,,ii ,cal5d> ,no4 #bfi #aae? ,,congress #a/ ,session ,s4 #a ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,novemb] #bh1 #bjag ,mr4 ,enzi1 f ! ,committee on ! ,budget1 report$ ! foll[+ orig9al bill2 :i* 0 read twice & plac$ on ! cal5d> ,a ,,bill ,to provide = reconciliation pursuant to title ,,ii ( ! concurr5t resolution on ! budget = fiscal ye> #bjah4 ,i #aajjj4 ,%ort title1 etc 7a7 ,%ort title ,?is title may be cit$ z ! ,tax ,cuts & ,jobs ,act4 7b7 ,am5dm5t ( #aihf code ,except z o!rwise expressly provid$1 :5ev] 9 ?is title an am5dm5t or repeal is express$ 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 ,a ,individual tax re=m ,i ,tax rate re=m #aajja4 ,modification ( rates 7a7 ,9 g5]al ,section #a is am5d$ by add+ at ! end ! foll[+ new subsection3 7j7 ,modifications = taxable ye>s #bjah ?r\gh #bjbe 7#a7 ,9 g5]al ,9 ! case ( a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 subsection 7i7 %all n apply1 & 7,b7 ?is section 7o!r ?an subsection 7i77 %all be appli$ z provid$ 9 p>agraphs 7#b7 ?r\gh 7#g74 7#b7 ,rate tables 7,a7 ,m>ri$ individuals fil+ jo9t returns & surviv+ sp\ses ,! foll[+ table %all be appli$ 9 lieu ( ! table conta9$ 9 subsection 7a73 ,if taxable income is3,! tax is3,n ov] #ai1jejaj ( taxable income4,ov] #ai1jej b n ov] #gg1djja1ije1 plus #ab ( ! excess ov] #ai1jej4,ov] #gg1djj b n ov] #adj1jjjh1ijg1 plus #bb ( ! excess ov] #gg1djj4,ov] #adj1jjj b n ov] #cbj1jjjbb1fgi1 plus #bd ( ! excess ov] #adj1jjj4,ov] #cbj1jjj b n ov] #djj1jjjfe1hgi1 plus #cb ( ! excess ov] #cbj1jjj4,ov] #djj1jjj b n ov] #a1jjj1jjjia1dgi1 plus #ce ( ! excess ov] #djj1jjj4,ov] #a1jjj1jjjcja1dgi plus #ch4e ( ! excess ov] #a1jjj1jjj4 7,b7 ,heads ( h\seholds ,! foll[+ table %all be appli$ 9 lieu ( ! table conta9$ 9 subsection 7b73 ,if taxable income is3,! tax is3,n ov] #ac1fjjaj ( taxable income4,ov] #ac1fjj b n ov] #ea1hjja1cfj1 plus #ab ( ! excess ov] #ac1fjj4,ov] #ea1hjj b n ov] #gj1jjje1idd1 plus #bb ( ! excess ov] #ea1hjj4,ov] #gj1jjj b n ov] #afj1jjji1idh1 plus #bd ( ! excess ov] #gj1jjj4,ov] #afj1jjj b n ov] #bjj1jjjca1edh1 plus #cb ( ! excess ov] #afj1jjj4,ov] #bjj1jjj b n ov] #ejj1jjjdd1cdh1 plus #ce ( ! excess ov] #bjj1jjj4,ov] #ejj1jjjadi1cdh1 plus #ch4e ( ! excess ov] #ejj1jjj4 7,c7 ,unm>ri$ individuals o!r ?an surviv+ sp\ses & heads ( h\seholds ,! foll[+ table %all be appli$ 9 lieu ( ! table conta9$ 9 subsection 7c73 ,if taxable income is3,! tax is3,n ov] #i1ebeaj ( taxable income4,ov] #i1ebe b n ov] #ch1gjjieb4ej1 plus #ab ( ! excess ov] #i1ebe4,ov] #ch1gjj b n ov] #gj1jjjd1dec4ej1 plus #bb ( ! excess ov] #ch1gjj4,ov] #gj1jjj b n ov] #afj1jjjaa1cci4ej1 plus #bd ( ! excess ov] #gj1jjj4,ov] #afj1jjj b n ov] #bjj1jjjcb1ici4ej1 plus #cb ( ! excess ov] #afj1jjj4,ov] #bjj1jjj b n ov] #ejj1jjjde1gci4ej1 plus #ce ( ! excess ov] #bjj1jjj4,ov] #ejj1jjjaej1gci4ej1 plus #ch4e ( ! excess ov] #ejj1jjj4 7,d7 ,m>ri$ individuals fil+ sep>ate returns ,! foll[+ table %all be appli$ 9 lieu ( ! table conta9$ 9 subsection 7d73 ,if taxable income is3,! tax is3,n ov] #i1ebeaj ( taxable income4,ov] #i1ebe b n ov] #ch1gjjieb4ej1 plus #ab ( ! excess ov] #i1ebe4,ov] #ch1gjj b n ov] #gj1jjjd1dec4ej1 plus #bb ( ! excess ov] #ch1gjj4,ov] #gj1jjj b n ov] #afj1jjjaa1cci4ej1 plus #bd ( ! excess ov] #gj1jjj4,ov] #afj1jjj b n ov] #bjj1jjjcb1ici4ej1 plus #cb ( ! excess ov] #afj1jjj4,ov] #bjj1jjj b n ov] #ejj1jjjde1gci4ej1 plus #ce ( ! excess ov] #bjj1jjj4,ov] #ejj1jjjaej1gci4ej1 plus #ch4e ( ! excess ov] #ejj1jjj4 7,e7 ,e/ates & tru/s ,! foll[+ table %all be appli$ 9 lieu ( ! table conta9$ 9 subsection 7e73 ,if taxable income is3,! tax is3,n ov] #b1eejaj ( taxable income4,ov] #b1eej b n ov] #i1aejbee1 plus #bd ( ! excess ov] #b1eej4,ov] #i1aej b n ov] #ab1ejja1hci1 plus #ce ( ! excess ov] #i1aej4,ov] #ab1ejjc1jaa4ej1 plus #ch4e ( ! excess ov] #ab1ejj4 7,f7 ,ref]5ces to rate tables ,any ref]5ce 9 ?is title to a rate ( tax "u subsection 7c7 %all be treat$ z a ref]5ce to ! correspond+ rate bracket "u subp>agraph 7,c7 ( ?is p>agraph1 except t ! ref]5ce 9 section #cdjb7q77#a7 to ! ?ird l[e/ rate ( tax applicable "u subsection 7c7 %all be treat$ z a ref]5ce to ! f\r? l[e/ rate ( tax "u subp>agraph 7,c74 7#c7 ,adju/m5ts1 elim9ation ( m>riage p5alty2 etc 7,a7 ,no adju/m5t 9 #bjah ,! tables conta9$ 9 p>agraph 7#b7 %all apply )\t adju/m5t = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjai4 7,b7 ,subsequ5t ye>s ,= taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah1 ! ,secret>y %all prescribe tables :i* %all apply 9 lieu ( ! tables conta9$ 9 p>agraph 7#b7 9 ! same mann] z "u p>agraphs 7#a7 & 7#b7 ( subsection 7f71 except t 9 prescrib+ su* tables-- 7i7 subsection 7f77#c7 %all be appli$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(1 & 7ii7 subsection 7f77#g7 %all n apply &-- 7,i7 ! maximum taxable income 9 ea* ( ! rate brackets 9 ! table conta9$ 9 p>agraph 7#b77;,a7 7& ! m9imum taxable income 9 ! next high] taxable income bracket ) respect to ea* su* bracket 9 su* table7 %all be #bjj p]c5t ( ! maximum taxable income 9 ! correspond+ rate bracket 9 ! table conta9$ 9 p>agraph 7#b77;,c7 7aft] any o!r adju/m5t "u p>agraph 7#c771 & 7,,ii7 ! comp>able taxable income am\nts 9 ! table conta9$ 9 p>agraph 7#b77;,d7 %all be ( ! am\nts det]m9$ "u subp>agraph 7,a74 7#d7 ,special rules = c]ta9 *ildr5 ) une>n$ income 7,a7 ,9 g5]al ,9 ! case ( a *ild to :om subsection 7g7 applies = ! taxable ye>1 ! rules ( subp>agraphs 7,b7 & 7,c7 %all apply 9 lieu ( ! rule "u subsection 7g77#a74 7,b7 ,modifications to applicable rate brackets ,9 det]m9+ ! am\nt ( tax impos$ by ?is section = ! taxable ye> on a *ild describ$ 9 subp>agraph 7,a71 ! income tax table o!rwise applicable "u ?is subsection to ! *ild %all be appli$ ) ! foll[+ modifications3 7i7 #bd-p]c5t bracket ,! maximum taxable income :i* is tax$ at a rate bel[ #bd p]c5t %all n be m ?an ! e>n$ taxable income ( su* *ild4 7ii7 #ce-p]c5t bracket ,! maximum taxable income :i* is tax$ at a rate bel[ #ce p]c5t %all n be m ?an ! sum (-- 7,i7 ! e>n$ taxable income ( su* *ild1 plus 7,,ii7 ! m9imum taxable income = ! #ce-p]c5t bracket 9 ! table "u p>agraph 7#b77;,e7 7z adju/$ "u p>agraph 7#c77 = ! taxable ye>4 7iii7 #ch4e-p]c5t bracket ,! maximum taxable income :i* is tax$ at a rate bel[ #ch4e p]c5t %all n be m ?an ! sum (-- 7,i7 ! e>n$ taxable income ( su* *ild1 plus 7,,ii7 ! m9imum taxable income = ! #ch4e-p]c5t bracket 9 ! table "u p>agraph 7#b77;,e7 7z adju/$ "u p>agraph 7#c77 = ! taxable ye>4 7,c7 ,coord9ation ) capital ga9s rates ,= purposes ( apply+ section #a7;h7 7aft] ! modifications "u p>agraph 7#e77-- 7i7 ! maximum z]o rate am\nt %all n be m ?an ! sum (-- 7,i7 ! e>n$ taxable income ( su* *ild1 plus 7,,ii7 ! am\nt 9 effect "u p>agraph 7#e77;,b77i77,,iv7 = ! taxable ye>1 & 7ii7 ! maximum #ae-p]c5t rate am\nt %all n be m ?an ! sum (-- 7,i7 ! e>n$ taxable income ( su* *ild1 plus 7,,ii7 ! am\nt 9 effect "u p>agraph 7#e77;,b77ii77,,iv7 = ! taxable ye>4 7,d7 ,e>n$ taxable income ,= purposes ( ?is p>agraph1 ! t]m e>n$ taxable income means1 ) respect to any *ild = any taxable ye>1 ! taxable income ( su* *ild r$uc$ 7b n bel[ z]o7 by ! net une>n$ income 7z def9$ 9 subsection 7g77#d77 ( su* *ild4 7#e7 ,application ( curr5t income tax brackets to capital ga9s brackets 7,a7 ,9 g5]al ,section #a7;h77#a7 %all be appli$-- 7i7 by sub/itut+ bel[ ! maximum z]o rate am\nt = :i* w\ld 7)\t reg>d to ?is p>agraph7 be tax$ at a rate bel[ #be p]c5t 9 subp>agraph 7,b77i71 & 7ii7 by sub/itut+ bel[ ! maximum #ae-p]c5t rate am\nt = :i* w\ld 7)\t reg>d to ?is p>agraph7 be tax$ at a rate bel[ #ci4f p]c5t 9 subp>agraph 7,c77ii77,i74 7,b7 ,maximum am\nts def9$ ,= purposes ( apply+ section #a7;h7 ) ! modifications describ$ 9 subp>agraph 7,a7-- 7i7 ,maximum z]o rate am\nt ,! maximum z]o rate am\nt %all be-- 7,i7 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 7,,ii7 9 ! case ( an individual :o is a head ( h\sehold 7z def9$ 9 section #b7;b771 #ea1gjj1 7,,iii7 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 & 7,,iv7 9 ! case ( an e/ate or tru/1 #b1fjj4 7ii7 ,maximum #ae-p]c5t rate am\nt ,! maximum #ae-p]c5t rate am\nt %all be-- 7,i7 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 7,,ii7 9 ! case ( an individual :o is ! head ( a h\sehold 7z def9$ 9 section #b7;b771 #deb1djj1 7,,iii7 9 ! case ( any o!r individual 7o!r ?an an e/ate or tru/71 #dbe1hjj1 & 7,,iv7 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 clauses 7i7 & 7ii7 ( subp>agraph 7,b7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u subsection 7f77#c7 = ! 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#f7 ,section #ae n to apply ,section #ae %all n apply to any *ange 9 a rate ( tax by reason ( ?is subsection4 4 7b7 ,due dilig5ce tax prep>] requirem5t ) respect to head ( h\sehold fil+ /atus ,subsection 7g7 ( section #ffie is am5d$ to read z foll[s3 7g7 ,failure to be dilig5t 9 det]m9+ eligibility = c]ta9 tax b5efits ,any p]son :o is a tax return prep>] ) respect to any return or claim = refund :o fails to comply ) due dilig5ce requirem5ts impos$ by ! ,secret>y by regulations ) respect to det]m9+-- 7#a7 eligibility to file z a head ( h\sehold 7z def9$ 9 section #b7;b77 on ! return1 or 7#b7 eligibility =1 or ! am\nt (1 ! cr$it all[able by section #bd1 #be;,a7a77#a71 or #cb1 %all pay a p5alty ( #ejj = ea* su* failure4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajjb4 ,inflation adju/m5ts bas$ on *a9$ ,,cpi 7a7 ,9 g5]al ,subsection 7f7 ( section #a is am5d$ by /rik+ p>agraph 7#c7 & by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,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 ! ,,cpi = cal5d> ye> #bjaf1 multipli$ by ! am\nt det]m9$ "u subp>agraph 7,b74 7,b7 ,am\nt det]m9$ ,! am\nt det]m9$ "u ?is clause is ! am\nt obta9$ by divid+-- 7i7 ! ,c-,,cpi-,u = cal5d> ye> #bjaf1 by 7ii7 ! ,,cpi = cal5d> ye> #bjaf4 7,c7 ,special rule = adju/m5ts ) a base ye> aft] #bjaf ,= purposes ( any provision ( ?is title :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 = cal5d> ye> #bjaf = ! ,,cpi = cal5d> ye> #bjaf & all t foll[s 9 clause 7ii7 !re(4 4 7b7 ,c-,,cpi-,u ,subsection 7f7 ( section #a is am5d$ by /rik+ p>agraph 7#g71 by r$esignat+ p>agraph 7#f7 z p>agraph 7#g71 & by ins]t+ aft] p>agraph 7#e7 ! foll[+ new p>agraph3 7#f7 ,c-,,cpi-,u ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,c-,,cpi-,u means ! ,*a9$ ,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$+ cal5d> ye>4 7,b7 ,det]m9ation = cal5d> ye> ,! ,c-,,cpi-,u = any cal5d> ye> is ! av]age ( ! ,c-,,cpi-,u z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 4 7c7 ,application to p]man5t tax tables ,section #a7;f77#b77;,a7 is am5d$ by ins]t+ 1 det]m9$ by sub/itut+ #aiib = #bjaf 9 p>agraph 7#c77;,a77ii74 7d7 ,application to o!r ,int]nal ,rev5ue ,code ( #aihf provisions 7#a7 ,! foll[+ sections are ea* am5d$ by /rik+ = cal5d> ye> #aiib 9 subp>agraph 7,b7 & ins]t+ = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii73 7,a7 ,section #bc7;h77#b74 7,b7 ,p>agraphs 7#a77;,a77ii7 & 7#b77;,a77ii7 ( section #be;,a7h74 7,c7 ,section #be;,b7b77#c77;,b74 7,d7 ,subsection 7b77#b77;,b77ii77,,ii71 & clauses 7i7 & 7ii7 ( subsection 7j77#a77;,b71 ( section #cb4 7,e7 ,section #cf;,b7f77#b77;,b77ii77,,ii74 7,f7 ,section #da7;e77#e77;,c77i74 7,g7 ,subsections 7e77#c77;,d77ii7 & 7h77#c77;,h77i77,,ii7 ( section #db4 7,h7 ,section #de,r7d77#c77;,b77ii74 7,i7 ,section #fb7;d77#c77;,b74 7,j7 ,section #abe7;i77#b77;,b74 7,k7 ,section #ace7;b77#b77;,b77ii74 7,l7 ,section #acg7;f77#b74 7,m7 ,section #adf7;d77#b77;,b74 7,n7 ,section #adg7;c77#b77;,h77ii74 7,o7 ,section #agi7;b77#f77;,a77ii74 7,p7 ,subsections 7b77#e77;,c77i77,,ii7 & 7g77#h77;,b7 ( section #bai4 7,q7 ,section #bbj7;g77#b74 7,r7 ,section #bba7;f77#a77;,b74 7,s7 ,section #bbc7;g77#a77;,b74 7,t7 ,section #djh;,a7c77#c77;,d77ii74 7,u7 ,section #dcj7;c77#g77;,d77vii77,,ii74 7,v7 ,section #eab7;d77#b77;,b74 7,w7 ,section #eac7;h77#b77;,c77ii74 7,x7 ,section #hca7;b77#b77;,d77ii74 7,y7 ,section #hgg;,a7a77#c77;,b77i77,,ii74 7,z7 ,section #bjaj7;c77#c77;,b77ii74 7,,aa7 ,section #bjcb;,a7a77#c77;,b74 7,,bb7 ,section #bejc7;b77#b77;,b74 7,,cc7 ,section #dbfa7;e77#d77;,a77ii74 7,,dd7 ,section #ejjj;,a7c77#c77;,d77ii74 7,,ee7 ,section #fcbc7;i77#d77;,b74 7,,ff7 ,section #fccd7;g77#a77;,b74 7,,gg7 ,section #ffja7;j77#c77;,b74 7,,hh7 ,section #ffea7;i77#a74 7,,ii7 ,section #ffeb7;c77#g77;,a74 7,,jj7 ,section #ffie7;h77#a74 7,,kk7 ,section #ffih7;e77#a74 7,,ll7 ,section #ffii7;e77#a74 7,,mm7 ,section #fgba7;f77#a74 7,,nn7 ,section #fgbb7;f77#a74 7,,oo7 ,section #gcde7;f77#b74 7,,pp7 ,section #gdcj7;c77#a74 7,,qq7 ,section #ihca7;d77#b77;,d77ii77,,ii74 7#b7 ,section #da7;e77#e77;,c77ii7 is am5d$-- 7,a7 by /rik+ #a7;f77#c77;,b7 & ins]t+ #a7;f77#c77;,a77ii71 & 7,b7 by /rik+ #aiib & ins]t+ #bjaf4 7#c7 ,section #db7;h77#f77;,g7 is am5d$-- 7,a7 by /rik+ = cal5d> ye> #aihg 9 clause 7i77,,ii7 & ins]t+ = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(1 & 7,b7 by /rik+ if ! ,,cpi = any cal5d> ye> & all t foll[s 9 clause 7ii7 & ins]t+ if ! ,c-,,cpi-,u = any cal5d> ye> 7z def9$ 9 section #a7;f77#f77 exce$s ! ,c-,,cpi-,u = ! prec$+ cal5d> ye> by m ?an #e p]c5t1 ! ,c-,,cpi-,u = ! base cal5d> ye> %all be increas$ su* t su* excess %all nev] be tak5 into acc\nt "u clause 7i74 ,9 ! case ( a base cal5d> ye> be=e #bjag1 ! ,c-,,cpi-,u = su* ye> %all be det]m9$ by multiply+ ! ,,cpi = su* ye> by ! am\nt det]m9$ "u section #a7;f77#c77;,b744 7#d7 ,section #acb7;f77#f77;,a77ii7 is am5d$ by /rik+ = cal5d> ye> #aiib & ins]t+ = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 7#e7 ,section #afb7o77#c7 is am5d$ by /rik+ adju/$ = *anges 9 ! ,consum] ,price ,index 7z def9$ 9 section #a7;f77#e77 s9ce #aiia & ins]t+ 8adju/$ by increas+ any su* am\nt "u ! #aiia agreem5t by an am\nt equal to-- 7,a7 su* am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #aiij = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re( 4 7#f7 ,s mu* ( clause 7ii7 ( section #bac7;d77#aj77;,b7 z prec$es ! la/ s5t5ce is am5d$ to read z foll[s3 7ii7 ,m$ical c>e co/ adju/m5t ,= purposes ( clause 7i71 ! m$ical c>e co/ adju/m5t = any cal5d> ye> is ! p]c5tage 7if any7 by :i*-- 7,i7 ! m$ical c>e compon5t ( ! ,c-,,cpi-,u 7z def9$ 9 section #a7;f77#f77 = ,augu/ ( ! prec$+ cal5d> ye>1 exce$s 7,,ii7 su* compon5t ( ! ,,cpi 7z def9$ 9 section #a7;f77#d77 = ,augu/ ( #aiif1 multipli$ by ! am\nt det]m9$ "u section #a7;f77#c77;,b74 4 7#g7 ,section #hgg7;a77#b7 is am5d$ by /rik+ = #aiib 9 subp>agraph 7,b7 & ins]t+ = #bjaf 9 subp>agraph 7,a77ii74 7#h7 ,section #iaa7;b77#b77;,d77ii77,,ii7 is am5d$ by /rik+ = #aiib 9 subp>agraph 7,b7 & ins]t+ = #bjaf 9 subp>agraph 7,a77ii74 7#i7 ,p>agraph 7#b7 ( section #abgd;,a7d7 is am5d$ to read z foll[s3 7#b7 ,adju/m5t = inflation ,9 ! case ( any debt in/rum5t aris+ out ( a sale or ex*ange dur+ any cal5d> ye> aft] #aihi1 ea* doll> am\nt conta9$ 9 ! prec$+ provisions ( ?is section %all be increas$ by an am\nt equal to-- 7,a7 su* am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #aihh = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,any increase "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #ajj 7or1 if su* increase is a multiple ( #ej1 su* increase %all be increas$ to ! ne>e/ multiple ( #ajj74 4 7#aj7 ,section #dafa7;b77#b77;,c77i77,,ii7 is am5d$ by /rik+ = #aiib 9 subp>agraph 7,b7 & ins]t+ = #bjaf 9 subp>agraph 7,a77ii74 7#aa7 ,section #dihj;,i7b77#c77;,c77v77,,ii7 is am5d$ by /rik+ = #aiib 9 subp>agraph 7,b7 & ins]t+ = #bjaf 9 subp>agraph 7,a77ii74 7#ab7 ,section #fjci;,f7d7 is am5d$ by /rik+ subp>agraph 7,b7 !re( %all be appli$ by sub/itut+ #aiie = #aiib & ins]t+ subp>agraph 7,a77ii7 !re( %all be appli$ by sub/itut+ #aiie = #bjaf4 7#ac7 ,section #ghgb7;g77#e7 is am5d$ to read z foll[s3 7#e7 ,adju/m5t ( limit = inflation ,9 ! case ( any loan made dur+ any cal5d> ye> aft] #aihf1 ! doll> am\nt 9 p>agraph 7#b7 %all be increas$ by an am\nt equal to-- 7,a7 su* am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #aihe = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,any increase "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #ajj 7or1 if su* increase is a multiple ( #ej1 su* increase %all be increas$ to ! ne>e/ multiple ( #ajj74 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,ii ,d$uction = qualifi$ bus9ess income ( pass-?ru entities #aajaa4 ,d$uction = qualifi$ bus9ess income 7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #aii;,a4 ,qualifi$ bus9ess income 7a7 ,9 g5]al ,9 ! case ( a taxpay] o!r ?an a corporation1 !re %all be all[$ z a d$uction = any taxable ye> an am\nt equal to ! less] (-- 7#a7 ! comb9$ qualifi$ bus9ess income am\nt ( ! taxpay]1 or 7#b7 an am\nt equal to #ag4d p]c5t ( ! excess 7if any7 (-- 7,a7 ! taxable income ( ! taxpay] = ! taxable ye>1 ov] 7,b7 any net capital ga9 7z def9$ 9 section #a7;h77 ( ! taxpay] = ! taxable ye>4 7b7 ,comb9$ qualifi$ bus9ess income am\nt ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m comb9$ qualifi$ bus9ess income am\nt means1 ) respect to any taxable ye>1 an am\nt equal to-- 7,a7 ! sum ( ! am\nts det]m9$ "u p>agraph 7#b7 = ea* qualifi$ trade or bus9ess c>ri$ on by ! taxpay]1 plus 7,b7 #ag4d p]c5t ( ! aggregate am\nt ( ! qualifi$ ,,reit divid5ds & qualifi$ coop]ative divid5ds ( ! taxpay] = ! taxable ye>4 7#b7 ,det]m9ation ( d$uctible am\nt = ea* trade or bus9ess ,! am\nt det]m9$ "u ?is p>agraph ) respect to any qualifi$ trade or bus9ess is ! less] (-- 7,a7 #ag4d p]c5t ( ! taxpay]'s qualifi$ bus9ess income ) respect to ! qualifi$ trade or bus9ess1 or 7,b7 #ej p]c5t ( ! ,w-#b wages ) respect to ! qualifi$ trade or bus9ess4 7#c7 ,modifications to ! wage limit bas$ on taxable income 7,a7 ,exception f wage limit ,9 ! case ( any taxpay] ^: taxable income = ! taxable ye> does n exce$ ! ?re%old am\nt1 p>agraph 7#b7 %all be appli$ )\t reg>d to subp>agraph 7,b74 7,b7 ,phase-9 ( limit = c]ta9 taxpay]s 7i7 ,9 g5]al ,if-- 7,i7 ! taxable income ( a taxpay] = any taxable ye> exce$s ! ?re%old am\nt1 b does n exce$ ! sum ( ! ?re%old am\nt plus #ej1jjj 7#ajj1jjj 9 ! case ( a jo9t return71 & 7,,ii7 ! am\nt det]m9$ "u p>agraph 7#b77;,b7 7det]m9$ )\t reg>d to ?is subp>agraph7 ) respect to any qualifi$ trade or bus9ess c>ri$ on by ! taxpay] is less ?an ! am\nt det]m9$ "u p>agraph 7#b77;,a7 ) respect su* trade or bus9ess1 !n p>agraph 7#b7 %all be appli$ ) respect to su* trade or bus9ess )\t reg>d to subp>agraph 7,b7 !re( & by r$uc+ ! am\nt det]m9$ "u subp>agraph 7,a7 !re( by ! am\nt det]m9$ "u clause 7ii74 7ii7 ,am\nt ( r$uction ,! am\nt det]m9$ "u ?is subp>agraph is ! am\nt :i* be>s ! same ratio to ! excess am\nt z-- 7,i7 ! am\nt by :i* ! taxpay]'s taxable income = ! taxable ye> exce$s ! ?re%old am\nt1 be>s to 7,,ii7 #ej1jjj 7#ajj1jjj 9 ! case ( a jo9t return74 7iii7 ,excess am\nt ,= purposes ( clause 7ii71 ! excess am\nt is ! excess (-- 7,i7 ! am\nt det]m9$ "u p>agraph 7#b77;,a7 7det]m9$ )\t reg>d to ?is p>agraph71 ov] 7,,ii7 ! am\nt det]m9$ "u p>agraph 7#b77;,b7 7det]m9$ )\t reg>d to ?is p>agraph74 7#d7 ,wages1 etc 7,a7 ,9 g5]al ,! t]m ,w-#b wages means1 ) respect to any p]son = any taxable ye> ( su* p]son1 ! am\nts describ$ 9 p>agraphs 7#c7 & 7#h7 ( section #fjea7;a7 paid by su* p]son ) respect to employm5t ( employees by su* p]son dur+ ! cal5d> ye> end+ dur+ su* taxable ye>4 7,b7 ,limitation to wages attributable to qualifi$ bus9ess income ,su* t]m %all n include any am\nt :i* is n prop]ly allocable to qualifi$ bus9ess income = purposes ( subsection 7c77#a74 7,c7 ,return requirem5t ,su* t]m %all n include any am\nt :i* is n prop]ly includ$ 9 a return fil$ ) ! ,social ,security ,adm9i/ration on or be=e ! #fj? day aft] ! due date 7includ+ ext5sions7 = su* return4 7#e7 ,acquisitions1 dispositions1 & %ort taxable ye>s ,! ,secret>y %all provide = ! application ( ?is subsection 9 cases ( a %ort taxable ye> or :]e ! taxpay] acquires1 or disposes (1 ! major portion ( a trade or bus9ess or ! major portion ( a sep>ate unit ( a trade or bus9ess dur+ ! taxable ye>4 7c7 ,qualifi$ bus9ess income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ bus9ess income means1 = any taxable ye>1 ! net am\nt ( qualifi$ items ( income1 ga91 d$uction1 & loss ) respect to any qualifi$ trade or bus9ess ( ! taxpay]4 7#b7 ,c>ryov] ( losses ,if ! net am\nt ( qualifi$ income1 ga91 d$uction1 & loss ) respect to qualifi$ trade or bus9esses ( ! taxpay] am\nt = any taxable ye> is less ?an z]o1 su* am\nt %all be treat$ z a loss f a qualifi$ trade or bus9ess 9 ! succe$+ taxable ye>4 7#c7 ,qualifi$ items ( income1 ga91 d$uction1 & loss ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ items ( income1 ga91 d$uction1 & loss means items ( income1 ga91 d$uction1 & loss to ! ext5t su* items are-- 7i7 effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates 7)9 ! mean+ ( section #hfd7;c71 det]m9$ by sub/itut+ qualifi$ trade or bus9ess 7)9 ! mean+ ( section #aii;,a7 = nonresid5t ali5 individual or a =eign corporation or = a =eign corporation ea* place x appe>s71 & 7ii7 includ$ or all[$ 9 det]m9+ taxable income = ! taxable ye>4 7,b7 ,exceptions ,! foll[+ inve/m5t items %all n be tak5 into acc\nt z a qualifi$ item ( income1 ga91 d$uction1 or loss3 7i7 ,any item ( %ort-t]m capital ga91 %ort-t]m capital loss1 long-t]m capital ga91 or long-t]m capital loss4 7ii7 ,any divid5d1 income equival5t to a divid5d1 or paym5t 9 lieu ( divid5ds describ$ 9 section #ied7;c77#a77;,g74 7iii7 ,any int]e/ income o!r ?an int]e/ income :i* is prop]ly allocable to a trade or bus9ess4 7iv7 ,any item ( ga9 or loss describ$ 9 subp>agraph 7,c7 or 7,d7 ( section #ied7;c77#a7 7appli$ by sub/itut+ qualifi$ trade or bus9ess = controll$ =eign corporation74 7v7 ,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#g774 7vi7 ,any am\nt receiv$ f an annuity :i* is n receiv$ 9 connection ) ! trade or bus9ess4 7vii7 ,any item ( d$uction or loss prop]ly allocable to an am\nt describ$ 9 any ( ! prec$+ clauses4 7#d7 ,treatm5t ( reasonable comp5sation & gu>ante$ paym5ts ,qualifi$ bus9ess income %all n include-- 7,a7 reasonable comp5sation paid to ! taxpay] by any qualifi$ trade or bus9ess ( ! taxpay] = s]vices r5d]$ ) respect to ! trade or bus9ess1 7,b7 any gu>ante$ paym5t describ$ 9 section #gjg7;c7 paid to a p>tn] = s]vices r5d]$ ) respect to ! trade or bus9ess1 & 7,c7 to ! ext5t provid$ 9 regulations1 any paym5t describ$ 9 section #gjg7;a7 to a p>tn] = s]vices r5d]$ ) respect to ! trade or bus9ess4 7d7 ,qualifi$ trade or bus9ess ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ trade or bus9ess means any trade or bus9ess o!r ?an a specifi$ s]vice trade or bus9ess4 7#b7 ,specifi$ s]vice trade or bus9ess 7,a7 ,9 g5]al ,! t]m specifi$ s]vice trade or bus9ess means-- 7i7 any trade or bus9ess involv+ ! p]=mance ( s]vices describ$ 9 section #abjb7;e77#c77;,a71 includ+ inve/+ & inve/m5t managem5t1 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#c7 ,exception = specifi$ s]vice bus9esses bas$ on taxpay]'s income 7,a7 ,9 g5]al ,if1 = any taxable ye>1 ! taxable income ( any taxpay] is less ?an ! sum ( ! ?re%old am\nt plus #ej1jjj 7#ajj1jjj 9 ! case ( a jo9t return71 !n-- 7i7 ! exception "u p>agraph 7#a7 %all n apply to specifi$ s]vice trades or bus9esses ( ! taxpay] = ! taxable ye>1 b 7ii7 only ! applicable p]c5tage ( qualifi$ items ( income1 ga91 d$uction1 or loss1 & ! ,w-#b wages1 ( ! taxpay] allocable to su* specifi$ s]vice trades or bus9esses %all be tak5 into acc\nt 9 comput+ ! qualifi$ bus9ess income & ,w-#b wages ( ! taxpay] = ! taxable ye> = purposes ( apply+ ?is section4 7,b7 ,applicable p]c5tage ,= purposes ( subp>agraph 7,a71 ! t]m applicable p]c5tage means1 ) respect to any taxable ye>1 #ajj p]c5t r$uc$ 7n bel[ z]o7 by ! p]c5tage equal to ! ratio (-- 7i7 ! taxable income ( ! taxpay] = ! taxable ye> 9 excess ( ! ?re%old am\nt1 be>s to 7ii7 #ej1jjj 7#ajj1jjj 9 ! case ( a jo9t return74 7e7 ,o!r def9itions ,= purposes ( ?is section-- 7#a7 ,taxable income ,taxable income %all be comput$ )\t reg>d to ! d$uction all[able "u ?is section4 7#b7 ,?re%old am\nt 7,a7 ,9 g5]al ,! t]m ?re%old am\nt means #bej1jjj 7#bjj p]c5t ( su* am\nt 9 ! case ( a jo9t return74 7,b7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjah1 ! doll> am\nt 9 p>agraph 7#a7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any am\nt z increas$ "u ! prec$+ s5t5ce is n a multiple ( #a1jjj1 su* am\nt %all be r\nd$ to ! ne>e/ multiple ( #a1jjj4 7#c7 ,qualifi$ ,,reit divid5d ,! t]m qualifi$ ,,reit divid5d means any divid5d f a real e/ate inve/m5t tru/ receiv$ dur+ ! taxable ye> :i*-- 7,a7 is n a capital ga9 divid5d1 z def9$ 9 section #heg7;b77#c71 & 7,b7 is n qualifi$ divid5d income1 z def9$ 9 section #a7;h77#aa74 7#d7 ,qualifi$ coop]ative divid5d ,! t]m qualifi$ coop]ative divid5d means any patronage divid5d 7z def9$ 9 section #achh7;a771 any p]-unit reta9 allocation 7z def9$ 9 section #achh7;f771 & any qualifi$ writt5 notice ( allocation 7z def9$ 9 section #achh7;c771 or any simil> am\nt receiv$ f an organization describ$ 9 subp>agraph 7,b77ii71 :i*-- 7,a7 is includible 9 gross income1 & 7,b7 is receiv$ f-- 7i7 an organization or corporation describ$ 9 section #eja7;c77#ab7 or #acha7;a71 or 7ii7 an organization :i* is gov]n$ "u ?is title by ! rules applicable to coop]atives "u ?is title be=e ! enactm5t ( sub*apt] ,t4 7f7 ,special rules 7#a7 ,application to p>tn]%ips & ,s corporations 7,a7 ,9 g5]al ,9 ! case ( a p>tn]%ip or ,s corporation-- 7i7 ?is section %all be appli$ at ! p>tn] or %>ehold] level1 7ii7 ea* p>tn] or %>ehold] %all take into acc\nt su* p]son's allocable %>e ( ea* qualifi$ item ( income1 ga91 d$uction1 & loss1 & 7iii7 ea* p>tn] or %>ehold] %all be treat$ = purposes ( subsection 7b7 z hav+ ,w-#b wages = ! taxable ye> 9 an am\nt equal to su* p]son's allocable %>e ( ! ,w-#b wages ( ! p>tn]%ip or ,s corporation = ! taxable ye> 7z det]m9$ "u regulations prescrib$ by ! ,secret>y74 ,= purposes ( clause 7iii71 a p>tn]'s or %>ehold]'s allocable %>e ( ,w-#b wages %all be det]m9$ 9 ! same mann] z ! p>tn]'s or %>ehold]'s allocable %>e ( wage exp5ses4 ,= purposes ( ?is subp>agraph1 9 ! case ( an ,s corporation1 an allocable %>e %all be ! %>ehold]'s pro rata %>e ( an item4 7,b7 ,application to tru/s & e/ates ,?is section %all n apply to any tru/ or e/ate4 7,c7 ,treatm5t ( trades or bus9ess 9 ,pu]to ,rico 7i7 ,9 g5]al ,9 ! case ( any taxpay] ) qualifi$ bus9ess income f s\rces )9 ! commonweal? ( ,pu]to ,rico1 if all su* income is taxable "u section #a = su* taxable ye>1 !n = purposes ( det]m9+ ! qualifi$ bus9ess income ( su* taxpay] = su* taxable ye>1 ! t]m ,unit$ ,/ates %all include ! ,commonweal? ( ,pu]to ,rico4 7ii7 ,special rule = apply+ wage limitation ,9 ! case ( any taxpay] describ$ 9 clause 7i71 ! det]m9ation ( ,w-#b wages ( su* taxpay] ) respect to any qualifi$ trade or bus9ess conduct$ 9 ,pu]to ,rico %all be made )\t reg>d to any exclusion "u section #cdja7;a77#h7 = remun]ation paid = s]vices 9 ,pu]to ,rico4 7#b7 ,coord9ation ) m9imum tax ,= purposes ( det]m9+ alt]native m9imum taxable income "u section #ee1 qualifi$ bus9ess income %all be det]m9$ )\t reg>d to any adju/m5ts "u sections #ef ?r\gh #ei4 7#c7 ,d$uction limit$ to income taxes ,! d$uction "u subsection 7a7 %all only be all[$ = purposes ( ?is *apt]4 7#d7 ,regulations ,! ,secret>y %all prescribe su* regulations z are necess>y to c>ry out ! purposes ( ?is section1 includ+ regulations-- 7,a7 = requir+ or re/rict+ ! allocation ( items & wages "u ?is section & su* report+ requirem5ts z ! ,secret>y det]m9es appropriate1 & 7,b7 = ! application ( ?is section 9 ! case ( ti]$ entities4 7g7 ,t]m9ation ,?is section %all n apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe4 4 7b7 ,accuracy-relat$ p5alty on det]m9ation ( applicable p]c5tage ,section #fffb7;d77#a7 is am5d$ by ins]t+ at ! end ! foll[+ new subp>agraph3 7,c7 ,special rule = taxpay]s claim+ section #aii;,a d$uction ,9 ! case ( any taxpay] :o claims ! d$uction all[$ "u section #aii;,a = ! taxable ye>1 subp>agraph 7,a7 %all be appli$ by sub/itut+ #e p]c5t = #aj p]c5t4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #agj7;b77#b77;,d7 is am5d$ by /rik+ 1 & at ! end ( clause 7iv71 by r$esignat+ clause 7v7 z clause 7vi71 & by ins]t+ aft] clause 7iv7 ! foll[+ new clause3 7v7 section #aii;,a1 & 4 7#b7 ,section #agb7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,qualifi$ bus9ess income d$uction ,! d$uction "u section #aii;,a %all n be all[$4 4 7#c7 ,section #bdf7;b77#a7 is am5d$ by ins]t+ #aii;,a1 be=e #bdc7;a77#a74 7#d7 ,section #fac7;a7 is am5d$ by ins]t+ & )\t ! d$uction "u section #aii;,a aft] & )\t ! d$uction "u section #aii4 7#e7 ,section #fac;,a7d77#a7 is am5d$ by r$esignat+ subp>agraphs 7,c71 7,d71 & 7,e7 z subp>agraphs 7,d71 7,e71 & 7,f71 respectively1 & by ins]t+ aft] subp>agraph 7,b71 ! foll[+ new subp>agraph3 7,c7 any d$uction all[able "u section #aii;,a1 4 7#f7 ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ at ! end ! foll[+ new item3 ,sec4 #aii;,a4 ,qualifi$ bus9ess income4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajab4 ,limitation on losses = taxpay]s o!r ?an corporations 7a7 ,9 g5]al ,section #dfa is am5d$ by add+ at ! end ! foll[+ new subsection3 7l7 ,limitation on excess bus9ess losses ( noncorporate taxpay]s 7#a7 ,limitation ,9 ! case ( taxable ye> ( a taxpay] o!r ?an a corporation beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 subsection 7j7 7relat+ to limitation on excess f>m losses ( c]ta9 taxpay]s7 %all n apply1 & 7,b7 any excess bus9ess loss ( ! taxpay] = ! taxable ye> %all n be all[$4 7#b7 ,disall[$ loss c>ryov] ,any loss :i* is disall[$ "u p>agraph 7#a7 %all be treat$ z a net op]at+ loss c>ryov] to ! foll[+ taxable ye> "u section #agb4 7#c7 ,excess bus9ess loss ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m excess bus9ess loss means ! excess 7if any7 (-- 7i7 ! aggregate d$uctions ( ! taxpay] = ! taxable ye> :i* are attributable to trades or bus9esses ( su* taxpay] 7det]m9$ )\t reg>d to :e!r or n su* d$uctions are disall[$ = su* taxable ye> "u p>agraph 7#a771 ov] 7ii7 ! sum (-- 7,i7 ! aggregate gross income or ga9 ( su* taxpay] = ! taxable ye> :i* is attributable to su* trades or bus9esses1 plus 7,,ii7 #bej1jjj 7#bjj p]c5t ( su* am\nt 9 ! case ( a jo9t return74 7,b7 ,adju/m5t = inflation ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 ! #bej1jjj am\nt 9 subp>agraph 7,a77ii77,,ii7 %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;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,if any am\nt z increas$ "u ! prec$+ s5t5ce is n a multiple ( #a1jjj1 su* am\nt %all be r\nd$ to ! ne>e/ multiple ( #a1jjj4 7#d7 ,application ( subsection 9 case ( p>tn]%ips & s corporations ,9 ! case ( a p>tn]%ip or ,s corporation-- 7,a7 ?is subsection %all be appli$ at ! p>tn] or %>ehold] level1 & 7,b7 ea* p>tn]'s or %>ehold]'s allocable %>e ( ! items ( income1 ga91 d$uction1 or loss ( ! p>tn]%ip or ,s corporation = any taxable ye> f trades or bus9esses attributable to ! p>tn]%ip or ,s corporation %all be tak5 into acc\nt by ! p>tn] or %>ehold] 9 apply+ ?is subsection to ! taxable ye> ( su* p>tn] or %>ehold] ) or )9 :i* ! taxable ye> ( ! p>tn]%ip or ,s corporation ends4 ,= purposes ( ?is p>agraph1 9 ! case ( an ,s corporation1 an allocable %>e %all be ! %>ehold]'s pro rata %>e ( an item4 7#e7 ,additional report+ ,! ,secret>y %all prescribe su* additional report+ requirem5ts z ! ,secret>y det]m9es appropriate to c>ry out ! purposes ( ?is subsection4 7#f7 ,coord9ation ) section #dfi ,?is subsection %all be appli$ aft] ! application ( section #dfi4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,iii ,tax b5efits = families & individuals #aajba4 ,increase 9 /&>d d$uction 7a7 ,9 g5]al ,subsection 7c7 ( section #fc is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,special rules = taxable ye>s #bjah ?r\gh #bjbe ,9 ! case ( a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 ,increase 9 /&>d d$uction ,p>agraph 7#b7 %all be appli$-- 7i7 by sub/itut+ #ah1jjj = #d1djj 9 subp>agraph 7,b71 & 7ii7 by sub/itut+ #ab1jjj = #c1jjj 9 subp>agraph 7,c74 7,b7 ,adju/m5t = inflation 7i7 ,9 g5]al ,p>agraph 7#d7 %all n apply to ! doll> am\nts conta9$ 9 p>agraphs 7#b77;,b7 & 7#b77;,c74 7ii7 ,adju/m5t ( increas$ am\nts ,9 ! case ( a taxable ye> beg9n+ aft] #bjah1 ! #ah1jjj & #ab1jjj am\nts 9 subp>agraph 7,a7 %all ea* be increas$ by an am\nt equal to-- 7,i7 su* doll> am\nt1 multipli$ by 7,,ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjag = #bjaf 9 subp>agraph 7,a77ii7 !re(4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajbb4 ,increase 9 & modification ( *ild tax cr$it 7a7 ,9 g5]al ,section #bd is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,special rules = taxable ye>s #bjah ?r\gh #bjbe 7#a7 ,9 g5]al ,9 ! case ( a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 ?is section %all be appli$ z provid$ 9 p>agraphs 7#b7 ?r\gh 7#h74 7#b7 ,cr$it am\nt ,subsection 7a7 %all be appli$ by sub/itut+ #b1jjj = #a1jjj4 7#c7 ,limitation ,9 lieu ( ! am\nt det]m9$ "u subsection 7b77#b71 ! ?re%old am\nt %all be #ejj1jjj4 7#d7 ,def9ition ( qualify+ *ild ,p>agraph 7#a7 ( subsection 7c7 %all be appli$ by sub/itut+ #ah = #ag4 7#e7 ,p>tial cr$it all[$ = c]ta9 o!r dep5d5ts 7,a7 ,9 g5]al ,! cr$it det]m9$ "u subsection 7a7 7aft] ! application ( p>agraph 7#b77 %all be increas$ by #ejj = ea* dep5d5t ( ! taxpay] 7z def9$ 9 section #aeb7 o!r ?an a qualify+ *ild describ$ 9 subsection 7c7 7aft] ! application ( p>agraph 7#d774 7,b7 ,exception = c]ta9 noncitiz5s ,subp>agraph 7,a7 %all n apply ) respect to any individual :o w\ld n be a dep5d5t if subp>agraph 7,a7 ( section #aeb7;b77#c7 7 appli$ )\t reg>d to all t foll[s resid5t ( ! ,unit$ ,/ates4 7#f7 ,maximum am\nt ( refundable cr$it 7,a7 ,9 g5]al ,subsection 7d77#a77;,a7 %all be appli$ )\t reg>d to p>agraphs 7#b7 & 7#e7 ( ?is subsection4 7,b7 ,adju/m5t = inflation ,9 ! case ( a taxable ye> beg9n+ aft] #bjag1 subsection 7d77#a77;,a7 %all be appli$ z if ! #a1jjj am\nt 9 subsection 7a7 7 increas$ 7b n to exce$ ! am\nt "u p>agraph 7#b7 ( ?is subsection7 by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! next highe/ multiple ( #ajj4 7#g7 ,e>n$ income ?re%old = refundable cr$it ,subsection 7d77#a77;,b77i7 %all be appli$ by sub/itut+ #b1ejj = #c1jjj4 7#h7 ,social security numb] requir$ ,no cr$it %all be all[$ "u subsection 7d7 to a taxpay] ) respect to any qualify+ *ild unless ! taxpay] includes ! social security numb] ( su* *ild on ! return ( tax = ! taxable ye>4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m social security numb] means a social security numb] issu$ to an individual by ! ,social ,security ,adm9i/ration1 b only if ! social security numb] is issu$ to a citiz5 ( ! ,unit$ ,/ates or is issu$ 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 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajbc4 ,increas$ limitation = c]ta9 *>itable contributions 7a7 ,9 g5]al ,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> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 %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$s ! applicable limitation "u clause 7i7 = any taxable ye> describ$ 9 su* clause1 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$+ ye>s 9 ord] ( "t4 7iii7 ,coord9ation ) subp>agraphs 7a7 & 7b7 7,i7 ,9 g5]al ,contributions tak5 into acc\nt "u ?is subp>agraph %all n be tak5 into acc\nt "u subp>agraph 7,a74 7,,ii7 ,limitation r$uction ,subp>agraphs 7,a7 & 7,b7 %all be appli$ = ea* taxable ye> describ$ 9 clause 7i71 & ea* taxable ye> to :i* any contribution "u ?is subp>agraph is c>ri$ ov] "u clause 7ii71 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 ,effective date ,! am5dm5t made by ?is section %all apply to contributions 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajbd4 ,increas$ contributions to ,,able acc\nts 7a7 ,increase 9 limitation = contributions f comp5sation ( individuals ) disabilities 7#a7 ,9 g5]al ,section #ebi;,a7b77#b77;,b7 is am5d$ to read z foll[s3 7,b7 except 9 ! case ( contributions "u subsection 7c77#a77;,c71 if su* contribution to an ,,able acc\nt w\ld result 9 aggregate contributions f all contributors to ! ,,able acc\nt = ! taxable ye> exce$+ ! sum (-- 7i7 ! am\nt 9 effect "u section #bejc7;b7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 plus 7ii7 9 ! case ( any contribution by a designat$ b5efici>y describ$ 9 p>agraph 7#g7 be=e ,janu>y #a1 #bjbf1 ! less] (-- 7,i7 comp5sation 7z def9$ by section #bai7;f77#a77 includible 9 ! designat$ b5efici>y's gross income = ! prec$+ taxable ye>1 or 7,,ii7 an am\nt equal to ! pov]ty l9e = a "o-p]son h\sehold1 z det]m9$ = ! cal5d> ye> prec$+ ! cal5d> ye> 9 :i* ! taxable ye> beg9s4 4 7#b7 ,eligible designat$ b5efici>y ,section #ebi;,a7b7 is am5d$ by add+ at ! end ! foll[+3 7#g7 ,special rules relat$ to contribution limit ,= purposes ( p>agraph 7#b77;,b77ii7-- 7,a7 ,designat$ b5efici>y ,a designat$ b5efici>y describ$ 9 ?is p>agraph is an employee 7includ+ an employee )9 ! mean+ ( section #dja7;c77 ) respect to :om-- 7i7 no contribution is made = ! taxable ye> to a def9$ contribution plan 7)9 ! mean+ ( section #dad7;i77 ) respect to :i* ! requirem5ts ( section #dja7;a7 or #djc7;a7 are met1 7ii7 no contribution is made = ! taxable ye> to an annuity contract describ$ 9 section #djc7;b71 & 7iii7 no contribution is made = ! taxable ye> to an eligible def]r$ comp5sation plan describ$ 9 section #deg7;b74 7,b7 ,pov]ty l9e ,! t]m pov]ty l9e has ! mean+ giv5 su* t]m by section #fgc ( ! ,community ,s]vices ,block ,grant ,act 7#db ,u4,s4,c4 #iijb74 4 7b7 ,all[ance ( sav]'s cr$it = ,,able contributions by acc\nt hold] ,section #be;,b7d77#a7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,b77ii71 by /rik+ ! p]iod at ! end ( subp>agraph 7,c7 & ins]t+ 1 &1 & by ins]t+ at ! end ! foll[+3 7,d7 ! am\nt ( contributions made be=e ,janu>y #a1 #bjbf1 by su* individual to ! ,,able acc\nt 7)9 ! mean+ ( section #ebi;,a7 ( :i* su* individual is ! designat$ b5efici>y4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 #aajbe4 ,rollov]s to ,,able programs f #ebi programs 7a7 ,9 g5]al ,clause 7i7 ( section #ebi7;c77#c77;,c7 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[+3 7,,iii7 be=e ,janu>y #a1 #bjbf1 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$s ! limitation "u section #ebi;,a7b77#b77;,b74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions aft] ! date ( ! enactm5t ( ?is ,act4 #aajbf4 ,treatm5t ( c]ta9 individuals p]=m+ s]vices 9 ! ,s9ai ,p59sula ( ,egypt 7a7 ,9 g5]al ,= purposes ( ! foll[+ provisions ( ! ,int]nal ,rev5ue ,code ( #aihf1 ) respect to ! applicable p]iod1 a qualifi$ haz>d\s duty area %all be treat$ 9 ! same mann] z if x 7 a combat zone 7z det]m9$ "u section #aab ( su* ,code73 7#a7 ,section #b7;a77#c7 7relat+ to special rule :]e deceas$ sp\se 0 9 miss+ /atus74 7#b7 ,section #aab 7relat+ to ! exclusion ( c]ta9 combat pay ( memb]s ( ! ,arm$ ,=ces74 7#c7 ,section #fib 7relat+ to income taxes ( memb]s ( ,arm$ ,=ces on dea?74 7#d7 ,section #bbja 7relat+ to memb]s ( ! ,arm$ ,=ces dy+ 9 combat zone or by reason ( combat-zone-incurr$ w\nds1 etc474 7#e7 ,section #cdja7;a77#a7 7def9+ wages relat+ to combat pay = memb]s ( ! ,arm$ ,=ces74 7#f7 ,section #dbec7;d7 7relat+ to ! taxation ( phone s]vice orig9at+ f a combat zone f memb]s ( ! ,arm$ ,=ces74 7#g7 ,section #fjac7;f77#a7 7relat+ to jo9t return :]e individual is 9 miss+ /atus74 7#h7 ,section #gejh 7relat+ to "t = p]=m+ c]ta9 acts po/pon$ by reason ( s]vice 9 combat zone74 7b7 ,qualifi$ haz>d\s duty area ,= purposes ( ?is section1 ! t]m qualifi$ haz>d\s duty area means ! ,s9ai ,p59sula ( ,egypt1 if z ( ! date ( ! enactm5t ( ?is section any memb] ( ! ,arm$ ,=ces ( ! ,unit$ ,/ates is entitl$ to special pay "u section #caj ( title #cg1 ,unit$ ,/ates ,code 7relat+ to special pay2 duty subject to ho/ile fire or imm95t dang]71 = s]vices p]=m$ 9 su* location4 ,su* t]m includes su* location only dur+ ! p]iod su* entitlem5t is 9 effect4 7c7 ,applicable p]iod 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! applicable p]iod is-- 7,a7 ! portion ( ! fir/ taxable ye> end+ aft] ,june #i1 #bjae1 :i* beg9s on su* date1 & 7,b7 any subsequ5t taxable ye> beg9n+ be=e ,janu>y #a1 #bjbf4 7#b7 ,)hold+ ,9 ! case ( subsection 7a77#e71 ! applicable p]iod is-- 7,a7 ! portion ( ! fir/ taxable ye> end+ aft] ! date ( ! enactm5t ( ?is ,act :i* beg9s on su* date1 & 7,b7 any subsequ5t taxable ye> beg9n+ be=e ,janu>y #a1 #bjbf4 7d7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! provisions ( ?is section %all take effect on ,june #i1 #bjae4 7#b7 ,)hold+ ,subsection 7a77#e7 %all apply to remun]ation paid aft] ! date ( ! enactm5t ( ?is ,act4 #aajbg4 ,ext5sion ( waiv] ( limitations ) respect to exclud+ f gross income am\nts receiv$ by wrongfully inc>c]at$ individuals 7a7 ,9 g5]al ,section #cjd7;d7 ( ! ,protect+ ,am]icans f ,tax ,hikes ,act ( #bjae 7#bf ,u4,s4,c4 #aci;,f note7 is am5d$ by /rik+ #a-ye> & ins]t+ #b-ye>4 7b7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #aajbh4 ,unborn *ildr5 all[$ z #ebi acc\nt b5efici>ies 7a7 ,9 g5]al ,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 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to contributions made aft] ,decemb] #ca1 #bjag4 #aajbi4 ,relief = ,mississippi ,riv] ,delta flood disa/] area 7a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m ,mississippi ,riv] ,delta flood disa/] area means any area-- 7#a7 ) respect to :i* a major disa/] has be5 decl>$ by ! ,presid5t "u section #dja ( ! ,rob]t ,t4 ,/af=d ,disa/] ,relief & ,em]g5cy ,assi/ance ,act be=e ,septemb] #c1 #bjaf1 by reason ( sev]e /orms & flood+ occurr+ 9 ,l\isiana dur+ ,augu/ ( #bjaf1 or 7#b7 ) respect to :i* a major disa/] has be5 decl>$ by ! ,presid5t "u section #dja ( ! ,rob]t ,t4 ,/af=d ,disa/] ,relief & ,em]g5cy ,assi/ance ,act be=e ,m>* #ca1 #bjaf1 by reason ( sev]e /orms & flood+ occurr+ 9 ,l\isiana1 ,texas1 & ,mississippi dur+ ,m>* ( #bjaf4 7b7 ,special rules = use ( retirem5t funds ) respect to ,mississippi ,delta areas damag$ by #bjaf flood+ 7#a7 ,tax-,favor$ ,)drawals ,f ,retirem5t ,plans 7,a7 ,9 g5]al ,section #gb7t7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all n apply to any qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution4 7,b7 ,aggregate doll> limitation 7i7 ,9 g5]al ,= purposes ( ?is subsection1 ! aggregate am\nt ( di/ributions receiv$ by an individual :i* may be treat$ z qualifi$ ,mississippi ,riv] ,delta flood+ di/ributions = any taxable ye> %all n exce$ ! excess 7if any7 (-- 7,i7 #ajj1jjj1 ov] 7,,ii7 ! aggregate am\nts treat$ z qualifi$ ,mississippi ,riv] ,delta flood+ di/ributions receiv$ by su* individual = all prior taxable ye>s4 7ii7 ,treatm5t ( plan di/ributions ,if a di/ribution to an individual w\ld 7)\t reg>d to clause 7i77 be a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution1 a plan %all n be treat$ z violat+ any requirem5t ( ?is title m]ely because ! plan treats su* di/ribution z a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution1 unless ! aggregate am\nt ( su* di/ributions f all plans ma9ta9$ by ! employ] 7& any memb] ( any controll$ gr\p :i* includes ! employ]7 to su* individual exce$s #ajj1jjj4 7iii7 ,controll$ gr\p ,= purposes ( clause 7ii71 ! t]m controll$ gr\p means any gr\p treat$ z a s+le employ] "u subsection 7b71 7c71 7m71 or 7o7 ( section #dad ( ! ,int]nal ,rev5ue ,code ( #aihf4 7,c7 ,am\nt di/ribut$ may be repaid 7i7 ,9 g5]al ,any individual :o receives a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution may1 at any "t dur+ ! #c-ye> p]iod beg9n+ on ! day aft] ! date on :i* su* di/ribution 0 receiv$1 make "o or m contributions 9 an aggregate am\nt n to exce$ ! am\nt ( su* di/ribution to an eligible retirem5t plan ( :i* su* individual is a b5efici>y & to :i* a rollov] contribution ( su* di/ribution c\ld be made "u section #djb7;c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 or #deg7;e77#af7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z ! case may be4 7ii7 ,treatm5t ( repaym5ts ( di/ributions f eligible retirem5t plans o!r ?an iras ,= purposes ( ?is title1 if a contribution is made pursuant to clause 7i7 ) respect to a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution f an eligible retirem5t plan o!r ?an an individual retirem5t plan1 !n ! taxpay] %all1 to ! ext5t ( ! am\nt ( ! contribution1 be treat$ z hav+ receiv$ ! qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution 9 an eligible rollov] di/ribution 7z def9$ 9 section #djb7;c77#d7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 & z hav+ transf]r$ ! am\nt to ! eligible retirem5t plan 9 a direct tru/ee to tru/ee transf] )9 #fj days ( ! di/ribution4 7iii7 ,treatm5t ( repaym5ts = di/ributions f iras ,= purposes ( ! ,int]nal ,rev5ue ,code ( #aihf1 if a contribution is made pursuant to clause 7i7 ) respect to a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution f an individual retirem5t plan 7z def9$ by section #ggja7;a77#cg7 ( ! ,int]nal ,rev5ue ,code ( #aihf71 !n1 to ! ext5t ( ! am\nt ( ! contribution1 ! qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution %all be treat$ z a di/ribution describ$ 9 section #djh7;d77#c7 ( su* ,code & z hav+ be5 transf]r$ to ! eligible retirem5t plan 9 a direct tru/ee to tru/ee transf] )9 #fj days ( ! di/ribution4 7,d7 ,def9itions ,= purposes ( ?is p>agraph-- 7i7 ,qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution ,except z provid$ 9 subp>agraph 7,b71 ! t]m qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution means-- 7,i7 any di/ribution f an eligible retirem5t plan made on or aft] ,augu/ #aa1 #bjaf1 & be=e ,janu>y #a1 #bjah1 to an individual ^: pr9cipal place ( abode on ,augu/ #aa1 #bjaf1 0 locat$ 9 ! portion ( ,mississippi ,riv] ,delta disa/] area describ$ 9 subsection 7a77#a7 & :o has su/a9$ an economic loss by reason ( ! sev]e /orms & flood+ giv+ rise to ! ,presid5tial decl>ation describ$ 9 subsection 7a77#a71 or 7,,ii7 any di/ribution f an eligible retirem5t plan made on or aft] ,m>* #a1 #bjaf1 & be=e ,janu>y #a1 #bjah1 to an individual ^: pr9cipal place ( abode on ,m>* #a1 #bjaf1 0 locat$ 9 ! portion ( ,mississippi ,riv] ,delta disa/] area describ$ 9 subsection 7a77#b7 & :o has su/a9$ an economic loss by reason ( ! sev]e /orms & flood+ giv+ rise to ! ,presid5tial decl>ation describ$ 9 subsection 7a77#b74 7ii7 ,eligible retirem5t plan ,! t]m eligible retirem5t plan %all h ! mean+ giv5 su* t]m by section #djb7;c77#h77;,b7 ( ! ,int]nal ,rev5ue ,code ( #aihf4 7,e7 ,income inclusion spread ov] #c-ye> p]iod 7i7 ,9 g5]al ,9 ! case ( any qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution1 unless ! taxpay] elects n to h ?is subp>agraph apply = any taxable ye>1 any am\nt requir$ to be includ$ 9 gross income = su* taxable ye> %all be s includ$ ratably ov] ! #c-taxable-ye> p]iod beg9n+ ) su* taxable ye>4 7ii7 ,special rule ,= purposes ( clause 7i71 rules simil> to ! rules ( subp>agraph 7,e7 ( section #djh;,a7d77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all apply4 7,f7 ,special rules 7i7 ,exemption ( di/ributions f tru/ee to tru/ee transf] & )hold+ rules ,= purposes ( sections #dja7;a77#ca71 #djb7;f71 & #cdje ( ! ,int]nal ,rev5ue ,code ( #aihf1 qualifi$ ,mississippi ,riv] ,delta flood+ di/ributions %all n be treat$ z eligible rollov] di/ributions4 7ii7 ,qualifi$ ,mississippi ,riv] ,delta flood+ di/ributions treat$ z meet+ plan di/ribution requirem5ts ,= purposes ( ! ,int]nal ,rev5ue ,code ( #aihf1 a qualifi$ ,mississippi ,riv] ,delta flood+ di/ribution %all be treat$ z meet+ ! requirem5ts ( sections #dja7k77#b77;,b77i71 #djc7;b77#g77;,a77ii71 #djc7;b77#aa71 & #deg7;d77#a77;,a7 ( ! ,int]nal ,rev5ue ,code ( #aihf4 7#b7 ,provisions ,relat+ to ,plan ,am5dm5ts 7,a7 ,9 g5]al ,if ?is p>agraph applies to any am5dm5t to any plan or annuity contract1 su* plan or contract %all be treat$ z be+ op]at$ 9 accordance ) ! t]ms ( ! plan dur+ ! p]iod describ$ 9 subp>agraph 7,b77ii77,i74 7,b7 ,am5dm5ts to :i* subsection applies 7i7 ,9 g5]al ,?is p>agraph %all apply to any am5dm5t to any plan or annuity contract :i* is made-- 7,i7 pursuant to any provision ( ?is section1 or pursuant to any regulation "u any provision ( ?is section2 & 7,,ii7 on or be=e ! la/ day ( ! fir/ plan ye> beg9n+ on or aft] ,janu>y #a1 #bjah1 or su* lat] date z ! ,secret>y prescribes4 ,9 ! case ( a gov]nm5tal plan 7z def9$ 9 section #dad7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf71 subclause 7,,ii7 %all be appli$ by sub/itut+ ! date :i* is #b ye>s aft] ! date o!rwise appli$ "u subclause 7,,ii74 7ii7 ,conditions ,?is p>agraph %all n apply to any am5dm5t unless-- 7,i7 dur+ ! p]iod-- 7aa7 beg9n+ on ! date t ?is section or ! regulation describ$ 9 clause 7i77,i7 takes effect 7or 9 ! case ( a plan or contract am5dm5t n requir$ by ?is section or su* regulation1 ! effective date specifi$ by ! plan72 & 7bb7 end+ on ! date describ$ 9 clause 7i77,,ii7 7or1 if e>li]1 ! date ! plan or contract am5dm5t is adopt$71 ! plan or contract is op]at$ z if su* plan or contract am5dm5t 7 9 effect2 & 7,,ii7 su* plan or contract am5dm5t applies retroactively = su* p]iod4 7c7 ,special rules = p]sonal casualty losses relat$ to ,l\isiana sev]e /orms & flood+ 7#a7 ,9 g5]al ,if an individual has a net disa/] loss = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 ! am\nt det]m9$ "u section #afe7;h77#b77;,a77ii7 ( ! ,int]nal ,rev5ue ,code ( #aihf %all be equal to ! sum (-- 7i7 su* net disa/] loss1 & 7ii7 s mu* ( ! excess ref]r$ to 9 ! matt] prec$+ clause 7i7 ( section #afe7;h77#b77;,a7 ( su* ,code 7r$uc$ by ! am\nt 9 clause 7i7 ( ?is subp>agraph7 z exce$s #aj p]c5t ( ! adju/$ gross income ( ! individual1 7,b7 section #afe7;h77#a7 ( su* ,code %all be appli$ by sub/itut+ #ejj = #ejj 7#ajj = taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjji71 7,c7 ! /&>d d$uction det]m9$ "u section #fc7;c7 ( su* ,code %all be increas$ by ! net disa/] loss1 & 7,d7 section #ef7;b77#a77;,e7 ( su* ,code %all n apply to s mu* ( ! /&>d d$uction z is attributable to ! increase "u subp>agraph 7,c7 ( ?is p>agraph4 7#b7 ,net disa/] loss ,= purposes ( ?is subsection1 ! t]m net disa/] loss means ! excess ( qualifi$ disa/]-relat$ p]sonal casualty losses ov] p]sonal casualty ga9s 7z def9$ 9 section #afe7;h77#c77;,a7 ( ! ,int]nal ,rev5ue ,code ( #aihf74 7#c7 ,qualifi$ disa/]-relat$ p]sonal casualty losses ,= purposes ( ?is p>agraph1 ! t]m qualifi$ disa/]-relat$ p]sonal casualty losses means losses describ$ 9 section #afe7;c77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf :i* arise-- 7,a7 9 ! portion ( ! ,mississippi ,riv] ,delta flood disa/] area describ$ 9 subsection 7a77#a7 on or aft] ,augu/ #aa1 #bjaf1 & :i* are attributable to ! sev]e /orms & flood+ giv+ rise to ! ,presid5tial decl>ation describ$ 9 subsection 7a77#a71 or 7,b7 9 ! portion ( ! ,mississippi ,riv] ,delta flood disa/] area describ$ 9 subsection 7a77#b7 on or aft] ,m>* #a1 #bjaf1 & :i* are attributable to ! sev]e /orms & flood+ giv+ rise to ! ,presid5tial decl>ation describ$ 9 subsection 7a77#b74 ,,iv ,education #aajca4 ,treatm5t ( /ud5t loans dis*>g$ on acc\nt ( dea? or disability 7a7 ,9 g5]al ,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 = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 does n include any am\nt :i* 7b = ?is subsection7 w\ld be includible 9 gross income = su* taxable ye> 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$it ,protection ,act 7#ae ,u4,s4,c4 #afej7g7774 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to dis*>ges ( indebt$ness aft] ,decemb] #ca1 #bjag4 #aajcb4 ,increase 9 d$uction = tea*] exp5ses 7a7 ,9 g5]al ,subp>agraph 7,d7 ( section #fb7;a77#b7 is am5d$ by /rik+ #bej & ins]t+ #bej 7#ejj 9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,v ,d$uctions & exclusions #aajda4 ,susp5sion ( d$uction = p]sonal exemptions 7a7 ,9 g5]al ,subsection 7d7 ( section #aea is am5d$-- 7#a7 by /rik+ ,9 ! case ( 9 p>agraph 7#d7 & ins]t+ ,except z provid$ 9 p>agraph 7#e71 9 ! case (1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,special rules = taxable ye>s #bjah ?r\gh #bjbe ,9 ! case ( a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 ,exemption am\nt ,! t]m exemption am\nt means z]o4 7,b7 ,ref]5ces ,= purposes ( any o!r provision ( ?is title1 ! r$uction ( ! exemption am\nt to z]o "u subp>agraph 7,a7 %all n be tak5 into acc\nt 9 det]m9+ :e!r a d$uction is all[$ or all[able1 or :e!r a taxpay] is entitl$ to a d$uction1 "u ?is section4 4 7b7 ,application to e/ates & tru/s ,section #fdb7;b77#b77;,c7 is am5d$ by add+ at ! end ! foll[+ new clause3 7iii7 ,ye>s :5 p]sonal exemption am\nt is z]o 7,i7 ,9 g5]al ,9 ! case ( any taxable ye> 9 :i* ! exemption am\nt "u section #aea7;d7 is z]o1 clause 7i7 %all be appli$ by sub/itut+ #d1aej = ! exemption am\nt "u section #aea7;d74 7,,ii7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjah1 ! #d1aej am\nt 9 subp>agraph 7,a7 %all be increas$ by an am\nt equal to-- 7aa7 su* doll> am\nt1 multipli$ by 7bb7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjag = #bjaf 9 subp>agraph 7,a77ii7 !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 7c7 ,exception = wage )hold+ rules ,section #cdjb7;a7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,ye>s :5 p]sonal exemption am\nt is z]o 7,a7 ,9 g5]al ,9 ! case ( any taxable ye> 9 :i* ! exemption am\nt "u section #aea7;d7 is z]o1 p>agraph 7#b7 %all be appli$ by sub/itut+ #d1aej = ! am\nt ( "o p]sonal exemption provid$ 9 section #aea7;b74 7,b7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjah1 ! #d1aej am\nt 9 subp>agraph 7,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;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjag = #bjaf 9 subp>agraph 7,a77ii7 !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 7d7 ,exception = det]m9+ prop]ty exempt f levy ,section #fccd7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,ye>s :5 p]sonal exemption am\nt is z]o 7,a7 ,9 g5]al ,9 ! case ( any taxable ye> 9 :i* ! exemption am\nt "u section #aea7;d7 is z]o1 p>agraph 7#b7 %all n apply & = purposes ( p>agraph 7#a7 ! t]m exempt am\nt means an am\nt equal to-- 7i7 ! sum ( ! am\nt det]m9$ "u subp>agraph 7,b7 & ! /&>d d$uction1 divid$ by 7ii7 #eb4 7,b7 ,am\nt det]m9$ ,= purposes ( subp>agraph 7,a71 ! am\nt det]m9$ "u ?is subp>agraph is #d1aej multipli$ by ! numb] ( ! taxpay]'s dep5d5ts = ! taxable ye> 9 :i* ! levy occurs4 7,c7 ,inflation adju/m5t ,9 ! case ( any taxable ye> beg9n+ aft] #bjah1 ! #d1aej am\nt 9 subp>agraph 7,b7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 det]m9$ by sub/itut+ #bjag = #bjaf 9 subp>agraph 7,a77ii7 !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 7,d7 ,v]ifi$ /atem5t ,unless ! taxpay] submits to ! ,secret>y a writt5 & prop]ly v]ifi$ /atem5t specify+ ! facts necess>y to det]m9e ! prop] am\nt "u subp>agraph 7,a71 subp>agraph 7,a7 %all be appli$ z if ! taxpay] 7 a m>ri$ individual fil+ a sep>ate return ) no dep5d5ts4 4 7e7 ,p]sons requir$ to make returns ( income ,section #fjab is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,special rule = taxable ye>s #bjah ?r\gh #bjbe ,9 ! case ( a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 subsection 7a77#a7 %all n apply1 & e individual :o has gross income = ! taxable ye> %all be requir$ to make returns ) respect to income taxes "u subtitle ,a1 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-- 7,a7 ! gross income ( su* individual1 :5 comb9$ ) ! gross income ( su* individual's sp\se1 = ! taxable ye> does n exce$ ! /&>d d$uction :i* w\ld be applicable to ! taxpay] = su* taxable ye> "u section #fc if su* individual & su* individual's sp\se made a jo9t return1 7,b7 su* individual & su* individual's sp\se h ! same h\sehold z _! home at ! close ( ! taxable ye>1 7,c7 su* individual's sp\se does n make a sep>ate return1 & 7,d7 nei!r su* individual nor su* individual's sp\se is an individual describ$ 9 section #fc7;c77#e7 :o has income 7o!r ?an e>n$ income7 9 excess ( ! am\nt 9 effect "u section #fc7;c77#e77;,a74 ,! am\nt specifi$ 9 p>agraph 7#a7 or 7#b77;,a7 %all be increas$ by ! am\nt ( #a additional /&>d d$uction 7)9 ! mean+ ( section #fc7;c77#c77 9 ! case ( an individual entitl$ to su* d$uction by reason ( section #fc7;f77#a77;,a7 7relat+ to individuals age #fe or m71 & by ! am\nt ( ea* additional /&>d d$uction to :i* ! individual or ! individual's sp\se is entitl$ by reason ( section #fc7;f77#a74 4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajdb4 ,susp5sion ( d$uction = ,/ate & local1 etc4 taxes 7a7 ,9 g5]al ,subsection 7b7 ( section #afd is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,susp5sion ( individual d$uctions = taxable ye>s #bjah ?r\gh #bjbe ,9 ! case ( an individual & a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 p>agraphs 7#a7 & 7#b7 ( subsection 7a7 %all n apply to any real prop]ty or p]sonal prop]ty taxes1 o!r ?an taxes :i* are paid or accru$ 9 c>ry+ on a trade or bus9ess or an activity describ$ 9 section #bab1 & 7,b7 subsection 7a77#c7 %all n apply to any ,/ate or local taxes4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajdc4 ,susp5sion ( d$uction = home equity int]e/ 7a7 ,9 g5]al ,section #afc7;h77#c77;,a77ii7 is am5d$ by ins]t+ 9 ! case ( taxable ye>s beg9n+ be=e ,janu>y #a1 #bjah1 or aft] ,decemb] #ca1 #bjbe1 be=e home equity indebt$ness4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ,decemb] #ca1 #bjag4 #aajdd4 ,modification ( d$uction = p]sonal casualty losses 7a7 ,9 g5]al ,subsection 7h7 ( section #afe is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,limitation = taxable ye>s #bjah ?r\gh #bjbe ,9 ! case ( any loss ( an individual describ$ 9 subsection 7c77#c7 :i* 7b = ?is p>agraph7 w\ld be d$uctible 9 a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf 7)\t reg>d to any election "u subsection 7i71 su* loss %all be all[$ only to ! ext5t x is attributable to a ,f$]ally decl>$ disa/] 7z def9$ 9 subsection 7i77#e774 ,! prec$+ s5t5ce %all n apply to any d$uction "u section #agb :i* is c>ri$ to su* a taxable ye> f a taxable ye> beg9n+ be=e ,janu>y #a1 #bjah4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to losses incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajde4 ,susp5sion ( miscellane\s itemiz$ d$uctions 7a7 ,9 g5]al ,section #fg is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,susp5sion = taxable ye>s #bjah ?r\gh #bjbe ,not)/&+ subsection 7a71 no miscellane\s itemiz$ d$uction %all be all[$ = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajdf4 ,susp5sion ( ov]all limitation on itemiz$ d$uctions 7a7 ,9 g5]al ,section #fh is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,section n to apply ,?is section %all n apply to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajdg4 ,modification ( exclusion ( ga9 f sale ( pr9cipal resid5ce 7a7 ,9 g5]al ,section #aba is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,special rules = sales or ex*anges 9 taxable ye>s #bjah ?r\gh #bjbe 7#a7 ,9 g5]al ,9 apply+ ?is section ) respect to sales or ex*anges aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf-- 7,a7 #h-ye> %all be sub/itut$ = #e-ye> ea* place x appe>s 9 subsections 7a71 7b77#e77;,c77ii77,i71 & 7c77#a77;,b77i77,i7 & p>agraphs 7#g71 7#i71 7#aj71 & 7#ab7 ( subsection 7d71 7,b7 #e ye>s %all be sub/itut$ = #b ye>s ea* place x appe>s 9 subsections 7a71 7b77#c71 7b77#d71 7b77#e77;,c77ii77,,iii71 & 7c77#a77;,b77ii71 & 7,c7 #e-ye> %all be sub/itut$ = #b-ye> 9 subsection 7b77#c74 7#b7 ,exception = b9d+ contracts ,p>agraph 7#a7 %all n apply to any sale or ex*ange ) respect to :i* !re 0 a writt5 b9d+ contract 9 effect be=e ,janu>y #a1 #bjah1 & at all times !reaft] be=e ! sale or ex*ange4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to sales & ex*anges aft] ,decemb] #ca1 #bjag4 #aajdh4 ,susp5sion ( exclusion = qualifi$ bicycle commut+ reimbursem5t 7a7 ,9 g5]al ,section #acb7;f7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,susp5sion ( qualifi$ bicycle commut+ reimbursem5t exclusion ,p>agraph 7#a77;,d7 %all n apply to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajdi4 ,susp5sion ( exclusion = qualifi$ mov+ exp5se reimbursem5t 7a7 ,9 g5]al ,section #acb7;g7 is am5d$-- 7#a7 by /rik+ ,= purposes ( ?is section1 ! t]m & ins]t+ 8,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m 1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,susp5sion = taxable ye>s #bjah ?r\gh #bjbe ,except 9 ! case ( a memb] ( ! ,arm$ ,=ces ( ! ,unit$ ,/ates on active duty :o moves pursuant to a milit>y ord] & incid5t to a p]man5t *ange ( /ation1 subsection 7a77#f7 %all n apply to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajej4 ,susp5sion ( d$uction = mov+ exp5ses 7a7 ,9 g5]al ,section #bag is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,susp5sion ( d$uction = taxable ye>s #bjah ?r\gh #bjbe ,except 9 ! case ( an individual to :om subsection 7g7 applies1 ?is section %all n apply to any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajea4 ,limitation on wag]+ losses 7a7 ,9 g5]al ,section #afe7;d7 is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ! prec$+ s5t5ce1 9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 ! t]m losses f wag]+ transactions includes any d$uction o!rwise all[able "u ?is *apt] incurr$ 9 c>ry+ on any wag]+ transaction44 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,vi ,increase 9 e/ate & gift tax exemption #aajfa4 ,increase 9 e/ate & gift tax exemption 7a7 ,9 g5]al ,section #bjaj7;c77#c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,increase 9 basic exclusion am\nt ,9 ! case ( e/ates ( dec$5ts dy+ or gifts made aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 subp>agraph 7,a7 %all be appli$ by sub/itut+ #aj1jjj1jjj = #e1jjj1jjj4 4 7b7 ,con=m+ am5dm5t ,subsection 7g7 ( section #bjja is am5d$ to read z foll[s3 7g7 ,modifications to tax payable 7#a7 ,modifications to gift tax payable to reflect diff]5t tax rates ,= purposes ( apply+ subsection 7b77#b7 ) respect to #a or m gifts1 ! rates ( tax "u subsection 7c7 9 effect at ! dec$5t's dea? %all1 9 lieu ( ! rates ( tax 9 effect at ! "t ( su* gifts1 be us$ bo? to compute-- 7,a7 ! tax impos$ by *apt] #ab ) respect to su* gifts1 & 7,b7 ! cr$it all[$ aga9/ su* tax "u section #beje1 includ+ 9 comput+-- 7i7 ! applicable cr$it am\nt "u section #beje7;a77#a71 & 7ii7 ! sum ( ! am\nts all[$ z a cr$it = all prec$+ p]iods "u section #beje7;a77#b74 7#b7 ,modifications to e/ate tax payable to reflect diff]5t basic exclusion am\nts ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ?is section ) respect to any diff]5ce betwe5-- 7,a7 ! basic exclusion am\nt "u section #bjaj7;c77#c7 applicable at ! "t ( ! dec$5t's dea?1 & 7,b7 ! basic exclusion am\nt "u su* section applicable ) respect to any gifts made by ! dec$5t4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+ & gifts made aft] ,decemb] #ca1 #bjag4 ,,vii ,taxpay] rights & tax adm9i/ration #aajga4 ,ext5sion ( "t limit = conte/+ ,,irs levy 7a7 ,ext5sion ( ,"t = ,return ( ,prop]ty ,subject to ,levy ,subsection 7b7 ( section #fcdc is am5d$ by /rik+ #i mon?s & ins]t+ #b ye>s4 7b7 ,p]iod ( ,limitation on ,suits ,subsection 7c7 ( section #fecb is am5d$-- 7#a7 by /rik+ #i mon?s 9 p>agraph 7#a7 & ins]t+ #b ye>s1 & 7#b7 by /rik+ #i-mon? 9 p>agraph 7#b7 & ins]t+ #b-ye>4 7c7 ,effective ,date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 levies made aft] ! date ( ! enactm5t ( ?is ,act1 & 7#b7 levies made on or be=e su* date if ! #i-mon? p]iod has n expir$ "u section #fcdc7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7)\t reg>d to ?is section7 z ( su* date4 #aajgb4 ,individuals held h>mless on improp] levy on retirem5t plans 7a7 ,9 ,g5]al ,section #fcdc is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,individuals ,held ,h>mless on ,wrongful ,levy1 etc4 on ,retirem5t ,plan 7#a7 ,9 g5]al ,if ! ,secret>y det]m9es t an individual's acc\nt or b5efit "u an eligible retirem5t plan 7z def9$ 9 section #djb7;c77#h77;,b77 has be5 levi$ ^u 9 a case to :i* subsection 7b7 or 7d77#b77;,a7 applies & prop]ty or an am\nt ( money is return$ to ! individual-- 7,a7 ! individual may contribute su* prop]ty or an am\nt equal to ! sum (-- 7i7 ! am\nt ( money s return$ by ! ,secret>y1 & 7ii7 int]e/ paid "u subsection 7c7 on su* am\nt ( money1 into su* eligible retirem5t plan if su* contribution is p]mitt$ by ! plan1 or into an individual retirem5t plan 7o!r ?an an end[m5t contract7 to :i* a rollov] contribution ( a di/ribution f su* eligible retirem5t plan is p]mitt$1 b only if su* contribution is made n lat] ?an ! due date 7n includ+ ext5sions7 = fil+ ! return ( tax = ! taxable ye> 9 :i* su* prop]ty or am\nt ( money is return$1 & 7,b7 ! ,secret>y %all1 at ! "t su* prop]ty or am\nt ( money is return$1 notify su* individual t a contribution describ$ 9 subp>agraph 7,a7 may be made4 7#b7 ,treatm5t z rollov] ,! di/ribution on acc\nt ( ! levy & any contribution "u p>agraph 7#a7 ) respect to ! return ( su* di/ribution %all be treat$ = purposes ( ?is title z if su* di/ribution & contribution 7 describ$ 9 section #djb7;c71 #djb;,a7c77#c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 #djh;,a7d77#c71 or #deg7;e77#af71 :i*ev] is applicable2 except t-- 7,a7 ! contribution %all be treat$ z hav+ be5 made = ! taxable ye> 9 :i* ! di/ribution on acc\nt ( ! levy occurr$1 & ! int]e/ paid "u subsection 7c7 %all be treat$ z e>n+s )9 ! plan aft] ! contribution & %all n be includ$ 9 gross income1 & 7,b7 su* contribution %all n be tak5 into acc\nt "u section #djh7;d77#c77;,b74 7#c7 ,refund1 etc41 ( income tax on levy 7,a7 ,9 g5]al ,if any am\nt is includible 9 gross income = a taxable ye> by reason ( a di/ribution on acc\nt ( a levy ref]r$ to 9 p>agraph 7#a7 & any portion ( su* am\nt is treat$ z a rollov] contribution "u p>agraph 7#b71 any tax impos$ by *apt] #a on su* portion %all n be assess$1 & if assess$ %all be abat$1 & if collect$ %all be cr$it$ or refund$ z an ov]paym5t made on ! due date = fil+ ! return ( tax = su* taxable ye>4 7,b7 ,exception ,subp>agraph 7,a7 %all n apply to a rollov] contribution "u ?is subsection :i* is made f an eligible retirem5t plan :i* is n a ,ro? ,,ira or a designat$ ,ro? acc\nt 7)9 ! mean+ ( section #djb;,a7 to a ,ro? ,,ira or a designat$ ,ro? acc\nt "u an eligible retirem5t plan4 7#d7 ,int]e/ ,not)/&+ subsection 7d71 int]e/ %all be all[$ "u subsection 7c7 9 a case 9 :i* ! ,secret>y makes a det]m9ation describ$ 9 subsection 7d77#b77;,a7 ) respect to a levy ^u an individual retirem5t plan4 7#e7 ,treatm5t ( inh]it$ acc\nts ,= purposes ( p>agraph 7#a77;,a71 section #djh7;d77#c77;,c7 %all be disreg>d$ 9 det]m9+ :e!r an individual retirem5t plan is a plan to :i* a rollov] contribution ( a di/ribution f ! plan levi$ ^u is p]mitt$4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to am\nts paid "u subsections 7b71 7c71 & 7d77#b77;,a7 ( section #fcdc ( ! ,int]nal ,rev5ue ,code ( #aihf 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajgc4 ,modification ( us] fee requirem5ts = in/allm5t agreem5ts 7a7 ,9 g5]al ,section #faei is am5d$ by r$esignat+ subsection 7f7 z subsection 7g7 & by ins]t+ aft] subsection 7e7 ! foll[+ new subsection3 7f7 ,in/allm5t agreem5t fees 7#a7 ,limitation on fee am\nt ,! am\nt ( any fee impos$ on an in/allm5t agreem5t "u ?is section may n exce$ ! am\nt ( su* fee z 9 effect on ! date ( ! enactm5t ( ?is subsection4 7#b7 ,waiv] or reimbursem5t ,9 ! case ( any taxpay] ) an adju/$ gross income1 z det]m9$ = ! mo/ rec5t ye> = :i* su* in=mation is available1 :i* does n exce$ #bej p]c5t ( ! applicable pov]ty level 7z det]m9$ by ! ,secret>y7-- 7,a7 if ! taxpay] has agre$ to make paym5ts "u ! in/allm5t agreem5t by electronic paym5t ?r\gh a debit in/rum5t1 no fee %all be impos$ on an in/allm5t agreem5t "u ?is section1 & 7,b7 if ! taxpay] is unable to make paym5ts "u ! in/allm5t agreem5t by electronic paym5t ?r\gh a debit in/rum5t1 ! ,secret>y %all1 ^u completion ( ! in/allm5t agreem5t1 pay ! taxpay] an am\nt equal to any su* fees impos$4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to agreem5ts ent]$ into on or aft] ! date :i* is #fj days aft] ! date ( ! enactm5t ( ?is ,act4 #aajgd4 ,=m #ajdj,,sr = s5iors 7a7 ,9 g5]al ,! ,secret>y ( ! ,treasury 7or ! ,secret>y's delegate7 %all make available a =m1 to be kn[n z ,=m #ajdj,,sr1 = use by individuals to file ! return ( tax impos$ by *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf4 ,su* =m %all be z simil> z practicable to ,=m #ajdj;,,ez1 except t-- 7#a7 ! =m %all be available only to individuals :o h atta9$ age #fe z ( ! close ( ! taxable ye>1 7#b7 ! =m may be us$ ev5 if income = ! taxable ye> includes-- 7,a7 social security b5efits 7z def9$ 9 section #hf7;d7 ( ! ,int]nal ,rev5ue ,code ( #aihf71 7,b7 di/ributions f qualifi$ retirem5t plans 7z def9$ 9 section #digd7;c7 ( su* ,code71 annuities or o!r su* def]r$ paym5t arrangem5ts1 7,c7 int]e/ & divid5ds1 or 7,d7 capital ga9s & losses tak5 into acc\nt 9 det]m9+ adju/$ net capital ga9 7z def9$ 9 section #a7;h77#c7 ( su* ,code71 & 7#c7 ! =m %all be available )\t reg>d to ! am\nt ( any item ( taxable income or ! total am\nt ( taxable income = ! taxable ye>4 7b7 ,effective date ,! =m requir$ by subsection 7a7 %all be made available = taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act & end+ be=e ,janu>y #a1 #bjbf4 #aajge4 ,s5se ( ! ,s5ate on improv+ cu/om] s]vice & protections = taxpay]s by re9/at+ appropriate fund+ levels ,x is ! s5se ( ! ,s5ate t politically motivat$ budget cuts-- 7#a7 are c\nt]productive to deficit r$uction1 7#b7 dim9i% ! ability ( ! ,int]nal ,rev5ue ,s]vice to adequately s]ve taxpay]s & protect taxpay] in=mation1 & 7#c7 r$uce ! ability ( ! ,int]nal ,rev5ue ,s]vice to en=ce ! law4 #aajgf4 ,return prep>ation programs = l[-income taxpay]s 7a7 ,9 g5]al ,*apt] #gg is am5d$ by ins]t+ aft] section #gebf ! foll[+ new section3 #gebf;,a4 ,return prep>ation programs = l[-income taxpay]s 7a7 ,volunte] ,income ,tax ,assi/ance ,mat*+ ,grant ,program 7#a7 ,e/abli%m5t ( ,program ,! ,secret>y1 ?r\gh ! ,int]nal ,rev5ue ,s]vice1 %all e/abli% a ,community ,volunte] ,income ,tax ,assi/ance ,mat*+ ,grant ,program 7h]e9aft] 9 ?is section ref]r$ to z ! ,,vita grant program74 ,except z o!rwise provid$ 9 ?is section1 ! ,,vita grant program %all be adm9i/]$ 9 a mann] :i* is sub/antially simil> to ! ,community ,volunte] ,income ,tax ,assi/ance mat*+ grants demon/ration program e/abli%$ "u title ,i ( division ,d ( ! ,consolidat$ ,appropriations ,act1 #bjjh4 7#b7 ,mat*+ grants 7,a7 ,9 g5]al ,! ,secret>y %all1 subject to ! availability ( appropriat$ funds1 make available grants "u ! ,,vita grant program to provide mat*+ funds = ! developm5t1 expansion1 or cont9uation ( qualifi$ return prep>ation programs assi/+ l[-income taxpay]s & memb]s ( und]s]v$ populations4 7,b7 ,application 7i7 ,9 g5]al ,subject to clause 7ii71 9 ord] to be eligible = a grant "u ?is section1 a qualifi$ return prep>ation program %all submit an application to ! ,secret>y at su* "t1 9 su* mann]1 & conta9+ su* in=mation z ! ,secret>y reasonably requires4 7ii7 ,accuracy review ,9 ! case ( any qualifi$ return prep>ation program :i* 0 aw>d$ a grant "u ?is section & 0 subsequ5tly subject to a field site visit by ! ,int]nal ,rev5ue ,s]vice 7includ+ ?r\gh ! ,/akehold] ,p>tn]%ips1 ,education1 & ,communication (fice7 9 :i* x 0 det]m9$ t ! av]age accuracy rate = prep>ation ( tax returns ?r\gh su* program 0 less ?an #ij p]c5t1 su* program %all n be eligible = any additional grants "u ?is section unless su* program provides1 z "p ( _! application1 suffici5t docum5tation reg>d+ ! corrective measures e/abli%$ by su* program to address ! defici5cies id5tifi$ foll[+ ! field site visit4 7,c7 ,priority ,9 aw>d+ grants "u ?is section1 ! ,secret>y %all give priority to applications-- 7i7 demon/rat+ assi/ance to l[-income taxpay]s1 ) emphasis on outrea* to & s]vices = su* taxpay]s1 7ii7 demon/rat+ taxpay] outrea* & educational activities relat+ to eligibility & availability ( income supports available ?r\gh ! ,int]nal ,rev5ue ,code ( #aihf1 su* z ! e>n$ income tax cr$it1 & 7iii7 demon/rat+ specific outrea* & focus on "o or m und]s]v$ populations4 7,d7 ,duration ( grants ,^u application ( a qualifi$ return prep>ation program1 ! ,secret>y is au?oriz$ to aw>d a multi-ye> grant n to exce$ #c ye>s4 7#c7 ,aggregate limitation ,unless o!rwise provid$ by specific appropriation1 ! ,secret>y %all n allocate m ?an #cj1jjj1jjj p] fiscal ye> 7exclusive ( co/s ( adm9i/]+ ! program7 to c>ry out ! purposes ( ?is section4 7b7 ,use ( funds 7#a7 ,9 g5]al ,qualifi$ return prep>ation programs receiv+ a grant "u ?is section may use ! grant =-- 7,a7 ord9>y & necess>y co/s associat$ ) program op]ation 9 accordance ) ,co/ ,pr9ciples ,circul>s z set =? by ! ,(fice ( ,managem5t & ,budget1 includ+-- 7i7 = wages or sal>ies ( p]sons coord9at+ ! activities ( ! program1 7ii7 to develop tra9+ mat]ials1 conduct tra9+1 & p]=m quality reviews ( ! returns = :i* assi/ance has be5 provid$ "u ! program1 & 7iii7 = equipm5t pur*ases & vehicle-relat$ exp5ses associat$ ) remote or rural tax prep>ation s]vices1 7,b7 outrea* & educational activities describ$ 9 subsection 7a77#b77;,c77ii71 & 7,c7 s]vices relat$ to f9ancial education & capability1 asset developm5t1 & ! e/abli%m5t ( sav+s acc\nts 9 connection ) tax return prep>ation4 7#b7 ,use ( grants = ov]head exp5ses prohibit$ ,no grant made "u ?is section may be us$ = ov]head exp5ses t are n directly relat$ to any qualifi$ return prep>ation program4 7c7 ,promotion & ref]ral 7#a7 ,promotion ,! ,secret>y %all promote ! b5efits (1 & enc\rage ! use (1 tax prep>ation ?r\gh qualifi$ return prep>ation programs ?r\gh ! use ( mass communications1 ref]rals1 & o!r means4 7#b7 ,int]nal rev5ue s]vice ref]rals ,! ,secret>y %all ref] taxpay]s to qualifi$ return prep>ation programs receiv+ fund+ "u ?is section4 7#c7 ,,vita grantee ref]ral ,qualifi$ return prep>ation programs receiv+ a grant "u ?is section are enc\rag$ to ref]1 z appropriate1 to local or regional ,l[ ,income ,taxpay] ,cl9ics individuals :o are eligible to receive s]vices at su* cl9ics4 7d7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,qualifi$ return prep>ation program ,! t]m qualifi$ return prep>ation program means any program-- 7,a7 :i* provides assi/ance to individuals1 n less ?an #ij p]c5t ( :om are l[-income taxpay]s1 9 prep>+ & fil+ ,f$]al income tax returns1 7,b7 :i* is adm9i/]$ by a qualifi$ entity1 7,c7 9 :i* all ( ! volunte]s :o assi/ 9 ! prep>ation ( ,f$]al income tax returns meet ! tra9+ requirem5ts prescrib$ by ! ,secret>y1 & 7,d7 :i* uses a quality review process :i* reviews #ajj p]c5t ( all returns4 7#b7 ,qualifi$ entity 7,a7 ,9 g5]al ,! t]m qualifi$ entity means any entity :i*-- 7i7 is an eligible organization 7z describ$ 9 subp>agraph 7,b771 7ii7 is 9 compliance ) ,f$]al tax fil+ & paym5t requirem5ts1 7iii7 is n deb>r$ or susp5d$ f ,f$]al contracts1 grants1 or coop]ative agreem5ts1 & 7iv7 agrees to provide docum5tation to sub/antiate any mat*+ funds provid$ "u ! ,,vita grant program4 7,b7 ,eligible organization 7i7 ,9 g5]al ,subject to clause 7ii71 ! t]m eligible organization means-- 7,i7 an in/itution ( high] education :i* is describ$ 9 section #ajb 7o!r ?an subsection 7a77#a77;,c7 !re(7 ( ! ,high] ,education ,act ( #aife 7#bj ,u4,s4,c4 #ajhh71 z 9 effect on ! date ( ! enactm5t ( ?is section1 & :i* has n be5 disqualifi$ f p>ticipat+ 9 a program "u title ,,iv ( su* ,act1 7,,ii7 an organization describ$ 9 section #eja7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf & exempt f tax "u section #eja7;a7 ( su* ,code1 7,,iii7 a local gov]nm5t ag5cy1 includ+-- 7aa7 a c\nty or municipal gov]nm5t ag5cy1 & 7bb7 an ,indian tribe1 z def9$ 9 section #d7ac7 ( ! ,native ,am]ican ,h\s+ ,assi/ance & ,self-,det]m9ation ,act ( #aiif 7#be ,u4,s4,c4 #dajc7ac771 includ+ any tribally designat$ h\s+ entity 7z def9$ 9 section #d7bb7 ( su* ,act 7#be ,u4,s4,c4 #dajc7bb7771 tribal subsidi>y1 subdivision1 or o!r :olly own$ tribal entity1 or 7,,iv7 a local1 ,/ate1 regional1 or national coalition 7) "o lead organization :i* meets ! eligibility requirem5ts ( subclause 7,i71 7,,ii71 or 7,,iii7 act+ z ! applicant organization74 7ii7 ,alt]native eligible organization ,if no eligible organization describ$ 9 clause 7i7 is available to assi/ ! t>get$ population or community1 ! t]m eligible organization %all include-- 7,i7 a ,/ate gov]nm5t ag5cy1 & 7,,ii7 a ,coop]ative ,ext5sion ,s]vice (fice4 7#c7 ,l[-income taxpay]s ,! t]m l[-income taxpay] means a taxpay] :o has income = ! taxable ye> :i* does n exce$ an am\nt equal to ! complet$ phase\t am\nt "u section #cb7;b7 = a m>ri$ c\ple fil+ a jo9t return ) ?ree or m qualify+ *ildr51 z det]m9$ 9 a rev5ue proc$ure or o!r publi%$ guidance4 7#d7 ,und]s]v$ population ,! t]m und]s]v$ population includes populations ( p]sons ) disabilities1 p]sons ) limit$ ,engli% pr(ici5cy1 ,native ,am]icans1 individuals liv+ 9 rural areas1 memb]s ( ! ,arm$ ,=ces & _! sp\ses1 & ! eld]ly4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = *apt] #gg is am5d$ by ins]t+ aft] ! item relat+ to section #gebf ! foll[+ new item3 #gebf;,a4 ,return prep>ation programs = l[-income taxpay]s4 4 #aajgg4 ,free file program 7a7 ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's delegate1 %all cont9ue to op]ate ! ,,irs ,free ,file ,program z e/abli%$ by ! ,int]nal ,rev5ue ,s]vice & publi%$ 9 ! ,f$]al ,regi/] on ,novemb] #d1 #bjjb 7#fg ,f$4 ,reg4 #fgbdg71 includ+ any subsequ5t agreem5ts & gov]n+ rules e/abli%$ pursuant !reto4 7b7 ,! ,,irs ,free ,file ,program %all cont9ue to provide free comm]cial-type onl9e individual income tax prep>ation & electronic fil+ s]vices to ! l[e/ #gj p]c5t ( taxpay]s by income4 ,! numb] ( taxpay]s eligible to receive su* s]vices ea* ye> %all be calculat$ by ! ,int]nal ,rev5ue ,s]vice annually bas$ on prior ye> aggregate taxpay] adju/$ gross income data4 7c7 ,9 addition to ! s]vices describ$ 9 subsection 7b71 & 9 ! same mann]1 ! ,,irs ,free ,file ,program %all cont9ue to make available to all taxpay]s 7)\t reg>d to income7 a basic1 onl9e electronic fillable =ms utility4 7d7 ,! ,,irs ,free ,file ,program %all cont9ue to "w coop]atively ) ! private sector to provide ! free individual income tax prep>ation & ! electronic fil+ s]vices describ$ 9 subsections 7b7 & 7c74 7e7 ,! ,,irs ,free ,file ,program %all "w coop]atively ) ,/ate gov]nm5t ag5cies to enhance & exp& ! use ( ! program to provide ne$$ b5efits to ! taxpay] :ile r$uc+ ! co/ ( process+ returns4 7f7 ,no?+ 9 ?is section is int5d$ to impact ! cont9uity ( s]vices provid$ "u ,taxpay] ,assi/ance ,c5t]s1 ,tax ,c\nsel+ = ! ,eld]ly1 & ,volunte] ,income ,tax ,assi/ance programs4 #aajgh4 ,attorneys' fees relat+ to aw>ds to :i/lebl[]s 7a7 ,9 g5]al ,p>agraph 7#ba7 ( section #fb7;a7 is am5d$ to read z foll[s3 7#ba7 ,attorneys' fees relat+ to aw>ds to :i/lebl[]s 7,a7 ,9 g5]al ,any d$uction all[able "u ?is *apt] = attorney fees & c\rt co/s paid by1 or on behalf (1 ! taxpay] 9 connection ) any aw>d "u-- 7i7 section #gfbc7;b71 or 7ii7 9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 any action br\ght "u-- 7,i7 section #ba;,f ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghu-#f71 7,,ii7 a ,/ate law relat+ to false or fraudul5t claims t meets ! requirem5ts describ$ 9 section #aiji7;b7 ( ! ,social ,security ,act 7#db ,u4,s4,c4 #acif;h7b771 or 7,,iii7 section #bc ( ! ,commodity ,ex*ange ,act 7#g ,u4,s4,c4 #bf74 7,b7 ,may n exce$ aw>d ,subp>agraph 7,a7 %all n apply to any d$uction 9 excess ( ! am\nt includible 9 ! taxpay]'s gross income = ! taxable ye> on acc\nt ( su* aw>d4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aajgi4 ,cl>ification ( :i/lebl[] aw>ds 7a7 ,def9ition ( proce$s 7#a7 ,9 g5]al ,section #gfbc is am5d$ by add+ at ! end ! foll[+ new subsection3 7c7 ,proce$s ,= purposes ( ?is section1 ! t]m proce$s includes-- 7#a7 p5alties1 int]e/1 additions to tax1 & additional am\nts provid$ "u ! int]nal rev5ue laws1 & 7#b7 any proce$s aris+ f laws = :i* ! ,int]nal ,rev5ue ,s]vice is au?oriz$ to adm9i/]1 en=ce1 or inve/igate1 includ+-- 7,a7 crim9al f9es & civil =feitures1 & 7,b7 violations ( report+ requirem5ts4 4 7#b7 ,con=m+ am5dm5ts ,p>agraphs 7#a7 & 7#b77;,a7 ( section #gfbc7;b7 are ea* am5d$ by /rik+ collect$ proce$s 7includ+ p5alties1 int]e/1 additions to tax1 & additional am\nts7 result+ f ! action & ins]t+ proce$s collect$ z a result ( ! action4 7b7 ,am\nt ( proce$s det]m9$ )\t reg>d to availability ,p>agraphs 7#a7 & 7#b77;,a7 ( section #gfbc7;b7 are ea* am5d$ by ins]t+ 7det]m9$ )\t reg>d to :e!r su* proce$s are available to ! ,secret>y7 aft] 9 response to su* action4 7c7 ,disput$ am\nt ?re%old ,section #gfbc7;b77#e77;,b7 is am5d$ by /rik+ tax1 p5alties1 int]e/1 additions to tax1 & additional am\nts & ins]t+ proce$s4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to in=mation provid$ be=e1 on1 or aft] ! date ( ! enactm5t ( ?is ,act ) respect to :i* a f9al det]m9ation = an aw>d has n be5 made be=e su* date ( enactm5t4 ,,viii ,individual m&ate #aajha4 ,elim9ation ( %>$ responsibility paym5t = individuals fail+ to ma9ta9 m9imum ess5tial cov]age 7a7 ,9 g5]al ,section #ejjj;,a7c7 is am5d$-- 7#a7 9 p>agraph 7#b77;,b77iii71 by /rik+ #b4e p]c5t & ins]t+ ,z]o p]c5t1 & 7#b7 9 p>agraph 7#c7-- 7,a7 by /rik+ #fie 9 subp>agraph 7,a7 & ins]t+ #j1 & 7,b7 by /rik+ subp>agraph 7,d74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to mon?s beg9n+ aft] ,decemb] #ca1 #bjah4 ,b ,alt]native ,m9imum ,tax #abjja4 ,repeal ( tax = corporations 7a7 ,9 g5]al ,section #ee7;a7 is am5d$ by /rik+ ,!re & ins]t+ ,9 ! case ( a taxpay] o!r ?an a corporation1 !re4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ch7;c77#f7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,corporations ,9 ! case ( a corporation1 ?is subsection %all be appli$ by treat+ ! corporation z hav+ a t5tative m9imum tax ( z]o4 4 7#b7 7,a7 ,section #ee7;b77#a7 is am5d$ to read z foll[s3 7#a7 ,am\nt ( t5tative tax 7,a7 ,9 g5]al ,! t5tative m9imum tax = ! taxable ye> is ! sum (-- 7i7 #bf p]c5t ( s mu* ( ! taxable excess z does n exce$ #age1jjj1 plus 7ii7 #bh p]c5t ( s mu* ( ! taxable excess z exce$s #age1jjj4 ,! am\nt det]m9$ "u ! prec$+ s5t5ce %all be r$uc$ by ! alt]native m9imum tax =eign tax cr$it = ! taxable ye>4 7,b7 ,taxable excess ,= purposes ( ?is subsection1 ! t]m taxable excess means s mu* ( ! alt]native m9imum taxable income = ! taxable ye> z exce$s ! exemption am\nt4 7,c7 ,m>ri$ individual fil+ sep>ate return ,9 ! case ( a m>ri$ individual fil+ a sep>ate return1 subp>agraph 7,a7 %all be appli$ by sub/itut+ #ej p]c5t ( ! doll> am\nt o!rwise applicable "u clause 7i7 & cause 7ii7 !re(4 ,= purposes ( ! prec$+ s5t5ce1 m>ital /atus %all be det]m9$ "u section #ggjc4 4 7,b7 ,section #ei7;a7 is am5d$-- 7i7 by /rik+ subp>agraph 7,a77i7 or 7,b77i7 ( section #ee7;b77#a7 7:i*ev] applies7 9 lieu ( ! highe/ rate ( tax specifi$ 9 section #a or #aa 7:i*ev] applies7 9 p>agraph 7#a77;,c7 & ins]t+ section #ee7;b77#a7 9 lieu ( ! highe/ rate ( tax specifi$ 9 section #a1 & 7ii7 9 p>agraph 7#b71 by /rik+ means & all t foll[s & ins]t+ means ! am\nt det]m9$ "u ! fir/ s5t5ce ( section #ee7;b77#a744 7,c7 ,section #hig7;a77#b77;,a7 is am5d$ by /rik+ section #ee7;b77#a77;,a7 & ins]t+ section #ee7;b77#a74 7,d7 ,section #iaa7;f7 is am5d$-- 7i7 9 p>agraph 7#a77;,b7-- 7,i7 by /rik+ section #ee7;b77#a77;,a77ii7 & ins]t+ section #ee7;b77#a77;,b71 & 7,,ii7 by /rik+ section #ee7;b77#a77;,a77i7 & ins]t+ section #ee7;b77#a77;,a71 & 7ii7 9 p>agraph 7#b77;,b71 by /rik+ section #ee7;b77#a77;,a77ii7 ea* place x appe>s & ins]t+ section #ee7;b77#a77;,b74 7#c7 ,section #ee7;c77#a7 is am5d$ by /rik+ 1 ! section #icf cr$it all[able "u section #bg7;b71 & ! ,pu]to ,rico economic activity cr$it "u section #cj;,a4 7#d7 ,section #ee7;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 p>agraph 7#b7 7z s r$esignat$71 by ins]t+ & at ! end ( subp>agraph 7,b71 by /rik+ 1 & at ! end ( subp>agraph 7,c7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,d71 & 7,c7 9 p>agraph 7#c7 7z s r$esignat$7-- 7i7 by /rik+ 7b77#a77;,a77i7 9 subp>agraph 7,b77i7 & ins]t+ 7b77#a77;,a71 & 7ii7 by /rik+ p>agraph 7#c7 9 subp>agraph 7,b77iii7 & ins]t+ p>agraph 7#b74 7#e7 ,section #ee is am5d$ by /rik+ subsection 7e74 7#f7 7,a7 ,section #ef is am5d$ by /rik+ subsections 7c7 & 7g74 7,b7 ,section #hdg is am5d$ by /rik+ ! la/ s5t5ce ( p>agraph 7#i74 7,c7 ,section #hdh is am5d$ by /rik+ subsection 7i74 7#g7 ,section #eh7;a7 is am5d$ by /rik+ p>agraph 7#c7 & r$esignat+ p>agraph 7#d7 z p>agraph 7#c74 7#h7 ,section #ei is am5d$ by /rik+ subsections 7b7 & 7f74 7#i7 ,section #aa7;d7 is am5d$ by /rik+ ! taxes impos$ by subsection 7a7 & section #ee & ins]t+ ! tax impos$ by subsection 7a74 7#aj7 ,section #ab is am5d$ by /rik+ p>agraph 7#g74 7#aa7 ,section #afh7k7 is am5d$ by /rik+ p>agraph 7#d74 7#ab7 ,section #hhb7;a77#a7 is am5d$ by /rik+ 1 #ee14 7#ac7 ,section #ifb7;a77#a7 is am5d$ by /rik+ sections #aa & #ee & ins]t+ section #aa4 7#ad7 ,section #aefa7;a7 is am5d$-- 7,a7 by ins]t+ & at ! end ( p>agraph 7#a71 by /rik+ 1 & at ! end ( p>agraph 7#b7 & ins]t+ a p]iod1 & by /rik+ p>agraph 7#c71 & 7,b7 by /rik+ ! la/ s5t5ce4 7#ae7 ,section #fdbe7;c77#a77;,a7 is am5d$ to read z foll[s3 7,a7 ! tax impos$ by section #aa or #abja7;a71 or sub*apt] ,l ( *apt] #a1 :i*ev] is applicable1 ov] 4 7#af7 ,section #ffee7;e77#b7 is am5d$ by /rik+ & alt]native m9imum taxable income ea* place x appe>s 9 subp>agraphs 7,a7 & 7,b77i74 7#ag7 ,section #ffee7;g77#a77;,a7 is am5d$ by ins]t+ plus at ! end ( clause 7i71 by /rik+ clause 7ii71 & by r$esignat+ clause 7iii7 z clause 7ii74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #abjjb4 ,susp5sion ( tax on individuals 7a7 ,9 g5]al ,section #ee7;a7 is am5d$ by add+ at ! end ! foll[+ new flu% s5t5ce3 ,no tax %all be impos$ by ?is section = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbf1 & ! t5tative m9imum tax ( any taxpay] = any su* taxable ye> %all be z]o = purposes ( ?is title4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #abjjc4 ,cr$it = prior ye> m9imum tax liability 7a7 ,cr$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 #bjah1 #bjai1 #bjbj1 or #bjba1 ! 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$it am\nt is an am\nt equal to #ej p]c5t 7#ajj p]c5t 9 ! case ( a taxable ye> beg9n+ 9 #bjba7 ( ! excess 7if any7 (-- 7,a7 ! m9imum tax cr$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 7b7 ,treatm5t ( ref]5ces ,section #ec7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,,amt t]m ref]5ces ,9 ! case ( a corporation1 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 ! am5dm5ts made by ,tax ,cuts & ,jobs ,act4 4 7c7 ,con=m+ am5dm5t ,section #acgd7;b77#c77;,b7 is am5d$ by /rik+ ! la/ s5t5ce !re(4 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 ,con=m+ am5dm5t ,! am5dm5t made by subsection 7c7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjba4 ,c ,bus9ess-relat$ provisions ,i ,corporate provisions ,a #bj-p]c5t tax rate #acjja4 #bj-p]c5t corporate tax rate 7a7 ,9 g5]al ,subsection 7b7 ( section #aa is am5d$ to read z foll[s3 7b7 ,am\nt ( tax ,! am\nt ( ! tax impos$ by subsection 7a7 %all be #bj p]c5t ( taxable income4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,! foll[+ sections are ea* am5d$ by /rik+ section #aa7;b77#a7 & ins]t+ section #aa7;b73 7,a7 ,section #bhj;,c7c77#c77;,b77ii77,,ii74 7,b7 ,p>agraphs 7#b77;,b7 & 7#f77;,a77ii7 ( section #hfj;,e7e74 7,c7 ,section #ghgd7;e77#a77;,b7 7#b7 7,a7 ,"p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abja 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ab is am5d$ by /rik+ p>agraphs 7#d7 & 7#f71 & by r$esignat+ p>agraph 7#e7 z p>agraph 7#d74 7,c7 ,section #dec;,a7c77#c7 is am5d$ by /rik+ or #abja 7:i*ev] is appropriate74 7,d7 ,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,e7 ,sections #eid7;a7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja7;a7 & ins]t+ tax impos$ by section #aa4 7,f7 ,section #fia7;c77#d7 is am5d$ by /rik+ #abja14 7,g7 ,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,h7 ,section #hca7;e7 is am5d$ by /rik+ p>agraph 7#a7 & by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#a7 & 7#b71 respectively4 7,i7 ,sections #hcb7;c77#e7 & #hcd7;b77#a77;,d7 are ea* am5d$ by /rik+ sec4 #abja & foll[+14 7,j7 ,section #heb7;b77#c77;,a7 is am5d$ by /rik+ section #abja7;a7 & ins]t+ section #aa7;b74 7,k7 ,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,l7 ,section #hhb7;a77#a71 z am5d$ by section #abjja1 is am5d$ by /rik+ or #abja7;a74 7,m7 ,section #ijd7;b7 is am5d$-- 7i7 by /rik+ or #abja7;a7 9 p>agraph 7#b77;,c71 7ii7 by /rik+ p>agraph 7#c77;,d7 & ins]t+ ! foll[+3 7,d7 ,capital ga9 rate diff]5tial ,!re is a capital ga9 rate diff]5tial = any ye> if subsection 7h7 ( section #a applies to su* taxable ye>4 1 & 7iii7 by /rik+ p>agraph 7#c77;,e7 & ins]t+ ! foll[+3 7,e7 ,rate diff]5tial portion ,! rate diff]5tial portion ( =eign s\rce net capital ga91 net capital ga91 or ! excess ( net capital ga9 f s\rces )9 ! ,unit$ ,/ates ov] net capital ga91 z ! case may be1 is ! same proportion ( su* am\nt z-- 7i7 ! excess (-- 7,i7 ! highe/ rate ( tax set =? 9 subsection 7a71 7b71 7c71 7d71 or 7e7 ( section #a 7:i*ev] applies71 ov] 7,,ii7 ! alt]native rate ( tax det]m9$ "u section #a7;h71 be>s to 7ii7 t rate ref]r$ to 9 subclause 7,i74 4 7,n7 ,section #acgd7;b7 is am5d$ by /rik+ p>agraph 7#d74 7,o7 ,section #acha7;b7 is am5d$ by /rik+ taxes impos$ by section #aa or #abja & ins]t+ tax impos$ by section #aa4 7,p7 ,sections #fdbe7;c77#a77;,a71 z am5d$ by section #abjja1 & #ffee7;g77#a77;,a77i7 are ea* am5d$ by /rik+ or #abja7;a714 7,q7 ,section #geah7;g77#f77;,a7 is am5d$ by /rik+ or #abja7;a74 7#c7 7,a7 ,section #adde7;e77#a7 is am5d$-- 7i7 by /rik+ #ce p]c5t & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b71 & 7ii7 by /rik+ ( ! ga9 & ins]t+ multipli$ by ! ga94 7,b7 ,section #adde7;e77#b7 is am5d$ by /rik+ #ce p]c5t ( ! am\nt & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b7 multipli$ by ! am\nt4 7,c7 ,section #adde7;e77#f7 is am5d$-- 7i7 by /rik+ #ce p]c5t & ins]t+ ! highe/ rate ( tax 9 effect = ! taxable ye> "u section #aa7;b71 & 7ii7 by /rik+ ( ! am\nt & ins]t+ multipli$ by ! am\nt4 7,d7 ,section #addf7;b77#b77;,b7 is am5d$ by /rik+ section #aa7;b77#a7 & ins]t+ section #aa7;b74 7#d7 ,section #heb7;b77#a7 is am5d$ by /rik+ ! la/ s5t5ce4 7#e7 7,a7 ,"p ,i ( sub*apt] ,b ( *apt] #e is am5d$ by /rik+ section #aeea 7& by /rik+ ! item relat+ to su* section 9 ! table ( sections = su* "p74 7,b7 ,section #ece7;c77#e7 is am5d$ to read z foll[s3 7#e7 ,cross ref]5ce ,= limitation on cr$it provid$ 9 p>agraph 7#b7 or 7#c7 9 ! case ( c]ta9 controll$ corporations1 see section #aefa4 4 7#f7 7,a7 ,section #aefa1 z am5d$ by section #abjja1 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$-- 7,a7 by /rik+ ,) respect to ! portion & ins]t+ ,9 ! case ( a taxpay] o!r ?an a corporation1 ) respect to ! portion1 & 7,b7 by /rik+ 7#cd p]c5t 9 ! case ( a corporation74 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 7#b7 ,)hold+ ,! am5dm5ts made by subsection 7b77#c7 %all apply to di/ributions made aft] ,decemb] #ca1 #bjah4 7#c7 ,c]ta9 transf]s ,! am5dm5ts made by subsection 7b77#f7 %all apply to transf]s made aft] ,decemb] #ca1 #bjah4 7d7 ,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 ( #aihf7 z det]m9$ "u ! ,int]nal ,rev5ue ,code ( #aihf z 9 effect on ! day be=e ! date ( ! enactm5t ( ?is ,act1 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 #acjjb4 ,r$uction 9 divid5d receiv$ d$uctions to reflect l[] corporate income tax rates 7a7 ,divid5ds receiv$ 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$-- 7,a7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t1 & 7,b7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t4 7#c7 ,con=m+ am5dm5t ,! head+ = section #bdc7;c7 is am5d$ by /rik+ ,ret5tion ( #hj-p]c5t divid5d receiv$ d$uction & ins]t+ ,increas$ p]c5tage4 7b7 ,divid5ds receiv$ f ,,fsc ,section #bde7;c77#a77;,b7 is am5d$-- 7#a7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t1 & 7#b7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t4 7c7 ,limitation on aggregate am\nt ( d$uctions ,section #bdf7;b77#c7 is am5d$-- 7#a7 by /rik+ #hj p]c5t 9 subp>agraph 7,a7 & ins]t+ #fe p]c5t1 & 7#b7 by /rik+ #gj p]c5t 9 subp>agraph 7,b7 & ins]t+ #ej p]c5t4 7d7 ,r$uction 9 d$uction :]e portfolio /ock is debt-f9anc$ ,section #bdf;,a7a77#a7 is am5d$-- 7#a7 by /rik+ #gj p]c5t & ins]t+ #ej p]c5t1 & 7#b7 by /rik+ #hj p]c5t & ins]t+ #fe p]c5t4 7e7 ,income f s\rces )9 ! ,unit$ ,/ates ,section #hfa7;a77#b7 is am5d$-- 7#a7 by /rik+ #ajj_/gj? & ins]t+ #ajj_/ej? 9 subp>agraph 7,b71 & 7#b7 9 ! flu% s5t5ce at ! end-- 7,a7 by /rik+ #ajj_/hj? & ins]t+ #ajj_/fe?1 & 7,b7 by /rik+ #ajj_/gj? & ins]t+ #ajj_/ej?4 7f7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section 7o!r ?an subsection 7c7 !re(7 %all apply to divid5ds receiv$ by a corporation aft] ,decemb] #ca1 #bjah1 9 taxable ye>s end+ aft] su* date4 7#b7 ,limitation ,! am5dm5ts made by section #ajb7;c7 %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 ,b ,divid5ds paid d$uction = dome/ic corporations #acjaa4 ,divid5ds paid d$uction 7a7 ,g5]al rule ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #bda ! foll[+3 ,b ,divid5ds paid d$uction ,sec4 #bdb4 ,divid5ds paid d$uction4 #bdb4 ,divid5ds paid d$uction 7a7 ,all[ance ( d$uction ,9 ! case ( an eligible corporation1 !re %all be all[$ z a d$uction an am\nt equal to z]o p]c5t ( ! aggregate am\nt ( applicable divid5ds paid by ! corporation dur+ ! taxable ye>4 7b7 ,applicable ,divid5d ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable divid5d means1 ) respect to an eligible corporation1 any di/ribution by ! eligible corporation dur+ a taxable ye> :i* is-- 7,a7 treat$ z a divid5d = purposes ( ?is *apt]1 & 7,b7 paid out ( its applicable e>n+s & pr(its4 7#b7 ,ord]+ rule = divid5d paym5ts ,= purposes ( p>agraph 7#a77;,b71 divid5ds %all be treat$ z paid-- 7,a7 fir/1 out ( exempt e>n+s & pr(its1 7,b7 second1 out ( applicable e>n+s & pr(its1 & 7,c7 f9ally1 out ( e>n+s & pr(its n describ$ 9 subp>agraph 7,a7 or 7,b74 7#c7 ,coord9ation ) o!r d$uctions ,su* t]m %all n include-- 7,a7 any am\nt all[$ z a d$uction "u section #eia 7relat+ to d$uction = divid5ds paid by mutual sav+s banks1 etc471 & 7,b7 any divid5d describ$ 9 p>agraph 7#b7 ( section #djd7k7 7relat+ to d$uction = divid5ds paid on c]ta9 employ] securities74 7#d7 ,election to treat c]ta9 di/ributions paid aft] close ( ye> z paid dur+ ye> ,= purposes ( ?is title1 an eligible corporation may elect on its return ( tax = any taxable ye> to treat any di/ribution made on or be=e ! #ae? day ( ! #d? mon? foll[+ ! close ( ! taxable ye> z hav+ be5 made imm$iately be=e ! close ( ! taxable ye>4 ,! prec$+ s5t5ce %all n apply = purposes ( det]m9+ ! "t ! di/ribution 0 receiv$ by ! %>ehold] to :om ! di/ribution 0 made4 7#e7 ,applicable e>n+s & pr(its 7,a7 ,9 g5]al ,! t]m applicable e>n+s & pr(its means1 ) respect to any corporation = any taxable ye>1 its e>n+s & pr(its = ! taxable ye> & its e>n+s & pr(its accumulat$ 9 prior taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 ,= purposes ( ! prec$+ s5t5ce1 e>n+s & pr(its = ! taxable ye> %all be det]m9$ )\t reg>d to ! d$uction "u ?is section = ! taxable ye>4 7,b7 ,exempt e>n+s & pr(its n treat$ z applicable e>n+s & pr(its ,! applicable e>n+s & pr(its ( a corporation %all n include any exempt e>n+s & pr(its 7z def9$ 9 p>agraph 7#f774 7,c7 ,look-?ru 9 ! case ( divid5ds receiv$ f controll$ =eign corporation or #aj_/ej corporation ,if a corporation :i* is a ,unit$ ,/ates %>ehold] 9 a controll$ =eign corporation1 or is a %>ehold] 9 a =eign corporation ) respect to :i* ! %>ehold] meets ! /ock own]%ip requirem5ts ( section #ijb7;a71 receives a divid5d 7o!r ?an a divid5d to :i* subp>agraph 7,b7 applies7 f su* controll$ =eign corporation or su* =eign corporation1 ! e>n+s & pr(its f su* divid5d %all n be treat$ z applicable e>n+s & pr(its ( ! corporation receiv+ su* divid5d to ! ext5t ( any portion ( ! divid5d n prop]ly allocable 7z det]m9$ "u section #caf1 z modifi$ by section #iei7;c7 9 ! case ( su* controll$ =eign corporation7 to applicable e>n+s & pr(its ( su* controll$ =eign corporation or su* =eign corporation4 7#f7 ,exempt e>n+s & pr(its 7,a7 ,9 g5]al ,! t]m exempt e>n+s & pr(its means1 ) respect to any corporation = any taxable ye>1 its e>n+s & pr(its = ! taxable ye> & its e>n+s & pr(its accumulat$ 9 prior taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah1 :i* are prop]ly allocable to exempt am\nts receiv$ or accru$ by ! corporation4 7,b7 ,exempt am\nts ,! t]m exempt am\nts means1 ) respect to any corporation-- 7i7 any divid5d to ! ext5t ( ! d$uction all[able to ! corporation "u section #bdc1 #bde1 or #bde;,a ) respect to ! divid5d1 7ii7 any =eign-d]iv$ intangible income 7z def9$ 9 section #bej7;b77 or global intangible l[-tax$ income 7z def9$ 9 section #iea;,a7b77 to ! ext5t ( ! d$uction all[able to ! corporation "u section #bej ) respect to any su* income1 7iii7 any increase 9 subp>t ,f income by reason ( section #ife to ! ext5t ( ! d$uction all[able to ! corporation "u section #ife7;c77#a7 ) respect to any su* income1 & 7iv7 any o!r am\nt to ! ext5t su* am\nt is exempt f taxation "u ?is title4 7#g7 ,prop] allocation ( divid5ds to e>n+s & pr(its 7,a7 ,9 g5]al ,! ,secret>y %all prescribe rules = ! prop] allocation ( divid5ds to e>n+s & pr(its = purposes ( apply+ ?is subsection4 7,b7 ,look ?r\gh rules ,= purposes ( p>agraph 7#d77;,c71 su* rules %all include rules requir+ 9 appropriate cases ! look ?r\gh to e>n+s & pr(its ( memb]s ( any affiliat$ gr\p includ+ a controll$ =eign corporation or =eign corporation describ$ 9 su* p>agraph :]e ! e>n+s & pr(its ( su* controll$ =eign corporation or su* =eign corporation are attributable to di/ributions receiv$ f o!r memb]s ( ! gr\p4 7c7 ,eligible corporation ,= purposes ( ?is section1 ! t]m eligible corporation means any dome/ic corporation o!r ?an-- 7#a7 a regulat$ inve/m5t company1 7#b7 a real e/ate inve/m5t tru/1 7#c7 an ,s corporation1 7#d7 a corporation :i* is exempt f tax "u section #eja or #eba1 7#e7 an organization taxable "u sub*apt] ,t ( ?is *apt] 7relat+ to coop]ative organizations71 7#f7 a coop]ative gov]n$ by ! rules applicable to coop]atives z 9 effect be=e ! enactm5t ( sub*apt] ,t1 or 7#g7 a ,,disc or =m] ,,disc4 7d7 ,report+ requirem5t 7#a7 ,9 g5]al ,ea* eligible corporation :i* makes paym5ts ( divid5ds dur+ ! report+ p]iod = any taxable ye> %all make a return1 accord+ to ! =ms & regulations prescrib$ by ! ,secret>y1 sett+ =?-- 7,a7 ! aggregate am\nt ( su* divid5ds1 7,b7 ! aggregate am\nt ( su* divid5ds ) respect to :i* ! corporation is claim+ a d$uction "u ?is section = ! taxable ye>1 7,c7 ! aggregate am\nt ( su* divid5ds :i* ! corporation paid dur+ ! p]iod beg9n+ on ! #a/ day ( ! report+ taxable ye> & end+ on ! #ae? day ( ! #d? mon? ( su* taxable ye> :i* ! corporation elect$ "u subsection 7b77#d7 to treat z paid 9 ! prec$+ taxable ye>1 7,d7 ! aggregate am\nt ( su* divid5ds :i* ! corporation paid dur+ ! p]iod beg9n+ on ! #a/ day ( ! taxable ye> foll[+ ! report+ taxable ye> & end+ on ! #ae? day ( ! #d? mon? ( su* foll[+ taxable ye> :i* ! corporation elect$ "u subsection 7b77#d7 to treat z paid 9 ! report+ taxable ye>1 & 7,e7 su* o!r in=mation ) respect to su* divid5ds z ! ,secret>y %all require = ! adm9i/ration ( ?is section4 7#b7 ,report+ p]iod2 due date ,= purposes ( ?is subsection-- 7,a7 ,report+ p]iod ,! t]m report+ p]iod means )1 respect to any taxable ye>1 ! p]iod beg9n+ on ! #a/ day ( ! taxable ye> & end+ on ! #ae? day ( ! #d? mon? foll[+ ! close ( ! taxable ye>4 7,b7 ,due date ,any return "u p>agraph 7#a7 ) respect to any taxable ye> %all be includ$ ) ! return ( income tax = su* taxable ye>4 4 7b7 ,p5alty = failure to report ,section #ffeb1 z am5d$ by subtitle ,e ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new subsection3 7r7 ,failure to file returns by corporations eligible = divid5ds paid d$uction 7#a7 ,p5alty = failure to file return ,9 ! case ( a failure to make a return requir$ "u section #bdb7;d7 conta9+ ! in=mation requir$ by su* section by ! due date = ! return1 ! eligible corporation %all pay 7on notice & dem& by ! ,secret>y & 9 ! same mann] z tax7 a p5alty ( #a1jjj p] day = ea* day su* failure cont9ues unless x is %[n t su* failure is due to reasonable cause4 ,! maximum am\nt ( ! p5alty "u ?is p>agraph ) respect to any failure = a taxable ye> %all n exce$ #bej1jjj4 7#b7 ,eligible corporation ,= purposes ( ?is subsection1 ! t]m eligible corporation has ! mean+ giv5 su* t]m by section #bdb7;c74 4 7c7 ,divid5ds paid d$uction all[able only 9 taxable ye> ( divid5d paym5t 7#a7 ,9 g5]al ,subsection 7d7 ( section #agb1 z am5d$ by section #aajaa1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#i7 ,divid5ds paid d$uction ,! d$uction "u section #bdb %all n be all[$4 4 7#b7 ,treatm5t ( c>rybacks & c>ryov]s ,subp>agraph 7,a7 ( section #agb7;b77#b71 z am5d$ by section #accjb1 is am5d$ by /rik+ & 7#e7 & ins]t+ 7#e71 & 7#h74 7d7 ,o!r con=m+ am5dm5ts ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$-- 7#a7 by /rik+ ! table ( sections & ins]t+ ! foll[+3 ,,viii ,special d$uctions = corporations ,subp>t ,a4 ,all[ance ( special d$uctions4,subp>t ,b4 ,divid5ds paid d$uction4,subp>t ,c4 ,divid5ds receiv$ d$uctions4,subp>t ,d4 ,o!r d$uctions4 ,a ,all[ance ( special d$uctions ,sec4 #bda4 ,all[ance ( special d$uctions4 1 7#b7 by ins]t+ ! foll[+ be=e section #bdc3 ,c ,divid5ds receiv$ d$uctions ,sec4 #bdc4 ,divid5ds receiv$ by corporations4,sec4 #bde4 ,divid5ds receiv$ f c]ta9 =eign corporations4 ,sec4 #bde;,a4 ,d$uction = =eign-s\rce portion ( divid5ds receiv$ by dome/ic corporations f specifi$ #aj-p]c5t own$ =eign corporations4,sec4 #bdf4 ,rules apply+ to d$uctions = divid5ds receiv$4,sec4 #bdf;,a4 ,divid5ds receiv$ d$uction r$uc$ :]e portfolio /ock is debt f9anc$4 1 & 7#c7 by ins]t+ ! foll[+ be=e section #bdh3 ,d ,o!r d$uctions ,sec4 #bdh4 ,organizational exp5ditures4,sec4 #bdi4 ,limitation ( d$uction ( bond premium on repur*ase4,sec4 #bej4 ,=eign-d]iv$ intangible income & global intangible l[-tax$ income4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to divid5ds paid 9 taxable ye>s ( ! payor beg9n+ aft] ,decemb] #ca1 #bjah4 #acjab4 ,tax equival5t to divid5ds paid d$uction = c]ta9 =eign corporations 7a7 ,divid5ds paid d$uction ,p>agraph 7#a7 ( section #hhb7;c7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,special rule = divid5ds paid d$uction ,= purposes ( subp>agraph 7,a7-- 7i7 ! d$uction "u section #bdb %all n be all[$ = any taxable ye>1 & 7ii7 !re %all be all[$1 9 lieu ( su* d$uction1 a d$uction 9 an am\nt equal to z]o p]c5t ( ! divid5d equival5t am\nt 7z def9$ 9 section #hhd7;b77 ( ! =eign corporation = ! taxable ye>4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 #acjac4 ,allocation ( divid5d exp5se among memb]s ( worldwide affiliat$ gr\ps 7a7 ,9 g5]al ,p>agraph 7#f7 ( section #hfd7;e7 is am5d$ to read z foll[s3 7#f7 ,allocation & apportionm5t ( o!r exp5ses 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 exp5ses o!r ?an int]e/ :i* are n directly allocable or apportion$ to any specific income produc+ activity %all be allocat$ & apportion$ z if all memb]s ( ! affiliat$ gr\p 7 a s+le corporation4 7,b7 ,divid5d exp5se ,! divid5d exp5se ( any dome/ic corporation :i* is a memb] ( an affiliat$ gr\p %all be allocat$ & apportion$ to income f s\rces )\t ! ,unit$ ,/ates 9 ! same proportion :i*-- 7i7 ! aggregate am\nt ( income treat$ z f s\rces )\t ! ,unit$ ,/ates by all dome/ic corporations :i* are memb]s ( su* gr\p 7det]m9$ )\t reg>d to su* divid5d exp5se71 be>s to 7ii7 ! aggregate income ( all su* dome/ic corporations f s\rces )9 & )\t ! ,unit$ ,/ates 7z s det]m9$74 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 ,,ii ,small bus9ess re=ms #acaja4 ,modifications ( rules = exp5s+ depreciable bus9ess assets 7a7 ,increase 9 limitation 7#a7 ,doll> limitation ,section #agi7;b77#a7 is am5d$ by /rik+ #ejj1jjj & ins]t+ #a1jjj1jjj4 7#b7 ,r$uction 9 limitation ,section #agi7;b77#b7 is am5d$ by /rik+ #b1jjj1jjj & ins]t+ #b1ejj1jjj4 7#c7 ,inflation adju/m5ts 7,a7 ,9 g5]al ,subp>agraph 7,a7 ( section #agi7;b77#f7 is am5d$-- 7i7 by /rik+ #bjae & ins]t+ #bjah1 & 7ii7 9 clause 7ii71 by /rik+ cal5d> ye> #bjad & ins]t+ cal5d> ye> #bjag4 7,b7 ,sport utility vehicles ,section #agi7;b77#f7 is am5d$-- 7i7 9 subp>agraph 7,a71 by /rik+ p>agraphs 7#a7 & 7#b7 & ins]t+ p>agraphs 7#a71 7#b71 & 7#e77;,a71 & 7ii7 9 subp>agraph 7,b71 by ins]t+ 7#ajj 9 ! case ( any increase 9 ! am\nt "u p>agraph 7#e77;,a77 aft] #aj1jjj4 7b7 ,section #agi prop]ty to include qualifi$ real prop]ty 7#a7 ,9 g5]al ,subp>agraph 7,b7 ( section #agi7;d77#a7 is am5d$ to read z foll[s3 7,b7 :i* is-- 7i7 section #abde prop]ty 7z def9$ 9 section #abde7;a77#c771 or 7ii7 qualifi$ real prop]ty 7z def9$ 9 subsection 7f771 & 4 7#b7 ,qualifi$ real prop]ty def9$ ,subsection 7f7 ( section #agi is am5d$ to read z foll[s3 7f7 ,qualifi$ real prop]ty ,= purposes ( ?is subsection1 ! t]m qualifi$ real prop]ty means-- 7#a7 any qualifi$ improvem5t prop]ty describ$ 9 section #afh7;e77#f71 & 7#b7 any ( ! foll[+ improvem5ts to nonresid5tial real prop]ty plac$ 9 s]vice aft] ! date su* prop]ty 0 fir/ plac$ 9 s]vice3 7,a7 ,ro(s4 7,b7 ,heat+1 v5tilation1 & air-condition+ prop]ty4 7,c7 ,fire protection & al>m sy/ems4 7,d7 ,security sy/ems4 4 7c7 ,repeal ( exclusion = c]ta9 prop]ty ,! la/ s5t5ce ( section #agi7;d77#a7 is am5d$ by ins]t+ 7o!r ?an p>agraph 7#b7 !re(7 aft] section #ej7;b74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acajb4 ,modifications ( gross receipts te/ = use ( ca% me?od ( acc\nt+ by corporations & p>tn]%ips 7a7 ,modifications ( gross receipts te/ 7#a7 ,9 g5]al ,s mu* ( section #ddh7;c7 z prec$es p>agraph 7#b7 is am5d$ to read z foll[s3 7c7 ,gross receipts te/ 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$es su* taxable ye> does n exce$ ! applicable doll> limit4 4 7#b7 ,applicable doll> limit ,subsection 7c7 ( section #ddh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,applicable doll> limit 7,a7 ,9 g5]al ,! applicable doll> limit is #ae1jjj1jjj4 7,b7 ,adju/m5t = inflation ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 ! #ae1jjj1jjj am\nt "u subp>agraph 7,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;f77#c7 = ! 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$+ s5t5ce is n a multiple ( #a1jjj1 su* am\nt %all be r\nd$ to ! next l[e/ multiple ( #a1jjj4 4 7#c7 ,*ange 9 me?od ( acc\nt+ ,p>agraph 7#g7 ( section #ddh7;d7 is am5d$-- 7,a7 by /rik+ ,9 ! case ( & all t foll[s up to subp>agraph 7,a7 & ins]t+3 ,if a taxpay] *anges its me?od ( acc\nt+ because ! taxpay] is prohibit$ f us+ ! ca% receipts & disbursem5t me?od ( acc\nt+ by reason ( subsection 7a7 or is no long] prohibit$ f us+ su* me?od by reason ( su* subsection--1 & 7,b7 by ins]t+ & at ! end ( subp>agraph 7,a71 by /rik+ 1 & at ! end ( subp>agraph 7,b7 & ins]t+ a p]iod1 & by /rik+ subp>agraph 7,c74 7#d7 ,con=m+ am5dm5t ,p>agraph 7#c7 ( section #ddh7;b7 is am5d$ to read z foll[s3 7#c7 ,entities satisfy+ 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 meets ! gross receipts te/ ( subsection 7c7 = ! taxable ye>4 4 7b7 ,application ( modifications to f>m+ corporations 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #ddg7;d7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,a corporation meets ! requirem5ts ( ?is subsection = any taxable ye> ) respect to its gross receipts if ! corporation meets ! gross receipts te/ ( section #ddh7;c7 = ! taxable ye>4 4 7#b7 ,family corporations ,p>agraph 7#b7 ( section #ddg7;d7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,a7 & ins]t+ ! foll[+3 7,a7 ,9 g5]al ,9 ! case ( a family corporation1 9 apply+ section #ddh7;c7 = purposes ( p>agraph 7#a7-- 7i7 p>agraph 7#a7 ( section #ddh7;c7 %all be appli$ by sub/itut+ ! applicable family corporation limit = ! applicable doll> limit1 & 7ii7 ! rules ( subp>agraph 7,b7 %all apply 9 comput+ gross receipts4 1 7,b7 ,clause 7i7 ( section #ddg7;d77#b77;,b7 is am5d$ by /rik+ ! la/ s5t5ce ( p>agraph 7#a7 & ins]t+ p>agraph 7#b7 ( section #ddh7;c71 & 7,c7 by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,applicable family corporation limit 7i7 ,9 g5]al ,! applicable family corporation limit is #be1jjj1jjj4 7ii7 ,adju/m5t = inflation ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah1 ! #be1jjj1jjj am\nt "u clause 7i7 %all be increas$ by an am\nt equal to-- 7,i7 su* doll> am\nt1 multipli$ by 7,,ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = ! cal5d> ye> 9 :i* ! taxable ye> beg9s1 by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,if any am\nt z increas$ "u ! prec$+ s5t5ce is n a multiple ( #a1jjj1 su* am\nt %all be r\nd$ to ! next l[e/ multiple ( #a1jjj4 4 7#c7 ,exception = c]ta9 corporations ,subsection 7c7 ( section #ddg is am5d$ by ins]t+ = any taxable ye> aft] n be+ a corporation4 7#d7 ,*ange 9 me?od ( acc\nt+ ,section #ddg7;f7 is am5d$-- 7,a7 by /rik+ ,9 ! case ( & all t foll[s up to p>agraph 7#a7 & ins]t+ ! foll[+3 ,if a taxpay] *anges its me?od ( acc\nt+ because ! taxpay] is requir$ to use an accrual me?od ( acc\nt+ by reason ( subsection 7a7 or is no long] requir$ to use su* me?od by reason ( su* subsection--1 & 7,b7 by /rik+ p>agraph 7#b7 & ins]t+ ! foll[+3 7#b7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acajc4 ,cl>ification ( inv5tory acc\nt+ rules = small bus9esses 7a7 ,cl>ification ( inv5tory rules 7#a7 ,9 g5]al ,section #dga is am5d$ by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,small bus9ess taxpay]s n requir$ to use inv5tories 7#a7 ,9 g5]al ,a qualifi$ taxpay] %all n be requir$ to use inv5tories "u ?is section = a taxable ye>4 7#b7 ,treatm5t ( taxpay]s n us+ inv5tories ,a qualifi$ taxpay] :o is n requir$ "u ?is subsection to use inv5tories ) respect to any prop]ty = a taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 may treat su* prop]ty-- 7,a7 z a non-incid5tal mat]ial or supply1 or 7,b7 9 a mann] :i* con=ms to ! taxpay]'s me?od = acc\nt+ = su* prop]ty 9-- 7i7 an applicable f9ancial /atem5t 7z def9$ 9 section #dea7;b77#a771 or 7ii7 9 ! case ( a taxpay] t does n h an applicable f9ancial /atem5t1 _! books & records us$ = purposes ( det]m9+ tax impos$ by ?is title4 7#c7 ,qualifi$ taxpay] ,= purposes ( ?is subsection1 ! t]m qualifi$ taxpay] means1 ) respect to any taxable ye>1 a taxpay] :o meets ! gross receipts te/ ( section #ddh7;c7 = ! taxable ye> 7or1 9 ! case ( a sole proprietor%ip1 :o w\ld meet su* te/ if su* proprietor%ip 7 a corporation74 ,su* t]m %all n include a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c74 7#d7 ,coord9ation ) section #dha ,if a taxpay] *anges its me?od ( acc\nt+ because ! taxpay] is n requir$ to use inv5tories by reason ( p>agraph 7#a7 or is requir$ to use inv5tories because su* p>agraph no long] applies to ! taxpay]-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y4 4 7#b7 ,con=m+ am5dm5t ,subsection 7c7 ( section #bfc;,a is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,exclusion f inv5tory rules ,no?+ 9 ?is section %all require ! use ( inv5tories = any taxable ye> by a qualifi$ taxpay] 7)9 ! mean+ ( section #dga7;c77#c77 :o is n requir$ to use inv5tories "u section #dga = su* taxable ye>4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acajd4 ,modification ( rules = uni=m capitalization ( c]ta9 exp5ses 7a7 ,9 g5]al ,section #bfc;,a7b7 is am5d$ by /rik+ all t foll[s p>agraph 7#a7 & ins]t+ ! foll[+ new p>agraphs3 7#b7 ,prop]ty acquir$ = resale ,real or p]sonal prop]ty describ$ 9 section #abba7;a77#a7 :i* is acquir$ by ! taxpay] = resale4 7#c7 ,exception = small bus9esses ,?is section %all n apply to any taxpay] :o meets ! gross receipts te/ "u section #ddh7;c7 = ! taxable ye> 7or1 9 ! case ( a sole proprietor%ip1 :o w\ld meet su* te/ if su* proprietor%ip 7 a corporation71 o!r ?an a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c74 7#d7 ,films1 s\nd record+s1 books1 etc ,= purposes ( ?is subsection1 ! t]m tangible p]sonal prop]ty %all include a film1 s\nd record+1 video tape1 book1 or simil> prop]ty4 7#e7 ,coord9ation ) section #dha ,if a taxpay] *anges its me?od ( acc\nt+ because ?is section does n apply to ! taxpay] by reason ( ! exception "u p>agraph 7#c7 or ?is section applies to ! taxpay] because su* exception no long] applies to ! taxpay]-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acaje4 ,increase 9 gross receipts te/ = con/ruction contract exception to p]c5tage ( completion me?od 7a7 ,increase 7#a7 ,9 g5]al ,section #dfj7;e77#a77;,b7 is am5d$-- 7,a7 9 ! matt] prec$+ clause 7i71 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]1 & 7,b7 by /rik+ clause 7ii7 & ins]t+ ! foll[+3 7ii7 :o meets ! gross receipts te/ ( section #ddh7;c7 = ! taxable ye> 9 :i* su* contract is ent]$ into 7or1 9 ! case ( a sole proprietor%ip1 :o w\ld meet su* te/ if su* proprietor%ip 7 a corporation74 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #dfj7;e7 is am5d$ by /rik+ p>agraphs 7#b7 & 7#c7 & by r$esignat+ p>agraphs 7#d7 ?r\gh 7#f7 z p>agraphs 7#b7 ?r\gh 7#d71 respectively4 7,b7 ,! la/ s5t5ce ( section #ef7;a77#c7 is am5d$ by /rik+ section #dfj7;e77#f7 & ins]t+ section #dfj7;e77#d74 7b7 ,coord9ation ) section #dha ,section #dfj7;e71 z am5d$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+3 7#e7 ,coord9ation ) section #dha ,if a taxpay] *anges its me?od ( acc\nt+ because subsections 7a71 7b71 7c77#a71 & 7c77#b7 d n apply by reason ( ! exception "u p>agraph 7#a77;,b7 or su* subsections apply to ! taxpay] because su* exception no long] applies to ! taxpay]-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y1 & 7,c7 su* *ange %all be p]mitt$ only on a cut-(f basis = all simil>ly classifi$ contracts ent]$ into on or aft] ! ye> ( *ange & no adju/m5ts "u section #dha7;a7 %all be made4 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to contracts ent]$ into aft] ,decemb] #ca1 #bjag1 9 taxable ye>s end+ aft] su* date4 ,,iii ,co/ recov]y & acc\nt+ me?ods ,a ,co/ recov]y #acbja4 ,tempor>y #ajj-p]c5t exp5s+ = c]ta9 bus9ess assets 7a7 ,9 g5]al 7#a7 #ajj p]c5t exp5s+ ,section #afh7k7 is am5d$-- 7,a7 9 p>agraph 7#a77;,a71 by /rik+ #ej p]c5t & ins]t+ #ajj p]c5t1 & 7,b7 9 p>agraph 7#e77;,a77i71 by /rik+ #ej p]c5t & ins]t+ #ajj p]c5t4 7#b7 ,ext5sion ?r\gh #bjbb ,section #afh7k7 is am5d$-- 7,a7 9 ! head+1 by /rik+ ,decemb] #ca1 #bjjg1 & be=e ,janu>y #a1 #bjbj & ins]t+ ,septemb] #bg1 #bjag1 & be=e ,janu>y #a1 #bjbc1 7,b7 9 p>agraph 7#b7-- 7i7 9 subp>agraph 7,a77iii71 clauses 7i77,,iii7 & 7ii7 ( subp>agraph 7,b71 & subp>agraph 7,e77i71 by /rik+ ,janu>y #a1 #bjbj ea* place x appe>s & ins]t+ ,janu>y #a1 #bjbc1 & 7ii7 9 subp>agraph 7,b7-- 7,i7 9 clause 7i77,,ii71 by /rik+ ,janu>y #a1 #bjba & ins]t+ ,janu>y #a1 #bjbd1 & 7,,ii7 9 ! head+ ( clause 7ii71 by /rik+ pre-,janu>y #a1 #bjbj & ins]t+ pre-,janu>y #a1 #bjbc1 & 7,c7 9 p>agraph 7#e77;,a71 by /rik+ ,janu>y #a1 #bjbj & ins]t+ ,janu>y #a1 #bjbc4 7#c7 ,exception = public utilities ,p>agraph 7#f7 ( section #afh7k7 is am5d$ to read z foll[s3 7#f7 ,exception = c]ta9 public utility prop]ty ,! t]m qualifi$ prop]ty %all n include any prop]ty :i* is prim>ily us$ 9 a trade or bus9ess describ$ 9 clause 7iv7 ( section #afc7;j77#g77;,a74 4 7#d7 ,special rule ,section #afh7k7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,special rule = prop]ty plac$ 9 s]vice dur+ c]ta9 p]iods 7,a7 ,9 g5]al ,9 ! case ( qualifi$ prop]ty plac$ 9 s]vice by ! taxpay] dur+ ! fir/ taxable ye> end+ aft] ,septemb] #bg1 #bjag1 if ! taxpay] elects to h ?is p>agraph apply = su* taxable ye>1 p>agraphs 7#a77;,a7 & 7#e77;,a77i7 %all be appli$ by sub/itut+ #8#ej p]c5t' = #8#ajj p]c5t'4 7,b7 ,=m ( election ,any election "u ?is p>agraph %all be made at su* "t & 9 su* =m & mann] z ! ,secret>y may prescribe4 4 7#e7 ,coord9ation ) section #bhj;,f ,section #afh7k77#b77;,f7 is am5d$ by /rik+ clause 7iii74 7#f7 ,qualifi$ film & television & live !atrical productions 7,a7 ,9 g5]al ,clause 7i7 ( section #afh7k77#b77;,a71 z am5d$ by section #acbjd1 is am5d$-- 7i7 9 subclause 7,,ii71 by /rik+ or1 7ii7 9 subclause 7,,iii71 by add+ or aft] ! comma1 & 7iii7 by add+ at ! end ! foll[+3 7,,iv7 :i* is a qualifi$ film or television production 7z def9$ 9 subsection 7d7 ( section #aha7 = :i* a d$uction w\ld h be5 all[able "u section #aha )\t reg>d to subsections 7a77#b7 & 7g7 ( su* section or ?is subsection1 or 7,v7 :i* is a qualifi$ live !atrical production 7z def9$ 9 subsection 7e7 ( section #aha7 = :i* a d$uction w\ld h be5 all[able "u section #aha )\t reg>d to subsections 7a77#b7 & 7g7 ( su* section or ?is subsection1 4 7,b7 ,production plac$ 9 s]vice ,p>agraph 7#b7 ( section #afh7k7 is am5d$ by add+ at ! end ! foll[+3 7,h7 ,production plac$ 9 s]vice ,= purposes ( subp>agraph 7,a7-- 7i7 a qualifi$ film or television production %all be consid]$ to be plac$ 9 s]vice at ! "t ( initial release or broadca/1 & 7ii7 a qualifi$ live !atrical production %all be consid]$ to be plac$ 9 s]vice at ! "t ( ! initial live /ag$ p]=mance4 4 7#g7 ,con=m+ am5dm5ts 7,a7 ,p>agraph 7#e7 ( section #afh7k7 is am5d$ by /rik+ subp>agraph 7,f74 7,b7 ,clause 7ii7 ( section #dfj7;c77#f77;,b7 is am5d$ by /rik+ ,janu>y #a1 #bjbj 7,janu>y #a1 #bjba & ins]t+ ,janu>y #a1 #bjbc 7,janu>y #a1 #bjbd4 7b7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by subsection 7a7 %all apply to prop]ty plac$ 9 s]vice aft] ,septemb] #bg1 #bjag1 9 taxable ye>s end+ aft] su* date4 7#b7 ,c]ta9 plants ,! am5dm5ts made by p>agraphs 7#a77;,b7 & 7#b77;,c7 ( subsection 7a7 %all apply to specifi$ plants plant$ or graft$ aft] ,septemb] #bg1 #bjag1 9 taxable ye>s end+ aft] su* date4 #acbjb4 ,modifications to depreciation limitations on luxury automobiles & p]sonal use prop]ty 7a7 ,luxury automobiles 7#a7 ,9 g5]al #bhj;,f7a77#a77;,a7 is am5d$-- 7,a7 9 clause 7i71 by /rik+ #b1efj & ins]t+ #aj1jjj1 7,b7 9 clause 7ii71 by /rik+ #d1ajj & ins]t+ #af1jjj1 7,c7 9 clause 7iii71 by /rik+ #b1dej & ins]t+ #i1fjj1 & 7,d7 9 clause 7iv71 by /rik+ #a1dge & ins]t+ #e1gfj4 7#b7 ,con=m+ am5dm5ts 7,a7 ,clause 7ii7 ( section #bhj;,f7a77#a77;,b7 is am5d$ by /rik+ #a1dge 9 ! text & head+ & ins]t+ #e1gfj4 7,b7 ,p>agraph 7#g7 ( section #bhj;,f7d7 is am5d$-- 7i7 9 subp>agraph 7,a71 by /rik+ #aihh & ins]t+ #bjah1 & 7ii7 9 subp>agraph 7,b77i77,,ii71 by /rik+ #aihg & ins]t+ #bjag4 7b7 ,removal ( comput] equipm5t f li/$ prop]ty 7#a7 ,9 g5]al ,section #bhj;,f7d77#d77;,a7 is am5d$-- 7,a7 by ins]t+ & at ! end ( clause 7iii71 7,b7 by /rik+ clause 7iv71 & 7,c7 by r$esignat+ clause 7v7 z clause 7iv74 7#b7 ,con=m+ am5dm5t ,section #bhj;,f7d77#d7 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjag1 9 taxable ye>s end+ aft] su* date4 #acbjc4 ,modifications ( treatm5t ( c]ta9 f>m prop]ty 7a7 ,treatm5t ( c]ta9 f>m prop]ty z #e-,ye> prop]ty ,clause 7vii7 ( section #afh7;e77#c77;,b7 is am5d$ by /rik+ aft] ,decemb] #ca1 #bjjh1 & :i* is plac$ 9 s]vice be=e ,janu>y #a1 #bjaj & ins]t+ aft] ,decemb] #ca1 #bjag4 7b7 ,repeal ( requir$ use ( #aej-,p]c5t decl9+ balance me?od ,section #afh7;b77#b7 is am5d$ by /rik+ subp>agraph 7,b7 & by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjag1 9 taxable ye>s end+ aft] su* date4 #acbjd4 ,applicable recov]y p]iod = real prop]ty 7a7 ,resid5tial r5tal prop]ty & nonresid5tial real prop]ty 7#a7 ,r$uction ( recov]y p]iod ,! table conta9$ 9 section #afh7;c7 is am5d$-- 7,a7 by /rik+ #bg4e ye>s & ins]t+ #be ye>s1 & 7,b7 by /rik+ #ci ye>s & ins]t+ #be ye>s4 7#b7 ,/atutory recov]y p]iod ,! table conta9$ 9 section #dfg7;e77#c77;,a7 is am5d$-- 7,a7 by ins]t+ 7o!r ?an resid5tial r5tal prop]ty & nonresid5tial real prop]ty7 aft] #ae-ye> & #bj-ye> prop]ty1 & 7,b7 by /rik+ #ai ye>s & ins]t+ #be ye>s4 7#c7 ,con=m+ am5dm5t ,clause 7ii7 ( section #afh7;e77#b77;,b7 is am5d$ by /rik+ #bg4e ye>s & ins]t+ #be ye>s4 7b7 ,improvem5ts to real prop]ty 7#a7 ,classification ( qualifi$ improvem5t prop]ty z #aj-ye> prop]ty ,subp>agraph 7,d7 ( section #afh7;e77#c7 is am5d$-- 7,a7 9 clause 7iii71 by /rik+ &1 7,b7 9 clause 7iv71 by /rik+ ! p]iod & ins]t+ 1 &1 & 7,c7 by add+ at ! end ! foll[+ new clause3 7v7 any qualifi$ improvem5t prop]ty describ$ 9 subsection 7e77#f74 4 7#b7 ,elim9ation ( qualifi$ leasehold improvem5t1 qualifi$ re/aurant1 & qualifi$ retail improvem5t prop]ty ,subsection 7e7 ( section #afh is am5d$-- 7,a7 9 subp>agraph 7,e7 ( p>agraph 7#c7-- 7i7 by /rik+ clauses 7iv71 7v71 & 7ix71 7ii7 9 clause 7vii71 by ins]t+ & at ! end1 7iii7 9 clause 7viii71 by /rik+ 1 & & ins]t+ a p]iod1 & 7iv7 by r$esignat+ clauses 7vi71 7vii71 & 7viii71 z s am5d$1 z clauses 7iv71 7v71 & 7vi71 respectively1 & 7,b7 by /rik+ p>agraphs 7#f71 7#g71 & 7#h74 7#c7 ,application ( /raight l9e me?od to qualifi$ improvem5t prop]ty ,p>agraph 7#c7 ( section #afh7;b7 is am5d$-- 7,a7 by /rik+ subp>agraphs 7,g71 7,h71 & 7,i71 & 7,b7 by ins]t+ aft] subp>agraph 7,f7 ! foll[+ new subp>agraph3 7,g7 ,qualifi$ improvem5t prop]ty describ$ 9 subsection 7e77#f74 4 7#d7 ,alt]native ,depreciation ,sy/em 7,a7 ,elect+ real prop]ty trade or bus9ess ,subsection 7g7 ( section #afh is am5d$-- 7i7 9 p>agraph 7#a7-- 7,i7 9 subp>agraph 7,d71 by /rik+ & at ! end1 7,,ii7 9 subp>agraph 7,e71 by ins]t+ & at ! end1 & 7,,iii7 by ins]t+ aft] subp>agraph 7,e7 ! foll[+ new subp>agraph3 7,f7 any prop]ty describ$ 9 p>agraph 7#h71 1 & 7ii7 by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,elect+ real prop]ty trade or bus9ess ,! prop]ty describ$ 9 ?is p>agraph %all consi/ ( any nonresid5tial real prop]ty1 resid5tial r5tal prop]ty1 & qualifi$ improvem5t prop]ty held by an elect+ real prop]ty trade or bus9ess 7z def9$ 9 #afc7;j77#g77;,b774 4 7,b7 ,qualifi$ improvem5t prop]ty ,! table conta9$ 9 subp>agraph 7,b7 ( section #afh7;g77#c7 is am5d$-- 7i7 by ins]t+ aft] ! item relat+ to subp>agraph 7,d77ii7 ! foll[+ new item3 7,d77v7#bj 4 1 & 7ii7 by /rik+ ! item relat+ to subp>agraph 7,e77iv7 & all t foll[s ?r\gh ! item relat+ to subp>agraph 7,e77ix7 & ins]t+ ! foll[+3 7,e77iv7#bj7;,e77v7#cj7;,e77vi7#ce 4 7,c7 ,applicable recov]y p]iod = resid5tial r5tal prop]ty ,! table conta9$ 9 subp>agraph 7,c7 ( section #afh7;g77#b7 is am5d$ by /rik+ clauses 7iii7 & 7iv7 & ins]t+ ! foll[+3 7iii7 ,resid5tial r5tal prop]ty#cj ye>s7iv7 ,nonresid5tial real prop]ty#dj ye>s7v7 ,any railroad grad+ or tunnel bore or wat] utility prop]ty#ej ye>s 4 7#e7 ,con=m+ am5dm5ts 7,a7 ,clause 7i7 ( section #afh7k77#b77;,a7 is am5d$-- 7i7 9 subclause 7,,ii71 by ins]t+ or aft] ! comma1 7ii7 9 subclause 7,,iii71 by /rik+ or at ! end1 & 7iii7 by /rik+ subclause 7,,iv74 7,b7 ,section #afh is am5d$-- 7i7 9 subsection 7e71 z am5d$ by p>agraph 7#b77;,b71 by add+ at ! end ! foll[+3 7#f7 ,qualifi$ improvem5t prop]ty 7,a7 ,9 g5]al ,! t]m qualifi$ improvem5t prop]ty means any improvem5t to an int]ior portion ( a build+ :i* is nonresid5tial real prop]ty if su* improvem5t is plac$ 9 s]vice aft] ! date su* build+ 0 fir/ plac$ 9 s]vice4 7,b7 ,c]ta9 improvem5ts n includ$ ,su* t]m %all n include any improvem5t = :i* ! exp5diture is attributable to-- 7i7 ! enl>gem5t ( ! build+1 7ii7 any elevator or escalator1 or 7iii7 ! int]nal /ructural framework ( ! build+4 4 7ii7 9 subsection 7k71 by /rik+ p>agraph 7#c74 7c7 ,effective date 7#a7 ,application ,! am5dm5ts made by ?is section %all apply to prop]ty plac$ 9 s]vice aft] ,decemb] #ca1 #bjag4 7#b7 ,%ort] recov]y p]iod or m accel]at$ depreciation me?od ,9 ! case ( prop]ty plac$ 9 s]vice be=e ,janu>y #a1 #bjah1 if ! am5dm5ts made by ?is section result 9-- 7,a7 an applicable recov]y p]iod :i* is less ?an ! applicable recov]y p]iod = su* prop]ty be=e enactm5t ( su* am5dm5ts1 or 7,b7 an applicable depreciation me?od :i* is m accel]at$ ?an ! applicable depreciation me?od = su* prop]ty be=e enactm5t ( su* am5dm5ts1 ! depreciation d$uction = su* prop]ty %all1 = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 be det]m9$ z if su* prop]ty 7 plac$ 9 s]vice on ,janu>y #a1 #bjah4 #acbje4 ,use ( alt]native depreciation sy/em = elect+ f>m+ bus9esses 7a7 ,9 g5]al ,section #afh7;g77#a71 z am5d$ by section #acbjd1 is am5d$ by /rik+ & at ! end ( subp>agraph 7,e71 by ins]t+ & at ! end ( subp>agraph 7,f71 & by ins]t+ aft] subp>agraph 7,f7 ! foll[+ new subp>agraph3 7,g7 any prop]ty ) a recov]y p]iod ( #aj ye>s or m :i* is held by an elect+ f>m+ bus9ess 7z def9$ 9 section #afc7;j77#g77;,c771 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acbjf4 ,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$uction %all cont9ue ) respect to su* exp5ditures4 4 7b7 ,*ange 9 me?od ( acc\nt+ ,! am5dm5ts made by subsection 7a7 %all be treat$ z a *ange 9 me?od ( acc\nt+ = purposes ( section #dha ( ! ,int]nal ,rev5ue ,code ( #aihf &-- 7#a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7#b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y1 & 7#c7 su* *ange %all be appli$ only on a cut-(f basis = any rese>* or exp]im5tal exp5ditures paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe1 & no adju/m5ts "u section #dha7;a7 %all be made4 7c7 ,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 7d7 ,con=m+ am5dm5ts 7#a7 ,section #da7;d77#a77;,a7 is am5d$ by /rik+ exp5ses "u section #agd & ins]t+ specifi$ rese>* or exp]im5tal exp5ditures "u section #agd4 7#b7 ,subsection 7c7 ( section #bhj;,c is am5d$-- 7,a7 by /rik+ p>agraph 7#a7 & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,if-- 7,a7 ! am\nt ( ! cr$it det]m9$ = ! taxable ye> "u section #da7;a77#a71 exce$s 7,b7 ! am\nt all[able z a d$uction = su* taxable ye> = qualifi$ rese>* exp5ses or basic rese>* exp5ses1 ! am\nt *>geable to capital acc\nt = ! taxable ye> = su* exp5ses %all be r$uc$ by ! am\nt ( su* excess4 1 7,b7 by /rik+ p>agraph 7#b71 7,c7 by r$esignat+ p>agraphs 7#c7 7z am5d$ by ?is ,act7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively1 & 7,d7 9 p>agraph 7#b71 z r$esignat$ by subp>agraph 7,c71 by /rik+ p>agraphs 7#a7 & 7#b7 & ins]t+ p>agraph 7#a74 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe4 #acbjg4 ,exp5s+ ( c]ta9 co/s ( replant+ citrus plants lo/ by reason ( casualty 7a7 ,9 g5]al ,section #bfc;,a7d77#b7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,special tempor>y rule = citrus plants lo/ by reason ( casualty 7i7 ,9 g5]al ,9 ! case ( ! replant+ ( citrus plants1 subp>agraph 7,a7 %all apply to am\nts paid or incurr$ by a p]son 7o!r ?an ! taxpay] describ$ 9 subp>agraph 7,a77 if-- 7,i7 ! taxpay] describ$ 9 subp>agraph 7,a7 has an equity int]e/ ( n less ?an #ej p]c5t 9 ! replant$ citrus plants at all times dur+ ! taxable ye> 9 :i* su* am\nts 7 paid or incurr$ & su* o!r p]son holds any "p ( ! rema9+ equity int]e/1 or 7,,ii7 su* o!r p]son acquir$ ! entirety ( su* taxpay]'s equity int]e/ 9 ! l& on :i* ! lo/ or damag$ citrus plants 7 locat$ at ! "t ( su* loss or damage1 & ! replant+ is on su* l&4 7ii7 ,t]m9ation ,clause 7i7 %all n apply to any co/ paid or incurr$ aft] ! date :i* is #aj ye>s aft] ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to co/s paid or incurr$ aft] ! date ( ! enactm5t ( ?is ,act4 ,b ,acc\nt+ me?ods #acbba4 ,c]ta9 special rules = taxable ye> ( inclusion 7a7 ,inclusion n lat] ?an = f9ancial acc\nt+ purposes ,section #dea is am5d$ by r$esignat+ subsections 7b7 ?r\gh 7i7 z subsections 7c7 ?r\gh 7j71 respectively1 & by ins]t+ aft] subsection 7a7 ! foll[+ new subsection3 7b7 ,inclusion n lat] ?an = f9ancial acc\nt+ purposes ,not)/&+ "p ,v ( sub*apt] ,p-- 7#a7 ,f9ancial /atem5t 7,a7 ,9 g5]al ,9 ! case ( a taxpay] ! taxable income ( :i* is comput$ "u ! accrual me?od ( acc\nt+1 ! am\nt ( any portion ( any item ( gross income %all be includ$ 9 gross income n lat] ?an ! taxable ye> ) respect to :i* su* am\nt is tak5 into acc\nt z income 9-- 7i7 an applicable f9ancial /atem5t ( ! taxpay]1 or 7ii7 su* o!r f9ancial /atem5t z ! ,secret>y may specify = purposes ( ?is subsection4 7,b7 ,exception ,9 ! case ( a taxpay] :i* does n h a f9ancial /atem5t describ$ 9 clause 7i7 or 7ii7 ( subp>agraph 7,a7 = a taxable ye>1 su* subp>agraph %all n apply4 7#b7 ,coord9ation ) special rules = long-t]m contracts ,p>agraph 7#a7 %all n apply ) respect to any item ( income to :i* section #dfj applies4 7#c7 ,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$]al ag5cy = purposes o!r ?an ,f$]al tax purposes1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 clause 7i7 or 7ii71 7,b7 a f9ancial /atem5t :i* is made on ! basis ( int]national f9ancial report+ /&>ds & is fil$ by ! taxpay] ) an ag5cy ( a =eign gov]nm5t :i* is equival5t to ! ,unit$ ,/ates ,securities & ,ex*ange ,commission & :i* has report+ /&>ds n less /r+5t ?an ! /&>ds requir$ by su* ,commission1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 subp>agraph 7,a71 or 7,c7 a f9ancial /atem5t fil$ by ! taxpay] ) any o!r regulatory or gov]nm5tal body specifi$ by ! ,secret>y1 b only if !re is no /atem5t ( ! taxpay] describ$ 9 subp>agraph 7,a7 or 7,b74 7#d7 ,allocation ( transaction price ,= purposes ( ?is subsection1 9 ! case ( a contract :i* conta9s multiple p]=mance obligations1 ! allocation ( ! transaction price to ea* p]=mance obligation %all be equal to ! am\nt allocat$ to ea* p]=mance obligation = purposes ( includ+ su* item 9 rev5ue 9 ! applicable f9ancial /atem5t ( ! taxpay]4 7#e7 ,gr\p ( entities ,= purposes ( p>agraph 7#a71 if ! f9ancial results ( a taxpay] are report$ on ! applicable f9ancial /atem5t 7z def9$ 9 p>agraph 7#c77 = a gr\p ( entities1 su* /atem5t may be treat$ z ! applicable f9ancial /atem5t ( ! taxpay]4 4 7b7 ,treatm5t ( advance paym5ts ,section #dea1 z am5d$ by subsection 7a71 is am5d$ by r$esignat+ subsections 7c7 ?r\gh 7j7 z subsections 7d7 ?r\gh 7k71 respectively1 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,treatm5t ( advance paym5ts 7#a7 ,9 g5]al ,a taxpay] :i* computes taxable income "u ! accrual me?od ( acc\nt+1 & receives any advance paym5t dur+ ! taxable ye>1 %all-- 7,a7 except z provid$ 9 subp>agraph 7,b71 include su* advance paym5t 9 gross income = su* taxable ye>1 or 7,b7 if ! taxpay] elects ! application ( ?is subp>agraph ) respect to ! category ( advance paym5ts to :i* su* advance paym5t belongs1 ! taxpay] %all-- 7i7 to ! ext5t t any portion ( su* advance paym5t is requir$ "u subsection 7b7 to be includ$ 9 gross income 9 ! taxable ye> 9 :i* su* paym5t is receiv$1 s include su* portion1 & 7ii7 include ! rema9+ portion ( su* advance paym5t 9 gross income 9 ! taxable ye> foll[+ ! taxable ye> 9 :i* su* paym5t is receiv$4 7#b7 ,election 7,a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is p>agraph1 ! election "u p>agraph 7#a77;,b7 %all be made at su* "t1 9 su* =m & mann]1 & ) respect to su* categories ( advance paym5ts1 z ! ,secret>y may provide4 7,b7 ,p]iod to :i* election applies ,an election "u p>agraph 7#a77;,b7 %all be effective = ! taxable ye> ) respect to :i* x is fir/ made & = all subsequ5t taxable ye>s1 unless ! taxpay] secures ! cons5t ( ! ,secret>y to revoke su* election4 ,= purposes ( ?is title1 ! computation ( taxable income "u an election made "u p>agraph 7#a77;,b7 %all be treat$ z a me?od ( acc\nt+4 7#c7 ,taxpay]s ceas+ to exi/ ,except z o!rwise provid$ by ! ,secret>y1 ! election "u p>agraph 7#a77;,b7 %all n apply ) respect to advance paym5ts receiv$ by ! taxpay] dur+ a taxable ye> if su* taxpay] ceases to exi/ dur+ 7or ) ! close (7 su* taxable ye>4 7#d7 ,advance paym5t ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m advance paym5t means any paym5t-- 7i7 ! full inclusion ( :i* 9 ! gross income ( ! taxpay] = ! taxable ye> ( receipt is a p]missible me?od ( acc\nt+ "u ?is section 7det]m9$ )\t reg>d to ?is subsection71 7ii7 any portion ( :i* is includ$ 9 rev5ue by ! taxpay] 9 a f9ancial /atem5t describ$ 9 clause 7i7 or 7ii7 ( subsection 7b77#a77;,a7 = a subsequ5t taxable ye>1 & 7iii7 :i* is = goods1 s]vices1 or su* o!r items z may be id5tifi$ by ! ,secret>y = purposes ( ?is clause4 7,b7 ,exclusions ,except z o!rwise provid$ by ! ,secret>y1 su* t]m %all n include-- 7i7 r5t1 7ii7 insurance premiums gov]n$ by sub*apt] ,l1 7iii7 paym5ts ) respect to f9ancial in/rum5ts1 7iv7 paym5ts ) respect to w>ranty or gu>antee contracts "u :i* a ?ird p>ty is ! prim>y obligor1 7v7 paym5ts subject to section #hga7;a71 #hha1 #adda1 or #addb1 7vi7 paym5ts 9 prop]ty to :i* section #hc applies1 & 7vii7 any o!r paym5t id5tifi$ by ! ,secret>y = purposes ( ?is subp>agraph4 7,c7 ,receipt ,= purposes ( ?is subsection1 an item ( gross income is receiv$ by ! taxpay] if x is actually or con/ructively receiv$1 or if x is due & payable to ! taxpay]4 7,d7 ,allocation ( transaction price ,= purposes ( ?is subsection1 rules simil> to subsection 7b77#d7 %all apply4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7d7 ,coord9ation ) section #dha 7#a7 ,9 g5]al ,9 ! case ( any qualifi$ *ange 9 me?od ( acc\nt+ = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag-- 7,a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 & 7,b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y ( ! ,treasury4 7#b7 ,qualifi$ *ange 9 me?od ( acc\nt+ ,= purposes ( ?is subsection1 ! t]m qualifi$ *ange 9 me?od ( acc\nt+ means any *ange 9 me?od ( acc\nt+ :i*-- 7,a7 is requir$ by ! am5dm5ts made by ?is section1 or 7,b7 0 prohibit$ "u ! ,int]nal ,rev5ue ,code ( #aihf prior to su* am5dm5ts & is p]mitt$ "u su* ,code aft] su* am5dm5ts4 ,,iv ,bus9ess-relat$ exclusions & d$uctions #accja4 ,limitation on d$uction = 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 ,! am\nt all[$ z a d$uction "u ?is *apt] = any taxable ye> = bus9ess int]e/ %all n exce$ ! sum (-- 7,a7 ! bus9ess int]e/ income ( su* taxpay] = su* taxable ye>1 plus 7,b7 #cj p]c5t ( ! adju/$ taxable income ( su* taxpay] = su* taxable ye>4 ,! am\nt det]m9$ "u subp>agraph 7,b7 %all n be less ?an z]o4 7#b7 ,c>ry=w>d ( disall[$ bus9ess int]e/ ,! am\nt ( any bus9ess int]e/ n all[$ z a d$uction = any taxable ye> by reason ( p>agraph 7#a7 %all be treat$ z bus9ess int]e/ paid or accru$ 9 ! succe$+ taxable ye>4 7#c7 ,exemption = c]ta9 small bus9esses ,9 ! case ( any taxpay] 7o!r ?an a tax %elt] prohibit$ 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 7#d7 ,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-- 7,i7 %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 & 7,,ii7 %all be increas$ by su* p>tn]'s di/ributive %>e ( su* p>tn]%ip's excess taxable income4 ,= purposes ( clause 7ii77,,ii71 a p>tn]'s di/ributive %>e ( p>tn]%ip excess taxable income %all be det]m9$ 9 ! same mann] z ! p>tn]'s di/ributive %>e ( nonsep>ately /at$ taxable income or loss ( ! p>tn]%ip4 7,b7 ,special rules = c>ry=w>ds 7i7 ,9 g5]al ,! am\nt ( any bus9ess int]e/ n all[$ z a d$uction to a p>tn]%ip = any taxable ye> by reason ( p>agraph 7#a7 = any taxable ye>-- 7,i7 %all n be treat$ "u p>agraph 7#b7 z bus9ess int]e/ paid or accru$ by ! p>tn]%ip 9 ! succe$+ taxable ye>1 & 7,,ii7 %all1 subject to clause 7ii71 be treat$ z excess bus9ess int]e/ :i* is allocat$ to ea* p>tn] 9 ! same mann] z ! non-sep>ately /at$ taxable income or loss ( ! p>tn]%ip4 7ii7 ,treatm5t ( excess bus9ess int]e/ allocat$ to p>tn]s ,if a p>tn] is allocat$ any excess bus9ess int]e/ f a p>tn]%ip "u clause 7i7 = any taxable ye>-- 7,i7 su* excess bus9ess int]e/ %all be treat$ z bus9ess int]e/ paid or accru$ by ! p>tn] 9 ! next succe$+ taxable ye> 9 :i* ! p>tn] is allocat$ excess taxable income f su* p>tn]%ip1 b only to ! ext5t ( su* excess taxable income1 & 7,,ii7 any portion ( su* excess bus9ess int]e/ rema9+ aft] ! application ( subclause 7,i7 %all1 subject to ! limitations ( subclause 7,i71 be treat$ z bus9ess int]e/ paid or accru$ 9 succe$+ taxable ye>s4 ,= purposes ( apply+ ?is p>agraph1 excess taxable income allocat$ to a p>tn] f a p>tn]%ip = any taxable ye> %all n be tak5 into acc\nt "u p>agraph 7#a77;,a7 ) respect to any bus9ess int]e/ o!r ?an excess bus9ess int]e/ f ! p>tn]%ip until all su* excess bus9ess int]e/ = su* taxable ye> & all prec$+ taxable ye>s has be5 treat$ z paid or accru$ "u clause 7ii74 7iii7 ,basis adju/m5ts 7,i7 ,9 g5]al ,! adju/$ basis ( a p>tn] 9 a p>tn]%ip int]e/ %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( excess bus9ess int]e/ allocat$ to ! p>tn] "u clause 7i77,,ii74 7,,ii7 ,special rule = dispositions ,if a p>tn] disposes ( a p>tn]%ip int]e/1 ! adju/$ basis ( ! p>tn] 9 ! p>tn]%ip int]e/ %all be increas$ imm$iately be=e ! disposition by ! am\nt ( ! excess 7if any7 ( ! am\nt ( ! basis r$uction "u subclause 7,i7 ov] ! portion ( any excess bus9ess int]e/ allocat$ to ! p>tn] "u clause 7i77,,ii7 :i* has previ\sly be5 treat$ "u clause 7ii7 z bus9ess int]e/ paid or accru$ by ! p>tn]4 ,! prec$+ s5t5ce %all also apply to transf]s ( ! p>tn]%ip int]e/ 7includ+ by reason ( dea?7 9 a transaction 9 :i* ga9 is n recogniz$ 9 :ole or 9 "p4 ,no d$uction %all be all[$ to ! transf]or or transf]ee "u ?is *apt] = any excess bus9ess int]e/ result+ 9 a basis increase "u ?is subclause4 7,c7 ,excess taxable income ,! t]m excess taxable income means1 ) respect to any p>tn]%ip1 ! am\nt :i* be>s ! same ratio to ! p>tn]%ip's adju/$ taxable income z-- 7i7 ! excess 7if any7 (-- 7,i7 ! am\nt det]m9$ = ! p>tn]%ip "u p>agraph 7#a77;,b71 ov] 7,,ii7 ! am\nt 7if any7 by :i* ! bus9ess int]e/ ( ! p>tn]%ip exce$s ! bus9ess int]e/ income ( ! p>tn]%ip1 be>s to 7ii7 ! am\nt det]m9$ = ! p>tn]%ip "u p>agraph 7#a77;,b74 7,d7 ,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#e7 ,bus9ess int]e/ ,= purposes ( ?is subsection1 ! t]m bus9ess int]e/ means any int]e/ paid or accru$ on indebt$ness prop]ly allocable to a trade or bus9ess4 ,su* t]m %all n include inve/m5t int]e/ 7)9 ! mean+ ( subsection 7d774 7#f7 ,bus9ess int]e/ income ,= purposes ( ?is subsection1 ! t]m bus9ess int]e/ income means ! am\nt ( int]e/ includible 9 ! gross income ( ! taxpay] = ! taxable ye> :i* is prop]ly allocable to a trade or bus9ess4 ,su* t]m %all n include inve/m5t income 7)9 ! mean+ ( subsection 7d774 7#g7 ,trade or bus9ess ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m trade or bus9ess %all n include-- 7i7 ! trade or bus9ess ( p]=m+ s]vices z an employee1 7ii7 any elect+ real prop]ty trade or bus9ess1 7iii7 any elect+ f>m+ bus9ess1 or 7iv7 ! trade or bus9ess ( ! furni%+ or sale (-- 7,i7 electrical en]gy1 wat]1 or sewage disposal s]vices1 7,,ii7 gas or /eam ?r\gh a local di/ribution sy/em1 or 7,,iii7 transportation ( gas or /eam by pipel9e1 if ! rates = su* furni%+ or sale1 z ! case may be1 h be5 e/abli%$ or approv$ by a ,/ate or political subdivision !re(1 by any ag5cy or in/rum5tality ( ! ,unit$ ,/ates1 by a public s]vice or public utility commission or o!r simil> body ( any ,/ate or political subdivision !re(1 or by ! gov]n+ or ratemak+ body ( an electric coop]ative4 7,b7 ,elect+ real prop]ty trade or bus9ess ,= purposes ( ?is p>agraph1 ! t]m elect+ real prop]ty trade or bus9ess means any trade or bus9ess :i* is describ$ 9 section #dfi7;c77#g77;,c7 & :i* makes an election "u ?is subp>agraph4 ,any su* election %all be made at su* "t & 9 su* mann] z ! ,secret>y %all prescribe1 &1 once made1 %all be irrevocable4 7,c7 ,elect+ f>m+ bus9ess ,= purposes ( ?is p>agraph1 ! t]m elect+ f>m+ bus9ess means a f>m+ bus9ess 7z def9$ 9 section #bfc;,a7e77#d77 :i* makes an election "u ?is subp>agraph4 ,any su* election %all be made at su* "t & 9 su* mann] z ! ,secret>y %all prescribe1 &1 once made1 %all be irrevocable4 7#h7 ,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 ! am\nt ( any d$uction all[$ "u section #aii or #aii;,a1 & 7,b7 comput$ ) su* o!r adju/m5ts z provid$ by ! ,secret>y4 7#i7 ,cross ref]5ces 7,a7 ,= requirem5t t an elect+ real prop]ty trade or bus9ess use ! alt]native depreciation sy/em1 see section #afh7;g77#a77;,f74 7,b7 ,= requirem5t t an elect+ f>m+ bus9ess use ! alt]native depreciation sy/em1 see section #afh7;g77#a77;,g74 4 7b7 ,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[$ bus9ess int]e/ ,! c>ryov] ( disall[$ bus9ess int]e/ describ$ 9 section #afc7;j77#b7 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 #afc7n7 "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#bj744 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #accjb4 ,modification ( net op]at+ loss d$uction 7a7 ,limitation on d$uction 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$uction = ! taxable ye> an am\nt equal to ! less] (-- 7#a7 ! aggregate ( ! net op]at+ loss c>ryov]s to su* ye>1 plus ! net op]at+ loss c>rybacks to su* ye>1 or 7#b7 #ij p]c5t 7#hj p]c5t 9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbb7 ( taxable income comput$ )\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 7b7 ,repeal ( net op]at+ loss c>ryback2 indef9ite c>ry=w>d 7#a7 ,9 g5]al ,section #agb7;b77#a77;,a7 is am5d$-- 7,a7 by /rik+ %all be a net op]at+ loss c>ryback to ea* ( ! #b taxable ye>s 9 clause 7i7 & ins]t+ except z o!rwise provid$ 9 ?is p>agraph1 %all n be a net op]at+ loss c>ryback to any taxable ye>1 & 7,b7 by /rik+ to ea* ( ! #bj taxable ye>s 9 clause 7ii7 & ins]t+ to ea* taxable ye>4 7#b7 ,con=m+ am5dm5t ,section #agb7;b77#a7 is am5d$ by /rik+ subp>agraphs 7,b7 ?r\gh 7,f74 7c7 ,treatm5t ( f>m+ losses 7#a7 ,all[ance ( c>rybacks ,section #agb7;b77#a71 z am5d$ by subsection 7b77#b71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,b7 ,f>m+ losses 7i7 ,9 g5]al ,9 ! case ( any portion ( a net op]at+ loss = ! taxable ye> :i* is a f>m+ loss ) respect to ! taxpay]1 su* loss %all be a net op]at+ loss c>ryback to ea* ( ! #b taxable ye>s prec$+ ! taxable ye> ( su* loss4 7ii7 ,f>m+ loss ,= purposes ( ?is section1 ! t]m f>m+ loss means ! less] (-- 7,i7 ! am\nt :i* w\ld be ! net op]at+ loss = ! taxable ye> if only income & d$uctions attributable to f>m+ bus9esses 7z def9$ 9 section #bfc;,a7e77#d77 are tak5 into acc\nt1 or 7,,ii7 ! am\nt ( ! net op]at+ loss = su* taxable ye>4 7iii7 ,coord9ation ) p>agraph 7#b7 ,= purposes ( apply+ p>agraph 7#b71 a f>m+ loss = any taxable ye> %all be treat$ z a sep>ate net op]at+ loss = su* taxable ye> to be tak5 into acc\nt aft] ! rema9+ portion ( ! net op]at+ loss = su* taxable ye>4 7iv7 ,election ,any taxpay] entitl$ to a #b-ye> c>ryback "u clause 7i7 f any loss ye> may elect n to h su* clause apply to su* loss ye>4 ,su* election %all be made 9 su* mann] z prescrib$ by ! ,secret>y & %all be made by ! due date 7includ+ ext5sions ( "t7 = fil+ ! taxpay]'s return = ! taxable ye> ( ! net op]at+ loss4 ,su* election1 once made = any taxable ye>1 %all be irrevocable = su* taxable ye>4 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #agb is am5d$ by /rik+ subsections 7f71 7g71 & 7h71 & by r$esignat+ subsection 7i7 z subsection 7f74 7,b7 ,section #ecg7;b77#d7 is am5d$ by ins]t+ 7z 9 effect be=e ! date ( enactm5t ( ! ,tax ,cuts & ,jobs ,act7 aft] z def9$ 9 section #agb7;f74 7d7 ,treatm5t ( c]ta9 insurance losses 7#a7 ,treatm5t ( c>ry=w>ds & c>rybacks ,section #agb7;b77#a71 z am5d$ by subsections 7b77#b7 & 7c77#a71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,c7 ,insurance companies ,9 ! case ( an insurance company 7z def9$ 9 section #haf7;a77 o!r ?an a life insurance company1 ! net op]at+ loss = any taxable ye>-- 7i7 %all be a net op]at+ loss c>ryback to ea* ( ! #b taxable ye>s prec$+ ! taxable ye> ( su* loss1 & 7ii7 %all be a net op]at+ loss c>ryov] to ea* ( ! #bj taxable ye>s foll[+ ! taxable ye> ( ! loss4 4 7#b7 ,exemption f limitation ,section #agb1 z am5d$ by subsection 7c77#b77;,a71 is am5d$ by r$esignat+ subsection 7f7 z subsection 7g7 & ins]t+ aft] subsection 7e7 ! foll[+ new subsection3 7f7 ,special rule = insurance companies ,9 ! case ( an insurance company 7z def9$ 9 section #haf7;a77 o!r ?an a life insurance company-- 7#a7 ! am\nt ( ! d$uction all[$ "u subsection 7a7 %all be ! aggregate ( ! net op]at+ loss c>ryov]s to su* ye>1 plus ! net op]at+ loss c>rybacks to su* ye>1 & 7#b7 subp>agraph 7,c7 ( subsection 7b77#b7 %all n apply4 4 7e7 ,effective date 7#a7 ,net op]at+ loss limitation ,! am5dm5ts made by subsections 7a7 & 7d77#b7 %all apply to losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,c>ry=w>ds & c>rybacks ,! am5dm5ts made by subsections 7b71 7c71 & 7d77#a7 %all apply to net op]at+ losses aris+ 9 taxable ye>s end+ aft] ,decemb] #ca1 #bjag4 #accjc4 ,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 7e74 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 ,section #ajca7;i7 is am5d$ to read z foll[s3 7i7 ,special rules = mutual dit*1 res]voir1 or irrigation company /ock ,= purposes ( subsection 7a71 %>es 9 a mutual dit*1 res]voir1 or irrigation company %all be treat$ z real prop]ty if at ! "t ( ! ex*ange-- 7#a7 ! mutual dit*1 res]voir1 or irrigation company is an organization describ$ 9 section #eja7;c77#ab77;,a7 7det]m9$ )\t reg>d to ! p]c5tage ( its income t is collect$ f its memb]s = ! purpose ( meet+ losses & exp5ses71 & 7#b7 ! %>es 9 su* company h be5 recogniz$ by ! highe/ c\rt ( ! ,/ate 9 :i* su* company 0 organiz$ or by applicable ,/ate /atute z con/itut+ or repres5t+ real prop]ty or an int]e/ 9 real prop]ty4 4 7#f7 ,! head+ ( section #ajca is am5d$ by /rik+ prop]ty & ins]t+ real prop]ty4 7#g7 ,! 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 #accjd4 ,limitation on d$uction by employ]s ( exp5ses = fr+e b5efits 7a7 ,no d$uction all[$ = ent]ta9m5t exp5ses 7#a7 ,9 g5]al ,section #bgd7;a7 is am5d$-- 7,a7 9 p>agraph 7#a77;,a71 by /rik+ unless & all t foll[s ?r\gh trade or bus9ess11 7,b7 by /rik+ ! flu% s5t5ce at ! end ( p>agraph 7#a71 & 7,c7 by /rik+ p>agraph 7#b77;,c74 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #bgd7;d7 is am5d$-- 7i7 by /rik+ p>agraph 7#b7 & r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively1 & 7ii7 9 ! flu% text foll[+ p>agraph 7#c7 7z s r$esignat$7-- 7,i7 by /rik+ 1 ent]ta9m5t1 amusem5t1 recreation1 or use ( ! facility or prop]ty1 9 item 7,b71 & 7,,ii7 by /rik+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( p]sons ent]ta9$1 us+ ! facility or prop]ty1 or receiv+ ! gift & ins]t+ 7,d7 ! bus9ess relation%ip to ! taxpay] ( ! p]son receiv+ ! b5efit1 7,b7 ,section #bgd is am5d$ by /rik+ subsection 7l74 7,c7 ,section #bgd7n7 is am5d$ by /rik+ & ent]ta9m5t 9 ! head+4 7,d7 ,section #bgd7n77#a7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al ,! am\nt all[able z a d$uction "u ?is *apt] = any exp5se = food or bev]ages %all n exce$ #ej p]c5t ( ! am\nt ( su* exp5se :i* w\ld 7b = ?is p>agraph7 be all[able z a d$uction "u ?is *apt]4 4 7,e7 ,section #bgd7n77#b7 is am5d$-- 7i7 9 subp>agraph 7,b71 by /rik+ 9 ! case ( an exp5se = food or bev]ages11 7ii7 by /rik+ subp>agraph 7,c7 & r$esignat+ subp>agraphs 7,d7 & 7,e7 z subp>agraphs 7,c7 & 7,d71 respectively1 7iii7 by /rik+ ( subp>agraph 7,e7 ! la/ s5t5ce & ins]t+ ( subp>agraph 7,d71 & 7iv7 by /rik+ 9 subp>agraph 7,d7 9 ! la/ s5t5ce & ins]t+ 9 subp>agraph 7,c74 7,f7 ,clause 7iv7 ( section #ggja7;b77#e77;,a7 is am5d$ to read z foll[s3 7iv7 a pr(essional a?lete :o is tempor>ily 9 ! ,unit$ ,/ates to compete 9 a sports ev5t-- 7,i7 :i* is organiz$ = ! prim>y purpose ( b5efit+ an organization :i* is describ$ 9 section #eja7;c77#c7 & exempt f tax "u section #eja7;a71 7,,ii7 all ( ! net proce$s ( :i* are contribut$ to su* organization1 &1 7,,iii7 :i* utilizes volunte]s = sub/antially all ( ! "w p]=m$ 9 c>ry+ out su* ev5t4 4 7b7 ,only #ej p]c5t ( exp5ses = meals provid$ on or ne> bus9ess premises all[$ z d$uction ,p>agraph 7#b7 ( section #bgd7n71 z am5d$ by subsection 7a71 is am5d$-- 7#a7 by /rik+ subp>agraph 7,b71 7#b7 by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively1 7#c7 by /rik+ ( subp>agraph 7,d7 9 ! la/ s5t5ce & ins]t+ ( subp>agraph 7,c71 & 7#d7 by /rik+ 9 subp>agraph 7,c7 9 ! la/ s5t5ce & ins]t+ 9 subp>agraph 7,b74 7c7 ,treatm5t ( transportation b5efits ,section #bgd1 z am5d$ by subsection 7a71 is am5d$-- 7#a7 9 subsection 7a7-- 7,a7 9 ! head+1 by /rik+ or recreation & ins]t+ recreation1 or qualifi$ transportation fr+es1 & 7,b7 by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,qualifi$ transportation fr+es ,no d$uction %all be all[$ "u ?is *apt] = ! exp5se ( any qualifi$ transportation fr+e 7z def9$ 9 section #acb7;f77 provid$ to an employee ( ! taxpay]4 1 & 7#b7 by ins]t+ aft] subsection 7k7 ! foll[+ new subsection3 7l7 ,transportation & commut+ b5efits ,no d$uction %all be all[$ "u ?is *apt] = any exp5se incurr$ = provid+ any transportation1 or any paym5t or reimbursem5t1 to an employee ( ! taxpay] 9 connection ) travel betwe5 ! employee's resid5ce & place ( employm5t1 except z necess>y = ensur+ ! safety ( ! employee4 4 7d7 ,elim9ation ( d$uction = meals provid$ at conv5i5ce ( employ] ,section #bgd1 z am5d$ by subsection 7c71 is am5d$-- 7#a7 by r$esignat+ subsection 7o7 z subsection 7p71 & 7#b7 by ins]t+ aft] subsection 7n7 ! foll[+ new subsection3 7o7 ,meals provid$ at conv5i5ce ( employ] ,no d$uction %all be all[$ "u ?is *apt] =-- 7#a7 any exp5se = ! op]ation ( a facility describ$ 9 section #acb7;e77#b71 & any exp5se = food or bev]ages1 includ+ "u section #acb7;e77#a71 associat$ ) su* facility1 or 7#b7 any exp5se = meals describ$ 9 section #aai7;a74 4 7e7 ,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 incurr$ or paid aft] ,decemb] #ca1 #bjag4 7#b7 ,effective date = elim9ation ( d$uction = meals provid$ at conv5i5ce ( employ] ,! am5dm5ts made by subsection 7d7 %all apply to am\nts incurr$ or paid aft] ,decemb] #ca1 #bjbe4 #accje4 ,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 #ace7;c77#d77;,a71 #acg7;b77#c77;,a71 #bai7;g77#c77;,a77ii71 #bba7;b77#b77;,c71 #bbb7;b77#b77;,c71 #bdf7;b77#a71 & #dfi7;i77#c77;,f77iii7 are ea* am5d$ by /rik+ #aii14 7#b7 ,section #agj7;b77#b77;,d71 z am5d$ by section #aajaa1 is am5d$ by /rik+ clause 7iv7 & by r$esignat+ clauses 7v7 & 7vi7 z r$esignat+ clauses 7iv7 z clause 7v71 respectively4 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$esignat+ subp>agraphs 7,c71 7,d71 & 7,e7 z subp>agraphs 7,b71 7,c71 & 7,d74 7c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 #accjf4 ,d5ial ( d$uction = c]ta9 f9es1 p5alties1 & o!r am\nts 7a7 ,d5ial ( d$uction 7#a7 ,9 g5]al ,subsection 7f7 ( section #afb is am5d$ to read z foll[s3 7f7 ,f9es1 ,p5alties1 & ,o!r ,am\nts 7#a7 ,9 g5]al ,except z provid$ 9 ! foll[+ p>agraphs ( ?is subsection1 no d$uction o!rwise all[able %all be all[$ "u ?is *apt] = any am\nt paid or incurr$ 7:e!r by suit1 agreem5t1 or o!rwise7 to1 or at ! direction (1 a gov]nm5t or gov]nm5tal entity 9 relation to ! violation ( any law or ! inve/igation or inquiry by su* gov]nm5t or entity into ! pot5tial violation ( any law4 7#b7 ,exception = am\nts con/itut+ re/itution or paid to come into compliance ) law 7,a7 ,9 g5]al ,p>agraph 7#a7 %all n apply to any am\nt t-- 7i7 ! taxpay] e/abli%es-- 7,i7 con/itutes re/itution 7includ+ rem$iation ( prop]ty7 = damage or h>m :i* 0 or may be caus$ by ! violation ( any law or ! pot5tial violation ( any law1 or 7,,ii7 is paid to come into compliance ) any law :i* 0 violat$ or o!rwise involv$ 9 ! inve/igation or inquiry describ$ 9 p>agraph 7#a71 7ii7 is id5tifi$ z re/itution or z an am\nt paid to come into compliance ) su* law1 z ! case may be1 9 ! c\rt ord] or settlem5t agreem5t1 & 7iii7 9 ! case ( any am\nt ( re/itution = failure to pay any tax impos$ "u ?is title 9 ! same mann] z if su* am\nt 7 su* tax1 w\ld h be5 all[$ z a d$uction "u ?is *apt] if x _h be5 timely paid4 ,! id5tification "u clause 7ii7 alone %all n be suffici5t to make ! e/abli%m5t requir$ "u clause 7i74 7,b7 ,limitation ,subp>agraph 7,a7 %all n apply to any am\nt paid or incurr$ z reimbursem5t to ! gov]nm5t or entity = ! co/s ( any inve/igation or litigation4 7#c7 ,exception = am\nts paid or incurr$ z ! result ( c]ta9 c\rt ord]s ,p>agraph 7#a7 %all n apply to any am\nt paid or incurr$ by reason ( any ord] ( a c\rt 9 a suit 9 :i* no gov]nm5t or gov]nm5tal entity is a p>ty4 7#d7 ,exception = taxes due ,p>agraph 7#a7 %all n apply to any am\nt paid or incurr$ z taxes due4 7#e7 ,treatm5t ( c]ta9 nongov]nm5tal regulatory entities ,= purposes ( ?is subsection1 ! foll[+ nongov]nm5tal entities %all be treat$ z gov]nm5tal entities3 7,a7 ,any nongov]nm5tal entity :i* ex]cises self-regulatory p[]s 7includ+ impos+ sanctions7 9 connection ) a qualifi$ bo>d or ex*ange 7z def9$ 9 section #abef7;g77#g774 7,b7 ,to ! ext5t provid$ 9 regulations1 any nongov]nm5tal entity :i* ex]cises self-regulatory p[]s 7includ+ impos+ sanctions7 z "p ( p]=m+ an ess5tial gov]nm5tal function4 4 7#b7 ,effective ,date ,! am5dm5t made by ?is subsection %all apply to am\nts paid or incurr$ on or aft] ! date ( ! enactm5t ( ?is ,act1 except t su* am5dm5ts %all n apply to am\nts paid or incurr$ "u any b9d+ ord] or agreem5t ent]$ into be=e su* date4 ,su* exception %all n apply to an ord] or agreem5t requir+ c\rt approval unless ! approval 0 obta9$ be=e su* date4 7b7 ,report+ ( d$uctible am\nts 7#a7 ,9 g5]al ,subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] section #fjej,w ! foll[+ new section3 #fjej,x4 ,in=mation ) respect to c]ta9 f9es1 p5alties1 & o!r am\nts 7a7 ,requirem5t ( report+ 7#a7 ,9 g5]al ,! appropriate (ficial ( any gov]nm5t or any entity describ$ 9 section #afb7;f77#e7 :i* is involv$ 9 a suit or agreem5t describ$ 9 p>agraph 7#b7 %all make a return 9 su* =m z det]m9$ by ! ,secret>y sett+ =?-- 7,a7 ! am\nt requir$ to be paid z a result ( ! suit or agreem5t to :i* p>agraph 7#a7 ( section #afb7;f7 applies1 7,b7 any am\nt requir$ to be paid z a result ( ! suit or agreem5t :i* con/itutes re/itution or rem$iation ( prop]ty1 & 7,c7 any am\nt requir$ to be paid z a result ( ! suit or agreem5t = ! purpose ( com+ into compliance ) any law :i* 0 violat$ or involv$ 9 ! inve/igation or inquiry4 7#b7 ,suit or agreem5t describ$ 7,a7 ,9 g5]al ,a suit or agreem5t is describ$ 9 ?is p>agraph if-- 7i7 x is-- 7,i7 a suit ) respect to a violation ( any law ov] :i* ! gov]nm5t or entity has au?ority & ) respect to :i* !re has be5 a c\rt ord]1 or 7,,ii7 an agreem5t :i* is ent]$ into ) respect to a violation ( any law ov] :i* ! gov]nm5t or entity has au?ority1 or ) respect to an inve/igation or inquiry by ! gov]nm5t or entity into ! pot5tial violation ( any law ov] :i* su* gov]nm5t or entity has au?ority1 & 7ii7 ! aggregate am\nt involv$ 9 all c\rt ord]s & agreem5ts ) respect to ! violation1 inve/igation1 or inquiry is #fjj or m4 7,b7 ,adju/m5t ( report+ ?re%old ,! ,secret>y %all adju/ ! #fjj am\nt 9 subp>agraph 7,a77ii7 z necess>y 9 ord] to ensure ! effici5t adm9i/ration ( ! int]nal rev5ue laws4 7#c7 ,"t ( fil+ ,! return requir$ "u ?is subsection %all be fil$ at ! "t ! agreem5t is ent]$ into1 z det]m9$ by ! ,secret>y4 7b7 ,/atem5ts ,to be furni%$ to individuals involv$ 9 ! settlem5t ,e p]son requir$ to make a return "u subsection 7a7 %all furni% to ea* p]son :o is a p>ty to ! suit or agreem5t a writt5 /atem5t %[+-- 7#a7 ! "n ( ! gov]nm5t or entity1 & 7#b7 ! in=mation suppli$ to ! ,secret>y "u subsection 7a77#a74 ,! writt5 /atem5t requir$ "u ! prec$+ s5t5ce %all be furni%$ to ! p]son at ! same "t ! gov]nm5t or entity provides ! ,secret>y ) ! in=mation requir$ "u subsection 7a74 7c7 ,appropriate (ficial def9$ ,= purposes ( ?is section1 ! t]m appropriate (ficial means ! (fic] or employee hav+ control ( ! suit1 inve/igation1 or inquiry or ! p]son appropriately designat$ = purposes ( ?is section4 4 7#b7 ,con=m+ am5dm5t ,! table ( sections = subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ by ins]t+ aft] ! item relat+ to section #fjej,w ! foll[+ new item3 ,sec4 #fjej,x4 ,in=mation ) respect to c]ta9 f9es1 p5alties1 & o!r am\nts4 4 7#c7 ,effective ,date ,! am5dm5ts made by ?is subsection %all apply to am\nts paid or incurr$ on or aft] ! date ( ! enactm5t ( ?is ,act1 except t su* am5dm5ts %all n apply to am\nts paid or incurr$ "u any b9d+ ord] or agreem5t ent]$ into be=e su* date4 ,su* exception %all n apply to an ord] or agreem5t requir+ c\rt approval unless ! approval 0 obta9$ be=e su* date4 #accjg4 ,d5ial ( d$uction = settlem5ts subject to nondisclosure agreem5ts paid 9 connection ) sexual h>assm5t or sexual abuse 7a7 ,d5ial ( d$uction ,section #afb is am5d$ by r$esignat+ subsection 7q7 z subsection 7r7 & by ins]t+ aft] subsection 7p7 ! foll[+ new subsection3 7q7 ,paym5ts relat$ to sexual h>assm5t & sexual abuse ,no d$uction %all be all[$ "u ?is *apt] =-- 7#a7 any settlem5t or paym5t relat$ to sexual h>assm5t or sexual abuse if su* settlem5t or paym5t is subject to a nondisclosure agreem5t1 or 7#b7 attorney's fees relat$ to su* a settlem5t or paym5t4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ! date ( ! enactm5t ( ?is ,act4 #accjh4 ,uni=m treatm5t ( exp5ses 9 cont+5cy fee cases 7a7 ,9 g5]al ,section #afb1 z am5d$ by section #accjg1 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 #accji4 ,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$ on or aft] ! date ( ! enactm5t ( ?is ,act4 #accaj4 ,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 ga91 not)/&+ section #hc or any election 9 effect "u section #hc7;b74 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 ,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 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,v ,bus9ess cr$its ,a ,g5]al provisions #acdja4 ,modification ( orphan drug cr$it 7a7 ,cr$it rate ,subsection 7a7 ( section #de;,c is am5d$ by /rik+ #ej p]c5t & ins]t+ #bg4e p]c5t4 7b7 ,disclosure ( cr$its ,section #de;,c is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,disclosure ( cr$its ,! ,secret>y %all publicly disclose ! id5tity ( any taxpay] 79 ! case ( a pass-?ru entity1 ! "n ( ! entity7 to :om a cr$it is all[$ "u ?is section1 z well z ! am\nt ( su* cr$it1 ! drug ) respect to :i* ! qualifi$ cl9ical te/+ exp5ses 7 tak5 into acc\nt "u ?is section1 & ! r>e disease or condition = :i* su* drug 0 be+ te/$4 4 7c7 ,election ( r$uc$ cr$it ,subsection 7b7 ( section #bhj;,c is am5d$ by r$esignat+ p>agraph 7#c7 z p>agraph 7#d7 & by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,election ( r$uc$ cr$it 7,a7 ,9 g5]al ,9 ! case ( any taxable ye> = :i* an election is made "u ?is p>agraph-- 7i7 p>agraphs 7#a7 & 7#b7 %all n apply1 & 7ii7 ! am\nt ( ! cr$it "u section #de;,c7a7 %all be ! am\nt det]m9$ "u subp>agraph 7,b74 7,b7 ,am\nt ( r$uc$ cr$it ,! am\nt ( cr$it det]m9$ "u ?is subp>agraph = any taxable ye> %all be ! am\nt equal to ! excess (-- 7i7 ! am\nt ( cr$it det]m9$ "u section #de;,c7a7 )\t reg>d to ?is p>agraph1 ov] 7ii7 ! product (-- 7,i7 ! am\nt describ$ 9 clause 7i71 & 7,,ii7 ! maximum rate ( tax "u section #aa7;b74 7,c7 ,election ,an election "u ?is p>agraph = any taxable ye> %all be made n lat] ?an ! "t = fil+ ! return ( tax = su* ye> 7includ+ ext5sions71 %all be made on su* return1 & %all be made 9 su* mann] z ! ,secret>y %all prescribe4 ,su* an election1 once made1 %all be irrevocable4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acdjb4 ,rehabilitation cr$it limit$ to c]tifi$ hi/oric /ructures 7a7 ,9 g5]al ,subsection 7a7 ( section #dg is am5d$ to read z foll[s3 7a7 ,g5]al rule 7#a7 ,9 g5]al ,= purposes ( section #df1 = any taxable ye> dur+ ! #e-ye> p]iod beg9n+ 9 ! taxable ye> 9 :i* a qualifi$ rehabilitat$ build+ is plac$ 9 s]vice1 ! rehabilitation cr$it = su* ye> is an am\nt equal to ! ratable %>e = su* ye>4 7#b7 ,ratable %>e ,= purposes ( p>agraph 7#a71 ! ratable %>e = any taxable ye> dur+ ! p]iod describ$ 9 su* p>agraph is ! am\nt equal to #bj p]c5t ( ! qualifi$ rehabilitation exp5ditures ) respect to ! qualifi$ rehabilitat$ build+1 z allocat$ ratably to ea* ye> dur+ su* p]iod4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #dg7;c7 is am5d$-- 7,a7 9 p>agraph 7#a7-- 7i7 9 subp>agraph 7,a71 by am5d+ clause 7iii7 to read z foll[s3 7iii7 su* build+ is a c]tifi$ hi/oric /ructure1 & 1 7ii7 by /rik+ subp>agraph 7,b71 & 7iii7 by r$esignat+ subp>agraphs 7,c7 & 7,d7 z subp>agraphs 7,b7 & 7,c71 respectively1 & 7,b7 9 p>agraph 7#b77;,b71 by am5d+ clause 7iv7 to read z foll[s3 7iv7 ,c]tifi$ hi/oric /ructure ,any exp5diture attributable to ! rehabilitation ( a qualifi$ rehabilitat$ build+ unless ! rehabilitation is a c]tifi$ rehabilitation 7)9 ! mean+ ( subp>agraph 7,c774 4 7#b7 ,p>agraph 7#d7 ( section #ade7;d7 is am5d$-- 7,a7 by /rik+ ( section #dg7;c77#a77;,c7 ea* place x appe>s & ins]t+ ( section #dg7;c77#a77;,b71 & 7,b7 by /rik+ section #dg7;c77#a77;,c77i7 & ins]t+ section #dg7;c77#a77;,b77i74 7c7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 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 ) respect to any build+-- 7,a7 own$ or leas$ by ! taxpay] dur+ ! entirety ( ! p]iod aft] ,decemb] #ca1 #bjag1 & 7,b7 ) respect to :i* ! #bd-mon? p]iod select$ by ! taxpay] "u section #dg7;c77#a77;,b7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z am5d$ by subsection 7b77 beg9s n lat] ?an #ahj days aft] ! 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 #acdjc4 ,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 #acdjd4 ,employ] cr$it = paid family & m$ical leave 7a7 ,9 g5]al 7#a7 ,all[ance ( cr$it ,subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #de,s4 ,employ] cr$it = paid family & m$ical leave 7a7 ,e/abli%m5t ( cr$it 7#a7 ,9 g5]al ,= purposes ( section #ch1 9 ! case ( an eligible employ]1 ! paid family & m$ical leave cr$it is an am\nt equal to ! applicable p]c5tage ( ! am\nt ( wages paid to qualify+ employees dur+ any p]iod 9 :i* su* employees are on family & m$ical leave4 7#b7 ,applicable p]c5tage ,= purposes ( p>agraph 7#a71 ! t]m applicable p]c5tage means #ab4e p]c5t increas$ 7b n above #be p]c5t7 by #j4be p]c5tage po9ts = ea* p]c5tage po9t by :i* ! rate ( paym5t 7z describ$ "u subsection 7c77#a77;,b77 exce$s #ej p]c5t4 7b7 ,limitation 7#a7 ,9 g5]al ,! cr$it all[$ "u subsection 7a7 ) respect to any employee = any taxable ye> %all n exce$ an am\nt equal to ! product ( ! normal h\rly wage rate ( su* employee = ea* h\r 7or fraction !re(7 ( actual s]vices p]=m$ = ! employ] & ! numb] ( h\rs 7or fraction !re(7 = :i* family & m$ical leave is tak54 7#b7 ,non-h\rly wage rate ,= purposes ( p>agraph 7#a71 9 ! case ( any employee :o is n paid on an h\rly wage rate1 ! wages ( su* employee %all be prorat$ to an h\rly wage rate "u regulations e/abli%$ by ! ,secret>y4 7#c7 ,maximum am\nt ( leave subject to cr$it ,! am\nt ( family & m$ical leave t may be tak5 into acc\nt ) respect to any employee "u subsection 7a7 = any taxable ye> %all n exce$ #ab weeks4 7c7 ,eligible employ] ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m eligible employ] means any employ] :o has 9 place a policy t meets ! foll[+ requirem5ts3 7,a7 ,! policy provides-- 7i7 9 ! case ( a qualify+ employee :o is n a "p-"t employee 7z def9$ 9 section #dihj;,e7d77#d77;,b771 n less ?an #b weeks ( annual paid family & m$ical leave1 & 7ii7 9 ! case ( a qualify+ employee :o is a "p-"t employee1 an am\nt ( annual paid family & m$ical leave t is n less ?an an am\nt :i* be>s ! same ratio to ! am\nt ( annual paid family & m$ical leave t is provid$ to a qualify+ employee describ$ 9 clause 7i7 z-- 7,i7 ! numb] ( h\rs ! employee is expect$ to "w dur+ any week1 be>s to 7,,ii7 ! numb] ( h\rs an equival5t qualify+ employee describ$ 9 clause 7i7 is expect$ to "w dur+ ! week4 7,b7 ,! policy requires t ! rate ( paym5t "u ! program is n less ?an #ej p]c5t ( ! wages normally paid to su* employee = s]vices p]=m$ = ! employ]4 7#b7 ,special rule = c]ta9 employ]s 7,a7 ,9 g5]al ,an add$ employ] %all n be treat$ z an eligible employ] unless su* employ] provides paid family & m$ical leave 9 compliance ) a policy :i* ensures t ! employ]-- 7i7 w n int]f]e )1 re/ra91 or d5y ! ex]cise ( or ! attempt to ex]cise1 any "r provid$ "u ! policy1 & 7ii7 w n dis*>ge or 9 any o!r mann] discrim9ate aga9/ any individual = oppos+ any practice prohibit$ by ! policy4 7,b7 ,add$ employ]2 add$ employee ,= purposes ( ?is p>agraph-- 7i7 ,add$ employee ,! t]m add$ employee means a qualify+ employee :o is n cov]$ by title ,i ( ! ,family & ,m$ical ,leave ,act ( #aiic1 z am5d$4 7ii7 ,add$ employ] ,! t]m add$ employ] means an eligible employ] 7det]m9$ )\t reg>d to ?is p>agraph71 :e!r or n cov]$ by t title ,i1 :o (f]s paid family & m$ical leave to add$ employees4 7#c7 ,aggregation rule ,all p]sons :i* are treat$ z a s+le employ] "u subsections 7a7 & 7b7 ( section #eb %all be treat$ z a s+le taxpay]4 7#d7 ,treatm5t ( b5efits m&at$ or paid = by ,/ate or local gov]nm5ts ,= purposes ( ?is section1 any leave :i* is paid by a ,/ate or local gov]nm5t or requir$ by ,/ate or local law %all n be tak5 into acc\nt 9 det]m9+ ! am\nt ( paid family & m$ical leave provid$ by ! employ]4 7#e7 ,no inf]5ce ,no?+ 9 ?is subsection %all be con/ru$ z subject+ an employ] to any p5alty1 liability1 or o!r consequ5ce 7o!r ?an ineligibility = ! cr$it all[$ by reason ( subsection 7a7 or recaptur+ ! b5efit ( su* cr$it7 = failure to comply ) ! requirem5ts ( ?is subsection4 7d7 ,qualify+ employees ,= purposes ( ?is section1 ! t]m qualify+ employee means any employee 7z def9$ 9 section #c7;e7 ( ! ,fair ,labor ,/&>ds ,act ( #aich1 z am5d$7 :o-- 7#a7 has be5 employ$ by ! employ] = #a ye> or m1 & 7#b7 = ! prec$+ ye>1 _h comp5sation n 9 excess ( an am\nt equal to #fj p]c5t ( ! am\nt applicable = su* ye> "u clause 7i7 ( section #dad7q77#a77;,b74 7e7 ,family & m$ical leave 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 = purposes ( ?is section1 ! t]m family & m$ical leave means leave = any #a or m ( ! purposes describ$ "u subp>agraph 7,a71 7,b71 7,c71 7,d71 or 7,e7 ( p>agraph 7#a71 or p>agraph 7#c71 ( section #ajb7;a7 ( ! ,family & ,m$ical ,leave ,act ( #aiic1 z am5d$1 :e!r ! leave is provid$ "u t ,act or by a policy ( ! employ]4 7#b7 ,exclusion ,if an employ] provides paid leave z vacation leave1 p]sonal leave1 or m$ical or sick leave 7o!r ?an leave specifically = #a or m ( ! purposes ref]r$ to 9 p>agraph 7#a771 t paid leave %all n be consid]$ to be family & m$ical leave "u p>agraph 7#a74 7#c7 ,def9itions ,9 ?is subsection1 ! t]ms vacation leave1 p]sonal leave1 & m$ical or sick leave mean ^? #c types ( leave1 )9 ! mean+ ( section #ajb7;d77#b7 ( t ,act4 7f7 ,wages ,= purposes ( ?is section1 ! t]m wages has ! mean+ giv5 su* t]m by subsection 7b7 ( section #ccjf 7det]m9$ )\t reg>d to any doll> limitation conta9$ 9 su* section74 ,su* t]m %all n include any am\nt tak5 into acc\nt = purposes ( det]m9+ any o!r cr$it all[$ "u ?is subp>t4 7g7 ,election to h cr$it n apply 7#a7 ,9 g5]al ,a taxpay] may elect to h ?is section n apply = any taxable ye>4 7#b7 ,o!r rules ,rules simil> to ! rules ( p>agraphs 7#b7 & 7#c7 ( section #ea7;j7 %all apply = purposes ( ?is subsection4 7h7 ,t]m9ation ,?is section %all n apply to wages paid 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjai4 4 7b7 ,cr$it "p ( g5]al bus9ess cr$it ,section #ch7;b7 is am5d$ by /rik+ plus at ! end ( p>agraph 7#ce71 by /rik+ ! p]iod at ! end ( p>agraph 7#cf7 & ins]t+ 1 plus1 & by add+ at ! end ! foll[+ new p>agraph3 7#cg7 9 ! case ( an eligible employ] 7z def9$ 9 section #de,s7c771 ! paid family & m$ical leave cr$it det]m9$ "u section #de,s7a74 4 7c7 ,cr$it all[$ aga9/ ,,amt ,subp>agraph 7,b7 ( section #ch7;c77#d7 is am5d$ by r$esignat+ clauses 7ix7 ?r\gh 7xi7 z clauses 7x7 ?r\gh 7xii71 respectively1 & by ins]t+ aft] clause 7viii7 ! foll[+ new clause3 7ix7 ! cr$it det]m9$ "u section #de,s1 4 7d7 ,con=m+ am5dm5ts 7#a7 ,d5ial ( d\ble b5efit ,section #bhj;,c7a7 is am5d$ by ins]t+ #de,s7a71 aft] #de,p7a714 7#b7 ,election to h cr$it n apply ,section #feja7m7 is am5d$ by ins]t+ #de,s7g71 aft] #de;,h7g714 7#c7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #de,s4 ,employ] cr$it = paid family & m$ical leave4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to wages paid 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,b ,provisions relat+ to l[-income h\s+ cr$it #acdaa4 ,recon/ruction or replacem5t p]iod aft] casualty loss 7a7 ,9 g5]al ,subp>agraph 7,e7 ( section #db7;j77#d7 is am5d$ by /rik+ a reasonable p]iod e/abli%$ by ! ,secret>y & ins]t+ a reasonable p]iod e/abli%$ by ! applicable h\s+ cr$it ag5cy 7n to exce$ #be mon?s f ! date on :i* ! casualty loss arises74 ,! det]m9ation "u p>agraph 7#a7 %all n be made ) respect to a prop]ty ! basis ( :i* is affect$ by a casualty loss until ! p]iod describ$ 9 ! prec$+ s5t5ce ) respect to su* prop]ty has expir$44 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to casualty losses aris+ aft] ! date ( ! enactm5t ( ?is ,act4 #acdab4 ,modification ( rights relat+ to build+ pur*ase 7a7 ,9 g5]al ,subp>agraph 7,a7 ( section #db7;i77#g7 is am5d$-- 7#a7 by /rik+ a "r ( #a/ refusal & ins]t+ an option1 & 7#b7 by /rik+ ! prop]ty & ins]t+ ! prop]ty or a p>tn]%ip int]e/ relat+ to ! prop]ty4 7b7 ,con=m+ am5dm5t ,subp>agraph 7,b7 ( section #db7;i77#g7 is am5d$ by add+ at ! end ! foll[+ new s5t5ce3 ,9 ! case ( a pur*ase ( a p>tn]%ip int]e/1 ! m9imum pur*ase price is an am\nt equal to su* int]e/'s ratable %>e ( ! am\nt det]m9$ "u ! fir/ s5t5ce ( ?is subp>agraph44 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to agreem5ts ent]$ into or am5d$ aft] ! date ( ! enactm5t ( ?is ,act4 #acdac4 ,det]m9ation ( community revitalization plan to be made by h\s+ cr$it ag5cy 7a7 ,9 g5]al ,subclause 7,,iii7 ( section #db7m77#a77;,b77ii7 is am5d$ by ins]t+ 1 z det]m9$ by ! h\s+ cr$it ag5cy accord+ to crit]ia e/abli%$ by su* ag5cy1 aft] 7d77#e77;,c77 &4 7b7 ,crit]ia ,p>agraph 7#a7 ( section #db7m7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,e7 ,crit]ia = det]m9ation relat+ to conc]t$ community revitalization plan ,= purposes ( subp>agraph 7,b77ii77,,iii71 ! crit]ia = det]m9+ :e!r ! developm5t ( a project contributes to a conc]t$ community developm5t plan %all take into acc\nt any factors ! ag5cy deems appropriate1 includ+ ! ext5t to :i* ! propos$ plan-- 7i7 is geographically specific1 7ii7 outl9es a cle> plan = implem5tation & goals = outcomes1 7iii7 includes a /rategy = apply+ = or obta9+ commitm5ts ( public or private inve/m5t 7or bo?7 9 nonh\s+ infra/ructure1 am5ities1 or s]vices1 & 7iv7 demon/rates ! ne$ = community revitalization4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations ( h\s+ cr$it doll> am\nts made "u qualifi$ allocation plans 7z def9$ 9 section #db7m77#a77;,b7 ( ! ,int]nal ,rev5ue ,code ( #aihf7 adopt$ aft] ,decemb] #ca1 #bjag4 #acdad4 ,prohibition ( local approval & contribution requirem5ts 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #db7m71 z am5d$ by section #acdac1 is fur!r am5d$-- 7#a7 by /rik+ clause 7ii7 ( subp>agraph 7,a7 & by r$esignat+ clauses 7iii7 & 7iv7 !re( z clauses 7ii7 & 7iii71 & 7#b7 by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,local approval or contribution n tak5 into acc\nt ,! selection crit]ia "u a qualifi$ allocation plan %all n include consid]ation (-- 7i7 any support or opposition ) respect to ! project f local or elect$ (ficials1 or 7ii7 any local gov]nm5t contribution to ! project1 except to ! ext5t su* contribution is tak5 into acc\nt z "p ( a broad] consid]ation ( ! project's ability to lev]age outside fund+ s\rces1 & is n prioritiz$ ov] any o!r s\rce ( outside fund+4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations ( h\s+ cr$it doll> am\nts made aft] ,decemb] #ca1 #bjag4 #acdae4 ,selection crit]ia "u qualifi$ allocation plans 7a7 ,9 g5]al ,subp>agraph 7,c7 ( section #db7m77#a7 is am5d$ by /rik+ & at ! end ( clause 7ix71 by /rik+ ! p]iod at ! end ( clause 7x7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new clause3 7xi7 ! af=dable h\s+ ne$s ( individuals 9 ! ,/ate :o are memb]s ( ,indian tribes 7z def9$ 9 section #de;,a7c77#f774 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to allocations ( cr$its "u section #db ( ! ,int]nal ,rev5ue ,code ( #aihf made aft] ,decemb] #ca1 #bjag4 #acdaf4 ,af=dable h\s+ tax cr$it 7a7 ,9 g5]al ,! head+ ( section #db is am5d$ by /rik+ ,l[-income & ins]t+ ,af=dable4 7b7 ,con=m+ am5dm5ts 7#a7 ,subsection 7a7 ( section #db is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7#b7 ,p>agraph 7#e7 ( section #ch7;b7 is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7#c7 ,! head+ ( subp>agraph 7,d7 ( section #dfi7;i77#c7 is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7#d7 ,! head+ ( subp>agraph 7,b7 ( section #dfi7;i77#f7 is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7#e7 ,p>agraph 7#g7 ( section #ggb7;a7 is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7#f7 ,p>agraph 7#e7 ( section #ggb7;d7 is am5d$ by /rik+ l[-income & ins]t+ af=dable4 7c7 ,cl]ical am5dm5t ,! item relat+ to section #db 9 ! table ( sections = subp>t ,d ( "p ,,iv ( sub*apt] ,a ( *apt] #a is am5d$ to read z foll[s3 ,sec4 #db4 ,af=dable h\s+ cr$it4 4 ,,vi ,provisions relat$ to specific entities & indu/ries ,a ,p>tn]%ip provisions #aceja4 ,treatm5t ( ga9 or loss ( =eign p]sons f sale or ex*ange ( int]e/s 9 p>tn]%ips engag$ 9 trade or bus9ess )9 ! ,unit$ ,/ates 7a7 ,9 g5]al ,section #hfd7;c7 is am5d$ by add+ at ! end ! foll[+3 7#h7 ,ga9 or loss ( =eign p]sons f sale or ex*ange ( c]ta9 p>tn]%ip int]e/s 7,a7 ,9 g5]al ,not)/&+ any o!r provision ( ?is subtitle1 if a nonresid5t ali5 individual or =eign corporation owns1 directly or indirectly1 an int]e/ 9 a p>tn]%ip :i* is engag$ 9 any trade or bus9ess )9 ! ,unit$ ,/ates1 ga9 or loss on ! sale or ex*ange ( all 7or any portion (7 su* int]e/ %all be treat$ z effectively connect$ ) ! conduct ( su* trade or bus9ess to ! ext5t su* ga9 or loss does n exce$ ! am\nt det]m9$ "u subp>agraph 7,b74 7,b7 ,am\nt treat$ z effectively connect$ ,! am\nt det]m9$ "u ?is subp>agraph ) respect to any p>tn]%ip int]e/ sold or ex*ang$-- 7i7 9 ! case ( any ga9 on ! sale or ex*ange ( ! p>tn]%ip int]e/1 is-- 7,i7 ! portion ( ! p>tn]'s di/ributive %>e ( ! am\nt ( ga9 :i* w\ld h be5 effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates if ! p>tn]%ip _h sold all ( its assets at _! fair m>ket value z ( ! date ( ! sale or ex*ange ( su* int]e/1 or 7,,ii7 z]o if no ga9 on su* deem$ sale w\ld h be5 s effectively connect$1 & 7ii7 9 ! case ( any loss on ! sale or ex*ange ( ! p>tn]%ip int]e/1 is-- 7,i7 ! portion ( ! p>tn]'s di/ributive %>e ( ! am\nt ( loss on ! deem$ sale describ$ 9 clause 7i77,i7 :i* w\ld h be5 s effectively connect$1 or 7,,ii7 z]o if no loss on su* deem$ sale w\ld be h be5 s effectively connect$4 ,= purposes ( ?is subp>agraph1 a p>tn]'s di/ributive %>e ( ga9 or loss on ! deem$ sale %all be det]m9$ 9 ! same mann] z su* p>tn]'s di/ributive %>e ( ! non-sep>ately /at$ taxable income or loss ( su* p>tn]%ip4 7,c7 ,coord9ation ) ,unit$ ,/ates real prop]ty int]e/s ,if a p>tn]%ip describ$ 9 subp>agraph 7,a7 holds any ,unit$ ,/ates real prop]ty int]e/ 7z def9$ 9 section #hig7;c77 at ! "t ( ! sale or ex*ange ( ! p>tn]%ip int]e/1 !n ! ga9 or loss treat$ z effectively connect$ income "u subp>agraph 7,a7 %all be r$uc$ by ! am\nt s treat$ ) respect to su* ,unit$ ,/ates real prop]ty int]e/ "u section #hig4 7,d7 ,sale or ex*ange ,= purposes ( ?is p>agraph1 an individual or corporation %all be treat$ z hav+ sold or ex*ang$ any int]e/ 9 a p>tn]%ip if1 "u any provision ( ?is subtitle1 ga9 or loss is realiz$ f ! sale or ex*ange ( su* int]e/4 7,e7 ,secret>ial au?ority ,! ,secret>y %all prescribe su* regulations z ! ,secret>y det]m9es appropriate = ! application ( ?is p>agraph1 includ+ regulations :i* provide t1 not)/&+ subp>agraph 7,d71 ?is p>agraph applies 9 a case ev5 if ga9 or loss f a sale or ex*ange w\ld n be realiz$ "u any o!r provision ( ?is subtitle4 4 7b7 ,)hold+ requirem5ts ,section #addf is am5d$ by r$esignat+ subsection 7f7 z subsection 7g7 & by ins]t+ aft] subsection 7e7 ! foll[+3 7f7 ,special rules = )hold+ on sales ( p>tn]%ip int]e/s 7#a7 ,9 g5]al ,except z provid$ 9 ?is subsection1 if any portion ( ! ga9 7if any7 on any disposition ( an int]e/ 9 a p>tn]%ip w\ld be treat$ "u section #hfd7;c77#h7 z effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates1 ! transf]ee %all be requir$ to d$uct & )hold a tax equal to #aj p]c5t ( ! am\nt realiz$ on ! disposition4 7#b7 ,exception if non=eign affidavit furni%$ 7,a7 ,9 g5]al ,no p]son %all be requir$ to d$uct & )hold any am\nt "u p>agraph 7#a7 ) respect to any disposition if ! transf]or furni%es to ! transf]ee an affidavit by ! transf]or /at+1 "u p5alty ( p]jury1 ! transf]or's ,unit$ ,/ates taxpay] id5tification numb] & t ! transf]or is n a =eign p]son4 7,b7 ,false affidavit ,subp>agraph 7,a7 %all n apply to any disposition if-- 7i7 ! transf]ee has actual k t ! affidavit is false1 or ! transf]ee receives a notice 7z describ$ 9 section #adde7;d77 f a transf]or's ag5t or transf]ee's ag5t t su* affidavit or /atem5t is false1 or 7ii7 ! ,secret>y by regulations requires ! transf]ee to furni% a copy ( su* affidavit or /atem5t to ! ,secret>y & ! transf]ee fails to furni% a copy ( su* affidavit or /atem5t to ! ,secret>y at su* "t & 9 su* mann] z requir$ by su* regulations4 7,c7 ,rules = ag5ts ,! rules ( section #adde7;d7 %all apply to a transf]or's ag5t or transf]ee's ag5t ) respect to any affidavit describ$ 9 subp>agraph 7,a7 9 ! same mann] z su* rules apply ) respect to ! disposition ( a ,unit$ ,/ates real prop]ty int]e/ "u su* section4 7#c7 ,au?ority ( ,secret>y to prescribe r$uc$ am\nt ,at ! reque/ ( ! transf]or or transf]ee1 ! ,secret>y may prescribe a r$uc$ am\nt to be )held "u ?is section if ! ,secret>y det]m9es t to sub/itute su* r$uc$ am\nt w n jeop>dize ! collection ( ! tax impos$ "u ?is title ) respect to ga9 treat$ "u section #hfd7;c77#h7 z effectively connect$ ) ! conduct ( a trade or bus9ess ) 9 ! ,unit$ ,/ates4 7#d7 ,p>tn]%ip to )hold am\nts n )held by ! transf]ee ,if a transf]ee fails to )hold any am\nt requir$ to be )held "u p>agraph 7#a71 ! p>tn]%ip %all be requir$ to d$uct & )hold f di/ributions to ! transf]ee a tax 9 an am\nt equal to ! am\nt ! transf]ee fail$ to )hold 7plus int]e/ "u ?is title on su* am\nt74 7#e7 ,def9itions ,any t]m us$ 9 ?is subsection :i* is also us$ "u section #adde %all h ! same mean+ z :5 us$ 9 su* section4 7#f7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y to c>ry out ! purposes ( ?is subsection1 includ+ regulations provid+ = exceptions f ! provisions ( ?is subsection4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales & ex*anges on or aft] ,novemb] #bg1 #bjag4 #acejb4 ,modify def9ition ( sub/antial built-9 loss 9 ! case ( transf] ( p>tn]%ip int]e/ 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #gdc7;d7 is to read z foll[s3 7#a7 ,9 g5]al ,= purposes ( ?is section1 a p>tn]%ip has a sub/antial built-9 loss ) respect to a transf] ( an int]e/ 9 ! p>tn]%ip if-- 7,a7 ! p>tn]%ip's adju/$ basis 9 ! p>tn]%ip prop]ty exce$s by m ?an #bej1jjj ! fair m>ket value ( su* prop]ty1 or 7,b7 ! transf]ee p>tn] w\ld be allocat$ a loss ( m ?an #bej1jjj if ! p>tn]%ip assets 7 sold = ca% equal to _! fair m>ket value imm$iately aft] su* transf]4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s ( p>tn]%ip int]e/s aft] ,decemb] #ca1 #bjag4 #acejc4 ,*>itable contributions & =eign taxes tak5 into acc\nt 9 det]m9+ limitation on all[ance ( p>tn]'s %>e ( loss 7a7 ,9 g5]al ,subsection 7d7 ( section #gjd is am5d$-- 7#a7 by /rik+ ,a p>tn]'s di/ributive %>e & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,a p>tn]'s di/ributive %>e 1 7#b7 by /rik+ ,any excess ( su* loss & ins]t+ ! foll[+3 7#b7 ,c>ryov] ,any excess ( su* loss 1 & 7#c7 by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,special rules 7,a7 ,9 g5]al ,9 det]m9+ ! am\nt ( any loss "u p>agraph 7#a71 !re %all be tak5 into acc\nt ! p>tn]'s di/ributive %>e ( am\nts describ$ 9 p>agraphs 7#d7 & 7#f7 ( section #gjb7;a74 7,b7 ,exception ,9 ! case ( a *>itable contribution ( prop]ty ^: fair m>ket value exce$s its adju/$ basis1 subp>agraph 7,a7 %all n apply to ! ext5t ( ! p>tn]'s di/ributive %>e ( su* excess4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to p>tn]%ip taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,b ,insurance re=ms #aceaa4 ,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 7,a7 ,"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,b7 ,section #hca7;b77#c7 is am5d$ by /rik+ except z provid$ 9 section #hdd1 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 #hje7;b77#b77;,a77iv7 is am5d$ to read z foll[s3 7iv7 any net op]at+ loss c>ryback to ! taxable ye> "u section #agb1 & 4 7#g7 ,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 7#h7 ,section #acea7;i77#c7 is am5d$ by /rik+ or ! op]ations loss d$uction "u section #haj14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to losses aris+ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aceab4 ,repeal ( small life insurance company d$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 ?is ,act1 is am5d$ by /rik+ clause 7i7 & by r$esignat+ clauses 7ii71 7iii71 & 7iv7 z clauses 7i71 7ii71 & 7iii71 respectively4 7#f7 ,section #hje7;b77#b77;,a71 z am5d$ by ?is ,act1 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 #aceaa1 is am5d$ by /rik+ subp>agraph 7,a7 & by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aceac4 ,adju/m5t = *ange 9 comput+ res]ves 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #hjg7;f7 is am5d$ 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 #acead4 ,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 #aceae4 ,modification ( proration rules = prop]ty & casualty insurance companies 7a7 ,9 g5]al ,section #hcb7;b77#e77;,b7 is am5d$-- 7#a7 by /rik+ #ae p]c5t & ins]t+ ! applicable p]c5tage1 & 7#b7 by ins]t+ at ! end ! foll[+ new s5t5ce3 ,= purposes ( ?is subp>agraph1 ! applicable p]c5tage is #e4be p]c5t divid$ by ! highe/ rate 9 effect "u section #aa7;b744 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aceaf4 ,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 #aceag4 ,capitalization ( c]ta9 policy acquisition exp5ses 7a7 ,amortization p]iod ,section #hdh is am5d$ by /rik+ #abj-mon? ea* place x appe>s 9 subsections 7a77#b7 & 7b77#a7 & ins]t+ #fjj-mon?4 7b7 ,det]m9ation ( exp5ses ,p>agraph 7#a7 ( section #hdh7;c7 is am5d$-- 7#a7 by /rik+ #a4ge p]c5t 9 subp>agraph 7,a7 & ins]t+ #c4ag p]c5t1 7#b7 by /rik+ #b4je p]c5t 9 subp>agraph 7,b7 & ins]t+ #c4gb p]c5t1 & 7#c7 by /rik+ #g4g p]c5t 9 subp>agraph 7,c7 & ins]t+ #ac4ig p]c5t4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #aceah4 ,tax report+ = life settlem5t transactions 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa1 z am5d$ by section #accje1 is am5d$ by add+ at ! end ! foll[+ new section3 #fjej,y4 ,returns relat+ to c]ta9 life insurance contract transactions 7a7 ,requirem5t ( report+ ( c]ta9 paym5ts 7#a7 ,9 g5]al ,e p]son :o acquires a life insurance contract or any int]e/ 9 a life insurance contract 9 a reportable policy sale dur+ any taxable ye> %all make a return = su* taxable ye> 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( su* p]son1 7,b7 ! "n1 address1 & ,,t9 ( ea* recipi5t ( paym5t 9 ! reportable policy sale1 7,c7 ! date ( su* sale1 7,d7 ! "n ( ! issu] ( ! life insurance contract sold & ! policy numb] ( su* contract1 & 7,e7 ! am\nt ( ea* paym5t4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to su* p]son1 except t 9 ! case ( an issu] ( a life insurance contract1 su* /atem5t is n requir$ to include ! in=mation specifi$ 9 p>agraph 7#a77;,e74 7b7 ,requirem5t ( report+ ( sell]'s basis 9 life insurance contracts 7#a7 ,9 g5]al ,^u receipt ( ! /atem5t requir$ "u subsection 7a77#b7 or ^u notice ( a transf] ( a life insurance contract to a =eign p]son1 ea* issu] ( a life insurance contract %all make a return 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( ! sell] :o transf]s any int]e/ 9 su* contract 9 su* sale1 7,b7 ! inve/m5t 9 ! contract 7z def9$ 9 section #gb7;e77#f77 ) respect to su* sell]1 & 7,c7 ! policy numb] ( su* contract4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to ea* sell] ^: "n is requir$ to be set =? 9 su* return4 7c7 ,requirem5t ( report+ ) respect to reportable dea? b5efits 7#a7 ,9 g5]al ,e p]son :o makes a paym5t ( reportable dea? b5efits dur+ any taxable ye> %all make a return = su* taxable ye> 7at su* "t & 9 su* mann] z ! ,secret>y %all prescribe7 sett+ =?-- 7,a7 ! "n1 address1 & ,,t9 ( ! p]son mak+ su* paym5t1 7,b7 ! "n1 address1 & ,,t9 ( ea* recipi5t ( su* paym5t1 7,c7 ! date ( ea* su* paym5t1 & 7,d7 ! gross am\nt ( ea* su* paym5t4 7,e7 su* p]son's e/imate ( ! inve/m5t 9 ! contract 7z def9$ 9 section #gb7;e77#f77 ) respect to ! buy]4 7#b7 ,/atem5t to be furni%$ to p]sons ) respect to :om in=mation is requir$ ,e p]son requir$ to make a return "u ?is subsection %all furni% to ea* p]son ^: "n is requir$ to be set =? 9 su* return a writt5 /atem5t %[+-- 7,a7 ! "n1 address1 & phone numb] ( ! in=mation contact ( ! p]son requir$ to make su* return1 & 7,b7 ! in=mation requir$ to be %[n on su* return ) respect to ea* recipi5t ( paym5t ^: "n is requir$ to be set =? 9 su* return4 7d7 ,def9itions ,= purposes ( ?is section3 7#a7 ,paym5t ,! t]m paym5t means1 ) respect to any reportable policy sale1 ! am\nt ( ca% & ! fair m>ket value ( any consid]ation transf]r$ 9 ! sale4 7#b7 ,reportable policy sale ,! t]m reportable policy sale has ! mean+ giv5 su* t]m 9 section #aja7;a77#c77;,b74 7#c7 ,issu] ,! t]m issu] means any life insurance company t be>s ! risk ) respect to a life insurance contract on ! date any return or /atem5t is requir$ to be made "u ?is section4 7#d7 ,reportable dea? b5efits ,! t]m reportable dea? b5efits means am\nts paid by reason ( ! dea? ( ! insur$ "u a life insurance contract t has be5 transf]r$ 9 a reportable policy sale4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa1 z am5d$ by section #accje1 is am5d$ by ins]t+ aft] ! item relat+ to section #fjej,x ! foll[+ new item3 ,sec4 #fjej,y4 ,returns relat+ to c]ta9 life insurance contract transactions4 4 7c7 ,con=m+ am5dm5ts 7#a7 ,subsection 7d7 ( section #fgbd is am5d$-- 7,a7 by /rik+ or at ! end ( clause 7xxiv7 ( p>agraph 7#a77;,b71 by /rik+ & at ! end ( clause 7xxv7 ( su* p>agraph & ins]t+ or1 & by ins]t+ aft] su* clause 7xxv7 ! foll[+ new clause3 7xxvi7 section #fjej,y 7relat+ to returns relat+ to c]ta9 life insurance contract transactions71 & 1 & 7,b7 by /rik+ or at ! end ( subp>agraph 7,,hh7 ( p>agraph 7#b71 by /rik+ ! p]iod at ! end ( subp>agraph 7,,ii7 ( su* p>agraph & ins]t+ 1 or1 & by ins]t+ aft] su* subp>agraph 7,,ii7 ! foll[+ new subp>agraph3 7,,jj7 subsection 7a77#b71 7b77#b71 or 7c77#b7 ( section #fjej,y 7relat+ to returns relat+ to c]ta9 life insurance contract transactions74 4 7#b7 ,section #fjdg is am5d$-- 7,a7 by r$esignat+ subsection 7g7 z subsection 7h71 7,b7 by ins]t+ aft] subsection 7f7 ! foll[+ new subsection3 7g7 ,in=mation relat+ to life insurance contract transactions ,?is section %all n apply to any in=mation :i* is requir$ to be report$ "u section #fjej,y4 1 & 7,c7 by add+ at ! end ( subsection 7h71 z s r$esignat$1 ! foll[+ new p>agraph3 7#d7 ,= provisions requir+ report+ ( in=mation relat+ to c]ta9 life insurance contract transactions1 see section #fjej,y4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 reportable policy sales 7z def9$ 9 section #fjej,y7d77#b7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by subsection 7a77 aft] ,decemb] #ca1 #bjag1 & 7#b7 reportable dea? b5efits 7z def9$ 9 section #fjej,y7d77#d7 ( su* ,code 7z add$ by subsection 7a77 paid aft] ,decemb] #ca1 #bjag4 #aceai4 ,cl>ification ( tax basis ( life insurance contracts 7a7 ,cl>ification ) respect to adju/m5ts ,p>agraph 7#a7 ( section #ajaf7;a7 is am5d$ by /rik+ subp>agraph 7,a7 & all t foll[s & ins]t+ ! foll[+3 7,a7 =-- 7i7 taxes or o!r c>ry+ *>ges describ$ 9 section #bff2 or 7ii7 exp5ditures describ$ 9 section #agc 7relat+ to circulation exp5ditures71 = :i* d$uctions h be5 tak5 by ! taxpay] 9 det]m9+ taxable income = ! taxable ye> or prior taxable ye>s2 or 7,b7 = mortality1 exp5se1 or o!r reasonable *>ges incurr$ "u an annuity or life insurance contract2 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to transactions ent]$ into aft] ,augu/ #be1 #bjji4 #acebj4 ,exception to transf] = valuable consid]ation rules 7a7 ,9 g5]al ,subsection 7a7 ( section #aja is am5d$ by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,exception to valuable consid]ation rules = comm]cial transf]s 7,a7 ,9 g5]al ,! second s5t5ce ( p>agraph 7#b7 %all n apply 9 ! case ( a transf] ( a life insurance contract1 or any int]e/ !re91 :i* is a reportable policy sale4 7,b7 ,reportable policy sale ,= purposes ( ?is p>agraph1 ! t]m reportable policy sale means ! acquisition ( an int]e/ 9 a life insurance contract1 directly or indirectly1 if ! acquir] has no sub/antial family1 bus9ess1 or f9ancial relation%ip ) ! insur$ ap>t f ! acquir]'s int]e/ 9 su* life insurance contract4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m indirectly applies to ! acquisition ( an int]e/ 9 a p>tn]%ip1 tru/1 or o!r entity t holds an int]e/ 9 ! life insurance contract4 4 7b7 ,con=m+ am5dm5t ,p>agraph 7#a7 ( section #aja7;a7 is am5d$ by /rik+ p>agraph 7#b7 & ins]t+ p>agraphs 7#b7 & 7#c74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s aft] ,decemb] #ca1 #bjag4 ,c ,banks & ,f9ancial ,in/rum5ts #aceca4 ,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 7i7 ,9 g5]al ,= purposes ( ?is p>agraph1 ! t]m exp&$ affiliat$ gr\p means an affiliat$ gr\p z def9$ 9 section #aejd7;a71 det]m9$-- 7,i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s1 & 7,,ii7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b74 7ii7 ,control ( non-corporate entities ,a p>tn]%ip or any o!r entity 7o!r ?an a corporation7 %all be treat$ 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 clause74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acecb4 ,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 #acecc4 ,co/ basis ( specifi$ securities det]m9$ )\t reg>d to id5tification 7a7 ,9 g5]al ,section #ajab is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,co/ basis ( specifi$ securities det]m9$ )\t reg>d to id5tification 7#a7 ,9 g5]al ,unless ! ,secret>y p]mits ! use ( an av]age basis me?od = det]m9+ co/1 9 ! case ( ! sale1 ex*ange1 or o!r disposition ( a specifi$ security 7)9 ! mean+ ( section #fjde7;g77#c77;,b771 ! basis 7& hold+ p]iod7 ( su* security %all be det]m9$ on a fir/-9 fir/-out basis4 7#b7 ,exception ,9 ! case ( a sale1 ex*ange1 or o!r disposition ( a specifi$ security by a regulat$ inve/m5t company 7z def9$ 9 section #hea7;a771 p>agraph 7#a7 %all n apply4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ajab7;c77#a7 is am5d$ by /rik+ ! conv5tions prescrib$ by regulations "u ?is section & ins]t+ ! me?od applicable = det]m9+ ! co/ ( su* security4 7#b7 ,section #ajab7;c77#b77;,a7 is am5d$ by ins]t+ 7z 9 effect prior to ! enactm5t ( ! ,tax ,cuts & ,jobs ,act7 aft] ?is section4 7#c7 ,section #fjde7;g77#b77;,b77i77,i7 is am5d$ by /rik+ unless ! cu/om] notifies ! brok] by means ( mak+ an adequate id5tification ( ! /ock sold or transf]r$4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to sales1 ex*anges1 & o!r dispositions aft] ,decemb] #ca1 #bjag4 ,d ,s ,corporations #aceda4 ,expansion ( qualify+ b5efici>ies ( an elect+ small bus9ess tru/ 7a7 ,no look-,?r\gh = eligibility purposes ,section #acfa7;c77#b77;,b77v7 is am5d$ by add+ at ! end ! foll[+ new s5t5ce3 ,?is clause %all n apply = purposes ( subsection 7b77#a77;,c744 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect on ,janu>y #a1 #bjah4 #acedb4 ,*>itable contribution d$uction = elect+ small bus9ess tru/s 7a7 ,9 g5]al ,section #fda7;c77#b7 is am5d$ by ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 7i7 ,section #fdb7;c7 %all n apply4 7ii7 ,= purposes ( section #agj7;b77#a77;,g71 adju/$ gross income %all be comput$ 9 ! same mann] z 9 ! case ( an individual1 except t ! d$uctions = co/s :i* are paid or incurr$ 9 connection ) ! adm9i/ration ( ! tru/ & :i* w\ld n h be5 incurr$ if ! prop]ty 7 n held 9 su* tru/ %all be treat$ z all[able 9 arriv+ at adju/$ gross income4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,vii ,employm5t ,a ,comp5sation #acfja4 ,modification ( limitation on excessive employee remun]ation 7a7 ,repeal ( p]=mance-bas$ comp5sation & commission exceptions = limitation on excessive employee remun]ation 7#a7 ,9 g5]al ,p>agraph 7#d7 ( section #afb7m7 is am5d$ by /rik+ subp>agraphs 7,b7 & 7,c7 & by r$esignat+ subp>agraphs 7,d71 7,e71 7,f71 & 7,g7 z subp>agraphs 7,b71 7,c71 7,d71 & 7,e71 respectively4 7#b7 ,con=m+ am5dm5ts 7,a7 ,p>agraphs 7#e77;,e7 & 7#f77;,d7 ( section #afb7m7 are ea* am5d$ by /rik+ subp>agraphs 7,b71 7,c71 & 7,d7 & ins]t+ subp>agraph 7,b74 7,b7 ,p>agraphs 7#e77;,g7 & 7#f77;,g7 ( section #afb7m7 are ea* am5d$ by /rik+ 7,f7 & 7,g7 & ins]t+ 7,d7 & 7,e74 7b7 ,modification ( def9ition ( cov]$ employees ,p>agraph 7#c7 ( section #afb7m7 is am5d$-- 7#a7 9 subp>agraph 7,a71 by /rik+ z ( ! close ( ! taxable ye>1 su* employee is ! *ief executive (fic] ( ! taxpay] or is & ins]t+ su* employee is ! pr9cipal executive (fic] or pr9cipal f9ancial (fic] ( ! taxpay] at any "t dur+ ! taxable ye>1 or 01 7#b7 9 subp>agraph 7,b7-- 7,a7 by /rik+ #d & ins]t+ #c1 & 7,b7 by /rik+ 7o!r ?an ! *ief executive (fic]7 & ins]t+ 7o!r ?an any individual describ$ 9 subp>agraph 7,a771 & 7#c7 by /rik+ or at ! end ( subp>agraph 7,a71 by /rik+ ! p]iod at ! end ( subp>agraph 7,b7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+3 7,c7 0 a cov]$ employee ( ! taxpay] 7or any pr$ecessor7 = any prec$+ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjaf4 4 7c7 ,expansion ( applicable employ] 7#a7 ,9 g5]al ,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 7#b7 ,con=m+ am5dm5t ,section #afb7m77#c71 z am5d$ by subsection 7b71 is am5d$ by add+ at ! end ! foll[+ flu% s5t5ce3 ,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$4 4 7d7 ,special rule = remun]ation paid to b5efici>ies1 etc ,p>agraph 7#d7 ( section #afb7m71 z am5d$ by subsection 7a71 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ,special rule = remun]ation paid to b5efici>ies1 etc ,remun]ation %all n fail to be applicable employee remun]ation m]ely because x is includible 9 ! income (1 or paid to1 a p]son o!r ?an ! cov]$ employee1 includ+ aft] ! dea? ( ! cov]$ employee4 4 7e7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,exception = b9d+ contracts ,! am5dm5ts made by ?is section %all n apply to remun]ation :i* is pursuant to a writt5 b9d+ contract :i* 0 9 effect on ,novemb] #b1 #bjag1 & :i* 0 n modifi$ 9 any mat]ial respect on or aft] su* date4 #acfjb4 ,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 ,= purposes ( ! prec$+ s5t5ce1 remun]ation %all be treat$ z paid :5 !re is no sub/antial risk ( =feiture ( ! rights to su* remun]ation4 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 :i* = ! 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;,a7c77 & %all include am\nts requir$ to be includ$ 9 gross income "u section #deg7;f74 7#d7 ,remun]ation f relat$ organizations 7,a7 ,9 g5]al ,remun]ation ( a cov]$ employee by an applicable tax-exempt organization %all include any remun]ation paid ) respect to employm5t ( su* employee by any relat$ p]son or gov]nm5tal entity4 7,b7 ,relat$ organizations ,a p]son or gov]nm5tal entity %all be treat$ z relat$ to an applicable tax-exempt organization if su* p]son or gov]nm5tal entity-- 7i7 controls1 or is controll$ by1 ! organization1 7ii7 is controll$ by "o or m p]sons :i* control ! organization1 7iii7 is a support$ organization 7z def9$ 9 section #eji7;f77#c77 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 :i* is a volunt>y employees' b5efici>y association describ$ 9 section #eja7;c77#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 ( ! tax "u ?is section1 includ+ regulations prev5t+ employees f be+ misclassifi$ z contractors or f be+ comp5sat$ ?r\gh a pass-?r\gh or o!r entity to avoid su* tax4 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 #acfjc4 ,treatm5t ( qualifi$ equity grants 7a7 ,9 g5]al ,section #hc is am5d$ by add+ at ! end ! foll[+ new subsection3 7i7 ,qualifi$ equity grants 7#a7 ,9 g5]al ,= purposes ( ?is subtitle-- 7,a7 ,tim+ ( inclusion ,if qualifi$ /ock is transf]r$ to a qualifi$ employee :o makes an election ) respect to su* /ock "u ?is subsection1 subsection 7a7 %all be appli$ by includ+ ! am\nt det]m9$ "u su* subsection ) respect to su* /ock 9 income ( ! employee 9 ! taxable ye> det]m9$ "u subp>agraph 7,b7 9 lieu ( ! taxable ye> describ$ 9 subsection 7a74 7,b7 ,taxable ye> det]m9$ ,! taxable ye> det]m9$ "u ?is subp>agraph is ! taxable ye> ( ! employee :i* includes ! e>lie/ (-- 7i7 ! fir/ date su* qualifi$ /ock becomes transf]able 7includ+1 solely = purposes ( ?is clause1 becom+ 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 provides7 ! 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 grant$ 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 made 9 a simil> mann] z "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 are 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 0 = any ( ! #aj prec$+ taxable ye>s "o ( ! #d highe/ comp5sat$ (fic]s ( su* corporation1 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/ 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 & %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$+ ! cal5d> ye> :i* includes ! fir/ date ! rights ( ! employee 9 su* /ock are transf]able or are n subject to a sub/antial risk ( =feiture1 unless-- 7,i7 n less ?an #be p]c5t ( ! total doll> am\nt ( ! /ock s pur*as$ 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 ( subp>agraph 7,b77iii7 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 requires = purposes ( adm9i/]+ ?is p>agraph4 7#e7 ,controll$ gr\ps ,= purposes ( ?is subsection1 all p]sons treat$ z a s+le employ] "u section #dad7;b7 %all be treat$ z #a corporation4 7#f7 ,notice requirem5t ,any corporation :i* 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 be eligible to 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 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#b77 ) 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 #dbc is am5d$-- 7i7 by add+ at ! end ( subsection 7a7 ! foll[+ flu% s5t5ce3 ,! prec$+ s5t5ce %all n apply to any %>e ( /ock ) respect to :i* an election is made "u section #hc7;i74 1 & 7ii7 9 subsection 7b77#e71 by /rik+ & be=e ! plan & by ins]t+ 1 & ! rules ( section #hc7;i7 %all apply 9 det]m9+ :i* employees h a "r to make an election "u su* section be=e ! semicolon at ! end4 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 includible 9 gross income "u subp>agraph 7,a7 ( section #hc7;i77#a7 ) respect to an ev5t describ$ 9 subp>agraph 7,b7 ( su* section :i* occurs 9 su* cal5d> ye>1 & 7#af7 ! 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 7p7 ,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$1 aft] ,decemb] #ca1 #bjag4 7#b7 ,requirem5t to provide notice ,! am5dm5ts made by subsection 7e7 %all apply to failures aft] ,decemb] #ca1 #bjag4 7g7 ,transition rule ,until su* "t z ! ,secret>y 7or ! ,secret>y's delegate7 issues regulations or o!r guidance = purposes ( implem5t+ ! requirem5ts ( p>agraph 7#b77;,c77i77,,ii7 ( section #hc7;i7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ 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 #acfjd4 ,increase 9 excise tax rate = /ock comp5sation ( insid]s 9 expatriat$ corporations 7a7 ,9 g5]al ,section #dihe7;a77#a7 is am5d$ by /rik+ section #a7;h77#a77;,c7 & ins]t+ section #a7;h77#a77;,d74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to corporations fir/ becom+ expatriat$ corporations 7z def9$ 9 section #dihe ( ! ,int]nal ,rev5ue ,code ( #aihf7 aft] ! date ( enactm5t ( ?is ,act4 ,b ,retirem5t plans #acfaa4 ,con=mity ( contribution limits = employ]-sponsor$ retirem5t plans 7a7 #djc7;b7 plans 7#a7 ,elim9ation ( special cat*-up rule ,subsection 7g7 ( section #djb is am5d$ by /rik+ p>agraph 7#g7 & by r$esignat+ p>agraph 7#h7 z p>agraph 7#g74 7#b7 ,elim9ation ( po/ t]m9ation non-elective contributions ,subsection 7b7 ( section #djc is am5d$-- 7,a7 9 p>agraph 7#c71 by /rik+ = ! mo/ rec5t p]iod & all t foll[s ?r\gh m ?an five ye>s1 & 7,b7 by /rik+ p>agraph 7#d74 7#c7 ,elim9ation ( sep>ate #dae7;c7 limits ,p>agraph 7#d7 ( section #dae7k7 is am5d$ by /rik+ ea* employ] ) respect to :i* ! p>ticipant has ! control requir$ & ins]t+ ! employ] & ea* employ] :i* is "p ( ! same controll$ gr\p or "u common control4 7b7 #deg7;b7 plans 7#a7 ,elim9ation ( sep>ate def]ral limit ,p>agraph 7#c7 ( section #djb7;g7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,c71 by /rik+ ! p]iod at ! end ( subp>agraph 7,d7 & ins]t+ 1 &1 & by ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 any am\nt def]r$ "u an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a74 4 7#b7 ,tak5 into acc\nt "u limitation = def9$ contribution plans 7,a7 ,9 g5]al ,p>agraph 7#b7 ( section #dae7;a7 is am5d$-- 7i7 by /rik+ or at ! end ( subp>agraph 7,b71 by ins]t+ or at ! end ( subp>agraph 7,c71 & by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a71 1 & 7ii7 by /rik+ or #djh7k7 9 ! flu% language & ins]t+ #djh7k71 or #deg7;b74 7,b7 ,def9ition ,p>agraph 7#a7 ( section #dae7k7 is am5d$ by /rik+ or at ! end ( subp>agraph 7,c71 by /rik+ ! p]iod at ! end ( subp>agraph 7,d7 & ins]t+ 1 or1 & by add+ at ! end ! foll[+ new subp>agraph3 7,e7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg7;b77 ( an eligible employ] describ$ 9 section #deg7;e77#a77;,a74 4 7#c7 ,elim9ation ( special cat*-up rule ,p>agraph 7#c7 ( section #deg7;b7 is am5d$ by ins]t+ 9 ! case ( an eligible employ] describ$ 9 subsection 7e77#a77;,b71 be=e :i*4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #be;,b7d77#a77;,b7 is am5d$-- 7,a7 by /rik+ clause 7ii71 & 7,b7 by /rik+ ! am\nt (-- & all t foll[s ?r\gh any elective def]rals & ins]t+ ! am\nt ( any elective def]rals4 7#b7 ,section #djb;,a7e77#b7 is am5d$ by /rik+ means-- & all t foll[s & ins]t+ means any elective def]ral describ$ 9 subp>agraph 7,a71 7,c71 or 7,e7 ( section #djb7;g77#c74 7#c7 ,section #deg7;e7 is am5d$ by /rik+ p>agraph 7#ah74 7#d7 ,section #dad7u77#b77;,c7 is am5d$ by ins]t+ ( an eligible employ] describ$ 9 section #deg7;e77#a77;,b7 aft] 7z def9$ 9 section #deg7;b774 7#e7 ,section #dad7v77#b77;,d7 is am5d$-- 7,a7 by /rik+ clauses 7i71 7ii71 & 7iv7 (1 & 7,b7 by /rik+ 1 & plans describ$ 9 clause 7iii7 & all t foll[s & ins]t+ a p]iod4 7#f7 ,section #dad7v77#c77;,a77i7 is am5d$ by /rik+ 7det]m9$ )\t reg>d to section #deg7;b77#c774 7#g7 ,section #dad7v77#f77;,b7 is am5d$ by /rik+ subsection 7u77#b77;,c7 & ins]t+ section #djb7;g77#c74 7#h7 ,section #dad7v77#f7 is am5d$ by /rik+ subp>agraph 7,c74 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to plan ye>s & taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acfab4 ,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$esignat+ p>agraph 7#g7 z p>agraph 7#f74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acfac4 ,modification ( rules applicable to l5g? ( s]vice aw>d plans 7a7 ,maximum def]ral am\nt ,clause 7ii7 ( section #deg7;e77#aa77;,b7 is am5d$ by /rik+ #c1jjj & ins]t+ #f1jjj4 7b7 ,co/ ( liv+ adju/m5t ,subp>agraph 7,b7 ( section #deg7;e77#aa7 is am5d$ by add+ at ! end ! foll[+3 7iii7 ,co/ ( liv+ adju/m5t ,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag1 ! ,secret>y %all adju/ ! #f1jjj am\nt "u clause 7ii7 at ! same "t & 9 ! same mann] z "u section #dae7;d71 except t ! base p]iod %all be ! cal5d> qu>t] beg9n+ ,july #a1 #bjaf1 & any increase "u ?is p>agraph t is n a multiple ( #ejj %all be r\nd$ to ! next l[e/ multiple ( #ejj4 4 7c7 ,application ( limitation on accruals ,subp>agraph 7,b7 ( section #deg7;e77#aa71 z am5d$ by subsection 7b71 is am5d$ by add+ at ! end ! foll[+3 7iv7 ,special rule = application ( limitation on accruals = c]ta9 plans ,9 ! case ( a plan describ$ 9 subp>agraph 7,a77ii7 :i* is a def9$ b5efit plan 7z def9$ 9 section #dad7;j771 ! limitation "u clause 7ii7 %all apply to ! actu>ial pres5t value ( ! aggregate am\nt ( l5g? ( s]vice aw>ds accru+ ) respect to any ye> ( s]vice4 ,su* actu>ial pres5t value ) respect to any ye> %all be calculat$ us+ reasonable actu>ial assumptions & me?ods1 assum+ paym5t w be made "u ! mo/ valuable =m ( paym5t "u ! plan ) paym5t comm5c+ at ! lat] ( ! e>lie/ age at :i* unr$uc$ b5efits are payable "u ! plan or ! p>ticipant's age at ! "t ( ! calculation4 4 7d7 ,effective date ,! am5dm5ts made by ?is ,act %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acfad4 ,ext5d$ rollov] p]iod = plan loan (fset am\nts 7a7 ,9 g5]al ,p>agraph 7#c7 ( section #djb7;c7 is am5d$ by r$esignat+ subp>agraph 7,b7 z subp>agraph 7,c7 & by ins]t+ aft] subp>agraph 7,a7 ! foll[+ new subp>agraph3 7,b7 ,rollov] ( c]ta9 plan loan (fset am\nts 7i7 ,9 g5]al ,9 ! case ( an eligible rollov] di/ribution ( a qualifi$ plan loan (fset am\nt1 ! requirem5ts ( subp>agraph 7,a7 %all be treat$ z met if su* transf] occurs on or be=e ! 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 ( ! sev]ance f employm5t ( ! p>ticipant4 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 plan loan (fset am\nts :i* are treat$ z di/ribut$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,viii ,exempt ,organizations #acgja4 ,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 #difh4 ,excise tax bas$ on inve/m5t income ( private colleges & univ]sities4 #difh4 ,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;,a7f77#b77-- 7,a7 :i* _h at lea/ #ejj tuition-pay+ /ud5ts dur+ ! prec$+ taxable ye>1 7,b7 :i* is n describ$ 9 ! fir/ s5t5ce ( section #eaa7;a77#b77;,b7 7relat+ to ,/ate colleges & univ]sities71 & 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 ) respect to an educational in/itution %all be treat$ z assets & net inve/m5t income1 respectively1 ( ! educational in/itution1 except t-- 7,a7 no su* am\nt %all be tak5 into acc\nt ) respect to m ?an #a educational in/itution1 & 7,b7 unless su* organization is controll$ by su* in/itution or is describ$ 9 section #eji7;a77#c7 ) respect to su* in/itution = ! taxable ye>1 assets & net inve/m5t income :i* are n int5d$ or available = ! use or b5efit ( ! educational in/itution %all n be tak5 into acc\nt4 7#b7 ,relat$ organization ,= purposes ( ?is subsection1 ! t]m relat$ organization means1 ) respect to an educational in/itution1 any organization :i*-- 7,a7 controls1 or is controll$ by1 su* in/itution1 7,b7 is controll$ by #a or m p]sons :i* also 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 #acgjb4 ,"n & logo royalties treat$ z unrelat$ bus9ess taxable income 7a7 ,9 g5]al ,section #eac is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,"n & logo royalties ,any sale or lic5s+ by an organization ( any "n or logo ( ! organization 7includ+ any tradem>k or copyright relat+ to su* "n or logo7 %all be treat$ z an unrelat$ trade or bus9ess regul>ly c>ri$ on by su* organization4 4 7b7 ,calculation ( unrelat$ bus9ess taxable income ,subsection 7b7 ( section #eab is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#bj7 ,special rule = "n & logo royalties ,not)/&+ p>agraph 7#a71 7#b71 7#c71 or 7#e71 any income d]iv$ f any sale or lic5s+ describ$ 9 section #eac7k7 %all be includ$ z an item ( gross income d]iv$ f an unrelat$ trade or bus9ess4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acgjc4 ,unrelat$ bus9ess taxable income sep>ately comput$ = ea* trade or bus9ess activity 7a7 ,9 g5]al ,subsection 7a7 ( section #eab is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,special rule = organization ) m ?an #a unrelat$ trade or bus9ess ,9 ! case ( any organization ) m ?an #a unrelat$ trade or bus9ess-- 7,a7 unrelat$ bus9ess taxable income1 includ+ = purposes ( det]m9+ any net op]at+ loss d$uction1 %all be comput$ sep>ately ) respect to ea* su* trade or bus9ess & )\t reg>d to subsection 7b77#ab71 7,b7 ! unrelat$ bus9ess taxable income ( su* organization %all be ! sum ( ! unrelat$ bus9ess taxable income s comput$ ) respect to ea* su* trade or bus9ess1 less a specific d$uction "u subsection 7b77#ab71 & 7,c7 = purposes ( subp>agraph 7,b71 unrelat$ bus9ess taxable income ) respect to any su* trade or bus9ess %all n be less ?an z]o4 4 7b7 ,effective date 7#a7 ,9 g5]al ,except to ! ext5t provid$ 9 p>agraph 7#b71 ! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,c>ryov]s ( net op]at+ losses ,if any net op]at+ loss aris+ 9 a taxable ye> beg9n+ be=e ,janu>y #a1 #bjah1 is c>ri$ ov] to a taxable ye> beg9n+ on or aft] su* date-- 7,a7 subp>agraph 7,a7 ( section #eab7;a77#f7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is ,act1 %all n apply to su* net op]at+ loss1 & 7,b7 ! unrelat$ bus9ess taxable income ( ! organization1 aft] ! application ( subp>agraph 7,b7 ( su* section1 %all be r$uc$ by ! am\nt ( su* net op]at+ loss4 #acgjd4 ,repeal ( tax-exempt /atus = pr(essional sports leagues 7a7 ,9 g5]al ,p>agraph 7#f7 ( section #eja7;c7 is am5d$-- 7#a7 by /rik+ 1 bo>ds ( trade1 or pr(essional & all t foll[s ?r\gh play]s7 & ins]t+ 1 or bo>ds ( trade1 & 7#b7 by add+ at ! end ! foll[+3 ,?is p>agraph %all n apply to any pr(essional sports league 7:e!r or n adm9i/]+ a p5sion fund = play]s744 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acgje4 ,modification ( taxes on excess b5efit transactions 7a7 ,organization level tax ,subsection 7a7 ( section #dieh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,on ! organization ,9 any case 9 :i* a tax is impos$ by p>agraph 7#a71 !re is h]eby impos$ on ! organization a tax equal to #aj p]c5t ( ! excess b5efit1 unless ! p>ticipation ( ! organization 9 ! excess b5efit transaction is n willful & is due to reasonable cause4 4 7b7 ,m9imum /&>ds ( organization due dilig5ce ,subsection 7d7 ( section #dieh is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,m9imum /&>ds ( organization due dilig5ce 7,a7 ,9 g5]al ,subsection 7a77#c7 %all n apply to a transaction1 if-- 7i7 ! organization e/abli%es t ! m9imum /&>ds ( due dilig5ce describ$ 9 subp>agraph 7,b7 7 met ) respect to ! transaction1 or 7ii7 ! organization e/abli%es to ! satisfaction ( ! ,secret>y t o!r reasonable proc$ures 7 us$ to ensure t no excess b5efit 0 provid$4 7,b7 ,m9imum /&>ds ,an organization %all be treat$ z satisfy+ ! m9imum /&>ds ( due dilig5ce describ$ 9 ?is subp>agraph ) respect to any transaction1 if-- 7i7 ! transaction 0 approv$ 9 advance by an au?oriz$ body ( ! organization compos$ entirely ( individuals :o did n h a conflict ( int]e/ ) respect to ! transaction1 7ii7 ! au?oriz$ body obta9$ & reli$ ^u appropriate data z to comp>ability prior to approval ( ! transaction1 & 7iii7 ! au?oriz$ body adequately & concurr5tly docum5t$ ! basis = approv+ ! transaction4 7,c7 ,no presumption z to reasonabl5ess ,meet+ ! requirem5ts ( clause 7i7 or 7ii7 ( subp>agraph 7,a7 ) respect to a transaction %all n give rise to a presumption ( reasonabl5ess = purposes ( ! taxes impos$ by p>agraphs 7#a7 ( 7#b7 ( subsection 7a7 & %all n1 by itself1 support a conclusion t a manag] did n act kn[+ly = purposes ( subsection 7a77#b7 or t ! organization did n act wilfully or )\t reasonable cause = purposes ( subsection 7a77#c74 4 7c7 ,repeal ( exception = manag] reliance on pr(essional advice ,section #dieh is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,no safe h>bor = reliance on pr(essional advice ,an organization manag]'s reliance on a writt5 op9ion ( a pr(essional ) respect to elem5ts ( a transaction )9 ! pr(essional's exp]tise %all n1 by itself1 preclude ! manag] f be+ treat$ z p>ticipat+ 9 ! transaction kn[+ly4 4 7d7 ,a?letic coa*es & inve/m5t manag]s treat$ z disqualifi$ p]sons 7#a7 ,a?letic coa*es 7,a7 ,9 g5]al ,p>agraph 7#a7 ( section #dieh7;f7 is am5d$ by /rik+ & at ! end ( subp>agraph 7,e71 by /rik+ ! p]iod at ! end ( subp>agraph 7,f7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,g7 :i* involves an eligible educational in/itution 7z def9$ 9 section #be;,a7f77#b771 any p]son :o p]=ms s]vices z an a?letic coa* = ! organization4 4 7,b7 ,family memb]s ,subp>agraph 7,b7 ( section #dieh7;f77#a7 is am5d$ by ins]t+ or 7,g7 aft] subp>agraph 7,a74 7#b7 ,inve/m5t advisors 7,a7 ,9 g5]al ,subp>agraph 7,f7 ( section #dieh7;f77#a7 is am5d$-- 7i7 by /rik+ :i* involves a sponsor+ organization 7z def9$ 9 section #diff7;d77#a7711 & 7ii7 by /rik+ su* sponsor+ organization 7z s def9$7 & ins]t+ ! organization4 7,b7 ,inve/m5t advisor def9ition ,subp>agraph 7,b7 ( section #dieh7;f77#h7 is am5d$ to read z foll[s3 7,b7 ,inve/m5t advisor def9$ ,= purposes ( subp>agraph 7,a71 ! t]m inve/m5t advisor means-- 7i7 ) respect to any organization1 any p]son :o is comp5sat$ by su* organization & is prim>ily responsible = manag+ ! inve/m5t (1 or provid+ inve/m5t advice ) respect to1 assets ( su* organization1 & 7ii7 ) respect to any sponsor+ organization 7z def9$ 9 section #diff7;d77#a771 any p]son 7o!r ?an an employee ( su* organization7 comp5sat$ by su* organization = manag+ ! inve/m5t (1 or provid+ inve/m5t advice ) respect to1 assets ma9ta9$ 9 donor advis$ funds 7z def9$ 9 section #diff7;d77#b77 own$ by su* organization4 4 7e7 ,application to unions & trade associations ,p>agraph 7#a7 ( section #dieh7;e7 is am5d$ by ins]t+ 7#e71 7#f71 aft] 7#d714 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acgjf4 ,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* meets ! requirem5ts ( p>agraphs 7#b71 7#c71 & 7#d7 = ! taxable ye>4 7#b7 ,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$ by means o!r ?an by pur*ase4 7#c7 ,all pr(its to *>ity 7,a7 ,9 g5]al ,! requirem5ts ( ?is p>agraph are 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$s ( ! bus9ess ent]prise4 7#d7 ,indep5d5t op]ation ,! requirem5ts ( ?is p>agraph are met if1 at all times dur+ ! taxable ye>-- 7,a7 no sub/antial contributor 7z def9$ 9 section #dieh7;c77#c77;,c77 to ! private f\ndation or family memb] 7z det]m9$ "u section #dieh7;f77#d77 ( su* a contributor 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 p]sons :o are n-- 7i7 directors or (fic]s ( ! bus9ess ent]prise1 or 7ii7 family memb]s 7z s det]m9$7 ( a sub/antial contributor 7z s def9$7 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 to any family memb] ( su* a 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 #acgjg4 ,repeal ( d$uction = am\nts paid 9 ex*ange = college a?letic ev5t seat+ rights 7a7 ,9 g5]al ,section #agj7l77#a7 is am5d$ 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 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #acgjh4 ,repeal ( sub/antiation exception 9 case ( contributions report$ by donee 7a7 ,9 g5]al ,section #agj7;f77#h7 is am5d$ by /rik+ subp>agraph 7,d7 & by r$esignat+ subp>agraph 7,e7 z subp>agraph 7,d74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to contributions made 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 ,,ix ,o!r provisions ,a ,craft ,bev]age ,mod]nization & ,tax ,re=m #achja4 ,rule ( con/ruction ,no?+ 9 ?is subp>t1 ! am5dm5ts made by ?is subp>t1 or any regulation promulgat$ "u ?is subp>t or ! am5dm5ts made by ?is subp>t1 %all be con/ru$ to preempt1 sup]s$e1 or o!rwise limit or re/rict any ,/ate1 local1 or tribal law t prohibits or regulates ! production or sale ( di/ill$ spirits1 w9e1 or malt bev]ages4 #achjb4 ,production p]iod = be]1 w9e1 & di/ill$ spirits 7a7 ,9 g5]al ,section #bfc;,a7f7 is am5d$-- 7#a7 by r$esignat+ p>agraph 7#d7 z p>agraph 7#e71 & 7#b7 by ins]t+ aft] p>agraph 7#c7 ! foll[+ new p>agraph3 7#d7 ,exemption = ag+ process ( be]1 w9e1 & di/ill$ spirits 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! production p]iod %all n include ! ag+ p]iod =-- 7i7 be] 7z def9$ 9 section #ejeb7;a771 7ii7 w9e 7z describ$ 9 section #ejda7;a771 or 7iii7 di/ill$ spirits 7z def9$ 9 section #ejjb7;a77#h771 except su* spirits t are unfit = use = bev]age purposes4 7,b7 ,t]m9ation ,?is p>agraph %all n apply to int]e/ co/s paid or accru$ aft] ,decemb] #ca1 #bjai4 4 7b7 ,con=m+ am5dm5t ,p>agraph 7#e77;,b77ii7 ( section #bfc;,a7f71 z r$esignat$ by ?is section1 is am5d$ by ins]t+ except z provid$ 9 p>agraph 7#d71 be=e end+ on ! date4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to int]e/ co/s paid or accru$ 9 cal5d> ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #achjc4 ,r$uc$ rate ( excise tax on be] 7a7 ,9 g5]al ,p>agraph 7#a7 ( section #ejea7;a7 is am5d$ to read z foll[s3 7#a7 ,9 g5]al 7,a7 ,imposition ( tax ,a tax is h]eby impos$ on all be] brew$ or produc$1 & remov$ = consumption or sale1 )9 ! ,unit$ ,/ates1 or import$ into ! ,unit$ ,/ates4 ,except z provid$ 9 p>agraph 7#b71 ! rate ( su* tax %all be ! am\nt det]m9$ "u ?is p>agraph4 7,b7 ,rate ,except z provid$ 9 subp>agraph 7,b71 ! rate ( tax %all be #ah = p] b>rel4 7,c7 ,special rule ,9 ! case ( be] remov$ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj1 ! rate ( tax %all be-- 7i7 #af on ! fir/ #f1jjj1jjj b>rels ( be]-- 7,i7 brew$ by ! brew] & remov$ dur+ ! cal5d> ye> = consumption or sale1 or 7,,ii7 import$ by ! import] into ! ,unit$ ,/ates dur+ ! cal5d> ye>1 & 7ii7 #ah on any b>rels ( be] to :i* clause 7i7 does n apply4 7,d7 ,b>rel ,= purposes ( ?is section1 a b>rel %all conta9 n m ?an #ca gallons ( be]1 & any tax impos$ "u ?is section %all be appli$ at a l rate = any o!r quantity or = fractional p>ts ( a b>rel4 4 7b7 ,r$uc$ rate = c]ta9 dome/ic production ,subp>agraph 7,a7 ( section #ejea7;a77#b7 is am5d$-- 7#a7 9 ! head+1 by /rik+ #g a b>rel1 & 7#b7 by ins]t+ 7#c4ej 9 ! case ( be] remov$ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj7 aft] #g4 7c7 ,application ( r$uc$ tax rate = =eign manufactur]s & import]s ,subsection 7a7 ( section #ejea is am5d$-- 7#a7 9 subp>agraph 7,c77ii7 ( p>agraph 7#a71 z am5d$ by subsection 7a71 by ins]t+ b only if ! import] is an elect+ import] "u p>agraph 7#d7 & ! b>rels h be5 assign$ to ! import] pursuant to su* p>agraph aft] dur+ ! cal5d> ye>1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,r$uc$ tax rate = =eign manufactur]s & import]s 7,a7 ,9 g5]al ,9 ! case ( any b>rels ( be] :i* h be5 brew$ or produc$ outside ( ! ,unit$ ,/ates & import$ into ! ,unit$ ,/ates1 ! rate ( tax applicable "u clause 7i7 ( p>agraph 7#a77;,c7 7ref]r$ to 9 ?is p>agraph z ! r$uc$ tax rate7 may be assign$ by ! brew] 7provid$ t ! brew] makes an election describ$ 9 subp>agraph 7,b77ii77 to any elect+ import] ( su* b>rels pursuant to ! requirem5ts e/abli%$ by ! ,secret>y "u subp>agraph 7,b74 7,b7 ,assignm5t ,! ,secret>y %all1 ?r\gh su* rules1 regulations1 & proc$ures z are det]m9$ appropriate1 e/abli% proc$ures = assignm5t ( ! r$uc$ tax rate provid$ "u ?is p>agraph1 :i* %all include-- 7i7 a limitation to ensure t ! numb] ( b>rels ( be] = :i* ! r$uc$ tax rate has be5 assign$ by a brew]-- 7,i7 to any import] does n exce$ ! numb] ( b>rels ( be] brew$ or produc$ by su* brew] dur+ ! cal5d> ye> :i* 7 import$ into ! ,unit$ ,/ates by su* import]1 & 7,,ii7 to all import]s does n exce$ ! #f1jjj1jjj b>rels to :i* ! r$uc$ tax rate applies1 7ii7 proc$ures t all[ ! election ( a brew] to assign & an import] to receive ! r$uc$ tax rate provid$ "u ?is p>agraph1 7iii7 requirem5ts t ! brew] provide any in=mation z ! ,secret>y det]m9es necess>y & appropriate = purposes ( c>ry+ out ?is p>agraph1 & 7iv7 proc$ures t all[ = revocation ( eligibility ( ! brew] & ! import] = ! r$uc$ tax rate provid$ "u ?is p>agraph 9 ! case ( any errone\s or fraudul5t in=mation provid$ "u clause 7iii7 :i* ! ,secret>y deems to be mat]ial to qualify+ = su* r$uc$ rate4 7,c7 ,controll$ gr\p ,= purposes ( ?is section1 any import] mak+ an election describ$ 9 subp>agraph 7,b77ii7 %all be deem$ to be a memb] ( ! controll$ gr\p ( ! brew]1 z describ$ "u p>agraph 7#e74 4 7d7 ,controll$ gr\p & s+le taxpay] rules ,subsection 7a7 ( section #ejea1 z am5d$ by ?is section1 is am5d$-- 7#a7 9 p>agraph 7#b7-- 7,a7 by /rik+ subp>agraph 7,b71 & 7,b7 by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,b71 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,controll$ gr\p & s+le taxpay] rules 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 9 ! case ( a controll$ gr\p1 ! #f1jjj1jjj b>rel quantity specifi$ 9 p>agraph 7#a77;,c77i7 & ! #b1jjj1jjj b>rel quantity specifi$ 9 p>agraph 7#b77;,a7 %all be appli$ to ! controll$ gr\p1 & ! #f1jjj1jjj b>rel quantity specifi$ 9 p>agraph 7#a77;,c77i7 & ! #fj1jjj b>rel quantity specifi$ 9 p>agraph 7#b77;,a7 %all be apportion$ among ! brew]s :o are memb]s ( su* gr\p 9 su* mann] z ! ,secret>y or _! delegate %all by regulations prescribe4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m controll$ gr\p has ! mean+ assign$ to x by subsection 7a7 ( section #aefc1 except t = su* purposes ! phrase m ?an #ej p]c5t %all be sub/itut$ = ! phrase at lea/ #hj p]c5t 9 ea* place x appe>s 9 su* subsection4 ,"u regulations prescrib$ by ! ,secret>y1 pr9ciples simil> to ! pr9ciples ( ! prec$+ two s5t5ces %all be appli$ to a gr\p ( brew]s "u common control :]e "o or m ( ! brew]s is n a corporation4 7,b7 ,=eign manufactur]s & import]s ,= purposes ( p>agraph 7#d71 9 ! case ( a controll$ gr\p1 ! #f1jjj1jjj b>rel quantity specifi$ 9 p>agraph 7#a77;,c77i7 %all be appli$ to ! controll$ gr\p & apportion$ among ! memb]s ( su* gr\p 9 su* mann] z ! ,secret>y %all by regulations prescribe4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m controll$ gr\p has ! mean+ giv5 su* t]m "u subp>agraph 7,a74 ,"u regulations prescrib$ by ! ,secret>y1 pr9ciples simil> to ! pr9ciples ( ! prec$+ two s5t5ces %all be appli$ to a gr\p ( brew]s "u common control :]e "o or m ( ! brew]s is n a corporation4 7,c7 ,s+le taxpay] ,pursuant to rules issu$ by ! ,secret>y1 two or m entities 7:e!r or n "u common control7 t produce be] m>ket$ "u a simil> br&1 lic5se1 fran*ise1 or o!r arrangem5t %all be treat$ z a s+le taxpay] = purposes ( ! application ( ?is subsection4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to be] remov$ aft] ,decemb] #ca1 #bjag4 #achjd4 ,simplification ( rules reg>d+ records1 /atem5ts1 & returns 7a7 ,9 g5]al ,subsection 7a7 ( section #eeee is am5d$ by add+ at ! end ! foll[+3 ,= cal5d> qu>t]s beg9n+ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj1 ! ,secret>y %all p]mit a p]son to employ a unifi$ sy/em = any records1 /atem5ts1 & returns requir$ to be kept1 r5d]$1 or made "u ?is section = any be] produc$ 9 ! brew]y = :i* ! tax impos$ by section #ejea has be5 det]m9$1 includ+ any be] :i* has be5 remov$ = consumption on ! premises ( ! brew]y44 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to any cal5d> qu>t]s beg9n+ aft] ,decemb] #ca1 #bjag4 #achje4 ,transf] ( be] betwe5 bond$ facilities 7a7 ,9 g5]al ,section #edad is am5d$-- 7#a7 by /rik+ ,be] may be remov$ & ins]t+ 7a7 ,9 g5]al4--,be] may be remov$1 & 7#b7 by add+ at ! end ! foll[+3 7b7 ,transf] ( be] betwe5 bond$ facilities 7#a7 ,9 g5]al ,be] may be remov$ f "o brew]y to ano!r bond$ brew]y1 )\t paym5t ( tax1 & may be m+l$ ) be] at ! receiv+ brew]y1 subject to su* conditions1 includ+ paym5t ( ! tax1 & 9 su* conta9]s1 z ! ,secret>y by regulations %all prescribe1 :i* %all include-- 7,a7 any removal f "o brew]y to ano!r brew]y belong+ to ! same brew]1 7,b7 any removal f a brew]y own$ by "o corporation to a brew]y own$ by ano!r corporation :5-- 7i7 "o su* corporation owns ! controll+ int]e/ 9 ! o!r su* corporation1 or 7ii7 ! controll+ int]e/ 9 ea* su* corporation is own$ by ! same p]son or p]sons1 & 7,c7 any removal f "o brew]y to ano!r brew]y :5-- 7i7 ! proprietors ( transf]r+ & receiv+ premises are indep5d5t ( ea* o!r & nei!r has a propriet>y int]e/1 directly or indirectly1 9 ! bus9ess ( ! o!r1 & 7ii7 ! transf]or has dive/$ itself ( all int]e/ 9 ! be] s transf]r$ & ! transf]ee has accept$ responsibility = paym5t ( ! tax4 7#b7 ,transf] ( liability = tax ,= purposes ( p>agraph 7#a77;,c71 su* relief f liability %all be effective f ! "t ( removal f ! transf]or's bond$ premises1 or f ! "t ( dive/m5t ( int]e/1 :i*ev] is lat]4 7#c7 ,t]m9ation ,?is subsection %all n apply to any cal5d> qu>t] beg9n+ aft] ,decemb] #ca1 #bjai4 4 7b7 ,removal f brew]y by pipel9e ,section #edab is am5d$ by ins]t+ pursuant to section #edad or be=e by pipel9e4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to any cal5d> qu>t]s beg9n+ aft] ,decemb] #ca1 #bjag4 #achjf4 ,r$uc$ rate ( excise tax on c]ta9 w9e 7a7 ,9 g5]al ,section #ejda7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,special rule = #bjah & #bjai 7,a7 ,9 g5]al ,9 ! case ( w9e remov$ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj1 p>agraphs 7#a7 & 7#b7 %all n apply & !re %all be all[$ z a cr$it aga9/ any tax impos$ by ?is title 7o!r ?an *apt]s #b1 #ba1 & #bb7 an am\nt equal to ! sum (-- 7i7 #a p] w9e gallon on ! fir/ #cj1jjj w9e gallons ( w9e1 plus 7ii7 #ij c5ts p] w9e gallon on ! fir/ #ajj1jjj w9e gallons ( w9e to :i* clause 7i7 does n apply1 plus 7iii7 #ec4e c5ts p] w9e gallon on ! fir/ #fbj1jjj w9e gallons ( w9e to :i* clauses 7i7 & 7ii7 d n apply1 :i* are produc$ by ! produc] & remov$ dur+ ! cal5d> ye> = consumption or sale1 or :i* are import$ by ! import] into ! ,unit$ ,/ates dur+ ! cal5d> ye>4 7,b7 ,adju/m5t ( cr$it = h>d cid] ,9 ! case ( w9e describ$ 9 subsection 7b77#f71 subp>agraph 7,a7 ( ?is p>agraph %all be appli$-- 7i7 9 clause 7i7 ( su* subp>agraph1 by sub/itut+ #f4b c5ts = #a1 7ii7 9 clause 7ii7 ( su* subp>agraph1 by sub/itut+ #e4f c5ts = #ij c5ts1 & 7iii7 9 clause 7iii7 ( su* subp>agraph1 by sub/itut+ #c4c c5ts = #ec4e c5ts4 1 7b7 ,controll$ gr\p & s+le taxpay] rules ,p>agraph 7#d7 ( section #ejda7;c7 is am5d$ by /rik+ section #ejea7;a77#b77;,b7 & ins]t+ section #ejea7;a77#e74 7c7 ,all[ance ( cr$it = =eign manufactur]s & import]s ,subsection 7c7 ( section #ejda1 z am5d$ by subsection 7a71 is am5d$-- 7#a7 9 subp>agraph 7,a7 ( p>agraph 7#h71 by ins]t+ b only if ! import] is an elect+ import] "u p>agraph 7#i7 & ! w9e gallons ( w9e h be5 assign$ to ! import] pursuant to su* p>agraph aft] into ! ,unit$ ,/ates dur+ ! cal5d> ye>1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#i7 ,all[ance ( cr$it = =eign manufactur]s & import]s 7,a7 ,9 g5]al ,9 ! case ( any w9e gallons ( w9e :i* h be5 produc$ outside ( ! ,unit$ ,/ates & import$ into ! ,unit$ ,/ates1 ! cr$it all[able "u p>agraph 7#h7 7ref]r$ to 9 ?is p>agraph z ! tax cr$it7 may be assign$ by ! p]son :o produc$ su* w9e 7ref]r$ to 9 ?is p>agraph z ! =eign produc]71 provid$ t su* p]son makes an election describ$ 9 subp>agraph 7,b77ii71 to any elect+ import] ( su* w9e gallons pursuant to ! requirem5ts e/abli%$ by ! ,secret>y "u subp>agraph 7,b74 7,b7 ,assignm5t ,! ,secret>y %all1 ?r\gh su* rules1 regulations1 & proc$ures z are det]m9$ appropriate1 e/abli% proc$ures = assignm5t ( ! tax cr$it provid$ "u ?is p>agraph1 :i* %all include-- 7i7 a limitation to ensure t ! numb] ( w9e gallons ( w9e = :i* ! tax cr$it has be5 assign$ by a =eign produc]-- 7,i7 to any import] does n exce$ ! numb] ( w9e gallons ( w9e produc$ by su* =eign produc] dur+ ! cal5d> ye> :i* 7 import$ into ! ,unit$ ,/ates by su* import]1 & 7,,ii7 to all import]s does n exce$ ! #gej1jjj w9e gallons ( w9e to :i* ! tax cr$it applies1 7ii7 proc$ures t all[ ! election ( a =eign produc] to assign & an import] to receive ! tax cr$it provid$ "u ?is p>agraph1 7iii7 requirem5ts t ! =eign produc] provide any in=mation z ! ,secret>y det]m9es necess>y & appropriate = purposes ( c>ry+ out ?is p>agraph1 & 7iv7 proc$ures t all[ = revocation ( eligibility ( ! =eign produc] & ! import] = ! tax cr$it provid$ "u ?is p>agraph 9 ! case ( any errone\s or fraudul5t in=mation provid$ "u clause 7iii7 :i* ! ,secret>y deems to be mat]ial to qualify+ = su* cr$it4 7,c7 ,controll$ gr\p ,= purposes ( ?is section1 any import] mak+ an election describ$ 9 subp>agraph 7,b77ii7 %all be deem$ to be a memb] ( ! controll$ gr\p ( ! =eign produc]1 z describ$ "u p>agraph 7#d74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to w9e remov$ aft] ,decemb] #ca1 #bjag4 #achjg4 ,adju/m5t ( alcohol cont5t level = application ( excise tax rates 7a7 ,9 g5]al ,p>agraphs 7#a7 & 7#b7 ( section #ejda7;b7 are ea* am5d$ by ins]t+ 7#af p]c5t 9 ! case ( w9e remov$ aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj aft] #ad p]c5t4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to w9e remov$ aft] ,decemb] #ca1 #bjag4 #achjh4 ,def9ition ( mead & l[ alcohol by volume w9e 7a7 ,9 g5]al ,section #ejda is am5d$-- 7#a7 9 subsection 7a71 by /rik+ ,/ill w9es & ins]t+ ,subject to subsection 7h71 /ill w9es1 & 7#b7 by add+ at ! end ! foll[+ new subsection3 7h7 ,mead & l[ alcohol by volume w9e 7#a7 ,9 g5]al ,= purposes ( subsections 7a7 & 7b77#a71 mead & l[ alcohol by volume w9e %all be deem$ to be /ill w9es conta9+ n m ?an #af p]c5t ( alcohol by volume4 7#b7 ,def9itions 7,a7 ,mead ,= purposes ( ?is section1 ! t]m mead means a w9e-- 7i7 conta9+ n m ?an #j4fd gram ( c>bon dioxide p] hundr$ millilit]s ( w9e1 except t ! ,secret>y %all by regulations prescribe su* tol]ances to ?is limitation z may be reasonably necess>y 9 good comm]cial practice1 7ii7 :i* is d]iv$ solely f honey & wat]1 7iii7 :i* conta9s no fruit product or fruit flavor+1 & 7iv7 :i* conta9s less ?an #h4e p]c5t alcohol by volume4 7,b7 ,l[ alcohol by volume w9e ,= purposes ( ?is section1 ! t]m l[ alcohol by volume w9e means a w9e-- 7i7 conta9+ n m ?an #j4fd gram ( c>bon dioxide p] hundr$ millilit]s ( w9e1 except t ! ,secret>y %all by regulations prescribe su* tol]ances to ?is limitation z may be reasonably necess>y 9 good comm]cial practice1 7ii7 :i* is d]iv$-- 7,i7 prim>ily f grapes1 or 7,,ii7 f grape juice conc5trate & wat]1 7iii7 :i* conta9s no fruit product or fruit flavor+ o!r ?an grape1 & 7iv7 :i* conta9s less ?an #h4e p]c5t alcohol by volume4 7#c7 ,t]m9ation ,?is subsection %all n apply to w9e remov$ aft] ,decemb] #ca1 #bjai4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to w9e remov$ aft] ,decemb] #ca1 #bjag4 #achji4 ,r$uc$ rate ( excise tax on c]ta9 di/ill$ spirits 7a7 ,9 g5]al ,section #ejja is am5d$ by r$esignat+ subsection 7c7 z subsection 7d7 & by ins]t+ aft] subsection 7b7 ! foll[+ new subsection3 7c7 ,r$uc$ rate = #bjah & #bjai 7#a7 ,9 g5]al ,9 ! case ( a di/ill$ spirits op]ation1 ! o!rwise applicable tax rate "u subsection 7a77#a7 %all be-- 7,a7 #b4gj p] pro( gallon on ! fir/ #ajj1jjj pro( gallons ( di/ill$ spirits1 & 7,b7 #ac4cd p] pro( gallon on ! fir/ #bb1acj1jjj ( pro( gallons ( di/ill$ spirits to :i* subp>agraph 7,a7 does n apply1 :i* h be5 di/ill$ or process$ by su* op]ation & remov$ dur+ ! cal5d> ye> = consumption or sale1 or :i* h be5 import$ by ! import] into ! ,unit$ ,/ates dur+ ! cal5d> ye>4 7#b7 ,controll$ gr\ps 7,a7 ,9 g5]al ,9 ! case ( a controll$ gr\p1 ! pro( gallon quantities specifi$ "u subp>agraphs 7,a7 & 7,b7 ( p>agraph 7#a7 %all be appli$ to su* gr\p & apportion$ among ! memb]s ( su* gr\p 9 su* mann] z ! ,secret>y or _! delegate %all by regulations prescribe4 7,b7 ,def9ition ,= purposes ( subp>agraph 7,a71 ! t]m controll$ gr\p %all h ! mean+ giv5 su* t]m by subsection 7a7 ( section #aefc1 except t m ?an #ej p]c5t %all be sub/itut$ = at lea/ #hj p]c5t ea* place x appe>s 9 su* subsection4 7,c7 ,rules = non-corporations ,"u regulations prescrib$ by ! ,secret>y1 pr9ciples simil> to ! pr9ciples ( subp>agraphs 7,a7 & 7,b7 %all be appli$ to a gr\p "u common control :]e "o or m ( ! p]sons is n a corporation4 7,d7 ,s+le taxpay] ,pursuant to rules issu$ by ! ,secret>y1 two or m entities 7:e!r or n "u common control7 t produce di/ill$ spirits m>ket$ "u a simil> br&1 lic5se1 fran*ise1 or o!r arrangem5t %all be treat$ z a s+le taxpay] = purposes ( ! application ( ?is subsection4 7#c7 ,t]m9ation ,?is subsection %all n apply to di/ill$ spirits remov$ aft] ,decemb] #ca1 #bjai4 4 7b7 ,con=m+ am5dm5t ,section #gfeb7;f77#b7 is am5d$ by /rik+ section #ejja7;a77#a7 & ins]t+ subsection 7a77#a7 ( section #ejja1 det]m9$ z if subsection 7c77#a7 ( su* section did n apply4 7c7 ,application ( r$uc$ tax rate = =eign manufactur]s & import]s ,subsection 7c7 ( section #ejja1 z add$ by subsection 7a71 is am5d$-- 7#a7 9 p>agraph 7#a71 by ins]t+ b only if ! import] is an elect+ import] "u p>agraph 7#c7 & ! pro( gallons ( di/ill$ spirits h be5 assign$ to ! import] pursuant to su* p>agraph aft] into ! ,unit$ ,/ates dur+ ! cal5d> ye>1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,r$uc$ tax rate = =eign manufactur]s & import]s 7,a7 ,9 g5]al ,9 ! case ( any pro( gallons ( di/ill$ spirits :i* h be5 produc$ outside ( ! ,unit$ ,/ates & import$ into ! ,unit$ ,/ates1 ! rate ( tax applicable "u p>agraph 7#a7 7ref]r$ to 9 ?is p>agraph z ! r$uc$ tax rate7 may be assign$ by ! di/ill$ sprits op]ation 7provid$ t su* op]ation makes an election describ$ 9 subp>agraph 7,b77ii77 to any elect+ import] ( su* pro( gallons pursuant to ! requirem5ts e/abli%$ by ! ,secret>y "u subp>agraph 7,b74 7,b7 ,assignm5t ,! ,secret>y %all1 ?r\gh su* rules1 regulations1 & proc$ures z are det]m9$ appropriate1 e/abli% proc$ures = assignm5t ( ! r$uc$ tax rate provid$ "u ?is p>agraph1 :i* %all include-- 7i7 a limitation to ensure t ! numb] ( pro( gallons ( di/ill$ spirits = :i* ! r$uc$ tax rate has be5 assign$ by a di/ill$ spirits op]ation-- 7,i7 to any import] does n exce$ ! numb] ( pro( gallons produc$ by su* op]ation dur+ ! cal5d> ye> :i* 7 import$ into ! ,unit$ ,/ates by su* import]1 & 7,,ii7 to all import]s does n exce$ ! #bb1bcj1jjj pro( gallons ( di/ill$ spirits to :i* ! r$uc$ tax rate applies1 7ii7 proc$ures t all[ ! election ( a di/ill$ spirits op]ation to assign & an import] to receive ! r$uc$ tax rate provid$ "u ?is p>agraph1 7iii7 requirem5ts t ! di/ill$ spirits op]ation provide any in=mation z ! ,secret>y det]m9es necess>y & appropriate = purposes ( c>ry+ out ?is p>agraph1 & 7iv7 proc$ures t all[ = revocation ( eligibility ( ! di/ill$ spirits op]ation & ! import] = ! r$uc$ tax rate provid$ "u ?is p>agraph 9 ! case ( any errone\s or fraudul5t in=mation provid$ "u clause 7iii7 :i* ! ,secret>y deems to be mat]ial to qualify+ = su* r$uc$ rate4 7,c7 ,controll$ gr\p 7i7 ,9 g5]al ,= purposes ( ?is section1 any import] mak+ an election describ$ 9 subp>agraph 7,b77ii7 %all be deem$ to be a memb] ( ! controll$ gr\p ( ! di/ill$ spirits op]ation1 z describ$ "u p>agraph 7#b74 7ii7 ,apportionm5t ,= purposes ( ?is p>agraph1 9 ! case ( a controll$ gr\p1 rules simil> to section #ejea7;a77#e77;,b7 %all apply4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ill$ spirits remov$ aft] ,decemb] #ca1 #bjag4 #achaj4 ,bulk di/ill$ spirits 7a7 ,9 g5]al ,section #ebab is am5d$ by add+ at ! end ! foll[+ s5t5ce3 ,9 ! case ( di/ill$ spirits transf]r$ 9 bond aft] ,decemb] #ca1 #bjag1 & be=e ,janu>y #a1 #bjbj1 ?is section %all be appli$ )\t reg>d to :e!r di/ill$ spirits are bulk di/ill$ spirits44 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply di/ill$ spirits transf]r$ 9 bond aft] ,decemb] #ca1 #bjag4 ,b ,miscellane\s provisions #achba4 ,modification ( tax treatm5t ( ,alaska ,native ,corporations & settlem5t tru/s 7a7 ,exclusion = ,,ancsa paym5ts assign$ to ,alaska ,native ,settlem5t ,tru/s 7#a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e section #adj ! foll[+ new section3 #aci;,g4 ,assignm5ts to ,alaska ,native ,settlem5t ,tru/s 7a7 ,9 g5]al ,9 ! case ( a ,native ,corporation1 gross income %all n include ! value ( any paym5ts t w\ld o!rwise be made1 or treat$ z be+ made1 to su* ,native ,corporation pursuant to1 or z requir$ by1 any provision ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afja et seq471 includ+ any paym5t t w\ld o!rwise be made to a ,village ,corporation pursuant to section #g7;j7 ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afjf7;j771 provid$ t any su* paym5ts-- 7#a7 are assign$ 9 writ+ to a ,settlem5t ,tru/1 & 7#b7 7 n receiv$ by su* ,native ,corporation prior to ! assignm5t describ$ 9 p>agraph 7#a74 7b7 ,inclusion 9 gross income ,9 ! case ( a ,settlem5t ,tru/ :i* has be5 assign$ paym5ts describ$ 9 subsection 7a71 gross income %all include su* paym5ts :5 receiv$ by su* ,settlem5t ,tru/ pursuant to ! assignm5t & %all h ! same "* z if su* paym5ts 7 receiv$ by ! ,native ,corporation4 7c7 ,am\nt & scope ( assignm5t ,! am\nt & scope ( any assignm5t "u subsection 7a7 %all be describ$ ) reasonable p>ticul>ity & may ei!r be 9 a p]c5tage ( "o or m su* paym5ts or 9 a fix$ doll> am\nt4 7d7 ,duration ( assignm5t2 revocability ,any assignm5t "u subsection 7a7 %all specify-- 7#a7 a duration ei!r 9 p]petuity or = a p]iod ( "t1 & 7#b7 :e!r su* assignm5t is revocable4 7e7 ,prohibition on d$uction ,not)/&+ section #bdg1 no d$uction %all be all[$ to a ,native ,corporation = purposes ( any am\nts describ$ 9 subsection 7a74 7f7 ,def9itions ,= purposes ( ?is section1 ! t]ms ,native ,corporation & ,settlem5t ,tru/ h ! same mean+ giv5 su* t]ms "u section #fdf7;h74 4 7#b7 ,con=m+ am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e ! item relat+ to section #adj ! foll[+ new item3 ,sec4 #aci;,g4 ,assignm5ts to ,alaska ,native ,settlem5t ,tru/s4 4 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 7b7 ,d$uction ( contributions to ,alaska ,native ,settlem5t ,tru/s 7#a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e section #bdh ! foll[+ new section3 #bdg4 ,contributions to ,alaska ,native ,settlem5t ,tru/s 7a7 ,9 g5]al ,9 ! case ( a ,native ,corporation1 !re %all be all[$ a d$uction = any contributions made by su* ,native ,corporation to a ,settlem5t ,tru/ 7reg>dless ( :e!r an election "u section #fdf is 9 effect = su* ,settlem5t ,tru/7 = :i* ! ,native ,corporation has made an annual election "u subsection 7e74 7b7 ,am\nt ( d$uction ,! am\nt ( ! d$uction "u subsection 7a7 %all be equal to-- 7#a7 9 ! case ( a ca% contribution 7reg>dless ( ! me?od ( paym5t1 includ+ curr5cy1 co9s1 money ord]1 or *eck71 ! am\nt ( su* contribution1 or 7#b7 9 ! case ( a contribution n describ$ 9 p>agraph 7#a71 ! less] (-- 7,a7 ! ,native ,corporation's adju/$ basis 9 ! prop]ty contribut$1 or 7,b7 ! fair m>ket value ( ! prop]ty contribut$4 7c7 ,limitation & c>ryov] 7#a7 ,9 g5]al ,subject to p>agraph 7#b71 ! d$uction all[$ "u subsection 7a7 = any taxable ye> %all n exce$ ! taxable income 7z det]m9$ )\t reg>d to su* d$uction7 ( ! ,native ,corporation = ! taxable ye> 9 :i* ! contribution 0 made4 7#b7 ,c>ryov] ,if ! aggregate am\nt ( contributions describ$ 9 subsection 7a7 = any taxable ye> exce$s ! limitation "u p>agraph 7#a71 su* excess %all be treat$ z a contribution describ$ 9 subsection 7a7 9 ea* ( ! #ae succe$+ ye>s 9 ord] ( "t4 7d7 ,def9itions ,= purposes ( ?is section1 ! t]ms ,native ,corporation & ,settlem5t ,tru/ h ! same mean+ giv5 su* t]ms "u section #fdf7;h74 7e7 ,mann] ( mak+ election 7#a7 ,9 g5]al ,= ea* taxable ye>1 a ,native ,corporation may elect to h ?is section apply = su* taxable ye> on ! income tax return or an am5dm5t or supplem5t to ! return ( ! ,native ,corporation1 ) su* election to h effect solely = su* taxable ye>4 7#b7 ,revocation ,any election made by a ,native ,corporation pursuant to ?is subsection may be revok$ pursuant to an am5dm5t or supplem5t to ! income tax return :i* has be5 timely fil$ by su* ,native ,corporation4 7f7 ,additional rules 7#a7 ,e>n+s & pr(its ,not)/&+ section #fdf7;d77#b71 9 ! case ( a ,native ,corporation :i* claims a d$uction "u ?is section = any taxable ye>1 ! e>n+s & pr(its ( su* ,native ,corporation = su* taxable ye> %all be r$uc$ by ! am\nt ( su* d$uction4 7#b7 ,ga9 or loss ,no ga9 or loss %all be recogniz$ by ! ,native ,corporation ) respect to a contribution ( prop]ty = :i* a d$uction is all[$ "u ?is section4 7#c7 ,income ,subject to subsection 7g71 a ,settlem5t ,tru/ %all include 9 income ! am\nt ( any d$uction all[$ "u ?is section 9 ! taxable ye> 9 :i* ! ,settlem5t ,tru/ actually receives su* contribution4 7#d7 ,p]iod ,! hold+ p]iod "u section #abbc ( ! ,settlem5t ,tru/ %all include ! p]iod ! prop]ty 0 held by ! ,native ,corporation4 7#e7 ,basis ,! basis t a ,settlem5t ,tru/ has = :i* a d$uction is all[$ "u ?is section %all be equal to ! less] (-- 7,a7 ! adju/$ basis ( ! ,native ,corporation 9 su* prop]ty imm$iately be=e su* contribution1 or 7,b7 ! fair m>ket value ( ! prop]ty imm$iately be=e su* contribution4 7#f7 ,prohibition ,no d$uction %all be all[$ "u ?is section ) respect to any contributions made to a ,settlem5t ,tru/ :i* are 9 violation ( subsection 7a77#b7 or 7c77#b7 ( section #ci ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afbi;e74 7g7 ,election by ,settlem5t ,tru/ ,to ,def] ,income ,recognition 7#a7 ,9 g5]al ,9 ! case ( a contribution :i* consi/s ( prop]ty o!r ?an ca%1 a ,settlem5t ,tru/ may elect to def] recognition ( any income relat$ to su* prop]ty until ! sale or ex*ange ( su* prop]ty1 9 :ole or 9 "p1 by ! ,settlem5t ,tru/4 7#b7 ,treatm5t ,9 ! case ( prop]ty describ$ 9 p>agraph 7#a71 any income or ga9 realiz$ on ! sale or ex*ange ( su* prop]ty %all be treat$ z-- 7,a7 = su* am\nt ( ! income or ga9 z is equal to or less ?an ! am\nt ( income :i* w\ld be includ$ 9 income at ! "t ( contribution "u subsection 7f77#c7 b = ! taxpay]'s election "u ?is subsection1 ord9>y income1 & 7,b7 = any am\nts ( ! income or ga9 :i* are 9 excess ( ! am\nt ( income :i* w\ld be includ$ 9 income at ! "t ( contribution "u subsection 7f77#c7 b = ! taxpay]'s election "u ?is subsection1 hav+ ! same "* z if ?is subsection did n apply4 7#c7 ,election 7,a7 ,9 g5]al ,= ea* taxable ye>1 a ,settlem5t ,tru/ may elect to apply ?is subsection = any prop]ty describ$ 9 p>agraph 7#a7 :i* 0 contribut$ dur+ su* ye>4 ,any prop]ty to :i* ! election applies %all be id5tifi$ & describ$ ) reasonable p>ticul>ity on ! income tax return or an am5dm5t or supplem5t to ! return ( ! ,settlem5t ,tru/1 ) su* election to h effect solely = su* taxable ye>4 7,b7 ,revocation ,any election made by a ,settlem5t ,tru/ pursuant to ?is subsection may be revok$ pursuant to an am5d$ income tax return :i* has be5 timely fil$ by su* ,settlem5t ,tru/4 7,c7 ,c]ta9 dispositions 7i7 ,9 g5]al ,9 ! case ( any prop]ty = :i* an election is 9 effect "u ?is subsection & :i* is dispos$ ( )9 ! fir/ taxable ye> subsequ5t to ! taxable ye> 9 :i* su* prop]ty 0 contribut$ to ! ,settlem5t ,tru/-- 7,i7 ?is section %all be appli$ z if ! election "u ?is subsection _h n be5 made1 7,,ii7 any income or ga9 :i* w\ld h be5 includ$ 9 ! ye> ( contribution "u subsection 7f77#c7 b = ! taxpay]'s election "u ?is subsection %all be includ$ 9 income = ! taxable ye> ( su* contribution1 & 7,,iii7 ! ,settlem5t ,tru/ %all pay any increase 9 tax result+ f su* inclusion1 includ+ any applicable int]e/1 & increas$ by #aj p]c5t ( ! am\nt ( su* increase ) int]e/4 7ii7 ,assessm5t ,not)/&+ section #feja7;a71 any am\nt describ$ 9 subclause 7,,iii7 ( clause 7i7 may be assess$1 or a proce$+ 9 c\rt ) respect to su* am\nt may be initiat$ )\t assessm5t1 )9 #d ye>s aft] ! date on :i* ! return mak+ ! election "u ?is subsection = su* prop]ty 0 fil$4 4 7#b7 ,con=m+ am5dm5t ,! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ be=e ! item relat+ to section #bdh ! foll[+ new item3 ,sec4 #bdg4 ,contributions to ,alaska ,native ,settlem5t ,tru/s4 4 7#c7 ,p]missive ,am5dm5ts to ,tru/ ,agreem5ts ,e/abli%+ ,settlem5t ,tru/s 7,a7 ,9 g5]al ,not)/&+ any provision ( law1 includ+ any provision ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afja et seq471 ,alaska ,/ate law1 or ! t]ms ( any tru/ agreem5t ( a ,settlem5t ,tru/ 7z def9$ "u section #c7t7 ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afjb7t7771 ! t]ms ( any tru/ agreem5t ( a ,settlem5t ,tru/ may1 )9 ! #a-ye> p]iod foll[+ ! date ( ! enactm5t ( ?is ,act1 be am5d$ z necess>y to all[ su* ,tru/ to make an election describ$ 9 subsection 7g7 ( section #bdg ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by p>agraph 7#a774 7,b7 ,am5dm5t ,an am5dm5t describ$ 9 subp>agraph 7,a7 %all be enact$ pursuant to "o or m agreem5ts betwe5 ! ,native ,corporation t e/abli%$ ! ,settlem5t ,tru/ & ! tru/ees ( su* ,tru/ & %all n require any vote by ! b5efici>ies ( su* ,tru/ or ! %>ehold]s ( su* ,native ,corporation4 7,c7 ,regi/ration /atem5t ,any ,settlem5t ,tru/ :i* 0 regi/]$ 9 accordance ) ,alaska ,/ate law prior to ! date ( ! enactm5t ( an am5dm5t describ$ 9 subp>agraph 7,a7 %all n be requir$ to file a new or am5d$ regi/ration /atem5t to reflect su* am5dm5t4 7#d7 ,effective date 7,a7 ,9 g5]al ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s = :i* ! p]iod ( limitation on refund or cr$it "u section #feaa ( ! ,int]nal ,rev5ue ,code ( #aihf has n expir$4 7,b7 ,"o-ye> waiv] ( /atute ( limitations ,if ! p]iod ( limitation on a cr$it or refund result+ f ! am5dm5ts made by p>agraph 7#a7 expires be=e ! end ( ! #a-ye> p]iod beg9n+ on ! date ( ! enactm5t ( ?is ,act1 refund or cr$it ( su* ov]paym5t 7to ! ext5t attributable to su* am5dm5ts7 may1 nev]!less1 be made or all[$ if claim !re= is fil$ be=e ! close ( su* #a-ye> p]iod4 7c7 ,in=mation report+ = d$uctible contributions to ,alaska ,native ,settlem5t ,tru/s 7#a7 ,9 g5]al ,section #fjci;,h is am5d$-- 7,a7 9 ! head+1 by /rik+ sponsor+1 & 7,b7 by add+ at ! end ! foll[+ new subsection3 7e7 ,d$uctible contributions by ,native ,corporations to ,alaska ,native ,settlem5t ,tru/s 7#a7 ,9 g5]al ,any ,native ,corporation 7z def9$ 9 subsection 7m7 ( section #c ( ! ,alaska ,native ,claims ,settlem5t ,act 7#dc ,u4,s4,c4 #afjb7m777 :i* has made a contribution to a ,settlem5t ,tru/ 7z def9$ 9 subsection 7t7 ( su* section7 to :i* an election "u subsection 7e7 ( section #bdg applies %all provide su* ,settlem5t ,tru/ ) a /atem5t reg>d+ su* election n lat] ?an ,janu>y #ca ( ! cal5d> ye> subsequ5t to ! cal5d> ye> 9 :i* ! contribution 0 made4 7#b7 ,cont5t ( ,/atem5t ,! /atem5t describ$ 9 p>agraph 7#a7 %all include-- 7,a7 ! total am\nt ( contributions to :i* ! election "u subsection 7e7 ( section #bdg applies1 7,b7 = ea* contribution1 :e!r su* contribution 0 9 ca%1 7,c7 = ea* contribution :i* consi/s ( prop]ty o!r ?an ca%1 ! date t su* prop]ty 0 acquir$ by ! ,native ,corporation & ! adju/$ basis ( su* prop]ty on ! date su* prop]ty 0 contribut$ to ! ,settlem5t ,tru/1 7,d7 ! date on :i* ea* contribution 0 made to ! ,settlem5t ,tru/1 & 7,e7 su* in=mation z ! ,secret>y det]m9es to be necess>y or appropriate = ! id5tification ( ea* contribution & ! accurate inclusion ( income relat+ to su* contributions by ! ,settlem5t ,tru/4 4 7#b7 ,con=m+ am5dm5t ,! item relat+ to section #fjci;,h 9 ! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa is am5d$ to read z foll[s3 ,sec4 #fjci;,h4 ,in=mation ,) ,respect to ,alaska ,native ,settlem5t ,tru/s & ,native ,corporations4 4 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjaf4 7d7 ,/atutory con/ruction ,?is section is rem$ial ,indian legislation enact$ "u ! pl5>y au?ority ( ! ,congress "u ! ,con/itution ( ! ,unit$ ,/ates to regulate ,indian affairs1 & any ambiguities 9 section #aci;,f or #bdg ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is ,act1 %all be resolv$ 9 favor ( ,native ,corporations attempt+ to exclude income or claim a d$uction !reund]4 #achbb4 ,am\nts paid = aircraft managem5t s]vices 7a7 ,9 g5]al ,subsection 7e7 ( section #dbfa is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,am\nts paid = aircraft managem5t s]vices 7,a7 ,9 g5]al ,no tax %all be impos$ by ?is section or section #dbga on any am\nts paid by an aircraft own] = aircraft managem5t s]vices relat$ to-- 7i7 ma9t5ance & support ( ! aircraft own]'s aircraft1 or 7ii7 flights on ! aircraft own]'s aircraft4 7,b7 ,aircraft managem5t s]vices ,= purposes ( subp>agraph 7,a71 ! t]m aircraft managem5t s]vices includes-- 7i7 assi/+ an aircraft own] ) adm9i/rative & support s]vices1 su* z s*$ul+1 flight plann+1 & wea!r =eca/+1 7ii7 obta9+ insurance1 7iii7 ma9t5ance1 /orage & fuel+ ( aircraft1 7iv7 hir+1 tra9+1 & provision ( pilots & crew1 7v7 e/abli%+ & comply+ ) safety /&>ds1 & 7vi7 su* o!r s]vices z are necess>y to support flights op]at$ by an aircraft own]4 7,c7 ,lessee treat$ z aircraft own] 7i7 ,9 g5]al ,= purposes ( ?is p>agraph1 ! t]m aircraft own] includes a p]son :o leases ! aircraft o!r ?an "u a disqualifi$ lease4 7ii7 ,disqualifi$ lease ,= purposes ( clause 7i71 ! t]m disqualifi$ lease means a lease f a p]son provid+ aircraft managem5t s]vices ) respect to su* aircraft 7or a relat$ p]son 7)9 ! mean+ ( section #dfe7;b77#c77;,c77 to ! p]son provid+ su* s]vices71 if su* lease is = a t]m ( #ca days or less4 7,d7 ,pro rata allocation ,9 ! case ( am\nts paid to any p]son :i* 7b = ?is subsection7 are subject to ! tax impos$ by subsection 7a71 a portion ( :i* consi/s ( am\nts describ$ 9 subp>agraph 7,a71 ?is p>agraph %all apply on a pro rata basis only to ! portion :i* consi/s ( am\nts describ$ 9 su* subp>agraph4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to am\nts paid aft] ! date ( ! enactm5t ( ?is ,act4 #achbc4 ,opportunity zones 7a7 ,9 g5]al ,*apt] #a is am5d$ by add+ at ! end ! foll[+3 ,z ,opportunity ,zones ,sec4 #adjj,z-#a4 ,designation4 ,sec4 #adjj,z-#b4 ,special rules = capital ga9s inve/$ 9 opportunity zones4 #adjj,z-#a4 ,designation 7a7 ,qualifi$ opportunity zone def9$ ,= ! purposes ( ?is sub*apt]1 ! t]m qualifi$ opportunity zone means a population c5sus tract t is a l[-income community t is designat$ z a qualifi$ opportunity zone4 7b7 ,designation 7#a7 ,gov]nor 7,a7 ,9 g5]al ,= purposes ( subsection 7a71 a population c5sus tract t is a l[-income community is designat$ z a qualifi$ opportunity zone if-- 7i7 n lat] ?an ! end ( ! det]m9ation p]iod1 ! gov]nor ( ! ,/ate 9 :i* ! tract is locat$-- 7,i7 nom9ates ! tract = designation z a qualifi$ opportunity zone1 & 7,,ii7 notifies ! ,secret>y 9 writ+ ( su* nom9ation1 & 7ii7 ! ,secret>y c]tifies su* nom9ation & designates su* tract z a qualifi$ opportunity zone be=e ! end ( ! consid]ation p]iod4 7,b7 ,ext5sion ( p]iods ,a gov]nor may reque/ t ! ,secret>y ext5d ei!r ! det]m9ation or consid]ation p]iod1 or bo? 7det]m9$ )\t reg>d to ?is subp>agraph71 = an additional #cj days4 7,c7 ,deem$ designation if ,secret>y fails to act ,unless ! tracts are ineligible = designation1 if ! ,secret>y decl9es 9 writ+ to make su* c]tification & designation or fails to act be=e ! end ( ! consid]ation p]iod1 su* nom9ation %all be deem$ to be c]tifi$ & designat$1 effective on ! day aft] ! la/ day ( ! consid]ation p]iod4 7#b7 ,secret>y ,if a gov]nor fails to make ! nom9ations & notifications by ! end ( ! p]iods ref]r$ to 9 p>agraphs 7#a77;,a7 & 7#a77;,b71 ! ,secret>y %all designate & c]tify population c5sus tracts t are l[-income communities z qualifi$ opportunity zones1 z p]mitt$ by subsection 7e74 7c7 ,o!r def9itions ,= purposes ( ?is subsection-- 7#a7 ,l[-income communities ,! t]m l[-income community has ! same mean+ z :5 us$ 9 section #de;,d7e74 7#b7 ,def9ition ( p]iods 7,a7 ,consid]ation p]iod ,! t]m consid]ation p]iod means ! #cj-;day p]iod beg9n+ on ! date on :i* ! ,secret>y receives notice "u subsection 7b77#a77;,a77i77,,ii71 z ext5d$ "u subsection 7b77#a77;,b74 7,b7 ,det]m9ation p]iod ,! t]m det]m9ation p]iod means ! #ij-;day p]iod beg9n+ on ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act1 z ext5d$ "u subsection 7b77#a77;,b74 7#c7 ,/ate ,= purposes ( ?is section1 ! t]m ,/ate includes any possession ( ! ,unit$ ,/ates4 7d7 ,guidance = opportunity zone nom9ations ,:5 consid]+ ! nom9ation ( qualifi$ opportunity zones1 gov]nors %\ld /rive = ! creation ( qualifi$ opportunity zones t are geographically conc5trat$ & contigu\s clu/]s ( population c5sus tracts & %\ld give p>ticul> consid]ation to areas t-- 7#a7 are curr5tly ! focus ( mutually re9=c+ ,/ate1 local1 or private economic developm5t initiatives to attract inve/m5t & fo/] />tup activity1 7#b7 h demon/rat$ success 9 geographically t>get$ developm5t programs1 su* z promise zones1 new m>ket tax cr$it1 emp[]m5t zones1 & r5ewal communities1 & 7#c7 h rec5tly exp]i5c$ significant lay(fs due to bus9ess closures or relocations4 7e7 ,numb] ( designations 7#a7 ,9 g5]al ,except z provid$ by p>agraph 7#b71 ! numb] ( population c5sus tracts 9 a ,/ate t may be designat$ z qualifi$ opportunity zones "u ?is section may n exce$ #be p]c5t ( ! numb] ( l[-income communities 9 ! ,/ate4 7#b7 ,exception ,if ! numb] ( l[-income communities 9 a ,/ate is less ?an #ajj1 !n a total ( #be ( su* tracts may be designat$ z qualifi$ opportunity zones4 7f7 ,designation ( tracts contigu\s ) l[-,income communities 7#a7 ,9 g5]al ,a population c5sus tract t is n a l[-income community may be designat$ z a qualifi$ opportunity zone "u ?is section if-- 7,a7 ! tract is contigu\s ) ! l[-income community t is designat$ z a qualifi$ opportunity zone1 & 7,b7 ! m$ian family income ( ! tract does n exce$ #abe p]c5t ( ! m$ian family income ( ! l[-income community ) :i* ! tract is contigu\s4 7#b7 ,limitation ,n m ?an #e p]c5t ( ! population c5sus tracts designat$ 9 a ,/ate z a qualifi$ opportunity zone may be designat$ "u p>agraph 7#a74 7g7 ,p]iod = :i* designation is 9 effect ,a designation z a qualifi$ opportunity zone %all rema9 9 effect = ! p]iod beg9n+ on ! date ( ! designation & end+ at ! close ( ! #aj? cal5d> ye> beg9n+ on or aft] su* date ( designation4 #adjj,z-#b4 ,special rules = capital ga9s inve/$ 9 opportunity zones 7a7 ,9 g5]al ,9 ! case ( ga9 f ! sale to1 or ex*ange )1 an unrelat$ p]son ( any prop]ty held by ! taxpay]1 at ! election ( ! taxpay]-- 7#a7 gross income = ! taxable ye> %all n include s mu* ( su* ga9 z does n exce$ ! aggregate am\nt inve/$ by ! taxpay] 9 a qualifi$ opportunity fund dur+ ! #ahj-;day p]iod beg9n+ on ! date ( su* sale or ex*ange1 7#b7 ! am\nt ( ga9 exclud$ by p>agraph 7#a7 %all be includ$ 9 gross income z provid$ by subsection 7b71 & 7#c7 subsection 7c7 %all apply4 ,no election may be made "u ! prec$+ s5t5ce ) respect to a sale or ex*ange if an election previ\sly made ) respect to su* sale or ex*ange is 9 effect4 7b7 ,def]ral ( ga9 inve/$ 9 opportunity zone prop]ty 7#a7 ,ye> ( inclusion ,ga9 to :i* subsection 7a77#b7 applies %all be includ$ 9 income 9 ! taxable ye> :i* includes ! e>li] (-- 7,a7 ! date on :i* su* inve/m5t is sold or ex*ang$1 or 7,b7 ,decemb] #ca1 #bjbf4 7#b7 ,am\nt includible 7,a7 ,9 g5]al ,! am\nt ( ga9 includ$ 9 gross income "u subsection 7a77#a7 %all be ! excess (-- 7i7 ! less] ( ! am\nt ( ga9 exclud$ "u p>agraph 7#a7 or ! fair m>ket value ( ! prop]ty z ( ! det]m9$ z ( ! date describ$ 9 p>agraph 7#a71 ov] 7ii7 ! taxpay]'s basis 9 ! inve/m5t4 7,b7 ,det]m9ation ( basis 7i7 ,9 g5]al ,except z o!rwise provid$ 9 ?is clause or subsection 7c71 ! taxpay]'s basis 9 ! inve/m5t %all be z]o4 7ii7 ,increase = ga9 recogniz$ "u subsection 7a77#b7 ,! basis 9 ! inve/m5t %all be increas$ by ! am\nt ( ga9 recogniz$ by reason ( subsection 7a77#b7 ) respect to su* prop]ty4 7iii7 ,inve/m5ts held = #e ye>s ,9 ! case ( any inve/m5t held = at lea/ #e ye>s1 ! basis ( su* inve/m5t %all be increas$ by an am\nt equal to #aj p]c5t ( ! am\nt ( ga9 def]r$ by reason ( subsection 7a77#a74 7iv7 ,inve/m5ts held = #g ye>s ,9 ! case ( any inve/m5t held by ! taxpay] = at lea/ #g ye>s1 9 addition to any adju/m5t made "u clause 7iii71 ! basis ( su* prop]ty %all be increas$ by an am\nt equal to #e p]c5t ( ! am\nt ( ga9 def]r$ by reason ( subsection 7a77#a74 7c7 ,special rule = inve/m5ts held = at lea/ #aj ye>s ,9 ! case ( any inve/m5t held by ! taxpay] = at lea/ #aj ye>s & ) respect to :i* ! taxpay] makes an election "u ?is clause1 ! basis ( su* prop]ty %all be equal to ! fair m>ket value ( su* inve/m5t on ! date t ! inve/m5t is sold or ex*ang$4 7d7 ,qualifi$ opportunity fund ,= purposes ( ?is section-- 7#a7 ,qualifi$ opportunity fund ,! t]m qualifi$ opportunity fund means any inve/m5t vehicle :i* is organiz$ z a corporation or a p>tn]%ip = ! purpose ( inve/+ 9 qualifi$ opportunity zone prop]ty 7o!r ?an ano!r qualifi$ opportunity fund7 t holds at lea/ #ij p]c5t ( its assets 9 qualifi$ opportunity zone prop]ty1 det]m9$-- 7,a7 on ! la/ day ( ! fir/ #f-mon? p]iod ( ! taxable ye> ( ! fund1 & 7,b7 on ! la/ day ( ! taxable ye> ( ! fund4 7#b7 ,qualifi$ opportunity zone prop]ty 7,a7 ,9 g5]al ,! t]m qualifi$ opportunity zone prop]ty means prop]ty :i* is-- 7i7 qualifi$ opportunity zone /ock1 7ii7 qualifi$ opportunity zone p>tn]%ip int]e/1 or 7iii7 qualifi$ opportunity zone bus9ess prop]ty4 7,b7 ,qualifi$ opportunity zone /ock 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 ! t]m qualifi$ opportunity zone /ock means any /ock 9 a dome/ic corporation if-- 7,i7 su* /ock is acquir$ by ! taxpay] aft] ,decemb] #ca1 #bjag1 at its orig9al issue 7directly or ?r\gh an und]writ]7 f ! corporation solely 9 ex*ange = ca%1 7,,ii7 z ( ! "t su* /ock 0 issu$1 su* corporation 0 a qualifi$ opportunity zone bus9ess 7or1 9 ! case ( a new corporation1 su* corporation 0 be+ organiz$ = purposes ( be+ a qualifi$ opportunity zone bus9ess71 & 7,,iii7 dur+ sub/antially all ( ! taxpay]'s hold+ p]iod = su* /ock1 su* corporation qualifi$ z a qualifi$ opportunity zone bus9ess4 7ii7 ,r$emptions ,a rule simil> to ! rule ( section #abjb7;c77#c7 %all apply = purposes ( ?is p>agraph4 7,c7 ,qualifi$ opportunity zone p>tn]%ip int]e/ ,! t]m qualifi$ opportunity zone p>tn]%ip int]e/ means any capital or pr(its int]e/ 9 a dome/ic p>tn]%ip if-- 7i7 su* int]e/ is acquir$ by ! taxpay] aft] ,decemb] #ca1 #bjag1 f ! p>tn]%ip solely 9 ex*ange = ca%1 7ii7 z ( ! "t su* int]e/ 0 acquir$1 su* p>tn]%ip 0 a qualifi$ opportunity zone bus9ess 7or1 9 ! case ( a new p>tn]%ip1 su* p>tn]%ip 0 be+ organiz$ = purposes ( be+ a qualifi$ opportunity zone bus9ess71 & 7iii7 dur+ sub/antially all ( ! taxpay]'s hold+ p]iod = su* int]e/1 su* p>tn]%ip qualifi$ z a qualifi$ opportunity zone bus9ess4 7,d7 ,qualifi$ opportunity zone bus9ess prop]ty 7i7 ,9 g5]al ,! t]m qualifi$ opportunity zone bus9ess prop]ty means tangible prop]ty us$ 9 a trade or bus9ess ( ! taxpay] if-- 7,i7 su* prop]ty 0 acquir$ by ! taxpay] by pur*ase 7z def9$ 9 section #agi7;d77#b77 aft] ,decemb] #ca1 #bjag1 7,,ii7 ! orig9al use ( su* prop]ty 9 ! qualifi$ opportunity zone comm5ces ) ! taxpay] or ! taxpay] sub/antially improves ! prop]ty1 & 7,,iii7 dur+ sub/antially all ( ! taxpay]'s hold+ p]iod = su* prop]ty1 sub/antially all ( ! use ( su* prop]ty 0 9 a qualifi$ opportunity zone4 7ii7 ,sub/antial improvem5t ,= purposes ( subp>agraph 7,a77ii71 prop]ty %all be treat$ z sub/antially improv$ by ! taxpay] only if1 dur+ any #cj-mon? p]iod beg9n+ aft] ! date ( acquisition ( su* prop]ty1 additions to basis ) respect to su* prop]ty 9 ! h&s ( ! taxpay] exce$ an am\nt equal to ! adju/$ basis ( su* prop]ty at ! beg9n+ ( su* #cj-mon? p]iod 9 ! h&s ( ! taxpay]4 7iii7 ,relat$ p>ty ,= purposes ( subp>agraph 7,a77i71 ! relat$ p]son rule ( section #agi7;d77#b7 %all be appli$ pursuant to p>agraph 7#h7 ( ?is subsection 9 lieu ( ! application ( su* rule 9 section #agi7;d77#b77;,a74 7#c7 ,qualifi$ opportunity zone bus9ess 7,a7 ,9 g5]al ,! t]m qualifi$ opportunity zone bus9ess means a trade or bus9ess-- 7i7 9 :i* sub/antially all ( ! tangible prop]ty own$ or leas$ by ! taxpay] is qualifi$ opportunity zone bus9ess prop]ty1 7ii7 :i* satisfies ! requirem5ts ( p>agraphs 7#b71 7#d71 & 7#h7 ( section #acig;,c7b71 & 7iii7 :i* is n describ$ 9 section #add7;c77#f77;,b74 7,b7 ,special rule ,= purposes ( subp>agraph 7,a71 tangible prop]ty t ceases to be a qualifi$ opportunity zone bus9ess prop]ty %all cont9ue to be treat$ z a qualifi$ opportunity zone bus9ess prop]ty = ! less] (-- 7i7 #e ye>s aft] ! date on :i* su* tangible prop]ty ceases to be s qualifi$1 or 7ii7 ! date on :i* su* tangible prop]ty is no long] held by ! qualifi$ opportunity zone bus9ess4 7e7 ,applicable rules 7#a7 ,treatm5t ( inve/m5ts ) mix$ funds ,9 ! case ( any inve/m5t 9 a qualifi$ opportunity fund only a portion ( :i* consi/s ( inve/m5ts ( ga9 to :i* an election "u subsection 7a77#a7 is 9 effect-- 7,a7 su* inve/m5t %all be treat$ z #b sep>ate inve/m5ts1 consi/+ (-- 7i7 "o inve/m5t t only includes am\nts to :i* ! election "u subsection 7a77#a7 applies1 & 7ii7 a sep>ate inve/m5t consi/+ ( o!r am\nts1 & 7,b7 subsections 7a71 7b71 & 7c7 %all only apply to ! inve/m5t describ$ 9 subp>agraph 7,a77i74 7#b7 ,relat$ p]sons ,= purposes ( ?is section1 p]sons are relat$ to ea* o!r if su* p]sons are describ$ 9 section #bfg7;b7 or #gjg7;b77#a71 det]m9$ by sub/itut+ #bj p]c5t = #ej p]c5t ea* place x occurs 9 su* sections4 7#c7 ,dec$5ts ,9 ! case ( a dec$5t1 am\nts recogniz$ "u ?is section %all1 if n prop]ly includible 9 ! gross income ( ! dec$5t1 be includible 9 gross income z provid$ by section #fia4 7#d7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+-- 7,a7 rules = ! c]tification ( qualifi$ opportunity funds = ! purposes ( ?is section1 & 7,b7 rules to prev5t abuse4 7f7 ,failure ( qualifi$ opportunity fund to ma9ta9 inve/m5t /&>d 7#a7 ,9 g5]al ,if a qualifi$ opportunity fund fails to meet ! #ij-p]c5t requirem5t ( subsection 7c77#a71 ! qualifi$ opportunity fund %all pay a p5alty = ea* mon? x fails to meet ! requirem5t 9 an am\nt equal to ! product (-- 7,a7 ! excess (-- 7i7 ! am\nt equal to #ij p]c5t ( its aggregate assets1 ov] 7ii7 ! aggregate am\nt ( qualifi$ opportunity zone prop]ty held by ! fund1 multipli$ by 7,b7 ! und]paym5t rate e/abli%$ "u section #ffba7;a77#b7 = su* mon?4 7#b7 ,special rule = p>tn]%ips ,9 ! case t ! qualifi$ opportunity fund is a p>tn]%ip1 ! p5alty impos$ by p>agraph 7#a7 %all be tak5 into acc\nt proportionately z "p ( ! di/ributive %>e ( ea* p>tn] ( ! p>tn]%ip4 7#c7 ,reasonable cause exception ,no p5alty %all be impos$ "u ?is subsection ) respect to any failure if x is %[n t su* failure is due to reasonable cause4 4 7b7 ,basis adju/m5ts ,section #ajaf7;a7 is am5d$ by /rik+ & at ! end ( p>agraph 7#cf71 by /rik+ ! p]iod at ! end ( p>agraph 7#cg7 & ins]t+ 1 &1 & by ins]t+ aft] p>agraph 7#cg7 ! foll[+3 7#ch7 to ! ext5t provid$ 9 subsections 7b77#b7 & 7c7 ( section #adjj,z-#b4 4 7c7 ,report to ,congress ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's delegate1 %all submit a report to ,congress on ! opportunity zone inc5tives enact$ by ?is section beg9n+ #e ye>s aft] ! date ( enactm5t ( ?is ,act & annually !reaft]4 ,! report %all include an assessm5t ( inve/m5ts held by qualifi$ opportunity funds nationally & at ! ,/ate level4 ,to ! ext5t su* in=mation is available1 ! report %all include ! numb] ( qualifi$ opportunity funds1 ! am\nt ( assets held 9 qualifi$ opportunity funds1 ! composition ( qualifi$ opportunity fund inve/m5ts by asset class1 ! p]c5tage ( qualifi$ opportunity zone c5sus tracts designat$ "u sub*apt] ,z ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section7 t h receiv$ qualifi$ opportunity fund inve/m5ts4 ,! report %all also include an assessm5t ( ! impacts & outcomes ( ! inve/m5ts 9 ^? areas on economic indicators includ+ job creation1 pov]ty r$uction1 & new bus9ess />ts1 & o!r metrics z det]m9$ by ! ,secret>y4 7d7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,z4 ,opportunity zones 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 ,d ,int]national tax provisions ,i ,outb\nd transactions ,a ,e/abli%m5t ( p>ticipation exemption sy/em = taxation ( =eign income #adaja4 ,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 section-- 7#a7 ,9 g5]al ,! 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] ) respect to su* corporation4 7#b7 ,exclusion ( passive =eign inve/m5t companies ,su* t]m %all n include any corporation :i* is a passive =eign inve/m5t company 7z def9$ 9 section #abig7 ) respect to ! %>ehold] & :i* 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 f a specifi$ #aj-p]c5t own$ =eign corporation is an am\nt :i* be>s ! same ratio to su* divid5d z-- 7,a7 ! undi/ribut$ =eign e>n+s ( ! specifi$ #aj-p]c5t own$ =eign corporation1 be>s to 7,b7 ! total undi/ribut$ e>n+s ( su* =eign corporation4 7#b7 ,undi/ribut$ e>n+s ,! t]m 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-- 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 ,undi/ribut$ =eign e>n+s ,! t]m undi/ribut$ =eign e>n+s means ! portion ( ! 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 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$7 ) respect to any di/ribution any portion ( :i* con/itutes a divid5d = :i* a d$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 ,special rules = hybrid divid5ds 7#a7 ,9 g5]al ,subsection 7a7 %all n apply to any divid5d receiv$ by a ,unit$ ,/ates %>ehold] f a controll$ =eign corporation if ! divid5d is a hybrid divid5d4 7#b7 ,hybrid divid5ds ( ti]$ corporations ,if a controll$ =eign corporation ) respect to :i* a dome/ic corporation is a ,unit$ ,/ates %>ehold] receives a hybrid divid5d f any o!r controll$ =eign corporation ) respect to :i* su* dome/ic corporation is also a ,unit$ ,/ates %>ehold]1 !n1 not)/&+ any o!r provision ( ?is title-- 7,a7 ! hybrid divid5d %all be treat$ = purposes ( section #iea7;a77#a77;,a7 z subp>t ,f income ( ! receiv+ controll$ =eign corporation = ! taxable ye> ( ! controll$ =eign corporation 9 :i* ! divid5d 0 receiv$1 & 7,b7 ! ,unit$ ,/ates %>ehold] %all include 9 gross income an am\nt equal to ! %>ehold]'s pro rata %>e 7det]m9$ 9 ! same mann] z "u section #iea7;a77#b77 ( ! subp>t ,f income describ$ 9 subp>agraph 7,a74 7#c7 ,d5ial ( =eign tax cr$it1 etc ,! rules ( subsection 7d7 %all apply to any hybrid divid5d receiv$ by1 or any am\nt includ$ "u p>agraph 7#b7 9 ! gross income (1 a ,unit$ ,/ates %>ehold]4 7#d7 ,hybrid divid5d ,! t]m hybrid divid5d means an am\nt receiv$ f a controll$ =eign corporation-- 7,a7 = :i* a d$uction w\ld be all[$ "u subsection 7a7 b = ?is subsection1 & 7,b7 = :i* ! controll$ =eign corporation receiv$ a d$uction 7or o!r tax b5efit7 f taxes impos$ by any =eign c\ntry4 7f7 ,special rule = purg+ di/ributions ( passive =eign inve/m5t companies ,any am\nt :i* is treat$ z a divid5d "u section #abia7;d77#b77;,b7 %all n be treat$ z a divid5d = purposes ( ?is section4 7g7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section1 includ+ regulations = ! treatm5t ( ,unit$ ,/ates %>ehold]s own+ /ock ( a specifi$ #aj p]c5t own$ =eign corporation ?r\gh a p>tn]%ip4 4 7b7 ,application ( hold+ p]iod requirem5t ,subsection 7c7 ( section #bdf is am5d$-- 7#a7 by /rik+ or #bde 9 p>agraph 7#a7 & ins]t+ #bde1 or #bde;,a1 & 7#b7 by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,special rules = =eign s\rce portion ( divid5ds receiv$ f specifi$ #aj-p]c5t own$ =eign corporations 7,a7 #a-ye> hold+ p]iod requirem5t ,= purposes ( section #bde;,a-- 7i7 p>agraph 7#a77;,a7 %all be appli$-- 7,i7 by sub/itut+ #cfe days = #de days ea* place x appe>s1 & 7,,ii7 by sub/itut+ #gca-;day p]iod = #ia-;day p]iod1 & 7ii7 p>agraph 7#b7 %all n apply4 7,b7 ,/atus mu/ be ma9ta9$ 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 at all times dur+ su* p]iod1 & 7ii7 ! taxpay] is a ,unit$ ,/ates %>ehold] ) respect to su* specifi$ #aj-p]c5t own$ =eign corporation at all times dur+ su* p]iod4 4 7c7 ,application ( rules g5]ally applicable to d$uctions = divid5ds receiv$ 7#a7 ,treatm5t ( divid5ds f c]ta9 corporations ,p>agraph 7#a7 ( section #bdf7;a7 is am5d$ by /rik+ & #bde & ins]t+ #bde1 & #bde;,a4 7#b7 ,assets g5]at+ tax-exempt portion ( divid5d n tak5 into acc\nt 9 allocat+ & apportion+ d$uctible exp5ses ,p>agraph 7#c7 ( section #hfd7;e7 is am5d$ by /rik+ or #bde7;a7 & ins]t+ 1 #bde7;a71 or #bde;,a4 7#c7 ,coord9ation ) section #ajei ,subp>agraph 7,b7 ( section #ajei7;b77#b7 is am5d$ by /rik+ or #bde & ins]t+ #bde1 or #bde;,a4 7d7 ,coord9ation ) =eign tax cr$it limitation ,subsection 7b7 ( section #ijd is am5d$ 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 dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to a specifi$ #aj-p]c5t own$ =eign corporation1 su* dome/ic corporation's taxable income f s\rces )\t ! ,unit$ ,/ates %all be det]m9$ )\t reg>d to-- 7,a7 ! =eign-s\rce portion ( any divid5d receiv$ f su* =eign corporation1 & 7,b7 any d$uctions prop]ly allocable to su* portion4 ,any t]m :i* is us$ 9 section #bde;,a & 9 ?is p>agraph %all h ! same mean+ = purposes ( ?is p>agraph z :5 us$ 9 su* section4 4 7e7 ,con=m+ am5dm5ts 7#a7 ,subsection 7b7 ( section #iea is am5d$ by /rik+ subp>t & ins]t+ title4 7#b7 ,subsection 7a7 ( section #ieg is am5d$ by /rik+ subp>t 9 ! matt] prec$+ p>agraph 7#a7 & ins]t+ title4 7#c7 ,! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bde ! foll[+ new item3 ,sec4 #bde;,a4 ,divid5ds receiv$ by dome/ic corporations f c]ta9 =eign corporations4 4 7f7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #adajb4 ,special rules relat+ to sales or transf]s involv+ specifi$ #aj-p]c5t own$ =eign corporations 7a7 ,sales by ,unit$ ,/ates p]sons ( /ock ,section #abdh is am5d$ by r$esignat+ subsection 7j7 z subsection 7k7 & by ins]t+ aft] subsection 7i7 ! foll[+ new subsection3 7j7 ,coord9ation ) divid5ds receiv$ d$uction ,9 ! case ( ! sale or ex*ange by a dome/ic corporation ( /ock 9 a =eign corporation held = #a ye> or m1 any am\nt receiv$ by ! dome/ic corporation :i* is treat$ z a divid5d by reason ( ?is section %all be treat$ z a divid5d = purposes ( apply+ section #bde;,a4 4 7b7 ,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 receives 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$uction all[able to su* dome/ic corporation "u section #bde;,a ) respect to su* /ock4 4 7#b7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to divid5ds receiv$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7c7 ,sale by a ,,cfc ( a l[] ti] ,,cfc ,section #ifd7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,coord9ation ) divid5ds receiv$ d$uction 7,a7 ,9 g5]al ,if1 = any taxable ye> ( a controll$ =eign corporation beg9n+ aft] ,decemb] #ca1 #bjag1 any am\nt is treat$ z a divid5d "u p>agraph 7#a7 by reason ( a sale or ex*ange by ! controll$ =eign corporation ( /ock 9 ano!r =eign corporation held = #a ye> or m1 !n1 not)/&+ any o!r provision ( ?is title-- 7i7 ! =eign-s\rce portion ( su* divid5d %all be treat$ = purposes ( section #iea7;a77#a77;,a7 z subp>t ,f income ( ! sell+ controll$ =eign corporation = su* taxable ye>1 7ii7 a ,unit$ ,/ates %>ehold] ) respect to ! sell+ controll$ =eign corporation %all include 9 gross income = ! taxable ye> ( ! %>ehold] ) or )9 :i* su* taxable ye> ( ! controll$ =eign corporation ends an am\nt equal to ! %>ehold]'s pro rata %>e 7det]m9$ 9 ! same mann] z "u section #iea7;a77#b77 ( ! am\nt treat$ z subp>t ,f income "u clause 7i71 & 7iii7 ! d$uction "u section #bde;,a7a7 %all be all[able to ! ,unit$ ,/ates %>ehold] ) respect to ! subp>t ,f income includ$ 9 gross income "u clause 7ii7 9 ! same mann] z if su* subp>t ,f income 7 a divid5d receiv$ by ! %>ehold] f ! sell+ controll$ =eign corporation4 7,b7 ,effect ( loss on e>n+s & pr(its ,= purposes ( ?is title1 9 ! case ( a sale or ex*ange by a controll$ =eign corporation ( /ock 9 ano!r =eign corporation 9 a taxable ye> ( ! sell+ controll$ =eign corporation beg9n+ aft] ,decemb] #ca1 #bjag1 to :i* ?is p>agraph w\ld apply if ga9 7 recogniz$1 ! e>n+s & pr(its ( ! sell+ controll$ =eign corporation %all n be r$uc$ by reason ( any loss f su* sale or ex*ange4 7,c7 ,=eign-s\rce portion ,= purposes ( ?is p>agraph1 ! =eign-s\rce portion ( any am\nt treat$ z a divid5d "u p>agraph 7#a7 %all be det]m9$ 9 ! same mann] z "u section #bde;,a7c74 4 7d7 ,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;,c71 z 9 effect be=e ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act7 to a specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7 ) respect to :i* x is a ,unit$ ,/ates %>ehold] aft] su* transf]1 su* dome/ic corporation %all include 9 gross income = ! taxable ye> :i* includes su* transf] an am\nt equal to ! transf]r$ loss am\nt ) respect to su* transf]4 7b7 ,limitation & c>ry=w>d bas$ on =eign-s\rce divid5ds receiv$ 7#a7 ,9 g5]al ,! am\nt includ$ 9 ! gross income ( ! taxpay] "u subsection 7a7 = any taxable ye> %all n exce$ ! am\nt all[$ z a d$uction "u section #bde;,a = su* taxable ye> 7tak+ into acc\nt divid5ds receiv$ f all specifi$ #aj-p]c5t own$ =eign corporations ) respect to :i* ! taxpay] is a ,unit$ ,/ates %>ehold]74 7#b7 ,am\nts n includ$ c>ri$ =w>d ,any am\nt n includ$ 9 gross income = any taxable ye> by reason ( p>agraph 7#a7 %all1 subject to ! application ( p>agraph 7#a7 to ! succe$+ taxable ye>1 be includ$ 9 gross income = ! succe$+ taxable ye>4 7c7 ,transf]r$ loss am\nt ,= purposes ( ?is section1 ! t]m transf]r$ loss am\nt means1 ) respect to any transf] ( sub/antially all ( ! assets ( a =eign bran*1 ! excess 7if any7 (-- 7#a7 ! sum ( losses-- 7,a7 :i* 7 incurr$ by ! =eign bran* aft] ,decemb] #ca1 #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 7d7 ,r$uction = recogniz$ ga9s ,! 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 7e7 ,s\rce ( income ,am\nts includ$ 9 gross income "u ?is section %all be treat$ z d]iv$ f s\rces )9 ! ,unit$ ,/ates4 7f7 ,basis adju/m5ts ,consi/5t ) su* regulations or o!r guidance z ! ,secret>y %all 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 ,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#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to transf]s aft] ,decemb] #ca1 #bjag4 7e7 ,repeal ( active trade or bus9ess exception "u section #cfg 7#a7 ,9 g5]al ,section #cfg7;a7 is am5d$ by /rik+ p>agraph 7#c7 & r$esignat+ p>agraphs 7#d71 7#e71 & 7#f7 z p>agraphs 7#c71 7#d71 & 7#e71 respectively 7#b7 ,con=m+ am5dm5ts ,section #cfg7;a77#d71 z r$esignat$ by p>agraph 7#a71 is am5d$-- 7,a7 by /rik+ ,p>agraphs 7#b7 & 7#c7 & ins]t+ ,p>agraph 7#b71 & 7,b7 by /rik+ ,p>agraphs 7#b7 & 7#c7 9 ! head+ & ins]t+ ,p>agraph 7#b74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to transf]s aft] ,decemb] #ca1 #bjag4 #adajc4 ,treatm5t ( def]r$ =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$ 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] #i1 #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$uc$ 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 ep 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 ep deficits ,= purposes ( ?is subsection-- 7,a7 ,aggregate =eign ep deficit 7i7 ,9 g5]al ,! t]m aggregate =eign ,e,p deficit means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! less] (-- 7,i7 ! aggregate ( su* %>ehold]'s pro rata %>es ( ! specifi$ ,e,p deficits ( ! ,e,p deficit =eign corporations ( su* %>ehold]1 or 7,,ii7 ! am\nt det]m9$ "u p>agraph 7#b77;,b74 7ii7 ,allocation ( deficit ,if ! am\nt describ$ 9 clause 7i77,,ii7 is less ?an ! am\nt describ$ 9 clause 7i77,i71 !n ! %>ehold] %all designate1 9 su* =m & mann] z ! ,secret>y det]m9es-- 7,i7 ! am\nt ( ! specifi$ ,e,p deficit :i* is to be tak5 into acc\nt = ea* ,e,p deficit corporation ) respect to ! taxpay]1 & 7,,ii7 9 ! case ( an ,e,p deficit corporation :i* has a qualifi$ deficit 7z def9$ 9 section #ieb71 ! portion 7if any7 ( ! deficit tak5 into acc\nt "u subclause 7,i7 :i* is attributable to a qualifi$ deficit1 includ+ ! qualifi$ activities to :i* su* portion is attributable4 7,b7 ,ep 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] #i1 #bjag-- 7,i7 su* corporation 0 a specifi$ =eign corporation1 & 7,,ii7 su* taxpay] 0 a ,unit$ ,/ates %>ehold] ( su* corporation4 7,c7 ,specifi$ ep 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 ,treatm5t ( e>n+s & pr(its 9 future ye>s 7,a7 ,r$uc$ e>n+s & pr(its treat$ z previ\sly tax$ income :5 di/ribut$ ,= purposes ( apply+ section #iei 9 any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjag1 ) respect to any ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 an am\nt equal to su* %>ehold]'s r$uction "u p>agraph 7#a7 :i* is allocat$ to su* def]r$ =eign income corporation "u ?is subsection %all be treat$ z an am\nt :i* 0 includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a74 7,b7 ,ep deficits ,= purposes ( ?is title1 a ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! e>n+s & pr(its ( any specifi$ ,e,p deficit =eign corporation "u ?is subsection %all be increas$ by ! am\nt ( ! specifi$ ,e,p deficit ( su* corporation tak5 into acc\nt by su* %>ehold] "u p>agraph 7#a71 &1 = purposes ( section #ieb1 su* increase %all be attributable to ! same activity to :i* ! deficit s tak5 into acc\nt 0 attributable4 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 #he4g p]c5t ( ! excess 7if any7 (-- 7i7 ! am\nt s includ$ z gross income1 ov] 7ii7 ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ca% position1 plus 7,b7 #ga4d p]c5t ( s mu* ( ! am\nt describ$ 9 subp>agraph 7,a77ii7 z does n exce$ ! am\nt describ$ 9 subp>agraph 7,a77i74 7#b7 ,aggregate =eign ca% position ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m aggregate =eign ca% position means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! great] (-- 7i7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! ca% position ( ea* specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] det]m9$ z ( ! close ( ! la/ taxable ye> ( su* specifi$ =eign corporation :i* beg9s be=e ,janu>y #a1 #bjah1 or 7ii7 "o half ( ! sum (-- 7,i7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! la/ taxable ye> ( ea* su* specifi$ =eign corporation :i* ends be=e ,novemb] #i1 #bjag1 plus 7,,ii7 ! aggregate describ$ 9 clause 7i7 det]m9$ z ( ! close ( ! taxable ye> ( ea* su* specifi$ =eign corporation :i* prec$es ! taxable ye> ref]r$ to 9 subclause 7,i74 7,b7 ,ca% position ,= purposes ( ?is p>agraph1 ! ca% position ( any specifi$ =eign corporation is ! sum (-- 7i7 ca% & =eign curr5cy held by su* =eign corporation1 7ii7 ! net acc\nts receivable ( su* =eign corporation1 plus 7iii7 ! fair m>ket value ( ! foll[+ assets held by su* corporation3 7,i7 ,p]sonal prop]ty :i* is ( a type t is actively trad$ & = :i* !re is an e/abli%$ f9ancial m>ket 7o!r ?an /ock 9 ! specifi$ =eign corporation74 7,,ii7 ,comm]cial pap]1 c]tificates ( deposit1 ! securities ( ! ,f$]al gov]nm5t & ( any ,/ate or =eign gov]nm5t4 7,,iii7 ,any obligation ) a t]m ( less ?an "o ye>4 7,,iv7 ,any asset :i* ! ,secret>y id5tifies z be+ economically equival5t to any asset describ$ 9 ?is subp>agraph4 7,c7 ,net acc\nts receivable ,= purposes ( ?is p>agraph1 ! t]m net acc\nts receivable means1 ) respect to any specifi$ =eign corporation1 ! excess 7if any7 (-- 7i7 su* corporation's acc\nts receivable1 ov] 7ii7 su* corporation's acc\nts payable 7det]m9$ consi/5t ) ! rules ( section #dfa74 7,d7 ,prev5tion ( d\ble c\nt+ ,ca% positions ( a specifi$ =eign corporation describ$ 9 clause 7ii7 or 7iii77,,iii7 ( subp>agraph 7,b7 %all n be tak5 into acc\nt by a ,unit$ ,/ates %>ehold] "u subp>agraph 7,a7 to ! ext5t t su* ,unit$ ,/ates %>ehold] demon/rates to ! satisfaction ( ! ,secret>y t su* am\nt is s tak5 into acc\nt by su* ,unit$ ,/ates %>ehold] ) respect to ano!r specifi$ =eign corporation4 7,e7 ,ca% positions ( c]ta9 non-corporate entities tak5 into acc\nt ,an entity %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-- 7i7 su* entity is a =eign entity :i* w\ld be a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] if su* entity 7 a corporation1 or 7ii7 any int]e/ 9 su* entity is held by a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] 7det]m9$ aft] application ( clause 7i77 & su* entity w\ld be a specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] if su* entity 7 a =eign corporation4 7,f7 ,anti-abuse ,if ! ,secret>y det]m9es t a pr9cipal purpose ( any transaction 0 to r$uce ! aggregate =eign ca% position tak5 into acc\nt "u ?is subsection1 su* transaction %all be disreg>d$ = purposes ( ?is subsection4 7d7 ,def]r$ =eign income corporation2 accumulat$ po/-#aihf def]r$ =eign income ,= purposes ( ?is section-- 7#a7 ,def]r$ =eign income corporation ,! t]m def]r$ =eign income corporation means1 ) respect to any ,unit$ ,/ates %>ehold]1 any specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] :i* has accumulat$ po/-#aihf def]r$ =eign income 7z ( ! close ( ! taxable ye> ref]r$ to 9 subsection 7a77 great] ?an z]o4 7#b7 ,accumulat$ po/-#aihf def]r$ =eign income ,! t]m accumulat$ po/-#aihf def]r$ =eign income means ! po/-#aihf e>n+s & pr(its except to ! ext5t su* e>n+s-- 7,a7 are attributable to income ( ! specifi$ =eign corporation :i* is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates & subject to tax "u ?is *apt]1 or 7,b7 9 ! case ( a controll$ =eign corporation1 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 & #ihf1 & by only tak+ into acc\nt p]iods :5 ! =eign corporation 0 a specifi$ =eign corporation7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf1 & det]m9$-- 7,a7 z ( ! date ( ! taxable ye> ref]r$ 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* date4 7e7 ,specifi$ =eign corporation 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m specifi$ =eign corporation means-- 7,a7 any controll$ =eign corporation1 & 7,b7 any section #ijb corporation 7z def9$ 9 section #iji7;d77#e7 z 9 effect be=e ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act74 7#b7 ,application to section #ijb corporations ,= purposes ( sections #iea & #ifa1 a section #ijb corporation 7z s def9$7 %all be treat$ z a controll$ =eign corporation solely = purposes ( tak+ into acc\nt ! subp>t ,f income ( su* corporation "u subsection 7a7 7& = purposes ( apply+ subsection 7e774 7#c7 ,exclusion ( passive =eign inve/m5t companies ,su* t]m %all n include any corporation :i* is a passive =eign inve/m5t company 7z def9$ 9 section #abig7 ) respect to ! %>ehold] & :i* 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 #j4heg multipli$ by ! ratio (-- 7i7 ! excess to :i* subsection 7c77#a77;,a7 applies1 divid$ by 7ii7 ! sum ( su* excess plus ! am\nt to :i* subsection 7c77#a77;,b7 applies1 plus 7,b7 #j4gad multipli$ by ! ratio (-- 7i7 ! am\nt to :i* subsection 7c77#a77;,b7 applies1 divid$ by 7ii7 ! sum describ$ 9 subp>agraph 7,a77ii74 7#c7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7#d7 ,coord9ation ) section #gh ,section #gh %all n apply to any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a74 7h7 ,election to pay liability 9 in/allm5ts 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold] may elect to pay ! net tax liability "u ?is section 9 #h in/allm5ts ( ! foll[+ am\nts3 7,a7 #h p]c5t ( ! net tax liability 9 ! case ( ea* ( ! fir/ #e ( su* in/allm5ts1 7,b7 #ae p]c5t ( ! net tax liability 9 ! case ( ! #f? su* in/allm5t1 7,c7 #bj p]c5t ( ! net tax liability 9 ! case ( ! #g? su* in/allm5t1 & 7,d7 #be p]c5t ( ! net tax liability 9 ! case ( ! #h? su* in/allm5t4 7#b7 ,date = paym5t ( in/allm5ts ,if an election is made "u p>agraph 7#a71 ! fir/ in/allm5t %all be paid on ! due date 7det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return7 = ! return ( tax = ! taxable ye> describ$ 9 subsection 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 %all 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$-- 7,i7 )\t reg>d to ?is section1 & 7,,ii7 )\t reg>d to any income or d$uction 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 ( tax 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 ( subp>agraph 7,a7 %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 ,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 %all provide4 7j7 ,report+ by ,s corporation ,ea* ,s corporation :i* is a ,unit$ ,/ates %>ehold] ( a specifi$ =eign 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$uction all[able by subsection 7b74 ,any copy provid$ to a %>ehold] "u section #fjcg7;b7 %all include a /atem5t ( su* %>ehold]'s pro rata %>e ( su* am\nts4 7k7 ,ext5sion ( limitation on assessm5t ,not)/&+ section #feja1 ! limitation on ! "t p]iod = ! assessm5t ( ! net tax liability "u ?is section 7z def9$ 9 subsection 7h77#f77 %all n expire be=e ! date t is #f ye>s aft] ! return = ! taxable ye> describ$ 9 su* subsection 0 fil$4 7l7 ,recapture = expatriat$ entities 7#a7 ,9 g5]al ,if a d$uction is all[$ "u subsection 7c7 to a ,unit$ ,/ates %>ehold] & su* %>ehold] fir/ becomes an expatriat$ entity at any "t dur+ ! #aj-ye> p]iod beg9n+ on ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act1 !n-- 7,a7 ! tax impos$ by ?is *apt] %all be increas$ = ! fir/ taxable ye> 9 :i* su* taxpay] becomes an expatriat$ entity by an am\nt equal to #ce p]c5t ( ! am\nt ( ! d$uction all[$ to ! specifi$ =eign corporation "u subsection 7c71 & 7,b7 no cr$its %all be all[$ aga9/ ! increase 9 tax "u subp>agraph 7,a74 7#b7 ,expatriat$ entity ,= purposes ( ?is subsection1 ! t]m expatriat$ entity has ! same mean+ giv5 su* t]m "u section #ghgd7;a77#b71 except t su* t]m %all n include an entity if ! surrogate =eign corporation ) respect to ! entity is treat$ z a dome/ic corporation "u section #ghgd7;b74 7m7 ,special rules = ,unit$ ,/ates %>ehold]s :i* are real e/ate inve/m5t tru/s 7#a7 ,9 g5]al ,if a real e/ate inve/m5t tru/ is a ,unit$ ,/ates %>ehold] 9 #a or m def]r$ =eign income corporations-- 7,a7 any am\nt requir$ to be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( ?is section %all n be tak5 into acc\nt z gross income ( ! real e/ate inve/m5t tru/ = purposes ( apply+ p>agraphs 7#b7 & 7#c7 ( section #hef7;c7 to any taxable ye> = :i* su* am\nt is tak5 into acc\nt "u section #iea7;a77#a71 & 7,b7 if ! real e/ate inve/m5t tru/ elects ! application ( ?is subp>agraph1 not)/&+ subsection 7a71 any am\nt requir$ to be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( ?is section %all1 9 lieu ( ! taxable ye> 9 :i* x w\ld o!rwise be includ$ 9 gross income 7= purposes ( ! computation ( real e/ate inve/m5t tru/ taxable income "u section #heg7;b771 be includ$ 9 gross income z foll[s3 7i7 #h p]c5t ( su* am\nt 9 ! case ( ea* ( ! taxable ye>s 9 ! #e-taxable ye> p]iod beg9n+ ) ! taxable ye> 9 :i* su* am\nt w\ld o!rwise be includ$4 7ii7 #ae p]c5t ( su* am\nt 9 ! case ( ! #a/ taxable ye> foll[+ su* p]iod4 7iii7 #bj p]c5t ( su* am\nt 9 ! case ( ! #bnd taxable ye> foll[+ su* p]iod4 7iv7 #be p]c5t ( su* am\nt 9 ! case ( ! #crd taxable ye> foll[+ su* p]iod4 7#b7 ,rules = tru/s elect+ def]r$ inclusion 7,a7 ,election ,any election "u p>agraph 7#a77;,b7 %all be made n lat] ?an ! due date = ! fir/ taxable ye> 9 ! #e-taxable ye> p]iod describ$ 9 clause 7i7 ( p>agraph 7#a77;,b7 & %all be made 9 su* mann] z ! ,secret>y %all provide4 7,b7 ,special rules ,if an election "u p>agraph 7#a77;,b7 is 9 effect ) respect to any real e/ate inve/m5t tru/1 ! foll[+ rules %all apply3 7i7 ,application ( p>ticipation exemption ,= purposes ( subsection 7c77#a7-- 7,i7 ! aggregate am\nt to :i* subp>agraph 7,a7 or 7,b7 ( subsection 7c77#a7 applies %all be det]m9$ )\t reg>d to ! election1 7,,ii7 ea* su* aggregate am\nt %all be allocat$ to ea* taxable ye> describ$ 9 p>agraph 7#a77;,b7 9 ! same proportion z ! am\nt includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a77#a7 by reason ( ?is section is allocat$ to ea* su* taxable ye>4 7,,iii7 ,no in/allm5t paym5ts ,! real e/ate inve/m5t tru/ may n make an election "u subsection 7g7 = any taxable ye> describ$ 9 p>agraph 7#a77;,b74 7ii7 ,accel]ation ( inclusion ,if !re is a liquidation or sale ( sub/antially all ! assets ( ! real e/ate inve/m5t tru/ 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by su* tru/1 or any simil> circum/ance1 !n any am\nt n yet includ$ 9 gross income "u p>agraph 7#a77;,b7 %all be includ$ 9 gross income z ( ! day be=e ! date ( ! ev5t & ! unpaid portion ( any tax liability ) respect to su* inclusion %all be due on ! date ( su* ev5t 7or 9 ! case ( a title #aa or simil> case1 ! day be=e ! petition is fil$74 7n7 ,election n to apply net op]at+ loss d$uction 7#a7 ,9 g5]al ,if a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation elects ! application ( ?is subsection = ! taxable ye> describ$ 9 subsection 7a71 !n ! am\nt describ$ 9 p>agraph 7#b7 %all n be tak5 into acc\nt-- 7,a7 9 det]m9+ ! am\nt ( ! net op]at+ loss d$uction "u section #agb ( su* %>ehold] = su* taxable ye>1 or 7,b7 9 det]m9+ ! am\nt ( taxable income = su* taxable ye> :i* may be r$uc$ by net op]at+ loss c>ryov]s or c>rybacks to su* taxable ye> "u section #agb4 7#b7 ,am\nt describ$ ,! am\nt describ$ 9 ?is p>agraph is ! sum (-- 7,a7 ! am\nt requir$ to be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( ?is section 7det]m9$ aft] ! application ( subsection 7c771 plus 7,b7 9 ! case ( a dome/ic corporation :i* *ooses to h ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n = ! taxable ye>1 ! taxes deem$ to be paid by su* corporation "u subsections 7a7 & 7b7 ( section #ifj = su* taxable ye> ) respect to ! am\nt describ$ 9 subp>agraph 7,a7 :i* are treat$ z a divid5ds "u section #gh4 7#c7 ,election ,any election "u ?is subsection %all be made n lat] ?an ! due date 7includ+ ext5sions7 = fil+ ! return ( tax = ! taxable ye> & %all be made 9 su* mann] z ! ,secret>y %all prescribe4 7o7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section or to prev5t ! avoidance ( ! purposes ( ?is section1 includ+ ?r\gh a r$uction 9 e>n+s & pr(its ?r\gh *anges 9 entity classification1 *anges 9 acc\nt+ me?ods1 or o!rwise4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ 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 ,rules relat$ to passive & mobile income #a ,taxation ( =eign-d]iv$ intangible income & global intangible l[-tax$ income #adbja4 ,curr5t ye> inclusion ( global intangible l[-tax$ income by ,unit$ ,/ates %>ehold]s 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 ,global intangible l[-tax$ income 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* %>ehold]'s global intangible l[-tax$ income = su* taxable ye>4 7b7 ,global intangible l[-tax$ income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m global intangible l[-tax$ income 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 su* %>ehold]'s net deem$ tangible income return = su* taxable ye>4 7#b7 ,net deem$ tangible income return ,! t]m net deem$ tangible income return means1 ) respect to any ,unit$ ,/ates %>ehold] = any taxable ye>1 an am\nt equal to #aj p]c5t ( ! 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]74 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 describ$ 9 section #ieb7;b71 7,,ii7 any gross income tak5 into acc\nt 9 det]m9+ ! subp>t ,f income ( su* corporation1 7,,iii7 any gross income exclud$ f ! =eign base company income 7z def9$ 9 section #ied7 & ! insurance income 7z def9$ 9 section #iec7 ( su* corporation by reason ( section #ied7;b77#d71 7,,iv7 any divid5d receiv$ f a relat$ p]son 7z def9$ 9 section #ied7;d77#c771 & 7,v7 any =eign oil & gas extraction income 7z def9$ 9 section #ijg7;c77#a77 ( su* corporation1 ov] 7ii7 ! d$uctions 7includ+ taxes7 prop]ly allocable to su* gross income "u rules simil> to ! rules ( section #ied7;b77#e74 7,b7 ,te/$ loss 7i7 ,9 g5]al ,! 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 7ii7 ,coord9ation ) subp>t ,f to d5y d\ble b5efit ( losses ,section #ieb7;c77#a77;,a7 %all be appli$ by increas+ ! e>n+s & pr(its ( ! controll$ =eign corporation by ! te/$ loss ( su* corporation4 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 corporation = any taxable ye> ( su* controll$ =eign corporation1 ! av]age ( ! aggregate ( ! corporation's adju/$ bases z ( ! close ( ea* qu>t] ( su* taxable ye> 9 specifi$ tangible prop]ty -- 7,a7 us$ 9 a trade or bus9ess ( ! corporation1 & 7,b7 ( a type ) respect to :i* a d$uction is all[able "u section #afg4 7#b7 ,specifi$ tangible prop]ty 7,a7 ,9 g5]al ,! t]m specifi$ tangible prop]ty means1 except z provid$ 9 subp>agraph 7,b71 any tangible prop]ty us$ 9 ! production ( te/$ income4 7,b7 ,dual use prop]ty ,9 ! case ( prop]ty us$ bo? 9 ! production ( te/$ income & income :i* is n te/$ income1 su* prop]ty %all be treat$ z specifi$ tangible prop]ty 9 ! same proportion t ! gross income describ$ 9 subsection 7c77#a77;,a7 produc$ ) respect to su* prop]ty be>s to ! total gross income produc$ ) respect to su* prop]ty4 7#c7 ,det]m9ation ( adju/$ basis ,= purposes ( ?is subsection1 not)/&+ any provision ( ?is title 7or any o!r provision ( law7 :i* is enact$ aft] ! date ( ! enactm5t ( ?is section1 ! adju/$ basis 9 any prop]ty %all be det]m9$ us+ ! alt]native depreciation sy/em "u section #afh7;g74 7#d7 ,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$1 or held1 tempor>ily1 or 7,b7 ! avoidance ( ! purposes ( ?is p>agraph is a factor 9 ! transf] or hold+ ( su* prop]ty4 7e7 ,det]m9ation ( pro rata %>e1 etc ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! pro rata %>es ref]r$ to 9 subsections 7b71 7c77#a77;,a71 & 7c77#a77;,b71 respectively1 %all be det]m9$ "u ! rules ( section #iea7;a77#b7 9 ! same mann] z su* section applies to subp>t ,f income & %all be tak5 into acc\nt 9 ! taxable ye> ( ! ,unit$ ,/ates %>ehold] 9 :i* or ) :i* ! taxable ye> ( ! controll$ =eign corporation ends4 7#b7 ,treatm5t z ,unit$ ,/ates %>ehold] ,= purposes ( p>agraph 7#a71 a p]son %all be treat$ z a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation = any taxable ye> only if su* p]son owns 7)9 ! mean+ ( section #ieh7;a77 /ock 9 su* =eign corporation on ! la/ day1 9 su* ye>1 on :i* su* =eign corporation is a controll$ =eign corporation4 7#c7 ,treatm5t z controll$ =eign corporation ,a =eign corporation %all be treat$ z a controll$ =eign corporation = any taxable ye> if su* =eign corporation is a controll$ =eign corporation at any "t dur+ su* taxable ye>4 7f7 ,treatm5t z subp>t ,f income = c]ta9 purposes 7#a7 ,9 g5]al 7,a7 ,application ,except z provid$ 9 subp>agraph 7,b71 any global intangible l[-tax$ income 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 #ifb7;c71 #ifb7;d71 #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 ,exception ,! ,secret>y %all provide rules = ! application ( subp>agraph 7,a7 to o!r provisions ( ?is title 9 any case 9 :i* ! det]m9ation ( subp>t ,f income is requir$ to be made at ! level ( ! controll$ =eign corporation4 7#b7 ,allocation ( global intangible l[-tax$ income 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+ ! global intangible l[-tax$ income includ$ 9 gross income ( a ,unit$ ,/ates %>ehold] "u subsection 7a71 ! portion ( su* global intangible l[-tax$ income :i* is treat$ z be+ ) respect to su* controll$ =eign corporation is-- 7,a7 9 ! case ( a controll$ =eign corporation ) no te/$ income1 z]o1 & 7,b7 9 ! case ( a controll$ =eign corporation ) te/$ income1 ! portion ( su* global intangible l[-tax$ income :i* be>s ! same ratio to su* global intangible l[-tax$ income z-- 7i7 su* ,unit$ ,/ates %>ehold]'s pro rata am\nt ( ! te/$ income ( su* controll$ =eign corporation1 be>s to 7ii7 ! aggregate am\nt describ$ 9 subsection 7c77#a77;,a7 ) respect to su* ,unit$ ,/ates %>ehold]4 4 7b7 ,=eign tax cr$it 7#a7 ,application ( deem$ paid =eign tax cr$it ,section #ifj is am5d$ add+ at ! end ! 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 ( ! product (-- 7,a7 su* dome/ic corporation's inclusion p]c5tage1 multipli$ by 7,b7 ! aggregate te/$ =eign income taxes paid or accru$ by controll$ =eign corporations4 7#b7 ,inclusion p]c5tage ,= purposes ( p>agraph 7#a71 ! t]m inclusion p]c5tage means1 ) respect to any dome/ic corporation1 ! ratio 7express$ z a p]c5tage7 (-- 7,a7 su* corporation's global intangible l[-tax$ income 7z def9$ 9 section #iea;,a7b771 divid$ by 7,b7 ! aggregate am\nt describ$ 9 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 ! te/$ income ( su* =eign corporation tak5 into acc\nt by su* dome/ic corporation "u section #iea;,a4 4 7#b7 ,application ( =eign tax cr$it limitation 7,a7 ,sep>ate basket = global intangible l[-tax$ income ,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$7 ! foll[+ new subp>agraph3 7,a7 any am\nt includible 9 gross income "u section #iea;,a 7o!r ?an passive category income71 4 7,b7 ,exclusion f g5]al category income ,section #ijd7;d77#b77;,a77ii7 is am5d$ by ins]t+ income describ$ 9 p>agraph 7#a77;,a7 & be=e passive category income4 7,c7 ,no c>ryov] or c>ryback ( 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;,a744 7c7 ,cl]ical am5dm5t ,! 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 ,global intangible l[-tax$ income 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 #adbjb4 ,d$uction = =eign-d]iv$ intangible income & global intangible l[-tax$ income 7a7 ,9 g5]al ,"p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #bej4 ,=eign-d]iv$ intangible income & global intangible l[-tax$ income 7a7 ,all[ance ( d$uction 7#a7 ,9 g5]al ,9 ! case ( a dome/ic corporation = any taxable ye>1 !re %all be all[$ z a d$uction an am\nt equal to ! sum (-- 7,a7 #cg4e p]c5t ( ! =eign-d]iv$ intangible income ( su* dome/ic corporation = su* taxable ye>1 plus 7,b7 #ej p]c5t ( ! global intangible l[-tax$ income am\nt 7if any7 :i* is includ$ 9 ! gross income ( su* dome/ic corporation "u section #iea;,a = su* taxable ye>4 7#b7 ,limitation bas$ on taxable income 7,a7 ,9 g5]al ,if1 = any taxable ye>-- 7i7 ! sum ( ! =eign-d]iv$ intangible income & ! global intangible l[-tax$ income am\nt o!rwise tak5 into acc\nt by ! dome/ic corporation "u p>agraph 7#a71 exce$s 7ii7 ! taxable income ( ! dome/ic corporation 7det]m9$ )\t reg>d to ?is section71 !n ! am\nt ( ! =eign-d]iv$ intangible income & ! global intangible l[-tax$ income am\nt s tak5 into acc\nt %all be r$uc$ z provid$ 9 subp>agraph 7,b74 7,b7 ,r$uction ,= purposes ( subp>agraph 7,a7-- 7i7 =eign-d]iv$ intangible income %all be r$uc$ by an am\nt :i* be>s ! same ratio to ! excess describ$ 9 subp>agraph 7,a7 z su* =eign-d]iv$ intangible income be>s to ! sum describ$ 9 subp>agraph 7,a77i71 & 7ii7 ! global intangible l[-tax$ income am\nt %all be r$uc$ by ! rema9d] ( su* excess4 7#c7 ,r$uction 9 d$uction = taxable ye>s aft] #bjbe ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjbe1 p>agraph 7#a7 %all be appli$ by sub/itut+-- 7,a7 #ba4hge p]c5t = #cg4e p]c5t 9 subp>agraph 7,a71 & 7,b7 #cg4e p]c5t = #ej p]c5t 9 subp>agraph 7,b74 7b7 ,=eign-d]iv$ intangible income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! =eign-d]iv$ intangible income ( any dome/ic corporation is ! am\nt :i* be>s ! same ratio to ! deem$ intangible income ( su* corporation z-- 7,a7 ! =eign-d]iv$ d$uction eligible income ( su* corporation1 be>s to 7,b7 ! d$uction eligible income ( su* corporation4 7#b7 ,deem$ intangible income ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m deem$ intangible income means ! excess 7if any7 (-- 7i7 ! d$uction eligible income ( ! dome/ic corporation1 ov] 7ii7 ! deem$ tangible income return ( ! corporation4 7,b7 ,deem$ tangible income return ,! t]m deem$ tangible income return means1 ) respect to any corporation1 an am\nt equal to #aj p]c5t ( ! corporation's qualifi$ bus9ess asset inve/m5t 7z def9$ 9 section #iea;,a7d71 det]m9$ by sub/itut+ d$uction eligible income = te/$ income 9 p>agraph 7#b7 !re(74 7#c7 ,d$uction eligible income 7,a7 ,9 g5]al ,! t]m d$uction eligible income means1 ) respect to any dome/ic corporation1 ! excess 7if any7 (-- 7i7 gross income ( su* corporation det]m9$ )\t reg>d to-- 7,i7 ! subp>t ,f income ( su* corporation det]m9$ "u section #iea1 7,,ii7 ! global intangible l[-tax$ income det]m9$ "u section #iea;,a1 7,,iii7 any f9ancial s]vices income 7z def9$ 9 section #ijd7;d77#b77;,d77 ( su* corporation :i* is n describ$ 9 clause 7ii71 7,,iv7 any divid5d receiv$ f a corporation :i* is a controll$ =eign corporation ( su* dome/ic corporation1 7,v7 any dome/ic oil & gas extraction income ( su* corporation1 & 7,,vi7 any =eign bran* income 7z def9$ 9 section #ijd7;d77#b77;,j771 ov] 7ii7 ! d$uctions 7includ+ taxes7 prop]ly allocable to su* gross income "u rules simil> to ! rules ( section #ied7;b77#e74 7,b7 ,dome/ic oil & gas extraction income ,= purposes ( subp>agraph 7,a71 ! t]m dome/ic oil & gas extraction income means income describ$ 9 section #ijg7;c77#a71 det]m9$ by sub/itut+ )9 ! ,unit$ ,/ates = )\t ! ,unit$ ,/ates4 7#d7 ,=eign-d]iv$ d$uction eligible income ,! t]m =eign-d]iv$ d$uction eligible income means1 ) respect to any taxpay] = any taxable ye>1 any d$uction eligible income ( su* taxpay] :i* is d]iv$ 9 connection )-- 7,a7 prop]ty-- 7i7 :i* is sold by ! taxpay] to any p]son :o is n a ,unit$ ,/ates p]son1 & 7ii7 :i* ! taxpay] e/abli%es to ! satisfaction ( ! ,secret>y is = a =eign use1 or 7,b7 s]vices provid$ by ! taxpay] :i* ! taxpay] e/abli%es to ! satisfaction ( ! ,secret>y are provid$ to any p]son1 or ) respect to prop]ty1 n locat$ )9 ! ,unit$ ,/ates4 7#e7 ,rules relat+ to =eign use prop]ty or s]vices ,= purposes ( ?is subsection-- 7,a7 ,=eign use ,! t]m =eign use means any use1 consumption1 or disposition :i* is n )9 ! ,unit$ ,/ates4 7,b7 ,prop]ty or s]vices provid$ to dome/ic int]m$i>ies 7i7 ,prop]ty ,if a taxpay] sells prop]ty to ano!r p]son 7o!r ?an a relat$ p>ty7 = fur!r manufacture or o!r modification )9 ! ,unit$ ,/ates1 su* prop]ty %all n be treat$ z sold = a =eign use ev5 if su* o!r p]son subsequ5tly uses su* prop]ty = a =eign use4 7ii7 ,s]vices ,if a taxpay] provides s]vices to ano!r p]son 7o!r ?an a relat$ p>ty7 locat$ )9 ! ,unit$ ,/ates1 su* s]vices %all n be treat$ z describ$ 9 p>agraph 7#d77;,b7 ev5 if su* o!r p]son uses su* s]vices 9 provid+ s]vices :i* are s describ$4 7,c7 ,special rules ) respect to relat$ p>ty transactions 7i7 ,sales to relat$ p>ties ,if prop]ty is sold to a relat$ p>ty :o is n a ,unit$ ,/ates p]son1 su* sale %all n be treat$ z = a =eign use unless su* prop]ty is sold by ! relat$ p>ty to ano!r p]son :o is an unrelat$ p>ty :o is n a ,unit$ ,/ates p]son & ! taxpay] e/abli%es to ! satisfaction ( ! ,secret>y t su* prop]ty is = a =eign use4 7ii7 ,s]vice provid$ to relat$ p>ties ,if a s]vice is provid$ to a relat$ p>ty :o is n locat$ 9 ! ,unit$ ,/ates1 su* s]vice %all be n be treat$ describ$ 9 subp>agraph 7,a77ii7 unless ! taxpay] e/abli%$ to ! satisfaction ( ! ,secret>y t su* s]vice is n sub/antially simil> to s]vices provid$ by su* relat$ p>ty to p]sons locat$ )9 ! ,unit$ ,/ates4 7,d7 ,relat$ p>ty ,= purposes ( ?is p>agraph1 ! t]m relat$ p>ty means any memb] ( an affiliat$ gr\p z def9$ 9 section #aejd7;a71 det]m9$-- 7i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s1 & 7ii7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b74 ,any p]son 7o!r ?an a corporation7 %all be treat$ z a memb] ( su* gr\p if su* p]son is controll$ by memb]s ( su* gr\p 7includ+ any entity treat$ z a memb] ( su* gr\p by reason ( ?is s5t5ce7 or controls any su* memb]4 ,= purposes ( ! prec$+ s5t5ce1 control %all be det]m9$ "u ! rules ( section #ied7;d77#c74 7,e7 ,sold ,= purposes ( ?is subsection1 ! t]ms sold1 sells1 & sale %all include any lease1 lic5se1 ex*ange1 or o!r disposition4 7c7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #agb7;d71 z am5d$ by section #acjaa1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aj7 ,d$uction = =eign-d]iv$ intangible income ,! d$uction "u section #bej %all n be all[$4 4 7#b7 ,section #bdf7;b77#a7 is am5d$-- 7,a7 by /rik+ & subsection 7a7 & 7b7 ( section #bde ! fir/ place x appe>s & ins]t+ 1 subsection 7a7 & 7b7 ( section #bde1 & section #bej1 7,b7 by /rik+ & subsection 7a7 & 7b7 ( section #bde ! second place x appe>s & ins]t+ subsection 7a7 & 7b7 ( section #bde1 & #bej4 7#c7 ,section #dfi7;i77#c77;,f77iii7 is am5d$ by /rik+ & #bbb & ins]t+ #bbb1 & #bej4 7#d7 ,! table ( sections = "p ,,viii ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bej4 ,=eign-d]iv$ intangible income & global intangible l[-tax$ income4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adbjc4 ,special rules = transf]s ( intangible prop]ty f controll$ =eign corporations to ,unit$ ,/ates %>ehold]s 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #iff4 ,transf]s ( intangible prop]ty to ,unit$ ,/ates %>ehold]s 7a7 ,9 g5]al ,9 ! case ( any di/ribution ( intangible prop]ty :i* is held by a controll$ =eign corporation on ! date ( enactm5t ( ?is section & :i* is describ$ 9 subsection 7b7-- 7#a7 = purposes ( "p ,i ( sub*apt] ,c & any o!r provision ( ?is title specifi$ by ! ,secret>y1 ! fair m>ket value ( su* prop]ty on ! date ( su* di/ribution %all be treat$ z n exce$+ ! adju/$ basis ( su* prop]ty imm$iately be=e su* di/ribution1 & 7#b7 if ! di/ribution is to a ,unit$ ,/ates %>ehold] & is n a divid5d-- 7,a7 ! ,unit$ ,/ates %>ehold]'s adju/$ basis 9 ! /ock ( ! controll$ =eign corporation ) respect to :i* su* di/ribution is made %all be increas$ by ! am\nt 7if any7 ( su* di/ribution :i* w\ld 7b = ?is subsection7 be includible 9 gross income1 & 7,b7 ! adju/$ basis ( su* prop]ty 9 ! h&s ( su* ,unit$ ,/ates %>ehold] imm$iately aft] su* di/ribution %all be su* adju/$ basis imm$iately be=e su* di/ribution r$uc$ by ! am\nt ( ! increase describ$ 9 subp>agraph 7,a74 7b7 ,di/ribution ,a di/ribution is describ$ 9 ?is section if ! di/ribution is-- 7#a7 receiv$ by a dome/ic corporation f a controll$ =eign corporation ) respect to :i* su* corporation is a ,unit$ ,/ates %>ehold]1 & 7#b7 made by ! controll$ =eign corporation be=e ! la/ day ( ! ?ird taxable ye> ( ! controll$ =eign corporation beg9n+ aft] ,decemb] #ca1 #bjag4 7c7 ,intangible prop]ty ,= purposes ( ?is subsection1 ! t]m intangible prop]ty has ! mean+ giv5 su* t]m by section #icf7;h77#c77;,b7 or :i* is comput] s(tw>e describ$ 9 section #aig7;e77#c77;,b74 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #aig7;f77#b77;,b77i7 is am5d$ by ins]t+ #iff7;a71 aft] #gca14 7#b7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #iff4 ,transf]s ( intangible prop]ty to ,unit$ ,/ates %>ehold]s4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions made 9 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 #b ,o!r modifications ( subp>t ,f provisions #adbaa4 ,elim9ation ( inclusion ( =eign base company oil relat$ income 7a7 ,repeal ,subsection 7a7 ( section #ied is am5d$-- 7#a7 by ins]t+ & at ! end ( p>agraph 7#b71 7#b7 by /rik+ ! comma at ! end ( p>agraph 7#c7 & ins]t+ a p]iod1 & 7#c7 by /rik+ p>agraph 7#e74 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ieb7;c77#a77;,b77iii7 is am5d$ by /rik+ subclause 7,i7 & r$esignat+ subclauses 7,,ii7 ?r\gh 7,v7 z subclauses 7,i7 ?r\gh 7,,iv71 respectively4 7#b7 ,section #ied7;b7 is am5d$-- 7,a7 by /rik+ ! second s5t5ce ( p>agraph 7#d71 7,b7 by /rik+ ! =eign base company s]vices income1 & ! =eign base company oil relat$ income 9 p>agraph 7#e7 & ins]t+ & ! =eign base company s]vices income1 & 7,c7 by /rik+ p>agraph 7#f74 7#c7 ,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 ) or )9 :i* su* taxable ye>s ( =eign corporations end4 #adbab4 ,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;f77#c7 = ! 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 #adbac4 ,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;b7 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 #adbad4 ,modification ( /ock attribution rules = det]m9+ /atus z a controll$ =eign corporation 7a7 ,9 g5]al ,section #ieh7;b7 is am5d$-- 7#a7 by /rik+ p>agraph 7#d71 & 7#b7 by /rik+ ,p>agraphs 7#a7 & 7#d7 9 ! la/ s5t5ce & ins]t+ ,p>agraph 7#a74 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to-- 7#a7 ! la/ taxable ye> ( =eign corporations beg9n+ be=e ,janu>y #a1 #bjah1 & ea* subsequ5t taxable ye> ( su* =eign corporations1 & 7#b7 taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #adbae4 ,modification ( def9ition ( ,unit$ ,/ates %>ehold] 7a7 ,9 g5]al ,section #iea7;b7 is am5d$ by ins]t+ 1 or #aj p]c5t or m ( ! total value ( %>es ( all classes ( /ock ( su* =eign corporation aft] su* =eign corporation4 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 #adbaf4 ,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 #adbag4 ,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 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #adbah4 ,corporations eligible = d$uction = divid5ds f controll$ =eign corporations exempt f subp>t ,f inclusion = inve/m5t 9 ,unit$ ,/ates prop]ty 7a7 ,9 g5]al ,section #ief7;a7 is am5d$ by ins]t+ 7o!r ?an a corporation7 aft] ,unit$ ,/ates %>ehold] 9 ! matt] prec$+ p>agraph 7#a74 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s ( controll$ =eign corporations end+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( controll$ =eign corporations end4 #c ,prev5tion ( base erosion #adbba4 ,d5ial ( d$uction = int]e/ exp5se ( ,unit$ ,/ates %>ehold]s :i* are memb]s ( worldwide affiliat$ gr\ps ) excess dome/ic indebt$ness 7a7 ,9 g5]al ,section #afc is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,disall[ance ( d$uction = int]e/ exp5se ( ,unit$ ,/ates %>ehold]s :i* are memb]s ( worldwide affiliat$ gr\ps ) excess dome/ic indebt$ness 7#a7 ,9 g5]al ,9 ! case ( any dome/ic corporation :i* is a memb] ( a worldwide affiliat$ gr\p1 ! d$uction all[$ "u ?is *apt] = int]e/ paid or accru$ by su* dome/ic corporation dur+ ! taxable ye> %all be r$uc$ by ! product (-- 7,a7 ! net int]e/ exp5se ( su* dome/ic corporation1 multipli$ by 7,b7 ! debt-to-equity diff]5tial p]c5tage ( su* worldwide affiliat$ gr\p4 7#b7 ,c>ry=w>d ,any am\nt disall[$ "u p>agraph 7#a7 = any taxable ye> %all be treat$ z int]e/ paid or accru$ 9 ! succe$+ taxable ye>4 7#c7 ,debt-to-equity diff]5tial p]c5tage 7,a7 ,9 g5]al ,= purposes ( ?is subsection1 ! t]m debt-to-equity diff]5tial p]c5tage means1 ) respect to any worldwide affiliat$ gr\p1 ! p]c5tage :i* ! excess dome/ic indebt$ness ( su* gr\p be>s to ! total indebt$ness ( ! dome/ic corporations :i* are memb]s ( su* gr\p4 7,b7 ,excess dome/ic indebt$ness ,= purposes ( subp>agraph 7,a71 ! t]m excess dome/ic indebt$ness means1 ) respect to any worldwide affiliat$ gr\p1 ! excess 7if any7 (-- 7i7 ! total indebt$ness ( ! dome/ic corporations :i* are memb]s ( su* gr\p1 ov] 7ii7 #aaj p]c5t ( ! am\nt :i* ! total indebt$ness ( su* dome/ic corporations w\ld be if ! ratio ( su* indebt$ness to ! total equity ( su* dome/ic corporations equal$ ! ratio :i*-- 7,i7 ! total indebt$ness ( su* gr\p1 be>s to 7,,ii7 ! total equity ( su* gr\p4 7,c7 ,total equity ,= purposes ( subp>agraph 7,b71 ! t]m total equity means1 ) respect to "o or m corporations1 ! excess 7if any7 (-- 7i7 ! money & all o!r assets ( su* corporations1 ov] 7ii7 ! total indebt$ness ( su* corporations4 7,d7 ,special rules = det]m9+ debt & equity 7i7 ,9 g5]al ,= purposes ( ?is p>agraph-- 7,i7 ! am\nt tak5 into acc\nt ) respect to any asset %all be ! adju/$ basis !re( = purposes ( det]m9+ ga91 7,,ii7 ! am\nt tak5 into acc\nt ) respect to any indebt$ness ) orig9al issue disc\nt %all be its issue price plus ! portion ( ! orig9al issue disc\nt previ\sly accru$ z det]m9$ "u ! rules ( section #abgb 7det]m9$ )\t reg>d to subsection 7a77#g7 or 7b77#d7 !re(71 & 7,,iii7 !re %all be su* o!r adju/m5ts z ! ,secret>y %all by regulations prescribe4 7ii7 ,intragr\p debt & equity int]e/s disreg>d$ ,= purposes ( ?is p>agraph1 ! total indebt$ness1 & ! assets1 ( any gr\p ( corporations %all be det]m9$ by treat+ all memb]s ( su* gr\p z "o corporation4 7iii7 ,det]m9ation ( assets ( dome/ic gr\p ,= purposes ( ?is p>agraph1 ! assets ( ! dome/ic corporations :i* are memb]s ( any worldwide affiliat$ gr\p %all be det]m9$ by disreg>d+ any int]e/ held by any su* dome/ic corporation 9 any =eign corporation :i* is a memb] ( su* gr\p4 7#d7 ,o!r def9itions ,= purposes ( ?is subsection-- 7,a7 ,worldwide affiliat$ gr\p ,! t]m worldwide affiliat$ gr\p means a gr\p consi/+ ( ! includible memb]s ( an affiliat$ gr\p1 z def9$ 9 section #aejd7;a71 det]m9$-- 7i7 by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s 9 su* section1 & 7ii7 )\t reg>d to p>agraphs 7#b71 7#c71 & 7#d7 ( section #aejd7;b74 7,b7 ,net int]e/ exp5se ,! t]m net int]e/ exp5se means ! excess 7if any7 ( 7i7 ! int]e/ paid or accru$ by ! taxpay] dur+ ! taxable ye>1 ov] 7ii7 ! am\nt ( int]e/ includible 9 ! gross income ( su* taxpay] = su* taxable ye>4 ,! ,secret>y %all by regulations provide = adju/m5ts 9 det]m9+ ! am\nt ( net int]e/ exp5se if necess>y4 7#e7 ,treatm5t ( affiliat$ gr\p ,= purposes ( ?is subsection1 all memb]s ( ! same affiliat$ gr\p 7)9 ! mean+ ( section #aejd7;a7 appli$ by sub/itut+ m ?an #ej p]c5t = at lea/ #hj p]c5t ea* place x appe>s7 %all be treat$ z "o taxpay]4 7#f7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance-- 7,a7 to prev5t ! avoidance ( ! purposes ( ?is subsection1 7,b7 provid+ su* adju/m5ts 9 ! case ( corporations :i* are memb]s ( an affiliat$ gr\p z may be appropriate to c>ry out ! purposes ( ?is subsection1 7,c7 provid+ = ! coord9ation ( ?is subsection ) section #hhd1 7,d7 provid+ = ! reallocation ( %>es ( p>tn]%ip indebt$ness1 or di/ributive %>es ( ! p>tn]%ip's int]e/ income or int]e/ exp5se1 & 7,e7 provid+ = ! coord9ation ) ! limitation "u subsection 7j74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adbbb4 ,limitations on income %ift+ ?r\gh intangible prop]ty transf]s 7a7 ,def9ition ( intangible asset ,section #icf7;h77#c77;,b7 is am5d$-- 7#a7 by /rik+ or at ! end ( clause 7v71 7#b7 by /rik+ clause 7vi7 & ins]t+ ! foll[+3 7vi7 any goodwill1 go+ conc]n value1 or work=ce 9 place 7includ+ its composition & t]ms & conditions 7contractual or o!rwise7 ( its employm5t72 or 7vii7 any o!r item ! value or pot5tial value ( :i* is n attributable to tangible prop]ty or ! s]vices ( any individual4 1 & 7#c7 by /rik+ ! flu% language aft] clause 7vii71 z add$ by p>agraph 7#b74 7b7 ,cl>ification ( all[able valuation me?ods 7#a7 ,=eign corporations ,section #cfg7;d77#b7 is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,regulatory au?ority ,= purposes ( ! la/ s5t5ce ( subp>agraph 7,a71 ! ,secret>y %all require-- 7i7 ! valuation ( transf]s ( intangible prop]ty1 includ+ intangible prop]ty transf]r$ ) o!r prop]ty or s]vices1 on an aggregate basis1 or 7ii7 ! valuation ( su* a transf] on ! basis ( ! reali/ic alt]natives to su* a transf]1 if ! ,secret>y det]m9es t su* basis is ! mo/ reliable means ( valuation ( su* transf]s4 4 7#b7 ,allocation among taxpay]s ,section #dhb is am5d$ by add+ at ! end ! foll[+3 ,= purposes ( ?is section1 ! ,secret>y %all require ! valuation ( transf]s ( intangible prop]ty 7includ+ intangible prop]ty transf]r$ ) o!r prop]ty or s]vices7 on an aggregate basis or ! valuation ( su* a transf] on ! basis ( ! reali/ic alt]natives to su* a transf]1 if ! ,secret>y det]m9es t su* basis is ! mo/ reliable means ( valuation ( su* transf]s44 7c7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to transf]s 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 7#b7 ,no inf]5ce ,no?+ 9 ! am5dm5t made by subsection 7a7 %all be con/ru$ to create any inf]5ce ) respect to ! application ( section #icf7;h77#c7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 or ! au?ority ( ! ,secret>y ( ! ,treasury to provide regulations = su* application1 ) respect to taxable ye>s beg9n+ be=e ,janu>y #a1 #bjah4 #adbbc4 ,c]ta9 relat$ p>ty am\nts paid or accru$ 9 hybrid transactions or ) hybrid entities 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] section #bfg ! foll[+3 #bfg;,a4 ,c]ta9 relat$ p>ty am\nts paid or accru$ 9 hybrid transactions or ) hybrid entities 7a7 ,9 g5]al ,no d$uction %all be all[$ "u ?is *apt] = any disqualifi$ relat$ p>ty am\nt paid or accru$ pursuant to a hybrid transaction or by1 or to1 a hybrid entity4 7b7 ,disqualifi$ relat$ p>ty am\nt ,= purposes ( ?is section-- 7#a7 ,disqualifi$ relat$ p>ty am\nt ,! t]m disqualifi$ relat$ p>ty am\nt means any int]e/ or royalty paid or accru$ to a relat$ p>ty to ! ext5t t-- 7,a7 su* am\nt is n includ$ 9 ! income ( su* relat$ p>ty "u ! tax law ( ! c\ntry ( :i* su* relat$ p>ty is a resid5t = tax purposes or is subject to tax1 or 7,b7 su* relat$ p>ty is all[$ a d$uction ) respect to su* am\nt "u ! tax law ( su* c\ntry4 ,su* t]m %all n include any paym5t to ! ext5t su* paym5t is includ$ 9 ! gross income ( a ,unit$ ,/ates %>ehold] "u section #iea7;a74 7#b7 ,relat$ p>ty ,! t]m relat$ p>ty means a relat$ p]son z def9$ 9 section #ied7;d77#c71 except t su* section %all be appli$ ) respect to ! p]son mak+ ! paym5t describ$ 9 p>agraph 7#a7 9 lieu ( ! controll$ =eign corporation o!rwise ref]r$ to 9 su* section4 7c7 ,hybrid transaction ,= purposes ( ?is section1 ! t]m hybrid transaction means any transaction1 s]ies ( transactions1 agreem5t1 or in/rum5t "o or m paym5ts ) respect to :i* are treat$ z int]e/ or royalties = purposes ( ?is *apt] & :i* are n s treat$ = purposes ! tax law ( ! =eign c\ntry ( :i* ! recipi5t ( su* paym5t is resid5t = tax purposes or is subject to tax4 7d7 ,hybrid entity ,= purposes ( ?is section1 ! t]m hybrid entity means any entity :i* is ei!r-- 7#a7 treat$ z fiscally transp>5t = purposes ( ?is *apt] b n s treat$ = purposes ( ! tax law ( ! =eign c\ntry ( :i* ! entity is resid5t = tax purposes or is subject to tax1 or 7#b7 treat$ z fiscally transp>5t = purposes ( su* tax law b n s treat$ = purposes ( ?is *apt]4 7e7 ,regulations ,! ,secret>y %all 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 provid+ =-- 7#a7 rules = treat+ c]ta9 conduit arrangem5ts :i* involve a hybrid transaction or a hybrid entity z subject to subsection 7a71 7#b7 rules = ! application ( ?is section to =eign bran*es1 7#c7 rules = treat+ c]ta9 /ructur$ transactions z subject to subsection 7a71 7#d7 rules = treat+ a tax pref]5ce z an exclusion f income = purposes ( apply+ subsection 7b77#a7 if su* tax pref]5ce has ! effect ( r$uc+ ! g5]ally applicable /atutory rate by #be p]c5t or m1 7#e7 rules = treat+ ! entire am\nt ( int]e/ or royalty paid or accru$ to a relat$ p>ty z a disqualifi$ relat$ p>ty am\nt if su* am\nt is subject to a p>ticipation exemption sy/em or o!r sy/em :i* provides = ! exclusion or d$uction ( a sub/antial portion ( su* am\nt1 7#f7 rules = det]m9+ ! tax resid5ce ( a =eign entity if ! entity is o!rwise consid]$ a resid5t ( m ?an "o c\ntry or ( no c\ntry1 7#g7 exceptions f subsection 7a7 ) respect to-- 7,a7 cases 9 :i* ! disqualifi$ relat$ p>ty am\nt is tax$ "u ! laws ( a =eign c\ntry o!r ?an ! c\ntry ( :i* ! relat$ p>ty is a resid5t = tax purposes1 & 7,b7 o!r cases :i* ! ,secret>y det]m9es d n pres5t a risk ( erod+ ! ,f$]al tax base1 7#h7 requirem5ts = record keep+ & in=mation report+ 9 addition to any requirem5ts impos$ by section #fjch;,a4 4 7b7 ,con=m+ am5dm5t ,! table ( sections = "p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bfg ! foll[+ new item3 ,sec4 #bfg;,a4 ,c]ta9 relat$ p>ty am\nts paid or accru$ 9 hybrid transactions or ) hybrid entities4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adbbd4 ,t]m9ation ( special rules = dome/ic int]national sales corporations 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,n ( *apt] #a 7relat+ to dome/ic int]national sales corporations7 is am5d$ by add+ at ! end ! foll[+ new subp>t3 ,c ,t]m9ation ,sec4 #iih4 ,t]m9ation ( dome/ic int]national sales corporation provisions4 #iih4 ,t]m9ation ( dome/ic int]national sales corporation provisions 7a7 ,t]m9ation ( election ,any election "u section #iib7;b7 9 effect = a corporation's la/ taxable ye> beg9n+ 9 #bjah %all be t]m9at$ effective = su* corporation's next succe$+ taxable ye>4 7b7 ,no new election ,no election may be made "u section #iib7;b7 = any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjah4 7c7 ,effect ( t]m9ation ,a %>ehold] ( a corporation ^: election is t]m9at$ by reason ( subsection 7a7 %all be deem$ to h receiv$ a di/ribution to :i* section #iie7;b77#b7 applies = ! fir/ taxable ye> = :i* ! t]m9ation is effective4 ,su* di/ribution 7or any actual di/ribution aft] t]m9ation to ! ext5t paid out ( ! corporation's accumulat$ ,,disc income7 %all n be treat$ z qualifi$ divid5d income 7)9 ! mean+ ( section #a7;h77#aa77;,b774 4 7b7 ,con=m+ am5dm5t ,! table ( cont5ts = "p ,,iv ( sub*apt] ,n ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,subp>t ,c--,t]m9ation 4 #adbbe4 ,%>ehold]s ( surrogate =eign corporations n eligible = r$uc$ rate on divid5ds 7a7 ,9 g5]al ,section #a7;h77#aa77;,c77iii7 is am5d$-- 7#a7 by /rik+ %all n include any =eign corporation & ins]t+ %all n include-- 7,i7 any =eign corporation 1 7#b7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7#c7 by add+ at ! end ! foll[+ new subclause3 7,,ii7 any corporation :i* is a surrogate =eign corporation 7z def9$ 9 section #ghgd7;a77#b77;,b77 o!r ?an a =eign corporation :i* is treat$ z a dome/ic corporation "u section #ghgd7;b74 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to divid5ds paid 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,c ,modifications relat$ to =eign tax cr$it sy/em #adcja4 ,repeal ( section #ijb indirect =eign tax cr$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$it on curr5t ye> basis ,section #ifj1 z am5d$ by section #adbja1 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 = any prior taxable ye>4 1 7#b7 & by add+ aft] subsection 7d7 7z add$ by section #adbja7 ! foll[+ new subsections3 7e7 ,=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 7f7 ,regulations ,! ,secret>y %all 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 #gh1 z am5d$ by section #adbja1 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>-- 7#a7 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 section #ifj7 z an item ( income requir$ to be includ$ 9 ! gross income ( su* dome/ic corporation "u section #iea7;a71 & 7#b7 an am\nt equal to ! aggregate te/$ =eign income taxes deem$ paid by su* corporation "u section #ifj7;d7 7det]m9$ )\t reg>d to ! phrase #hj p]c5t ( 9 p>agraph 7#a7 !re(7 %all be treat$ = purposes ( ?is title 7o!r ?an section #ifj7 z an addition to ! global intangible l[-tax$ income ( su* dome/ic corporation "u section #iea;,a7a7 = su* taxable ye>4 4 7#b7 ,p>agraph 7#d7 ( section #bde7;a7 is am5d$ to read z foll[s3 7#d7 ,po/-#aihf undi/ribut$ e>n+s ,! t]m po/-#aihf undi/ribut$ e>n+s means ! am\nt ( ! e>n+s & pr(its ( ! =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> ( ! =eign corporation 9 :i* ! divid5d is di/ribut$1 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 4 7#c7 ,section #bde7;a77#aj77;,c7 is am5d$ by /rik+ #ijb1 #ijg1 & #ifj & ins]t+ #ijg & #ifj4 7#d7 ,sections #ece7;b77#a7 & #ede7;b77#a7 are ea* am5d$ by /rik+ section #ijb7;a7 or #ifj7;a77#a7 & ins]t+ section #ifj4 7#e7 ,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#f7 ,section #hfe7;h77#a77;,b7 is am5d$ by /rik+ #ijb1 #ijg1 & ins]t+ #ijg4 7#g7 ,section #ija7;a7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#h7 ,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$ to t portion4 7#i7 ,section #ija7;f7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#aj7 ,section #ija7;j77#a77;,a7 is am5d$ by /rik+ #ijb or4 7#aa7 ,section #ija7;j77#a77;,b7 is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#ab7 ,section #ija7k77#b7 is am5d$ by /rik+ 1 #ijb14 7#ac7 ,section #ija7k77#f7 is am5d$ by /rik+ #ijb or4 7#ad7 ,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#ae7 ,section #ijd7;d77#f77;,a7 is am5d$ by /rik+ #ijb1 #ijg1 & ins]t+ #ijg4 7#af7 ,section #ijd7;h77#aj77;,a7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#ag7 ,section #ijd7k7 is am5d$ to read z foll[s3 7k7 ,cross ref]5ces ,= 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;c74 4 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+ specifi$ #aj-p]c5t own$ =eign corporation 7z def9$ 9 section #bde;,a7b771 7,b7 by /rik+ #ijb or 9 p>agraph 7#a71 7,c7 by /rik+ by su* section #ijb corporation & all t foll[s 9 ! matt] foll[+ p>agraph 7#b7 & ins]t+ by su* specifi$ #aj-p]c5t own$ =eign corporation or a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] ) respect to su* specifi$ #aj-p]c5t own$ =eign corporation41 & 7,d7 by /rik+ section #ijb corporations 9 ! head+ !re( & ins]t+ specifi$ #aj-p]c5t own$ =eign corporations4 7#bh7 ,section #iji7;d7 is am5d$ by /rik+ p>agraph 7#e74 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$it = subp>t ,f inclusions4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ aft] ,decemb] #ca1 #bjag1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s 9 :i* or ) :i* su* taxable ye>s ( =eign corporations end4 #adcjb4 ,sep>ate =eign tax cr$it limitation basket = =eign bran* income 7a7 ,9 g5]al ,section #ijd7;d77#a71 z am5d$ by section #adbja1 is am5d$ by r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,c7 & 7,d71 respectively1 & by ins]t+ aft] subp>agraph 7,a7 ! foll[+ new subp>agraph3 7,b7 =eign bran* income1 4 7b7 ,=eign bran* income 7#a7 ,9 g5]al ,section #ijd7;d77#b7 is am5d$ by ins]t+ aft] subp>agraph 7,i7 ! foll[+ new subp>agraph3 7,j7 ,=eign bran* income 7i7 ,9 g5]al ,! t]m =eign bran* income means ! bus9ess pr(its ( su* ,unit$ ,/ates p]son :i* are attributable to #a or m qualifi$ bus9ess units 7z def9$ 9 section #ihi7;a77 9 #a or m =eign c\ntries4 ,= purposes ( ! prec$+ s5t5ce1 ! am\nt ( bus9ess pr(its attributable to a qualifi$ bus9ess unit %all be det]m9$ "u rules e/abli%$ by ! ,secret>y4 7ii7 ,exception ,su* t]m %all n include any income :i* is passive category income4 4 7#b7 ,con=m+ am5dm5t ,section #ijd7;d77#b77;,a77ii71 z am5d$ by section #adbja1 is am5d$ by /rik+ income describ$ 9 p>agraph 7#a77;,a7 & & ins]t+ income describ$ 9 p>agraph 7#a77;,a71 =eign bran* income1 &4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adcjc4 ,accel]ation ( election to allocate int]e/1 etc41 on a worldwide basis 7a7 ,9 g5]al ,section #hfd7;f77#f7 is am5d$ by /rik+ ,decemb] #ca1 #bjbj & ins]t+ ,decemb] #ca1 #bjag4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adcjd4 ,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 ,,ii ,inb\nd transactions #addja4 ,base erosion & anti-abuse tax 7a7 ,imposition ( tax ,sub*apt] ,a ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new "p3 ,,vii ,base erosion & anti-abuse tax ,sec4 #ei;,a4 ,tax on base erosion paym5ts ( taxpay]s ) sub/antial gross receipts4 #ei;,a4 ,tax on base erosion paym5ts ( taxpay]s ) sub/antial gross receipts 7a7 ,imposition ( tax ,!re is h]eby impos$ on ea* applicable taxpay] = any taxable ye> a tax equal to ! base erosion m9imum tax am\nt = ! taxable ye>4 ,su* tax %all be 9 addition to any o!r tax impos$ by ?is subtitle4 7b7 ,base erosion m9imum tax am\nt ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! t]m base erosion m9imum tax am\nt means1 ) respect to any applicable taxpay] = any taxable ye>1 ! excess 7if any7 (-- 7,a7 an am\nt equal to #aj p]c5t ( ! modifi$ taxable income ( su* taxpay] = ! taxable ye>1 ov] 7,b7 an am\nt equal to ! regul> tax liability 7z def9$ 9 section #bf7;b77 ( ! taxpay] = ! taxable ye>1 r$uc$ 7b n bel[ z]o7 by ! excess 7if any7 (-- 7i7 ! cr$its all[$ "u ?is *apt] aga9/ su* regul> tax liability1 ov] 7ii7 ! cr$it all[$ "u section #ch = ! taxable ye> :i* is prop]ly allocable to ! rese>* cr$it det]m9$ "u section #da7;a74 7#b7 ,modifications = taxable ye>s beg9n+ aft] #bjbe ,9 ! case ( any taxable ye> beg9n+ aft] ,decemb] #ca1 #bjbe1 p>agraph 7#a7 %all be appli$-- 7,a7 by sub/itut+ #ab4e p]c5t = #aj p]c5t 9 subp>agraph 7,a7 !re(1 & 7,b7 by r$uc+ 7b n bel[ z]o7 ! regul> tax liability 7z def9$ 9 section #bf7;b77 = purposes ( subp>agraph 7,b7 !re( by ! aggregate am\nt ( ! cr$its all[$ "u ?is *apt] aga9/ su* regul> tax liability r ?an ! excess describ$ 9 su* subp>agraph4 7c7 ,modifi$ taxable income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m modifi$ taxable income means ! taxable income ( ! taxpay] comput$ "u ?is *apt] = ! taxable ye>1 det]m9$ )\t reg>d to-- 7,a7 any base erosion tax b5efit ) respect to any base erosion paym5t1 or 7,b7 ! base erosion p]c5tage ( any net op]at+ loss d$uction all[$ "u section #agb = ! taxable ye>4 7#b7 ,base erosion tax b5efit 7,a7 ,9 g5]al ,! t]m base erosion tax b5efit means-- 7i7 any d$uction describ$ 9 subsection 7d77#a7 :i* is all[$ "u ?is *apt] = ! taxable ye> ) respect to any base erosion paym5t1 7ii7 9 ! case ( a base erosion paym5t describ$ 9 subsection 7d77#b71 any d$uction all[$ "u ?is *apt] = ! taxable ye> = depreciation 7or amortization 9 lieu ( depreciation7 ) respect to ! prop]ty acquir$ ) su* paym5t1 & 7iii7 9 ! case ( a base erosion paym5t describ$ 9 subsection 7d77#c71 any r$uction 9 gross receipts ) respect to su* paym5t 9 comput+ gross income ( ! taxpay] = ! taxable ye> = purposes ( ?is *apt]4 7,b7 ,tax b5efits disreg>d$ if tax )held on base erosion paym5t 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 any base erosion tax b5efit attributable to any base erosion paym5t-- 7,i7 on :i* tax is impos$ by section #hga or #hha1 & 7,,ii7 ) respect to :i* tax has be5 d$uct$ & )held "u section #adda or #addb1 %all n be tak5 into acc\nt 9 comput+ modifi$ taxable income "u p>agraph 7#a77;,a7 or ! base erosion p]c5tage "u p>agraph 7#d74 7ii7 ,exception ,! am\nt n tak5 into acc\nt 9 comput+ modifi$ taxable income by reason ( clause 7i7 %all be r$uc$ "u rules simil> to ! rules "u section #afc7;j77#e77;,b7 7z 9 effect be=e ! date ( ! enactm5t ( ! ,tax ,cuts & ,jobs ,act74 7#c7 ,special rules = det]m9+ int]e/ = :i* d$uction all[$ ,= purposes ( apply+ p>agraph 7#a71 9 ! case ( a taxpay] to :i* subsection 7j7 or 7n7 ( section #afc applies = ! taxable ye>1 ! r$uction 9 ! am\nt ( int]e/ = :i* a d$uction is all[$ by reason ( su* subsection %all be treat$ z allocable fir/ to int]e/ paid or accru$ to p]sons :o are n relat$ p>ties ) respect to ! taxpay] & !n to su* relat$ p>ties4 7#d7 ,base erosion p]c5tage ,= purposes ( p>agraph 7#a77;,b7-- 7,a7 ,9 g5]al ,! t]m base erosion p]c5tage means1 = any taxable ye>1 ! p]c5tage det]m9$ by divid+-- 7i7 ! aggregate am\nt ( base erosion tax b5efits ( ! taxpay] = ! taxable ye>1 by 7ii7 ! aggregate am\nt ( ! d$uctions all[able to ! taxpay] "u ?is *apt] = ! taxable ye>4 7,b7 ,special rules ,! am\nt "u subp>agraph 7,a77ii7 %all be det]m9$-- 7i7 by tak+ into acc\nt base erosion tax b5efits describ$ 9 clauses 7i7 & 7ii7 ( p>agraph 7#b77;,a71 & 7ii7 by n tak+ into acc\nt any d$uction all[$ "u section #agb1 #bde;,a1 or #bej = ! taxable ye>4 7d7 ,base erosion paym5t ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m base erosion paym5t means any am\nt paid or accru$ by ! taxpay] to a =eign p]son :i* is a relat$ p>ty ( ! taxpay] & ) respect to :i* a d$uction is all[able "u ?is *apt]4 7#b7 ,pur*ase ( depreciable prop]ty ,su* t]m %all also include any am\nt paid or accru$ by ! taxpay] to a =eign p]son :i* is a relat$ p>ty ( ! taxpay] 9 connection ) ! acquisition by ! taxpay] f su* p]son ( prop]ty ( a "* subject to ! all[ance ( depreciation 7or amortization 9 lieu ( depreciation74 7#c7 ,c]ta9 paym5ts to expatriat$ entities 7,a7 ,9 g5]al ,su* t]m %all also include any am\nt paid or accru$ by ! taxpay] ) respect to a p]son describ$ 9 subp>agraph 7,b7 :i* results 9 a r$uction ( ! gross receipts ( ! taxpay]4 7,b7 ,p]son describ$ ,a p]son is describ$ 9 ?is subp>agraph if su* p]son is a-- 7i7 surrogate =eign corporation :i* is a relat$ p>ty ( ! taxpay]1 b only if su* p]son fir/ became a surrogate =eign corporation aft] ,novemb] #i1 #bjag1 or 7ii7 =eign p]son :i* is a memb] ( ! same exp&$ affiliat$ gr\p z ! surrogate =eign corporation4 7,c7 ,def9itions ,= purposes ( ?is p>agraph-- 7i7 ,surrogate =eign corporation ,! t]m surrogate =eign corporation has ! mean+ giv5 su* t]m by section #ghgd7;a77#b7 b does n include a =eign corporation treat$ z a dome/ic corporation "u section #ghgd7;b74 7ii7 ,exp&$ affiliat$ gr\p ,! t]m exp&$ affiliat$ gr\p has ! mean+ giv5 su* t]m by section #ghgd7;c77#a74 7#d7 ,exception = c]ta9 am\nts ) respect to s]vices ,p>agraph 7#a7 %all n apply to any am\nt paid or accru$ by a taxpay] = s]vices if-- 7,a7 su* s]vices are s]vices :i* meet ! requirem5ts = eligibility = use ( ! s]vices co/ me?od "u section #dhb 7det]m9$ )\t reg>d to ! requirem5t t ! s]vices n contribute significantly to fundam5tal risks ( bus9ess success or failure71 & 7,b7 su* am\nt con/itutes ! total s]vices co/ ) no m>kup4 7e7 ,applicable taxpay] ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable taxpay] means1 ) respect to any taxable ye>1 a taxpay]-- 7,a7 :i* is a corporation o!r ?an a regulat$ inve/m5t company1 a real e/ate inve/m5t tru/1 or an ,s corporation1 7,b7 ! av]age annual gross receipts ( :i* = ! #c-taxable-ye> p]iod end+ ) ! prec$+ taxable ye> are at lea/ #ejj1jjj1jjj1 & 7,c7 ! base erosion p]c5tage 7z det]m9$ "u subsection 7c77#d77 ( :i* = ! taxable ye> is #d p]c5t or high]4 7#b7 ,gross receipts 7,a7 ,special rule = =eign p]sons ,9 ! case ( a =eign p]son ! gross receipts ( :i* are tak5 into acc\nt = purposes ( p>agraph 7#a77;,b71 only gross receipts :i* are tak5 into acc\nt 9 det]m9+ income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates %all be tak5 into acc\nt4 ,9 ! case ( a taxpay] :i* is a =eign p]son1 ! prec$+ s5t5ce %all n apply to ! gross receipts ( any ,unit$ ,/ates p]son :i* are aggregat$ ) ! taxpay]'s gross receipts by reason ( p>agraph 7#c74 7,b7 ,o!r rules made applicable ,rules simil> to ! rules ( subp>agraphs 7,b71 7,c71 & 7,d7 ( section #ddh7;c77#c7 %all apply 9 det]m9+ gross receipts = purposes ( ?is section4 7#c7 ,aggregation rules ,all p]sons treat$ z a s+le employ] "u subsection 7a7 ( section #eb %all be treat$ z #a p]son = purposes ( ?is subsection & subsection 7c77#d71 except t 9 apply+ section #aefc = purposes ( section #eb1 ! exception = =eign corporations "u section #aefc7;b77#b77;,c7 %all be disreg>d$4 7f7 ,=eign ,p]son ,= purposes ( ?is section1 ! t]m =eign p]son has ! mean+ giv5 su* t]m by section #fjch;,a7c77#c74 7g7 ,relat$ p>ty ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m relat$ p>ty means1 ) respect to any applicable taxpay]-- 7,a7 any #be-p]c5t own] ( ! taxpay]1 7,b7 any p]son :o is relat$ 7)9 ! mean+ ( section #bfg7;b7 or #gjg7;b77#a77 to ! taxpay] or any #be-p]c5t own] ( ! taxpay]1 & 7,c7 any o!r p]son :o is relat$ 7)9 ! mean+ ( section #dhb7 to ! taxpay]4 7#b7 #be-p]c5t own] ,! t]m #be-p]c5t own] means1 ) respect to any corporation1 any p]son :o owns at lea/ #be p]c5t (-- 7,a7 ! total vot+ p[] ( all classes ( /ock ( a corporation entitl$ to vote1 or 7,b7 ! total value ( all classes ( /ock ( su* corporation4 7#c7 ,section #cah to apply ,section #cah %all apply = purposes ( p>agraphs 7#a7 & 7#b71 except t-- 7,a7 #aj p]c5t %all be sub/itut$ = #ej p]c5t 9 section #cah7;a77#b77;,c71 & 7,b7 subp>agraphs 7,a71 7,b71 & 7,c7 ( section #cah7;a77#c7 %all n be appli$ s z to consid] a ,unit$ ,/ates p]son z own+ /ock :i* is own$ by a p]son :o is n a ,unit$ ,/ates p]son4 7h7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section1 includ+ regulations provid+ = su* adju/m5ts to ! application ( ?is section z are necess>y to prev5t ! avoidance ( ! purposes ( ?is section1 includ+ ?r\gh-- 7#a7 ! use ( unrelat$ p]sons1 conduit transactions1 or o!r int]m$i>ies1 or 7#b7 transactions or arrangem5ts design$1 9 :ole or 9 "p-- 7,a7 to *>act]ize paym5ts o!rwise subject to ?is section z paym5ts n subject to ?is section1 or 7,b7 to sub/itute paym5ts n subject to ?is section = paym5ts o!rwise subject to ?is section4 4 7b7 ,report+ requirem5ts & p5alties 7#a7 ,9 g5]al ,subsection 7b7 ( section #fjch;,a is am5d$ to read z foll[s3 7b7 ,requir$ in=mation 7#a7 ,9 g5]al ,= purposes ( subsection 7a71 ! in=mation describ$ 9 ?is subsection is su* in=mation z ! ,secret>y prescribes by regulations relat+ to-- 7,a7 ! "n1 pr9cipal place ( bus9ess1 nature ( bus9ess1 & c\ntry or c\ntries 9 :i* organiz$ or resid5t1 ( ea* p]son :i*-- 7i7 is a relat$ p>ty to ! report+ corporation1 & 7ii7 _h any transaction ) ! report+ corporation dur+ its taxable ye>1 7,b7 ! mann] 9 :i* ! report+ corporation is relat$ to ea* p]son ref]r$ to 9 subp>agraph 7,a71 & 7,c7 transactions betwe5 ! report+ corporation & ea* =eign p]son :i* is a relat$ p>ty to ! report+ corporation4 7#b7 ,additional in=mation reg>d+ base erosion paym5ts ,= purposes ( subsection 7a7 & section #fjch;,c1 if ! report+ corporation or ! =eign corporation to :om section #fjch;,c applies is an applicable taxpay]1 ! in=mation describ$ 9 ?is subsection %all include-- 7,a7 su* in=mation z ! ,secret>y det]m9es necess>y to det]m9e ! base erosion m9imum tax am\nt1 base erosion paym5ts1 & base erosion tax b5efits ( ! taxpay] = purposes ( section #ei;,a = ! taxable ye>1 & 7,b7 su* o!r in=mation z ! ,secret>y det]m9es necess>y to c>ry out su* section4 ,= purposes ( ?is p>agraph1 any t]m us$ 9 ?is p>agraph :i* is also us$ 9 section #ei;,a %all h ! same mean+ z :5 us$ 9 su* section4 4 7#b7 ,increase 9 p5alty ,p>agraphs 7#a7 & 7#b7 ( section #fjch;,a7d7 are ea* am5d$ by /rik+ #aj1jjj & ins]t+ #be1jjj4 7c7 ,disall[ance ( cr$its aga9/ base erosion tax ,p>agraph 7#b7 ( section #bf7;b7 is am5d$ by ins]t+ aft] subp>agraph 7,a7 ! foll[+ new subp>agraph3 7,b7 section #ei;,a 7relat+ to base erosion & anti-abuse tax71 4 7d7 ,con=m+ am5dm5ts 7#a7 ,! table ( p>ts = sub*apt] ,a ( *apt] #a is am5d$ by add+ aft] ! item relat+ to "p ,,vi ! foll[+ new item3 ,"p ,,vii4 ,base erosion & anti-abuse tax 4 7#b7 ,p>agraph 7#a7 ( section #hhb7;a71 z am5d$ by ?is ,act1 is am5d$ by ins]t+ or #ei;,a1 aft] section #aa14 7#c7 ,subp>agraph 7,a7 ( section #fdbe7;c77#a71 z am5d$ by sections #abjja & #acjja1 is am5d$ to read z foll[s3 7,a7 ! sum (-- 7i7 ! tax impos$ by section #aa1 or sub*apt] ,l ( *apt] #a1 :i*ev] is applicable1 plus 7ii7 ! tax impos$ by section #ei;,a1 ov] 4 7#d7 7,a7 ,subp>agraph 7,a7 ( section #ffee7;g77#a71 z am5d$ by sections #abjja & #acjja1 is am5d$ by /rik+ plus at ! end ( clause 7i71 by r$esignat+ clause 7ii7 z clause 7iii71 & by ins]t+ aft] clause 7i7 ! foll[+ new clause3 7ii7 ! tax impos$ by section #ei;,a1 plus 4 7,b7 ,subp>agraphs 7,a77i7 & 7,b77i7 ( section #ffee7;e77#b71 z am5d$ by section #acjja1 are ea* am5d$ by ins]t+ & modifi$ taxable income aft] taxable income4 7,c7 ,subp>agraph 7,b7 ( section #ffee7;e77#b7 is am5d$ by add+ at ! end ! foll[+ new clause3 7iii7 ,modifi$ taxable income ,! t]m modifi$ taxable income has ! mean+ giv5 su* t]m by section #ei;,a7c77#a74 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to base erosion paym5ts 7z def9$ 9 section #ei;,a7d7 ( ! ,int]nal ,rev5ue ,code ( #aihf1 z add$ by ?is section7 paid or accru$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,,iii ,o!r provisions #adeja4 ,taxation ( pass5g] cruise gross income ( =eign corporations & nonresid5t ali5 individuals 7a7 ,9 g5]al ,section #hhb is am5d$ by r$esignat+ subsection 7f7 z subsection 7g7 & by ins]t+ aft] subsection 7e7 ! foll[+ new subsection3 7f7 ,treatm5t ( pass5g] cruise gross income 7#a7 ,9 g5]al ,= purposes ( ?is title1 ! effectively connect$ pass5g] cruise gross income ( a =eign corporation %all be treat$ z gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates4 7#b7 ,effectively connect$ pass5g] cruise gross income ,= purposes ( ?is subsection1 ! t]m effectively connect$ pass5g] cruise gross income means1 ) respect to ! op]ation ( any %ip 9 a cov]$ voyage1 ! ,unit$ ,/ates t]ritorial wat]s p]c5tage ( ! gross income 7det]m9$ )\t reg>d to section #hhc7;a77#a77 d]iv$ f su* op]ation1 includ+ any am\nt receiv$ ) respect to ! provision ( any on- or (f-bo>d activities1 s]vices1 or sales1 ) respect to pass5g]s incid5tal to su* op]ation 7or ) respect to any agreem5t ) any p]son ) respect to ! provision ( any su* activities1 s]vices1 or sales74 7#c7 ,unit$ ,/ates t]ritorial wat]s p]c5tage ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m ,unit$ ,/ates t]ritorial wat]s p]c5tage means1 ) respect to ! op]ation ( any %ip 9 any cov]$ voyage1 ! ratio 7express$ z a p]c5tage7 (-- 7i7 ! numb] ( days dur+ su* voyage su* %ip 0 op]at$ 9 ! t]ritorial wat]s ( ! ,unit$ ,/ates1 divid$ by 7ii7 ! total numb] ( days ( su* voyage4 7,b7 ,cal5d> day rule ,if a %ip-- 7i7 is op]at$ 9 a cov]$ voyage1 or 7ii7 is op]at$ 9 ! t]ritorial wat]s ( ! ,unit$ ,/ates dur+ a cov]$ voyage1 = any portion ( a cal5d> day1 su* %ip %all be treat$ z hav+ op]at$ 9 a cov]$ voyage1 or z hav+ op]at$ 9 su* t]ritorial wat]s1 respectively1 = ! entirety ( su* day4 7,c7 ,t]ritorial wat]s ,! t]ritorial wat]s ( ! ,unit$ ,/ates %all be treat$ z consi/+ ( ^? wat]s :i* are-- 7i7 )9 ! int]national b\nd>y l9e betwe5 ! ,unit$ ,/ates & any contigu\s =eign c\ntry1 or 7ii7 )9 #ab nautical miles f l[ tide on ! coa/l9e ( ! ,unit$ ,/ates4 7#d7 ,cov]$ voyage ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m cov]$ voyage has ! mean+ giv5 su* t]m by section #ddgb7a74 7,b7 ,anti-abuse rule ,except z o!rwise provid$ by ! ,secret>y1 if pass5g]s emb>k a %ip 9 ! ,unit$ ,/ates & m ?an #aj p]c5t ( su* pass5g]s disemb>k 9 ! ,unit$ ,/ates1 ! op]ation ( su* %ip at all times betwe5 su* ev5ts %all be treat$ z a cov]$ voyage4 ,no?+ 9 ! prec$+ s5t5ce %all preclude any op]ation ( a %ip 7includ+ any op]ation ( a %ip be=e or aft] su* ev5ts7 :i* w\ld o!rwise be treat$ z "p ( a cov]$ voyage f be+ s treat$4 7#e7 ,treatm5t ( o!rwise effectively connect$ income ,gross income :i* w\ld1 )\t reg>d to ?is subsection1 be gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates-- 7,a7 %all be s treat$1 & 7,b7 %all n be tak5 into acc\nt z gross income "u p>agraph 7#b74 4 7b7 ,application to nonresid5t ali5 individuals ,section #hga is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,treatm5t ( pass5g] cruise gross income 7#a7 ,9 g5]al ,= purposes ( ?is title1 ! effectively connect$ pass5g] cruise gross income ( a nonresid5t ali5 individual %all be treat$ z gross income :i* is effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates4 7#b7 ,def9itions & special rules ,= purposes ( ?is subsection-- 7,a7 ,def9itions ,t]ms us$ 9 ?is subsection :i* are also us$ 9 section #hhb7;f7 %all h ! same mean+ z :5 us$ 9 su* section1 except t section #hhb7;f77#b7 %all be appli$ by sub/itut+ section #hgb7;b77#a7 = section #hhc7;a77#a74 7,b7 ,treatm5t ( o!rwise effectively connect$ income ,rules simil> to ! rules ( section #hhb7;f77#e7 %all apply = purposes ( ?is subsection4 4 7c7 ,coord9ation ) reciprocal exemptions = %ipp+ income 7#a7 ,9 g5]al ,section #hhc7;a77#a7 is am5d$ by /rik+ ,gross income & ins]t+ ,except z provid$ 9 section #hhb7;f71 gross income4 7#b7 ,nonresid5t ali5 individuals ,section #hgb7;b77#a7 is am5d$ by /rik+ ,gross income & ins]t+ ,except z provid$ 9 section #hga7n71 gross income4 7d7 ,coord9ation ) tax on gross transportation income ,section #hhg7;b77#d7 is am5d$ by add+ at ! end ! foll[+ new flu% text3 ,! prec$+ s5t5ce %all n apply to any ,unit$ ,/ates s\rce gross transportation income :i* is effectively connect$ pass5g] cruise gross income 7)9 ! mean+ ( section #hga7n7 or #hhb7;f774 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adejb4 ,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$4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adejc4 ,repeal ( fair m>ket value me?od ( int]e/ exp5se apportionm5t 7a7 ,9 g5]al ,p>agraph 7#b7 ( section #hfd7;e7 is am5d$ to read z foll[s3 7#b7 ,gross income & fair m>ket value me?ods may n be us$ = int]e/ ,all allocations & apportionm5ts ( int]e/ exp5se %all be det]m9$ us+ ! adju/$ bases ( assets r ?an on ! basis ( ! fair m>ket value ( ! assets or gross income4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 #adejd4 ,modification to s\rce rules involv+ possessions 7a7 ,9 g5]al ,subsection 7b77#b7 ( ,section #icg ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ 1 b only to ! ext5t su* income is attributable to an (fice or fix$ place ( bus9ess )9 ! ,unit$ ,/ates 7det]m9$ "u ! rules ( ,section #hfd7;c77#e77 be=e ! p]iod at ! end4 7b7 ,s\rce rules = p]sonal prop]ty sales ,subsection 7j77#c7 ( section #hfe ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ #icb1 aft] #ica14 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjah4 #adeje4 ,repeal ( exclusion applicable to c]ta9 pass5g] aircraft op]at$ by a =eign corporation 7a7 ,9 g5]al ,section #hhc is am5d$-- 7#a7 by /rik+ ,gross income 9 subsection 7a77#b7 & ins]t+ ,except z provid$ 9 subsection 7d71 gross income1 & 7#b7 by add+ at ! end ! foll[+ new subsection3 7d7 ,exception = aircraft op]at$ by =eign corporations 7#a7 ,9 g5]al ,subsection 7a77#b7 %all n apply to any corporation op]at+ a pass5g] airl9e if-- 7,a7 ! corporation is organiz$ 9 a =eign c\ntry ! resid5ts ( :i* are n eligible = a r$uc$ rate ( tax or an exemption f tax "u section #hha or #hhb1 & 7,b7 su* =eign c\ntry has few] ?an #b arrivals & dep>tures1 p] week1 f pass5g] airl9e c>ri]s :i*-- 7i7 are organiz$ "u ! laws ( ! ,unit$ ,/ates or any ,/ate1 & 7ii7 h annual gross op]ational rev5ues ( m ?an #a1jjj1jjj1jjj4 ,= purposes ( subp>agraph 7,b71 an aircraft t l&s 9 "o c\ntry & subsequ5tly dep>ts f t c\ntry %all be treat$ z hav+ engag$ 9 #a arrival & dep>ture4 7#b7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjah1 ! doll> am\nt 9 subp>agraph 7,a77ii7 %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;f77#c7 = ! cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjag = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,any increase det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ multiple ( #a1jjj1jjj4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjag4 ,e ,rev5ue dep5d5t proposals #aejja4 ,repeal ( increas$ limitation on net op]at+ losses ,section #agb7;a77#b71 z am5d$ by section #accjb1 is am5d$ by /rik+ 7#hj p]c5t1 9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbb74 #aejjb4 ,repeal ( limitation on d$uction = meals provid$ at ! conv5i5ce ( ! employ] ,section #bgd1 z am5d$ by section #accjd1 is am5d$ by /rik+ subsection 7o7 & r$esignat+ subsection 7p7 z subsection 7o74 #aejjc4 ,repeal ( r$uc$ d$uction = global intangible l[-tax$ income & =eign-d]iv$ intangible income ,section #bej7;a71 z add$ by section #adbjb1 is am5d$ by /rik+ p>agraph 7#c74 #aejjd4 ,repeal ( modifications to ! base erosion & anti-abuse tax ,section #ei;,a7b71 z add$ by section #addja1 is am5d$ to read z foll[s3 7b7 ,base erosion m9imum tax am\nt ,= purposes ( ?is section1 ! t]m base erosion m9imum tax am\nt means1 ) respect to any applicable taxpay] = any taxable ye>1 ! excess 7if any7 (-- 7#a7 an am\nt equal to #aj p]c5t ( ! modifi$ taxable income ( su* taxpay] = ! taxable ye>1 ov] 7#b7 an am\nt equal to ! regul> tax liability 7z def9$ 9 section #bf7;b77 ( ! taxpay] = ! taxable ye>1 r$uc$ 7b n bel[ z]o7 by ! excess 7if any7 (-- 7,a7 ! cr$its all[$ "u ?is *apt] aga9/ su* regul> tax liability1 ov] 7,b7 ! cr$it all[$ "u section #ch = ! taxable ye> :i* is prop]ly allocable to ! rese>* cr$it det]m9$ "u section #da7;a74 4 #aejje4 ,repeal ( amortization ( rese>* & exp]im5tal exp5ditures 7a7 ,9 g5]al ,section #agd1 z am5d$ by section #acbjf1 is am5d$ to read z foll[s3 #agd4 ,rese>* & exp]im5tal exp5ditures 7a7 ,treatm5t z ,exp5ses 7#a7 ,9 g5]al ,a taxpay] may treat rese>* or exp]im5tal exp5ditures :i* are paid or incurr$ by him dur+ ! taxable ye> 9 connection ) 8 trade or bus9ess z exp5ses :i* are n *>geable to capital acc\nt4 ,! exp5ditures s treat$ %all be all[$ z a d$uction4 7#b7 ,:5 me?od may be adopt$ 7,a7 ,)\t cons5t ,a taxpay] may1 )\t ! cons5t ( ! ,secret>y1 adopt ! me?od provid$ 9 ?is subsection = 8 fir/ taxable ye> = :i* exp5ditures describ$ 9 p>agraph 7#a7 are paid or incurr$4 7,b7 ,) cons5t ,a taxpay] may1 ) ! cons5t ( ! ,secret>y1 adopt at any "t ! me?od provid$ 9 ?is subsection4 7#c7 ,scope ,! me?od adopt$ "u ?is subsection %all apply to all exp5ditures describ$ 9 p>agraph 7#a74 ,! me?od adopt$ %all be adh]$ to 9 comput+ taxable income = ! taxable ye> & = all subsequ5t taxable ye>s unless1 ) ! approval ( ! ,secret>y1 a *ange to a diff]5t me?od is au?oriz$ ) respect to "p or all ( su* exp5ditures4 7b7 ,amortization ( ,c]ta9 ,rese>* & ,exp]im5tal ,exp5ditures 7#a7 ,9 g5]al ,at ! election ( ! taxpay]1 made 9 accordance ) regulations prescrib$ by ! ,secret>y1 rese>* or exp]im5tal exp5ditures :i* are-- 7,a7 paid or incurr$ by ! taxpay] 9 connection ) 8 trade or bus9ess1 7,b7 n treat$ z exp5ses "u subsection 7a71 & 7,c7 *>geable to capital acc\nt b n *>geable to prop]ty ( a "* :i* is subject to ! all[ance "u section #afg 7relat+ to all[ance = depreciation1 etc47 or section #faa 7relat+ to all[ance = depletion71 may be treat$ z def]r$ exp5ses4 ,9 comput+ taxable income1 su* def]r$ exp5ses %all be all[$ z a d$uction ratably ov] su* p]iod ( n less ?an #fj mon?s z may be select$ by ! taxpay] 7beg9n+ ) ! mon? 9 :i* ! taxpay] fir/ realizes b5efits f su* exp5ditures74 ,su* def]r$ exp5ses are exp5ditures prop]ly *>geable to capital acc\nt = purposes ( section #ajaf7;a77#a7 7relat+ to adju/m5ts to basis ( prop]ty74 7#b7 ,"t = & scope ( election ,! election provid$ by p>agraph 7#a7 may be made = any taxable ye>1 b only if made n lat] ?an ! "t prescrib$ by law = fil+ ! return = su* taxable ye> 7includ+ ext5sions !re(74 ,! me?od s elect$1 & ! p]iod select$ by ! taxpay]1 %all be adh]$ to 9 comput+ taxable income = ! taxable ye> = :i* ! election is made & = all subsequ5t taxable ye>s unless1 ) ! approval ( ! ,secret>y1 a *ange to a diff]5t me?od 7or to a diff]5t p]iod7 is au?oriz$ ) respect to "p or all ( su* exp5ditures4 ,! election %all n apply to any exp5diture paid or incurr$ dur+ any taxable ye> be=e ! taxable ye> = :i* ! taxpay] makes ! election4 7c7 ,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 7d7 ,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 7e7 ,only ,reasonable ,rese>* ,exp5ditures ,eligible ,?is section %all apply to a rese>* or exp]im5tal exp5diture only to ! ext5t t ! am\nt !re( is reasonable "u ! circum/ances4 7f7 ,cross ,ref]5ces 7#a7 ,= adju/m5ts to basis ( prop]ty = am\nts all[$ z d$uctions z def]r$ exp5ses "u subsection 7b71 see section #ajaf7;a77#ad74 7#b7 ,= election ( #aj-ye> amortization ( exp5ditures all[able z a d$uction "u subsection 7a71 see section #ei7;e74 4 7b7 ,*ange 9 me?od ( acc\nt+ ,! am5dm5ts made by subsection 7a7 %all be treat$ z a *ange 9 me?od ( acc\nt+ = purposes ( section #dha ( ! ,int]nal ,rev5ue ,code ( #aihf &-- 7#a7 su* *ange %all be treat$ z initiat$ by ! taxpay]1 7#b7 su* *ange %all be treat$ z made ) ! cons5t ( ! ,secret>y1 & 7#c7 su* *ange %all be appli$ only on a cut-(f basis = any rese>* or exp]im5tal exp5ditures paid or incurr$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe1 & no adju/m5ts "u section #dha7;a7 %all be made4 7c7 ,con=m+ am5dm5ts 7#a7 ,section #da7;d77#a77;,a71 z am5d$ by section #acbjf1 is am5d$ by /rik+ specifi$ rese>* or exp]im5tal exp5ditures "u section #agd & ins]t+ exp5ses "u section #agd4 7#b7 ,subsection 7c7 ( section #bhj;,c1 z am5d$ by section #acbjf1 is am5d$-- 7,a7 by r$esignat+ p>agraphs 7#b7 & 7#c7 z p>agraphs 7#c7 & 7#d71 respectively1 & 7,b7 by /rik+ p>agraph 7#a7 & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,no d$uction %all be all[$ = t portion ( ! qualifi$ rese>* exp5ses 7z def9$ 9 section #da7;b77 or basic rese>* exp5ses 7z def9$ 9 section #da7;e77#b77 o!rwise all[able z a d$uction = ! taxable ye> :i* is equal to ! am\nt ( ! cr$it det]m9$ = su* taxable ye> "u section #da7;a74 7#b7 ,simil> rule :]e taxpay] capitalizes r ?an d$ucts exp5ses ,if-- 7,a7 ! am\nt ( ! cr$it det]m9$ = ! taxable ye> "u section #da7;a77#a71 exce$s 7,b7 ! am\nt all[able z a d$uction = su* taxable ye> = qualifi$ rese>* exp5ses or basic rese>* exp5ses 7det]m9$ )\t reg>d to p>agraph 7#a771 ! am\nt *>geable to capital acc\nt = ! taxable ye> = su* exp5ses %all be r$uc$ by ! am\nt ( su* excess4 1 & 7,c7 9 p>agraph 7#c77;,a77i71 z r$esignat$ by subp>agraph 7,a71 by /rik+ p>agraph 7#a7 & ins]t+ p>agraphs 7#a7 & 7#b74 7#c7 ,! table ( sections = "p ,,vi ( sub*apt] ,b ( *apt] #a1 z am5d$ by section #acbjf1 is am5d$ by /rik+ ! item relat$ to section #agd & ins]t+ ! foll[+3 ,sec4 #agd4 ,rese>* & exp]im5tal exp5ditures4 4 #aejjf4 ,report+ 7a7 ,9 g5]al ,subp>t ,b ( "p ,,iii ( sub*apt] ,a ( *apt] #fa1 z am5d$ by ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new section3 #fjej,z4 ,transaction affect+ rev5ue dep5d5t proposals 7a7 ,rese>* & exp]im5tal exp5ditures ,any taxpay] :o makes rese>* & exp]im5tal exp5ditures 7)9 ! mean+ ( section #agd7 dur+ a taxable ye> %all make a return accord+ to ! =ms & regulations prescrib$ by ! ,secret>y1 sett+ =? ! aggregate am\nt ( su* exp5ditures4 7b7 ,=eign relat$ p>ty paym5ts ,any taxpay] :o makes a paym5t to a =eign p]son :i* is a relat$ p>ty 7z su* t]ms are def9$ 9 section #ei;,a7 ( ! taxpay] dur+ ! taxable ye> %all make a return accord+ to ! =ms & regulations prescrib$ by ! ,secret>y1 sett+ =?-- 7#a7 ! am\nt ( su* paym5ts by type & sep>ately /at$1 & 7#b7 any am\nt paid :i* results 9 a r$uction ( gross receipts to ! taxpay]4 7c7 ,=eign-d]iv$ intangible income ,any taxpay] :o has =eign-d]iv$ intangible income 7z def9$ 9 section #bej7;b77 = a taxable ye> %all make a return accord+ to ! =ms & regulations prescrib$ by ! ,secret>y1 sett+ =?-- 7#a7 ! aggregate am\nt ( su* income1 7#b7 ! am\nt ( =eign-d]iv$ d$uction eligible income 7z def9$ 9 section #bej7;b77#d771 & 7#c7 a c]tification t any income describ$ 9 p>agraph 7#b7 does n relate to ! sale ( products = any use1 consumption1 or disposition )9 ! ,unit$ ,/ates4 4 7b7 ,p5alty ,section #ffeb1 z am5d$ by section #acfjc1 is am5d$ by add+ at ! end ! foll[+ new subsection3 7q7 ,failure to file ) respect to transactions affect+ rev5ue dep5d5t proposals ,9 ! case ( any failure to make a return requir$ "u section #fjej,z conta9+ ! in=mation requir$ by su* section on ! date prescrib$ !re= 7det]m9$ ) reg>d to any ext5sion ( "t = fil+71 unless x is %[n t su* failure is due to reasonable cause1 !re %all be paid 7on notice & dem& by ! ,secret>y & 9 ! same mann] z tax7 by ! p]son fail+ to file su* return1 an am\nt equal to #a1jjj = ea* day dur+ :i* su* failure cont9ues1 b ! total am\nt impos$ "u ?is subsection ) respect to any return %all n exce$ #bej1jjj4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbd4 #aejjg4 ,effective date 7a7 ,9 g5]al ,! am5dm5ts made by ?is subtitle %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe4 7b7 ,rev5ue requirem5t ,not)/&+ subsection 7a71 ! am5dm5ts made by ?is subtitle %all n take effect unless-- 7#a7 ! excess (-- 7,a7 ! cumulative aggregate on-budget ,f$]al rev5ue f all s\rces = ! p]iod beg9n+ on ,octob] #a1 #bjag1 & end+ on ,septemb] #cj1 #bjbf1 7z det]m9$ by ! ,secret>y ( ! ,treasury bas$ on am\nts report$ 9 ! ,f9ancial ,report ( ! ,unit$ ,/ates71 ov] 7,b7 #bg1dhg1jjj1jjj1jjj1 is great] ?an or equal to 7#b7 #ijj1jjj1jjj1jjj4 ,,ii #bjjja4 ,oil & gas program 7a7 ,def9itions ,9 ?is section3 7#a7 ,coa/al ,pla9 ,! t]m ,coa/al ,pla9 means ! area id5tifi$ z ! #ajjb ,area on ! plates prep>$ by ! ,unit$ ,/ates ,geological ,survey entitl$ ,,anwr ,map - ,plate #a & ,,anwr ,map - ,plate #b1 dat$ ,octob] #bd1 #bjag1 & on file ) ! ,unit$ ,/ates ,geological ,survey & ! ,(fice ( ! ,solicitor ( ! ,dep>tm5t ( ! ,int]ior4 7#b7 ,secret>y ,! t]m ,secret>y means ! ,secret>y ( ! ,int]ior1 act+ ?r\gh ! ,bureau ( ,l& ,managem5t4 7b7 ,oil & gas program 7#a7 ,9 g5]al ,section #ajjc ( ! ,alaska ,national ,int]e/ ,l&s ,cons]vation ,act 7#af ,u4,s4,c4 #cadc7 is repeal$4 7#b7 ,e/abli%m5t 7,a7 ,9 g5]al ,! ,secret>y %all e/abli% & adm9i/] a competitive oil & gas program = ! leas+1 developm5t1 production1 & transportation ( oil & gas 9 & f ! ,coa/al ,pla94 7,b7 ,purposes ,section #cjc7b77;,b7 ( ! ,alaska ,national ,int]e/ ,l&s ,cons]vation ,act 7,public ,law #if-dhg2 #id ,/at4 #bcij7 is am5d$-- 7i7 9 clause 7iii71 by /rik+ & at ! end2 7ii7 9 clause 7iv71 by /rik+ ! p]iod at ! end & ins]t+ 2 &2 & 7iii7 by add+ at ! end ! foll[+3 7v7 to provide = an oil & gas program on ! ,coa/al ,pla94 4 7#c7 ,managem5t ,except z o!rwise provid$ 9 ?is section1 ! ,secret>y %all manage ! oil & gas program on ! ,coa/al ,pla9 9 accordance ) ! ,naval ,petroleum ,res]ves ,production ,act ( #aigf 7#db ,u4,s4,c4 #feja et seq47 7includ+ regulations74 7#d7 ,royalties ,not)/&+ ! ,m9]al ,leas+ ,act 7#cj ,u4,s4,c4 #aha et seq471 ! royalty rate = leases issu$ pursuant to ?is section %all be #af4fg p]c5t4 7#e7 ,receipts ,not)/&+ ! ,m9]al ,leas+ ,act 7#cj ,u4,s4,c4 #aha et seq471 ( ! am\nt ( adju/$ bonus1 r5tal1 & royalty receipts d]iv$ f ! oil & gas program & op]ations on ,f$]al l& au?oriz$ "u ?is section-- 7,a7 #ej p]c5t %all be paid to ! ,/ate ( ,alaska2 & 7,b7 ! balance %all be deposit$ into ! ,treasury z miscellane\s receipts4 7c7 #b lease sales )9 #aj ye>s 7#a7 ,requirem5t 7,a7 ,9 g5]al ,subject to subp>agraph 7,b71 ! ,secret>y %all conduct n few] ?an #b lease sales area-wide "u ! oil & gas program "u ?is section by n lat] ?an #aj ye>s aft] ! date ( enactm5t ( ?is ,act4 7,b7 ,sale acreages2 s*$ule 7i7 ,acreages ,! ,secret>y %all (f] = lease "u ! oil & gas program "u ?is section-- 7,i7 n few] ?an #djj1jjj acres area-wide 9 ea* lease sale2 & 7,,ii7 ^? areas t h ! highe/ pot5tial = ! discov]y ( hydroc>bons4 7ii7 ,s*$ule ,! ,secret>y %all (f]-- 7,i7 ! initial lease sale "u ! oil & gas program "u ?is section n lat] ?an #d ye>s aft] ! date ( enactm5t ( ?is ,act2 & 7,,ii7 a second lease sale "u ! oil & gas program "u ?is section n lat] ?an #g ye>s aft] ! date ( enactm5t ( ?is ,act4 7#b7 ,rights-(-way ,! ,secret>y %all issue any rights-(-way or easem5ts across ! ,coa/al ,pla9 = ! exploration1 developm5t1 production1 or transportation necess>y to c>ry out ?is section4 7#c7 ,surface developm5t ,9 adm9i/]+ ?is section1 ! ,secret>y %all au?orize up to #b1jjj surface acres ( ,f$]al l& on ! ,coa/al ,pla9 to be cov]$ by production & support facilities 7includ+ air/rips & any area cov]$ by gravel b]ms or pi]s = support ( pipel9es7 dur+ ! t]m ( ! leases "u ! oil & gas program "u ?is section4 #bjjjb4 ,limitations on am\nt ( di/ribut$ qualifi$ out] ,cont95tal ,%elf rev5ues ,section #aje7;f77#a7 ( ! ,gulf ( ,mexico ,en]gy ,security ,act ( #bjjf 7#dc ,u4,s4,c4 #acca note2 ,public ,law #aji-dcb7 is am5d$ by /rik+ exce$ #ejj1jjj1jjj = ea* ( fiscal ye>s #bjaf ?r\gh #bjee4 & ins]t+ ! foll[+3 8exce$-- 7,a7 #ejj1jjj1jjj = ea* ( fiscal ye>s #bjaf ?r\gh #bjai2 7,b7 #fej1jjj1jjj = ea* ( fiscal ye>s #bjbj & #bjba2 & 7,c7 #ejj1jjj1jjj = ea* ( fiscal ye>s #bjbb ?r\gh #bjee4 4 #bjjjc4 ,/rategic ,petroleum ,res]ve drawd[n & sale 7a7 ,drawd[n & sale 7#a7 ,9 g5]al ,not)/&+ section #afa ( ! ,en]gy ,policy & ,cons]vation ,act 7#db ,u4,s4,c4 #fbda71 except z provid$ 9 subsections 7b7 & 7c71 ! ,secret>y ( ,en]gy %all draw d[n & sell f ! ,/rategic ,petroleum ,res]ve #e1jjj1jjj b>rels ( crude oil dur+ ! p]iod ( fiscal ye>s #bjbf ?r\gh #bjbg4 7#b7 ,deposit ( am\nts receiv$ f sale ,am\nts receiv$ f a sale "u p>agraph 7#a7 %all be deposit$ 9 ! g5]al fund ( ! ,treasury dur+ ! fiscal ye> 9 :i* ! sale occurs4 7b7 ,em]g5cy protection ,! ,secret>y ( ,en]gy %all n draw d[n & sell crude oil "u subsection 7a7 9 a quantity t w\ld limit ! au?ority to sell petroleum products "u subsection 7h7 ( section #afa ( ! ,en]gy ,policy & ,cons]vation ,act 7#db ,u4,s4,c4 #fbda7 9 ! full quantity au?oriz$ by t subsection4 7c7 ,limitation ,! ,secret>y ( ,en]gy %all n drawd[n or conduct sales ( crude oil "u subsection 7a7 aft] ! date on :i* a total ( #cbe1jjj1jjj has be5 deposit$ 9 ! g5]al fund ( ! ,treasury f sales au?oriz$ "u t subsection4 ,novemb] #bh1 #bjag,read twice & plac$ on ! cal5d>