,,ii  #aac? ,,congress  #a/ ,session    
,s4 #eea  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,m>* #ac1 #bjac ,mr4   
,wyd5 7= himself1 ,ms4 ,murk[ski1 ,mr4  
,begi*1 ,ms4 ,cantwell1 ,mrs4 ,murray1 &
 ,mr4 ,m]kley7 introduc$ ! foll[+ bill2 
:i* 0 read twice & ref]r$ to !          
,committee on ,f9ance  ,a ,,bill  ,to   
provide an election to t]m9ate c]ta9    
capital con/ruction funds )\t p5alties4 
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,capital ,con/ruction ,fund ,p5alty   
,relief ,act4  #b4 ,election to t]m9ate 
c]ta9 capital con/ruction funds  7a7    
,am5dm5ts to *apt] #ece ( title #df1    
,unit$ ,/ates ,code  7#a7 ,9 g5]al      
,*apt] #ece ( title #df1 ,unit$ ,/ates  
,code1 is am5d$ by add+ at ! end !      
foll[+ new section3  #eceah4 ,election  
to t]m9ate  7a7 ,9 g5]al  7#a7 ,election
 ,any p]son :o has ent]$ into an        
agreem5t "u ?is *apt] ) respect to a    
vessel op]at$ 9 ! fi%]ies ( ! ,unit$    
,/ates may make an election "u ?is      
p>agraph to t]m9ate ! capital           

con/ruction fund e/abli%$ "u su*        
agreem5t4  7#b7 ,effect ( election on   
individuals ,9 ! case ( an individual :o
 makes an election "u p>agraph 7#a7 )   
respect to a capital con/ruction fund-- 
7,a7 any am\nt rema9+ 9 su* capital     
con/ruction fund on ! date ( su*        
election %all be di/ribut$ to su*       
individual z a nonqualifi$ )drawal1     
except t--  7i7 9 comput+ ! tax on su*  
)drawal1 except z provid$ 9 p>agraph    
7#d71 subsections 7c77#c77;,b7 & 7f7 (  
section #eceaa %all n apply2 &  7ii7 !  
taxpay] may elect to av]age ! income f  
su* )drawal z provid$ 9 subsection 7b72 
&  7,b7 su* individual %all n be        
eligible to ent] into1 directly or      
indirectly1 any future agreem5t to      
e/abli% a capital con/ruction fund "u   
?is *apt] ) respect to a vessel op]at$ 9
 ! fi%]ies ( ! ,unit$ ,/ates4  7#c7     
,effect ( election = entities  7,a7 ,9  
g5]al ,9 ! case ( a p]son 7o!r ?an an   
individual7 :o makes an election "u     
p>agraph 7#a7--  7i7 ! total am\nt 9 !  

capital con/ruction fund on ! date ( su*
 election %all be di/ribut$ to !        
%>ehold]s1 p>tn]s1 or memb]s ( su* p]son
 9 accordance ) ! t]ms ( ! in/rum5ts    
sett+ =? ! own]%ip int]e/s ( su*        
%>ehold]s1 p>tn]s1 or memb]s2  7ii7 ea* 
%>ehold]1 p>tn]1 or memb] %all be treat$
 z hav+ e/abli%$ a special tempor>y     
capital con/ruction fund & hav+ deposit$
 am\nts receiv$ 9 ! di/ribution into su*
 special tempor>y capital con/ruction   
fund2  7iii7 no ga9 or loss %all be     
recogniz$ ) respect to su* di/ribution2 
7iv7 ! basis ( any %>ehold]1 p>tn]1 or  
memb] 9 ! p]son %all n be r$uc$ z a     
result ( su* di/ribution2  7v7 any      
am\nts n di/ribut$ pursuant to clause   
7i7 %all be di/ribut$ 9 a nonqualifi$   
)drawal2 &  7vi7 su* p]son %all n be    
eligible to ent] into1 directly or      
indirectly1 any future agreem5t to      
e/abli% a capital con/ruction fund "u   
?is *apt] ) respect to a vessel op]at$ 9
 ! fi%]ies ( ! ,unit$ ,/ates4  7,b7     
,special tempor>y capital con/ruction   

funds ,= purposes ( ?is *apt]1 a special
 tempor>y capital con/ruction fund %all 
be treat$ 9 ! same mann] z a capital    
con/ruction fund e/abli%$ "u section    
#ecejc1 except t ! foll[+ rules %all    
apply3  7i7 ,a special tempor>y capital 
con/ruction fund %all be e/abli%$ )\t   
reg>d to any agreem5t "u section #ecejc 
& )\t reg>d to any eligible or qualifi$ 
vessel4  7ii7 ,section #eceje %all n    
apply & no am\nts may be deposit$ into a
 special tempor>y capital con/ruction   
fund o!r ?an am\nts receiv$ pursuant to 
a di/ribution describ$ 9 subp>agraph    
7,a77i74  7iii7 ,9 ! case ( any am\nts  
di/ribut$ f a special tempor>y capital  
con/ruction fund directly to a capital  
con/ruction fund ( ! taxpay] e/abli%$ "u
 section #eceje--  7,i7 no ga9 or loss  
%all be recogniz$2  7,,ii7 ! limitation 
"u section #eceje %all n apply ) respect
 to any am\nt s transf]r$2  7,,iii7 su* 
am\nts %all n r$uce taxable income "u   
section #ecejg7;a77#a72 &  7,,iv7 =     
purposes ( section #eceaa7;e71 su*      

am\nts %all be treat$ z deposit$ 9 !    
capital con/ruction fund on ! date t su*
 funds 7 deposit$ 9 ! capital           
con/ruction fund ) respect to :i* !     
election "u p>agraph 7#a7 0 made4  7iv7 
,9 ! case ( any am\nts di/ribut$ f a    
special tempor>y capital con/ruction    
fund pursuant to an election "u p>agraph
 7#a71 clauses 7i7 & 7ii7 ( p>agraph    
7#b77;,a7 %all n apply to s mu* ( su*   
am\nts z are attributable to e>n+s      
accru$ aft] ! date ( ! e/abli%m5t ( su* 
special tempor>y capital con/ruction    
fund4  7v7 ,any am\nt n di/ribut$ f a   
special tempor>y capital con/ruction    
fund be=e ! due date ( ! tax return     
7includ+ ext5sion7 = ! la/ taxable ye> (
 ! individual end+ be=e ,janu>y #a1     
#bjai1 %all be treat$ z di/ribut$ to !  
taxpay] on ! day be=e su* due date z if 
an election "u p>agraph 7#a7 7 made by !
 taxpay] on su* day4  7,c7 ,regulations 
,! jo9t regulations %all provide rules  
=--  7i7 assign+ ! am\nts receiv$ by !  
%>ehold]s1 p>tn]s1 or memb]s 9 a        

di/ribution describ$ 9 subp>agraph      
7,a77i7 to ! acc\nts describ$ 9 section 
#ecejh7;a7 9 special tempor>y capital   
con/ruction funds2 &  7ii7 prev5t+ !    
abuse ( ! purposes ( ?is section4  7#d7 
,tax b5efit rule ,rules simil> to !     
rules "u section #eceaa7;f77#c7 %all    
apply = purposes ( det]m9+ tax liability
 on any nonqualifi$ )drawal "u p>agraph 
7#b77;,a71 7#c77;,a77v71 or             
7#c77;,b77v74  7#e7 ,election ,any      
election "u p>agraph 7#a7--  7,a7 may   
only be made--  7i7 by a p]son :o       
ma9ta9s a capital con/ruction fund )    
respect to a vessel op]at$ 9 ! fi%]ies (
 ! ,unit$ ,/ates on ! date ( ! enactm5t 
( ?is section2 or  7ii7 by a p]son :o   
ma9ta9s a capital con/ruction fund :i* 0
 e/abli%$ pursuant to p>agraph          
7#c77;,a77ii7 z a result ( an election  
made by an entity 9 :i* su* p]son 0 a   
%>ehold]1 p>tn]1 or memb]2  7,b7 %all be
 made n lat] ?an ! due date ( ! tax     
return 7includ+ ext5sions7 = ! p]son's  
la/ taxable ye> end+ on or be=e ,decemb]

 #ca1 #bjah2 &  7,c7 %all apply to all  
am\nts 9 ! capital con/ruction fund )   
respect to :i* ! election is made4  7b7 
,election to av]age income ,at !        
election ( an individual :o has receiv$ 
a di/ribution describ$ 9 subsection 7a71
 = purposes ( section #acja ( ! ,int]nal
 ,rev5ue ,code ( #aihf--  7#a7 su*      
individual %all be treat$ z engag$ 9 a  
fi%+ bus9ess1 &  7#b7 su* di/ribution   
%all be treat$ z income attributable to 
a fi%+ bus9ess = su* taxable ye>4  4    
7#b7 ,con=m+ am5dm5ts  7,a7 ,section    
#eceaa ( title #df1 ,unit$ ,/ates ,code1
 is am5d$ by /rik+ section #eceac &     
ins]t+ sections #eceac & #eceah4  7,b7  
,! table ( sections = *apt] #ece ( title
 #df1 ,unit$ ,/ates ,code1 is am5d$ by  
ins]t+ aft] ! item relat+ to section    
#eceag ! foll[+ new item3  #eceah4      
,election to t]m9ate4  4  7b7 ,am5dm5ts 
to ! ,int]nal ,rev5ue ,code ( #aihf     
7#a7 ,9 g5]al ,section #geah ( !        
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           

subsection3  7j7 ,election ,to t]m9ate  
capital con/ruction funds  7#a7 ,9 g5]al
 ,any p]son :o has ent]$ into an        
agreem5t "u *apt] #ece ( title #df ( !  
,unit$ ,/ates ,code1 ) respect to a     
vessel op]at$ 9 ! fi%]ies ( ! ,unit$    
,/ates may make an election "u ?is      
p>agraph to t]m9ate ! capital           
con/ruction fund e/abli%$ "u su*        
agreem5t4  7#b7 ,effect ( election on   
individuals ,9 ! case ( an individual :o
 makes an election "u p>agraph 7#a7 )   
respect to a capital con/ruction fund1  
any am\nt rema9+ 9 su* capital          
con/ruction fund on ! date ( su*        
election %all be di/ribut$ to su*       
individual z a nonqualifi$ )drawal1     
except t--  7,a7 9 comput+ ! tax on su* 
)drawal1 except z provid$ 9 p>agraph    
7#d71 p>agraphs 7#c77;,c77ii7 & 7#f7 (  
subsection 7g7 %all n apply1 &  7,b7 !  
taxpay] may elect to av]age ! income f  
su* )drawal z provid$ 9 p>agraph 7#f74  
7#c7 ,effect ( election = entities  7,a7
 ,9 g5]al ,9 ! case ( a p]son 7o!r ?an  

an individual7 :o makes an election "u  
p>agraph 7#a7--  7i7 ! total am\nt 9 !  
capital con/ruction fund on ! date ( su*
 election %all be di/ribut$ to !        
%>ehold]s1 p>tn]s1 or memb]s ( su* p]son
 9 accordance ) ! t]ms ( ! in/rum5ts    
sett+ =? ! own]%ip int]e/s ( su*        
%>ehold]s1 p>tn]s1 or memb]s1  7ii7 ea* 
%>ehold]1 p>tn]1 or memb] %all be treat$
 z hav+ e/abli%$ a special tempor>y     
capital con/ruction fund & hav+ deposit$
 am\nts receiv$ 9 ! di/ribution into su*
 special tempor>y capital con/ruction   
fund1  7iii7 no ga9 or loss %all be     
recogniz$ ) respect to su* di/ribution1 
7iv7 ! basis ( any %>ehold]1 p>tn]1 or  
memb] 9 ! p]son %all n be r$uc$ z a     
result ( su* di/ribution1 &  7v7 any    
am\nts n di/ribut$ pursuant to clause   
7i7 %all be di/ribut$ z a nonqualifi$   
)drawal4  7,b7 ,special tempor>y capital
 con/ruction funds ,= purposes ( ?is    
section1 a special tempor>y capital     
con/ruction fund %all be treat$ 9 ! same
 mann] z a capital con/ruction fund     

e/abli%$ "u section #ecejc ( title #df1 
,unit$ ,/ates ,code1 except t ! foll[+  
rules %all apply3  7i7 ,subsection 7a7  
%all n apply & no am\nts may be deposit$
 into a special tempor>y capital        
con/ruction fund o!r ?an am\nts receiv$ 
pursuant to a di/ribution describ$ 9    
subp>agraph 7,a77i74  7ii7 ,9 ! case (  
any am\nts di/ribut$ f a special        
tempor>y capital con/ruction fund       
directly to a capital con/ruction fund (
 ! taxpay] e/abli%$ "u section #eceje ( 
title #df1 ,unit$ ,/ates ,code--  7,i7  
no ga9 or loss %all be recogniz$2       
7,,ii7 ! limitation "u subsection 7a7   
%all n apply ) respect to any am\nt s   
transf]r$2  7,,iii7 su* am\nts %all n   
r$uce taxable income "u subsection      
7c77#a77;,a72 &  7,,iv7 = purposes (    
subsection 7g77#e71 su* am\nts %all be  
treat$ z deposit$ 9 ! capital           
con/ruction fund on ! date t su* funds 7
 deposit$ 9 ! capital con/ruction fund )
 respect to :i* ! election "u p>agraph  
7#a7 0 made4  7iii7 ,9 ! case ( any     

am\nts di/ribut$ f a special tempor>y   
capital con/ruction fund pursuant to an 
election "u p>agraph 7#a71 subp>agraphs 
7,a7 & 7,b7 ( p>agraph 7#b7 %all n apply
 to s mu* ( su* am\nts z are            
attributable to e>n+s accru$ aft] ! date
 ( ! e/abli%m5t ( su* special tempor>y  
capital con/ruction fund4  7iv7 ,any    
am\nt n di/ribut$ f a special tempor>y  
capital con/ruction fund be=e ! due date
 ( ! tax return 7includ+ ext5sion7 = !  
la/ taxable ye> ( ! individual end+ be=e
 ,janu>y #a1 #bjai1 %all be treat$ z    
di/ribut$ to ! taxpay] on ! day be=e su*
 due date z if an election "u p>agraph  
7#a7 7 made by ! taxpay] on su* day4    
7,c7 ,regulations ,! jo9t regulations   
%all provide rules =--  7i7 assign+ !   
am\nts receiv$ by ! %>ehold]s1 p>tn]s1  
or memb]s 9 a di/ribution describ$ 9    
subp>agraph 7,a77i7 to ! acc\nts        
describ$ 9 subsection 7d77#a7 9 special 
tempor>y capital con/ruction funds2 &   
7ii7 prev5t+ ! abuse ( ! purposes ( ?is 
section4  7#d7 ,tax b5efit rule ,rules  

simil> to ! rules "u subsection         
7g77#f77;,b7 %all apply = purposes (    
det]m9+ tax liability on any nonqualifi$
 )drawal "u p>agraph 7#b71 7#c77;,a77v71
 or 7#c77;,b77iv74  7#e7 ,election ,any 
election "u p>agraph 7#a7--  7,a7 may   
only be made--  7i7 by a p]son :o       
ma9ta9s a capital con/ruction fund )    
respect to a vessel op]at$ 9 ! fi%]ies (
 ! ,unit$ ,/ates on ! date ( ! enactm5t 
( ?is subsection1 or  7ii7 by a p]son :o
 ma9ta9s a capital con/ruction fund :i* 
0 e/abli%$ pursuant to subp>agraph      
7#c77;,a77ii7 z a result ( an election  
made by an entity 9 :i* su* p]son 0 a   
%>ehold]1 p>tn]1 or memb]1  7,b7 %all be
 made n lat] ?an ! due date ( ! tax     
return 7includ+ ext5sions7 = ! p]son's  
la/ taxable ye> end+ on or be=e ,decemb]
 #ca1 #bjah1 &  7,c7 %all apply to all  
am\nts 9 ! capital con/ruction fund )   
respect to :i* ! election is made4  7#f7
 ,election to av]age income ,at !       
election ( an individual :o has receiv$ 
a di/ribution describ$ 9 p>agraph 7#b71 

= purposes ( section #acja--  7,a7 su*  
individual %all be treat$ z engag$ 9 a  
fi%+ bus9ess1 &  7,b7 su* di/ribution   
%all be treat$ z income attributable to 
a fi%+ bus9ess = su* taxable ye>4  4    
7#b7 ,con=m+ am5dm5t ,section           
#geah7;g77#a7 ( su* ,code is am5d$ by   
/rik+ subsection 7h7 & ins]t+           
subsections 7h7 & 7j74