,,ii #aadth ,,congress #b;d ,session ,s4 #bfgg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #ae1 #bjaf,ms4 ,baldwin 7for herself1 ,mr4 ,blumenthal1 ,mr4 ,booker1 ,mrs4 ,boxer1 ,mr4 ,brown1 ,mr4 ,cardin1 ,mr4 ,casey1 ,mr4 ,durbin1 ,mr4 ,franken1 ,mrs4 ,gillibrand1 ,ms4 ,hirono1 ,ms4 ,klobuchar1 ,mr4 ,leahy1 ,mr4 ,markey1 ,mr4 ,menendez1 ,mr4 ,merkley1 ,ms4 ,mikulski1 ,mrs4 ,murray1 ,mr4 ,peters1 ,mr4 ,reed1 ,mr4 ,reid1 ,mr4 ,schatz1 ,mr4 ,schumer1 ,mrs4 ,shaheen1 ,ms4 ,stabenow1 ,mr4 ,udall1 ,ms4 ,warren1 ,mr4 ,whitehouse1 and ,mr4 ,wyden7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to make college more affordable1 reduce student debt1 and provide greater access to higher education for all students of the ,united ,states4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,in the ,red ,act of #bjaf4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,,title ,i--,america's college promise ,sec4 #aja4 ,state and ,indian tribe grants for community college4 ,sec4 #ajb4 ,pathways to student success4 ,,title ,,ii--,student loan refinancing ,sec4 #bja4 ,refinancing programs4 ,,title ,,iii--,federal ,pell ,grant protection ,sec4 #cja4 ,federal ,pell ,grant protection4 ,sec4 #cjb4 ,point of order against cutting ,federal ,pell ,grants4 ,sec4 #cjc4 ,affirming that ,federal ,pell ,grants are a foundational investment in affordable higher education4 ,,title ,,iv--,accountability ,sec4 #dja4 ,supporting efforts to ensure that institutions of higher education are accountable for ensuring the high value of degrees and credentials4 ,,title ,v--,offsets ,sec4 #eja4 ,amendment of #aihf ,code4 ,sec4 #ejb4 ,fair share tax on high-income taxpayers4 ,sec4 #ejc4 ,expansion of denial of deduction for certain excessive employee remuneration4 ,sec4 #ejd4 ,partnership interests transferred in connection with performance of services4 ,sec4 #eje4 ,special rules for partners providing investment management services to partnerships4 ,sec4 #ejf4 ,consistent treatment of stock options by corporations4 ,sec4 #ejg4 ,application of executive pay deduction limit4 ,sec4 #ejh4 ,modifications to rules relating to inverted corporations4 ,sec4 #eji4 ,modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers4 ,sec4 #eaj4 ,limitation on section #aii deduction attributable to oil1 natural gas1 or primary products thereof4 ,sec4 #eaa4 ,limitation on deduction for intangible drilling and development costs2 amortization of disallowed amounts4 ,sec4 #eab4 ,limitation on percentage depletion allowance for oil and gas wells4 ,sec4 #eac4 ,limitation on deduction for tertiary injectants4 ,sec4 #ead4 ,modification of definition of major integrated oil company4 ,sec4 #eae4 ,repeal of outer ,continental ,shelf deep water and deep gas royalty relief4 ,sec4 #eaf4 ,coordination of ,american ,opportunity ,credit and ,lifetime ,learning ,credit with ,pell ,grants not used for qualified tuition and related expenses4 ,sec4 #eag4 ,expansion of ,pell ,grant exclusion from gross income4 ,i ,america's college promise #aja4 ,state and ,indian tribe grants for community college 7a7 ,in general ,from amounts appropriated under subsection 7g77#a7 for any fiscal year1 the ,secretary shall award grants to eligible ,states and ,indian tribes to pay the ,federal share of expenditures needed to carry out the activities and services described in subsection 7e74 7b7 ,federal share2 non-,federal share 7#a7 ,federal share 7,a7 ,formula ,subject to subparagraph 7,b71 the ,federal share of a grant under this section shall be based on a formula1 determined by the ,secretary1 that-- 7i7 accounts for the ,state or ,indian tribe's share of eligible students2 and 7ii7 provides1 for each eligible student in the ,state or ,indian tribe1 a per-student amount that is-- 7,i7 not less than #cjj percent of the per-student amount of the ,state or ,indian tribe share1 determined under paragraph 7#b71 subject to subclause 7,,ii72 and 7,,ii7 not greater than #ge percent of-- 7aa7 for the #bjaf-bjag award year1 the average resident community college tuition and fees per student in all ,states for the most recent year for which data are available2 and 7bb7 for each subsequent award year1 the average resident community college tuition and fees per student in all ,states calculated under this subclause for the preceding year1 increased by the lesser of-- 7,,aa7 the percentage by which the average resident community college tuition and fees per student in all ,states for the most recent year for which data are available increased as compared to such average for the preceding year2 or 7,,bb7 #c percent4 7,b7 ,exception for certain indian tribes ,in any case in which not less than #ge percent of the students at the community colleges operated or controlled by an ,indian tribe are low-income students1 the amount of the ,federal share for such ,indian tribe shall be not less than #ie percent of the total amount needed to waive tuition and fees for all eligible students enrolled in such community colleges4 7#b7 ,state or tribal share 7,a7 ,formula 7i7 ,in general ,the ,state or tribal share of a grant under this section for each fiscal year shall be the amount needed to pay #be percent of the average community college resident tuition and fees per student in all ,states in the #bjaf-bjag award year for all eligible students in the ,state or ,indian tribe1 respectively1 for such fiscal year1 except as provided in clause 7ii74 7ii7 ,exception for certain indian tribes ,in a case in which not less than #e percent of the students at the community colleges operated or controlled by an ,indian tribe are low-income students1 the amount of such ,indian tribe's tribal share shall not exceed #e percent of the total amount needed to waive tuition and fees for all eligible students enrolled in such community colleges4 7,b7 ,need-based aid ,a ,state or ,indian tribe may include any need-based financial aid provided through ,state or tribal funds to eligible students as part of the ,state or tribal share4 7,c7 ,no in-kind contributions ,a ,state or ,indian tribe shall not include in-kind contributions for purposes of the ,state or tribal share described in subparagraph 7,a74 7c7 ,eligibility ,to be eligible for a grant under this section1 a ,state or ,indian tribe shall agree to waive community college resident tuition and fees for all eligible students for each year of the grant4 7d7 ,applications 7#a7 ,submission ,for each fiscal year for which a ,state or ,indian tribe desires a grant under this section1 an application shall be submitted to the ,secretary at such time1 in such manner1 and containing such information as the ,secretary may require4 ,such application shall be submitted by-- 7,a7 in the case of a ,state1 the ,governor1 the ,state agency with jurisdiction over higher education1 or another agency designated by the ,governor to administer the program under this section2 or 7,b7 in the case of an ,indian tribe1 the governing body of such tribe4 7#b7 ,contents ,each ,state or ,indian tribe application shall include1 at a minimum-- 7,a7 an estimate of the number of eligible students in the ,state or ,indian tribe and the cost of waiving community college resident tuition and fees for all eligible students for each fiscal year covered by the grant1 with annual increases of an amount that shall not exceed #c percent of the prior year's average resident community college tuition and fees2 7,b7 an assurance that all community colleges in the ,state or under the jurisdiction of the ,indian tribe1 respectively1 will waive resident tuition and fees for eligible students in programs that are-- 7i7 academic programs with credits that can fully transfer via articulation agreement toward a baccalaureate degree or postbaccalaureate degree at any public institution of higher education in the ,state2 or 7ii7 occupational skills training programs that lead to a recognized postsecondary credential that is in an in-demand industry sector or occupation in the ,state2 7,c7 a description of the promising and evidence-based institutional reforms and innovative practices to improve student outcomes1 including completion or transfer rates1 that have been or will be adopted by the participating community colleges1 such as-- 7i7 providing comprehensive academic and student support services1 including mentoring and advising1 especially for first-generation and minority students2 7ii7 providing accelerated learning opportunities1 such as dual or concurrent enrollment programs2 7iii7 advancing competency-based education2 7iv7 strengthening remedial education1 especially for low-income students1 first generation students1 adult students1 and students from other underrepresented groups in postsecondary education2 7v7 implementing course redesigns of high-enrollment courses to improve student outcomes and reduce cost2 or 7vi7 utilizing career pathways or degree pathways2 7,d7 a description of how the ,state or ,indian tribe will promote alignment between its public secondary school and postsecondary education systems1 including between #b-year and #d-year public institutions of higher education and with minority-serving institutions described in section #cga of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajfgq71 to expand awareness of and access to postsecondary education1 reduce the need for remediation and repeated coursework1 and improve student outcomes2 7,e7 a description of how the ,state or ,indian tribe will ensure that programs leading to a recognized postsecondary credential meet the quality criteria established by the ,state under section #abc7;a7 of the ,workforce ,innovation and ,opportunity ,act 7#bi ,u4,s4,c4 #caec7;a77 or other quality criteria determined appropriate by the ,state or ,indian tribe2 7,f7 an assurance that all participating community colleges in the ,state or under the authority of the ,indian tribe have entered into program participation agreements under section #dhg of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajid72 7,g7 an assurance that1 for each year of the grant1 the ,state or ,indian tribe will notify each eligible student of the student's remaining eligibility for assistance under this section2 and 7,h7 a description of how the ,state or ,indian tribe will promote the improved performance of public institutions of higher education through funding reform1 including through the use of a performance-based model that allocates a portion of the ,state or ,indian tribe's public higher education expenditures based on the performance of those institutions on ,state-specified metrics1 including successful student outcomes4 7e7 ,allowable uses of funds 7#a7 ,in general ,a ,state or ,indian tribe shall use a grant under this section only to provide funds to participating community colleges to waive resident tuition and fees for eligible students who are enrolled in-- 7,a7 academic programs with credits that can fully transfer via articulation agreement toward a baccalaureate degree or postbaccalaureate degree at any public institution of higher education in the ,state2 or 7,b7 occupational skills training programs that lead to a recognized postsecondary credential that is in an in-demand industry sector or occupation in the ,state4 7#b7 ,additional uses ,if a ,state or ,indian tribe demonstrates to the ,secretary that it has grant funds remaining after meeting the demand for activities described in paragraph 7#a71 the ,state or ,indian tribe may use those funds to carry out one or more of the following3 7,a7 ,expanding the waiver of resident tuition and fees at community college to students who are returning students or otherwise not enrolling in postsecondary education for the first time1 and who meet the student eligibility requirements of clauses 7ii7 through 7v7 of subsection 7f77#d77;,a74 7,b7 ,expanding the scope and capacity of high-quality academic and occupational skills training programs at community colleges4 7,c7 ,improving postsecondary education readiness in the ,state or ,indian tribe1 through outreach and early intervention4 7,d7 ,expanding access to dual or concurrent enrollment programs4 7,e7 ,improving affordability at #d-year public institutions of higher education4 7#c7 ,use of funds for administrative purposes ,a ,state or ,indian tribe that receives a grant under this section may not use any funds provided under this section for administrative purposes relating to such grant4 7#d7 ,maintenance of effort ,a ,state or ,indian tribe receiving a grant under this section is entitled to receive its full allotment of funds under this section for a fiscal year only if1 for each year of the grant1 the ,state or ,indian tribe provides financial support for public higher education at a level equal to or exceeding the average amount provided per full-time equivalent student for public institutions of higher education for the #c consecutive preceding ,state or ,indian tribe fiscal years4 ,in making the calculation under this paragraph1 the ,state or ,indian tribe shall exclude capital expenses and research and development costs and include need-based financial aid for students who attend public institutions of higher education4 7#e7 ,annual report ,a ,state or ,indian tribe receiving a grant under this section shall submit an annual report to the ,secretary-- 7,a7 describing the uses of grant funds under this section1 the progress made in fulfilling the requirements of the grant1 and the rates of graduation1 transfer1 and attainment of a recognized postsecondary credential for the students at participating community colleges2 and 7,b7 including any other information as the ,secretary may require4 7#f7 ,reporting by ,secretary ,the ,secretary annually shall-- 7,a7 compile and analyze the information described in paragraph 7#e72 and 7,b7 prepare and submit a report to the ,committee on ,health1 ,education1 ,labor1 and ,pensions of the ,senate and the ,committee on ,education and the ,workforce of the ,house of ,representatives containing the analysis described in subparagraph 7,a7 and an identification of ,state and ,indian tribe best practices for achieving the purpose of this section4 7#g7 ,technical assistance ,the ,secretary shall provide technical assistance to eligible ,states and ,indian tribes concerning best practices regarding the promising and evidence-based institutional reforms and innovative practices to improve student outcomes as described in subsection 7d77#b77;,c7 and shall disseminate such best practices among the ,states and ,indian tribes4 7#h7 ,continuation of funding 7,a7 ,in general ,a ,state or ,indian tribe receiving a grant under this section for a fiscal year may continue to receive funding under this section for future fiscal years conditioned on the availability of budget authority and on meeting the requirements of the grant1 as determined by the ,secretary4 7,b7 ,discontinuation ,the ,secretary may discontinue funding of the ,federal share of a grant under this section if the ,state or ,indian tribe has violated the terms of the grant or is not making adequate progress in implementing the reforms described in the application submitted under subsection 7d74 7f7 ,definitions ,in this section3 7#a7 ,career pathway ,the term career pathway has the meaning given the term in section #c of the ,workforce ,innovation and ,opportunity ,act 7#bi ,u4,s4,c4 #cajb74 7#b7 ,community college ,the term community college means a public institution of higher education at which the highest degree that is predominantly awarded to students is an associate's degree1 including #b-year tribally controlled colleges under section #caf of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajei;c7 and public #b-year ,state institutions of higher education4 7#c7 ,dual or concurrent enrollment program ,the term dual or concurrent enrollment program means an academic program through which a secondary school student is able simultaneously to earn credit toward a secondary school diploma and a postsecondary degree or other recognized postsecondary credential1 including an early college high school program4 7#d7 ,eligible student 7,a7 ,definition ,the term eligible student means a student who-- 7i7 7,i7 enrolls in a community college for the first time1 regardless of age1 after the date of enactment of this ,act2 or 7,,ii7 is enrolled in a community college1 for the first time1 as of the date of enactment of this ,act2 7ii7 attends the community college on not less than a half-time basis2 7iii7 is maintaining satisfactory progress1 as defined in section #dhd7;c7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajia7;c771 in the student's course of study2 7iv7 qualifies for resident tuition1 as determined by the ,state or ,indian tribe2 and 7v7 is enrolled in an eligible program described in subsection 7d77#b77;,b74 7,b7 ,special rule ,an otherwise eligible student shall lose eligibility #c calendar years after first receiving benefits under this section4 7#e7 ,in-demand industry sector or occupation ,the term in-demand industry sector or occupation has the meaning given the term in section #c of the ,workforce ,innovation and ,opportunity ,act 7#bi ,u4,s4,c4 #cajb74 7#f7 ,indian tribe ,the term ,indian tribe has the meaning given the term in section #ajb of the ,federally ,recognized ,indian ,tribe ,list ,act of #aiid 7#be ,u4,s4,c4 #dgi;a74 7#g7 ,institution of higher education ,the term institution of higher education has the meaning given the term in section #aja of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajja74 7#h7 ,recognized postsecondary credential ,the term recognized postsecondary credential has the meaning as described in section #c of the ,workforce ,innovation and ,opportunity ,act 7#bi ,u4,s4,c4 #cajb74 7#i7 ,secretary ,the term ,secretary means the ,secretary of ,education4 7#aj7 ,state ,the term ,state has the meaning given the term in section #ajc of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajjc74 7g7 ,appropriations 7#a7 ,authorization and appropriations ,for the purpose of making grants under this section1 there are authorized to be appropriated1 and there are appropriated-- 7,a7 #a1cfe1jjj1jjj for fiscal year #bjaf2 7,b7 #c1jbj1jjj1jjj for fiscal year #bjag2 7,c7 #c1hed1jjj1jjj for fiscal year #bjah2 7,d7 #e1cie1jjj1jjj for fiscal year #bjai2 7,e7 #g1jfa1jjj1jjj for fiscal year #bjbj2 7,f7 #h1jhe1jjj1jjj for fiscal year #bjba2 7,g7 #aj1ahb1jjj1jjj for fiscal year #bjbb2 7,h7 #ac1jai1jjj1jjj for fiscal year #bjbc2 7,i7 #ac1ehc1jjj1jjj for fiscal year #bjbd2 and 7,j7 #ad1aga1jjj1jjj for fiscal year #bjbe and each succeeding fiscal year4 7#b7 ,availability ,funds appropriated under paragraph 7#a7 shall remain available to the ,secretary until expended4 7#c7 ,insufficient funds ,if the amount appropriated under paragraph 7#a7 for a fiscal year is not sufficient to award each participating ,state and ,indian tribe a grant under this section that is equal to the minimum amount of the ,federal share described in subsection 7b77#a71 the ,secretary may ratably reduce the amount of each such grant or take other actions necessary to ensure an equitable distribution of such amount4 #ajb4 ,pathways to student success 7a7 ,pathways to student success for historically black colleges and universities 7#a7 ,in general ,from amounts appropriated under subsection 7d77#a7 for any fiscal year1 the ,secretary shall award grants to participating #d-year historically black colleges or universities that meet the requirements of paragraph 7#b7 to-- 7,a7 encourage students to enroll as first-time students and successfully complete a bachelor's degree at participating institutions2 7,b7 provide incentives to community college students to transfer to participating institutions through strong transfer pathways to complete a bachelor's degree program2 and 7,c7 support participating institutions to better serve new and existing students by engaging in reforms and innovations designed to improve completion rates and other student outcomes4 7#b7 ,eligibility ,to be eligible to receive a grant under the program under this subsection1 an institution shall be a historically black college or university that-- 7,a7 has a student body of which not less than #ce percent are low-income students2 7,b7 commits to maintaining or adopting and implementing promising and evidence-based institutional reforms and innovative practices to improve the completion rates and other student outcomes1 such as-- 7i7 providing comprehensive academic and student support services1 including mentoring and advising2 7ii7 providing accelerated learning opportunities and degree pathways1 such as dual enrollment and pathways to graduate and professional degree programs2 7iii7 advancing distance and competency-based education2 7iv7 partnering with employers1 industry1 not-for-profit associations1 and other groups to provide opportunities to advance learning outside the classroom1 including work-based learning opportunities such as internships or apprenticeships or programs designed to improve intercultural development and personal growth1 such as foreign exchange and study abroad programs2 7v7 reforming remedial education1 especially for low-income students1 first generation college students1 adult students1 and other underrepresented students2 or 7vi7 implementing course redesigns of high-enrollment courses to improve student outcomes and reduce cost2 7,c7 sets performance goals for improving student outcomes for the duration of the grant2 and 7,d7 if receiving a grant for transfer students1 has articulation agreements with community colleges at the national1 ,state1 or local level to ensure that community college credits can fully transfer to the participating institution4 7#c7 ,grant amount 7,a7 ,initial amount ,for the first year that an eligible institution participates in the grant program under this subsection and subject to subparagraph 7,c71 such eligible institution shall receive a grant in an amount based on the product of-- 7i7 the actual cost of tuition and fees at the eligible institution in such year 7referred to in this subsection as the per-student rebate72 multiplied by 7ii7 the number of eligible students enrolled in the eligible institution for the preceding year4 7,b7 ,subsequent increases ,for each succeeding year after the first year of the grant program under this subsection1 each participating eligible institution shall receive a grant in the amount determined under subparagraph 7,a7 for such year1 except that in no case shall the amount of the per-student rebate for an eligible institution increase by more than #c percent as compared to the amount of such rebate for the preceding year4 7,c7 ,limitations 7i7 ,maximum per-student rebate ,no eligible institution participating in the grant program under this subsection shall receive a per-student rebate amount for any year that is greater than the national average of annual tuition and fees at public #d-year institutions of higher education for such year1 as determined by the ,secretary4 7ii7 ,first year tuition and fees ,during the first year of participation in the grant program under this subsection1 no eligible institution may increase tuition and fees at a rate greater than any annual increase at the eligible institution in the previous #e years4 7#d7 ,application ,an eligible institution that desires a grant under this subsection shall submit an application to the ,secretary at such time1 in such manner1 and containing such information as the ,secretary may require4 7#e7 ,use of funds ,funds awarded under this subsection to a participating eligible institution shall be-- 7,a7 applied in their entirety to student accounts2 and 7,b7 used to waive or significantly reduce tuition and fees for eligible students in an amount of not more than up to the annual per-student rebate amount for each student1 for not more than the first #fj credits an eligible student enrolls in the participating eligible institution4 7b7 ,pathways to student success for ,hispanic-,serving institutions1 ,asian ,american and ,native ,american ,pacific ,islander-,serving institutions1 ,tribal ,colleges and ,universities1 ,alaska ,native-,serving institutions1 ,native ,hawaiian-,serving institutions1 ,predominantly ,black ,institutions1 and ,native ,american-,serving nontribal institutions 7#a7 ,in general ,from amounts appropriated under subsection 7d77#a7 for any fiscal year1 the ,secretary shall award grants to participating #d-year minority-serving institutions to-- 7,a7 encourage students to enroll as first-time students and successfully complete a bachelor's degree at participating institutions2 7,b7 provide incentives to community college students to transfer to participating institutions through strong transfer pathways to complete a bachelor's degree program2 and 7,c7 support participating institutions to better serve new and existing students by engaging in reforms and innovations designed to improve completion rates and other student outcomes4 7#b7 ,institutional eligibility ,to be eligible to participate and receive a grant under this subsection1 an institution shall be a minority-serving institution that-- 7,a7 has a student body of which not less than #ce percent are low-income students2 7,b7 commits to maintaining or adopting and implementing promising and evidence-based institutional reforms and innovative practices to improve the completion rates and other student outcomes1 such as-- 7i7 providing comprehensive academic and student support services1 including mentoring and advising2 7ii7 providing accelerated learning opportunities and degree pathways1 such as dual enrollment and pathways to graduate and professional degree programs2 7iii7 advancing distance and competency-based education2 7iv7 partnering with employers1 industry1 not-for-profit associations1 and other groups to provide opportunities to advance learning outside the classroom1 including work-based learning opportunities such as internships or apprenticeships or programs designed to improve intercultural development and personal growth1 such as foreign exchange and study abroad programs2 7v7 reforming remedial education1 especially for low-income students1 first generation college students1 adult students1 and other underrepresented students2 and 7vi7 implementing course redesigns of high-enrollment courses to improve student outcomes and reduce cost2 7,c7 sets performance goals for improving student outcomes for the duration of the grant2 and 7,d7 if receiving a grant for transfer students1 has articulation agreements with community colleges at the national1 ,state1 or local levels to ensure that community college credits can fully transfer to the participating institution4 7#c7 ,grant amount 7,a7 ,initial amount ,for the first year that an eligible institution participates in the grant program under this subsection and subject to subparagraph 7,c71 such participating eligible institution shall receive a grant in an amount based on the product of-- 7i7 the actual cost of tuition and fees at the eligible institution in such year 7referred to in this subsection as the per-student rebate72 multiplied by 7ii7 the number of eligible students enrolled in the eligible institution for the preceding year4 7,b7 ,subsequent increases ,for each succeeding year after the first year of the grant program under this subsection1 each participating eligible institution shall receive a grant in the amount determined under subparagraph 7,a7 for such year1 except that in no case shall the amount of the per-student rebate increase by more than #c percent as compared to the amount of such rebate for the preceding year4 7,c7 ,limitations 7i7 ,maximum per-student rebate ,no eligible institution participating in the grant program under this subsection shall receive a per-student rebate amount for a grant year greater than the national average of public #d-year institutional tuition and fees1 as determined by the ,secretary4 7ii7 ,first year tuition and fees ,during the first year of participation in the grant program under this subsection1 no eligible institution may increase tuition and fees at a rate greater than any annual increase made by the institution in the previous #e years4 7#d7 ,application ,an eligible institution shall submit an application to the ,secretary at such time1 in such a manner1 and containing such information as determined by the ,secretary4 7#e7 ,use of funds ,funds awarded under this subsection to a participating eligible institution shall be-- 7,a7 applied in their entirety to student accounts2 and 7,b7 used to waive or significantly reduce tuition and fees for eligible students in an amount of not more than up to the annual per-student rebate amount for each student1 for not more than the first #fj credits an eligible student enrolls in the participating eligible institution4 7c7 ,definitions ,in this section3 7#a7 ,eligible student 7,a7 ,definition ,the term eligible student means a student1 regardless of age1 who-- 7i7 7,i7 enrolls in a historically black college or university1 or minority-serving institution1 for the first time2 or 7,,ii7 transfers from a community college into a historically black college or university1 or minority-serving institution1 for the first time2 7ii7 attends the historically black college or university1 or minority serving institution1 on at least a half-time basis2 7iii7 maintains satisfactory academic progress2 and 7iv7 is a low-income student4 7,b7 ,special rules 7i7 ,first #c years ,an otherwise eligible student shall lose eligibility #c calendar years after first receiving benefits under this section4 7ii7 ,special rule for certain students ,notwithstanding subparagraph 7,a77i71 an otherwise eligible student whose parent or guardian was denied a ,,plus loan after ,november #bjaa and before ,march #bi1 #bjae1 and who subsequently withdrew from a historically black college or university1 or minority-serving institution1 and has not yet completed a program of study at such historically black college or university or minority-serving institution1 shall be eligible to participate under subsection 7a7 or 7b7 in order to complete such program of study1 subject to all other requirements of subsection 7a7 or 7b7 7as the case may be74 7#b7 ,historically black college or university ,the term historically black college or university means a part ,b institution described in section #cbb7b7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajfa7b774 7#c7 ,low-income student ,the term low-income student has the meaning given such term by the ,secretary1 except that such term shall not exclude any student eligible for a ,federal ,pell ,grant under section #dja of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a74 7#d7 ,minority-serving institution ,the term minority-serving institution means any public or not-for-profit institution of higher education-- 7,a7 described in paragraphs 7#b7 through 7#g7 of section #cga7;a7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajfgq7a772 and 7,b7 designated as a minority-serving institution by the ,secretary4 7d7 ,appropriations 7#a7 ,authorization and appropriations for ,,hbcu and ,,msi grants ,for the purpose of carrying out subsections 7a7 and 7b71 there are authorized to be appropriated1 and there are appropriated-- 7,a7 #ee1jjj1jjj for fiscal year #bjaf2 7,b7 #ahj1jjj1jjj for fiscal year #bjag2 7,c7 #a1jgb1jjj1jjj for fiscal year #bjah2 7,d7 #a1aae1jjj1jjj for fiscal year #bjai2 7,e7 #a1afj1jjj1jjj for fiscal year #bjbj2 7,f7 #a1bjf1jjj1jjj for fiscal year #bjba2 7,g7 #a1bbe1jjj1jjj for fiscal year #bjbb2 7,h7 #a1cjf1jjj1jjj for fiscal year #bjbc2 7,i7 #a1cei1jjj1jjj for fiscal year #bjbd2 and 7,j7 #a1dad1jjj1jjj for fiscal year #bjbe and each succeeding fiscal year4 7#b7 ,availability ,funds appropriated under paragraph 7#a7 are to remain available to the ,secretary until expended4 7#c7 ,insufficient funds ,if the amount appropriated under paragraph 7#a7 for a fiscal year is not sufficient to award1 to each participating institution in the grant programs under subsections 7a7 and 7b71 a grant under this section equal to #ajj percent of the grant amount determined under subsection 7a77#c7 or 7b77#c7 7as the case may be71 the ,secretary may ratably reduce the amount of each such grant or take other actions necessary to ensure an equitable distribution of such amount4 ,,ii ,student loan refinancing #bja4 ,refinancing programs 7a7 ,program authority ,section #dea7;a7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;a7a77 is amended-- 7#a7 by striking and 7#b7 and inserting 7#b72 and 7#b7 by inserting 2 and 7#c7 to make loans under section #dfj;,a and section #dfj;,b after section #dei;,a4 7b7 ,refinancing program ,part ,d of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;a et seq47 is amended by adding at the end the following3 #dfj;,a4 ,refinancing ,,ffel and ,federal ,direct ,loans 7a7 ,in general ,beginning not later than #ahj days after the date of enactment of the ,in the ,red ,act of #bjaf1 the ,secretary shall establish a program under which the ,secretary1 upon the receipt of an application from a qualified borrower1 makes a loan under this part1 in accordance with the provisions of this section1 in order to permit the borrower to obtain the interest rate provided under subsection 7c74 7b7 ,refinancing ,direct ,loans 7#a7 ,federal ,direct ,loans ,upon application of a qualified borrower1 the ,secretary shall repay a ,federal ,direct ,stafford ,loan1 a ,federal ,direct ,unsubsidized ,stafford ,loan1 a ,federal ,direct ,,plus ,loan1 or a ,federal ,direct ,consolidation ,loan of the qualified borrower1 for which the first disbursement was made1 or the application for the consolidation loan was received1 before ,july #a1 #bjaf1 with the proceeds of a refinanced ,federal ,direct ,stafford ,loan1 a ,federal ,direct ,unsubsidized ,stafford ,loan1 a ,federal ,direct ,,plus ,loan1 or a ,federal ,direct ,consolidation ,loan1 respectively1 issued to the borrower in an amount equal to the sum of the unpaid principal1 accrued unpaid interest1 and late charges of the original loan4 7#b7 ,refinancing ,,ffel program loans as refinanced ,federal ,direct ,loans ,upon application of a qualified borrower for any loan that was made1 insured1 or guaranteed under part ,b and for which the first disbursement was made1 or the application for the consolidation loan was received1 before ,july #a1 #bjaj1 the ,secretary shall make a loan under this part1 in an amount equal to the sum of the unpaid principal1 accrued unpaid interest1 and late charges of the original loan to the borrower in accordance with the following3 7,a7 ,the ,secretary shall pay the proceeds of such loan to the eligible lender of the loan made1 insured1 or guaranteed under part ,b1 in order to discharge the borrower from any remaining obligation to the lender with respect to the original loan4 7,b7 ,a loan made under this section that was originally-- 7i7 a loan originally made1 insured1 or guaranteed under section #dbh shall be a ,federal ,direct ,stafford ,loan2 7ii7 a loan originally made1 insured1 or guaranteed under section #dbh;,b shall be a ,federal ,direct ,,plus ,loan2 7iii7 a loan originally made1 insured1 or guaranteed under section #dbh;,h shall be a ,federal ,direct ,unsubsidized ,stafford ,loan2 and 7iv7 a loan originally made1 insured1 or guaranteed under section #dbh;,c shall be a ,federal ,direct ,consolidation ,loan4 7,c7 ,the interest rate for each loan made by the ,secretary under this paragraph shall be the rate provided under subsection 7c74 7c7 ,interest rates 7#a7 ,in general ,the interest rate for the refinanced ,federal ,direct ,stafford ,loans1 ,federal ,direct ,unsubsidized ,stafford ,loans1 ,federal ,direct ,,plus ,loans1 and ,federal ,direct ,consolidation ,loans1 shall be a rate equal to-- 7,a7 in any case where the original loan was a loan under section #dbh or #dbh;,h1 a ,federal ,direct ,stafford loan1 or a ,federal ,direct ,unsubsidized ,stafford ,loan1 that was issued to an undergraduate student1 a rate equal to the rate for ,federal ,direct ,stafford ,loans and ,federal ,direct ,unsubsidized ,stafford ,loans issued to undergraduate students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 7,b7 in any case where the original loan was a loan under section #dbh or #dbh;,h1 a ,federal ,direct ,stafford ,loan1 or a ,federal ,direct ,unsubsidized ,stafford ,loan1 that was issued to a graduate or professional student1 a rate equal to the rate for ,federal ,direct ,unsubsidized ,stafford ,loans issued to graduate or professional students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 7,c7 in any case where the original loan was a loan under section #dbh;,b or a ,federal ,direct ,,plus ,loan1 a rate equal to the rate for ,federal ,direct ,,plus ,loans for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 and 7,d7 in any case where the original loan was a loan under section #dbh;,c or a ,federal ,direct ,consolidation ,loan1 a rate calculated in accordance with paragraph 7#b74 7#b7 ,interest ,rates for ,consolidation ,loans 7,a7 ,method of calculation ,in order to determine the interest rate for any refinanced ,federal ,direct ,consolidation ,loan under paragraph 7#a77;,d71 the ,secretary shall-- 7i7 determine each of the component loans that were originally consolidated in the loan under section #dbh;,c or the ,federal ,direct ,consolidation ,loan1 and calculate the proportion of the unpaid principal balance of the loan under section #dbh;,c or the ,federal ,direct ,consolidation ,loan that each component loan represents2 7ii7 use the proportions determined in accordance with clause 7i7 and the interest rate applicable for each component loan1 as determined under subparagraph 7,b71 to calculate the weighted average of the interest rates on the loans consolidated into the loan under section #dbh;,c or the ,federal ,direct ,consolidation ,loan2 and 7iii7 apply the weighted average calculated under clause 7ii7 as the interest rate for the refinanced ,federal ,direct ,consolidation ,loan4 7,b7 ,interest rates for component loans ,the interest rates for the component loans of a loan made under section #dbh;,c or a ,federal ,direct ,consolidation ,loan shall be the following3 7i7 ,the interest rate for any loan under section #dbh or #dbh;,h1 ,federal ,direct ,stafford ,loan1 or ,federal ,direct ,unsubsidized ,stafford ,loan issued to an undergraduate student shall be a rate equal to the lesser of-- 7,i7 the rate for ,federal ,direct ,stafford ,loans and ,federal ,direct ,unsubsidized ,stafford ,loans issued to undergraduate students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 or 7,,ii7 the original interest rate of the component loan4 7ii7 ,the interest rate for any loan under section #dbh or #dbh;,h1 ,federal ,direct ,stafford ,loan1 or ,federal ,direct ,unsubsidized ,stafford ,loan issued to a graduate or professional student shall be a rate equal to the lesser of-- 7,i7 the rate for ,federal ,direct ,unsubsidized ,stafford ,loans issued to graduate or professional students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 or 7,,ii7 the original interest rate of the component loan4 7iii7 ,the interest rate for any loan under section #dbh;,b or ,federal ,direct ,,plus ,loan shall be a rate equal to the lesser of-- 7,i7 the rate for ,federal ,direct ,,plus ,loans for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 or 7,,ii7 the original interest rate of the component loan4 7iv7 ,the interest rate for any component loan that is a loan under section #dbh;,c or a ,federal ,direct ,consolidation ,loan shall be the weighted average of the interest rates that would apply under this subparagraph for each loan comprising the component consolidation loan4 7v7 ,the interest rate for any eligible loan that is a component of a loan made under section #dbh;,c or a ,federal ,direct ,consolidation ,loan and is not described in clauses 7i7 through 7iv7 shall be the interest rate on the original component loan4 7#c7 ,fixed ,rate ,the applicable rate of interest determined under paragraph 7#a7 for a refinanced loan under this section shall be fixed for the period of the loan4 7d7 ,terms and conditions of loans 7#a7 ,in general ,a loan that is refinanced under this section shall have the same terms and conditions as the original loan1 except as otherwise provided in this section4 7#b7 ,no automatic extension of repayment period ,refinancing a loan under this section shall not result in the extension of the duration of the repayment period of the loan1 and the borrower shall retain the same repayment term that was in effect on the original loan4 ,nothing in this paragraph shall be construed to prevent a borrower from electing a different repayment plan at any time in accordance with section #dee7;d77#c74 7e7 ,definition of qualified borrower 7#a7 ,in ,general ,for purposes of this section1 the term qualified borrower means a borrower-- 7,a7 of a loan under this part or part ,b for which the first disbursement was made1 or the application for a consolidation loan was received1 before ,july #a1 #bjaf2 and 7,b7 who meets the eligibility requirements based on income or debt-to-income ratio established by the ,secretary4 7#b7 ,income requirements ,not later than #ahj days after the date of enactment of the ,in the ,red ,act of #bjaf1 the ,secretary shall establish eligibility requirements based on income or debt-to-income ratio that take into consideration providing access to refinancing under this section for borrowers with the greatest financial need4 7f7 ,notification to borrowers ,the ,secretary1 in coordination with the ,director of the ,bureau of ,consumer ,financial ,protection1 shall undertake a campaign to alert borrowers of loans that are eligible for refinancing under this section that the borrowers are eligible to apply for such refinancing4 ,the campaign shall include the following activities3 7#a7 ,developing consumer information materials about the availability of ,federal student loan refinancing4 7#b7 ,requiring servicers of loans under this part or part ,b to provide such consumer information to borrowers in a manner determined appropriate by the ,secretary1 in consultation with the ,director of the ,bureau of ,consumer ,financial ,protection4 #dfj;,b4 ,federal ,direct ,refinanced ,private ,loan program 7a7 ,definitions ,in this section3 7#a7 ,eligible private education loan ,the term eligible private education loan means a private education loan1 as defined in section #adj7;a7 of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afej7;a771 that-- 7,a7 was disbursed to the borrower before ,july #a1 #bjaf2 and 7,b7 was for the borrower's own postsecondary educational expenses for an eligible program at an institution of higher education participating in the loan program under this part1 as of the date that the loan was disbursed4 7#b7 ,federal ,direct ,refinanced ,private ,loan ,the term ,federal ,direct ,refinanced ,private ,loan means a loan issued under subsection 7b77#a74 7#c7 ,private educational lender ,the term private educational lender has the meaning given the term in section #adj7;a7 of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afej7;a774 7#d7 ,qualified borrower ,the term qualified borrower means an individual who-- 7,a7 has an eligible private education loan2 7,b7 has been current on payments on the eligible private education loan for the #f months prior to the date of the qualified borrower's application for refinancing under this section1 and is in good standing on the loan at the time of such application2 7,c7 is not in default on the eligible private education loan or on any loan made1 insured1 or guaranteed under this part or part ,b or ,e2 and 7,d7 meets the eligibility requirements described in subsection 7b77#b74 7b7 ,program authorized 7#a7 ,in general ,the ,secretary1 in consultation with the ,secretary of the ,treasury1 shall carry out a program under which the ,secretary1 upon application by a qualified borrower who has an eligible private education loan1 shall issue such borrower a loan under this part in accordance with the following3 7,a7 ,the loan issued under this program shall be in an amount equal to the sum of the unpaid principal1 accrued unpaid interest1 and late charges of the private education loan4 7,b7 ,the ,secretary shall pay the proceeds of the loan issued under this program to the private educational lender of the private education loan1 in order to discharge the qualified borrower from any remaining obligation to the lender with respect to the original loan4 7,c7 ,the ,secretary shall require that the qualified borrower undergo loan counseling that provides all of the information and counseling required under clauses 7i7 through 7viii7 of section #dhe7;b77#a77;,a7 before the loan is refinanced in accordance with this section1 and before the proceeds of such loan are paid to the private educational lender4 7,d7 ,the ,secretary shall issue the loan as a ,federal ,direct ,refinanced ,private ,loan1 which shall have the same terms1 conditions1 and benefits as a ,federal ,direct ,unsubsidized ,stafford ,loan1 except as otherwise provided in this section4 7#b7 ,borrower eligibility ,not later than #ahj days after the date of enactment of the ,in the ,red ,act of #bjaf1 the ,secretary1 in consultation with the ,secretary of the ,treasury and the ,director of the ,bureau of ,consumer ,financial ,protection1 shall establish eligibility requirements-- 7,a7 based on income or debt-to-income ratio that take into consideration providing access to refinancing under this section for borrowers with the greatest financial need2 7,b7 to ensure eligibility only for borrowers in good standing2 7,c7 to minimize inequities between ,federal ,direct ,refinanced ,private ,loans and other ,federal student loans2 7,d7 to preclude windfall profits for private educational lenders2 and 7,e7 to ensure full access to the program authorized in this subsection for borrowers with private loans who otherwise meet the criteria established in accordance with subparagraphs 7,a7 and 7,b74 7c7 ,interest rate 7#a7 ,in general ,the interest rate for a ,federal ,direct ,refinanced ,private ,loan is-- 7,a7 in the case of a ,federal ,direct ,refinanced ,private ,loan for a private education loan originally issued for undergraduate postsecondary educational expenses1 a rate equal to the rate for ,federal ,direct ,stafford ,loans and ,federal ,direct ,unsubsidized ,stafford ,loans issued to undergraduate students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad2 and 7,b7 in the case of a ,federal ,direct ,refinanced ,private ,loan for a private education loan originally issued for graduate or professional degree postsecondary educational expenses1 a rate equal to the rate for ,federal ,direct ,unsubsidized ,stafford ,loans issued to graduate or professional students for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad4 7#b7 ,combined undergraduate and graduate study loans ,if a ,federal ,direct ,refinanced ,private ,loan is for a private education loan originally issued for both undergraduate and graduate or professional postsecondary educational expenses1 the interest rate shall be a rate equal to the rate for ,federal ,direct ,,plus ,loans for the #ab-month period beginning on ,july #a1 #bjac1 and ending on ,june #cj1 #bjad4 7#c7 ,fixed ,rate ,the applicable rate of interest determined under this subsection for a ,federal ,direct ,refinanced ,private ,loan shall be fixed for the period of the loan4 7d7 ,no inclusion in aggregate limits ,the amount of a ,federal ,direct ,refinanced ,private ,loan1 or a ,federal ,direct ,consolidated ,loan to the extent such loan was used to repay a ,federal ,direct ,refinanced ,private ,loan1 shall not be included in calculating a borrower's annual or aggregate loan limits under section #dbh or #dbh;,h4 7e7 ,no eligibility for service-,related repayment ,notwithstanding sections #dbh,k7a77#b77;,a71 #dbh,l7b77#b71 #dee7m77#c77;,a71 and #dfj7;b71 a ,federal ,direct ,refinanced ,private ,loan1 or any ,federal ,direct ,consolidation ,loan to the extent such loan was used to repay a ,federal ,direct ,refinanced ,private ,loan1 shall not be eligible for any loan repayment or loan forgiveness program under section #dbh,k1 #dbh,l1 or #dfj or for the repayment plan for public service employees under section #dee7m74 7f7 ,private educational lender reporting requirement 7#a7 ,reporting required ,not later than #ahj days after the date of enactment of the ,in the ,red ,act of #bjaf1 the ,secretary1 in consultation with the ,secretary of the ,treasury and the ,director of the ,bureau of ,consumer ,financial ,protection1 shall establish a requirement that private educational lenders report the data described in paragraph 7#b7 to the ,secretary1 to ,congress1 to the ,secretary of the ,treasury1 and to the ,director of the ,bureau of ,consumer ,financial ,protection1 in order to allow for an assessment of the private education loan market4 7#b7 ,contents of reporting ,the data that private educational lenders shall report in accordance with paragraph 7#a7 shall include each of the following about private education loans 7as defined in section #adj7;a7 of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afej7;a7773 7,a7 ,the total amount of private education loan debt the lender holds4 7,b7 ,the total number of private education loan borrowers the lender serves4 7,c7 ,the average interest rate on the outstanding private education loan debt held by the lender4 7,d7 ,the proportion of private education loan borrowers who are in default on a loan held by the lender4 7,e7 ,the proportion of the outstanding private education loan volume held by the lender that is in default4 7,f7 ,the proportions of outstanding private education loan borrowers who are #cj1 #fj1 and #ij days delinquent4 7,g7 ,the proportions of outstanding private education loan volume that is #cj1 #fj1 and #ij days delinquent4 7g7 ,notification to borrowers ,the ,secretary1 in coordination with the ,secretary of the ,treasury and the ,director of the ,bureau of ,consumer ,financial ,protection1 shall undertake a campaign to alert borrowers about the availability of private student loan refinancing under this section4 4 7c7 ,amendments to public service repayment plan provisions ,section #dee7m7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;e7m77 is amended-- 7#a7 by redesignating paragraphs 7#c7 and 7#d7 as paragraphs 7#d7 and 7#e71 respectively2 7#b7 by inserting after paragraph 7#b7 the following3 7#c7 ,special rules for section #dfj;,a loans 7,a7 ,refinanced ,federal ,direct loans ,notwithstanding paragraph 7#a71 in determining the number of monthly payments that meet the requirements of such paragraph for an eligible ,federal ,direct ,loan refinanced under section #dfj;,a that was originally a loan under this part1 the ,secretary shall include all monthly payments made on the original loan that meet the requirements of such paragraph4 7,b7 ,refinanced ,,ffel loans ,in the case of an eligible ,federal ,direct ,loan refinanced under section #dfj;,a that was originally a loan under part ,b1 only monthly payments made after the date on which the loan was refinanced may be included for purposes of paragraph 7#a74 2 and 7#c7 in paragraph 7#d77;,a7 7as redesignated by paragraph 7#a771 by inserting 7including any ,federal ,direct ,stafford ,loan1 ,federal ,direct ,,plus ,loan1 ,federal ,direct ,unsubsidized ,stafford ,loan1 or ,federal ,direct ,consolidation ,loan refinanced under section #dfj;,a7 before the period at the end4 7d7 ,income-,based repayment ,section #dic;,c of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajih;e7 is amended by adding at the end the following3 7f7 ,special rule for refinanced loans 7#a7 ,refinanced ,federal ,direct and ,,ffel loans ,in calculating the period of time during which a borrower of a loan that is refinanced under section #dfj;,a has made monthly payments for purposes of subsection 7b77#g71 the ,secretary shall deem the period to include all monthly payments made for the original loan1 and all monthly payments made for the refinanced loan1 that otherwise meet the requirements of this section4 7#b7 ,federal ,direct ,refinanced ,private ,loans ,in calculating the period of time during which a borrower of a ,federal ,direct ,refinanced ,private ,loan under section #dfj;,b has made monthly payments for purposes of subsection 7b77#g71 the ,secretary shall include only payments-- 7,a7 that are made after the date of the issuance of the ,federal ,direct ,refinanced ,private ,loan2 and 7,b7 that otherwise meet the requirements of this section4 4 ,,iii ,federal ,pell ,grant protection #cja4 ,federal ,pell ,grant protection ,section #dja7;b77#g7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a7b77#g77 is amended-- 7#a7 in subparagraph 7,a77iii71 by striking clauses 7ii7 and 7iii7 of subparagraph 7,b7 and inserting subparagraph 7,b77ii72 and 7#b7 in subparagraph 7,c7-- 7,a7 in clause 7ii7-- 7i7 in the clause heading1 by striking ,award years #bjad-bjae through #bjag-bjah and inserting ,award year #bjad-bjae and subsequent award years2 7ii7 in the matter preceding subclause 7,i71 by striking each of the award years #bjad-bjae through #bjag-bjah and inserting award year #bjad-bjae and each subsequent award year2 and 7iii7 in subclause 7,i71 by striking clause 7iv77,,ii7 and inserting clause 7iii77,,ii72 7,b7 by striking clause 7iii72 and 7,c7 by redesignating clause 7iv7 as clause 7iii74 #cjb4 ,point of order against cutting ,federal ,pell ,grants 7a7 ,point of ,order ,it shall not be in order in the ,senate to consider any bill1 joint resolution1 motion1 amendment1 amendment between the ,houses1 or conference report that would decrease the appropriations provided for ,federal ,pell ,grants under section #dja7;b77#g7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a7b77#g77 or restrict eligibility for ,federal ,pell ,grants4 7b7 ,waiver and appeal ,subsection 7a7 may be waived or suspended in the ,senate only by an affirmative vote of three-fifths of the ,members1 duly chosen and sworn4 ,an affirmative vote of three-fifths of the ,members of the ,senate1 duly chosen and sworn1 shall be required to sustain an appeal of the ruling of the ,chair on a point of order raised under subsection 7a74 #cjc4 ,affirming that ,federal ,pell ,grants are a foundational investment in affordable higher education 7a7 ,findings ,congress finds the following3 7#a7 ,research shows that with higher educational attainment1 individuals are more likely to be employed1 earn higher wages1 secure health and retirement benefits1 make healthier life choices1 and be more engaged citizens of their communities4 7#b7 ,higher education1 whether at a #b- or #d-year institution1 can help people of the ,united ,states from lower income backgrounds climb into the middle class4 7#c7 ,in #bjae1 more than #bj1jjj1jjj students enrolled in colleges and universities in the ,united ,states--an increase of #d1ijj1jjj since #bjjj4 7#d7 ,despite the benefits of further education beyond high school1 many students from low-income backgrounds do not attend college4 ,according to the ,united ,states ,census ,bureau1 approximately #hj percent of high school graduates from the wealthiest families pursue higher education1 while only a little more than half from the lowest income quartile attend college4 7#e7 ,federal ,pell ,grants provide need-based aid to students who want to further their education and are the single largest source of grant aid for helping students afford college4 7#f7 ,in award year #bjac-bjad1 an estimated #gc percent of all ,pell ,grant recipients had a total family income equal to or less than #cj1jjj4 7#g7 ,in #bjae1 more than #h1bjj1jjj students1 or approximately #da percent of all undergraduates1 used ,federal ,pell ,grants to finance their education4 7b7 ,sense of the ,senate ,it is the sense of the ,senate that ,congress should-- 7#a7 affirm that ,federal ,pell ,grants are a foundational investment in affordable higher education for students and families2 and 7#b7 commit to ensuring that ,federal ,pell ,grants remain a stable source of financial support for students and families4 ,,iv ,accountability #dja4 ,supporting efforts to ensure that institutions of higher education are accountable for ensuring the high value of degrees and credentials 7a7 ,findings ,congress finds the following3 7#a7 ,the employment rate for people of the ,united ,states between the ages of #ba to #be has declined by #ab percent from #bjjj through #bjab4 7#b7 ,the cost of attending a #d-year public institution of higher education has increased by #cb percent from #bjjb through #bjab4 7#c7 ,more than #a in #d student loan borrowers are now in default or delinquent on a student loan4 7#d7 ,there are limited means through which to ensure that institutions of higher education are held accountable for the value of the degrees and credentials obtained by students1 or the outcomes of those students4 7#e7 ,student borrowers who obtain a high-value degree or credential are much more likely to be able to find a good paying job and repay their student loan debt4 7b7 ,sense of the ,senate ,it is the sense of the ,senate that ,congress should support efforts to ensure that institutions of higher education have strong incentives to ensure that students graduate with degrees and credentials that have a high value1 and that will enable graduates to secure good-paying employment in their field of study and enjoy long-term success1 by-- 7#a7 enhancing accountability for institutions of higher education for the quality and cost of degree programs1 including student debt burden2 7#b7 holding institutions of higher education and their leaders financially accountable when the institutions or leaders engage in fraud or misconduct that violates ,federal and ,state laws2 7#c7 creating incentives and tools that will allow ,state governments and institutions of higher education to curb tuition inflation and maintain investment in higher education2 7#d7 creating incentives for institutions of higher education to direct more resources to their academic programs and to provide pathways to ensure that all students can complete their degrees and credentials in a timely manner2 and 7#e7 guaranteeing that the servicing of student loans made1 insured1 or guaranteed under part ,b or ,d of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajga et seq41 #ajhg;a et seq47 provided through these institutions of higher education will meet the highest standards of quality1 customer service1 and compliance with the law to promote borrower success and minimize defaults4 ,v ,offsets #eja4 ,amendment of #aihf ,code ,except as otherwise expressly provided1 whenever in this title an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #ejb4 ,fair share tax on high-income taxpayers 7a7 ,in general ,subchapter ,a of chapter #a is amended by adding at the end the following new part3 ,,vii ,fair share tax on high-income taxpayers ,sec4 #ei;,a4 ,fair share tax4 #ei;,a4 ,fair share tax 7a7 ,general rule 7#a7 ,phase-in of tax ,in the case of any high-income taxpayer1 there is hereby imposed for a taxable year 7in addition to any other tax imposed by this subtitle7 a tax equal to the product of-- 7,a7 the amount determined under paragraph 7#b71 and 7,b7 a fraction 7not to exceed #a7-- 7i7 the numerator of which is the excess of-- 7,i7 the taxpayer's adjusted gross income1 over 7,,ii7 the dollar amount in effect under subsection 7c77#a71 and 7ii7 the denominator of which is the dollar amount in effect under subsection 7c77#a74 7#b7 ,amount of tax ,the amount of tax determined under this paragraph is an amount equal to the excess 7if any7 of-- 7,a7 the tentative fair share tax for the taxable year1 over 7,b7 the excess of-- 7i7 the sum of-- 7,i7 the regular tax liability 7as defined in section #bf7;b77 for the taxable year1 determined without regard to any tax liability determined under this section1 7,,ii7 the tax imposed by section #ee for the taxable year1 plus 7,,iii7 the payroll tax for the taxable year1 over 7ii7 the credits allowable under part ,,iv of subchapter ,a 7other than sections #bg7;a71 #ca1 and #cd74 7b7 ,tentative fair share tax ,for purposes of this section-- 7#a7 ,in general ,the tentative fair share tax for the taxable year is #cj percent of the excess of-- 7,a7 the adjusted gross income of the taxpayer1 over 7,b7 the modified charitable contribution deduction for the taxable year4 7#b7 ,modified charitable contribution deduction ,for purposes of paragraph 7#a7-- 7,a7 ,in general ,the modified charitable contribution deduction for any taxable year is an amount equal to the amount which bears the same ratio to the deduction allowable under section #agj 7section #fdb7;c7 in the case of a trust or estate7 for such taxable year as-- 7i7 the amount of itemized deductions allowable under the regular tax 7as defined in section #ee7 for such taxable year1 determined after the application of section #fh1 bears to 7ii7 such amount1 determined before the application of section #fh4 7,b7 ,taxpayer must itemize ,in the case of any individual who does not elect to itemize deductions for the taxable year1 the modified charitable contribution deduction shall be zero4 7c7 ,high-,income taxpayer ,for purposes of this section-- 7#a7 ,in general ,the term high-income taxpayer means1 with respect to any taxable year1 any taxpayer 7other than a corporation7 with an adjusted gross income for such taxable year in excess of #a1jjj1jjj 7#ej percent of such amount in the case of a married individual who files a separate return74 7#b7 ,inflation adjustment 7,a7 ,in general ,in the case of a taxable year beginning after #bjaf1 the #a1jjj1jjj amount under paragraph 7#a7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjae for calendar year #aiib in subparagraph 7,b7 thereof4 7,b7 ,rounding ,if any amount as adjusted under subparagraph 7,a7 is not a multiple of #aj1jjj1 such amount shall be rounded to the next lowest multiple of #aj1jjj4 7d7 ,payroll tax ,for purposes of this section1 the payroll tax for any taxable year is an amount equal to the excess of-- 7#a7 the taxes imposed on the taxpayer under sections #adja1 #adaa1 #caja1 #cbja1 and #cbaa7;a7 7to the extent such tax is attributable to the rate of tax in effect under section #caja7 with respect to such taxable year or wages or compensation received during such taxable year1 over 7#b7 the deduction allowable under section #afd7;f7 for such taxable year4 7e7 ,special rule for estates and trusts ,for purposes of this section1 in the case of an estate or trust1 adjusted gross income shall be computed in the manner described in section #fg7;e74 7f7 ,not treated as tax imposed by this chapter for certain purposes ,the tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter 7other than the credit allowed under section #bg7;a77 or for purposes of section #ee4 4 7b7 ,clerical amendment ,the table of parts for subchapter ,a of chapter #a is amended by adding at the end the following new item3 ,part ,,vii4 ,fair share tax on high-,income taxpayers 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #ejc4 ,expansion of denial of deduction for certain excessive employee remuneration 7a7 ,application to all current and former employees 7#a7 ,in general ,section #afb7m7 is amended-- 7,a7 by striking covered employee each place it appears in paragraphs 7#a7 and 7#d7 and inserting covered individual1 and 7,b7 by striking such employee each place it appears in subparagraphs 7,a7 and 7,g7 of paragraph 7#d7 and inserting such individual4 7#b7 ,covered individual ,paragraph 7#c7 of section #afb7m7 is amended to read as follows3 7#c7 ,covered individual ,for purposes of this subsection1 the term covered individual means any individual who is an officer1 director1 or employee of the taxpayer or a former officer1 director1 or employee of the taxpayer4 4 7#c7 ,conforming amendments 7,a7 ,section #dh;,d7b77#c77;,a7 is amended by inserting 7as in effect for taxable years beginning before ,january #a1 #bjaf7 after section #afb7m77#c74 7,b7 ,section #dji;,a7b77#c77;,d77ii7 is amended by inserting 7as in effect for taxable years beginning before ,january #a1 #bjaf7 after section #afb7m77#c74 7b7 ,expansion of applicable employee remuneration 7#a7 ,elimination of exception for commission-based pay 7,a7 ,in general ,paragraph 7#d7 of section #afb7m71 as amended by subsection 7a71 is amended by striking subparagraph 7,b7 and by redesignating subparagraphs 7,c7 through 7,g7 as subparagraphs 7,b7 through 7,f71 respectively4 7,b7 ,conforming amendments 7i7 ,section #afb7m77#e7 is amended-- 7,i7 by striking subparagraphs 7,b71 7,c71 and 7,d7 thereof in subparagraph 7,e7 and inserting subparagraphs 7,b7 and 7,c7 thereof1 and 7,,ii7 by striking subparagraphs 7,f7 and 7,g7 in subparagraph 7,g7 and inserting subparagraphs 7,e7 and 7,f74 7ii7 ,section #afb7m77#f7 is amended-- 7,i7 by striking subparagraphs 7,b71 7,c71 and 7,d7 thereof in subparagraph 7,d7 and inserting subparagraphs 7,b7 and 7,c7 thereof1 and 7,,ii7 by striking subparagraphs 7,f7 and 7,g7 in subparagraph 7,g7 and inserting subparagraphs 7,e7 and 7,f74 7#b7 ,inclusion of performance-based compensation 7,a7 ,in general ,paragraph 7#d7 of section #afb7m71 as amended by subsection 7a7 and paragraph 7#a7 of this subsection1 is amended by striking subparagraph 7,b7 and redesignating subparagraphs 7,c7 through 7,f7 as subparagraphs 7,b7 through 7,e71 respectively4 7,b7 ,conforming amendments 7i7 ,section #afb7m77#e71 as amended by paragraph 7#a71 is amended-- 7,i7 by striking subparagraphs 7,b7 and 7,c7 thereof in subparagraph 7,e7 and inserting subparagraph 7,b7 thereof1 and 7,,ii7 by striking subparagraphs 7,e7 and 7,f7 in subparagraph 7,g7 and inserting subparagraphs 7,d7 and 7,e74 7ii7 ,section #afb7m77#f71 as amended by paragraph 7#a71 is amended-- 7,i7 by striking subparagraphs 7,b7 and 7,c7 thereof in subparagraph 7,d7 and inserting subparagraph 7,b7 thereof1 and 7,,ii7 by striking subparagraphs 7,e7 and 7,f7 in subparagraph 7,g7 and inserting subparagraphs 7,d7 and 7,e74 7c7 ,expansion of applicable employer ,paragraph 7#b7 of section #afb7m7 is amended to read as follows3 7#b7 ,publicly held corporation ,for purposes of this subsection1 the term publicly held corporation means any corporation which is an issuer 7as defined in section #c of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c77-- 7,a7 the securities of which are registered under section #ab of such ,act 7#ae ,u4,s4,c4 #ghl71 or 7,b7 that is required to file reports under section #ae7;d7 of such ,act 7#ae ,u4,s4,c4 #ghj7;d774 4 7d7 ,regulatory authority 7#a7 ,in general ,section #afb7m7 is amended by adding at the end the following new paragraph3 7#g7 ,regulations ,the ,secretary may prescribe such guidance1 rules1 or regulations1 including with respect to reporting1 as are necessary to carry out the purposes of this subsection4 4 7#b7 ,conforming amendment ,paragraph 7#f7 of section #afb7m7 is amended by striking subparagraph 7,h74 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #ejd4 ,partnership interests transferred in connection with performance of services 7a7 ,modification to election ,to include partnership interest in gross income in year of transfer ,subsection 7c7 of section #hc is amended by redesignating paragraph 7#d7 as paragraph 7#e7 and by inserting after paragraph 7#c7 the following new paragraph3 7#d7 ,partnership interests ,except as provided by the ,secretary-- 7,a7 ,in general ,in the case of any transfer of an interest in a partnership in connection with the provision of services to 7or for the benefit of7 such partnership-- 7i7 the fair market value of such interest shall be treated for purposes of this section as being equal to the amount of the distribution which the partner would receive if the partnership sold 7at the time of the transfer7 all of its assets at fair market value and distributed the proceeds of such sale 7reduced by the liabilities of the partnership7 to its partners in liquidation of the partnership1 and 7ii7 the person receiving such interest shall be treated as having made the election under subsection 7b77#a7 unless such person makes an election under this paragraph to have such subsection not apply4 7,b7 ,election ,the election under subparagraph 7,a77ii7 shall be made under rules similar to the rules of subsection 7b77#b74 4 7b7 ,effective date ,the amendments made by this section shall apply to interests in partnerships transferred after the date of the enactment of this ,act4 #eje4 ,special rules for partners providing investment management services to partnerships 7a7 ,in general ,part ,i of subchapter ,k of chapter #a is amended by adding at the end the following new section3 #gaj4 ,special rules for partners providing investment management services to partnerships 7a7 ,treatment of distributive share of partnership items ,for purposes of this title1 in the case of an investment services partnership interest-- 7#a7 ,in general ,notwithstanding section #gjb7;b7-- 7,a7 an amount equal to the net capital gain with respect to such interest for any partnership taxable year shall be treated as ordinary income1 and 7,b7 subject to the limitation of paragraph 7#b71 an amount equal to the net capital loss with respect to such interest for any partnership taxable year shall be treated as an ordinary loss4 7#b7 ,recharacterization of losses limited to recharacterized gains ,the amount treated as ordinary loss under paragraph 7#a77;,b7 for any taxable year shall not exceed the excess 7if any7 of-- 7,a7 the aggregate amount treated as ordinary income under paragraph 7#a77;,a7 with respect to the investment services partnership interest for all preceding partnership taxable years to which this section applies1 over 7,b7 the aggregate amount treated as ordinary loss under paragraph 7#a77;,b7 with respect to such interest for all preceding partnership taxable years to which this section applies4 7#c7 ,allocation to items of gain and loss 7,a7 ,net capital gain ,the amount treated as ordinary income under paragraph 7#a77;,a7 shall be allocated ratably among the items of long-term capital gain taken into account in determining such net capital gain4 7,b7 ,net capital loss ,the amount treated as ordinary loss under paragraph 7#a77;,b7 shall be allocated ratably among the items of long-term capital loss and short-term capital loss taken into account in determining such net capital loss4 7#d7 ,terms relating to capital gains and losses ,for purposes of this section-- 7,a7 ,in general ,net capital gain1 long-term capital gain1 and long-term capital loss1 with respect to any investment services partnership interest for any taxable year1 shall be determined under section #abbb1 except that such section shall be applied-- 7i7 without regard to the recharacterization of any item as ordinary income or ordinary loss under this section1 7ii7 by only taking into account items of gain and loss taken into account by the holder of such interest under section #gjb 7other than subsection 7a77#i7 thereof7 with respect to such interest for such taxable year1 and 7iii7 by treating property which is taken into account in determining gains and losses to which section #abca applies as capital assets held for more than #a year4 7,b7 ,net capital loss ,the term net capital loss means the excess of the losses from sales or exchanges of capital assets over the gains from such sales or exchanges4 ,rules similar to the rules of clauses 7i7 through 7iii7 of subparagraph 7,a7 shall apply for purposes of the preceding sentence4 7#e7 ,special rule for dividends ,any dividend allocated with respect to any investment services partnership interest shall not be treated as qualified dividend income for purposes of section #a7;h74 7#f7 ,special rule for qualified small business stock ,section #abjb shall not apply to any gain from the sale or exchange of qualified small business stock 7as defined in section #abjb7;c77 allocated with respect to any investment services partnership interest4 7b7 ,dispositions of partnership interests 7#a7 ,gain 7,a7 ,in general ,any gain on the disposition of an investment services partnership interest shall be-- 7i7 treated as ordinary income1 and 7ii7 recognized notwithstanding any other provision of this subtitle4 7,b7 ,gift and transfers at death ,in the case of a disposition of an investment services partnership interest by gift or by reason of death of the taxpayer-- 7i7 subparagraph 7,a7 shall not apply1 7ii7 such interest shall be treated as an investment services partnership interest in the hands of the person acquiring such interest1 and 7iii7 any amount that would have been treated as ordinary income under this subsection had the decedent sold such interest immediately before death shall be treated as an item of income in respect of a decedent under section #fia4 7#b7 ,loss ,any loss on the disposition of an investment services partnership interest shall be treated as an ordinary loss to the extent of the excess 7if any7 of-- 7,a7 the aggregate amount treated as ordinary income under subsection 7a7 with respect to such interest for all partnership taxable years to which this section applies1 over 7,b7 the aggregate amount treated as ordinary loss under subsection 7a7 with respect to such interest for all partnership taxable years to which this section applies4 7#c7 ,election with respect to certain exchanges ,paragraph 7#a77;,a77ii7 shall not apply to the contribution of an investment services partnership interest to a partnership in exchange for an interest in such partnership if-- 7,a7 the taxpayer makes an irrevocable election to treat the partnership interest received in the exchange as an investment services partnership interest1 and 7,b7 the taxpayer agrees to comply with such reporting and recordkeeping requirements as the ,secretary may prescribe4 7#d7 ,distributions of partnership property 7,a7 ,in general ,in the case of any distribution of property by a partnership with respect to any investment services partnership interest held by a partner1 the partner receiving such property shall recognize gain equal to the excess 7if any7 of-- 7i7 the fair market value of such property at the time of such distribution1 over 7ii7 the adjusted basis of such property in the hands of such partner 7determined without regard to subparagraph 7,c774 7,b7 ,treatment of gain as ordinary income ,any gain recognized by such partner under subparagraph 7,a7 shall be treated as ordinary income to the same extent and in the same manner as the increase in such partner's distributive share of the taxable income of the partnership would be treated under subsection 7a7 if1 immediately prior to the distribution1 the partnership had sold the distributed property at fair market value and all of the gain from such disposition were allocated to such partner4 ,for purposes of applying subsection 7a77#b71 any gain treated as ordinary income under this subparagraph shall be treated as an amount treated as ordinary income under subsection 7a77#a77;,a74 7,c7 ,adjustment of basis ,in the case of a distribution to which subparagraph 7,a7 applies1 the basis of the distributed property in the hands of the distributee partner shall be the fair market value of such property4 7,d7 ,special rules with respect to mergers1 divisions1 and technical terminations ,in the case of a taxpayer which satisfies requirements similar to the requirements of subparagraphs 7,a7 and 7,b7 of paragraph 7#c71 this paragraph and paragraph 7#a77;,a77ii7 shall not apply to the distribution of a partnership interest if such distribution is in connection with a contribution 7or deemed contribution7 of any property of the partnership to which section #gba applies pursuant to a transaction described in paragraph 7#a77;,b7 or 7#b7 of section #gjh7;b74 7c7 ,investment services partnership interest ,for purposes of this section-- 7#a7 ,in general ,the term investment services partnership interest means any interest in an investment partnership acquired or held by any person in connection with the conduct of a trade or business described in paragraph 7#b7 by such person 7or any person related to such person74 ,an interest in an investment partnership held by any person-- 7,a7 shall not be treated as an investment services partnership interest for any period before the first date on which it is so held in connection with such a trade or business1 7,b7 shall not cease to be an investment services partnership interest merely because such person holds such interest other than in connection with such a trade or business1 and 7,c7 shall be treated as an investment services partnership interest if acquired from a related person in whose hands such interest was an investment services partnership interest4 7#b7 ,businesses to which this section applies ,a trade or business is described in this paragraph if such trade or business primarily involves the performance of any of the following services with respect to assets held 7directly or indirectly7 by one or more investment partnerships referred to in paragraph 7#a73 7,a7 ,advising as to the advisability of investing in1 purchasing1 or selling any specified asset4 7,b7 ,managing1 acquiring1 or disposing of any specified asset4 7,c7 ,arranging financing with respect to acquiring specified assets4 7,d7 ,any activity in support of any service described in subparagraphs 7,a7 through 7,c74 7#c7 ,investment partnership 7,a7 ,in general ,the term investment partnership means any partnership if1 at the end of any two consecutive calendar quarters ending after the date of enactment of this section-- 7i7 substantially all of the assets of the partnership are specified assets 7determined without regard to any section #aig intangible within the meaning of section #aig7;d771 and 7ii7 less than #ge percent of the capital of the partnership is attributable to qualified capital interests which constitute property held in connection with a trade or business of the owner of such interest4 7,b7 ,look-through of certain wholly owned entities for purposes of determining assets of the partnership 7i7 ,in general ,for purposes of determining the assets of a partnership under subparagraph 7,a77i7-- 7,i7 any interest in a specified entity shall not be treated as an asset of such partnership1 and 7,,ii7 such partnership shall be treated as holding its proportionate share of each of the assets of such specified entity4 7ii7 ,specified entity ,for purposes of clause 7i71 the term specified entity means1 with respect to any partnership 7hereafter referred to as the upper-tier partnership71 any person which engages in the same trade or business as the upper-tier partnership and is-- 7,i7 a partnership all of the capital and profits interests of which are held directly or indirectly by the upper-tier partnership1 or 7,,ii7 a foreign corporation which does not engage in a trade or business in the ,united ,states and all of the stock of which is held directly or indirectly by the upper-tier partnership4 7,c7 ,special rules for determining if property held in connection with trade or business 7i7 ,in general ,except as otherwise provided by the ,secretary1 solely for purposes of determining whether any interest in a partnership constitutes property held in connection with a trade or business under subparagraph 7,a77ii7-- 7,i7 a trade or business of any person closely related to the owner of such interest shall be treated as a trade or business of such owner1 7,,ii7 such interest shall be treated as held by a person in connection with a trade or business during any taxable year if such interest was so held by such person during any #c taxable years preceding such taxable year1 and 7,,iii7 paragraph 7#e77;,b7 shall not apply4 7ii7 ,closely related persons ,for purposes of clause 7i77,i71 a person shall be treated as closely related to another person if1 taking into account the rules of section #bfg7;c71 the relationship between such persons is described in-- 7,i7 paragraph 7#a7 or 7#i7 of section #bfg7;b71 or 7,,ii7 section #bfg7;b77#d71 but solely in the case of a trust with respect to which each current beneficiary is the grantor or a person whose relationship to the grantor is described in paragraph 7#a7 or 7#i7 of section #bfg7;b74 7,d7 ,anti-abuse rules ,the ,secretary may issue regulations or other guidance which prevent the avoidance of the purposes of subparagraph 7,a71 including regulations or other guidance which treat convertible and contingent debt 7and other debt having the attributes of equity7 as a capital interest in the partnership4 7,e7 ,controlled groups of entities 7i7 ,in general ,in the case of a controlled group of entities1 if an interest in the partnership received in exchange for a contribution to the capital of the partnership by any member of such controlled group would 7in the hands of such member7 constitute property held in connection with a trade or business1 then any interest in such partnership held by any member of such group shall be treated for purposes of subparagraph 7,a7 as constituting 7in the hands of such member7 property held in connection with a trade or business4 7ii7 ,controlled group of entities ,for purposes of clause 7i71 the term controlled group of entities means a controlled group of corporations as defined in section #aefc7;a77#a71 applied without regard to subsections 7a77#d7 and 7b77#b7 of section #aefc4 ,a partnership or any other entity 7other than a corporation7 shall be treated as a member of a controlled group of entities if such entity is controlled 7within the meaning of section #ied7;d77#c77 by members of such group 7including any entity treated as a member of such group by reason of this sentence74 7,f7 ,special rule for corporations ,for purposes of this paragraph1 in the case of a corporation1 the determination of whether property is held in connection with a trade or business shall be determined as if the taxpayer were an individual4 7#d7 ,specified asset ,the term specified asset means securities 7as defined in section #dge7;c77#b7 without regard to the last sentence thereof71 real estate held for rental or investment1 interests in partnerships1 commodities 7as defined in section #dge7;e77#b771 cash or cash equivalents1 or options or derivative contracts with respect to any of the foregoing4 7#e7 ,related persons 7,a7 ,in general ,a person shall be treated as related to another person if the relationship between such persons is described in section #bfg7;b7 or #gjg7;b74 7,b7 ,attribution of partner services ,any service described in paragraph 7#b7 which is provided by a partner of a partnership shall be treated as also provided by such partnership4 7d7 ,exception for certain capital interests 7#a7 ,in general ,in the case of any portion of an investment services partnership interest which is a qualified capital interest1 all items of gain and loss 7and any dividends7 which are allocated to such qualified capital interest shall not be taken into account under subsection 7a7 if-- 7,a7 allocations of items are made by the partnership to such qualified capital interest in the same manner as such allocations are made to other qualified capital interests held by partners who do not provide any services described in subsection 7c77#b7 and who are not related to the partner holding the qualified capital interest1 and 7,b7 the allocations made to such other interests are significant compared to the allocations made to such qualified capital interest4 7#b7 ,authority to provide exceptions to allocation requirements ,to the extent provided by the ,secretary in regulations or other guidance-- 7,a7 ,allocations to portion of qualified capital interest ,paragraph 7#a7 may be applied separately with respect to a portion of a qualified capital interest4 7,b7 ,no or insignificant allocations to nonservice providers ,in any case in which the requirements of paragraph 7#a77;,b7 are not satisfied1 items of gain and loss 7and any dividends7 shall not be taken into account under subsection 7a7 to the extent that such items are properly allocable under such regulations or other guidance to qualified capital interests4 7,c7 ,allocations to service providers' qualified capital interests which are less than other allocations ,allocations shall not be treated as failing to meet the requirement of paragraph 7#a77;,a7 merely because the allocations to the qualified capital interest represent a lower return than the allocations made to the other qualified capital interests referred to in such paragraph4 7#c7 ,special rule for changes in services and capital contributions ,in the case of an interest in a partnership which was not an investment services partnership interest and which1 by reason of a change in the services with respect to assets held 7directly or indirectly7 by the partnership or by reason of a change in the capital contributions to such partnership1 becomes an investment services partnership interest1 the qualified capital interest of the holder of such partnership interest immediately after such change shall not1 for purposes of this subsection1 be less than the fair market value of such interest 7determined immediately before such change74 7#d7 ,special rule for tiered partnerships ,except as otherwise provided by the ,secretary1 in the case of tiered partnerships1 all items which are allocated in a manner which meets the requirements of paragraph 7#a7 to qualified capital interests in a lower-tier partnership shall retain such character to the extent allocated on the basis of qualified capital interests in any upper-tier partnership4 7#e7 ,exception for no-self-charged carry and management fee provisions ,except as otherwise provided by the ,secretary1 an interest shall not fail to be treated as satisfying the requirement of paragraph 7#a77;,a7 merely because the allocations made by the partnership to such interest do not reflect the cost of services described in subsection 7c77#b7 which are provided 7directly or indirectly7 to the partnership by the holder of such interest 7or a related person74 7#f7 ,special rule for dispositions ,in the case of any investment services partnership interest any portion of which is a qualified capital interest1 subsection 7b7 shall not apply to so much of any gain or loss as bears the same proportion to the entire amount of such gain or loss as-- 7,a7 the distributive share of gain or loss that would have been allocated to the qualified capital interest 7consistent with the requirements of paragraph 7#a77 if the partnership had sold all of its assets at fair market value immediately before the disposition1 bears to 7,b7 the distributive share of gain or loss that would have been so allocated to the investment services partnership interest of which such qualified capital interest is a part4 7#g7 ,qualified capital interest ,for purposes of this section-- 7,a7 ,in general ,the term qualified capital interest means so much of a partner's interest in the capital of the partnership as is attributable to-- 7i7 the fair market value of any money or other property contributed to the partnership in exchange for such interest 7determined without regard to section #geb7;a771 7ii7 any amounts which have been included in gross income under section #hc with respect to the transfer of such interest1 and 7iii7 the excess 7if any7 of-- 7,i7 any items of income and gain taken into account under section #gjb with respect to such interest1 over 7,,ii7 any items of deduction and loss so taken into account4 7,b7 ,adjustment to qualified capital interest 7i7 ,distributions and losses ,the qualified capital interest shall be reduced by distributions from the partnership with respect to such interest and by the excess 7if any7 of the amount described in subparagraph 7,a77iii77,,ii7 over the amount described in subparagraph 7,a77iii77,i74 7ii7 ,special rule for contributions of property ,in the case of any contribution of property described in subparagraph 7,a77i7 with respect to which the fair market value of such property is not equal to the adjusted basis of such property immediately before such contribution1 proper adjustments shall be made to the qualified capital interest to take into account such difference consistent with such regulations or other guidance as the ,secretary may provide4 7,c7 ,technical terminations1 etc41 disregarded ,no increase or decrease in the qualified capital interest of any partner shall result from a termination1 merger1 consolidation1 or division described in section #gjh1 or any similar transaction4 7#h7 ,treatment of certain loans 7,a7 ,proceeds of partnership loans not treated as qualified capital interest of service providing partners ,for purposes of this subsection1 an investment services partnership interest shall not be treated as a qualified capital interest to the extent that such interest is acquired in connection with the proceeds of any loan or other advance made or guaranteed1 directly or indirectly1 by any other partner or the partnership 7or any person related to any such other partner or the partnership74 ,the preceding sentence shall not apply to the extent the loan or other advance is repaid before the date of the enactment of this section unless such repayment is made with the proceeds of a loan or other advance described in the preceding sentence4 7,b7 ,reduction in allocations to qualified capital interests for loans from nonservice-providing partners to the partnership ,for purposes of this subsection1 any loan or other advance to the partnership made or guaranteed1 directly or indirectly1 by a partner not providing services described in subsection 7c77#b7 to the partnership 7or any person related to such partner7 shall be taken into account in determining the qualified capital interests of the partners in the partnership4 7#i7 ,special rule for qualified family partnerships 7,a7 ,in general ,in the case of any specified family partnership interest1 paragraph 7#a77;,a7 shall be applied without regard to the phrase and who are not related to the partner holding the qualified capital interest4 7,b7 ,specified family partnership interest ,for purposes of this paragraph1 the term specified family partnership interest means any investment services partnership interest if-- 7i7 such interest is an interest in a qualified family partnership1 7ii7 such interest is held by a natural person or by a trust with respect to which each beneficiary is a grantor or a person whose relationship to the grantor is described in section #bfg7;b77#a71 and 7iii7 all other interests in such qualified family partnership with respect to which significant allocations are made 7within the meaning of paragraph 7#a77;,b7 and in comparison to the allocations made to the interest described in clause 7ii77 are held by persons who-- 7,i7 are related to the natural person or trust referred to in clause 7ii71 or 7,,ii7 provide services described in subsection 7c77#b74 7,c7 ,qualified family partnership ,for purposes of this paragraph1 the term qualified family partnership means any partnership if-- 7i7 all of the capital and profits interests of such partnership are held by-- 7,i7 specified family members1 7,,ii7 any person closely related 7within the meaning of subsection 7c77#c77;,c77ii77 to a specified family member1 or 7,,iii7 any other person 7not described in subclause 7,i7 or 7,,ii77 if such interest is an investment services partnership interest with respect to such person1 and 7ii7 such partnership does not hold itself out to the public as an investment advisor4 7,d7 ,specified family members ,for purposes of subparagraph 7,c71 individuals shall be treated as specified family members if such individuals would be treated as one person under the rules of section #acfa7;c77#a7 if the applicable date 7within the meaning of subparagraph 7,b77iii7 thereof7 were the latest of-- 7i7 the date of the establishment of the partnership1 7ii7 the earliest date that the common ancestor holds a capital or profits interest in the partnership1 or 7iii7 the date of the enactment of this section4 7e7 ,other income and gain in connection with investment management services 7#a7 ,in general ,if-- 7,a7 a person performs 7directly or indirectly7 investment management services for any investment entity1 7,b7 such person holds 7directly or indirectly7 a disqualified interest with respect to such entity1 and 7,c7 the value of such interest 7or payments thereunder7 is substantially related to the amount of income or gain 7whether or not realized7 from the assets with respect to which the investment management services are performed1 any income or gain with respect to such interest shall be treated as ordinary income4 ,rules similar to the rules of subsections 7a77#e7 and 7d7 shall apply for purposes of this subsection4 7#b7 ,definitions ,for purposes of this subsection-- 7,a7 ,disqualified interest 7i7 ,in general ,the term disqualified interest means1 with respect to any investment entity-- 7,i7 any interest in such entity other than indebtedness1 7,,ii7 convertible or contingent debt of such entity1 7,,iii7 any option or other right to acquire property described in subclause 7,i7 or 7,,ii71 and 7,,iv7 any derivative instrument entered into 7directly or indirectly7 with such entity or any investor in such entity4 7ii7 ,exceptions ,such term shall not include-- 7,i7 a partnership interest1 7,,ii7 except as provided by the ,secretary1 any interest in a taxable corporation1 and 7,,iii7 except as provided by the ,secretary1 stock in an ,s corporation4 7,b7 ,taxable corporation ,the term taxable corporation means-- 7i7 a domestic ,c corporation1 or 7ii7 a foreign corporation substantially all of the income of which is-- 7,i7 effectively connected with the conduct of a trade or business in the ,united ,states1 or 7,,ii7 subject to a comprehensive foreign income tax 7as defined in section #deg;,a7d77#b774 7,c7 ,investment management services ,the term investment management services means a substantial quantity of any of the services described in subsection 7c77#b74 7,d7 ,investment entity ,the term investment entity means any entity which1 if it were a partnership1 would be an investment partnership4 7f7 ,exception for domestic ,c corporations ,except as otherwise provided by the ,secretary1 in the case of a domestic ,c corporation-- 7#a7 subsections 7a7 and 7b7 shall not apply to any item allocated to such corporation with respect to any investment services partnership interest 7or to any gain or loss with respect to the disposition of such an interest71 and 7#b7 subsection 7e7 shall not apply4 7g7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as is necessary or appropriate to carry out the purposes of this section1 including regulations or other guidance to-- 7#a7 require such reporting and recordkeeping by any person in such manner and at such time as the ,secretary may prescribe for purposes of enabling the partnership to meet the requirements of section #fjca with respect to any item described in section #gjb7;a77#i71 7#b7 provide modifications to the application of this section 7including treating related persons as not related to one another7 to the extent such modification is consistent with the purposes of this section1 7#c7 prevent the avoidance of the purposes of this section 7including through the use of qualified family partnerships71 and 7#d7 coordinate this section with the other provisions of this title4 7h7 ,cross reference ,for #dj-percent penalty on certain underpayments due to the avoidance of this section1 see section #fffb4 4 7b7 ,application of section #gea to indirect dispositions of investment services partnership interests 7#a7 ,in general ,subsection 7a7 of section #gea is amended by striking or at the end of paragraph 7#a71 by inserting or at the end of paragraph 7#b71 and by inserting after paragraph 7#b7 the following new paragraph3 7#c7 investment services partnership interests held by the partnership1 4 7#b7 ,certain distributions treated as sales or exchanges ,subparagraph 7,a7 of section #gea7;b77#a7 is amended by striking or at the end of clause 7i71 by inserting or at the end of clause 7ii71 and by inserting after clause 7ii7 the following new clause3 7iii7 investment services partnership interests held by the partnership1 4 7#c7 ,application of special rules in the case of tiered partnerships ,subsection 7f7 of section #gea is amended-- 7,a7 by striking or at the end of paragraph 7#a71 by inserting or at the end of paragraph 7#b71 and by inserting after paragraph 7#b7 the following new paragraph3 7#c7 an investment services partnership interest held by the partnership1 1 and 7,b7 by striking partner4 and inserting partner 7other than a partnership in which it holds an investment services partnership interest744 7#d7 ,investment services partnership interests2 qualified capital interests ,section #gea is amended by adding at the end the following new subsection3 7g7 ,investment services partnership interests ,for purposes of this section-- 7#a7 ,in general ,the term investment services partnership interest has the meaning given such term by section #gaj7;c74 7#b7 ,adjustments for qualified capital interests ,the amount to which subsection 7a7 applies by reason of paragraph 7#c7 thereof shall not include so much of such amount as is attributable to any portion of the investment services partnership interest which is a qualified capital interest 7determined under rules similar to the rules of section #gaj7;d774 7#c7 ,exception for publicly traded partnerships ,except as otherwise provided by the ,secretary1 in the case of an exchange of an interest in a publicly traded partnership 7as defined in section #ggjd7 to which subsection 7a7 applies-- 7,a7 this section shall be applied without regard to subsections 7a77#c71 7b77#a77;,a77iii71 and 7f77#c71 and 7,b7 such partnership shall be treated as owning its proportionate share of the property of any other partnership in which it is a partner4 7#d7 ,recognition of gains ,any gain with respect to which subsection 7a7 applies by reason of paragraph 7#c7 thereof shall be recognized notwithstanding any other provision of this title4 7#e7 ,coordination with inventory items ,an investment services partnership interest held by the partnership shall not be treated as an inventory item of the partnership4 7#f7 ,prevention of double counting ,under regulations or other guidance prescribed by the ,secretary1 subsection 7a77#c7 shall not apply with respect to any amount to which section #gaj applies4 7#g7 ,valuation methods ,the ,secretary shall prescribe regulations or other guidance which provide the acceptable methods for valuing investment services partnership interests for purposes of this section4 4 7c7 ,treatment for purposes of section #ggjd ,subsection 7d7 of section #ggjd is amended by adding at the end the following new paragraph3 7#f7 ,income from certain carried interests not qualified 7,a7 ,in general ,specified carried interest income shall not be treated as qualifying income4 7,b7 ,specified carried interest income ,for purposes of this paragraph-- 7i7 ,in general ,the term specified carried interest income means-- 7,i7 any item of income or gain allocated to an investment services partnership interest 7as defined in section #gaj7;c77 held by the partnership1 7,,ii7 any gain on the disposition of an investment services partnership interest 7as so defined7 or a partnership interest to which 7in the hands of the partnership7 section #gea applies1 and 7,,iii7 any income or gain taken into account by the partnership under subsection 7b77#d7 or 7e7 of section #gaj4 7ii7 ,exception for qualified capital interests ,a rule similar to the rule of section #gaj7;d7 shall apply for purposes of clause 7i74 7,c7 ,coordination with other provisions ,subparagraph 7,a7 shall not apply to any item described in paragraph 7#a77;,e7 7or so much of paragraph 7#a77;,f7 as relates to paragraph 7#a77;,e774 7,d7 ,special rules for certain partnerships 7i7 ,certain partnerships owned by real estate investment trusts ,subparagraph 7,a7 shall not apply in the case of a partnership which meets each of the following requirements3 7,i7 ,such partnership is treated as publicly traded under this section solely by reason of interests in such partnership being convertible into interests in a real estate investment trust which is publicly traded4 7,,ii7 ,fifty percent or more of the capital and profits interests of such partnership are owned1 directly or indirectly1 at all times during the taxable year by such real estate investment trust 7determined with the application of section #bfg7;c774 7,,iii7 ,such partnership meets the requirements of paragraphs 7#b71 7#c71 and 7#d7 of section #hef7;c74 7ii7 ,certain partnerships owning other publicly traded partnerships ,subparagraph 7,a7 shall not apply in the case of a partnership which meets each of the following requirements3 7,i7 ,substantially all of the assets of such partnership consist of interests in one or more publicly traded partnerships 7determined without regard to subsection 7b77#b774 7,,ii7 ,substantially all of the income of such partnership is ordinary income or section #abca gain 7as defined in section #abca7;a77#c774 7,e7 ,transitional rule ,subparagraph 7,a7 shall not apply to any taxable year of the partnership beginning before the date which is #aj years after the date of the enactment of this paragraph4 4 7d7 ,imposition of penalty on underpayments 7#a7 ,in general ,subsection 7b7 of section #fffb is amended by inserting after paragraph 7#g7 the following new paragraph3 7#h7 ,the application of section #gaj7;e7 or the regulations or other guidance prescribed under section #gaj7;g7 to prevent the avoidance of the purposes of section #gaj4 4 7#b7 ,amount of penalty 7,a7 ,in general ,section #fffb is amended by adding at the end the following new subsection3 7k7 ,increase in penalty in case of property transferred for investment management services ,in the case of any portion of an underpayment to which this section applies by reason of subsection 7b77#h71 subsection 7a7 shall be applied with respect to such portion by substituting #dj percent for #bj percent4 4 7,b7 ,conforming amendment ,subparagraph 7,b7 of section #fffb;,a7e77#b7 is amended by striking or 7i7 and inserting 1 7i71 or 7k74 7#c7 ,special rules for application of reasonable cause exception ,subsection 7c7 of section #fffd is amended-- 7,a7 by redesignating paragraphs 7#c7 and 7#d7 as paragraphs 7#d7 and 7#e71 respectively2 7,b7 by striking paragraph 7#c7 in paragraph 7#e77;,a71 as so redesignated1 and inserting paragraph 7#d72 and 7,c7 by inserting after paragraph 7#b7 the following new paragraph3 7#c7 ,special rule for underpayments attributable to investment management services 7,a7 ,in general ,paragraph 7#a7 shall not apply to any portion of an underpayment to which section #fffb applies by reason of subsection 7b77#h7 unless-- 7i7 the relevant facts affecting the tax treatment of the item are adequately disclosed1 7ii7 there is or was substantial authority for such treatment1 and 7iii7 the taxpayer reasonably believed that such treatment was more likely than not the proper treatment4 7,b7 ,rules relating to reasonable belief ,rules similar to the rules of subsection 7d77#c7 shall apply for purposes of subparagraph 7,a77iii74 4 7e7 ,income and loss from investment services partnership interests taken into account in determining net earnings from self-,employment 7#a7 ,internal ,revenue ,code 7,a7 ,in general ,section #adjb7;a7 is amended by striking and at the end of paragraph 7#af71 by striking the period at the end of paragraph 7#ag7 and inserting 2 and1 and by inserting after paragraph 7#ag7 the following new paragraph3 7#ah7 notwithstanding the preceding provisions of this subsection1 in the case of any individual engaged in the trade or business of providing services described in section #gaj7;c77#b7 with respect to any entity1 investment services partnership income or loss 7as defined in subsection 7m77 of such individual with respect to such entity shall be taken into account in determining the net earnings from self-employment of such individual4 4 7,b7 ,investment services partnership income or loss ,section #adjb is amended by adding at the end the following new subsection3 7m7 ,investment services partnership income or loss ,for purposes of subsection 7a7-- 7#a7 ,in general ,the term investment services partnership income or loss means1 with respect to any investment services partnership interest 7as defined in section #gaj7;c77 or disqualified interest 7as defined in section #gaj7;e771 the net of-- 7,a7 the amounts treated as ordinary income or ordinary loss under subsections 7b7 and 7e7 of section #gaj with respect to such interest1 7,b7 all items of income1 gain1 loss1 and deduction allocated to such interest1 and 7,c7 the amounts treated as realized from the sale or exchange of property other than a capital asset under section #gea with respect to such interest4 7#b7 ,exception for qualified capital interests ,a rule similar to the rule of section #gaj7;d7 shall apply for purposes of applying paragraph 7#a77;,b74 4 7#b7 ,social ,security ,act ,section #baa7;a7 of the ,social ,security ,act is amended by striking and at the end of paragraph 7#ae71 by striking the period at the end of paragraph 7#af7 and inserting 2 and1 and by inserting after paragraph 7#af7 the following new paragraph3 7#ag7 ,notwithstanding the preceding provisions of this subsection1 in the case of any individual engaged in the trade or business of providing services described in section #gaj7;c77#b7 of the ,internal ,revenue ,code of #aihf with respect to any entity1 investment services partnership income or loss 7as defined in section #adjb7m7 of such ,code7 shall be taken into account in determining the net earnings from self-employment of such individual4 4 7f7 ,separate accounting by partner ,section #gjb7;a7 is amended by striking and at the end of paragraph 7#g71 by striking the period at the end of paragraph 7#h7 and inserting 1 and1 and by inserting after paragraph 7#h7 the following3 7#i7 any amount treated as ordinary income or loss under subsection 7a71 7b71 or 7e7 of section #gaj4 4 7g7 ,conforming amendments 7#a7 ,subsection 7d7 of section #gca is amended by inserting section #gaj7;b77#d7 7relating to distributions of partnership property71 after to the extent otherwise provided by4 7#b7 ,section #gda is amended by inserting or section #gaj 7relating to special rules for partners providing investment management services to partnerships7 before the period at the end4 7#c7 ,the table of sections for part ,i of subchapter ,k of chapter #a is amended by adding at the end the following new item3 ,sec4 #gaj4 ,special rules for partners providing investment management services to partnerships4 4 7h7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to taxable years ending after the date of the enactment of this ,act4 7#b7 ,partnership taxable years which include effective date ,in applying section #gaj7;a7 of the ,internal ,revenue ,code of #aihf 7as added by this section7 in the case of any partnership taxable year which includes the date of the enactment of this ,act1 the amount of the net capital gain referred to in such section shall be treated as being the lesser of the net capital gain for the entire partnership taxable year or the net capital gain determined by only taking into account items attributable to the portion of the partnership taxable year which is after such date4 7#c7 ,dispositions of partnership interests 7,a7 ,in general ,section #gaj7;b7 of such ,code 7as added by this section7 shall apply to dispositions and distributions after the date of the enactment of this ,act4 7,b7 ,indirect dispositions ,the amendments made by subsection 7b7 shall apply to transactions after the date of the enactment of this ,act4 7#d7 ,other income and gain in connection with investment management services ,section #gaj7;e7 of such ,code 7as added by this section7 shall take effect on the date of the enactment of this ,act4 #ejf4 ,consistent treatment of stock options by corporations 7a7 ,consistent treatment for wage deduction 7#a7 ,in general ,section #hc7;h7 is amended-- 7,a7 by striking ,in the case of and inserting3 7#a7 ,in general ,in the case of 1 and 7,b7 by adding at the end the following new paragraph3 7#b7 ,stock options ,in the case of property transferred to a person in connection with a stock option1 any deduction related to such stock option shall be allowed only under section #afb7q7 and paragraph 7#a7 shall not apply4 4 7#b7 ,treatment of compensation paid with stock options ,section #afb is amended by redesignating subsection 7q7 as subsection 7r7 and by inserting after subsection 7p7 the following new subsection3 7q7 ,treatment of compensation paid with stock options 7#a7 ,in general ,in the case of compensation for personal services that is paid with stock options1 the deduction under subsection 7a77#a7 shall not exceed the amount the taxpayer has treated as compensation cost with respect to such stock options for the purpose of ascertaining income1 profit1 or loss in a report or statement to shareholders1 partners1 or other proprietors 7or to beneficiaries71 and shall be taken into account in the same period that such compensation cost is recognized for such purpose4 7#b7 ,special rules for controlled groups ,the ,secretary may prescribe rules for the application of paragraph 7#a7 in cases where the stock option is granted by-- 7,a7 a parent or subsidiary corporation 7within the meaning of section #dbd7 of the taxpayer1 or 7,b7 another corporation4 4 7b7 ,consistent treatment for research tax credit ,section #da7;b77#b77;,d7 is amended by inserting at the end the following new clause3 7iv7 ,special rule for stock options ,the amount which may be treated as wages for any taxable year in connection with the issuance of a stock option shall not exceed the amount allowed for such taxable year as a compensation deduction under section #afb7q7 with respect to such stock option4 4 7c7 ,application of amendments ,the amendments made by this section shall apply to stock options exercised after the date of the enactment of this ,act1 except that-- 7#a7 such amendments shall not apply to stock options that were granted before such date and that vested in taxable periods beginning on or before ,june #ae1 #bjje1 7#b7 for stock options that were granted before such date of enactment and vested during taxable periods beginning after ,june #ae1 #bjje1 and ending before such date of enactment1 a deduction under section #afb7q7 of the ,internal ,revenue ,code of #aihf 7as added by subsection 7a77#b77 shall be allowed in the first taxable period of the taxpayer that ends after such date of enactment1 7#c7 for public entities reporting as small business issuers and for nonpublic entities required to file public reports of financial condition1 paragraphs 7#a7 and 7#b7 shall be applied by substituting ,december #ae1 #bjje for ,june #ae1 #bjje1 and 7#d7 no deduction shall be allowed under section #hc7;h7 or section #afb7q7 of such ,code with respect to any stock option the vesting date of which is changed to accelerate the time at which the option may be exercised in order to avoid the applicability of such amendments4 #ejg4 ,application of executive pay deduction limit 7a7 ,in general ,subparagraph 7,b7 of section #afb7m77#d71 as redesignated by paragraphs 7#a77;,a7 and 7#b77;,a7 of section #ejc7;b7 of this ,act1 is amended to read as follows3 7,b7 ,stock option compensation ,the term applicable employee remuneration shall include any compensation deducted under subsection 7q74 4 7b7 ,effective date ,the amendment made by this section shall apply to stock options exercised or granted after the date of the enactment of this ,act4 #ejh4 ,modifications to rules relating to inverted corporations 7a7 ,in general ,subsection 7b7 of section #ghgd of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7b7 ,inverted corporations treated as domestic corporations 7#a7 ,in general ,notwithstanding section #ggja7;a77#d71 a foreign corporation shall be treated for purposes of this title as a domestic corporation if-- 7,a7 such corporation would be a surrogate foreign corporation if subsection 7a77#b7 were applied by substituting #hj percent for #fj percent1 or 7,b7 such corporation is an inverted domestic corporation4 7#b7 ,inverted domestic corporation ,for purposes of this subsection1 a foreign corporation shall be treated as an inverted domestic corporation if1 pursuant to a plan 7or a series of related transactions7-- 7,a7 the entity completes after ,february #aj1 #bjaf1 the direct or indirect acquisition of-- 7i7 substantially all of the properties held directly or indirectly by a domestic corporation1 or 7ii7 substantially all of the assets of1 or substantially all of the properties constituting a trade or business of1 a domestic partnership1 and 7,b7 after the acquisition1 more than #ej percent of the stock 7by vote or value7 of the entity is held-- 7i7 in the case of an acquisition with respect to a domestic corporation1 by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation1 or 7ii7 in the case of an acquisition with respect to a domestic partnership1 by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership4 7#c7 ,exception for corporations with substantial business activities in foreign country of organization ,a foreign corporation described in paragraph 7#b7 shall not be treated as an inverted domestic corporation if after the acquisition the expanded affiliated group which includes the entity has substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group4 ,for purposes of subsection 7a77#b77;,b77iii7 and the preceding sentence1 the term substantial business activities shall have the meaning given such term under regulations in effect on ,february #aj1 #bjaf1 except that the ,secretary may issue regulations increasing the threshold percent in any of the tests under such regulations for determining if business activities constitute substantial business activities for purposes of this paragraph4 4 7b7 ,conforming amendments 7#a7 ,clause 7i7 of section #ghgd7;a77#b77;,b7 of such ,code is amended by striking after ,march #d1 #bjjc1 and inserting after ,march #d1 #bjjc1 and before ,february #aa1 #bjaf14 7#b7 ,subsection 7c7 of section #ghgd of such ,code is amended-- 7,a7 in paragraph 7#b7-- 7i7 by striking subsection 7a77#b77;,b77ii7 and inserting subsections 7a77#b77;,b77ii7 and 7b77#b77;,b71 and 7ii7 by inserting or 7b77#b77;,a7 after 7a77#b77;,b77i7 in subparagraph 7,b71 7,b7 in paragraph 7#c71 by inserting or 7b77#b77;,b71 as the case may be1 after 7a77#b77;,b77ii71 7,c7 in paragraph 7#e71 by striking subsection 7a77#b77;,b77ii7 and inserting subsections 7a77#b77;,b77ii7 and 7b77#b77;,b71 and 7,d7 in paragraph 7#f71 by inserting or inverted domestic corporation1 as the case may be1 after surrogate foreign corporation4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years ending after ,february #aj1 #bjaf4 #eji4 ,modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers 7a7 ,in general ,section #ija of the ,internal ,revenue ,code of #aihf is amended by redesignating subsection 7n7 as subsection 7o7 and by inserting after subsection 7m7 the following new subsection3 7n7 ,special rules relating to major integrated oil companies which are dual capacity taxpayers 7#a7 ,general rule ,notwithstanding any other provision of this chapter1 any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company 7within the meaning of section #afg7;h77#e77 to a foreign country or possession of the ,united ,states for any period shall not be considered a tax-- 7,a7 if1 for such period1 the foreign country or possession does not impose a generally applicable income tax1 or 7,b7 to the extent such amount exceeds the amount 7determined in accordance with regulations7 which-- 7i7 is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession1 or 7ii7 would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer4 ,nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph 7,b74 7#b7 ,dual capacity taxpayer ,for purposes of this subsection1 the term dual capacity taxpayer means1 with respect to any foreign country or possession of the ,united ,states1 a person who-- 7,a7 is subject to a levy of such country or possession1 and 7,b7 receives 7or will receive7 directly or indirectly a specific economic benefit 7as determined in accordance with regulations7 from such country or possession4 7#c7 ,generally applicable income tax ,for purposes of this subsection-- 7,a7 ,in general ,the term generally applicable income tax means an income tax 7or a series of income taxes7 which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession4 7,b7 ,exceptions ,such term shall not include a tax unless it has substantial application1 by its terms and in practice1 to-- 7i7 persons who are not dual capacity taxpayers1 and 7ii7 persons who are citizens or residents of the foreign country or possession4 4 7b7 ,effective ,date 7#a7 ,in general ,the amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this ,act4 7#b7 ,contrary treaty obligations upheld ,the amendments made by this section shall not apply to the extent contrary to any treaty obligation of the ,united ,states4 #eaj4 ,limitation on section #aii deduction attributable to oil1 natural gas1 or primary products thereof 7a7 ,denial of deduction ,paragraph 7#d7 of section #aii7;c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,e7 ,special rule for certain oil and gas income ,in the case of any taxpayer who is a major integrated oil company 7within the meaning of section #afg7;h77#e77 for the taxable year1 the term domestic production gross receipts shall not include gross receipts from the production1 refining1 processing1 transportation1 or distribution of oil1 gas1 or any primary product 7within the meaning of subsection 7d77#i77 thereof4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #eaa4 ,limitation on deduction for intangible drilling and development costs2 amortization of disallowed amounts 7a7 ,in general ,section #bfc7;c7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7c7 ,intangible drilling and development costs in the case of oil and gas wells and geothermal wells 7#a7 ,in general ,notwithstanding subsection 7a71 and except as provided in subsection 7i71 regulations shall be prescribed by the ,secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the ,congress in ,house ,concurrent ,resolution #ej1 ,seventy-ninth ,congress4 ,such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit 7as defined in section #fac7;e77#b77 to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells4 ,this subsection shall not apply with respect to any costs to which any deduction is allowed under section #ei7;e7 or #bia4 7#b7 ,exclusion 7,a7 ,in general ,this subsection shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company 7within the meaning of section #afg7;h77#e774 7,b7 ,amortization of amounts not allowable as deductions under subparagraph 7,a7 ,the amount not allowable as a deduction for any taxable year by reason of subparagraph 7,a7 shall be allowable as a deduction ratably over the #fj-month period beginning with the month in which the costs are paid or incurred4 ,for purposes of section #abed1 any deduction under this subparagraph shall be treated as a deduction under this subsection4 4 7b7 ,effective date ,the amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after ,december #ca1 #bjae4 #eab4 ,limitation on percentage depletion allowance for oil and gas wells 7a7 ,in general ,section #fac;,a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,application with respect to major integrated oil companies ,in the case of any taxable year in which the taxpayer is a major integrated oil company 7within the meaning of section #afg7;h77#e771 the allowance for percentage depletion shall be zero4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #eac4 ,limitation on deduction for tertiary injectants 7a7 ,in general ,section #aic of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7d7 ,application with respect to major integrated oil companies 7#a7 ,in general ,this section shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company 7within the meaning of section #afg7;h77#e774 7#b7 ,amortization of amounts not allowable as deductions under paragraph 7#a7 ,the amount not allowable as a deduction for any taxable year by reason of paragraph 7#a7 shall be allowable as a deduction ratably over the #fj-month period beginning with the month in which the costs are paid or incurred4 4 7b7 ,effective date ,the amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after ,december #ca1 #bjae4 #ead4 ,modification of definition of major integrated oil company 7a7 ,in general ,paragraph 7#e7 of section #afg7;h7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,c7 ,certain successors in interest ,for purposes of this paragraph1 the term major integrated oil company includes any successor in interest of a company that was described in subparagraph 7,b7 in any taxable year1 if such successor controls more than #ej percent of the crude oil production or natural gas production of such company4 4 7b7 ,conforming amendments 7#a7 ,in general ,subparagraph 7,b7 of section #afg7;h77#e7 of the ,internal ,revenue ,code of #aihf is amended by inserting except as provided in subparagraph 7,c71 after ,for purposes of this paragraph14 7#b7 ,taxable years tested ,clause 7iii7 of section #afg7;h77#e77;,b7 of such ,code is amended-- 7,a7 by striking does not apply by reason of paragraph 7#d7 of section #fac;,a7d7 and inserting did not apply by reason of paragraph 7#d7 of section #fac;,a7d7 for any taxable year after #bjjd1 and 7,b7 by striking does not apply in subclause 7,,ii7 and inserting did not apply for the taxable year4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #eae4 ,repeal of outer ,continental ,shelf deep water and deep gas royalty relief 7a7 ,in general ,sections #cdd and #cde of the ,energy ,policy ,act of #bjje 7#db ,u4,s4,c4 #aeijd1 #aeije7 are repealed4 7b7 ,administration ,the ,secretary of the ,interior shall not be required to provide for royalty relief in the lease sale terms beginning with the first lease sale held on or after the date of enactment of this ,act for which a final notice of sale has not been published4 #eaf4 ,coordination of ,american ,opportunity ,credit and ,lifetime ,learning ,credit with ,pell ,grants not used for qualified tuition and related expenses 7a7 ,in general ,section #be;,a7g77#b7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7#b7 ,adjustment for certain scholarships1 etc 7,a7 ,in general ,the amount of qualified tuition and related expenses otherwise taken into account under subsection 7a7 with respect to an individual for an academic period shall be reduced 7before the application of subsections 7b71 7c71 and 7d77 by the sum of any amounts paid for the benefit of such individual which are allocable to such period as-- 7i7 a qualified scholarship which is excludable from gross income under section #aag1 7ii7 an educational assistance allowance under chapter #cj1 #ca1 #cb1 #cd1 or #ce of title #ch1 ,united ,states ,code1 or under chapter #afjf of title #aj1 ,united ,states ,code1 and 7iii7 a payment 7other than a gift1 bequest1 devise1 or inheritance within the meaning of section #ajb7;a77 for such individual's educational expenses1 or attributable to such individual's enrollment at an eligible educational institution1 which is excludable from gross income under any law of the ,united ,states4 7,b7 ,coordination with pell grants not used for qualified tuition and related expenses ,for purposes of subparagraph 7,a71 the amount of any ,federal ,pell ,grant under section #dja of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a7 shall be reduced 7but not below zero7 by the amount of expenses 7other than qualified tuition and related expenses7 which are taken into account in determining the cost of attendance 7as defined in section #dgb of the ,higher ,education ,act of #aife1 as in effect on the date of the enactment of this subparagraph7 of such individual at an eligible educational institution for the academic period for which the credit under this section is being determined4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #eag4 ,expansion of ,pell ,grant exclusion from gross income 7a7 ,in general ,paragraph 7#a7 of section #aag7;b7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking the period at the end and inserting 1 or1 7#b7 by striking received by an individual as a scholarship and inserting the following3 received by an individual-- 7,a7 as a scholarship 1 and 7#c7 by adding at the end the following new subparagraph3 7,b7 as a ,federal ,pell ,grant under section #dja of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a74 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4