Text: H.R.4440 — 109th Congress (2005-2006)All Bill Information (Except Text)

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Public Law No: 109-135 (12/22/2005)

 
[109th Congress Public Law 135]
[From the U.S. Government Printing Office]


[DOCID: f:publ135.109]

[[Page 119 STAT. 2577]]

Public Law 109-135
109th Congress

                                 An Act


 
 To amend the Internal Revenue Code of 1986 to provide tax benefits for 
the Gulf Opportunity Zone and certain areas affected by Hurricanes Rita 
   and Wilma, and for other purposes. <<NOTE: Dec. 21, 2005 -  [H.R. 
                                4440]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Gulf Opportunity 
Zone Act of 2005.>> 

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This <<NOTE: 26 USC 1 note.>> Act may be cited as 
the ``Gulf Opportunity Zone Act of 2005''.

    (b) Amendment of 1986 Code.--Except as otherwise expressly provided, 
whenever in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.

             TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE

Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Expansion of Hope Scholarship and Lifetime Learning Credit for 
           students in the Gulf Opportunity Zone.
Sec. 103. Housing relief for individuals affected by Hurricane Katrina.
Sec. 104. Extension of special rules for mortgage revenue bonds.
Sec. 105. Special extension of bonus depreciation placed in service date 
           for taxpayers affected by Hurricanes Katrina, Rita, and 
           Wilma.

       TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA

Sec. 201. Extension of certain emergency tax relief for Hurricane 
           Katrina to Hurricanes Rita and Wilma.

                       TITLE III--OTHER PROVISIONS

Sec. 301. Gulf Coast Recovery Bonds.
Sec. 302. Election to include combat pay as earned income for purposes 
           of earned income credit.
Sec. 303. Modification of effective date of exception from suspension 
           rules for certain listed and reportable transactions.
Sec. 304. Authority for undercover operations.
Sec. 305. Disclosures of certain tax return information.

                          TITLE IV--TECHNICALS

                       Subtitle A--Tax Technicals

Sec. 401. Short title.
Sec. 402. Amendments related to Energy Policy Act of 2005.
Sec. 403. Amendments related to the American Jobs Creation Act of 2004.
Sec. 404. Amendments related to the Working Families Tax Relief Act of 
           2004.
Sec. 405. Amendments related to the Jobs and Growth Tax Relief 
           Reconciliation Act of 2003.
Sec. 406. Amendment related to the Victims of Terrorism Tax Relief Act 
           of 2001.

[[Page 119 STAT. 2578]]

Sec. 407. Amendments related to the Economic Growth and Tax Relief 
           Reconciliation Act of 2001.
Sec. 408. Amendments related to the Internal Revenue Service 
           Restructuring and Reform Act of 1998.
Sec. 409. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 410. Amendment related to the Omnibus Budget Reconciliation Act of 
           1990.
Sec. 411. Amendment related to the Omnibus Budget Reconciliation Act of 
           1987.
Sec. 412. Clerical corrections.
Sec. 413. Other corrections related to the American Jobs Creation Act of 
           2004.

                      Subtitle B--Trade Technicals

Sec. 421. Technical corrections to regional value content methods for 
           rules of origin under Public Law 109-53.

                     TITLE V--EMERGENCY REQUIREMENT

Sec. 501. Emergency requirement.

             TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE

SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.

    (a) In General.--Subchapter Y of chapter 1 is amended by adding at 
the end the following new part:

                  ``PART II--TAX BENEFITS FOR GO ZONES

        ``Sec. 1400M. Definitions. 
        ``Sec. 1400N. Tax benefits for Gulf Opportunity Zone.

``SEC. 1400M. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Gulf opportunity zone.--The terms `Gulf Opportunity 
        Zone' and `GO Zone' mean that portion of the Hurricane Katrina 
        disaster area determined by the President to warrant individual 
        or individual and public assistance from the Federal Government 
        under the Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act by reason of Hurricane Katrina.
            ``(2) Hurricane katrina disaster area.--The term `Hurricane 
        Katrina disaster area' means an area with respect to which a 
        major disaster has been declared by the President before 
        September 14, 2005, under section 401 of such Act by reason of 
        Hurricane Katrina.
            ``(3) Rita go zone.--The term `Rita GO Zone' means that 
        portion of the Hurricane Rita disaster area determined by the 
        President to warrant individual or individual and public 
        assistance from the Federal Government under such Act by reason 
        of Hurricane Rita.
            ``(4) Hurricane rita disaster area.--The term `Hurricane 
        Rita disaster area' means an area with respect to which a major 
        disaster has been declared by the President before October 6, 
        2005, under section 401 of such Act by reason of Hurricane Rita.
            ``(5) Wilma go zone.--The term `Wilma GO Zone' means that 
        portion of the Hurricane Wilma disaster area determined by the 
        President to warrant individual or individual and public 
        assistance from the Federal Government under such Act by reason 
        of Hurricane Wilma.
            ``(6) Hurricane wilma disaster area.--The term `Hurricane 
        Wilma disaster area' means an area with respect to which

[[Page 119 STAT. 2579]]

        a major disaster has been declared by the President before 
        November 14, 2005, under section 401 of such Act by reason of 
        Hurricane Wilma.

``SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.

    ``(a) Tax-Exempt Bond Financing.--
            ``(1) In general.--For purposes of this title--
                    ``(A) any qualified Gulf Opportunity Zone Bond 
                described in paragraph (2)(A)(i) shall be treated as an 
                exempt facility bond, and
                    ``(B) any qualified Gulf Opportunity Zone Bond 
                described in paragraph (2)(A)(ii) shall be treated as a 
                qualified mortgage bond.
            ``(2) Qualified gulf opportunity zone bond.--For purposes of 
        this subsection, the term `qualified Gulf Opportunity Zone Bond' 
        means any bond issued as part of an issue if--
                    ``(A)(i) 95 percent or more of the net proceeds (as 
                defined in section 150(a)(3)) of such issue are to be 
                used for qualified project costs, or
                    ``(ii) such issue meets the requirements of a 
                qualified mortgage issue, except as otherwise provided 
                in this subsection,
                    ``(B) such bond is issued by the State of Alabama, 
                Louisiana, or Mississippi, or any political subdivision 
                thereof,
                    ``(C) such bond is designated for purposes of this 
                section by--
                          ``(i) in the case of a bond which is required 
                      under State law to be approved by the bond 
                      commission of such State, such bond commission, 
                      and
                          ``(ii) in the case of any other bond, the 
                      Governor of such State,
                    ``(D) such bond is issued after the date of the 
                enactment of this section and before January 1, 2011, 
                and
                    ``(E) no portion of the proceeds of such issue is to 
                be used to provide any property described in section 
                144(c)(6)(B).
            ``(3) Limitations on bonds.--
                    ``(A) Aggregate amount designated.--The maximum 
                aggregate face amount of bonds which may be designated 
                under this subsection with respect to any State shall 
                not exceed the product of $2,500 multiplied by the 
                portion of the State population which is in the Gulf 
                Opportunity Zone (as determined on the basis of the most 
                recent census estimate of resident population released 
                by the Bureau of Census before August 28, 2005).
                    ``(B) Movable property.--No bonds shall be issued 
                which are to be used for movable fixtures and equipment.
            ``(4) Qualified project costs.--For purposes of this 
        subsection, the term `qualified project costs' means--
                    ``(A) the cost of any qualified residential rental 
                project (as defined in section 142(d)) located in the 
                Gulf Opportunity Zone, and
                    ``(B) the cost of acquisition, construction, 
                reconstruction, and renovation of--

[[Page 119 STAT. 2580]]

                          ``(i) nonresidential real property (including 
                      fixed improvements associated with such property) 
                      located in the Gulf Opportunity Zone, and
                          ``(ii) public utility property (as defined in 
                      section 168(i)(10)) located in the Gulf 
                      Opportunity Zone.
            ``(5) Special rules.--In <<NOTE: Applicability.>> applying 
        this title to any qualified Gulf Opportunity Zone Bond, the 
        following modifications shall apply:
                    ``(A) Section 142(d)(1) (defining qualified 
                residential rental project) shall be applied--
                          ``(i) by substituting `60 percent' for `50 
                      percent' in subparagraph (A) thereof, and
                          ``(ii) by substituting `70 percent' for `60 
                      percent' in subparagraph (B) thereof.
                    ``(B) Section 143 (relating to mortgage revenue 
                bonds: qualified mortgage bond and qualified veterans' 
                mortgage bond) shall be applied--
                          ``(i) only with respect to owner-occupied 
                      residences in the Gulf Opportunity Zone,
                          ``(ii) by treating any such residence in the 
                      Gulf Opportunity Zone as a targeted area 
                      residence,
                          ``(iii) by applying subsection (f)(3) thereof 
                      without regard to subparagraph (A) thereof, and
                          ``(iv) by substituting `$150,000' for 
                      `$15,000' in subsection (k)(4) thereof.
                    ``(C) Except as provided in section 143, repayments 
                of principal on financing provided by the issue of which 
                such bond is a part may not be used to provide 
                financing.
                    ``(D) Section 146 (relating to volume cap) shall not 
                apply.
                    ``(E) Section 147(d)(2) (relating to acquisition of 
                existing property not permitted) shall be applied by 
                substituting `50 percent' for `15 percent' each place it 
                appears.
                    ``(F) Section 148(f)(4)(C) (relating to exception 
                from rebate for certain proceeds to be used to finance 
                construction expenditures) shall apply to the available 
                construction proceeds of bonds which are part of an 
                issue described in paragraph (2)(A)(i).
                    ``(G) Section 57(a)(5) (relating to tax-exempt 
                interest) shall not apply.
            ``(6) Separate issue treatment of portions of an issue.--
        This subsection shall not apply to the portion of an issue which 
        (if issued as a separate issue) would be treated as a qualified 
        bond or as a bond that is not a private activity bond 
        (determined without regard to paragraph (1)), if the issuer 
        elects to so treat such portion.

    ``(b) Advance Refundings of Certain Tax-Exempt Bonds.--
            ``(1) In general.--With respect to a bond described in 
        paragraph (3), one additional advance refunding after the date 
        of the enactment of this section and before January 1, 2011, 
        shall be allowed under the applicable rules of section 149(d) 
        if--
                    ``(A) the Governor of the State designates the 
                advance refunding bond for purposes of this subsection, 
                and
                    ``(B) the requirements of paragraph (5) are met.
            ``(2) Certain private activity bonds.--With respect to a 
        bond described in paragraph (3) which is an exempt facility

[[Page 119 STAT. 2581]]

        bond described in paragraph (1) or (2) of section 142(a), one 
        advance refunding after the date of the enactment of this 
        section and before January 1, 2011, shall be allowed under the 
        applicable rules of section 149(d) (notwithstanding paragraph 
        (2) thereof) if the requirements of subparagraphs (A) and (B) of 
        paragraph (1) are met.
            ``(3) Bonds described.--A bond is described in this 
        paragraph if such bond was outstanding on August 28, 2005, and 
        is issued by the State of Alabama, Louisiana, or Mississippi, or 
        a political subdivision thereof.
            ``(4) Aggregate limit.--The maximum aggregate face amount of 
        bonds which may be designated under this subsection by the 
        Governor of a State shall not exceed--
                    ``(A) $4,500,000,000 in the case of the State of 
                Louisiana,
                    ``(B) $2,250,000,000 in the case of the State of 
                Mississippi, and
                    ``(C) $1,125,000,000 in the case of the State of 
                Alabama.
            ``(5) Additional requirements.--The requirements of this 
        paragraph are met with respect to any advance refunding of a 
        bond described in paragraph (3) if--
                    ``(A) no advance refundings of such bond would be 
                allowed under this title on or after August 28, 2005,
                    ``(B) the advance refunding bond is the only other 
                outstanding bond with respect to the refunded bond, and
                    ``(C) the requirements of section 148 are met with 
                respect to all bonds issued under this subsection.
            ``(6) Use of proceeds requirement.--This subsection shall 
        not apply to any advance refunding of a bond which is issued as 
        part of an issue if any portion of the proceeds of such issue 
        (or any prior issue) was (or is to be) used to provide any 
        property described in section 144(c)(6)(B).

    ``(c) Low-Income Housing Credit.--
            ``(1) Additional housing credit dollar amount for gulf 
        opportunity zone.--
                    ``(A) In general.--For purposes of section 42, in 
                the case of calendar years 2006, 2007, and 2008, the 
                State housing credit ceiling of each State, any portion 
                of which is located in the Gulf Opportunity Zone, shall 
                be increased by the lesser of--
                          ``(i) the aggregate housing credit dollar 
                      amount allocated by the State housing credit 
                      agency of such State to buildings located in the 
                      Gulf Opportunity Zone for such calendar year, or
                          ``(ii) the Gulf Opportunity housing amount for 
                      such State for such calendar year.
                    ``(B) Gulf opportunity housing amount.--For purposes 
                of subparagraph (A), the term `Gulf Opportunity housing 
                amount' means, for any calendar year, the amount equal 
                to the product of $18.00 multiplied by the portion of 
                the State population which is in the Gulf Opportunity 
                Zone (as determined on the basis of the most recent 
                census estimate of resident population released by the 
                Bureau of Census before August 28, 2005).
                    ``(C) Allocations treated as made first from 
                additional allocation amount for purposes of determining 
                carryover.--For purposes of determining the

[[Page 119 STAT. 2582]]

                unused State housing credit ceiling under section 
                42(h)(3)(C) for any calendar year, any increase in the 
                State housing credit ceiling under subparagraph (A) 
                shall be treated as an amount described in clause (ii) 
                of such section.
            ``(2) Additional housing credit dollar amount for texas and 
        florida.--For purposes of section 42, in the case of calendar 
        year 2006, the State housing credit ceiling of Texas and Florida 
        shall each be increased by $3,500,000.
            ``(3) Difficult development area.--
                    ``(A) In general.--For purposes of section 42, in 
                the case of property placed in service during 2006, 
                2007, or 2008, the Gulf Opportunity Zone, the Rita GO 
                Zone, and the Wilma GO Zone--
                          ``(i) shall be treated as difficult 
                      development areas designated under subclause (I) 
                      of section 42(d)(5)(C)(iii), and
                          ``(ii) shall not be taken into account for 
                      purposes of applying the limitation under 
                      subclause (II) of such section.
                    ``(B) Application.--Subparagraph (A) shall apply 
                only to--
                          ``(i) housing credit dollar amounts allocated 
                      during the period beginning on January 1, 2006, 
                      and ending on December 31, 2008, and
                          ``(ii) buildings placed in service during such 
                      period to the extent that paragraph (1) of section 
                      42(h) does not apply to any building by reason of 
                      paragraph (4) thereof, but only with respect to 
                      bonds issued after December 31, 2005.
            ``(4) Special rule for applying income tests.--In the case 
        of property placed in service--
                    ``(A) during 2006, 2007, or 2008,
                    ``(B) in the Gulf Opportunity Zone, and
                    ``(C) in a nonmetropolitan area (as defined in 
                section 42(d)(5)(C)(iv)(IV)),
        section 42 shall be applied by substituting `national 
        nonmetropolitan median gross income (determined under rules 
        similar to the rules of section 142(d)(2)(B))' for `area median 
        gross income' in subparagraphs (A) and (B) of section 42(g)(1).
            ``(5) Definitions.--Any term used in this subsection which 
        is also used in section 42 shall have the same meaning as when 
        used in such section.

    ``(d) Special Allowance for Certain Property Acquired on or After 
August 28, 2005.--
            ``(1) Additional allowance.--In the case of any qualified 
        Gulf Opportunity Zone property--
                    ``(A) the depreciation deduction provided by section 
                167(a) for the taxable year in which such property is 
                placed in service shall include an allowance equal to 50 
                percent of the adjusted basis of such property, and
                    ``(B) the adjusted basis of the qualified Gulf 
                Opportunity Zone property shall be reduced by the amount 
                of such deduction before computing the amount otherwise 
                allowable as a depreciation deduction under this chapter 
                for such taxable year and any subsequent taxable year.
            ``(2) Qualified gulf opportunity zone property.--For 
        purposes of this subsection--

[[Page 119 STAT. 2583]]

                    ``(A) In general.--The term `qualified Gulf 
                Opportunity Zone property' means property--
                          ``(i)(I) which is described in section 
                      168(k)(2)(A)(i), or
                          ``(II) which is nonresidential real property 
                      or residential rental property,
                          ``(ii) substantially all of the use of which 
                      is in the Gulf Opportunity Zone and is in the 
                      active conduct of a trade or business by the 
                      taxpayer in such Zone,
                          ``(iii) the original use of which in the Gulf 
                      Opportunity Zone commences with the taxpayer on or 
                      after August 28, 2005,
                          ``(iv) which is acquired by the taxpayer by 
                      purchase (as defined in section 179(d)) on or 
                      after August 28, 2005, but only if no written 
                      binding contract for the acquisition was in effect 
                      before August 28, 2005, and
                          ``(v) which is placed in service by the 
                      taxpayer on or before December 31, 2007 (December 
                      31, 2008, in the case of nonresidential real 
                      property and residential rental property).
                    ``(B) Exceptions.--
                          ``(i) Alternative depreciation property.--Such 
                      term shall not include any property described in 
                      section 168(k)(2)(D)(i).
                          ``(ii) Tax-exempt bond-financed property.--
                      Such term shall not include any property any 
                      portion of which is financed with the proceeds of 
                      any obligation the interest on which is exempt 
                      from tax under section 103.
                          ``(iii) Qualified revitalization buildings.--
                      Such term shall not include any qualified 
                      revitalization building with respect to which the 
                      taxpayer has elected the application of paragraph 
                      (1) or (2) of section 1400I(a).
                          ``(iv) Election out.--If a taxpayer makes an 
                      election under this clause with respect to any 
                      class of property for any taxable year, this 
                      subsection shall not apply to all property in such 
                      class placed in service during such taxable year.
            ``(3) Special rules.--For <<NOTE: Applicability.>> purposes 
        of this subsection, rules similar to the rules of subparagraph 
        (E) of section 168(k)(2) shall apply, except that such 
        subparagraph shall be applied--
                    ``(A) by substituting `August 27, 2005' for 
                `September 10, 2001' each place it appears therein,
                    ``(B) by substituting `January 1, 2008' for `January 
                1, 2005' in clause (i) thereof, and
                    ``(C) by substituting `qualified Gulf Opportunity 
                Zone property' for `qualified property' in clause (iv) 
                thereof.
            ``(4) Allowance <<NOTE: Applicability.>> against alternative 
        minimum tax.--For purposes of this subsection, rules similar to 
        the rules of section 168(k)(2)(G) shall apply.
            ``(5) Recapture.--For <<NOTE: Applicability.>> purposes of 
        this subsection, rules similar to the rules under section 
        179(d)(10) shall apply with respect to any qualified Gulf 
        Opportunity Zone property which ceases to be qualified Gulf 
        Opportunity Zone property.

    ``(e) Increase in Expensing Under Section 179.--
            ``(1) In general.--For purposes of section 179--

[[Page 119 STAT. 2584]]

                    ``(A) the dollar amount in effect under section 
                179(b)(1) for the taxable year shall be increased by the 
                lesser of--
                          ``(i) $100,000, or
                          ``(ii) the cost of qualified section 179 Gulf 
                      Opportunity Zone property placed in service during 
                      the taxable year, and
                    ``(B) the dollar amount in effect under section 
                179(b)(2) for the taxable year shall be increased by the 
                lesser of--
                          ``(i) $600,000, or
                          ``(ii) the cost of qualified section 179 Gulf 
                      Opportunity Zone property placed in service during 
                      the taxable year.
            ``(2) Qualified section 179 gulf opportunity zone 
        property.--For purposes of this subsection, the term `qualified 
        section 179 Gulf Opportunity Zone property' means section 179 
        property (as defined in section 179(d)) which is qualified Gulf 
        Opportunity Zone property (as defined in subsection (d)(2)).
            ``(3) Coordination with empowerment zones and renewal 
        communities.--For purposes of sections 1397A and 1400J, 
        qualified section 179 Gulf Opportunity Zone property shall not 
        be treated as qualified zone property or qualified renewal 
        property, unless the taxpayer elects not to take such qualified 
        section 179 Gulf Opportunity Zone property into account for 
        purposes of this subsection.
            ``(4) Recapture.--For <<NOTE: Applicability.>> purposes of 
        this subsection, rules similar to the rules under section 
        179(d)(10) shall apply with respect to any qualified section 179 
        Gulf Opportunity Zone property which ceases to be qualified 
        section 179 Gulf Opportunity Zone property.

    ``(f) Expensing for Certain Demolition and Clean-up Costs.--
            ``(1) In general.--A taxpayer may elect to treat 50 percent 
        of any qualified Gulf Opportunity Zone clean-up cost as an 
        expense which is not chargeable to capital account. Any cost so 
        treated shall be allowed as a deduction for the taxable year in 
        which such cost is paid or incurred.
            ``(2) Qualified gulf opportunity zone clean-up cost.--For 
        purposes of this subsection, the term `qualified Gulf 
        Opportunity Zone clean-up cost' means any amount paid or 
        incurred during the period beginning on August 28, 2005, and 
        ending on December 31, 2007, for the removal of debris from, or 
        the demolition of structures on, real property which is located 
        in the Gulf Opportunity Zone and which is--
                    ``(A) held by the taxpayer for use in a trade or 
                business or for the production of income, or
                    ``(B) property described in section 1221(a)(1) in 
                the hands of the taxpayer.
        For purposes of the preceding sentence, amounts paid or incurred 
        shall be taken into account only to the extent that such amount 
        would (but for paragraph (1)) be chargeable to capital account.

    ``(g) Extension of Expensing for Environmental Remediation Costs.--
With respect to any qualified environmental remediation expenditure (as 
defined in section 198(b)) paid or incurred on or after August 28, 2005, 
in connection with a qualified contaminated site located in the Gulf 
Opportunity Zone, section 198

[[Page 119 STAT. 2585]]

(relating to expensing of environmental remediation costs) shall be 
applied--
            ``(1) in the case of expenditures paid or incurred on or 
        after August 28, 2005, and before January 1, 2008, by 
        substituting `December 31, 2007' for the date contained in 
        section 198(h), and
            ``(2) except as provided in section 198(d)(2), by treating 
        petroleum products (as defined in section 4612(a)(3)) as a 
        hazardous substance.

    ``(h) Increase in Rehabilitation Credit.--In the case of qualified 
rehabilitation expenditures (as defined in section 47(c)) paid or 
incurred during the period beginning on August 28, 2005, and ending on 
December 31, 2008, with respect to any qualified rehabilitated building 
or certified historic structure (as defined in section 47(c)) located in 
the Gulf Opportunity Zone, subsection (a) of section 47 (relating to 
rehabilitation credit) shall be applied--
            ``(1) by substituting `13 percent' for `10 percent' in 
        paragraph (1) thereof, and
            ``(2) by substituting `26 percent' for `20 percent' in 
        paragraph (2) thereof.

    ``(i) Special Rules for Small Timber Producers.--
            ``(1) Increased expensing for qualified timber property.--In 
        the case of qualified timber property any portion of which is 
        located in the Gulf Opportunity Zone, in that portion of the 
        Rita GO Zone which is not part of the Gulf Opportunity Zone, or 
        in the Wilma GO Zone, the limitation under subparagraph (B) of 
        section 194(b)(1) shall be increased by the lesser of--
                    ``(A) the limitation which would (but for this 
                subsection) apply under such subparagraph, or
                    ``(B) the amount of reforestation expenditures (as 
                defined in section 194(c)(3)) paid or incurred by the 
                taxpayer with respect to such qualified timber property 
                during the specified portion of the taxable year.
            ``(2) 5 year nol carryback of certain timber losses.--For 
        purposes of determining any farming loss under section 172(i), 
        income and deductions which are allocable to the specified 
        portion of the taxable year and which are attributable to 
        qualified timber property any portion of which is located in the 
        Gulf Opportunity Zone, in that portion of the Rita GO Zone which 
        is not part of the Gulf Opportunity Zone, or in the Wilma GO 
        Zone shall be treated as attributable to farming businesses.
            ``(3) Rules not applicable to certain entities.--Paragraphs 
        (1) and (2) shall not apply to any taxpayer which--
                    ``(A) is a corporation the stock of which is 
                publicly traded on an established securities market, or
                    ``(B) is a real estate investment trust.
            ``(4) Rules not applicable to large timber producers.--
                    ``(A) Expensing.--Paragraph (1) shall not apply to 
                any taxpayer if such taxpayer holds more than 500 acres 
                of qualified timber property at any time during the 
                taxable year.
                    ``(B) NOL carryback.--Paragraph (2) shall not apply 
                with respect to any qualified timber property unless--
                          ``(i) such property was held by the taxpayer--

[[Page 119 STAT. 2586]]

                                    ``(I) on August 28, 2005, in the 
                                case of qualified timber property any 
                                portion of which is located in the Gulf 
                                Opportunity Zone,
                                    ``(II) on September 23, 2005, in the 
                                case of qualified timber property (other 
                                than property described in subclause 
                                (I)) any portion of which is located in 
                                that portion of the Rita GO Zone which 
                                is not part of the Gulf Opportunity 
                                Zone, or
                                    ``(III) on October 23, 2005, in the 
                                case of qualified timber property (other 
                                than property described in subclause (I) 
                                or (II)) any portion of which is located 
                                in the Wilma GO Zone, and
                          ``(ii) such taxpayer held not more than 500 
                      acres of qualified timber property on such date.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Specified portion.--
                          ``(i) In general.--The term `specified 
                      portion' means--
                                    ``(I) in the case of qualified 
                                timber property any portion of which is 
                                located in the Gulf Opportunity Zone, 
                                that portion of the taxable year which 
                                is on or after August 28, 2005, and 
                                before the termination date,
                                    ``(II) in the case of qualified 
                                timber property (other than property 
                                described in clause (i)) any portion of 
                                which is located in the Rita GO Zone, 
                                that portion of the taxable year which 
                                is on or after September 23, 2005, and 
                                before the termination date, or
                                    ``(III) in the case of qualified 
                                timber property (other than property 
                                described in clause (i) or (ii)) any 
                                portion of which is located in the Wilma 
                                GO Zone, that portion of the taxable 
                                year which is on or after October 23, 
                                2005, and before the termination date.
                          ``(ii) Termination date.--The term 
                      `termination date' means--
                                    ``(I) for purposes of paragraph (1), 
                                January 1, 2008, and
                                    ``(II) for purposes of paragraph 
                                (2), January 1, 2007.
                    ``(B) Qualified timber property.--The term 
                `qualified timber property' has the meaning given such 
                term in section 194(c)(1).

    ``(j) Special Rule for Gulf Opportunity Zone Public Utility Casualty 
Losses.--
            ``(1) In general.--The amount described in section 
        172(f)(1)(A) for any taxable year shall be increased by the Gulf 
        Opportunity Zone public utility casualty loss for such taxable 
        year.
            ``(2) Gulf opportunity zone public utility casualty loss.--
        For purposes of this subsection, the term `Gulf Opportunity Zone 
        public utility casualty loss' means any casualty loss of public 
        utility property (as defined in section 168(i)(10)) located in 
        the Gulf Opportunity Zone if--

[[Page 119 STAT. 2587]]

                    ``(A) such loss is allowed as a deduction under 
                section 165 for the taxable year,
                    ``(B) such loss is by reason of Hurricane Katrina, 
                and
                    ``(C) the taxpayer elects the application of this 
                subsection with respect to such loss.
            ``(3) Reduction for gains from involuntary conversion.--The 
        amount of any Gulf Opportunity Zone public utility casualty loss 
        which would (but for this paragraph) be taken into account under 
        paragraph (1) for any taxable year shall be reduced by the 
        amount of any gain recognized by the taxpayer for such year from 
        the involuntary conversion by reason of Hurricane Katrina of 
        public utility property (as so defined) located in the Gulf 
        Opportunity Zone.
            ``(4) Coordination with general disaster loss rules.--
        Subsection (k) and section 165(i) shall not apply to any Gulf 
        Opportunity Zone public utility casualty loss to the extent such 
        loss is taken into account under paragraph (1).
            ``(5) Election.--Any election under paragraph (2)(C) shall 
        be made in such manner as may be prescribed by the Secretary and 
        shall be made by the due date (including extensions of time) for 
        filing the taxpayer's return for the taxable year of the loss. 
        Such election, once made for any taxable year, shall be 
        irrevocable for such taxable year.

    ``(k) Treatment of Net Operating Losses Attributable to Gulf 
Opportunity Zone Losses.--
            ``(1) In general.--If a <<NOTE: Applicability.>> portion of 
        any net operating loss of the taxpayer for any taxable year is a 
        qualified Gulf Opportunity Zone loss, the following rules shall 
        apply:
                    ``(A) Extension of carryback period.--Section 
                172(b)(1) shall be applied with respect to such 
                portion--
                          ``(i) by substituting `5 taxable years' for `2 
                      taxable years' in subparagraph (A)(i), and
                          ``(ii) by not taking such portion into account 
                      in determining any eligible loss of the taxpayer 
                      under subparagraph (F) thereof for the taxable 
                      year.
                    ``(B) Suspension of 90 percent amt limitation.--
                Section 56(d)(1) shall be applied by increasing the 
                amount determined under subparagraph (A)(ii)(I) thereof 
                by the sum of the carrybacks and carryovers of any net 
                operating loss attributable to such portion.
            ``(2) Qualified gulf opportunity zone loss.--For purposes of 
        paragraph (1), the term `qualified Gulf Opportunity Zone loss' 
        means the lesser of--
                    ``(A) the excess of--
                          ``(i) the net operating loss for such taxable 
                      year, over
                          ``(ii) the specified liability loss for such 
                      taxable year to which a 10-year carryback applies 
                      under section 172(b)(1)(C), or
                    ``(B) the aggregate amount of the following 
                deductions to the extent taken into account in computing 
                the net operating loss for such taxable year:
                          ``(i) Any deduction for any qualified Gulf 
                      Opportunity Zone casualty loss.
                          ``(ii) Any deduction for moving expenses paid 
                      or incurred after August 27, 2005, and before 
                      January

[[Page 119 STAT. 2588]]

                      1, 2008, and allowable under this chapter to any 
                      taxpayer in connection with the employment of any 
                      individual--
                                    ``(I) whose principal place of abode 
                                was located in the Gulf Opportunity Zone 
                                before August 28, 2005,
                                    ``(II) who was unable to remain in 
                                such abode as the result of Hurricane 
                                Katrina, and
                                    ``(III) whose principal place of 
                                employment with the taxpayer after such 
                                expense is located in the Gulf 
                                Opportunity Zone.
                      For purposes of this clause, the term `moving 
                      expenses' has the meaning given such term by 
                      section 217(b), except that the taxpayer's former 
                      residence and new residence may be the same 
                      residence if the initial vacating of the residence 
                      was as the result of Hurricane Katrina.
                          ``(iii) Any deduction allowable under this 
                      chapter for expenses paid or incurred after August 
                      27, 2005, and before January 1, 2008, to 
                      temporarily house any employee of the taxpayer 
                      whose principal place of employment is in the Gulf 
                      Opportunity Zone.
                          ``(iv) Any deduction for depreciation (or 
                      amortization in lieu of depreciation) allowable 
                      under this chapter with respect to any qualified 
                      Gulf Opportunity Zone property (as defined in 
                      subsection (d)(2), but without regard to 
                      subparagraph (B)(iv) thereof)) for the taxable 
                      year such property is placed in service.
                          ``(v) Any deduction allowable under this 
                      chapter for repair expenses (including expenses 
                      for removal of debris) paid or incurred after 
                      August 27, 2005, and before January 1, 2008, with 
                      respect to any damage attributable to Hurricane 
                      Katrina and in connection with property which is 
                      located in the Gulf Opportunity Zone.
            ``(3) Qualified gulf opportunity zone casualty loss.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(B)(i), the term `qualified Gulf Opportunity Zone 
                casualty loss' means any uncompensated section 1231 loss 
                (as defined in section 1231(a)(3)(B)) of property 
                located in the Gulf Opportunity Zone if--
                          ``(i) such loss is allowed as a deduction 
                      under section 165 for the taxable year, and
                          ``(ii) such loss is by reason of Hurricane 
                      Katrina.
                    ``(B) Reduction for gains from involuntary 
                conversion.--The amount of qualified Gulf Opportunity 
                Zone casualty loss which would (but for this 
                subparagraph) be taken into account under subparagraph 
                (A) for any taxable year shall be reduced by the amount 
                of any gain recognized by the taxpayer for such year 
                from the involuntary conversion by reason of Hurricane 
                Katrina of property located in the Gulf Opportunity 
                Zone.
                    ``(C) Coordination with general disaster loss 
                rules.--Section 165(i) shall not apply to any qualified 
                Gulf Opportunity Zone casualty loss to the extent such 
                loss is taken into account under this subsection.

[[Page 119 STAT. 2589]]

            ``(4) Special rules.--For <<NOTE: Applicability.>> purposes 
        of paragraph (1), rules similar to the rules of paragraphs (2) 
        and (3) of section 172(i) shall apply with respect to such 
        portion.

    ``(l) Credit to Holders of Gulf Tax Credit Bonds.--
            ``(1) Allowance of credit.--If a taxpayer holds a Gulf tax 
        credit bond on one or more credit allowance dates of the bond 
        occurring during any taxable year, there shall be allowed as a 
        credit against the tax imposed by this chapter for the taxable 
        year an amount equal to the sum of the credits determined under 
        paragraph (2) with respect to such dates.
            ``(2) Amount of credit.--
                    ``(A) In general.--The amount of the credit 
                determined under this paragraph with respect to any 
                credit allowance date for a Gulf tax credit bond is 25 
                percent of the annual credit determined with respect to 
                such bond.
                    ``(B) Annual credit.--The annual credit determined 
                with respect to any Gulf tax credit bond is the product 
                of--
                          ``(i) the credit rate determined by the 
                      Secretary under subparagraph (C) for the day on 
                      which such bond was sold, multiplied by
                          ``(ii) the outstanding face amount of the 
                      bond.
                    ``(C) Determination.--For purposes of subparagraph 
                (B), with respect to any Gulf tax credit bond, the 
                Secretary shall determine daily or cause 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 Gulf tax credit bonds with a specified 
                maturity or redemption date without discount and without 
                interest cost to the issuer.
                    ``(D) Credit allowance date.--For purposes of this 
                subsection, the term `credit allowance date' means March 
                15, June 15, September 15, and December 15. Such term 
                also includes the last day on which the bond is 
                outstanding.
                    ``(E) 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 paragraph 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.
            ``(3) Limitation based on amount of tax.--The credit allowed 
        under paragraph (1) for any taxable year shall not exceed the 
        excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part IV 
                of subchapter A (other than subpart C and this 
                subsection).
            ``(4) Gulf tax credit bond.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `Gulf tax credit bond' 
                means any bond issued as part of an issue if--

[[Page 119 STAT. 2590]]

                          ``(i) the bond is issued by the State of 
                      Alabama, Louisiana, or Mississippi,
                          ``(ii) 95 percent or more of the proceeds of 
                      such issue are to be used to--
                                    ``(I) pay principal, interest, or 
                                premiums on qualified bonds issued by 
                                such State or any political subdivision 
                                of such State, or
                                    ``(II) make a loan to any political 
                                subdivision of such State to pay 
                                principal, interest, or premiums on 
                                qualified bonds issued by such political 
                                subdivision,
                          ``(iii) the Governor of such State designates 
                      such bond for purposes of this subsection,
                          ``(iv) the bond is a general obligation of 
                      such State and is in registered form (within the 
                      meaning of section 149(a)),
                          ``(v) the maturity of such bond does not 
                      exceed 2 years, and
                          ``(vi) the bond is issued after December 31, 
                      2005, and before January 1, 2007.
                    ``(B) State matching requirement.--A bond shall not 
                be treated as a Gulf tax credit bond unless--
                          ``(i) the issuer of such bond pledges as of 
                      the date of the issuance of the issue an amount 
                      equal to the face amount of such bond to be used 
                      for payments described in subclause (I) of 
                      subparagraph (A)(ii), or loans described in 
                      subclause (II) of such subparagraph, as the case 
                      may be, with respect to the issue of which such 
                      bond is a part, and
                          ``(ii) any such payment or loan is made in 
                      equal amounts from the proceeds of such issue and 
                      from the amount pledged under clause (i).
                The requirement of clause (ii) shall be treated as met 
                with respect to any such payment or loan made during the 
                1-year period beginning on the date of the issuance (or 
                any successor 1-year period) if such requirement is met 
                when applied with respect to the aggregate amount of 
                such payments and loans made during such period.
                    ``(C) Aggregate limit on bond designations.--The 
                maximum aggregate face amount of bonds which may be 
                designated under this subsection by the Governor of a 
                State shall not exceed--
                          ``(i) $200,000,000 in the case of the State of 
                      Louisiana,
                          ``(ii) $100,000,000 in the case of the State 
                      of Mississippi, and
                          ``(iii) $50,000,000 in the case of the State 
                      of Alabama.
                    ``(D) Special rules relating to arbitrage.--A bond 
                which is part of an issue shall not be treated as a Gulf 
                tax credit bond unless, with respect to the issue of 
                which the bond is a part, the issuer satisfies the 
                arbitrage requirements of section 148 with respect to 
                proceeds of the issue and any loans made with such 
                proceeds.
            ``(5) Qualified bond.--For purposes of this subsection--

[[Page 119 STAT. 2591]]

                    ``(A) In general.--The term `qualified bond' means 
                any obligation of a State or political subdivision 
                thereof which was outstanding on August 28, 2005.
                    ``(B) Exception for private activity bonds.--Such 
                term shall not include any private activity bond.
                    ``(C) Exception for advance refundings.--Such term 
                shall not include any bond with respect to which there 
                is any outstanding refunded or refunding bond during the 
                period in which a Gulf tax credit bond is outstanding 
                with respect to such bond.
                    ``(D) Use of proceeds requirement.--Such term shall 
                not include any bond issued as part of an issue if any 
                portion of the proceeds of such issue was (or is to be) 
                used to provide any property described in section 
                144(c)(6)(B).
            ``(6) Credit included in gross income.--Gross income 
        includes the amount of the credit allowed to the taxpayer under 
        this subsection (determined without regard to paragraph (3)) and 
        the amount so included shall be treated as interest income.
            ``(7) Other definitions and special rules.--For purposes of 
        this subsection--
                    ``(A) Bond.--The term `bond' includes any 
                obligation.
                    ``(B)  Partnership; 
                s <<NOTE: Applicability.>> corporation; and other pass-
                thru entities.--
                          ``(i) In general.--
                      Under <<NOTE: Regulations.>> 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 paragraph (1).
                          ``(ii) 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.
                    ``(C) Bonds held by <<NOTE: Procedures.>> regulated 
                investment companies.--If any Gulf tax credit bond is 
                held by a regulated investment company, the credit 
                determined under paragraph (1) shall be allowed to 
                shareholders of such company under procedures prescribed 
                by the Secretary.
                    ``(D) Reporting.--Issuers of Gulf tax credit bonds 
                shall submit reports similar to the reports required 
                under section 149(e).
                    ``(E) Credit treated as nonrefundable bondholder 
                credit.--For purposes of this title, the credit allowed 
                by this subsection shall be treated as a credit 
                allowable under subpart H of part IV of subchapter A of 
                this chapter.

    ``(m) Application of New Markets Tax Credit to Investments in 
Community Development Entities Serving Gulf Opportunity Zone.--For 
purposes of section 45D--
            ``(1) a qualified community development entity shall be 
        eligible for an allocation under subsection (f)(2) thereof of 
        the increase in the new markets tax credit limitation described 
        in paragraph (2) only if a significant mission of such entity is 
        the recovery and redevelopment of the Gulf Opportunity Zone,
            ``(2) the new markets tax credit limitation otherwise 
        determined under subsection (f)(1) thereof shall be increased by 
        an amount equal to--

[[Page 119 STAT. 2592]]

                    ``(A) $300,000,000 for 2005 and 2006, to be 
                allocated among qualified community development entities 
                to make qualified low-income community investments 
                within the Gulf Opportunity Zone, and
                    ``(B) $400,000,000 for 2007, to be so allocated, and
            ``(3) subsection (f)(3) thereof shall be applied separately 
        with respect to the amount of the increase under paragraph (2).

    ``(n) Treatment of Representations Regarding Income Eligibility for 
Purposes of Qualified Residential Rental Project Requirements.--For 
purposes of determining if any residential rental project meets the 
requirements of section 142(d)(1) and if any certification with respect 
to such project meets the requirements under section 142(d)(7), the 
operator of the project may rely on the representations of any 
individual applying for tenancy in such project that such individual's 
income will not exceed the applicable income limits of section 142(d)(1) 
upon commencement of the individual's tenancy if such tenancy begins 
during the 6-month period beginning on and after the date such 
individual was displaced by reason of Hurricane Katrina.
    ``(o) Treatment of Public Utility Property Disaster Losses.--
            ``(1) In general.--Upon the election of the taxpayer, in the 
        case of any eligible public utility property loss--
                    ``(A) section 165(i) shall be applied by 
                substituting `the fifth taxable year immediately 
                preceding' for `the taxable year immediately preceding',
                    ``(B) an application for a tentative carryback 
                adjustment of the tax for any prior taxable year 
                affected by the application of subparagraph (A) may be 
                made under section 6411, and
                    ``(C) section 6611 shall not apply to any 
                overpayment attributable to such loss.
            ``(2) Eligible public utility property loss.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `eligible public utility 
                property loss' means any loss with respect to public 
                utility property located in the Gulf Opportunity Zone 
                and attributable to Hurricane Katrina.
                    ``(B) Public utility property.--The term `public 
                utility property' has the meaning given such term by 
                section 168(i)(10) without regard to the matter 
                following subparagraph (D) thereof.
            ``(3) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the application of paragraph 
        (1) is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this section by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

    ``(p) Tax Benefits Not Available With Respect to Certain Property.--
            ``(1) Qualified gulf opportunity zone property.--For 
        purposes of subsections (d), (e), and (k)(2)(B)(iv), the term 
        `qualified Gulf Opportunity Zone property' shall not include any 
        property described in paragraph (3).

[[Page 119 STAT. 2593]]

            ``(2) Qualified gulf opportunity zone casualty losses.--For 
        purposes of subsection (k)(2)(B)(i), the term `qualified Gulf 
        Opportunity Zone casualty loss' shall not include any loss with 
        respect to any property described in paragraph (3).
            ``(3) Property described.--
                    ``(A) In general.--For purposes of this subsection, 
                property is described in this paragraph if such property 
                is--
                          ``(i) any property used in connection with any 
                      private or commercial golf course, country club, 
                      massage parlor, hot tub facility, suntan facility, 
                      or any store the principal business of which is 
                      the sale of alcoholic beverages for consumption 
                      off premises, or
                          ``(ii) any gambling or animal racing property.
                    ``(B) Gambling or animal racing property.--For 
                purposes of subparagraph (A)(ii)--
                          ``(i) In general.--The term `gambling or 
                      animal racing property' means--
                                    ``(I) any equipment, furniture, 
                                software, or other property used 
                                directly in connection with gambling, 
                                the racing of animals, or the on-site 
                                viewing of such racing, and
                                    ``(II) the portion of any real 
                                property (determined by square footage) 
                                which is dedicated to gambling, the 
                                racing of animals, or the on-site 
                                viewing of such racing.
                          ``(ii) De minimis portion.--Clause (i)(II) 
                      shall not apply to any real property if the 
                      portion so dedicated is less than 100 square 
                      feet.''.

    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 54(c) is <<NOTE: 26 USC 
        54.>> amended by inserting ``, section 1400N(l),'' after 
        ``subpart C''.
            (2) Subparagraph (A) of section 6049(d)(8) is amended--
                    (A) by inserting ``or 1400N(l)(6)'' after ``section 
                54(g)'', and
                    (B) by inserting ``or 1400N(l)(2)(D), as the case 
                may be'' after ``section 54(b)(4)''.
            (3) So much of subchapter Y of chapter 1 as precedes section 
        1400L is amended to read as follows:

              ``Subchapter Y--Short-Term Regional Benefits

            ``Part I--Tax Benefits for New York Liberty Zone

                  ``Part II--Tax Benefits for GO Zones

            ``PART I--TAX BENEFITS FOR NEW YORK LIBERTY ZONE

        ``Sec. 1400L. Tax benefits for New York Liberty Zone.''.
            (4) The item relating to subchapter Y in the table of 
        subchapters for chapter 1 is amended to read as follows:

             ``subchapter y--short-term regional benefits''.

    (c) Effective <<NOTE: 26 USC 1400N note.>> Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending on or after August 28, 2005.

[[Page 119 STAT. 2594]]

            (2) Carrybacks.--Subsections (i)(2), (j), and (k) of section 
        1400N of the Internal Revenue Code of 1986 (as added by this 
        section) shall apply to losses arising in such taxable years.

SEC. 102. EXPANSION OF HOPE SCHOLARSHIP AND LIFETIME LEARNING CREDIT FOR 
            STUDENTS IN THE GULF OPPORTUNITY ZONE.

    (a) In General.--Part II of subchapter Y of chapter 1 (as added by 
this Act) is amended by adding at the end the following new section:

``SEC. 1400O. EDUCATION TAX BENEFITS.

    ``In the case of an individual who attends an eligible educational 
institution (as defined in section 25A(f)(2)) located in the Gulf 
Opportunity Zone for any taxable year beginning during 2005 or 2006--
            ``(1) in applying section 25A, the term `qualified tuition 
        and related expenses' shall include any costs which are 
        qualified higher education expenses (as defined in section 
        529(e)(3)),
            ``(2) each of the dollar amounts in effect under of 
        subparagraphs (A) and (B) of section 25A(b)(1) shall be twice 
        the amount otherwise in effect before the application of this 
        subsection, and
            ``(3) section 25A(c)(1) shall be applied by substituting `40 
        percent' for `20 percent'.''.

    (b) Conforming Amendment.--The table of sections for part II of 
subchapter Y of chapter 1 is amended by adding at the end the following 
new item:
        ``Sec. 1400O. Education tax benefits.''.

SEC. 103. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY HURRICANE KATRINA.

    (a) In General.--Part II of subchapter Y of chapter 1 (as added by 
this Act) is amended by adding at the end the following new section:

``SEC. 1400P. HOUSING TAX BENEFITS .

    ``(a) Exclusion of Employer Provided Housing for Individual Affected 
by Hurricane Katrina.--
            ``(1) In general.--Gross income of a qualified employee 
        shall not include the value of any lodging furnished in-kind to 
        such employee (and such employee's spouse or any of such 
        employee's dependents) by or on behalf of a qualified employer 
        for any month during the taxable year.
            ``(2) Limitation.--The amount which may be excluded under 
        paragraph (1) for any month for which lodging is furnished 
        during the taxable year shall not exceed $600.
            ``(3) Treatment of exclusion.--The exclusion under paragraph 
        (1) shall be treated as an exclusion under section 119 (other 
        than for purposes of sections 3121(a)(19) and 3306(b)(14)).

    ``(b) Employer Credit for Housing Employees Affected by Hurricane 
Katrina.--For purposes of section 38, in the case of a qualified 
employer, the Hurricane Katrina housing credit for any month during the 
taxable year is an amount equal to 30 percent of any amount which is 
excludable from the gross income of a qualified employee of such 
employer under subsection (a) and not otherwise excludable under section 
119.

[[Page 119 STAT. 2595]]

    ``(c) Qualified Employee.--For purposes of this section, the term 
`qualified employee' means, with respect to any month, an individual--
            ``(1) who had a principal residence (as defined in section 
        121) in the Gulf Opportunity Zone on August 28, 2005, and
            ``(2) who performs substantially all employment services--
                    ``(A) in the Gulf Opportunity Zone, and
                    ``(B) for the qualified employer which furnishes 
                lodging to such individual.

    ``(d) Qualified Employer.--For purposes of this section, the term 
`qualified employer' means any employer with a trade or business located 
in the Gulf Opportunity Zone.
    ``(e) Certain Rules to Apply.--For purposes of this subsection, 
rules similar to the rules of sections 51(i)(1) and 52 shall apply.
    ``(f) Application of Section.--This section shall apply to lodging 
furnished during the period--
            ``(1) beginning on the first day of the first month 
        beginning after the date of the enactment of this section, and
            ``(2) ending on the date which is 6 months after the first 
        day described in paragraph (1).''.

    (b) Conforming Amendments.--
            (1) Subsection (b) of <<NOTE: 26 USC 38.>> section 38 is 
        amended by striking ``and'' at the end of paragraph (25), by 
        striking the period at the end of paragraph (26) and inserting 
        ``, and'', and by adding at the end the following new paragraph:
            ``(27) the Hurricane Katrina housing credit determined under 
        section 1400P(b).''.
            (2) Section 280C(a) is amended by striking ``and 1396(a)'' 
        and inserting ``1396(a), and 1400P(b)''.
            (3) The table of sections for part II of subchapter Y of 
        chapter 1 is amended by adding at the end the following new 
        item:
        ``Sec. 1400P. Housing tax benefits.''.

SEC. 104. EXTENSION OF SPECIAL RULES FOR MORTGAGE REVENUE BONDS.

    Section 404(d) of the Katrina Emergency Tax Relief Act of 2005 is 
amended by <<NOTE: Ante, p. 2027.>> striking ``December 31, 2007'' and 
inserting ``December 31, 2010''.

SEC. 105. SPECIAL EXTENSION OF BONUS DEPRECIATION PLACED IN SERVICE DATE 
            FOR TAXPAYERS AFFECTED BY HURRICANES KATRINA, RITA, AND 
            WILMA.

    In applying the rule under section 168(k)(2)(A)(iv) of the Internal 
Revenue Code of 1986 to any property described in subparagraph (B) or 
(C) of section 168(k)(2) of such Code--
            (1) the placement in service of which--
                    (A) is to be located in the GO Zone (as defined in 
                section 1400M(1) of such Code), the Rita GO Zone (as 
                defined in section 1400M(3) of such Code), or the Wilma 
                GO Zone (as defined in section 1400M(5) of such Code), 
                and
                    (B) is to be made by any taxpayer affected by 
                Hurricane Katrina, Rita, or Wilma, or
            (2) which is manufactured in such Zone by any person 
        affected by Hurricane Katrina, Rita, or Wilma,

[[Page 119 STAT. 2596]]

the Secretary of the Treasury may, on a taxpayer by taxpayer basis, 
extend the required date of the placement in service of such property 
under such section by such period of time as is determined necessary by 
the Secretary but not to exceed 1 year. For purposes of the preceding 
sentence, the determination shall be made by only taking into account 
the effect of one or more hurricanes on the date of such placement by 
the taxpayer.

       TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA

SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR HURRICANE 
            KATRINA TO HURRICANES RITA AND WILMA.

    (a) In General.--Part II of subchapter Y of chapter 1 (as added by 
this Act) is amended by adding at the end the following new sections:

``SEC. 1400Q. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.

    ``(a) Tax-Favored Withdrawals From Retirement Plans.--
            ``(1) In general.--Section 72(t) shall not apply to any 
        qualified hurricane distribution.
            ``(2) Aggregate dollar limitation.--
                    ``(A) In general.--For purposes of this subsection, 
                the aggregate amount of distributions received by an 
                individual which may be treated as qualified hurricane 
                distributions for any taxable year shall not exceed the 
                excess (if any) of--
                          ``(i) $100,000, over
                          ``(ii) the aggregate amounts treated as 
                      qualified hurricane distributions received by such 
                      individual for all prior taxable years.
                    ``(B) Treatment of plan distributions.--If a 
                distribution to an individual would (without regard to 
                subparagraph (A)) be a qualified hurricane distribution, 
                a plan shall not be treated as violating any requirement 
                of this title merely because the plan treats such 
                distribution as a qualified hurricane distribution, 
                unless the aggregate amount of such distributions from 
                all plans maintained by the employer (and any member of 
                any controlled group which includes the employer) to 
                such individual exceeds $100,000.
                    ``(C) Controlled group.--For purposes of 
                subparagraph (B), the term `controlled group' means any 
                group treated as a single employer under subsection (b), 
                (c), (m), or (o) of section 414.
            ``(3) Amount distributed may be repaid.--
                    ``(A) In general.--Any individual who receives a 
                qualified hurricane distribution may, at any time during 
                the 3-year period beginning on the day after the date on 
                which such distribution was received, make one or more 
                contributions in an aggregate amount not to exceed the 
                amount of such distribution to an eligible retirement 
                plan of which such individual is a beneficiary and to 
                which a rollover contribution of such distribution could 
                be made under section 402(c), 403(a)(4), 403(b)(8), 
                408(d)(3), or 457(e)(16), as the case may be.

[[Page 119 STAT. 2597]]

                    ``(B) Treatment of repayments of distributions from 
                eligible retirement plans other than iras.--For purposes 
                of this title, if a contribution is made pursuant to 
                subparagraph (A) with respect to a qualified hurricane 
                distribution from an eligible retirement plan other than 
                an individual retirement plan, then the taxpayer shall, 
                to the extent of the amount of the contribution, be 
                treated as having received the qualified hurricane 
                distribution in an eligible rollover distribution (as 
                defined in section 402(c)(4)) and as having transferred 
                the amount to the eligible retirement plan in a direct 
                trustee to trustee transfer within 60 days of the 
                distribution.
                    ``(C) Treatment of repayments for distributions from 
                iras.--For purposes of this title, if a contribution is 
                made pursuant to subparagraph (A) with respect to a 
                qualified hurricane distribution from an individual 
                retirement plan (as defined by section 7701(a)(37)), 
                then, to the extent of the amount of the contribution, 
                the qualified hurricane distribution shall be treated as 
                a distribution described in section 408(d)(3) and as 
                having been transferred to the eligible retirement plan 
                in a direct trustee to trustee transfer within 60 days 
                of the distribution.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Qualified hurricane distribution.--Except as 
                provided in paragraph (2), the term `qualified hurricane 
                distribution' means--
                          ``(i) any distribution from an eligible 
                      retirement plan made on or after August 25, 2005, 
                      and before January 1, 2007, to an individual whose 
                      principal place of abode on August 28, 2005, is 
                      located in the Hurricane Katrina disaster area and 
                      who has sustained an economic loss by reason of 
                      Hurricane Katrina,
                          ``(ii) any distribution (which is not 
                      described in clause (i)) from an eligible 
                      retirement plan made on or after September 23, 
                      2005, and before January 1, 2007, to an individual 
                      whose principal place of abode on September 23, 
                      2005, is located in the Hurricane Rita disaster 
                      area and who has sustained an economic loss by 
                      reason of Hurricane Rita, and
                          ``(iii) any distribution (which is not 
                      described in clause (i) or (ii)) from an eligible 
                      retirement plan made on or after October 23, 2005, 
                      and before January 1, 2007, to an individual whose 
                      principal place of abode on October 23, 2005, is 
                      located in the Hurricane Wilma disaster area and 
                      who has sustained an economic loss by reason of 
                      Hurricane Wilma.
                    ``(B) Eligible retirement plan.--The term `eligible 
                retirement plan' shall have the meaning given such term 
                by section 402(c)(8)(B).
            ``(5) Income inclusion spread over 3-year period.--
                    ``(A) In general.--In the case of any qualified 
                hurricane distribution, unless the taxpayer elects not 
                to have this paragraph apply for any taxable year, any 
                amount required to be included in gross income for such 
                taxable year shall be so included ratably over the 3-
                taxable year period beginning with such taxable year.

[[Page 119 STAT. 2598]]

                    ``(B) Special rule.--
                For <<NOTE: Applicability.>> purposes of subparagraph 
                (A), rules similar to the rules of subparagraph (E) of 
                section 408A(d)(3) shall apply.
            ``(6) Special rules.--
                    ``(A) Exemption of distributions from trustee to 
                trustee transfer and withholding rules.--For purposes of 
                sections 401(a)(31), 402(f), and 3405, qualified 
                hurricane distributions shall not be treated as eligible 
                rollover distributions.
                    ``(B) Qualified hurricane distributions treated as 
                meeting plan distribution requirements.--For purposes 
                this title, a qualified hurricane distribution shall be 
                treated as meeting the requirements of sections 
                401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 
                457(d)(1)(A).

    ``(b) Recontributions of Withdrawals for Home Purchases.--
            ``(1) Recontributions.--
                    ``(A) In general.--Any individual who received a 
                qualified distribution may, during the applicable 
                period, make one or more contributions in an aggregate 
                amount not to exceed the amount of such qualified 
                distribution to an eligible retirement plan (as defined 
                in section 402(c)(8)(B)) of which such individual is a 
                beneficiary and to which a rollover contribution of such 
                distribution could be made under section 402(c), 
                403(a)(4), 403(b)(8), or 408(d)(3), as the case may be.
                    ``(B) Treatment of repayments.--Rules similar to the 
                rules of subparagraphs (B) and (C) of subsection (a)(3) 
                shall apply for purposes of this subsection.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified distribution' 
                means any qualified Katrina distribution, any qualified 
                Rita distribution, and any qualified Wilma distribution.
                    ``(B) Qualified katrina distribution.--The term 
                `qualified Katrina distribution' means any 
                distribution--
                          ``(i) described in section 
                      401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to 
                      the extent such distribution relates to financial 
                      hardship), 403(b)(11)(B), or 72(t)(2)(F),
                          ``(ii) received after February 28, 2005, and 
                      before August 29, 2005, and
                          ``(iii) which was to be used to purchase or 
                      construct a principal residence in the Hurricane 
                      Katrina disaster area, but which was not so 
                      purchased or constructed on account of Hurricane 
                      Katrina.
                    ``(C) Qualified rita distribution.--The term 
                `qualified Rita distribution' means any distribution 
                (other than a qualified Katrina distribution)--
                          ``(i) described in section 
                      401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to 
                      the extent such distribution relates to financial 
                      hardship), 403(b)(11)(B), or 72(t)(2)(F),
                          ``(ii) received after February 28, 2005, and 
                      before September 24, 2005, and
                          ``(iii) which was to be used to purchase or 
                      construct a principal residence in the Hurricane 
                      Rita disaster

[[Page 119 STAT. 2599]]

                      area, but which was not so purchased or 
                      constructed on account of Hurricane Rita.
                    ``(D) Qualified wilma distribution.--The term 
                `qualified Wilma distribution' means any distribution 
                (other than a qualified Katrina distribution or a 
                qualified Rita distribution)--
                          ``(i) described in section 
                      401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to 
                      the extent such distribution relates to financial 
                      hardship), 403(b)(11)(B), or 72(t)(2)(F),
                          ``(ii) received after February 28, 2005, and 
                      before October 24, 2005, and
                          ``(iii) which was to be used to purchase or 
                      construct a principal residence in the Hurricane 
                      Wilma disaster area, but which was not so 
                      purchased or constructed on account of Hurricane 
                      Wilma.
            ``(3) Applicable period.--For purposes of this subsection, 
        the term `applicable period' means--
                    ``(A) with respect to any qualified Katrina 
                distribution, the period beginning on August 25, 2005, 
                and ending on February 28, 2006,
                    ``(B) with respect to any qualified Rita 
                distribution, the period beginning on September 23, 
                2005, and ending on February 28, 2006, and
                    ``(C) with respect to any qualified Wilma 
                distribution, the period beginning on October 23, 2005, 
                and ending on February 28, 2006.

    ``(c) Loans From Qualified Plans.--
            ``(1) Increase in <<NOTE: Applicability.>> limit on loans 
        not treated as distributions.--In the case of any loan from a 
        qualified employer plan (as defined under section 72(p)(4)) to a 
        qualified individual made during the applicable period--
                    ``(A) clause (i) of section 72(p)(2)(A) shall be 
                applied by substituting `$100,000' for `$50,000', and
                    ``(B) clause (ii) of such section shall be applied 
                by substituting `the present value of the nonforfeitable 
                accrued benefit of the employee under the plan' for 
                `one-half of the present value of the nonforfeitable 
                accrued benefit of the employee under the plan'.
            ``(2) Delay of repayment.--In the case of a qualified 
        individual with an outstanding loan on or after the qualified 
        beginning date from a qualified employer plan (as defined in 
        section 72(p)(4))--
                    ``(A) if the due date pursuant to subparagraph (B) 
                or (C) of section 72(p)(2) for any repayment with 
                respect to such loan occurs during the period beginning 
                on the qualified beginning date and ending on December 
                31, 2006, such due date shall be delayed for 1 year,
                    ``(B) any subsequent repayments with respect to any 
                such loan shall be appropriately adjusted to reflect the 
                delay in the due date under paragraph (1) and any 
                interest accruing during such delay, and
                    ``(C) in determining the 5-year period and the term 
                of a loan under subparagraph (B) or (C) of section 
                72(p)(2), the period described in subparagraph (A) shall 
                be disregarded.

[[Page 119 STAT. 2600]]

            ``(3) Qualified individual.--For purposes of this sub- 
        section--
                    ``(A) In general.--The term `qualified individual' 
                means any qualified Hurricane Katrina individual, any 
                qualified Hurricane Rita individual, and any qualified 
                Hurricane Wilma individual.
                    ``(B) Qualified hurricane katrina individual.--The 
                term `qualified Hurricane Katrina individual' means an 
                individual whose principal place of abode on August 28, 
                2005, is located in the Hurricane Katrina disaster area 
                and who has sustained an economic loss by reason of 
                Hurricane Katrina.
                    ``(C) Qualified hurricane rita individual.--The term 
                `qualified Hurricane Rita individual' means an 
                individual (other than a qualified Hurricane Katrina 
                individual) whose principal place of abode on September 
                23, 2005, is located in the Hurricane Rita disaster area 
                and who has sustained an economic loss by reason of 
                Hurricane Rita.
                    ``(D) Qualified hurricane wilma individual.--The 
                term `qualified Hurricane Wilma individual' means an 
                individual (other than a qualified Hurricane Katrina 
                individual or a qualified Hurricane Rita individual) 
                whose principal place of abode on October 23, 2005, is 
                located in the Hurricane Wilma disaster area and who has 
                sustained an economic loss by reason of Hurricane Wilma.
            ``(4) Applicable period; qualified beginning date.--For 
        purposes of this subsection--
                    ``(A) Hurricane katrina.--In the case of any 
                qualified Hurricane Katrina individual--
                          ``(i) the applicable period is the period 
                      beginning on September 24, 2005, and ending on 
                      December 31, 2006, and
                          ``(ii) the qualified beginning date is August 
                      25, 2005.
                    ``(B) Hurricane rita.--In the case of any qualified 
                Hurricane Rita individual--
                          ``(i) the applicable period is the period 
                      beginning on the date of the enactment of this 
                      subsection and ending on December 31, 2006, and
                          ``(ii) the qualified beginning date is 
                      September 23, 2005.
                    ``(C) Hurricane wilma.--In the case of any qualified 
                Hurricane Wilma individual--
                          ``(i) the applicable period is the period 
                      beginning on the date of the enactment of this 
                      subparagraph and ending on December 31, 2006, and
                          ``(ii) the qualified beginning date is October 
                      23, 2005.

    ``(d) Provisions Relating to Plan Amendments.--
            ``(1) In general.--If this subsection applies to any 
        amendment to any plan or annuity contract, such plan or contract 
        shall be treated as being operated in accordance with the terms 
        of the plan during the period described in paragraph (2)(B)(i).
            ``(2) Amendments to which subsection applies.--

[[Page 119 STAT. 2601]]

                    ``(A) In general.--This subsection shall apply to 
                any amendment to any plan or annuity contract which is 
                made--
                          ``(i) pursuant to any provision of this 
                      section, or pursuant to any regulation issued by 
                      the Secretary or the Secretary of Labor under any 
                      provision of this section, and
                          ``(ii) on or before the last day of the first 
                      plan year beginning on or after January 1, 2007, 
                      or such later date as the Secretary may prescribe.
                In the case of a governmental plan (as defined in 
                section 414(d)), clause (ii) shall be applied by 
                substituting the date which is 2 years after the date 
                otherwise applied under clause (ii).
                    ``(B) Conditions.--This subsection shall not apply 
                to any amendment unless--
                          ``(i) during the period--
                                    ``(I) beginning on the date that 
                                this section or the regulation described 
                                in subparagraph (A)(i) takes effect (or 
                                in the case of a plan or contract 
                                amendment not required by this section 
                                or such regulation, the effective date 
                                specified by the plan), and
                                    ``(II) ending on the date described 
                                in subparagraph (A)(ii) (or, if earlier, 
                                the date the plan or contract amendment 
                                is adopted),
                      the plan or contract is operated as if such plan 
                      or contract amendment were in effect; and
                          ``(ii) such plan or contract amendment applies 
                      retroactively for such period.

``SEC. 1400R. EMPLOYMENT RELIEF.

    ``(a) Employee Retention Credit for Employers Affected by Hurricane 
Katrina.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Katrina employee 
        retention credit for any taxable year is an amount equal to 40 
        percent of the qualified wages with respect to each eligible 
        employee of such employer for such taxable year. For purposes of 
        the preceding sentence, the amount of qualified wages which may 
        be taken into account with respect to any individual shall not 
        exceed $6,000.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                          ``(i) which conducted an active trade or 
                      business on August 28, 2005, in the GO Zone, and
                          ``(ii) with respect to whom the trade or 
                      business described in clause (i) is inoperable on 
                      any day after August 28, 2005, and before January 
                      1, 2006, as a result of damage sustained by reason 
                      of Hurricane Katrina.
                    ``(B) Eligible employee.--The term `eligible 
                employee' means with respect to an eligible employer an 
                employee whose principal place of employment on August 
                28, 2005, with such eligible employer was in the GO 
                Zone.

[[Page 119 STAT. 2602]]

                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but without 
                regard to section 3306(b)(2)(B)) paid or incurred by an 
                eligible employer with respect to an eligible employee 
                on any day after August 28, 2005, and before January 1, 
                2006, which occurs during the period--
                          ``(i) beginning on the date on which the trade 
                      or business described in subparagraph (A) first 
                      became inoperable at the principal place of 
                      employment of the employee immediately before 
                      Hurricane Katrina, and
                          ``(ii) ending on the date on which such trade 
                      or business has resumed significant operations at 
                      such principal place of employment.
                Such term shall include wages paid without regard to 
                whether the employee performs no services, performs 
                services at a different place of employment than such 
                principal place of employment, or performs services at 
                such principal place of employment before significant 
                operations have resumed.
            ``(3) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1) and 
        52 shall apply.
            ``(4) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under section 51 
        with respect to such employee for such period.

    ``(b) Employee Retention Credit for Employers Affected by Hurricane 
Rita.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Rita employee retention 
        credit for any taxable year is an amount equal to 40 percent of 
        the qualified wages with respect to each eligible employee of 
        such employer for such taxable year. For purposes of the 
        preceding sentence, the amount of qualified wages which may be 
        taken into account with respect to any individual shall not 
        exceed $6,000.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                          ``(i) which conducted an active trade or 
                      business on September 23, 2005, in the Rita GO 
                      Zone, and
                          ``(ii) with respect to whom the trade or 
                      business described in clause (i) is inoperable on 
                      any day after September 23, 2005, and before 
                      January 1, 2006, as a result of damage sustained 
                      by reason of Hurricane Rita.
                    ``(B) Eligible employee.--The term `eligible 
                employee' means with respect to an eligible employer an 
                employee whose principal place of employment on 
                September 23, 2005, with such eligible employer was in 
                the Rita GO Zone.
                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but without 
                regard to section 3306(b)(2)(B)) paid or incurred by an 
                eligible employer with respect to an eligible employee 
                on

[[Page 119 STAT. 2603]]

                any day after September 23, 2005, and before January 1, 
                2006, which occurs during the period--
                          ``(i) beginning on the date on which the trade 
                      or business described in subparagraph (A) first 
                      became inoperable at the principal place of 
                      employment of the employee immediately before 
                      Hurricane Rita, and
                          ``(ii) ending on the date on which such trade 
                      or business has resumed significant operations at 
                      such principal place of employment.
                Such term shall include wages paid without regard to 
                whether the employee performs no services, performs 
                services at a different place of employment than such 
                principal place of employment, or performs services at 
                such principal place of employment before significant 
                operations have resumed.
            ``(3) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1) and 
        52 shall apply.
            ``(4) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under subsection 
        (a) or section 51 with respect to such employee for such period.

    ``(c) Employee Retention Credit for Employers Affected by Hurricane 
Wilma.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Wilma employee retention 
        credit for any taxable year is an amount equal to 40 percent of 
        the qualified wages with respect to each eligible employee of 
        such employer for such taxable year. For purposes of the 
        preceding sentence, the amount of qualified wages which may be 
        taken into account with respect to any individual shall not 
        exceed $6,000.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                          ``(i) which conducted an active trade or 
                      business on October 23, 2005, in the Wilma GO 
                      Zone, and
                          ``(ii) with respect to whom the trade or 
                      business described in clause (i) is inoperable on 
                      any day after October 23, 2005, and before January 
                      1, 2006, as a result of damage sustained by reason 
                      of Hurricane Wilma.
                    ``(B) Eligible employee.--The term `eligible 
                employee' means with respect to an eligible employer an 
                employee whose principal place of employment on October 
                23, 2005, with such eligible employer was in the Wilma 
                GO Zone.
                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but without 
                regard to section 3306(b)(2)(B)) paid or incurred by an 
                eligible employer with respect to an eligible employee 
                on any day after October 23, 2005, and before January 1, 
                2006, which occurs during the period--
                          ``(i) beginning on the date on which the trade 
                      or business described in subparagraph (A) first 
                      became inoperable at the principal place of 
                      employment of

[[Page 119 STAT. 2604]]

                      the employee immediately before Hurricane Wilma, 
                      and
                          ``(ii) ending on the date on which such trade 
                      or business has resumed significant operations at 
                      such principal place of employment.
                Such term shall include wages paid without regard to 
                whether the employee performs no services, performs 
                services at a different place of employment than such 
                principal place of employment, or performs services at 
                such principal place of employment before significant 
                operations have resumed.
            ``(3) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1) and 
        52 shall apply.
            ``(4) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under subsection 
        (a) or (b) or section 51 with respect to such employee for such 
        period.

``SEC. 1400S. ADDITIONAL TAX RELIEF PROVISIONS.

    ``(a) Temporary Suspension of Limitations on Charitable 
Contributions.--
            ``(1) In general.--Except as otherwise provided in paragraph 
        (2), section 170(b) shall not apply to qualified contributions 
        and such contributions shall not be taken into account for 
        purposes of applying subsections (b) and (d) of section 170 to 
        other contributions.
            ``(2) Treatment of excess contributions.--For purposes of 
        section 170--
                    ``(A) Individuals.--In the case of an individual--
                          ``(i) Limitation.--Any qualified contribution 
                      shall be allowed only to the extent that the 
                      aggregate of such contributions does not exceed 
                      the excess of the taxpayer's contribution base (as 
                      defined in subparagraph (F) of section 170(b)(1)) 
                      over the amount of all other charitable 
                      contributions allowed under section 170(b)(1).
                          ``(ii) Carryover.--If the aggregate amount of 
                      qualified contributions made in the contribution 
                      year (within the meaning of section 170(d)(1)) 
                      exceeds the limitation of clause (i), such excess 
                      shall be added to the excess described in the 
                      portion of subparagraph (A) of such section which 
                      precedes clause (i) thereof for purposes of 
                      applying such section.
                    ``(B) Corporations.--In the case of a corporation--
                          ``(i) Limitation.--Any qualified contribution 
                      shall be allowed only to the extent that the 
                      aggregate of such contributions does not exceed 
                      the excess of the taxpayer's taxable income (as 
                      determined under paragraph (2) of section 170(b)) 
                      over the amount of all other charitable 
                      contributions allowed under such paragraph.
                          ``(ii) Carryover.--Rules similar to the rules 
                      of subparagraph (A)(ii) shall apply for purposes 
                      of this subparagraph.

[[Page 119 STAT. 2605]]

            ``(3) Exception to overall limitation on itemized 
        deductions.--So much of any deduction allowed under section 170 
        as does not exceed the qualified contributions paid during the 
        taxable year shall not be treated as an itemized deduction for 
        purposes of section 68.
            ``(4) Qualified contributions.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified contribution' means any charitable 
                contribution (as defined in section 170(c)) if--
                          ``(i) such contribution is paid during the 
                      period beginning on August 28, 2005, and ending on 
                      December 31, 2005, in cash to an organization 
                      described in section 170(b)(1)(A) (other than an 
                      organization described in section 509(a)(3)),
                          ``(ii) in the case of a contribution paid by a 
                      corporation, such contribution is for relief 
                      efforts related to Hurricane Katrina, Hurricane 
                      Rita, or Hurricane Wilma, and
                          ``(iii) the taxpayer has elected the 
                      application of this subsection with respect to 
                      such contribution.
                    ``(B) Exception.--Such term shall not include a 
                contribution if the contribution is for establishment of 
                a new, or maintenance in an existing, segregated fund or 
                account with respect to which the donor (or any person 
                appointed or designated by such donor) has, or 
                reasonably expects to have, advisory privileges with 
                respect to distributions or investments by reason of the 
                donor's status as a donor.
                    ``(C) Application of election to partnerships and s 
                corporations.--In the case of a partnership or S 
                corporation, the election under subparagraph (A)(iii) 
                shall be made separately by each partner or shareholder.

    ``(b) Suspension of Certain Limitations on Personal Casualty 
Losses.--Paragraphs (1) and (2)(A) of section 165(h) shall not apply to 
losses described in section 165(c)(3)--
            ``(1) which arise in the Hurricane Katrina disaster area on 
        or after August 25, 2005, and which are attributable to 
        Hurricane Katrina,
            ``(2) which arise in the Hurricane Rita disaster area on or 
        after September 23, 2005, and which are attributable to 
        Hurricane Rita, or
            ``(3) which arise in the Hurricane Wilma disaster area on or 
        after October 23, 2005, and which are attributable to Hurricane 
        Wilma.

In the case of any other losses, section 165(h)(2)(A) shall be applied 
without regard to the losses referred to in the preceding sentence.
    ``(c) Required Exercise of <<NOTE: Termination date.>> Authority 
Under Section 7508A.--In the case of any taxpayer determined by the 
Secretary to be affected by the Presidentially declared disaster 
relating to Hurricane Katrina, Hurricane Rita, or Hurricane Wilma, any 
relief provided by the Secretary under section 7508A shall be for a 
period ending not earlier than February 28, 2006.

    ``(d) Special Rule for Determining Earned Income.--
            ``(1) In general.--In the case of a qualified individual, if 
        the earned income of the taxpayer for the taxable year which 
        includes the applicable date is less than the earned income of 
        the taxpayer for the preceding taxable year, the

[[Page 119 STAT. 2606]]

        credits allowed under sections 24(d) and 32 may, at the election 
        of the taxpayer, be determined by substituting--
                    ``(A) such earned income for the preceding taxable 
                year, for
                    ``(B) such earned income for the taxable year which 
                includes the applicable date.
            ``(2) Qualified individual.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified individual' 
                means any qualified Hurricane Katrina individual, any 
                qualified Hurricane Rita individual, and any qualified 
                Hurricane Wilma individual.
                    ``(B) Qualified hurricane katrina individual.--The 
                term `qualified Hurricane Katrina individual' means any 
                individual whose principal place of abode on August 25, 
                2005, was located--
                          ``(i) in the GO Zone, or
                          ``(ii) in the Hurricane Katrina disaster area 
                      (but outside the GO Zone) and such individual was 
                      displaced from such principal place of abode by 
                      reason of Hurricane Katrina.
                    ``(C) Qualified hurricane rita individual.--The term 
                `qualified Hurricane Rita individual' means any 
                individual (other than a qualified Hurricane Katrina 
                individual) whose principal place of abode on September 
                23, 2005, was located--
                          ``(i) in the Rita GO Zone, or
                          ``(ii) in the Hurricane Rita disaster area 
                      (but outside the Rita GO Zone) and such individual 
                      was displaced from such principal place of abode 
                      by reason of Hurricane Rita.
                    ``(D) Qualified hurricane wilma individual.--The 
                term `qualified Hurricane Wilma individual' means any 
                individual whose principal place of abode on October 23, 
                2005, was located--
                          ``(i) in the Wilma GO Zone, or
                          ``(ii) in the Hurricane Wilma disaster area 
                      (but outside the Wilma GO Zone) and such 
                      individual was displaced from such principal place 
                      of abode by reason of Hurricane Wilma.
            ``(3) Applicable date.--For purposes of this subsection, the 
        term `applicable date' means--
                    ``(A) in the case of a qualified Hurricane Katrina 
                individual, August 25, 2005,
                    ``(B) in the case of a qualified Hurricane Rita 
                individual, September 23, 2005, and
                    ``(C) in the case of a qualified Hurricane Wilma 
                individual, October 23, 2005.
            ``(4) Earned income.--For purposes of this subsection, the 
        term `earned income' has the meaning given such term under 
        section 32(c).
            ``(5) Special rules.--
                    ``(A) Application to joint returns.--For purposes of 
                paragraph (1), in the case of a joint return for a 
                taxable year which includes the applicable date--
                          ``(i) such paragraph shall apply if either 
                      spouse is a qualified individual, and

[[Page 119 STAT. 2607]]

                          ``(ii) the earned income of the taxpayer for 
                      the preceding taxable year shall be the sum of the 
                      earned income of each spouse for such preceding 
                      taxable year.
                    ``(B) Uniform application of election.--Any election 
                made under paragraph (1) shall apply with respect to 
                both sections 24(d) and section 32.
                    ``(C) Errors treated as mathematical error.--For 
                purposes of section 6213, an incorrect use on a return 
                of earned income pursuant to paragraph (1) shall be 
                treated as a mathematical or clerical error.
                    ``(D) No effect on determination of gross income, 
                etc.--Except as otherwise provided in this subsection, 
                this title shall be applied without regard to any 
                substitution under paragraph (1).

    ``(e) Secretarial Authority To Make Adjustments Regarding Taxpayer 
and Dependency Status.--With respect to taxable years beginning in 2005 
or 2006, the Secretary may make such adjustments in the application of 
the internal revenue laws as may be necessary to ensure that taxpayers 
do not lose any deduction or credit or experience a change of filing 
status by reason of temporary relocations by reason of Hurricane 
Katrina, Hurricane Rita, or Hurricane Wilma. Any adjustments made under 
the preceding sentence shall ensure that an individual is not taken into 
account by more than one taxpayer with respect to the same tax benefit.

``SEC. 1400T. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.

    ``(a) In General.--In the case of <<NOTE: Applicability.>> financing 
provided with respect to owner-occupied residences in the GO Zone, the 
Rita GO Zone, or the Wilma GO Zone, section 143 shall be applied--
            ``(1) by treating any such residence in the Rita GO Zone or 
        the Wilma GO Zone as a targeted area residence,
            ``(2) by applying subsection (f)(3) thereof without regard 
        to subparagraph (A) thereof, and
            ``(3) by substituting `$150,000' for `$15,000' in subsection 
        (k)(4) thereof.

    ``(b) Application.--Subsection (a) shall not apply to financing 
provided after December 31, 2010.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38, <<NOTE: 26 USC 38.>> as 
        amended by this Act, is amended by striking ``and'' at the end 
        of paragraph (26), by striking the period at the end of 
        paragraph (27) and inserting a comma, and by adding at the end 
        the following new paragraphs:
            ``(28) the Hurricane Katrina employee retention credit 
        determined under section 1400R(a),
            ``(29) the Hurricane Rita employee retention credit 
        determined under section 1400R(b), and
            ``(30) the Hurricane Wilma employee retention credit 
        determined under section 1400R(c).''.
            (2) Section 280C(a), as amended by this Act, is amended by 
        striking ``and 1400P(b)'' and inserting ``1400P(b), and 1400R''.
            (3) The table of sections for part II of subchapter Y of 
        chapter 1 is amended by adding at the end the following new 
        items:
        ``Sec. 1400Q. Special rules for use of retirement funds.
        ``Sec. 1400R. Employment relief.
        ``Sec. 1400S. Additional tax relief provisions.''.

[[Page 119 STAT. 2608]]

            (4) The <<NOTE: Repeal.>> following provisions of the 
        Katrina Emergency Tax Relief Act of 2005 are hereby repealed:
                    (A) <<NOTE: Ante, p. 2017.>> Title I.
                    (B) <<NOTE: Ante, pp. 2021, 2022, 2027-
                2029.>> Sections 202, 301, 402, 403(b), 406, and 407.

                       TITLE III--OTHER PROVISIONS

SEC. 301. GULF COAST RECOVERY BONDS.

    It is the sense of the Congress that the Secretary of the Treasury, 
or the Secretary's delegate, should designate one or more series of 
bonds or certificates (or any portion thereof) issued under section 3105 
of title 31, United States Code, as ``Gulf Coast Recovery Bonds'' in 
response to Hurricanes Katrina, Rita, and Wilma.

SEC. 302. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES 
            OF EARNED INCOME CREDIT.

    (a) In General.--Subclause (II) of section 32(c)(2)(B)(vi) is 
amended by striking ``January 1, 2006'' and inserting ``January 1, 
2007''.
    (b) Effective Date.--The <<NOTE: 26 USC 32 note.>> amendment made by 
subsection (a) shall apply to taxable years beginning after December 31, 
2005.

SEC. 303. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM SUSPENSION 
            RULES FOR CERTAIN LISTED AND REPORTABLE TRANSACTIONS.

    (a) Effective Date Modification.--
            (1) In general.--Paragraph (2) of section 903(d) of the 
        American Jobs Creation Act of 2004 is <<NOTE: 26 USC 6404 
        note.>> amended to read as follows:
            ``(2) Exception for reportable or listed transactions.--
                    ``(A) In general.--The amendments made by subsection 
                (c) shall apply with respect to interest accruing after 
                October 3, 2004.
                    ``(B) Special rule for certain listed and reportable 
                transactions.--
                          ``(i) In general.--Except as provided in 
                      clauses (ii), (iii), and (iv), the amendments made 
                      by subsection (c) shall also apply with respect to 
                      interest accruing on or before October 3, 2004.
                          ``(ii) Participants in settlement 
                      initiatives.--Clause (i) shall not apply to any 
                      transaction if, as of January 23, 2006--
                                    ``(I) the taxpayer is participating 
                                in a settlement initiative described in 
                                Internal Revenue Service Announcement 
                                2005-80 with respect to such 
                                transaction, or
                                    ``(II) the taxpayer has entered into 
                                a settlement agreement pursuant to such 
                                an initiative.
                      Subclause (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.

[[Page 119 STAT. 2609]]

                          ``(iii) Taxpayers acting in good faith.--The 
                      Secretary of the Treasury may except from the 
                      application of clause (i) any transaction in which 
                      the taxpayer has acted reasonably and in good 
                      faith.
                          ``(iv) Closed transactions.--Clause (i) shall 
                      not apply to a transaction if, as of December 14, 
                      2005--
                                    ``(I) the assessment of all Federal 
                                income taxes for the taxable year in 
                                which the tax liability to which the 
                                interest relates arose is prevented by 
                                the operation of any law or rule of law, 
                                or
                                    ``(II) a closing agreement under 
                                section 7121 has been entered into with 
                                respect to the tax liability arising in 
                                connection with the transaction.''.
            (2) Effective date.--The <<NOTE: 26 USC 6404 
        note.>> 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.

    (b) Treatment of Amended Returns and Other Similar Notices of 
Additional Tax Owed.--
            (1) In general.--Section <<NOTE: 26 USC 6404.>> 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.''.
            (2) Effective date.--The <<NOTE: 26 USC 6404 
        note.>> amendment made by this subsection shall apply to 
        documents provided on or after the date of the enactment of this 
        Act.

SEC. 304. AUTHORITY FOR UNDERCOVER OPERATIONS.

    Paragraph (6) of section 7608(c) (relating to application of 
section) is amended by striking ``January 1, 2006'' both places is 
appears and inserting ``January 1, 2007''.

SEC. 305. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.

    (a) Disclosures To Facilitate Combined Employment Tax Reporting.--
            (1) In general.--Subparagraph (B) of section 6103(d)(5) 
        (relating to termination) is amended by striking ``December 31, 
        2005'' and inserting ``December 31, 2006''.
            (2) Effective date.--The <<NOTE: 26 USC 6103 
        note.>> amendment made by paragraph (1) shall apply to 
        disclosures after December 31, 2005.

    (b) Disclosures Relating to Terrorist Activities.--
            (1) In general.--Clause (iv) of section 6103(i)(3)(C) and 
        subparagraph (E) of section 6103(i)(7) are each amended by 
        striking ``December 31, 2005'' and inserting ``December 31, 
        2006''.
            (2) Effective date.--The <<NOTE: 26 USC 6103 
        note.>> amendments made by paragraph (1) shall apply to 
        disclosures after December 31, 2005.

    (c) Disclosures Relating to Student Loans.--
            (1) In general.--Subparagraph (D) of section 6103(l)(13) 
        (relating to termination) is amended by striking ``December 31, 
        2005'' and inserting ``December 31, 2006''.
            (2) Effective date.--The <<NOTE: 26 USC 6103 
        note.>> amendment made by paragraph (1) shall apply to requests 
        made after December 31, 2005.

[[Page 119 STAT. 2610]]

                          TITLE IV--TECHNICALS

        Subtitle A--Tax <<NOTE: Tax Technical Corrections Act of 
2005.>> Technicals

SEC. 401. <<NOTE: 26 USC 1 note.>> SHORT TITLE.

    This subtitle may be cited as the ``Tax Technical Corrections Act of 
2005''.

SEC. 402. AMENDMENTS RELATED TO ENERGY POLICY ACT OF 2005.

    (a) Amendments Related to Section 1263.--
            (1) Part <<NOTE: Repeal. 26 USC 1081-1083.>> VI of 
        subchapter O of chapter 1 is repealed.
            (2) Section 1223 is amended by striking paragraph (3) and by 
        redesignating paragraphs (4) through (16) as paragraphs (3) 
        through (15), respectively.
            (3) Section 121(g) is amended by striking ``1223(7)'' and 
        inserting ``1223(6)''.
            (4) Section 246(c)(3)(B) is amended by striking ``paragraph 
        (4) of section 1223'' and inserting ``paragraph (3) of section 
        1223''.
            (5) Section 247(b)(2)(D) is amended by inserting ``as in 
        effect before its repeal'' after ``part VI of subchapter O''.
            (6)(A) Section 1245(b) is amended by striking paragraph (5) 
        and redesignating paragraphs (6) through (9) as paragraphs (5) 
        through (8), respectively.
            (B) Section 1245(b)(3) is amended by striking ``paragraph 
        (7)'' and inserting ``paragraph (6)''.
            (7)(A) Section 1250(d) is amended by striking paragraph (5) 
        and redesignating paragraphs (6) through (8) as paragraphs (5) 
        through (7), respectively.
            (B) Section 1250(e)(2) is amended by striking ``(3), or 
        (5)'' and inserting ``or (3)''.

    (b) Amendment Related to Section 1301.--Clause (ii) of section 
45(c)(3)(A) is amended by striking ``nonhazardous lignin waste 
material'' and inserting ``lignin material''.
    (c) Amendments Related to Section 1303.--
            (1) Subsection (l) of section 54 is amended by striking 
        paragraph (5), and by redesignating paragraphs (6) and (7) as 
        paragraphs (5) and (6), respectively.
            (2) Subsection (e) of section 1303 of the Energy Policy Act 
        of 2005 <<NOTE: Ante, p. 991.>> is amended to read as follows:

    ``(e) Effective Dates.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to bonds issued 
        after December 31, 2005.
            ``(2) Subsection (c).--The amendments made by subsection (c) 
        shall apply to taxable years beginning after December 31, 
        2005.''.

    (d) Amendments Related to Section 1306.--
            (1) Paragraph (2) of section 45J(c) is amended to read as 
        follows:
            ``(2) Phaseout of credit.--
                    ``(A) In general.--The amount of the credit 
                determined under subsection (a) shall be reduced by an 
                amount which bears the same ratio to the amount of the 
                credit (determined without regard to this paragraph) 
                as--

[[Page 119 STAT. 2611]]

                          ``(i) the amount by which the reference price 
                      (as defined in section 45(e)(2)(C)) for the 
                      calendar year in which the sale occurs exceeds 8 
                      cents, bears to
                          ``(ii) 3 cents.
                    ``(B) Phaseout adjustment based on inflation.--The 8 
                cent amount in subparagraph (A) shall be adjusted by 
                multiplying such amount by the inflation adjustment 
                factor (as defined in section 45(e)(2)(B)) for the 
                calendar year in which the sale occurs. If any amount as 
                increased under the preceding sentence is not a multiple 
                of 0.1 cent, such amount shall be rounded to the nearest 
                multiple of 0.1 cent.''.
            (2) Subsection (e) of <<NOTE: 26 USC 45J.>> section 45J is 
        amended by striking ``(2),''.

    (e) Amendment Related to Section 1309.--Subparagraph (B) of section 
169(d)(5) is amended by adding at beginning thereof ``in the case of 
facility placed in service in connection with a plant or other property 
placed in operation after December 31, 1975,''.
    (f) Amendments Related to Section 1311.--
            (1) Clause (i) of section 172(b)(1)(I) is amended to read as 
        follows:
                          ``(i) In general.--At the election of the 
                      taxpayer for any taxable year ending after 
                      December 31, 2005, and before January 1, 2009, in 
                      the case of a net operating loss for a taxable 
                      year ending after December 31, 2002, and before 
                      January 1, 2006, there shall be a net operating 
                      loss carryback to each of the 5 taxable years 
                      preceding the taxable year of such loss to the 
                      extent that such loss does not exceed 20 percent 
                      of the sum of the electric transmission property 
                      capital expenditures and the pollution control 
                      facility capital expenditures of the taxpayer for 
                      the taxable year preceding the taxable year for 
                      which such election is made.''.
            (2) Clause (ii) of section 172(b)(1)(I) is amended by 
        striking ``in a taxable year'' and inserting ``for a taxable 
        year''.
            (3) Subparagraph (I) of section 172(b)(1) is amended by 
        striking clause (iv) and (v), by redesignating clause (vi) as 
        clause (v), and by inserting after clause (iii) the following:
                          ``(iv) Special rules relating to credit or 
                      refund.--In the case of the portion of the loss 
                      which is carried back 5 years by reason of clause 
                      (i)--
                                    ``(I) an application under section 
                                6411(a) with respect to such portion 
                                shall not fail to be treated as timely 
                                filed if filed within 24 months after 
                                the due date specified under such 
                                section, and
                                    ``(II) references in sections 
                                6501(h), 6511(d)(2)(A), and 6611(f)(1) 
                                to the taxable year in which such net 
                                operating loss arises or results in a 
                                net operating loss carryback shall be 
                                treated as references to the taxable 
                                year for which such election is made.''.

    (g) Amendment Related to Section 1322.--Subsection (a) of section 
45K is amended by striking ``if the taxpayer elects to have this section 
apply,''.
    (h) Amendment Related to Section 1331.--Paragraph (3) of section 
1250(b) is amended by striking ``or by section 179D''.

[[Page 119 STAT. 2612]]

    (i) Amendments Related to Section 1335.--
            (1) Paragraph (1) of <<NOTE: 26 USC 25D.>> section 25D(b) is 
        amended by inserting ``(determined without regard to subsection 
        (c))'' after ``subsection (a)''.
            (2) Subparagraphs (A) and (B) of section 25D(e)(4) are 
        amended to read as follows:
                    ``(A) Maximum expenditures.--The maximum amount of 
                expenditures which may be taken into account under 
                subsection (a) by all such individuals with respect to 
                such dwelling unit during such calendar year shall be--
                          ``(i) $6,667 in the case of any qualified 
                      photovoltaic property expenditures,
                          ``(ii) $6,667 in the case of any qualified 
                      solar water heating property expenditures, and
                          ``(iii) $1,667 in the case of each half 
                      kilowatt of capacity of qualified fuel cell 
                      property (as defined in section 48(c)(1)) for 
                      which qualified fuel cell property expenditures 
                      are made.
                    ``(B) Allocation of expenditures.--The expenditures 
                allocated to any individual for the taxable year in 
                which such calendar year ends shall be an amount equal 
                to the lesser of--
                          ``(i) the amount of expenditures made by such 
                      individual with respect to such dwelling during 
                      such calendar year, or
                          ``(ii) the maximum amount of such expenditures 
                      set forth in subparagraph (A) multiplied by a 
                      fraction--
                                    ``(I) the numerator of which is the 
                                amount of such expenditures with respect 
                                to such dwelling made by such individual 
                                during such calendar year, and
                                    ``(II) the denominator of which is 
                                the total expenditures made by all such 
                                individuals with respect to such 
                                dwelling during such calendar year.''.
            (3)(A)(i) The matter preceding subparagraph (A) of section 
        23(b)(4) is amended by striking ``The credit'' and inserting 
        ``In the case of a taxable year to which section 26(a)(2) does 
        not apply, the credit''.
            (ii) Subsection (c) of section 23 is amended to read as 
        follows:

    ``(c) Carryforwards of Unused Credit.--
            ``(1) Rule for years in which all personal credits allowed 
        against regular and alternative minimum tax.--In the case of a 
        taxable year to which section 26(a)(2) applies, if the credit 
        allowable under subsection (a) for any taxable year exceeds the 
        limitation imposed by section 26(a)(2) for such taxable year 
        reduced by the sum of the credits allowable under this subpart 
        (other than this section and sections 25D and 1400C), such 
        excess shall be carried to the succeeding taxable year and added 
        to the credit allowable under subsection (a) for such taxable 
        year.
            ``(2) Rule for other years.--In the case of a taxable year 
        to which section 26(a)(2) does not apply, if the credit 
        allowable under subsection (a) for any taxable year exceeds the 
        limitation imposed by subsection (b)(4) for such taxable year, 
        such excess shall be carried to the succeeding taxable

[[Page 119 STAT. 2613]]

        year and added to the credit allowable under subsection (a) for 
        such taxable year.
            ``(3) Limitation.--No credit may be carried forward under 
        this subsection to any taxable year following the fifth taxable 
        year after the taxable year in which the credit arose. For 
        purposes of the preceding sentence, credits shall be treated as 
        used on a first-in first-out basis.''.
            (B)(i) The matter preceding subparagraph (A) of section 
        24(b)(3) is amended <<NOTE: 26 USC 24.>> by striking ``The 
        credit'' and inserting ``In the case of a taxable year to which 
        section 26(a)(2) does not apply, the credit''.
            (ii) Paragraph (1) of section 24(d) is amended to read as 
        follows:
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 26(a)(2) or subsection (b)(3), 
                as the case may be, or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would increase if the 
                limitation imposed by section 26(a)(2) or subsection 
                (b)(3), as the case may be, were increased by the excess 
                (if any) of--
                          ``(i) 15 percent of so much of the taxpayer's 
                      earned income (within the meaning of section 32) 
                      which is taken into account in computing taxable 
                      income for the taxable year as exceeds $10,000, or
                          ``(ii) in the case of a taxpayer with 3 or 
                      more qualifying children, the excess (if any) of--
                                    ``(I) the taxpayer's social security 
                                taxes for the taxable year, over
                                    ``(II) the credit allowed under 
                                section for the taxable year.
        The amount of the credit allowed under this subsection shall not 
        be treated as a credit allowed under this subpart and shall 
        reduce the amount of credit otherwise allowable under subsection 
        (a) without regard to section 26(a)(2) or subsection (b)(3), as 
        the case may be. For purposes of subparagraph (B), any amount 
        excluded from gross income by reason of section 112 shall be 
        treated as earned income which is taken into account in 
        computing taxable income for the taxable year.''.
            (C) Subparagraph (C) of section 25(e)(1) is amended to read 
        as follows:
                    ``(C) Applicable tax limit.--For purposes of this 
                paragraph, the term `applicable tax limit' means--
                          ``(i) in the case of a taxable year to which 
                      section 26(a)(2) applies, the limitation imposed 
                      by section 26(a)(2) for the taxable year reduced 
                      by the sum of the credits allowable under this 
                      subpart (other than this section and sections 23, 
                      25D, and 1400C), and
                          ``(ii) in the case of a taxable year to which 
                      section 26(a)(2) does not apply, the limitation 
                      imposed by section 26(a)(1) for the taxable year 
                      reduced by the sum of the credits allowable under 
                      this subpart (other than this section and sections 
                      23, 24, 25B, 25D, and 1400C).''.

[[Page 119 STAT. 2614]]

            (D) The matter preceding <<NOTE: 26 USC 25B.>> paragraph (1) 
        of section 25B(g) is amended by striking ``The credit'' and 
        inserting ``In the case of a taxable year to which section 
        26(a)(2) does not apply, the credit''.
            (E) Subsection (c) of section 25D is amended to read as 
        follows:

    ``(c) Carryforward of Unused Credit.--
            ``(1) Rule for years in which all personal credits allowed 
        against regular and alternative minimum tax.--In the case of a 
        taxable year to which section 26(a)(2) applies, if the credit 
        allowable under subsection (a) exceeds the limitation imposed by 
        section 26(a)(2) for such taxable year reduced by the sum of the 
        credits allowable under this subpart (other than this section), 
        such excess shall be carried to the succeeding taxable year and 
        added to the credit allowable under subsection (a) for such 
        succeeding taxable year.
            ``(2) Rule for other years.--In the case of a taxable year 
        to which section 26(a)(2) does not apply, if the credit 
        allowable under subsection (a) exceeds the limitation imposed by 
        section 26(a)(1) for such taxable year reduced by the sum of the 
        credits allowable under this subpart (other than this section 
        and sections 23, 24, and 25B), such excess shall be carried to 
        the succeeding taxable year and added to the credit allowable 
        under subsection (a) for such succeeding taxable year.''.
            (F) Subsection (d) of section 1400C is amended to read as 
        follows:

    ``(d) Carryforward of Unused Credit.--
            ``(1) Rule for years in which all personal credits allowed 
        against regular and alternative minimum tax.--In the case of a 
        taxable year to which section 26(a)(2) applies, if the credit 
        allowable under subsection (a) exceeds the limitation imposed by 
        section 26(a)(2) for such taxable year reduced by the sum of the 
        credits allowable under subpart A of part IV of subchapter A 
        (other than this section and section 25D), such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
            ``(2) Rule for other years.--In the case of a taxable year 
        to which section 26(a)(2) does not apply, if the credit 
        allowable under subsection (a) exceeds the limitation imposed by 
        section 26(a)(1) for such taxable year reduced by the sum of the 
        credits allowable under subpart A of part IV of subchapter A 
        (other than this section and sections 23, 24, 25B, and 25D), 
        such excess shall be carried to the succeeding taxable year and 
        added to the credit allowable under subsection (a) for such 
        taxable year.''.
            (G) Subsection (i) of section 904 is amended to read as 
        follows:

    ``(i) Coordination With Nonrefundable Personal Credits.--In the case 
of any taxable year of an individual to which section 26(a)(2) does not 
apply, for purposes of subsection (a), the tax against which the credit 
is taken is such tax reduced by the sum of the credits allowable under 
subpart A of part IV of subchapter A of this chapter (other than 
sections 23, 24, and 25B).''.

[[Page 119 STAT. 2615]]

            (H) Application of egtrra sunset.--The <<NOTE: 26 USC 23 
        note.>> amendments made by this paragraph (and each part 
        thereof) shall be subject to title IX of the Economic Growth and 
        Tax Relief Reconciliation Act of 2001 in the same manner as the 
        provisions of such Act to which such amendment (or part thereof) 
        relates.
            (4) Subsection (b) of section 1335 of the Energy Policy Act 
        of 2005 is amended <<NOTE: Ante, p. 1033.>> by striking 
        paragraphs (1), (2), and (3). 
        The <<NOTE: Applicability.>> Internal Revenue Code of 1986 shall 
        be applied and administered as if the amendments made such 
        paragraphs had never been enacted.

    (j) Amendment Related to Section 1341.--Paragraph (6) of section 
30B(h) is <<NOTE: 26 USC 30B.>> amended by adding at the end the 
following sentence: ``For purposes of subsection (g), property to which 
this paragraph applies shall be treated as of a character subject to an 
allowance for depreciation.''.

    (k) Amendment Related to Section 1342.--Paragraph (2) of section 
30C(e) is amended by adding at the end the following sentence: ``For 
purposes of subsection (d), property to which this paragraph applies 
shall be treated as of a character subject to an allowance for 
depreciation.''.
    (l) Amendments Related to Section 1351.--
            (1) Paragraph (6) of section 41(f) (relating to special 
        rules) is amended by adding at the end the following:
                    ``(C) Foreign research.--For purposes of subsection 
                (a)(3), amounts paid or incurred for any energy research 
                conducted outside the United States, the Commonwealth of 
                Puerto Rico, or any possession of the United States 
                shall not be taken into account.
                    ``(D) Denial of double benefit.--Any amount taken 
                into account under subsection (a)(3) shall not be taken 
                into account under paragraph (1) or (2) of subsection 
                (a).''.
            (2) Clause (ii) of section 41(b)(3)(C) is amended by 
        striking ``(other than an energy research consortium)''.

    (m) Effective <<NOTE: 26 USC 23 note.>> Date.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall take effect as if 
        included in the provisions of the Energy Policy Act of 2005 to 
        which they relate.
            (2) Repeal of public utility holding company act of 1935.--
        The amendments made by subsection (a) shall not apply with 
        respect to any transaction ordered in compliance with the Public 
        Utility Holding Company Act of 1935 before its repeal.
            (3) Coordination of personal credits.--The amendments made 
        by subsection (i)(3) shall apply to taxable years beginning 
        after December 31, 2005.

SEC. 403. AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION ACT OF 2004.

    (a) Amendments Related to Section 102 of the Act.--
            (1) Paragraph (1) of section 199(b) is amended by striking 
        ``the employer'' and inserting ``the taxpayer''.
            (2) Paragraph (2) of section 199(b) is amended to read as 
        follows:
            ``(2) W-2 wages.--For purposes of this section, the term `W-
        2 wages' means, with respect to any person for any taxable year 
        of such person, the sum of the amounts described in

[[Page 119 STAT. 2616]]

        paragraphs (3) and (8) of section 6051(a) paid by such person 
        with respect to employment of employees by such person during 
        the calendar year ending during such taxable year. Such term 
        shall not include any amount which is not properly included in a 
        return filed with the Social Security Administration on or 
        before the 60th day after the due date (including extensions) 
        for such return.''.
            (3) Subparagraph (B) of <<NOTE: 26 USC 199.>> section 
        199(c)(1) is amended by inserting ``and'' at the end of clause 
        (i), by striking clauses (ii) and (iii), and by inserting after 
        clause (i) the following:
                          ``(ii) other expenses, losses, or deductions 
                      (other than the deduction allowed under this 
                      section), which are properly allocable to such 
                      receipts.''.
            (4) Paragraph (2) of section 199(c) is amended to read as 
        follows:
            ``(2) Allocation method.--
        The <<NOTE: Regulations.>> Secretary shall prescribe rules for 
        the proper allocation of items described in paragraph (1) for 
        purposes of determining qualified production activities income. 
        Such rules shall provide for the proper allocation of items 
        whether or not such items are directly allocable to domestic 
        production gross receipts.''.
            (5) Subparagraph (A) of section 199(c)(4) is amended by 
        striking clauses (ii) and (iii) and inserting the following new 
        clauses:
                          ``(ii) in the case of a taxpayer engaged in 
                      the active conduct of a construction trade or 
                      business, construction of real property performed 
                      in the United States by the taxpayer in the 
                      ordinary course of such trade or business, or
                          ``(iii) in the case of a taxpayer engaged in 
                      the active conduct of an engineering or 
                      architectural services trade or business, 
                      engineering or architectural services performed in 
                      the United States by the taxpayer in the ordinary 
                      course of such trade or business with respect to 
                      the construction of real property in the United 
                      States.''.
            (6) Subparagraph (B) of section 199(c)(4) is amended by 
        striking ``and'' at the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding at the end the following:
                          ``(iii) the lease, rental, license, sale, 
                      exchange, or other disposition of land.''.
            (7) Paragraph (4) of section 199(c) is amended by adding at 
        the end the following new subparagraphs:
                    ``(C) Special rule for certain government 
                contracts.--Gross receipts derived from the manufacture 
                or production of any property described in subparagraph 
                (A)(i)(I) shall be treated as meeting the requirements 
                of subparagraph (A)(i) if--
                          ``(i) such property is manufactured or 
                      produced by the taxpayer pursuant to a contract 
                      with the Federal Government, and
                          ``(ii) the Federal Acquisition Regulation 
                      requires that title or risk of loss with respect 
                      to such property be transferred to the Federal 
                      Government before the manufacture or production of 
                      such property is complete.

[[Page 119 STAT. 2617]]

                    ``(D) Partnerships owned by expanded affiliated 
                groups.--For purposes of this paragraph, if all of the 
                interests in the capital and profits of a partnership 
                are owned by members of a single expanded affiliated 
                group at all times during the taxable year of such 
                partnership, the partnership and all members of such 
                group shall be treated as a single taxpayer during such 
                period.''.
            (8) Paragraph (1) of <<NOTE: 26 USC 199.>> section 199(d) is 
        amended to read as follows:
            ``(1) Application of section to pass-thru entities.--
                    ``(A) Partnerships and s corporations.--In the case 
                of a partnership or S corporation--
                          ``(i) this section shall be applied at the 
                      partner or shareholder level,
                          ``(ii) each partner or shareholder shall take 
                      into account such person's allocable share of each 
                      item described in subparagraph (A) or (B) of 
                      subsection (c)(1) (determined without regard to 
                      whether the items described in such subparagraph 
                      (A) exceed the items described in such 
                      subparagraph (B)), and
                          ``(iii) each partner or shareholder shall be 
                      treated for purposes of subsection (b) as having 
                      W-2 wages for the taxable year in an amount equal 
                      to the lesser of--
                                    ``(I) such person's allocable share 
                                of the W-2 wages of the partnership or S 
                                corporation for the taxable year (as 
                                determined under regulations prescribed 
                                by the Secretary), or
                                    ``(II) 2 times 9 percent of so much 
                                of such person's qualified production 
                                activities income as is attributable to 
                                items allocated under clause (ii) for 
                                the taxable year.
                    ``(B) Trusts and estates.--In the case of a trust or 
                estate--
                          ``(i) the items referred to in subparagraph 
                      (A)(ii) (as determined therein) and the W-2 wages 
                      of the trust or estate for the taxable year, shall 
                      be apportioned between the beneficiaries and the 
                      fiduciary (and among the beneficiaries) under 
                      regulations prescribed by the Secretary, and
                          ``(ii) for purposes of paragraph (2), adjusted 
                      gross income of the trust or estate shall be 
                      determined as provided in section 67(e) with the 
                      adjustments described in such paragraph.
                    ``(C) Regulations.--The Secretary may prescribe 
                rules requiring or restricting the allocation of items 
                and wages under this paragraph and may prescribe such 
                reporting requirements as the Secretary determines 
                appropriate.''.
            (9) Paragraph (3) of section 199(d) is amended to read as 
        follows:
            ``(3) Agricultural and horticultural cooperatives.--
                    ``(A) Deduction allowed to patrons.--Any person who 
                receives a qualified payment from a specified 
                agricultural or horticultural cooperative shall be 
                allowed for the taxable year in which such payment is 
                received a deduction under subsection (a) equal to the 
                portion of the deduction

[[Page 119 STAT. 2618]]

                allowed under subsection (a) to such cooperative which 
                is--
                          ``(i) allowed with respect to the portion of 
                      the qualified production activities income to 
                      which such payment is attributable, and
                          ``(ii) identified by such cooperative in a 
                      written notice mailed to such person during the 
                      payment period described in section 1382(d).
                    ``(B) Cooperative denied deduction for portion of 
                qualified payments.--The taxable income of a specified 
                agricultural or horticultural cooperative shall not be 
                reduced under section 1382 by reason of that portion of 
                any qualified payment as does not exceed the deduction 
                allowable under subparagraph (A) with respect to such 
                payment.
                    ``(C) Taxable income of cooperatives determined 
                without regard to certain deductions.--For purposes of 
                this section, the taxable income of a specified 
                agricultural or horticultural cooperative shall be 
                computed without regard to any deduction allowable under 
                subsection (b) or (c) of section 1382 (relating to 
                patronage dividends, per-unit retain allocations, and 
                nonpatronage distributions).
                    ``(D) Special rule for marketing cooperatives.--For 
                purposes of this section, a specified agricultural or 
                horticultural cooperative described in subparagraph 
                (F)(ii) shall be treated as having manufactured, 
                produced, grown, or extracted in whole or significant 
                part any qualifying production property marketed by the 
                organization which its patrons have so manufactured, 
                produced, grown, or extracted.
                    ``(E) Qualified payment.--For purposes of this 
                paragraph, the term `qualified payment' means, with 
                respect to any person, any amount which--
                          ``(i) is described in paragraph (1) or (3) of 
                      section 1385(a),
                          ``(ii) is received by such person from a 
                      specified agricultural or horticultural 
                      cooperative, and
                          ``(iii) is attributable to qualified 
                      production activities income with respect to which 
                      a deduction is allowed to such cooperative under 
                      subsection (a).
                    ``(F) Specified agricultural or horticultural 
                cooperative.--For purposes of this paragraph, the term 
                `specified agricultural or horticultural cooperative' 
                means an organization to which part I of subchapter T 
                applies which is engaged--
                          ``(i) in the manufacturing, production, 
                      growth, or extraction in whole or significant part 
                      of any agricultural or horticultural product, or
                          ``(ii) in the marketing of agricultural or 
                      horticultural products.''.
            (10) Clause (i) of <<NOTE: 26 USC 199.>> section 
        199(d)(4)(B) is amended--
                    (A) by striking ``50 percent'' and inserting ``more 
                than 50 percent'', and
                    (B) by striking ``80 percent'' and inserting ``at 
                least 80 percent''.

[[Page 119 STAT. 2619]]

            (11)(A) Paragraph (6) of section 199(d) is amended to read 
        as follows:
            ``(6) Coordination with minimum tax.--For purposes of 
        determining alternative minimum taxable income under section 
        55--
                    ``(A) qualified production activities income shall 
                be determined without regard to any adjustments under 
                sections 56 through 59, and
                    ``(B) in the case of a corporation, subsection 
                (a)(1)(B) shall be applied by substituting `alternative 
                minimum taxable income' for `taxable income'.''.
            (B) Paragraph (2) of section 199(a) is <<NOTE: 26 USC 
        199.>> amended by striking ``subsections (d)(1) and (d)(6)'' and 
        inserting ``subsection (d)(1)''.
            (12) Subsection (d) of section 199 is amended by 
        redesignating paragraph (7) as paragraph (8) and by inserting 
        after paragraph (6) the following new paragraph:
            ``(7) Unrelated <<NOTE: Applicability.>> business taxable 
        income.--For purposes of determining the tax imposed by section 
        511, subsection (a)(1)(B) shall be applied by substituting 
        `unrelated business taxable income' for `taxable income'.''.
            (13) Paragraph (8) of section 199(d), as redesignated by 
        paragraph (12), is amended by inserting ``, including 
        regulations which prevent more than 1 taxpayer from being 
        allowed a deduction under this section with respect to any 
        activity described in subsection (c)(4)(A)(i)'' before the 
        period at the end.
            (14) Clauses (i)(II) and (ii)(II) of section 56(d)(1)(A) are 
        each amended by striking ``such deduction'' and inserting ``such 
        deduction and the deduction under section 199''.
            (15) Clause (i) of section 163(j)(6)(A) is amended by 
        striking ``and'' at the end of subclause (II), by redesignating 
        subclause (III) as subclause (IV), and by inserting after 
        subclause (II) the following new subclause:
                                    ``(III) any deduction allowable 
                                under section 199, and''.
            (16) Paragraph (2) of section 170(b) is amended by 
        redesignating subparagraphs (C) and (D) as subparagraphs (D) and 
        (E), respectively, and by inserting after subparagraph (B) the 
        following new subparagraph:
                    ``(C) section 199,''.
            (17) Subsection (d) of section 172 is amended by adding at 
        the end the following new paragraph:
            ``(7) Manufacturing deduction.--The deduction under section 
        199 shall not be allowed.''.
            (18) Paragraph (1) of section 613A(d) is amended by 
        redesignating subparagraphs (B), (C), and (D) as subparagraphs 
        (C), (D), and (E), respectively, and by inserting after 
        subparagraph (A) the following new subparagraph:
                    ``(B) any deduction allowable under section 199,''.
            (19) Subsection (e) of section 102 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 56 note.>> amended to 
        read as follows:

    ``(e) Effective Date.--
            ``(1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2004.
            ``(2) Application to pass-thru entities, etc.--In 
        determining the deduction under section 199 of the Internal 
        Revenue Code of 1986 (as added by this section), items arising 
        from

[[Page 119 STAT. 2620]]

        a taxable year of a partnership, S corporation, estate, or trust 
        beginning before January 1, 2005, shall not be taken into 
        account for purposes of subsection (d)(1) of such section.''.

    (b) Amendment Related to Section 231 of the Act.--Paragraph (1) of 
section 1361(c) is <<NOTE: 26 USC 1361.>> amended to read as follows:
            ``(1) Members of a family treated as 1 shareholder.--
                    ``(A) In general.--For purposes of subsection 
                (b)(1)(A), there shall be treated as one shareholder--
                          ``(i) a husband and wife (and their estates), 
                      and
                          ``(ii) all members of a family (and their 
                      estates).
                    ``(B) Members of a family.--For purposes of this 
                paragraph--
                          ``(i) In general.--The term `members of a 
                      family' means a common ancestor, any lineal 
                      descendant of such common ancestor, and any spouse 
                      or former spouse of such common ancestor or any 
                      such lineal descendant.
                          ``(ii) Common ancestor.--An individual shall 
                      not be considered to be a common ancestor if, on 
                      the applicable date, the individual is more than 6 
                      generations removed from the youngest generation 
                      of shareholders who would (but for this 
                      subparagraph) be members of the family. For 
                      purposes of the preceding sentence, a spouse (or 
                      former spouse) shall be treated as being of the 
                      same generation as the individual to whom such 
                      spouse is (or was) married.
                          ``(iii) Applicable date.--The term `applicable 
                      date' means the latest of--
                                    ``(I) the date the election under 
                                section 1362(a) is made,
                                    ``(II) the earliest date that an 
                                individual described in clause (i) holds 
                                stock in the S corporation, or
                                    ``(III) October 22, 2004.
                    ``(C) Effect of adoption, etc.--Any legally adopted 
                child of an individual, any child who is lawfully placed 
                with an individual for legal adoption by the individual, 
                and any eligible foster child of an individual (within 
                the meaning of section 152(f)(1)(C)), shall be treated 
                as a child of such individual by blood.''.

    (c) Amendment Related to Section 235 of the Act.--Subsection (b) of 
section 235 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC 
1366 note.>> amended by striking ``taxable years beginning'' and 
inserting ``transfers''.

    (d) Amendments Related to Section 243 of the Act.--
            (1) Paragraph (7) of section 856(c) is amended to read as 
        follows:
            ``(7) Rules of application for failure to satisfy paragraph 
        (4).--
                    ``(A) In general.--A corporation, trust, or 
                association that fails to meet the requirements of 
                paragraph (4) (other than a failure to meet the 
                requirements of paragraph (4)(B)(iii) which is described 
                in subparagraph (B)(i) of this paragraph) for a 
                particular quarter shall nevertheless be considered to 
                have satisfied the requirements of such paragraph for 
                such quarter if--

[[Page 119 STAT. 2621]]

                          ``(i) following the corporation, trust, or 
                      association's identification of the failure to 
                      satisfy the requirements of such paragraph for a 
                      particular quarter, a description of each asset 
                      that causes the corporation, trust, or association 
                      to fail to satisfy the requirements of such 
                      paragraph at the close of such quarter of any 
                      taxable year is set forth in a schedule for such 
                      quarter filed in accordance with regulations 
                      prescribed by the Secretary,
                          ``(ii) the failure to meet the requirements of 
                      such paragraph for a particular quarter is due to 
                      reasonable cause and not due to willful neglect, 
                      and
                          ``(iii)(I) the corporation, trust, or 
                      association disposes of the assets set forth on 
                      the schedule specified in clause (i) within 6 
                      months after the last day of the quarter in which 
                      the corporation, trust or association's 
                      identification of the failure to satisfy the 
                      requirements of such paragraph occurred or such 
                      other time period prescribed by the Secretary and 
                      in the manner prescribed by the Secretary, or
                          ``(II) the requirements of such paragraph are 
                      otherwise met within the time period specified in 
                      subclause (I).
                    ``(B) Rule for certain de minimis failures.--A 
                corporation, trust, or association that fails to meet 
                the requirements of paragraph (4)(B)(iii) for a 
                particular quarter shall nevertheless be considered to 
                have satisfied the requirements of such paragraph for 
                such quarter if--
                          ``(i) such failure is due to the ownership of 
                      assets the total value of which does not exceed 
                      the lesser of--
                                    ``(I) 1 percent of the total value 
                                of the trust's assets at the end of the 
                                quarter for which such measurement is 
                                done, and
                                    ``(II) $10,000,000, and
                          ``(ii)(I) the corporation, trust, or 
                      association, following the identification of such 
                      failure, disposes of assets in order to meet the 
                      requirements of such paragraph within 6 months 
                      after the last day of the quarter in which the 
                      corporation, trust or association's identification 
                      of the failure to satisfy the requirements of such 
                      paragraph occurred or such other time period 
                      prescribed by the Secretary and in the manner 
                      prescribed by the Secretary, or
                          ``(II) the requirements of such paragraph are 
                      otherwise met within the time period specified in 
                      subclause (I).
                    ``(C) Tax.--
                          ``(i) Tax imposed.--If subparagraph (A) 
                      applies to a corporation, trust, or association 
                      for any taxable year, there is hereby imposed on 
                      such corporation, trust, or association a tax in 
                      an amount equal to the greater of--
                                    ``(I) $50,000, or
                                    ``(II) 
                                the <<NOTE: Regulations.>> amount 
                                determined (pursuant to regulations 
                                promulgated by the Secretary) by 
                                multiplying the net income generated by 
                                the assets

[[Page 119 STAT. 2622]]

                                described in the schedule specified in 
                                subparagraph (A)(i) for the period 
                                specified in clause (ii) by the highest 
                                rate of tax specified in section 11.
                          ``(ii) Period.--For purposes of clause 
                      (i)(II), the period described in this clause is 
                      the period beginning on the first date that the 
                      failure to satisfy the requirements of such 
                      paragraph (4) occurs as a result of the ownership 
                      of such assets and ending on the earlier of the 
                      date on which the trust disposes of such assets or 
                      the end of the first quarter when there is no 
                      longer a failure to satisfy such paragraph (4).
                          ``(iii) Administrative provisions.--For 
                      purposes of subtitle F, the taxes imposed by this 
                      subparagraph shall be treated as excise taxes with 
                      respect to which the deficiency procedures of such 
                      subtitle apply.''.
            (2) Subsection (m) of <<NOTE: 26 USC 856.>> section 856 is 
        amended by adding at the end the following new paragraph:
            ``(6) Transition rule.--
                    ``(A) In general.--Notwithstanding paragraph (2)(C), 
                securities held by a trust shall not be considered 
                securities held by the trust for purposes of subsection 
                (c)(4)(B)(iii)(III) during any period beginning on or 
                before October 22, 2004, if such securities--
                          ``(i) are held by such trust continuously 
                      during such period, and
                          ``(ii) would not be taken into account for 
                      purposes of such subsection by reason of paragraph 
                      (7)(C) of subsection (c) (as in effect on October 
                      22, 2004) if the amendments made by section 243 of 
                      the American Jobs Creation Act of 2004 had never 
                      been enacted.
                    ``(B) Rule not to apply to securities held after 
                maturity date.--Subparagraph (A) shall not apply with 
                respect to any security after the later of October 22, 
                2004, or the latest maturity date under the contract (as 
                in effect on October 22, 2004) taking into account any 
                renewal or extension permitted under the contract if 
                such renewal or extension does not significantly modify 
                any other terms of the contract.
                    ``(C) Successors.--If the successor of a trust to 
                which this paragraph applies acquires securities in a 
                transaction to which section 381 applies, such trusts 
                shall be treated as a single entity for purposes of 
                determining the holding period of such securities under 
                subparagraph (A).''.
            (3) Subparagraph (E) of section 857(b)(2) is amended by 
        striking ``section 856(c)(7)(B)(iii), and section 856(g)(1).'' 
        and inserting ``section 856(c)(7)(C), and section 856(g)(5)''.
            (4) Subsection (g) of section 243 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 856 note.>> amended to 
        read as follows:

    ``(g) Effective Dates.--
            ``(1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to taxable years beginning 
        after December 31, 2000.
            ``(2) Subsections (c) and (e).--The amendments made by 
        subsections (c) and (e) shall apply to taxable years beginning 
        after the date of the enactment of this Act.

[[Page 119 STAT. 2623]]

            ``(3) Subsection (d).--The amendment made by subsection (d) 
        shall apply to transactions entered into after December 31, 
        2004.
            ``(4) Subsection (f).--
                    ``(A) The amendment made by paragraph (1) of 
                subsection (f) shall apply to failures with respect to 
                which the requirements of subparagraph (A) or (B) of 
                section 856(c)(7) of the Internal Revenue Code of 1986 
                (as added by such paragraph) are satisfied after the 
                date of the enactment of this Act.
                    ``(B) The amendment made by paragraph (2) of 
                subsection (f) shall apply to failures with respect to 
                which the requirements of paragraph (6) of section 
                856(c) of the Internal Revenue Code of 1986 (as amended 
                by such paragraph) are satisfied after the date of the 
                enactment of this Act.
                    ``(C) The amendments made by paragraph (3) of 
                subsection (f) shall apply to failures with respect to 
                which the requirements of paragraph (5) of section 
                856(g) of the Internal Revenue Code of 1986 (as added by 
                such paragraph) are satisfied after the date of the 
                enactment of this Act.
                    ``(D) The amendment made by paragraph (4) of 
                subsection (f) shall apply to taxable years ending after 
                the date of the enactment of this Act.
                    ``(E) The amendments made by paragraph (5) of 
                subsection (f) shall apply to statements filed after the 
                date of the enactment of this Act.''.

    (e) Amendments Related to Section 244 of the Act.--
            (1) Paragraph (2) of section 181(d) is <<NOTE: 26 USC 
        181.>> amended by striking the last sentence in subparagraph 
        (A), by redesignating subparagraph (B) as subparagraph (C), and 
        by inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) Special rules for television series.--In the 
                case of a television series--
                          ``(i) each episode of such series shall be 
                      treated as a separate production, and
                          ``(ii) only the first 44 episodes of such 
                      series shall be taken into account.''.
            (2) Subparagraph (C) of section 1245(a)(2) is amended by 
        inserting ``181,'' after ``179B,''.

    (f) Amendments Related to Section 245 of the Act.--
            (1) Subsection (b) of section 45G is amended to read as 
        follows:

    ``(b) Limitation.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the product of--
                    ``(A) $3,500, multiplied by
                    ``(B) the sum of--
                          ``(i) the number of miles of railroad track 
                      owned or leased by the eligible taxpayer as of the 
                      close of the taxable year, and
                          ``(ii) the number of miles of railroad track 
                      assigned for purposes of this subsection to the 
                      eligible taxpayer by a Class II or Class III 
                      railroad which owns or leases such railroad track 
                      as of the close of the taxable year.

[[Page 119 STAT. 2624]]

            ``(2) Assignments.--With respect to any assignment of a mile 
        of railroad track under paragraph (1)(B)(ii)--
                    ``(A) such assignment may be made only once per 
                taxable year of the Class II or Class III railroad and 
                shall be treated as made as of the close of such taxable 
                year,
                    ``(B) such mile may not be taken into account under 
                this section by such railroad for such taxable year, and
                    ``(C) such assignment shall be taken into account 
                for the taxable year of the assignee which includes the 
                date that such assignment is treated as effective.''.
            (2) Paragraph (2) of section 45G(c) is <<NOTE: 26 USC 
        45G.>> amended to read as follows:
            ``(2) any person who transports property using the rail 
        facilities of a Class II or Class III railroad or who furnishes 
        railroad-related property or services to a Class II or Class III 
        railroad, but only with respect to miles of railroad track 
        assigned to such person by such Class II or Class III railroad 
        for purposes of subsection (b).''.

    (g) Amendments Related to Section 248 of the Act.--
            (1)(A) Subsection (d) of section 1353 is amended by striking 
        ``ownership and charter interests'' and inserting ``ownership, 
        charter, and operating agreement interests''.
            (B) Subsection (a) of section 1355 is amended by striking 
        paragraph (8).
            (C) Paragraph (1) of section 1355(b) is amended to read as 
        follows:
            ``(1) In general.--Except as provided in paragraph (2), a 
        person is treated as operating any vessel during any period if--
                    ``(A)(i) such vessel is owned by, or chartered 
                (including a time charter) to, the person, or
                    ``(ii) the person provides services for such vessel 
                pursuant to an operating agreement, and
                    ``(B) such vessel is in use as a qualifying vessel 
                during such period.''.
            (D) Paragraph (3) of section 1355(d) is amended to read as 
        follows:
            ``(3) the extent of a partner's ownership, charter, or 
        operating agreement interest in any vessel operated by the 
        partnership shall be determined on the basis of the partner's 
        interest in the partnership.''.
            (2) Paragraph (3) of section 1355(c) is amended by striking 
        ``determined--'' and all that follows and inserting ``determined 
        by treating all members of such group as 1 person.''.
            (3) Subsection (c) of section 1356 is amended--
                    (A) by striking paragraph (3), and
                    (B) by adding at the end of paragraph (2) the 
                following new flush sentence:

    ``Such term shall not include any core qualifying activities.''.
            (4) The last sentence of section 1354(b) is amended by 
        inserting ``on or'' after ``only if made''.

    (h) Amendment Related to Section 314 of the Act.--Paragraph (2) of 
section 55(c) is amended by striking ``regular tax'' and inserting 
``regular tax liability''.
    (i) Amendments Related to Section 322 of the Act.--
            (1)(A) Subparagraph (B) of section 194(b)(1) is amended to 
        read as follows:

[[Page 119 STAT. 2625]]

                    ``(B) Dollar limitation.--The aggregate amount of 
                reforestation expenditures which may be taken into 
                account under subparagraph (A) with respect to each 
                qualified timber property for any taxable year shall not 
                exceed--
                          ``(i) except as provided in clause (ii) or 
                      (iii), $10,000,
                          ``(ii) in the case of a separate return by a 
                      married individual (as defined in section 7703), 
                      $5,000, and
                          ``(iii) in the case of a trust, zero.''.
            (B) Paragraph (4) of <<NOTE: 26 USC 194.>> section 194(c) is 
        amended to read as follows:
            ``(4) Treatment of trusts and estates.--The aggregate amount 
        of reforestation expenditures incurred by any trust or estate 
        shall be apportioned between the income beneficiaries and the 
        fiduciary under regulations prescribed by the Secretary. Any 
        amount so apportioned to a beneficiary shall be taken into 
        account as expenditures incurred by such beneficiary in applying 
        this section to such beneficiary.''.
            (2) Subparagraph (C) of section 1245(a)(2) is amended by 
        striking ``or 193'' and inserting ``193, or 194''.

    (j) Amendments Related to Section 336 of the Act.--
            (1) Clause (iv) of section 168(k)(2)(A) is amended by 
        striking ``subparagraphs (B) and (C)'' and inserting 
        ``subparagraph (B) or (C)''.
            (2) Clause (iii) of section 168(k)(4)(B) is amended by 
        striking ``and paragraph (2)(C)'' and inserting ``or paragraph 
        (2)(C) (as so modified)''.

    (k) Amendment Related to Section 402 of the Act.--Paragraph (2) of 
section 904(g) is amended to read as follows:
            ``(2) Overall domestic loss.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `overall domestic loss' 
                means--
                          ``(i) with respect to any qualified taxable 
                      year, the domestic loss for such taxable year to 
                      the extent such loss offsets taxable income from 
                      sources without the United States for the taxable 
                      year or for any preceding qualified taxable year 
                      by reason of a carryback, and
                          ``(ii) with respect to any other taxable year, 
                      the domestic loss for such taxable year to the 
                      extent such loss offsets taxable income from 
                      sources without the United States for any 
                      preceding qualified taxable year by reason of a 
                      carryback.
                    ``(B) Domestic loss.--For purposes of subparagraph 
                (A), the term `domestic loss' means the amount by which 
                the gross income for the taxable year from sources 
                within the United States is exceeded by the sum of the 
                deductions properly apportioned or allocated thereto 
                (determined without regard to any carryback from a 
                subsequent taxable year).
                    ``(C) Qualified taxable year.--For purposes of 
                subparagraph (A), the term `qualified taxable year' 
                means any taxable year for which the taxpayer chose the 
                benefits of this subpart.''.

    (l) Amendment Related to <<NOTE: 26 USC 864 note.>> Section 403 of 
the Act.--Section 403 of the American Jobs Creation Act of 2004 is 
amended by adding at the end the following new subsection:

[[Page 119 STAT. 2626]]

    ``(d) Transition Rule.--If the <<NOTE: Applicability.>> taxpayer 
elects (at such time and in such form and manner as the Secretary of the 
Treasury may prescribe) to have the rules of this subsection apply--
            ``(1) the amendments made by this section shall not apply to 
        taxable years beginning after December 31, 2002, and before 
        January 1, 2005, and
            ``(2) in the case of taxable years beginning after December 
        31, 2004, clause (iv) of section 904(d)(4)(C) of the Internal 
        Revenue Code of 1986 (as amended by this section) shall be 
        applied by substituting `January 1, 2005' for `January 1, 2003' 
        both places it appears.''.

    (m) Amendment Related to Section 412 of the Act.--Subparagraph (B) 
of section 954(c)(4) is <<NOTE: 26 USC 954.>> amended by adding at the 
end the following: ``If a controlled foreign corporation is treated as 
owning a capital or profits interest in a partnership under constructive 
ownership rules similar to the rules of section 958(b), the controlled 
foreign corporation shall be treated as owning such interest directly 
for purposes of this subparagraph.''.

    (n) Amendments Related to Section 413 of the Act.--
            (1) Subsection (b) of section 532 is amended by striking 
        paragraph (2) and redesignating paragraphs (3) and (4) as 
        paragraphs (2) and (3), respectively.
            (2) Subsection (b) of section 535 is amended by adding at 
        the end the following new paragraph:
            ``(10) Controlled foreign corporations.--There shall be 
        allowed as a deduction the amount of the corporation's income 
        for the taxable year which is included in the gross income of a 
        United States shareholder under section 951(a). In the case of 
        any corporation the accumulated taxable income of which would 
        (but for this sentence) be determined without allowance of any 
        deductions, the deduction under this paragraph shall be allowed 
        and shall be appropriately adjusted to take into account any 
        deductions which reduced such inclusion.''.
            (3)(A) Section 6683 is repealed.
            (B) The table of sections for part I of subchapter B of 
        chapter 68 is amended by striking the item relating to section 
        6683.

    (o) Amendment Related to Section 415 of the Act.--Subparagraph (D) 
of section 904(d)(2) is amended by inserting ``as in effect before its 
repeal'' after ``section 954(f)''.
    (p) Amendments Related to Section 418 of the Act.--
            (1) The second sentence of section 897(h)(1) is amended--
                    (A) by striking ``any distribution'' and all that 
                follows through ``any class of stock'' and inserting 
                ``any distribution by a real estate investment trust 
                with respect to any class of stock'', and
                    (B) by striking ``the taxable year'' and inserting 
                ``the 1-year period ending on the date of the 
                distribution''.
            (2) Subsection (c) of section 418 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 857 note.>> amended to 
        read as follows:

    ``(c) Effective Date.--The amendments made by this section shall 
apply to--
            ``(1) any distribution by a real estate investment trust 
        which is treated as a deduction for a taxable year of such trust 
        beginning after the date of the enactment of this Act, and

[[Page 119 STAT. 2627]]

            ``(2) any distribution by a real estate investment trust 
        made after such date which is treated as a deduction under 
        section 860 for a taxable year of such trust beginning on or 
        before such date.''.

    (q) Amendments Related to Section 422 of the Act.--
            (1) Subparagraph (B) of section 965(a)(2) is <<NOTE: 26 USC 
        965.>> amended by inserting ``from another controlled foreign 
        corporation in such chain of ownership'' before ``, but only to 
        the extent''.
            (2) Subparagraph (A) of section 965(b)(2) is amended by 
        inserting ``cash'' before ``dividends''.
            (3) Paragraph (3) of section 965(b) is amended by adding at 
        the end the following: ``The Secretary may prescribe such 
        regulations as may be necessary or appropriate to prevent the 
        avoidance of the purposes of this paragraph, including 
        regulations which provide that cash dividends shall not be taken 
        into account under subsection (a) to the extent such dividends 
        are attributable to the direct or indirect transfer (including 
        through the use of intervening entities or capital 
        contributions) of cash or other property from a related person 
        (as so defined) to a controlled foreign corporation.''.
            (4) Paragraph (1) of section 965(c) is amended to read as 
        follows:
            ``(1) Applicable financial statement.--The term `applicable 
        financial statement' means--
                    ``(A) with respect to a United States shareholder 
                which is required to file a financial statement with the 
                Securities and Exchange Commission (or which is included 
                in such a statement so filed by another person), the 
                most recent audited annual financial statement 
                (including the notes which form an integral part of such 
                statement) of such shareholder (or which includes such 
                shareholder)--
                          ``(i) which was so filed on or before June 30, 
                      2003, and
                          ``(ii) which was certified on or before June 
                      30, 2003, as being prepared in accordance with 
                      generally accepted accounting principles, and
                    ``(B) with respect to any other United States 
                shareholder, the most recent audited financial statement 
                (including the notes which form an integral part of such 
                statement) of such shareholder (or which includes such 
                shareholder)--
                          ``(i) which was certified on or before June 
                      30, 2003, as being prepared in accordance with 
                      generally accepted accounting principles, and
                          ``(ii) which is used for the purposes of a 
                      statement or report--
                                    ``(I) to creditors,
                                    ``(II) to shareholders, or
                                    ``(III) for any other substantial 
                                nontax purpose.''.
            (5) Paragraph (2) of section 965(d) is amended by striking 
        ``properly allocated and apportioned'' and inserting ``directly 
        allocable''.
            (6) Subsection (d) of section 965 is amended by adding at 
        the end the following new paragraph:

[[Page 119 STAT. 2628]]

            ``(4) Coordination with section 78.--Section 78 shall not 
        apply to any tax which is not allowable as a credit under 
        section 901 by reason of this subsection.''.
            (7) The last sentence of section 965(e)(1) is <<NOTE: 26 USC 
        965.>> amended by inserting ``which are imposed by foreign 
        countries and possessions of the United States and are'' after 
        ``taxes''.
            (8) Subsection (f) of section 965 is amended by inserting 
        ``on or'' before ``before the due date''.

    (r) Amendments Related to Section 501 of the Act.--
            (1) Subparagraph (A) of section 164(b)(5) is amended to read 
        as follows:
                    ``(A) Election to <<NOTE: Applicability.>> deduct 
                state and local sales taxes in lieu of state and local 
                income taxes.--At the election of the taxpayer for the 
                taxable year, subsection (a) shall be applied--
                          ``(i) without regard to the reference to State 
                      and local income taxes, and
                          ``(ii) as if State and local general sales 
                      taxes were referred to in a paragraph thereof.''.
            (2) Clause (ii) of section 56(b)(1)(A) is amended by 
        inserting ``or clause (ii) of section 164(b)(5)(A)'' before the 
        period at the end.

    (s) Amendments Related to Section 708 of the Act.--Section 708 of 
the <<NOTE: 26 USC 460 note.>> American Jobs Creation Act of 2004 is 
amended--
            (1) in subsection (a), by striking ``contract commencement 
        date'' and inserting ``construction commencement date'', and
            (2) by redesignating subsection (d) as subsection (e) and 
        inserting after subsection (c) the following new subsection:

    ``(d) Certain Adjustments Not to Apply.--Section 481 of the Internal 
Revenue Code of 1986 shall not apply with respect to any change in the 
method of accounting which is required by this section.''.
    (t) Amendment Related to Section 710 of the Act.--Clause (i) of 
section 45(c)(7)(A) is amended by striking ``synthetic''.
    (u) Amendment Related to Section 801 of the Act.--Paragraph (3) of 
section 7874(a) is amended to read as follows:
            ``(3) Coordination with subsection (b).--A corporation which 
        is treated as a domestic corporation under subsection (b) shall 
        not be treated as a surrogate foreign corporation for purposes 
        of paragraph (2)(A).''.

    (v) Amendments Related to Section 804 of the Act.--
            (1) Subparagraph (C) of section 877(g)(2) is amended by 
        striking ``section 7701(b)(3)(D)(ii)'' and inserting ``section 
        7701(b)(3)(D)''.
            (2) Subsection (n) of section 7701 is amended to read as 
        follows:

    ``(n) Special Rules for Determining When an Individual Is No Longer 
a United States Citizen or Long-Term Resident.--For purposes of this 
chapter--
            ``(1) United states citizens.--An individual who would (but 
        for this paragraph) cease to be treated as a citizen of the 
        United States shall continue to be treated as a citizen of the 
        United States until such individual--
                    ``(A) gives notice of an expatriating act (with the 
                requisite intent to relinquish citizenship) to the 
                Secretary of State, and

[[Page 119 STAT. 2629]]

                    ``(B) provides a statement in accordance with 
                section 6039G (if such a statement is otherwise 
                required).
            ``(2) Long-term residents.--A long-term resident (as defined 
        in section 877(e)(2)) who would (but for this paragraph) be 
        described in section 877(e)(1) shall be treated as a lawful 
        permanent resident of the United States and as not described in 
        section 877(e)(1) until such individual--
                    ``(A) gives notice of termination of residency (with 
                the requisite intent to terminate residency) to the 
                Secretary of Homeland Security, and
                    ``(B) provides a statement in accordance with 
                section 6039G (if such a statement is otherwise 
                required).''.

    (w) Amendment Related to Section 811 of the Act.--Subsection (c) of 
section 811 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC 
6707A note.>> amended by inserting ``and which were not filed before 
such date'' before the period at the end.

    (x) Amendments Related to Section 812 of the Act.--
            (1) Subsection (b) of section 6662 is <<NOTE: 26 USC 
        6662.>> amended by adding at the end the following new sentence: 
        ``Except as provided in paragraph (1) or (2)(B) of section 
        6662A(e), this section shall not apply to the portion of any 
        underpayment which is attributable to a reportable transaction 
        understatement on which a penalty is imposed under section 
        6662A.''.
            (2) Paragraph (2) of section 6662A(e) is amended to read as 
        follows:
            ``(2) Coordination with other penalties.--
                    ``(A) Coordination with fraud penalty.--This section 
                shall not apply to any portion of an understatement on 
                which a penalty is imposed under section 6663.
                    ``(B) Coordination with gross valuation misstatement 
                penalty.--This section shall not apply to any portion of 
                an understatement on which a penalty is imposed under 
                section 6662 if the rate of the penalty is determined 
                under section 6662(h).''.
            (3) Subsection (f) of section 812 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 6662 note.>> amended to 
        read as follows:

    ``(f) Effective Dates.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after the date of the enactment of this Act.
            ``(2) Disqualified opinions.--Section 6664(d)(3)(B) of the 
        Internal Revenue Code of 1986 (as added by subsection (c)) shall 
        not apply to the opinion of a tax advisor if--
                    ``(A) the opinion was provided to the taxpayer 
                before the date of the enactment of this Act,
                    ``(B) the opinion relates to one or more 
                transactions all of which were entered into before such 
                date, and
                    ``(C) the tax treatment of items relating to each 
                such transaction was included on a return or statement 
                filed by the taxpayer before such date.''.

    (y) Amendment Related to Section 814 of the Act.--Subparagraph (B) 
of section 6501(c)(10) is amended by striking ``(as defined in section 
6111)''.
    (z) Amendment Related to Section 815 of the Act.--Paragraph (1) of 
section 6112(b) is amended by inserting ``(or was required to maintain a 
list under subsection (a) as in effect before

[[Page 119 STAT. 2630]]

the enactment of the American Jobs Creation Act of 2004)'' after ``a 
list under subsection (a)''.
    (aa) Amendments Related to Section 832 of the Act.--
            (1) Subsection (e) of section 853 is <<NOTE: 26 USC 
        853.>> amended to read as follows:

    ``(e) Treatment of Certain Taxes Not Allowed as a Credit Under 
Section 901.--This section shall not apply to any tax with respect to 
which the regulated investment company is not allowed a credit under 
section 901 by reason of subsection (k) or (l) of such section.''.
            (2) Clause (i) of section 901(l)(2)(C) is amended by 
        striking ``if such security were stock''.

    (bb) Amendments Related to Section 833 of the Act.--
            (1) Subsection (a) of section 734 is amended by inserting 
        ``with respect to such distribution'' before the period at the 
        end.
            (2) So much of subsection (b) of section 734 as precedes 
        paragraph (1) is amended to read as follows:

    ``(b) Method of Adjustment.--In the case of a distribution of 
property to a partner by a partnership with respect to which the 
election provided in section 754 is in effect or with respect to which 
there is a substantial basis reduction, the partnership shall--''.
    (cc) Amendment Related to Section 835 of the Act.--Paragraph (3) of 
section 860G(a) is amended--
            (1) in subparagraph (A)(iii)(I), by striking ``the 
        obligation'' and inserting ``a reverse mortgage loan or other 
        obligation'', and
            (2) by striking all that follows subparagraph (C) and 
        inserting the following:
        ``For purposes of subparagraph (A), any obligation secured by 
        stock held by a person as a tenant-stockholder (as defined in 
        section 216) in a cooperative housing corporation (as so 
        defined) shall be treated as secured by an interest in real 
        property. For purposes of subparagraph (A), any obligation 
        originated by the United States or any State (or any political 
        subdivision, agency, or instrumentality of the United States or 
        any State) shall be treated as principally secured by an 
        interest in real property if more than 50 percent of such 
        obligations which are transferred to, or purchased by, the REMIC 
        are principally secured by an interest in real property 
        (determined without regard to this sentence).''.

    (dd) Amendments Related to Section 836 of the Act.--
            (1) Paragraph (1) of section 334(b) is amended by striking 
        ``except that'' and all that follows and inserting ``except 
        that, in the hands of such distributee--
                    ``(A) the basis of such property shall be the fair 
                market value of the property at the time of the 
                distribution in any case in which gain or loss is 
                recognized by the liquidating corporation with respect 
                to such property, and
                    ``(B) the basis of any property described in section 
                362(e)(1)(B) shall be the fair market value of the 
                property at the time of the distribution in any case in 
                which such distributee's aggregate adjusted basis of 
                such property would (but for this subparagraph) exceed 
                the fair market value of such property immediately after 
                such liquidation.''.

[[Page 119 STAT. 2631]]

            (2) Clause (ii) of section 362(e)(2)(C) is <<NOTE: 26 USC 
        362.>> amended to read as follows:
                          ``(ii) Election.--Any election under clause 
                      (i) shall be made at such time and in such form 
                      and manner as the Secretary may prescribe, and, 
                      once made, shall be irrevocable.''.

    (ee) Amendment Related to Section 840 of the Act.--Subsection (d) of 
section 121 is amended--
            (1) by redesignating the paragraph (10) relating to property 
        acquired from a decedent as paragraph (11) and by moving such 
        paragraph to the end of such subsection, and
            (2) by amending the paragraph (10) relating to property 
        acquired in like-kind exchange to read as follows:
            ``(10) Property acquired in like-kind exchange.--If a 
        taxpayer acquires property in an exchange with respect to which 
        gain is not recognized (in whole or in part) to the taxpayer 
        under subsection (a) or (b) of section 1031, subsection (a) 
        shall not apply to the sale or exchange of such property by such 
        taxpayer (or by any person whose basis in such property is 
        determined, in whole or in part, by reference to the basis in 
        the hands of such taxpayer) during the 5-year period beginning 
        with the date of such acquisition.''.

    (ff) Amendment Related to Section 849 of the Act.--Subsection (a) of 
section 849 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC 
470 note.>> amended by inserting ``, and in the case of property treated 
as tax-exempt use property other than by reason of a lease, to property 
acquired after March 12, 2004'' before the period at the end.

    (gg) Amendment Related to Section 884 of the Act.--Subparagraph (B) 
of section 170(f)(12) is amended by adding at the end the following new 
clauses:
                          ``(v) Whether the donee organization provided 
                      any goods or services in consideration, in whole 
                      or in part, for the qualified vehicle.
                          ``(vi) A description and good faith estimate 
                      of the value of any goods or services referred to 
                      in clause (v) or, if such goods or services 
                      consist solely of intangible religious benefits 
                      (as defined in paragraph (8)(B)), a statement to 
                      that effect.''.

    (hh) Amendments Related to Section 885 of the Act.--
            (1) Paragraph (2) of section 26(b) is amended by striking 
        ``and'' at the end of subparagraph (R), by striking the period 
        at the end of subparagraph (S) and inserting ``, and'', and by 
        adding at the end the following new subparagraph:
                    ``(T) subsections (a)(1)(B)(i) and (b)(4)(A) of 
                section 409A (relating to interest and additional tax 
                with respect to certain deferred compensation).''.
            (2) Clause (ii) of section 409A(a)(4)(C) is amended by 
        striking ``first''.
            (3)(A) Notwithstanding <<NOTE: Effective date. 26 USC 409A 
        note.>> section 885(d)(1) of the American Jobs Creation Act of 
        2004, subsection (b) of section 409A of the Internal Revenue 
        Code of 1986 shall take effect on January 1, 2005.
            (B) Not later than 90 
        days <<NOTE: Deadline. Guidance.>> after the date of the 
        enactment of this Act, the Secretary of the Treasury shall issue 
        guidance under which a nonqualified deferred compensation plan 
        which is in violation of the requirements of section 409A(b) of 
        such

[[Page 119 STAT. 2632]]

        Code shall be treated as not having violated such requirements 
        if such plan comes into conformance with such requirements 
        during such limited period as the Secretary may specify in such 
        guidance.
            (4) Subsection (f) of section 885 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 409A note.>> amended by 
        striking ``December 31, 2004'' the first place it appears and 
        inserting ``January 1, 2005''.

    (ii) Amendment Related to Section 888 of the Act.--Paragraph (2) of 
section 1092(a) <<NOTE: 26 USC 1092.>> is amended by striking the last 
sentence and adding at the end the following new subparagraph:
                    ``(C) Regulations.--The Secretary shall prescribe 
                such regulations or other guidance as may be necessary 
                or appropriate to carry out the purposes of this 
                paragraph. Such regulations or other guidance may 
                specify the proper methods for clearly identifying a 
                straddle as an identified straddle (and for identifying 
                the positions comprising such straddle), the rules for 
                the application of this section to a taxpayer which 
                fails to comply with those identification requirements, 
                and the ordering rules in cases where a taxpayer 
                disposes (or otherwise ceases to be the holder) of any 
                part of any position which is part of an identified 
                straddle.''.

    (jj) Amendments Related to Section 898 of the Act.--
            (1) Paragraph (3) of section 361(b) is amended by inserting 
        ``(reduced by the amount of the liabilities assumed (within the 
        meaning of section 357(c)))'' before the period at the end.
            (2) Paragraph (1) of section 357(d) is amended by inserting 
        ``section 361(b)(3),'' after ``section 358(h),''.

    (kk) Amendment Related to Section 899 of the Act.--Subparagraph (A) 
of section 351(g)(3) is amended by adding at the end the following: ``If 
there is not a real and meaningful likelihood that dividends beyond any 
limitation or preference will actually be paid, the possibility of such 
payments will be disregarded in determining whether stock is limited and 
preferred as to dividends.''.
    (ll) Amendment Related to Section 902 of the Act.--Paragraph (1) of 
section 709(b) is amended by striking ``taxpayer'' both places it 
appears and inserting ``partnership''.
    (mm) Amendments Related to Section 907 of the Act.--Clause (ii) of 
section 274(e)(2)(B) is amended--
            (1) in subclause (I), by inserting ``or a related party to 
        the taxpayer'' after ``the taxpayer'',
            (2) in subclause (II), by inserting ``(or such related 
        party)'' after ``the taxpayer'', and
            (3) by adding at the end the following new flush sentence:
                      ``For purposes of this clause, a person is a 
                      related party with respect to another person if 
                      such person bears a relationship to such other 
                      person described in section 267(b) or 707(b).''.

    (nn) Effective Date.--The <<NOTE: 26 USC 26 note.>> amendments made 
by this section shall take effect as if included in the provisions of 
the American Jobs Creation Act of 2004 to which they relate.

SEC. 404. AMENDMENTS RELATED TO THE WORKING FAMILIES TAX RELIEF ACT OF 
            2004.

    (a) Amendment Related to Section 201 of the Act.--Subsection (e) of 
section 152 is amended to read as follows:

[[Page 119 STAT. 2633]]

    ``(e) Special Rule for Divorced Parents, Etc.--
            ``(1) In general.--Notwithstanding subsection (c)(1)(B), 
        (c)(4), or (d)(1)(C), if--
                    ``(A) a child receives over one-half of the child's 
                support during the calendar year from the child's 
                parents--
                          ``(i) who are divorced or legally separated 
                      under a decree of divorce or separate maintenance,
                          ``(ii) who are separated under a written 
                      separation agreement, or
                          ``(iii) who live apart at all times during the 
                      last 6 months of the calendar year, and--
                    ``(B) such child is in the custody of 1 or both of 
                the child's parents for more than one-half of the 
                calendar year, such child shall be treated as being the 
                qualifying child or qualifying relative of the 
                noncustodial parent for a calendar year if the 
                requirements described in paragraph (2) or (3) are met.
            ``(2) Exception where custodial parent releases claim to 
        exemption for the year.--For purposes of paragraph (1), the 
        requirements described in this paragraph are met with respect to 
        any calendar year if--
                    ``(A) the <<NOTE: Regulations.>> custodial parent 
                signs a written declaration (in such manner and form as 
                the Secretary may by regulations prescribe) that such 
                custodial parent will not claim such child as a 
                dependent for any taxable year beginning in such 
                calendar year, and
                    ``(B) the noncustodial parent attaches such written 
                declaration to the noncustodial parent's return for the 
                taxable year beginning during such calendar year.
            ``(3) Exception for certain pre-1985 instruments.--
                    ``(A) In general .--For purposes of paragraph (1), 
                the requirements described in this paragraph are met 
                with respect to any calendar year if--
                          ``(i) a qualified pre-1985 instrument between 
                      the parents applicable to the taxable year 
                      beginning in such calendar year provides that the 
                      noncustodial parent shall be entitled to any 
                      deduction allowable under section 151 for such 
                      child, and
                          ``(ii) the noncustodial parent provides at 
                      least $600 for the support of such child during 
                      such calendar year.
                For purposes of this subparagraph, amounts expended for 
                the support of a child or children shall be treated as 
                received from the noncustodial parent to the extent that 
                such parent provided amounts for such support.
                    ``(B) Qualified pre-1985 instrument.--For purposes 
                of this paragraph, the term `qualified pre-1985 
                instrument' means any decree of divorce or separate 
                maintenance or written agreement--
                          ``(i) which is executed before January 1, 
                      1985,
                          ``(ii) which on such date contains the 
                      provision described in subparagraph (A)(i), and
                          ``(iii) which is not modified on or after such 
                      date in a modification which expressly provides 
                      that this paragraph shall not apply to such decree 
                      or agreement.
            ``(4) Custodial parent and noncustodial parent.--For 
        purposes of this subsection--

[[Page 119 STAT. 2634]]

                    ``(A) Custodial parent.--The term `custodial parent' 
                means the parent having custody for the greater portion 
                of the calendar year.
                    ``(B) Noncustodial parent.--The term `noncustodial 
                parent' means the parent who is not the custodial 
                parent.
            ``(5) Exception for multiple-support agreement.--This 
        subsection shall not apply in any case where over one-half of 
        the support of the child is treated as having been received from 
        a taxpayer under the provision of subsection (d)(3).
            ``(6) Special rule for support received from new spouse of 
        parent.--For purposes of this subsection, in the case of the 
        remarriage of a parent, support of a child received from the 
        parent's spouse shall be treated as received from the parent.''.

    (b) Amendment Related to Section 203 of the Act.--Subparagraph (B) 
of section 21(b)(1) is <<NOTE: 26 USC 21.>> amended by inserting ``(as 
defined in section 152, determined without regard to subsections (b)(1), 
(b)(2), and (d)(1)(B))'' after ``dependent of the taxpayer''.

    (c) Amendment Related to Section 207 of the Act.--Subparagraph (A) 
of section 223(d)(2) is amended by inserting ``, determined without 
regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof'' after 
``section 152''.
    (d) Effective Date.--The <<NOTE: 26 USC 21 note.>> amendments made 
by this section shall take effect as if included in the provisions of 
the Working Families Tax Relief Act of 2004 to which they relate.

SEC. 405. AMENDMENTS RELATED TO THE JOBS AND GROWTH TAX RELIEF 
            RECONCILIATION ACT OF 2003.

    (a) Amendments Related to Section 201 of the Act.--
            (1) Clause (ii) of section 168(k)(4)(B) is amended to read 
        as follows:
                          ``(ii) which is--
                                    ``(I) acquired by the taxpayer after 
                                May 5, 2003, and before January 1, 2005, 
                                but only if no written binding contract 
                                for the acquisition was in effect before 
                                May 6, 2003, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after May 5, 
                                2003, and before January 1, 2005, and''.
            (2) Subparagraph (D) of section 1400L(b)(2) is amended by 
        striking ``September 11, 2004'' and inserting ``January 1, 
        2005''.

    (b) Effective Date.--The <<NOTE: 26 USC 168 note.>> amendments made 
by this section shall take effect as if included in section 201 of the 
Jobs and Growth Tax Relief and Reconciliation Act of 2003.

SEC. 406. AMENDMENT RELATED TO THE VICTIMS OF TERRORISM TAX RELIEF ACT 
            OF 2001.

    (a) Amendment Related to Section 201 of the Act.--Paragraph (17) of 
section 6103(l) is amended by striking ``subsection (f), (i)(7), or 
(p)'' and inserting ``subsection (f), (i)(8), or (p)''.
    (b) Effective Date.--The <<NOTE: 26 USC 6103 note.>> amendment made 
by this section shall take effect as if included in section 201 of the 
Victims of Terrorism Tax Relief Act of 2001.

[[Page 119 STAT. 2635]]

SEC. 407. AMENDMENTS RELATED TO THE ECONOMIC GROWTH AND TAX RELIEF 
            RECONCILIATION ACT OF 2001.

    (a) Amendments Related to Section 617 of the Act.--
            (1) Clause (ii) of section 402(g)(7)(A) is <<NOTE: 26 USC 
        402.>> amended to read as follows:
                          ``(ii) $15,000 reduced by the sum of--
                                    ``(I) the amounts not included in 
                                gross income for prior taxable years by 
                                reason of this paragraph, plus
                                    ``(II) the aggregate amount of 
                                designated Roth contributions (as 
                                defined in section 402A(c)) for prior 
                                taxable years, or''.
            (2) Subparagraph (A) of section 402(g)(1) is amended by 
        inserting ``to'' after ``shall not apply''.

    (b) Amendment Related to Section 632 of the Act.--Subparagraph (C) 
of section 415(c)(7) is amended by striking ``the greater of $3,000'' 
and all that follows and inserting ``$3,000. This subparagraph shall not 
apply with respect to any taxable year to any individual whose adjusted 
gross income for such taxable year (determined separately and without 
regard to community property laws) exceeds $17,000.''.
    (c) Effective Date.--The <<NOTE: 26 USC 402 note.>> amendments made 
by this section shall take effect as if included in the provisions of 
the Economic Growth and Tax Relief Reconciliation Act of 2001 to which 
they relate.

SEC. 408. AMENDMENTS RELATED TO THE INTERNAL REVENUE SERVICE 
            RESTRUCTURING AND REFORM ACT OF 1998.

    (a) Amendments Related to Section 3415 of the Act.--
            (1) Paragraph (2) of section 7609(c) is amended by inserting 
        ``or'' at the end of subparagraph (D), by striking ``; or'' at 
        the end of subparagraph (E) and inserting a period, and by 
        striking subparagraph (F).
            (2) Subsection (c) of section 7609 is amended by 
        redesignating paragraph (3) as paragraph (4) and by inserting 
        after paragraph (2) the following new paragraph:
            ``(3) John doe and certain other summonses.--Subsection (a) 
        shall not apply to any summons described in subsection (f) or 
        (g).''.

    (b) Effective Date.--The <<NOTE: 26 USC 7609 note.>> amendments made 
by this section shall take effect as if included in section 3415 of the 
Internal Revenue Service Restructuring and Reform Act of 1998.

SEC. 409. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.

    (a) Amendments Related to Section 1055 of the Act.--
            (1) The last sentence of section 6411(a) is amended by 
        striking ``6611(f)(3)(B)'' and inserting ``6611(f)(4)(B)''.
            (2) Paragraph (4) of section 6601(d) is amended by striking 
        ``6611(f)(3)(A)'' and inserting ``6611(f)(4)(A)''.

    (b) Amendment Related to Section 1112 of the Act.--Subsection (c) of 
section 961 is amended to read as follows:
    ``(c) Basis Adjustments in <<NOTE: Regulations.>> Stock Held by 
Foreign Corporations.--Under regulations prescribed by the Secretary, if 
a United States shareholder is treated under section 958(a)(2) as owning 
stock in a controlled foreign corporation which is owned by another 
controlled foreign corporation, then adjustments similar to the 


[[Page 119 STAT. 2636]]

adjustments provided by subsections (a) and (b) shall be made to--
            ``(1) the basis of such stock, and
            ``(2) the basis of stock in any other controlled foreign 
        corporation by reason of which the United States shareholder is 
        considered under section 958(a)(2) as owning the stock described 
        in paragraph (1),

but only for the purposes of determining the amount included under 
section 951 in the gross income of such United States shareholder (or 
any other United States shareholder who acquires from any person any 
portion of the interest of such United States shareholder by reason of 
which such shareholder was treated as owning such stock, but only to the 
extent of such portion, and subject to such proof of identity of such 
interest as the Secretary may prescribe by regulations). The preceding 
sentence shall not apply with respect to any stock to which a basis 
adjustment applies under subsection (a) or (b).''.
    (c) Amendment Related to Section 1144 of the Act.--Subparagraph (B) 
of section 6038B(a)(1) is <<NOTE: 26 USC 6038B.>> amended by inserting 
``or'' at the end.

    (d) Effective Date.--The <<NOTE: 26 USC 961 note.>> amendments made 
by this section shall take effect as if included in the provisions of 
the Taxpayer Relief Act of 1997 to which they relate.

SEC. 410. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF 
            1990.

    (a) Amendment Related to Section 11813 of the Act.--Subclause (I) of 
section 168(e)(3)(B)(vi) is amended by striking ``if `solar and wind' 
were substituted for `solar' in clause (i) thereof'' and inserting ``if 
`solar or wind energy' were substituted for `solar energy' in clause (i) 
thereof''.
    (b) Effective Date.--The <<NOTE: 26 USC 168 note.>> amendment made 
by this section shall take effect as if included in section 11813 of the 
Omnibus Budget Reconciliation Act of 1990.

SEC. 411. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF 
            1987.

    (a) Amendment Related to Section 10227 of the Act.--Section 1363(d) 
is amended by adding at the end the following new paragraph:
            ``(5) Special rule.--Sections 1367(a)(2)(D) and 1371(c)(1) 
        shall not apply with respect to any increase in the tax imposed 
        by reason of this subsection.''.

    (b) Effective Date.--The <<NOTE: 26 USC 1363 note.>> amendment made 
by this section shall take effect as if included in section 10227 of the 
Omnibus Budget Reconciliation Act of 1987.

SEC. 412. CLERICAL CORRECTIONS.

    (a) Subparagraph (C) of section 2(b)(2) is amended by striking 
``subparagraph (C)'' and inserting ``subparagraph (B)''.
    (b) Paragraph (2) of section 25C(b) is amended by striking 
``subsection (c)(3)(B)'' and inserting ``subsection (c)(2)(B)''.
    (c) Subparagraph (E) of section 26(b)(2) is amended by striking 
``section 530(d)(3)'' and inserting ``section 530(d)(4)''.
    (d) Subparagraph (A) of section 30B(g)(2) and subparagraph (A) of 
section 30C(d)(2) are each amended by striking ``regular tax'' and 
inserting ``regular tax liability (as defined in section 26(b))''.

[[Page 119 STAT. 2637]]

    (e) The table of sections for subpart B of part IV of subchapter A 
of chapter 1 is amended by striking the item relating to section 30C and 
inserting the following new item:

``Sec. 30C. Alternative fuel vehicle refueling property credit.''.

    (f)(1) Subclause (II) of section 38(c)(2)(A)(ii) is <<NOTE: 26 USC 
38.>> amended by striking ``or the New York Liberty Zone business 
employee credit or the specified credits'' and inserting ``, the New 
York Liberty Zone business employee credit, and the specified credits''.

    (2) Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking 
``or the specified credits'' and inserting ``and the specified 
credits''.
    (3) Subparagraph (B) of section 38(c)(4) is amended--
            (A) by striking ``includes'' and inserting ``means'', and
            (B) by inserting ``and'' at the end of clause (i).

    (g)(1) Subparagraph (A) of section 39(a)(1) is amended by striking 
``each of the 1 taxable years'' and inserting ``the taxable year''.
    (2) Subparagraph (B) of section 39(a)(3) is amended to read as 
follows:
                    ``(B) paragraph (1) <<NOTE: Applicability.>> shall 
                be applied by substituting `each of the 5 taxable years' 
                for `the taxable year' in subparagraph (A) thereof, 
                and''.

    (h) Subparagraph (B) of section 40A(b)(5) is amended by striking 
``(determined without regard to the last sentence of subsection 
(d)(2))''.
    (i) Paragraph (5) of section 43(c) is amended to read as follows:
            ``(5) Alaska natural gas.--For purposes of paragraph 
        (1)(D)--
                    ``(A) In general.--The term `Alaska natural gas' 
                means natural gas entering the Alaska natural gas 
                pipeline (as defined in section 168(i)(16) (determined 
                without regard to subparagraph (B) thereof)) which is 
                produced from a well--
                          ``(i) located in the area of the State of 
                      Alaska lying north of 64 degrees North latitude, 
                      determined by excluding the area of the Alaska 
                      National Wildlife Refuge (including the 
                      continental shelf thereof within the meaning of 
                      section 638(1)), and
                          ``(ii) pursuant to the applicable State and 
                      Federal pollution prevention, control, and permit 
                      requirements from such area (including the 
                      continental shelf thereof within the meaning of 
                      section 638(1)).
                    ``(B) Natural gas.--The term `natural gas' has the 
                meaning given such term by section 613A(e)(2).''.

    (j) Subsection (d) of section 45 is amended--
            (1) in paragraph (8) by striking ``The term'' and inserting 
        ``In the case of a facility that produces refined coal, the 
        term'', and
            (2) in paragraph (10) by striking ``The term'' and inserting 
        ``In the case of a facility that produces Indian coal, the 
        term''.

    (k) Paragraph (2) of section 45I(a) is amended by striking 
``qualified credit oil production'' and inserting ``qualified crude oil 
production''.
    (l) Subsection (g) of section 45K, as redesignated by section 1322 
of the <<NOTE: Ante, p. 1011.>> Energy Policy Act of 2005, is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``subsection (f)'' and inserting ``subsection (e)'', and

[[Page 119 STAT. 2638]]

            (2) in paragraph (2)(C), by striking ``subsection (g)'' and 
        inserting ``subsection (f)''.

    (m) Paragraph (1) of section 48(a), as amended by section 1336 of 
the Energy Policy Act of 2005, is <<NOTE: Ante, p. 1036.>> amended by 
striking ``paragraph (1)(B) or (2)(B) of subsection (d)'' and inserting 
``paragraphs (1)(B) and (2)(B) of subsection (c)''.

    (n) Subparagraph (A) of section 48(a)(3) is amended--
            (1) by redesignating clause (iii) (relating to qualified 
        fuel cell property or qualified microturbine property), as added 
        by section 1336 of the Energy Policy Act of 2005, as clause (iv) 
        and by moving such clause to the end of such subparagraph, and
            (2) by striking ``or'' at the end of clause (ii).

    (o) Subparagraph (E) of section 50(a)(2) is <<NOTE: 26 USC 
50.>> amended by striking ``section 48(a)(5)'' and inserting ``section 
48(b)''.

    (p)(1) Paragraph (3) of section 55(c) is amended by inserting 
``30B(g)(2), 30C(d)(2),'' after ``30(b)(3),''.
    (2) Section 1341(b)(3) of the <<NOTE: Repeal.3Ante, p. 
1038.>> Energy Policy Act of 2005 is repealed.

    (3) Section 1342(b)(3) of the <<NOTE: Repeal.3Ante, p. 
1049.>> Energy Policy Act of 2005 is repealed.

    (q)(1) Subsection (a) of section 62 is amended--
            (A) by redesignating paragraph (19) (relating to costs 
        involving discrimination suits, etc.), as added by section 703 
        of the American Jobs Creation Act of 2004, as paragraph (20), 
        and
            (B) by moving such paragraph after paragraph (19) (relating 
        to health savings accounts).

    (2) Subsection (e) of section 62 is amended by striking ``subsection 
(a)(19)'' and inserting ``subsection (a)(20)''.
    (r) Paragraph (3) of section 167(f) is amended by striking ``section 
197(e)(7)'' and inserting ``section 197(e)(6)''.
    (s) Subparagraph (D) of section 168(i)(15) is amended by striking 
``This paragraph shall not apply to'' and inserting ``Such term shall 
not include''.
    (t) Paragraph (2) of section 221(d) is amended by striking ``this 
Act'' and inserting ``the Taxpayer Relief Act of 1997''.
    (u) Paragraph (8) of section 318(b) is amended by striking ``section 
6038(d)(2)'' and inserting ``section 6038(e)(2)''.
    (v) Subparagraph (B) of section 332(d)(1) is amended by striking 
``distribution to which section 301 applies'' and inserting 
``distribution of property to which section 301 applies''.
    (w) Subparagraph (B) of section 403(b)(9) is amended by inserting 
``or'' before ``a convention''.
    (x)(1) Clause (i) of section 412(m)(4)(B) is amended by striking 
``subsection (c)'' and inserting ``subsection (d)''.
    (2) Clause (i) of section 302(e)(4)(B) of the Employee Retirement 
Income Security Act of 1974 is <<NOTE: 29 USC 1082.>> amended by 
striking ``subsection (c)'' and inserting ``subsection (d)''.

    (y) Paragraph (1) of section 415(l) is amended by striking 
``individual medical account'' and inserting ``individual medical 
benefit account''.
    (z) The matter following clause (iv) of section 415(n)(3)(C) is 
amended by striking ``clauses'' and inserting ``clause''.
    (aa) Subparagraph (C) of section 461(i)(3) is amended by striking 
``section 6662(d)(2)(C)(iii)'' and inserting ``section 
6662(d)(2)(C)(ii)''.

[[Page 119 STAT. 2639]]

    (bb) Paragraph (12) of <<NOTE: 26 USC 501.>> section 501(c) is 
amended--
            (1) by striking ``subparagraph (C)(iii)'' in subparagraph 
        (F) and inserting ``subparagraph (C)(iv)'', and
            (2) by striking ``subparagraph (C)(iv)'' in subparagraph (G) 
        and inserting ``subparagraph (C)(v)''.

    (cc) Clause (ii) of section 501(c)(22)(B) is amended by striking 
``clause (ii) of paragraph (21)(B)'' and inserting ``clause (ii) of 
paragraph (21)(D)''.
    (dd) Paragraph (1) of section 512(b) is amended by striking 
``section 512(a)(5)'' and inserting ``subsection (a)(5)''.
    (ee)(1) Subsection (b) of section 512 is amended--
            (A) by redesignating paragraph (18) (relating to the 
        treatment of gain or loss on sale or exchange of certain 
        brownfield sites), as added by section 702 of the American Jobs 
        Creation Act of 2004, as paragraph (19), and
            (B) by moving such paragraph to the end of such subsection.

    (2) Subparagraph (E) of section 514(b)(1) is amended by striking 
``section 512(b)(18)'' and inserting ``section 512(b)(19)''.
    (3) Paragraph (6) of section 529(c) is amended by striking 
``education individual retirement account'' and inserting ``Coverdell 
education savings account''.
    (ff)(1) Subsection (b) of section 530 is amended by striking 
paragraph (3) and by redesignating paragraphs (4) and (5) as paragraphs 
(3) and (4), respectively.
    (2) Clause (ii) of section 530(b)(2)(A) is amended by striking 
``paragraph (4)'' and inserting ``paragraph (3)''.
    (gg) Subparagraph (H) of section 613(c)(4) is amended by inserting 
``(including in situ retorting)'' after ``and retorting''.
    (hh) Subparagraph (A) of section 856(g)(5) is amended by striking 
``subsection (c)(6) or (c)(7) of section 856'' and inserting ``paragraph 
(2), (3), or (4) of subsection (c)''.
    (ii) Paragraph (6) of section 857(b) is amended--
            (1) in subparagraph (E), by striking ``subparagraph (C)'' 
        and inserting ``subparagraphs (C) and (D)'', and
            (2) in subparagraph (F)--
                    (A) by striking ``subparagraph (C) of this 
                paragraph'' and inserting ``subparagraph (C) or (D)'', 
                and
                    (B) by striking ``subparagraphs (C) and (D)'' and 
                inserting ``subparagraphs (C), (D), and (E)''.

    (jj) Subparagraph (C) of section 881(e)(1) is amended by inserting 
``interest-related dividend received by a controlled foreign 
corporation'' after ``shall apply to any''.
    (kk) Clause (ii) of section 952(c)(1)(B) is amended--
            (1) by striking ``clause (iii)(III) or (IV)'' and inserting 
        ``subclause (II) or (III) of clause (iii)'', and
            (2) by striking ``clause (iii)(II)'' and inserting ``clause 
        (iii)(I)''.

    (ll) Clause (i) of section 954(c)(1)(C) is amended by striking 
``paragraph (4)(A)'' and inserting ``paragraph (5)(A)''.
    (mm) Subparagraph (F) of section 954(c)(1) is amended by striking 
``Net income from notional principal contracts.'' after ``Income from 
notional principal contracts.--''.
    (nn) Paragraph (23) of section 1016(a) is amended by striking 
``1045(b)(4)'' and inserting ``1045(b)(3)''.
    (oo) Paragraph (1) of section 1256(f) is amended by striking 
``subsection (e)(2)(C)'' and inserting ``subsection (e)(2)''.

[[Page 119 STAT. 2640]]

    (pp) The matter preceding clause (i) of <<NOTE: 26 USC 
1031.>> section 1031(h)(2)(B) is amended by striking ``subparagraph'' 
and inserting ``subparagraphs''.

    (qq) Paragraphs (1) and (2) of section 1375(d) are each amended by 
striking ``subchapter C'' and inserting ``accumulated''.
    (rr) Each of the following provisions are amended by striking 
``General Accounting Office'' each place it appears therein and 
inserting ``Government Accountability Office'':
            (1) Clause (ii) of section 1400E(c)(4)(A).
            (2) Paragraph (1) of section 6050M(b).
            (3) Subparagraphs (A), (B)(i), and (B)(ii) of section 
        6103(i)(8).
            (4) Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section 
        6103(p).
            (5) Subsection (e) of section 8021.

    (ss)(1) Clause (ii) of section 1400L(b)(2)(C) is amended by striking 
``section 168(k)(2)(C)(i)'' and inserting ``section 168(k)(2)(D)(i)''.
    (2) Clause (iv) of section 1400L(b)(2)(C) is amended by striking 
``section 168(k)(2)(C)(iii)'' and inserting ``section 
168(k)(2)(D)(iii)''.
    (3) Subparagraph (D) of section 1400L(b)(2) is amended by striking 
``section 168(k)(2)(D)'' and inserting ``section 168(k)(2)(E)''.
    (4) Subparagraph (E) of section 1400L(b)(2) is amended by striking 
``section 168(k)(2)(F)'' and inserting ``section 168(k)(2)(G)''.
    (5) Paragraph (5) of section 1400L(c) is amended by striking 
``section 168(k)(2)(C)(iii)'' and inserting ``section 
168(k)(2)(D)(iii)''.
    (tt) Section 3401 is amended by redesignating subsection (h) as 
subsection (g).
    (uu) Paragraph (2) of section 4161(a) is amended to read as follows:
            ``(2) 3 percent rate of tax for electric outboard motors.--
        In the case of an electric outboard motor, paragraph (1) shall 
        be <<NOTE: Applicability.>> applied by substituting `3 percent' 
        for `10 percent'.''.

    (vv) Subparagraph (C) of section 4261(e)(4) is amended by striking 
``imposed subsection (b)'' and inserting ``imposed by subsection (b)''.
    (ww) Subsection (a) of section 4980D is amended by striking 
``plans'' and inserting ``plan''.
    (xx) The matter following clause (iii) of section 6045(e)(5)(A) is 
amended by striking ``for `$250,000'.'' and all that follows through 
``to the Treasury.'' and inserting ``for `$250,000'. The Secretary may 
by regulation increase the dollar amounts under this subparagraph if the 
Secretary determines that such an increase will not materially reduce 
revenues to the Treasury.''.
    (yy) Subsection (p) of section 6103 is amended--
            (1) by striking so much of paragraph (4) as precedes 
        subparagraph (A) and inserting the following:
            ``(4) Safeguards.--Any Federal agency described in 
        subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7), 
        (j)(1), (2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11), 
        (13), (14), or (17) or (o)(1), the Government Accountability 
        Office, the Congressional Budget Office, or any agency, body, or 
        commission described in subsection (d), (i)(3)(B)(i) or 
        7(A)(ii), or (l)(6), (7), (8), (9), (12), (15), or (16) or any 
        other person described in subsection (l)(16), (18), (19), or 
        (20) shall, as a condition for receiving returns or return 
        information--'',
            (2) by amending paragraph (4)(F)(i) to read as follows:

[[Page 119 STAT. 2641]]

                          ``(i) in the case of an agency, body, or 
                      commission described in subsection (d), 
                      (i)(3)(B)(i), or (l)(6), (7), (8), (9), or (16), 
                      or any other person described in subsection 
                      (l)(16), (18), (19), or (20) return to the 
                      Secretary such returns or return information 
                      (along with any copies made therefrom) or make 
                      such returns or return information undisclosable 
                      in any manner and furnish a written report to the 
                      Secretary describing such manner,'', and
            (3) by striking the first full sentence in the matter 
        following subparagraph (F) of paragraph (4) and inserting the 
        following: ``If the Secretary determines that any such agency, 
        body, or commission, including an agency or any other person 
        described in subsection (l)(16), (18), (19), or (20), or the 
        Government Accountability Office or the Congressional Budget 
        Office, has failed to, or does not, meet the requirements of 
        this paragraph, he may, after any proceedings for review 
        established under paragraph (7), take such actions as are 
        necessary to ensure such requirements are met, including 
        refusing to disclose returns or return information to such 
        agency, body, or commission, including an agency or any other 
        person described in subsection (l)(16), (18), (19), or (20), or 
        the Government Accountability Office or the Congressional Budget 
        Office, until he determines that such requirements have been or 
        will be met.''.

    (zz) Clause (ii) of <<NOTE: 26 USC 6111.>> section 6111(b)(1)(A) is 
amended by striking ``advice or assistance'' and inserting ``aid, 
assistance, or advice''.

    (aaa) Paragraph (3) of section 6662(d) is amended by striking 
``the'' before ``1 or more''.

SEC. 413. OTHER CORRECTIONS RELATED TO THE AMERICAN JOBS CREATION ACT OF 
            2004.

    (a) Amendments Related to Section 233 of the Act.--
            (1) Clause (vi) of section 1361(c)(2)(A) is amended--
                    (A) by inserting ``or a depository institution 
                holding company (as defined in section 3(w)(1) of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))'' 
                after ``a bank (as defined in section 581)'', and
                    (B) by inserting ``or company'' after ``such bank''.
            (2) Paragraph (16) of section 4975(d) is amended--
                    (A) in subparagraph (A), by inserting ``or a 
                depository institution holding company (as defined in 
                section 3(w)(1) of the Federal Deposit Insurance Act (12 
                U.S.C. 1813(w)(1))'' after ``a bank (as defined in 
                section 581)'', and
                    (B) in subparagraph (C), by inserting ``or company'' 
                after ``such bank''.

    (b) Amendment Related to Section 237 of the Act.--Subparagraph (F) 
of section 1362(d)(3) is amended by striking ``a bank holding company'' 
and all that follows through ``section 2(p) of such Act)'' and inserting 
``a depository institution holding company (as defined in section 
3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))''.
    (c) Amendments Related to Section 239 of the Act.--Paragraph (3) of 
section 1361(b) is amended--
            (1) in subparagraph (A), by striking ``and in the case of 
        information returns required under part III of subchapter A of 
        chapter 61'', and

[[Page 119 STAT. 2642]]

            (2) by adding at the end the following new subparagraph:
                    ``(E) Information returns.--Except to the extent 
                provided by the Secretary, this paragraph shall not 
                apply to part III of subchapter A of chapter 61 
                (relating to information returns).''.

    (d) Effective Date.--The <<NOTE: 26 USC 1361 note.>> amendments made 
by this section shall take effect as if included in the provisions of 
the American Jobs Creation Act of 2004 to which they relate.

                      Subtitle B--Trade Technicals

SEC. 421. TECHNICAL CORRECTIONS TO REGIONAL VALUE-CONTENT METHODS FOR 
            RULES OF ORIGIN UNDER PUBLIC LAW 109-53.

    Section 203(c) of the Dominican Republic-Central America-United 
States Free Trade Agreement Implementation Act (Public Law 109-53; 19 
U.S.C. 4033(c)) is amended as follows:
            (1) In paragraph (2)(A), by striking all that follows ``the 
        following build-down method:'' and inserting the following:

                                       av-vnm

                        ``rvc = -------- <dbl-dagger> 100''.

                                         av

            (2) In paragraph (3)(A), by striking all that follows ``the 
        following build-up method:'' and inserting the following:

                                         vom

                         ``rvc = -------- <dbl-dagger> 100''.

                                         av

            (3) In paragraph (4)(A), by striking all that follows ``the 
        following net cost method:'' and inserting the following:

                                       nc-vnm

                        ``rvc = -------- <dbl-dagger> 100''.

                                         nc

                     TITLE V--EMERGENCY REQUIREMENT

SEC. 501. EMERGENCY REQUIREMENT.

    Any provision of this Act causing an effect on receipts, budget 
authority, or outlays is designated as an emergency requirement pursuant 
to section 402 of H. Con. Res. 95 (109th Congress).

    Approved December 21, 2005.

LEGISLATIVE HISTORY--H.R. 4440:
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 151 (2005):
            Dec. 7, considered and passed House.
            Dec. 16, considered and passed Senate, amended. House 
                concurred in Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 41 (2005):
            Dec. 21, Presidential remarks.

                                  <all>