,,ii  #aad? ,,congress  #a/ ,session    
,s4 #afca  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,june #ah1 #bjae ,mr4  
,s&]s 7= himself1 ,mr4 ,br[n1 & ,ms4    
,baldw97 introduc$ ! foll[+ bill2 :i* 0 
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,employee
 ,retirem5t ,income ,security ,act (    
#aigd & ! ,int]nal ,rev5ue ,code ( #aihf
 to modify c]ta9 provisions relat+ to   
multiemploy] p5sions1 & = o!r purposes4 
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,keep ,our ,p5sion ,promises ,act4    
#b4 ,re/or+ anti-cutback provisions     
,section #bja ( ! ,multiemploy] ,p5sion 
,re=m ,act ( #bjad 7division ,o (       
,public ,law #aac-bce7 & ! am5dm5ts made
 by su* section are repeal$1 & !        
,employee ,retirem5t ,income ,security  
,act ( #aigd & ! ,int]nal ,rev5ue ,code 
( #aihf %all be appli$ z if su* section 
& am5dm5ts _h nev] be5 enact$4  #c4     
,p>titions ( eligible multiemploy] plans
  7a7 ,9 g5]al ,section #dbcc ( !       
,employee ,retirem5t ,income ,security  

,act ( #aigd 7#bi ,u4,s4,c4 #adac71 z   
am5d$ by section #abb ( ! ,multiemploy] 
,p5sion ,re=m ,act ( #bjad 7division ,o 
( ,public ,law #aac-bce71 is am5d$ to   
read z foll[s3  #dbcc4 ,p>titions (     
eligible multiemploy] plans  7a7 7#a7   
,^u ! application by ! plan sponsor ( an
 eligible multiemploy] plan = a p>tition
 ( ! plan1 ! corporation may ord] a     
p>tition ( ! plan 9 accordance ) ?is    
section4 ,! corporation %all make a     
det]m9ation reg>d+ ! application1 9     
accordance ) regulations promulgat$ by !
 corporation1 n lat] ?an #bgj days      
aft]--  7,a7 ! date su* application 0   
fil$2 or  7,b7 if lat]1 ! date su*      
application 0 complet$4  7#b7 ,at lea/  
#ad days be=e submitt+ an application = 
p>tition ( a plan "u p>agraph 7#a71 !   
plan sponsor ( ! plan %all notify all   
p>ticipants & b5efici>ies ( su*         
application1 9 ! =m & mann] prescrib$ by
 regulations issu$ by ! corporation4    
7b7 ,= purposes ( ?is section1 a        
multiemploy] plan is an eligible        

multiemploy] plan if--  7#a7 ! plan is 9
 critical /atus & is project$ to become 
insolv5t )9 ! mean+ ( section #dbde--   
7,a7 dur+ ! curr5t plan ye> or any ( !  
#ad succe$+ plan ye>s2 or  7,b7 dur+ !  
curr5t plan ye> or any ( ! #ai succe$+  
plan ye>s1 if ! plan has a ratio (      
inactive p>ticipants to active          
p>ticipants t exce$s #b to #a & ! fund$ 
p]c5tage ( ! plan is less ?an #hj p]c5t2
  7#b7 ! corporation det]m9es1 aft]     
consultation ) ! ,p>ticipant & ,plan    
,sponsor ,advocate select$ "u section   
#djjd1 t ! plan sponsor has tak5 7or is 
tak+ concurr5tly ) an application =     
p>tition7 all reasonable measures       
describ$ 9 section #dcb7;e77#c77;,a7 ( !
 ,int]nal ,rev5ue ,code ( #aihf1 & has  
made 7or is mak+7 b5efit adju/m5ts "u   
section #dcb7;e77#h7 ( su* ,code to     
r$uce ! risk ( insolv5cy2  7#c7 #bj     
p]c5t or m ( ! am\nt by :i* !           
liabilities ( ! plan exce$ ! value (    
plan assets is attributable to ! s]vice 
( p>ticipants ^: employ]s-- 7,a7 )drew f

 ! plan prior to ! date ( enactm5t ( !  
,keep ,our ,p5sion ,promises ,act2 &    
7,b7 fail$ to pay 7or are del9qu5t )    
respect to pay+7 ! full am\nt ( !       
employ]'s )drawal liability "u section  
#dbja7;b77#a7 or z o!rwise det]m9$ "u an
 agreem5t ) ! plan2  7#d7 ! corporation 
reasonably expects t--  7,a7 a p>tition 
( ! plan w r$uce ! corporation's expect$
 long-t]m loss ) respect to ! plan2 &   
7,b7 a p>tition ( ! plan is necess>y = !
 plan to rema9 or become solv5t2 &  7#e7
 ! corporation c]tifies to ,congress t  
aft] p>tition ! corporation w cont9ue to
 h ! ability to meet exi/+ f9ancial     
assi/ance obligations to o!r plans      
7includ+ any liabilities associat$ )    
multiemploy] plans t are insolv5t or t  
are project$ to become insolv5t )9 #aj  
ye>s74  7c7 7#a7 ,a p>tition "u ?is     
section %all consi/ ( a transf] to !    
plan creat$ by ! p>tition ord] ( b5efits
 to :i* eligible p>ticipants &          
b5efici>ies 7 entitl$ "u ! plan t 0     
p>tition$1 9 an am\nt n to exce$ ! am\nt

 t w\ld be gu>ante$ "u section #djbb;,a 
if ! plan 7 insolv5t z ( ! date ( !     
p>tition ord]4  7#b7 ,! corporation's   
p>tition ord] %all provide = an annual  
transf] by ! corporation to ! plan      
creat$ by ! p>tition ord] ( an am\nt    
equal to ! ye>ly b5efits t w\ld be      
gu>ante$ "u section #djbb;,a to !       
eligible p>ticipants & b5efici>ies if ! 
plan 7 insolv5t z ( ! date ( ! p>tition 
ord]4  7#c7 7,a7 ,:]e practicable1 !    
initial transf] 9 accordance ) p>agraph 
7#b7 %all be complet$ at lea/ #fj days  
prior to ! plan ye> t imm$iately foll[s 
! p>tition />t date4 ,! p>tition ord]   
%all require t ! initial transf] be     
suffici5t to satisfy ! gu>ante$ b5efits 
9 ! fir/ plan ye> ( ! p>tition$ plan4   
7,b7 ,subsequ5t transf]s 9 accordance ) 
p>agraph 7#b7 %all be complet$ at lea/  
#fj days prior to ! fir/ day ( ea*      
succe$+ plan ye>4  7d7 7#a7 7,a7 ,! plan
 creat$ by ! p>tition ord] is a         
successor plan to :i* section #djbb;,a  
applies4  7,b7 ,at ! discretion ( ! plan

 sponsor1 ! plan creat$ by ! p>tition   
ord] may rema9 a "p ( ! plan t 0        
p>tition$ or be ma9ta9$ z a sep>ate     
plan4  7#b7 7,a7 ,! plan sponsor & !    
adm9i/rator ( an eligible multiemploy]  
plan prior to ! p>tition %all be ! plan 
sponsor & ! adm9i/rator1 respectively1 (
 ! plan creat$ by ! p>tition ord]1 &    
%all adopt reasonable proc$ures to r$uce
 adm9i/rative exp5ses & to coord9ate    
b5efit paym5ts & communications ) !     
p>ticipants & b5efici>ies 9 ! plan      
creat$ by ! p>tition ord]4  7,b7 ,b5efit
 paym5ts equal to ! am\nt ( an eligible 
p>ticipant or b5efici>y's gu>ante$      
b5efits %all be paid to su* p>ticipant  
or b5efici>y & may be-- 7i7 paid        
sep>ately by ! plan creat$ by ! p>tition
 ord]2 or  7ii7 paid 9 a s+le1 mon?ly   
paym5t by ! plan t 0 p>tition$4  7#c7 ,9
 ! ev5t an employ] )draws f ! plan t 0  
p>tition$1 )drawal liability %all be    
comput$ "u section #dbja ) respect to   
bo? ! plan t 0 p>tition$ & ! plan creat$
 by ! p>tition ord]4  7e7 ,9 addition to

 ! paym5t ( gu>ante$ b5efits "u         
subsection 7d77#b77;,b71 ea* eligible   
p>ticipant or b5efici>y ( ! plan creat$ 
by ! p>tition ord] %all receive a mon?ly
 b5efit = ea* mon? ! b5efit is 9 pay    
/atus 9 an am\nt t-- 7#a7 ! corporation1
 9 consultation ) ! ,p>ticipant & ,plan 
,sponsor ,advocate1 det]m9es to be fair 
to ! plan1 ! p>ticipant or b5efici>y1 ! 
employ]s1 & ! corporation2 &  7#b7 is at
 lea/ equal to ! less] (-- 7,a7 ! mon?ly
 non=feitable b5efit = su* p>ticipant or
 b5efici>y payable "u ! plan t 0        
p>tition$2 or  7,b7 #hj p]c5t ( !       
maximum b5efit comm5c+ at age #fe       
gu>ante$ "u section #djbb7;a7 =         
p>ticipants & b5efici>ies 9 t]m9at$ s+le
 employ] plans1 unr$uc$ = e>ly          
retirem5t4  ,su* mon?ly b5efit may be   
comb9$ ) ! mon?ly paym5t "u subsection  
7d77#b77;,b77ii74  7f7 7#a7 ,!          
corporation %all e/abli% a legacy fund =
 ! purposes ( fund+ ! adm9i/rative &    
b5efit co/s to ! corporation aris+ f    
p>titions "u ?is section1 z describ$ 9  

p>agraph 7#b74  7#b7 ,any adm9i/rative &
 b5efit co/s to ! corporation aris+ f a 
p>tition ord]$ "u ?is section 9 excess (
 am\nts available 9 su* legacy fund %all
 be paid f ! fund = basic b5efits       
gu>ante$ = multiemploy] plans4  7g7     
,only "o p>tition ord] %all be issu$ )  
respect to ea* eligible multiemploy]    
plan4  7h7 ,= purposes ( ?is subsection1
 ! t]m eligible p>ticipant or b5efici>y 
means a p>ticipant or b5efici>y ( an    
eligible multiemploy] plan t is         
p>tition$ 9 accordance ) a petition ord]
 "u ?is section1 & :o is an employee or 
b5efici>y ( an employee ( an employ] t  
is describ$ 9 subsection 7b77#c74  7i7  
,n lat] ?an #ad days aft] ! issuance ( a
 p>tition ord] "u ?is section1 !        
corporation %all provide notice ( su*   
ord] to ! ,committee on ,f9ance ( !     
,s5ate1 ! ,committee on ,heal?1         
,education1 ,labor1 & ,p5sions ( !      
,s5ate1 ! ,committee on ,education & !  
,work=ce ( ! ,h\se ( ,repres5tatives1 ! 
,committee on ,ways & ,means ( ! ,h\se (

 ,repres5tatives1 & to all eligible     
p>ticipants or b5efici>ies ^: gu>ante$  
b5efits w be paid directly or indirectly
 by ! plan creat$ by ! p>tition ord]4  4
  7b7 ,effective date ,! am5dm5ts made  
by subsection 7a7 %all apply ) respect  
to plan ye>s beg9n+ aft] ! date (       
enactm5t ( ?is ,act4  7c7 ,transf]s to  
legacy fund ,! ,secret>y ( ! ,treasury  
%all f "t to "t transf] f ! g5]al fund (
 ! ,treasury to ! legacy fund e/abli%$  
"u section #dbcc7;f77#a7 ( ! ,employee  
,retirem5t ,income ,security ,act (     
#aigd 7#bi ,u4,s4,c4 #adac7;f77#a77 7z  
am5d$ by subsection 7a77 am\nts equal to
 ! increase 9 rev5ues to ! ,treasury by 
reason ( ! am5dm5ts made by sections #f 
& #g ( ?is ,act4  7d7 ,transf]s betwe5  
funds ( ! ,,pbgc ,section #djje ( !     
,employee ,retirem5t ,income ,security  
,act ( #aigd 7#bi ,u4,s4,c4 #acje7 is   
am5d$ by add+ at ! end ! foll[+3  7i7   
7#a7 ,an eigh? fund is e/abli%$ "u      
section #dbcc7;f7 & cr$it$ ) ! am\nts   
describ$ 9 section #c7;c7 ( ! ,keep ,our

 ,p5sion ,promises ,act4  7#b7 ,not)/&+ 
subsection 7g71 ! corporation may       
transf] am\nts into ! legacy fund       
e/abli%$ "u section #dbcc7;f77#a7 f o!r 
funds e/abli%$ "u ?is section1 z !      
corporation det]m9es appropriate4  4    
#d4 ,employ] )drawals relat+ to         
multiemploy] plans ,! matt] prec$+      
p>agraph 7#a7 ( section #dbbe7;b7 ( !   
,employee ,retirem5t ,income ,security  
,act ( #aigd 7#bi ,u4,s4,c4 #adje7;b77  
is am5d$ by ins]t+ 1 includ+ an employ] 
und]go+ liquidation "u *apt] #g ( title 
#aa1 ,unit$ ,/ates ,code1 or simil>     
provisions ( ,/ate law1 aft]            
dissolution14  #e4 ,priorities ( claims 
9 bankruptcy  7a7 ,9 g5]al ,section     
#ejg7;a7 ( title #aa1 ,unit$ ,/ates     
,code is am5d$-- 7#a7 by r$esignat+     
p>agraphs 7#a7 ?r\gh #aj z p>agraphs    
7#b7 ?r\gh 7#aa71 respectively2  7#b7 by
 ins]t+ be=e p>agraph 7#b7 7z           
r$esignat$7 ! foll[+3  7#a7 ,fir/1      
)drawal liability det]m9$ "u "p #a (    
subtitle ,e ( title ,,iv ( ! ,employee  

,retirem5t ,income ,security ,act (     
#aigd 7#bi ,u4,s4,c4 #acha et seq474  4 
7#c7 9 ! matt] prec$+ subp>agraph 7,a7 (
 p>agraph 7#b7 7z r$esignat$71 by /rik+ 
,fir/3 & ins]t+ ,second32  7#d7 9       
p>agraph 7#c7 7z r$esignat$71 by /rik+  
,second1 & ins]t+ ,?ird12  7#e7 9       
p>agraph 7#d7 7z r$esignat$71 by /rik+  
,?ird1 & ins]t+ ,f\r?12  7#f7 9 ! matt] 
prec$+ subp>agraph 7,a7 ( p>agraph 7#e7 
7z r$esignat$71 by /rik+ ,f\r?1 & ins]t+
 ,fif?12  7#g7 9 ! matt] prec$+         
subp>agraph 7,a7 ( p>agraph 7#f7 7z     
r$esignat$71 by /rik+ ,fif?1 & ins]t+   
,six?12  7#h7 9 ! matt] prec$+          
subp>agraph 7,a7 ( p>agraph 7#g7 7z     
r$esignat$71 by /rik+ ,six?1 & ins]t+   
,sev5?12  7#i7 9 p>agraph 7#h7 7z       
r$esignat$71 by /rik+ ,sev5?1 & ins]t+  
,eigh?12  7#aj7 9 ! matt] prec$+        
subp>agraph 7,a7 ( p>agraph 7#i7 7z     
r$esignat$71 by /rik+ ,eigh?1 & ins]t+  
,n9?12  7#aa7 9 p>agraph 7#aj7 7z       
r$esignat$71 by /rik+ ,n9?1 & ins]t+    
,t5?12 &  7#ab7 9 p>agraph 7#aa7 7z     

r$esignat$71 by /rik+ ,t5?1 & ins]t+    
,elev5?14  7b7 ,te*nical & con=m+       
am5dm5ts  7#a7 ,section #ejb7;i7 ( title
 #aa1 ,unit$ ,/ates ,code1 is am5d$ by  
/rik+ section #ejg7;a77#h7 & ins]t+     
section #ejg7;a77#i74  7#b7 ,section    
#ejc7;b77#a77;,b77i7 ( title #aa1 ,unit$
 ,/ates ,code1 is am5d$ by /rik+ section
 #ejg7;a77#h7 & ins]t+ section          
#ejg7;a77#i74  7#c7 ,section #ejg7;d7 ( 
title #aa1 ,unit$ ,/ates ,code1 is am5d$
 by /rik+ 7a77#a71 7a77#d71 7a77#e71    
7a77#f71 7a77#g71 7a77#h71 or 7a77#i7 & 
ins]t+ 7a77#b71 7a77#e71 7a77#f71       
7a77#g71 7a77#h71 7a77#i71 or 7a77#aj74 
7#d7 ,section #ebc7;,a7 ( title #aa1    
,unit$ ,/ates ,code1 is am5d$ by /rik+  
section #ejg7;a77#c7 or #ejg7;a77#h7 &  
ins]t+ section #ejg7;a77#d7 or          
#ejg7;a77#i74  7#e7 ,section #gbd (     
title #aa1 ,unit$ ,/ates ,code1 is      
am5d$-- 7,a7 9 subsection 7b77#b71 by   
/rik+ section #ejg7;a77#a77;,c7 or      
#ejg7;a77#b7 & ins]t+ section           
#ejg7;a77#b77;,c7 or #ejg7;a77#c72 &    

7,b7 9 subsection 7f7-- 7i7 9 p>agraph  
7#a71 by /rik+ section #ejg7;a77#d7 &   
ins]t+ section #ejg7;a77#e72 &  7ii7 9  
p>agraph 7#b71 by /rik+ section         
#ejg7;a77#e7 & ins]t+ section           
#ejg7;a77#f74  7#f7 ,section #gbf7;b7 ( 
title #aa1 ,unit$ ,/ates ,code1 is am5d$
 by /rik+ p>agraph 7#a71 7#b71 7#c71    
7#d71 7#e71 7#f71 7#g71 7#h71 7#i71 or  
7#aj7 ( section #ejg7;a7 & ins]t+       
p>agraphs 7#b7 ?r\gh 7#aa7 ( section    
#ejg7;a74  7#g7 ,section #geb7;a7 (     
title #aa1 ,unit$ ,/ates ,code1 is am5d$
 by /rik+ section #ejg7;a77#b7 & ins]t+ 
section #ejg7;a77#c74  7#h7 ,section    
#gff ( title #aa1 ,unit$ ,/ates ,code1  
is am5d$--  7,a7 9 subsection 7h71 by   
/rik+ section #ejg7;a77#b7 & ins]t+     
section #ejg7;a77#c72 &  7,b7 9         
subsection 7i7--  7i7 9 p>agraph 7#a71  
by /rik+ section #ejg7;a77#b7 & ins]t+  
section #ejg7;a77#c72 &  7ii7 9 p>agraph
 7#b71 by /rik+ section #ejg7;a77#b7 &  
ins]t+ section #ejg7;a77#c74  7#i7      
,section #ija ( title #aa1 ,unit$ ,/ates

 ,code1 is am5d$ by /rik+ #ejg7;a77#b7 &
 ins]t+ #ejg7;a77#c74  7#aj7 ,section   
#idc7;b77#e7 ( title #aa1 ,unit$ ,/ates 
,code1 is am5d$ by /rik+ section        
#ejg7;a77#b7 & ins]t+ section           
#ejg7;a77#c74  7#aa7 ,section           
#aabc7;a77#a7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$ by /rik+ section       
#ejg7;a77#b71 #ejg7;a77#c71 or          
#ejg7;a77#h7 & ins]t+ section           
#ejg7;a77#c71 #ejg7;a77#d71 or          
#ejg7;a77#i74  7#ab7 ,section           
#aabi7;a77#i7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$--  7,a7 9 subp>agraph  
7,a71 by /rik+ section #ejg7;a77#c7 or  
#ejg7;a77#d7 & ins]t+ section           
#ejg7;a77#d7 or #ejg7;a77#e72  7,b7 9 ! 
matt] prec$+ clause 7i7 ( subp>agraph   
7,b71 by /rik+ section #ejg7;a77#a71    
#ejg7;a77#d71 #ejg7;a77#e71             
#ejg7;a77#f71 or #ejg7;a77#g7 & ins]t+  
section #ejg7;a77#b71 #ejg7;a77#e71     
#ejg7;a77#f71 #ejg7;a77#g71 or          
#ejg7;a77#h72  7,c7 9 ! matt] prec$+    
clause 7i7 ( subp>agraph 7,c71 by /rik+ 

section #ejg7;a77#h7 & ins]t+ section   
#ejg7;a77#i72 &  7,d7 9 subp>agraph     
7,d71 by /rik+ section #ejg7;a77#h7 &   
ins]t+ section #ejg7;a77#i74  7#ac7     
,section #abbb7;a77#d7 ( title #aa1     
,unit$ ,/ates ,code1 is am5d$ by /rik+  
section #ejg7;a77#a77;,b7 & ins]t+      
#ejg7;a77#b77;,b74  7#ad7 ,section      
#abbf7;b77#a7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$ by /rik+ section       
#ejg7;a77#b7 & ins]t+ section           
#ejg7;a77#c74  7#ae7 ,section           
#acbb7;a77#d7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$ by /rik+ section       
#ejg7;a77#a77;,b7 & ins]t+ section      
#ejg7;a77#b77;,b74  7#af7 ,section      
#acbf7;b77#a7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$ by /rik+ section       
#ejg7;a77#b7 & ins]t+ section           
#ejg7;a77#c74  7#ag7 ,section           
#acbh7;a77#b7 ( title #aa1 ,unit$ ,/ates
 ,code1 is am5d$ by /rik+ section       
#ejg7;a77#h77;,c7 & ins]t+ section      
#ejg7;a77#i77;,c74  #f4 ,limitation (   
nonrecognition ( l-k9d ex*anges  7a7 ,9 

g5]al ,p>agraph 7#b7 ( section #ajca7;a7
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$--  7#a7 by r$esignat+ subp>agraphs
 7,a71 7,b71 7,c71 7,d71 7,e71 & 7,f7 z 
clauses 7i71 7ii71 7iii71 7iv71 7v71 &  
7vi71 & by mov+ su* clauses #b ems to ! 
"r1  7#b7 by mov+ ! flu% language aft] !
 fir/ s5t5ce #b ems to ! "r1  7#c7 by   
/rik+ 7#b7 ,exception4--,?is subsection 
& ins]t+ 87#b7 ,exceptions4--  7,a7     
,exclud$ prop]ty ,?is subsection  1 &   
7#d7 by add+ at ! end ! foll[+ new      
subp>agraph3  7,b7 ,doll> limitation =  
ex*anges ( real prop]ty  7i7 ,9 g5]al   
,p>agraph 7#a7 %all n apply s mu* ( !   
ga9 :i*1 b = su* p>agraph1 w\ld be      
recogniz$ by ! taxpay] ) respect to real
 prop]ty ex*ang$ dur+ ! taxable ye> z   
exce$s #a1jjj1jjj4  7ii7 ,special rules 
= p>tn]%ips & ,s-corporations ,9 ! case 
( a pass-?r\gh entity1 clause 7i7 %all  
be appli$ at bo? ! entity & at ! p>tn]  
or own] level4  7iii7 ,aggregation rules
 ,= purposes ( ?is subp>agraph--  7,i7  
,family memb]s ,individuals :o are      

sp\ses or :o be> any ( ! relation%ips   
describ$ 9 section #aeb7;d77#b7 to ea*  
o!r %all be treat$ z #a taxpay] 7)\t    
reg>d to :e!r sp\ses file a jo9t        
return74  7,,ii7 ,corporations & o!r    
entities ,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 #a p]son4 
7iv7 ,adju/m5t = inflation ,9 ! case (  
ex*anges complet$ 9 a taxable ye> beg9n+
 aft] ,decemb] #ca1 #bjaf1 ! #a1jjj1jjj 
am\nt 9 clause 7i7 %all 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;f77#c7 
= ! cal5d> ye> 9 :i* ! taxable ye>      
beg9s1 det]m9$ by sub/itut+ cal5d> ye>  
#bjae = cal5d> ye> #aiib 9 subp>agraph  
7,b7 !re(4  ,if any am\nt z adju/$ "u ! 
prec$+ s5t5ce is n a multiple ( #a1jjj1 
su* am\nt %all be r\nd$ to ! ne>e/      
multiple ( #a1jjj4  4  7b7 ,exclusion ( 
art & collectibles ,subp>agraph 7,a7 (  
section #ajca7;a77#b7 ( ! ,int]nal      

,rev5ue ,code ( #aihf1 z am5d$ by       
subsection 7a71 is am5d$--  7#a7 by     
/rik+ or at ! end ( clause 7v71  7#b7 by
 /rik+ ! p]iod at ! end ( clause 7vi7 & 
ins]t+ 1 or1 &  7#c7 by ins]t+ aft]     
clause 7vi7 ! foll[+ new clause3  7vii7 
any collectible 7)9 ! mean+ ( section   
#djh7m71 )\t reg>d to p>agraph 7#c7     
!re(74  4  7c7 ,regulatory au?ority     
,subsection 7f7 ( section #ajca ( !     
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#e7 ,rules relat+ to doll> limitation  
,! ,secret>y %all prescribe su* guidance
 z is necess>y = apply+ subsection      
7a77#b77;,b77i7 9 ! case ( ! ex*ange (  
multiple pieces ( real prop]ty by relat$
 p]sons4  4  7d7 ,con=m+ am5dm5ts  7#a7 
,subsection 7b7 ( section #ajca ( !     
,int]nal ,rev5ue ,code ( #aihf is       
am5d$-- 7,a7 by /rik+ 9 k9d4--,if an    
ex*ange & ins]t+ 89 k9d4--  7#a7 ,9     
g5]al ,if an ex*ange  1 &  7,b7 by add+ 
at ! end ! foll[+ new p>agraph3  7#b7   
,coord9ation ) subsection 7a77#b77;,b7  

,9 ! case ( an ex*ange to :i* p>agraph  
7#a7 applies-- 7,a7 p>agraph 7#a7 %all  
be appli$ be=e ! application (          
subsection 7a77#b77;,b71 &  7,b7        
subsection 7a77#b77;,b7 %all be appli$--
 7i7 z if su* ex*ange 7 )9 ! provisions 
( subsection 7a71 &  7ii7 by increas+ ! 
basis ( ! prop]ty dispos$ ( by ! taxpay]
 9 su* ex*ange by ! am\nt ( any ga9     
det]m9$ "u p>agraph 7#a74  4  7#b7      
,subsection 7d7 ( section #ajca ( su*   
,code is am5d$ by /rik+ 9 ! am\nt ( ga9 
& ins]t+ 9 ! am\nt ( ga9 7includ+ any   
ga9 recogniz$ by reason ( subsection    
7a77#b77;,b77i774  7#c7 ,subsection 7i7 
( section #ajca ( su* ,code is am5d$ by 
/rik+ 7a77#b77;,b7 & ins]t+             
7a77#b77;,a77ii74  7e7 ,effective date  
,! am5dm5ts made by ?is section %all    
apply to ex*anges complet$ 9 taxable    
ye>s beg9n+ aft] ,decemb] #ca1 #bjae4   
#g4 ,valuation rules = c]ta9 transf]s ( 
nonbus9ess assets2 limitation on m9ority
 disc\nts  7a7 ,9 g5]al ,section #bjca (
 ! ,int]nal ,rev5ue ,code ( #aihf is    

am5d$ by r$esignat+ subsection 7d7 z    
subsection 7f7 & by ins]t+ aft]         
subsection 7c7 ! foll[+ new subsections3
  7d7 ,valuation rules = c]ta9 transf]s 
( nonbus9ess assets ,= purposes ( ?is   
*apt] & *apt] #ab--  7#a7 ,9 g5]al ,9 ! 
case ( ! transf] ( any int]e/ 9 an      
entity o!r ?an an int]e/ :i* is actively
 trad$ 7)9 ! mean+ ( section #ajib7--   
7,a7 ! value ( any nonbus9ess assets    
held by ! entity ) respect to su* int]e/
 %all be det]m9$ z if ! transf]or _h    
transf]r$ su* assets directly to !      
transf]ee 7& no valuation disc\nt %all  
be all[$ ) respect to su* nonbus9ess    
assets71 &  7,b7 su* nonbus9ess assets  
%all n be tak5 into acc\nt 9 det]m9+ !  
value ( ! int]e/ 9 ! entity4  7#b7      
,nonbus9ess assets ,= purposes ( ?is    
subsection--  7,a7 ,9 g5]al ,! t]m      
nonbus9ess asset means any asset :i* is 
n us$ 9 ! active conduct ( #a or m      
trades or bus9esses4  7,b7 ,exception = 
c]ta9 passive assets ,except z provid$ 9
 subp>agraph 7,c71 a passive asset %all 

n be treat$ = purposes ( subp>agraph    
7,a7 z us$ 9 ! active conduct ( a trade 
or bus9ess unless--  7i7 ! asset is     
prop]ty describ$ 9 p>agraph 7#a7 or 7#d7
 ( section #abba7;a7 or is a h$ge )     
respect to su* prop]ty1 or  7ii7 ! asset
 is real prop]ty us$ 9 ! active conduct 
( #a or m real prop]ty trades or        
bus9esses 7)9 ! mean+ ( section         
#dfi7;c77#g77;,c77 9 :i* ! transf]or    
mat]ially p>ticipates & ) respect to :i*
 ! transf]or meets ! requirem5ts (      
section #dfi7;c77#g77;,b77ii74  ,=      
purposes ( clause 7ii71 mat]ial         
p>ticipation %all be det]m9$ "u ! rules 
( section #dfi7;h71 except t section    
#dfi7;h77#c7 %all be appli$ )\t reg>d to
 ! limitation to f>m+ activity4  7,c7   
,exception = work+ capital ,any asset   
7includ+ a passive asset7 :i* is held z 
a "p ( ! reasonably requir$ work+       
capital ne$s ( a trade or bus9ess %all  
be treat$ z us$ 9 ! active conduct ( a  
trade or bus9ess4  7#c7 ,passive asset  
,= purposes ( ?is subsection1 ! t]m     

passive asset means any--  7,a7 ca% or  
ca% equival5ts1  7,b7 except to ! ext5t 
provid$ by ! ,secret>y1 /ock 9 a        
corporation or any o!r equity1 pr(its1  
or capital int]e/ 9 any entity1  7,c7   
evid5ce ( indebt$ness1 option1 =w>d or  
futures contract1 notional pr9cipal     
contract1 or d]ivative1  7,d7 asset     
describ$ 9 clause 7iii71 7iv71 or 7v7 ( 
section #cea7;e77#a77;,b71  7,e7        
annuity1  7,f7 real prop]ty us$ 9 #a or 
m real prop]ty trades or bus9esses 7z   
def9$ 9 section #dfi7;c77#g77;,c771     
7,g7 asset 7o!r ?an a pat5t1 tradem>k1  
or copyright7 :i* produces royalty      
income1  7,h7 commodity1  7,i7          
collectible 7)9 ! mean+ ( section       
#dja7m771 or  7,j7 any o!r asset        
specifi$ 9 regulations prescrib$ by !   
,secret>y4  7#d7 ,look-?ru rules  7,a7  
,9 g5]al ,if a nonbus9ess asset ( an    
entity consi/s ( a #aj-p]c5t int]e/ 9   
any o!r entity1 ?is subsection %all be  
appli$ by disreg>d+ ! #aj-p]c5t int]e/ &
 by treat+ ! entity z hold+ directly its

 ratable %>e ( ! assets ( ! o!r entity4 
,?is subp>agraph %all be appli$         
successively to any #aj-p]c5t int]e/ (  
su* o!r entity 9 any o!r entity4  7,b7  
#aj-p]c5t int]e/ ,! t]m #aj-p]c5t int]e/
 means--  7i7 9 ! case ( an int]e/ 9 a  
corporation1 own]%ip ( at lea/ #aj p]c5t
 7by vote or value7 ( ! /ock 9 su*      
corporation1  7ii7 9 ! case ( an int]e/ 
9 a p>tn]%ip1 own]%ip ( at lea/ #aj     
p]c5t ( ! capital or pr(its int]e/ 9 !  
p>tn]%ip1 &  7iii7 9 any o!r case1      
own]%ip ( at lea/ #aj p]c5t ( !         
b5eficial int]e/s 9 ! entity4  7#e7     
,coord9ation ) subsection 7b7           
,subsection 7b7 %all apply aft] !       
application ( ?is subsection4  7e7      
,limitation on m9ority disc\nts ,=      
purposes ( ?is *apt] & *apt] #ab1 9 !   
case ( ! transf] ( any int]e/ 9 an      
entity o!r ?an an int]e/ :i* is actively
 trad$ 7)9 ! mean+ ( section #ajib71 no 
disc\nt %all be all[$ by reason ( ! fact
 t ! transf]ee does n h control ( su*   
entity if ! transf]or1 ! transf]ee1 &   

memb]s ( ! family 7z def9$ 9 section    
#bjcb;,a7e77#b77 ( ! transf]or &        
transf]ee-- 7#a7 h control ( su* entity1
 or  7#b7 own ! majority ( ! own]%ip    
int]e/s 7by value7 9 su* entity4  4  7b7
 ,effective date ,! am5dm5ts made by ?is
 section %all apply to transf]s aft] !  
date ( ! enactm5t ( ?is ,act4