,i #aac? ,,congress #b;d ,session ,h4 ,r4 #a ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,decemb] #aj1 #bjad ,mr4 ,camp introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to provide = compreh5sive tax re=m4 #a4 ,%ort title2 etc 7a7 ,%ort title ,?is ,act may be cit$ z ! ,tax ,re=m ,act ( #bjad4 7b7 ,am5dm5t ( #aihf ,code ,except z o!rwise expressly provid$1 :5ev] 9 ?is ,act an am5dm5t or repeal is express$ 9 t]ms ( an am5dm5t to1 or repeal (1 a section or o!r provision1 ! ref]5ce %all be consid]$ to be made to a section or o!r provision ( ! ,int]nal ,rev5ue ,code ( #aihf4 7c7 ,table ( cont5ts ,! table ( cont5ts ( ?is ,act is z foll[s3 ,sec4 #a4 ,%ort title2 etc4 ,title ,i--,tax ,re=m = ,individuals ,subtitle ,a--,individual income tax rate re=m ,sec4 #ajja4 ,simplification ( individual income tax rates4 ,sec4 #ajjb4 ,d$uction = adju/$ net capital ga94 ,sec4 #ajjc4 ,con=m+ am5dm5ts relat$ to simplification ( individual income tax rates4 ,subtitle ,b--,simplification ( tax b5efits = families ,sec4 #aaja4 ,/&>d d$uction4 ,sec4 #aajb4 ,increase & expansion ( *ild tax cr$it4 ,sec4 #aajc4 ,modification ( e>n$ income tax cr$it4 ,sec4 #aajd4 ,repeal ( d$uction = p]sonal exemptions4 ,subtitle ,c--,simplification ( education inc5tives ,sec4 #abja4 ,am]ican opportunity tax cr$it4 ,sec4 #abjb4 ,expansion ( ,pell ,grant exclusion f gross income4 ,sec4 #abjc4 ,repeal ( exclusion ( income f ,unit$ ,/ates sav+s bonds us$ to pay high] education tuition & fees4 ,sec4 #abjd4 ,repeal ( d$uction = int]e/ on education loans4 ,sec4 #abje4 ,repeal ( d$uction = qualifi$ tuition & relat$ exp5ses4 ,sec4 #abjf4 ,no new contributions to ,cov]dell education sav+s acc\nts4 ,sec4 #abjg4 ,repeal ( exclusion = dis*>ge ( /ud5t loan indebt$ness4 ,sec4 #abjh4 ,repeal ( exclusion = qualifi$ tuition r$uctions4 ,sec4 #abji4 ,repeal ( exclusion = education assi/ance programs4 ,sec4 #abaj4 ,repeal ( exception to #aj-p]c5t p5alty = high] education exp5ses4 ,subtitle ,d--,repeal ( c]ta9 cr$its = individuals ,sec4 #acja4 ,repeal ( dep5d5t c>e cr$it4 ,sec4 #acjb4 ,repeal ( cr$it = adoption exp5ses4 ,sec4 #acjc4 ,repeal ( cr$it = nonbus9ess en]gy prop]ty4 ,sec4 #acjd4 ,repeal ( cr$it = resid5tial en]gy effici5t prop]ty4 ,sec4 #acje4 ,repeal ( cr$it = qualifi$ electric vehicles4 ,sec4 #acjf4 ,repeal ( alt]native motor vehicle cr$it4 ,sec4 #acjg4 ,repeal ( alt]native fuel vehicle refuel+ prop]ty cr$it4 ,sec4 #acjh4 ,repeal ( cr$it = new qualifi$ plug-9 electric drive motor vehicles4 ,sec4 #acji4 ,repeal ( cr$it = heal? insurance co/s ( eligible individuals4 ,sec4 #acaj4 ,repeal ( fir/-"t homebuy] cr$it4 ,subtitle ,e--,d$uctions1 exclusions1 & c]ta9 o!r provisions ,sec4 #adja4 ,exclusion ( ga9 f sale ( a pr9cipal resid5ce4 ,sec4 #adjb4 ,mortgage int]e/4 ,sec4 #adjc4 ,*>itable contributions4 ,sec4 #adjd4 ,d5ial ( d$uction = exp5ses attributable to ! trade or bus9ess ( be+ an employee4 ,sec4 #adje4 ,repeal ( d$uction = taxes n paid or accru$ 9 a trade or bus9ess4 ,sec4 #adjf4 ,repeal ( d$uction = p]sonal casualty losses4 ,sec4 #adjg4 ,limitation on wag]+ losses4 ,sec4 #adjh4 ,repeal ( d$uction = tax prep>ation exp5ses4 ,sec4 #adji4 ,repeal ( d$uction = m$ical exp5ses4 ,sec4 #adaj4 ,repeal ( disqualification ( exp5ses = ov]-!-c\nt] drugs "u c]ta9 acc\nts & arrangem5ts4 ,sec4 #adaa4 ,repeal ( d$uction = alimony paym5ts & correspond+ inclusion 9 gross income4 ,sec4 #adab4 ,repeal ( d$uction = mov+ exp5ses4 ,sec4 #adac4 ,t]m9ation ( d$uction & exclusions = contributions to m$ical sav+s acc\nts4 ,sec4 #adad4 ,repeal ( #b-p]c5t floor on miscellane\s itemiz$ d$uctions4 ,sec4 #adae4 ,repeal ( ov]all limitation on itemiz$ d$uctions4 ,sec4 #adaf4 ,d$uction = amortizable bond premium all[$ 9 det]m9+ adju/$ gross income4 ,sec4 #adag4 ,repeal ( exclusion1 etc41 = employee a*ievem5t aw>ds4 ,sec4 #adah4 ,cl>ification ( special rule = c]ta9 gov]nm5tal plans4 ,sec4 #adai4 ,limitation on exclusion = employ]-provid$ h\s+4 ,sec4 #adbj4 ,fr+e b5efits4 ,sec4 #adba4 ,repeal ( exclusion ( net unrealiz$ appreciation 9 employ] securities4 ,sec4 #adbb4 ,consi/5t basis report+ betwe5 e/ate & p]son acquir+ prop]ty f dec$5t4 ,subtitle ,f--,employm5t tax modifications ,sec4 #aeja4 ,modifications ( d$uction = ,social ,security taxes 9 comput+ net e>n+s f self-employm5t4 ,sec4 #aejb4 ,det]m9ation ( net e>n+s f self-employm5t4 ,sec4 #aejc4 ,repeal ( exemption f ,,fica taxes = c]ta9 =eign work]s4 ,sec4 #aejd4 ,repeal ( exemption f ,,fica taxes = c]ta9 /ud5ts4 ,sec4 #aeje4 ,ov]ride ( ,treasury guidance provid+ t c]ta9 employ]-provid$ supplem5tal unemploym5t b5efits are n subject to employm5t taxes4 ,sec4 #aejf4 ,c]tifi$ pr(essional employ] organizations4 ,subtitle ,g--,p5sions & ,retirem5t ,"p #a--;,individual ,retirem5t ,plans ,sec4 #afja4 ,elim9ation ( income limits on contributions to ,ro? ,i,r,as4 ,sec4 #afjb4 ,no new contributions to traditional ,i,r,as4 ,sec4 #afjc4 ,inflation adju/m5t = ,ro? ,,ira contributions4 ,sec4 #afjd4 ,repeal ( special rule p]mitt+ re*>act]ization ( ,ro? ,,ira contributions z traditional ,,ira contributions4 ,sec4 #afje4 ,repeal ( exception to #aj-p]c5t p5alty = fir/ home pur*ases4 ,"p #b--;,employ]-,provid$ ,plans ,sec4 #afaa4 ,t]m9ation = new ,s,e,ps4 ,sec4 #afab4 ,t]m9ation = new ,,simple #dja7k7s4 ,sec4 #afac4 ,rules relat$ to designat$ ,ro? contributions4 ,sec4 #afad4 ,modifications ( requir$ di/ribution rules = p5sion plans4 ,sec4 #afae4 ,r$uction 9 m9imum age = all[able 9-s]vice di/ributions4 ,sec4 #afaf4 ,modification ( rules gov]n+ h>d%ip di/ributions4 ,sec4 #afag4 ,ext5d$ rollov] p]iod = ! rollov] ( plan loan (fset am\nts 9 c]ta9 cases4 ,sec4 #afah4 ,coord9ation ( contribution limitations = #djc7;b7 plans & gov]nm5tal #deg7;b7 plans4 ,sec4 #afai4 ,application ( #aj-p]c5t e>ly di/ribution tax to gov]nm5tal #deg plans4 ,sec4 #afbj4 ,inflation adju/m5ts = qualifi$ plan b5efit & contribution limitations4 ,sec4 #afba4 ,inflation adju/m5ts = qualifi$ plan elective def]ral limitations4 ,sec4 #afbb4 ,inflation adju/m5ts = ,,simple retirem5t acc\nts4 ,sec4 #afbc4 ,inflation adju/m5ts = cat*-up contributions = c]ta9 employ] plans4 ,sec4 #afbd4 ,inflation adju/m5ts = gov]nm5tal & tax-exempt organization plans4 ,subtitle ,h--,c]ta9 provisions relat$ to memb]s ( ,indian tribes ,sec4 #agja4 ,indian g5]al welf>e b5efits4 ,sec4 #agjb4 ,tribal ,advisory ,committee4 ,sec4 #agjc4 ,o!r relief = ,indian tribes4 ,title ,,ii--,alt]native ,m9imum ,tax ,repeal ,sec4 #bjja4 ,repeal ( alt]native m9imum tax4 ,title ,,iii--,bus9ess ,tax ,re=m ,subtitle ,a--,tax ,rates ,sec4 #cjja4 #be-p]c5t corporate tax rate4 ,subtitle ,b--,re=m ( bus9ess-,relat$ exclusions & d$uctions ,sec4 #caja4 ,revision ( treatm5t ( contributions to capital4 ,sec4 #cajb4 ,repeal ( d$uction = local lobby+ exp5ses4 ,sec4 #cajc4 ,exp5ditures = repairs 9 connection ) casualty losses4 ,sec4 #cajd4 ,re=m ( accel]at$ co/ recov]y sy/em4 ,sec4 #caje4 ,repeal ( amortization ( pollution control facilities4 ,sec4 #cajf4 ,net op]at+ loss d$uction4 ,sec4 #cajg4 ,circulation exp5ditures4 ,sec4 #cajh4 ,amortization ( rese>* & exp]im5tal exp5ditures4 ,sec4 #caji4 ,repeal ( d$uctions = soil & wat] cons]vation exp5ditures & endang]$ species recov]y exp5ditures4 ,sec4 #caaj4 ,amortization ( c]ta9 adv]tis+ exp5ses4 ,sec4 #caaa4 ,exp5s+ c]ta9 depreciable bus9ess assets = small bus9ess4 ,sec4 #caab4 ,repeal ( election to exp5se c]ta9 ref9]ies4 ,sec4 #caac4 ,repeal ( d$uction = en]gy effici5t comm]cial build+s4 ,sec4 #caad4 ,repeal ( election to exp5se advanc$ m9e safety equipm5t4 ,sec4 #caae4 ,repeal ( d$uction = exp5ditures by f>m]s = f]tiliz]1 etc4 ,sec4 #caaf4 ,repeal ( special treatm5t ( c]ta9 qualifi$ film & television productions4 ,sec4 #caag4 ,repeal ( special rules = recov]ies ( damages ( antitru/ violations1 etc4 ,sec4 #caah4 ,treatm5t ( re=e/ation exp5ditures4 ,sec4 #caai4 #bj-ye> amortization ( goodwill & c]ta9 o!r intangibles4 ,sec4 #cabj4 ,treatm5t ( environm5tal rem$iation co/s4 ,sec4 #caba4 ,repeal ( exp5s+ ( qualifi$ disa/] exp5ses4 ,sec4 #cabb4 ,phase\t & repeal ( d$uction = income attributable to dome/ic production activities4 ,sec4 #cabc4 ,unification ( d$uction = organizational exp5ditures4 ,sec4 #cabd4 ,prev5tion ( arbitrage ( d$uctible int]e/ exp5se & tax-exempt int]e/ income4 ,sec4 #cabe4 ,prev5tion ( transf] ( c]ta9 losses f tax indiff]5t p>ties4 ,sec4 #cabf4 ,ent]ta9m5t1 etc4 exp5ses4 ,sec4 #cabg4 ,repeal ( limitation on corporate acquisition indebt$ness4 ,sec4 #cabh4 ,d5ial ( d$uctions & cr$its = exp5ditures 9 illegal bus9esses4 ,sec4 #cabi4 ,limitation on d$uction = ,,fdic premiums4 ,sec4 #cacj4 ,repeal ( p]c5tage depletion4 ,sec4 #caca4 ,repeal ( passive activity exception = work+ int]e/s 9 oil & gas prop]ty4 ,sec4 #cacb4 ,repeal ( special rules = ga9 or loss on timb]1 coal1 or dome/ic iron ore4 ,sec4 #cacc4 ,repeal ( l-k9d ex*anges4 ,sec4 #cacd4 ,re/riction on trade or bus9ess prop]ty treat$ z simil> or relat$ 9 s]vice to involunt>ily conv]t$ prop]ty 9 disa/] areas4 ,sec4 #cace4 ,repeal ( rollov] ( publicly trad$ securities ga9 into specializ$ small bus9ess inve/m5t companies4 ,sec4 #cacf4 ,t]m9ation ( special rules = ga9 f c]ta9 small bus9ess /ock4 ,sec4 #cacg4 ,c]ta9 self-creat$ prop]ty n treat$ z a capital asset4 ,sec4 #cach4 ,repeal ( special rule = sale or ex*ange ( pat5ts4 ,sec4 #caci4 ,depreciation recapture on ga9 f disposition ( c]ta9 depreciable realty4 ,sec4 #cadj4 ,common d$uction con=m+ am5dm5ts4 ,subtitle ,c--,re=m ( bus9ess cr$its ,sec4 #cbja4 ,repeal ( cr$it = alcohol1 etc41 us$ z fuel4 ,sec4 #cbjb4 ,repeal ( cr$it = biodiesel & r5ewable diesel us$ z fuel4 ,sec4 #cbjc4 ,rese>* cr$it modifi$ & made p]man5t4 ,sec4 #cbjd4 ,l[-income h\s+ tax cr$it4 ,sec4 #cbje4 ,repeal ( enhanc$ oil recov]y cr$it4 ,sec4 #cbjf4 ,phase\t & repeal ( cr$it = electricity produc$ f c]ta9 r5ewable res\rces4 ,sec4 #cbjg4 ,repeal ( ,indian employm5t cr$it4 ,sec4 #cbjh4 ,repeal ( cr$it = portion ( employ] ,social ,security taxes paid ) respect to employee ca% tips4 ,sec4 #cbji4 ,repeal ( cr$it = cl9ical te/+ exp5ses = c]ta9 drugs = r>e diseases or conditions4 ,sec4 #cbaj4 ,repeal ( cr$it = small employ] p5sion plan />tup co/s4 ,sec4 #cbaa4 ,repeal ( employ]-provid$ *ild c>e cr$it4 ,sec4 #cbab4 ,repeal ( railroad track ma9t5ance cr$it4 ,sec4 #cbac4 ,repeal ( cr$it = production ( l[ sulfur diesel fuel4 ,sec4 #cbad4 ,repeal ( cr$it = produc+ oil & gas f m>g9al wells4 ,sec4 #cbae4 ,repeal ( cr$it = production f advanc$ nucle> p[] facilities4 ,sec4 #cbaf4 ,repeal ( cr$it = produc+ fuel f a nonconv5tional s\rce4 ,sec4 #cbag4 ,repeal ( new en]gy effici5t home cr$it4 ,sec4 #cbah4 ,repeal ( en]gy effici5t appliance cr$it4 ,sec4 #cbai4 ,repeal ( m9e rescue team tra9+ cr$it4 ,sec4 #cbbj4 ,repeal ( agricultural *emicals security cr$it4 ,sec4 #cbba4 ,repeal ( cr$it = c>bon dioxide seque/ration4 ,sec4 #cbbb4 ,repeal ( cr$it = employee heal? insurance exp5ses ( small employ]s4 ,sec4 #cbbc4 ,repeal ( rehabilitation cr$it4 ,sec4 #cbbd4 ,repeal ( en]gy cr$it4 ,sec4 #cbbe4 ,repeal ( qualify+ advanc$ coal project cr$it4 ,sec4 #cbbf4 ,repeal ( qualify+ gasification project cr$it4 ,sec4 #cbbg4 ,repeal ( qualify+ advanc$ en]gy project cr$it4 ,sec4 #cbbh4 ,repeal ( qualify+ !rapeutic discov]y project cr$it4 ,sec4 #cbbi4 ,repeal ( "w opportunity tax cr$it4 ,sec4 #cbcj4 ,repeal ( d$uction = c]ta9 unus$ bus9ess cr$its4 ,subtitle ,d--,acc\nt+ me?ods ,sec4 #ccja4 ,limitation on use ( ca% me?od ( acc\nt+4 ,sec4 #ccjb4 ,rules = det]m9+ :e!r taxpay] has adopt$ a me?od ( acc\nt+4 ,sec4 #ccjc4 ,c]ta9 special rules = taxable ye> ( inclusion4 ,sec4 #ccjd4 ,in/allm5t sales4 ,sec4 #ccje4 ,repeal ( special rule = prepaid subscription income4 ,sec4 #ccjf4 ,repeal ( special rule = prepaid dues income ( c]ta9 memb]%ip organizations4 ,sec4 #ccjg4 ,repeal ( special rule = magaz9es1 pap]backs1 & records return$ aft] close ( ! taxable ye>4 ,sec4 #ccjh4 ,modification ( rules = long-t]m contracts4 ,sec4 #ccji4 ,nucle> decommission+ res]ve funds4 ,sec4 #ccaj4 ,repeal ( la/-91 fir/-out me?od ( inv5tory4 ,sec4 #ccaa4 ,repeal ( l[] ( co/ or m>ket me?od ( inv5tory4 ,sec4 #ccab4 ,modification ( rules = capitalization & inclusion 9 inv5tory co/s ( c]ta9 exp5ses4 ,sec4 #ccac4 ,modification ( income =eca/ me?od4 ,sec4 #ccad4 ,repeal ( av]ag+ ( f>m income4 ,sec4 #ccae4 ,treatm5t ( pat5t or tradem>k infr+em5t aw>ds4 ,sec4 #ccaf4 ,repeal ( r$undant rules ) respect to c>ry+ *>ges4 ,sec4 #ccag4 ,repeal ( recurr+ item exception = spudd+ ( oil or gas wells4 ,subtitle ,e--,f9ancial ,in/rum5ts ,"p #a--;,d]ivatives & h$ges ,sec4 #cdja4 ,treatm5t ( c]ta9 d]ivatives4 ,sec4 #cdjb4 ,modification ( c]ta9 rules relat$ to h$ges4 ,"p #b--,treatm5t ( debt in/rum5ts ,sec4 #cdaa4 ,curr5t inclusion 9 income ( m>ket disc\nt4 ,sec4 #cdab4 ,treatm5t ( c]ta9 ex*anges ( debt in/rum5ts4 ,sec4 #cdac4 ,coord9ation ) rules = inclusion n lat] ?an = f9ancial acc\nt+ purposes4 ,sec4 #cdad4 ,rules reg>d+ c]ta9 gov]nm5t debt4 ,"p #c--;,c]ta9 rules = det]m9+ ga9 & loss ,sec4 #cdba4 ,co/ basis ( specifi$ securities det]m9$ )\t reg>d to id5tification4 ,sec4 #cdbb4 ,wa% sales by relat$ p>ties4 ,sec4 #cdbc4 ,nonrecognition = d]ivative transactions by a corporation ) respect to its /ock4 ,"p #d--,tax favor$ bonds ,sec4 #cdca4 ,t]m9ation ( private activity bonds4 ,sec4 #cdcb4 ,t]m9ation ( cr$it = int]e/ on c]ta9 home mortgages4 ,sec4 #cdcc4 ,repeal ( advance refund+ bonds4 ,sec4 #cdcd4 ,repeal ( tax cr$it bond rules4 ,subtitle ,f--,insurance re=ms ,sec4 #ceja4 ,exception to pro rata int]e/ exp5se disall[ance = corporate-own$ life insurance re/rict$ to #bj-p]c5t own]s4 ,sec4 #cejb4 ,net op]at+ losses ( life insurance companies4 ,sec4 #cejc4 ,repeal ( small life insurance company d$uction4 ,sec4 #cejd4 ,computation ( life insurance tax res]ves4 ,sec4 #ceje4 ,adju/m5t = *ange 9 comput+ res]ves4 ,sec4 #cejf4 ,modification ( rules = life insurance proration = purposes ( det]m9+ ! divid5ds receiv$ d$uction4 ,sec4 #cejg4 ,repeal ( special rule = di/ributions to %>ehold]s f pre-#aihd policyhold]s surplus acc\nt4 ,sec4 #cejh4 ,modification ( proration rules = prop]ty & casualty insurance companies4 ,sec4 #ceji4 ,repeal ( special treatm5t ( ,blue ,cross & ,blue ,%ield organizations1 etc4 ,sec4 #ceaj4 ,modification ( disc\nt+ rules = prop]ty & casualty insurance companies4 ,sec4 #ceaa4 ,repeal ( special e/imat$ tax paym5ts4 ,sec4 #ceab4 ,capitalization ( c]ta9 policy acquisition exp5ses4 ,sec4 #ceac4 ,tax report+ = life settlem5t transactions4 ,sec4 #cead4 ,cl>ification ( tax basis ( life insurance contracts4 ,sec4 #ceae4 ,exception to transf] = valuable consid]ation rules4 ,subtitle ,g--,pass-,?ru & c]ta9 o!r entities ,"p #a--,s ,corporations ,sec4 #cfja4 ,r$uc$ recognition p]iod = built-9 ga9s made p]man5t4 ,sec4 #cfjb4 ,modifications to ,s corporation passive inve/m5t income rules4 ,sec4 #cfjc4 ,expansion ( qualify+ b5efici>ies ( an elect+ small bus9ess tru/4 ,sec4 #cfjd4 ,*>itable contribution d$uction = elect+ small bus9ess tru/s4 ,sec4 #cfje4 ,p]man5t rule reg>d+ basis adju/m5t to /ock ( ,s corporations mak+ *>itable contributions ( prop]ty4 ,sec4 #cfjf4 ,ext5sion ( "t = mak+ ,s corporation elections4 ,sec4 #cfjg4 ,relocation ( ,c corporation def9ition4 ,"p #b--,p>tn]%ips ,sec4 #cfaa4 ,repeal ( rules relat+ to gu>ante$ paym5ts & liquidat+ di/ributions4 ,sec4 #cfab4 ,m&atory adju/m5ts to basis ( p>tn]%ip prop]ty 9 case ( transf] ( p>tn]%ip int]e/s4 ,sec4 #cfac4 ,m&atory adju/m5ts to basis ( undi/ribut$ p>tn]%ip prop]ty4 ,sec4 #cfad4 ,correspond+ adju/m5ts to basis ( prop]ties held by p>tn]%ip :]e p>tn]%ip basis adju/$4 ,sec4 #cfae4 ,*>itable contributions & =eign taxes tak5 into acc\nt 9 det]m9+ limitation on all[ance ( p>tn]'s %>e ( loss4 ,sec4 #cfaf4 ,revisions relat$ to unrealiz$ receivables & inv5tory items4 ,sec4 #cfag4 ,repeal ( "t limitation on tax+ precontribution ga94 ,sec4 #cfah4 ,p>tn]%ip int]e/s creat$ by gift4 ,sec4 #cfai4 ,repeal ( te*nical t]m9ation4 ,sec4 #cfbj4 ,publicly trad$ p>tn]%ip exception re/rict$ to m9+ & natural res\rces p>tn]%ips4 ,sec4 #cfba4 ,ord9>y income treatm5t 9 ! case ( p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices4 ,sec4 #cfbb4 ,p>tn]%ip audits & adju/m5ts4 ,"p #c--,r,e,i,ts & ,r,i,cs ,sec4 #cfca4 ,prev5tion ( tax-free sp9(fs involv+ ,r,e,i,ts4 ,sec4 #cfcb4 ,ext5sion ( p]iod = prev5tion ( ,,reit election foll[+ revocation or t]m9ation4 ,sec4 #cfcc4 ,c]ta9 %ort-life prop]ty n treat$ z real prop]ty = purposes ( ,,reit provisions4 ,sec4 #cfcd4 ,repeal ( special rules = timb] held by ,r,e,i,ts4 ,sec4 #cfce4 ,limitation on fix$ p]c5tage r5t & int]e/ exceptions = ,,reit income te/s4 ,sec4 #cfcf4 ,repeal ( pref]5tial divid5d rule = publicly (f]$ ,r,e,i,ts4 ,sec4 #cfcg4 ,au?ority = alt]native rem$ies to address c]ta9 ,,reit di/ribution failures4 ,sec4 #cfch4 ,limitations on designation ( divid5ds by ,r,e,i,ts4 ,sec4 #cfci4 ,non-,,reit e>n+s & pr(its requir$ to be di/ribut$ by ,,reit 9 ca%4 ,sec4 #cfdj4 ,debt in/rum5ts ( publicly (f]$ ,r,e,i,ts & mortgages treat$ z real e/ate assets4 ,sec4 #cfda4 ,asset & income te/ cl>ification reg>d+ ancill>y p]sonal prop]ty4 ,sec4 #cfdb4 ,h$g+ provisions4 ,sec4 #cfdc4 ,modification ( ,,reit e>n+s & pr(its calculation to avoid duplicate taxation4 ,sec4 #cfdd4 ,r$uction 9 p]c5tage limitation on assets ( ,,reit :i* may be taxable ,,reit subsidi>ies4 ,sec4 #cfde4 ,treatm5t ( c]ta9 s]vices provid$ by taxable ,,reit subsidi>ies4 ,sec4 #cfdf4 ,/udy relat+ to taxable ,,reit subsidi>ies4 ,sec4 #cfdg4 ,c corporation election to become1 or transf] assets to1 a ,,ric or ,,reit4 ,sec4 #cfdh4 ,int]e/s 9 ,r,i,cs & ,r,e,i,ts n exclud$ f def9ition ( ,unit$ ,/ates real prop]ty int]e/s4 ,sec4 #cfdi4 ,divid5ds d]iv$ f ,r,i,cs & ,r,e,i,ts ineligible = d$uction = ,unit$ ,/ates s\rce portion ( divid5ds f c]ta9 =eign corporations4 ,"p #d--,p]sonal hold+ companies ,sec4 #cffa4 ,exclusion ( divid5ds f controll$ =eign corporations f ! def9ition ( p]sonal hold+ company income = purposes ( ! p]sonal hold+ company rules4 ,subtitle ,h--,taxation ( =eign p]sons ,sec4 #cgja4 ,prev5tion ( avoidance ( tax ?r\gh re9surance ) non-tax$ affiliates4 ,sec4 #cgjb4 ,taxation ( pass5g] cruise gross income ( =eign corporations & nonresid5t ali5 individuals4 ,sec4 #cgjc4 ,re/riction on insurance bus9ess exception to passive =eign inve/m5t company rules4 ,sec4 #cgjd4 ,modification ( limitation on e>n+s /ripp+4 ,sec4 #cgje4 ,limitation on treaty b5efits = c]ta9 d$uctible paym5ts4 ,subtitle ,i--,provisions relat$ to comp5sation ,"p #a--;,executive comp5sation ,sec4 #chja4 ,nonqualifi$ def]r$ comp5sation4 ,sec4 #chjb4 ,modification ( limitation on excessive employee remun]ation4 ,sec4 #chjc4 ,excise tax on excess tax-exempt organization executive comp5sation4 ,sec4 #chjd4 ,d5ial ( d$uction z rese>* exp5diture = /ock transf]r$ pursuant to an inc5tive /ock option4 ,"p #b--,work] classification ,sec4 #chaa4 ,det]m9ation ( work] classification4 ,subtitle ,j--,zones & ,%ort-,t]m ,regional ,b5efits ,sec4 #chba4 ,repeal ( provisions relat+ to ,emp[]m5t ,zones & ,ent]prise ,communities4 ,sec4 #chbb4 ,repeal ( ,,dc ,zone provisions4 ,sec4 #chbc4 ,repeal ( provisions relat+ to r5ewal communities4 ,sec4 #chbd4 ,repeal ( v>i\s %ort-t]m regional b5efits4 ,title ,,iv--,p>ticipation exemption sy/em = ! taxation ( =eign income ,subtitle ,a--,e/abli%m5t ( exemption sy/em ,sec4 #djja4 ,d$uction = divid5ds receiv$ by dome/ic corporations f c]ta9 =eign corporations4 ,sec4 #djjb4 ,limitation on losses ) respect to specifi$ #aj-p]c5t own$ =eign corporations4 ,sec4 #djjc4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation4 ,sec4 #djjd4 ,look-?ru rule = relat$ controll$ =eign corporations made p]man5t4 ,subtitle ,b--,modifications relat$ to =eign tax cr$it sy/em ,sec4 #daja4 ,repeal ( section #ijb indirect =eign tax cr$its2 det]m9ation ( section #ifj cr$it on curr5t ye> basis4 ,sec4 #dajb4 ,=eign tax cr$it limitation appli$ by allocat+ only directly allocable d$uctions to =eign s\rce income4 ,sec4 #dajc4 ,passive category income exp&$ to include o!r mobile income4 ,sec4 #dajd4 ,s\rce ( income f sales ( inv5tory det]m9$ solely on basis ( production activities4 ,subtitle ,c--,rules relat$ to passive & mobile income ,"p #a--,modification ( subp>t ,f provisions ,sec4 #dbja4 ,subp>t ,f income to only include l[-tax$ =eign income4 ,sec4 #dbjb4 ,=eign base company sales income4 ,sec4 #dbjc4 ,inflation adju/m5t ( de m9imis exception = =eign base company income4 ,sec4 #dbjd4 ,active f9anc+ exception ext5d$ ) limitation = l[-tax$ =eign income4 ,sec4 #dbje4 ,repeal ( inclusion bas$ on )drawal ( previ\sly exclud$ subp>t ,f income f qualifi$ inve/m5t4 ,"p #b--,prev5tion ( base erosion ,sec4 #dbaa4 ,=eign intangible income subject to taxation at r$uc$ rate2 intangible income treat$ z subp>t ,f income4 ,sec4 #dbab4 ,d5ial ( d$uction = int]e/ exp5se ( ,unit$ ,/ates %>ehold]s :i* are memb]s ( worldwide affiliat$ gr\ps ) excess dome/ic indebt$ness4 ,title ,v--,tax ,exempt ,entities ,subtitle ,a--,unrelat$ ,bus9ess ,income ,tax ,sec4 #ejja4 ,cl>ification ( unrelat$ bus9ess income tax treatm5t ( entities treat$ z exempt f taxation "u section #eja7;a74 ,sec4 #ejjb4 ,"n & logo royalties treat$ z unrelat$ bus9ess taxable income4 ,sec4 #ejjc4 ,unrelat$ bus9ess taxable income sep>ately comput$ = ea* trade or bus9ess activity4 ,sec4 #ejjd4 ,exclusion ( rese>* income limit$ to publicly available rese>*4 ,sec4 #ejje4 ,p>ity ( *>itable contribution limitation betwe5 tru/s & corporations4 ,sec4 #ejjf4 ,increas$ specific d$uction4 ,sec4 #ejjg4 ,repeal ( exclusion ( ga9 or loss f disposition ( di/ress$ prop]ty4 ,sec4 #ejjh4 ,qualifi$ sponsor%ip paym5ts4 ,subtitle ,b--,p5alties ,sec4 #eaja4 ,increase 9 in=mation return p5alties4 ,sec4 #eajb4 ,manag]-level accuracy-relat$ p5alty on und]paym5t ( unrelat$ bus9ess income tax4 ,subtitle ,c--,excise ,taxes ,sec4 #ebja4 ,modification ( int]m$iate sanctions4 ,sec4 #ebjb4 ,modification ( taxes on self-deal+4 ,sec4 #ebjc4 ,excise tax on failure to di/ribute )9 #e ye>s contribution to donor advis$ fund4 ,sec4 #ebjd4 ,simplification ( excise tax on private f\ndation inve/m5t income4 ,sec4 #ebje4 ,repeal ( exception = private op]at+ f\ndation failure to di/ribute income4 ,sec4 #ebjf4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities4 ,subtitle ,d--,requirem5ts = ,organizations ,exempt ,f ,tax ,sec4 #ecja4 ,repeal ( tax-exempt /atus = pr(essional sports leagues4 ,sec4 #ecjb4 ,repeal ( exemption f tax = c]ta9 insurance companies & co-op heal? insurance issu]s4 ,sec4 #ecjc4 ,9-,/ate requirem5t = workm5's comp5sation insurance organization4 ,sec4 #ecjd4 ,repeal ( ,type ,,ii & ,type ,,iii support+ organizations4 ,title ,,vi--,tax adm9i/ration & compliance ,subtitle ,a--,,irs ,inve/igation-,relat$ ,re=ms ,sec4 #fjja4 ,organizations requir$ to notify ,secret>y ( int5t to op]ate z #eja7;c77#d74 ,sec4 #fjjb4 ,decl>atory judgm5ts = #eja7;c77#d7 organizations4 ,sec4 #fjjc4 ,re/riction on donation report+ = c]ta9 #eja7;c77#d7 organizations4 ,sec4 #fjjd4 ,m&atory electronic fil+ = annual returns ( exempt organizations4 ,sec4 #fjje4 ,duty to ensure t ,,irs employees are famili> ) & act 9 accord ) c]ta9 taxpay] rights4 ,sec4 #fjjf4 ,t]m9ation ( employm5t ( ,,irs employees = tak+ (ficial actions = political purposes4 ,sec4 #fjjg4 ,release ( in=mation reg>d+ ! /atus ( c]ta9 inve/igations4 ,sec4 #fjjh4 ,review ( ,,irs exam9ation selection proc$ures4 ,sec4 #fjji4 ,,irs employees prohibit$ f us+ p]sonal email acc\nts = (ficial bus9ess4 ,sec4 #fjaj4 ,moratorium on ,,irs conf]5ces4 ,sec4 #fjaa4 ,applicable /&>d = det]m9ations ( :e!r an organization is op]at$ exclusively = ! promotion ( social welf>e4 ,subtitle ,b--,taxpay] ,protection & ,s]vice ,re=ms ,sec4 #faja4 ,ext5sion ( ,,irs au?ority to require truncat$ ,social ,security numb]s on ,=m ,w-#b4 ,sec4 #fajb4 ,free electronic fil+4 ,sec4 #fajc4 ,pre-populat$ returns prohibit$4 ,sec4 #fajd4 ,=m #ajdj,,sr = s5iors4 ,sec4 #faje4 ,increas$ refund & cr$it ?re%old = ,jo9t ,committee on ,taxation review ( ,c corporation return4 ,subtitle ,c--,tax return due date simplification ,sec4 #fbja4 ,due dates = returns ( p>tn]%ips1 ,s corporations1 & ,c corporations4 ,sec4 #fbjb4 ,modification ( due dates by regulation4 ,sec4 #fbjc4 ,corporations p]mitt$ /atutory automatic #f-mon? ext5sion ( income tax returns4 ,subtitle ,d--,compliance ,re=ms ,sec4 #fcja4 ,p5alty = failure to file4 ,sec4 #fcjb4 ,p5alty = failure to file correct in=mation returns & provide payee /atem5ts4 ,sec4 #fcjc4 ,cl>ification ( #f-ye> /atute ( limitations 9 case ( ov]/atem5t ( basis4 ,sec4 #fcjd4 ,re=m ( rules relat$ to qualifi$ tax collection contracts4 ,sec4 #fcje4 #ajj p]c5t cont9u\s levy on paym5ts to ,m$ic>e provid]s & suppli]s4 ,sec4 #fcjf4 ,treatm5t ( refundable cr$its = purposes ( c]ta9 p5alties4 ,title ,,vii--,excise taxes ,sec4 #gjja4 ,repeal ( m$ical device excise tax4 ,sec4 #gjjb4 ,modifications relat+ to oil spill liability tru/ fund4 ,sec4 #gjjc4 ,modification relat+ to inl& wat]ways tru/ fund f9anc+ rate4 ,sec4 #gjjd4 ,excise tax on sy/emically important f9ancial in/itutions4 ,sec4 #gjje4 ,cl>ification ( orphan drug exception to annual fee on br&$ prescription ph>maceutical manufactur]s & import]s4 ,title ,,viii--,deadwood & te*nical provisions ,subtitle ,a--,repeal ( ,deadwood ,sec4 #hjja4 ,repeal ( ,pu]to ,rico economic activity cr$it4 ,sec4 #hjjb4 ,repeal ( mak+ "w pay cr$it4 ,sec4 #hjjc4 ,g5]al bus9ess cr$it4 ,sec4 #hjjd4 ,environm5tal tax4 ,sec4 #hjje4 ,annuities2 c]ta9 proce$s ( end[m5t & life insurance contracts4 ,sec4 #hjjf4 ,unemploym5t comp5sation4 ,sec4 #hjjg4 ,flexible sp5d+ arrangem5ts4 ,sec4 #hjjh4 ,c]ta9 combat zone comp5sation ( memb]s ( ! arm$ =ces4 ,sec4 #hjji4 ,qualifi$ gr\p legal s]vices plans4 ,sec4 #hjaj4 ,c]ta9 r$uc$ uni=m$ s]vices retirem5t pay4 ,sec4 #hjaa4 ,great pla9s cons]vation program4 ,sec4 #hjab4 ,/ate legislators' travel exp5ses away f home4 ,sec4 #hjac4 ,treble damage paym5ts "u ! antitru/ law4 ,sec4 #hjad4 ,phase-9 ( limitation on inve/m5t int]e/4 ,sec4 #hjae4 ,*>itable1 etc41 contributions & gifts4 ,sec4 #hjaf4 ,amortizable bond premium4 ,sec4 #hjag4 ,repeal ( d$uction = clean-fuel vehicles & c]ta9 refuel+ prop]ty4 ,sec4 #hjah4 ,repeal ( d$uction = capital co/s incurr$ 9 comply+ ) environm5tal protection ag5cy sulfur regulations4 ,sec4 #hjai4 ,activities n engag$ 9 = pr(it4 ,sec4 #hjbj4 ,divid5ds receiv$ on c]ta9 pref]r$ /ock2 & divid5ds paid on c]ta9 pref]r$ /ock ( public utilities4 ,sec4 #hjba4 ,acquisitions made to evade or avoid income tax4 ,sec4 #hjbb4 ,di/ributions ( prop]ty4 ,sec4 #hjbc4 ,effect on e>n+s & pr(its4 ,sec4 #hjbd4 ,basis to corporations4 ,sec4 #hjbe4 ,tax cr$it employee /ock own]%ip plans4 ,sec4 #hjbf4 ,employee /ock pur*ase plans4 ,sec4 #hjbg4 ,transition rules4 ,sec4 #hjbh4 ,limitation on d$uctions = c]ta9 f>m+4 ,sec4 #hjbi4 ,d$uctions limit$ to am\nt at risk4 ,sec4 #hjcj4 ,passive activity losses & cr$its limit$4 ,sec4 #hjca4 ,adju/m5ts requir$ by *anges 9 me?od ( acc\nt+4 ,sec4 #hjcb4 ,exemption f tax on corporations1 c]ta9 tru/s1 etc4 ,sec4 #hjcc4 ,requirem5ts = exemption4 ,sec4 #hjcd4 ,repeal ( special treatm5t = religi\s broadca/+ company4 ,sec4 #hjce4 ,repeal ( exclusion ( ga9 or loss f disposition ( br[nfield prop]ty4 ,sec4 #hjcf4 ,accumulat$ taxable income4 ,sec4 #hjcg4 ,c]ta9 provisions relat$ to depletion4 ,sec4 #hjch4 ,am\nts receiv$ by surviv+ annuitant "u jo9t & survivor annuity contract4 ,sec4 #hjci4 ,income taxes ( memb]s ( arm$ =ces on dea?4 ,sec4 #hjdj4 ,special rules = comput+ res]ves4 ,sec4 #hjda4 ,insurance company taxable income4 ,sec4 #hjdb4 ,capitalization ( c]ta9 policy acquisition exp5ses4 ,sec4 #hjdc4 ,repeal ( provision on expatriation to avoid tax4 ,sec4 #hjdd4 ,repeal ( c]ta9 transition rules on income f s\rces )\t ,unit$ ,/ates4 ,sec4 #hjde4 ,repeal ( ,pu]to ,rico & possession tax cr$it4 ,sec4 #hjdf4 ,basis ( prop]ty acquir$ f dec$5t4 ,sec4 #hjdg4 ,prop]ty on :i* lessee has made improvem5ts4 ,sec4 #hjdh4 ,involunt>y conv]sion4 ,sec4 #hjdi4 ,prop]ty acquir$ dur+ affiliation4 ,sec4 #hjej4 ,repeal ( special hold+ p]iod rules = c]ta9 commodity futures transactions4 ,sec4 #hjea4 ,hold+ p]iod ( prop]ty4 ,sec4 #hjeb4 ,prop]ty us$ 9 ! trade or bus9ess & involunt>y conv]sions4 ,sec4 #hjec4 ,sale ( pat5ts4 ,sec4 #hjed4 ,ga9 f disposition ( f>ml&4 ,sec4 #hjee4 ,transition rules relat$ to ! treatm5t ( am\nts receiv$ on retirem5t or sale or ex*ange ( debt in/rum5ts4 ,sec4 #hjef4 ,c]ta9 rules ) respect to debt in/rum5ts issu$ be=e ,july #b1 #aihb4 ,sec4 #hjeg4 ,c]ta9 rules ) respect to /ripp$ bonds pur*as$ be=e ,july #b1 #aihb4 ,sec4 #hjeh4 ,am\nt & me?od ( adju/m5t4 ,sec4 #hjei4 ,old-age1 survivors1 & disability insurance4 ,sec4 #hjfj4 ,hospital insurance4 ,sec4 #hjfa4 ,m9i/]s1 memb]s ( religi\s ord]s1 & *ri/ian sci5ce practition]s4 ,sec4 #hjfb4 ,affiliat$ gr\p def9$4 ,sec4 #hjfc4 ,cr$it = /ate dea? taxes4 ,sec4 #hjfd4 ,family-own$ bus9ess int]e/4 ,sec4 #hjfe4 ,prop]ty )9 ! unit$ /ates4 ,sec4 #hjff4 ,repeal ( deadwood provisions relat+ to employm5t taxes4 ,sec4 #hjfg4 ,luxury pass5g] automobiles4 ,sec4 #hjfh4 ,transportation by air4 ,sec4 #hjfi4 ,taxes on failure to di/ribute income4 ,sec4 #hjgj4 ,taxes on taxable exp5ditures4 ,sec4 #hjga4 ,def9itions & special rules4 ,sec4 #hjgb4 ,returns4 ,sec4 #hjgc4 ,in=mation returns4 ,sec4 #hjgd4 ,abatem5ts4 ,sec4 #hjge4 ,failure by corporation to pay e/imat$ income tax4 ,sec4 #hjgf4 ,repeal ( #bjjh recov]y rebates4 ,sec4 #hjgg4 ,repeal ( advance paym5t ( portion ( increas$ *ild cr$it = #bjjc4 ,sec4 #hjgh4 ,repeal ( provisions relat$ to ,,cobra premium assi/ance4 ,sec4 #hjgi4 ,retirem5t4 ,sec4 #hjhj4 ,annuities to surviv+ sp\ses & dep5d5t *ildr5 ( judges4 ,sec4 #hjha4 ,m]*ant m>9e capital con/ruction funds4 ,sec4 #hjhb4 ,valuation tables4 ,sec4 #hjhc4 ,def9ition ( employee4 ,sec4 #hjhd4 ,effective date4 ,subtitle ,b--,con=m+ ,am5dm5ts ,relat$ to ,multiple ,sections ,sec4 #haja4 ,con=m+ am5dm5ts relat$ to multiple sections4 ,i ,tax ,re=m = ,individuals ,a ,individual income tax rate re=m #ajja4 ,simplification ( individual income tax rates 7a7 ,9 g5]al ,section #a is am5d$ to read z foll[s3 #a4 ,tax impos$ 7a7 ,9 g5]al ,!re is h]eby impos$ on ! income ( e individual a tax equal to ! sum (-- 7#a7 #aj p]c5t bracket #aj p]c5t ( s mu* ( ! taxable income z does n exce$ ! #be-p]c5t bracket ?re%old am\nt1 7#b7 #be p]c5t bracket #be p]c5t ( s mu* ( ! taxable income z exce$s ! #be-p]c5t bracket ?re%old am\nt1 plus 7#c7 #ce p]c5t bracket #aj p]c5t ( s mu* ( ! modifi$ adju/$ gross income 7z def9$ 9 section #b7 z exce$s ! #ce-p]c5t bracket ?re%old am\nt4 7b7 ,bracket ?re%old am\nts ,= purposes ( ?is section-- 7#a7 #be-p]c5t bracket ?re%old am\nt ,! t]m #be-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #ga1bjj1 7,b7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 "o-half ( ! doll> am\nt 9 effect "u subp>agraph 7,a71 & 7,c7 9 ! case ( an e/ate or tru/1 z]o4 7#b7 #ce-p]c5t bracket ?re%old am\nt ,! t]m #ce-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #dej1jjj1 7,b7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 #djj1jjj1 & 7,c7 9 ! case ( an e/ate or tru/1 #ab1jjj4 7c7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ea* doll> am\nt 9 subsections 7b77#a77;,a71 7b77#b77;,a71 7b77#b77;,b71 7b77#b77;,c71 7e77#c77;,a71 & 7e77#c77;,b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u ?is subsection = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 7#b7 ,co/-(-liv+ adju/m5t ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! co/-(-liv+ adju/m5t = any cal5d> ye> is ! p]c5tage 7if any7 by :i*-- 7i7 ! ,c-,,cpi-,u = ! prec$+ cal5d> ye>1 exce$s 7ii7 ! normaliz$ ,,cpi = cal5d> ye> #bjab4 7,b7 ,special rule = adju/m5ts ) a base ye> aft] #bjab ,= purposes ( any provision :i* provides = ! sub/itution ( a ye> aft] #bjab = #bjab 9 subp>agraph 7,a77ii71 subp>agraph 7,a7 %all be appli$ by sub/itut+ ,c-,,cpi-,u = normaliz$ ,,cpi 9 clause 7ii74 7#c7 ,normaliz$ ,,cpi ,= purposes ( ?is subsection1 ! normaliz$ ,,cpi = any cal5d> ye> is ! product (-- 7,a7 ! ,,cpi = su* cal5d> ye>1 multipli$ by 7,b7 ! ,c-,,cpi-,u transition multiple4 7#d7 ,c-,,cpi-,u transition multiple ,= purposes ( ?is subsection1 ! t]m ,c-,,cpi-,u transition multiple means ! am\nt obta9$ by divid+-- 7,a7 ! ,c-,,cpi-,u = cal5d> ye> #bjac1 by 7,b7 ! ,,cpi = cal5d> ye> #bjac4 7#e7 ,c-,,cpi-,u ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,c-,,cpi-,u means ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s 7z publi%$ by ! ,bureau ( ,labor ,/ati/ics ( ! ,dep>tm5t ( ,labor74 ,! values ( ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s tak5 into acc\nt = purposes ( det]m9+ ! co/-(-liv+ adju/m5t = any cal5d> ye> "u ?is subsection %all be ! late/ values s publi%$ z ( ! date on :i* su* ,bureau publi%es ! initial value ( ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s = ! mon? ( ,augu/ = ! prec$+ cal5d> ye>4 7,b7 ,det]m9ation = cal5d> ye> ,! ,c-,,cpi-,u = any cal5d> ye> is ! av]age ( ! ,c-,,cpi-,u z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 7#f7 ,,cpi ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,consum] ,price ,index means ! la/ ,consum] ,price ,index = ,all ,urban ,consum]s publi%$ by ! ,dep>tm5t ( ,labor4 ,= purposes ( ! prec$+ s5t5ce1 ! revision ( ! ,consum] ,price ,index :i* is mo/ consi/5t ) ! ,consum] ,price ,index = cal5d> ye> #aihf %all be us$4 7,b7 ,det]m9ation = cal5d> ye> ,! ,,cpi = any cal5d> ye> is ! av]age ( ! ,consum] ,price ,index z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 7d7 ,special rules = c]ta9 *ildr5 ) une>n$ income 7#a7 ,9 g5]al ,9 ! case ( any *ild to :om ?is subsection applies = any taxable ye>-- 7,a7 ! #be-p]c5t bracket ?re%old am\nt %all n be m ?an ! taxable income ( su* *ild = ! taxable ye> r$uc$ by ! net une>n$ income ( su* *ild1 & 7,b7 ! #ce-p]c5t bracket ?re%old am\nt %all n be m ?an ! sum (-- 7i7 ! taxable income ( su* *ild = ! taxable ye> r$uc$ by ! net une>n$ income ( su* *ild1 plus 7ii7 ! doll> am\nt 9 effect "u subsection 7b77#b77;,c7 = ! taxable ye>4 7#b7 ,*ild to :om subsection applies ,?is subsection %all apply to any *ild = any taxable ye> if-- 7,a7 su* *ild-- 7i7 has n atta9$ age #ah be=e ! close ( ! taxable ye>1 or 7ii7 has atta9$ age #ah be=e ! close ( ! taxable ye> & is describ$ 9 p>agraph 7#c71 7,b7 ei!r p>5t ( su* *ild is alive at ! close ( ! taxable ye>1 & 7,c7 su* *ild does n file a jo9t return = ! taxable ye>4 7#c7 ,c]ta9 *ildr5 ^: e>n$ income does n exce$ "o-half ( individual's support ,a *ild is describ$ 9 ?is p>agraph if-- 7,a7 su* *ild-- 7i7 has n atta9$ age #ai be=e ! close ( ! taxable ye>1 or 7ii7 is a /ud5t 7)9 ! mean+ ( section #ggje7;f77#b77 :o has n atta9$ age #bd be=e ! close ( ! taxable ye>1 & 7,b7 su* *ild's e>n$ income 7z def9$ 9 section #iaa7;d77#b77 = su* taxable ye> does n exce$ "o-half ( ! am\nt ( ! individual's support 7)9 ! mean+ ( section #ggje7;c77#a77;,d7 aft] ! application ( section #ggje7;f77#e7 7)\t reg>d to subp>agraph 7,a7 !re(77 = su* taxable ye>4 7#d7 ,net une>n$ income ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m net une>n$ income means ! excess (-- 7i7 ! portion ( ! adju/$ gross income = ! taxable ye> :i* is n attributable to e>n$ income 7z def9$ 9 section #iaa7;d77#b771 ov] 7ii7 ! sum (-- 7,i7 ! am\nt 9 effect = ! taxable ye> "u section #fc7;c77#d77;,a7 7relat+ to limitation on /&>d d$uction 9 ! case ( c]ta9 dep5d5ts71 plus 7,,ii7 ! great] ( ! am\nt describ$ 9 subclause 7,i7 or1 if ! *ild itemizes 8 d$uctions = ! taxable ye>1 ! am\nt ( ! itemiz$ d$uctions all[$ by ?is *apt] = ! taxable ye> :i* are directly connect$ ) ! production ( ! portion ( adju/$ gross income ref]r$ to 9 clause 7i74 7,b7 ,limitation bas$ on taxable income ,! am\nt ( ! net une>n$ income = any taxable ye> %all n exce$ ! individual's taxable income = su* taxable ye>4 7e7 ,phase\t ( #aj-,p]c5t rate 7#a7 ,9 g5]al ,! am\nt ( tax impos$ by ?is section 7det]m9$ )\t reg>d to ?is subsection7 %all be increas$ by #e p]c5t ( ! excess 7if any7 (-- 7,a7 modifi$ adju/$ gross income1 ov] 7,b7 ! applicable doll> am\nt4 7#b7 ,limitation ,! increase det]m9$ "u p>agraph 7#a7 ) respect to any taxpay] = any taxable ye> %all n exce$ #ae p]c5t ( ! less] (-- 7,a7 ! taxpay]'s taxable income = su* taxable ye>1 or 7,b7 ! #be-p]c5t bracket ?re%old am\nt 9 effect ) respect to ! taxpay] = su* taxable ye>4 7#c7 ,applicable doll> am\nt ,= purposes ( ?is subsection1 ! t]m applicable doll> am\nt means-- 7,a7 9 ! case ( a jo9t return or a surviv+ sp\se1 #cjj1jjj1 7,b7 9 ! case ( any o!r individual1 #bej1jjj4 7#d7 ,e/ates & tru/s ,p>agraph 7#a7 %all n apply 9 ! case ( an e/ate or tru/4 7f7 ,det]m9ation ( highe/ rate ,= purposes ( any provision ( law :i* ref]s to ! highe/ rate ( tax specifi$ 9 ?is section 7or any subsection ( ?is section71 su* highe/ rate %all be treat$ z be+ #ce p]c5t4 4 7b7 ,modifi$ adju/$ gross income ,section #b is am5d$ by /rik+ subsection 7b71 by r$esignat+ subsections 7c71 7d71 & 7e71 z subsections 7d71 7e71 & 7f71 respectively1 & by ins]t+ aft] subsection 7a7 ! foll[+ new subsections3 7b7 ,modifi$ adju/$ gross income ,= purposes ( section #a-- 7#a7 ,9 g5]al ,! t]m modifi$ adju/$ gross income means adju/$ gross income-- 7,a7 increas$ by-- 7i7 any am\nt exclud$ f gross income "u sections #iaa1 #ica1 & #icc1 7ii7 ! excess 7if any7 (-- 7,i7 am\nts ( int]e/ receiv$ or accru$ by ! taxpay] dur+ ! taxable ye> :i* are exempt f tax1 ov] 7,,ii7 am\nts disall[$ z a d$uction by reason ( section #afc7;d77#a77;,a7 or #aga7;a77#b71 7iii7 any exclusion f gross income ) respect to ! co/ describ$ 9 section #fjea7;a77#ad7 7)\t reg>d to subp>agraphs 7,a7 & 7,b7 !re(71 7iv7 any d$uction all[able "u section #afb7l7 7relat+ to special rules = heal? insurance co/s ( self-employ$ individuals71 7v7 any annual addition 7z def9$ 9 section #dae7;c77#b77 to a def9$ contribution plan :i* is n includible 91 or :i* is d$uctible f1 ! gross income ( ! individual = ! taxable ye>1 7vi7 any d$uction all[able "u section #bbc1 & 7vii7 ! excess 7if any7 (-- 7,i7 ! social security b5efits ( ! individual = ! taxable ye> 7z def9$ 9 section #hf7;d771 ov] 7,,ii7 ! am\nt includ$ 9 ! gross income ( su* individual = su* taxable ye> "u section #hf1 & 7,b7 decreas$ by-- 7i7 any d$uction all[$ "u section #agj 7& 9 ! case ( an e/ate or tru/1 any d$uction all[$ "u section #fdb7;c771 & 7ii7 qualifi$ dome/ic manufactur+ income4 7#b7 ,det]m9ation ( adju/$ gross income 9 case ( e/ates & tru/s ,= purposes ( ?is subsection1 ! adju/$ gross income ( an e/ate or tru/ %all be comput$ 9 ! same mann] z 9 ! case ( an individual1 except t-- 7,a7 ! d$uctions = co/s :i* are paid or incurr$ 9 connection ) ! adm9i/ration ( ! e/ate or tru/ & :i* w\ld n h be5 incurr$ if ! prop]ty 7 n held 9 su* tru/ or e/ate1 & 7,b7 ! d$uctions all[able "u sections #fdb7;b71 #fea1 & #ffa1 %all be treat$ z all[able 9 arriv+ at adju/$ gross income4 ,"u regulations1 appropriate adju/m5ts %all be made 9 ! application ( "p ,i ( sub*apt] ,j ( ?is *apt] to take into acc\nt ! application ( ?is p>agraph4 7c7 ,qualifi$ dome/ic manufactur+ income 7#a7 ,9 g5]al ,= purposes ( subsection 7b71 ! t]m qualifi$ dome/ic manufactur+ income = any taxable ye> means an am\nt equal to ! excess 7if any7 (-- 7,a7 ! taxpay]'s dome/ic manufactur+ gross receipts = su* taxable ye>1 ov] 7,b7 ! sum (-- 7i7 ! co/ ( goods sold t are allocable to su* receipts1 & 7ii7 o!r exp5ses1 losses1 or d$uctions1 :i* are prop]ly allocable to su* receipts4 7#b7 ,allocation me?od ,! ,secret>y %all prescribe rules = ! prop] allocation ( items describ$ 9 p>agraph 7#a7 = purposes ( det]m9+ qualifi$ dome/ic manufactur+ income4 ,su* rules %all provide = ! prop] allocation ( items :e!r or n su* items are directly allocable to dome/ic manufactur+ gross receipts4 7#c7 ,special rules = det]m9+ co/s 7,a7 ,9 g5]al ,= purposes ( det]m9+ co/s "u clause 7i7 ( p>agraph 7#a77;,b71 any item or s]vice br\ght into ! ,unit$ ,/ates %all be treat$ z acquir$ by pur*ase1 & its co/ %all be treat$ z n less ?an its value imm$iately aft] x ent]$ ! ,unit$ ,/ates4 ,a simil> rule %all apply 9 det]m9+ ! adju/$ basis ( leas$ or r5t$ prop]ty :]e ! lease or r5tal gives rise to dome/ic manufactur+ gross receipts4 7,b7 ,exports = fur!r manufacture ,9 ! case ( any prop]ty describ$ 9 subp>agraph 7,a7 t _h be5 export$ by ! taxpay] = fur!r manufacture1 ! increase 9 co/ or adju/$ basis "u subp>agraph 7,a7 %all n exce$ ! diff]5ce betwe5 ! value ( ! prop]ty :5 export$ & ! value ( ! prop]ty :5 br\ght back into ! ,unit$ ,/ates aft] ! fur!r manufacture4 7#d7 ,dome/ic manufactur+ gross receipts ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m dome/ic manufactur+ gross receipts means ! gross receipts ( ! taxpay] :i* are d]iv$ f-- 7i7 any lease1 r5tal1 lic5se1 sale1 ex*ange1 or o!r disposition ( tangible p]sonal prop]ty :i* 0 manufactur$1 produc$1 gr[n1 or extract$ by ! taxpay] 9 :ole or 9 significant "p )9 ! ,unit$ ,/ates1 or 7ii7 9 ! case ( a taxpay] engag$ 9 ! active conduct ( a con/ruction trade or bus9ess1 con/ruction ( real prop]ty p]=m$ 9 ! ,unit$ ,/ates by ! taxpay] 9 ! ord9>y c\rse ( su* trade or bus9ess if su* real prop]ty is plac$ 9 s]vice aft] ,decemb] #ca1 #bjad4 7,b7 ,exceptions ,su* t]m %all n include gross receipts ( ! taxpay] :i* are d]iv$ f-- 7i7 ! sale ( food & bev]ages prep>$ by ! taxpay] at a retail e/abli%m5t1 7ii7 ! transmission or di/ribution ( electricity1 natural gas1 or potable wat]1 & 7iii7 ! lease1 r5tal1 lic5se1 sale1 ex*ange1 or o!r disposition ( l&4 7,c7 ,special rule = c]ta9 gov]nm5t contracts ,gross receipts d]iv$ f ! manufacture or production ( any prop]ty describ$ 9 subp>agraph 7,a77i7 %all be treat$ z meet+ ! requirem5ts ( subp>agraph 7,a77i7 if-- 7i7 su* prop]ty is manufactur$ or produc$ by ! taxpay] pursuant to a contract ) ! ,f$]al ,gov]nm5t1 & 7ii7 ! ,f$]al ,acquisition ,regulation requires t title or risk ( loss ) respect to su* prop]ty be transf]r$ to ! ,f$]al ,gov]nm5t be=e ! manufacture or production ( su* prop]ty is complete4 7,d7 ,treatm5t ( activities 9 ,pu]to ,rico ,9 ! case ( any taxpay] ) gross receipts = any taxable ye> f s\rces )9 ! ,commonweal? ( ,pu]to ,rico1 if all ( su* receipts are taxable "u section #a = su* taxable ye>1 !n ?is p>agraph %all be appli$ by treat+ ea* ref]5ce 9 subp>agraph 7,a7 to ! ,unit$ ,/ates z includ+ ! ,commonweal? ( ,pu]to ,rico4 7,e7 ,tangible p]sonal prop]ty ,! t]m tangible p]sonal prop]ty %all n include comput] s(tw>e or any prop]ty describ$ 9 p>agraph 7#c7 or 7#d7 ( section #afh7;f74 7,f7 ,relat$ p]sons 7i7 ,9 g5]al ,! t]m dome/ic manufactur+ gross receipts %all n include any gross receipts ( ! taxpay] d]iv$ f prop]ty leas$1 lic5s$1 or r5t$ by ! taxpay] = use by any relat$ p]son4 7ii7 ,relat$ p]son ,= purposes ( clause 7i71 a p]son %all be treat$ z relat$ to ano!r p]son if su* p]sons are treat$ z a s+le employ] "u subsection 7a7 or 7b7 ( section #eb or subsection 7m7 or 7o7 ( section #dad1 except t det]m9ations "u subsections 7a7 & 7b7 ( section #eb %all be made )\t reg>d to section #aefc7;b74 7#e7 ,c]ta9 income n qualifi$ 7,a7 ,net e>n+s f self employm5t ,dome/ic manufactur+ gross receipts %all n include any am\nt :i* is prop]ly allocable to ! taxpay]'s net e>n+s f self employm5t 7det]m9$ aft] any r$uction provid$ "u section #adjb7m774 7,b7 ,c]ta9 acc\nt+ me?od adju/m5ts ,dome/ic manufactur+ gross receipts %all n include any am\nt attributable to-- 7i7 a qualifi$ *ange 9 me?od ( acc\nt+ 7z def9$ 9 section #ccja7;d77#b7 ( ! ,tax ,re=m ,act ( #bjad71 or 7ii7 any o!r *ange 9 me?od ( acc\nt+ :i* is requir$ by ! am5dm5ts made by su* ,act4 7#f7 ,application ( section to pass-?r\gh entities 7,a7 ,p>tn]%ips & s corporations ,except z provid$ 9 subp>agraph 7,b71 9 ! case ( a p>tn]%ip or ,s corporation1 ea* p>tn] or %>ehold] %all take into acc\nt su* p]son's allocable %>e ( ea* item describ$ 9 subp>agraph 7,a7 or 7,b7 ( p>agraph 7#a7 7det]m9$ )\t reg>d to :e!r ! items describ$ 9 su* subp>agraph 7,a7 exce$ ! items describ$ 9 su* subp>agraph 7,b774 7,b7 ,publicly trad$ p>tn]%ips ,9 ! case ( a publicly trad$ p>tn]%ip describ$ 9 section #ggjd7;c71 ea* p>tn] %all n take into acc\nt any allocable %>e ( any item ref]r$ to 9 subp>agraph 7,a74 7,c7 ,tru/s & e/ates ,9 ! case ( a tru/ or e/ate1 ! items ref]r$ to 9 subp>agraph 7,a7 7z det]m9$ !re97 %all be apportion$ betwe5 ! b5efici>ies & ! fiduci>y 7& among ! b5efici>ies7 "u regulations prescrib$ by ! ,secret>y4 7#g7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or o!r guidance-- 7,a7 :i* prev5t m ?an #a taxpay] f tak+ into acc\nt ! same qualifi$ dome/ic manufactur+ income1 & 7,b7 :i* require or re/rict ! allocation ( items "u p>agraph 7#f7 & require su* report+ = purposes ( c>ry+ out su* p>agraph z ! ,secret>y det]m9es appropriate4 7#h7 ,phase-9 ( exclusion ,9 ! case ( any taxable ye> beg9n+ be=e ,janu>y #a1 #bjag1 ! t]m qualifi$ dome/ic manufactur+ income %all be an am\nt equal to ! product ( ! qualifi$ dome/ic manufactur+ income det]m9$ )\t reg>d to ?is p>agraph1 multipli$ by-- 7,a7 9 ! case ( any taxable ye> beg9n+ 9 #bjae1 #cc p]c5t1 & 7,b7 9 ! case ( any taxable ye> beg9n+ 9 #bjaf1 #fg p]c5t4 4 7c7 ,application ( section #ae 7#a7 ,9 g5]al ,subsection 7a7 ( section #ae is am5d$ by /rik+ ?is *apt] & ins]t+ section #aa4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ae is am5d$ by /rik+ subsections 7d7 & 7f7 & by r$esignat+ subsection 7e7 z subsection 7d74 7,b7 ,section #ae7;d71 z r$esignat$ by subp>agraph 7,a71 is am5d$ by /rik+ section #a or #aa7;b7 & ins]t+ section #aa7;b74 7,c7 ,sub*apt] ,a ( *apt] #a is am5d$-- 7i7 by r$esignat+ section #ab z section #ac1 7ii7 by r$esignat+ section #ae 7z am5d$ by ?is subsection7 z section #ab & mov+ su* section f "p ,,iii ( su* sub*apt] to aft] section #aa 9 "p ,,ii ( su* sub*apt]1 7iii7 by /rik+ "p ,,iii1 & 7iv7 by am5d+ ! table ( sections = "p ,,ii ( su* sub*apt] by r$esignat+ ! item relat+ to section #ab z an item relat+ to section #ac & by ins]t+ aft] ! item relat+ to section #aa ! foll[+ new item3 ,sec4 #ab4 ,effect ( *anges4 4 7,d7 ,section #fjac7;c7 is am5d$ by /rik+ sections #ae1 #ddc1 & #ghea7;a77#a77;,a7 & ins]t+ sections #ddc & #ghea7;a77#a77;,a74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ajjb4 ,d$uction = adju/$ net capital ga9 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a1 z am5d$ by section #caje1 is am5d$ by ins]t+ aft] section #afh ! foll[+ new section3 #afi4 ,adju/$ net capital ga9 7a7 ,9 g5]al ,if = any taxable ye> a taxpay] o!r ?an a corporation has an adju/$ net capital ga91 #dj p]c5t ( ! am\nt ( ! adju/$ net capital ga9 %all be all[$ z a d$uction f gross income4 7b7 ,adju/$ net capital ga9 ,= purposes ( ?is section1 ! t]m adju/$ net capital ga9 means ! sum (-- 7#a7 net capital ga9 r$uc$ 7b n bel[ z]o7 by ! net collectibles ga91 plus 7#b7 qualifi$ divid5d income4 7c7 ,net capital ga9 r$uc$ by am\nts tak5 into acc\nt z inve/m5t income ,= purposes ( ?is section1 ! net capital ga9 = any taxable ye> %all be r$uc$ 7b n bel[ z]o7 by ! am\nt :i* ! taxpay] takes into acc\nt z inve/m5t income "u section #afc7;d77#d77;,b77iii74 7d7 ,net collectibles ga9 ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m net collectibles ga9 means ! excess 7if any7 (-- 7,a7 collectibles ga91 ov] 7,b7 collectibles loss4 7#b7 ,collectibles ga9 & loss ,! t]ms collectibles ga9 & collectibles loss mean ga9 or loss 7respectively7 f ! sale or ex*ange ( a collectible 7z def9$ 9 section #djh7m7 )\t reg>d to p>agraph 7#c7 !re(7 :i* is a capital asset held = m ?an #a ye> b only to ! ext5t su* ga9 is tak5 into acc\nt 9 comput+ gross income & su* loss is tak5 into acc\nt 9 comput+ taxable income4 7#c7 ,p>tn]%ips1 etc ,= purposes ( p>agraph 7#b71 any ga9 f ! sale ( an int]e/ 9 a p>tn]%ip1 ,s corporation1 or tru/ :i* is attributable to unrealiz$ appreciation 9 ! value ( collectibles %all be treat$ z ga9 f ! sale or ex*ange ( a collectible4 ,rules simil> to ! rules ( section #gea %all apply = purposes ( ! prec$+ s5t5ce4 7e7 ,qualifi$ divid5d income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ divid5d income means divid5ds receiv$ dur+ ! taxable ye> f-- 7,a7 dome/ic corporations1 & 7,b7 qualifi$ =eign corporations4 7#b7 ,c]ta9 divid5ds exclud$ ,su* t]m %all n include-- 7,a7 any divid5d f a corporation :i* = ! taxable ye> ( ! corporation 9 :i* ! di/ribution is made1 or ! prec$+ taxable ye>1 is a corporation exempt f tax "u section #eja or #eba1 7,b7 any am\nt all[$ z a d$uction "u section #eia 7relat+ to d$uction = divid5ds paid by mutual sav+s banks1 etc471 & 7,c7 any divid5d describ$ 9 section #djd7k74 7#c7 ,coord9ation ) section #bdf7;c7 ,su* t]m %all n include any divid5d on any %>e ( /ock-- 7,a7 ) respect to :i* ! hold+ p]iod requirem5ts ( section #bdf7;c7 are n met 7det]m9$ )\t reg>d to p>agraph 7#e7 ( section #bdf7;c7 & by sub/itut+ 9 section #bdf7;c7 #fj days = #de days ea* place x appe>s & by sub/itut+ #aba-;day p]iod = #ia-;day p]iod71 or 7,b7 to ! ext5t t ! taxpay] is "u an obligation 7:e!r pursuant to a %ort sale or o!rwise7 to make relat$ paym5ts ) respect to positions 9 sub/antially simil> or relat$ prop]ty4 7#d7 ,qualifi$ =eign corporations 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subp>agraph1 ! t]m qualifi$ =eign corporation means any =eign corporation if-- 7i7 su* corporation is incorporat$ 9 a possession ( ! ,unit$ ,/ates1 or 7ii7 su* corporation is eligible z a qualifi$ resid5t = all ( ! b5efits provid$ "u a compreh5sive income tax treaty ) ! ,unit$ ,/ates :i* ! ,secret>y det]m9es is satisfactory = purposes ( ?is p>agraph & :i* includes an ex*ange ( in=mation program4 7,b7 ,divid5ds on /ock readily tradable on ,unit$ ,/ates securities m>ket ,a =eign corporation n o!rwise treat$ z a qualifi$ =eign corporation "u subp>agraph 7,a7 %all be s treat$ ) respect to any divid5d paid by su* corporation if ! /ock ) respect to :i* su* divid5d is paid is readily tradable on an e/abli%$ securities m>ket 9 ! ,unit$ ,/ates4 7,c7 ,exclusion ( divid5ds ( c]ta9 =eign corporations ,! t]m qualifi$ =eign corporation %all n include any =eign corporation :i* = ! taxable ye> ( ! corporation 9 :i* ! divid5d 0 paid1 or ! prec$+ taxable ye>1 is a passive =eign inve/m5t company 7z def9$ 9 section #abig74 7#e7 ,treatm5t ( divid5ds f regulat$ inve/m5t companies & real e/ate inve/m5t tru/s ,a divid5d receiv$ f a regulat$ inve/m5t company or a real e/ate inve/m5t tru/ %all be subject to ! limitations prescrib$ 9 sections #hed & #heg4 4 7b7 ,d$uction all[$ :e!r or n individual itemizes d$uctions ,section #fb7;a7 is am5d$ by ins]t+ aft] p>agraph 7#g7 ! foll[+ new p>agraph3 7#h7 ,adju/$ net capital ga9 ,! d$uction all[$ by section #afi4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ajjc4 ,con=m+ am5dm5ts relat$ to simplification ( individual income tax rates 7a7 ,am5dm5ts relat$ to modification ( inflation adju/m5t 7#a7 ,section #be;,b7b77#c77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjje = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjje = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#b7 ,subclause 7,,ii7 ( section #cf;,b7b77#c77;,a77ii7 is am5d$ by /rik+ consum] price index & ins]t+ ,c-,,cpi-,u 7z def9$ 9 section #a7;c774 7#c7 ,section #da7;e77#e77;,c7 is am5d$ to read z foll[s3 7,c7 ,co/-(-liv+ adju/m5t def9$ 7i7 ,9 g5]al ,! co/-(-liv+ adju/m5t = any cal5d> ye> is ! co/-(-liv+ adju/m5t = su* cal5d> ye> det]m9$ "u section #a7;c77#b77;,a71 by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7ii7 ,special rule :]e base p]iod ends 9 a cal5d> ye> o!r ?an #aihc or #aihd ,if ! base p]iod ( any taxpay] does n end 9 #aihc or #aihd1 clause 7i7 %all be appli$ by sub/itut+ ! cal5d> ye> 9 :i* su* base p]iod ends = #aihg4 4 7#d7 ,section #abe7;i77#b7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #bjab = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( 9 subp>agraph 7,b7 & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 & 7,b7 by /rik+ #ej bo? places x appe>s 9 ! la/ s5t5ce & ins]t+ #ajj4 7#e7 ,section #acg7;f7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjja = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( 9 p>agraph 7#b7 & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjja = cal5d> ye> #bjab 9 clause 7ii7 !re(1 & 7,b7 9 ! la/ s5t5ce !re(-- 7i7 by /rik+ #aj ! fir/ place x appe>s & ins]t+ #ajj1 & 7ii7 by /rik+ ne>e/ multiple ( #aj & ins]t+ next l[e/ multiple ( #ajj4 7#f7 ,section #afb7o77#c7 is am5d$ by ins]t+ z 9 effect be=e enactm5t ( ! ,tax ,re=m ,act ( #bjad aft] section #a7;f77#e74 7#g7 ,section #bbj7;g77#b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#h7 ,section #bbc7;g77#a7 is am5d$ by /rik+ all t foll[s subp>agraph 7,a7 & ins]t+ ! foll[+3 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$-- 7i7 by sub/itut+ = cal5d> ye> #bjab 9 clause 7ii7 !re(-- 7,i7 except z provid$ 9 clause 7ii71 cal5d> ye> #aiig1 & 7,,ii7 9 ! case ( ea* doll> am\nt 9 subsection 7c77#b77;,a71 cal5d> ye> #bjjc1 & 7ii7 by sub/itut+ ,m>* #ca = ,augu/ #ca 9 p>agraphs 7#e77;,b7 & 7#f77;,b7 ( section #a7;c74 ,! ,secret>y %all publi% ! doll> am\nts z adju/$ "u ?is subsection = taxable ye>s beg9n+ 9 any cal5d> ye> no lat] ?an ,june #a ( ! prec$+ cal5d> ye>4 4 7#i7 ,section #dcj7;c77#g77;,d77vii77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjji = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjji = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#aj7 ,section #eab7;d77#b77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #aiid = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re(& ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aiid = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#aa7 ,section #eac7;h77#b77;,c77ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ab7 ,section #hgg;,a7a77#c77;,b77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ac7 ,section #iaa7;b77#b77;,d77ii77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjjd = #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjd = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ad7 ,section #abgd;,a7d77#b7 is am5d$ to read z foll[s3 7#b7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any debt in/rum5t aris+ out ( a sale or ex*ange dur+ any cal5d> ye> aft] #bjad1 ea* adju/$ doll> am\nt %all be increas$ by an am\nt equal to-- 7i7 su* adju/$ doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7,b7 ,adju/$ doll> am\nts ,= purposes ( ?is p>agraph1 ! t]m adju/$ doll> am\nt means ! doll> am\nts 9 subsections 7b7 & 7c71 9 ea* case z 9 effect = cal5d> ye> #bjad4 7,c7 ,r\nd+ ,any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #ajj4 4 7#ae7 ,section #bjaj7;c77#c77;,b77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjaj = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjaj = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#af7 ,section #bjcb;,a7a77#c77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ag7 ,section #bejc7;b77#b77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ah7 ,section #dafa7;b77#b77;,c77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 det]m9$ by sub/itut+ #bjjd = #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjjd = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#ai7 ,section #dbfa7;e77#d77;,a77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ ! ye> be=e ! la/ non9dex$ ye> = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ ! ye> be=e ! la/ non9dex$ ye> = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#bj7 ,section #dihj;,i7b77#c77;,c77v77,,ii7 is am5d$ 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjab4 7#ba7 ,section #ejjj;,a7c77#c77;,d77ii7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjab4 7#bb7 ,section #fjci;,f7d7 is am5d$ by /rik+ section #a7;f77#c71 except t subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a71 except t clause 7ii7 !re( 4 7#bc7 ,section #fcbc7;i77#d77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiif = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiif = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#bd7 ,section #fccd7;g77#a77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 by sub/itut+ cal5d> ye> #aiih = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiii = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#be7 ,section #fgba7;f77#a7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjab4 7#bf7 ,section #fgbb7;f77#a7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjab4 7#bg7 ,section #gdcj7;c77#a7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 by sub/itut+ cal5d> ye> #aiie = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( 9 ! flu% text at ! end & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiie = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#bh7 ,section #ghgb7;g77#e7 is am5d$ to read z foll[s3 7#e7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any loan made dur+ any cal5d> ye> aft] #bjad to :i* p>agraph 7#a7 applies1 ! adju/$ doll> am\nt %all be increas$ by an am\nt equal to-- 7i7 su* adju/$ doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7,b7 ,adju/$ doll> am\nt ,= purposes ( ?is p>agraph1 ! t]m adju/$ doll> am\nt means ! doll> am\nt 9 p>agraph 7#b7 z 9 effect = cal5d> ye> #bjad4 7,c7 ,r\nd+ ,any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #ajj4 4 7b7 ,am5dm5ts relat$ to d$uction = adju/$ net capital ga9 7#a7 ,section #afc7;d77#d77;,b7 is am5d$ by /rik+ section #a7;h77#aa77;,b7 & ins]t+ section #afi7;e74 7#b7 ,section #agb7;d77#b77;,b7 is am5d$ by ins]t+ ! d$uction all[able "u section #afi & be=e ! exclusion4 7#c7 ,section #cja7;f77#d7 is am5d$ by /rik+ section #a7;h77#aa7 & ins]t+ section #afi7;e74 7#d7 ,section #cjf7;a77#a77;,d7 is am5d$ by /rik+ section #a7;h77#aa7 & ins]t+ section #afi7;e74 7#e7 ,! la/ s5t5ce ( section #dec;,a7c77#c7 is am5d$ by /rik+ capital ga9 & all t foll[s & ins]t+ capital ga91 ! d$uction "u section #afi %all be tak5 into acc\nt44 7#f7 ,sections #eca & #eda are ea* am5d$ by /rik+ #bj p]c5t & ins]t+ #ba p]c5t4 7#g7 ,section #ehd7;c7 is am5d$ by /rik+ & to :i* section #a7;h77#aa7 applies 9 ! la/ s5t5ce & ins]t+ :i* is qualifi$ divid5d income 7z def9$ 9 section #afi7;e77 9 ! h&s ( su* common tru/ fund4 7#h7 ,section #fda7;c77#b77;,c7 7prior to r$esignation by title ,,ii7 is am5d$ by add+ at ! end ! foll[+ new clause3 7v7 ,! d$uction all[$ by section #afi4 4 7#i7 ,! fir/ s5t5ce ( section #fdb7;c77#d7 is am5d$ by /rik+ consi/s ( & all t foll[s & ins]t+ consi/s ( long-t]m capital ga9 or ga9 describ$ 9 section #abjb7;a71 prop] adju/m5ts %all be made = any d$uction all[able to ! tru/ or e/ate "u section #afi & = any exclusion all[able "u section #abjb44 7#aj7 ,! la/ s5t5ce ( section #fdc7;a77#c7 is am5d$ to read z foll[s3 ,! d$uction "u section #afi & ! exclusion "u section #abjb %all n be tak5 into acc\nt44 7#aa7 ,section #fia7;c77#d7 is am5d$ by /rik+ #a7;h7 & ins]t+ #afi4 7#ab7 ,section #gjb7;a77#e7 is am5d$ by /rik+ section #a7;h77#aa7 & ins]t+ section #afi4 7#ac7 ,section #hed is am5d$-- 7,a7 by /rik+ section #a7;h77#aa7 7relat+ to maximum rate ( tax on divid5ds7 9 subsection 7a7 & ins]t+ section #afi 7relat+ to adju/$ net capital ga971 7,b7 by /rik+ ,maximum rate "u section #a7;h7 9 ! head+ ( subsection 7b77#a77;,b7 & ins]t+ ,det]m9ation ( adju/$ net capital ga91 & 7,c7 by /rik+ section #a7;h77#aa77;,b7 9 subsection 7b77#d7 & ins]t+ section #afi7;e74 7#ad7 ,section #heg7;c77#b7 is am5d$-- 7,a7 by /rik+ section #a7;h77#aa77;,b7 9 subp>agraph 7,d7 & ins]t+ section #afi7;e71 & 7,b7 by /rik+ ,section #a7;h77#aa7 9 ! head+ & ins]t+ ,section #afi7;e74 7#ae7 ,section #ijd7;b7 is am5d$-- 7,a7 by am5d+ p>agraph 7#b7 to read z foll[s3 7#b7 ,capital ga9s ,= purposes ( ?is section1 taxable income f s\rces outside ! ,unit$ ,/ates %all include ga9 f ! sale or ex*ange ( capital assets 7includ+ ga9 s treat$ "u section #abca7 only to ! ext5t ( ! less] (-- 7,a7 capital ga9 net income f s\rces )\t ! ,unit$ ,/ates1 or 7,b7 capital ga9 net income4 1 & 7,b7 by /rik+ p>agraph 7#c74 7#af7 ,section #abfj7;a7 is am5d$ by /rik+ long-t]m capital ga9 ! fir/ place su* t]m appe>s & all t foll[s & ins]t+ long-t]m capital ga91 su* ga9 %all be treat$ z ord9>y income to ! ext5t su* ga9 exce$s ! net und]ly+ long-t]m capital ga944 7#ag7 ,section #adaa7;c77#a77;,b7 is am5d$ by ins]t+ 7o!r ?an section #afi7 aft] ?is subtitle4 7#ah7 ,section #dihe7;a77#a7 is am5d$ by /rik+ ! rate ( tax specifi$ 9 section #a7;h77#a77;,c7 & ins]t+ #ba p]c5t4 7#ai7 ,section #geah7;g77#f77;,a7 is am5d$ by /rik+ all t foll[s clause 7i7 & ins]t+ ! foll[+3 7ii7 by increas+ ! tax impos$ by *apt] #a by ! product ( ! am\nt ( su* )drawal1 multipli$ by-- 7,i7 9 ! case ( a taxpay] o!r ?an a corporation1 #fj p]c5t ( ! highe/ rate ( tax specifi$ 9 section #a1 & 7,,ii7 9 ! case ( a corporation1 ! highe/ rate ( tax specifi$ 9 section #aa4 4 7#bj7 ,section #eceaa7;f7 ( title #df1 ,unit$ ,/ates ,code1 is am5d$ by-- 7,a7 by am5d+ p>agraph 7#a77;,b7 to read z foll[s3 7,b7 increas+ ! tax impos$ by *apt] #a ( su* ,code by ! product ( ! am\nt ( su* )drawal1 multipli$ by-- 7i7 9 ! case ( a taxpay] o!r ?an a corporation1 ! highe/ rate ( tax specifi$ 9 section #a 7#fj p]c5t ( su* highe/ rate 9 ! case ( s mu* ( su* )drawal z is made f ! capital ga9 acc\nt71 & 7ii7 9 ! case ( a corporation1 ! highe/ rate ( tax specifi$ 9 section #aa4 1 & 7,b7 by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively4 7#ba7 ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #afh ! foll[+ new item3 ,sec4 #afi4 ,adju/$ net capital ga94 4 7c7 ,o!r con=m+ am5dm5ts 7#a7 ,section #be;,b7b77#b7 is am5d$ by /rik+ ,9 ! case (-- & all t foll[s ?r\gh any taxpay] n describ$ 9 p>agraph 7#a7 or subp>agraph 7,a71 & ins]t+ ,9 ! case ( any taxpay] n describ$ 9 p>agraph 7#a714 7#b7 ,section #cf;,b7b77#c77;,b77ii77,i77aa7 is am5d$ to read z foll[s3 7aa7 :o is describ$ 9 section #a7;b77#a77;,b7 & :o does n h any dep5d5ts = ! taxable ye>1 4 7#c7 ,section #dhf;,b7b77#a7 is am5d$-- 7,a7 by /rik+ maximum rate 9 effect & ins]t+ highe/ rate specifi$1 & 7,b7 by /rik+ section #a7;e7 & ins]t+ section #a4 7#d7 ,section #eaa7;b77#a7 is am5d$ to read z foll[s3 7#a7 ,imposition ( tax ,!re is h]eby impos$ = ea* taxable ye> on ! unrelat$ bus9ess taxable income ( e tru/ describ$ 9 p>agraph 7#b7 a tax comput$ z provid$ 9 section #a4 ,9 mak+ su* computation = purposes ( ?is section1 ! t]ms taxable income & modifi$ adju/$ gross income z us$ 9 section #a %all bo? be read z unrelat$ bus9ess taxable income z def9$ 9 section #eab4 4 7#e7 ,section #fda7;a7 is am5d$ by /rik+ section #a7;e7 %all apply to ! taxable income & ins]t+ section #a %all apply to ! income4 7#f7 ,section #fda7;c77#b77;,a7 is am5d$ to read z foll[s3 7,a7 ,! doll> am\nt 9 effect "u section #a7;b77#b77;,c7 %all be treat$ z be+ z]o4 4 7#g7 ,section #fdf7;b7 is am5d$ to read z foll[s3 7b7 ,taxation ( income ( tru/ ,except z provid$ 9 subsection 7f77#a77;,b77ii71 !re is h]eby impos$ on ! taxable income ( an elect+ ,settlem5t ,tru/ a tax at ! rate specifi$ 9 section #a7;a77#a74 ,su* tax %all be 9 lieu ( ! income tax o!rwise impos$ by ?is *apt] on su* income4 4 7#h7 ,section #fhe7;c7 is am5d$ by /rik+ ,section #a7;e7 & ins]t+ ,section #a4 7#i7 ,section #acih7;c7 is am5d$ by /rik+ p>agraphs 7#a7 & 7#b71 by r$esignat+ p>agraph 7#c7 z p>agraph 7#b71 & by ins]t+ be=e p>agraph 7#b7 z s r$esignat$ ! foll[+ new p>agraph3 7#a7 ,computation & paym5t ( tax ,except z o!rwise provid$ 9 ?is section or "p ,i ( sub*apt] ,a1 ! taxable income & modifi$ adju/$ gross income ( ! e/ate %all be comput$ 9 ! same mann] z = an individual4 ,! tax %all be comput$ "u section #a & %all be paid by ! tru/ee4 4 7#aj7 ,section #cdjb7p77#a77;,b7 is am5d$ by /rik+ any p]c5tage applicable to any ( ! #c l[e/ income brackets 9 ! table "u section #a7;c71 & ins]t+ #aj p]c5t1 #be p]c5t1 #ce p]c5t14 7#aa7 ,section #cdjb7q77#a7 is am5d$ by /rik+ ! ?ird l[e/ rate ( tax applicable "u section #a7;c7 & ins]t+ ! highe/ rate ( tax specifi$ 9 section #a4 7#ab7 ,section #cdjb7r77#c7 is am5d$ by /rik+ ! am\nt ( tax :i* w\ld be impos$ by section #a7;c7 7det]m9$ )\t reg>d to any rate ( tax 9 excess ( ! f\r? l[e/ rate ( tax applicable "u section #a7;c77 on an am\nt ( taxable income equal to & ins]t+ an am\nt equal to ! product ( ! highe/ rate ( tax specifi$ 9 section #a multipli$ by4 7#ac7 ,section #cdjf7;a77#a7 is am5d$ by /rik+ ! f\r? l[e/ rate ( tax applicable "u section #a7;c7 & ins]t+ ! highe/ rate ( tax specifi$ 9 section #a4 7#ad7 ,section #fajc7;e77#a77;,a77iii7 is am5d$ by /rik+ section #a7;g7 & ins]t+ section #a7;d74 7d7 ,)hold+ f supplem5tal wage paym5ts 7#a7 ,9 g5]al ,if an employ] elects "u ,treasury ,regulation section #ca4cdjb7;g7-#a to det]m9e ! am\nt to be d$uct$ & )held f any supplem5tal wage paym5t by us+ a flat p]c5tage rate1 ! rate to be us$ 9 det]m9+ su* am\nt %all n be less ?an #ce p]c5t4 7#b7 ,repeal ( sup]c$$ provision ,! ,am]ican ,jobs ,creation ,act ( #bjjd is am5d$ by /rik+ section #ijd4 7e7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,)hold+ f supplem5tal wage paym5ts ,! provisions (1 & am5dm5ts made by1 subsection 7d7 %all apply to paym5ts made aft] ,decemb] #ca1 #bjad4 ,b ,simplification ( tax b5efits = families #aaja4 ,/&>d d$uction 7a7 ,increase 9 /&>d d$uction ,subsection 7c7 ( section #fc is am5d$ to read z foll[s3 7c7 ,/&>d d$uction ,= purposes ( ?is subtitle-- 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! t]m /&>d d$uction means-- 7,a7 #bb1jjj1 9 ! case ( a jo9t return1 & 7,b7 "o-half ( ! am\nt 9 effect "u subp>agraph 7,a7 = ! taxable ye>1 9 any o!r case4 7#b7 ,phase\t ( /&>d d$uction ,! am\nt ( ! /&>d d$uction det]m9$ "u ?is subsection 7)\t reg>d to ?is p>agraph & aft] ! application ( p>agraph 7#d77 %all be r$uc$ 7b n bel[ z]o7 by an am\nt equal to #bj p]c5t ( ! excess 7if any7 (-- 7,a7 ! taxpay]'s modifi$ adju/$ gross income 7z def9$ 9 section #b7;b77 = ! taxable ye>1 ov] 7,b7 7i7 ! jo9t return /&>d d$uction phase\t ?re%old = ! taxable ye>1 9 ! case ( a taxpay] describ$ 9 p>agraph 7#a77;,a71 & 7ii7 ! non-jo9t return /&>d d$uction phase\t ?re%old = ! taxable ye>1 9 any o!r case4 7#c7 ,/&>d d$uction phase\t ?re%olds 7,a7 ,jo9t return /&>d d$uction phase\t ?re%old ,! t]m jo9t return /&>d d$uction phase\t ?re%old means1 ) respect to any taxable ye>-- 7i7 ! doll> am\nt 9 effect "u section #a7;e77#c77;,a7 = su* taxable ye>1 plus 7ii7 ! product (-- 7,i7 ! doll> am\nt 9 effect "u section #a7;b77#a77;,a7 = su* taxable ye>1 multipli$ by 7,,ii7 #c4 7,b7 ,non-jo9t return /&>d d$uction phase\t ?re%old ,! t]m non-jo9t return /&>d d$uction phase\t ?re%old means1 ) respect to any taxable ye>-- 7i7 ! doll> am\nt 9 effect "u section #a7;e77#c77;,b7 = su* taxable ye>1 plus 7ii7 ! product (-- 7,i7 ! doll> am\nt 9 effect "u section #a7;b77#a77;,b7 = su* taxable ye>1 multipli$ by 7,,ii7 #c4 7#d7 ,limitation on /&>d d$uction 9 ! case ( c]ta9 dep5d5ts ,9 ! case ( an individual :o is a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* ! individual's taxable ye> beg9s1 ! /&>d d$uction applicable to su* individual = su* individual's taxable ye> %all n exce$ ! great] (-- 7,a7 #ejj1 or 7,b7 ! sum ( #bej & su* individual's e>n$ income 7z def9$ 9 section #bd7;d77#b774 7#e7 ,c]ta9 individuals1 etc41 n eligible = /&>d d$uction ,9 ! case (-- 7,a7 a m>ri$ individual fil+ a sep>ate return :]e su* individual's sp\se elects to itemize d$uctions1 7,b7 a nonresid5t ali5 individual1 7,c7 an individual mak+ a return "u section #ddc7;a77#a7 = a p]iod ( less ?an #ab mon?s on acc\nt ( a *ange 9 8 annual acc\nt+ p]iod1 or 7,d7 an e/ate or tru/1 common tru/ fund1 or p>tn]%ip1 ! /&>d d$uction %all be z]o4 7#f7 ,inflation adju/m5ts ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ea* ( ! doll> am\nts 9 p>agraphs 7#a77;,a7 & 7#d7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$-- 7i7 9 ! case ( ! doll> am\nt 9 p>agraph 7#a77;,a71 "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 7ii7 9 ! case ( ! doll> am\nt 9 p>agraph 7#d77;,a71 "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjab 9 clause 7ii7 !re(1 & 7iii7 9 ! case ( ! doll> am\nt 9 p>agraph 7#d77;,b71 "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjab 9 clause 7ii7 !re(4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7b7 ,additional d$uction = unm>ri$ individuals ) at lea/ "o qualify+ *ild 7#a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by r$esignat+ section #bbd z section #bbe & by ins]t+ aft] section #bbc ! foll[+ new section3 #bbd4 ,d$uction = unm>ri$ individuals ) at lea/ "o qualify+ *ild 7a7 ,9 g5]al ,9 ! case ( an unm>ri$ individual ) at lea/ "o qualify+ *ild 7)9 ! mean+ ( section #ggje71 !re %all be all[$ z a d$uction an am\nt equal to #e1ejj4 7b7 ,phase\t ( d$uction ,! am\nt ( ! d$uction det]m9$ "u subsection 7a7 7)\t reg>d to ?is subsection7 %all be r$uc$ 7b n bel[ z]o7 by an am\nt equal to ! excess 7if any7 (-- 7#a7 ! taxpay]'s adju/$ gross income 7det]m9$ )\t reg>d to ?is section7 = ! taxable ye>1 ov] 7#b7 #cj1jjj4 7c7 ,unm>ri$ individual ,= purposes ( ?is section1 ! t]m unm>ri$ individual means any individual :o-- 7#a7 is n m>ri$ z ( ! close ( ! taxable ye> 7z det]m9$ by apply+ section #ggjc71 7#b7 is n a surviv+ sp\se 7z def9$ 9 section #b7;a77 = ! taxable ye>1 & 7#c7 is n a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* ! individual's taxable ye> beg9s4 7d7 ,inflation adju/m5ts 7#a7 ,d$uction am\nt ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ! doll> am\nt 9 subsection 7a7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 7#b7 ,phase\t ?re%old ,9 ! case ( any taxable ye> beg9n+ aft] #bjae1 ! doll> am\nt 9 subsection 7b77#b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #bjad = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#c7 ,r\nd+ ,if any increase det]m9$ "u p>agraph 7#a7 or 7#b7 is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7#b7 ,d$uction all[$ :e!r or n taxpay] itemizes d$uctions ,section #fb7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#bb7 ,d$uction = unm>ri$ individuals ) at lea/ "o qualify+ *ild ,! d$uction all[$ by section #bbd4 4 7c7 ,application ( /&>d d$uction phase\t to itemiz$ d$uctions ,subsection 7f7 ( section #fc is am5d$ to read z foll[s3 7f7 ,application ( phase\t ( /&>d d$uction to itemiz$ d$uctions 7#a7 ,9 g5]al ,9 ! case ( an individual ^: modifi$ adju/$ gross income 7z def9$ 9 section #b7;b77 exce$s ! am\nt 9 effect "u subsection 7c77#b77;,b7 ) respect to ! taxpay] = ! taxable ye>1 ! am\nt ( ! itemiz$ d$uctions o!rwise all[able = ! taxable ye> %all be r$uc$ by ! less] (-- 7,a7 #bj p]c5t ( ! excess describ$ 9 subsection 7c77#b7 ) respect to su* taxpay] = su* taxable ye>1 or 7,b7 ! am\nt ( ! taxpay]'s /&>d d$uction = su* taxable ye> 7det]m9$ )\t reg>d to subsection 7c77#b7 & )\t reg>d to any election to itemize d$uctions74 7#b7 ,coord9ation ) o!r limitations ,?is subsection %all be appli$ aft] ! application ( any o!r limitation on ! all[ance ( any itemiz$ d$uction4 7#c7 ,exception = e/ates & tru/s ,?is subsection %all n apply to any e/ate or tru/4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,sections #hf7;b77#b77;,a7 & #acg7;b77#c77;,a7 are ea* am5d$ by ins]t+ #bbd1 be=e #iaa14 7#b7 ,section #aii7;d77#b77;,b7 is am5d$ by ins]t+ section #bbd & be=e ?is section4 7#c7 ,section #dfi7;i77#c77;,f77iii7 is am5d$ by ins]t+ & #bbd aft] #bai14 7#d7 ,section #acih7;c71 z am5d$ by section #ajjc7;c71 is am5d$-- 7,a7 by /rik+ ,basic 9 ! head+ !re(1 7,b7 by /rik+ ,basic /&>d 9 ! head+ ( p>agraph 7#b7 & ins]t+ ,/&>d1 & 7,c7 by /rik+ basic 9 p>agraph 7#b74 7#e7 ,section #cdjb7m77#c7 is am5d$ by /rik+ 7includ+ ! additional /&>d d$uction "u section #fc7;c77#c7 = ! ag$ & bl9d74 7#f7 ,section #fjad7;b77#d7 is am5d$ by /rik+ section #fc7;c77#e7 & ins]t+ section #fc7;c77#d74 7#g7 ,! table ( sections = "p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by r$esignat+ ! item relat+ to section #bbd z an item relat+ to section #bbe & by ins]t+ aft] ! item relat+ to section #bbc ! foll[+ new item3 ,sec4 #bbd4 ,d$uction = unm>ri$ individuals ) at lea/ "o qualify+ *ild4 4 7e7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #aajb4 ,increase & expansion ( *ild tax cr$it 7a7 ,9 g5]al ,section #bd is am5d$ to read z foll[s3 #bd4 ,*ild & dep5d5t tax cr$it 7a7 ,all[ance ( cr$it ,!re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] = ! taxable ye> ) respect to ea* dep5d5t ( ! taxpay] an am\nt equal to #ejj 7#a1ejj 9 ! case ( a qualify+ *ild74 7b7 ,phase\t ( cr$it 7#a7 ,9 g5]al ,! cr$it all[$ "u subsection 7a7 7det]m9$ )\t reg>d to ?is subsection7 %all be r$uc$ 7b n bel[ z]o7 by #e p]c5t ( ! excess 7if any7 (-- 7,a7 ! taxpay]'s modifi$ adju/$ gross income 7z def9$ 9 section #b7;b771 ov] 7,b7 7i7 ! jo9t return *ild cr$it phase\t ?re%old1 9 ! case ( a jo9t return or a surviv+ sp\se 7z def9$ 9 section #b7;a771 or 7ii7 ! non-jo9t return *ild cr$it phase\t ?re%old1 9 any o!r case4 7#b7 ,jo9t return *ild cr$it phase\t ?re%old ,= purposes ( ?is section1 ! t]m jo9t return *ild cr$it phase\t ?re%old means1 ) respect to any taxable ye>1 ! sum (-- 7,a7 ! jo9t return /&>d d$uction phase\t ?re%old 7z def9$ 9 section #fc7;c77#c77;,a771 plus 7,b7 an am\nt equal to-- 7i7 ! doll> am\nt 9 effect "u section #fc7;c77#a77;,a7 = su* taxable ye>1 divid$ by 7ii7 #j4b4 7#c7 ,non-jo9t return *ild cr$it phase\t ?re%old ,= purposes ( ?is section1 ! t]m non-jo9t return *ild cr$it phase\t ?re%old means1 ) respect to any taxable ye>1 ! sum (-- 7,a7 ! non-jo9t return /&>d d$uction phase\t ?re%old 7z def9$ 9 section #fc7;c77#c77;,b771 plus 7,b7 an am\nt equal to-- 7i7 ! doll> am\nt 9 effect "u section #fc7;c77#a77;,b7 = su* taxable ye>1 divid$ by 7ii7 #j4b4 7c7 ,qualify+ *ild ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! t]m qualify+ *ild has ! mean+ giv5 su* t]m by section #ggje4 7#b7 ,exception = c]ta9 noncitiz5s ,! t]m qualify+ *ild %all n include any individual :o w\ld n be a dep5d5t if subp>agraph 7,a7 ( section #ggje7;b77#c7 7 appli$ )\t reg>d to all t foll[s resid5t ( ! ,unit$ ,/ates4 7d7 ,portion ( cr$it refundable 7#a7 ,9 g5]al ,! aggregate cr$its all[$ "u subp>t ,c %all be increas$ by ! less] (-- 7,a7 ! cr$it :i* w\ld be all[$ "u ?is section )\t reg>d to ?is subsection & ! limitation "u section #bf7;a71 or 7,b7 ! am\nt by :i* ! aggregate am\nt ( cr$its all[$ "u ! subp>t 7det]m9$ )\t reg>d to ?is subsection7 w\ld increase if ! limitation "u section #bf7;a7 7 increas$ by #be p]c5t ( ! taxpay]'s e>n$ income = ! taxable ye>4 ,! am\nt ( ! cr$it all[$ "u ?is subsection %all n be treat$ z a cr$it all[$ "u ?is subp>t & %all r$uce ! am\nt ( cr$it o!rwise all[able "u subsection 7a7 )\t reg>d to section #bf7;a74 7#b7 ,e>n$ income ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m e>n$ income means-- 7i7 ! taxpay]'s wages1 sal>ies1 tips1 & o!r employee comp5sation1 b only if su* am\nts are includible 9 gross income = ! taxable ye>1 plus 7ii7 ! taxpay]'s net e>n+s f self-employm5t = ! taxable ye> 7)9 ! mean+ ( section #adjb7;a77 det]m9$ ) reg>d to ! d$uction all[$ to ! taxpay] by section #afd7;f74 7,b7 ,special rules ,= purposes ( subp>agraph 7,a7-- 7i7 ! e>n$ income ( an individual %all be comput$ )\t reg>d to any community prop]ty laws1 7ii7 no am\nt receiv$ z a p5sion or annuity %all be tak5 into acc\nt1 7iii7 no am\nt to :i* section #hga7;a7 applies 7relat+ to income ( nonresid5t ali5 individuals n connect$ ) ,unit$ ,/ates bus9ess7 %all be tak5 into acc\nt1 7iv7 no am\nt receiv$ = s]vices provid$ by an individual :ile ! individual is an inmate at a p5al in/itution %all be tak5 into acc\nt1 7v7 no am\nt describ$ 9 subp>agraph 7,a7 receiv$ = s]vice p]=m$ 9 "w activities z def9$ 9 p>agraph 7#d7 or 7#g7 ( section #djg7;d7 ( ! ,social ,security ,act to :i* ! taxpay] is assign$ "u any ,/ate program "u "p ,a ( title ,,iv ( su* ,act %all be tak5 into acc\nt1 b only to ! ext5t su* am\nt is subsidiz$ "u su* ,/ate program1 & 7vi7 am\nts exclud$ f gross income by reason ( section #aab %all be tak5 into acc\nt z e>n$ income4 7,c7 ,special rule = taxable ye>s beg9n+ be=e #bjah ,9 ! case ( any taxable ye> beg9n+ be=e ,janu>y #a1 #bjah1 ! e>n$ income ( ! taxpay] tak5 into acc\nt "u p>agraph 7#a7 %all be r$uc$ 7b n bel[ z]o7 by #c1jjj4 7#c7 ,exception = taxpay]s exclud+ =eign e>n$ income ,p>agraph 7#a7 %all n apply to any taxpay] = any taxable ye> if su* taxpay] elects to exclude any am\nt f gross income "u section #iaa = su* taxable ye>4 7e7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ea* doll> am\nt 9 subsection 7a7 %all be increas$ by an am\nt equal to-- 7#a7 su* doll> am\nt1 multipli$ by 7#b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 7f7 ,id5tification requirem5ts 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u ?is section to a taxpay] ) respect to any dep5d5t unless ! taxpay] includes ! "n & taxpay] id5tification numb] ( su* dep5d5t on ! return ( tax = ! taxable ye>4 7#b7 ,additional id5tification requirem5t ) respect to refundable cr$it 7,a7 ,9 g5]al ,subsection 7d7 %all n apply to any taxpay] = any taxable ye> unless ! taxpay] includes ! taxpay]'s ,social ,security numb] on ! return ( tax = su* taxable ye>4 7,b7 ,jo9t returns ,9 ! case ( a jo9t return1 ! requirem5t ( subp>agraph 7,a7 %all be treat$ z met if ! ,social ,security numb] ( ei!r sp\se is includ$ on su* return4 7g7 ,taxable ye> mu/ be full taxable ye> ,except 9 ! case ( a taxable ye> clos$ by reason ( ! dea? ( ! taxpay]1 no cr$it %all be all[able "u ?is section 9 ! case ( a taxable ye> cov]+ a p]iod ( less ?an #ab mon?s4 4 7b7 ,omission ( id5tification in=mation treat$ z ma!matical or cl]ical error ,subp>agraph 7,i7 ( section #fbac7;g77#b7 ( su* ,code is am5d$ to read z foll[s3 7,i7 an omission ( a correct ,,t9 "u section #bd7;f77#a7 7relat+ to ! *ild & dep5d5t tax cr$it71 or a correct ,social ,security numb] "u section #bd7;f77#b7 7relat+ to ! refundable portion ( *ild & dep5d5t tax cr$it71 to be includ$ on a return1 4 7c7 ,application ( rule = %ort taxable ye>s ,section #ddc7;c7 is am5d$ to read z foll[s3 7c7 ,adju/m5t 9 *ild & dep5d5t tax cr$it ,if a return is made = a %ort p]iod by reason ( subsection 7a77#a7 & if ! tax is n comput$ "u subsection 7b77#b71 !n ! cr$it all[$ "u section #bd %all be r$uc$ to an am\nt :i* be>s ! same ratio to ! full am\nt ( su* cr$it z ! numb] ( mon?s 9 ! %ort p]iod be>s to #ab4 4 7d7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #bd & ins]t+ ! foll[+ new item3 ,sec4 #bd4 ,*ild & dep5d5t tax cr$it4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #aajc4 ,modification ( e>n$ income tax cr$it 7a7 ,9 g5]al ,section #cb is am5d$ to read z foll[s3 #cb4 ,e>n$ income 7a7 ,9 g5]al ,9 ! case ( an individual :o is an eligible individual = any taxable ye>1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is subtitle = su* taxable ye> an am\nt equal to ! taxpay]'s employm5t-relat$ taxes = su* taxable ye>4 7b7 ,limitations 7#a7 ,doll> limitation ,! cr$it all[$ "u subsection 7a7 %all n exce$-- 7,a7 9 ! case ( a taxpay] ) #b or m qualify+ *ildr51 #c1jjj 7#d1jjj 9 ! case ( a jo9t return71 & 7,b7 9 ! case ( a taxpay] ) #a qualify+ *ild1 #b1djj4 7#b7 ,phase-out ( cr$it ,! cr$it all[$ "u subsection 7a7 7det]m9$ aft] application ( p>agraph 7#a77 %all be r$uc$ 7b n bel[ z]o7 by ! sum (-- 7,a7 #ai p]c5t ( s mu* ( ! taxpay]'s adju/$ gross income 7r$uc$ by ! am\nt ( any excess describ$ 9 subp>agraph 7,b77 z exce$s #bj1jjj 7#bg1jjj 9 ! case ( a jo9t return71 plus 7,b7 s mu* ( ! taxpay]'s inve/m5t income = ! taxable ye> z exce$s #c1cjj4 7c7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,eligible individual 7,a7 ,9 g5]al ,! t]m eligible individual means any individual :o has a qualify+ *ild = ! taxable ye>4 7,b7 ,qualify+ *ild ineligible ,if an individual is ! qualify+ *ild ( a taxpay] = any taxable ye> ( su* taxpay] beg9n+ 9 a cal5d> ye>1 su* individual %all n be treat$ z an eligible individual = any taxable ye> ( su* individual beg9n+ 9 su* cal5d> ye>4 7,c7 ,exception = individual claim+ b5efits "u section #iaa ,! t]m eligible individual does n include any individual :o claims ! b5efits ( section #iaa 7relat+ to citiz5s or resid5ts liv+ abroad7 = ! taxable ye>4 7,d7 ,limitation on eligibility ( nonresid5t ali5s ,! t]m eligible individual %all n include any individual :o is a nonresid5t ali5 individual = any portion ( ! taxable ye> unless su* individual is treat$ = su* taxable ye> z a resid5t ( ! ,unit$ ,/ates = purposes ( ?is *apt] by reason ( an election "u subsection 7g7 or 7h7 ( section #fjac4 7#b7 ,employm5t-relat$ taxes ,! t]m employm5t-relat$ taxes means1 ) respect to any taxpay] = any taxable ye>1 ! sum (-- 7,a7 any tax impos$ "u sections #caja or #caaa on ! wages 7z def9$ 9 section #caba7;a77 receiv$ by ! taxpay] dur+ ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 7,b7 any tax impos$ "u sections #cbja7;a71 #cbaa7;a71 or #cbba7;a7 on ! comp5sation 7z def9$ 9 section #cbca7;e77 receiv$ by ! taxpay] dur+ ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 & 7,c7 any tax impos$ "u section #adja on ! self-employm5t income ( ! taxpay] = ! taxable ye>4 7#c7 ,qualify+ *ild 7,a7 ,9 g5]al ,! t]m qualify+ *ild means a qualify+ *ild ( ! taxpay] 7)9 ! mean+ ( section #ggje1 det]m9$ )\t reg>d to subsections 7c77#a77;,d7 & 7e7 !re(74 7,b7 ,place ( abode ,= purposes ( subp>agraph 7,a71 ! requirem5ts ( section #ggje7;c77#a77;,b7 %all be met only if ! pr9cipal place ( abode is 9 ! ,unit$ ,/ates4 7,c7 ,treatm5t ( milit>y p]sonnel /ation$ outside ! ,unit$ ,/ates ,= purposes ( subp>agraph 7,b71 ! pr9cipal place ( abode ( a memb] ( ! ,arm$ ,=ces ( ! ,unit$ ,/ates %all be treat$ z 9 ! ,unit$ ,/ates dur+ any p]iod dur+ :i* su* memb] is /ation$ outside ! ,unit$ ,/ates :ile s]v+ on ext5d$ active duty ) ! ,arm$ ,=ces ( ! ,unit$ ,/ates4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m ext5d$ active duty means any p]iod ( active duty pursuant to a call or ord] to su* duty = a p]iod 9 excess ( #ij days or = an indef9ite p]iod4 7#d7 ,inve/m5t income ,= purposes ( p>agraph 7#a71 ! t]m inve/m5t income means-- 7,a7 int]e/ or divid5ds to ! ext5t includible 9 gross income = ! taxable ye>1 7,b7 int]e/ receiv$ or accru$ dur+ ! taxable ye> :i* is exempt f tax impos$ by ?is *apt]1 7,c7 ! excess 7if any7 (-- 7i7 gross income f r5ts or royalties n d]iv$ 9 ! ord9>y c\rse ( a trade or bus9ess1 ov] 7ii7 ! sum (-- 7,i7 ! d$uctions 7o!r ?an int]e/7 :i* are cle>ly & directly allocable to su* gross income1 plus 7,,ii7 int]e/ d$uctions prop]ly allocable to su* gross income1 7,d7 ! capital ga9 net income 7z def9$ 9 section #abbb7 ( ! taxpay] = su* taxable ye>1 & 7,e7 ! excess 7if any7 (-- 7i7 ! aggregate income f all passive activities = ! taxable ye> 7det]m9$ )\t reg>d to any am\nt ) respect to :i* a tax describ$ 9 subsection 7c77#b7 is impos$ or an am\nt describ$ 9 a prec$+ subp>agraph71 ov] 7ii7 ! aggregate losses f all passive activities = ! taxable ye> 7z s det]m9$74 ,= purposes ( subp>agraph 7,e71 ! t]m passive activity has ! mean+ giv5 su* t]m by section #dfi4 7d7 ,id5tification requirem5ts 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u ?is section unless ! taxpay] includes on ! return ( tax = ! taxable ye>-- 7,a7 ! taxpay]'s ,social ,security numb]1 & 7,b7 ! "n1 age1 & ,social ,security numb] ( ea* qualify+ *ild tak5 into acc\nt "u subsection 7b77#a74 7#b7 ,jo9t returns ,9 ! case ( a jo9t return1 ! requirem5t ( p>agraph 7#a77;,a7 %all be treat$ z met if ! ,social ,security numb] ( ei!r sp\se is includ$ on su* return4 7#c7 ,o!r me?ods ( provid+ *ildr5's in=mation ,! ,secret>y may prescribe o!r me?ods = provid+ ! in=mation describ$ 9 p>agraph 7#a77;,b74 7e7 ,re/rictions on taxpay]s :o improp]ly claim$ cr$it 9 prior ye> 7#a7 ,taxpay]s mak+ prior fraudul5t or reckless claims 7,a7 ,9 g5]al ,no cr$it %all be all[$ "u ?is section = any taxable ye> 9 ! disall[ance p]iod4 7,b7 ,disall[ance p]iod ,= purposes ( p>agraph 7#a71 ! disall[ance p]iod is-- 7i7 ! p]iod ( #aj taxable ye>s aft] ! mo/ rec5t taxable ye> = :i* !re 0 a f9al det]m9ation t ! taxpay]'s claim ( cr$it "u ?is section 0 due to fraud1 & 7ii7 ! p]iod ( #b taxable ye>s aft] ! mo/ rec5t taxable ye> = :i* !re 0 a f9al det]m9ation t ! taxpay]'s claim ( cr$it "u ?is section 0 due to reckless or int5tional disreg>d ( rules & regulations 7b n due to fraud74 7#b7 ,taxpay]s mak+ improp] prior claims ,9 ! case ( a taxpay] :o is d5i$ cr$it "u ?is section = any taxable ye> z a result ( ! defici5cy proc$ures "u sub*apt] ,b ( *apt] #fc1 no cr$it %all be all[$ "u ?is section = any subsequ5t taxable ye> unless ! taxpay] provides su* in=mation z ! ,secret>y may require to demon/rate eligibility = su* cr$it4 7f7 ,o!r special rules ,= purposes ( ?is section-- 7#a7 ,m>ri$ individuals ,9 ! case ( an individual :o is m>ri$ 7)9 ! mean+ ( section #ggjc71 ?is section %all apply only if a jo9t return is fil$ = ! taxable ye> "u section #fjac4 7#b7 ,taxable ye> mu/ be full taxable ye> ,except 9 ! case ( a taxable ye> clos$ by reason ( ! dea? ( ! taxpay]1 no cr$it %all be all[able "u ?is section 9 ! case ( a taxable ye> cov]+ a p]iod ( less ?an #ab mon?s4 7#c7 ,coord9ation ) c]ta9 means-te/$ programs ,= purposes (-- 7,a7 ! ,unit$ ,/ates ,h\s+ ,act ( #aicg1 7,b7 title ,v ( ! ,h\s+ ,act ( #aidi1 7,c7 section #aja ( ! ,h\s+ & ,urban ,developm5t ,act ( #aife1 7,d7 sections #bba7;d77#c71 #bce1 & #bcf ( ! ,national ,h\s+ ,act1 & 7,e7 ! ,food & ,nutrition ,act ( #bjjh1 any refund made to an individual 7or ! sp\se ( an individual7 by reason ( ?is section1 & any paym5t made to su* individual 7or su* sp\se7 by an employ] "u section #cejg1 %all n be treat$ z income 7& %all n be tak5 into acc\nt 9 det]m9+ res\rces = ! mon? ( its receipt & ! foll[+ mon?74 7#d7 ,coord9ation ) payroll tax cr$its ,! cr$it all[$ "u subsection 7a7 ) respect to any taxpay] = any taxable ye> %all be r$uc$ by ! sum ( ! cr$its all[$ "u sections #cajc & #cbjc ) respect to su* taxpay] = su* taxable ye>4 7g7 ,application to c]ta9 individuals )\t qualify+ *ildr5 ,= purposes ( ?is section & sections #cajc & #cbjc-- 7#a7 ,9 g5]al ,9 ! case ( an individual describ$ 9 p>agraph 7#b7-- 7,a7 su* individual %all be treat$ z an eligible individual1 7,b7 not)/&+ subsection 7i71 ! doll> limitation applicable to su* individual "u subsection 7b77#a7 %all be #ajj 7twice su* am\nt 9 ! case ( a jo9t return71 7,c7 subsection 7b77#b77;,a7 %all be appli$ by sub/itut+ #h1jjj 7#ac1jjj = #bj1jjj 7#bg1jjj1 & 7,d7 subsection 7i77#a7 %all n apply & ! employm5t-relat$ taxes ) respect to su* individual = any taxable ye> %all n exce$ ! sum (-- 7i7 any tax impos$ "u section #caja on ! wages 7z def9$ 9 section #caba7;a77 receiv$ by ! taxpay] dur+ ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 7ii7 any tax impos$ "u sections #cbja7;a7 7& s mu* ( ! tax impos$ by section #cbaa7;a7 z is attributable to ! rates ( tax "u subsections 7a7 & 7b7 ( section #caja7 on ! comp5sation 7z def9$ 9 section #cbca7;e77 receiv$ by ! taxpay] dur+ ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 & 7iii7 #ej p]c5t ( any tax impos$ "u section #adja on ! self-employm5t income ( ! taxpay] = ! taxable ye>4 7#b7 ,individual to :om subsection applies ,an individual is describ$ 9 ?is p>agraph = any taxable ye> if-- 7,a7 su* individual does n h a qualify+ *ild = ! taxable ye>1 7,b7 su* individual's pr9cipal place ( abode is 9 ! ,unit$ ,/ates = m ?an "o-half ( su* taxable ye>1 7,c7 su* individual 7or1 if ! individual is m>ri$ 7)9 ! mean+ ( section #ggjc71 ei!r ! individual or ! individual's sp\se7 has atta9$ age #be b n atta9$ age #fe be=e ! close ( ! taxable ye>1 & 7,d7 su* individual is n a dep5d5t ( ano!r taxpay] = any taxable ye> beg9n+ 9 ! same cal5d> ye> z su* taxable ye>4 7h7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 bo? doll> am\nts 9 subsection 7b77#a77;,a71 ! doll> am\nt 9 subsection 7b77#a77;,b71 bo? doll> am\nts 9 subsection 7b77#b77;,a71 ! doll> am\nt 9 subsection 7b77#b77;,b71 ! #ajj am\nt 9 subsection 7g77#a77;,b71 ! #h1jjj & #ac1jjj am\nts 9 subsection 7g77#a77;,c71 ! #d1jjj am\nt 9 subsection 7i77#b71 & ! #c1jjj am\nt 9 subsection 7i77#c71 %all ea* be increas$ by an am\nt equal to-- 7#a7 su* doll> am\nt1 multipli$ by 7#b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj 7#aj 9 ! case ( ! #ajj am\nt 9 subsection 7g77#a77;,b771 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj 7#aj 9 ! case ( ! #ajj am\nt 9 subsection 7g77#a77;,b774 7i7 ,special rules = taxable ye>s beg9n+ be=e #bjah ,9 ! case ( any taxable ye> beg9n+ be=e ,janu>y #a1 #bjah-- 7#a7 subsection 7a7 %all be appli$ by sub/itut+ #bjj p]c5t ( ! taxpay]'s employm5t-relat$ taxes = ! taxpay]'s employm5t-relat$ taxes1 7#b7 subsection 7b77#a77;,a7 %all be appli$ by sub/itut+ #d1jjj = #c1jjj 7#d1jjj 9 ! case ( a jo9t return71 & 7#c7 subsection 7b77#a77;,b7 %all be appli$ by sub/itut+ #c1jjj = #b1djj4 4 7b7 ,cr$it all[$ aga9/ payroll taxes 7#a7 ,,fica tax ,sub*apt] ,a ( *apt] #ba is am5d$ by add+ at ! end ! foll[+ new section3 #cajc4 ,cr$it aga9/ tax 7a7 ,9 g5]al ,9 ! case ( an individual :o is all[$ a cr$it "u section #cb 7det]m9$ )\t reg>d to subsection 7f77#d7 !re(7 = a taxable ye>1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by section #caja ) respect to wages receiv$ by su* individual dur+ ! cal5d> ye> end+ ) or )9 su* taxable ye> ! less] (-- 7#a7 ! am\nt ( tax s impos$1 or 7#b7 ! am\nt ( ! cr$it all[$ "u section #cb 7z s det]m9$7 = su* taxable ye>4 7b7 ,application ( cr$it ,! cr$it det]m9$ "u subsection 7a7 %all be tak5 into acc\nt "u ?is title 9 ! same mann] z a cr$it or refund to :i* ! taxpay] is entitl$ "u section #fdac7;c77#a74 ,su* cr$it %all n be tak5 into acc\nt = purposes ( det]m9+ any am\nt d$uct$ & )held "u section #cajb4 4 7#b7 ,railroad retirem5t tax ,sub*apt] ,a ( *apt] #bb is am5d$ by add+ at ! end ! foll[+ new section3 #cbjc4 ,cr$it aga9/ tax 7a7 ,9 g5]al ,9 ! case ( an individual :o is all[$ a cr$it "u section #cb 7det]m9$ )\t reg>d to subsection 7f77#d7 !re(7 = a taxable ye>1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by section #cbja7;a7 7& s mu* ( ! tax impos$ by section #cbaa7;a7 z is attributable to ! rates ( tax "u subsections 7a7 & 7b7 ( section #caja7 ) respect to comp5sation receiv$ by su* individual dur+ ! cal5d> ye> end+ ) or )9 su* taxable ye> ! less] (-- 7#a7 ! am\nt ( tax s impos$1 or 7#b7 ! excess (-- 7,a7 ! am\nt ( ! cr$it all[$ "u section #cb 7z s det]m9$7 = su* taxable ye>1 ov] 7,b7 ! am\nt ( ! cr$it all[$ "u section #cajc4 7b7 ,application ( cr$it ,! cr$it det]m9$ "u subsection 7a7 %all be tak5 into acc\nt "u ?is title 9 ! same mann] z a cr$it or refund to :i* ! taxpay] is entitl$ "u section #fdac7;c77#a74 ,su* cr$it %all n be tak5 into acc\nt = purposes ( det]m9+ any am\nt d$uct$ & )held "u section #cbjb4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #hf7;f77#b7 is am5d$ by /rik+ section #cb7;c77#b7 & ins]t+ section #bd7;d77#b74 7#b7 ,section #abi7;e77#b7 is am5d$ by /rik+ section #cb7;c77#b7 & ins]t+ section #bd7;d77#b7 7#c7 ,section #fjea7;a77#aj7 is am5d$ by /rik+ = purposes ( section #cb 7relat+ to e>n$ income cr$it7 & ins]t+ "u section #bd7;d77#b74 7#d7 ,section #fbaa7;b77#d77;,a7 is am5d$ by ins]t+ 7det]m9$ )\t reg>d to subsection 7f77#d7 !re(7 aft] #cb4 7#e7 ,section #fbac7;g77#b77;,f7 is am5d$ by /rik+ taxpay] id5tification numb] & ins]t+ ,social ,security numb]4 7#f7 ,section #fbac7;g77#b77;,g7 is am5d$ by /rik+ ) respect to & all t foll[s & ins]t+ ) respect to ! tax impos$ "u section #adja 7relat+ to self-employm5t tax7 to ! ext5t su* tax has n be5 paid14 7#g7 ,section #fbac7;g77#b77,k7 is am5d$ by /rik+ section #cb7k77#b7 & ins]t+ section #cb7;e77#b74 7#h7 ,section #ggje7;f77#f77;,b71 z r$esignat$ by ?is ,act1 is am5d$ by /rik+ clause 7iv71 by /rik+ 1 & at ! end ( clause 7iii7 & ins]t+ a p]iod1 & by ins]t+ & at ! end ( clause 7ii74 7#i7 ,! table ( sections = sub*apt] ,a ( *apt] #ba is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #cajc4 ,cr$it aga9/ tax4 4 7#aj7 ,! table ( sections = sub*apt] ,a ( *apt] #bb is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #cbjc4 ,cr$it aga9/ tax4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7e7 ,treatm5t ( taxpay]s :o improp]ly claim$ cr$it 9 prior ye>s ,a claim ( cr$it "u section #cb ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e ! am5dm5ts made by ?is section7 %all n fail to be tak5 into acc\nt "u subsection 7e7 ( su* section 7z am5d$ by ?is section7 m]ely because su* claim is = a taxable ye> beg9n+ be=e ,janu>y #a1 #bjae4 7f7 ,treasury report on mak+ cr$it advanceable ,n lat] ?an ! date :i* is #ahj days aft] ! date ( ! enactm5t ( ?is ,act1 ! ,secret>y ( ! ,treasury 7or ! ,secret>y's designee7 %all submit a report to ,congress mak+ recomm5dations reg>d+ ! be/ me?od = provid+ = advance paym5t ( ! cr$its e/abli%$ by ! am5dm5ts made by ?is section4 ,! recomm5dations 9 su* report %all seek to-- 7#a7 provide = ! paym5t ( su* cr$its to taxpay]s z promptly z is feasible1 includ+ on a weekly1 biweekly1 or mon?ly basis1 & 7#b7 m9imize any adm9i/rative burd5s on employ]s & ! ,int]nal ,rev5ue ,s]vice4 #aajd4 ,repeal ( d$uction = p]sonal exemptions 7a7 ,9 g5]al ,"p ,v ( sub*apt] ,b ( *apt] #a is h]eby repeal$4 7b7 ,def9ition ( dep5d5t reta9$ 7#a7 ,9 g5]al ,section #aeb1 prior to repeal by subsection 7a71 is h]eby r$esignat$ z section #ggje & mov$ to ! end ( *apt] #gi4 7#b7 ,modification ( age requirem5ts ,section #ggje7;c77#c77;,a71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ z a qualify+ *ild &-- & all t foll[s & ins]t+ is a qualify+ *ild & has n atta9$ ! age ( #ah z ( ! close ( ! cal5d> ye> 9 :i* ! taxable ye> ( ! taxpay] beg9s44 7c7 ,application to e/ates & tru/s ,subsection 7b7 ( section #fdb is am5d$-- 7#a7 by /rik+ p>agraph 7#b77;,c71 7#b7 by /rik+ p>agraph 7#c71 & 7#c7 by /rik+ ,d$uction = p]sonal exemption 9 ! head+ !re( & ins]t+ ,basic d$uction4 7d7 ,application to nonresid5t ali5s ,section #hgc7;b7 is am5d$ by /rik+ p>agraph 7#c74 7e7 ,modification ( wage )hold+ rules 7#a7 ,9 g5]al ,section #cdjb7;a77#b7 is am5d$ by /rik+ ! am\nt ( "o p]sonal exemption provid$ 9 section #aea7;b7 & ins]t+ #c1ijj4 7#b7 ,inflation adju/m5t ,section #cdjb7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjad1 ! #c1ijj am\nt 9 p>agraph 7#b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7#c7 ,numb] ( exemptions ,section #cdjb7;f77#a7 is am5d$-- 7,a7 9 subp>agraph 7,a71 by /rik+ an individual describ$ 9 section #aea7;d77#b7 & ins]t+ a dep5d5t ( any o!r taxpay]1 & 7,b7 9 subp>agraph 7,c71 by /rik+ ) respect to :om1 on ! basis ( facts exi/+ at ! beg9n+ ( su* day1 !re may reasonably be expect$ to be all[able an exemption "u section #aea7;c7 & ins]t+ :o1 on ! basis ( facts exi/+ at ! beg9n+ ( su* day1 is reasonably expect$ to be a dep5d5t ( ! employee4 7f7 ,modification ( return requirem5t 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #fjab7;a7 is am5d$ to read z foll[s3 7#a7 ,e individual :o has gross income = ! taxable ye>1 except t a return %all n be requir$ (-- 7,a7 an individual :o is n m>ri$ 7det]m9$ by apply+ section #ggjc7 & :o has gross income = ! taxable ye> :i* does n exce$ ! /&>d d$uction applicable to su* individual = su* taxable ye> "u section #fc1 or 7,b7 an individual entitl$ to make a jo9t return if-- 7i7 ! gross income ( su* individual1 :5 comb9$ ) ! gross income ( su* individual's sp\se1 = ! taxable ye> does n exce$ ! /&>d d$uction :i* w\ld be applicable to ! taxpay] = su* taxable ye> "u section #fc if su* individual & su* individual's sp\se made a jo9t return1 7ii7 su* individual & su* individual's sp\se h ! same h\sehold z _! home at ! close ( ! taxable ye>1 7iii7 su* individual's sp\se does n make a sep>ate return1 & 7iv7 nei!r su* individual nor su* individual's sp\se is an individual describ$ 9 section #fc7;c77#d7 :o has income 7o!r ?an e>n$ income7 9 excess ( ! am\nt 9 effect "u section #fc7;c77#d77;,a74 4 7#b7 ,bankruptcy e/ates ,p>agraph 7#h7 ( section #fjab7;a7 is am5d$ by /rik+ ! sum ( ! exemption am\nt plus ! basic /&>d d$uction "u section #fc7;c77#b77;,d7 & ins]t+ ! /&>d d$uction 9 effect "u section #fc7;c77#a77;,b74 7g7 ,con=m+ am5dm5ts 7#a7 ,section #b7;a77#a77;,b7 is am5d$ by /rik+ a dep5d5t & all t foll[s ?r\gh section #aea & ins]t+ a dep5d5t :o 7)9 ! mean+ ( section #ggje1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b7 & 7d77#a77;,b7 !re(7 is a son1 /epson1 daught]1 or /epdaught] ( ! taxpay]4 7#b7 ,section #cf;,b7b77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#c7 ,section #cf;,b7b77#c77;,b7 is am5d$ by /rik+ unless a d$uction is all[$ "u section #aea = ! taxable ye> ) respect to a dep5d5t 9 ! flu% matt] at ! end & ins]t+ unless ! taxpay] has a dep5d5t = ! taxable ye>4 7#d7 ,section #cf;,b7c77#a77;,d7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to ano!r taxpay] & ins]t+ :o is a dep5d5t ( ano!r taxpay]4 7#e7 ,section #cf;,b7d77#a7 is am5d$ by /rik+ equal to ! numb] ( individuals = :om ! taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> & ins]t+ ! sum ( #a 7#b 9 ! case ( a jo9t return7 plus ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye>4 7#f7 ,section #cf;,b7e77#a7 is am5d$ by /rik+ #a or m individuals = :om a taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> 7includ+ ! taxpay] or 8 sp\se7 & ins]t+ #a or m ( ! taxpay]1 ! taxpay]'s sp\se1 or any dep5d5t ( ! taxpay]4 7#g7 ,section #db7;i77#c77;,d77ii77,i7 is am5d$-- 7,a7 by /rik+ section #aeb & ins]t+ section #ggje1 & 7,b7 by /rik+ ! p]iod at ! end & ins]t+ a comma4 7#h7 ,section #fc7;b7 is am5d$ by /rik+ m9us-- & all t foll[s & ins]t+ m9us ! /&>d d$uction44 7#i7 ,section #fc7;d7 is am5d$ by /rik+ o!r ?an-- & all t foll[s & ins]t+ o!r ?an ! d$uctions all[able 9 arriv+ at adju/$ gross income44 7#aj7 ,section #gb7t77#b77;,d77i77,,iii7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#aa7 ,section #gb7t77#g77;,a77iii7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggje7;f77#a74 7#ab7 ,section #aje7;b7 is am5d$-- 7,a7 by /rik+ z def9$ 9 section #aeb & ins]t+ z def9$ 9 section #ggje1 7,b7 by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggje7;f77#a7 & 7,c7 by /rik+ section #aeb7;e7 & ins]t+ section #ggje7;e74 7#ac7 ,section #aje7;c77#a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#ad7 ,section #abe7;e77#a77;,d7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#ae7 ,section #abi7;c7 is am5d$-- 7,a7 by /rik+ ) respect to :om1 = su* taxable ye>1 a d$uction is all[able "u section #aea7;c7 7relat+ to p]sonal exemptions = dep5d5ts7 to 9 p>agraph 7#a7 & ins]t+ :o is a dep5d5t (1 & 7,b7 by /rik+ section #aeb7;f77#a7 9 p>agraph 7#b7 & ins]t+ section #ggje7;f77#a74 7#af7 ,section #acb7;h77#b77;,b7 is am5d$-- 7,a7 by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggje7;f77#a71 & 7,b7 by /rik+ section #aeb7;e7 & ins]t+ section #ggje7;e74 7#ag7 ,section #aci;,d7c77#e7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#ah7 ,section #afb7l77#a77;,d7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggje7;f77#a74 7#ai7 ,section #agj7;g77#a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#bj7 ,section #agj7;g77#c7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggje7;d77#b74 7#ba7 ,section #agb7;d7 is am5d$ by /rik+ p>agraph 7#c74 7#bb7 ,section #bbj7;b77#f7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to & ins]t+ :o is a dep5d5t (4 7#bc7 ,section #bbj7;d77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#bd7 ,section #bbc7;b77#f7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to & ins]t+ :o is a dep5d5t (4 7#be7 ,section #bbc7;d77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#bf7 ,section #dja7;h7 is am5d$ by /rik+ section #aeb7;f77#a7 9 ! la/ s5t5ce & ins]t+ section #ggje7;f77#a74 7#bg7 ,section #djb7l77#d77;,d7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#bh7 ,section #dji;,a7a77#b77;,b77ii77,i7 is am5d$ by /rik+ section #aeb7;a7 & ins]t+ section #ggje7;a74 7#bi7 ,section #eja7;c77#i7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggje7;f77#a74 7#cj7 ,section #ebi7;e77#b77;,b7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggje7;d77#b74 7#ca7 ,section #gjc7;a77#b7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 ?r\gh 7,f7 z subp>agraphs 7,a7 ?r\gh 7,e71 respectively4 7#cb7 ,section #hgd is am5d$ by /rik+ subsection 7b7 & by r$esignat+ subsection 7c7 z subsection 7b74 7#cc7 ,section #hia is am5d$ by /rik+ "u section #aea &4 7#cd7 ,section #ijd7;b7 is am5d$ by /rik+ p>agraph 7#a74 7#ce7 ,section #ica7;b77#a7 is am5d$ by /rik+ 7o!r ?an ! d$uction "u section #aea1 relat+ to p]sonal exemptions74 7#cf7 ,section #icc is am5d$-- 7,a7 by /rik+ 7o!r ?an ! d$uction "u section #aea1 relat+ to p]sonal exemptions7 9 p>agraph 7#a71 & 7,b7 by /rik+ 7o!r ?an ! d$uction = p]sonal exemptions "u section #aea7 9 p>agraph 7#b74 7#cg7 ,section #abab7;b77#b77;,b77ii7 is am5d$ to read z foll[s3 7ii7 9 ! case ( an e/ate or tru/1 ! d$uction all[$ = su* ye> "u section #fdb7;b74 4 7#ch7 ,section #acfa7;c77#a77;,c7 is am5d$ by /rik+ section #aeb7;f77#a77;,c7 & ins]t+ section #ggje7;f77#a77;,c74 7#ci7 ,section #adjb7;a7 is am5d$ by /rik+ p>agraph 7#g74 7#dj7 ,section #bjcb;,a7c77#g77;,d7 is am5d$ by /rik+ section #aeb7;f77#b7 & ins]t+ section #ggje7;f77#b74 7#da7 ,section #cdjb7m77#a7 is am5d$ by /rik+ o!r ?an ! d$uctions ref]r$ to 9 section #aea &4 7#db7 ,section #cdjb7r77#b7 is am5d$ by /rik+ ! sum (-- & all t foll[s & ins]t+ ! /&>d d$uction 9 effect "u section #fc7;c77#a77;,b744 7#dc7 ,section #ejjj;,a7b77#c77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggje4 7#dd7 ,section #ejjj;,a7c77#d77;,a7 is am5d$ by /rik+ ! numb] ( individuals = :om ! taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> & ins]t+ ! sum ( #a 7#b 9 ! case ( a jo9t return7 plus ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye>4 7#de7 ,section #fjac7;b77#c77;,a7 is am5d$-- 7,a7 by /rik+ _h less ?an ! exemption am\nt ( gross income 9 clause 7ii7 & ins]t+ _h no gross income1 7,b7 by /rik+ _h gross income ( ! exemption am\nt or m 9 clause 7iii7 & ins]t+ _h any gross income1 & 7,c7 by /rik+ ! flu% language foll[+ clause 7iii74 7#df7 ,section #fajc7l77#ba77;,a77iii7 is am5d$ to read z foll[s3 7iii7 ! numb] ( ! taxpay]'s dep5d5ts1 4 7#dg7 ,section #fbac7;g77#b7 is am5d$ by /rik+ subp>agraph 7,h74 7#dh7 ,section #fccd7;d77#b7 is am5d$ to read z foll[s3 7#b7 ,exempt am\nt 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m exempt am\nt means an am\nt equal to-- 7i7 ! sum ( ! /&>d d$uction & ! p]sonal exemption am\nt1 divid$ by 7ii7 #eb4 7,b7 ,p]sonal exemption am\nt ,= purposes ( subp>agraph 7,a71 ! p]sonal exemption am\nt is #c1ijj multipli$ by ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye> 9 :i* ! levy occurs4 7,c7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ! #c1ijj am\nt 9 subp>agraph 7,b7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 7,d7 ,v]ifi$ /atem5t ,unless ! taxpay] submits to ! ,secret>y a writt5 & prop]ly v]ifi$ /atem5t specify+ ! facts necess>y to det]m9e ! prop] am\nt "u subp>agraph 7,a71 subp>agraph 7,a7 %all be appli$ z if ! taxpay] 7 a m>ri$ individual fil+ a sep>ate return ) no dep5d5ts4 4 7#di7 ,section #ggjb;,b7f77#b77;,c77iii7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggje7;d77#b74 7#ej7 ,section #ggjc7;a7 is am5d$ by /rik+ "p ,v ( sub*apt] ,b ( *apt] #a &4 7#ea7 ,section #ggjc7;b77#a7 is am5d$ by /rik+ section #aeb7;f77#a7 & all t foll[s & ins]t+ section #ggje7;f77#a714 7#eb7 ,section #ggje7;a71 z r$esignat$ by ?is section1 is am5d$ by /rik+ ?is subtitle & ins]t+ subtitle ,a4 7#ec7 7,a7 ,section #ggje7;d77#a77;,b71 z r$esignat$ by ?is section1 is am5d$ by /rik+ ! exemption am\nt 7z def9$ 9 section #aea7;d77 & ins]t+ #c1ijj4 7,b7 ,section #ggje7;d71 z r$esignat$ by ?is section1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjad1 ! #c1ijj am\nt 9 p>agraph 7#a77;,b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7#ed7 ,! table ( sections = *apt] #gi is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ggje4 ,dep5d5t def9$4 4 7h7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,c ,simplification ( education inc5tives #abja4 ,am]ican opportunity tax cr$it 7a7 ,9 g5]al ,section #be;,a is am5d$ to read z foll[s3 #be;,a4 ,am]ican opportunity tax cr$it 7a7 ,9 g5]al ,9 ! case ( an individual1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] = ! taxable ye> an am\nt equal to ! sum (-- 7#a7 #ajj p]c5t ( s mu* ( ! qualifi$ tuition & relat$ exp5ses paid by ! taxpay] dur+ ! taxable ye> 7= education furni%$ to any eligible /ud5t = :om an election is 9 effect "u ?is section = su* taxable ye> dur+ any academic p]iod beg9n+ 9 su* taxable ye>7 z does n exce$ #b1jjj1 plus 7#b7 #be p]c5t ( s mu* ( su* exp5ses s paid z exce$s ! doll> am\nt 9 effect "u p>agraph 7#a7 b does n exce$ twice su* doll> am\nt4 7b7 ,portion ( cr$it refundable ,s mu* ( ! cr$it all[able "u subsection 7a7 7det]m9$ )\t reg>d to ?is subsection & section #bf7;a7 & aft] application ( all o!r provisions ( ?is section7 z does n exce$ #a1ejj %all be treat$ z a cr$it all[able "u subp>t ,c 7& n "u ?is "p74 ,! prec$+ s5t5ce %all n apply to any taxpay] = any taxable ye> if su* taxpay] is a *ild to :om section #a7;d7 applies = su* taxable ye>4 7c7 ,limitation bas$ on modifi$ adju/$ gross income 7#a7 ,9 g5]al ,! am\nt all[able z a cr$it "u subsection 7a7 = any taxable ye> %all be r$uc$ 7b n bel[ z]o7 by an am\nt :i* be>s ! same ratio to ! am\nt s all[able 7det]m9$ )\t reg>d to ?is subsection & subsection 7b7 b aft] application ( all o!r provisions ( ?is section7 z-- 7,a7 ! excess (-- 7i7 ! taxpay]'s modifi$ adju/$ gross income = su* taxable ye>1 ov] 7ii7 #dc1jjj 7twice su* am\nt 9 ! case ( a jo9t return71 be>s to 7,b7 #bj1jjj 7twice su* am\nt 9 ! case ( a jo9t return74 7#b7 ,modifi$ adju/$ gross income ,= purposes ( ?is subsection1 ! t]m modifi$ adju/$ gross income means ! adju/$ gross income ( ! taxpay] = ! taxable ye> increas$ by any am\nt exclud$ f gross income "u section #iaa1 #ica1 or #icc4 7d7 ,o!r limitations 7#a7 ,cr$it all[$ only = #d taxable ye>s ,an election to h ?is section apply may n be made = any taxable ye> if su* an election 7by ! taxpay] or any o!r individual7 is 9 effect ) respect to su* /ud5t = any #d prior taxable ye>s4 7#b7 ,cr$it all[$ only = fir/ #d ye>s ( po/second>y education ,no cr$it %all be all[$ "u subsection 7a7 = a taxable ye> ) respect to ! qualifi$ tuition & relat$ exp5ses ( an eligible /ud5t if ! /ud5t has complet$ 7be=e ! beg9n+ ( su* taxable ye>7 ! fir/ #d ye>s ( po/second>y education at an eligible educational in/itution4 7e7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,eligible /ud5t ,! t]m eligible /ud5t means1 ) respect to any academic p]iod1 a /ud5t :o-- 7,a7 meets ! requirem5ts ( section #dhd7;a77#a7 ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajia7;a77#a771 z 9 effect on ,augu/ #e1 #aiig1 & 7,b7 is c>ry+ at lea/ #a_/b ! normal full-"t "w load = ! c\rse ( /udy ! /ud5t is pursu+4 7#b7 ,qualifi$ tuition & relat$ exp5ses 7,a7 ,9 g5]al ,! t]m qualifi$ tuition & relat$ exp5ses means tuition1 fees1 & c\rse mat]ials1 requir$ = enrollm5t or att5dance (-- 7i7 ! taxpay]1 7ii7 ! taxpay]'s sp\se1 or 7iii7 any dep5d5t ( ! taxpay]1 at an eligible educational in/itution = c\rses ( in/ruction ( su* individual at su* in/itution4 7,b7 ,exception = education involv+ sports1 etc ,su* t]m does n include exp5ses ) respect to any c\rse or o!r education involv+ sports1 games1 or hobbies1 unless su* c\rse or o!r education is "p ( ! individual's degree program4 7,c7 ,exception = nonacademic fees ,su* t]m does n include /ud5t activity fees1 a?letic fees1 insurance exp5ses1 or o!r exp5ses unrelat$ to an individual's academic c\rse ( in/ruction4 7#c7 ,eligible educational in/itution ,! t]m eligible educational in/itution means an in/itution-- 7,a7 :i* is describ$ 9 section #dha ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajhh71 z 9 effect on ,augu/ #e1 #aiig1 & 7,b7 :i* is eligible to p>ticipate 9 a program "u title ,,iv ( su* ,act4 7f7 ,special rules 7#a7 ,id5tification requirem5t ,no cr$it %all be all[$ "u subsection 7a7 to a taxpay] ) respect to ! qualifi$ tuition & relat$ exp5ses ( an individual unless ! taxpay] includes ! "n & taxpay] id5tification numb] ( su* individual1 & ! employ] id5tification numb] ( any in/itution to :i* su* exp5ses 7 paid1 on ! return ( tax = ! taxable ye>4 7#b7 ,adju/m5t = c]ta9 s*ol>%ips1 etc 7,a7 ,9 g5]al ,! am\nt ( qualifi$ tuition & relat$ exp5ses o!rwise tak5 into acc\nt "u subsection 7a7 ) respect to an individual = an academic p]iod %all be r$uc$ 7be=e ! application ( subsection 7c77 by ! sum ( any am\nts paid = ! b5efit ( su* individual :i* are allocable to su* p]iod z-- 7i7 a qualifi$ s*ol>%ip :i* is excludable f gross income "u section #aag1 7ii7 an educational assi/ance all[ance "u *apt] #cj1 #ca1 #cb1 #cd1 or #ce ( title #ch1 ,unit$ ,/ates ,code1 or "u *apt] #afjf ( title #aj1 ,unit$ ,/ates ,code1 & 7iii7 a paym5t 7o!r ?an a gift1 beque/1 devise1 or inh]itance )9 ! mean+ ( section #ajb7;a77 = su* individual's educational exp5ses1 or attributable to su* individual's enrollm5t at an eligible educational in/itution1 :i* is excludable f gross income "u any law ( ! ,unit$ ,/ates4 7,b7 ,coord9ation ) ,pell ,grants n us$ = qualifi$ tuition & relat$ exp5ses ,= purposes ( subp>agraph 7,a71 ! am\nt ( any ,f$]al ,pell ,grant "u section #dja ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajgj;a7 %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( exp5ses 7o!r ?an qualifi$ tuition & relat$ exp5ses7 :i* are tak5 into acc\nt 9 det]m9+ ! co/ ( att5dance 7z def9$ 9 section #dgb ( ! ,high] ,education ,act ( #aife1 z 9 effect on ! date ( ! enactm5t ( ?is p>agraph7 ( su* individual at an eligible educational in/itution = ! academic p]iod = :i* ! cr$it "u ?is section is be+ det]m9$4 7#c7 ,treatm5t ( exp5ses paid by dep5d5t ,if an individual is a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* su* individuals taxable ye> beg9s-- 7,a7 no cr$it %all be all[$ "u subsection 7a7 to su* individual = su* individual's taxable ye>1 & 7,b7 qualifi$ tuition & relat$ exp5ses paid by su* individual dur+ su* individual's taxable ye> %all be treat$ = purposes ( ?is section z paid by su* o!r taxpay]4 7#d7 ,treatm5t ( c]ta9 prepaym5ts ,if qualifi$ tuition & relat$ exp5ses are paid by ! taxpay] dur+ a taxable ye> = an academic p]iod :i* beg9s dur+ ! fir/ #c mon?s foll[+ su* taxable ye>1 su* academic p]iod %all be treat$ = purposes ( ?is section z beg9n+ dur+ su* taxable ye>4 7#e7 ,d5ial ( d\ble b5efit ,no cr$it %all be all[$ "u ?is section = any am\nt = :i* a d$uction is all[$ "u any o!r provision ( ?is *apt]4 7#f7 ,no cr$it = m>ri$ individuals fil+ sep>ate returns ,if ! taxpay] is a m>ri$ individual 7)9 ! mean+ ( section #ggjc71 ?is section %all apply only if ! taxpay] & ! taxpay]'s sp\se file a jo9t return = ! taxable ye>4 7#g7 ,nonresid5t ali5s ,if ! taxpay] is a nonresid5t ali5 individual = any portion ( ! taxable ye>1 ?is section %all apply only if su* individual is treat$ z a resid5t ali5 ( ! ,unit$ ,/ates = purposes ( ?is *apt] by reason ( an election "u subsection 7g7 or 7h7 ( section #fjac4 7g7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( a taxable ye> beg9n+ aft] #bjah1 ! #b1jjj am\nt 9 subsection 7a77#a71 ! #a1ejj am\nt 9 subsection 7b71 & ! #dc1jjj am\nt 9 subsection 7c77#a77;,a77ii7 %all ea* be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#b7 ,r\nd+ ,if any am\nt z adju/$ "u p>agraph 7#a7 is n a multiple ( #ajj 7#a1jjj 9 ! case ( ! am\nt 9 subsection 7c77#a77;,a77ii771 su* am\nt %all be r\nd$ to ! next l[e/ multiple ( #ajj 7#a1jjj 9 ! case ( ! am\nt 9 subsection 7c77#a77;,a77ii774 7h7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ?is section1 includ+ regulations provid+ = a recapture ( ! cr$it all[$ "u ?is section 9 cases :]e !re is a refund 9 a subsequ5t taxable ye> ( any am\nt :i* 0 tak5 into acc\nt 9 det]m9+ ! am\nt ( su* cr$it4 4 7b7 ,requirem5t ,to report tuition paid r ?an tuition bill$ ,section #fjej,s7b77#b77;,b77i7 is am5d$ by /rik+ or ! aggregate am\nt bill$4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #gb7t77#g77;,b7 ( su* ,code is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7f77#b74 7#b7 ,section #ebi7;c77#c77;,b77v77,i7 ( su* ,code is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7f77#b74 7#c7 ,section #ebi7;e77#c77;,b77i7 ( su* ,code is am5d$ by /rik+ section #be;,a7b77#c7 & ins]t+ section #be;,a7d74 7#d7 ,section #ecj7;d77#b77;,c7 ( su* ,code is am5d$-- 7,a7 by /rik+ section #be;,a7g77#b7 9 clause 7i77,i7 & ins]t+ section #be;,a7f77#b71 & 7,b7 by /rik+ ,hope & ,lifetime ,le>n+ cr$its 9 ! head+ & ins]t+ ,am]ican opportunity tax cr$it4 7#e7 ,section #ecj7;d77#d77;,b77iii7 ( su* ,code is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7d77#d77;,b74 7#f7 ,section #fjej,s7e7 ( su* ,code is am5d$ by /rik+ subsection 7g77#b7 & ins]t+ subsection 7f77#b74 7#g7 ,section #fbaa7;b77#d77;,a7 ( su* ,code is am5d$ by /rik+ subsection 7i77#f7 & ins]t+ subsection 7b74 7#h7 ,section #fbac7;g77#b77;,j7 ( su* ,code is am5d$ by /rik+ ,,t9 requir$ "u section #be;,a7g77#a7 & ins]t+ ,,t91 & employ] id5tification numb]1 requir$ "u section #be;,a7f77#a74 7#i7 ,section #ajjd7;c7 ( division ,b ( ! ,am]ican ,recov]y & ,re9ve/m5t ,tax ,act ( #bjji is am5d$-- 7,a7 9 p>agraph 7#a7-- 7i7 by /rik+ section #be;,a7i77#f7 ea* place x appe>s & ins]t+ section #be;,a7b71 & 7ii7 by /rik+ ) respect to taxable ye>s beg9n+ aft] #bjjh & be=e #bjah ea* place x appe>s & ins]t+ ) respect to ea* taxable ye>1 7,b7 9 p>agraph 7#b71 by /rik+ ,section #be;,a7i77#f7 & ins]t+ ,section #be;,a7b71 & 7,c7 9 p>agraph 7#c77;,c71 by /rik+ subsection 7i77#f7 & ins]t+ subsection 7b74 7#aj7 ,! table ( sections = subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ ! item relat+ to section #be;,a & ins]t+ ! foll[+ new item3 ,sec4 #be;,a4 ,am]ican opportunity tax cr$it4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #abjb4 ,expansion ( ,pell ,grant exclusion f gross income 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #aag7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$-- 7#a7 by /rik+ ! p]iod at ! end & ins]t+ 1 or1 7#b7 by /rik+ receiv$ by an individual z a s*ol>%ip & ins]t+ ! foll[+3 receiv$ by an individual-- 7,a7 z a s*ol>%ip 1 & 7#c7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 z a ,f$]al ,pell ,grant "u section #dja ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajgj;a74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #abjc4 ,repeal ( exclusion ( income f ,unit$ ,/ates sav+s bonds us$ to pay high] education tuition & fees 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #ace 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #abjd4 ,repeal ( d$uction = int]e/ on education loans 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bba 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ag74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #abje4 ,repeal ( d$uction = qualifi$ tuition & relat$ exp5ses 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bbb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ah74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #abjf4 ,no new contributions to ,cov]dell education sav+s acc\nts 7a7 ,9 g5]al ,section #ecj7;b77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ,except 9 ! case ( rollov] contributions1 no contribution w be accept$ aft] ,decemb] #ca1 #bjad4 4 7b7 ,rollov]s to qualifi$ tuition programs p]mitt$ ,section #ecj7;d77#e7 is am5d$ by ins]t+ 1 or into 7by pur*ase or contribution7 a qualifi$ tuition program 7z def9$ 9 section #ebi71 aft] into ano!r ,cov]dell education sav+s acc\nt4 7c7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to contributions made aft] ,decemb] #ca1 #bjad4 7#b7 ,rollov]s to qualifi$ tuition programs ,! am5dm5ts made by subsection 7b7 %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 #abjg4 ,repeal ( exclusion = dis*>ge ( /ud5t loan indebt$ness 7a7 ,9 g5]al ,section #ajh is am5d$ by /rik+ subsection 7f74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #caba7;a77#bj7 is am5d$ by /rik+ #ajh7;f77#d714 7#b7 ,section #bji7;a77#ag7 ( ! ,social ,security ,act is am5d$ by /rik+ #ajh7;f77#d714 7#c7 ,section #cbca7;e77#e7 is am5d$ by /rik+ #ajh7;f77#d714 7#d7 ,section #ccjf7;b77#af7 is am5d$ by /rik+ #ajh7;f77#d714 7#e7 ,section #cdja7;a77#ai7 is am5d$ by /rik+ #ajh7;f77#d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts dis*>g$ aft] ,decemb] #ca1 #bjad4 #abjh4 ,repeal ( exclusion = qualifi$ tuition r$uctions 7a7 ,9 g5]al ,section #aag is am5d$ by /rik+ subsection 7d74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #aag7;c77#a7 is am5d$-- 7,a7 by /rik+ subsections 7a7 & 7d7 & ins]t+ subsection 7a71 & 7,b7 by /rik+ or qualifi$ tuition r$uction4 7#b7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #aag7;d714 7#c7 ,section #dad7t77#b7 is am5d$ by /rik+ #aag7;d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #abji4 ,repeal ( exclusion = education assi/ance programs 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #abg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #abe7;f77#a7 is am5d$ by /rik+ #abg14 7#b7 ,section #acb7;j77#h7 is am5d$ by /rik+ :i* are n excludable f gross income "u section #abg4 7#c7 ,section #acg7;c7 is am5d$ to read z foll[s3 7c7 ,adoption assi/ance program 7#a7 ,9 g5]al ,= purposes ( ?is section1 an adoption assi/ance program is a sep>ate writt5 plan ( an employ] = ! exclusive b5efit ( su* employ]'s employees "u :i* ! employ] provides su* employees ) adoption assi/ance4 ,except z provid$ 9 p>agraph 7#f71 su* program mu/ meet ! requirem5ts ( p>agraphs 7#b71 7#c71 & 7#d74 7#b7 ,eligibility ,! program %all b5efit employees :o qualify "u a classification set up by ! employ] & f\nd by ! ,secret>y n to be discrim9atory 9 favor ( employees :o are highly comp5sat$ employees 7)9 ! mean+ ( section #dad7q77 or _! dep5d5ts4 ,= purposes ( ?is p>agraph1 !re %all be exclud$ f consid]ation employees n includ$ 9 ! program :o are includ$ 9 a unit ( employees cov]$ by an agreem5t :i* ! ,secret>y ( ,labor f9ds to be a collective b>ga9+ agreem5t betwe5 employee repres5tatives & "o or m employ]s1 if !re is evid5ce t adoption assi/ance b5efits 7 ! subject ( good fai? b>ga9+ betwe5 su* employee repres5tatives & su* employ] or employ]s4 7#c7 ,pr9cipal %>ehold]s or own]s ,n m ?an #e p]c5t ( ! am\nts paid or incurr$ by ! employ] = adoption assi/ance dur+ ! ye> may be provid$ = ! class ( individuals :o are %>ehold]s or own]s 7or _! sp\ses or dep5d5ts71 ea* ( :om 7on any day ( ! ye>7 owns m ?an #e p]c5t ( ! /ock or ( ! capital or pr(its int]e/ 9 ! employ]4 7#d7 ,notification ( employees ,reasonable notification ( ! availability & t]ms ( ! program mu/ be provid$ to eligible employees4 7#e7 ,no fund+ requir$ ,a program ref]r$ to 9 p>agraph 7#a7 is n requir$ to be fund$4 7#f7 ,c]ta9 ,f$]al programs ,an adoption reimbursem5t program op]at$ "u section #ajeb ( title #aj1 ,unit$ ,/ates ,code 7relat+ to arm$ =ces7 or section #ead ( title #ad1 ,unit$ ,/ates ,code 7relat+ to memb]s ( ! ,coa/ ,gu>d7 %all be treat$ z an adoption assi/ance program = purposes ( ?is section4 4 7#d7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #abg14 7#e7 ,section #dad7t77#b7 is am5d$ by /rik+ #abg14 7#f7 ,section #caba7;a77#ah7 is am5d$ by /rik+ #abg14 7#g7 ,section #bji7;a77#ae7 ( ! ,social ,security ,act is am5d$ by /rik+ #abg or4 7#h7 ,section #cbca7;e7 is am5d$ by /rik+ p>agraph 7#f74 7#i7 ,section #ccjf7;b77#ac7 is am5d$ by /rik+ #abg14 7#aj7 ,section #cdja7;a77#ah7 is am5d$ by /rik+ #abg14 7#aa7 ,section #fjci;,d7d77#a7 is am5d$ by /rik+ #abg14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 #abaj4 ,repeal ( exception to #aj-p]c5t p5alty = high] education exp5ses 7a7 ,9 g5]al ,section #gb7t77#b7 is am5d$ by /rik+ subp>agraph 7,e74 7b7 ,con=m+ am5dm5t ,section #gb7t7 is am5d$ by /rik+ p>agraph 7#g74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 ,d ,repeal ( c]ta9 cr$its = individuals #acja4 ,repeal ( dep5d5t c>e cr$it 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #ba 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #abi7;a77#b7 is am5d$ by /rik+ subp>agraph 7,c74 7,b7 ,section #abi7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aj7 ,m>ital /atus ,rules simil> to ! rules ( subsections 7a7 & 7b7 ( section #ggjc %all apply = purposes ( ?is section4 4 7#b7 ,section #abi7;e77#a7 is am5d$ to read z foll[s3 7#a7 ,dep5d5t c>e assi/ance 7,a7 ,9 g5]al ,! t]m dep5d5t c>e assi/ance means employm5t-relat$ exp5ses & ! provision ( s]vices :i* con/itute employm5t-relat$ exp5ses4 7,b7 ,employm5t-relat$ exp5ses ,! t]m employm5t-relat$ exp5ses means am\nts paid = ! foll[+ exp5ses1 b only if su* exp5ses are incurr$ to enable ! employee to be ga9fully employ$ = any p]iod = :i* !re are #a or m qualify+ individuals ) respect to ! employee3 7i7 exp5ses = h\sehold s]vices1 & 7ii7 exp5ses = ! c>e ( a qualify+ individual4 ,su* t]m %all n include any am\nt paid = s]vices outside ! employee's h\sehold at a camp :]e ! qualify+ individual /ays ov]night4 7,c7 ,exception ,employm5t-relat$ exp5ses describ$ 9 subp>agraph 7,a7 :i* are incurr$ = s]vices outside ! employee's h\sehold %all be tak5 into acc\nt only if incurr$ = ! c>e (-- 7i7 a qualify+ individual describ$ 9 subp>agraph 7,d77i71 or 7ii7 a qualify+ individual 7n describ$ 9 subp>agraph 7,d77i77 :o regul>ly sp5ds at lea/ #h h\rs ea* day 9 ! employee's h\sehold4 7,d7 ,qualify+ individual ,! t]m qualify+ individual means-- 7i7 a dep5d5t ( ! taxpay] 7z def9$ 9 section #ggje7;a77#a77 :o has n atta9$ age #ac1 7ii7 a dep5d5t ( ! taxpay] 7z def9$ 9 section #ggje1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b71 & 7d77#a77;,b77 :o is physically or m5tally incapable ( c>+ = himself or h]self & :o has ! same pr9cipal place ( abode z ! taxpay] = m ?an "o-half ( su* taxable ye>1 or 7iii7 ! sp\se ( ! taxpay]1 if ! sp\se is physically or m5tally incapable ( c>+ = himself or h]self & :o has ! same pr9cipal place ( abode z ! taxpay] = m ?an "o-half ( su* taxable ye>4 7,e7 ,dep5d5t c>e c5t]s ,employm5t-relat$ exp5ses describ$ 9 subp>agraph 7,a7 :i* are incurr$ = s]vices provid$ outside ! employee's h\sehold by a dep5d5t c>e c5t] %all be tak5 into acc\nt only if-- 7i7 su* c5t] complies ) all applicable laws & regulations ( a ,/ate or unit ( local gov]nm5t1 & 7ii7 ! requirem5ts ( subp>agraph 7,b7 are met4 7,f7 ,dep5d5t c>e c5t] def9$ ,= purposes ( ?is p>agraph1 ! t]m dep5d5t c>e c5t] means any facility :i*-- 7i7 provides c>e = m ?an six individuals 7o!r ?an individuals :o reside at ! facility71 & 7ii7 receives a fee1 paym5t1 or grant = provid+ s]vices = any ( ! individuals 7reg>dless ( :e!r su* facility is op]at$ = pr(it74 7,g7 ,place ( abode ,= purposes ( ?is p>agraph1 an individual %all n be treat$ z hav+ ! same pr9cipal place ( abode z ! taxpay] if at any "t dur+ ! taxable ye> ( ! taxpay] ! relation%ip betwe5 ! individual & ! taxpay] is 9 violation ( local law4 7,h7 ,special dep5d5cy te/ 9 case ( divorc$ p>5ts1 etc4 ,if-- 7i7 section #ggje7;e7 applies to any *ild ) respect to any cal5d> ye>1 & 7ii7 su* *ild is "u ! age ( #ac or is physically or m5tally incapable ( c>+ = himself1 9 ! case ( any taxable ye> beg9n+ 9 su* cal5d> ye>1 su* *ild %all be treat$ z a qualify+ individual describ$ 9 clause 7i7 or 7ii7 ( subp>agraph 7,d7 7:i*ev] is appropriate7 ) respect to ! cu/odial p>5t 7z def9$ 9 section #ggje7;e77#d77;,a771 & %all n be treat$ z a qualify+ individual ) respect to ! noncu/odial p>5t4 4 7#c7 ,section #fbac7;g77#b77,l7 is am5d$ by /rik+ #ba14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #acjb4 ,repeal ( cr$it = adoption exp5ses 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #bc 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #acg is am5d$ by /rik+ subsections 7d7 & 7e74 7#b7 ,subsections 7d7 & 7e7 ( section #bc 7prior to be+ /rick5 by subsection 7a77 are ea* mov$ to section #acg 7aft] am5dm5t by p>agraph 7#a77 & ins]t$ aft] subsection 7c7 z new subsections 7d7 & 7e71 respectively4 7#c7 ,section #acg7;d77#a77;,d71 z am5d$ by p>agraphs 7#a7 & 7#b71 is am5d$ by ins]t+ 7det]m9$ )\t reg>d to reimbursem5ts "u ?is section7 be=e ! p]iod at ! end4 7#d7 ,section #acg7;e71 z am5d$ by p>agraphs 7#a7 & 7#b71 is am5d$ by /rik+ 7z def9$ 9 section #bag7;h77#c77 & ins]t+ 7or any possession ( ! ,unit$ ,/ates74 7#e7 ,section #acg is am5d$ by r$esignat+ subsection 7f7 z subsection 7h71 & by ins]t+ be=e subsection 7h7 7z s r$esignat$7 ! foll[+ new subsections3 7f7 ,fil+ requirem5ts 7#a7 ,m>ri$ c\ples mu/ file jo9t return 7,a7 ,9 g5]al ,if ! taxpay] is m>ri$ at ! close ( ! taxable ye>1 subsection 7a7 %all apply to ! taxpay] only if ! taxpay] & ! taxpay]'s sp\se file a jo9t return = ! taxable ye>4 7,b7 ,m>ital /atus ,rules simil> to ! rules ( subsections 7a7 & 7b7 ( section #ggjc %all apply = purposes ( ?is section4 7#b7 ,taxpay] mu/ include ,,t9 7,a7 ,9 g5]al ,subsection 7a7 %all apply ) respect to any *ild only if ! taxpay] includes 7if kn[n7 ! "n1 age1 & ,,t9 ( su* *ild on ! return ( tax = ! taxable ye>4 7,b7 ,o!r me?ods ,! ,secret>y may1 9 lieu ( ! in=mation ref]r$ to 9 subp>agraph 7,a71 require o!r in=mation meet+ ! purposes ( subp>agraph 7,a71 includ+ id5tification ( an ag5t assi/+ ) ! adoption4 7g7 ,basis adju/m5ts ,= purposes ( ?is subtitle1 if ! am\nt ( any exp5diture ) respect to any prop]ty is exclud$ f gross income "u ?is section1 ! increase 9 ! basis ( su* prop]ty :i* w\ld 7b = ?is subsection7 result f su* exp5diture %all be r$uc$ by ! am\nt ( su* exp5diture :i* is s exclud$4 4 7#f7 ,section #ajaf7;a77#bf7 is am5d$ by /rik+ sections #bc7;g7 & #acg7;e7 & ins]t+ section #acg7;g74 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 7#b7 ,special ne$s adoptions ,= purposes ( p>agraph 7#a71 any am\nt treat$ z paid by ! taxpay] "u section #bc7;a77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e its repeal by subsection 7a77 %all be treat$ z paid on ! date t ! adoption ref]r$ to 9 su* section becomes f9al4 #acjc4 ,repeal ( cr$it = nonbus9ess en]gy prop]ty 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #be;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cc74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjac4 #acjd4 ,repeal ( cr$it = resid5tial en]gy effici5t prop]ty 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #be;,d 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cd74 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjad4 #acje4 ,repeal ( cr$it = qualifi$ electric vehicles 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#be74 7#b7 ,section #feja7m7 is am5d$ by /rik+ section #cj7;e77#f714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to vehicles acquir$ aft] ,decemb] #ca1 #bjaa4 #acjf4 ,repeal ( alt]native motor vehicle cr$it 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj;,b 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#be74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#ce74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #cj;,b7h77#i714 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to prop]ty pur*as$ aft] ,decemb] #ca1 #bjad4 #acjg4 ,repeal ( alt]native fuel vehicle refuel+ prop]ty cr$it 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#bf74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cf74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #cj;,c7e77#e714 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjad4 #acjh4 ,repeal ( cr$it = new qualifi$ plug-9 electric drive motor vehicles 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj;,d 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ce74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cg74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #cj;,d7e77#d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to vehicles acquir$ aft] ,decemb] #ca1 #bjad4 #acji4 ,repeal ( cr$it = heal? insurance co/s ( eligible individuals 7a7 ,9 g5]al ,subp>t ,c ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #ce 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,*apt] #gg is am5d$ by /rik+ section #gebg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* *apt]74 7#b7 ,section #dihj;,b7f77#e77;,c77iv77,,ii7 is am5d$ by ins]t+ z 9 effect be=e its repeal aft] section #ce7;c74 7#c7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ #ce14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to mon?s beg9n+ aft] ,decemb] #ca1 #bjac4 #acaj4 ,repeal ( fir/-"t homebuy] cr$it 7a7 ,9 g5]al ,subp>t ,c ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,w74 7#b7 ,section #adjj;,c7e7 is am5d$ by /rik+ p>agraph 7#d74 7#c7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ #cf14 7#d7 ,section #fbac7;g77#b7 is am5d$ by /rik+ subp>agraphs 7,o7 & 7,p74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to resid5ces pur*as$ aft] ,june #cj1 #bjaa4 ,e ,d$uctions1 exclusions1 & c]ta9 o!r provisions #adja4 ,exclusion ( ga9 f sale ( a pr9cipal resid5ce 7a7 ,requirem5t t resid5ce be pr9cipal resid5ce = #e ye>s dur+ #h-,ye> p]iod ,subsection 7a7 ( section #aba is am5d$-- 7#a7 by /rik+ #e-ye> p]iod & ins]t+ #h-ye> p]iod1 & 7#b7 by /rik+ #b ye>s & ins]t+ #e ye>s4 7b7 ,application to only #a sale or ex*ange e #e ye>s ,p>agraph 7#c7 ( section #aba7;b7 is am5d$ to read z foll[s3 7#c7 ,application to only #a sale or ex*ange e #e ye>s ,subsection 7a7 %all n apply to any sale or ex*ange by ! taxpay] if1 dur+ ! #e-ye> p]iod end+ on ! date ( su* sale or ex*ange1 !re 0 any o!r sale or ex*ange by ! taxpay] to :i* subsection 7a7 appli$4 4 7c7 ,phase\t bas$ on modifi$ adju/$ gross income ,section #aba is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,phase\t bas$ on modifi$ adju/$ gross income 7#a7 ,9 g5]al ,if ! modifi$ adju/$ gross income ( ! taxpay] = ! taxable ye> exce$s #bej1jjj 7twice su* am\nt 9 ! case ( a jo9t return71 ! am\nt :i* w\ld 7b = ?is subsection7 be exclud$ f gross income "u subsection 7a7 = su* taxable ye> %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* excess4 7#b7 ,modifi$ adju/$ gross income ,= purposes ( ?is subsection1 ! t]m modifi$ adju/$ gross income has ! mean+ giv5 su* t]m by section #b det]m9$ aft] ! application ( ?is section b )\t reg>d to ?is subsection4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,! la/ p>agraph ( section #aba7;b7 7relat+ to exclusion ( ga9 allocat$ to nonqualifi$ use7 is r$esignat$ z p>agraph 7#e74 7#b7 ,! foll[+ provisions ( section #aba are ea* am5d$ by /rik+ #e-ye> p]iod ea* place x appe>s !re9 & ins]t+ #h-ye> p]iod3 7,a7 ,subsection 7b77#e77;,c77ii77,i7 7z r$esignat$ by p>agraph 7#a774 7,b7 ,subsection 7c77#a77;,b77i77,i74 7,c7 ,subsection 7d77#g77;,b74 7,d7 ,subp>agraphs 7,a7 & 7,b7 ( subsection 7d77#i74 7,e7 ,subsection 7d77#aj7 7,f7 ,subsection 7d77#ab77;,a74 7#c7 ,section #aba7;c77#a77;,b77ii7 is am5d$ by /rik+ #b ye>s & ins]t+ #e ye>s3 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales & ex*anges aft] ,decemb] #ca1 #bjad4 #adjb4 ,mortgage int]e/ 7a7 ,modification ( limitations 7#a7 ,9 g5]al ,p>agraph 7#c7 ( section #afc7;h7 is am5d$ to read z foll[s3 7#c7 ,qualifi$ resid5ce int]e/ ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ resid5ce int]e/ means any int]e/ :i* is paid or accru$ dur+ ! taxable ye> on indebt$ness :i*-- 7i7 is incurr$ 9 acquir+1 con/ruct+1 or sub/antially improv+ any qualifi$ resid5ce 7det]m9$ z ( ! "t ! int]e/ is accru$7 ( ! taxpay]1 & 7ii7 is secur$ by su* resid5ce4 ,su* t]m also includes int]e/ on any indebt$ness secur$ by su* resid5ce result+ f ! ref9anc+ ( indebt$ness meet+ ! requirem5ts ( ! prec$+ s5t5ce 7or ?is s5t5ce72 b only to ! ext5t ! am\nt ( ! indebt$ness result+ f su* ref9anc+ does n exce$ ! am\nt ( ! ref9anc$ indebt$ness4 7,b7 ,limitation 7i7 ,9 g5]al ,! aggregate am\nt ( indebt$ness tak5 into acc\nt "u subp>agraph 7,a7 = any p]iod %all n exce$ #ejj1jjj 7half ( su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return74 7ii7 ,phase-9 ( decreas$ limitation ,= purposes ( apply+ clause 7i7 ) respect to any indebt$ness incurr$ dur+ a cal5d> ye> aft] #bjad & be=e #bjah1 ! #ejj1jjj am\nt 9 clause 7i7 %all be increas$ by ! phase-9 am\nt det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( indebt$ness incurr$ dur+3,! phase-9 am\nt is3 #bjaecge1jjj #bjafbej1jjj #bjagabe1jjj 7iii7 ,treatm5t ( ref9anc+s ( indebt$ness incurr$ dur+ phase-9 p]iod ,9 ! case ( any indebt$ness :i* is incurr$ to ref9ance indebt$ness to :i* clause 7ii7 applies 7or to :i* ?is clause applies71 su* ref9anc$ indebt$ness %all be treat$ = purposes ( clause 7ii7 z incurr$ on ! date t ! orig9al indebt$ness 0 incurr$ to ! ext5t ! am\nt ( ! indebt$ness result+ f su* ref9anc+ does n exce$ ! am\nt ( ! ref9anc$ indebt$ness4 7,c7 ,treatm5t ( indebt$ness incurr$ be=e ,janu>y #a1 #bjae 7i7 ,9 g5]al ,9 ! case ( any pre-,janu>y #a1 #bjae1 indebt$ness1 ?is p>agraph %all apply z 9 effect imm$iately be=e ! enactm5t ( ! ,tax ,re=m ,act ( #bjad4 7ii7 ,r$uction 9 doll> limitation ,! limitation ( subp>agraph 7,b7 7aft] application ( clause 7ii7 !re(7 %all be r$uc$ 7b n bel[ z]o7 by ! aggregate am\nt ( out/&+ pre-,janu>y #a1 #bjae1 indebt$ness ( ! taxpay] ) respect to :i* int]e/ is all[able z a d$uction by reason ( ?is subp>agraph4 7iii7 ,pre-,janu>y #a1 #bjae1 indebt$ness ,= purposes ( ?is subp>agraph1 ! t]m pre-,janu>y #a1 #bjae1 indebt$ness means-- 7,i7 any indebt$ness incurr$ be=e ,janu>y #a1 #bjae1 & 7,,ii7 any indebt$ness incurr$ on or aft] su* date to ref9ance indebt$ness describ$ 9 subclause 7,i7 7or ref9anc$ indebt$ness meet+ ! requirem5ts ( ?is subclause7 to ! ext5t ! am\nt ( ! indebt$ness result+ f su* ref9anc+ does n exce$ ! am\nt ( ! ref9anc$ indebt$ness4 7,d7 ,limitation on p]iod ( ref9anc+ ,subp>agraphs 7,b77iii7 & 7,c77iii77,,ii7 %all n apply to any indebt$ness aft]-- 7i7 ! expiration ( ! t]m ( ! orig9al indebt$ness1 or 7ii7 if ! pr9cipal ( su* orig9al indebt$ness is n amortiz$ ov] its t]m1 ! expiration ( ! t]m ( ! #a/ ref9anc+ ( su* indebt$ness 7or if e>li]1 ! date :i* is #cj ye>s aft] ! date ( su* #a/ ref9anc+74 7,e7 ,coord9ation ) c]ta9 exclusions ,! am\nt o!rwise treat$ z qualifi$ resid5ce int]e/ 7det]m9$ )\t reg>d to ?is subp>agraph7 ) respect to any resid5ce ( ! taxpay] = any taxable ye> %all be r$uc$ by ! sum ( ! am\nts excludable f ! gross income ( su* taxpay] "u sections #ajg & #aai ) respect to su* resid5ce4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ajh7;h77#b7 is am5d$ to read z foll[s3 7#b7 ,qualifi$ pr9cipal resid5ce indebt$ness ,= purposes ( ?is section1 ! t]m qualifi$ pr9cipal resid5ce indebt$ness means indebt$ness describ$ 9 section #afc7;h77#c7 appli$ )\t reg>d to clauses 7ii7 & 7iii7 ( subp>agraph 7,b7 !re( & by sub/itut+ #b1jjj1jjj = #ejj1jjj 9 subp>agraph 7,b77i7 !re(4 4 7,b7 ,section #afc7;h7 is am5d$-- 7i7 by /rik+ subp>agraph 7,e7 9 p>agraph 7#c71 7ii7 by /rik+ subp>agraphs 7,e7 & 7,f7 9 p>agraph 7#d71 & 7iii7 by /rik+ p>agraph 7#e74 7,c7 ,section #bfe7;a77#f7 is am5d$-- 7i7 by /rik+ an am\nt z-- & all t foll[s & ins]t+ an am\nt z a milit>y h\s+ all[ance41 & 7ii7 by /rik+ p>sonage & 9 ! head+ !re(4 7b7 ,modification ( report+ requirem5ts 7#a7 ,in=mation return requirem5ts ,p>agraph 7#b7 ( section #fjej;,h7b7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,c71 by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,f7 & by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraphs3 7,d7 ! am\nt ( out/&+ pr9cipal on ! mortgage z ( ! beg9n+ ( su* cal5d> ye>1 7,e7 ! date ( ! orig9ation ( ! mortgage1 & 4 7#b7 ,/atem5ts to individuals ,p>agraph 7#b7 ( section #fjej;,h7d7 is am5d$ by /rik+ subsection 7b77#b77;,c7 & ins]t+ subp>agraphs 7,c71 7,d71 & 7,e7 ( subsection 7b77#b74 7c7 ,effective dates 7#a7 ,modification ( limitations 7,a7 ,9 g5]al ,! am5dm5ts made by subsection 7a7 %all apply to int]e/ paid or accru$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad1 ) respect to indebt$ness incurr$ be=e1 on1 or aft] su* date4 7,b7 ,treatm5t ( gr&fa!r$ indebt$ness ,= application ( ! am5dm5ts made by subsection 7a7 to gr&fa!r$ indebt$ness1 see section #afc7;h77#c77;,c7 ( ! ,int]nal ,rev5ue ,code ( #aihf z am5d$ by ?is section4 7#b7 ,modification ( report+ requirem5ts ,! am5dm5ts made by subsection 7b7 %all apply to returns & /atem5ts = cal5d> ye>s aft] ,decemb] #ca1 #bjad4 #adjc4 ,*>itable contributions 7a7 #b p]c5t floor on *>itable d$uction = individuals ,p>agraph 7#c7 ( section #agj7;b7 is am5d$ to read z foll[s3 7#c7 #b p]c5t floor on *>itable d$uction = individuals ,! am\nt ( *>itable contributions tak5 into acc\nt "u ?is section z made by any individual dur+ a taxable ye> 7det]m9$ )\t reg>d to subsection 7d77 %all be r$uc$ by #b p]c5t ( ! taxpay]'s contribution base = su* taxable ye>4 ,su* r$uction %all apply-- 7,a7 fir/1 to *>itable contributions to :i* p>agraph 7#a77;,b7 applies to ! ext5t !re(1 7,b7 second1 to *>itable contributions to :i* p>agraph 7#a77;,c7 applies to ! ext5t !re(1 & 7,c7 ?ird1 to *>itable contributions to :i* p>agraph 7#a77;,a7 applies to ! ext5t !re(4 4 7b7 ,ext5sion ( "t = mak+ *>itable contributions ,subsection 7a7 ( section #agj is am5d$ by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#c7 & 7#d71 respectively1 & by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraph3 7#b7 ,treatm5t ( *>itable contributions made by individuals be=e due date ( return ,if any *>itable contribution is made by an individual aft] ! close ( a taxable ye> b n lat] ?an ! due date 7det]m9$ )\t reg>d to ext5sions7 = ! return ( tax = su* taxable ye>1 !n ! taxpay] may elect to treat su* *>itable contribution z made 9 su* taxable ye>4 ,su* election may be made only at ! "t ( ! fil+ ( su* return ( tax & %all be signifi$ 9 su* mann] z ! ,secret>y may provide4 4 7c7 ,d$uction = contributions ( prop]ty g5]ally limit$ to adju/$ basis 7#a7 ,9 g5]al ,subsection 7e7 ( section #agj is am5d$-- 7,a7 by /rik+ p>agraphs 7#a7 & 7#f71 7,b7 by r$esignat+ p>agraphs 7#b71 7#c71 7#d71 & 7#e7 z p>agraphs 7#c71 7#d71 7#e71 & 7#f71 respectively1 & 7,c7 by ins]t+ be=e p>agraph 7#c7 7z s r$esignat$7 ! foll[+ new p>agraphs3 7#a7 ,9 g5]al ,except 9 ! case ( prop]ty to :i* p>agraph 7#b7 applies1 ! am\nt ( any *>itable contribution ( prop]ty o!rwise tak5 into acc\nt "u ?is section %all be r$uc$ by ! am\nt ( ga9 :i* w\ld h be5 realiz$ if ! prop]ty contribut$ _h be5 sold by ! taxpay] = its fair m>ket value 7det]m9$ at ! "t ( su* contribution74 7#b7 ,special rule = c]ta9 prop]ty 7,a7 ,9 g5]al ,9 ! case ( prop]ty to :i* ?is p>agraph applies1 ! am\nt ( any *>itable contribution ( prop]ty o!rwise tak5 into acc\nt "u ?is section %all be r$uc$ by ! am\nt ( ga9 :i* w\ld n h be5 long-t]m capital ga9 if ! prop]ty contribut$ _h be5 sold by ! taxpay] at its fair m>ket value 7det]m9$ at ! "t ( su* contribution74 7,b7 ,prop]ty to :i* ?is p>agraph applies ,?is p>agraph %all apply to-- 7i7 any contribution ( tangible p]sonal prop]ty if ! use ( su* prop]ty by ! donee is relat$ to ! purpose or function con/itut+ ! basis = its exemption "u section #eja 7or1 9 ! case ( a gov]nm5tal unit1 to any purpose or function describ$ 9 subsection 7c771 7ii7 any qualifi$ cons]vation contribution 7z def9$ 9 subsection 7h77#a771 7iii7 any qualifi$ contribution 7z def9$ 9 p>agraph 7#d77;,a771 7iv7 any qualifi$ rese>* contribution 7z def9$ 9 p>agraph 7#e77;,b771 & 7v7 any qualifi$ appreciat$ /ock 7z def9$ 9 subsection 7e77#f774 7,c7 ,special rules = det]m9+ long-t]m capital ga9 7i7 ,9 g5]al ,= purposes ( apply+ ?is p>agraph 7o!r ?an 9 ! case ( ga9 to :i* section #abde7;a71 #abej7;a71 #abeb7;a71 or #abed7;a7 applies71 prop]ty :i* is prop]ty us$ 9 ! trade or bus9ess 7z def9$ 9 section #abca7;b77 %all be treat$ z a capital asset4 7ii7 ,contributions ( /ock 9 ,s corporations ,= purposes ( apply+ ?is p>agraph 9 ! case ( a *>itable contribution ( /ock 9 an ,s corporation1 rules simil> to ! rules ( section #gea %all apply 9 det]m9+ :e!r ga9 on su* /ock w\ld h be5 long-t]m capital ga9 if su* /ock 7 sold by ! taxpay]4 4 7#b7 ,repeal ( special rules = food & book inv5tory ,p>agraph 7#d7 ( section #agj7;e71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ subp>agraphs 7,c7 & 7,d7 & by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,c74 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #agj7;e77#c71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ p>agraph 7#a7 & ins]t+ p>agraphs 7#a7 & 7#b74 7,b7 ,p>agraphs 7#d7 & 7#e7 ( section #agj7;e71 z r$esignat$ by p>agraph 7#a71 are ea* am5d$ by /rik+ p>agraph 7#a77;,a7 ea* place x appe>s & ins]t+ p>agraph 7#b77;,a74 7,c7 ,section #agj7;e77#f71 z r$esignat$ by p>agraph 7#a71 is am5d$-- 7i7 by /rik+ all t prec$es = purposes ( ?is p>agraph 9 subp>agraph 7,b7 & ins]t+ ! foll[+3 7#f7 ,qualifi$ appreciat$ /ock 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 1 7ii7 by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b71 & 7iii7 by /rik+ 9 a contribution to :i* p>agraph 7#a77;,b77ii7 applies 7det]m9$ )\t reg>d to ?is p>agraph7 9 subp>agraph 7,b7 z s r$esignat$4 7d7 ,modification ( income bas$ contribution limitations 7#a7 ,9 g5]al ,section #agj7;b77#a7 is am5d$-- 7,a7 by /rik+ #cj p]c5t 9 subp>agraph 7,b77i7 & ins]t+ #be p]c5t1 & 7,b7 by /rik+ #ej p]c5t & ins]t+ #dj p]c5t 9-- 7i7 ! flu% matt] at ! end ( subp>agraph 7,a71 7ii7 subp>agraph 7,b77ii71 & 7iii7 clauses 7i71 7iv77,i71 & 7v7 ( subp>agraph 7,c7 7z r$esignat$ by p>agraph 7#b774 7#b7 ,repeal ( special limitations = c]ta9 capital ga9 prop]ty 7,a7 ,9 g5]al ,p>agraph 7#a7 ( section #agj7;b7 is am5d$ by /rik+ subp>agraphs 7,c7 & 7,d7 & by r$esignat+ subp>agraphs 7,e71 7,f71 & 7,g7 z subp>agraphs 7,c71 7,d71 & 7,e71 respectively4 7,b7 ,con=m+ am5dm5ts 7i7 ,section #agj7;b77#a77;,a77vii7 is am5d$ by /rik+ subp>agraph 7,f7 & ins]t+ subp>agraph 7,d7 7ii7 ,section #agj7;b77#a77;,b77ii7 is am5d$ by /rik+ 7det]m9$ )\t reg>d to subp>agraph 7,c774 7iii7 ,section #agj7;b77#a77;,c77iii71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ subp>agraph 7,a71 7,b71 7,c7 or 7,d7 & ins]t+ subp>agraph 7,a7 or 7,b74 7iv7 ,section #agj7;b77#b77;,b77i77,i7 is am5d$ by /rik+ p>agraph 7#a77;,e77v7 & ins]t+ p>agraph 7#a77;,c77v74 7v7 ,section #ede7;b77#b7 is am5d$ by /rik+ 7,d71 & 7,e7 & ins]t+ & 7,c74 7e7 ,qualifi$ cons]vation contributions 7#a7 ,rules made p]man5t 7,a7 ,9 g5]al ,subp>agraph 7,c7 ( section #agj7;b77#a71 z r$esignat$ by subsection 7d71 is am5d$ by /rik+ clause 7vi74 7,b7 ,corporate f>m]s & ran*]s ,subp>agraph 7,b7 ( section #agj7;b77#b7 is am5d$ by /rik+ clause 7iii74 7#b7 ,treatm5t ( golf c\rse easem5ts ,subsection 7h7 ( section #agj is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,special rule ) respect to golf c\rses ,an int]e/ 9 real prop]ty %all n be treat$ z a qualifi$ real prop]ty int]e/ = purposes ( ?is subsection if 7at ! "t ( ! contribution ( su* int]e/7 su* prop]ty is1 or is reasonably expect$ to be1 us$ z a golf c\rse4 4 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #agj7;b77#a77;,c77iv77,,ii71 z r$esignat$ by subsection 7d71 is am5d$ by /rik+ made aft] ! date ( ! enactm5t ( ?is subp>agraph4 7,b7 ,section #agj7;b77#b77;,b77i77,,ii7 is am5d$ by /rik+ 1 9 ! case ( contributions made aft] ! date ( ! enactm5t ( ?is subp>agraph14 7f7 ,repeal ( special rule = college a?letic ev5t seat+ rights ,section #agj is am5d$ by /rik+ subsection 7l74 7g7 ,repeal ( special rule treat+ donee income f intellectual prop]ty z an additional *>itable contribution 7#a7 ,9 g5]al ,section #agj is am5d$ by /rik+ subsection 7m74 7#b7 ,con=m+ am5dm5ts ,section #fjej,l is am5d$-- 7,a7 by /rik+ subsection 7b7 & r$esignat+ subsection 7c7 z subsection 7b71 & 7,b7 by /rik+ or 7b7 9 subsection 7b7 7z r$esignat$ by subp>agraph 7,a774 7h7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,qualifi$ cons]vation contributions ,! am5dm5ts made by subsection 7e7 %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #adjd4 ,d5ial ( d$uction = exp5ses attributable to ! trade or bus9ess ( be+ an employee 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bfb ! foll[+ new item3 #bfb;,a4 ,exp5ses attributable to be+ an employee 7a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section1 no d$uction %all be all[$ ) respect to any trade or bus9ess ( ! taxpay] :i* consi/s ( ! p]=mance ( s]vices by ! taxpay] z an employee4 7b7 ,exception = above-!-,l9e d$uctions ,subsection 7a7 %all n apply to any d$uction all[able 7det]m9$ )\t reg>d to subsection 7a77 9 det]m9+ adju/$ gross income4 4 7b7 ,repeal ( c]ta9 above-!-,l9e trade & bus9ess d$uctions ( employees 7#a7 ,9 g5]al ,p>agraph 7#b7 ( section #fb7;a7 is am5d$-- 7,a7 by /rik+ subp>agraphs 7,b71 7,c71 & 7,d71 & 7,b7 by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,b74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #fb is am5d$ by /rik+ subsections 7b7 & 7d7 & by r$esignat+ subsections 7c7 & 7e7 z subsections 7b7 & 7c71 respectively4 7,b7 ,section #fb7;a77#bj7 is am5d$ by /rik+ subsection 7e7 & ins]t+ subsection 7c74 7c7 ,cont9u$ exclusion ( work+ condition fr+e b5efits ,section #acb7;d7 is am5d$ by ins]t+ 7det]m9$ )\t reg>d to section #bfb;,a7 aft] section #afb4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adje4 ,repeal ( d$uction = taxes n paid or accru$ 9 a trade or bus9ess 7a7 ,9 g5]al ,subsection 7b7 ( section #afd is am5d$ by /rik+ p>agraphs 7#e7 & 7#f7 & ins]t+ ! foll[+ new p>agraph3 7#e7 ,limitation 9 case ( individuals ,9 ! case ( a taxpay] o!r ?an a corporation-- 7,a7 p>agraphs 7#a7 & 7#b7 ( subsection 7a7 %all only apply to taxes :i* are paid or accru$ 9 c>ry+ on a trade or bus9ess or an activity describ$ 9 section #bab1 & 7,b7 p>agraph 7#c7 ( subsection 7a7 %all n apply to ,/ate & local taxes4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #afd7;a7 is am5d$ by /rik+ p>agraph 7#f74 7#b7 7,a7 ,section #baf7;a7 is am5d$ by /rik+ proportionate %>e (-- & all t foll[s & ins]t+ proportionate %>e ( ! int]e/ all[able z a d$uction to ! corporation "u section #afc :i* is paid or incurr$ by ! corporation on its indebt$ness contract$-- 7#a7 9 ! acquisition1 con/ruction1 alt]ation1 rehabilitation1 or ma9t5ance ( ! h\ses or ap>tm5t build+1 or 7#b7 9 ! acquisition ( ! l& on :i* ! h\ses 7or ap>tm5t build+7 are situat$4 4 7,b7 ,section #baf7;b77#c77;,b77i7 is am5d$-- 7i7 by /rik+ a %>e ( su* corporation's real e/ate taxes describ$ 9 subsection 7a77#a7 or 9 subclause 7,i71 & 7ii7 by /rik+ ( su* taxes1 or ( su* int]e/1 9 subclause 7,,ii7 & ins]t+ ( su* int]e/4 7,c7 ,section #baf7;d7 is am5d$ by /rik+ subsections 7a77#a7 & 7a77#b7 & ins]t+ subsection 7a74 7#c7 ,section #bgd7;f7 is am5d$ by /rik+ taxes1 9 ! head+ !re(4 7#d7 ,section #bhj;,a7b7 is am5d$ by /rik+ taxes1 9 ! head+ !re(4 7#e7 ,section #iaa7;c77#c77;,a77ii7 is am5d$-- 7,a7 by /rik+ & taxes1 & 7,b7 by /rik+ or #afd4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adjf4 ,repeal ( d$uction = p]sonal casualty losses 7a7 ,9 g5]al ,subsection 7c7 ( section #afe is am5d$ by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ 2 & at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #afe is am5d$ by /rik+ subsections 7h7 & 7k74 7#b7 ,subsection 7i7 ( section #afe is am5d$-- 7,a7 9 p>agraph 7#a7-- 7i7 by /rik+ 7z def9$ by clause 7ii7 ( subsection 7h77#c77;,c771 & 7ii7 by /rik+ 7z def9$ by clause 7i7 ( su* subsection71 7,b7 by /rik+ 7z def9$ by subsection 7h77#c77;,c77i7 9 p>agraph 7#d71 & 7,c7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,f$]ally decl>$ disa/] ,= purposes ( ?is subsection-- 7,a7 ,f$]ally decl>$ disa/] ,! t]m f$]ally decl>$ disa/] means any disa/] subsequ5tly det]m9$ by ! ,presid5t ( ! ,unit$ ,/ates to w>rant assi/ance by ! ,f$]al ,gov]nm5t "u ! ,rob]t ,t4 ,/af=d ,disa/] ,relief & ,em]g5cy ,assi/ance ,act4 7,b7 ,disa/] area ,! t]m disa/] area means ! area s det]m9$ to w>rant su* assi/ance4 4 7#c7 7,a7 ,section #afe7l77#a7 is am5d$ by /rik+ a loss describ$ 9 subsection 7c77#c7 & ins]t+ an ord9>y loss describ$ 9 subsection 7c77#b74 7,b7 ,section #afe7l7 is am5d$-- 7i7 by /rik+ p>agraph 7#e71 7ii7 by r$esignat+ p>agraphs 7#b71 7#c71 & 7#d7 z p>agraphs 7#c71 7#d71 & 7#e71 respectively1 & 7iii7 by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraph3 7#b7 ,limitations 7,a7 ,deposit may n be f$]ally insur$ ,no election may be made "u p>agraph 7#a7 ) respect to any loss on a deposit 9 a qualifi$ f9ancial in/itution if "p or all ( su* deposit is insur$ "u ,f$]al law4 7,b7 ,doll> limitation ,) respect to ea* f9ancial in/itution1 ! aggregate am\nt ( losses attributable to deposits 9 su* f9ancial in/itution to :i* an election "u p>agraph 7#a7 may be made by ! taxpay] = any taxable ye> %all n exce$ #bj1jjj 7#aj1jjj 9 ! case ( a sep>ate return by a m>ri$ individual74 ,! limitation ( ! prec$+ s5t5ce %all be r$uc$ by ! am\nt ( any insurance proce$s "u any ,/ate law :i* c reasonably be expect$ to be receiv$ ) respect to losses on deposits 9 su* in/itution4 4 7#d7 ,section #agb7;b77#a77;,f77ii71 prior to r$esignation "u title ,,iii1 is am5d$-- 7,a7 by /rik+ subclause 7,i7 & by r$esignat+ subclauses 7,,ii7 & 7,,iii7 z subclauses 7,i7 & 7,,ii71 respectively1 & 7,b7 by /rik+ subsection 7h77#c77;,c77i7 & ins]t+ section #afe7;i77#e74 7#e7 ,section #agb7;d77#d77;,c7 is am5d$ by /rik+ p>agraph 7#b7 or 7#c7 ( section #afe7;c7 & ins]t+ section #afe7;c77#b74 7#f7 ,section #bgd7;f7 is am5d$ by /rik+ casualty losses1 9 ! head+ !re(4 7#g7 ,section #bhj;,a7b7 is am5d$ by /rik+ casualty losses1 9 ! head+ !re(4 7#h7 ,section #hgc7;b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adjg4 ,limitation on wag]+ losses 7a7 ,9 g5]al ,section #afe7;d7 is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ! prec$+ s5t5ce1 ! t]m losses f wag]+ transactions includes any d$uction o!rwise all[able "u ?is *apt] incurr$ 9 c>ry+ on any wag]+ transaction44 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adjh4 ,repeal ( d$uction = tax prep>ation exp5ses 7a7 ,9 g5]al ,section #bab is am5d$ by add+ or at ! end ( p>agraph 7#a71 by /rik+ 2 or at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adji4 ,repeal ( d$uction = m$ical exp5ses 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bac 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #bbc is am5d$ by r$esignat+ subsections 7e71 7f71 7g71 & 7h7 z subsections 7f71 7g71 7h71 & 7i71 respectively1 & by ins]t+ aft] subsection 7d7 ! foll[+ new subsection3 7e7 ,m$ical c>e ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m m$ical c>e means am\nts paid-- 7,a7 = ! diagnosis1 cure1 mitigation1 treatm5t1 or prev5tion ( disease1 or = ! purpose ( affect+ any /ructure or function ( ! body1 7,b7 = transportation prim>ily = & ess5tial to m$ical c>e ref]r$ to 9 subp>agraph 7,a71 7,c7 = qualifi$ long-t]m c>e s]vices 7z def9$ 9 section #ggjb;,b7c771 or 7,d7 = insurance 7includ+ am\nts paid z premiums "u "p ,b ( title ,,xviii ( ! ,social ,security ,act1 relat+ to supplem5t>y m$ical insurance = ! ag$7 cov]+ m$ical c>e ref]r$ to 9 subp>agraphs 7,a7 & 7,b7 or = any qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b774 ,9 ! case ( a qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b771 only eligible long-t]m c>e premiums 7z def9$ 9 p>agraph 7#g77 %all be tak5 into acc\nt "u subp>agraph 7,d74 7#b7 ,am\nts paid = c]ta9 lodg+ away f home treat$ z paid = m$ical c>e ,am\nts paid = lodg+ 7n lavi% or extravagant "u ! circum/ances7 :ile away f home prim>ily = & ess5tial to m$ical c>e ref]r$ to 9 p>agraph 7#a77;,a7 %all be treat$ z am\nts paid = m$ical c>e if-- 7,a7 ! m$ical c>e ref]r$ to 9 p>agraph 7#a77;,a7 is provid$ by a physician 9 a lic5s$ hospital 7or 9 a m$ical c>e facility :i* is relat$ to1 or ! equival5t (1 a lic5s$ hospital71 & 7,b7 !re is no significant elem5t ( p]sonal pleasure1 recreation1 or vacation 9 ! travel away f home4 ,! am\nt tak5 into acc\nt "u ! prec$+ s5t5ce %all n exce$ #ej = ea* night = ea* individual4 7#c7 ,physician ,! t]m physician has ! mean+ giv5 to su* t]m by section #ahfa7r7 ( ! ,social ,security ,act 7#db ,u4,s4,c4 #aciex7r774 7#d7 ,contracts cov]+ o!r ?an m$ical c>e ,9 ! case ( an insurance contract "u :i* am\nts are payable = o!r ?an m$ical c>e ref]r$ to 9 subp>agraphs 7,a71 7,b7 & 7,c7 ( p>agraph 7#a7-- 7,a7 no am\nt %all be treat$ z paid = insurance to :i* p>agraph 7#a77;,d7 applies unless ! *>ge = su* insurance is ei!r sep>ately /at$ 9 ! contract1 or furni%$ to ! policyhold] by ! insurance company 9 a sep>ate /atem5t1 7,b7 ! am\nt tak5 into acc\nt z ! am\nt paid = su* insurance %all n exce$ su* *>ge1 & 7,c7 no am\nt %all be treat$ z paid = su* insurance if ! am\nt specifi$ 9 ! contract 7or furni%$ to ! policyhold] by ! insurance company 9 a sep>ate /atem5t7 z ! *>ge = su* insurance is unreasonably l>ge 9 relation to ! total *>ges "u ! contract4 7#e7 ,c]ta9 pre-paid contracts ,subject to ! limitations ( p>agraph 7#d71 premiums paid dur+ ! taxable ye> by a taxpay] be=e he atta9s ! age ( #fe = insurance cov]+ m$ical c>e 7)9 ! mean+ ( subp>agraphs 7,a71 7,b71 & 7,c7 ( p>agraph 7#a77 = ! taxpay]1 8 sp\se1 or a dep5d5t aft] ! taxpay] atta9s ! age ( #fe %all be treat$ z exp5ses paid dur+ ! taxable ye> = insurance :i* con/itutes m$ical c>e if premiums = su* insurance are payable 7on a level paym5t basis7 "u ! contract = a p]iod ( #aj ye>s or m or until ! ye> 9 :i* ! taxpay] atta9s ! age ( #fe 7b 9 no case = a p]iod ( less ?an #e ye>s74 7#f7 ,cosmetic surg]y 7,a7 ,9 g5]al ,! t]m m$ical c>e does n include cosmetic surg]y or o!r simil> proc$ures1 unless ! surg]y or proc$ure is necess>y to ameliorate a de=mity aris+ f1 or directly relat$ to1 a cong5ital abnormality1 a p]sonal injury result+ f an accid5t or trauma1 or disfigur+ disease4 7,b7 ,cosmetic surg]y def9$ ,= purposes ( ?is p>agraph1 ! t]m cosmetic surg]y means any proc$ure :i* is direct$ at improv+ ! pati5t's appe>ance & does n mean+fully promote ! prop] function ( ! body or prev5t or treat illness or disease4 7#g7 ,eligible long-t]m c>e premiums 7,a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m eligible long-t]m c>e premiums means ! am\nt paid dur+ a taxable ye> = any qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b77 cov]+ an individual1 to ! ext5t su* am\nt does n exce$ ! limitation det]m9$ "u ! foll[+ table3 ,9 ! case ( an individual ) an atta9$ age be=e ! close ( ! taxable ye> (3,! limitation is3 #dj or less#bjj ,m ?an #dj b n m ?an #ejcge ,m ?an #ej b n m ?an #fjgej ,m ?an #fj b n m ?an #gjb1jjj ,m ?an #gjb1ejj 7,b7 ,index+ 7i7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #aiig1 ea* doll> am\nt 9 subp>agraph 7,a7 %all be increas$ by ! m$ical c>e co/ adju/m5t ( su* am\nt = su* cal5d> ye>4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #aj4 7ii7 ,m$ical c>e co/ adju/m5t ,= purposes ( clause 7i71 ! m$ical c>e co/ adju/m5t = any cal5d> ye> is ! adju/m5t prescrib$ by ! ,secret>y1 9 consultation ) ! ,secret>y ( ,heal? & ,human ,s]vices1 = purposes ( su* clause4 ,to ! ext5t t ,,cpi 7z def9$ section #a7;c771 or any compon5t !re(1 is tak5 into acc\nt 9 det]m9+ su* adju/m5t1 su* adju/m5t %all be det]m9$ by tak+ into acc\nt ,c-,,cpi-,u 7z s def9$71 or ! correspond+ compon5t !re(1 9 lieu ( su* ,,cpi 7or compon5t !re(71 b only ) respect to ! portion ( su* adju/m5t :i* relates to p]iods aft] ,decemb] #ca1 #bjad4 7#h7 ,c]ta9 paym5ts to relatives treat$ z n paid = m$ical c>e ,an am\nt paid = a qualifi$ long-t]m c>e s]vice 7z def9$ 9 section #ggjb;,b7c77 provid$ to an individual %all be treat$ z n paid = m$ical c>e if su* s]vice is provid$-- 7,a7 by ! sp\se ( ! individual or by a relative 7directly or ?r\gh a p>tn]%ip1 corporation1 or o!r entity7 unless ! s]vice is provid$ by a lic5s$ pr(essional ) respect to su* s]vice1 or 7,b7 by a corporation or p>tn]%ip :i* is relat$ 7)9 ! mean+ ( section #bfg7;b7 or #gjg7;b77 to ! individual4 ,= purposes ( ?is p>agraph1 ! t]m relative means an individual be>+ a relation%ip to ! individual :i* is describ$ 9 any ( subp>agraphs 7,a7 ?r\gh 7,g7 ( section #ggje7;d77#b74 ,?is p>agraph %all n apply = purposes ( section #aje7;b7 ) respect to reimbursem5ts ?r\gh insurance4 4 7,b7 ,section #gb7t77#b77;,d77i77,,iii7 is am5d$ by /rik+ section #bac7;d77#a77;,d7 & ins]t+ section #bbc7;e77#a77;,d74 7,c7 ,section #ajd7;a7 is am5d$ by /rik+ section #bac7;d77#a7 9 ! la/ s5t5ce & ins]t+ section #bbc7;e77#a74 7,d7 ,section #aje7;b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,e7 ,section #aci;,d is am5d$ by /rik+ section #bac & ins]t+ section #bbc4 7,f7 ,section #afb7l77#b7 is am5d$ by /rik+ section #bac7;d77#aj7 & ins]t+ section #bbc7;e77#g74 7,g7 ,section #bbj7;d77#b77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,h7 ,section #bbc7;d77#b77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ subsection 7e774 7,i7 ,section #dai;,a7f77#b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,j7 ,section #eja7;c77#bf77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,k7 ,section #bejc7;e7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,l7 ,section #dihj;,b7c77#d77;,b77i77,i7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,m7 ,section #fjda7;f7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,n7 ,section #ggjb;,b7a77#b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7,o7 ,section #ggjb;,b7a77#d7 is am5d$ by /rik+ section #bac7;d77#a77;,d7 & ins]t+ section #bbc7;e77#a77;,d74 7,p7 ,section #ggjb;,b7d77#e7 is am5d$ by /rik+ section #bac7;d77#aj7 & ins]t+ section #bbc7;e77#g74 7,q7 ,section #ihcb7;d77#c7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #bbc7;e74 7#b7 ,section #gb7t77#b77;,b7 is am5d$ to read z foll[s3 7,b7 ,m$ical exp5ses ,di/ributions made to an individual 7o!r ?an di/ributions describ$ 9 subp>agraph 7,a71 7,c71 or 7,d7 to ! ext5t su* di/ributions d n exce$ ! excess (-- 7i7 ! exp5ses paid by ! taxpay] dur+ ! taxable ye>1 n comp5sat$ = by insurance or o!rwise1 = m$ical c>e 7z def9$ 9 #bbc7;e77 ( ! taxpay]1 8 sp\se1 or a dep5d5t 7z def9$ 9 section #ggje1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b71 & 7d77#a77;,b7 !re(71 ov] 7ii7 #aj p]c5t ( ! taxpay]'s adju/$ gross income4 4 7#c7 ,section #aje is am5d$ by /rik+ subsection 7f74 7#d7 ,section #afb7l7 is am5d$ by /rik+ p>agraph 7#c74 7#e7 ,section #djb7l7 is am5d$ by /rik+ p>agraph 7#g7 & r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#f7 ,section #bbj7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#g7 ,section #bbc7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#h7 ,section #ggjb;,b7e7 is am5d$ by /rik+ p>agraph 7#b74 7#i7 ,section #ggje7;f77#g71 z r$esignat$ by ?is ,act1 is am5d$ by /rik+ sections #aje7;b71 #acb7;h77#b77;,b71 & #bac7;d77#e7 & ins]t+ sections #aje7;b7 & #acb7;h77#b77;,b74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adaj4 ,repeal ( disqualification ( exp5ses = ov]-!-c\nt] drugs "u c]ta9 acc\nts & arrangem5ts 7a7 ,h,s,as ,subp>agraph 7,a7 ( section #bbc7;d77#b7 is am5d$ by /rik+ ! la/ s5t5ce4 7b7 ,ar*] ,m,s,as ,subp>agraph 7,a7 ( section #bbj7;d77#b7 is am5d$ by /rik+ ! la/ s5t5ce4 7c7 ,heal? flexible sp5d+ arrangem5ts & heal? reimbursem5t arrangem5ts ,section #ajf is am5d$ by /rik+ subsection 7f74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ses incurr$ aft] ,decemb] #ca1 #bjad4 #adaa4 ,repeal ( d$uction = alimony paym5ts & correspond+ inclusion 9 gross income 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bae 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,correspond+ repeal ( provisions provid+ = inclusion ( alimony 9 gross income 7#a7 ,subsection 7a7 ( section #fa is am5d$ by /rik+ p>agraph 7#h7 & by r$esignat+ p>agraphs 7#i7 ?r\gh 7#ae7 z p>agraphs 7#h7 ?r\gh 7#ad71 respectively4 7#b7 ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #ga 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#c7 ,subp>t ,f ( "p ,i ( sub*apt] ,j ( *apt] #a is am5d$ by /rik+ section #fhb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7c7 ,con=m+ am5dm5ts 7#a7 ,relat$ to repeal ( section #bae 7,a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#aj74 7,b7 ,section #cdjb7m77#a7 is am5d$ by /rik+ 7o!r ?an p>agraph 7#aj7 !re(74 7#b7 ,relat$ to repeal ( section #ga 7,a7 ,section #aba7;d77#c7 is am5d$-- 7i7 by /rik+ 7z def9$ 9 section #ga7;b77#b77 9 subp>agraph 7,b71 & 7ii7 by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,divorce or sep>ation in/rum5t ,= purposes ( ?is p>agraph1 ! t]m divorce or sep>ation in/rum5t means-- 7i7 a decree ( divorce or sep>ate ma9t5ance or a writt5 in/rum5t incid5t to su* a decree1 7ii7 a writt5 sep>ation agreem5t1 or 7iii7 a decree 7n describ$ 9 clause 7i77 requir+ a sp\se to make paym5ts = ! support or ma9t5ance ( ! o!r sp\se4 4 7,b7 ,section #bbj7;f77#g7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7,c7 ,section #bbc7;f77#g7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7,d7 ,section #chb7l77#c77;,b77iii7 is am5d$ by /rik+ section #ga7;b77#b7 & ins]t+ section #aba7;d77#c77;,c74 7,e7 ,section #djh7;d77#f7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 any divorce or sep>ation in/rum5t 7z def9$ 9 section #ga7;b77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect be=e ! date ( ! enactm5t ( ?is ,act7 execut$ aft] ,decemb] #ca1 #bjad1 & 7#b7 any divorce or sep>ation in/rum5t 7z s def9$7 execut$ on or be=e su* date & modifi$ aft] su* date if ! modification expressly provides t ! am5dm5ts made by ?is section apply to su* modification4 #adab4 ,repeal ( d$uction = mov+ exp5ses 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bag 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ae74 7#b7 7,a7 ,section #acb7;a7 is am5d$ by /rik+ p>agraph 7#f74 7,b7 ,section #hb is am5d$ by /rik+ ,except z provid$ 9 section #acb7;a77#f71 !re & ins]t+ ,!re4 7#c7 7,a7 ,section #acb is am5d$ by /rik+ subsection 7g74 7,b7 ,section #acb7l7 is am5d$ by /rik+ by /rik+ subsections 7e7 & 7g7 & ins]t+ subsection 7e74 7#d7 ,section #bgd7m77#c7 is am5d$ by /rik+ 7o!r ?an section #bag74 7#e7 ,section #caba7;a7 is am5d$ by /rik+ p>agraph 7#aa74 7#f7 ,section #bji7;a7 ( ! ,social ,security ,act is am5d$ by /rik+ p>agraph 7#i74 7#g7 ,section #ccjf7;b7 is am5d$ by /rik+ p>agraph 7#i74 7#h7 ,section #cdja7;a7 is am5d$ by /rik+ p>agraph 7#ae74 7#i7 ,section #ghgb7;f7 is am5d$ by /rik+ p>agraph 7#aa74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adac4 ,t]m9ation ( d$uction & exclusions = contributions to m$ical sav+s acc\nts 7a7 ,t]m9ation ( income tax d$uction ,section #bbj is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,t]m9ation ,no d$uction %all be all[$ "u subsection 7a7 ) respect to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad4 4 7b7 ,t]m9ation ( exclusion = employ]-,provid$ contributions ,section #ajf is am5d$ by /rik+ subsection 7b74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#af74 7#b7 ,section #ajf7;d7 is am5d$ by /rik+ p>agraph 7#b71 by r$esignat+ p>agraph 7#c7 z p>agraph 7#f71 & by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraphs3 7#b7 ,no con/ructive receipt ,no am\nt %all be includ$ 9 ! gross income ( any employee solely because ! employee may *oose betwe5 ! contributions ref]r$ to 9 p>agraph 7#a7 & employ] contributions to ano!r heal? plan ( ! employ]4 7#c7 ,special rule = d$uction ( employ] contributions ,any employ] contribution to a heal? sav+s acc\nt 7z s def9$71 if o!rwise all[able z a d$uction "u ?is *apt]1 %all be all[$ only = ! taxable ye> 9 :i* paid4 7#d7 ,employ] heal? sav+s acc\nt contribution requir$ to be %[n on return ,e individual requir$ to file a return "u section #fjab = ! taxable ye> %all include on su* return ! aggregate am\nt contribut$ by employ]s to ! heal? sav+s acc\nts 7z s def9$7 ( su* individual or su* individual's sp\se = su* taxable ye>4 7#e7 ,heal? sav+s acc\nt contributions n "p ( ,,cobra cov]age ,p>agraph 7#a7 %all n apply = purposes ( section #dihj;,b4 4 7#c7 ,section #bbc7;b77#d7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7#d7 ,section #cbca7;e7 is am5d$ by /rik+ p>agraph 7#aj7 & by r$esignat+ p>agraphs 7#aa7 & 7#ab7 z p>agraphs 7#aj7 & 7#aa71 respectively4 7#e7 ,section #ccjf7;b7 is am5d$ by /rik+ p>agraph 7#ag74 7#f7 ,section #cdja7;a7 is am5d$ by /rik+ p>agraph 7#ba74 7#g7 ,*apt] #dc is am5d$ by /rik+ section #dihj;,e 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* *apt]74 7#h7 ,section #dihj;,g is am5d$ to read z foll[s3 #dihj;,g4 ,failure ( employ] to make comp>able heal? sav+s acc\nt contributions 7a7 ,9 g5]al ,9 ! case ( an employ] :o makes a contribution to ! heal? sav+s acc\nt ( any employee dur+ a cal5d> ye>1 !re is h]eby impos$ a tax on ! failure ( su* employ] to meet ! requirem5ts ( subsection 7d7 = su* cal5d> ye>4 7b7 ,am\nt ( tax ,! am\nt ( ! tax impos$ by subsection 7a7 on any failure = any cal5d> ye> is ! am\nt equal to #ce p]c5t ( ! aggregate am\nt contribut$ by ! employ] to heal? sav+s acc\nts ( employees = taxable ye>s ( su* employees end+ ) or )9 su* cal5d> ye>4 7c7 ,waiv] by ,secret>y ,9 ! case ( a failure :i* is due to reasonable cause & n to willful neglect1 ! ,secret>y may waive "p or all ( ! tax impos$ by subsection 7a7 to ! ext5t t ! paym5t ( su* tax w\ld be excessive relative to ! failure involv$4 7d7 ,employ] requir$ ,to make comp>able heal? sav+s acc\nt contributions = all p>ticipat+ employees 7#a7 ,9 g5]al ,an employ] meets ! requirem5ts ( ?is subsection = any cal5d> ye> if ! employ] makes available comp>able contributions to ! heal? sav+s acc\nts ( all comp>able p>ticipat+ employees = ea* cov]age p]iod dur+ su* cal5d> ye>4 7#b7 ,comp>able contributions 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m comp>able contributions means contributions-- 7i7 :i* are ! same am\nt1 or 7ii7 :i* are ! same p]c5tage ( ! annual d$uctible limit "u ! high d$uctible heal? plan cov]+ ! employees4 7,b7 ,"p-ye> employees ,9 ! case ( an employee :o is employ$ by ! employ] = only a portion ( ! cal5d> ye>1 a contribution to ! heal? sav+s acc\nt ( su* employee %all be treat$ z comp>able if x is an am\nt :i* be>s ! same ratio to ! comp>able am\nt 7det]m9$ )\t reg>d to ?is subp>agraph7 z su* portion be>s to ! entire cal5d> ye>4 7#c7 ,comp>able p>ticipat+ employees 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m comp>able p>ticipat+ employees means all employees-- 7i7 :o are eligible individuals cov]$ "u any high d$uctible heal? plan ( ! employ]1 & 7ii7 :o h ! same category ( cov]age4 7,b7 ,categories ( cov]age ,= purposes ( subp>agraph 7,b71 ! categories ( cov]age are self-only & family cov]age4 7#d7 ,"p-"t employees 7,a7 ,9 g5]al ,p>agraph 7#c7 %all be appli$ sep>ately ) respect to "p-"t employees & o!r employees4 7,b7 ,"p-"t employee ,= purposes ( subp>agraph 7,a71 ! t]m "p-"t employee means any employee :o is cu/om>ily employ$ = few] ?an #cj h\rs p] week4 7#e7 ,special rule = non-highly comp5sat$ employees ,= purposes ( apply+ ?is section to a contribution to a heal? sav+s acc\nt ( an employee :o is n a highly comp5sat$ employee 7z def9$ 9 section #dad7q771 highly comp5sat$ employees %all n be treat$ z comp>able p>ticipat+ employees4 7e7 ,controll$ gr\ps ,= purposes ( ?is section1 all p]sons treat$ z a s+le employ] "u subsection 7b71 7c71 7m71 or 7o7 ( section #dad %all be treat$ z #a employ]4 7f7 ,def9itions ,t]ms us$ 9 ?is section :i* are also us$ 9 section #bbc h ! respective mean+s giv5 su* t]ms 9 section #bbc4 7g7 ,regulations ,! ,secret>y %all issue regulations to c>ry out ! purposes ( ?is section4 4 7#i7 ,section #fjea7;a7 is am5d$ by /rik+ p>agraph 7#aa74 7#aj7 ,section #fjea7;a77#ad77;,a7 is am5d$ by /rik+ p>agraphs 7#aa7 & 7#ab7 & ins]t+ p>agraph 7#ab74 7d7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adad4 ,repeal ( #b-p]c5t floor on miscellane\s itemiz$ d$uctions 7a7 ,9 g5]al ,"p #a ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #fg 7& ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fdb7;b77#b77;,c77i77,,ii7 is am5d$ to read z foll[s3 7,,ii7 by det]m9+ ! adju/$ gross income ( ! tru/ "u ! rules ( section #b7;b77#b7 7)\t ! ref]5ce to section #fdb7;b774 4 7#b7 ,section #afb7o7 is am5d$ by /rik+ p>agraph 7#b74 7#c7 ,section #cjb7;b77#e7 is am5d$ by /rik+ section #fg7;c77#b77;,b7 & ins]t+ section #efb7;c77#b74 7#d7 ,section #efb7;c7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #fg7;c77#b77;,b771 7,b7 by /rik+ 7z s def9$71 7,c7 by /rik+ ,except 9 ! case ( & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,except 9 ! case ( 1 & 7,d7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,publicly (f]$ regulat$ inve/m5t company ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m publicly (f]$ regulat$ inve/m5t company means a regulat$ inve/m5t company ! %>es ( :i* are-- 7i7 cont9u\sly (f]$ pursuant to a public (f]+ 7)9 ! mean+ ( section #d ( ! ,securities ,act ( #aicc1 z am5d$ 7#ae ,u4,s4,c4 #gg;a to #gg;aa771 7ii7 regul>ly trad$ on an e/abli%$ securities m>ket1 or 7iii7 held by or = no few] ?an #ejj p]sons at all times dur+ ! taxable ye>4 7,b7 ,secret>y may r$uce #ejj p]son requirem5t ,! ,secret>y may by regulation decrease ! m9imum %>ehold] requirem5t ( clause 7i77,,iii7 9 ! case ( regulat$ inve/m5t companies :i* exp]i5ce a loss ( %>ehold]s ?r\gh net r$emptions ( _! %>es4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adae4 ,repeal ( ov]all limitation on itemiz$ d$uctions 7a7 ,9 g5]al ,"p #a ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #fh 7& ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adaf4 ,d$uction = amortizable bond premium all[$ 9 det]m9+ adju/$ gross income 7a7 ,9 g5]al ,subsection 7a7 ( section #fb1 z am5d$ by section #adaa1 is am5d$ by ins]t+ aft] p>agraph 7#i7 ! foll[+ new p>agraph3 7#aj7 ,amortizable bond premium ,! d$uction all[$ "u section #aga7;a77#a74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adag4 ,repeal ( exclusion1 etc41 = employee a*ievem5t aw>ds 7a7 ,9 g5]al ,section #gd is am5d$ by /rik+ subsection 7c74 7b7 ,repeal ( limitation on d$uction ,section #bgd is am5d$ by /rik+ subsection 7j74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ajb7;c77#b7 is am5d$ by /rik+ ! fir/ s5t5ce4 7#b7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #bgd7;j714 7#c7 ,section #dad7t77#b7 is am5d$ by /rik+ #bgd7;j714 7#d7 ,section #caba7;a77#bj7 is am5d$ by /rik+ #gd7;c714 7#e7 ,section #bji7;a77#ag7 ( ! ,social ,security ,act is am5d$ by /rik+ #gd7;c714 7#f7 ,section #cbca7;e77#e7 is am5d$ by /rik+ #gd7;c714 7#g7 ,section #ccjf7;b77#af7 is am5d$ by /rik+ #gd7;c714 7#h7 ,section #cdja7;a77#ai7 is am5d$ by /rik+ #gd7;c714 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adah4 ,cl>ification ( special rule = c]ta9 gov]nm5tal plans 7a7 ,treatm5t ( b5efici>ies ,section #aje7;j77#a7 is am5d$-- 7#a7 by /rik+ ! taxpay] & ins]t+ an employee1 sp\se1 dep5d5t 7z def9$ = purposes ( subsection 7b771 or *ild 7z s def9$71 & 7#b7 by /rik+ deceas$ plan p>ticipant's b5efici>y & ins]t+ deceas$ employee's b5efici>y :o is n a surviv+ sp\se1 dep5d5t 7z s def9$71 or *ild 7z s def9$74 7b7 ,application to political subdivisions ( ,/ates ,section #aje7;j77#b7 is am5d$-- 7#a7 by ins]t+ or e/abli%$ by or on behalf ( a ,/ate or political subdivision !re( aft] public retirem5t sy/em1 & 7#b7 by ins]t+ or #eja7;c77#i7 aft] section #aae 9 subp>agraph 7,b7 !re(4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to paym5ts aft] ! date ( ! enactm5t ( ?is ,act4 #adai4 ,limitation on exclusion = employ]-provid$ h\s+ 7a7 ,9 g5]al ,section #aai is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,limitation on exclusion ( lodg+ 7#a7 ,9 g5]al ,! aggregate am\nt exclud$ f gross income ( ! taxpay] "u subsections 7a7 & 7d7 ) respect to lodg+ = any taxable ye> %all n exce$ #ej1jjj 7half su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return74 7#b7 ,limitation to #a home ,subsections 7a7 & 7d7 7sep>ately & 9 comb9ation7 %all n apply ) respect to m ?an #a resid5ce ( ! taxpay] at any giv5 "t4 ,9 ! case ( a jo9t return1 ! prec$+ s5t5ce %all apply sep>ately to ea* sp\se = any p]iod dur+ :i* ea* sp\se resides sep>ate f ! o!r sp\se 9 a resid5ce :i* is provid$ 9 connection ) ! employm5t ( ea* sp\se1 respectively4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adbj4 ,fr+e b5efits 7a7 ,repeal ( special rule = air transportation by p>5t ( employee ,subsection 7h7 ( section #acb is am5d$ by /rik+ p>agraph 7#c74 7b7 ,transportation & p>k+ 7#a7 ,freeze at curr5t levels 7,a7 ,9 g5]al ,p>agraph 7#b7 ( section #acb7;f7 is am5d$-- 7i7 9 subp>agraph 7,a7 by /rik+ #ajj & ins]t+ #acj1 & 7ii7 9 subp>agraph 7,b7 by /rik+ #age & ins]t+ #bej4 7,b7 ,inflation adju/m5t ,subsection 7f7 ( su* section is am5d$ by /rik+ p>agraph 7#f7 & r$esignat+ p>agraph 7#g7 z p>agraph 7#f74 7#b7 ,repeal ( bicycle b5efit 7,a7 ,9 g5]al ,p>agraph 7#a7 ( section #acb7;f7 is am5d$ by /rik+ subp>agraph 7,d74 7,b7 ,con=m+ am5dm5ts 7i7 ,section #acb7;f77#b7 is am5d$ by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,c74 7ii7 ,section #acb7;f77#d7 is am5d$ by /rik+ 7o!r ?an a qualifi$ bicycle commut+ reimbursem5t74 7iii7 ,section #acb7;f77#e7 is am5d$ by /rik+ subp>agraph 7,f74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #adba4 ,repeal ( exclusion ( net unrealiz$ appreciation 9 employ] securities 7a7 ,9 g5]al ,section #djb7;e7 is am5d$ by /rik+ p>agraph 7#d74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dja7k77#aj7 is am5d$ by /rik+ subp>agraph 7,b7 & ins]t+ ! foll[+ new subp>agraphs3 7,b7 ,di/ributions mu/ be lump sum di/ributions ,a t]m9ation %all n be treat$ z describ$ 9 subp>agraph 7,a7 ) respect to any employee unless ! employee receives a lump sum di/ribution by reason ( ! t]m9ation4 7,c7 ,lump-sum di/ribution def9$ ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m lump sum di/ribution means ! di/ribution or paym5t )9 "o taxable ye> ( ! recipi5t ( ! balance to ! cr$it ( an employee :i* becomes payable to ! recipi5t f a tru/ :i* =ms a "p ( a plan describ$ 9 section #dja7;a7 & :i* is exempt f tax "u section #eja or f a plan describ$ 9 section #djc7;a74 ,su* t]m includes a di/ribution ( an annuity contract f-- 7,i7 a tru/ :i* =ms a "p ( a plan describ$ 9 section #dja7;a7 & :i* is exempt f tax "u section #eja7;a71 or 7,,ii7 an annuity plan describ$ 9 section #djc7;a74 ,= purposes ( ?is clause1 a di/ribution to two or m tru/s %all be treat$ z a di/ribution to "o recipi5t4 7ii7 ,aggregation ( c]ta9 tru/s & plans ,= purposes ( det]m9+ ! balance to ! cr$it ( an employee "u clause 7i7-- 7,i7 all tru/s :i* are "p ( a plan %all be treat$ z a s+le tru/1 all p5sion plans ma9ta9$ by ! employ] %all be treat$ z a s+le plan1 all pr(it-%>+ plans ma9ta9$ by ! employ] %all be treat$ z a s+le plan1 & all /ock bonus plans ma9ta9$ by ! employ] %all be treat$ z a s+le plan1 & 7,,ii7 tru/s :i* are n qualifi$ tru/s "u section #dja7;a7 & annuity contracts :i* d n satisfy ! requirem5ts ( section #djd7;a77#b7 %all n be tak5 into acc\nt4 7iii7 ,community prop]ty laws ,! provisions ( ?is subp>agraph %all be appli$ )\t reg>d to community prop]ty laws4 7iv7 ,balance to cr$it ( employee n to include am\nts payable "u qualifi$ dome/ic relations ord] ,! balance to ! cr$it ( an employee %all n include any am\nt payable to an alt]nate payee "u a qualifi$ dome/ic relations ord] 7)9 ! mean+ ( section #dad7p774 7v7 ,transf]s to co/-(-liv+ arrangem5t n treat$ z di/ribution ,! balance to ! cr$it ( an employee "u a def9$ contribution plan %all n include any am\nt transf]r$ f su* def9$ contribution plan to a qualifi$ co/-(-liv+ arrangem5t 7)9 ! mean+ ( section #dae7k77#b77 "u a def9$ b5efit plan4 7vii7 7vi7 ,lump-sum di/ributions ( alt]nate payees ,if any di/ribution or paym5t ( ! balance to ! cr$it ( an employee w\ld be treat$ z a lump-sum di/ribution1 !n1 = purposes ( ?is p>agraph1 ! paym5t "u a qualifi$ dome/ic relations ord] 7)9 ! mean+ ( section #dad7p77 ( ! balance to ! cr$it ( an alt]nate payee :o is ! sp\se or =m] sp\se ( ! employee %all be treat$ z a lump-sum di/ribution4 ,= purposes ( ?is clause1 ! balance to ! cr$it ( ! alt]nate payee %all n include any am\nt payable to ! employee4 7vii7 ,exclusion ( accumulate d$uctible employee contributions ,= purposes ( ?is subp>agraph1 ! balance to ! cr$it ( ! employee does n include ! accumulat$ d$uctible employee contributions "u ! plan 7)9 ! mean+ ( section #gb7o77#e774 4 7#b7 ,section #cdje7;e7 is am5d$ by /rik+ p>agraph 7#h74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 #adbb4 ,consi/5t basis report+ betwe5 e/ate & p]son acquir+ prop]ty f dec$5t 7a7 ,prop]ty acquir$ f a dec$5t ,section #ajad is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,basis mu/ be consi/5t ) e/ate tax return ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! basis ( any prop]ty to :i* subsection 7a7 applies %all n exce$-- 7,a7 9 ! case ( prop]ty ! f9al value ( :i* has be5 det]m9$ = purposes ( ! tax impos$ by *apt] #aa on ! e/ate ( su* dec$5t1 su* value1 & 7,b7 9 ! case ( prop]ty n describ$ 9 subp>agraph 7,a7 & ) respect to :i* a /atem5t has be5 furni%$ "u section #fjce7;a7 id5tify+ ! value ( su* prop]ty1 su* value4 7#b7 ,exception ,p>agraph 7#a7 %all only apply to any prop]ty ^: inclusion 9 ! dec$5t's e/ate increas$ ! liability = ! tax impos$ by *apt] #aa 7r$uc$ by cr$its all[able aga9/ su* tax7 on su* e/ate4 7#c7 ,regulations ,! ,secret>y may by regulations provide exceptions to ! application ( ?is subsection4 4 7b7 ,in=mation report+ 7#a7 ,9 g5]al ,subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] section #fjcd;,a ! foll[+ new section3 #fjce4 ,basis in=mation to p]sons acquir+ prop]ty f dec$5t 7a7 ,in=mation ) respect to prop]ty acquir$ f dec$5ts 7#a7 ,9 g5]al ,! executor ( any e/ate requir$ to file a return "u section #fjah7;a7 %all furni% to ! ,secret>y & to ea* p]son acquir+ any int]e/ 9 prop]ty includ$ 9 ! dec$5t's gross e/ate = ,f$]al e/ate tax purposes a /atem5t id5tify+ ! value ( ea* int]e/ 9 su* prop]ty z report$ on su* return & su* o!r in=mation ) respect to su* int]e/ z ! ,secret>y may prescribe4 7#b7 ,/atem5ts by b5efici>ies ,ea* p]son requir$ to file a return "u section #fjah7;b7 %all furni% to ! ,secret>y & to ea* o!r p]son :o holds a legal or b5eficial int]e/ 9 ! prop]ty to :i* su* return relates a /atem5t id5tify+ ! in=mation describ$ 9 p>agraph 7#a74 7#c7 ,"t = furni%+ /atem5t 7,a7 ,9 g5]al ,ea* /atem5t requir$ to be furni%$ "u p>agraph 7#a7 or 7#b7 %all be furni%$ at su* "t z ! ,secret>y may prescribe1 b 9 no case at a "t lat] ?an ! e>li] (-- 7i7 ! date :i* is #cj days aft] ! date on :i* ! return "u section #fjah 0 requir$ to be fil$ 7includ+ ext5sions1 if any71 or 7ii7 ! date :i* is #cj days aft] ! date su* return is fil$4 7,b7 ,adju/m5ts ,9 any case 9 :i* !re is an adju/m5t to ! in=mation requir$ to be includ$ on a /atem5t fil$ "u p>agraph 7#a7 or 7#b7 aft] su* /atem5t has be5 fil$1 a supplem5tal /atem5t "u su* p>agraph %all be fil$ n lat] ?an ! date :i* is #cj days aft] su* adju/m5t is made4 7b7 ,regulations ,! ,secret>y %all prescribe su* regulations z necess>y to c>ry out ?is section1 includ+ regulations relat+ to-- 7#a7 ! application ( ?is section to prop]ty ) reg>d to :i* no e/ate tax return is requir$ to be fil$1 & 7#b7 situations 9 :i* ! surviv+ jo9t t5ant or o!r recipi5t may h bett] in=mation ?an ! executor reg>d+ ! basis or fair m>ket value ( ! prop]ty4 4 7#b7 ,p5alty = failure to file 7,a7 ,return ,section #fgbd7;d77#a7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,b71 by /rik+ ! p]iod at ! end ( subp>agraph 7,c7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,d7 any /atem5t requir$ to be fil$ ) ! ,secret>y "u section #fjce4 4 7,b7 ,/atem5t ,section #fgbd7;d77#b7 is am5d$ by /rik+ or at ! end ( subp>agraph 7,,gg71 by /rik+ ! p]iod at ! end ( subp>agraph 7,,hh7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new subp>agraph3 7,,ii7 section #fjce 7o!r ?an a /atem5t describ$ 9 p>agraph 7#a77;,d774 4 7#c7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] ! item relat+ to section #fjcd;,a ! foll[+ new item3 ,sec4 #fjce4 ,basis in=mation to p]sons acquir+ prop]ty f dec$5t4 4 7c7 ,p5alty = inconsi/5t report+ 7#a7 ,9 g5]al ,subsection 7b7 ( section #fffb is am5d$ by ins]t+ aft] p>agraph 7#g7 ! foll[+ new p>agraph3 7#h7 ,any inconsi/5t e/ate basis4 4 7#b7 ,inconsi/5t basis report+ ,section #fffb is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,inconsi/5t e/ate basis report+ ,= purposes ( ?is section1 ! t]m inconsi/5t e/ate basis means ! portion ( ! und]/atem5t :i* is attributable to 9 ! case ( prop]ty acquir$ f a dec$5t1 a basis det]m9ation ) respect to su* prop]ty :i* is n consi/5t ) ! value ( su* prop]ty z det]m9$ "u section #ajad7;f74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s = :i* an e/ate tax return is fil$ aft] ! date ( ! enactm5t ( ?is ,act4 ,f ,employm5t tax modifications #aeja4 ,modifications ( d$uction = ,social ,security taxes 9 comput+ net e>n+s f self-employm5t 7a7 ,9 g5]al ,p>agraph 7#ab7 ( section #adjb7;a7 is am5d$ to read z foll[s3 7#ab7 9 lieu ( ! d$uction all[able "u section #afd7;f7 7relat+ to d$uction = "o-half ( self-employm5t taxes71 !re %all be all[$ z a d$uction an am\nt equal to ! sum (-- 7,a7 #g4ajfd p]c5t ( s mu* ( ! individual's net e>n+s f self-employm5t = ! taxable ye> 7det]m9$ )\t reg>d to ?is p>agraph7 z does n exce$ an am\nt equal to ! product ( #a4jgfe & ! excess 7if any7 (-- 7i7 ! contribution & b5efit base 7z det]m9$ "u section #bcj ( ! ,social ,security ,act7 9 effect = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 ov] 7ii7 ! wages 7)9 ! mean+ ( subsection 7b77#a77 paid to ! individual dur+ su* taxable ye>1 plus 7,b7 #a4dbic p]c5t ( ! excess 7if any7 ( ! individual's net e>n+s f self-employm5t = ! taxable ye> 7det]m9$ )\t reg>d to ?is p>agraph7 ov] ! am\nt ( su* net e>n+s tak5 into acc\nt "u subp>agraph 7,a72 4 7b7 ,coord9ation ) b5efits ,p>agraph 7#aa7 ( section #baa7;a7 ( ! ,social ,security ,act is am5d$ to read z foll[s3 7#aa7 9 lieu ( ! d$uction all[able "u section #afd7;f7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7relat+ to d$uction = "o-half ( self-employm5t taxes71 !re %all be all[$ z a d$uction an am\nt equal to ! sum (-- 7,a7 #g4ajfd p]c5t ( s mu* ( ! individual's net-e>n+s f self-employm5t = ! taxable ye> 7det]m9$ )\t reg>d to ?is p>agraph7 z does n exce$ an am\nt equal to ! product ( #a4jgfe & ! excess 7if any7 (-- 7i7 ! contribution & b5efit base 7z det]m9$ "u section #bcj7 9 effect = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 7ii7 ! wages 7)9 ! mean+ ( section #adjb7;b77#a7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 paid to ! individual dur+ su* taxable ye>1 plus 7,b7 #a4dbic p]c5t ( ! excess 7if any7 ( su* net e>n+s ov] ! am\nt ( su* net e>n+s tak5 into acc\nt "u subp>agraph 7,a72 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #aejb4 ,det]m9ation ( net e>n+s f self-employm5t 7a7 ,pro rata %>e ( ,s corporation items includ$ z net e>n+s f self-,employm5t 7#a7 ,9 g5]al ,section #adjb7;a7 is am5d$ by ins]t+ 1 plus 7not)/&+ subsection 7c77#b77 8 pro rata %>e ( nonsep>ately comput$ income or loss 7z def9$ 9 section #acff7;a77#b77 f any trade or bus9ess c>ri$ on by an ,s corporation 9 :i* he is a %>ehold] be=e 2 except t 9 ! matt] prec$+ p>agraph 7#a74 7#b7 ,application ( adju/m5ts ,section #adjb7;a7 is am5d$ by ins]t+ & su* pro rata %>e ( ,s corporation nonsep>ately comput$ income or loss aft] su* di/ributive %>e ( p>tn]%ip ord9>y income or loss 9 ! matt] prec$+ p>agraph 7#a74 7#c7 ,con=m+ am5dm5ts ,section #baa7;a7 ( ! ,social ,security ,act is am5d$ 9 ! matt] prec$+ p>agraph 7#a7-- 7,a7 by ins]t+ 1 plus 7not)/&+ subsection 7c77#b77 8 pro rata %>e ( nonsep>ately comput$ income or loss 7z def9$ 9 section #acff7;a77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf7;f any trade or bus9ess c>ri$ on by an ,s corporation 9 :i* he is a %>ehold] be=e 2 except t1 & 7,b7 by ins]t+ & su* pro rata %>e ( ,s corporation nonsep>ately comput$ income or loss aft] su* di/ributive %>e ( p>tn]%ip ord9>y income or loss4 7b7 ,repeal ( exception = limit$ p>tn]s 7#a7 ,9 g5]al ,section #adjb7;a7 is am5d$ by /rik+ p>agraph 7#ac74 7#b7 ,con=m+ am5dm5t ,section #baa7;a7 ( ! ,social ,security ,act is am5d$ by /rik+ p>agraph 7#ab74 7c7 ,d$uction = return on inve/$ capital 7#a7 ,9 g5]al ,section #adjb is am5d$ by add+ at ! end ! foll[+ new subsection3 7m7 ,d$uction = return on inve/$ capital 7#a7 ,9 g5]al ,an individual's net e>n+s f self-employm5t %all be r$uc$ 7b n bel[ z]o7 by ! less] (-- 7,a7 #cj p]c5t ( ! sum (-- 7i7 su* individual's pass-?r\gh net e>n+s f self-employm5t1 & 7ii7 su* individual's wages 7z def9$ 9 section #caba7 paid ) respect to any trade or bus9ess c>ri$ on by an ,s corporation 9 :i* he is a %>ehold]1 or 7,b7 su* individual's pass-?r\gh net e>n+s f self-employm5t4 7#b7 ,pass-?r\gh net e>n+s f self-employm5t ,= purposes ( ?is subsection1 ! t]m pass-?r\gh net e>n+s f self-employm5t means net e>n+s f self-employm5t 7z comput$ "u subsection 7a7 )\t reg>d to ?is subsection7 det]m9$ )\t reg>d to any trade or bus9ess c>ri$ on by ! individual4 7#c7 #ajj p]c5t d$uction :]e no mat]ial p>ticipation 7,a7 ,9 g5]al ,if an individual does n h mat]ial p>ticipation ) respect to an entity 7z det]m9$ "u subp>agraph 7,b771 9 lieu ( ! r$uction provid$ "u p>agraph 7#a7 su* individual's net e>n+s f self-employm5t %all be r$uc$ 7b n bel[ z]o7 by ! sum (-- 7i7 ! r$uction det]m9$ "u p>agraph 7#a7 appli$-- 7,i7 by sub/itut+ #ajj p]c5t = #cj p]c5t 9 subp>agraph 7,a7 !re(1 & 7,,ii7 by det]m9+ pass-?r\gh net e>n+s f self-employm5t by only tak+ into acc\nt di/ributive & pro rata %>es f non-p>ticipation entities1 & 7,,iii7 by only tak+ into acc\nt "u subp>agraph 7,a77ii7 !re( wages paid ) respect to trades or bus9esses c>ri$ on by ,s corporations :i* are non-p>ticipation entities1 plus 7ii7 ! r$uction det]m9$ "u p>agraph 7#a7 appli$-- 7,i7 by det]m9+ pass-?r\gh net e>n+s f self-employm5t by n tak+ into acc\nt any di/ributive or pro rata %>e f a non-p>ticipation entity1 & 7,,ii7 by n tak+ into acc\nt "u subp>agraph 7,a77ii7 !re( any wages paid ) respect to trades or bus9esses c>ri$ on by an ,s corporation :i* is a non-p>ticipation entity4 7,b7 ,mat]ial p>ticipation ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,an individual does n h mat]ial p>ticipation ) respect to an entity 7h]eaft] ref]r$ to z ! top-ti] entity7 if su* individual demon/rates to ! satisfaction ( ! ,secret>y t su* individual-- 7,i7 does n mat]ially p>ticipate 7z det]m9$ "u section #dfi7;h7 )\t reg>d to p>agraph 7#b7 !re(7 9 any activity c>ri$ on by su* top-ti] entity1 & 7,,ii7 does n mat]ially p>ticipate 7z s det]m9$7 9 any activity c>ri$ on by any entity 9 :i* su* top-ti] entity holds 7directly or indirectly7 any int]e/4 7ii7 ,family attribution ,= purposes ( apply+ clause 7i71 ! p>ticipation ( any individual 9 any activity %all also be treat$ z p]=m$ by su* individual's sp\se & ! l9eal desc5dants ( su* individual & su* individual's sp\se4 7,c7 ,non-p>ticipation entity ,= purposes ( ?is p>agraph1 ! t]m non-p>ticipation entity means1 ) respect to any individual1 any entity ) respect to :i* su* individual does n h mat]ial p>ticipation 7z det]m9$ "u subp>agraph 7,b774 4 7#b7 ,con=m+ am5dm5t ,section #baa ( ! ,social ,security ,act is am5d$ by add+ at ! end ! foll[+ new subsection3 7l7 ,d$uction = return on inve/$ capital 7#a7 ,9 g5]al ,an individual's net e>n+s f self-employm5t %all be r$uc$ 7b n bel[ z]o7 by ! less] (-- 7,a7 #cj p]c5t ( ! sum (-- 7i7 su* individual's pass-?r\gh net e>n+s f self-employm5t1 & 7ii7 su* individual's wages 7z def9$ 9 section #bji7 paid ) respect to any trade or bus9ess c>ri$ on by an ,s corporation 9 :i* he is a %>ehold]1 or 7,b7 su* individual's pass-?r\gh net e>n+s f self-employm5t4 7#b7 ,pass-?r\gh net e>n+s f self-employm5t ,= purposes ( ?is subsection1 ! t]m pass-?r\gh net e>n+s f self-employm5t means net e>n+s f self-employm5t 7z comput$ "u subsection 7a7 )\t reg>d to ?is subsection7 det]m9$ )\t reg>d to any trade or bus9ess c>ri$ on by ! individual4 7#c7 #ajj p]c5t d$uction :]e no mat]ial p>ticipation 7,a7 ,9 g5]al ,if an individual does n h mat]ial p>ticipation ) respect to an entity 7z det]m9$ "u subp>agraph 7,b771 9 lieu ( ! r$uction provid$ "u p>agraph 7#a7 su* individual's net e>n+s f self-employm5t %all be r$uc$ 7b n bel[ z]o7 by ! sum (-- 7i7 ! r$uction det]m9$ "u p>agraph 7#a7 appli$-- 7,i7 by sub/itut+ #ajj p]c5t = #cj p]c5t 9 subp>agraph 7,a7 !re(1 & 7,,ii7 by det]m9+ pass-?r\gh net e>n+s f self-employm5t by only tak+ into acc\nt di/ributive & pro rata %>es f non-p>ticipation entities1 & 7,,iii7 by only tak+ into acc\nt "u subp>agraph 7,a77ii7 !re( wages paid ) respect to trades or bus9esses c>ri$ on by ,s corporations :i* are non-p>ticipation entities1 plus 7ii7 ! r$uction det]m9$ "u p>agraph 7#a7 appli$-- 7,i7 by det]m9+ pass-?r\gh net e>n+s f self-employm5t by n tak+ into acc\nt any di/ributive or pro rata %>e f a nonp>ticipation entity1 & 7,,ii7 by n tak+ into acc\nt "u subp>agraph 7,a77ii7 !re( any wages paid ) respect to trades or bus9esses c>ri$ on by an ,s corporation :i* is a nonp>ticipation entity4 7,b7 ,mat]ial p>ticipation ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,an individual does n h mat]ial p>ticipation ) respect to an entity 7h]eaft] ref]r$ to z ! top-ti] entity7 if su* individual demon/rates to ! satisfaction ( ! ,secret>y ( ! ,treasury "u section #adjb7m7 ( ! ,int]nal ,rev5ue ,code ( #aihf t su* individual-- 7,i7 does n mat]ially p>ticipate 7z det]m9$ "u section #dfi7;h7 ( ! ,int]nal ,rev5ue ,code ( #aihf )\t reg>d to p>agraph 7#b7 !re(7 9 any activity c>ri$ on by su* top-ti] entity1 & 7,,ii7 does n mat]ially p>ticipate 7z s det]m9$7 9 any activity c>ri$ on by any entity 9 :i* su* top-ti] entity holds 7directly or indirectly7 any int]e/4 7ii7 ,family attribution ,= purposes ( apply+ clause 7i71 ! p>ticipation ( any individual 9 any activity %all also be treat$ z p]=m$ by su* individual's sp\se & ! l9eal desc5dants ( su* individual & su* individual's sp\se4 7,c7 ,nonp>ticipation entity ,= purposes ( ?is p>agraph1 ! t]m nonp>ticipation entity means1 ) respect to any individual1 any entity ) respect to :i* su* individual does n h mat]ial p>ticipation 7z det]m9$ "u subp>agraph 7,b774 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #aejc4 ,repeal ( exemption f ,,fica taxes = c]ta9 =eign work]s 7a7 ,9 g5]al ,subsection 7b7 ( section #caba is am5d$ by /rik+ p>agraphs 7#a7 & 7#ai74 7b7 ,coord9ation ) b5efits ,subsection 7a7 ( section #baj ( ! ,social ,security ,act is am5d$ by /rik+ p>agraphs 7#a7 & 7#ai74 7c7 ,railroad retirem5t tax ,p>agraph 7#a7 ( section #cbca7;e7 is am5d$ by /rik+ ! ?ird s5t5ce4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to remun]ation receiv$ = s]vices p]=m$ aft] ,decemb] #ca1 #bjad4 #aejd4 ,repeal ( exemption f ,,fica taxes = c]ta9 /ud5ts 7a7 ,9 g5]al ,p>agraph 7#aj7 ( section #caba7;b7 is am5d$-- 7#a7 by ins]t+ dur+ any cal5d> ye> aft] s]vice p]=m$ 9 ! matt] prec$+ subp>agraph 7,a71 & 7#b7 by ins]t+ 1 & ! remun]ation paid by ! employ] ) respect to su* s]vice dur+ su* cal5d> ye> is less ?an ! doll> am\nt 9 effect "u section #bac7;d7 ( ! ,social ,security ,act 7relat+ to am\nt requir$ = a qu>t] ( cov]age7 ) respect to su* ye> be=e ! semicolon at ! end4 7b7 ,college clubs1 frat]nities1 & sororities ,p>agraph 7#b7 ( section #caba7;b7 is am5d$-- 7#a7 by ins]t+ dur+ any cal5d> ye> aft] dome/ic s]vice p]=m$1 & 7#b7 by ins]t+ 1 if ! remun]ation paid by ! employ] ) respect to su* s]vice dur+ su* cal5d> ye> is less ?an ! doll> am\nt 9 effect "u section #bac7;d7 ( ! ,social ,security ,act 7relat+ to am\nt requir$ = a qu>t] ( cov]age7 ) respect to su* ye> be=e ! semicolon at ! end4 7c7 ,d$uction ( tax f wages ,subsection 7a7 ( section #cajb is am5d$ by ins]t+ 2 & an employ] :o 9 any cal5d> ye> pays to an employee remun]ation to :i* p>agraph 7#b7 or 7#aj7 ( section #caba7;b7 is applicable may d$uct an am\nt equival5t to su* tax f any su* paym5t ( remun]ation1 ev5 ?\gh at ! "t ( paym5t ! total am\nt ( su* remun]ation paid to ! employee by ! employ] 9 ! cal5d> ye> is less ?an ! doll> am\nt 9 effect "u section #bac7;d7 ( ! ,social ,security ,act ) respect to su* ye> be=e ! p]iod at ! end4 7d7 ,coord9ation ) b5efits 7#a7 ,p>agraph 7#aj7 ( section #baj7;a7 ( ! ,social ,security ,act is am5d$-- 7,a7 by ins]t+ dur+ any cal5d> ye> aft] ,s]vice p]=m$ 9 ! matt] prec$+ subp>agraph 7,a71 & 7,b7 by ins]t+ 1 & ! remun]ation paid by ! employ] ) respect to su* s]vice dur+ su* cal5d> ye> is less ?an ! doll> am\nt 9 effect "u section #bac7;d7 7relat+ to am\nt requir$ = a qu>t] ( cov]age7 ) respect to su* ye> be=e ! semicolon at ! end4 7#b7 ,p>agraph 7#b7 ( section #baj7;a7 ( ! ,social ,security ,act is am5d$-- 7,a7 by ins]t+ dur+ any cal5d> ye> aft] ,dome/ic s]vice p]=m$1 & 7,b7 by ins]t+ 1 if ! remun]ation paid by ! employ] ) respect to su* s]vice dur+ su* cal5d> ye> is less ?an ! doll> am\nt 9 effect "u section #bac7;d7 7relat+ to am\nt requir$ = a qu>t] ( cov]age7 ) respect to su* ye> be=e ! semicolon at ! end4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to remun]ation receiv$ = s]vices p]=m$ aft] ,decemb] #ca1 #bjad4 #aeje4 ,ov]ride ( ,treasury guidance provid+ t c]ta9 employ]-provid$ supplem5tal unemploym5t b5efits are n subject to employm5t taxes 7a7 ,9 g5]al ,effective ) respect to am\nts paid aft] ,decemb] #ca1 #bjad-- 7#a7 ,rev5ue ,rul+ #ef-bdi1 7#b7 ,rev5ue ,rul+ #eh-abh1 7#c7 ,rev5ue ,rul+ #fj-ccj1 7#d7 s mu* ( ! hold+ ( ,rev5ue ,rul+ #gg-cdg z relates to ,plan 7#a7 & ,plan 7#b71 7#e7 ,rev5ue ,rul+ #ij-gb1 & 7#f7 any o!r rul+1 regulation1 or o!r guidance provid$ by ! ,secret>y ( ! ,treasury1 or 8 designee1 to ! ext5t t su* rul+1 regulation1 or guidance provides t any paym5t made by an employ] by reason ( involunt>y t]m9ation ( employm5t %all n be treat$ z wages or comp5sation = purposes ( any provision ( ! ,int]nal ,rev5ue ,code ( #aihf1 %all be null & void4 ,! prec$+ s5t5ce %all n apply to ! ext5t a rul+1 regulation1 or o!r guidance implem5ts a /atutory exception to wages or comp5sation4 7b7 ,repeal ( )hold+ requirem5t 7#a7 ,9 g5]al ,section #cdjb7o77#a7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #cdjb7o77#b7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7,b7 ,section #cdjb7o77#e77;,a7 is am5d$ by /rik+ p>agraph 7#a77;,c7 & ins]t+ p>agraph 7#a77;,b74 7#c7 ,effective date 7,a7 ,9 g5]al ,! am5dm5ts made by ?is subsection %all apply to am\nts paid aft] ,decemb] #ca1 #bjac4 7,b7 ,no inf]5ce ,no am5dm5t made by ?is subsection %all be con/ru$ to create any inf]5ce ) respect to any am\nts paid be=e ,janu>y #a1 #bjad4 #aejf4 ,c]tifi$ pr(essional employ] organizations 7a7 ,employm5t taxes ,*apt] #be is am5d$ by add+ at ! end ! foll[+ new section3 #ceaa4 ,c]tifi$ pr(essional employ] organizations 7a7 ,g5]al rules ,= purposes ( ! taxes & o!r obligations impos$ by ?is subtitle-- 7#a7 a c]tifi$ pr(essional employ] organization %all be treat$ z ! employ] 7& no o!r p]son %all be treat$ z ! employ]7 ( any "w site employee p]=m+ s]vices = any cu/om] ( su* organization1 b only ) respect to remun]ation remitt$ by su* organization to su* "w site employee1 & 7#b7 ! exemptions1 exclusions1 def9itions1 & o!r rules :i* are bas$ on type ( employ] & :i* w\ld 7b = p>agraph 7#a77 apply %all apply ) respect to su* taxes impos$ on su* remun]ation4 7b7 ,successor employ] /atus ,= purposes ( sections #caba7;a77#a71 #cbca7;e77#b77;,c71 & #ccjf7;b77#a7-- 7#a7 a c]tifi$ pr(essional employ] organization ent]+ into a s]vice contract ) a cu/om] ) respect to a "w site employee %all be treat$ z a successor employ] & ! cu/om] %all be treat$ z a pr$ecessor employ] dur+ ! t]m ( su* s]vice contract1 & 7#b7 a cu/om] ^: s]vice contract ) a c]tifi$ pr(essional employ] organization is t]m9at$ ) respect to a "w site employee %all be treat$ z a successor employ] & ! c]tifi$ pr(essional employ] organization %all be treat$ z a pr$ecessor employ]4 7c7 ,liability ( c]tifi$ pr(essional employ] organization ,solely = purposes ( its liability = ! taxes & o!r obligations impos$ by ?is subtitle-- 7#a7 a c]tifi$ pr(essional employ] organization %all be treat$ z ! employ] ( any "w site employee 7o!r ?an a p]son describ$ 9 subsection 7e77 :o is p]=m+ s]vices cov]$ by a contract meet+ ! requirem5ts ( section #ggjf7;e77#b71 b only ) respect to remun]ation remitt$ by su* organization to su* individual1 & 7#b7 exemptions1 exclusions1 def9itions1 & o!r rules :i* are bas$ on type ( employ] & :i* w\ld 7b = p>agraph 7#a77 apply %all apply ) respect to su* taxes impos$ on su* remun]ation4 7d7 ,special rule = relat$ p>ty ,?is section %all n apply 9 ! case ( a cu/om] :i* be>s a relation%ip to a c]tifi$ pr(essional employ] organization describ$ 9 section #bfg7;b7 or #gjg7;b74 ,= purposes ( ! prec$+ s5t5ce1 su* sections %all be appli$ by sub/itut+ #aj p]c5t = #ej p]c5t4 7e7 ,special rule = c]ta9 individuals ,= purposes ( ! taxes impos$ "u ?is subtitle1 an individual ) net e>n+s f self-employm5t d]iv$ f ! cu/om]'s trade or bus9ess 7includ+ a p>tn] 9 a p>tn]%ip t is a cu/om]71 is n a "w site employee ) respect to remun]ation paid by a c]tifi$ pr(essional employ] organization4 7f7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is section4 4 7b7 ,c]tifi$ pr(essional employ] organization def9$ ,*apt] #gi1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new section3 #ggjf4 ,c]tifi$ pr(essional employ] organizations 7a7 ,9 g5]al ,= purposes ( ?is title1 ! t]m c]tifi$ pr(essional employ] organization means a p]son :o applies to be treat$ z a c]tifi$ pr(essional employ] organization = purposes ( section #ceaa & :o has be5 c]tifi$ by ! ,secret>y z meet+ ! requirem5ts ( subsection 7b74 7b7 ,c]tification requirem5ts ,a p]son meets ! requirem5ts ( ?is subsection if su* p]son-- 7#a7 demon/rates t su* p]son 7& any own]1 (fic]1 & su* o!r p]sons z may be specifi$ 9 regulations7 meets su* requirem5ts z ! ,secret>y %all e/abli% ) respect to tax /atus1 backgr\nd1 exp]i5ce1 bus9ess location1 & annual f9ancial audits1 7#b7 agrees t x w satisfy ! bond & indep5d5t f9ancial review requirem5ts ( subsections 7c7 on an ongo+ basis1 7#c7 agrees t x w satisfy su* report+ obligations z may be impos$ by ! ,secret>y1 7#d7 computes its taxable income us+ an accrual me?od ( acc\nt+ unless ! ,secret>y approves ano!r me?od1 7#e7 agrees to v]ify on su* p]iodic basis z ! ,secret>y may prescribe t x cont9ues to meet ! requirem5ts ( ?is subsection1 & 7#f7 agrees to notify ! ,secret>y 9 writ+1 )9 su* "t z ! ( ,secret>y may prescribe1 ( any *ange t mat]ially affects ! cont9u+ accuracy ( any agreem5t or in=mation :i* 0 previ\sly made or provid$4 7c7 ,bond & indep5d5t f9ancial review 7#a7 ,9 g5]al ,an organization meets ! requirem5ts ( ?is p>agraph if su* organization-- 7,a7 meets ! bond requirem5ts ( p>agraph 7#b71 & 7,b7 meets ! indep5d5t f9ancial review requirem5ts ( p>agraph 7#c74 7#b7 ,bond 7,a7 ,9 g5]al ,a c]tifi$ pr(essional employ] organization meets ! requirem5ts ( ?is p>agraph if ! organization has po/$ a bond = ! paym5t ( taxes "u subtitle ,c 79 a =m acceptable to ! ,secret>y7 t is 9 an am\nt at lea/ equal to ! am\nt specifi$ 9 subp>agraph 7,b74 7,b7 ,am\nt ( bond 7i7 ,9 g5]al ,= ! p]iod ,april #a ( any cal5d> ye> ?r\gh ,m>* #ca ( ! foll[+ cal5d> ye>1 ! am\nt ( ! bond requir$ is equal to ! great] (-- 7,i7 #e p]c5t ( ! organization's liability "u section #ceaa = taxes impos$ by subtitle ,c dur+ ! prec$+ cal5d> ye> 7b n to exce$ #a1jjj1jjj71 or 7,,ii7 #ej1jjj4 7ii7 ,special rule = newly creat$ pr(essional employ] organizations ,dur+ ! fir/ ?ree full cal5d> ye>s t an organization is 9 exi/5ce1 subclause 7,i7 ( clause 7i7 %all n apply4 ,= ?is purpose-- 7,i7 "u rules provid$ by ! ,secret>y1 an organization is treat$ z 9 exi/5ce z ( ! date t su* organization began provid+ s]vices to any cu/om] :i* 7 comp>able to ! s]vices be+ provid$ ) respect to "w site employees1 reg>dless ( :e!r su* date occurr$ be=e or aft] ! organization is c]tifi$ "u subsection 7b71 & 7,,ii7 an organization ) liability "u section #ceaa = taxes impos$ by subtitle ,c dur+ ! prec$+ cal5d> ye> 9 excess ( #e1jjj1jjj %all no long] be describ$ 9 ?is clause 7ii7 z ( ,april #a ( ! ye> foll[+ su* cal5d> ye>4 7#c7 ,indep5d5t f9ancial review requirem5ts ,a c]tifi$ pr(essional employ] organization meets ! requirem5ts ( ?is p>agraph if su* organization-- 7,a7 has1 z ( ! mo/ rec5t audit date1 caus$ to be prep>$ & provid$ to ! ,secret>y 79 su* mann] z ! ,secret>y may prescribe7 an op9ion ( an indep5d5t c]tifi$ public acc\ntant z to :e!r ! c]tifi$ pr(essional employ] organization's f9ancial /atem5ts are pres5t$ fairly 9 accordance ) g5]ally accept$ acc\nt+ pr9ciples1 & 7,b7 provides to ! ,secret>y an ass]tion reg>d+ ,f$]al employm5t tax paym5ts & an exam9ation level atte/ation on su* ass]tion f an indep5d5t c]tifi$ public acc\ntant n lat] ?an ! la/ day ( ! second mon? beg9n+ aft] ! end ( ea* cal5d> qu>t]4 ,su* ass]tion %all /ate t ! organization has )held & made deposits ( all taxes impos$ by *apt]s #ba1 #bb1 & #bd ( ! ,int]nal ,rev5ue ,code 9 accordance ) regulations impos$ by ! ,secret>y = su* cal5d> qu>t] & su* exam9ation level atte/ation %all /ate t su* ass]tion is fairly /at$1 9 all mat]ial respects4 7#d7 ,controll$ gr\p rules ,= purposes ( ! requirem5ts ( p>agraphs 7#b7 & 7#c71 all pr(essional employ] organizations t are memb]s ( a controll$ gr\p )9 ! mean+ ( sections #dad7;b7 & 7c7 %all be treat$ z a s+le organization4 7#e7 ,failure to file ass]tion & atte/ation ,if ! c]tifi$ pr(essional employ] organization fails to file ! ass]tion & atte/ation requir$ by p>agraph 7#c7 ) respect to any cal5d> qu>t]1 !n ! requirem5ts ( p>agraph 7#c7 ) respect to su* failure %all be treat$ z n satisfi$ = ! p]iod beg9n+ on ! due date = su* atte/ation4 7#f7 ,audit date ,= purposes ( p>agraph 7#c77;,a71 ! audit date %all be six mon?s aft] ! completion ( ! organization's fiscal ye>4 7d7 ,susp5sion & revocation au?ority ,! ,secret>y may susp5d or revoke a c]tification ( any p]son "u subsection 7b7 = purposes ( section #ceaa if ! ,secret>y det]m9es t su* p]son is n satisfy+ ! agreem5ts or requirem5ts ( subsections 7b7 or 7c71 or fails to satisfy applicable acc\nt+1 report+1 paym5t1 or deposit requirem5ts4 7e7 ,"w site employee ,= purposes ( ?is title-- 7#a7 ,9 g5]al ,! t]m "w site employee means1 ) respect to a c]tifi$ pr(essional employ] organization1 an individual :o-- 7,a7 p]=ms s]vices = a cu/om] pursuant to a contract :i* is betwe5 su* cu/om] & ! c]tifi$ pr(essional employ] organization & :i* meets ! requirem5ts ( p>agraph 7#b71 & 7,b7 p]=ms s]vices at a "w site meet+ ! requirem5ts ( p>agraph 7#c74 7#b7 ,s]vice contract requirem5ts ,a contract meets ! requirem5ts ( ?is p>agraph ) respect to an individual p]=m+ s]vices = a cu/om] if su* contract is 9 writ+ & provides t ! c]tifi$ pr(essional employ] organization %all-- 7,a7 assume responsibility = paym5t ( wages to ! individual1 )\t reg>d to ! receipt or adequacy ( paym5t f ! cu/om] = su* s]vices1 7,b7 assume responsibility = report+1 )hold+1 & pay+ any applicable taxes "u subtitle ,c1 ) respect to ! individual's wages1 )\t reg>d to ! receipt or adequacy ( paym5t f ! cu/om] = su* s]vices1 7,c7 assume responsibility = any employee b5efits :i* ! s]vice contract may require ! c]tifi$ pr(essional employ] organization to provide1 )\t reg>d to ! receipt or adequacy ( paym5t f ! cu/om] = su* s]vices1 7,d7 assume responsibility = hir+1 fir+ & = recruit+ work]s 9 addition to ! cu/om]'s responsibility = recruit+1 hir+1 & fir+ work]s1 7,e7 ma9ta9 employee records relat+ to ! individual1 & 7,f7 agree to be treat$ z a c]tifi$ pr(essional employ] organization = purposes ( section #ceaa ) respect to su* individual4 7#c7 ,"w site cov]age requirem5t ,! requirem5ts ( ?is p>agraph are met ) respect to an individual if at lea/ #he p]c5t ( ! individuals p]=m+ s]vices = ! cu/om] at ! "w site :]e su* individual p]=ms s]vices are subject to #a or m contracts ) ! c]tifi$ pr(essional employ] organization :i* meet ! requirem5ts ( p>agraph 7#b7 7b n tak+ into acc\nt ^? individuals :o are exclud$ employees )9 ! mean+ ( section #dad7q77#e774 7f7 ,det]m9ation ( employm5t /atus ,except to ! ext5t necess>y = purposes ( section #ceaa1 no?+ 9 ?is section %all be con/ru$ to affect ! det]m9ation ( :o is an employee or employ] = purposes ( ?is title4 7g7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is section4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ccjb is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,treatm5t ( c]tifi$ pr(essional employ] organizations ,if a c]tifi$ pr(essional employ] organization 7z def9$ 9 section #ggjf71 or a cu/om] ( su* organization1 makes a contribution to ! ,/ate's unemploym5t fund ) respect to a "w site employee1 su* organization %all be eligible = ! cr$its available "u ?is section ) respect to su* contribution4 4 7#b7 ,section #ccjc7;a7 is am5d$-- 7,a7 by /rik+ ! p]iod at ! end ( p>agraph 7#c7 & ins]t+ 2 & & by ins]t+ aft] p>agraph 7#c7 ! foll[+ new p>agraph3 7#d7 if ! taxpay] is a c]tifi$ pr(essional employ] organization 7z def9$ 9 section #ggjf7 t is treat$ z ! employ] "u section #ceaa1 su* c]tifi$ pr(essional employ] organization is p]mitt$ to collect & remit1 9 accordance ) p>agraphs 7#a71 7#b71 & 7#c71 contributions dur+ ! taxable ye> to ! ,/ate unemploym5t fund ) respect to a "w site employee4 1 & 7,b7 9 ! la/ s5t5ce-- 7i7 by /rik+ p>agraphs 7#a71 7#b71 & 7#c7 & ins]t+ p>agraphs 7#a71 7#b71 7#c71 & 7#d71 & 7ii7 by /rik+ p>agraph 7#a71 7#b71 or 7#c7 & ins]t+ p>agraph 7#a71 7#b71 7#c71 or 7#d74 7#c7 ,section #fjec7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,c]tifi$ pr(essional employ] organizations ,= purposes ( any report requir$ by ?is subsection1 9 ! case ( a c]tifi$ pr(essional employ] organization t is treat$1 "u section #ceaa1 z ! employ] ( a "w site employee1 ! cu/om] ) respect to :om a "w site employee p]=ms s]vices %all be ! employ] = purposes ( report+ "u ?is section & ! c]tifi$ pr(essional employ] organization %all furni% to ! cu/om] any in=mation necess>y to complete su* report+ no lat] ?an su* "t z ! ,secret>y %all prescribe4 4 7d7 ,cl]ical am5dm5ts 7#a7 ,! table ( sections = *apt] #be is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ceaa4 ,c]tifi$ pr(essional employ] organizations4 4 7#b7 ,! table ( sections = *apt] #gi1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ggjf4 ,c]tifi$ pr(essional employ] organizations4 4 7e7 ,report+ requirem5ts & obligations ,! ,secret>y ( ! ,treasury %all develop su* report+ & recordkeep+ rules1 regulations1 & proc$ures z ! ,secret>y det]m9es necess>y or appropriate to ensure compliance ) ! am5dm5ts made by ?is section ) respect to entities apply+ = c]tification z c]tifi$ pr(essional employ] organizations or entities t h be5 s c]tifi$4 ,su* rules %all be design$ 9 a mann] :i* /reaml9es1 to ! ext5t possible1 ! application ( requirem5ts ( su* am5dm5ts1 ! ex*ange ( in=mation betwe5 a c]tifi$ pr(essional employ] organization & its cu/om]s1 & ! report+ & recordkeep+ obligations ( ! c]tifi$ pr(essional employ] organization4 7f7 ,us] fees ,subsection 7b7 ( section #gebh is am5d$ by add+ at ! end !re( ! foll[+ new p>agraph3 7#d7 ,c]tifi$ pr(essional employ] organizations ,! fee *>g$ "u ! program 9 connection ) ! c]tification by ! ,secret>y ( a pr(essional employ] organization "u section #ggjf %all be an annual fee n to exce$ #a1jjj p] ye>4 4 7g7 ,effective dates 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply ) respect to wages = s]vices p]=m$ on or aft] ,janu>y #a ( ! fir/ cal5d> ye> beg9n+ m ?an #ab mon?s aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,c]tification program ,! ,secret>y ( ! ,treasury %all e/abli% ! c]tification program describ$ 9 section #ggjf7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is section1 n lat] ?an #f mon?s be=e ! effective date det]m9$ "u p>agraph 7#a74 7h7 ,no inf]5ce ,no?+ conta9$ 9 ?is section or ! am5dm5ts made by ?is section %all be con/ru$ to create any inf]5ce ) respect to ! det]m9ation ( :o is an employee or employ]-- 7#a7 = ,f$]al tax purposes 7o!r ?an ! purposes set =? 9 ! am5dm5ts made by ?is section71 or 7#b7 = purposes ( any o!r provision ( law4 ,g ,p5sions & ,retirem5t #a ,individual ,retirem5t ,plans #afja4 ,elim9ation ( income limits on contributions to ,ro? ,i,r,as 7a7 ,9 g5]al ,subsection 7c7 ( section #djh;,a is am5d$ by /rik+ p>agraph 7#c74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afjb4 ,no new contributions to traditional ,i,r,as 7a7 ,9 g5]al 7#a7 ,individual retirem5t acc\nts ,p>agraph 7#a7 ( section #djh7;a7 is am5d$ by /rik+ 9 excess ( ! am\nt & all t foll[s ?r\gh ! end & ins]t+ ! foll[+3 unless x is a contribution "u a simplifi$ employee p5sion describ$ 9 subsection 7k7 n 9 excess ( ! am\nt ( ! limitation 9 effect = su* taxable ye> "u section #dae7;c77#a77;,a71 a contribution to a simple retirem5t acc\nt describ$ 9 subsection 7p7 n 9 excess ( ! am\nt describ$ 9 section #djh7p77#h7 = su* taxable ye>1 or a contribution to a ,ro? ,,ira describ$ 9 section #djh;,a n 9 excess ( ! am\nt 9 effect = ! taxable ye> ) respect to su* individual "u section #djh;,a7c77#a77;,a77i744 7#b7 ,individual retirem5t annuities 7,a7 ,9 g5]al ,subp>agraph 7,b7 ( section #djh7;b77#b7 is am5d$ to read z foll[s3 7,b7 any am\nt paid z a premium on behalf ( any individual = a taxable ye> w\ld meet ! requirem5ts ( subsection 7a77#a7 if x 7 paid z a contribution to an individual retirem5t acc\nt1 & 4 7,b7 ,end[m5t contract requirem5t ,! la/ s5t5ce ( section #djh7;b7 is am5d$ by /rik+ ! doll> am\nt 9 effect "u section #bai7;b77#a77;,a7 & ins]t+ ! am\nts describ$ 9 p>agraph 7#b77;,b74 7b7 ,con=m+ am5dm5ts 7#a7 ,am5dm5ts relat+ to d$uctibility 7,a7 ,section #bai7;a7 is am5d$ by /rik+ equal to ! qualifi$ retirem5t contributions ( ! individual & ins]t+ equal to ! am\nts contribut$ on behalf ( ! individual to a plan describ$ 9 section #eja7;c77#ah74 7,b7 ,section #bai7;b7 is am5d$-- 7i7 by /rik+ ,maximum am\nt ( d$uction & all t foll[s ?r\gh ,not)/&+ p>agraph 7#a71 ! am\nt all[able z a d$uction & ins]t+ ,maximum am\nt ( d$uction4--,! am\nt all[able z a d$uction1 & 7ii7 by /rik+ p>agraphs 7#d7 & 7#e74 7,c7 ,section #bai is am5d$ by /rik+ subsections 7c71 7d71 7e71 7g71 & 7h7 & by r$esignat+ subsection 7f7 z subsection 7c74 7,d7 ,section #bai7;c71 z s r$esignat$1 is am5d$-- 7i7 by /rik+ ,o!r def9itions & special rules & ins]t+ ,special rules1 7ii7 by /rik+ p>agraphs 7#a71 7#c71 7#d71 7#e71 7#f71 7#g71 & 7#h71 & 7iii7 by ins]t+ be=e p>agraph 7#b7 ! foll[+ new p>agraph3 7#a7 ,b5efici>y mu/ be "u age #gja_/b ,no d$uction %all be all[$ "u ?is section ) respect to any am\nt contribut$ on behalf ( an individual to a plan describ$ 9 section #eja7;c77#ah7 if su* individual has atta9$ age #gja_/b be=e ! close ( su* individual's taxable ye> = :i* ! contribution 0 made4 4 7,e7 ,section #digc7;b77#b77;,c7 is am5d$ by /rik+ 7det]m9$ )\t reg>d to section #bai7;f77#f774 7#b7 ,am5dm5ts relat+ to ,ro? ,,ira contribution limits 7,a7 ,section #djh;,a7c71 z am5d$ by ?is ,act1 is am5d$-- 7i7 by /rik+ p>agraphs 7#a7 & 7#b7 & ins]t+ ! foll[+ new p>agraphs3 7#a7 ,maximum contribution 7,a7 ,9 g5]al ,! aggregate am\nt ( contributions = any taxable ye> to all ,ro? ,i,r,as ma9ta9$ = ! b5efit ( an individual %all n exce$ ! less] (-- 7i7 #e1ejj1 or 7ii7 an am\nt equal to ! comp5sation includible 9 ! individual's gross income = su* taxable ye>4 7,b7 ,cat*-up contributions = individuals #ej or old] ,9 ! case ( an individual :o has atta9$ ! age ( #ej be=e ! close ( ! taxable ye>1 ! am\nt 9 effect "u subp>agraph 7,a77i7 = su* taxable ye> %all be increas$ by #a1jjj4 7#b7 ,special rule = c]ta9 m>ri$ individuals ,9 ! case ( an individual to :om ?is p>agraph applies = ! taxable ye>1 ! limitation ( p>agraph 7#a7 %all be equal to ! less] (-- 7,a7 ! doll> am\nt 9 effect "u p>agraph 7#a77;,a77i7 = ! taxable ye>1 or 7,b7 ! sum (-- 7i7 ! comp5sation includible 9 su* individual's gross income = ! taxable ye>1 plus 7ii7 ! comp5sation includible 9 ! gross income ( su* individual's sp\se = ! taxable ye> r$uc$ by-- 7,i7 ! am\nt all[$ z a d$uction "u section #bai7;a7 to su* sp\se = su* taxable ye>1 7,,ii7 ! am\nt ( any contribution on behalf ( su* sp\se to a ,ro? ,,ira = su* taxable ye>4 7#c7 ,individuals to :om p>agraph 7#b7 applies ,p>agraph 7#b7 %all apply to any individual if-- 7,a7 su* individual files a jo9t return = ! taxable ye>1 & 7,b7 ! am\nt ( comp5sation 7if any7 includible 9 su* individual's gross income = ! taxable ye> is less ?an ! comp5sation includible 9 ! gross income ( su* individual's sp\se = ! taxable ye>4 4 7ii7 by /rik+ p>agraph 7#b7 9 p>agraph 7#f7 & ins]t+ p>agraph 7#a71 7iii7 by /rik+ ! rule ( section #bai7;f77#c7 %all apply 9 p>agraph 7#g7 & ins]t+ ! foll[+3 a taxpay] %all be deem$ to h made a contribution to a ,ro? ,,ira on ! la/ day ( ! prec$+ taxable ye> if ! contribution is made on acc\nt ( su* taxable ye> & is made n lat] ?an ! "t prescrib$ by law = fil+ ! return = su* taxable ye> 7n includ+ ext5sions !re(71 & 7iv7 by add+ at ! end ! foll[+ new p>agraphs3 7#h7 ,comp5sation ,= purposes ( ?is section1 ! t]m comp5sation includes e>n$ income 7z def9$ 9 section #dja7;c77#b774 ,! t]m comp5sation does n include any am\nt receiv$ z a p5sion or annuity & does n include any am\nt receiv$ z def]r$ comp5sation4 ,= purposes ( ?is p>agraph1 section #dja7;c77#b7 %all be appli$ z if ! t]m trade or bus9ess = purposes ( section #adjb includ$ s]vice describ$ 9 subsection 7c77#f7 !re(4 ,! t]m comp5sation includes any diff]5tial wage paym5t 7z def9$ 9 section #cdja7;h77#b774 7#i7 ,m>ri$ individuals ,! limitation "u ?is subsection %all be comput$ sep>ately = ea* individual1 & ?is section %all be appli$ )\t reg>d to any community prop]ty laws4 7#aj7 ,special rule = comp5sation e>n$ by memb]s ( ,arm$ ,=ces = s]vices 9 combat zone ,= purposes ( p>agraphs 7#a77;,a77ii7 & 7#b71 ! am\nt ( comp5sation includible 9 an individual's gross income %all be det]m9$ )\t reg>d to section #aab4 4 7,b7 ,section #djh;,a7d77#c77;,a7 is am5d$-- 7i7 by ins]t+ & at ! end ( clause 7i71 7ii7 by /rik+ 1 & at ! end ( clause 7ii7 & ins]t+ a p]iod1 7iii7 by /rik+ clause 7iii71 & 7iv7 by /rik+ ! la/ s5t5ce4 7#c7 ,am5dm5ts relat+ to traditional ,i,r,as 7,a7 ,section #djh7;d77#d7 is am5d$-- 7i7 by /rik+ subp>agraph 7,b7 & ins]t+ ! foll[+3 7,b7 9 ! case ( simplifi$ employee p5sion1 su* contribution is n exclud$ f gross income "u section #djb7;h71 4 7ii7 by add+ at ! end ! foll[+3 ,?is p>agraph %all n apply to any contribution to a simple retirem5t acc\nt44 7,b7 ,section #djh7;d77#e77;,a7 is am5d$-- 7i7 by /rik+ 9 effect "u section #bai7;b77#a77;,a7 & ins]t+ 9 effect ) respect to ! taxpay] = ! taxable ye> "u section #djh;,a7c77#a77;,a77i71 7ii7 by /rik+ ! am\nt all[able z a d$uction & all t foll[s ?r\gh su* excess contribution4 & ins]t+ ! am\nt t may be contribut$ "u section #djh;,a7c77#a7 = ! taxable ye> = :i* ! contribution 0 made if su* di/ribution is receiv$ aft] ! date describ$ 9 p>agraph 7#d741 7iii7 by add+ at ! end ( subp>agraph 7,a7 ! foll[+3 ,?is p>agraph %all n apply to any contribution to a simple retirem5t acc\nt41 & 7iv7 by /rik+ ! la/ s5t5ce4 7,c7 ,section #djh is am5d$ by /rik+ subsection 7o74 7#d7 ,am5dm5ts relat+ to simple retirem5t acc\nts 7,a7 ,section #djh7p77#b77;,d77ii7 is am5d$ by /rik+ means a plan1 contract & all t foll[s ?r\gh ! p]iod at ! end & ins]t+ ! foll[+3 means-- 7,i7 a plan describ$ 9 section #dja7;a7 :i* includes a tru/ exempt f tax "u section #eja7;a71 7,,ii7 an annuity plan describ$ 9 section #djc7;a71 7,,iii7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a771 7,,iv7 an annuity contract describ$ 9 section #djc7;b71 7,v7 a simplifi$ employee p5sion 7)9 ! mean+ ( section #djh7k771 7,,vi7 any simple retirem5t acc\nt 7)9 ! mean+ ( section #djh7p771 or 7,,vii7 a tru/ describ$ 9 section #eja7;c77#ah74 4 7,b7 ,section #djh7p77#h7 is am5d$ to read z foll[s3 7#h7 ,coord9ation ) maximum limitation "u subsection 7a7 ,9 ! case ( a simple retirem5t acc\nt1 = purposes ( subsections 7a77#a7 & 7b77#b71 contributions may n exce$ ! sum (-- 7,a7 ! doll> am\nt 9 effect "u p>agraph 7#b77;,a77ii71 & 7,b7 ! employ] contribution requir$ "u subp>agraph 7,a77iii7 or 7,b77i7 ( p>agraph 7#b71 :i*ev] is applicable4 4 7#e7 ,am5dm5ts relat+ to ,s,e,ps ,section #djh is am5d$ by /rik+ subsection 7j74 7#f7 ,am5dm5ts relat+ to excise tax on excess contributions 7,a7 ,traditional ,i,r,as ,subsection 7b7 ( section #digc is am5d$-- 7i7 by /rik+ p>agraph 7#a7 & ins]t+ ! foll[+3 7#a7 ! am\nts contribut$ = ! taxable ye> to ! acc\nts or = ! annuities or bonds 7o!r ?an any contributions to a ,ro? ,,ira7 :i* are n p]mitt$ contributions "u subsection 7a77#a7 or 7b77#b7 ( section #djh1 & 4 7ii7 9 p>agraph 7#b77;,c71 by /rik+ ! maximum am\nt all[able & all t foll[s ?r\gh )\t reg>d to section #bai7;f77#f77 & ins]t+ ! p]mitt$ contributions "u subsection 7a77#a7 or 7b77#b7 ( section #djh = ! taxable ye> ov] ! am\nt contribut$1 & 7iii7 by /rik+ ! la/ s5t5ce & ins]t+ ! foll[+3 ,p>agraph 7#b7 %all be det]m9$ sep>ately ) respect to any simplifi$ employee p5sion 7)9 ! mean+ ( section #djh7k77 & any simple retirem5t acc\nt 7)9 ! mean+ ( section #djh7p7744 7,b7 ,ro? ,i,r,as ,section #digc7;f7 is am5d$ by /rik+ sections #djh;,a7c77#b7 & 7c77#c7 ea* place x appe>s & ins]t+ section #djh;,a7c77#a74 7#g7 ,am5dm5ts relat+ to sav]'s cr$it ,section #be;,b7d77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ! am\nts-- 7i7 paid 9 ca% = ! taxable ye> by or on behalf ( an individual to all ,ro? ,i,r,as ma9ta9$ = su* individual's b5efit1 & 7ii7 contribut$ on behalf ( ! individual to a plan describ$ 9 section #eja7;c77#ah71 4 7#h7 ,o!r con=m+ am5dm5ts 7,a7 ,section #hf7;f77#c7 is am5d$ by /rik+ #bai7;f77#a7 & ins]t+ section #djh;,a7c77#h74 7,b7 ,section #acb7m77#c7 is am5d$ by /rik+ section #bai7;g77#e7 & ins]t+ section #djh7p77#b77;,d77ii74 7,c7 7i7 ,section #bbc7;d7 is am5d$-- 7,i7 by r$esignat+ p>agraph 7#d7 z p>agraph 7#g71 7,,ii7 by ins]t+ aft] p>agraph 7#c7 ! foll[+ new p>agraphs3 7#d7 ,recontribut$ am\nts ,no d$uction %all be all[$ "u ?is section ) respect to a rollov] contribution describ$ 9 subsection 7f77#e74 7#e7 ,"t :5 contributions deem$ made ,= purposes ( ?is section1 a taxpay] %all be deem$ to h made a contribution to a heal? sav+s acc\nt on ! la/ day ( ! prec$+ taxable ye> if ! contribution is made on acc\nt ( su* taxable ye> & is made n lat] ?an ! "t prescrib$ by law = fil+ ! return = su* taxable ye> 7n includ+ ext5sions !re(74 7#f7 ,employ] paym5ts ,except z provid$ 9 section #ajf7;d71 = purposes ( ?is title1 any am\nt paid by an employ] to a heal? sav+s acc\nt %all be treat$ z paym5t ( comp5sation to ! employee 7o!r ?an a self-employ$ individual :o is an employee )9 ! mean+ ( section #dja7;c77#a77 includible 9 8 gross income 9 ! taxable ye> = :i* ! am\nt 0 contribut$1 :e!r or n a d$uction = su* paym5t is all[able "u ?is section to ! employee4 4 7ii7 ,section #bbc7;d77#g71 z s r$esignat$1 is am5d$ by /rik+ subp>agraphs 7,a71 7,b71 & 7,c71 & r$esignat+ subp>agraphs 7,d7 & 7,e7 z subp>agraphs 7,a7 & 7,b71 respectively4 7,d7 ,section #dji;,a7d77#b77;,a7 is am5d$ by /rik+ subp>agraph 7,a7 or 7,b7 ( section #bai7;g77#e7 7)\t reg>d to subp>agraph 7,a77iii77 & ins]t+ section #djh7p77#b77;,d77ii7 7)\t reg>d to subclause 7,,iii7 !re(74 7,e7 ,section #eja7;c77#ah77;,d77i7 is am5d$ by /rik+ section #bai7;b77#c7 & ins]t+ section #bai7;a74 7,f7 ,section #hgg;,a7d77#d77;,a7 is am5d$ by /rik+ section #bai7;g77#e7 & ins]t+ #djh7p77#b77;,d77ii74 7,g7 ,section #ffeb is am5d$ by /rik+ subsection 7g74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afjc4 ,inflation adju/m5t = ,ro? ,,ira contributions 7a7 ,9 g5]al ,subsection 7c7 ( section #djh;,a1 z am5d$ by ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,co/-(-liv+ adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjbc1 ! doll> am\nt 9 p>agraph 7#a77;,a77i7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjbb = cal5d> ye> #bjab 9 clause 7ii7 !re(4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ejj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ejj4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afjd4 ,repeal ( special rule p]mitt+ re*>act]ization ( ,ro? ,,ira contributions z traditional ,,ira contributions 7a7 ,9 g5]al ,section #djh;,a7d7 is am5d$ by /rik+ p>agraph 7#f7 & by r$esignat+ p>agraph 7#g7 z p>agraph 7#f74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afje4 ,repeal ( exception to #aj-p]c5t p5alty = fir/ home pur*ases 7a7 ,9 g5]al ,section #gb7t77#b7 is am5d$ by /rik+ subp>agraph 7,f74 7b7 ,ro? ,i,r,as ,subp>agraph 7,a7 ( section #djh;,a7d77#b7 is am5d$ by ins]t+ or at ! end ( clause 7ii71 & by /rik+ 1 or at ! end ( clause 7iii7 & ins]t+ a p]iod1 & by /rik+ clause 7iv74 7c7 ,con=m+ am5dm5t 7#a7 ,section #gb7t7 is am5d$ by /rik+ p>agraph 7#h74 7#b7 ,section #djh;,a7d71 z am5d$ by ?is ,act1 is am5d$ by /rik+ p>agraph 7#e7 & by r$esignat+ p>agraph 7#f7 z p>agraph 7#e74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 #b ,employ]-,provid$ ,plans #afaa4 ,t]m9ation = new ,s,e,ps 7a7 ,9 g5]al 7#a7 ,section #djh7k7 is am5d$ by r$esignat+ p>agraph 7#i7 z p>agraph 7#aj7 & by ins]t+ aft] p>agraph 7#h7 ! foll[+ new p>agraph3 7#i7 ,t]m9ation ,?is subsection %all n apply to ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,! prec$+ s5t5ce %all n apply to any simplifi$ employee p5sion ( an employ] if su* simplifi$ employee p5sion1 & ! t]ms !re(1 meet ! requirem5ts ( ?is subsection on & aft] su* date4 4 7#b7 ,section #djb7;h7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,t]m9ation ,?is subsection %all n apply to any simplifi$ employee p5sion ! arrangem5t = :i* is e/abli%$ aft] ,decemb] #ca1 #bjad4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afab4 ,t]m9ation = new ,,simple #dja7k7s 7a7 ,am5dm5ts relat+ to ,,simple #dja7k7s ,section #dja7k77#aa7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,t]m9ation ,?is p>agraph %all apply to a ca% or def]r$ arrangem5t = any plan ye> beg9n+ aft] ,decemb] #ca1 #bjad1 only if su* arrangem5t meets ! requirem5ts ( ?is p>agraph = ! la/ plan ye> beg9n+ be=e ,janu>y #a1 #bjae1 & = ea* plan ye> !reaft]4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afac4 ,rules relat$ to designat$ ,ro? contributions 7a7 ,applicable retirem5t plans :i* p]mit elective def]rals requir$ ,to accept designat$ ,ro? contributions 7#a7 ,9 g5]al ,p>agraph 7#cj7 ( section #dja7;a7 is am5d$-- 7,a7 by /rik+ def]rals4-- & all t foll[s ?r\gh ,9 ! case ( a tru/ & ins]t+ ! foll[+3 def]rals4-- 7,a7 ,9 g5]al ,9 ! case ( a tru/ 1 7,b7 by /rik+ unless ! plan provides t & ins]t+ ! foll[+3 unless ! plan-- 7i7 provides t 1 7,c7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7,d7 by add+ at ! end ! foll[+3 7ii7 except z provid$ 9 subp>agraph 7,b71 includes a qualifi$ ,ro? contribution program 7z def9$ 9 section #djb;,a7b774 7,b7 ,exception = c]ta9 small plans ,subp>agraph 7,a77ii7 %all n apply to any plan ( an eligible employ] 7z def9$ 9 section #djh7p77#b77;,c774 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #djb;,a7b77#a7 is am5d$ by /rik+ all t foll[s designat$ ,ro? contributions & ins]t+ a p]iod4 7,b7 ,! head+ ( section #djb;,a 7& ! item relat+ to su* section 9 ! table ( sections = "p ,i ( sub*apt] ,d ( *apt] #a7 is am5d$ by /rik+ ,optional treatm5t ( elective def]rals z ,ro? contributions & ins]t+ ,designat$ ,ro? contributions4 7b7 ,re/riction on portion ( elective def]ral limitation :i* may apply to traditional elective def]rals 7#a7 ,9 g5]al ,subp>agraph 7,a7 ( section #djb7;g77#a7 is am5d$ by /rik+ ! applicable doll> am\nt & ins]t+ #ej p]c5t 7#ajj p]c5t 9 ! case ( elective def]rals ) respect to any plan ( an eligible employ] 7z def9$ 9 section #djh7p77#b77;,c77 ( ! applicable doll> am\nt4 7#b7 ,gov]nm5t #deg7;b7 plans 7,a7 ,9 g5]al ,subsection 7b7 ( section #deg is am5d$ by /rik+ & at ! end ( p>agraph 7#e71 by r$esignat+ p>agraph 7#f7 z p>agraph 7#g71 & by ins]t+ aft] p>agraph 7#e7 ! foll[+ new p>agraph3 7#f7 :i*1 9 ! case ( a plan ma9ta9$ by an employ] describ$ 9 subsection 7e77#a77;,a71 meets requirem5ts simil> to ! requirem5ts ( section #dja7;a77#cj71 & 4 7,b7 ,con=m+ am5dm5t ,section #djb7;g77#a77;,a7 is am5d$ by ins]t+ & section #deg7;a77#a7 aft] 7h77#a77;,b74 7,c7 ,cross-ref]5ce ,= treatm5t ( am\nts def]r$ "u an eligible comp5sation plan ( a gov]nm5tal employ] z elective def]rals1 see section #afah7;b77#a7 ( ?is ,act4 7#c7 ,ro? elective def]rals p]mitt$ to ext5t ( full limitation am\nt 7,a7 ,9 g5]al ,section #djb;,a7c77#b77;,a7 is am5d$ to read z foll[s3 7,a7 ! applicable doll> am\nt 9 effect "u section #djb7;g77#a77;,b7 ) respect to ! employee = ! taxable ye>1 ov] 4 7,b7 ,con=m+ am5dm5ts 7i7 ,section #dja7;a77#cj7 is am5d$-- 7,i7 by ins]t+ 7includ+ contributions treat$ z elective def]rals "u section #djb;,a7a77#a77 aft] section #djb7;g77#c71 & 7,,ii7 by /rik+ section #djb7;g77#a77;,a7 & ins]t+ section #djb7;g77#a77;,b71 & t ! am\nt ( elective def]rals n includ$ 9 gross income may n exce$ ! am\nt ( ! limitation 9 effect "u section #djb7;g77#a77;,a714 7ii7 ,section #djb7;g77#a77;,c7 is am5d$-- 7,i7 by /rik+ ,9 addition to subp>agraph 7,a7 & ins]t+ ,= purposes ( subp>agraph 7,a74 7,,ii7 by /rik+ gross income %all n include & all t foll[s ?r\gh does n exce$ & ins]t+ ! applicable doll> am\nt 9 effect = ! taxable ye> "u subp>agraph 7,b7 %all be increas$ by4 7iii7 7,i7 ,s mu* ( section #djb7;g77#b77;,a7 z prec$es clause 7i7 is am5d$ to read z foll[s3 7,a7 ,9 g5]al ,if an individual's aggregate elective def]rals = a taxable ye> exce$ ! applicable doll> am\nt "u p>agraph 7#a7 7h]e9aft] 9 ?is p>agraph ref]r$ to z excess total def]rals7 or if an individual's aggregate elective def]rals 7disreg>d+ designat$ ,ro? contributions & simple ,ro? contributions7 exce$ ! am\nt excludable "u p>agraph 7#a77;,a7 7h]e9aft] 9 ?is p>agraph ref]r$ to z excess non-,ro? def]rals7-- 4 7,,ii7 ,section #djb7;g77#b77;,a77i7 is am5d$ by /rik+ su* excess def]rals & ins]t+ su* excess total def]rals or excess non-,ro? def]rals4 7,,iii7 ,section #djb7;g77#b77;,c77ii7 is am5d$ by /rik+ ! excess def]ral & ins]t+ ! excess total def]ral or excess non-,ro? def]ral4 7,,iv7 ,section #djb;,a7d77#b77;,c7 is am5d$ by /rik+ excess def]ral & ins]t+ excess total def]ral4 7,v7 ,section #djb;,a7d77#c7 is am5d$ by /rik+ excess def]ral ea* place x appe>s & ins]t+ excess total def]ral4 7,,vi7 ,section #djb7;g77#a77;,a7 is am5d$ by /rik+ ! second s5t5ce4 7iv7 ,section #djb;,a7c77#a77;,a7 is am5d$ by /rik+ )\t reg>d to ?is section & ins]t+ 7det]m9$ )\t reg>d to ?is section & section #djb7;g774 7#d7 ,report+ by employ]s ,section #fjea7;a77#h7 is am5d$ by ins]t+ aft] 7z def9$ 9 section #djb;,a7 ! foll[+3 1 & ! type ( plan "u :i* am\nts are def]r$ or contribut$4 7c7 ,,simple ,ro? retirem5t acc\nts p]mitt$ 7#a7 ,9 g5]al ,subsection 7p7 ( section #djh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,ro? contributions ,= purposes ( ?is section-- 7,a7 ,9 g5]al ,if a qualifi$ sal>y r$uction arrangem5t ) respect to a simple retirem5t acc\nt includes a simple ,ro? contribution program1 any simple ,ro? contribution made by an employ] pursuant to su* program %all be treat$ z an elective employ] contribution1 except t su* contribution %all be paid to a ,ro? ,,ira & %all n be excludable f gross income4 7,b7 ,simple ,ro? contribution program ,! t]m simple ,ro? contribution program means a program "u :i* an employee may elect to make simple ,ro? contributions4 7,c7 ,simple ,ro? contribution ,! t]m simple ,ro? contribution means any elective employ] contribution :i*-- 7i7 is excludable f gross income ( an employee )\t reg>d to ?is p>agraph1 & 7ii7 ! employee designates 7at su* "t & 9 su* mann] z ! ,secret>y may prescribe7 z n be+ s excludable4 7,d7 ,limitation ,9 ! case ( an eligible employ] :i* elects ! application ( ?is subp>agraph ) respect to ! simple retirem5t acc\nts e/abli%$ pursuant to a qualifi$ sal>y r$uction arrangem5t ( su* employ]1 not)/&+ p>agraph 7#b77;,e71 ! applicable doll> am\nt = purposes ( p>agraph 7#b77;,a77ii71 %all be equal to-- 7i7 9 ! case ( any su* acc\nt :i* is n designat$ z a ,ro? ,,ira1 #ej p]c5t ( ! applicable doll> am\nt 9 effect "u section #djb7;g77#a77;,b7 = ! taxable ye>1 & 7ii7 9 ! case ( any su* acc\nt :i* is designat$ z a ,ro? ,,ira1 ! excess 7if any7 (-- 7,i7 ! applicable doll> am\nt 9 effect "u section #djb7;g77#a77;,b7 = ! taxable ye>1 ov] 7,,ii7 ! aggregate am\nt ( elective employ] contributions to any acc\nt describ$ 9 clause 7i74 ,9 ! case ( a simple retirem5t acc\nt ) respect to :i* ! application ( ?is subp>agraph is elect$1 ! employ] %all n be treat$ z an eligible employ] = purposes ( section #djb7;g77#a77;,a71 & ! applicable doll> am\nt ) respect to any eligible p>ticipant 7z def9$ 9 section #dad7v77 %all1 not)/&+ section #dad7v77#b77;,b77ii71 be det]m9$ by ref]5ce to section #djb7;g77#a77;,c74 4 7#b7 ,coord9ation ) maximum ,ro? limitation ,subsection 7c7 ( section #djh;,a1 z am5d$ by ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ab7 ,increase 9 maximum limitation = ,,simple ,ro? ,9 ! case ( any simple retirem5t acc\nt1 subp>agraphs 7,a77i7 & 7,b7 ( p>agraph 7#a7 %all be appli$ by disreg>d+ any contributions made to a simple retirem5t acc\nt & any qualifi$ rollov] contributions4 4 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #djh;,a7f77#a7 is am5d$ by /rik+ or a simple retirem5t acc\nt4 7,b7 ,section #fjea7;a77#h71 z am5d$ by ?is ,act1 is am5d$ by ins]t+ aft] 7z def9$ 9 section #djb;,a7 ! foll[+3 & simple ,ro? contributions 7z def9$ 9 section #djh7p77#aa77;,c774 7d7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to plan ye>s & taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,subsection 7c7 ,! am5dm5ts made by subsection 7c7 %all apply to cal5d> ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afad4 ,modifications ( requir$ di/ribution rules = p5sion plans 7a7 ,9 g5]al ,section #dja7;a77#i77;,b7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ to read z foll[s3 7,b7 ,requir$ di/ributions :]e employee dies be=e entire int]e/ is di/ribut$ 7i7 #e-ye> g5]al rule ,a tru/ %all n con/itute a qualifi$ tru/ "u ?is section unless ! plan provides t1 if an employee dies be=e ! di/ribution ( ! employee's int]e/ 7:e!r or n su* di/ribution has begun 9 accordance ) subp>agraph 7,a771 ! entire int]e/ ( ! employee w be di/ribut$ )9 #e ye>s aft] ! dea? ( su* employee4 7ii7 ,exception = eligible designat$ b5efici>ies ,if-- 7,i7 any portion ( ! employee's int]e/ is payable to 7or = ! b5efit (7 an eligible designat$ b5efici>y1 7,,ii7 su* portion w be di/ribut$ 79 accordance ) regulations7 ov] ! life ( su* eligible designat$ b5efici>y 7or ov] a p]iod n ext5d+ beyond ! life expectancy ( su* b5efici>y71 & 7,,iii7 su* di/ributions beg9 n lat] ?an #a ye> aft] ! date ( ! employee's dea? or su* lat] date z ! ,secret>y may by regulations prescribe1 !n1 = purposes ( clause 7i7 & except z provid$ 9 clause 7iv7 or subp>agraph 7,e77iii71 ! portion ref]r$ to 9 subclause 7,i7 %all be treat$ z di/ribut$ on ! date on :i* su* di/ributions beg94 7iii7 ,special rule = surviv+ sp\se ( employee ,if ! eligible designat$ b5efici>y ref]r$ to 9 clause 7ii77,i7 is ! surviv+ sp\se ( ! employee-- 7,i7 ! date on :i* ! di/ributions are requir$ to beg9 "u clause 7ii77,,iii7 %all n be e>li] ?an ! date on :i* ! employee w\ld h atta9$ age #gja_/b1 & 7,,ii7 if ! surviv+ sp\se dies be=e ! di/ributions to su* sp\se beg91 ?is subp>agraph %all be appli$ z if ! surviv+ sp\se 7 ! employee4 7iv7 ,rules ^u dea? ( eligible designat$ b5efici>y ,if an eligible designat$ b5efici>y dies be=e ! portion ( an employee's int]e/ describ$ 9 clause 7ii7 is entirely di/ribut$1 clause 7ii7 %all n apply to any b5efici>y ( su* eligible designat$ b5efici>y & ! rema9d] ( su* portion %all be di/ribut$ )9 #e ye>s aft] ! dea? ( su* b5efici>y4 4 7b7 ,def9ition ( eligible designat$ b5efici>y ,section #dja7;a77#i77;,e7 ( su* ,code is am5d$ to read z foll[s3 7,e7 ,def9itions & rules relat+ to designat$ b5efici>y ,= purposes ( ?is p>agraph-- 7i7 ,designat$ b5efici>y ,! t]m designat$ b5efici>y means any individual designat$ z a b5efici>y by ! employee4 7ii7 ,eligible designat$ b5efici>y ,! t]m eligible designat$ b5efici>y means1 ) respect to any employee1 any designat$ b5efici>y :o1 z ( ! date ( dea? ( ! employee1 is-- 7,i7 ! surviv+ sp\se ( ! employee1 7,,ii7 subject to clause 7iii71 a *ild ( ! employee :o has n atta9$ age #bb1 7,,iii7 disabl$ 7)9 ! mean+ ( section #gb7m77#g771 7,,iv7 a *ronically ill individual 7)9 ! mean+ ( section #ggjb;,b7c77#b71 except t ! requirem5ts ( subp>agraph 7,a77i7 !re( %all only be treat$ z met if !re is a c]tification t1 z ( su* date1 ! p]iod ( inability describ$ 9 su* subp>agraph ) respect to ! individual is an indef9ite "o t is reasonably expect$ to be l5g?y 9 nature71 or 7,v7 an individual n describ$ 9 any ( ! prec$+ subp>agraphs :o is n m ?an #aj ye>s y\ng] ?an ! employee4 7iii7 ,special rule = *ildr5 ,subject to subp>agraph 7,f71 an individual describ$ 9 clause 7ii77,,ii7 %all cease to be an eligible designat$ b5efici>y z ( ! date ! individual atta9s age #bb & ! requirem5t ( subp>agraph 7,b77i7 %all n be treat$ z met ) respect to any rema9+ portion ( an employee's int]e/ payable to ! individual unless su* portion is di/ribut$ )9 #e ye>s aft] su* date4 4 7c7 ,requir$ beg9n+ date ,section #dja7;a77#i77;,c7 ( su* ,code is am5d$ by add+ at ! end ! foll[+ new clause3 7v7 ,employees becom+ #e-p]c5t own]s aft] age #gja_/b ,if an employee becomes a #e-p]c5t own] 7z def9$ 9 section #daf7 ) respect to a plan ye> end+ 9 a cal5d> ye> aft] ! cal5d> ye> 9 :i* ! employee atta9s age #gja_/b1 !n clause 7i77,,ii7 %all be appli$ by sub/itut+ ! cal5d> ye> 9 :i* ! employee became su* an own] = ! cal5d> ye> 9 :i* ! employee retires4 4 7d7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to di/ributions ) respect to employees :o die aft] ,decemb] #ca1 #bjad4 7#b7 ,requir$ beg9n+ date ,! am5dm5t made by subsection 7c7 %all apply to employees becom+ a #e-p]c5t own] ) respect to plan ye>s end+ 9 cal5d> ye>s beg9n+ be=e1 on1 or aft] ! date ( ! enactm5t ( ?is ,act1 except t-- 7,a7 if1 )\t reg>d to su* am5dm5t1 an employee's requir$ beg9n+ date occurs be=e ,april #a1 #bjae1 su* am5dm5t %all n result 9 an e>li] requir$ beg9n+ date = su* employee1 & 7,b7 if1 solely by reason ( su* am5dm5t1 an employee's requir$ beg9n+ date w\ld occur be=e ,april #a1 #bjae1 su* employee's requir$ beg9n+ date %all occur on ,april #a1 #bjae4 7#c7 ,exception = c]ta9 b5efici>ies ,if a designat$ b5efici>y ( an employee :o dies be=e ,janu>y #a1 #bjae1 dies aft] ,decemb] #ca1 #bjad-- 7,a7 ! am5dm5ts made by ?is section %all apply to any b5efici>y ( su* designat$ b5efici>y1 & 7,b7 ! designat$ b5efici>y %all be treat$ z an eligible designat$ b5efici>y = purposes ( apply+ section #dja7;a77#i77;,b77iv7 ( su* ,code 7z 9 effect aft] ! am5dm5ts made by ?is section74 7#d7 ,exception = c]ta9 exi/+ annuity contracts 7,a7 ,9 g5]al ,! am5dm5ts made by ?is section %all n apply to a qualifi$ annuity :i* is a b9d+ annuity contract 9 effect on ! date ( ! enactm5t ( ?is ,act & at all times !reaft]4 7,b7 ,qualifi$ annuity contract ,= purposes ( ?is p>agraph1 ! t]m qualifi$ annuity means1 ) respect to an employee1 an annuity-- 7i7 :i* is a comm]cial annuity 7z def9$ 9 section #cdje7;e77#f7 ( su* ,code7 or payable by a def9$ b5efit plan1 7ii7 "u :i* ! annuity paym5ts are sub/antially equal p]iodic paym5ts 7n less frequ5tly ?an annually7 ov] ! lives ( su* employee & a designat$ b5efici>y 7or ov] a p]iod n ext5d+ beyond ! life expectancy ( su* employee or ! life expectancy ( su* employee & a designat$ b5efici>y7 9 accordance ) ! regulations describ$ 9 section #dja7;a77#i77;,a77ii7 ( su* ,code 7z 9 effect be=e su* am5dm5ts7 & :i* meets ! o!r requirem5ts ( ?is section #dja7;a77#i7 ( su* ,code 7z s 9 effect7 ) respect to su* paym5ts1 & 7iii7 ) respect to :i*-- 7,i7 annuity paym5ts to ! employee h begun be=e ,janu>y #a1 #bjae1 & ! employee has made an irrevocable election be=e su* date z to ! me?od & am\nt ( ! annuity paym5ts to ! employee or any designat$ b5efici>ies1 or 7,,ii7 if subclause 7,i7 does n apply1 ! employee has made an irrevocable election be=e ! date ( ! enactm5t ( ?is ,act z to ! me?od & am\nt ( ! annuity paym5ts to ! employee or any designat$ b5efici>ies4 #afae4 ,r$uction 9 m9imum age = all[able 9-s]vice di/ributions 7a7 ,9 g5]al ,section #dja7;a77#cf7 is am5d$ by /rik+ age #fb & ins]t+ age #eia_/b4 7b7 ,application to gov]nm5tal section #deg7;b7 plans ,clause 7i7 ( section #deg7;d77#a77;,a7 is am5d$ by ins]t+ 79 ! case ( a plan ma9ta9$ by an employ] describ$ 9 subsection 7e77#a77;,a71 age #eia_/b7 be=e ! comma at ! end4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions made aft] ,decemb] #ca1 #bjad4 #afaf4 ,modification ( rules gov]n+ h>d%ip di/ributions 7a7 ,9 g5]al ,n lat] ?an #a ye> aft] ! date ( ! enactm5t ( ?is ,act1 ! ,secret>y ( ! ,treasury %all modify ,treasury ,regulation section #a4dja7k7-#a7;d77#c77;iv77,e7 to-- 7#a7 delete ! #f-mon? prohibition on contributions impos$ by p>agraph 7#b7 !re(1 & 7#b7 to make any o!r modifications necess>y to c>ry out ! purposes ( section #dja7k77#b77;,b77i77,,iv7 ( ! ,int]nal ,rev5ue ,code ( #aihf4 7b7 ,effective date ,! revis$ regulations "u ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afag4 ,ext5d$ rollov] p]iod = ! rollov] ( plan loan (fset am\nts 9 c]ta9 cases 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #djb7;c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,rollov] ( c]ta9 plan loan (fset am\nts 7i7 ,9 g5]al ,9 ! case ( a qualifi$ plan loan (fset am\nt1 p>agraph 7#a7 %all n apply to any transf] ( su* am\nt made aft] ! due date 7includ+ ext5sions7 = fil+ ! return ( tax = ! taxable ye> 9 :i* su* am\nt is treat$ z di/ribut$ f a qualifi$ employ] plan4 7ii7 ,qualifi$ plan loan (fset am\nt ,= purposes ( ?is subp>agraph1 ! t]m qualifi$ plan loan (fset am\nt means a plan loan (fset am\nt :i* is treat$ z di/ribut$ f a qualifi$ employ] plan to a p>ticipant or b5efici>y solely by reason (-- 7,i7 ! t]m9ation ( ! qualifi$ employ] plan1 or 7,,ii7 ! failure to meet ! repaym5t t]ms ( ! loan f su* plan because ( ! sep>ation f s]vice ( ! p>ticipant 7:e!r due to lay(f1 cessation ( bus9ess1 t]m9ation ( employm5t1 or o!rwise74 7iii7 ,plan loan (fset am\nt ,= purposes ( clause 7ii71 ! t]m plan loan (fset am\nt means ! am\nt by :i* ! p>ticipant's accru$ b5efit "u ! plan is r$uc$ 9 ord] to repay a loan f ! plan4 7iv7 ,limitation ,?is subp>agraph %all n apply to any plan loan (fset am\nt unless su* plan loan (fset am\nt relates to a loan to :i* section #gb7p77#a7 does n apply by reason ( section #gb7p77#b74 7v7 ,qualifi$ employ] plan ,= purposes ( ?is subsection1 ! t]m qualifi$ employ] plan has ! mean+ giv5 su* t]m by section #gb7p77#d74 4 7b7 ,con=m+ am5dm5t ,subp>agraph 7,a7 ( section #djb7;c77#c7 is am5d$ by /rik+ subp>agraph 7,b7 & ins]t+ subp>agraphs 7,b7 & 7,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afah4 ,coord9ation ( contribution limitations = #djc7;b7 plans & gov]nm5tal #deg7;b7 plans 7a7 #djc7;b7 plans 7#a7 ,elim9ation ( special cat*-up rule ,subsection 7g7 ( section #djb is am5d$ by /rik+ p>agraph 7#g7 & by r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#b7 ,elim9ation ( po/ t]m9ation non-elective contributions ,subsection 7b7 ( section #djc is am5d$-- 7,a7 9 p>agraph 7#c71 by /rik+ = ! mo/ rec5t p]iod & all t foll[s ?r\gh m ?an five ye>s1 & 7,b7 by /rik+ p>agraph 7#d74 7#c7 ,elim9ation ( increas$ contribution limit = *ur* plans ,subsection 7c7 ( section #dae is am5d$ by /rik+ p>agraph 7#g74 7#d7 ,elim9ation ( sep>ate #dae7;c7 limits ,p>agraph 7#d7 ( section #dae7k7 is am5d$ by /rik+ ea* employ] ) respect to :i* ! p>ticipant has ! control requir$ & ins]t+ ! employ] & ea* employ] :i* is "p ( a controll$ gr\p or "u common control4 7b7 #deg7;b7 plans 7#a7 ,elim9ation ( sep>ate def]ral limit ,p>agraph 7#c7 ( section #djb7;g7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,c71 by /rik+ ! p]iod at ! end ( subp>agraph 7,d7 & ins]t+ 1 &1 & by ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 any am\nt def]r$ "u an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a74 4 7#b7 ,tak5 into acc\nt "u limitation = def9$ contribution plans 7,a7 ,9 g5]al ,p>agraph 7#b7 ( section #dae7;a7 is am5d$ by /rik+ or at ! end ( subp>agraph 7,b71 by ins]t+ or at ! end ( subp>agraph 7,c71 & by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a71 4 7,b7 ,def9ition ,p>agraph 7#a7 ( section #dae7k7 is am5d$ by /rik+ or at ! end ( subp>agraph 7,c71 by /rik+ ! p]iod at ! end ( subp>agraph 7,d7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new subp>agraph3 7,e7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a74 4 7#c7 ,elim9ation ( special cat*-up rule ,p>agraph 7#c7 ( section #deg7;b7 is am5d$ by ins]t+ 1 9 ! case ( an eligible employ] describ$ 9 subsection 7e77#a77;,b71 aft] :i*4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #be;,b7d77#a77;,b7 is am5d$-- 7,a7 by /rik+ clause 7ii71 & 7,b7 by /rik+ ! am\nt (-- & all t foll[s ?r\gh any elective def]rals & ins]t+ ! foll[+3 ! am\nt ( any elective def]rals4 7#b7 ,section #djb;,a7e77#b7 is am5d$-- 7,a7 by /rik+ 1 & & all t foll[s & ins]t+ a p]iod1 & 7,b7 by /rik+ means-- & all t foll[s ?r\gh any elective def]ral describ$ 9 subp>agraph 7,a7 or 7,c7 & ins]t+ ! foll[+3 means any elective def]ral describ$ 9 7,a71 7,c71 or 7,e74 7#c7 ,section #deg7;e7 is am5d$ by /rik+ p>agraph 7#ah74 7#d7 ,section #dad7u77#b77;,c7 is am5d$ by ins]t+ by an eligible employ] describ$ 9 section #deg7;e77#a77;,b7 aft] 7z def9$ 9 section #deg7;b774 7#e7 ,section #dad7v77#b77;,d7 is am5d$-- 7,a7 by /rik+ clauses 7i71 7ii71 & 7iv7 (1 & 7,b7 by /rik+ 1 & plans describ$ 9 clause 7iii7 & all t foll[s ?r\gh ! end & ins]t+ a p]iod4 7#f7 ,section #dad7v77#c77;,a77i7 is am5d$ by /rik+ 7det]m9$ )\t reg>d to section #deg7;b77#c774 7#g7 ,section #dad7v77#f77;,b7 is am5d$ by /rik+ subsection 7u77#b77;,c7 & ins]t+ section #djb7;g77#c74 7#h7 ,section #dad7v77#f7 is am5d$ by /rik+ subp>agraph 7,c74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to plan ye>s & taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afai4 ,application ( #aj-p]c5t e>ly di/ribution tax to gov]nm5tal #deg plans 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #gb7t7 is am5d$ by ins]t+ or an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a71 aft] section #digd7;c7714 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to )drawals on or aft] ,febru>y #bf1 #bjad4 #afbj4 ,inflation adju/m5ts = qualifi$ plan b5efit & contribution limitations 7a7 ,def9$ b5efit plans 7#a7 ,curr5t limit ,subp>agraph 7,a7 ( section #dae7;b77#a7 is am5d$ by /rik+ #afj1jjj & ins]t+ #baj1jjj4 7#b7 ,inflation adju/m5t ,section #dae7;d7 is am5d$-- 7,a7 9 p>agraph 7#a77;,a7-- 7i7 by /rik+ #afj1jjj & ins]t+ #baj1jjj1 & 7ii7 by ins]t+ = cal5d> ye>s beg9n+ aft] #bjbc aft] subsection 7b77#a77;,a71 7,b7 p>agraph 7#c77;,a71 by /rik+ ,july #a1 #bjja & ins]t+ ,july #a1 #bjbb4 7b7 ,def9$ contribution plans 7#a7 ,curr5t limit ,subp>agraph 7,a7 ( section #dae7;c77#a7 is am5d$ by /rik+ #dj1jjj & ins]t+ #eb1jjj4 7#b7 ,inflation adju/m5t ,subsection 7d7 ( section #dae is am5d$-- 7,a7 9 p>agraph 7#a77;,c7-- 7i7 by /rik+ #dj1jjj & ins]t+ #eb1jjj1 7ii7 by ins]t+ = cal5d> ye>s beg9n+ aft] #bjbc aft] subsection 7c77#a77;,a71 7,b7 9 p>agraph 7#c77;,d71 by /rik+ ,july #a1 #bjja & ins]t+ ,july #a1 #bjbb4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #dae7;b77#b7 is am5d$ by /rik+ #afj1jjj ea* place x appe>s 9 subp>agraphs 7,c7 & 7,d7 & ins]t+ #baj1jjj4 7#b7 ,section #dae7;b7 is am5d$ by /rik+ #afj1jjj 9 ! f\r? s5t5ce ( p>agraph 7#g7 & ins]t+ #baj1jjj4 7#c7 ,! head+s = subp>agraphs 7,c7 & 7,d7 ( section #dae7;b77#b7 are ea* am5d$ by /rik+ #afj1jjj & ins]t+ #baj1jjj4 7#d7 ,! head+ = subp>agraph 7,a7 ( section #dae7;d77#c7 is am5d$ by /rik+ #afj1jjj & ins]t+ #baj1jjj4 7#e7 ,! head+ = subp>agraph 7,d7 ( section #dae7;d77#c7 is am5d$ by /rik+ #dj1jjj & ins]t+ #eb1jjj4 7#f7 ,! head+ = subp>agraph 7,a7 ( section #dae7;d77#d7 is am5d$ by /rik+ #afj1jjj & ins]t+ #baj1jjj4 7#g7 ,! head+ = subp>agraph 7,b7 ( section #dae7;d77#d7 is am5d$ by /rik+ #dj1jjj & ins]t+ #eb1jjj4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to ye>s end+ ) or )9 a cal5d> ye> beg9n+ aft] #bjad4 #afba4 ,inflation adju/m5ts = qualifi$ plan elective def]ral limitations 7a7 ,curr5t limit ,subp>agraph 7,b7 ( section #djb7;g77#a7 is am5d$ by /rik+ %all be & all t foll[s & ins]t+ is #ag1ejj4 7b7 ,inflation adju/m5t ,p>agraph 7#d7 ( section #djb7;g7 is am5d$-- 7#a7 by /rik+ ,decemb] #ca1 #bjjf & ins]t+ ,decemb] #ca1 #bjbc1 7#b7 by /rik+ #ae1jjj & ins]t+ #ag1ejj1 & 7#c7 by /rik+ #bjje & ins]t+ #bjbb4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to plan ye>s & taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afbb4 ,inflation adju/m5ts = ,,simple retirem5t acc\nts 7a7 ,curr5t limit ,clause 7i7 ( section #djh7p77#b77;,e7 is am5d$ by /rik+ %all be & all t foll[s & ins]t+ %all be #ab1jjj4 7b7 ,inflation adju/m5t ,clause 7ii7 ( section #djh7p77#b77;,e7 is am5d$-- 7#a7 by /rik+ ,decemb] #ca1 #bjje & ins]t+ ,decemb] #ca1 #bjbc1 7#b7 by /rik+ #aj1jjj & ins]t+ #ab1jjj1 7#c7 by /rik+ #bjjd & ins]t+ #bjbb4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to cal5d> ye>s beg9n+ aft] #bjad4 #afbc4 ,inflation adju/m5ts = cat*-up contributions = c]ta9 employ] plans 7a7 ,curr5t limit 7#a7 ,plans o!r ?an simple #dja7k7 & simple retirem5t acc\nts ,clause 7i7 ( section #dad7v77#b77;,b7 is am5d$ by /rik+ det]m9$ 9 accordance ) ! foll[+ table & all t foll[s ?r\gh ! p]iod at ! end & ins]t+ #e1ejj44 7#b7 ,simple #dja7k7 & simple retirem5t acc\nts ,clause 7ii7 ( section #dad7v77#b77;,b7 is am5d$ by /rik+ det]m9$ 9 accordance ) ! foll[+ table & all t foll[s ?r\gh ! p]iod at ! end & ins]t+ #b1ejj44 7b7 ,inflation adju/m5t ,subp>agraph 7,c7 ( section #dad7v77#b7 is am5d$-- 7#a7 by /rik+ ,decemb] #ca1 #bjjf & ins]t+ ,decemb] #ca1 #bjbc1 7#b7 by /rik+ #e1jjj & ins]t+ #e1ejj1 & 7#c7 by /rik+ #bjje & ins]t+ #bjbb4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #afbd4 ,inflation adju/m5ts = gov]nm5tal & tax-exempt organization plans 7a7 ,curr5t limit ,subp>agraph 7,a7 ( section #deg7;b77#b7 is am5d$ by /rik+ ! applicable doll> am\nt & ins]t+ #ag1ejj4 7b7 ,inflation adju/m5t ,p>agraph 7#ae7 ( section #deg7;e7 is am5d$-- 7#a7 by /rik+ ,applicable doll> am\nt4-- & all t foll[s ?r\gh ,co/-(-liv+ adju/m5ts4--,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjjf & ins]t+ ! foll[+3 ,co/-(-liv+ adju/m5ts4--,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbc1 7#b7 by /rik+ ! #ae1jjj am\nt "u subp>agraph 7,a7 & ins]t+ ! #ag1ejj am\nt "u subsection 7b77#b77;,a71 & 7#c7 by /rik+ #bjje & ins]t+ #bjbb4 7c7 ,con=m+ am5dm5t ,section #deg7;f77#d77;,a7 is am5d$ by /rik+ twice ! applicable doll> limit det]m9$ "u subsection 7e77#ae7 & ins]t+ twice ! am\nt 9 effect "u subsection 7b77#b77;,a74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,h ,c]ta9 provisions relat$ to memb]s ( ,indian tribes #agja4 ,indian g5]al welf>e b5efits 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e section #adj ! foll[+ new section3 #aci;,e4 ,indian g5]al welf>e b5efits 7a7 ,9 g5]al ,gross income does n include ! value ( any ,indian g5]al welf>e b5efit4 7b7 ,indian g5]al welf>e b5efit ,= purposes ( ?is section1 ! t]m ,indian g5]al welf>e b5efit includes any paym5t made or s]vices provid$ to or on behalf ( a memb] ( an ,indian tribe 7or any sp\se or dep5d5t ( su* a memb]7 pursuant to an ,indian tribal gov]nm5t program1 b only if-- 7#a7 ! program is adm9i/]$ "u specifi$ writt5 guidel9es & does n discrim9ate 9 favor ( memb]s ( ! gov]n+ body ( ! tribe1 & 7#b7 ! b5efits provid$ "u su* program-- 7,a7 are available to any tribal memb] :o meets su* guidel9es1 7,b7 are = ! promotion ( g5]al welf>e1 7,c7 are n lavi% or extravagant1 & 7,d7 are n comp5sation = s]vices4 7c7 ,def9itions & special rules ,= purposes ( ?is section-- 7#a7 ,indian tribal gov]nm5t ,= purposes ( ?is section1 ! t]m ,indian tribal gov]nm5t includes any ag5cies or in/rum5talities ( an ,indian tribal gov]nm5t & any ,alaska ,native regional or village corporation1 z def9$ 91 or e/abli%$ pursuant to1 ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afja1 et seq474 7#b7 ,dep5d5t ,! t]m dep5d5t has ! mean+ giv5 su* t]m by section #ggje1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b71 & 7d77#a77;,b74 7#c7 ,lavi% or extravagant ,! ,secret>y %all1 9 consultation ) ! ,tribal ,advisory ,committee 7z e/abli%$ "u section #agjb ( ! ,tax ,re=m ,act ( #bjad71 e/abli% guidel9es = :at con/itutes lavi% or extravagant b5efits ) respect to ,indian tribal gov]nm5t programs4 7#d7 ,e/abli%m5t ( tribal gov]nm5t program ,a program %all n fail to be treat$ z an ,indian tribal gov]nm5t program solely by reason ( ! program be+ e/abli%$ by tribal cu/om or gov]nm5t practice4 4 7b7 ,con=m+ am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e ! item relat+ to section #adj ! foll[+ new item3 ,sec4 #aci;,e4 ,indian g5]al welf>e b5efits4 4 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s = :i* ! p]iod ( limitation on refund or cr$it "u section #feaa ( ! ,int]nal ,rev5ue ,code ( #aihf has n expir$4 7#b7 ,"o-ye> waiv] ( /atute ( limitations ,if ! p]iod ( limitation on a cr$it or refund result+ f ! am5dm5ts made by subsection 7a7 expires be=e ! end ( ! #a-ye> p]iod beg9n+ on ! date ( ! enactm5t ( ?is ,act1 refund or cr$it ( su* ov]paym5t 7to ! ext5t attributable to su* am5dm5ts7 may1 nev]!less1 be made or all[$ if claim !re= is fil$ be=e ! close ( su* #a-ye> p]iod4 #agjb4 ,tribal ,advisory ,committee 7a7 ,e/abli%m5t ,! ,secret>y ( ! ,treasury %all e/abli% a ,tribal ,advisory ,committee 7h]e9aft] 9 ?is subsection ref]r$ to z ! ,committee74 7b7 ,duties 7#a7 ,implem5tation ,! ,committee %all advise ! ,secret>y on matt]s relat+ to ! taxation ( ,indians4 7#b7 ,education & tra9+ ,! ,secret>y %all1 9 consultation ) ! ,committee1 e/abli% & require-- 7,a7 tra9+ & education = int]nal rev5ue field ag5ts :o adm9i/] & en=ce int]nal rev5ue laws ) respect to ,indian tribes on ,f$]al ,indian law & ! ,f$]al ,gov]nm5t's unique legal treaty & tru/ relation%ip ) ,indian tribal gov]nm5ts1 & 7,b7 tra9+ ( su* int]nal rev5ue field ag5ts1 & provision ( tra9+ & te*nical assi/ance to tribal f9ancial (fic]s1 ab\t implem5tation ( ?is ,act & ! am5dm5ts made !reby4 7c7 ,memb]%ip 7#a7 ,9 g5]al ,! ,committee %all be compos$ ( #g memb]s appo9t$ z foll[s3 7,a7 ,?ree memb]s appo9t$ by ! ,secret>y ( ! ,treasury4 7,b7 ,"o memb] appo9t$ by ! ,*airman1 & "o memb] appo9t$ by ! ,rank+ ,memb]1 ( ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives4 7,c7 ,"o memb] appo9t$ by ! ,*airman1 & "o memb] appo9t$ by ! ,rank+ ,memb]1 ( ! ,committee on ,f9ance ( ! ,s5ate4 7#b7 ,t]m 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ea* memb]'s t]m %all be #d ye>s4 7,b7 ,initial /agg]+ ,! fir/ appo9tm5ts made by ! ,secret>y "u p>agraph 7#a77;,a7 %all be = a t]m ( #b ye>s4 #agjc4 ,o!r relief = ,indian tribes 7a7 ,waiv] ( p5alties & int]e/ ,! ,secret>y ( ! ,treasury may waive any int]e/ & p5alties impos$ "u ! ,int]nal ,rev5ue ,code ( #aihf on any ,indian tribal gov]nm5t or memb] ( an ,indian tribe 7or any sp\se or dep5d5t ( su* a memb]7 to ! ext5t su* int]e/ & p5alties relate to exclud+ a paym5t or b5efit f gross income "u ! g5]al welf>e exclusion4 7b7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,indian tribal gov]nm5t ,! t]m ,indian tribal gov]nm5t %all h ! mean+ giv5 su* t]m by section #aci;,e ( su* ,code1 z add$ by ?is ,act4 7#b7 ,indian tribe ,! t]m ,indian tribe %all h ! mean+ giv5 su* t]m by section #aci;,d7c77#a7 ( su* ,code1 z am5d$ by ?is ,act4 ,,ii ,alt]native ,m9imum ,tax ,repeal #bjja4 ,repeal ( alt]native m9imum tax 7a7 ,9 g5]al ,sub*apt] ,a ( *apt] #a is am5d$ by /rik+ "p ,,vi 7& by /rik+ ! item relat+ to su* "p 9 ! table ( p>ts = sub*apt] ,a74 7b7 ,cr$it = prior ye> m9imum tax liability 7#a7 ,limitation ,subsection 7c7 ( section #ec is am5d$ to read z foll[s3 7c7 ,limitation ,! cr$it all[$ "u subsection 7a7 %all n exce$ ! regul> tax liability ( ! taxpay] r$uc$ by ! sum ( ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d4 4 7#b7 ,cr$its treat$ z refundable ,subsection 7e7 ( section #ec is am5d$ to read z foll[s3 7e7 ,portion ( cr$it treat$ z refundable 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ 9 #bjaf1 #bjag1 #bjah1 or #bjai1 ! limitation "u subsection 7c7 %all be increas$ by ! ,,amt refundable cr$it am\nt = su* ye>4 7#b7 ,,amt refundable cr$it am\nt ,= purposes ( p>agraph 7#a71 ! ,,amt refundable cr$it am\nt is an am\nt equal to #ej p]c5t 7#ajj p]c5t 9 ! case ( a taxable ye> beg9n+ 9 #bjai7 ( ! excess 7if any7 (-- 7,a7 ! m9imum tax cr$it det]m9$ "u subsection 7b7 = ! taxable ye>1 ov] 7,b7 ! m9imum tax cr$it all[$ "u subsection 7a7 = su* ye> 7be=e ! application ( ?is subsection = su* ye>74 7#c7 ,cr$it refundable ,= purposes ( ?is title 7o!r ?an ?is section71 ! cr$it all[$ by reason ( ?is subsection %all be treat$ z a cr$it all[$ "u subp>t ,c 7& n ?is subp>t74 7#d7 ,%ort taxable ye>s ,9 ! case ( any taxable ye> ( less ?an #cfe days1 ! ,,amt refundable cr$it am\nt det]m9$ "u p>agraph 7#b7 ) respect to su* taxable ye> %all be ! am\nt :i* be>s ! same ratio to su* am\nt det]m9$ )\t reg>d to ?is p>agraph z ! numb] ( days 9 su* taxable ye> be>s to #cfe4 4 7#c7 ,treatm5t ( ref]5ces ,section #ec7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,,amt t]m ref]5ces ,any ref]5ces 9 ?is subsection to section #ee1 #ef1 or #eg %all be treat$ z a ref]5ce to su* section z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad4 4 7#d7 ,repeal ( special rules ) respect to treatm5t ( inc5tive /ock options ,section #ec is am5d$ by /rik+ subsection 7f74 7c7 ,con=m+ am5dm5ts relat$ to ,,amt repeal 7#a7 ,section #b7;e71 z r$esignat$ by section #ajja1 is am5d$ by /rik+ sections #a & #ee & ins]t+ section #a4 7#b7 ,section #e7;a7 is am5d$ by /rik+ p>agraph 7#d74 7#c7 ,section #aa7;d7 is am5d$ by /rik+ ! taxes impos$ by subsection 7a7 & section #ee & ins]t+ ! tax impos$ by subsection 7a74 7#d7 ,section #ac1 z r$esignat$ by title ,i1 is am5d$ by /rik+ p>agraph 7#g74 7#e7 ,section #bf7;a7 is am5d$ to read z foll[s3 7a7 ,limitation bas$ on am\nt ( tax ,! aggregate am\nt ( cr$its all[$ by ?is subp>t = ! taxable ye> %all n exce$ ! taxpay]'s regul> tax liability = ! taxable ye>4 4 7#f7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,a74 7#g7 ,section #bf is am5d$ by /rik+ subsection 7c74 7#h7 ,section #ch7;c7 is am5d$-- 7,a7 by /rik+ p>agraphs 7#a7 ?r\gh 7#e71 7,b7 by r$esignat+ p>agraph 7#f7 z p>agraph 7#b71 7,c7 by ins]t+ be=e p>agraph 7#b7 7z s r$esignat$7 ! foll[+ new p>agraph3 7#a7 ,9 g5]al ,! cr$it all[$ "u subsection 7a7 = any taxable ye> %all n exce$ ! excess (-- 7,a7 ! sum (-- 7i7 s mu* ( ! regul> tax liability z does n exce$ #be1jjj1 plus 7ii7 #ge p]c5t ( s mu* ( ! regul> tax liability z exce$s #be1jjj1 ov] 7,b7 ! sum ( ! cr$its all[able "u subp>ts ,a & ,b ( ?is "p4 1 & 7,d7 by /rik+ subp>agraph 7,b7 ( p>agraph 7#a7 ea* place x appe>s 9 p>agraph 7#b7 7z s r$esignat$7 & ins]t+ clauses 7i7 & 7ii7 ( p>agraph 7#a77;,a74 7#i7 ,section #de;,d7g77#d77;,b7 is am5d$ by /rik+ or = purposes ( section #ee4 7#aj7 ,section #ed7;c77#a7 is am5d$ to read z foll[s3 7#a7 regul> tax liability 7z def9$ 9 section #bf7;b771 ov] 4 7#aa7 ,section #ed;,a7c77#a77;,a7 is am5d$ to read z foll[s3 7,a7 regul> tax liability 7z def9$ 9 section #bf7;b771 ov] 4 7#ab7 7,a7 ,section #ajh7;b77#b7 is am5d$ by /rik+ subp>agraph 7,c7 & by r$esignat+ subp>agraphs 7,d7 ?r\gh 7,g7 z subp>agraphs 7,c7 ?r\gh 7,f71 respectively4 7,b7 ,section #ajh7;b77#c77;,b7 is am5d$-- 7i7 by /rik+ subp>agraphs 7,b71 7,c71 & 7,g7 & ins]t+ subp>agraphs 7,b7 & 7,f7 ( p>agraph 7#b71 & 7ii7 by /rik+ subp>agraph 7,f7 & ins]t+ p>agraph 7#b77;,e74 7,c7 ,section #ajh7;b77#d77;,b7 is am5d$ by /rik+ subp>agraph 7,a7 or 7,d7 9 ! head+ & text !re( & ins]t+ subp>agraph 7,a7 or 7,c74 7,d7 ,section #ajh7;b77#d77;,c7 is am5d$ by /rik+ subp>agraphs 7,b7 & 7,g7 9 ! head+ & text !re( & ins]t+ subp>agraphs 7,b7 & 7,f74 7#ac7 ,section #afh7k77#b7 is am5d$ by /rik+ subp>agraph 7,g74 7#ad7 ,section #agc is am5d$ by /rik+ subsection 7b74 7#ae7 ,section #agd7;f7 is am5d$ to read z foll[s3 7f7 ,cross ref]5ce ,= adju/m5ts to basis ( prop]ty = am\nts all[$ z d$uctions z def]r$ exp5ses "u subsection 7b71 see section #ajaf7;a77#ad74 4 7#af7 ,section #bfc;,a7c7 is am5d$ by /rik+ p>agraph 7#f74 7#ag7 ,section #chb7l7 is am5d$ by /rik+ p>agraph 7#g7 & by r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#ah7 ,section #ddc 7relat+ to returns = a p]iod ( less ?an #ab mon?s7 adju/m5t 9 comput+ m9imum tax & tax pref]5ces7 is am5d$ by /rik+ subsection 7d7 & by r$esignat+ subsection 7e7 z subsection 7d74 7#ai7 ,section #fda7;c7 is am5d$-- 7,a7 9 p>agraph 7#b7 by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively1 & 7,b7 9 p>agraph 7#c71 by /rik+ p>agraph 7#b77;,c7 & ins]t+ p>agraph 7#b77;,b74 7#bj7 ,subsections 7b7 & 7c7 ( section #fff are ea* am5d$ by /rik+ 7o!r ?an ! tax impos$ by section #ee74 7#ba7 ,section #hae7;c77#b7 is am5d$ by /rik+ ! la/ s5t5ce4 7#bb7 ,section #hdg is am5d$-- 7,a7 by /rik+ ! la/ s5t5ce ( p>agraph 7#i71 & 7,b7 9 p>agraph 7#aj71 by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ subp>agraph 7,b71 & by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b74 7#bc7 ,section #hdh is am5d$ by /rik+ subsection 7i7 & by r$esignat+ subsection 7j7 z subsection 7i74 7#bd7 ,section #hfj;,e7a7 is am5d$ by /rik+ p>agraph 7#d74 7#be7 ,section #hga7;b77#a7 is am5d$ by /rik+ or #ee4 7#bf7 ,section #hhb7;a77#a7 is am5d$ by /rik+ #ee14 7#bg7 ,section #hig7;a7 is am5d$ to read z foll[s3 7a7 ,treatm5t z effectively connect$ ) unit$ /ates trade or bus9ess ,= purposes ( ?is title1 ga9 or loss ( a nonresid5t ali5 individual or a =eign corporation f ! disposition ( a ,unit$ ,/ates real prop]ty int]e/ %all be tak5 into acc\nt-- 7#a7 9 ! case ( a nonresid5t ali5 individual1 "u section #hga7;b77#a71 or 7#b7 9 ! case ( a =eign corporation1 "u section #hhb7;a77#a71 z if ! taxpay] 7 engag$ 9 a trade or bus9ess )9 ! ,unit$ ,/ates dur+ ! taxable ye> & z if su* ga9 or loss 7 effectively connect$ ) su* trade or bus9ess4 4 7#bh7 ,section #ijd7k7 is am5d$ to read z foll[s3 7k7 ,cross ref]5ce ,= increase ( limitation "u subsection 7a7 = taxes paid ) respect to am\nts receiv$ :i* 7 includ$ 9 ! gross income ( ! taxpay] = a prior taxable ye> z a ,unit$ ,/ates %>ehold] ) respect to a controll$ =eign corporation1 see section #ifj7;b74 4 7#bi7 ,section #iaa7;f7 is am5d$ to read z foll[s3 7f7 ,det]m9ation ( tax liability ,if1 = any taxable ye>1 any am\nt is exclud$ f gross income ( a taxpay] "u subsection 7a71 !n1 not)/&+ section #a1 if su* taxpay] has taxable income = su* taxable ye>1 ! tax impos$ by section #a = su* taxable ye> %all be equal to ! excess 7if any7 (-- 7#a7 ! tax :i* w\ld be impos$ by section #a = su* taxable ye> if ! taxpay]'s taxable income 7 increas$ by ! am\nt exclud$ "u subsection 7a7 = su* taxable ye>1 ov] 7#b7 ! tax :i* w\ld be impos$ by section #a = su* taxable ye> if ! taxpay]'s taxable income 7 equal to ! am\nt exclud$ "u subsection 7a7 = su* taxable ye>4 4 7#cj7 ,section #ifb7;a77#a7 is am5d$-- 7,a7 by /rik+ sections #a & #ee & ins]t+ section #a1 & 7,b7 by /rik+ sections #aa & #ee & ins]t+ section #aa4 7#ca7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bj74 7#cb7 ,section #abjb7;a77#d7 is am5d$ by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ 1 & & ins]t+ a p]iod at ! end ( subp>agraph 7,b71 & by /rik+ subp>agraph 7,c74 7#cc7 ,section #acgd7;b77#c77;,b7 is am5d$ by /rik+ ! la/ s5t5ce !re(4 7#cd7 ,section #acig;,e7c77#a7 is am5d$ to read z foll[s3 7#a7 regul> tax liability 7z def9$ 9 section #bf7;b71 ov] 4 7#ce7 ,section #aefa7;a7 is am5d$-- 7,a7 by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ ! comma at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraphs 7#c7 & 7#d71 & 7,b7 by /rik+ ! la/ s5t5ce4 7#cf7 ,section #fjae7;d77#b77;,b7 is am5d$ by /rik+ or #ee4 7#cg7 ,section #fdbe7;c77#a77;,a7 is am5d$-- 7,a7 by add+ plus at ! end ( clause 7i71 & 7,b7 by /rik+ clause 7ii7 & by r$esignat+ clause 7iii7 z clause 7ii74 7#ch7 ,section #ffed7;d77#b7 is am5d$-- 7,a7 9 clause 7i7 ( subp>agraph 7,b71 by /rik+ 1 alt]native m9imum taxable income11 & 7,b7 9 clause 7i7 ( subp>agraph 7,c71 by /rik+ 1 alt]native m9imum taxable income14 7#ci7 ,section #ffee7;e77#b77;,b7 is am5d$-- 7,a7 by /rik+ ,! taxable income1 alt]native m9imum taxable income1 & modifi$ alt]native taxable income %all & ins]t+ ,taxable income %all1 & 7,b7 by /rik+ clause 7iii74 7#dj7 ,section #ffee7;g77#a77;,a7 is am5d$-- 7,a7 by /rik+ clause 7ii71 & 7,b7 by r$esignat+ clauses 7iii7 & 7iv7 z clauses 7ii7 & 7iii71 respectively4 7#da7 ,section #fffb7;e77#c77;,c7 is am5d$ by /rik+ ! regul> tax 7z def9$ 9 section #ee7;c77 & ins]t+ ! regul> tax liability 7z def9$ 9 section #bf7;b774 7d7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,prior elections ) respect to c]ta9 tax pref]5ces ,s mu* ( ! am5dm5t made by subsection 7a7 z relates to ! repeal ( section #ei7;e7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 7#c7 ,treatm5t ( net op]at+ loss c>rybacks ,= purposes ( section #ef7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e its repeal71 ! am\nt ( any net op]at+ loss :i* may be c>ri$ back f a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 to taxable ye>s beg9n+ be=e ,janu>y #a1 #bjae1 %all be det]m9$ )\t reg>d to any adju/m5ts "u section #ef7;d77#b77;,a7 ( su* ,code 7z s 9 effect74 ,,iii ,bus9ess ,tax ,re=m ,a ,tax ,rates #cjja4 #be-p]c5t corporate tax rate 7a7 ,9 g5]al ,subsection 7b7 ( section #aa is am5d$ to read z foll[s3 7b7 ,am\nt ( tax 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am\nt ( ! tax impos$ by subsection 7a7 %all be #be p]c5t ( taxable income4 7#b7 ,phase-9 = taxable ye>s beg9n+ be=e #bjai 7,a7 ,9 g5]al ,9 ! case ( taxable ye>s beg9n+ be=e #bjai1 ! am\nt ( tax impos$ by subsection 7a7 %all be ! sum (-- 7i7 #be p]c5t ( s mu* ( ! taxable income z does n exce$ #ge1jjj1 & 7ii7 ! applicable p]c5tage ( s mu* ( taxable income z exce$s #ge1jjj4 7,b7 ,applicable p]c5tage ,= purposes ( ?is p>agraph1 ! applicable p]c5tage %all be det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( taxable ye>s beg9n+ dur+ cal5d> year,the applicable p]c5tage is3 #bjaecc #bjafca #bjagbi #bjahbg 4 7b7 ,con=m+ am5dm5ts 7#a7 ,p>agraphs 7#b77;,b7 & 7#f77;,a77ii7 ( section #hfj;,e7e7 are ea* am5d$ by /rik+ section #aa7;b77#a7 & ins]t+ section #aa7;b74 7#b7 7,a7 ,"p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abja 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ac1 z am5d$ & r$esignat$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraphs 7#d7 & 7#f71 & by r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7,c7 ,section #ebg7;b7 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by /rik+ all t prec$es is h]eby impos$ & ins]t+3 7b7 ,tax impos$ ,a tax 4 7,d7 ,sections #eid7;a7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja7;a7 & ins]t+ tax impos$ by section #aa4 7,e7 ,section #fia7;c77#d7 is am5d$ by /rik+ #abja14 7,f7 ,section #hja7;a7 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by /rik+ all t prec$es is h]eby impos$ & ins]t+3 7a7 ,tax impos$ ,a tax 4 7,g7 ,section #hca7;d7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7,h7 ,sections #hcb7;c77#e7 & #hcd7;b77#a77;,d7 are ea* am5d$ by /rik+ sec4 #abja & foll[+14 7,i7 ,section #heb7;b77#c77;,a7 is am5d$ by /rik+ section #abja7;a7 & ins]t+ section #aa7;b74 7,j7 ,section #heg7;b77#c7 is am5d$-- 7i7 by /rik+ subp>agraph 7,a7 & r$esignat+ subp>agraphs 7,b7 ?r\gh 7,f7 z subp>agraphs 7,a7 ?r\gh 7,e71 respectively1 7ii7 9 subp>agraph 7,c71 z s r$esignat$-- 7,i7 by /rik+ subp>agraph 7,a77ii7 9 clause 7i7 !re( & ins]t+ p>agraph 7#a71 7,,ii7 by /rik+ ! tax impos$ by subp>agraph 7,a77ii7 9 clauses 7ii7 & 7iv7 !re( & ins]t+ ! tax impos$ by p>agraph 7#a7 on undi/ribut$ capital ga91 7iii7 9 subp>agraph 7,e71 z s r$esignat$1 by /rik+ subp>agraph 7,b7 or 7,d7 & ins]t+ subp>agraph 7,a7 or 7,c71 & 7iv7 by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,undi/ribut$ capital ga9 ,= purposes ( ?is p>agraph1 ! t]m undi/ribut$ capital ga9 means ! excess ( ! net capital ga9 ov] ! d$uction = divid5ds paid 7z def9$ 9 section #efa7 det]m9$ ) ref]5ce to capital ga9 divid5ds only4 4 7,k7 ,section #hhb7;a77#a7 is am5d$ by /rik+ 1 or #abja7;a74 7,l7 ,section #acgd7;b7 is am5d$ by /rik+ p>agraph 7#d74 7,m7 ,section #acha7;b7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja & ins]t+ tax impos$ by section #aa4 7,n7 ,sections #fdbe7;c77#a77;,a77i7 & #ffee7;g77#a77;,a77i7 are ea* am5d$ by /rik+ or #abja7;a714 7#c7 7,a7 ,section #adde7;e77#a7 is am5d$-- 7i7 by /rik+ #ce p]c5t & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b71 & 7ii7 by /rik+ ( ! ga9 & ins]t+ multipli$ by ! ga94 7,b7 ,section #adde7;e77#b7 is am5d$ by /rik+ #ce p]c5t ( ! am\nt & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b7 multipli$ by ! am\nt4 7,c7 ,section #adde7;e77#f7 is am5d$-- 7i7 by /rik+ #ce p]c5t & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b71 & 7ii7 by /rik+ ( ! am\nt & ins]t+ multipli$ by ! am\nt4 7,d7 ,section #addf7;b77#b77;,b7 is am5d$ by /rik+ section #aa7;b77#a7 & ins]t+ section #aa7;b74 7#d7 ,section #heb7;b77#a7 is am5d$ by /rik+ ! la/ s5t5ce4 7#e7 7,a7 ,"p ,i ( sub*apt] ,b ( *apt] #e is am5d$ by /rik+ section #aeea 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ece7;c77#e7 is am5d$ to read z foll[s3 7#e7 ,cross ref]5ce ,= limitation on cr$it provid$ 9 p>agraph 7#b7 or 7#c7 9 ! case ( c]ta9 controll$ corporations1 see section #aefa4 4 7#f7 7,a7 ,section #aefa1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 #aefa4 ,limitation on accumulat$ e>n+s cr$it 9 ! case ( c]ta9 controll$ corporations 7a7 ,9 g5]al ,! compon5t memb]s ( a controll$ gr\p ( corporations on a ,decemb] #ca %all1 = _! taxable ye>s :i* include su* ,decemb] #ca1 be limit$ = purposes ( ?is subtitle to "o #bej1jjj 7#aej1jjj if any compon5t memb] is a corporation describ$ 9 section #ece7;c77#b77;,b77 am\nt = purposes ( comput+ ! accumulat$ e>n+s cr$it "u section #ece7;c77#b7 & 7#c74 ,su* am\nt %all be divid$ equally among ! compon5t memb]s ( su* gr\p on su* ,decemb] #ca unless ! ,secret>y prescribes regulations p]mitt+ an unequal allocation ( su* am\nt4 7b7 ,c]ta9 %ort taxable ye>s ,if a corporation has a %ort taxable ye> :i* does n include a ,decemb] #ca & is a compon5t memb] ( a controll$ gr\p ( corporations ) respect to su* taxable ye>1 !n = purposes ( ?is subtitle1 ! am\nt to be us$ 9 comput+ ! accumulat$ e>n+s cr$it "u section #ece7;c77#b7 & 7#c7 ( su* corporation = su* taxable ye> %all be ! am\nt specifi$ 9 subsection 7a7 ) respect to su* gr\p1 divid$ by ! numb] ( corporations :i* are compon5t memb]s ( su* gr\p on ! la/ day ( su* taxable ye>4 ,= purposes ( ! prec$+ s5t5ce1 section #aefc7;b7 %all be appli$ z if su* la/ day 7 sub/itut$ = ,decemb] #ca4 4 7,b7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #e is am5d$ by /rik+ ! item relat+ to section #aefa & ins]t+ ! foll[+ new item3 ,sec4 #aefa4 ,limitation on accumulat$ e>n+s cr$it 9 ! case ( c]ta9 controll$ corporations4 4 7#g7 ,section #ghgd7;e77#a77;,b7 is am5d$ by /rik+ section #aa7;b77#a7 & ins]t+ section #aa7;b74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,)hold+ ,! am5dm5ts made by subsection 7b77#c7 %all apply to di/ributions made aft] ,decemb] #ca1 #bjad4 7#c7 ,c]ta9 transf]s ,! am5dm5ts made by subsection 7b77#e7 %all apply to transf]s made aft] ,decemb] #ca1 #bjah4 7#d7 ,c]ta9 o!r am5dm5ts relat$ to s+le rate ( tax ,! am5dm5ts made by p>agraphs 7#d7 & 7#f7 ( subsection 7b7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 ,b ,re=m ( bus9ess-,relat$ exclusions & d$uctions #caja4 ,revision ( treatm5t ( contributions to capital 7a7 ,inclusion ( contributions to capital ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #ge ! foll[+ new section3 #gf4 ,contributions to capital 7a7 ,9 g5]al ,gross income includes-- 7#a7 any contribution to ! capital ( any entity1 & 7#b7 any premium receiv$ by su* entity ) respect to any option on any int]e/ 9 su* entity4 7b7 ,treatm5t ( contributions 9 ex*ange = /ock1 etc 7#a7 ,9 g5]al ,9 ! case ( any contribution ( money or o!r prop]ty to a corporation 9 ex*ange = /ock ( su* corporation-- 7,a7 su* contribution %all n be treat$ = purposes ( subsection 7a7 z a contribution to ! capital ( su* corporation 7& %all n be includible 9 ! gross income ( su* corporation71 & 7,b7 no ga9 or loss %all be recogniz$ to su* corporation ^u ! issuance ( su* /ock4 7#b7 ,treatm5t limit$ to value ( /ock ,= purposes ( ?is subsection1 a contribution ( money or o!r prop]ty to a corporation %all be treat$ z be+ 9 ex*ange = /ock ( su* corporation only to ! ext5t t ! fair m>ket value ( su* money & o!r prop]ty does n exce$ ! fair m>ket value ( su* /ock4 7#c7 ,application to entities o!r ?an corporations ,9 ! case ( any entity o!r ?an a corporation1 rules simil> to ! rules ( p>agraphs 7#a7 & 7#b7 %all apply 9 ! case ( any contribution ( money or o!r prop]ty to su* entity 9 ex*ange = any int]e/ 9 su* entity4 7c7 ,treasury /ock treat$ z /ock ,any ref]5ce 9 ?is section to /ock %all be treat$ z includ+ a ref]5ce to treasury /ock4 4 7b7 ,basis ( corporation 9 contribut$ prop]ty 7#a7 ,contributions to capital ,subsection 7c7 ( section #cfb is am5d$ to read z foll[s3 7c7 ,contributions to capital ,if prop]ty o!r ?an money is transf]r$ to a corporation z a contribution to ! capital ( su* corporation 7)9 ! mean+ ( section #gf7 !n ! basis ( su* prop]ty %all be ! great] (-- 7#a7 ! basis det]m9$ 9 ! h&s ( ! transf]or1 increas$ by ! am\nt ( ga9 recogniz$ to ! transf]or on su* transf]1 or 7#b7 ! am\nt includ$ 9 gross income by su* corporation "u section #gf ) respect to su* contribution4 4 7#b7 ,contributions 9 ex*ange = /ock ,p>agraph 7#b7 ( section #cfb7;a7 is am5d$ by /rik+ contribution to capital & ins]t+ contribution 9 ex*ange = /ock ( su* corporation 7det]m9$ "u rules simil> to ! rules ( p>agraphs 7#b7 & 7#c7 ( section #gf7;b774 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ajh7;e7 is am5d$ by /rik+ p>agraph 7#f74 7#b7 ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aah 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#c7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #ge ! foll[+ new item3 ,sec4 #gf4 ,contributions to capital4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to contributions made1 & transactions ent]$ into1 aft] ! date ( ! enactm5t ( ?is ,act4 #cajb4 ,repeal ( d$uction = local lobby+ exp5ses 7a7 ,9 g5]al ,section #afb7;e7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#g7 & by r$esignat+ p>agraphs 7#c71 7#d71 7#e71 7#f71 & 7#h7 z p>agraphs 7#b71 7#c71 7#d71 7#e71 & 7#f71 respectively4 7b7 ,con=m+ am5dm5t ,section #fjcc7;e77#a77;,b77ii7 is am5d$ by /rik+ section #afb7;e77#e77;,b77ii7 & ins]t+ section #afb7;e77#d77;,b77ii74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 #cajc4 ,exp5ditures = repairs 9 connection ) casualty losses 7a7 ,9 g5]al ,section #afe1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ aft] subsection 7g7 ! foll[+ new subsection3 7h7 ,special rule = casualty losses 7#a7 ,exp5ditures = repairs 9 connection ) casualty losses ,if a d$uction is all[able "u ?is section = any casualty loss ) respect to any prop]ty1 any exp5diture made = any repair ( damage to su* prop]ty 9 connection ) su* casualty loss %all be treat$ z a p]man5t improvem5t made to increase ! value ( su* prop]ty = purposes ( section #bfc7;a77#a74 7#b7 ,election to exp5se repair 9 lieu ( d$uct+ casualty loss ,if ! taxpay] elects ! application ( ?is p>agraph ) respect to any prop]ty ) respect to :i* !re is a casualty loss1 no d$uction %all be all[able "u ?is section = ! casualty loss ) respect to su* prop]ty & p>agraph 7#a7 %all n apply to exp5ditures made = repair ( damage to su* prop]ty 9 connection ) su* casualty loss4 ,any election "u ?is p>agraph %all be made n lat] ?an ! due date = ! return ( tax 7includ+ ext5sions7 = ! taxable ye> 9 :i* ! casualty loss occurs &1 once made1 may be revok$ only ) ! cons5t ( ! ,secret>y4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to losses su/a9$ aft] ,decemb] #ca1 #bjad4 #cajd4 ,re=m ( accel]at$ co/ recov]y sy/em 7a7 ,applicable depreciation me?od ,subsection 7b7 ( section #afh is am5d$ to read z foll[s3 7b7 ,applicable depreciation me?od ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! applicable depreciation me?od is ! /raight l9e me?od4 7#b7 ,salvage value treat$ z z]o ,salvage value %all be treat$ z z]o4 4 7b7 ,applicable recov]y p]iod ,subsection 7c7 ( section #afh is am5d$ to read z foll[s3 7c7 ,applicable recov]y p]iod ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! applicable recov]y p]iod = any prop]ty is ! class life ( su* prop]ty4 7#b7 ,special rules = det]m9+ class life ( c]ta9 prop]ty 7,a7 ,prop]ty ) no class life ,9 ! case ( p]sonal prop]ty ) no class life1 ! recov]y p]iod is #ab ye>s4 7,b7 ,c]ta9 horses ,9 ! case ( any race horse1 & any horse o!r ?an a race horse :i* is m ?an #ab ye>s old at ! "t x is plac$ 9 s]vice1 #c ye>s4 7,c7 ,semi-,conductor manufactur+ equipm5t ,9 ! case ( any semi-conductor manufactur+ equipm5t1 ! recov]y p]iod is #e ye>s4 7,d7 ,qualifi$ te*nological equipm5t ,9 ! case ( any qualifi$ te*nological equipm5t1 ! recov]y p]iod is #e ye>s4 7,e7 ,automobile or light g5]al purpose truck ,9 ! case ( any automobile or light g5]al purpose truck1 ! recov]y p]iod is #e ye>s4 7,f7 ,qualifi$ r5t-to-own prop]ty ,9 ! case ( any qualifi$ r5t-to-own prop]ty1 ! recov]y p]iod is #i ye>s4 7,g7 ,c]ta9 telephone swit*+ equipm5t ,9 ! case ( any comput]-bas$ telephone c5tral (fice swit*+ equipm5t1 ! recov]y p]iod is #i4e ye>s4 7,h7 ,railroad track ,9 ! case ( any railroad track1 ! recov]y p]iod is #aj ye>s4 7,i7 ,sm>t electric di/ribution prop]ty ,9 ! case ( qualifi$ sm>t electric met]s & qualifi$ sm>t electric grid sy/ems1 ! recov]y p]iod is #aj ye>s4 7,j7 ,airplanes ,9 ! case ( any fix$-w+ aircraft 7includ+ any fix$-w+ airframe or eng9e71 ! recov]y p]iod is #ab ye>s4 7,k7 ,natural gas ga!r+ l9e ,9 ! case ( any natural gas ga!r+ l9e1 ! recov]y p]iod is #ad ye>s4 7,l7 ,tree or v9e be>+ fruit or nuts ,9 ! case ( any tree or v9e be>+ fruit or nuts1 ! recov]y p]iod is #bj ye>s4 7,m7 ,telephone di/ribution plant ,9 ! case ( any telephone di/ribution plant & comp>able equipm5t us$ = #b-way ex*ange ( voice & data communications by cable1 ! recov]y p]iod is #bd ye>s4 7,n7 ,real prop]ty ,9 ! case ( nonresid5tial real prop]ty1 resid5tial r5tal prop]ty1 & any section #abde prop]ty 7z def9$ 9 section #abde7;a77#c77 :i* is real prop]ty ) no class life1 ! recov]y p]iod is #dj ye>s4 7,o7 ,wat] treatm5t & utility prop]ty ,9 ! case ( any municipal wa/ewat] treatm5t plant or wat] utility prop]ty1 ! recov]y p]iod is #ej ye>s4 7,p7 ,cle>+ & grad+ improvem5ts2 tunnel bore ,9 ! case ( any cle>+ & grad+ l& improvem5ts or tunnel bore1 ! recov]y p]iod is #ej ye>s4 7,q7 ,tax-exempt use prop]ty subject to lease ,9 ! case ( any tax-exempt use prop]ty subject to a lease1 ! recov]y p]iod us$ = purposes ( p>agraph 7#b7 %all 7not)/&+ any o!r subp>agraph ( ?is p>agraph7 9 no ev5t be less ?an #abe p]c5t ( ! lease t]m4 4 7c7 ,neutral co/ recov]y sy/em ,section #afh1 z am5d$ by subsection 7f71 is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,neutral co/ recov]y sy/em 7#a7 ,9 g5]al ,9 ! case ( any prop]ty 7to :i* ?is section applies7 plac$ 9 s]vice by ! taxpay] 9 a taxable ye> = :i* su* taxpay] has elect$ ! application ( ?is subsection1 ! d$uction det]m9$ "u subsection 7a7 ) respect to su* prop]ty = any taxable ye> %all be increas$ by an am\nt equal to ! product (-- 7,a7 ! modifi$ adju/$ basis ( su* prop]ty det]m9$ z ( ! close ( su* taxable ye> 7det]m9$ )\t reg>d to ?is subsection b aft] tak+ all o!r adju/m5ts = su* taxable ye> into acc\nt71 multipli$ by 7,b7 ! inflation adju/m5t p]c5tage = ! cal5d> ye> 9 :i* su* taxable ye> beg9s4 7#b7 ,modifi$ adju/$ basis ,= purposes ( ?is subsection1 ! t]m modifi$ adju/$ basis means1 ) respect to any prop]ty1 ! adju/$ basis :i* w\ld be det]m9$ ) respect to su* prop]ty if ?is subsection nev] appli$ to su* prop]ty4 7#c7 ,inflation adju/m5t p]c5tage ,= purposes ( ?is subsection1 ! t]m inflation adju/m5t p]c5tage means1 ) respect to any cal5d> ye>1 ! co/-(-liv+ adju/m5t :i* w\ld be det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye> if clause 7ii7 !re( 7 appli$ by sub/itut+ ! ,c-,,cpi-,u = ! cal5d> ye> prec$+ ! cal5d> ye> ref]r$ to 9 clause 7i7 = ! normaliz$ ,,cpi = cal5d> ye> #bjab4 7#d7 ,increase = fir/ taxable ye> r$uc$ to take into acc\nt plac$ 9 s]vice conv5tion ,9 ! case ( ! taxable ye> 9 :i* any prop]ty is plac$ 9 s]vice1 ! increase det]m9$ "u p>agraph 7#a7 ) respect to su* prop]ty %all be equal to-- 7,a7 9 ! case ( any prop]ty to :i* subsection 7d77#c7 applies1 #a_/h ( ! am\nt ( su* increase det]m9$ )\t reg>d to ?is p>agraph1 & 7,b7 9 ! case ( any o!r prop]ty1 #a_/b ( ! am\nt ( su* increase det]m9$ )\t reg>d to ?is p>agraph4 7#e7 ,ov]all depreciation all[ance n to exce$ basis ,! d$uction det]m9$ "u subsection 7a7 7aft] any increase det]m9$ "u ?is subsection7 ) respect to any prop]ty = any taxable ye> %all n exce$ ! adju/$ basis ( su* prop]ty det]m9$ z ( ! beg9n+ ( su* taxable ye>4 7#f7 ,c]ta9 prop]ty exclud$ ,p>agraph 7#a7 %all n apply to any specifi$ prop]ty us$ outside ! ,unit$ ,/ates or to any prop]ty describ$ 9 subsection 7d77#b74 7#g7 ,election 7,a7 ,9 g5]al ,an election "u p>agraph 7#a7 = any taxable ye> %all be made n lat] ?an ! due date 7includ+ ext5sions7 = ! return ( tax = su* taxable ye>4 ,su* election1 once made1 %all be irrevocable4 ,su* election %all apply ) respect to all prop]ty plac$ 9 s]vice dur+ ! taxable = :i* made 7& %all apply = subsequ5t taxable ye>s b only ) respect to su* prop]ty74 7,b7 ,taxpay] engag$ 9 m ?an "o bus9ess ,a taxpay] engag$ 9 m ?an "o trade or bus9ess may make sep>ate elections "u p>agraph 7#a7 ) respect to ea* su* trade or bus9ess4 4 7d7 ,application ( mid-,mon? conv5tion 7#a7 ,9 g5]al ,subp>agraphs 7,a71 7,b7 & 7,c7 ( section #afh7;d77#b7 are am5d$ to read z foll[s3 7,a7 real prop]ty1 7,b7 wat] treatm5t & utility prop]ty1 & 7,c7 any cle>+ & grad+ l& improvem5ts or tunnel bore1 4 7#b7 ,con=m+ am5dm5t ,clause 7i7 ( section #afh7;d77#c77;,b7 is am5d$ to read z foll[s3 7i7 any prop]ty describ$ 9 p>agraph 7#b71 4 7e7 ,def9itions ,subsection 7e7 ( section #afh is am5d$ to read z foll[s3 7e7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,class life 7,a7 ,9 g5]al ,except z provid$ 9 ?is section1 ! t]m class life means ! class life 7if any7 :i* w\ld be applicable ) respect to any prop]ty z ( ,janu>y #a1 #aihf1 "u subsection 7m7 ( section #afg 7det]m9$ )\t reg>d to p>agraph 7#d7 & z if ! taxpay] _h made an election "u su* subsection74 ,! ref]5ce 9 ?is p>agraph to subsection 7m7 ( section #afg %all be treat$ z a ref]5ce to su* subsection z 9 effect on ! day be=e ! date ( ! enactm5t ( ! ,rev5ue ,reconciliation ,act ( #aiij4 7,b7 ,secret>ial au?ority to modify ,rev4 ,proc4 #hg-ef 7i7 ,9 g5]al ,! ,secret>y1 ?r\gh ! ,(fice ( ,tax ,analysis & 9 consultation ) ! ,bureau ( ,economic ,analysis ( ! ,dep>tm5t ( ,comm]ce1 %all-- 7,i7 det]m9e1 & develop a s*$ule (1 ! economic depreciation ( ! major categories ( depreciable prop]ty 7o!r ?an prop]ty ) a specifi$ class life "u subsection 7c77#b77 to approximate con/ant /raight-l9e depreciation1 & 7,,ii7 develop recomm5dations reg>d+ ! prop] economic depreciation = prop]ty ) a specifi$ class life "u subsection 7c77#b74 7ii7 ,report ,n lat] ?an ,decemb] #ca1 #bjag1 ! ,secret>y %all submit to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives & ! ,committee on ,f9ance ( ! ,s5ate-- 7,i7 ! s*$ule develop$ "u clause 7i77,i71 & 7,,ii7 ! recomm5dations develop$ "u clause 7i77,,ii74 ,! s*$ule develop$ "u clause 7i77,i7 %all take effect ) respect to prop]ty plac$ 9 s]vice aft] ! lat] ( ,decemb] #ca1 #bjag1 or ! end ( ! fir/ cal5d> ye> end+ aft] ! cal5d> ye> dur+ :i* su* s*$ule is submitt$4 7#b7 ,resid5tial r5tal prop]ty 7,a7 ,9 g5]al ,! t]m resid5tial r5tal prop]ty means any build+ or /ructure if #hj p]c5t or m ( ! gross r5tal income f su* build+ or /ructure = ! taxable ye> is r5tal income f dwell+ units4 7,b7 ,dwell+ unit ,= purposes ( subp>agraph 7,a7-- 7i7 ! t]m dwell+ unit means a h\se or ap>tm5t us$ to provide liv+ accommodations 9 a build+ or /ructure1 b does n include a unit 9 a hotel1 motel1 or o!r e/abli%m5t m ?an "o-half ( ! units 9 :i* are us$ on a transi5t basis1 & 7ii7 if any portion ( ! build+ or /ructure is occupi$ by ! taxpay]1 ! gross r5tal income f su* build+ or /ructure %all include ! r5tal value ( ! portion s occupi$4 7#c7 ,nonresid5tial real prop]ty ,! t]m nonresid5tial real prop]ty means section #abej prop]ty :i* is n-- 7,a7 resid5tial r5tal prop]ty1 or 7,b7 prop]ty ) a class life ( less ?an #bg4e ye>s4 7#d7 ,wat] utility prop]ty ,! t]m wat] utility prop]ty means prop]ty-- 7,a7 :i* is an integral "p ( ! ga!r+1 treatm5t1 or comm]cial di/ribution ( wat]1 & 7,b7 any municipal sew]4 7#e7 ,qualifi$ r5t-to-own prop]ty 7,a7 ,9 g5]al ,! t]m qualifi$ r5t-to-own prop]ty means any prop]ty held by a r5t-to-own deal] = purposes ( be+ subject to a r5t-to-own contract4 7,b7 ,r5t-to-own deal] ,! t]m r5t-to-own deal] means a p]son t1 9 ! ord9>y c\rse ( bus9ess1 regul>ly ent]s into r5t-to-own contracts ) cu/om]s = ! use ( consum] prop]ty1 if a sub/antial portion ( ^? contracts t]m9ate & ! prop]ty is return$ to su* p]son be=e ! receipt ( all paym5ts requir$ to transf] own]%ip ( ! prop]ty f su* p]son to ! cu/om]4 7,c7 ,consum] prop]ty ,! t]m consum] prop]ty means tangible p]sonal prop]ty ( a type g5]ally us$ )9 ! home = p]sonal use4 7,d7 ,r5t-to-own contract ,! t]m r5t-to-own contract means any lease = ! use ( consum] prop]ty betwe5 a r5t-to-own deal] & a cu/om] :o is an individual :i*-- 7i7 is titl$ ,r5t-to-,own ,agreem5t or ,lease ,agreem5t ) ,own]%ip ,option1 or uses o!r simil> language1 7ii7 provides = level 7or decreas+ :]e no paym5t is less ?an #dj p]c5t ( ! l>ge/ paym5t71 regul> p]iodic paym5ts 7= a paym5t p]iod :i* is a week or mon?71 7iii7 provides t legal title to su* prop]ty rema9s ) ! r5t-to-own deal] until ! cu/om] makes all ! paym5ts describ$ 9 clause 7ii7 or e>ly pur*ase paym5ts requir$ "u ! contract to acquire legal title to ! item ( prop]ty1 7iv7 provides a beg9n+ date & a maximum p]iod ( "t = :i* ! contract may be 9 effect t does n exce$ #aef weeks or #cf mon?s f su* beg9n+ date 7includ+ r5ewals or options to ext5d71 7v7 provides = paym5ts )9 ! #aef-week or #cf-mon? p]iod t1 9 ! aggregate1 g5]ally exce$ ! normal retail price ( ! consum] prop]ty plus int]e/1 7vi7 provides = paym5ts "u ! contract t1 9 ! aggregate1 d n exce$ #aj1jjj p] item ( consum] prop]ty1 7vii7 provides t ! cu/om] does n h any legal obligation to make all ! paym5ts ref]r$ to 9 clause 7ii7 set =? "u ! contract1 & t at ! end ( ea* paym5t p]iod ! cu/om] may ei!r cont9ue to use ! consum] prop]ty by mak+ ! paym5t = ! next paym5t p]iod or return su* prop]ty to ! r5t-to-own deal] 9 good work+ ord]1 9 :i* case ! cu/om] does n incur any fur!r obligations "u ! contract & is n entitl$ to a return ( any paym5ts previ\sly made "u ! contract1 & 7viii7 provides t ! cu/om] has no "r to sell1 sublease1 mortgage1 pawn1 pl$ge1 encumb]1 or o!rwise dispose ( ! consum] prop]ty until all ! paym5ts /at$ 9 ! contract h be5 made4 7#f7 ,qualifi$ te*nological equipm5t 7,a7 ,9 g5]al ,! t]m qualifi$ te*nological equipm5t means-- 7i7 any comput] or p]iph]al equipm5t1 7ii7 any high te*nology telephone /ation equipm5t in/all$ on ! cu/om]'s premises1 & 7iii7 any high te*nology m$ical equipm5t4 7,b7 ,comput] or p]iph]al equipm5t def9$ ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m comput] or p]iph]al equipm5t means-- 7,i7 any comput]1 & 7,,ii7 any relat$ p]iph]al equipm5t4 7ii7 ,comput] ,! t]m comput] means a programmable electronically activat$ device :i*-- 7,i7 is capable ( accept+ in=mation1 apply+ prescrib$ processes to ! in=mation1 & supply+ ! results ( ^! processes ) or )\t human int]v5tion1 & 7,,ii7 consi/s ( a c5tral process+ unit conta9+ ext5sive /orage1 logic1 ari?metic1 & control capabilities4 7,c7 ,high te*nology m$ical equipm5t ,= purposes ( ?is p>agraph1 ! t]m high te*nology m$ical equipm5t means any electronic1 electrome*anical1 or comput]-bas$ high te*nology equipm5t us$ 9 ! scre5+1 monitor+1 obs]vation1 diagnosis1 or treatm5t ( pati5ts 9 a laboratory1 m$ical1 or hospital environm5t4 7#g7 ,natural gas ga!r+ l9e ,! t]m natural gas ga!r+ l9e means-- 7,a7 ! pipe1 equipm5t1 & appurt5ances det]m9$ to be a ga!r+ l9e by ! ,f$]al ,en]gy ,regulatory ,commission1 & 7,b7 ! pipe1 equipm5t1 & appurt5ances us$ to deliv] natural gas f ! wellhead or a commonpo9t to ! po9t at :i* su* gas fir/ rea*es-- 7i7 a gas process+ plant1 7ii7 an int]connection ) a transmission pipel9e = :i* a c]tificate z an int]/ate transmission pipel9e has be5 issu$ by ! ,f$]al ,en]gy ,regulatory ,commission1 7iii7 an int]connection ) an intra/ate transmission pipel9e1 or 7iv7 a direct int]connection ) a local di/ribution company1 a gas /orage facility1 or an indu/rial consum]4 7#h7 ,qualifi$ sm>t electric met]s 7,a7 ,9 g5]al ,! t]m qualifi$ sm>t electric met] means any sm>t electric met] :i*-- 7i7 is plac$ 9 s]vice by a taxpay] t is a suppli] ( electric en]gy or a provid] ( electric en]gy s]vices1 & 7ii7 does n h a class life 7det]m9$ )\t reg>d to subsection 7c77 ( less ?an #aj ye>s4 7,b7 ,sm>t electric met] ,= purposes ( subp>agraph 7,a71 ! t]m sm>t electric met] means any "t-bas$ met] & relat$ communication equipm5t :i* is capable ( be+ us$ by ! taxpay] z "p ( a sy/em t-- 7i7 measures & records electricity usage data on a "t-diff]5tiat$ basis 9 at lea/ #bd sep>ate "t segm5ts p] day1 7ii7 provides = ! ex*ange ( in=mation betwe5 suppli] or provid] & ! cu/om]'s electric met] 9 support ( "t-bas$ rates or o!r =ms ( dem& response1 7iii7 provides data to su* suppli] or provid] s t ! suppli] or provid] c provide en]gy usage in=mation to cu/om]s electronically1 & 7iv7 provides net met]+4 7#i7 ,qualifi$ sm>t electric grid sy/ems 7,a7 ,9 g5]al ,! t]m qualifi$ sm>t electric grid sy/em means any sm>t grid prop]ty :i*-- 7i7 is us$ z "p ( a sy/em = electric di/ribution grid communications1 monitor+1 & managem5t plac$ 9 s]vice by a taxpay] :o is a suppli] ( electric en]gy or a provid] ( electric en]gy s]vices1 & 7ii7 does n h a class life 7det]m9$ )\t reg>d to subsection 7c77 ( less ?an #aj ye>s4 7,b7 ,sm>t grid prop]ty ,= ! purposes ( subp>agraph 7,a71 ! t]m sm>t grid prop]ty means electronics & relat$ equipm5t t is capable (-- 7i7 s5s+1 collect+1 & monitor+ data ( or f all portions ( a utility's electric di/ribution grid1 7ii7 provid+ real-"t1 two-way communications to monitor or manage su* grid1 & 7iii7 provid+ real "t analysis ( & ev5t pr$iction bas$ ^u collect$ data t c be us$ to improve electric di/ribution sy/em reliability1 quality1 & p]=mance4 7#aj7 ,specifi$ prop]ty us$ outside ! ,unit$ ,/ates 7,a7 ,9 g5]al ,! t]m specifi$ prop]ty us$ outside ! ,unit$ ,/ates means-- 7i7 any aircraft :i* is regi/]$ by ! ,adm9i/rator ( ! ,f$]al ,aviation ,ag5cy & :i* is op]at$ to & f ! ,unit$ ,/ates or is op]at$ "u contract ) ! ,unit$ ,/ates1 7ii7 roll+ /ock :i* is us$ )9 & )\t ! ,unit$ ,/ates & :i* is-- 7,i7 ( a rail c>ri] subject to "p ,a ( subtitle ,,iv ( title #di1 or 7,,ii7 ( a ,unit$ ,/ates p]son 7o!r ?an a corporation describ$ 9 subclause 7,i77 b only if ! roll+ /ock is n leas$ to "o or m =eign p]sons = p]iods aggregat+ m ?an #ab mon?s 9 any #bd-mon? p]iod1 7iii7 any vessel docum5t$ "u ! laws ( ! ,unit$ ,/ates :i* is op]at$ 9 ! =eign or dome/ic comm]ce ( ! ,unit$ ,/ates1 7iv7 any motor vehicle ( a ,unit$ ,/ates p]son 7z def9$ 9 section #ggja7;a77#cj77 :i* is op]at$ to & f ! ,unit$ ,/ates1 7v7 any conta9] ( a ,unit$ ,/ates p]son :i* is us$ 9 ! transportation ( prop]ty to & f ! ,unit$ ,/ates1 7vi7 any prop]ty 7o!r ?an a vessel or an aircraft7 ( a ,unit$ ,/ates p]son :i* is us$ = ! purpose ( explor+ =1 develop+1 remov+1 or transport+ res\rces f ! out] ,cont95tal ,%elf 7)9 ! mean+ ( section #b ( ! ,out] ,cont95tal ,%elf ,l&s ,act1 z am5d$ & supplem5t$ 7#dc ,u4,s4,c4 #acca771 7vii7 any prop]ty :i* is own$ by a dome/ic corporation or by a ,unit$ ,/ates citiz5 7o!r ?an a citiz5 entitl$ to ! b5efits ( section #ica or #icc7 & :i* is us$ pr$om9antly 9 a possession ( ! ,unit$ ,/ates by su* a corporation1 or su* a citiz51 or by a corporation creat$ or organiz$ 91 or "u ! law (1 a possession ( ! ,unit$ ,/ates1 7viii7 any communications satellite 7z def9$ 9 section #ajc7c7 ( ! ,communications ,satellite ,act ( #aifb1 #dg ,u4,s4,c4 #gjb7c771 or any int]e/ !re91 ( a ,unit$ ,/ates p]son1 7ix7 any cable1 or any int]e/ !re91 ( a dome/ic corporation engag$ 9 furni%+ telephone s]vice to :i* section #afh7;e77#aj77;,c7 applies 7or ( a :olly own$ dome/ic subsidi>y ( su* a corporation71 if su* cable is "p ( a subm>9e cable sy/em :i* con/itutes "p ( a communication l9k exclusively betwe5 ! ,unit$ ,/ates & "o or m =eign c\ntries1 7x7 any prop]ty 7o!r ?an a vessel or an aircraft7 ( a ,unit$ ,/ates p]son :i* is us$ 9 int]national or t]ritorial wat]s )9 ! nor!rn portion ( ! ,we/]n ,hemisph]e = ! purpose ( explor+ =1 develop+1 remov+1 or transport+ res\rces f ocean wat]s or deposits "u su* wat]s1 7xi7 any prop]ty describ$ 9 section #dh7l77#c77;,a77ix7 7z 9 effect on ! day be=e ! date ( ! enactm5t ( ! ,rev5ue ,reconciliation ,act ( #aiij7 :i* is own$ by a ,unit$ ,/ates p]son & :i* is us$ 9 int]national or t]ritorial wat]s to g5]ate en]gy = use 9 ! ,unit$ ,/ates1 & 7xii7 any satellite 7n describ$ 9 clause 7viii77 or o!r spacecraft 7or any int]e/ !re97 held by a ,unit$ ,/ates p]son if su* satellite or o!r spacecraft 0 laun*$ f )9 ! ,unit$ ,/ates4 7,b7 ,nor!rn portion ( ! ,we/]n ,hemisph]e ,= purposes ( subp>agraph 7,a77x71 ! t]m nor!rn portion ( ! ,we/]n ,hemisph]e means ! area ly+ we/ ( ! #cj? m]idian we/ ( ,gre5wi*1 ea/ ( ! int]national datel9e1 & nor? ( ! ,equator1 b n includ+ any =eign c\ntry :i* is a c\ntry ( ,s\? ,am]ica4 4 7f7 ,con=m+ am5dm5ts 7#a7 ,am5dm5ts to section #afh 7,a7 ,section #afh is am5d$ by /rik+ subsections 7g71 7j71 7k71 7l71 7m71 & 7n71 & by r$esignat+ subsections 7h7 & 7i7 z subsections 7g7 & 7h71 respectively4 7,b7 ,section #afh7;h71 z r$esignat$ by subp>agraph 7,a71 is am5d$-- 7i7 by /rik+ p>agraphs 7#a71 7#b71 7#aa71 7#ab71 7#ac71 7#ad71 7#ae71 7#af71 7#ag71 7#ah71 & 7#ai7 & by r$esignat+ p>agraphs 7#c7 ?r\gh 7#aj7 z p>agraphs 7#a7 ?r\gh 7#h71 respectively1 & 7ii7 by /rik+ ,def9itions & 9 ! head+ !re(4 7,c7 ,section #afh7;h77#h71 z r$esignat$ by subp>agraphs 7,a7 & 7,b71 is mov$ to ! end ( section #afh7;e7 7z am5d$ by subsection 7e77 & r$esignat$ z p>agraph 7#aa74 7#b7 ,o!r con=m+ am5dm5ts 7,a7 ,section #ej7;b77#d7 is am5d$-- 7i7 9 subp>agraph 7,a77ii7-- 7,i7 by /rik+ section #afh7;h77#b77;,c7 & ins]t+ section #afh7;g77#b77;,c71 7,,ii7 by /rik+ section #afh7;h77#b77;,a77iii7 & ins]t+ section #afh7;g77#b77;,a77iii71 & 7,,iii7 by /rik+ section #afh7;h77#b77;,b7 & ins]t+ section #afh7;g77#b77;,b71 7ii7 9 subp>agraph 7,b71 by /rik+ section #afh7;i77#c7 & ins]t+ section #afh7;h77#a71 & 7iii7 9 subp>agraphs 7,d7 & 7,e71 by /rik+ section #afh7;h7 ea* place x appe>s & ins]t+ section #afh7;g74 7,b7 7i7 ,section #ej7;b77#a77;,b7 is am5d$ by /rik+ any prop]ty describ$ 9 section #afh7;g77#d7 & ins]t+ any specifi$ prop]ty us$ outside ! ,unit$ ,/ates 7z def9$ 9 section #afh7;e77#aj74 7ii7 ,section #hfe7;c77#c77;,b7 is am5d$ by /rik+ prop]ty ( a k9d describ$ 9 section #afh7;g77#d7 & ins]t+ specifi$ prop]ty us$ outside ! ,unit$ ,/ates 7z def9$ 9 section #afh7;e77#aj74 7,c7 ,section #agi7;e77#b7 is am5d$ by ins]t+ z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad aft] section #afh7n77#b74 7,d7 ,section #agi7;f71 z am5d$ by section #caaa1 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraphs3 7#b7 ,qualifi$ real prop]ty ,= purposes ( ?is subsection1 ! t]m qualifi$ real prop]ty means qualifi$ leasehold improvem5t prop]ty1 qualifi$ re/aurant prop]ty1 & qualifi$ retail improvem5t prop]ty4 7#c7 ,qualifi$ leasehold improvem5t prop]ty ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ leasehold improvem5t prop]ty means any improvem5t to an int]ior portion ( a build+ :i* is nonresid5tial real prop]ty if-- 7i7 su* improvem5t is made "u or pursuant to a lease 7z def9$ 9 section #afh7;g77#g77-- 7,i7 by ! lessee 7or any sublessee7 ( su* portion1 or 7,,ii7 by ! lessor ( su* portion1 7ii7 su* portion is to be occupi$ exclusively by ! lessee 7or any sublessee7 ( su* portion1 & 7iii7 su* improvem5t is plac$ 9 s]vice m ?an #c ye>s aft] ! date ! build+ 0 fir/ plac$ 9 s]vice4 7,b7 ,c]ta9 improvem5ts n includ$ ,su* t]m %all n include any improvem5t = :i* ! exp5diture is attributable to-- 7i7 ! enl>gem5t ( ! build+1 7ii7 any elevator or escalator1 7iii7 any /ructural compon5t b5efitt+ a common area1 & 7iv7 ! int]nal /ructural framework ( ! build+4 7,c7 ,def9itions & special rules ,= purposes ( ?is p>agraph-- 7i7 ,commitm5t to lease treat$ z lease ,a commitm5t to ent] into a lease %all be treat$ z a lease1 & ! p>ties to su* commitm5t %all be treat$ z lessor & lessee1 respectively4 7ii7 ,relat$ p]sons ,a lease betwe5 relat$ p]sons %all n be consid]$ a lease4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m relat$ p]sons means-- 7,i7 memb]s ( an affiliat$ gr\p 7z def9$ 9 section #aejd71 & 7,,ii7 p]sons hav+ a relation%ip describ$ 9 subsection 7b7 ( section #bfg2 except t1 = purposes ( ?is subclause1 ! phrase #hj p]c5t or m %all be sub/itut$ = ! phrase m ?an #ej p]c5t ea* place x appe>s 9 su* subsection4 7,d7 ,improvem5ts made by lessor ,9 ! case ( an improvem5t made by ! p]son :o 0 ! lessor ( su* improvem5t :5 su* improvem5t 0 plac$ 9 s]vice1 su* improvem5t %all be qualifi$ leasehold improvem5t prop]ty 7if at all7 only s long z su* improvem5t is held by su* p]son4 7,e7 ,exception = *anges 9 =m ( bus9ess ,prop]ty %all n cease to be qualifi$ leasehold improvem5t prop]ty by reason (-- 7i7 dea?1 7ii7 a transaction to :i* section #cha7;a7 applies1 7iii7 a m]e *ange 9 ! =m ( conduct+ ! trade or bus9ess s long z ! prop]ty is reta9$ 9 su* trade or bus9ess z qualifi$ leasehold improvem5t prop]ty & ! taxpay] reta9s a sub/antial int]e/ 9 su* trade or bus9ess1 7iv7 ! acquisition ( su* prop]ty 9 an ex*ange describ$ 9 section #ajca 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad71 #ajcc1 or #ajch to ! ext5t t ! basis ( su* prop]ty includes an am\nt repres5t+ ! adju/$ basis ( o!r prop]ty own$ by ! taxpay] or a relat$ p]son1 or 7v7 ! acquisition ( su* prop]ty by ! taxpay] 9 a transaction describ$ 9 section #ccb1 #cea1 #cfa1 #gba1 or #gca 7or ! acquisition ( su* prop]ty by ! taxpay] f ! transf]ee or acquir+ corporation 9 a transaction describ$ 9 su* section71 to ! ext5t t ! basis ( ! prop]ty 9 ! h&s ( ! taxpay] is det]m9$ by ref]5ce to its basis 9 ! h&s ( ! transf]or or di/ributor4 7#d7 ,qualifi$ re/aurant prop]ty ,= purposes ( ?is subsection1 ! t]m qualifi$ re/aurant prop]ty means any section #abej prop]ty :i* is-- 7,a7 a build+1 or 7,b7 an improvem5t to a build+1 if m ?an #ej p]c5t ( ! build+'s squ>e footage is devot$ to prep>ation (1 & seat+ = on-premises consumption (1 prep>$ meals4 7#e7 ,qualifi$ retail improvem5t prop]ty 7,a7 ,9 g5]al ,! t]m qualifi$ retail improvem5t prop]ty means any improvem5t to an int]ior portion ( a build+ :i* is nonresid5tial real prop]ty if-- 7i7 su* portion is op5 to ! g5]al public & is us$ 9 ! retail trade or bus9ess ( sell+ tangible p]sonal prop]ty to ! g5]al public1 & 7ii7 su* improvem5t is plac$ 9 s]vice m ?an #c ye>s aft] ! date ! build+ 0 fir/ plac$ 9 s]vice4 7,b7 ,improvem5ts made by own] ,9 ! case ( an improvem5t made by ! own] ( su* improvem5t1 su* improvem5t %all be qualifi$ retail improvem5t prop]ty 7if at all7 only s long z su* improvem5t is held by su* own]4 ,rules simil> to ! rules "u p>agraph 7#c77;,e7 %all apply = purposes ( ! prec$+ s5t5ce4 7,c7 ,c]ta9 improvem5ts n includ$ ,su* t]m %all n include any improvem5t = :i* ! exp5diture is attributable to-- 7i7 ! enl>gem5t ( ! build+1 7ii7 any elevator or escalator1 7iii7 any /ructural compon5t b5efitt+ a common area1 or 7iv7 ! int]nal /ructural framework ( ! build+4 4 7,e7 ,section #bhj;,f7b7 is am5d$-- 7i7 by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively1 & 7ii7 by /rik+ 1 & ! depreciation d$uction & all t foll[s ?r\gh alt]native depreciation sy/em7 9 p>agraph 7#a7 7z r$esignat$ by clause 7i774 7,f7 ,section #bhj;,f7d77#d77;,a77iv7 is am5d$ by /rik+ section #afh7;i77#b77;,b7 & ins]t+ section #afh7;e77#f77;,b74 7,g7 ,section #cab7k77#c7 is am5d$ by /rik+ ,exception = tangible prop]ty & all t foll[s ?r\gh ,= purposes ( comput+ ! e>n+s & pr(its & ins]t+ ,exception = c]ta9 tangible prop]ty4--,= purposes ( comput+ ! e>n+s & pr(its4 7,h7 ,section #dfj7;c7 is am5d$ by /rik+ p>agraph 7#f74 7,i7 ,section #dfj7;d77#b7 is am5d$ by /rik+ section #afh7;h77#b77;,d7 & ins]t+ section #afh7;g77#b77;,d74 7,j7 ,section #dfj7;e77#f7 is am5d$ by /rik+ section #afh7;e77#b77;,a77ii7 ea* place x appe>s & ins]t+ section #afh7;e77#b77;,b74 7,k7 7i7 ,subp>agraphs 7,a7 & 7,c7 ( section #dgj7;c77#b7 are ea* am5d$ by /rik+ section #afh7;h7 & ins]t+ section #afh7;g74 7ii7 ,section #dgj7;c77#b77;,b7 is am5d$ by /rik+ section #afh7;h77#f7 & ins]t+ section #afh7;g77#f74 7,l7 ,section #eab7;b77#ag77;,b77ii77,i7 is am5d$ by /rik+ section #afh7;h77#d77;,b7 & ins]t+ section #afh7;g77#d77;,b74 7,m7 ,section #ead7;c77#i77;,b77vi77,,ii7 is am5d$ by /rik+ section #afh7;h77#f7 & ins]t+ section #afh7;g77#f74 7,n7 ,section #ebg7;i77#c77;,d7 is am5d$ by /rik+ section #afh7;h77#d7 & ins]t+ section #afh7;g77#d74 7,o7 ,! second s5t5ce ( section #hfj;,e7e77#e7 is am5d$ by /rik+ section #afh7;h77#b77;,d7 & ins]t+ section #afh7;g77#b77;,d74 7,p7 ,section #abde7;a7 is am5d$-- 7i7 9 p>agraph 7#c77;,d71 by /rik+ section #afh7;i77#ac7 & ins]t+ p>agraph 7#d71 & 7ii7 by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,s+le purpose agricultural or horticultural /ructure ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m s+le purpose agricultural or horticultural /ructure means-- 7i7 a s+le purpose live/ock /ructure1 & 7ii7 a s+le purpose horticultural /ructure4 7,b7 ,def9itions ,= purposes ( ?is p>agraph-- 7i7 ,s+le purpose live/ock /ructure ,! t]m s+le purpose live/ock /ructure means any enclosure or /ructure specifically design$1 con/ruct$1 & us$-- 7,i7 = h\s+1 rais+1 & fe$+ a p>ticul> type ( live/ock & _! produce1 & 7,,ii7 = h\s+ ! equipm5t 7includ+ any replacem5ts7 necess>y = ! h\s+1 rais+1 & fe$+ ref]r$ to 9 subclause 7,i74 7ii7 ,s+le purpose horticultural /ructure ,! t]m s+le purpose horticultural /ructure means-- 7,i7 a gre5h\se specifically design$1 con/ruct$1 & us$ = ! comm]cial production ( plants1 & 7,,ii7 a /ructure specifically design$1 con/ruct$1 & us$ = ! comm]cial production ( mu%rooms4 7iii7 ,/ructures :i* include "w space ,an enclosure or /ructure :i* provides "w space %all be treat$ z a s+le purpose agricultural or horticultural /ructure only if su* "w space is solely =-- 7,i7 ! /ock+1 c>+ =1 or collect+ ( live/ock or plants 7z ! case may be7 or _! produce1 7,,ii7 ! ma9t5ance ( ! enclosure or /ructure1 & 7,,iii7 ! ma9t5ance or replacem5t ( ! equipm5t or /ock enclos$ or h\s$ !re94 7iv7 ,live/ock ,! t]m 8live/ock0 includes p\ltry4 4 7,q7 ,section #abde7;a77#c77;,f7 is am5d$ to read z foll[s3 7,f7 any cle>+ & grad+ l& improvem5ts or tunnel bore 7)9 ! mean+ ( section #afh7;c77#b77,p774 4 7,r7 ,section #fjej,v7d77#c7 is am5d$ by /rik+ section #afh7;h77#b77;,a77iv7 & ins]t+ section #afh7;g77#b77;,a77iv74 7,s7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ #afh7k77#d714 7,t7 ,! second s5t5ce ( section #ggja7;e77#d77;,a7 is am5d$ by /rik+ section #afh7;h7 & ins]t+ section #afh7;g74 7,u7 ,section #ghga7;f77#c7 is am5d$-- 7i7 by /rik+ 7z def9$ 9 section #afh7;j77#f77 9 subp>agraph 7,b77ii71 & 7ii7 by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,indian res]vation ,= purposes ( ?is p>agraph1 ! t]m ,indian res]vation means a res]vation1 z def9$ 9-- 7i7 section #c7;d7 ( ! ,indian ,f9anc+ ,act ( #aigd 7#be ,u4,s4,c4 #adeb7;d771 or 7ii7 section #d7aj7 ( ! ,indian ,*ild ,welf>e ,act ( #aigh 7#be ,u4,s4,c4 #aijc7aj774 ,= purposes ( ! prec$+ s5t5ce1 su* section #c7;d7 %all be appli$ by treat+ ! t]m =m] ,indian res]vations 9 ,oklahoma z includ+ only l&s :i* are )9 ! jurisdictional area ( an ,oklahoma ,indian tribe 7z det]m9$ by ! ,secret>y ( ! ,int]ior7 & are recogniz$ by su* ,secret>y z eligible = tru/ l& /atus "u #be ,,cfr ,"p #aea 7z 9 effect on ,augu/ #e1 #aiig74 4 7g7 ,normalization requirem5ts 7#a7 ,9 g5]al ,a normalization me?od ( acc\nt+ %all n be treat$ z be+ us$ ) respect to any public utility prop]ty = purposes ( section #afg or #afh ( ! ,int]nal ,rev5ue ,code ( #aihf if ! taxpay]1 9 comput+ its co/ ( s]vice = ratemak+ purposes & reflect+ op]at+ results 9 its regulat$ books ( acc\nt1 r$uces ! excess tax res]ve m rapidly or to a great] ext5t ?an su* res]ve w\ld be r$uc$ "u ! av]age rate assumption me?od4 7#b7 ,alt]native ,me?od = ,c]ta9 ,taxpay]s ,if1 z ( ! fir/ day ( ! taxable ye> t includes ! date ( enactm5t ( ?is ,act-- 7,a7 ! taxpay] 0 requir$ by a regulatory ag5cy to compute depreciation = public utility prop]ty on ! basis ( an av]age life or composite rate me?od1 & 7,b7 ! taxpay]'s books & und]ly+ records did n conta9 ! v9tage acc\nt data necess>y to apply ! av]age rate assumption me?od1 ! taxpay] w be treat$ z us+ a normalization me?od ( acc\nt+ if1 ) respect to su* jurisdiction1 ! taxpay] uses ! alt]native me?od = public utility prop]ty t is subject to ! regulatory au?ority ( t jurisdiction4 7#c7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,excess tax res]ve ,! t]m excess tax res]ve means ! excess (-- 7i7 ! res]ve = def]r$ taxes 7z describ$ 9 section #afh7;i77#i77;,a77ii7 ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect on ! day be=e ! date ( ! enactm5t ( ?is ,act71 ov] 7ii7 ! am\nt :i* w\ld be ! balance 9 su* res]ve if ! am\nt ( su* res]ve 7 det]m9$ by assum+ t ! corporate rate r$uctions provid$ 9 ?is ,act 7 9 effect = all prior p]iods4 7,b7 ,av]age rate assumption me?od ,! av]age rate assumption me?od is ! me?od "u :i* ! excess 9 ! res]ve = def]r$ taxes is r$uc$ ov] ! rema9+ lives ( ! prop]ty z us$ 9 its regulat$ books ( acc\nt :i* gave rise to ! res]ve = def]r$ taxes4 ,"u su* me?od1 if tim+ diff]5ces = ! prop]ty rev]se1 ! am\nt ( ! adju/m5t to ! res]ve = ! def]r$ taxes is calculat$ by multiply+-- 7i7 ! ratio ( ! aggregate def]r$ taxes = ! prop]ty to ! aggregate tim+ diff]5ces = ! prop]ty z ( ! beg9n+ ( ! p]iod 9 "q1 by 7ii7 ! am\nt ( ! tim+ diff]5ces :i* rev]se dur+ su* p]iod4 7,c7 ,alt]native me?od ,! alt]native me?od is ! me?od 9 :i* ! taxpay]-- 7i7 computes ! excess tax res]ve on all public utility prop]ty includ$ 9 ! plant acc\nt on ! basis ( ! weight$ av]age life or composite rate us$ to compute depreciation = regulatory purposes1 & 7ii7 r$uces ! excess tax res]ve ratably ov] ! rema9+ regulatory life ( ! prop]ty4 7#d7 ,tax increas$ = normalization violation ,if1 = any taxable ye> end+ aft] ! date ( ! enactm5t ( ?is ,act1 ! taxpay] does n use a normalization me?od ( acc\nt+1 ! taxpay]'s tax = ! taxable ye> %all be increas$ by ! am\nt by :i* x r$uces its excess tax res]ve m rapidly ?an p]mitt$ "u a normalization me?od ( acc\nt+4 7h7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjaf4 #caje4 ,repeal ( amortization ( pollution control facilities 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #afi 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fdb7;f7 is am5d$ by /rik+ ! d$uctions = amortization provid$ by sections #afi & #aig & ins]t+ ! d$uction = amortization provid$ by section #aig4 7#b7 ,section #abej7;b77#c7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] #afi4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to facilities plac$ 9 s]vice aft] ,decemb] #ca1 #bjad4 #cajf4 ,net op]at+ loss d$uction 7a7 ,limitation on net op]at+ losses ( corporations 7#a7 ,9 g5]al ,section #agb7;a7 is am5d$ to read z foll[s3 7a7 ,d$uction all[$ 7#a7 ,9 g5]al ,!re %all be all[$ z a d$uction = ! taxable ye> an am\nt equal to ! aggregate (-- 7,a7 ! net op]at+ loss c>ryov]s to su* ye>1 plus 7,b7 ! net op]at+ loss c>rybacks to su* ye>4 7#b7 ,limitation 9 case ( corporations ,9 ! case ( a corporation-- 7,a7 ! d$uction all[$ "u p>agraph 7#a7 = ! taxable ye> %all n exce$ #ij p]c5t ( ! taxable income = su* ye> comput$ )\t reg>d to ! d$uction all[able "u ?is section1 & 7,b7 appropriate adju/m5ts 9 ! application ( subsection 7b77#b7 %all be made to take into acc\nt ! limitation ( subp>agraph 7,a74 7#c7 ,net op]at+ loss d$uction def9$ ,= purposes ( ?is subtitle1 ! t]m net op]at+ loss d$uction means ! d$uction all[$ by ?is subsection4 4 7#b7 ,coord9ation ) limitation on d$uction = *>itable contributions 7,a7 ,9 g5]al ,section #agj7;b77#b77;,c7 is am5d$ by r$esignat+ clauses 7iv7 & 7v7 z clauses 7v7 & 7vi71 respectively1 & by ins]t+ aft] clause 7iii7 ! foll[+ new clause3 7iv7 ! limitation impos$ "u section #agb7;a77#b77;,a71 4 7,b7 ,life insurance companies ,section #hje7;b77#b77;,a7 is am5d$ by r$esignat+ clauses 7ii7 ?r\gh 7v7 z clauses 7iii7 ?r\gh 7vi71 respectively1 & by ins]t+ aft] clause 7i7 ! foll[+ new clause3 7ii7 ! limitation impos$ "u section #agb7;a77#b77;,a71 4 7b7 ,repeal ( special c>ryback provisions 7#a7 ,9 g5]al ,section #agb7;b77#a7 is am5d$ by /rik+ subp>agraphs 7,c71 7,d71 7,e71 7,g71 7,h71 7,i71 & 7,j7 & by r$esignat+ subp>agraph 7,f7 z subp>agraph 7,c74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #agb7;b77#a77;,c71 z r$esignat$ by p>agraph 7#a71 is am5d$-- 7i7 9 clause 7ii71 by /rik+ ! la/ s5t5ce1 & 7ii7 9 clause 7iv71 by /rik+ 9 a mann] simil> to ! mann] 9 :i* a specifi$ liability loss is treat$ & ins]t+ z a sep>ate net op]at+ loss = su* taxable ye> to be tak5 into acc\nt aft] ! rema9+ portion ( ! net op]at+ loss = su* taxable ye>4 7,b7 ,section #agb is am5d$ by /rik+ subsections 7f71 7g71 7h71 7i71 & 7j7 & by r$esignat+ subsection 7k7 z subsection 7f74 7c7 ,effective dates 7#a7 ,limitation on ,n,o,ls ( corporations ,! am5dm5ts made by subsection 7a7 %all apply to-- 7,a7 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad1 & 7,b7 to c>rybacks ( losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad1 to taxable ye>s beg9n+ on or be=e su* date4 7#b7 ,repeal ( special c>rybacks 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is p>agraph1 ! am5dm5ts made by subsection 7b7 %all apply to losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7,b7 ,expir$ provisions ,s mu* ( ! am5dm5ts made by subsection 7b7 z relate to /rik+ subp>agraphs 7,d71 7,h71 7,i71 & 7,j7 ( section #agb7;b77#a7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all take effect on ! date ( ! enactm5t ( ?is ,act4 #cajg4 ,circulation exp5ditures 7a7 ,9 g5]al ,section #agc is am5d$ to read z foll[s3 #agc4 ,circulation exp5ditures 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s specifi$ circulation exp5ditures-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ditures1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ditures to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ditures ratably ov] ! #cf-mon? p]iod beg9n+ ) ! midpo9t ( ! mon? 9 :i* su* exp5ditures are paid or incurr$4 7b7 ,specifi$ circulation exp5ditures ,= purposes ( ?is section1 ! t]m specifi$ circulation exp5ditures means all exp5ditures 7o!r ?an exp5ditures = ! pur*ase ( l& or depreciable prop]ty or = ! acquisition ( circulation ?r\gh ! pur*ase ( any "p ( ! bus9ess ( ano!r publi%] ( a newspap]1 magaz9e1 or o!r p]iodical7 to e/abli%1 ma9ta91 or increase ! circulation ( a newspap]1 magaz9e1 or o!r p]iodical4 7c7 ,treatm5t ^u ab&onm5t ,if any prop]ty ) respect to :i* specifi$ circulation exp5ditures are paid or incurr$ is dispos$1 retir$1 or ab&on$ dur+ ! p]iod dur+ :i* su* exp5ditures are all[$ z an amortization d$uction "u ?is section1 no d$uction %all be all[$ ) respect to su* exp5ditures on acc\nt ( su* disposition1 retirem5t1 or ab&onm5t & su* amortization d$uction %all cont9ue ) respect to su* exp5ditures4 7d7 ,phase-,9 = taxable ye>s beg9n+ be=e #bjai 7#a7 ,9 g5]al ,9 ! case ( specifi$ circulation exp5ditures paid or incurr$ 9 taxable ye>s beg9n+ be=e #bjai-- 7,a7 not)/&+ subsection 7a71 ! applicable p]c5tage ( su* exp5ditures %all be all[$ z a d$uction = ! taxable ye> 9 :i* paid or incurr$1 & 7,b7 subsection 7a7 %all apply to ! rema9d] ( su* exp5ditures4 7#b7 ,applicable p]c5tage ,= purposes ( p>agraph 7#a71 ! applicable p]c5tage %all be det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( taxable ye>s beg9n+ 93,! applicable p]c5tage is3 #bjafge #bjagej #bjahbe 7#c7 ,election out ( phase-9 ,! taxpay] may elect1 at su* "t & 9 su* =m & mann] z ! ,secret>y %all prescribe1 = p>agraph 7#a7 n to apply = all taxable ye>s beg9n+ be=e #bjai4 ,su* election1 once made1 %all be irrevocable4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjae4 #cajh4 ,amortization ( rese>* & exp]im5tal exp5ditures 7a7 ,9 g5]al ,section #agd is am5d$ to read z foll[s3 #agd4 ,amortization ( rese>* & exp]im5tal exp5ditures 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s specifi$ rese>* or exp]im5tal exp5ditures = any taxable ye>-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ditures1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ditures to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ditures ratably ov] ! #e-ye> p]iod 7#ae-ye> p]iod 9 ! case ( any specifi$ rese>* or exp]im5tal exp5ditures :i* are attributable to =eign rese>* 7)9 ! mean+ ( section #da7;d77#d77;,f777 beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* su* exp5ditures are paid or incurr$4 7b7 ,specifi$ rese>* or exp]im5tal exp5ditures ,= purposes ( ?is section1 ! t]m specifi$ rese>* or exp]im5tal exp5ditures means1 ) respect to any taxable ye>1 rese>* or exp]im5tal exp5ditures :i* are paid or incurr$ by ! taxpay] dur+ su* taxable ye> 9 connection ) ! taxpay]'s trade or bus9ess4 7c7 ,special rules 7#a7 ,l& & o!r prop]ty ,?is section %all n apply to any exp5diture = ! acquisition or improvem5t ( l&1 or = ! acquisition or improvem5t ( prop]ty to be us$ 9 connection ) ! rese>* or exp]im5tation & ( a "* :i* is subject to ! all[ance "u section #afg 7relat+ to all[ance = depreciation1 etc47 or section #faa 7relat+ to all[ance = depletion72 b = purposes ( ?is section all[ances "u section #afg1 & all[ances "u section #faa1 %all be consid]$ z exp5ditures4 7#b7 ,exploration exp5ditures ,?is section %all n apply to any exp5diture paid or incurr$ = ! purpose ( asc]ta9+ ! exi/5ce1 location1 ext5t1 or quality ( any deposit ( ore or o!r m9]al 7includ+ oil & gas74 7#c7 ,s(tw>e developm5t ,= purposes ( ?is section1 any am\nt paid or incurr$ 9 connection ) ! developm5t ( any s(tw>e %all be treat$ z a rese>* or exp]im5tal exp5diture4 7d7 ,treatm5t ^u disposition1 retirem5t1 or ab&onm5t ,if any prop]ty ) respect to :i* specifi$ rese>* or exp]im5tal exp5ditures are paid or incurr$ is dispos$1 retir$1 or ab&on$ dur+ ! p]iod dur+ :i* su* exp5ditures are all[$ z an amortization d$uction "u ?is section1 no d$uction %all be all[$ ) respect to su* exp5ditures on acc\nt ( su* disposition1 retirem5t1 or ab&onm5t & su* amortization d$uction %all cont9ue ) respect to su* exp5ditures4 7e7 ,special rules = exp5ditures = dome/ic rese>* dur+ taxable ye>s beg9n+ be=e #bjba 7#a7 ,9 g5]al ,9 ! case ( dome/ic rese>* or exp]im5tal exp5ditures paid or incurr$ dur+ any taxable ye> beg9n+ be=e #bjba-- 7,a7 not)/&+ subsection 7a71 ! applicable p]c5tage ( su* exp5ditures %all be all[$ z a d$uction 9 ! taxable ye> 9 :i* paid or incurr$1 & 7,b7 subsection 7a7 %all apply to ! rema9d] ( su* exp5ditures by sub/itut+ ! applicable p]iod = ! #e-ye> p]iod4 7#b7 ,dome/ic rese>* or exp]im5tal exp5ditures ,= purposes ( ?is subsection1 ! t]m dome/ic rese>* or exp]im5tal exp5ditures means any exp5ditures-- 7,a7 to :i* subsection 7a7 applies 7det]m9$ )\t reg>d to ?is subsection71 & 7,b7 :i* are n attributable to =eign rese>* 7)9 ! mean+ ( section #da7;d77#d77;,f774 7#c7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! applicable p]c5tage %all be det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( taxable ye>s beg9n+ 93,! applicable p]c5tage is3 #bjaefj #bjaf or #bjagdj #bjah1 #bjai1 or #bjbjbj 7#d7 ,applicable p]iod ,= purposes ( ?is subsection1 ! applicable p]iod %all be det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( taxable ye>s beg9n+ 93,! applicable p]iod is !3 #bjaeb-ye> p]iod #bjaf or #bjagc-ye> p]iod #bjah1 #bjai1 or #bjbjd-ye> p]iod 7#e7 ,election out ( phase-9 ,! taxpay] may elect1 at su* "t & 9 su* =m & mann] z ! ,secret>y %all prescribe1 = p>agraph 7#a7 n to apply to all dome/ic rese>* or exp]im5tal exp5ditures ( ! taxpay] = any taxable ye>s beg9n+ be=e #bjba4 ,su* election1 once made1 %all be irrevocable4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #agd & ins]t+ ! foll[+ new item3 ,sec4 #agd4 ,amortization ( rese>* & exp]im5tal exp5ditures4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caji4 ,repeal ( d$uctions = soil & wat] cons]vation exp5ditures & endang]$ species recov]y exp5ditures 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #age 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts ,p>agraphs 7#a77;,a7 & 7#b7 ( section #abeb7;a7 are ea* am5d$ by /rik+ relat+ to soil & wat] cons]vation exp5ditures & ins]t+ z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad4 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 7#b7 ,assessm5ts treat$ z paid or incurr$ ,9 ! case ( any am\nt paid or incurr$ be=e ,decemb] #ca1 #bjad1 & treat$ z paid or incurr$ 9 any succe$+ taxable ye> by reason ( section #age7;f7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect on ! day be=e ! date ( ! enactm5t ( ?is ,act71 p>agraph 7#a7 %all n apply4 #caaj4 ,amortization ( c]ta9 adv]tis+ exp5ses 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #agf ! foll[+ new section3 #agg4 ,amortization ( c]ta9 adv]tis+ exp5ses 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s amortizable adv]tis+ exp5ses = any taxable ye>-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ses1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ses to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ses ratably ov] ! #aj-ye> p]iod beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* su* exp5ses are paid or incurr$4 7b7 ,exemption 7#a7 ,9 g5]al ,s mu* ( ! taxpay]'s o!rwise d$uctible adv]tis+ exp5ses = any taxable ye> z d n exce$ #a1jjj1jjj %all n be tak5 into acc\nt 9 det]m9+ su* taxpay]'s amortizable adv]tis+ exp5ses = su* taxable ye>4 7#b7 ,phase\t ( exemption ,9 ! case ( a taxpay] ^: o!rwise d$uctible adv]tis+ exp5ses = any taxable ye> exce$ #a1ejj1jjj1 ! doll> am\nt 9 effect "u p>agraph 7#a7 ) respect to su* taxpay] = su* taxable ye> %all be r$uc$ 7b n bel[ z]o7 by twice su* excess4 7#c7 ,aggregation2 %ort taxable ye>s ,= purposes ( ?is subsection1 rules simil> to ! rules ( p>agraphs 7#b7 & 7#c77;,b7 ( section #ddh7;b7 %all apply4 7c7 ,amortizable adv]tis+ exp5ses 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m amortizable adv]tis+ exp5ses means1 ) respect to any taxpay] = any taxable ye>1 ! applicable p]c5tage ( ! taxpay]'s o!rwise d$uctible adv]tis+ exp5ses = su* taxable ye>4 7#b7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means 7) respect to ! taxpay]'s o!rwise d$uctible adv]tis+ exp5ses = any taxable ye>7 ! p]c5tage det]m9$ 9 accordance ) ! foll[+ table3 ,= taxable ye>s beg9n+ 93,! applicable p]c5tage is3 #bjaebj p]c5t #bjafcj p]c5t #bjagdj p]c5t #bjah or !reaft]#ej p]c5t4 7#c7 ,election out ( phase-9 ,! taxpay] may elect1 at su* "t & 9 su* =m & mann] z ! ,secret>y %all prescribe1 to treat ! applicable p]c5tage z be+ equal to #ej p]c5t = all taxable ye>s beg9n+ be=e #bjah4 ,su* election1 once made1 %all be irrevocable4 7d7 ,o!rwise d$uctible adv]tis+ exp5ses ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m o!rwise d$uctible adv]tis+ exp5ses means1 ) respect to any taxpay] = any taxable ye>1 ! d$uctions :i* w\ld 7b = ?is section7 be all[able to ! taxpay] = su* taxable ye> ) respect to specifi$ adv]tis+ exp5ses4 7#b7 ,specifi$ adv]tis+ exp5ses ,! t]m specifi$ adv]tis+ exp5ses means any am\nt paid or incurr$ = ! developm5t1 production1 or placem5t 7includ+ any =m ( transmission1 broadca/1 publication1 display1 or di/ribution7 ( any communication to ! g5]al public 7or portions !re(7 :i* is int5d$ to promote ! taxpay] or a trade or bus9ess ( ! taxpay] 7or any s]vice1 facility1 or product provid$ pursuant to su* trade or bus9ess74 7#c7 ,exceptions ,! t]m specifi$ adv]tis+ exp5ses %all n include-- 7,a7 ,c]ta9 wages ,wages paid or incurr$ to any employee unless ! s]vices r5d]$ by su* employee are prim>ily relat$ to-- 7i7 an activity describ$ 9 p>agraph 7#b7 7o!r ?an ! direct sale ( goods or s]vices to cu/om]s ( ! taxpay]71 or 7ii7 ! direct sup]vision ( employees r5d]+ s]vices prim>ily relat$ to su* an activity4 7,b7 ,depreciation ( tangible prop]ty ,9 ! case ( any tangible prop]ty1 any am\nt = :i* a d$uction is all[$ = depreciation "u section #afg4 7,c7 ,amortizable section #aig intangibles ,any am\nt = :i* a d$uction is all[$ = amortization "u section #aig4 7,d7 ,disc\nts1 etc ,any disc\nt1 c\pon1 rebate1 slott+ all[ance1 sample1 prize1 loyalty rew>d po9t1 or any item det]m9$ by ! ,secret>y to be simil> to any ( ! =ego+ 7o!r ?an any am\nt paid or incurr$ to promote any ( ! =ego+74 7,e7 ,c]ta9 communications on taxpay]'s prop]ty ,any am\nt paid or incurr$ ) respect to any communication appe>+ on tangible prop]ty ( ! taxpay] :i*-- 7i7 is ( a "* subject to ! all[ance = depreciation1 or 7ii7 is prop]ly treat$ z inv5tory = purposes ( section #dga4 7,f7 ,creation ( logos1 trade names1 etc ,any am\nt paid or incurr$ = ! creation ( any logo1 tradem>k1 or trade "n4 7,g7 ,package design ,any am\nt to :i* section #bfc;,a7i7 applies4 7,h7 ,m>ket+ rese>* ,any am\nt paid or incurr$ = m>ket+ rese>*4 7,i7 ,bus9ess meals ,any am\nt paid or incurr$ = meals4 7,j7 ,qualifi$ sponsor%ip paym5ts ,any am\nt paid or incurr$ z a qualifi$ sponsor%ip paym5t 7z def9$ 9 section #eac7;i77#b77 ) respect to an organization subject to ! tax impos$ by section #eaa4 7e7 ,treatm5t ^u ab&onm5t ,if any prop]ty ) respect to :i* specifi$ adv]tis+ exp5ses are paid or incurr$ is dispos$1 retir$1 or ab&on$ dur+ ! p]iod dur+ :i* su* exp5ses are all[$ z an amortization d$uction "u ?is section1 no d$uction %all be all[$ ) respect su* exp5ses on acc\nt ( su* disposition1 retirem5t1 or ab&onm5t & su* amortization d$uction %all cont9ue ) respect to su* exp5ses4 7f7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #bjae1 ea* ( ! doll> am\nts 9 subsection 7b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjad = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7#b7 ,r\nd+ ,! am\nt ( any increase "u p>agraph 7#a7 %all be r\nd$ to ! ne>e/ multiple ( #aj1jjj4 4 7b7 ,capitalization ( package design exp5ses ,section #bfc;,a is am5d$ by r$esignat+ subsection 7i7 z subsection 7j7 & by ins]t+ aft] subsection 7h7 ! foll[+ new subsection3 7i7 ,capitalization ( package design exp5ses ,= purposes ( ?is section1 9 ! case ( any am\nt paid or incurr$ = package design1 su* am\nts %all be treat$ z an indirect co/ describ$ 9 subsection 7a77#b77;,b7 ) respect to packages :i* utilize su* design4 4 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #agf ! foll[+ new item3 ,sec4 #agg4 ,amortization ( c]ta9 adv]tis+ exp5ses4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caaa4 ,exp5s+ c]ta9 depreciable bus9ess assets = small bus9ess 7a7 ,9 g5]al 7#a7 ,doll> limitation ,p>agraph 7#a7 ( section #agi7;b7 is am5d$ by /rik+ %all n exce$-- & all t foll[s & ins]t+ %all n exce$ #bej1jjj44 7#b7 ,r$uction 9 limitation ,p>agraph 7#b7 ( section #agi7;b7 is am5d$ by /rik+ exce$s-- & all t foll[s & ins]t+ exce$s #hjj1jjj44 7b7 ,comput] s(tw>e ,clause 7ii7 ( section #agi7;d77#a77;,a7 is am5d$ by /rik+ to :i* section #afg applies1 & :i* is plac$ 9 s]vice 9 a taxable ye> beg9n+ aft] #bjjb & be=e #bjad & ins]t+ & to :i* section #afg applies4 7c7 ,election ,p>agraph 7#b7 ( section #agi7;c7 is am5d$-- 7#a7 by /rik+ may n be revok$ & all t foll[s ?r\gh & be=e #bjad1 & 7#b7 by /rik+ irrevocable 9 ! head+ !re(4 7d7 ,air condition+ & heat+ units ,p>agraph 7#a7 ( section #agi7;d7 is am5d$ by /rik+ & %all n include air condition+ or heat+ units4 7e7 ,qualifi$ real prop]ty ,section #agi7;f7 is am5d$-- 7#a7 by /rik+ beg9n+ 9 #bjaj1 #bjaa1 #bjab1 or #bjac 9 p>agraph 7#a71 & 7#b7 by /rik+ p>agraphs 7#c7 & 7#d74 7f7 ,inflation adju/m5t ,subsection 7b7 ( section #agi is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 ! doll> am\nts 9 p>agraphs 7#a7 & 7#b7 %all ea* be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7,b7 ,r\nd+ ,! am\nt ( any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #aj1jjj4 4 7g7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #caab4 ,repeal ( election to exp5se c]ta9 ref9]ies 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #agi;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t ,section #cab7k77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ 1 #agi;,c ea* place x appe>s4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjac4 #caac4 ,repeal ( d$uction = en]gy effici5t comm]cial build+s 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #agi;,d 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t 7#a7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#ca74 7#b7 ,section #cab7k77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ 1 #agi;,d ea* place x appe>s4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjac4 #caad4 ,repeal ( election to exp5se advanc$ m9e safety equipm5t 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #agi;,e 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t ,section #cab7k77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7#a7 by /rik+ 1 or #agi;,e1 z ! case may be1 & 7#b7 by /rik+ 1 or #agi;,e ea* place x appe>s4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjac4 #caae4 ,repeal ( d$uction = exp5ditures by f>m]s = f]tiliz]1 etc 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #ahj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ses paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caaf4 ,repeal ( special treatm5t ( c]ta9 qualifi$ film & television productions 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aha 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to productions comm5c+ aft] ,decemb] #ca1 #bjac4 #caag4 ,repeal ( special rules = recov]ies ( damages ( antitru/ violations1 etc 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #ahf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caah4 ,treatm5t ( re=e/ation exp5ditures 7a7 ,elim9ation ( exp5s+ election ,section #aid is am5d$ by /rik+ subsections 7a7 & 7b71 by r$esignat+ subsection 7c7 & 7d7 z subsections 7b7 & 7c71 respectively1 & by ins]t+ be=e subsection 7b7 7z s r$esignat$7 ! foll[+ new subsection3 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s qualifi$ re=e/ation exp5ditures = any taxable ye>-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ditures1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ditures to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ditures ratably ov] ! #g-ye> p]iod beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* su* exp5ditures are paid or incurr$4 4 7b7 ,qualifi$ re=e/ation exp5ditures ,section #aid7;b71 z r$esignat$ by subsection 7a71 is am5d$ by /rik+ p>agraph 7#b71 by r$esignat+ p>agraph 7#a7 z p>agraph 7#b71 & by ins]t+ be=e p>agraph 7#b7 7z s r$esignat$ ! foll[+ new p>agraph3 7#a7 ,qualifi$ re=e/ation exp5ditures ,! t]m qualifi$ re=e/ation exp5ditures means1 ) respect to any taxable ye>1 ! re=e/ation exp5ditures paid or incurr$ by ! taxpay] dur+ su* taxable ye> ) respect to qualifi$ timb] prop]ty4 4 7c7 ,qualifi$ timb] prop]ty limit$ to ornam5tal trees ,section #aid7;b77#b71 z r$esignat$ by subsections 7a7 & 7b71 is am5d$ to read z foll[s3 7#b7 ,qualifi$ timb] prop]ty ,! t]m qualifi$ timb] prop]ty means a woodlot or o!r site locat$ 9 ! ,unit$ ,/ates :i*-- 7,a7 w conta9 ev]gre5 trees 9 significant comm]cial quantities :i* are reasonably expect$ to be m ?an #f ye>s old at ! "t sev]$ f ! roots1 & 7,b7 is held by ! taxpay] = ! plant+1 cultivat+1 c>+ =1 & cutt+ ( su* trees = sale = ornam5tal purposes4 4 7d7 ,det]m9ation ( recomput$ basis ,section #abde7;b7 is am5d$ by /rik+ p>agraph 7#g74 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ditures paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caai4 #bj-ye> amortization ( goodwill & c]ta9 o!r intangibles 7a7 ,9 g5]al ,subsection 7a7 ( section #aig is am5d$ by /rik+ #ae-ye> p]iod & ins]t+ #bj-ye> p]iod4 7b7 ,mortgage s]vic+ rights ,subsection 7e7 ( section #aig is am5d$ by /rik+ p>agraph 7#f7 & by r$esignat+ p>agraph 7#g7 z p>agraph 7#f74 7c7 ,con=m+ am5dm5ts 7#a7 ,clause 7i7 ( section #aig7;e77#d77;,d7 is am5d$ by /rik+ #ae ye>s & ins]t+ #bj ye>s4 7#b7 ,section #afg7;f7 is am5d$ by /rik+ p>agraph 7#c74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty acquir$ aft] ,decemb] #ca1 #bjad4 #cabj4 ,treatm5t ( environm5tal rem$iation co/s 7a7 ,9 g5]al ,subsection 7a7 ( section #aih is am5d$ to read z foll[s3 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s qualifi$ environm5tal rem$iation exp5ditures = any taxable ye>-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ditures1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ditures to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ditures ratably ov] ! #dj-ye> p]iod beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* su* exp5ditures are paid or incurr$4 4 7b7 ,made p]man5t ,section #aih is am5d$ by /rik+ subsection 7h74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #aih1 z am5d$ by subsection 7b71 is am5d$ by /rik+ subsection 7f7 & by r$esignat+ subsection 7g7 z subsection 7f74 7#b7 ,section #aih 7& ! item relat+ to su* section 9 ! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a7 is am5d$ by /rik+ ,exp5s+ 9 ! head+ !re( & ins]t+ ,amortization4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ditures paid or incurr$ aft] ,decemb] #ca1 #bjad4 #caba4 ,repeal ( exp5s+ ( qualifi$ disa/] exp5ses 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aih;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 #cabb4 ,phase\t & repeal ( d$uction = income attributable to dome/ic production activities 7a7 ,phase\t 7#a7 ,9 g5]al ,subsection 7a7 ( section #aii is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,phase\t ,9 ! case ( any taxable ye> beg9n+ aft] #bjad1 p>agraph 7#a7 %all be appli$ by sub/itut+ = ! p]c5tage conta9$ !re9 ! phase\t p]c5tage det]m9$ "u ! foll[+ table3 ,= taxable ye>s beg9n+ 93,! phase\t p]c5tage is3 #bjaef #bjafc 4 7#b7 ,coord9ation ) oil relat$ qualifi$ production activities income ,section #aii7;d7 is am5d$ by /rik+ p>agraph 7#i74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7b7 ,repeal 7#a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aii 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#b7 ,con=m+ am5dm5ts 7,a7 ,sections #hf7;b77#b77;,a71 #acg7;b77#c77;,a71 #bdf7;b77#a71 & #dfi7;i77#c77;,f77iii7 are ea* am5d$ by /rik+ #aii14 7,b7 ,section #afc7;j77#f77;,a77i71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ subclause 7,,iii7 & by r$esignat+ subclauses 7,,iv7 & 7,v7 z subclauses 7,,iii7 & 7,,iv71 respectively4 7,c7 ,section #agj7;b77#b77;,c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ clause 7v71 by r$esignat+ clause 7vi7 z clause 7v71 & by ins]t+ & at ! end ( clause 7iv74 7,d7 ,section #agb7;d7 is am5d$ by /rik+ p>agraph 7#g74 7,e7 ,section #adjb7;a7 is am5d$ by add+ & at ! end ( p>agraph 7#ae7 & by /rik+ p>agraph 7#af74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #cabc4 ,unification ( d$uction = organizational exp5ditures 7a7 ,9 g5]al ,subsections 7a7 & 7b7 ( section #aie is am5d$ by ins]t+ & organizational aft] />t-up ea* place x appe>s4 7b7 ,organizational exp5ditures ,subsection 7c7 ( section #aie is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,organizational exp5ditures ,! t]m organizational exp5ditures means any exp5diture :i*-- 7,a7 is incid5t to ! creation ( a corporation or a p>tn]%ip1 7,b7 is *>geable to capital acc\nt1 & 7,c7 is ( a "* :i*1 if exp5d$ incid5t to ! creation ( a corporation or a p>tn]%ip hav+ a limit$ life1 w\ld be amortizable ov] su* life4 4 7c7 ,doll> am\nts ,clause 7ii7 ( section #aie7;b77#a77;,a7 is am5d$-- 7#a7 by /rik+ #e1jjj & ins]t+ #aj1jjj1 & 7#b7 by /rik+ #ej1jjj & ins]t+ #fj1jjj4 7d7 ,mid-,ye> conv5tion ,subp>agraph 7,b7 ( section #aie7;b77#a71 z am5d$ by subsection 7a71 is am5d$ to read z foll[s3 7,b7 ! rema9d] ( su* />t-up & organizational exp5ditures %all be *>g$ to capital acc\nt & all[$ z an amortization d$uction det]m9$ by amortiz+ su* exp5ditures ratably ov] ! #ae-ye> p]iod beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* ! active trade or bus9ess beg9s4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,section #aie7;b77#a7 is am5d$-- 7,a7 by ins]t+ 7or1 9 ! case ( a p>tn]%ip1 ! p>tn]%ip elects7 aft] ,if a taxpay] elects1 & 7,b7 by ins]t+ 7or ! p>tn]%ip1 z ! case may be7 aft] ! taxpay] 9 subp>agraph 7,a74 7#b7 ,section #aie7;b77#b7 is am5d$-- 7,a7 by /rik+ amortization p]iod4--,9 any case & ins]t+ ! foll[+3 amortization p]iod4-- 7,a7 ,9 g5]al ,9 any case 1 & 7,b7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 ,special p>tn]%ip rule ,9 ! case ( a p>tn]%ip1 subp>agraph 7,a7 %all be appli$ at ! p>tn]%ip level4 4 7#c7 ,section #aie7;b7 is am5d$ by /rik+ p>agraph 7#c74 7#d7 7,a7 ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bdh 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #agj7;b77#b77;,c77ii7 is am5d$ by /rik+ 7except section #bdh74 7,c7 ,section #cab7n77#c7 is am5d$ by /rik+ ,sections #agc & #bdh & ins]t+ ,section #agc4 7,d7 ,section #ece7;b77#c7 is am5d$ by /rik+ 7except section #bdh74 7,e7 ,section #ede7;b77#c7 is am5d$ by /rik+ 7except section #bdh74 7,f7 ,section #hcd7;c77#g7 is am5d$ by /rik+ 7except section #bdh74 7,g7 ,section #heb7;b77#b77;,c7 is am5d$ by /rik+ 7except section #bdh74 7,h7 ,section #heg7;b77#b77;,a7 is am5d$ by /rik+ 7except section #bdh74 7,i7 ,section #acfc7;b7 is am5d$ by ins]t+ & at ! end ( p>agraph 7#b71 by /rik+ p>agraph 7#c71 & by r$esignat+ p>agraph 7#d7 z p>agraph 7#c74 7,j7 ,section #acge7;b77#a77;,b77i7 is am5d$ by /rik+ 7o!r ?an ! d$uction all[$ by section #bdh1 relat+ to organization exp5ditures74 7#e7 ,"p ,i ( sub*apt] ,k ( *apt] #a is am5d$ by /rik+ section #gji 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#f7 ,! head+ ( section #aie 7& ! item relat+ to su* section 9 ! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a7 are ea* am5d$ by ins]t+ & organizational aft] ,/>t-up4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ses paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cabd4 ,prev5tion ( arbitrage ( d$uctible int]e/ exp5se & tax-exempt int]e/ income 7a7 ,pro rata allocation rules applicable to f9ancial in/itutions modifi$ & made applicable to all ,c corporations 7#a7 ,application to corporations ,s mu* ( section #bfe7;b7 z prec$es p>agraph 7#c7 is am5d$ to read z foll[s3 7b7 ,pro rata allocation ( int]e/ exp5se ( corporations & f9ancial in/itutions to tax-,exempt int]e/ 7#a7 ,9 g5]al ,9 ! case ( a ,c corporation or a f9ancial in/itution1 no d$uction %all be all[$ = t portion ( ! taxpay]'s int]e/ exp5se :i* is allocable to tax-exempt int]e/4 7#b7 ,allocation ,= purposes ( p>agraph 7#a71 ! portion ( ! taxpay]'s int]e/ exp5se :i* is allocable to tax-exempt int]e/ is an am\nt :i* be>s ! same ratio to su* int]e/ exp5se z-- 7,a7 ! taxpay]'s av]age adju/$ bases 7)9 ! mean+ ( section #ajaf7 ( tax-exempt obligations acquir$ on or aft] ,febru>y #bf1 #bjad 7,augu/ #g1 #aihf1 9 ! case ( a f9ancial in/itution71 be>s to 7,b7 su* av]age adju/$ bases = all assets ( ! taxpay]4 4 7#b7 ,repeal ( exceptions ,section #bfe7;b7 is am5d$ by /rik+ p>agraphs 7#c7 & 7#g74 7b7 ,limitation on inve/m5t int]e/ 7#a7 ,9 g5]al ,section #afc7;d77#a7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,9 ! case ( a taxpay] o!r ?an a corporation1 ! am\nt all[$ z a d$uction "u ?is *apt] = inve/m5t int]e/ = any taxable ye>-- 7,a7 %all be r$uc$ by ! am\nt ( tax-exempt int]e/ receiv$ by ! taxpay] dur+ su* taxable ye>1 & 7,b7 %all n 7aft] any r$uction "u subp>agraph 7,a77 exce$ ! net inve/m5t income ( ! taxpay] = su* taxable ye>4 4 7#b7 ,r$uctions = tax-exempt int]e/ n c>ri$ =w>d ,section #afc7;d77#b7 is am5d$ by /rik+ p>agraph 7#a7 & ins]t+ p>agraph 7#a77;,b74 7#c7 ,cl>ification t prop]ty held = inve/m5t includes prop]ty produc+ tax-exempt int]e/ ,section #afc7;d77#e77;,a7 is am5d$ by /rik+ & at ! end ( clause 7i71 by /rik+ ! p]iod at ! end ( clause 7ii77,,ii7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7iii7 any prop]ty held = ! production ( tax-exempt int]e/ 7includ+ any %>es ( /ock ( a regulat$ inve/m5t company :i* dur+ ! taxable ye> ( ! hold] !re( di/ributes exempt-int]e/ divid5ds74 4 7#d7 ,coord9ation ) section #bfe 7,a7 ,9 g5]al ,section #bfe7;a7 is am5d$ by-- 7i7 /rik+ p>agraph 7#b7 & ins]t+ ! foll[+ new p>agraph3 7#b7 ,int]e/ 7,a7 ,corporations & f9ancial in/itutions ,= pro rata allocation rules 9 ! case ( corporations & f9ancial in/itutions1 see subsection 7b74 7,b7 ,o!r taxpay]s ,= limitation on inve/m5t int]e/ 9 ! case ( o!r taxpay]s1 see section #afc7;d74 1 & 7ii7 by /rik+ p>agraphs 7#d7 & 7#e7 & by r$esignat+ p>agraph 7#f7 z p>agraph 7#d74 7,b7 ,con=m+ am5dm5ts 7i7 ,section #bfe7;b71 z am5d$ by subsection 7a71 is am5d$ by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,special rules = %ort sales 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 int]e/ includes any am\nt paid or incurr$-- 7i7 by any p]son mak+ a %ort sale 9 connection ) p]sonal prop]ty us$ 9 su* %ort sale1 or 7ii7 by any o!r p]son = ! use ( any collat]al ) respect to su* %ort sale4 7,b7 ,exception :]e no return on ca% collat]al ,if-- 7i7 ! taxpay] provides ca% z collat]al = any %ort sale1 & 7ii7 ! taxpay] receives no mat]ial e>n+s on su* ca% dur+ ! p]iod ( ! sale1 subp>agraph 7,a77i7 %all n apply to su* %ort sale4 4 7ii7 ,section #bfe7;b77#f7 is am5d$ to read z foll[s3 7#f7 ,coord9ation ) section #bfc;,a ,?is section %all be appli$ be=e ! application ( section #bfc;,a 7relat+ to capitalization ( c]ta9 exp5ses :]e taxpay] produces prop]ty74 4 7iii7 ,section #afc7n77#b7 is am5d$ to read z foll[s3 7#b7 ,= disall[ance ( d$uction = int]e/ relat+ to tax-exempt income1 see sections #afc7;d7 & #bfe7;b7 4 7c7 ,effective dates 7#a7 ,application ( pro rata allocation rules 7,a7 ,application to ,c corporations ,! am5dm5ts made by subsection 7a77#a7 %all apply to taxable ye>s end+ on or aft] ,febru>y #bf1 #bjad4 7,b7 ,repeal ( exceptions ,! am5dm5ts made by subsection 7a77#b7 %all apply to obligations issu$ on or aft] ,febru>y #bf1 #bjad4 7#b7 ,limitation on inve/m5t int]e/ ,! am5dm5ts made by subsection 7b7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cabe4 ,prev5tion ( transf] ( c]ta9 losses f tax indiff]5t p>ties 7a7 ,9 g5]al ,section #bfg7;d7 is am5d$ to read z foll[s3 7d7 ,am\nt ( ga9 :]e loss previ\sly disall[$ 7#a7 ,9 g5]al ,if-- 7,a7 9 ! case ( a sale or ex*ange ( prop]ty to ! taxpay] a loss su/a9$ by ! transf]or is n all[able to ! transf]or z a d$uction by reason ( subsection 7a77#a71 & 7,b7 ! taxpay] sells or o!rwise disposes ( su* prop]ty 7or ( o!r prop]ty ! basis ( :i* 9 ! taxpay]'s h&s is det]m9$ directly or indirectly by ref]5ce to su* prop]ty7 at a ga91 !n su* ga9 %all be recogniz$ only to ! ext5t t x exce$s s mu* ( su* loss z is prop]ly allocable to ! prop]ty sold or o!rwise dispos$ ( by ! taxpay]4 7#b7 ,exception = wa% sales ,p>agraph 7#a7 %all n apply if ! loss su/a9$ by ! transf]or is n all[able to ! transf]or z a d$uction by reason ( section #ajia 7relat+ to wa% sales74 7#c7 ,exception = transf]s f tax indiff]5t p>ties ,p>agraph 7#a7 %all n apply to ! ext5t any loss su/a9$ by ! transf]or 7if all[$7 w\ld n be tak5 into acc\nt 9 det]m9+ a tax impos$ "u section #a or #aa or a tax comput$ z provid$ by ei!r ( su* sections4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to sales & ex*anges aft] ,decemb] #ca1 #bjad4 #cabf4 ,ent]ta9m5t1 etc4 exp5ses 7a7 ,d5ial ( d$uction ,subsection 7a7 ( section #bgd is am5d$ to read z foll[s3 7a7 ,ent]ta9m5t1 amusem5t1 or recreation 7#a7 ,9 g5]al ,no d$uction o!rwise all[able "u ?is *apt] %all be all[$ = am\nts paid or incurr$ = any ( ! foll[+ items3 7,a7 ,activity ,) respect to an activity :i* is ( a type g5]ally consid]$ to con/itute ent]ta9m5t1 amusem5t1 or recreation4 7,b7 ,memb]%ip dues ,) respect to memb]%ip 9 any club organiz$ = bus9ess1 pleasure1 recreation or o!r social purposes4 7,c7 ,am5ity ,) respect to a de m9imis fr+e 7z def9$ 9 section #acb7;e77#a77 t is prim>ily p]sonal 9 nature & involv+ prop]ty or s]vices t are n directly relat$ to ! taxpay]'s trade or bus9ess4 7,d7 ,facility ,) respect to a facility or portion !re( us$ 9 connection ) an activity ref]r$ to 9 subp>agraph 7,a71 memb]%ip dues or simil> am\nts ref]r$ to 9 subp>agraph 7,b71 or an am5ity ref]r$ to 9 subp>agraph 7,c74 7,e7 ,qualifi$ transportation fr+e & p>k+ facility ,:i* is a qualifi$ transportation fr+e 7z def9$ 9 section #acb7;f77 or :i* is a p>k+ facility us$ 9 connection ) qualifi$ p>k+ 7z def9$ 9 section #acb7;f77#e77;,c774 7#b7 ,special rules ,= purposes ( apply+ p>agraph 7#a71 an activity describ$ 9 section #bab %all be treat$ z a trade or bus9ess4 7#c7 ,regulations ,"u ! regulations prescrib$ to c>ry out ?is section1 ! ,secret>y %all include regulations-- 7,a7 def9+ ent]ta9m5t1 am5ities1 recreation1 amusem5t1 & facilities = purposes ( ?is subsection1 7,b7 provid+ = ! appropriate allocation ( depreciation & o!r co/s ) respect to facilities us$ = p>k+1 & 7,c7 specify+ arrangem5ts a prim>y purpose ( :i* is ! avoidance ( ?is subsection4 4 7b7 ,exception = c]ta9 exp5ses includible 9 income ( recipi5t 7#a7 ,exp5ses treat$ z comp5sation ,p>agraph 7#b7 ( section #bgd7;e7 is am5d$ to read z foll[s3 7#b7 ,exp5ses treat$ z comp5sation ,exp5ses = goods1 s]vices1 & facilities1 to ! ext5t t ! exp5ses d n exce$ ! am\nt ( ! exp5ses :i* are treat$ by ! taxpay]1 ) respect to ! recipi5t ( ! ent]ta9m5t1 amusem5t1 or recreation1 z comp5sation to an employee on ! taxpay]'s return ( tax "u ?is *apt] & z wages to su* employee = purposes ( *apt] #bd 7relat+ to )hold+ ( income tax at s\rce on wages74 4 7#b7 ,exp5ses includible 9 income ( p]sons :o are n employees ,p>agraph 7#i7 ( section #bgd7;e7 is am5d$ by /rik+ to ! ext5t t ! exp5ses & ins]t+ to ! ext5t t ! exp5ses d n exce$ ! am\nt ( ! exp5ses t4 7c7 ,exceptions = reimburs$ exp5ses ,p>agraph 7#c7 ( section #bgd7;e7 is am5d$ to read z foll[s3 7#c7 ,reimburs$ exp5ses 7,a7 ,9 g5]al ,exp5ses paid or incurr$ by ! taxpay]1 9 connection ) ! p]=mance by him ( s]vices = ano!r p]son 7:e!r or n su* o!r p]son is ! taxpay]'s employ]71 "u a reimbursem5t or o!r exp5se all[ance arrangem5t ) su* o!r p]son1 b ?is p>agraph %all apply-- 7i7 :]e ! s]vices are p]=m$ = an employ]1 only if ! employ] has n treat$ su* exp5ses 9 ! mann] provid$ 9 p>agraph 7#b71 or 7ii7 :]e ! s]vices are p]=m$ = a p]son o!r ?an an employ]1 only if ! taxpay] acc\nts 7to ! ext5t provid$ by subsection 7d77 to su* p]son4 7,b7 ,exception ,except z provid$ by ! ,secret>y1 subp>agraph 7,a7 %all n apply-- 7i7 9 ! case ( an arrangem5t 9 :i* ! p]son o!r ?an ! employ] is an entity describ$ 9 section #afh7;g77#b77;,a71 or 7ii7 to any o!r arrangem5t designat$ by ! ,secret>y z hav+ ! effect ( avoid+ ! limitation "u subp>agraph 7,a74 4 7d7 #ej-,p]c5t limitation on meals & ent]ta9m5t exp5ses ,subsection 7n7 ( section #bgd is am5d$ to read z foll[s3 7n7 ,limitation on c]ta9 exp5ses 7#a7 ,9 g5]al ,! am\nt all[able z a d$uction "u ?is *apt] = any exp5se = food or bev]ages 7pursuant to subsection 7e77#a77 or bus9ess meals 7pursuant to subsection 7k77#a77 %all n exce$ #ej p]c5t ( ! am\nt ( su* exp5se or item :i* w\ld 7b = ?is p>agraph7 be all[able z a d$uction "u ?is *apt]4 7#b7 ,exceptions ,p>agraph 7#a7 %all n apply to any exp5se if-- 7,a7 su* exp5se is describ$ 9 p>agraph 7#b71 7#c71 7#f71 7#g71 or 7#h7 ( subsection 7e71 7,b7 9 ! case ( an exp5se = food or bev]ages1 su* exp5se is excludable f ! gross income ( ! recipi5t "u section #acb by reason ( subsection 7e7 !re( 7relat+ to de m9imis fr+es7 or "u section #aai 7relat+ to meals & lodg+ furni%$ = conv5i5ce ( employ]71 or 7,c7 9 ! case ( an employ] :o pays or reimburses mov+ exp5ses ( an employee1 su* exp5ses are includible 9 ! income ( ! employee "u section #hb4 7#c7 ,special rule = individuals subject to ,f$]al h\rs ( s]vice ,9 ! case ( any exp5ses = food or bev]ages consum$ :ile away f home 7)9 ! mean+ ( section #afb7;a77#b77 by an individual dur+1 or incid5t to1 ! p]iod ( duty subject to ! h\rs ( s]vice limitations ( ! ,dep>tm5t ( ,transportation1 p>agraph 7#a7 %all be appli$ by sub/itut+ #hj p]c5t = #ej p]c5t4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,section #bgd7;d7 is am5d$-- 7,a7 by /rik+ p>agraph 7#b7 & r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively1 & 7,b7 9 ! flu% mat]ial foll[+ p>agraph 7#c7 7z s r$esignat$7-- 7i7 by /rik+ 1 ent]ta9m5t1 amusem5t1 recreation1 or 9 item 7,b71 & 7ii7 by /rik+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( p]sons ent]ta9$1 us+ ! facility or prop]ty1 or receiv+ ! gift & ins]t+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( ! p]son receiv+ ! b5efit4 7#b7 ,section #bgd7;e7 is am5d$ by /rik+ p>agraph 7#d7 & r$esignat+ p>agraphs 7#e71 7#f71 7#g71 7#h71 & 7#i7 z p>agraphs 7#d71 7#e71 7#f71 7#g71 & 7#h71 respectively4 7#c7 ,section #bgd7k77#b77;,a7 is am5d$ by /rik+ 7#d71 7#g71 7#h71 or 7#i7 & ins]t+ 7#f71 7#g71 or 7#h74 7#d7 ,section #bgd is am5d$ by /rik+ subsection 7l74 7#e7 ,section #bgd7m77#a77;,b77ii7 is am5d$ by /rik+ 7#d71 7#g71 7#h71 or 7#i7 & ins]t+ 7#f71 7#g71 or 7#h74 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 #cabg4 ,repeal ( limitation on corporate acquisition indebt$ness 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bgi 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to int]e/ paid or incurr$ ) respect to indebt$ness incurr$ aft] ,decemb] #ca1 #bjad4 #cabh4 ,d5ial ( d$uctions & cr$its = exp5ditures 9 illegal bus9esses 7a7 ,9 g5]al ,section #bhj;,e is am5d$ to read z foll[s3 #bhj;,e4 ,exp5ditures 9 connection ) illegal bus9esses ,no d$uction or cr$it %all be all[$ = any am\nt paid or incurr$ dur+ ! taxable ye> 9 c>ry+ on any trade or bus9ess if-- 7#a7 su* trade or bus9ess 7or ! activities :i* comprise su* trade or bus9ess7 consi/s ( traffick+ 9 controll$ sub/ances 7)9 ! mean+ ( s*$ule ,i & ,,ii ( ! ,controll$ ,sub/ances ,act7 :i* is prohibit$ by ,f$]al law or ! law ( any ,/ate 9 :i* su* trade or bus9ess is conduct$1 or 7#b7 ! c>ry+ out ( su* trade or bus9ess is a felony "u ,f$]al law or ! law ( any ,/ate 9 :i* su* trade or bus9ess is conduct$4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #bhj;,e & ins]t+ ! foll[+ new item3 ,sec4 #bhj;,e4 ,exp5ditures 9 connection ) illegal bus9esses4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ! date ( ! enactm5t ( ?is ,act 9 taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 #cabi4 ,limitation on d$uction = ,,fdic premiums 7a7 ,9 g5]al ,section #afb is am5d$ by r$esignat+ subsection 7q7 z subsection 7r7 & by ins]t+ aft] subsection 7p7 ! foll[+ new subsection3 7q7 ,disall[ance ( ,,fdic premiums paid by c]ta9 l>ge f9ancial in/itutions 7#a7 ,9 g5]al ,no d$uction %all be all[$ = ! applicable p]c5tage ( any ,,fdic premium paid or incurr$ by ! taxpay]4 7#b7 ,exception = small in/itutions ,p>agraph 7#a7 %all n apply to any taxpay] = any taxable ye> if ! total consolidat$ assets ( su* taxpay] 7det]m9$ z ( ! close ( su* taxable ye>7 d n exce$ #aj1jjj1jjj1jjj4 7#c7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means1 ) respect to any taxpay] = any taxable ye>1 ! ratio 7express$ z a p]c5tage b n great] ?an #ajj p]c5t7 :i*-- 7,a7 ! excess (-- 7i7 ! total consolidat$ assets ( su* taxpay] 7det]m9$ z ( ! close ( su* taxable ye>71 ov] 7ii7 #aj1jjj1jjj1jjj1 be>s to 7,b7 #dj1jjj1jjj1jjj4 7#d7 ,,fdic premiums ,= purposes ( ?is subsection1 ! t]m ,,fdic premium means any assessm5t impos$ "u section #g7;b7 ( ! ,f$]al ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahag7;b774 7#e7 ,total consolidat$ assets ,= purposes ( ?is subsection1 ! t]m total consolidat$ assets has ! mean+ giv5 su* t]m "u section #afe ( ! ,dodd-,frank ,wall ,/reet ,re=m & ,consum] ,protection ,act 7#ab ,u4,s4,c4 #ecfe74 7#f7 ,aggregation rule 7,a7 ,9 g5]al ,memb]s ( an exp&$ affiliat$ gr\p %all be treat$ z a s+le taxpay] = purposes ( apply+ ?is subsection4 7,b7 ,exp&$ affiliat$ gr\p ,= purposes ( ?is p>agraph1 ! t]m exp&$ affiliat$ gr\p means an affiliat$ gr\p z def9$ 9 section #aejd7;a71 det]m9$-- 7i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s1 & 7ii7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b74 ,a p>tn]%ip or any o!r entity 7o!r ?an a corporation7 %all be treat$ z a memb] ( an exp&$ affiliat$ gr\p if su* entity is controll$ 7)9 ! mean+ ( section #ied7;d77#c77 by memb]s ( su* gr\p 7includ+ any entity treat$ z a memb] ( su* gr\p by reason ( ?is s5t5ce74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cacj4 ,repeal ( p]c5tage depletion 7a7 ,9 g5]al ,"p ,i ( sub*apt] ,i ( *apt] #a is am5d$ by /rik+ sections #fac & #fac;,a 7& by /rik+ ! items relat+ to su* sections 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,su* "p is am5d$ by r$esignat+ section #fad z section #fac 7&1 9 ! table ( sections = su* "p1 by r$esignat+ ! item relat+ to section #fad z an item relat+ to section #fac74 7,b7 ,clauses 7iv7 & 7v7 ( section #dfe7;c77#b77;,a7 are ea* am5d$ by /rik+ section #fad & ins]t+ section #fac4 7,c7 ,section #ajaf7;e7 is am5d$ by /rik+ section #fad & ins]t+ section #fac4 7,d7 ,section #abed7;a77#c7 is am5d$ by /rik+ section #fad & ins]t+ section #fac4 7#b7 ,section #de7;c77#d7 is am5d$ to read z foll[s3 7#d7 ,geo!rmal en]gy 7,a7 ,9 g5]al ,! t]m geo!rmal en]gy means en]gy d]iv$ f a geo!rmal deposit4 7,b7 ,geo!rmal deposit ,! t]m geo!rmal deposit means a geo!rmal res]voir consi/+ ( natural heat :i* is /or$ 9 rocks or 9 an aque\s liquid or vapor 7:e!r or n "u pressure74 4 7#c7 ,section #dh7;a77#c77;,a77iii7 is am5d$ by /rik+ section #fac7;e77#b7 & ins]t+ section #de7;c77#d77;,b7 7#d7 ,section #cha7;c7 is am5d$ by /rik+ p>agraph 7#ah74 7#e7 ,section #dfe7;c77#a77;,e7 is am5d$ by /rik+ section #fac7;e77#b7 & ins]t+ section #de7;c77#d77;,b74 7#f7 ,section #dfh7;d77#c7 is am5d$ by /rik+ section #fad & ins]t+ section #fac4 7#g7 ,section #faa7;a7 is am5d$ by /rik+ ! second s5t5ce4 7#h7 ,section #fac7;d71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ includes only & all t foll[s & ins]t+ includes only an int]e/ burd5$ by ! co/s ( production44 7#i7 ,section #fcf7;a7 is am5d$ by /rik+ 7= purposes ( section #fac74 7#aj7 ,section #fcf7;d7 is am5d$ by /rik+ section #fad7;a7 & ins]t+ section #fac7;a74 7#aa7 ,section #gje7;a7 is am5d$-- 7,a7 9 p>agraph 7#a71 by add+ & at ! end ( subp>agraph 7,a71 by /rik+ 2 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,c71 7,b7 9 p>agraph 7#b71 by /rik+ 2 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & 7,c7 by /rik+ p>agraph 7#c74 7#ab7 ,section #ija7;e77#a77;,a7 is am5d$ by /rik+ 7or1 if small] & all t foll[s ?r\gh "u section #fac74 7#ac7 ,section #iic7;c77#b77;,c7 is am5d$ by ins]t+ 7z ea* su* section 0 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #fac or #fac;,a4 7#ad7 ,section #abjb7;e77#c77;,d7 is am5d$ by ins]t+ 7z ea* su* section 0 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #fac or #fac;,a4 7#ae7 ,section #acfg7;a7 is am5d$-- 7,a7 9 p>agraph 7#a71 by add+ & at ! end ( subp>agraph 7,a71 by /rik+ 1 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,c71 & 7,b7 9 p>agraph 7#b71 by add+ & at ! end ( subp>agraph 7,c71 by /rik+ 1 & at ! end ( subp>agraph 7,d7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,e74 7#af7 ,section #addf7;c7 is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraph 7#c7 z p>agraph 7#b74 7#ag7 ,section #dfab7;a77#g7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #fac4 7#ah7 ,section #didj7;c77#c77;,b7 is am5d$-- 7,a7 by /rik+ clause 7ii71 & 7,b7 by /rik+ all t prec$es ,! d$uction provid$ & ins]t+ ! foll[+3 7,b7 ,modifications ,= purposes ( subp>agraph 7,a71 ! d$uction provid$ 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #caca4 ,repeal ( passive activity exception = work+ int]e/s 9 oil & gas prop]ty 7a7 ,9 g5]al ,subsection 7c7 ( section #dfi is am5d$ by /rik+ p>agraph 7#c74 7b7 ,con=m+ am5dm5ts ,section #dfi is am5d$-- 7#a7 by /rik+ p>agraph 7#d7 & by r$esignat+ p>agraphs 7#e71 7#f71 & 7#g7 z p>agraphs 7#c71 7#d71 & 7#e71 respectively1 & 7#b7 9 p>agraph 7#b7-- 7,a7 by /rik+ p>agraph 7#g7 & ins]t+ p>agraph 7#e71 & 7,b7 by ins]t+ 1 )\t reg>d to :e!r or n ! taxpay] mat]ially p>ticipates 9 ! activity be=e ! p]iod at ! end4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cacb4 ,repeal ( special rules = ga9 or loss on timb]1 coal1 or dome/ic iron ore 7a7 ,9 g5]al ,sub*apt] ,i ( *apt] #a is am5d$ by /rik+ "p ,,iii 7& by /rik+ ! item relat+ to su* "p 9 ! table ( p>ts = su* sub*apt]74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #eab7;b77#e7 is am5d$ by /rik+ ! la/ s5t5ce4 7#b7 ,section #hga7;a77#a77;,b7 is am5d$ by /rik+ ga9s describ$ 9 section #fca7;b7 or 7c71 &4 7#c7 ,section #hga7;d77#a77;,a7 is am5d$-- 7,a7 by /rik+ 1 7ii7 r5ts & ins]t+ & 7ii7 r5ts1 & 7,b7 by /rik+ 1 & 7iii7 ga9s describ$ 9 section #fca7;b7 or 7c74 7#d7 7,a7 ,section #hha7;a7 is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively4 7,b7 ,section #addb7;a7 is am5d$-- 7i7 by /rik+ #hha7;a77#c7 & 7#d7 & ins]t+ #hha7;a77#b7 & 7#c71 7ii7 by /rik+ #hha7;a77#c71 & ins]t+ #hha7;a77#b711 & 7iii7 by /rik+ #hha7;a77#d7 & ins]t+ #hha7;a77#c74 7#e7 ,section #hhb7;d77#a77;,a7 is am5d$-- 7,a7 by /rik+ 1 7ii7 r5ts & ins]t+ & 7ii7 r5ts1 & 7,b7 by /rik+ 1 & 7iii7 ga9s describ$ 9 section #fca7;b7 or 7c74 7#f7 ,section #abca7;b7 is am5d$ by /rik+ p>agraph 7#b74 7#g7 ,section #adjb7;a77#c7 is am5d$ by ins]t+ or at ! end ( subp>agraph 7,a7 & by /rik+ subp>agraph 7,b7 & r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b74 7#h7 ,section #adda is am5d$-- 7,a7 9 subsection 7b71 by /rik+ 1 ga9s describ$ 9 section #fca7;b7 or 7c71 & 7,b7 9 subsection 7c77#e71 by /rik+ ga9s describ$ 9 section #fca7;b7 or 7c71 ga9s subject to tax "u section #hga7;a77#a77;,d71 & ins]t+ ga9s subject to tax "u section #hga7;a77#a77;,d74 7#i7 7,a7 ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bgb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7,b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#ae74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,basis adju/m5ts ,! am5dm5t made by subsection 7b77#i77;,b7 %all apply to d$uctions det]m9$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cacc4 ,repeal ( l-k9d ex*anges 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ section #ajca 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #aba7;d77#aj7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #ajca4 7#b7 ,section #aig7;f77#b77;,b77i7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] #ajca4 7#c7 ,section #dec7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#d7 ,section #dgj7;e77#d7 is am5d$-- 7,a7 by /rik+ ,sections #ajca7;a7 & 9 subp>agraph 7,a7 & ins]t+ ,section1 7i7 by /rik+ #ajca or 9 subp>agraph 7,b71 & 7ii7 by /rik+ sections #ajca & 9 ! head+ !re( & ins]t+ section4 7#e7 7,a7 ,section #eja7;c77#ab77;,c77v7 is am5d$ by /rik+ asset ex*ange or conv]sion transaction & ins]t+ specifi$ involunt>y conv]sion4 7,b7 ,section #eja7;c77#ab77;,g7 is am5d$-- 7i7 by /rik+ asset ex*ange or conv]sion transaction & ins]t+ specifi$ involunt>y conv]sion1 7ii7 by /rik+ volunt>y ex*ange or1 & 7iii7 by /rik+ #ajca or4 7#f7 7,a7 ,section #gjd7;c7 is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraph 7#c7 z p>agraph 7#b74 7,b7 ,section #gjd7;c77#b71 z s r$esignat$1 is am5d$ by /rik+ or 7#b74 7#g7 ,section #heg7;e77#b7 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively4 7#h7 7,a7 ,section #ajce is am5d$ by /rik+ subsection 7d7 & ins]t+ ! foll[+ new subsections3 7d7 ,ga9 f ex*anges n solely 9 k9d ,if an ex*ange w\ld be )9 ! provisions ( subsection 7a71 ( section #ajcf7;a71 or ( section #ajcg7;a71 if x 7 n = ! fact t ! prop]ty receiv$ 9 ex*ange consi/s n only ( prop]ty p]mitt$ by su* provisions to be receiv$ )\t ! recognition ( ga91 b also ( o!r prop]ty or money1 !n ! ga91 if any1 to ! recipi5t %all be recogniz$1 b 9 an am\nt n 9 excess ( ! sum ( su* money & ! fair m>ket value ( su* o!r prop]ty4 7e7 ,loss f ex*anges n solely 9 k9d ,if an ex*ange w\ld be )9 ! provisions ( subsection 7a71 ( section #ajcf7;a71 or ( section #ajcg7;a71 if x 7 n = ! fact t ! prop]ty receiv$ 9 ex*ange consi/s n only ( prop]ty p]mitt$ by su* provisions to be receiv$ )\t ! recognition ( ga9 or loss1 b also ( o!r prop]ty or money1 !n no loss f ! ex*ange %all be recogniz$4 7f7 ,basis ,if prop]ty 0 acquir$ on an ex*ange describ$ 9 ?is section1 section #ajcf7;a71 or section #ajcg7;a71 !n ! basis %all be ! same z t ( ! prop]ty ex*ang$1 decreas$ 9 ! am\nt ( any money receiv$ by ! taxpay] & increas$ 9 ! am\nt ( ga9 or decreas$ 9 ! am\nt ( loss to ! taxpay] t 0 recogniz$ on su* ex*ange4 ,if ! prop]ty s acquir$ consi/$ 9 "p ( ! type ( prop]ty p]mitt$ by ?is section1 section #ajcf7;a71 or section #ajcg7;a71 to be receiv$ )\t ! recognition ( ga9 or loss1 & 9 "p ( o!r prop]ty1 ! basis provid$ 9 ?is subsection %all be allocat$ betwe5 ! prop]ties 7o!r ?an money7 receiv$1 & = ! purpose ( ! allocation !re %all be assign$ to su* o!r prop]ty an am\nt equival5t to its fair m>ket value at ! date ( ! ex*ange4 ,= purposes ( ?is section & section #ajcf7;a71 :]e z "p ( ! consid]ation to ! taxpay] ano!r p>ty to ! ex*ange assum$ 7z det]m9$ "u section #ceg7;d77 a liability ( ! taxpay]1 su* assumption %all be consid]$ z money receiv$ by ! taxpay] on ! ex*ange4 4 7,b7 ,section #ajcf7;c7 is am5d$-- 7i7 9 p>agraph 7#a71 by /rik+ subsections 7b7 & 7c7 ( section #ajca & ins]t+ subsections 7d7 & 7e7 ( section #ajce1 & 7ii7 9 p>agraph 7#b71 by /rik+ subsection 7d7 ( section #ajca & ins]t+ subsection 7f7 ( section #ajce4 7,c7 ,section #ajcg7;c7 is am5d$-- 7i7 9 p>agraph 7#a71 by /rik+ subsections 7b7 & 7c7 ( section #ajca & ins]t+ subsections 7d7 & 7e7 ( section #ajce1 & 7ii7 9 p>agraph 7#b71 by /rik+ subsection 7d7 ( section #ajca & ins]t+ subsection 7f7 ( section #ajce4 7,d7 ,section #hc7;g7 is am5d$ by /rik+ section #ajca & ins]t+ section #ajce4 7,e7 ,section #dbd7;b7 is am5d$ by /rik+ section #ajca & ins]t+ section #ajce4 7,f7 ,section #dbd7;c77#a77;,b7 is am5d$ by /rik+ section #ajca & ins]t+ section #ajce4 7#i7 ,section #ajfj7;c7 is am5d$ by /rik+ ! second s5t5ce !re(4 7#aj7 ,section #abde7;b77#d7 is am5d$-- 7,a7 by /rik+ ,l k9d ex*anges2 involunt>y & ins]t+ ,involunt>y1 & 7,b7 by /rik+ #ajca or4 7#aa7 ,section #abej7;d77#d7 is am5d$-- 7,a7 by /rik+ ,l k9d ex*anges2 involunt>y & ins]t+ ,involunt>y1 7,b7 by /rik+ #ajca or 9 subp>agraph 7,a71 & 7,c7 by /rik+ #ajca or 9 subp>agraph 7,e74 7#ab7 ,section #bjcb;,a7e77#ad77;,c7 is am5d$-- 7,a7 9 clause 7i77,i71 by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #ajca1 & 7,b7 9 clause 7ii77,i71 by ins]t+ 7z s 9 effect7 aft] section #ajca4 7#ac7 ,section #didj7;c77#d7 is am5d$ by /rik+ subp>agraph 7,d74 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to transf]s aft] ,decemb] #ca1 #bjad4 7#b7 ,exception = transf]s pursuant to b9d+ contracts ,not)/&+ p>agraph 7#a71 ! am5dm5ts made by ?is section %all n apply to any transf] if-- 7,a7 su* transf] is pursuant to a writt5 b9d+ contract ent]$ into be=e ,janu>y #a1 #bjae1 & 7,b7 ! ex*ange ( :i* su* transf] is a "p is complet$ be=e ,janu>y #a1 #bjag4 #cacd4 ,re/riction on trade or bus9ess prop]ty treat$ z simil> or relat$ 9 s]vice to involunt>ily conv]t$ prop]ty 9 disa/] areas 7a7 ,class life ( replacem5t prop]ty n ,to exce$ conv]t$ prop]ty ,section #ajcc7;h77#b7 is am5d$ by ins]t+ if ! class life ( su* tangible prop]ty does n exce$ ! class life ( ! prop]ty s conv]t$ be=e ! p]iod at ! end4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to disa/]s decl>$ aft] ,decemb] #ca1 #bjad4 #cace4 ,repeal ( rollov] ( publicly trad$ securities ga9 into specializ$ small bus9ess inve/m5t companies 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ section #ajdd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #de;,d7c77#b77;,a7 is am5d$ to read z foll[s3 7,a7 any p>tn]%ip or corporation :i* is lic5s$ by ! ,small ,bus9ess ,adm9i/ration "u section #cja7;d7 ( ! ,small ,bus9ess ,inve/m5t ,act ( #aieh 7z 9 effect on ,may #ac1 #aiic71 & 4 7#b7 ,section #ajaf7;a77#bc7 is am5d$-- 7,a7 by /rik+ #ajdd11 & 7,b7 by /rik+ #ajdd7;d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales aft] ,decemb] #ca1 #bjad4 #cacf4 ,t]m9ation ( special rules = ga9 f c]ta9 small bus9ess /ock 7a7 ,t]m9ation ( p>tial exclusion ,section #abjb is am5d$-- 7#a7 by ins]t+ & be=e ! date ( ! enactm5t ( ! ,tax ,re=m ,act ( #bjad aft] ,rev5ue ,reconciliation ,act ( #aiic 9 subsection 7c77#a71 & 7#b7 by add+ at ! end ! foll[+ new subsection3 7l7 ,t]m9ation ,= t]m9ation ) respect to qualifi$ small bus9ess /ock issu$ aft] ! date ( ! enactm5t ( ! ,tax ,re=m ,act ( #bjad1 see subsection 7c77#a74 4 7b7 ,repeal ( rollov] rules 7#a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ section #ajde 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* "p74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ajaf7;a77#bc7 is am5d$-- 7i7 by /rik+ #ajde11 & 7ii7 by /rik+ #ajde7;b77#c714 7,b7 ,section #abbc is am5d$ by /rik+ p>agraph 7#ac74 7c7 ,effective dates 7#a7 ,t]m9ation ( p>tial exclusion ,! am5dm5ts made by subsection 7a7 %all apply to sales & ex*anges aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,repeal ( rollov] rules 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! am5dm5ts made by subsection 7b7 %all apply to sales aft] ! date ( ! enactm5t ( ?is ,act4 7,b7 ,sav+s provision ,! am5dm5ts made by subsection 7b77#b7 %all n apply ) respect to prop]ty ! acquisition ( :i* 0 be=e ! date ( ! enactm5t ( ?is ,act4 #cacg4 ,c]ta9 self-creat$ prop]ty n treat$ z a capital asset 7a7 ,pat5ts1 etc ,section #abba7;a77#c7 is am5d$ by ins]t+ a pat5t1 inv5tion1 model or design 7:e!r or n pat5t$71 a secret =mula or process1 be=e a copyright4 7b7 ,self-,creat$ musical works ,section #abba7;b7 is am5d$ by /rik+ p>agraph 7#c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjad4 #cach4 ,repeal ( special rule = sale or ex*ange ( pat5ts 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abce 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dhc7;d7 is am5d$ by /rik+ p>agraph 7#d74 7#b7 7,a7 ,section #hga7;a77#a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively4 7,b7 ,section #hga7;g77#c7 is am5d$ by /rik+ 7a77#a77;,c7 & ins]t+ 7a77#a77;,b74 7,c7 ,subsections 7h77#a7 & 7i77#a7 ( section #hga are ea* am5d$ by /rik+ 7#a77;,c7 & ins]t+ 7#a77;,b74 7,d7 ,section #adda1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 9 subsections 7b7 & 7c77#h71 by /rik+ #hga7;a77#a77;,c7 & ins]t+ #hga7;a77#a77;,b71 & 7ii7 9 subsections 7b7 & 7c77#e71 by /rik+ #hga7;a77#a77;,d7 & ins]t+ #hga7;a77#a77;,c74 7,e7 ,section #addb7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 by /rik+ #hga7;a77#a77;,c7 & 7,d7 & ins]t+ #hga7;a77#a77;,b7 & 7,c71 & 7ii7 by /rik+ #hga7;a77#a77;,d7 & ins]t+ #hga7;a77#a77;,c74 7#c7 ,section #ija7l77#e7 is am5d$ by /rik+ )\t reg>d to section #abce or any simil> rule & ins]t+ )\t reg>d to any provision :i* treats a disposition z a sale or ex*ange ( a capital asset held = m ?an #a ye> or any simil> provision4 7#d7 ,section #abgd7;c77#c7 is am5d$ by /rik+ subp>agraph 7,e7 & r$esignat+ subp>agraph 7,f7 z subp>agraph 7,e74 7#e7 ,subsections 7b7 & 7c77#e7 ( section #adda1 z am5d$ by ! prec$+ provisions ( ?is ,act1 are ea* am5d$ by /rik+ ga9s subject to tax "u section #hga7;a77#a77;,c71 & ga9s on transf]s describ$ 9 section #abce made on or be=e ,octob] #d1 #aiff & ins]t+ & ga9s subject to tax "u section #hga7;a77#a77;,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjad4 #caci4 ,depreciation recapture on ga9 f disposition ( c]ta9 depreciable realty 7a7 ,9 g5]al ,subsection 7a7 ( section #abej is am5d$ to read z foll[s3 7a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section1 if section #abej prop]ty is dispos$ ( aft] ,decemb] #ca1 #bjad1 ! am\nt ( ga9 ) respect to su* prop]ty :i* is treat$ z ord9>y income %all be an am\nt equal to ! less] (-- 7#a7 ! sum (-- 7,a7 ! am\nt ( additional depreciation attributable to p]iods be=e ,janu>y #a1 #bjae1 9 respect ( su* prop]ty1 & 7,b7 ! am\nt ( depreciation adju/m5ts attributable to p]iods aft] ,decemb] #ca1 #bjad1 9 respect ( su* prop]ty1 or 7#b7 ! excess ( ! am\nt realiz$ 7or1 9 ! case ( a disposition o!r ?an a sale1 ex*ange1 or involunt>y conv]sion1 ! fair m>ket value ( su* prop]ty71 ov] ! adju/$ basis ( su* prop]ty4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #bfg7;e77#e77;,d77i7 is am5d$ to read z foll[s3 7i7 any int]e/ 9-- 7,i7 any section #abej prop]ty ) respect to :i* a mortgage is insur$ "u section #bba7;d77#c7 or #bcf ( ! ,national ,h\s+ ,act1 or h\s+ f9anc$ or assi/$ by direct loan or tax abatem5t "u simil> provisions ( ,/ate or local laws & ) respect to :i* ! own] is subject to ! re/rictions describ$ 9 section #ajci7;b77#a77;,b7 7z 9 effect on ! day be=e ! date ( ! enactm5t ( ! ,rev5ue ,reconciliation ,act ( #aiij71 7,,ii7 dwell+ units :i*1 on ! av]age1 7 held = occupancy by families or individuals eligible to receive subsidies "u section #h ( ! ,unit$ ,/ates ,h\s+ ,act ( #aicg1 z am5d$1 or "u ! provisions ( ,/ate or local law au?oriz+ simil> levels ( subsidy = l[]-income families1 7,,iii7 any section #abej prop]ty ) respect to :i* a depreciation d$uction = rehabilitation exp5ditures 0 all[$ "u section #afg7k71 or 7,,iv7 any section #abej prop]ty ) respect to :i* a loan is made or insur$ "u title ,v ( ! ,h\s+ ,act ( #aidi1 & 4 7#b7 ,section #abej7;b7 is am5d$ by /rik+ p>agraph 7#d7 & by r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7#c7 ,section #abej7;c7 is am5d$ by /rik+ ,= purposes ( ?is section & ins]t+ ,= purposes ( ?is title 7#d7 7,a7 ,section #abej7;d77#e77;,b77i7 is am5d$ by /rik+ & ! applicable p]c5tage = ! prop]ty _h be5 #ajj p]c5t4 7,b7 ,section #abej7;d77#e77;,b77ii7 is am5d$ to read z foll[s3 7ii7 ! am\nt ( su* ga9 7if any7 to :i* section #gea7;b7 appli$4 4 7#e7 ,section #abej7;d7 is am5d$ by /rik+ p>agraph 7#g74 7#f7 ,section #abej is am5d$ by /rik+ subsections 7e7 & 7f7 & by r$esignat+ subsections 7g7 & 7h7 z subsections 7e7 & 7f71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjad4 #cadj4 ,common d$uction con=m+ am5dm5ts 7a7 ,9 g5]al 7#a7 ,section #abde7;a77#b77;,c7 is am5d$ by /rik+ section #agi1 & all t foll[s ?r\gh or #aid & ins]t+ section #agi or 7z 9 effect be=e repeal by ! ,tax ,re=m ,act ( #bjad7 section #agi;,a1 #agi;,b1 #agi;,c1 #agi;,d1 #agi;,e1 #aha1 #aij1 #aic1 or #aid1 7#b7 ,section #abde7;a77#c77;,c7 is am5d$ by /rik+ section #afi & all t foll[s ?r\gh or #aid & ins]t+ section #agi1 #ahe1 #ahh 7z 9 effect be=e its repeal by ! ,rev5ue ,reconciliation ,act ( #aiij71 or 7z 9 effect be=e repeal by ! ,tax ,re=m ,act ( #bjad7 section #afi1 #agi;,a1 #agi;,b1 #agi;,c1 #agi;,d1 #agi;,e1 #aij1 #aic1 or #aid4 7#c7 ,section #bfc7;a77#a7 is am5d$ by /rik+ subp>agraphs 7,c71 7,d71 7,f71 7,h71 7,i71 7,j71 7,k71 & 7,l7 & by r$esignat+ subp>agraphs 7,e7 & 7,g7 z subp>agraphs 7,c7 & 7,d71 respectively4 7#d7 ,section #bhj;,c1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsections 7c7 & 7g7 z subsections 7b7 & 7c71 respectively4 7b7 ,effective date ,ea* portion ( ea* am5dm5t made by ?is section %all take effect z if includ$ 9 ! provision ( ?is subtitle to :i* su* portion relates4 ,c ,re=m ( bus9ess cr$its #cbja4 ,repeal ( cr$it = alcohol1 etc41 us$ z fuel 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,repeal ( correspond+ excise tax cr$its 7#a7 ,cr$it ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdbf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 7#b7 ,paym5t ,section #fdbg is am5d$ by /rik+ subsection 7e74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#c74 7#b7 ,section #fdaf7;a77#d77;,c7 is am5d$-- 7,a7 by /rik+ section #fdbg7;i77#d7 & ins]t+ section #fdbg7;i77#c71 & 7,b7 by /rik+ section #fdbg7;i77#c77;,b7 & ins]t+ subp>agraph 7,b7 !re(4 7#c7 ,section #fdbg7;i7 is am5d$ by /rik+ p>agraph 7#c7 & by r$esignat+ p>agraph 7#d7 z p>agraph 7#c74 7#d7 ,section #fdbg7;i77#c71 z r$esignat$ by p>agraph 7#b71 is am5d$-- 7,a7 by /rik+ ! s5t5ce at ! end ( subp>agraph 7,a71 7,b7 by r$esignat+ subp>agraph 7,b7 z subp>agraph 7,c71 & 7,c7 by ins]t+ aft] subp>agraph 7,a7 ! foll[+ new subp>agraph3 7,b7 ,paym5t ( claim ,not)/&+ subsection 7l77#a71 if ! ,secret>y has n paid pursuant to a claim fil$ "u subsection 7b77#d71 7l77#d77;,c77ii71 or 7l77#e7 )9 #de days ( ! date ( ! fil+ ( su* claim 7#bj days 9 ! case ( an electronic claim71 ! claim %all be paid ) int]e/ f su* date det]m9$ by us+ ! ov]paym5t rate & me?od "u section #ffba4 4 7#e7 ,subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #cb is am5d$ by /rik+ section #dajd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#f7 ,section #feja7m7 is am5d$ by /rik+ #dj7;f714 7#g7 ,section #iejc7;b77#a7 is am5d$ by /rik+ ! second s5t5ce4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to fuels sold or us$ aft] ,decemb] #ca1 #bjac4 #cbjb4 ,repeal ( cr$it = biodiesel & r5ewable diesel us$ z fuel 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dj;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ag74 7#b7 ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #hg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#c7 ,section #daja7;a77#a7 is am5d$ by /rik+ 1 e p]son produc+ & all t foll[s ?r\gh section #dj7;b77#f77;,e774 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to fuels sold or us$ aft] ,decemb] #ca1 #bjac4 #cbjc4 ,rese>* cr$it modifi$ & made p]man5t 7a7 ,p]man5t simplification ( increm5tal rese>* cr$it & elim9ation ( cr$it = en]gy rese>* consortium paym5ts 7#a7 ,9 g5]al ,subsection 7a7 ( section #da is am5d$ to read z foll[s3 7a7 ,9 g5]al ,= purposes ( section #ch1 ! rese>* cr$it det]m9$ "u ?is section = ! taxable ye> %all be an am\nt equal to ! sum (-- 7#a7 #ae p]c5t ( s mu* ( ! qualifi$ rese>* exp5ses = ! taxable ye> z exce$s #ej p]c5t ( ! av]age qualifi$ rese>* exp5ses = ! #c taxable ye>s prec$+ ! taxable ye> = :i* ! cr$it is be+ det]m9$1 plus 7#b7 #ae p]c5t ( s mu* ( ! basic rese>* paym5ts = ! taxable ye> z exce$s #ej p]c5t ( ! av]age basic rese>* paym5ts = ! #c taxable ye>s prec$+ ! taxable ye> = :i* ! cr$it is be+ det]m9$4 4 7#b7 ,repeal ( t]m9ation ,section #da is am5d$ by /rik+ subsection 7h74 7#c7 ,con=m+ am5dm5ts 7,a7 ,subsection 7c7 ( section #da is am5d$ to read z foll[s3 7c7 ,det]m9ation ( av]age rese>* exp5ses = prior ye>s 7#a7 ,special rule 9 case ( no qualifi$ rese>* exp5ditures 9 any ( #c prec$+ taxable ye>s ,9 any case 9 :i* ! taxpay] has no qualifi$ rese>* exp5ses 9 any "o ( ! #c taxable ye>s prec$+ ! taxable ye> = :i* ! cr$it is be+ det]m9$1 ! am\nt det]m9$ "u subsection 7a77#a7 = su* taxable ye> %all be equal to #aj p]c5t ( ! qualifi$ rese>* exp5ses = ! taxable ye>4 7#b7 ,consi/5t treatm5t ( exp5ses 7,a7 ,9 g5]al ,not)/&+ :e!r ! p]iod = fil+ a claim = cr$it or refund has expir$ = any taxable ye> tak5 into acc\nt 9 det]m9+ ! av]age qualifi$ rese>* exp5ses1 or av]age basic rese>* paym5ts1 tak5 into acc\nt "u subsection 7a71 ! qualifi$ rese>* exp5ses & basic rese>* paym5ts tak5 into acc\nt 9 det]m9+ su* av]ages %all be det]m9$ on a basis consi/5t ) ! det]m9ation ( qualifi$ rese>* exp5ses & basic rese>* paym5ts1 respectively1 = ! cr$it ye>4 7,b7 ,prev5tion ( di/ortions ,! ,secret>y may prescribe regulations to prev5t di/ortions 9 calculat+ a taxpay]'s qualifi$ rese>* exp5ses or basic rese>* paym5ts caus$ by a *ange 9 acc\nt+ me?ods us$ by su* taxpay] betwe5 ! curr5t ye> & a ye> tak5 into acc\nt 9 det]m9+ ! av]age qualifi$ rese>* exp5ses or av]age basic rese>* paym5ts tak5 into acc\nt "u subsection 7a74 4 7,b7 ,section #da7;e7 is am5d$-- 7i7 by /rik+ all t prec$es p>agraph 7#f7 & ins]t+ ! foll[+3 7e7 ,basic rese>* paym5ts ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m basic rese>* paym5t means1 ) respect to any taxable ye>1 any am\nt paid 9 ca% dur+ su* taxable ye> by a corporation to any qualifi$ organization = basic rese>* b only if-- 7,a7 su* paym5t is pursuant to a writt5 agreem5t betwe5 su* corporation & su* qualifi$ organization1 & 7,b7 su* basic rese>* is to be p]=m$ by su* qualifi$ organization4 7#b7 ,exception to requirem5t t rese>* be p]=m$ by ! organization ,9 ! case ( a qualifi$ organization describ$ 9 subp>agraph 7,c7 or 7,d7 ( p>agraph 7#c71 subp>agraph 7,b7 ( p>agraph 7#a7 %all n apply4 1 7ii7 by r$esignat+ p>agraphs 7#f7 & 7#g7 z p>agraphs 7#c7 & 7#d71 respectively1 & 7iii7 9 p>agraph 7#d7 z s r$esignat$1 by /rik+ subp>agraphs 7,b7 & 7,c7 & by r$esignat+ subp>agraphs 7,d7 & 7,e7 z subp>agraphs 7,b7 & 7,c71 respectively4 7,c7 7i7 ,section #da7;f77#a7 is am5d$ by /rik+ 1 basic rese>* paym5ts1 & am\nts paid or incurr$ to en]gy rese>* consortiums1 9 subp>agraphs 7,a77ii7 & 7,b77ii7 & ins]t+ & basic rese>* paym5ts4 7ii7 ,section #da7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#d7 ,effective date 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 7,b7 ,p>agraph 7#b7 ,! am5dm5t made by p>agraph 7#b7 %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjac4 7b7 ,o!r re=ms 7#a7 ,elim9ation ( cr$it = comput] s(tw>e ,subp>agraph 7,e7 ( section #da7;d77#d7 is am5d$-- 7,a7 by /rik+ ,except to ! ext5t provid$ 9 regulations1 any rese>* & ins]t+ ,any rese>*1 & 7,b7 by /rik+ :i* is develop$ by & all t foll[s ?r\gh ! end & ins]t+ a p]iod4 7#b7 ,elim9ation ( increas$ cr$it = am\nts paid to c]ta9 entities ,p>agraph 7#c7 ( section #da7;b7 is am5d$ by /rik+ subp>agraphs 7,c7 & 7,d74 7#c7 ,elim9ation ( cr$it = supplies ,subp>agraph 7,a7 ( section #da7;b77#b7 is am5d$ by ins]t+ & at ! end ( clause 7i71 by /rik+ clause 7ii71 & by r$esignat+ clause 7iii7 z clause 7ii74 7#d7 ,elim9ation ( election ( r$uc$ cr$it ,section #bhj;,c7c7 is am5d$ by /rik+ p>agraphs 7#c7 & 7#d74 7#e7 ,con=m+ am5dm5ts 7,a7 ,! second s5t5ce ( section #da7;b77#b77;,a7 is am5d$ by /rik+ ,clause 7iii7 & ins]t+ ,clause 7ii74 7,b7 ,section #da7;b77#b7 is am5d$ by /rik+ subp>agraph 7,c7 & by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,c74 7,c7 ,section #da7;d77#b77;,b7 is am5d$ by /rik+ 1 comput] s(tw>e4 7#f7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cbjd4 ,l[-income h\s+ tax cr$it 7a7 ,re=m ( limitation & allocation rules 7#a7 ,allocations ( eligible basis am\nts r ?an cr$it am\nts2 elim9ation ( national reallocations ,subsection 7h7 ( section #db is am5d$ to read z foll[s3 7h7 ,limitation on qualifi$ basis ) respect to projects locat$ 9 a ,/ate 7#a7 ,qualifi$ basis may n exce$ limitation am\nt allocat$ to build+ 7,a7 ,9 g5]al ,! qualifi$ basis ( any build+ :i* is tak5 into acc\nt "u subsection 7a7 = any taxable ye> %all n exce$ ! limitation am\nt allocat$ to su* build+ "u ?is subsection4 7,b7 ,"t = mak+ allocation ,except 9 ! case ( an allocation :i* meets ! requirem5ts ( subp>agraph 7,c71 7,d71 7,e71 or 7,f71 an allocation %all be tak5 into acc\nt "u subp>agraph 7,a7 only if x is made n lat] ?an ! close ( ! cal5d> ye> 9 :i* ! build+ is plac$ 9 s]vice4 7,c7 ,exception :]e b9d+ commitm5t ,an allocation meets ! requirem5ts ( ?is subp>agraph if !re is a b9d+ commitm5t 7n lat] ?an ! close ( ! cal5d> ye> 9 :i* ! build+ is plac$ 9 s]vice7 by ! h\s+ cr$it ag5cy to allocate a specifi$ limitation am\nt to su* build+ beg9n+ 9 a specifi$ lat] taxable ye>4 7,d7 ,exception :]e increase 9 qualifi$ basis 7i7 ,9 g5]al ,an allocation meets ! requirem5ts ( ?is subp>agraph if su* allocation is made n lat] ?an ! close ( ! cal5d> ye> 9 :i* ends ! taxable ye> to :i* x w #a/ apply b only to ! ext5t ! am\nt ( su* allocation does n exce$ ! limitation "u clause 7ii74 7ii7 ,limitation ,! limitation "u ?is clause is ! excess (-- 7,i7 ! qualifi$ basis ( su* build+ z ( ! close ( ! #a/ taxable ye> to :i* su* allocation w apply1 ov] 7,,ii7 ! qualifi$ basis ( su* build+ z ( ! close ( ! #a/ taxable ye> to :i* ! mo/ rec5t prior allocation ) respect to su* build+ appli$4 7iii7 ,h\s+ cr$it basis limitation r$uc$ by full allocation ,not)/&+ clause 7i71 ! full am\nt ( ! allocation %all be tak5 into acc\nt "u p>agraph 7#b74 7,e7 ,exception :]e #aj p]c5t ( co/ incurr$ 7i7 ,9 g5]al ,an allocation meets ! requirem5ts ( ?is subp>agraph if su* allocation is made ) respect to a qualifi$ build+ :i* is plac$ 9 s]vice n lat] ?an ! close ( ! second cal5d> ye> foll[+ ! cal5d> ye> 9 :i* ! allocation is made4 7ii7 ,qualifi$ build+ ,= purposes ( clause 7i71 ! t]m qualifi$ build+ means any build+ :i* is "p ( a project if ! taxpay]'s basis 9 su* project 7z ( ! date :i* is #a ye> aft] ! date t ! allocation 0 made7 is m ?an #aj p]c5t ( ! taxpay]'s reasonably expect$ basis 9 su* project 7z ( ! close ( ! second cal5d> ye> ref]r$ to 9 clause 7i774 ,su* t]m does n include any exi/+ build+ unless a cr$it is all[able "u subsection 7e7 = rehabilitation exp5ditures paid or incurr$ by ! taxpay] ) respect to su* build+ = a taxable ye> end+ dur+ ! second cal5d> ye> ref]r$ to 9 clause 7i7 or ! prior taxable ye>4 7,f7 ,allocation ( cr$it on a project basis 7i7 ,9 g5]al ,9 ! case ( a project :i* includes 7or w include7 m ?an #a build+1 an allocation meets ! requirem5ts ( ?is subp>agraph if-- 7,i7 ! allocation is made to ! project = a cal5d> ye> dur+ ! project p]iod1 7,,ii7 ! allocation only applies to build+s plac$ 9 s]vice dur+ or aft] ! cal5d> ye> = :i* ! allocation is made1 & 7,,iii7 ! portion ( su* allocation :i* is allocat$ to any build+ 9 su* project is specifi$ n lat] ?an ! close ( ! cal5d> ye> 9 :i* ! build+ is plac$ 9 s]vice4 7ii7 ,project p]iod ,= purposes ( clause 7i71 ! t]m project p]iod means ! p]iod-- 7,i7 beg9n+ ) ! #a/ cal5d> ye> = :i* an allocation may be made = ! #a/ build+ plac$ 9 s]vice z "p ( su* project1 & 7,,ii7 end+ ) ! cal5d> ye> ! la/ build+ is plac$ 9 s]vice z "p ( su* project4 7#b7 ,allocat$ limitation am\nt to apply to all taxable ye>s end+ dur+ or aft] allocation ye> ,any limitation am\nt allocat$ to any build+ = any cal5d> ye>-- 7,a7 %all apply to su* build+ = all taxable ye>s 9 ! compliance p]iod end+ dur+ or aft] su* cal5d> ye>1 & 7,b7 %all r$uce ! aggregate limitation am\nt ( ! allocat+ ag5cy only = su* cal5d> ye>4 7#c7 ,limitation am\nt = ag5cies 7,a7 ,9 g5]al ,! limitation am\nt :i* a h\s+ cr$it ag5cy may allocate = any cal5d> ye> is ! portion ( ! ,/ate limitation allocat$ "u ?is p>agraph = su* cal5d> ye> to su* ag5cy4 7,b7 ,/ate limitation initially allocat$ to ,/ate h\s+ cr$it ag5cies ,except z provid$ 9 subp>agraph 7,f71 ! ,/ate limitation = ea* cal5d> ye> %all be allocat$ to ! h\s+ cr$it ag5cy ( su* ,/ate4 ,if !re is m ?an #a h\s+ cr$it ag5cy ( a ,/ate1 all su* ag5cies %all be treat$ z a s+le ag5cy4 7,c7 ,/ate limitation ,! ,/ate limitation applicable to any ,/ate = any cal5d> ye> %all be an am\nt equal to ! sum (-- 7i7 ! unus$ ,/ate limitation 7if any7 ( su* ,/ate = ! prec$+ cal5d> ye>1 7ii7 ! great] (-- 7,i7 #ca4bj multipli$ by ! ,/ate population1 or 7,,ii7 #cf1cjj1jjj1 plus 7iii7 ! am\nt ( ,/ate limitation return$ 9 ! cal5d> ye>4 7,d7 ,unus$ ,/ate limitation ,= purposes ( subp>agraph 7,c77i71 ! unus$ ,/ate limitation = any cal5d> ye> is ! excess 7if any7 ( ! sum ( ! am\nts describ$ 9 clauses 7ii7 & 7iii7 ( subp>agraph 7,c7 ov] ! aggregate limitation am\nt allocat$ = su* ye>4 7,e7 ,/ate limitation return$ 9 ! cal5d> ye> ,= purposes ( subp>agraph 7,c77iii71 ! am\nt ( ,/ate limitation return$ 9 ! cal5d> ye> equals ! limitation am\nt previ\sly allocat$ )9 ! ,/ate to any project-- 7i7 :i* fails to meet ! #aj p]c5t te/ "u p>agraph 7#a77;,e77ii7 on a date aft] ! close ( ! cal5d> ye> 9 :i* ! allocation 0 made1 7ii7 :i* does n become a qualifi$ l[-income h\s+ project )9 ! p]iod requir$ by ?is section or ! t]ms ( ! allocation1 or 7iii7 ) respect to :i* an allocation is cancell$ by mutual cons5t ( ! h\s+ cr$it ag5cy & ! allocation recipi5t4 7,f7 ,/ate may provide = diff]5t allocation ,= purposes ( ?is p>agraph1 a ,/ate may by law provide 7or a ,gov]nor ( a ,/ate may proclaim7 a diff]5t =mula = allocat+ ! ,/ate limitation among ! ,/ate h\s+ cr$it ag5cies 9 su* ,/ate4 7,g7 ,population ,= purposes ( ?is p>agraph1 det]m9ations ( ! population ( any ,/ate %all be made ) respect to any cal5d> ye> on ! basis ( ! mo/ rec5t c5sus e/imate ( ! resid5t population ( su* ,/ate releas$ by ! ,bureau ( ,c5sus be=e ! beg9n+ ( su* cal5d> ye>4 7,h7 ,co/-(-liv+ adju/m5t 7i7 ,9 g5]al ,9 ! case ( a cal5d> ye> aft] #bjae1 ! doll> am\nts 9 subp>agraph 7,c77ii7 %all ea* be increas$ by an am\nt equal to-- 7,i7 su* doll> am\nt1 multipli$ by 7,,ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjad = cal5d> ye> #bjab 9 clause 7ii7 !re(4 7ii7 ,r\nd+ 7,i7 ,9 ! case ( ! doll> am\nt 9 subp>agraph 7,c77ii77,i71 any increase "u clause 7i7 :i* is n a multiple ( #bj c5ts %all be r\nd$ to ! next l[e/ multiple ( #bj c5ts4 7,,ii7 ,9 ! case ( ! doll> am\nt 9 subp>agraph 7,c77ii77,,ii71 any increase "u clause 7i7 :i* is n a multiple ( #ajj1jjj %all be r\nd$ to ! next l[e/ multiple ( #ajj1jjj4 7#d7 ,portion ( ,/ate limitation set-aside = c]ta9 projects involv+ qualifi$ nonpr(it organizations 7,a7 ,9 g5]al ,n m ?an #ij p]c5t ( ! ,/ate limitation = any ,/ate = any cal5d> ye> %all be allocat$ to projects o!r ?an qualifi$ l[-income h\s+ projects describ$ 9 subp>agraph 7,b74 7,b7 ,projects involv+ qualifi$ nonpr(it organizations ,= purposes ( subp>agraph 7,a71 a qualifi$ l[-income h\s+ project is describ$ 9 ?is subp>agraph if a qualifi$ nonpr(it organization is to own an int]e/ 9 ! project 7directly or ?r\gh a p>tn]%ip7 & mat]ially p>ticipate 7)9 ! mean+ ( section #dfi7;h77 9 ! developm5t & op]ation ( ! project ?r\gh\t ! cr$it p]iod4 7,c7 ,qualifi$ nonpr(it organization ,= purposes ( ?is p>agraph1 ! t]m qualifi$ nonpr(it organization means any organization if-- 7i7 su* organization is describ$ 9 p>agraph 7#c7 or 7#d7 ( section #eja7;c7 & is exempt f tax "u section #eja7;a71 7ii7 su* organization is det]m9$ by ! ,/ate h\s+ cr$it ag5cy n to be affiliat$ ) or controll$ by a =-pr(it organization2 & 7iii7 #a ( ! exempt purposes ( su* organization includes ! fo/]+ ( l[-income h\s+4 7,d7 ,treatm5t ( c]ta9 subsidi>ies 7i7 ,9 g5]al ,= purposes ( ?is p>agraph1 a qualifi$ nonpr(it organization %all be treat$ z satisfy+ ! own]%ip & mat]ial p>ticipation te/ ( subp>agraph 7,b7 if any qualifi$ corporation 9 :i* su* organization holds /ock satisfies su* te/4 7ii7 ,qualifi$ corporation ,= purposes ( clause 7i71 ! t]m qualifi$ corporation means any corporation if #ajj p]c5t ( ! /ock ( su* corporation is held by #a or m qualifi$ nonpr(it organizations at all times dur+ ! p]iod su* corporation is 9 exi/5ce4 7,e7 ,/ate may n ov]ride set-aside ,no?+ 9 subp>agraph 7,f7 ( p>agraph 7#c7 %all be con/ru$ to p]mit a ,/ate n to comply ) subp>agraph 7,a7 ( ?is p>agraph4 7#e7 ,build+s eligible = cr$it only if m9imum long-t]m commitm5t to l[-income h\s+ 7,a7 ,9 g5]al ,no cr$it %all be all[$ by reason ( ?is section ) respect to any build+ = ! taxable ye> unless an ext5d$ l[-income h\s+ commitm5t is 9 effect z ( ! end ( su* taxable ye>4 7,b7 ,ext5d$ l[-income h\s+ commitm5t ,= purposes ( ?is p>agraph1 ! t]m ext5d$ l[-income h\s+ commitm5t means any agreem5t betwe5 ! taxpay] & ! h\s+ cr$it ag5cy-- 7i7 :i* requires t ! applicable fraction 7z def9$ 9 subsection 7c77#a77 = ! build+ = ea* taxable ye> 9 ! ext5d$ use p]iod w n be less ?an ! applicable fraction specifi$ 9 su* agreem5t & :i* prohibits ! actions describ$ 9 subclauses 7,i7 & 7,,ii7 ( subp>agraph 7,e77ii71 7ii7 :i* all[s individuals :o meet ! income limitation applicable to ! build+ "u subsection 7g7 7:e!r prospective1 pres5t1 or =m] occupants ( ! build+7 ! "r to en=ce 9 any ,/ate c\rt ! requirem5t & prohibitions ( clause 7i71 7iii7 :i* prohibits ! disposition to any p]son ( any portion ( ! build+ to :i* su* agreem5t applies unless all ( ! build+ to :i* su* agreem5t applies is dispos$ ( to su* p]son1 7iv7 :i* prohibits ! refusal to lease to a hold] ( a v\*] or c]tificate ( eligibility "u section #h ( ! ,unit$ ,/ates ,h\s+ ,act ( #aicg because ( ! /atus ( ! prospective t5ant z su* a hold]1 7v7 :i* is b9d+ on all successors ( ! taxpay]1 & 7vi7 :i*1 ) respect to ! prop]ty1 is record$ pursuant to ,/ate law z a re/rictive cov5ant4 7,c7 ,allocation ( limitation am\nt may n exce$ am\nt necess>y to support commitm5t ,! limitation am\nt allocat$ to any build+ may n exce$ ! am\nt necess>y to support ! applicable fraction specifi$ 9 ! ext5d$ l[-income h\s+ commitm5t = su* build+4 7,d7 ,ext5d$ use p]iod ,= purposes ( ?is p>agraph1 ! t]m ext5d$ use p]iod means ! p]iod-- 7i7 beg9n+ on ! #a/ day 9 ! cr$it p]iod on :i* su* build+ is "p ( a qualifi$ l[-income h\s+ project1 & 7ii7 end+ on ! lat] (-- 7,i7 ! date specifi$ by su* ag5cy 9 su* agreem5t1 or 7,,ii7 ! date :i* is #ae ye>s aft] ! close ( ! cr$it p]iod4 7,e7 ,exceptions if =eclosure or if no buy] will+ to ma9ta9 l[-income /atus 7i7 ,9 g5]al ,! ext5d$ use p]iod = any build+ %all t]m9ate-- 7,i7 on ! date ! build+ is acquir$ by =eclosure 7or in/rum5t 9 lieu ( =eclosure7 unless ! ,secret>y det]m9es t su* acquisition is "p ( an arrangem5t ) ! taxpay] a purpose ( :i* is to t]m9ate su* p]iod1 or 7,,ii7 on ! la/ day ( ! p]iod specifi$ 9 subp>agraph 7,i7 if ! h\s+ cr$it ag5cy is unable to pres5t dur+ su* p]iod a qualifi$ contract = ! acquisition ( ! l[-income portion ( ! build+ by any p]son :o w cont9ue to op]ate su* portion z a qualifi$ l[-income build+4 ,subclause 7,,ii7 %all n apply to ! ext5t m /r+5t requirem5ts are provid$ 9 ! agreem5t or 9 ,/ate law4 7ii7 ,eviction1 etc41 ( exi/+ l[-income t5ants n p]mitt$ ,! t]m9ation ( an ext5d$ use p]iod "u clause 7i7 %all n be con/ru$ to p]mit be=e ! close ( ! #c-ye> p]iod foll[+ su* t]m9ation-- 7,i7 ! eviction or ! t]m9ation ( t5ancy 7o!r ?an = good cause7 ( an exi/+ t5ant ( any l[-income unit1 or 7,,ii7 any increase 9 ! gross r5t ) respect to su* unit n o!rwise p]mitt$ "u ?is section4 7,f7 ,qualifi$ contract ,= purposes ( subp>agraph 7,e71 ! t]m qualifi$ contract means a bona fide contract to acquire 7)9 a reasonable p]iod aft] ! contract is ent]$ into7 ! nonl[-income portion ( ! build+ = fair m>ket value & ! l[-income portion ( ! build+ = an am\nt n less ?an ! applicable fraction 7specifi$ 9 ! ext5d$ l[-income h\s+ commitm5t7 (-- 7i7 ! sum (-- 7,i7 ! out/&+ indebt$ness secur$ by1 or ) respect to1 ! build+1 7,,ii7 ! adju/$ inve/or equity 9 ! build+1 plus 7,,iii7 o!r capital contributions n reflect$ 9 ! am\nts describ$ 9 subclause 7,i7 or 7,,ii71 r$uc$ by 7ii7 ca% di/ributions f 7or available = di/ribution f7 ! project4 ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ?is p>agraph1 includ+ regulations to prev5t ! manipulation ( ! am\nt det]m9$ "u ! prec$+ s5t5ce4 7,g7 ,adju/$ inve/or equity 7i7 ,9 g5]al ,= purposes ( subp>agraph 7,f71 ! t]m adju/$ inve/or equity means1 ) respect to any cal5d> ye>1 ! aggregate am\nt ( ca% taxpay]s inve/$ ) respect to ! project increas$ by ! am\nt equal to-- 7,i7 su* am\nt1 multipli$ by 7,,ii7 ! co/-(-liv+ adju/m5t = su* cal5d> ye>1 det]m9$ "u section #a7;c77#b77;,a7 by sub/itut+ ! base cal5d> ye> = cal5d> ye> #bjab 9 clause 7ii7 !re(4 ,an am\nt %all be tak5 into acc\nt z an inve/m5t 9 ! project only to ! ext5t !re 0 an obligation to inve/ su* am\nt z ( ! beg9n+ ( ! cr$it p]iod & to ! ext5t su* am\nt is reflect$ 9 ! adju/$ basis ( ! project4 7ii7 ,co/-(-liv+ increases 9 excess ( #e p]c5t n tak5 into acc\nt ,"u regulations prescrib$ by ! ,secret>y1 if ! ,c-,,cpi-,u = any cal5d> ye> 7)9 ! mean+ ( section #a7;c77 exce$s ! ,c-,,cpi-,u = ! prec$+ cal5d> ye> by m ?an #e p]c5t1 ! ,c-,,cpi-,u = ! base cal5d> ye> %all be increas$ su* t su* excess %all nev] be tak5 into acc\nt "u clause 7i74 7iii7 ,base cal5d> ye> ,= purposes ( ?is subp>agraph1 ! t]m base cal5d> ye> means ! cal5d> ye> ) or )9 :i* ! #a/ taxable ye> ( ! cr$it p]iod ends4 7,h7 ,l[-income portion ,= purposes ( ?is p>agraph1 ! l[-income portion ( a build+ is ! portion ( su* build+ equal to ! applicable fraction specifi$ 9 ! ext5d$ l[-income h\s+ commitm5t = ! build+4 7,i7 ,p]iod = f9d+ buy] ,! p]iod ref]r$ to 9 ?is subp>agraph is ! #a-ye> p]iod beg9n+ on ! date 7aft] ! #ad? ye> ( ! cr$it p]iod7 ! taxpay] submits a writt5 reque/ to ! h\s+ cr$it ag5cy to f9d a p]son to acquire ! taxpay]'s int]e/ 9 ! l[-income portion ( ! build+4 7,j7 ,effect ( noncompliance ,if1 dur+ a taxable ye>1 !re is a det]m9ation t an ext5d$ l[-income h\s+ agreem5t 0 n 9 effect z ( ! beg9n+ ( su* ye>1 su* det]m9ation %all n apply to any p]iod be=e su* ye> & subp>agraph 7,a7 %all be appli$ )\t reg>d to su* det]m9ation if ! failure is correct$ )9 #a ye> f ! date ( ! det]m9ation4 7,k7 ,projects :i* consi/ ( m ?an #a build+ ,! application ( ?is p>agraph to projects :i* consi/ ( m ?an #a build+ %all be made "u regulations prescrib$ by ! ,secret>y4 7#f7 ,special rules 7,a7 ,build+ mu/ be locat$ )9 jurisdiction ( cr$it ag5cy ,a h\s+ cr$it ag5cy may allocate its limitation am\nt only to build+s locat$ 9 ! jurisdiction ( ! gov]nm5tal unit ( :i* su* ag5cy is a "p4 7,b7 ,ag5cy allocations 9 excess ( limit ,if ! limitation am\nts allocat$ by a h\s+ cr$it ag5cy = any cal5d> ye> exce$ ! portion ( ! ,/ate limitation allocat$ to su* ag5cy = su* cal5d> ye>1 ! limitation am\nts s allocat$ %all be r$uc$ 7to ! ext5t ( su* excess7 = build+s 9 ! rev]se ( ! ord] 9 :i* ! allocations ( su* am\nts 7 made4 7,c7 ,cr$it r$uc$ if cr$it is less ?an cr$it :i* w\ld be all[able )\t reg>d to plac$ 9 s]vice conv5tion1 etc 7i7 ,9 g5]al ,! am\nt ( ! cr$it det]m9$ "u ?is section ) respect to any build+ %all n exce$ ! clause 7ii7 p]c5tage ( ! am\nt ( ! cr$it :i* w\ld 7b = ?is subp>agraph7 be det]m9$ "u ?is section ) respect to su* build+4 7ii7 ,det]m9ation ( p]c5tage ,= purposes ( clause 7i71 ! clause 7ii7 p]c5tage ) respect to any build+ is ! p]c5tage :i*-- 7,i7 ! cr$it am\nt :i* w\ld be det]m9$ "u ?is section ) respect to ! build+ if ! limitation am\nt allocat$ to su* build+ 7 equal to ! qualifi$ basis ( su* build+1 be>s to 7,,ii7 ! cr$it am\nt det]m9$ 9 accordance ) clause 7iii74 7iii7 ,det]m9ation ( cr$it am\nt ,! cr$it am\nt det]m9$ 9 accordance ) ?is clause is ! am\nt ( ! cr$it :i* w\ld 7b = ?is subp>agraph7 be det]m9$ "u ?is section ) respect to ! build+ if ?is section 7 appli$ )\t reg>d to subsection 7f77#b77;,a74 7#g7 ,o!r def9itions ,= purposes ( ?is subsection-- 7,a7 ,h\s+ cr$it ag5cy ,! t]m h\s+ cr$it ag5cy means any ag5cy au?oriz$ to c>ry out ?is subsection4 7,b7 ,possessions treat$ z ,/ates ,! t]m ,/ate includes a possession ( ! ,unit$ ,/ates4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #db7;f7 is am5d$ by /rik+ p>agraph 7#c74 7,b7 ,section #db7;i77#c77;,b77iii77,,ii7 is am5d$ by /rik+ subsection 7h77#e7 & ins]t+ subsection 7h77#d74 7,c7 ,section #db7;i77#g77;,a7 is am5d$ by /rik+ subsection 7h77#e77;,c7 & ins]t+ subsection 7h77#d77;,c74 7,d7 ,section #db7;i77#h7 is am5d$ by /rik+ ! la/ s5t5ce4 7,e7 ,section #db7;i7 is am5d$ by /rik+ p>agraph 7#i74 7,f7 ,section #db7k77#b77;,a7 is am5d$ by /rik+ subsection 7h77#e7 & ins]t+ subsection 7h77#d74 7,g7 ,section #db7l77#c7 is am5d$ by /rik+ h\s+ cr$it am\nt bo? places x appe>s & ins]t+ limitation am\nt4 7,h7 ,section #db7m77#a77;,a7 is am5d$ by /rik+ h\s+ cr$it doll> am\nt bo? places x appe>s & ins]t+ limitation am\nt4 7,i7 ,section #db7m77#a77;,b77ii7 is am5d$ by /rik+ h\s+ cr$it doll> am\nts & ins]t+ limitation am\nts4 7,j7 ,section #db7m77#a7 is am5d$ by /rik+ subp>agraph 7,d74 7,k7 ,subp>agraphs 7,a71 7,b77iii71 7,c77i77,i71 & 7,c77i77,,ii7 ( section #db7m77#b7 are ea* am5d$ by /rik+ h\s+ cr$it doll> am\nt & ins]t+ limitation am\nt4 7,l7 ,section #db7m77#b7 is am5d$ by /rik+ subp>agraph 7,d74 7b7 #ae-,ye> cr$it p]iod 7#a7 ,9 g5]al ,section #db7;f77#a7 is am5d$ by /rik+ #aj taxable ye>s & ins]t+ #ae taxable ye>s4 7#b7 ,repeal ( recapture ,section #db is am5d$ by /rik+ subsection 7j74 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #db7;d77#g7 is am5d$-- 7i7 by /rik+ compliance p]iod 9 ! head+ !re( & ins]t+ cr$it p]iod1 & 7ii7 by /rik+ compliance p]iod 9 subp>agraph 7,b77ii7 & ins]t+ cr$it p]iod4 7,b7 ,section #db7;f77#d7 is am5d$ by /rik+ ! la/ s5t5ce !re(4 7,c7 ,section #db7;i7 is am5d$ by /rik+ p>agraph 7#a74 7,d7 ,section #db7;i77#f7 is am5d$ by /rik+ & any increase 9 tax "u subsection 7j74 7,e7 ,section #db7k77#d77;,c7 is am5d$ to read z foll[s3 7,c7 ,special rules 7i7 ,tax b5efit rule ,! tax = ! taxable ye> %all be increas$ "u subp>agraph 7,a7 only ) respect to cr$its all[$ by reason ( ?is section :i* 7 us$ to r$uce tax liability4 ,9 ! case ( cr$its n s us$ to r$uce tax liability1 ! c>ry=w>ds & c>rybacks "u section #ci %all be appropriately adju/$4 7ii7 ,no cr$its aga9/ tax ,any increase 9 tax "u ?is p>agraph %all n be treat$ z a tax impos$ by ?is *apt] = purposes ( det]m9+ ! am\nt ( any cr$it "u ?is *apt]4 4 7c7 ,det]m9ation ( applicable p]c5tage 7#a7 ,elim9ation ( #cj p]c5t cr$it2 modification ( disc\nt rate ,subsection 7b7 ( section #db is am5d$ to read z foll[s3 7b7 ,applicable p]c5tage 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m applicable p]c5tage means ) respect to any build+1 ! appropriate p]c5tage prescrib$ by ! ,secret>y = ! e>li] (-- 7,a7 ! mon? 9 :i* su* build+ is plac$ 9 s]vice1 or 7,b7 at ! election ( ! taxpay]1 ! mon? 9 :i* ! taxpay] & ! h\s+ cr$it ag5cy ent] into an agreem5t ) respect to su* build+ 7:i* is b9d+ on su* ag5cy1 ! taxpay]1 & all successors 9 int]e/7 z to ! limitation am\nt to be allocat$ to su* build+4 ,a mon? may be elect$ "u subp>agraph 7,b7 only if ! election is made n lat] ?an ! #e? day aft] ! close ( su* mon?4 ,su* an election1 once made1 %all be irrevocable4 7#b7 ,me?od ( prescrib+ p]c5tages ,! p]c5tages prescrib$ by ! ,secret>y = any mon? %all be p]c5tages :i* w yield ov] a #ae-ye> p]iod am\nts ( cr$it "u subsection 7a7 :i* h a pres5t value equal to #gj p]c5t ( ! qualifi$ basis ( ! build+4 7#c7 ,me?od ( disc\nt+ 7,a7 ,9 g5]al ,! pres5t value "u p>agraph 7#b7 %all be det]m9$-- 7i7 z ( ! la/ day ( ! #a/ ye> ( ! #ae-ye> p]iod ref]r$ to 9 p>agraph 7#b71 7ii7 by us+ a disc\nt rate equal to ! applicable disc\nt p]c5tage ( ! av]age ( ! annual ,f$]al mid-t]m rate & ! annual ,f$]al long-t]m rate applicable "u section #abgd7;d77#a7 to ! mon? applicable "u subp>agraph 7,a7 or 7,b7 ( p>agraph 7#a7 & comp\nd$ annually1 & 7iii7 by assum+ t ! cr$it all[able "u ?is section = any ye> is receiv$ on ! la/ day ( su* ye>4 7,b7 ,applicable disc\nt p]c5tage ,= purposes ( ?is p>agraph1 ! t]m applicable disc\nt p]c5tage means1 ) respect to any mon? ref]r$ to 9 subp>agraph 7,a77ii7 ! numb] ( p]c5tage po9ts by :i* #ajj p]c5t exce$s ! highe/ rate ( tax 9 effect "u section #aa = a taxable ye> :i* beg9s 9 su* mon?4 7#d7 ,cross ref]5ce ,= treatm5t ( c]ta9 rehabilitation exp5ditures z sep>ate new build+s1 see subsection 7e74 4 7#b7 ,exi/+ & ,f$]ally subsidiz$ build+s ineligible = cr$it ,section #db7;d7 is am5d$-- 7,a7 by /rik+ p>agraphs 7#a71 7#b71 & 7#f71 & r$esignat+ p>agraphs 7#c71 7#d71 7#e71 & 7#g7 z p>agraphs 7#b71 7#c71 7#d71 & 7#e71 respectively1 & 7,b7 by ins]t+ be=e p>agraph 7#b7 7z s r$esignat$7 ! foll[+ new p>agraph3 7#a7 ,9 g5]al ,! eligible basis ( any build+ is-- 7,a7 9 ! case a new build+ :i* is n ,f$]ally subsidiz$ = ! taxable ye>1 its adju/$ basis z ( ! close ( ! #a/ taxable ye> ( ! cr$it p]iod1 & 7,b7 z]o 9 any o!r case4 4 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #db7;e7 is am5d$-- 7i7 9 p>agraph 7#b77;,b71 by /rik+ p>agraph 7#c7 or 7#d7 & ins]t+ p>agraph 7#b7 or 7#c74 7ii7 9 p>agraph 7#c71 by /rik+ subp>agraph 7,b7 & r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively1 7iii7 9 p>agraph 7#d71 by /rik+ ! la/ s5t5ce !re(1 & 7iv7 by /rik+ p>agraph 7#e7 & r$esignat+ p>agraph 7#f7 z p>agraph 7#e74 7,b7 ,section #db7;f7 is am5d$ by /rik+ p>agraph 7#e74 7,c7 ,section #db7;i77#b77;,a7 is am5d$ by /rik+ = purposes ( subsection 7b77#a714 7,d7 ,section #db7;i77#c7 is am5d$-- 7i7 by /rik+ 7z def9$ 9 subsection 7d77#b77;,d77iii77 9 subp>agraph 7,c77ii7 & ins]t+ 7)9 ! mean+ ( subp>agraph 7,f771 & 7ii7 by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,relat$ p]son ,= purposes ( subp>agraph 7,c71 a p]son 7h]e9aft] 9 ?is subp>agraph ref]r$ to z ! relat$ p]son7 is relat$ to any p]son if ! relat$ p]son be>s a relation%ip to su* p]son specifi$ 9 section #bfg7;b7 or #gjg7;b77#a71 or ! relat$ p]son & su* p]son are engag$ 9 trades or bus9esses "u common control 7)9 ! mean+ ( subsections 7a7 & 7b7 ( section #eb74 4 7,e7 ,section #db7;i7 is am5d$ by /rik+ p>agraph 7#e74 7,f7 ,section #db7k77#b77;,b7 is am5d$ by /rik+ 1 except t & all t foll[s & ins]t+ a p]iod4 7d7 ,repeal ( special rules = build+s 9 high co/ & difficult developm5t areas 7#a7 ,9 g5]al ,p>agraph 7#d7 ( section #db7;d71 z r$esignat$ by subsection 7c77#b71 is am5d$ to read z foll[s3 7#d7 ,f$]al grants n tak5 into acc\nt 9 det]m9+ eligible basis ,! eligible basis ( a build+ %all n include any co/s f9anc$ ) ! proce$s ( a f$]ally fund$ grant4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,p>agraph 7#c7 ( section #db7;d71 z r$esignat$ by subsection 7c77#b71 is am5d$-- 7i7 by /rik+ 7z def9$ 9 p>agraph 7#e77;,c77 9 subp>agraph 7,c77i71 & 7ii7 by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,qualifi$ c5sus tract ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m qualifi$ c5sus tract means any c5sus tract :i* is designat$ by ! ,secret>y ( ,h\s+ & ,urban ,developm5t &1 = ! mo/ rec5t ye> = :i* c5sus data are available on h\sehold income 9 su* tract1 ei!r 9 :i* #ej p]c5t or m ( ! h\seholds h an income :i* is less ?an #fj p]c5t ( ! area m$ian gross income = su* ye> or :i* has a pov]ty rate ( at lea/ #be p]c5t4 ,if ! ,secret>y ( ,h\s+ & ,urban ,developm5t det]m9es t suffici5t data = any p]iod are n available to apply ?is subp>agraph on ! basis ( c5sus tracts1 su* ,secret>y %all apply ?is subp>agraph = su* p]iod on ! basis ( enum]ation di/ricts4 7ii7 ,limit on ,,msa's designat$ ,! portion ( a metropolitan /ati/ical area :i* may be designat$ = purposes ( ?is subp>agraph %all n exce$ an area hav+ #bj p]c5t ( ! population ( su* metropolitan /ati/ical area4 7iii7 ,det]m9ation ( areas ,= purposes ( ?is subp>agraph1 ea* metropolitan /ati/ical area %all be treat$ z a sep>ate area & all nonmetropolitan areas 9 a ,/ate %all be treat$ z #a area4 4 7,b7 ,clause 7i7 ( section #db7;d77#e77;,a71 z r$esignat$ by subsection 7c77#b71 is am5d$ to read z foll[s3 7i7 su* build+ %all be treat$ z a new build+1 b 4 7e7 ,repeal ( c]ta9 exceptions to rules aga9/ pref]5tial treatm5t ,section #db7;g77#i7 is am5d$-- 7#a7 by add+ or at ! end ( subp>agraph 7,a71 & 7#b7 by /rik+ subp>agraphs 7,b7 & 7,c7 & ins]t+ ! foll[+ new subp>agraph3 7,b7 :o are vet]ans 7z def9$ 9 section #aja ( title #ch1 ,unit$ ,/ates ,code74 4 7f7 ,modification ( selection crit]ia ,section #db7m77#a77;,c7 is am5d$-- 7#a7 by add+ & at ! end ( clause 7vii71 7#b7 by /rik+ ! comma at ! end ( clause 7viii7 & ins]t+ a p]iod1 & 7#c7 by /rik+ clauses 7ix7 & 7x74 7g7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply ) respect to ,/ate limitation am\nts det]m9$ = cal5d> ye>s aft] #bjad 7& to det]m9ations ) respect to allocations ( su* limitation am\nts74 7#b7 ,transition rule ,= purposes ( det]m9+ ! ,/ate limitation am\nt = cal5d> ye> #bjae "u section #db7;h77#c77;,c7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z am5d$ by ?is section1 ! am\nt describ$ 9 clause 7i7 ( su* section %all be treat$ z be+ equal to ! quoti5t (-- 7,a7 ! am\nt :i* w\ld be describ$ 9 section #db7;h77#c77;,c77i7 ( su* ,code 7det]m9$ )\t reg>d to ! am5dm5ts made by ?is section71 divid$ by 7,b7 ! applicable p]c5tage det]m9$ "u section #db7;b77#a77;,b77i7 = ,decemb] #bjad 7det]m9$ )\t reg>d to ! am5dm5ts made by ?is section74 #cbje4 ,repeal ( enhanc$ oil recov]y cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dc 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#f74 7#b7 ,section #feja7m7 is am5d$ by /rik+ #dc14 7c7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #cbjf4 ,phase\t & repeal ( cr$it = electricity produc$ f c]ta9 r5ewable res\rces 7a7 ,r$uction ( cr$it & phase\t am\nts 7#a7 ,9 g5]al ,section #de7;b7 is am5d$ by /rik+ p>agraph 7#b74 7#b7 ,con=m+ am5dm5ts ,section #de7;e77#b7 is am5d$-- 7,a7 by /rik+ ! inflation adju/m5t factor & 9 subp>agraph 7,a71 & 7,b7 by /rik+ subp>agraph 7,b7 & r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to electricity1 & ref9$ coal1 produc$ & sold aft] ,decemb] #ca1 #bjad4 7b7 ,special rule = det]m9+ beg9n+ ( con/ruction 7#a7 ,9 g5]al ,section #de7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ab7 ,special rule = det]m9+ beg9n+ ( con/ruction ,= purposes ( subsection 7d7 & section #dh7;a77#e71 ! con/ruction ( any facility1 modification1 improvem5t1 addition1 or o!r prop]ty %all n be treat$ z beg9n+ be=e any date unless !re is a cont9u\s program ( con/ruction :i* beg9s be=e su* date & ends on ! date t su* prop]ty is plac$ 9 s]vice4 4 7#b7 ,effective date ,! am5dm5t made by ?is subsection %all apply to taxable ye>s beg9n+ be=e1 on1 or aft] ! date ( ! enactm5t ( ?is ,act4 7c7 ,repeal ( cr$it 7#a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#h74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to electricity1 & ref9$ coal1 produc$ & sold aft] ,decemb] #ca1 #bjbd4 #cbjg4 ,repeal ( ,indian employm5t cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#aj74 7#b7 ,section #aci;,d7c77#a7 is am5d$ to read z foll[s3 7#a7 ,indian tribe ,! t]m ,indian tribe means any ,indian tribe1 b&1 nation1 pueblo1 or o!r organiz$ gr\p or community1 includ+ any ,alaska ,native village or regional or village corporation1 z def9$ 91 or e/abli%$ pursuant to1 ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afja et seq47 :i* is recogniz$ z eligible = ! special programs & s]vices provid$ by ! ,unit$ ,/ates to ,indians because ( _! /atus z ,indians4 4 7#c7 ,section #bhj;,c7a7 is am5d$ by /rik+ #de;,a14 7#d7 ,section #ejjj;,a7e77#c7 is am5d$ by /rik+ section #de;,a7c77#f7 & ins]t+ section #aci;,d7c77#a74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cbjh4 ,repeal ( cr$it = portion ( employ] ,social ,security taxes paid ) respect to employee ca% tips 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,b 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#aa74 7#b7 ,section #feja7m7 is am5d$ by /rik+ #de;,b14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply ) respect to tips receiv$ = s]vices p]=m$ aft] ,decemb] #ca1 #bjad4 #cbji4 ,repeal ( cr$it = cl9ical te/+ exp5ses = c]ta9 drugs = r>e diseases or conditions 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ab74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7b74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #de;,c7d77#d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbaj4 ,repeal ( cr$it = small employ] p5sion plan />tup co/s 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,e 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ad74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to co/s paid or incurr$ aft] ,decemb] #ca1 #bjad1 ) respect to qualifi$ employ] plans fir/ effective aft] su* date4 #cbaa4 ,repeal ( employ]-provid$ *ild c>e cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,f 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ae74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bh74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,basis adju/m5ts ,! am5dm5t made by subsection 7b77#b7 %all apply to cr$its det]m9$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbab4 ,repeal ( railroad track ma9t5ance cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,g 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#af74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bi74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 7#b7 ,basis adju/m5ts ,! am5dm5t made by subsection 7b77#b7 %all apply to cr$its det]m9$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cbac4 ,repeal ( cr$it = production ( l[ sulfur diesel fuel 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,h 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ah74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7d74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #de;,h7g714 7#d7 ,section #fgbj;,a is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #de;,h7c77#c77 9 subsection 7a71 & 7,b7 by add+ at ! end ! foll[+ new subsection3 7c7 ,applicable ,,epa regulations ,! t]m applicable ,,epa regulations means ! ,highway ,diesel ,fuel ,sulfur ,control ,requirem5ts ( ! ,environm5tal ,protection ,ag5cy4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to exp5ses paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbad4 ,repeal ( cr$it = produc+ oil & gas f m>g9al wells 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,i 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ai74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbae4 ,repeal ( cr$it = production f advanc$ nucle> p[] facilities 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,j 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ba74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to electricity produc$ & sold aft] ,decemb] #ca1 #bjad4 #cbaf4 ,repeal ( cr$it = produc+ fuel f a nonconv5tional s\rce 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,k 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#bb74 7#b7 ,section #de7;e77#i7 is am5d$-- 7,a7 9 subp>agraph 7,a7-- 7i7 by ins]t+ 1 z 9 effect be=e its repeal aft] )9 ! mean+ ( section #de,k1 & 7ii7 by ins]t+ 7z 9 effect be=e its repeal7 aft] "u section #de,k1 & 7,b7 9 subp>agraph 7,b71 by ins]t+ 7z 9 effect be=e its repeal7 aft] section #de,k4 7#c7 ,section #djda7;a77#b7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #de,k7c77#c77 9 subp>agraph 7,b77ii71 & 7,b7 by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,biomass ,! t]m 8biomass0 means any organic mat]ial o!r ?an-- 7i7 oil & natural gas 7or any product !re(71 & 7ii7 coal 7includ+ lignite7 or any product !re(4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to fuel produc$ & sold aft] ,decemb] #ca1 #bjac4 #cbag4 ,repeal ( new en]gy effici5t home cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,l 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#bc74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cb74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to homes acquir$ aft] ,decemb] #ca1 #bjac4 #cbah4 ,repeal ( en]gy effici5t appliance cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,m 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#bd74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to appliances produc$ aft] ,decemb] #ca1 #bjac4 #cbai4 ,repeal ( m9e rescue team tra9+ cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,n 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ca74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7e74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cbbj4 ,repeal ( agricultural *emicals security cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,o 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#cb74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7f74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjab4 #cbba4 ,repeal ( cr$it = c>bon dioxide seque/ration 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,q 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#cd74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to cr$its det]m9$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbbb4 ,repeal ( cr$it = employee heal? insurance exp5ses ( small employ]s 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de,r 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#cf74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7h74 7#c7 ,section #fjee7;b77#b7 is am5d$ by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ 1 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cbbc4 ,repeal ( rehabilitation cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #agj7;f77#ad77;,a7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #dg4 7#b7 ,section #agj7;h77#d7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #dg7;c77#c77;,b77 9 subp>agraph 7,c77ii71 & 7,b7 by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,regi/]$ hi/oric di/rict ,! t]m regi/]$ hi/oric di/rict means-- 7i7 any di/rict li/$ 9 ! ,national ,regi/]1 & 7ii7 any di/rict-- 7,i7 :i* is designat$ "u a /atute ( ! appropriate ,/ate or local gov]nm5t1 if su* /atute is c]tifi$ by ! ,secret>y ( ! ,int]ior to ! ,secret>y z conta9+ crit]ia :i* w sub/antially a*ieve ! purpose ( pres]v+ & rehabilitat+ build+s ( hi/oric significance to ! di/rict1 & 7,,ii7 :i* is c]tifi$ by ! ,secret>y ( ! ,int]ior to ! ,secret>y z meet+ sub/antially all ( ! requirem5ts = ! li/+ ( di/ricts 9 ! ,national ,regi/]4 4 7#c7 ,section #dfi7;i77#c7 is am5d$ by /rik+ subp>agraph 7,b74 7#d7 ,section #dfi7;i77#f77;,b7 is am5d$-- 7,a7 by /rik+ 9 ! case (-- & all t foll[s & ins]t+ 9 ! case ( any cr$it det]m9$ "u section #db = any taxable ye>41 & 7,b7 by /rik+ 1 rehabilitation cr$it1 9 ! head+ !re(4 7#e7 ,section #dfi7k77#a7 is am5d$ by /rik+ 1 or any rehabilitation cr$it det]m9$ "u section #dg14 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to am\nts paid aft] ,decemb] #ca1 #bjad4 7#b7 ,transition rule ,9 ! case ( qualifi$ rehabilitation exp5ditures 7)9 ! mean+ ( section #dg ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect be=e its repeal7 ) respect to any build+-- 7,a7 acquir$ by ! taxpay] be=e ,janu>y #a1 #bjae1 & 7,b7 ) respect to :i* ! #bd-mon? p]iod select$ by ! taxpay] "u section #dg7;c77#a77;,c7 ( su* ,code beg9s n lat] ?an ,janu>y #a1 #bjae1 ! am5dm5ts made by ?is section %all apply to am\nts paid aft] ,decemb] #ca1 #bjaf4 #cbbd4 ,repeal ( en]gy cr$it 7a7 ,t]m9ation ,section #dh is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,application ( section ,?is section %all n apply to any en]gy prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjaf4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,p>agraph 7#b77;,a77i77,,ii71 & clauses 7ii7 & 7vii7 ( p>agraph 7#c77;,a71 ( section #dh7;a7 are ea* am5d$ by /rik+ b only ) respect to p]iods end+ be=e ,janu>y #a1 #bjag4 7#b7 ,p>agraph 7#a7 ( section #dh7;c7 is am5d$ by /rik+ subp>agraph 7,d74 7#c7 ,p>agraph 7#b7 ( section #dh7;c7 is am5d$ by /rik+ subp>agraph 7,d74 7#d7 ,subp>agraph 7,a7 ( section #dh7;c77#c7 is am5d$ by ins]t+ & at ! end ( clause 7ii71 by /rik+ 1 & at ! end ( clause 7iii7 & ins]t+ a p]iod1 & by /rik+ clause 7iv74 7#e7 ,p>agraph 7#d7 ( section #dh7;c7 is am5d$ by /rik+ subp>agraph 7,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjaf4 #cbbe4 ,repeal ( qualify+ advanc$ coal project cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dh;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations & reallocations aft] ,decemb] #ca1 #bjad4 #cbbf4 ,repeal ( qualify+ gasification project cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dh;,b 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations & reallocations aft] ,decemb] #ca1 #bjad4 #cbbg4 ,repeal ( qualify+ advanc$ en]gy project cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dh;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations & reallocations aft] ,decemb] #ca1 #bjad4 #cbbh4 ,repeal ( qualify+ !rapeutic discov]y project cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dh;,d 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts ,section #bhj;,c is am5d$ by /rik+ ! second subsection 7g7 7z add$ by ! ,pati5t ,protection & ,af=dable ,c>e ,act74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations & reallocations aft] ,decemb] #ca1 #bjad4 #cbbi4 ,repeal ( "w opportunity tax cr$it 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #ea 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,cl]ical am5dm5t ,! head+ ( su* subp>t ,f 7& ! item relat+ to su* subp>t 9 ! table ( subp>ts = "p ,,iv ( sub*apt] ,a ( *apt] #a7 are ea* am5d$ by /rik+ ,rules = ,comput+ ,"w ,opportunity ,cr$it & ins]t+ ,special ,rules4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ to individuals :o beg9 "w = ! employ] aft] ,decemb] #ca1 #bjac4 #cbcj4 ,repeal ( d$uction = c]ta9 unus$ bus9ess cr$its 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aif 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,d ,acc\nt+ me?ods #ccja4 ,limitation on use ( ca% me?od ( acc\nt+ 7a7 ,9 g5]al ,section #ddh is am5d$ to read z foll[s3 #ddh4 ,limitation on use ( ca% me?od ( acc\nt+ 7a7 ,9 g5]al ,! ca% receipts & disbursem5ts me?od ( acc\nt+ may only be us$ by-- 7#a7 a natural p]son1 7#b7 a f>m+ bus9ess1 & 7#c7 any o!r entity :i* meets ! gross receipts te/ ( subsection 7b7 = ! taxable ye>4 ,su* me?od may n be us$ by a tax %elt] 7z def9$ 9 subsection 7d774 7b7 ,gross receipts te/ ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,an entity meets ! gross receipts te/ ( ?is subsection = any taxable ye> if ! av]age annual gross receipts ( su* entity = ! #c-taxable-ye> p]iod end+ ) ! taxable ye> :i* prec$es su* taxable ye> does n exce$ #aj1jjj1jjj4 7#b7 ,aggregation rules ,all p]sons treat$ z a s+le employ] "u subsection 7a7 or 7b7 ( section #eb or subsection 7m7 or 7o7 ( section #dad %all be treat$ z "o entity = purposes ( p>agraph 7#a74 7#c7 ,special rules ,= purposes ( ?is subsection-- 7,a7 ,n 9 exi/5ce = entire #c-ye> p]iod ,if ! entity 0 n 9 exi/5ce = ! entire #c-ye> p]iod ref]r$ to 9 p>agraph 7#a71 su* p>agraph %all be appli$ on ! basis ( ! p]iod dur+ :i* su* entity 7or trade or bus9ess7 0 9 exi/5ce4 7,b7 ,%ort taxable ye>s ,gross receipts = any taxable ye> ( less ?an #ab mon?s %all be annualiz$ by multiply+ ! gross receipts = ! %ort p]iod by #ab & divid+ ! result by ! numb] ( mon?s 9 ! %ort p]iod4 7,c7 ,gross receipts ,gross receipts = any taxable ye> %all be r$uc$ by returns & all[ances made dur+ su* ye>4 7,d7 ,treatm5t ( pr$ecessors ,any ref]5ce 9 ?is subsection to an entity %all include a ref]5ce to any pr$ecessor ( su* entity4 7c7 ,f>m+ bus9ess ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m f>m+ bus9ess means ! trade or bus9ess ( f>m+4 7#b7 ,c]ta9 trades & bus9esses includ$ 7,a7 ,9 g5]al ,! t]m f>m+ bus9ess %all include ! trade or bus9ess (-- 7i7 op]at+ a nurs]y or sod f>m1 or 7ii7 ! rais+ or h>ve/+ ( trees be>+ fruit1 nuts1 or o!r crops1 or ornam5tal trees4 7,b7 ,c]ta9 ev]gre5 trees n treat$ z ornam5tal ,= purposes ( subp>agraph 7,a77ii71 an ev]gre5 tree :i* is m ?an #f ye>s old at ! "t sev]$ f ! roots %all n be treat$ z an ornam5tal tree4 7d7 ,tax %elt] def9$ ,= purposes ( ?is section1 ! t]m tax %elt] has ! mean+ giv5 su* t]m by section #dfa7;i77#b7 7det]m9$ aft] application ( p>agraph 7#c7 !re(74 ,an ,s corporation %all n be treat$ z a tax %elt] = purposes ( ?is section m]ely by reason ( be+ requir$ to file a notice ( exemption f regi/ration ) a ,/ate ag5cy describ$ 9 section #dfa7;i77#b77;,a71 b only if !re is a requirem5t applicable to all corporations (f]+ securities = sale 9 ! ,/ate t to be exempt f su* regi/ration ! corporation mu/ file su* a notice4 7e7 ,special rules ,= purposes ( ?is section-- 7#a7 ,coord9ation ) section #dha ,9 ! case ( any p]son requir$ by ?is section to *ange its me?od ( acc\nt+ = any taxable ye>-- 7,a7 su* *ange %all be treat$ z initiat$ by su* p]son1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y4 7#b7 ,use ( relat$ p>ties1 etc ,! ,secret>y %all prescribe su* regulations z may be necess>y to prev5t ! use ( relat$ p>ties1 pass-?ru entities1 or int]m$i>ies to avoid ! application ( ?is section4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ddf7;c77#a7 is am5d$ by ins]t+ to ! ext5t provid$ 9 section #ddh1 be=e ! ca% receipts4 7#b7 ,section #dea is am5d$ by add+ at ! end ! foll[+ new subsection3 7j7 ,special rule = losses ( c]ta9 s]vice provid]s on accrual me?od ( acc\nt+ 7#a7 ,9 g5]al ,9 ! case ( any p]son us+ an accrual me?od ( acc\nt+ ) respect to am\nts to be receiv$ = ! p]=mance ( s]vices by su* p]son1 su* p]son %all n be requir$ to accrue any portion ( su* am\nts :i* 7on ! basis ( su* p]son's exp]i5ce7 w n be collect$ if su* s]vices are 9 ! fields ( heal?1 law1 eng9e]+1 ar*itecture1 acc\nt+1 actu>ial sci5ce1 p]=m+ arts1 consult+1 or any o!r field id5tifi$ by ! ,secret>y = purposes ( ?is subsection4 7#b7 ,exception ,p>agraph 7#a7 %all n apply to any am\nt if int]e/ is requir$ to be paid on su* am\nt or !re is any p5alty = failure to timely pay su* am\nt4 7#c7 ,regulations ,! ,secret>y %all prescribe regulations to p]mit taxpay]s to det]m9e am\nts ref]r$ to 9 p>agraph 7#a7 us+ computations or =mulas :i*1 bas$ on exp]i5ce1 accurately reflect ! am\nt ( income t w n be collect$ by su* p]son4 ,a taxpay] may adopt1 or reque/ cons5t ( ! ,secret>y to *ange to1 a computation or =mula t cle>ly reflects ! taxpay]'s exp]i5ce4 ,a reque/ "u ! prec$+ s5t5ce %all be approv$ if su* computation or =mula cle>ly reflects ! taxpay]'s exp]i5ce4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7d7 ,*ange 9 me?od ( acc\nt+ 7#a7 ,9 g5]al ,9 ! case ( any qualifi$ *ange 9 me?od ( acc\nt+ = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury1 & 7,c7 if ! net am\nt ( ! adju/m5ts requir$ to be tak5 into acc\nt by ! taxpay] "u section #dha ( ! ,int]nal ,rev5ue ,code ( #aihf by reason ( su* *ange is positive-- 7i7 su* am\nt %all be tak5 into acc\nt dur+ ! #d-taxable ye> p]iod beg9n+ ) ! e>li] ( ! taxpay]'s elect$ taxable ye> or ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 z foll[s3 7,i7 #aj p]c5t ( su* am\nt 9 ! fir/ taxable ye> 9 su* p]iod1 7,,ii7 #ae p]c5t ( su* am\nt 9 ! second taxable ye> 9 su* p]iod1 7,,iii7 #be p]c5t ( su* am\nt 9 ! ?ird taxable ye> 9 su* p]iod1 & 7,,iv7 #ej p]c5t ( su* am\nt 9 ! f\r? taxable ye> 9 su* p]iod1 & 7ii7 = purposes ( apply+ ! regulations & o!r guidance issu$ "u su* section 7includ+ any provisions :i* require accel]at$ inclusion71 ! p]iod beg9n+ ) ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca #bjad1 & end+ ) ! taxable ye> be=e ! fir/ taxable ye> ref]r$ to 9 clause 7i7 %all n fail to be tak5 into acc\nt z "p ( ! p]iod ( ! adju/m5t m]ely because su* am\nt is n o!rwise tak5 into acc\nt "u clause 7i7 dur+ su* p]iod4 7#b7 ,qualifi$ *ange 9 me?od ( acc\nt+ ,= purposes ( ?is subsection1 ! t]m qualifi$ *ange 9 me?od ( acc\nt+ means any *ange 9 me?od ( acc\nt+ :i*-- 7,a7 is requir$ by ! am5dm5ts made by ?is section1 or 7,b7 0 prohibit$ "u ! ,int]nal ,rev5ue ,code ( #aihf prior to su* am5dm5ts & is p]mitt$ "u su* ,code aft] su* am5dm5ts4 7#c7 ,elect$ taxable ye> ,= purposes ( ?is subsection1 ! t]m elect$ taxable ye> means su* taxable ye> z ! taxpay] may elect 7at su* "t & 9 su* =m & mann] z ! ,secret>y may provide7 :i* beg9s aft] ,decemb] #ca1 #bjad1 & is be=e ! taxpay]'s second taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah4 #ccjb4 ,rules = det]m9+ :e!r taxpay] has adopt$ a me?od ( acc\nt+ 7a7 ,9 g5]al ,section #ddf is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,rules = treat+ acc\nt+ me?od z adopt$ by taxpay] ,if ! taxpay] uses a me?od ( acc\nt+ ) respect to any item on any return ( tax-- 7#a7 9 ! case ( any me?od ( acc\nt+ :i* ! taxpay] is p]mitt$ to use ) respect to su* item1 su* me?od %all be treat$ z hav+ be5 adopt$ by ! taxpay] ) respect to su* item1 & 7#b7 9 ! case ( any me?od ( acc\nt+ :i* ! taxpay] is n p]mitt$ to use ) respect to su* item1 su* me?od %all be treat$ z hav+ be5 adopt$ by ! taxpay] ) respect to su* item if ! taxpay] us$ ! same me?od ) respect to su* item on ! return ( tax = ! prec$+ taxable ye>4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ccjc4 ,c]ta9 special rules = taxable ye> ( inclusion 7a7 ,inclusion n lat] ?an = f9ancial acc\nt+ purposes ,section #dea is am5d$ by r$esignat+ subsections 7b7 ?r\gh 7j7 z subsection 7c7 ?r\gh 7k71 respectively1 & by ins]t+ aft] subsection 7a7 ! foll[+ new subsection3 7b7 ,inclusion n lat] ?an = f9ancial acc\nt+ purposes 7#a7 ,9 g5]al ,9 ! case ( a taxpay] ! taxable income ( :i* is comput$ "u ! accrual me?od ( acc\nt+1 ! am\nt ( any portion ( any item ( income %all be includ$ 9 gross income n lat] ?an ! taxable ye> ) respect to :i* su* am\nt is tak5 into acc\nt z income 9-- 7,a7 an audit$ f9ancial /atem5t ( ! taxpay] describ$ 9 section #abba7;b77#c77;,b71 or 7,b7 su* o!r f9ancial /atem5t z ! ,secret>y may specify = purposes ( ?is subsection4 7#b7 ,coord9ation ) special rules = long-t]m contracts ,p>agraph 7#a7 %all n apply ) respect to any item ( income to :i* section #dfj applies4 4 7b7 ,treatm5t ( advance paym5ts ,section #dea1 z am5d$ by subsection 7a71 is am5d$ by r$esignat+ subsections 7c7 ?r\gh 7k7 z subsections 7d7 ?r\gh 7l71 respectively1 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,treatm5t ( advance paym5ts 7#a7 ,9 g5]al ,a taxpay] :i* computes taxable income "u ! accrual me?od ( acc\nt+1 & receives any advance paym5t dur+ ! taxable ye>1 %all-- 7,a7 except z provid$ 9 subp>agraph 7,b71 include su* advance paym5t 9 gross income = su* taxable ye>1 or 7,b7 if ! taxpay] elects ! application ( ?is subp>agraph ) respect to ! category ( advance paym5ts to :i* su* advance paym5t belongs1 ! taxpay] %all-- 7i7 to ! ext5t t any portion ( su* advance paym5t is requir$ "u subsection 7b7 to be includ$ 9 gross income 9 ! taxable ye> 9 :i* su* paym5t is receiv$1 s include su* portion1 & 7ii7 include ! rema9+ portion ( su* advance paym5t 9 gross income 9 ! taxable ye> foll[+ ! taxable ye> 9 :i* su* paym5t is receiv$4 7#b7 ,election 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is p>agraph1 ! election "u p>agraph 7#a77;,b7 %all be made at su* "t1 9 su* =m & mann]1 & ) respect to su* categories ( advance paym5ts1 z ! ,secret>y may provide4 7,b7 ,p]iod to :i* election applies ,an election "u p>agraph 7#a77;,b7 %all be effective = ! taxable ye> ) respect to :i* x is fir/ made & = all subsequ5t taxable ye>s1 unless ! taxpay] secures ! cons5t ( ! ,secret>y to revoke su* election4 ,= purposes ( ?is title1 ! computation ( taxable income "u an election made "u p>agraph 7#a77;,b7 %all be treat$ z a me?od ( acc\nt+4 7#c7 ,advance paym5t ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m advance paym5t means any paym5t-- 7i7 ! full inclusion ( :i* 9 ! gross income ( ! taxpay] = ! taxable ye> ( receipt is a p]missible me?od ( acc\nt+ "u ?is section 7det]m9$ )\t reg>d to ?is subsection71 & 7ii7 :i* is = goods1 s]vices1 or su* o!r items z may be id5tifi$ by ! ,secret>y = purposes ( ?is clause4 7,b7 ,exclusions ,except z o!rwise provid$ by ! ,secret>y1 su* t]m %all n include-- 7i7 r5t1 7ii7 insurance premiums1 7iii7 paym5ts ) respect to f9ancial in/rum5ts1 7iv7 paym5ts ) respect to w>ranty or gu>antee contracts "u :i* a ?ird p>ty is ! prim>y obligor1 7v7 paym5ts subject to section #hga7;a71 #hha1 #adda1 or #addb1 7vi7 paym5ts 9 prop]ty to :i* section #hc applies1 & 7vii7 any o!r paym5t id5tifi$ by ! ,secret>y = purposes ( ?is subp>agraph4 4 7c7 ,crop insurance proce$s & disa/] paym5ts ,section #dea1 z am5d$ by subsections 7a7 & 7b71 is am5d$ by /rik+ subsection 7f74 7d7 ,live/ock sold on acc\nt ( dr\ght1 flood1 & o!r wea!r-,relat$ conditions ,section #dea1 z am5d$ by subsections 7a7 & 7b71 is am5d$ by /rik+ subsection 7g74 7e7 ,sales or dispositions ,to implem5t ,f$]al ,en]gy ,regulatory ,commission or ,/ate electric re/ructur+ policy ,section #dea1 z am5d$ by subsections 7a7 & 7b71 is am5d$ by /rik+ subsection 7k74 7f7 ,con=m+ am5dm5ts ,section #dea1 z am5d$ by subsections 7a71 7b71 7c71 7d71 & 7e71 is am5d$ by r$esignat+ subsections 7h71 7i71 7j71 & 7l7 z subsections 7f71 7g71 7h71 & 7i71 respectively4 7g7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,crop insurance proce$s & disa/] paym5ts -- 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! am5dm5ts made by subsection 7c7 %all apply to de/ruction & damage ( crops occurr+ aft] ,decemb] #ca1 #bjad4 7,b7 ,inability to plant ,9 ! case ( inability to plant crops because ( a natural disa/]1 ! am5dm5ts made by subsection 7c7 %all apply to natural disa/]s occurr+ aft] ,decemb] #ca1 #bjad4 7#c7 ,live/ock ,! am5dm5ts made by subsection 7d7 %all apply to sales & ex*anges aft] ,decemb] #ca1 #bjad4 7#d7 ,sales or dispositions to implem5t electric re/ructur+ policy ,! am5dm5ts made by subsection 7e7 %all apply to sales & dispositions aft] ,decemb] #ca1 #bjac4 7#e7 ,*ange 9 me?od ( acc\nt+ ,9 ! case ( any taxpay] requir$ by ! am5dm5ts made by subsections 7a7 & 7b7 to *ange its me?od ( acc\nt+ = its fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury4 #ccjd4 ,in/allm5t sales 7a7 ,repeal ( exceptions to treatm5t z deal] dispositions ,section #dec7l7 is am5d$ to read z foll[s3 7l7 ,deal] dispositions ,= purposes ( subsection 7b77#b77;,a71 ! t]m deal] disposition means any ( ! foll[+ dispositions3 7#a7 ,p]sonal prop]ty ,any disposition ( p]sonal prop]ty by a p]son :o regul>ly sells or o!rwise disposes ( p]sonal prop]ty ( ! same type on ! in/allm5t plan4 7#b7 ,real prop]ty ,any disposition ( real prop]ty :i* is held by ! taxpay] = sale to cu/om]s 9 ! ord9>y c\rse ( ! taxpay]'s trade or bus9ess4 4 7b7 ,modification ( rules = nondeal]s 7#a7 ,repeal ( special rule = int]e/ paym5ts ,section #dec;,a7b77#b7 is am5d$ to read z foll[s3 7#b7 ,int]e/ paym5t exception = obligations n out/&+ at close ( taxable ye> ,subsection 7a77#a7 %all apply to an obligation describ$ 9 p>agraph 7#a7 aris+ dur+ any taxable ye> only if su* obligation is out/&+ z ( ! close ( su* taxable ye>4 4 7#b7 ,repeal ( exception = f>m prop]ty ,section #dec;,a7b77#c7 is am5d$-- 7,a7 by /rik+ f ! disposition-- & all t foll[s & ins]t+ f ! disposition by an individual ( p]sonal use prop]ty 7)9 ! mean+ ( section #abge7;b77#c7741 & 7,b7 by /rik+ & f>m 9 ! head+4 7#c7 ,repeal ( special rule = time%>es & resid5tial lots ,section #dec;,a7b7 is am5d$ by /rik+ p>agraph 7#d7 & by r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7#d7 ,con=m+ am5dm5t ,section #dec;,a7c7 is am5d$-- 7,a7 by /rik+ ! applicable p]c5tage ( 9 p>agraph 7#b77;,a71 & 7,b7 by /rik+ p>agraph 7#d7 & by r$esignat+ p>agraphs 7#e7 & 7#f7 z p>agraphs 7#d7 & 7#e71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales & o!r dispositions aft] ,decemb] #ca1 #bjad4 #ccje4 ,repeal ( special rule = prepaid subscription income 7a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ section #dee 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to paym5ts receiv$ aft] ,decemb] #ca1 #bjad4 #ccjf4 ,repeal ( special rule = prepaid dues income ( c]ta9 memb]%ip organizations 7a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ section #def 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #bgg7;b77#b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal7 aft] section #def7;c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to paym5ts receiv$ aft] ,decemb] #ca1 #bjad4 #ccjg4 ,repeal ( special rule = magaz9es1 pap]backs1 & records return$ aft] close ( ! taxable ye> 7a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ section #deh 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,*ange 9 me?od ( acc\nt+ ,9 ! case ( any taxpay] requir$ by ! am5dm5ts made by ?is section to *ange its me?od ( acc\nt+ = its fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury4 #ccjh4 ,modification ( rules = long-t]m contracts 7a7 ,repeal ( exception = home con/ruction contracts ,p>agraph 7#a7 ( section #dfj7;e7 is am5d$ to read z foll[s3 7#a7 ,exception = c]ta9 con/ruction contracts ,subsections 7a71 7b71 & 7c77#a7 & 7#b7 %all n apply to any con/ruction contract ent]$ into by a taxpay]-- 7,a7 :o e/imates 7at ! "t su* contract is ent]$ into7 t su* contract w be complet$ )9 ! #b-ye> p]iod beg9n+ on ! contract comm5cem5t date ( su* contract1 & 7,b7 ^: av]age annual gross receipts = ! #c taxable ye>s prec$+ ! taxable ye> 9 :i* su* contract is ent]$ into d n exce$ #aj1jjj1jjj4 ,= purposes ( ?is p>agraph1 rules simil> to ! rules ( p>agraphs 7#b7 & 7#c7 ( section #ddh7;b7 %all apply4 4 7b7 ,repeal ( special rule = o!r resid5tial con/ruction contracts ,section #dfj7;e7 is am5d$ by /rik+ p>agraphs 7#e7 & 7#f74 7c7 ,repeal ( special rules = qualifi$ %ip contracts 7#a7 ,9 g5]al ,section #ajbjc7;b7 ( ! ,rev5ue ,act ( #aihg is am5d$ by /rik+ p>agraph 7#b74 7#b7 ,qualifi$ naval %ip contracts ,! ,am]ican ,jobs ,creation ,act ( #bjjd is am5d$ by /rik+ section #gjh4 7d7 ,con=m+ am5dm5ts ,section #dfj7;e7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#c7 & by r$esignat+ p>agraph 7#d7 z p>agraph 7#b74 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to contracts ent]$ into aft] ,decemb] #ca1 #bjad4 #ccji4 ,nucle> decommission+ res]ve funds 7a7 ,gross income on nucle> decommission+ res]ve funds tax$ at corporate rate ,section #dfh;,a7e77#b7 is am5d$ by /rik+ at ! rate ( #bj p]c5t & ins]t+ at a rate equal to ! maximum rate 9 effect = su* taxable ye> "u section #aa4 7b7 ,income inclusion ^u disqualifi$ di/ribution ,section #dfh;,a7c77#a7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,a71 by /rik+ ! p]iod at ! end ( subp>agraph 7,b7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,c7 if any di/ribution is made f ! ,fund dur+ su* taxable ye> :i* is n us$ z provid$ 9 subsection 7e77#d71 ! balance ( ! ,fund det]m9$ imm$iately be=e su* di/ribution4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ccaj4 ,repeal ( la/-91 fir/-out me?od ( inv5tory 7a7 ,9 g5]al ,section #dga is am5d$ by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,la/-,91 fir/-,out me?od n p]missible ,! la/-91 fir/-out me?od ( det]m9+ inv5tories %all 9 no ev5t be treat$ z cle>ly reflect+ income4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,subp>t ,d ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ sections #dgb1 #dgc1 & #dgd 7& by /rik+ ! items relat+ to su* sections 9 ! table ( sections = su* subp>t74 7#b7 7,a7 ,section #cab7n71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#c7 & by r$esignat+ p>agraphs 7#d7 ?r\gh 7#g7 z p>agraphs 7#c7 ?r\gh 7#f71 respectively4 7,b7 ,section #cab7n77#f71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 by /rik+ p>agraphs 7#d7 & 7#f7 9 subp>agraph 7,a7 & ins]t+ p>agraph 7#d71 & 7ii7 by /rik+ p>agraph 7#e7 9 subp>agraph 7,b7 & ins]t+ p>agraph 7#c74 7,c7 ,section #cja7;e77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 by /rik+ p>agraph 7#f7 & ins]t+ p>agraph 7#e71 & 7ii7 by /rik+ section #cab7n77#f7 9 ! head+ & ins]t+ section #cab7n77#e74 7,d7 ,section #ieb7;c77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraphs 7#c71 7#d71 & 7#e7 & ins]t+ p>agraphs 7#b71 7#c71 & 7#d74 7,e7 ,section #abic7;e77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraphs 7#c71 7#d71 & 7#e7 & ins]t+ p>agraphs 7#b71 7#c71 & 7#d74 7,f7 ,section #aejc7;e77#b77;,c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 by /rik+ p>agraph 7#f7 & ins]t+ p>agraph 7#e71 & 7ii7 by /rik+ section #cab7n77#f7 9 ! head+ & ins]t+ section #cab7n77#e74 7#c7 ,section #acfc is am5d$ by /rik+ subsection 7d74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7d7 ,*ange 9 me?od ( acc\nt+ 7#a7 ,9 g5]al ,9 ! case ( any taxpay] requir$ by ! am5dm5ts made by ?is section to *ange its me?od ( acc\nt+ = its fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury1 & 7,c7 if ! net am\nt ( ! adju/m5ts requir$ to be tak5 into acc\nt by ! taxpay] "u section #dha ( ! ,int]nal ,rev5ue ,code ( #aihf by reason ( su* *ange is positive-- 7i7 su* am\nt %all be tak5 into acc\nt dur+ ! #d-taxable ye> p]iod beg9n+ ) ! e>li] ( ! taxpay]'s elect$ taxable ye> or ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 z foll[s3 7,i7 #aj p]c5t ( su* am\nt 9 ! fir/ taxable ye> 9 su* p]iod1 7,,ii7 #ae p]c5t ( su* am\nt 9 ! second taxable ye> 9 su* p]iod1 7,,iii7 #be p]c5t ( su* am\nt 9 ! ?ird taxable ye> 9 su* p]iod1 & 7,,iv7 #ej p]c5t ( su* am\nt 9 ! f\r? taxable ye> 9 su* p]iod1 & 7ii7 = purposes ( apply+ ! regulations & o!r guidance issu$ "u su* section 7includ+ any provisions :i* require accel]at$ inclusion71 ! p]iod beg9n+ ) ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca #bjad1 & end+ ) ! taxable ye> be=e ! fir/ taxable ye> ref]r$ to 9 clause 7i7 %all n fail to be tak5 into acc\nt z "p ( ! p]iod ( ! adju/m5t m]ely because su* am\nt is n o!rwise tak5 into acc\nt "u clause 7i7 dur+ su* p]iod4 7#b7 ,elect$ taxable ye> ,= purposes ( ?is subsection1 ! t]m elect$ taxable ye> means su* taxable ye> z ! taxpay] may elect 7at su* "t & 9 su* =m & mann] z ! ,secret>y may provide7 :i* beg9s aft] ,decemb] #ca1 #bjad1 & is be=e ! taxpay]'s second taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah4 7#c7 ,r$uction 9 am\nt ( adju/m5t = closely-held entities 7,a7 ,9 g5]al ,9 ! case ( any closely-held entity1 p>agraph 7#a77;,c7 %all be appli$ by treat+ any ref]5ce to su* am\nt z a ref]5ce to #bj p]c5t 7#bh p]c5t 9 ! case ( a ,c corporation7 ( su* am\nt4 7,b7 ,closely-held entity ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m closely-held entity means any dome/ic corporation or dome/ic p>tn]%ip :i*-- 7,i7 is n an ineligible entity1 7,,ii7 does n h m ?an #ajj %>ehold]s or p>tn]s 7z ! case may be71 & 7,,iii7 does n h z a %>ehold] or p>tn] a p]son 7o!r ?an an e/ate1 a tru/ describ$ 9 section #acfa7;c77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 or an organization describ$ section #acfa7;c77#f7 ( su* ,code7 :o is n an individual4 7ii7 ,c]ta9 subsidi>ies ,an entity %all n fail to be treat$ z a closely-held entity by reason ( clause 7i77,,iii7 if all ( ! int]e/s 9 su* entity are held by a s+le closely-held entity 7det]m9$ )\t reg>d to ?is clause7 & individuals tak5 into acc\nt "u clause 7i77,,ii7 ) respect to su* entity4 ,9 ! case ( ti]$ entities 7o!r ?an ! top ti] entity71 ! prec$+ s5t5ce %all be appli$-- 7,i7 by sub/itut+ 7det]m9$ aft] application ( ?is clause7 = 7det]m9$ )\t reg>d to ?is clause71 & 7,,ii7 by sub/itut+ ) respect to ! top ti] entity = ) respect to su* entity4 7iii7 ,ineligible entity ,! t]m ineligible entity means any entity describ$ 9 section #acfa7;b77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf appli$ by sub/itut+ corporation or p>tn]%ip = corporation ea* place x appe>s4 7iv7 ,date ( det]m9ation ,! /atus ( any entity z a closely-held entity %all be det]m9$ z ( ,febru>y #bf1 #bjad4 7v7 ,sole proprietors ,an individual op]at+ a trade or bus9ess %all be treat$ z a closely-held entity4 7,c7 ,c]ta9 transf]s disreg>d$ 7i7 ,9 g5]al ,9 ! case ( any specifi$ inv5tory transf]1 ! adju/m5ts ref]r$ to 9 p>agraph 7#a77;,c7 %all be det]m9$-- 7,i7 ) respect to ! transf]or1 z ?\gh ! prop]ty transf]r$ cont9u$ to be held at all times by su* transf]or1 & 7,,ii7 ) respect to ! transf]ee1 z ?\gh su* prop]ty 0 nev] transf]r$ to su* transf]ee4 7ii7 ,specifi$ inv5tory transf] ,! t]m specifi$ inv5tory transf] means any transf] ( prop]ty describ$ 9 section #abba7;a77#a7 if-- 7,i7 su* transf] is to a closely-held entity f any p]son :o is n a closely-held entity1 7,,ii7 su* transf] is on or aft] ,febru>y #bf1 #bjad1 & be=e ! beg9n+ ( ! transf]or's fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 & 7,,iii7 ! basis ( su* prop]ty 9 ! h&s ( ! transf]ee imm$iately aft] su* transf] is ei!r det]m9$ by ref]5ce to ! basis ( su* prop]ty 9 ! h&s ( ! transf]or or is less ?an ! fair m>ket value ( su* prop]ty at ! "t ( su* transf]4 #ccaa4 ,repeal ( l[] ( co/ or m>ket me?od ( inv5tory 7a7 ,9 g5]al ,section #dga1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsection 7d7 z subsection 7e7 & by ins]t+ aft] subsection 7c7 ! foll[+ new subsection3 7d7 ,l[] ( co/ or m>ket me?od n p]missible ,! l[] ( co/ or m>ket me?od ( det]m9+ inv5tories %all 9 no ev5t be treat$ z cle>ly reflect+ income4 ,= purposes ( ! prec$+ s5t5ce1 ! l[] ( co/ or m>ket %all include ! l[] ( co/ or bona fide net sell+ price4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7c7 ,*ange 9 me?od ( acc\nt+ 7#a7 ,9 g5]al ,9 ! case ( any taxpay] requir$ by ! am5dm5ts made by ?is section to *ange its me?od ( acc\nt+ = its fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury1 & 7,c7 if ! net am\nt ( ! adju/m5ts requir$ to be tak5 into acc\nt by ! taxpay] "u section #dha ( ! ,int]nal ,rev5ue ,code ( #aihf by reason ( su* *ange is positive-- 7i7 su* am\nt %all be tak5 into acc\nt dur+ ! #d-taxable ye> p]iod beg9n+ ) ! e>li] ( ! taxpay]'s elect$ taxable ye> or ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 z foll[s3 7,i7 #aj p]c5t ( su* am\nt 9 ! fir/ taxable ye> 9 su* p]iod1 7,,ii7 #ae p]c5t ( su* am\nt 9 ! second taxable ye> 9 su* p]iod1 7,,iii7 #be p]c5t ( su* am\nt 9 ! ?ird taxable ye> 9 su* p]iod1 & 7,,iv7 #ej p]c5t ( su* am\nt 9 ! f\r? taxable ye> 9 su* p]iod1 & 7ii7 = purposes ( apply+ ! regulations & o!r guidance issu$ "u su* section 7includ+ any provisions :i* require accel]at$ inclusion71 ! p]iod beg9n+ ) ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca #bjad1 & end+ ) ! taxable ye> be=e ! fir/ taxable ye> ref]r$ to 9 clause 7i7 %all n fail to be tak5 into acc\nt z "p ( ! p]iod ( ! adju/m5t m]ely because su* am\nt is n o!rwise tak5 into acc\nt "u clause 7i7 dur+ su* p]iod4 7#b7 ,elect$ taxable ye> ,= purposes ( ?is subsection1 ! t]m elect$ taxable ye> means su* taxable ye> z ! taxpay] may elect 7at su* "t & 9 su* =m & mann] z ! ,secret>y may provide7 :i* beg9s aft] ,decemb] #ca1 #bjad1 & is be=e ! taxpay]'s second taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah4 #ccab4 ,modification ( rules = capitalization & inclusion 9 inv5tory co/s ( c]ta9 exp5ses 7a7 #aj1jjj1jjj gross receipts exception ,to apply to prop]ty produc$ by ! taxpay] ,section #bfc;,a7b7 is am5d$ by /rik+ all t foll[s p>agraph 7#a7 & ins]t+ ! foll[+ new p>agraphs3 7#b7 ,prop]ty acquir$ = resale ,real or p]sonal prop]ty describ$ 9 section #abba7;a77#a7 :i* is acquir$ by ! taxpay] = resale4 7#c7 ,exception = taxpay] ) gross receipts ( #aj1jjj1jjj or less ,?is section %all n apply to any prop]ty produc$ or acquir$ by ! taxpay] dur+ any taxable ye> if ! av]age annual gross receipts ( ! taxpay] 7or any pr$ecessor7 = ! #c-taxable ye> p]iod end+ ) ! taxable ye> prec$+ su* taxable ye> d n exce$ #aj1jjj1jjj4 ,= purposes ( ?is p>agraph1 rules simil> to ! rules ( p>agraphs 7#b7 & 7#c7 ( section #ddh7;b7 %all apply4 7#d7 ,films1 s\nd record+s1 books1 etc ,= purposes ( ?is subsection1 ! t]m tangible p]sonal prop]ty %all include a film1 s\nd record+1 video tape1 book1 or simil> prop]ty4 4 7b7 ,repeal ( exceptions = timb] & c]ta9 ornam5tal trees ,section #bfc;,a7c7 is am5d$ by /rik+ p>agraph 7#e74 7c7 ,repeal ( exception = qualifi$ creative exp5ses ,section #bfc;,a is am5d$ by /rik+ subsection 7h74 7d7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,*ange 9 me?od ( acc\nt+ ,9 ! case ( any taxpay] requir$ by ! am5dm5ts made by ?is section to *ange its me?od ( acc\nt+ = its fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury4 #ccac4 ,modification ( income =eca/ me?od 7a7 ,ext5sion ( =eca/ p]iod 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #afg7;g7 is am5d$ by /rik+ #aj? ea* place x appe>s & ins]t+ #bj?4 7#b7 ,modification ( recomputation ye>s ,p>agraph 7#d7 ( section #afg7;g7 is am5d$ by /rik+ ! #c;d & ! #aj? & ins]t+ ! #e?1 #aj?1 #ae?1 & #bj?4 7b7 ,modification ( rules = treatm5t ( p>ticipations & residuals ,p>agraph 7#g7 ( section #afg7;g7 is am5d$ to read z foll[s3 7#g7 ,treatm5t ( p>ticipations & residuals 7,a7 ,9 g5]al ,9 ! case ( any p>ticipation or residual ) respect to any prop]ty to :i* ?is subsection applies 7includ+ any prop]ty to :i* section #afh applies by reason ( p>agraph 7#h771 ! taxpay]-- 7i7 %all exclude su* p>ticipation or residual f ! adju/$ basis ( su* prop]ty1 & 7ii7 %all be all[$ a d$uction = su* p>ticipation or residual 9 ! taxable ye> 9 :i* su* p>ticipation or residual is paid4 7,b7 ,p>ticipations & residuals ,= purposes ( ?is p>agraph1 ! t]m p>ticipation or residual means1 ) respect to any prop]ty1 any co/ ! am\nt ( :i* by contract v>ies ) ! am\nt ( income e>n$ 9 connection ) su* prop]ty4 4 7c7 ,election ,to utilize #bj-,ye> /raight l9e recov]y ,subsection 7g7 ( section #afg is am5d$ by r$esignat+ 7#h7 z p>agraph 7#i7 & by ins]t+ aft] p>agraph 7#g7 ! foll[+ new p>agraph3 7#h7 ,election to utilize #bj-ye> /raight l9e recov]y ,if ! taxpay] elects ! application ( ?is p>agraph = any taxable ye>1 ! depreciation d$uction all[able ) respect to any prop]ty plac$ 9 s]vice by ! taxpay] dur+ su* taxable ye> :i* w\ld o!rwise be det]m9$ "u p>agraph 7#a7 %all be det]m9$ "u section #afh-- 7,a7 by treat+ ! /raight l9e me?od z ! applicable depreciation me?od1 & 7,b7 by treat+ #bj ye>s z ! applicable recov]y p]iod4 4 7d7 ,repeal ( special rules = c]ta9 musical works & copyrights ,subsection 7g7 ( section #afg1 z am5d$ by subsection 7c71 is am5d$ by /rik+ p>agraph 7#i74 7e7 ,safe h>bor amortization ( c]ta9 intangible assets ,effective = prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjad1 ! ,secret>y ( ! ,treasury1 or ! ,secret>y's designee1 %all revise ,treasury ,regulation section #a4afg7;a7-#c7;b7 7& su* regulation %all be appli$7 su* t ! safe h>bor amortization = c]ta9 intangible assets to :i* su* regulation applies %all all[ ! taxpay] to treat su* asset z hav+ a useful life equal to #bj ye>s 7& n #ae ye>s74 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjad4 #ccad4 ,repeal ( av]ag+ ( f>m income 7a7 ,9 g5]al ,sub*apt] ,q ( *apt] #a is am5d$ by /rik+ "p ,i 7& by /rik+ ! item relat+ to su* "p 9 ! table ( p>ts = su* sub*apt]74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ccae4 ,treatm5t ( pat5t or tradem>k infr+em5t aw>ds 7a7 ,9 g5]al ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #ia4 ,pat5t or tradem>k infr+em5t aw>ds 7a7 ,9 g5]al ,except z provid$ 9 subsection 7b71 any paym5t receiv$ = infr+em5t ( any pat5t or tradem>k 7:e!r by reason ( judgm5t or settlem5t7 %all be includ$ 9 gross income z ord9>y income4 7b7 ,impairm5t ( capital ,if ! taxpay] demon/rates to ! satisfaction ( ! ,secret>y t a paym5t describ$ 9 subsection 7a7 con/itutes damages receiv$ by reason ( ! r$uction 9 value ( prop]ty ( ! taxpay] caus$ by ! infr+em5t ref]r$ to 9 subsection 7a7-- 7#a7 ! taxpay]'s basis 9 su* prop]ty %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* paym5t1 & 7#b7 subsection 7a7 %all apply to s mu* ( su* paym5t z exce$s ! am\nt ( ! r$uction "u p>agraph 7#a74 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ajaf7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ch7 to ! ext5t provid$ 9 section #ia7;b77#a71 4 7#b7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ia4 ,pat5t or tradem>k infr+em5t aw>ds4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to paym5ts receiv$ pursuant to judgm5ts & settlem5ts aft] ,decemb] #ca1 #bjad4 #ccaf4 ,repeal ( r$undant rules ) respect to c>ry+ *>ges 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #bff 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #afc7n7 is am5d$ by /rik+ p>agraph 7#c7 & by r$esignat+ p>agraphs 7#d7 & 7#e7 z p>agraphs 7#c7 & 7#d71 respectively4 7#b7 ,section #ajaf7;a77#a77;,a77i71 z am5d$ by section #cead1 is am5d$ by /rik+ describ$ 9 section #bff4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjad4 #ccag4 ,repeal ( recurr+ item exception = spudd+ ( oil or gas wells 7a7 ,9 g5]al ,section #dfa7;i7 is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraphs 7#c71 7#d71 & 7#e7 z p>agraphs 7#b71 7#c71 & 7#d71 respectively4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,e ,f9ancial ,in/rum5ts #a ,d]ivatives & h$ges #cdja4 ,treatm5t ( c]ta9 d]ivatives 7a7 ,9 ,g5]al ,sub*apt] ,e ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new "p3 ,,iv ,d]ivatives ,sec4 #dhe4 ,treatm5t ( c]ta9 d]ivatives4 ,sec4 #dhf4 ,d]ivative def9$4 #dhe4 ,treatm5t ( c]ta9 d]ivatives 7a7 ,9 g5]al ,= purposes ( ?is subtitle-- 7#a7 any d]ivative held by a taxpay] at ! close ( ! taxable ye> %all be treat$ z sold = its fair m>ket value on ! la/ bus9ess day ( su* taxable ye> 7& any ga9 or loss %all be tak5 into acc\nt = ! taxable ye>71 & 7#b7 prop] adju/m5t %all be made 9 ! am\nt ( any ga9 or loss subsequ5tly realiz$ = ga9 or loss tak5 into acc\nt by reason ( p>agraph 7#a74 7b7 ,treatm5t z ord9>y income or loss2 all[ance z net op]at+ loss ,all items ( income1 ga91 loss1 & d$uction ) respect to any d]ivative-- 7#a7 %all be treat$ z ord9>y income or loss1 & 7#b7 %all be treat$ = purposes ( section #agb7;d77#d7 z attributable to a trade or bus9ess ( ! taxpay]4 7c7 ,m>k to m>ket ( c]ta9 (fsett+ positions 7#a7 ,9 g5]al ,9 ! case ( any /raddle :i* includes any d]ivative1 subsections 7a7 & 7b7 %all apply to all positions compris+ su* /raddle 9 ! same mann] z su* subsections apply to su* d]ivative4 7#b7 ,application to built-9 ga9 positions 7,a7 ,9 g5]al ,9 ! case ( any built-9 ga9 position to :i* subsection 7a7 applies by reason ( p>agraph 7#a7-- 7i7 9 addition to any o!r "t at :i* su* position is treat$ z sold "u subsection 7a77#a71 su* position %all be treat$ z sold = its fair m>ket value at ! "t t ! /raddle is e/abli%$ ) respect to su* position1 7ii7 prop] adju/m5t %all be made 9 ! am\nt ( any ga9 or loss subsequ5tly realiz$ = ga9 tak5 into acc\nt by reason ( clause 7i71 & 7iii7 subsection 7b7 %all n apply to any ga9 tak5 into acc\nt by reason ( clause 7i74 7,b7 ,built-9 ga9 position ,= purposes ( ?is subsection1 ! t]m built-9 ga9 position means any position 7o!r ?an a d]ivative to :i* subsection 7a7 applies7 ) respect to :i* a ga9 w\ld be realiz$ if su* position 7 sold = its fair m>ket value at ! "t t ! /raddle is e/abli%$ ) respect to su* position4 7,c7 ,exception = /raight debt ,subp>agraph 7,a7 %all n apply to any position ) respect to debt if-- 7i7 ! int]e/ paym5ts 7or o!r simil> am\nts7 ) respect to su* position meet ! requirem5ts ( section #hfj;,g7a77#a77;,b77i71 & 7ii7 su* position is n conv]tible 7directly or indirectly7 into /ock ( ! issu] or any relat$ p]son4 7,d7 ,exception = /raddles consi/+ ( qualifi$ cov]$ call options & ! option$ /ock ,subp>agraph 7,a7 %all n apply to any position :i* is "p ( a /raddle if-- 7i7 all ! (fsett+ positions :i* are "p ( su* /raddle consi/ ( #a or m qualifi$ cov]$ call options 7z def9$ 9 p>agraph 7#f77 & ! /ock to be pur*as$ f ! taxpay] "u su* options1 & 7ii7 su* /raddle is n "p ( a l>g] /raddle4 7#c7 ,application to built-9 loss positions 7,a7 ,9 g5]al ,9 ! case ( any built-9 loss position to :i* subsection 7a7 applies by reason ( p>agraph 7#a71 any ga9 or loss realiz$ "u subsection 7a77#a7 %all be prop]ly adju/$ s z n to take into acc\nt ! loss ref]r$ to 9 subp>agraph 7,b7 ) respect to su* position4 7,b7 ,built-9 loss position ,= purposes ( subp>agraph 7,a71 ! t]m built-9 loss position means any position 7o!r ?an a d]ivative to :i* subsection 7a7 applies7 ) respect to :i* a loss w\ld be realiz$ if su* position 7 sold = its fair m>ket value at ! "t t ! /raddle is e/abli%$ ) respect to su* position4 7#d7 ,hold+ p]iod ( non-d]ivatives ,= purposes ( section #abbb1 9 ! case ( any position to :i* subsection 7a7 applies by reason ( p>agraph 7#a71 ! hold+ p]iod ( su* position %all n include-- 7,a7 ! p]iod dur+ :i* subsection 7a7 applies to su* position1 & 7,b7 9 ! case ( a built-9 ga9 position1 ! p]iod be=e su* position is treat$ z sold "u p>agraph 7#b77;,a74 7#e7 ,/raddle ,= purposes ( ?is section-- 7,a7 ! t]m /raddle has ! mean+ giv5 su* t]m by section #ajib7;c7 appli$ by treat+ all (fsett+ positions z be+ ) respect to p]sonal prop]ty1 & 7,b7 ! t]m position includes any d]ivative4 7#f7 ,qualifi$ cov]$ call options 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#b77;,d71 ! t]m qualifi$ cov]$ call option means any option grant$ by ! taxpay] to pur*ase /ock held by ! taxpay] 7or /ock acquir$ by ! taxpay] 9 connection ) ! grant+ ( ! option7 b only if-- 7i7 su* option is trad$ on a national securities ex*ange :i* is regi/]$ ) ! ,securities & ,ex*ange ,commission or o!r m>ket :i* ! ,secret>y det]m9es has rules adequate to c>ry out ! purposes ( ?is p>agraph1 7ii7 su* option is grant$-- 7,i7 m ?an #cj days be=e ! day on :i* ! option expires1 & 7,,ii7 n m ?an #ij days be=e ! day on :i* ! option expires1 7iii7 su* option is n grant$ by an options deal] 7z def9$ 9 subp>agraph 7,b77 9 connection ) su* deal]'s activity ( deal+ 9 options1 & 7iv7 ga9 or loss ) respect to su* option w\ld n be ord9>y income or loss if det]m9$ )\t reg>d to ?is section4 7,b7 ,options deal] ,= purposes ( subp>agraph 7,a71 ! t]m options deal] means-- 7i7 any p]son regi/]$ ) an appropriate national securities ex*ange z a m>ket mak] or speciali/ 9 li/$ options1 & 7ii7 to ! ext5t provid$ by ! ,secret>y consi/5t ) ! purposes ( ?is p>agraph1 any p]son :om ! ,secret>y det]m9es p]=ms functions simil> to ! p]sons describ$ 9 clause 7i74 7,c7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is p>agraph & p>agraph 7#b77;,d74 ,su* regulations may include modifications to ! provisions ( ?is p>agraph & p>agraph 7#b77;,d7 :i* are appropriate to take acc\nt ( *anges 9 ! practices ( option ex*anges or to prev5t ! use ( options = tax avoidance purposes4 7d7 ,t]m9ations1 etc 7#a7 ,9 g5]al ,! rules ( subsections 7a7 & 7b7 %all also apply to ! t]m9ation 7or transf]7 dur+ ! taxable ye> ( ! taxpay]'s obligation 7or rights7 ) respect to a d]ivative by (fsett+1 by tak+ or mak+ deliv]y1 by ex]cise or be+ ex]cis$1 by assignm5t or be+ assign$1 by lapse1 by expiration1 by settlem5t1 or o!rwise4 7#b7 ,m>k to m>ket ( all positions 9 /raddle if any position t]m9at$ or transf]r$ ,if p>agraph 7#a7 applies ) respect to any position :i* is "p ( a /raddle1 ! rules ( subsections 7a7 & 7b7 %all apply to e position :i* is "p ( su* /raddle4 7e7 ,det]m9ation ( fair m>ket value ,= purposes ( ?is section-- 7#a7 ,t]m9ations1 etc ,= purposes ( subsection 7d71 fair m>ket value %all be det]m9$ at ! "t ( ! t]m9ation 7or transf]74 7#b7 ,blockage factor n tak5 into acc\nt ,to ! ext5t provid$ 9 regulations prescrib$ by ! ,secret>y1 fair m>ket value %all be det]m9$ )\t reg>d to any premium or disc\nt bas$ on ! proportion ( ! total available trad+ units :i* are held4 7f7 ,coord9ation ) c]ta9 rules ,! rules ( sections #bfc7;g7 & #bfc;,a %all n apply to any d]ivative or o!r position to :i* subsection 7a7 applies1 & section #ajia %all n apply 7& section #ajib %all apply7 to any loss recogniz$ "u subsection 7a74 #dhf4 ,d]ivative def9$ 7a7 ,9 g5]al ,= purposes ( ?is "p1 except z o!rwise provid$ 9 ?is section1 ! t]m d]ivative means any contract 7includ+ any option1 =w>d contract1 futures contract1 %ort position1 swap1 or simil> contract7 ! value ( :i*1 or any paym5t or o!r transf] ) respect to :i*1 is 7directly or indirectly7 det]m9$ by ref]5ce to "o or m ( ! foll[+3 7#a7 ,any %>e ( /ock 9 a corporation4 7#b7 ,any p>tn]%ip or b5eficial own]%ip int]e/ 9 a p>tn]%ip or tru/4 7#c7 ,any evid5ce ( indebt$ness4 7#d7 ,except z provid$ 9 subsection 7d71 any real prop]ty4 7#e7 ,any commodity :i* is actively trad$ 7)9 ! mean+ ( section #ajib7;d77#a774 7#f7 ,any curr5cy4 7#g7 ,any rate1 price1 am\nt1 index1 =mula1 or algori?m4 7#h7 ,any o!r item z ! ,secret>y may prescribe4 ,su* t]m %all n include any item describ$ 9 p>agraphs 7#a7 ?r\gh 7#h74 7b7 ,exceptions 7#a7 ,c]ta9 real prop]ty 7,a7 ,9 g5]al ,= purposes ( subsection 7a77#d71 ! t]m real prop]ty %all n include-- 7i7 a tract ( real prop]ty 7z def9$ 9 section #abcg7;c771 or 7ii7 any real prop]ty :i* w\ld be prop]ty describ$ 9 section #abba7;a77#a7 ) respect to ! taxpay] if held directly by ! taxpay]4 7,b7 ,regulations ,! ,secret>y %all prescribe regulations or o!r guidance "u :i* multiple tracts ( real prop]ty may be treat$ z a s+le tract ( real prop]ty = purposes ( subp>agraph 7,a77i7 if ! contract ref]r$ to 9 subsection 7a7 is ( a type :i* is design$ to facilitate ! acquisition or disposition ( su* real prop]ty4 7#b7 ,h$g+ transactions 7,a7 ,9 g5]al ,= purposes ( ?is "p1 ! t]m d]ivative %all n include any contract :i* is "p ( a h$g+ transaction 7z def9$ 9 section #abba7;b774 7,b7 ,section #ihh h$g+ transactions ,= exception = section #ihh h$g+ transactions1 see section #ihh7;d77#a74 7#c7 ,securities l5d+1 sale-repur*ase1 & simil> f9anc+ transactions ,to ! ext5t provid$ by ! ,secret>y1 = purposes ( ?is "p1 ! t]m d]ivative %all n include ! "r to ! return ( ! same or sub/antially id5tical securities transf]r$ 9 a securities l5d+ transaction1 sale-repur*ase transaction1 or simil> f9anc+ transaction4 7#d7 ,options receiv$ 9 connection ) ! p]=mance ( s]vices ,= purposes ( ?is "p1 ! t]m d]ivative %all n include any option describ$ 9 section #hc7;e77#c7 receiv$ 9 connection ) ! p]=mance ( s]vices4 7#e7 ,insurance contracts1 annuities1 & end[m5ts ,= purposes ( ?is "p1 ! t]m d]ivative %all n include any insurance1 annuity1 or end[m5t contract issu$ by an insurance company to :i* sub*apt] ,l applies 7or issu$ by any =eign corporation to :i* su* sub*apt] w\ld apply if su* =eign corporation 7 a dome/ic corporation74 7#f7 ,d]ivatives ) respect to /ock ( memb]s ( same worldwide affiliat$ gr\p ,= purposes ( ?is "p1 ! t]m d]ivative %all n include1 & subsections 7c7 & 7d77#b7 ( section #dhe %all n apply to1 any d]ivative 7det]m9$ )\t reg>d to ?is subsection7 ) respect to /ock issu$ by any memb] ( ! same worldwide affiliat$ gr\p 7z def9$ 9 section #hfd7;f77 9 :i* ! taxpay] is a memb]4 7#g7 ,commodities us$ 9 normal c\rse ( trade or bus9ess ,= purposes ( ?is "p1 ! t]m d]ivative %all n include any contract ) respect to any commodity if-- 7,a7 su* contract requires physical deliv]y ) ! option ( ca% settlem5t only 9 unusual & exceptional circum/ances1 & 7,b7 su* commodity is us$ 7& is us$ 9 quantities ) respect to :i* su* d]ivative relates7 9 ! normal c\rse ( ! taxpay]'s trade or bus9ess 7or1 9 ! case ( an individual1 = p]sonal consumption74 7c7 ,contracts ) emb$d$ d]ivative compon5ts 7#a7 ,9 g5]al ,if a contract has d]ivative & nond]ivative compon5ts1 !n ea* d]ivative compon5t %all be treat$ z a d]ivative = purposes ( ?is "p4 ,if ! d]ivative compon5t _c be sep>ately valu$1 !n ! entire contract %all be treat$ z a d]ivative = purposes ( ?is "p4 7#b7 ,exception = c]ta9 emb$d$ d]ivative compon5ts ( debt in/rum5ts ,a debt in/rum5t %all n be treat$ z hav+ a d]ivative compon5t m]ely because-- 7,a7 su* debt in/rum5t is d5om9at$ 9 a nonfunctional curr5cy 7z def9$ 9 section #ihh7;c77#a77;,c77ii771 7,b7 paym5ts ) respect to su* debt in/rum5t are det]m9$ by ref]5ce to ! value ( a nonfunctional curr5cy 7z s def9$71 or 7,c7 su* debt in/rum5t is a conv]tible debt in/rum5t1 cont+5t paym5t debt in/rum5t1 a v>iable rate debt in/rum5t1 an integrat$ debt in/rum5t1 an inve/m5t unit1 a debt in/rum5t ) alt]native paym5t s*$ules1 or o!r debt in/rum5t ) respect to :i* ! regulations "u section #abge7;d7 apply4 7d7 ,treatm5t ( ,am]ican ,depository ,receipts & simil> in/rum5ts ,except z o!rwise provid$ by ! ,secret>y1 = purposes ( ?is "p1 ,am]ican depository receipts 7& simil> in/rum5ts7 ) respect to %>es ( /ock 9 =eign corporations %all be treat$ z %>es ( /ock 9 su* =eign corporations4 4 7b7 ,coord9ation ) rules = deal]s & trad]s 7#a7 ,d]ivatives n treat$ z securities ,section #dge7;c77#b7 is am5d$-- 7,a7 by add+ & at ! end ( subp>agraph 7,c71 7,b7 by /rik+ subp>agraphs 7,d7 & 7,e7 & by r$esignat+ subp>agraph 7,f7 z subp>agraph 7,d71 7,c7 by /rik+ subp>agraph 7,a71 7,b71 7,c71 7,d71 or 7,e7 9 subp>agraph 7,d77i71 z s r$esignat$1 & ins]t+ subp>agraph 7,a71 7,b71 or 7,c71 & 7,d7 by am5d+ ! la/ s5t5ce to read z foll[s3 ,su* t]m %all n include any position to :i* section #dhe7;a7 applies4 7#b7 ,d]ivatives n treat$ z commodities ,section #dge7;e77#b7 is am5d$-- 7,a7 by add+ & at ! end ( subp>agraph 7,a71 7,b7 by /rik+ subp>agraphs 7,b7 & 7,c7 & by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,b71 & 7,c7 by /rik+ subp>agraph 7,a71 7,b7 or 7,c7 9 subp>agraph 7,b77i71 z s r$esignat$1 & ins]t+ subp>agraph 7,a74 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #dge7;b7 is am5d$ by /rik+ p>agraph 7#d74 7,b7 ,section #dge7;d77#b77;,b7 is am5d$-- 7i7 by /rik+ subsection 7c77#b77;,f77iii7 & ins]t+ subsection 7c77#b77;,d77iii71 & 7ii7 by /rik+ subsection 7c77#b77;,f7 & ins]t+ subsection 7c77#b77;,d74 7,c7 ,section #dge7;f77#a77;,d7 is am5d$ by /rik+ subsections 7b77#d7 & 7d7 & ins]t+ subsection 7d74 7c7 ,coord9ation ) /raddle rules 7#a7 ,9 g5]al ,section #ajib7;e7 is am5d$ to read z foll[s3 7e7 ,exception = h$g+ transactions & /raddles ) d]ivatives ,?is section %all n apply 9 ! case (-- 7#a7 any h$g+ transaction 7z def9$ 9 section #abba7;b771 & 7#b7 any /raddle 7z def9$ 9 section #dhe7 :i* includes any d]ivative 7z def9$ 9 section #dhf74 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #bfc7;g77#c7 is am5d$ to read z foll[s3 7#c7 ,exception = h$g+ transactions & /raddles ) d]ivatives ,?is subsection %all n apply 9 ! case (-- 7,a7 any h$g+ transaction 7z def9$ 9 section #abba7;b771 & 7,b7 any /raddle 7z def9$ 9 section #dhe7 :i* includes any d]ivative 7z def9$ 9 section #dhf74 4 7,b7 ,section #ajib7;b7 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by /rik+ all t prec$es ,! ,secret>y %all & ins]t+ ! foll[+3 7b7 ,regulations ,! ,secret>y %all 4 7,c7 ,section #ajib7;c7 is am5d$ by /rik+ p>agraph 7#d74 7,d7 ,section #ajib is am5d$ by /rik+ subsection 7f7 & by r$esignat+ subsection 7g7 z subsection 7f74 7d7 ,treatm5t ( conv]tible debt in/rum5ts ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's designee1 %all modify ! regulations issu$ "u section #abge7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf to provide t conv]tible debt in/rum5ts are treat$ 9 a mann] simil> to cont+5t paym5t debt in/rum5ts4 7e7 ,repeal ( c]ta9 o!r sup]c$$ rules = det]m9+ capital ga9s & losses 7#a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ sections #abcc1 #abcd1 #abcd;,a1 #abcd;,b1 #abcf1 #abef1 #abeh1 #abei1 & #abfj 7& by /rik+ ! items relat+ to su* sections 9 ! table ( sections = su* "p74 7#b7 ,con=m+ am5dm5ts relat$ to repeal ( section #abcc ,section #ajib7;b7 is am5d$ by ins]t+ 7z 9 effect be=e _! repeal7 aft] section #abcc4 7#c7 ,con=m+ am5dm5ts relat$ to repeal ( section #abcd ,section #fjde7;h77#b7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #abcd7;b77#b77;,a71 & 7,b7 by add+ at ! end ! foll[+3 ,= purposes ( ! prec$+ s5t5ce1 ! t]m clos+ transaction means any t]m9ation ( ! taxpay]'s obligation "u an option 9 prop]ty o!r ?an ?r\gh ! ex]cise or lapse ( ! option44 7#d7 ,con=m+ am5dm5ts relat$ to repeal ( section #abcf 7,a7 ,section #dge7;d77#c77;,a7 is am5d$ by /rik+ or section #abcf7;b74 7,b7 ,section #eab7;b77#e7 is am5d$ by /rik+ section #abcf7;c7 & ins]t+ section #ajeh7;c74 7,c7 ,section #ajeh is am5d$-- 7i7 by /rik+ 7z def9$ 9 section #abcf7;c77 9 subsection 7a71 & 7ii7 by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,securities ,= purposes ( ?is section1 ! t]m security means any %>e ( /ock 9 any corporation1 c]tificate ( /ock or int]e/ 9 any corporation1 note1 bond1 deb5ture1 or evid5ce ( indebt$ness1 or any evid5ce ( an int]e/ 9 or "r to subscribe to or pur*ase any ( ! =ego+4 4 7#e7 ,con=m+ am5dm5ts relat$ to repeal ( section #abef 7,a7 ,section #dfa7;i77#b77;,b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7,b7 any p>tn]%ip or o!r entity 7o!r ?an a corporation :i* is n an ,s corporation7 if m ?an #ce p]c5t ( ! losses ( su* entity dur+ ! taxable ye> are allocable to limit$ p>tn]s or limit$ entrepr5eurs 7)9 ! mean+ ( section #dfa7;j77#d771 & 4 7,b7 ,section #dge7;d77#a7 is am5d$ by /rik+ sections #bfc7;g71 #bfc;,a1 & #abef7;a7 & ins]t+ sections #bfc7;g7 & #bfc;,a4 7,c7 ,section #ihh7;c77#a7 is am5d$ by /rik+ subp>agraphs 7,d7 & 7,e74 7,d7 ,section #ajib7;a77#c77;,c77ii77,,ii7 is am5d$ by /rik+ section #abef7;e7 & ins]t+ section #abba7;b74 7,e7 ,section #ajib7;d7 is am5d$ by /rik+ p>agraphs 7#e7 & 7#f7 & by r$esignat+ p>agraphs 7#g7 & 7#h7 z p>agraphs 7#e7 & 7#f71 respectively4 7,f7 ,section #abab is am5d$ by /rik+ subsection 7c74 7,g7 ,section #abbc is am5d$ by /rik+ p>agraphs 7#g7 & 7#ad74 7,h7 ,section #abha7;b77#a77;,e7 is am5d$ to read z foll[s3 7,e7 is a h$g+ transaction 7z def9$ 9 section #abba7;b771 or 4 7,i7 ,section #adjb is am5d$ by /rik+ subsection 7i74 7,j7 ,section #dihb7;e77#f77;,b7 is am5d$ by /rik+ sections #abef & #abif & ins]t+ sections #dhe & #abif4 7#f7 ,con=m+ am5dm5ts relat$ to repeal ( section #abei ,section #dge7;f77#a7 is am5d$ by /rik+ subp>agraph 7,c7 & by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,c74 7f7 ,o!r con=m+ am5dm5ts 7#a7 ,section #cee7;g77#b77;,b77i77,v7 is am5d$ to read z foll[s3 7,v7 any d]ivative 7z def9$ 9 section #dhf71 4 7#b7 ,section #hef7n77#d7 is am5d$ by ins]t+ or d]ivatives 7z def9$ 9 section #dhf7 aft] securities 7z def9$ 9 section #dge7;c77#b774 7#c7 ,section #heg7;e77#b77;,b77i71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ section #hfj;,e or #abgb & ins]t+ section #dhe1 #hfj;,e1 or #abgb4 7#d7 ,section #ihh7;d77#a7 is am5d$-- 7,a7 by /rik+ or #abef & ins]t+ or #dhe1 & 7,b7 by /rik+ #ajib1 & #abef & ins]t+ #dhe1 & #ajib4 7#e7 ,section #ajia7;e7 is am5d$ to read z foll[s3 7e7 ,coord9ation ) m>k to m>ket ( d]ivatives ,not)/&+ any o!r provision ( ?is section1 a d]ivative 7z def9$ 9 section #dhf7 %all n be treat$ z a security = purposes ( ?is section4 4 7#f7 7,a7 ,section #abba7;a77#f7 is am5d$ to read z foll[s3 7#f7 any d]ivative 7z def9$ 9 section #dhf71 4 7,b7 ,section #abba7;b7 is am5d$ by /rik+ p>agraph 7#a74 7#g7 ,section #dige7;f77#aa77;,d7 is am5d$ by /rik+ clauses 7i7 & 7ii7 & ins]t+ ! foll[+3 7i7 ,security ,! t]m security means any security describ$ 9 section #dge7;c77#b7 7)\t reg>d to subp>agraph 7,d77iii7 !re(7 & any d]ivative ) respect to su* a security 7)9 ! mean+ ( section #dhf74 7ii7 ,commodity ,! t]m commodity means any commodity describ$ 9 section #dge7;e77#b7 7)\t reg>d to subp>agraph 7,b77iii7 !re(7 & any d]ivative ) respect to su* a commodity 7)9 ! mean+ ( section #dhf74 4 7#h7 ,! table ( p>ts = sub*apt] ,e ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,"p ,,iv4 ,d]ivatives 4 7g7 ,effective dates ,! am5dm5ts made by ?is section %all apply to-- 7#a7 taxable ye>s end+ aft] ,decemb] #ca1 #bjad1 9 ! case ( prop]ty acquir$ & positions e/abli%$ aft] ,decemb] #ca1 #bjad1 & 7#b7 taxable ye>s end+ aft] ,decemb] #ca1 #bjai1 9 ! case ( any o!r prop]ty or position4 ,= purposes ( ?is subsection1 any prop]ty acquir$ on or be=e ,decemb] #ca1 #bjad1 :i* becomes "p ( a /raddle 7z def9$ 9 section #dhe1 z add$ by ?is section7 aft] su* date %all be treat$ z a position e/abli%$ aft] su* date4 #cdjb4 ,modification ( c]ta9 rules relat$ to h$ges 7a7 ,treatm5t ( h$ges id5tifi$ = f9ancial acc\nt+ purposes 7#a7 ,9 g5]al ,section #abba7;b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7b7 ,h$g+ transaction ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m h$g+ transaction means any transaction describ$ 9 p>agraph 7#b7 & id5tifi$ "u p>agraph 7#c74 7#b7 ,transaction describ$ ,a transaction is describ$ 9 ?is p>agraph if su* transaction is ent]$ into by ! taxpay] 9 ! normal c\rse ( ! taxpay]'s trade or bus9ess prim>ily-- 7,a7 to manage risk ( price *anges or curr5cy fluctuations ) respect to ord9>y prop]ty :i* is held or to be held by ! taxpay]1 7,b7 to manage risk ( int]e/ rate or price *anges or curr5cy fluctuations ) respect to borr[+s made or to be made1 or ord9>y obligations incurr$ or to be incurr$1 by ! taxpay]1 or 7,c7 to manage su* o!r risks z ! ,secret>y may prescribe 9 regulations4 7#c7 ,id5tification ,a transaction is id5tifi$ "u ?is p>agraph if-- 7,a7 su* transaction is cle>ly id5tifi$ z a h$g+ transaction = purposes ( ?is p>agraph be=e ! close ( ! day on :i* x 0 acquir$1 orig9at$1 or ent]$ into 7or su* o!r "t z ! ,secret>y may by regulations prescribe71 or 7,b7 su* transaction is treat$ z a h$g+ transaction 7)9 ! mean+ ( g5]ally accept$ acc\nt+ pr9ciples7 = purposes ( an audit$ f9ancial /atem5t ( ! taxpay] :i*-- 7i7 is c]tifi$ z be+ prep>$ 9 accordance ) g5]ally accept$ acc\nt+ pr9ciples1 & 7ii7 is us$ = ! purposes ( a /atem5t or report-- 7,i7 to %>ehold]s1 p>tn]s1 or o!r proprietors1 or to b5efici>ies1 or 7,,ii7 = cr$it purposes4 7#d7 ,treatm5t ( nonid5tification or improp] id5tification ( h$g+ transactions ,! ,secret>y %all prescribe regulations to prop]ly *>act]ize any income1 ga91 exp5se1 or loss aris+ f a transaction-- 7,a7 :i* w\ld be a h$g+ transaction if id5tifi$ "u p>agraph 7#c71 or 7,b7 :i* is id5tifi$ "u p>agraph 7#c7 b is n a transaction describ$ 9 p>agraph 7#b74 ,9 ! case ( a transaction id5tifi$ "u p>agraph 7#c7 solely by reason ( p>agraph 7#c77;,b71 subp>agraph 7,b7 ( ?is p>agraph %all n apply ) respect to su* transaction unless ! taxpay] treats su* transaction z a h$g+ transaction = purposes ( any provision ( ?is title4 7#e7 ,bonds held by an insurance company ,= purposes ( p>agraph 7#b77;,a71 9 ! case ( an insurance company to :i* sub*apt] ,l applies1 any bond1 deb5ture1 note1 c]tificate1 or o!r evid5ce ( indebt$ness held by ! taxpay] %all be treat$ z ord9>y prop]ty4 7#f7 ,regulations ,! ,secret>y %all prescribe su* regulations z are appropriate to c>ry\t ! purposes ( ?is subsection & subsection 7a77#g7 9 ! case ( transactions involv+ relat$ p>ties4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #hef7;c77#e77;,g77i7 is am5d$ by /rik+ 7z def9$ 9 clause 7ii7 or 7iii7 ( section #abba7;b77#b77;,a77 :i* is cle>ly id5tifi$ pursuant to section #abba7;a77#g7 & ins]t+ 7z def9$ 9 section #abba7;b7 7det]m9$ )\t reg>d to p>agraph 7#b77;,a7 !re(74 7,b7 ,section #ied7;c77#e77;,a7 is am5d$ to read z foll[s3 7,a7 ,commodity h$g+ transactions 7i7 ,9 g5]al ,= purposes ( p>agraph 7#a77;,c77i71 ! t]m commodity h$g+ transaction means any transaction ) respect to a commodity if su* transaction w\ld be a h$g+ transaction "u section #abba7;b7 if-- 7,i7 ! only transactions describ$ 9 p>agraph 7#b7 !re( 7 transactions describ$ 9 clause 7ii71 & 7,,ii7 p>agraphs 7#c7 & 7#d7 !re( 7 appli$ by sub/itut+ controll$ =eign corporation = taxpay] ea* place x appe>s4 7ii7 ,transaction describ$ ,a transaction is describ$ 9 ?is clause if su* transaction is ent]$ into by ! controll$ =eign corporation 9 ! normal c\rse ( ! controll$ =eign corporation's trade or bus9ess prim>ily-- 7,i7 to manage risk ( price *anges or curr5cy fluctuations ) respect to ord9>y prop]ty or prop]ty describ$ 9 section #abca7;b7 :i* is held or to be held by ! controll$ =eign corporation1 or 7,,ii7 to manage su* o!r risks z ! ,secret>y may prescribe 9 regulations4 4 7,c7 ,section #abba7;a77#g7 is am5d$ by /rik+ :i* is cle>ly & all t foll[s ?r\gh regulations prescribe74 7b7 ,special rule = commodity h$g+ transactions involv+ relat$ controll$ =eign corporations ,section #ied7;c77#e77;,a71 z am5d$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new clause3 7iii7 ,application to relat$ controll$ =eign corporations 7,i7 ,9 g5]al ,9 ! case ( qualifi$ prop]ty1 clause 7ii77,i7 %all be appli$ by sub/itut+ ! controll$ =eign corporation or ano!r controll$ =eign corporation :i* is a relat$ p]son 7)9 ! mean+ ( subsection 7d77#c77 = ! controll$ =eign corporation4 7,,ii7 ,qualifi$ prop]ty ,= purposes ( ?is clause1 ! t]m qualifi$ prop]ty means ord9>y prop]ty or prop]ty describ$ 9 section #abca7;b7 7if dispos$ ( at a ga97 ! income f ! disposition ( :i* w\ld be nei!r subp>t ,f income nor income treat$ z effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transactions ent]$ into aft] ,decemb] #ca1 #bjad4 #b ,treatm5t ( debt in/rum5ts #cdaa4 ,curr5t inclusion 9 income ( m>ket disc\nt 7a7 ,9 g5]al ,subp>t ,b ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ by r$esignat+ section #abgh z section #abgi & by ins]t+ aft] section #abgg ! foll[+ new section3 #abgh4 ,curr5t inclusion 9 income ( m>ket disc\nt on bonds acquir$ aft] #bjad 7a7 ,9 g5]al ,!re %all be includ$ 9 ! gross income ( ! hold] ( any m>ket disc\nt bond acquir$ aft] ,decemb] #ca1 #bjad1 an am\nt equal to ! sum ( ! daily portions ( ! m>ket disc\nt = ea* day dur+ ! taxable ye> on :i* su* hold] held su* bond4 7b7 ,det]m9ation ( daily portions 7#a7 ,9 g5]al ,= purposes ( subsection 7a71 ! daily portion ( ! m>ket disc\nt on any m>ket disc\nt bond %all be an am\nt equal to ! daily portion ( orig9al issue disc\nt :i* w\ld be includible 9 gross income "u section #abgb7;a7 7det]m9$ )\t reg>d to p>agraph 7#b7 !re(7 if su* bond _h be5-- 7,a7 orig9ally issu$ on ! date on :i* su* bond 0 acquir$ by ! taxpay]1 7,b7 = an issue price equal to ! basis ( su* bond imm$iately aft] su* acquisition4 7#b7 ,coord9ation :]e bond has orig9al issue disc\nt ,9 ! case ( any bond hav+ orig9al issue disc\nt1 ! daily portion det]m9$ "u p>agraph 7#a7 %all be r$uc$ by ! daily portion ( orig9al issue disc\nt includible 9 gross income "u section #abgb7;a7 7det]m9$ )\t reg>d to p>agraph 7#b7 !re(7 ) respect to su* bond4 7#c7 ,special rule :]e p>tial pr9cipal paym5ts ,9 ! case ( a bond ! pr9cipal ( :i* may be paid 9 #b or m paym5ts1 ! daily portions ( m>ket disc\nt %all be det]m9$ "u regulations prescrib$ by ! ,secret>y4 7c7 ,limitation 7#a7 ,9 g5]al ,! am\nt ( m>ket disc\nt allocable to any accrual p]iod = purposes ( det]m9+ ! sum ( ! daily portions "u subsection 7a7 %all n exce$ ! excess 7if any7 (-- 7,a7 ! product (-- 7i7 ! maximum accrual rate det]m9$ "u p>agraph 7#b71 prop]ly adju/$ = ! l5g? ( ! accrual p]iod1 multipli$ by 7ii7 ! adju/$ basis ( su* bond at ! beg9n+ ( su* accrual p]iod1 ov] 7,b7 ! sum ( ! qualifi$ /at$ int]e/ & orig9al issue disc\nt allocable to su* accrual p]iod4 7#b7 ,maximum accrual rate ,! maximum accrual rate det]m9$ "u ?is p>agraph ) respect to any bond is ! great] (-- 7,a7 su* bonds's yield to maturity 7det]m9$ z ( ! date ( ! issuance ( su* bond7 plus #e p]c5tage po9ts1 or 7,b7 ! applicable ,f$]al rate = su* bond 7det]m9$ "u section #abgd7;d7 z ( ! date ( ! acquisition ( su* bond & on ! basis ( ! rema9+ t]m ( su* bond z ( su* date7 plus #aj p]c5tage po9ts4 7#c7 ,application to pools ,9 ! case ( debt in/rum5ts to :i* section #abgb7;a77#f7 applies1 rules simil> to ! rules ( su* section %all apply = purposes ( det]m9+ ! daily portions ( m>ket disc\nt4 7#d7 ,accrual p]iod ,= purposes ( ?is subsection1 ! t]m accrual p]iod has ! mean+ giv5 su* t]m 9 section #abgb7;a77#e74 7d7 ,special rules 7#a7 ,accruals treat$ z int]e/ ,except = purposes ( sections #ajc1 #hga7;a71 #hha1 #adda1 #addb1 & #fjdi 7& su* o!r provisions z may be specifi$ 9 regulations71 any am\nt includ$ 9 gross income "u ?is section %all be treat$ z int]e/ = purposes ( ?is title4 7#b7 ,basis adju/m5t ,! basis ( any m>ket disc\nt bond 9 ! h&s ( ! taxpay] %all be increas$ by ! am\nt includ$ 9 gross income pursuant to ?is section4 7#c7 ,treatm5t ( loss on disposition ,s mu* ( any loss recogniz$ by ! taxpay] on ! disposition ( a m>ket disc\nt bond z does n exce$ ! aggregate am\nts includ$ 9 ! taxpay]'s gross income "u subsection 7a7 ) respect to su* bond %all be treat$ = purposes ( ?is title z an ord9>y loss4 4 7b7 ,treatm5t ( m>ket disc\nt on %ort-,t]m nongov]nm5tal bonds 7#a7 ,accrual basis taxpay]s1 etc ,section #abhc is am5d$ by /rik+ subsection 7c7 & r$esignat+ subsection 7d7 z subsection 7c74 7#b7 ,o!r taxpay]s 7,a7 ,section #abga7;a77#c7 is am5d$-- 7i7 by /rik+ all t prec$es subp>agraph 7,c7 & ins]t+ ! foll[+3 7#c7 ,c]ta9 %ort-t]m obligations 7,a7 ,9 g5]al ,on ! sale or ex*ange ( any %ort-t]m obligation 7z def9$ 9 section #abhc7;a77#a771 any ga9 realiz$ :i* does n exce$ an am\nt equal to ! ratable %>e ( ! acquisition disc\nt %all be treat$ z ord9>y income4 1 & 7ii7 by r$esignat+ subp>agraphs 7,c71 7,d71 & 7,e7 z subp>agraphs 7,b71 7,c71 & 7,d71 respectively4 7,b7 ,section #abga7;a7 is am5d$ by /rik+ p>agraph 7#d74 7,c7 ,section #abhc7;c77#c71 z r$esignat$ by p>agraph 7#a71 is am5d$ by /rik+ p>agraphs 7#c7 & 7#d7 ( section #abga7;a7 & ins]t+ section #abga7;a77#c74 7c7 ,coord9ation ) rules relat$ ,to treat+ m>ket disc\nt z ord9>y income ^u disposition 7#a7 ,9 g5]al ,section #abgf is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,coord9ation ) rules = curr5t inclusion ( m>ket disc\nt ,?is section %all n apply to any m>ket disc\nt bond to :i* section #abgh applies4 4 7#b7 ,coord9ation ) def]ral ( int]e/ d$uction ,section #abgg is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,coord9ation ) rules = curr5t inclusion ( m>ket disc\nt ,?is section %all n apply to any m>ket disc\nt bond to :i* section #abgh applies4 4 7#c7 ,coord9ation ) election to include m>ket disc\nt curr5tly ,section #abgi7;b71 z r$esignat$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,coord9ation ) rules = curr5t inclusion ( m>ket disc\nt ,?is subsection %all n apply to any m>ket disc\nt bond to :i* section #abgh applies4 4 7d7 ,treatm5t ( c]ta9 bonds held by p>tn]%ips 7#a7 ,transf]s ( p>tn]%ip int]e/s ,section #abgi7;a71 z r$esignat$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,transf]s ( p>tn]%ip int]e/s ,9 ! case ( a transf] describ$ 9 section #gdc ( an int]e/ 9 a p>tn]%ip hold+ a bond1 ! p>tn]%ip %all be treat$ z acquir+ ! transf]ee p>tn]'s proportionate %>e ( su* bond at ! "t ( su* transf]4 4 7#b7 ,di/ribution ( bonds by p>tn]%ips ,section #abgi7;a77#b71 z r$esignat$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,di/ribution by p>tn]%ip ,if ! basis ( ! taxpay] 9 a bond is det]m9$ "u section #gcd7;a77#b7 or 7b71 = purposes ( subp>agraph 7,a77ii71 ! basis ( su* bond %all n be less ?an its fair m>ket value imm$iately aft] its acquisition by ! taxpay]4 4 7e7 ,mod]nization ( c]ta9 def9itions 7#a7 ,repeal ( sup]c$$ exception = m>ket disc\nt bonds acquir$ at issue ,section #abgi7;a77#a71 z r$esignat$ by subsection 7a71 is am5d$ by /rik+ subp>agraph 7,d7 7#b7 ,revis$ issue price ,section #abgi7;a77#d71 z r$esignat$ by subsection 7a71 is am5d$-- 7,a7 by r$esignat+ subp>agraphs 7,a7 & 7,b7 z clauses 7i7 & 7ii7 & by ind5t+ su* clauses appropriately1 7,b7 by /rik+ means ! sum (-- & ins]t+ means ! excess (-- 7,a7 ! sum (-- 1 7,c7 by /rik+ ! p]iod at ! end & ins]t+ 1 ov]1 & 7,d7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 ! sum (-- 7i7 any paym5ts o!r ?an qualifi$ /at$ int]e/ made "u ! bond dur+ p]iods be=e ! acquisition ( ! bond by ! taxpay]1 & 7ii7 any premium :i* has accru$ dur+ su* p]iods 7det]m9$ z if own$ at all times by ! orig9al hold]74 4 7#c7 ,r$emption price 7,a7 ,9 g5]al ,section #abgc7;a77#b7 is am5d$ to read z foll[s3 7#b7 ,r$emption price 7,a7 ,9 g5]al ,! t]m r$emption price means ! sum ( all paym5ts provid$ by ! debt in/rum5t o!r ?an qualifi$ /at$ int]e/4 7,b7 ,qualifi$ /at$ int]e/ ,! t]m qualifi$ /at$ int]e/ means /at$ int]e/ t is unconditionally payable 9 money & o!r prop]ty 7o!r ?an a debt in/rum5t ( ! issu]7 at lea/ annually at a fix$ rate 7or to ! ext5t provid$ by regulations1 at a v>iable rate74 7,c7 ,basis adju/m5t ,! basis ( any debt in/rum5t %all be r$uc$ by ! am\nt ( any paym5t receiv$ o!r ?an qualifi$ /at$ int]e/4 4 7,b7 ,con=m+ am5dm5ts 7i7 ,ea* ( ! foll[+ provisions is am5d$ by /rik+ /at$ r$emption price at maturity & ins]t+ r$emption price3 7,i7 ,section #abga7;a77#c77;,b7 7z r$esignat$ by subsection 7b774 7,,ii7 ,section #abgc7;a77#a77;,a74 7,,iii7 ,section #abgc7;a77#c74 7,,iv7 ,section #abgc7;b77#d74 7,v7 ,section #abgd7;c77#a77;,a74 7,,vi7 ,section #abgi7;a77#e7 7z r$esignat$ by subsection 7a774 7,,vii7 ,section #abhc7;a77#b77;,a74 7,,viii7 ,section #abhf7;a77#a74 7,,ix7 ,! head+ & text ( section #abhf7;e77#d74 7ii7 ,section #ajh7;e77#aj77;,b7 is am5d$ by /rik+ /at$ bo? places x appe>s4 7iii7 ,section #abgb7;a77#f77;,a77i7 is am5d$ by /rik+ /at$4 7iv7 ,subp>agraphs 7,a77i7 & 7,c7 ( section #abgi7;a77#b7 7z r$esignat$ by subsection 7a77 are ea* am5d$ by /rik+ ! /at$ r$emption price ( ! bond at maturity & ins]t+ ! r$emption price ( ! bond4 7v7 ,section #abgi7;a77#b77;,b7 7z r$esignat$ by subsection 7a77 is am5d$ by /rik+ ! /at$ r$emption price ( su* bond at maturity & ins]t+ ! r$emption price ( su* bond4 7#d7 ,adju/$ issue price ,section #abge7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,adju/$ issue price 7,a7 ,9 g5]al ,= purposes ( ?is "p1 ! adju/$ issue price ( any debt in/rum5t is its issue price-- 7i7 increas$ by ! aggregate ( ! orig9al issue disc\nt includible 9 ! gross income ( all hold]s = prior p]iods 7det]m9$ )\t reg>d to p>agraph 7#g7 ( section #abgb7;a771 or1 9 ! case ( a tax-exempt obligation1 ! aggregate am\nt :i* accru$ 9 ! mann] provid$ by ?is subsection 7det]m9$ )\t reg>d to su* p>agraph 7#g77 = all prior p]iods1 & 7ii7 r$uc$ by ! sum (-- 7,i7 any paym5ts o!r ?an qualifi$ /at$ int]e/ previ\sly made on ! debt in/rum5t1 & 7,,ii7 9 ! case ( a debt in/rum5t :i* 0 issu$ ) amortizable bond premium 7z def9$ 9 section #aga7;b771 ! aggregate am\nt by :i* ! basis ( su* in/rum5t w\ld h be5 r$uc$ "u section #ajaf7;a77#e7 = prior p]iods if ! in/rum5t _h be5 held by ! orig9al hold] at all times4 7,b7 ,de m9imis rule ,! adju/$ issue price ( ! issu] %all be prop]ly adju/$ to take into acc\nt t section #abgc7;a77#c7 does n apply to ! d$uction "u section #afc = orig9al issue disc\nt4 4 7#e7 ,c]ta9 o!r t]ms ,p>agraphs 7#c71 7#d71 & 7#e7 ( section #abgb7;a7 are am5d$ to read z foll[s3 7#c7 ,det]m9ation ( daily portions ,= purposes ( p>agraph 7#a71 ! daily portion ( ! orig9al issue disc\nt on any debt in/rum5t %all be det]m9$ by allocat+ to ea* day 9 any accrual p]iod its ratable %>e ( ! orig9al issue disc\nt allocable to su* accrual p]iod4 ,= purposes ( ! prec$+ s5t5ce1 ! orig9al issue disc\nt allocable to any accrual p]iod is ! excess 7if any7 (-- 7,a7 ! product (-- 7i7 ! adju/$ issue price ( ! debt in/rum5t at ! beg9n+ ( su* accrual p]iod1 multipli$ by 7ii7 ! yield to maturity ( ! debt in/rum5t prop]ly adju/$ = ! l5g? ( ! accrual p]iod1 ov] 7,b7 ! am\nt ( any qualifi$ /at$ int]e/ allocable to su* accrual p]iod4 7#d7 ,yield to maturity ,= purposes ( ?is subsection1 ! t]m yield to maturity means ! disc\nt rate t1 :5 us$ 9 comput+ ! pres5t value ( all pr9cipal & int]e/ paym5ts to be made "u ! debt in/rum5t produces an am\nt equal to ! issue price ( ! debt in/rum5t4 7#e7 ,accrual p]iod ,= purposes ( ?is subsection1 ! t]m accrual p]iod %all be det]m9$ "u regulations prescrib$ by ! ,secret>y1 provid$ t an accrual p]iod %all 9 no ev5t be long] ?an "o ye>4 4 7f7 ,brok] report+ ( includible disc\nt on bonds 7#a7 ,9 g5]al ,section #fjde is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,disc\nt on bonds 7#a7 ,9 g5]al ,if any cu/om] ( a brok] holds a cov]$ bond 9 an acc\nt ) su* brok] at any "t dur+ a cal5d> ye>-- 7,a7 su* brok] %all file a return "u subsection 7a7 = su* cal5d> ye>1 & 7,b7 su* return %all include ) respect to ea* su* cov]$ bond-- 7i7 ! am\nt 7if any7 includible 9 ! gross income ( su* cu/om] z orig9al issue disc\nt ) respect to su* bond "u section #abgb = p]iods dur+ su* cal5d> ye>1 &4 7ii7 ! am\nt 7if any7 includible 9 ! gross income ( su* cu/om] z m>ket disc\nt ) respect to su* bond "u section #abgh7;a7 = p]iods dur+ su* cal5d> ye>4 7#b7 ,cov]$ bond ,= purposes ( ?is subsection1 ! t]m cov]$ bond means any obligation to :i* section #abgb or #abgh7;a7 applies if su* obligation-- 7,a7 0 acquir$ aft] ,decemb] #ca1 #bjad1 ?r\gh a transaction 9 ! acc\nt 9 :i* su* obligation is held1 or 7,b7 0 transf]r$ to su* acc\nt f an acc\nt 9 :i* su* obligation 0 a cov]$ bond1 b only if ! brok] receiv$ a /atem5t "u section #fjde;,a ) respect to ! transf]4 7#c7 ,/atem5ts to cu/om]s ,! requirem5ts ( subsections 7b7 %all apply ) respect to any return fil$ "u subsection 7a7 by reason ( ?is subsection4 4 7#b7 ,in=mation requir$ 9 connection ) transf]s ( cov]$ bonds to brok]s ,subsection 7a7 ( section #fjde;,a is am5d$-- 7,a7 by ins]t+ or a cov]$ bond 7z def9$ 9 section #fjde7;i77#b77 aft] cov]$ security 7z def9$ 9 section #fjde7;g77#c771 & 7,b7 by /rik+ section #fjde7;g7 & ins]t+ subsections 7g7 & 7i7 ( section #fjde4 7#c7 ,coord9ation ) report+ by issu] ( orig9al issue disc\nt ,p>agraph 7#f7 ( section #fjdi7;d7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,prev5tion ( d\ble report+ ,except z o!rwise provid$ by ! ,secret>y1 orig9al issue disc\nt ) respect to any obligation %all n be requir$ to be report$ "u ?is section if su* orig9al issue disc\nt is requir$ to be report$ ) respect to su* obligation "u section #fjde7;i74 4 7g7 ,con=m+ am5dm5ts 7#a7 ,section #heg7;e77#b77;,b77i71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ or #abgb & ins]t+ #abgb1 or #abgh4 7#b7 ,section #ajdb7;d7 is am5d$ by /rik+ section #abgh7;a77#b77;,a77ii7 9 ! matt] foll[+ p>agraph 7#b7 & ins]t+ section #abgi7;a77#b77;,a77ii74 7#c7 ,section #ajaf7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ci7 9 ! case ( any debt in/rum5t1 to ext5d provid$ 9 sections #abgb7;d77#a71 #abgc7;a77#b77;,c71 & #abgh7;d77#b74 4 7#d7 ,section #abgf is am5d$ by ins]t+ on bonds n subject to curr5t inclusion aft] accru$ m>ket disc\nt 9 ! head+ !re(4 7#e7 ,section #abgg is am5d$ by ins]t+ on bonds n subject to curr5t inclusion aft] accru$ m>ket disc\nt 9 ! head+ !re(4 7#f7 ,section #abha is am5d$ by /rik+ subsection 7c74 7#g7 ,section #abhb is am5d$ by /rik+ subsection 7d74 7#h7 ,! table ( sections = subp>t ,b ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ to read z foll[s3 ,sec4 #abgf4 ,disposition ga9 repres5t+ accru$ m>ket disc\nt on bonds n subject to curr5t inclusion treat$ z ord9>y income4 ,sec4 #abgg4 ,def]ral ( int]e/ d$uction allocable to accru$ m>ket disc\nt on bonds n subject to curr5t inclusion4 ,sec4 #abgh4 ,curr5t inclusion 9 income ( m>ket disc\nt on bonds acquir$ aft] #bjad4 ,sec4 #abgi4 ,def9itions & special rules4 4 7h7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to obligations acquir$ aft] ,decemb] #ca1 #bjad4 7#b7 ,mod]nization ( t]ms ,! am5dm5ts made by subsection 7e7 %all take effect on ,janu>y #a1 #bjae4 #cdab4 ,treatm5t ( c]ta9 ex*anges ( debt in/rum5ts 7a7 ,det]m9ation ( issue price 7#a7 ,9 g5]al ,subp>t ,a ( "p ,v ( sub*apt] ,p is am5d$ by ins]t+ aft] section #abgd;,a ! foll[+ new section3 #abgd;,b4 ,det]m9ation ( issue price 9 ! case ( an ex*ange ( debt in/rum5ts 7a7 ,9 g5]al ,9 ! case ( an ex*ange 7includ+ by significant modification7 by an issu] ( a new debt in/rum5t = an exi/+ debt in/rum5t issu$ by ! same issu]1 ! issue price ( ! new debt in/rum5t %all be ! lea/ (-- 7#a7 ! adju/$ issue price ( ! exi/+ debt in/rum5t1 7#b7 ! /at$ pr9cipal am\nt ( ! new debt in/rum5t1 or 7#c7 ! imput$ pr9cipal am\nt ( ! new debt in/rum5t4 7b7 ,applicable rate ,! disc\nt rate us$ to det]m9e ! imput$ pr9cipal am\nt ( ! new debt in/rum5t "u subsection 7a77#c7 %all be ! less] (-- 7#a7 ! applicable ,f$]al rate det]m9$ "u section #abgd7;d7 ) respect to ! new debt in/rum5t1 or 7#b7 ! great] (-- 7,a7 ! rate ( qualifi$ /at$ int]e/ ) respect to ! exi/+ debt in/rum5t1 or 7,b7 ! applicable ,f$]al rate det]m9$ "u section #abgd7;d7 ) respect to ! exi/+ debt in/rum5t4 7c7 ,treatm5t ( inve/m5t units ,rules simil> to ! rules ( section #abgc7;c77#b7 %all apply = purposes ( ?is section4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ajh7;e77#aj77;,b7 is am5d$ by /rik+ & #abgd & ins]t+ 1 #abgd1 & #abgd;,b4 7,b7 ,section #abgd7;c77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,c]ta9 modifi$ debt ,any debt in/rum5t ! issue price ( :i* is det]m9$ "u section #abgd;,b4 4 7,c7 ,! table ( sections = subp>t ,a ( "p ,v ( sub*apt] ,p is am5d$ by ins]t+ aft] ! item relat+ to section #abgd;,a ! foll[+ new item3 ,sec4 #abgd;,b4 ,det]m9ation ( issue price 9 ! case ( an ex*ange ( debt in/rum5ts4 4 7b7 ,nonrecognition ( ga9 or loss by hold] 7#a7 ,9 g5]al ,section #ajcg is am5d$ to read z foll[s3 #ajcg4 ,c]ta9 ex*anges ( debt in/rum5ts 7a7 ,nonrecognition ( ga9 or loss ,no ga9 or loss %all be recogniz$ to ! hold] ( a debt in/rum5t if su* exi/+ debt in/rum5t is ex*ang$ solely = a new debt in/rum5t 7:e!r by ex*ange or significant modification7 issu$ by ! same issu]4 7b7 ,prop]ty attributable to accru$ int]e/ ,subsection 7a7 %all n apply to ! ext5t t any prop]ty receiv$ is attributable to int]e/ :i* accru$ on ! exi/+ debt in/rum5t on or aft] ! beg9n+ ( ! hold]'s hold+ p]iod ( su* in/rum5t4 7c7 ,limitation on ga9 recognition 9 case ( ex*ange n solely = a new debt in/rum5t ,9 ! case ( an ex*ange ( a debt in/rum5t to :i* section #ajce7;d7 applies1 ! am\nt ( ga9 recogniz$ %all n exce$ ! am\nt ( ga9 :i* w\ld h be5 recogniz$ if section #abgd;,b did n apply4 7d7 ,cross ref]5ces 7#a7 ,= rules relat+ to securities ex*ang$ or di/ribut$ 9 a reorganization1 etc41 see sections #ced1 #cee1 & #cef4 7#b7 ,= rules relat+ to recognition ( ga9 or loss :]e ex*ange 0 n made solely = ano!r debt in/rum5t ( ! issu]1 see subsections 7d7 & 7e7 ( section #ajce4 7#c7 ,= rules relat+ to basis ( obligations acquir$ 9 an ex*ange describ$ 9 subsection 7a71 see subsection 7f7 ( section #ajce4 4 7#b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ajcg & ins]t+ ! foll[+ new item3 ,sec4 #ajcg4 ,c]ta9 ex*anges ( debt in/rum5ts4 4 7c7 ,application to excess pr9cipal rules = corporate reorganizations 7#a7 ,ex*anges ( securities 9 reorganizations 7,a7 ,9 g5]al ,section #ced7;a77#b77;,a77i7 is am5d$ to read z foll[s3 7i7 ! issue price ( any su* securities receiv$ exce$s ! adju/$ issue price ( any su* securities surr5d]$1 or 4 7,b7 ,def9itions ,section #ced7;a77#b7 is am5d$ by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 ,def9itions ,= purposes ( ?is p>agraph-- 7i7 ,issue price ,! issue price ( any security %all be det]m9$ "u sections #abgc1 #abgd1 & #abgd;,b4 7ii7 ,adju/$ issue price ,! adju/$ issue price ( any security %all be det]m9$ "u section #abge7;a77#e74 4 7#b7 ,section #cee transactions ,section #cee7;a77#c77;,a77i7 is am5d$ to read z foll[s3 7i7 ! issue price 7z def9$ 9 section #ced7;a77#b77;,d77 ( ! securities 9 ! controll$ corporation :i* are receiv$ exce$s ! adju/$ issue price 7z s def9$7 ( ! securities :i* are surr5d]$ 9 connection ) su* di/ribution1 or 4 7#c7 ,section #cef transactions 7,a7 ,9 g5]al ,section #cef7;d77#b77;,b77ii7 is am5d$ to read z foll[s3 7ii7 ! issue price 7z def9$ 9 section #ced7;a77#b77;,d77 ( su* securities receiv$ exce$s ! adju/$ issue price 7z s def9$7 ( su* securities surr5d]$1 4 7,b7 ,con=m+ am5dm5ts 7i7 ,section #cef7;d77#b77;,b7 is am5d$ 9 ! matt] foll[+ clause 7ii7-- 7,i7 by /rik+ 8! fair m>ket value ( su* excess0 & ins]t+ 8! am\nt ( su* excess01 & 7,,ii7 by /rik+ 8! entire pr9cipal am\nt0 & ins]t+ 8! entire issue price 7z s def9$704 7ii7 ,section #cef7;d77#b77;,c7 is am5d$ to read z foll[s3 7,c7 ,great] pr9cipal am\nt 9 section #cee transaction ,if1 9 an ex*ange or di/ribution describ$ 9 section #cee1 ! issue price 7z def9$ 9 section #ced7;a77#b77;,d77 ( ! securities 9 ! controll$ corporation :i* are receiv$ exce$s ! adju/$ issue price 7z s def9$7 ( ! securities 9 ! di/ribut+ corporation :i* are surr5d]$1 !n1 ) respect to su* securities receiv$1 ! t]m o!r prop]ty means only ! am\nt ( su* excess4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to transactions aft] ,decemb] #ca1 #bjad4 #cdac4 ,coord9ation ) rules = inclusion n lat] ?an = f9ancial acc\nt+ purposes 7a7 ,9 g5]al ,section #dea7;b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ imm$iately aft] ! head+ !re( 7& be=e p>agraph 7#a7 !re(7 ! foll[+3 ,not)/&+ any o!r provision ( law 7includ+ "p ,v ( sub*apt] ,p7--4 7b7 ,effective date2 *ange 9 me?od ( acc\nt+ ,! am5dm5t made by subsection 7a7 %all be treat$ = purposes ( section #ccjc7;g7 z ?\gh su* am5dm5t 7 made by section #ccjc7;a74 #cdad4 ,rules reg>d+ c]ta9 gov]nm5t debt 7a7 ,repeal ( c]ta9 sup]c$$ rules ,subp>t ,b ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ section #ded 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,pres]vation ( rules relat$ to ,unit$ ,/ates sav+s bonds ,subp>t ,a ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ by ins]t+ aft] section #abgb ! foll[+ new section3 #abgb;,a4 ,unit$ ,/ates sav+s bonds 7a7 ,election ,to include increase 9 r$emption price 9 income ,a taxpay] hold+ a ,unit$ ,/ates sav+s bond may elect 7on ! taxpay]'s return = ! taxable ye>7 to treat any increase 9 ! r$emption price z income receiv$ 9 ! taxable ye>4 ,if any su* election is made ) respect to any su* obligation1 x %all apply also to all su* obligations own$ by ! taxpay] at ! beg9n+ ( ! fir/ taxable ye> to :i* x applies & to all su* obligations !reaft] acquir$ by ! taxpay] & %all be b9d+ = all subsequ5t taxable ye>s1 unless revok$ ) ! cons5t ( ! ,secret>y4 ,9 ! case ( any su* obligations own$ by ! taxpay] at ! beg9n+ ( ! fir/ taxable ye> to :i* ! taxpay]'s election applies1 ! increase 9 ! r$emption price ( su* obligations occurr+ betwe5 ! date ( acquisition & ! fir/ day ( su* taxable ye> %all also be treat$ z income receiv$ 9 su* taxable ye>4 7b7 ,treatm5t ^u r$emption or f9al maturity ,! increase 9 r$emption value ( a ,unit$ ,/ates sav+s bond 7to ! ext5t n previ\sly includ$ 9 gross income7 9 excess ( ! adju/$ basis ( su* bond %all be includ$ 9 gross income 9 ! e>li] ( ! taxable ye> 9 :i* ! bond is r$eem$ or 9 ! taxable ye> ( f9al maturity4 7c7 ,cross ref]5ces 7#a7 ,= exception f curr5t inclusion ( orig9al issue disc\nt1 see section #abgb7;a77#b77;,b74 7#b7 ,= exception f m>ket disc\nt rules1 see section #abgi7;a77#a77;,b77iii74 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #heb7;b77#b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ subp>agraph 7,e7 & r$esignat+ subp>agraphs 7,f7 & 7,g7 z subp>agraphs 7,e7 & 7,f71 respectively4 7#b7 ,section #abhc7;c77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ all t prec$es %all n apply & ins]t+ ! foll[+3 7#c7 ,coord9ation ) section #abga ,section #abga7;a77#c7 4 7#c7 ,section #ghga7;a77#f7 is am5d$ by add+ & at ! end ( subp>agraph 7,a7 & by /rik+ subp>agraph 7,c74 7#d7 ,! table ( sections = subp>t ,a ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #abgb ! foll[+ new item3 ,sec4 #abgb;,a4 ,unit$ ,/ates sav+s bonds4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #c ,c]ta9 rules = det]m9+ ga9 & loss #cdba4 ,co/ basis ( specifi$ securities det]m9$ )\t reg>d to id5tification 7a7 ,9 g5]al ,section #ajab is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,co/ basis ( specifi$ securities det]m9$ )\t reg>d to id5tification ,except to ! ext5t o!rwise provid$ 9 ?is section or 9 regulations !reund] p]mitt+ ! use ( an av]age basis me?od = det]m9+ co/1 9 ! case ( ! sale1 ex*ange1 or o!r disposition ( a specifi$ security 7)9 ! mean+ ( section #fjde7;g77#c77;,b771 ! basis 7& hold+ p]iod7 ( su* security %all be det]m9$ on a fir/-9 fir/-out basis4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ajab7;c77#a7 is am5d$ by /rik+ ! conv5tions prescrib$ by regulations "u ?is section & ins]t+ ! me?od applicable = det]m9+ ! co/ ( su* security4 7#b7 ,section #ajab7;c77#b77;,a7 is am5d$ by /rik+ section #ajab & ins]t+ ?is section 7z 9 effect prior to ! enactm5t ( ! ,tax ,re=m ,act ( #bjad74 7#c7 ,section #fjde7;g77#b77;,b77i77,i7 is am5d$ by /rik+ unless ! cu/om] notifies ! brok] by means ( mak+ an adequate id5tification ( ! /ock sold or transf]r$4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales1 ex*anges1 & o!r dispositions aft] ,decemb] #ca1 #bjad4 #cdbb4 ,wa% sales by relat$ p>ties 7a7 ,application ( wa% sale rules to relat$ p>ties ,subsection 7a7 ( section #ajia is am5d$ by /rik+ ! taxpay] has acquir$ & ins]t+ ! taxpay] 7or a relat$ p>ty7 has acquir$4 7b7 ,modification ( basis adju/m5t rule ,to prev5t transf] ( losses to relat$ p>ties ,subsection 7d7 ( section #ajia is am5d$ to read z foll[s3 7d7 ,adju/m5t to basis 9 case ( wa% sale ,if ! taxpay] 7or ! taxpay]'s sp\se7 acquires sub/antially id5tical /ock or securities dur+ ! p]iod :i*-- 7#a7 beg9s #cj days be=e ! disposition ) respect to :i* a d$uction 0 disall[$ "u subsection 7a71 & 7#b7 ends ) ! close ( ! taxpay]'s fir/ taxable ye> :i* beg9s aft] su* disposition1 ! basis ( su* /ock or securities %all be increas$ by ! am\nt ( ! d$uction s disall[$ 7r$uc$ by any am\nt ( su* d$uction tak5 into acc\nt "u ?is subsection to increase ! basis ( /ock or securities previ\sly acquir$74 4 7c7 ,relat$ p>ty ,section #ajia is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,relat$ p>ty ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m relat$ p>ty means-- 7,a7 ! taxpay]'s sp\se1 7,b7 any dep5d5t ( ! taxpay] & any o!r taxpay] ) respect to :om ! taxpay] is a dep5d5t1 7,c7 any individual1 corporation1 p>tn]%ip1 tru/1 or e/ate :i* controls1 or is controll$ by1 7)9 ! mean+ ( section #ied7;d77#c77 ! taxpay] or any individual describ$ 9 subp>agraph 7,a7 or 7,b7 ) respect to ! taxpay] 7or any comb9ation !re(71 7,d7 any individual retirem5t plan1 ,ar*] ,,msa 7z def9$ 9 section #bbj7;d771 or heal? sav+s acc\nt 7z def9$ 9 section #bbc7;d771 ( ! taxpay] or ( any individual describ$ 9 subp>agraph 7,a7 or 7,b7 ) respect to ! taxpay]1 7,e7 any acc\nt "u a qualifi$ tuition program describ$ 9 section #ebi or a ,cov]dell education sav+s acc\nt 7z def9$ 9 section #ecj7;b77 if ! taxpay]1 or any individual describ$ 9 subp>agraph 7,a7 or 7,b7 ) respect to ! taxpay]1 is ! designat$ b5efici>y ( su* acc\nt or has ! "r to make any decision ) respect to ! inve/m5t ( any am\nt 9 su* acc\nt1 & 7,f7 any acc\nt "u-- 7i7 a plan describ$ 9 section #dja7;a71 7ii7 an annuity plan describ$ 9 section #djc7;a71 7iii7 an annuity contract describ$ 9 section #djc7;b71 or 7iv7 an eligible def]r$ comp5sation plan describ$ 9 section #deg7;b7 & ma9ta9$ by an employ] describ$ 9 section #deg7;e77#a77;,a71 if ! taxpay] or any individual describ$ 9 subp>agraph 7,a7 or 7,b7 ) respect to ! taxpay] has ! "r to make any decision ) respect to ! inve/m5t ( any am\nt 9 su* acc\nt4 7#b7 ,rules = det]m9+ /atus 7,a7 ,relation%ips det]m9$ at "t ( acquisition ,det]m9ations "u p>agraph 7#a7 %all be made z ( ! "t ( ! pur*ase or ex*ange ref]r$ to 9 subsection 7a7 except t det]m9ations "u subp>agraphs 7,a7 & 7,b7 ( p>agraph 7#a7 %all be made = ! taxable ye> :i* includes su* pur*ase or ex*ange4 7,b7 ,det]m9ation ( m>ital /atus 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 m>ital /atus %all be det]m9$ "u section #ggjc4 7ii7 ,special rule = m>ri$ individuals fil+ sep>ately & liv+ ap>t ,a husb& & wife :o-- 7,i7 file sep>ate returns = any taxable ye>1 & 7,,ii7 live ap>t at all times dur+ su* taxable ye>1 %all n be treat$ z m>ri$ individuals4 7#c7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z may be necess>y to prev5t ! avoidance ( ! purposes ( ?is subsection1 includ+ regulations :i* treat p]sons z relat$ p>ties if su* p]sons are =m$ or avail$ ( to avoid ! purposes ( ?is subsection4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales & o!r dispositions aft] ,decemb] #ca1 #bjad4 #cdbc4 ,nonrecognition = d]ivative transactions by a corporation ) respect to its /ock 7a7 ,9 g5]al ,section #ajcb is am5d$ to read z foll[s3 #ajcb4 ,d]ivative transactions by a corporation ) respect to its /ock 7a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section or section #gf1 section #ajcb d]ivative items ( a corporation %all n be tak5 into acc\nt 9 det]m9+ su* corporation's liability = tax "u ?is subtitle4 7b7 ,income recognition on c]ta9 =w>d contracts 7#a7 ,9 g5]al ,if-- 7,a7 a corporation acquires its /ock1 & 7,b7 su* acquisition is "p ( a plan 7or s]ies ( relat$ transactions7 pursuant to :i* ! corporation ent]s into a =w>d contract ) respect to its /ock1 su* corporation %all include am\nts 9 income z if ! excess ( ! am\nt to be receiv$ "u ! =w>d contract ov] ! fair m>ket value ( ! /ock z ( ! date ! corporation ent]$ into ! =w>d contract 7 orig9al issue disc\nt on a debt in/rum5t acquir$ on su* date4 ,! prec$+ s5t5ce %all apply only to ! ext5t t ! am\nt ( /ock involv$ 9 ! =w>d contract does n exce$ ! am\nt acquir$ z describ$ 9 subp>agraph 7,a74 7#b7 ,plan presum$ to exi/ ,if a corporation ent]s into a =w>d contract ) respect to its /ock )9 ! #fj-;day p]iod beg9n+ on ! date :i* is #cj days be=e ! date t ! corporation acquires its /ock1 su* acquisition %all be treat$ z pursuant to a plan describ$ 9 p>agraph 7#a77;,b7 unless x is e/abli%$ t ent]+ into su* contract & su* acquisition are n pursuant to a plan or s]ies ( relat$ transactions4 7c7 ,section #ajcb d]ivative items ,= purposes ( ?is section1 ! t]m section #ajcb d]ivative item means any item ( income1 ga91 loss1 or d$uction if-- 7#a7 su* item arises out ( ! rights or obligations "u any d]ivative 7z def9$ 9 section #dhf7 to ! ext5t su* d]ivative relates to ! corporation's /ock 7or is attributable to any transf] or ext+ui%m5t ( any su* "r or obligation71 or 7#b7 su* item arises "u any o!r contract or position b only to ! ext5t t su* item reflects 7or is det]m9$ by ref]5ce to7 *anges 9 ! value ( su* /ock or di/ributions !reon4 ,su* t]m %all n include any d$uction ) respect to :i* section #hc7;h7 applies & %all n include any d$uction = any item :i* is 9 ! nature ( comp5sation = s]vices r5d]$4 ,= purposes ( ?is subp>agraph1 de m9imis relation%ips1 z det]m9$ by ! ,secret>y1 %all be disreg>d$4 7d7 ,treasury /ock treat$ z /ock ,any ref]5ce 9 ?is section to /ock %all be treat$ z includ+ a ref]5ce to treasury /ock4 7e7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or o!r guidance :i*-- 7#a7 treat ! portion ( an in/rum5t :i* is describ$ 9 subsection 7c77#a7 sep>ately f ! portion ( su* in/rum5t :i* is n s describ$1 & 7#b7 treat section #ajcb d]ivative items z contributions to ! capital ( ! corporation to ! ext5t t ! application ( ?is section w\ld be inconsi/5t ) ! purposes ( section #gf7;b74 4 7b7 ,cl]ical am5dm5t ,! item relat+ to section #ajcb 9 ! table ( sections = "p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ to read z foll[s3 ,sec4 #ajcb4 ,d]ivative transactions by a corporation ) respect to its /ock4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transactions ent]$ into aft] ! date ( ! enactm5t ( ?is ,act4 #d ,tax favor$ bonds #cdca4 ,t]m9ation ( private activity bonds 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #ajc7;b7 is am5d$-- 7#a7 by /rik+ :i* is n a qualifi$ bond 7)9 ! mean+ ( section #ada71 & 7#b7 by /rik+ :i* is n a qualifi$ bond 9 ! head+ !re(4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ada is am5d$ by /rik+ subsection 7e74 7#b7 ,subp>t ,a ( "p ,,iv ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ sections #adb1 #adc1 #add1 #ade1 #adf1 & #adg 7& by /rik+ ea* ( ! items relat+ to su* sections 9 ! table ( sections = su* subp>t74 7#c7 ,section #be is am5d$ by add+ at ! end ! foll[+ new subsection3 7j7 ,coord9ation ) repeal ( private activity bonds ,any ref]5ce to section #adc1 #add1 or #adf %all be treat$ z a ref]5ce to su* section z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad4 4 7#d7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,d74 7#e7 ,section #ada7;b7 is am5d$ by /rik+ p>agraphs 7#e7 & 7#i7 & by r$esignat+ p>agraphs 7#f71 7#g71 & 7#h7 z p>agraphs 7#e71 7#f71 & 7#g71 respectively4 7#f7 ,section #ada7;d7 is am5d$ by /rik+ p>agraph 7#e7 & by r$esignat+ p>agraphs 7#f7 & 7#g7 z p>agraphs 7#e7 & 7#f74 7#g7 ,section #adh7;b77#b77;,e7 is am5d$ by /rik+ 9 ! case ( a bond o!r ?an a private activity bond14 7#h7 ,section #adh7;b77#c7 is am5d$ to read z foll[s3 7#c7 ,tax-exempt bonds n treat$ z inve/m5t prop]ty ,! t]m inve/m5t prop]ty does n include any tax-exempt bond4 4 7#i7 ,section #adh7;f77#c7 is am5d$ by /rik+ or is a private activity bond 9 ! f\r? s5t5ce4 7#aj7 ,section #adh7;f77#d7 is am5d$-- 7,a7 by /rik+ 7det]m9$ 9 accordance ) section #adg7;b77#b77;,a77 9 ! flu% matt] foll[+ subp>agraph 7,a77ii71 7,b7 by /rik+ ! la/ s5t5ce ( subp>agraph 7,d77v71 & 7,c7 by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,av]age maturity ,= purposes ( ?is p>agraph1 ! av]age maturity ( any issue %all be det]m9$ by tak+ into acc\nt ! respective issue prices ( ! bonds issu$ z "p ( su* issue4 4 7#aa7 ,section #adh7;f77#d77;,a7 is am5d$ 9 ! flu% matt] aft] clause 7ii7 by /rik+ ,9 ! case ( an issue no bond ( :i* is a private activity bond1 clause & ins]t+ ,clause4 7#ab7 ,section #adh7;f77#d77;,b77ii7 is am5d$-- 7,a7 by /rik+ subclause 7,,ii71 & 7,b7 by /rik+ c]ta9 bonds4-- & all t foll[s ?r\gh issue describ$ 9 subclause 7,,ii7 & ins]t+ c]ta9 bonds4--,9 ! case ( an issue no bond ( :i* is a tax or rev5ue anticipation bond4 7#ac7 7,a7 ,section #adh7;f77#d77;,c77iv7 is am5d$ to read z foll[s3 7iv7 ,con/ruction issue ,= purposes ( ?is subp>agraph1 ! t]m con/ruction issue means any issue if at lea/ #ge p]c5t ( ! available con/ruction proce$s ( su* issue are to be us$ = con/ruction exp5ditures ) respect to prop]ty :i* is to be own$ by a gov]nm5tal unit4 4 7,b7 ,section #adh7;f77#d77;,c7 is am5d$ by r$esignat+ clauses 7v7 ?r\gh 7xvii7 z clauses 7viii7 ?r\gh 7xx71 respectively1 & by ins]t+ aft] clause 7iv7 ! foll[+ new clauses3 7v7 ,con/ruction ,= purposes ( ?is subp>agraph1 ! t]m con/ruction includes recon/ruction & rehabilitation4 7vi7 ,safe h>bor = leases & managem5t contracts ,= purposes ( ?is subp>agraph1 prop]ty leas$ by a gov]nm5tal unit %all be treat$ z own$ by su* gov]nm5tal unit if-- 7,i7 ! lessee makes an irrevocable election 7b9d+ on ! lessee & all successors 9 int]e/ "u ! lease7 n to claim depreciation or an inve/m5t cr$it ) respect to su* prop]ty1 7,,ii7 ! lease t]m 7z def9$ 9 section #afh7;h77#a77 is n m ?an #hj p]c5t ( ! reasonably expect$ economic life ( ! prop]ty1 & 7,,iii7 ! lessee has no option to pur*ase ! prop]ty o!r ?an at fair m>ket value 7z ( ! "t su* option is ex]cis$74 7vii7 ,det]m9ation ( economic life ,= purposes ( clause 7vi71 ! reasonably expect$ economic life ( any facility %all be det]m9$ z ( ! lat] (-- 7,i7 ! date on :i* ! bonds are issu$1 or 7,,ii7 ! date on :i* ! facility is plac$ 9 s]vice 7or expect$ to be plac$ 9 s]vice74 4 7,c7 ,section #adh7;f77#d77;,d7 is am5d$ by /rik+ subp>agraph 7,c77iv7 ea* place x appe>s & ins]t+ subp>agraph 7,c77v74 7#ad7 ,section #adh7;f77#d77;,d77i7 is am5d$-- 7,a7 by /rik+ subclause 7,,ii71 7,b7 by /rik+ 7o!r ?an private activity bonds7 9 subclause 7,,iv71 & 7,c7 by r$esignat+ subclauses 7,,iii7 & 7,,iv7 7z am5d$ by subp>agraph 7,b77 z subclauses 7,,ii7 & 7,,iii74 7#ae7 ,section #adh7;f77#d77;,d77ii7 is am5d$ by /rik+ subclause 7,,iv7 bo? places x appe>s & ins]t+ subclause 7,,iii74 7#af7 ,section #adh7;f77#d77;,d77iii7 is am5d$ by /rik+ subclause 7,,iv7 & ins]t+ subclause 7,,iii74 7#ag7 ,section #adh7;f77#d77;,d77iv77,,ii7 is am5d$ by /rik+ clause 7i77,,iv7 & ins]t+ clause 7i77,,iii74 7#ah7 ,section #adh7;f77#d77;,d77vi7 is am5d$ by /rik+ ! la/ s5t5ce4 7#ai7 ,section #adh7;f77#g7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b74 7#bj7 ,section #adi7;b77#c7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,c7 & by r$esignat+ subp>agraphs 7,d7 & 7,e7 z subp>agraphs 7,c7 & 7,d71 & 7,b7 by /rik+ subp>agraph 7,e7 9 subp>agraph 7,a77iv7 & ins]t+ subp>agraph 7,d74 7#ba7 ,section #adi7;e77#b7 is am5d$-- 7,a7 by /rik+ subp>agraphs 7,c71 7,d71 & 7,f7 & by r$esignat+ subp>agraphs 7,e7 & 7,g7 z subp>agraphs 7,c7 & 7,d71 respectively1 & 7,b7 by /rik+ ! second s5t5ce4 7#bb7 ,section #adi7;f77#f7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by /rik+ ,= purposes ( ?is subsection & all t foll[s ?r\gh ,! t]m & ins]t+ ! foll[+3 ,= purposes ( ?is subsection1 ! t]m4 7#bc7 ,section #aej is am5d$ by /rik+ subsections 7b7 & 7c7 & by r$esignat+ subsections 7d7 & 7e7 z subsections 7b7 & 7c71 respectively4 7#bd7 ,section #aej7;e77#c7 is am5d$ to read z foll[s3 7#c7 ,public approval requirem5t ,a bond %all n be treat$ z "p ( an issue :i* meets ! requirem5ts ( p>agraph 7#a7 unless su* bond satisfies ! requirem5ts ( section #adg7;f77#b7 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad74 4 7#be7 ,section #bfi;,a7b77#c7 is am5d$ by /rik+ #add7;a77#c7 & ins]t+ #dad7n77#f77;,a74 7#bf7 ,section #dad7m77#e7 is am5d$ by /rik+ section #add7;a77#c7 & ins]t+ subsection 7n77#f77;,a74 7#bg7 ,section #dad7n77#f77;,a7 is am5d$ to read z foll[s3 7,a7 ,relat$ p]sons ,a p]son is a relat$ p]son to ano!r p]son if-- 7i7 ! relation%ip betwe5 su* p]sons w\ld result 9 a disall[ance ( losses "u section #bfg or #gjg7;b71 or 7ii7 su* p]sons are memb]s ( ! same controll$ gr\p ( corporations 7z def9$ 9 section #aefc7;a71 except t m ?an #ej p]c5t %all be sub/itut$ = at lea/ #hj p]c5t ea* place x appe>s !re974 4 7#bh7 ,section #fjde7;e77#d77;,b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #adc7m77#c74 7#bi7 ,section #ffed7;f77#a7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #adc7m74 7#cj7 ,section #ghga7;c7 is am5d$-- 7,a7 by /rik+ p>agraphs 7#b7 & 7#c71 & 7,b7 by /rik+ tax-exempt bonds4-- & all t foll[s ?r\gh ,subsection 7a7 ( section #ajc & ins]t+ ! foll[+3 tax-exempt bonds4--,subsection 7a7 ( section #ajc4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to bonds issu$ aft] ,decemb] #ca1 #bjad4 #cdcb4 ,t]m9ation ( cr$it = int]e/ on c]ta9 home mortgages 7a7 ,9 g5]al ,section #be1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,t]m9ation ,no cr$it %all be all[$ "u ?is section ) respect to any mortgage cr$it c]tificate issu$ aft] ,decemb] #ca1 #bjad4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ,decemb] #ca1 #bjad4 #cdcc4 ,repeal ( advance refund+ bonds 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #adi7;d7 is am5d$ by /rik+ z "p ( an issue describ$ 9 p>agraph 7#b71 7#c71 or 7#d74 & ins]t+ to advance refund a bond44 7b7 ,con=m+ am5dm5ts 7#a7 ,section #adi7;d7 is am5d$ by /rik+ p>agraphs 7#b71 7#c71 7#d71 & 7#f7 & by r$esignat+ p>agraphs 7#e7 & 7#g7 z p>agraphs 7#b7 & 7#c74 7#b7 ,section #adh7;f77#d77;,c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ clause 7xvii7 & by r$esignat+ clauses 7xviii71 7xix71 & 7xx7 z clauses 7xvii71 7xviii71 & 7xix71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to advance refund+ bonds issu$ aft] ,decemb] #ca1 #bjad4 #cdcd4 ,repeal ( tax cr$it bond rules 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ subp>ts ,h1 ,i1 & ,j 7& by /rik+ ! items relat+ to su* subp>ts 9 ! table ( subp>ts = su* "p74 7b7 ,paym5ts to issu]s ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdca 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ & #fdca4 7#b7 ,section #fdja7;b77#a7 is am5d$ by /rik+ ,g1 ,h1 ,i1 & ,j & ins]t+ & ,g4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to bonds issu$ aft] ! date ( ! enactm5t ( ?is ,act4 ,f ,insurance re=ms #ceja4 ,exception to pro rata int]e/ exp5se disall[ance = corporate-own$ life insurance re/rict$ to #bj-p]c5t own]s 7a7 ,9 g5]al ,subp>agraph 7,a7 ( section #bfd7;f77#d7 is am5d$-- 7#a7 by /rik+ policy or contract7-- & all t foll[s ?r\gh ,a policy or contract & ins]t+ policy or contract7 a #bj-p]c5t own] ( su* entity4 ,a policy or contract1 & 7#b7 by /rik+ 1 (fic]s1 directors1 & employees 9 ! head+4 7b7 ,con=m+ am5dm5t ,section #bfd7;f77#d7 is am5d$ by /rik+ subp>agraph 7,e74 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to contracts issu$ aft] ,decemb] #ca1 #bjad4 ,= purposes ( ! prec$+ s5t5ce1 any mat]ial increase 9 ! dea? b5efit or o!r mat]ial *ange 9 ! contract %all be treat$ z a new contract4 #cejb4 ,net op]at+ losses ( life insurance companies 7a7 ,9 g5]al ,p>agraph 7#e7 ( section #hje7;a7 is am5d$ to read z foll[s3 7#e7 ,net op]at+ loss d$uction ,! d$uction all[$ "u section #agb1 det]m9$-- 7,a7 by treat+ ! net op]at+ loss = any taxable ye> z equal to ! excess 7if any7 (-- 7i7 ! life insurance d$uctions = su* taxable ye>1 ov] 7ii7 ! life insurance gross income = su* taxable ye>1 & 7,b7 by apply+ subsection 7d77#e7 !re( ) ! modifications describ$ 9 p>agraph 7#d7 ( ?is subsection4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,"p ,i ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #haj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#b7 ,"p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hdd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#c7 ,section #cha is am5d$ by /rik+ subsection 7d74 7#d7 ,section #hje7;a77#d77;,b77i71 z r$esignat$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7ii7 ! net op]at+ loss d$uction provid$ by p>agraph 7#e71 4 7#e7 ,section #hje7;b77#b77;,a77iii71 z r$esignat$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7iv7 any net op]at+ loss c>ryback to ! taxable ye> "u section #agb 7z appli$ pursuant to subsection 7a77#e771 & 4 7#f7 ,section #hje7;b7 is am5d$ by /rik+ p>agraph 7#d7 & r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7#g7 ,section #iec7;b77#a77;,a71 z r$esignat$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ op]ations & ins]t+ net op]at+4 7#h7 ,section #acea7;i77#c7 is am5d$ by /rik+ or ! op]ations loss d$uction "u section #haj14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cejc4 ,repeal ( small life insurance company d$uction 7a7 ,9 g5]al ,"p ,i ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hjf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dec;,b7e7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #hjf7;b77#c77 9 p>agraph 7#b77;,b71 & 7,b7 by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,non9surance bus9ess 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! t]m non9surance bus9ess means any activity :i* is n an insurance bus9ess4 7,b7 ,c]ta9 activities treat$ z insurance bus9esses ,= purposes ( subp>agraph 7,a71 any activity :i* is n an insurance bus9ess %all be treat$ z an insurance bus9ess if-- 7i7 x is ( a type traditionally c>ri$ on by life insurance companies = inve/m5t purposes1 b only if ! c>ry+ on ( su* activity 7o!r ?an 9 ! case ( real e/ate7 does n con/itute ! active conduct ( a trade or bus9ess1 or 7ii7 x involves ! p]=mance ( adm9i/rative s]vices 9 connection ) plans provid+ life insurance1 p5sion1 or accid5t & heal? b5efits4 4 7#b7 ,section #dfe7;c77#g77;,d77v77,,ii7 is am5d$ by /rik+ section #hjf7;b77#c7 & ins]t+ section #dec;,b7e77#c74 7#c7 ,section #hja7;a77#b7 is am5d$ by /rik+ subp>agraph 7,c74 7#d7 ,section #hjd is am5d$ by /rik+ means-- & all t foll[s & ins]t+ means ! g5]al d$uctions provid$ 9 section #hje44 7#e7 ,section #hje7;a77#d77;,b7 is am5d$ by /rik+ clause 7i7 & by r$esignat+ clauses 7ii71 7iii71 & 7iv7 z clauses 7i71 7ii71 & 7iii71 respectively4 7#f7 ,section #hje7;b77#b77;,a7 is am5d$ by /rik+ clause 7iii7 & by r$esignat+ clauses 7iv7 & 7v7 z clauses 7iii7 & 7iv71 respectively4 7#g7 ,section #hae7;c77#b77;,a7 is am5d$ by ins]t+ & at ! end ( clause 7i71 by /rik+ clause 7ii71 & by r$esignat+ clause 7iii7 z clause 7ii74 7#h7 ,section #hdb7;c7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7#i7 ,section #iec7;b77#a7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cejd4 ,computation ( life insurance tax res]ves 7a7 ,9 g5]al ,subp>agraph 7,b7 ( section #hjg7;d77#b7 is am5d$ to read z foll[s3 7,b7 an int]e/ rate equal to ! sum (-- 7i7 ! applicable ,f$]al int]e/ rate1 plus 7ii7 #c4e p]c5tage po9ts1 & 4 7b7 ,con=m+ am5dm5ts 7#a7 ,p>agraph 7#d7 ( section #hjg7;d7 is am5d$ to read z foll[s3 7#d7 ,applicable ,f$]al int]e/ rate 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! t]m applicable ,f$]al int]e/ rate means ! annual rate det]m9$ by ! ,secret>y "u subp>agraph 7,c7 = ! cal5d> ye> 9 :i* ! contract 0 issu$4 7,b7 ,election to recompute ,f$]al int]e/ rate e #e ye>s ,= purposes ( ?is subsection-- 7i7 ,9 g5]al ,9 comput+ ! am\nt ( ! res]ve ) respect to any contract to :i* an election "u ?is subp>agraph applies = p]iods dur+ any recomputation p]iod1 ! applicable ,f$]al int]e/ rate %all be ! annual rate det]m9$ by ! ,secret>y "u subp>agraph 7,c7 = ! #a/ ye> ( su* p]iod4 ,no *ange 9 ! applicable ,f$]al int]e/ rate %all be made "u ! prec$+ s5t5ce unless su* *ange w\ld equal or exce$ #a_/b ( #a p]c5tage po9t4 7ii7 ,recomputation p]iod ,= purposes ( clause 7i71 ! t]m recomputation p]iod means1 ) respect to any contract1 ! #e cal5d> ye> p]iod beg9n+ ) ! #e? cal5d> ye> beg9n+ aft] ! cal5d> ye> 9 :i* ! contract 0 issu$ 7& ea* subsequ5t #e cal5d> ye> p]iod74 7iii7 ,election ,an election "u ?is subp>agraph %all apply to all contracts issu$ dur+ ! cal5d> ye> = :i* ! election 0 made or dur+ any subsequ5t cal5d> ye> unless su* election is revok$ ) ! cons5t ( ! ,secret>y4 7iv7 ,spread n available ,subsection 7f7 %all n apply to any adju/m5t requir$ "u ?is p>agraph4 7,c7 ,rate ( int]e/ 7i7 ,9 g5]al ,= purposes ( ?is p>agraph1 ! rate ( int]e/ det]m9$ "u ?is subp>agraph %all be ! annual rate det]m9$ by ! ,secret>y "u clause 7ii74 7ii7 ,det]m9ation ( annual rate 7,i7 ,9 g5]al ,! annual rate det]m9$ by ! ,secret>y "u ?is clause = any cal5d> ye> %all be a rate equal to ! av]age ( ! applicable ,f$]al mid-t]m rates 7z def9$ 9 section #abgd7;d7 b bas$ on annual comp\nd+7 effective z ( ! beg9n+ ( ea* ( ! cal5d> mon?s 9 ! te/ p]iod4 7,,ii7 ,te/ p]iod ,= purposes ( subclause 7,i71 ! te/ p]iod is ! mo/ rec5t #fj-;cal5d>-mon? p]iod end+ be=e ! beg9n+ ( ! cal5d> ye> = :i* ! det]m9ation is made4 4 7#b7 ,! fir/ s5t5ce foll[+ p>agraph 7#f7 9 section #hjg7;c7 is am5d$ by /rik+ ! applicable ,f$]al int]e/ rate "u subsection 7d77#b77;,b77i71 ! prevail+ ,/ate assum$ int]e/ rate "u subsection 7d77#b77;,b77ii71 & ins]t+ ! int]e/ rate det]m9$ "u subsection 7d77#b77;,b74 7#c7 ,section #hjh is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,prevail+ ,/ate assum$ int]e/ rate ,= purposes ( ?is sub*apt]-- 7#a7 ,9 g5]al ,! t]m prevail+ ,/ate assum$ int]e/ rate means1 ) respect to any contract1 ! highe/ assum$ int]e/ rate p]mitt$ to be us$ 9 comput+ life insurance res]ves = insurance contracts or annuity contracts 7z ! case may be7 "u ! insurance laws ( at lea/ #bf ,/ates4 ,= purposes ( ! prec$+ s5t5ce1 ! effect ( non=feiture laws ( a ,/ate on int]e/ rates = res]ves %all n be tak5 into acc\nt4 7#b7 ,:5 rate det]m9$ ,! prevail+ ,/ate assum$ int]e/ rate ) respect to any contract %all be det]m9$ z ( ! beg9n+ ( ! cal5d> ye> 9 :i* ! contract 0 issu$4 4 7#d7 ,p>agraph 7#a7 ( section #haa7;d7 is am5d$ by /rik+ ! great] ( ! prevail+ ,/ate assum$ int]e/ rate or applicable ,f$]al int]e/ rate 9 effect "u section #hjg & ins]t+ ! int]e/ rate 9 effect "u section #hjg7;d77#b77;,b74 7#e7 ,subp>agraph 7,a7 ( section #hdf7;f77#f7 is am5d$ by /rik+ except t & all t foll[s & ins]t+ except t ! limitation ( subsection 7a77#c7 %all apply 9 lieu ( ! limitation ( ! la/ s5t5ce ( section #hjg7;d77#a71 &4 7#f7 ,subp>agraph 7,b7 ( section #ied7;i77#e7 is am5d$ by /rik+ %all be sub/itut$ = ! prevail+ ,/ate assum$ int]e/ rate & ins]t+ %all1 if high]1 be sub/itut$ = ! int]e/ rate 9 effect "u section #hjg7;d77#b77;,b74 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,transition rule ,= ! fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 ! res]ve ) respect to any contract 7z det]m9$ "u section #hjg7;d77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 at ! end ( ! prec$+ taxable ye> %all be det]m9$ z if ! am5dm5ts made by ?is section _h appli$ to su* res]ve 9 su* prec$+ taxable ye> & by us+ ! int]e/ rate applicable to su* res]ves "u section #hjg7;d77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf = cal5d> ye> #bjae4 ,= subsequ5t taxable ye>s1 su* am5dm5ts %all be appli$ ) respect to su* res]ve by us+ ! int]e/ rate applicable "u su* section = cal5d> ye> #bjae4 7#c7 ,transition relief 7,a7 ,9 g5]al ,if-- 7i7 ! res]ve det]m9$ "u section #hjg7;d77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf ) respect to any contract z ( ! close ( ! ye> prec$+ ! fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 diff]s f 7ii7 ! res]ve :i* w\ld h be5 det]m9$ ) respect to su* contract z ( ! close ( su* taxable ye> "u su* section det]m9$ )\t reg>d to p>agraph 7#b71 !n ! diff]5ce betwe5 ! am\nt ( ! res]ve describ$ 9 clause 7i7 & ! am\nt ( ! res]ve describ$ 9 clause 7ii7 %all be tak5 into acc\nt "u ! me?od provid$ 9 subp>agraph 7,b74 7,b7 ,me?od ,! me?od provid$ 9 ?is subp>agraph is z foll[s3 7i7 if ! am\nt det]m9$ "u subp>agraph 7,a77i7 exce$s ! am\nt det]m9$ "u subp>agraph 7,a77ii71 #a_/h ( su* excess %all be tak5 into acc\nt1 = ea* ( ! #h succe$+ taxable ye>s1 z a d$uction "u section #hje7;a77#b7 ( su* ,code1 or 7ii7 if ! am\nt det]m9$ "u subp>agraph 7,a77ii7 exce$s ! am\nt det]m9$ "u subp>agraph 7,a77i71 #a_/h ( su* excess %all be includ$ 9 gross income1 = ea* ( ! #h succe$+ taxable ye>s1 "u section #hjc7;a77#b7 ( su* ,code4 #ceje4 ,adju/m5t = *ange 9 comput+ res]ves 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #hjg7;f7 is am5d$ to read z foll[s3 7#a7 ,treatm5t z *ange 9 me?od ( acc\nt+ ,if ! basis = det]m9+ any item ref]r$ to 9 subsection 7c7 z ( ! close ( any taxable ye> diff]s f ! basis = su* det]m9ation z ( ! close ( ! prec$+ taxable ye>1 !n s mu* ( ! diff]5ce betwe5-- 7,a7 ! am\nt ( ! item at ! close ( ! taxable ye>1 comput$ on ! new basis1 & 7,b7 ! am\nt ( ! item at ! close ( ! taxable ye>1 comput$ on ! old basis1 z is attributable to contracts issu$ be=e ! taxable ye> %all be tak5 into acc\nt "u section #dha z adju/m5ts attributable to a *ange 9 me?od ( acc\nt+ initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cejf4 ,modification ( rules = life insurance proration = purposes ( det]m9+ ! divid5ds receiv$ d$uction 7a7 ,9 g5]al ,section #hab is am5d$ to read z foll[s3 #hab4 ,det]m9ation ( company's & policyhold]'s %>e on acc\nt by acc\nt basis 7a7 ,det]m9ation on acc\nt by acc\nt basis ,sections #hje7;a77#d7 & #hjg %all be appli$ on an acc\nt by acc\nt basis4 7b7 ,company's %>e ,= purposes ( section #hje7;a77#d71 ! t]m company's %>e means1 ) respect to any acc\nt = any taxable ye>1 ! ratio 7express$ z a p]c5tage7 (-- 7#a7 ! excess (-- 7,a7 ! mean assets ( su* acc\nt = su* taxable ye>1 ov] 7,b7 ! mean res]ves ) respect to su* acc\nt = su* taxable ye>1 divid$ by 7#b7 ! mean assets ( su* acc\nt = su* taxable ye>4 7c7 ,policyhold]'s %>e ,= purposes ( section #hjg1 ! t]m policyhold]'s %>e means1 ) respect to any acc\nt = any taxable ye>1 ! excess ( #ajj p]c5t ov] ! p]c5tage det]m9$ "u p>agraph 7#b74 7d7 ,mean assets & mean res]ves def9$ ,= purposes ( ?is subsection-- 7#a7 ,mean assets ,! t]m mean assets means1 ) respect to any acc\nt = any taxable ye>1 #ej p]c5t ( ! sum (-- 7,a7 ! fair m>ket value ( ! assets ( su* acc\nt det]m9$ z ( ! beg9n+ ( su* taxable ye>1 & 7,b7 ! fair m>ket value ( ! assets ( su* acc\nt det]m9$ z ( ! close ( su* taxable ye>4 7#b7 ,mean res]ves ,! t]m mean res]ves means1 ) respect to any acc\nt = any taxable ye>1 #ej p]c5t ( ! sum (-- 7,a7 ! res]ves ) respect to su* acc\nt z det]m9$ "u section #hjg z ( ! beg9n+ ( su* taxable ye>1 & 7,b7 ! res]ves ) respect to su* acc\nt z det]m9$ "u section #hjg z ( ! close ( su* taxable ye>4 7#c7 ,c]ta9 divid5ds n tak5 into acc\nt ,divid5ds describ$ 9 section #bdf7;c7 %all n be tak5 into acc\nt = purposes ( det]m9+ mean assets or mean res]ves4 7#d7 ,fees & exp5ses n tak5 into acc\nt ,fees & exp5ses %all n be tak5 into acc\nt = purposes ( det]m9+ mean assets or mean res]ves4 4 7b7 ,con=m+ am5dm5t ,section #hag;,a7e77#b7 is am5d$ by /rik+ 1 #hjg7;d77#b77;,b71 & #hab & ins]t+ & #hjg7;d77#b77;,b7 7c7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,d ( "p ,i ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #hab & ins]t+ ! foll[+3 ,sec4 #hab4 ,det]m9ation ( company's & policyhold]'s %>e on acc\nt by acc\nt basis4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cejg4 ,repeal ( special rule = di/ributions to %>ehold]s f pre-#aihd policyhold]s surplus acc\nt 7a7 ,9 g5]al ,subp>t ,d ( "p ,i ( sub*apt] ,l is am5d$ by /rik+ section #hae 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #hja is am5d$ by /rik+ subsection 7c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7d7 ,phas$ inclusion ( rema9+ balance ( policyhold]s surplus acc\nts ,9 ! case ( any /ock life insurance company :i* has a balance 7det]m9$ z ( ! close ( su* company's la/ taxable ye> beg9n+ be=e ,janu>y #a1 #bjae7 9 an exi/+ policyhold]s surplus acc\nt 7z def9$ 9 section #hae ( ! ,int]nal ,rev5ue ,code ( #aihf1 z 9 effect be=e its repeal71 ! tax impos$ by section #hja ( su* ,code = ! fir/ #h taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad1 %all be ! am\nt :i* w\ld be impos$ by su* section = su* ye> on ! sum (-- 7#a7 life insurance company taxable income = su* ye> 7)9 ! mean+ ( su* section #hja b n less ?an z]o71 plus 7#b7 #a_/h ( su* balance4 #cejh4 ,modification ( proration rules = prop]ty & casualty insurance companies 7a7 ,9 g5]al ,section #hcb7;b77#e77;,b7 is am5d$ by /rik+ #ae p]c5t & ins]t+ ! p]c5tage det]m9$ "u subp>agraph 7,f774 7b7 ,det]m9ation ( p]c5tage ,section #hcb7;b77#e7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,det]m9ation ( p]c5tage 7i7 ,9 g5]al ,= purposes ( subp>agraph 7,b71 ! p]c5tage det]m9$ "u ?is subp>agraph is ! ratio 7express$ z a p]c5tage7 (-- 7,i7 ! av]age adju/$ bases 7)9 ! mean+ ( section #ajaf7 ( tax-exempt assets ( ! company1 to 7,,ii7 su* av]age adju/$ bases ( all assets ( ! company4 7ii7 ,tax-exempt assets ,= purposes ( clause 7i77,i71 ! t]m tax-exempt assets means assets ( ! type :i* give rise to income describ$ 9 subp>agraph 7,b74 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ceji4 ,repeal ( special treatm5t ( ,blue ,cross & ,blue ,%ield organizations1 etc 7a7 ,transitional repeal ( special rules 7#a7 ,9 g5]al ,section #hcc is am5d$ by /rik+ subsection 7b71 by r$esignat+ subsection 7c7 z subsection 7b71 & by am5d+ subsection 7a7 to read z foll[s3 7a7 ,9 g5]al ,an organization to :i* ?is section applies %all be taxable "u ?is "p 9 ! same mann] z if x 7 a /ock insurance company4 4 7#b7 ,tax /atus n dep5d5t on m$ical loss ratio ,subsection 7b7 ( section #hcc1 z r$esignat$ by subsection 7a71 is am5d$ by /rik+ p>agraph 7#e74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7b7 ,repeal ( /atutory treatm5t z a /ock insurance company 7#a7 ,9 g5]al ,"p ,,ii ( sub*apt] ,l ( *apt] is am5d$ by /rik+ section #hcc 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#b7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #ceaj4 ,modification ( disc\nt+ rules = prop]ty & casualty insurance companies 7a7 ,modification ( rate ( int]e/ us$ ,to disc\nt unpaid losses ,p>agraph 7#b7 ( section #hdf7;c7 is am5d$ to read z foll[s3 7#b7 ,det]m9ation ( annual rate ,! annual rate det]m9$ by ! ,secret>y "u ?is p>agraph = any cal5d> ye> %all be a rate det]m9$ on ! basis ( ! corporate bond yield curve 7z def9$ 9 section #dcj7;h77#b77;,d77i774 4 7b7 ,modification ( computational rules = loss paym5t patt]ns ,section #hdf7;d77#c7 is am5d$ by /rik+ subp>agraphs 7,b7 ?r\gh 7,g7 & ins]t+ ! foll[+ new subp>agraphs3 7,b7 ,treatm5t ( c]ta9 losses ,losses :i* w\ld h be5 treat$ z paid 9 ! la/ ye> ( ! p]iod applicable "u subp>agraph 7,a77i7 or 7,a77ii7 %all be treat$ z paid 9 ! foll[+ mann]3 7i7 #c-ye> loss paym5t patt]n 7,i7 ,9 g5]al ,! p]iod tak5 into acc\nt "u subp>agraph 7,a77i7 %all be ext5d$ to ! ext5t requir$ "u subclause 7,,ii74 7,,ii7 ,computation ( ext5sion ,! am\nt ( losses :i* w\ld h be5 treat$ z paid 9 ! #c;d ye> aft] ! accid5t ye> %all be treat$ z paid 9 su* #c;d ye> & ea* subsequ5t ye> 9 an am\nt equal to ! am\nt ( ! losses treat$ z paid 9 ! #b;d ye> aft] ! accid5t ye> 7or1 if less]1 ! portion ( ! unpaid losses n !ret(ore tak5 into acc\nt74 7ii7 #aj-ye> loss paym5t patt]n 7,i7 ,9 g5]al ,! p]iod tak5 into acc\nt "u subp>agraph 7,a77ii7 %all be ext5d$ to ! ext5t requir$ "u subclause 7,,ii74 7,,ii7 ,computation ( ext5sion ,! am\nt ( losses :i* w\ld h be5 treat$ z paid 9 ! #aj? ye> aft] ! accid5t ye> %all be treat$ z paid 9 su* #aj? ye> & ea* subsequ5t ye> 9 an am\nt equal to ! am\nt ( ! losses treat$ z paid 9 ! #i? ye> aft] ! accid5t ye> 7or1 if less]1 ! portion ( ! unpaid losses n !ret(ore tak5 into acc\nt74 7,c7 ,special rule = int]national & re9surance l9es ( bus9ess ,except z o!rwise provid$ by regulations1 any det]m9ation made "u subsection 7a7 ) respect to unpaid losses relat+ to ! int]national or re9surance l9es ( bus9ess %all be made us+1 9 lieu ( ! loss paym5t patt]n applicable to ! respective l9es ( bus9ess1 a patt]n det]m9$ by ! ,secret>y "u p>agraphs 7#a7 & 7#b7 bas$ on ! comb9$ losses = all l9es ( bus9ess describ$ 9 subp>agraph 7,a77ii74 7,d7 ,special rule = #b;d or #i? ye> if negative or z]o 7i7 #c-ye> loss paym5t patt]n ,if ! am\nt ( ! losses treat$ z paid 9 ! #b;d ye> aft] ! accid5t ye> is z]o or a negative am\nt1 subp>agraph 7,b77i77,,ii7 %all be appli$ by sub/itut+ ! av]age ( ! losses treat$ z paid 9 ! #a/ & #b;d ye>s aft] ! accid5t ye> = ! losses treat$ z paid 9 ! #b;d ye> aft] ! accid5t ye>4 7ii7 #aj-ye> loss paym5t patt]n ,if ! am\nt ( ! losses treat$ z paid 9 ! #i? ye> aft] ! accid5t ye> is z]o or a negative am\nt1 subp>agraph 7,b77ii77,,ii7 %all be appli$ by sub/itut+ ! av]age ( ! losses treat$ z paid 9 ! #g?1 #h?1 & #i? ye>s aft] ! accid5t ye> = ! losses treat$ z paid 9 ! #i? ye> aft] ! accid5t ye>4 4 7c7 ,repeal ( hi/orical paym5t patt]n election ,section #hdf is am5d$ by /rik+ subsection 7e7 & by r$esignat+ subsections 7f7 & 7g7 z subsections 7e7 & 7f71 respectively4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7e7 ,transitional rule ,= ! fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad-- 7#a7 ! unpaid losses & ! exp5ses unpaid 7z def9$ 9 p>agraphs 7#e77;,b7 & 7#f7 ( section #hcb7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 at ! end ( ! prec$+ taxable ye>1 & 7#b7 ! unpaid losses z def9$ 9 sections #hjg7;c77#b7 & #hje7;a77#a7 ( su* ,code at ! end ( ! prec$+ taxable ye>1 %all be det]m9$ z if ! am5dm5ts made by ?is section _h appli$ to su* unpaid losses & exp5ses unpaid 9 ! prec$+ taxable ye> & by us+ ! int]e/ rate & loss paym5t patt]ns applicable to accid5t ye>s end+ ) cal5d> ye> #bjae1 & any adju/m5t %all be tak5 into acc\nt ratably 9 su* fir/ taxable ye> & ! #g succe$+ taxable ye>s4 ,= subsequ5t taxable ye>s1 su* am5dm5ts %all be appli$ ) respect to su* unpaid losses & exp5ses unpaid by us+ ! int]e/ rate & loss paym5t patt]ns applicable to accid5t ye>s end+ ) cal5d> ye> #bjae4 #ceaa4 ,repeal ( special e/imat$ tax paym5ts 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hdg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ceab4 ,capitalization ( c]ta9 policy acquisition exp5ses 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #hdh7;c7 is am5d$ by /rik+ subp>agraphs 7,a71 7,b71 & 7,c7 & ins]t+ ! foll[+ new subp>agraphs3 7,a7 #e p]c5t ( ! net premiums = su* taxable ye> on specifi$ insurance contracts :i* are gr\p contracts1 & 7,b7 #ab p]c5t ( ! net premiums = su* taxable ye> on specifi$ insurance contracts n describ$ 9 subp>agraph 7,a74 4 7b7 ,gr\p contracts ,s mu* ( p>agraph 7#b7 ( section #hdh7;e7 z prec$es subp>agraph 7,a7 !re( is am5d$ to read z foll[s3 7#b7 ,gr\p contract ,! t]m gr\p contract means any specifi$ insurance contract-- 4 7c7 ,con=m+ am5dm5ts ,section #hdh7;e7 is am5d$ by /rik+ p>agraphs 7#c7 & 7#f7 & by r$esignat+ p>agraphs 7#d7 & 7#e7 z p>agraphs 7#c7 & 7#d71 respectively4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ceac4 ,tax report+ = life settlem5t transactions 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by add+ at ! end ! foll[+ new section3 #fjej,x4 ,returns relat+ to c]ta9 life insurance contract transactions 7a7 ,requirem5t ( report+ ( c]ta9 paym5ts 7#a7 ,9 g5]al ,e p]son :o acquires a life insurance contract or any int]e/ 9 a life insurance contract 9 a reportable policy sale dur+ any taxable ye> %all make a return = su* taxable ye> 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( su* p]son1 7,b7 ! "n1 address1 & ,,t9 ( ea* recipi5t ( paym5t 9 ! reportable policy sale1 7,c7 ! date ( su* sale1 7,d7 ! "n ( ! issu] ( ! life insurance contract sold & ! policy numb] ( su* contract1 & 7,e7 ! am\nt ( ea* paym5t4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to su* p]son1 except t 9 ! case ( an issu] ( a life insurance contract1 su* /atem5t is n requir$ to include ! in=mation specifi$ 9 p>agraph 7#a77;,e74 7b7 ,requirem5t ( report+ ( sell]'s basis 9 life insurance contracts 7#a7 ,9 g5]al ,^u receipt ( ! /atem5t requir$ "u subsection 7a77#b7 or ^u notice ( a transf] ( a life insurance contract to a =eign p]son1 ea* issu] ( a life insurance contract %all make a return 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( ! sell] :o transf]s any int]e/ 9 su* contract 9 su* sale1 7,b7 ! inve/m5t 9 ! contract 7z def9$ 9 section #gb7;e77#f77 ) respect to su* sell]1 & 7,c7 ! policy numb] ( su* contract4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to ea* sell] ^: "n is requir$ to be set =? 9 su* return4 7c7 ,requirem5t ( report+ ) respect to reportable dea? b5efits 7#a7 ,9 g5]al ,e p]son :o makes a paym5t ( reportable dea? b5efits dur+ any taxable ye> %all make a return = su* taxable ye> 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( ! p]son mak+ su* paym5t1 7,b7 ! "n1 address1 & ,,t9 ( ea* recipi5t ( su* paym5t1 7,c7 ! date ( ea* su* paym5t1 & 7,d7 ! am\nt ( ea* su* paym5t4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to ea* recipi5t ( paym5t ^: "n is requir$ to be set =? 9 su* return4 7d7 ,def9itions ,= purposes ( ?is section3 7#a7 ,paym5t ,! t]m paym5t means ! am\nt ( ca% & ! fair m>ket value ( any consid]ation transf]r$ 9 a reportable policy sale4 7#b7 ,reportable policy sale ,! t]m reportable policy sale has ! mean+ giv5 su* t]m 9 section #aja7;a77#c77;,b74 7#c7 ,issu] ,! t]m issu] means any life insurance company t be>s ! risk ) respect to a life insurance contract on ! date any return or /atem5t is requir$ to be made "u ?is section4 7#d7 ,reportable dea? b5efits ,! t]m reportable dea? b5efits means am\nts paid by reason ( ! dea? ( ! insur$ "u a life insurance contract t has be5 transf]r$ 9 a reportable policy sale4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] ! item relat+ to section #fjej,w ! foll[+ new item3 ,sec4 #fjej,x4 ,returns relat+ to c]ta9 life insurance contract transactions4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,subsection 7d7 ( section #fgbd is am5d$-- 7,a7 by /rik+ or at ! end ( clause 7xxiv7 ( p>agraph 7#a77;,b71 by /rik+ & at ! end ( clause 7xxv7 ( su* p>agraph & ins]t+ or1 & by ins]t+ aft] su* clause 7xxv7 ! foll[+ new clause3 7xxvi7 section #fjej,x 7relat+ to returns relat+ to c]ta9 life insurance contract transactions71 & 1 & 7,b7 by /rik+ or at ! end ( subp>agraph 7,,gg7 ( p>agraph 7#b71 by /rik+ ! p]iod at ! end ( subp>agraph 7,,hh7 ( su* p>agraph & ins]t+ 1 or1 & by ins]t+ aft] su* subp>agraph 7,,hh7 ! foll[+ new subp>agraph3 7,,ii7 subsection 7a77#b71 7b77#b71 or 7c77#b7 ( section #fjej,x 7relat+ to returns relat+ to c]ta9 life insurance contract transactions74 4 7#b7 ,section #fjdg is am5d$-- 7,a7 by r$esignat+ subsection 7g7 z subsection 7h71 7,b7 by ins]t+ aft] subsection 7f7 ! foll[+ new subsection3 7g7 ,in=mation relat+ to life insurance contract transactions ,?is section %all n apply to any in=mation :i* is requir$ to be report$ "u section #fjej,x4 1 & 7,c7 by add+ at ! end ( subsection 7h71 z s r$esignat$1 ! foll[+ new p>agraph3 7#d7 ,= provisions requir+ report+ ( in=mation relat+ to c]ta9 life insurance contract transactions1 see section #fjej,x4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 reportable policy sales 7z def9$ 9 section #fjej,x7d77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by subsection 7a77 aft] ,decemb] #ca1 #bjad1 & 7#b7 reportable dea? b5efits 7z def9$ 9 section #fjej,x7d77#d7 ( su* ,code 7z add$ by subsection 7a77 paid aft] ,decemb] #ca1 #bjad4 #cead4 ,cl>ification ( tax basis ( life insurance contracts 7a7 ,cl>ification ) respect to adju/m5ts ,p>agraph 7#a7 ( section #ajaf7;a7 is am5d$ by /rik+ subp>agraph 7,a7 & all t foll[s & ins]t+ ! foll[+3 7,a7 =-- 7i7 taxes or o!r c>ry+ *>ges describ$ 9 section #bff2 or 7ii7 exp5ditures describ$ 9 section #agc 7relat+ to circulation exp5ditures71 = :i* d$uctions h be5 tak5 by ! taxpay] 9 det]m9+ taxable income = ! taxable ye> or prior taxable ye>s2 or 7,b7 = mortality1 exp5se1 or o!r reasonable *>ges incurr$ "u an annuity or life insurance contract2 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to transactions ent]$ into aft] ,augu/ #be1 #bjji4 #ceae4 ,exception to transf] = valuable consid]ation rules 7a7 ,9 g5]al ,subsection 7a7 ( section #aja is am5d$ by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,exception to valuable consid]ation rules = comm]cial transf]s 7,a7 ,9 g5]al ,! second s5t5ce ( p>agraph 7#b7 %all n apply 9 ! case ( a transf] ( a life insurance contract1 or any int]e/ !re91 :i* is a reportable policy sale4 7,b7 ,reportable policy sale ,= purposes ( ?is p>agraph1 ! t]m reportable policy sale means ! acquisition ( an int]e/ 9 a life insurance contract1 directly or indirectly1 if ! acquir] has no sub/antial family1 bus9ess1 or f9ancial relation%ip ) ! insur$ ap>t f ! acquir]'s int]e/ 9 su* life insurance contract4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m indirectly applies to ! acquisition ( an int]e/ 9 a p>tn]%ip1 tru/1 or o!r entity t holds an int]e/ 9 ! life insurance contract4 4 7b7 ,con=m+ am5dm5t ,p>agraph 7#a7 ( section #aja7;a7 is am5d$ by /rik+ p>agraph 7#b7 & ins]t+ p>agraphs 7#b7 & 7#c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s aft] ,decemb] #ca1 #bjad4 ,g ,pass-,?ru & c]ta9 o!r entities #a ,s ,corporations #cfja4 ,r$uc$ recognition p]iod = built-9 ga9s made p]man5t 7a7 ,9 g5]al ,p>agraph 7#g7 ( section #acgd7;d7 7relat+ to def9itions & special rules7 is am5d$ to read z foll[s3 7#g7 ,recognition p]iod 7,a7 ,9 g5]al ,! t]m recognition p]iod means ! #e-ye> p]iod beg9n+ ) ! #a/ day ( ! #a/ taxable ye> = :i* ! corporation 0 an ,s corporation4 ,= purposes ( apply+ ?is section to any am\nt includible 9 income by reason ( di/ributions to %>ehold]s pursuant to section #eic7;e71 ! prec$+ s5t5ce %all be appli$ )\t reg>d to ! phrase #e-ye>4 7,b7 ,in/allm5t sales ,if an ,s corporation sells an asset & reports ! income f ! sale us+ ! in/allm5t me?od "u section #dec1 ! treatm5t ( all paym5ts receiv$ %all be gov]n$ by ! provisions ( ?is p>agraph applicable to ! taxable ye> 9 :i* su* sale 0 made4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cfjb4 ,modifications to ,s corporation passive inve/m5t income rules 7a7 ,increas$ p]c5tage limit ,p>agraph 7#b7 ( section #acge7;a7 is am5d$ by /rik+ #be p]c5t & ins]t+ #fj p]c5t4 7b7 ,repeal ( excessive passive income z a t]m9ation ev5t ,section #acfb7;d7 is am5d$ by /rik+ p>agraph 7#c74 7c7 ,con=m+ am5dm5ts 7#a7 ,subsection 7b7 ( section #acge is am5d$ by /rik+ p>agraphs 7#c7 & 7#d7 & ins]t+ ! foll[+ new p>agraph3 7#c7 ,passive inve/m5t income def9$ 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is p>agraph1 ! t]m passive inve/m5t income means gross receipts d]iv$ f royalties1 r5ts1 divid5ds1 int]e/1 & annuities4 7,b7 ,exception = int]e/ on notes f sales ( inv5tory ,! t]m passive inve/m5t income %all n include int]e/ on any obligation acquir$ 9 ! ord9>y c\rse ( ! corporation's trade or bus9ess f its sale ( prop]ty describ$ 9 section #abba7;a77#a74 7,c7 ,treatm5t ( c]ta9 l5d+ or f9ance companies ,if ! ,s corporation meets ! requirem5ts ( section #edb7;c77#f7 = ! taxable ye>1 ! t]m passive inve/m5t income %all n include gross receipts = ! taxable ye> :i* are d]iv$ directly f ! active & regul> conduct ( a l5d+ or f9ance bus9ess 7z def9$ 9 section #edb7;d77#a774 7,d7 ,treatm5t ( c]ta9 divid5ds ,if an ,s corporation holds /ock 9 a ,c corporation meet+ ! requirem5ts ( section #aejd7;a77#b71 ! t]m passive inve/m5t income %all n include divid5ds f su* ,c corporation to ! ext5t su* divid5ds are attributable to ! e>n+s & pr(its ( su* ,c corporation d]iv$ f ! active conduct ( a trade or bus9ess4 7,e7 ,exception = banks1 etc ,9 ! case ( a bank 7z def9$ 9 section #eha7 or a depository in/itution hold+ company 7z def9$ 9 section #c7w77#a7 ( ! ,f$]al ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7w77#a771 ! t]m passive inve/m5t income %all n include-- 7i7 int]e/ income e>n$ by su* bank or company1 or 7ii7 divid5ds on assets requir$ to be held by su* bank or company1 includ+ /ock 9 ! ,f$]al ,res]ve ,bank1 ! ,f$]al ,home ,loan ,bank1 or ! ,f$]al ,agricultural ,mortgage ,bank or p>ticipation c]tificates issu$ by a ,f$]al ,int]m$iate ,cr$it ,bank4 7,f7 ,gross receipts f ! sales ( c]ta9 assets ,= purposes ( ?is p>agraph-- 7i7 ,capital assets o!r ?an /ock & securities ,9 ! case ( dispositions ( capital assets 7o!r ?an /ock & securities71 gross receipts f su* dispositions %all be tak5 into acc\nt only to ! ext5t ( capital ga9 net income !refrom4 7ii7 ,/ock & securities ,9 ! case ( sales or ex*anges ( /ock or securities1 gross receipts %all be tak5 into acc\nt only to ! ext5t ( ! ga9 !refrom4 7,g7 ,coord9ation ) section #acgd ,! am\nt ( passive inve/m5t income %all be det]m9$ by n tak+ into acc\nt any recogniz$ built-9 ga9 or loss ( ! ,s corporation = any taxable ye> 9 ! recognition p]iod4 ,t]ms us$ 9 ! prec$+ s5t5ce %all h ! same respective mean+s z :5 us$ 9 section #acgd4 4 7#b7 7,a7 ,subp>agraph 7,j7 ( section #bf7;b77#b7 is am5d$ by /rik+ #be p]c5t & ins]t+ #fj p]c5t4 7,b7 ,clause 7i7 ( section #acge7;b77#a77;,a7 is am5d$ by /rik+ #be p]c5t & ins]t+ #fj p]c5t4 7,c7 ,! head+ = section #acge is am5d$ by /rik+ #be p]c5t & ins]t+ #fj p]c5t4 7,d7 ,! item relat+ to section #acge 9 ! table ( sections = "p ,,iii ( sub*apt] ,s ( *apt] #a is am5d$ by /rik+ #be p]c5t & ins]t+ #fj p]c5t4 7#c7 ,subp>agraph 7,b7 ( section #acfb7;f77#a7 is am5d$ by /rik+ p>agraph 7#b7 or 7#c7 ( subsection 7d7 & ins]t+ subsection 7d77#b74 7d7 ,effective ,date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfjc4 ,expansion ( qualify+ b5efici>ies ( an elect+ small bus9ess tru/ 7a7 ,no look-,?r\gh = eligibility purposes ,subp>agraph 7,c7 ( section #acfa7;b77#a7 is am5d$ by ins]t+ 7det]m9$ )\t reg>d to subsection 7c77#b77;,b77v77 aft] %>ehold]4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ,janu>y #a1 #bjae4 #cfjd4 ,*>itable contribution d$uction = elect+ small bus9ess tru/s 7a7 ,9 g5]al ,p>agraph 7#b7 ( section #fda7;c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 7i7 ,section #fdb7;c7 %all n apply4 7ii7 ,= purposes ( section #agj7;b77#a77;,e71 adju/$ gross income %all be comput$ 9 ! same mann] z 9 ! case ( an individual1 except t ! d$uctions = co/s :i* are paid or incurr$ 9 connection ) ! adm9i/ration ( ! tru/ & :i* w\ld n h be5 incurr$ if ! prop]ty 7 n held 9 su* tru/ %all be treat$ z all[able 9 arriv+ at adju/$ gross income4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfje4 ,p]man5t rule reg>d+ basis adju/m5t to /ock ( ,s corporations mak+ *>itable contributions ( prop]ty 7a7 ,9 g5]al ,section #acfg7;a77#b7 7relat+ to decreases 9 basis7 is am5d$ by /rik+ ! la/ s5t5ce4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #cfjf4 ,ext5sion ( "t = mak+ ,s corporation elections 7a7 ,9 g5]al ,subsection 7b7 ( section #acfb is am5d$ to read z foll[s3 7b7 ,:5 made 7#a7 ,9 g5]al ,an election "u subsection 7a7 may be made by a small bus9ess corporation = any taxable ye> n lat] ?an ! due date = fil+ ! return ( ! ,s corporation = su* taxable ye> 7includ+ ext5sions74 7#b7 ,c]ta9 elections treat$ z made = next taxable ye> ,if-- 7,a7 an election "u subsection 7a7 is made = any taxable ye> )9 ! p]iod describ$ 9 p>agraph 7#a71 b 7,b7 ei!r-- 7i7 on #a or m days 9 su* taxable ye> & be=e ! day on :i* ! election 0 made ! corporation did n meet ! requirem5ts ( subsection 7b7 ( section #acfa1 or 7ii7 #a or m ( ! p]sons :o held /ock 9 ! corporation dur+ su* taxable ye> & be=e ! election 0 made did n cons5t to ! election1 !n su* election %all be treat$ z made = ! foll[+ taxable ye>4 7#c7 ,au?ority to treat late elections1 etc41 z timely ,if-- 7,a7 an election "u subsection 7a7 is made = any taxable ye> aft] ! date prescrib$ by ?is subsection = mak+ su* election = su* taxable ye> or no su* election is made = any taxable ye>1 & 7,b7 ! ,secret>y det]m9es t !re 0 reasonable cause = ! failure to timely make su* election1 ! ,secret>y may treat su* an election z timely made = su* taxable ye>4 7#d7 ,election on timely fil$ returns ,except z o!rwise provid$ by ! ,secret>y1 an election "u subsection 7a7 = any taxable ye> may be made on a timely fil$ return ( ! ,s corporation = su* taxable ye>4 7#e7 ,secret>ial au?ority ,! ,secret>y may prescribe su* regulations1 rules1 or o!r guidance z may be necess>y or appropriate = purposes ( apply+ ?is subsection4 4 7b7 ,coord9ation ) c]ta9 o!r provisions 7#a7 ,qualifi$ sub*apt] ,s subsidi>ies ,section #acfa7;b77#c77;,b7 is am5d$ by add+ at ! end ! foll[+ flu% s5t5ce3 ,rules simil> to ! rules ( section #acfb7;b7 %all apply ) respect to any election "u clause 7ii74 4 7#b7 ,qualifi$ sub*apt] ,s tru/s ,section #acfa7;d77#b7 is am5d$ by /rik+ subp>agraph 7,d74 7c7 ,revocations ,p>agraph 7#a7 ( section #acfb7;d7 is am5d$-- 7#a7 by /rik+ subp>agraph 7,d7 9 subp>agraph 7,c7 & ins]t+ subp>agraphs 7,d7 & 7,e71 & 7#b7 by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,au?ority to treat late revocations z timely ,if-- 7i7 a revocation "u subp>agraph 7,a7 is made = any taxable ye> aft] ! date prescrib$ by ?is p>agraph = mak+ su* revocation = su* taxable ye> or no su* revocation is made = any taxable ye>1 & 7ii7 ! ,secret>y det]m9es t !re 0 reasonable cause = ! failure to timely make su* revocation1 ! ,secret>y may treat su* a revocation z timely made = su* taxable ye>4 4 7d7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to elections = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,revocations ,! am5dm5ts made by subsection 7c7 %all apply to revocations aft] ,decemb] #ca1 #bjad4 #cfjg4 ,relocation ( ,c corporation def9ition 7a7 ,9 g5]al ,subsection 7a7 ( section #acfa is am5d$-- 7#a7 by /rik+ p>agraph 7#b71 & 7#b7 by /rik+ ,s corporation def9$4-- & all t foll[s ?r\gh ,= purposes ( ?is title1 ! t]m ,s corporation means & ins]t+ ! foll[+3 ,9 g5]al4--,= purposes ( ?is title1 ! t]m ,s corporation means4 7b7 ,con=m+ am5dm5t ,section #ggja7;a77#c7 is am5d$-- 7#a7 by /rik+ ,corporation4--,! t]m corporation means & ins]t+ ! foll[+3 ,corporations4-- 7#a7 ,9 g5]al ,! t]m corporation means 1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,c corporations ,! t]m ,c corporation means1 ) respect to any taxable ye>1 a corporation :i* is n an ,s corporation = su* ye>4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #b ,p>tn]%ips #cfaa4 ,repeal ( rules relat+ to gu>ante$ paym5ts & liquidat+ di/ributions 7a7 ,paym5t to p>tn] = s]vices or use ( capital 7#a7 ,9 g5]al ,section #gjg is am5d$ by /rik+ subsection 7c74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #bfg7;e7 is am5d$ by /rik+ p>agraph 7#d74 7,b7 ,section #gjf7;a7 is am5d$ by /rik+ & #gjg7;c74 7,c7 ,section #adjb7;a7 is am5d$1 9 ! matt] foll[+ p>agraph 7#ag7-- 7i7 by /rik+ 7aft] su* gross income has be5 r$uc$ by ! sum ( all paym5ts to :i* section #gjg7;c7 applies7 9 clauses 7iii7 & 7iv71 & 7ii7 by /rik+ 7aft] su* gross income has be5 s r$uc$7 9 clause 7iv74 7,d7 ,section #bgja7;c77#a77;,b7 is am5d$ by ins]t+ or at ! end ( clause 7i71 by /rik+ 1 or at ! end ( clause 7ii7 & ins]t+ a p]iod1 & by /rik+ clause 7iii74 7,e7 ,section #geai7;d7 is am5d$ by /rik+ p>agraph 7#e74 7#c7 ,effective dates 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is p>agraph1 ! am5dm5ts made by ?is subsection %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7,b7 ,transf]s ,! am5dm5t made by p>agraph 7#b77;,e7 %all apply to transf]s aft] ,decemb] #ca1 #bjad4 7b7 ,paym5ts made 9 liquidation ( retir+ or deceas$ p>tn] 7#a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,k ( *apt] #a is am5d$ by /rik+ section #gcf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#b7 ,retir$ p>tn]s & successors 9 int]e/ ( deceas$ p>tn]s treat$ z p>tn]s until liquidation ,section #gfa7;d7 is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ?is sub*apt]1 any retir$ p>tn] or a deceas$ p>tn]'s successor 9 int]e/ %all be treat$ z a p>tn] until ! complete liquidation ( su* int]e/4 7#c7 ,con=m+ am5dm5t 7,a7 ,section #ceg7;c77#c77;,a7 is am5d$ by /rik+ paym5t ( :i* ei!r-- & all t foll[s ?r\gh !n1 = purposes ( & ins]t+ paym5t ( :i* w\ld give rise to a d$uction1 !n1 = purposes (4 7,b7 ,section #gca7;d7 is am5d$-- 7i7 by /rik+ section #gcf 7relat+ to paym5ts to a retir+ p>tn] or a deceas$ p>tn]'s successor 9 int]e/711 & 7ii7 by /rik+ items71 & & ins]t+ items7 &4 7,c7 ,section #gea7;b77#b7 is am5d$-- 7i7 by /rik+ subp>agraph 7,b71 & 7ii7 by /rik+ %all n apply to-- & all t foll[s ?r\gh a di/ribution ( prop]ty & ins]t+ ! foll[+3 %all n apply to a di/ribution ( prop]ty4 7,d7 7i7 ,section #gec is am5d$ by /rik+ ,! am\nt includible & all t foll[s & ins]t+ ,= treatm5t ( income 9 respect ( a dec$5t1 see section #fia4 7ii7 ,section #fia is am5d$ by /rik+ subsection 7e74 7#d7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to p>tn]s retir+ or dy+ aft] ,decemb] #ca1 #bjad4 #cfab4 ,m&atory adju/m5ts to basis ( p>tn]%ip prop]ty 9 case ( transf] ( p>tn]%ip int]e/s 7a7 ,9 g5]al ,section #gdc is am5d$-- 7#a7 by /rik+ subsections 7a71 7c71 7d71 7e71 & 7f7 & by r$esignat+ subsection 7b7 z subsection 7a71 7#b7 9 subsection 7a7 7z s r$esignat$7 by /rik+ ) respect to :i* ! election provid$ 9 section #ged is 9 effect or :i* has a sub/antial built-9 loss imm$iately aft] su* transf]1 & 7#c7 by add+ at ! end ! foll[+ new subsection3 7b7 ,allocation ( basis 7#a7 ,g5]al rule ,any increase or decrease 9 ! adju/$ basis ( p>tn]%ip prop]ty "u subsection 7a7 %all1 except z provid$ 9 p>agraph 7#b71 be allocat$-- 7,a7 9 a mann] :i* has ! effect ( r$uc+ ! diff]5ce betwe5 ! fair m>ket value & ! adju/$ basis ( p>tn]%ip prop]ties1 or 7,b7 9 any o!r mann] p]mitt$ by regulations prescrib$ by ! ,secret>y4 7#b7 ,special rule ,9 apply+ ! allocation rules provid$ 9 p>agraph 7#a71 increases or decreases 9 ! adju/$ basis ( p>tn]%ip prop]ty aris+ f a transf] ( an int]e/ attributable to prop]ty consi/+ (-- 7,a7 capital assets & prop]ty describ$ 9 section #abca7;b71 or 7,b7 any o!r prop]ty ( ! p>tn]%ip1 %all be allocat$ to p>tn]%ip prop]ty ( a l "* except t ! basis ( any su* p>tn]%ip prop]ty %all n be r$uc$ bel[ z]o4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #gjd7;c77#a7 is am5d$-- 7,a7 by add+ & at ! end ( subp>agraph 7,a71 7,b7 by /rik+ 1 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & 7,c7 by /rik+ all t foll[s subp>agraph 7,b74 7#b7 ,section #gcb is am5d$ by /rik+ subsection 7d7 & by r$esignat+ subsections 7e7 & 7f7 z subsections 7d7 & 7e71 respectively4 7#c7 ,section #gfa7;e77#b7 is am5d$ by /rik+ optional4 7#d7 ,section #fjca is am5d$ by /rik+ subsection 7f74 7#e7 ,! head+ = section #gdc is am5d$ to read z foll[s3 ,adju/m5t to basis ( p>tn]%ip prop]ty4 7#f7 ,! head+ = subsection 7a7 7z r$esignat$ by ! prec$+ provisions ( ?is ,act7 ( section #gdc is am5d$ by /rik+ ,adju/m5t to basis ( p>tn]%ip prop]ty & ins]t+ ,9 g5]al4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s aft] ,decemb] #ca1 #bjad4 #cfac4 ,m&atory adju/m5ts to basis ( undi/ribut$ p>tn]%ip prop]ty 7a7 ,9 g5]al ,section #gcd is am5d$ to read z foll[s3 #gcd4 ,adju/m5t to basis ( undi/ribut$ p>tn]%ip prop]ty 7a7 ,9 g5]al ,9 ! case ( any di/ribution to a p>tn]1 ! p>tn]%ip %all adju/ ! basis ( p>tn]%ip prop]ty su* t ea* rema9+ p>tn]'s net liquidation am\nt imm$iately aft] su* di/ribution is equal to su* p>tn]'s net liquidation am\nt imm$iately be=e su* di/ribution4 7b7 ,di/ributions o!r ?an 9 liquidation ( a p>tn]'s int]e/ ,9 ! case ( any di/ribution to a p>tn] o!r ?an 9 liquidation ( su* p>tn]'s int]e/1 prop] adju/m5t %all be made "u subsection 7a7 ) respect to su* p>tn] to take into acc\nt-- 7#a7 ! am\nt ( any ga9 recogniz$ by su* p>tn] ) respect to su* di/ribution "u section #gca7;a71 & 7#b7 ! am\nt ( any ga9 or loss :i* w\ld be recogniz$ by su* p>tn] if su* p>tn] sold ! prop]ty di/ribut$ at fair m>ket value imm$iately aft] su* di/ribution4 7c7 ,net liquidation am\nt ,= purposes ( ?is section1 ! t]m net liquidation am\nt means1 ) respect to any p>tn]1 ! net am\nt ( ga9 or loss 7if any7 :i* w\ld be tak5 into acc\nt by ! p>tn] "u section #gjb if ! p>tn]%ip sold all ( its assets at fair m>ket value 7& no o!r am\nts 7 tak5 into acc\nt "u su* section74 7d7 ,allocation ( basis 7#a7 ,decreases 9 basis ,any decrease 9 ! adju/$ basis ( p>tn]%ip prop]ty :i* is requir$ "u ?is section-- 7,a7 %all be made 9 accordance ) p>agraph 7#c7 ( section #gcb7;c71 & 7,b7 %all be made fir/ ) respect to prop]ty o!r ?an unrealiz$ receivables 7z def9$ 9 section #gea7;c77 & inv5tory 7z def9$ 9 section #gea7;d77 to ! ext5t !re(4 ,if any su* decrease is prev5t$ by ! abs5ce ( suffici5t adju/$ basis ( p>tn]%ip prop]ty1 ea* p>tn] %all recognize ga9 9 ! am\nt ( su* p>tn]'s di/ributive %>e ( su* prev5t$ decrease4 ,su* ga9 %all be treat$ z ga9 f ! sale ( ! p>tn]'s p>tn]%ip int]e/4 7#b7 ,increases 9 basis ,any increase 9 ! adju/$ basis ( p>tn]%ip prop]ty :i* is requir$ "u ?is section-- 7,a7 %all be made 9 accordance ) p>agraph 7#b7 ( section #gcb7;c71 & 7,b7 %all be made only ) respect to prop]ty o!r ?an unrealiz$ receivables 7z def9$ 9 section #gea7;c77 & inv5tory 7z def9$ 9 section #gea7;d774 ,if any su* increase is prev5t$ by ! abs5ce ( prop]ty describ$ 9 subp>agraph 7,b71 ea* p>tn]s %all recognize a loss 9 ! am\nt ( su* p>tn]'s di/ributive %>e ( su* prev5t$ increase4 ,su* loss %all be treat$ z a loss f ! sale ( ! p>tn]'s p>tn]%ip int]e/4 7e7 ,no allocation ( basis decrease to /ock ( corporate p>tn] ,9 mak+ an allocation "u subsection 7d7 ( any decrease 9 ! adju/$ basis ( p>tn]%ip prop]ty requir$ "u subsection 7a7-- 7#a7 no allocation may be made to /ock 9 a corporation 7or any p]son relat$ 7)9 ! mean+ ( section #bfg7;b7 or #gjg7;b77#a77 to su* corporation7 :i* is a p>tn] 9 ! p>tn]%ip1 & 7#b7 any am\nt n allocable to /ock by reason ( p>agraph 7#a7 %all be allocat$ "u subsection 7d7 to o!r p>tn]%ip prop]ty4 ,ga9 %all be recogniz$ by ! p>tn]%ip to ! ext5t t ! am\nt requir$ to be allocat$ to o!r p>tn]%ip prop]ty "u subsection 7e77#b7 exce$s ! aggregate adju/$ basis ( su* o!r prop]ty imm$iately be=e ! allocation requir$ by subsection 7a74 4 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,subp>t ,d ( "p ,,ii ( sub*apt] ,k ( *apt] #a is am5d$ by /rik+ sections #ged & #gee 7& by /rik+ items relat+ to su* sections 9 ! table ( sections ( su* subp>t74 7,b7 ,clause 7ii7 ( section #gjf7;d77#b77;,d7 is am5d$ by /rik+ section #gee & ins]t+ section #gdc7;b74 7#b7 ,subsection 7d7 ( section #ajfj is am5d$-- 7,a7 by /rik+ section #gee 9 p>agraph 7#a7 & ins]t+ sections #gcd & #gdc1 & 7,b7 by /rik+ section #gee 9 p>agraph 7#b7 & ins]t+ section #gcd or #gdc4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 #cfad4 ,correspond+ adju/m5ts to basis ( prop]ties held by p>tn]%ip :]e p>tn]%ip basis adju/$ 7a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,k ( *apt] #a1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ aft] section #gce ! foll[+ new section3 #gcf4 ,correspond+ adju/m5t to basis ( prop]ties held by l[]-ti] p>tn]%ip 9 case ( upp]-ti] p>tn]%ip basis adju/m5ts 7a7 ,di/ributions by upp]-,ti] p>tn]%ip ,9 ! case ( any di/ribution ( prop]ty to a p>tn] by an upp]-ti] p>tn]%ip1 if su* di/ribution results 9 an adju/m5t 9 ! upp]-ti] p>tn]%ip's adju/$ basis 9 an int]e/ 9 a l[]-ti] p>tn]%ip "u section #gcd1 !n su* l[]-ti] p>tn]%ip %all make a correspond+ adju/m5t to ! adju/$ basis ( its p>tn]%ip prop]ty4 7b7 ,di/ributions ( int]e/s 9 l[]-,ti] p>tn]%ip ,9 ! case ( any di/ribution ( an int]e/ 9 a l[]-ti] p>tn]%ip by an upp]-ti] p>tn]%ip-- 7#a7 if ! adju/$ basis ( su* int]e/ 9 ! h&s ( ! upp]-ti] p>tn]%ip 7det]m9$ imm$iately be=e su* di/ribution7 exce$s ! adju/$ basis ( su* int]e/ 9 ! h&s ( ! di/ributee p>tn] 7det]m9$ imm$iately aft] su* di/ribution71 !n su* l[]-ti] p>tn]%ip %all decrease ! adju/$ basis ( its p>tn]%ip prop]ty by ! am\nt ( su* excess1 or 7#b7 if ! adju/$ basis ( su* int]e/ 9 ! h&s ( ! di/ributee p>tn] 7det]m9$ imm$iately aft] su* di/ribution7 exce$s ! adju/$ basis ( su* int]e/ 9 ! h&s ( ! upp]-ti] p>tn]%ip 7det]m9$ imm$iately be=e su* di/ribution71 !n su* l[]-ti] p>tn]%ip %all increase ! adju/$ basis ( its p>tn]%ip prop]ty by ! am\nt ( su* excess4 7c7 ,dispositions ( int]e/s 9 upp]-,ti] p>tn]%ip ,9 ! case ( a disposition ( an int]e/ 9 an upp]-ti] p>tn]%ip :i* holds an int]e/ 9 a l[]-ti] p>tn]%ip1 if !re is an adju/m5t to ! adju/$ basis ( ! l[]-ti] p>tn]%ip "u section #gdc1 !n su* l[]-ti] p>tn]%ip %all make a correspond+ adju/m5t to ! adju/$ basis ( its p>tn]%ip prop]ty4 7d7 ,multi-,ti]$ p>tn]%ips ,9 ! case ( any adju/m5t "u subsection 7a71 7b71 or 7c7 9 ! adju/$ basis ( an int]e/ 9 ano!r p>tn]%ip1 su* o!r p>tn]%ip %all make a correspond+ adju/m5t 9 ! adju/$ basis ( its p>tn]%ip prop]ty4 7e7 ,allocation ( basis2 recognition ( ga9 ,9 ! case ( any adju/m5t 9 ! adju/$ basis ( p>tn]%ip prop]ty-- 7#a7 "u subsection 7a71 7b71 7c71 or 7d71 su* adju/m5t %all be made only ) respect to ! upp]-ti] p>tn]%ip's proportionate %>e 7z det]m9$ "u section #gdc7;a77 ( ! adju/$ basis ( ! l[]-ti] p>tn]%ip's prop]ty1 7#b7 "u subsection 7a7 or 7b7 7or s mu* ( subsection 7d7 z relates to ei!r su* subsection71 rules simil> to ! rules ( section #gcd7;d7 %all apply1 & 7#c7 "u subsection 7c7 7or s mu* ( subsection 7d7 z relates to su* subsection71 rules simil> to ! rules ( section #gdc7;b7 %all apply4 7f7 ,report+ ,9 ! case ( any adju/m5t 9 ! adju/$ basis ( p>tn]%ip prop]ty by a l[]-ti] p>tn]%ip "u ?is section by reason ( a di/ribution by1 or a disposition ( an int]e/ 91 an upp]-ti] p>tn]%ip1 su* upp]-ti] p>tn]%ip %all furni% 79 su* mann] z ! ,secret>y %all prescribe7 to su* l[]-ti] p>tn]%ip su* in=mation z is necess>y to enable su* l[]-ti] p>tn]%ip to make su* adju/m5t4 7g7 ,upp]- & l[]-,ti] p>tn]%ips ,= purposes ( ?is section-- 7#a7 ,upp]-ti] p>tn]%ip ,! t]m upp]-ti] p>tn]%ip means a p>tn]%ip own+ an int]e/ 9 ano!r p>tn]%ip4 7#b7 ,l[]-ti] p>tn]%ip ,! t]m l[]-ti] p>tn]%ip means ! p>tn]%ip ref]r$ to 9 p>agraph 7#a7 an int]e/ 9 :i* is own$ by ! upp]-ti] p>tn]%ip4 4 7b7 ,effective dates ,! am5dm5ts made by ?is section %all apply to di/ributions & transf]s aft] ,decemb] #ca1 #bjad4 #cfae4 ,*>itable contributions & =eign taxes tak5 into acc\nt 9 det]m9+ limitation on all[ance ( p>tn]'s %>e ( loss 7a7 ,9 g5]al ,subsection 7d7 ( section #gjd is am5d$-- 7#a7 by /rik+ ,a p>tn]'s di/ributive %>e & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,a p>tn]'s di/ributive %>e 1 7#b7 by /rik+ ,any excess ( su* loss & ins]t+ ! foll[+3 7#b7 ,c>ryov] ,any excess ( su* loss 1 & 7#c7 by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,special rules ,9 det]m9+ ! am\nt ( any loss "u p>agraph 7#a71 !re %all be tak5 into acc\nt z a d$uction ! p>tn]'s di/ributive %>e (-- 7,a7 ! adju/$ basis ( *>itable contributions describ$ 9 p>agraph 7#d7 ( section #gjb7;a71 & 7,b7 ! am\nt ( taxes describ$ 9 p>agraph 7#f7 ( su* section4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfaf4 ,revisions relat$ to unrealiz$ receivables & inv5tory items 7a7 ,repeal ( requirem5t t inv5tory be sub/antially appreciat$ 9 c]ta9 p>tn]%ip di/ributions treat$ z sale or ex*ange 7#a7 ,9 g5]al ,clause 7ii7 ( section #gea7;b77#a77;,a7 is am5d$ by /rik+ :i* h appreciat$ sub/antially 9 value4 7#b7 ,con=m+ am5dm5t ,section #gea7;b7 is am5d$ by /rik+ p>agraph 7#c74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to di/ributions aft] ,decemb] #ca1 #bjad4 7b7 ,revision ( regulations relat+ to treatm5t ( unrealiz$ receivables & inv5tory items ,! ,secret>y ( ! ,treasury %all revise regulations issu$ "u section #gea7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf to take into acc\nt ! p>tn]'s %>e ( income & ga9 r ?an ! p>tn]'s %>e ( p>tn]%ip assets4 7c7 ,simplification ( def9ition ( unrealiz$ receivables 7#a7 ,9 g5]al ,section #gea7;c7 is am5d$ by /rik+ all t foll[s p>agraph 7#b7 & ins]t+ ! foll[+3 ,= purposes ( ?is section & sections #gca1 #gcb1 #gcd1 & #gda1 su* t]m also includes any prop]ty o!r ?an inv5tory items1 b only to ! ext5t ( ! am\nt :i* w\ld be treat$ z ord9>y income if 7at ! "t ( ! transaction describ$ 9 ! applicable section7 su* prop]ty _h be5 sold by ! p>tn]%ip = its fair m>ket value4 4 7#b7 ,effective date ,! am5dm5t made by ?is subsection %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfag4 ,repeal ( "t limitation on tax+ precontribution ga9 7a7 ,9 g5]al ,subp>agraph 7,b7 ( section #gjd7;c77#a7 is am5d$ by /rik+ )9 #g ye>s ( be+ contribut$4 7b7 ,con=m+ am5dm5t ,p>agraph 7#a7 ( section #gcg7;b7 is am5d$ by /rik+ )9 #g ye>s ( ! di/ribution4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty contribut$ to a p>tn]%ip aft] ,decemb] #ca1 #bjad4 #cfah4 ,p>tn]%ip int]e/s creat$ by gift 7a7 ,9 g5]al ,section #gfa7;b7 is am5d$ by add+ at ! end ! foll[+3 ,9 ! case ( a capital int]e/ 9 a p>tn]%ip 9 :i* capital is a mat]ial income-produc+ factor1 :e!r a p]son is a p>tn] ) respect to su* int]e/ %all be det]m9$ )\t reg>d to :e!r su* int]e/ 0 d]iv$ by gift f any o!r p]son44 7b7 ,con=m+ am5dm5ts ,section #gjd7;e7 is am5d$-- 7#a7 by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively1 7#b7 by /rik+ ?is section 9 p>agraph 7#b7 7z s r$esignat$7 & ins]t+ ?is subsection1 & 7#c7 by /rik+ ,family p>tn]%ips 9 ! head+ & ins]t+ ,p>tn]%ip int]e/s creat$ by gift4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfai4 ,repeal ( te*nical t]m9ation 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #gjh7;b7 is am5d$-- 7#a7 by /rik+ 1 or & all t foll[s & ins]t+ a p]iod1 & 7#b7 by /rik+ only if-- & all t foll[s ?r\gh no "p ( any bus9ess & ins]t+ ! foll[+3 only if no "p ( any bus9ess4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfbj4 ,publicly trad$ p>tn]%ip exception re/rict$ to m9+ & natural res\rces p>tn]%ips 7a7 ,9 g5]al ,subsection 7d7 ( section #ggjd is am5d$ to read z foll[s3 7d7 ,qualify+ income ,= purposes ( ?is section1 ! t]m qualify+ income means-- 7#a7 income & ga9s d]iv$ f ! exploration1 developm5t1 m9+ or production1 process+1 ref9+1 transportation 7includ+ pipel9es transport+ gas1 oil1 or products !re(71 or ! m>ket+ ( any m9]al or natural res\rce 7includ+ geo!rmal en]gy & exclud+ f]tiliz] & timb]7 or indu/rial s\rce c>bon dioxide1 & 7#b7 any ga9 f ! sale or disposition ( a capital asset 7or prop]ty describ$ 9 section #abca7;b77 held = ! production ( income describ$ 9 p>agraph 7#a74 ,= purposes ( ?is subsection1 ! t]m m9]al or natural res\rce means any product ( a "* ) respect to :i* a d$uction = depletion is all[able "u section #faa 7o!r ?an m9]als f sea wat] or ! air 7or simil> inexhau/ible s\rces71 soil1 sod1 dirt1 turf1 wat]1 or mosses74 4 7b7 ,con=m+ am5dm5ts ,section #ihh7;c77#a77;,e7 is am5d$-- 7#a7 by /rik+ income or ga9s describ$ 9 subp>agraph 7,a71 7,b71 or 7,g7 ( section #ggjd7;d77#a7 9 clause 7iii77,,iii7 & ins]t+ qualify+ income or ga9s1 7#b7 by /rik+ subclause 7,,iii7 ( clause 7vi7 & by r$esignat+ subclause 7,,iv7 z subclause 7,,iii71 7#c7 by r$esignat+ clause 7vi7 7z am5d$ by ?is subp>agraph7 z clause 7viii71 & 7#d7 by ins]t+ aft] clause 7v7 ! foll[+ new clauses3 7vi7 ,qualify+ income or ga9s ,! t]m qualify+ income or ga9s means-- 7,i7 int]e/1 7,,ii7 divid5ds1 & 7,,iii7 9 ! case ( a p>tn]%ip describ$ 9 ! second s5t5ce ( section #ggjd7;c77#c71 income & ga9s f commodities 7n describ$ 9 section #abba7;a77#a77 or futures1 =w>ds1 & options ) respect to commodities4 7vii7 ,inadv]t5t t]m9ations ,if-- 7,i7 ,a p>tn]%ip fails to meet ! gross income requirem5ts ( ?is subp>agraph1 7,,ii7 ! ,secret>y det]m9es t su* failure 0 inadv]t5t1 7,,iii7 no lat] ?an a reasonable "t aft] ! discov]y ( su* failure1 /eps are tak5 s t su* p>tn]%ip once m meets su* gross income requirem5ts1 & 7,,iv7 su* p>tn]%ip agrees to make su* adju/m5ts 7includ+ adju/m5ts ) respect to ! p>tn]s7 or to pay su* am\nts z may be requir$ by ! ,secret>y ) respect to su* p]iod1 !n1 not)/&+ su* failure1 su* entity %all be treat$ z cont9u+ to meet su* gross income requirem5ts = su* p]iod4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #cfba4 ,ord9>y income treatm5t 9 ! case ( p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$-- 7#a7 by r$esignat+ section #ajfa z section #ajfb1 & 7#b7 by ins]t+ aft] section #ajfj ! foll[+ new section3 #ajfa4 ,p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices 7a7 ,9 g5]al ,if "o or m applicable p>tn]%ip int]e/s are held by a taxpay] at any "t dur+ ! taxable ye>1 s mu* (-- 7#a7 ! taxpay]'s net capital ga9 ) respect to su* int]e/s = su* taxable ye>1 z does n exce$ 7#b7 ! taxpay]'s re*>act]ization acc\nt balance = su* taxable ye>1 %all be treat$ z ord9>y income4 7b7 ,net capital ga9 7#a7 ,9 g5]al ,= purposes ( subsection 7a77#a71 net capital ga9 %all be det]m9$ "u section #abbb1 except t su* section %all be appli$-- 7,a7 )\t reg>d to ! re*>act]ization ( any item z ord9>y income "u ?is section1 7,b7 by only tak+ into acc\nt items ( ga9 & loss-- 7i7 tak5 into acc\nt by ! taxpay] "u section #gjb ) respect to any applicable p>tn]%ip int]e/1 7ii7 recogniz$ by ! taxpay] on ! disposition ( any su* int]e/1 or 7iii7 recogniz$ by ! taxpay] "u p>agraph 7#d7 on a di/ribution ( prop]ty ) respect to su* int]e/1 & 7,c7 9 ! case ( a taxable ye> = :i* section #abca ga9s 7z def9$ 9 section #abca7;a77#c77;,a77 exce$ section #abca losses 7z def9$ 9 section #abca7;a77#c77;,b771 by treat+ prop]ty :i* is tak5 into acc\nt 9 det]m9+ su* ga9s & losses z capital assets held = m ?an #a ye>4 7#b7 ,allocation to items ( ga9 ,! am\nt treat$ z ord9>y income "u subsection 7a7 %all be allocat$ ratably among ! items ( long-t]m capital ga9 tak5 into acc\nt 9 det]m9+ net capital ga9 "u p>agraph 7#a74 7#c7 ,recognition ( ga9 on disposition ( applicable p>tn]%ip int]e/s ,any ga9 on ! disposition ( any applicable p>tn]%ip int]e/ %all be recogniz$ not)/&+ any o!r provision ( ?is title4 7#d7 ,recognition ( ga9 on di/ributions ( p>tn]%ip prop]ty 7,a7 ,9 g5]al ,9 ! case ( any di/ribution ( prop]ty by a p>tn]%ip ) respect to any applicable p>tn]%ip int]e/1 ! p>tn] receiv+ su* prop]ty %all recognize ga9 equal to ! excess 7if any7 (-- 7i7 ! fair m>ket value ( su* prop]ty at ! "t ( su* di/ribution1 ov] 7ii7 ! adju/$ basis ( su* prop]ty 9 ! h&s ( su* p>tn] 7det]m9$ )\t reg>d to subp>agraph 7,b774 7,b7 ,adju/m5t ( basis ,9 ! case ( a di/ribution to :i* subp>agraph 7,a7 applies1 ! basis ( ! di/ribut$ prop]ty 9 ! h&s ( ! di/ributee p>tn] %all be ! am\nt det]m9$ "u subp>agraph 7,a77i74 7c7 ,re*>act]ization acc\nt balance 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m re*>act]ization acc\nt balance means1 ) respect to any taxpay] = any taxable ye>1 ! excess 7if any7 (-- 7,a7 ! sum (-- 7i7 ! taxpay]'s aggregate annual re*>act]ization am\nts ) respect to applicable p>tn]%ip int]e/s = su* taxable ye>1 plus 7ii7 ! taxpay]'s re*>act]ization acc\nt balance = ! taxable ye> prec$+ su* taxable ye>1 ov] 7,b7 ! sum (-- 7i7 ! taxpay]'s net ord9>y income ) respect to applicable p>tn]%ip int]e/s = su* taxable ye> 7det]m9$ )\t reg>d to ?is section71 plus 7ii7 ! am\nt treat$ z ord9>y income ( ! taxpay] "u ?is section = ! taxable ye> prec$+ su* taxable ye>4 7#b7 ,annual re*>act]ization am\nt ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m annual re*>act]ization am\nt means1 ) respect to any applicable p>tn]%ip int]e/ = any p>tn]%ip taxable ye>1 an am\nt equal to ! product (-- 7i7 ! specifi$ rate det]m9$ "u subp>agraph 7,b7 = ! cal5d> ye> 9 :i* su* taxable ye> beg9s1 multipli$ by 7ii7 ! excess 7if any7 (-- 7,i7 an am\nt equal to ! applicable p]c5tage ( ! p>tn]%ip's aggregate inve/$ capital = su* taxable ye>1 ov] 7,,ii7 ! specifi$ capital contribution ( ! p>tn] ) respect to ! applicable p>tn]%ip int]e/ = su* taxable ye>4 ,if a taxpay] holds an applicable p>tn]%ip int]e/ = less ?an ! entire taxable ye>1 ! am\nt det]m9$ "u ! prec$+ s5t5ce %all be ratably r$uc$4 7,b7 ,specifi$ rate ,= purposes ( subp>agraph 7,a71 ! t]m specifi$ rate means1 ) respect to any cal5d> ye>1 a p]c5tage equal to-- 7i7 ! ,f$]al long-t]m rate det]m9$ "u section #abgd7;d77#a7 = ! la/ mon? ( ! cal5d> ye>1 plus 7ii7 #aj p]c5tage po9ts4 7,c7 ,applicable p]c5tage 7i7 ,9 g5]al ,! t]m applicable p]c5tage means1 ) respect to any applicable p>tn]%ip int]e/1 ! highe/ p]c5tage ( pr(its ( ! p>tn]%ip t c\ld be allocat$ ) respect to su* int]e/ = ! taxable ye> 7consi/5t ) ! p>tn]%ip agreem5t & assum+ su* facts & circum/ances ) respect to su* taxable ye> z w\ld result 9 su* highe/ p]c5tage74 7ii7 ,secret>ial au?ority ,! ,secret>y %all prescribe rules = ! det]m9ation ( ! applicable p]c5tage 9 cases 9 :i* ! p]c5tage ( pr(its ( a p>tn]%ip t are to be allocat$ ) respect to an applicable p>tn]%ip int]e/ v>ies on ! basis ( ! aggregate am\nt ( su* pr(its4 ,su* rules may provide a p]c5tage :i* may be us$ 9 lieu ( ! highe/ p]c5tage det]m9$ "u clause 7i7 9 cases :]e su* o!r p]c5tage is consi/5t ) ! purposes ( ?is section4 7,d7 ,aggregate inve/$ capital 7i7 ,9 g5]al ,! t]m aggregate inve/$ capital means1 ) respect to any taxable ye>1 ! av]age daily am\nt ( inve/$ capital ( ! p>tn]%ip = su* taxable ye>4 7ii7 ,inve/$ capital ,! t]m inve/$ capital means1 ) respect to any p>tn]%ip z ( any day1 ! total cumulative value1 det]m9$ at ! "t ( contribution1 ( all money or o!r prop]ty contribut$ to ! p>tn]%ip on or be=e su* day4 7iii7 ,r$uction = liquidation ( p>tn]%ip int]e/s ,! inve/$ capital ( a p>tn]%ip %all be r$uc$ by ! aggregate am\nt di/ribut$ 9 liquidation ( int]e/s 9 ! p>tn]%ip4 7iv7 ,treatm5t ( c]ta9 indebt$ness z inve/$ capital ,! foll[+ am\nts %all be treat$ z inve/$ capital3 7,i7 ,p>tn] loans ,! aggregate value 7det]m9$ z ( ! "t ( ! loan7 ( money or o!r prop]ty :i* a p>tn] loans to ! p>tn]%ip4 7,,ii7 ,indebt$ness eligible to %>e 9 equity ( ! p>tn]%ip ,! face am\nt ( any conv]tible debt ( ! p>tn]%ip or any debt obligation provid+ equity p>ticipation 9 ! p>tn]%ip4 7,e7 ,specifi$ capital contribution 7i7 ,9 g5]al ,! t]m specifi$ capital contribution means1 ) respect to any applicable p>tn]%ip int]e/ = any taxable ye>1 ! av]age daily am\nt ( contribut$ capital ) respect to su* int]e/ = su* ye>4 7ii7 ,contribut$ capital ,! t]m contribut$ capital means1 ) respect to applicable p>tn]%ip int]e/ z ( any day1 ! excess 7if any7 (-- 7,i7 ! total cumulative value1 det]m9$ at ! "t ( contribution1 ( all money or o!r prop]ty contribut$ by ! p>tn] to ! p>tn]%ip ) respect to su* int]e/ z ( su* day1 ov] 7,,ii7 ! total cumulative value1 det]m9$ at ! "t ( di/ribution1 ( all money or o!r prop]ty di/ribut$ by ! p>tn]%ip to ! p>tn] ) respect to su* int]e/ z ( su* day4 7iii7 ,treatm5t ( relat$ p>ty borr[+s ,any am\nt borr[$ directly or indirectly f ! p>tn]%ip or any o!r p>tn] ( ! p>tn]%ip or any p]son relat$ to su* o!r p>tn] or su* p>tn]%ip %all n be tak5 into acc\nt "u ?is subp>agraph4 ,= purposes ( ! prec$+ s5t5ce1 a p]son %all be treat$ z relat$ to ano!r p]son if ! relation%ip betwe5 su* p]sons w\ld be describ$ 9 section #bfg7;b7 or #gjg7;b7 if su* sections & section #bfg7;f7 7 appli$ by sub/itut+ #aj p]c5t = #ej p]c5t ea* place x appe>s4 7,f7 ,multiple int]e/s ,if at any "t dur+ a taxable ye> a taxpay] holds directly or indirectly m ?an #a applicable p>tn]%ip int]e/ 9 a s+le p>tn]%ip1 su* int]e/s %all be treat$ z #a applicable p>tn]%ip int]e/ = purposes ( apply+ ?is p>agraph4 7#c7 ,net ord9>y income ,= purposes ( ?is subsection1 ! net ord9>y income ) respect to applicable p>tn]%ip int]e/s = any taxable ye> is ! excess 7if any7 (-- 7,a7 ! taxpay]'s di/ributive %>e ( items ( income & ga9 "u section #gjb ) respect to applicable p>tn]%ip int]e/s = su* taxable ye> 7det]m9$ )\t reg>d to any items ( ga9 tak5 into acc\nt 9 det]m9+ net capital ga9 "u subsection 7b77#a771 ov] 7,b7 ! taxpay]'s di/ributive %>e ( items ( d$uction & loss "u section #gjb ) respect to su* int]e/s = su* taxable ye> 7det]m9$ )\t reg>d to any items ( loss tak5 into acc\nt 9 det]m9+ net capital ga9 "u subsection 7b77#a774 7d7 ,applicable p>tn]%ip int]e/ ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable p>tn]%ip int]e/ means any int]e/ 9 a p>tn]%ip :i*1 directly or indirectly1 is transf]r$ to 7or is held by7 ! taxpay] 9 connection ) ! p]=mance ( s]vices by ! taxpay]1 or any o!r p]son1 9 any applicable trade or bus9ess4 7#b7 ,applicable trade or bus9ess 7,a7 ,9 g5]al ,! t]m applicable trade or bus9ess means any trade or bus9ess conduct$ on a regul>1 cont9u\s1 & sub/antial basis :i*1 reg>dless ( :e!r ! activities are conduct$ 9 "o or m entities1 consi/s1 9 :ole or 9 "p1 (-- 7i7 rais+ or return+ capital1 7ii7 inve/+ 9 7or dispos+ (7 trades or bus9esses 7or id5tify+ trades or bus9esses = su* inve/+ or disposition71 & 7iii7 develop+ su* trades or bus9esses4 7,b7 ,treatm5t ( rese>* & exp]im5tation activities ,any activity involv+ rese>* or exp]im5tation 7)9 ! mean+ ( section #dfi7;c77#d77 %all be treat$ z a trade or bus9ess = purposes ( clauses 7ii7 & 7iii7 ( subp>agraph 7,a74 7e7 ,transf] ( applicable p>tn]%ip int]e/ to relat$ p]son 7#a7 ,9 g5]al ,if a taxpay] transf]s any applicable p>tn]%ip int]e/1 directly or indirectly1 to a p]son relat$ to ! taxpay]1 ! taxpay] %all include 9 gross income 7z ord9>y income7 s mu* ( ! taxpay]'s re*>act]ization acc\nt balance = su* taxable ye> z is allocable to su* int]e/ 7det]m9$ 9 su* mann] z ! ,secret>y may provide & r$uc$ by any am\nt treat$ z ord9>y income "u subsection 7a7 ) respect to ! transf] ( su* int]e/74 7#b7 ,relat$ p]son ,= purposes ( ?is p>agraph1 a p]son is relat$ to ! taxpay] if-- 7,a7 ! p]son is a memb] ( ! taxpay]'s family )9 ! mean+ ( section #cah7;a77#a71 or 7,b7 ! p]son p]=m$ a s]vice )9 ! curr5t cal5d> ye> or ! prec$+ ?ree cal5d> ye>s 9 any applicable trade or bus9ess 9 :i* or = :i* ! taxpay] p]=m$ a s]vice4 7f7 ,report+ by entity ( taxpay]'s annual re*>act]ization am\nt ,a p>tn]%ip %all report to ! ,secret>y1 & include ) ! in=mation requir$ to be furni%$ "u section #fjca7;b7 to ea* p>tn]1 ! am\nt ( ! p>tn]'s annual re*>act]ization am\nt = ! taxable ye>1 if any4 ,a simil> rule applies to any entity t receives a report ( an annual re*>act]ization am\nt = ! taxable ye>4 7g7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z necess>y to c>ry out ?is section1 includ+ regulations-- 7#a7 to prev5t ! abuse ( ! purposes ( ?is section1 includ+ ?r\gh-- 7,a7 ! allocation ( income to tax indiff]5t p>ties1 or 7,b7 a r$uction 9 ! inve/$ capital ( ! p>tn]%ip 7includ+ attempts to und]value contribut$ or loan$ prop]ty71 7#b7 :i* provide t p>tn]%ip int]e/s %all n fail to be treat$ z transf]r$ or held 9 connection ) ! p]=mance ( s]vices m]ely because ! taxpay] also made contributions to ! p>tn]%ip1 7#c7 :i* provide = ! application ( ?is section 9 cases :]e ! taxpay] has m ?an #a applicable int]e/ 9 a p>tn]%ip1 & 7#d7 :i* provide = ! application ( ?is section 9 cases ( ti]$ /ructures ( entities4 4 7b7 ,coord9ation ) section #hc ,subsection 7e7 ( section #hc is am5d$ by /rik+ or at ! end ( p>agraph 7#d71 by /rik+ ! p]iod at ! end ( p>agraph 7#e7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new p>agraph3 7#f7 a transf] ( a p>tn]%ip int]e/ to :i* section #ajfa applies4 4 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ ! item relat+ to #ajfa & ins]t+ ! foll[+ new items3 ,sec4 #ajfa4 ,p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices4 ,sec4 #ajfb4 ,cross ref]5ces4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfbb4 ,p>tn]%ip audits & adju/m5ts 7a7 ,repeal ( ,,tefra p>tn]%ip audit rules ,*apt] #fc is am5d$ by /rik+ sub*apt] ,c 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7b7 ,repeal ( elect+ l>ge p>tn]%ip rules 7#a7 ,9 g5]al ,sub*apt] ,k ( *apt] #a is am5d$ by /rik+ "p ,,iv 7& by /rik+ ! item relat+ to su* "p 9 ! table ( p>ts = su* sub*apt]74 7#b7 ,assessm5t rules relat+ to elect+ l>ge p>tn]%ips ,*apt] #fc is am5d$ by /rik+ sub*apt] ,d 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7#c7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns fil$ aft] ,decemb] #ca1 #bjad4 7c7 ,p>tn]%ip audit re=m 7#a7 ,9 g5]al ,*apt] #fc1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ aft] sub*apt] ,b ! foll[+ new sub*apt]3 ,c ,treatm5t ( p>tn]%ips ,"p ,i--,9 g5]al ,"p ,,ii--,p>tn]%ip adju/m5ts ,"p ,,iii--,proc$ure ,"p ,,iv--,def9itions & special rules ,i ,9 g5]al ,sec4 #fbba4 ,det]m9ation at p>tn]%ip level4 ,sec4 #fbbb4 ,p>tn]'s return mu/ be consi/5t ) p>tn]%ip return4 ,sec4 #fbbc4 ,designation ( p>tn]%ip repres5tative4 #fbba4 ,det]m9ation at p>tn]%ip level 7a7 ,9 g5]al ,items ( income1 ga91 loss1 d$uction1 or cr$it ( a p>tn]%ip = a p>tn]%ip taxable ye> 7& any p>tn]'s di/ributive %>e !re(7 %all be audit$1 any tax attributable !reto %all be assess$ & collect$1 & ! applicability ( any p5alty1 addition to tax1 or additional am\nt :i* relates to an adju/m5t to any su* item or %>e %all be det]m9$1 at ! p>tn]%ip level pursuant to ?is sub*apt]4 7b7 ,election out = c]ta9 p>tn]%ips ) #ajj or few] p>tn]s ,?is sub*apt] %all n apply ) respect to any p>tn]%ip = any taxable ye> if-- 7#a7 ! p>tn]%ip elects ! application ( ?is subsection = su* taxable ye>1 7#b7 ! p>tn]%ip has #ajj or few] p>tn]s on ! la/ day ( su* taxable ye>1 7#c7 ea* ( ! p>tn]s ( su* p>tn]%ip is an individual1 a ,c corporation 7o!r ?an a real e/ate inve/m5t tru/ or a regulat$ inve/m5t company71 any =eign entity t w\ld be treat$ z a ,c corporation 7 x dome/ic1 or an e/ate ( a deceas$ p>tn]1 7#d7 ! election-- 7,a7 is made ) a timely fil$ return = su* taxable ye>1 & 7,b7 includes 79 ! mann] prescrib$ by ! ,secret>y7 a disclosure ( ! "n & taxpay] id5tification numb] ( ea* p>tn] ( su* p>tn]%ip1 & 7#e7 ! p>tn]%ip notifies ea* su* p>tn] ( su* election 9 ! mann] prescrib$ by ! ,secret>y4 ,= purposes ( p>agraph 7#d77;,b71 ! ,secret>y may provide = alt]native id5tification ( any =eign p>tn]s4 #fbbb4 ,p>tn]'s return mu/ be consi/5t ) p>tn]%ip return 7a7 ,9 g5]al ,a p>tn] ( any p>tn]%ip %all1 on ! p>tn]'s return1 treat ea* item ( income1 ga91 loss1 d$uction1 or cr$it attributable to su* p>tn]%ip 9 a mann] :i* is consi/5t ) ! treatm5t ( su* income1 ga91 loss1 d$uction1 or cr$it on ! p>tn]%ip return4 7b7 ,und]paym5t due to inconsi/5t treatm5t assess$ z ma? error ,any und]paym5t ( tax by a p>tn] by reason ( fail+ to comply ) ! requirem5ts ( subsection 7a7 %all be assess$ & collect$ 9 ! same mann] z if su* und]paym5t 7 on acc\nt ( a ma!matical or cl]ical error appe>+ on ! p>tn]'s return4 ,p>agraph 7#b7 ( section #fbac7;b7 %all n apply to any assessm5t ( an und]paym5t ref]r$ to 9 ! prec$+ s5t5ce4 7c7 ,addition to tax = failure ,to comply ) section ,= addition to tax 9 ! case ( p>tn]'s disreg>d ( ! requirem5ts ( ?is section1 see "p ,,ii ( sub*apt] ,a ( *apt] #fh4 #fbbc4 ,p>tn]s b\nd by actions ( p>tn]%ip 7a7 ,designation ( p>tn] ,ea* p>tn]%ip %all designate 79 ! mann] prescrib$ by ! ,secret>y7 a p>tn] 7or o!r p]son7 z ! p>tn]%ip repres5tative :o %all h ! sole au?ority to act on behalf ( ! p>tn]%ip "u ?is sub*apt]4 ,9 any case 9 :i* su* a designation is n 9 effect1 ! ,secret>y may select any p>tn] z ! p>tn]%ip repres5tative4 7b7 ,b9d+ effect ,a p>tn]%ip & all p>tn]s ( su* p>tn]%ip %all be b\nd-- 7#a7 by actions tak5 "u ?is sub*apt] by ! p>tn]%ip1 & 7#b7 by any decision 9 a proce$+ br\ght "u ?is sub*apt]4 ,,ii ,p>tn]%ip adju/m5ts ,sec4 #fbbe4 ,p>tn]%ip adju/m5t by ,secret>y4 ,sec4 #fbbf4 ,adm9i/rative adju/m5t reque/ by p>tn]%ip4 #fbbe4 ,p>tn]%ip adju/m5t by ,secret>y 7a7 ,9 g5]al ,9 ! case ( any adju/m5t by ! ,secret>y 9 ! am\nt ( any item ( income1 ga91 loss1 d$uction1 or cr$it ( a p>tn]%ip1 or any p>tn]'s di/ributive %>e !re(-- 7#a7 ! p>tn]%ip %all pay any imput$ und]paym5t ) respect to su* adju/m5t 9 ! adju/m5t ye> z provid$ 9 section #fbcb1 & 7#b7 any imput$ ov]paym5t %all be tak5 into acc\nt by ! p>tn]%ip 9 ! adju/m5t ye> z a r$uction 9 non-sep>ately /at$ income or an increase 9 non-sep>ately /at$ loss 7:i*ev] is appropriate7 "u section #gjb7;a77#h74 7b7 ,det]m9ation ( imput$ und]paym5ts & ov]paym5ts ,= purposes ( ?is sub*apt]-- 7#a7 ,9 g5]al ,except z provid$ 9 subsection 7c71 any imput$ und]paym5t or imput$ ov]paym5t ) respect to any p>tn]%ip adju/m5t = any review$ ye> %all be det]m9$-- 7,a7 by nett+ all adju/m5ts ( items ( income1 ga91 loss1 or d$uction & multiply+ su* net am\nt by ! highe/ rate ( tax 9 effect = ! review$ ye> "u section #a or #aa1 7,b7 by treat+ any net increase or decrease 9 loss "u subp>agraph 7,a7 z a decrease or increase1 respectively1 9 income1 & 7,c7 by tak+ into acc\nt any adju/m5ts to items ( cr$it z an increase or decrease1 z ! case may be1 9 ! am\nt det]m9$ "u subp>agraph 7,a74 7#b7 ,adju/m5ts to di/ributive %>es ( p>tn]s n nett$ ,9 ! case ( any adju/m5t :i* reallocates ! di/ributive %>e ( any item f "o p>tn] to ano!r1 su* adju/m5t %all be tak5 into acc\nt "u p>agraph 7#a7 by disreg>d+-- 7,a7 any decrease 9 any item ( income or ga91 & 7,b7 any increase 9 any item ( d$uction1 loss1 or cr$it4 7c7 ,modification ( imput$ und]paym5ts 7#a7 ,me?od 9 g5]al ,! ,secret>y %all e/abli% proc$ures "u :i* ! imput$ und]paym5t am\nt may be modifi$ consi/5t ) ! requirem5ts ( ?is subsection4 7#b7 ,am5d$ returns ( p>tn]s ,su* proc$ures %all provide t if-- 7,a7 "o or m p>tn]s file returns = ! taxable ye> ( ! p>tn]s :i* includes ! end ( ! review$ ye> ( ! p>tn]%ip1 7,b7 su* returns take into acc\nt all adju/m5ts "u subsection 7a7 prop]ly allocable to su* p>tn]s 7& = any o!r taxable ye> ) respect to :i* any tax attribute is affect$ by reason ( su* adju/m5ts71 & 7,c7 paym5t ( any tax due is includ$ ) su* return1 !n ! imput$ und]paym5t am\nt %all be det]m9$ )\t reg>d to ! portion ( ! adju/m5ts s tak5 into acc\nt4 7#c7 ,reallocation ( di/ributive %>e ,9 ! case ( any adju/m5t :i* reallocates ! di/ributive %>e ( any item f "o p>tn] to ano!r1 p>agraph 7#b7 %all apply only if returns are fil$ by all p>tn]s affect$ by su* adju/m5t4 7#d7 ,ye> & day = submission to ,secret>y ,any?+ requir$ to be submitt$ pursuant to p>agraph 7#a7 %all be submitt$ to ! ,secret>y n lat] ?an ! close ! #ahj-;day p]iod beg9n+ on ! date on :i* ! notice ( a propos$ p>tn]%ip adju/m5t is mail$ "u section #fbca unless su* p]iod is ext5d$ ) ! cons5t ( ! ,secret>y4 7#e7 ,decision ( ,secret>y ,any modification ( ! imput$ und]paym5t am\nt "u ?is subsection %all be made only ^u approval ( su* modification by ! ,secret>y4 7d7 ,def9itions & special rule ,= purposes ( ?is sub*apt]-- 7#a7 ,review$ ye> ,! t]m review$ ye> means ! p>tn]%ip taxable ye> to :i* ! item be+ adju/$ relates4 7#b7 ,adju/m5t ye> ,! t]m adju/m5t ye> means ! p>tn]%ip taxable ye> 9 :i*-- 7,a7 9 ! case ( an adju/m5t pursuant to ! decision ( a c\rt 9 a proce$+ br\ght "u section #fbcd1 su* decision becomes f9al1 7,b7 9 ! case ( an adm9i/rative adju/m5t reque/ "u section #fbbf1 su* adm9i/rative adju/m5t reque/ is made1 or 7,c7 9 any o!r case1 notice ( ! f9al p>tn]%ip adju/m5t is mail$ "u section #fbca4 #fbbf4 ,adm9i/rative adju/m5t reque/ by p>tn]%ip 7a7 ,9 g5]al ,a p>tn]%ip may file a reque/ = an adm9i/rative adju/m5t 9 ! am\nt ( any item ( income1 ga91 loss1 d$uction1 or cr$it ( ! p>tn]%ip = any p>tn]%ip taxable ye>1 b only to ! ext5t su* adju/m5t results 9 an imput$ und]paym5t4 7b7 ,adju/m5t ,any adju/m5t "u subsection 7a7 %all be det]m9$ & tak5 into acc\nt by ! p>tn]%ip "u rules simil> to ! rules ( section #fbbe 7o!r ?an subsection 7c7 !re(7 = ! p>tn]%ip taxable ye> 9 :i* ! adm9i/rative adju/m5t reque/ is made4 7c7 ,p]iod ( limitations ,a p>tn]%ip may n file su* a reque/-- 7#a7 m ?an #c ye>s aft] ! lat] (-- 7,a7 ! date on :i* ! p>tn]%ip return = su* ye> is fil$1 or 7,b7 ! la/ day = fil+ ! p>tn]%ip return = su* ye> 7det]m9$ )\t reg>d to ext5sions71 & 7#b7 aft] any notice ( an adm9i/rative proce$+ ) respect to ! taxable ye> is mail$ "u section #fbca4 ,,iii ,proc$ure ,sec4 #fbca4 ,notice ( proce$+s & adju/m5t4 ,sec4 #fbcb4 ,assessm5t1 collection1 & paym5t4 ,sec4 #fbcc4 ,p5alties & int]e/4 ,sec4 #fbcd4 ,judicial review ( p>tn]%ip adju/m5t4 ,sec4 #fbce4 ,p]iod ( limitations on mak+ adju/m5ts4 #fbca4 ,notice ( proce$+s & adju/m5t 7a7 ,9 g5]al ,! ,secret>y %all mail to ! p>tn]%ip & ! p>tn]%ip repres5tative-- 7#a7 notice ( any adm9i/rative proce$+ initiat$ at ! p>tn]%ip level ) respect to an adju/m5t ( any item ( income1 ga91 loss1 d$uction1 or cr$it ( a p>tn]%ip = a p>tn]%ip taxable ye>1 or any p>tn]'s di/ributive %>e !re(1 7#b7 notice ( any propos$ p>tn]%ip adju/m5t result+ f su* proce$+1 & 7#c7 notice ( any f9al p>tn]%ip adju/m5t result+ f su* proce$+4 ,any notice ( a f9al p>tn]%ip adju/m5t %all n be mail$ e>li] ?an #ahj days aft] ! date on :i* ! notice ( ! propos$ p>tn]%ip adju/m5t is mail$4 ,su* notices %all be suffici5t if mail$ to ! la/ kn[n address ( ! p>tn]%ip repres5tative or ! p>tn]%ip 7ev5 if ! p>tn]%ip has t]m9at$ its exi/5ce74 ,! fir/ s5t5ce %all apply to any proce$+ ) respect to an adm9i/rative adju/m5t reque/ fil$ by a p>tn]%ip "u section #fbbf4 7b7 ,fur!r notices re/rict$ ,if ! ,secret>y mails a notice ( a f9al p>tn]%ip adju/m5t to any p>tn]%ip = any p>tn]%ip taxable ye> & ! p>tn]%ip files a petition "u section #fbcd ) respect to su* notice1 9 ! abs5ce ( a %[+ ( fraud1 malfeasance1 or misrepres5tation ( a mat]ial fact1 ! ,secret>y %all n mail ano!r su* notice to su* p>tn]%ip ) respect to su* taxable ye>4 7c7 ,au?ority ,to resc9d notice ) p>tn]%ip cons5t ,! ,secret>y may1 ) ! cons5t ( ! p>tn]%ip1 resc9d any notice ( a p>tn]%ip adju/m5t mail$ to su* p>tn]%ip4 ,any notice s resc9d$ %all n be treat$ z a notice ( a p>tn]%ip adju/m5t = purposes ( ?is sub*apt]1 & ! taxpay] %all h no "r to br+ a proce$+ "u section #fbcd ) respect to su* notice4 #fbcb4 ,assessm5t1 collection1 & paym5t 7a7 ,9 g5]al ,any imput$ und]paym5t-- 7#a7 %all be assess$ & collect$ 9 ! same mann] z if x 7 a tax impos$ = ! adju/m5t ye> by subtitle ,a1 & 7#b7 %all be paid on or be=e ! return due date = ! adju/m5t ye>4 7b7 ,limitation on assessm5t ,except z o!rwise provid$ 9 ?is *apt]1 no assessm5t ( a defici5cy may be made 7& no levy or proce$+ 9 any c\rt = ! collection ( any am\nt result+ f su* adju/m5t may be made1 begun or prosecut$7 be=e-- 7#a7 ! close ( ! #ij? day aft] ! day on :i* a notice ( a f9al p>tn]%ip adju/m5t 0 mail$1 & 7#b7 if a petition is fil$ "u section #fbcd ) respect to su* notice1 ! decision ( ! c\rt has become f9al4 7c7 ,premature action may be enjo9$ ,not)/&+ section #gdba7;a71 any action :i* violates subsection 7b7 may be enjo9$ 9 ! prop] c\rt1 includ+ ! ,tax ,c\rt4 ,! ,tax ,c\rt %all h no jurisdiction to enjo9 any action "u ?is subsection unless a timely petition has be5 fil$ "u section #fbcd & !n only 9 respect ( ! adju/m5ts t are ! subject ( su* petition4 7d7 ,exceptions to re/rictions on adju/m5ts 7#a7 ,adju/m5ts aris+ out ( ma? or cl]ical errors 7,a7 ,9 g5]al ,if ! p>tn]%ip is notifi$ t1 on acc\nt ( a ma!matical or cl]ical error appe>+ on ! p>tn]%ip return1 an adju/m5t to a p>tn]%ip item is requir$1 rules simil> to ! rules ( p>agraphs 7#a7 & 7#b7 ( section #fbac7;b7 %all apply to su* adju/m5t4 7,b7 ,special rule ,if a p>tn]%ip is a p>tn] 9 ano!r p>tn]%ip1 any adju/m5t on acc\nt ( su* p>tn]%ip's failure to comply ) ! requirem5ts ( section #fbbb7;a7 ) respect to its int]e/ 9 su* o!r p>tn]%ip %all be treat$ z an adju/m5t ref]r$ to 9 subp>agraph 7,a71 except t p>agraph 7#b7 ( section #fbac7;b7 %all n apply to su* adju/m5t4 7#b7 ,p>tn]%ip may waive re/rictions ,! p>tn]%ip may at any "t 7:e!r or n any notice ( p>tn]%ip adju/m5t has be5 issu$71 by a sign$ notice 9 writ+ fil$ ) ! ,secret>y1 waive ! re/rictions provid$ 9 subsection 7b7 on ! mak+ ( any p>tn]%ip adju/m5t4 7e7 ,limit :]e no proce$+ begun ,if no proce$+ "u section #fbcd is begun ) respect to any notice ( a f9al p>tn]%ip adju/m5t dur+ ! #ij-;day p]iod describ$ 9 subsection 7b7 !re(1 ! am\nt = :i* ! p>tn]%ip is liable "u section #fbbe %all n exce$ ! am\nt det]m9$ 9 accordance ) su* notice4 #fbcc4 ,p5alties & int]e/ 7a7 ,p5alties & int]e/ det]m9$ f review$ ye> 7#a7 ,9 g5]al ,9 ! case ( an imput$ und]paym5t ) respect to a p>tn]%ip adju/m5t = a review$ ye>1 ! p>tn]%ip-- 7,a7 %all pay to ! ,secret>y int]e/ comput$ "u p>agraph 7#b71 & 7,b7 %all be liable = any p5alty1 addition to tax1 or additional am\nt z provid$ 9 p>agraph 7#c74 7#b7 ,det]m9ation ( am\nt ( int]e/ ,! int]e/ comput$ "u ?is p>agraph ) respect to any p>tn]%ip adju/m5t is ! int]e/ :i* w\ld be det]m9$ "u *apt] #fg-- 7,a7 on ! imput$ und]paym5t det]m9$ ) respect to su* adju/m5t1 7,b7 = ! p]iod beg9n+ on ! day aft] ! return due date = ! review$ ye> & end+ on ! return due date = ! adju/m5t ye> 7or1 if e>li]1 ! date paym5t ( ! imput$ und]paym5t is made74 ,prop] adju/m5ts 9 ! am\nt det]m9$ "u ! prec$+ s5t5ce %all be made = adju/m5ts requir$ = p>tn]%ip taxable ye>s aft] ! review$ ye> & be=e ! adju/m5t ye> by reason ( su* p>tn]%ip adju/m5t4 7#c7 ,p5alties ,a p>tn]%ip %all be liable = any p5alty1 addition to tax1 or additional am\nt = :i* x w\ld h be5 liable if su* p>tn]%ip _h be5 an individual subject to tax "u *apt] #a = ! review$ ye> & ! imput$ und]paym5t 7 an actual und]paym5t 7or und]/atem5t7 = su* ye>4 7b7 ,int]e/ & p5alties ) respect to adju/m5t ye> return 7#a7 ,9 g5]al ,9 ! case ( any failure to pay an imput$ und]paym5t on ! date prescrib$ !re=1 ! p>tn]%ip %all be liable-- 7,a7 = int]e/ z det]m9$ "u p>agraph 7#b71 & 7,b7 = any p5alty1 addition to tax1 or additional am\nt z det]m9$ "u p>agraph 7#c74 7#b7 ,int]e/ ,int]e/ det]m9$ "u ?is p>agraph is ! int]e/ t w\ld be det]m9$ by treat+ ! imput$ und]paym5t z an und]paym5t ( tax impos$ 9 ! adju/m5t ye>4 7#c7 ,p5alties ,p5alties1 additions to tax1 or additional am\nts det]m9$ "u ?is p>agraph are ! p5alties1 additions to tax1 or additional am\nts t w\ld be det]m9$-- 7,a7 by apply+ section #ffea7;a77#b7 to su* failure to pay4 7,b7 by treat+ ! imput$ und]paym5t z an und]paym5t ( tax = purposes ( "p ,,ii ( sub*apt] ,a ( *apt] #fh4 #fbcd4 ,judicial review ( p>tn]%ip adju/m5t 7a7 ,9 g5]al ,)9 #ij days aft] ! date on :i* a notice ( a f9al p>tn]%ip adju/m5t is mail$ "u section #fbca ) respect to any p>tn]%ip taxable ye>1 ! p>tn]%ip may file a petition = a readju/m5t = su* taxable ye> )-- 7#a7 ! ,tax ,c\rt1 7#b7 ! di/rict c\rt ( ! ,unit$ ,/ates = ! di/rict 9 :i* ! p>tn]%ip's pr9cipal place ( bus9ess is locat$1 or 7#c7 ! ,claims ,c\rt4 7b7 ,jurisdictional requirem5t = br++ action 9 di/rict c\rt or ,claims ,c\rt 7#a7 ,9 g5]al ,a readju/m5t petition "u ?is section may be fil$ 9 a di/rict c\rt ( ! ,unit$ ,/ates or ! ,claims ,c\rt only if ! p>tn]%ip fil+ ! petition deposits ) ! ,secret>y1 on or be=e ! date ! petition is fil$1 ! am\nt ( ! imput$ und]paym5t 7z ( ! date ( ! fil+ ( ! petition7 if ! p>tn]%ip adju/m5t 0 made z provid$ by ! notice ( f9al p>tn]%ip adju/m5t4 ,! c\rt may by ord] provide t ! jurisdictional requirem5ts ( ?is p>agraph are satisfi$ :]e !re has be5 a good fai? attempt to satisfy su* requirem5t & any %ortfall ( ! am\nt requir$ to be deposit$ is timely correct$4 7#b7 ,int]e/ payable ,any am\nt deposit$ "u p>agraph 7#a71 :ile deposit$1 %all n be treat$ z a paym5t ( tax = purposes ( ?is title 7o!r ?an *apt] #fg74 7c7 ,scope ( judicial review ,a c\rt ) :i* a petition is fil$ 9 accordance ) ?is section %all h jurisdiction to det]m9e all items ( income1 ga91 loss1 d$uction1 or cr$it ( ! p>tn]%ip = ! p>tn]%ip taxable ye> to :i* ! notice ( f9al p>tn]%ip adju/m5t relates1 ! prop] allocation ( su* items among ! p>tn]s1 & ! applicability ( any p5alty1 addition to tax1 or additional am\nt = :i* ! p>tn]%ip may be liable "u ?is sub*apt]4 7d7 ,det]m9ation ( c\rt reviewable ,any det]m9ation by a c\rt "u ?is section %all h ! =ce & effect ( a decision ( ! ,tax ,c\rt or a f9al judgm5t or decree ( ! di/rict c\rt or ! ,claims ,c\rt1 z ! case may be1 & %all be reviewable z su*4 ,! date ( any su* det]m9ation %all be treat$ z be+ ! date ( ! c\rt's ord] ent]+ ! decision4 7e7 ,effect ( decision dismiss+ action ,if an action br\ght "u ?is section is dismiss$ o!r ?an by reason ( a rescission "u section #fbca7;c71 ! decision ( ! c\rt dismiss+ ! action %all be consid]$ z its decision t ! notice ( f9al p>tn]%ip adju/m5t is correct1 & an appropriate ord] %all be ent]$ 9 ! records ( ! c\rt4 #fbce4 ,p]iod ( limitations on mak+ adju/m5ts 7a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section1 no adju/m5t "u ?is subp>t = any p>tn]%ip taxable ye> may be made aft] ! date :i* is #c ye>s aft] ! late/ (-- 7#a7 ! date on :i* ! p>tn]%ip return = su* taxable ye> 0 fil$1 7#b7 ! return due date = ! taxable ye>1 or 7#c7 ! date on :i* ! p>tn]%ip fil$ an adm9i/rative adju/m5t reque/ ) respect to su* ye> "u section #fbbf4 7b7 ,ext5sion by agreem5t ,! p]iod describ$ 9 subsection 7a7 7includ+ an ext5sion p]iod "u ?is subsection7 may be ext5d$ by an agreem5t ent]$ into by ! ,secret>y & ! p>tn]%ip be=e ! expiration ( su* p]iod4 7c7 ,special rule 9 case ( fraud1 etc 7#a7 ,false return ,9 ! case ( a false or fraudul5t p>tn]%ip return ) int5t to evade tax1 ! adju/m5t may be made at any "t4 7#b7 ,sub/antial omission ( income ,if any p>tn]%ip omits f gross income an am\nt prop]ly includible !re9 & su* am\nt is describ$ 9 section #feja7;e77#a77;,a71 subsection 7a7 %all be appli$ by sub/itut+ #f ye>s = #c ye>s4 7#c7 ,no return ,9 ! case ( a failure by a p>tn]%ip to file a return = any taxable ye>1 ! adju/m5t may be made at any "t4 7#d7 ,return fil$ by ,secret>y ,= purposes ( ?is section1 a return execut$ by ! ,secret>y "u subsection 7b7 ( section #fjbj on behalf ( ! p>tn]%ip %all n be treat$ z a return ( ! p>tn]%ip4 7d7 ,susp5sion :5 ,secret>y mails notice ( adju/m5t ,if notice ( a f9al p>tn]%ip adju/m5t ) respect to any taxable ye> is mail$ "u section #fbca1 ! runn+ ( ! p]iod specifi$ 9 subsection 7a7 7z modifi$ by ! o!r provisions ( ?is section7 %all be susp5d$-- 7#a7 = ! p]iod dur+ :i* an action may be br\ght "u section #fbcd 7&1 if a petition is fil$ "u su* section ) respect to su* notice1 until ! decision ( ! c\rt becomes f9al71 & 7#b7 = #a ye> !reaft]4 ,,iv ,def9itions & special rules ,sec4 #fbda4 ,def9itions & special rules4 #fbda4 ,def9itions & special rules 7a7 ,def9itions & special rules ,= purposes ( ?is sub*apt]-- 7#a7 ,p>tn]%ip ,! t]m p>tn]%ip means any p>tn]%ip requir$ to file a return "u section #fjca7;a74 7#b7 ,p>tn] ,! t]m p>tn] means-- 7,a7 a p>tn] 9 ! p>tn]%ip1 & 7,b7 any o!r p]son ^: income tax liability "u subtitle ,a is det]m9$ 9 :ole or 9 "p by tak+ into acc\nt directly or indirectly income1 ga91 d$uction1 or loss ( ! p>tn]%ip4 7b7 ,p>tn]%ip adju/m5t ,! t]m p>tn]%ip adju/m5t means any adju/m5t 9 ! am\nt ( any item ( income1 ga91 loss1 d$uction1 or cr$it ( a p>tn]%ip1 or any p>tn]'s di/ributive %>e !re(4 7c7 ,return due date ,! t]m return due date means1 ) respect to ! taxable ye>1 ! date prescrib$ = fil+ ! p>tn]%ip return = su* taxable ye> 7det]m9$ )\t reg>d to ext5sions74 7d7 ,jo9t & sev]al liability 7#a7 ,9 g5]al ,! p>tn]%ip & any p>tn] ( ! p>tn]%ip %all be jo9tly & sev]ally liable = any imput$ und]paym5t & any p5alty1 addition to tax1 or additional am\nt attributable !reto4 7#b7 ,p]iod = assessm5t ( p>tn]s ,! p]iod = assessm5t ( an imput$ und]paym5t ) respect to a p>tn] ( a p>tn]%ip %all n expire e>li] ?an #c ye>s aft] ! date on :i* an assessm5t ( su* imput$ und]paym5t 0 made ) respect to ! p>tn]%ip4 7#c7 ,det]m9+ p>tn]s ,a p]son %all be treat$ z p>tn] ( ! p>tn]%ip if su* p]son is a p>tn] ( su* p>tn]%ip at any "t dur+ ! review$ or adju/m5t ye>4 7e7 ,paym5ts nond$uctible ,no d$uction %all be all[$ "u subtitle ,a = any paym5t requir$ to be made by a p>tn]%ip "u ?is sub*apt]4 7f7 ,special rule = d$uctions1 losses1 & cr$its ( =eign p>tn]%ips ,except to ! ext5t o!rwise provid$ 9 regulations1 9 ! case ( any p>tn]%ip ! p>tn]%ip repres5tative ( :i* resides outside ! ,unit$ ,/ates or ! books ( :i* are ma9ta9$ outside ! ,unit$ ,/ates1 no d$uction1 loss1 or cr$it %all be all[able to any p>tn] unless section #fjca is compli$ ) = ! p>tn]%ip's taxable ye> 9 :i* su* d$uction1 loss1 or cr$it arose at su* "t z ! ,secret>y prescribes by regulations4 7g7 ,p>tn]%ips hav+ pr9cipal place ( bus9ess outside ,unit$ ,/ates ,= purposes ( sections #fbcd1 a pr9cipal place ( bus9ess locat$ outside ! ,unit$ ,/ates %all be treat$ z locat$ 9 ! ,di/rict ( ,columbia4 7h7 ,p>tn]%ips 9 cases "u title #aa ( ,unit$ ,/ates ,code 7#a7 ,susp5sion ( p]iod ( limitations on mak+ adju/m5t1 assessm5t1 or collection ,! runn+ ( any p]iod ( limitations provid$ 9 ?is sub*apt] on mak+ a p>tn]%ip adju/m5t 7or provid$ by section #feja or #fejb on ! assessm5t or collection ( any imput$ und]paym5t det]m9$ "u ?is sub*apt]7 %all1 9 a case "u title #aa ( ! ,unit$ ,/ates ,code1 be susp5d$ dur+ ! p]iod dur+ :i* ! ,secret>y is prohibit$ by reason ( su* case f mak+ ! adju/m5t 7or assessm5t or collection7 &-- 7,a7 = adju/m5t or assessm5t1 #fj days !reaft]1 & 7,b7 = collection1 #f mon?s !reaft]4 ,a rule simil> to ! rule ( section #fbac7;f77#b7 %all apply = purposes ( section #fbcb7;b74 7#b7 ,susp5sion ( p]iod ( limitation = fil+ = judicial review ,! runn+ ( ! p]iod specifi$ 9 section #fbcd %all1 9 a case "u title #aa ( ! ,unit$ ,/ates ,code1 be susp5d$ dur+ ! p]iod dur+ :i* ! p>tn]%ip is prohibit$ by reason ( su* case f fil+ a petition "u section #fbcd & = #fj days !reaft]4 4 7#b7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #fc is am5d$ by ins]t+ aft] ! item relat+ to sub*apt] ,b ! foll[+ new items3 ,sub*apt] ,c4 ,treatm5t ( p>tn]%ips4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,section #fdbb is am5d$ by /rik+ p>agraph 7#ab74 7#b7 ,section #feja7n7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#c7 & by /rik+ ,cross ref]5ces & all t foll[s ?r\gh ,= p]iod ( limitations & ins]t+ ,cross ref]5ce4--,= p]iod ( limitations4 7#c7 ,section #fejc7;a77#a7 is am5d$ by /rik+ 7or section #fbbi & all t foll[s ?r\gh ( section #fbcj7;a774 7#d7 ,section #fejd is am5d$ by /rik+ p>agraph 7#aa74 7#e7 ,section #feaa is am5d$ by /rik+ subsection 7g74 7#f7 ,section #feab7;b77#c7 is am5d$ by /rik+ ! second s5t5ce4 7#g7 ,section #feae is am5d$ by /rik+ p>agraph 7#f74 7#h7 ,section #ffja7;c7 is am5d$ by /rik+ ! la/ s5t5ce4 7#i7 ,section #gdba7;a7 is am5d$ by /rik+ #fbbe7;b71 #fbdf7;b7 & ins]t+ #fbcb7;c74 7#aj7 ,section #gdbb is am5d$ by /rik+ subsection 7h74 7#aa7 ,section #gdei7;c7 is am5d$ by /rik+ section #fbbf & all t foll[s ?r\gh or #fbeb & ins]t+ section #fbcd4 7#ab7 ,section #gdhb7;b77#a7 is am5d$-- 7,a7 9 subp>agraph 7,e71 by /rik+ section #fbbf1 #fbbh1 #fbdg1 or #fbeb & ins]t+ section #fbcd1 7,b7 by /rik+ subp>agraph 7,f71 by /rik+ or at ! end ( subp>agraph 7,e7 & ins]t+ a p]iod1 & by ins]t+ or at ! end ( subp>agraph 7,d71 & 7,c7 9 ! la/ s5t5ce1 by /rik+ section #fbbf1 #fbbh7;a71 or #fbcd7;c7 & ins]t+ section #fbcd4 7#ac7 ,section #gdhe7;b7 is am5d$ by /rik+ section #fbbf1 #fbbh7;a71 #fbdg1 or #fbeb & ins]t+ section #fbcd4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns fil$ = p>tn]%ip taxable ye>s end+ aft] ,decemb] #ca1 #bjad1 except t a p>tn]%ip may elect 7at su* "t & 9 su* =m & mann] z ! ,secret>y ( ! ,treasury may prescribe7 = su* am5dm5ts to apply to any return ( ! p>tn]%ip fil$ = p>tn]%ip taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act & be=e ,janu>y #a1 #bjae4 #c ,r,e,i,ts & ,r,i,cs #cfca4 ,prev5tion ( tax-free sp9(fs involv+ ,r,e,i,ts 7a7 ,9 g5]al ,section #cee is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,section n ,to apply to di/ributions involv+ real e/ate inve/m5t tru/s ,?is section 7& s mu* ( section #cef z relates to ?is section7 %all n apply to any di/ribution if ei!r ! di/ribut+ corporation or controll$ corporation is a real e/ate inve/m5t tru/4 4 7b7 ,prev5tion ( ,,reit election foll[+ tax-,free sp9 (f ,section #hef7;c7 is am5d$ by r$esignat+ p>agraph 7#h7 z p>agraph 7#i7 & by ins]t+ aft] p>agraph 7#g7 ! foll[+ new p>agraph3 7#h7 ,election aft] tax-free reorganization ,if a corporation 0 a di/ribut+ corporation or a controll$ corporation ) respect to any di/ribution to :i* section #cee appli$1 su* corporation 7& any successor corporation7 %all n be eligible to make any election "u subsection 7c77#a7 = any taxable ye> prior to ! #aj? taxable ye> :i* beg9s aft] ! taxable ye> 9 :i* su* di/ribution 0 made4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to di/ributions on or aft] ,febru>y #bf1 #bjad4 7#b7 ,transition rule ,! am5dm5ts made by ?is section %all n apply to any di/ribution made pursuant to an agreem5t :i* 0 b9d+ on ,febru>y #bf1 #bjad1 & at all times !reaft]4 #cfcb4 ,ext5sion ( p]iod = prev5tion ( ,,reit election foll[+ revocation or t]m9ation 7a7 ,9 g5]al ,section #hef7;g77#c7 is am5d$ by /rik+ fif? & ins]t+ #aj?4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to t]m9ations & revocations aft] ,decemb] #ca1 #bjad4 #cfcc4 ,c]ta9 %ort-life prop]ty n treat$ z real prop]ty = purposes ( ,,reit provisions 7a7 ,9 g5]al ,section #hef7;c77#e7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,l7 ,real prop]ty ,! t]m real prop]ty %all n include any tangible prop]ty ) a class life ( less ?an #bg4e ye>s4 ,= purposes ( ! prec$+ s5t5ce1 class life ( tangible prop]ty = any taxable ye> %all be ! great] (-- 7i7 ! class life ( su* prop]ty 9 ! h&s ( ! real e/ate inve/m5t tru/1 or 7ii7 ! class life :i* w\ld be applicable to su* prop]ty if su* prop]ty 0 plac$ 9 s]vice 9 ! taxable ye>4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #cfcd4 ,repeal ( special rules = timb] held by ,r,e,i,ts 7a7 ,9 g5]al ,section #hef7;c77#e77,l71 z add$ by ?is ,act1 is am5d$ by ins]t+ timb] or aft] %all n include4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #hef7;c77#b7 is am5d$ by ins]t+ & at ! end ( subp>agraph 7,g71 by /rik+ & at ! end ( subp>agraph 7,h71 & by /rik+ subp>agraph 7,i74 7#b7 ,section #hef7;c77#e71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ subp>agraphs 7,h7 & 7,i7 & by r$esignat+ subp>agraphs 7,j71 7,k71 & 7,l7 z subp>agraphs 7,h71 7,i7 & 7,j71 respectively4 7#c7 ,section #hef7;c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#i74 7#d7 ,section #heg7;b77#f7 is am5d$ by /rik+ subp>agraphs 7,d71 7,g71 & 7,h71 & by r$esignat+ subp>agraphs 7,e7 & 7,f7 z subp>agraphs 7,d7 & 7,e71 respectively4 7#e7 ,section #heg7;b77#f77;,d71 z r$esignat$ by p>agraph 7#d71 is am5d$ by /rik+ subp>agraphs 7,c7 & 7,d7 & ins]t+ subp>agraph 7,c74 7#f7 ,section #heg7;b77#f77;,e71 z r$esignat$ by p>agraph 7#d71 is am5d$-- 7,a7 by /rik+ subp>agraph 7,c7 or 7,d7 & ins]t+ subp>agraph 7,c71 & 7,b7 by /rik+ subp>agraphs 7,c71 7,d71 & 7,e7 & ins]t+ subp>agraphs 7,c7 & 7,d74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #cfce4 ,limitation on fix$ p]c5tage r5t & int]e/ exceptions = ,,reit income te/s 7a7 ,9 g5]al ,section #hef is am5d$ by add+ at ! end ! foll[+ new subsection3 7o7 ,limitation on fix$ p]c5tage r5t & int]e/ exceptions 7#a7 ,9 g5]al ,if ! fix$ p]c5tage r5t & int]e/ income receiv$ or accru$ by a real e/ate inve/m5t tru/ f a s+le ,c corporation 7o!r ?an a taxable ,,reit subsidi>y ( su* real e/ate inve/m5t tru/7 = any taxable ye> exce$s ei!r-- 7,a7 #be p]c5t ( ! fix$ p]c5tage r5t income receiv$ or accru$ by su* real e/ate inve/m5t tru/ = su* taxable ye>1 or 7,b7 #be p]c5t ( ! fix$ p]c5tage int]e/ income receiv$ or accru$ by su* real e/ate inve/m5t tru/ = su* taxable ye>1 !n1 not)/&+ subsection 7d77#b71 none ( ! fix$ p]c5tage r5t income receiv$ or accru$ f su* corporation :i* is attributable to leases ent]$ into aft] ,decemb] #ca1 #bjad1 %all be treat$ z r5ts f real prop]ty &1 not)/&+ subsection 7f71 none ( ! fix$ p]c5tage int]e/ income receiv$ or accru$ f su* corporation :i* is attributable to debt in/rum5ts acquir$ aft] ,decemb] #ca1 #bjad1 %all be treat$ z int]e/4 7#b7 ,fix$ p]c5tage r5t & int]e/ income ,= purposes ( ?is subsection-- 7,a7 ,fix$ p]c5tage r5t & int]e/ income ,! t]m fix$ p]c5tage r5t & int]e/ income means ! sum ( ! fix$ p]c5tage r5t income plus ! fix$ p]c5tage int]e/ income4 7,b7 ,fix$ p]c5tage r5t income ,! t]m fix$ p]c5tage r5t income means am\nts describ$ 9 subsection 7d77#b77;,a7 :i* are bas$ on a fix$ p]c5tage or p]c5tages ( receipts or sales4 7,c7 ,fix$ p]c5tage int]e/ income ,! t]m fix$ p]c5tage int]e/ income means am\nts describ$ 9 subsection 7f77#a7 :i* are bas$ on a fix$ p]c5tage or p]c5tages ( receipts or sales4 7#c7 ,aggregation rule ,memb]s ( ! same affiliat$ gr\p 7z def9$ 9 section #aejd1 appli$ by sub/itut+ #ej p]c5t = #hj p]c5t ea* place x appe>s !re97 %all be treat$ z #a corporation = purposes ( p>agraph 7#a74 7#d7 ,treatm5t ( modifications ,= purposes ( p>agraph 7#a71 any mat]ial modification 7includ+ any ext5sion ( ! t]m7 ( a lease or debt in/rum5t %all be treat$ z a new lease or debt in/rum5t1 z ! case may be1 ent]$ into on ! date ( su* modification4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s end+ aft] ,decemb] #ca1 #bjad4 #cfcf4 ,repeal ( pref]5tial divid5d rule = publicly (f]$ ,r,e,i,ts 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #efb7;c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ or a publicly (f]$ ,,reit aft] a publicly (f]$ regulat$ inve/m5t company4 7b7 ,publicly (f]$ ,,reit ,subsection 7c7 ( section #efb1 z s am5d$1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,publicly (f]$ ,,reit ,= purposes ( ?is subsection1 ! t]m publicly (f]$ ,,reit means a real e/ate inve/m5t tru/ :i* is requir$ to file annual & p]iodic reports ) ! ,securities & ,ex*ange ,commission "u ! ,securities ,ex*ange ,act ( #aicd4 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to di/ributions 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfcg4 ,au?ority = alt]native rem$ies to address c]ta9 ,,reit di/ribution failures 7a7 ,9 g5]al ,subsection 7e7 ( section #efb is am5d$-- 7#a7 by /rik+ ,9 ! case ( a real e/ate inve/m5t tru/ & ins]t+ ! foll[+3 7#a7 ,det]m9ation ( e>n+s & pr(its = purposes ( divid5ds paid d$uction ,9 ! case ( a real e/ate inve/m5t tru/ 1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,au?ority to provide alt]native rem$ies = c]ta9 failures ,9 ! case ( a failure ( a di/ribution by a real e/ate inve/m5t tru/ to comply ) ! requirem5ts ( subsection 7c71 ! ,secret>y may provide an appropriate rem$y to cure su* failure 9 lieu ( n consid]+ ! di/ribution to be a divid5d = purposes ( comput+ ! divid5ds paid d$uction if-- 7,a7 ! ,secret>y det]m9es t su* failure is inadv]t5t or is due to reasonable cause & n due to willful neglect1 or 7,b7 su* failure is ( a type ( failure :i* ! ,secret>y has id5tifi$ = purposes ( ?is p>agraph z be+ describ$ 9 subp>agraph 7,a74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfch4 ,limitations on designation ( divid5ds by ,r,e,i,ts 7a7 ,9 g5]al ,section #heg is am5d$ by r$esignat+ subsection 7g7 z subsection 7h7 & by ins]t+ aft] subsection 7f7 ! foll[+ new subsection3 7g7 ,limitations on designation ( divid5ds 7#a7 ,ov]all limitation ,! aggregate am\nt ( divid5ds designat$ by a real e/ate inve/m5t tru/ "u subsections 7b77#c77;,c7 & 7c77#b77;,a7 ) respect to any taxable ye> may n exce$ ! divid5ds paid by su* tru/ ) respect to su* ye>4 ,= purposes ( ! prec$+ s5t5ce1 divid5ds paid aft] ! close ( ! taxable ye> describ$ 9 section #heh %all be treat$ z paid ) respect to su* ye>4 7#b7 ,proportionality ,! ,secret>y may prescribe regulations or o!r guidance requir+ ! proportionality ( ! designation ( p>ticul> types ( divid5ds among %>es or b5eficial int]e/s ( a real e/ate inve/m5t tru/4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfci4 ,non-,,reit e>n+s & pr(its requir$ to be di/ribut$ by ,,reit 9 ca% 7a7 ,9 g5]al ,section #heg1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsection 7h7 z subsection 7i7 & by ins]t+ aft] subsection 7g7 ! foll[+ new subsection3 7h7 ,det]m9ation ( e>n+s & pr(its accumulat$ 9 non-,,reit ye>s 7#a7 ,9 g5]al ,= purposes ( subsection 7a77#b77;,b71 di/ributions dur+ ! transition p]iod %all be tak5 into acc\nt 9 det]m9+ accumulat$ e>n+ & pr(its only if su* di/ributions are made 9 ca%4 7#b7 ,transition p]iod ,= purposes ( ?is subsection1 ! t]m transition p]iod means ! p]iod ( taxable ye>s beg9n+ ) ! la/ taxable ye> 7o!r ?an a %ort taxable ye>7 :i* 0 a non-,,reit ye> 7z def9$ 9 subsection 7a77 & end+ ) ! fir/ taxable ye> to :i* ! provisions ( ?is "p apply4 4 7b7 ,con=m+ am5dm5t ,section #heg7;a77#b77;,b7 is am5d$ by ins]t+ 7det]m9$ z provid$ 9 subsection 7h77 be=e ! p]iod at ! end4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions made on or aft] ,febru>y #bf1 #bjad4 #cfdj4 ,debt in/rum5ts ( publicly (f]$ ,r,e,i,ts & mortgages treat$ z real e/ate assets 7a7 ,debt in/rum5ts ( publicly (f]$ ,r,e,i,ts treat$ z real e/ate assets 7#a7 ,9 g5]al ,subp>agraph 7,b7 ( section #hef7;c77#e7 is am5d$-- 7,a7 by /rik+ & %>es & ins]t+ 1 %>es1 & 7,b7 by ins]t+ 1 & debt in/rum5ts issu$ by publicly (f]$ ,r,e,i,ts be=e ! p]iod at ! end ( ! fir/ s5t5ce4 7#b7 ,income f nonqualifi$ debt in/rum5ts ( publicly (f]$ ,r,e,i,ts n qualifi$ = purposes ( satisfy+ ! #ge p]c5t gross income te/ ,subp>agraph 7,h7 ( section #hef7;c77#c7 is am5d$ by ins]t+ 7o!r ?an a nonqualifi$ publicly (f]$ ,,reit debt in/rum5t7 aft] real e/ate asset4 7#c7 #be p]c5t asset limitation on hold+ ( nonqualifi$ debt in/rum5ts ( publicly (f]$ ,r,e,i,ts ,subp>agraph 7,b7 ( section #hef7;c77#d7 is am5d$ by r$esignat+ clause 7iii7 z clause 7iv7 & by ins]t+ aft] clause 7ii7 ! foll[+ new clause3 7iii7 n m ?an #be p]c5t ( ! value ( its total assets is repres5t$ by nonqualifi$ publicly (f]$ ,,reit debt in/rum5ts1 & 4 7#d7 ,def9itions relat$ to debt in/rum5ts ( publicly (f]$ ,r,e,i,ts ,p>agraph 7#e7 ( section #hef7;c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,k7 ,def9itions relat$ to debt in/rum5ts ( publicly (f]$ ,r,e,i,ts 7i7 ,publicly (f]$ ,,reit ,! t]m publicly (f]$ ,,reit has ! mean+ giv5 su* t]m by section #efb7;c77#c74 7ii7 ,nonqualifi$ publicly (f]$ ,,reit debt in/rum5t ,! t]m nonqualifi$ publicly (f]$ ,,reit debt in/rum5t means any real e/ate asset :i* w\ld cease to be a real e/ate asset if subp>agraph 7,b7 7 appli$ )\t reg>d to ! ref]5ce to debt in/rum5ts issu$ by publicly (f]$ ,r,e,i,ts4 4 7b7 ,int]e/s 9 mortgages on int]e/s 9 real prop]ty treat$ z real e/ate assets ,subp>agraph 7,b7 ( section #hef7;c77#e7 is am5d$ by ins]t+ or on int]e/s 9 real prop]ty aft] int]e/s 9 mortgages on real prop]ty4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfda4 ,asset & income te/ cl>ification reg>d+ ancill>y p]sonal prop]ty 7a7 ,9 g5]al ,subsection 7c7 ( section #hef is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#i7 ,special rules = c]ta9 p]sonal prop]ty :i* is ancill>y to real prop]ty 7,a7 ,c]ta9 p]sonal prop]ty leas$ 9 connection ) real prop]ty ,p]sonal prop]ty %all be treat$ z a real e/ate asset = purposes ( p>agraph 7#d77;,a7 to ! ext5t t r5ts attributable to su* p]sonal prop]ty are treat$ z r5ts f real prop]ty "u subsection 7d77#a77;,c74 7,b7 ,c]ta9 p]sonal prop]ty mortgag$ 9 connection ) real prop]ty ,9 ! case ( an obligation secur$ by a mortgage on bo? real prop]ty & p]sonal prop]ty1 if ! fair m>ket value ( su* p]sonal prop]ty does n exce$ #ae p]c5t ( ! total fair m>ket value ( all su* prop]ty1 su* p]sonal prop]ty %all be treat$ z real prop]ty = purposes ( apply+ p>agraphs 7#c77;,b7 & 7#d77;,a74 ,= purposes ( ! prec$+ s5t5ce1 ! fair m>ket value ( all su* prop]ty %all be det]m9$ 9 ! same mann] z ! fair m>ket value ( real prop]ty is det]m9$ = purposes ( apportion+ int]e/ income betwe5 real prop]ty & p]sonal prop]ty "u p>agraph 7#c77;,b74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfdb4 ,h$g+ provisions 7a7 ,modification ,to p]mit ! t]m9ation ( a h$g+ transaction us+ an additional h$g+ in/rum5t ,subp>agraph 7,g7 ( section #hef7;c77#e7 is am5d$ by /rik+ & at ! end ( clause 7i71 by /rik+ ! p]iod at ! end ( clause 7ii7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7iii7 if-- 7,i7 a real e/ate inve/m5t tru/ ent]s into "o or m positions describ$ 9 clause 7i7 ) respect to indebt$ness describ$ 9 clause 7i7 or "o or m positions describ$ 9 clause 7ii7 ) respect to prop]ty :i* g5]ates income or ga9 describ$ 9 p>agraph 7#b7 or 7#c71 7,,ii7 any portion ( su* indebt$ness is ext+ui%$ or any portion ( su* prop]ty is dispos$ (1 & 7,,iii7 9 connection ) su* ext+ui%m5t or disposition1 su* tru/ ent]s into "o or m transactions :i* w\ld be h$g+ transactions describ$ 9 subp>agraph 7,b7 or 7,c7 ( section #abba7;b77#b7 ) respect to any position ref]r$ to 9 subclause 7,i7 if su* position 7 ord9>y prop]ty1 any income ( su* tru/ f any position ref]r$ to 9 subclause 7,i7 & f any transaction ref]r$ to 9 subclause 7,,iii7 7includ+ ga9 f ! t]m9ation ( any su* position or transaction7 %all n con/itute gross income "u p>agraphs 7#b7 & 7#c7 to ! ext5t t su* transaction h$ges su* position4 4 7b7 ,id5tification requirem5ts 7#a7 ,9 g5]al ,subp>agraph 7,g7 ( section #hef7;c77#e71 z am5d$ by subsection 7a71 is am5d$ by /rik+ & at ! end ( clause 7ii71 by /rik+ ! p]iod at ! end ( clause 7iii7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7iv7 clauses 7i71 7ii71 & 7iii7 %all n apply ) respect to any transaction unless su* transaction satisfies ! id5tification requirem5t describ$ 9 section #abba7;b77#c77;,a7 7det]m9$ aft] tak+ into acc\nt any curative provisions provid$ "u ! regulations ref]r$ to !re974 4 7#b7 ,con=m+ am5dm5ts ,subp>agraph 7,g7 ( section #hef7;c77#e7 is am5d$-- 7,a7 by /rik+ :i* is cle>ly id5tifi$ pursuant to section #abba7;a77#g7 9 clause 7i71 & 7,b7 by /rik+ 1 b only if su* transaction is cle>ly id5tifi$ z su* be=e ! close ( ! day on :i* x 0 acquir$1 orig9at$1 or ent]$ into 7or su* o!r "t z ! ,secret>y may prescribe7 9 clause 7ii74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfdc4 ,modification ( ,,reit e>n+s & pr(its calculation to avoid duplicate taxation 7a7 ,e>n+s & pr(its n increas$ by am\nts all[$ 9 comput+ taxable income 9 prior ye>s 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #heg7;d7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,! e>n+s & pr(its ( a real e/ate inve/m5t tru/ = any taxable ye> 7b n its accumulat$ e>n+s7 %all n be r$uc$ by any am\nt :i*-- 7,a7 is n all[able 9 comput+ its taxable income = su* taxable ye>1 & 7,b7 0 n all[able 9 comput+ its taxable income = any prior taxable ye>4 4 7#b7 ,exception = purposes ( det]m9+ divid5ds paid d$uction ,p>agraph 7#a7 ( section #efb7;e71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7,a7 by /rik+ d$uction1 ! e>n+s & ins]t+ ! foll[+3 d$uction-- 7,a7 ! e>n+s 1 7,b7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7,c7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 section #heg7;d77#a7 %all be appli$ )\t reg>d to subp>agraph 7,b7 !re(4 4 7#c7 ,con=m+ am5dm5ts ,subsection 7d7 ( section #heg is am5d$ by add+ at ! end ! foll[+ new p>agraphs3 7#d7 ,real e/ate inve/m5t tru/ ,= purposes ( ?is subsection1 ! t]m real e/ate inve/m5t tru/ includes a dome/ic corporation1 tru/1 or association :i* is a real e/ate inve/m5t tru/ det]m9$ )\t reg>d to ! requirem5ts ( subsection 7a74 7#e7 ,special rules = det]m9+ e>n+s & pr(its = purposes ( ! d$uction = divid5ds paid ,= special rules = det]m9+ ! e>n+s & pr(its ( a real e/ate inve/m5t tru/ = purposes ( ! d$uction = divid5ds paid1 see section #efb7;e77#a74 4 7b7 ,treatm5t ( ga9 on sales ( real prop]ty ,subp>agraph 7,a7 ( section #efb7;e77#a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7,a7 ! e>n+s & pr(its ( su* tru/ = any taxable ye> 7b n its accumulat$ e>n+s7 %all be increas$ by ! am\nt ( ga9 7if any7 on ! sale or ex*ange ( real prop]ty :i* is tak5 into acc\nt 9 det]m9+ ! taxable income ( su* tru/ = su* taxable ye> 7& n o!rwise tak5 into acc\nt 9 det]m9+ su* e>n+s & pr(its71 & 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfdd4 ,r$uction 9 p]c5tage limitation on assets ( ,,reit :i* may be taxable ,,reit subsidi>ies 7a7 ,9 g5]al ,section #hef7;c77#d77;,b77ii7 is am5d$ by /rik+ #be p]c5t & ins]t+ #bj p]c5t4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #cfde4 ,treatm5t ( c]ta9 s]vices provid$ by taxable ,,reit subsidi>ies 7a7 ,taxable ,,reit subsidi>ies treat$ 9 same mann] z indep5d5t contractors = c]ta9 purposes 7#a7 ,m>ket+ & developm5t exp5ses "u r5tal prop]ty safe h>bor ,clause 7v7 ( section #heg7;b77#f77;,c7 is am5d$ by ins]t+ or by a taxable ,,reit subsidi>y be=e ! p]iod at ! end4 7#b7 ,=eclosure prop]ty grace p]iod ,subp>agraph 7,c7 ( section #hef7;e77#d7 is am5d$ by ins]t+ or ?r\gh a taxable ,,reit subsidi>y aft] receive any income4 7b7 ,tax on r$et]m9$ ,,trs s]vice income 7#a7 ,9 g5]al ,subp>agraph 7,a7 ( section #heg7;b77#g7 is am5d$ by /rik+ & excess int]e/ & ins]t+ excess int]e/1 & r$et]m9$ ,,trs s]vice income4 7#b7 ,r$et]m9$ ,,trs s]vice income ,p>agraph 7#g7 ( section #heg7;b7 is am5d$ by r$esignat+ subp>agraphs 7,e7 & 7,f7 z subp>agraphs 7,f7 & 7,g71 respectively1 & ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 ,r$et]m9$ ,,trs s]vice income 7i7 ,9 g5]al ,! t]m r$et]m9$ ,,trs s]vice income means gross income ( a taxable ,,reit subsidi>y ( a real e/ate inve/m5t tru/ attributable to s]vices provid$ to1 or on behalf (1 su* tru/ 7less d$uctions prop]ly allocable !reto7 to ! ext5t ! am\nt ( su* income 7less su* d$uctions7 w\ld 7b = subp>agraph 7,f77 be increas$ on di/ribution1 apportionm5t1 or allocation "u section #dhb4 7ii7 ,coord9ation ) r$et]m9$ r5ts ,clause 7i7 %all n apply ) respect to gross income attributable to s]vices furni%$ or r5d]$ to a t5ant ( ! real e/ate inve/m5t tru/ 7or to d$uctions prop]ly allocable !reto74 4 7#c7 ,con=m+ am5dm5ts ,subp>agraphs 7,b77i7 & 7,c7 ( section #heg7;b77#g7 are ea* am5d$ by /rik+ subp>agraph 7,e7 & ins]t+ subp>agraph 7,f74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cfdf4 ,/udy relat+ to taxable ,,reit subsidi>ies ,! ,secret>y ( ! ,treasury 7or ! ,secret>y's designee7 %all1 biannually-- 7#a7 conduct a /udy to det]m9e-- 7,a7 h[ _m taxable ,,reit subsidi>ies are 9 exi/5ce & ! aggregate am\nt ( taxes paid by su* subsidi>ies1 & 7,b7 ! am\nt by :i* transactions betwe5 a ,,reit & a taxable ,,reit subsidi>y r$uce taxable income ( ! taxable ,,reit subsidi>y 7:e!r or n su* transactions are conduct$ at arms l5g?71 & 7#b7 submit a report to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives & ! ,committee on ,f9ance ( ! ,s5ate describ+ ! results ( su* /udy4 #cfdg4 ,c corporation election to become1 or transf] assets to1 a ,,ric or ,,reit 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,o ( *apt] #a1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ section #ajfb z section #ajfc & by ins]t+ aft] section #ajfa ! foll[+ new section3 #ajfb4 ,recognition ( ga9 or loss ^u ,c corporation election to become1 or transf] assets to1 a regulat$ inve/m5t company or a real e/ate inve/m5t tru/ 7a7 ,9 g5]al ,if a ,c corporation elects to become a regulat$ inve/m5t company or a real e/ate inve/m5t tru/ = a taxable ye>1 su* corporation %all recognize ga9 or loss z if all its assets 7 sold by su* corporation at _! fair m>ket value imm$iately be=e ! close ( ! la/ taxable ye> be=e su* corporation becomes a regulat$ inve/m5t company or real e/ate inve/m5t tru/ 7z ! case may be74 7b7 ,application to transf]s ( assets ,9 ! case ( a ,c corporation :i* transf]s to a regulat$ inve/m5t company or a real e/ate inve/m5t tru/ "o or m assets ! basis ( :i* is det]m9$ 79 :ole or 9 "p7 by ref]5ce to ! basis ( su* asset or assets 9 ! h&s ( ! ,c corporation1 su* corporation %all recognize ga9 or loss z if su* assets 7 sold by su* corporation at _! fair m>ket value z ( ! end ( ! day be=e ! day ( ! transf]4 7c7 ,nonapplication to net loss ,subsections 7a7 & 7b7 %all n apply if _! application w\ld result 9 ! recognition ( a net loss4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m net loss means ! excess ( aggregate losses ov] aggregate ga9s 7includ+ items ( income7 )\t reg>d to "*4 7d7 ,basis adju/m5t ,if any asset is treat$ z sold "u subsection 7a7 or 7b71 ! basis ( su* asset imm$iately aft] su* deem$ sale %all be equal to ! fair m>ket value ( su* asset z det]m9$ "u su* subsection4 7e7 ,c corporation ,= purposes ( ?is section1 ! t]m ,c corporation does n include a regulat$ inve/m5t company or a real e/ate inve/m5t tru/4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$ by r$esignat+ ! item relat+ to section #ajfb z an item relat+ to section #ajfc & by ins]t+ aft] ! item relat+ to section #ajfa ! foll[+ new item3 ,sec4 #ajfb4 ,recognition ( ga9 or loss ^u ,c corporation election to become1 or transf] assets to1 a regulat$ inve/m5t company or a real e/ate inve/m5t tru/4 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to elections & transf]s on or aft] ,febru>y #bf1 #bjad4 #cfdh4 ,int]e/s 9 ,r,i,cs & ,r,e,i,ts n exclud$ f def9ition ( ,unit$ ,/ates real prop]ty int]e/s 7a7 ,9 g5]al ,section #hig7;c77#a77;,b7 is am5d$ by /rik+ & at ! end ( clause 7i71 by /rik+ ! p]iod at ! end ( clause 7ii77,,ii7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7iii7 nei!r su* corporation nor any pr$ecessor ( su* corporation 0 a regulat$ inve/m5t company or a real e/ate inve/m5t company at any "t dur+ ! p]iod describ$ 9 subp>agraph 7,a77ii74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjad4 #cfdi4 ,divid5ds d]iv$ f ,r,i,cs & ,r,e,i,ts ineligible = d$uction = ,unit$ ,/ates s\rce portion ( divid5ds f c]ta9 =eign corporations 7a7 ,9 g5]al ,section #bde7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ab7 ,divid5ds d]iv$ f ,r,i,cs & ,r,e,i,ts ineligible = d$uction ,regulat$ inve/m5t companies & real e/ate inve/m5t tru/s %all n be treat$ z dome/ic corporations = purposes ( p>agraph 7#e77;,b74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to divid5ds receiv$ f regulat$ inve/m5t companies & real e/ate inve/m5t tru/s on or aft] ,febru>y #bf1 #bjad4 #d ,p]sonal hold+ companies #cffa4 ,exclusion ( divid5ds f controll$ =eign corporations f ! def9ition ( p]sonal hold+ company income = purposes ( ! p]sonal hold+ company rules 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #edc7;a7 is am5d$-- 7#a7 by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,d7 & 7,e71 respectively1 & 7#b7 by ins]t+ aft] subp>agraph 7,b7 ! foll[+3 7,c7 divid5ds receiv$ by a ,unit$ ,/ates %>ehold] 7z def9$ 9 section #iea7;b77 f a controll$ =eign corporation 7z def9$ 9 section #ieg7;a771 4 7b7 ,effective date ,! am5dm5ts made by ?is ,act %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,h ,taxation ( =eign p]sons #cgja4 ,prev5tion ( avoidance ( tax ?r\gh re9surance ) non-tax$ affiliates 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #hdi4 ,special rules = re9surance ( non-life contracts ) non-tax$ affiliates 7a7 ,9 g5]al ,! taxable income "u section #hca7;a7 or ! life insurance company taxable income "u section #hja7;b7 7z ! case may be7 ( an insurance company %all be det]m9$ by n tak+ into acc\nt-- 7#a7 any non-tax$ re9surance premium1 7#b7 any additional am\nt paid by su* insurance company ) respect to ! re9surance = :i* su* non-tax$ re9surance premium is paid1 to ! ext5t su* additional am\nt is prop]ly allocable to su* non-tax$ re9surance premium1 & 7#c7 any return premium1 c$+ commission1 re9surance recov]$1 or o!r am\nt receiv$ by su* insurance company ) respect to ! re9surance = :i* su* non-tax$ re9surance premium is paid1 to ! ext5t su* return premium1 c$+ commission1 re9surance recov]$1 or o!r am\nt is prop]ly allocable to su* non-tax$ re9surance premium4 7b7 ,non-,tax$ re9surance premiums ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m non-tax$ re9surance premium means any re9surance premium paid directly or indirectly to an affiliat$ corporation ) respect to re9surance ( risks 7o!r ?an except$ risks71 to ! ext5t t ! income attributable to ! premium is n subject to tax "u ?is subtitle 7ei!r z ! income ( ! affiliat$ corporation or z am\nts includ$ 9 gross income by a ,unit$ ,/ates %>ehold] "u section #iea74 7#b7 ,except$ risks ,! t]m except$ risks means any risk ) respect to :i* res]ves describ$ 9 section #haf7;b77#a7 are e/abli%$4 7c7 ,affiliat$ corporations ,= purposes ( ?is section1 a corporation %all be treat$ z affiliat$ ) an insurance company if bo? corporations w\ld be memb]s ( ! same controll$ gr\p ( corporations 7z def9$ 9 section #aefc7;a77 if section #aefc 7 appli$-- 7#a7 by sub/itut+ at lea/ #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s 9 subsection 7a77#a71 & 7#b7 )\t reg>d to subsections 7a77#d71 7b77#b77;,c71 7b77#b77;,d71 & 7e77#c77;,c74 7d7 ,election ,to treat re9surance income z effectively connect$ 7#a7 ,9 g5]al ,a specifi$ affiliat$ corporation may elect = any taxable ye> to treat specifi$ re9surance income z-- 7,a7 income effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates1 & 7,b7 = purposes ( any treaty betwe5 ! ,unit$ ,/ates & any =eign c\ntry1 income attributable to a p]man5t e/abli%m5t 9 ! ,unit$ ,/ates4 7#b7 ,effect ( election ,9 ! case ( any specifi$ re9surance income ) respect to :i* ! election "u ?is subsection applies-- 7,a7 ,d$uction all[$ = re9surance premiums ,= exemption f subsection 7a71 see def9ition ( non-tax$ re9surance premiums 9 subsection 7b74 7,b7 ,exception f excise tax ,! tax impos$ by section #dcga %all n apply ) respect to any income treat$ z effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates "u p>agraph 7#a74 7,c7 ,taxation "u ?is sub*apt] ,su* income %all be subject to tax "u ?is sub*apt] to ! same ext5t & 9 ! same mann] z if su* income 7 ! income ( a dome/ic insurance company4 7,d7 ,coord9ation ) =eign tax cr$it provisions ,= purposes ( subp>t ,a ( "p ,,iii ( sub*apt] ,n & sections #gh & #ifj-- 7i7 su* specifi$ re9surance income %all be treat$ z d]iv$ f s\rces )\t ! ,unit$ ,/ates1 & 7ii7 subsections 7a71 7b71 & 7c7 ( section #ijd1 & section #ifj1 %all be appli$ sep>ately ) respect to ea* item ( su* income4 ,! ,secret>y may issue regulations or o!r guidance :i* provide t relat$ items ( specifi$ re9surance income may be aggregat$ = purposes ( apply+ clause 7ii74 7#c7 ,specifi$ affiliat$ corporation ,= purposes ( ?is subsection1 ! t]m specifi$ affiliat$ corporation means any affiliat$ corporation :i* is a =eign corporation & :i* meets su* requirem5ts z ! ,secret>y %all prescribe to ensure t tax on ! specifi$ re9surance income ( su* corporation is prop]ly det]m9$ & paid4 7#d7 ,specifi$ re9surance income ,= purposes ( ?is p>agraph1 ! t]m specifi$ re9surance income means all income ( a specifi$ affiliat$ corporation :i* is attributable to re9surance ) respect to :i* subsection 7a7 w\ld 7b = ! election "u ?is subsection7 apply4 7#e7 ,rules relat$ to election ,any election "u p>agraph 7#a7 %all-- 7,a7 be made at su* "t & 9 su* =m & mann] z ! ,secret>y may provide1 & 7,b7 apply = ! taxable ye> = :i* made & all subsequ5t taxable ye>s unless revok$ ) ! cons5t ( ! ,secret>y4 7e7 ,exception = am\nts subject to =eign tax ,an am\nt %all n be treat$ z describ$ 9 p>agraph 7#a71 7#b71 or 7#c7 ( subsection 7a7 if ! taxpay] demon/rates to ! satisfaction ( ! ,secret>y t su* am\nt 0 subject to an effective rate ( income tax impos$ by a =eign c\ntry :i* is n less ?an #ajj p]c5t ( ! maximum rate ( tax specifi$ 9 section #aa4 7f7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be appropriate to c>ry out1 or to prev5t ! avoidance ( ! purposes (1 ?is section1 includ+ regulations or o!r guidance :i* provide = ! application ( ?is section to alt]native re9surance transactions1 front+ transactions1 conduit & reciprocal transactions1 & any economically equival5t transactions4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #hdi4 ,special rules = re9surance ( non-life contracts ) non-tax$ affiliates4 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cgjb4 ,taxation ( pass5g] cruise gross income ( =eign corporations & nonresid5t ali5 individuals 7a7 ,9 g5]al ,section #hhb is am5d$ by r$esignat+ subsection 7f7 z subsection 7g7 & by ins]t+ aft] subsection 7e7 ! foll[+ new subsection3 7f7 ,treatm5t ( pass5g] cruise gross income 7#a7 ,9 g5]al ,= purposes ( ?is title1 ! effectively connect$ pass5g] cruise gross income ( a =eign corporation %all be treat$ z gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates4 7#b7 ,effectively connect$ pass5g] cruise gross income ,= purposes ( ?is subsection1 ! t]m effectively connect$ pass5g] cruise gross income means1 ) respect to ! op]ation ( any %ip 9 a cov]$ voyage1 ! ,unit$ ,/ates t]ritorial wat]s p]c5tage ( ! gross income 7det]m9$ )\t reg>d to section #hhc7;a77#a77 d]iv$ f su* op]ation1 includ+ any am\nt receiv$ ) respect to ! provision ( any on- or (f-bo>d activities1 s]vices1 or sales1 ) respect to pass5g]s incid5tal to su* op]ation 7or ) respect to any agreem5t ) any p]son ) respect to ! provision ( any su* activities1 s]vices1 or sales74 7#c7 ,unit$ ,/ates t]ritorial wat]s p]c5tage ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,unit$ ,/ates t]ritorial wat]s p]c5tage means1 ) respect to ! op]ation ( any %ip 9 any cov]$ voyage1 ! ratio 7express$ z a p]c5tage7 (-- 7i7 ! numb] ( days dur+ su* voyage su* %ip 0 op]at$ 9 ! t]ritorial wat]s ( ! ,unit$ ,/ates1 divid$ by 7ii7 ! total numb] ( days ( su* voyage4 7,b7 ,cal5d> day rule ,if a %ip-- 7i7 is op]at$ 9 a cov]$ voyage1 or 7ii7 is op]at$ 9 ! t]ritorial wat]s ( ! ,unit$ ,/ates dur+ a cov]$ voyage1 = any portion ( a cal5d> day1 su* %ip %all be treat$ z hav+ op]at$ 9 a cov]$ voyage1 or z hav+ op]at$ 9 su* t]ritorial wat]s1 respectively1 = ! entirety ( su* day4 7,c7 ,t]ritorial wat]s ,! t]ritorial wat]s ( ! ,unit$ ,/ates %all be treat$ z consi/+ ( ^? wat]s :i* are-- 7i7 )9 ! int]national b\nd>y l9e betwe5 ! ,unit$ ,/ates & any contigu\s =eign c\ntry1 or 7ii7 )9 #ab nautical miles f l[ tide on ! coa/l9e ( ! ,unit$ ,/ates4 7#d7 ,cov]$ voyage ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m cov]$ voyage has ! mean+ giv5 su* t]m by section #ddgb7a74 7,b7 ,anti-abuse rule ,except z o!rwise provid$ by ! ,secret>y1 if pass5g]s emb>k a %ip 9 ! ,unit$ ,/ates & m ?an #aj p]c5t ( su* pass5g]s disemb>k 9 ! ,unit$ ,/ates1 ! op]ation ( su* %ip at all times betwe5 su* ev5ts %all be treat$ z a cov]$ voyage4 ,no?+ 9 ! prec$+ s5t5ce %all preclude any op]ation ( a %ip 7includ+ any op]ation ( a %ip be=e or aft] su* ev5ts7 :i* w\ld o!rwise be treat$ z "p ( a cov]$ voyage f be+ s treat$4 7#e7 ,treatm5t ( o!rwise effectively connect$ income ,gross income :i* w\ld1 )\t reg>d to ?is subsection1 be gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates-- 7,a7 %all be s treat$1 & 7,b7 %all n be tak5 into acc\nt z gross income "u p>agraph 7#b74 4 7b7 ,application to nonresid5t ali5 individuals ,section #hga is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,treatm5t ( pass5g] cruise gross income 7#a7 ,9 g5]al ,= purposes ( ?is title1 ! effectively connect$ pass5g] cruise gross income ( a nonresid5t ali5 individual %all be treat$ z gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates4 7#b7 ,def9itions & special rules ,= purposes ( ?is subsection-- 7,a7 ,def9itions ,t]ms us$ 9 ?is subsection :i* are also us$ 9 section #hhb7;f7 %all h ! same mean+ z :5 us$ 9 su* section1 except t section #hhb7;f77#b7 %all be appli$ by sub/itut+ section #hgb7;b77#a7 = section #hhc7;a77#a74 7,b7 ,treatm5t ( o!rwise effectively connect$ income ,rules simil> to ! rules ( section #hhb7;f77#e7 %all apply = purposes ( ?is subsection4 4 7c7 ,coord9ation ) reciprocal exemptions = %ipp+ income 7#a7 ,9 g5]al ,section #hhc7;a77#a7 is am5d$ by /rik+ ,gross income & ins]t+ ,except z provid$ 9 section #hhb7;f71 gross income4 7#b7 ,nonresid5t ali5 individuals ,section #hgb7;b77#a7 is am5d$ by /rik+ ,gross income & ins]t+ ,except z provid$ 9 section #hga7n71 gross income4 7d7 ,coord9ation ) tax on gross transportation income ,section #hhg7;b77#d7 is am5d$ by add+ at ! end ! foll[+ new flu% text3 ,! prec$+ s5t5ce %all n apply to any ,unit$ ,/ates s\rce gross transportation income :i* is effectively connect$ pass5g] cruise gross income 7)9 ! mean+ ( section #hga7n7 or #hhb7;f774 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cgjc4 ,re/riction on insurance bus9ess exception to passive =eign inve/m5t company rules 7a7 ,9 g5]al ,section #abig7;b77#b77;,b7 is am5d$ to read z foll[s3 7,b7 d]iv$ 9 ! active conduct ( an insurance bus9ess by a corporation if-- 7i7 su* corporation w\ld be subject to tax "u sub*apt] ,l if su* corporation 7 a dome/ic corporation1 7ii7 m ?an #ej p]c5t ( su* corporation's gross receipts = ! taxable ye> consi/ ( premiums1 & 7iii7 ! applicable insurance liabilities ( su* corporation con/itute m ?an #ce p]c5t ( its total assets z report$ on ! corporation's applicable f9ancial /atem5t = ! ye> ) :i* or 9 :i* ! taxable ye> ends1 4 7b7 ,applicable insurance liabilities2 applicable f9ancial /atem5t 7#a7 ,9 g5]al ,section #abig7;b7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,applicable insurance liabilities ,! t]m applicable insurance liabilities means1 ) respect to any life or prop]ty & casualty insurance bus9ess-- 7i7 loss & loss adju/m5t exp5ses1 7ii7 une>n$ premiums1 & 7iii7 res]ves 7o!r ?an defici5cy or cont+5cy res]ves7 = life & heal? insurance risks & life & heal? insurance claims ) respect to contracts provid+ cov]age = mortality or morbidity risks 7n to exce$ ! am\nt ( su* res]ve t is requir$ to be report$ to ! home c\ntry insurance regulatory body74 7,b7 ,applicable f9ancial /atem5t ,! t]m applicable f9ancial /atem5t means a /atem5t = f9ancial report+ purposes :i*-- 7i7 is made on ! basis ( g5]ally accept$ acc\nt+ pr9ciples1 7ii7 is made on ! basis ( int]national f9ancial report+ /&>ds1 b only if !re is no /atem5t t meets ! requirem5t ( clause 7i71 or 7iii7 except z o!rwise provid$ by ! ,secret>y 9 regulations1 is ! annual /atem5t :i* is requir$ to be fil$ ) ! home c\ntry insurance regulatory body1 b only if !re is no /atem5t :i* meets ! requirem5ts ( clause 7i7 or 7ii74 4 7#b7 ,con=m+ am5dm5t ,section #abig7;b7 is am5d$-- 7,a7 by /rik+ ! la/ s5t5ce 9 p>agraph 7#b7 !re(1 & 7,b7 by add+ at ! end ( p>agraph 7#c7 !re( 7z add$ by p>agraph 7#a771 ! foll[+ new subp>agraph3 7,c7 ,relat$ p]son ,! t]m relat$ p]son has ! mean+ giv5 su* t]m by section #ied7;d77#c7 det]m9$ by sub/itut+ =eign corporation = controll$ =eign corporation ea* place x appe>s !re94 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cgjd4 ,modification ( limitation on e>n+s /ripp+ 7a7 ,9 g5]al ,section #afc7;j77#b77;,b77i77,,ii7 is am5d$ by /rik+ #ej p]c5t & ins]t+ #dj p]c5t4 7b7 ,no new excess limitation c>ry=w>ds ,section #afc7;j77#b77;,b77ii7 is am5d$ by /rik+ = any taxable ye> & ins]t+ = any taxable ye> beg9n+ be=e ,janu>y #a1 #bjae4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #cgje4 ,limitation on treaty b5efits = c]ta9 d$uctible paym5ts 7a7 ,9 g5]al ,section #hid ( ! ,int]nal ,rev5ue ,code ( #aihf 7relat+ to income affect$ by treaty7 is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,limitation on treaty b5efits = c]ta9 d$uctible paym5ts 7#a7 ,9 g5]al ,9 ! case ( any d$uctible relat$-p>ty paym5t1 any )hold+ tax impos$ "u *apt] #c 7& any tax impos$ "u subp>t ,a or ,b ( ?is "p7 ) respect to su* paym5t may n be r$uc$ "u any treaty ( ! ,unit$ ,/ates unless any su* )hold+ tax w\ld be r$uc$ "u a treaty ( ! ,unit$ ,/ates if su* paym5t 7 made directly to ! =eign p>5t corporation4 7#b7 ,d$uctible relat$-p>ty paym5t ,= purposes ( ?is subsection1 ! t]m d$uctible relat$-p>ty paym5t means any paym5t made1 directly or indirectly1 by any p]son to any o!r p]son if ! paym5t is all[able z a d$uction "u ?is *apt] & bo? p]sons are memb]s ( ! same =eign controll$ gr\p ( entities4 7#c7 ,=eign controll$ gr\p ( entities ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m =eign controll$ gr\p ( entities means a controll$ gr\p ( entities ! common p>5t ( :i* is a =eign corporation4 7,b7 ,controll$ gr\p ( entities ,! t]m controll$ gr\p ( entities means a controll$ gr\p ( corporations z def9$ 9 section #aefc7;a77#a71 except t-- 7i7 m ?an #ej p]c5t %all be sub/itut$ = at lea/ #hj p]c5t ea* place x appe>s !re91 & 7ii7 ! det]m9ation %all be made )\t reg>d to subsections 7a77#d7 & 7b77#b7 ( section #aefc4 ,a p>tn]%ip or any o!r entity 7o!r ?an a corporation7 %all be treat$ z a memb] ( a controll$ gr\p ( entities if su* entity is controll$ 7)9 ! mean+ ( section #ied7;d77#c77 by memb]s ( su* gr\p 7includ+ any entity treat$ z a memb] ( su* gr\p by reason ( ?is s5t5ce74 7#d7 ,=eign p>5t corporation ,= purposes ( ?is subsection1 ! t]m =eign p>5t corporation means1 ) respect to any d$uctible relat$-p>ty paym5t1 ! common p>5t ( ! =eign controll$ gr\p ( entities ref]r$ to 9 p>agraph 7#c77;,a74 7#e7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z are necess>y or appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance :i* provide =-- 7,a7 ! treatm5t ( two or m p]sons z memb]s ( a =eign controll$ gr\p ( entities if su* p]sons w\ld be ! common p>5t ( su* gr\p if treat$ z "o corporation1 & 7,b7 ! treatm5t ( any memb] ( a =eign controll$ gr\p ( entities z ! common p>5t ( su* gr\p if su* treatm5t is appropriate tak+ into acc\nt ! economic relation%ips among su* entities4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to paym5ts made aft] ! date ( ! enactm5t ( ?is ,act4 ,i ,provisions relat$ to comp5sation #a ,executive comp5sation #chja4 ,nonqualifi$ def]r$ comp5sation 7a7 ,9 g5]al ,subp>t ,a ( "p ,i ( sub*apt] ,d ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #dji;,b4 ,nonqualifi$ def]r$ comp5sation 7a7 ,9 g5]al ,any comp5sation :i* is def]r$ "u a nonqualifi$ def]r$ comp5sation plan %all be includible 9 gross income :5 !re is no sub/antial risk ( =feiture ( ! rights to su* comp5sation4 7b7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,sub/antial risk ( =feiture ,! rights ( a p]son to comp5sation %all be treat$ z subject to a sub/antial risk ( =feiture only if su* p]son's rights to su* comp5sation are condition$ ^u ! future p]=mance ( sub/antial s]vices by any individual4 7#b7 ,nonqualifi$ def]r$ comp5sation plan ,= purposes ( ?is section3 7,a7 ,nonqualifi$ def]r$ comp5sation plan ,! t]m nonqualifi$ def]r$ comp5sation plan means any plan t provides = ! def]ral ( comp5sation1 o!r ?an-- 7i7 a qualifi$ employ] plan1 7ii7 any bona fide vacation leave1 sick leave1 comp5satory "t1 disability pay1 or dea? b5efit plan1 & 7iii7 any o!r plan or arrangem5t designat$ by ! ,secret>y consi/5t ) ! purposes ( ?is section4 7,b7 ,equity-bas$ comp5sation ,! t]m nonqualifi$ def]r$ comp5sation plan %all include any plan t provides a "r to comp5sation bas$ on ! appreciation 9 value ( a specifi$ numb] ( equity units ( ! s]vice recipi5t or /ock options4 7#c7 ,qualifi$ employ] plan ,! t]m qualifi$ employ] plan means any plan1 contract1 p5sion1 acc\nt1 or tru/ describ$ 9 #djh7p77#b77;,d77ii74 7#d7 ,plan includes arrangem5ts1 etc ,! t]m plan includes any agreem5t or arrangem5t1 includ+ an agreem5t or arrangem5t t includes "o p]son4 7#e7 ,exception ,comp5sation %all n be treat$ z def]r$ = purposes ( ?is section if ! s]vice provid] receives paym5t ( su* comp5sation n lat] ?an #f mon?s aft] ! end ( ! taxable ye> ( ! s]vice recipi5t dur+ :i* ! "r to ! paym5t ( su* comp5sation is no long] subject to a sub/antial risk ( =feiture4 7#f7 ,treatm5t ( e>n+s ,ref]5ces to def]r$ comp5sation %all be treat$ z includ+ ref]5ces to income 7:e!r actual or notional7 attributable to su* comp5sation or su* income4 7#g7 ,aggregation rules ,except z provid$ by ! ,secret>y1 rules simil> to ! rules ( subsections 7b7 & 7c7 ( section #dad %all apply4 7c7 ,no inf]5ce on e>li] income inclusion or requirem5t ( lat] inclusion ,no?+ 9 ?is section %all be con/ru$ to prev5t ! inclusion ( am\nts 9 gross income "u any o!r provision ( ?is *apt] or any o!r rule ( law e>li] ?an ! "t provid$ 9 ?is section4 ,any am\nt includ$ 9 gross income "u ?is section %all n be requir$ to be includ$ 9 gross income "u any o!r provision ( ?is *apt] or any o!r rule ( law lat] ?an ! "t provid$ 9 ?is section4 7d7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations disreg>d+ a sub/antial risk ( =feiture 9 cases :]e necess>y to c>ry out ! purposes ( ?is section4 4 7b7 ,t]m9ation ( c]ta9 o!r nonqualifi$ def]r$ comp5sation rules 7#a7 ,nonqualifi$ def]r$ comp5sation 7,a7 ,9 g5]al ,subp>t ,a ( "p ,i ( sub*apt] ,d ( *apt] #a is am5d$ by /rik+ section #dji;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7,b7 ,con=m+ am5dm5ts 7i7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,v74 7ii7 ,section #cdja7;a7 is am5d$ by /rik+ ! flu% s5t5ce at ! end4 7iii7 ,section #fjda is am5d$ by /rik+ subsection 7g74 7iv7 ,section #fjea7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#ab71 by ins]t+ & at ! end ( p>agraph 7#aa71 & by r$esignat+ p>agraph 7#ac7 z p>agraph 7#ab74 7#b7 #deg7;b7 plans ( tax exempt organizations ,section #deg is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,t]m9ation ( c]ta9 plans 7#a7 ,tax-exempt organization plans ,?is section %all n apply to am\nts def]r$ :i* are attributable to s]vices p]=m$ aft] ,decemb] #ca1 #bjad1 "u a plan ma9ta9$ by an employ] describ$ 9 subsection 7e77#a77;,b74 7#b7 ,ineligible def]r$ comp5sation plans ,subsection 7f7 %all n apply to am\nts def]r$ :i* are attributable to s]vices p]=m$ aft] ,decemb] #ca1 #bjad4 4 7#c7 ,nonqualifi$ def]r$ comp5sation f c]ta9 tax indiff]5t p>ties 7,a7 ,9 g5]al ,subp>t ,b ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ section #deg;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7,b7 ,con=m+ am5dm5t ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,x74 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,i ( sub*apt] ,d ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #dji;,b4 ,nonqualifi$ def]r$ comp5sation4 4 7d7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to am\nts :i* are attributable to s]vices p]=m$ aft] ,decemb] #ca1 #bjad4 7#b7 ,application to exi/+ def]rals ,9 ! case ( any am\nt def]r$ to :i* ! am5dm5ts made by ?is section d no apply solely by reason ( ! fact t ! am\nt is attributable to s]vices p]=m$ be=e ,janu>y #a1 #bjae1 to ! ext5t su* am\nt is n includible 9 gross income 9 a taxable ye> beg9n+ be=e #bjbc1 su* am\nts %all be includible 9 gross income 9 ! lat] (-- 7,a7 ! la/ taxable ye> beg9n+ be=e #bjbc1 or 7,b7 ! taxable ye> 9 :i* !re is no sub/antial risk ( =feiture ( ! rights to su* comp5sation 7det]m9$ 9 ! same mann] z det]m9$ = purposes ( section #dji;,b ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is section74 7#c7 ,accel]at$ paym5ts ,no lat] ?an #abj days aft] ! date ( ! enactm5t ( ?is ,act1 ! ,secret>y %all issue guidance provid+ a limit$ p]iod ( "t dur+ :i* a nonqualifi$ def]r$ comp5sation arrangem5t attributable to s]vices p]=m$ on or be=e ,decemb] #ca1 #bjad1 may1 )\t violat+ ! requirem5ts ( section #dji;,a ( ! ,int]nal ,rev5ue ,code ( #aihf1 be am5d$ to con=m ! date ( di/ribution to ! date ! am\nts are requir$ to be includ$ 9 income4 7#d7 ,c]ta9 back-to-back arrangem5ts ,if ! taxpay] is also a s]vice recipi5t & ma9ta9s "o or m nonqualifi$ def]r$ comp5sation arrangem5ts = its s]vice provid]s "u :i* any am\nt is attributable to s]vices p]=m$ on or be=e ,decemb] #ca1 #bjad1 ! guidance issu$ "u p>agraph 7#c7 %all p]mit su* arrangem5ts to be am5d$ to con=m ! dates ( di/ribution "u su* arrangem5t to ! date am\nts are requir$ to be includ$ 9 ! income ( su* taxpay] "u ?is subsection4 7#e7 ,accel]at$ paym5t n treat$ z mat]ial modification ,any am5dm5t to a nonqualifi$ def]r$ comp5sation arrangem5t made pursuant to p>agraph 7#c7 or 7#d7 %all n be treat$ z a mat]ial modification ( ! arrangem5t = purposes ( section #dji;,a ( ! ,int]nal ,rev5ue ,code ( #aihf4 #chjb4 ,modification ( limitation on excessive employee remun]ation 7a7 ,repeal ( p]=mance-,bas$ comp5sation & commission exceptions = limitation on excessive employee remun]ation 7#a7 ,9 g5]al ,p>agraph 7#d7 ( section #afb7m7 is am5d$ by /rik+ subp>agraphs 7,b7 & 7,c7 & by r$esignat+ subp>agraphs 7,d71 7,e71 7,f71 & 7,g7 z subp>agraphs 7,b71 7,c71 7,d71 & 7,e71 respectively4 7#b7 ,con=m+ am5dm5ts 7,a7 ,p>agraphs 7#e77;,e7 & 7#f77;,d7 ( section #afb7m7 are ea* am5d$ by /rik+ subp>agraphs 7,b71 7,c71 & 7,d7 & ins]t+ subp>agraph 7,b74 7,b7 ,p>agraphs 7#e77;,g7 & 7#f77;,g7 ( section #afb7m7 are ea* am5d$ by /rik+ 7,f7 & 7,g7 & ins]t+ 7,d7 & 7,e74 7b7 ,modification ( def9ition ( cov]$ employees ,p>agraph 7#c7 ( section #afb7m7 is am5d$-- 7#a7 9 subp>agraph 7,a71 by /rik+ z ( ! close ( ! taxable ye>1 su* employee is ! *ief executive (fic] ( ! taxpay] or is & ins]t+ su* employee is ! *ief executive (fic] or ! *ief f9ancial (fic] ( ! taxpay] at any "t dur+ ! taxable ye>1 or 01 7#b7 9 subp>agraph 7,b7-- 7,a7 by /rik+ #d & ins]t+ #c1 & 7,b7 by /rik+ 7o!r ?an ! *ief executive (fic]7 & ins]t+ 7o!r ?an any individual describ$ 9 subp>agraph 7,a771 & 7#c7 by /rik+ or at ! end ( subp>agraph 7,a71 by /rik+ ! p]iod at ! end ( subp>agraph 7,b7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+3 7,c7 0 a cov]$ employee ( ! taxpay] 7or any pr$ecessor7 = any prec$+ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjac4 4 7c7 ,special rule = remun]ation paid to b5efici>ies1 etc ,p>agraph 7#d7 ( section #afb7m71 z am5d$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,special rule = remun]ation paid to b5efici>ies1 etc ,remun]ation %all n fail to be applicable employee remun]ation m]ely because x is includible 9 ! income (1 or paid to1 a p]son o!r ?an ! cov]$ employee1 includ+ aft] ! dea? ( ! cov]$ employee4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #chjc4 ,excise tax on excess tax-exempt organization executive comp5sation 7a7 ,9 g5]al ,sub*apt] ,d ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new section3 #difj4 ,tax on excess tax-exempt organization executive comp5sation 7a7 ,tax impos$ ,!re is h]eby impos$ a tax equal to #be p]c5t ( ! sum (-- 7#a7 s mu* ( ! remun]ation paid 7o!r ?an any excess p>a*ute paym5t7 by an applicable tax-exempt organization = ! taxable ye> ) respect to employm5t ( any cov]$ employee 9 excess ( #a1jjj1jjj1 plus 7#b7 any excess p>a*ute paym5t paid by su* an organization to any cov]$ employee4 7b7 ,liability = tax ,! employ] %all be liable = ! tax impos$ "u subsection 7a74 7c7 ,def9itions & special rules ,= purposes ( ?is section-- 7#a7 ,applicable tax-exempt organization ,! t]m applicable tax-exempt organization means any organization t = ! taxable ye>-- 7,a7 is exempt f taxation "u section #eja7;a71 7,b7 is a f>m]s' coop]ative organization describ$ 9 section #eba7;b77#a71 or 7,c7 has income exclud$ f taxation "u section #aae7a74 7#b7 ,cov]$ employee ,= purposes ( ?is section1 ! t]m cov]$ employee means any employee 7includ+ any =m] employee7 ( an applicable tax-exempt organization if ! employee-- 7,a7 is "o ( ! #e highe/ comp5sat$ employees ( ! organization = ! taxable ye>1 or 7,b7 0 a cov]$ employee ( ! organization 7or any pr$ecessor7 = any prec$+ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjac4 7#c7 ,remun]ation ,= purposes ( ?is section1 ! t]m remun]ation means wages 7z def9$ 9 section #cdja7;a771 except t su* t]m %all n include any designat$ ,ro? contribution 7z def9$ 9 section #djb;,a7c774 7#d7 ,remun]ation f relat$ organizations 7,a7 ,9 g5]al ,remun]ation ( a cov]$ employee by an applicable tax-exempt organization %all include any remun]ation paid ) respect to employm5t ( su* employee by any relat$ p]son or gov]nm5tal entity4 7,b7 ,relat$ organizations ,a p]son or gov]nm5tal entity %all be treat$ z relat$ to an applicable tax-exempt organization if su* p]son or gov]nm5tal entity-- 7i7 controls1 or is controll$ by1 ! organization1 7ii7 is controll$ by "o or m p]sons t control ! organization1 7iii7 is a support$ organization 7z def9$ 9 section #eji7;f77#b77 dur+ ! taxable ye> ) respect to ! organization1 7iv7 is a support+ organization describ$ 9 section #eji7;a77#c7 dur+ ! taxable ye> ) respect to ! organization1 or 7v7 9 ! case ( an organization t is a volunt>y employees' b5efici>y association describ$ 9 section #eja7;a77#i71 e/abli%es1 ma9ta9s1 or makes contributions to su* volunt>y employees' b5efici>y association4 7,c7 ,liability = tax ,9 any case 9 :i* remun]ation f m ?an "o employ] is tak5 into acc\nt "u ?is p>agraph 9 det]m9+ ! tax impos$ by subsection 7a71 ea* su* employ] %all be liable = su* tax 9 an am\nt :i* be>s ! same ratio to ! total tax det]m9$ "u subsection 7a7 ) respect to su* remun]ation z-- 7i7 ! am\nt ( remun]ation paid by su* employ] ) respect to su* employee1 be>s to 7ii7 ! am\nt ( remun]ation paid by all su* employ]s to su* employee4 7#e7 ,excess p>a*ute paym5t ,= purposes det]m9+ ! tax impos$ by subsection 7a77#b7-- 7,a7 ,9 g5]al ,! t]m excess p>a*ute paym5t means an am\nt equal to ! excess ( any p>a*ute paym5t ov] ! portion ( ! base am\nt allocat$ to su* paym5t4 7,b7 ,p>a*ute paym5t ,! t]m p>a*ute paym5t means any paym5t 9 ! nature ( comp5sation to 7or = ! b5efit (7 a cov]$ employee if-- 7i7 su* paym5t is cont+5t on su* employee's sep>ation f employm5t ) ! employ]1 & 7ii7 ! aggregate pres5t value ( ! paym5ts 9 ! nature ( comp5sation to 7or = ! b5efit (7 su* individual :i* are cont+5t on su* sep>ation equals or exce$s an am\nt equal to #c times ! base am\nt4 ,su* t]m does n include any paym5t describ$ 9 section #bhj;,g7b77#f7 7relat+ to exemption = paym5ts "u qualifi$ plans7 or any paym5t made "u or to an annuity contract describ$ 9 section #djc7;b7 or a plan describ$ 9 section #deg7;b74 7,c7 ,base am\nt ,rules simil> to ! rules ( #bhj;,g7b77#c7 %all apply = purposes ( det]m9+ ! base am\nt4 7,d7 ,prop]ty transf]s2 pres5t value ,rules simil> to ! rules ( p>agraphs 7#c7 & 7#d7 ( section #bhj;,g7d7 %all apply4 7#f7 ,coord9ation ) d$uction limitation ,remun]ation ! d$uction = :i* is n all[$ by reason ( section #afb7m7 %all n be tak5 into acc\nt = purposes ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = sub*apt] ,d ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #difj4 ,tax on excess exempt organization executive comp5sation4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #chjd4 ,d5ial ( d$uction z rese>* exp5diture = /ock transf]r$ pursuant to an inc5tive /ock option 7a7 ,9 g5]al ,p>agraph 7#b7 ( section #dba7;a7 is am5d$ by /rik+ "u section #afb 7relat+ to trade or bus9ess exp5ses74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to /ock transf]r$ on or aft] ,febru>y #bf1 #bjad4 #b ,work] classification #chaa4 ,det]m9ation ( work] classification 7a7 ,9 g5]al ,*apt] #gi1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new section3 #ggjg4 ,det]m9ation ( work] classification 7a7 ,9 g5]al ,= purposes ( ?is title 7& not)/&+ any provision ( ?is title n conta9$ 9 ?is section to ! contr>y71 if ! requirem5ts ( subsections 7b71 7c71 & 7d7 are met ) respect to any s]vice p]=m$ by a s]vice provid]1 !n ) respect to su* s]vice-- 7#a7 ! s]vice provid] %all n be treat$ z an employee1 7#b7 ! s]vice recipi5t %all n be treat$ z an employ]1 7#c7 any payor %all n be treat$ z an employ]1 & 7#d7 ! comp5sation paid or receiv$ = su* s]vice %all n be treat$ z paid or receiv$ ) respect to employm5t4 7b7 ,g5]al s]vice provid] requirem5ts 7#a7 ,9 g5]al ,! requirem5ts ( ?is subsection are met ) respect to any s]vice if ! s]vice provid] ei!r-- 7,a7 meets ! requirem5ts ( p>agraph 7#b7 ) respect to su* s]vice1 or 7,b7 9 ! case a s]vice provid] engag$ 9 ! trade or bus9ess ( sell+ 7or solicit+ ! sale (7 goods or s]vices1 meets ! requirem5ts ( p>agraph 7#c7 ) respect to su* s]vice4 7#b7 ,g5]al requirem5ts ,! requirem5ts ( ?is p>agraph are met ) respect to any s]vice if ! s]vice provid]1 9 connection ) p]=m+ ! s]vice-- 7,a7 incurs significant unreimburs$ exp5ses1 7,b7 agrees to p]=m ! s]vice = a p>ticul> am\nt ( "t1 to a*ieve a specific result1 or to complete a specific task1 7,c7 is prim>ily comp5sat$ on a basis n ti$ to ! numb] ( h\rs work$1 & 7,d7 at lea/ "o ( ! foll[+3 7i7 has a significant inve/m5t 9 assets or tra9+1 7ii7 is n requir$ to p]=m s]vices exclusively = ! s]vice recipi5t1 or 7iii7 has n p]=m$ s]vices = ! s]vice recipi5t z an employee dur+ ! #a-ye> p]iod end+ ) ! date ( ! comm5cem5t ( s]vices "u ! contract describ$ 9 subsection 7d74 7#c7 ,alt]native requirem5ts ) respect to sales p]sons ,9 ! case ( a s]vice provid] engag$ 9 ! trade or bus9ess ( sell+ 7or solicit+ ! sale (7 goods or s]vices1 ! requirem5ts ( ?is p>agraph are met ) respect to any s]vice provid$ 9 ! ord9>y c\rse ( su* trade or bus9ess if-- 7,a7 ! s]vice provid] is comp5sat$ prim>ily on a commission basis1 & 7,b7 sub/antially all ! comp5sation = su* s]vice is directly relat$ to sales ( goods or s]vices r ?an to ! numb] ( h\rs work$4 7c7 ,place ( bus9ess or own equipm5t requirem5t ,! requirem5t ( ?is subsection is met ) respect to any s]vice if ! s]vice provid]-- 7#a7 has a pr9cipal place ( bus9ess1 7#b7 does n prim>ily provide ! s]vice 9 ! s]vice recipi5t's place ( bus9ess1 7#c7 pays a fair m>ket r5t = use ( ! s]vice recipi5t's place ( bus9ess1 or 7#d7 provides ! s]vice prim>ily us+ equipm5t suppli$ by ! s]vice provid]4 7d7 ,writt5 contract requirem5t ,! requirem5ts ( ?is subsection are met ) respect to any s]vice if su* s]vice is p]=m$ pursuant to a writt5 contract betwe5 ! s]vice provid] & ! s]vice recipi5t 7or payor7 :i* meets ! foll[+ requirem5ts3 7#a7 ,! contract includes ea* ( ! foll[+3 7,a7 ,! s]vice provid]'s "n1 taxpay] id5tification numb]1 & address4 7,b7 ,a /atem5t t ! s]vice provid] w n be treat$ z an employee ) respect to ! s]vices provid$ pursuant to ! contract = purposes ( ?is title4 7,c7 ,a /atem5t t ! s]vice recipi5t 7or ! payor7 w )hold ^u & report to ! ,int]nal ,rev5ue ,s]vice ! comp5sation payable pursuant to ! contract consi/5t ) ! requirem5ts ( ?is title4 7,d7 ,a /atem5t t ! s]vice provid] is responsible = paym5t ( ,f$]al1 ,/ate1 & local taxes1 includ+ self-employm5t taxes1 on comp5sation payable pursuant to ! contract4 7,e7 ,a /atem5t t ! contract is int5d$ to be consid]$ a contract describ$ 9 ?is subsection4 7#b7 ,! t]m ( ! contract does n exce$ #a ye>4 ,! prec$+ s5t5ce %all n prev5t "o or m subsequ5t writt5 r5ewals ( ! contract f satisfy+ ! requirem5ts ( ?is subsection if ! t]m ( ea* su* r5ewal does n exce$ #a ye> & if ! in=mation requir$ "u p>agraph 7#a77;,a7 is updat$ 9 connection ) ea* su* r5ewal4 7#c7 ,! contract 7or r5ewal7 is sign$ by bo? ! s]vice recipi5t 7or payor7 & ! s]vice provid] n lat] ?an ! date on :i* ! aggregate paym5ts made by ! s]vice recipi5t to ! s]vice provid] exce$s #fjj = ! ye> cov]$ by ! contract 7or r5ewal74 7e7 ,report+ requirem5ts ,if any s]vice recipi5t or payor fails to meet ! applicable report+ requirem5ts ( section #fjda7;a7 or #fjda;,a7a7 = any taxable ye> ) respect to any s]vice provid]1 ?is section %all n apply = purposes ( mak+ any det]m9ation ) respect to ! liability ( su* s]vice recipi5t or payor = any tax ) respect to su* s]vice provid] = su* p]iod4 ,= purposes ( ! prec$+ s5t5ce1 su* report+ requirem5ts %all be treat$ z met if ! failure to satisfy su* requirem5ts is due to reasonable cause & n willful neglect4 7f7 ,exception = s]vices provid$ by own] ,?is section %all n apply ) respect to any s]vice provid$ by a s]vice provid] to a s]vice recipi5t if ! s]vice provid] owns any int]e/ 9 ! s]vice recipi5t or any payor ) respect to ! s]vice provid$4 ,! prec$+ s5t5ce %all n apply 9 ! case ( a s]vice recipi5t ! /ock ( :i* is regul>ly trad$ on an e/abli%$ securities m>ket4 7g7 ,exception = s]vices n receiv$ 9 c\rse ( a trade or bus9ess ,?is section %all n apply ) respect to any s]vice unless su* s]vice is p]=m$ 9 ! ord9>y c\rse ( a trade or bus9ess ( ! s]vice recipi5t4 7h7 ,limitation on reclassification by ,secret>y ,= purposes ( ?is title-- 7#a7 ,effect ( reclassification on recipi5ts & payors ,a det]m9ation by ! ,secret>y t a s]vice recipi5t or a payor %\ld h treat$ a s]vice provid] z an employee %all be effective ) respect to ! s]vice recipi5t or payor no e>li] ?an ! notice date if-- 7,a7 ! s]vice recipi5t or ! payor ent]$ into a writt5 contract ) ! s]vice provid] :i* meets ! requirem5ts ( subsection 7d71 7,b7 ! s]vice recipi5t or ! payor satisfi$ ! applicable report+ requirem5ts ( section #fjda7;a7 or #fjda;,a7a7 = all relevant taxable ye>s ) respect to ! s]vice provid]1 7,c7 ! s]vice recipi5t or ! payor collect$ & paid ov] all applicable taxes impos$ "u subtitle ,c = all relevant taxable ye>s ) respect to ! s]vice provid]1 7,d7 ! s]vice recipi5t or ! payor demon/rates a reasonable basis = hav+ det]m9$ t ! s]vice provid] %\ld n be treat$ z an employee "u ?is section & t su* det]m9ation 0 made 9 good fai?4 7#b7 ,effect ( reclassification on s]vice provid]s ,a det]m9ation by ! ,secret>y t a s]vice provid] %\ld h be5 treat$ z an employee %all be effective ) respect to ! s]vice provid] no e>li] ?an ! notice date if-- 7,a7 ! s]vice provid] ent]$ into a writt5 contract ) ! s]vice recipi5t or payor :i* meets ! requirem5ts ( subsection 7d71 7,b7 ! s]vice provid] satisfi$ ! applicable report+ requirem5ts ( sections #fjab7;a7 & #fjag = all relevant taxable ye>s ) respect to ! s]vice recipi5t or payor1 & 7,c7 ! s]vice provid] demon/rates a reasonable basis = det]m9+ t ! s]vice provid] is n an employee "u ?is section & t su* det]m9ation 0 made 9 good fai?4 7#c7 ,notice date ,= purposes ( ?is subsection1 ! t]m notice date means ! #cj? day aft] ! e>lie/ (-- 7,a7 ! date on :i* ! fir/ lett] ( propos$ defici5cy :i* all[s ! s]vice provid]1 ! s]vice recipi5t1 or ! payor an opportunity = adm9i/rative review 9 ! ,int]nal ,rev5ue ,s]vice ,(fice ( ,appeals is s5t1 7,b7 ! date on :i* a defici5cy notice "u section #fbab is s5t1 or 7,c7 ! date on :i* a notice ( det]m9ation "u section #gdcf7;b77#b7 is s5t4 7#d7 ,reasonable cause exception ,! requirem5ts ( p>agraphs 7#a77;,b7 & 7#b77;,b7 %all be treat$ z met if ! failure to satisfy su* requirem5ts is due to reasonable cause & n willful neglect4 7#e7 ,no re/riction on adm9i/rative or judicial review ,no?+ 9 ?is subsection %all be con/ru$ z limit+ any provision ( law :i* provides an opportunity = adm9i/rative or judicial review ( a det]m9ation by ! ,secret>y4 7i7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,s]vice provid] 7,a7 ,9 g5]al ,! t]m s]vice provid] means any qualifi$ p]son :o p]=ms s]vice = ano!r p]son4 7,b7 ,qualifi$ p]son ,! t]m qualifi$ p]son means-- 7i7 any natural p]son1 & 7ii7 any entity if any ( ! s]vices ref]r$ to 9 subp>agraph 7,a7 are p]=m$ by "o or m natural p]sons :o directly own int]e/s 9 su* entity4 7#b7 ,s]vice recipi5t ,! t]m s]vice recipi5t means ! p]son = :om ! s]vice provid] p]=ms su* s]vice4 7#c7 ,payor ,! t]m payor means any p]son :o pays ! s]vice provid] = p]=m+ su* s]vice4 7j7 ,regulations ,not)/&+ section #ecj7;d7 ( ! ,rev5ue ,act ( #aigh1 ! ,secret>y %all issue su* regulations z ! ,secret>y det]m9es are necess>y to c>ry out ! purposes ( ?is section4 4 7b7 ,)hold+ by payor 9 case ( c]ta9 p]sons classifi$ z n employees ,section #cdjb is am5d$ by r$esignat+ subsection 7s7 z subsection 7t7 & ins]t+ aft] subsection 7r7 ! foll[+ new subsection3 7s7 ,ext5sion ( )hold+ to paym5ts to c]ta9 p]sons classifi$ z n employees 7#a7 ,9 g5]al ,= purposes ( ?is *apt] & s mu* ( subtitle ,f z relates to ?is *apt]1 comp5sation paid pursuant to a contract describ$ 9 section #ggjg7;d7 %all be treat$ z if x 7 a paym5t ( wages by an employ] to an employee4 7#b7 ,am\nt )held ,except z o!rwise provid$ "u subsection 7i71 ! am\nt to be d$uct$ & )held pursuant to p>agraph 7#a7 ) respect to comp5sation paid pursuant to any su* contract dur+ any cal5d> ye> %all be an am\nt equal to #e p]c5t ( s mu* ( ! am\nt ( su* comp5sation z does n exce$ #aj1jjj4 4 7c7 ,report+ ,section #fjda;,a is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,special rules = c]ta9 p]sons classifi$ z n employees ,9 ! case ( any s]vice recipi5t requir$ to make a return "u subsection 7a7 ) respect to comp5sation to :i* section #ggjg7;a7 applies-- 7#a7 su* return %all include-- 7,a7 ! aggregate am\nt ( su* comp5sation paid to ea* p]son ^: "n is requir$ to be includ$ on su* return1 7,b7 ! aggregate am\nt d$uct$ & )held "u section #cdjb7s7 ) respect to su* comp5sation1 & 7,c7 an indication ( :e!r a copy ( ! contract describ$ 9 section #ggjg7;d7 is on file ) ! s]vice recipi5t or payor1 & 7#b7 ! /atem5t requir$ to be furni%$ "u subsection 7e7 %all include ! in=mation describ$ 9 p>agraph 7#a7 ) respect to ! s]vice provid] to :om su* /atem5t is furni%$4 ,t]ms us$ 9 ?is subsection :i* are also us$ 9 section #ggjg %all h ! same mean+ z :5 us$ 9 su* section4 4 7d7 ,cl]ical am5dm5t ,! table ( sections = *apt] #gi1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ggjg4 ,det]m9ation ( work] classification4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to s]vices p]=m$ aft] ,decemb] #ca1 #bjad 7& to paym5ts made = su* s]vices aft] su* date74 ,j ,zones & ,%ort-,t]m ,regional ,b5efits #chba4 ,repeal ( provisions relat+ to ,emp[]m5t ,zones & ,ent]prise ,communities 7a7 ,9 g5]al ,*apt] #a is am5d$ by /rik+ sub*apt] ,u 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#i74 7,b7 ,section #bhj;,c7a7 is am5d$ by /rik+ #acif7;a714 7#b7 ,section #agi7;e7 is am5d$ by /rik+ p>agraph 7#c7 & by r$esignat+ p>agraph 7#d7 z p>agraph 7#c74 7#c7 ,section #abjb7;a77#b77;,a7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] section #acig;,c7b74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5t made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,rollov]s ,s mu* ( subsection 7a7 z relates to ! repeal ( section #acig;,b ( ! ,int]nal ,rev5ue ,code ( #aihf %all apply to sales aft] ! date ( ! enactm5t ( ?is ,act4 7#c7 ,sav+s provision ,! am5dm5ts made by ?is section %all n apply to obligations describ$ 9 section #acid ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e its repeal7 :i* 7 issu$ be=e ,janu>y #a1 #bjad4 #chbb4 ,repeal ( ,,dc ,zone provisions 7a7 ,9 g5]al ,*apt] #a is am5d$ by /rik+ sub*apt] ,w 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #abjb7;a77#b77;,b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 aft] #adjj;,b7b74 7#b7 ,section #be7;e77#a77;,c7 is am5d$ by /rik+ sections #bc1 #be;,d1 & #adjj;,c & ins]t+ section #bc4 7#c7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bg74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,sav+s provision ,! am5dm5ts made by ?is section %all n apply to-- 7,a7 9 ! case ( ! repeal ( section #adjj;,a ( ! ,int]nal ,rev5ue ,code ( #aihf1 obligations describ$ 9 section #acid ( su* ,code 7z 9 effect be=e its repeal7 :i* 7 issu$ be=e ,janu>y #a1 #bjab1 7,b7 9 ! case ( ! repeal ( section #adjj;,b ( su* ,code1 ,,dc ,zone assets 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 :i* 7 acquir$ by ! taxpay] be=e ,janu>y #a1 #bjab1 & 7,c7 9 ! case ( ! repeal ( section #adjj;,c ( su* ,code1 pr9cipal resid5ces acquir$ be=e ,janu>y #a1 #bjab4 #chbc4 ,repeal ( provisions relat+ to r5ewal communities 7a7 ,9 g5]al ,*apt] #a is am5d$ by /rik+ sub*apt] ,x 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #dfi7;i77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ subp>agraph 7,c7 & by r$esignat+ subp>agraphs 7,d71 7,e71 & 7,f7 z subp>agraphs 7,b71 7,c71 & 7,d74 7,b7 ,section #dfi7;i77#c77;,c71 z s r$esignat$1 is am5d$ to read z foll[s3 7,c7 ,ord]+ rule ,if subp>agraph 7,b7 applies = a taxable ye>1 p>agraph 7#a7 %all be appli$-- 7i7 fir/ to ! portion ( ! passive activity loss to :i* su* subp>agraph does n apply1 & 7ii7 !n to ! portion ( su* loss to :i* su* subp>agraph does apply4 4 7,c7 ,section #dfi7;i77#f77;,b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7i7 by /rik+ comm]cial revitalization d$uction 9 ! head+1 7ii7 by /rik+ 9 ! case (-- & all t foll[s ?r\gh any cr$it 9 clause 7i71 7iii7 by /rik+ ye>1 or 9 clause 7i7 & ins]t+ ye>41 & 7iv7 by /rik+ clause 7iii74 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,sav+s provision ,! am5dm5ts made by ?is section %all n apply to-- 7,a7 9 ! case ( ! repeal ( section #adjj;,f ( ! ,int]nal ,rev5ue ,code ( #aihf1 qualifi$ community assets 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 :i* 7 acquir$ by ! taxpay] be=e ,janu>y #a1 #bjaj1 7,b7 9 ! case ( ! repeal section #adjj;,h ( su* ,code1 wages paid or incurr$ be=e ,janu>y #a1 #bjaj1 7,c7 9 ! case ( ! repeal ( section #adjj;,i ( su* ,code1 qualifi$ revitalization build+s 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 :i* 7 plac$ 9 s]vice be=e ,janu>y #a1 #bjaj1 & 7,d7 9 ! case ( ! repeal ( section #adjj;,j ( su* ,code1 prop]ty acquir$ be=e ,janu>y #a1 #bjaj4 #chbd4 ,repeal ( v>i\s %ort-t]m regional b5efits 7a7 ,9 g5]al ,*apt] #a is am5d$ by /rik+ sub*apt] ,y 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sub*apt]s = su* *apt]74 7b7 ,con=m+ am5dm5ts ,section #ch7;b7 is am5d$ by /rik+ p>agraphs 7#bg71 7#bh71 7#bi7 & 7#cj74 7c7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,sav+s provision ,! am5dm5ts made by ?is section %all n apply to-- 7,a7 9 ! case ( ! repeal ( section #adjj,l7a7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 qualifi$ wages 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 :i* 7 paid or incurr$ be=e ,janu>y #a1 #bjjd1 7,b7 9 ! case ( ! repeal ( subsections 7b7 & 7f7 ( section #adjj,l ( su* ,code1 qualifi$ ,new ,york ,lib]ty ,zone prop]ty 7z def9$ 9 section #adjj,l7b7 ( su* ,code1 z 9 effect be=e its repeal7 plac$ 9 s]vice be=e ,janu>y #a1 #bjaj1 7,c7 9 ! case ( ! repeal ( section #adjj,l7c7 ( su* ,code1 qualifi$ ,new ,york ,lib]ty ,zone leasehold improvem5t prop]ty 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 plac$ 9 s]vice be=e ,janu>y #a1 #bjjg1 7,d7 9 ! case ( ! repeal ( section #adjj,l7d7 ( su* ,code1 qualifi$ ,new ,york ,lib]ty bonds 7z def9$ 9 su* section1 z 9 effect be=e its repeal7 issu$ be=e ,janu>y #a1 #bjad1 7,e7 9 ! case ( ! repeal ( section #adjj,l7e7 ( su* ,code1 advanc$ refund+s be=e ,janu>y #a1 #bjjf1 7,f7 9 ! case ( ! repeal ( section #adjj,l7g7 ( su* ,code1 prop]ty :i* is compulsorily or involunt>ily conv]t$ z a result ( ! t]rori/ attacks on ,septemb] #aa1 #bjja1 7,g7 9 ! case ( ! repeal ( section #adjj,n7a7 ( su* ,code1 obligations issu$ be=e ,janu>y #a1 #bjab1 7,h7 9 ! case ( ! repeal ( section #adjj,n7b7 ( su* ,code1 advanc$ refund+s be=e ,janu>y #a1 #bjaa1 7,i7 9 ! case ( ! repeal ( section #adjj,n7d7 ( su* ,code1 prop]ty plac$ 9 s]vice be=e ,janu>y #a1 #bjab1 7,j7 9 ! case ( ! repeal ( section #adjj,n7e7 ( su* ,code1 prop]ty plac$ 9 s]vice be=e ,janu>y #a1 #bjji1 7,k7 9 ! case ( ! repeal ( subsections 7f7 & 7g7 ( section #adjj,n ( su* ,code1 am\nts paid or incurr$ be=e ,janu>y #a1 #bjjh1 7,l7 9 ! case ( ! repeal ( section #adjj,n7h7 ( su* ,code1 am\nts paid or incurr$ be=e ,janu>y #a1 #bjab1 7,m7 9 ! case ( ! repeal ( section #adjj,n7l7 ( su* ,code1 bonds issu$ be=e ,janu>y #a1 #bjjg1 7,n7 9 ! case ( ! repeal ( section #adjj,q7a7 ( su* ,code1 di/ributions be=e ,janu>y #a1 #bjjg1 7,o7 9 ! case ( ! repeal ( section #adjj,q7b7 ( su* ,code1 contributions be=e ,m>* #a1 #bjjf1 7,p7 9 ! case ( ! repeal ( section #adjj,q7c7 ( su* ,code1 loans made be=e ,janu>y #a1 #bjjg1 7,q7 9 ! case ( ! repeal ( section #adjj,r ( su* ,code1 wages paid or incurr$ be=e ,janu>y #a1 #bjjf1 7,r7 9 ! case ( ! repeal ( section #adjj,s7a7 ( su* ,code1 contributions paid be=e ,janu>y #a1 #bjjf1 7,s7 9 ! case ( ! repeal ( section #adjj,t ( su* ,code1 f9anc+ provid$ be=e ,janu>y #a1 #bjaa1 & 7,t7 9 ! case ( ! repeal ( "p ,,iii ( sub*apt] ,y ( *apt] #a ( su* ,code1 obligations issu$ be=e ,janu>y #a1 #bjaa4 ,,iv ,p>ticipation exemption sy/em = ! taxation ( =eign income ,a ,e/abli%m5t ( exemption sy/em #djja4 ,d$uction = divid5ds receiv$ by dome/ic corporations f c]ta9 =eign corporations 7a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #bde ! foll[+ new section3 #bde;,a4 ,divid5ds receiv$ by dome/ic corporations f c]ta9 =eign corporations 7a7 ,9 g5]al ,9 ! case ( any divid5d receiv$ f a specifi$ #aj-p]c5t own$ =eign corporation by a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* =eign corporation1 !re %all be all[$ z a d$uction an am\nt equal to #ie p]c5t ( ! =eign-s\rce portion ( su* divid5d4 7b7 ,specifi$ #aj-,p]c5t own$ =eign corporation ,= purposes ( ?is section1 ! t]m specifi$ #aj-p]c5t own$ =eign corporation means any =eign corporation if any dome/ic corporation owns directly1 or indirectly ?r\gh a *a9 ( own]%ip describ$ "u section #ieh7;a71 #aj p]c5t or m ( ! vot+ /ock ( su* =eign corporation4 7c7 ,=eign-,s\rce portion ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! =eign-s\rce portion ( any divid5d is an am\nt :i* be>s ! same ratio to su* divid5ds z-- 7,a7 ! po/-#aihf undi/ribut$ =eign e>n+s1 be>s to 7,b7 ! total po/-#aihf undi/ribut$ e>n+s4 7#b7 ,po/-#aihf undi/ribut$ e>n+s ,! t]m po/-#aihf undi/ribut$ e>n+s means ! am\nt ( ! e>n+s & pr(its ( ! specifi$ #aj-p]c5t own$ =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf-- 7,a7 z ( ! close ( ! taxable ye> ( ! specifi$ #aj-p]c5t own$ =eign corporation 9 :i* ! divid5d is di/ribut$1 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 7#c7 ,po/-#aihf undi/ribut$ =eign e>n+s ,! t]m po/-#aihf undi/ribut$ =eign e>n+s means ! portion ( ! po/-#aihf undi/ribut$ e>n+s :i* is attributable to nei!r-- 7,a7 income describ$ 9 subp>agraph 7,a7 ( section #bde7;a77#e71 nor 7,b7 divid5ds describ$ 9 subp>agraph 7,b7 ( su* section 7det]m9$ )\t reg>d to section #bde7;a77#ab774 7#d7 ,treatm5t ( di/ributions f e>n+s be=e #aihg 7,a7 ,9 g5]al ,9 ! case ( any divid5d paid out ( e>n+s & pr(its ( ! specifi$ #aj-p]c5t own$ =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ be=e ,janu>y #a1 #aihg-- 7i7 p>agraphs 7#a71 7#b71 & 7#c7 %all be appli$ )\t reg>d to ! phrase po/-#aihf ea* place x appe>s1 & 7ii7 p>agraph 7#b7 %all be appli$ )\t reg>d to ! phrase 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf4 7,b7 ,divid5ds paid fir/ out ( po/-#aihf e>n+s ,divid5ds %all be treat$ z paid out ( po/-#aihf undi/ribut$ e>n+s to ! ext5t !re(4 7d7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija = any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any divid5d = :i* a d$uction is all[$ "u ?is section4 7#b7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7e7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,application ( hold+ p]iod requirem5t ,subsection 7c7 ( section #bdf is am5d$-- 7#a7 by /rik+ or #bde 9 p>agraph 7#a7 & ins]t+ #bde1 or #bde;,a1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,special rules = =eign s\rce portion ( divid5ds receiv$ f specifi$ #aj-p]c5t own$ =eign corporations 7,a7 #f-mon? hold+ p]iod requirem5t ,= purposes ( section #bde;,a-- 7i7 p>agraph 7#a77;,a7 %all be appli$-- 7,i7 by sub/itut+ #ahj days = #de daysea* place x appe>s1 & 7,,ii7 by sub/itut+ #cfa-;day p]iod = #ia-;day p]iod1 & 7ii7 p>agraph 7#b7 %all n apply4 7,b7 ,/atus mu/ be ma9ta9$ dur+ hold+ p]iod ,= purposes ( section #bde;,a1 ! hold+ p]iod requirem5t ( ?is subsection %all be treat$ z met only if-- 7i7 ! specifi$ #aj-p]c5t own$ corporation ref]r$ to 9 section #bde;,a7a7 is a specifi$ #aj-p]c5t own$ corporation at all times dur+ su* p]iod1 & 7ii7 ! taxpay] is a ,unit$ ,/ates %>ehold] ) respect to su* specifi$ #aj-p]c5t own$ corporation at all times dur+ su* p]iod4 4 7c7 ,application ( rules g5]ally applicable to d$uctions = divid5ds receiv$ 7#a7 ,treatm5t ( divid5ds f c]ta9 corporations ,p>agraph 7#a7 ( section #bdf7;a7 is am5d$ by /rik+ & #bde & ins]t+ #bde1 & #bde;,a4 7#b7 ,assets g5]at+ tax-exempt portion ( divid5d n tak5 into acc\nt 9 allocat+ & apportion+ d$uctible exp5ses ,p>agraph 7#c7 ( section #hfd7;e7 is am5d$ by /rik+ or #bde7;a7 & ins]t+ 1 #bde7;a71 or #bde;,a4 7#c7 ,coord9ation ) section #ajei ,subp>agraph 7,b7 ( section #ajei7;b77#b7 is am5d$ by /rik+ or #bde & ins]t+ #bde1 or #bde;,a4 7d7 ,coord9ation ) =eign tax cr$it limitation ,subsection 7b7 ( section #ijd1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ p>agraph 7#b7 z p>agraph 7#a7 & by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,treatm5t ( divid5ds = :i* d$uction is all[$ "u section #bde;,a ,= purposes ( subsection 7a71 9 ! case ( a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to a specifi$ #aj-p]c5t own$ =eign corporation1 su* dome/ic corporation's taxable income f s\rces )\t ! ,unit$ ,/ates %all be det]m9$ )\t reg>d to-- 7,a7 ! =eign-s\rce portion ( any divid5d receiv$ f su* =eign corporation1 & 7,b7 any d$uctions prop]ly allocable to su* portion4 ,any t]m :i* is us$ 9 section #bde;,a & 9 ?is p>agraph %all h ! same mean+ = purposes ( ?is p>agraph z :5 us$ 9 su* section4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,p>agraph 7#d7 ( section #bde7;a7 is am5d$ by /rik+ section #ijb7;c77#a7 & ins]t+ section #bde;,a7c77#b74 7#b7 ,subsection 7b7 ( section #iea is am5d$ by /rik+ subp>t & ins]t+ title4 7#c7 ,subsection 7a7 ( section #ieg is am5d$ by /rik+ subp>t 9 ! matt] prec$+ p>agraph 7#a7 & ins]t+ title4 7#d7 ,! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bde ! foll[+ new item3 ,sec4 #bde;,a4 ,divid5ds receiv$ by dome/ic corporations f c]ta9 =eign corporations4 4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #djjb4 ,limitation on losses ) respect to specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,basis 9 specifi$ #aj-,p]c5t own$ =eign corporation r$uc$ by nontax$ portion ( divid5d = purposes ( det]m9+ loss 7#a7 ,9 g5]al ,section #ifa is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,basis 9 specifi$ #aj-,p]c5t own$ =eign corporation r$uc$ by nontax$ portion ( divid5d = purposes ( det]m9+ loss ,if a dome/ic corporation receiv$ a divid5d f a specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7 9 any taxable ye>1 solely = purposes ( det]m9+ loss on any disposition 9 su* taxable ye> or any subsequ5t taxable ye>1 ! basis ( su* dome/ic corporation 9 ! /ock ( su* =eign corporation %all be r$uc$ by ! am\nt ( any d$uction all[able to su* dome/ic corporation "u section #bde;,a ) respect to su* /ock4 4 7#b7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to divid5ds receiv$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7b7 ,treatm5t ( =eign bran* losses transf]r$ to specifi$ #aj-,p]c5t own$ =eign corporations 7#a7 ,9 g5]al ,"p ,,ii ( sub*apt] ,b ( *apt] #a1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new section3 #ib4 ,c]ta9 =eign bran* losses transf]r$ to specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,9 g5]al ,if a dome/ic corporation transf]s sub/antially all ( ! assets ( a =eign bran* 7)9 ! mean+ ( section #cfg7;a77#c77;,c77 to a specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7 ) respect to :i* x is a ,unit$ ,/ates %>ehold] aft] su* transf]1 su* dome/ic corporation %all include 9 gross income = ! taxable ye> :i* includes su* transf] an am\nt equal to ! transf]r$ loss am\nt ) respect to su* transf]4 7b7 ,limitation & c>ry=w>d bas$ on =eign-,s\rce divid5ds receiv$ 7#a7 ,9 g5]al ,! am\nt includ$ 9 ! gross income ( ! taxpay] "u subsection 7a7 = any taxable ye> %all n exce$ ! am\nt all[$ z a d$uction "u section #bde;,a = su* taxable ye> 7tak+ into acc\nt divid5ds receiv$ f all specifi$ #aj-p]c5t own$ =eign corporations ) respect to :i* ! taxpay] is a ,unit$ ,/ates %>ehold]74 7#b7 ,am\nts n includ$ c>ri$ =w>d ,any am\nt n includ$ 9 gross income = any taxable ye> by reason ( p>agraph 7#a7 %all1 subject to ! application ( p>agraph 7#a7 to ! succe$+ taxable ye>1 be includ$ 9 gross income = ! succe$+ taxable ye>4 7c7 ,transf]r$ loss am\nt ,= purposes ( ?is section1 ! t]m transf]r$ loss am\nt means1 ) respect to any transf] ( sub/antially all ( ! assets ( a =eign bran*1 ! excess 7if any7 (-- 7#a7 ! sum ( losses-- 7,a7 :i* 7 incurr$ by ! =eign bran* aft] ,decemb] #ca1 #bjad1 & be=e ! transf]1 & 7,b7 ) respect to :i* a d$uction 0 all[$ to ! taxpay]1 ov] 7#b7 ! sum (-- 7,a7 any taxable income ( su* bran* = a taxable ye> aft] ! taxable ye> 9 :i* ! loss 0 incurr$ & ?r\gh ! close ( ! taxable ye> ( ! transf]1 & 7,b7 any am\nt :i* is recogniz$ "u section #ijd7;f77#c7 on acc\nt ( ! transf]4 7d7 ,r$uction = recogniz$ ga9s 7#a7 ,9 g5]al ,9 ! case ( a transf] n describ$ 9 section #cfg7;a77#c77;,c71 ! transf]r$ loss am\nt %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( ga9 recogniz$ by ! taxpay] on acc\nt ( ! transf] 7o!r ?an am\nts tak5 into acc\nt "u subsection 7c77#b77;,b774 7#b7 ,coord9ation ) recognition "u section #cfg ,9 ! case ( a transf] describ$ 9 section #cfg7;a77#c77;,c71 ! transf]r$ loss am\nt %all n exce$ ! excess 7if any7 (-- 7,a7 ! excess ( ! am\nt describ$ 9 section #cfg7;a77#c77;,c77i7 ov] ! am\nt describ$ 9 section #cfg7;a77#c77;,c77ii7 ) respect to su* transf]1 ov] 7,b7 ! am\nt ( ga9 recogniz$ "u section #cfg7;a77#c77;,c7 ) respect to su* transf]4 7e7 ,s\rce ( income ,am\nts includ$ 9 gross income "u ?is section %all be treat$ z d]iv$ f s\rces )9 ! ,unit$ ,/ates4 7f7 ,basis adju/m5ts ,consi/5t ) su* regulations or o!r guidance z ! ,secret>y may prescribe1 prop] adju/m5ts %all be made 9 ! adju/$ basis ( ! taxpay]'s /ock 9 ! specifi$ #aj-p]c5t own$ =eign corporation to :i* ! transf] is made1 & 9 ! transf]ee's adju/$ basis 9 ! prop]ty transf]r$1 to reflect am\nts includ$ 9 gross income "u ?is section4 4 7#b7 ,am\nts recogniz$ "u section #cfg on transf] ( =eign bran* ) previ\sly d$uct$ losses treat$ z ,unit$ ,/ates s\rce ,subp>agraph 7,c7 ( section #cfg7;a77#c7 is am5d$ by /rik+ outside 9 ! la/ s5t5ce & ins]t+ )94 7#c7 ,cl]ical am5dm5t ,! table ( subp>ts = su* "p1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ib4 ,c]ta9 =eign bran* losses transf]r$ to specifi$ #aj-p]c5t own$ =eign corporations4 4 7#d7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to transf]s aft] ,decemb] #ca1 #bjad4 #djjc4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation 7a7 ,9 g5]al ,section #ife is am5d$ to read z foll[s3 #ife4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation 7a7 ,treatm5t ( def]r$ =eign income z subp>t ,f income ,9 ! case ( ! la/ taxable ye> ( a def]r$ =eign income corporation :i* beg9s be=e ,janu>y #a1 #bjae1 ! subp>t ,f income ( su* =eign corporation 7z o!rwise det]m9$ = su* taxable ye> "u section #ieb7 %all be increas$ by ! accumulat$ po/-#aihf def]r$ =eign income ( su* corporation det]m9$ z ( ! close ( su* taxable ye>4 7b7 ,r$uction 9 am\nts includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s ( specifi$ =eign corporations ) deficits 9 e>n+s & pr(its 7#a7 ,9 g5]al ,9 ! case ( a taxpay] :i* is a ,unit$ ,/ates %>ehold] ) respect to at lea/ "o def]r$ =eign income corporation & at lea/ "o ,e,p deficit =eign corporation1 ! am\nt :i* w\ld 7b = ?is subsection7 be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( subsection 7a7 z su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! subp>t ,f income ( ea* def]r$ =eign income corporation %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ,e,p deficit :i* is allocat$ "u p>agraph 7#b7 to su* def]r$ =eign income corporation4 7#b7 ,allocation ( aggregate =eign ,e,p deficit ,! aggregate =eign ,e,p deficit ( any ,unit$ ,/ates %>ehold] %all be allocat$ among ! def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold] 9 an am\nt :i* be>s ! same proportion to su* aggregate z-- 7,a7 su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( ea* su* def]r$ =eign income corporation1 be>s to 7,b7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( all def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold]4 7#c7 ,def9itions relat$ to ,e,p deficits ,= purposes ( ?is subsection-- 7,a7 ,aggregate =eign ,e,p deficit ,! t]m aggregate =eign ,e,p deficit means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! aggregate ( su* %>ehold]'s pro rata %>es ( ! specifi$ ,e,p deficits ( ! ,e,p deficit =eign corporations ( su* %>ehold]4 7,b7 ,e,p deficit =eign corporation ,! t]m ,e,p deficit =eign corporation means1 ) respect to any taxpay]1 any specifi$ =eign corporation ) respect to :i* su* taxpay] is a ,unit$ ,/ates %>ehold]1 if-- 7i7 su* specifi$ =eign corporation has a deficit 9 po/-#aihf e>n+s & pr(its1 & 7ii7 z ( ,febru>y #bf1 #bjad-- 7,i7 su* corporation 0 a specifi$ =eign corporation1 & 7,,ii7 su* taxpay] 0 a ,unit$ ,/ates %>ehold] ( su* corporation4 7,c7 ,specifi$ ,e,p deficit ,! t]m specifi$ ,e,p deficit means1 ) respect to any ,e,p deficit =eign corporation1 ! am\nt ( ! deficit ref]r$ to 9 subp>agraph 7,b74 7c7 ,application ( p>ticipation exemption to includ$ income 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 !re %all be all[$ z a d$uction = ! taxable ye> 9 :i* an am\nt is includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a77#a7 by reason ( ?is section an am\nt equal to ! sum (-- 7,a7 #ij p]c5t ( ! excess 7if any7 (-- 7i7 ! am\nt s includ$ z gross income1 ov] 7ii7 ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ca% position1 plus 7,b7 #ge p]c5t ( s mu* ( ! am\nt describ$ 9 subp>agraph 7,a77ii7 z does n exce$ ! am\nt describ$ 9 subp>agraph 7,a77i74 7#b7 ,aggregate =eign ca% position ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m aggregate =eign ca% position means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! great] (-- 7i7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! ca% position ( ea* specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] det]m9$ z ( ! close ( ! la/ taxable ye> ( su* specifi$ =eign corporation :i* beg9s be=e ,janu>y #a1 #bjae1 or 7ii7 "o half ( ! sum (-- 7,i7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! la/ taxable ye> ( ea* su* specifi$ =eign corporation :i* ends be=e ,febru>y #bf1 #bjad1 plus 7,,ii7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! taxable ye> ( ea* su* specifi$ =eign corporation :i* prec$es ! taxable ye> ref]r$ to 9 subclause 7,i74 7,b7 ,ca% position ,= purposes ( ?is p>agraph1 ! ca% position ( any specifi$ =eign corporation is ! sum (-- 7i7 ca% & =eign curr5cy held by su* =eign corporation1 7ii7 ! net acc\nts receivable ( su* =eign corporation1 plus 7iii7 ! fair m>ket value ( ! foll[+ assets held by su* corporation3 7,i7 ,actively trad$ p]sonal prop]ty = :i* !re is an e/abli%$ f9ancial m>ket4 7,,ii7 ,comm]cial pap]1 c]tificates ( deposit1 ! securities ( ! ,f$]al gov]nm5t & ( any ,/ate or =eign gov]nm5t 7,,iii7 ,any obligation ) a t]m ( less ?an "o ye>4 7,,iv7 ,any asset :i* ! ,secret>y id5tifies z be+ economically equival5t to any asset describ$ 9 ?is subp>agraph4 7,c7 ,net acc\nts receivable ,= purposes ( ?is p>agraph1 ! t]m net acc\nts receivable means1 ) respect to any specifi$ =eign corporation1 ! excess 7if any7 (-- 7i7 su* corporation's acc\nts receivable1 ov] 7ii7 su* corporation's acc\nts payable 7det]m9$ consi/5t ) ! rules ( section #dfa74 7,d7 ,prev5tion ( d\ble c\nt+ ,ca% positions ( a specifi$ =eign corporation describ$ 9 clause 7ii7 or 7iii77,,iii7 ( subp>agraph 7,b7 %all n be tak5 into acc\nt by a ,unit$ ,/ates %>ehold] "u subp>agraph 7,a7 to ! ext5t t su* ,unit$ ,/ates %>ehold] demon/rates to ! satisfaction ( ! ,secret>y t su* am\nt is s tak5 into acc\nt by su* ,unit$ ,/ates %>ehold] ) respect to ano!r specifi$ =eign corporation4 7,e7 ,ca% positions ( =eign pass-?ru entities tak5 into acc\nt ,any =eign entity :i* w\ld be a specifi$ =eign corporation ( a ,unit$ ,/ates %>ehold] if su* entity 7 a corporation %all be treat$ z a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] = purposes ( det]m9+ su* ,unit$ ,/ates %>ehold]'s aggregate =eign ca% position4 7,f7 ,anti-abuse ,if ! ,secret>y det]m9es t ! pr9cipal purpose ( any transaction 0 to r$uce ! aggregate =eign ca% position tak5 into acc\nt "u ?is subsection1 su* transaction %all be disreg>d$ = purposes ( ?is subsection4 7d7 ,def]r$ =eign income corporation2 accumulat$ po/-#aihf def]r$ =eign income ,= purposes ( ?is section-- 7#a7 ,def]r$ =eign income corporation ,! t]m def]r$ =eign income corporation means1 ) respect to any ,unit$ ,/ates %>ehold]1 any specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] :i* has accumulat$ po/-#aihf def]r$ =eign income 7z ( ! close ( ! taxable ye> ref]r$ to 9 subsection 7a77 great] ?an z]o4 7#b7 ,accumulat$ po/-#aihf def]r$ =eign income ,! t]m accumulat$ po/-#aihf def]r$ =eign income means ! po/-#aihf e>n+s & pr(its except to ! ext5t su* e>n+s-- 7,a7 are attributable to income ( ! specifi$ =eign corporation :i* is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates & subject to tax "u ?is *apt]1 7,b7 if di/ribut$1 w\ld-- 7i7 9 ! case ( a controll$ =eign corporation1 be exclud$ f ! gross income ( a ,unit$ ,/ates %>ehold] "u section #iei1 or 7ii7 9 ! case ( any passive =eign inve/m5t company 7z def9$ 9 section #abig7 o!r ?an a controll$ =eign corporation1 be treat$ z a di/ribution :i* is n a divid5d1 or 7,c7 9 ! case ( any passive =eign inve/m5t company 7z s def9$71 is prop]ly attributable to an unrev]s$ inclusion ( a ,unit$ ,/ates p]son "u section #abif4 ,to ! ext5t provid$ 9 regulations or o!r guidance prescrib$ by ! ,secret>y1 9 ! case ( any controll$ =eign corporation :i* has %>ehold]s :i* are n ,unit$ ,/ates %>ehold]s1 accumulat$ po/-#aihf def]r$ =eign income %all be appropriately r$uc$ by am\nts :i* w\ld be describ$ 9 subp>agraph 7,b77i7 is su* %>ehold]s 7 ,unit$ ,/ates %>ehold]s4 ,su* regulations or o!r guidance may provide a simil> rule = purposes ( subp>agraph 7,b77ii7 & 7,c74 7#c7 ,po/-#aihf e>n+s & pr(its ,! t]m po/-#aihf e>n+s & pr(its means ! e>n+s & pr(its ( ! =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf1 & det]m9$-- 7,a7 z ( ! close ! taxable ye> ref]r$ to 9 subsection 7a71 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 7e7 ,specifi$ =eign corporation 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m specifi$ =eign corporation means-- 7,a7 any controll$ =eign corporation1 & 7,b7 any section #ijb corporation 7z def9$ 9 section #iji7;d77#e7 z 9 effect be=e ! date ( ! enactm5t ( ! ,tax ,re=m ,act ( #bjad74 7#b7 ,application to section #ijb corporations ,= purposes ( section #iea1 a section #ijb corporation 7z s def9$7 %all be treat$ z a controll$ =eign corporation solely = purposes ( tak+ into acc\nt ! subp>t ,f income ( su* corporation "u subsection 7a7 7& = purposes ( apply+ subsection 7f774 7f7 ,det]m9ations ( pro rata %>e ,= purposes ( ?is section1 ! det]m9ation ( any ,unit$ ,/ates %>ehold]'s pro rata %>e ( any am\nt ) respect to any specifi$ =eign corporation %all be det]m9$ "u rules simil> to ! rules ( section #iea7;a77#b7 by treat+ su* am\nt 9 ! same mann] z subp>t ,f income 7& by treat+ su* specifi$ =eign corporation z a controll$ =eign corporation74 7g7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija = ! applicable p]c5tage ( any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any am\nt = :i* a d$uction is all[$ "u ?is section4 7#b7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means ! am\nt 7express$ z a p]c5tage7 equal to ! sum (-- 7,a7 #j4i multipli$ by ! ratio (-- 7i7 ! excess to :i* subsection 7c77#a77;,a7 applies1 divid$ by 7ii7 ! sum ( su* excess plus ! am\nt to :i* subsection 7c77#a77;,b7 applies1 plus 7,b7 #j4ge multipli$ by ! ratio (-- 7i7 ! am\nt to :i* subsection 7c77#a77;,b7 applies1 divid$ by 7ii7 ! sum describ$ 9 subp>agraph 7,a77ii74 7#c7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7#d7 ,coord9ation ) section #gh ,section #gh %all n apply to any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a74 7h7 ,election ,to pay liability 9 in/allm5ts 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold] may elect to pay ! net tax liability "u ?is section 9 #h in/allm5ts ( ! foll[+ am\nts3 7,a7 #h p]c5t ( ! net tax liability 9 ! case ( ea* ( ! fir/ #e ( su* in/allm5ts1 7,b7 #ae p]c5t ( ! net tax liability 9 ! case ( ! #f? su* in/allm5t1 7,c7 #bj p]c5t ( ! net tax liability 9 ! case ( ! #g? su* in/allm5t1 & 7,d7 #be p]c5t ( ! net tax liability 9 ! case ( ! #h? su* in/allm5t4 7#b7 ,date = paym5t ( in/allm5ts ,if an election is made "u p>agraph 7#a71 ! fir/ in/allm5t %all be paid on ! due date 7det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return7 = ! return ( tax = ! taxable ye> describ$ 9 subsection 7b7 & ea* succe$+ in/allm5t %all be paid on ! due date 7z s det]m9$7 = ! return ( tax = ! taxable ye> foll[+ ! taxable ye> ) respect to :i* ! prec$+ in/allm5t 0 made4 7#c7 ,accel]ation ( paym5t ,if !re is an addition to tax = failure to pay timely assess$ ) respect to any in/allm5t requir$ "u ?is subsection1 a liquidation or sale ( sub/antially all ! assets ( ! taxpay] 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by ! taxpay]1 or any simil> circum/ance1 !n ! unpaid portion ( all rema9+ in/allm5ts %all be due on ! date ( su* ev5t 7or 9 ! case ( a title #aa or simil> case1 ! day be=e ! petition is fil$74 ,! prec$+ s5t5ce %all n apply to ! sale ( sub/antially all ! assets ( a taxpay] to a buy] if su* buy] ent]s into an agreem5t ) ! ,secret>y "u :i* su* buy] is liable = ! rema9+ in/allm5ts due "u ?is subsection 9 ! same mann] z if su* buy] 7 ! taxpay]4 7#d7 ,proration ( defici5cy to in/allm5ts ,if an election is made "u p>agraph 7#a7 to pay ! net tax liability "u ?is section 9 in/allm5ts & a defici5cy has be5 assess$ ) respect to su* net tax liability1 ! defici5cy %all be prorat$ to ! in/allm5ts payable "u p>agraph 7#a74 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has n arriv$ %all be collect$ at ! same "t z1 & z a "p (1 su* in/allm5t4 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has arriv$ %all be paid ^u notice & dem& f ! ,secret>y4 ,?is subsection %all n apply if ! defici5cy is due to neglig5ce1 to int5tional disreg>d ( rules & regulations1 or to fraud ) int5t to evade tax4 7#e7 ,election ,any election "u p>agraph 7#a7 %all be made n lat] ?an ! due date = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a7 & %all be made 9 su* mann] z ! ,secret>y may provide4 7#f7 ,net tax liability "u ?is section ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! net tax liability "u ?is section ) respect to any ,unit$ ,/ates %>ehold] is ! excess 7if any7 (-- 7i7 su* taxpay]'s net income tax = ! taxable ye> describ$ 9 subsection 7a71 ov] 7ii7 su* taxpay]'s net income tax = su* taxable ye> det]m9$ )\t reg>d to ?is section4 7,b7 ,net income tax ,! t]m net income tax means ! regul> tax liability r$uc$ by ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d ( "p ,,iv ( sub*apt] ,a4 7i7 ,special rules = ,s corporation %>ehold]s 7#a7 ,9 g5]al ,9 ! case ( any ,s corporation :i* is a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 ea* %>ehold] ( su* ,s corporation may elect to def] paym5t ( su* %>ehold]'s net tax liability "u ?is section ) respect to su* ,s corporation until ! %>ehold]'s taxable ye> :i* includes ! trigg]+ ev5t ) respect to su* liability4 7#b7 ,trigg]+ ev5t 7,a7 ,9 g5]al ,9 ! case ( any %>ehold]'s net tax liability "u ?is section ) respect to any ,s corporation1 ! trigg]+ ev5t ) respect to su* liability is :i*ev] ( ! foll[+ occurs fir/3 7i7 ,su* corporation ceases to be an ,s corporation 7det]m9$ z ( ! fir/ day ( ! fir/ taxable ye> t su* corporation is n an ,s corporation74 7ii7 ,a liquidation or sale ( sub/antially all ! assets ( su* ,s corporation 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by su* ,s corporation1 su* ,s corporation ceases to exi/1 or any simil> circum/ance4 7iii7 ,a transf] ( any %>e ( /ock 9 su* ,s corporation by ! taxpay] 7includ+ by reason ( dea?1 or o!rwise74 7,b7 ,p>tial transf]s ( /ock ,9 ! case ( a transf] ( less ?an all ( ! taxpay]'s %>es ( /ock 9 ! ,s corporation1 su* transf] %all only be a trigg]+ ev5t ) respect to s mu* ( ! taxpay]'s net tax liability "u ?is section ) respect to su* ,s corporation z is prop]ly allocable to su* /ock4 7,c7 ,transf] ( liability ,a transf] describ$ 9 clause 7iii7 %all n be treat$ z a trigg]+ ev5t if ! transf]ee ent]s into an agreem5t ) ! ,secret>y "u :i* su* transf]ee is liable = net tax liability ) respect to su* /ock 9 ! same mann] z if su* transf]ee 7 ! taxpay]4 7#c7 ,net tax liability ,a %>ehold]'s net tax liability "u ?is section ) respect to any ,s corporation is ! net tax liability "u ?is section :i* w\ld be det]m9$ "u subsection 7h77#f7 if ! only subp>t ,f income tak5 into acc\nt by su* %>ehold] by reason ( ?is section 7 allocations f su* ,s corporation4 7#d7 ,election to pay def]r$ liability 9 in/allm5ts ,9 ! case ( a taxpay] :i* elects to def] paym5t "u p>agraph 7#a71 subsection 7h7 %all be appli$-- 7,a7 sep>ately ) respect to ! liability to :i* su* election applies1 7,b7 an election "u subsection 7h7 ) respect to su* liability %all be treat$ z timely made if made n lat] ?an ! due date = ! return ( tax = ! taxable ye> 9 :i* ! trigg]+ ev5t ) respect to su* liability occurs1 7,c7 ! fir/ in/allm5t "u subsection 7h7 ) respect to su* liability %all be paid n lat] ?an su* due date 7b det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return71 & 7,d7 if ! trigg]+ ev5t ) respect to any net tax liability is describ$ 9 p>agraph 7#b77;,a77ii71 an election "u subsection 7h7 ) respect to su* liability may be made only ) ! cons5t ( ! ,secret>y4 7#e7 ,jo9t & sev]al liability ( ,s corporation ,if any %>ehold] ( an ,s corporation elects to def] paym5t "u p>agraph 7#a71 su* ,s corporation %all be jo9tly & sev]ally liable = su* paym5t & any p5alty1 addition to tax1 or additional am\nt attributable !reto4 7#f7 ,ext5sion ( limitation on collection ,not)/&+ any o!r provision ( law1 any limitation on ! "t p]iod = ! collection ( a liability def]r$ "u ?is subsection %all n be treat$ z beg9n+ be=e ! date ( ! trigg]+ ev5t ) respect to su* liability4 7#g7 ,election ,any election "u p>agraph 7#a7 %all be made n lat] ?an ! due date = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a7 & %all be made 9 su* mann] z ! ,secret>y may provide4 7j7 ,inclusion ( def]r$ =eign income "u ?is section n ,to trigg] recapture ( ov]all =eign loss ,= purposes ( section #ijd7;f77#a71 9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold]'s taxable income f s\rces )\t ! ,unit$ ,/ates %all be det]m9$ )\t reg>d to ?is section4 7k7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,d$ication ( rev5ues to highway tru/ fund 7#a7 ,9 g5]al ,section #iejc7;f7 is am5d$ by r$esignat+ p>agraph 7#e7 z p>agraph 7#f7 & by ins]t+ aft] p>agraph 7#d7 ! foll[+ new p>agraph3 7#e7 ,appropriation to tru/ fund ( net tax liabilities receiv$ "u section #ife 7,a7 ,9 g5]al ,out ( money 9 ! ,treasury n o!rwise appropriat$1 !re are h]eby appropriat$ to ! ,highway ,tru/ ,fund am\nts equival5t to ! aggregate net tax liabilities "u section #ife 7z def9$ 9 su* section7 receiv$ 9 ! ,treasury4 7,b7 ,mon?ly transf]s bas$ on e/imates ,= rule provid+ = ! mon?ly transf] ( am\nts appropriat$ "u subp>agraph 7,a7 bas$ on e/imates ( ! ,secret>y1 see section #ifja4 4 7#b7 ,transf]s to ,mass ,transit ,acc\nt ,section #iejc7;e77#b7 is am5d$ by /rik+ ! mass transit portion & ins]t+ 1 #bj p]c5t ( ! am\nts appropriat$ to ! ,highway ,tru/ ,fund "u subsection 7f77#e71 & ! mass transit portion4 7c7 ,cl]ical am5dm5t ,! table ( section = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ife & ins]t+ ! foll[+3 ,sec4 #ife4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation4 4 #djjd4 ,look-?ru rule = relat$ controll$ =eign corporations made p]man5t 7a7 ,9 g5]al ,p>agraph 7#f7 ( section #ied7;c7 is am5d$ by /rik+ subp>agraph 7,c74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjac1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 ,b ,modifications relat$ to =eign tax cr$it sy/em #daja4 ,repeal ( section #ijb indirect =eign tax cr$its2 det]m9ation ( section #ifj cr$it on curr5t ye> basis 7a7 ,repeal ( section #ijb indirect =eign tax cr$its ,subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #ijb4 7b7 ,det]m9ation ( section #ifj cr$it on curr5t ye> basis ,section #ifj is am5d$-- 7#a7 by /rik+ subsection 7c71 by r$esignat+ subsection 7b7 z subsection 7c71 by /rik+ all t prec$es subsection 7c7 7z s r$esignat$7 & ins]t+ ! foll[+3 #ifj4 ,deem$ paid cr$it = subp>t ,f inclusions 7a7 ,9 g5]al ,= purposes ( ?is subp>t1 if !re is includ$ 9 ! gross income ( a dome/ic corporation any item ( income "u section #iea7;a77#a7 ) respect to any controll$ =eign corporation ) respect to :i* su* dome/ic corporation is a ,unit$ ,/ates %>ehold]1 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z are prop]ly attributable to ! item ( income s includ$4 7b7 ,special rules = di/ributions f previ\sly tax$ e>n+s & pr(its ,= purposes ( ?is subp>t-- 7#a7 ,9 g5]al ,if any portion ( a di/ribution f a controll$ =eign corporation to a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* controll$ =eign corporation is exclud$ f gross income "u section #iei7;a71 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z-- 7,a7 are prop]ly attributable to su* portion1 & 7,b7 h n be5 deem$ to h to be5 paid by su* dome/ic corporation "u ?is section = any prior taxable ye>4 7#b7 ,ti]$ controll$ =eign corporations ,if section #iei7;b7 applies to any portion ( a di/ribution f a controll$ =eign corporation to ano!r controll$ =eign corporation1 su* controll$ =eign corporation %all be deem$ to h paid s mu* ( su* o!r controll$ =eign corporation's =eign income taxes z-- 7,a7 are prop]ly attributable to su* portion1 & 7,b7 h n be5 deem$ to h be5 paid by a dome/ic corporation "u ?is section = any prior taxable ye>4 1 7#b7 & by add+ aft] subsection 7c7 7z s r$esignat$7 ! foll[+ new subsections3 7d7 ,=eign income taxes ,! t]m =eign income taxes means any income1 w> pr(its1 or excess pr(its taxes paid or accru$ to any =eign c\ntry or possession ( ! ,unit$ ,/ates4 7e7 ,regulations ,! ,secret>y %all provide su* regulations z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #gh is am5d$ to read z foll[s3 #gh4 ,gross up = deem$ paid =eign tax cr$it ,if a dome/ic corporation *ooses to h ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n 7relat+ to =eign tax cr$it7 = any taxable ye>1 an am\nt equal to ! taxes deem$ to be paid by su* corporation "u section #ifj 7relat+ to deem$ paid cr$it = subp>t ,f inclusions7 = su* taxable ye> %all be treat$ = purposes ( ?is title 7o!r ?an section #ifj7 z an item ( income requir$ to be includ$ 9 ! gross income ( su* dome/ic corporation "u section #iea7;a74 4 7#b7 ,section #bde7;a77#aj7 is am5d$ by /rik+ #ijb14 7#c7 ,sections #ece7;b77#a7 & #ede7;b77#a7 are ea* am5d$ by /rik+ section #ijb7;a7 or #ifj7;a77#a7 & ins]t+ section #ifj4 7#d7 ,p>agraph 7#a7 ( section #had7;f7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by /rik+ all t prec$es ,no income & ins]t+ ! foll[+3 7#a7 ,treatm5t ( =eign taxes 4 7#e7 ,subp>agraph 7,b7 ( section #hfd7;h77#a7 is am5d$ by /rik+ #ijb14 7#f7 ,subsection 7a7 ( section #ija is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#g7 ,p>agraph 7#b7 ( section #ija7;e7 is am5d$ by /rik+ b is n limit$ to-- & all t foll[s ?r\gh t portion & ins]t+ b is n limit$ to t portion4 7#h7 ,subsection 7f7 ( section #ija is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#i7 ,subp>agraph 7,a7 ( section #ija7;j77#a7 is am5d$ by /rik+ #ijb or4 7#aj7 ,subp>agraph 7,b7 ( section #ija7;j77#a7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#aa7 ,p>agraph 7#b7 ( section #ija7k7 is am5d$ by /rik+ #ijb14 7#ab7 ,p>agraph 7#f7 ( section #ija7k7 is am5d$ by /rik+ #ijb or4 7#ac7 ,subp>agraph 7,a7 ( section #ijd7;h77#aj7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#ad7 ,section #ijd is am5d$ by /rik+ subsection 7k74 7#ae7 ,p>agraph 7#a7 ( section #ije7;c7 is am5d$ by /rik+ ! la/ s5t5ce4 7#af7 ,subclause 7,i7 ( section #ije7;c77#b77;,b77i7 is am5d$ by /rik+ section #ijb or4 7#ag7 ,subsection 7a7 ( section #ijf is am5d$ by /rik+ 7or deem$1 "u section #ijb1 paid or accru$ dur+ ! taxable ye>74 7#ah7 ,subsection 7b7 ( section #ijf is am5d$ by /rik+ p>agraphs 7#d7 & 7#e74 7#ai7 ,subp>agraph 7,b7 ( section #ijg7;b77#b7 is am5d$ by /rik+ #ijb or4 7#bj7 ,p>agraph 7#c7 ( section #ijg7;c7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,a7 & r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively1 & 7,b7 by /rik+ section #ifj7;a7 9 subp>agraph 7,a7 7z s r$esignat$7 & ins]t+ section #ifj4 7#ba7 ,p>agraph 7#e7 ( section #ijg7;c7 is am5d$ by /rik+ #ijb or4 7#bb7 ,clause 7i7 ( section #ijg7;f77#b77;,b7 is am5d$ by /rik+ #ijb or4 7#bc7 ,subsection 7a7 ( section #ijh is am5d$ by /rik+ #ijb or4 7#bd7 ,subsection 7b7 ( section #iji is am5d$-- 7,a7 by /rik+ section #ijb corporation 9 ! matt] prec$+ p>agraph 7#a7 & ins]t+ specifi$ #aj-p]c5t own$ =eign corporation1 7,b7 by /rik+ #ijb or 9 p>agraph 7#a71 7,c7 by /rik+ by su* section #ijb corporation & all t foll[s 9 ! matt] foll[+ p>agraph 7#b7 & ins]t+ by su* specifi$ #aj-p]c5t own$ =eign corporation or a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* specifi$ #aj-p]c5t own$ =eign corporation41 & 7,d7 by /rik+ section #ijb corporations 9 ! head+ !re( & ins]t+ specifi$ #aj-p]c5t own$ =eign corporations4 7#be7 ,subsection 7d7 ( section #iji is am5d$ by /rik+ p>agraph 7#e74 7#bf7 ,p>agraph 7#a7 ( section #ieh7;a7 is am5d$ by /rik+ #ifj7;a77#a7 & ins]t+ #ifj4 7#bg7 ,subsection 7d7 ( section #iei is am5d$ by /rik+ ,except z provid$ 9 section #ifj7;a77#c71 any & ins]t+ ,any4 7#bh7 ,subsection 7e7 ( section #iei is am5d$ by /rik+ & section #ifj7;b74 7#bi7 ,subp>agraph 7,a7 ( section #abia7;g77#b7 is am5d$ by /rik+ any di/ribution-- & all t foll[s ?r\gh b only if & ins]t+ any di/ribution1 any )hold+ tax impos$ ) respect to su* di/ribution1 b only if4 7#cj7 ,section #abic is am5d$ by /rik+ subsection 7f74 7#ca7 ,subp>agraph 7,b7 ( section #fjch7;c77#a7 is am5d$ by /rik+ sections #ijb 7relat+ to =eign tax cr$it = corporate /ockhold] 9 =eign corporation7 & #ifj 7relat+ to special rules = =eign tax cr$it7 & ins]t+ section #ifj4 7#cb7 ,p>agraph 7#d7 ( section #fjch7;c7 is am5d$ by /rik+ subp>agraph 7,c74 7#cc7 ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ijb4 7#cd7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ifj & ins]t+ ! foll[+3 ,sec4 #ifj4 ,deem$ paid cr$it = subp>t ,f inclusions4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dajb4 ,=eign tax cr$it limitation appli$ by allocat+ only directly allocable d$uctions to =eign s\rce income 7a7 ,9 g5]al ,subsection 7b7 ( section #ijd1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,d$uctions allocable to =eign s\rce income only if directly allocable ,= purposes ( subsection 7a71 ! taxpay]'s taxable income f s\rces )\t ! ,unit$ ,/ates %all be det]m9$ by allocat+ d$uctions to su* income only if su* d$uctions are directly allocable to su* income4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dajc4 ,passive category income exp&$ to include o!r mobile income 7a7 ,treatm5t ( =eign base company intangible income & =eign base company sales income z mobile category income ,clause 7i7 ( section #ijd7;d77#b77;,a7 is am5d$ by /rik+ & specifi$ passive category income & ins]t+ specifi$ passive category income1 =eign base company sales income 7z def9$ 9 section #ied7;d771 & =eign base company intangible income 7z def9$ 9 section #ied7;f774 7b7 ,repeal ( special rules treat+ f9ancial s]vices income z g5]al category income ,p>agraph 7#b7 ( section #ijd7;d7 is am5d$ by /rik+ subp>agraphs 7,c7 & 7,d7 & by r$esignat+ subp>agraphs 7,e7 ?r\gh 7,k7 z subp>agraphs 7,c7 ?r\gh 7,i71 respectively4 7c7 ,con=m+ am5dm5ts 7#a7 ,relat+ to ref]5ces to passive income 7,a7 ,section #ijd7;d77#a77;,a7 is am5d$ by /rik+ passive category income & ins]t+ mobile category income4 7,b7 ,section #ijd7;d77#b77;,a77i71 z am5d$ by subsection 7a71 is am5d$-- 7i7 by /rik+ ,passive category income 9 ! head+ !re( & ins]t+ ,mobile category income1 7ii7 by /rik+ passive category income & ins]t+ mobile category income1 7iii7 by /rik+ passive income & ins]t+ mobile income1 & 7iv7 by /rik+ specifi$ passive category income & ins]t+ specifi$ mobile category income4 7,c7 ,section #ijd7;d77#b77;,a77ii7 is am5d$ by /rik+ passive category income & ins]t+ mobile category income4 7,d7 ,section #ijd7;d77#b77;,b7 is am5d$-- 7i7 by /rik+ ,passive income 9 ! head+ !re( & ins]t+ ,mobile income1 7ii7 by /rik+ passive income 9 clauses 7i71 7ii71 & 7iii7 & ins]t+ mobile income1 7iii7 by /rik+ ,specifi$ passive category income 9 ! head+ ( clause 7iv7 & ins]t+ ,specifi$ mobile category income1 & 7iv7 by /rik+ specifi$ passive category income 9 clause 7iv7 & ins]t+ specifi$ mobile category income4 7,e7 ,section #ijd7;d77#b77;,d71 z r$esignat$ by subsection 7b71 is am5d$ by /rik+ passive income & ins]t+ mobile income4 7,f7 ,section #ijd7;d77#c77;,a7 is am5d$ by /rik+ passive category income & ins]t+ mobile category income4 7,g7 ,section #ijd7;d77#c77;,b7 is am5d$ by /rik+ passive category income bo? places x appe>s & ins]t+ mobile category income4 7,h7 ,section #ijd7;d77#c77;,c7 is am5d$ by /rik+ passive category income bo? places x appe>s & ins]t+ mobile category income4 7,i7 ,section #ijd7;d77#c77;,d7 is am5d$ by /rik+ passive category income bo? places x appe>s & ins]t+ mobile category income4 7,j7 ,section #ijd7;d77#c77;,e7 is am5d$-- 7i7 by /rik+ passive category income bo? places x appe>s & ins]t+ mobile category income1 & 7ii7 by /rik+ passive income & ins]t+ mobile income4 7,k7 ,section #ijd7;d77#c77;,f7 is am5d$ by /rik+ passive category income bo? places x appe>s & ins]t+ mobile category income4 7#b7 ,o!r con=m+ am5dm5ts 7,a7 ,subp>agraph 7,b7 ( section #hfd7;f77#e7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal7 aft] section #ijd7;d77#b77;,d77ii74 7,b7 ,subp>agraph 7,b7 ( section #ied7;c77#b7 is am5d$ by /rik+ section #ijd7;d77#b77;,g7 & ins]t+ section #ijd7;d77#b77;,e74 7d7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 7#b7 ,treatm5t ( c>ry=w>ds & c>rybacks ,= purposes ( section #ijd ( ! ,int]nal ,rev5ue ,code ( #aihf-- 7,a7 ! am5dm5ts made by ?is section %all apply to any taxes c>ri$ f any taxable ye> beg9n+ be=e ,janu>y #a1 #bjae1 to any taxable ye> beg9n+ on or aft] su* date1 & 7,b7 ! ,secret>y ( ! ,treasury1 or 8 designee1 may by regulations provide = ! allocation ( any c>ryback ( taxes ) respect to income f a taxable ye> beg9n+ on or aft] ,janu>y #a1 #bjae1 to a taxable ye> beg9n+ be=e su* date = purposes ( allocat+ su* income among ! sep>ate categories 9 effect "u section #ijd7;d7 = ! taxable ye> to :i* c>ri$4 #dajd4 ,s\rce ( income f sales ( inv5tory det]m9$ solely on basis ( production activities 7a7 ,9 g5]al ,subsection 7b7 ( section #hfc is am5d$ by add+ at ! end ! foll[+3 ,ga9s1 pr(its1 & income f ! sale or ex*ange ( inv5tory prop]ty describ$ 9 p>agraph 7#b7 %all be allocat$ & apportion$ betwe5 s\rces )9 & )\t ! ,unit$ ,/ates solely on ! basis ( ! production activities ) respect to ! prop]ty44 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,c ,rules relat$ to passive & mobile income #a ,modification ( subp>t ,f provisions #dbja4 ,subp>t ,f income to only include l[-tax$ =eign income 7a7 ,9 g5]al ,subsection 7a7 ( section #ied is am5d$-- 7#a7 by r$esignat+ p>agraphs 7#a71 7#b71 7#c71 & 7#e7 z subp>agraphs 7,a7 ?r\gh 7,d71 respectively1 7#b7 by /rik+ ,= purposes ( & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,= purposes ( 1 & 7#c7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,application only to =eign base company income subject to a l[ =eign effective rate ( tax 7,a7 ,9 g5]al ,=eign base company income %all only include items ( income receiv$ by a controll$ =eign corporation :i* are subject to an effective rate ( income tax impos$ by a =eign c\ntry :i* is less ?an #ajj p]c5t ( ! maximum rate ( tax specifi$ 9 section #aa4 7,b7 ,application to =eign base company income subject to r$uc$ dome/ic rate ( tax 7i7 ,=eign base company sales income ,9 ! case ( =eign base company sales income1 subp>agraph 7,a7 %all be appli$ by sub/itut+ #ej p]c5t = #ajj p]c5t4 7ii7 ,=eign base company intangible income ,9 ! case ( =eign base company intangible income1 subp>agraph 7,a7 %all be appli$-- 7,i7 by sub/itut+ ! applicable p]c5tage ( ! =eign p]c5tage 7det]m9$ "u section #bej7;c7 ) respect to ! controll$ =eign corporation7 = #ajj p]c5t1 & 7,,ii7 by treat+ ! =eign base company intangible income z a s+le item ( income4 7iii7 ,applicable p]c5tage ,= purposes ( clause 7ii77,i71 ! t]m applicable p]c5tage means1 ) respect to any taxable ye> ( a controll$ =eign corporation1 ! p]c5tage det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( any taxable ye> beg9n+ 93,! applicable p]c5tage is3 #bjaede p]c5t #bjafdh p]c5t #bjageb p]c5t #bjahef p]c5t #bjai or !reaft]#fj p]c5t4 4 7b7 ,insurance income ,subsection 7a7 ( section #iec is am5d$ by r$esignat+ p>agraph 7#b7 z p>agraph 7#c7 & by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraph3 7#b7 ,application only to insurance income subject to a l[ =eign effective rate ( tax ,insurance income %all only include items ( income receiv$ by a controll$ =eign corporation :i* are subject to an effective rate ( income tax impos$ by a =eign c\ntry :i* is less ?an ! maximum rate ( tax specifi$ 9 section #aa4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ied7;b77#c77;,b7 is am5d$ by /rik+ p>agraphs 7#d7 & 7#e7 & ins]t+ subsection 7a77#b71 section #iec7;a77#b71 & p>agraph 7#e7 7#b7 ,section #ied7;b7 is am5d$ by /rik+ p>agraph 7#d74 7#c7 ,section #ied7;c77#a7 is am5d$ by /rik+ subsection 7a77#a7 & ins]t+ ?is section4 7#d7 ,section #ied7;d77#a7 is am5d$ by /rik+ subsection 7a77#b7 & ins]t+ ?is section4 7#e7 ,section #ied7;e77#a7 is am5d$ by /rik+ subsection 7a77#c7 & ins]t+ ?is section4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjb4 ,=eign base company sales income 7a7 #ej-,p]c5t exclusion = l[-,tax$ =eign base company sales income 7#a7 ,9 g5]al ,subp>agraph 7,b7 ( section #ied7;a77#a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ #ej p]c5t ( be=e ! =eign base company sales income4 7#b7 ,pres]vation ( deem$ paid =eign tax cr$it on l[-tax$ =eign base company income ,section #ifj1 z am5d$ by ?is ,act1 is am5d$ by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,deem$ paid cr$it det]m9$ )\t reg>d to c]ta9 exclusions f subp>t ,f income ,solely = purposes ( subsection 7a71 section #ied7;a77#a77;,b7 %all be appli$ by sub/itut+ #ajj p]c5t = #ej p]c5t 9 det]m9+ am\nts includ$ "u section #iea7;a77#a74 4 7b7 ,exception f =eign base company sales income = =eign corporations eligible = b5efits "u compreh5sive income tax treaties ,section #ied7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,exception = =eign corporations eligible = b5efits "u compreh5sive income tax treaties ,no portion ( ! gross income ( a controll$ =eign corporation %all be treat$ z =eign base company sales income if su* controll$ =eign corporation is eligible z a qualifi$ resid5t = all ( ! b5efits provid$ "u a compreh5sive income tax treaty ) ! ,unit$ ,/ates4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjc4 ,inflation adju/m5t ( de m9imis exception = =eign base company income 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #ied7;b7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjae1 ! doll> am\nt 9 subp>agraph 7,a77ii7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjad = cal5d> ye> #bjab 9 clause 7ii7 !re(4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #ej1jjj4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjd4 ,active f9anc+ exception ext5d$ ) limitation = l[-tax$ =eign income 7a7 ,ext5sion ( active f9anc+ exception 7#a7 ,9 g5]al ,p>agraph 7#i7 ( section #ied7;h7 is am5d$ by /rik+ ,janu>y #a1 #bjad & ins]t+ ,janu>y #a1 #bjai4 7#b7 ,exempt insurance income ,p>agraph 7#aj7 ( section #iec7;e7 is am5d$-- 7,a7 by /rik+ ,janu>y #a1 #bjad & ins]t+ ,janu>y #a1 #bjai1 & 7,b7 by /rik+ ,decemb] #ca1 #bjac & ins]t+ ,decemb] #ca1 #bjah4 7b7 ,limitation = l[-,tax$ =eign income 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #ied7;h7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,= purposes ( subsection 7c77#a71 9 ! case ( an eligible controll$ =eign corporation1 =eign p]sonal hold+ company income %all n include-- 7,a7 qualifi$ bank+ or f9anc+ income :i* is subject to an effective rate ( income tax impos$ by a =eign c\ntry :i* is at lea/ #ej p]c5t ( ! maximum rate ( tax specifi$ 9 section #aa1 & 7,b7 #ej p]c5t ( any o!r qualifi$ bank+ or f9anc+ income ( su* eligible controll$ =eign corporation4 4 7#b7 ,insurance bus9ess income ,p>agraph 7#a7 ( section #ied7;i7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,= purposes ( subsection 7c77#a71 9 ! case ( a qualify+ insurance company1 =eign p]sonal hold+ company income %all n include-- 7,a7 any qualifi$ insurance income :i* is subject to an effective rate ( income tax impos$ by a =eign c\ntry :i* is at lea/ #ej p]c5t ( ! maximum rate ( tax specifi$ 9 section #aa1 & 7,b7 #ej p]c5t ( any o!r qualifi$ insurance income ( su* qualify+ insurance company4 4 7#c7 ,pres]vation ( deem$ paid =eign tax cr$it on high-tax$ =eign income ,subsection 7c7 ( section #ifj1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ ,solely = purposes ( subsection 7a7 & all t foll[+ & ins]t+ ! foll[+3 ,solely = purposes ( subsection 7a7-- 7#a7 section #ied7;a77#a77;,b7 %all be appli$ by sub/itut+ #ajj p]c5t = #ej p]c5t1 & 7#b7 ! exclusions "u subsections 7h77#a77;,b7 & 7i77#a77;,b7 ( section #ied %all n apply1 9 det]m9+ am\nts includ$ "u section #iea7;a77#a74 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjac1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbje4 ,repeal ( inclusion bas$ on )drawal ( previ\sly exclud$ subp>t ,f income f qualifi$ inve/m5t 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #iee4 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,subp>agraph 7,a7 ( section #iea7;a77#a71 z am5d$ by ?is ,act1 is am5d$ to read z foll[s3 7,a7 8 pro rata %>e 7det]m9$ "u p>agraph 7#b77 ( ! corporation's subp>t ,f income = su* ye>1 & 4 7,b7 ,p>agraph 7#c7 ( section #hea7;b7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 9 ! flu% language at ! end & ins]t+ section #iea7;a77#a77;,a74 7,c7 ,clause 7i7 ( section #ieb7;c77#a77;,b7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 & ins]t+ section #iea7;a77#a77;,a74 7,d7 ,subp>agraph 7,c7 ( section #iec7;c77#a7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 & ins]t+ section #iea7;a77#a77;,a74 7#b7 ,subsection 7a7 ( section #iea is am5d$ by /rik+ p>agraph 7#c74 7#c7 ,subclause 7,,ii7 ( section #iec7;d77#d77;,b77iv7 is am5d$ by /rik+ or am\nts ref]r$ to 9 clause 7ii7 or 7iii7 ( section #iea7;a77#a77;,a74 7#d7 ,subsection 7b7 ( section #ifd is am5d$ by /rik+ 1 #iee14 7#e7 ,section #igj is am5d$ by /rik+ subsection 7b74 7#f7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #iee4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #b ,prev5tion ( base erosion #dbaa4 ,=eign intangible income subject to taxation at r$uc$ rate2 intangible income treat$ z subp>t ,f income 7a7 ,=eign base company intangible income treat$ z subp>t ,f income 7#a7 ,treatm5t z subp>t ,f income ,p>agraph 7#a7 ( section #ied7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,e7 & by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 ! =eign base company intangible income = ! taxable ye> 7det]m9$ "u subsection 7f7 & r$uc$ z provid$ 9 subsection 7b77#e771 & 4 7#b7 ,=eign base company intangible income def9$ ,section #ied ( su* ,code is am5d$ by ins]t+ aft] subsection 7e7 ! foll[+ new subsection3 7f7 ,=eign base company intangible income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m =eign base company intangible income means1 ) respect to any corporation = any taxable ye>1 ! excess (-- 7,a7 s mu* ( ! adju/$ gross income ( ! corporation z exce$s #aj p]c5t ( ! corporation's qualifi$ bus9ess asset inve/m5t1 ov] 7,b7 ! applicable p]c5tage ( su* corporation's =eign p]sonal hold+ company income1 =eign base company sales income1 =eign base company s]vices income1 & =eign base company oil relat$ income4 7#b7 ,applicable p]c5tage ,= purposes ( p>agraph 7#a71 ! t]m applicable p]c5tage means1 ) respect to any corporation = any taxable ye>1 ! ratio 7express$ z a p]c5tage7 (-- 7,a7 ! excess describ$ 9 p>agraph 7#a77;,a71 divid$ by 7,b7 ! adju/$ gross income ( ! corporation4 7#c7 ,qualifi$ bus9ess asset inve/m5t 7,a7 ,9 g5]al ,! t]m qualifi$ bus9ess asset inve/m5t means1 ) respect to any corporation = any taxable ye>1 ! aggregate ( ! corporation's adju/$ bases 7det]m9$ z ( ! close ( su* taxable ye> & aft] any adju/m5ts ) respect to su* taxable ye>7 9 specifi$ tangible prop]ty-- 7i7 us$ 9 a trade or bus9ess ( ! corporation1 & 7ii7 ( a type ) respect to :i* a d$uction is all[able "u section #afh4 7,b7 ,det]m9ation ( adju/$ basis ,= purposes ( subp>agraph 7,a71 ! adju/$ basis 9 any prop]ty %all be det]m9$ )\t reg>d to any provision ( ?is title 7or any o!r provision ( law7 :i* is enact$ aft] ! date ( ! enactm5t ( ?is section4 7,c7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z ! ,secret>y det]m9es appropriate to prev5t ! avoidance ( ! purposes ( ?is p>agraph1 includ+ regulations or o!r guidance :i* provide = ! treatm5t ( prop]ty if-- 7i7 su* prop]ty is transf]r$1 or held1 tempor>ily1 or 7ii7 ! avoidance ( ! purposes ( ?is p>agraph is a factor 9 ! transf] or hold+ ( su* prop]ty4 7#d7 ,adju/$ gross income2 specifi$ tangible prop]ty ,= purposes ( ?is subsection-- 7,a7 ,adju/$ gross income 7i7 ,9 g5]al ,! t]m adju/$ gross income means1 ) respect to any corporation1 ! gross income ( su* corporation r$uc$ by su* corporation's commodities gross income4 7ii7 ,commodities gross income ,! t]m commodities gross income means1 ) respect to any corporation1 ! gross income ( su* corporation :i* is d]iv$ f commodities :i* are produc$ or extract$ by su* corporation4 7,b7 ,specifi$ tangible prop]ty ,! t]m specifi$ tangible prop]ty means any tangible prop]ty unless su* prop]ty is us$ 9 ! production ( commodities gross income4 ,9 ! case ( prop]ty :i* is us$ 9 ! production ( commodities gross income & o!r gross income1 su* prop]ty %all be treat$ z specifi$ tangible prop]ty 9 ! same proportion t ! adju/$ gross income produc$ ) respect to su* prop]ty be>s to ! total gross income produc$ ) respect to su* prop]ty4 7,c7 ,commodity ,! t]m commodity means any commodity describ$ 9 section #dge7;e77#b74 4 7#c7 ,application only to =eign base company intangible income subject to a l[ =eign effective rate ( tax ,p>agraph 7#b7 ( section #ied7;a71 z am5d$ by prec$+ provisions ( ?is ,act1 is am5d$ by ins]t+ or =eign base company intangible income aft] =eign base company sales income4 7#d7 ,con=m+ am5dm5t ,p>agraph 7#e7 ( section #ied7;b7 is am5d$ by ins]t+ ! =eign base company intangible income1 be=e & ! =eign base company oil relat$ income4 7b7 ,d$uction = =eign intangible income 7#a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #bej4 ,=eign intangible income 7a7 ,9 g5]al ,9 ! case ( a dome/ic corporation = any taxable ye>1 !re %all be all[$ z a d$uction an am\nt equal to ! applicable p]c5tage ( ! less] (-- 7#a7 ! sum (-- 7,a7 ! =eign p]c5tage multipli$ by ! net imput$ intangible income ( su* dome/ic corporation = su* taxable ye>1 plus 7,b7 9 ! case ( a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to any controll$ =eign corporation1 ! =eign p]c5tage 7det]m9$ ) respect to su* controll$ =eign corporation7 multipli$ by any =eign base company intangible income 7z def9$ 9 section #ied7;f77 ( su* controll$ =eign corporation :i* is includ$ 9 ! gross income ( su* dome/ic corporation "u section #iea = su* taxable ye>1 or 7#b7 taxable income ( su* dome/ic corporation 7det]m9$ )\t reg>d to ?is section7 = ! taxable ye>4 7b7 ,net imput$ intangible income ,= purposes ( ?is subsection1 ! t]m net imput$ intangible income means ! excess (-- 7#a7 ! excess describ$ 9 section #ied7;f77#a77;,a71 ov] 7#b7 ! d$uctions prop]ly allocable to ! am\nt describ$ 9 p>agraph 7#a74 7c7 ,=eign p]c5tage ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m =eign p]c5tage means1 ) respect to any corporation = any taxable ye>1 ! ratio 7express$ z a p]c5tage7 (-- 7,a7 ! =eign-d]iv$ adju/$ gross income ( su* corporation = su* taxable ye>1 ov] 7,b7 ! adju/$ gross income ( su* corporation = su* taxable ye>4 7#b7 ,=eign-d]iv$ adju/$ gross income 7,a7 ,9 g5]al ,! t]m =eign-d]iv$ adju/$ gross income means1 ) respect to any corporation = any taxable ye>1 any adju/$ gross income ( su* corporation :i* is d]iv$ 9 connection )-- 7i7 prop]ty :i* is sold = use1 consumption1 or disposition outside ! ,unit$ ,/ates1 or 7ii7 s]vices provid$ ) respect to p]sons or prop]ty locat$ outside ! ,unit$ ,/ates4 7,b7 ,special rules 7i7 ,ultimate disposition ,prop]ty %all n be treat$ z sold = use1 consumption1 or disposition outside ! ,unit$ ,/ates if ! taxpay] knew1 or _h reason to "k1 t su* prop]ty w\ld be ultimately sold = use1 consumption1 or disposition 9 ! ,unit$ ,/ates4 7ii7 ,sales to relat$ p>ties ,if prop]ty is sold to a relat$ p>ty1 su* sale %all n be treat$ z = use1 consumption or disposition outside ! ,unit$ ,/ates unless-- 7,i7 su* prop]ty is ultimately sold = use1 consumption or disposition outside ! ,unit$ ,/ates1 or 7,,ii7 su* prop]ty is resold to an unrelat$ p>ty outside ! ,unit$ ,/ates & no relat$ p>ty knew or _h reason to "k t su* prop]ty w\ld be ultimately sold = use1 consumption1 or disposition 9 ! ,unit$ ,/ates4 7iii7 ,application to s]vices ,rules simil> to ! rules ( clauses 7i7 & 7ii7 %all apply ) respect to s]vices describ$ 9 subp>agraph 7,a77ii74 7,c7 ,relat$ p>ty ,= purposes ( ?is p>agraph1 ! t]m relat$ p>ty means any memb] ( an affiliat$ gr\p z def9$ 9 section #aejd7;a71 det]m9$-- 7i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s1 & 7ii7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b74 ,any p]son 7o!r ?an a corporation7 %all be treat$ z a memb] ( su* gr\p if su* p]son is controll$ by memb]s ( su* gr\p 7includ+ any entity treat$ z a memb] ( su* gr\p by reason ( ?is s5t5ce7 or controls any su* memb]4 ,= purposes ( ! prec$+ s5t5ce1 control %all be det]m9$ "u ! rules ( section #ied7;d77#c74 7#c7 ,adju/$ gross income ,! t]m adju/$ gross income has ! mean+ giv5 su* t]m by section #ied7;f77#d74 7d7 ,applicable p]c5tage ,= purposes ( ?is section1 ! t]m applicable p]c5tage means1 ) respect to any taxable ye> ( ! dome/ic corporation ref]r$ to 9 subsection 7a71 ! p]c5tage det]m9$ 9 accordance ) ! foll[+ table3 ,9 ! case ( any taxable ye> beg9n+ 93,! applicable p]c5tage is3 #bjaeee p]c5t #bjafeb p]c5t #bjagdh p]c5t #bjahdd p]c5t #bjai or !reaft]#dj p]c5t4 7e7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,clause 7i7 ( section #afc7;j77#f77;,a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ & at ! end ( subclause 7,,ii7 & by add+ at ! end ! foll[+ new subclause3 7,,iv7 any d$uction all[able "u section #bej1 & 4 7,b7 ,subp>agraph 7,c7 ( section #agj7;b77#b7 is am5d$ by /rik+ & at ! end ( clause 7iv71 by r$esignat+ clause 7v7 z clause 7vi71 & by ins]t+ aft] clause 7iv7 ! foll[+ new clause3 7v7 section #bej1 & 4 7,c7 ,subsection 7d7 ( section #agb1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,d$uction = =eign intangible income ,! d$uction "u section #bej %all n be all[$4 4 7,d7 ,p>agraph 7#a7 ( section #bdf7;b7 is am5d$ by /rik+ & #bdg & ins]t+ #bdg1 & #bej4 7,e7 ,clause 7iii7 ( section #dfi7;i77#c77;,d71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ & #bbb & ins]t+ #bbb1 & #bej4 7c7 ,effective date 7#a7 ,treatm5t z subp>t ,f income ,! am5dm5ts made by subsection 7a7 %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjad1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 7#b7 ,d$uction = =eign intangible income ,! am5dm5ts made by subsection 7b7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #dbab4 ,d5ial ( d$uction = int]e/ exp5se ( ,unit$ ,/ates %>ehold]s :i* are memb]s ( worldwide affiliat$ gr\ps ) excess dome/ic indebt$ness 7a7 ,9 g5]al ,section #afc is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,disall[ance ( d$uction = int]e/ exp5se ( ,unit$ ,/ates %>ehold]s :i* are memb]s ( worldwide affiliat$ gr\ps ) excess dome/ic indebt$ness 7#a7 ,9 g5]al ,9 ! case ( any dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] 7z def9$ 9 section #iea7;b77 ) respect to any =eign corporation bo? ( :i* are memb]s ( ! same worldwide affiliat$ gr\p1 ! d$uction all[$ "u ?is *apt] = int]e/ paid or accru$ by su* dome/ic corporation dur+ ! taxable ye> %all be r$uc$ by ! less] (-- 7,a7 ! product (-- 7i7 ! net int]e/ exp5se ( su* dome/ic corporation1 multipli$ by 7ii7 ! debt-to-equity diff]5tial p]c5tage ( su* worldwide affiliat$ gr\p1 or 7,b7 ! excess 7if any7 (-- 7i7 su* net int]e/ exp5se1 ov] 7ii7 #dj p]c5t ( ! adju/$ taxable income 7z def9$ 9 subsection 7j77#f77;,a77 ( su* dome/ic corporation4 7#b7 ,c>ry=w>d ,any am\nt disall[$ "u p>agraph 7#a7 = any taxable ye> %all be treat$ z int]e/ paid or accru$ 9 ! succe$+ taxable ye> 7& %all n be treat$ z disqualifi$ int]e/ = purposes ( apply+ subsection 7j774 7#c7 ,debt-to-equity diff]5tial p]c5tage 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! t]m debt-to-equity diff]5tial p]c5tage means1 ) respect to any worldwide affiliat$ gr\p1 ! p]c5tage :i* ! excess dome/ic indebt$ness ( su* gr\p be>s to ! total indebt$ness ( ! dome/ic corporations :i* are memb]s ( su* gr\p4 7,b7 ,excess dome/ic indebt$ness ,= purposes ( subp>agraph 7,a71 ! t]m excess dome/ic indebt$ness means1 ) respect to any worldwide affiliat$ gr\p1 ! excess 7if any7 (-- 7i7 ! total indebt$ness ( ! dome/ic corporations :i* are memb]s ( su* gr\p1 ov] 7ii7 #aaj p]c5t ( ! am\nt :i* ! total indebt$ness ( su* dome/ic corporations w\ld be if ! ratio ( su* indebt$ness to ! total equity ( su* dome/ic corporations equal$ ! ratio :i*-- 7,i7 ! total indebt$ness ( su* gr\p1 be>s to 7,,ii7 ! total equity ( su* gr\p4 7,c7 ,total equity ,= purposes ( subp>agraph 7,b71 ! t]m total equity means1 ) respect to "o or m corporations1 ! excess 7if any7 (-- 7i7 ! money & all o!r assets ( su* corporations1 ov] 7ii7 ! total indebt$ness ( su* corporations4 7,d7 ,special rules = det]m9+ debt & equity ,= purposes ( ?is p>agraph-- 7i7 ,application ( c]ta9 g5]al rules ,rules simil> to ! rules ( clauses 7i71 7ii71 & 7iii7 ( subsection 7j77#b77;,c7 %all apply4 7ii7 ,intragr\p debt & equity int]e/s disreg>d$ ,! total indebt$ness1 & ! assets1 ( any gr\p ( corporations %all be det]m9$ by treat+ all memb]s ( su* gr\p z "o corporation4 7iii7 ,det]m9ation ( assets ( dome/ic gr\p ,! assets ( ! dome/ic corporations :i* are memb]s ( any worldwide affiliat$ gr\p %all be det]m9$ by disreg>d+ any int]e/ held by any su* dome/ic corporation 9 any =eign corporation :i* is a memb] ( su* gr\p4 7#d7 ,o!r def9itions ,= purposes ( ?is subsection-- 7,a7 ,worldwide affiliat$ gr\p ,! t]m worldwide affiliat$ gr\p has ! mean+ :i* w\ld be giv5 su* t]m by section #hfd7;f77#a77;,c7 if section #aejd7;a7 7 appli$ by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s4 7,b7 ,net int]e/ exp5se ,! t]m net int]e/ exp5se has ! mean+ giv5 su* t]m by subsection 7j77#f77;,b74 7#e7 ,treatm5t ( affiliat$ gr\p ,= purposes ( ?is subsection1 all memb]s ( ! same affiliat$ gr\p 7)9 ! mean+ ( section #aejd7;a7 appli$ by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s7 %all be treat$ z #a taxpay]4 7#f7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance-- 7,a7 to prev5t ! avoidance ( ! purposes ( ?is subsection1 7,b7 provid+ su* adju/m5ts 9 ! case ( corporations :i* are memb]s ( an affiliat$ gr\p z may be appropriate to c>ry out ! purposes ( ?is subsection1 7,c7 provid+ = ! coord9ation ( ?is subsection ) section #hhd1 & 7,d7 provid+ = ! reallocation ( %>es ( p>tn]%ip indebt$ness1 or di/ributive %>es ( ! p>tn]%ip's int]e/ income or int]e/ exp5se4 4 7b7 ,coord9ation ) limitation on relat$ p>ty indebt$ness ,p>agraph 7#a7 ( section #afc7;j7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,coord9ation ) limitation on excess dome/ic indebt$ness ,! am\nt disall[$ "u subp>agraph 7,a7 ) respect to any corporation = any taxable ye> %all be r$uc$ by any am\nt disall[$ "u subsection 7n77#a7 ) respect to su* corporation = su* taxable ye>4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,v ,tax ,exempt ,entities ,a ,unrelat$ ,bus9ess ,income ,tax #ejja4 ,cl>ification ( unrelat$ bus9ess income tax treatm5t ( entities treat$ z exempt f taxation "u section #eja7;a7 7a7 ,9 g5]al ,subp>agraph 7,a7 ( section #eaa7;a77#b7 is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ! prec$+ s5t5ce1 an organization %all n fail to be treat$ z exempt f taxation "u ?is subtitle by reason ( section #eja7;a7 solely because su* organization is also s exempt1 or excludes am\nts f gross income1 by reason ( any o!r provision ( ?is title44 7b7 ,cl]ical am5dm5t ,! head+ = subp>agraph 7,a7 ( section #eaa7;a77#b7 is am5d$ to read z foll[s3 ,organizations exempt f taxation by reason ( section #eja7;a74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ejjb4 ,"n & logo royalties treat$ z unrelat$ bus9ess taxable income 7a7 ,9 g5]al ,section #eac is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,"n & logo royalties ,any sale or lic5s+ by an organization ( any "n or logo ( ! organization 7includ+ any tradem>k or copyright relat+ to su* "n or logo7 %all be treat$ z an unrelat$ trade or bus9ess regul>ly c>ri$ on by su* organization4 4 7b7 ,calculation ( unrelat$ bus9ess taxable income ,subsection 7b7 ( section #eab is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#bj7 ,special rule = "n & logo royalties ,not)/&+ p>agraph 7#a71 7#b71 7#c71 or 7#e71 any income d]iv$ f any sale or lic5s+ describ$ 9 section #eac7k7 %all be includ$ z an item ( gross income d]iv$ f an unrelat$ trade or bus9ess4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ejjc4 ,unrelat$ bus9ess taxable income sep>ately comput$ = ea* trade or bus9ess activity 7a7 ,9 g5]al ,subsection 7a7 ( section #eab is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,special rule = organization ) m ?an #a unrelat$ trade or bus9ess ,9 ! case ( any organization ) m ?an #a unrelat$ trade or bus9ess-- 7,a7 unrelat$ bus9ess taxable income %all be comput$ sep>ately ) respect to ea* su* trade or bus9ess & )\t reg>d to subsection 7b77#ab71 7,b7 ! unrelat$ bus9ess taxable income ( su* organization %all be ! sum ( ! unrelat$ bus9ess taxable income s comput$ ) respect to ea* su* trade or bus9ess1 less a specific d$uction "u subsection 7b77#ab71 & 7,c7 = purposes ( subp>agraph 7,b71 unrelat$ bus9ess taxable income ) respect to any su* trade or bus9ess %all n be less ?an z]o1 & 7,d7 ! net op]at+ loss d$uction %all only be all[$ ) respect to ! trade or bus9ess f :i* ! net op]at+ loss arose4 4 7b7 ,effective date 7#a7 ,9 g5]al ,except to ! ext5t provid$ 9 p>agraph 7#b71 ! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,net op]at+ losses 7,a7 ,c]ta9 c>ryov]s ,9 ! case ( any net op]at+ loss aris+ 9 a taxable ye> beg9n+ be=e ,janu>y #a1 #bjae1 t is c>ri$ ov] to a taxable ye> beg9n+ on or aft] su* date1 section #eab7;a77#f77;,d7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is ,act1 %all n apply4 7,b7 ,c]ta9 c>rybacks ,9 ! case ( any net op]at+ loss aris+ 9 a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 & c>ri$ back to any taxable ye> beg9n+ on or be=e su* date1 9 comput+ unrelat$ bus9ess taxable income ( an organization "u section #eab7;a7 ( su* ,code = ! taxable ye>1 ! net op]at+ loss d$uction %all be all[$ only ) respect to ! trade or bus9ess f :i* ! net op]at+ loss arose4 #ejjd4 ,exclusion ( rese>* income limit$ to publicly available rese>* 7a7 ,9 g5]al ,p>agraph 7#i7 ( section #eab7;b7 is am5d$ by /rik+ f rese>* & ins]t+ f su* rese>*4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ejje4 ,p>ity ( *>itable contribution limitation betwe5 tru/s & corporations 7a7 ,9 g5]al ,p>agraph 7#aa7 ( section #eab7;b7 is am5d$ by /rik+ ! second s5t5ce & ins]t+ ! foll[+3 ,! d$uction all[$ by ?is p>agraph %all n exce$ #aj p]c5t ( ! unrelat$ bus9ess taxable income comput$ )\t ! b5efit ( ?is p>agraph4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ejjf4 ,increas$ specific d$uction 7a7 ,9 g5]al ,p>agraph 7#ab7 ( section #eab7;b7 is am5d$ by /rik+ #a1jjj ea* place x appe>s & ins]t+ #aj1jjj4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ejjg4 ,repeal ( exclusion ( ga9 or loss f disposition ( di/ress$ prop]ty 7a7 ,9 g5]al ,subsection 7b7 ( section #eab is am5d$ by /rik+ p>agraph 7#af74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to prop]ty acquir$ aft] ,decemb] #ca1 #bjad4 #ejjh4 ,qualifi$ sponsor%ip paym5ts 7a7 ,repeal ( use or ackn[l$gm5t ( product l9es = qualifi$ sponsor%ip paym5ts ,subp>agraphs 7,a7 & 7,b77ii77,i7 ( section #eac7;i77#b7 are ea* am5d$ by /rik+ 7or product l9es74 7b7 ,use or ackn[l$gm5t limit$ 9 case ( c]ta9 ev5ts ,subp>agraph 7,b7 ( section #eac7;i77#b7 is am5d$ by add+ at ! end ! foll[+ new clause3 7iii7 ,use or ackn[l$gm5t limit$ 9 case ( c]ta9 ev5ts ,9 ! case ( an ev5t ) respect to :i* an organization receives an aggregate am\nt ( qualifi$ sponsor%ip paym5ts great] ?an #be1jjj1 a paym5t %all n be treat$ z a qualifi$ sponsor%ip paym5t = purposes ( p>agraph 7#a7 unless ! use or ackn[l$gm5t ( ! sponsor's "n or logo appe>s )1 & 9 sub/antially ! same mann] z1 ! names ( a significant portion ( o!r donors to ! organization4 ,= purposes ( ! prec$+ s5t5ce1 :e!r a numb] ( donors is a significant portion %all be det]m9$ bas$ on ! total numb] ( donors & ! total contribut$ ) respect to ! ev5t1 b 9 no ev5t %all few] ?an #b o!r donors be treat$ z a significant portion ( o!r donors4 4 7c7 ,cl]ical am5dm5t ,! head+ = clause 7ii7 ( section #eac7;i77#b77;,b7 is am5d$ to read z foll[s3 ,p]iodicals & qualifi$ conv5tion & trade %[ activities44 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,b ,p5alties #eaja4 ,increase 9 in=mation return p5alties 7a7 ,failure ,to file return 7#a7 ,organization ,subp>agraph 7,a7 ( section #ffeb7;c77#a7 is am5d$-- 7,a7 by /rik+ #bj ea* place x appe>s & ins]t+ #dj1 & 7,b7 by /rik+ #ajj & ins]t+ #bjj4 7#b7 ,manag]s ,clause 7ii7 ( section #ffeb7;c77#a77;,b7 is am5d$ by /rik+ #aj & ins]t+ #bj4 7b7 ,failure ,to make returns1 reports1 & applications available = public inspection ,subp>agraphs 7,c7 & 7,d7 ( section #ffeb7;c77#a7 are ea* am5d$ by /rik+ #bj & ins]t+ #dj4 7c7 ,failure ,to file returns "u section #fjcd or #fjdc ,p>agraph 7#b7 ( section #ffeb7;c7 is am5d$-- 7#a7 by /rik+ #aj ea* place x appe>s 9 subp>agraphs 7,a7 & 7,b7 & ins]t+ #bj1 & 7#b7 by /rik+ sub/itut+ #ajj = #bj1 9 subp>agraph 7,c77ii7 & ins]t+ sub/itut+ #bjj = #dj14 7d7 ,failure ,to file disclosure "u section #fjcc7;a77#b7 7#a7 ,organization ,subp>agraph 7,a7 ( section #ffeb7;c77#c7 is am5d$ by /rik+ #ajj & ins]t+ #bjj4 7#b7 ,manag]s ,subp>agraph 7,b7 ( section #ffeb7;c77#c7 is am5d$ by /rik+ #ajj & ins]t+ #bjj4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply ) respect to in=mation returns requir$ to be fil$ on or aft] ,janu>y #a1 #bjae4 #eajb4 ,manag]-level accuracy-relat$ p5alty on und]paym5t ( unrelat$ bus9ess income tax 7a7 ,9 g5]al ,section #fffb is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,manag]-,level p5alty = sub/antial und]paym5t ( unrelat$ bus9ess income tax 7#a7 ,9 g5]al ,9 ! case ( any sub/antial und]paym5t ( income tax :i* is attributable to ! tax impos$ by section #eaa on ! unrelat$ bus9ess taxable income ( an organization = ! taxable ye>1 !re is h]eby impos$ a tax ) respect to su* organization an am\nt equal to #e p]c5t ( su* und]paym5t to :i* ! und]paym5t relates4 ,su* tax %all be paid by any manag] ( ! organization4 7#b7 ,manag] ,= purposes ( ?is subsection1 ! t]m manag] means any (fic]1 director1 tru/ee1 employee1 or o!r individual :o is "u a duty to p]=m an act 9 respect ( :i* ! und]paym5t relates4 7#c7 ,jo9t & sev]al liability ,if m ?an "o p]son is liable "u p>agraph 7#a7 ) respect to an und]paym5t1 all su* p]sons %all be jo9tly & sev]ally liable "u su* p>agraph ) respect to su* und]paym5t 7#d7 ,limit ,) respect to any sub/antial und]paym5t ( income tax = a taxable ye>1 ! maximum am\nt ( ! tax add$ by p>agraph 7#a7 %all n exce$ #bj1jjj4 4 7b7 ,reportable transactions ,section #fffb;,a is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,manag]-,level p5alty 9 case ( unrelat$ bus9ess income tax 7#a7 ,9 g5]al ,9 ! case ( any portion ( a reportable transaction und]/atem5t ( ! tax impos$ by section #eaa to :i* ?is section applies1 !re is h]eby impos$ a tax 9 an am\nt equal to #aj p]c5t ( su* portion ( ! und]paym5t to :i* ! reportable transaction und]/atem5t occurs4 ,su* tax %all be paid by any manag] ( ! organization4 7#b7 ,manag] ,= purposes ( ?is subsection1 ! t]m manag] means any (fic]1 director1 tru/ee1 employee1 or o!r individual :o is "u a duty to p]=m an act 9 respect ( :i* su* und]/atem5t occurs4 7#c7 ,jo9t & sev]al liability ,if m ?an "o p]son is liable "u p>agraph 7#a7 ) respect to an und]/atem5t1 all su* p]sons %all be jo9tly & sev]ally liable "u su* p>agraph ) respect to su* und]/atem5t4 7#d7 ,limit ,) respect to any und]/atem5t ( tax to :i* ?is section applies1 ! maximum am\nt ( ! tax add$ by p>agraph 7#a7 %all n exce$ #dj1jjj 4 7c7 ,coord9ation ,section #fffb is am5d$-- 7#a7 by /rik+ ! flu% matt] at ! end ( subsection 7b71 & 7#b7 by add+ at ! end ! foll[+ new subsection3 7l7 ,coord9ation ) o!r p5alties ,?is section %all n apply to any portion ( an und]paym5t on :i* a p5alty is impos$ "u section #fffc4 ,except z provid$ 9 p>agraph 7#a7 or 7#b77;,b7 ( section #fffb;,a7e71 ?is section %all n apply to ! portion ( any und]paym5t :i* is attributable to a reportable transaction und]/atem5t on :i* a p5alty is impos$ "u section #fffb;,a4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,c ,excise ,taxes #ebja4 ,modification ( int]m$iate sanctions 7a7 ,organization level tax ,subsection 7a7 ( section #dieh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,on ! organization ,9 any case 9 :i* a tax is impos$ by p>agraph 7#a71 !re is h]eby impos$ on ! organization a tax equal to #aj p]c5t ( ! excess b5efit4 4 7b7 ,m9imum /&>ds ( organization due dilig5ce ,subsection 7d7 ( section #dieh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,m9imum /&>ds ( organization due dilig5ce 7,a7 ,9 g5]al ,subsection 7a77#c7 %all n apply to a transaction1 if-- 7i7 ! organization e/abli%es t ! m9imum /&>ds ( due dilig5ce describ$ 9 subp>agraph 7,b7 7 met ) respect to ! transaction1 or 7ii7 ! organization e/abli%es to ! satisfaction ( ! ,secret>y t su* o!r reasonable proc$ures 7 us$ to ensure t no excess b5efit 0 provid$4 7,b7 ,m9imum /&>ds ,an organization %all be treat$ z satisfy+ ! m9imum /&>ds ( due dilig5ce describ$ 9 ?is subp>agraph ) respect to any transaction1 if-- 7i7 ! transaction 0 approv$ 9 advance by an au?oriz$ body ( ! organization compos$ entirely ( individuals :o did n h a conflict ( int]e/ ) respect to ! transaction1 7ii7 ! au?oriz$ body obta9$ & reli$ ^u appropriate data z to comp>ability prior to approval ( ! transaction1 & 7iii7 ! au?oriz+ body adequately & concurr5tly docum5t$ ! basis = approv+ ! transaction4 7,c7 ,no presumption z to reasonabl5ess ,meet+ ! requirem5ts ( clause 7i7 or 7ii7 ( subp>agraph 7,a7 ) respect to a transaction %all n give rise to a presumption ( reasonabl5ess = purposes ( ! taxes impos$ by p>agraphs 7#a7 or 7#b7 ( subsection 7a7 & %all n1 by itself1 support a conclusion t a manag] did n act kn[+ly = purposes ( subsection 7a77#b74 4 7c7 ,repeal ( exception = manag] reliance on pr(essional advice ,section #dieh is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,no safe h>bor = reliance on pr(essional advice ,an organization manag]'s reliance on a writt5 op9ion ( a pr(essional ) respect to elem5ts ( a transaction )9 ! pr(essional's exp]tise %all n1 by itself1 preclude ! manag] f be+ treat$ z p>ticipat+ 9 ! transaction kn[+ly4 4 7d7 ,a?letic coa*es & inve/m5t manag]s treat$ z disqualifi$ p]sons 7#a7 ,a?letic coa*es 7,a7 ,9 g5]al ,p>agraph 7#a7 ( section #dieh7;f7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,e71 by /rik+ ! p]iod at ! end ( subp>agraph 7,f7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,g7 any p]son :o p]=ms s]vices z an a?letic coa* = ! organization4 4 7,b7 ,family memb]s ,subp>agraph 7,b7 ( section #dieh7;f77#a7 is am5d$ by ins]t+ or 7,g7 aft] subp>agraph 7,a74 7#b7 ,inve/m5t advisors 7,a7 ,9 g5]al ,subp>agraph 7,f7 ( section #dieh7;f77#a7 is am5d$-- 7i7 by /rik+ :i* involves a sponsor+ organization 7z def9$ 9 section #diff7;d77#a7711 & 7ii7 by /rik+ su* sponsor+ organization 7z s def9$7 & ins]t+ ! organization4 7,b7 ,inve/m5t advisor def9ition ,subp>agraph 7,b7 ( section #dieh7;f77#h7 is am5d$ to read z foll[s3 7,b7 ,inve/m5t advisor def9$ ,= purposes ( subp>agraph 7,a71 ! t]m inve/m5t advisor means-- 7i7 ) respect to any organization1 any p]son :o is comp5sat$ by su* organization & is prim>ily responsible = manag+ ! inve/m5t (1 or provid+ inve/m5t advice ) respect to1 assets ( su* organization1 & 7ii7 ) respect to any sponsor+ organization 7z def9$ 9 section #diff7;d77#a771 any p]son 7o!r ?an an employee ( su* organization7 comp5sat$ by su* organization = manag+ ! inve/m5t (1 or provid+ inve/m5t advice ) respect to1 assets ma9ta9$ 9 donor advis$ funds 7z def9$ 9 section #diff7;d77#b77 own$ by su* organization4 4 7e7 ,application to unions & trade associations ,p>agraph 7#a7 ( section #dieh7;e7 is am5d$ by ins]t+ 7#e71 7#f71 aft] 7#d714 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ebjb4 ,modification ( taxes on self-deal+ 7a7 ,organization level tax ,subsection 7a7 ( section #dida is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,on ! f\ndation ,9 any case 9 :i* a tax is impos$ by p>agraph 7#a71 !re is h]eby impos$ on ! f\ndation a tax equal to #b4e p]c5t 7#aj p]c5t 9 ! case paym5t ( comp5sation7 ( ! am\nt involv$ ) respect to ! act ( self-deal+ = ea* ye> 7or "p !re(7 9 ! taxable p]iod4 4 7b7 ,repeal ( exception = manag] reliance on advice f c\nsel ,section #dida is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,no safe h>bor = reliance on advice ( c\nsel ,a f\ndation manag]'s reliance on a writt5 legal op9ion by legal c\nsel t an act is n an act ( self-deal+ %all n1 by itself1 preclude ! manag] f be+ treat$ z p>ticipat+ 9 ! act kn[+ly4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ebjc4 ,excise tax on failure to di/ribute )9 #e ye>s contribution to donor advis$ fund 7a7 ,9 g5]al ,sub*apt] ,g ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new section3 #difh4 ,failure to di/ribute contributions )9 #e ye>s 7a7 ,9 g5]al ,9 ! case ( a contribution :i* is held 9 a donor advis$ fund1 !re is h]eby impos$ a tax equal to #bj p]c5t ( s mu* ( ! portion ( su* contribution z has n be5 di/ribut$ by ! sponsor+ organization 9 an eligible di/ribution be=e ! beg9n+ ( ! #f? 7or succe$+7 taxable ye> beg9n+ aft] ! taxable ye> dur+ :i* su* contribution 0 made4 ,! tax impos$ by ?is subsection %all be paid by su* sponsor+ organization4 7b7 ,treatm5t ( di/ributions ,= purposes ( ?is section-- 7#a7 ,eligible di/ribution ,! t]m eligible di/ribution means any di/ribution to an organization describ$ 9 section #agj7;b77#a77;,a7 7o!r ?an an organization describ$ 9 section #eji7;a77#c7 or any fund or acc\nt describ$ 9 section #diff7;d77#b74 7#b7 ,acc\nt+ ,di/ributions %all be treat$ z made f contributions 7& any e>n+s attributable !reto7 on a fir/-91 fir/-out basis4 4 7b7 ,con=m+ am5dm5t ,! table ( sections = sub*apt] ,g ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #difh4 ,failure to di/ribute contributions )9 #e ye>s4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to contributions made aft] ,decemb] #ca1 #bjad4 7#b7 ,transition rule ,9 ! case ( any contribution-- 7,a7 :i* 0 made be=e ,janu>y #a1 #bjae1 & 7,b7 any portion ( :i* 7includ+ any e>n+s attributable !reto7 is held 9 a donor advis$ fund on su* date1 su* portion %all be treat$ z contribut$ on su* date4 #ebjd4 ,simplification ( excise tax on private f\ndation inve/m5t income 7a7 ,rate r$uction ,subsection 7a7 ( section #didj is am5d$ by /rik+ #b p]c5t & ins]t+ #a p]c5t4 7b7 ,repeal ( special rules = c]ta9 private f\ndations ,section #didj is am5d$ by /rik+ subsections 7d7 & 7e74 7c7 ,con=m+ am5dm5t ,section #dide7;d77#d77;,a7 is am5d$ by /rik+ clause 7iii7 & by ins]t+ or at ! end ( clause 7i74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ebje4 ,repeal ( exception = private op]at+ f\ndation failure to di/ribute income 7a7 ,9 g5]al ,subsection 7a7 ( section #didb is am5d$-- 7#a7 by /rik+ a private f\ndation-- & all t foll[s ?r\gh 7#b7 to ! ext5t & ins]t+ a private f\ndation to ! ext5t1 & 7#b7 by r$esignat+ subp>agraphs 7,a71 7,b71 7,c71 & 7,d7 z p>agraphs 7#a71 7#b71 7#c71 & 7#d71 respectively1 & by mov+ su* p>agraphs1 z s r$esignat$1 two ems to ! left4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #didb7;j7 is am5d$ by /rik+ p>agraphs 7#c71 7#d71 & 7#e74 7#b7 ,section #agj7;b77#a77;,f77i7 is am5d$ by /rik+ 7z def9$ 9 section #didb7;j77#c771 7#c7 ,section #agj7;b77#a7 is am5d$ by add+ at ! end ! foll[+ new subp>agraphs3 7,h7 ,private op]at+ f\ndation ,= purposes ( ?is p>agraph1 ! t]m private op]at+ f\ndation means any organization-- 7i7 :i* makes qualify+ di/ributions 7)9 ! mean+ ( p>agraph 7#a7 or 7#b7 ( section #didb7;g77 directly = ! active conduct ( ! activities con/itut+ ! purpose or function = :i* x is organiz$ & op]at$ equal to sub/antially all ( ! less] (-- 7,i7 its adju/$ net income 7z def9$ 9 subsection section #didb7;f771 or 7,,ii7 its m9imum inve/m5t return1 & 7ii7 7,i7 sub/antially m ?an half ( ! assets ( :i* are devot$ directly to su* activities or to functionally relat$ bus9esses1 or to bo?1 or are /ock ( a corporation :i* is controll$ by ! f\ndation & sub/antially all ( ! assets ( :i* are s devot$1 7,,ii7 :i* normally makes qualify+ di/ributions 7)9 ! mean+ ( p>agraph 7#a7 or 7#b7 ( section #didb7;g77 directly = ! active conduct ( ! activities con/itut+ ! purpose or function = :i* x is organiz$ & op]at$ 9 an am\nt n less ?an two-?irds ( its m9imum inve/m5t return 7z def9$ 9 section #didb7;e771 or 7,,iii7 sub/antially all ( ! support 7o!r ?an gross inve/m5t income z def9$ 9 section #eji7;e77 ( :i* is normally receiv$ f ! g5]al public & f #e or m exempt organizations :i* are n describ$ 9 section #didf7;a77#a77;,h7 ) respect to ea* o!r or ! recipi5t f\ndation2 n m ?an #be p]c5t ( ! support 7o!r ?an gross inve/m5t income7 ( :i* is normally receiv$ f any "o su* exempt organization2 & n m ?an half ( ! support ( :i* is normally receiv$ f gross inve/m5t income4 ,not)/&+ ! provisions ( clause 7i71 if ! qualify+ di/ributions 7)9 ! mean+ ( p>agraph 7#a7 or 7#b7 ( section #didb7;g77 ( an organization = ! taxable ye> exce$ ! m9imum inve/m5t return = ! taxable ye>1 subclause 7,,ii7 ( clause 7i7 %all n apply unless sub/antially all ( su* qualify+ di/ributions are made directly = ! active conduct ( ! activities con/itut+ ! purpose or function = :i* x is organiz$ & op]at$4 7,i7 ,functionally relat$ bus9ess ,= purposes ( subp>agraph 7,h71 ! t]m functionally relat$ bus9ess means-- 7i7 a trade or bus9ess :i* is n an unrelat$ trade or bus9ess 7z def9$ 9 section #eac71 or 7ii7 an activity :i* is c>ri$ on )9 a l>g] aggregate ( simil> activities or )9 a l>g] complex ( o!r endeavors :i* is relat$ 7aside f ! ne$ ( ! organization = income or funds or ! use x makes ( ! pr(its d]iv$7 to ! exempt purposes ( ! organization4 4 7#d7 ,section #agj7;e77#c77;,a7 is am5d$ by /rik+ z def9$ 9 section #didb7;j77#c7 & ins]t+ z def9$ 9 subsection 7b77#a77;,h74 7#e7 ,section #aej7;b77#c77;,f71 z r$esignat$ by ?is ,act1 is am5d$-- 7,a7 by /rik+ #didb 7relat+ to ! excise tax on a failure to di/ribute income7 &1 7,b7 by /rik+ section #didb7;j77#d7 & ins]t+ section #agj7;b77#a77;,i74 7#f7 ,section #bjee7;e77#d77;,d7 is am5d$ by /rik+ section #didb7;j77#c7 & ins]t+ section #agj7;b77#a77;,h74 7#g7 ,section #bejc7;g77#b77;,b7 is am5d$ by /rik+ section #didb7;j77#c7 & ins]t+ section #agj7;b77#a77;,h74 7#h7 ,section #didb7;g77#a77;,a7 is am5d$ by /rik+ :i* is n an op]at+ f\ndation 7z def9$ 9 subsection 7j77#c774 7#i7 ,section #didb7;g77#c77;,a7 is am5d$ by /rik+ :i* is n an op]at+ f\ndation4 7#aj7 ,section #didb7;g77#d77;,a7 is am5d$ by /rik+ :i* is n an op]at+ f\ndation4 7#aa7 ,section #didc7;d77#c77;,a7 is am5d$ by /rik+ section #didb7;j77#d7 & ins]t+ section #agj7;b77#a77;,i74 7#ab7 ,section #faaj7l77#b77;,a7 is am5d$ by /rik+ section #didb7;j77#c7 & ins]t+ section #agj7;b77#a77;,h74 7#ac7 ,section #gdbh7;a77#a77;,c7 is am5d$ by /rik+ section #didb7;j77#c7 & ins]t+ section #agj7;b77#a77;,h74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ebjf4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 7a7 ,9 g5]al ,*apt] #db is am5d$ by add+ at ! end ! foll[+ new sub*apt]3 ,h ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities ,sec4 #difi4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities4 #difi4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 7a7 ,tax impos$ ,!re is h]eby impos$ on ea* applicable educational in/itution = ! taxable ye> a tax equal to #a p]c5t ( ! net inve/m5t income ( su* in/itution = ! taxable ye>4 7b7 ,applicable educational in/itution ,= purposes ( ?is sub*apt]-- 7#a7 ,9 g5]al ,! t]m applicable educational in/itution means an eligible educational in/itution 7z def9$ 9 section #be;,a7e77#c77-- 7,a7 :i* is n describ$ 9 ! fir/ s5t5ce ( section #eaa7;a77#b77;,b7 7relat+ to ,/ate colleges & univ]sities71 & 7,b7 ! aggregate fair m>ket value ( ! assets ( :i* at ! end ( ! prec$+ taxable ye> 7o!r ?an ^? assets :i* are us$ 7or held = use7 directly 9 c>ry+ out ! in/itution's exempt purpose7 is at lea/ #ajj1jjj p] /ud5t ( ! in/itution4 7#b7 ,/ud5ts ,= purposes ( p>agraph 7#a77;,b71 ! numb] ( /ud5ts ( an in/itution %all be bas$ on ! daily av]age numb] ( full-"t /ud5ts att5d+ su* in/itution 7) "p-"t /ud5ts tak5 into acc\nt on a full-"t /ud5t equival5t basis74 7c7 ,net inve/m5t income ,= purposes ( ?is section1 net inve/m5t income %all be det]m9$ "u rules simil> to ! rules ( section #didj7;c74 4 7b7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #db is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,h--,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,d ,requirem5ts = ,organizations ,exempt ,f ,tax #ecja4 ,repeal ( tax-exempt /atus = pr(essional sports leagues 7a7 ,9 g5]al ,p>agraph 7#f7 ( section #eja7;c7 is am5d$-- 7#a7 by /rik+ 1 bo>ds ( trade1 or pr(essional & all t foll[s ?r\gh play]s7 & ins]t+ 1 or bo>ds ( trade1 & 7#b7 by add+ at ! end ! foll[+3 ,?is p>agraph %all n apply to any pr(essional sports league 7:e!r or n adm9i/]+ a p5sion fund = play]s744 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #ecjb4 ,repeal ( exemption f tax = c]ta9 insurance companies & co-op heal? insurance issu]s 7a7 ,9 g5]al ,section #eja7;c7 is am5d$ by /rik+ p>agraphs 7#ae7 & 7#bi74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #hca7;d71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7d7 ,cross ref]5ce ,= taxation ( =eign corporations c>ry+ on an insurance bus9ess )9 ! ,unit$ ,/ates1 see section #hdb4 4 7#b7 ,section #dieh7;e77#a7 is am5d$ by /rik+ 7#d71 or 7#bi7 & ins]t+ or 7#d74 7#c7 ,section #fjcc is am5d$ by /rik+ subsection 7m7 & r$esignat+ subsection 7n7 z subsection 7m74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7d7 ,transition rules ,9 ! case ( any organization describ$ 9 p>agraph 7#ae7 or 7#bi7 ( section #eja7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect imm$iately be=e ! enactm5t ( ?is ,act7-- 7#a7 no adju/m5t %all be made "u section #dha 7or any o!r provision7 ( ! ,int]nal ,rev5ue ,code ( #aihf on acc\nt ( a *ange 9 its me?od ( acc\nt+ = its #a/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjad1 & 7#b7 = purposes ( det]m9+ ga9 or loss1 ! adju/$ basis ( any asset held on ! #a/ day ( su* taxable ye> %all be treat$ z equal to its fair m>ket value z ( su* day4 #ecjc4 ,9-,/ate requirem5t = workm5's comp5sation insurance organization 7a7 ,9 g5]al ,clause 7ii7 ( section #eja7;c77#bg77;,b7 is am5d$ by ins]t+ be=e ! comma at ! end ! foll[+3 1 & mu/ n (f] any o!r insurance4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to insurance policies issu$1 & r5ewals1 aft] ,decemb] #ca1 #bjad4 #ecjd4 ,repeal ( ,type ,,ii & ,type ,,iii support+ organizations 7a7 ,9 g5]al ,subp>agraph 7,b7 ( section #eji7;a77#c7 is am5d$-- 7#a7 by ins]t+ & at ! end ( clause 7i71 7#b7 by /rik+ clauses 7ii7 & 7iii71 & 7#c7 by /rik+ is-- & all t foll[s ?r\gh op]at$1 sup]vis$1 or controll$ & ins]t+ is op]at$1 sup]vis$1 or controll$4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #agj7;f77#ah77;,a7 is am5d$ by /rik+ is n-- & all t foll[s ?r\gh 1 & & ins]t+ ! foll[+3 is n describ$ 9 p>agraph 7#c71 7#d71 or 7#e7 ( subsection 7c71 &4 7#b7 7,a7 7i7 ,section #eji7;f7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7ii7 ,section #didb7;g77#d77;,a77ii77,i7 is am5d$ by /rik+ section #eji7;f77#c7 & ins]t+ section #eji7;f77#b74 7iii7 ,section #dieh7;c77#c77;,c77ii77,,ii7 is am5d$ by /rik+ section #eji7;f77#c7 & ins]t+ section #eji7;f77#b74 7iv7 ,section #diff7;d77#d77;,a77ii77,i7 is am5d$ by /rik+ section #eji7;f77#c7 & ins]t+ section #eji7;f77#b74 7,b7 ,section #eji7;f77#a77;,a71 z s r$esignat$1 is am5d$ by /rik+ %all n be consid]$ to be-- & all t foll[s ?r\gh if su* organization & ins]t+ ! foll[+3 %all n be consid]$ to be op]at$1 sup]vis$1 or controll$ by any organization describ$ 9 p>agraph 7#a7 or 7#b7 ( subsection 7a71 if su* organization4 7#c7 ,section #bjee7;e77#e77;,a7 is am5d$ by /rik+ is n-- & all t foll[s ?r\gh 1 & & ins]t+ ! foll[+3 is n describ$ 9 p>agraph 7#c7 or 7#d7 ( subsection 7a71 &4 7#d7 ,section #bebb7;c77#e77;,a7 is am5d$ by /rik+ is n-- & all t foll[s ?r\gh 1 & & ins]t+ ! foll[+3 is n describ$ 9 p>agraph 7#c7 or 7#d7 ( subsection 7a71 &4 7#e7 7,a7 ,section #didb7;g77#d77;,a71 z am5d$ by ! prec$+ provision ( ?is ,act1 is am5d$-- 7i7 by r$esignat+ subclauses 7,i7 & 7,,ii7 ( clause 7ii7 z clauses 7i7 & 7ii71 respectively1 & mov+ su* r$esignat$ clauses #b ems to ! left1 7ii7 by /rik+ paid by a private f\ndation to-- & all t foll[s ?r\gh any organization :i* & ins]t+ ! foll[+3 paid by a private f\ndation to any organization :i*1 & 7iii7 by /rik+ subp>agraph 7,b7 or 7,c7 & ins]t+ subp>agraph 7,b74 7,b7 ,section #didb7;g77#d77;,b7 is am5d$-- 7i7 by /rik+ clause 7ii71 7ii7 by /rik+ section #eji7;a71 or & ins]t+ section #eji7;a741 7iii7 by /rik+ & is-- & all t foll[s ?r\gh op]at$1 sup]vis$1 or controll$ by & ins]t+ ! foll[+3 & is op]at$1 sup]vis$1 or controll$ by1 & 7iv7 by /rik+ ,type ,i & type ,,ii 9 ! head+ !re(4 7,c7 ,section #didb7;g77#d7 is am5d$ by /rik+ subp>agraph 7,c74 7,d7 ,section #dide7;d77#d77;,a77ii7 is am5d$ by /rik+ clause 7i7 or 7ii7 ( section #didb7;g77#d77;,a7 & ins]t+ section #didb7;g77#d77;,a74 7#f7 ,section #didc is am5d$ by /rik+ subsection 7f74 7#g7 7,a7 ,section #diff7;d77#d77;,a71 z am5d$ by ?is ,act1 is am5d$-- 7i7 by r$esignat+ subclauses 7,i7 & 7,,ii7 ( clause 7ii7 z clauses 7i7 & 7ii71 respectively1 & mov+ su* r$esignat$ clauses #b ems to ! left1 7ii7 by /rik+ ) respect to any di/ribution-- & all t foll[s ?r\gh any organization :i* & ins]t+ ! foll[+3 ) respect to any di/ribution1 any organization :i*1 & 7iii7 by /rik+ subp>agraph 7,b7 or 7,c7 & ins]t+ subp>agraph 7,b74 7,b7 ,section #diff7;d77#d77;,b7 is am5d$-- 7i7 by /rik+ clause 7ii71 7ii7 by /rik+ section #eji7;a71 or & ins]t+ section #eji7;a741 7iii7 by /rik+ & is-- & all t foll[s ?r\gh op]at$1 sup]vis$1 or controll$ by & ins]t+ ! foll[+3 & is op]at$1 sup]vis$1 or controll$ by1 & 7iv7 by /rik+ ,type ,i & type ,,ii 9 ! head+ !re(4 7,c7 ,section #diff7;d77#d7 is am5d$ by /rik+ subp>agraph 7,c74 7#h7 ,section #fjcc7l7 is am5d$ by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ p>agraph 7#b71 & by r$esignat+ p>agraph 7#c7 z p>agraph 7#b74 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,delay = curr5t support+ organizations ,9 ! case ( an organization :i*1 z ( ! date ( ! enactm5t ( ?is ,act1 meets ! requirem5ts ( subp>agraphs 7,a7 & 7,c7 ( section #eji7;a77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf & is-- 7,a7 sup]vis$ or controll$ 9 connection ) "o or m organizations describ$ 9 p>agraph 7#a7 or 7#b7 ( section #eji7;a7 ( su* ,code1 or 7,b7 is op]at$ 9 connection ) "o or m su* organizations1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjae4 ,,vi ,tax adm9i/ration & compliance ,a ,,irs ,inve/igation-,relat$ ,re=ms #fjja4 ,organizations requir$ to notify ,secret>y ( int5t to op]ate z #eja7;c77#d7 7a7 ,9 g5]al ,"p ,i ( sub*apt] ,f ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #ejf4 ,organizations requir$ to notify ,secret>y ( int5t to op]ate z #eja7;c77#d7 7a7 ,9 g5]al ,an organization describ$ 9 section #eja7;c77#d7 %all1 n lat] ?an #fj days aft] ! organization is e/abli%$1 notify ! ,secret>y 79 su* mann] z ! ,secret>y %all by regulation prescribe7 t x is op]at+ z su*4 7b7 ,cont5ts ( notice ,! notice requir$ "u subsection 7a7 %all include ! foll[+ in=mation3 7#a7 ,! "n1 address1 & taxpay] id5tification numb] ( ! organization4 7#b7 ,! date on :i*1 & ! ,/ate "u ! laws ( :i*1 ! organization 0 organiz$4 7#c7 ,a /atem5t ( ! purpose ( ! organization4 7c7 ,ackn[l$gm5t ( receipt ,n lat] ?an #fj days aft] receipt ( su* a notice1 ! ,secret>y %all s5d to ! organization an ackn[l$gm5t ( su* receipt4 7d7 ,ext5sion = reasonable cause ,! ,secret>y may1 = reasonable cause1 ext5d ! #fj-;day p]iod describ$ 9 subsection 7a74 7e7 ,us] fee ,! ,secret>y %all impose a reasonable us] fee = submission ( ! notice "u subsection 7a74 7f7 ,reque/ = det]m9ation ,^u reque/ by an organization to be treat$ z an organization describ$ 9 section #eja7;c77#d71 ! ,secret>y may issue a det]m9ation ) respect to su* treatm5t4 ,su* reque/ %all be treat$ = purposes ( section #fajd z an application = exemption f taxation "u section #eja7;a74 4 7b7 ,support+ in=mation ) fir/ return ,p>agraph 7#a7 ( section #fjcc7;f7 is am5d$-- 7#a7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 7#b7 by /rik+ include on ! return requir$ "u subsection 7a7 ! in=mation & ins]t+ ! foll[+3 include on ! return requir$ "u subsection 7a7-- 7#a7 ! in=mation 1 & 7#c7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 9 ! case ( ! fir/ su* return fil$ by su* an organization aft] submitt+ a notice to ! ,secret>y "u section #ejf7;a71 su* in=mation z ! ,secret>y %all by regulation require 9 support ( ! organization's treatm5t z an organization describ$ 9 section #eja7;c77#d74 4 7c7 ,failure ,to file initial notification ,subsection 7c7 ( section #ffeb is am5d$ by r$esignat+ p>agraphs 7#d7 & 7#e7 z p>agraphs 7#e7 & 7#f71 respectively1 & by ins]t+ aft] p>agraph 7#c7 ! foll[+ new p>agraph3 7#d7 ,notices "u section #ejf 7,a7 ,p5alty on organization ,9 ! case ( a failure to submit a notice requir$ "u section #ejf7;a7 7relat+ to organizations requir$ to notify ,secret>y ( int5t to op]ate z #eja7;c77#d77 on ! date & 9 ! mann] prescrib$ !re=1 !re %all be paid by ! organization fail+ to s submit #bj = ea* day dur+ :i* su* failure cont9ues1 b ! total am\nt impos$ "u ?is subp>agraph on any organization = failure to submit any "o notice %all n exce$ #e1jjj4 7,b7 ,manag]s ,! ,secret>y may make writt5 dem& on an organization subject to p5alty "u subp>agraph 7,a7 specify+ 9 su* dem& a reasonable future date by :i* ! notice %all be submitt$ = purposes ( ?is subp>agraph4 ,if su* notice is n submitt$ on or be=e su* date1 !re %all be paid by ! p]son fail+ to s submit #bj = ea* day aft] ! expiration ( ! "t specifi$ 9 ! writt5 dem& dur+ :i* su* failure cont9ues1 b ! total am\nt impos$ "u ?is subp>agraph on all p]sons = failure to submit any "o notice %all n exce$ #e1jjj4 4 7d7 ,cl]ical am5dm5t ,! table ( sections = "p ,i ( sub*apt] ,f ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ejf4 ,organizations requir$ to notify ,secret>y ( int5t to op]ate z #eja7;c77#d74 4 7e7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to organizations :i* are describ$ 9 section #eja7;c77#d7 ( ! ,int]nal ,rev5ue ,code ( #aihf & organiz$ aft] ,decemb] #ca1 #bjad4 7#b7 ,c]ta9 exi/+ organizations ,9 ! case ( any o!r organization describ$ 9 section #eja7;c77#d7 ( su* ,code1 ! am5dm5ts made by ?is section %all apply to su* organization only if1 on or be=e ! date ( ! enactm5t ( ?is ,act-- 7,a7 su* organization has n appli$ = a writt5 det]m9ation ( recognition z an organization describ$ 9 section #eja7;c77#d7 ( su* ,code1 & 7,b7 su* organization has n fil$ at lea/ "o annual return or notice requir$ "u subsection 7a77#a7 or 7i7 7z ! case may be7 ( section #fjcc ( su* ,code4 ,9 ! case ( any organization to :i* ! am5dm5ts made by ?is section apply by reason ( ! prec$+ s5t5ce1 su* organization %all submit ! notice requir$ by section #ejf7;a7 ( su* ,code1 z add$ by ?is ,act1 n lat] ?an #ahj days aft] ! date ( ! enactm5t ( ?is ,act4 #fjjb4 ,decl>atory judgm5ts = #eja7;c77#d7 organizations 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #gdbh7;a7 is am5d$ by /rik+ or at ! end ( subp>agraph 7,c7 & by ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 ) respect to ! initial classification or cont9u+ classification ( an organization describ$ 9 section #eja7;c77#d7 :i* is exempt f tax "u section #eja7;a71 or 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to plead+s fil$ aft] ! date ( ! enactm5t ( ?is ,act4 #fjjc4 ,re/riction on donation report+ = c]ta9 #eja7;c77#d7 organizations 7a7 ,9 g5]al ,subsection 7f7 ( section #fjcc1 z am5d$ by ?is ,act1 is am5d$-- 7#a7 by r$esignat+ p>agraphs 7#a7 & 7#b7 z subp>agraphs 7,a7 & 7,b71 respectively1 & by mov+ su* subp>agraphs #b ems to ! "r1 7#b7 by /rik+ 9 section #eja7;c77#d74--;,e organization & ins]t+ ! foll[+3 9 section #eja7;c77#d74-- 7#a7 ,9 g5]al ,e organization 1 & 7#c7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,re/riction on donation report+ ,9 ! case ( any su* organization1 in=mation relat+ to contributions & gifts may only be requir$ to be includ$ on a return requir$ "u subsection 7a7 if ! contribution or gift is made by an (fic] or director ( ! organization 7or an individual hav+ p[]s or responsibilities simil> to ^? ( (fic]s or directors7 or any cov]$ employee 7z def9$ 9 section #difj7;c77#b77 ( ! organization4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #fjjd4 ,m&atory electronic fil+ = annual returns ( exempt organizations 7a7 ,9 g5]al ,section #fjcc1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsection 7m7 z subsection 7n7 & by ins]t+ aft] subsection 7l7 ! foll[+ new subsection3 7m7 ,m&atory electronic fil+ ,any organization requir$ to file a return "u ?is section %all file su* return 9 electronic =m4 4 7b7 ,inspection ( electronically fil$ annual returns ,subsection 7b7 ( section #fajd is am5d$ by add+ at ! end ! foll[+3 ,any annual return requir$ to be fil$ electronically "u section #fjcc7m7 %all be made available by ! ,secret>y to ! public 9 ma*9e readable =mat z soon z practicable44 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,transitional relief 7,a7 ,small organizations 7i7 ,9 g5]al ,9 ! case ( any small organizations1 or any o!r organizations = :i* ! ,secret>y det]m9es ! application ( ! am5dm5ts made by subsection 7a7 w\ld cause undue burd5 )\t a delay1 ! ,secret>y may delay ! application ( su* am5dm5ts1 b n lat] ?an taxable ye>s beg9n+ #b ye>s aft] ! date ( ! enactm5t ( ?is ,act4 7ii7 ,small organization ,= purposes ( clause 7i71 ! t]m small organization means any organization-- 7,i7 ! gross receipts ( :i* = ! taxable ye> are less ?an #bjj1jjj1 & 7,,ii7 ! aggregate gross assets ( :i* at ! end ( ! taxable ye> are less ?an #ejj1jjj4 7,b7 ,organizations fil+ =m #iij-,t ,9 ! case ( any organization describ$ 9 section #eaa7;a77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf :i* is subject to ! tax impos$ by section #eaa7;a77#a7 ( su* ,code on its unrelat$ bus9ess taxable income1 or any organization requir$ to file a return "u section #fjcc ( su* ,code & include in=mation "u subsection 7e7 !re(1 ! ,secret>y may delay ! application ( ! am5dm5ts made by ?is section1 b n lat] ?an taxable ye>s beg9n+ #b ye>s aft] ! date ( ! enactm5t ( ?is ,act4 #fjje4 ,duty to ensure t ,,irs employees are famili> ) & act 9 accord ) c]ta9 taxpay] rights ,section #ghjc7;a7 is am5d$ by r$esignat+ p>agraph 7#c7 z p>agraph 7#d7 & by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,execution ( ,duties 9 ,accord ) ,taxpay] ,rights ,9 dis*>g+ 8 duties1 ! ,commission] %all ensure t employees ( ! ,int]nal ,rev5ue ,s]vice are famili> ) & act 9 accord ) taxpay] rights z af=d$ by o!r provisions ( ?is title1 includ+-- 7,a7 ! "r to be in=m$1 7,b7 ! "r to be assi/$1 7,c7 ! "r to be he>d1 7,d7 ! "r to pay no m ?an ! correct am\nt ( tax1 7,e7 ! "r ( appeal1 7,f7 ! "r to c]ta9ty1 7,g7 ! "r to privacy1 7,h7 ! "r to confid5tiality1 7,i7 ! "r to repres5tation1 & 7,j7 ! "r to a fair & j tax sy/em4 4 #fjjf4 ,t]m9ation ( employm5t ( ,,irs employees = tak+ (ficial actions = political purposes ,p>agraph 7#aj7 ( section #abjc7;b7 ( ! ,int]nal ,rev5ue ,s]vice ,re/ructur+ & ,re=m ,act ( #aiih is am5d$ to read z foll[s3 7#aj7 p]=m+1 delay+1 or fail+ to p]=m 7or ?reat5+ to p]=m1 delay1 or fail to p]=m7 any (ficial action 7includ+ any audit7 ) respect to a taxpay] = purpose ( extract+ p]sonal ga9 or b5efit or = a political purpose4 4 #fjjg4 ,release ( in=mation reg>d+ ! /atus ( c]ta9 inve/igations 7a7 ,9 g5]al ,subsection 7e7 ( section #fajc is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,disclosure ( in=mation reg>d+ /atus ( inve/igation ( violation ( ?is section ,9 ! case ( a p]son :o provides to ! ,secret>y in=mation indicat+ a violation ( section #gbac1 #gbac;,a1 or #gbad ) respect to any return or return in=mation ( su* p]son1 ! ,secret>y may disclose to su* p]son 7or su* p]son's designee7-- 7,a7 :e!r an inve/igation bas$ on ! p]son's provision ( su* in=mation has be5 initiat$ & :e!r x is op5 or clos$1 7,b7 :e!r any su* inve/igation sub/antiat$ su* a violation by any individual1 & 7,c7 :e!r any action has be5 tak5 ) respect to su* individual 7includ+ :e!r a ref]ral has be5 made = prosecution ( su* individual74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #fjjh4 ,review ( ,,irs exam9ation selection proc$ures 7a7 ,9 g5]al ,! ,comptroll] ,g5]al ( ! ,unit$ ,/ates %all conduct a /udy ( ea* ,int]nal ,rev5ue ,s]vice op]at+ division to assess ! process us$ = det]m9+ h[ en=cem5t cases are select$ & process$4 ,su* /udy %all include a review ( ! foll[+3 7#a7 ,! /&>ds ea* su* op]at+ division has e/abli%$ = en=cem5t case selection 7includ+ any automat$ or discretion>y selection processes7 & case "w1 & :e!r su* /&>ds meet ! objectives ( imp>tiality1 objectivity1 compliance1 & m9imiz+ taxpay] burd54 7#b7 ,! ext5t to :i* any cases are initiat$ by ref]rals or compla9ts f inside or outside ( ! op]at+ division 7includ+ f outside ( ! ,int]nal ,rev5ue ,s]vice74 7#c7 ,! ,int]nal ,rev5ue ,s]vice controls 7includ+ managem5t reviews & regul> updates7 = assur+ t its /&>ds = en=cem5t cases 7& h&l+ ( ref]rals & compla9ts7 9 ea* op]at+ division are suffici5t = a*iev+ ! objectives describ$ 9 p>agraph 7#a74 7#d7 ,! ,int]nal ,rev5ue ,s]vice controls 7includ+ tra9+1 monitor+1 & quality assessm5ts7 = assur+ t its /&>ds are adh]$ to by all division p]sonnel & ! effectiv5ess ( su* controls4 7#e7 ,:e!r ! exi/+ /&>ds & controls provide reasonable assurance t ea* division's en=cem5t processes meet ! ,int]nal ,rev5ue ,s]vice objectives ( imp>tiality1 objectivity1 compliance1 & m9imiz+ taxpay] burd54 7b7 ,initial report ,n lat] ?an #a ye> aft] ! date ( ! enactm5t ( ?is section1 ! ,comptroll] ,g5]al %all submit to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives1 ! ,committee on ,f9ance ( ! ,s5ate1 & ! ,secret>y ( ! ,treasury a report on ! results ( su* /udy4 ,su* report %all include su* recomm5dations z ! ,comptroll] ,g5]al may deem advisable4 7c7 ,foll[-,up on recomm5dations ,n lat] ?an #ahj days aft] a report is submitt$ ) respect to an op]at+ division "u subsection 7b71 ! ,comptroll] ,g5]al %all conduct a foll[-up /udy1 & submit to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives1 ! ,committee on ,f9ance ( ! ,s5ate1 & ! ,secret>y ( ! ,treasury a report1 on :e!r any recomm5dations to improve case selection & case "w processes h be5 implem5t$ & are work+ z int5d$4 7d7 ,cont9u+ case managem5t /udies & reports 7#a7 ,9 g5]al ,aft] a report is submitt$ "u subsection 7b71 ! ,comptroll] ,g5]al %all conduct foll[-up /udies & reports 9 ! same mann] z provid$ 9 subsections 7a7 & 7b7 ) respect to ea* op]at+ division ( ! ,int]nal ,rev5ue ,s]vice & %all include 9 su* /udy & report a review ( :e!r any previ\s recomm5dations to improve case selection & case "w processes h be5 implem5t$ & are work+ z int5d$4 7#b7 ,frequ5cy ,ea* su* report ) respect to an op]at+ division %all be submitt$ n lat] ?an #d ye>s aft] ! date ! mo/ rec5t report 0 submitt$ ) respect to su* op]at+ division "u subsection 7b7 or ?is subsection4 ,! ,comptroll] ,g5]al %all submit no few] ?an #a su* report ea* ye>4 #fjji4 ,,irs employees prohibit$ f us+ p]sonal email acc\nts = (ficial bus9ess ,no (fic] or employee ( ! ,int]nal ,rev5ue ,s]vice may use a p]sonal email acc\nt to conduct any (ficial bus9ess ( ! ,gov]nm5t4 #fjaj4 ,moratorium on ,,irs conf]5ces ,! ,int]nal ,rev5ue ,s]vice %all n hold any conf]5ce until ! ,treasury ,inspector ,g5]al = ,tax ,adm9i/ration submits a report to ,congress-- 7#a7 c]tify+ t ! ,int]nal ,rev5ue ,s]vice has implem5t$ all ( ! recomm5dations set out 9 su* ,inspector ,g5]al's report titl$ ,review ( ! ,augu/ #bjaj ,small ,bus9ess_/,self-,employ$ ,division's ,conf]5ce 9 ,anaheim1 ,cali=nia1 & 7#b7 describ+ su* implem5tation4 #fjaa4 ,applicable /&>d = det]m9ations ( :e!r an organization is op]at$ exclusively = ! promotion ( social welf>e 7a7 ,9 g5]al ,! /&>d & def9itions z 9 effect on ,janu>y #a1 #bjaj1 :i* are us$ to det]m9e :e!r an organization is op]at$ exclusively = ! promotion ( social welf>e = purposes ( section #eja7;c77#d7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all apply = purposes ( det]m9+ ! /atus ( organizations "u section #eja7;c77#d7 ( ! ,int]nal ,rev5ue ,code ( #aihf aft] ! date ( ! enactm5t ( ?is ,act4 7b7 ,prohibition on modification ( /&>d ,! ,secret>y ( ! ,treasury may n 7nor may any delegate ( su* ,secret>y7 issue1 revise1 or f9alize any regulation 7includ+ ! propos$ regulations publi%$ at #gh ,f$4 ,reg4 #gaece 7,novemb] #bi1 #bjac771 rev5ue rul+1 or o!r guidance n limit$ to a p>ticul> taxpay] relat+ to ! /&>d & def9itions specifi$ 9 subsection 7a74 7c7 ,application to organizations ,except z provid$ 9 subsection 7d71 ?is section %all apply ) respect to any organization claim+ tax exempt /atus "u section #eja7;c77#d7 ( ! ,int]nal ,rev5ue ,code ( #aihf :i* 0 creat$ on1 be=e1 or aft] ! date ( ! enactm5t ( ?is ,act4 7d7 ,sunset ,?is section %all n apply aft] ! "o-ye> p]iod beg9n+ on ! date ( ! enactm5t ( ?is ,act4 ,b ,taxpay] ,protection & ,s]vice ,re=ms #faja4 ,ext5sion ( ,,irs au?ority to require truncat$ ,social ,security numb]s on ,=m ,w-#b 7a7 ,9 g5]al ,p>agraph 7#b7 ( section #fjea7;a7 is am5d$ by /rik+ 8 social security numb] & ins]t+ an id5tify+ numb] = ! employee4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #fajb4 ,free electronic fil+ 7a7 ,9 g5]al ,! ,secret>y ( ! ,treasury %all1 9 coop]ation ) ! private sector te*nology indu/ry1 ma9ta9 a program t provides free individual income tax prep>ation & electronic fil+ s]vices to l[-income taxpay]s & eld]ly taxpay]s4 7b7 ,requirem5ts ( program ,! ,secret>y %all by regulation or o!r guidance prescribe ) respect to ! program-- 7#a7 ! qualifications1 selection process1 & contract t]m = bus9esses p>ticipat+ 9 ! program1 7#b7 a process = p]iodic review ( bus9esses p>ticipat+ 9 ! program1 7#c7 proc$ures = t]m9at+ bus9ess p>ticipation 9 ! program = failure to comply ) any program requirem5ts1 & 7#d7 su* o!r proc$ures z ! ,secret>y det]m9es are necess>y or appropriate to c>ry out ! purposes ( ! program4 7c7 ,free ,file program ,! ,int]nal ,rev5ue ,s]vice ,free ,file program1 z set =? 9 ! notice publi%$ 9 ! ,f$]al ,regi/] on ,novemb] #d1 #bjjb 7#fg ,f$4 ,reg4 #fgbdg71 %all be treat$ z meet+ ! requirem5ts ( subsection 7a74 #fajc4 ,pre-populat$ returns prohibit$ ,except to ! ext5t provid$ 9 section #fjad1 #fjbj1 or #fbja7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 ! ,secret>y ( ! ,treasury %all n provide to any p]son a propos$ f9al return or /atem5t = use by su* p]son to satisfy a fil+ or report+ requirem5t "u su* ,code4 #fajd4 ,=m #ajdj,,sr = s5iors 7a7 ,9 g5]al ,! ,secret>y ( ! ,treasury 7or ! ,secret>y's delegate7 %all make available a =m1 to be kn[n z ,=m #ajdj,,sr1 = use by individuals to file ! return ( tax impos$ by *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf4 ,su* =m %all be z simil> z practicable to ,=m #ajdj;,,ez1 except t-- 7#a7 ! =m %all be available to individuals :o h atta9$ age #fe z ( ! close ( ! taxable ye>1 7#b7 ! =m may be us$ ev5 if income = ! taxable ye> includes-- 7,a7 social security b5efits 7z def9$ 9 section #hf7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf71 7,b7 di/ributions f qualifi$ retirem5t plans 7z def9$ 9 section #digd7;c7 ( su* ,code71 annuities or o!r su* def]r$ paym5t arrangem5ts1 7,c7 int]e/ & divid5ds1 or 7,d7 capital ga9s & losses tak5 into acc\nt 9 det]m9+ ! d$uction = adju/$ net capital ga9 "u section #afi ( su* ,code1 & 7#c7 ! =m %all be available )\t reg>d to ! am\nt ( any item ( taxable income or ! total am\nt ( taxable income = ! taxable ye>4 7b7 ,effective date ,! =m requir$ by subsection 7a7 %all be made available = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 #faje4 ,increas$ refund & cr$it ?re%old = ,jo9t ,committee on ,taxation review ( ,c corporation return 7a7 ,9 g5]al ,subsections 7a7 & 7b7 ( section #fdje are ea* am5d$ by ins]t+ 7#e1jjj1jjj 9 ! case ( a ,c corporation7 aft] #b1jjj1jjj4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act1 except t su* am5dm5t %all n apply ) respect to any refund or cr$it ) respect to a report t has be5 made be=e su* date "u section #fdje ( ! ,int]nal ,rev5ue ,code ( #aihf4 ,c ,tax return due date simplification #fbja4 ,due dates = returns ( p>tn]%ips1 ,s corporations1 & ,c corporations 7a7 ,p>tn]%ips & ,s corporations 7#a7 ,9 g5]al ,s mu* ( subsection 7b7 ( #fjgb z prec$es ! second s5t5ce !re( is am5d$ to read z foll[s3 7b7 ,returns ( p>tn]%ips & ,s corporations ,returns ( p>tn]%ips "u section #fjca & returns ( ,s corporations "u sections #fjab & #fjcg made on ! basis ( ! cal5d> ye> %all be fil$ on or be=e ! #ae? day ( ,m>* foll[+ ! close ( ! cal5d> ye>1 & su* returns made on ! basis ( a fiscal ye> %all be fil$ on or be=e ! #ae? day ( ! ?ird mon? foll[+ ! close ( ! fiscal ye>4 4 7#b7 ,con=m+ am5dm5t ,section #fjgb7;a7 is am5d$ by /rik+ #fjag1 or #fjca & ins]t+ or #fjag4 7b7 ,con=m+ am5dm5ts relat+ to ,c corporation due date ( #ae? day ( f\r? mon? foll[+ taxable ye> 7#a7 ,section #agj7;a77#c77;,b71 z r$esignat$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ ?ird mon? & ins]t+ f\r? mon?4 7#b7 ,section #efc is am5d$ by /rik+ ?ird mon? ea* place x appe>s & ins]t+ f\r? mon?4 7#c7 ,section #aced7;d77#a77;,b77i7 is am5d$ by /rik+ #c;d mon? & ins]t+ #d? mon?4 7#d7 ,subsection 7a7 & 7c7 ( section #fafg are ea* am5d$ by /rik+ ?ird mon? & ins]t+ f\r? mon?4 7#e7 ,section #fdbe7;a77#a7 is am5d$ by /rik+ ?ird mon? & ins]t+ f\r? mon?4 7#f7 ,subsections 7b77#b77;,a71 7g77#c71 & 7h77#a7 ( section #ffee are ea* am5d$ by /rik+ #crd mon? & ins]t+ #d? mon?4 7c7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to returns = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 7#b7 ,special rule = c corporations ) fiscal ye>s end+ on ,june #cj ,9 ! case ( any ,c corporation ) a fiscal ye> end+ on ,june #cj1 ! am5dm5ts made by ?is section %all n apply to any taxable ye> beg9n+ 9 #bjbb4 #fbjb4 ,modification ( due dates by regulation ,9 ! case ( returns = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad1 ! ,secret>y ( ! ,treasury1 or ! ,secret>y's designee1 %all modify appropriate regulations to provide z foll[s3 7#a7 ,! maximum ext5sion = ! returns ( p>tn]%ips fil+ ,=m #ajfe %all be a #f-mon? p]iod end+ on ,septemb] #ae = cal5d> ye> taxpay]s4 7#b7 ,! maximum ext5sion = ! returns ( tru/s fil+ ,=m #ajda %all be a #e-mon? p]iod end+ on ,septemb] #cj = cal5d> ye> taxpay]s4 7#c7 ,! maximum ext5sion = ! returns ( employee b5efit plans fil+ ,=m #eejj %all be an automatic #c-mon? p]iod end+ on ,novemb] #ae = cal5d> ye> plans4 7#d7 ,! maximum ext5sion = ! returns ( organizations exempt f income tax fil+ ,=m #iij %all be an automatic #f-mon? p]iod end+ on ,novemb] #ae = cal5d> ye> fil]s4 7#e7 ,! due date ( ,=m #cebj-;,a 7relat+ to ! ,annual ,in=mation ,return ( ,=eign ,tru/ ) a ,unit$ ,/ates ,own]7 = cal5d> ye> fil]s %all be ,april #ae ) a maximum ext5sion = a #f-mon? p]iod end+ on ,octob] #ae4 7#f7 ,! due date ( ,=m ,,td ,f #ij-bb4a 7relat+ to ,report ( ,=eign ,bank & ,f9ancial ,acc\nts7 %all be ,april #ae ) a maximum ext5sion = a #f-mon? p]iod end+ on ,octob] #ae & ) provision = an ext5sion "u rules simil> to ! rules 9 ,treas4 ,reg4 section #a4fjha-e4 ,= any taxpay] requir$ to file su* ,=m = ! fir/ "t1 any p5alty = failure to timely reque/ =1 or file1 an ext5sion1 may be waiv$ by ! ,secret>y4 #fbjc4 ,corporations p]mitt$ /atutory automatic #f-mon? ext5sion ( income tax returns 7a7 ,9 g5]al ,section #fjha7;b7 is am5d$ by /rik+ #c mon?s & ins]t+ #f mon?s4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4 ,d ,compliance ,re=ms #fcja4 ,p5alty = failure to file 7a7 ,9 g5]al ,section #ffea7;a7 is am5d$ by /rik+ #ace 9 ! flu% mat]ial at ! end & ins]t+ #djj4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns ! due date = ! fil+ ( :i* 7includ+ ext5sion7 is aft] ,decemb] #ca1 #bjad4 #fcjb4 ,p5alty = failure to file correct in=mation returns & provide payee /atem5ts 7a7 ,9 g5]al ,section #fgba7;a77#a7 is am5d$-- 7#a7 by /rik+ #ajj & ins]t+ #bej1 & 7#b7 by /rik+ #a1ejj1jjj & ins]t+ #c1jjj1jjj4 7b7 ,r$uction :]e correction 9 specifi$ p]iod 7#a7 ,correction )9 #cj days ,section #fgba7;b77#a7 is am5d$-- 7,a7 by /rik+ #cj & ins]t+ #ej1 7,b7 by /rik+ #ajj & ins]t+ #bej1 & 7,c7 by /rik+ #bej1jjj & ins]t+ #ejj1jjj4 7#b7 ,failures correct$ on or be=e ,augu/ #a ,section #fgba7;b77#b7 is am5d$-- 7,a7 by /rik+ #fj & ins]t+ #ajj1 7,b7 by /rik+ #ajj 7prior to am5dm5t by subp>agraph 7,a77 & ins]t+ #bej1 & 7,c7 by /rik+ #ejj1jjj & ins]t+ #a1ejj1jjj4 7c7 ,l[] limitation = p]sons ) gross receipts ( n m ?an #e1jjj1jjj ,section #fgba7;d77#a7 is am5d$-- 7#a7 9 subp>agraph 7,a7-- 7,a7 by /rik+ #ejj1jjj & ins]t+ #a1jjj1jjj1 & 7,b7 by /rik+ #a1ejj1jjj & ins]t+ #c1jjj1jjj1 7#b7 9 subp>agraph 7,b7-- 7,a7 by /rik+ #ge1jjj & ins]t+ #age1jjj1 & 7,b7 by /rik+ #bej1jjj & ins]t+ #ejj1jjj1 & 7#c7 9 subp>agraph 7,c7-- 7,a7 by /rik+ #bjj1jjj & ins]t+ #ejj1jjj1 & 7,b7 by /rik+ #ejj1jjj 7prior to am5dm5t by subp>agraph 7,a77 & ins]t+ #a1ejj1jjj4 7d7 ,p5alty 9 case ( int5tional disreg>d ,section #fgba7;e7 is am5d$-- 7#a7 by /rik+ #bej 9 p>agraph 7#b7 & ins]t+ #ejj1 & 7#b7 by /rik+ #a1ejj1jjj 9 p>agraph 7#c77;,a7 & ins]t+ #c1jjj1jjj4 7e7 ,failure ,to furni% correct payee /atem5ts 7#a7 ,9 g5]al ,section #fgbb7;a77#a7 is am5d$-- 7,a7 by /rik+ #ajj & ins]t+ #bej1 & 7,b7 by /rik+ #a1ejj1jjj & ins]t+ #c1jjj1jjj4 7#b7 ,r$uction :]e correction 9 specifi$ p]iod 7,a7 ,correction )9 #cj days ,section #fgbb7;b77#a7 is am5d$-- 7i7 by /rik+ #cj & ins]t+ #ej1 7ii7 by /rik+ #ajj & ins]t+ #bej1 & 7iii7 by /rik+ #bej1jjj & ins]t+ #ejj1jjj4 7,b7 ,failures correct$ on or be=e ,augu/ #a ,section #fgbb7;b77#b7 is am5d$-- 7i7 by /rik+ #fj & ins]t+ #ajj1 7ii7 by /rik+ #ajj 7prior to am5dm5t by clause 7i77 & ins]t+ #bej1 & 7iii7 by /rik+ #ejj1jjj & ins]t+ #a1ejj1jjj4 7#c7 ,l[] limitation = p]sons ) gross receipts ( n m ?an #e1jjj1jjj ,section #fgbb7;d77#a7 is am5d$-- 7,a7 9 subp>agraph 7,a7-- 7i7 by /rik+ #ejj1jjj & ins]t+ #a1jjj1jjj1 & 7ii7 by /rik+ #a1ejj1jjj & ins]t+ #c1jjj1jjj1 7,b7 9 subp>agraph 7,b7-- 7i7 by /rik+ #ge1jjj & ins]t+ #age1jjj1 & 7ii7 by /rik+ #bej1jjj & ins]t+ #ejj1jjj1 & 7,c7 9 subp>agraph 7,c7-- 7i7 by /rik+ #bjj1jjj & ins]t+ #ejj1jjj1 & 7ii7 by /rik+ #ejj1jjj 7prior to am5dm5t by subp>agraph 7,a77 & ins]t+ #a1ejj1jjj4 7#d7 ,p5alty 9 case ( int5tional disreg>d ,section #fgbb7;e7 is am5d$-- 7,a7 by /rik+ #bej 9 p>agraph 7#b7 & ins]t+ #ejj1 & 7,b7 by /rik+ #a1ejj1jjj 9 p>agraph 7#c77;,a7 & ins]t+ #c1jjj1jjj4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply ) respect to returns & /atem5ts requir$ to be fil$ aft] ,decemb] #ca1 #bjad4 #fcjc4 ,cl>ification ( #f-ye> /atute ( limitations 9 case ( ov]/atem5t ( basis 7a7 ,9 g5]al ,subp>agraph 7,b7 ( section #feja7;e77#a7 is am5d$-- 7#a7 by /rik+ & at ! end ( clause 7i71 by r$esignat+ clause 7ii7 z clause 7iii71 & by ins]t+ aft] clause 7i7 ! foll[+ new clause3 7ii7 ,an und]/atem5t ( gross income by reason ( an ov]/atem5t ( unrecov]$ co/ or o!r basis is an omission f gross income2 & 1 & 7#b7 by ins]t+ 7o!r ?an 9 ! case ( an ov]/atem5t ( unrecov]$ co/ or o!r basis7 9 clause 7iii7 7z s r$esignat$7 aft] ,9 det]m9+ ! am\nt omitt$ f gross income4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 returns fil$ aft] ! date ( ! enactm5t ( ?is ,act1 & 7#b7 returns fil$ on or be=e su* date if ! p]iod specifi$ 9 section #feja ( ! ,int]nal ,rev5ue ,code ( #aihf 7det]m9$ )\t reg>d to su* am5dm5ts7 = assessm5t ( ! taxes ) respect to :i* su* return relates has n expir$ z ( su* date4 #fcjd4 ,re=m ( rules relat$ to qualifi$ tax collection contracts 7a7 ,requirem5t ,to collect c]ta9 inactive tax receivables "u qualifi$ tax collection contracts ,section #fcjf is am5d$ by r$esignat+ subsections 7c7 ?r\gh 7f7 z subsections 7d7 ?r\gh 7g71 respectively1 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,collection ( inactive tax receivables 7#a7 ,9 g5]al ,not)/&+ any o!r provision ( law1 ! ,secret>y %all ent] into "o or m qualifi$ tax collection contracts = ! collection ( all out/&+ inactive tax receivables4 7#b7 ,inactive tax receivables ,= purposes ( ?is section-- 7,a7 ,9 g5]al ,! t]m inactive tax receivable means any tax receivable if-- 7i7 at any "t aft] assessm5t1 ! ,int]nal ,rev5ue ,s]vice removes su* receivable f ! active inv5tory = lack ( res\rces or inability to locate ! taxpay]1 7ii7 m ?an #a_/c ( ! p]iod ( ! applicable /atute ( limitation has laps$ & no employee ( ! ,int]nal ,rev5ue ,s]vice has be5 assign$ su* receivable = collection1 or 7iii7 9 ! case ( a receivable :i* has be5 assign$ = collection1 m ?an #cfe days h pass$ )\t int]action ) ! taxpay] or a ?ird p>ty = purposes ( fur!r+ ! collection ( su* receivable4 7,b7 ,tax receivable ,! t]m tax receivable means any out/&+ assessm5t :i* ! ,int]nal ,rev5ue ,s]vice includes 9 pot5tially collectible inv5tory4 4 7b7 ,c]ta9 tax receivables n eligible = collection "u qualifi$ tax collection contracts ,section #fcjf1 z am5d$ by subsection 7a71 is am5d$ by r$esignat+ subsections 7d7 ?r\gh 7g7 z subsections 7e7 ?r\gh 7h71 respectively1 & by ins]t+ aft] subsection 7c7 ! foll[+ new subsection3 7d7 ,c]ta9 tax receivables n eligible = collection "u qualifi$ tax collections contracts ,a tax receivable %all n be eligible = collection pursuant to a qualifi$ tax collection contract if su* receivable-- 7#a7 is subject to a p5d+ or active (f]-9-compromise or in/allm5t agreem5t1 7#b7 is classifi$ z an innoc5t sp\se case1 7#c7 involves a taxpay] id5tifi$ by ! ,secret>y z be+-- 7,a7 deceas$1 7,b7 "u ! age ( #ah1 7,c7 9 a designat$ combat zone1 or 7,d7 a victim ( id5tity !ft1 7#d7 is curr5tly "u exam9ation1 litigation1 crim9al inve/igation1 or levy1 or 7#e7 is curr5tly subject to a prop] ex]cise ( a "r ( appeal "u ?is title4 4 7c7 ,contract+ priority ,section #fcjf1 z am5d$ by ! prec$+ provisions ( ?is section1 is am5d$ by r$esignat+ subsection 7h7 z subsection 7i7 & by ins]t+ aft] subsection 7g7 ! foll[+ new subsection3 7h7 ,contract+ priority ,9 contract+ = ! s]vices ( any p]son "u ?is section1 ! ,secret>y %all give priority to private collection contractors & debt collection c5t]s on ! s*$ule requir$ "u section #cgaa7;g7 ( title #ca1 ,unit$ ,/ates ,code1 to ! ext5t su* private collection contractors & debt collection c5t]s are appropriate to c>ry out ! purposes ( ?is section4 4 7d7 ,disclosure ( return in=mation ,section #fajc7k7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,qualifi$ tax collection contractors ,p]sons provid+ s]vices pursuant to a qualifi$ tax collection contract "u section #fcjf may1 if speak+ to a p]son :o has id5tifi$ himself or h]self z hav+ ! "n ( ! taxpay] to :i* a tax receivable 7)9 ! mean+ ( su* section7 relates1 id5tify !mselves z contractors ( ! ,int]nal ,rev5ue ,s]vice & disclose ! bus9ess "n ( ! contractor1 & ! nature1 subject1 & reason = ! contact4 ,disclosures "u ?is p>agraph %all be made only 9 su* situations & "u su* conditions z h be5 approv$ by ! ,secret>y4 4 7e7 ,taxpay]s affect$ by f$]ally decl>$ disa/]s ,section #fcjf1 z am5d$ by ! prec$+ provisions ( ?is section1 is am5d$ by r$esignat+ subsection 7i7 z subsection 7j7 & by ins]t+ aft] subsection 7h7 ! foll[+ new subsection3 7i7 ,taxpay]s 9 ,presid5tially decl>$ disa/] areas ,! ,secret>y may prescribe proc$ures "u :i* a taxpay] det]m9$ to be affect$ by a f$]ally decl>$ disa/] 7z def9$ by section #afe7;i77#e77 may reque/-- 7#a7 relief f imm$iate collection measures by contractors "u ?is section1 & 7#b7 a return ( ! inactive tax receivable to ! ,int]nal ,rev5ue ,s]vice = collection4 4 7f7 ,report to ,congress 7#a7 ,9 g5]al ,section #fcjf1 z am5d$ by ! prec$+ provisions ( ?is section1 is am5d$ by r$esignat+ subsection 7j7 z subsection 7k7 & by ins]t+ aft] subsection 7i7 ! foll[+ new subsection3 7j7 ,report to ,congress ,n lat] ?an #ij days aft] ea* fiscal ye> end+ on ,septemb] #cj1 ! ,secret>y %all submit to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives & ! ,committee on ,f9ance ( ! ,s5ate a report ) respect to qualifi$ tax collection contracts "u ?is section :i* %all include-- 7#a7 annually 7) respect to ea* su* fiscal ye> beg9n+ ) ! fir/ su* fiscal ye> end+ aft] ! date ( ! enactm5t ( ?is subsection7-- 7,a7 ! total numb] & am\nt ( tax receivables provid$ to ea* contractor = collection "u ?is section1 7,b7 ! total am\nts collect$ 7& am\nts ( in/allm5t agreem5ts ent]$ into "u subsection 7b77#a77;,b77 ) respect to ea* contractor & ! collection co/s incurr$ 7directly & indirectly7 by ! ,int]nal ,rev5ue ,s]vice ) respect to su* am\nts1 7,c7 ! impact ( su* contracts on ! total numb] & am\nt ( unpaid assessm5ts1 & on ! numb] & am\nt ( assessm5ts collect$ by ,int]nal ,rev5ue ,s]vice p]sonnel aft] initial contact by a contractor1 7,d7 ! am\nt ( fees reta9$ by ! ,secret>y "u subsection 7e7 & a description ( ! use ( su* funds1 & 7,e7 a disclosure safegu>d report 9 a =m simil> to t requir$ "u section #fajc7p77#e71 & 7#b7 biannually 7beg9n+ ) ! second report submitt$ "u ?is subsection7-- 7,a7 an indep5d5t evaluation ( contractor p]=mance2 & 7,b7 a measurem5t plan t includes a comp>ison ( ! be/ practices us$ by ! private collectors to ! collection te*niques us$ by ! ,int]nal ,rev5ue ,s]vice & me*anisms to id5tify & capture in=mation on successful collection te*niques us$ by ! contractors t c\ld be adopt$ by ! ,int]nal ,rev5ue ,s]vice4 4 7#b7 ,repeal ( exi/+ report+ requirem5ts ) respect to qualifi$ tax collection contracts ,section #hha ( ! ,am]ican ,jobs ,creation ,act ( #bjjd is am5d$ by /rik+ subsection 7e74 7g7 ,effective dates 7#a7 ,9 g5]al ,! am5dm5ts made by subsections 7a7 & 7b7 %all apply to tax receivables id5tifi$ by ! ,secret>y aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,contract+ priority ,! am5dm5ts made by subsection 7c7 %all apply to contracts & agreem5ts ent]$ into aft] ! date ( ! enactm5t ( ?is ,act4 7#c7 ,disclosures ,! am5dm5ts made by subsection 7d7 %all apply to disclosures made aft] ! date ( ! enactm5t ( ?is ,act4 7#d7 ,proc$ures2 ,report to ,congress ,! am5dm5ts made by subsections 7e7 & 7f7 %all take effect on ! date ( ! enactm5t ( ?is ,act4 #fcje4 #ajj p]c5t cont9u\s levy on paym5ts to ,m$ic>e provid]s & suppli]s 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #fcca7;h7 is am5d$ by /rik+ ! p]iod at ! end & ins]t+ 1 or to a ,m$ic>e provid] or suppli] "u title ,,xviii ( ! ,social ,security ,act44 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to levies issu$ aft] ! date ( ! enactm5t ( ?is ,act4 #fcjf4 ,treatm5t ( refundable cr$its = purposes ( c]ta9 p5alties 7a7 ,application ( und]paym5t p5alties ,section #fffd7;a7 is am5d$ by add+ at ! end ! foll[+3 ,a rule simil> to ! rule ( section #fbaa7;b77#d7 %all apply = purposes ( ?is subsection44 7b7 ,p5alty = errone\s claim ( cr$it made applicable to e>n$ income cr$it ,section #ffgf7;a7 is am5d$ by /rik+ 7o!r ?an a claim = a refund or cr$it relat+ to ! e>n$ income cr$it "u section #cb74 7c7 ,effective dates 7#a7 ,und]paym5t p5alties ,! am5dm5t made by subsection 7a7 %all apply to-- 7,a7 returns fil$ aft] ,febru>y #bf1 #bjad1 & 7,b7 returns fil$ on or be=e su* date if ! p]iod specifi$ 9 section #feja ( ! ,int]nal ,rev5ue ,code ( #aihf = assessm5t ( ! taxes ) respect to :i* su* return relates has n expir$ z ( su* date4 7#b7 ,p5alty = errone\s claim ( cr$it ,! am5dm5t made by subsection 7b7 %all apply to claims fil$ aft] ,febru>y #bf1 #bjad4 ,,vii ,excise taxes #gjja4 ,repeal ( m$ical device excise tax 7a7 ,9 g5]al ,*apt] #cb is am5d$ by /rik+ sub*apt] ,e4 7b7 ,con=m+ am5dm5ts 7#a7 ,subsection 7a7 ( section #dbba is am5d$ by /rik+ ! la/ s5t5ce4 7#b7 ,p>agraph 7#b7 ( section #fdaf7;b7 is am5d$ by /rik+ ! la/ s5t5ce4 7c7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #cb is am5d$ by /rik+ ! item relat+ to sub*apt] ,e4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales aft] ! date ( ! enactm5t ( ?is ,act4 #gjjb4 ,modifications relat+ to oil spill liability tru/ fund 7a7 ,ext5sion ( ,oil ,spill ,liability ,tru/ ,fund f9anc+ rate ,p>agraph 7#b7 ( section #dfaa7;f7 is am5d$ by /rik+ ,decemb] #ca1 #bjag & ins]t+ ,decemb] #ca1 #bjbc4 7b7 ,application ) respect to bitum5 & bitum9\s mixtures & %ale oil ,p>agraph 7#a7 ( section #dfab7;a7 is am5d$ to read z foll[s3 7#a7 ,crude oil ,! t]m crude oil includes crude oil cond5sates1 natural gasol9e1 any bitum5 or bitum9\s mixture1 any oil d]iv$ f a bitum5 or bitum9\s mixture1 %ale oil1 & any oil d]iv$ f k]og5-be>+ s\rces4 4 7c7 ,con=m+ am5dm5t ,p>agraph 7#b7 ( section #dfab7;a7 is am5d$ by /rik+ f a well locat$4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to oil & petroleum products receiv$ or ent]$ dur+ cal5d> qu>t]s beg9n+ m ?an #fj days aft] ! date ( ! enactm5t ( ?is ,act4 #gjjc4 ,modification relat+ to inl& wat]ways tru/ fund f9anc+ rate 7a7 ,9 g5]al ,section #djdb7;b77#b77;,a7 is am5d$ to read z foll[s3 7,a7 ,! ,inl& ,wat]ways ,tru/ ,fund f9anc+ rate is #bf c5ts p] gallon4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to fuel us$ aft] ,decemb] #ca1 #bjad4 #gjjd4 ,excise tax on sy/emically important f9ancial in/itutions 7a7 ,9 g5]al ,*apt] #cf is am5d$ by add+ at ! end ! foll[+ new sub*apt]3 ,e ,tax on sy/emically important f9ancial in/itutions ,sec4 #ddia4 ,tax on sy/emically important f9ancial in/itutions4 #ddia4 ,tax on sy/emically important f9ancial in/itutions 7a7 ,9 g5]al ,!re is h]eby impos$ a tax on ! excess total consolidat$ assets ( any sy/emically important f9ancial in/itution on ! close ( ea* cal5d> qu>t]4 7b7 ,am\nt ( tax ,! rate ( tax impos$ by subsection 7a7 is #j4jce p]c5t ( su* excess total consolidat$ assets4 7c7 ,by :om paid ,! tax impos$ by subsection 7a7 %all be paid by ! sy/emically important f9ancial in/itution4 7d7 ,due date ,! tax impos$ by subsection 7a7 = a cal5d> qu>t] %all be due on ! fir/ day ( ! ?ird mon? beg9n+ aft] ! close ( su* qu>t]4 7e7 ,sy/emically important f9ancial in/itution ,= purposes ( ?is section1 ! t]m sy/emically important f9ancial in/itution means any p]son subject to section #afe ( ! ,dodd-,frank ,wall ,/reet ,re=m & ,consum] ,protection ,act4 7f7 ,excess total consolidat$ assets ,= purposes ( ?is section1 ! t]m excess total consolidat$ assets means ! excess (-- 7#a7 total consolidat$ assets 7)9 ! mean+ ( section #afe ( ! ,dodd-,frank ,wall ,/reet ,re=m & ,consum] ,protection ,act71 ov] 7#b7 #ejj1jjj1jjj1jjj4 7g7 ,adju/m5t ( doll> am\nt 7#a7 ,9 g5]al ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjae1 !re %all be sub/itut$ = ! doll> am\nt 9 subsection 7f77#b7 a doll> am\nt :i* be>s ! same ratio to su* am\nt 7det]m9$ )\t reg>d to ?is subsection7 z-- 7,a7 ! ,,gdp = ! prec$+ cal5d> ye>1 be>s to 7,b7 ! ,,gdp = #bjad4 ,any doll> am\nt det]m9$ "u ?is p>agraph = sub/itution 9 subsection 7f77#b7 :i* is n a multiple ( #a1jjj1jjj1jjj %all be r\nd$ to ! ne>e/ multiple ( #a1jjj1jjj1jjj4 7#b7 ,,gdp ,= purposes ( ?is subsection1 ! ,,gdp = any cal5d> ye> means ! late/ e/imate ( ! gross dome/ic product publi%$ by ! ,dep>tm5t ( ,comm]ce = ! prec$+ cal5d> ye>4 7h7 ,treatm5t ( c]ta9 ref]5ces ,any ref]5ce 9 ?is section to any provision ( ! ,dodd-,frank ,wall ,/reet ,re=m & ,consum] ,protection ,act %all be treat$ z a ref]5ce to su* provision z 9 effect on ! date ( ! enactm5t ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #cf is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,e4 ,tax on sy/emically important f9ancial in/itutions4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to cal5d> qu>t]s beg9n+ aft] ,decemb] #ca1 #bjad4 #gjje4 ,cl>ification ( orphan drug exception to annual fee on br&$ prescription ph>maceutical manufactur]s & import]s 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #ijjh7;e7 ( ! ,pati5t ,protection & ,af=dable ,c>e ,act 7,public ,law #aaa-adh7 is am5d$ to read z foll[s3 7#c7 ,exclusion ( orphan drug sales 7,a7 ,9 g5]al ,! t]m br&$ prescription drug sales %all n include sales ( any drug or biological product-- 7i7 ) respect to :i* a cr$it 0 all[$ = any taxable ye> "u section #de;,c ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad72 or 7ii7 :i* is approv$ or lic5s$ by ! ,food & ,drug ,adm9i/ration = m>ket+ solely = "o or m r>e diseases or conditions4 7,b7 ,limitation ,subp>agraph 7,a7 %all n apply ) respect to any drug or biological product aft] ! date on :i* ! drug or biological product is approv$ or lic5s$ by ! ,food & ,drug ,adm9i/ration = m>ket+ = any indication o!r ?an ! treatm5t ( a r>e disease or condition4 7,c7 ,r>e disease or condition 7i7 ,9 g5]al ,= purposes ( ?is p>agraph1 ! t]m r>e disease or condition means any disease or condition :i*-- 7,i7 affects less ?an #bjj1jjj p]sons 9 ! ,unit$ ,/ates1 or 7,,ii7 affects m ?an #bjj1jjj p]sons 9 ! ,unit$ ,/ates b = :i* !re is no reasonable expectation t ! co/ ( develop+ & mak+ available 9 ! ,unit$ ,/ates a drug or biological product = su* disease or condition w be recov]$ f sales 9 ! ,unit$ ,/ates ( su* drug or biological product4 7ii7 ,"t ( det]m9ation ,det]m9ations "u ! prec$+ s5t5ce ) respect to any drug or biological product %all be made on ! basis ( ! facts & circum/ances z (-- 7,i7 9 ! case a drug or biological product t has be5 designat$ "u section #ebf ( ! ,f$]al ,food1 ,drug1 & ,cosmetic ,act = a p>ticul> indication1 ! date ( su* designation1 & 7,,ii7 9 any o!r case1 ! date su* drug or biological product is approv$ or lic5s$ by ! ,food & ,drug ,adm9i/ration = m>ket+ = ! treatm5t ( ! disease or condition ref]r$ to 9 clause 7i74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to fees impos$ "u section #ijjh7;a77#a7 ( ! ,pati5t ,protection & ,af=dable ,c>e ,act ) annual paym5t dates aft] #bjac4 ,,viii ,deadwood & te*nical provisions ,a ,repeal ( ,deadwood #hjja4 ,repeal ( ,pu]to ,rico economic activity cr$it ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 #hjjb4 ,repeal ( mak+ "w pay cr$it 7a7 ,9 g5]al ,subp>t ,c ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cf;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ #cf;,a14 7#b7 ,section #fbac7;g77#b7 is am5d$ by /rik+ subp>agraph 7,n74 #hjjc4 ,g5]al bus9ess cr$it ,subsection 7d7 ( section #ch is am5d$ by /rik+ p>agraph 7#c74 #hjjd4 ,environm5tal tax 7a7 ,9 g5]al ,sub*apt] ,a ( *apt] #a is am5d$ by /rik+ "p ,,vii 7& ! table ( p>ts = su* *apt] is am5d$ by /rik+ ! item relat+ to "p ,,vii74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,b74 7#b7 ,section #afd7;a7 is am5d$ by /rik+ p>agraph 7#e74 7#c7 ,section #bge7;a7 is am5d$ by /rik+ ! la/ s5t5ce4 7#d7 ,section #hhb7;a77#a7 is am5d$ by /rik+ #ei;,a14 7#e7 ,section #fdbe7;c77#a77;,a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 7,a7 ! tax impos$ by section #aa or #abja7;a71 or sub*apt] ,l ( *apt] #a1 :i*ev] is applicable1 ov] 4 7#f7 ,section #ffee7;g77#a77;,a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ plus at ! end ( clause 7i7 & by /rik+ clause 7ii74 #hjje4 ,annuities2 c]ta9 proce$s ( end[m5t & life insurance contracts ,section #gb is am5d$-- 7#a7 9 subsection 7c77#d7 by /rik+ 2 except t if su* date 0 be=e ,janu>y #a1 #aied1 !n ! annuity />t+ date is ,janu>y #a1 #aied1 & 7#b7 9 subsection 7g77#c7 by /rik+ ,janu>y #a1 #aied1 or & 1 :i*ev] is lat]4 #hjjf4 ,unemploym5t comp5sation ,section #he is am5d$ by /rik+ subsection 7c74 #hjjg4 ,flexible sp5d+ arrangem5ts ,section #ajf7;c77#a7 is am5d$ by /rik+ ,effective on & aft] ,janu>y #a1 #aiig1 gross & ins]t+ ,gross4 #hjjh4 ,c]ta9 combat zone comp5sation ( memb]s ( ! arm$ =ces ,subsection 7c7 ( section #aab is am5d$-- 7#a7 by /rik+ 7aft] ,june #bd1 #aiej7 9 p>agraph 7#b71 & 7#b7 /rik+ su* zone2 & all t foll[s 9 p>agraph 7#c7 & ins]t+ su* zone44 #hjji4 ,qualifi$ gr\p legal s]vices plans 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #abj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,tax-,exemption ( gr\p legal s]vices plans ,section #eja7;c7 is am5d$ by /rik+ p>agraph 7#bj74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #abj14 7#b7 ,section #dad7t77#b7 is am5d$ by /rik+ #abj14 7#c7 ,section #caba7;a7 is am5d$ by /rik+ p>agraph 7#ag74 7#d7 ,section #cbca7;e7 is am5d$ by /rik+ p>agraph 7#g74 7#e7 ,section #ccjf7;b7 is am5d$ by /rik+ p>agraph 7#ab74 7#f7 ,section #fjci;,d7d77#a7 is am5d$ by /rik+ #abj14 7#g7 ,section #bji7;a77#ad7 ( ! ,social ,security ,act is am5d$-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by /rik+ 7#ad77;,a7 & ins]t+ 7#ad74 #hjaj4 ,c]ta9 r$uc$ uni=m$ s]vices retirem5t pay ,section #abb7;b77#a7 is am5d$ by /rik+ aft] ,decemb] #ca1 #aife14 #hjaa4 ,great pla9s cons]vation program ,section #abf7;a7 is am5d$ by /rik+ p>agraph 7#f7 & by r$esignat+ p>agraphs 7#g717h71 7#i71 & 7#aj7 z p>agraphs 7#f71 7#g71 7#h71 & 7#i71 respectively4 #hjab4 ,/ate legislators' travel exp5ses away f home ,p>agraph 7#d7 ( section #afb7;h7 is am5d$ by /rik+ ,= taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihj1 ?is & ins]t+ ,?is4 #hjac4 ,treble damage paym5ts "u ! antitru/ law ,section #afb7;g7 is am5d$ by /rik+ ! la/ s5t5ce4 #hjad4 ,phase-9 ( limitation on inve/m5t int]e/ ,section #afc7;d7 is am5d$ by /rik+ p>agraph 7#f74 #hjae4 ,*>itable1 etc41 contributions & gifts ,section #agj is am5d$ by /rik+ subsection 7k74 #hjaf4 ,amortizable bond premium 7a7 ,9 g5]al ,subp>agraph 7,b7 ( section #aga7;b77#a7 is am5d$ to read z foll[s3 7,b7 7i7 ) ref]5ce to ! am\nt payable on maturity 7or if x results 9 a small] amortizable bond premium attributable to ! p]iod be=e ! call date1 ) ref]5ce to ! am\nt payable on ! e>li] call date71 9 ! case ( a bond describ$ 9 subsection 7a77#a71 & 7ii7 ) ref]5ce to ! am\nt payable on maturity or on an e>li] call date1 9 ! case ( a bond describ$ 9 subsection 7a77#b74 4 7b7 ,con=m+ am5dm5ts ,p>agraphs 7#b77;,b7 & 7#c77;,b7 ( section #aga7;b7 are ea* am5d$ by /rik+ p>agraph 7#a77;,b77ii7 & ins]t+ p>agraph 7#a77;,b77i74 #hjag4 ,repeal ( d$uction = clean-fuel vehicles & c]ta9 refuel+ prop]ty 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #agi;,a 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5t 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ad74 7#b7 ,section #bhj;,f7a77#a7 is am5d$ by /rik+ subp>agraph 7,c74 7#c7 ,section #cab7k77#c71 z am5d$ by ?is ,act1 is am5d$ by /rik+ 1 #agi;,a ea* place x appe>s4 7#d7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bd74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjje4 #hjah4 ,repeal ( d$uction = capital co/s incurr$ 9 comply+ ) environm5tal protection ag5cy sulfur regulations 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #agi;,b 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #cab7k77#c71 z am5d$ by ?is ,act1 is am5d$ by /rik+ 1 #agi;,b ea* place x appe>s4 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cj74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjji4 #hjai4 ,activities n engag$ 9 = pr(it ,section #ahc7;e77#a7 is am5d$ by /rik+ ! la/ s5t5ce4 #hjbj4 ,divid5ds receiv$ on c]ta9 pref]r$ /ock2 & divid5ds paid on c]ta9 pref]r$ /ock ( public utilities 7a7 ,9 g5]al ,sections #bdd & #bdg are h]eby repeal$1 & ! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ ! items relat+ to sections #bdd & #bdg4 7b7 ,con=m+ am5dm5ts 7#a7 ,p>agraph 7#e7 ( section #agb7;d7 is am5d$ to read z foll[s3 7#e7 ,computation ( d$uction = divid5ds receiv$ ,! d$uctions all[$ by section #bdc 7relat+ to divid5ds receiv$ by corporations7 & #bde 7relat+ to divid5ds receiv$ f c]ta9 =eign corporations7 %all be comput$ )\t reg>d to section #bdf7;b7 7relat+ to limitation on aggregate am\nt ( d$uctions74 4 7#b7 ,p>agraph 7#a7 ( section #bdc7;c7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,9 ! case ( any divid5d receiv$ f a #bj-p]c5t own$ corporation1 subsection 7a77#a7 %all be appli$ by sub/itut+ #hj p]c5t = #gj p]c5t 4''4 7#c7 ,section #bdc7;d7 is am5d$ by /rik+ p>agraph 7#d74 7#d7 ,section #bdf is am5d$-- 7,a7 by /rik+ 1 #bdd1 9 subsection 7a77#a71 7,b7 9 subsection 7b77#a7-- 7i7 by /rik+ sections #bdc7;a77#a71 #bdd7;a71 ! fir/ place x appe>s & ins]t+ section #bdc7;a77#a71 7ii7 by /rik+ #bdd7;a71 ! second place x appe>s1 & 7iii7 by /rik+ subsection 7a7 or 7b7 ( section #bde1 & #bdg1 & ins]t+ & subsection 7a7 or 7b7 ( section #bde11 & 7,c7 by /rik+ 1 #bdd1 9 subsection 7c77#a74 7#e7 ,section #bdf;,a is am5d$ by /rik+ 1 #bdd1 bo? places x appe>s 9 subsections 7a7 & 7e74 7#f7 ,sections #bfc7;g77#b77;,b77iii71 #bgg7;a71 #cja7;e77#b71 #dfi7;e77#d71 #eab7;a77#c77;,a71 #hje7;a77#d77;,a71 7,c71 & 7,d71 #hje7;b77#d7 7z r$esignat$ by ?is ,act71 #hcb7;b77#e77;,b77ii71 7,d77i71 & 7,d77ii77,i71 #hcc7;b77#c77;,e71 & #ajei7;b77#b77;,b7 are ea* am5d$ by /rik+ 1 #bdd1 ea* place x appe>s4 7#g7 ,section #hje7;a77#d77;,b7 is am5d$ by /rik+ 1 #bdd7;a71 ea* place x appe>s4 7#h7 ,section #haj7;c77#b77;,b7 is am5d$ by /rik+ #bdd 7relat+ to divid5ds on c]ta9 pref]r$ /ock ( public utilities714 7#i7 ,section #abdd7;c77#b77;,c7 is am5d$ by /rik+ #bdd14 #hjba4 ,acquisitions made to evade or avoid income tax ,p>agraphs 7#a7 & 7#b7 ( section #bfi7;a7 are ea* am5d$ by /rik+ or acquir$ on or aft] ,octob] #h1 #aidj14 #hjbb4 ,di/ributions ( prop]ty ,p>agraph 7#c7 ( section #cja7;c7 is am5d$ to read z foll[s3 7#c7 ,am\nts 9 excess ( basis ,t portion ( ! di/ribution :i* is n a divid5d1 to ! ext5t t x exce$s ! adju/$ basis ( ! /ock1 %all be treat$ z ga9 f ! sale or ex*ange ( prop]ty4 4 #hjbc4 ,effect on e>n+s & pr(its ,subsection 7d7 ( section #cab is am5d$ by /rik+ p>agraph 7#b7 & r$esignat+ p>agraph 7#c7 z p>agraph 7#b74 #hjbd4 ,basis to corporations ,section #cfb7;a7 is am5d$ by /rik+ on or aft] ,june #bb1 #aied14 #hjbe4 ,tax cr$it employee /ock own]%ip plans ,section #dji is am5d$ by /rik+ subsection 7q74 #hjbf4 ,employee /ock pur*ase plans ,section #dbc7;a7 is am5d$ by /rik+ aft] ,decemb] #ca1 #aifc4 #hjbg4 ,transition rules 7a7 ,p>agraph 7#e7 ( section #dcj7;c7 is am5d$ by /rik+ subp>agraph 7,b7 & by /rik+ 7,a7 ,9 g5]al4--4 7b7 ,p>agraph 7#b7 ( section #dcj7;h7 is am5d$ by /rik+ subp>agraph 7,g74 7c7 ,p>agraph 7#c7 ( section #dcf7;j7 is am5d$ by /rik+ subp>agraphs 7,b7 & 7,c7 & by /rik+ 7,a7 ,9 g5]al4-- 7d7 ,section #dcf is am5d$ by /rik+ subsection 7m74 #hjbh4 ,limitation on d$uctions = c]ta9 f>m+ 7a7 ,9 g5]al ,section #dfd is am5d$ by /rik+ any f>m+ syndicate 7z def9$ 9 subsection 7c77 bo? places x appe>s 9 subsections 7a7 & 7b7 & ins]t+ any taxpay] to :om subsection 7d7 applies4 7b7 ,f>m+ syndicate 7#a7 ,subsection 7c7 ( section #dfd is h]eby mov$ to ! end ( section #dfa & r$esignat$ z subsection 7j74 7#b7 ,su* subsection 7j7 is am5d$-- 7,a7 by /rik+ ,= purposes ( ?is section 9 p>agraph 7#a7 & ins]t+ ,= purposes ( subsection 7i77#d71 & 7,b7 by add+ at ! end ! foll[+ new p>agraphs3 7#c7 ,f>m+ ,= purposes ( ?is subsection1 ! t]m f>m+ has ! mean+ giv5 to su* t]m by section #dfd7;e74 7#d7 ,limit$ entrepr5eur ,= purposes ( ?is subsection1 ! t]m limit$ entrepr5eur means a p]son :o-- 7,a7 has an int]e/ 9 an ent]prise o!r ?an z a limit$ p>tn]1 & 7,b7 does n actively p>ticipate 9 ! managem5t ( su* ent]prise4 4 7,c7 ,p>agraph 7#d7 ( section #dfa7;i7 is am5d$ by /rik+ section #dfd7;c7 & ins]t+ subsection 7j74 7c7 ,section #dfd is am5d$-- 7#a7 by /rik+ subsections 7e7 & 7g7 & r$esignat+ subsections 7d7 & 7f7 z subsections 7c7 & 7d71 respectively1 & 7#b7 by ins]t+ aft] subsection 7d7 ! foll[+ new subsection3 7e7 ,f>m+ ,= purposes ( ?is section1 ! t]m f>m+ means ! cultivation ( l& or ! rais+ or h>ve/+ ( any agricultural or horticultural commodity includ+ ! rais+1 %e>+1 fe$+1 c>+ =1 tra9+1 & managem5t ( animals4 ,= purposes ( ! prec$+ s5t5ce1 trees 7o!r ?an trees be>+ fruit or nuts7 %all n be treat$ z an agricultural or horticultural commodity4 4 7d7 ,subsection 7d7 ( section #dfd ( su* ,code1 z r$esignat$ by subsection 7c71 is am5d$-- 7#a7 by /rik+ p>agraph 7#a7 & r$esignat+ p>agraphs 7#b71 7#c71 & 7#d7 z p>agraphs 7#a71 7#b71 & 7#c71 respectively1 & 7#b7 by /rik+ ,,subsections 7a7 ,,& 7b7 ,,to ,,apply ,,to 9 ! subsection head+4 7e7 ,subp>agraph 7,a7 ( section #eh7;a77#b7 is am5d$ by /rik+ section #dfd7;c7 & ins]t+ section #dfa7;j74 #hjbi4 ,d$uctions limit$ to am\nt at risk ,p>agraph 7#c7 ( section #dfe7;c7 is am5d$ by /rik+ ,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #aigh1 ?is & ins]t+ ,?is4 #hjcj4 ,passive activity losses & cr$its limit$ ,section #dfi is am5d$ by /rik+ subsection 7m74 #hjca4 ,adju/m5ts requir$ by *anges 9 me?od ( acc\nt+ ,section #dha7;b77#c7 is am5d$ by /rik+ subp>agraph 7,c74 #hjcb4 ,exemption f tax on corporations1 c]ta9 tru/s1 etc ,section #eja is am5d$ by /rik+ subsection 7s74 #hjcc4 ,requirem5ts = exemption 7a7 ,section #ejc7;a77#a7 is am5d$ to read z foll[s3 7#a7 ,g5]al rule ,an organization describ$ 9 p>agraph 7#ag7 or 7#ah7 ( section #eja7;c7 or describ$ 9 section #dja7;a7 & ref]r$ to 9 section #dige7;g77#b7 or 7#c7 %all n be exempt f taxation "u section #eja7;a7 if x has engag$ 9 a prohibit$ transaction4 4 7b7 ,p>agraph 7#b7 ( section #ejc7;a7 is am5d$ by /rik+ describ$ 9 section #eja7;c77#ag7 or 7#ah7 or p>agraph 7a77#a77;,b7 & ins]t+ describ$ 9 p>agraph 7#a74 7c7 ,subsection 7c7 ( section #ejc is am5d$ by /rik+ describ$ 9 section #eja7;c77#ag7 or 7#ah7 or subsection 7a77#a77;,b7 & ins]t+ describ$ 9 subsection 7a77#a74 #hjcd4 ,repeal ( special treatm5t = religi\s broadca/+ company 7a7 ,9 g5]al ,subsection 7b7 ( section #eab is am5d$ by /rik+ p>agraph 7#ae74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 #hjce4 ,repeal ( exclusion ( ga9 or loss f disposition ( br[nfield prop]ty 7a7 ,9 g5]al ,subsection 7b7 ( section #eab is am5d$ by /rik+ p>agraph 7#ai74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to prop]ty acquir$ aft] ,decemb] #ca1 #bjji4 #hjcf4 ,accumulat$ taxable income ,p>agraph 7#a7 ( section #ece7;b7 & p>agraph 7#a7 ( section #ede7;b7 are ea* am5d$ by /rik+ section #eca & all t foll[s & ins]t+ section #eca or ! p]sonal hold+ company tax impos$ by section #eda44 #hjcg4 ,c]ta9 provisions relat$ to depletion 7a7 ,section #fad7;b77#c7 7be=e be+ r$esignat$ by title ,,iii7 is am5d$ by /rik+ subp>agraph 7,c74 7b7 ,section #fad7;b77#d7 7be=e be+ r$esignat$ by title ,,iii7 is am5d$ by /rik+ :i*ev] ( ! foll[+ taxable ye>s is ! lat]3 ,! fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #aifc1 or4 7c7 ,section #fad7;b7 7be=e be+ r$esignat$ by title ,,iii7 is am5d$ by /rik+ p>agraph 7#e74 #hjch4 ,am\nts receiv$ by surviv+ annuitant "u jo9t & survivor annuity contract ,subp>agraph 7,a7 ( section #fia7;d77#a7 is am5d$ by /rik+ aft] ,decemb] #ca1 #aiec1 &4 #hjci4 ,income taxes ( memb]s ( arm$ =ces on dea? ,section #fib7;a77#a7 is am5d$ by /rik+ aft] ,june #bd1 #aiej4 #hjdj4 ,special rules = comput+ res]ves ,p>agraph 7#g7 ( section #hjg7;e7 is am5d$ by /rik+ subp>agraph 7,b7 & r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b74 #hjda4 ,insurance company taxable income 7a7 ,section #hcb7;e7 is am5d$ by /rik+ ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #aiff14 7b7 ,section #hcb7;e77#f7 is am5d$ by /rik+ ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #aigj1 ! & ins]t+ ,!4 #hjdb4 ,capitalization ( c]ta9 policy acquisition exp5ses ,section #hdh 7z am5d$ by title ,,ii7 is am5d$ by /rik+ subsection 7i74 #hjdc4 ,repeal ( provision on expatriation to avoid tax 7a7 ,9 g5]al ,subp>t ,a ( "p ,,ii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #hgg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #b7;d7 is am5d$ by /rik+ or #hgg4 7#b7 ,section #aba is am5d$ by /rik+ subsection 7e74 7#c7 ,section #hfe7;j77#c7 is am5d$ by ins]t+ z 9 effect be=e its repeal aft] section #hgg4 7#d7 ,p>agraph 7#b7 ( section #hga7o7 7z am5d$ by ?is ,act7 is am5d$ to read z foll[s3 7#b7 ,= taxation ( cov]$ expatriates1 see section #hgg;,a4 4 7#e7 7,a7 ,section #hgg;,a7g77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ,9 g5]al ,! t]m cov]$ expatriate means any expatriate if-- 7i7 ! av]age annual net income tax ( su* individual = ! p]iod ( #e taxable ye>s end+ be=e ! date ( ! loss ( ,unit$ ,/ates citiz5%ip is great] ?an #abd1jjj1 7ii7 ! net wor? ( ! individual z ( su* date is #b1jjj1jjj or m1 or 7iii7 su* individual fails to c]tify "u p5alty ( p]jury t he has met ! requirem5ts ( ?is title = ! #e prec$+ taxable ye>s or fails to submit su* evid5ce ( su* compliance z ! ,secret>y may require4 4 7,b7 ,section #hgg;,a7g77#a77;,b7 is am5d$ by /rik+ %all n be treat$ z meet+ ! requirem5ts ( subp>agraph 7,a7 or 7,b7 ( section #hgg7;a77#b7 & ins]t+ %all n be treat$ z describ$ 9 clause 7i7 or 7ii7 ( subp>agraph 7,a74 7,c7 ,section #hgg;,a7g77#a7 is am5d$ by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,d7 & ins]t+ aft] subp>agraph 7,b7 ! foll[+ new subp>agraph3 7,c7 ,net income tax ,= purposes ( subp>agraph 7,a71 ! t]m net income tax means ! regul> tax liability r$uc$ by ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d ( "p ,,iv ( sub*apt] ,a4 4 7,d7 ,section #hgg;,a7g77#a71 z am5d$ by subp>agraph 7,c71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,inflation adju/m5t ,9 ! case ( ! loss ( ,unit$ ,/ates citiz5%ip 9 any cal5d> ye> aft] #bjjg1 ! doll> am\nt 9 subp>agraph 7,a77i7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* su* loss ( ,unit$ ,/ates citiz5%ip occurs det]m9$ by sub/itut+ cal5d> ye> #bjjc = cal5d> ye> #bjab 9 clause 7ii7 !re(4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #a1jjj4 4 7,e7 ,section #hgg;,a7g77#e7 is am5d$ to read z foll[s3 7#e7 ,long-t]m resid5t ,! t]m long-t]m resid5t means any individual 7o!r ?an a citiz5 ( ! ,unit$ ,/ates7 :o is a lawful p]man5t resid5t ( ! ,unit$ ,/ates 9 at lea/ #h taxable ye>s dur+ ! p]iod ( #ae taxable ye>s end+ ) ! taxable ye> dur+ :i* ! ev5t describ$ 9 subp>agraph 7,a7 or 7,b7 ( p>agraph 7#b7 occurs4 ,= purposes ( ! prec$+ s5t5ce1 an individual %all n be treat$ z a lawful p]man5t resid5t = any taxable ye> if su* individual is treat$ z a resid5t ( a =eign c\ntry = ! taxable ye> "u ! provisions ( a tax treaty betwe5 ! ,unit$ ,/ates & ! =eign c\ntry & does n waive ! b5efits ( su* treaty applicable to resid5ts ( ! =eign c\ntry4 4 7#f7 ,section #hid7;b7 is am5d$ by /rik+ ! la/ s5t5ce4 7#g7 ,section #bajg is am5d$ by /rik+ subsection 7e74 7#h7 ,section #beja7;a7 is am5d$ by /rik+ p>agraphs 7#c7 & 7#e7 & by r$esignat+ p>agraph 7#d7 z p>agraph 7#c74 7#i7 ,section #cdje7;e77#ac77;,b7 is am5d$ by /rik+ t su* p]son is n-- & all t foll[s & ins]t+ t su* p]son is n a ,unit$ ,/ates citiz5 or a resid5t ali5 ( ! ,unit$ ,/ates44 7#aj7 ,section #fjci;,g7a7 is am5d$ by /rik+ section #hgg7;b7 or #hgg;,a & ins]t+ section #hgg;,a4 7#aa7 ,section #fjci;,g7d7 is am5d$ by /rik+ section #hgg7;a7 or #hgg;,a & ins]t+ section #hgg;,a4 7#ab7 ,section #ggja7;b7 is am5d$ by /rik+ p>agraph 7#aj7 & by r$esignat+ p>agraph 7#aa7 z p>agraph 7#aj74 7c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to individuals ^: expatriation date 7z def9$ 9 section #hgg;,a7g77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 is on or aft] ,june #ag1 #bjjh4 #hjdd4 ,repeal ( c]ta9 transition rules on income f s\rces )\t ,unit$ ,/ates 7a7 ,limitation on cr$it ,p>agraph 7#b7 ( section #ijd7;d7 is am5d$ by /rik+ subp>agraph 7,j74 7b7 ,=eign e>n$ income ,clause 7i7 ( section #iaa7;b77#b77;,d7 is am5d$ to read z foll[s3 7i7 ,9 g5]al ,! exclusion am\nt = any cal5d> ye> is #hj1jjj4 4 #hjde4 ,repeal ( ,pu]to ,rico & possession tax cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #icf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #bg is am5d$ to read z foll[s3 #bg4 ,taxes ( =eign c\ntries & possessions ( ! ,unit$ ,/ates ,! am\nt ( taxes impos$ by =eign c\ntries & possessions ( ! ,unit$ ,/ates %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] to ! ext5t provid$ 9 section #ija4 4 7,b7 ,! item relat+ to section #bg 9 ! table ( sections = subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ to read z foll[s3 ,sec4 #bg4 ,taxes ( =eign c\ntries & possessions ( ! ,unit$ ,/ates4 4 7#b7 ,section #bdc7;b77#a77;,b7 is am5d$ to read z foll[s3 7,b7 if su* divid5d is di/ribut$ out ( ! e>n+s & pr(its ( a taxable ye> ( ! di/ribut+ corporation :i* ends aft] ,decemb] #ca1 #aifc1 & on ea* day ( :i* ! di/ribut+ corporation & ! corporation receiv+ ! divid5d 7 memb]s ( su* affiliat$ gr\p4 4 7#c7 ,section #bdf is am5d$ by /rik+ subsection 7e74 7#d7 ,section #cch7;h77#f77;,b77i7 is am5d$ by /rik+ 1 a ,,disc1 or a corporation to :i* an election "u section #icf applies & ins]t+ or a ,,disc4 7#e7 ,section #hfa7;a77#b7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b71 7,c71 & 7,d7 z subp>agraphs 7,a71 7,b71 & 7,c71 respectively1 & 7,b7 by /rik+ subp>agraph 7,b7 ea* place x appe>s & ins]t+ subp>agraph 7,a74 7#f7 ,section #hfd7;d77#e7 is am5d$ to read z foll[s3 7#e7 ,c]ta9 provisions n to apply ,! foll[+ provisions %all n apply to any am\nt treat$ z int]e/ "u p>agraph 7#a7 or 7#f73 7,a7 ,section #ijd7;d77#b77;,b77iii77,i7 7relat+ to exceptions = export f9anc+ int]e/74 7,b7 ,subp>agraph 7,a7 ( section #ied7;b77#c7 7relat+ to exception :]e =eign base company income is less ?an #e p]c5t or #a1jjj1jjj74 7,c7 ,subp>agraph 7,b7 ( section #ied7;c77#b7 7relat+ to c]ta9 export f9anc+74 7,d7 ,clause 7i7 ( section #ied7;c77#c77;,a7 7relat+ to c]ta9 income receiv$ f relat$ p]sons74 4 7#g7 ,section #hfe7;j77#c7 is am5d$ by /rik+ 1 #icc1 & #icf & ins]t+ & #icc4 7#h7 ,section #ija7;g77#b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal7 aft] #icf4 7#i7 ,section #ijd7;b7 is am5d$ by /rik+ p>agraph 7#d74 7#aj7 ,section #abjb7;e77#d7 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively4 7#aa7 ,section #acfa7;b77#b7 is am5d$ by add+ or at ! end ( subp>agraph 7,b71 by /rik+ subp>agraph 7,c71 & by r$esignat+ subp>agraph 7,d7 z subp>agraph 7,c74 7#ab7 ,section #aejd7;b7 is am5d$ by /rik+ p>agraph 7#d74 7#ac7 ,section #fjia7;b77#b77;,b7 is am5d$ by /rik+ clause 7ii7 & by r$esignat+ clauses 7iii7 & 7iv7 z clauses 7ii7 & 7iii71 respectively4 7#ad7 ,section #ffed7;d77#b77;,d7 is am5d$-- 7,a7 by /rik+ #icf7;h7 or 9 clause 7i71 & 7,b7 by /rik+ 8& section #icf0 9 ! head+4 7#ae7 ,section #ffee7;e77#d7 is am5d$-- 7,a7 by /rik+ #icf7;h7 or 9 subp>agraph 7,a71 & 7,b7 by /rik+ 8& section #icf0 9 ! head+4 7#af7 7,a7 ,section #cfg7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,intangible prop]ty ,= purposes ( ?is subsection1 ! t]m intangible prop]ty means any-- 7,a7 pat5t1 inv5tion1 =mula1 process1 design1 patt]n1 or "k-h[1 7,b7 copyright1 lit]>y1 musical1 or arti/ic composition1 7,c7 tradem>k1 trade "n1 or br& "n1 7,d7 fran*ise1 lic5se1 or contract1 7,e7 me?od1 program1 sy/em1 proc$ure1 campaign1 survey1 /udy1 =eca/1 e/imate1 cu/om] li/1 or te*nical data1 or 7,f7 any simil> item1 :i* has sub/antial value indep5d5t ( ! s]vices ( any individual4 4 7,b7 ,section #cfg7;a77#c77;,b77iv7 is am5d$ by /rik+ section #icf7;h77#c77;,b7 & ins]t+ subsection 7d77#d74 7,c7 ,sections #dhb & #abih7;e77#b77;,a7 are ea* am5d$ by /rik+ section #icf7;h77#d77;,b7 & ins]t+ section #cfg7;d77#d74 #hjdf4 ,basis ( prop]ty acquir$ f dec$5t ,section #ajad is am5d$-- 7#a7 by /rik+ ei!r & by /rik+ or section #haa7;j7 ( ! ,int]nal ,rev5ue ,code ( #aici :]e ! dec$5t di$ aft] ,octob] #ba1 #aidb 9 subsection 7a77#b71 & 7#b7 by /rik+ p>agraphs 7#g7 & 7#h7 ( subsection 7b74 #hjdg4 ,prop]ty on :i* lessee has made improvem5ts ,section #ajai is am5d$ by /rik+ ! la/ s5t5ce4 #hjdh4 ,involunt>y conv]sion ,section #ajcc is am5d$ by /rik+ subsection 7j7 & by r$esignat+ subsection 7k7 z subsection 7j74 #hjdi4 ,prop]ty acquir$ dur+ affiliation ,section #ajea is h]eby repeal$1 & ! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ajea4 #hjej4 ,repeal ( special hold+ p]iod rules = c]ta9 commodity futures transactions ,section #abbb is am5d$ by /rik+ ! la/ s5t5ce4 #hjea4 ,hold+ p]iod ( prop]ty 7a7 ,p>agraph 7#a7 ( section #abbc is am5d$ by /rik+ 1 9 ! case ( su* ex*anges aft] ,m>* #a1 #aied14 7b7 ,p>agraph 7#d7 ( section #abbc is am5d$ by /rik+ 7or "u s mu* ( section #ajeb7;c7 z ref]s to section #aac7;a77#bc7 ( ! ,int]nal ,rev5ue ,code ( #aici74 7c7 ,p>agraph 7#f7 ( section #abbc is repeal$4 7d7 ,p>agraph 7#h7 ( section #abbc is repeal$4 #hjeb4 ,prop]ty us$ 9 ! trade or bus9ess & involunt>y conv]sions ,subp>agraph 7,a7 ( section #abca7;c77#b7 is am5d$ by /rik+ beg9n+ aft] ,decemb] #ca1 #aiha4 #hjec4 ,sale ( pat5ts ,subsection 7a7 ( section #abdi is am5d$ by /rik+ aft] ,decemb] #ca1 #aifb14 #hjed4 ,ga9 f disposition ( f>ml& 7a7 ,p>agraph 7#a7 ( section #abeb7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7#a7 by /rik+ beg9n+ aft] ,decemb] #ca1 #aifi 9 ! matt] prec$+ subp>agraph 7,a71 & 7#b7 by am5d+ subp>agraph 7,a7 to read z foll[s3 7,a7 ! applicable p]c5tage ( ! aggregate d$uctions all[$ "u section #age 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad7 ) respect to ! f>ml&1 or 4 7b7 ,p>agraph 7#b7 ( section #abeb7;a7 is am5d$ by /rik+ sections #age & all t foll[s & ins]t+ section #age 7z 9 effect be=e its repeal by ! ,tax ,re=m ,act ( #bjad744 #hjee4 ,transition rules relat$ to ! treatm5t ( am\nts receiv$ on retirem5t or sale or ex*ange ( debt in/rum5ts 7a7 ,section #abga is am5d$ by /rik+ subsection 7c74 7b7 ,section #abga7;a77#b77;,b7 is am5d$ by /rik+ 7& p>agraph 7#b7 ( subsection 7c774 #hjef4 ,c]ta9 rules ) respect to debt in/rum5ts issu$ be=e ,july #b1 #aihb 7a7 ,section #abgb is am5d$ by /rik+ subsection 7b74 7b7 ,section #afc7;j77#b77;,c77ii7 is am5d$ by /rik+ or 7b77#d74 7c7 ,section #abga7;a77#b77;,a77ii7 is am5d$ by /rik+ subsection 7a77#g7 or 7b77#d7 ( section #abgb & ins]t+ section #abgb7;a77#g74 7d7 ,section #abga7;b77#a7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,?is section %all n apply to any obligation issu$ by a natural p]son be=e ,june #i1 #aiig4 4 7e7 ,section #abgi7;a77#d77;,a77ii71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ or 7b77#d74 7f7 ,! am5dm5ts made by ?is section %all apply to debt in/rum5ts issu$ aft] ,july #a1 #aihb4 #hjeg4 ,c]ta9 rules ) respect to /ripp$ bonds pur*as$ be=e ,july #b1 #aihb 7a7 ,section #abhf is am5d$ by /rik+ subsection 7c74 7b7 ,section #abhf7;e77#e7 is am5d$ by /rik+ ! la/ s5t5ce4 7c7 ,subsections 7a7 & 7b7 ( section #abhf are ea* am5d$ by /rik+ aft] ,july #a1 #aihb14 7d7 ,! am5dm5ts made by ?is section %all apply to bonds & c\pons pur*as$ aft] ,july #a1 #aihb4 #hjeh4 ,am\nt & me?od ( adju/m5t ,section #acad is am5d$ by /rik+ subsection 7d7 & by r$esignat+ subsection 7e7 z subsection 7d74 #hjei4 ,old-age1 survivors1 & disability insurance ,subsection 7a7 ( section #adja is am5d$ by /rik+ ! foll[+ p]c5t & all t foll[s & ins]t+ #ab4d p]c5t ( ! am\nt ( ! self-employm5t income = su* taxable ye>44 #hjfj4 ,hospital insurance ,p>agraph 7#a7 ( section #adja7;b7 is am5d$ by /rik+ ! foll[+ p]c5t& all t foll[s & ins]t+ #b4i p]c5t ( ! am\nt ( ! self-employm5t income = su* taxable ye>44 #hjfa4 ,m9i/]s1 memb]s ( religi\s ord]s1 & *ri/ian sci5ce practition]s ,p>agraph 7#c7 ( section #adjb7;e7 is am5d$ by /rik+ :i*ev] ( ! foll[+ dates is lat]3 7,a7 & by /rik+ 2 or 7,b7 & all t foll[s & ins]t+ a p]iod4 #hjfb4 ,affiliat$ gr\p def9$ ,subp>agraph 7,a7 ( section #aejd7;a77#c7 is am5d$ by /rik+ = a taxable ye> :i* includes any p]iod aft] ,decemb] #ca1 #aihd 9 clause 7i7 & by /rik+ 9 a taxable ye> beg9n+ aft] ,decemb] #ca1 #aihd 9 clause 7ii74 #hjfc4 ,cr$it = /ate dea? taxes 7a7 ,"p ,,ii ( sub*apt] ,a ( *apt] #aa is am5d$ by /rik+ section #bjaa 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,sub*apt] ,a ( *apt] #ac is am5d$ by /rik+ section #bfjd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 #hjfd4 ,family-own$ bus9ess int]e/ ,"p ,,iv ( sub*apt] ,a ( *apt] #aa is am5d$ by /rik+ section #bjeg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 #hjfe4 ,prop]ty )9 ! unit$ /ates ,subsection 7c7 ( section #bajd is am5d$ by /rik+ ,) respect to e/ates ( dec$5ts dy+ aft] ,decemb] #ca1 #aifi1 deposits & ins]t+ ,deposits4 #hjff4 ,repeal ( deadwood provisions relat+ to employm5t taxes 7a7 ,tax on employees ,subsection 7a7 ( section #caja is am5d$ by /rik+ ! foll[+ p]c5tages & all t foll[s & ins]t+ #f4b p]c5t ( ! wages 7z def9$ 9 section #caba7;a77 receiv$ by him ) respect to employm5t 7z def9$ 9 section #caba7;b7744 7b7 ,tax on employ]s 7#a7 ,subsection 7a7 ( section #caaa is am5d$ by /rik+ ! foll[+ p]c5tages & all t foll[s & ins]t+ #f4b p]c5t ( ! wages 7z def9$ 9 section #caba7;a77 paid by him ) respect to employm5t 7z def9$ 9 section #caba7;b774 7#b7 ,subsection 7b7 ( section #caaa is am5d$ by /rik+ ! foll[+ p]c5tages & all t foll[s & ins]t+ #a4de p]c5t ( ! wages 7z def9$ 9 section #caba7;a77 paid by him ) respect to employm5t 7z def9$ 9 section #caba7;b774 7#c7 ,section #caaa is am5d$ by /rik+ subsection 7d7 & r$esignat+ subsection 7e7 z subsection 7d74 7c7 ,ti] #b tax on employees ,subsection 7b7 ( section #cbja is am5d$ to read z foll[s3 7b7 ,ti] #b tax ,9 addition to o!r taxes1 !re is h]eby impos$ on ! income ( ea* employee a tax equal to ! p]c5tage det]m9$ "u section #cbda = any cal5d> ye> ( ! comp5sation receiv$ dur+ su* cal5d> ye> by su* employee = s]vices r5d]$ by su* employee4 4 7d7 ,rate ( ,ti] #b tax on employee repres5tatives ,subsection 7b7 ( section #cbaa is am5d$ to read z foll[s3 7b7 ,ti] #b tax ,9 addition to o!r taxes1 !re is h]eby impos$ on ! income ( ea* employee repres5tative a tax equal to ! p]c5tage det]m9$ "u section #cbda = any cal5d> ye> ( ! comp5sation receiv$ dur+ su* cal5d> ye> by su* employee repres5tative = s]vices r5d]$ by su* employee repres5tative4 4 7e7 ,ti] #b tax on employ]s 7#a7 ,subsection 7b7 ( section #cbba is am5d$ to read z foll[s3 7b7 ,ti] #b tax ,9 addition to o!r taxes1 !re is h]eby impos$ on ! income ( ea* employ] a tax equal to ! p]c5tage det]m9$ "u section #cbda = any cal5d> ye> ( ! comp5sation paid dur+ su* cal5d> ye> by su* employ] = s]vices r5d]$ = su* employ]4 4 7#b7 ,section #cbba is am5d$ by /rik+ subsection 7d7 & r$esignat+ subsection 7e7 z subsection 7d74 7f7 ,employee "u ,railroad ,retirem5t ,sy/em ,subsection 7b7 ( section #cbca is am5d$ by is am5d$ by /rik+ 2 except & all t foll[s & ins]t+ a p]iod4 7g7 ,def9ition ( wages 7#a7 ,section #caba7;b7 is am5d$ by /rik+ p>agraph 7#ag74 7#b7 ,section #baj7;a7 ( ! ,social ,security ,act is am5d$ by /rik+ p>agraph 7#ag74 7h7 ,cr$its aga9/ unemploym5t tax 7#a7 ,p>agraph 7#d7 ( section #ccjb7;f7 is am5d$-- 7,a7 by /rik+ subsection-- & all t foll[s ?r\gh 7,a7 9 g5]al--,! & ins]t+ subsection1 !1 7,b7 by /rik+ subp>agraph 7,b71 7,c7 by r$esignat+ clauses 7i7 &7ii7 z subp>agraphs 7,a7 & 7,b71 respectively1 & 7,d7 by mov+ ! text ( su* subp>agraphs 7z s r$esignat$7 #b ems to ! left4 7#b7 ,p>agraph 7#e7 ( section #ccjb7;f7 is am5d$ by /rik+ subp>agraph 7,d7 & by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,d74 7i7 ,dome/ic s]vice employm5t taxes ,section #ceaj7;b7 is am5d$ by /rik+ p>agraph 7#d74 #hjfg4 ,luxury pass5g] automobiles 7a7 ,9 g5]al ,*apt] #ca is am5d$ by /rik+ sub*apt] ,a 7& by /rik+ ! item relat+ to su* sub*apt] 9 ! table ( sections = su* *apt]74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dbic is am5d$ by /rik+ sub*apt] ,a ( *apt] #ca14 7#b7 ,section #dbba is am5d$-- 7,a7 9 subsections 7a7 & 7d77#a71 by /rik+ sub*apt] ,a or & ins]t+ sub*apt]1 7,b7 9 subsection 7a71 by /rik+ ,9 ! case ( taxes impos$ by sub*apt] ,a ( *apt] #ca1 p>agraphs 7#a71 7#c71 7#d71 & 7#e7 %all n apply41 & 7,c7 9 subsection 7c71 by /rik+ #djja7;c71 #djja7;d74 7#c7 ,section #dbbb is am5d$ by /rik+ #djja7;c71 #djja7;d714 #hjfh4 ,transportation by air ,section #dbfa7;e7 is am5d$-- 7#a7 9 p>agraph 7#a7 by /rik+ subp>agraph 7,c71 & 7#b7 by /rik+ p>agraph 7#e74 #hjfi4 ,taxes on failure to di/ribute income 7a7 ,p>agraph 7#b7 ( section #didb7;f7 is am5d$ by /rik+ ! semicolon at ! end ( subp>agraph 7,b7 & ins]t+ 1 &1 by /rik+ 2 & at ! end ( subp>agraph 7,c7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,d74 7b7 ,subsection 7g7 ( section #didb 7z am5d$ by ?is ,act7 is am5d$-- 7#a7 by /rik+ ,= all taxable ye>s beg9n+ on or aft] ,janu>y #a1 #aige1 subject 9 p>agraph 7#b77;,a7 & ins]t+ ,subject1 & 7#b7 by /rik+ p>agraph 7#d74 7c7 ,section #didb7;i77#b7 is am5d$ by /rik+ beg9n+ aft] ,decemb] #ca1 #aifi1 &4 #hjgj4 ,taxes on taxable exp5ditures ,section #dide7;f7 is am5d$ by /rik+ 7exclud+ !refrom any prec$+ taxable ye> :i* beg9s be=e ,janu>y #a1 #aigj74 #hjga4 ,def9itions & special rules ,section #dfhb is am5d$ by /rik+ subsection 7h74 #hjgb4 ,returns ,subsection 7a7 ( section #fjci;,d is am5d$ by /rik+ beg9n+ aft] ,decemb] #ca1 #aihd14 #hjgc4 ,in=mation returns ,subsection 7c7 ( section #fjfj is am5d$ by /rik+ ye> & all t foll[s & ins]t+ ye>44 #hjgd4 ,abatem5ts ,section #fdjd7;f7 is am5d$ by /rik+ p>agraph 7#c74 #hjge4 ,failure by corporation to pay e/imat$ income tax ,clause 7i7 ( section #ffee7;g77#d77;,a7 is am5d$ by /rik+ 7or ! correspond+ provisions ( prior law74 #hjgf4 ,repeal ( #bjjh recov]y rebates 7a7 ,9 g5]al ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdbh 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ #fdbh14 7#b7 ,section #fbac7;g77#b77,l7 is am5d$ by /rik+ #cb1 or #fdbh & ins]t+ or #cb4 7#c7 ,p>agraph 7#b7 ( section #acbd7;b7 ( title #ca1 ,unit$ ,/ates ,code1 is am5d$ by /rik+ or #fdbh4 #hjgg4 ,repeal ( advance paym5t ( portion ( increas$ *ild cr$it = #bjjc ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdbi 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 #hjgh4 ,repeal ( provisions relat$ to ,,cobra premium assi/ance 7a7 ,9 g5]al ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdcb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 7b7 ,notification requirem5t ,"p ,i ( sub*apt] ,b ( *apt] #fh is am5d$ by /rik+ section #fgbj;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7c7 ,exclusion f gross income ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aci;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 #hjgi4 ,retirem5t ,section #gddg7;i77#c77;,b77ii7 is am5d$ by /rik+ at #d p]c5t p] annum to ,decemb] #ca1 #aidg1 & at #c p]c5t p] annum !reaft]1 & ins]t+ at #c p]c5t p] annum4 #hjhj4 ,annuities to surviv+ sp\ses & dep5d5t *ildr5 ( judges 7a7 ,p>agraph 7#b7 ( section #gddh7;a7 is am5d$ by /rik+ or "u section #aajf ( ! ,int]nal ,rev5ue ,code ( #aici & by /rik+ or pursuant to section #aajf7;d7 ( ! ,int]nal ,rev5ue ,code ( #aici4 7b7 ,subsection 7g7 ( section #gddh is am5d$ by /rik+ or o!r ?an pursuant to section #aajf ( ! ,int]nal ,rev5ue ,code ( #aici4 7c7 ,subsections 7g71 7j77#a71 & 7j77#b7 ( section #gddh are ea* am5d$ by /rik+ at #d p]c5t p] annum to ,decemb] #ca1 #aidg1 & at #c p]c5t p] annum !reaft] & ins]t+ at #c p]c5t p] annum4 #hjha4 ,m]*ant m>9e capital con/ruction funds ,p>agraph 7#d7 ( section #geah7;g7 is am5d$ by /rik+ any nonqualifi$ )drawal & all t foll[s ?r\gh %all be det]m9$ & ins]t+ any nonqualifi$ )drawal %all be det]m9$4 #hjhb4 ,valuation tables 7a7 ,subsection 7c7 ( section #gebj is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraph 7#c7 z p>agraph 7#b74 7b7 ,p>agraph 7#b7 ( section #gebj7;c7 ( su* ,code1 z s r$esignat$1 is am5d$-- 7#a7 by /rik+ ,n lat] ?an ,decemb] #ca1 #aihi1 ! & ins]t+ ,!1 & 7#b7 by /rik+ !reaft] 9 ! la/ s5t5ce !re(4 #hjhc4 ,def9ition ( employee ,section #ggja7;a77#bj7 is am5d$ by /rik+ *apt] #ba & all t foll[s & ins]t+ *apt] #ba44 #hjhd4 ,effective date 7a7 ,g5]al ,rule ,except z o!rwise provid$ 9 subsection 7b7 ( ?is section & ! prec$+ sections ( ?is subtitle1 ! am5dm5ts made by ?is subtitle %all take effect on ! date ( enactm5t ( ?is ,act4 7b7 ,sav+s provision ,if-- 7#a7 any provision am5d$ or repeal$ by ! am5dm5ts made by ?is subtitle appli$ to-- 7,a7 any transaction occurr+ be=e ! date ( ! enactm5t ( ?is ,act1 7,b7 any prop]ty acquir$ be=e su* date ( enactm5t1 or 7,c7 any item ( income1 loss1 d$uction1 or cr$it tak5 into acc\nt be=e su* date ( enactm5t1 & 7#b7 ! treatm5t ( su* transaction1 prop]ty1 or item "u su* provision w\ld 7)\t reg>d to ! am5dm5ts or repeals made by ?is subtitle7 affect ! liability = tax = p]iods end+ aft] su* date ( enactm5t1 no?+ 9 ! am5dm5ts or repeals made by ?is subtitle %all be con/ru$ to affect ! treatm5t ( su* transaction1 prop]ty1 or item = purposes ( det]m9+ liability = tax = p]iods end+ aft] su* date ( enactm5t4 ,b ,con=m+ ,am5dm5ts ,relat$ to ,multiple ,sections #haja4 ,con=m+ am5dm5ts relat$ to multiple sections 7a7 ,g5]al bus9ess cr$it ,section #ch7;b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7#a7 by r$esignat+ p>agraphs 7#d71 7#e71 7#g71 7#h71 7#ac71 7#bj71 & 7#cc7 z p>agraphs 7#c71 7#d71 7#e71 7#f71 7#g71 7#h71 & 7#i71 respectively1 7#b7 by add+ plus at ! end ( p>agraph 7#h7 7z s r$esignat$71 & 7#c7 by /rik+ ! comma at ! end ( p>agraph 7#i7 7z s r$esignat$7 & ins]t+ a p]iod4 7b7 ,adju/m5ts to basis ,section #ajaf7;a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7#a7 by /rik+ ! la/ two s5t5ces ( p>agraph 7#b71 7#b7 9 p>agraph 7#d7 by /rik+ 7n includ+ & all t foll[s ?r\gh #aiba71 7#c7 by /rik+ p>agraph 7#ab71 7#d7 by r$esignat+ p>agraphs 7#aa71 7#ad71 7#af71 7#ag71 7#ah71 7#ba71 7#bc71 7#bf71 7#ch71 & 7#ci7 z p>agraphs 7#i71 7#aj71 7#aa71 7#ab71 7#ac71 7#ad71 7#ae71 7#af71 7#ag71 & 7#ah71 respectively1 & 7#e7 by add+ & at ! end ( p>agraph 7#ag7 7z s r$esignat$74 7c7 ,hold+ p]iod ( prop]ty ,section #abbc1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ p>agraphs 7#i71 7#aj71 7#aa71 7#ab71 & 7#ae7 z p>agraphs 7#f71 7#g71 7#h71 7#i7 & 7#aj71 respectively4 7d7 ,corporate pref]5ce items 7#a7 ,9 g5]al ,sub*apt] ,b ( *apt] #a1 z am5d$ by ?is ,act1 is am5d$ by /rik+ "p ,,xi 7& by /rik+ ! item relat+ to su* "p f ! table ( p>ts = su* sub*apt]74 7#b7 ,pres]vation ( special rule = treatm5t ( intangible drill+ co/s ,section #bfc7;c7 is am5d$-- 7,a7 by /rik+ all t prec$es & except z provid$ 9 subsection 7i7 & ins]t+ ! foll[+3 7c7 ,intangible drill+ & developm5t co/s 9 ! case ( oil & gas wells & geo!rmal wells 7#a7 ,9 g5]al ,not)/&+ subsection 7a71 1 & 7,b7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,r$uction = integrat$ oil companies 7,a7 ,9 g5]al ,9 ! case ( a corporation :i* is an integrat$ oil company1 ! am\nt all[able z a d$uction = any taxable ye> 7det]m9$ )\t reg>d to ?is p>agraph7 "u p>agraph 7#a7 %all be r$uc$ by #cj p]c5t4 7,b7 ,amortization ( disall[$ am\nts ,! am\nt n all[able z a d$uction "u p>agraph 7#a7 = any taxable ye> by reason ( subp>agraph 7,a7 %all be all[able z a d$uction ratably ov] ! #fj-mon? p]iod beg9n+ ) ! mon? 9 :i* ! co/s are paid or incurr$4 7,c7 ,dispositions ,= purposes ( section #abed1 any d$uction "u subp>agraph 7,b7 %all be treat$ z a d$uction all[able "u p>agraph 7#a74 7,d7 ,integrat$ oil company ,= purposes ( ?is p>agraph1 ! t]m integrat$ oil company means1 ) respect to any taxable ye>1 any produc] ( crude oil to :om subsection 7c7 ( section #fac;,a does n apply by reason ( p>agraph 7#b7 or 7#d7 ( section #fac;,a7d7 7z su* provisions 7 9 effect be=e _! repeal by ! ,tax ,re=m ,act ( #bjad74 7,e7 ,coord9ation ) co/ depletion ,! portion ( ! adju/$ basis ( any prop]ty :i* is attributable to am\nts to :i* subp>agraph 7,a7 appli$ %all n be tak5 into acc\nt = purposes ( det]m9+ depletion "u section #faa4 4 7#c7 ,pres]vation ( limitation on c]ta9 int]e/ on indebt$ness ( f9ancial in/itutions 7,a7 ,9 g5]al ,section #afc is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,limitation on c]ta9 int]e/ on indebt$ness ( f9ancial in/itutions 7#a7 ,9 g5]al ,= purposes ( ?is subtitle1 9 ! case ( a corporation1 ! am\nt all[able z a d$uction "u ?is *apt] 7det]m9$ )\t reg>d to ?is subsection7 ) respect to ! am\nt describ$ 9 p>agraph 7#b7 %all be r$uc$ by #bj p]c5t4 7#b7 ,int]e/ on debt to c>ry tax-exempt obligations acquir$ aft] ,decemb] #ca1 #aihb1 & be=e ,augu/ #h1 #aihf 7,a7 ,9 g5]al ,9 ! case ( a f9ancial in/itution :i* is a bank 7z def9$ 9 section #ehe7;a77#b771 ! am\nt describ$ 9 ?is p>agraph is ! am\nt ( int]e/ on indebt$ness incurr$ or cont9u$ to pur*ase or c>ry obligations acquir$ aft] ,decemb] #ca1 #aihb1 & be=e ,augu/ #h1 #aihf1 ! int]e/ on :i* is exempt f taxes = ! taxable ye>1 to ! ext5t t a d$uction w\ld 7b = ?is p>agraph or section #bfe7;b77 be all[able ) respect to su* int]e/ = su* taxable ye>4 7,b7 ,det]m9ation ( int]e/ allocable to indebt$ness on tax-exempt obligations ,unless ! taxpay] 7"u regulations prescrib$ by ! ,secret>y7 e/abli%es o!rwise1 ! am\nt det]m9$ "u subp>agraph 7,a7 %all be an am\nt :i* be>s ! same ratio to ! aggregate am\nt all[able 7det]m9$ )\t reg>d to ?is section & section #bfe7;b77 to ! taxpay] z a d$uction = int]e/ = ! taxable ye> z-- 7i7 ! taxpay]'s av]age adju/$ basis 7)9 ! mean+ ( section #ajaf7 ( obligations describ$ 9 subp>agraph 7,a71 be>s to 7ii7 su* av]age adju/$ basis = all assets ( ! taxpay]4 7,c7 ,int]e/ ,= purposes ( ?is p>agraph1 ! t]m int]e/ includes am\nts 7:e!r or n designat$ z int]e/7 paid 9 respect ( deposits1 inve/m5t c]tificates1 or )drawable or repur*asable %>es4 7,d7 ,application ( subp>agraph to c]ta9 obligations issu$ aft] ,augu/ #g1 #aihf ,= application ( ?is subp>agraph to c]ta9 obligations issu$ aft] ,augu/ #g1 #aihf1 see section #bfe7;b77#c7 7z 9 effect be=e ! enactm5t ( ! ,tax ,re=m ,act ( #bjad74 ,t portion ( any obligation n tak5 into acc\nt "u p>agraph 7#b77;,a7 ( section #bfe7;b7 7z s 9 effect7 by reason ( p>agraph 7#g7 ( su* section %all be treat$ = purposes ( ?is section z hav+ be5 acquir$ on ,augu/ #g1 #aihf4 4 7,b7 ,con=m+ am5dm5ts 7i7 ,section #abgg7;c7 is am5d$ by /rik+ section #bia7;e77#a77;,b77ii7 & ins]t+ section #afc7n77#b77;,b74 7ii7 ,section #acfc7;b77#c71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ section #bia & ins]t+ section #afc7n74 7#d7 ,effective date ,except z o!rwise provid$ 9 ?is ,act ) respect to am5dm5ts made to section #bia ( ! ,int]nal ,rev5ue ,code ( #aihf1 ! am5dm5ts made ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjad4