To provide for a manager's amendment.

1. 1

   Change 1: Adds SEC. 224. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC VEHICLES on page 82, between lines 20 and 21

   Adds a sectionPrinted page

   Inserted: SEC. 224. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

   Inserted: (a) In General.--Section 30(b) (relating to limitations) is amended by striking paragraph (2) and by redesignating paragraph (3) as paragraph (2).

   Inserted: (b) Effective Date.--The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

   Original wording

   On page 82, between lines 20 and 21, insert the following:

2. 2

   Change 2: Adds SEC. 307. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE FOR CONSERVATION PURPOSES on page 107, between lines 4 and 5

   Adds a sectionPrinted page

   Inserted: SEC. 307. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE FOR CONSERVATION PURPOSES.

   Inserted: (a) In General.--

   Inserted: (1) Individuals.--Paragraph (1) of subsection 170(b) (relating to percentage limitations) is amended by redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively, and by inserting after subparagraph (D) the following new subparagraph:

   Inserted: "(E) Contributions of qualified conservation contributions.--

   Inserted: "(i) In general.--Any qualified conservation contribution (as defined in subsection (h)(1)) to an organization described in subparagraph (A) shall be allowed to the extent the aggregate of such contributions does not exceed the excess of 50 percent of the taxpayer's contribution base over the amount of all other charitable contributions allowable under this paragraph.

   Inserted: "(ii) Carryover.--If the aggregate amount of contributions described in clause (i) exceeds the limitation of clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 15 succeeding years in order of time.

   Inserted: "(iii) Coordination with other subparagraphs.--For purposes of applying this subsection and subsection (d)(1), contributions described in clause (i) shall not be treated as described in subparagraph (A), (B), (C), or (D).

   Inserted: "(iv) Qualified farmer or rancher.--

   Inserted: "(I) In general.--If the individual is a qualified farmer or rancher for the taxable year in which the contribution is made, clause (i) shall be applied by substituting '100 percent' for '50 percent'.

   Inserted: "(II) Definition.--For purposes of subclause (I), the term 'qualified farmer or rancher' means a taxpayer whose gross income from the trade or business of farming (within the meaning of section 2032A(e)(5)) is greater than 50 percent of the taxpayer's gross income for the taxable year.".

   Inserted: (2) Corporations.--Paragraph (2) of section 170(b) is amended to read as follows:

   Inserted: "(2) Corporations.--In the case of a corporation--

   Show 69 more inserted paragraphsShow less

   Inserted: "(A) In general.--The total deductions under subsection (a) for any taxable year (other than for contributions to which subparagraph (B) applies) shall not exceed 10 percent of the taxpayer's taxable income.

   Inserted: "(B) Qualified conservation contributions by certain corporate farmers and ranchers.--

   Inserted: "(i) In general.--Any qualified conservation contribution (as defined in subsection (h)(1)) made--

   Inserted: "(I) by a corporation which, for the taxable year during which the contribution is made, is a qualified farmer or rancher (as defined in paragraph (1)(E)(iv)(II)) and the stock of which is not readily tradable on an established securities market at any time during such year, and

   Inserted: "(II) to an organization described in paragraph (1)(A), shall be allowed to the extent the aggregate of such contributions does not exceed the excess of the taxpayer's taxable income over the amount of charitable contributions allowable under subparagraph (A).

   Inserted: "(ii) Carryover.--If the aggregate amount of contributions described in clause (i) exceeds the limitation of clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(2)) as a charitable contribution to which clause (i) applies in each of the 15 succeeding years in order of time.

   Inserted: "(C) Taxable income.--For purposes of this paragraph, taxable income shall be computed without regard to--

   Inserted: "(i) this section,

   Inserted: "(ii) part VIII (except section 248),

   Inserted: "(iii) any net operating loss carrryback to the taxable year under section 172,

   Inserted: "(iv) section 199, and

   Inserted: "(v) any capital loss carryback to the taxable year under section 1212(a)(1).".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) The second sentence of clause (i) of section 170(b)(1)(C) is amended by striking "subparagraph (D)" and inserting "subparagraph (D) or (E)".

   Inserted: (2) Clause (i) of section 170(b)(1)(D) is amended by striking "subparagraph (A)" and inserting "subparagraphs (A) or (E)".

   Inserted: (3) Paragraph (2) of section 170(d) is amended by striking "subsection (b)(2)" each place it appears and inserting "subsection (b)(2)(A)".

   Inserted: (4) Section 545(b)(2) is amended by striking "and (D)" and inserting "(D), and (E)".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2005, and before January 1, 2008.

   Inserted: SEC. 308. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF LITERARY, MUSICAL, ARTISTIC, AND SCHOLARLY COMPOSITIONS.

   Inserted: (a) In General.--Subsection (e) of section 170 (relating to certain contributions of ordinary income and capital gain property), as amended by this section 33 of this Act, is amended by adding at the end the following new paragraph:

   Inserted: "(18) Special rule for certain contributions of literary, musical, artistic, or scholarly compositions.--

   Inserted: "(A) In general.--In the case of a qualified artistic charitable contribution--

   Inserted: "(i) the amount of such contribution taken into account under this section shall be the fair market value of the property contributed (determined at the time of such contribution), and

   Inserted: "(ii) no reduction in the amount of such contribution shall be made under paragraph (1).

   Inserted: "(B) Qualified artistic charitable contribution.--For purposes of this paragraph, the term 'qualified artistic charitable contribution' means a charitable contribution of any literary, musical, artistic, or scholarly composition, or similar property, or the copyright thereon (or both), but only if--

   Inserted: "(i) such property was created by the personal efforts of the taxpayer making such contribution no less than 18 months prior to such contribution,

   Inserted: "(ii) the taxpayer--

   Inserted: "(I) has received a qualified appraisal of the fair market value of such property in accordance with the regulations under this section, and

   Inserted: "(II) attaches to the taxpayer's income tax return for the taxable year in which such contribution was made a copy of such appraisal,

   Inserted: "(iii) the donee is an organization described in subsection (b)(1)(A),

   Inserted: "(iv) the use of such property by the donee is related to the purpose or function constituting the basis for the donee's exemption under section 501 (or, in the case of a governmental unit, to any purpose or function described under section 501(c)),

   Inserted: "(v) the taxpayer receives from the donee a written statement representing that the donee's use of the property will be in accordance with the provisions of clause (iv), and

   Inserted: "(vi) the written appraisal referred to in clause (ii) includes evidence of the extent (if any) to which property created by the personal efforts of the taxpayer and of the same type as the donated property is or has been--

   Inserted: "(I) owned, maintained, and displayed by organizations described in subsection (b)(1)(A), and

   Inserted: "(II) sold to or exchanged by persons other than the taxpayer, donee, or any related person (as defined in section 465(b)(3)(C)).

   Inserted: "(C) Maximum dollar limitation; no carryover of increased deduction.--The increase in the deduction under this section by reason of this paragraph for any taxable year--

   Inserted: "(i) shall not exceed the artistic adjusted gross income of the taxpayer for such taxable year, and

   Inserted: "(ii) shall not be taken into account in determining the amount which may be carried from such taxable year under subsection (d).

   Inserted: "(D) Artistic adjusted gross income.--For purposes of this paragraph, the term 'artistic adjusted gross income' means that portion of the adjusted gross income of the taxpayer for the taxable year attributable to--

   Inserted: "(i) income from the sale or use of property created by the personal efforts of the taxpayer which is of the same type as the donated property, and

   Inserted: "(ii) income from teaching, lecturing, performing, or similar activity with respect to property described in clause (i).

   Inserted: "(E) Paragraph not to apply to certain contributions.--Subparagraph (A) shall not apply to any charitable contribution of any letter, memorandum, or similar property which was written, prepared, or produced by or for an individual while the individual is an officer or employee of any person (including any government agency or instrumentality) unless such letter, memorandum, or similar property is entirely personal.

   Inserted: "(F) Copyright treated as separate property for partial interest rule.--In the case of a qualified artistic charitable contribution, the tangible literary, musical, artistic, or scholarly composition, or similar property and the copyright on such work shall be treated as separate properties for purposes of this paragraph and subsection (f)(3).

   Inserted: "(G) Termination.--This paragraph shall not apply to contributions made after December 31, 2007.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to contributions made after December 31, 2005.

   Inserted: SEC. 309. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS EXCLUDED FROM GROSS INCOME.

   Inserted: (a) In General.--Part III of subchapter B of chapter 1 is amended by inserting after section 139A the following new section:

   Inserted: "SEC. 139B. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

   Inserted: "(a) In General.--Gross income of an individual does not include amounts received, from an organization described in section 170(c), as reimbursement of operating expenses with respect to use of a passenger automobile for the benefit of such organization. The preceding sentence shall apply only to the extent that the expenses which are reimbursed would be deductible under this chapter if section 274(d) were applied--

   Inserted: "(1) by using the standard business mileage rate established under such section, and

   Inserted: "(2) as if the individual were an employee of an organization not described in section 170(c).

   Inserted: "(b) Application to Volunteer Services Only.--Subsection (a) shall not apply with respect to any expenses relating to the performance of services for compensation.

   Inserted: "(c) No Double Benefit.--A taxpayer may not claim a deduction or credit under any other provision of this title with respect to the expenses under subsection (a).

   Inserted: "(d) Exemption From Reporting Requirements.--Section 6041 shall not apply with respect to reimbursements excluded from income under subsection (a).

   Inserted: "(e) Termination.--This section shall not apply to taxable years beginning after December 31, 2007.".

   Inserted: (b) Clerical Amendment.--The table of sections for part III of subchapter B of chapter 1 is amended by inserting after the item relating to section 139 the following new item:

   Inserted: "Sec. 139A. Mileage reimbursements to charitable volunteers".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

   Inserted: SEC. 310. ALTERNATIVE PERCENTAGE LIMITATION FOR CORPORATE CHARITABLE CONTRIBUTIONS TO THE MATHEMATICS AND SCIENCE PARTNERSHIP PROGRAM.

   Inserted: (a) In General.--Section 170(b) (related to percentage limitations) is amended by adding at the end the following new paragraph:

   Inserted: "(3) Special rule for corporate contributions to the mathematics and science partnership program.--

   Inserted: "(A) In general.--In the case of a corporation which makes an eligible mathematics and science contribution--

   Inserted: "(i) the limitation under paragraph (2) shall apply separately with respect to all such contributions and all other charitable contributions, and

   Inserted: "(ii) paragraph (2) shall be applied with respect to all eligible mathematics and science contributions by substituting '15 percent' for '10 percent'.

   Inserted: "(B) Eligible mathematics and science contribution.--

   Inserted: "(i) In general.--For purposes of this paragraph, the term 'eligible mathematics and science contribution' means a charitable contribution (other than a contribution of used equipment) to a qualified partnership for the purpose of an activity described in section 2202(c) of the Elementary and Secondary Education Act of 1965..

   Inserted: "(ii) Qualified partnership.--The term 'qualified partnership' means an eligible partnership (within the meaning of section 2201(b)(1) of the Elementary and Secondary Education Act of 1965), but only to the extent that such partnership does not include a person other than a person described in paragraph (1)(A).

   Inserted: "(C) Termination.--This paragraph shall not apply to any contributions made in taxable years beginning after December 31, 2006.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to contributions made in taxable years beginning after December 31, 2005.

   Original wording

   On page 107, between lines 4 and 5, insert the following:

3. 3

   Change 3: Replaces “$100” with “$250”

   ReplacesPage 149, line 7Printed page

   [struck: $100][inserted: $250]

   Original wording

   On page 149, line 7, strike “$100” and insert “$250”.

4. 4

   Change 4: Rewrites page 150, line 4 through page 151, line 2

   ReplacesPrinted page

   Removes page 150, line 4 through page 151, line 2 of the printed bill. See that page

   Inserted: SEC. 318. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR CERTAIN CHARITABLE CONTRIBUTIONS.

   Inserted: (a) Recordkeeping Requirement.--Subsection (f) of section 170, as amended by section 317 of this Act, is amended by adding at the end the following new paragraph:

   Inserted: "(16) Recordkeeping.--No deduction shall be allowed under subsection (a) for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of such contribution--

   Inserted: "(A) a cancelled check, or

   Inserted: "(B) a receipt or a letter or other written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to contributions made in taxable years beginning after the date of the enactment of this Act.

   Original wording

   Beginning on page 150, line 4, strike all through page 151, line 2 and insert the following:

5. 5

   Change 5: Adds SEC. 322. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION NET INVESTMENT INCOME on page 172, line 21

   Adds a sectionPrinted page

   Inserted: SEC. 322. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION NET INVESTMENT INCOME.

   Inserted: (a) Gross Investment Income.--

   Inserted: (1) In general.--Paragraph (2) of section 4940(c) (relating to gross investment income) is amended by adding at the end the following new sentence: "Such term shall also include income from sources similar to those in the preceding sentence.".

   Inserted: (2) Conforming amendment.--Subsection (e) of section 509 (relating to gross investment income) is amended by adding at the end the following new sentence: "Such term shall also include income from sources similar to those in the preceding sentence.".

   Inserted: (b) Capital Gain Net Income.--Paragraph (4) of section 4940(c) (relating to capital gains and losses) is amended--

   Inserted: (1) in subparagraph (A), by striking "used for the production of interest, dividends, rents, and royalties" and inserting "used for the production of gross investment income (as defined in paragraph (2))", and

   Inserted: (2) in subparagraph (C), by inserting "or carrybacks" after "carryovers".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

   Inserted: SEC. 323. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

   Inserted: Section 7701 (relating to definitions) is amended by redesignating subsection(o) as subsection (p) and by inserting after subsection (n) the following new subsection:

   Inserted: "(o) Convention or Association of Churches.--For purposes of this title, any organization which is otherwise a convention or association of churches shall not fail to so qualify merely because the membership of such organization includes individuals as well as churches or because individuals have voting rights in such organization.".

   Inserted: SEC. 324. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY REQUIRED TO FILE.

   Show 61 more inserted paragraphsShow less

   Inserted: (a) In General.--Section 6033 (relating to returns by exempt organizations), as amended by section 346 of this Act, is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection:

   Inserted: "(j) Additional Notification Requirements.--Any organization the gross receipts of which in any taxable year result in such organization being referred to in subsection (a)(3)(A)(ii) or (a)(3)(B)--

   Inserted: "(1) shall furnish annually, at such time and in such manner as the Secretary may by forms or regulations prescribe, information setting forth--

   Inserted: "(A) the legal name of the organization,

   Inserted: "(B) any name under which such organization operates or does business,

   Inserted: "(C) the organization's mailing address and Internet web site address (if any),

   Inserted: "(D) the organization's taxpayer identification number,

   Inserted: "(E) the name and address of a principal officer, and

   Inserted: "(F) evidence of the continuing basis for the organization's exemption from the filing requirements under subsection (a)(1), and

   Inserted: "(2) upon the termination of the existence of the organization, shall furnish notice of such termination.".

   Inserted: (b) Loss of Exempt Status for Failure To File Return or Notice.--Section 6033 (relating to returns by exempt organizations), as amended by subsection (a), is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection:

   Inserted: "(k) Loss of Exempt Status for Failure To File Return or Notice.--

   Inserted: "(1) In general.--If an organization described in subsection (a)(1) or (i) fails to file an annual return or notice required under either subsection for 3 consecutive years, such organization's status as an organization exempt from tax under section 501(a) shall be considered revoked on and after the date set by the Secretary for the filing of the third annual return or notice. The Secretary shall publish and maintain a list of any organization the status of which is so revoked.

   Inserted: "(2) Application necessary for reinstatement.--Any organization the tax-exempt status of which is revoked under paragraph (1) must apply in order to obtain reinstatement of such status regardless of whether such organization was originally required to make such an application.

   Inserted: "(3) Retroactive reinstatement if reasonable cause shown for failure.--If upon application for reinstatement of status as an organization exempt from tax under section 501(a), an organization described in paragraph (1) can show to the satisfaction of the Secretary evidence of reasonable cause for the failure described in such paragraph, the organization's exempt status may, in the discretion of the Secretary, be reinstated effective from the date of the revocation under such paragraph.".

   Inserted: (c) No Declaratory Judgment Relief.--Section 7428(b) (relating to limitations) is amended by adding at the end the following new paragraph:

   Inserted: "(4) Nonapplication for certain revocations.--No action may be brought under this section with respect to any revocation of status described in section 6033(k)(1).".

   Inserted: (d) No Inspection Requirement.--Section 6104(b) (relating to inspection of annual information returns) is amended by inserting "(other than subsection (j) thereof)" after "6033".

   Inserted: (e) No Disclosure Requirement.--Section 6104(d)(3) (relating to exceptions from disclosure requirements) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

   Inserted: "(B) Nondisclosure of annual notices.--Paragraph (1) shall not require the disclosure of any notice required under section 6033(j).".

   Inserted: (f) No Monetary Penalty for Failure To Notify.--Section 6652(c)(1) (relating to annual returns under section 6033 or 6012(a)(6)) is amended by adding at the end the following new subparagraph:

   Inserted: "(E) No penalty for certain annual notices.--This paragraph shall not apply with respect to any notice required under section 6033(j).".

   Inserted: (g) Secretarial Outreach Requirements.--

   Inserted: (1) Notice requirement.--The Secretary of the Treasury shall notify in a timely manner every organization described in section 6033(j) of the Internal Revenue Code of 1986 (as added by this section) of the requirement under such section 6033(j) and of the penalty established under section 6033(k)--

   Inserted: (A) by mail, in the case of any organization the identity and address of which is included in the list of exempt organizations maintained by the Secretary, and

   Inserted: (B) by Internet or other means of outreach, in the case of any other organization.

   Inserted: (2) Loss of status penalty for failure to file return.--The Secretary of the Treasury shall publicize in a timely manner in appropriate forms and instructions and through other appropriate means, the penalty established under section 6033(k) of such Code for the failure to file a return under section 6033(a)(1) of such Code.

   Inserted: (h) Effective Date.--The amendments made by this section shall apply to notices and returns with respect to annual periods beginning after 2005 SEC. 325. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS RELATED TO EXEMPT ORGANIZATIONS.

   Inserted: (a) In General.--Subsection (c) of section 6104 is amended by striking paragraph (2) and inserting the following new paragraphs:

   Inserted: "(2) Disclosure of proposed actions related to charitable organizations.--

   Inserted: "(A) Specific notifications.--In the case of an organization to which paragraph (1) applies, the Secretary may disclose to the appropriate State officer--

   Inserted: "(i) a notice of proposed refusal to recognize such organization as an organization described in section 501(c)(3) or a notice of proposed revocation of such organization's recognition as an organization exempt from taxation,

   Inserted: "(ii) the issuance of a letter of proposed deficiency of tax imposed under section 507 or chapter 41 or 42, and

   Inserted: "(iii) the names, addresses, and taxpayer identification numbers of organizations which have applied for recognition as organizations described in section 501(c)(3).

   Inserted: "(B) Additional disclosures.--Returns and return information of organizations with respect to which information is disclosed under subparagraph (A) may be made available for inspection by or disclosed to an appropriate State officer.

   Inserted: "(C) Procedures for disclosure.--Information may be inspected or disclosed under subparagraph (A) or (B) only--

   Inserted: "(i) upon written request by an appropriate State officer, and

   Inserted: "(ii) for the purpose of, and only to the extent necessary in, the administration of State laws regulating such organizations.

   Inserted: Such information may only be inspected by or disclosed to representatives of the appropriate State officer designated as the individuals who are to inspect or to receive the returns or return information under this paragraph on behalf of such officer. Such representatives shall not include any contractor or agent.

   Inserted: "(D) Disclosures other than by request.--The Secretary may make available for inspection or disclose returns and return information of an organization to which paragraph (1) applies to an appropriate State officer of any State if the Secretary determines that such inspection or disclosure may facilitate the resolution of Federal or State issues relating to the tax-exempt status of such organization.

   Inserted: "(3) Disclosure with respect to certain other exempt organizations.--Upon written request by an appropriate State officer, the Secretary may make available for inspection or disclosure returns and return information of an organization described in paragraph (2), (4), (6), (7), (8), (10), or (13) of section 501(c) for the purpose of, and to the extent necessary in, the administration of State laws regulating the solicitation or administration of the charitable funds or charitable assets of such organizations. Such information may be inspected only by or disclosed only to representatives of the appropriate State officer designated as the individuals who are to inspect or to receive the returns or return information under this paragraph on behalf of such officer. Such representatives shall not include any contractor or agent.

   Inserted: "(4) Use in civil judicial and administrative proceedings.--Returns and return information disclosed pursuant to this subsection may be disclosed in civil administrative and civil judicial proceedings pertaining to the enforcement of State laws regulating such organizations in a manner prescribed by the Secretary similar to that for tax administration proceedings under section 6103(h)(4).

   Inserted: "(5) No disclosure if impairment.--Returns and return information shall not be disclosed under this subsection, or in any proceeding described in paragraph (4), to the extent that the Secretary determines that such disclosure would seriously impair Federal tax administration.

   Inserted: "(6) Definitions.--For purposes of this subsection--

   Inserted: "(A) Return and return information.--The terms 'return' and 'return information' have the respective meanings given to such terms by section 6103(b).

   Inserted: "(B) Appropriate state officer.--The term 'appropriate State officer' means--

   Inserted: "(i) the State attorney general,

   Inserted: "(ii) the State tax officer,

   Inserted: "(iii) in the case of an organization to which paragraph (1) applies, any other State official charged with overseeing organizations of the type described in section 501(c)(3), and

   Inserted: "(iv) in the case of an organization to which paragraph (3) applies, the head of an agency designated by the State attorney general as having primary responsibility for overseeing the solicitation of funds for charitable purposes.".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) Subparagraph (A) of section 6103(p)(3) is amended by inserting "an section 6104(c)" after "section" in the first sentence.

   Inserted: (2) Paragraph (4) of section 6103(p) is amended--

   Inserted: (A) in the matter preceding subparagraph (A), by inserting ", or any appropriate State officer (as defined in section 6104(c))," before "or any other person",

   Inserted: (B) in subparagraph (F)(i), by inserting "or any appropriate State officer (as defined in section 6104(c))," before "or any other person", and

   Inserted: (C) in the matter following subparagraph (F), by inserting ", an appropriate State officer (as defined in section 6104(c))," after "including an agency" each place it appear.

   Inserted: (3) The heading for paragraph (1) of section 6104(c) is amended by inserting "for charitable organizations" after "rule".

   Inserted: (4) Paragraph (2) of section 7213(a) is amended by inserting "or under section 6104(c)" after "6103".

   Inserted: (5) Paragraph (2) of section 7213A(a) is amended by inserting "or 6104(c)" after "6103".

   Inserted: (6) Paragraph (2) of section 7431(a) is amended by inserting "(including any disclosure in violation of section 6014(c)" after "6103".

   Inserted: (c) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act but shall not apply to requests made before such date.

   Original wording

   On page 172, after line 21, add the following:

6. 6

   Change 6: Replaces “121st day” with “181st day”

   ReplacesPage 174, line 4Printed page

   [struck: 121st day][inserted: 181st day]

   Original wording

   On page 174, line 4, strike “121st day” and insert “181st day”.

7. 7

   Change 7: Replaces “121st day” with “181st day”

   ReplacesPage 174, line 6Printed page

   [struck: 121st day][inserted: 181st day]

   Original wording

   On page 174, line 6, strike “121st day” and insert “181st day”.

8. 8

   Change 8: Replaces “121st day” with “181st day”

   ReplacesPage 174, line 10Printed page

   [struck: 121st day][inserted: 181st day]

   Original wording

   On page 174, line 10, strike “121st day” and insert “181st day”.

9. 9

   Change 9: Replaces “121st day” with “181st day”

   ReplacesPage 174, line 12Printed page

   [struck: 121st day][inserted: 181st day]

   Original wording

   On page 174, line 12, strike “121st day” and insert “181st day”.

10. 10

    Change 10: Replaces “5” with “the applicable percentage”

    ReplacesPage 176, line 25Printed page

    [struck: 5][inserted: the applicable percentage]

    Original wording

    On page 176, line 25, strike “5” and insert “the applicable percentage”.

11. 11

    Change 11: Strikes “percent”

    StrikesPage 177, line 1Printed page

    Struck: percent

    Original wording

    On page 177, line 1, strike “percent”.

12. 12

    Change 12: Replaces “5 percent” with “the applicable percentage”

    ReplacesPage 178, line 2Printed page

    [struck: 5 percent][inserted: the applicable percentage]

    Original wording

    On page 178, line 2, strike “5 percent” and insert “the applicable percentage”.

13. 13

    Change 13: Inserts new text on page 178, between lines 4 and 5

    InsertsPrinted page

    Inserted: (4) Applicable percentage.--For purposes of paragraphs (1) and (3), the applicable percentage is--

    Inserted: (A) 3 percent for the first taxable year beginning after the date of the enactment of this section,

    Inserted: (B) 4 percent for the second taxable year beginning after such date, and

    Inserted: (C) 5 percent for any taxable year beginning after the second taxable year beginning after such date.

    Original wording

    On page 178, between lines 4 and 5, insert the following:

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    Change 14: Rewrites page 178, lines 9–15

    ReplacesPrinted page

    Removes page 178, lines 9–15 of the printed bill. See that page

    Inserted: (A) any amount paid by the sponsoring organization from a donor advised fund--

    Inserted: (i) to any organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3)) or any sponsoring organization if such amount is for maintenance in a donor advised fund), and

    Inserted: (ii) notwithstanding clause (i), to any organization described section 170(f)(17)(B)(ii), but only to the extent not prohibited by regulations, and

    Original wording

    On page 178, strike lines 9 through 15 and insert the following:

15. 15

    Change 15: Rewrites page 179, lines 1–3

    ReplacesPrinted page

    Removes page 179, lines 1–3 of the printed bill. See that page

    Inserted: (2) Distributions to sponsoring organizations.--

    Inserted: (A) In general.--Except as provided in subparagraph (B), such term shall include any distribution to a sponsoring organization.

    Inserted: (B) Organization level distributions.--For purposes of subsection (c)(1)(B), such term shall not include any distribution to a sponsoring organization unless such distribution is designated for use in connection with a charitable program of such organization.

    Original wording

    On page 179, strike lines 1 through 3 and insert the following:

16. 16

    Change 16: Replaces “section 4967(g)(2)(C)” with “section 4967(g)(2)(A)(iii)”

    ReplacesPage 185, line 9Printed page

    [struck: section 4967(g)(2)(C)][inserted: section 4967(g)(2)(A)(iii)]

    Original wording

    On page 185, line 9, strike “section 4967(g)(2)(C)” and insert “section 4967(g)(2)(A)(iii)”.

17. 17

    Change 17: Rewrites page 186, lines 7–14

    ReplacesPrinted page

    Removes page 186, lines 7–14 of the printed bill. See that page

    Inserted: (c) Taxable Distribution.--For purposes of this subsection--

    Inserted: (1) In general.--The term 'taxable distribution' means any distribution from a donor advised fund to any person other than the sponsoring organization's non donor advised funds or accounts or organizations described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any sponsoring organization if such amount is for maintenance in a donor advised fund).

    Inserted: (2) Exception.--Notwithstanding paragraph (1), such term shall not include any distribution from a donor advised fund to any organization described section 170(f)(17)(B)(ii) to the extent such distribution is not prohibited under regulations.

    Original wording

    On page 186, strike lines 7 through 14 and insert the following:

18. 18

    Change 18: Replaces “121st day” with “181st day”

    ReplacesPage 189, line 17Printed page

    [struck: 121st day][inserted: 181st day]

    Original wording

    On page 189, line 17, strike “121st day” and insert “181st day”.

19. 19

    Change 19: Replaces “4967(g)(2)(C)” with “4967(g)(2)(A)(iii)”

    ReplacesPage 190, line 22Printed page

    [struck: 4967(g)(2)(C)][inserted: 4967(g)(2)(A)(iii)]

    Original wording

    On page 190, line 22, strike “4967(g)(2)(C)” and insert “4967(g)(2)(A)(iii)”.

20. 20

    Change 20: Replaces “provided by the sponsoring organization in connection with” with “from”

    ReplacesPage 192, lines 18–19Printed page

    In S. 2020 · Placed on Calendar Senate

    "(2) Special rules for donor advised funds owned by sponsoring organizations.--In the case of any donor advised fund (as defined in section 4967(g)(2)) of a sponsoring organization (as defined in section 4967(g)(1))--

    "(A) the term 'excess benefit transaction' includes any grant, loan, compensation, or other payment [struck: provided by the sponsoring organization in connection with ][inserted: from ]such fund to a person described in subsection (f)(1)(D) (determined without regard to any investment advisor) with respect to such fund, and

    "(B) the term 'excess benefit' includes, with respect to any transaction described in subparagraph (A), the amount of any such grant, loan, compensation, or other payment. Notwithstanding the last sentence of subsection (e), a sponsoring organization shall be treated as an applicable tax- exempt organization to the extent necessary to carry out this paragraph.".

    Original wording

    On page 192, lines 18 and 19, strike “provided by the sponsoring organization in connection with” and insert “from”.

21. 21

    Change 21: Replaces “5 percent” with “the applicable percentage”

    ReplacesPage 205, line 16Printed page

    [struck: 5 percent][inserted: the applicable percentage]

    Original wording

    On page 205, line 16, strike “5 percent” and insert “the applicable percentage”.

22. 22

    Change 22: Inserts new text on page 206, between lines 11 and 12

    InsertsPrinted page

    Inserted: (3) Applicable percentage.--For purposes of paragraph (1)(A)(ii), the applicable percentage is--

    Inserted: (A) 3 percent for the first taxable year beginning after the date of the enactment of this section,

    Inserted: (B) 4 percent for the second taxable year beginning after such date, and

    Inserted: (C) 5 percent for any taxable year beginning after the second taxable year beginning after such date.

    Original wording

    On page 206, between lines 11 and 12, insert the following:

23. 23

    Change 23: Rewrites page 206, lines 18–22

    ReplacesPrinted page

    Removes page 206, lines 18–22 of the printed bill. See that page

    Inserted: (2) Administrative and operating expenses.--Reasonable and necessary administrative expenses of a type III supporting organization shall be treated as a qualifying distribution to a supported organization.

    Original wording

    On page 206, strike lines 18 through 22 and insert the following:

24. 24

    Change 24: Strikes “any”

    StrikesPage 214, line 6Printed page

    Struck: any

    Original wording

    On page 214, line 6, strike “any”.

25. 25

    Change 25: Rewrites page 216, line 24

    ReplacesPrinted page

    Removes page 216, line 24 of the printed bill. See that page

    Inserted: (5) Special rule for certain holdings of type iii supporting organizations.--For purposes of this subsection, the term 'excess business holdings' shall not include any holdings of a type III supporting organization (as defined in section 4959(h)(2)) in any business enterprise if the holdings are held for the benefit of the community pursuant to the direction of a State attorney general or a State official with jurisdiction over the type III supporting organization.

    Inserted: (6) Present holdings.--For purposes of

    Original wording

    On page 216, strike line 24 and insert the following:

26. 26

    Change 26: Rewrites page 219, lines 5–9

    ReplacesPrinted page

    Removes page 219, lines 5–9 of the printed bill. See that page

    Inserted: (a) Requirement to File Return.--Subparagraph (B) of section 6033(a)(3), as redesignated by section 311, is amended by inserting "(other than an organization described in section 509(a)(3))" after "paragraph (1)".

    Original wording

    On page 219, strike lines 5 through 9 and insert the following:

27. 27

    Change 27: Rewrites page 225, line 9 through page 230, line 21

    ReplacesPrinted page

    Removes page 225, line 9 through page 230, line 21 of the printed bill. See that page

    Inserted: SEC. 402. MODIFICATION TO S CORPORATION PASSIVE INVESTMENT INCOME RULES.

    Inserted: (a) Increased Percentage Limit.--Paragraph (2) of section 1375(a) is amended by striking "25 PERCENT" and inserting "60 PERCENT".

    Inserted: (b) Repeal of Excessive Passive Income as a Termination Event.--

    Inserted: (1) In general.--Section 1362(d) is amended by striking paragraph (3).

    Inserted: (2) Conforming amendment.--Subsection (b) of section 1375 is amended by striking paragraphs (3) and (4) and inserting the following new paragraph:

    Inserted: "(3) Passive investment income defined.--

    Inserted: "(A) Except as otherwise provided in this paragraph, the term 'passive investment income' means gross receipts derived from royalties, rents, dividends, interest, and annuities.

    Inserted: "(B) Exception for interest on notes from sales of inventory.--The term 'passive investment income' shall not include interest on any obligation acquired in the ordinary course of the corporation's trade or business from its sale of property described in section 1221(a)(1).

    Inserted: "(C) Treatment of certain lending or finance companies.--If the S corporation meets the requirements of section 542(c)(6) for the taxable year, the term 'passive investment income' shall not include gross receipts for the taxable year which are derived directly from the active and regular conduct of a lending or finance business (as defined in section 542(d)(1)).

    Inserted: "(D) Treatment of certain dividends.--If an S corporation holds stock in a C corporation meeting the requirements of section 1504(a)(2), the term 'passive investment income' shall not include dividends from such C corporation to the extent such dividends are attributable to the earnings and profits of such C corporation derived from the active conduct of a trade or business.

    Inserted: "(E) Exception for banks, etc.--In the case of a bank (as defined in section 581), a bank holding company (within the meaning of section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a))), or a financial holding company (within the meaning of section 2(p) of such Act), the term 'passive investment income' shall not include--

    Inserted: "(i) interest income earned by such bank or company, or

    Show 11 more inserted paragraphsShow less

    Inserted: "(ii) dividends on assets required to be held by such bank or company, including stock in the Federal Reserve Bank, the Federal Home Loan Bank, or the Federal Agricultural Mortgage Bank or participation certificates issued by a Federal Intermediate Credit Bank.

    Inserted: "(F) Coordination with section 1374.--The amount of passive investment income shall be determined by not taking into account any recognized built-in gain or loss of the S corporation for any taxable year in the recognition period. Terms used in the preceding sentence shall have the same respective meanings as when used in section 1374.".

    Inserted: (c) Conforming Amendments.--

    Inserted: (1) Subparagraph (J) of section 26(b)(2) is amended by striking "25 percent" and inserting "60 percent".

    Inserted: (2) Clause (i) of section 1042(c)(4)(A) is amended by striking "section 1362(d)(3)(C)" and inserting "section 1375(b)(3)".

    Inserted: (3) Subparagraph (B) of section 1362(f)(1) is amended by striking "or (3)".

    Inserted: (4) Clause (i) of section 1375(b)(1)(A) is amended by striking "25 percent" and inserting "60 percent".

    Inserted: (5) Subsection (d) of section 1375 is amended by striking "subchapter C" both places it appears and inserting "accumulated".

    Inserted: (6) The heading for section 1375 is amended by striking "25 PERCENT" and inserting "60 PERCENT".

    Inserted: (7) The item relating to section 1375 in the table of sections for part III of subchapter S of chapter 1 is amended by striking "25 percent" and inserting "60 percent".

    Inserted: (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

    Original wording

    Beginning on page 225, line 9, strike all through page 230, line 21 and insert the following:

28. 28

    Change 28: Rewrites page 236, line 17 through page 239, line 6

    ReplacesPrinted page

    Removes page 236, line 17 through page 239, line 6 of the printed bill. See that page

    Inserted: SEC. 502. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM SUSPENSION RULES FOR CERTAIN LISTED AND REPORTABLE TRANSACTIONS.

    Inserted: (a) Effective Date Modification.--

    Inserted: (1) In general.--Paragraph (2) of section 903(d) of the American Jobs Creation Act of 2004 is amended to read as follows:

    Inserted: "(2) Exception for reportable or listed transactions.--

    Inserted: "(A) In general.--The amendments made by subsection (c) shall apply with respect to interest accruing after October 3, 2004.

    Inserted: "(B) Special rule for certain listed and reportable transactions.--

    Inserted: "(i) In general.--Except as provided in clause (ii), the amendments made by subsection (c) shall also apply with respect to interest accruing on or before October 3, 2004.

    Inserted: "(ii) Participants in settlement initiatives.--Clause (i) shall not apply to any transaction if, as of January 23, 2006--

    Inserted: "(I) the taxpayer is participating in a settlement initiative described in Internal Revenue Service Announcement 2005-80 with respect to such transaction, or

    Inserted: "(II) the taxpayer has entered into a settlement agreement pursuant to such an initiative.

    Inserted: "(iii) Termination of exception.--Clause (ii)(I) shall not apply to any taxpayer if, after January 23, 2006, the taxpayer withdraws from, or terminates, participation in the initiative or the Secretary of the Treasury or the Secretary's delegate determines that a settlement agreement will not be reached pursuant to the initiative within a reasonable period of time.".

    Inserted: (2) Effective date.--The amendment made by this subsection shall take effect as if included in the provisions of the American Jobs Creation Act of 2004 to which it relates.

    Show 3 more inserted paragraphsShow less

    Inserted: (b) Treatment of Amended Returns and Other Similar Notices of Additional Tax Owed.--

    Inserted: (1) In general.--Section 6404(g)(1) (relating to suspension) is amended by adding at the end the following new sentence: "If, after the return for a taxable year is filed, the taxpayer provides to the Secretary 1 or more signed written documents showing that the taxpayer owes an additional amount of tax for the taxable year, clause (i) shall be applied by substituting the date the last of the documents was provided for the date on which the return is filed.".

    Inserted: (2) Effective date.--The amendment made by this subsection shall apply to documents provided on or after the date of the enactment of this Act.

    Original wording

    Beginning on page 236, line 17, strike all through page 239, line 6 and insert the following:

29. 29

    Change 29: Adds SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS on page 244, line 24

    Adds a sectionPrinted page

    Inserted: SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

    Inserted: (a) Penalty for Promoting Abusive Tax Shelters.--Section 6700 (relating to promoting abusive tax shelters, etc.) is amended--

    Inserted: (1) by redesignating subsections (b) and (c) as subsections (d) and (e), respectively,

    Inserted: (2) by striking "a penalty" and all that follows through the period in the first sentence of subsection (a) and inserting "a penalty determined under subsection (b)", and

    Inserted: (3) by inserting after subsection (a) the following new subsections:

    Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

    Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall be 100 percent of the gross income derived (or to be derived) from such activity by the person or persons subject to such penalty.

    Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of an activity described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who participated in such an activity.

    Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to such activity, all such persons shall be jointly and severally liable for the penalty under such subsection.

    Inserted: "(c) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

    Inserted: (b) Conforming Amendment.--Section 6700(a) is amended by striking the last sentence.

    Inserted: (c) Effective Date.--The amendments made by this section shall apply to the activities described in paragraphs (1) and (2) of section 6700(a) of the Internal Revenue Code of 1986 and after the date of the enactment of this Act.

    Show 13 more inserted paragraphsShow less

    Inserted: SEC. 505. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT OF TAX LIABILITY.

    Inserted: (a) In General.--Section 6701(a) (relating to imposition of penalty) is amended--

    Inserted: (1) by inserting ", or tax liability reflected in," after "the preparation or presentation of" in paragraph (1),

    Inserted: (2) by inserting "aid, assistance, procurement, or advice with respect to such" before "portion" both places it appears in paragraphs (2) and (3), and

    Inserted: (3) by inserting "instance of aid, assistance, procurement, or advice or each such" before "document" in the matter following paragraph (3).

    Inserted: (b) Amount of Penalty.--Subsection (b) of section 6701 (relating to penalties for aiding and abetting understatement of tax liability) is amended to read as follows:

    Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

    Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall be 100 percent of the gross income derived (or to be derived) from such aid, assistance, procurement, or advice provided by the person or persons subject to such penalty.

    Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of aid, assistance, procurement, or advice described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who made such an understatement of the liability for tax.

    Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to providing such aid, assistance, procurement, or advice, all such persons shall be jointly and severally liable for the penalty under such subsection.".

    Inserted: (c) Penalty Not Deductible.--Section 6701 is amended by adding at the end the following new subsection:

    Inserted: "(g) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

    Inserted: (d) Effective Date.--The amendments made by this section shall apply to the activities described in section 6701(a) of the Internal Revenue Code of 1986 after the date of the enactment of this Act.

    Original wording

    On page 244, after line 24, insert the following:

30. 30

    Change 30: Rewrites page 261, line 20 through page 264, line 14

    ReplacesPrinted page

    Removes page 261, line 20 through page 264, line 14 of the printed bill. See that page

    Inserted: SEC. 531. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE TO FRAUD.

    Inserted: (a) In General.--Section 7206 (relating to fraud and false statements) is amended--

    Inserted: (1) by striking "Any person who--" and inserting "(a) In General.--Any person who--", and

    Inserted: (2) by adding at the end the following new subsection:

    Inserted: "(b) Increase in Monetary Limitation for Underpayment or Overpayment of Tax Due to Fraud.--If any portion of any underpayment (as defined in section 6664(a)) or overpayment (as defined in section 6401(a)) of tax required to be shown on a return is attributable to fraudulent action described in subsection (a), the applicable dollar amount under subsection (a) shall in no event be less than an amount equal to such portion. A rule similar to the rule under section 6663(b) shall apply for purposes of determining the portion so attributable.".

    Inserted: (b) Increase in Penalties.--

    Inserted: (1) Attempt to evade or defeat tax.--Section 7201 is amended--

    Inserted: (A) by striking "$100,000" and inserting "$500,000",

    Inserted: (B) by striking "$500,000" and inserting "$1,000,000", and

    Inserted: (C) by striking "5 years" and inserting "10 years".

    Inserted: (2) Willful failure to file return, supply information, or pay tax.--Section 7203 is amended--

    Inserted: (A) in the first sentence--

    Show 16 more inserted paragraphsShow less

    Inserted: (i) by striking "Any person" and inserting the following:

    Inserted: "(a) In General.--Any person", and

    Inserted: (ii) by striking "$25,000" and inserting "$50,000",

    Inserted: (B) in the third sentence, by striking "section" and inserting "subsection", and

    Inserted: (C) by adding at the end the following new subsection:

    Inserted: "(b) Aggravated Failure to File.--

    Inserted: "(1) In general.--In the case of any failure described in paragraph (2), the first sentence of subsection (a) shall be applied by substituting--

    Inserted: "(A) 'felony' for 'misdemeanor',

    Inserted: "(B) '$500,000 ($1,000,000' for '$25,000 ($100,000', and

    Inserted: "(C) '10 years' for '1 year'.

    Inserted: "(2) Failure described.--A failure described in this paragraph is a failure to make a return described in subsection (a) for a period of 3 or more consecutive taxable years.".

    Inserted: (3) Fraud and false statements.--Section 7206(a) (as redesignated by subsection (a)) is amended--

    Inserted: (A) by striking "$100,000" and inserting "$500,000",

    Inserted: (B) by striking "$500,000" and inserting "$1,000,000", and

    Inserted: (C) by striking "3 years" and inserting "5 years".

    Inserted: (c) Effective Date.--The amendments made by this section shall apply to actions, and failures to act, occurring after the date of the enactment of this Act.

    Original wording

    Beginning on page 261, line 20, strike all through page 264, line 14, and insert the following:

31. 31

    Change 31: Replaces “$1,250” with “$2,000”

    ReplacesPage 276, line 20Printed page

    In S. 2020 · Placed on Calendar Senate

    (a) In General.--Section 6657 (relating to bad checks) is amended--

    (1) by striking "$750" and inserting "[struck: $1,250][inserted: $2,000]", and

    (2) by striking "$15" and inserting "$25".

    Original wording

    On page 276, line 20, strike “$1,250” and insert “$2,000”.

32. 32

    Change 32: Replaces “$25” with “$40”

    ReplacesPage 276, line 22Printed page

    [struck: $25][inserted: $40]

    Original wording

    On page 276, line 22, strike “$25” and insert “$40”.

33. 33

    Change 33: Adds SEC. 563. APPLICATION OF FIRPTA TO REGULATED INVESTMENT COMPANIES on page 323, line 20

    Adds a sectionPrinted page

    Inserted: SEC. 563. APPLICATION OF FIRPTA TO REGULATED INVESTMENT COMPANIES.

    Inserted: (a) In General.--Subclause (II) of section 897(h)(4)(A)(i) (defining qualified investment entity) is amended by inserting "which is a United States real property holding corporation or which would be a United States real property holding corporation if the exceptions provided in subsections (c)(3) and (h)(2) did not apply to interests in any real estate investment trust or regulated investment company" after "regulated investment company".

    Inserted: (b) Effective Date.--The amendment made by this section shall apply to distributions with respect to taxable years beginning after December 31, 2004.

    Inserted: SEC. 564. TREATMENT OF DISTRIBUTIONS ATTRIBUTABLE TO FIRPTA GAINS.

    Inserted: (a) Qualified Investment Entity.--

    Inserted: (1) In general.--Section 897(h)(1) is amended--

    Inserted: (A) by striking "a nonresident alien individual or a foreign corporation" in the first sentence and inserting "a nonresident alien individual, a foreign corporation, or other qualified investment entity",

    Inserted: (B) by striking "such nonresident alien individual or foreign corporation" in the first sentence and inserting "such nonresident alien individual, foreign corporation, or other qualified investment entity", and

    Inserted: (C) by striking the second sentence and inserting the following new sentence: "Notwithstanding the preceding sentence, any distribution by a qualified investment entity to a nonresident alien, a foreign corporation, or other qualified investment entity with respect to any class of stock which is regularly traded on an established securities market located in the United States shall not be treated as gain recognized from the sale or exchange of a United States real property interest if the shareholder did not own more than 5 percent of such class of stock at any time during the 1 year period ending on the date of such distribution.".

    Inserted: (2) Application after 2007.--Clause (ii) of section 897(h)(4)(A) is amended by adding at the end the following new sentence: "Notwithstanding the preceding sentence, an entity described in clause (i)(II) shall be treated as a qualified investment entity for purposes of applying paragraph (1) in any case in which a real estate investment trust makes a distribution to an entity described in clause (i)(II).".

    Inserted: (b) Treatment of Certain Distributions as Dividends.--

    Inserted: (1) In general.--Section 852(b)(3) (relating to capital gains) is amended by adding at the end the following new subparagraph:

    Show 275 more inserted paragraphsShow less

    Inserted: "(E) Certain distributions.--In the case of a distribution to which section 897 does not apply by reason of the second sentence of section 897(h)(1), the amount of such distribution which would be included in computing long-term capital gains for the shareholder under subparagraph (B) or (D) (without regard to this subparagraph)--

    Inserted: "(i) shall not be included in computing such shareholder's long-term capital gains, and

    Inserted: "(ii) shall be included in such shareholder's gross income as a dividend from the regulated investment company.".

    Inserted: (2) Conforming amendment.--Section 871(k)(2) (relating to short-term capital gain dividends) is amended by adding at the end the following new subparagraph:

    Inserted: "(E) Certain distributions.--In the case of a distribution to which section 897 does not apply by reason of the second sentence of section 897(h)(1), the amount which would be treated as a short-term capital gain dividend to the shareholder (without regard to this subparagraph)--

    Inserted: "(i) shall not be treated as a short-term capital gain dividend, and

    Inserted: "(ii) shall be included in such shareholder's gross income as a dividend from the regulated investment company.".

    Inserted: (c) Effective Dates.--

    Inserted: (1) In general.--Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years of qualified investment entities beginning after the date of the enactment of this Act.

    Inserted: (2) Dividends.--The amendments made by subsection (b) shall apply to dividends with respect to taxable years of regulated investment companies beginning after December 31, 2004.

    Inserted: SEC. 565. PREVENTION OF AVOIDANCE OF TAX ON INVESTMENTS OF FOREIGN PERSONS IN UNITED STATES REAL PROPERTY THROUGH WASH SALE TRANSACTIONS.

    Inserted: (a) In General.--Section 897(h) of the Internal Revenue Code of 1986 (relating to special rules in certain investment entities) is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

    Inserted: "(4) Treatment of certain wash sale transactions.--

    Inserted: "(A) In general.--If an interest in a domestically controlled qualified investment entity is disposed of in an applicable wash sale transaction, the taxpayer shall, for purposes of this section, be treated as having gain from the sale or exchange of a United States real property interest in an amount equal to the portion of the distribution described in subparagraph (B) with respect to such interest which, but for the disposition, would have been treated by the taxpayer as gain from the sale or exchange of a United States real property interest under paragraph (1).

    Inserted: "(B) Applicable wash sales transaction.--For purposes of this paragraph--

    Inserted: "(i) In general.--The term 'applicable wash sales transaction' means any transaction (or series of transactions) under which a nonresident alien individual or foreign corporation--

    Inserted: "(I) disposes of an interest in a domestically controlled qualified investment entity during the 30-day period preceding a distribution which is to be made with respect to the interest and any portion of which, but for the disposition, would have been treated by the taxpayer as gain from the sale or exchange of a United States real property interest under paragraph (1), and

    Inserted: "(II) acquires an identical interest in such entity during the 60-day period beginning with the 1st day of the 30-day period described in subclause (I).

    Inserted: For purposes of subclause (II), a nonresident alien individual or foreign corporation shall be treated as having acquired any interest acquired by a person related (within the meaning of section 465(b)(3)(C)) to the individual or corporation.

    Inserted: "(ii) Exception where distribution actually received.--A transaction shall not be treated as an applicable wash sales transaction if the nonresident alien individual or foreign corporation receives the distribution described in clause (i)(I) with respect to either the interest which was disposed of, or acquired, in the transaction.

    Inserted: "(iii) Exception for certain publicly traded stock.--A transaction shall not be treated as an applicable wash sales transaction if it involves the disposition of any class of stock in a qualified investment entity which is regularly traded on an established securities market within the United States but only if the nonresident alien individual or foreign corporation did not own more than 5 percent of such class of stock at any time during the 1-year period ending on the date of the distribution described in clause (i)(I).".

    Inserted: (b) No Withholding Required.--Section 1445(b) of the Internal Revenue Code of 1986 (relating to exemptions) is amended by adding at the end the following new paragraph:

    Inserted: "(8) Applicable wash sales transactions.--No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition which is treated as a disposition of a United States real property interest solely by reason of section 897(h)(4).".

    Inserted: (c) Effective Date.--The amendments made by this section shall apply to dispositions after December 31, 2005, in taxable years ending after such date.

    Inserted: SEC. 566. MODIFICATIONS TO RULES RELATING TO TAXATION OF DISTRIBUTIONS OF STOCK AND SECURITIES OF A CONTROLLED CORPORATION.

    Inserted: (a) Modification of Active Business Definition Under Section 355.--

    Inserted: (1) In general.--Section 355(b) (defining active conduct of a trade or business) is amended by adding at the end the following new paragraph:

    Inserted: "(3) Special rules relating to active business requirement.--

    Inserted: "(A) In general.--For purposes of determining whether a corporation meets the requirement of paragraph (2)(A), all members of such corporation's separate affiliated group shall be treated as 1 corporation. For purposes of the preceding sentence, the term 'separate affiliated group' means, with respect to any corporation, the affiliated group which would be determined under section 1504(a) if such corporation were the common parent and section 1504(b) did not apply.

    Inserted: "(B) Control.--For purposes of paragraph (2)(D), all distributee corporations which are members of the same affiliated group (as defined in section 1504(a) without regard to section 1504(b)) shall be treated as 1 distributee corporation.".

    Inserted: (2) Conforming amendments.--

    Inserted: (A) Subparagraph (A) of section 355(b)(2) is amended to read as follows:

    Inserted: "(A) it is engaged in the active conduct of a trade or business,".

    Inserted: (B) Section 355(b)(2) of such Code is amended by striking the last sentence.

    Inserted: (3) Effective dates.--

    Inserted: (A) In general.--The amendments made by this subsection shall apply--

    Inserted: (i) to distributions after the date of the enactment of this Act, and before January 1, 2010, and

    Inserted: (ii) for purposes of determining the continued qualification under section 355(b)(2)(A) of the Internal Revenue Code of 1986 (as amended by paragraph (2)(A)) of distributions made before such date, as a result of an acquisition, disposition, or other restructuring after such date and before January 1, 2010.

    Inserted: (B) Transition rule.--The amendments made by this subsection shall not apply to any distribution pursuant to a transaction which is--

    Inserted: (i) made pursuant to an agreement which was binding on such date of enactment and at all times thereafter,

    Inserted: (ii) described in a ruling request submitted to the Internal Revenue Service on or before such date, or

    Inserted: (iii) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission.

    Inserted: (C) Elections.--

    Inserted: (i) Out of transition relief.--Subparagraph (B) shall not apply if the distributing corporation elects not to have such subparagraph apply to distributions of such corporation. Any such election, once made, shall be irrevocable.

    Inserted: (ii) Application to prior distributions.--Subparagraph (A)(ii) shall not apply to a distributing or controlled corporation if the corporation elects not to have such subparagraph apply to such corporation. Any such election, once made, shall be irrevocable.

    Inserted: (b) Section 355 Not to Apply to Distributions if the Distributing or Controlled Corporation Is a Disqualified Investment Corporation.--

    Inserted: (1) In general.--Section 355 (relating to distributions of stock and securities of a controlled corporation) is amended by adding at the end the following new subsection:

    Inserted: "(g) Section Not to Apply to Distributions Involving Disqualified Investment Corporations.--

    Inserted: "(1) In general.--This section (and so much of section 356 as relates to this section) shall not apply to any distribution which is part of a transaction if--

    Inserted: "(A) either the distributing corporation or controlled corporation is, immediately after the transaction, a disqualified investment corporation, and

    Inserted: "(B) any person holds, immediately after the transaction, a 50-percent or greater interest in any disqualified investment corporation, but only if such person did not hold such an interest in such corporation immediately before the transaction.

    Inserted: "(2) Disqualified investment corporation.--For purposes of this subsection--

    Inserted: "(A) In general.--The term 'disqualified investment corporation' means any distributing or controlled corporation if the fair market value of the investment assets of the corporation is 75 percent or more of the fair market value of all assets of the corporation.

    Inserted: "(B) Investment assets.--

    Inserted: "(i) In general.--Except as otherwise provided in this subparagraph, the term 'investment assets' means--

    Inserted: "(I) cash,

    Inserted: "(II) any stock or securities in a corporation,

    Inserted: "(III) any interest in a partnership,

    Inserted: "(IV) any debt instrument or other evidence of indebtedness,

    Inserted: "(V) any option, forward or futures contract, notional principal contract, or derivative,

    Inserted: "(VI) foreign currency, or

    Inserted: "(VII) any similar asset.

    Inserted: "(ii) Exception for assets used in active conduct of certain financial trades or businesses.--Such term shall not include any asset which is held for use in the active and regular conduct of--

    Inserted: "(I) a lending or finance business (within the meaning of section 954(h)(4)),

    Inserted: "(II) a banking business through a bank (as defined in section 581), a domestic building and loan association (within the meaning of section 7701(a)(19)), or any similar institution specified by the Secretary, or

    Inserted: "(III) an insurance business if the conduct of the business is licensed, authorized, or regulated by an applicable insurance regulatory body.

    Inserted: This clause shall only apply with respect to any business if substantially all of the income of the business is derived from persons who are not related (within the meaning of section 267(b) or 707(b)(1)) to the person conducting the business.

    Inserted: "(iii) Exception for securities marked to market.--Such term shall not include any security (as defined in section 475(c)(2)) which is held by a dealer in securities and to which section 475(a) applies.

    Inserted: "(iv) Stock or securities in a 25-percent controlled entity.--

    Inserted: "(I) In general.--Such term shall not include any stock and securities in, or any asset described in subclause (IV) or (V) of clause (i) issued by, a corporation which is a 25-percent controlled entity with respect to the distributing or controlled corporation.

    Inserted: "(II) Look-thru rule.--The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any 25-percent controlled entity.

    Inserted: "(III) 25-percent controlled entity.--For purposes of this clause, the term '25-percent controlled entity' means, with respect to any distributing or controlled corporation, any corporation with respect to which the distributing or controlled corporation owns directly or indirectly stock meeting the requirements of section 1504(a)(2), except that such section shall be applied by substituting '25 percent' for '80 percent' and without regard to stock described in section 1504(a)(4).

    Inserted: "(v) Interests in certain partnerships.--

    Inserted: "(I) In general.--Such term shall not include any interest in a partnership, or any debt instrument or other evidence of indebtedness, issued by the partnership, if 1 or more of the trades or businesses of the partnership are (or, without regard to the 5-year requirement under subsection (b)(2)(B), would be) taken into account by the distributing or controlled corporation, as the case may be, in determining whether the requirements of subsection (b) are met with respect to the distribution.

    Inserted: "(II) Look-thru rule.--The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any partnership described in subclause (I).

    Inserted: "(3) 50-percent or greater interest.--For purposes of this subsection--

    Inserted: "(A) In general.--The term '50-percent or greater interest' has the meaning given such term by subsection (d)(4).

    Inserted: "(B) Attribution rules.--The rules of section 318 shall apply for purposes of determining ownership of stock for purposes of this paragraph.

    Inserted: "(4) Transaction.--For purposes of this subsection, the term 'transaction' includes a series of transactions.

    Inserted: "(5) Regulations.--The Secretary shall prescribe such regulations as may be necessary to carry out, or prevent the avoidance of, the purposes of this subsection, including regulations--

    Inserted: "(A) to carry out, or prevent the avoidance of, the purposes of this subsection in cases involving--

    Inserted: "(i) the use of related persons, intermediaries, pass-thru entities, options, or other arrangements, and

    Inserted: "(ii) the treatment of assets unrelated to the trade or business of a corporation as investment assets if, prior to the distribution, investment assets were used to acquire such unrelated assets,

    Inserted: "(B) which in appropriate cases exclude from the application of this subsection a distribution which does not have the character of a redemption which would be treated as a sale or exchange under section 302, and

    Inserted: "(C) which modify the application of the attribution rules applied for purposes of this subsection.".

    Inserted: (2) Effective dates.--

    Inserted: (A) In general.--The amendments made by this subsection shall apply to distributions after the date of the enactment of this Act.

    Inserted: (B) Transition rule.--The amendments made by this subsection shall not apply to any distribution pursuant to a transaction which is--

    Inserted: (i) made pursuant to an agreement which was binding on such date of enactment and at all times thereafter,

    Inserted: (ii) described in a ruling request submitted to the Internal Revenue Service on or before such date, or

    Inserted: (iii) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission.

    Inserted: SEC. 567. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING MUSIC OR MUSIC COPYRIGHTS.

    Inserted: (a) In General.--Section 263A (relating to capitalization and inclusion in inventory costs of certain expenses) is amended by redesignating subsection (i) as subsection (j) and by adding after subsection (h) the following new subsection:

    Inserted: "(i) Special Rules for Certain Musical Works and Copyrights.--

    Inserted: "(1) In general.--If--

    Inserted: "(A) any expense is paid or incurred by the taxpayer in creating or acquiring any musical composition (including any accompanying words) or any copyright with respect to a musical composition, and

    Inserted: "(B) such expense is required to be capitalized under this section, then, notwithstanding section 167(g), the amount capitalized shall be amortized ratably over the 5-year period beginning with the month in which the composition or copyright was acquired (or, in the case of expenses paid or incurred in connection with the creation of a musical composition, the 5-taxable-year period beginning with the taxable year in which the expenses were paid or incurred).

    Inserted: "(2) Exceptions.--Paragraph (1) shall not apply to any expense--

    Inserted: "(A) which is a qualified creative expense under subsection (h),

    Inserted: "(B) to which a simplified procedure established under subsection (j)(2) applies,

    Inserted: "(C) which is an amortizable section 197 intangible (as defined in section 197(c)), or

    Inserted: "(D) which, without regard to this section, would not be allowable as a deduction."

    Inserted: (b) Effective Date.--The amendments made by this section shall apply to expenses paid or incurred after December 31, 2005, in taxable years ending after such date.

    Inserted: SEC. 568. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    Inserted: (a) In General.--Subpart H of part IV of subchapter A of chapter 1 (relating to credits against tax) is amended by adding at the end the following new section:

    Inserted: "SEC. 54A. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    Inserted: "(a) Allowance of Credit.--In the case of a taxpayer who holds a rural renaissance bond on a credit allowance date of such bond, which occurs during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to credit allowance dates during such year on which the taxpayer holds such bond.

    Inserted: "(b) Amount of Credit.--

    Inserted: "(1) In general.--The amount of the credit determined under this subsection with respect to any credit allowance date for a rural renaissance bond is 25 percent of the annual credit determined with respect to such bond.

    Inserted: "(2) Annual credit.--The annual credit determined with respect to any rural renaissance bond is the product of--

    Inserted: "(A) the credit rate determined by the Secretary under paragraph (3) for the day on which such bond was sold, multiplied by

    Inserted: "(B) the outstanding face amount of the bond.

    Inserted: "(3) Determination.--For purposes of paragraph (2), with respect to any rural renaissance bond, the Secretary shall determine daily or caused to be determined daily a credit rate which shall apply to the first day on which there is a binding, written contract for the sale or exchange of the bond. The credit rate for any day is the credit rate which the Secretary or the Secretary's designee estimates will permit the issuance of rural renaissance bonds with a specified maturity or redemption date without discount and without interest cost to the qualified issuer.

    Inserted: "(4) Credit allowance date.--For purposes of this section, the term 'credit allowance date' means--

    Inserted: "(A) March 15,

    Inserted: "(B) June 15,

    Inserted: "(C) September 15, and

    Inserted: "(D) December 15.

    Inserted: Such term also includes the last day on which the bond is outstanding.

    Inserted: "(5) Special rule for issuance and redemption.--In the case of a bond which is issued during the 3-month period ending on a credit allowance date, the amount of the credit determined under this subsection with respect to such credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during which the bond is outstanding. A similar rule shall apply when the bond is redeemed or matures.

    Inserted: "(c) Limitation Based on Amount of Tax.--The credit allowed under subsection (a) for any taxable year shall not exceed the excess of--

    Inserted: "(1) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

    Inserted: "(2) the sum of the credits allowable under this part (other than subpart C thereof, relating to refundable credits).

    Inserted: "(d) Rural Renaissance Bond.--For purposes of this section--

    Inserted: "(1) In general.--The term 'rural renaissance bond' means any bond issued as part of an issue if--

    Inserted: "(A) the bond is issued by a qualified issuer,

    Inserted: "(B) 95 percent or more of the proceeds from the sale of such issue are to be used for capital expenditures incurred for 1 or more qualified projects,

    Inserted: "(C) the qualified issuer designates such bond for purposes of this section and the bond is in registered form, and

    Inserted: "(D) the issue meets the requirements of subsections (e) and (h).

    Inserted: "(2) Qualified project; special use rules.--

    Inserted: "(A) In general.--The term 'qualified project' means 1 or more projects described in subparagraph (B) located in a rural area.

    Inserted: "(B) Projects described.--A project described in this subparagraph is--

    Inserted: "(i) a water or waste treatment project,

    Inserted: "(ii) an affordable housing project,

    Inserted: "(iii) a community facility project, including hospitals, fire and police stations, and nursing and assisted-living facilities,

    Inserted: "(iv) a value-added agriculture or renewable energy facility project for agricultural producers or farmer-owned entities, including any project to promote the production, processing, or retail sale of ethanol (including fuel at least 85 percent of the volume of which consists of ethanol), biodiesel, animal waste, biomass, raw commodities, or wind as a fuel,

    Inserted: "(v) a distance learning or telemedicine project,

    Inserted: "(vi) a rural utility infrastructure project, including any electric or telephone system,

    Inserted: "(vii) a project to expand broadband technology,

    Inserted: "(viii) a rural teleworks project, and

    Inserted: "(ix) any project described in any preceding clause carried out by the Delta Regional Authority.

    Inserted: "(C) Special rules.--For purposes of this paragraph--

    Inserted: "(i) any project described in subparagraph (B)(iv) for a farmer-owned entity may be considered a qualified project if such entity is located in a rural area, or in the case of a farmer-owned entity the headquarters of which are located in a nonrural area, if the project is located in a rural area, and

    Inserted: "(ii) any project for a farmer-owned entity which is a facility described in subparagraph (B)(iv) for agricultural producers may be considered a qualified project regardless of whether the facility is located in a rural or nonrural area.

    Inserted: "(3) Special use rules.--

    Inserted: "(A) Refinancing rules.--For purposes of paragraph (1)(B), a qualified project may be refinanced with proceeds of a rural renaissance bond only if the indebtedness being refinanced (including any obligation directly or indirectly refinanced by such indebtedness) was originally incurred after the date of the enactment of this section.

    Inserted: "(B) Reimbursement.--For purposes of paragraph (1)(B), a rural renaissance bond may be issued to reimburse a borrower for amounts paid after the date of the enactment of this section with respect to a qualified project, but only if--

    Inserted: "(i) prior to the payment of the original expenditure, the borrower declared its intent to reimburse such expenditure with the proceeds of a rural renaissance bond,

    Inserted: "(ii) not later than 60 days after payment of the original expenditure, the qualified issuer adopts an official intent to reimburse the original expenditure with such proceeds, and

    Inserted: "(iii) the reimbursement is made not later than 18 months after the date the original expenditure is paid.

    Inserted: "(C) Treatment of changes in use.--For purposes of paragraph (1)(B), the proceeds of an issue shall not be treated as used for a qualified project to the extent that a borrower takes any action within its control which causes such proceeds not to be used for a qualified project. The Secretary shall prescribe regulations specifying remedial actions that may be taken (including conditions to taking such remedial actions) to prevent an action described in the preceding sentence from causing a bond to fail to be a rural renaissance bond.

    Inserted: "(e) Maturity Limitations.--

    Inserted: "(1) Duration of term.--A bond shall not be treated as a rural renaissance bond if the maturity of such bond exceeds the maximum term determined by the Secretary under paragraph (2) with respect to such bond.

    Inserted: "(2) Maximum term.--During each calendar month, the Secretary shall determine the maximum term permitted under this paragraph for bonds issued during the following calendar month. Such maximum term shall be the term which the Secretary estimates will result in the present value of the obligation to repay the principal on the bond being equal to 50 percent of the face amount of such bond. Such present value shall be determined without regard to the requirements of subsection (f)(3) and using as a discount rate the average annual interest rate of tax-exempt obligations having a term of 10 years or more which are issued during the month. If the term as so determined is not a multiple of a whole year, such term shall be rounded to the next highest whole year.

    Inserted: "(3) Ratable principal amortization required.--A bond shall not be treated as a rural renaissance bond unless it is part of an issue which provides for an equal amount of principal to be paid by the qualified issuer during each calendar year that the issue is outstanding.

    Inserted: "(f) Limitation on Amount of Bonds Designated.--

    Inserted: "(1) National limitation.--There is a rural renaissance bond limitation of $200,000,000.

    Inserted: "(2) Allocation by secretary.--The Secretary shall allocate the amount described in paragraph (1) among qualified projects in such manner as the Secretary determines appropriate.

    Inserted: "(g) Credit Included in Gross Income.--Gross income includes the amount of the credit allowed to the taxpayer under this section (determined without regard to subsection (c)) and the amount so included shall be treated as interest income.

    Inserted: "(h) Special Rules Relating to Expenditures.--

    Inserted: "(1) In general.--An issue shall be treated as meeting the requirements of this subsection if, as of the date of issuance, the qualified issuer reasonably expects--

    Inserted: "(A) at least 95 percent of the proceeds from the sale of the issue are to be spent for 1 or more qualified projects within the 5-year period beginning on the date of issuance of the rural renaissance bond,

    Inserted: "(B) a binding commitment with a third party to spend at least 10 percent of the proceeds from the sale of the issue will be incurred within the 6-month period beginning on the date of issuance of the rural renaissance bond or, in the case of a rural renaissance bond, the proceeds of which are to be loaned to 2 or more borrowers, such binding commitment will be incurred within the 6-month period beginning on the date of the loan of such proceeds to a borrower, and

    Inserted: "(C) such projects will be completed with due diligence and the proceeds from the sale of the issue will be spent with due diligence.

    Inserted: "(2) Extension of period.--Upon submission of a request prior to the expiration of the period described in paragraph (1)(A), the Secretary may extend such period if the qualified issuer establishes that the failure to satisfy the 5-year requirement is due to reasonable cause and the related projects will continue to proceed with due diligence.

    Inserted: "(3) Failure to spend required amount of bond proceeds within 5 years.--To the extent that less than 95 percent of the proceeds of such issue are expended by the close of the 5-year period beginning on the date of issuance (or if an extension has been obtained under paragraph (2), by the close of the extended period), the qualified issuer shall redeem all of the nonqualified bonds within 90 days after the end of such period. For purposes of this paragraph, the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section 142.

    Inserted: "(i) Special Rules Relating to Arbitrage.--A bond which is part of an issue shall not be treated as a rural renaissance bond unless, with respect to the issue of which the bond is a part, the qualified issuer satisfies the arbitrage requirements of section 148 with respect to proceeds of the issue.

    Inserted: "(j) Qualified Issuer.--For purposes of this section--

    Inserted: "(1) In general.--The term 'qualified issuer' means any not-for-profit cooperative lender which has as of the date of the enactment of this section received a guarantee under section 306 of the Rural Electrification Act and which meets the requirement of paragraph (2).

    Inserted: "(2) User fee requirement.--The requirement of this paragraph is met if the issuer of any rural renaissance bond makes grants for qualified projects as defined under subsection (d)(2) on a semi-annual basis every year that such bond is outstanding in an annual amount equal to one-half of the rate on United States Treasury Bills of the same maturity multiplied by the outstanding principle balance of rural renaissance bonds issued by such issuer.

    Inserted: "(k) Special Rules Relating to Pool Bonds.--No portion of a pooled financing bond may be allocable to loan unless the borrower has entered into a written loan commitment for such portion prior to the issue date of such issue.

    Inserted: "(l) Other Definitions and Special Rules.--For purposes of this section--

    Inserted: "(1) Bond.--The term 'bond' includes any obligation.

    Inserted: "(2) Pooled financing bond.--The term 'pooled financing bond' shall have the meaning given such term by section 149(f)(4)(A).

    Inserted: "(3) Rural area.--The term 'rural area' means any area other than--

    Inserted: "(A) a city or town which has a population of greater than 50,000 inhabitants, or

    Inserted: "(B) the urbanized area contiguous and adjacent to such a city or town.

    Inserted: "(4) Partnership; s corporation; and other pass-thru entities.--

    Inserted: "(A) In general.--Under regulations prescribed by the Secretary, in the case of a partnership, trust, S corporation, or other pass-thru entity, rules similar to the rules of section 41(g) shall apply with respect to the credit allowable under subsection (a).

    Inserted: "(B) No basis adjustment.--In the case of a bond held by a partnership or an S corporation, rules similar to the rules under section 1397E(i) shall apply.

    Inserted: "(5) Bonds held by regulated investment companies.--If any rural renaissance bond is held by a regulated investment company, the credit determined under subsection (a) shall be allowed to shareholders of such company under procedures prescribed by the Secretary.

    Inserted: "(6) Reporting.--Issuers of rural renaissance bonds shall submit reports similar to the reports required under section 149(e).".

    Inserted: (b) Reporting.--Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph:

    Inserted: "(9) Reporting of credit on rural renaissance bonds.--

    Inserted: "(A) In general.--For purposes of subsection (a), the term 'interest' includes amounts includible in gross income under section 54(f) and such amounts shall be treated as paid on the credit allowance date (as defined in section 54(b)(4)).

    Inserted: "(B) Reporting to corporations, etc.--Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A), subsection (b)(4) shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such subsection.

    Inserted: "(C) Regulatory authority.--The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.".

    Inserted: (c) Conforming Amendment.--The table of sections for subpart H of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

    Inserted: "Sec. 54A. Credit to holders of rural renaissance bonds.".

    Inserted: (d) Issuance of Regulations.--The Secretary of Treasury shall issue regulations required under section 54A of the Internal Revenue Code of 1986 (as added by this section) not later than 120 days after the date of the enactment of this Act.

    Inserted: (e) Effective Date.--The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act and before January 1, 2010.

    Inserted: SEC. 569. MODIFICATION OF TREATMENT OF LOANS TO QUALIFIED CONTINUING CARE FACILITIES.

    Inserted: (a) In General.--Subsection (g) of section 7872 is amended to read as follows:

    Inserted: "(g) Exception for Loans to Qualified Continuing Care Facilities.--

    Inserted: "(1) In general.--This section shall not apply for any calendar year to any below-market loan owed by a facility which on the last day of such year is a continuing care facility, if such loan was made pursuant to a continuing care contract and if the lender (or the lender's spouse) attains age 62 before the close of such year.

    Inserted: "(2) Continuing care contract.--For purposes of this section, the term 'continuing care contract' means a written contract between an individual and a qualified continuing care facility under which--

    Inserted: "(A) the individual or individual's spouse may use a qualified continuing care facility for their life or lives,

    Inserted: "(B) the individual or individual's spouse will be provided with housing in an independent living unit (which has additional available facilities outside such unit for the provision of meals and other personal care), an assisted living facility or a nursing facility, as is available in the continuing care facility, as appropriate for the health of such individual or individual's spouse, and

    Inserted: "(C) the individual or individual's spouse will be provided assisted living or nursing care as the health of such individual or individual's spouse requires, and as is available in the continuing care facility.

    Inserted: "(3) Qualified continuing care facility.--

    Inserted: "(A) In general.--For purposes of this section, the term 'qualified continuing care facility' means 1 or more facilities--

    Inserted: "(i) which are designed to provide services under continuing care contracts,

    Inserted: "(ii) that include an independent living unit, plus an assisted living or nursing facility, or both, and

    Inserted: "(iii) substantially all of the independent living unit residents of which are covered by continuing care contracts.

    Inserted: "(B) Nursing homes excluded.--The term 'qualified continuing care facility' shall not include any facility which is of a type which is traditionally considered a nursing home.".

    Inserted: (b) Effective Date.--The amendment made by this section shall apply to loans made after December 31, 2005.

    Inserted: SEC. 570. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.

    Inserted: (a) In General.--Section 901 (relating to credit for taxes of foreign countries and of possessions of the United States), as amended by this Act, is amended by redesignating subsections (m) and (n) as subsections (n) and (o), respectively, and by inserting after subsection (l) the following new subsection:

    Inserted: "(m) Special Rules Relating To Large Integrated Oil Companies Which Are Dual Capacity Taxpayers.--

    Inserted: "(1) General rule.--Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a large integrated oil company to a foreign country or possession of the United States for any period shall not be considered a tax--

    Inserted: "(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

    Inserted: "(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which--

    Inserted: "(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

    Inserted: "(ii) would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

    Inserted: Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).

    Inserted: "(2) Dual capacity taxpayer.--For purposes of this subsection, the term 'dual capacity taxpayer' means, with respect to any foreign country or possession of the United States, a person who--

    Inserted: "(A) is subject to a levy of such country or possession, and

    Inserted: "(B) receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.

    Inserted: "(3) Generally applicable income tax.--For purposes of this subsection--

    Inserted: "(A) In general.--The term 'generally applicable income tax' means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.

    Inserted: "(B) Exceptions.--Such term shall not include a tax unless it has substantial application, by its terms and in practice, to--

    Inserted: "(i) persons who are not dual capacity taxpayers, and

    Inserted: "(ii) persons who are citizens or residents of the foreign country or possession.

    Inserted: "(4) Large integrated oil company.--For purposes of this subsection, the term 'large integrated oil company' means, with respect to any taxable year, an integrated oil company (as defined in section 291(b)(4)) which--

    Inserted: "(A) had gross receipts in excess of $1,000,000,000 for such taxable year, and

    Inserted: "(B) has an average daily worldwide production of crude oil of at least 500,000 barrels for such taxable year."

    Inserted: (b) Effective Date.--

    Inserted: (1) In general.--The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.

    Inserted: (2) Contrary treaty obligations upheld.--The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.

    Inserted: SEC. 571. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY CERTAIN EMPLOYEES OF THE INTELLIGENCE COMMUNITY.

    Inserted: (a) In General.--Subparagraph (A) of section 121(d)(9) (relating to exclusion of gain from sale of principal residence) is amended by striking "duty" and all that follows and inserting "duty--

    Inserted: "(i) as a member of the uniformed services,

    Inserted: "(ii) as a member of the Foreign Service of the United States, or

    Inserted: "(iii) as an employee of the intelligence community.".

    Inserted: (b) Employee of Intelligence Community Defined.--Subparagraph (C) of section 121(d)(9) is amended by redesignating clause (iv) as clause (v) and by inserting after clause (iii) the following new clause:

    Inserted: "(iv) Employee of intelligence community.--The term 'employee of the intelligence community' means an employee (as defined by section 2105 of title 5, United States Code) of--

    Inserted: "(I) the Office of the Director of National Intelligence,

    Inserted: "(II) the Central Intelligence Agency,

    Inserted: "(III) the National Security Agency,

    Inserted: "(IV) the Defense Intelligence Agency,

    Inserted: "(V) the National Geospatial-Intelligence Agency,

    Inserted: "(VI) the National Reconnaissance Office,

    Inserted: "(VII) any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs,

    Inserted: "(VIII) any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard,

    Inserted: "(IX) the Bureau of Intelligence and Research of the Department of State, or

    Inserted: "(X) any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information.".

    Inserted: (c) Special Rule.--Subparagraph (C) of section 121(d)(9), as amended by subsection (b), is amended by adding at the end the following new clause:

    Inserted: "(vi) Special rule relating to intelligence community.--An employee of the intelligence community shall not be treated as serving on qualified extended duty unless--

    Inserted: "(I) for purposes of such duty such employee has moved from 1 duty station to another, and

    Inserted: "(II) at least 1 of such duty stations is located outside of the Washington, District of Columbia, and Baltimore metropolitan statistical areas (as defined by the Secretary of Commerce).".

    Inserted: (d) Conforming Amendment.--The heading for section 121(d)(9) is amended to read as follows: "Uniformed services, foreign service, and intelligence community".

    Inserted: (e) Effective Date.--The amendments made by this section shall apply to sales or exchanges after the date of the enactment of this Act.

    Inserted: SEC. 572. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION CONTRACTS.

    Inserted: (a) In General.--The Secretary of the Treasury shall not enter into any qualified tax collection contract after April 1, 2006, until the Secretary implements a disability preference program that meets the requirements of subsection (b).

    Inserted: (b) Disability Preference Program Requirements.--

    Inserted: (1) In general.--A disability preference program meets the requirements of this subsection if such program requires that not less than 10 percent of the accounts of each dollar value category are awarded to persons described in paragraph (2).

    Inserted: (2) Person described.--For purposes of paragraph (1), a person is described in this paragraph if--

    Inserted: (A) as of the date any qualified tax collection contract is awarded--

    Inserted: (i) such person employs not less than 50 severely disabled individuals within the United States; or

    Inserted: (ii) not less than 30 percent of the employees of such person within the United States are severely disabled individuals;

    Inserted: (B) such person agrees as a condition of the qualified tax collection contract that not more than 90 days after the date such contract is awarded, not less than 35 percent of the employees of such person employed in connection with providing services under such contract shall--

    Inserted: (i) be hired after the date such contract is awarded; and

    Inserted: (ii) be severely disabled individuals; and

    Inserted: (C) such person is otherwise qualified to perform the services required.

    Inserted: (c) Definitions.--For purposes of this section--

    Inserted: (1) Qualified tax collection contract.--The term "qualified tax collection contract" shall have the meaning given such term under section 6306(b) of the Internal Revenue Code of 1986.

    Inserted: (2) Dollar value category.--The term "dollar value category" means the dollar ranges of accounts for collection as determined and assigned by the Secretary under section 6306(b)(1)(B) of the Internal Revenue Code of 1986 with respect to a qualified tax collection contract.

    Inserted: (3) Severely disabled individual.--The term "severely disabled individual" means--

    Inserted: (A) a veteran of the United States armed forces with a disability of 50 percent or greater--

    Inserted: (i) determined by the Secretary of Veterans Affairs to be service-connected; or

    Inserted: (ii) deemed by law to be service-connected; or

    Inserted: (B) any individual who is a disabled beneficiary (as defined in section 1148(k)(2) of the Social Security Act (42 U.S.C. 1320b-19(k)(2))) or who would be considered to be such a disabled beneficiary but for having income or resources in excess of the income or resources eligibility limits established under title XVI of the Social Security Act (42 U.S.C. 1381 et seq.), respectively.

    Inserted: TITLE VI--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

    Inserted: SEC. 601. SUNSET OF CERTAIN PROVISIONS AND AMENDMENTS.

    Inserted: The provisions of, and amendments made by, title I, title II, subtitle A of title III, and title IV shall not apply to taxable years beginning after September 30, 2010, and the Internal Revenue Code of 1986 shall be applied and administered to such years as if such provisions and amendments had never been enacted.

    Original wording

    On page 323, after line 20, insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed