in loss with respect to a transfer 
of an interest in the partnership if— 
‘‘(A) the partnership’s adjusted basis in the partnership 
property exceeds by more than $250,000 the fair market 
value of such property, or 
‘‘(B) the transferee partner would be allocated a loss 
of more than $250,000 if the partnership assets were sold 
for cash equal to their fair market value immediately after 
such transfer.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to transfers of partnership interests after December 
31, 2017. 
SEC. 13503. CHARITABLE CONTRIBUTIONS AND FOREIGN TAXES TAKEN 
INTO 
ACCOUNT 
IN 
DETERMINING 
LIMITATION 
ON 
ALLOWANCE OF PARTNER’S SHARE OF LOSS. 
(a) IN GENERAL.—Subsection (d) of section 704 is amended— 
(1) by striking ‘‘A partner’s distributive share’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—A partner’s distributive share’’, 
(2) by striking ‘‘Any excess of such loss’’ and inserting 
the following: 
‘‘(2) CARRYOVER.—Any excess of such loss’’, and 
(3) by adding at the end the following new paragraph: 
‘‘(3) SPECIAL RULES.— 
‘‘(A) IN GENERAL.—In determining the amount of any 
loss under paragraph (1), there shall be taken into account 
the partner’s distributive share of amounts described in 
paragraphs (4) and (6) of section 702(a). 
‘‘(B) EXCEPTION.—In the case of a charitable contribu-
tion of property whose fair market value exceeds its 
adjusted basis, subparagraph (A) shall not apply to the 
extent of the partner’s distributive share of such excess.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to partnership taxable years beginning after December 
31, 2017. 
SEC. 13504. REPEAL OF TECHNICAL TERMINATION OF PARTNERSHIPS. 
(a) IN GENERAL.—Paragraph (1) of section 708(b) is amended— 
(1) by striking ‘‘, or’’ at the end of subparagraph (A) and 
all that follows and inserting a period, and 
(2) by striking ‘‘only if—’’ and all that follows through 
‘‘no part of any business’’ and inserting the following: ‘‘only 
if no part of any business’’. 
(b) CONFORMING AMENDMENT.— 
26 USC 704 note. 
26 USC 743 note. 
26 USC 743. 
26 USC 1446 
note. 
26 USC 864 note. 
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131 STAT. 2142 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) Section 168(i)(7)(B) is amended by striking the second 
sentence. 
(2) Section 743(e) is amended by striking paragraph (4) 
and redesignating paragraphs (5), (6), and (7) as paragraphs 
(4), (5), and (6). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to partnership taxable years beginning after December 
31, 2017. 
Subpart B—Insurance Reforms 
SEC. 13511. NET OPERATING LOSSES OF LIFE INSURANCE COMPANIES. 
(a) IN GENERAL.—Section 805(b) is amended by striking para-
graph (4) and by redesignating paragraph (5) as paragraph (4). 
(b) CONFORMING AMENDMENTS.— 
(1) Part I of subchapter L of chapter 1 is amended by 
striking section 810 (and by striking the item relating to such 
section in the table of sections for such part). 
(2)(A) Part III of subchapter L of chapter 1 is amended 
by striking section 844 (and by striking the item relating to 
such section in the table of sections for such part). 
(B) Section 831(b)(3) is amended by striking ‘‘except as 
provided in section 844,’’ 
(3) Section 381 is amended by striking subsection (d). 
(4) Section 805(a)(4)(B)(ii) is amended to read as follows: 
‘‘(ii) the deduction allowed under section 172,’’. 
(5) Section 805(a) is amended by striking paragraph (5). 
(6) Section 805(b)(2)(A)(iv) is amended to read as follows: 
‘‘(iv) any net operating loss carryback to the tax-
able year under section 172, and’’. 
(7) Section 953(b)(1)(B) is amended to read as follows: 
‘‘(B) So much of section 805(a)(8) as relates to the 
deduction allowed under section 172.’’. 
(8) Section 1351(i)(3) is amended by striking ‘‘or the oper-
ations loss deduction under section 810,’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to losses arising in taxable years beginning after 
December 31, 2017. 
SEC. 13512. REPEAL OF SMALL LIFE INSURANCE COMPANY DEDUC-
TION. 
(a) IN GENERAL.—Part I of subchapter L of chapter 1 is 
amended by striking section 806 (and by striking the item relating 
to such section in the table of sections for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 453B(e) is amended— 
(A) by striking ‘‘(as defined in section 806(b)(3))’’ in 
paragraph (2)(B), and 
(B) by adding at the end the following new paragraph: 
‘‘(3) NONINSURANCE BUSINESS.— 
‘‘(A) IN GENERAL.—For purposes of this subsection, the 
term ‘noninsurance business’ means any activity which 
is not an insurance business. 
‘‘(B) CERTAIN
ACTIVITIES
TREATED
AS
INSURANCE 
BUSINESSES.—For purposes of subparagraph (A), any 
activity which is not an insurance business shall be treated 
as an insurance business if— 
26 USC 
prec. 804. 
26 USC 381 note. 
26 USC 
prec. 841. 
26 USC 
prec. 804. 
26 USC 168 note. 
26 USC 168. 
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131 STAT. 2143 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) it is of a type traditionally carried on by life 
insurance companies for investment purposes, but only 
if the carrying on of such activity (other than in the 
case of real estate) does not constitute the active con-
duct of a trade or business, or 
‘‘(ii) it involves the performance of administrative 
services in connection with plans providing life insur-
ance, pension, or accident and health benefits.’’. 
(2) Section 465(c)(7)(D)(v)(II) is amended by striking ‘‘sec-
tion 806(b)(3)’’ and inserting ‘‘section 453B(e)(3)’’. 
(3) Section 801(a)(2) is amended by striking subparagraph 
(C). 
(4) Section 804 is amended by striking ‘‘means—’’ and 
all that follows and inserting ‘‘means the general deductions 
provided in section 805.’’. 
(5) Section 805(a)(4)(B), as amended by this Act, is amended 
by striking clause (i) and by redesignating clauses (ii), (iii), 
and (iv) as clauses (i), (ii), and (iii), respectively. 
(6) Section 805(b)(2)(A), as amended by this Act, is amended 
by striking clause (iii) and by redesignating clauses (iv) and 
(v) as clauses (iii) and (iv), respectively. 
(7) Section 842(c) is amended by striking paragraph (1) 
and by redesignating paragraphs (2) and (3) as paragraphs 
(1) and (2), respectively. 
(8) Section 953(b)(1), as amended by section 13511, is 
amended by striking subparagraph (A) and by redesignating 
subparagraphs (B) and (C) as subparagraphs (A) and (B), 
respectively. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13513. ADJUSTMENT FOR CHANGE IN COMPUTING RESERVES. 
(a) IN GENERAL.—Paragraph (1) of section 807(f) is amended 
to read as follows: 
‘‘(1) TREATMENT AS CHANGE IN METHOD OF ACCOUNTING.— 
If the basis for determining any item referred to in subsection 
(c) as of the close of any taxable year differs from the basis 
for such determination as of the close of the preceding taxable 
year, then so much of the difference between— 
‘‘(A) the amount of the item at the close of the taxable 
year, computed on the new basis, and 
‘‘(B) the amount of the item at the close of the taxable 
year, computed on the old basis, 
as is attributable to contracts issued before the taxable year 
shall be taken into account under section 481 as adjustments 
attributable to a change in method of accounting initiated by 
the taxpayer and made with the consent of the Secretary.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13514. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS TO SHARE-
HOLDERS FROM PRE-1984 POLICYHOLDERS SURPLUS 
ACCOUNT. 
(a) IN GENERAL.—Subpart D of part I of subchapter L is 
amended by striking section 815 (and by striking the item relating 
to such section in the table of sections for such subpart). 
(b) CONFORMING AMENDMENT.—Section 801 is amended by 
striking subsection (c). 
26 USC 
prec. 811. 
26 USC 807 note. 
26 USC 453B 
note. 
26 USC 465. 
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131 STAT. 2144 
PUBLIC LAW 115–97—DEC. 22, 2017 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
(d) PHASED INCLUSION
OF REMAINING BALANCE
OF POLICY-
HOLDERS SURPLUS ACCOUNTS.—In the case of any stock life insur-
ance company which has a balance (determined as of the close 
of such company’s last taxable year beginning before January 1, 
2018) in an existing policyholders surplus account (as defined in 
section 815 of the Internal Revenue Code of 1986, as in effect 
before its repeal), the tax imposed by section 801 of such Code 
for the first 8 taxable years beginning after December 31, 2017, 
shall be the amount which would be imposed by such section 
for such year on the sum of— 
(1) life insurance company taxable income for such year 
(within the meaning of such section 801 but not less than 
zero), plus 
(2) 1⁄8 of such balance. 
SEC. 13515. MODIFICATION OF PRORATION RULES FOR PROPERTY AND 
CASUALTY INSURANCE COMPANIES. 
(a) IN GENERAL.—Section 832(b)(5)(B) is amended— 
(1) by striking ‘‘15 percent’’ and inserting ‘‘the applicable 
percentage’’, and 
(2) by inserting at the end the following new sentence: 
‘‘For purposes of this subparagraph, the applicable percentage 
is 5.25 percent divided by the highest rate in effect under 
section 11(b).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13516. REPEAL OF SPECIAL ESTIMATED TAX PAYMENTS. 
(a) IN GENERAL.—Part III of subchapter L of chapter 1 is 
amended by striking section 847 (and by striking the item relating 
to such section in the table of sections for such part). 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13517. COMPUTATION OF LIFE INSURANCE TAX RESERVES. 
(a) IN GENERAL.— 
(1) APPROPRIATE RATE OF INTEREST.—The second sentence 
of section 807(c) is amended to read as follows: ‘‘For purposes 
of paragraph (3), the appropriate rate of interest is the highest 
rate or rates permitted to be used to discount the obligations 
by the National Association of Insurance Commissioners as 
of the date the reserve is determined.’’. 
(2) METHOD OF COMPUTING RESERVES.—Section 807(d) is 
amended— 
(A) by striking paragraphs (1), (2), (4), and (5), 
(B) by redesignating paragraph (6) as paragraph (4), 
(C) by inserting before paragraph (3) the following 
new paragraphs: 
‘‘(1) DETERMINATION OF RESERVE.— 
‘‘(A) IN
GENERAL.—For purposes of this part (other 
than section 816), the amount of the life insurance reserves 
for any contract (other than a contract to which subpara-
graph (B) applies) shall be the greater of— 
‘‘(i) the net surrender value of such contract, or 
‘‘(ii) 92.81 percent of the reserve determined under 
paragraph (2). 
26 USC 847 note. 
26 USC 
prec. 841. 
26 USC 832 note. 
26 USC 801 note. 
26 USC 801 note. 
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131 STAT. 2145 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) VARIABLE CONTRACTS.—For purposes of this part 
(other than section 816), the amount of the life insurance 
reserves for a variable contract shall be equal to the sum 
of— 
‘‘(i) the greater of— 
‘‘(I) the net surrender value of such contract, 
or 
‘‘(II) the portion of the reserve that is sepa-
rately accounted for under section 817, plus 
‘‘(ii) 92.81 percent of the excess (if any) of the 
reserve determined under paragraph (2) over the 
amount in clause (i). 
‘‘(C) STATUTORY CAP.—In no event shall the reserves 
determined under subparagraphs (A) or (B) for any contract 
as of any time exceed the amount which would be taken 
into account with respect to such contract as of such time 
in determining statutory reserves (as defined in paragraph 
(4)). 
‘‘(D) NO
DOUBLE
COUNTING.—In no event shall any 
amount or item be taken into account more than once 
in determining any reserve under this subchapter. 
‘‘(2) AMOUNT
OF
RESERVE.—The amount of the reserve 
determined under this paragraph with respect to any contract 
shall be determined by using the tax reserve method applicable 
to such contract.’’. 
(D) by striking ‘‘(other than a qualified long-term care 
insurance contract, as defined in section 7702B(b)), a 2- 
year full preliminary term method’’ in paragraph (3)(A)(iii) 
and inserting ‘‘, the reserve method prescribed by the 
National Association of Insurance Commissioners which 
covers such contract as of the date the reserve is deter-
mined’’, 
(E) by striking ‘‘(as of the date of issuance)’’ in para-
graph (3)(A)(iv)(I) and inserting ‘‘(as of the date the reserve 
is determined)’’, 
(F) by striking ‘‘as of the date of the issuance of’’ 
in paragraph (3)(A)(iv)(II) and inserting ‘‘as of the date 
the reserve is determined for’’, 
(G) by striking ‘‘in effect on the date of the issuance 
of the contract’’ in paragraph (3)(B)(i) and inserting 
‘‘applicable to the contract and in effect as of the date 
the reserve is determined’’, and 
(H) by striking ‘‘in effect on the date of the issuance 
of the contract’’ in paragraph (3)(B)(ii) and inserting 
‘‘applicable to the contract and in effect as of the date 
the reserve is determined’’. 
(3) SPECIAL RULES.—Section 807(e) is amended— 
(A) by striking paragraphs (2) and (5), 
(B) by redesignating paragraphs (3), (4), (6), and (7) 
as paragraphs (2), (3), (4), and (5), respectively, 
(C) by amending paragraph (2) (as so redesignated) 
to read as follows: 
‘‘(2) QUALIFIED SUPPLEMENTAL BENEFITS.— 
‘‘(A) QUALIFIED
SUPPLEMENTAL
BENEFITS
TREATED 
SEPARATELY.—For purposes of this part, the amount of 
the life insurance reserve for any qualified supplemental 
26 USC 807. 
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131 STAT. 2146 
PUBLIC LAW 115–97—DEC. 22, 2017 
benefit shall be computed separately as though such benefit 
were under a separate contract. 
‘‘(B) QUALIFIED SUPPLEMENTAL BENEFIT.—For purposes 
of this paragraph, the term ‘qualified supplemental benefit’ 
means any supplemental benefit described in subparagraph 
(C) if— 
‘‘(i) there is a separately identified premium or 
charge for such benefit, and 
‘‘(ii) any net surrender value under the contract 
attributable to any other benefit is not available to 
fund such benefit. 
‘‘(C) SUPPLEMENTAL BENEFITS.—For purposes of this 
paragraph, the supplemental benefits described in this 
subparagraph are any— 
‘‘(i) guaranteed insurability, 
‘‘(ii) accidental death or disability benefit, 
‘‘(iii) convertibility, 
‘‘(iv) disability waiver benefit, or 
‘‘(v) other benefit prescribed by regulations, 
which is supplemental to a contract for which there is 
a reserve described in subsection (c).’’, and 
(D) by adding at the end the following new paragraph: 
‘‘(6) REPORTING
RULES.—The Secretary shall require 
reporting (at such time and in such manner as the Secretary 
shall prescribe) with respect to the opening balance and closing 
balance of reserves and with respect to the method of computing 
reserves for purposes of determining income.’’. 
(4) DEFINITION
OF
LIFE
INSURANCE
CONTRACT.—Section 
7702 is amended— 
(A) by striking clause (i) of subsection (c)(3)(B) and 
inserting the following: 
‘‘(i) reasonable mortality charges which meet the 
requirements prescribed in regulations to be promul-
gated by the Secretary or that do not exceed the mor-
tality charges specified in the prevailing commis-
sioners’ standard tables as defined in subsection 
(f)(10),’’ and 
(B) by adding at the end of subsection (f) the following 
new paragraph: 
‘‘(10) PREVAILING COMMISSIONERS’ STANDARD TABLES.—For 
purposes of subsection (c)(3)(B)(i), the term ‘prevailing commis-
sioners’ standard tables’ means the most recent commissioners’ 
standard tables prescribed by the National Association of Insur-
ance Commissioners which are permitted to be used in com-
puting reserves for that type of contract under the insurance 
laws of at least 26 States when the contract was issued. If 
the prevailing commissioners’ standard tables as of the begin-
ning of any calendar year (hereinafter in this paragraph 
referred to as the ‘year of change’) are different from the pre-
vailing commissioners’ standard tables as of the beginning of 
the preceding calendar year, the issuer may use the prevailing 
commissioners’ standard tables as of the beginning of the pre-
ceding calendar year with respect to any contract issued after 
the change and before the close of the 3-year period beginning 
on the first day of the year of change.’’. 
(b) CONFORMING AMENDMENTS.— 
26 USC 7702. 
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131 STAT. 2147 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) Section 808 is amended by adding at the end the fol-
lowing new subsection: 
‘‘(g) PREVAILING STATE ASSUMED INTEREST RATE.—For purposes 
of this subchapter— 
‘‘(1) IN
GENERAL.—The term ‘prevailing State assumed 
interest rate’ means, with respect to any contract, the highest 
assumed interest rate permitted to be used in computing life 
insurance reserves for insurance contracts or annuity contracts 
(as the case may be) under the insurance laws of at least 
26 States. For purposes of the preceding sentence, the effect 
of nonforfeiture laws of a State on interest rates for reserves 
shall not be taken into account. 
‘‘(2) WHEN
RATE
DETERMINED.—The prevailing State 
assumed interest rate with respect to any contract shall be 
determined as of the beginning of the calendar year in which 
the contract was issued.’’. 
(2) Paragraph (1) of section 811(d) is amended by striking 
‘‘the greater of the prevailing State assumed interest rate or 
applicable Federal interest rate in effect under section 807’’ 
and inserting ‘‘the interest rate in effect under section 808(g)’’. 
(3) Subparagraph (A) of section 846(f)(6) is amended by 
striking ‘‘except that’’ and all that follows and inserting ‘‘except 
that the limitation of subsection (a)(3) shall apply, and’’. 
(4) Section 848(e)(1)(B)(iii) is amended by striking 
‘‘807(e)(4)’’ and inserting ‘‘807(e)(3)’’. 
(5) Subparagraph (B) of section 954(i)(5) is amended by 
striking ‘‘shall be substituted for the prevailing State assumed 
interest rate,’’ and inserting ‘‘shall apply,’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
(2) TRANSITION RULE.—For the first taxable year beginning 
after December 31, 2017, the reserve with respect to any con-
tract (as determined under section 807(d) of the Internal Rev-
enue Code of 1986) at the end of the preceding taxable year 
shall be determined as if the amendments made by this section 
had applied to such reserve in such preceding taxable year. 
(3) TRANSITION RELIEF.— 
(A) IN GENERAL.—If— 
(i) the reserve determined under section 807(d) 
of the Internal Revenue Code of 1986 (determined after 
application of paragraph (2)) with respect to any con-
tract as of the close of the year preceding the first 
taxable year beginning after December 31, 2017, differs 
from 
(ii) the reserve which would have been determined 
with respect to such contract as of the close of such 
taxable year under such section determined without 
regard to paragraph (2), 
then the difference between the amount of the reserve 
described in clause (i) and the amount of the reserve 
described in clause (ii) shall be taken into account under 
the method provided in subparagraph (B). 
(B) METHOD.—The method provided in this subpara-
graph is as follows: 
26 USC 807 note. 
26 USC 808. 
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131 STAT. 2148 
PUBLIC LAW 115–97—DEC. 22, 2017 
(i) If the amount determined under subparagraph 
(A)(i) exceeds the amount determined under subpara-
graph (A)(ii), 1/8 of such excess shall be taken into 
account, for each of the 8 succeeding taxable years, 
as a deduction under section 805(a)(2) or 832(c)(4) of 
such Code, as applicable. 
(ii) If the amount determined under subparagraph 
(A)(ii) exceeds the amount determined under subpara-
graph (A)(i), 1/8 of such excess shall be included in 
gross income, for each of the 8 succeeding taxable 
years, under section 803(a)(2) or 832(b)(1)(C) of such 
Code, as applicable. 
SEC. 13518. MODIFICATION OF RULES FOR LIFE INSURANCE PRORA-
TION FOR PURPOSES OF DETERMINING THE DIVIDENDS 
RECEIVED DEDUCTION. 
(a) IN GENERAL.—Section 812 is amended to read as follows: 
‘‘SEC. 812. DEFINITION OF COMPANY’S SHARE AND POLICYHOLDER’S 
SHARE. 
‘‘(a) COMPANY’S SHARE.—For purposes of section 805(a)(4), the 
term ‘company’s share’ means, with respect to any taxable year 
beginning after December 31, 2017, 70 percent. 
‘‘(b) POLICYHOLDER’S SHARE.—For purposes of section 807, the 
term ‘policyholder’s share’ means, with respect to any taxable year 
beginning after December 31, 2017, 30 percent.’’. 
(b) CONFORMING AMENDMENT.—Section 817A(e)(2) is amended 
by striking ‘‘, 807(d)(2)(B), and 812’’ and inserting ‘‘and 807(d)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13519. CAPITALIZATION OF CERTAIN POLICY ACQUISITION 
EXPENSES. 
(a) IN GENERAL.— 
(1) Section 848(a)(2) is amended by striking ‘‘120-month’’ 
and inserting ‘‘180-month’’. 
(2) Section 848(c)(1) is amended by striking ‘‘1.75 percent’’ 
and inserting ‘‘2.09 percent’’. 
(3) Section 848(c)(2) is amended by striking ‘‘2.05 percent’’ 
and inserting ‘‘2.45 percent’’. 
(4) Section 848(c)(3) is amended by striking ‘‘7.7 percent’’ 
and inserting ‘‘9.2 percent’’. 
(b) CONFORMING AMENDMENTS.—Section 848(b)(1) is amended 
by striking ‘‘120-month’’ and inserting ‘‘180-month’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to net premiums for taxable years beginning after 
December 31, 2017. 
(2) TRANSITION RULE.—Specified policy acquisition expenses 
first required to be capitalized in a taxable year beginning 
before January 1, 2018, will continue to be allowed as a deduc-
tion ratably over the 120-month period beginning with the 
first month in the second half of such taxable year. 
SEC. 13520. TAX REPORTING FOR LIFE SETTLEMENT TRANSACTIONS. 
(a) IN GENERAL.—Subpart B of part III of subchapter A of 
chapter 61, as amended by section 13306, is amended by adding 
at the end the following new section: 
26 USC 848 note. 
26 USC 812 note. 
26 USC 812. 
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131 STAT. 2149 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘SEC. 6050Y. RETURNS RELATING TO CERTAIN LIFE INSURANCE CON-
TRACT TRANSACTIONS. 
‘‘(a) REQUIREMENT OF REPORTING OF CERTAIN PAYMENTS.— 
‘‘(1) IN GENERAL.—Every person who acquires a life insur-
ance contract or any interest in a life insurance contract in 
a reportable policy sale during any taxable year shall make 
a return for such taxable year (at such time and in such 
manner as the Secretary shall prescribe) setting forth— 
‘‘(A) the name, address, and TIN of such person, 
‘‘(B) the name, address, and TIN of each recipient 
of payment in the reportable policy sale, 
‘‘(C) the date of such sale, 
‘‘(D) the name of the issuer of the life insurance con-
tract sold and the policy number of such contract, and 
‘‘(E) the amount of each payment. 
‘‘(2) STATEMENT
TO
BE
FURNISHED
TO
PERSONS
WITH 
RESPECT TO WHOM INFORMATION IS REQUIRED.—Every person 
required to make a return under this subsection shall furnish 
to each person whose name is required to be set forth in 
such return a written statement showing— 
‘‘(A) the name, address, and phone number of the 
information contact of the person required to make such 
return, and 
‘‘(B) the information required to be shown on such 
return with respect to such person, except that in the 
case of an issuer of a life insurance contract, such statement 
is not required to include the information specified in para-
graph (1)(E). 
‘‘(b) REQUIREMENT OF REPORTING OF SELLER’S BASIS IN LIFE 
INSURANCE CONTRACTS.— 
‘‘(1) IN GENERAL.—Upon receipt of the statement required 
under subsection (a)(2) or upon notice of a transfer of a life 
insurance contract to a foreign person, each issuer of a life 
insurance contract shall make a return (at such time and 
in such manner as the Secretary shall prescribe) setting forth— 
‘‘(A) the name, address, and TIN of the seller who 
transfers any interest in such contract in such sale, 
‘‘(B) the investment in the contract (as defined in sec-
tion 72(e)(6)) with respect to such seller, and 
‘‘(C) the policy number of such contract. 
‘‘(2) STATEMENT
TO
BE
FURNISHED
TO
PERSONS
WITH 
RESPECT TO WHOM INFORMATION IS REQUIRED.—Every person 
required to make a return under this subsection shall furnish 
to each person whose name is required to be set forth in 
such return a written statement showing— 
‘‘(A) the name, address, and phone number of the 
information contact of the person required to make such 
return, and 
‘‘(B) the information required to be shown on such 
return with respect to each seller whose name is required 
to be set forth in such return. 
‘‘(c) REQUIREMENT OF REPORTING WITH RESPECT TO REPORT-
ABLE DEATH BENEFITS.— 
‘‘(1) IN
GENERAL.—Every person who makes a payment 
of reportable death benefits during any taxable year shall make 
a return for such taxable year (at such time and in such 
manner as the Secretary shall prescribe) setting forth— 
26 USC 6050Y. 
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131 STAT. 2150 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) the name, address, and TIN of the person making 
such payment, 
‘‘(B) the name, address, and TIN of each recipient 
of such payment, 
‘‘(C) the date of each such payment, 
‘‘(D) the gross amount of each such payment, and 
‘‘(E) such person’s estimate of the investment in the 
contract (as defined in section 72(e)(6)) with respect to 
the buyer. 
‘‘(2) STATEMENT
TO
BE
FURNISHED
TO
PERSONS
WITH 
RESPECT TO WHOM INFORMATION IS REQUIRED.—Every person 
required to make a return under this subsection shall furnish 
to each person whose name is required to be set forth in 
such return a written statement showing— 
‘‘(A) the name, address, and phone number of the 
information contact of the person required to make such 
return, and 
‘‘(B) the information required to be shown on such 
return with respect to each recipient of payment whose 
name is required to be set forth in such return. 
‘‘(d) DEFINITIONS.—For purposes of this section: 
‘‘(1) PAYMENT.—The term ‘payment’ means, with respect 
to any reportable policy sale, the amount of cash and the 
fair market value of any consideration transferred in the sale. 
‘‘(2) REPORTABLE POLICY SALE.—The term ‘reportable policy 
sale’ has the meaning given such term in section 101(a)(3)(B). 
‘‘(3) ISSUER.—The term ‘issuer’ means any life insurance 
company that bears the risk with respect to a life insurance 
contract on the date any return or statement is required to 
be made under this section. 
‘‘(4) REPORTABLE DEATH BENEFITS.—The term ‘reportable 
death benefits’ means amounts paid by reason of the death 
of the insured under a life insurance contract that has been 
transferred in a reportable policy sale.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for subpart 
B of part III of subchapter A of chapter 61, as amended by section 
13306, is amended by inserting after the item relating to section 
6050X the following new item: 
‘‘Sec. 6050Y. Returns relating to certain life insurance contract transactions.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Subsection (d) of section 6724 is amended— 
(A) by striking ‘‘or’’ at the end of clause (xxiv) of para-
graph (1)(B), by striking ‘‘and’’ at the end of clause (xxv) 
of such paragraph and inserting ‘‘or’’, and by inserting 
after such clause (xxv) the following new clause: 
‘‘(xxvi) section 6050Y (relating to returns relating 
to certain life insurance contract transactions), and’’, 
and 
(B) by striking ‘‘or’’ at the end of subparagraph (HH) 
of paragraph (2), by striking the period at the end of 
subparagraph (II) of such paragraph and inserting ‘‘, or’’, 
and by inserting after such subparagraph (II) the following 
new subparagraph: 
‘‘(JJ) subsection (a)(2), (b)(2), or (c)(2) of section 6050Y 
(relating to returns relating to certain life insurance con-
tract transactions).’’. 
26 USC 6724. 
26 USC 
prec. 6041. 
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131 STAT. 2151 
PUBLIC LAW 115–97—DEC. 22, 2017 
(2) Section 6047 is amended— 
(A) by redesignating subsection (g) as subsection (h), 
(B) by inserting after subsection (f) the following new 
subsection: 
‘‘(g) INFORMATION RELATING
TO LIFE INSURANCE CONTRACT 
TRANSACTIONS.—This section shall not apply to any information 
which is required to be reported under section 6050Y.’’, and 
(C) by adding at the end of subsection (h), as so redesig-
nated, the following new paragraph: 
‘‘(4) For provisions requiring reporting of information 
relating to certain life insurance contract transactions, see sec-
tion 6050Y.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to— 
(1) reportable policy sales (as defined in section 6050Y(d)(2) 
of the Internal Revenue Code of 1986 (as added by subsection 
(a)) after December 31, 2017, and 
(2) reportable death benefits (as defined in section 
6050Y(d)(4) of such Code (as added by subsection (a)) paid 
after December 31, 2017. 
SEC. 13521. CLARIFICATION OF TAX BASIS OF LIFE INSURANCE CON-
TRACTS. 
(a) CLARIFICATION WITH RESPECT
TO ADJUSTMENTS.—Para-
graph (1) of section 1016(a) is amended by striking subparagraph 
(A) and all that follows and inserting the following: 
‘‘(A) for— 
‘‘(i) taxes or other carrying charges described in 
section 266; or 
‘‘(ii) expenditures described in section 173 (relating 
to circulation expenditures), 
for which deductions have been taken by the taxpayer 
in determining taxable income for the taxable year or prior 
taxable years; or 
‘‘(B) for mortality, expense, or other reasonable charges 
incurred under an annuity or life insurance contract;’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to transactions entered into after August 25, 2009. 
SEC. 13522. EXCEPTION TO TRANSFER FOR VALUABLE CONSIDER-
ATION RULES. 
(a) IN GENERAL.—Subsection (a) of section 101 is amended 
by inserting after paragraph (2) the following new paragraph: 
‘‘(3) EXCEPTION TO VALUABLE CONSIDERATION RULES FOR 
COMMERCIAL TRANSFERS.— 
‘‘(A) IN GENERAL.—The second sentence of paragraph 
(2) shall not apply in the case of a transfer of a life 
insurance contract, or any interest therein, which is a 
reportable policy sale. 
‘‘(B) REPORTABLE POLICY SALE.—For purposes of this 
paragraph, the term ‘reportable policy sale’ means the 
acquisition of an interest in a life insurance contract, 
directly or indirectly, if the acquirer has no substantial 
family, business, or financial relationship with the insured 
apart from the acquirer’s interest in such life insurance 
contract. For purposes of the preceding sentence, the term 
‘indirectly’ applies to the acquisition of an interest in a 
26 USC 1016 
note. 
26 USC 6047 
note. 
26 USC 6047. 
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131 STAT. 2152 
PUBLIC LAW 115–97—DEC. 22, 2017 
partnership, trust, or other entity that holds an interest 
in the life insurance contract.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (1) of section 101(a) 
is amended by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs 
(2) and (3)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to transfers after December 31, 2017. 
SEC. 13523. MODIFICATION OF DISCOUNTING RULES FOR PROPERTY 
AND CASUALTY INSURANCE COMPANIES. 
(a) MODIFICATION OF RATE OF INTEREST USED TO DISCOUNT 
UNPAID LOSSES.—Paragraph (2) of section 846(c) is amended to 
read as follows: 
‘‘(2) DETERMINATION OF ANNUAL RATE.—The annual rate 
determined by the Secretary under this paragraph for any 
calendar year shall be a rate determined on the basis of the 
corporate bond yield curve (as defined in section 430(h)(2)(D)(i), 
determined by substituting ‘60-month period’ for ‘24-month 
period’ therein).’’. 
(b) MODIFICATION OF COMPUTATIONAL RULES FOR LOSS PAY-
MENT PATTERNS.—Section 846(d)(3) is amended by striking subpara-
graphs (B) through (G) and inserting the following new subpara-
graph: 
‘‘(B) TREATMENT OF CERTAIN LOSSES.— 
‘‘(i) 3-YEAR LOSS PAYMENT PATTERN.—In the case 
of any line of business not described in subparagraph 
(A)(ii), losses paid after the 1st year following the 
accident year shall be treated as paid equally in the 
2nd and 3rd year following the accident year. 
‘‘(ii) 10-YEAR LOSS PAYMENT PATTERN.— 
‘‘(I) IN
GENERAL.—The period taken into 
account under subparagraph (A)(ii) shall be 
extended to the extent required under subclause 
(II). 
‘‘(II) 
COMPUTATION
OF
EXTENSION.—The 
amount of losses which would have been treated 
as paid in the 10th year after the accident year 
shall be treated as paid in such 10th year and 
each subsequent year in an amount equal to the 
amount of the average of the losses treated as 
paid in the 7th, 8th, and 9th years after the 
accident year (or, if lesser, the portion of the 
unpaid losses not theretofore taken into account). 
To the extent such unpaid losses have not been 
treated as paid before the 24th year after the 
accident year, they shall be treated as paid in 
such 24th year.’’. 
(c) REPEAL OF HISTORICAL PAYMENT PATTERN ELECTION.—Sec-
tion 846, as amended by this Act, is amended by striking subsection 
(e) and by redesignating subsections (f) and (g) as subsections 
(e) and (f), respectively. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
(e) TRANSITIONAL RULE.—For the first taxable year beginning 
after December 31, 2017— 
(1) the unpaid losses and the expenses unpaid (as defined 
in paragraphs (5)(B) and (6) of section 832(b) of the Internal 
26 USC 846 note. 
26 USC 846 note. 
26 USC 101 note. 
26 USC 101. 
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131 STAT. 2153 
PUBLIC LAW 115–97—DEC. 22, 2017 
Revenue Code of 1986) at the end of the preceding taxable 
year, and 
(2) the unpaid losses as defined in sections 807(c)(2) and 
805(a)(1) of such Code at the end of the preceding taxable 
year, 
shall be determined as if the amendments made by this section 
had applied to such unpaid losses and expenses unpaid in the 
preceding taxable year and by using the interest rate and loss 
payment patterns applicable to accident years ending with calendar 
year 2018, and any adjustment shall be taken into account ratably 
in such first taxable year and the 7 succeeding taxable years. 
For subsequent taxable years, such amendments shall be applied 
with respect to such unpaid losses and expenses unpaid by using 
the interest rate and loss payment patterns applicable to accident 
years ending with calendar year 2018. 
Subpart C—Banks and Financial Instruments 
SEC. 13531. LIMITATION ON DEDUCTION FOR FDIC PREMIUMS. 
(a) IN GENERAL.—Section 162, as amended by sections 13307, 
is amended by redesignating subsection (r) as subsection (s) and 
by inserting after subsection (q) the following new subsection: 
‘‘(r) DISALLOWANCE OF FDIC PREMIUMS PAID BY CERTAIN LARGE 
FINANCIAL INSTITUTIONS.— 
‘‘(1) IN GENERAL.—No deduction shall be allowed for the 
applicable percentage of any FDIC premium paid or incurred 
by the taxpayer. 
‘‘(2) EXCEPTION FOR SMALL INSTITUTIONS.—Paragraph (1) 
shall not apply to any taxpayer for any taxable year if the 
total consolidated assets of such taxpayer (determined as of 
the close of such taxable year) do not exceed $10,000,000,000. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes of this sub-
section, the term ‘applicable percentage’ means, with respect 
to any taxpayer for any taxable year, the ratio (expressed 
as a percentage but not greater than 100 percent) which— 
‘‘(A) the excess of— 
‘‘(i) the total consolidated assets of such taxpayer 
(determined as of the close of such taxable year), over 
‘‘(ii) $10,000,000,000, bears to 
‘‘(B) $40,000,000,000. 
‘‘(4) FDIC PREMIUMS.—For purposes of this subsection, the 
term ‘FDIC premium’ means any assessment imposed under 
section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(b)). 
‘‘(5) TOTAL CONSOLIDATED ASSETS.—For purposes of this 
subsection, the term ‘total consolidated assets’ has the meaning 
given such term under section 165 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 5365). 
‘‘(6) AGGREGATION RULE.— 
‘‘(A) IN GENERAL.—Members of an expanded affiliated 
group shall be treated as a single taxpayer for purposes 
of applying this subsection. 
‘‘(B) EXPANDED AFFILIATED GROUP.— 
‘‘(i) IN GENERAL.—For purposes of this paragraph, 
the term ‘expanded affiliated group’ means an affiliated 
group as defined in section 1504(a), determined— 
26 USC 162. 
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131 STAT. 2154 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(I) by substituting ‘more than 50 percent’ for 
‘at least 80 percent’ each place it appears, and 
‘‘(II) without regard to paragraphs (2) and (3) 
of section 1504(b). 
‘‘(ii) CONTROL
OF
NON-CORPORATE
ENTITIES.—A 
partnership or any other entity (other than a corpora-
tion) shall be treated as a member of an expanded 
affiliated group if such entity is controlled (within the 
meaning of section 954(d)(3)) by members of such group 
(including any entity treated as a member of such 
group by reason of this clause).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13532. REPEAL OF ADVANCE REFUNDING BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 149(d) is amended 
by striking ‘‘as part of an issue described in paragraph (2), (3), 
or (4).’’ and inserting ‘‘to advance refund another bond.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 149(d) is amended by striking paragraphs (2), 
(3), (4), and (6) and by redesignating paragraphs (5) and (7) 
as paragraphs (2) and (3). 
(2) Section 148(f)(4)(C) is amended by striking clause (xiv) 
and by redesignating clauses (xv) to (xvii) as clauses (xiv) 
to (xvi). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to advance refunding bonds issued after December 31, 
2017. 
Subpart D—S Corporations 
SEC. 13541. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
ELECTING SMALL BUSINESS TRUST. 
(a) NO LOOK-THROUGH
FOR ELIGIBILITY PURPOSES.—Section 
1361(c)(2)(B)(v) is amended by adding at the end the following 
new sentence: ‘‘This clause shall not apply for purposes of subsection 
(b)(1)(C).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect on January 1, 2018. 
SEC. 13542. CHARITABLE CONTRIBUTION DEDUCTION FOR ELECTING 
SMALL BUSINESS TRUSTS. 
(a) IN GENERAL.—Section 641(c)(2) is amended by inserting 
after subparagraph (D) the following new subparagraph: 
‘‘(E)(i) Section 642(c) shall not apply. 
‘‘(ii) For purposes of section 170(b)(1)(G), adjusted gross 
income shall be computed in the same manner as in the 
case of an individual, except that the deductions for costs 
which are paid or incurred in connection with the adminis-
tration of the trust and which would not have been incurred 
if the property were not held in such trust shall be treated 
as allowable in arriving at adjusted gross income.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
26 USC 641 note. 
26 USC 1361 
note. 
26 USC 148 note. 
26 USC 149. 
26 USC 162 note. 
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131 STAT. 2155 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13543. MODIFICATION OF TREATMENT OF S CORPORATION 
CONVERSIONS TO C CORPORATIONS. 
(a) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION FROM S COR-
PORATION TO C CORPORATION.—Section 481 is amended by adding 
at the end the following new subsection: 
‘‘(d) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION FROM S COR-
PORATION TO C CORPORATION.— 
‘‘(1) IN GENERAL.—In the case of an eligible terminated 
S corporation, any adjustment required by subsection (a)(2) 
which is attributable to such corporation’s revocation described 
in paragraph (2)(A)(ii) shall be taken into account ratably 
during the 6-taxable year period beginning with the year of 
change. 
‘‘(2) ELIGIBLE TERMINATED S CORPORATION.—For purposes 
of this subsection, the term ‘eligible terminated S corporation’ 
means any C corporation— 
‘‘(A) which— 
‘‘(i) was an S corporation on the day before the 
date of the enactment of the Tax Cuts and Jobs Act, 
and 
‘‘(ii) during the 2-year period beginning on the 
date of such enactment makes a revocation of its elec-
tion under section 1362(a), and 
‘‘(B) the owners of the stock of which, determined on 
the date such revocation is made, are the same owners 
(and in identical proportions) as on the date of such enact-
ment.’’. 
(b) CASH DISTRIBUTIONS FOLLOWING POST-TERMINATION TRANSI-
TION PERIOD FROM S CORPORATION STATUS.—Section 1371 is 
amended by adding at the end the following new subsection: 
‘‘(f) 
CASH
DISTRIBUTIONS
FOLLOWING
POST-TERMINATION 
TRANSITION PERIOD.—In the case of a distribution of money by 
an eligible terminated S corporation (as defined in section 481(d)) 
after the post-termination transition period, the accumulated adjust-
ments account shall be allocated to such distribution, and the 
distribution shall be chargeable to accumulated earnings and 
profits, in the same ratio as the amount of such accumulated 
adjustments account bears to the amount of such accumulated 
earnings and profits.’’. 
PART VII—EMPLOYMENT 
Subpart A—Compensation 
SEC. 13601. MODIFICATION OF LIMITATION ON EXCESSIVE EMPLOYEE 
REMUNERATION. 
(a) REPEAL
OF
PERFORMANCE-BASED
COMPENSATION
AND 
COMMISSION EXCEPTIONS FOR LIMITATION ON EXCESSIVE EMPLOYEE 
REMUNERATION.— 
(1) IN
GENERAL.—Paragraph (4) of section 162(m) is 
amended by striking subparagraphs (B) and (C) and by redesig-
nating subparagraphs (D), (E), (F), and (G) as subparagraphs 
(B), (C), (D), and (E), respectively. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraphs (5)(E) and (6)(D) of section 162(m) are 
each amended by striking ‘‘subparagraphs (B), (C), and 
(D)’’ and inserting ‘‘subparagraph (B)’’. 
26 USC 481. 
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131 STAT. 2156 
PUBLIC LAW 115–97—DEC. 22, 2017 
(B) Paragraphs (5)(G) and (6)(G) of section 162(m) are 
each amended by striking ‘‘(F) and (G)’’ and inserting ‘‘(D) 
and (E)’’. 
(b) MODIFICATION OF DEFINITION OF COVERED EMPLOYEES.— 
Paragraph (3) of section 162(m) is amended— 
(1) in subparagraph (A), by striking ‘‘as of the close of 
the taxable year, such employee is the chief executive officer 
of the taxpayer or is’’ and inserting ‘‘such employee is the 
principal executive officer or principal financial officer of the 
taxpayer at any time during the taxable year, or was’’, 
(2) in subparagraph (B)— 
(A) by striking ‘‘4’’ and inserting ‘‘3’’, and 
(B) by striking ‘‘(other than the chief executive officer)’’ 
and inserting ‘‘(other than any individual described in 
subparagraph (A))’’, and 
(3) by striking ‘‘or’’ at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and inserting 
‘‘, or’’, and by adding at the end the following: 
‘‘(C) was a covered employee of the taxpayer (or any 
predecessor) for any preceding taxable year beginning after 
December 31, 2016.’’. 
(c) EXPANSION OF APPLICABLE EMPLOYER.— 
(1) IN GENERAL.—Section 162(m)(2) is amended to read 
as follows: 
‘‘(2) PUBLICLY HELD CORPORATION.—For purposes of this 
subsection, the term ‘publicly held corporation’ means any cor-
poration which is an issuer (as defined in section 3 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c))— 
‘‘(A) the securities of which are required to be reg-
istered under section 12 of such Act (15 U.S.C. 78l), or 
‘‘(B) that is required to file reports under section 15(d) 
of such Act (15 U.S.C. 78o(d)).’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
162(m)(3), 
as 
amended by subsection (b), is amended by adding at the end 
the following flush sentence: 
‘‘Such term shall include any employee who would be 
described in subparagraph (B) if the reporting described in 
such subparagraph were required as so described.’’. 
(d) SPECIAL RULE FOR REMUNERATION PAID TO BENEFICIARIES, 
ETC.—Paragraph (4) of section 162(m), as amended by subsection 
(a), is amended by adding at the end the following new subpara-
graph: 
‘‘(F) SPECIAL RULE FOR REMUNERATION PAID TO BENE-
FICIARIES, 
ETC.—Remuneration shall not fail to be 
applicable employee remuneration merely because it is 
includible in the income of, or paid to, a person other 
than the covered employee, including after the death of 
the covered employee.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after December 31, 2017. 
(2) EXCEPTION FOR BINDING CONTRACTS.—The amendments 
made by this section shall not apply to remuneration which 
is provided pursuant to a written binding contract which was 
in effect on November 2, 2017, and which was not modified 
in any material respect on or after such date. 
26 USC 162 note. 
26 USC 162. 
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131 STAT. 2157 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13602. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
EXECUTIVE COMPENSATION. 
(a) IN GENERAL.—Subchapter D of chapter 42 is amended by 
adding at the end the following new section: 
‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION EXECUTIVE 
COMPENSATION. 
‘‘(a) TAX IMPOSED.—There is hereby imposed a tax equal to 
the product of the rate of tax under section 11 and the sum of— 
‘‘(1) so much of the remuneration paid (other than any 
excess parachute payment) by an applicable tax-exempt 
organization for the taxable year with respect to employment 
of any covered employee in excess of $1,000,000, plus 
‘‘(2) any excess parachute payment paid by such an 
organization to any covered employee. 
For purposes of the preceding sentence, remuneration shall be 
treated as paid when there is no substantial risk of forfeiture 
(within the meaning of section 457(f)(3)(B)) of the rights to such 
remuneration. 
‘‘(b) LIABILITY FOR TAX.—The employer shall be liable for the 
tax imposed under subsection (a). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
‘‘(1) APPLICABLE
TAX-EXEMPT
ORGANIZATION.—The term 
‘applicable tax-exempt organization’ means any organization 
which for the taxable year— 
‘‘(A) is exempt from taxation under section 501(a), 
‘‘(B) is a farmers’ cooperative organization described 
in section 521(b)(1), 
‘‘(C) has income excluded from taxation under section 
115(1), or 
‘‘(D) is a political organization described in section 
527(e)(1). 
‘‘(2) COVERED EMPLOYEE.—For purposes of this section, the 
term ‘covered employee’ means any employee (including any 
former employee) of an applicable tax-exempt organization if 
the employee— 
‘‘(A) is one of the 5 highest compensated employees 
of the organization for the taxable year, or 
‘‘(B) was a covered employee of the organization (or 
any predecessor) for any preceding taxable year beginning 
after December 31, 2016. 
‘‘(3) REMUNERATION.—For purposes of this section: 
‘‘(A) IN
GENERAL.—The term ‘remuneration’ means 
wages (as defined in section 3401(a)), except that such 
term shall not include any designated Roth contribution 
(as defined in section 402A(c)) and shall include amounts 
required to be included in gross income under section 457(f). 
‘‘(B) EXCEPTION FOR REMUNERATION FOR MEDICAL SERV-
ICES.—The term ‘remuneration’ shall not include the por-
tion of any remuneration paid to a licensed medical profes-
sional (including a veterinarian) which is for the perform-
ance of medical or veterinary services by such professional. 
‘‘(4) REMUNERATION FROM RELATED ORGANIZATIONS.— 
‘‘(A) IN GENERAL.—Remuneration of a covered employee 
by an applicable tax-exempt organization shall include any 
26 USC 4960 
note. 
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131 STAT. 2158 
PUBLIC LAW 115–97—DEC. 22, 2017 
remuneration paid with respect to employment of such 
employee by any related person or governmental entity. 
‘‘(B) RELATED
ORGANIZATIONS.—A person or govern-
mental entity shall be treated as related to an applicable 
tax-exempt organization if such person or governmental 
entity— 
‘‘(i) controls, or is controlled by, the organization, 
‘‘(ii) is controlled by one or more persons which 
control the organization, 
‘‘(iii) is a supported organization (as defined in 
section 509(f)(3)) during the taxable year with respect 
to the organization, 
‘‘(iv) is a supporting organization described in sec-
tion 509(a)(3) during the taxable year with respect 
to the organization, or 
‘‘(v) in the case of an organization which is a 
voluntary employees’ beneficiary association described 
in section 501(c)(9), establishes, maintains, or makes 
contributions to such voluntary employees’ beneficiary 
association. 
‘‘(C) LIABILITY FOR TAX.—In any case in which remu-
neration from more than one employer is taken into account 
under this paragraph in determining the tax imposed by 
subsection (a), each such employer shall be liable for such 
tax in an amount which bears the same ratio to the total 
tax determined under subsection (a) with respect to such 
remuneration as— 
‘‘(i) the amount of remuneration paid by such 
employer with respect to such employee, bears to 
‘‘(ii) the amount of remuneration paid by all such 
employers to such employee. 
‘‘(5) EXCESS PARACHUTE PAYMENT.—For purposes of deter-
mining the tax imposed by subsection (a)(2)— 
‘‘(A) IN GENERAL.—The term ‘excess parachute pay-
ment’ means an amount equal to the excess of any para-
chute payment over the portion of the base amount allo-
cated to such payment. 
‘‘(B) PARACHUTE PAYMENT.—The term ‘parachute pay-
ment’ means any payment in the nature of compensation 
to (or for the benefit of) a covered employee if— 
‘‘(i) such payment is contingent on such employee’s 
separation from employment with the employer, and 
‘‘(ii) the aggregate present value of the payments 
in the nature of compensation to (or for the benefit 
of) such individual which are contingent on such sepa-
ration equals or exceeds an amount equal to 3 times 
the base amount. 
‘‘(C) EXCEPTION.—Such term does not include any pay-
ment— 
‘‘(i) described in section 280G(b)(6) (relating to 
exemption for payments under qualified plans), 
‘‘(ii) made under or to an annuity contract 
described in section 403(b) or a plan described in sec-
tion 457(b), 
‘‘(iii) to a licensed medical professional (including 
a veterinarian) to the extent that such payment is 
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131 STAT. 2159 
PUBLIC LAW 115–97—DEC. 22, 2017 
for the performance of medical or veterinary services 
by such professional, or 
‘‘(iv) to an individual who is not a highly com-
pensated employee as defined in section 414(q). 
‘‘(D) BASE
AMOUNT.—Rules similar to the rules of 
280G(b)(3) shall apply for purposes of determining the base 
amount. 
‘‘(E) PROPERTY
TRANSFERS; PRESENT
VALUE.—Rules 
similar to the rules of paragraphs (3) and (4) of section 
280G(d) shall apply. 
‘‘(6) COORDINATION WITH DEDUCTION LIMITATION.—Remu-
neration the deduction for which is not allowed by reason 
of section 162(m) shall not be taken into account for purposes 
of this section. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary to prevent avoidance of the tax under 
this section, including regulations to prevent avoidance of such 
tax through the performance of services other than as an employee 
or by providing compensation through a pass-through or other 
entity to avoid such tax.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for subchapter 
D of chapter 42 is amended by adding at the end the following 
new item: 
‘‘Sec. 4960. Tax on excess tax-exempt organization executive compensation.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13603. TREATMENT OF QUALIFIED EQUITY GRANTS. 
(a) IN GENERAL.—Section 83 is amended by adding at the 
end the following new subsection: 
‘‘(i) QUALIFIED EQUITY GRANTS.— 
‘‘(1) IN GENERAL.—For purposes of this subtitle— 
‘‘(A) TIMING OF INCLUSION.—If qualified stock is trans-
ferred to a qualified employee who makes an election with 
respect to such stock under this subsection, subsection 
(a) shall be applied by including the amount determined 
under such subsection with respect to such stock in income 
of the employee in the taxable year determined under 
subparagraph (B) in lieu of the taxable year described 
in subsection (a). 
‘‘(B) TAXABLE
YEAR
DETERMINED.—The taxable year 
determined under this subparagraph is the taxable year 
of the employee which includes the earliest of— 
‘‘(i) the first date such qualified stock becomes 
transferable (including, solely for purposes of this 
clause, becoming transferable to the employer), 
‘‘(ii) the date the employee first becomes an 
excluded employee, 
‘‘(iii) the first date on which any stock of the cor-
poration which issued the qualified stock becomes 
readily tradable on an established securities market 
(as determined by the Secretary, but not including 
any market unless such market is recognized as an 
established securities market by the Secretary for pur-
poses of a provision of this title other than this sub-
section), 
26 USC 83. 
26 USC 4960 
note. 
26 USC 
prec. 4958. 
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131 STAT. 2160 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(iv) the date that is 5 years after the first date 
the rights of the employee in such stock are transfer-
able or are not subject to a substantial risk of for-
feiture, whichever occurs earlier, or 
‘‘(v) the date on which the employee revokes (at 
such time and in such manner as the Secretary pro-
vides) the election under this subsection with respect 
to such stock. 
‘‘(2) QUALIFIED STOCK.— 
‘‘(A) IN GENERAL.—For purposes of this subsection, the 
term ‘qualified stock’ means, with respect to any qualified 
employee, any stock in a corporation which is the employer 
of such employee, if— 
‘‘(i) such stock is received— 
‘‘(I) in connection with the exercise of an 
option, or 
‘‘(II) in settlement of a restricted stock unit, 
and 
‘‘(ii) such option or restricted stock unit was 
granted by the corporation— 
‘‘(I) in connection with the performance of serv-
ices as an employee, and 
‘‘(II) during a calendar year in which such 
corporation was an eligible corporation. 
‘‘(B) LIMITATION.—The term ‘qualified stock’ shall not 
include any stock if the employee may sell such stock 
to, or otherwise receive cash in lieu of stock from, the 
corporation at the time that the rights of the employee 
in such stock first become transferable or not subject to 
a substantial risk of forfeiture. 
‘‘(C) ELIGIBLE CORPORATION.—For purposes of subpara-
graph (A)(ii)(II)— 
‘‘(i) IN GENERAL.—The term ‘eligible corporation’ 
means, with respect to any calendar year, any corpora-
tion if— 
‘‘(I) no stock of such corporation (or any prede-
cessor of such corporation) is readily tradable on 
an established securities market (as determined 
under paragraph (1)(B)(iii)) during any preceding 
calendar year, and 
‘‘(II) such corporation has a written plan under 
which, in such calendar year, not less than 80 
percent of all employees who provide services to 
such corporation in the United States (or any 
possession of the United States) are granted stock 
options, or are granted restricted stock units, with 
the same rights and privileges to receive qualified 
stock. 
‘‘(ii) SAME RIGHTS AND PRIVILEGES.—For purposes 
of clause (i)(II)— 
‘‘(I) except as provided in subclauses (II) and 
(III), the determination of rights and privileges 
with respect to stock shall be made in a similar 
manner as under section 423(b)(5), 
‘‘(II) employees shall not fail to be treated 
as having the same rights and privileges to receive 
qualified stock solely because the number of shares 
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131 STAT. 2161 
PUBLIC LAW 115–97—DEC. 22, 2017 
available to all employees is not equal in amount, 
so long as the number of shares available to each 
employee is more than a de minimis amount, and 
‘‘(III) rights and privileges with respect to the 
exercise of an option shall not be treated as the 
same as rights and privileges with respect to the 
settlement of a restricted stock unit. 
‘‘(iii) EMPLOYEE.—For purposes of clause (i)(II), the 
term ‘employee’ shall not include any employee 
described in section 4980E(d)(4) or any excluded 
employee. 
‘‘(iv) SPECIAL RULE FOR CALENDAR YEARS BEFORE 
2018.—In the case of any calendar year beginning before 
January 1, 2018, clause (i)(II) shall be applied without 
regard to whether the rights and privileges with 
respect to the qualified stock are the same. 
‘‘(3) QUALIFIED EMPLOYEE; EXCLUDED EMPLOYEE.—For pur-
poses of this subsection— 
‘‘(A) IN GENERAL.—The term ‘qualified employee’ means 
any individual who— 
‘‘(i) is not an excluded employee, and 
‘‘(ii) agrees in the election made under this sub-
section to meet such requirements as are determined 
by the Secretary to be necessary to ensure that the 
withholding requirements of the corporation under 
chapter 24 with respect to the qualified stock are met. 
‘‘(B) 
EXCLUDED
EMPLOYEE.—The 
term 
‘excluded 
employee’ means, with respect to any corporation, any indi-
vidual— 
‘‘(i) who is a 1-percent owner (within the meaning 
of section 416(i)(1)(B)(ii)) at any time during the cal-
endar year or who was such a 1 percent owner at 
any time during the 10 preceding calendar years, 
‘‘(ii) who is or has been at any prior time— 
‘‘(I) the chief executive officer of such corpora-
tion or an individual acting in such a capacity, 
or 
‘‘(II) the chief financial officer of such corpora-
tion or an individual acting in such a capacity, 
‘‘(iii) who bears a relationship described in section 
318(a)(1) to any individual described in subclause (I) 
or (II) of clause (ii), or 
‘‘(iv) who is one of the 4 highest compensated offi-
cers of such corporation for the taxable year, or was 
one of the 4 highest compensated officers of such cor-
poration for any of the 10 preceding taxable years, 
determined with respect to each such taxable year 
on the basis of the shareholder disclosure rules for 
compensation under the Securities Exchange Act of 
1934 (as if such rules applied to such corporation). 
‘‘(4) ELECTION.— 
‘‘(A) TIME FOR MAKING ELECTION.—An election with 
respect to qualified stock shall be made under this sub-
section no later than 30 days after the first date the rights 
of the employee in such stock are transferable or are not 
subject to a substantial risk of forfeiture, whichever occurs 
earlier, and shall be made in a manner similar to the 
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131 STAT. 2162 
PUBLIC LAW 115–97—DEC. 22, 2017 
manner in which an election is made under subsection 
(b). 
‘‘(B) LIMITATIONS.—No election may be made under 
this section with respect to any qualified stock if— 
‘‘(i) the qualified employee has made an election 
under subsection (b) with respect to such qualified 
stock, 
‘‘(ii) any stock of the corporation which issued the 
qualified stock is readily tradable on an established 
securities market (as determined under paragraph 
(1)(B)(iii)) at any time before the election is made, 
or 
‘‘(iii) such corporation purchased any of its out-
standing stock in the calendar year preceding the cal-
endar year which includes the first date the rights 
of the employee in such stock are transferable or are 
not subject to a substantial risk of forfeiture, unless— 
‘‘(I) not less than 25 percent of the total dollar 
amount of the stock so purchased is deferral stock, 
and 
‘‘(II) the determination of which individuals 
from whom deferral stock is purchased is made 
on a reasonable basis. 
‘‘(C) DEFINITIONS
AND
SPECIAL
RULES
RELATED
TO 
LIMITATION ON STOCK REDEMPTIONS.— 
‘‘(i) DEFERRAL STOCK.—For purposes of this para-
graph, the term ‘deferral stock’ means stock with 
respect to which an election is in effect under this 
subsection. 
‘‘(ii) DEFERRAL STOCK WITH RESPECT TO ANY INDI-
VIDUAL NOT TAKEN INTO ACCOUNT IF INDIVIDUAL HOLDS 
DEFERRAL
STOCK
WITH
LONGER
DEFERRAL
PERIOD.— 
Stock purchased by a corporation from any individual 
shall not be treated as deferral stock for purposes 
of subparagraph (B)(iii) if such individual (immediately 
after such purchase) holds any deferral stock with 
respect to which an election has been in effect under 
this subsection for a longer period than the election 
with respect to the stock so purchased. 
‘‘(iii) PURCHASE
OF
ALL
OUTSTANDING
DEFERRAL 
STOCK.—The requirements of subclauses (I) and (II) 
of subparagraph (B)(iii) shall be treated as met if the 
stock so purchased includes all of the corporation’s 
outstanding deferral stock. 
‘‘(iv) REPORTING.—Any corporation which has out-
standing deferral stock as of the beginning of any 
calendar year and which purchases any of its out-
standing stock during such calendar year shall include 
on its return of tax for the taxable year in which, 
or with which, such calendar year ends the total dollar 
amount of its outstanding stock so purchased during 
such calendar year and such other information as the 
Secretary requires for purposes of administering this 
paragraph. 
‘‘(5) CONTROLLED GROUPS.—For purposes of this subsection, 
all persons treated as a single employer under section 414(b) 
shall be treated as 1 corporation. 
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131 STAT. 2163 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(6) NOTICE REQUIREMENT.—Any corporation which trans-
fers qualified stock to a qualified employee shall, at the time 
that (or a reasonable period before) an amount attributable 
to such stock would (but for this subsection) first be includible 
in the gross income of such employee— 
‘‘(A) certify to such employee that such stock is quali-
fied stock, and 
‘‘(B) notify such employee— 
‘‘(i) that the employee may be eligible to elect 
to defer income on such stock under this subsection, 
and 
‘‘(ii) that, if the employee makes such an election— 
‘‘(I) the amount of income recognized at the 
end of the deferral period will be based on the 
value of the stock at the time at which the rights 
of the employee in such stock first become transfer-
able or not subject to substantial risk of forfeiture, 
notwithstanding whether the value of the stock 
has declined during the deferral period, 
‘‘(II) the amount of such income recognized 
at the end of the deferral period will be subject 
to withholding under section 3401(i) at the rate 
determined under section 3402(t), and 
‘‘(III) the responsibilities of the employee (as 
determined by the Secretary under paragraph 
(3)(A)(ii)) with respect to such withholding. 
‘‘(7) RESTRICTED STOCK UNITS.—This section (other than 
this subsection), including any election under subsection (b), 
shall not apply to restricted stock units.’’. 
(b) WITHHOLDING.— 
(1) TIME OF WITHHOLDING.—Section 3401 is amended by 
adding at the end the following new subsection: 
‘‘(i) QUALIFIED STOCK FOR WHICH AN ELECTION IS IN EFFECT 
UNDER SECTION 83(I).—For purposes of subsection (a), qualified 
stock (as defined in section 83(i)) with respect to which an election 
is made under section 83(i) shall be treated as wages— 
‘‘(1) received on the earliest date described in section 
83(i)(1)(B), and 
‘‘(2) in an amount equal to the amount included in income 
under section 83 for the taxable year which includes such 
date.’’. 
(2) AMOUNT OF WITHHOLDING.—Section 3402 is amended 
by adding at the end the following new subsection: 
‘‘(t) RATE OF WITHHOLDING FOR CERTAIN STOCK.—In the case 
of any qualified stock (as defined in section 83(i)(2)) with respect 
to which an election is made under section 83(i)— 
‘‘(1) the rate of tax under subsection (a) shall not be less 
than the maximum rate of tax in effect under section 1, and 
‘‘(2) such stock shall be treated for purposes of section 
3501(b) in the same manner as a non-cash fringe benefit.’’. 
(c) COORDINATION
WITH
OTHER
DEFERRED
COMPENSATION 
RULES.— 
(1) ELECTION TO APPLY DEFERRAL TO STATUTORY OPTIONS.— 
(A) INCENTIVE
STOCK
OPTIONS.—Section 422(b) is 
amended by adding at the end the following: ‘‘Such term 
shall not include any option if an election is made under 
26 USC 3401. 
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131 STAT. 2164 
PUBLIC LAW 115–97—DEC. 22, 2017 
section 83(i) with respect to the stock received in connection 
with the exercise of such option.’’. 
(B) EMPLOYEE STOCK PURCHASE PLANS.—Section 423 
is amended— 
(i) in subsection (b)(5), by striking ‘‘and’’ before 
‘‘the plan’’ and by inserting ‘‘, and the rules of section 
83(i) shall apply in determining which employees have 
a right to make an election under such section’’ before 
the semicolon at the end, and 
(ii) by adding at the end the following new sub-
section: 
‘‘(d) COORDINATION
WITH
QUALIFIED
EQUITY
GRANTS.—An 
option for which an election is made under section 83(i) with respect 
to the stock received in connection with its exercise shall not be 
considered as granted pursuant an employee stock purchase plan.’’. 
(2) 
EXCLUSION
FROM
DEFINITION
OF
NONQUALIFIED 
DEFERRED COMPENSATION PLAN.—Subsection (d) of section 409A 
is amended by adding at the end the following new paragraph: 
‘‘(7) TREATMENT
OF
QUALIFIED
STOCK.—An arrangement 
under which an employee may receive qualified stock (as 
defined in section 83(i)(2)) shall not be treated as a nonqualified 
deferred compensation plan with respect to such employee 
solely because of such employee’s election, or ability to make 
an election, to defer recognition of income under section 83(i).’’. 
(d) INFORMATION REPORTING.—Section 6051(a) is amended by 
striking ‘‘and’’ at the end of paragraph (14)(B), by striking the 
period at the end of paragraph (15) and inserting a comma, and 
by inserting after paragraph (15) the following new paragraphs: 
‘‘(16) the amount includible in gross income under subpara-
graph (A) of section 83(i)(1) with respect to an event described 
in subparagraph (B) of such section which occurs in such cal-
endar year, and 
‘‘(17) the aggregate amount of income which is being 
deferred pursuant to elections under section 83(i), determined 
as of the close of the calendar year.’’. 
(e) PENALTY FOR FAILURE OF EMPLOYER TO PROVIDE NOTICE 
OF TAX CONSEQUENCES.—Section 6652 is amended by adding at 
the end the following new subsection: 
‘‘(p) FAILURE TO PROVIDE NOTICE UNDER SECTION 83(I).—In 
the case of each failure to provide a notice as required by section 
83(i)(6), at the time prescribed therefor, unless it is shown that 
such failure is due to reasonable cause and not to willful neglect, 
there shall be paid, on notice and demand of the Secretary and 
in the same manner as tax, by the person failing to provide such 
notice, an amount equal to $100 for each such failure, but the 
total amount imposed on such person for all such failures during 
any calendar year shall not exceed $50,000.’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to stock attrib-
utable to options exercised, or restricted stock units settled, 
after December 31, 2017. 
(2) REQUIREMENT TO PROVIDE NOTICE.—The amendments 
made by subsection (e) shall apply to failures after December 
31, 2017. 
(g) TRANSITION RULE.—Until such time as the Secretary (or 
the Secretary’s delegate) issues regulations or other guidance for 
26 USC 83 note. 
26 USC 83 note. 
26 USC 423. 
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131 STAT. 2165 
PUBLIC LAW 115–97—DEC. 22, 2017 
purposes of implementing the requirements of paragraph (2)(C)(i)(II) 
of section 83(i) of the Internal Revenue Code of 1986 (as added 
by this section), or the requirements of paragraph (6) of such 
section, a corporation shall be treated as being in compliance with 
such requirements (respectively) if such corporation complies with 
a reasonable good faith interpretation of such requirements. 
SEC. 13604. INCREASE IN EXCISE TAX RATE FOR STOCK COMPENSA-
TION OF INSIDERS IN EXPATRIATED CORPORATIONS. 
(a) IN GENERAL.—Section 4985(a)(1) is amended by striking 
‘‘section 1(h)(1)(C)’’ and inserting ‘‘section 1(h)(1)(D)’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to corporations first becoming expatriated corporations 
(as defined in section 4985 of the Internal Revenue Code of 1986) 
after the date of enactment of this Act. 
Subpart B—Retirement Plans 
SEC. 13611. REPEAL OF SPECIAL RULE PERMITTING RECHARACTER-
IZATION OF ROTH CONVERSIONS. 
(a) IN GENERAL.—Section 408A(d)(6)(B) is amended by adding 
at the end the following new clause: 
‘‘(iii) CONVERSIONS.—Subparagraph (A) shall not 
apply in the case of a qualified rollover contribution 
to which subsection (d)(3) applies (including by reason 
of subparagraph (C) thereof).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13612. MODIFICATION OF RULES APPLICABLE TO LENGTH OF 
SERVICE AWARD PLANS. 
(a) MAXIMUM
DEFERRAL
AMOUNT.—Clause (ii) of section 
457(e)(11)(B) is amended by striking ‘‘$3,000’’ and inserting 
‘‘$6,000’’. 
(b) COST OF LIVING ADJUSTMENT.—Subparagraph (B) of section 
457(e)(11) is amended by adding at the end the following: 
‘‘(iii) COST OF LIVING ADJUSTMENT.—In the case 
of taxable years beginning after December 31, 2017, 
the Secretary shall adjust the $6,000 amount under 
clause (ii) at the same time and in the same manner 
as under section 415(d), except that the base period 
shall be the calendar quarter beginning July 1, 2016, 
and any increase under this paragraph that is not 
a multiple of $500 shall be rounded to the next lowest 
multiple of $500.’’. 
(c) APPLICATION OF LIMITATION ON ACCRUALS.—Subparagraph 
(B) of section 457(e)(11), as amended by subsection (b), is amended 
by adding at the end the following: 
‘‘(iv) SPECIAL RULE FOR APPLICATION OF LIMITATION 
ON ACCRUALS FOR CERTAIN PLANS.—In the case of a 
plan described in subparagraph (A)(ii) which is a 
defined benefit plan (as defined in section 414(j)), the 
limitation under clause (ii) shall apply to the actuarial 
present value of the aggregate amount of length of 
service awards accruing with respect to any year of 
service. Such actuarial present value with respect to 
any year shall be calculated using reasonable actuarial 
assumptions and methods, assuming payment will be 
26 USC 408A 
note. 
26 USC 4985 
note. 
26 USC 4985. 
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131 STAT. 2166 
PUBLIC LAW 115–97—DEC. 22, 2017 
made under the most valuable form of payment under 
the plan with payment commencing at the later of 
the earliest age at which unreduced benefits are pay-
able under the plan or the participant’s age at the 
time of the calculation.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13613. EXTENDED ROLLOVER PERIOD FOR PLAN LOAN OFFSET 
AMOUNTS. 
(a) IN GENERAL.—Paragraph (3) of section 402(c) is amended 
by adding at the end the following new subparagraph: 
‘‘(C) ROLLOVER
OF
CERTAIN
PLAN
LOAN
OFFSET 
AMOUNTS.— 
‘‘(i) IN GENERAL.—In the case of a qualified plan 
loan offset amount, paragraph (1) shall not apply to 
any transfer of such amount made after the due date 
(including extensions) for filing the return of tax for 
the taxable year in which such amount is treated as 
distributed from a qualified employer plan. 
‘‘(ii) QUALIFIED PLAN LOAN OFFSET AMOUNT.—For 
purposes of this subparagraph, the term ‘qualified plan 
loan offset amount’ means a plan loan offset amount 
which is treated as distributed from a qualified 
employer plan to a participant or beneficiary solely 
by reason of— 
‘‘(I) the termination of the qualified employer 
plan, or 
‘‘(II) the failure to meet the repayment terms 
of the loan from such plan because of the severance 
from employment of the participant. 
‘‘(iii) PLAN LOAN OFFSET AMOUNT.—For purposes 
of clause (ii), the term ‘plan loan offset amount’ means 
the amount by which the participant’s accrued benefit 
under the plan is reduced in order to repay a loan 
from the plan. 
‘‘(iv) LIMITATION.—This subparagraph shall not 
apply to any plan loan offset amount unless such plan 
loan offset amount relates to a loan to which section 
72(p)(1) does not apply by reason of section 72(p)(2). 
‘‘(v) QUALIFIED EMPLOYER PLAN.—For purposes of 
this subsection, the term ‘qualified employer plan’ has 
the meaning given such term by section 72(p)(4).’’. 
(b) CONFORMING AMENDMENTS.—Section 402(c)(3) is amended— 
(1) by striking ‘‘TRANSFER MUST BE MADE WITHIN 60 DAYS 
OF RECEIPT’’ in the heading and inserting ‘‘TIME LIMIT ON TRANS-
FERS’’, and 
(2) by striking ‘‘subparagraph (B)’’ in subparagraph (A) 
and inserting ‘‘subparagraphs (B) and (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan loan offset amounts which are treated as distrib-
uted in taxable years beginning after December 31, 2017. 
26 USC 402 note. 
26 USC 402. 
26 USC 457 note. 
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131 STAT. 2167 
PUBLIC LAW 115–97—DEC. 22, 2017 
PART VIII—EXEMPT ORGANIZATIONS 
SEC. 13701. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
COLLEGES AND UNIVERSITIES. 
(a) IN GENERAL.—Chapter 42 is amended by adding at the 
end the following new subchapter: 
‘‘Subchapter H—Excise Tax Based on Investment Income of 
Private Colleges and Universities 
‘‘Sec. 4968. Excise tax based on investment income of private colleges and univer-
sities. 
‘‘SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
COLLEGES AND UNIVERSITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on each applicable 
educational institution for the taxable year a tax equal to 1.4 
percent of the net investment income of such institution for the 
taxable year. 
‘‘(b) APPLICABLE EDUCATIONAL INSTITUTION.—For purposes of 
this subchapter— 
‘‘(1) IN GENERAL.—The term ‘applicable educational institu-
tion’ means an eligible educational institution (as defined in 
section 25A(f)(2))— 
‘‘(A) which had at least 500 students during the pre-
ceding taxable year, 
‘‘(B) more than 50 percent of the students of which 
are located in the United States, 
‘‘(C) which is not described in the first sentence of 
section 511(a)(2)(B) (relating to State colleges and univer-
sities), and 
‘‘(D) the aggregate fair market value of the assets 
of which at the end of the preceding taxable year (other 
than those assets which are used directly in carrying out 
the institution’s exempt purpose) is at least $500,000 per 
student of the institution. 
‘‘(2) STUDENTS.—For purposes of paragraph (1), the number 
of students of an institution (including for purposes of deter-
mining the number of students at a particular location) shall 
be based on the daily average number of full-time students 
attending such institution (with part-time students taken into 
account on a full-time student equivalent basis). 
‘‘(c) NET INVESTMENT INCOME.—For purposes of this section, 
net investment income shall be determined under rules similar 
to the rules of section 4940(c). 
‘‘(d) ASSETS
AND
NET
INVESTMENT
INCOME
OF
RELATED 
ORGANIZATIONS.— 
‘‘(1) IN GENERAL.—For purposes of subsections (b)(1)(C) and 
(c), assets and net investment income of any related organiza-
tion with respect to an educational institution shall be treated 
as assets and net investment income, respectively, of the edu-
cational institution, except that— 
‘‘(A) no such amount shall be taken into account with 
respect to more than 1 educational institution, and 
‘‘(B) unless such organization is controlled by such 
institution or is described in section 509(a)(3) with respect 
to such institution for the taxable year, assets and net 
26 USC 4968. 
26 USC 
prec. 4968. 
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131 STAT. 2168 
PUBLIC LAW 115–97—DEC. 22, 2017 
investment income which are not intended or available 
for the use or benefit of the educational institution shall 
not be taken into account. 
‘‘(2) RELATED
ORGANIZATION.—For purposes of this sub-
section, the term ‘related organization’ means, with respect 
to an educational institution, any organization which— 
‘‘(A) controls, or is controlled by, such institution, 
‘‘(B) is controlled by 1 or more persons which also 
control such institution, or 
‘‘(C) is a supported organization (as defined in section 
509(f)(3)), or an organization described in section 509(a)(3), 
during the taxable year with respect to such institution.’’. 
(b) CLERICAL
AMENDMENT.—The table of subchapters for 
chapter 42 is amended by adding at the end the following new 
item: 
‘‘SUBCHAPTER H—EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES 
AND UNIVERSITIES’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 13702. UNRELATED BUSINESS TAXABLE INCOME SEPARATELY 
COMPUTED FOR EACH TRADE OR BUSINESS ACTIVITY. 
(a) IN GENERAL.—Subsection (a) of section 512 is amended 
by adding at the end the following new paragraph: 
‘‘(6) SPECIAL
RULE
FOR
ORGANIZATION
WITH
MORE
THAN 
1 UNRELATED TRADE OR BUSINESS.—In the case of any organiza-
tion with more than 1 unrelated trade or business— 
‘‘(A) unrelated business taxable income, including for 
purposes of determining any net operating loss deduction, 
shall be computed separately with respect to each such 
trade or business and without regard to subsection (b)(12), 
‘‘(B) the unrelated business taxable income of such 
organization shall be the sum of the unrelated business 
taxable income so computed with respect to each such 
trade or business, less a specific deduction under subsection 
(b)(12), and 
‘‘(C) for purposes of subparagraph (B), unrelated busi-
ness taxable income with respect to any such trade or 
business shall not be less than zero.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except to the extent provided in para-
graph (2), the amendment made by this section shall apply 
to taxable years beginning after December 31, 2017. 
(2) CARRYOVERS OF NET OPERATING LOSSES.—If any net 
operating loss arising in a taxable year beginning before 
January 1, 2018, is carried over to a taxable year beginning 
on or after such date— 
(A) subparagraph (A) of section 512(a)(6) of the Internal 
Revenue Code of 1986, as added by this Act, shall not 
apply to such net operating loss, and 
(B) the unrelated business taxable income of the 
organization, after the application of subparagraph (B) of 
such section, shall be reduced by the amount of such net 
operating loss. 
26 USC 512 note. 
26 USC 512. 
26 USC 4968 
note. 
26 USC 
prec. 4940. 
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131 STAT. 2169 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13703. UNRELATED BUSINESS TAXABLE INCOME INCREASED BY 
AMOUNT OF CERTAIN FRINGE BENEFIT EXPENSES FOR 
WHICH DEDUCTION IS DISALLOWED. 
(a) IN GENERAL.—Section 512(a), as amended by this Act, is 
further amended by adding at the end the following new paragraph: 
‘‘(7) INCREASE IN UNRELATED BUSINESS TAXABLE INCOME 
BY DISALLOWED FRINGE.—Unrelated business taxable income 
of an organization shall be increased by any amount for which 
a deduction is not allowable under this chapter by reason 
of section 274 and which is paid or incurred by such organiza-
tion for any qualified transportation fringe (as defined in section 
132(f)), any parking facility used in connection with qualified 
parking (as defined in section 132(f)(5)(C)), or any on-premises 
athletic facility (as defined in section 132(j)(4)(B)). The pre-
ceding sentence shall not apply to the extent the amount paid 
or incurred is directly connected with an unrelated trade or 
business which is regularly carried on by the organization. 
The Secretary shall issue such regulations or other guidance 
as may be necessary or appropriate to carry out the purposes 
of this paragraph, including regulations or other guidance pro-
viding for the appropriate allocation of depreciation and other 
costs with respect to facilities used for parking or for on- 
premises athletic facilities.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to amounts paid or incurred after December 31, 2017. 
SEC. 13704. REPEAL OF DEDUCTION FOR AMOUNTS PAID IN EXCHANGE 
FOR COLLEGE ATHLETIC EVENT SEATING RIGHTS. 
(a) IN GENERAL.—Section 170(l) is amended— 
(1) by striking paragraph (1) and inserting the following: 
‘‘(1) IN GENERAL.—No deduction shall be allowed under 
this section for any amount described in paragraph (2).’’, and 
(2) in paragraph (2)(B), by striking ‘‘such amount would 
be allowable as a deduction under this section but for the 
fact that’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions made in taxable years beginning after 
December 31, 2017. 
SEC. 13705. REPEAL OF SUBSTANTIATION EXCEPTION IN CASE OF CON-
TRIBUTIONS REPORTED BY DONEE. 
(a) IN GENERAL.—Section 170(f)(8) is amended by striking 
subparagraph (D) and by redesignating subparagraph (E) as 
subparagraph (D). 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions made in taxable years beginning after 
December 31, 2016. 
PART IX—OTHER PROVISIONS 
Subpart A—Craft Beverage Modernization and 
Tax Reform 
SEC. 13801. PRODUCTION PERIOD FOR BEER, WINE, AND DISTILLED 
SPIRITS. 
(a) IN GENERAL.—Section 263A(f) is amended— 
(1) by redesignating paragraph (4) as paragraph (5), and 
26 USC 170 note. 
26 USC 170 note. 
26 USC 512 note. 
26 USC 512. 
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131 STAT. 2170 
PUBLIC LAW 115–97—DEC. 22, 2017 
(2) by inserting after paragraph (3) the following new para-
graph: 
‘‘(4) EXEMPTION FOR AGING PROCESS OF BEER, WINE, AND 
DISTILLED SPIRITS.— 
‘‘(A) IN GENERAL.—For purposes of this subsection, the 
production period shall not include the aging period for— 
‘‘(i) beer (as defined in section 5052(a)), 
‘‘(ii) wine (as described in section 5041(a)), or 
‘‘(iii) distilled spirits (as defined in section 
5002(a)(8)), except such spirits that are unfit for use 
for beverage purposes. 
‘‘(B) TERMINATION.—This paragraph shall not apply 
to interest costs paid or accrued after December 31, 2019.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (5)(B)(ii) of section 
263A(f), as redesignated by this section, is amended by inserting 
‘‘except as provided in paragraph (4),’’ before ‘‘ending on the date’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to interest costs paid or accrued in calendar years 
beginning after December 31, 2017. 
SEC. 13802. REDUCED RATE OF EXCISE TAX ON BEER. 
(a) IN GENERAL.—Paragraph (1) of section 5051(a) is amended 
to read as follows: 
‘‘(1) IN GENERAL.— 
‘‘(A) IMPOSITION OF TAX.—A tax is hereby imposed on 
all beer brewed or produced, and removed for consumption 
or sale, within the United States, or imported into the 
United States. Except as provided in paragraph (2), the 
rate of such tax shall be the amount determined under 
this paragraph. 
‘‘(B) RATE.—Except as provided in subparagraph (C), 
the rate of tax shall be $18 for per barrel. 
‘‘(C) SPECIAL RULE.—In the case of beer removed after 
December 31, 2017, and before January 1, 2020, the rate 
of tax shall be— 
‘‘(i) $16 on the first 6,000,000 barrels of beer— 
‘‘(I) brewed by the brewer and removed during 
the calendar year for consumption or sale, or 
‘‘(II) imported by the importer into the United 
States during the calendar year, and 
‘‘(ii) $18 on any barrels of beer to which clause 
(i) does not apply. 
‘‘(D) BARREL.—For purposes of this section, a barrel 
shall contain not more than 31 gallons of beer, and any 
tax imposed under this section shall be applied at a like 
rate for any other quantity or for fractional parts of a 
barrel.’’. 
(b) REDUCED RATE
FOR CERTAIN DOMESTIC PRODUCTION.— 
Subparagraph (A) of section 5051(a)(2) is amended— 
(1) in the heading, by striking ‘‘$7 A BARREL’’, and 
(2) by inserting ‘‘($3.50 in the case of beer removed after 
December 31, 2017, and before January 1, 2020)’’ after ‘‘$7’’. 
(c) APPLICATION OF REDUCED TAX RATE FOR FOREIGN MANUFAC-
TURERS
AND
IMPORTERS.—Subsection (a) of section 5051 is 
amended— 
(1) in subparagraph (C)(i)(II) of paragraph (1), as amended 
by subsection (a), by inserting ‘‘but only if the importer is 
26 USC 263A 
note. 
26 USC 263A. 
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131 STAT. 2171 
PUBLIC LAW 115–97—DEC. 22, 2017 
an electing importer under paragraph (4) and the barrels have 
been assigned to the importer pursuant to such paragraph’’ 
after ‘‘during the calendar year’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(4) REDUCED TAX RATE FOR FOREIGN MANUFACTURERS AND 
IMPORTERS.— 
‘‘(A) IN GENERAL.—In the case of any barrels of beer 
which have been brewed or produced outside of the United 
States and imported into the United States, the rate of 
tax applicable under clause (i) of paragraph (1)(C) (referred 
to in this paragraph as the ‘reduced tax rate’) may be 
assigned by the brewer (provided that the brewer makes 
an election described in subparagraph (B)(ii)) to any 
electing importer of such barrels pursuant to the require-
ments established by the Secretary under subparagraph 
(B). 
‘‘(B) ASSIGNMENT.—The Secretary shall, through such 
rules, regulations, and procedures as are determined appro-
priate, establish procedures for assignment of the reduced 
tax rate provided under this paragraph, which shall 
include— 
‘‘(i) a limitation to ensure that the number of bar-
rels of beer for which the reduced tax rate has been 
assigned by a brewer— 
‘‘(I) to any importer does not exceed the 
number of barrels of beer brewed or produced by 
such brewer during the calendar year which were 
imported into the United States by such importer, 
and 
‘‘(II) to all importers does not exceed the 
6,000,000 barrels to which the reduced tax rate 
applies, 
‘‘(ii) procedures that allow the election of a brewer 
to assign and an importer to receive the reduced tax 
rate provided under this paragraph, 
‘‘(iii) requirements that the brewer provide any 
information as the Secretary determines necessary and 
appropriate for purposes of carrying out this para-
graph, and 
‘‘(iv) procedures that allow for revocation of eligi-
bility of the brewer and the importer for the reduced 
tax rate provided under this paragraph in the case 
of any erroneous or fraudulent information provided 
under clause (iii) which the Secretary deems to be 
material to qualifying for such reduced rate. 
‘‘(C) CONTROLLED GROUP.—For purposes of this section, 
any importer making an election described in subparagraph 
(B)(ii) shall be deemed to be a member of the controlled 
group of the brewer, as described under paragraph (5).’’. 
(d) CONTROLLED GROUP AND SINGLE TAXPAYER RULES.—Sub-
section (a) of section 5051, as amended by this section, is amended— 
(1) in paragraph (2)— 
(A) by striking subparagraph (B), and 
(B) by redesignating subparagraph (C) as subpara-
graph (B), and 
(2) by adding at the end the following new paragraph: 
‘‘(5) CONTROLLED GROUP AND SINGLE TAXPAYER RULES.— 
26 USC 5051. 
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131 STAT. 2172 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), in the case of a controlled group, the 6,000,000 barrel 
quantity specified in paragraph (1)(C)(i) and the 2,000,000 
barrel quantity specified in paragraph (2)(A) shall be 
applied to the controlled group, and the 6,000,000 barrel 
quantity specified in paragraph (1)(C)(i) and the 60,000 
barrel quantity specified in paragraph (2)(A) shall be appor-
tioned among the brewers who are members of such group 
in such manner as the Secretary or their delegate shall 
by regulations prescribe. For purposes of the preceding 
sentence, the term ‘controlled group’ has the meaning 
assigned to it by subsection (a) of section 1563, except 
that for such purposes the phrase ‘more than 50 percent’ 
shall be substituted for the phrase ‘at least 80 percent’ 
in each place it appears in such subsection. Under regula-
tions prescribed by the Secretary, principles similar to the 
principles of the preceding two sentences shall be applied 
to a group of brewers under common control where one 
or more of the brewers is not a corporation. 
‘‘(B) FOREIGN MANUFACTURERS AND IMPORTERS.—For 
purposes of paragraph (4), in the case of a controlled group, 
the 6,000,000 barrel quantity specified in paragraph 
(1)(C)(i) shall be applied to the controlled group and appor-
tioned among the members of such group in such manner 
as the Secretary shall by regulations prescribe. For pur-
poses of the preceding sentence, the term ‘controlled group’ 
has the meaning given such term under subparagraph 
(A). Under regulations prescribed by the Secretary, prin-
ciples similar to the principles of the preceding two sen-
tences shall be applied to a group of brewers under common 
control where one or more of the brewers is not a corpora-
tion. 
‘‘(C) SINGLE TAXPAYER.—Pursuant to rules issued by 
the Secretary, two or more entities (whether or not under 
common control) that produce beer marketed under a 
similar brand, license, franchise, or other arrangement 
shall be treated as a single taxpayer for purposes of the 
application of this subsection.’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to beer removed after December 31, 2017. 
SEC. 13803. TRANSFER OF BEER BETWEEN BONDED FACILITIES. 
(a) IN GENERAL.—Section 5414 is amended— 
(1) by striking ‘‘Beer may be removed’’ and inserting ‘‘(a) 
IN GENERAL.—Beer may be removed’’, and 
(2) by adding at the end the following: 
‘‘(b) TRANSFER OF BEER BETWEEN BONDED FACILITIES.— 
‘‘(1) IN GENERAL.—Beer may be removed from one bonded 
brewery to another bonded brewery, without payment of tax, 
and may be mingled with beer at the receiving brewery, subject 
to such conditions, including payment of the tax, and in such 
containers, as the Secretary by regulations shall prescribe, 
which shall include— 
‘‘(A) any removal from one brewery to another brewery 
belonging to the same brewer, 
‘‘(B) any removal from a brewery owned by one corpora-
tion to a brewery owned by another corporation when— 
26 USC 5414. 
26 USC 5051 
note. 
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131 STAT. 2173 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) one such corporation owns the controlling 
interest in the other such corporation, or 
‘‘(ii) the controlling interest in each such corpora-
tion is owned by the same person or persons, and 
‘‘(C) any removal from one brewery to another brewery 
when— 
‘‘(i) the proprietors of transferring and receiving 
premises are independent of each other and neither 
has a proprietary interest, directly or indirectly, in 
the business of the other, and 
‘‘(ii) the transferor has divested itself of all interest 
in the beer so transferred and the transferee has 
accepted responsibility for payment of the tax. 
‘‘(2) TRANSFER OF LIABILITY FOR TAX.—For purposes of para-
graph (1)(C), such relief from liability shall be effective from 
the time of removal from the transferor’s bonded premises, 
or from the time of divestment of interest, whichever is later. 
‘‘(3) TERMINATION.—This subsection shall not apply to any 
calendar quarter beginning after December 31, 2019.’’. 
(b) REMOVAL FROM BREWERY BY PIPELINE.—Section 5412 is 
amended by inserting ‘‘pursuant to section 5414 or’’ before ‘‘by 
pipeline’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to any calendar quarters beginning after December 
31, 2017. 
SEC. 13804. REDUCED RATE OF EXCISE TAX ON CERTAIN WINE. 
(a) IN GENERAL.—Section 5041(c) is amended by adding at 
the end the following new paragraph: 
‘‘(8) SPECIAL RULE FOR 2018 AND 2019.— 
‘‘(A) IN GENERAL.—In the case of wine removed after 
December 31, 2017, and before January 1, 2020, paragraphs 
(1) and (2) shall not apply and there shall be allowed 
as a credit against any tax imposed by this title (other 
than chapters 2, 21, and 22) an amount equal to the 
sum of— 
‘‘(i) $1 per wine gallon on the first 30,000 wine 
gallons of wine, plus 
‘‘(ii) 90 cents per wine gallon on the first 100,000 
wine gallons of wine to which clause (i) does not apply, 
plus 
‘‘(iii) 53.5 cents per wine gallon on the first 620,000 
wine gallons of wine to which clauses (i) and (ii) do 
not apply, 
which are produced by the producer and removed during 
the calendar year for consumption or sale, or which are 
imported by the importer into the United States during 
the calendar year. 
‘‘(B) ADJUSTMENT OF CREDIT FOR HARD CIDER.—In the 
case of wine described in subsection (b)(6), subparagraph 
(A) of this paragraph shall be applied— 
‘‘(i) in clause (i) of such subparagraph, by sub-
stituting ‘6.2 cents’ for ‘$1’, 
‘‘(ii) in clause (ii) of such subparagraph, by sub-
stituting ‘5.6 cents’ for ‘90 cents’, and 
‘‘(iii) in clause (iii) of such subparagraph, by sub-
stituting ‘3.3 cents’ for ‘53.5 cents’.’’, 
26 USC 5412 
note. 
26 USC 5412. 
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131 STAT. 2174 
PUBLIC LAW 115–97—DEC. 22, 2017 
(b) CONTROLLED GROUP AND SINGLE TAXPAYER RULES.—Para-
graph (4) of section 5041(c) is amended by striking ‘‘section 
5051(a)(2)(B)’’ and inserting ‘‘section 5051(a)(5)’’. 
(c) ALLOWANCE OF CREDIT FOR FOREIGN MANUFACTURERS AND 
IMPORTERS.—Subsection (c) of section 5041, as amended by sub-
section (a), is amended— 
(1) in subparagraph (A) of paragraph (8), by inserting ‘‘but 
only if the importer is an electing importer under paragraph 
(9) and the wine gallons of wine have been assigned to the 
importer pursuant to such paragraph’’ after ‘‘into the United 
States during the calendar year’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(9) ALLOWANCE OF CREDIT FOR FOREIGN MANUFACTURERS 
AND IMPORTERS.— 
‘‘(A) IN
GENERAL.—In the case of any wine gallons 
of wine which have been produced outside of the United 
States and imported into the United States, the credit 
allowable under paragraph (8) (referred to in this para-
graph as the ‘tax credit’) may be assigned by the person 
who produced such wine (referred to in this paragraph 
as the ‘foreign producer’), provided that such person makes 
an election described in subparagraph (B)(ii), to any 
electing importer of such wine gallons pursuant to the 
requirements established by the Secretary under subpara-
graph (B). 
‘‘(B) ASSIGNMENT.—The Secretary shall, through such 
rules, regulations, and procedures as are determined appro-
priate, establish procedures for assignment of the tax credit 
provided under this paragraph, which shall include— 
‘‘(i) a limitation to ensure that the number of wine 
gallons of wine for which the tax credit has been 
assigned by a foreign producer— 
‘‘(I) to any importer does not exceed the 
number of wine gallons of wine produced by such 
foreign producer during the calendar year which 
were imported into the United States by such 
importer, and 
‘‘(II) to all importers does not exceed the 
750,000 wine gallons of wine to which the tax 
credit applies, 
‘‘(ii) procedures that allow the election of a foreign 
producer to assign and an importer to receive the tax 
credit provided under this paragraph, 
‘‘(iii) requirements that the foreign producer pro-
vide any information as the Secretary determines nec-
essary and appropriate for purposes of carrying out 
this paragraph, and 
‘‘(iv) procedures that allow for revocation of eligi-
bility of the foreign producer and the importer for 
the tax credit provided under this paragraph in the 
case of any erroneous or fraudulent information pro-
vided under clause (iii) which the Secretary deems 
to be material to qualifying for such credit. 
‘‘(C) CONTROLLED GROUP.—For purposes of this section, 
any importer making an election described in subparagraph 
(B)(ii) shall be deemed to be a member of the controlled 
26 USC 5041. 
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131 STAT. 2175 
PUBLIC LAW 115–97—DEC. 22, 2017 
group of the foreign producer, as described under paragraph 
(4).’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to wine removed after December 31, 2017. 
SEC. 13805. ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR APPLICA-
TION OF EXCISE TAX RATES. 
(a) IN GENERAL.—Paragraphs (1) and (2) of section 5041(b) 
are each amended by inserting ‘‘(16 percent in the case of wine 
removed after December 31, 2017, and before January 1, 2020’’ 
after ‘‘14 percent’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to wine removed after December 31, 2017. 
SEC. 13806. DEFINITION OF MEAD AND LOW ALCOHOL BY VOLUME 
WINE. 
(a) IN GENERAL.—Section 5041 is amended— 
(1) in subsection (a), by striking ‘‘Still wines’’ and inserting 
‘‘Subject to subsection (h), still wines’’, and 
(2) by adding at the end the following new subsection: 
‘‘(h) MEAD AND LOW ALCOHOL BY VOLUME WINE.— 
‘‘(1) IN
GENERAL.—For purposes of subsections (a) and 
(b)(1), mead and low alcohol by volume wine shall be deemed 
to be still wines containing not more than 16 percent of alcohol 
by volume. 
‘‘(2) DEFINITIONS.— 
‘‘(A) MEAD.—For purposes of this section, the term 
‘mead’ means a wine— 
‘‘(i) containing not more than 0.64 gram of carbon 
dioxide per hundred milliliters of wine, except that 
the Secretary shall by regulations prescribe such toler-
ances to this limitation as may be reasonably necessary 
in good commercial practice, 
‘‘(ii) which is derived solely from honey and water, 
‘‘(iii) which contains no fruit product or fruit fla-
voring, and 
‘‘(iv) which contains less than 8.5 percent alcohol 
by volume. 
‘‘(B) LOW ALCOHOL BY VOLUME WINE.—For purposes 
of this section, the term ‘low alcohol by volume wine’ means 
a wine— 
‘‘(i) containing not more than 0.64 gram of carbon 
dioxide per hundred milliliters of wine, except that 
the Secretary shall by regulations prescribe such toler-
ances to this limitation as may be reasonably necessary 
in good commercial practice, 
‘‘(ii) which is derived— 
‘‘(I) primarily from grapes, or 
‘‘(II) from grape juice concentrate and water, 
‘‘(iii) which contains no fruit product or fruit fla-
voring other than grape, and 
‘‘(iv) which contains less than 8.5 percent alcohol 
by volume. 
‘‘(3) TERMINATION.—This subsection shall not apply to wine 
removed after December 31, 2019.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to wine removed after December 31, 2017. 
26 USC 5401 
note. 
26 USC 5401 
note. 
26 USC 5041. 
26 USC 5401 
note. 
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131 STAT. 2176 
PUBLIC LAW 115–97—DEC. 22, 2017 
SEC. 13807. REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED 
SPIRITS. 
(a) IN GENERAL.—Section 5001 is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection 
(b) the following new subsection: 
‘‘(c) REDUCED RATE FOR 2018 AND 2019.— 
‘‘(1) IN GENERAL.—In the case of a distilled spirits oper-
ation, the otherwise applicable tax rate under subsection (a)(1) 
shall be— 
‘‘(A) $2.70 per proof gallon on the first 100,000 proof 
gallons of distilled spirits, and 
‘‘(B) $13.34 per proof gallon on the first 22,130,000 
of proof gallons of distilled spirits to which subparagraph 
(A) does not apply, 
which have been distilled or processed by such operation and 
removed during the calendar year for consumption or sale, 
or which have been imported by the importer into the United 
States during the calendar year. 
‘‘(2) CONTROLLED GROUPS.— 
‘‘(A) IN GENERAL.—In the case of a controlled group, 
the proof gallon quantities specified under subparagraphs 
(A) and (B) of paragraph (1) shall be applied to such group 
and apportioned among the members of such group in 
such manner as the Secretary or their delegate shall by 
regulations prescribe. 
‘‘(B) DEFINITION.—For purposes of subparagraph (A), 
the term ‘controlled group’ shall have the meaning given 
such term by subsection (a) of section 1563, except that 
‘more than 50 percent’ shall be substituted for ‘at least 
80 percent’ each place it appears in such subsection. 
‘‘(C) RULES
FOR
NON-CORPORATIONS.—Under regula-
tions prescribed by the Secretary, principles similar to the 
principles of subparagraphs (A) and (B) shall be applied 
to a group under common control where one or more of 
the persons is not a corporation. 
‘‘(D) SINGLE TAXPAYER.—Pursuant to rules issued by 
the Secretary, two or more entities (whether or not under 
common control) that produce distilled spirits marketed 
under a similar brand, license, franchise, or other arrange-
ment shall be treated as a single taxpayer for purposes 
of the application of this subsection. 
‘‘(3) TERMINATION.—This subsection shall not apply to dis-
tilled spirits removed after December 31, 2019.’’. 
(b) CONFORMING AMENDMENT.—Section 7652(f)(2) is amended 
by striking ‘‘section 5001(a)(1)’’ and inserting ‘‘subsection (a)(1) of 
section 5001, determined as if subsection (c)(1) of such section 
did not apply’’. 
(c) APPLICATION OF REDUCED TAX RATE FOR FOREIGN MANUFAC-
TURERS AND IMPORTERS.—Subsection (c) of section 5001, as added 
by subsection (a), is amended— 
(1) in paragraph (1), by inserting ‘‘but only if the importer 
is an electing importer under paragraph (3) and the proof 
gallons of distilled spirits have been assigned to the importer 
pursuant to such paragraph’’ after ‘‘into the United States 
during the calendar year’’, and 
(2) by redesignating paragraph (3) as paragraph (4) and 
by inserting after paragraph (2) the following new paragraph: 
26 USC 5001. 
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131 STAT. 2177 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(3) REDUCED TAX RATE FOR FOREIGN MANUFACTURERS AND 
IMPORTERS.— 
‘‘(A) IN GENERAL.—In the case of any proof gallons 
of distilled spirits which have been produced outside of 
the United States and imported into the United States, 
the rate of tax applicable under paragraph (1) (referred 
to in this paragraph as the ‘reduced tax rate’) may be 
assigned by the distilled spirits operation (provided that 
such operation makes an election described in subpara-
graph (B)(ii)) to any electing importer of such proof gallons 
pursuant to the requirements established by the Secretary 
under subparagraph (B). 
‘‘(B) ASSIGNMENT.—The Secretary shall, through such 
rules, regulations, and procedures as are determined appro-
priate, establish procedures for assignment of the reduced 
tax rate provided under this paragraph, which shall 
include— 
‘‘(i) a limitation to ensure that the number of proof 
gallons of distilled spirits for which the reduced tax 
rate has been assigned by a distilled spirits operation— 
‘‘(I) to any importer does not exceed the 
number of proof gallons produced by such oper-
ation during the calendar year which were 
imported into the United States by such importer, 
and 
‘‘(II) to all importers does not exceed the 
22,230,000 proof gallons of distilled spirits to which 
the reduced tax rate applies, 
‘‘(ii) procedures that allow the election of a distilled 
spirits operation to assign and an importer to receive 
the reduced tax rate provided under this paragraph, 
‘‘(iii) requirements that the distilled spirits oper-
ation provide any information as the Secretary deter-
mines necessary and appropriate for purposes of car-
rying out this paragraph, and 
‘‘(iv) procedures that allow for revocation of eligi-
bility of the distilled spirits operation and the importer 
for the reduced tax rate provided under this paragraph 
in the case of any erroneous or fraudulent information 
provided under clause (iii) which the Secretary deems 
to be material to qualifying for such reduced rate. 
‘‘(C) CONTROLLED GROUP.— 
‘‘(i) IN GENERAL.—For purposes of this section, any 
importer making an election described in subparagraph 
(B)(ii) shall be deemed to be a member of the controlled 
group of the distilled spirits operation, as described 
under paragraph (2). 
‘‘(ii) APPORTIONMENT.—For purposes of this para-
graph, in the case of a controlled group, rules similar 
to section 5051(a)(5)(B) shall apply.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distilled spirits removed after December 31, 2017. 
SEC. 13808. BULK DISTILLED SPIRITS. 
(a) IN GENERAL.—Section 5212 is amended by adding at the 
end the following sentence: ‘‘In the case of distilled spirits trans-
ferred in bond after December 31, 2017, and before January 1, 
26 USC 5212. 
26 USC 5001 
note. 
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131 STAT. 2178 
PUBLIC LAW 115–97—DEC. 22, 2017 
2020, this section shall be applied without regard to whether dis-
tilled spirits are bulk distilled spirits.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply distilled spirits transferred in bond after December 
31, 2017. 
Subpart B—Miscellaneous Provisions 
SEC. 13821. MODIFICATION OF TAX TREATMENT OF ALASKA NATIVE 
CORPORATIONS AND SETTLEMENT TRUSTS. 
(a) EXCLUSION FOR ANCSA PAYMENTS ASSIGNED TO ALASKA 
NATIVE SETTLEMENT TRUSTS.— 
(1) IN GENERAL.—Part III of subchapter B of chapter 1 
is amended by inserting before section 140 the following new 
section: 
‘‘SEC. 139G. ASSIGNMENTS TO ALASKA NATIVE SETTLEMENT TRUSTS. 
‘‘(a) IN GENERAL.—In the case of a Native Corporation, gross 
income shall not include the value of any payments that would 
otherwise be made, or treated as being made, to such Native Cor-
poration pursuant to, or as required by, any provision of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1601 et seq.), including 
any payment that would otherwise be made to a Village Corporation 
pursuant to section 7(j) of the Alaska Native Claims Settlement 
Act (43 U.S.C. 1606(j)), provided that any such payments— 
‘‘(1) are assigned in writing to a Settlement Trust, and 
‘‘(2) were not received by such Native Corporation prior 
to the assignment described in paragraph (1). 
‘‘(b) INCLUSION IN GROSS INCOME.—In the case of a Settlement 
Trust which has been assigned payments described in subsection 
(a), gross income shall include such payments when received by 
such Settlement Trust pursuant to the assignment and shall have 
the same character as if such payments were received by the 
Native Corporation. 
‘‘(c) AMOUNT AND SCOPE OF ASSIGNMENT.—The amount and 
scope of any assignment under subsection (a) shall be described 
with reasonable particularity and may either be in a percentage 
of one or more such payments or in a fixed dollar amount. 
‘‘(d) DURATION
OF ASSIGNMENT; REVOCABILITY.—Any assign-
ment under subsection (a) shall specify— 
‘‘(1) a duration either in perpetuity or for a period of 
time, and 
‘‘(2) whether such assignment is revocable. 
‘‘(e) PROHIBITION ON DEDUCTION.—Notwithstanding section 247, 
no deduction shall be allowed to a Native Corporation for purposes 
of any amounts described in subsection (a). 
‘‘(f) DEFINITIONS.—For purposes of this section, the terms 
‘Native Corporation’ and ‘Settlement Trust’ have the same meaning 
given such terms under section 646(h).’’. 
(2) CONFORMING AMENDMENT.—The table of sections for 
part III of subchapter B of chapter 1 is amended by inserting 
before the item relating to section 140 the following new item: 
‘‘Sec. 139G. Assignments to Alaska Native Settlement Trusts.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years beginning after December 
31, 2016. 
26 USC 139G 
note. 
26 USC 
prec. 101. 
26 USC 139G. 
26 USC 5212 
note. 
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131 STAT. 2179 
PUBLIC LAW 115–97—DEC. 22, 2017 
(b) DEDUCTION OF CONTRIBUTIONS TO ALASKA NATIVE SETTLE-
MENT TRUSTS.— 
(1) IN
GENERAL.—Part VIII of subchapter B of chapter 
1 is amended by inserting before section 248 the following 
new section: 
‘‘SEC. 247. CONTRIBUTIONS TO ALASKA NATIVE SETTLEMENT TRUSTS. 
‘‘(a) IN GENERAL.—In the case of a Native Corporation, there 
shall be allowed a deduction for any contributions made by such 
Native Corporation to a Settlement Trust (regardless of whether 
an election under section 646 is in effect for such Settlement Trust) 
for which the Native Corporation has made an annual election 
under subsection (e). 
‘‘(b) AMOUNT OF DEDUCTION.—The amount of the deduction 
under subsection (a) shall be equal to— 
‘‘(1) in the case of a cash contribution (regardless of the 
method of payment, including currency, coins, money order, 
or check), the amount of such contribution, or 
‘‘(2) in the case of a contribution not described in paragraph 
(1), the lesser of— 
‘‘(A) the Native Corporation’s adjusted basis in the 
property contributed, or 
‘‘(B) the fair market value of the property contributed. 
‘‘(c) LIMITATION AND CARRYOVER.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), the deduction 
allowed under subsection (a) for any taxable year shall not 
exceed the taxable income (as determined without regard to 
such deduction) of the Native Corporation for the taxable year 
in which the contribution was made. 
‘‘(2) CARRYOVER.—If the aggregate amount of contributions 
described in subsection (a) for any taxable year exceeds the 
limitation under paragraph (1), such excess shall be treated 
as a contribution described in subsection (a) in each of the 
15 succeeding years in order of time. 
‘‘(d) DEFINITIONS.—For purposes of this section, the terms 
‘Native Corporation’ and ‘Settlement Trust’ have the same meaning 
given such terms under section 646(h). 
‘‘(e) MANNER OF MAKING ELECTION.— 
‘‘(1) IN GENERAL.—For each taxable year, a Native Corpora-
tion may elect to have this section apply for such taxable 
year on the income tax return or an amendment or supplement 
to the return of the Native Corporation, with such election 
to have effect solely for such taxable year. 
‘‘(2) REVOCATION.—Any election made by a Native Corpora-
tion pursuant to this subsection may be revoked pursuant 
to a timely filed amendment or supplement to the income 
tax return of such Native Corporation. 
‘‘(f) ADDITIONAL RULES.— 
‘‘(1) EARNINGS
AND
PROFITS.—Notwithstanding section 
646(d)(2), in the case of a Native Corporation which claims 
a deduction under this section for any taxable year, the earnings 
and profits of such Native Corporation for such taxable year 
shall be reduced by the amount of such deduction. 
‘‘(2) GAIN OR LOSS.—No gain or loss shall be recognized 
by the Native Corporation with respect to a contribution of 
property for which a deduction is allowed under this section. 
26 USC 247. 
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131 STAT. 2180 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(3) INCOME.—Subject to subsection (g), a Settlement Trust 
shall include in income the amount of any deduction allowed 
under this section in the taxable year in which the Settlement 
Trust actually receives such contribution. 
‘‘(4) PERIOD.—The holding period under section 1223 of 
the Settlement Trust shall include the period the property 
was held by the Native Corporation. 
‘‘(5) BASIS.—The basis that a Settlement Trust has for 
which a deduction is allowed under this section shall be equal 
to the lesser of— 
‘‘(A) the adjusted basis of the Native Corporation in 
such property immediately before such contribution, or 
‘‘(B) the fair market value of the property immediately 
before such contribution. 
‘‘(6) PROHIBITION.—No deduction shall be allowed under 
this section with respect to any contributions made to a Settle-
ment Trust which are in violation of subsection (a)(2) or (c)(2) 
of section 39 of the Alaska Native Claims Settlement Act (43 
U.S.C. 1629e). 
‘‘(g) ELECTION BY SETTLEMENT TRUST TO DEFER INCOME REC-
OGNITION.— 
‘‘(1) IN GENERAL.—In the case of a contribution which con-
sists of property other than cash, a Settlement Trust may 
elect to defer recognition of any income related to such property 
until the sale or exchange of such property, in whole or in 
part, by the Settlement Trust. 
‘‘(2) TREATMENT.—In the case of property described in para-
graph (1), any income or gain realized on the sale or exchange 
of such property shall be treated as— 
‘‘(A) for such amount of the income or gain as is equal 
to or less than the amount of income which would be 
included in income at the time of contribution under sub-
section (f)(3) but for the taxpayer’s election under this 
subsection, ordinary income, and 
‘‘(B) for any amounts of the income or gain which 
are in excess of the amount of income which would be 
included in income at the time of contribution under sub-
section (f)(3) but for the taxpayer’s election under this 
subsection, having the same character as if this subsection 
did not apply. 
‘‘(3) ELECTION.— 
‘‘(A) IN GENERAL.—For each taxable year, a Settlement 
Trust may elect to apply this subsection for any property 
described in paragraph (1) which was contributed during 
such year. Any property to which the election applies shall 
be identified and described with reasonable particularity 
on the income tax return or an amendment or supplement 
to the return of the Settlement Trust, with such election 
to have effect solely for such taxable year. 
‘‘(B) REVOCATION.—Any election made by a Settlement 
Trust pursuant to this subsection may be revoked pursuant 
to a timely filed amendment or supplement to the income 
tax return of such Settlement Trust. 
‘‘(C) CERTAIN DISPOSITIONS.— 
‘‘(i) IN GENERAL.—In the case of any property for 
which an election is in effect under this subsection 
and which is disposed of within the first taxable year 
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131 STAT. 2181 
PUBLIC LAW 115–97—DEC. 22, 2017 
subsequent to the taxable year in which such property 
was contributed to the Settlement Trust— 
‘‘(I) this section shall be applied as if the elec-
tion under this subsection had not been made, 
‘‘(II) any income or gain which would have 
been included in the year of contribution under 
subsection (f)(3) but for the taxpayer’s election 
under this subsection shall be included in income 
for the taxable year of such contribution, and 
‘‘(III) the Settlement Trust shall pay any 
increase in tax resulting from such inclusion, 
including any applicable interest, and increased 
by 10 percent of the amount of such increase with 
interest. 
‘‘(ii) 
ASSESSMENT.—Notwithstanding 
section 
6501(a), any amount described in subclause (III) of 
clause (i) may be assessed, or a proceeding in court 
with respect to such amount may be initiated without 
assessment, within 4 years after the date on which 
the return making the election under this subsection 
for such property was filed.’’. 
(2) CONFORMING AMENDMENT.—The table of sections for 
part VIII of subchapter B of chapter 1 is amended by inserting 
before the item relating to section 248 the following new item: 
‘‘Sec. 247. Contributions to Alaska Native Settlement Trusts.’’. 
(3) EFFECTIVE DATE.— 
(A) IN GENERAL.—The amendments made by this sub-
section shall apply to taxable years for which the period 
of limitation on refund or credit under section 6511 of 
the Internal Revenue Code of 1986 has not expired. 
(B) ONE-YEAR WAIVER OF STATUTE OF LIMITATIONS.— 
If the period of limitation on a credit or refund resulting 
from the amendments made by paragraph (1) expires before 
the end of the 1-year period beginning on the date of 
the enactment of this Act, refund or credit of such overpay-
ment (to the extent attributable to such amendments) may, 
nevertheless, be made or allowed if claim therefor is filed 
before the close of such 1-year period. 
(c) INFORMATION REPORTING FOR DEDUCTIBLE CONTRIBUTIONS 
TO ALASKA NATIVE SETTLEMENT TRUSTS.— 
(1) IN GENERAL.—Section 6039H is amended— 
(A) in the heading, by striking ‘‘SPONSORING’’, and 
(B) by adding at the end the following new subsection: 
‘‘(e) DEDUCTIBLE CONTRIBUTIONS BY NATIVE CORPORATIONS TO 
ALASKA NATIVE SETTLEMENT TRUSTS.— 
‘‘(1) IN GENERAL.—Any Native Corporation (as defined in 
subsection (m) of section 3 of the Alaska Native Claims Settle-
ment Act (43 U.S.C. 1602(m))) which has made a contribution 
to a Settlement Trust (as defined in subsection (t) of such 
section) to which an election under subsection (e) of section 
247 applies shall provide such Settlement Trust with a state-
ment regarding such election not later than January 31 of 
the calendar year subsequent to the calendar year in which 
the contribution was made. 
‘‘(2) CONTENT OF STATEMENT.—The statement described in 
paragraph (1) shall include— 
26 USC 6039H. 
26 USC 247 note. 
26 USC 
prec. 241. 
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131 STAT. 2182 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) the total amount of contributions to which the 
election under subsection (e) of section 247 applies, 
‘‘(B) for each contribution, whether such contribution 
was in cash, 
‘‘(C) for each contribution which consists of property 
other than cash, the date that such property was acquired 
by the Native Corporation and the adjusted basis and 
fair market value of such property on the date such prop-
erty was contributed to the Settlement Trust, 
‘‘(D) the date on which each contribution was made 
to the Settlement Trust, and 
‘‘(E) such information as the Secretary determines to 
be necessary or appropriate for the identification of each 
contribution and the accurate inclusion of income relating 
to such contributions by the Settlement Trust.’’. 
(2) CONFORMING AMENDMENT.—The item relating to section 
6039H in the table of sections for subpart A of part III of 
subchapter A of chapter 61 is amended to read as follows: 
‘‘Sec. 6039H. Information With Respect to Alaska Native Settlement Trusts and 
Native Corporations.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years beginning after December 
31, 2016. 
SEC. 13822. AMOUNTS PAID FOR AIRCRAFT MANAGEMENT SERVICES. 
(a) IN GENERAL.—Subsection (e) of section 4261 is amended 
by adding at the end the following new paragraph: 
‘‘(5) AMOUNTS PAID FOR AIRCRAFT MANAGEMENT SERVICES.— 
‘‘(A) IN GENERAL.—No tax shall be imposed by this 
section or section 4271 on any amounts paid by an aircraft 
owner for aircraft management services related to— 
‘‘(i) maintenance and support of the aircraft 
owner’s aircraft, or 
‘‘(ii) flights on the aircraft owner’s aircraft. 
‘‘(B) AIRCRAFT MANAGEMENT SERVICES.—For purposes 
of subparagraph (A), the term ‘aircraft management serv-
ices’ includes— 
‘‘(i) assisting an aircraft owner with administrative 
and support services, such as scheduling, flight plan-
ning, and weather forecasting, 
‘‘(ii) obtaining insurance, 
‘‘(iii) maintenance, storage and fueling of aircraft, 
‘‘(iv) hiring, training, and provision of pilots and 
crew, 
‘‘(v) establishing and complying with safety stand-
ards, and 
‘‘(vi) such other services as are necessary to sup-
port flights operated by an aircraft owner. 
‘‘(C) LESSEE TREATED AS AIRCRAFT OWNER.— 
‘‘(i) IN GENERAL.—For purposes of this paragraph, 
the term ‘aircraft owner’ includes a person who leases 
the aircraft other than under a disqualified lease. 
‘‘(ii) DISQUALIFIED LEASE.—For purposes of clause 
(i), the term ‘disqualified lease’ means a lease from 
a person providing aircraft management services with 
respect to such aircraft (or a related person (within 
26 USC 4261. 
26 USC 6039H 
note. 
26 USC 
prec. 6031. 
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131 STAT. 2183 
PUBLIC LAW 115–97—DEC. 22, 2017 
the meaning of section 465(b)(3)(C)) to the person pro-
viding such services), if such lease is for a term of 
31 days or less. 
‘‘(D) PRO RATA ALLOCATION.—In the case of amounts 
paid to any person which (but for this subsection) are 
subject to the tax imposed by subsection (a), a portion 
of which consists of amounts described in subparagraph 
(A), this paragraph shall apply on a pro rata basis only 
to the portion which consists of amounts described in such 
subparagraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to amounts paid after the date of the enactment of 
this Act. 
SEC. 13823. OPPORTUNITY ZONES. 
(a) IN GENERAL.—Chapter 1 is amended by adding at the 
end the following: 
‘‘Subchapter Z—Opportunity Zones 
‘‘Sec. 1400Z–1. Designation. 
‘‘Sec. 1400Z–2. Special rules for capital gains invested in opportunity zones. 
‘‘SEC. 1400Z–1. DESIGNATION. 
‘‘(a) QUALIFIED OPPORTUNITY ZONE DEFINED.—For the purposes 
of this subchapter, the term ‘qualified opportunity zone’ means 
a population census tract that is a low-income community that 
is designated as a qualified opportunity zone. 
‘‘(b) DESIGNATION.— 
‘‘(1) IN GENERAL.—For purposes of subsection (a), a popu-
lation census tract that is a low-income community is des-
ignated as a qualified opportunity zone if— 
‘‘(A) not later than the end of the determination period, 
the chief executive officer of the State in which the tract 
is located— 
‘‘(i) nominates the tract for designation as a quali-
fied opportunity zone, and 
‘‘(ii) notifies the Secretary in writing of such 
nomination, and 
‘‘(B) the Secretary certifies such nomination and des-
ignates such tract as a qualified opportunity zone before 
the end of the consideration period. 
‘‘(2) EXTENSION OF PERIODS.—A chief executive officer of 
a State may request that the Secretary extend either the deter-
mination or consideration period, or both (determined without 
regard to this subparagraph), for an additional 30 days. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this subsection— 
‘‘(1) LOW-INCOME
COMMUNITIES.—The term ‘low-income 
community’ has the same meaning as when used in section 
45D(e). 
‘‘(2) DEFINITION OF PERIODS.— 
‘‘(A) CONSIDERATION PERIOD.—The term ‘consideration 
period’ means the 30-day period beginning on the date 
on which the Secretary receives notice under subsection 
(b)(1)(A)(ii), as extended under subsection (b)(2). 
‘‘(B) DETERMINATION PERIOD.—The term ‘determination 
period’ means the 90-day period beginning on the date 
26 USC 1400Z–1. 
26 USC 
prec. 1400Z–1. 
26 USC 4261 
note. 
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131 STAT. 2184 
PUBLIC LAW 115–97—DEC. 22, 2017 
of the enactment of the Tax Cuts and Jobs Act, as extended 
under subsection (b)(2). 
‘‘(3) STATE.—For purposes of this section, the term ‘State’ 
includes any possession of the United States. 
‘‘(d) NUMBER OF DESIGNATIONS.— 
‘‘(1) IN GENERAL.—Except as provided by paragraph (2), 
the number of population census tracts in a State that may 
be designated as qualified opportunity zones under this section 
may not exceed 25 percent of the number of low-income commu-
nities in the State. 
‘‘(2) EXCEPTION.—If the number of low-income communities 
in a State is less than 100, then a total of 25 of such tracts 
may be designated as qualified opportunity zones. 
‘‘(e) DESIGNATION OF TRACTS CONTIGUOUS WITH LOW-INCOME 
COMMUNITIES.— 
‘‘(1) IN GENERAL.—A population census tract that is not 
a low-income community may be designated as a qualified 
opportunity zone under this section if— 
‘‘(A) the tract is contiguous with the low-income 
community that is designated as a qualified opportunity 
zone, and 
‘‘(B) the median family income of the tract does not 
exceed 125 percent of the median family income of the 
low-income community with which the tract is contiguous. 
‘‘(2) LIMITATION.—Not more than 5 percent of the popu-
lation census tracts designated in a State as a qualified oppor-
tunity zone may be designated under paragraph (1). 
‘‘(f) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.—A designa-
tion as a qualified opportunity zone shall remain in effect for 
the period beginning on the date of the designation and ending 
at the close of the 10th calendar year beginning on or after such 
date of designation. 
‘‘SEC. 1400Z–2. SPECIAL RULES FOR CAPITAL GAINS INVESTED IN 
OPPORTUNITY ZONES. 
‘‘(a) IN GENERAL.— 
‘‘(1) TREATMENT OF GAINS.—In the case of gain from the 
sale to, or exchange with, an unrelated person of any property 
held by the taxpayer, at the election of the taxpayer— 
‘‘(A) gross income for the taxable year shall not include 
so much of such gain as does not exceed the aggregate 
amount invested by the taxpayer in a qualified opportunity 
fund during the 180-day period beginning on the date of 
such sale or exchange, 
‘‘(B) the amount of gain excluded by subparagraph 
(A) shall be included in gross income as provided by sub-
section (b), and 
‘‘(C) subsection (c) shall apply. 
‘‘(2) ELECTION.—No election may be made under paragraph 
(1)— 
‘‘(A) with respect to a sale or exchange if an election 
previously made with respect to such sale or exchange 
is in effect, or 
‘‘(B) with respect to any sale or exchange after 
December 31, 2026. 
‘‘(b) DEFERRAL OF GAIN INVESTED IN OPPORTUNITY ZONE PROP-
ERTY.— 
26 USC 1400Z–2. 
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131 STAT. 2185 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(1) YEAR
OF
INCLUSION.—Gain to which subsection 
(a)(1)(B) applies shall be included in income in the taxable 
year which includes the earlier of— 
‘‘(A) the date on which such investment is sold or 
exchanged, or 
‘‘(B) December 31, 2026. 
‘‘(2) AMOUNT INCLUDIBLE.— 
‘‘(A) IN
GENERAL.—The amount of gain included in 
gross income under subsection (a)(1)(A) shall be the excess 
of— 
‘‘(i) the lesser of the amount of gain excluded under 
paragraph (1) or the fair market value of the invest-
ment as determined as of the date described in para-
graph (1), over 
‘‘(ii) the taxpayer’s basis in the investment. 
‘‘(B) DETERMINATION OF BASIS.— 
‘‘(i) IN
GENERAL.—Except as otherwise provided 
in this clause or subsection (c), the taxpayer’s basis 
in the investment shall be zero. 
‘‘(ii) INCREASE FOR GAIN RECOGNIZED UNDER SUB-
SECTION (a)(1)(B).—The basis in the investment shall 
be increased by the amount of gain recognized by rea-
son of subsection (a)(1)(B) with respect to such prop-
erty. 
‘‘(iii) INVESTMENTS HELD FOR 5 YEARS.—In the case 
of any investment held for at least 5 years, the basis 
of such investment shall be increased by an amount 
equal to 10 percent of the amount of gain deferred 
by reason of subsection (a)(1)(A). 
‘‘(iv) INVESTMENTS HELD FOR 7 YEARS.—In the case 
of any investment held by the taxpayer for at least 
7 years, in addition to any adjustment made under 
clause (iii), the basis of such property shall be increased 
by an amount equal to 5 percent of the amount of 
gain deferred by reason of subsection (a)(1)(A). 
‘‘(c) SPECIAL RULE FOR INVESTMENTS HELD FOR AT LEAST 10 
YEARS.—In the case of any investment held by the taxpayer for 
at least 10 years and with respect to which the taxpayer makes 
an election under this clause, the basis of such property shall 
be equal to the fair market value of such investment on the date 
that the investment is sold or exchanged. 
‘‘(d) QUALIFIED OPPORTUNITY FUND.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified opportunity fund’ 
means any investment vehicle which is organized as a corpora-
tion or a partnership for the purpose of investing in qualified 
opportunity zone property (other than another qualified oppor-
tunity fund) that holds at least 90 percent of its assets in 
qualified opportunity zone property, determined by the average 
of the percentage of qualified opportunity zone property held 
in the fund as measured— 
‘‘(A) on the last day of the first 6-month period of 
the taxable year of the fund, and 
‘‘(B) on the last day of the taxable year of the fund. 
‘‘(2) QUALIFIED OPPORTUNITY ZONE PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘qualified opportunity zone 
property’ means property which is— 
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131 STAT. 2186 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) qualified opportunity zone stock, 
‘‘(ii) 
qualified 
opportunity 
zone 
partnership 
interest, or 
‘‘(iii) qualified opportunity zone business property. 
‘‘(B) QUALIFIED OPPORTUNITY ZONE STOCK.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), the term ‘qualified opportunity zone stock’ means 
any stock in a domestic corporation if— 
‘‘(I) such stock is acquired by the qualified 
opportunity fund after December 31, 2017, at its 
original issue (directly or through an underwriter) 
from the corporation solely in exchange for cash, 
‘‘(II) as of the time such stock was issued, 
such corporation was a qualified opportunity zone 
business (or, in the case of a new corporation, 
such corporation was being organized for purposes 
of being a qualified opportunity zone business), 
and 
‘‘(III) during substantially all of the qualified 
opportunity fund’s holding period for such stock, 
such corporation qualified as a qualified oppor-
tunity zone business. 
‘‘(ii) REDEMPTIONS.—A rule similar to the rule of 
section 1202(c)(3) shall apply for purposes of this para-
graph. 
‘‘(C) 
QUALIFIED
OPPORTUNITY
ZONE
PARTNERSHIP 
INTEREST.—The term ‘qualified opportunity zone partner-
ship interest’ means any capital or profits interest in a 
domestic partnership if— 
‘‘(i) such interest is acquired by the qualified oppor-
tunity fund after December 31, 2017, from the partner-
ship solely in exchange for cash, 
‘‘(ii) as of the time such interest was acquired, 
such partnership was a qualified opportunity zone busi-
ness (or, in the case of a new partnership, such partner-
ship was being organized for purposes of being a quali-
fied opportunity zone business), and 
‘‘(iii) during substantially all of the qualified oppor-
tunity fund’s holding period for such interest, such 
partnership qualified as a qualified opportunity zone 
business. 
‘‘(D) QUALIFIED
OPPORTUNITY
ZONE
BUSINESS
PROP-
ERTY.— 
‘‘(i) IN GENERAL.—The term ‘qualified opportunity 
zone business property’ means tangible property used 
in a trade or business of the qualified opportunity 
fund if— 
‘‘(I) such property was acquired by the quali-
fied opportunity fund by purchase (as defined in 
section 179(d)(2)) after December 31, 2017, 
‘‘(II) the original use of such property in the 
qualified opportunity zone commences with the 
qualified opportunity fund or the qualified oppor-
tunity fund substantially improves the property, 
and 
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131 STAT. 2187 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(III) during substantially all of the qualified 
opportunity fund’s holding period for such prop-
erty, substantially all of the use of such property 
was in a qualified opportunity zone. 
‘‘(ii) SUBSTANTIAL IMPROVEMENT.—For purposes of 
subparagraph (A)(ii), property shall be treated as 
substantially improved by the qualified opportunity 
fund only if, during any 30-month period beginning 
after the date of acquisition of such property, additions 
to basis with respect to such property in the hands 
of the qualified opportunity fund exceed an amount 
equal to the adjusted basis of such property at the 
beginning of such 30-month period in the hands of 
the qualified opportunity fund. 
‘‘(iii) RELATED PARTY.—For purposes of subpara-
graph (A)(i), the related person rule of section 179(d)(2) 
shall be applied pursuant to paragraph (8) of this 
subsection in lieu of the application of such rule in 
section 179(d)(2)(A). 
‘‘(3) QUALIFIED OPPORTUNITY ZONE BUSINESS.— 
‘‘(A) IN GENERAL.—The term ‘qualified opportunity zone 
business’ means a trade or business— 
‘‘(i) in which substantially all of the tangible prop-
erty owned or leased by the taxpayer is qualified oppor-
tunity zone business property (determined by sub-
stituting ‘qualified opportunity zone business’ for 
‘qualified opportunity fund’ each place it appears in 
paragraph (2)(D)), 
‘‘(ii) which satisfies the requirements of paragraphs 
(2), (4), and (8) of section 1397C(b), and 
‘‘(iii) which is not described in section 144(c)(6)(B). 
‘‘(B) SPECIAL RULE.—For purposes of subparagraph (A), 
tangible property that ceases to be a qualified opportunity 
zone business property shall continue to be treated as 
a qualified opportunity zone business property for the lesser 
of— 
‘‘(i) 5 years after the date on which such tangible 
property ceases to be so qualified, or 
‘‘(ii) the date on which such tangible property is 
no longer held by the qualified opportunity zone busi-
ness. 
‘‘(e) APPLICABLE RULES.— 
‘‘(1) TREATMENT OF INVESTMENTS WITH MIXED FUNDS.—In 
the case of any investment in a qualified opportunity fund 
only a portion of which consists of investments of gain to 
which an election under subsection (a) is in effect— 
‘‘(A) such investment shall be treated as 2 separate 
investments, consisting of— 
‘‘(i) one investment that only includes amounts 
to which the election under subsection (a) applies, and 
‘‘(ii) a separate investment consisting of other 
amounts, and 
‘‘(B) subsections (a), (b), and (c) shall only apply to 
the investment described in subparagraph (A)(i). 
‘‘(2) RELATED PERSONS.—For purposes of this section, per-
sons are related to each other if such persons are described 
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131 STAT. 2188 
PUBLIC LAW 115–97—DEC. 22, 2017 
in section 267(b) or 707(b)(1), determined by substituting ‘20 
percent’ for ‘50 percent’ each place it occurs in such sections. 
‘‘(3) DECEDENTS.—In the case of a decedent, amounts recog-
nized under this section shall, if not properly includible in 
the gross income of the decedent, be includible in gross income 
as provided by section 691. 
‘‘(4) REGULATIONS.—The Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry out 
the purposes of this section, including— 
‘‘(A) rules for the certification of qualified opportunity 
funds for the purposes of this section, 
‘‘(B) rules to ensure a qualified opportunity fund has 
a reasonable period of time to reinvest the return of capital 
from investments in qualified opportunity zone stock and 
qualified opportunity zone partnership interests, and to 
reinvest proceeds received from the sale or disposition of 
qualified opportunity zone property, and 
‘‘(C) rules to prevent abuse. 
‘‘(f) FAILURE OF QUALIFIED OPPORTUNITY FUND TO MAINTAIN 
INVESTMENT STANDARD.— 
‘‘(1) IN GENERAL.—If a qualified opportunity fund fails to 
meet the 90-percent requirement of subsection (c)(1), the quali-
fied opportunity fund shall pay a penalty for each month it 
fails to meet the requirement in an amount equal to the product 
of— 
‘‘(A) the excess of— 
‘‘(i) the amount equal to 90 percent of its aggregate 
assets, over 
‘‘(ii) the aggregate amount of qualified opportunity 
zone property held by the fund, multiplied by 
‘‘(B) the underpayment rate established under section 
6621(a)(2) for such month. 
‘‘(2) SPECIAL RULE FOR PARTNERSHIPS.—In the case that 
the qualified opportunity fund is a partnership, the penalty 
imposed by paragraph (1) shall be taken into account propor-
tionately as part of the distributive share of each partner 
of the partnership. 
‘‘(3) REASONABLE CAUSE EXCEPTION.—No penalty shall be 
imposed under this subsection with respect to any failure if 
it is shown that such failure is due to reasonable cause.’’. 
(b) BASIS
ADJUSTMENTS.—Section 1016(a) is amended by 
striking ‘‘and’’ at the end of paragraph (36), by striking the period 
at the end of paragraph (37) and inserting ‘‘, and’’, and by inserting 
after paragraph (37) the following: 
‘‘(38) to the extent provided in subsections (b)(2) and (c) 
of section 1400Z–2.’’. 
(c) CLERICAL
AMENDMENT.—The table of subchapters for 
chapter 1 is amended by adding at the end the following new 
item: 
‘‘SUBCHAPTER Z. OPPORTUNITY ZONES’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the date of the enactment of this Act. 
26 USC 1016 
note. 
26 USC prec. 1. 
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131 STAT. 2189 
PUBLIC LAW 115–97—DEC. 22, 2017 
Subtitle D—International Tax Provisions 
PART I—OUTBOUND TRANSACTIONS 
Subpart A—Establishment of Participation 
Exemption System for Taxation of Foreign Income 
SEC. 14101. DEDUCTION FOR FOREIGN-SOURCE PORTION OF DIVI-
DENDS RECEIVED BY DOMESTIC CORPORATIONS FROM 
SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA-
TIONS. 
(a) IN GENERAL.—Part VIII of subchapter B of chapter 1 is 
amended by inserting after section 245 the following new section: 
‘‘SEC. 245A. DEDUCTION FOR FOREIGN SOURCE-PORTION OF DIVI-
DENDS RECEIVED BY DOMESTIC CORPORATIONS FROM 
SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA-
TIONS. 
‘‘(a) IN GENERAL.—In the case of any dividend received from 
a specified 10-percent owned foreign corporation by a domestic 
corporation which is a United States shareholder with respect to 
such foreign corporation, there shall be allowed as a deduction 
an amount equal to the foreign-source portion of such dividend. 
‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATION.— 
For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘specified 10-percent owned 
foreign corporation’ means any foreign corporation with respect 
to which any domestic corporation is a United States share-
holder with respect to such corporation. 
‘‘(2) EXCLUSION OF PASSIVE FOREIGN INVESTMENT COMPA-
NIES.—Such term shall not include any corporation which is 
a passive foreign investment company (as defined in section 
1297) with respect to the shareholder and which is not a 
controlled foreign corporation. 
‘‘(c) FOREIGN-SOURCE PORTION.—For purposes of this section— 
‘‘(1) IN GENERAL.—The foreign-source portion of any divi-
dend from a specified 10-percent owned foreign corporation 
is an amount which bears the same ratio to such dividend 
as— 
‘‘(A) the undistributed foreign earnings of the specified 
10-percent owned foreign corporation, bears to 
‘‘(B) the total undistributed earnings of such foreign 
corporation. 
‘‘(2) UNDISTRIBUTED
EARNINGS.—The term ‘undistributed 
earnings’ means the amount of the earnings and profits of 
the specified 10-percent owned foreign corporation (computed 
in accordance with sections 964(a) and 986)— 
‘‘(A) as of the close of the taxable year of the specified 
10-percent owned foreign corporation in which the dividend 
is distributed, and 
‘‘(B) without diminution by reason of dividends distrib-
uted during such taxable year. 
‘‘(3) UNDISTRIBUTED FOREIGN EARNINGS.—The term ‘undis-
tributed foreign earnings’ means the portion of the undistrib-
uted earnings which is attributable to neither— 
26 USC 245A. 
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131 STAT. 2190 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) income described in subparagraph (A) of section 
245(a)(5), nor 
‘‘(B) dividends described in subparagraph (B) of such 
section (determined without regard to section 245(a)(12)). 
‘‘(d) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed under section 
901 for any taxes paid or accrued (or treated as paid or accrued) 
with respect to any dividend for which a deduction is allowed 
under this section. 
‘‘(2) DENIAL OF DEDUCTION.—No deduction shall be allowed 
under this chapter for any tax for which credit is not allowable 
under section 901 by reason of paragraph (1) (determined by 
treating the taxpayer as having elected the benefits of subpart 
A of part III of subchapter N). 
‘‘(e) SPECIAL RULES FOR HYBRID DIVIDENDS.— 
‘‘(1) IN GENERAL.—Subsection (a) shall not apply to any 
dividend received by a United States shareholder from a con-
trolled foreign corporation if the dividend is a hybrid dividend. 
‘‘(2) HYBRID DIVIDENDS OF TIERED CORPORATIONS.—If a con-
trolled foreign corporation with respect to which a domestic 
corporation is a United States shareholder receives a hybrid 
dividend from any other controlled foreign corporation with 
respect to which such domestic corporation is also a United 
States shareholder, then, notwithstanding any other provision 
of this title— 
‘‘(A) the hybrid dividend shall be treated for purposes 
of section 951(a)(1)(A) as subpart F income of the receiving 
controlled foreign corporation for the taxable year of the 
controlled foreign corporation in which the dividend was 
received, and 
‘‘(B) the United States shareholder shall include in 
gross income an amount equal to the shareholder’s pro 
rata share (determined in the same manner as under sec-
tion 951(a)(2)) of the subpart F income described in 
subparagraph (A). 
‘‘(3) DENIAL OF FOREIGN TAX CREDIT, ETC.—The rules of 
subsection (d) shall apply to any hybrid dividend received by, 
or any amount included under paragraph (2) in the gross income 
of, a United States shareholder. 
‘‘(4) HYBRID DIVIDEND.—The term ‘hybrid dividend’ means 
an amount received from a controlled foreign corporation— 
‘‘(A) for which a deduction would be allowed under 
subsection (a) but for this subsection, and 
‘‘(B) for which the controlled foreign corporation 
received a deduction (or other tax benefit) with respect 
to any income, war profits, or excess profits taxes imposed 
by any foreign country or possession of the United States. 
‘‘(f) SPECIAL RULE
FOR PURGING DISTRIBUTIONS
OF PASSIVE 
FOREIGN INVESTMENT COMPANIES.—Any amount which is treated 
as a dividend under section 1291(d)(2)(B) shall not be treated as 
a dividend for purposes of this section. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section, including regulations for 
the treatment of United States shareholders owning stock of a 
specified 10 percent owned foreign corporation through a partner-
ship.’’. 
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131 STAT. 2191 
PUBLIC LAW 115–97—DEC. 22, 2017 
(b) APPLICATION
OF HOLDING PERIOD REQUIREMENT.—Sub-
section (c) of section 246 is amended— 
(1) by striking ‘‘or 245’’ in paragraph (1) and inserting 
‘‘245, or 245A’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(5) SPECIAL RULES FOR FOREIGN SOURCE PORTION OF DIVI-
DENDS RECEIVED FROM SPECIFIED 10-PERCENT OWNED FOREIGN 
CORPORATIONS.— 
‘‘(A) 1-YEAR HOLDING PERIOD REQUIREMENT.—For pur-
poses of section 245A— 
‘‘(i) paragraph (1)(A) shall be applied— 
‘‘(I) by substituting ‘365 days’ for ‘45 days’ 
each place it appears, and 
‘‘(II) by substituting ‘731-day period’ for ‘91- 
day period’, and 
‘‘(ii) paragraph (2) shall not apply. 
‘‘(B) STATUS
MUST
BE
MAINTAINED
DURING
HOLDING 
PERIOD.—For purposes of applying paragraph (1) with 
respect to section 245A, the taxpayer shall be treated as 
holding the stock referred to in paragraph (1) for any 
period only if— 
‘‘(i) the specified 10-percent owned foreign corpora-
tion referred to in section 245A(a) is a specified 10- 
percent owned foreign corporation at all times during 
such period, and 
‘‘(ii) the taxpayer is a United States shareholder 
with respect to such specified 10-percent owned foreign 
corporation at all times during such period.’’. 
(c) APPLICATION OF RULES GENERALLY APPLICABLE TO DEDUC-
TIONS FOR DIVIDENDS RECEIVED.— 
(1) TREATMENT
OF
DIVIDENDS
FROM
CERTAIN
CORPORA-
TIONS.—Paragraph (1) of section 246(a) is amended by striking 
‘‘and 245’’ and inserting ‘‘245, and 245A’’. 
(2) COORDINATION WITH SECTION 1059.—Subparagraph (B) 
of section 1059(b)(2) is amended by striking ‘‘or 245’’ and 
inserting ‘‘245, or 245A’’. 
(d) COORDINATION WITH FOREIGN TAX CREDIT LIMITATION.— 
Subsection (b) of section 904 is amended by adding at the end 
the following new paragraph: 
‘‘(5) TREATMENT OF DIVIDENDS FOR WHICH DEDUCTION IS 
ALLOWED UNDER SECTION 245A.—For purposes of subsection (a), 
in the case of a domestic corporation which is a United States 
shareholder with respect to a specified 10-percent owned foreign 
corporation, such shareholder’s taxable income from sources 
without the United States (and entire taxable income) shall 
be determined without regard to— 
‘‘(A) the foreign-source portion of any dividend received 
from such foreign corporation, and 
‘‘(B) any deductions properly allocable or apportioned 
to— 
‘‘(i) income (other than amounts includible under 
section 951(a)(1) or 951A(a)) with respect to stock of 
such specified 10-percent owned foreign corporation, 
or 
‘‘(ii) such stock to the extent income with respect 
to such stock is other than amounts includible under 
section 951(a)(1) or 951A(a). 
26 USC 246. 
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131 STAT. 2192 
PUBLIC LAW 115–97—DEC. 22, 2017 
Any term which is used in section 245A and in this paragraph 
shall have the same meaning for purposes of this paragraph 
as when used in such section.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Subsection (b) of section 951 is amended by striking 
‘‘subpart’’ and inserting ‘‘title’’. 
(2) Subsection (a) of section 957 is amended by striking 
‘‘subpart’’ in the matter preceding paragraph (1) and inserting 
‘‘title’’. 
(3) The table of sections for part VIII of subchapter B 
of chapter 1 is amended by inserting after the item relating 
to section 245 the following new item: 
‘‘Sec. 245A. Deduction for foreign source-portion of dividends received by domestic 
corporations from certain 10-percent owned foreign corporations.’’. 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions made after (and, in the case of the 
amendments made by subsection (d), deductions with respect to 
taxable years ending after) December 31, 2017. 
SEC. 14102. SPECIAL RULES RELATING TO SALES OR TRANSFERS 
INVOLVING SPECIFIED 10-PERCENT OWNED FOREIGN 
CORPORATIONS. 
(a) SALES BY UNITED STATES PERSONS OF STOCK.— 
(1) IN GENERAL.—Section 1248 is amended by redesignating 
subsection (j) as subsection (k) and by inserting after subsection 
(i) the following new subsection: 
‘‘(j) COORDINATION WITH DIVIDENDS RECEIVED DEDUCTION.— 
In the case of the sale or exchange by a domestic corporation 
of stock in a foreign corporation held for 1 year or more, any 
amount received by the domestic corporation which is treated as 
a dividend by reason of this section shall be treated as a dividend 
for purposes of applying section 245A.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to sales or exchanges after December 31, 
2017. 
(b) BASIS IN SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA-
TION REDUCED BY NONTAXED PORTION OF DIVIDEND FOR PURPOSES 
OF DETERMINING LOSS.— 
(1) IN GENERAL.—Section 961 is amended by adding at 
the end the following new subsection: 
‘‘(d) BASIS IN SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA-
TION REDUCED BY NONTAXED PORTION OF DIVIDEND FOR PURPOSES 
OF DETERMINING LOSS.—If a domestic corporation received a divi-
dend from a specified 10-percent owned foreign corporation (as 
defined in section 245A) in any taxable year, solely for purposes 
of determining loss on any disposition of stock of such foreign 
corporation in such taxable year or any subsequent taxable year, 
the basis of such domestic corporation in such stock shall be reduced 
(but not below zero) by the amount of any deduction allowable 
to such domestic corporation under section 245A with respect to 
such stock except to the extent such basis was reduced under 
section 1059 by reason of a dividend for which such a deduction 
was allowable.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to distributions made after December 31, 
2017. 
(c) SALE BY A CFC OF A LOWER TIER CFC.— 
26 USC 961 note. 
26 USC 1248 
note. 
26 USC 245A 
note. 
26 USC 
prec. 241. 
26 USC 951. 
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131 STAT. 2193 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) IN GENERAL.—Section 964(e) is amended by adding at 
the end the following new paragraph: 
‘‘(4) COORDINATION
WITH
DIVIDENDS
RECEIVED
DEDUC-
TION.— 
‘‘(A) IN GENERAL.—If, for any taxable year of a con-
trolled foreign corporation beginning after December 31, 
2017, any amount is treated as a dividend under paragraph 
(1) by reason of a sale or exchange by the controlled foreign 
corporation of stock in another foreign corporation held 
for 1 year or more, then, notwithstanding any other provi-
sion of this title— 
‘‘(i) the foreign-source portion of such dividend 
shall be treated for purposes of section 951(a)(1)(A) 
as subpart F income of the selling controlled foreign 
corporation for such taxable year, 
‘‘(ii) a United States shareholder with respect to 
the selling controlled foreign corporation shall include 
in gross income for the taxable year of the shareholder 
with or within which such taxable year of the controlled 
foreign corporation ends an amount equal to the share-
holder’s pro rata share (determined in the same 
manner as under section 951(a)(2)) of the amount 
treated as subpart F income under clause (i), and 
‘‘(iii) the deduction under section 245A(a) shall 
be allowable to the United States shareholder with 
respect to the subpart F income included in gross 
income under clause (ii) in the same manner as if 
such subpart F income were a dividend received by 
the shareholder from the selling controlled foreign cor-
poration. 
‘‘(B) APPLICATION OF BASIS OR SIMILAR ADJUSTMENT.— 
For purposes of this title, in the case of a sale or exchange 
by a controlled foreign corporation of stock in another for-
eign corporation in a taxable year of the selling controlled 
foreign corporation beginning after December 31, 2017, 
rules similar to the rules of section 961(d) shall apply. 
‘‘(C) FOREIGN-SOURCE PORTION.—For purposes of this 
paragraph, the foreign-source portion of any amount 
treated as a dividend under paragraph (1) shall be deter-
mined in the same manner as under section 245A(c).’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to sales or exchanges after December 31, 
2017. 
(d) TREATMENT OF FOREIGN BRANCH LOSSES TRANSFERRED TO 
SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATIONS.— 
(1) IN
GENERAL.—Part II of subchapter B of chapter 1 
is amended by adding at the end the following new section: 
‘‘SEC. 91. CERTAIN FOREIGN BRANCH LOSSES TRANSFERRED TO 
SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—If a domestic corporation transfers substan-
tially all of the assets of a foreign branch (within the meaning 
of section 367(a)(3)(C), as in effect before the date of the enactment 
of the Tax Cuts and Jobs Act) to a specified 10-percent owned 
foreign corporation (as defined in section 245A) with respect to 
which it is a United States shareholder after such transfer, such 
domestic corporation shall include in gross income for the taxable 
26 USC 91. 
26 USC 964 note. 
26 USC 964. 
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131 STAT. 2194 
PUBLIC LAW 115–97—DEC. 22, 2017 
year which includes such transfer an amount equal to the trans-
ferred loss amount with respect to such transfer. 
‘‘(b) TRANSFERRED LOSS AMOUNT.—For purposes of this section, 
the term ‘transferred loss amount’ means, with respect to any 
transfer of substantially all of the assets of a foreign branch, the 
excess (if any) of— 
‘‘(1) the sum of losses— 
‘‘(A) which were incurred by the foreign branch after 
December 31, 2017, and before the transfer, and 
‘‘(B) with respect to which a deduction was allowed 
to the taxpayer, over 
‘‘(2) the sum of— 
‘‘(A) any taxable income of such branch for a taxable 
year after the taxable year in which the loss was incurred 
and through the close of the taxable year of the transfer, 
and 
‘‘(B) any amount which is recognized under section 
904(f)(3) on account of the transfer. 
‘‘(c) REDUCTION FOR RECOGNIZED GAINS.—The transferred loss 
amount shall be reduced (but not below zero) by the amount of 
gain recognized by the taxpayer on account of the transfer (other 
than amounts taken into account under subsection (b)(2)(B)). 
‘‘(d) SOURCE OF INCOME.—Amounts included in gross income 
under this section shall be treated as derived from sources within 
the United States. 
‘‘(e) BASIS ADJUSTMENTS.—Consistent with such regulations or 
other guidance as the Secretary shall prescribe, proper adjustments 
shall be made in the adjusted basis of the taxpayer’s stock in 
the specified 10-percent owned foreign corporation to which the 
transfer is made, and in the transferee’s adjusted basis in the 
property transferred, to reflect amounts included in gross income 
under this section.’’. 
(2) CLERICAL AMENDMENT.—The table of sections for part 
II of subchapter B of chapter 1 is amended by adding at 
the end the following new item: 
‘‘Sec. 91. Certain foreign branch losses transferred to specified 10-percent owned 
foreign corporations.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to transfers after December 31, 2017. 
(4) TRANSITION
RULE.—The amount of gain taken into 
account under section 91(c) of the Internal Revenue Code of 
1986, as added by this subsection, shall be reduced by the 
amount of gain which would be recognized under section 
367(a)(3)(C) (determined without regard to the amendments 
made by subsection (e)) with respect to losses incurred before 
January 1, 2018. 
(e) REPEAL OF ACTIVE TRADE OR BUSINESS EXCEPTION UNDER 
SECTION 367.— 
(1) IN GENERAL.—Section 367(a) is amended by striking 
paragraph (3) and redesignating paragraphs (4), (5), and (6) 
as paragraphs (3), (4), and (5), respectively. 
(2) CONFORMING
AMENDMENTS.—Section 367(a)(4), as 
redesignated by paragraph (1), is amended— 
(A) by striking ‘‘Paragraphs (2) and (3)’’ and inserting 
‘‘Paragraph (2)’’, and 
26 USC 367. 
26 USC 91 note. 
26 USC 91 note. 
26 USC 
prec. 71. 
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131 STAT. 2195 
PUBLIC LAW 115–97—DEC. 22, 2017 
(B) by striking ‘‘PARAGRAPHS (2) AND (3)’’ in the heading 
and inserting ‘‘PARAGRAPH (2)’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to transfers after December 31, 2017. 
SEC. 14103. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
TAXATION. 
(a) IN GENERAL.—Section 965 is amended to read as follows: 
‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
TAXATION. 
‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME AS SUBPART 
F INCOME.—In the case of the last taxable year of a deferred 
foreign income corporation which begins before January 1, 2018, 
the subpart F income of such foreign corporation (as otherwise 
determined for such taxable year under section 952) shall be 
increased by the greater of— 
‘‘(1) the accumulated post-1986 deferred foreign income 
of such corporation determined as of November 2, 2017, or 
‘‘(2) the accumulated post-1986 deferred foreign income 
of such corporation determined as of December 31, 2017. 
‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN GROSS INCOME OF 
UNITED STATES SHAREHOLDERS OF SPECIFIED FOREIGN CORPORA-
TIONS WITH DEFICITS IN EARNINGS AND PROFITS.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer which is a 
United States shareholder with respect to at least one deferred 
foreign income corporation and at least one E&P deficit foreign 
corporation, the amount which would (but for this subsection) 
be taken into account under section 951(a)(1) by reason of 
subsection (a) as such United States shareholder’s pro rata 
share of the subpart F income of each deferred foreign income 
corporation shall be reduced by the amount of such United 
States shareholder’s aggregate foreign E&P deficit which is 
allocated under paragraph (2) to such deferred foreign income 
corporation. 
‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P DEFICIT.— 
The aggregate foreign E&P deficit of any United States share-
holder shall be allocated among the deferred foreign income 
corporations of such United States shareholder in an amount 
which bears the same proportion to such aggregate as— 
‘‘(A) such United States shareholder’s pro rata share 
of the accumulated post-1986 deferred foreign income of 
each such deferred foreign income corporation, bears to 
‘‘(B) the aggregate of such United States shareholder’s 
pro rata share of the accumulated post-1986 deferred for-
eign income of all deferred foreign income corporations 
of such United States shareholder. 
‘‘(3) DEFINITIONS RELATED TO E&P DEFICITS.—For purposes 
of this subsection— 
‘‘(A) AGGREGATE FOREIGN E&P DEFICIT.— 
‘‘(i) IN GENERAL.—The term ‘aggregate foreign E&P 
deficit’ means, with respect to any United States share-
holder, the lesser of— 
‘‘(I) the aggregate of such shareholder’s pro 
rata shares of the specified E&P deficits of the 
26 USC 965. 
26 USC 367 note. 
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131 STAT. 2196 
PUBLIC LAW 115–97—DEC. 22, 2017 
E&P deficit foreign corporations of such share-
holder, or 
‘‘(II) the amount determined under paragraph 
(2)(B). 
‘‘(ii) ALLOCATION
OF
DEFICIT.—If the amount 
described in clause (i)(II) is less than the amount 
described in clause (i)(I), then the shareholder shall 
designate, in such form and manner as the Secretary 
determines— 
‘‘(I) the amount of the specified E&P deficit 
which is to be taken into account for each E&P 
deficit corporation with respect to the taxpayer, 
and 
‘‘(II) in the case of an E&P deficit corporation 
which has a qualified deficit (as defined in section 
952), the portion (if any) of the deficit taken into 
account under subclause (I) which is attributable 
to a qualified deficit, including the qualified activi-
ties to which such portion is attributable. 
‘‘(B) E&P DEFICIT FOREIGN CORPORATION.—The term 
‘E&P deficit foreign corporation’ means, with respect to 
any taxpayer, any specified foreign corporation with respect 
to which such taxpayer is a United States shareholder, 
if, as of November 2, 2017— 
‘‘(i) such specified foreign corporation has a deficit 
in post-1986 earnings and profits, 
‘‘(ii) such corporation was a specified foreign cor-
poration, and 
‘‘(iii) such taxpayer was a United States share-
holder of such corporation. 
‘‘(C) SPECIFIED E&P DEFICIT.—The term ‘specified E&P 
deficit’ means, with respect to any E&P deficit foreign 
corporation, the amount of the deficit referred to in 
subparagraph (B). 
‘‘(4) TREATMENT
OF
EARNINGS
AND
PROFITS
IN
FUTURE 
YEARS.— 
‘‘(A) REDUCED EARNINGS AND PROFITS TREATED AS PRE-
VIOUSLY TAXED INCOME WHEN DISTRIBUTED.—For purposes 
of applying section 959 in any taxable year beginning with 
the taxable year described in subsection (a), with respect 
to any United States shareholder of a deferred foreign 
income corporation, an amount equal to such shareholder’s 
reduction under paragraph (1) which is allocated to such 
deferred foreign income corporation under this subsection 
shall be treated as an amount which was included in the 
gross income of such United States shareholder under sec-
tion 951(a). 
‘‘(B) E&P DEFICITS.—For purposes of this title, with 
respect to any taxable year beginning with the taxable 
year described in subsection (a), a United States share-
holder’s pro rata share of the earnings and profits of any 
E&P deficit foreign corporation under this subsection shall 
be increased by the amount of the specified E&P deficit 
of such corporation taken into account by such shareholder 
under paragraph (1), and, for purposes of section 952, such 
increase shall be attributable to the same activity to which 
the deficit so taken into account was attributable. 
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131 STAT. 2197 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(5) NETTING
AMONG
UNITED
STATES
SHAREHOLDERS
IN 
SAME AFFILIATED GROUP.— 
‘‘(A) IN GENERAL.—In the case of any affiliated group 
which includes at least one E&P net surplus shareholder 
and one E&P net deficit shareholder, the amount which 
would (but for this paragraph) be taken into account under 
section 951(a)(1) by reason of subsection (a) by each such 
E&P net surplus shareholder shall be reduced (but not 
below zero) by such shareholder’s applicable share of the 
affiliated group’s aggregate unused E&P deficit. 
‘‘(B) E&P NET SURPLUS SHAREHOLDER.—For purposes 
of this paragraph, the term ‘E&P net surplus shareholder’ 
means any United States shareholder which would (deter-
mined without regard to this paragraph) take into account 
an amount greater than zero under section 951(a)(1) by 
reason of subsection (a). 
‘‘(C) E&P NET DEFICIT SHAREHOLDER.—For purposes 
of this paragraph, the term ‘E&P net deficit shareholder’ 
means any United States shareholder if— 
‘‘(i) the aggregate foreign E&P deficit with respect 
to such shareholder (as defined in paragraph (3)(A) 
without regard to clause (i)(II) thereof), exceeds 
‘‘(ii) the amount which would (but for this sub-
section) be taken into account by such shareholder 
under section 951(a)(1) by reason of subsection (a). 
‘‘(D) AGGREGATE UNUSED E&P DEFICIT.—For purposes 
of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘aggregate unused 
E&P deficit’ means, with respect to any affiliated 
group, the lesser of— 
‘‘(I) the sum of the excesses described in 
subparagraph (C), determined with respect to each 
E&P net deficit shareholder in such group, or 
‘‘(II) the amount determined under subpara-
graph (E)(ii). 
‘‘(ii) REDUCTION WITH RESPECT TO E&P NET DEFICIT 
SHAREHOLDERS WHICH ARE NOT WHOLLY OWNED BY THE 
AFFILIATED GROUP.—If the group ownership percentage 
of any E&P net deficit shareholder is less than 100 
percent, the amount of the excess described in subpara-
graph (C) which is taken into account under clause 
(i)(I) with respect to such E&P net deficit shareholder 
shall be such group ownership percentage of such 
amount. 
‘‘(E) APPLICABLE SHARE.—For purposes of this para-
graph, the term ‘applicable share’ means, with respect to 
any E&P net surplus shareholder in any affiliated group, 
the amount which bears the same proportion to such 
group’s aggregate unused E&P deficit as— 
‘‘(i) the product of— 
‘‘(I) 
such 
shareholder’s 
group 
ownership 
percentage, multiplied by 
‘‘(II) the amount which would (but for this 
paragraph) be taken into account under section 
951(a)(1) by reason of subsection (a) by such share-
holder, bears to 
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131 STAT. 2198 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) the aggregate amount determined under 
clause (i) with respect to all E&P net surplus share-
holders in such group. 
‘‘(F) GROUP OWNERSHIP PERCENTAGE.—For purposes of 
this paragraph, the term ‘group ownership percentage’ 
means, with respect to any United States shareholder in 
any affiliated group, the percentage of the value of the 
stock of such United States shareholder which is held 
by other includible corporations in such affiliated group. 
Notwithstanding the preceding sentence, the group owner-
ship percentage of the common parent of the affiliated 
group is 100 percent. Any term used in this subparagraph 
which is also used in section 1504 shall have the same 
meaning as when used in such section. 
‘‘(c) APPLICATION OF PARTICIPATION EXEMPTION TO INCLUDED 
INCOME.— 
‘‘(1) IN GENERAL.—In the case of a United States share-
holder of a deferred foreign income corporation, there shall 
be allowed as a deduction for the taxable year in which an 
amount is included in the gross income of such United States 
shareholder under section 951(a)(1) by reason of this section 
an amount equal to the sum of— 
‘‘(A) the United States shareholder’s 8 percent rate 
equivalent percentage of the excess (if any) of— 
‘‘(i) the amount so included as gross income, over 
‘‘(ii) the amount of such United States share-
holder’s aggregate foreign cash position, plus 
‘‘(B) the United States shareholder’s 15.5 percent rate 
equivalent percentage of so much of the amount described 
in subparagraph (A)(ii) as does not exceed the amount 
described in subparagraph (A)(i). 
‘‘(2) 8 AND 15.5 PERCENT RATE EQUIVALENT PERCENTAGES.— 
For purposes of this subsection— 
‘‘(A) 8 PERCENT RATE EQUIVALENT PERCENTAGE.—The 
term ‘8 percent rate equivalent percentage’ means, with 
respect to any United States shareholder for any taxable 
year, the percentage which would result in the amount 
to which such percentage applies being subject to a 8 
percent rate of tax determined by only taking into account 
a deduction equal to such percentage of such amount and 
the highest rate of tax specified in section 11 for such 
taxable year. In the case of any taxable year of a United 
States shareholder to which section 15 applies, the highest 
rate of tax under section 11 before the effective date of 
the change in rates and the highest rate of tax under 
section 11 after the effective date of such change shall 
each be taken into account under the preceding sentence 
in the same proportions as the portion of such taxable 
year which is before and after such effective date, respec-
tively. 
‘‘(B) 15.5 PERCENT RATE EQUIVALENT PERCENTAGE.— 
The term ‘15.5 percent rate equivalent percentage’ means, 
with respect to any United States shareholder for any 
taxable year, the percentage determined under subpara-
graph (A) applied by substituting ‘15.5 percent rate of 
tax’ for ‘8 percent rate of tax’. 
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131 STAT. 2199 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(3) AGGREGATE FOREIGN CASH POSITION.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The term ‘aggregate foreign cash 
position’ means, with respect to any United States share-
holder, the greater of— 
‘‘(i) the aggregate of such United States share-
holder’s pro rata share of the cash position of each 
specified foreign corporation of such United States 
shareholder determined as of the close of the last tax-
able year of such specified foreign corporation which 
begins before January 1, 2018, or 
‘‘(ii) one half of the sum of— 
‘‘(I) the aggregate described in clause (i) deter-
mined as of the close of the last taxable year 
of each such specified foreign corporation which 
ends before November 2, 2017, plus 
‘‘(II) the aggregate described in clause (i) deter-
mined as of the close of the taxable year of each 
such specified foreign corporation which precedes 
the taxable year referred to in subclause (I). 
‘‘(B) CASH POSITION.—For purposes of this paragraph, 
the cash position of any specified foreign corporation is 
the sum of— 
‘‘(i) cash held by such foreign corporation, 
‘‘(ii) the net accounts receivable of such foreign 
corporation, plus 
‘‘(iii) the fair market value of the following assets 
held by such corporation: 
‘‘(I) Personal property which is of a type that 
is actively traded and for which there is an estab-
lished financial market. 
‘‘(II) Commercial paper, certificates of deposit, 
the securities of the Federal government and of 
any State or foreign government. 
‘‘(III) Any foreign currency. 
‘‘(IV) Any obligation with a term of less than 
one year. 
‘‘(V) Any asset which the Secretary identifies 
as being economically equivalent to any asset 
described in this subparagraph. 
‘‘(C) NET ACCOUNTS RECEIVABLE.—For purposes of this 
paragraph, the term ‘net accounts receivable’ means, with 
respect to any specified foreign corporation, the excess (if 
any) of— 
‘‘(i) such corporation’s accounts receivable, over 
‘‘(ii) such corporation’s accounts payable (deter-
mined consistent with the rules of section 461). 
‘‘(D) PREVENTION OF DOUBLE COUNTING.—Cash posi-
tions of a specified foreign corporation described in clause 
(ii), (iii)(I), or (iii)(IV) of subparagraph (B) shall not be 
taken into account by a United States shareholder under 
subparagraph (A) to the extent that such United States 
shareholder demonstrates to the satisfaction of the Sec-
retary that such amount is so taken into account by such 
United States shareholder with respect to another specified 
foreign corporation. 
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131 STAT. 2200 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(E) CASH POSITIONS OF CERTAIN NON-CORPORATE ENTI-
TIES TAKEN INTO ACCOUNT.—An entity (other than a cor-
poration) shall be treated as a specified foreign corporation 
of a United States shareholder for purposes of determining 
such United States shareholder’s aggregate foreign cash 
position if any interest in such entity is held by a specified 
foreign corporation of such United States shareholder 
(determined after application of this subparagraph) and 
such entity would be a specified foreign corporation of 
such United States shareholder if such entity were a foreign 
corporation. 
‘‘(F) ANTI-ABUSE.—If the Secretary determines that a 
principal purpose of any transaction was to reduce the 
aggregate foreign cash position taken into account under 
this subsection, such transaction shall be disregarded for 
purposes of this subsection. 
‘‘(d) DEFERRED FOREIGN INCOME CORPORATION; ACCUMULATED 
POST-1986 DEFERRED FOREIGN INCOME.—For purposes of this sec-
tion— 
‘‘(1) DEFERRED FOREIGN INCOME CORPORATION.—The term 
‘deferred foreign income corporation’ means, with respect to 
any United States shareholder, any specified foreign corporation 
of such United States shareholder which has accumulated post- 
1986 deferred foreign income (as of the date referred to in 
paragraph (1) or (2) of subsection (a)) greater than zero. 
‘‘(2) ACCUMULATED POST-1986 DEFERRED FOREIGN INCOME.— 
The term ‘accumulated post-1986 deferred foreign income’ 
means the post-1986 earnings and profits except to the extent 
such earnings— 
‘‘(A) are attributable to income of the specified foreign 
corporation which is effectively connected with the conduct 
of a trade or business within the United States and subject 
to tax under this chapter, or 
‘‘(B) in the case of a controlled foreign corporation, 
if distributed, would be excluded from the gross income 
of a United States shareholder under section 959. 
To the extent provided in regulations or other guidance pre-
scribed by the Secretary, in the case of any controlled foreign 
corporation which has shareholders which are not United States 
shareholders, accumulated post-1986 deferred foreign income 
shall be appropriately reduced by amounts which would be 
described in subparagraph (B) if such shareholders were United 
States shareholders. 
‘‘(3) POST-1986 EARNINGS AND PROFITS.—The term ‘post-1986 
earnings and profits’ means the earnings and profits of the 
foreign corporation (computed in accordance with sections 
964(a) and 986, and by only taking into account periods when 
the foreign corporation was a specified foreign corporation) 
accumulated in taxable years beginning after December 31, 
1986, and determined— 
‘‘(A) as of the date referred to in paragraph (1) or 
(2) of subsection (a), whichever is applicable with respect 
to such foreign corporation, and 
‘‘(B) without diminution by reason of dividends distrib-
uted during the taxable year described in subsection (a) 
other than dividends distributed to another specified for-
eign corporation. 
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131 STAT. 2201 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(e) SPECIFIED FOREIGN CORPORATION.— 
‘‘(1) IN GENERAL.—For purposes of this section, the term 
‘specified foreign corporation’ means— 
‘‘(A) any controlled foreign corporation, and 
‘‘(B) any foreign corporation with respect to which one 
or more domestic corporations is a United States share-
holder. 
‘‘(2) APPLICATION TO CERTAIN FOREIGN CORPORATIONS.—For 
purposes of sections 951 and 961, a foreign corporation 
described in paragraph (1)(B) shall be treated as a controlled 
foreign corporation solely for purposes of taking into account 
the subpart F income of such corporation under subsection 
(a) (and for purposes of applying subsection (f)). 
‘‘(3) EXCLUSION OF PASSIVE FOREIGN INVESTMENT COMPA-
NIES.—Such term shall not include any corporation which is 
a passive foreign investment company (as defined in section 
1297) with respect to the shareholder and which is not a 
controlled foreign corporation. 
‘‘(f) DETERMINATIONS OF PRO RATA SHARE.— 
‘‘(1) IN GENERAL.—For purposes of this section, the deter-
mination of any United States shareholder’s pro rata share 
of any amount with respect to any specified foreign corporation 
shall be determined under rules similar to the rules of section 
951(a)(2) by treating such amount in the same manner as 
subpart F income (and by treating such specified foreign cor-
poration as a controlled foreign corporation). 
‘‘(2) SPECIAL RULES.—The portion which is included in the 
income of a United States shareholder under section 951(a)(1) 
by reason of subsection (a) which is equal to the deduction 
allowed under subsection (c) by reason of such inclusion— 
‘‘(A) shall be treated as income exempt from tax for 
purposes of sections 705(a)(1)(B) and 1367(a)(1)(A), and 
‘‘(B) shall not be treated as income exempt from tax 
for purposes of determining whether an adjustment shall 
be made to an accumulated adjustment account under sec-
tion 1368(e)(1)(A). 
‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed under section 
901 for the applicable percentage of any taxes paid or accrued 
(or treated as paid or accrued) with respect to any amount 
for which a deduction is allowed under this section. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of this sub-
section, the term ‘applicable percentage’ means the amount 
(expressed as a percentage) equal to the sum of— 
‘‘(A) 0.771 multiplied by the ratio of— 
‘‘(i) the excess to which subsection (c)(1)(A) applies, 
divided by 
‘‘(ii) the sum of such excess plus the amount to 
which subsection (c)(1)(B) applies, plus 
‘‘(B) 0.557 multiplied by the ratio of— 
‘‘(i) the amount to which subsection (c)(1)(B) 
applies, divided by 
‘‘(ii) the sum described in subparagraph (A)(ii). 
‘‘(3) DENIAL OF DEDUCTION.—No deduction shall be allowed 
under this chapter for any tax for which credit is not allowable 
under section 901 by reason of paragraph (1) (determined by 
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131 STAT. 2202 
PUBLIC LAW 115–97—DEC. 22, 2017 
treating the taxpayer as having elected the benefits of subpart 
A of part III of subchapter N). 
‘‘(4) COORDINATION WITH SECTION 78.—With respect to the 
taxes treated as paid or accrued by a domestic corporation 
with respect to amounts which are includible in gross income 
of such domestic corporation by reason of this section, section 
78 shall apply only to so much of such taxes as bears the 
same proportion to the amount of such taxes as— 
‘‘(A) the excess of— 
‘‘(i) the amounts which are includible in gross 
income of such domestic corporation by reason of this 
section, over 
‘‘(ii) the deduction allowable under subsection (c) 
with respect to such amounts, bears to 
‘‘(B) such amounts. 
‘‘(h) ELECTION TO PAY LIABILITY IN INSTALLMENTS.— 
‘‘(1) IN GENERAL.—In the case of a United States share-
holder of a deferred foreign income corporation, such United 
States shareholder may elect to pay the net tax liability under 
this section in 8 installments of the following amounts: 
‘‘(A) 8 percent of the net tax liability in the case of 
each of the first 5 of such installments, 
‘‘(B) 15 percent of the net tax liability in the case 
of the 6th such installment, 
‘‘(C) 20 percent of the net tax liability in the case 
of the 7th such installment, and 
‘‘(D) 25 percent of the net tax liability in the case 
of the 8th such installment. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.—If an election 
is made under paragraph (1), the first installment shall be 
paid on the due date (determined without regard to any exten-
sion of time for filing the return) for the return of tax for 
the taxable year described in subsection (a) and each succeeding 
installment shall be paid on the due date (as so determined) 
for the return of tax for the taxable year following the taxable 
year with respect to which the preceding installment was made. 
‘‘(3) ACCELERATION OF PAYMENT.—If there is an addition 
to tax for failure to timely pay any installment required under 
this subsection, a liquidation or sale of substantially all the 
assets of the taxpayer (including in a title 11 or similar case), 
a cessation of business by the taxpayer, or any similar cir-
cumstance, then the unpaid portion of all remaining install-
ments shall be due on the date of such event (or in the case 
of a title 11 or similar case, the day before the petition is 
filed). The preceding sentence shall not apply to the sale of 
substantially all the assets of a taxpayer to a buyer if such 
buyer enters into an agreement with the Secretary under which 
such buyer is liable for the remaining installments due under 
this subsection in the same manner as if such buyer were 
the taxpayer. 
‘‘(4) PRORATION OF DEFICIENCY TO INSTALLMENTS.—If an 
election is made under paragraph (1) to pay the net tax liability 
under this section in installments and a deficiency has been 
assessed with respect to such net tax liability, the deficiency 
shall be prorated to the installments payable under paragraph 
(1). The part of the deficiency so prorated to any installment 
the date for payment of which has not arrived shall be collected 
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131 STAT. 2203 
PUBLIC LAW 115–97—DEC. 22, 2017 
at the same time as, and as a part of, such installment. The 
part of the deficiency so prorated to any installment the date 
for payment of which has arrived shall be paid upon notice 
and demand from the Secretary. This subsection shall not apply 
if the deficiency is due to negligence, to intentional disregard 
of rules and regulations, or to fraud with intent to evade 
tax. 
‘‘(5) ELECTION.—Any election under paragraph (1) shall 
be made not later than the due date for the return of tax 
for the taxable year described in subsection (a) and shall be 
made in such manner as the Secretary shall provide. 
‘‘(6) NET TAX LIABILITY UNDER THIS SECTION.—For purposes 
of this subsection— 
‘‘(A) IN GENERAL.—The net tax liability under this sec-
tion with respect to any United States shareholder is the 
excess (if any) of— 
‘‘(i) such taxpayer’s net income tax for the taxable 
year in which an amount is included in the gross 
income of such United States shareholder under section 
951(a)(1) by reason of this section, over 
‘‘(ii) such taxpayer’s net income tax for such tax-
able year determined— 
‘‘(I) without regard to this section, and 
‘‘(II) without regard to any income or deduction 
properly attributable to a dividend received by 
such United States shareholder from any deferred 
foreign income corporation. 
‘‘(B) NET
INCOME
TAX.—The term ‘net income tax’ 
means the regular tax liability reduced by the credits 
allowed under subparts A, B, and D of part IV of subchapter 
A. 
‘‘(i) SPECIAL RULES FOR S CORPORATION SHAREHOLDERS.— 
‘‘(1) IN GENERAL.—In the case of any S corporation which 
is a United States shareholder of a deferred foreign income 
corporation, each shareholder of such S corporation may elect 
to defer payment of such shareholder’s net tax liability under 
this section with respect to such S corporation until the share-
holder’s taxable year which includes the triggering event with 
respect to such liability. Any net tax liability payment of which 
is deferred under the preceding sentence shall be assessed 
on the return of tax as an addition to tax in the shareholder’s 
taxable year which includes such triggering event. 
‘‘(2) TRIGGERING EVENT.— 
‘‘(A) IN GENERAL.—In the case of any shareholder’s 
net tax liability under this section with respect to any 
S corporation, the triggering event with respect to such 
liability is whichever of the following occurs first: 
‘‘(i) Such corporation ceases to be an S corporation 
(determined as of the first day of the first taxable 
year that such corporation is not an S corporation). 
‘‘(ii) A liquidation or sale of substantially all the 
assets of such S corporation (including in a title 11 
or similar case), a cessation of business by such S 
corporation, such S corporation ceases to exist, or any 
similar circumstance. 
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131 STAT. 2204 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(iii) A transfer of any share of stock in such 
S corporation by the taxpayer (including by reason 
of death, or otherwise). 
‘‘(B) PARTIAL
TRANSFERS
OF
STOCK.—In the case of 
a transfer of less than all of the taxpayer’s shares of stock 
in the S corporation, such transfer shall only be a triggering 
event with respect to so much of the taxpayer’s net tax 
liability under this section with respect to such S corpora-
tion as is properly allocable to such stock. 
‘‘(C) TRANSFER OF LIABILITY.—A transfer described in 
clause (iii) of subparagraph (A) shall not be treated as 
a triggering event if the transferee enters into an agree-
ment with the Secretary under which such transferee is 
liable for net tax liability with respect to such stock in 
the same manner as if such transferee were the taxpayer. 
‘‘(3) NET TAX LIABILITY.—A shareholder’s net tax liability 
under this section with respect to any S corporation is the 
net tax liability under this section which would be determined 
under subsection (h)(6) if the only subpart F income taken 
into account by such shareholder by reason of this section 
were allocations from such S corporation. 
‘‘(4) ELECTION
TO
PAY
DEFERRED
LIABILITY
IN
INSTALL-
MENTS.—In the case of a taxpayer which elects to defer payment 
under paragraph (1)— 
‘‘(A) subsection (h) shall be applied separately with 
respect to the liability to which such election applies, 
‘‘(B) an election under subsection (h) with respect to 
such liability shall be treated as timely made if made 
not later than the due date for the return of tax for the 
taxable year in which the triggering event with respect 
to such liability occurs, 
‘‘(C) the first installment under subsection (h) with 
respect to such liability shall be paid not later than such 
due date (but determined without regard to any extension 
of time for filing the return), and 
‘‘(D) if the triggering event with respect to any net 
tax liability is described in paragraph (2)(A)(ii), an election 
under subsection (h) with respect to such liability may 
be made only with the consent of the Secretary. 
‘‘(5) JOINT AND SEVERAL LIABILITY OF S CORPORATION.— 
If any shareholder of an S corporation elects to defer payment 
under paragraph (1), such S corporation shall be jointly and 
severally liable for such payment and any penalty, addition 
to tax, or additional amount attributable thereto. 
‘‘(6) EXTENSION
OF
LIMITATION
ON
COLLECTION.—Any 
limitation on the time period for the collection of a liability 
deferred under this subsection shall not be treated as beginning 
before the date of the triggering event with respect to such 
liability. 
‘‘(7) ANNUAL REPORTING OF NET TAX LIABILITY.— 
‘‘(A) IN GENERAL.—Any shareholder of an S corporation 
which makes an election under paragraph (1) shall report 
the amount of such shareholder’s deferred net tax liability 
on such shareholder’s return of tax for the taxable year 
for which such election is made and on the return of 
tax for each taxable year thereafter until such amount 
has been fully assessed on such returns. 
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131 STAT. 2205 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) DEFERRED NET TAX LIABILITY.—For purposes of 
this paragraph, the term ‘deferred net tax liability’ means, 
with respect to any taxable year, the amount of net tax 
liability payment of which has been deferred under para-
graph (1) and which has not been assessed on a return 
of tax for any prior taxable year. 
‘‘(C) FAILURE TO REPORT.—In the case of any failure 
to report any amount required to be reported under 
subparagraph (A) with respect to any taxable year before 
the due date for the return of tax for such taxable year, 
there shall be assessed on such return as an addition 
to tax 5 percent of such amount. 
‘‘(8) ELECTION.—Any election under paragraph (1)— 
‘‘(A) shall be made by the shareholder of the S corpora-
tion not later than the due date for such shareholder’s 
return of tax for the taxable year which includes the close 
of the taxable year of such S corporation in which the 
amount described in subsection (a) is taken into account, 
and 
‘‘(B) shall be made in such manner as the Secretary 
shall provide. 
‘‘(j) REPORTING BY S CORPORATION.—Each S corporation which 
is a United States shareholder of a specified foreign corporation 
shall report in its return of tax under section 6037(a) the amount 
includible in its gross income for such taxable year by reason 
of this section and the amount of the deduction allowable by sub-
section (c). Any copy provided to a shareholder under section 6037(b) 
shall include a statement of such shareholder’s pro rata share 
of such amounts. 
‘‘(k) EXTENSION
OF LIMITATION
ON ASSESSMENT.—Notwith-
standing section 6501, the limitation on the time period for the 
assessment of the net tax liability under this section (as defined 
in subsection (h)(6)) shall not expire before the date that is 6 
years after the return for the taxable year described in such sub-
section was filed. 
‘‘(l) RECAPTURE FOR EXPATRIATED ENTITIES.— 
‘‘(1) IN GENERAL.—If a deduction is allowed under sub-
section (c) to a United States shareholder and such shareholder 
first becomes an expatriated entity at any time during the 
10-year period beginning on the date of the enactment of the 
Tax Cuts and Jobs Act (with respect to a surrogate foreign 
corporation which first becomes a surrogate foreign corporation 
during such period), then— 
‘‘(A) the tax imposed by this chapter shall be increased 
for the first taxable year in which such taxpayer becomes 
an expatriated entity by an amount equal to 35 percent 
of the amount of the deduction allowed under subsection 
(c), and 
‘‘(B) no credits shall be allowed against the increase 
in tax under subparagraph (A). 
‘‘(2) EXPATRIATED ENTITY.—For purposes of this subsection, 
the term ‘expatriated entity’ has the same meaning given such 
term under section 7874(a)(2), except that such term shall 
not include an entity if the surrogate foreign corporation with 
respect to the entity is treated as a domestic corporation under 
section 7874(b). 
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131 STAT. 2206 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(3) SURROGATE FOREIGN CORPORATION.—For purposes of 
this subsection, the term ‘surrogate foreign corporation’ has 
the meaning given such term in section 7874(a)(2)(B). 
‘‘(m) SPECIAL RULES FOR UNITED STATES SHAREHOLDERS WHICH 
ARE REAL ESTATE INVESTMENT TRUSTS.— 
‘‘(1) IN GENERAL.—If a real estate investment trust is a 
United States shareholder in 1 or more deferred foreign income 
corporations— 
‘‘(A) any amount required to be taken into account 
under section 951(a)(1) by reason of this section shall not 
be taken into account as gross income of the real estate 
investment trust for purposes of applying paragraphs (2) 
and (3) of section 856(c) to any taxable year for which 
such amount is taken into account under section 951(a)(1), 
and 
‘‘(B) if the real estate investment trust elects the 
application of this subparagraph, notwithstanding sub-
section (a), any amount required to be taken into account 
under section 951(a)(1) by reason of this section shall, 
in lieu of the taxable year in which it would otherwise 
be included in gross income (for purposes of the computa-
tion of real estate investment trust taxable income under 
section 857(b)), be included in gross income as follows: 
‘‘(i) 8 percent of such amount in the case of each 
of the taxable years in the 5-taxable year period begin-
ning with the taxable year in which such amount would 
otherwise be included. 
‘‘(ii) 15 percent of such amount in the case of 
the 1st taxable year following such period. 
‘‘(iii) 20 percent of such amount in the case of 
the 2nd taxable year following such period. 
‘‘(iv) 25 percent of such amount in the case of 
the 3rd taxable year following such period. 
‘‘(2) RULES FOR TRUSTS ELECTING DEFERRED INCLUSION.— 
‘‘(A) ELECTION.—Any election under paragraph (1)(B) 
shall be made not later than the due date for the first 
taxable year in the 5-taxable year period described in clause 
(i) of paragraph (1)(B) and shall be made in such manner 
as the Secretary shall provide. 
‘‘(B) SPECIAL RULES.—If an election under paragraph 
(1)(B) is in effect with respect to any real estate investment 
trust, the following rules shall apply: 
‘‘(i) APPLICATION OF PARTICIPATION EXEMPTION.— 
For purposes of subsection (c)(1)— 
‘‘(I) the aggregate amount to which subpara-
graph (A) or (B) of subsection (c)(1) applies shall 
be determined without regard to the election, 
‘‘(II) each such aggregate amount shall be allo-
cated to each taxable year described in paragraph 
(1)(B) in the same proportion as the amount 
included in the gross income of such United States 
shareholder under section 951(a)(1) by reason of 
this section is allocated to each such taxable year. 
‘‘(III) NO INSTALLMENT PAYMENTS.—The real 
estate investment trust may not make an election 
under subsection (g) for any taxable year described 
in paragraph (1)(B). 
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131 STAT. 2207 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) ACCELERATION OF INCLUSION.—If there is a 
liquidation or sale of substantially all the assets of 
the real estate investment trust (including in a title 
11 or similar case), a cessation of business by such 
trust, or any similar circumstance, then any amount 
not yet included in gross income under paragraph 
(1)(B) shall be included in gross income as of the day 
before the date of the event and the unpaid portion 
of any tax liability with respect to such inclusion shall 
be due on the date of such event (or in the case of 
a title 11 or similar case, the day before the petition 
is filed). 
‘‘(n) ELECTION NOT TO APPLY NET OPERATING LOSS DEDUC-
TION.— 
‘‘(1) IN
GENERAL.—If a United States shareholder of a 
deferred foreign income corporation elects the application of 
this subsection for the taxable year described in subsection 
(a), then the amount described in paragraph (2) shall not be 
taken into account— 
‘‘(A) in determining the amount of the net operating 
loss deduction under section 172 of such shareholder for 
such taxable year, or 
‘‘(B) in determining the amount of taxable income for 
such taxable year which may be reduced by net operating 
loss carryovers or carrybacks to such taxable year under 
section 172. 
‘‘(2) AMOUNT DESCRIBED.—The amount described in this 
paragraph is the sum of— 
‘‘(A) the amount required to be taken into account 
under section 951(a)(1) by reason of this section (deter-
mined after the application of subsection (c)), plus 
‘‘(B) in the case of a domestic corporation which chooses 
to have the benefits of subpart A of part III of subchapter 
N for the taxable year, the taxes deemed to be paid by 
such corporation under subsections (a) and (b) of section 
960 for such taxable year with respect to the amount 
described in subparagraph (A) which are treated as a divi-
dends under section 78. 
‘‘(3) ELECTION.—Any election under this subsection shall 
be made not later than the due date (including extensions) 
for filing the return of tax for the taxable year and shall 
be made in such manner as the Secretary shall prescribe. 
‘‘(o) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section, including— 
‘‘(1) regulations or other guidance to provide appropriate 
basis adjustments, and 
‘‘(2) regulations or other guidance to prevent the avoidance 
of the purposes of this section, including through a reduction 
in earnings and profits, through changes in entity classification 
or accounting methods, or otherwise.’’. 
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131 STAT. 2208 
PUBLIC LAW 115–97—DEC. 22, 2017 
(b) CLERICAL AMENDMENT.—The table of sections for subpart 
F of part III of subchapter N of chapter 1 is amended by striking 
the item relating to section 965 and inserting the following: 
‘‘Sec. 965. Treatment of deferred foreign income upon transition to participation ex-
emption system of taxation.’’. 
Subpart B—Rules Related to Passive and Mobile 
Income 
CHAPTER 1—TAXATION OF FOREIGN-DERIVED INTAN-
GIBLE INCOME AND GLOBAL INTANGIBLE LOW-TAXED 
INCOME 
SEC. 14201. CURRENT YEAR INCLUSION OF GLOBAL INTANGIBLE LOW- 
TAXED INCOME BY UNITED STATES SHAREHOLDERS. 
(a) IN GENERAL.—Subpart F of part III of subchapter N of 
chapter 1 is amended by inserting after section 951 the following 
new section: 
‘‘SEC. 951A. GLOBAL INTANGIBLE LOW-TAXED INCOME INCLUDED IN 
GROSS INCOME OF UNITED STATES SHAREHOLDERS. 
‘‘(a) IN GENERAL.—Each person who is a United States share-
holder of any controlled foreign corporation for any taxable year 
of such United States shareholder shall include in gross income 
such shareholder’s global intangible low-taxed income for such tax-
able year. 
‘‘(b) GLOBAL INTANGIBLE LOW-TAXED INCOME.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘global intangible low-taxed 
income’ means, with respect to any United States shareholder 
for any taxable year of such United States shareholder, the 
excess (if any) of— 
‘‘(A) such shareholder’s net CFC tested income for such 
taxable year, over 
‘‘(B) such shareholder’s net deemed tangible income 
return for such taxable year. 
‘‘(2) NET DEEMED TANGIBLE INCOME RETURN.—The term 
‘net deemed tangible income return’ means, with respect to 
any United States shareholder for any taxable year, the excess 
of— 
‘‘(A) 10 percent of the aggregate of such shareholder’s 
pro rata share of the qualified business asset investment 
of each controlled foreign corporation with respect to which 
such shareholder is a United States shareholder for such 
taxable year (determined for each taxable year of each 
such controlled foreign corporation which ends in or with 
such taxable year of such United States shareholder), over 
‘‘(B) the amount of interest expense taken into account 
under subsection (c)(2)(A)(ii) in determining the share-
holder’s net CFC tested income for the taxable year to 
the extent the interest income attributable to such expense 
is not taken into account in determining such shareholder’s 
net CFC tested income. 
‘‘(c) NET CFC TESTED INCOME.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘net CFC tested income’ means, 
with respect to any United States shareholder for any taxable 
26 USC 951A. 
26 USC 
prec. 951. 
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131 STAT. 2209 
PUBLIC LAW 115–97—DEC. 22, 2017 
year of such United States shareholder, the excess (if any) 
of— 
‘‘(A) the aggregate of such shareholder’s pro rata share 
of the tested income of each controlled foreign corporation 
with respect to which such shareholder is a United States 
shareholder for such taxable year of such United States 
shareholder (determined for each taxable year of such con-
trolled foreign corporation which ends in or with such 
taxable year of such United States shareholder), over 
‘‘(B) the aggregate of such shareholder’s pro rata share 
of the tested loss of each controlled foreign corporation 
with respect to which such shareholder is a United States 
shareholder for such taxable year of such United States 
shareholder (determined for each taxable year of such con-
trolled foreign corporation which ends in or with such 
taxable year of such United States shareholder). 
‘‘(2) TESTED INCOME; TESTED LOSS.—For purposes of this 
section— 
‘‘(A) TESTED INCOME.—The term ‘tested income’ means, 
with respect to any controlled foreign corporation for any 
taxable year of such controlled foreign corporation, the 
excess (if any) of— 
‘‘(i) the gross income of such corporation deter-
mined without regard to— 
‘‘(I) any item of income described in section 
952(b), 
‘‘(II) any gross income taken into account in 
determining the subpart F income of such corpora-
tion, 
‘‘(III) any gross income excluded from the for-
eign base company income (as defined in section 
954) and the insurance income (as defined in sec-
tion 953) of such corporation by reason of section 
954(b)(4), 
‘‘(IV) any dividend received from a related per-
son (as defined in section 954(d)(3)), and 
‘‘(V) any foreign oil and gas extraction income 
(as defined in section 907(c)(1)) of such corporation, 
over 
‘‘(ii) the deductions (including taxes) properly allo-
cable to such gross income under rules similar to the 
rules of section 954(b)(5) (or to which such deductions 
would be allocable if there were such gross income). 
‘‘(B) TESTED LOSS.— 
‘‘(i) IN GENERAL.—The term ‘tested loss’ means, 
with respect to any controlled foreign corporation for 
any taxable year of such controlled foreign corporation, 
the excess (if any) of the amount described in subpara-
graph (A)(ii) over the amount described in subpara-
graph (A)(i). 
‘‘(ii) COORDINATION
WITH
SUBPART
F
TO
DENY 
DOUBLE BENEFIT OF LOSSES.—Section 952(c)(1)(A) shall 
be applied by increasing the earnings and profits of 
the controlled foreign corporation by the tested loss 
of such corporation. 
‘‘(d) QUALIFIED BUSINESS ASSET INVESTMENT.—For purposes 
of this section— 
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131 STAT. 2210 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(1) IN GENERAL.—The term ‘qualified business asset invest-
ment’ means, with respect to any controlled foreign corporation 
for any taxable year, the average of such corporation’s aggregate 
adjusted bases as of the close of each quarter of such taxable 
year in specified tangible property— 
‘‘(A) used in a trade or business of the corporation, 
and 
‘‘(B) of a type with respect to which a deduction is 
allowable under section 167. 
‘‘(2) SPECIFIED TANGIBLE PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘specified tangible prop-
erty’ means, except as provided in subparagraph (B), any 
tangible property used in the production of tested income. 
‘‘(B) DUAL USE PROPERTY.—In the case of property used 
both in the production of tested income and income which 
is not tested income, such property shall be treated as 
specified tangible property in the same proportion that 
the gross income described in subsection (c)(1)(A) produced 
with respect to such property bears to the total gross 
income produced with respect to such property. 
‘‘(3) DETERMINATION OF ADJUSTED BASIS.—For purposes of 
this subsection, notwithstanding any provision of this title (or 
any other provision of law) which is enacted after the date 
of the enactment of this section, the adjusted basis in any 
property shall be determined— 
‘‘(A) by using the alternative depreciation system under 
section 168(g), and 
‘‘(B) by allocating the depreciation deduction with 
respect to such property ratably to each day during the 
period in the taxable year to which such depreciation 
relates. 
‘‘(3) PARTNERSHIP
PROPERTY.—For purposes of this sub-
section, if a controlled foreign corporation holds an interest 
in a partnership at the close of such taxable year of the con-
trolled foreign corporation, such controlled foreign corporation 
shall take into account under paragraph (1) the controlled 
foreign corporation’s distributive share of the aggregate of the 
partnership’s adjusted bases (determined as of such date in 
the hands of the partnership) in tangible property held by 
such partnership to the extent such property— 
‘‘(A) is used in the trade or business of the partnership, 
‘‘(B) is of a type with respect to which a deduction 
is allowable under section 167, and 
‘‘(C) is used in the production of tested income (deter-
mined with respect to such controlled foreign corporation’s 
distributive share of income with respect to such property). 
For purposes of this paragraph, the controlled foreign corpora-
tion’s distributive share of the adjusted basis of any property 
shall be the controlled foreign corporation’s distributive share 
of income with respect to such property. 
‘‘(4) REGULATIONS.—The Secretary shall issue such regula-
tions or other guidance as the Secretary determines appropriate 
to prevent the avoidance of the purposes of this subsection, 
including regulations or other guidance which provide for the 
treatment of property if— 
‘‘(A) such property is transferred, or held, temporarily, 
or 
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131 STAT. 2211 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) the avoidance of the purposes of this paragraph 
is a factor in the transfer or holding of such property. 
‘‘(e) DETERMINATION OF PRO RATA SHARE, ETC.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The pro rata shares referred to in sub-
sections (b), (c)(1)(A), and (c)(1)(B), respectively, shall be deter-
mined under the rules of section 951(a)(2) in the same manner 
as such section applies to subpart F income and shall be taken 
into account in the taxable year of the United States share-
holder in which or with which the taxable year of the controlled 
foreign corporation ends. 
‘‘(2) TREATMENT AS UNITED STATES SHAREHOLDER.—A per-
son shall be treated as a United States shareholder of a con-
trolled foreign corporation for any taxable year of such person 
only if such person owns (within the meaning of section 958(a)) 
stock in such foreign corporation on the last day in the taxable 
year of such foreign corporation on which such foreign corpora-
tion is a controlled foreign corporation. 
‘‘(3) TREATMENT AS CONTROLLED FOREIGN CORPORATION.— 
A foreign corporation shall be treated as a controlled foreign 
corporation for any taxable year if such foreign corporation 
is a controlled foreign corporation at any time during such 
taxable year. 
‘‘(f) TREATMENT
AS SUBPART F INCOME
FOR CERTAIN PUR-
POSES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) APPLICATION.—Except as provided in subpara-
graph (B), any global intangible low-taxed income included 
in gross income under subsection (a) shall be treated in 
the same manner as an amount included under section 
951(a)(1)(A) for purposes of applying sections 168(h)(2)(B), 
535(b)(10), 851(b), 904(h)(1), 959, 961, 962, 993(a)(1)(E), 
996(f)(1), 
1248(b)(1), 
1248(d)(1), 
6501(e)(1)(C), 
6654(d)(2)(D), and 6655(e)(4). 
‘‘(B) EXCEPTION.—The Secretary shall provide rules for 
the application of subparagraph (A) to other provisions 
of this title in any case in which the determination of 
subpart F income is required to be made at the level 
of the controlled foreign corporation. 
‘‘(2) ALLOCATION OF GLOBAL INTANGIBLE LOW-TAXED INCOME 
TO CONTROLLED FOREIGN CORPORATIONS.—For purposes of the 
sections referred to in paragraph (1), with respect to any con-
trolled foreign corporation any pro rata amount from which 
is taken into account in determining the global intangible low- 
taxed income included in gross income of a United States 
shareholder under subsection (a), the portion of such global 
intangible low-taxed income which is treated as being with 
respect to such controlled foreign corporation is— 
‘‘(A) in the case of a controlled foreign corporation 
with no tested income, zero, and 
‘‘(B) in the case of a controlled foreign corporation 
with tested income, the portion of such global intangible 
low-taxed income which bears the same ratio to such global 
intangible low-taxed income as— 
‘‘(i) such United States shareholder’s pro rata 
amount of the tested income of such controlled foreign 
corporation, bears to 
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131 STAT. 2212 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) the aggregate amount described in subsection 
(c)(1)(A) with respect to such United States share-
holder.’’. 
(b) FOREIGN TAX CREDIT.— 
(1) APPLICATION OF DEEMED PAID FOREIGN TAX CREDIT.— 
Section 960 is amended adding at the end the following new 
subsection: 
‘‘(d) DEEMED PAID CREDIT FOR TAXES PROPERLY ATTRIBUTABLE 
TO TESTED INCOME.— 
‘‘(1) IN GENERAL.—For purposes of subpart A of this part, 
if any amount is includible in the gross income of a domestic 
corporation under section 951A, such domestic corporation shall 
be deemed to have paid foreign income taxes equal to 80 percent 
of the product of— 
‘‘(A) such domestic corporation’s inclusion percentage, 
multiplied by 
‘‘(B) the aggregate tested foreign income taxes paid 
or accrued by controlled foreign corporations. 
‘‘(2) INCLUSION PERCENTAGE.—For purposes of paragraph 
(1), the term ‘inclusion percentage’ means, with respect to any 
domestic corporation, the ratio (expressed as a percentage) 
of— 
‘‘(A) such corporation’s global intangible low-taxed 
income (as defined in section 951A(b)), divided by 
‘‘(B) the aggregate amount described in section 
951A(c)(1)(A) with respect to such corporation. 
‘‘(3) TESTED FOREIGN INCOME TAXES.—For purposes of para-
graph (1), the term ‘tested foreign income taxes’ means, with 
respect to any domestic corporation which is a United States 
shareholder of a controlled foreign corporation, the foreign 
income taxes paid or accrued by such foreign corporation which 
are properly attributable to the tested income of such foreign 
corporation taken into account by such domestic corporation 
under section 951A.’’. 
(2) APPLICATION OF FOREIGN TAX CREDIT LIMITATION.— 
(A) SEPARATE BASKET FOR GLOBAL INTANGIBLE LOW- 
TAXED INCOME.—Section 904(d)(1) is amended by redesig-
nating subparagraphs (A) and (B) as subparagraphs (B) 
and (C), respectively, and by inserting before subparagraph 
(B) (as so redesignated) the following new subparagraph: 
‘‘(A) any amount includible in gross income under sec-
tion 951A (other than passive category income),’’. 
(B) EXCLUSION
FROM
GENERAL
CATEGORY
INCOME.— 
Section 904(d)(2)(A)(ii) is amended by inserting ‘‘income 
described in paragraph (1)(A) and’’ before ‘‘passive category 
income’’. 
(C) NO CARRYOVER OR CARRYBACK OF EXCESS TAXES.— 
Section 904(c) is amended by adding at the end the fol-
lowing: ‘‘This subsection shall not apply to taxes paid or 
accrued with respect to amounts described in subsection 
(d)(1)(A).’’. 
26 USC 960. 
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131 STAT. 2213 
PUBLIC LAW 115–97—DEC. 22, 2017 
(c) CLERICAL AMENDMENT.—The table of sections for subpart 
F of part III of subchapter N of chapter 1 is amended by inserting 
after the item relating to section 951 the following new item: 
‘‘Sec. 951A. Global intangible low-taxed income included in gross income of United 
States shareholders.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 14202. DEDUCTION FOR FOREIGN-DERIVED INTANGIBLE INCOME 
AND GLOBAL INTANGIBLE LOW-TAXED INCOME. 
(a) IN GENERAL.—Part VIII of subchapter B of chapter 1 is 
amended by adding at the end the following new section: 
‘‘SEC. 250. FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL 
INTANGIBLE LOW-TAXED INCOME. 
‘‘(a) ALLOWANCE OF DEDUCTION.— 
‘‘(1) IN GENERAL.—In the case of a domestic corporation 
for any taxable year, there shall be allowed as a deduction 
an amount equal to the sum of— 
‘‘(A) 37.5 percent of the foreign-derived intangible 
income of such domestic corporation for such taxable year, 
plus 
‘‘(B) 50 percent of— 
‘‘(i) the global intangible low-taxed income amount 
(if any) which is included in the gross income of such 
domestic corporation under section 951A for such tax-
able year, and 
‘‘(ii) the amount treated as a dividend received 
by such corporation under section 78 which is attrib-
utable to the amount described in clause (i). 
‘‘(2) LIMITATION BASED ON TAXABLE INCOME.— 
‘‘(A) IN GENERAL.—If, for any taxable year— 
‘‘(i) the sum of the foreign-derived intangible 
income and the global intangible low-taxed income 
amount otherwise taken into account by the domestic 
corporation under paragraph (1), exceeds 
‘‘(ii) the taxable income of the domestic corporation 
(determined without regard to this section), 
then the amount of the foreign-derived intangible income 
and the global intangible low-taxed income amount so 
taken into account shall be reduced as provided in subpara-
graph (B). 
‘‘(B) REDUCTION.—For purposes of subparagraph (A)— 
‘‘(i) foreign-derived intangible income shall be 
reduced by an amount which bears the same ratio 
to the excess described in subparagraph (A) as such 
foreign-derived intangible income bears to the sum 
described in subparagraph (A)(i), and 
‘‘(ii) the global intangible low-taxed income amount 
shall be reduced by the remainder of such excess. 
‘‘(3) REDUCTION IN DEDUCTION FOR TAXABLE YEARS AFTER 
2025.—In the case of any taxable year beginning after December 
31, 2025, paragraph (1) shall be applied by substituting— 
26 USC 250. 
26 USC 904 note. 
26 USC 
prec. 951. 
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131 STAT. 2214 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) ‘21.875 percent’ for ‘37.5 percent’ in subparagraph 
(A), and 
‘‘(B) ‘37.5 percent’ for ‘50 percent’ in subparagraph 
(B). 
‘‘(b) FOREIGN-DERIVED INTANGIBLE INCOME.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The foreign-derived intangible income 
of any domestic corporation is the amount which bears the 
same ratio to the deemed intangible income of such corporation 
as— 
‘‘(A) the foreign-derived deduction eligible income of 
such corporation, bears to 
‘‘(B) the deduction eligible income of such corporation. 
‘‘(2) DEEMED
INTANGIBLE
INCOME.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘deemed intangible 
income’ means the excess (if any) of— 
‘‘(i) the deduction eligible income of the domestic 
corporation, over 
‘‘(ii) the deemed tangible income return of the cor-
poration. 
‘‘(B) DEEMED
TANGIBLE
INCOME
RETURN.—The term 
‘deemed tangible income return’ means, with respect to 
any corporation, an amount equal to 10 percent of the 
corporation’s qualified business asset investment (as 
defined in section 951A(d), determined by substituting 
‘deduction eligible income’ for ‘tested income’ in paragraph 
(2) thereof and without regard to whether the corporation 
is a controlled foreign corporation). 
‘‘(3) DEDUCTION ELIGIBLE INCOME.— 
‘‘(A) IN GENERAL.—The term ‘deduction eligible income’ 
means, with respect to any domestic corporation, the excess 
(if any) of— 
‘‘(i) gross income of such corporation determined 
without regard to— 
‘‘(I) any amount included in the gross income 
of such corporation under section 951(a)(1), 
‘‘(II) the global intangible low-taxed income 
included in the gross income of such corporation 
under section 951A, 
‘‘(III) any financial services income (as defined 
in section 904(d)(2)(D)) of such corporation, 
‘‘(IV) any dividend received from a corporation 
which is a controlled foreign corporation of such 
domestic corporation, 
‘‘(V) any domestic oil and gas extraction 
income of such corporation, and 
‘‘(VI) any foreign branch income (as defined 
in section 904(d)(2)(J)), over 
‘‘(ii) the deductions (including taxes) properly allo-
cable to such gross income. 
‘‘(B) DOMESTIC OIL AND GAS EXTRACTION INCOME.—For 
purposes of subparagraph (A), the term ‘domestic oil and 
gas extraction income’ means income described in section 
907(c)(1), determined by substituting ‘within the United 
States’ for ‘without the United States’. 
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131 STAT. 2215 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(4) FOREIGN-DERIVED DEDUCTION ELIGIBLE INCOME.—The 
term ‘foreign-derived deduction eligible income’ means, with 
respect to any taxpayer for any taxable year, any deduction 
eligible income of such taxpayer which is derived in connection 
with— 
‘‘(A) property— 
‘‘(i) which is sold by the taxpayer to any person 
who is not a United States person, and 
‘‘(ii) which the taxpayer establishes to the satisfac-
tion of the Secretary is for a foreign use, or 
‘‘(B) services provided by the taxpayer which the tax-
payer establishes to the satisfaction of the Secretary are 
provided to any person, or with respect to property, not 
located within the United States. 
‘‘(5) RULES RELATING TO FOREIGN USE PROPERTY OR SERV-
ICES.—For purposes of this subsection— 
‘‘(A) FOREIGN USE.—The term ‘foreign use’ means any 
use, consumption, or disposition which is not within the 
United States. 
‘‘(B) PROPERTY
OR
SERVICES
PROVIDED
TO
DOMESTIC 
INTERMEDIARIES.— 
‘‘(i) PROPERTY.—If a taxpayer sells property to 
another person (other than a related party) for further 
manufacture or other modification within the United 
States, such property shall not be treated as sold for 
a foreign use even if such other person subsequently 
uses such property for a foreign use. 
‘‘(ii) SERVICES.—If a taxpayer provides services to 
another person (other than a related party) located 
within the United States, such services shall not be 
treated as described in paragraph (4)(B) even if such 
other person uses such services in providing services 
which are so described. 
‘‘(C) SPECIAL RULES WITH RESPECT TO RELATED PARTY 
TRANSACTIONS.— 
‘‘(i) SALES TO RELATED PARTIES.—If property is sold 
to a related party who is not a United States person, 
such sale shall not be treated as for a foreign use 
unless— 
‘‘(I) such property is ultimately sold by a 
related party, or used by a related party in connec-
tion with property which is sold or the provision 
of services, to another person who is an unrelated 
party who is not a United States person, and 
‘‘(II) the taxpayer establishes to the satisfac-
tion of the Secretary that such property is for 
a foreign use. 
For purposes of this clause, a sale of property shall 
be treated as a sale of each of the components thereof. 
‘‘(ii) SERVICE PROVIDED TO RELATED PARTIES.—If 
a service is provided to a related party who is not 
located in the United States, such service shall not 
be treated described in subparagraph (A)(ii) unless the 
taxpayer established to the satisfaction of the Secretary 
that such service is not substantially similar to services 
provided by such related party to persons located 
within the United States. 
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131 STAT. 2216 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(D) RELATED PARTY.—For purposes of this paragraph, 
the term ‘related party’ means any member of an affiliated 
group as defined in section 1504(a), determined— 
‘‘(i) by substituting ‘more than 50 percent’ for ‘at 
least 80 percent’ each place it appears, and 
‘‘(ii) without regard to paragraphs (2) and (3) of 
section 1504(b). 
Any person (other than a corporation) shall be treated 
as a member of such group if such person is controlled 
by members of such group (including any entity treated 
as a member of such group by reason of this sentence) 
or controls any such member. For purposes of the preceding 
sentence, control shall be determined under the rules of 
section 954(d)(3). 
‘‘(E) SOLD.—For purposes of this subsection, the terms 
‘sold’, ‘sells’, and ‘sale’ shall include any lease, license, 
exchange, or other disposition. 
‘‘(c) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 172(d), as amended by this Act, is amended 
by adding at the end the following new paragraph: 
‘‘(9) 
DEDUCTION
FOR
FOREIGN-DERIVED
INTANGIBLE 
INCOME.—The deduction under section 250 shall not be 
allowed.’’. 
(2) Section 246(b)(1) is amended— 
(A) by striking ‘‘and subsection (a) and (b) of section 
245’’ the first place it appears and inserting ‘‘, subsection 
(a) and (b) of section 245, and section 250’’, 
(B) by striking ‘‘and subsection (a) and (b) of section 
245’’ the second place it appears and inserting ‘‘subsection 
(a) and (b) of section 245, and 250’’. 
(3) Section 469(i)(3)(F)(iii) is amended by striking ‘‘and 
222’’ and inserting ‘‘222, and 250’’. 
(4) The table of sections for part VIII of subchapter B 
of chapter 1 is amended by adding at the end the following 
new item: 
‘‘Sec. 250. Foreign-derived intangible income and global intangible low-taxed in-
come.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
CHAPTER 2—OTHER MODIFICATIONS OF SUBPART F 
PROVISIONS 
SEC. 14211. ELIMINATION OF INCLUSION OF FOREIGN BASE COMPANY 
OIL RELATED INCOME. 
(a) REPEAL.—Subsection (a) of section 954 is amended— 
(1) by inserting ‘‘and’’ at the end of paragraph (2), 
(2) by striking the comma at the end of paragraph (3) 
and inserting a period, and 
(3) by striking paragraph (5). 
(b) CONFORMING AMENDMENTS.— 
26 USC 172 note. 
26 USC 
prec. 241. 
26 USC 172. 
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131 STAT. 2217 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) Section 952(c)(1)(B)(iii) is amended by striking subclause 
(I) and redesignating subclauses (II) through (V) as subclauses 
(I) through (IV), respectively. 
(2) Section 954(b) is amended— 
(A) by striking the second sentence of paragraph (4), 
(B) by striking ‘‘the foreign base company services 
income, and the foreign base company oil related income’’ 
in paragraph (5) and inserting ‘‘and the foreign base com-
pany services income’’, and 
(C) by striking paragraph (6). 
(3) Section 954 is amended by striking subsection (g). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
SEC. 14212. REPEAL OF INCLUSION BASED ON WITHDRAWAL OF PRE-
VIOUSLY EXCLUDED SUBPART F INCOME FROM QUALI-
FIED INVESTMENT. 
(a) IN GENERAL.—Subpart F of part III of subchapter N of 
chapter 1 is amended by striking section 955. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 951(a)(1)(A) is amended to read as follows: 
‘‘(A) his pro rata share (determined under paragraph 
(2)) of the corporation’s subpart F income for such year, 
and’’. 
(B) Section 851(b) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ in the flush language at the end and inserting 
‘‘section 951(a)(1)(A)’’. 
(C) Section 952(c)(1)(B)(i) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ and inserting ‘‘section 951(a)(1)(A)’’. 
(D) Section 953(c)(1)(C) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ and inserting ‘‘section 951(a)(1)(A)’’. 
(2) Section 951(a) is amended by striking paragraph (3). 
(3) Section 953(d)(4)(B)(iv)(II) is amended by striking ‘‘or 
amounts referred to in clause (ii) or (iii) of section 951(a)(1)(A)’’. 
(4) Section 964(b) is amended by striking ‘‘, 955,’’. 
(5) Section 970 is amended by striking subsection (b). 
(6) The table of sections for subpart F of part III of sub-
chapter N of chapter 1 is amended by striking the item relating 
to section 955. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 14213. MODIFICATION OF STOCK ATTRIBUTION RULES FOR 
DETERMINING STATUS AS A CONTROLLED FOREIGN 
CORPORATION. 
(a) IN GENERAL.—Section 958(b) is amended— 
(1) by striking paragraph (4), and 
(2) by striking ‘‘Paragraphs (1) and (4)’’ in the last sentence 
and inserting ‘‘Paragraph (1)’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to— 
26 USC 958 note. 
26 USC 851 note. 
26 USC 
prec. 951. 
26 USC 952 note. 
26 USC 952. 
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131 STAT. 2218 
PUBLIC LAW 115–97—DEC. 22, 2017 
(1) the last taxable year of foreign corporations beginning 
before January 1, 2018, and each subsequent taxable year 
of such foreign corporations, and 
(2) taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end. 
SEC. 14214. MODIFICATION OF DEFINITION OF UNITED STATES SHARE-
HOLDER. 
(a) IN GENERAL.—Section 951(b) is amended by inserting ‘‘, 
or 10 percent or more of the total value of shares of all classes 
of stock of such foreign corporation’’ after ‘‘such foreign corporation’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
SEC. 14215. ELIMINATION OF REQUIREMENT THAT CORPORATION 
MUST BE CONTROLLED FOR 30 DAYS BEFORE SUBPART 
F INCLUSIONS APPLY. 
(a) IN GENERAL.—Section 951(a)(1) is amended by striking ‘‘for 
an uninterrupted period of 30 days or more’’ and inserting ‘‘at 
any time’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
CHAPTER 3—PREVENTION OF BASE EROSION 
SEC. 14221. LIMITATIONS ON INCOME SHIFTING THROUGH INTAN-
GIBLE PROPERTY TRANSFERS. 
(a) DEFINITION OF INTANGIBLE ASSET.—Section 936(h)(3)(B) is 
amended— 
(1) by striking ‘‘or’’ at the end of clause (v), 
(2) by striking clause (vi) and inserting the following: 
‘‘(vi) any goodwill, going concern value, or 
workforce in place (including its composition and terms 
and conditions (contractual or otherwise) of its employ-
ment); or 
‘‘(vii) any other item the value or potential value 
of which is not attributable to tangible property or 
the services of any individual.’’, and 
(3) by striking the flush language after clause (vii), as 
added by paragraph (2). 
(b) CLARIFICATION OF ALLOWABLE VALUATION METHODS.— 
(1) FOREIGN CORPORATIONS.—Section 367(d)(2) is amended 
by adding at the end the following new subparagraph: 
‘‘(D) REGULATORY AUTHORITY.—For purposes of the last 
sentence of subparagraph (A), the Secretary shall require— 
‘‘(i) the valuation of transfers of intangible prop-
erty, including intangible property transferred with 
other property or services, on an aggregate basis, or 
‘‘(ii) the valuation of such a transfer on the basis 
of the realistic alternatives to such a transfer, 
if the Secretary determines that such basis is the most 
reliable means of valuation of such transfers.’’. 
26 USC 951 note. 
26 USC 951 note. 
26 USC 951. 
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131 STAT. 2219 
PUBLIC LAW 115–97—DEC. 22, 2017 
(2) 
ALLOCATION
AMONG
TAXPAYERS.—Section 
482 
is 
amended by adding at the end the following: ‘‘For purposes 
of this section, the Secretary shall require the valuation of 
transfers of intangible property (including intangible property 
transferred with other property or services) on an aggregate 
basis or the valuation of such a transfer on the basis of the 
realistic alternatives to such a transfer, if the Secretary deter-
mines that such basis is the most reliable means of valuation 
of such transfers.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to transfers in taxable years beginning after 
December 31, 2017. 
(2) NO INFERENCE.—Nothing in the amendment made by 
subsection (a) shall be construed to create any inference with 
respect to the application of section 936(h)(3) of the Internal 
Revenue Code of 1986, or the authority of the Secretary of 
the Treasury to provide regulations for such application, with 
respect to taxable years beginning before January 1, 2018. 
SEC. 14222. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED 
IN HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES. 
(a) IN GENERAL.—Part IX of subchapter B of chapter 1 is 
amended by inserting after section 267 the following: 
‘‘SEC. 267A. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED 
IN HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES. 
‘‘(a) IN GENERAL.—No deduction shall be allowed under this 
chapter for any disqualified related party amount paid or accrued 
pursuant to a hybrid transaction or by, or to, a hybrid entity. 
‘‘(b) DISQUALIFIED RELATED PARTY AMOUNT.—For purposes of 
this section— 
‘‘(1) DISQUALIFIED RELATED PARTY AMOUNT.—The term ‘dis-
qualified related party amount’ means any interest or royalty 
paid or accrued to a related party to the extent that— 
‘‘(A) such amount is not included in the income of 
such related party under the tax law of the country of 
which such related party is a resident for tax purposes 
or is subject to tax, or 
‘‘(B) such related party is allowed a deduction with 
respect to such amount under the tax law of such country. 
Such term shall not include any payment to the extent such 
payment is included in the gross income of a United States 
shareholder under section 951(a). 
‘‘(2) RELATED PARTY.—The term ‘related party’ means a 
related person as defined in section 954(d)(3), except that such 
section shall be applied with respect to the person making 
the payment described in paragraph (1) in lieu of the controlled 
foreign corporation otherwise referred to in such section. 
‘‘(c) HYBRID TRANSACTION.—For purposes of this section, the 
term ‘hybrid transaction’ means any transaction, series of trans-
actions, agreement, or instrument one or more payments with 
respect to which are treated as interest or royalties for purposes 
of this chapter and which are not so treated for purposes the 
tax law of the foreign country of which the recipient of such payment 
is resident for tax purposes or is subject to tax. 
‘‘(d) HYBRID ENTITY.—For purposes of this section, the term 
‘hybrid entity’ means any entity which is either— 
26 USC 267A. 
26 USC 963 note. 
26 USC 367 note. 
26 USC 482. 
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131 STAT. 2220 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(1) treated as fiscally transparent for purposes of this 
chapter but not so treated for purposes of the tax law of 
the foreign country of which the entity is resident for tax 
purposes or is subject to tax, or 
‘‘(2) treated as fiscally transparent for purposes of such 
tax law but not so treated for purposes of this chapter. 
‘‘(e) REGULATIONS.—The Secretary shall issue such regulations 
or other guidance as may be necessary or appropriate to carry 
out the purposes of this section, including regulations or other 
guidance providing for— 
‘‘(1) rules for treating certain conduit arrangements which 
involve a hybrid transaction or a hybrid entity as subject to 
subsection (a), 
‘‘(2) rules for the application of this section to branches 
or domestic entities, 
‘‘(3) rules for treating certain structured transactions as 
subject to subsection (a), 
‘‘(4) rules for treating a tax preference as an exclusion 
from income for purposes of applying subsection (b)(1) if such 
tax preference has the effect of reducing the generally 
applicable statutory rate by 25 percent or more, 
‘‘(5) rules for treating the entire amount of interest or 
royalty paid or accrued to a related party as a disqualified 
related party amount if such amount is subject to a participa-
tion exemption system or other system which provides for the 
exclusion or deduction of a substantial portion of such amount, 
‘‘(6) rules for determining the tax residence of a foreign 
entity if the entity is otherwise considered a resident of more 
than one country or of no country, 
‘‘(7) exceptions from subsection (a) with respect to— 
‘‘(A) cases in which the disqualified related party 
amount is taxed under the laws of a foreign country other 
than the country of which the related party is a resident 
for tax purposes, and 
‘‘(B) other cases which the Secretary determines do 
not present a risk of eroding the Federal tax base, 
‘‘(8) requirements for record keeping and information 
reporting in addition to any requirements imposed by section 
6038A.’’. 
(b) CONFORMING AMENDMENT.—The table of sections for part 
IX of subchapter B of chapter 1 is amended by inserting after 
the item relating to section 267 the following new item: 
‘‘Sec. 267A. Certain related party amounts paid or accrued in hybrid transactions 
or with hybrid entities.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14223. SHAREHOLDERS OF SURROGATE FOREIGN CORPORATIONS 
NOT ELIGIBLE FOR REDUCED RATE ON DIVIDENDS. 
(a) IN GENERAL.—Section 1(h)(11)(C)(iii) is amended— 
(1) by striking ‘‘shall not include any foreign corporation’’ 
and inserting ‘‘shall not include— 
‘‘(I) any foreign corporation’’, 
(2) by striking the period at the end and inserting ‘‘, and’’, 
and 
(3) by adding at the end the following new subclause: 
26 USC 1. 
26 USC 267A 
note. 
26 USC 
prec. 261. 
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131 STAT. 2221 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(II) any corporation which first becomes a 
surrogate foreign corporation (as defined in section 
7874(a)(2)(B)) after the date of the enactment of 
this subclause, other than a foreign corporation 
which is treated as a domestic corporation under 
section 7874(b).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to dividends received after the date of the enactment 
of this Act. 
Subpart C—Modifications Related to Foreign Tax 
Credit System 
SEC. 14301. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX CREDITS; 
DETERMINATION OF SECTION 960 CREDIT ON CURRENT 
YEAR BASIS. 
(a) REPEAL OF SECTION 902 INDIRECT FOREIGN TAX CREDITS.— 
Subpart A of part III of subchapter N of chapter 1 is amended 
by striking section 902. 
(b) DETERMINATION OF SECTION 960 CREDIT ON CURRENT YEAR 
BASIS.—Section 960, as amended by section 14201, is amended— 
(1) by striking subsection (c), by redesignating subsection 
(b) as subsection (c), by striking all that precedes subsection 
(c) (as so redesignated) and inserting the following: 
‘‘SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLUSIONS. 
‘‘(a) IN GENERAL.—For purposes of subpart A of this part, 
if there is included in the gross income of a domestic corporation 
any item of income under section 951(a)(1) with respect to any 
controlled foreign corporation with respect to which such domestic 
corporation is a United States shareholder, such domestic corpora-
tion shall be deemed to have paid so much of such foreign corpora-
tion’s foreign income taxes as are properly attributable to such 
item of income. 
‘‘(b) SPECIAL RULES
FOR DISTRIBUTIONS FROM PREVIOUSLY 
TAXED EARNINGS AND PROFITS.—For purposes of subpart A of this 
part— 
‘‘(1) IN GENERAL.—If any portion of a distribution from 
a controlled foreign corporation to a domestic corporation which 
is a United States shareholder with respect to such controlled 
foreign corporation is excluded from gross income under section 
959(a), such domestic corporation shall be deemed to have 
paid so much of such foreign corporation’s foreign income taxes 
as— 
‘‘(A) are properly attributable to such portion, and 
‘‘(B) have not been deemed to have to been paid by 
such domestic corporation under this section for the taxable 
year or any prior taxable year. 
‘‘(2) TIERED CONTROLLED FOREIGN CORPORATIONS.—If sec-
tion 959(b) applies to any portion of a distribution from a 
controlled foreign corporation to another controlled foreign cor-
poration, such controlled foreign corporation shall be deemed 
to have paid so much of such other controlled foreign corpora-
tion’s foreign income taxes as— 
‘‘(A) are properly attributable to such portion, and 
26 USC 902. 
26 USC 1 note. 
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131 STAT. 2222 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) have not been deemed to have been paid by a 
domestic corporation under this section for the taxable 
year or any prior taxable year.’’, 
(2) and by adding after subsection (d) (as added by section 
14201) the following new subsections: 
‘‘(e) FOREIGN INCOME TAXES.—The term ‘foreign income taxes’ 
means any income, war profits, or excess profits taxes paid or 
accrued to any foreign country or possession of the United States. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 78 is amended to read as follows: 
‘‘SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT. 
‘‘If a domestic corporation chooses to have the benefits of sub-
part A of part III of subchapter N (relating to foreign tax credit) 
for any taxable year, an amount equal to the taxes deemed to 
be paid by such corporation under subsections (a), (b), and (d) 
of section 960 (determined without regard to the phrase ‘80 percent 
of’ in subsection (d)(1) thereof) for such taxable year shall be treated 
for purposes of this title (other than sections 245 and 245A) as 
a dividend received by such domestic corporation from the foreign 
corporation.’’. 
(2) Paragraph (4) of section 245(a) is amended to read 
as follows: 
‘‘(4) POST-1986 UNDISTRIBUTED EARNINGS.—The term ‘post- 
1986 undistributed earnings’ means the amount of the earnings 
and profits of the foreign corporation (computed in accordance 
with sections 964(a) and 986) accumulated in taxable years 
beginning after December 31, 1986— 
‘‘(A) as of the close of the taxable year of the foreign 
corporation in which the dividend is distributed, and 
‘‘(B) without diminution by reason of dividends distrib-
uted during such taxable year.’’. 
(3) Section 245(a)(10)(C) is amended by striking ‘‘902, 907, 
and 960’’ and inserting ‘‘907 and 960’’. 
(4) Sections 535(b)(1) and 545(b)(1) are each amended by 
striking ‘‘section 902(a) or 960(a)(1)’’ and inserting ‘‘section 
960’’. 
(5) Section 814(f)(1) is amended— 
(A) by striking subparagraph (B), and 
(B) by striking all that precedes ‘‘No income’’ and 
inserting the following: 
‘‘(1) TREATMENT OF FOREIGN TAXES.—’’. 
(6) Section 865(h)(1)(B) is amended by striking ‘‘902, 907,’’ 
and inserting ‘‘907’’. 
(7) Section 901(a) is amended by striking ‘‘sections 902 
and 960’’ and inserting ‘‘section 960’’. 
(8) Section 901(e)(2) is amended by striking ‘‘but is not 
limited to—’’ and all that follows through ‘‘that portion’’ and 
inserting ‘‘but is not limited to that portion’’. 
(9) Section 901(f) is amended by striking ‘‘sections 902 
and 960’’ and inserting ‘‘section 960’’. 
(10) Section 901(j)(1)(A) is amended by striking ‘‘902 or’’. 
(11) Section 901(j)(1)(B) is amended by striking ‘‘sections 
902 and 960’’ and inserting ‘‘section 960’’. 
26 USC 78. 
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131 STAT. 2223 
PUBLIC LAW 115–97—DEC. 22, 2017 
(12) Section 901(k)(2) is amended by striking ‘‘, 902,’’. 
(13) Section 901(k)(6) is amended by striking ‘‘902 or’’. 
(14) Section 901(m)(1)(B) is amended to read as follows: 
‘‘(B) in the case of a foreign income tax paid by a 
foreign corporation, shall not be taken into account for 
purposes of section 960.’’. 
(15) Section 904(d)(2)(E) is amended— 
(A) by amending clause (i) to read as follows: 
‘‘(i) NONCONTROLLED 10-PERCENT OWNED FOREIGN 
CORPORATION.—The term ‘noncontrolled 10-percent 
owned foreign corporation’ means any foreign corpora-
tion which is— 
‘‘(I) a specified 10-percent owned foreign cor-
poration (as defined in section 245A(b)), or 
‘‘(II) a passive foreign investment company (as 
defined in section 1297(a)) with respect to which 
the taxpayer meets the stock ownership require-
ments of section 902(a) (or, for purposes of applying 
paragraphs (3) and (4), the requirements of section 
902(b)). 
A controlled foreign corporation shall not be treated 
as a noncontrolled 10-percent owned foreign corpora-
tion with respect to any distribution out of its earnings 
and profits for periods during which it was a controlled 
foreign corporation. Any reference to section 902 in 
this clause shall be treated as a reference to such 
section as in effect before its repeal.’’, and 
(B) by striking ‘‘non-controlled section 902 corporation’’ 
in clause (ii) and inserting ‘‘noncontrolled 10-percent owned 
foreign corporation’’. 
(16) Section 904(d)(4) is amended— 
(A) by striking ‘‘noncontrolled section 902 corporation’’ 
each place it appears and inserting ‘‘noncontrolled 10-per-
cent owned foreign corporation’’, 
(B) by striking ‘‘NONCONTROLLED SECTION 902 CORPORA-
TIONS’’ in the heading thereof and inserting ‘‘NONCON-
TROLLED 10-PERCENT OWNED FOREIGN CORPORATIONS’’. 
(17) Section 904(d)(6)(A) is amended by striking ‘‘902, 907,’’ 
and inserting ‘‘907’’. 
(18) Section 904(h)(10)(A) is amended by striking ‘‘sections 
902, 907, and 960’’ and inserting ‘‘sections 907 and 960’’. 
(19) Section 904(k) is amended to read as follows: 
‘‘(k) CROSS REFERENCES.—For increase of limitation under sub-
section (a) for taxes paid with respect to amounts received which 
were included in the gross income of the taxpayer for a prior 
taxable year as a United States shareholder with respect to a 
controlled foreign corporation, see section 960(c).’’. 
(20) Section 905(c)(1) is amended by striking the last sen-
tence. 
(21) Section 905(c)(2)(B)(i) is amended to read as follows: 
‘‘(i) shall be taken into account for the taxable 
year to which such taxes relate, and’’. 
(22) Section 906(a) is amended by striking ‘‘(or deemed, 
under section 902, paid or accrued during the taxable year)’’. 
(23) Section 906(b) is amended by striking paragraphs (4) 
and (5). 
(24) Section 907(b)(2)(B) is amended by striking ‘‘902 or’’. 
26 USC 901. 
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131 STAT. 2224 
PUBLIC LAW 115–97—DEC. 22, 2017 
(25) Section 907(c)(3)(A) is amended— 
(A) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) interest, to the extent the category of income of 
such interest is determined under section 904(d)(3),’’, and 
(B) by striking ‘‘section 960(a)’’ in subparagraph (B) 
and inserting ‘‘section 960’’. 
(26) Section 907(c)(5) is amended by striking ‘‘902 or’’. 
(27) Section 907(f)(2)(B)(i) is amended by striking ‘‘902 
or’’. 
(28) Section 908(a) is amended by striking ‘‘902 or’’. 
(29) Section 909(b) is amended— 
(A) by striking ‘‘section 902 corporation’’ in the matter 
preceding paragraph (1) and inserting ‘‘specified 10-percent 
owned foreign corporation (as defined in section 245A(b) 
without regard to paragraph (2) thereof)’’, 
(B) by striking ‘‘902 or’’ in paragraph (1), 
(C) by striking ‘‘by such section 902 corporation’’ and 
all that follows in the matter following paragraph (2) and 
inserting ‘‘by such specified 10-percent owned foreign cor-
poration or a domestic corporation which is a United States 
shareholder with respect to such specified 10-percent owned 
foreign corporation.’’, and 
(D) by striking ‘‘SECTION 902 CORPORATIONS’’ in the 
heading thereof and inserting ‘‘SPECIFIED
10-PERCENT 
OWNED FOREIGN CORPORATIONS’’. 
(30) Section 909(d) is amended by striking paragraph (5). 
(31) Section 958(a)(1) is amended by striking ‘‘960(a)(1)’’ 
and inserting ‘‘960’’. 
(32) Section 959(d) is amended by striking ‘‘Except as pro-
vided in section 960(a)(3), any’’ and inserting ‘‘Any’’. 
(33) Section 959(e) is amended by striking ‘‘section 960(b)’’ 
and inserting ‘‘section 960(c)’’. 
(34) Section 1291(g)(2)(A) is amended by striking ‘‘any dis-
tribution—’’ and all that follows through ‘‘but only if’’ and 
inserting ‘‘any distribution, any withholding tax imposed with 
respect to such distribution, but only if’’. 
(35) Section 1293(f) is amended by striking ‘‘and’’ at the 
end of paragraph (1), by striking the period at the end of 
paragraph (2) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(3) a domestic corporation which owns (or is treated under 
section 1298(a) as owning) stock of a qualified electing fund 
shall be treated in the same manner as a United States share-
holder of a controlled foreign corporation (and such qualified 
electing fund shall be treated in the same manner as such 
controlled foreign corporation) if such domestic corporation 
meets the stock ownership requirements of subsection (a) or 
(b) of section 902 (as in effect before its repeal) with respect 
to such qualified electing fund.’’. 
(36) Section 6038(c)(1)(B) is amended by striking ‘‘sections 
902 (relating to foreign tax credit for corporate stockholder 
in foreign corporation) and 960 (relating to special rules for 
foreign tax credit)’’ and inserting ‘‘section 960’’. 
(37) Section 6038(c)(4) is amended by striking subpara-
graph (C). 
26 USC 907. 
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131 STAT. 2225 
PUBLIC LAW 115–97—DEC. 22, 2017 
(38) The table of sections for subpart A of part III of 
subchapter N of chapter 1 is amended by striking the item 
relating to section 902. 
(39) The table of sections for subpart F of part III of 
subchapter N of chapter 1 is amended by striking the item 
relating to section 960 and inserting the following: 
‘‘Sec. 960. Deemed paid credit for subpart F inclusions.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 14302. SEPARATE FOREIGN TAX CREDIT LIMITATION BASKET FOR 
FOREIGN BRANCH INCOME. 
(a) IN GENERAL.—Section 904(d)(1), as amended by section 
14201, is amended by redesignating subparagraphs (B) and (C) 
as subparagraphs (C) and (D), respectively, and by inserting after 
subparagraph (A) the following new subparagraph: 
‘‘(B) foreign branch income,’’. 
(b) FOREIGN BRANCH INCOME.— 
(1) IN GENERAL.—Section 904(d)(2) is amended by inserting 
after subparagraph (I) the following new subparagraph: 
‘‘(J) FOREIGN BRANCH INCOME.— 
‘‘(i) IN GENERAL.—The term ‘foreign branch income’ 
means the business profits of such United States per-
son which are attributable to 1 or more qualified busi-
ness units (as defined in section 989(a)) in 1 or more 
foreign countries. For purposes of the preceding sen-
tence, the amount of business profits attributable to 
a qualified business unit shall be determined under 
rules established by the Secretary. 
‘‘(ii) EXCEPTION.—Such term shall not include any 
income which is passive category income.’’. 
(2) CONFORMING AMENDMENT.—Section 904(d)(2)(A)(ii), as 
amended by section 14201, is amended by striking ‘‘income 
described in paragraph (1)(A) and’’ and inserting ‘‘income 
described in paragraph (1)(A), foreign branch income, and’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14303. SOURCE OF INCOME FROM SALES OF INVENTORY DETER-
MINED SOLELY ON BASIS OF PRODUCTION ACTIVITIES. 
(a) IN GENERAL.—Section 863(b) is amended by adding at the 
end the following: ‘‘Gains, profits, and income from the sale or 
exchange of inventory property described in paragraph (2) shall 
be allocated and apportioned between sources within and without 
the United States solely on the basis of the production activities 
with respect to the property.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14304. ELECTION TO INCREASE PERCENTAGE OF DOMESTIC TAX-
ABLE INCOME OFFSET BY OVERALL DOMESTIC LOSS 
TREATED AS FOREIGN SOURCE. 
(a) IN GENERAL.—Section 904(g) is amended by adding at the 
end the following new paragraph: 
26 USC 863 note. 
26 USC 904 note. 
26 USC 904. 
26 USC 78 note. 
26 USC 
prec. 951. 
26 USC 
prec. 901. 
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131 STAT. 2226 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(5) ELECTION
TO
INCREASE
PERCENTAGE
OF
TAXABLE 
INCOME TREATED AS FOREIGN SOURCE.— 
‘‘(A) IN
GENERAL.—If any pre-2018 unused overall 
domestic loss is taken into account under paragraph (1) 
for any applicable taxable year, the taxpayer may elect 
to have such paragraph applied to such loss by substituting 
a percentage greater than 50 percent (but not greater than 
100 percent) for 50 percent in subparagraph (B) thereof. 
‘‘(B) PRE-2018 UNUSED OVERALL DOMESTIC LOSS.—For 
purposes of this paragraph, the term ‘pre-2018 unused 
overall domestic loss’ means any overall domestic loss 
which— 
‘‘(i) arises in a qualified taxable year beginning 
before January 1, 2018, and 
‘‘(ii) has not been used under paragraph (1) for 
any taxable year beginning before such date. 
‘‘(C) APPLICABLE TAXABLE YEAR.—For purposes of this 
paragraph, the term ‘applicable taxable year’ means any 
taxable year of the taxpayer beginning after December 
31, 2017, and before January 1, 2028.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
PART II—INBOUND TRANSACTIONS 
SEC. 14401. BASE EROSION AND ANTI-ABUSE TAX. 
(a) IMPOSITION OF TAX.—Subchapter A of chapter 1 is amended 
by adding at the end the following new part: 
‘‘PART VII—BASE EROSION AND ANTI-ABUSE 
TAX 
‘‘Sec. 59A. Tax on base erosion payments of taxpayers with substantial gross re-
ceipts. 
‘‘SEC. 59A. TAX ON BASE EROSION PAYMENTS OF TAXPAYERS WITH 
SUBSTANTIAL GROSS RECEIPTS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on each 
applicable taxpayer for any taxable year a tax equal to the base 
erosion minimum tax amount for the taxable year. Such tax shall 
be in addition to any other tax imposed by this subtitle. 
‘‘(b) BASE EROSION MINIMUM TAX AMOUNT.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (3), the term ‘base erosion minimum tax amount’ means, 
with respect to any applicable taxpayer for any taxable year, 
the excess (if any) of— 
‘‘(A) an amount equal to 10 percent (5 percent in the 
case of taxable years beginning in calendar year 2018) 
of the modified taxable income of such taxpayer for the 
taxable year, over 
‘‘(B) an amount equal to the regular tax liability (as 
defined in section 26(b)) of the taxpayer for the taxable 
year, reduced (but not below zero) by the excess (if any) 
of— 
‘‘(i) the credits allowed under this chapter against 
such regular tax liability, over 
26 USC 59A. 
26 USC 
prec. 59A. 
26 USC 904 note. 
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131 STAT. 2227 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) the sum of— 
‘‘(I) the credit allowed under section 38 for 
the taxable year which is properly allocable to 
the research credit determined under section 41(a), 
plus 
‘‘(II) the portion of the applicable section 38 
credits not in excess of 80 percent of the lesser 
of the amount of such credits or the base erosion 
minimum tax amount (determined without regard 
to this subclause). 
‘‘(2) MODIFICATIONS FOR TAXABLE YEARS BEGINNING AFTER 
2025.—In the case of any taxable year beginning after December 
31, 2025, paragraph (1) shall be applied— 
‘‘(A) by substituting ‘12.5 percent’ for ‘10 percent’ in 
subparagraph (A) thereof, and 
‘‘(B) by reducing (but not below zero) the regular tax 
liability (as defined in section 26(b)) for purposes of 
subparagraph (B) thereof by the aggregate amount of the 
credits allowed under this chapter against such regular 
tax liability rather than the excess described in such 
subparagraph. 
‘‘(3) INCREASED RATE FOR CERTAIN BANKS AND SECURITIES 
DEALERS.— 
‘‘(A) IN GENERAL.—In the case of a taxpayer described 
in subparagraph (B) who is an applicable taxpayer for 
any taxable year, the percentage otherwise in effect under 
paragraphs (1)(A) and (2)(A) shall each be increased by 
one percentage point. 
‘‘(B) TAXPAYER
DESCRIBED.—A taxpayer is described 
in this subparagraph if such taxpayer is a member of 
an affiliated group (as defined in section 1504(a)(1)) which 
includes— 
‘‘(i) a bank (as defined in section 581), or 
‘‘(ii) a registered securities dealer under section 
15(a) of the Securities Exchange Act of 1934. 
‘‘(4) APPLICABLE SECTION 38 CREDITS.—For purposes of para-
graph (1)(B)(ii)(II), the term ‘applicable section 38 credits’ 
means the credit allowed under section 38 for the taxable 
year which is properly allocable to— 
‘‘(A) the low-income housing credit determined under 
section 42(a), 
‘‘(B) the renewable electricity production credit deter-
mined under section 45(a), and 
‘‘(C) the investment credit determined under section 
46, but only to the extent properly allocable to the energy 
credit determined under section 48. 
‘‘(c) MODIFIED TAXABLE INCOME.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘modified taxable income’ 
means the taxable income of the taxpayer computed under 
this chapter for the taxable year, determined without regard 
to— 
‘‘(A) any base erosion tax benefit with respect to any 
base erosion payment, or 
‘‘(B) the base erosion percentage of any net operating 
loss deduction allowed under section 172 for the taxable 
year. 
‘‘(2) BASE EROSION TAX BENEFIT.— 
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131 STAT. 2228 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(A) IN GENERAL.—The term ‘base erosion tax benefit’ 
means— 
‘‘(i) any deduction described in subsection (d)(1) 
which is allowed under this chapter for the taxable 
year with respect to any base erosion payment, 
‘‘(ii) in the case of a base erosion payment described 
in subsection (d)(2), any deduction allowed under this 
chapter for the taxable year for depreciation (or 
amortization in lieu of depreciation) with respect to 
the property acquired with such payment, 
‘‘(iii) in the case of a base erosion payment 
described in subsection (d)(3)— 
‘‘(I) any reduction under section 803(a)(1)(B) 
in the gross amount of premiums and other consid-
eration on insurance and annuity contracts for 
premiums and other consideration arising out of 
indemnity insurance, and 
‘‘(II) any deduction under section 832(b)(4)(A) 
from the amount of gross premiums written on 
insurance contracts during the taxable year for 
premiums paid for reinsurance, and 
‘‘(iv) in the case of a base erosion payment 
described in subsection (d)(4), any reduction in gross 
receipts with respect to such payment in computing 
gross income of the taxpayer for the taxable year for 
purposes of this chapter. 
‘‘(B) TAX BENEFITS DISREGARDED IF TAX WITHHELD ON 
BASE EROSION PAYMENT.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), any base erosion tax benefit attributable to any 
base erosion payment— 
‘‘(I) on which tax is imposed by section 871 
or 881, and 
‘‘(II) with respect to which tax has been 
deducted and withheld under section 1441 or 1442, 
shall not be taken into account in computing modified 
taxable income under paragraph (1)(A) or the base 
erosion percentage under paragraph (4). 
‘‘(ii) EXCEPTION.—The amount not taken into 
account in computing modified taxable income by rea-
son of clause (i) shall be reduced under rules similar 
to the rules under section 163(j)(5)(B) (as in effect 
before the date of the enactment of the Tax Cuts and 
Jobs Act). 
‘‘(3) SPECIAL RULES FOR DETERMINING INTEREST FOR WHICH 
DEDUCTION ALLOWED.—For purposes of applying paragraph (1), 
in the case of a taxpayer to which section 163(j) applies for 
the taxable year, the reduction in the amount of interest for 
which a deduction is allowed by reason of such subsection 
shall be treated as allocable first to interest paid or accrued 
to persons who are not related parties with respect to the 
taxpayer and then to such related parties. 
‘‘(4) BASE
EROSION
PERCENTAGE.—For purposes of para-
graph (1)(B)— 
‘‘(A) IN GENERAL.—The term ‘base erosion percentage’ 
means, for any taxable year, the percentage determined 
by dividing— 
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131 STAT. 2229 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) the aggregate amount of base erosion tax bene-
fits of the taxpayer for the taxable year, by 
‘‘(ii) the sum of— 
‘‘(I) the aggregate amount of the deductions 
(including deductions described in clauses (i) and 
(ii) of paragraph (2)(A)) allowable to the taxpayer 
under this chapter for the taxable year, plus 
‘‘(II) the base erosion tax benefits described 
in clauses (iii) and (iv) of paragraph (2)(A) allow-
able to the taxpayer for the taxable year. 
‘‘(B) CERTAIN ITEMS NOT TAKEN INTO ACCOUNT.—The 
amount under subparagraph (A)(ii) shall be determined 
by not taking into account— 
‘‘(i) any deduction allowed under section 172, 245A, 
or 250 for the taxable year, 
‘‘(ii) any deduction for amounts paid or accrued 
for services to which the exception under subsection 
(d)(5) applies, and 
‘‘(iii) any deduction for qualified derivative pay-
ments which are not treated as a base erosion payment 
by reason of subsection (h). 
‘‘(d) BASE EROSION PAYMENT.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘base erosion payment’ means 
any amount paid or accrued by the taxpayer to a foreign person 
which is a related party of the taxpayer and with respect 
to which a deduction is allowable under this chapter. 
‘‘(2) PURCHASE
OF
DEPRECIABLE
PROPERTY.—Such term 
shall also include any amount paid or accrued by the taxpayer 
to a foreign person which is a related party of the taxpayer 
in connection with the acquisition by the taxpayer from such 
person of property of a character subject to the allowance 
for depreciation (or amortization in lieu of depreciation). 
‘‘(3) REINSURANCE PAYMENTS.—Such term shall also include 
any premium or other consideration paid or accrued by the 
taxpayer to a foreign person which is a related party of the 
taxpayer for any reinsurance payments which are taken into 
account under sections 803(a)(1)(B) or 832(b)(4)(A). 
‘‘(4) CERTAIN PAYMENTS TO EXPATRIATED ENTITIES.— 
‘‘(A) IN GENERAL.—Such term shall also include any 
amount paid or accrued by the taxpayer with respect to 
a person described in subparagraph (B) which results in 
a reduction of the gross receipts of the taxpayer. 
‘‘(B) PERSON DESCRIBED.—A person is described in this 
subparagraph if such person is a— 
‘‘(i) surrogate foreign corporation which is a related 
party of the taxpayer, but only if such person first 
became a surrogate foreign corporation after November 
9, 2017, or 
‘‘(ii) foreign person which is a member of the same 
expanded affiliated group as the surrogate foreign cor-
poration. 
‘‘(C) DEFINITIONS.—For purposes of this paragraph— 
‘‘(i) SURROGATE FOREIGN CORPORATION.—The term 
‘surrogate foreign corporation’ has the meaning given 
such term by section 7874(a)(2)(B) but does not include 
a foreign corporation treated as a domestic corporation 
under section 7874(b). 
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131 STAT. 2230 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) EXPANDED
AFFILIATED
GROUP.—The term 
‘expanded affiliated group’ has the meaning given such 
term by section 7874(c)(1). 
‘‘(5) EXCEPTION FOR CERTAIN AMOUNTS WITH RESPECT TO 
SERVICES.—Paragraph (1) shall not apply to any amount paid 
or accrued by a taxpayer for services if— 
‘‘(A) such services are services which meet the require-
ments for eligibility for use of the services cost method 
under section 482 (determined without regard to the 
requirement that the services not contribute significantly 
to fundamental risks of business success or failure), and 
‘‘(B) such amount constitutes the total services cost 
with no markup component. 
‘‘(e) APPLICABLE TAXPAYER.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘applicable taxpayer’ means, 
with respect to any taxable year, a taxpayer— 
‘‘(A) which is a corporation other than a regulated 
investment company, a real estate investment trust, or 
an S corporation, 
‘‘(B) the average annual gross receipts of which for 
the 3-taxable-year period ending with the preceding taxable 
year are at least $500,000,000, and 
‘‘(C) the base erosion percentage (as determined under 
subsection (c)(4)) of which for the taxable year is 3 percent 
(2 percent in the case of a taxpayer described in subsection 
(b)(3)(B)) or higher. 
‘‘(2) GROSS RECEIPTS.— 
‘‘(A) SPECIAL RULE FOR FOREIGN PERSONS.—In the case 
of a foreign person the gross receipts of which are taken 
into account for purposes of paragraph (1)(B), only gross 
receipts which are taken into account in determining 
income which is effectively connected with the conduct 
of a trade or business within the United States shall be 
taken into account. In the case of a taxpayer which is 
a foreign person, the preceding sentence shall not apply 
to the gross receipts of any United States person which 
are aggregated with the taxpayer’s gross receipts by reason 
of paragraph (3). 
‘‘(B) OTHER RULES MADE APPLICABLE.—Rules similar 
to the rules of subparagraphs (B), (C), and (D) of section 
448(c)(3) shall apply in determining gross receipts for pur-
poses of this section. 
‘‘(3) AGGREGATION RULES.—All persons treated as a single 
employer under subsection (a) of section 52 shall be treated 
as 1 person for purposes of this subsection and subsection 
(c)(4), except that in applying section 1563 for purposes of 
section 52, the exception for foreign corporations under section 
1563(b)(2)(C) shall be disregarded. 
‘‘(f) FOREIGN PERSON.—For purposes of this section, the term 
‘foreign person’ has the meaning given such term by section 
6038A(c)(3). 
‘‘(g) RELATED PARTY.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘related party’ means, with 
respect to any applicable taxpayer— 
‘‘(A) any 25-percent owner of the taxpayer, 
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131 STAT. 2231 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(B) any person who is related (within the meaning 
of section 267(b) or 707(b)(1)) to the taxpayer or any 25- 
percent owner of the taxpayer, and 
‘‘(C) any other person who is related (within the 
meaning of section 482) to the taxpayer. 
‘‘(2) 25-PERCENT
OWNER.—The term ‘25-percent owner’ 
means, with respect to any corporation, any person who owns 
at least 25 percent of— 
‘‘(A) the total voting power of all classes of stock of 
a corporation entitled to vote, or 
‘‘(B) the total value of all classes of stock of such 
corporation. 
‘‘(3) SECTION 318 TO APPLY.—Section 318 shall apply for 
purposes of paragraphs (1) and (2), except that— 
‘‘(A) ‘10 percent’ shall be substituted for ‘50 percent’ 
in section 318(a)(2)(C), and 
‘‘(B) subparagraphs (A), (B), and (C) of section 318(a)(3) 
shall not be applied so as to consider a United States 
person as owning stock which is owned by a person who 
is not a United States person. 
‘‘(h) EXCEPTION FOR CERTAIN PAYMENTS MADE IN THE ORDINARY 
COURSE OF TRADE OR BUSINESS.—For purposes of this section— 
‘‘(1) IN GENERAL.—Except as provided in paragraph (3), 
any qualified derivative payment shall not be treated as a 
base erosion payment. 
‘‘(2) QUALIFIED DERIVATIVE PAYMENT.— 
‘‘(A) IN GENERAL.—The term ‘qualified derivative pay-
ment’ means any payment made by a taxpayer pursuant 
to a derivative with respect to which the taxpayer— 
‘‘(i) recognizes gain or loss as if such derivative 
were sold for its fair market value on the last business 
day of the taxable year (and such additional times 
as required by this title or the taxpayer’s method of 
accounting), 
‘‘(ii) treats any gain or loss so recognized as ordi-
nary, and 
‘‘(iii) treats the character of all items of income, 
deduction, gain, or loss with respect to a payment 
pursuant to the derivative as ordinary. 
‘‘(B) REPORTING REQUIREMENT.—No payments shall be 
treated as qualified derivative payments under subpara-
graph (A) for any taxable year unless the taxpayer includes 
in the information required to be reported under section 
6038B(b)(2) with respect to such taxable year such informa-
tion as is necessary to identify the payments to be so 
treated and such other information as the Secretary deter-
mines necessary to carry out the provisions of this sub-
section. 
‘‘(3) EXCEPTIONS
FOR
PAYMENTS
OTHERWISE
TREATED
AS 
BASE EROSION PAYMENTS.—This subsection shall not apply to 
any qualified derivative payment if— 
‘‘(A) the payment would be treated as a base erosion 
payment if it were not made pursuant to a derivative, 
including any interest, royalty, or service payment, or 
‘‘(B) in the case of a contract which has derivative 
and nonderivative components, the payment is properly 
allocable to the nonderivative component. 
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131 STAT. 2232 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(4) DERIVATIVE
DEFINED.—For purposes of this sub-
section— 
‘‘(A) IN GENERAL.—The term ‘derivative’ means any 
contract (including any option, forward contract, futures 
contract, short position, swap, or similar contract) the value 
of which, or any payment or other transfer with respect 
to which, is (directly or indirectly) determined by reference 
to one or more of the following: 
‘‘(i) Any share of stock in a corporation. 
‘‘(ii) Any evidence of indebtedness. 
‘‘(iii) Any commodity which is actively traded. 
‘‘(iv) Any currency. 
‘‘(v) Any rate, price, amount, index, formula, or 
algorithm. 
Such term shall not include any item described in clauses 
(i) through (v). 
‘‘(B) TREATMENT OF AMERICAN DEPOSITORY RECEIPTS 
AND SIMILAR INSTRUMENTS.—Except as otherwise provided 
by the Secretary, for purposes of this part, American deposi-
tory receipts (and similar instruments) with respect to 
shares of stock in foreign corporations shall be treated 
as shares of stock in such foreign corporations. 
‘‘(C) EXCEPTION FOR CERTAIN CONTRACTS.—Such term 
shall not include any insurance, annuity, or endowment 
contract issued by an insurance company to which sub-
chapter L applies (or issued by any foreign corporation 
to which such subchapter would apply if such foreign cor-
poration were a domestic corporation). 
‘‘(i) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section, including regulations— 
‘‘(1) providing for such adjustments to the application of 
this section as are necessary to prevent the avoidance of the 
purposes of this section, including through— 
‘‘(A) the use of unrelated persons, conduit transactions, 
or other intermediaries, or 
‘‘(B) transactions or arrangements designed, in whole 
or in part— 
‘‘(i) to characterize payments otherwise subject to 
this section as payments not subject to this section, 
or 
‘‘(ii) to substitute payments not subject to this 
section for payments otherwise subject to this section 
and 
‘‘(2) for the application of subsection (g), including rules 
to prevent the avoidance of the exceptions under subsection 
(g)(3).’’. 
(b) REPORTING REQUIREMENTS AND PENALTIES.— 
(1) IN
GENERAL.—Subsection (b) of section 6038A is 
amended to read as follows: 
‘‘(b) REQUIRED INFORMATION.— 
‘‘(1) IN
GENERAL.—For purposes of subsection (a), the 
information described in this subsection is such information 
as the Secretary prescribes by regulations relating to— 
‘‘(A) the name, principal place of business, nature of 
business, and country or countries in which organized or 
resident, of each person which— 
26 USC 6038A. 
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131 STAT. 2233 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(i) is a related party to the reporting corporation, 
and 
‘‘(ii) had any transaction with the reporting cor-
poration during its taxable year, 
‘‘(B) the manner in which the reporting corporation 
is related to each person referred to in subparagraph (A), 
and 
‘‘(C) transactions between the reporting corporation 
and each foreign person which is a related party to the 
reporting corporation. 
‘‘(2) ADDITIONAL
INFORMATION
REGARDING
BASE
EROSION 
PAYMENTS.—For purposes of subsection (a) and section 6038C, 
if the reporting corporation or the foreign corporation to whom 
section 6038C applies is an applicable taxpayer, the information 
described in this subsection shall include— 
‘‘(A) such information as the Secretary determines nec-
essary to determine the base erosion minimum tax amount, 
base erosion payments, and base erosion tax benefits of 
the taxpayer for purposes of section 59A for the taxable 
year, and 
‘‘(B) such other information as the Secretary deter-
mines necessary to carry out such section. 
For purposes of this paragraph, any term used in this para-
graph which is also used in section 59A shall have the same 
meaning as when used in such section.’’. 
(2) INCREASE IN PENALTY.—Paragraphs (1) and (2) of section 
6038A(d) are each amended by striking ‘‘$10,000’’ and inserting 
‘‘$25,000’’. 
(c) DISALLOWANCE OF CREDITS AGAINST BASE EROSION TAX.— 
Paragraph (2) of section 26(b) is amended by inserting after 
subparagraph (A) the following new subparagraph: 
‘‘(B) section 59A (relating to base erosion and anti- 
abuse tax),’’. 
(d) CONFORMING AMENDMENTS.— 
(1) The table of parts for subchapter A of chapter 1 is 
amended by adding after the item relating to part VI the 
following new item: 
‘‘PART VII. BASE EROSION AND ANTI-ABUSE TAX’’. 
(2) Paragraph (1) of section 882(a), as amended by this 
Act, is amended by inserting ‘‘or 59A,’’ after ‘‘section 11,’’. 
(3) Subparagraph (A) of section 6425(c)(1), as amended 
by section 13001, is amended to read as follows: 
‘‘(A) the sum of— 
‘‘(i) the tax imposed by section 11, or subchapter 
L of chapter 1, whichever is applicable, plus 
‘‘(ii) the tax imposed by section 59A, over’’. 
(4)(A) Subparagraph (A) of section 6655(g)(1), as amended 
by sections 12001 and 13001, is amended by striking ‘‘plus’’ 
at the end of clause (i), by redesignating clause (ii) as clause 
(iii), and by inserting after clause (i) the following new clause: 
‘‘(ii) the tax imposed by section 59A, plus’’. 
(B) Subparagraphs (A)(i) and (B)(i) of section 6655(e)(2), 
as amended by sections 12001 and 13001, are each amended 
by inserting ‘‘and modified taxable income’’ after ‘‘taxable 
income’’. 
26 USC 
prec. 1. 
26 USC 6038A. 
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131 STAT. 2234 
PUBLIC LAW 115–97—DEC. 22, 2017 
(C) Subparagraph (B) of section 6655(e)(2) is amended by 
adding at the end the following new clause: 
‘‘(iii) MODIFIED TAXABLE INCOME.—The term ‘modi-
fied taxable income’ has the meaning given such term 
by section 59A(c)(1).’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to base erosion payments (as defined in section 59A(d) 
of the Internal Revenue Code of 1986, as added by this section) 
paid or accrued in taxable years beginning after December 31, 
2017. 
PART III—OTHER PROVISIONS 
SEC. 14501. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO 
PASSIVE FOREIGN INVESTMENT COMPANY RULES. 
(a) IN GENERAL.—Section 1297(b)(2)(B) is amended to read 
as follows: 
‘‘(B) derived in the active conduct of an insurance 
business by a qualifying insurance corporation (as defined 
in subsection (f)),’’. 
(b) QUALIFYING INSURANCE CORPORATION DEFINED.—Section 
1297 is amended by adding at the end the following new subsection: 
‘‘(f) QUALIFYING INSURANCE CORPORATION.—For purposes of 
subsection (b)(2)(B)— 
‘‘(1) IN GENERAL.—The term ‘qualifying insurance corpora-
tion’ means, with respect to any taxable year, a foreign corpora-
tion— 
‘‘(A) which would be subject to tax under subchapter 
L if such corporation were a domestic corporation, and 
‘‘(B) the applicable insurance liabilities of which con-
stitute more than 25 percent of its total assets, determined 
on the basis of such liabilities and assets as reported on 
the corporation’s applicable financial statement for the last 
year ending with or within the taxable year. 
‘‘(2) ALTERNATIVE FACTS AND CIRCUMSTANCES TEST FOR CER-
TAIN CORPORATIONS.—If a corporation fails to qualify as a quali-
fied insurance corporation under paragraph (1) solely because 
the percentage determined under paragraph (1)(B) is 25 percent 
or less, a United States person that owns stock in such corpora-
tion may elect to treat such stock as stock of a qualifying 
insurance corporation if— 
‘‘(A) the percentage so determined for the corporation 
is at least 10 percent, and 
‘‘(B) under regulations provided by the Secretary, based 
on the applicable facts and circumstances— 
‘‘(i) the corporation is predominantly engaged in 
an insurance business, and 
‘‘(ii) such failure is due solely to runoff-related 
or rating-related circumstances involving such insur-
ance business. 
‘‘(3) APPLICABLE INSURANCE LIABILITIES.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘applicable insurance 
liabilities’ means, with respect to any life or property and 
casualty insurance business— 
‘‘(i) loss and loss adjustment expenses, and 
26 USC 1297. 
26 USC 26 note. 
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131 STAT. 2235 
PUBLIC LAW 115–97—DEC. 22, 2017 
‘‘(ii) reserves (other than deficiency, contingency, 
or unearned premium reserves) for life and health 
insurance risks and life and health insurance claims 
with respect to contracts providing coverage for mor-
tality or morbidity risks. 
‘‘(B) LIMITATIONS
ON
AMOUNT
OF
LIABILITIES.—Any 
amount determined under clause (i) or (ii) of subparagraph 
(A) shall not exceed the lesser of such amount— 
‘‘(i) as reported to the applicable insurance regu-
latory body in the applicable financial statement 
described in paragraph (4)(A) (or, if less, the amount 
required by applicable law or regulation), or 
‘‘(ii) as determined under regulations prescribed 
by the Secretary. 
‘‘(4) OTHER DEFINITIONS AND RULES.—For purposes of this 
subsection— 
‘‘(A) APPLICABLE
FINANCIAL
STATEMENT.—The term 
‘applicable financial statement’ means a statement for 
financial reporting purposes which— 
‘‘(i) is made on the basis of generally accepted 
accounting principles, 
‘‘(ii) is made on the basis of international financial 
reporting standards, but only if there is no statement 
that meets the requirement of clause (i), or 
‘‘(iii) except as otherwise provided by the Secretary 
in regulations, is the annual statement which is 
required to be filed with the applicable insurance regu-
latory body, but only if there is no statement which 
meets the requirements of clause (i) or (ii). 
‘‘(B) APPLICABLE INSURANCE REGULATORY BODY.—The 
term ‘applicable insurance regulatory body’ means, with 
respect to any insurance business, the entity established 
by law to license, authorize, or regulate such business 
and to which the statement described in subparagraph 
(A) is provided.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14502. REPEAL OF FAIR MARKET VALUE METHOD OF INTEREST 
EXPENSE APPORTIONMENT. 
(a) IN GENERAL.—Paragraph (2) of section 864(e) is amended 
to read as follows: 
‘‘(2) GROSS INCOME AND FAIR MARKET VALUE METHODS MAY 
NOT BE USED FOR INTEREST.—All allocations and apportion-
ments of interest expense shall be determined using the 
adjusted bases of assets rather than on the basis of the fair 
market value of the assets or gross income.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
TITLE II 
SEC. 20001. OIL AND GAS PROGRAM. 
(a) DEFINITIONS.—In this section: 
(1) COASTAL PLAIN.—The term ‘‘Coastal Plain’’ means the 
area identified as the 1002 Area on the plates prepared by 
26 USC 3143 
note. 
26 USC 864 note. 
26 USC 864. 
26 USC 1297 
note. 
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131 STAT. 2236 
PUBLIC LAW 115–97—DEC. 22, 2017 
the United States Geological Survey entitled ‘‘ANWR Map – 
Plate 1’’ and ‘‘ANWR Map – Plate 2’’, dated October 24, 2017, 
and on file with the United States Geological Survey and the 
Office of the Solicitor of the Department of the Interior. 
(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 
of the Interior, acting through the Bureau of Land Management. 
(b) OIL AND GAS PROGRAM.— 
(1) IN
GENERAL.—Section 1003 of the Alaska National 
Interest Lands Conservation Act (16 U.S.C. 3143) shall not 
apply to the Coastal Plain. 
(2) ESTABLISHMENT.— 
(A) IN GENERAL.—The Secretary shall establish and 
administer a competitive oil and gas program for the 
leasing, development, production, and transportation of oil 
and gas in and from the Coastal Plain. 
(B) PURPOSES.—Section 303(2)(B) of the Alaska 
National Interest Lands Conservation Act (Public Law 96– 
487; 94 Stat. 2390) is amended— 
(i) in clause (iii), by striking ‘‘and’’ at the end; 
(ii) in clause (iv), by striking the period at the 
end and inserting ‘‘; and’’; and 
(iii) by adding at the end the following: 
‘‘(v) to provide for an oil and gas program on 
the Coastal Plain.’’. 
(3) MANAGEMENT.—Except as otherwise provided in this 
section, the Secretary shall manage the oil and gas program 
on the Coastal Plain in a manner similar to the administration 
of lease sales under the Naval Petroleum Reserves Production 
Act of 1976 (42 U.S.C. 6501 et seq.) (including regulations). 
(4) ROYALTIES.—Notwithstanding the Mineral Leasing Act 
(30 U.S.C. 181 et seq.), the royalty rate for leases issued pursu-
ant to this section shall be 16.67 percent. 
(5) RECEIPTS.—Notwithstanding the Mineral Leasing Act 
(30 U.S.C. 181 et seq.), of the amount of adjusted bonus, rental, 
and royalty receipts derived from the oil and gas program 
and operations on Federal land authorized under this section— 
(A) 50 percent shall be paid to the State of Alaska; 
and 
(B) the balance shall be deposited into the Treasury 
as miscellaneous receipts. 
(c) 2 LEASE SALES WITHIN 10 YEARS.— 
(1) REQUIREMENT.— 
(A) IN GENERAL.—Subject to subparagraph (B), the Sec-
retary shall conduct not fewer than 2 lease sales area- 
wide under the oil and gas program under this section 
by not later than 10 years after the date of enactment 
of this Act. 
(B) SALE ACREAGES; SCHEDULE.— 
(i) ACREAGES.—The Secretary shall offer for lease 
under the oil and gas program under this section— 
(I) not fewer than 400,000 acres area-wide 
in each lease sale; and 
(II) those areas that have the highest potential 
for the discovery of hydrocarbons. 
(ii) SCHEDULE.—The Secretary shall offer— 
16 USC 668dd 
note. 
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131 STAT. 2237 
PUBLIC LAW 115–97—DEC. 22, 2017 
(I) the initial lease sale under the oil and 
gas program under this section not later than 4 
years after the date of enactment of this Act; and 
(II) a second lease sale under the oil and gas 
program under this section not later than 7 years 
after the date of enactment of this Act. 
(2) RIGHTS-OF-WAY.—The Secretary shall issue any rights- 
of-way or easements across the Coastal Plain for the explo-
ration, development, production, or transportation necessary 
to carry out this section. 
(3) SURFACE DEVELOPMENT.—In administering this section, 
the Secretary shall authorize up to 2,000 surface acres of Fed-
eral land on the Coastal Plain to be covered by production 
and support facilities (including airstrips and any area covered 
by gravel berms or piers for support of pipelines) during the 
term of the leases under the oil and gas program under this 
section. 
SEC. 20002. LIMITATIONS ON AMOUNT OF DISTRIBUTED QUALIFIED 
OUTER CONTINENTAL SHELF REVENUES. 
Section 105(f)(1) of the Gulf of Mexico Energy Security Act 
of 2006 (43 U.S.C. 1331 note; Public Law 109–432) is amended 
by striking ‘‘exceed $500,000,000 for each of fiscal years 2016 
through 2055.’’ and inserting the following: ‘‘exceed— 
‘‘(A) $500,000,000 for each of fiscal years 2016 through 
2019; 
‘‘(B) $650,000,000 for each of fiscal years 2020 and 
2021; and 
‘‘(C) $500,000,000 for each of fiscal years 2022 through 
2055.’’. 
SEC. 20003. STRATEGIC PETROLEUM RESERVE DRAWDOWN AND SALE. 
(a) DRAWDOWN AND SALE.— 
(1) IN
GENERAL.—Notwithstanding section 161 of the 
Energy Policy and Conservation Act (42 U.S.C. 6241), except 
as provided in subsections (b) and (c), the Secretary of Energy 
shall draw down and sell from the Strategic Petroleum Reserve 
7,000,000 barrels of crude oil during the period of fiscal years 
2026 through 2027. 
(2) DEPOSIT OF AMOUNTS RECEIVED FROM SALE.—Amounts 
received from a sale under paragraph (1) shall be deposited 
in the general fund of the Treasury during the fiscal year 
in which the sale occurs. 
(b) EMERGENCY PROTECTION.—The Secretary of Energy shall 
not draw down and sell crude oil under subsection (a) in a quantity 
that would limit the authority to sell petroleum products under 
subsection (h) of section 161 of the Energy Policy and Conservation 
Act (42 U.S.C. 6241) in the full quantity authorized by that sub-
section. 
42 USC 6241 
note. 
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131 STAT. 2238 
PUBLIC LAW 115–97—DEC. 22, 2017 
LEGISLATIVE HISTORY—H.R. 1 (S. 1): 
HOUSE REPORTS: Nos. 115–409 (Comm. on Ways and Means) and 115–466 
(Comm. of Conference). 
CONGRESSIONAL RECORD, Vol. 163 (2017): 
Nov. 15, 16, considered and passed House. 
Nov. 29, 30, Dec. 1, considered and passed Senate, amended. 
Dec. 19, House agreed to conference report. Senate sustained point of order 
against conference report; receded from its amendment and concurred with 
an amendment. 
Dec. 20, House concurred in Senate amendment. 
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2017): 
Dec. 22, Presidential remarks. 
(c) LIMITATION.—The Secretary of Energy shall not drawdown 
or conduct sales of crude oil under subsection (a) after the date 
on which a total of $600,000,000 has been deposited in the general 
fund of the Treasury from sales authorized under that subsection. 
Approved December 22, 2017. 
VerDate Sep 11 2014 
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