,,ii ,cal5d> ,no4 #bff #aae? ,,congress #a/ ,session ,h4 ,r4 #a ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,novemb] #bg1 #bjag,receiv$2 read ! fir/ "t ,novemb] #bh1 #bjag,read ! second "t & plac$ on ! cal5d> ,,an ,,act ,to provide = reconciliation pursuant to titles ,,ii & ,v ( ! concurr5t resolution on ! budget = fiscal ye> #bjah4 #a4 ,%ort title2 etc 7a7 ,%ort title ,?is ,act may be cit$ z ! ,tax ,cuts & ,jobs ,act4 7b7 ,am5dm5t ( #aihf ,code ,except z o!rwise expressly provid$1 :5ev] 9 ?is ,act an am5dm5t or repeal is express$ 9 t]ms ( an am5dm5t to1 or repeal (1 a section or o!r provision1 ! ref]5ce %all be consid]$ to be made to a section or o!r provision ( ! ,int]nal ,rev5ue ,code ( #aihf4 7c7 ,table ( cont5ts ,! table ( cont5ts = ?is ,act is z foll[s3 ,sec4 #a4 ,%ort title2 etc4 ,title ,i--,tax re=m = individuals ,subtitle ,a--,simplification & re=m ( rates1 /&>d d$uction1 & exemptions ,sec4 #ajja4 ,r$uction & simplification ( individual income tax rates4 ,sec4 #ajjb4 ,enhancem5t ( /&>d d$uction4 ,sec4 #ajjc4 ,repeal ( d$uction = p]sonal exemptions4 ,sec4 #ajjd4 ,maximum rate on bus9ess income ( individuals4 ,sec4 #ajje4 ,con=m+ am5dm5ts relat$ to simplification ( individual income tax rates4 ,subtitle ,b--,simplification & re=m ( family & individual tax cr$its ,sec4 #aaja4 ,enhancem5t ( *ild tax cr$it & new family tax cr$it4 ,sec4 #aajb4 ,repeal ( nonrefundable cr$its4 ,sec4 #aajc4 ,refundable cr$it program integrity4 ,sec4 #aajd4 ,proc$ures to r$uce improp] claims ( e>n$ income cr$it4 ,sec4 #aaje4 ,c]ta9 income disall[$ = purposes ( ! e>n$ income tax cr$it4 ,subtitle ,c--,simplification & re=m ( education inc5tives ,sec4 #abja4 ,am]ican opportunity tax cr$it4 ,sec4 #abjb4 ,consolidation ( education sav+s rules4 ,sec4 #abjc4 ,re=ms to dis*>ge ( c]ta9 /ud5t loan indebt$ness4 ,sec4 #abjd4 ,repeal ( o!r provisions relat+ to education4 ,sec4 #abje4 ,rollov]s betwe5 qualifi$ tuition programs & qualifi$ ,,able programs4 ,subtitle ,d--,simplification & re=m ( d$uctions ,sec4 #acja4 ,repeal ( ov]all limitation on itemiz$ d$uctions4 ,sec4 #acjb4 ,mortgage int]e/4 ,sec4 #acjc4 ,repeal ( d$uction = c]ta9 taxes n paid or accru$ 9 a trade or bus9ess4 ,sec4 #acjd4 ,repeal ( d$uction = p]sonal casualty losses4 ,sec4 #acje4 ,limitation on wag]+ losses4 ,sec4 #acjf4 ,*>itable contributions4 ,sec4 #acjg4 ,repeal ( d$uction = tax prep>ation exp5ses4 ,sec4 #acjh4 ,repeal ( m$ical exp5se d$uction4 ,sec4 #acji4 ,repeal ( d$uction = alimony paym5ts4 ,sec4 #acaj4 ,repeal ( d$uction = mov+ exp5ses4 ,sec4 #acaa4 ,t]m9ation ( d$uction & exclusions = contributions to m$ical sav+s acc\nts4 ,sec4 #acab4 ,d5ial ( d$uction = exp5ses attributable to ! trade or bus9ess ( be+ an employee4 ,subtitle ,e--,simplification & re=m ( exclusions & taxable comp5sation ,sec4 #adja4 ,limitation on exclusion = employ]-provid$ h\s+4 ,sec4 #adjb4 ,exclusion ( ga9 f sale ( a pr9cipal resid5ce4 ,sec4 #adjc4 ,repeal ( exclusion1 etc41 = employee a*ievem5t aw>ds4 ,sec4 #adjd4 ,sunset ( exclusion = dep5d5t c>e assi/ance programs4 ,sec4 #adje4 ,repeal ( exclusion = qualifi$ mov+ exp5se reimbursem5t4 ,sec4 #adjf4 ,repeal ( exclusion = adoption assi/ance programs4 ,subtitle ,f--,simplification & re=m ( sav+s1 p5sions1 retirem5t ,sec4 #aeja4 ,repeal ( special rule p]mitt+ re*>act]ization ( ,ro? ,,ira contributions z traditional ,,ira contributions4 ,sec4 #aejb4 ,r$uction 9 m9imum age = all[able 9-s]vice di/ributions4 ,sec4 #aejc4 ,modification ( rules gov]n+ h>d%ip di/ributions4 ,sec4 #aejd4 ,modification ( rules relat+ to h>d%ip )drawals f ca% or def]r$ arrangem5ts4 ,sec4 #aeje4 ,ext5d$ rollov] p]iod = ! rollov] ( plan loan (fset am\nts 9 c]ta9 cases4 ,sec4 #aejf4 ,modification ( nondiscrim9ation rules to protect old]1 long] s]vice p>ticipants4 ,subtitle ,g--,e/ate1 gift1 & g5]ation-skipp+ transf] taxes ,sec4 #afja4 ,increase 9 cr$it aga9/ e/ate1 gift1 & g5]ation-skipp+ transf] tax4 ,sec4 #afjb4 ,repeal ( e/ate & g5]ation-skipp+ transf] taxes4 ,title ,,ii--,alt]native ,m9imum ,tax ,repeal ,sec4 #bjja4 ,repeal ( alt]native m9imum tax4 ,title ,,iii--,bus9ess tax re=m ,subtitle ,a--,tax rates ,sec4 #cjja4 ,r$uction 9 corporate tax rate4 ,subtitle ,b--,co/ recov]y ,sec4 #caja4 ,increas$ exp5s+4 ,subtitle ,c--,small bus9ess re=ms ,sec4 #cbja4 ,expansion ( section #agi exp5s+4 ,sec4 #cbjb4 ,small bus9ess acc\nt+ me?od re=m & simplification4 ,sec4 #cbjc4 ,small bus9ess exception f limitation on d$uction ( bus9ess int]e/4 ,sec4 #cbjd4 ,modification ( treatm5t ( ,s corporation conv]sions to ,c corporations4 ,subtitle ,d--,re=m ( bus9ess-relat$ exclusions1 d$uctions1 etc4 ,sec4 #ccja4 ,int]e/4 ,sec4 #ccjb4 ,modification ( net op]at+ loss d$uction4 ,sec4 #ccjc4 ,l-k9d ex*anges ( real prop]ty4 ,sec4 #ccjd4 ,revision ( treatm5t ( contributions to capital4 ,sec4 #ccje4 ,repeal ( d$uction = local lobby+ exp5ses4 ,sec4 #ccjf4 ,repeal ( d$uction = income attributable to dome/ic production activities4 ,sec4 #ccjg4 ,ent]ta9m5t1 etc4 exp5ses4 ,sec4 #ccjh4 ,unrelat$ bus9ess taxable income increas$ by am\nt ( c]ta9 fr+e b5efit exp5ses = :i* d$uction is disall[$4 ,sec4 #ccji4 ,limitation on d$uction = ,,fdic premiums4 ,sec4 #ccaj4 ,repeal ( rollov] ( publicly trad$ securities ga9 into specializ$ small bus9ess inve/m5t companies4 ,sec4 #ccaa4 ,c]ta9 self-creat$ prop]ty n treat$ z a capital asset4 ,sec4 #ccab4 ,repeal ( special rule = sale or ex*ange ( pat5ts4 ,sec4 #ccac4 ,repeal ( te*nical t]m9ation ( p>tn]%ips4 ,sec4 #ccad4 ,re*>act]ization ( c]ta9 ga9s 9 ! case ( p>tn]%ip pr(its int]e/s held 9 connection ) p]=mance ( inve/m5t s]vices4 ,sec4 #ccae4 ,amortization ( rese>* & exp]im5tal exp5ditures4 ,sec4 #ccaf4 ,uni=m treatm5t ( exp5ses 9 cont+5cy fee cases4 ,subtitle ,e--,re=m ( bus9ess cr$its ,sec4 #cdja4 ,repeal ( cr$it = cl9ical te/+ exp5ses = c]ta9 drugs = r>e diseases or conditions4 ,sec4 #cdjb4 ,repeal ( employ]-provid$ *ild c>e cr$it4 ,sec4 #cdjc4 ,repeal ( rehabilitation cr$it4 ,sec4 #cdjd4 ,repeal ( "w opportunity tax cr$it4 ,sec4 #cdje4 ,repeal ( d$uction = c]ta9 unus$ bus9ess cr$its4 ,sec4 #cdjf4 ,t]m9ation ( new m>kets tax cr$it4 ,sec4 #cdjg4 ,repeal ( cr$it = exp5ditures to provide access to disabl$ individuals4 ,sec4 #cdjh4 ,modification ( cr$it = portion ( employ] social security taxes paid ) respect to employee tips4 ,subtitle ,f--,en]gy cr$its ,sec4 #ceja4 ,modifications to cr$it = electricity produc$ f c]ta9 r5ewable res\rces4 ,sec4 #cejb4 ,modification ( ! en]gy inve/m5t tax cr$it4 ,sec4 #cejc4 ,ext5sion & phase\t ( resid5tial en]gy effici5t prop]ty4 ,sec4 #cejd4 ,repeal ( enhanc$ oil recov]y cr$it4 ,sec4 #ceje4 ,repeal ( cr$it = produc+ oil & gas f m>g9al wells4 ,sec4 #cejf4 ,modifications ( cr$it = production f advanc$ nucle> p[] facilities4 ,subtitle ,g--,bond re=ms ,sec4 #cfja4 ,t]m9ation ( private activity bonds4 ,sec4 #cfjb4 ,repeal ( advance refund+ bonds4 ,sec4 #cfjc4 ,repeal ( tax cr$it bonds4 ,sec4 #cfjd4 ,no tax exempt bonds = pr(essional /adiums4 ,subtitle ,h--,insurance ,sec4 #cgja4 ,net op]at+ losses ( life insurance companies4 ,sec4 #cgjb4 ,repeal ( small life insurance company d$uction4 ,sec4 #cgjc4 ,surtax on life insurance company taxable income4 ,sec4 #cgjd4 ,adju/m5t = *ange 9 comput+ res]ves4 ,sec4 #cgje4 ,repeal ( special rule = di/ributions to %>ehold]s f pre-#aihd policyhold]s surplus acc\nt4 ,sec4 #cgjf4 ,modification ( proration rules = prop]ty & casualty insurance companies4 ,sec4 #cgjg4 ,modification ( disc\nt+ rules = prop]ty & casualty insurance companies4 ,sec4 #cgjh4 ,repeal ( special e/imat$ tax paym5ts4 ,subtitle ,i--,comp5sation ,sec4 #chja4 ,modification ( limitation on excessive employee remun]ation4 ,sec4 #chjb4 ,excise tax on excess tax-exempt organization executive comp5sation4 ,sec4 #chjc4 ,treatm5t ( qualifi$ equity grants4 ,title ,,iv--,taxation ( =eign income & =eign p]sons ,subtitle ,a--,e/abli%m5t ( p>ticipation exemption sy/em = taxation ( =eign income ,sec4 #djja4 ,d$uction = =eign-s\rce portion ( divid5ds receiv$ by dome/ic corporations f specifi$ #aj-p]c5t own$ =eign corporations4 ,sec4 #djjb4 ,application ( p>ticipation exemption to inve/m5ts 9 ,unit$ ,/ates prop]ty4 ,sec4 #djjc4 ,limitation on losses ) respect to specifi$ #aj-p]c5t own$ =eign corporations4 ,sec4 #djjd4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation4 ,subtitle ,b--,modifications relat$ to =eign tax cr$it sy/em ,sec4 #daja4 ,repeal ( section #ijb indirect =eign tax cr$its2 det]m9ation ( section #ifj cr$it on curr5t ye> basis4 ,sec4 #dajb4 ,s\rce ( income f sales ( inv5tory det]m9$ solely on basis ( production activities4 ,subtitle ,c--,modification ( subp>t ,f provisions ,sec4 #dbja4 ,repeal ( inclusion bas$ on )drawal ( previ\sly exclud$ subp>t ,f income f qualifi$ inve/m5t4 ,sec4 #dbjb4 ,repeal ( treatm5t ( =eign base company oil relat$ income z subp>t ,f income4 ,sec4 #dbjc4 ,inflation adju/m5t ( de m9imis exception = =eign base company income4 ,sec4 #dbjd4 ,look-?ru rule = relat$ controll$ =eign corporations made p]man5t4 ,sec4 #dbje4 ,modification ( /ock attribution rules = det]m9+ /atus z a controll$ =eign corporation4 ,sec4 #dbjf4 ,elim9ation ( requirem5t t corporation mu/ be controll$ = #cj days be=e subp>t ,f inclusions apply4 ,subtitle ,d--,prev5tion ( base erosion ,sec4 #dcja4 ,curr5t ye> inclusion by ,unit$ ,/ates %>ehold]s ) =eign high returns4 ,sec4 #dcjb4 ,limitation on d$uction ( int]e/ by dome/ic corporations :i* are memb]s ( an int]national f9ancial report+ gr\p4 ,sec4 #dcjc4 ,excise tax on c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations2 election to treat su* paym5ts z effectively connect$ income4 ,subtitle ,e--,provisions relat$ to possessions ( ! ,unit$ ,/ates ,sec4 #ddja4 ,ext5sion ( d$uction all[able ) respect to income attributable to dome/ic production activities 9 ,pu]to ,rico4 ,sec4 #ddjb4 ,ext5sion ( tempor>y increase 9 limit on cov] ov] ( rum excise taxes to ,pu]to ,rico & ! ,virg9 ,isl&s4 ,sec4 #ddjc4 ,ext5sion ( ,am]ican ,samoa economic developm5t cr$it4 ,subtitle ,f--,o!r int]national re=ms ,sec4 #deja4 ,re/riction on insurance bus9ess exception to passive =eign inve/m5t company rules4 ,title ,v--,exempt organizations ,subtitle ,a--,unrelat$ ,bus9ess ,income ,tax ,sec4 #ejja4 ,cl>ification ( unrelat$ bus9ess income tax treatm5t ( entities treat$ z exempt f taxation "u section #eja7;a74 ,sec4 #ejjb4 ,exclusion ( rese>* income limit$ to publicly available rese>*4 ,subtitle ,b--,excise ,taxes ,sec4 #eaja4 ,simplification ( excise tax on private f\ndation inve/m5t income4 ,sec4 #eajb4 ,private op]at+ f\ndation requirem5ts relat+ to op]ation ( art museum4 ,sec4 #eajc4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities4 ,sec4 #eajd4 ,exception f private f\ndation excess bus9ess hold+ tax = indep5d5tly-op]at$ philan?ropic bus9ess hold+s4 ,subtitle ,c--,requirem5ts = organizations exempt f tax ,sec4 #ebja4 #eja7;c77#c7 organizations p]mitt$ to make /atem5ts relat+ to political campaign 9 ord9>y c\rse ( activities4 ,sec4 #ebjb4 ,additional report+ requirem5ts = donor advis$ fund sponsor+ organizations4 ,i ,tax re=m = individuals ,a ,simplification & re=m ( rates1 /&>d d$uction1 & exemptions #ajja4 ,r$uction & simplification ( individual income tax rates 7a7 ,9 g5]al ,section #a is am5d$ by /rik+ subsection 7i7 & by /rik+ all t prec$es subsection 7h7 & ins]t+ ! foll[+3 #a4 ,tax impos$ 7a7 ,9 g5]al ,!re is h]eby impos$ on ! income ( e individual a tax equal to ! sum (-- 7#a7 #ab p]c5t bracket #ab p]c5t ( s mu* ( ! taxable income z does n exce$ ! #be-p]c5t bracket ?re%old am\nt1 7#b7 #be p]c5t bracket #be p]c5t ( s mu* ( ! taxable income z exce$s ! #be-p]c5t bracket ?re%old am\nt b does n exce$ ! #ce-p]c5t bracket ?re%old am\nt1 plus 7#c7 #ce p]c5t bracket #ce p]c5t ( s mu* ( taxable income z exce$s ! #ce-p]c5t bracket ?re%old am\nt b does n exce$ ! #ci4f p]c5t bracket ?re%old am\nt4 7#d7 #ci4f p]c5t bracket #ci4f p]c5t ( s mu* ( taxable income z exce$s ! #ci4f-p]c5t bracket ?re%old am\nt4 7b7 ,bracket ?re%old am\nts ,= purposes ( ?is section-- 7#a7 #be-p]c5t bracket ?re%old am\nt ,! t]m #be-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #ij1jjj1 7,b7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #fg1ejj1 7,c7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 an am\nt equal to ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,d7 9 ! case ( an e/ate or tru/1 #b1eej4 7#b7 #ce-p]c5t bracket ?re%old am\nt ,! t]m #ce-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #bfj1jjj1 7,b7 9 ! case ( a m>ri$ individual fil+ a sep>ate return1 an am\nt equal to ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,c7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 #bjj1jjj1 & 7,d7 9 ! case ( an e/ate or tru/1 #i1aej4 7#c7 #ci4f-p]c5t bracket ?re%old am\nt ,! t]m #ci4f-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #a1jjj1jjj1 7,b7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 an am\nt equal to ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,c7 9 ! case ( an e/ate or tru/1 #ab1ejj4 7c7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #bjah1 ea* doll> am\nt 9 subsections 7b7 & 7e77#c7 7o!r ?an any am\nt det]m9$ by ref]5ce to su* a doll> am\nt7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u ?is subsection = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ #bjag = #bjaf 9 p>agraph 7#b77;,a77ii74 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 7#b7 ,co/-(-liv+ adju/m5t ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! co/-(-liv+ adju/m5t = any cal5d> ye> is ! p]c5tage 7if any7 by :i*-- 7i7 ! ,c-,,cpi-,u = ! prec$+ cal5d> ye>1 exce$s 7ii7 ! normaliz$ ,,cpi = cal5d> ye> #bjaf4 7,b7 ,special rule = adju/m5ts ) a base ye> aft] #bjaf ,= purposes ( any provision :i* provides = ! sub/itution ( a ye> aft] #bjaf = #bjaf 9 subp>agraph 7,a77ii71 subp>agraph 7,a7 %all be appli$ by sub/itut+ ,c-,,cpi-,u = normaliz$ ,,cpi 9 clause 7ii74 7#c7 ,normaliz$ ,,cpi ,= purposes ( ?is subsection1 ! normaliz$ ,,cpi = any cal5d> ye> is ! product (-- 7,a7 ! ,,cpi = su* cal5d> ye>1 multipli$ by 7,b7 ! ,c-,,cpi-,u transition multiple4 7#d7 ,c-,,cpi-,u transition multiple ,= purposes ( ?is subsection1 ! t]m ,c-,,cpi-,u transition multiple means ! am\nt obta9$ by divid+-- 7,a7 ! ,c-,,cpi-,u = cal5d> ye> #bjaf1 by 7,b7 ! ,,cpi = cal5d> ye> #bjaf4 7#e7 ,c-,,cpi-,u ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,c-,,cpi-,u means ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s 7z publi%$ by ! ,bureau ( ,labor ,/ati/ics ( ! ,dep>tm5t ( ,labor74 ,! values ( ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s tak5 into acc\nt = purposes ( det]m9+ ! co/-(-liv+ adju/m5t = any cal5d> ye> "u ?is subsection %all be ! late/ values s publi%$ z ( ! date on :i* su* ,bureau publi%es ! initial value ( ! ,*a9$ ,consum] ,price ,index = ,all ,urban ,consum]s = ! mon? ( ,augu/ = ! prec$+ cal5d> ye>4 7,b7 ,det]m9ation = cal5d> ye> ,! ,c-,,cpi-,u = any cal5d> ye> is ! av]age ( ! ,c-,,cpi-,u z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 7#f7 ,,cpi ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,consum] ,price ,index means ! la/ ,consum] ,price ,index = ,all ,urban ,consum]s publi%$ by ! ,dep>tm5t ( ,labor4 ,= purposes ( ! prec$+ s5t5ce1 ! revision ( ! ,consum] ,price ,index :i* is mo/ consi/5t ) ! ,consum] ,price ,index = cal5d> ye> #aihf %all be us$4 7,b7 ,det]m9ation = cal5d> ye> ,! ,,cpi = any cal5d> ye> is ! av]age ( ! ,consum] ,price ,index z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 7d7 ,special rules = c]ta9 *ildr5 ) une>n$ income 7#a7 ,9 g5]al ,9 ! case ( any *ild to :om ?is subsection applies = any taxable ye>-- 7,a7 ! #be-p]c5t bracket ?re%old am\nt %all n be m ?an ! taxable income ( su* *ild = ! taxable ye> r$uc$ by ! net une>n$ income ( su* *ild1 & 7,b7 ! #ce-p]c5t bracket ?re%old am\nt %all n be m ?an ! sum (-- 7i7 ! taxable income ( su* *ild = ! taxable ye> r$uc$ by ! net une>n$ income ( su* *ild1 plus 7ii7 ! doll> am\nt 9 effect "u subsection 7b77#b77;,d7 = ! taxable ye>4 7,c7 ! #ci4f-p]c5t bracket ?re%old am\nt %all n be m ?an ! sum (-- 7i7 ! taxable income ( su* *ild = ! taxable ye> r$uc$ by ! net une>n$ income ( su* *ild1 plus 7ii7 ! doll> am\nt 9 effect "u subsection 7b77#c77;,c74 7#b7 ,*ild to :om subsection applies ,?is subsection %all apply to any *ild = any taxable ye> if-- 7,a7 su* *ild-- 7i7 has n atta9$ age #ah be=e ! close ( ! taxable ye>1 or 7ii7 has atta9$ age #ah be=e ! close ( ! taxable ye> & is describ$ 9 p>agraph 7#c71 7,b7 ei!r p>5t ( su* *ild is alive at ! close ( ! taxable ye>1 & 7,c7 su* *ild does n file a jo9t return = ! taxable ye>4 7#c7 ,c]ta9 *ildr5 ^: e>n$ income does n exce$ "o-half ( individual's support ,a *ild is describ$ 9 ?is p>agraph if-- 7,a7 su* *ild-- 7i7 has n atta9$ age #ai be=e ! close ( ! taxable ye>1 or 7ii7 is a /ud5t 7)9 ! mean+ ( section #ggjf7;f77#b77 :o has n atta9$ age #bd be=e ! close ( ! taxable ye>1 & 7,b7 su* *ild's e>n$ income 7z def9$ 9 section #iaa7;d77#b77 = su* taxable ye> does n exce$ "o-half ( ! am\nt ( ! individual's support 7)9 ! mean+ ( section #ggjf7;c77#a77;,d7 aft] ! application ( section #ggjf7;f77#e7 7)\t reg>d to subp>agraph 7,a7 !re(77 = su* taxable ye>4 7#d7 ,net une>n$ income ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m net une>n$ income means ! excess (-- 7i7 ! portion ( ! adju/$ gross income = ! taxable ye> :i* is n attributable to e>n$ income 7z def9$ 9 section #iaa7;d77#b771 ov] 7ii7 ! sum (-- 7,i7 ! am\nt 9 effect = ! taxable ye> "u section #fc7;c77#b77;,a7 7relat+ to limitation on /&>d d$uction 9 ! case ( c]ta9 dep5d5ts71 plus 7,,ii7 ,! great] ( ! am\nt describ$ 9 subclause 7,i7 or1 if ! *ild itemizes 8 d$uctions = ! taxable ye>1 ! am\nt ( ! itemiz$ d$uctions all[$ by ?is *apt] = ! taxable ye> :i* are directly connect$ ) ! production ( ! portion ( adju/$ gross income ref]r$ to 9 clause 7i74 7,b7 ,limitation bas$ on taxable income ,! am\nt ( ! net une>n$ income = any taxable ye> %all n exce$ ! individual's taxable income = su* taxable ye>4 7e7 ,phase\t ( #ab-p]c5t rate 7#a7 ,9 g5]al ,! am\nt ( tax impos$ by ?is section 7det]m9$ )\t reg>d to ?is subsection7 %all be increas$ by #f p]c5t ( ! excess 7if any7 (-- 7,a7 adju/$ gross income1 ov] 7,b7 ! applicable doll> am\nt4 7#b7 ,limitation ,! increase det]m9$ "u p>agraph 7#a7 ) respect to any taxpay] = any taxable ye> %all n exce$ #bg4f p]c5t ( ! less] (-- 7,a7 ! taxpay]'s taxable income = su* taxable ye>1 or 7,b7 ! #be-p]c5t bracket ?re%old am\nt 9 effect ) respect to ! taxpay] = su* taxable ye>4 7#c7 ,applicable doll> am\nt ,= purposes ( ?is subsection1 ! t]m applicable doll> am\nt means-- 7,a7 9 ! case ( a jo9t return or a surviv+ sp\se1 #a1bjj1jjj1 7,b7 9 ! case ( a m>ri$ individual fil+ a sep>ate return1 an am\nt equal to #a_/b ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,c7 9 ! case ( any o!r individual1 #a1jjj1jjj4 7#d7 ,e/ates & tru/s ,p>agraph 7#a7 %all n apply 9 ! case ( an e/ate or tru/4 4 7b7 ,application ( curr5t income tax brackets to capital ga9s brackets 7#a7 ,9 g5]al 7,a7 #j-p]c5t capital ga9s bracket ,section #a7;h77#a7 is am5d$ by /rik+ :i* w\ld 7)\t reg>d to ?is p>agraph7 be tax$ at a rate bel[ #be p]c5t 9 subp>agraph 7,b77i7 & ins]t+ bel[ ! #ae-p]c5t rate ?re%old4 7,b7 #ae-p]c5t capital ga9s bracket ,section #a7;h77#a77;,c77ii77,i7 is am5d$ by /rik+ :i* w\ld 7)\t reg>d to ?is p>agraph7 be tax$ at a rate bel[ #ci4f p]c5t & ins]t+ bel[ ! #bj-p]c5t rate ?re%old4 7#b7 ,rate ?re%olds def9$ ,section #a7;h7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ab7 ,rate ?re%olds def9$ ,= purposes ( ?is subsection-- 7,a7 #ae-p]c5t rate ?re%old ,! #ae-p]c5t rate ?re%old %all be-- 7i7 9 ! case ( a jo9t return or surviv+ sp\se1 #gg1bjj 7 su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return71 7ii7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #ea1gjj1 7iii7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 an am\nt equal to ( ! am\nt 9 effect = ! taxable ye> "u clause 7i71 & 7iv7 9 ! case ( an e/ate or tru/1 #b1fjj4 7,b7 #bj-p]c5t rate ?re%old ,! #bj-p]c5t rate ?re%old %all be-- 7i7 9 ! case ( a jo9t return or surviv+ sp\se1 #dgi1jjj 7 su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return71 7ii7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #deb1djj1 7iii7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 #dbe1hjj1 & 7iv7 9 ! case ( an e/ate or tru/1 #ab1gjj4 7,c7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjah1 ea* ( ! doll> am\nts 9 subp>agraphs 7,a7 & 7,b7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u subsection 7c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 4 7c7 ,application ( section #ae 7#a7 ,9 g5]al ,subsection 7a7 ( section #ae is am5d$ by /rik+ by ?is *apt] & ins]t+ by section #aa 7or by ref]5ce to any su* rates74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ae is am5d$ by /rik+ subsections 7d7 & 7f7 & by r$esignat+ subsection 7e7 z subsection 7d74 7,b7 ,section #ae7;d71 z r$esignat$ by subp>agraph 7,a71 is am5d$ by /rik+ section #a or #aa7;b7 & ins]t+ section #aa7;b74 7,c7 ,section #fjac7;c7 is am5d$ by /rik+ sections #ae1 #ddc1 & #ghea7;a77#a77;,a7 & ins]t+ sections #ddc & #ghea7;a77#a77;,a74 7#c7 ,application to ?is ,act ,section #ae ( ! ,int]nal ,rev5ue ,code ( #aihf %all n apply to any *ange 9 a rate ( tax impos$ by *apt] #a ( su* ,code :i* occurs by reason ( any am5dm5t made by ?is ,act 7o!r ?an ! am5dm5ts made by section #cjja74 7d7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,subsection 7c7 ,! am5dm5ts made by subsection 7c7 %all take effect on ! date ( ! enactm5t ( ?is ,act4 #ajjb4 ,enhancem5t ( /&>d d$uction 7a7 ,increase 9 /&>d d$uction ,section #fc7;c7 is am5d$ to read z foll[s3 7c7 ,/&>d d$uction ,= purposes ( ?is subtitle-- 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! t]m /&>d d$uction means-- 7,a7 #bd1djj1 9 ! case ( a jo9t return 7or a surviv+ sp\se 7z def9$ 9 section #b7;a771 7,b7 ?ree-qu>t]s ( ! am\nt 9 effect "u subp>agraph 7,a7 = ! taxable ye>1 9 ! case ( ! head ( a h\sehold 7z def9$ 9 section #b7;b771 & 7,c7 "o-half ( ! am\nt 9 effect "u subp>agraph 7,a7 = ! taxable ye>1 9 any o!r case4 7#b7 ,limitation on /&>d d$uction 9 ! case ( c]ta9 dep5d5ts ,9 ! case ( an individual :o is a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* ! individual's taxable ye> beg9s1 ! /&>d d$uction applicable to su* individual = su* individual's taxable ye> %all n exce$ ! great] (-- 7,a7 #ejj1 or 7,b7 ! sum ( #bej & su* individual's e>n$ income 7)9 ! means ( section #cb74 7#c7 ,c]ta9 individuals1 etc41 n eligible = /&>d d$uction ,9 ! case (-- 7,a7 a m>ri$ individual fil+ a sep>ate return :]e ei!r sp\se itemizes d$uctions1 7,b7 a nonresid5t ali5 individual1 7,c7 an individual mak+ a return "u section #ddc7;a77#a7 = a p]iod ( less ?an #ab mon?s on acc\nt ( a *ange 9 8 annual acc\nt+ p]iod1 or 7,d7 an e/ate or tru/1 common tru/ fund1 or p>tn]%ip1 ! /&>d d$uction %all be z]o4 7#d7 ,unm>ri$ individual ,= purposes ( ?is section1 ! t]m unm>ri$ individual means any individual :o-- 7,a7 is n m>ri$ z ( ! close ( ! taxable ye> 7z det]m9$ by apply+ section #ggjc71 7,b7 is n a surviv+ sp\se 7z def9$ 9 section #b7;a77 = ! taxable ye>1 & 7,c7 is n a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* ! individual's taxable ye> beg9s4 7#e7 ,inflation adju/m5ts 7,a7 ,/&>d d$uction am\nt ,9 ! case ( any taxable ye> beg9n+ aft] #bjai1 ! doll> am\nt 9 p>agraph 7#a77;,a7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjah = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7,b7 ,limitation am\nt 9 case ( c]ta9 dep5d5ts ,9 ! case ( any taxable ye> beg9n+ aft] #bjag1 ea* ( ! doll> am\nts 9 p>agraph 7#b7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 7,i7 9 ! case ( ! doll> am\nt 9 p>agraph 7#b77;,a71 "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjaf 9 clause 7ii7 !re(1 & 7,,ii7 9 ! case ( ! doll> am\nt 9 p>agraph 7#b77;,b71 "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 ,if any increase det]m9$ "u ?is p>agraph is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #fc7;b7 is am5d$ by /rik+ 1 m9us-- & all t foll[s & ins]t+ m9us ! /&>d d$uction4 7#b7 ,section #fc is am5d$ by /rik+ subsections 7f7 & 7g74 7#c7 ,section #acih7;c7 is am5d$-- 7,a7 by /rik+ ,basic 9 ! head+ !re(1 7,b7 by /rik+ ,basic /&>d 9 ! head+ ( p>agraph 7#c7 & ins]t+ ,/&>d1 & 7,c7 by /rik+ basic 9 p>agraph 7#c74 7#d7 ,section #cdjb7m77#c7 is am5d$ by /rik+ 7includ+ ! additional /&>d d$uction "u section #fc7;c77#c7 = ! ag$ & bl9d74 7#e7 ,section #fjad7;b77#d7 is am5d$ by /rik+ section #fc7;c77#e7 & ins]t+ section #fc7;c77#b74 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ajjc4 ,repeal ( d$uction = p]sonal exemptions 7a7 ,9 g5]al ,"p ,v ( sub*apt] ,b ( *apt] #a is h]eby repeal$4 7b7 ,def9ition ( dep5d5t reta9$ ,section #aeb1 prior to repeal by subsection 7a71 is h]eby r$esignat$ z section #ggjf & mov$ to ! end ( *apt] #gi4 7c7 ,application to e/ates & tru/s ,subsection 7b7 ( section #fdb is am5d$-- 7#a7 by /rik+ p>agraph 7#b77;,c71 7#b7 by /rik+ p>agraph 7#c71 & 7#c7 by /rik+ ,d$uction = p]sonal exemption 9 ! head+ !re( & ins]t+ ,basic d$uction4 7d7 ,application to nonresid5t ali5s ,section #hgc7;b7 is am5d$ by /rik+ p>agraph 7#c74 7e7 ,modification ( wage )hold+ rules 7#a7 ,9 g5]al ,section #cdjb7;a7 is am5d$ by /rik+ p>agraph 7#b74 7#b7 ,con=m+ am5dm5t ,section #cdjb7;a7 is am5d$-- 7,a7 by r$esignat+ subp>agraphs 7,a7 & 7,b7 ( p>agraph 7#a7 z p>agraphs 7#a7 & 7#b7 & mov+ su* r$esignat$ p>agraphs #b ems to ! left1 & 7,b7 by /rik+ all t prec$es o!rwise provid$ 9 ?is section & ins]t+ ! foll[+3 7a7 ,requirem5t ( )hold+ ,except z 4 7#c7 ,numb] ( exemptions ,section #cdjb7;f77#a7 is am5d$-- 7,a7 9 subp>agraph 7,a71 by /rik+ an individual describ$ 9 section #aea7;d77#b7 & ins]t+ a dep5d5t ( any o!r taxpay]1 & 7,b7 9 subp>agraph 7,c71 by /rik+ ) respect to :om1 on ! basis ( facts exi/+ at ! beg9n+ ( su* day1 !re may reasonably be expect$ to be all[able an exemption "u section #aea7;c7 & ins]t+ :o1 on ! basis ( facts exi/+ at ! beg9n+ ( su* day1 is reasonably expect$ to be a dep5d5t ( ! employee4 7f7 ,modification ( return requirem5t 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #fjab7;a7 is am5d$ to read z foll[s3 7#a7 ,e individual :o has gross income = ! taxable ye>1 except t a return %all n be requir$ (-- 7,a7 an individual :o is n m>ri$ 7det]m9$ by apply+ section #ggjc7 & :o has gross income = ! taxable ye> :i* does n exce$ ! /&>d d$uction applicable to su* individual = su* taxable ye> "u section #fc1 or 7,b7 an individual entitl$ to make a jo9t return if-- 7i7 ! gross income ( su* individual1 :5 comb9$ ) ! gross income ( su* individual's sp\se1 = ! taxable ye> does n exce$ ! /&>d d$uction :i* w\ld be applicable to ! taxpay] = su* taxable ye> "u section #fc if su* individual & su* individual's sp\se made a jo9t return1 7ii7 su* individual & su* individual's sp\se h ! same h\sehold z _! home at ! close ( ! taxable ye>1 7iii7 su* individual's sp\se does n make a sep>ate return1 & 7iv7 nei!r su* individual nor su* individual's sp\se is an individual describ$ 9 section #fc7;c77#b7 :o has income 7o!r ?an e>n$ income7 9 excess ( ! am\nt 9 effect "u section #fc7;c77#b77;,a74 4 7#b7 ,bankruptcy e/ates ,p>agraph 7#h7 ( section #fjab7;a7 is am5d$ by /rik+ ! sum ( ! exemption am\nt plus ! basic /&>d d$uction "u section #fc7;c77#b77;,d7 & ins]t+ ! /&>d d$uction 9 effect "u section #fc7;c77#a77;,b74 7g7 ,con=m+ am5dm5ts 7#a7 ,section #b7;a77#a77;,b7 is am5d$ by /rik+ a dep5d5t & all t foll[s ?r\gh section #aea & ins]t+ a dep5d5t :o 7)9 ! mean+ ( section #ggjf1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b7 & 7d77#a77;,b7 !re(7 is a son1 /epson1 daught]1 or /epdaught] ( ! taxpay]4 7#b7 ,section #cf;,b7b77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#c7 ,section #cf;,b7b77#c77;,b7 is am5d$ by /rik+ unless a d$uction is all[$ "u section #aea = ! taxable ye> ) respect to a dep5d5t 9 ! flu% matt] at ! end & ins]t+ unless ! taxpay] has a dep5d5t = ! taxable ye>4 7#d7 ,section #cf;,b7c77#a77;,d7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to ano!r taxpay] & ins]t+ :o is a dep5d5t ( ano!r taxpay]4 7#e7 ,section #cf;,b7d77#a7 is am5d$ by /rik+ equal to ! numb] ( individuals = :om ! taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> & ins]t+ ! sum ( #a 7#b 9 ! case ( a jo9t return7 plus ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye>4 7#f7 ,section #cf;,b7e77#a7 is am5d$ by /rik+ #a or m individuals = :om a taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> 7includ+ ! taxpay] or 8 sp\se7 & ins]t+ #a or m ( ! taxpay]1 ! taxpay]'s sp\se1 or any dep5d5t ( ! taxpay]4 7#g7 ,section #db7;i77#c77;,d77ii77,i7 is am5d$-- 7,a7 by /rik+ section #aeb & ins]t+ section #ggjf1 & 7,b7 by /rik+ ! p]iod at ! end & ins]t+ a comma4 7#h7 ,section #gb7t77#b77;,d77i77,,iii7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#i7 ,section #gb7t77#g77;,a77iii7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggjf7;f77#a74 7#aj7 ,section #aje7;b7 is am5d$-- 7,a7 by /rik+ z def9$ 9 section #aeb & ins]t+ z def9$ 9 section #ggjf1 7,b7 by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggjf7;f77#a7 & 7,c7 by /rik+ section #aeb7;e7 & ins]t+ section #ggjf7;e74 7#aa7 ,section #aje7;c77#a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#ab7 ,section #abe7;e77#a77;,d7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#ac7 ,section #acb7;h77#b77;,b7 is am5d$-- 7,a7 by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggjf7;f77#a71 & 7,b7 by /rik+ section #aeb7;e7 & ins]t+ section #ggjf7;e74 7#ad7 ,section #aci;,d7c77#e7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#ae7 ,section #afb7l77#a77;,d7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggjf7;f77#a74 7#af7 ,section #agj7;g77#a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#ag7 ,section #agj7;g77#c7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggjf7;d77#b74 7#ah7 ,section #agb7;d7 is am5d$ by /rik+ p>agraph 7#c74 7#ai7 ,section #bbj7;b77#f7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to & ins]t+ :o is a dep5d5t (4 7#bj7 ,section #bbj7;d77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#ba7 ,section #bbc7;b77#f7 is am5d$ by /rik+ ) respect to :om a d$uction "u section #aea is all[able to & ins]t+ :o is a dep5d5t (4 7#bb7 ,section #bbc7;d77#b77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#bc7 ,section #dja7;h7 is am5d$ by /rik+ section #aeb7;f77#a7 9 ! la/ s5t5ce & ins]t+ section #ggjf7;f77#a74 7#bd7 ,section #djb7l77#d77;,d7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#be7 ,section #dji;,a7a77#b77;,b77ii77,i7 is am5d$ by /rik+ section #aeb7;a7 & ins]t+ section #ggjf7;a74 7#bf7 ,section #eja7;c77#i7 is am5d$ by /rik+ section #aeb7;f77#a7 & ins]t+ section #ggjf7;f77#a74 7#bg7 ,section #ebi7;e77#b77;,b7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggjf7;d77#b74 7#bh7 ,section #gjc7;a77#b7 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 ?r\gh 7,f7 z subp>agraphs 7,a7 ?r\gh 7,e71 respectively4 7#bi7 ,section #hgd is am5d$ by /rik+ subsection 7b7 & by r$esignat+ subsection 7c7 z subsection 7b74 7#cj7 ,section #hia is am5d$ by /rik+ "u section #aea &4 7#ca7 ,section #ijd7;b7 is am5d$ by /rik+ p>agraph 7#a74 7#cb7 ,section #ica7;b77#a7 is am5d$ by /rik+ 7o!r ?an ! d$uction "u section #aea1 relat+ to p]sonal exemptions74 7#cc7 ,section #icc is am5d$-- 7,a7 by /rik+ 7o!r ?an ! d$uction "u section #aea1 relat+ to p]sonal exemptions7 9 p>agraph 7#a71 & 7,b7 by /rik+ 7o!r ?an ! d$uction = p]sonal exemptions "u section #aea7 9 p>agraph 7#b74 7#cd7 ,section #abab7;b77#b77;,b77ii7 is am5d$ to read z foll[s3 7ii7 9 ! case ( an e/ate or tru/1 ! d$uction all[$ = su* ye> "u section #fdb7;b74 4 7#ce7 ,section #acfa7;c77#a77;,c7 is am5d$ by /rik+ section #aeb7;f77#a77;,c7 & ins]t+ section #ggjf7;f77#a77;,c74 7#cf7 ,section #adjb7;a7 is am5d$ by /rik+ p>agraph 7#g74 7#cg7 ,section #bjcb;,a7c77#g77;,d7 is am5d$ by /rik+ section #aeb7;f77#b7 & ins]t+ section #ggjf7;f77#b74 7#ch7 ,section #cdjb7m77#a7 is am5d$ by /rik+ o!r ?an ! d$uctions ref]r$ to 9 section #aea &4 7#ci7 ,section #cdjb7r77#b7 is am5d$ by /rik+ ! sum (-- & all t foll[s & ins]t+ ! /&>d d$uction 9 effect "u section #fc7;c77#a77;,b744 7#dj7 ,section #ejjj;,a7b77#c77;,a7 is am5d$ by /rik+ section #aeb & ins]t+ section #ggjf4 7#da7 ,section #ejjj;,a7c77#d77;,a7 is am5d$ by /rik+ ! numb] ( individuals = :om ! taxpay] is all[$ a d$uction "u section #aea 7relat+ to all[ance ( d$uction = p]sonal exemptions7 = ! taxable ye> & ins]t+ ! sum ( #a 7#b 9 ! case ( a jo9t return7 plus ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye>4 7#db7 ,section #fjac7;b77#c77;,a7 is am5d$-- 7,a7 by /rik+ _h less ?an ! exemption am\nt ( gross income 9 clause 7ii7 & ins]t+ _h no gross income1 7,b7 by /rik+ _h gross income ( ! exemption am\nt or m 9 clause 7iii7 & ins]t+ _h any gross income1 & 7,c7 by /rik+ ! flu% language foll[+ clause 7iii74 7#dc7 ,section #fajc7l77#ba77;,a77iii7 is am5d$ to read z foll[s3 7iii7 ! numb] ( ! taxpay]'s dep5d5ts1 4 7#dd7 ,section #fbac7;g77#b7 is am5d$ by /rik+ subp>agraph 7,h74 7#de7 ,section #fccd7;d77#b7 is am5d$ to read z foll[s3 7#b7 ,exempt am\nt 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m exempt am\nt means an am\nt equal to-- 7i7 ! /&>d d$uction1 divid$ by 7ii7 #eb4 7,b7 ,v]ifi$ /atem5t ,unless ! taxpay] submits to ! ,secret>y a writt5 & prop]ly v]ifi$ /atem5t specify+ ! facts necess>y to det]m9e ! prop] am\nt "u subp>agraph 7,a71 subp>agraph 7,a7 %all be appli$ z if ! taxpay] 7 a m>ri$ individual fil+ a sep>ate return ) no dep5d5ts4 4 7#df7 ,section #ggjb;,b7f77#b77;,c77iii7 is am5d$ by /rik+ section #aeb7;d77#b7 & ins]t+ section #ggjf7;d77#b74 7#dg7 ,section #ggjc7;a7 is am5d$ by /rik+ "p ,v ( sub*apt] ,b ( *apt] #a &4 7#dh7 ,section #ggjc7;b77#a7 is am5d$ by /rik+ section #aeb7;f77#a7 & all t foll[s & ins]t+ section #ggjf7;f77#a714 7#di7 ,section #ggjf7;a71 z r$esignat$ by ?is section1 is am5d$ by /rik+ ?is subtitle & ins]t+ subtitle ,a4 7#ej7 7,a7 ,section #ggjf7;d77#a77;,b71 z r$esignat$ by ?is section1 is am5d$ by /rik+ ! exemption am\nt 7z def9$ 9 section #aea7;d77 & ins]t+ #d1aej4 7,b7 ,section #ggjf7;d71 z r$esignat$ by ?is section1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjah1 ! #d1aej am\nt 9 p>agraph 7#a77;,b7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 4 7#ea7 ,! table ( sections = *apt] #gi is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ggjf4 ,dep5d5t def9$4 4 7h7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ajjd4 ,maximum rate on bus9ess income ( individuals 7a7 ,9 g5]al ,"p ,i ( sub*apt] ,a ( *apt] #a is am5d$ by ins]t+ aft] section #c ! foll[+ new section3 #d4 #be p]c5t maximum rate on bus9ess income ( individuals 7a7 ,r$uction 9 tax to a*ieve #be p]c5t maximum rate ,! tax impos$ by section #a %all be r$uc$ by ! sum (-- 7#a7 #aj p]c5t ( ! less] (-- 7,a7 qualifi$ bus9ess income1 or 7,b7 ! excess 7if any7 (-- 7i7 taxable income r$uc$ by net capital ga9 7z def9$ 9 section #a7;h77#aa77;,a771 ov] 7ii7 ! maximum doll> am\nt = ! #be-p]c5t rate bracket :i* applies to ! taxpay] "u section #a = ! taxable ye>1 & 7#b7 #d4f p]c5t ( ! excess 7if any7 (-- 7,a7 ! less] (-- 7i7 qualifi$ bus9ess income1 or 7ii7 ! excess 7if any7 det]m9$ "u p>agraph 7#a77;,b71 ov] 7,b7 ! excess (-- 7i7 ! maximum doll> am\nt = ! #ce-p]c5t rate bracket :i* applies to ! taxpay] "u section #a = ! taxable ye>1 ov] 7ii7 ! maximum doll> am\nt = ! #be-p]c5t rate bracket :i* applies to ! taxpay] "u section #a = ! taxable ye>4 7b7 ,qualifi$ bus9ess income ,= purposes ( ?is section1 ! t]m qualifi$ bus9ess income means ! excess 7if any7 (-- 7#a7 ! sum (-- 7,a7 #ajj p]c5t ( any net bus9ess income d]iv$ f any passive bus9ess activity1 plus 7,b7 ! capital p]c5tage ( any net bus9ess income d]iv$ f any active bus9ess activity1 ov] 7#b7 ! sum (-- 7,a7 #ajj p]c5t ( any net bus9ess loss d]iv$ f any passive bus9ess activity1 7,b7 except z provid$ 9 subsection 7e77#c77;,a71 #cj p]c5t ( any net bus9ess loss d]iv$ f any active bus9ess activity1 plus 7,c7 any c>ryov] bus9ess loss det]m9$ = ! prec$+ taxable ye>4 7c7 ,det]m9ation ( net bus9ess income or loss ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,net bus9ess income or loss %all be det]m9$ ) respect to any bus9ess activity by appropriately nett+ items ( income1 ga91 d$uction1 & loss ) respect to su* bus9ess activity4 7#b7 ,wages1 etc ,any wages 7z def9$ 9 section #cdja71 paym5ts describ$ 9 subsection 7a7 or 7c7 ( section #gjg1 or directors' fees receiv$ by ! taxpay] :i* are prop]ly attributable to any bus9ess activity %all be tak5 into acc\nt "u p>agraph 7#a7 z an item ( income ) respect to su* bus9ess activity4 7#c7 ,exception = c]ta9 inve/m5t-relat$ items ,!re %all n be tak5 into acc\nt "u p>agraph 7#a7-- 7,a7 any item ( %ort-t]m capital ga91 %ort-t]m capital loss1 long-t]m capital ga91 or long-t]m capital loss1 7,b7 any divid5d1 income equival5t to a divid5d1 or paym5t 9 lieu ( divid5ds describ$ 9 section #ied7;c77#a77;,g71 7,c7 any int]e/ income o!r ?an int]e/ income :i* is prop]ly allocable to a trade or bus9ess1 7,d7 any item ( ga9 or loss describ$ 9 subp>agraph 7,c7 or 7,d7 ( section #ied7;c77#a7 7appli$ by sub/itut+ bus9ess activity = controll$ =eign corporation71 7,e7 any item ( income1 ga91 d$uction1 or loss tak5 into acc\nt "u section #ied7;c77#a77;,f7 7det]m9$ )\t reg>d to clause 7ii7 !re( & o!r ?an items attributable to notional pr9cipal contracts ent]$ into 9 transactions qualify+ "u section #abba7;a77#g771 7,f7 any am\nt receiv$ f an annuity :i* is n receiv$ 9 connection ) ! trade or bus9ess ( ! bus9ess activity1 & 7,g7 any item ( d$uction or loss prop]ly allocable to an am\nt describ$ 9 any ( ! prec$+ subp>agraphs4 7#d7 ,application ( re/rictions applicable to det]m9+ taxable income ,net bus9ess income or loss %all be appropriately adju/$ s z only to take into acc\nt any am\nt ( income1 ga91 d$uction1 or loss to ! ext5t su* am\nt affects ! det]m9ation ( taxable income = ! taxable ye>4 7#e7 ,c>ryov] bus9ess loss ,= purposes ( subsection 7b77#b77;,c71 ! c>ryov] bus9ess loss det]m9$ = any taxable ye> is ! excess 7if any7 ( ! sum describ$ 9 subsection 7b77#b7 ov] ! sum describ$ 9 subsection 7b77#a7 = su* taxable ye>4 7d7 ,passive & active bus9ess activity ,= purposes ( ?is section-- 7#a7 ,passive bus9ess activity ,! t]m passive bus9ess activity means any passive activity z def9$ 9 section #dfi7;c7 det]m9$ )\t reg>d to p>agraphs 7#c7 & 7#f77;,b7 !re(4 7#b7 ,active bus9ess activity ,! t]m active bus9ess activity means any bus9ess activity :i* is n a passive bus9ess activity4 7#c7 ,bus9ess activity ,! t]m bus9ess activity means any activity 7)9 ! mean+ ( section #dfi7 :i* involves ! conduct ( any trade or bus9ess4 7e7 ,capital p]c5tage ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section1 ! t]m capital p]c5tage means #cj p]c5t4 7#b7 ,increas$ p]c5tage = capital-int5sive bus9ess activities ,9 ! case ( a taxpay] :o elects ! application ( ?is p>agraph ) respect to any active bus9ess activity 7o!r ?an a specifi$ s]vice activity71 ! capital p]c5tage %all be equal to ! applicable p]c5tage 7z def9$ 9 subsection 7f77 = ea* taxable ye> ) respect to :i* su* election applies4 ,any election made "u ?is p>agraph %all apply to ! taxable ye> = :i* su* election is made & ea* ( ! #d subsequ5t taxable ye>s4 ,su* election %all be made n lat] ?an ! due date 7includ+ ext5sions7 = ! return ( tax = ! taxable ye> = :i* su* election is made1 &1 once made1 may n be revok$4 7#c7 ,treatm5t ( specifi$ s]vice activities 7,a7 ,9 g5]al ,9 ! case ( any active bus9ess activity :i* is a specifi$ s]vice activity-- 7i7 ! capital p]c5tage %all be #j p]c5t1 & 7ii7 subsection 7b77#b77;,b7 %all be appli$ by sub/itut+ #j p]c5t = #cj p]c5t4 7,b7 ,exception = capital-int5sive specifi$ s]vice activities ,if-- 7i7 ! taxpay] elects ! application ( ?is subp>agraph ) respect to su* activity = any taxable ye>1 & 7ii7 ! applicable p]c5tage 7z def9$ 9 subsection 7f77 ) respect to su* activity = su* taxable ye> is at lea/ #aj p]c5t1 !n subp>agraph 7,a7 %all n apply & ! capital p]c5tage ) respect to su* activity %all be equal to su* applicable p]c5tage4 7,c7 ,specifi$ s]vice activity ,! t]m specifi$ s]vice activity means any activity involv+ ! p]=mance ( s]vices describ$ 9 section #abjb7;e77#c77;,a71 includ+ inve/+1 trad+1 or deal+ 9 securities 7z def9$ 9 section #dge7;c77#b771 p>tn]%ip int]e/s1 or commodities 7z def9$ 9 section #dge7;e77#b774 7#d7 ,r$uction 9 capital p]c5tage 9 c]ta9 cases ,! capital p]c5tage 7det]m9$ aft] ! application ( p>agraphs 7#b7 & 7#c77 ) respect to any active bus9ess activity %all n exce$ #a m9us ! quoti5t 7n great] ?an #a7 (-- 7,a7 any am\nts describ$ 9 subsection 7c77#b7 :i* are tak5 into acc\nt 9 det]m9+ ! net bus9ess income d]iv$ f su* activity1 divid$ by 7,b7 su* net bus9ess income4 7f7 ,applicable p]c5tage ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable p]c5tage means1 ) respect to any active bus9ess activity = any taxable ye>1 ! quoti5t 7n great] ?an #a7 (-- 7,a7 ! specifi$ return on capital ) respect to su* activity = su* taxable ye>1 divid$ by 7,b7 ! taxpay]'s net bus9ess income d]iv$ f su* activity = su* taxable ye>4 7#b7 ,specifi$ return on capital ,! t]m specifi$ return on capital means1 ) respect to any active bus9ess activity ref]r$ to 9 p>agraph 7#a71 ! excess (-- 7,a7 ! product (-- 7i7 ! deem$ rate ( return = ! taxable ye>1 multipli$ by 7ii7 ! asset balance ) respect to su* activity = su* taxable ye>1 ov] 7,b7 an am\nt equal to ! int]e/ :i* is paid or accru$1 & = :i* a d$uction is all[$ "u ?is *apt]1 ) respect to su* activity = su* taxable ye>4 7#c7 ,deem$ rate ( return ,! t]m deem$ rate ( return means1 ) respect to any taxable ye>1 ! ,f$]al %ort-t]m rate 7det]m9$ "u section #abgd7;d7 = ! mon? 9 :i* or ) :i* su* taxable ye> ends7 plus #g p]c5tage po9ts4 7#d7 ,asset balance 7,a7 ,9 g5]al ,! asset balance ) respect to any active bus9ess activity ref]r$ to 9 p>agraph 7#a7 = any taxable ye> equals ! taxpay]'s adju/$ basis ( any prop]ty describ$ 9 section #abba7;a77#b7 :i* is us$ 9 connection ) su* activity z ( ! end ( ! taxable ye> 7det]m9$ )\t reg>d to sections #afh7k7 & #agi74 7,b7 ,application to activities c>ri$ on ?r\gh p>tn]%ips & ,s corporations ,9 ! case ( any active bus9ess activity c>ri$ on ?r\gh a p>tn]%ip or ,s corporation1 ! taxpay] %all take into acc\nt su* taxpay]'s di/ributive or pro rata %>e 7z ! case may be7 ( ! asset balance ) respect to su* activity z det]m9$ ) respect to su* p>tn]%ip or ,s corporation "u subp>agraph 7,a7 7appli$ by sub/itut+ ! p>tn]%ip's or ,s corporation's adju/$ basis = ! taxpay]'s adju/$ basis74 7g7 ,r$uc$ rate = small bus9esses ) net active bus9ess income 7#a7 ,9 g5]al ,! tax impos$ by section #a %all be r$uc$ by #c p]c5t ( ! excess 7if any7 (-- 7,a7 ! lea/ (-- 7i7 qualifi$ active bus9ess income1 7ii7 taxable income r$uc$ by net capital ga9 7z def9$ 9 section #a7;h77#aa77;,a771 or 7iii7 ! #i-p]c5t bracket ?re%old am\nt1 ov] 7,b7 ! excess 7if any7 ( taxable income ov] ! applicable ?re%old am\nt4 7#b7 ,phase-9 ( rate r$uction ,9 ! case ( any taxable ye> beg9n+ be=e ,janu>y #a1 #bjbb1 p>agraph 7#a7 %all be appli$ by sub/itut+ = #c p]c5t-- 7,a7 9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj1 #a p]c5t1 & 7,b7 9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjai1 & be=e ,janu>y #a1 #bjbb1 #b p]c5t4 7#c7 ,qualifi$ active bus9ess income ,= purposes ( ?is subsection1 ! t]m qualifi$ active bus9ess income means ! excess 7if any7 (-- 7,a7 any net bus9ess income d]iv$ f any active bus9ess activity1 ov] 7,b7 any net bus9ess loss d]iv$ f any active bus9ess activity4 7#d7 #i-p]c5t bracket ?re%old am\nt ,= purposes ( ?is subsection1 ! t]m #i-p]c5t bracket ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #ge1jjj1 7,b7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #c_/d ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,c7 9 ! case ( any o!r individual1 #a_/b ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a74 7#e7 ,applicable ?re%old am\nt ,= purposes ( ?is subsection1 ! t]m applicable ?re%old am\nt means-- 7,a7 9 ! case ( a jo9t return or surviv+ sp\se1 #aej1jjj1 7,b7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #c_/d ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a71 & 7,c7 9 ! case ( any o!r individual1 #a_/b ( ! am\nt 9 effect = ! taxable ye> "u subp>agraph 7,a74 7#f7 ,e/ates & tru/s ,p>agraph 7#a7 %all n apply to any e/ate or tru/4 7#g7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjah1 ! doll> am\nts 9 p>agraphs 7#d77;,a7 & 7#e77;,a7 %all ea* be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u subsection 7c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 ,if any increase det]m9$ "u ! prec$+ s5t5ce is n a multiple ( #ajj1 su* increase %all be r\nd$ to ! next l[e/ multiple ( #ajj4 7h7 ,regulations ,! ,secret>y may issue su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or o!r guidance-- 7#a7 :i* ensures t no am\nt is tak5 into acc\nt "u subsection 7f77#d7 ) respect to m ?an "o activity1 & 7#b7 :i* treats all specifi$ s]vice activities ( ! taxpay] z a s+le bus9ess activity = purposes ( ?is section to ! ext5t t su* activities w\ld be treat$ z a s+le employ] "u subsection 7a7 or 7b7 ( section #eb or subsection 7m7 or 7o7 ( section #dad4 7i7 ,ref]5ces ,any ref]5ce 9 ?is title to section #a %all be treat$ z includ+ a ref]5ce to ?is section unless ! context ( su* ref]5ce cle>ly indicates o!rwise4 4 7b7 #be p]c5t rate = c]ta9 divid5ds ( real e/ate inve/m5t tru/s & coop]atives ,section #a7;h71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ac7 #be p]c5t rate = c]ta9 divid5ds ( real e/ate inve/m5t tru/s & coop]atives 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 net capital ga9 7z def9$ 9 p>agraph 7#aa77 & unrecaptur$ section #abej ga9 7z def9$ 9 p>agraph 7#f77 %all ea* be increas$ by specifi$ divid5d income4 7,b7 ,specifi$ divid5d income ,= purposes ( ?is p>agraph1 ! t]m specifi$ divid5d income means-- 7i7 9 ! case ( any divid5d receiv$ f a real e/ate inve/m5t tru/1 ! portion ( su* divid5d :i* is nei!r-- 7,i7 a capital ga9 divid5d 7z def9$ 9 section #heb7;b77#c771 nor 7,,ii7 tak5 into acc\nt 9 det]m9+ qualifi$ divid5d income 7z def9$ 9 p>agraph 7#aa771 & 7ii7 any divid5d :i* is includible 9 gross income & :i* is receiv$ f an organization or corporation describ$ 9 section #eja7;c77#ab7 or #acha7;a74 4 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,i ( sub*apt] ,a ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #c ! foll[+ new item3 ,sec4 #d4 #be p]c5t maximum rate on bus9ess income ( individuals4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7e7 ,transition rule ,9 ! case ( any taxable ye> :i* includes ,decemb] #ca1 #bjag1 ! am5dm5t made by subsection 7a7 %all apply ) respect to su* taxable ye> adju/$-- 7#a7 s z to apply ) respect to ! rates ( tax 9 effect "u section #a ( ! ,int]nal ,rev5ue ,code ( #aihf ) respect to su* taxable ye> 7& s z to a*ieve a #be p]c5t effective rate ( tax on ! bus9ess income 7det]m9$ )\t reg>d to p>agraph 7#b77 9 ! same mann] z su* am5dm5t applies to taxable ye>s beg9n+ aft] su* date ) respect to ! rates ( tax 9 effect = su* ye>s71 & 7#b7 by r$uc+ ! am\nt ( ! r$uction 9 tax 7z o!rwise det]m9$ "u p>agraph 7#a77 by ! am\nt :i* be>s ! same proportion to ! am\nt ( su* r$uction z ! numb] ( days 9 ! taxable ye> :i* are be=e ,janu>y #a1 #bjah1 be>s to ! numb] ( days 9 ! entire taxable ye>4 #ajje4 ,con=m+ am5dm5ts relat$ to simplification ( individual income tax rates 7a7 ,am5dm5ts relat$ to modification ( inflation adju/m5t 7#a7 ,section #cb7;b77#b77;,b77ii77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #bjjh = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s det]m9$ by sub/itut+ cal5d> ye> #bjjh = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#b7 ,section #cb7;j77#a77;,b7 is am5d$-- 7,a7 9 ! matt] prec$+ clause 7i71 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 9 clause 7i71 by /rik+ = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ = cal5d> ye> #bjaf 9 clause 7ii7 !re(1 & 7,c7 9 clause 7ii71 by /rik+ = cal5d> ye> #aiib 9 subp>agraph 7,b7 ( su* section #a & ins]t+ = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#c7 ,section #cf;,b7b77#c77;,a77ii77,,ii7 is am5d$ by /rik+ consum] price index & ins]t+ ,c-,,cpi-,u 7z def9$ 9 section #a7;c774 7#d7 ,section #da7;e77#e77;,c7 is am5d$ to read z foll[s3 7,c7 ,co/-(-liv+ adju/m5t def9$ 7i7 ,9 g5]al ,! co/-(-liv+ adju/m5t = any cal5d> ye> is ! co/-(-liv+ adju/m5t = su* cal5d> ye> det]m9$ "u section #a7;c77#b77;,a71 by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7ii7 ,special rule :]e base p]iod ends 9 a cal5d> ye> o!r ?an #aihc or #aihd ,if ! base p]iod ( any taxpay] does n end 9 #aihc or #aihd1 clause 7i7 %all be appli$ by sub/itut+ ! cal5d> ye> 9 :i* su* base p]iod ends = #aihg4 4 7#e7 ,section #db7;e77#c77;,d77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjjh = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjjh = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#f7 ,section #db7;h77#c77;,h77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjja = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjja = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#g7 ,section #de,r7d77#c77;,b77ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjab = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjab = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#h7 ,section #abe7;i77#b7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #bjab = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( 9 subp>agraph 7,b7 & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 & 7,b7 by /rik+ #ej bo? places x appe>s 9 ! la/ s5t5ce & ins]t+ #ajj4 7#i7 ,section #afb7o77#c7 is am5d$ by ins]t+ z 9 effect be=e enactm5t ( ! ,tax ,cuts & ,jobs ,act aft] section #a7;f77#e74 7#aj7 ,section #bbj7;g77#b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#aa7 ,section #bbc7;g77#a7 is am5d$ by /rik+ all t foll[s subp>agraph 7,a7 & ins]t+ ! foll[+3 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$-- 7i7 by sub/itut+ = cal5d> ye> #bjaf 9 clause 7ii7 !re(-- 7,i7 except z provid$ 9 clause 7ii71 cal5d> ye> #aiig1 & 7,,ii7 9 ! case ( ea* doll> am\nt 9 subsection 7c77#b77;,a71 cal5d> ye> #bjjc1 & 7ii7 by sub/itut+ ,m>* #ca = ,augu/ #ca 9 p>agraphs 7#e77;,b7 & 7#f77;,b7 ( section #a7;c74 ,! ,secret>y %all publi% ! doll> am\nts z adju/$ "u ?is subsection = taxable ye>s beg9n+ 9 any cal5d> ye> no lat] ?an ,june #a ( ! prec$+ cal5d> ye>4 4 7#ab7 ,section #dcj7;c77#g77;,d77vii77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjji = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjji = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ac7 ,section #eab7;d77#b77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #aiid = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re(& ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aiid = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ad7 ,section #eac7;h77#b77;,c77ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #aihg = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ae7 ,section #hca7;b77#b77;,d77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#af7 ,section #hgg;,a7a77#c77;,b77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ag7 ,section #iaa7;b77#b77;,d77ii77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjjd = #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjd = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ah7 ,section #abgd;,a7d77#b7 is am5d$ to read z foll[s3 7#b7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any debt in/rum5t aris+ out ( a sale or ex*ange dur+ any cal5d> ye> aft] #bjah1 ea* adju/$ doll> am\nt %all be increas$ by an am\nt equal to-- 7i7 su* adju/$ doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7,b7 ,adju/$ doll> am\nts ,= purposes ( ?is p>agraph1 ! t]m adju/$ doll> am\nt means ! doll> am\nts 9 subsections 7b7 & 7c71 9 ea* case z 9 effect = cal5d> ye> #bjah4 7,c7 ,r\nd+ ,any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #ajj4 4 7#ai7 ,section #bjaj7;c77#c77;,b77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #bjaj = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjaj = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bj7 ,section #bjcb;,a7a77#c77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ba7 ,section #bejc7;b77#b77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bb7 ,section #dafa7;b77#b77;,c77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 det]m9$ by sub/itut+ #bjjd = #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjjd = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bc7 ,section #dbfa7;e77#d77;,a77ii7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ ! ye> be=e ! la/ non9dex$ ye> = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ ! ye> be=e ! la/ non9dex$ ye> = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bd7 ,section #dihj;,i7b77#c77;,c77v77,,ii7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjaf4 7#be7 ,section #ejjj;,a7c77#c77;,d77ii7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjaf4 7#bf7 ,section #fjci;,f7d7 is am5d$ by /rik+ section #a7;f77#c71 except t subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a71 except t clause 7ii7 !re( 4 7#bg7 ,section #fcbc7;i77#d77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiif = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiif = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bh7 ,section #fccd7;g77#a77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 by sub/itut+ cal5d> ye> #aiih = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiii = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#bi7 ,section #ffja7;j77#c77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye> by sub/itut+ cal5d> ye> #aiig = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#cj7 ,section #ffea7;i77#a7 is am5d$ by /rik+ section #a7;f77#c7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ca7 ,section #fgba7;f77#a7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjaf4 7#cb7 ,section #fgbb7;f77#a7 is am5d$-- 7,a7 by /rik+ section #a7;f77#c7 & ins]t+ section #a7;c77#b77;,a71 7,b7 by /rik+ subp>agraph 7,b7 & ins]t+ clause 7ii71 & 7,c7 by /rik+ #aiib & ins]t+ #bjaf4 7#cc7 ,section #ffeb7;c77#g77;,a7 is am5d$ by /rik+ section #a7;f77#c7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re( 4 7#cd7 ,section #ffie7;h77#a7 is am5d$ by /rik+ section #a7;f77#c7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ce7 ,section #ffih7;e77#a7 is am5d$ by /rik+ section #a7;f77#c7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#cf7 ,section #ffii7;e77#a7 is am5d$ by /rik+ section #a7;f77#c7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 det]m9$ by sub/itut+ cal5d> ye> #bjac = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#cg7 ,section #gcde7;f77#b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjae = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjae = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ch7 ,section #gdcj7;c77#a7 is am5d$ by /rik+ section #a7;f77#c7 = su* cal5d> ye>1 by sub/itut+ cal5d> ye> #aiie = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( 9 ! flu% text at ! end & ins]t+ section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #aiie = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#ci7 ,section #ghgb7;g77#e7 is am5d$ to read z foll[s3 7#e7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any loan made dur+ any cal5d> ye> aft] #bjah to :i* p>agraph 7#a7 applies1 ! adju/$ doll> am\nt %all be increas$ by an am\nt equal to-- 7i7 su* adju/$ doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7,b7 ,adju/$ doll> am\nt ,= purposes ( ?is p>agraph1 ! t]m adju/$ doll> am\nt means ! doll> am\nt 9 p>agraph 7#b7 z 9 effect = cal5d> ye> #bjah4 7,c7 ,r\nd+ ,any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #ajj4 4 7#dj7 ,section #bai7;b77#e77;,c77i77,,ii7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjjg = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#da7 ,section #bai7;g77#h77;,b7 is am5d$ by /rik+ section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjje = cal5d> ye> #aiib 9 subp>agraph 7,b7 !re( & ins]t+ section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjje = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7b7 ,o!r con=m+ am5dm5ts 7#a7 ,section #cf;,b7b77#c77;,b77ii77,i77aa7 is am5d$ to read z foll[s3 7aa7 :o is describ$ 9 section #a7;b77#a77;,b7 & :o does n h any dep5d5ts = ! taxable ye>1 4 7#b7 ,section #dhf;,b7b77#a7 is am5d$-- 7,a7 by /rik+ maximum rate 9 effect & ins]t+ highe/ rate specifi$1 & 7,b7 by /rik+ section #a7;e7 & ins]t+ section #a4 7#c7 ,section #eaa7;b77#a7 is am5d$ by /rik+ section #a7;e7 & ins]t+ section #a4 7#d7 ,section #fda7;a7 is am5d$ by /rik+ section #a7;e7 %all apply to ! taxable income & ins]t+ section #a %all apply to ! taxable income4 7#e7 ,section #fda7;c77#b77;,a7 is am5d$ to read z foll[s3 7,a7 ,except to ! ext5t provid$ 9 section #a7;h71 ! rate ( tax %all be treat$ z be+ ! highe/ rate ( tax set =? 9 section #a7;a74 4 7#f7 ,section #fdf7;b7 is am5d$ to read z foll[s3 7b7 ,taxation ( income ( tru/ ,except z provid$ 9 subsection 7f77#a77;,b77ii71 !re is h]eby impos$ on ! taxable income ( an elect+ ,settlem5t ,tru/ a tax at ! rate specifi$ 9 section #a7;a77#a74 ,su* tax %all be 9 lieu ( ! income tax o!rwise impos$ by ?is *apt] on su* income4 4 7#g7 ,section #fhe7;c7 is am5d$ by /rik+ ,section #a7;e7 & ins]t+ ,section #a4 7#h7 ,section #ijd7;b77#c77;,e77ii77,i7 is am5d$ by /rik+ set =? 9 subsection 7a71 7b71 7c71 7d71 or 7e7 ( section #a 7:i*ev] applies7 & ins]t+ ! highe/ rate ( tax specifi$ 9 section #a4 7#i7 ,section #acih7;c77#b7 is am5d$ by /rik+ subsection 7d7 (4 7#aj7 ,section #cdjb7p77#a77;,b7 is am5d$ by /rik+ any p]c5tage applicable to any ( ! #c l[e/ income brackets 9 ! table "u section #a7;c71 & ins]t+ #ab p]c5t1 #be p]c5t14 7#aa7 ,section #cdjb7q77#a7 is am5d$ by /rik+ ! product ( ?ird l[e/ rate ( tax applicable "u section #a7;c7 & & ins]t+ #be p]c5t (4 7#ab7 ,section #cdjb7r77#c7 is am5d$ by /rik+ ! am\nt ( tax :i* w\ld be impos$ by section #a7;c7 7det]m9$ )\t reg>d to any rate ( tax 9 excess ( ! f\r? l[e/ rate ( tax applicable "u section #a7;c77 on an am\nt ( taxable income equal to & ins]t+ an am\nt equal to ! product ( #be p]c5t multipli$ by4 7#ac7 ,section #cdjf7;a77#a7 is am5d$ by /rik+ ! product ( ! f\r? l[e/ rate ( tax applicable "u section #a7;c7 & & ins]t+ #be p]c5t ( 4 7#ad7 ,section #fajc7;e77#a77;,a77iii7 is am5d$ by ins]t+ 7z 9 effect on ! day be=e ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act7 aft] section #a7;g74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,b ,simplification & re=m ( family & individual tax cr$its #aaja4 ,enhancem5t ( *ild tax cr$it & new family tax cr$it 7a7 ,increase 9 cr$it am\nt & addition ( o!r dep5d5ts 7#a7 ,9 g5]al ,section #bd7;a7 is am5d$ to read z foll[s3 7a7 ,all[ance ( cr$it ,!re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] = ! taxable ye> an am\nt equal to ! sum (-- 7#a7 ) respect to ea* qualify+ *ild ( ! taxpay]1 #a1fjj1 & 7#b7 = taxable ye>s beg9n+ be=e ,janu>y #a1 #bjbc1 ) respect to ! taxpay] 7ea* sp\se 9 ! case ( a jo9t return7 & ea* dep5d5t ( ! taxpay] to :om p>agraph 7#a7 does n apply1 #cjj4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #bd7;c7 is am5d$-- 7i7 by r$esignat+ p>agraphs 7#a7 & 7#b7 z p>agraphs 7#b7 & 7#c71 respectively1 7ii7 by /rik+ #aeb7;c7 9 p>agraph 7#b7 7z s r$esignat$7 & ins]t+ #ggjf7;c71 7iii7 by ins]t+ be=e p>agraph 7#b7 7z s r$esignat$7 ! foll[+ new p>agraph3 7#a7 ,dep5d5t 7,a7 ,9 g5]al ,! t]m dep5d5t %all h ! mean+ giv5 su* t]m by section #ggjf4 7,b7 ,c]ta9 individuals n treat$ z dep5d5ts ,9 ! case ( an individual ) respect to :om a cr$it "u ?is section is all[able to ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* ! individual's taxable ye> beg9s1 ! am\nt applicable to su* individual "u subsection 7a7 = su* individual's taxable ye> %all be z]o4 1 7iv7 9 p>agraph 7#c7 7z s r$esignat$7-- 7,i7 by /rik+ t]m qualify+ *ild & ins]t+ t]ms qualify+ *ild & dep5d5t1 & 7,,ii7 by /rik+ #aeb7;b77#c7 & ins]t+ #ggjf7;b77#c71 & 7v7 9 ! head+ by /rik+ ,qualify+ & ins]t+ ,dep5d5t2 qualify+4 7,b7 ,! head+ = section #bd is am5d$ by ins]t+ & family aft] ,*ild4 7,c7 ,! table ( sections = subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #bd & ins]t+ ! foll[+ new item3 ,sec4 #bd4 ,*ild & family tax cr$it4 4 7b7 ,elim9ation ( m>riage p5alty ,section #bd7;b77#b7 is am5d$-- 7#a7 by /rik+ #aaj1jjj 9 subp>agraph 7,a7 & ins]t+ #bcj1jjj1 7#b7 by ins]t+ & at ! end ( subp>agraph 7,a71 7#c7 by /rik+ #ge1jjj 9 ! case ( an individual :o is n m>ri$ & all t foll[s ?r\gh ! p]iod at ! end & ins]t+ "o-half ( ! am\nt 9 effect "u subp>agraph 7,a7 = ! taxable ye> 9 ! case ( any o!r individual44 7c7 ,cr$it refundable up to #a1jjj p] *ild 7#a7 ,9 g5]al ,section #bd7;d77#a77;,a7 is am5d$ by /rik+ all t foll[s "u ?is section & ins]t+ ! foll[+3 det]m9$-- 7i7 )\t reg>d to ?is subsection & ! limitation "u section #bf7;a71 7ii7 )\t reg>d to subsection 7a77#b71 & 7iii7 by sub/itut+ #a1jjj = #a1fjj 9 subsection 7a77#a71 or 4 7#b7 ,inflation adju/m5t ,section #bd7;d7 is am5d$ by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ 9 a cal5d> ye> aft] #bjag1 ! #a1jjj am\nt 9 p>agraph 7#a77;,a77iii7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t "u section #a7;c77#b77;,a7 = su* cal5d> ye>4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! next highe/ multiple ( #ajj & %all n exce$ ! am\nt 9 effect "u subsection 7a77#b74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajb4 ,repeal ( nonrefundable cr$its 7a7 ,repeal ( section #bb 7#a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #bb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#b7 ,con=m+ am5dm5t 7,a7 ,section #hf7;f7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b71 7#c71 & 7#d7 z p>agraphs 7#a71 7#b71 & 7#c71 respectively4 7,b7 7i7 ,subsections 7c77#c77;,b7 & 7d77#d77;,a7 ( section #ggjf1 z r$esignat$ by ?is ,act1 are ea* am5d$ by /rik+ 7z def9$ 9 section #bb7;e77#c74 7ii7 ,section #ggjf7;f71 z r$esignat$ by ?is ,act1 is am5d$ by r$esignat+ p>agraph 7#g7 z p>agraph 7#h7 & by ins]t+ aft] p>agraph 7#f7 ! foll[+ new p>agraph3 7#g7 ,p]man5t & total disability def9$ ,an individual is p]man5tly & totally disabl$ if he is unable to engage 9 any sub/antial ga9ful activity by reason ( any m$ically det]m9able physical or m5tal impairm5t :i* c be expect$ to result 9 dea? or :i* has la/$ or c be expect$ to la/ = a cont9u\s p]iod ( n less ?an #ab mon?s4 ,an individual %all n be consid]$ to be p]man5tly & totally disabl$ unless he furni%es pro( ( ! exi/5ce !re( 9 su* =m & mann]1 & at su* times1 z ! ,secret>y may require4 4 7iii7 ,section #dae7;c77#c77;,c77i7 is am5d$ by /rik+ #bb7;e77#c7 & ins]t+ #ggjf7;f77#g74 7iv7 ,section #dbb7;c77#f7 is am5d$ by /rik+ #bb7;e77#c7 & ins]t+ #ggjf7;f77#g74 7b7 ,t]m9ation ( section #be ,section #be1 z am5d$ by section #cfja1 is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,t]m9ation ,no cr$it %all be all[$ "u ?is section ) respect to any mortgage cr$it c]tificate issu$ aft] ,decemb] #ca1 #bjag4 4 7c7 ,repeal ( section #cj;,d 7#a7 ,9 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #cj;,d 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ce74 7,b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#cg74 7,c7 ,section #feja7m7 is am5d$ by /rik+ #cj;,d7e77#d714 7d7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraphs 7#b7 & 7#c71 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,subsection 7b7 ,! am5dm5t made by subsection 7c7 %all apply to taxable ye>s end+ aft] ,decemb] #ca1 #bjag4 7#c7 ,subsection 7c7 ,! am5dm5ts made by subsection 7d7 %all apply to vehicles plac$ 9 s]vice 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajc4 ,refundable cr$it program integrity 7a7 ,id5tification requirem5ts = *ild & family tax cr$it 7#a7 ,9 g5]al ,section #bd7;e7 is am5d$ to read z foll[s3 7e7 ,id5tification requirem5ts 7#a7 ,requirem5ts = qualify+ *ild ,no cr$it %all be all[$ "u ?is section to a taxpay] ) respect to any qualify+ *ild unless ! taxpay] includes ! "n & social security numb] ( su* qualify+ *ild on ! return ( tax = ! taxable ye>4 ,! prec$+ s5t5ce %all n prev5t a qualify+ *ild f be+ treat$ z a dep5d5t describ$ 9 subsection 7a77#b74 7#b7 ,o!r id5tification requirem5ts ,no cr$it %all be all[$ "u ?is section ) respect to any individual unless ! taxpay] id5tification numb] ( su* individual is includ$ on ! return ( tax = ! taxable ye> & su* id5tify+ numb] 0 issu$ be=e ! due date = fil+ ! return = ! taxable ye>4 7#c7 ,social security numb] ,= purposes ( ?is subsection1 ! t]m social security numb] means a social security numb] issu$ by ! ,social ,security ,adm9i/ration 7b only if ! social security numb] is issu$ to a citiz5 ( ! ,unit$ ,/ates or pursuant to subclause 7,i7 7or t portion ( subclause 7,,iii7 t relates to subclause 7,i77 ( section #bje7;c77#b77;,b77i7 ( ! ,social ,security ,act774 4 7#b7 ,omissions treat$ z ma!matical or cl]ical error 7,a7 ,9 g5]al ,section #fbac7;g77#b77;,i7 is am5d$ to read z foll[s3 7,i7 an omission ( a correct social security numb]1 or a correct ,,t91 requir$ "u section #bd7;e7 7relat+ to *ild tax cr$it71 to be includ$ on a return1 4 7b7 ,social security numb] mu/ be provid$ 7#a7 ,9 g5]al ,section #be;,a7f77#a77;,a71 z am5d$ by section #abja ( ?is ,act1 is am5d$ by /rik+ taxpay] id5tification numb] ea* place x appe>s & ins]t+ social security numb]4 7#b7 ,omission treat$ z ma!matical or cl]ical error ,section #fbac7;g77#b77;,j7 is am5d$ by /rik+ ,,t9 & ins]t+ social security numb] & employ] id5tification numb]4 7c7 ,individuals prohibit$ f engag+ 9 employm5t 9 ,unit$ ,/ates n eligible = e>n$ income tax cr$it ,section #cb7m7 is am5d$-- 7#a7 by /rik+ 7o!r ?an3 & all t foll[s ?r\gh ( ! ,social ,security ,act71 & 7#b7 by ins]t+ be=e ! p]iod at ! end ! foll[+3 1 b only if1 9 ! case ( subsection 7c77#a77;,e71 ! social security numb] is issu$ to a citiz5 ( ! ,unit$ ,/ates or pursuant to subclause 7,i7 7or t portion ( subclause 7,,iii7 t relates to subclause 7,i77 ( section #bje7;c77#b77;,b77i7 ( ! ,social ,security ,act4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajd4 ,proc$ures to r$uce improp] claims ( e>n$ income cr$it 7a7 ,cl>ification reg>d+ det]m9ation ( self-employm5t income :i* is treat$ z e>n$ income ,section #cb7;c77#b77;,b7 is am5d$ by /rik+ & at ! end ( clause 7v71 by /rik+ ! p]iod at ! end ( clause 7vi7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7vii7 9 det]m9+ ! taxpay]'s net e>n+s f self-employm5t "u subp>agraph 7,a77ii7 !re %all n fail to be tak5 into acc\nt any d$uction :i* is all[able to ! taxpay] "u ?is subtitle4 4 7b7 ,requir$ qu>t]ly report+ ( wages ( employees ,section #fjaa is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,employ] report+ ( wages ,e p]son requir$ to d$uct & )hold f an employee a tax "u section #caja or #cdjb %all include on ea* return or /atem5t submitt$ ) respect to su* tax1 ! "n & address ( su* employee & ! am\nt ( wages = su* employee on :i* su* tax 0 )held4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,report+ ,! ,secret>y ( ! ,treasury1 or 8 designee1 may delay ! application ( ! am5dm5t made by subsection 7b7 = su* p]iod z su* ,secret>y 7or designee7 det]m9es to be reasonable to all[ p]sons adequate "t to modify electronic 7or o!r7 sy/ems to p]mit su* p]son to comply ) ! requirem5ts ( su* am5dm5t4 #aaje4 ,c]ta9 income disall[$ = purposes ( ! e>n$ income tax cr$it 7a7 ,sub/antiation requirem5t ,section #cb is am5d$ by add+ at ! end ! foll[+ new subsection3 7n7 ,inconsi/5t income report+ ,if ! e>n$ income ( a taxpay] claim$ on a return = purposes ( ?is section is n sub/antiat$ by /atem5ts or returns "u sections #fjea1 #fjeb1 #fjda7;a71 or #fjej,w ) respect to su* taxpay]1 ! ,secret>y may require su* taxpay] to provide books & records to sub/antiate su* income1 includ+ = ! purpose ( prev5t+ fraud4 4 7b7 ,exclusion ( unsub/antiat$ am\nt f e>n$ income ,section #cb7;c77#b7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,exclusion ,9 ! case ( a taxpay] ) respect to :i* !re is an inconsi/5cy describ$ 9 subsection 7n7 :o fails to sub/antiate su* inconsi/5cy to ! satisfaction ( ! ,secret>y1 ! t]m e>n$ income %all n include am\nts to ! ext5t ( su* inconsi/5cy4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 ,c ,simplification & re=m ( education inc5tives #abja4 ,am]ican opportunity tax cr$it 7a7 ,9 g5]al ,section #be;,a is am5d$ to read z foll[s3 #be;,a4 ,am]ican opportunity tax cr$it 7a7 ,9 g5]al ,9 ! case ( an individual1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] = ! taxable ye> an am\nt equal to ! sum (-- 7#a7 #ajj p]c5t ( s mu* ( ! qualifi$ tuition & relat$ exp5ses paid by ! taxpay] dur+ ! taxable ye> 7= education furni%$ to any eligible /ud5t = :om an election is 9 effect "u ?is section = su* taxable ye> dur+ any academic p]iod beg9n+ 9 su* taxable ye>7 z does n exce$ #b1jjj1 plus 7#b7 #be p]c5t ( s mu* ( su* exp5ses s paid z exce$s ! doll> am\nt 9 effect "u p>agraph 7#a7 b does n exce$ twice su* doll> am\nt4 7b7 ,portion ( cr$it refundable #dj p]c5t ( ! cr$it all[able "u subsection 7a77#a7 7det]m9$ )\t reg>d to ?is subsection & section #bf7;a7 & aft] application ( all o!r provisions ( ?is section7 %all be treat$ z a cr$it all[able "u subp>t ,c 7& n "u ?is "p74 ,! prec$+ s5t5ce %all n apply to any taxpay] = any taxable ye> if su* taxpay] is a *ild to :om section #a7;d7 applies = su* taxable ye>4 7c7 ,limitation bas$ on modifi$ adju/$ gross income 7#a7 ,9 g5]al ,! am\nt all[able z a cr$it "u subsection 7a7 = any taxable ye> %all be r$uc$ 7b n bel[ z]o7 by an am\nt :i* be>s ! same ratio to ! am\nt s all[able 7det]m9$ )\t reg>d to ?is subsection & subsection 7b7 b aft] application ( all o!r provisions ( ?is section7 z-- 7,a7 ! excess (-- 7i7 ! taxpay]'s modifi$ adju/$ gross income = su* taxable ye>1 ov] 7ii7 #hj1jjj 7twice su* am\nt 9 ! case ( a jo9t return71 be>s to 7,b7 #aj1jjj 7twice su* am\nt 9 ! case ( a jo9t return74 7#b7 ,modifi$ adju/$ gross income ,= purposes ( ?is subsection1 ! t]m modifi$ adju/$ gross income means ! adju/$ gross income ( ! taxpay] = ! taxable ye> increas$ by any am\nt exclud$ f gross income "u section #iaa1 #ica1 or #icc4 7d7 ,o!r limitations 7#a7 ,cr$it all[$ only = #e taxable ye>s ,an election to h ?is section apply may n be made = any taxable ye> if su* an election 7by ! taxpay] or any o!r individual7 is 9 effect ) respect to su* /ud5t = any #e prior taxable ye>s4 7#b7 ,cr$it all[$ only = fir/ #e ye>s ( po/second>y education 7,a7 ,9 g5]al ,no cr$it %all be all[$ "u subsection 7a7 = a taxable ye> ) respect to ! qualifi$ tuition & relat$ exp5ses ( an eligible /ud5t if ! /ud5t has complet$ 7be=e ! beg9n+ ( su* taxable ye>7 ! fir/ #e ye>s ( po/second>y education at an eligible educational in/itution4 7,b7 ,fif? ye> limitations ,9 ! case ( an eligible /ud5t ) respect to :om an election has be5 9 effect = #d prec$+ taxable ye>s = purposes ( ! fif? taxable ye>-- 7i7 ! am\nt ( ! cr$it all[$ "u ?is section = ! taxable ye> %all n exce$ an am\nt equal to #ej p]c5t ( ! cr$it o!rwise det]m9$ ) respect to su* /ud5t "u ?is section 7)\t reg>d to ?is subp>agraph71 & 7ii7 ! am\nt ( ! cr$it det]m9$ "u subsection 7b7 & all[able "u subp>t ,c %all n exce$ an am\nt equal to #dj p]c5t ( ! am\nt det]m9$ ) respect to su* /ud5t "u clause 7i74 7e7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,eligible /ud5t ,! t]m eligible /ud5t means1 ) respect to any academic p]iod1 a /ud5t :o-- 7,a7 meets ! requirem5ts ( section #dhd7;a77#a7 ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajia7;a77#a771 z 9 effect on ,augu/ #e1 #aiig1 & 7,b7 is c>ry+ at lea/ ! normal full-"t "w load = ! c\rse ( /udy ! /ud5t is pursu+4 7#b7 ,qualifi$ tuition & relat$ exp5ses 7,a7 ,9 g5]al ,! t]m qualifi$ tuition & relat$ exp5ses means tuition1 fees1 & c\rse mat]ials1 requir$ = enrollm5t or att5dance (-- 7i7 ! taxpay]1 7ii7 ! taxpay]'s sp\se1 or 7iii7 any dep5d5t ( ! taxpay]1 at an eligible educational in/itution = c\rses ( in/ruction ( su* individual at su* in/itution4 7,b7 ,exception = education involv+ sports1 etc ,su* t]m does n include exp5ses ) respect to any c\rse or o!r education involv+ sports1 games1 or hobbies1 unless su* c\rse or o!r education is "p ( ! individual's degree program4 7,c7 ,exception = nonacademic fees ,su* t]m does n include /ud5t activity fees1 a?letic fees1 insurance exp5ses1 or o!r exp5ses unrelat$ to an individual's academic c\rse ( in/ruction4 7#c7 ,eligible educational in/itution ,! t]m eligible educational in/itution means an in/itution-- 7,a7 :i* is describ$ 9 section #dha ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajhh71 z 9 effect on ,augu/ #e1 #aiig1 & 7,b7 :i* is eligible to p>ticipate 9 a program "u title ,,iv ( su* ,act4 7f7 ,special rules 7#a7 ,id5tification requirem5ts 7,a7 ,/ud5t ,no cr$it %all be all[$ "u subsection 7a7 to a taxpay] ) respect to ! qualifi$ tuition & relat$ exp5ses ( an individual unless ! taxpay] includes ! "n & taxpay] id5tification numb] ( su* individual on ! return ( tax = ! taxable ye>1 & su* taxpay] id5tification numb] 0 issu$ on or be=e ! due date = fil+ su* return4 7,b7 ,taxpay] ,no cr$it %all be all[$ "u ?is section if ! id5tify+ numb] ( ! taxpay] 0 issu$ aft] ! due date = fil+ ! return = ! taxable ye>4 7,c7 ,in/itution ,no cr$it %all be all[$ "u ?is section unless ! taxpay] includes ! employ] id5tification numb] ( any in/itution to :i* qualifi$ tuition & relat$ exp5ses 7 paid ) respect to ! individual4 7#b7 ,adju/m5t = c]ta9 s*ol>%ips1 etc ,! am\nt ( qualifi$ tuition & relat$ exp5ses o!rwise tak5 into acc\nt "u subsection 7a7 ) respect to an individual = an academic p]iod %all be r$uc$ 7be=e ! application ( subsection 7c77 by ! sum ( any am\nts paid = ! b5efit ( su* individual :i* are allocable to su* p]iod z-- 7,a7 a qualifi$ s*ol>%ip :i* is excludable f gross income "u section #aag1 7,b7 an educational assi/ance all[ance "u *apt] #cj1 #ca1 #cb1 #cd1 or #ce ( title #ch1 ,unit$ ,/ates ,code1 or "u *apt] #afjf ( title #aj1 ,unit$ ,/ates ,code1 & 7,c7 a paym5t 7o!r ?an a gift1 beque/1 devise1 or inh]itance )9 ! mean+ ( section #ajb7;a77 = su* individual's educational exp5ses1 or attributable to su* individual's enrollm5t at an eligible educational in/itution1 :i* is excludable f gross income "u any law ( ! ,unit$ ,/ates4 7#c7 ,treatm5t ( exp5ses paid by dep5d5t ,if an individual is a dep5d5t ( ano!r taxpay] = a taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* su* individuals taxable ye> beg9s-- 7,a7 no cr$it %all be all[$ "u subsection 7a7 to su* individual = su* individual's taxable ye>1 & 7,b7 qualifi$ tuition & relat$ exp5ses paid by su* individual dur+ su* individual's taxable ye> %all be treat$ = purposes ( ?is section z paid by su* o!r taxpay]4 7#d7 ,treatm5t ( c]ta9 prepaym5ts ,if qualifi$ tuition & relat$ exp5ses are paid by ! taxpay] dur+ a taxable ye> = an academic p]iod :i* beg9s dur+ ! fir/ #c mon?s foll[+ su* taxable ye>1 su* academic p]iod %all be treat$ = purposes ( ?is section z beg9n+ dur+ su* taxable ye>4 7#e7 ,d5ial ( d\ble b5efit ,no cr$it %all be all[$ "u ?is section = any am\nt = :i* a d$uction is all[$ "u any o!r provision ( ?is *apt]4 7#f7 ,no cr$it = m>ri$ individuals fil+ sep>ate returns ,if ! taxpay] is a m>ri$ individual 7)9 ! mean+ ( section #ggjc71 ?is section %all apply only if ! taxpay] & ! taxpay]'s sp\se file a jo9t return = ! taxable ye>4 7#g7 ,nonresid5t ali5s ,if ! taxpay] is a nonresid5t ali5 individual = any portion ( ! taxable ye>1 ?is section %all apply only if su* individual is treat$ z a resid5t ali5 ( ! ,unit$ ,/ates = purposes ( ?is *apt] by reason ( an election "u subsection 7g7 or 7h7 ( section #fjac4 7#h7 ,re/rictions on taxpay]s :o improp]ly claim$ cr$it 9 prior ye> 7,a7 ,taxpay]s mak+ prior fraudul5t or reckless claims 7i7 ,9 g5]al ,no cr$it %all be all[$ "u ?is section = any taxable ye> 9 ! disall[ance p]iod4 7ii7 ,disall[ance p]iod ,= purposes ( clause 7i71 ! disall[ance p]iod is-- 7,i7 ! p]iod ( #aj taxable ye>s aft] ! mo/ rec5t taxable ye> = :i* !re 0 a f9al det]m9ation t ! taxpay]'s claim ( cr$it "u ?is section 0 due to fraud1 & 7,,ii7 ! p]iod ( #b taxable ye>s aft] ! mo/ rec5t taxable ye> = :i* !re 0 a f9al det]m9ation t ! taxpay]'s claim ( cr$it "u ?is section 0 due to reckless or int5tional disreg>d ( rules & regulations 7b n due to fraud74 7,b7 ,taxpay]s mak+ improp] prior claims ,9 ! case ( a taxpay] :o is d5i$ cr$it "u ?is section = any taxable ye> z a result ( ! defici5cy proc$ures "u sub*apt] ,b ( *apt] #fc1 no cr$it %all be all[$ "u ?is section = any subsequ5t taxable ye> unless ! taxpay] provides su* in=mation z ! ,secret>y may require to demon/rate eligibility = su* cr$it4 7g7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( a taxable ye> beg9n+ aft] #bjah1 ! #hj1jjj am\nt 9 subsection 7c77#a77;,a77ii7 %all ea* be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7#b7 ,r\nd+ ,if any am\nt z adju/$ "u p>agraph 7#a7 is n a multiple ( #a1jjj1 su* am\nt %all be r\nd$ to ! next l[e/ multiple ( #a1jjj4 7h7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ?is section1 includ+ regulations provid+ = a recapture ( ! cr$it all[$ "u ?is section 9 cases :]e !re is a refund 9 a subsequ5t taxable ye> ( any am\nt :i* 0 tak5 into acc\nt 9 det]m9+ ! am\nt ( su* cr$it4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #gb7t77#g77;,b7 is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7f77#b74 7#b7 ,section #ebi7;c77#c77;,b77v77,i7 is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7f77#b74 7#c7 ,section #ebi7;e77#c77;,b77i7 is am5d$ by /rik+ section #be;,a7b77#c7 & ins]t+ section #be;,a7d74 7#d7 ,section #ecj7;d77#b77;,c7 is am5d$-- 7,a7 by /rik+ section #be;,a7g77#b7 9 clause 7i77,i7 & ins]t+ section #be;,a7f77#b71 & 7,b7 by /rik+ ,hope & ,lifetime ,le>n+ cr$its 9 ! head+ & ins]t+ ,am]ican opportunity tax cr$it4 7#e7 ,section #ecj7;d77#d77;,b77iii7 is am5d$ by /rik+ section #be;,a7g77#b7 & ins]t+ section #be;,a7d77#d77;,b74 7#f7 ,section #fjej,s7e7 is am5d$ by /rik+ subsection 7g77#b7 & ins]t+ subsection 7f77#b74 7#g7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ subsection 7i77#f7 & ins]t+ subsection 7b74 7#h7 ,section #fbac7;g77#b77;,j7 is am5d$ by /rik+ ,,t9 requir$ "u section #be;,a7g77#a7 & ins]t+ ,,t91 & employ] id5tification numb]1 requir$ "u section #be;,a7f77#a74 7#i7 ,section #fbac7;g77#b77,q7 is am5d$ to read z foll[s3 7,q7 an omission ( in=mation requir$ by section #be;,a7f77#h77;,b7 or an entry on ! return claim+ ! cr$it det]m9$ "u section #be;,a7a7 = a taxable ye> = :i* ! cr$it is disall[$ "u section #be;,a7f77#h77;,a74 4 7#aj7 ,section #ajjd7;c7 ( division ,b ( ! ,am]ican ,recov]y & ,re9ve/m5t ,tax ,act ( #bjji is am5d$-- 7,a7 9 p>agraph 7#a7-- 7i7 by /rik+ section #be;,a7i77#f7 ea* place x appe>s & ins]t+ section #be;,a7b71 & 7ii7 by /rik+ ) respect to taxable ye>s beg9n+ aft] #bjjh & be=e #bjah ea* place x appe>s & ins]t+ ) respect to ea* taxable ye>1 7,b7 9 p>agraph 7#b71 by /rik+ ,section #be;,a7i77#f7 & ins]t+ ,section #be;,a7b71 & 7,c7 9 p>agraph 7#c77;,c71 by /rik+ subsection 7i77#f7 & ins]t+ subsection 7b74 7#aa7 ,! table ( sections = subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #be;,a & ins]t+ ! foll[+ new item3 ,sec4 #be;,a4 ,am]ican opportunity tax cr$it4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #abjb4 ,consolidation ( education sav+s rules 7a7 ,no new contributions to ,cov]dell education sav+s acc\nt ,section #ecj7;b77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ,except 9 ! case ( rollov] contributions1 no contribution w be accept$ aft] ,decemb] #ca1 #bjag4 4 7b7 ,limit$ di/ribution all[$ = elem5t>y & second>y tuition 7#a7 ,9 g5]al ,section #ebi7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,treatm5t ( elem5t>y & second>y tuition ,any ref]5ce 9 ?is subsection to ! t]m qualifi$ high] education exp5se %all include a ref]5ce to exp5ses = tuition 9 connection ) enrollm5t at an elem5t>y or second>y s*ool4 4 7#b7 ,limitation ,section #ebi7;e77#c77;,a7 is am5d$ by add+ at ! end ! foll[+3 ,! am\nt ( ca% di/ributions f all qualifi$ tuition programs describ$ 9 subsection 7b77#a77;,a77ii7 ) respect to a b5efici>y dur+ any taxable ye>1 %all1 9 ! aggregate1 include n m ?an #aj1jjj 9 exp5ses = tuition incurr$ dur+ ! taxable ye> 9 connection ) ! enrollm5t or att5dance ( ! b5efici>y z an elem5t>y or second>y s*ool /ud5t at a public1 private1 or religi\s s*ool44 7c7 ,rollov]s to qualifi$ tuition programs p]mitt$ ,section #ecj7;d77#e7 is am5d$ by ins]t+ 1 or into 7by pur*ase or contribution7 a qualifi$ tuition program 7z def9$ 9 section #ebi71 aft] into ano!r ,cov]dell education sav+s acc\nt4 7d7 ,di/ributions f qualifi$ tuition programs = c]ta9 exp5ses associat$ ) regi/]$ appr5tice%ip programs ,section #ebi7;e77#c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,c]ta9 exp5ses associat$ ) regi/]$ appr5tice%ip programs ,! t]m qualifi$ high] education exp5ses %all include books1 supplies1 & equipm5t requir$ = ! enrollm5t or att5dance ( a designat$ b5efici>y 9 an appr5tice%ip program regi/]$ & c]tifi$ ) ! ,secret>y ( ,labor "u section #a ( ! ,national ,appr5tice%ip ,act 7#bi ,u4,s4,c4 #ej74 4 7e7 ,unborn *ildr5 all[$ z acc\nt b5efici>ies ,section #ebi7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,treatm5t ( unborn *ildr5 7,a7 ,9 g5]al ,no?+ %all prev5t an unborn *ild f be+ treat$ z a designat$ b5efici>y or an individual "u ?is section4 7,b7 ,unborn *ild ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m unborn *ild means a *ild 9 ut]o4 7ii7 ,*ild 9 ut]o ,! t]m *ild 9 ut]o means a memb] ( ! species homo sapi5s1 at any /age ( developm5t1 :o is c>ri$ 9 ! womb4 4 7f7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to contributions made aft] ,decemb] #ca1 #bjag4 7#b7 ,rollov]s to qualifi$ tuition programs ,! am5dm5ts made by subsection 7b7 %all apply to di/ributions aft] ,decemb] #ca1 #bjag4 #abjc4 ,re=ms to dis*>ge ( c]ta9 /ud5t loan indebt$ness 7a7 ,treatm5t ( /ud5t loans dis*>g$ on acc\nt ( dea? or disability ,section #ajh7;f7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,dis*>ges on acc\nt ( dea? or disability 7,a7 ,9 g5]al ,9 ! case ( an individual1 gross income does n include any am\nt :i* 7b = ?is subsection7 w\ld be includible 9 gross income by reasons ( ! dis*>ge 79 :ole or 9 "p7 ( any loan describ$ 9 subp>agraph 7,b7 if su* dis*>ge 0-- 7i7 pursuant to subsection 7a7 or 7d7 ( section #dcg ( ! ,high] ,education ,act ( #aife or ! p>allel b5efit "u "p ,d ( title ,,iv ( su* ,act 7relat+ to ! repaym5t ( loan liability71 7ii7 pursuant to section #dfd7;c77#a77;,f7 ( su* ,act1 or 7iii7 o!rwise dis*>g$ on acc\nt ( ! dea? or total & p]man5t disability ( ! /ud5t4 7,b7 ,loans describ$ ,a loan is describ$ 9 ?is subp>agraph if su* loan is-- 7i7 a /ud5t loan 7z def9$ 9 p>agraph 7#b771 or 7ii7 a private education loan 7z def9$ 9 section #adj7g7 ( ! ,consum] ,cr$it ,protection ,act 7#ae ,u4,s4,c4 #afej7g7774 4 7b7 ,exclusion f gross income = paym5ts made "u indian heal? s]vice loan repaym5t program 7#a7 ,9 g5]al ,section #ajh7;f77#d7 is am5d$ by ins]t+ "u section #ajh ( ! ,indian ,heal? ,c>e ,improvem5t ,act1 aft] #cch;,i ( su* ,act14 7#b7 ,cl]ical am5dm5t ,! head+ = section #ajh7;f77#d7 is am5d$ by /rik+ & c]ta9 & ins]t+ 1 indian heal? s]vice loan repaym5t program1 & c]ta94 7c7 ,effective dates 7#a7 ,subsection 7a7 ,! am5dm5t made by subsection 7a77#a7 %all apply to dis*>ges ( indebt$ness aft] ,decemb] #ca1 #bjag4 7#b7 ,subsection 7b7 ,! am5dm5ts made by subsection 7b7 %all apply to am\nts receiv$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #abjd4 ,repeal ( o!r provisions relat+ to education 7a7 ,9 g5]al ,sub*apt] ,b ( *apt] #a is am5d$-- 7#a7 9 "p ,,vii by /rik+ sections #bba & #bbb 7& by /rik+ ! items relat+ to su* sections 9 ! table ( sections = su* "p71 7#b7 9 "p ,,vii by /rik+ sections #ace & #abg 7& by /rik+ ! items relat+ to su* sections 9 ! table ( sections = su* "p71 & 7#c7 by /rik+ subsection 7d7 ( section #aag4 7b7 ,con=m+ am5dm5t relat+ to section #bba 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ag74 7#b7 ,section #gd7;d7 is am5d$ by /rik+ #bba14 7#c7 ,section #hf7;b77#b77;,a7 is am5d$ by /rik+ #bba14 7#d7 ,section #bai7;g77#c77;,a77ii7 is am5d$ by /rik+ #bba14 7#e7 ,section #afc7;h77#b7 is am5d$ by /rik+ subp>agraph 7,f74 7#f7 ,section #fjej,s7a7 is am5d$-- 7,a7 by ins]t+ or at ! end ( p>agraph 7#a71 7,b7 by /rik+ or at ! end ( p>agraph 7#b71 & 7,c7 by /rik+ p>agraph 7#c74 7#g7 ,section #fjej,s7e7 is am5d$ by /rik+ all t foll[s !re(7 & ins]t+ a p]iod4 7c7 ,con=m+ am5dm5ts relat$ to section #bbb 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ah74 7#b7 ,section #gd7;d77#b77;,b7 is am5d$ by /rik+ #bbb14 7#c7 ,section #hf7;b77#b77;,a7 is am5d$ by /rik+ #bbb14 7#d7 ,section #bai7;g77#c77;,a77ii7 is am5d$ by /rik+ #bbb14 7d7 ,con=m+ am5dm5ts relat+ to section #abg 7#a7 ,section #abe7;f77#a7 is am5d$ by /rik+ #abg14 7#b7 ,section #acb7;j77#h7 is am5d$ by /rik+ :i* are n excludable f gross income "u section #abg4 7#c7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #abg14 7#d7 ,section #dad7t77#b7 is am5d$ by /rik+ #abg14 7#e7 ,section #caba7;a77#ah7 is am5d$ by /rik+ #abg14 7#f7 ,section #cbca7;e7 is am5d$ by /rik+ p>agraph 7#f74 7#g7 ,section #ccjf7;b77#ac7 is am5d$ by #abg14 7#h7 ,section #cdja7;a77#ah7 is am5d$ by /rik+ #abg14 7#i7 ,section #fjci;,d7d77#a7 is am5d$ by /rik+ 1 #abg4 7e7 ,con=m+ am5dm5ts relat+ to section #aag7;d7 7#a7 ,section #aag7;c77#a7 is am5d$-- 7,a7 by /rik+ subsections 7a7 & 7d7 & ins]t+ subsection 7a71 & 7,b7 by /rik+ or qualifi$ tuition r$uction4 7#b7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #aag7;d714 7#c7 ,section #dad7t77#b7 is am5d$ by /rik+ #aag7;d714 7f7 ,con=m+ am5dm5ts relat$ to section #ace 7#a7 ,section #gd7;d77#b77;,b7 is am5d$ by /rik+ #ace14 7#b7 ,section #hf7;b77#b77;,a7 is am5d$ by /rik+ #ace14 7#c7 ,section #bai7;g77#c77;,a77ii7 is am5d$ by /rik+ #ace14 7g7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,am5dm5ts relat+ to section #aag7;d7 ,! am5dm5ts made by subsections 7a77#c7 & 7e7 %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 #abje4 ,rollov]s betwe5 qualifi$ tuition programs & qualifi$ ,,able programs 7a7 ,rollov]s f qualifi$ tuition programs to qualifi$ ,,able programs ,section #ebi7;c77#c77;,c77i7 is am5d$ by /rik+ or at ! end ( subclause 7,i71 by /rik+ ! p]iod at ! end ( subclause 7,,ii7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new subclause3 7,,iii7 to an ,,able acc\nt 7z def9$ 9 section #ebi;,a7e77#f77 ( ! designat$ b5efici>y or a memb] ( ! family ( ! designat$ b5efici>y4 ,subclause 7,,iii7 %all n apply to s mu* ( a di/ribution :i*1 :5 add$ to all o!r contributions made to ! ,,able acc\nt = ! taxable ye>1 exce$s ! limitation "u section #ebi;,a7b77#b77;,b74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ,decemb] #ca1 #bjag4 ,d ,simplification & re=m ( d$uctions #acja4 ,repeal ( ov]all limitation on itemiz$ d$uctions 7a7 ,9 g5]al ,"p #a ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #fh 7& ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acjb4 ,mortgage int]e/ 7a7 ,modification ( limitations 7#a7 ,9 g5]al ,section #afc7;h77#c7 is am5d$ to read z foll[s3 7#c7 ,qualifi$ resid5ce int]e/ ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ resid5ce int]e/ means any int]e/ :i* is paid or accru$ dur+ ! taxable ye> on indebt$ness :i*-- 7i7 is incurr$ 9 acquir+1 con/ruct+1 or sub/antially improv+ any qualifi$ resid5ce 7det]m9$ z ( ! "t ! int]e/ is accru$7 ( ! taxpay]1 & 7ii7 is secur$ by su* resid5ce4 ,su* t]m also includes int]e/ on any indebt$ness secur$ by su* resid5ce result+ f ! ref9anc+ ( indebt$ness meet+ ! requirem5ts ( ! prec$+ s5t5ce 7or ?is s5t5ce72 b only to ! ext5t ! am\nt ( ! indebt$ness result+ f su* ref9anc+ does n exce$ ! am\nt ( ! ref9anc$ indebt$ness4 7,b7 ,limitation ,! aggregate am\nt ( indebt$ness tak5 into acc\nt "u subp>agraph 7,a7 = any p]iod %all n exce$ #ejj1jjj 7half ( su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return74 7,c7 ,treatm5t ( indebt$ness incurr$ on or be=e ,novemb] #b1 #bjag 7i7 ,9 g5]al ,9 ! case ( any pre-,novemb] #b1 #bjag1 indebt$ness1 ?is p>agraph %all apply z 9 effect imm$iately be=e ! enactm5t ( ! ,tax ,cuts & ,jobs ,act4 7ii7 ,pre-,novemb] #b1 #bjag1 indebt$ness ,= purposes ( ?is subp>agraph1 ! t]m pre-,novemb] #b1 #bjag1 indebt$ness means-- 7,i7 any pr9cipal resid5ce acquisition indebt$ness :i* 0 incurr$ on or be=e ,novemb] #b1 #bjag1 or 7,,ii7 any pr9cipal resid5ce acquisition indebt$ness :i* is incurr$ aft] ,novemb] #b1 #bjag1 to ref9ance indebt$ness describ$ 9 clause 7i7 7or ref9anc$ indebt$ness meet+ ! requirem5ts ( ?is clause7 to ! ext5t 7imm$iately aft] ! ref9anc+7 ! pr9cipal am\nt ( ! indebt$ness result+ f ! ref9anc+ does n exce$ ! pr9cipal am\nt ( ! ref9anc$ indebt$ness 7imm$iately be=e ! ref9anc+74 7iii7 ,limitation on p]iod ( ref9anc+ clause 7ii77,,ii7 %all n apply to any indebt$ness aft]-- 7,i7 ! expiration ( ! t]m ( ! orig9al indebt$ness1 or 7,,ii7 if ! pr9cipal ( su* orig9al indebt$ness is n amortiz$ ov] its t]m1 ! expiration ( ! t]m ( ! #a/ ref9anc+ ( su* indebt$ness 7or if e>li]1 ! date :i* is #cj ye>s aft] ! date ( su* #a/ ref9anc+74 7iv7 ,b9d+ contract exception ,9 ! case ( a taxpay] :o ent]s into a writt5 b9d+ contract be=e ,novemb] #b1 #bjag1 to close on ! pur*ase ( a pr9cipal resid5ce be=e ,janu>y #a1 #bjah1 & :o pur*ases su* resid5ce be=e ,april #a1 #bjah1 subp>agraphs 7,a7 & 7,b7 %all be appli$ by sub/itut+ ,april #a1 #bjah = ,novemb] #b1 #bjag4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #ajh7;h77#b7 is by /rik+ = #a1jjj1jjj 7#ejj1jjj 9 clause 7ii7 !re( & ins]t+ = #ejj1jjj 7#bej1jjj 9 p>agraph 7#b77;,a71 & #a1jjj1jjj = #ejj1jjj 9 p>agraph 7#b77;,b71 !re(4 7,b7 ,section #afc7;h7 is am5d$ by /rik+ subp>agraphs 7,e7 & 7,f7 9 p>agraph 7#d74 7b7 ,taxpay]s limit$ to #a qualifi$ resid5ce ,section #afc7;h77#d77;,a77i7 is am5d$ to read z foll[s3 7i7 ,9 g5]al ,! t]m qualifi$ resid5ce means ! pr9cipal resid5ce 7)9 ! mean+ ( section #aba7 ( ! taxpay]4 4 7c7 ,effective dates 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to int]e/ paid or accru$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 ) respect to indebt$ness incurr$ be=e1 on1 or aft] su* date4 7#b7 ,treatm5t ( gr&fa!r$ indebt$ness ,= application ( ! am5dm5ts made by ?is section to gr&fa!r$ indebt$ness1 see p>agraph 7#c77;,c7 ( section #afc7;h7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z am5d$ by ?is section4 #acjc4 ,repeal ( d$uction = c]ta9 taxes n paid or accru$ 9 a trade or bus9ess 7a7 ,9 g5]al ,section #afd7;b77#e7 is am5d$ to read z foll[s3 7#e7 ,limitation 9 case ( individuals ,9 ! case ( a taxpay] o!r ?an a corporation-- 7,a7 =eign real prop]ty taxes 7o!r ?an taxes :i* are paid or accru$ 9 c>ry+ on a trade or bus9ess or an activity describ$ 9 section #bab7 %all n be tak5 into acc\nt "u subsection 7a77#a71 7,b7 ! aggregate am\nt ( taxes 7o!r ?an taxes :i* are paid or accru$ 9 c>ry+ on a trade or bus9ess or an activity describ$ 9 section #bab7 tak5 into acc\nt "u subsection 7a77#a7 = any taxable ye> %all n exce$ #aj1jjj 7#e1jjj 9 ! case ( a m>ri$ individual fil+ a sep>ate return71 7,c7 subsection 7a77#b7 %all only apply to taxes :i* are paid or accru$ 9 c>ry+ on a trade or bus9ess or an activity describ$ 9 section #bab1 & 7,d7 subsection 7a77#c7 %all n apply to ,/ate & local taxes4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acjd4 ,repeal ( d$uction = p]sonal casualty losses 7a7 ,9 g5]al ,section #afe7;c7 is am5d$ by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ 2 & at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #afe7;h7 is am5d$ to read z foll[s3 7h7 ,special rule :]e p]sonal casualty ga9s exce$ p]sonal casualty losses 7#a7 ,9 g5]al ,if ! p]sonal casualty ga9s = any taxable ye> exce$ ! p]sonal casualty losses = su* taxable ye>-- 7,a7 all su* ga9s %all be treat$ z ga9s f sales or ex*anges ( capital assets1 & 7,b7 all su* losses %all be treat$ z losses f sales or ex*anges ( capital assets4 7#b7 ,def9itions ( p]sonal casualty ga9 & p]sonal casualty loss ,= purposes ( ?is subsection-- 7,a7 ,p]sonal casualty loss ,! t]m p]sonal casualty loss means any loss ( prop]ty n connect$ ) a trade or bus9ess or a transaction ent]$ into = pr(it1 if su* loss arises f fire1 /orm1 %ipwreck1 or o!r casualty1 or f !ft4 7,b7 ,p]sonal casualty ga9 ,! t]m p]sonal casualty ga9 means ! recogniz$ ga9 f any involunt>y conv]sion ( prop]ty :i* is describ$ 9 subp>agraph 7,a7 aris+ f fire1 /orm1 %ipwreck1 or o!r casualty1 or f !ft4 4 7#b7 ,section #afe is am5d$ by /rik+ subsection 7k74 7#c7 7,a7 ,section #afe7l77#a7 is am5d$ by /rik+ a loss describ$ 9 subsection 7c77#c7 & ins]t+ an ord9>y loss describ$ 9 subsection 7c77#b74 7,b7 ,section #afe7l7 is am5d$-- 7i7 by /rik+ p>agraph 7#e71 7ii7 by r$esignat+ p>agraphs 7#b71 7#c71 & 7#d7 z p>agraphs 7#c71 7#d71 & 7#e71 respectively1 & 7iii7 by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraph3 7#b7 ,limitations 7,a7 ,deposit may n be f$]ally insur$ ,no election may be made "u p>agraph 7#a7 ) respect to any loss on a deposit 9 a qualifi$ f9ancial in/itution if "p or all ( su* deposit is insur$ "u ,f$]al law4 7,b7 ,doll> limitation ,) respect to ea* f9ancial in/itution1 ! aggregate am\nt ( losses attributable to deposits 9 su* f9ancial in/itution to :i* an election "u p>agraph 7#a7 may be made by ! taxpay] = any taxable ye> %all n exce$ #bj1jjj 7#aj1jjj 9 ! case ( a sep>ate return by a m>ri$ individual74 ,! limitation ( ! prec$+ s5t5ce %all be r$uc$ by ! am\nt ( any insurance proce$s "u any ,/ate law :i* c reasonably be expect$ to be receiv$ ) respect to losses on deposits 9 su* in/itution4 4 7#d7 ,section #agb7;b77#a77;,e77ii71 prior to am5dm5t "u title ,,iii1 is am5d$ by /rik+ subclause 7,i7 & by r$esignat+ subclauses 7,,ii7 & 7,,iii7 z subclauses 7,i7 & 7,,ii71 respectively4 7#e7 ,section #agb7;d77#d77;,c7 is am5d$ by /rik+ p>agraph 7#b7 or 7#c7 ( section #afe7;c7 & ins]t+ section #afe7;c77#b74 7#f7 ,section #bgd7;f7 is am5d$ by /rik+ casualty losses1 9 ! head+ !re(4 7#g7 ,section #bhj;,a7b7 is am5d$ by /rik+ casualty losses1 9 ! head+ !re(4 7#h7 ,section #hgc7;b71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7#i7 ,section #ejd7;b7 ( ! ,disa/] ,tax ,relief & ,airport & ,airway ,ext5sion ,act ( #bjag is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,coord9ation ) ,tax ,re=m ,?is subsection %all be appli$ )\t reg>d to ! am5dm5ts made by section #acjd ( ! ,tax ,cuts & ,jobs ,act4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acje4 ,limitation on wag]+ losses 7a7 ,9 g5]al ,section #afe7;d7 is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ! prec$+ s5t5ce1 ! t]m losses f wag]+ transactions includes any d$uction o!rwise all[able "u ?is *apt] incurr$ 9 c>ry+ on any wag]+ transaction44 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acjf4 ,*>itable contributions 7a7 ,increas$ limitation = ca% contributions ,section #agj7;b77#a7 is am5d$ by r$esignat+ subp>agraph 7,g7 z subp>agraph 7,h7 & by ins]t+ aft] subp>agraph 7,f7 ! foll[+ new subp>agraph3 7,g7 ,increas$ limitation = ca% contributions 7i7 ,9 g5]al ,9 ! case ( any contribution ( ca% to an organization describ$ 9 subp>agraph 7,a71 ! total am\nt ( su* contributions :i* may be tak5 into acc\nt "u subsection 7a7 = any taxable ye> %all n exce$ #fj p]c5t ( ! taxpay]'s contribution base = su* ye>4 7ii7 ,c>ryov] ,if ! aggregate am\nt ( contributions describ$ 9 clause 7i7 exce$s ! applicable limitation "u clause 7i71 su* excess %all be treat$ 79 a mann] consi/5t ) ! rules ( subsection 7d77#a77 z a *>itable contribution to :i* clause 7i7 applies 9 ea* ( ! #e succe$+ ye>s 9 ord] ( "t4 7iii7 ,coord9ation ) subp>agraphs 7,a7 & 7,b7 7,i7 ,9 g5]al ,contributions tak5 into acc\nt "u ?is subp>agraph %all n be tak5 into acc\nt "u subp>agraph 7,a74 7,,ii7 ,limitation r$uction ,subp>agraphs 7,a7 & 7,b7 %all be appli$ by r$uc+ 7b n bel[ z]o7 ! aggregate contribution limitation all[$ = ! taxable ye> "u ea* su* subp>agraph by ! aggregate contributions all[$ "u ?is subp>agraph = su* taxable ye>4 4 7b7 ,d5ial ( d$uction = college a?letic ev5t seat+ rights ,section #agj7l77#a7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,no d$uction %all be all[$ "u ?is section = any am\nt describ$ 9 p>agraph 7#b74 4 7c7 ,*>itable mileage rate adju/$ = inflation ,section #agj7;i7 is am5d$ by /rik+ %all be #ad c5ts p] mile & ins]t+ %all be a rate :i* takes into acc\nt ! v>iable co/ ( op]at+ an automobile4 7d7 ,repeal ( sub/antiation exception 9 case ( contributions report$ by donee ,section #agj7;f77#h7 is am5d$ by /rik+ subp>agraph 7,d7 & by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,d74 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acjg4 ,repeal ( d$uction = tax prep>ation exp5ses 7a7 ,9 g5]al ,section #bab is am5d$ by add+ or at ! end ( p>agraph 7#a71 by /rik+ 2 or at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acjh4 ,repeal ( m$ical exp5se d$uction 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b is am5d$ by /rik+ by /rik+ section #bac 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #aje7;f7 is am5d$ to read z foll[s3 7f7 ,m$ical c>e ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m m$ical c>e means am\nts paid-- 7,a7 = ! diagnosis1 cure1 mitigation1 treatm5t1 or prev5tion ( disease1 or = ! purpose ( affect+ any /ructure or function ( ! body1 7,b7 = transportation prim>ily = & ess5tial to m$ical c>e ref]r$ to 9 subp>agraph 7,a71 7,c7 = qualifi$ long-t]m c>e s]vices 7z def9$ 9 section #ggjb;,b7c771 or 7,d7 = insurance 7includ+ am\nts paid z premiums "u "p ,b ( title ,,xviii ( ! ,social ,security ,act1 relat+ to supplem5t>y m$ical insurance = ! ag$7 cov]+ m$ical c>e ref]r$ to 9 subp>agraphs 7,a7 & 7,b7 or = any qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b774 ,9 ! case ( a qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b771 only eligible long-t]m c>e premiums 7z def9$ 9 p>agraph 7#g77 %all be tak5 into acc\nt "u subp>agraph 7,d74 7#b7 ,am\nts paid = c]ta9 lodg+ away f home treat$ z paid = m$ical c>e ,am\nts paid = lodg+ 7n lavi% or extravagant "u ! circum/ances7 :ile away f home prim>ily = & ess5tial to m$ical c>e ref]r$ to 9 p>agraph 7#a77;,a7 %all be treat$ z am\nts paid = m$ical c>e if-- 7,a7 ! m$ical c>e ref]r$ to 9 p>agraph 7#a77;,a7 is provid$ by a physician 9 a lic5s$ hospital 7or 9 a m$ical c>e facility :i* is relat$ to1 or ! equival5t (1 a lic5s$ hospital71 & 7,b7 !re is no significant elem5t ( p]sonal pleasure1 recreation1 or vacation 9 ! travel away f home4 ,! am\nt tak5 into acc\nt "u ! prec$+ s5t5ce %all n exce$ #ej = ea* night = ea* individual4 7#c7 ,physician ,! t]m physician has ! mean+ giv5 to su* t]m by section #ahfa7r7 ( ! ,social ,security ,act 7#db ,u4,s4,c4 #aciex7r774 7#d7 ,contracts cov]+ o!r ?an m$ical c>e ,9 ! case ( an insurance contract "u :i* am\nts are payable = o!r ?an m$ical c>e ref]r$ to 9 subp>agraphs 7,a71 7,b7 & 7,c7 ( p>agraph 7#a7-- 7,a7 no am\nt %all be treat$ z paid = insurance to :i* p>agraph 7#a77;,d7 applies unless ! *>ge = su* insurance is ei!r sep>ately /at$ 9 ! contract1 or furni%$ to ! policyhold] by ! insurance company 9 a sep>ate /atem5t1 7,b7 ! am\nt tak5 into acc\nt z ! am\nt paid = su* insurance %all n exce$ su* *>ge1 & 7,c7 no am\nt %all be treat$ z paid = su* insurance if ! am\nt specifi$ 9 ! contract 7or furni%$ to ! policyhold] by ! insurance company 9 a sep>ate /atem5t7 z ! *>ge = su* insurance is unreasonably l>ge 9 relation to ! total *>ges "u ! contract4 7#e7 ,c]ta9 pre-paid contracts ,subject to ! limitations ( p>agraph 7#d71 premiums paid dur+ ! taxable ye> by a taxpay] be=e he atta9s ! age ( #fe = insurance cov]+ m$ical c>e 7)9 ! mean+ ( subp>agraphs 7,a71 7,b71 & 7,c7 ( p>agraph 7#a77 = ! taxpay]1 8 sp\se1 or a dep5d5t aft] ! taxpay] atta9s ! age ( #fe %all be treat$ z exp5ses paid dur+ ! taxable ye> = insurance :i* con/itutes m$ical c>e if premiums = su* insurance are payable 7on a level paym5t basis7 "u ! contract = a p]iod ( #aj ye>s or m or until ! ye> 9 :i* ! taxpay] atta9s ! age ( #fe 7b 9 no case = a p]iod ( less ?an #e ye>s74 7#f7 ,cosmetic surg]y 7,a7 ,9 g5]al ,! t]m m$ical c>e does n include cosmetic surg]y or o!r simil> proc$ures1 unless ! surg]y or proc$ure is necess>y to ameliorate a de=mity aris+ f1 or directly relat$ to1 a cong5ital abnormality1 a p]sonal injury result+ f an accid5t or trauma1 or disfigur+ disease4 7,b7 ,cosmetic surg]y def9$ ,= purposes ( ?is p>agraph1 ! t]m cosmetic surg]y means any proc$ure :i* is direct$ at improv+ ! pati5t's appe>ance & does n mean+fully promote ! prop] function ( ! body or prev5t or treat illness or disease4 7#g7 ,eligible long-t]m c>e premiums 7,a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m eligible long-t]m c>e premiums means ! am\nt paid dur+ a taxable ye> = any qualifi$ long-t]m c>e insurance contract 7z def9$ 9 section #ggjb;,b7b77 cov]+ an individual1 to ! ext5t su* am\nt does n exce$ ! limitation det]m9$ "u ! foll[+ table3 ,9 ! case ( an individual ) an atta9$ age be=e ! close ( ! taxable ye> (3,! limitation is3 #dj or less#bjj ,m ?an #dj b n m ?an #ejcge ,m ?an #ej b n m ?an #fjgej ,m ?an #fj b n m ?an #gjb1jjj ,m ?an #gjb1ejj 7,b7 ,index+ 7i7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ aft] #aiig1 ea* doll> am\nt 9 subp>agraph 7,a7 %all be increas$ by ! m$ical c>e co/ adju/m5t ( su* am\nt = su* cal5d> ye>4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #aj4 7ii7 ,m$ical c>e co/ adju/m5t ,= purposes ( clause 7i71 ! m$ical c>e co/ adju/m5t = any cal5d> ye> is ! adju/m5t prescrib$ by ! ,secret>y1 9 consultation ) ! ,secret>y ( ,heal? & ,human ,s]vices1 = purposes ( su* clause4 ,to ! ext5t t ,,cpi 7z def9$ section #a7;c771 or any compon5t !re(1 is tak5 into acc\nt 9 det]m9+ su* adju/m5t1 su* adju/m5t %all be det]m9$ by tak+ into acc\nt ,c-,,cpi-,u 7z s def9$71 or ! correspond+ compon5t !re(1 9 lieu ( su* ,,cpi 7or compon5t !re(71 b only ) respect to ! portion ( su* adju/m5t :i* relates to p]iods aft] ,decemb] #ca1 #bjag4 7#h7 ,c]ta9 paym5ts to relatives treat$ z n paid = m$ical c>e ,an am\nt paid = a qualifi$ long-t]m c>e s]vice 7z def9$ 9 section #ggjb;,b7c77 provid$ to an individual %all be treat$ z n paid = m$ical c>e if su* s]vice is provid$-- 7,a7 by ! sp\se ( ! individual or by a relative 7directly or ?r\gh a p>tn]%ip1 corporation1 or o!r entity7 unless ! s]vice is provid$ by a lic5s$ pr(essional ) respect to su* s]vice1 or 7,b7 by a corporation or p>tn]%ip :i* is relat$ 7)9 ! mean+ ( section #bfg7;b7 or #gjg7;b77 to ! individual4 ,= purposes ( ?is p>agraph1 ! t]m relative means an individual be>+ a relation%ip to ! individual :i* is describ$ 9 any ( subp>agraphs 7,a7 ?r\gh 7,g7 ( section #ggjf7;d77#b74 ,?is p>agraph %all n apply = purposes ( subsection 7b7 ) respect to reimbursem5ts ?r\gh insurance4 4 7,b7 ,section #gb7t77#b77;,d77i77,,iii7 is am5d$ by /rik+ section #bac7;d77#a77;,d7 & ins]t+ section #aje7;f77#a77;,d74 7,c7 ,section #ajd7;a7 is am5d$ by /rik+ section #bac7;d77#a7 9 ! la/ s5t5ce & ins]t+ section #aje7;f77#a74 7,d7 ,section #aje7;b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,e7 ,section #aci;,d is am5d$ by /rik+ section #bac & ins]t+ section #bbc4 7,f7 ,section #afb7l77#b7 is am5d$ by /rik+ section #bac7;d77#aj7 & ins]t+ section #aje7;f77#g74 7,g7 ,section #bbj7;d77#b77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,h7 ,section #bbc7;d77#b77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,i7 ,section #dai;,a7f77#b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,j7 ,section #eja7;c77#bf77;,a7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,k7 ,section #bejc7;e7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,l7 ,section #dihj;,b7c77#d77;,b77i77,i7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,m7 ,section #fjda7;f7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,n7 ,section #ggjb;,b7a77#b7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7,o7 ,section #ggjb;,b7a77#d7 is am5d$ by /rik+ section #bac7;d77#a77;,d7 & ins]t+ section #aje7;f77#a77;,d74 7,p7 ,section #ggjb;,b7d77#e7 is am5d$ by /rik+ section #bac7;d77#aj7 & ins]t+ section #aje7;f77#g74 7,q7 ,section #ihcb7;d77#c7 is am5d$ by /rik+ section #bac7;d7 & ins]t+ section #aje7;f74 7#b7 ,section #gb7t77#b77;,b7 is am5d$ to read z foll[s3 7,b7 ,m$ical exp5ses ,di/ributions made to an individual 7o!r ?an di/ributions describ$ 9 subp>agraph 7,a71 7,c71 or 7,d7 to ! ext5t su* di/ributions d n exce$ ! excess (-- 7i7 ! exp5ses paid by ! taxpay] dur+ ! taxable ye>1 n comp5sat$ = by insurance or o!rwise1 = m$ical c>e 7z def9$ 9 #aje7;f77 ( ! taxpay]1 8 sp\se1 or a dep5d5t 7z def9$ 9 section #ggjf1 det]m9$ )\t reg>d to subsections 7b77#a71 7b77#b71 & 7d77#a77;,b7 !re(71 ov] 7ii7 #aj p]c5t ( ! taxpay]'s adju/$ gross income4 4 7#c7 ,section #afb7l7 is am5d$ by /rik+ p>agraph 7#c74 7#d7 ,section #djb7l7 is am5d$ by /rik+ p>agraph 7#g7 & r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#e7 ,section #bbj7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#f7 ,section #bbc7;f7 is am5d$ by /rik+ p>agraph 7#f74 7#g7 ,section #ggjb;,b7e7 is am5d$ by /rik+ p>agraph 7#b74 7#h7 ,section #ggjf7;f77#g71 z r$esignat$ by ?is ,act1 is am5d$ by /rik+ sections #aje7;b71 #acb7;h77#b77;,b71 & #bac7;d77#e7 & ins]t+ sections #aje7;b7 & #acb7;h77#b77;,b74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acji4 ,repeal ( d$uction = alimony paym5ts 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b is am5d$ by /rik+ by /rik+ section #bae 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,correspond+ repeal ( provisions provid+ = inclusion ( alimony 9 gross income 7,a7 ,subsection 7a7 ( section #fa is am5d$ by /rik+ p>agraph 7#h7 & by r$esignat+ p>agraphs 7#i7 ?r\gh 7#ae7 z p>agraphs 7#h7 ?r\gh 7#ad71 respectively4 7,b7 ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #ga 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,c7 ,subp>t ,f ( "p ,i ( sub*apt] ,j ( *apt] #a is am5d$ by /rik+ section #fhb 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7#b7 ,relat$ to repeal ( section #bae 7,a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#aj74 7,b7 ,section #cdjb7m77#a7 is am5d$ by /rik+ 7o!r ?an p>agraph 7#aj7 !re(74 7#c7 ,relat$ to repeal ( section #ga 7,a7 ,section #aba7;d77#c7 is am5d$-- 7i7 by /rik+ 7z def9$ 9 section #ga7;b77#b77 9 subp>agraph 7,b71 & 7ii7 by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,divorce or sep>ation in/rum5t ,= purposes ( ?is p>agraph1 ! t]m divorce or sep>ation in/rum5t means-- 7i7 a decree ( divorce or sep>ate ma9t5ance or a writt5 in/rum5t incid5t to su* a decree1 7ii7 a writt5 sep>ation agreem5t1 or 7iii7 a decree 7n describ$ 9 clause 7i77 requir+ a sp\se to make paym5ts = ! support or ma9t5ance ( ! o!r sp\se4 4 7,b7 ,section #bbj7;f77#g7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7,c7 ,section #bbc7;f77#g7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7,d7 ,section #chb7l77#c77;,b77iii7 is am5d$ by /rik+ section #ga7;b77#b7 & ins]t+ section #aba7;d77#c77;,c74 7,e7 ,section #djh7;d77#f7 is am5d$ by /rik+ subp>agraph 7,a7 ( section #ga7;b77#b7 & ins]t+ clause 7i7 ( section #aba7;d77#c77;,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 any divorce or sep>ation in/rum5t 7z def9$ 9 section #ga7;b77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect be=e ! date ( ! enactm5t ( ?is ,act7 execut$ aft] ,decemb] #ca1 #bjag1 & 7#b7 any divorce or sep>ation in/rum5t 7z s def9$7 execut$ on or be=e su* date & modifi$ aft] su* date if ! modification expressly provides t ! am5dm5ts made by ?is section apply to su* modification4 #acaj4 ,repeal ( d$uction = mov+ exp5ses 7a7 ,9 g5]al ,"p ,,vii ( sub*apt] ,b is am5d$ by /rik+ by /rik+ section #bag 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,ret5tion ( mov+ exp5ses = memb]s ( ,arm$ ,=ces ,section #acd7;b7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,mov+ exp5ses ,! t]m qualifi$ milit>y b5efit includes any b5efit describ$ 9 section #bag7;g7 7z 9 effect be=e ! enactm5t ( ! ,tax ,cuts ,& ,jobs ,act74 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#ae74 7#b7 ,section #bgd7m77#c7 is am5d$ by /rik+ 7o!r ?an section #bag74 7#c7 ,section #caba7;a7 is am5d$ by /rik+ p>agraph 7#aa74 7#d7 ,section #ccjf7;b7 is am5d$ by /rik+ p>agraph 7#i74 7#e7 ,section #cdja7;a7 is am5d$ by /rik+ p>agraph 7#ae74 7#f7 ,section #ghgb7;f7 is am5d$ by /rik+ p>agraph 7#aa74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acaa4 ,t]m9ation ( d$uction & exclusions = contributions to m$ical sav+s acc\nts 7a7 ,t]m9ation ( income tax d$uction ,section #bbj is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,t]m9ation ,no d$uction %all be all[$ "u subsection 7a7 ) respect to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag4 4 7b7 ,t]m9ation ( exclusion = employ]-,provid$ contributions ,section #ajf is am5d$ by /rik+ subsection 7b74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #fb7;a7 is am5d$ by /rik+ p>agraph 7#af74 7#b7 ,section #ajf7;d7 is am5d$ by /rik+ p>agraph 7#b71 by r$esignat+ p>agraph 7#c7 z p>agraph 7#f71 & by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraphs3 7#b7 ,no con/ructive receipt ,no am\nt %all be includ$ 9 ! gross income ( any employee solely because ! employee may *oose betwe5 ! contributions ref]r$ to 9 p>agraph 7#a7 & employ] contributions to ano!r heal? plan ( ! employ]4 7#c7 ,special rule = d$uction ( employ] contributions ,any employ] contribution to a heal? sav+s acc\nt 7z s def9$71 if o!rwise all[able z a d$uction "u ?is *apt]1 %all be all[$ only = ! taxable ye> 9 :i* paid4 7#d7 ,employ] heal? sav+s acc\nt contribution requir$ to be %[n on return ,e individual requir$ to file a return "u section #fjab = ! taxable ye> %all include on su* return ! aggregate am\nt contribut$ by employ]s to ! heal? sav+s acc\nts 7z s def9$7 ( su* individual or su* individual's sp\se = su* taxable ye>4 7#e7 ,heal? sav+s acc\nt contributions n "p ( ,,cobra cov]age ,p>agraph 7#a7 %all n apply = purposes ( section #dihj;,b4 4 7#c7 ,section #bbc7;b77#d7 is am5d$ by /rik+ subp>agraph 7,a71 by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively1 & by /rik+ ! second s5t5ce !re(4 7#d7 ,section #bbc7;b77#e7 is am5d$ by /rik+ "u p>agraph 7#c77 & all t foll[s ?r\gh %all be divid$ equally betwe5 !m & ins]t+ ! foll[+3 "u p>agraph 7#c77 %all be divid$ equally betwe5 ! sp\ses4 7#e7 ,section #bbc7;c7 is am5d$ by /rik+ p>agraph 7#e74 7#f7 ,section #cbca7;e7 is am5d$ by /rik+ p>agraph 7#aj74 7#g7 ,section #ccjf7;b7 is am5d$ by /rik+ p>agraph 7#ag74 7#h7 ,section #cdja7;a7 is am5d$ by /rik+ p>agraph 7#ba74 7#i7 ,*apt] #dc is am5d$ by /rik+ section #dihj;,e 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* *apt]74 7#aj7 ,section #dihj;,g is am5d$ to read z foll[s3 #dihj;,g4 ,failure ( employ] to make comp>able heal? sav+s acc\nt contributions 7a7 ,9 g5]al ,9 ! case ( an employ] :o makes a contribution to ! heal? sav+s acc\nt ( any employee dur+ a cal5d> ye>1 !re is h]eby impos$ a tax on ! failure ( su* employ] to meet ! requirem5ts ( subsection 7d7 = su* cal5d> ye>4 7b7 ,am\nt ( tax ,! am\nt ( ! tax impos$ by subsection 7a7 on any failure = any cal5d> ye> is ! am\nt equal to #ce p]c5t ( ! aggregate am\nt contribut$ by ! employ] to heal? sav+s acc\nts ( employees = taxable ye>s ( su* employees end+ ) or )9 su* cal5d> ye>4 7c7 ,waiv] by ,secret>y ,9 ! case ( a failure :i* is due to reasonable cause & n to willful neglect1 ! ,secret>y may waive "p or all ( ! tax impos$ by subsection 7a7 to ! ext5t t ! paym5t ( su* tax w\ld be excessive relative to ! failure involv$4 7d7 ,employ] requir$ ,to make comp>able heal? sav+s acc\nt contributions = all p>ticipat+ employees 7#a7 ,9 g5]al ,an employ] meets ! requirem5ts ( ?is subsection = any cal5d> ye> if ! employ] makes available comp>able contributions to ! heal? sav+s acc\nts ( all comp>able p>ticipat+ employees = ea* cov]age p]iod dur+ su* cal5d> ye>4 7#b7 ,comp>able contributions 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m comp>able contributions means contributions-- 7i7 :i* are ! same am\nt1 or 7ii7 :i* are ! same p]c5tage ( ! annual d$uctible limit "u ! high d$uctible heal? plan cov]+ ! employees4 7,b7 ,"p-ye> employees ,9 ! case ( an employee :o is employ$ by ! employ] = only a portion ( ! cal5d> ye>1 a contribution to ! heal? sav+s acc\nt ( su* employee %all be treat$ z comp>able if x is an am\nt :i* be>s ! same ratio to ! comp>able am\nt 7det]m9$ )\t reg>d to ?is subp>agraph7 z su* portion be>s to ! entire cal5d> ye>4 7#c7 ,comp>able p>ticipat+ employees 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m comp>able p>ticipat+ employees means all employees-- 7i7 :o are eligible individuals cov]$ "u any high d$uctible heal? plan ( ! employ]1 & 7ii7 :o h ! same category ( cov]age4 7,b7 ,categories ( cov]age ,= purposes ( subp>agraph 7,b71 ! categories ( cov]age are self-only & family cov]age4 7#d7 ,"p-"t employees 7,a7 ,9 g5]al ,p>agraph 7#c7 %all be appli$ sep>ately ) respect to "p-"t employees & o!r employees4 7,b7 ,"p-"t employee ,= purposes ( subp>agraph 7,a71 ! t]m "p-"t employee means any employee :o is cu/om>ily employ$ = few] ?an #cj h\rs p] week4 7#e7 ,special rule = non-highly comp5sat$ employees ,= purposes ( apply+ ?is section to a contribution to a heal? sav+s acc\nt ( an employee :o is n a highly comp5sat$ employee 7z def9$ 9 section #dad7q771 highly comp5sat$ employees %all n be treat$ z comp>able p>ticipat+ employees4 7e7 ,controll$ gr\ps ,= purposes ( ?is section1 all p]sons treat$ z a s+le employ] "u subsection 7b71 7c71 7m71 or 7o7 ( section #dad %all be treat$ z #a employ]4 7f7 ,def9itions ,t]ms us$ 9 ?is section :i* are also us$ 9 section #bbc h ! respective mean+s giv5 su* t]ms 9 section #bbc4 7g7 ,regulations ,! ,secret>y %all issue regulations to c>ry out ! purposes ( ?is section4 4 7#aa7 ,section #fjea7;a7 is am5d$ by /rik+ p>agraph 7#aa74 7#ab7 ,section #fjea7;a77#ad77;,a7 is am5d$ by /rik+ p>agraphs 7#aa7 & 7#ab7 & ins]t+ p>agraph 7#ab74 7d7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acab4 ,d5ial ( d$uction = exp5ses attributable to ! trade or bus9ess ( be+ an employee 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bfb ! foll[+ new item3 #bfb;,a4 ,exp5ses attributable to be+ an employee 7a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is section1 no d$uction %all be all[$ ) respect to any trade or bus9ess ( ! taxpay] :i* consi/s ( ! p]=mance ( s]vices by ! taxpay] z an employee4 7b7 ,exception = above-!-l9e d$uctions ,subsection 7a7 %all n apply to any d$uction all[able 7det]m9$ )\t reg>d to subsection 7a77 9 det]m9+ adju/$ gross income4 4 7b7 ,repeal ( c]ta9 above-!-l9e trade & bus9ess d$uctions ( employees 7#a7 ,9 g5]al ,section #fb7;a77#b7 is am5d$-- 7,a7 by /rik+ subp>agraphs 7,b71 7,c71 & 7,d71 & 7,b7 by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,b74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #fb is am5d$ by /rik+ subsections 7b7 & 7d7 & by r$esignat+ subsections 7c7 & 7e7 z subsections 7b7 & 7c71 respectively4 7,b7 ,section #fb7;a77#bj7 is am5d$ by /rik+ subsection 7e7 & ins]t+ subsection 7c74 7c7 ,cont9u$ exclusion ( work+ condition fr+e b5efits ,section #acb7;d7 is am5d$ by ins]t+ 7det]m9$ )\t reg>d to section #bfb;,a7 aft] section #afb4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,e ,simplification & re=m ( exclusions & taxable comp5sation #adja4 ,limitation on exclusion = employ]-provid$ h\s+ 7a7 ,9 g5]al ,section #aai is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,limitation on exclusion ( lodg+ 7#a7 ,9 g5]al ,! aggregate am\nt exclud$ f gross income ( ! taxpay] "u subsections 7a7 & 7d7 ) respect to lodg+ = any taxable ye> %all n exce$ #ej1jjj 7half su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return74 7#b7 ,limitation to #a home ,subsections 7a7 & 7d7 7sep>ately & 9 comb9ation7 %all n apply ) respect to m ?an #a resid5ce ( ! taxpay] at any giv5 "t4 ,9 ! case ( a jo9t return1 ! prec$+ s5t5ce %all apply sep>ately to ea* sp\se = any p]iod dur+ :i* ea* sp\se resides sep>ate f ! o!r sp\se 9 a resid5ce :i* is provid$ 9 connection ) ! employm5t ( ea* sp\se1 respectively4 7#c7 ,limitation = highly comp5sat$ employees 7,a7 ,r$uc$ = excess comp5sation ,9 ! case ( an individual ^: comp5sation = ! taxable ye> exce$s ! am\nt 9 effect "u section #dad7q77#a77;,b77i7 = ! cal5d> 9 :i* su* taxable ye> beg9s1 ! #ej1jjj am\nt "u p>agraph 7#a7 %all be r$uc$ 7b n bel[ z]o7 by an am\nt equal to #ej p]c5t ( su* excess4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m comp5sation means wages 7z def9$ 9 section #caba7;a7 7)\t reg>d to ! contribution & b5efit base limitation 9 section #caba7;a77#a774 7,b7 ,exclusion d5i$ = #e-p]c5t own]s ,9 ! case ( an individual :o is a #e-p]c5t own] 7z def9$ 9 section #daf7;i77#a77;,b77i77 ( ! employ] at any "t dur+ ! taxable ye>1 ! am\nt "u p>agraph 7#a7 %all be z]o4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adjb4 ,exclusion ( ga9 f sale ( a pr9cipal resid5ce 7a7 ,requirem5t t resid5ce be pr9cipal resid5ce = #e ye>s dur+ #h-ye> p]iod ,subsection 7a7 ( section #aba is am5d$-- 7#a7 by /rik+ #e-ye> p]iod & ins]t+ #h-ye> p]iod1 & 7#b7 by /rik+ #b ye>s & ins]t+ #e ye>s4 7b7 ,application to only #a sale or ex*ange e #e ye>s ,p>agraph 7#c7 ( section #aba7;b7 is am5d$ to read z foll[s3 7#c7 ,application to only #a sale or ex*ange e #e ye>s ,subsection 7a7 %all n apply to any sale or ex*ange by ! taxpay] if1 dur+ ! #e-ye> p]iod end+ on ! date ( su* sale or ex*ange1 !re 0 any o!r sale or ex*ange by ! taxpay] to :i* subsection 7a7 appli$4 4 7c7 ,phase\t bas$ on modifi$ adju/$ gross income ,section #aba is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,phase\t bas$ on modifi$ adju/$ gross income 7#a7 ,9 g5]al ,if ! av]age modifi$ adju/$ gross income ( ! taxpay] = ! taxable ye> & ! #b prec$+ taxable ye>s exce$s #bej1jjj 7twice su* am\nt 9 ! case ( a jo9t return71 ! am\nt :i* w\ld 7b = ?is subsection7 be exclud$ f gross income "u subsection 7a7 = su* taxable ye> %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* excess4 7#b7 ,modifi$ adju/$ gross income ,= purposes ( ?is subsection1 ! t]m modifi$ adju/$ gross income means1 ) respect to any taxable ye>1 adju/$ gross income det]m9$ aft] application ( ?is section 7b )\t reg>d to subsection 7b77#a7 & ?is subsection74 7#c7 ,special rule = jo9t returns ,9 ! case ( a jo9t return1 ! av]age modifi$ adju/$ gross income ( ! taxpay] %all be det]m9$ )\t reg>d to any taxable ye> ) respect to :i* ! taxpay] did n file a jo9t return4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,! foll[+ provisions ( section #aba are ea* am5d$ by /rik+ #e-ye> p]iod ea* place x appe>s !re9 & ins]t+ #h-ye> p]iod3 7,a7 ,subsection 7b77#e77;,c77ii77,i74 7,b7 ,subsection 7c77#a77;,b77i77,i74 7,c7 ,subsection 7d77#g77;,b74 7,d7 ,subp>agraphs 7,a7 & 7,b7 ( subsection 7d77#i74 7,e7 ,subsection 7d77#aj74 7,f7 ,subsection 7d77#ab77;,a74 7#b7 ,section #aba7;c77#a77;,b77ii7 is am5d$ by /rik+ #b ye>s & ins]t+ #e ye>s3 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales & ex*anges aft] ,decemb] #ca1 #bjag4 #adjc4 ,repeal ( exclusion1 etc41 = employee a*ievem5t aw>ds 7a7 ,9 g5]al ,section #gd is am5d$ by /rik+ subsection 7c74 7b7 ,repeal ( limitation on d$uction ,section #bgd is am5d$ by /rik+ subsection 7j74 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ajb7;c77#b7 is am5d$ by /rik+ ! fir/ s5t5ce4 7#b7 ,section #dad7n77#c77;,c7 is am5d$ by /rik+ #bgd7;j714 7#c7 ,section #dad7t77#b7 is am5d$ by /rik+ #bgd7;j714 7#d7 ,section #caba7;a77#bj7 is am5d$ by /rik+ #gd7;c74 7#e7 ,section #cbca7;e77#e7 is am5d$ by /rik+ #gd7;c714 7#f7 ,section #ccjf7;b77#af7 is am5d$ by /rik+ #gd7;c714 7#g7 ,section #cdja7;a77#ai7 is am5d$ by /rik+ #gd7;c714 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adjd4 ,sunset ( exclusion = dep5d5t c>e assi/ance programs 7a7 ,9 g5]al ,section #abi is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,t]m9ation ,subsection 7a7 %all n apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbb4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #adje4 ,repeal ( exclusion = qualifi$ mov+ exp5se reimbursem5t 7a7 ,9 g5]al ,section #acb7;a7 is am5d$ by /rik+ p>agraph 7#f74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #hb is am5d$ by /rik+ ,except z provid$ 9 section #acb7;a77#f71 !re & ins]t+ ,!re4 7#b7 ,section #acb is am5d$ by /rik+ subsection 7g74 7#c7 ,section #acb7l7 is am5d$ by /rik+ by /rik+ subsections 7e7 & 7g7 & ins]t+ subsection 7e74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adjf4 ,repeal ( exclusion = adoption assi/ance programs 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #acg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,sections #dad7n77#c77;,c71 #dad7t77#b71 #gd7;d77#b77;,b71 #hf7;b77#b77;,a71 #bai7;g77#c77;,a77ii7 are ea* am5d$ by /rik+ 1 #acg4 7#b7 ,section #ajaf7;a71 z am5d$ by ! prec$+ provision ( ?is ,act1 is am5d$ by /rik+ p>agraph 7#bf74 7#c7 ,section #fjci;,d7d77#a71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7,a7 by /rik+ 1 or #acg1 & 7,b7 by ins]t+ or be=e #abe4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,f ,simplification & re=m ( sav+s1 p5sions1 retirem5t #aeja4 ,repeal ( special rule p]mitt+ re*>act]ization ( ,ro? ,,ira contributions z traditional ,,ira contributions 7a7 ,9 g5]al ,section #djh;,a7d7 is am5d$ by /rik+ p>agraph 7#f7 & by r$esignat+ p>agraph 7#g7 z p>agraph 7#f74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aejb4 ,r$uction 9 m9imum age = all[able 9-s]vice di/ributions 7a7 ,9 g5]al ,section #dja7;a77#cf7 is am5d$ by /rik+ age #fb & ins]t+ age #ei 4 7b7 ,application to gov]nm5tal section #deg7;b7 plans ,clause 7i7 ( section #deg7;d77#a77;,a7 is am5d$ by ins]t+ 79 ! case ( a plan ma9ta9$ by an employ] describ$ 9 subsection 7e77#a77;,a71 age #ei 7 be=e ! comma at ! end4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aejc4 ,modification ( rules gov]n+ h>d%ip di/ributions 7a7 ,9 g5]al ,n lat] ?an #a ye> aft] ! date ( ! enactm5t ( ?is ,act1 ! ,secret>y ( ! ,treasury %all modify ,treasury ,regulation section #a4dja7k7-#a7;d77#c77;iv77,e7 to-- 7#a7 delete ! #f-mon? prohibition on contributions impos$ by p>agraph 7#b7 !re(1 & 7#b7 make any o!r modifications necess>y to c>ry out ! purposes ( section #dja7k77#b77;,b77i77,,iv7 ( ! ,int]nal ,rev5ue ,code ( #aihf4 7b7 ,effective date ,! revis$ regulations "u ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aejd4 ,modification ( rules relat+ to h>d%ip )drawals f ca% or def]r$ arrangem5ts 7a7 ,9 g5]al ,section #dja7k7 is am5d$ by add+ at ! end ! foll[+3 7#ad7 ,special rules relat+ to h>d%ip )drawals ,= purposes ( p>agraph 7#b77;,b77i77,,iv7-- 7,a7 ,am\nts :i* may be )drawn ,! foll[+ am\nts may be di/ribut$ ^u h>d%ip ( ! employee3 7i7 ,contributions to a pr(it-%>+ or /ock bonus plan to :i* section #djb7;e77#c7 applies4 7ii7 ,qualifi$ nonelective contributions 7z def9$ 9 subsection 7m77#d77;,c774 7iii7 ,qualifi$ mat*+ contributions describ$ 9 p>agraph 7#c77;,d77ii77,i74 7iv7 ,e>n+s on any contributions describ$ 9 clause 7i71 7ii71 or 7iii74 7,b7 ,no requirem5t to take available loan ,a di/ribution %all n be treat$ z fail+ to be made ^u ! h>d%ip ( an employee solely because ! employee does n take any available loan "u ! plan44 4 7b7 ,con=m+ am5dm5t ,section #dja7k77#b77;,b77i77,,iv7 is am5d$ to read z foll[s3 7,,iv7 subject to ! provisions ( p>agraph 7#ad71 ^u h>d%ip ( ! employee1 or4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aeje4 ,ext5d$ rollov] p]iod = ! rollov] ( plan loan (fset am\nts 9 c]ta9 cases 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #djb7;c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,rollov] ( c]ta9 plan loan (fset am\nts 7i7 ,9 g5]al ,9 ! case ( a qualifi$ plan loan (fset am\nt1 p>agraph 7#a7 %all n apply to any transf] ( su* am\nt made aft] ! due date 7includ+ ext5sions7 = fil+ ! return ( tax = ! taxable ye> 9 :i* su* am\nt is treat$ z di/ribut$ f a qualifi$ employ] plan4 7ii7 ,qualifi$ plan loan (fset am\nt ,= purposes ( ?is subp>agraph1 ! t]m qualifi$ plan loan (fset am\nt means a plan loan (fset am\nt :i* is treat$ z di/ribut$ f a qualifi$ employ] plan to a p>ticipant or b5efici>y solely by reason (-- 7,i7 ! t]m9ation ( ! qualifi$ employ] plan1 or 7,,ii7 ! failure to meet ! repaym5t t]ms ( ! loan f su* plan because ( ! sep>ation f s]vice ( ! p>ticipant 7:e!r due to lay(f1 cessation ( bus9ess1 t]m9ation ( employm5t1 or o!rwise74 7iii7 ,plan loan (fset am\nt ,= purposes ( clause 7ii71 ! t]m plan loan (fset am\nt means ! am\nt by :i* ! p>ticipant's accru$ b5efit "u ! plan is r$uc$ 9 ord] to repay a loan f ! plan4 7iv7 ,limitation ,?is subp>agraph %all n apply to any plan loan (fset am\nt unless su* plan loan (fset am\nt relates to a loan to :i* section #gb7p77#a7 does n apply by reason ( section #gb7p77#b74 7v7 ,qualifi$ employ] plan ,= purposes ( ?is subsection1 ! t]m qualifi$ employ] plan has ! mean+ giv5 su* t]m by section #gb7p77#d74 4 7b7 ,con=m+ am5dm5t ,subp>agraph 7,a7 ( section #djb7;c77#c7 is am5d$ by /rik+ subp>agraph 7,b7 & ins]t+ subp>agraphs 7,b7 & 7,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aejf4 ,modification ( nondiscrim9ation rules to protect old]1 long] s]vice p>ticipants 7a7 ,9 g5]al ,section #dja is am5d$-- 7#a7 by r$esignat+ subsection 7o7 z subsection 7p71 & 7#b7 by ins]t+ aft] subsection 7n7 ! foll[+ new subsection3 7o7 ,special rules = apply+ nondiscrim9ation rules to protect old]1 long] s]vice & gr&fa!r$ p>ticipants 7#a7 ,te/+ ( def9$ b5efit plans ) clos$ classes ( p>ticipants 7,a7 ,b5efits1 rights1 or features provid$ to clos$ classes ,a def9$ b5efit plan :i* provides b5efits1 rights1 or features to a clos$ class ( p>ticipants %all n fail to satisfy ! requirem5ts ( subsection 7a77#d7 by reason ( ! composition ( su* clos$ class or ! b5efits1 rights1 or features provid$ to su* clos$ class1 if-- 7i7 = ! plan ye> z ( :i* ! class closes & ! #b succe$+ plan ye>s1 su* b5efits1 rights1 & features satisfy ! requirem5ts ( subsection 7a77#d7 7)\t reg>d to ?is subp>agraph b tak+ into acc\nt ! rules ( subp>agraph 7,i771 7ii7 aft] ! date z ( :i* ! class 0 clos$1 any plan am5dm5t :i* modifies ! clos$ class or ! b5efits1 rights1 & features provid$ to su* clos$ class does n discrim9ate significantly 9 favor ( highly comp5sat$ employees1 & 7iii7 ! class 0 clos$ be=e ,april #e1 #bjag1 or ! plan is describ$ 9 subp>agraph 7,c74 7,b7 ,aggregate te/+ ) def9$ contribution plans p]mitt$ on a b5efits basis 7i7 ,9 g5]al ,= purposes ( det]m9+ compliance ) subsection 7a77#d7 & section #daj7;b71 a def9$ b5efit plan describ$ 9 clause 7iii7 may be aggregat$ & te/$ on a b5efits basis ) #a or m def9$ contribution plans1 includ+ ) ! portion ( #a or m def9$ contribution plans :i*-- 7,i7 provides mat*+ contributions 7z def9$ 9 subsection 7m77#d77;,a771 7,,ii7 provides annuity contracts describ$ 9 section #djc7;b7 :i* are pur*as$ ) mat*+ contributions or nonelective contributions1 or 7,,iii7 consi/s ( an employee /ock own]%ip plan 7)9 ! mean+ ( section #dige7;e77#g77 or a tax cr$it employee /ock own]%ip plan 7)9 ! mean+ ( section #dji7;a774 7ii7 ,special rules = mat*+ contributions ,= purposes ( clause 7i71 if a def9$ b5efit plan is aggregat$ ) a portion ( a def9$ contribution plan provid+ mat*+ contributions-- 7,i7 su* def9$ b5efit plan mu/ also be aggregat$ ) any portion ( su* def9$ contribution plan :i* provides elective def]rals describ$ 9 subp>agraph 7,a7 or 7,c7 ( section #djb7;g77#c71 & 7,,ii7 su* mat*+ contributions %all be treat$ 9 ! same mann] z nonelective contributions1 includ+ = purposes ( apply+ ! rules ( subsection 7l74 7iii7 ,plans describ$ ,a def9$ b5efit plan is describ$ 9 ?is clause if-- 7,i7 ! plan provides b5efits to a clos$ class ( p>ticipants1 7,,ii7 = ! plan ye> z ( :i* ! class closes & ! #b succe$+ plan ye>s1 ! plan satisfies ! requirem5ts ( section #daj7;b7 & subsection 7a77#d7 7)\t reg>d to ?is subp>agraph b tak+ into acc\nt ! rules ( subp>agraph 7,i771 7,,iii7 aft] ! date z ( :i* ! class 0 clos$1 any plan am5dm5t :i* modifies ! clos$ class or ! b5efits provid$ to su* clos$ class does n discrim9ate significantly 9 favor ( highly comp5sat$ employees1 & 7,,iv7 ! class 0 clos$ be=e ,april #e1 #bjag1 or ! plan is describ$ 9 subp>agraph 7,c74 7,c7 ,plans describ$ ,a plan is describ$ 9 ?is subp>agraph if1 tak+ into acc\nt any pr$ecessor plan-- 7i7 su* plan has be5 9 effect = at lea/ #e ye>s z ( ! date ! class is clos$1 & 7ii7 dur+ ! #e-ye> p]iod prec$+ ! date ! class is clos$1 !re has n be5 a sub/antial increase 9 ! cov]age or value ( ! b5efits1 rights1 or features describ$ 9 subp>agraph 7,a7 or 9 ! cov]age or b5efits "u ! plan describ$ 9 subp>agraph 7,b77iii7 7:i*ev] is applicable74 7,d7 ,det]m9ation ( sub/antial increase = b5efits1 rights1 & features ,9 apply+ subp>agraph 7,c77ii7 = purposes ( subp>agraph 7,a77iii71 a plan %all be treat$ z hav+ _h a sub/antial increase 9 cov]age or value ( ! b5efits1 rights1 or features describ$ 9 subp>agraph 7,a7 dur+ ! applicable #e-ye> p]iod only if1 dur+ su* p]iod-- 7i7 ! numb] ( p>ticipants cov]$ by su* b5efits1 rights1 or features on ! date su* p]iod ends is m ?an #ej p]c5t great] ?an ! numb] ( su* p>ticipants on ! fir/ day ( ! plan ye> 9 :i* su* p]iod began1 or 7ii7 su* b5efits1 rights1 & features h be5 modifi$ by #a or m plan am5dm5ts 9 su* a way t1 z ( ! date ! class is clos$1 ! value ( su* b5efits1 rights1 & features to ! clos$ class z a :ole is sub/antially great] ?an ! value z ( ! fir/ day ( su* #e-ye> p]iod1 solely z a result ( su* am5dm5ts4 7,e7 ,det]m9ation ( sub/antial increase = aggregate te/+ on b5efits basis ,9 apply+ subp>agraph 7,c77ii7 = purposes ( subp>agraph 7,b77iii77,,iv71 a plan %all be treat$ z hav+ _h a sub/antial increase 9 cov]age or b5efits dur+ ! applicable #e-ye> p]iod only if1 dur+ su* p]iod-- 7i7 ! numb] ( p>ticipants b5efitt+ "u ! plan on ! date su* p]iod ends is m ?an #ej p]c5t great] ?an ! numb] ( su* p>ticipants on ! fir/ day ( ! plan ye> 9 :i* su* p]iod began1 or 7ii7 ! av]age b5efit provid$ to su* p>ticipants on ! date su* p]iod ends is m ?an #ej p]c5t great] ?an ! av]age b5efit provid$ on ! fir/ day ( ! plan ye> 9 :i* su* p]iod began4 7,f7 ,c]ta9 employees disreg>d$ ,= purposes ( subp>agraphs 7,d7 & 7,e71 any increase 9 cov]age or value or 9 cov]age or b5efits1 :i*ev] is applicable1 :i* is attributable to su* cov]age & value or cov]age & b5efits provid$ to employees-- 7i7 :o became p>ticipants z a result ( a m]g]1 acquisition1 or simil> ev5t :i* occurr$ dur+ ! #g-ye> p]iod prec$+ ! date ! class is clos$1 or 7ii7 :o became p>ticipants by reason ( a m]g] ( ! plan ) ano!r plan :i* _h be5 9 effect = at lea/ #e ye>s z ( ! date ( ! m]g]1 %all be disreg>d$1 except t clause 7ii7 %all apply = purposes ( subp>agraph 7,d7 only if1 "u ! m]g]1 ! b5efits1 rights1 or features "u #a plan are con=m$ to ! b5efits1 rights1 or features ( ! o!r plan prospectively4 7,g7 ,rules relat+ to av]age b5efit ,= purposes ( subp>agraph 7,e7-- 7i7 ! av]age b5efit provid$ to p>ticipants "u ! plan w be treat$ z hav+ rema9$ ! same betwe5 ! #b dates describ$ 9 subp>agraph 7,e77ii7 if ! b5efit =mula applicable to su* p>ticipants has n *ang$ betwe5 su* dates1 & 7ii7 if ! b5efit =mula applicable to #a or m p>ticipants "u ! plan has *ang$ betwe5 su* #b dates1 !n ! av]age b5efit "u ! plan %all be consid]$ to h increas$ by m ?an #ej p]c5t only if-- 7,i7 ! total am\nt det]m9$ "u section #dcj7;b77#a77;,a77i7 = all p>ticipants b5efitt+ "u ! plan = ! plan ye> 9 :i* ! #e-ye> p]iod describ$ 9 subp>agraph 7,e7 ends1 exce$s 7,,ii7 ! total am\nt det]m9$ "u section #dcj7;b77#a77;,a77i7 = all su* p>ticipants = su* plan ye>1 by us+ ! b5efit =mula 9 effect = ea* su* p>ticipant = ! fir/ plan ye> 9 su* #e-ye> p]iod1 by m ?an #ej p]c5t4 ,9 ! case ( a ,,csec plan 7z def9$ 9 section #dad7y771 ! normal co/ ( ! plan 7z det]m9$ "u section #dcc7;j77#a77;,b77 %all be us$ 9 lieu ( ! am\nt det]m9$ "u section #dcj7;b77#a77;,a77i74 7,h7 ,treatm5t z s+le plan ,= purposes ( subp>agraphs 7,e7 & 7,g71 a plan describ$ 9 section #dac7;c7 %all be treat$ z a s+le plan r ?an z sep>ate plans ma9ta9$ by ea* p>ticipat+ employ]4 7,i7 ,special rules ,= purposes ( subp>agraphs 7,a77i7 & 7,b77iii77,,ii71 ! foll[+ rules %all apply3 7i7 ,9 apply+ section #daj7;b77#f77;,c71 ! clos+ ( ! class ( p>ticipants %all n be treat$ z a significant *ange 9 cov]age "u section #daj7;b77#f77;,c77i77,,ii74 7ii7 #b or m plans %all n fail to be eligible to be aggregat$ & treat$ z a s+le plan solely by reason ( hav+ diff]5t plan ye>s4 7iii7 ,*anges 9 ! employee population %all be disreg>d$ to ! ext5t attributable to individuals :o become employees or cease to be employees1 aft] ! date ! class is clos$1 by reason ( a m]g]1 acquisition1 dive/iture1 or simil> ev5t4 7iv7 ,aggregation & all o!r te/+ me?odologies o!rwise applicable "u subsection 7a77#d7 & section #daj7;b7 may be tak5 into acc\nt4 ,! rule ( clause 7ii7 %all also apply = purposes ( det]m9+ :e!r plans to :i* subp>agraph 7,b77i7 applies may be aggregat$ & treat$ z #a plan = purposes ( det]m9+ :e!r su* plans meet ! requirem5ts ( subsection 7a77#d7 & section #daj7;b74 7,j7 ,spun-(f plans ,= purposes ( ?is p>agraph1 if a portion ( a def9$ b5efit plan describ$ 9 subp>agraph 7,a7 or 7,b77iii7 is spun (f to ano!r employ] & ! spun-(f plan cont9ues to satisfy ! requirem5ts (-- 7i7 subp>agraph 7,a77i7 or 7,b77iii77,,ii71 :i*ev] is applicable1 if ! orig9al plan 0 /ill )9 ! #c-ye> p]iod describ$ 9 su* subp>agraph at ! "t ( ! sp9 (f1 & 7ii7 subp>agraph 7,a77ii7 or 7,b77iii77,,iii71 :i*ev] is applicable1 ! treatm5t "u subp>agraph 7,a7 or 7,b7 ( ! spun-(f plan %all cont9ue ) respect to su* o!r employ]4 7#b7 ,te/+ ( def9$ contribution plans 7,a7 ,te/+ on a b5efits basis ,a def9$ contribution plan %all be p]mitt$ to be te/$ on a b5efits basis if-- 7i7 su* def9$ contribution plan provides make-:ole contributions to a clos$ class ( p>ticipants ^: accruals "u a def9$ b5efit plan h be5 r$uc$ or elim9at$1 7ii7 = ! plan ye> ( ! def9$ contribution plan z ( :i* ! class eligible to receive su* make-:ole contributions closes & ! #b succe$+ plan ye>s1 su* clos$ class ( p>ticipants satisfies ! requirem5ts ( section #daj7;b77#b77;,a77i7 7det]m9$ by apply+ ! rules ( p>agraph 7#a77;,i771 7iii7 aft] ! date z ( :i* ! class 0 clos$1 any plan am5dm5t to ! def9$ contribution plan :i* modifies ! clos$ class or ! allocations1 b5efits1 rights1 & features provid$ to su* clos$ class does n discrim9ate significantly 9 favor ( highly comp5sat$ employees1 & 7iv7 ! class 0 clos$ be=e ,april #e1 #bjag1 or ! def9$ b5efit plan "u clause 7i7 is describ$ 9 p>agraph 7#a77;,c7 7z appli$ = purposes ( p>agraph 7#a77;,b77iii77,,iv774 7,b7 ,aggregation ) plans includ+ mat*+ contributions 7i7 ,9 g5]al ,) respect to #a or m def9$ contribution plans describ$ 9 subp>agraph 7,a71 = purposes ( det]m9+ compliance ) subsection 7a77#d7 & section #daj7;b71 ! portion ( su* plans :i* provides make-:ole contributions or o!r nonelective contributions may be aggregat$ & te/$ on a b5efits basis ) ! portion ( #a or m o!r def9$ contribution plans :i*-- 7,i7 provides mat*+ contributions 7z def9$ 9 subsection 7m77#d77;,a771 7,,ii7 provides annuity contracts describ$ 9 section #djc7;b7 :i* are pur*as$ ) mat*+ contributions or nonelective contributions1 or 7,,iii7 consi/s ( an employee /ock own]%ip plan 7)9 ! mean+ ( section #dige7;e77#g77 or a tax cr$it employee /ock own]%ip plan 7)9 ! mean+ ( section #dji7;a774 7ii7 ,special rules = mat*+ contributions ,rules simil> to ! rules ( p>agraph 7#a77;,b77ii7 %all apply = purposes ( clause 7i74 7,c7 ,special rules = te/+ def9$ contribution plan features provid+ mat*+ contributions to c]ta9 old]1 long] s]vice p>ticipants ,9 ! case ( a def9$ contribution plan :i* provides b5efits1 rights1 or features to a clos$ class ( p>ticipants ^: accruals "u a def9$ b5efit plan h be5 r$uc$ or elim9at$1 ! plan %all n fail to satisfy ! requirem5ts ( subsection 7a77#d7 solely by reason ( ! composition ( ! clos$ class or ! b5efits1 rights1 or features provid$ to su* clos$ class if ! def9$ contribution plan & def9$ b5efit plan o!rwise meet ! requirem5ts ( subp>agraph 7,a7 b = ! fact t ! make-:ole contributions "u ! def9$ contribution plan are made 9 :ole or 9 "p ?r\gh mat*+ contributions4 7,d7 ,spun-(f plans ,= purposes ( ?is p>agraph1 if a portion ( a def9$ contribution plan describ$ 9 subp>agraph 7,a7 or 7,c7 is spun (f to ano!r employ]1 ! treatm5t "u subp>agraph 7,a7 or 7,c7 ( ! spun-(f plan %all cont9ue ) respect to ! o!r employ] if su* plan cont9ues to comply ) ! requirem5ts ( clauses 7ii7 7if ! orig9al plan 0 /ill )9 ! #c-ye> p]iod describ$ 9 su* clause at ! "t ( ! sp9 (f7 & 7iii7 ( subp>agraph 7,a71 z det]m9$ = purposes ( subp>agraph 7,a7 or 7,c71 :i*ev] is applicable4 7#c7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,make-:ole contributions ,except z o!rwise provid$ 9 p>agraph 7#b77;,c71 ! t]m make-:ole contributions means nonelective allocations = ea* employee 9 ! class :i* are reasonably calculat$1 9 a consi/5t mann]1 to replace "s or all ( ! retirem5t b5efits :i* ! employee w\ld h receiv$ "u ! def9$ b5efit plan & any o!r plan or qualifi$ ca% or def]r$ arrangem5t "u subsection 7k77#b7 if no *ange _h be5 made to su* def9$ b5efit plan & su* o!r plan or arrangem5t4 ,= purposes ( ! prec$+ s5t5ce1 consi/5cy %all n be requir$ ) respect to employees :o 7 subject to diff]5t b5efit =mulas "u ! def9$ b5efit plan4 7,b7 ,ref]5ces to clos$ class ( p>ticipants ,ref]5ces to a clos$ class ( p>ticipants & simil> ref]5ces to a clos$ class %all include arrangem5ts "u :i* #a or m classes ( p>ticipants are clos$1 except t #a or m classes ( p>ticipants clos$ on diff]5t dates %all n be aggregat$ = purposes ( det]m9+ ! date any su* class 0 clos$4 7,c7 ,highly comp5sat$ employee ,! t]m highly comp5sat$ employee has ! mean+ giv5 su* t]m 9 section #dad7q744 4 7b7 ,p>ticipation requirem5ts ,p>agraph 7#bf7 ( section #dja7;a7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,i7 ,protect$ p>ticipants 7i7 ,9 g5]al ,a plan %all be deem$ to satisfy ! requirem5ts ( subp>agraph 7,a7 if-- 7,i7 ! plan is am5d$-- 7aa7 to cease all b5efit accruals1 or 7bb7 to provide future b5efit accruals only to a clos$ class ( p>ticipants1 7,,ii7 ! plan satisfies subp>agraph 7,a7 7)\t reg>d to ?is subp>agraph7 z ( ! effective date ( ! am5dm5t1 & 7,,iii7 ! am5dm5t 0 adopt$ be=e ,april #e1 #bjag1 or ! plan is describ$ 9 clause 7ii74 7ii7 ,plans describ$ ,a plan is describ$ 9 ?is clause if ! plan w\ld be describ$ 9 subsection 7o77#a77;,c71 z appli$ = purposes ( subsection 7o77#a77;,b77iii77,,iv7 & by treat+ ! effective date ( ! am5dm5t z ! date ! class 0 clos$ = purposes ( subsection 7o77#a77;,c74 7iii7 ,special rules ,= purposes ( clause 7i77,,ii71 9 apply+ section #daj7;b77#f77;,c71 ! am5dm5ts describ$ 9 clause 7i7 %all n be treat$ z a significant *ange 9 cov]age "u section #daj7;b77#f77;,c77i77,,ii74 7iv7 ,spun-(f plans ,= purposes ( ?is subp>agraph1 if a portion ( a plan describ$ 9 clause 7i7 is spun (f to ano!r employ]1 ! treatm5t "u clause 7i7 ( ! spun-(f plan %all cont9ue ) respect to ! o!r employ]4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act1 )\t reg>d to :e!r any plan modifications ref]r$ to 9 su* am5dm5ts are adopt$ or effective be=e1 on1 or aft] su* date ( enactm5t4 7#b7 ,special rules 7,a7 ,election ( e>li] application ,at ! election ( ! plan sponsor1 ! am5dm5ts made by ?is section %all apply to plan ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 7,b7 ,clos$ classes ( p>ticipants ,= purposes ( p>agraphs 7#a77;,a77iii71 7#a77;,b77iii77,,iv71 & 7#b77;,a77iv7 ( section #dja7o7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section71 a clos$ class ( p>ticipants %all be treat$ z be+ clos$ be=e ,april #e1 #bjag1 if ! plan sponsor's int5tion to create su* clos$ class is reflect$ 9 =mal writt5 docum5ts & communicat$ to p>ticipants be=e su* date4 7,c7 ,c]ta9 po/-enactm5t plan am5dm5ts ,a plan %all n be treat$ z fail+ to be eligible = ! application ( section #dja7o77#a77;,a71 #dja7o77#a77;,b77iii71 or #dja7;a77#bf7 ( su* ,code 7z add$ by ?is section7 to su* plan solely because 9 ! case (-- 7i7 su* section #dja7o77#a77;,a71 ! plan 0 am5d$ be=e ! date ( ! enactm5t ( ?is ,act to elim9ate #a or m b5efits1 rights1 or features1 & is fur!r am5d$ aft] su* date ( enactm5t to provide su* previ\sly elim9at$ b5efits1 rights1 or features to a clos$ class ( p>ticipants1 or 7ii7 su* section #dja7o77#a77;,b77iii7 or section #dja7;a77#bf71 ! plan 0 am5d$ be=e ! date ( ! enactm5t ( ?is ,act to cease all b5efit accruals1 & is fur!r am5d$ aft] su* date ( enactm5t to provide b5efit accruals to a clos$ class ( p>ticipants4 ,any su* section %all only apply if ! plan o!rwise meets ! requirem5ts ( su* section & 9 apply+ su* section1 ! date ! class ( p>ticipants is clos$ %all be ! effective date ( ! lat] am5dm5t4 ,g ,e/ate1 gift1 & g5]ation-skipp+ transf] taxes #afja4 ,increase 9 cr$it aga9/ e/ate1 gift1 & g5]ation-skipp+ transf] tax 7a7 ,9 g5]al ,section #bjaj7;c77#c7 is am5d$ by /rik+ #e1jjj1jjj & ins]t+ #aj1jjj1jjj4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+1 g5]ation-skipp+ transf]s1 & gifts made1 aft] ,decemb] #ca1 #bjag4 #afjb4 ,repeal ( e/ate & g5]ation-skipp+ transf] taxes 7a7 ,e/ate tax repeal 7#a7 ,9 g5]al ,sub*apt] ,c ( *apt] #aa is am5d$ by add+ at ! end ! foll[+ new section3 #bbaj4 ,t]m9ation 7a7 ,9 g5]al ,except z provid$ 9 subsection 7b71 ?is *apt] %all n apply to ! e/ates ( dec$5ts dy+ aft] ,decemb] #ca1 #bjbd4 7b7 ,c]ta9 ,di/ributions ,f ,qualifi$ ,dome/ic ,tru/s ,9 apply+ section #bjef;,a ) respect to ! surviv+ sp\se ( a dec$5t dy+ on or be=e ,decemb] #ca1 #bjbd-- 7#a7 section #bjef;,a7b77#a77;,a7 %all n apply to di/ributions made aft] ! #aj-ye> p]iod beg9n+ on su* date1 & 7#b7 section #bjef;,a7b77#a77;,b7 %all n apply aft] su* date4 4 7#b7 ,con=m+ am5dm5ts ,section #ajad7;b7 is am5d$-- 7,a7 9 p>agraph 7#f71 by /rik+ 0 includible 9 det]m9+ & all t foll[s ?r\gh ! end & ins]t+ 0 includible 7or w\ld h be5 includible )\t reg>d to section #bbaj7 9 det]m9+ ! value ( ! dec$5t's gross e/ate "u *apt] #aa ( subtitle ,b 1 7,b7 9 p>agraph 7#i71 by /rik+ requir$ to be includ$ ?r\gh ,code ( #aici & ins]t+ requir$ to be includ$ 7or w\ld h be5 requir$ to be includ$ )\t reg>d to section #bbaj7 9 det]m9+ ! value ( ! dec$5t's gross e/ate "u *apt] #aa ( subtitle ,b1 & 7,c7 9 p>agraph 7#aj71 by /rik+ ,prop]ty includible 9 ! gross e/ate & ins]t+ ,prop]ty includible 7or :i* w\ld h be5 includible )\t reg>d to section #bbaj7 9 ! gross e/ate4 7#c7 ,cl]ical am5dm5t ,! table ( sections = sub*apt] ,c ( *apt] #aa is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bbaj4 ,t]m9ation4 4 7b7 ,g5]ation-skipp+ transf] tax repeal 7#a7 ,9 g5]al ,sub*apt] ,g ( *apt] #ac ( subtitle ,b ( su* ,code is am5d$ by add+ at ! end ! foll[+ new section3 #bffd4 ,t]m9ation ,?is *apt] %all n apply to g5]ation-skipp+ transf]s aft] ,decemb] #ca1 #bjbd4 4 7#b7 ,cl]ical am5dm5t ,! table ( sections = sub*apt] ,g ( *apt] #ac ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bffd4 ,t]m9ation4 4 7c7 ,con=m+ am5dm5ts relat$ to gift tax 7#a7 ,computation ( gift tax ,section #bejb is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,gifts made aft] #bjbd 7#a7 ,9 g5]al ,9 ! case ( a gift made aft] ,decemb] #ca1 #bjbd1 subsection 7a7 %all be appli$ by sub/itut+ subsection 7d77#b7 = section #bjja7;c7 & su* subsection = su* section4 7#b7 ,rate s*$ule ,if ! am\nt ) respect to :i* ! t5tative tax to be comput$ is3,! t5tative tax is3 ,n ov] #aj1jjjah ( su* am\nt4 ,ov] #aj1jjj b n ov] #bj1jjja1hjj1 plus #bj ( ! excess ov] #aj1jjj4 ,ov] #bj1jjj b n ov] #dj1jjjc1hjj1 plus #bb ( ! excess ov] #bj1jjj4 ,ov] #dj1jjj b n ov] #fj1jjjh1bjj1 plus #bd ( ! excess ov] #dj1jjj4 ,ov] #fj1jjj b n ov] #hj1jjjac1jjj1 plus #bf ( ! excess ov] #fj1jjj4 ,ov] #hj1jjj b n ov] #ajj1jjjah1bjj1 plus #bh ( ! excess ov] #hj1jjj4 ,ov] #ajj1jjj b n ov] #aej1jjjbc1hjj1 plus #cj ( ! excess ov] #ajj1jjj4 ,ov] #aej1jjj b n ov] #bej1jjjch1hjj1 plus #cb ( ! excess ( #aej1jjj4 ,ov] #bej1jjj b n ov] #ejj1jjjgj1hjj1 plus #cd ( ! excess ov] #bej1jjj4 ,ov] #ejj1jjjaee1hjj1 plus #ce ( ! excess ( #ejj1jjj4 4 7#b7 ,lifetime gift exemption ,section #beje is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,gifts made aft] #bjbd 7#a7 ,9 g5]al ,9 ! case ( a gift made aft] ,decemb] #ca1 #bjbd1 subsection 7a77#a7 %all be appli$ by sub/itut+ ! am\nt ( ! t5tative tax :i* w\ld be det]m9$ "u ! rate s*$ule set =? 9 section #bejb7;a77#b7 if ! am\nt ) respect to :i* su* t5tative tax is to be comput$ 7 #aj1jjj1jjj = ! applicable cr$it am\nt 9 effect "u section #bjaj7;c7 :i* w\ld apply if ! donor di$ z ( ! end ( ! cal5d> ye>4 7#b7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any cal5d> ye> aft] #bjbd1 ! doll> am\nt 9 subsection 7a77#a7 7aft] application ( ?is subsection7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 ( su* cal5d> ye> by sub/itut+ cal5d> ye> #bjaa = cal5d> ye> #bjaf 9 clause 7ii7 !re(4 7,b7 ,r\nd+ ,if any am\nt z adju/$ "u p>agraph 7#a7 is n a multiple ( #aj1jjj1 su* am\nt %all be r\nd$ to ! ne>e/ multiple ( #aj1jjj4 4 7#c7 ,o!r con=m+ am5dm5ts relat$ to gift tax ,section #bhja is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,gifts receiv$ aft] #bjbd ,9 ! case ( a gift receiv$ aft] ,decemb] #ca1 #bjbd1 subsection 7a77#a7 %all be appli$ by sub/itut+ section #bejb7;a77#b7 = section #bjja7;c7 z 9 effect on ! date ( su* receipt4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+1 g5]ation-skipp+ transf]s1 & gifts made1 aft] ,decemb] #ca1 #bjbd4 ,,ii ,alt]native ,m9imum ,tax ,repeal #bjja4 ,repeal ( alt]native m9imum tax 7a7 ,9 g5]al ,sub*apt] ,a ( *apt] #a is am5d$ by /rik+ "p ,,vi 7& by /rik+ ! item relat+ to su* "p 9 ! table ( p>ts = sub*apt] ,a74 7b7 ,cr$it = prior ye> m9imum tax liability 7#a7 ,limitation ,subsection 7c7 ( section #ec is am5d$ to read z foll[s3 7c7 ,limitation ,! cr$it all[able "u subsection 7a7 %all n exce$ ! regul> tax liability ( ! taxpay] r$uc$ by ! sum ( ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d4 4 7#b7 ,cr$its treat$ z refundable ,section #ec is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,portion ( cr$it treat$ z refundable 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ 9 #bjai1 #bjbj1 #bjba1 or #bjbb1 ! limitation "u subsection 7c7 %all be increas$ by ! ,,amt refundable cr$it am\nt = su* ye>4 7#b7 ,,amt refundable cr$it am\nt ,= purposes ( p>agraph 7#a71 ! ,,amt refundable cr$it am\nt is an am\nt equal to #ej p]c5t 7#ajj p]c5t 9 ! case ( a taxable ye> beg9n+ 9 #bjbb7 ( ! excess 7if any7 (-- 7,a7 ! m9imum tax cr$it det]m9$ "u subsection 7b7 = ! taxable ye>1 ov] 7,b7 ! m9imum tax cr$it all[$ "u subsection 7a7 = su* ye> 7be=e ! application ( ?is subsection = su* ye>74 7#c7 ,cr$it refundable ,= purposes ( ?is title 7o!r ?an ?is section71 ! cr$it all[$ by reason ( ?is subsection %all be treat$ z a cr$it all[$ "u subp>t ,c 7& n ?is subp>t74 7#d7 ,%ort taxable ye>s ,9 ! case ( any taxable ye> ( less ?an #cfe days1 ! ,,amt refundable cr$it am\nt det]m9$ "u p>agraph 7#b7 ) respect to su* taxable ye> %all be ! am\nt :i* be>s ! same ratio to su* am\nt det]m9$ )\t reg>d to ?is p>agraph z ! numb] ( days 9 su* taxable ye> be>s to #cfe4 4 7#c7 ,treatm5t ( ref]5ces ,section #ec7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,,amt t]m ref]5ces ,any ref]5ces 9 ?is subsection to section #ee1 #ef1 or #eg %all be treat$ z a ref]5ce to su* section z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act4 4 7c7 ,con=m+ am5dm5ts relat$ to ,,amt repeal 7#a7 ,section #b7;d7 is am5d$ by /rik+ sections #a & #ee & ins]t+ section #a4 7#b7 ,section #e7;a7 is am5d$ by /rik+ p>agraph 7#d74 7#c7 ,section #aa7;d7 is am5d$ by /rik+ ! taxes impos$ by subsection 7a7 & section #ee & ins]t+ ! tax impos$ by subsection 7a74 7#d7 ,section #ab is am5d$ by /rik+ p>agraph 7#g74 7#e7 ,section #bf7;a7 is am5d$ to read z foll[s3 7a7 ,limitation bas$ on am\nt ( tax ,! aggregate am\nt ( cr$its all[$ by ?is subp>t = ! taxable ye> %all n exce$ ! taxpay]'s regul> tax liability = ! taxable ye>4 4 7#f7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,a74 7#g7 ,section #bf is am5d$ by /rik+ subsection 7c74 7#h7 ,section #ch7;c7 is am5d$-- 7,a7 by /rik+ p>agraphs 7#a7 ?r\gh 7#e71 7,b7 by r$esignat+ p>agraph 7#f7 z p>agraph 7#b71 7,c7 by ins]t+ be=e p>agraph 7#b7 7z s r$esignat$7 ! foll[+ new p>agraph3 7#a7 ,9 g5]al ,! cr$it all[$ "u subsection 7a7 = any taxable ye> %all n exce$ ! excess 7if any7 (-- 7,a7 ! sum (-- 7i7 s mu* ( ! regul> tax liability z does n exce$ #be1jjj1 plus 7ii7 #ge p]c5t ( s mu* ( ! regul> tax liability z exce$s #be1jjj1 ov] 7,b7 ! sum ( ! cr$its all[able "u subp>ts ,a & ,b ( ?is "p4 1 & 7,d7 by /rik+ subp>agraph 7,b7 ( p>agraph 7#a7 ea* place x appe>s 9 p>agraph 7#b7 7z s r$esignat$7 & ins]t+ clauses 7i7 & 7ii7 ( p>agraph 7#a77;,a74 7#i7 ,section #ci7;a7 is am5d$-- 7,a7 by /rik+ or ! eligible small bus9ess cr$its 9 p>agraph 7#c77;,a71 & 7,b7 by /rik+ p>agraph 7#d74 7#aj7 ,section #de;,d7g77#d77;,b7 is am5d$ by /rik+ or = purposes ( section #ee4 7#aa7 ,section #ed7;c77#a7 is am5d$ to read z foll[s3 7#a7 regul> tax liability 7z def9$ 9 section #bf7;b771 ov] 4 7#ab7 ,section #ed;,a7c77#a77;,a7 is am5d$ to read z foll[s3 7,a7 regul> tax liability 7z def9$ 9 section #bf7;b771 ov] 4 7#ac7 ,section #adh7;b77#c7 is am5d$ to read z foll[s3 7#c7 ,tax-exempt bonds n treat$ z inve/m5t prop]ty ,! t]m inve/m5t prop]ty does n include any tax-exempt bond4 4 7#ad7 ,section #afh7k77#b7 is am5d$ by /rik+ subp>agraph 7,g74 7#ae7 ,section #afh7k7 is am5d$ by /rik+ p>agraph 7#d74 7#af7 ,section #afh7k77#e7 is am5d$ by /rik+ subp>agraph 7,e74 7#ag7 ,section #afh7m77#b77;,b77i7 is am5d$ by /rik+ 7det]m9$ )\t reg>d to p>agraph 7#d7 !re(74 7#ah7 ,section #afh7m77#b7 is am5d$ by /rik+ subp>agraph 7,d74 7#ai7 ,section #agc is am5d$ by /rik+ subsection 7b74 7#bj7 ,section #bfc7;c7 is am5d$ by /rik+ section #ei7;e7 or #bia & ins]t+ section #bia4 7#ba7 ,section #bfc;,a7c7 is am5d$ by /rik+ p>agraph 7#f7 & by r$esignat+ p>agraph 7#g7 7z am5d$7 z p>agraph 7#f74 7#bb7 ,section #chb7l7 is am5d$ by /rik+ p>agraph 7#g7 & by r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#bc7 ,section #ddc is am5d$ by /rik+ subsection 7d7 & by r$esignat+ subsection 7e7 z subsection 7d74 7#bd7 ,section #faf is am5d$ by /rik+ subsection 7e74 7#be7 ,section #fag is am5d$ by /rik+ subsection 7i74 7#bf7 ,section #fda7;c7 is am5d$-- 7,a7 9 p>agraph 7#b7 by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively1 & 7,b7 9 p>agraph 7#c71 by /rik+ p>agraph 7#b77;,c7 & ins]t+ p>agraph 7#b77;,b74 7#bg7 ,subsections 7b7 & 7c7 ( section #fff are ea* am5d$ by /rik+ 7o!r ?an ! tax impos$ by section #ee74 7#bh7 ,section #hdh is am5d$ by /rik+ subsection 7i74 7#bi7 ,section #hfj;,e7a7 is am5d$ by /rik+ p>agraph 7#d74 7#cj7 ,section #hga7;b77#a7 is am5d$ by /rik+ or #ee4 7#ca7 ,section #hhb7;a77#a7 is am5d$ by /rik+ #ee14 7#cb7 ,section #hig7;a7 is am5d$ to read z foll[s3 7a7 ,treatm5t z effectively connect$ ) unit$ /ates trade or bus9ess ,= purposes ( ?is title1 ga9 or loss ( a nonresid5t ali5 individual or a =eign corporation f ! disposition ( a ,unit$ ,/ates real prop]ty int]e/ %all be tak5 into acc\nt-- 7#a7 9 ! case ( a nonresid5t ali5 individual1 "u section #hga7;b77#a71 or 7#b7 9 ! case ( a =eign corporation1 "u section #hhb7;a77#a71 z if ! taxpay] 7 engag$ 9 a trade or bus9ess )9 ! ,unit$ ,/ates dur+ ! taxable ye> & z if su* ga9 or loss 7 effectively connect$ ) su* trade or bus9ess4 4 7#cc7 ,section #ijd7k7 is am5d$ to read z foll[s3 7k7 ,cross ref]5ce ,= increase ( limitation "u subsection 7a7 = taxes paid ) respect to am\nts receiv$ :i* 7 includ$ 9 ! gross income ( ! taxpay] = a prior taxable ye> z a ,unit$ ,/ates %>ehold] ) respect to a controll$ =eign corporation1 see section #ifj7;b74 4 7#cd7 ,section #iaa7;f7 is am5d$ to read z foll[s3 7f7 ,det]m9ation ( tax liability 7#a7 ,9 g5]al ,if1 = any taxable ye>1 any am\nt is exclud$ f gross income ( a taxpay] "u subsection 7a71 !n1 not)/&+ section #a1 if su* taxpay] has taxable income = su* taxable ye>1 ! tax impos$ by section #a = su* taxable ye> %all be equal to ! excess 7if any7 (-- 7,a7 ! tax :i* w\ld be impos$ by section #a = su* taxable ye> if ! taxpay]'s taxable income 7 increas$ by ! am\nt exclud$ "u subsection 7a7 = su* taxable ye>1 ov] 7,b7 ! tax :i* w\ld be impos$ by section #a = su* taxable ye> if ! taxpay]'s taxable income 7 equal to ! am\nt exclud$ "u subsection 7a7 = su* taxable ye>4 ,= purposes ( ?is p>agraph1 ! am\nt exclud$ "u subsection 7a7 %all be r$uc$ by ! aggregate am\nt ( any d$uctions or exclusions disall[$ "u subsection 7d77#f7 ) respect to su* exclud$ am\nt4 7#b7 ,treatm5t ( capital ga9 excess 7,a7 ,9 g5]al ,9 apply+ section #a7;h7 = purposes ( det]m9+ ! tax "u p>agraph 7#a77;,a7 = any taxable ye> 9 :i*1 )\t reg>d to ?is subsection1 ! taxpay]'s net capital ga9 exce$s taxable income 7h]eaft] 9 ?is subp>agraph ref]r$ to z ! capital ga9 excess7-- 7i7 ! taxpay]'s net capital ga9 7det]m9$ )\t reg>d to section #a7;h77#aa77 %all be r$uc$ 7b n bel[ z]o7 by su* capital ga9 excess1 7ii7 ! taxpay]'s qualifi$ divid5d income %all be r$uc$ by s mu* ( su* capital ga9 excess z exce$s ! taxpay]'s net capital ga9 7det]m9$ )\t reg>d to section #a7;h77#aa7 & ! r$uction "u clause 7i771 & 7iii7 adju/$ net capital ga91 unrecaptur$ section #abej ga91 & #bh-p]c5t rate ga9 %all ea* be det]m9$ aft] increas+ ! am\nt describ$ 9 section #a7;h77#d77;,b7 by su* capital ga9 excess4 7,b7 ,def9itions ,t]ms us$ 9 ?is p>agraph :i* are also us$ 9 section #a7;h7 %all h ! respective mean+s giv5 su* t]ms by section #a7;h74 4 7#ce7 ,section #ifb7;a77#a7 is am5d$-- 7,a7 by /rik+ sections #a & #ee & ins]t+ section #a1 & 7,b7 by /rik+ sections #aa & #ee & ins]t+ section #aa4 7#cf7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bj74 7#cg7 ,section #abjb7;a77#d7 is am5d$ by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ 1 & & ins]t+ a p]iod at ! end ( subp>agraph 7,b71 & by /rik+ subp>agraph 7,c74 7#ch7 ,section #acgd7;b77#c77;,b7 is am5d$ by /rik+ ! la/ s5t5ce !re(4 7#ci7 ,section #aefa7;a7 is am5d$-- 7,a7 by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ 1 & at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c71 & 7,b7 by /rik+ ! la/ s5t5ce4 7#dj7 ,section #fjae7;d77#b77;,b7 is am5d$ by /rik+ or #ee4 7#da7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+1 #afh7k77#d74 7#db7 ,section #fdbe7;c77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ! tax impos$ "u section #aa or sub*apt] ,l ( *apt] #a1 :i*ev] is applicable1 ov] 4 7#dc7 ,section #ffed7;d77#b7 is am5d$-- 7,a7 9 clause 7i7 ( subp>agraph 7,b71 by /rik+ 1 alt]native m9imum taxable income11 & 7,b7 9 clause 7i7 ( subp>agraph 7,c71 by /rik+ 1 alt]native m9imum taxable income14 7#dd7 ,section #ffee7;e77#b77;,b77i7 is am5d$ by /rik+ ,! taxable income & alt]native m9imum taxable income %all & ins]t+ ,taxable income %all4 7#de7 ,section #ffee7;g77#a77;,a7 is am5d$ by add+ plus at ! end ( clause 7i71 by /rik+ clause 7ii71 & by r$esignat+ clause 7iii7 z clause 7ii74 7#df7 ,section #fffb7;e77#c77;,c7 is am5d$ by /rik+ ! regul> tax 7z def9$ 9 section #ee7;c77 & ins]t+ ! regul> tax liability 7z def9$ 9 section #bf7;b774 7d7 ,effective dates 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,prior elections ) respect to c]ta9 tax pref]5ces ,s mu* ( ! am5dm5t made by subsection 7a7 z relates to ! repeal ( section #ei7;e7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 7#c7 ,treatm5t ( net op]at+ loss c>rybacks ,= purposes ( section #ef7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect be=e its repeal71 ! am\nt ( any net op]at+ loss :i* may be c>ri$ back f a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 to taxable ye>s beg9n+ be=e ,janu>y #a1 #bjah1 %all be det]m9$ )\t reg>d to any adju/m5ts "u section #ef7;d77#b77;,a7 ( su* ,code 7z s 9 effect74 ,,iii ,bus9ess tax re=m ,a ,tax rates #cjja4 ,r$uction 9 corporate tax rate 7a7 ,9 g5]al ,section #aa7;b7 is am5d$ to read z foll[s3 7b7 ,am\nt ( tax 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am\nt ( ! tax impos$ by subsection 7a7 %all be #bj p]c5t ( taxable income4 7#b7 ,special rule = p]sonal s]vice corporations 7,a7 ,9 g5]al ,9 ! case ( a p]sonal s]vice corporation 7z def9$ 9 section #ddh7;d77#b771 ! am\nt ( ! tax impos$ by subsection 7a7 %all be #be p]c5t ( taxable income4 7,b7 ,ref]5ces to corporate rate ,any ref]5ce to ! rate impos$ "u ?is section or to ! highe/ rate 9 effect "u ?is section 7or any simil> ref]5ce7 %all be det]m9$ )\t reg>d to ! rate impos$ ) respect to p]sonal s]vice corporations 7z s def9$74 4 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,"p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abja 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ab is am5d$ by /rik+ p>agraph 7#d74 7,c7 ,section #ebg7;b7 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by /rik+ all t prec$es is h]eby impos$ & ins]t+3 7b7 ,tax impos$ ,a tax 4 7,d7 ,section #eid7;a7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja7;a7 & ins]t+ tax impos$ by section #aa4 7,e7 ,section #fia7;c77#d7 is am5d$ by /rik+ #abja14 7,f7 ,section #hja7;a7 is am5d$-- 7i7 by /rik+ p>agraph 7#b71 & 7ii7 by /rik+ all t prec$es is h]eby impos$ & ins]t+3 7a7 ,tax impos$ ,a tax 4 7,g7 ,section #hca7;e7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7,h7 ,sections #hcb7;c77#e7 & #hcd7;b77#a77;,d7 are ea* am5d$ by /rik+ sec4 #abja & foll[+14 7,i7 ,section #heb7;b77#c77;,a7 is am5d$ by /rik+ section #abja7;a7 & ins]t+ section #aa7;b77#a74 7,j7 ,section #heg7;b77#c7 is am5d$-- 7i7 by /rik+ subp>agraph 7,a7 & r$esignat+ subp>agraphs 7,b7 ?r\gh 7,f7 z subp>agraphs 7,a7 ?r\gh 7,e71 respectively1 7ii7 9 subp>agraph 7,c71 z s r$esignat$-- 7,i7 by /rik+ subp>agraph 7,a77ii7 9 clause 7i7 !re( & ins]t+ p>agraph 7#a71 7,,ii7 by /rik+ ! tax impos$ by subp>agraph 7,a77ii7 9 clauses 7ii7 & 7iv7 !re( & ins]t+ ! tax impos$ by p>agraph 7#a7 on undi/ribut$ capital ga91 7iii7 9 subp>agraph 7,e71 z s r$esignat$1 by /rik+ subp>agraph 7,b7 or 7,d7 & ins]t+ subp>agraph 7,a7 or 7,c71 & 7iv7 by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,undi/ribut$ capital ga9 ,= purposes ( ?is p>agraph1 ! t]m undi/ribut$ capital ga9 means ! excess ( ! net capital ga9 ov] ! d$uction = divid5ds paid 7z def9$ 9 section #efa7 det]m9$ ) ref]5ce to capital ga9 divid5ds only4 4 7,k7 ,section #hhb7;a77#a7 is am5d$ by /rik+ 1 or #abja7;a74 7,l7 ,section #acgd7;b7 is am5d$ by /rik+ p>agraph 7#d74 7,m7 ,section #acha7;b7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja & ins]t+ tax impos$ by section #aa4 7,n7 ,section #ffee7;g77#a77;,a77i7 is am5d$ by /rik+ or #abja7;a714 7,o7 ,section #geah7;g77#f77;,a7 is am5d$ by /rik+ or #abja7;a74 7#b7 ,section #adde7;e77#a7 is am5d$ by /rik+ #ce p]c5t 7or1 to ! ext5t provid$ 9 regulations1 #bj p]c5t7 & ins]t+ #bj p]c5t4 7#c7 ,section #adde7;e77#b7 is am5d$ by /rik+ #ce p]c5t & ins]t+ #bj p]c5t4 7#d7 ,section #adde7;e77#f7 is am5d$ by /rik+ #ce p]c5t 7or1 to ! ext5t provid$ 9 regulations1 #bj p]c5t7 & ins]t+ #bj p]c5t4 7#e7 7,a7 ,"p ,i ( sub*apt] ,b ( *apt] #e is am5d$ by /rik+ section #aeea 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ab is am5d$ by /rik+ p>agraph 7#f74 7,c7 ,section #ece7;c77#e7 is am5d$ to read z foll[s3 7#e7 ,cross ref]5ce ,= limitation on cr$it provid$ 9 p>agraph 7#b7 or 7#c7 9 ! case ( c]ta9 controll$ corporations1 see section #aefa4 4 7#f7 7,a7 ,section #aefa1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ to read z foll[s3 #aefa4 ,limitation on accumulat$ e>n+s cr$it 9 ! case ( c]ta9 controll$ corporations 7a7 ,9 g5]al ,! compon5t memb]s ( a controll$ gr\p ( corporations on a ,decemb] #ca %all1 = _! taxable ye>s :i* include su* ,decemb] #ca1 be limit$ = purposes ( ?is subtitle to "o #bej1jjj 7#aej1jjj if any compon5t memb] is a corporation describ$ 9 section #ece7;c77#b77;,b77 am\nt = purposes ( comput+ ! accumulat$ e>n+s cr$it "u section #ece7;c77#b7 & 7#c74 ,su* am\nt %all be divid$ equally among ! compon5t memb]s ( su* gr\p on su* ,decemb] #ca unless ! ,secret>y prescribes regulations p]mitt+ an unequal allocation ( su* am\nt4 7b7 ,c]ta9 %ort taxable ye>s ,if a corporation has a %ort taxable ye> :i* does n include a ,decemb] #ca & is a compon5t memb] ( a controll$ gr\p ( corporations ) respect to su* taxable ye>1 !n = purposes ( ?is subtitle1 ! am\nt to be us$ 9 comput+ ! accumulat$ e>n+s cr$it "u section #ece7;c77#b7 & 7#c7 ( su* corporation = su* taxable ye> %all be ! am\nt specifi$ 9 subsection 7a7 ) respect to su* gr\p1 divid$ by ! numb] ( corporations :i* are compon5t memb]s ( su* gr\p on ! la/ day ( su* taxable ye>4 ,= purposes ( ! prec$+ s5t5ce1 section #aefc7;b7 %all be appli$ z if su* la/ day 7 sub/itut$ = ,decemb] #ca4 4 7,b7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #e is am5d$ by /rik+ ! item relat+ to section #aefa & ins]t+ ! foll[+ new item3 ,sec4 #aefa4 ,limitation on accumulat$ e>n+s cr$it 9 ! case ( c]ta9 controll$ corporations4 4 7#g7 ,section #geah7;g77#f77;,a7 is am5d$-- 7,a7 by /rik+ ,) respect to ! portion & ins]t+ ,9 ! case ( a taxpay] o!r ?an a corporation1 ) respect to ! portion1 & 7,b7 by /rik+ 7#cd p]c5t 9 ! case ( a corporation74 7c7 ,r$uction 9 divid5d receiv$ d$uctions to reflect l[] corporate income tax rates 7#a7 ,divid5ds receiv$ by corporations 7,a7 ,9 g5]al ,section #bdc7;a77#a7 is am5d$ by /rik+ #gj p]c5t & ins]t+ #ej p]c5t4 7,b7 ,divid5ds f #bj-p]c5t own$ corporations ,section #bdc7;c77#a7 is am5d$-- 7i7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t1 & 7ii7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t4 7,c7 ,con=m+ am5dm5t ,! head+ = section #bdc7;c7 is am5d$ by /rik+ ,ret5tion ( #hj-p]c5t divid5d receiv$ d$uction & ins]t+ ,increas$ p]c5tage4 7#b7 ,divid5ds receiv$ f ,,fsc ,section #bde7;c77#a77;,b7 is am5d$-- 7,a7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t1 & 7,b7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t4 7#c7 ,limitation on aggregate am\nt ( d$uctions ,section #bdf7;b77#c7 is am5d$-- 7,a7 by /rik+ #hj p]c5t 9 subp>agraph 7,a7 & ins]t+ #fe p]c5t1 & 7,b7 by /rik+ #gj p]c5t 9 subp>agraph 7,b7 & ins]t+ #ej p]c5t4 7#d7 ,r$uction 9 d$uction :]e portfolio /ock is debt-f9anc$ ,section #bdf;,a7a77#a7 is am5d$-- 7,a7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t1 & 7,b7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t4 7#e7 ,income f s\rces )9 ! ,unit$ ,/ates ,section #hfa7;a77#b7 is am5d$-- 7,a7 by /rik+ #ajj_/gj? & ins]t+ #ajj_/ej? 9 subp>agraph 7,b71 & 7,b7 9 ! flu% s5t5ce at ! end-- 7i7 by /rik+ #ajj_/hj? & ins]t+ #ajj_/fe?1 & 7ii7 by /rik+ #ajj_/gj? & ins]t+ #ajj_/ej?4 7d7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,c]ta9 con=m+ am5dm5ts ,! am5dm5ts made by p>agraphs 7#b71 7#c71 & 7#d7 ( subsection 7b7 %all apply to di/ributions aft] ,decemb] #ca1 #bjag4 7e7 ,normalization requirem5ts 7#a7 ,9 g5]al ,a normalization me?od ( acc\nt+ %all n be treat$ z be+ us$ ) respect to any public utility prop]ty = purposes ( section #afg or #afh ( ! ,int]nal ,rev5ue ,code ( #aihf if ! taxpay]1 9 comput+ its co/ ( s]vice = ratemak+ purposes & reflect+ op]at+ results 9 its regulat$ books ( acc\nt1 r$uces ! excess tax res]ve m rapidly or to a great] ext5t ?an su* res]ve w\ld be r$uc$ "u ! av]age rate assumption me?od4 7#b7 ,alt]native ,me?od = ,c]ta9 ,taxpay]s ,if1 z ( ! fir/ day ( ! taxable ye> t includes ! date ( enactm5t ( ?is ,act-- 7,a7 ! taxpay] 0 requir$ by a regulatory ag5cy to compute depreciation = public utility prop]ty on ! basis ( an av]age life or composite rate me?od1 & 7,b7 ! taxpay]'s books & und]ly+ records did n conta9 ! v9tage acc\nt data necess>y to apply ! av]age rate assumption me?od1 ! taxpay] w be treat$ z us+ a normalization me?od ( acc\nt+ if1 ) respect to su* jurisdiction1 ! taxpay] uses ! alt]native me?od = public utility prop]ty t is subject to ! regulatory au?ority ( t jurisdiction4 7#c7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,excess tax res]ve ,! t]m excess tax res]ve means ! excess (-- 7i7 ! res]ve = def]r$ taxes 7z describ$ 9 section #afh7;i77#i77;,a77ii7 ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect on ! day be=e ! date ( ! enactm5t ( ?is ,act71 ov] 7ii7 ! am\nt :i* w\ld be ! balance 9 su* res]ve if ! am\nt ( su* res]ve 7 det]m9$ by assum+ t ! corporate rate r$uctions provid$ 9 ?is ,act 7 9 effect = all prior p]iods4 7,b7 ,av]age rate assumption me?od ,! av]age rate assumption me?od is ! me?od "u :i* ! excess 9 ! res]ve = def]r$ taxes is r$uc$ ov] ! rema9+ lives ( ! prop]ty z us$ 9 its regulat$ books ( acc\nt :i* gave rise to ! res]ve = def]r$ taxes4 ,"u su* me?od1 if tim+ diff]5ces = ! prop]ty rev]se1 ! am\nt ( ! adju/m5t to ! res]ve = ! def]r$ taxes is calculat$ by multiply+-- 7i7 ! ratio ( ! aggregate def]r$ taxes = ! prop]ty to ! aggregate tim+ diff]5ces = ! prop]ty z ( ! beg9n+ ( ! p]iod 9 "q1 by 7ii7 ! am\nt ( ! tim+ diff]5ces :i* rev]se dur+ su* p]iod4 7,c7 ,alt]native me?od ,! alt]native me?od is ! me?od 9 :i* ! taxpay]-- 7i7 computes ! excess tax res]ve on all public utility prop]ty includ$ 9 ! plant acc\nt on ! basis ( ! weight$ av]age life or composite rate us$ to compute depreciation = regulatory purposes1 & 7ii7 r$uces ! excess tax res]ve ratably ov] ! rema9+ regulatory life ( ! prop]ty4 7#d7 ,tax increas$ = normalization violation ,if1 = any taxable ye> end+ aft] ! date ( ! enactm5t ( ?is ,act1 ! taxpay] does n use a normalization me?od ( acc\nt+1 ! taxpay]'s tax = ! taxable ye> %all be increas$ by ! am\nt by :i* x r$uces its excess tax res]ve m rapidly ?an p]mitt$ "u a normalization me?od ( acc\nt+4 ,b ,co/ recov]y #caja4 ,increas$ exp5s+ 7a7 #ajj p]c5t exp5s+ ,section #afh7k77#a77;,a7 is am5d$ by /rik+ #ej p]c5t & ins]t+ #ajj p]c5t4 7b7 ,ext5sion ?r\gh ,janu>y #a1 #bjbc ,section #afh7k77#b7 is am5d$-- 7#a7 9 subp>agraph 7,a77iii71 by /rik+ ,janu>y #a1 #bjbj & ins]t+ ,janu>y #a1 #bjbc1 7#b7 9 subp>agraph 7,b77i77,,ii71 by /rik+ ,janu>y #a1 #bjba & ins]t+ ,janu>y #a1 #bjbd1 7#c7 9 subp>agraph 7,b77i77,,iii71 by /rik+ ,janu>y #a1 #bjbj & ins]t+ ,janu>y #a1 #bjbc1 7#d7 9 subp>agraph 7,b77ii71 by /rik+ ,janu>y #a1 #bjbj 9 ea* place x appe>s & ins]t+ ,janu>y #a1 #bjbc1 & 7#e7 9 subp>agraph 7,e77i71 by /rik+ ,janu>y #a1 #bjbj & replac+ x ) ,janu>y #a1 #bjbc4 7c7 ,application to us$ prop]ty 7#a7 ,9 g5]al ,section #afh7k77#b77;,a77ii7 is am5d$ to read z foll[s3 7ii7 ! orig9al use ( :i* beg9s ) ! taxpay] or ! acquisition ( :i* by ! taxpay] meets ! requirem5ts ( clause 7ii7 ( subp>agraph 7,e71 & 4 7#b7 ,acquisition requirem5ts ,section #afh7k77#b77;,e77ii7 is am5d$ to read z foll[s3 7ii7 ,acquisition requirem5ts ,an acquisition ( prop]ty meets ! requirem5ts ( ?is clause if-- 7,i7 su* prop]ty 0 n us$ by ! taxpay] at any "t prior to su* acquisition1 & 7,,ii7 ! acquisition ( su* prop]ty meets ! requirem5ts ( p>agraphs 7#b77;,a71 7#b77;,b71 7#b77;,c71 & 7#c7 ( section #agi7;d74 1 7#c7 ,anti-abuse rules ,section #afh7k77#b77;,e7 is fur!r am5d$ by am5d+ clause 7iii77,i7 to read z foll[s3 7,i7 prop]ty is us$ by a lessor ( su* prop]ty & su* use is ! lessor's fir/ use ( su* prop]ty1 4 7d7 ,exception = c]ta9 trades & bus9esses n subject to limitation on int]e/ exp5se ,section #afh7k77#b71 z am5d$ by section #bjja1 is am5d$ by ins]t+ aft] subp>agraph 7,f7 ! foll[+ new subp>agraph3 7,g7 ,exception = prop]ty ( c]ta9 bus9esses n subject to limitation on int]e/ exp5se ,! t]m qualifi$ prop]ty %all n include any prop]ty us$ 9-- 7i7 a trade or bus9ess describ$ 9 subp>agraph 7,b7 or 7,c7 ( section #afc7;j77#g71 or 7ii7 a trade or bus9ess t has _h floor plan f9anc+ indebt$ness 7z def9$ 9 p>agraph 7#i7 ( section #afc7;j771 if ! floor plan f9anc+ int]e/ relat$ to su* indebt$ness 0 tak5 into acc\nt "u p>agraph 7#a77;,c7 ( su* section4 4 7e7 ,coord9ation ) section #bhj;,f ,section #afh7k77#b77;,f7 is am5d$-- 7#a7 by /rik+ #h1jjj 9 clauses 7i7 & 7iii7 & ins]t+ #af1jjj1 & 7#b7 9 clause 7iii7-- 7,a7 by /rik+ plac$ 9 s]vice by ! taxpay] aft] ,decemb] #ca1 #bjag & ins]t+ acquir$ by ! taxpay] be=e ,septemb] #bh1 #bjag1 & plac$ 9 s]vice by ! taxpay] aft] ,septemb] #bg1 #bjag1 & 7,b7 by r$esignat+ subclauses 7,i7 & 7,,ii7 z subclauses 7,,ii7 & 7,,iii7 respectively1 & ins]t+ be=e clause 7,,ii71 z s r$esignat$1 ! foll[+ new subclause3 7,i7 9 ! case ( a pass5g] automobile plac$ 9 s]vice be=e ,janu>y #a1 #bjah1 #h1jjj1 4 7f7 ,con=m+ am5dm5ts 7#a7 ,section #afh7k77#b77;,b77i77,,iii71 z am5d$1 is am5d$ by ins]t+ b9d+ be=e contract4 7#b7 ,section #afh7k77#e7 is am5d$ by-- 7,a7 by /rik+ ,janu>y #a1 #bjbj 9 subp>agraph 7,a7 & ins]t+ ,janu>y #a1 #bjbc1 7,b7 by /rik+ #ej p]c5t 9 subp>agraph 7,a77i7 & ins]t+ #ajj p]c5t1 & 7,c7 by /rik+ subp>agraph 7,f74 7#c7 ,section #afh7k77#f7 is am5d$ to read z foll[s3 7#f7 ,phase ,d[n ,9 ! case ( qualifi$ prop]ty acquir$ by ! taxpay] be=e ,septemb] #bh1 #bjag1 & plac$ 9 s]vice by ! taxpay] aft] ,septemb] #bg1 #bjag1 p>agraph 7#a77;,a7 %all be appli$ by sub/itut+ = #ajj p]c5t-- 7,a7 #ej p]c5t 9 ! case (-- 7i7 prop]ty plac$ 9 s]vice be=e ,janu>y #a1 #bjah1 & 7ii7 prop]ty describ$ 9 subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b7 :i* is plac$ 9 s]vice 9 #bjah1 7,b7 #dj p]c5t 9 ! case (-- 7i7 prop]ty plac$ 9 s]vice 9 #bjah 7o!r ?an prop]ty describ$ 9 subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b771 & 7ii7 prop]ty describ$ 9 subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b7 :i* is plac$ 9 s]vice 9 #bjai1 & 7,c7 #cj p]c5t 9 ! case (-- 7i7 prop]ty plac$ 9 s]vice 9 #bjai 7o!r ?an prop]ty describ$ 9 subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b771 & 7ii7 prop]ty describ$ 9 subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b7 :i* is plac$ 9 s]vice 9 #bjbj4 4 7#d7 ,! head+ ( section #afh7k7 is am5d$ by /rik+ ,special all[ance = c]ta9 prop]ty acquir$ aft] ,decemb] #ca1 #bjjg1 & be=e ,janu>y #a1 #bjbj & ins]t+ ,full exp5s+ ( c]ta9 prop]ty4 7#e7 ,section #dfj7;c77#f77;,b77ii7 is am5d$ by /rik+ ,janu>y #a1 #bjbj 7,janu>y #a1 #bjba 9 ! case ( prop]ty describ$ 9 section #afh7k77#b77;,b77 & ins]t+ ,janu>y #a1 #bjbc 7,janu>y #a1 #bjbd 9 ! case ( prop]ty describ$ 9 section #afh7k77#b77;,b774 7g7 ,effective date 7#a7 ,9 g5]al ,except at provid$ by p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to prop]ty :i*-- 7,a7 is acquir$ aft] ,septemb] #bg1 #bjag1 & 7,b7 is plac$ 9 s]vice aft] su* date4 ,= purposes ( ! prec$+ s5t5ce1 prop]ty %all n be treat$ z acquir$ aft] ! date on :i* a writt5 b9d+ contract is ent]$ into = su* acquisition4 7#b7 ,specifi$ plants ,! am5dm5ts made by subsection 7f77#b7 %all apply to specifi$ plants plant$ or graft$ aft] ,septemb] #bg1 #bjag4 7#c7 ,transition rule ,9 ! case ( any taxpay]'s fir/ taxable ye> end+ aft] ,septemb] #bg1 #bjag1 ! taxpay] may elect 7at su* "t & 9 su* =m & mann] z ! ,secret>y ( ! ,treasury1 or 8 designee1 may provide7 to apply section #afh ( ! ,int]nal ,rev5ue ,code ( #aihf )\t reg>d to ! am5dm5ts made by ?is section4 7#d7 ,limitation on net op]at+ loss c>rybacks attributable to full exp5s+ ,9 ! case ( any taxable ye> :i* includes any portion ( ! p]iod beg9n+ on ,septemb] #bh1 #bjag1 & end+ on ,decemb] #ca1 #bjag1 ! am\nt ( any net op]at+ loss = su* taxable ye> :i* may be treat$ z a net op]at+ loss c>ryback 7includ+ any su* c>ryback attributable to any specifi$ liability loss "u section #agb7;b77#a77;,c71 any corporate equity r$uction int]e/ loss "u section #agb7;b77#a77;,d71 any eligible loss "u section #agb7;b77#a77;,e71 & any f>m+ loss "u section #agb7;b77#a77;,f77 %all be det]m9$ )\t reg>d to ! am5dm5ts made by ?is section4 ,= purposes ( ?is p>agraph1 t]ms :i* are us$ 9 section #agb ( ! ,int]nal ,rev5ue ,code ( #aihf 7det]m9$ )\t reg>d to ! am5dm5ts made by section #ccjb7 %all h ! same mean+ z :5 us$ 9 su* section4 ,c ,small bus9ess re=ms #cbja4 ,expansion ( section #agi exp5s+ 7a7 ,increas$ doll> limitations 7#a7 ,9 g5]al ,section #agi7;b7 is am5d$-- 7,a7 by ins]t+ 7#e1jjj1jjj1 9 ! case ( taxable ye>s beg9n+ be=e ,janu>y #a1 #bjbc7 aft] #ejj1jjj 9 p>agraph 7#a71 & 7,b7 by ins]t+ 7#bj1jjj1jjj1 9 ! case ( taxable ye>s beg9n+ be=e ,janu>y #a1 #bjbc7 aft] #b1jjj1jjj 9 p>agraph 7#b74 7#b7 ,inflation adju/m5t ,section #agi7;b77#f7 is am5d$ to read z foll[s3 7#f7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( a taxable ye> beg9n+ aft] #bjae 7#bjah 9 ! case ( ! #e1jjj1jjj & #bj1jjj1jjj am\nts 9 subsection 7b771 ea* doll> am\nt 9 subsection 7b7 %all be increas$ by an am\nt equal to su* doll> am\nt multipli$ by-- 7i7 9 ! case ( ! #ejj1jjj & #b1jjj1jjj am\nts 9 subsection 7b71 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjad = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(1 & 7ii7 9 ! case ( ! #e1jjj1jjj & #bj1jjj1jjj am\nts 9 subsection 7b71 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 7,b7 ,r\nd+ ,! am\nt ( any increase "u subp>agraph 7,a7 %all be r\nd$ to ! ne>e/ multiple ( #aj1jjj 7#ajj1jjj 9 ! case ( ! #e1jjj1jjj & #bj1jjj1jjj am\nts 9 subsection 7b774 4 7b7 ,application to qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty 7#a7 ,9 g5]al ,section #agi7;f77#b7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,b71 by /rik+ ! p]iod at ! end ( subp>agraph 7,c7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,d7 qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty4 4 7#b7 ,qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty ,section #agi7;f7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty means any section #abej prop]ty-- 7i7 ) respect to :i* depreciation 7or amortization 9 lieu ( depreciation7 is all[able1 7ii7 :i* is in/all$ z "p ( a build+'s heat+1 cool+1 v5tilation1 or hot wat] sy/em1 & 7iii7 :i* is )9 ! scope ( ,/&>d #ij4a-bjjg or any successor /&>d4 7,b7 ,/&>d #ij4a-bjjg ,! t]m ,/&>d #ij4a-bjjg means ,/&>d #ij4a-bjjg ( ! ,am]ican ,society ( ,heat+1 ,refrig]at+ & ,air-,condition+ ,eng9e]s & ! ,illum9at+ ,eng9e]+ ,society ( ,nor? ,am]ica 7z 9 effect on ! day be=e ! date ( ! adoption ( ,/&>d #ij4a-bjaj ( su* ,societies74 4 7c7 ,effective date 7#a7 ,increas$ doll> limitations ,! am5dm5ts made by subsection 7a7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,application to qualifi$ en]gy effici5t heat+ & air-condition+ prop]ty ,! am5dm5ts made by subsection 7b7 %all apply to prop]ty acquir$ & plac$ 9 s]vice aft] ,novemb] #b1 #bjag4 ,= purposes ( ! prec$+ s5t5ce1 prop]ty %all n be treat$ z acquir$ aft] ! date on :i* a writt5 b9d+ contract is ent]$ into = su* acquisition4 #cbjb4 ,small bus9ess acc\nt+ me?od re=m & simplification 7a7 ,modification ( limitation on ca% me?od ( acc\nt+ 7#a7 ,increas$ limitation ,s mu* ( section #ddh7;c7 z prec$es p>agraph 7#b7 is am5d$ to read z foll[s3 7c7 ,gross receipts te/ ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,a corporation or p>tn]%ip meets ! gross receipts te/ ( ?is subsection = any taxable ye> if ! av]age annual gross receipts ( su* entity = ! #c-taxable-ye> p]iod end+ ) ! taxable ye> :i* prec$es su* taxable ye> does n exce$ #be1jjj1jjj4 4 7#b7 ,application ( exception on annual basis ,section #ddh7;b77#c7 is am5d$ to read z foll[s3 7#c7 ,entities :i* meet gross receipts te/ ,p>agraphs 7#a7 & 7#b7 ( subsection 7a7 %all n apply to any corporation or p>tn]%ip = any taxable ye> if su* entity 7or any pr$ecessor7 meets ! gross receipts te/ ( subsection 7c7 = su* taxable ye>4 4 7#c7 ,inflation adju/m5t ,section #ddh7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,adju/m5t = inflation ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 ! doll> am\nt 9 p>agraph 7#a7 %all be increas$ by an am\nt equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,if any am\nt z increas$ "u ! prec$+ s5t5ce is n a multiple ( #a1jjj1jjj1 su* am\nt %all be r\nd$ to ! ne>e/ multiple ( #a1jjj1jjj4 4 7#d7 ,coord9ation ) section #dha ,section #ddh7;d77#g7 is am5d$ to read z foll[s3 7#g7 ,coord9ation ) section #dha ,any *ange 9 me?od ( acc\nt+ made pursuant to ?is section %all be treat$ = purposes ( section #dha z initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7#e7 ,application ( exception to corporations engag$ 9 f>m+ 7,a7 ,9 g5]al ,section #ddg7;c7 is am5d$-- 7i7 by ins]t+ = any taxable ye> aft] n be+ a corporation 9 ! matt] prec$+ p>agraph 7#a71 & 7ii7 by am5d+ p>agraph 7#b7 to read z foll[s3 7#b7 a corporation :i* meets ! gross receipts te/ ( section #ddh7;c7 = su* taxable ye>4 4 7,b7 ,coord9ation ) section #dha ,section #ddg7;f7 is am5d$ to read z foll[s3 7f7 ,coord9ation ) section #dha ,any *ange 9 me?od ( acc\nt+ made pursuant to ?is section %all be treat$ = purposes ( section #dha z initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7,c7 ,con=m+ am5dm5ts ,section #ddg is am5d$-- 7i7 by /rik+ subsections 7d71 7e71 7h71 & 7i71 & 7ii7 by r$esignat+ subsections 7f7 & 7g7 7z am5d$ by subp>agraph 7,b77 z subsections 7d7 & 7e71 respectively4 7b7 ,exemption f ,,unicap requirem5ts 7#a7 ,9 g5]al ,section #bfc;,a is am5d$ by r$esignat+ subsection 7i7 z subsection 7j7 & by ins]t+ aft] subsection 7h7 ! foll[+ new subsection3 7i7 ,exemption = c]ta9 small bus9esses 7#a7 ,9 g5]al ,9 ! case ( any taxpay] 7o!r ?an a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c77 :i* meets ! gross receipts te/ ( section #ddh7;c7 = any taxable ye>1 ?is section %all n apply ) respect to su* taxpay] = su* taxable ye>4 7#b7 ,application ( gross receipts te/ to individuals1 etc ,9 ! case ( any taxpay] :i* is n a corporation or a p>tn]%ip1 ! gross receipts te/ ( section #ddh7;c7 %all be appli$ 9 ! same mann] z if ea* trade or bus9ess ( su* taxpay] 7 a corporation or p>tn]%ip4 7#c7 ,coord9ation ) section #dha ,any *ange 9 me?od ( acc\nt+ made pursuant to ?is subsection %all be treat$ = purposes ( section #dha z initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7#b7 ,con=m+ am5dm5t ,section #bfc;,a7b77#b7 is am5d$ to read z foll[s3 7#b7 ,prop]ty acquir$ = resale ,real or p]sonal prop]ty describ$ 9 section #abba7;a77#a7 :i* is acquir$ by ! taxpay] = resale4 4 7c7 ,exemption f inv5tories ,section #dga is am5d$ by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,exemption = c]ta9 small bus9esses 7#a7 ,9 g5]al ,9 ! case ( any taxpay] 7o!r ?an a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c77 :i* meets ! gross receipts te/ ( section #ddh7;c7 = any taxable ye>-- 7,a7 subsection 7a7 %all n apply ) respect to su* taxpay] = su* taxable ye>1 & 7,b7 ! taxpay]'s me?od ( acc\nt+ = inv5tory = su* taxable ye> %all n be treat$ z fail+ to cle>ly reflect income if su* me?od ei!r-- 7i7 treats inv5tory z non-incid5tal mat]ials & supplies1 or 7ii7 con=ms to su* taxpay]'s me?od ( acc\nt+ reflect$ 9 an applicable f9ancial /atem5t ( ! taxpay] ) respect to su* taxable ye> or1 if ! taxpay] does n h any applicable f9ancial /atem5t ) respect to su* taxable ye>1 ! books & records ( ! taxpay] prep>$ 9 accordance ) ! taxpay]'s acc\nt+ proc$ures4 7#b7 ,applicable f9ancial /atem5t ,= purposes ( ?is subsection1 ! t]m applicable f9ancial /atem5t means-- 7,a7 a f9ancial /atem5t :i* is c]tifi$ z be+ prep>$ 9 accordance ) g5]ally accept$ acc\nt+ pr9ciples & :i* is-- 7i7 a #aj-,k 7or successor =m71 or annual /atem5t to %>ehold]s1 requir$ to be fil$ by ! taxpay] ) ! ,unit$ ,/ates ,securities & ,ex*ange ,commission1 7ii7 an audit$ f9ancial /atem5t ( ! taxpay] :i* is us$ =-- 7,i7 cr$it purposes1 7,,ii7 report+ to %>ehold]s1 p>tn]s1 or o!r proprietors1 or to b5efici>ies1 or 7,,iii7 any o!r sub/antial nontax purpose1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 clause 7i71 or 7iii7 fil$ by ! taxpay] ) any o!r ,f$]al or ,/ate ag5cy = nontax purposes1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 clause 7i7 or 7ii71 or 7,b7 a f9ancial /atem5t ( ! taxpay] :i*-- 7i7 is us$ = a purpose describ$ 9 subclause 7,i71 7,,ii71 or 7,,iii7 ( subp>agraph 7,a77ii71 or 7ii7 fil$ by ! taxpay] ) any regulatory or gov]nm5tal body 7:e!r dome/ic or =eign7 specifi$ by ! ,secret>y1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 subp>agraph 7,a74 7#c7 ,application ( gross receipts te/ to individuals1 etc ,9 ! case ( any taxpay] :i* is n a corporation or a p>tn]%ip1 ! gross receipts te/ ( section #ddh7;c7 %all be appli$ 9 ! same mann] z if ea* trade or bus9ess ( su* taxpay] 7 a corporation or p>tn]%ip4 7#d7 ,coord9ation ) section #dha ,any *ange 9 me?od ( acc\nt+ made pursuant to ?is subsection %all be treat$ = purposes ( section #dha z initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7d7 ,exemption f p]c5tage completion = long-t]m contracts 7#a7 ,9 g5]al ,section #dfj7;e77#a77;,b7 is am5d$-- 7,a7 by ins]t+ 7o!r ?an a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c77 aft] taxpay] 9 ! matt] prec$+ clause 7i71 & 7,b7 by am5d+ clause 7ii7 to read z foll[s3 7ii7 :o meets ! gross receipts te/ ( section #ddh7;c7 = ! taxable ye> 9 :i* su* contract is ent]$ into4 4 7#b7 ,con=m+ am5dm5ts ,section #dfj7;e7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#c71 by r$esignat+ p>agraphs 7#d71 7#e71 & 7#f7 z p>agraphs 7#c71 7#d71 & 7#e71 respectively1 & by ins]t+ aft] p>agraph 7#a7 ! foll[+ new p>agraph3 7#b7 ,rules relat$ to gross receipts te/ 7,a7 ,application ( gross receipts te/ to individuals1 etc ,= purposes ( p>agraph 7#a77;,b77ii71 9 ! case ( any taxpay] :i* is n a corporation or a p>tn]%ip1 ! gross receipts te/ ( section #ddh7;c7 %all be appli$ 9 ! same mann] z if ea* trade or bus9ess ( su* taxpay] 7 a corporation or p>tn]%ip4 7,b7 ,coord9ation ) section #dha ,any *ange 9 me?od ( acc\nt+ made pursuant to p>agraph 7#a77;,b77ii7 %all be treat$ z initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 ,su* *ange %all be effect$ on a cut-(f basis = all simil>ly classifi$ contracts ent]$ into on or aft] ! ye> ( *ange4 4 7e7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,pres]vation ( susp5se acc\nt rules ) respect to any exi/+ susp5se acc\nts ,s mu* ( ! am5dm5ts made by subsection 7a77#e77;,c7 z relate to section #ddg7;i7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all n apply ) respect to any susp5se acc\nt e/abli%$ "u su* section be=e ! date ( ! enactm5t ( ?is ,act4 7#c7 ,exemption f p]c5tage completion = long-t]m contracts ,! am5dm5ts made by subsection 7d7 %all apply to contracts ent]$ into aft] ,decemb] #ca1 #bjag1 9 taxable ye>s end+ aft] su* date4 #cbjc4 ,small bus9ess exception f limitation on d$uction ( bus9ess int]e/ 7a7 ,9 g5]al ,section #afc7;j77#b71 z am5d$ by section #ccja1 is am5d$ to read z foll[s3 7#b7 ,exemption = c]ta9 small bus9esses ,9 ! case ( any taxpay] 7o!r ?an a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c77 :i* meets ! gross receipts te/ ( section #ddh7;c7 = any taxable ye>1 p>agraph 7#a7 %all n apply to su* taxpay] = su* taxable ye>4 ,9 ! case ( any taxpay] :i* is n a corporation or a p>tn]%ip1 ! gross receipts te/ ( section #ddh7;c7 %all be appli$ 9 ! same mann] z if su* taxpay] 7 a corporation or p>tn]%ip4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cbjd4 ,modification ( treatm5t ( ,s corporation conv]sions to ,c corporations 7a7 ,adju/m5ts attributable to conv]sion f ,s corporation to ,c corporation ,section #dha is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,adju/m5ts attributable to conv]sion f ,s corporation to ,c corporation 7#a7 ,9 g5]al ,9 ! case ( an eligible t]m9at$ ,s corporation1 any adju/m5t requir$ by subsection 7a77#b7 :i* is attributable to su* corporation's revocation describ$ 9 p>agraph 7#b77;,a77ii7 %all be tak5 into acc\nt ratably dur+ ! #f-taxable ye> p]iod beg9n+ ) ! ye> ( *ange4 7#b7 ,eligible t]m9at$ ,s corporation ,= purposes ( ?is subsection1 ! t]m eligible t]m9at$ ,s corporation means any ,c corporation-- 7,a7 :i*-- 7i7 0 an ,s corporation on ! day be=e ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act1 & 7ii7 dur+ ! #b-ye> p]iod beg9n+ on ! date ( su* enactm5t makes a revocation ( its election "u section #acfb7;a71 & 7,b7 ! own]s ( ! /ock ( :i*1 det]m9$ on ! date su* revocation is made1 are ! same own]s 7& 9 id5tical proportions7 z on ! date ( su* enactm5t4 4 7b7 ,ca% di/ributions foll[+ po/-t]m9ation transition p]iod f ,s corporation /atus ,section #acga is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,ca% di/ributions foll[+ po/-t]m9ation transition p]iod ,9 ! case ( a di/ribution ( money by an eligible t]m9at$ ,s corporation 7z def9$ 9 section #dha7;d77 aft] ! po/-t]m9ation transition p]iod1 ! accumulat$ adju/m5ts acc\nt %all be allocat$ to su* di/ribution1 & ! di/ribution %all be *>geable to accumulat$ e>n+s & pr(its1 9 ! same ratio z ! am\nt ( su* accumulat$ adju/m5ts acc\nt be>s to ! am\nt ( su* accumulat$ e>n+s & pr(its4 4 ,d ,re=m ( bus9ess-relat$ exclusions1 d$uctions1 etc4 #ccja4 ,int]e/ 7a7 ,9 g5]al ,section #afc7;j7 is am5d$ to read z foll[s3 7j7 ,limitation on bus9ess int]e/ 7#a7 ,9 g5]al ,9 ! case ( any taxpay] = any taxable ye>1 ! am\nt all[$ z a d$uction "u ?is *apt] = bus9ess int]e/ %all n exce$ ! sum (-- 7,a7 ! bus9ess int]e/ income ( su* taxpay] = su* taxable ye>1 7,b7 #cj p]c5t ( ! adju/$ taxable income ( su* taxpay] = su* taxable ye>1 plus 7,c7 ! floor plan f9anc+ int]e/ ( su* taxpay] = su* taxable ye>4 ,! am\nt det]m9$ "u subp>agraph 7,b7 7aft] any increases 9 su* am\nt "u p>agraph 7#c77;,a77iii77 %all n be less ?an z]o4 7#b7 ,exemption = c]ta9 small bus9esses ,= exemption = c]ta9 small bus9esses1 see ! am5dm5t made by section #cbjc ( ! ,tax ,cuts & ,jobs ,act4 7#c7 ,application to p>tn]%ips1 etc 7,a7 ,9 g5]al ,9 ! case ( any p>tn]%ip-- 7i7 ?is subsection %all be appli$ at ! p>tn]%ip level & any d$uction = bus9ess int]e/ %all be tak5 into acc\nt 9 det]m9+ ! non-sep>ately /at$ taxable income or loss ( ! p>tn]%ip1 7ii7 ! adju/$ taxable income ( ea* p>tn] ( su* p>tn]%ip %all be det]m9$ )\t reg>d to su* p>tn]'s di/ributive %>e ( ! non-sep>ately /at$ taxable income or loss ( su* p>tn]%ip1 & 7iii7 ! am\nt det]m9$ "u p>agraph 7#a77;,b7 ) respect to ea* p>tn] ( su* p>tn]%ip %all be increas$ by su* p>tn]'s di/ributive %>e ( su* p>tn]%ip's excess am\nt4 7,b7 ,excess am\nt ,! t]m excess am\nt means1 ) respect to any p>tn]%ip1 ! excess 7if any7 (-- 7i7 #cj p]c5t ( ! adju/$ taxable income ( ! p>tn]%ip1 ov] 7ii7 ! am\nt 7if any7 by :i* ! bus9ess int]e/ ( ! p>tn]%ip1 r$uc$ by floor plan f9anc+ int]e/1 exce$s ! bus9ess int]e/ income ( ! p>tn]%ip4 7,c7 ,application to ,s corporations ,rules simil> to ! rules ( subp>agraphs 7,a7 & 7,b7 %all apply ) respect to any ,s corporation & its %>ehold]s4 7#d7 ,bus9ess int]e/ ,= purposes ( ?is subsection1 ! t]m bus9ess int]e/ means any int]e/ paid or accru$ on indebt$ness prop]ly allocable to a trade or bus9ess4 ,su* t]m %all n include inve/m5t int]e/ 7)9 ! mean+ ( subsection 7d774 7#e7 ,bus9ess int]e/ income ,= purposes ( ?is subsection1 ! t]m bus9ess int]e/ income means ! am\nt ( int]e/ includible 9 ! gross income ( ! taxpay] = ! taxable ye> :i* is prop]ly allocable to a trade or bus9ess4 ,su* t]m %all n include inve/m5t income 7)9 ! mean+ ( subsection 7d774 7#f7 ,adju/$ taxable income ,= purposes ( ?is subsection1 ! t]m adju/$ taxable income means ! taxable income ( ! taxpay]-- 7,a7 comput$ )\t reg>d to-- 7i7 any item ( income1 ga91 d$uction1 or loss :i* is n prop]ly allocable to a trade or bus9ess1 7ii7 any bus9ess int]e/ or bus9ess int]e/ income1 7iii7 ! am\nt ( any net op]at+ loss d$uction "u section #agb1 & 7iv7 any d$uction all[able = depreciation1 amortization1 or depletion1 & 7,b7 comput$ ) su* o!r adju/m5ts z ! ,secret>y may provide4 7#g7 ,trade or bus9ess ,= purposes ( ?is subsection1 ! t]m trade or bus9ess %all n include-- 7,a7 ! trade or bus9ess ( p]=m+ s]vices z an employee1 7,b7 a real prop]ty trade or bus9ess 7z su* t]m is def9$ 9 section #dfi7;c77#g77;,c771 or 7,c7 ! trade or bus9ess ( ! furni%+ or sale (-- 7i7 electrical en]gy1 wat]1 or sewage disposal s]vices1 7ii7 gas or /eam ?r\gh a local di/ribution sy/em1 or 7iii7 transportation ( gas or /eam by pipel9e1 if ! rates = su* furni%+ or sale1 z ! case may be1 h be5 e/abli%$ or approv$ by a ,/ate or political subdivision !re(1 by any ag5cy or in/rum5tality ( ! ,unit$ ,/ates1 or by a public s]vice or public utility commission or o!r simil> body ( any ,/ate or political subdivision !re(4 7#h7 ,c>ry=w>d ( disall[$ int]e/ ,= c>ry=w>d ( int]e/ disall[$ "u p>agraph 7#a71 see subsection 7o74 7#i7 ,floor plan f9anc+ int]e/ def9$ ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m floor plan f9anc+ int]e/ means int]e/ paid or accru$ on floor plan f9anc+ indebt$ness4 7,b7 ,floor plan f9anc+ indebt$ness ,! t]m floor plan f9anc+ indebt$ness means indebt$ness-- 7i7 us$ to f9ance ! acquisition ( motor vehicles held = sale to retail cu/om]s1 & 7ii7 secur$ by ! inv5tory s acquir$4 7,c7 ,motor vehicle ,! t]m motor vehicle means a motor vehicle t is any ( ! foll[+3 7i7 ,an automobile4 7ii7 ,a truck4 7iii7 ,a recreational vehicle4 7iv7 ,a motorcycle4 7v7 ,a boat4 7vi7 ,f>m ma*9]y or equipm5t4 7vii7 ,con/ruction ma*9]y or equipm5t4 4 7b7 ,c>ry=w>d ( disall[$ bus9ess int]e/ ,section #afc1 aft] am5dm5t by section #dcjb7;a7 & be=e am5dm5t by section #dcjb7;b71 is am5d$ by ins]t+ aft] subsection 7n7 ! foll[+ new subsection3 7o7 ,c>ry=w>d ( disall[$ bus9ess int]e/ ,! am\nt ( any bus9ess int]e/ n all[$ z a d$uction = any taxable ye> by reason ( subsection 7j7 %all be treat$ z bus9ess int]e/ paid or accru$ 9 ! succe$+ taxable ye>4 ,bus9ess int]e/ paid or accru$ 9 any taxable ye> 7det]m9$ )\t reg>d to ! prec$+ s5t5ce7 %all n be c>ri$ pa/ ! #e? taxable ye> foll[+ su* taxable ye>1 det]m9$ by treat+ bus9ess int]e/ z all[$ z a d$uction on a fir/-91 fir/-out basis4 4 7c7 ,treatm5t ( c>ry=w>d ( disall[$ bus9ess int]e/ 9 c]ta9 corporate acquisitions 7#a7 ,9 g5]al ,section #cha7;c7 is am5d$ by ins]t+ aft] p>agraph 7#ai7 ! foll[+ new p>agraph3 7#bj7 ,c>ry=w>d ( disall[$ int]e/ ,! c>ryov] ( disall[$ int]e/ describ$ 9 section #afc7o7 to taxable ye>s end+ aft] ! date ( di/ribution or transf]4 4 7#b7 ,application ( limitation ,section #chb7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,application to c>ry=w>d ( disall[$ int]e/ ,! t]m pre-*ange loss %all include any c>ryov] ( disall[$ int]e/ describ$ 9 section #afc7o7 "u rules simil> to ! rules ( p>agraph 7#a74 4 7#c7 ,con=m+ am5dm5t ,section #chb7k77#a7 is am5d$ by ins]t+ aft] ! fir/ s5t5ce ! foll[+3 ,su* t]m %all include any corporation entitl$ to use a c>ry=w>d ( disall[$ int]e/ describ$ 9 section #cha7;c77#bj74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ccjb4 ,modification ( net op]at+ loss d$uction 7a7 ,indef9ite c>ry=w>d ( net op]at+ losses ,section #agb7;b77#a77;,a77ii7 is am5d$ by /rik+ to ea* ( ! #bj taxable ye>s & ins]t+ to ea* taxable ye>4 7b7 ,repeal ( net op]at+ loss c>rybacks o!r ?an #a-ye> c>ryback ( eligible disa/] losses 7#a7 ,9 g5]al ,section #agb7;b77#a77;,a77i7 is am5d$ to read z foll[s3 7i7 9 ! case ( any portion ( a net op]at+ loss = ! taxable ye> :i* is an eligible disa/] loss ) respect to ! taxpay]1 %all be a net op]at+ loss c>ryback to ! taxable ye> prec$+ ! taxable ye> ( su* loss1 & 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #agb7;b77#a7 is am5d$ by /rik+ subp>agraphs 7,b7 ?r\gh 7,f7 & ins]t+ ! foll[+3 7,b7 ,eligible disa/] loss 7i7 ,9 g5]al ,= purposes ( subp>agraph 7,a77i71 ! t]m eligible disa/] loss means-- 7,i7 9 ! case ( a taxpay] :i* is a small bus9ess1 net op]at+ losses attributable to f$]ally decl>$ disa/]s 7z def9$ by section #afe7;i77#e771 & 7,,ii7 9 ! case ( a taxpay] engag$ 9 ! trade or bus9ess ( f>m+1 net op]at+ losses attributable to su* f$]ally decl>$ disa/]s4 7ii7 ,small bus9ess ,= purposes ( ?is subp>agraph1 ! t]m small bus9ess means a corporation or p>tn]%ip :i* meets ! gross receipts te/ ( section #ddh7;c7 7det]m9$ by sub/itut+ #e1jjj1jjj = #be1jjj1jjj ea* place x appe>s !re97 = ! taxable ye> 9 :i* ! loss arose 7or1 9 ! case ( a sole proprietor%ip1 :i* w\ld meet su* te/ if su* proprietor%ip 7 a corporation74 7iii7 ,trade or bus9ess ( f>m+ ,= purposes ( ?is subp>agraph1 ! trade or bus9ess ( f>m+ %all include ! trade or bus9ess (-- 7,i7 op]at+ a nurs]y or sod f>m1 or 7,,ii7 ! rais+ or h>ve/+ ( trees be>+ fruit1 nuts1 or o!r crops1 or ornam5tal trees4 ,= purposes ( subclause 7,,ii71 an ev]gre5 tree :i* is m ?an #f ye>s old at ! "t sev]$ f ! roots %all n be treat$ z an ornam5tal tree4 4 7,b7 ,section #agb is am5d$ by /rik+ subsections 7f71 7g71 & 7h74 7c7 ,limitation ( net op]at+ loss to #ij p]c5t ( taxable income 7#a7 ,9 g5]al ,section #agb7;a7 is am5d$ to read z foll[s3 7a7 ,d$uction all[$ ,!re %all be all[$ z a d$uction = ! taxable ye> an am\nt equal to ! less] (-- 7#a7 ! aggregate ( ! net op]at+ loss c>ryov]s to su* ye>1 plus ! net op]at+ loss c>rybacks to su* ye>1 or 7#b7 #ij p]c5t ( taxable income comput$ )\t reg>d to ! d$uction all[able "u ?is section4 ,= purposes ( ?is subtitle1 ! t]m net op]at+ loss d$uction means ! d$uction all[$ by ?is subsection4 4 7#b7 ,coord9ation ( limitation ) c>rybacks & c>ryov]s ,section #agb7;b77#b7 is am5d$ by /rik+ %all be comput$-- & all t foll[s & ins]t+ %all-- 7,a7 be comput$ ) ! modifications specifi$ 9 subsection 7d7 o!r ?an p>agraphs 7#a71 7#d71 & 7#e7 !re(1 & by det]m9+ ! am\nt ( ! net op]at+ loss d$uction )\t reg>d to ! net op]at+ loss = ! loss ye> or = any taxable ye> !reaft]1 7,b7 n be consid]$ to be less ?an z]o1 & 7,c7 n exce$ ! am\nt det]m9$ "u subsection 7a77#b7 = su* prior taxable ye>4 4 7#c7 ,con=m+ am5dm5t ,section #agb7;d77#f7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,a71 by /rik+ ! p]iod at ! end ( subp>agraph 7,b7 & ins]t+ 2 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,c7 subsection 7a77#b7 %all be appli$ by sub/itut+ real e/ate inve/m5t tru/ taxable income 7z def9$ 9 section #heg7;b77#b7 b )\t reg>d to ! d$uction = divid5ds paid 7z def9$ 9 section #efa77 = taxable income4 4 7d7 ,annual increase ( indef9ite c>ryov] am\nts ,section #agb7;b7 is am5d$ by r$esignat+ p>agraph 7#c7 z p>agraph 7#d7 & by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,annual increase ( indef9ite c>ryov] am\nts ,= purposes ( p>agraph 7#b7-- 7,a7 ! am\nt ( any indef9ite net op]at+ loss :i* is c>ri$ to ! next succe$+ taxable ye> aft] ! loss ye> 7)9 ! mean+ ( p>agraph 7#b77 %all be increas$ by an am\nt equal to-- 7i7 ! am\nt ( ! loss :i* may be s c>ri$ ov] to su* succe$+ taxable ye> 7det]m9$ )\t reg>d to ?is p>agraph71 multipli$ by 7ii7 ! sum (-- 7,i7 ! annual ,f$]al %ort-t]m rate 7det]m9$ "u section #abgd7;d77 = ! la/ mon? end+ be=e ! beg9n+ ( su* taxable ye>1 plus 7,,ii7 #d p]c5tage po9ts1 & 7,b7 ! am\nt ( any indef9ite net op]at+ loss :i* is c>ri$ to any succe$+ taxable ye> 7aft] su* next succe$+ taxable ye>7 %all be an am\nt equal to-- 7i7 ! excess (-- 7,i7 ! am\nt ( ! loss c>ri$ to ! prior taxable ye> 7aft] any increase "u ?is p>agraph ) respect to su* am\nt71 ov] 7,,ii7 ! am\nt by :i* su* loss 0 r$uc$ "u p>agraph 7#b7 by reason ( ! taxable income = su* prior taxable ye>1 multipli$ by 7ii7 a p]c5tage equal to #ajj p]c5t plus ! p]c5tage det]m9$ "u subp>agraph 7,a77ii7 ) respect to su* succe$+ taxable ye>4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m indef9ite net op]at+ loss means any net op]at+ loss aris+ 9 a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag4 4 7e7 ,effective date 7#a7 ,c>ry=w>ds & c>rybacks ,! am5dm5ts made by subsections 7a7 & 7b7 %all apply to net op]at+ losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,net op]at+ loss limit$ to #ij p]c5t ( taxable income ,! am5dm5ts made by subsection 7c7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#c7 ,annual increase 9 c>ryov] am\nts ,! am5dm5ts made by subsection 7d7 %all apply to am\nts c>ri$ to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#d7 ,special rule = net disa/] losses ,not)/&+ p>agraph 7#a71 ! am5dm5ts made by subsection 7b7 %all n apply to ! portion ( ! net op]at+ loss = any taxable ye> :i* is a net disa/] loss to :i* section #ejd7;b7 ( ! ,disa/] ,tax ,relief & ,airport & ,airway ,ext5sion ,act ( #bjag applies4 #ccjc4 ,l-k9d ex*anges ( real prop]ty 7a7 ,9 g5]al ,section #ajca7;a77#a7 is am5d$ by /rik+ prop]ty ea* place x appe>s & ins]t+ real prop]ty4 7b7 ,con=m+ am5dm5ts 7#a7 ,p>agraph 7#b7 ( section #ajca7;a7 is am5d$ to read z foll[s3 7#b7 ,exception = real prop]ty held = sale ,?is subsection %all n apply to any ex*ange ( real prop]ty held prim>ily = sale4 4 7#b7 ,section #ajca is am5d$ by /rik+ subsections 7e7 & 7i74 7#c7 ,section #ajca1 z am5d$ by p>agraph 7#b71 is am5d$ by ins]t+ aft] subsection 7d7 ! foll[+ new subsection3 7e7 ,application to c]ta9 p>tn]%ips ,= purposes ( ?is section1 an int]e/ 9 a p>tn]%ip :i* has 9 effect a valid election "u section #gfa7;a7 to be exclud$ f ! application ( all ( sub*apt] ,k %all be treat$ z an int]e/ 9 ea* ( ! assets ( su* p>tn]%ip & n z an int]e/ 9 a p>tn]%ip4 4 7#d7 ,section #ajca7;h7 is am5d$ to read z foll[s3 7h7 ,special rules = =eign real prop]ty ,real prop]ty locat$ 9 ! ,unit$ ,/ates & real prop]ty locat$ outside ! ,unit$ ,/ates are n prop]ty ( a l k9d4 4 7#e7 ,! head+ ( section #ajca is am5d$ by /rik+ prop]ty & ins]t+ real prop]ty4 7#f7 ,! table ( sections = "p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ajca & ins]t+ ! foll[+ new item3 ,sec4 #ajca4 ,ex*ange ( real prop]ty held = productive use or inve/m5t4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to ex*anges complet$ aft] ,decemb] #ca1 #bjag4 7#b7 ,transition rule ,! am5dm5ts made by ?is section %all n apply to any ex*ange if-- 7,a7 ! prop]ty dispos$ ( by ! taxpay] 9 ! ex*ange is dispos$ ( on or be=e ,decemb] #ca #bjag1 or 7,b7 ! prop]ty receiv$ by ! taxpay] 9 ! ex*ange is receiv$ on or be=e ,decemb] #ca1 #bjag4 #ccjd4 ,revision ( treatm5t ( contributions to capital 7a7 ,inclusion ( contributions to capital ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #ge ! foll[+ new section3 #gf4 ,contributions to capital 7a7 ,9 g5]al ,gross income includes any contribution to ! capital ( any entity4 7b7 ,treatm5t ( contributions 9 ex*ange = /ock1 etc 7#a7 ,9 g5]al ,9 ! case ( any contribution ( money or o!r prop]ty to a corporation 9 ex*ange = /ock ( su* corporation-- 7,a7 su* contribution %all n be treat$ = purposes ( subsection 7a7 z a contribution to ! capital ( su* corporation 7& %all n be includible 9 ! gross income ( su* corporation71 & 7,b7 no ga9 or loss %all be recogniz$ to su* corporation ^u ! issuance ( su* /ock4 7#b7 ,treatm5t limit$ to value ( /ock ,= purposes ( ?is subsection1 a contribution ( money or o!r prop]ty to a corporation %all be treat$ z be+ 9 ex*ange = /ock ( su* corporation only to ! ext5t t ! fair m>ket value ( su* money & o!r prop]ty does n exce$ ! fair m>ket value ( su* /ock4 7#c7 ,application to entities o!r ?an corporations ,9 ! case ( any entity o!r ?an a corporation1 rules simil> to ! rules ( p>agraphs 7#a7 & 7#b7 %all apply 9 ! case ( any contribution ( money or o!r prop]ty to su* entity 9 ex*ange = any int]e/ 9 su* entity4 7c7 ,treasury /ock treat$ z /ock ,any ref]5ce 9 ?is section to /ock %all be treat$ z includ+ a ref]5ce to treasury /ock4 4 7b7 ,basis ( corporation 9 contribut$ prop]ty 7#a7 ,contributions to capital ,subsection 7c7 ( section #cfb is am5d$ to read z foll[s3 7c7 ,contributions to capital ,if prop]ty o!r ?an money is transf]r$ to a corporation z a contribution to ! capital ( su* corporation 7)9 ! mean+ ( section #gf7 !n ! basis ( su* prop]ty %all be ! great] (-- 7#a7 ! basis det]m9$ 9 ! h&s ( ! transf]or1 increas$ by ! am\nt ( ga9 recogniz$ to ! transf]or on su* transf]1 or 7#b7 ! am\nt includ$ 9 gross income by su* corporation "u section #gf ) respect to su* contribution4 4 7#b7 ,contributions 9 ex*ange = /ock ,p>agraph 7#b7 ( section #cfb7;a7 is am5d$ by /rik+ contribution to capital & ins]t+ contribution 9 ex*ange = /ock ( su* corporation 7det]m9$ "u rules simil> to ! rules ( p>agraphs 7#b7 & 7#c7 ( section #gf7;b774 7c7 ,con=m+ am5dm5ts 7#a7 ,section #ajh7;e7 is am5d$ by /rik+ p>agraph 7#f74 7#b7 ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aah 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#c7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #ge ! foll[+ new item3 ,sec4 #gf4 ,contributions to capital4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to contributions made1 & transactions ent]$ into1 aft] ! date ( ! enactm5t ( ?is ,act4 #ccje4 ,repeal ( d$uction = local lobby+ exp5ses 7a7 ,9 g5]al ,section #afb7;e7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#g7 & by r$esignat+ p>agraphs 7#c71 7#d71 7#e71 7#f71 & 7#h7 z p>agraphs 7#b71 7#c71 7#d71 7#e71 & 7#f71 respectively4 7b7 ,con=m+ am5dm5t ,section #fjcc7;e77#a77;,b77ii7 is am5d$ by /rik+ section #afb7;e77#e77;,b77ii7 & ins]t+ section #afb7;e77#d77;,b77ii74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 #ccjf4 ,repeal ( d$uction = income attributable to dome/ic production activities 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aii 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,sections #gd7;d77#b77;,b71 #hf7;b77#b77;,a71 #acg7;b77#c77;,a71 #bai7;g77#c77;,a77ii71 & #bdf7;b77#a7 are ea* am5d$ by /rik+ #aii14 7#b7 ,section #agj7;b77#b77;,d71 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by /rik+ clause 7iv71 by r$esignat+ clause 7v7 z clause 7iv71 & by ins]t+ & at ! end ( clause 7iii74 7#c7 ,section #agb7;d7 is am5d$ by /rik+ p>agraph 7#g74 7#d7 ,section #fac7;a7 is am5d$ by /rik+ & )\t ! d$uction "u section #aii4 7#e7 ,section #fac;,a7d77#a7 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c71 7,d71 & 7,e7 z subp>agraphs 7,b71 7,c71 & 7,d71 respectively4 7#f7 ,section #adjb7;a7 is am5d$ by add+ & at ! end ( p>agraph 7#ae7 & by /rik+ p>agraph 7#af74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ccjg4 ,ent]ta9m5t1 etc4 exp5ses 7a7 ,d5ial ( d$uction ,subsection 7a7 ( section #bgd is am5d$ to read z foll[s3 7a7 ,ent]ta9m5t1 amusem5t1 recreation1 & o!r fr+e b5efits 7#a7 ,9 g5]al ,no d$uction o!rwise all[able "u ?is *apt] %all be all[$ = am\nts paid or incurr$ = any ( ! foll[+ items3 7,a7 ,activity ,) respect to an activity :i* is ( a type g5]ally consid]$ to con/itute ent]ta9m5t1 amusem5t1 or recreation4 7,b7 ,memb]%ip dues ,) respect to memb]%ip 9 any club organiz$ = bus9ess1 pleasure1 recreation or o!r social purposes4 7,c7 ,am5ity ,) respect to a de m9imis fr+e 7z def9$ 9 section #acb7;e77#a77 t is prim>ily p]sonal 9 nature & involv+ prop]ty or s]vices t are n directly relat$ to ! taxpay]'s trade or bus9ess4 7,d7 ,facility ,) respect to a facility or portion !re( us$ 9 connection ) an activity ref]r$ to 9 subp>agraph 7,a71 memb]%ip dues or simil> am\nts ref]r$ to 9 subp>agraph 7,b71 or an am5ity ref]r$ to 9 subp>agraph 7,c74 7,e7 ,qualifi$ transportation fr+e & p>k+ facility ,:i* is a qualifi$ transportation fr+e 7z def9$ 9 section #acb7;f77 or :i* is a p>k+ facility us$ 9 connection ) qualifi$ p>k+ 7z def9$ 9 section #acb7;f77#e77;,c774 7,f7 ,on-premises a?letic facility ,:i* is an on-premises a?letic facility z def9$ 9 section #acb7;j77#d77;,b74 7#b7 ,special rules ,= purposes ( apply+ p>agraph 7#a71 an activity describ$ 9 section #bab %all be treat$ z a trade or bus9ess4 7#c7 ,regulations ,"u ! regulations prescrib$ to c>ry out ?is section1 ! ,secret>y %all include regulations-- 7,a7 def9+ ent]ta9m5t1 am5ities1 recreation1 amusem5t1 & facilities = purposes ( ?is subsection1 7,b7 provid+ = ! appropriate allocation ( depreciation & o!r co/s ) respect to facilities us$ = p>k+ or = on-premises a?letic facilities1 & 7,c7 specify+ arrangem5ts a prim>y purpose ( :i* is ! avoidance ( ?is subsection4 4 7b7 ,exception = c]ta9 exp5ses includible 9 income ( recipi5t 7#a7 ,exp5ses treat$ z comp5sation ,p>agraph 7#b7 ( section #bgd7;e7 is am5d$ to read z foll[s3 7#b7 ,exp5ses treat$ z comp5sation ,exp5ses = goods1 s]vices1 & facilities1 to ! ext5t t ! exp5ses d n exce$ ! am\nt ( ! exp5ses :i* are treat$ by ! taxpay]1 ) respect to ! recipi5t ( ! ent]ta9m5t1 amusem5t1 or recreation1 z comp5sation to an employee on ! taxpay]'s return ( tax "u ?is *apt] & z wages to su* employee = purposes ( *apt] #bd 7relat+ to )hold+ ( income tax at s\rce on wages74 4 7#b7 ,exp5ses includible 9 income ( p]sons :o are n employees ,p>agraph 7#i7 ( section #bgd7;e7 is am5d$ by /rik+ to ! ext5t t ! exp5ses & ins]t+ to ! ext5t t ! exp5ses d n exce$ ! am\nt ( ! exp5ses t4 7c7 ,exceptions = reimburs$ exp5ses ,p>agraph 7#c7 ( section #bgd7;e7 is am5d$ to read z foll[s3 7#c7 ,reimburs$ exp5ses 7,a7 ,9 g5]al ,exp5ses paid or incurr$ by ! taxpay]1 9 connection ) ! p]=mance by him ( s]vices = ano!r p]son 7:e!r or n su* o!r p]son is ! taxpay]'s employ]71 "u a reimbursem5t or o!r exp5se all[ance arrangem5t ) su* o!r p]son1 b ?is p>agraph %all apply-- 7i7 :]e ! s]vices are p]=m$ = an employ]1 only if ! employ] has n treat$ su* exp5ses 9 ! mann] provid$ 9 p>agraph 7#b71 or 7ii7 :]e ! s]vices are p]=m$ = a p]son o!r ?an an employ]1 only if ! taxpay] acc\nts 7to ! ext5t provid$ by subsection 7d77 to su* p]son4 7,b7 ,exception ,except z provid$ by ! ,secret>y1 subp>agraph 7,a7 %all n apply-- 7i7 9 ! case ( an arrangem5t 9 :i* ! p]son o!r ?an ! employ] is an entity describ$ 9 section #afh7;h77#b77;,a71 or 7ii7 to any o!r arrangem5t designat$ by ! ,secret>y z hav+ ! effect ( avoid+ ! limitation "u subp>agraph 7,a74 4 7d7 #ej p]c5t limitation on meals & ent]ta9m5t exp5ses ,subsection 7n7 ( section #bgd is am5d$ to read z foll[s3 7n7 ,limitation on c]ta9 exp5ses 7#a7 ,9 g5]al ,! am\nt all[able z a d$uction "u ?is *apt] = any exp5se = food or bev]ages 7pursuant to subsection 7e77#a77 or bus9ess meals 7pursuant to subsection 7k77#a77 %all n exce$ #ej p]c5t ( ! am\nt ( su* exp5se or item :i* w\ld 7b = ?is p>agraph7 be all[able z a d$uction "u ?is *apt]4 7#b7 ,exceptions ,p>agraph 7#a7 %all n apply to any exp5se if-- 7,a7 su* exp5se is describ$ 9 p>agraph 7#b71 7#c71 7#f71 7#g71 or 7#h7 ( subsection 7e71 7,b7 9 ! case ( an exp5se = food or bev]ages1 su* exp5se is excludable f ! gross income ( ! recipi5t "u section #acb by reason ( subsection 7e7 !re( 7relat+ to de m9imis fr+es7 or "u section #aai 7relat+ to meals & lodg+ furni%$ = conv5i5ce ( employ]71 or 7,c7 9 ! case ( an employ] :o pays or reimburses mov+ exp5ses ( an employee1 su* exp5ses are includible 9 ! income ( ! employee "u section #hb4 7#c7 ,special rule = individuals subject to ,f$]al h\rs ( s]vice ,9 ! case ( any exp5ses = food or bev]ages consum$ :ile away f home 7)9 ! mean+ ( section #afb7;a77#b77 by an individual dur+1 or incid5t to1 ! p]iod ( duty subject to ! h\rs ( s]vice limitations ( ! ,dep>tm5t ( ,transportation1 p>agraph 7#a7 %all be appli$ by sub/itut+ #hj p]c5t = #ej p]c5t4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,section #bgd7;d7 is am5d$-- 7,a7 by /rik+ p>agraph 7#b7 & r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively1 & 7,b7 9 ! flu% mat]ial foll[+ p>agraph 7#c7 7z s r$esignat$7-- 7i7 by /rik+ 1 ent]ta9m5t1 amusem5t1 recreation1 or 9 item 7,b71 & 7ii7 by /rik+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( p]sons ent]ta9$1 us+ ! facility or prop]ty1 or receiv+ ! gift & ins]t+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( ! p]son receiv+ ! b5efit4 7#b7 ,section #bgd7;e7 is am5d$ by /rik+ p>agraph 7#d7 & r$esignat+ p>agraphs 7#e71 7#f71 7#g71 7#h71 & 7#i7 z p>agraphs 7#d71 7#e71 7#f71 7#g71 & 7#h71 respectively4 7#c7 ,section #bgd7k77#b77;,a7 is am5d$ by /rik+ 7#d71 7#g71 7#h71 or 7#i7 & ins]t+ 7#f71 7#g71 or 7#h74 7#d7 ,section #bgd is am5d$ by /rik+ subsection 7l74 7#e7 ,section #bgd7m77#a77;,b77ii7 is am5d$ by /rik+ 7#d71 7#g71 7#h71 or 7#i7 & ins]t+ 7#f71 7#g71 or 7#h74 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 #ccjh4 ,unrelat$ bus9ess taxable income increas$ by am\nt ( c]ta9 fr+e b5efit exp5ses = :i* d$uction is disall[$ 7a7 ,9 g5]al ,section #eab7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,increase 9 unrelat$ bus9ess taxable income by disall[$ fr+e ,unrelat$ bus9ess taxable income ( an organization %all be increas$ by any am\nt = :i* a d$uction is n all[able "u ?is *apt] by reason ( section #bgd & :i* is paid or incurr$ by su* organization = any qualifi$ transportation fr+e 7z def9$ 9 section #acb7;f771 any p>k+ facility us$ 9 connection ) qualifi$ p>k+ 7z def9$ 9 section #acb7;f77#e77;,c771 or any on-premises a?letic facility 7z def9$ 9 section #acb7;j77#d77;,b774 ,! prec$+ s5t5ce %all n apply to ! ext5t ! am\nt paid or incurr$ is directly connect$ ) an unrelat$ trade or bus9ess :i* is regul>ly c>ri$ on by ! organization4 ,! ,secret>y may issue su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is p>agraph1 includ+ regulations or o!r guidance provid+ = ! appropriate allocation ( depreciation & o!r co/s ) respect to facilities us$ = p>k+ or = on-premises a?letic facilities4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 #ccji4 ,limitation on d$uction = ,,fdic premiums 7a7 ,9 g5]al ,section #afb is am5d$ by r$esignat+ subsection 7q7 z subsection 7r7 & by ins]t+ aft] subsection 7p7 ! foll[+ new subsection3 7q7 ,disall[ance ( ,,fdic premiums paid by c]ta9 l>ge f9ancial in/itutions 7#a7 ,9 g5]al ,no d$uction %all be all[$ = ! applicable p]c5tage ( any ,,fdic premium paid or incurr$ by ! taxpay]4 7#b7 ,exception = small in/itutions ,p>agraph 7#a7 %all n apply to any taxpay] = any taxable ye> if ! total consolidat$ assets ( su* taxpay] 7det]m9$ z ( ! close ( su* taxable ye>7 d n exce$ #aj1jjj1jjj1jjj4 7#c7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means1 ) respect to any taxpay] = any taxable ye>1 ! ratio 7express$ z a p]c5tage b n great] ?an #ajj p]c5t7 :i*-- 7,a7 ! excess (-- 7i7 ! total consolidat$ assets ( su* taxpay] 7det]m9$ z ( ! close ( su* taxable ye>71 ov] 7ii7 #aj1jjj1jjj1jjj1 be>s to 7,b7 #dj1jjj1jjj1jjj4 7#d7 ,,fdic premiums ,= purposes ( ?is subsection1 ! t]m ,,fdic premium means any assessm5t impos$ "u section #g7;b7 ( ! ,f$]al ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahag7;b774 7#e7 ,total consolidat$ assets ,= purposes ( ?is subsection1 ! t]m total consolidat$ assets has ! mean+ giv5 su* t]m "u section #afe ( ! ,dodd-,frank ,wall ,/reet ,re=m & ,consum] ,protection ,act 7#ab ,u4,s4,c4 #ecfe74 7#f7 ,aggregation rule 7,a7 ,9 g5]al ,memb]s ( an exp&$ affiliat$ gr\p %all be treat$ z a s+le taxpay] = purposes ( apply+ ?is subsection4 7,b7 ,exp&$ affiliat$ gr\p ,= purposes ( ?is p>agraph1 ! t]m exp&$ affiliat$ gr\p means an affiliat$ gr\p z def9$ 9 section #aejd7;a71 det]m9$-- 7i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s1 & 7ii7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b74 ,a p>tn]%ip or any o!r entity 7o!r ?an a corporation7 %all be treat$ z a memb] ( an exp&$ affiliat$ gr\p if su* entity is controll$ 7)9 ! mean+ ( section #ied7;d77#c77 by memb]s ( su* gr\p 7includ+ any entity treat$ z a memb] ( su* gr\p by reason ( ?is s5t5ce74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ccaj4 ,repeal ( rollov] ( publicly trad$ securities ga9 into specializ$ small bus9ess inve/m5t companies 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ section #ajdd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* "p74 7b7 ,con=m+ am5dm5ts ,section #ajaf7;a77#bc7 is am5d$-- 7#a7 by /rik+ #ajdd11 & 7#b7 by /rik+ #ajdd7;d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales aft] ,decemb] #ca1 #bjag4 #ccaa4 ,c]ta9 self-creat$ prop]ty n treat$ z a capital asset 7a7 ,pat5ts1 etc ,section #abba7;a77#c7 is am5d$ by ins]t+ a pat5t1 inv5tion1 model or design 7:e!r or n pat5t$71 a secret =mula or process1 be=e a copyright4 7b7 ,con=m+ am5dm5t ,section #abca7;b77#a77;,c7 is am5d$ by ins]t+ a pat5t1 inv5tion1 model or design 7:e!r or n pat5t$71 a secret =mula or process1 be=e a copyright4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjag4 #ccab4 ,repeal ( special rule = sale or ex*ange ( pat5ts 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abce 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections ( su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dhc7;d7 is am5d$ by /rik+ p>agraph 7#d74 7#b7 ,section #ija7l77#e7 is am5d$ by /rik+ )\t reg>d to section #abce or any simil> rule & ins]t+ )\t reg>d to any provision :i* treats a disposition z a sale or ex*ange ( a capital asset held = m ?an #a ye> or any simil> provision4 7#c7 ,section #abgd7;c77#c7 is am5d$ by /rik+ subp>agraph 7,e7 & r$esignat+ subp>agraph 7,f7 z subp>agraph 7,e74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ,decemb] #ca1 #bjag4 #ccac4 ,repeal ( te*nical t]m9ation ( p>tn]%ips 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #gjh7;b7 is am5d$-- 7#a7 by /rik+ 1 or at ! end ( subp>agraph 7,a7 & all t foll[s & ins]t+ a p]iod1 & 7#b7 by /rik+ only if-- & all t foll[s ?r\gh no "p ( any bus9ess & ins]t+ ! foll[+3 only if no "p ( any bus9ess4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ccad4 ,re*>act]ization ( c]ta9 ga9s 9 ! case ( p>tn]%ip pr(its int]e/s held 9 connection ) p]=mance ( inve/m5t s]vices 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$-- 7#a7 by r$esignat+ section #ajfa z section #ajfb1 & 7#b7 by ins]t+ aft] section #ajfj ! foll[+ new section3 #ajfa4 ,p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices 7a7 ,9 g5]al ,if "o or m applicable p>tn]%ip int]e/s are held by a taxpay] at any "t dur+ ! taxable ye>1 ! excess 7if any7 (-- 7#a7 ! taxpay]'s net long-t]m capital ga9 ) respect to su* int]e/s = su* taxable ye>1 ov] 7#b7 ! taxpay]'s net long-t]m capital ga9 ) respect to su* int]e/s = su* taxable ye> comput$ by apply+ p>agraphs 7#c7 & 7#d7 ( sections #abbb by sub/itut+ #c ye>s = #a ye>1 %all be treat$ z %ort-t]m capital ga94 7b7 ,special rule ,to ! ext5t provid$ by ! ,secret>y1 subsection 7a7 %all n apply to income or ga9 attributable to any asset n held = portfolio inve/m5t on behalf ( ?ird p>ty inve/ors4 7c7 ,applicable p>tn]%ip int]e/ ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,except z provid$ 9 ?is p>agraph or p>agraph 7#d71 ! t]m applicable p>tn]%ip int]e/ means any int]e/ 9 a p>tn]%ip :i*1 directly or indirectly1 is transf]r$ to 7or is held by7 ! taxpay] 9 connection ) ! p]=mance ( sub/antial s]vices by ! taxpay]1 or any o!r relat$ p]son1 9 any applicable trade or bus9ess4 ,! previ\s s5t5ce %all n apply to an int]e/ held by a p]son :o is employ$ by ano!r entity t is conduct+ a trade or bus9ess 7o!r ?an an applicable trade or bus9ess7 & only provides s]vices to su* o!r entity4 7#b7 ,applicable trade or bus9ess ,! t]m applicable trade or bus9ess means any activity conduct$ on a regul>1 cont9u\s1 & sub/antial basis :i*1 reg>dless ( :e!r ! activity is conduct$ 9 "o or m entities1 consi/s1 9 :ole or 9 "p1 (-- 7,a7 rais+ or return+ capital1 & 7,b7 ei!r-- 7i7 inve/+ 9 7or dispos+ (7 specifi$ assets 7or id5tify+ specifi$ assets = su* inve/+ or disposition71 or 7ii7 develop+ specifi$ assets4 7#c7 ,specifi$ asset ,! t]m specifi$ asset means securities 7z def9$ 9 section #dge7;c77#b7 )\t reg>d to ! la/ s5t5ce !re(71 commodities 7z def9$ 9 section #dge7;e77#b771 real e/ate held = r5tal or inve/m5t1 ca% or ca% equival5ts1 options or d]ivative contracts ) respect to any ( ! =ego+1 & an int]e/ 9 a p>tn]%ip to ! ext5t ( ! p>tn]%ip's proportionate int]e/ 9 any ( ! =ego+4 7#d7 ,exceptions ,! t]m applicable p>tn]%ip int]e/ %all n include-- 7,a7 any int]e/ 9 a p>tn]%ip directly or indirectly held by a corporation1 or 7,b7 any capital int]e/ 9 ! p>tn]%ip :i* provides ! taxpay] ) a "r to %>e 9 p>tn]%ip capital comm5surate )-- 7i7 ! am\nt ( capital contribut$ 7det]m9$ at ! "t ( receipt ( su* p>tn]%ip int]e/71 or 7ii7 ! value ( su* int]e/ subject to tax "u section #hc ^u ! receipt or ve/+ ( su* int]e/4 7#e7 ,?ird p>ty inve/or ,! t]m ?ird p>ty inve/or means a p]son :o-- 7,a7 holds an int]e/ 9 ! p>tn]%ip :i* does n con/itute prop]ty held 9 connection ) an applicable trade or bus9ess2 & 7,b7 is n 7& has n be57 actively engag$1 & is 7& 07 n relat$ to a p]son s engag$1 9 7directly or indirectly7 provid+ sub/antial s]vices describ$ 9 p>agraph 7#a7 = su* p>tn]%ip or any applicable trade or bus9ess4 7d7 ,transf] ( applicable p>tn]%ip int]e/ to relat$ p]son 7#a7 ,9 g5]al ,if a taxpay] transf]s any applicable p>tn]%ip int]e/1 directly or indirectly1 to a p]son relat$ to ! taxpay]1 ! taxpay] %all include 9 gross income 7z %ort t]m capital ga97 ! excess 7if any7 (-- 7,a7 s mu* ( ! taxpay]'s long-t]m capital ga9s ) respect to su* int]e/ = su* taxable ye> attributable to ! sale or ex*ange ( any asset held = n m ?an #c ye>s z is allocable to su* int]e/1 ov] 7,b7 any am\nt treat$ z %ort t]m capital ga9 "u subsection 7a7 ) respect to ! transf] ( su* int]e/4 7#b7 ,relat$ p]son ,= purposes ( ?is p>agraph1 a p]son is relat$ to ! taxpay] if-- 7,a7 ! p]son is a memb] ( ! taxpay]'s family )9 ! mean+ ( section #cah7;a77#a71 or 7,b7 ! p]son p]=m$ a s]vice )9 ! curr5t cal5d> ye> or ! prec$+ ?ree cal5d> ye>s 9 any applicable trade or bus9ess 9 :i* or = :i* ! taxpay] p]=m$ a s]vice4 7e7 ,report+ ,! ,secret>y %all require su* report+ 7at ! "t & 9 ! mann] prescrib$ by ! ,secret>y7 z is necess>y to c>ry out ! purposes ( ?is section4 7f7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z is necess>y or appropriate to c>ry out ! purposes ( ?is section 4 7b7 ,coord9ation ) section #hc ,subsection 7e7 ( section #hc is am5d$ by /rik+ or at ! end ( p>agraph 7#d71 by /rik+ ! p]iod at ! end ( p>agraph 7#e7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new p>agraph3 7#f7 a transf] ( an applicable p>tn]%ip int]e/ to :i* section #ajfa applies4 4 7c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ ! item relat+ to #ajfa & ins]t+ ! foll[+ new items3 ,sec4 #ajfa4 ,p>tn]%ip int]e/s held 9 connection ) p]=mance ( s]vices4 ,sec4 #ajfb4 ,cross ref]5ces4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ccae4 ,amortization ( rese>* & exp]im5tal exp5ditures 7a7 ,9 g5]al ,section #agd is am5d$ to read z foll[s3 #agd4 ,amortization ( rese>* & exp]im5tal exp5ditures 7a7 ,9 g5]al ,9 ! case ( a taxpay]'s specifi$ rese>* or exp]im5tal exp5ditures = any taxable ye>-- 7#a7 except z provid$ 9 p>agraph 7#b71 no d$uction %all be all[$ = su* exp5ditures1 & 7#b7 ! taxpay] %all-- 7,a7 *>ge su* exp5ditures to capital acc\nt1 & 7,b7 be all[$ an amortization d$uction ( su* exp5ditures ratably ov] ! #e-ye> p]iod 7#ae-ye> p]iod 9 ! case ( any specifi$ rese>* or exp]im5tal exp5ditures :i* are attributable to =eign rese>* 7)9 ! mean+ ( section #da7;d77#d77;,f777 beg9n+ ) ! midpo9t ( ! taxable ye> 9 :i* su* exp5ditures are paid or incurr$4 7b7 ,specifi$ rese>* or exp]im5tal exp5ditures ,= purposes ( ?is section1 ! t]m specifi$ rese>* or exp]im5tal exp5ditures means1 ) respect to any taxable ye>1 rese>* or exp]im5tal exp5ditures :i* are paid or incurr$ by ! taxpay] dur+ su* taxable ye> 9 connection ) ! taxpay]'s trade or bus9ess4 7c7 ,special rules 7#a7 ,l& & o!r prop]ty ,?is section %all n apply to any exp5diture = ! acquisition or improvem5t ( l&1 or = ! acquisition or improvem5t ( prop]ty to be us$ 9 connection ) ! rese>* or exp]im5tation & ( a "* :i* is subject to ! all[ance "u section #afg 7relat+ to all[ance = depreciation1 etc47 or section #faa 7relat+ to all[ance = depletion72 b = purposes ( ?is section all[ances "u section #afg1 & all[ances "u section #faa1 %all be consid]$ z exp5ditures4 7#b7 ,exploration exp5ditures ,?is section %all n apply to any exp5diture paid or incurr$ = ! purpose ( asc]ta9+ ! exi/5ce1 location1 ext5t1 or quality ( any deposit ( ore or o!r m9]al 7includ+ oil & gas74 7#c7 ,s(tw>e developm5t ,= purposes ( ?is section1 any am\nt paid or incurr$ 9 connection ) ! developm5t ( any s(tw>e %all be treat$ z a rese>* or exp]im5tal exp5diture4 7d7 ,treatm5t ^u disposition1 retirem5t1 or ab&onm5t ,if any prop]ty ) respect to :i* specifi$ rese>* or exp]im5tal exp5ditures are paid or incurr$ is dispos$1 retir$1 or ab&on$ dur+ ! p]iod dur+ :i* su* exp5ditures are all[$ z an amortization d$uction "u ?is section1 no d$uction %all be all[$ ) respect to su* exp5ditures on acc\nt ( su* disposition1 retirem5t1 or ab&onm5t & su* amortization d$uction %all cont9ue ) respect to su* exp5ditures4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #agd & ins]t+ ! foll[+ new item3 ,sec4 #agd4 ,amortization ( rese>* & exp]im5tal exp5ditures4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbb4 #ccaf4 ,uni=m treatm5t ( exp5ses 9 cont+5cy fee cases 7a7 ,9 g5]al ,section #afb1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsection 7r7 z subsection 7s7 & by ins]t+ aft] subsection 7q7 ! foll[+ new subsection3 7r7 ,exp5ses 9 cont+5cy fee cases ,no d$uction %all be all[$ "u subsection 7a7 to a taxpay] = any exp5se-- 7#a7 paid or incurr$ 9 ! c\rse ( ! trade or bus9ess ( practic+ law1 & 7#b7 result+ f a case = :i* ! taxpay] is comp5sat$ prim>ily on a cont+5t basis1 until su* "t z su* cont+5cy is resolv$4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to exp5ses & co/s paid or incurr$ 9 taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 ,e ,re=m ( bus9ess cr$its #cdja4 ,repeal ( cr$it = cl9ical te/+ exp5ses = c]ta9 drugs = r>e diseases or conditions 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,c 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ab74 7#b7 ,section #bhj;,c is am5d$ by /rik+ subsection 7b74 7#c7 ,section #feja7m7 is am5d$ by /rik+ #de;,c7d77#d714 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cdjb4 ,repeal ( employ]-provid$ *ild c>e cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,f 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ae74 7#b7 ,section #ajaf7;a7 is am5d$ by /rik+ p>agraph 7#bh74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,basis adju/m5ts ,! am5dm5t made by subsection 7b77#b7 %all apply to cr$its det]m9$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cdjc4 ,repeal ( rehabilitation cr$it 7a7 ,9 g5]al ,subp>t ,e ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #agj7;f77#ad77;,a7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act7 aft] section #dg4 7#b7 ,section #agj7;h77#d7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #dg7;c77#c77;,b77 9 subp>agraph 7,c77ii71 & 7,b7 by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,regi/]$ hi/oric di/rict ,! t]m regi/]$ hi/oric di/rict means-- 7i7 any di/rict li/$ 9 ! ,national ,regi/]1 & 7ii7 any di/rict-- 7,i7 :i* is designat$ "u a /atute ( ! appropriate ,/ate or local gov]nm5t1 if su* /atute is c]tifi$ by ! ,secret>y ( ! ,int]ior to ! ,secret>y z conta9+ crit]ia :i* w sub/antially a*ieve ! purpose ( pres]v+ & rehabilitat+ build+s ( hi/oric significance to ! di/rict1 & 7,,ii7 :i* is c]tifi$ by ! ,secret>y ( ! ,int]ior to ! ,secret>y z meet+ sub/antially all ( ! requirem5ts = ! li/+ ( di/ricts 9 ! ,national ,regi/]4 4 7#c7 ,section #dfi7;i77#c7 is am5d$ by /rik+ subp>agraph 7,b74 7#d7 ,section #dfi7;i77#f77;,b7 is am5d$-- 7,a7 by /rik+ 9 ! case (-- & all t foll[s & ins]t+ 9 ! case ( any cr$it det]m9$ "u section #db = any taxable ye>41 & 7,b7 by /rik+ 1 rehabilitation cr$it1 9 ! head+ !re(4 7#e7 ,section #dfi7k77#a7 is am5d$ by /rik+ 1 or any rehabilitation cr$it det]m9$ "u section #dg14 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjag4 7#b7 ,transition rule ,9 ! case ( qualifi$ rehabilitation exp5ditures 7)9 ! mean+ ( section #dg ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect be=e its repeal7 ) respect to any build+-- 7,a7 own$ or leas$ 7z p]mitt$ by section #dg ( ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect be=e its repeal7 by ! taxpay] at all times aft] ,decemb] #ca1 #bjag1 & 7,b7 ) respect to :i* ! #bd-mon? p]iod select$ by ! taxpay] "u section #dg7;c77#a77;,c7 ( su* ,code beg9s n lat] ?an ! end ( ! #ahj-;day p]iod beg9n+ on ! date ( ! enactm5t ( ?is ,act1 ! am5dm5ts made by ?is section %all apply to su* exp5ditures paid or incurr$ aft] ! end ( ! taxable ye> 9 :i* ! #bd-mon? p]iod ref]r$ to 9 subp>agraph 7,b7 ends4 #cdjd4 ,repeal ( "w opportunity tax cr$it 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #ea 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,cl]ical am5dm5t ,! head+ ( su* subp>t ,f 7& ! item relat+ to su* subp>t 9 ! table ( subp>ts = "p ,,iv ( sub*apt] ,a ( *apt] #a7 are ea* am5d$ by /rik+ ,rules = ,comput+ ,"w ,opportunity ,cr$it & ins]t+ ,special ,rules4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ to individuals :o beg9 "w = ! employ] aft] ,decemb] #ca1 #bjag4 #cdje4 ,repeal ( d$uction = c]ta9 unus$ bus9ess cr$its 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ section #aif 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cdjf4 ,t]m9ation ( new m>kets tax cr$it 7a7 ,9 g5]al ,section #de;,d7f7 is am5d$-- 7#a7 by /rik+ #bjai 9 p>agraph 7#a77;,g7 & ins]t+ #bjag1 & 7#b7 by /rik+ #bjbd 9 p>agraph 7#c7 & ins]t+ #bjbb4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to cal5d> ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cdjg4 ,repeal ( cr$it = exp5ditures to provide access to disabl$ individuals 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#g74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cdjh4 ,modification ( cr$it = portion ( employ] social security taxes paid ) respect to employee tips 7a7 ,cr$it det]m9$ ) respect to m9imum wage z 9 effect ,section #de;,b7b77#a77;,b7 is am5d$ by /rik+ z 9 effect on ,janu>y #a1 #bjjg1 &4 7b7 ,in=mation return requirem5t ,section #de;,b is am5d$ by r$esignat+ subsections 7c7 & 7d7 z subsections 7d7 & 7e71 respectively1 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,in=mation return requirem5t 7#a7 ,9 g5]al ,no cr$it %all be det]m9$ "u subsection 7a7 ) respect to any food or bev]age e/abli%m5t ( any taxpay] = any taxable ye> unless su* taxpay] has1 ) respect to ! cal5d> ye> :i* ends 9 or ) su* taxable ye>-- 7,a7 made a report to ! ,secret>y %[+ ! in=mation describ$ 9 section #fjec7;c77#a7 ) respect to su* food or bev]age e/abli%m5t1 & 7,b7 furni%$ writt5 /atem5ts to ea* employee ( su* food or bev]age e/abli%m5t %[+ ! in=mation describ$ 9 section #fjec7;c77#b74 7#b7 ,allocation ( #aj p]c5t ( gross receipts ,= purposes ( det]m9+ ! in=mation ref]r$ to 9 subp>agraphs 7,a7 & 7,b71 section #fjec7;c77#c77;,a77i7 %all be appli$ by sub/itut+ #aj p]c5t = #h p]c5t4 ,= purposes ( section #fjec7;c77#e71 any ref]5ce to section #fjec7;c77#c77;,b7 conta9$ !re9 %all be treat$ z includ+ a ref]5ce to ?is p>agraph4 7#c7 ,food or bev]age e/abli%m5t ,= purposes ( ?is subsection1 ! t]m food or bev]age e/abli%m5t means any trade or bus9ess 7or portion !re(7 :i* w\ld be a l>ge food or bev]age e/abli%m5t 7z def9$ 9 section #fjec7;c77#d77 if su* section 7 appli$ )\t reg>d to subp>agraph 7,c7 !re(4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,f ,en]gy cr$its #ceja4 ,modifications to cr$it = electricity produc$ f c]ta9 r5ewable res\rces 7a7 ,t]m9ation ( inflation adju/m5t ,section #de7;b77#b7 is am5d$-- 7#a7 by /rik+ ,! #a4e c5t am\nt & ins]t+ ! foll[+3 7,a7 ,9 g5]al ,! #a4e c5t am\nt 1 & 7#b7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 ,t]m9ation ,subp>agraph 7,a7 %all n apply ) respect to any electricity or ref9$ coal produc$ at a facility ! con/ruction ( :i* beg9s aft] ! date ( ! enactm5t ( ?is subp>agraph4 4 7b7 ,special rule = det]m9ation ( beg9n+ ( con/ruction ,section #de7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ab7 ,special rule = det]m9+ beg9n+ ( con/ruction ,= purposes ( subsection 7d71 ! con/ruction ( any facility1 modification1 improvem5t1 addition1 or o!r prop]ty %all n be treat$ z beg9n+ be=e any date unless !re is a cont9u\s program ( con/ruction :i* beg9s be=e su* date & ends on ! date t su* prop]ty is plac$ 9 s]vice4 4 7c7 ,effective dates 7#a7 ,t]m9ation ( inflation adju/m5t ,! am5dm5ts made by subsection 7a7 %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,special rule = det]m9ation ( beg9n+ ( con/ruction ,! am5dm5t made by subsection 7b7 %all apply to taxable ye>s beg9n+ be=e1 on1 or aft] ! date ( ! enactm5t ( ?is ,act4 #cejb4 ,modification ( ! en]gy inve/m5t tax cr$it 7a7 ,ext5sion ( sol> en]gy prop]ty ,section #dh7;a77#c77;,a77ii7 is am5d$ by /rik+ p]iods end+ be=e ,janu>y #a1 #bjag & ins]t+ prop]ty ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbb4 7b7 ,ext5sion ( qualifi$ fuel cell prop]ty ,section #dh7;c77#a77;,d7 is am5d$ by /rik+ = any p]iod aft] ,decemb] #ca1 #bjaf & ins]t+ ! con/ruction ( :i* does n beg9 be=e ,janu>y #a1 #bjbb4 7c7 ,ext5sion ( qualifi$ microturb9e prop]ty ,section #dh7;c77#b77;,d7 is am5d$ by /rik+ = any p]iod aft] ,decemb] #ca1 #bjaf & ins]t+ ! con/ruction ( :i* does n beg9 be=e ,janu>y #a1 #bjbb4 7d7 ,ext5sion ( comb9$ heat & p[] sy/em prop]ty ,section #dh7;c77#c77;,a77iv7 is am5d$ by /rik+ :i* is plac$ 9 s]vice be=e ,janu>y #a1 #bjag & ins]t+ ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbb4 7e7 ,ext5sion ( qualifi$ small w9d en]gy prop]ty ,section #dh7;c77#d77;,c7 is am5d$ by /rik+ = any p]iod aft] ,decemb] #ca1 #bjaf & ins]t+ ! con/ruction ( :i* does n beg9 be=e ,janu>y #a1 #bjbb4 7f7 ,ext5sion ( !rmal en]gy prop]ty ,section #dh7;a77#c77;,a77vii7 is am5d$ by /rik+ p]iods end+ be=e ,janu>y #a1 #bjag & ins]t+ prop]ty ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbb4 7g7 ,phase\t ( #cj p]c5t cr$it rate = fuel cell & small w9d en]gy prop]ty ,section #dh7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,phase\t = qualifi$ fuel cell prop]ty & qualifi$ small w9d en]gy prop]ty 7,a7 ,9 g5]al ,9 ! case ( qualifi$ fuel cell prop]ty or qualifi$ small w9d en]gy prop]ty1 ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbb1 ! en]gy p]c5tage det]m9$ "u p>agraph 7#b7 %all be equal to-- 7i7 9 ! case ( any prop]ty ! con/ruction ( :i* beg9s aft] ,decemb] #ca1 #bjai1 & be=e ,janu>y #a1 #bjba1 #bf p]c5t1 & 7ii7 9 ! case ( any prop]ty ! con/ruction ( :i* beg9s aft] ,decemb] #ca1 #bjbj1 & be=e ,janu>y #a1 #bjbb1 #bb p]c5t4 7,b7 ,plac$ 9 s]vice deadl9e ,9 ! case ( any qualifi$ fuel cell prop]ty or qualifi$ small w9d en]gy prop]ty1 ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbb1 & :i* is n plac$ 9 s]vice be=e ,janu>y #a1 #bjbd1 ! en]gy p]c5tage det]m9$ "u p>agraph 7#b7 %all be equal to #aj p]c5t4 4 7h7 ,phase\t = fib]-optic sol> en]gy prop]ty ,subp>agraphs 7,a7 & 7,b7 ( section #dh7;a77#f7 are ea* am5d$ by ins]t+ or 7#c77;,a77ii7 aft] p>agraph 7#c77;,a77i74 7i7 ,t]m9ation ( sol> en]gy prop]ty ,section #dh7;a77#c77;,a77i7 is am5d$ by ins]t+ 1 ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbh1 & aft] equipm5t4 7j7 ,t]m9ation ( geo!rmal en]gy prop]ty ,section #dh7;a77#c77;,a77iii7 is am5d$ by ins]t+ 1 ! con/ruction ( :i* beg9s be=e ,janu>y #a1 #bjbh1 & aft] equipm5t4 7k7 ,special rule = det]m9ation ( beg9n+ ( con/ruction ,section #dh7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,special rule = det]m9+ beg9n+ ( con/ruction ,! con/ruction ( any facility1 modification1 improvem5t1 addition1 or o!r prop]ty %all n be treat$ z beg9n+ be=e any date unless !re is a cont9u\s program ( con/ruction :i* beg9s be=e su* date & ends on ! date t su* prop]ty is plac$ 9 s]vice4 4 7l7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to p]iods aft] ,decemb] #ca1 #bjaf1 "u rules simil> to ! rules ( section #dh7m7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z 9 effect on ! day be=e ! date ( ! enactm5t ( ! ,rev5ue ,reconciliation ,act ( #aiij74 7#b7 ,ext5sion ( comb9$ heat & p[] sy/em prop]ty ,! am5dm5t made by subsection 7d7 %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjaf4 7#c7 ,phase\ts & t]m9ations ,! am5dm5ts made by subsections 7g71 7h71 7i71 & 7j7 %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#d7 ,special rule = det]m9ation ( beg9n+ ( con/ruction ,! am5dm5t made by subsection 7k7 %all apply to taxable ye>s beg9n+ be=e1 on1 or aft] ! date ( ! enactm5t ( ?is ,act4 #cejc4 ,ext5sion & phase\t ( resid5tial en]gy effici5t prop]ty 7a7 ,ext5sion ,section #be;,d7h7 is am5d$ by /rik+ ,decemb] #ca1 #bjaf 7,decemb] #ca1 #bjba1 9 ! case ( any qualifi$ sol> electric prop]ty exp5ditures & qualifi$ sol> wat] heat+ prop]ty exp5ditures7 & ins]t+ ,decemb] #ca1 #bjba4 7b7 ,phase\t 7#a7 ,9 g5]al ,p>agraphs 7#c71 7#d71 & 7#e7 ( section #be;,d7a7 are am5d$ by /rik+ #cj p]c5t ea* place x appe>s & ins]t+ ! applicable p]c5tage4 7#b7 ,con=m+ am5dm5t ,section #be;,d7g7 ( su* ,code is am5d$ by /rik+ p>agraphs 7#a7 & 7#b7 (4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjaf4 #cejd4 ,repeal ( enhanc$ oil recov]y cr$it 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #dc 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#f74 7#b7 ,section #feja7m7 is am5d$ by /rik+ #dc14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ceje4 ,repeal ( cr$it = produc+ oil & gas f m>g9al wells 7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ section #de;,i 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #ch7;b7 is am5d$ by /rik+ p>agraph 7#ai74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cejf4 ,modifications ( cr$it = production f advanc$ nucle> p[] facilities 7a7 ,treatm5t ( unutiliz$ limitation am\nts ,section #de;,j7b7 is am5d$-- 7#a7 9 p>agraph 7#d71 by ins]t+ or any am5dm5t to aft] enactm5t (2 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,allocation ( unutiliz$ limitation 7,a7 ,9 g5]al ,any unutiliz$ national megawatt capacity limitation %all be allocat$ by ! ,secret>y "u p>agraph 7#c7 z rapidly z is practicable aft] ,decemb] #ca1 #bjbj-- 7i7 fir/ to facilities plac$ 9 s]vice on or be=e su* date to ! ext5t t su* facilities did n receive an allocation equal to _! full nameplate capacity2 & 7ii7 !n to facilities plac$ 9 s]vice aft] su* date 9 ! ord] 9 :i* su* facilities are plac$ 9 s]vice4 7,b7 ,unutiliz$ national megawatt capacity limitation ,! t]m unutiliz$ national megawatt capacity limitation means ! excess 7if any7 (-- 7i7 #f1jjj megawatts1 ov] 7ii7 ! aggregate am\nt ( national megawatt capacity limitation allocat$ by ! ,secret>y be=e ,janu>y #a1 #bjba1 r$uc$ by any am\nt ( su* limitation :i* 0 allocat$ to a facility :i* 0 n plac$ 9 s]vice be=e su* date4 7,c7 ,coord9ation ) o!r provisions ,9 ! case ( any unutiliz$ national megawatt capacity limitation allocat$ by ! ,secret>y pursuant to ?is p>agraph-- 7i7 su* allocation %all be treat$ = purposes ( ?is section 9 ! same mann] z an allocation ( national megawatt capacity limitation2 & 7ii7 subsection 7d77#a77;,b7 %all n apply to any facility :i* receives su* allocation4 4 7b7 ,transf] ( cr$it by c]ta9 public entities 7#a7 ,9 g5]al ,section #de;,j is am5d$-- 7,a7 by r$esignat+ subsection 7e7 z subsection 7f72 & 7,b7 by ins]t+ aft] subsection 7d7 ! foll[+ new subsection3 7e7 ,transf] ( cr$it by c]ta9 public entities 7#a7 ,9 g5]al ,if1 ) respect to a cr$it "u subsection 7a7 = any taxable ye>-- 7,a7 ! taxpay] w\ld be a qualifi$ public entity2 & 7,b7 su* entity elects ! application ( ?is p>agraph = su* taxable ye> ) respect to all 7or any portion specifi$ 9 su* election7 ( su* cr$it1 ! eligible project p>tn] specifi$ 9 su* election 7& n ! qualifi$ public entity7 %all be treat$ z ! taxpay] = purposes ( ?is title ) respect to su* cr$it 7or su* portion !re(74 7#b7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,qualifi$ public entity ,! t]m qualifi$ public entity means-- 7i7 a ,f$]al1 ,/ate1 or local gov]nm5t entity1 or any political subdivision1 ag5cy1 or in/rum5tality !re(2 7ii7 a mutual or coop]ative electric company describ$ 9 section #eja7;c77#ab7 or section #acha7;a77#b72 or 7iii7 a n-=-pr(it electric utility :i* has or _h receiv$ a loan or loan gu>antee "u ! ,rural ,electrification ,act ( #aicf4 7,b7 ,eligible project p>tn] ,! t]m eligible project p>tn] means-- 7i7 any p]son responsible =1 or p>ticipat+ 91 ! design or con/ruction ( ! advanc$ nucle> p[] facility to :i* ! cr$it "u subsection 7a7 relates2 7ii7 any p]son :o p>ticipates 9 ! provision ( ! nucle> /eam supply sy/em to ! advanc$ nucle> p[] facility to :i* ! cr$it "u subsection 7a7 relates2 7iii7 any p]son :o p>ticipates 9 ! provision ( nucle> fuel to ! advanc$ nucle> p[] facility to :i* ! cr$it "u subsection 7a7 relates2 or 7iv7 any p]son :o has an own]%ip int]e/ 9 su* facility4 7#c7 ,special rules 7,a7 ,application to p>tn]%ips ,9 ! case ( a cr$it "u subsection 7a7 :i* is det]m9$ at ! p>tn]%ip level-- 7i7 = purposes ( p>agraph 7#a77;,a71 a qualifi$ public entity %all be treat$ z ! taxpay] ) respect to su* entity's di/ributive %>e ( su* cr$it2 & 7ii7 ! t]m eligible project p>tn] %all include any p>tn] ( ! p>tn]%ip4 7,b7 ,taxable ye> 9 :i* cr$it tak5 into acc\nt ,9 ! case ( any cr$it 7or portion !re(7 ) respect to :i* an election is made "u p>agraph 7#a71 su* cr$it %all be tak5 into acc\nt 9 ! fir/ taxable ye> ( ! eligible project p>tn] end+ )1 or aft]1 ! qualifi$ public entity's taxable ye> ) respect to :i* ! cr$it 0 det]m9$4 7,c7 ,treatm5t ( transf] "u private use rules ,= purposes ( section #ada7;b77#a71 any b5efit d]iv$ by an eligible project p>tn] 9 connection ) an election "u ?is subsection %all n be tak5 into acc\nt z a private bus9ess use4 4 7#b7 ,special rule = proce$s ( transf]s = mutual or coop]ative electric companies ,section #eja7;c77#ab7 ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,i7 ,9 ! case ( a mutual or coop]ative electric company describ$ 9 ?is p>agraph or an organization describ$ 9 section #acha7;a77#b71 income receiv$ or accru$ 9 connection ) an election "u section #de;,j7e77#a7 %all be treat$ z an am\nt collect$ f memb]s = ! sole purpose ( meet+ losses & exp5ses4 4 7c7 ,effective dates 7#a7 ,treatm5t ( unutiliz$ limitation am\nts ,! am5dm5t made by subsection 7a7 %all take effect on ! date ( ! enactm5t ( ?is ,act4 7#b7 ,transf] ( cr$it by c]ta9 public entities ,! am5dm5ts made by subsection 7b7 %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 ,g ,bond re=ms #cfja4 ,t]m9ation ( private activity bonds 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #ajc7;b7 is am5d$-- 7#a7 by /rik+ :i* is n a qualifi$ bond 7)9 ! mean+ ( section #ada71 & 7#b7 by /rik+ :i* is n a qualifi$ bond 9 ! head+ !re(4 7b7 ,con=m+ am5dm5ts 7#a7 ,subp>t ,a ( "p ,,iv ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ sections #adb1 #adc1 #add1 #ade1 #adf1 & #adg 7& by /rik+ ea* ( ! items relat+ to su* sections 9 ! table ( sections = su* subp>t74 7#b7 ,section #be is am5d$ by add+ at ! end ! foll[+ new subsection3 7j7 ,coord9ation ) repeal ( private activity bonds ,any ref]5ce to section #adc1 #add1 or #adf %all be treat$ z a ref]5ce to su* section z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act4 4 7#c7 ,section #bf7;b77#b7 is am5d$ by /rik+ subp>agraph 7,d74 7#d7 ,section #ada7;b7 is am5d$ by /rik+ p>agraphs 7#e7 & 7#i74 7#e7 ,section #ada7;d7 is am5d$ by /rik+ p>agraph 7#e74 7#f7 ,section #ada is am5d$ by /rik+ subsection 7e74 7#g7 ,section #adh7;f77#d7 is am5d$-- 7,a7 by /rik+ 7det]m9$ 9 accordance ) section #adg7;b77#b77;,a77 9 ! flu% matt] foll[+ subp>agraph 7,a77ii7 & ins]t+ 7det]m9$ by tak+ into acc\nt ! respective issue prices ( ! bonds issu$ z "p ( ! issue71 & 7,b7 by /rik+ ! la/ s5t5ce ( subp>agraph 7,d77v74 7#h7 ,clause 7iv7 ( section #adh7;f77#d77;,c7 is am5d$ to read z foll[s3 7iv7 ,con/ruction issue ,= purposes ( ?is subp>agraph-- 7,i7 ,9 g5]al ,! t]m con/ruction issue means any issue if at lea/ #ge p]c5t ( ! available con/ruction proce$s ( su* issue are to be us$ = con/ruction exp5ditures4 7,,ii7 ,con/ruction ,! t]m con/ruction includes recon/ruction & rehabilitation4 4 7#i7 ,section #adi7;b77#c7 is am5d$ by /rik+ subp>agraph 7,c74 7#aj7 ,section #adi7;e77#b7 is am5d$-- 7,a7 by /rik+ subp>agraphs 7,c71 7,d71 & 7,f7 & by r$esignat+ subp>agraphs 7,e7 & 7,g7 z subp>agraphs 7,c7 & 7,d71 respectively1 & 7,b7 by /rik+ ! second s5t5ce4 7#aa7 ,section #adi7;f77#f7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by /rik+ ,= purposes ( ?is subsection & all t foll[s ?r\gh ,! t]m & ins]t+ ! foll[+3 ,= purposes ( ?is subsection1 ! t]m4 7#ab7 ,section #aej7;e77#c7 is am5d$ to read z foll[s3 7#c7 ,public approval requirem5t ,a bond %all n be treat$ z "p ( an issue :i* meets ! requirem5ts ( p>agraph 7#a7 unless su* bond satisfies ! requirem5ts ( section #adg7;f77#b7 7z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act74 4 7#ac7 ,section #bfi;,a7b77#c7 is am5d$ by /rik+ #add7;a77#c7 & ins]t+ #dad7n77#f77;,a74 7#ad7 ,section #dad7m77#e7 is am5d$ by /rik+ section #add7;a77#c7 & ins]t+ subsection 7n77#f77;,a74 7#ae7 ,section #dad7n77#f77;,a7 is am5d$ to read z foll[s3 7,a7 ,relat$ p]sons ,a p]son is a relat$ p]son to ano!r p]son if-- 7i7 ! relation%ip betwe5 su* p]sons w\ld result 9 a disall[ance ( losses "u section #bfg or #gjg7;b71 or 7ii7 su* p]sons are memb]s ( ! same controll$ gr\p ( corporations 7z def9$ 9 section #aefc7;a71 except t m ?an #ej p]c5t %all be sub/itut$ = at lea/ #hj p]c5t ea* place x appe>s !re974 4 7#af7 ,section #fjde7;e77#d77;,b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act7 aft] section #adc7m77#c74 7#ag7 ,section #ffed7;f77#a7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act7 aft] section #adc7m74 7#ah7 ,section #ghga7;c7 is am5d$-- 7,a7 by /rik+ p>agraphs 7#b7 & 7#c71 & 7,b7 by /rik+ tax-exempt bonds4-- & all t foll[s ?r\gh ,subsection 7a7 ( section #ajc & ins]t+ ! foll[+3 tax-exempt bonds4--,subsection 7a7 ( section #ajc4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to bonds issu$ aft] ,decemb] #ca1 #bjag4 #cfjb4 ,repeal ( advance refund+ bonds 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #adi7;d7 is am5d$ by /rik+ z "p ( an issue describ$ 9 p>agraph 7#b71 7#c71 or 7#d74 & ins]t+ to advance refund ano!r bond44 7b7 ,con=m+ am5dm5ts 7#a7 ,section #adi7;d7 is am5d$ by /rik+ p>agraphs 7#b71 7#c71 7#d71 & 7#f7 & by r$esignat+ p>agraphs 7#e7 & 7#g7 z p>agraphs 7#b7 & 7#c74 7#b7 ,section #adh7;f77#d77;,c7 is am5d$ by /rik+ clause 7xiv7 & by r$esignat+ clauses 7xv7 to 7xvii7 z clauses 7xiv7 to 7xvi74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to advance refund+ bonds issu$ aft] ,decemb] #ca1 #bjag4 #cfjc4 ,repeal ( tax cr$it bonds 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by /rik+ subp>ts ,h1 ,i1 & ,j 7& by /rik+ ! items relat+ to su* subp>ts 9 ! table ( subp>ts = su* "p74 7b7 ,paym5ts to issu]s ,sub*apt] ,b ( *apt] #fe is am5d$ by /rik+ section #fdca 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* sub*apt]74 7c7 ,con=m+ am5dm5ts 7#a7 ,"p ,,iv ( sub*apt] ,u ( *apt] #a is am5d$ by /rik+ section #acig;,e 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#b7 ,section #ed7l77#c77;,b7 is am5d$ by ins]t+ 7z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act7 aft] section #acig;,e7,i74 7#c7 ,section #fbaa7;b77#d77;,a7 is am5d$ by /rik+ 1 & #fdca & ins]t+ & be=e #cf;,b4 7#d7 ,section #fdja7;b77#a7 is am5d$ by /rik+ ,g1 ,h1 ,i1 & ,j & ins]t+ & ,g4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to bonds issu$ aft] ,decemb] #ca1 #bjag4 #cfjd4 ,no tax exempt bonds = pr(essional /adiums 7a7 ,9 g5]al ,section #ajc7;b71 z am5d$ by ?is ,act1 is fur!r am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,pr(essional /adium bond ,any pr(essional /adium bond4 4 7b7 ,pr(essional /adium bond def9$ ,subsection 7c7 ( section #ajc is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,pr(essional /adium bond ,! t]m pr(essional /adium bond means any bond issu$ z "p ( an issue any proce$s ( :i* are us$ to f9ance or ref9ance capital exp5ditures allocable to a facility 7or appurt5ant real prop]ty7 :i*1 dur+ at lea/ #e days dur+ any cal5d> ye>1 is us$ z a /adium or ar5a = pr(essional sports exhibitions1 games1 or tra9+4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to bonds issu$ aft] ,novemb] #b1 #bjag4 ,h ,insurance #cgja4 ,net op]at+ losses ( life insurance companies 7a7 ,9 g5]al ,section #hje7;b7 is am5d$ by /rik+ p>agraph 7#d7 & by r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7b7 ,con=m+ am5dm5ts 7#a7 ,"p ,i ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #haj 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#b7 ,"p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hdd 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7#c7 ,section #cha is am5d$ by /rik+ subsection 7d74 7#d7 ,section #hje7;a77#d77;,b77ii7 is am5d$ to read z foll[s3 7ii7 ! d$uction all[$ "u section #agb1 4 7#e7 ,section #hje7;a7 is am5d$ by /rik+ p>agraph 7#e74 7#f7 ,section #iec7;b77#a77;,b7 is am5d$ to read z foll[s3 7,b7 ,s mu* ( section #hje7;a77#h7 z relates to ! d$uction all[$ "u section #agb4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cgjb4 ,repeal ( small life insurance company d$uction 7a7 ,9 g5]al ,"p ,i ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hjf 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dec;,b7e7 is am5d$-- 7,a7 by /rik+ 7z def9$ 9 section #hjf7;b77#c77 9 p>agraph 7#b77;,b71 & 7,b7 by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,non9surance bus9ess 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! t]m non9surance bus9ess means any activity :i* is n an insurance bus9ess4 7,b7 ,c]ta9 activities treat$ z insurance bus9esses ,= purposes ( subp>agraph 7,a71 any activity :i* is n an insurance bus9ess %all be treat$ z an insurance bus9ess if-- 7i7 x is ( a type traditionally c>ri$ on by life insurance companies = inve/m5t purposes1 b only if ! c>ry+ on ( su* activity 7o!r ?an 9 ! case ( real e/ate7 does n con/itute ! active conduct ( a trade or bus9ess1 or 7ii7 x involves ! p]=mance ( adm9i/rative s]vices 9 connection ) plans provid+ life insurance1 p5sion1 or accid5t & heal? b5efits4 4 7#b7 ,section #dfe7;c77#g77;,d77v77,,ii7 is am5d$ by /rik+ section #hjf7;b77#c7 & ins]t+ section #dec;,b7e77#c74 7#c7 ,section #hja7;a77#b7 is am5d$ by /rik+ subp>agraph 7,c74 7#d7 ,section #hjd is am5d$ by /rik+ means-- & all t foll[s & ins]t+ means ! g5]al d$uctions provid$ 9 section #hje44 7#e7 ,section #hje7;a77#d77;,b71 z am5d$ by section #cgja1 is am5d$ by /rik+ clause 7i7 & by r$esignat+ clauses 7ii71 7iii71 & 7iv7 z clauses 7i71 7ii71 & 7iii71 respectively4 7#f7 ,section #hje7;b77#b77;,a7 is am5d$ by /rik+ clause 7iii7 & by r$esignat+ clauses 7iv7 & 7v7 z clauses 7iii7 & 7iv71 respectively4 7#g7 ,section #hdb7;c7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7#h7 ,section #iec7;b77#a71 z am5d$ by section #cgja1 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cgjc4 ,surtax on life insurance company taxable income 7a7 ,9 g5]al ,section #hja7;a77#a7 is am5d$-- 7#a7 by /rik+ consi/ ( a tax & ins]t consi/ ( ! sum (-- 7,a7 a tax 1 & 7#b7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7#c7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 a tax equal to #h p]c5t ( ! life insurance company taxable income4 4 #cgjd4 ,adju/m5t = *ange 9 comput+ res]ves 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #hjg7;f7 is am5d$ to read z foll[s3 7#a7 ,treatm5t z *ange 9 me?od ( acc\nt+ ,if ! basis = det]m9+ any item ref]r$ to 9 subsection 7c7 z ( ! close ( any taxable ye> diff]s f ! basis = su* det]m9ation z ( ! close ( ! prec$+ taxable ye>1 !n s mu* ( ! diff]5ce betwe5-- 7,a7 ! am\nt ( ! item at ! close ( ! taxable ye>1 comput$ on ! new basis1 & 7,b7 ! am\nt ( ! item at ! close ( ! taxable ye>1 comput$ on ! old basis1 z is attributable to contracts issu$ be=e ! taxable ye> %all be tak5 into acc\nt "u section #dha z adju/m5ts attributable to a *ange 9 me?od ( acc\nt+ initiat$ by ! taxpay] & made ) ! cons5t ( ! ,secret>y4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cgje4 ,repeal ( special rule = di/ributions to %>ehold]s f pre-#aihd policyhold]s surplus acc\nt 7a7 ,9 g5]al ,subp>t ,d ( "p ,i ( sub*apt] ,l is am5d$ by /rik+ section #hae 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* subp>t74 7b7 ,con=m+ am5dm5t ,section #hja is am5d$ by /rik+ subsection 7c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7d7 ,phas$ inclusion ( rema9+ balance ( policyhold]s surplus acc\nts ,9 ! case ( any /ock life insurance company :i* has a balance 7det]m9$ z ( ! close ( su* company's la/ taxable ye> beg9n+ be=e ,janu>y #a1 #bjah7 9 an exi/+ policyhold]s surplus acc\nt 7z def9$ 9 section #hae ( ! ,int]nal ,rev5ue ,code ( #aihf1 z 9 effect be=e its repeal71 ! tax impos$ by section #hja ( su* ,code = ! fir/ #h taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 %all be ! am\nt :i* w\ld be impos$ by su* section = su* ye> on ! sum (-- 7#a7 life insurance company taxable income = su* ye> 7)9 ! mean+ ( su* section #hja b n less ?an z]o71 plus 7#b7 #a_/h ( su* balance4 #cgjf4 ,modification ( proration rules = prop]ty & casualty insurance companies 7a7 ,9 g5]al ,section #hcb7;b77#e77;,b7 is am5d$ by /rik+ #ae p]c5t & ins]t+ #bf4be p]c5t4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #cgjg4 ,modification ( disc\nt+ rules = prop]ty & casualty insurance companies 7a7 ,modification ( rate ( int]e/ us$ to disc\nt unpaid losses ,p>agraph 7#b7 ( section #hdf7;c7 is am5d$ to read z foll[s3 7#b7 ,det]m9ation ( annual rate ,! annual rate det]m9$ by ! ,secret>y "u ?is p>agraph = any cal5d> ye> %all be a rate det]m9$ on ! basis ( ! corporate bond yield curve 7z def9$ 9 section #dcj7;h77#b77;,d77i774 4 7b7 ,modification ( computational rules = loss paym5t patt]ns ,section #hdf7;d77#c7 is am5d$ by /rik+ subp>agraphs 7,b7 ?r\gh 7,g7 & ins]t+ ! foll[+ new subp>agraphs3 7,b7 ,treatm5t ( c]ta9 losses ,losses :i* w\ld h be5 treat$ z paid 9 ! la/ ye> ( ! p]iod applicable "u subp>agraph 7,a77i7 or 7,a77ii7 %all be treat$ z paid 9 ! foll[+ mann]3 7i7 #c-ye> loss paym5t patt]n 7,i7 ,9 g5]al ,! p]iod tak5 into acc\nt "u subp>agraph 7,a77i7 %all be ext5d$ to ! ext5t requir$ "u subclause 7,,ii74 7,,ii7 ,computation ( ext5sion ,! am\nt ( losses :i* w\ld h be5 treat$ z paid 9 ! #c;d ye> aft] ! accid5t ye> %all be treat$ z paid 9 su* #c;d ye> & ea* subsequ5t ye> 9 an am\nt equal to ! av]age ( ! losses treat$ z paid 9 ! #a/ & #b;d ye>s aft] ! accid5t ye> 7or1 if less]1 ! portion ( ! unpaid losses n !ret(ore tak5 into acc\nt74 ,to ! ext5t su* unpaid losses h n be5 treat$ z paid be=e ! #ah? ye> aft] ! accid5t ye>1 !y %all be treat$ z paid 9 su* #ah? ye>4 7ii7 #aj-ye> loss paym5t patt]n 7,i7 ,9 g5]al ,! p]iod tak5 into acc\nt "u subp>agraph 7,a77ii7 %all be ext5d$ to ! ext5t requir$ "u subclause 7,,ii74 7,,ii7 ,computation ( ext5sion ,! am\nt ( losses :i* w\ld h be5 treat$ z paid 9 ! #aj? ye> aft] ! accid5t ye> %all be treat$ z paid 9 su* #aj? ye> & ea* subsequ5t ye> 9 an am\nt equal to ! am\nt ( ! av]age ( ! losses treat$ z paid 9 ! #g?1 #h?1 & #i? ye>s aft] ! accid5t ye> 7or1 if less]1 ! portion ( ! unpaid losses n !ret(ore tak5 into acc\nt74 ,to ! ext5t su* unpaid losses h n be5 treat$ z paid be=e ! #be? ye> aft] ! accid5t ye>1 !y %all be treat$ z paid 9 su* #be? ye>4 4 7c7 ,repeal ( hi/orical paym5t patt]n election ,section #hdf is am5d$ by /rik+ subsection 7e7 & by r$esignat+ subsections 7f7 & 7g7 z subsections 7e7 & 7f71 respectively4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7e7 ,transitional rule ,= ! fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag-- 7#a7 ! unpaid losses & ! exp5ses unpaid 7z def9$ 9 p>agraphs 7#e77;,b7 & 7#f7 ( section #hcb7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 at ! end ( ! prec$+ taxable ye>1 & 7#b7 ! unpaid losses z def9$ 9 sections #hjg7;c77#b7 & #hje7;a77#a7 ( su* ,code at ! end ( ! prec$+ taxable ye>1 %all be det]m9$ z if ! am5dm5ts made by ?is section _h appli$ to su* unpaid losses & exp5ses unpaid 9 ! prec$+ taxable ye> & by us+ ! int]e/ rate & loss paym5t patt]ns applicable to accid5t ye>s end+ ) cal5d> ye> #bjah1 & any adju/m5t %all be tak5 into acc\nt ratably 9 su* fir/ taxable ye> & ! #g succe$+ taxable ye>s4 ,= subsequ5t taxable ye>s1 su* am5dm5ts %all be appli$ ) respect to su* unpaid losses & exp5ses unpaid by us+ ! int]e/ rate & loss paym5t patt]ns applicable to accid5t ye>s end+ ) cal5d> ye> #bjah4 #cgjh4 ,repeal ( special e/imat$ tax paym5ts 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,l ( *apt] #a is am5d$ by /rik+ section #hdg 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,i ,comp5sation #chja4 ,modification ( limitation on excessive employee remun]ation 7a7 ,repeal ( p]=mance-bas$ comp5sation & commission exceptions = limitation on excessive employee remun]ation 7#a7 ,9 g5]al ,section #afb7m77#d7 is am5d$ by /rik+ subp>agraphs 7,b7 & 7,c7 & by r$esignat+ subp>agraphs 7,d71 7,e71 7,f71 & 7,g7 z subp>agraphs 7,b71 7,c71 7,d71 & 7,e71 respectively4 7#b7 ,con=m+ am5dm5ts 7,a7 ,p>agraphs 7#e77;,e7 & 7#f77;,d7 ( section #afb7m7 are ea* am5d$ by /rik+ subp>agraphs 7,b71 7,c71 & 7,d7 & ins]t+ subp>agraph 7,b74 7,b7 ,p>agraphs 7#e77;,g7 & 7#f77;,g7 ( section #afb7m7 are ea* am5d$ by /rik+ 7,f7 & 7,g7 & ins]t+ 7,d7 & 7,e74 7b7 ,expansion ( applicable employ] ,section #afb7m77#b7 is am5d$ to read z foll[s3 7#b7 ,publicly held corporation ,= purposes ( ?is subsection1 ! t]m publicly held corporation means any corporation :i* is an issu] 7z def9$ 9 section #c ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c77-- 7,a7 ! securities ( :i* are requir$ to be regi/]$ "u section #ab ( su* ,act 7#ae ,u4,s4,c4 #ghl71 or 7,b7 t is requir$ to file reports "u section #ae7;d7 ( su* ,act 7#ae ,u4,s4,c4 #gho7d774 4 7c7 ,modification ( def9ition ( cov]$ employees ,section #afb7m77#c7 is am5d$-- 7#a7 9 subp>agraph 7,a71 by /rik+ z ( ! close ( ! taxable ye>1 su* employee is ! *ief executive (fic] ( ! taxpay] or is & ins]t+ su* employee is ! pr9cipal executive (fic] or pr9cipal f9ancial (fic] ( ! taxpay] at any "t dur+ ! taxable ye>1 or 01 7#b7 9 subp>agraph 7,b7-- 7,a7 by /rik+ #d & ins]t+ #c1 & 7,b7 by /rik+ 7o!r ?an ! *ief executive (fic]7 & ins]t+ 7o!r ?an ! pr9cipal executive (fic] or pr9cipal f9ancial (fic]71 & 7#c7 by /rik+ or at ! end ( subp>agraph 7,a71 by /rik+ ! p]iod at ! end ( subp>agraph 7,b7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+3 7,c7 0 a cov]$ employee ( ! taxpay] 7or any pr$ecessor7 = any prec$+ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjaf4 ,su* t]m %all include any employee :o w\ld be describ$ 9 subp>agraph 7,b7 if ! report+ describ$ 9 su* subp>agraph 7 requir$ z s describ$4 4 7d7 ,special rule = remun]ation paid to b5efici>ies1 etc ,section #afb7m77#d71 z am5d$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,special rule = remun]ation paid to b5efici>ies1 etc ,remun]ation %all n fail to be applicable employee remun]ation m]ely because x is includible 9 ! income (1 or paid to1 a p]son o!r ?an ! cov]$ employee1 includ+ aft] ! dea? ( ! cov]$ employee4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #chjb4 ,excise tax on excess tax-exempt organization executive comp5sation 7a7 ,9 g5]al ,sub*apt] ,d ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new section3 #difj4 ,tax on excess tax-exempt organization executive comp5sation 7a7 ,tax impos$ ,!re is h]eby impos$ a tax equal to #bj p]c5t ( ! sum (-- 7#a7 s mu* ( ! remun]ation paid 7o!r ?an any excess p>a*ute paym5t7 by an applicable tax-exempt organization = ! taxable ye> ) respect to employm5t ( any cov]$ employee 9 excess ( #a1jjj1jjj1 plus 7#b7 any excess p>a*ute paym5t paid by su* an organization to any cov]$ employee4 7b7 ,liability = tax ,! employ] %all be liable = ! tax impos$ "u subsection 7a74 7c7 ,def9itions & special rules ,= purposes ( ?is section-- 7#a7 ,applicable tax-exempt organization ,! t]m applicable tax-exempt organization means any organization t = ! taxable ye>-- 7,a7 is exempt f taxation "u section #eja7;a71 7,b7 is a f>m]s' coop]ative organization describ$ 9 section #eba7;b77#a71 7,c7 has income exclud$ f taxation "u section #aae7a71 or 7,d7 is a political organization describ$ 9 section #ebg7;e77#a74 7#b7 ,cov]$ employee ,= purposes ( ?is section1 ! t]m cov]$ employee means any employee 7includ+ any =m] employee7 ( an applicable tax-exempt organization if ! employee-- 7,a7 is "o ( ! #e highe/ comp5sat$ employees ( ! organization = ! taxable ye>1 or 7,b7 0 a cov]$ employee ( ! organization 7or any pr$ecessor7 = any prec$+ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjaf4 7#c7 ,remun]ation ,= purposes ( ?is section1 ! t]m remun]ation means wages 7z def9$ 9 section #cdja7;a771 except t su* t]m %all n include any designat$ ,ro? contribution 7z def9$ 9 section #djb;,a7c774 7#d7 ,remun]ation f relat$ organizations 7,a7 ,9 g5]al ,remun]ation ( a cov]$ employee paid by an applicable tax-exempt organization %all include any remun]ation paid ) respect to employm5t ( su* employee by any relat$ p]son or gov]nm5tal entity4 7,b7 ,relat$ organizations ,a p]son or gov]nm5tal entity %all be treat$ z relat$ to an applicable tax-exempt organization if su* p]son or gov]nm5tal entity-- 7i7 controls1 or is controll$ by1 ! organization1 7ii7 is controll$ by "o or m p]sons t control ! organization1 7iii7 is a support$ organization 7z def9$ 9 section #eji7;f77#b77 dur+ ! taxable ye> ) respect to ! organization1 7iv7 is a support+ organization describ$ 9 section #eji7;a77#c7 dur+ ! taxable ye> ) respect to ! organization1 or 7v7 9 ! case ( an organization t is a volunt>y employees' b5efici>y association describ$ 9 section #eja7;a77#i71 e/abli%es1 ma9ta9s1 or makes contributions to su* volunt>y employees' b5efici>y association4 7,c7 ,liability = tax ,9 any case 9 :i* remun]ation f m ?an "o employ] is tak5 into acc\nt "u ?is p>agraph 9 det]m9+ ! tax impos$ by subsection 7a71 ea* su* employ] %all be liable = su* tax 9 an am\nt :i* be>s ! same ratio to ! total tax det]m9$ "u subsection 7a7 ) respect to su* remun]ation z-- 7i7 ! am\nt ( remun]ation paid by su* employ] ) respect to su* employee1 be>s to 7ii7 ! am\nt ( remun]ation paid by all su* employ]s to su* employee4 7#e7 ,excess p>a*ute paym5t ,= purposes det]m9+ ! tax impos$ by subsection 7a77#b7-- 7,a7 ,9 g5]al ,! t]m excess p>a*ute paym5t means an am\nt equal to ! excess ( any p>a*ute paym5t ov] ! portion ( ! base am\nt allocat$ to su* paym5t4 7,b7 ,p>a*ute paym5t ,! t]m p>a*ute paym5t means any paym5t 9 ! nature ( comp5sation to 7or = ! b5efit (7 a cov]$ employee if-- 7i7 su* paym5t is cont+5t on su* employee's sep>ation f employm5t ) ! employ]1 & 7ii7 ! aggregate pres5t value ( ! paym5ts 9 ! nature ( comp5sation to 7or = ! b5efit (7 su* individual :i* are cont+5t on su* sep>ation equals or exce$s an am\nt equal to #c times ! base am\nt4 ,su* t]m does n include any paym5t describ$ 9 section #bhj;,g7b77#f7 7relat+ to exemption = paym5ts "u qualifi$ plans7 or any paym5t made "u or to an annuity contract describ$ 9 section #djc7;b7 or a plan describ$ 9 section #deg7;b74 7,c7 ,base am\nt ,rules simil> to ! rules ( #bhj;,g7b77#c7 %all apply = purposes ( det]m9+ ! base am\nt4 7,d7 ,prop]ty transf]s2 pres5t value ,rules simil> to ! rules ( p>agraphs 7#c7 & 7#d7 ( section #bhj;,g7d7 %all apply4 7#f7 ,coord9ation ) d$uction limitation ,remun]ation ! d$uction = :i* is n all[$ by reason ( section #afb7m7 %all n be tak5 into acc\nt = purposes ( ?is section4 7d7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y to prev5t avoidance ( ! purposes ( ?is section ?r\gh ! p]=mance ( s]vices o!r ?an z an employee4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = sub*apt] ,d ( *apt] #db is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #difj4 ,tax on excess exempt organization executive comp5sation4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #chjc4 ,treatm5t ( qualifi$ equity grants 7a7 ,9 g5]al 7#a7 ,election to def] income ,section #hc is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,qualifi$ equity grants 7#a7 ,9 g5]al ,= purposes ( ?is subtitle1 if qualifi$ /ock is transf]r$ to a qualifi$ employee :o makes an election ) respect to su* /ock "u ?is subsection-- 7,a7 except z provid$ 9 subp>agraph 7,b71 no am\nt %all be includ$ 9 income "u subsection 7a7 = ! fir/ taxable ye> 9 :i* ! rights ( ! employee 9 su* /ock are transf]able or are n subject to a sub/antial risk ( =feiture1 :i*ev] is applicable1 & 7,b7 an am\nt equal to ! am\nt :i* w\ld be includ$ 9 income ( ! employee "u subsection 7a7 7det]m9$ )\t reg>d to ?is subsection7 %all be includ$ 9 income = ! taxable ye> ( ! employee :i* includes ! e>lie/ (-- 7i7 ! fir/ date su* qualifi$ /ock becomes transf]able 7includ+ transf]able to ! employ]71 7ii7 ! date ! employee fir/ becomes an exclud$ employee1 7iii7 ! fir/ date on :i* any /ock ( ! corporation :i* issu$ ! qualifi$ /ock becomes readily tradable on an e/abli%$ securities m>ket 7z det]m9$ by ! ,secret>y1 b n includ+ any m>ket unless su* m>ket is recogniz$ z an e/abli%$ securities m>ket by ! ,secret>y = purposes ( a provision ( ?is title o!r ?an ?is subsection71 7iv7 ! date t is #e ye>s aft] ! fir/ date ! rights ( ! employee 9 su* /ock are transf]able or are n subject to a sub/antial risk ( =feiture1 :i*ev] occurs e>li]1 or 7v7 ! date on :i* ! employee revokes 7at su* "t & 9 su* mann] z ! ,secret>y may provide7 ! election "u ?is subsection ) respect to su* /ock4 7#b7 ,qualifi$ /ock 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! t]m qualifi$ /ock means1 ) respect to any qualifi$ employee1 any /ock 9 a corporation :i* is ! employ] ( su* employee1 if-- 7i7 su* /ock is receiv$-- 7,i7 9 connection ) ! ex]cise ( an option1 or 7,,ii7 9 settlem5t ( a re/rict$ /ock unit1 & 7ii7 su* option or re/rict$ /ock unit 0 provid$ by ! corporation-- 7,i7 9 connection ) ! p]=mance ( s]vices z an employee1 & 7,,ii7 dur+ a cal5d> ye> 9 :i* su* corporation 0 an eligible corporation4 7,b7 ,limitation ,! t]m qualifi$ /ock %all n include any /ock if ! employee may sell su* /ock to1 or o!rwise receive ca% 9 lieu ( /ock f1 ! corporation at ! "t t ! rights ( ! employee 9 su* /ock fir/ become transf]able or n subject to a sub/antial risk ( =feiture4 7,c7 ,eligible corporation ,= purposes ( subp>agraph 7,a77ii77,,ii7-- 7i7 ,9 g5]al ,! t]m eligible corporation means1 ) respect to any cal5d> ye>1 any corporation if-- 7,i7 no /ock ( su* corporation 7or any pr$ecessor ( su* corporation7 is readily tradable on an e/abli%$ securities m>ket 7z det]m9$ "u p>agraph 7#a77;,b77iii77 dur+ any prec$+ cal5d> ye>1 & 7,,ii7 su* corporation has a writt5 plan "u :i*1 9 su* cal5d> ye>1 n less ?an #hj p]c5t ( all employees :o provide s]vices to su* corporation 9 ! ,unit$ ,/ates 7or any possession ( ! ,unit$ ,/ates7 are grant$ /ock options1 or re/rict$ /ock units1 ) ! same rights & privileges to receive qualifi$ /ock4 7ii7 ,same rights & privileges ,= purposes ( clause 7i77,,ii7-- 7,i7 except z provid$ 9 subclauses 7,,ii7 & 7,,iii71 ! det]m9ation ( rights & privileges ) respect to /ock %all be det]m9$ 9 a simil> mann] z provid$ "u section #dbc7;b77#e71 7,,ii7 employees %all n fail to be treat$ z hav+ ! same rights & privileges to receive qualifi$ /ock solely because ! numb] ( %>es available to all employees is n equal 9 am\nt1 s long z ! numb] ( %>es available to ea* employee is m ?an a de m9imis am\nt1 & 7,,iii7 rights & privileges ) respect to ! ex]cise ( an option %all n be treat$ z ! same z rights & privileges ) respect to ! settlem5t ( a re/rict$ /ock unit4 7iii7 ,employee ,= purposes ( clause 7i77,,ii71 ! t]m employee %all n include any employee describ$ 9 section #dihj;,e7d77#d7 or any exclud$ employee4 7iv7 ,special rule = cal5d> ye>s be=e #bjah ,9 ! case ( any cal5d> ye> beg9n+ be=e ,janu>y #a1 #bjah1 clause 7i77,,ii7 %all be appli$ )\t reg>d to :e!r ! rights & privileges ) respect to ! qualifi$ /ock are ! same4 7#c7 ,qualifi$ employee2 exclud$ employee ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ employee means any individual :o-- 7i7 is n an exclud$ employee1 & 7ii7 agrees 9 ! election made "u ?is subsection to meet su* requirem5ts z det]m9$ by ! ,secret>y to be necess>y to ensure t ! )hold+ requirem5ts ( ! corporation "u *apt] #bd ) respect to ! qualifi$ /ock are met4 7,b7 ,exclud$ employee ,! t]m exclud$ employee means1 ) respect to any corporation1 any individual-- 7i7 :o 0 a #a-p]c5t own] 7)9 ! mean+ ( section #daf7;i77#a77;,b77ii77 at any "t dur+ ! #aj prec$+ cal5d> ye>s1 7ii7 :o is or has be5 at any prior "t-- 7,i7 ! *ief executive (fic] ( su* corporation or an individual act+ 9 su* a capacity1 or 7,,ii7 ! *ief f9ancial (fic] ( su* corporation or an individual act+ 9 su* a capacity1 7iii7 :o be>s a relation%ip describ$ 9 section #cah7;a77#a7 to any individual describ$ 9 subclause 7,i7 or 7,,ii7 ( clause 7ii71 or 7iv7 :o has be5 = any ( ! #aj prec$+ taxable ye>s "o ( ! #d highe/ comp5sat$ (fic]s ( su* corporation det]m9$ ) respect to ea* su* taxable ye> on ! basis ( ! %>ehold] disclosure rules = comp5sation "u ! ,securities ,ex*ange ,act ( #aicd 7z if su* rules appli$ to su* corporation74 7#d7 ,election 7,a7 ,"t = mak+ election ,an election ) respect to qualifi$ /ock %all be made "u ?is subsection no lat] ?an #cj days aft] ! fir/ "t ! rights ( ! employee 9 su* /ock are transf]able or are n subject to a sub/antial risk ( =feiture1 :i*ev] occurs e>li]1 & %all be made 9 a mann] simil> to ! mann] 9 :i* an election is made "u subsection 7b74 7,b7 ,limitations ,no election may be made "u ?is section ) respect to any qualifi$ /ock if-- 7i7 ! qualifi$ employee has made an election "u subsection 7b7 ) respect to su* qualifi$ /ock1 7ii7 any /ock ( ! corporation :i* issu$ ! qualifi$ /ock is readily tradable on an e/abli%$ securities m>ket 7z det]m9$ "u p>agraph 7#a77;,b77iii77 at any "t be=e ! election is made1 or 7iii7 su* corporation pur*as$ any ( its out/&+ /ock 9 ! cal5d> ye> prec$+ ! cal5d> ye> :i* includes ! fir/ "t ! rights ( ! employee 9 su* /ock are transf]able or are n subject to a sub/antial risk ( =feiture1 unless-- 7,i7 n less ?an #be p]c5t ( ! total doll> am\nt ( ! /ock s pur*as$ is def]ral /ock1 & 7,,ii7 ! det]m9ation ( :i* individuals f :om def]ral /ock is pur*as$ is made on a reasonable basis4 7,c7 ,def9itions & special rules relat$ to limitation on /ock r$emptions 7i7 ,def]ral /ock ,= purposes ( ?is p>agraph1 ! t]m def]ral /ock means /ock ) respect to :i* an election is 9 effect "u ?is subsection4 7ii7 ,def]ral /ock ) respect to any individual n tak5 into acc\nt if individual holds def]ral /ock ) long] def]ral p]iod ,/ock pur*as$ by a corporation f any individual %all n be treat$ z def]ral /ock = purposes ( clause 7iii7 if su* individual 7imm$iately aft] su* pur*ase7 holds any def]ral /ock ) respect to :i* an election has be5 9 effect "u ?is subsection = a long] p]iod ?an ! election ) respect to ! /ock s pur*as$4 7iii7 ,pur*ase ( all out/&+ def]ral /ock ,! requirem5ts ( subclauses 7,i7 & 7,,ii7 ( subp>agraph 7,b77iii7 %all be treat$ z met if ! /ock s pur*as$ includes all ( ! corporation's out/&+ def]ral /ock4 7iv7 ,report+ ,any corporation :i* has out/&+ def]ral /ock z ( ! beg9n+ ( any cal5d> ye> & :i* pur*ases any ( its out/&+ /ock dur+ su* cal5d> ye> %all include on its return ( tax = ! taxable ye> 9 :i*1 or ) :i*1 su* cal5d> ye> ends ! total doll> am\nt ( its out/&+ /ock s pur*as$ dur+ su* cal5d> ye> & su* o!r in=mation z ! ,secret>y may require = purposes ( adm9i/]+ ?is p>agraph4 7#e7 ,controll$ gr\ps ,= purposes ( ?is subsection1 all corporations :i* are memb]s ( ! same controll$ gr\p ( corporations 7z def9$ 9 section #aefc7;a77 %all be treat$ z "o corporation4 7#f7 ,notice requirem5t ,any corporation t transf]s qualifi$ /ock to a qualifi$ employee %all1 at ! "t t 7or a reasonable p]iod be=e7 an am\nt attributable to su* /ock w\ld 7b = ?is subsection7 fir/ be includible 9 ! gross income ( su* employee-- 7,a7 c]tify to su* employee t su* /ock is qualifi$ /ock1 & 7,b7 notify su* employee-- 7i7 t ! employee may elect to def] income on su* /ock "u ?is subsection1 & 7ii7 t1 if ! employee makes su* an election-- 7,i7 ! am\nt ( income recogniz$ at ! end ( ! def]ral p]iod w be bas$ on ! value ( ! /ock at ! "t at :i* ! rights ( ! employee 9 su* /ock fir/ become transf]able or n subject to sub/antial risk ( =feiture1 not)/&+ :e!r ! value ( ! /ock has decl9$ dur+ ! def]ral p]iod1 7,,ii7 ! am\nt ( su* income recogniz$ at ! end ( ! def]ral p]iod w be subject to )hold+ "u section #cdja7;i7 at ! rate det]m9$ "u section #cdjb7t71 & 7,,iii7 ! responsibilities ( ! employee 7z det]m9$ by ! ,secret>y "u p>agraph 7#c77;,a77ii77 ) respect to su* )hold+4 7#g7 ,re/rict$ /ock units ,?is section 7o!r ?an ?is subsection71 includ+ any election "u subsection 7b71 %all n apply to re/rict$ /ock units4 4 7#b7 ,d$uction by employ] ,subsection 7h7 ( section #hc is am5d$ by /rik+ or 7d77#b7 & ins]t+ 7d77#b71 or 7i74 7b7 ,)hold+ 7#a7 ,"t ( )hold+ ,section #cdja is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,qualifi$ /ock = :i* an election is 9 effect "u section #hc7;i7 ,= purposes ( subsection 7a71 qualifi$ /ock 7z def9$ 9 section #hc7;i77 ) respect to :i* an election is made "u section #hc7;i7 %all be treat$ z wages-- 7#a7 receiv$ on ! e>lie/ date describ$ 9 section #hc7;i77#a77;,b71 & 7#b7 9 an am\nt equal to ! am\nt includ$ 9 income "u section #hc = ! taxable ye> :i* includes su* date4 4 7#b7 ,am\nt ( )hold+ ,section #cdjb is am5d$ by add+ at ! end ! foll[+ new subsection3 7t7 ,rate ( )hold+ = c]ta9 /ock ,9 ! case ( any qualifi$ /ock 7z def9$ 9 section #hc7;i77 ) respect to :i* an election is made "u section #hc7;i7-- 7#a7 ! rate ( tax "u subsection 7a7 %all n be less ?an ! maximum rate ( tax 9 effect "u section #a1 & 7#b7 su* /ock %all be treat$ = purposes ( section #ceja7;b7 9 ! same mann] z a non-ca% fr+e b5efit4 4 7c7 ,coord9ation ) o!r def]r$ comp5sation rules 7#a7 ,election to apply def]ral to /atutory options 7,a7 ,inc5tive /ock options ,section #dbb7;b7 is am5d$ by add+ at ! end ! foll[+3 ,su* t]m %all n include any option if an election is made "u section #hc7;i7 ) respect to ! /ock receiv$ 9 connection ) ! ex]cise ( su* option44 7,b7 ,employee /ock pur*ase plans ,section #dbc7;a7 is am5d$ by add+ at ! end ! foll[+ flu% s5t5ce3 ,! prec$+ s5t5ce %all n apply to any %>e ( /ock ) respect to :i* an election is made "u section #hc7;i74 4 7#b7 ,exclusion f def9ition ( nonqualifi$ def]r$ comp5sation plan ,subsection 7d7 ( section #dji;,a is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,treatm5t ( qualifi$ /ock ,an arrangem5t "u :i* an employee may receive qualifi$ /ock 7z def9$ 9 section #hc7;i77#b77 %all n be treat$ z a nonqualifi$ def]r$ comp5sation plan solely because ( an employee's election1 or ability to make an election1 to def] recognition ( income "u section #hc7;i74 4 7d7 ,in=mation report+ ,section #fjea7;a7 is am5d$ by /rik+ & at ! end ( p>agraph 7#ac71 by /rik+ ! p]iod at ! end ( p>agraph 7#ad7 & ins]t+ a comma1 & by ins]t+ aft] p>agraph 7#ad7 ! foll[+ new p>agraphs3 7#ae7 ! am\nt excludable f gross income "u subp>agraph 7,a7 ( section #hc7;i77#a71 7#af7 ! am\nt includible 9 gross income "u subp>agraph 7,b7 ( section #hc7;i77#a7 ) respect to an ev5t describ$ 9 su* subp>agraph :i* occurs 9 su* cal5d> ye>1 & 7#ag7 ! aggregate am\nt ( income :i* is be+ def]r$ pursuant to elections "u section #hc7;i71 det]m9$ z ( ! close ( ! cal5d> ye>4 4 7e7 ,p5alty = failure ( employ] ,to provide notice ( tax consequ5ces ,section #ffeb is am5d$ by add+ at ! end ! foll[+ new subsection3 7o7 ,failure to provide notice "u section #hc7;i7 ,9 ! case ( ea* failure to provide a notice z requir$ by section #hc7;i77#f71 at ! "t prescrib$ !re=1 unless x is %[n t su* failure is due to reasonable cause & n to willful neglect1 !re %all be paid1 on notice & dem& ( ! ,secret>y & 9 ! same mann] z tax1 by ! p]son fail+ to provide su* notice1 an am\nt equal to #ajj = ea* su* failure1 b ! total am\nt impos$ on su* p]son = all su* failures dur+ any cal5d> ye> %all n exce$ #ej1jjj4 4 7f7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to /ock attributable to options ex]cis$1 or re/rict$ /ock units settl$1 aft] ,decemb] #ca1 #bjag4 7#b7 ,requirem5t to provide notice ,! am5dm5ts made by subsection 7e7 %all apply to failures aft] ,decemb] #ca1 #bjag4 7g7 ,transition rule ,until su* "t z ! ,secret>y 7or ! ,secret>y's delegate7 issue regulations or o!r guidance = purposes ( implem5t+ ! requirem5ts ( p>agraph 7#b77;,c77i77,,ii7 ( section #hc7;i7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section71 or ! requirem5ts ( p>agraph 7#f7 ( su* section1 a corporation %all be treat$ z be+ 9 compliance ) su* requirem5ts 7respectively7 if su* corporation complies ) a reasonable good fai? int]pretation ( su* requirem5ts4 ,,iv ,taxation ( =eign income & =eign p]sons ,a ,e/abli%m5t ( p>ticipation exemption sy/em = taxation ( =eign income #djja4 ,d$uction = =eign-s\rce portion ( divid5ds receiv$ by dome/ic corporations f specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #bde ! foll[+ new section3 #bde;,a4 ,d$uction = =eign-s\rce portion ( divid5ds receiv$ by dome/ic corporations f specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,9 g5]al ,9 ! case ( any divid5d receiv$ f a specifi$ #aj-p]c5t own$ =eign corporation by a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* =eign corporation1 !re %all be all[$ z a d$uction an am\nt equal to ! =eign-s\rce portion ( su* divid5d4 7b7 ,specifi$ #aj-p]c5t own$ =eign corporation ,= purposes ( ?is section1 ! t]m specifi$ #aj-p]c5t own$ =eign corporation means any =eign corporation ) respect to :i* any dome/ic corporation is a ,unit$ ,/ates %>ehold]4 ,su* t]m %all n include any passive =eign inve/m5t company 7)9 ! mean+ ( subp>t ,d ( "p ,,vi ( sub*apt] ,p7 t is n a controll$ =eign corporation4 7c7 ,=eign-s\rce portion ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! =eign-s\rce portion ( any divid5d is an am\nt :i* be>s ! same ratio to su* divid5d z-- 7,a7 ! po/-#aihf undi/ribut$ =eign e>n+s ( ! specifi$ #aj-p]c5t own$ =eign corporation1 be>s to 7,b7 ! total po/-#aihf undi/ribut$ e>n+s ( su* =eign corporation4 7#b7 ,po/-#aihf undi/ribut$ e>n+s ,! t]m po/-#aihf undi/ribut$ e>n+s means ! am\nt ( ! e>n+s & pr(its ( ! specifi$ #aj-p]c5t own$ =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf-- 7,a7 z ( ! close ( ! taxable ye> ( ! specifi$ #aj-p]c5t own$ =eign corporation 9 :i* ! divid5d is di/ribut$1 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 7#c7 ,po/-#aihf undi/ribut$ =eign e>n+s ,! t]m po/-#aihf undi/ribut$ =eign e>n+s means ! portion ( ! po/-#aihf undi/ribut$ e>n+s :i* is attributable to nei!r-- 7,a7 income describ$ 9 subp>agraph 7,a7 ( section #bde7;a77#e71 nor 7,b7 divid5ds describ$ 9 subp>agraph 7,b7 ( su* section 7det]m9$ )\t reg>d to section #bde7;a77#ab774 7#d7 ,treatm5t ( di/ributions f e>n+s be=e #aihg 7,a7 ,9 g5]al ,9 ! case ( any divid5d paid out ( e>n+s & pr(its ( ! specifi$ #aj-p]c5t own$ =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ be=e ,janu>y #a1 #aihg-- 7i7 p>agraphs 7#a71 7#b71 & 7#c7 %all be appli$ )\t reg>d to ! phrase po/-#aihf ea* place x appe>s1 & 7ii7 p>agraph 7#b7 %all be appli$ by sub/itut+ aft] ! date specifi$ 9 section #caf7;a77#a7 = 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf4 7,b7 ,divid5ds paid fir/ out ( po/-#aihf e>n+s ,divid5ds %all be treat$ z paid out ( po/-#aihf undi/ribut$ e>n+s to ! ext5t !re(4 7#e7 ,treatm5t ( c]ta9 divid5ds 9 excess ( undi/ribut$ e>n+s ,9 ! case ( any divid5d f ! specifi$ #aj-p]c5t own$ =eign corporation :i* is 9 excess ( undi/ribut$ e>n+s 7z det]m9$ "u p>agraph 7#b7 aft] tak+ into acc\nt ! modifications describ$ 9 clauses 7i7 & 7ii7 ( p>agraph 7#d77;,a771 ! =eign-s\rce portion ( su* divid5d is an am\nt :i* be>s ! same ratio to su* divid5d z-- 7,a7 ! portion ( ! e>n+s & pr(its describ$ 9 subp>agraph 7,b7 :i* is attributable to nei!r income describ$ 9 p>agraph 7#c77;,a7 nor divid5ds describ$ 9 p>agraph 7#c77;,b71 be>s to 7,b7 ! e>n+s & pr(its ( su* corporation = ! taxable ye> 9 :i* su* di/ribution is made 7comput$ z ( ! close ( ! taxable ye> )\t dim9ution by reason ( any di/ributions made dur+ ! taxable ye>74 7d7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija = any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any divid5d = :i* a d$uction is all[$ "u ?is section4 7#b7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7e7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,application ( hold+ p]iod requirem5t ,section #bdf7;c7 is am5d$-- 7#a7 by /rik+ or #bde 9 p>agraph 7#a7 & ins]t+ #bde1 or #bde;,a1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,special rules = =eign s\rce portion ( divid5ds receiv$ f specifi$ #aj-p]c5t own$ =eign corporations 7,a7 #f-mon? hold+ p]iod requirem5t ,= purposes ( section #bde;,a-- 7i7 p>agraph 7#a77;,a7 %all be appli$-- 7,i7 by sub/itut+ #ahj days = #de daysea* place x appe>s1 & 7,,ii7 by sub/itut+ #cfa-;day p]iod = #ia-;day p]iod1 & 7ii7 p>agraph 7#b7 %all n apply4 7,b7 ,/atus mu/ be ma9ta9$ dur+ hold+ p]iod ,= purposes ( apply+ p>agraph 7#a7 ) respect to section #bde;,a1 ! taxpay] %all be treat$ z hold+ ! /ock ref]r$ to 9 p>agraph 7#a7 = any p]iod only if-- 7i7 ! specifi$ #aj-p]c5t own$ =eign corporation ref]r$ to 9 section #bde;,a7a7 is a specifi$ #aj-p]c5t own$ =eign corporation = su* p]iod1 & 7ii7 ! taxpay] is a ,unit$ ,/ates %>ehold] ) respect to su* specifi$ #aj-p]c5t own$ =eign corporation = su* p]iod4 4 7c7 ,application ( rules g5]ally applicable to d$uctions = divid5ds receiv$ 7#a7 ,treatm5t ( divid5ds f c]ta9 corporations ,section #bdf7;a77#a7 is am5d$ by /rik+ & #bde & ins]t+ #bde1 & #bde;,a4 7#b7 ,coord9ation ) section #ajei ,section #ajei7;b77#b77;,b7 is am5d$ by /rik+ or #bde & ins]t+ #bde1 or #bde;,a4 7d7 ,coord9ation ) =eign tax cr$it limitation ,section #ijd7;b7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,treatm5t ( divid5ds = :i* d$uction is all[$ "u section #bde;,a ,= purposes ( subsection 7a71 9 ! case ( a ,unit$ ,/ates %>ehold] ) respect to a specifi$ #aj-p]c5t own$ =eign corporation1 su* %>ehold]'s taxable income f s\rces )\t ! ,unit$ ,/ates 7& entire taxable income7 %all be det]m9$ )\t reg>d to-- 7,a7 ! =eign-s\rce portion ( any divid5d receiv$ f su* =eign corporation1 & 7,b7 any d$uctions prop]ly allocable or apportion$ to-- 7i7 income 7o!r ?an subp>t ,f income 7z def9$ 9 section #ieb7 & =eign high return am\nts 7z def9$ 9 section #iea;,a7b77 ) respect to /ock ( su* specifi$ #aj-p]c5t own$ =eign corporation1 or 7ii7 su* /ock 7to ! ext5t income ) respect to su* /ock is o!r ?an subp>t ,f income 7z s def9$7 or =eign high return am\nts 7z s def9$774 ,any t]m :i* is us$ 9 section #bde;,a & 9 ?is p>agraph %all h ! same mean+ = purposes ( ?is p>agraph z :5 us$ 9 su* section4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,section #bde7;a77#d7 is am5d$ by /rik+ section #ijb7;c77#a7 & ins]t+ section #bde;,a7c77#b7 appli$ by sub/itut+ qualifi$ #aj-p]c5t own$ =eign corporation = specifi$ #aj-p]c5t own$ =eign corporation ea* place x appe>s4 7#b7 ,section #iea7;b7 is am5d$ by /rik+ subp>t & ins]t+ title4 7#c7 ,section #ieg7;a7 is am5d$ by /rik+ subp>t 9 ! matt] prec$+ p>agraph 7#a7 & ins]t+ title4 7#d7 ,! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #bde ! foll[+ new item3 ,sec4 #bde;,a4 ,d$uction = =eign-s\rce portion ( divid5ds receiv$ by dome/ic corporations f specifi$ #aj-p]c5t own$ =eign corporations4 4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions made aft] 7&1 9 ! case ( ! am5dm5ts made by subsection 7d71 d$uctions ) respect to taxable ye>s end+ aft]7 ,decemb] #ca1 #bjag4 #djjb4 ,application ( p>ticipation exemption to inve/m5ts 9 ,unit$ ,/ates prop]ty 7a7 ,9 g5]al ,section #ief7;a7 is am5d$ 9 ! matt] prec$+ p>agraph 7#a7 by ins]t+ 7o!r ?an a corporation7 aft] ,unit$ ,/ates %>ehold]4 7b7 ,regulatory au?ority to prev5t abuse ,section #ief7;e7 is am5d$ by /rik+ includ+ regulations to prev5t & ins]t+ includ+ regulations-- 7#a7 to address ,unit$ ,/ates %>ehold]s t are p>tn]%ips ) corporate p>tn]s1 & 7#b7 to prev5t 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag4 #djjc4 ,limitation on losses ) respect to specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,basis 9 specifi$ #aj-p]c5t own$ =eign corporation r$uc$ by nontax$ portion ( divid5d = purposes ( det]m9+ loss 7#a7 ,9 g5]al ,section #ifa is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,basis 9 specifi$ #aj-p]c5t own$ =eign corporation r$uc$ by nontax$ portion ( divid5d = purposes ( det]m9+ loss ,if a dome/ic corporation receiv$ a divid5d f a specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7 9 any taxable ye>1 solely = purposes ( det]m9+ loss on any disposition ( /ock ( su* =eign corporation 9 su* taxable ye> or any subsequ5t taxable ye>1 ! basis ( su* dome/ic corporation 9 su* /ock %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( any d$uction all[able to su* dome/ic corporation "u section #bde;,a ) respect to su* /ock except to ! ext5t su* basis 0 r$uc$ "u section #ajei by reason ( a divid5d = :i* su* a d$uction 0 all[able4 4 7#b7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to di/ributions made aft] ,decemb] #ca1 #bjag4 7b7 ,treatm5t ( =eign bran* losses transf]r$ to specifi$ #aj-p]c5t own$ =eign corporations 7#a7 ,9 g5]al ,"p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #ia4 ,c]ta9 =eign bran* losses transf]r$ to specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,9 g5]al ,if a dome/ic corporation transf]s sub/antially all ( ! assets ( a =eign bran* 7)9 ! mean+ ( section #cfg7;a77#c77;,c77 to a specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7 ) respect to :i* x is a ,unit$ ,/ates %>ehold] aft] su* transf]1 su* dome/ic corporation %all include 9 gross income = ! taxable ye> :i* includes su* transf] an am\nt equal to ! transf]r$ loss am\nt ) respect to su* transf]4 7b7 ,transf]r$ loss am\nt ,= purposes ( ?is section1 ! t]m transf]r$ loss am\nt means1 ) respect to any transf] ( sub/antially all ( ! assets ( a =eign bran*1 ! excess 7if any7 (-- 7#a7 ! sum ( losses-- 7,a7 :i* 7 incurr$ by ! =eign bran* aft] ,decemb] #ca1 #bjag1 & be=e ! transf]1 & 7,b7 ) respect to :i* a d$uction 0 all[$ to ! taxpay]1 ov] 7#b7 ! sum (-- 7,a7 any taxable income ( su* bran* = a taxable ye> aft] ! taxable ye> 9 :i* ! loss 0 incurr$ & ?r\gh ! close ( ! taxable ye> ( ! transf]1 & 7,b7 any am\nt :i* is recogniz$ "u section #ijd7;f77#c7 on acc\nt ( ! transf]4 7c7 ,r$uction = recogniz$ ga9s 7#a7 ,9 g5]al ,9 ! case ( a transf] n describ$ 9 section #cfg7;a77#c77;,c71 ! transf]r$ loss am\nt %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( ga9 recogniz$ by ! taxpay] on acc\nt ( ! transf] 7o!r ?an am\nts tak5 into acc\nt "u subsection 7c77#b77;,b774 7#b7 ,coord9ation ) recognition "u section #cfg ,9 ! case ( a transf] describ$ 9 section #cfg7;a77#c77;,c71 ! transf]r$ loss am\nt %all n exce$ ! excess 7if any7 (-- 7,a7 ! excess ( ! am\nt describ$ 9 section #cfg7;a77#c77;,c77i7 ov] ! am\nt describ$ 9 section #cfg7;a77#c77;,c77ii7 ) respect to su* transf]1 ov] 7,b7 ! am\nt ( ga9 recogniz$ "u section #cfg7;a77#c77;,c7 ) respect to su* transf]4 7d7 ,s\rce ( income ,am\nts includ$ 9 gross income "u ?is section %all be treat$ z d]iv$ f s\rces )9 ! ,unit$ ,/ates4 7e7 ,basis adju/m5ts ,consi/5t ) su* regulations or o!r guidance z ! ,secret>y may prescribe1 prop] adju/m5ts %all be made 9 ! adju/$ basis ( ! taxpay]'s /ock 9 ! specifi$ #aj-p]c5t own$ =eign corporation to :i* ! transf] is made1 & 9 ! transf]ee's adju/$ basis 9 ! prop]ty transf]r$1 to reflect am\nts includ$ 9 gross income "u ?is section4 4 7#b7 ,am\nts recogniz$ "u section #cfg on transf] ( =eign bran* ) previ\sly d$uct$ losses treat$ z ,unit$ ,/ates s\rce ,section #cfg7;a77#c77;,c7 is am5d$ by /rik+ outside 9 ! la/ s5t5ce & ins]t+ )94 7#c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ia4 ,c]ta9 =eign bran* losses transf]r$ to specifi$ #aj-p]c5t own$ =eign corporations4 4 7#d7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to transf]s aft] ,decemb] #ca1 #bjag4 #djjd4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation 7a7 ,9 g5]al ,section #ife is am5d$ to read z foll[s3 #ife4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation 7a7 ,treatm5t ( def]r$ =eign income z subp>t ,f income ,9 ! case ( ! la/ taxable ye> ( a def]r$ =eign income corporation :i* beg9s be=e ,janu>y #a1 #bjah1 ! subp>t ,f income ( su* =eign corporation 7z o!rwise det]m9$ = su* taxable ye> "u section #ieb7 %all be increas$ by ! great] (-- 7#a7 ! accumulat$ po/-#aihf def]r$ =eign income ( su* corporation det]m9$ z ( ,novemb] #b1 #bjag1 or 7#b7 ! accumulat$ po/-#aihf def]r$ =eign income ( su* corporation det]m9$ z ( ,decemb] #ca1 #bjag4 7b7 ,r$uction 9 am\nts includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s ( specifi$ =eign corporations ) deficits 9 e>n+s & pr(its 7#a7 ,9 g5]al ,9 ! case ( a taxpay] :i* is a ,unit$ ,/ates %>ehold] ) respect to at lea/ "o def]r$ =eign income corporation & at lea/ "o ,e,p deficit =eign corporation1 ! am\nt :i* w\ld 7b = ?is subsection7 be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( subsection 7a7 z su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! subp>t ,f income ( ea* def]r$ =eign income corporation %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ,e,p deficit :i* is allocat$ "u p>agraph 7#b7 to su* def]r$ =eign income corporation4 7#b7 ,allocation ( aggregate =eign ,e,p deficit ,! aggregate =eign ,e,p deficit ( any ,unit$ ,/ates %>ehold] %all be allocat$ among ! def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold] 9 an am\nt :i* be>s ! same proportion to su* aggregate z-- 7,a7 su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( ea* su* def]r$ =eign income corporation1 be>s to 7,b7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( all def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold]4 7#c7 ,def9itions relat$ to ,e,p deficits ,= purposes ( ?is subsection-- 7,a7 ,aggregate =eign ,e,p deficit ,! t]m aggregate =eign ,e,p deficit means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! aggregate ( su* %>ehold]'s pro rata %>es ( ! specifi$ ,e,p deficits ( ! ,e,p deficit =eign corporations ( su* %>ehold]4 7,b7 ,e,p deficit =eign corporation ,! t]m ,e,p deficit =eign corporation means1 ) respect to any taxpay]1 any specifi$ =eign corporation ) respect to :i* su* taxpay] is a ,unit$ ,/ates %>ehold]1 if-- 7i7 su* specifi$ =eign corporation has a deficit 9 po/-#aihf e>n+s & pr(its1 & 7ii7 z ( ,novemb] #b1 #bjag-- 7,i7 su* corporation 0 a specifi$ =eign corporation1 & 7,,ii7 su* taxpay] 0 a ,unit$ ,/ates %>ehold] ( su* corporation4 7,c7 ,specifi$ ,e,p deficit ,! t]m specifi$ ,e,p deficit means1 ) respect to any ,e,p deficit =eign corporation1 ! am\nt ( ! deficit ref]r$ to 9 subp>agraph 7,b74 7#d7 ,nett+ among ,unit$ ,/ates %>ehold]s 9 same affiliat$ gr\p 7,a7 ,9 g5]al ,9 ! case ( any affiliat$ gr\p :i* includes at lea/ "o ,e,p net surplus %>ehold] & "o ,e,p net deficit %>ehold]1 ! am\nt :i* w\ld 7b = ?is p>agraph7 be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( subsection 7a7 by ea* su* ,e,p net surplus %>ehold] %all be r$uc$ 7b n bel[ z]o7 by su* %>ehold]'s applicable %>e ( ! affiliat$ gr\p's aggregate unus$ ,e,p deficit4 7,b7 ,e,p net surplus %>ehold] ,= purposes ( ?is p>agraph1 ! t]m ,e,p net surplus %>ehold] means any ,unit$ ,/ates %>ehold] :i* w\ld 7det]m9$ )\t reg>d to ?is p>agraph7 take into acc\nt an am\nt great] ?an z]o "u section #iea7;a77#a7 by reason ( subsection 7a74 7,c7 ,e,p net deficit %>ehold] ,= purposes ( ?is p>agraph1 ! t]m ,e,p net deficit %>ehold] means any ,unit$ ,/ates %>ehold] if-- 7i7 ! aggregate =eign ,e,p deficit ) respect to su* %>ehold] 7z def9$ 9 p>agraph 7#c77;,a771 exce$s 7ii7 ! am\nt :i* w\ld 7b = ?is subsection7 be tak5 into acc\nt by su* %>ehold] "u section #iea7;a77#a7 by reason ( subsection 7a74 7,d7 ,aggregate unus$ ,e,p deficit ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m aggregate unus$ ,e,p deficit means1 ) respect to any affiliat$ gr\p1 ! less] (-- 7,i7 ! sum ( ! excesses describ$ 9 subp>agraph 7,c71 det]m9$ ) respect to ea* ,e,p net deficit %>ehold] 9 su* gr\p1 or 7,,ii7 ! am\nt det]m9$ "u subp>agraph 7,e77ii74 7ii7 ,r$uction ) respect to ,e,p net deficit %>ehold]s :i* are n :olly own$ by ! affiliat$ gr\p ,if ! gr\p own]%ip p]c5tage ( any ,e,p net deficit %>ehold] is less ?an #ajj p]c5t1 ! am\nt ( ! excess describ$ 9 subp>agraph 7,c7 :i* is tak5 into acc\nt "u clause 7i77,i7 ) respect to su* ,e,p net deficit %>ehold] %all be su* gr\p own]%ip p]c5tage ( su* am\nt4 7,e7 ,applicable %>e ,= purposes ( ?is p>agraph1 ! t]m applicable %>e means1 ) respect to any ,e,p net surplus %>ehold] 9 any affiliat$ gr\p1 ! am\nt :i* be>s ! same proportion to su* gr\p's aggregate unus$ ,e,p deficit z-- 7i7 ! product (-- 7,i7 su* %>ehold]'s gr\p own]%ip p]c5tage1 multipli$ by 7,,ii7 ! am\nt :i* w\ld 7b = ?is p>agraph7 be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( subsection 7a7 by su* %>ehold]1 be>s to 7ii7 ! aggregate am\nt det]m9$ "u clause 7i7 ) respect to all ,e,p net surplus %>ehold]s 9 su* gr\p4 7,f7 ,gr\p own]%ip p]c5tage ,= purposes ( ?is p>agraph1 ! t]m gr\p own]%ip p]c5tage means1 ) respect to any ,unit$ ,/ates %>ehold] 9 any affiliat$ gr\p1 ! p]c5tage ( ! value ( ! /ock ( su* ,unit$ ,/ates %>ehold] :i* is held by o!r includible corporations 9 su* affiliat$ gr\p4 ,not)/&+ ! prec$+ s5t5ce1 ! gr\p own]%ip p]c5tage ( ! common p>5t ( ! affiliat$ gr\p is #ajj p]c5t4 ,any t]m us$ 9 ?is subp>agraph :i* is also us$ 9 section #aejd %all h ! same mean+ z :5 us$ 9 su* section4 7c7 ,application ( p>ticipation exemption to includ$ income 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 !re %all be all[$ z a d$uction = ! taxable ye> 9 :i* an am\nt is includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a77#a7 by reason ( ?is section an am\nt equal to ! sum (-- 7,a7 ! ,unit$ ,/ates %>ehold]'s #g p]c5t rate equival5t p]c5tage ( ! excess 7if any7 (-- 7i7 ! am\nt s includ$ z gross income1 ov] 7ii7 ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ca% position1 plus 7,b7 ! ,unit$ ,/ates %>ehold]'s #ad p]c5t rate equival5t p]c5tage ( s mu* ( ! am\nt describ$ 9 subp>agraph 7,a77ii7 z does n exce$ ! am\nt describ$ 9 subp>agraph 7,a77i74 7#b7 #g & #ad p]c5t rate equival5t p]c5tages ,= purposes ( ?is subsection-- 7,a7 #g p]c5t rate equival5t p]c5tage ,! t]m #g p]c5t rate equival5t p]c5tage means1 ) respect to any ,unit$ ,/ates %>ehold] = any taxable ye>1 ! p]c5tage :i* w\ld result 9 ! am\nt to :i* su* p]c5tage applies be+ subject to a #g p]c5t rate ( tax det]m9$ by only tak+ into acc\nt a d$uction equal to su* p]c5tage ( su* am\nt & ! highe/ rate ( tax specifi$ 9 section #aa = su* taxable ye>4 ,9 ! case ( any taxable ye> ( a ,unit$ ,/ates %>ehold] to :i* section #ae applies1 ! highe/ rate ( tax "u section #aa be=e ! effective date ( ! *ange 9 rates & ! highe/ rate ( tax "u section #aa aft] ! effective date ( su* *ange %all ea* be tak5 into acc\nt "u ! prec$+ s5t5ce 9 ! same proportions z ! portion ( su* taxable ye> :i* is be=e & aft] su* effective date1 respectively4 7,b7 #ad p]c5t rate equival5t p]c5tage ,! t]m #ad p]c5t rate equival5t p]c5tage means1 ) respect to any ,unit$ ,/ates %>ehold] = any taxable ye>1 ! p]c5tage det]m9$ "u subp>agraph 7,a7 appli$ by sub/itut+ #ad p]c5t rate ( tax = #g p]c5t rate ( tax4 7#c7 ,aggregate =eign ca% position ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m aggregate =eign ca% position means1 ) respect to any ,unit$ ,/ates %>ehold]1 "o-?ird ( ! sum (-- 7i7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! ca% position ( ea* specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] det]m9$ z ( ,novemb] #b1 #bjag1 7ii7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! la/ taxable ye> ( ea* su* specifi$ =eign corporation :i* ends be=e ,novemb] #b1 #bjag1 & 7iii7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! taxable ye> ( ea* su* specifi$ =eign corporation :i* prec$es ! taxable ye> ref]r$ to 9 clause 7ii74 ,9 ! case ( any =eign corporation :i* did n exi/ z ( ! det]m9ation date describ$ 9 clause 7ii7 or 7iii71 ?is subp>agraph %all be appli$ sep>ately to su* =eign corporation by n tak+ into acc\nt su* clause & by sub/itut+ "o-half 7#ajj p]c5t 9 ! case t bo? clauses 7ii7 & 7iii7 are disreg>d$7 = "o-?ird4 7,b7 ,ca% position ,= purposes ( ?is p>agraph1 ! ca% position ( any specifi$ =eign corporation is ! sum (-- 7i7 ca% held by su* =eign corporation1 7ii7 ! net acc\nts receivable ( su* =eign corporation1 plus 7iii7 ! fair m>ket value ( ! foll[+ assets held by su* corporation3 7,i7 ,actively trad$ p]sonal prop]ty = :i* !re is an e/abli%$ f9ancial m>ket4 7,,ii7 ,comm]cial pap]1 c]tificates ( deposit1 ! securities ( ! ,f$]al gov]nm5t & ( any ,/ate or =eign gov]nm5t4 7,,iii7 ,any =eign curr5cy4 7,,iv7 ,any obligation ) a t]m ( less ?an "o ye>4 7,v7 ,any asset :i* ! ,secret>y id5tifies z be+ economically equival5t to any asset describ$ 9 ?is subp>agraph4 7,c7 ,net acc\nts receivable ,= purposes ( ?is p>agraph1 ! t]m net acc\nts receivable means1 ) respect to any specifi$ =eign corporation1 ! excess 7if any7 (-- 7i7 su* corporation's acc\nts receivable1 ov] 7ii7 su* corporation's acc\nts payable 7det]m9$ consi/5t ) ! rules ( section #dfa74 7,d7 ,prev5tion ( d\ble c\nt+ 7i7 ,9 g5]al ,! applicable p]c5tage ( ea* specifi$ ca% position ( a specifi$ =eign corporation %all n be tak5 into acc\nt by-- 7,i7 ! ,unit$ ,/ates %>ehold] ref]r$ to 9 clause 7ii7 ) respect to su* position1 or 7,,ii7 any ,unit$ ,/ates %>ehold] :i* is an includible corporation 9 ! same affiliat$ gr\p z su* ,unit$ ,/ates %>ehold] ref]r$ to 9 clause 7ii74 7ii7 ,specifi$ ca% position ,= purposes ( ?is subp>agraph1 ! t]m specifi$ ca% position means-- 7,i7 am\nts describ$ 9 subp>agraph 7,b77ii7 to ! ext5t su* am\nts are receivable f ano!r specifi$ =eign corporation ) respect to any ,unit$ ,/ates %>ehold]1 7,,ii7 am\nts describ$ 9 subp>agraph 7,b77iii77,i7 to ! ext5t su* am\nts consi/ ( an equity int]e/ 9 ano!r specifi$ =eign corporation ) respect to any ,unit$ ,/ates %>ehold]1 & 7,,iii7 am\nts describ$ 9 subp>agraph 7,b77iii77,,iv7 to ! ext5t t ano!r specifi$ =eign corporation ) respect to any ,unit$ ,/ates %>ehold] is obligat$ to repay su* am\nt4 7iii7 ,applicable p]c5tage ,= purposes ( ?is subp>agraph1 ! t]m applicable p]c5tage means-- 7,i7 ) respect to ea* specifi$ ca% position describ$ 9 subclause 7,i7 or 7,,iii7 ( clause 7ii71 ! pro rata %>e ( ! ,unit$ ,/ates %>ehold] ref]r$ to 9 clause 7ii7 ) respect to ! specifi$ =eign corporation ref]r$ to 9 su* clause1 & 7,,ii7 ) respect to ea* specifi$ ca% position describ$ 9 clause 7ii77,,ii71 ! ratio 7express$ z a p]c5tage & n 9 excess ( #ajj p]c5t7 ( ! ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! ca% position ( ! specifi$ =eign corporation ref]r$ to 9 su* clause divid$ by ! am\nt ( su* specifi$ ca% position4 ,= purposes ( ?is subp>agraph1 a sep>ate applicable p]c5tage %all be det]m9$ "u ea* ( subclauses 7,i7 & 7,,ii7 ) respect to ea* specifi$ =eign corporation ref]r$ to 9 clause 7ii7 ) respect to :i* a specifi$ ca% position is det]m9$ = ! specifi$ =eign corporation ref]r$ to 9 clause 7i74 7iv7 ,r$uction ) respect to affiliat$ gr\p memb]s n :olly own$ by ! affiliat$ gr\p ,= purposes ( clause 7i77,,ii71 9 ! case ( an includible corporation ! gr\p own]%ip p]c5tage ( :i* is less ?an #ajj p]c5t 7z det]m9$ "u subsection 7b77#d77;,f771 ! am\nt n take into acc\nt by reason ( su* clause %all be ! gr\p own]%ip p]c5tage ( su* am\nt 7det]m9$ )\t reg>d to ?is clause74 7,e7 ,c]ta9 block$ assets n tak5 into acc\nt ,a ca% position ( a specifi$ =eign corporation %all n be tak5 into acc\nt "u subp>agraph 7,a7 if su* position c\ld n 7z ( ! date t x w\ld o!rwise h be5 tak5 into acc\nt "u clause 7i71 7ii71 or 7iii7 ( subp>agraph 7,a77 h be5 di/ribut$ by su* specifi$ =eign corporation to ,unit$ ,/ates %>ehold]s ( su* specifi$ =eign corporation because ( curr5cy or o!r re/rictions or limitations impos$ "u ! laws ( any =eign c\ntry 7)9 ! mean+ ( section #ifd7;b774 7,f7 ,ca% positions ( c]ta9 non-corporate entities tak5 into acc\nt ,an entity 7o!r ?an a dome/ic corporation7 %all be treat$ z a specifi$ =eign corporation ( a ,unit$ ,/ates %>ehold] = purposes ( det]m9+ su* ,unit$ ,/ates %>ehold]'s aggregate =eign ca% position if any int]e/ 9 su* entity is held by a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] 7det]m9$ aft] application ( ?is subp>agraph7 & su* entity w\ld be a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] if su* entity 7 a =eign corporation4 7,g7 ,"t ( c]ta9 det]m9ations ,= purposes ( ?is p>agraph1 ! det]m9ation ( :e!r a p]son is a ,unit$ ,/ates %>ehold]1 :e!r a p]son is a specifi$ =eign corporation1 & ! pro rata %>e ( a ,unit$ ,/ates %>ehold] ) respect to a specifi$ =eign corporation1 %all be det]m9$ z ( ! end ( ! taxable ye> describ$ 9 subsection 7a74 7,h7 ,anti-abuse ,if ! ,secret>y det]m9es t ! pr9cipal purpose ( any transaction 0 to r$uce ! aggregate =eign ca% position tak5 into acc\nt "u ?is subsection1 su* transaction %all be disreg>d$ = purposes ( ?is subsection4 7d7 ,def]r$ =eign income corporation2 accumulat$ po/-#aihf def]r$ =eign income ,= purposes ( ?is section-- 7#a7 ,def]r$ =eign income corporation ,! t]m def]r$ =eign income corporation means1 ) respect to any ,unit$ ,/ates %>ehold]1 any specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] :i* has accumulat$ po/-#aihf def]r$ =eign income 7z ( ! date ref]r$ to 9 p>agraph 7#a7 or 7#b7 ( subsection 7a71 :i*ev] is applicable ) respect to su* =eign corporation7 great] ?an z]o4 7#b7 ,accumulat$ po/-#aihf def]r$ =eign income ,! t]m accumulat$ po/-#aihf def]r$ =eign income means ! po/-#aihf e>n+s & pr(its except to ! ext5t su* e>n+s-- 7,a7 are attributable to income ( ! specifi$ =eign corporation :i* is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates & subject to tax "u ?is *apt]1 or 7,b7 if di/ribut$1 w\ld be exclud$ f ! gross income ( a ,unit$ ,/ates %>ehold] "u section #iei4 ,to ! ext5t provid$ 9 regulations or o!r guidance prescrib$ by ! ,secret>y1 9 ! case ( any controll$ =eign corporation :i* has %>ehold]s :i* are n ,unit$ ,/ates %>ehold]s1 accumulat$ po/-#aihf def]r$ =eign income %all be appropriately r$uc$ by am\nts :i* w\ld be describ$ 9 subp>agraph 7,b7 if su* %>ehold]s 7 ,unit$ ,/ates %>ehold]s4 7#c7 ,po/-#aihf e>n+s & pr(its ,! t]m po/-#aihf e>n+s & pr(its means ! e>n+s & pr(its ( ! =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf1 & det]m9$-- 7,a7 z ( ! date ref]r$ to 9 p>agraph 7#a7 or 7#b7 ( subsection 7a71 :i*ev] is applicable ) respect to su* =eign corporation1 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ ! taxable ye> end+ ) or includ+ su* date1 & 7,c7 increas$ by ! am\nt ( any qualifi$ deficit 7)9 ! mean+ ( section #ieb7;c77#a77;,b77ii77 aris+ be=e ,janu>y #a1 #bjah1 :i* is treat$ z a qualifi$ deficit 7)9 ! mean+ ( su* section z am5d$ by ! ,tax ,cuts & ,jobs ,act7 = purposes ( su* =eign corporation's fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag4 7e7 ,specifi$ =eign corporation 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m specifi$ =eign corporation means-- 7,a7 any controll$ =eign corporation1 & 7,b7 any =eign corporation ) respect to :i* "o or m dome/ic corporations is a ,unit$ ,/ates %>ehold] 7det]m9$ )\t reg>d to section #ieh7;b77#d774 7#b7 ,application to c]ta9 =eign corporations ,= purposes ( sections #iea & #ifa1 a =eign corporation describ$ 9 p>agraph 7#a77;,b7 %all be treat$ z a controll$ =eign corporation solely = purposes ( tak+ into acc\nt ! subp>t ,f income ( su* corporation "u subsection 7a7 7& = purposes ( apply+ subsection 7f774 7#c7 ,exception = passive =eign inve/m5t companies ,! t]m specifi$ =eign corporation %all n include any passive =eign inve/m5t company 7)9 ! mean+ ( subp>t ,d ( "p ,,vi ( sub*apt] ,p7 t is n a controll$ =eign corporation4 7f7 ,det]m9ations ( pro rata %>e ,= purposes ( ?is section1 ! det]m9ation ( any ,unit$ ,/ates %>ehold]'s pro rata %>e ( any am\nt ) respect to any specifi$ =eign corporation %all be det]m9$ "u rules simil> to ! rules ( section #iea7;a77#b7 by treat+ su* am\nt 9 ! same mann] z subp>t ,f income 7& by treat+ su* specifi$ =eign corporation z a controll$ =eign corporation74 7g7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija = ! applicable p]c5tage ( any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any am\nt = :i* a d$uction is all[$ "u ?is section4 7#b7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means ! am\nt 7express$ z a p]c5tage7 equal to ! sum (-- 7,a7 #hj p]c5t ( ! ratio (-- 7i7 ! excess to :i* subsection 7c77#a77;,a7 applies1 divid$ by 7ii7 ! sum ( su* excess plus ! am\nt to :i* subsection 7c77#a77;,b7 applies1 plus 7,b7 #fj p]c5t ( ! ratio (-- 7i7 ! am\nt to :i* subsection 7c77#a77;,b7 applies1 divid$ by 7ii7 ! sum describ$ 9 subp>agraph 7,a77ii74 7#c7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7#d7 ,coord9ation ) section #gh ,) respect to ! taxes treat$ z paid or accru$ by a dome/ic corporation ) respect to am\nts :i* are includible 9 gross income ( su* dome/ic corporation by reason ( ?is section1 section #gh %all apply only to s mu* ( su* taxes z be>s ! same proportion to ! am\nt ( su* taxes z-- 7,a7 ! excess (-- 7i7 ! am\nts :i* are includible 9 gross income ( su* dome/ic corporation by reason ( ?is section1 ov] 7ii7 ! d$uction all[able "u subsection 7c7 ) respect to su* am\nts1 be>s to 7,b7 su* am\nts4 7#e7 ,ext5sion ( =eign tax cr$it c>ryov] p]iod ,) respect to any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any am\nt = :i* a d$uction is all[$ "u ?is section1 section #ijd7;c7 %all be appli$ by sub/itut+ fir/ #bj succe$+ taxable ye>s = fir/ #aj succe$+ taxable ye>s4 7h7 ,election to pay liability 9 in/allm5ts 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold] may elect to pay ! net tax liability "u ?is section 9 #h equal in/allm5ts4 7#b7 ,date = paym5t ( in/allm5ts ,if an election is made "u p>agraph 7#a71 ! fir/ in/allm5t %all be paid on ! due date 7det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return7 = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a7 & ea* succe$+ in/allm5t %all be paid on ! due date 7z s det]m9$7 = ! return ( tax = ! taxable ye> foll[+ ! taxable ye> ) respect to :i* ! prec$+ in/allm5t 0 made4 7#c7 ,accel]ation ( paym5t ,if !re is an addition to tax = failure to timely pay any in/allm5t requir$ "u ?is subsection1 a liquidation or sale ( sub/antially all ! assets ( ! taxpay] 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by ! taxpay]1 or any simil> circum/ance1 !n ! unpaid portion ( all rema9+ in/allm5ts %all be due on ! date ( su* ev5t 7or 9 ! case ( a title #aa or simil> case1 ! day be=e ! petition is fil$74 ,! prec$+ s5t5ce %all n apply to ! sale ( sub/antially all ! assets ( a taxpay] to a buy] if su* buy] ent]s into an agreem5t ) ! ,secret>y "u :i* su* buy] is liable = ! rema9+ in/allm5ts due "u ?is subsection 9 ! same mann] z if su* buy] 7 ! taxpay]4 7#d7 ,proration ( defici5cy to in/allm5ts ,if an election is made "u p>agraph 7#a7 to pay ! net tax liability "u ?is section 9 in/allm5ts & a defici5cy has be5 assess$ ) respect to su* net tax liability1 ! defici5cy %all be prorat$ to ! in/allm5ts payable "u p>agraph 7#a74 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has n arriv$ %all be collect$ at ! same "t z1 & z a "p (1 su* in/allm5t4 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has arriv$ %all be paid ^u notice & dem& f ! ,secret>y4 ,?is subsection %all n apply if ! defici5cy is due to neglig5ce1 to int5tional disreg>d ( rules & regulations1 or to fraud ) int5t to evade tax4 7#e7 ,election ,any election "u p>agraph 7#a7 %all be made n lat] ?an ! due date = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a7 & %all be made 9 su* mann] z ! ,secret>y may provide4 7#f7 ,net tax liability "u ?is section ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! net tax liability "u ?is section ) respect to any ,unit$ ,/ates %>ehold] is ! excess 7if any7 (-- 7i7 su* taxpay]'s net income tax = ! taxable ye> 9 :i* an am\nt is includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a77#a7 by reason ( ?is section1 ov] 7ii7 su* taxpay]'s net income tax = su* taxable ye> det]m9$-- 7,i7 )\t reg>d to ?is section1 & 7,,ii7 )\t reg>d to any income1 d$uction1 or cr$it1 prop]ly attributable to a divid5d receiv$ by su* ,unit$ ,/ates %>ehold] f any def]r$ =eign income corporation4 7,b7 ,net income tax ,! t]m net income tax means ! regul> tax liability r$uc$ by ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d ( "p ,,iv ( sub*apt] ,a4 7i7 ,special rules = ,s corporation %>ehold]s 7#a7 ,9 g5]al ,9 ! case ( any ,s corporation :i* is a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 ea* %>ehold] ( su* ,s corporation may elect to def] paym5t ( su* %>ehold]'s net tax liability "u ?is section ) respect to su* ,s corporation until ! %>ehold]'s taxable ye> :i* includes ! trigg]+ ev5t ) respect to su* liability4 ,any net tax liability paym5t ( :i* is def]r$ "u ! prec$+ s5t5ce %all be assess$ on ! return z an addition to tax 9 ! %>ehold]'s taxable ye> :i* includes su* trigg]+ ev5t4 7#b7 ,trigg]+ ev5t 7,a7 ,9 g5]al ,9 ! case ( any %>ehold]'s net tax liability "u ?is section ) respect to any ,s corporation1 ! trigg]+ ev5t ) respect to su* liability is :i*ev] ( ! foll[+ occurs fir/3 7i7 ,su* corporation ceases to be an ,s corporation 7det]m9$ z ( ! fir/ day ( ! fir/ taxable ye> t su* corporation is n an ,s corporation74 7ii7 ,a liquidation or sale ( sub/antially all ! assets ( su* ,s corporation 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by su* ,s corporation1 su* ,s corporation ceases to exi/1 or any simil> circum/ance4 7iii7 ,a transf] ( any %>e ( /ock 9 su* ,s corporation by ! taxpay] 7includ+ by reason ( dea?1 or o!rwise74 7,b7 ,p>tial transf]s ( /ock ,9 ! case ( a transf] ( less ?an all ( ! taxpay]'s %>es ( /ock 9 ! ,s corporation1 su* transf] %all only be a trigg]+ ev5t ) respect to s mu* ( ! taxpay]'s net tax liability "u ?is section ) respect to su* ,s corporation z is prop]ly allocable to su* /ock4 7,c7 ,transf] ( liability ,a transf] describ$ 9 clause 7iii7 %all n be treat$ z a trigg]+ ev5t if ! transf]ee ent]s into an agreem5t ) ! ,secret>y "u :i* su* transf]ee is liable = net tax liability ) respect to su* /ock 9 ! same mann] z if su* transf]ee 7 ! taxpay]4 7#c7 ,net tax liability ,a %>ehold]'s net tax liability "u ?is section ) respect to any ,s corporation is ! net tax liability "u ?is section :i* w\ld be det]m9$ "u subsection 7h77#f7 if ! only subp>t ,f income tak5 into acc\nt by su* %>ehold] by reason ( ?is section 7 allocations f su* ,s corporation4 7#d7 ,election to pay def]r$ liability 9 in/allm5ts ,9 ! case ( a taxpay] :i* elects to def] paym5t "u p>agraph 7#a7-- 7,a7 subsection 7h7 %all be appli$ sep>ately ) respect to ! liability to :i* su* election applies1 7,b7 an election "u subsection 7h7 ) respect to su* liability %all be treat$ z timely made if made n lat] ?an ! due date = ! return ( tax = ! taxable ye> 9 :i* ! trigg]+ ev5t ) respect to su* liability occurs1 7,c7 ! fir/ in/allm5t "u subsection 7h7 ) respect to su* liability %all be paid n lat] ?an su* due date 7b det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return71 & 7,d7 if ! trigg]+ ev5t ) respect to any net tax liability is describ$ 9 p>agraph 7#b77;,a77ii71 an election "u subsection 7h7 ) respect to su* liability may be made only ) ! cons5t ( ! ,secret>y4 7#e7 ,jo9t & sev]al liability ( ,s corporation ,if any %>ehold] ( an ,s corporation elects to def] paym5t "u p>agraph 7#a71 su* ,s corporation %all be jo9tly & sev]ally liable = su* paym5t & any p5alty1 addition to tax1 or additional am\nt attributable !reto4 7#f7 ,ext5sion ( limitation on collection ,not)/&+ any o!r provision ( law1 any limitation on ! "t p]iod = ! collection ( a liability def]r$ "u ?is subsection %all n be treat$ z beg9n+ be=e ! date ( ! trigg]+ ev5t ) respect to su* liability4 7#g7 ,annual report+ ( net tax liability 7,a7 ,9 g5]al ,any %>ehold] ( an ,s corporation :i* makes an election "u p>agraph 7#a7 %all report ! am\nt ( su* %>ehold]'s def]r$ net tax liability on su* %>ehold]'s return ( tax = ! taxable ye> = :i* su* election is made & on ! return ( tax = ea* taxable ye> !reaft] until su* am\nt has be5 fully assess$ on su* returns4 7,b7 ,def]r$ net tax liability ,= purposes ( ?is p>agraph1 ! t]m def]r$ net tax liability means1 ) respect to any taxable ye>1 ! am\nt ( net tax liability paym5t ( :i* has be5 def]r$ "u p>agraph 7#a7 & :i* has n be5 assess$ on a return ( tax = any prior taxable ye>4 7,c7 ,failure to report ,9 ! case ( any failure to report any am\nt requir$ to be report$ "u subp>agraph 7,a7 ) respect to any taxable ye> be=e ! due date = ! return ( tax = su* taxable ye>1 !re %all be assess$ on su* return z an addition to tax #e p]c5t ( su* am\nt4 7#h7 ,election ,any election "u p>agraph 7#a7-- 7,a7 %all be made by ! %>ehold] ( ! ,s corporation n lat] ?an ! due date = su* %>ehold]'s return ( tax = ! taxable ye> :i* includes ! close ( ! taxable ye> ( su* ,s corporation 9 :i* ! am\nt describ$ 9 subsection 7a7 is tak5 into acc\nt1 & 7,b7 %all be made 9 su* mann] z ! ,secret>y may provide4 7j7 ,report+ by ,s corporation ,ea* ,s corporation :i* is a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation %all report 9 its return ( tax "u section #fjcg7;a7 ! am\nt includible 9 its gross income = su* taxable ye> by reason ( ?is section & ! am\nt ( ! d$uction all[able by subsection 7c74 ,any copy provid$ to a %>ehold] "u section #fjcg7;b7 %all include a /atem5t ( su* %>ehold]'s pro rata %>e ( su* am\nts4 7k7 ,inclusion ( def]r$ =eign income "u ?is section n to trigg] recapture ( ov]all =eign loss1 etc ,= purposes ( sections #ijd7;f77#a7 & #ijg7;c77#d71 9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold]'s taxable income f s\rces )\t ! ,unit$ ,/ates & comb9$ =eign oil & gas income %all be det]m9$ )\t reg>d to ?is section4 7l7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ife & ins]t+ ! foll[+3 ,sec4 #ife4 ,treatm5t ( def]r$ =eign income ^u transition to p>ticipation exemption sy/em ( taxation4 4 ,b ,modifications relat$ to =eign tax cr$it sy/em #daja4 ,repeal ( section #ijb indirect =eign tax cr$its2 det]m9ation ( section #ifj cr$it on curr5t ye> basis 7a7 ,repeal ( section #ijb indirect =eign tax cr$its ,subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #ijb4 7b7 ,det]m9ation ( section #ifj cr$it on curr5t ye> basis ,section #ifj is am5d$-- 7#a7 by /rik+ subsection 7c71 by r$esignat+ subsection 7b7 z subsection 7c71 by /rik+ all t prec$es subsection 7c7 7z s r$esignat$7 & ins]t+ ! foll[+3 #ifj4 ,deem$ paid cr$it = subp>t ,f inclusions 7a7 ,9 g5]al ,= purposes ( ?is subp>t1 if !re is includ$ 9 ! gross income ( a dome/ic corporation any item ( income "u section #iea7;a77#a7 ) respect to any controll$ =eign corporation ) respect to :i* su* dome/ic corporation is a ,unit$ ,/ates %>ehold]1 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z are prop]ly attributable to su* item ( income4 7b7 ,special rules = di/ributions f previ\sly tax$ e>n+s & pr(its ,= purposes ( ?is subp>t-- 7#a7 ,9 g5]al ,if any portion ( a di/ribution f a controll$ =eign corporation to a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* controll$ =eign corporation is exclud$ f gross income "u section #iei7;a71 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z-- 7,a7 are prop]ly attributable to su* portion1 & 7,b7 h n be5 deem$ to h to be5 paid by su* dome/ic corporation "u ?is section = ! taxable ye> or any prior taxable ye>4 7#b7 ,ti]$ controll$ =eign corporations ,if section #iei7;b7 applies to any portion ( a di/ribution f a controll$ =eign corporation to ano!r controll$ =eign corporation1 su* controll$ =eign corporation %all be deem$ to h paid s mu* ( su* o!r controll$ =eign corporation's =eign income taxes z-- 7,a7 are prop]ly attributable to su* portion1 & 7,b7 h n be5 deem$ to h be5 paid by a dome/ic corporation "u ?is section = ! taxable ye> or any prior taxable ye>4 1 7#b7 & by add+ aft] subsection 7c7 7z s r$esignat$7 ! foll[+ new subsections3 7d7 ,=eign income taxes ,! t]m =eign income taxes means any income1 w> pr(its1 or excess pr(its taxes paid or accru$ to any =eign c\ntry or possession ( ! ,unit$ ,/ates4 7e7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #gh is am5d$ to read z foll[s3 #gh4 ,gross up = deem$ paid =eign tax cr$it ,if a dome/ic corporation *ooses to h ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n 7relat+ to =eign tax cr$it7 = any taxable ye>1 an am\nt equal to ! taxes deem$ to be paid by su* corporation "u subsections 7a7 & 7b7 ( section #ifj = su* taxable ye> %all be treat$ = purposes ( ?is title 7o!r ?an sections #iei1 #ifj1 & #ifa7 z an item ( income requir$ to be includ$ 9 ! gross income ( su* dome/ic corporation "u section #iea7;a7 = su* taxable ye>4 4 7#b7 ,section #bde7;a77#aj77;,c7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#c7 ,sections #ece7;b77#a7 & #ede7;b77#a7 are ea* am5d$ by /rik+ section #ijb7;a7 or #ifj7;a77#a7 & ins]t+ section #ifj4 7#d7 ,section #had7;f77#a7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by /rik+ all t prec$es ,no income & ins]t+ ! foll[+3 7#a7 ,treatm5t ( =eign taxes 4 7#e7 ,section #hfe7;h77#a77;,b7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#f7 ,section #ija7;a7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#g7 ,section #ija7;e77#b7 is am5d$ by /rik+ b is n limit$ to-- & all t foll[s ?r\gh t portion & ins]t+ b is n limit$ to1 t portion4 7#h7 ,section #ija7;f7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#i7 ,section #ija7;j77#a77;,a7 is am5d$ by /rik+ #ijb or4 7#aj7 ,section #ija7;j77#a77;,b7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#aa7 ,section #ija7k77#b7 is am5d$ by /rik+ section #hec1 #ijb1 or #ifj & ins]t+ section #hec or #ifj4 7#ab7 ,section #ija7k77#f7 is am5d$ by /rik+ #ijb or4 7#ac7 ,section #ija7m77#a7 is am5d$ by /rik+ relevant =eign assets-- & all t foll[s & ins]t+ relevant =eign assets %all n be tak5 into acc\nt 9 det]m9+ ! cr$it all[$ "u subsection 7a744 7#ad7 ,section #ijd7;d77#a7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#ae7 ,section #ijd7;d77#f77;,a7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#af7 ,section #ijd7;h77#aj77;,a7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#ag7 ,section #ijd is am5d$ by /rik+ subsection 7k74 7#ah7 ,section #ije7;c77#a7 is am5d$ by /rik+ ! la/ s5t5ce4 7#ai7 ,section #ije7;c77#b77;,b77i7 is am5d$ to read z foll[s3 7i7 %all be tak5 into acc\nt = ! taxable ye> to :i* su* taxes relate1 & 4 7#bj7 ,section #ijf7;a7 is am5d$ by /rik+ 7or deem$1 "u section #ijb1 paid or accru$ dur+ ! taxable ye>74 7#ba7 ,section #ijf7;b7 is am5d$ by /rik+ p>agraphs 7#d7 & 7#e74 7#bb7 ,section #ijg7;b77#b77;,b7 is am5d$ by /rik+ #ijb or4 7#bc7 ,section #ijg7;c77#c7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,a7 & r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively1 & 7,b7 by /rik+ section #ifj7;a7 9 subp>agraph 7,a7 7z s r$esignat$7 & ins]t+ section #ifj4 7#bd7 ,section #ijg7;c77#e7 is am5d$ by /rik+ #ijb or4 7#be7 ,section #ijg7;f77#b77;,b77i7 is am5d$ by /rik+ #ijb or4 7#bf7 ,section #ijh7;a7 is am5d$ by /rik+ #ijb or4 7#bg7 ,section #iji7;b7 is am5d$-- 7,a7 by /rik+ section #ijb corporation 9 ! matt] prec$+ p>agraph 7#a7 & ins]t+ #aj_/ej corporation1 7,b7 by /rik+ #ijb or 9 p>agraph 7#a71 7,c7 by /rik+ by su* section #ijb corporation & all t foll[s 9 ! matt] foll[+ p>agraph 7#b7 & ins]t+ by su* #aj_/ej corporation or a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* #aj_/ej corporation41 & 7,d7 by /rik+ section #ijb corporations 9 ! head+ !re( & ins]t+ #aj_/ej corporations4 7#bh7 ,section #iji7;d77#e7 is am5d$ to read z foll[s3 7#e7 #aj_/ej corporation ,! t]m #aj_/ej corporation means any =eign corporation ) respect to :i* "o or m dome/ic corporations is a ,unit$ ,/ates %>ehold]4 4 7#bi7 ,section #ieh7;a77#a7 is am5d$ by /rik+ #ifj7;a77#a7 & ins]t+ #ifj4 7#cj7 ,section #iei7;d7 is am5d$ by /rik+ ,except z provid$ 9 section #ifj7;a77#c71 any & ins]t+ ,any4 7#ca7 ,section #iei7;e7 is am5d$ by /rik+ section #ifj7;b7 & ins]t+ section #ifj7;c74 7#cb7 ,section #abia7;g77#b77;,a7 is am5d$ by /rik+ any di/ribution-- & all t foll[s ?r\gh b only if & ins]t+ any di/ribution1 any )hold+ tax impos$ ) respect to su* di/ribution1 b only if4 7#cc7 ,section #fjch7;c77#a77;,b7 is am5d$ by /rik+ sections #ijb 7relat+ to =eign tax cr$it = corporate /ockhold] 9 =eign corporation7 & #ifj 7relat+ to special rules = =eign tax cr$it7 & ins]t+ section #ifj4 7#cd7 ,section #fjch7;c77#d7 is am5d$ by /rik+ subp>agraph 7,c74 7#ce7 ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ijb4 7#cf7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ifj & ins]t+ ! foll[+3 ,sec4 #ifj4 ,deem$ paid cr$it = subp>t ,f inclusions4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #dajb4 ,s\rce ( income f sales ( inv5tory det]m9$ solely on basis ( production activities 7a7 ,9 g5]al ,section #hfc7;b7 is am5d$ by add+ at ! end ! foll[+3 ,ga9s1 pr(its1 & income f ! sale or ex*ange ( inv5tory prop]ty describ$ 9 p>agraph 7#b7 %all be allocat$ & apportion$ betwe5 s\rces )9 & )\t ! ,unit$ ,/ates solely on ! basis ( ! production activities ) respect to ! prop]ty44 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,c ,modification ( subp>t ,f provisions #dbja4 ,repeal ( inclusion bas$ on )drawal ( previ\sly exclud$ subp>t ,f income f qualifi$ inve/m5t 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #iee4 7b7 ,con=m+ am5dm5ts 7#a7 7,a7 ,section #iea7;a77#a77;,a7 is am5d$ to read z foll[s3 7,a7 8 pro rata %>e 7det]m9$ "u p>agraph 7#b77 ( ! corporation's subp>t ,f income = su* ye>1 & 4 7,b7 ,section #hea7;b77#c7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 9 ! flu% language at ! end & ins]t+ section #iea7;a77#a77;,a74 7,c7 ,section #ieb7;c77#a77;,b77i7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 & ins]t+ section #iea7;a77#a77;,a74 7,d7 ,section #iec7;c77#a77;,c7 is am5d$ by /rik+ section #iea7;a77#a77;,a77i7 & ins]t+ section #iea7;a77#a77;,a74 7#b7 ,section #iea7;a7 is am5d$ by /rik+ p>agraph 7#c74 7#c7 ,section #iec7;d77#d77;,b77iv77,,ii7 is am5d$ by /rik+ or am\nts ref]r$ to 9 clause 7ii7 or 7iii7 ( section #iea7;a77#a77;,a74 7#d7 ,section #ifd7;b7 is am5d$ by /rik+ 1 #iee14 7#e7 ,section #igj is am5d$ by /rik+ subsection 7b74 7#f7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #iee4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjb4 ,repeal ( treatm5t ( =eign base company oil relat$ income z subp>t ,f income 7a7 ,9 g5]al ,section #ied7;a7 is am5d$ by /rik+ p>agraph 7#e71 by /rik+ ! comma at ! end ( p>agraph 7#c7 & ins]t+ a p]iod1 & by ins]t+ & at ! end ( p>agraph 7#b74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ieb7;c77#a77;,b77iii7 is am5d$ by /rik+ subclause 7,i7 & by r$esignat+ subclauses 7,,ii7 ?r\gh 7,v7 z subclauses 7,i7 ?r\gh 7,,iv71 respectively4 7#b7 ,section #ied7;b77#d7 is am5d$ by /rik+ ! la/ s5t5ce4 7#c7 ,section #ied7;b77#e7 is am5d$ by /rik+ ! =eign base company s]vices income1 & ! =eign base company oil relat$ income & ins]t+ & ! =eign base company s]vices income4 7#d7 ,section #ied7;b7 is am5d$ by /rik+ p>agraph 7#f74 7#e7 ,section #ied is am5d$ by /rik+ subsection 7g74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjc4 ,inflation adju/m5t ( de m9imis exception = =eign base company income 7a7 ,9 g5]al ,section #ied7;b77#c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjag1 ! doll> am\nt 9 subp>agraph 7,a77ii7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;c77#b77;,a7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #ej1jjj4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjd4 ,look-?ru rule = relat$ controll$ =eign corporations made p]man5t 7a7 ,9 g5]al ,p>agraph 7#f7 ( section #ied7;c7 is am5d$ by /rik+ subp>agraph 7,c74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjai1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbje4 ,modification ( /ock attribution rules = det]m9+ /atus z a controll$ =eign corporation 7a7 ,9 g5]al ,section #ieh7;b7 is am5d$-- 7#a7 by /rik+ p>agraph 7#d71 & 7#b7 by /rik+ ,p>agraphs 7#a7 & 7#d7 9 ! la/ s5t5ce & ins]t+ ,p>agraph 7#a74 7b7 ,application ( c]ta9 report+ requirem5ts ,section #fjch7;e77#b7 is am5d$ by /rik+ except t-- & all t foll[s ?r\gh 9 apply+ subp>agraph 7,c7 & ins]t+ except t 9 apply+ subp>agraph 7,c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dbjf4 ,elim9ation ( requirem5t t corporation mu/ be controll$ = #cj days be=e subp>t ,f inclusions apply 7a7 ,9 g5]al ,section #iea7;a77#a7 is am5d$ by /rik+ = an un9t]rupt$ p]iod ( #cj days or m & ins]t+ at any "t4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 ,d ,prev5tion ( base erosion #dcja4 ,curr5t ye> inclusion by ,unit$ ,/ates %>ehold]s ) =eign high returns 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by ins]t+ aft] section #iea ! foll[+ new section3 #iea;,a4 ,=eign high return am\nt includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s 7a7 ,9 g5]al ,ea* p]son :o is a ,unit$ ,/ates %>ehold] ( any controll$ =eign corporation = any taxable ye> ( su* ,unit$ ,/ates %>ehold] %all include 9 gross income = su* taxable ye> #ej p]c5t ( su* %>ehold]'s =eign high return am\nt = su* taxable ye>4 7b7 ,=eign high return am\nt ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m =eign high return am\nt means1 ) respect to any ,unit$ ,/ates %>ehold] = any taxable ye> ( su* ,unit$ ,/ates %>ehold]1 ! excess 7if any7 (-- 7,a7 su* %>ehold]'s net ,,cfc te/$ income = su* taxable ye>1 ov] 7,b7 ! excess 7if any7 (-- 7i7 ! applicable p]c5tage ( ! aggregate ( su* %>ehold]'s pro rata %>e ( ! qualifi$ bus9ess asset inve/m5t ( ea* controll$ =eign corporation ) respect to :i* su* %>ehold] is a ,unit$ ,/ates %>ehold] = su* taxable ye> 7det]m9$ = ea* taxable ye> ( ea* su* controll$ =eign corporation :i* ends 9 or ) su* taxable ye> ( su* ,unit$ ,/ates %>ehold]71 ov] 7ii7 ! am\nt ( int]e/ exp5se tak5 into acc\nt "u subsection 7c77#b77;,a77ii7 9 det]m9+ ! %>ehold]'s net ,,cfc te/$ income = ! taxable ye>4 7#b7 ,applicable p]c5tage ,! t]m applicable p]c5tage means1 ) respect to any taxable ye>1 ! ,f$]al %ort-t]m rate 7det]m9$ "u section #abgd7;d7 = ! mon? 9 :i* or ) :i* su* taxable ye> ends7 plus #g p]c5tage po9ts4 7c7 ,net ,,cfc te/$ income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m net ,,cfc te/$ income means1 ) respect to any ,unit$ ,/ates %>ehold] = any taxable ye> ( su* ,unit$ ,/ates %>ehold]1 ! excess 7if any7 (-- 7,a7 ! aggregate ( su* %>ehold]'s pro rata %>e ( ! te/$ income ( ea* controll$ =eign corporation ) respect to :i* su* %>ehold] is a ,unit$ ,/ates %>ehold] = su* taxable ye> ( su* ,unit$ ,/ates %>ehold] 7det]m9$ = ea* taxable ye> ( su* controll$ =eign corporation :i* ends 9 or ) su* taxable ye> ( su* ,unit$ ,/ates %>ehold]71 ov] 7,b7 ! aggregate ( su* %>ehold]'s pro rata %>e ( ! te/$ loss ( ea* controll$ =eign corporation ) respect to :i* su* %>ehold] is a ,unit$ ,/ates %>ehold] = su* taxable ye> ( su* ,unit$ ,/ates %>ehold] 7det]m9$ = ea* taxable ye> ( su* controll$ =eign corporation :i* ends 9 or ) su* taxable ye> ( su* ,unit$ ,/ates %>ehold]74 7#b7 ,te/$ income2 te/$ loss ,= purposes ( ?is section-- 7,a7 ,te/$ income ,! t]m te/$ income means1 ) respect to any controll$ =eign corporation = any taxable ye> ( su* controll$ =eign corporation1 ! excess 7if any7 (-- 7i7 ! gross income ( su* corporation det]m9$ )\t reg>d to-- 7,i7 any item ( income :i* is effectively connect$ ) ! conduct by su* corporation ( a trade or bus9ess )9 ! ,unit$ ,/ates if subject to tax "u ?is *apt]1 7,,ii7 any gross income tak5 into acc\nt 9 det]m9+ ! subp>t ,f income ( su* corporation1 7,,iii7 except z o!rwise provid$ by ! ,secret>y1 any am\nt exclud$ f ! =eign p]sonal hold+ company income 7z def9$ 9 section #ied7 ( su* corporation by reason ( section #ied7;c77#f7 b only to ! ext5t t any d$uction all[able = ! paym5t or accrual ( su* am\nt does n result 9 a r$uction 9 ! =eign high return am\nt ( any ,unit$ ,/ates %>ehold] 7det]m9$ )\t reg>d to ?is subclause71 7,,iv7 any gross income exclud$ f ! =eign p]sonal hold+ company income 7z def9$ 9 section #ied7 ( su* corporation by reason ( subsection 7c77#b77;,c71 7h71 or 7i7 ( section #ied1 7,v7 any gross income exclud$ f ! insurance income 7z def9$ 9 section #iec7 ( su* corporation by reason ( section #iec7;a77#b71 7,,vi7 any gross income exclud$ f =eign base company income 7z def9$ 9 section #ied7 or insurance income 7z def9$ 9 section #iec7 ( su* corporation by reason ( section #ied7;b77#d71 7,,vii7 any divid5d receiv$ f a relat$ p]son 7z def9$ 9 section #ied7;d77#c771 & 7,,viii7 any commodities gross income ( su* corporation1 ov] 7ii7 ! d$uctions 7includ+ taxes7 prop]ly allocable to su* gross income "u rules simil> to ! rules ( section #ied7;b77#e7 7or :i* w\ld be s prop]ly allocable if su* corporation _h su* gross income74 7,b7 ,te/$ loss ,! t]m te/$ loss means1 ) respect to any controll$ =eign corporation = any taxable ye> ( su* controll$ =eign corporation1 ! excess 7if any7 ( ! am\nt describ$ 9 subp>agraph 7,a77ii7 ov] ! am\nt describ$ 9 subp>agraph 7,a77i74 7d7 ,qualifi$ bus9ess asset inve/m5t ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ bus9ess asset inve/m5t means1 ) respect to any controll$ =eign corporation = any taxable ye> ( su* controll$ =eign corporation1 ! aggregate ( ! corporation's adju/$ bases 7det]m9$ z ( ! close ( su* taxable ye> & aft] any adju/m5ts ) respect to su* taxable ye>7 9 specifi$ tangible prop]ty-- 7,a7 us$ 9 a trade or bus9ess ( ! corporation1 & 7,b7 ( a type ) respect to :i* a d$uction is all[able "u section #afh4 7#b7 ,specifi$ tangible prop]ty ,! t]m specifi$ tangible prop]ty means any tangible prop]ty to ! ext5t su* prop]ty is us$ 9 ! production ( te/$ income or te/$ loss4 7#c7 ,p>tn]%ip prop]ty ,= purposes ( ?is subsection1 if a controll$ =eign corporation holds an int]e/ 9 a p>tn]%ip at ! close ( su* taxable ye> ( ! controll$ =eign corporation1 su* controll$ =eign corporation %all take into acc\nt "u p>agraph 7#a7 ! controll$ =eign corporation's di/ributive %>e ( ! aggregate ( ! p>tn]%ip's adju/$ bases 7det]m9$ z ( su* date 9 ! h&s ( ! p>tn]%ip7 9 tangible prop]ty held by su* p>tn]%ip to ! ext5t su* prop]ty-- 7,a7 is us$ 9 ! trade or bus9ess ( ! p>tn]%ip1 7,b7 is ( a type ) respect to :i* a d$uction is all[able "u section #afh1 & 7,c7 is us$ 9 ! production ( te/$ income or te/$ loss 7det]m9$ ) respect to su* controll$ =eign corporation's di/ributive %>e ( income or loss ) respect to su* prop]ty74 ,= purposes ( ?is p>agraph1 ! controll$ =eign corporation's di/ributive %>e ( ! adju/$ basis ( any prop]ty %all be ! controll$ =eign corporation's di/ributive %>e ( income & loss ) respect to su* prop]ty4 7#d7 ,det]m9ation ( adju/$ basis ,= purposes ( ?is subsection1 ! adju/$ basis 9 any prop]ty %all be det]m9$ )\t reg>d to any provision ( ?is title 7or any o!r provision ( law7 :i* is enact$ aft] ! date ( ! enactm5t ( ?is section4 7#e7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z ! ,secret>y det]m9es appropriate to prev5t ! avoidance ( ! purposes ( ?is subsection1 includ+ regulations or o!r guidance :i* provide = ! treatm5t ( prop]ty if-- 7,a7 su* prop]ty is transf]r$1 or held1 tempor>ily1 or 7,b7 ! avoidance ( ! purposes ( ?is p>agraph is a factor 9 ! transf] or hold+ ( su* prop]ty4 7e7 ,commodities gross income ,= purposes ( ?is section-- 7#a7 ,commodities gross income ,! t]m commodities gross income means1 ) respect to any corporation-- 7,a7 gross income ( su* corporation f ! disposition ( commodities :i* are produc$ or extract$ by su* corporation 7or a p>tn]%ip 9 :i* su* corporation is a p>tn]71 & 7,b7 gross income ( su* corporation f ! disposition ( prop]ty :i* gives rise to income describ$ 9 subp>agraph 7,a74 7#b7 ,commodity ,! t]m commodity means any commodity describ$ 9 section #dge7;e77#b77;,a7 or section #dge7;e77#b77;,d7 7det]m9$ )\t reg>d to clause 7i7 !re( & by sub/itut+ a commodity describ$ 9 subp>agraph 7,a7 = su* a commodity 9 clause 7ii7 !re(74 7f7 ,taxable ye>s = :i* p]sons are treat$ z ,unit$ ,/ates %>ehold]s ( controll$ =eign corporations ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation %all be treat$ z a ,unit$ ,/ates %>ehold] ( su* controll$ =eign corporation = any taxable ye> ( su* ,unit$ ,/ates %>ehold] if-- 7,a7 a taxable ye> ( su* controll$ =eign corporation ends 9 or ) su* taxable ye> ( su* p]son1 & 7,b7 su* p]son owns 7)9 ! mean+ ( section #ieh7;a77 /ock 9 su* controll$ =eign corporation on ! la/ day1 9 su* taxable ye> ( su* =eign corporation1 on :i* ! =eign corporation is a controll$ =eign corporation4 7#b7 ,treatm5t z a controll$ =eign corporation ,except = purposes ( p>agraph 7#a77;,b7 & ! application ( section #iea7;a77#b7 to ?is section pursuant to subsection 7g71 a =eign corporation %all be treat$ z a controll$ =eign corporation = any taxable ye> ( su* =eign corporation if su* =eign corporation is a controll$ =eign corporation at any "t dur+ su* taxable ye>4 7g7 ,det]m9ation ( pro rata %>e ,= purposes ( ?is section1 pro rata %>es %all be det]m9$ "u ! rules ( section #iea7;a77#b7 9 ! same mann] z su* section applies to subp>t ,f income4 7h7 ,coord9ation ) subp>t ,f 7#a7 ,treatm5t z subp>t ,f income = c]ta9 purposes ,except z o!rwise provid$ by ! ,secret>y any =eign high return am\nt includ$ 9 gross income "u subsection 7a7 %all be treat$ 9 ! same mann] z an am\nt includ$ "u section #iea7;a77#a77;,a7 = purposes ( apply+ sections #afh7;h77#b77;,b71 #ece7;b77#aj71 #hea7;b71 #ijd7;h77#a71 #iei1 #ifa1 #ifb1 #iic7;a77#a77;,e71 #iif7;f77#a71 #abdh7;b77#a71 #abdh7;d77#a71 #feja7;e77#a77;,c71 #ffed7;d77#b77;,d71 & #ffee7;e77#d74 7#b7 ,entire =eign high return am\nt tak5 into acc\nt = purposes ( c]ta9 sections ,= purposes ( apply+ p>agraph 7#a7 ) respect to sections #afh7;h77#b77;,b71 #hea7;b71 #iei1 #ifa1 #ifb1 #abdh7;b77#a71 & #abdh7;d77#a71 ! =eign high return am\nt includ$ 9 gross income "u subsection 7a7 %all be det]m9$ by sub/itut+ #ajj p]c5t = #ej p]c5t 9 su* subsection4 7#c7 ,allocation ( =eign high return am\nt to controll$ =eign corporations ,= purposes ( ! sections ref]r$ to 9 p>agraph 7#a71 ) respect to any controll$ =eign corporation any pro rata am\nt f :i* is tak5 into acc\nt 9 det]m9+ ! =eign high return am\nt includ$ 9 gross income ( a ,unit$ ,/ates %>ehold] "u subsection 7a71 ! portion ( su* =eign high return am\nt :i* is treat$ z be+ ) respect to su* controll$ =eign corporation is-- 7,a7 9 ! case ( a controll$ =eign corporation ) te/$ loss1 z]o1 & 7,b7 9 ! case ( a controll$ =eign corporation ) te/$ income1 ! portion ( su* =eign high return am\nt :i* be>s ! same ratio to su* =eign high return am\nt z-- 7i7 su* ,unit$ ,/ates %>ehold]'s pro rata am\nt ( ! te/$ income ( su* controll$ =eign corporation1 be>s to 7ii7 ! aggregate am\nt det]m9$ "u subsection 7c77#a77;,a7 ) respect to su* ,unit$ ,/ates %>ehold]4 7#d7 ,coord9ation ) subp>t ,f to d5y d\ble b5efit ( losses ,9 ! case ( any ,unit$ ,/ates %>ehold] ( any controll$ =eign corporation1 ! am\nt includ$ 9 gross income "u section #iea7;a77#a77;,a7 %all be det]m9$ by increas+ ! e>n+s & pr(its ( su* controll$ =eign corporation 7solely = purposes ( det]m9+ su* am\nt7 by an am\nt t be>s ! same ratio 7n great] ?an #a7 to su* %>ehold]'s pro rata %>e ( ! te/$ loss ( su* controll$ =eign corporation z-- 7,a7 ! aggregate am\nt det]m9$ "u subsection 7c77#a77;,a7 ) respect to su* %>ehold]1 be>s to 7,b7 ! aggregate am\nt det]m9$ "u subsection 7c77#a77;,b7 ) respect to su* %>ehold]4 4 7b7 ,=eign tax cr$it 7#a7 ,application ( deem$ paid =eign tax cr$it ,section #ifj1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$ by r$esignat+ subsections 7d7 & 7e7 z subsections 7e7 & 7f71 respectively1 & by ins]t+ aft] subsection 7c7 ! foll[+ new subsection3 7d7 ,deem$ paid cr$it = taxes prop]ly attributable to te/$ income 7#a7 ,9 g5]al ,= purposes ( ?is subp>t1 if any am\nt is includible 9 ! gross income ( a dome/ic corporation "u section #iea;,a1 su* dome/ic corporation %all be deem$ to h paid =eign income taxes equal to #hj p]c5t (-- 7,a7 su* dome/ic corporation's =eign high return p]c5tage1 multipli$ by 7,b7 ! aggregate te/$ =eign income taxes paid or accru$ by controll$ =eign corporations ) respect to :i* su* dome/ic corporation is a ,unit$ ,/ates %>ehold]4 7#b7 ,=eign high return p]c5tage ,= purposes ( p>agraph 7#a71 ! t]m =eign high return p]c5tage means1 ) respect to any dome/ic corporation1 ! ratio 7express$ z a p]c5tage7 (-- 7,a7 su* corporation's =eign high return am\nt 7z def9$ 9 section #iea;,a7b771 divid$ by 7,b7 ! aggregate am\nt det]m9$ "u section #iea;,a7c77#a77;,a7 ) respect to su* corporation4 7#c7 ,te/$ =eign income taxes ,= purposes ( p>agraph 7#a71 ! t]m te/$ =eign income taxes means1 ) respect to any dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation1 ! =eign income taxes paid or accru$ by su* =eign corporation :i* are prop]ly attributable to gross income describ$ 9 section #iea;,a7c77#b77;,a77i74 4 7#b7 ,application ( =eign tax cr$it limitation 7,a7 ,sep>ate basket = =eign high return am\nt ,section #ijd7;d77#a7 is am5d$ by r$esignat+ subp>agraphs 7,a7 & 7,b7 z subp>agraphs 7,b7 & 7,c71 respectively1 & by ins]t+ be=e subp>agraph 7,b7 7z s r$esignat$7 ! foll[+ new subp>agraph3 7,a7 any am\nt includible 9 gross income "u section #iea;,a1 4 7,b7 ,no c>ryov] ( excess taxes ,section #ijd7;c7 is am5d$ by add+ at ! end ! foll[+3 ,?is subsection %all n apply to taxes paid or accru$ ) respect to am\nts describ$ 9 subsection 7d77#a77;,a74 7#c7 ,gross up = deem$ paid =eign tax cr$it ,section #gh1 z am5d$ by ! prec$+ provisions ( ?is ,act1 is am5d$-- 7,a7 by /rik+ any taxable ye>1 an am\nt & ins]t+ any taxable ye>-- 7#a7 an am\nt 1 & 7,b7 by /rik+ ! p]iod at ! end & ins]t+ 1 & 7#b7 an am\nt equal to ! taxes deem$ to be paid by su* corporation "u section #ifj7;d7 = su* taxable ye> 7det]m9$ by sub/itut+ #ajj p]c5t = #hj p]c5t 9 su* section7 %all be treat$ = purposes ( ?is title 7o!r ?an sections #iei1 #ifj1 & #ifa7 z an increase 9 ! =eign high return am\nt ( su* dome/ic corporation "u section #iea;,a = su* taxable ye>4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #agj7;b77#b77;,d7 is am5d$ by /rik+ comput$ )\t reg>d to & all t foll[s & ins]t+ comput$-- 7i7 )\t reg>d to-- 7,i7 ?is section1 7,,ii7 "p ,,viii 7except section #bdh71 7,,iii7 any net op]at+ loss c>ryback to ! taxable ye> "u section #agb1 7,,iv7 any capital loss c>ryback to ! taxable ye> "u section #abab7;a77#a71 & 7ii7 by sub/itut+ #ajj p]c5t = #ej p]c5t 9 section #iea;,a7a74 4 7#b7 ,section #bdf7;b77#a7 is am5d$ by-- 7,a7 /rik+ & )\t reg>d to & ins]t+ )\t reg>d to1 & 7,b7 by /rik+ ! p]iod at ! end & ins]t+ 1 & by sub/itut+ #ajj p]c5t = #ej p]c5t 9 section #iea;,a7a744 7#c7 ,section #dfi7;i77#c77;,f7 is am5d$ by /rik+ det]m9$ )\t reg>d to & all t foll[s & ins]t+ det]m9$-- 7i7 )\t reg>d to-- 7,i7 any am\nt includible 9 gross income "u section #hf1 7,,ii7 ! am\nts all[able z a d$uction "u section #bai1 & 7,,iii7 any passive activity loss or any loss all[able by reason ( subsection 7c77#g71 & 7ii7 by sub/itut+ #ajj p]c5t = #ej p]c5t 9 section #iea;,a7a74 4 7#d7 ,section #hef7;c77#b7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,h71 by add+ & at ! end ( subp>agraph 7,i71 & by ins]t+ aft] subp>agraph 7,i7 ! foll[+ new subp>agraph3 7,j7 am\nts includible 9 gross income "u section #iea;,a7a72 4 7#e7 ,section #hef7;c77#c77;,d7 is am5d$ by /rik+ divid5ds or o!r di/ributions on1 & ga9 & ins]t+ divid5ds1 o!r di/ributions on1 am\nts includible 9 gross income "u section #iea;,a7a7 ) respect to1 & ga94 7#f7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #iea ! foll[+ new item3 ,sec4 #iea;,a4 ,=eign high return am\nt includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #dcjb4 ,limitation on d$uction ( int]e/ by dome/ic corporations :i* are memb]s ( an int]national f9ancial report+ gr\p 7a7 ,9 g5]al ,section #afc is am5d$ by r$esignat+ subsection 7n7 z subsection 7p7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,limitation on d$uction ( int]e/ by dome/ic corporations 9 int]national f9ancial report+ gr\ps 7#a7 ,9 g5]al ,9 ! case ( any dome/ic corporation :i* is a memb] ( any int]national f9ancial report+ gr\p1 ! d$uction "u ?is *apt] = int]e/ paid or accru$ dur+ ! taxable ye> %all n exce$ ! sum (-- 7,a7 ! all[able p]c5tage ( #aaj p]c5t ( ! excess 7if any7 ( -- 7i7 ! am\nt ( su* int]e/ s paid or accru$1 ov] 7ii7 ! am\nt describ$ 9 subp>agraph 7,b71 plus 7,b7 ! am\nt ( int]e/ includible 9 gross income ( su* corporation = su* taxable ye>4 7#b7 ,int]national f9ancial report+ gr\p 7,a7 ,= purposes ( ?is subsection1 ! t]m int]national f9ancial report+ gr\p means1 ) respect to any report+ ye>1 any gr\p ( entities :i*-- 7i7 includes-- 7,i7 at lea/ "o =eign corporation engag$ 9 a trade or bus9ess )9 ! ,unit$ ,/ates1 or 7,,ii7 at lea/ "o dome/ic corporation & "o =eign corporation1 7ii7 prep>es consolidat$ f9ancial /atem5ts ) respect to su* ye>1 & 7iii7 reports 9 su* /atem5ts av]age annual gross receipts 7det]m9$ 9 ! aggregate ) respect to all entities :i* are "p ( su* gr\p7 = ! #c-report+-ye> p]iod end+ ) su* report+ ye> 9 excess ( #ajj1jjj1jjj4 7,b7 ,rules relat+ to det]m9ation ( av]age gross receipts ,= purposes ( subp>agraph 7,a77iii71 rules simil> to ! rules ( section #ddh7;c77#c7 %all apply4 7#c7 ,all[able p]c5tage ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m all[able p]c5tage means1 ) respect to any dome/ic corporation = any taxable ye>1 ! ratio 7express$ z a p]c5tage & n great] ?an #ajj p]c5t7 (-- 7i7 su* corporation's allocable %>e ( ! int]national f9ancial report+ gr\p's report$ net int]e/ exp5se = ! report+ ye> ( su* gr\p :i* ends 9 or ) su* taxable ye> ( su* corporation1 ov] 7ii7 su* corporation's report$ net int]e/ exp5se = su* report+ ye> ( su* gr\p4 7,b7 ,report$ net int]e/ exp5se ,! t]m report$ net int]e/ exp5se means-- 7i7 ) respect to any int]national f9ancial report+ gr\p = any report+ ye>1 ! excess (-- 7,i7 ! aggregate am\nt ( int]e/ exp5se report$ 9 su* gr\p's consolidat$ f9ancial /atem5ts = su* taxable ye>1 ov] 7,,ii7 ! aggregate am\nt ( int]e/ income report$ 9 su* gr\p's consolidat$ f9ancial /atem5ts = su* taxable ye>1 & 7ii7 ) respect to any dome/ic corporation = any report+ ye>1 ! excess (-- 7,i7 ! am\nt ( int]e/ exp5se ( su* corporation report$ 9 ! books & records ( ! int]national f9ancial report+ gr\p :i* are us$ 9 prep>+ su* gr\p's consolidat$ f9ancial /atem5ts = su* taxable ye>1 ov] 7,,ii7 ! am\nt ( int]e/ income ( su* corporation report$ 9 su* books & records4 7,c7 ,allocable %>e ( report$ net int]e/ exp5se ,) respect to any dome/ic corporation :i* is a memb] ( any int]national f9ancial report+ gr\p1 su* corporation's allocable %>e ( su* gr\p's report$ net int]e/ exp5se = any report+ ye> is ! portion ( su* exp5se :i* be>s ! same ratio to su* exp5se z-- 7i7 ! ,,ebitda ( su* corporation = su* report+ ye>1 be>s to 7ii7 ! ,,ebitda ( su* gr\p = su* report+ ye>4 7,d7 ,,ebitda 7i7 ,9 g5]al ,! t]m ,,ebitda means1 ) respect to any report+ ye>1 e>n+s be=e int]e/1 taxes1 depreciation1 & amortization-- 7,i7 z det]m9$ 9 ! int]national f9ancial report+ gr\p's consolidat$ f9ancial /atem5ts = su* ye>1 or 7,,ii7 = purposes ( subp>agraph 7,a77i71 z det]m9$ 9 ! books & records ( ! int]national f9ancial report+ gr\p :i* are us$ 9 prep>+ su* /atem5ts if n det]m9$ 9 su* /atem5ts4 7ii7 ,treatm5t ( disreg>d$ entities ,! ,,ebitda ( any dome/ic corporation %all n fail to include ! ,,ebitda ( any entity :i* is disreg>d$ = purposes ( ?is *apt]4 7iii7 ,treatm5t ( intra-gr\p di/ributions ,! ,,ebitda ( any dome/ic corporation %all be det]m9$ )\t reg>d to any di/ribution receiv$ by su* corporation f any o!r memb] ( ! int]national f9ancial report+ gr\p4 7,e7 ,special rules = non-positive ,,ebitda 7i7 ,non-positive gr\p ,,ebitda ,9 ! case ( any int]national f9ancial report+ gr\p ! ,,ebitda ( :i* is z]o or less1 p>agraph 7#a7 %all n apply to any memb] ( su* gr\p ! ,,ebitda ( :i* is above z]o4 7ii7 ,non-positive entity ,,ebitda ,9 ! case ( any gr\p memb] ! ,,ebitda ( :i* is z]o or less1 p>agraph 7#a7 %all be appli$ )\t reg>d to subp>agraph 7,a7 !re(4 7#d7 ,consolidat$ f9ancial /atem5t ,= purposes ( ?is subsection1 ! t]m consolidat$ f9ancial /atem5t means any consolidat$ f9ancial /atem5t describ$ 9 p>agraph 7#b77;,a77ii7 if su* /atem5t is-- 7,a7 a f9ancial /atem5t :i* is c]tifi$ z be+ prep>$ 9 accordance ) g5]ally accept$ acc\nt+ pr9ciples1 int]national f9ancial report+ /&>ds1 or any o!r comp>able me?od ( acc\nt+ id5tifi$ by ! ,secret>y1 & :i* is-- 7i7 a #aj-,k 7or successor =m71 or annual /atem5t to %>ehold]s1 requir$ to be fil$ ) ! ,unit$ ,/ates ,securities & ,ex*ange ,commission1 7ii7 an audit$ f9ancial /atem5t :i* is us$ =-- 7,i7 cr$it purposes1 7,,ii7 report+ to %>ehold]s1 p>tn]s1 or o!r proprietors1 or to b5efici>ies1 or 7,,iii7 any o!r sub/antial nontax purpose1 b only if !re is no /atem5t describ$ 9 clause 7i71 or 7iii7 fil$ ) any o!r ,f$]al or ,/ate ag5cy = nontax purposes1 b only if !re is no /atem5t describ$ 9 clause 7i7 or 7ii71 or 7,b7 a f9ancial /atem5t :i*-- 7i7 is us$ = a purpose describ$ 9 subclause 7,i71 7,,ii71 or 7,,iii7 ( subp>agraph 7,a77ii71 or 7ii7 fil$ ) any regulatory or gov]nm5tal body 7:e!r dome/ic or =eign7 specifi$ by ! ,secret>y1 b only if !re is no /atem5t describ$ 9 subp>agraph 7,a74 7#e7 ,report+ ye> ,= purposes ( ?is subsection1 ! t]m report+ ye> means1 ) respect to any int]national f9ancial report+ gr\p1 ! ye> ) respect to :i* ! consolidat$ f9ancial /atem5ts are prep>$4 7#f7 ,application to c]ta9 entities 7,a7 ,p>tn]%ips ,except z o!rwise provid$ by ! ,secret>y 9 p>agraph 7#g71 ?is subsection %all apply to any p>tn]%ip :i* is a memb] ( any int]national f9ancial report+ gr\p "u rules simil> to ! rules ( section #afc7;j77#c74 7,b7 ,=eign corporations engag$ 9 trade or bus9ess )9 ! ,unit$ ,/ates ,except z o!rwise provid$ by ! ,secret>y 9 p>agraph 7#h71 any d$uction = int]e/ paid or accru$ by a =eign corporation engag$ 9 a trade or bus9ess )9 ! ,unit$ ,/ates %all be limit$ 9 a mann] consi/5t ) ! pr9ciples ( ?is subsection4 7,c7 ,consolidat$ gr\ps ,= purposes ( ?is subsection1 ! memb]s ( any gr\p t file 7or are requir$ to file7 a consolidat$ return ) respect to ! tax impos$ by *apt] #a = a taxable ye> %all be treat$ z a s+le corporation4 7#g7 ,regulations ,! ,secret>y may issue su* regulations or o!r guidance z are necess>y or appropriate to c>ry out ! purposes ( ?is subsection4 4 7b7 ,c>ry=w>d ( disall[$ int]e/ 7#a7 ,9 g5]al ,section #afc7o7 is am5d$ to read z foll[s3 7o7 ,c>ry=w>d ( c]ta9 disall[$ int]e/ ,! am\nt ( any int]e/ n all[$ z a d$uction = any taxable ye> by reason ( subsection 7j77#a7 or 7n77#a7 7:i*ev] imposes ! l[] limitation ) respect to su* taxable ye>7 %all be treat$ z int]e/ 7& z bus9ess int]e/ = purposes ( subsection 7j77#a77 paid or accru$ 9 ! succe$+ taxable ye>4 ,int]e/ paid or accru$ 9 any taxable ye> 7det]m9$ )\t reg>d to ! prec$+ s5t5ce7 %all n be c>ri$ pa/ ! #e? taxable ye> foll[+ su* taxable ye>1 det]m9$ by treat+ int]e/ z all[$ z a d$uction on a fir/-91 fir/-out basis4 4 7#b7 ,treatm5t ( c>ry=w>d ( disall[$ int]e/ 9 c]ta9 corporate acquisitions ,= rules relat$ to ! c>ry=w>d ( disall[$ int]e/ 9 c]ta9 corporate acquisitions1 see ! am5dm5ts made by section #ccja7;c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #dcjc4 ,excise tax on c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations2 election to treat su* paym5ts z effectively connect$ income 7a7 ,excise tax on c]ta9 am\nts f dome/ic corporations to =eign affiliates 7#a7 ,9 g5]al ,*apt] #cf is am5d$ by add+ at ! end ! foll[+ new sub*apt]3 ,e ,tax on c]ta9 am\nts to =eign affiliates ,sec4 #ddia4 ,imposition ( tax on c]ta9 am\nts f dome/ic corporations to =eign affiliates4 #ddia4 ,imposition ( tax on c]ta9 am\nts f dome/ic corporations to =eign affiliates 7a7 ,9 g5]al ,!re is h]eby impos$ on ea* specifi$ am\nt paid or incurr$ by a dome/ic corporation to a =eign corporation :i* is a memb] ( ! same int]national f9ancial report+ gr\p z su* dome/ic corporation a tax equal to ! highe/ rate ( tax 9 effect "u section #aa multipli$ by su* am\nt4 7b7 ,by :om paid ,! tax impos$ by subsection 7a7 %all be paid by ! dome/ic corporation describ$ 9 su* subsection4 7c7 ,exception = effectively connect$ income ,subsection 7a7 %all n apply to s mu* ( any specifi$ am\nt z is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates if su* am\nt is subject to tax "u *apt] #a4 ,9 ! case ( any am\nt :i* is treat$ z effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates by reason ( section #hhb7;g71 ! prec$+ s5t5ce %all apply to su* am\nt only if ! dome/ic corporation provides to ! ,secret>y 7at su* "t & 9 su* =m & mann] z ! ,secret>y may provide7 a copy ( ! election made "u section #hhb7;g7 by ! =eign corporation ref]r$ to 9 subsection 7a74 7d7 ,def9itions & special rules ,t]ms us$ 9 ?is section t are also us$ 9 section #hhb7;g7 %all h ! same mean+ z :5 us$ 9 su* section & rules simil> to ! rules ( p>agraphs 7#e7 & 7#f7 ( su* section %all apply = purposes ( ?is section4 4 7#b7 ,d5ial ( d$uction = tax impos$ ,section #bge7;a7 is am5d$ by ins]t+ aft] p>agraph 7#f7 ! foll[+ new p>agraph3 7#g7 ,taxes impos$ by section #ddia4 4 7#c7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #cf is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,e4 ,tax on c]ta9 am\nts to =eign affiliates4 4 7b7 ,election to treat c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations z effectively connect$ income ,section #hhb is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,election to treat c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations z effectively connect$ income 7#a7 ,9 g5]al ,9 ! case ( any specifi$ am\nt paid or incurr$ by a dome/ic corporation to a =eign corporation :i* is a memb] ( ! same int]national f9ancial report+ gr\p z su* dome/ic corporation & :i* has elect$ to be subject to ! provisions ( ?is subsection-- 7,a7 su* am\nt %all be tak5 into acc\nt 7o!r ?an = purposes ( sections #bde1 #bde;,a1 & #hha7 9 ! taxable ye> ( su* =eign corporation dur+ :i* su* am\nt is paid or incurr$ z if-- 7i7 su* =eign corporation 7 engag$ 9 a trade or bus9ess )9 ! ,unit$ ,/ates1 7ii7 su* =eign corporation _h a p]man5t e/abli%m5t 9 ! ,unit$ ,/ates dur+ ! taxable ye>1 & 7iii7 su* paym5t 7 effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates & 7 attributable to su* p]man5t e/abli%m5t1 7,b7 = purposes ( subsection 7c77#a77;,a71 no d$uction %all be all[$ ) respect to su* am\nt & su* subsection %all be appli$ )\t reg>d to su* am\nt1 & 7,c7 ! =eign corporation %all be all[$ a d$uction 7= ! taxable ye> ref]r$ to 9 subp>agraph 7,a77 equal to ! deem$ exp5ses ) respect to su* am\nt4 7#b7 ,specifi$ am\nt ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m specifi$ am\nt means any am\nt :i* is1 ) respect to ! payor1 all[able z a d$uction or includible 9 co/s ( goods sold1 inv5tory1 or ! basis ( a depreciable or amortizable asset4 7,b7 ,exceptions ,! t]m specifi$ am\nt %all n include-- 7i7 int]e/1 7ii7 any am\nt paid or incurr$ = ! acquisition ( any security describ$ 9 section #dge7;c77#b7 7det]m9$ )\t reg>d to ! la/ s5t5ce !re(7 or any commodity describ$ 9 section #dge7;e77#b71 7iii7 except z provid$ 9 subp>agraph 7,c71 any am\nt ) respect to :i* tax is impos$ "u section #hha7;a71 & 7iv7 9 ! case ( a payor :i* has elect$ to use a s]vices co/ me?od = purposes ( section #dhb1 any am\nt paid or incurr$ = s]vices if su* am\nt is ! total s]vices co/ ) no m>kup4 7,c7 ,am\nts n treat$ z effectively connect$ to ext5t ( gross-basis tax ,subp>agraph 7,b77iii7 %all only apply to s mu* ( any specifi$ am\nt z be>s ! proportion to su* am\nt z-- 7i7 ! rate ( tax impos$ "u section #hha7;a7 ) respect to su* am\nt1 be>s to 7ii7 #cj p]c5t4 7#c7 ,deem$ exp5ses 7,a7 ,9 g5]al ,! deem$ exp5ses ) respect to any specifi$ am\nt receiv$ by a =eign corporation dur+ any report+ ye> is ! am\nt ( exp5ses su* t ! net income ratio ( su* =eign corporation ) respect to su* am\nt 7tak+ into acc\nt only su* specifi$ am\nt & su* deem$ exp5ses7 is equal to ! net income ratio ( ! int]national f9ancial report+ gr\p det]m9$ = su* report+ ye> ) respect to ! product l9e to :i* ! specifi$ am\nt relates4 7,b7 ,net income ratio ,= purposes ( ?is p>agraph1 ! t]m net income ratio means ! ratio (-- 7i7 net income det]m9$ )\t reg>d to int]e/ income1 int]e/ exp5se1 & income taxes1 divid$ by 7ii7 rev5ues4 7,c7 ,me?od ( det]m9ation ,am\nts describ$ 9 subp>agraph 7,b7 %all be det]m9$ ) respect to ! int]national f9ancial report+ gr\p on ! basis ( ! consolidat$ f9ancial /atem5ts ref]r$ to 9 p>agraph 7#d77;,a77i7 & ! books & records ( ! memb]s ( ! int]national f9ancial report+ gr\p :i* are us$ 9 prep>+ su* /atem5ts1 tak+ into acc\nt only rev5ues & exp5ses ( ! memb]s ( su* gr\p 7o!r ?an ! memb]s ( su* gr\p :i* are 7or are treat$ z7 a dome/ic corporation = purposes ( ?is subsection7 d]iv$ f1 or incurr$ ) respect to-- 7i7 p]sons :o are n memb]s ( su* gr\p1 & 7ii7 memb]s ( su* gr\p :i* are 7or are treat$ z7 a dome/ic corporation = purposes ( ?is subsection4 7#d7 ,int]national f9ancial report+ gr\p ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m int]national f9ancial report+ gr\p means any gr\p ( entities1 ) respect to any specifi$ am\nt1 if su* am\nt is paid or incurr$ dur+ a report+ ye> ( su* gr\p ) respect to :i*-- 7i7 su* gr\p prep>es consolidat$ f9ancial /atem5ts 7)9 ! mean+ ( section #afc7n77#d77 ) respect to su* ye>1 & 7ii7 ! av]age annual aggregate paym5t am\nt ( su* gr\p = ! #c-report+-ye> p]iod end+ ) su* report+ ye> exce$s #ajj1jjj1jjj4 7,b7 ,annual aggregate paym5t am\nt ,! t]m annual aggregate paym5t am\nt means1 ) respect to any report+ ye> ( ! gr\p ref]r$ to 9 subp>agraph 7,a77i71 ! aggregate specifi$ am\nts to :i* p>agraph 7#a7 applies 7or w\ld apply if su* gr\p 7 an int]national f9ancial report+ gr\p74 7,c7 ,application ( c]ta9 rules ,rules simil> to ! rules ( subp>agraphs 7,a71 7,b71 & 7,d7 ( section #ddh7;c77#c7 %all apply = purposes ( ?is p>agraph4 7#e7 ,treatm5t ( p>tn]%ips ,any specifi$ am\nt paid1 incurr$1 or receiv$ by a p>tn]%ip :i* is a memb] ( any int]national f9ancial report+ gr\p 7& any am\nt treat$ z paid1 incurr$1 or receiv$ by a p>tn]%ip "u ?is p>agraph7 %all be treat$ = purposes ( ?is subsection z am\nts paid1 incurr$1 or receiv$1 respectively1 by ea* p>tn] ( su* p>tn]%ip 9 an am\nt equal to su* p>tn]'s di/ributive %>e ( ! items ( income1 ga91 d$uction1 or loss to :i* su* am\nts relate4 7#f7 ,treatm5t ( am\nts 9 connection ) ,unit$ ,/ates trade or bus9ess ,any specifi$ am\nt paid1 incurr$1 or receiv$ by a =eign corporation 9 connection ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates 7o!r ?an a trade or bus9ess x is deem$ to conduct pursuant to ?is subsection7 %all be treat$ = purposes ( ?is subsection z an am\nt paid1 incurr$1 or receiv$1 respectively1 by a dome/ic corporation4 ,= purposes ( ! prec$+ s5t5ce1 a =eign corporation %all be deem$ to pay1 incur1 & receive am\nts ) respect to a trade or bus9ess x conducts )9 ! ,unit$ ,/ates 7o!r ?an a trade or bus9ess x is deem$ to conduct pursuant to ?is subsection7 to ! ext5t su* =eign corporation w\ld be treat$ z pay+1 incurr+1 or receiv+ su* am\nts f su* trade or bus9ess if su* trade or bus9ess 7 a dome/ic corporation4 7#g7 ,jo9t & sev]al liability ( memb]s ( int]nal f9ancial report+ gr\p ,9 ! case ( any und]paym5t ) respect to any taxable ye> ( a =eign corporation :i* is a memb] ( an int]national f9ancial acc\nt+ gr\p1 ea* dome/ic corporation :i* is a memb] ( su* gr\p at any "t dur+ su* taxable ye> %all be jo9tly & sev]ally liable =-- 7,a7 s mu* ( su* und]paym5t z does n exce$ ! excess 7if any7 ( su* und]paym5t ov] ! am\nt ( su* und]paym5t det]m9$ )\t reg>d to ?is subsection1 & 7,b7 any p5alty1 addition to tax1 or additional am\nt attributable to ! am\nt describ$ 9 subp>agraph 7,a74 7#h7 ,=eign tax cr$it all[$ ,! cr$it all[$ "u section #ijf7;a7 ) respect to am\nts tak5 into acc\nt 9 income "u p>agraph 7#a77;,a7 %all be limit$ to #hj p]c5t ( ! am\nt ( taxes paid or accru$ & det]m9$ )\t reg>d to section #ijf7;b77#a74 7#i7 ,election ,any election "u p>agraph 7#a7-- 7,a7 %all be made at su* "t & 9 su* =m & mann] z ! ,secret>y may provide1 & 7,b7 %all apply = ! taxable ye> = :i* made & all subsequ5t taxable ye>s unless revok$ ) ! cons5t ( ! ,secret>y4 7#aj7 ,regulations ,! ,secret>y may issue su* regulations or o!r guidance z are necess>y or appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance-- 7,a7 to provide = ! prop] det]m9ation ( product l9es1 & 7,b7 to prev5t ! avoidance ( ! purposes ( ?is subsection ?r\gh ! use ( conduit transactions or by o!r means4 4 7c7 ,report+ requirem5ts 7#a7 ,report+ by =eign corporation ,section #fjch;,c7b7 is am5d$ to read z foll[s3 7b7 ,requir$ in=mation 7#a7 ,9 g5]al ,! in=mation describ$ 9 ?is subsection is-- 7,a7 ! in=mation describ$ 9 section #fjch;,a7b71 & 7,b7 su* o!r in=mation z ! ,secret>y may prescribe by regulations relat+ to any item n directly connect$ ) a transaction = :i* in=mation is requir$ "u subp>agraph 7,a74 7#b7 ,c]ta9 paym5ts f relat$ dome/ic corporations 7,a7 ,9 g5]al ,9 ! case ( any report+ corporation t receives dur+ ! taxable ye> any am\nt to :i* section #hhb7;g77#a7 applies1 ! in=mation describ$ 9 ?is subsection %all include1 ) respect to ea* memb] ( ! int]national f9ancial report+ gr\p f :i* any su* am\nt is receiv$-- 7i7 ! "n & taxpay] id5tification numb] ( su* memb]1 7ii7 ! aggregate am\nts receiv$ f su* memb]1 7iii7 ! product l9es to :i* su* am\nts relate1 ! aggregate am\nts relat+ to ea* su* product l9e1 & ! net income ratio = ea* su* product l9e 7det]m9$ "u section #hhb7;g77#c77;,b7 ) respect to ! int]national f9ancial report+ gr\p71 & 7iv7 a summ>y ( any *anges 9 f9ancial acc\nt+ me?ods t affect ! computation ( any net income ratio describ$ 9 clause 7iii74 7,b7 ,def9itions & special rules ,t]ms us$ 9 ?is p>agraph t are also us$ 9 section #hhb7;g7 %all h ! same mean+ z :5 us$ 9 su* section & rules simil> to ! rules ( p>agraphs 7#e7 & 7#f7 ( su* section %all apply = purposes ( ?is p>agraph4 4 7#b7 ,report+ by dome/ic gr\p memb]s 7,a7 ,9 g5]al ,subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] section #fjch;,d ! foll[+ new section3 #fjch;,e4 ,in=mation ) respect to c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations 7a7 ,9 g5]al ,9 ! case ( any dome/ic corporation :i* pays or incurs any am\nt to :i* section #hhb7;g77#a7 applies1 su* p]son %all-- 7#a7 make a return accord+ to ! =ms & regulations prescrib$ ! ,secret>y1 sett+ =? ! in=mation describ$ 9 subsection 7b71 & 7#b7 ma9ta9 7at ! location1 9 ! mann]1 & to ! ext5t prescrib$ 9 regulations7 su* records z may be appropriate to det]m9e liability = tax pursuant to p>agraphs 7#a7 & 7#g7 ( section #hhb7;g74 7b7 ,requir$ in=mation ,! in=mation describ$ 9 ?is subsection is-- 7#a7 ! "n & taxpay] id5tification numb] ( ! common p>5t ( ! int]national f9ancial report+ gr\p 9 :i* su* dome/ic corporation is a memb]1 & 7#b7 ) respect to any p]son :o receives an am\nt describ$ 9 subsection 7a7 f su* dome/ic corporation-- 7,a7 ! "n & taxpay] id5tification numb] ( su* p]son1 7,b7 ! aggregate am\nts receiv$ by su* p]son1 7,c7 ! product l9es to :i* su* am\nts relate1 ! aggregate am\nts relat+ to ea* su* product l9e1 & ! net income ratio = ea* su* product l9e 7det]m9$ "u section #hhb7;g77#c77;,b7 ) respect to ! int]national f9ancial report+ gr\p71 & 7,d7 a summ>y ( any *anges 9 f9ancial acc\nt+ me?ods t affect ! computation ( any net income ratios describ$ 9 subp>agraph 7,c74 7c7 ,def9itions & special rules ,t]ms us$ 9 ?is p>agraph t are also us$ 9 section #hhb7;g7 %all h ! same mean+ z :5 us$ 9 su* section & rules simil> to ! rules ( p>agraphs 7#e7 & 7#f7 ( su* section %all apply = purposes ( ?is p>agraph4 4 7,b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] ! item relat+ to section #fjch;,d ! foll[+ new item3 ,sec4 #fjch;,e4 ,in=mation ) respect to c]ta9 paym5ts f dome/ic corporations to relat$ =eign corporations4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ,decemb] #ca1 #bjah4 ,e ,provisions relat$ to possessions ( ! ,unit$ ,/ates #ddja4 ,ext5sion ( d$uction all[able ) respect to income attributable to dome/ic production activities 9 ,pu]to ,rico 7a7 ,9 g5]al ,section #aii7;d77#h77;,c71 prior to its repeal by ?is ,act1 is am5d$-- 7#a7 by /rik+ fir/ #aa taxable ye>s & ins]t+ fir/ #ab taxable ye>s1 & 7#b7 by /rik+ ,janu>y #a1 #bjag & ins]t+ ,janu>y #a1 #bjah4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 #ddjb4 ,ext5sion ( tempor>y increase 9 limit on cov] ov] ( rum excise taxes to ,pu]to ,rico & ! ,virg9 ,isl&s 7a7 ,9 g5]al ,section #gfeb7;f77#a7 is am5d$ by /rik+ ,janu>y #a1 #bjag & ins]t+ ,janu>y #a1 #bjbc4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to di/ill$ spirits br\ght into ! ,unit$ ,/ates aft] ,decemb] #ca1 #bjaf4 #ddjc4 ,ext5sion ( ,am]ican ,samoa economic developm5t cr$it 7a7 ,9 g5]al ,section #aai7;d7 ( division ,a ( ! ,tax ,relief & ,heal? ,c>e ,act ( #bjjf is am5d$-- 7#a7 by /rik+ ,janu>y #a1 #bjag ea* place x appe>s & ins]t+ ,janu>y #a1 #bjbc1 7#b7 by /rik+ fir/ #aa taxable ye>s 9 p>agraph 7#a7 & ins]t+ fir/ #ag taxable ye>s1 & 7#c7 by /rik+ fir/ #e taxable ye>s 9 p>agraph 7#b7 & ins]t+ fir/ #aa taxable ye>s4 7b7 ,treatm5t ( c]ta9 ref]5ces ,section #aai7;e7 ( division ,a ( ! ,tax ,relief & ,heal? ,c>e ,act ( #bjjf is am5d$ by add+ at ! end ! foll[+3 ,ref]5ces 9 ?is subsection to section #aii ( ! ,int]nal ,rev5ue ,code ( #aihf %all be treat$ z ref]5ces to su* section z 9 effect be=e its repeal by ! ,tax ,cuts & ,jobs ,act44 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 ,f ,o!r int]national re=ms #deja4 ,re/riction on insurance bus9ess exception to passive =eign inve/m5t company rules 7a7 ,9 g5]al ,section #abig7;b77#b77;,b7 is am5d$ to read z foll[s3 7,b7 d]iv$ 9 ! active conduct ( an insurance bus9ess by a qualify+ insurance corporation 7z def9$ 9 subsection 7f771 4 7b7 ,qualify+ insurance corporation def9$ ,section #abig is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,qualify+ insurance corporation ,= purposes ( subsection 7b77#b77;,b7-- 7#a7 ,9 g5]al ,! t]m qualify+ insurance corporation means1 ) respect to any taxable ye>1 a =eign corporation-- 7,a7 :i* w\ld be subject to tax "u sub*apt] ,l if su* corporation 7 a dome/ic corporation1 & 7,b7 ! applicable insurance liabilities ( :i* con/itute m ?an #be p]c5t ( its total assets1 det]m9$ on ! basis ( su* liabilities & assets z report$ on ! corporation's applicable f9ancial /atem5t = ! la/ ye> end+ ) or )9 ! taxable ye>4 7#b7 ,alt]native facts & circum/ances te/ = c]ta9 corporations ,if a corporation fails to qualify z a qualifi$ insurance corporation "u p>agraph 7#a7 solely because ! p]c5tage det]m9$ "u p>agraph 7#a77;,b7 is #be p]c5t or less1 a ,unit$ ,/ates p]son t owns /ock 9 su* corporation may elect to treat su* /ock z /ock ( a qualify+ insurance corporation if-- 7,a7 ! p]c5tage s det]m9$ = ! corporation is at lea/ #aj p]c5t1 & 7,b7 "u regulations provid$ by ! ,secret>y1 bas$ on ! applicable facts & circum/ances-- 7i7 ! corporation is pr$om9antly engag$ 9 an insurance bus9ess1 & 7ii7 su* failure is due solely to run(f-relat$ or rat+-relat$ circum/ances involv+ su* insurance bus9ess4 7#c7 ,applicable insurance liabilities ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m applicable insurance liabilities means1 ) respect to any life or prop]ty & casualty insurance bus9ess-- 7i7 loss & loss adju/m5t exp5ses1 & 7ii7 res]ves 7o!r ?an defici5cy1 cont+5cy1 or une>n$ premium res]ves7 = life & heal? insurance risks & life & heal? insurance claims ) respect to contracts provid+ cov]age = mortality or morbidity risks4 7,b7 ,limitations on am\nt ( liabilities ,any am\nt det]m9$ "u clause 7i7 or 7ii7 ( subp>agraph 7,a7 %all n exce$ ! less] ( su* am\nt-- 7i7 z report$ to ! applicable insurance regulatory body 9 ! applicable f9ancial /atem5t describ$ 9 p>agraph 7#d77;,a7 7or1 if less1 ! am\nt requir$ by applicable law or regulation71 or 7ii7 z det]m9$ "u regulations prescrib$ by ! ,secret>y4 7#d7 ,o!r def9itions & rules ,= purposes ( ?is subsection-- 7,a7 ,applicable f9ancial /atem5t ,! t]m applicable f9ancial /atem5t means a /atem5t = f9ancial report+ purposes :i*-- 7i7 is made on ! basis ( g5]ally accept$ acc\nt+ pr9ciples1 7ii7 is made on ! basis ( int]national f9ancial report+ /&>ds1 b only if !re is no /atem5t t meets ! requirem5t ( clause 7i71 or 7iii7 except z o!rwise provid$ by ! ,secret>y 9 regulations1 is ! annual /atem5t :i* is requir$ to be fil$ ) ! applicable insurance regulatory body1 b only if !re is no /atem5t :i* meets ! requirem5ts ( clause 7i7 or 7ii74 7,b7 ,applicable insurance regulatory body ,! t]m applicable insurance regulatory body means1 ) respect to any insurance bus9ess1 ! entity e/abli%$ by law to lic5se1 au?orize1 or regulate su* bus9ess & to :i* ! /atem5t describ$ 9 subp>agraph 7,a7 is provid$4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,v ,exempt organizations ,a ,unrelat$ ,bus9ess ,income ,tax #ejja4 ,cl>ification ( unrelat$ bus9ess income tax treatm5t ( entities treat$ z exempt f taxation "u section #eja7;a7 7a7 ,9 g5]al ,section #eaa is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,organizations & tru/s exempt f taxation n solely by reason ( section #eja7;a7 ,= purposes ( subsections 7a77#b7 & 7b77#b71 an organization or tru/ %all n fail to be treat$ z exempt f taxation "u ?is subtitle by reason ( section #eja7;a7 solely because su* organization is also s exempt1 or excludes am\nts f gross income1 by reason ( any o!r provision ( ?is title4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #ejjb4 ,exclusion ( rese>* income limit$ to publicly available rese>* 7a7 ,9 g5]al ,section #eab7;b77#i7 is am5d$ by /rik+ f rese>* & ins]t+ f su* rese>*4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,b ,excise ,taxes #eaja4 ,simplification ( excise tax on private f\ndation inve/m5t income 7a7 ,rate r$uction ,section #didj7;a7 is am5d$ by /rik+ #b p]c5t & ins]t+ #a4d p]c5t4 7b7 ,repeal ( special rules = c]ta9 private f\ndations ,section #didj is am5d$ by /rik+ subsection 7e74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #eajb4 ,private op]at+ f\ndation requirem5ts relat+ to op]ation ( art museum 7a7 ,9 g5]al ,section #didb7;j7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,organization op]at+ art museum ,= purposes ( ?is section1 ! t]m op]at+ f\ndation %all n include an organization :i* op]ates an art museum z a sub/antial activity unless su* museum is op5 dur+ normal bus9ess h\rs to ! public = at lea/ #a1jjj h\rs dur+ ! taxable ye>4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #eajc4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 7a7 ,9 g5]al ,*apt] #db is am5d$ by add+ at ! end ! foll[+ new sub*apt]3 ,h ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities ,sec4 #difi4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities4 #difi4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 7a7 ,tax impos$ ,!re is h]eby impos$ on ea* applicable educational in/itution = ! taxable ye> a tax equal to #a4d p]c5t ( ! net inve/m5t income ( su* in/itution = ! taxable ye>4 7b7 ,applicable educational in/itution ,= purposes ( ?is sub*apt]-- 7#a7 ,9 g5]al ,! t]m applicable educational in/itution means an eligible educational in/itution 7z def9$ 9 section #be;,a7e77#c77-- 7,a7 :i* has at lea/ #ejj /ud5ts dur+ ! prec$+ taxable ye>1 7,b7 :i* is n describ$ 9 ! fir/ s5t5ce ( section #eaa7;a77#b77;,b71 & 7,c7 ! aggregate fair m>ket value ( ! assets ( :i* at ! end ( ! prec$+ taxable ye> 7o!r ?an ^? assets :i* are us$ directly 9 c>ry+ out ! in/itution's exempt purpose7 is at lea/ #bej1jjj p] /ud5t ( ! in/itution4 7#b7 ,/ud5ts ,= purposes ( p>agraph 7#a71 ! numb] ( /ud5ts ( an in/itution %all be bas$ on ! daily av]age numb] ( full-"t /ud5ts att5d+ su* in/itution 7) "p-"t /ud5ts tak5 into acc\nt on a full-"t /ud5t equival5t basis74 7c7 ,net inve/m5t income ,= purposes ( ?is section1 net inve/m5t income %all be det]m9$ "u rules simil> to ! rules ( section #didj7;c74 7d7 ,assets & net inve/m5t income ( relat$ organizations 7#a7 ,9 g5]al ,= purposes ( subsections 7b77#a77;,c7 & 7c71 ! assets & net inve/m5t income ( any relat$ organization %all be treat$ z ! assets & net inve/m5t income ( ! eligible educational in/itution4 7#b7 ,relat$ organization ,= purposes ( ?is subsection1 ! t]m relat$ organization means1 ) respect to an eligible educational in/itution1 any organization :i*-- 7,a7 controls1 or is controll$ by1 su* in/itution1 7,b7 is controll$ by "o or m p]sons t control su* in/itution1 or 7,c7 is a support$ organization 7z def9$ 9 section #eji7;f77#c771 or an organization describ$ 9 section #eji7;a77#c71 dur+ ! taxable ye> ) respect to su* in/itution4 4 7b7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #db is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,h--,excise tax bas$ on inve/m5t income ( private colleges & univ]sities 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #eajd4 ,exception f private f\ndation excess bus9ess hold+ tax = indep5d5tly-op]at$ philan?ropic bus9ess hold+s 7a7 ,9 g5]al ,section #didc is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,exception = c]ta9 hold+s limit$ to indep5d5tly-op]at$ philan?ropic bus9ess 7#a7 ,9 g5]al ,subsection 7a7 %all n apply ) respect to ! hold+s ( a private f\ndation 9 any bus9ess ent]prise :i* = ! taxable ye> meets-- 7,a7 ! own]%ip requirem5ts ( p>agraph 7#b71 7,b7 ! all pr(its to *>ity di/ribution requirem5t ( p>agraph 7#c71 & 7,c7 ! indep5d5t op]ation requirem5ts ( p>agraph 7#d74 7#b7 ,own]%ip ,! own]%ip requirem5ts ( ?is p>agraph are met if-- 7,a7 #ajj p]c5t ( ! vot+ /ock 9 ! bus9ess ent]prise is held by ! private f\ndation at all times dur+ ! taxable ye>1 & 7,b7 all ! private f\ndation's own]%ip int]e/s 9 ! bus9ess ent]prise 7 acquir$ n by pur*ase4 7#c7 ,all pr(its to *>ity 7,a7 ,9 g5]al ,! all pr(its to *>ity di/ribution requirem5t ( ?is p>agraph is met if ! bus9ess ent]prise1 n lat] ?an #abj days aft] ! close ( ! taxable ye>1 di/ributes an am\nt equal to its net op]at+ income = su* taxable ye> to ! private f\ndation4 7,b7 ,net op]at+ income ,= purposes ( ?is p>agraph1 ! net op]at+ income ( any bus9ess ent]prise = any taxable ye> is an am\nt equal to ! gross income ( ! bus9ess ent]prise = ! taxable ye>1 r$uc$ by ! sum (-- 7i7 ! d$uctions all[$ by *apt] #a = ! taxable ye> :i* are directly connect$ ) ! production ( su* income1 7ii7 ! tax impos$ by *apt] #a on ! bus9ess ent]prise = ! taxable ye>1 & 7iii7 an am\nt = a reasonable res]ve = work+ capital & o!r bus9ess ne$s ( ! bus9ess ent]prise4 7#d7 ,indep5d5t op]ation ,! indep5d5t op]ation requirem5ts ( ?is p>agraph are met if1 at all times dur+ ! taxable ye>-- 7,a7 no sub/antial contributor 7z def9$ 9 section #dieh7;c77#c77;,c77 to ! private f\ndation1 or family memb] ( su* a contributor 7det]m9$ "u section #dieh7;f77#d77 is a director1 (fic]1 tru/ee1 manag]1 employee1 or contractor ( ! bus9ess ent]prise 7or an individual hav+ p[]s or responsibilities simil> to any ( ! =ego+71 7,b7 at lea/ a majority ( ! bo>d ( directors ( ! private f\ndation are n-- 7i7 also directors or (fic]s ( ! bus9ess ent]prise1 or 7ii7 memb]s ( ! family 7det]m9$ "u section #dieh7;f77#d77 ( a sub/antial contributor 7z def9$ 9 section #dieh7;c77#c77;,c77 to ! private f\ndation1 & 7,c7 !re is no loan out/&+ f ! bus9ess ent]prise to a sub/antial contributor 7z s def9$7 to ! private f\ndation or a family memb] ( su* contributor 7z s det]m9$74 7#e7 ,c]ta9 deem$ private f\ndations exclud$ ,?is subsection %all n apply to-- 7,a7 any fund or organization treat$ z a private f\ndation = purposes ( ?is section by reason ( subsection 7e7 or 7f71 7,b7 any tru/ describ$ 9 section #didg7;a77#a7 7relat+ to *>itable tru/s71 & 7,c7 any tru/ describ$ 9 section #didg7;a77#b7 7relat+ to split-int]e/ tru/s74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,c ,requirem5ts = organizations exempt f tax #ebja4 #eja7;c77#c7 organizations p]mitt$ to make /atem5ts relat+ to political campaign 9 ord9>y c\rse ( activities 7a7 ,9 g5]al ,section #eja is am5d$ by add+ at ! end ! foll[+ new subsection3 7s7 ,special rule relat+ to political campaign /atem5ts ( organizations describ$ 9 subsection 7c77#c7 7#a7 ,9 g5]al ,= purposes ( subsection 7c77#c7 & sections #agj7;c77#b71 #bjee1 #bajf1 #bebb1 & #diee1 an organization %all n fail to be treat$ z organiz$ & op]at$ exclusively = a purpose describ$ 9 subsection 7c77#c71 nor %all x be deem$ to h p>ticipat$ 91 or int]v5$ 9 any political campaign on behalf ( 7or 9 opposition to7 any c&idate = public (fice1 solely because ( ! cont5t ( any /atem5t :i*-- 7,a7 is made 9 ! ord9>y c\rse ( ! organization's regul> & cu/om>y activities 9 c>ry+ out its exempt purpose1 & 7,b7 results 9 ! organization incurr+ n m ?an de m9imis increm5tal exp5ses4 7#b7 ,t]m9ation ,p>agraph 7#a7 %all n apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbc4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 #ebjb4 ,additional report+ requirem5ts = donor advis$ fund sponsor+ organizations 7a7 ,9 g5]al ,section #fjcc7k7 is am5d$ by /rik+ & at ! end ( p>agraph 7#b71 by /rik+ ! p]iod at ! end ( p>agraph 7#c71 & by add+ at ! end ! foll[+ new p>agraphs3 7#d7 indicate ! av]age am\nt ( grants made f su* funds dur+ su* taxable ye> 7express$ z a p]c5tage ( ! value ( assets held 9 su* funds at ! beg9n+ ( su* taxable ye>71 & 7#e7 indicate :e!r ! organization has a policy ) respect to donor advis$ funds 7z s def9$7 = frequ5cy & m9imum level ( di/ributions4 ,su* organization %all include ) su* return a copy ( any policy describ$ 9 p>agraph 7#e74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply = returns fil$ = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,pass$ ! ,h\se ( ,repres5tatives ,novemb] #af1 #bjag4,k>5 ,l4 ,haas1,cl]k ,novemb] #bh1 #bjag,read ! second "t & plac$ on ! cal5d>