TEXT OF AMENDMENTS
(Senate - November 29, 2017)

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[Congressional Record Volume 163, Number 194 (Wednesday, November 29, 2017)]
[Pages S7408-S7489]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 1588. Mrs. ERNST submitted an amendment intended to be proposed by 
her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. ELIMINATION OF DEDUCTION FOR LIVING EXPENSES 
                   INCURRED BY MEMBERS OF CONGRESS.

       (a) In General.--Subsection (a) of section 162 of the 
     Internal Revenue Code of 1986 is amended in the matter 
     following paragraph (3) by striking ``in excess of $3,000''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 1589. Mrs. ERNST (for herself and Mrs. Capito) submitted an 
amendment intended to be proposed by her to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. CREDIT FOR WORKING FAMILY CAREGIVERS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 25D the 
     following new section:

     ``SEC. 25E. WORKING FAMILY CAREGIVERS.

       ``(a) Allowance of Credit.--In the case of an eligible 
     caregiver, there shall be allowed as a credit against the tax 
     imposed by this chapter for the taxable year an amount equal 
     to 30 percent of the qualified expenses paid by the taxpayer 
     during the taxable year to the extent that such expenses 
     exceed $2,000.
       ``(b) Limitation.--
       ``(1) In general.--The amount allowed as a credit under 
     subsection (a) for the taxable year shall not exceed $3,000.
       ``(2) Adjustment for inflation.--In the case of any taxable 
     year beginning after 2018, the dollar amount contained in 
     paragraph (1) shall be increased by an amount equal to the 
     product of--
       ``(A) such dollar amount, and
       ``(B) the medical care cost adjustment determined under 
     section 213(d)(10)(B)(ii) for the calendar year in which the 
     taxable year begins, determined by substituting `2017' for 
     `1996' in subclause (II) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $50, such increase shall be rounded to the 
     next lowest multiple of $50.
       ``(c) Eligible Caregiver.--For purposes of this section, 
     the term `eligible caregiver' means an individual who--
       ``(1) during the taxable year pays or incurs qualified 
     expenses in connection with providing care for a qualified 
     care recipient, and
       ``(2) has earned income (as defined in section 32(c)(2)) 
     for the taxable year in excess of $7,500.
       ``(d) Qualified Care Recipient.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified care recipient' 
     means, with respect to any taxable year, any individual who--
       ``(A) is the spouse of the eligible caregiver, or any other 
     person who bears a relationship to the eligible caregiver 
     described in any of subparagraphs (A) through (H) of section 
     152(d)(2), and
       ``(B) has been certified, before the due date for filing 
     the return of tax for the taxable year, by a licensed health 
     care practitioner (as defined in section 7702B(c)(4)) as 
     being an individual with long-term care needs described in 
     paragraph (3) for a period--
       ``(i) which is at least 180 consecutive days, and
       ``(ii) a portion of which occurs within the taxable year.
       ``(2) Period for making certification.--Notwithstanding 
     paragraph (1)(B), a certification shall not be treated as 
     valid unless it

[[Page S7409]]

     is made within the 39\1/2\-month period ending on such due 
     date (or such other period as the Secretary prescribes).
       ``(3) Individuals with long-term care needs.--An individual 
     is described in this paragraph if the individual meets any of 
     the following requirements:
       ``(A) The individual is at least 6 years of age and--
       ``(i) is unable to perform (without substantial assistance 
     from another individual) at least 2 activities of daily 
     living (as defined in section 7702B(c)(2)(B)) due to a loss 
     of functional capacity, or
       ``(ii) requires substantial supervision to protect such 
     individual from threats to health and safety due to severe 
     cognitive impairment and is unable to perform, without 
     reminding or cuing assistance, at least 1 activity of daily 
     living (as so defined) or to the extent provided in 
     regulations prescribed by the Secretary (in consultation with 
     the Secretary of Health and Human Services), is unable to 
     engage in age appropriate activities.
       ``(B) The individual is at least 2 but not 6 years of age 
     and is unable due to a loss of functional capacity to perform 
     (without substantial assistance from another individual) at 
     least 2 of the following activities: eating, transferring, or 
     mobility.
       ``(C) The individual is under 2 years of age and requires 
     specific durable medical equipment by reason of a severe 
     health condition or requires a skilled practitioner trained 
     to address the individual's condition to be available if the 
     individual's parents or guardians are absent.
       ``(e) Qualified Expenses.--For purposes of this section--
       ``(1) In general.--Subject to paragraph (4), the term 
     `qualified expenses' means expenditures for goods, services, 
     and supports that--
       ``(A) assist a qualified care recipient with accomplishing 
     activities of daily living (as defined in section 
     7702B(c)(2)(B)) and instrumental activities of daily living 
     (as defined in section 1915(k)(6)(F) of the Social Security 
     Act (42 U.S.C. 1396n(k)(6)(F))), and
       ``(B) are provided solely for use by such qualified care 
     recipient.
       ``(2) Adjustment for other tax benefits.--The amount of 
     qualified expenses otherwise taken into account under 
     paragraph (1) with respect to an individual shall be reduced 
     by the sum of any amounts paid for the benefit of such 
     individual for the taxable year which are--
       ``(A) taken into account under section 21 or 213, or
       ``(B) excluded from gross income under section 129, 223(f), 
     or 529A(c)(1)(B).
       ``(3) Goods, services, and supports.--For purposes of 
     paragraph (1), goods, services, and supports (as defined by 
     the Secretary) shall include--
       ``(A) human assistance, supervision, cuing and standby 
     assistance,
       ``(B) assistive technologies and devices (including remote 
     health monitoring),
       ``(C) environmental modifications (including home 
     modifications),
       ``(D) health maintenance tasks (such as medication 
     management),
       ``(E) information,
       ``(F) transportation of the qualified care recipient,
       ``(G) non-health items (such as incontinence supplies), and
       ``(H) coordination of and services for people who live in 
     their own home, a residential setting, or a nursing facility, 
     as well as the cost of care in these or other locations.
       ``(4) Qualified expenses for eligible caregivers.--For 
     purposes of paragraph (1), the following shall be treated as 
     qualified expenses if paid or incurred by an eligible 
     caregiver:
       ``(A) Expenditures for respite care for a qualified care 
     recipient.
       ``(B) Expenditures for counseling, support groups, or 
     training relating to caring for a qualified care recipient.
       ``(C) Lost wages for unpaid time off due to caring for a 
     qualified care recipient as verified by an employer.
       ``(D) Travel costs of the eligible caregiver related to 
     caring for a qualified care recipient.
       ``(E) Expenditures for technologies, as determined by the 
     Secretary, that assist an eligible caregiver in providing 
     care for a qualified care recipient.
       ``(5) Human assistance.--The term `human assistance' 
     includes the costs of a direct care worker.
       ``(6) Documentation.--An expense shall not be taken into 
     account under this section unless the eligible caregiver 
     substantiates such expense under such regulations or guidance 
     as the Secretary shall provide.
       ``(7) Mileage rate.--For purposes of this section, the 
     mileage rate for the use of a passenger automobile shall be 
     the standard mileage rate used to calculate the deductible 
     costs of operating an automobile for medical purposes. Such 
     rate may be used in lieu of actual automobile-related travel 
     expenses.
       ``(8) Coordination with able accounts.--Qualified expenses 
     for a taxable year shall not include contributions to an ABLE 
     account (as defined in section 529A).
       ``(f) Phase Out Based on Adjusted Gross Income.--For 
     purposes of this section--
       ``(1) In general.--The amount of the credit allowable under 
     subsection (a) shall be reduced (but not below zero) by $100 
     for each $1,000 (or fraction thereof) by which the taxpayer's 
     modified adjusted gross income exceeds the threshold amount.
       ``(2) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income increased 
     by any amount excluded from gross income under section 911, 
     931, or 933.
       ``(3) Threshold amount.--The term `threshold amount' 
     means--
       ``(A) $150,000 in the case of a joint return, and
       ``(B) $75,000 in any other case.
       ``(4) Indexing.--In the case of any taxable year beginning 
     in a calendar year after 2018, each dollar amount contained 
     in paragraph (3) shall be increased by an amount equal to the 
     product of--
       ``(A) such dollar amount, and
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting ``calendar year 
     2017'' for ``calendar year 2016'' in subparagraph (A)(ii) 
     thereof.
       ``(5) Rounding rule.--If any increase determined under 
     paragraph (4) is not a multiple of $50, such increase shall 
     be rounded to the next lowest multiple of $50.
       ``(g) Identification of Eligible Caregiver With Care 
     Recipient (Qualified Care Recipient) Identification 
     Requirement.--No credit shall be allowed under this section 
     to a taxpayer with respect to any qualified care recipient 
     unless the taxpayer includes the name and taxpayer 
     identification number of such individual, and the 
     identification number of the licensed health care 
     practitioner certifying such individual, on the return of tax 
     for the taxable year.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 of such Code is 
     amended by inserting after the item relating to section 25D 
     the following new item:

``Sec. 25E. Working family caregivers.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1590. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 11042 and insert the following:

     SEC. 11042. SUSPENSION OF DEDUCTION FOR STATE AND LOCAL, ETC. 
                   TAXES.

       (a) In General.--Subsection (b) of section 164 is amended 
     by adding at the end the following new paragraph:
       ``(6) Suspension of individual deductions for taxable years 
     2018 through 2025.--In the case of an individual and a 
     taxable year beginning after December 31, 2017, and before 
     January 1, 2026--
       ``(A) foreign real property taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) shall not be taken into 
     account under subsection (a)(1),
       ``(B) the aggregate amount of taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) taken into account under 
     subsection (a)(1) for any taxable year shall not exceed 
     $10,000 ($5,000 in the case of a married individual filing a 
     separate return),
       ``(C) subsection (a)(2) shall only apply to taxes which are 
     paid or accrued in carrying on a trade or business or an 
     activity described in section 212,
       ``(D) subsection (a)(3) shall not apply to State and local 
     taxes, and
       ``(E) paragraph (5) shall not apply.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1591. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 11042 and insert the following:

     SEC. 11042. SUSPENSION OF DEDUCTION FOR STATE AND LOCAL, ETC. 
                   TAXES.

       (a) In General.--Subsection (b) of section 164 is amended 
     by adding at the end the following new paragraph:
       ``(6) Suspension of individual deductions for taxable years 
     2018 through 2025.--In the case of an individual and a 
     taxable year beginning after December 31, 2017, and before 
     January 1, 2026--
       ``(A) foreign real property taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) shall not be taken into 
     account under subsection (a)(1),
       ``(B) the aggregate amount of taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) taken into account under 
     subsection (a)(1) for any taxable year shall not exceed 
     $10,000 ($5,000 in the case of a married individual filing a 
     separate return),
       ``(C) subsection (a)(2) shall only apply to taxes which are 
     paid or accrued in carrying on a trade or business or an 
     activity described in section 212,
       ``(D) subsection (a)(3) shall not apply to State and local 
     taxes, and
       ``(E) paragraph (5) shall not apply.''.
       (b) Offsets.--
       (1) Adjustment of highest rate bracket.--

[[Page S7410]]

       (A) Joint returns.--The last row of the table contained in 
     section 1(j)(2)(A), as added by section 11001(a), is amended 
     to read as follows:


``Over $1,000,000.........................  $301,479, plus 39.6% of the
                                             excess over $1,000,000.''.

       (B) Heads of households.--The last row of the table 
     contained in section 1(j)(2)(B), as added by section 
     11001(a), is amended to read as follows:


``Over $500,000...........................  $149,348, plus 39.6% of the
                                             excess over $500,000.''.

       (C) Unmarried individuals.--The last row of the table 
     contained in section 1(j)(2)(C), as added by section 
     11001(a), is amended to read as follows:


``Over $500,000...........................  $150,739.50, plus 39.6% of
                                             the excess over
                                             $500,000.''.

       (D) Married individuals filing separate returns.--The last 
     row of the table contained in section 1(j)(2)(D), as added by 
     section 11001(a), is amended to read as follows:


``Over $500,000...........................  $150,739.50, plus 39.6% of
                                             the excess over
                                             $500,000.''.

       (2) Corporate tax rate.--
       (A) In general.--Section 11(b), as amended by this Act, is 
     amended by striking ``20 percent'' and inserting ``21 
     percent''.
       (B) Effective date.--The amendment made by this paragraph 
     shall apply to taxable years beginning after December 31, 
     2018.
       (c) Effective Date.--Except as provided in subsection 
     (b)(2)(B), the amendments made by this section shall apply to 
     taxable years beginning after December 31, 2017.
                                 ______
                                 
  SA 1592. Mr. LANKFORD submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. ELIMINATING FEDERAL TAX SUBSIDIZATION OF 
                   PROFESSIONAL SPORTS STADIUMS.

       (a) Treatment of Certain Obligations Financing Professional 
     Sports Stadiums as Private Activity Bonds.--Section 141(b) is 
     amended by adding at the end the following new paragraph:
       ``(10) Special rule for professional sports stadiums.--
       ``(A) In general.--In the case of any issue any proceeds of 
     which are to be used to provide a professional sports 
     stadium, such issue shall be treated as meeting the private 
     security or payment test of paragraph (2).
       ``(B) Professional sports stadium.--For purposes of this 
     paragraph, the term `professional sports stadium' means any 
     facility (and appurtenant real property) which, during at 
     least 5 days during any calendar year, is used as a stadium 
     or arena for professional sports exhibitions, games, or 
     training.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 1593. Mr. LANKFORD submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. ALLOWING ABOVE-THE-LINE DEDUCTIONS FOR CHARITABLE 
                   CONTRIBUTIONS FOR INDIVIDUALS NOT ITEMIZING 
                   DEDUCTIONS.

       (a) In General.--Subsection (a) of section 62 is amended by 
     inserting after paragraph (21) the following new paragraph:
       ``(22) Charitable contributions for individuals not 
     itemizing deductions.--In the case of an individual who does 
     not elect to itemize his deductions for the taxable year, the 
     deduction allowed by section 170. The preceding sentence 
     shall not apply to any deduction in excess of an amount equal 
     to the product of \1/3\ and the standard deduction for such 
     individual.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to taxable years beginning after the 
     date of enactment of this Act.
                                 ______
                                 
  SA 1594. Mr. GRAHAM (for himself and Mr. Isakson) submitted an 
amendment intended to be proposed by him to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. MODIFICATIONS OF CREDIT FOR PRODUCTION FROM 
                   ADVANCED NUCLEAR POWER FACILITIES.

       (a) Treatment of Unutilized Limitation Amounts.--Section 
     45J(b) is amended--
       (1) in paragraph (4), by inserting ``or any amendment to'' 
     after ``enactment of'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Allocation of unutilized limitation.--
       ``(A) In general.--Any unutilized national megawatt 
     capacity limitation shall be allocated by the Secretary under 
     paragraph (3) as rapidly as is practicable after December 31, 
     2020--
       ``(i) first to facilities placed in service on or before 
     such date to the extent that such facilities did not receive 
     an allocation equal to their full nameplate capacity, and
       ``(ii) then to facilities placed in service after such date 
     in the order in which such facilities are placed in service.
       ``(B) Unutilized national megawatt capacity limitation.--
     The term `unutilized national megawatt capacity limitation' 
     means the excess (if any) of--
       ``(i) 6,000 megawatts, over
       ``(ii) the aggregate amount of national megawatt capacity 
     limitation allocated by the Secretary before January 1, 2021, 
     reduced by any amount of such limitation which was allocated 
     to a facility which was not placed in service before such 
     date.
       ``(C) Coordination with other provisions.--In the case of 
     any unutilized national megawatt capacity limitation 
     allocated by the Secretary pursuant to this paragraph--
       ``(i) such allocation shall be treated for purposes of this 
     section in the same manner as an allocation of national 
     megawatt capacity limitation, and
       ``(ii) subsection (d)(1)(B) shall not apply to any facility 
     which receives such allocation.''.
       (b) Transfer of Credit by Certain Public Entities.--
       (1) In general.--Section 45J is amended--
       (A) by redesignating subsection (e) as subsection (f), and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Transfer of Credit by Certain Public Entities.--
       ``(1) In general.--If, with respect to a credit under 
     subsection (a) for any taxable year--
       ``(A) the taxpayer would be a qualified public entity, and
       ``(B) such entity elects the application of this paragraph 
     for such taxable year with respect to all (or any portion 
     specified in such election) of such credit,
     the eligible project partner specified in such election (and 
     not the qualified public entity) shall be treated as the 
     taxpayer for purposes of this title with respect to such 
     credit (or such portion thereof).
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Qualified public entity.--The term `qualified public 
     entity' means--
       ``(i) a Federal, State, or local government entity, or any 
     political subdivision, agency, or instrumentality thereof,
       ``(ii) a mutual or cooperative electric company described 
     in section 501(c)(12) or section 1381(a)(2), or
       ``(iii) a not-for-profit electric utility which has or had 
     received a loan or loan guarantee under the Rural 
     Electrification Act of 1936.
       ``(B) Eligible project partner.--The term `eligible project 
     partner' means--
       ``(i) any person responsible for, or participating in, the 
     design or construction of the advanced nuclear power facility 
     to which the credit under subsection (a) relates,
       ``(ii) any person who participates in the provision of the 
     nuclear steam supply system to the advanced nuclear power 
     facility to which the credit under subsection (a) relates,
       ``(iii) any person who participates in the provision of 
     nuclear fuel to the advanced nuclear power facility to which 
     the credit under subsection (a) relates, or
       ``(iv) any person who has an ownership interest in such 
     facility.
       ``(3) Special rules.--
       ``(A) Application to partnerships.--In the case of a credit 
     under subsection (a) which is determined at the partnership 
     level--
       ``(i) for purposes of paragraph (1)(A), a qualified public 
     entity shall be treated as the taxpayer with respect to such 
     entity's distributive share of such credit, and
       ``(ii) the term `eligible project partner' shall include 
     any partner of the partnership.
       ``(B) Taxable year in which credit taken into account.--In 
     the case of any credit (or portion thereof) with respect to 
     which an election is made under paragraph (1), such credit 
     shall be taken into account in the first taxable year of the 
     eligible project partner ending with, or after, the qualified 
     public entity's taxable year with respect to which the credit 
     was determined.
       ``(C) Treatment of transfer under private use rules.--For 
     purposes of section 141(b)(1), any benefit derived by an 
     eligible project partner in connection with an election under 
     this subsection shall not be taken into account as a private 
     business use.''.
       (2) Special rule for proceeds of transfers for mutual or 
     cooperative electric companies.--Section 501(c)(12) is 
     amended by adding at the end the following new subparagraph:
       ``(I) In the case of a mutual or cooperative electric 
     company described in this paragraph or an organization 
     described in section 1381(a)(2), income received or accrued 
     in connection with an election under section 45J(e)(1) shall 
     be treated as an amount collected from members for the sole 
     purpose of meeting losses and expenses.''.
       (c) Effective Dates.--
       (1) Treatment of unutilized limitation amounts.--The 
     amendment made by subsection (a) shall take effect on the 
     date of the enactment of this Act.
       (2) Transfer of credit by certain public entities.--The 
     amendments made by subsection (b) shall apply to taxable 
     years beginning after December 31, 2017.

[[Page S7411]]

  

                                 ______
                                 
  SA 1595. Mr. GRAHAM submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 13308.
                                 ______
                                 
  SA 1596. Mr. GRAHAM submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 13707.
                                 ______
                                 
  SA 1597. Mr. GRAHAM submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 13402.
                                 ______
                                 
  SA 1598. Ms. COLLINS (for herself and Mr. Portman) submitted an 
amendment intended to be proposed by her to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       Strike section 13611.
                                 ______
                                 
  SA 1599. Mr. INHOFE (for himself, Mr. Blunt, Mr. Lankford, and Mr. 
Cruz) submitted an amendment intended to be proposed by him to the bill 
H.R. 1, to provide for reconciliation pursuant to titles II and V of 
the concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       On page 185, strike lines 1 through 6, and insert the 
     following:
       ``(5) Business interest.--For purposes of this subsection--
       ``(A) In general.--The term `business interest' means any 
     interest paid or accrued on indebtedness properly allocable 
     to a trade or business. Such term shall not include 
     investment interest (within the meaning of subsection (d)).
       ``(B) Exception for interest on pre-2018 indebtedness.--
       ``(i) In general.--Business interest shall not include 
     interest paid or accrued on indebtedness incurred by the 
     taxpayer before January 1, 2018.
       ``(ii) Special rules for refinancing and debt instruments 
     allowing additional borrowing.--Clause (i) shall not apply 
     to--

       ``(I) interest on any indebtedness incurred after December 
     31, 2017, to refinance indebtedness described in clause (i), 
     or
       ``(II) in the case of any debt instrument, credit facility, 
     or other evidence of indebtedness under which additional 
     indebtedness may be issued under the same terms, interest on 
     any indebtedness incurred under such terms after December 31, 
     2017.

                                 ______
                                 
  SA 1600. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       On page 187, between lines 21 and 22, insert the following:
       ``(v) any deduction allowable for depreciation, 
     amortization, or depletion, but only if the amount of the 
     taxpayer's expenditures for property of a character subject 
     to the allowance for depreciation, amortization, or depletion 
     for the taxable year is at least 300 percent of the 
     taxpayer's adjusted taxable income for the taxable year 
     determined without regard to this clause, and
                                 ______
                                 
  SA 1601. Mr. INHOFE (for himself and Mr. Blunt) submitted an 
amendment intended to be proposed by him to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       On page 187, between lines 21 and 22, insert the following:
       ``(v) any deduction allowable for depreciation, 
     amortization, or depletion, and
                                 ______
                                 
  SA 1602. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 13303 and insert the following:

     SEC. 13303. TREATMENT OF LIKE-KIND EXCHANGES.

       (a) In General.--Section 1031(a) is amended by adding at 
     the end the following new paragraph:
       ``(4) Additional exception for disqualified bonus 
     depreciation property.--
       ``(A) In general.--This subsection shall not apply to any 
     exchange in which the property received by the taxpayer is 
     100 percent bonus depreciation property.
       ``(B) 100 percent bonus depreciation property.--For 
     purposes of this paragraph, the term `100 percent bonus 
     depreciation property' mean any property--
       ``(i) which is qualified property (as defined in section 
     168(k)(2)), and
       ``(ii) an allowance of 100 percent or more of the adjusted 
     basis of which was included in the depreciation deduction 
     provided by section 167(a) for the taxable year in which such 
     property was placed in service by the taxpayer.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to exchanges completed after December 31, 2017.
                                 ______
                                 
  SA 1603. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       On page __, strike line __, and insert the following:
       ``(9) Safe harbor for domestic members of worldwide 
     affiliated group.--
       ``(A) In general.--In the case of a taxpayer which is a 
     domestic corporation which is a member of a worldwide 
     affiliated group, this subsection shall not apply to such 
     taxpayer if the ratio of debt to equity of all domestic 
     corporations which are members of such group does not exceed 
     such ratio of all corporations which are members of such 
     group.
       ``(B) Ratio of debt to equity.--For purposes of this 
     paragraph, the ratio of debt to equity means the ratio which 
     total indebtedness bears to total equity, determined in the 
     same manner as subsection (n).
       ``(C) Definition and special rule.--For purposes of this 
     paragraph--
       ``(i) Worldwide affiliated group.--The term `worldwide 
     affiliated group' has the same meaning given such term by 
     subsection (n)(4)(A).
       ``(ii) Domestic members of affiliated group treated as 1 
     taxpayer.--The rule of subsection (n)(5) shall apply.
       ``(10) Cross references.--
                                 ______
                                 
  SA 1604. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. APPLICATION OF MEDICAID ASSET VERIFICATION PROGRAM 
                   TO ALL CATEGORIES OF APPLICANTS FOR MEDICAL 
                   ASSISTANCE.

       (a) In General.--Section 1940(b)(1)(A) of the Social 
     Security Act (42 U.S.C. 1396w(b)(1)(A)) is amended by 
     striking ``on the basis of being aged, blind, or disabled''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.
       (c) Phase-in Implementation.--
       (1) In general.--During the 180 day period that begins on 
     the date of enactment of this Act, the Secretary of Health 
     and Human Services shall require States to submit and 
     implement an asset verification program under section 1940 of 
     the Social Security Act (as amended by subsection (a)) in 
     such manner as is designed to result in the application of 
     such programs, in the aggregate for all such States, to 
     enrollment of approximately, but not less than, the following 
     percentage of enrollees, in the aggregate for all such 
     States, by the end of the fiscal year involved:
       (A) 12.5 percent by the end of fiscal year 2018.
       (B) 25 percent by the end of fiscal year 2019.
       (C) 50 percent by the end of fiscal year 2020.
       (D) 75 percent by the end of fiscal year 2021.
       (E) 100 percent by the end of fiscal year 2022.
       (2) Consideration.--In selecting States under paragraph 
     (1), the Secretary of Health and Human Services shall consult 
     with the States involved and take into account the 
     feasibility of implementing asset verification programs in 
     each such State.
       (3) Construction.--Nothing in paragraph (1) shall be 
     construed as preventing a State from requesting, and the 
     Secretary of Health and Human Services from approving, the 
     implementation of an asset verification program in advance of 
     the deadline otherwise established under such paragraph.
                                 ______
                                 
  SA 1605. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment 
intended to be proposed by him to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       Strike section 11022 and insert the following:

     SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.

       (a) In General.--Section 24 is amended by adding at the end 
     the following new subsection:
       ``(h) Special Rules for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026, this 
     section shall be

[[Page S7412]]

     applied as provided in paragraphs (2) through (8).
       ``(2) Credit amount.--Subsection (a) shall be applied by 
     substituting `$2,000' for `$1,000'.
       ``(3) Limitation.--In lieu of the amount determined under 
     subsection (b)(2), the threshold amount shall be--
       ``(A) in the case of a joint return, $500,000, and
       ``(B) in the case of an individual who is not married or a 
     married individual filing a separate return, $250,000.
       ``(4) Definition of qualifying child.--Paragraph (1) of 
     subsection (c) shall be applied by substituting `18' for 
     `17'.
       ``(5) Partial credit allowed for certain other 
     dependents.--
       ``(A) In general.--The credit determined under subsection 
     (a) (after the application of paragraph (2)) shall be 
     increased by $500 for each dependent of the taxpayer (as 
     defined in section 152) other than a qualifying child 
     described in subsection (c) (after the application of 
     paragraph (4)).
       ``(B) Exception for certain noncitizens.--Subparagraph (A) 
     shall not apply with respect to any individual who would not 
     be a dependent if subparagraph (A) of section 152(b)(3) were 
     applied without regard to all that follows `resident of the 
     United States'.
       ``(6) Portion of credit refundable.--In lieu of subsection 
     (d), the following provisions shall apply for purposes of the 
     credit allowable under this section:
       ``(A) In general.--The aggregate credits allowed to a 
     taxpayer under subpart C shall be increased by the lesser 
     of--
       ``(i) the credit which would be allowed under this section 
     without regard to this paragraph and the limitation under 
     section 26(a), or
       ``(ii) the amount by which the aggregate amount of credits 
     allowed by this subpart (determined without regard to this 
     paragraph) would increase if the limitation imposed by 
     section 26(a) were increased by an amount equal to the sum of 
     the taxpayer's payroll taxes for the taxable year.
       ``(B) Payroll taxes.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     term `payroll taxes' means, with respect to any taxpayer for 
     any taxable year, the amount of the taxes imposed by--

       ``(I) section 1401 on the self-employment income of the 
     taxpayer for the taxable year,
       ``(II) section 3101 on wages received by the taxpayer 
     during the calendar year in which the taxable year begins,
       ``(III) section 3111 on wages paid by an employer with 
     respect to employment of the taxpayer during the calendar 
     year in which the taxable year begins,
       ``(IV) sections 3201(a) and 3211(a) on compensation 
     received by the taxpayer during the calendar year in which 
     the taxable year begins, and
       ``(V) section 3221(a) on compensation paid by an employer 
     with respect to services rendered by the taxpayer during the 
     calendar year in which the taxable year begins.

       ``(ii) Coordination with special refund of payroll taxes.--
     The term `payroll taxes' shall not include any taxes to the 
     extent the taxpayer is entitled to a special refund of such 
     taxes under section 6413(c).
       ``(iii) Special rule.--Any amounts paid pursuant to an 
     agreement under section 3121(l) (relating to agreements 
     entered into by American employers with respect to foreign 
     affiliates) which are equivalent to the taxes referred to in 
     subclause (II) or (III) of clause (i) shall be treated as 
     taxes referred to in such clause.
       ``(C) Exception for taxpayers excluding foreign earned 
     income.--Subparagraph (A) shall not apply to any taxpayer for 
     any taxable year if such taxpayer elects to exclude any 
     amount from gross income under section 911 for such taxable 
     year.
       ``(7) Adjustment for inflation.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2017, the $2,000 amount in paragraph (2) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(B) Rounding.--Any increase determined under subparagraph 
     (A) shall be rounded to the next highest multiple of $100.
       ``(8) Social security number required.--No credit shall be 
     allowed under subsection (d) to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the social 
     security number of such child on the return of tax for the 
     taxable year. For purposes of the preceding sentence, the 
     term `social security number' means a social security number 
     issued to an individual by the Social Security 
     Administration, but only if the social security number is 
     issued to a citizen of the United States or is issued 
     pursuant to subclause (I) (or that portion of subclause (III) 
     that relates to subclause (I)) of section 205(c)(2)(B)(i) of 
     the Social Security Act.''.
       (b) Increase in Corporate Tax Rate.--Subsection (b) of 
     section 11, as amended by section 13001 of this Act, is 
     amended by striking ``20 percent'' and inserting ``22 
     percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1606. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment 
intended to be proposed by him to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       Strike section 11022 and insert the following:

     SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.

       (a) In General.--Section 24 is amended by adding at the end 
     the following new subsection:
       ``(h) Special Rules for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026, this 
     section shall be applied as provided in paragraphs (2) 
     through (8).
       ``(2) Credit amount.--Subsection (a) shall be applied by 
     substituting `$2,000' for `$1,000'.
       ``(3) Limitation.--In lieu of the amount determined under 
     subsection (b)(2), the threshold amount shall be--
       ``(A) in the case of a joint return, $500,000, and
       ``(B) in the case of an individual who is not married or a 
     married individual filing a separate return, $250,000.
       ``(4) Definition of qualifying child.--Paragraph (1) of 
     subsection (c) shall be applied by substituting `18' for 
     `17'.
       ``(5) Partial credit allowed for certain other 
     dependents.--
       ``(A) In general.--The credit determined under subsection 
     (a) (after the application of paragraph (2)) shall be 
     increased by $500 for each dependent of the taxpayer (as 
     defined in section 152) other than a qualifying child 
     described in subsection (c) (after the application of 
     paragraph (4)).
       ``(B) Exception for certain noncitizens.--Subparagraph (A) 
     shall not apply with respect to any individual who would not 
     be a dependent if subparagraph (A) of section 152(b)(3) were 
     applied without regard to all that follows `resident of the 
     United States'.
       ``(6) Portion of credit refundable.--Subsection 
     (d)(1)(B)(i) shall be applied by substituting--
       ``(A) `15.3 percent' for `15 percent', and
       ``(B) `$0' for `$3,000'.
       ``(7) Adjustment for inflation.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2017, the $2,000 amount in paragraph (2) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(B) Rounding.--Any increase determined under subparagraph 
     (A) shall be rounded to the next highest multiple of $100.
       ``(8) Social security number required.--No credit shall be 
     allowed under subsection (d) to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the social 
     security number of such child on the return of tax for the 
     taxable year. For purposes of the preceding sentence, the 
     term `social security number' means a social security number 
     issued to an individual by the Social Security 
     Administration, but only if the social security number is 
     issued to a citizen of the United States or is issued 
     pursuant to subclause (I) (or that portion of subclause (III) 
     that relates to subclause (I)) of section 205(c)(2)(B)(i) of 
     the Social Security Act.''.
       (b) Increase in Corporate Tax Rate.--Subsection (b) of 
     section 11, as amended by section 13001 of this Act, is 
     amended by striking ``20 percent'' and inserting ``22 
     percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1607. Mr. GARDNER submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part IV of subtitle A of title I, insert the 
     following:

     SEC. 11033. CONSOLIDATION OF EDUCATION SAVINGS RULES.

       (a) No New Contributions to Coverdell Education Savings 
     Accounts.--Section 530(b)(1)(A) is amended--
       (1) by striking ``or'' at the end of clause (ii),
       (2) by striking the period at the end of clause (iii) and 
     inserting ``, or'', and
       (3) by adding at the end the following new clause:
       ``(iv) except in the case of rollover contributions, after 
     December 31, 2017.''.
       (b) Rollovers From Coverdell Education Savings Accounts to 
     Qualified Tuition Programs.--Section 530(d)(5) is amended--
       (1) by inserting ``or a qualified tuition program (as 
     defined in section 529(b))'' after ``into another Coverdell 
     education savings account'', and
       (2) by inserting ``(by purchase or contribution)'' after 
     ``is paid''.
       (c) Distributions From Qualified Tuition Programs for 
     Certain Expenses Associated With Registered Apprenticeship 
     Programs.--Section 529(e)(3) is amended by adding at the end 
     the following new subparagraph:
       ``(C) Certain expenses associated with registered 
     apprenticeship programs.--The term `qualified higher 
     education expenses' shall include books, supplies, and 
     equipment required for the enrollment or attendance of

[[Page S7413]]

     a designated beneficiary in an apprenticeship program 
     registered and certified with the Secretary of Labor under 
     section 1 of the National Apprenticeship Act (29 U.S.C. 
     50).''.
       (d) Special Rules for 529 Programs With Respect to 
     Elementary and Secondary Tuition and Qualified Early 
     Education Expenses.--Section 529(e)(3), as amended by 
     subsection (c), is amended by adding at the end the following 
     new subparagraph:
       ``(D) Special rules permitting limited treatment of 
     elementary and secondary tuition and qualified early 
     education expenses.--
       ``(i) In general.--Except as provided in clause (ii)--

       ``(I) expenses for tuition in connection with enrollment or 
     attendance at an elementary or secondary public, private, or 
     religious school, and
       ``(II) qualified early education expenses,

     shall be treated as qualified higher education expenses.
       ``(ii) Limitation.--If the aggregate amount of cash 
     distributions from all qualified tuition programs described 
     in subsection (b)(1)(A)(ii) with respect to a beneficiary for 
     expenses described in clause (i) during any taxable year 
     exceeds $10,000, such excess shall be treated for purposes of 
     subsection (c)(3) as distributions in excess of the qualified 
     higher education expenses of the beneficiary.
       ``(iii) Qualified early education expenses.--For purposes 
     of this subparagraph, the term `qualified early education 
     expenses' means expenses for providing educational and other 
     care to a child under age 5, as determined under the law of 
     the State, pursuant to attendance at a school or facility 
     licensed in the State for such purpose.''.
       (e) Deduction for Contributions for Elementary and 
     Secondary Tuition and Qualified Early Education Expenses.--
     Section 529(e)(3)(D), as added by subsection (d), is amended 
     by adding at the end the following new clause:
       ``(iv) Deduction for contributions.--There shall be allowed 
     a deduction, as if allowed under part VI of subchapter A, in 
     an amount equal to any contribution made during the taxable 
     year to a qualified tuition program described in subsection 
     (b)(1)(A)(ii) which is designated for the qualified early 
     education expenses of a beneficiary, except that the 
     aggregate of the amounts taken into account with respect to 
     the same beneficiary shall not exceed $10,000.''.
       (f) Career and Technical Education Expenses.--Section 
     529(e)(3), as amended by subsections (c) and (d), is amended 
     by adding at the end the following new subparagraph:
       ``(E) Treatment of career and technical education 
     expenses.--Such term shall include expenses for books, 
     supplies, and equipment required for enrollment or attendance 
     of a designated beneficiary in a career and technical 
     education program (as defined in section 3 of the Carl D. 
     Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
     2302)).''.
       (g) Industry Intermediary Education Expenses.--Section 
     529(e)(3), as amended by the preceding subsections, is 
     amended by adding at the end the following new subparagraph:
       ``(F) Treatment of industry intermediary education 
     expenses.--
       ``(i) In general.--Such term shall include expenses for 
     books, supplies, and equipment required for enrollment or 
     attendance of a designated beneficiary in an industry 
     intermediary education program.
       ``(ii) Industry intermediary education program.--For 
     purposes of this subparagraph, the term `industry 
     intermediary education program' means any entity that--

       ``(I) in order to accelerate apprenticeship program 
     development and help establish new apprenticeship 
     partnerships at the national, State, or regional level, 
     serves as a conduit between an employer and an entity, such 
     as an industry partner, the Department of Labor, or a State 
     agency responsible for workforce development programs,
       ``(II) demonstrates a capacity to work with employers and 
     other key partners to identify workforce trends and foster 
     public-private funding to establish new apprenticeship 
     programs, and
       ``(III) is a business, a consortium of businesses, a 
     business-related nonprofit organization (including industry 
     associations and business federations), a private 
     organization functioning as a workforce intermediary for the 
     express purpose of serving the needs of businesses (including 
     community-based nonprofit service providers and industry-
     aligned training providers), or a consortium of any of such 
     entities.''.

       (h) Effective Date.--The amendments made by this section 
     shall apply to contributions made and distributions paid 
     after December 31, 2017.
                                 ______
                                 
  SA 1608. Mr. GARDNER submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part IV of subtitle A of title I, insert the 
     following:

     SEC. 11033. CONSOLIDATION OF EDUCATION SAVINGS RULES.

       (a) No New Contributions to Coverdell Education Savings 
     Account.--Section 530(b)(1)(A) is amended to read as follows:
       ``(A) Except in the case of rollover contributions, no 
     contribution will be accepted after December 31, 2017.''.
       (b) Limited Distribution Allowed for Elementary and 
     Secondary Tuition.--
       (1) In general.--Section 529(c) is amended by adding at the 
     end the following new paragraph:
       ``(7) Treatment of elementary and secondary tuition.--Any 
     reference in this subsection to the term `qualified higher 
     education expense' shall include a reference to expenses for 
     tuition in connection with enrollment at an elementary or 
     secondary school.''.
       (2) Limitation.--Section 529(e)(3)(A) is amended by adding 
     at the end the following: ``The amount of cash distributions 
     from all qualified tuition programs described in subsection 
     (b)(1)(A)(ii) with respect to a beneficiary during any 
     taxable year shall, in the aggregate, include not more than 
     $10,000 in expenses for tuition incurred during the taxable 
     year in connection with the enrollment or attendance of the 
     beneficiary as an elementary or secondary school student at a 
     public, private, or religious school.''.
       (c) Rollovers to Qualified Tuition Programs Permitted.--
     Section 530(d)(5) is amended by inserting ``, or into (by 
     purchase or contribution) a qualified tuition program (as 
     defined in section 529),'' after ``into another Coverdell 
     education savings account''.
       (d) Distributions From Qualified Tuition Programs for 
     Certain Expenses Associated With Registered Apprenticeship 
     Programs.--Section 529(e)(3) is amended by adding at the end 
     the following new subparagraph:
       ``(C) Certain expenses associated with registered 
     apprenticeship programs.--The term `qualified higher 
     education expenses' shall include books, supplies, and 
     equipment required for the enrollment or attendance of a 
     designated beneficiary in an apprenticeship program 
     registered and certified with the Secretary of Labor under 
     section 1 of the National Apprenticeship Act (29 U.S.C. 
     50).''.
       (e) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to contributions made after December 31, 2017.
       (2) Rollovers to qualified tuition programs.--The 
     amendments made by subsection (b) shall apply to 
     distributions after December 31, 2017.
                                 ______
                                 
  SA 1609. Mr. GARDNER submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part IV of subtitle C of title I, add the 
     following:

     SEC. 13311. ALLOWANCE OF DEDUCTIONS AND CREDITS RELATING TO 
                   EXPENDITURES IN CONNECTION WITH MARIJUANA SALES 
                   CONDUCTED IN COMPLIANCE WITH STATE LAW.

       (a) In General.--Section 280E is amended by inserting 
     before the period at the end the following: ``, unless such 
     trade or business consists of marijuana sales conducted in 
     compliance with State law''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to taxable years ending after the 
     date of the enactment of this Act.
                                 ______
                                 
  SA 1610. Mr. GARDNER submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. TAX-FREE PRODUCTION OF KOMBUCHA.

       (a) Exception From Definition of Brewer.--Subsection (d) of 
     section 5052 is amended to read as follows:
       ``(d) Brewer.--
       ``(1) In general.--For purposes of this chapter, the term 
     `brewer' means any person who brews beer or produces beer for 
     sale.
       ``(2) Exception.--The term `brewer' shall not include any 
     person who--
       ``(A) produces only beer exempt from tax under subsection 
     (e) of section 5053, or
       ``(B) produces only kombucha exempt from tax under 
     subsection (i) of such section.''.
       (b) Exemption From Tax.--Section 5053 is amended--
       (1) by redesignating subsection (i) as subsection (j), and
       (2) by inserting after subsection (h) the following new 
     subsection:
       ``(i) Production of Kombucha.--
       ``(1) In general.--Subject to regulation prescribed by the 
     Secretary, any person may, without payment of tax, produce 
     kombucha for consumption or sale.
       ``(2) Definition.--For purposes of this chapter, the term 
     `kombucha' means a beverage which--
       ``(A) is fermented solely by a symbiotic culture of 
     bacteria and yeast,
       ``(B) contains not more than 1.25 percent of alcohol by 
     volume,
       ``(C) is sold or offered for sale as kombucha, and
       ``(D) is derived from--
       ``(i) sugar, malt or malt substitute, tea, or coffee, and
       ``(ii) not more than 20 percent other wholesome 
     ingredients.''.
                                 ______
                                 
  SA 1611. Ms. COLLINS submitted an amendment intended to be proposed 
by

[[Page S7414]]

her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part III of subtitle A of title I, insert the 
     following:

     SEC. 11030. TEMPORARY REDUCTION IN MEDICAL EXPENSE DEDUCTION 
                   FLOOR.

       (a) In General.--Subsection (f) of section 213 is amended 
     to read as follows:
       ``(f) Special Rules for 2013 Through 2018.--In the case of 
     any taxable year--
       ``(1) beginning after December 31, 2012, and ending before 
     January 1, 2017, in the case of a taxpayer if such taxpayer 
     or such taxpayer's spouse has attained age 65 before the 
     close of such taxable year, and
       ``(2) beginning after December 31, 2016, and ending before 
     January 1, 2019, in the case of any taxpayer,
     subsection (a) shall be applied with respect to a taxpayer by 
     substituting `7.5 percent' for `10 percent'.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2016.
                                 ______
                                 
  SA 1612. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part III of subtitle A of title I, insert the 
     following:

     SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE TAX CREDIT.

       (a) In General.--The Internal Revenue Code of 1986 is 
     amended--
       (1) by redesignating section 21 as section 36C, and
       (2) by moving section 36C, as so redesignated, from subpart 
     A of part IV of subchapter A of chapter 1 to the location 
     immediately before section 37 in subpart C of part IV of 
     subchapter A of chapter 1.
       (b) Adjustment for Inflation.--Section 36C, as redesignated 
     by subsection (a), is amended--
       (1) by redesignating subsection (f) as subsection (g), and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2017, each of the dollar amounts in 
     subsections (a)(2) and (c) shall be increased by an amount 
     equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(2) Rounding.--If any increase determined under paragraph 
     (1) is not a multiple of $50, such increase shall be rounded 
     to the nearest multiple of $50.''.
       (c) Technical Amendments.--
       (1) Paragraph (1) of section 23(f) is amended by striking 
     ``21(e)'' and inserting ``36C(e)''.
       (2) Paragraph (6) of section 35(g) is amended by striking 
     ``21(e)'' and inserting ``36C(e)''.
       (3) Paragraph (1) of section 36C(a) (as redesignated by 
     subsection (a)) is amended by striking ``this chapter'' and 
     inserting ``this subtitle''.
       (4) Subparagraph (C) of section 129(a)(2) is amended by 
     striking ``section 21(e)'' and inserting ``section 36C(e)''.
       (5) Paragraph (2) of section 129(b) is amended by striking 
     ``section 21(d)(2)'' and inserting ``section 36C(d)(2)''.
       (6) Paragraph (1) of section 129(e) is amended by striking 
     ``section 21(b)(2)'' and inserting ``section 36C(b)(2)''.
       (7) Subsection (e) of section 213 is amended by striking 
     ``section 21'' and inserting ``section 36C''.
       (8) Subparagraph (H) of section 6213(g)(2) is amended by 
     striking ``section 21'' and inserting ``section 36C''.
       (9) Subparagraph (L) of section 6213(g)(2) is amended by 
     striking ``section 21, 24, or 32,'' and inserting ``section 
     24, 32, or 36C,''.
       (10) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting ``36C,'' after ``36B,''.
       (11) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 36B the following:

``Sec. 36C. Expenses for household and dependent care services 
              necessary for gainful employment.''.

       (12) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 21.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1613. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part III of subtitle A of title I, insert the 
     following:

     SEC. 11030. TEMPORARY REDUCTION IN MEDICAL EXPENSE DEDUCTION 
                   FLOOR.

       (a) In General.--Subsection (f) of section 213 is amended 
     to read as follows:
       ``(f) Special Rules for 2013 Through 2018.--In the case of 
     any taxable year--
       ``(1) beginning after December 31, 2012, and ending before 
     January 1, 2017, in the case of a taxpayer if such taxpayer 
     or such taxpayer's spouse has attained age 65 before the 
     close of such taxable year, and
       ``(2) beginning after December 31, 2016, and ending before 
     January 1, 2019, in the case of any taxpayer,
     subsection (a) shall be applied with respect to a taxpayer by 
     substituting `7.5 percent' for `10 percent'.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2016.
                                 ______
                                 
  SA 1614. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part III of subtitle A of title I, insert the 
     following:

     SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE TAX CREDIT.

       (a) In General.--The Internal Revenue Code of 1986 is 
     amended--
       (1) by redesignating section 21 as section 36C, and
       (2) by moving section 36C, as so redesignated, from subpart 
     A of part IV of subchapter A of chapter 1 to the location 
     immediately before section 37 in subpart C of part IV of 
     subchapter A of chapter 1.
       (b) Adjustment for Inflation.--Section 36C, as redesignated 
     by subsection (a), is amended--
       (1) by redesignating subsection (f) as subsection (g), and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2017, each of the dollar amounts in 
     subsections (a)(2) and (c) shall be increased by an amount 
     equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(2) Rounding.--If any increase determined under paragraph 
     (1) is not a multiple of $50, such increase shall be rounded 
     to the nearest multiple of $50.''.
       (c) Technical Amendments.--
       (1) Paragraph (1) of section 23(f) is amended by striking 
     ``21(e)'' and inserting ``36C(e)''.
       (2) Paragraph (6) of section 35(g) is amended by striking 
     ``21(e)'' and inserting ``36C(e)''.
       (3) Paragraph (1) of section 36C(a) (as redesignated by 
     subsection (a)) is amended by striking ``this chapter'' and 
     inserting ``this subtitle''.
       (4) Subparagraph (C) of section 129(a)(2) is amended by 
     striking ``section 21(e)'' and inserting ``section 36C(e)''.
       (5) Paragraph (2) of section 129(b) is amended by striking 
     ``section 21(d)(2)'' and inserting ``section 36C(d)(2)''.
       (6) Paragraph (1) of section 129(e) is amended by striking 
     ``section 21(b)(2)'' and inserting ``section 36C(b)(2)''.
       (7) Subsection (e) of section 213 is amended by striking 
     ``section 21'' and inserting ``section 36C''.
       (8) Subparagraph (H) of section 6213(g)(2) is amended by 
     striking ``section 21'' and inserting ``section 36C''.
       (9) Subparagraph (L) of section 6213(g)(2) is amended by 
     striking ``section 21, 24, or 32,'' and inserting ``section 
     24, 32, or 36C,''.
       (10) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting ``36C,'' after ``36B,''.
       (11) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 36B the following:

``Sec. 36C. Expenses for household and dependent care services 
              necessary for gainful employment.''.

       (12) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 21.
       (d) Effective Date.--The amendments made by subsections 
     (a), (b), and (c) shall apply to taxable years beginning 
     after December 31, 2017.
                                 ______
                                 
  SA 1615. Mr. HELLER (for himself and Mr. Cornyn) submitted an 
amendment intended to be proposed by him to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the end of part III of subtitle D of title I, add the 
     following:

     SEC. 14506. INTERNATIONAL REGULATED INVESTMENT COMPANIES.

       (a) In General.--Subchapter N of chapter 1 is amended by 
     redesignating part V as part VI and inserting after part IV 
     the following new part:

         ``PART V--INTERNATIONAL REGULATED INVESTMENT COMPANIES

``Sec. 998. Definition of international regulated investment company.
``Sec. 998A. Taxation of IRICs.
``Sec. 998B. Other rules.

     ``SEC. 998. DEFINITION OF INTERNATIONAL REGULATED INVESTMENT 
                   COMPANY.

       ``(a) General Rule.--For purposes of this title, the terms 
     `international regulated investment company' and `IRIC' mean, 
     with respect to any taxable year, a domestic corporation 
     which, at all times during the taxable year, meets the 
     following requirements:

[[Page S7415]]

       ``(1) The corporation is registered under the Investment 
     Company Act of 1940.
       ``(2) Except as provided in subsection (c), the corporation 
     holds no assets other than the stock of a single regulated 
     investment company--
       ``(A) to which part I of subchapter M applies, and
       ``(B) which is not a qualified investment entity (as 
     defined in section 897(h)(4)(A)(ii))).
       ``(3) All outstanding stock of the corporation is held by 
     nonresident alien individuals (and their foreign estates) and 
     qualified foreign pension funds (within the meaning of 
     section 897(l)(2)).
       ``(4) The corporation has in effect an election to be 
     treated as an IRIC.
       ``(b) Election.--An election to be treated as an IRIC shall 
     apply to the taxable year for which made and all subsequent 
     taxable years until terminated. Such election shall be made 
     for any taxable year not later than the due date (with 
     extensions) for the return of tax imposed by this subtitle 
     for the taxable year.
       ``(c) Permitted Assets.--For purposes of subsection (a)(2), 
     an IRIC may hold--
       ``(1) an amount of cash and cash equivalents reasonably 
     necessary or appropriate for the corporation to conduct its 
     normal affairs, and
       ``(2) such other assets as are incidental to the 
     corporation's conduct of its normal affairs or otherwise 
     allowed by the Secretary.
       ``(d) Termination.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     a corporation fails to meet the requirements of subsection 
     (a) at any time during the taxable year, the corporation 
     shall not be treated as an IRIC for such taxable year.
       ``(2) Inadvertent failure.--
       ``(A) In general.--A corporation which fails to meet the 
     requirements of subsection (a) for any taxable year shall 
     nevertheless be considered to have satisfied the requirements 
     of such subsection for such taxable year if--
       ``(i) the failure was due to reasonable cause and not due 
     to willful neglect,
       ``(ii) no later than 30 days after the discovery of the 
     event causing such failure, the corporation meets the 
     requirements of subsection (a),
       ``(iii) in the case of a failure to meet the requirements 
     of subsection (a)(3) for any period, the failure was caused 
     by persons not described therein holding, in the aggregate, 
     less than 1 percent of the stock (by value) of the 
     corporation, and
       ``(iv) the corporation pays the additional tax imposed by 
     reason of subparagraph (B).
       ``(B) Imposition of additional tax on certain failures.--In 
     the case of a failure described in subparagraph (A)(iii) for 
     any taxable year, the tax imposed by section 998A(a) on the 
     IRIC shall be equal to the sum of --
       ``(i) the tax determined under such section (without regard 
     to this subparagraph) on amounts received by the IRIC for the 
     taxable year other than amounts so received which are 
     attributable to stock held by persons not described in 
     subsection (a)(3) for the period so held, plus
       ``(ii) 100 percent of the amounts received which are so 
     attributable.
     The Secretary shall prescribe rules for the proper allocation 
     of deductions to amounts described in this subparagraph.

     ``SEC. 998A. TAXATION OF IRICS.

       ``(a) In General.--In the case of an IRIC, there shall be 
     imposed, in lieu of the tax imposed by section 11, a tax 
     equal to 30 percent of the excess of--
       ``(1) the amounts received by the IRIC which (before the 
     application of any treaty) would be subject to tax under 
     section 871(a) if received by a nonresident alien individual, 
     over
       ``(2) the deductions properly allocable to such amounts 
     (other than deductions allowed under sections 163, 172, 243, 
     and such other provisions as the Secretary may prescribe in 
     regulations to prevent abuse).
       ``(b) Treaties.--
       ``(1) In general.--In the case of a treaty IRIC, subsection 
     (a) shall be applied by substituting `15 percent' for `30 
     percent'.
       ``(2) Treaty iric.--For purposes of paragraph (1), the term 
     `treaty IRIC' means an IRIC--
       ``(A) all the outstanding stock of which is held by persons 
     resident in a country that has in effect with the United 
     States an income tax treaty pursuant to which such persons 
     would, by reason of section 894(a), be subject to tax under 
     section 871(a) on dividends at a rate not greater than 15 
     percent, and
       ``(B) which elects to be a treaty IRIC.
     Rules similar to the rules of section 998(b) shall apply to 
     an election under subparagraph (B).

     ``SEC. 998B. OTHER RULES.

       ``(a) Coordination With Subchapter M.--Except as provided 
     in subsection (e), an IRIC shall not be treated as a 
     regulated investment company for purposes of this title.
       ``(b) No Carryovers.--
       ``(1) Carryovers to iric years.--No carryforward, and no 
     carryback, arising for a taxable year for which the 
     corporation is not an IRIC may be carried to a taxable year 
     for which such corporation is an IRIC.
       ``(2) Carryovers from iric years.--No carryforward, and no 
     carryback, shall arise for a taxable year for which a 
     corporation is an IRIC.
       ``(c) Certain Taxes Not to Apply.--Sections 531 and 541 
     shall not apply to an IRIC.
       ``(d) Credits Not Allowed.--No credits under this chapter 
     shall be allowed to an IRIC.
       ``(e) Redemptions.--In applying section 302(b)(5), an IRIC 
     shall be treated as a publicly offered regulated investment 
     company.
       ``(f) Reliance on Certification.--
       ``(1) Reliance.--With respect to the requirement in 
     sections 998(a)(3) and 998A(b)(2)(A), a corporation may rely 
     on the certification of its shareholders, unless or until 
     such time that the corporation has reason to know that the 
     certification is false or is no longer true.
       ``(2) Redemption upon false certification.--If a 
     corporation has reason to know that the certification made by 
     one of its shareholders is false or is no longer true, the 
     corporation must redeem the stock held by such shareholder as 
     soon as reasonably practicable (and in no case more than 30 
     days after the corporation obtains such reason to know). 
     Failure to redeem such stock in a timely manner shall result 
     in the corporation failing the requirement of section 
     998(a)(3) or 998A(b)(2)(A), whichever is applicable.
       ``(3) Certification by certain institutions.--For purposes 
     of this subsection, a certification with regard to a person 
     which is made by an institution described in section 
     871(h)(5)(B) in a form satisfactory to the Secretary under 
     section 871(h) shall be deemed to be a certification by such 
     person.''.
       (b) Clerical Amendment.--The table of parts for subchapter 
     N of chapter 1 is amended by redesignating the item relating 
     to part V as relating to part VI and inserting after the item 
     relating to part IV the following new item:

       ``PART V--International Regulated Investment Companies''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 1616. Mr. HELLER submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. EXTENSION OF GEOTHERMAL ENERGY PROPERTY.

       (a) Credit Percentage for Geothermal Energy Property.--
     Section 48(a)(2)(A)(i)(II) is amended by striking ``paragraph 
     (3)(A)(i)'' and inserting ``clause (i) or (iii) of paragraph 
     (3)(A)''.
       (b) Phaseout of 30-Percent Credit Rate for Geothermal 
     Energy Property.--Section 48(a)(6) is amended--
       (1) in the heading, by inserting ``and geothermal'' after 
     ``solar'';
       (2) in subparagraph (A), by striking ``paragraph 
     (3)(A)(i)'' and inserting ``clause (i) or (iii) of paragraph 
     (3)(A)''; and
       (3) in subparagraph (B), by striking ``property energy 
     property described in paragraph (3)(A)(i)'' and inserting 
     ``energy property described in clause (i) or (iii) of 
     paragraph (3)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2017.
                                 ______
                                 
  SA 1617. Mr. HELLER submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. TECHNOLOGIES FOR ENERGY JOBS AND SECURITY.

       (a) Extension and Phaseout of Residential Energy Efficient 
     Property.--
       (1) Extension.--Section 25D(h) is amended by striking 
     ``December 31, 2016 (December 31, 2021, in the case of any 
     qualified solar electric property expenditures and qualified 
     solar water heating property expenditures)'', and inserting 
     ``December 31, 2021''.
       (2) Phaseout.--
       (A) In general.--Paragraphs (3), (4), and (5) of section 
     25D(a) are amended by striking ``30 percent'' each place it 
     appears and inserting ``the applicable percentage''.
       (B) Conforming amendment.--Section 25D(g) is amended by 
     striking ``paragraphs (1) and (2) of''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on January 1, 2017.
       (b) Extension and Phaseout of Energy Credit.--
       (1) Credit percentage for geothermal energy property.--
     Section 48(a)(2)(A)(i)(II) is amended by striking ``paragraph 
     (3)(A)(i)'' and inserting ``clause (i) or (iii) of paragraph 
     (3)(A)''.
       (2) Extension of solar and thermal energy property.--
     Section 48(a)(3)(A) is amended--
       (A) in clause (ii) by striking ``periods ending before 
     January 1, 2017'' and inserting ``property the construction 
     of which begins before January 1, 2022''; and
       (B) in clause (vii) by striking ``periods ending before 
     January 1, 2017'' and inserting ``property the construction 
     of which begins before January 1, 2022''.
       (3) Phaseout of 30-percent credit rate for geothermal 
     energy property.--Section 48(a)(6) is amended--

[[Page S7416]]

       (A) in the heading, by inserting ``and geothermal'' after 
     ``solar'';
       (B) in subparagraph (A), by striking ``paragraph 
     (3)(A)(i)'' and inserting ``clause (i) or (iii) of paragraph 
     (3)(A)''; and
       (C) in subparagraph (B), by striking ``property energy 
     property described in paragraph (3)(A)(i)'' and inserting 
     ``energy property described in clause (i) or (iii) of 
     paragraph (3)(A)''.
       (4) Phaseout of 30-percent credit rate for fiber-optic 
     solar, qualified fuel cell, and qualified small wind energy 
     property.--
       (A) In general.--Section 48(a) is amended by adding the 
     following:
       ``(7) Phaseout for fiber-optic solar, qualified fuel cell, 
     and qualified small wind energy property.--In the case of any 
     energy property described in paragraph (3)(A)(ii), qualified 
     fuel cell property, or qualified small wind property, the 
     energy percentage determined under paragraph (2) shall be 
     equal to--
       ``(A) in the case of any property the construction of which 
     begins after December 31, 2019, and before January 1, 2021, 
     26 percent, and
       ``(B) in the case of any property the construction of which 
     begins after December 31, 2020, and before January 1, 2022, 
     22 percent.''.
       (B) Conforming amendment.--Section 48(a)(2)(A) is amended 
     by striking ``paragraph (6)'' and inserting ``paragraphs (6) 
     and (7)''.
       (5) Extension of qualified fuel cell property.--Section 
     48(c)(1)(D) is amended by striking ``for any period after 
     December 31, 2016'' and inserting ``the construction of which 
     does not begin before January 1, 2022''.
       (6) Extension of qualified microturbine property.--Section 
     48(c)(2)(D) is amended by striking ``for any period after 
     December 31, 2016'' and inserting ``the construction of which 
     does not begin before January 1, 2022''.
       (7) Extension of combined heat and power system property.--
     Section 48(c)(3)(A)(iv) is amended by striking ``which is 
     placed in service before January 1, 2017'' and inserting 
     ``the construction of which begins before January 1, 2022''.
       (8) Extension of qualified small wind energy property.--
     Section 48(c)(4)(C) is amended by striking ``for any period 
     after December 31, 2016'' and inserting ``the construction of 
     which does not begin before January 1, 2022''.
       (9) Effective date.--The amendments made by this subsection 
     shall take effect on January 1, 2017.
       (c) Waste Heat to Power Property.--
       (1) In general.--
       (A) Introduction of waste to heat power energy property.--
     Section 48(a)(3)(A) is amended--
       (i) at the end of clause (vi) by striking ``or''; and
       (ii) at the end of clause (vii) by inserting ``or'' after 
     the comma; and
       (iii) by adding the following:
       ``(viii) waste heat to power property,''.
       (B) Definitions and limitations.--Section 48(c) is amended 
     by adding the following:
       ``(5) Waste heat to power property.--
       ``(A) In general.--The term `waste heat to power property' 
     means property--
       ``(i) comprising a system which generates electricity 
     through the recovery of a qualified waste heat resource, and
       ``(ii) the construction of which begins before January 1, 
     2022.
       ``(B) Qualified waste heat resource.--The term `qualified 
     waste heat resource' means--
       ``(i) exhaust heat or flared gas from an industrial process 
     that does not have, as its primary purpose, the production of 
     electricity, and
       ``(ii) a pressure drop in any gas for an industrial or 
     commercial process.
       ``(C) Limitations.--
       ``(i) In general.--For purposes of subsection (a)(1), the 
     basis of any waste heat to power property taken into account 
     under this section shall not exceed the excess of--

       ``(I) the basis of such property, over
       ``(II) the fair market value of comparable property which 
     does not have the capacity to capture and convert a qualified 
     waste heat resource to electricity.

       ``(ii) Capacity limitation.--The term `waste heat to power 
     property' shall not include any property comprising a system 
     if such system has a capacity in excess of 50 megawatts.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to periods after December 31, 2016, in taxable 
     years ending after such date, under rules similar to the 
     rules of section 48(m) of the Internal Revenue Code of 1986 
     (as in effect on the day before the date of the enactment of 
     the Revenue Reconciliation Act of 1990).
                                 ______
                                 
  SA 1618. Mr. HATCH (for himself and Ms. Murkowski) submitted an 
amendment intended to be proposed by him to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       Strike all after the first word and insert the following:

                                TITLE I

     SEC. 11000. SHORT TITLE, ETC.

       (a) Short Title.--This title may be cited as the ``Tax Cuts 
     and Jobs Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title 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.

                   Subtitle A--Individual Tax Reform

                        PART I--TAX RATE REFORM

     SEC. 11001. MODIFICATION OF RATES.

       (a) In General.--Section 1 is amended by adding at the end 
     the following new subsection:
       ``(j) Modifications for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026--
       ``(A) subsection (i) shall not apply, and
       ``(B) this section (other than subsection (i)) shall be 
     applied as provided in paragraphs (2) through (7).
       ``(2) Rate tables.--
       ``(A) Married individuals filing joint returns and 
     surviving spouses.--The following table shall be applied in 
     lieu of the table contained in subsection (a):

``If taxable income is:                                     The tax is:
10% of taxable income..................................................
$1,905, plus 12% of the excess over $19,050............................
$8,907, plus 22% of the excess over $77,400............................
$22,679, plus 24% of the excess over $140,000..........................
$65,879, plus 32% of the excess over $320,000..........................
$91,479, plus 35% of the excess over $400,000..........................
$301,479 plus 38.5% of the excess over $1,000,000......................
       ``(B) Heads of households.--The following table shall be 
     applied in lieu of the table contained in subsection (b):

``If taxable income is:                                     The tax is:
10% of taxable income..................................................
$1,360, plus 12% of the excess over $13,600............................
$5,944, plus 22% of the excess over $51,800............................
$9,948, plus 24% of the excess over $70,000............................
$31,548, plus 32% of the excess over $160,000..........................
$44,348, plus 35% of the excess over $200,000..........................
$149,348, plus 38.5% of the excess over $500,000.......................
       ``(C) Unmarried individuals other than surviving spouses 
     and heads of households.--The following table shall be 
     applied in lieu of the table contained in subsection (c):

``If taxable income is:                                     The tax is:
10% of taxable income..................................................
$952.50, plus 12% of the excess over $9,525............................
$4,453.50, plus 22% of the excess over $38,700.........................
$11,339.50, plus 24% of the excess over $70,000........................
$32,939.50, plus 32% of the excess over $160,000.......................
$45,739.50, plus 35% of the excess over $200,000.......................
$150,739.50, plus 38.5% of the excess over $500,000....................
       ``(D) Married individuals filing separate returns.--The 
     following table shall be applied in lieu of the table 
     contained in subsection (d):

``If taxable income is:                                     The tax is:
10% of taxable income..................................................
$952.50, plus 12% of the excess over $9,525............................
$4,453.50, plus 22% of the excess over $38,700.........................
$11,339.50, plus 24% of the excess over $70,000........................
$32,939.50, plus 32% of the excess over $160,000.......................
$45,739.50, plus 35% of the excess over $200,000.......................
$150,739.50, plus 38.5% of the excess over $500,000....................
       ``(E) Estates and trusts.--The following table shall be 
     applied in lieu of the table contained in subsection (e):

``If taxable income is:                                     The tax is:
10% of taxable income..................................................
$255, plus 24% of the excess over $2,550...............................
$1,839, plus 35% of the excess over $9,150.............................
$3,011.50, plus 38.5% of the excess over $12,500.......................
       ``(F) References to rate tables.--Any reference in this 
     title to a rate of tax under subsection (c) shall be treated 
     as a reference to the corresponding rate bracket under 
     subparagraph (C) of this paragraph, except that the reference 
     in section 3402(q)(1) to the third lowest rate of tax 
     applicable under subsection (c) shall be treated as a 
     reference to the fourth lowest rate of tax under subparagraph 
     (C).
       ``(3) Adjustments, elimination of marriage penalty; etc.--
       ``(A) No adjustment in 2018.--The tables contained in 
     paragraph (2) shall apply without adjustment for taxable 
     years beginning after December 31, 2017, and before January 
     1, 2019.
       ``(B) Subsequent years.--For taxable years beginning after 
     December 31, 2018, the Secretary shall prescribe tables which 
     shall apply in lieu of the tables contained in paragraph (2) 
     in the same manner as under paragraphs (1) and (2) of 
     subsection (f), except that in prescribing such tables--
       ``(i) subsection (f)(3) shall be applied by substituting 
     `calendar year 2017' for `calendar year 2016' in subparagraph 
     (A)(ii) thereof, and
       ``(ii) subsection (f)(7) shall not apply and--

       ``(I) the maximum taxable income in each of the rate 
     brackets in the table contained in paragraph (2)(A) (and the 
     minimum taxable

[[Page S7417]]

     income in the next higher taxable income bracket with respect 
     to each such bracket in such table) shall be 200 percent of 
     the maximum taxable income in the corresponding rate bracket 
     in the table contained in paragraph (2)(C) (after any other 
     adjustment under paragraph (3)), and
       ``(II) the comparable taxable income amounts in the table 
     contained in paragraph (2)(D) shall be \1/2\ of the amounts 
     determined under subparagraph (A).

       ``(4) Special rules for certain children with unearned 
     income.--
       ``(A) In general.--In the case of a child to whom 
     subsection (g) applies for the taxable year, the rules of 
     subparagraphs (B) and (C) shall apply in lieu of the rule 
     under subsection (g)(1).
       ``(B) Modifications to applicable rate brackets.--In 
     determining the amount of tax imposed by this section for the 
     taxable year on a child described in subparagraph (A), the 
     income tax table otherwise applicable under this subsection 
     to the child shall be applied with the following 
     modifications:
       ``(i) 24-percent bracket.--The maximum taxable income which 
     is taxed at a rate below 24 percent shall not be more than 
     the earned taxable income of such child.
       ``(ii) 35-percent bracket.--The maximum taxable income 
     which is taxed at a rate below 35 percent shall not be more 
     than the sum of--

       ``(I) the earned taxable income of such child, plus
       ``(II) the minimum taxable income for the 35-percent 
     bracket in the table under paragraph (2)(E) (as adjusted 
     under paragraph (3)) for the taxable year.

       ``(iii) 38.5-percent bracket.--The maximum taxable income 
     which is taxed at a rate below 38.5 percent shall not be more 
     than the sum of--

       ``(I) the earned taxable income of such child, plus
       ``(II) the minimum taxable income for the 38.5-percent 
     bracket in the table under paragraph (2)(E) (as adjusted 
     under paragraph (3)) for the taxable year.

       ``(C) Coordination with capital gains rates.--For purposes 
     of applying section 1(h) (after the modifications under 
     paragraph (5))--
       ``(i) the maximum zero rate amount shall not be more than 
     the sum of--

       ``(I) the earned taxable income of such child, plus
       ``(II) the amount in effect under paragraph (5)(B)(i)(IV) 
     for the taxable year, and

       ``(ii) the maximum 15-percent rate amount shall not be more 
     than the sum of--

       ``(I) the earned taxable income of such child, plus
       ``(II) the amount in effect under paragraph (5)(B)(ii)(IV) 
     for the taxable year.

       ``(D) Earned taxable income.--For purposes of this 
     paragraph, the term `earned taxable income' means, with 
     respect to any child for any taxable year, the taxable income 
     of such child reduced (but not below zero) by the net 
     unearned income (as defined in subsection (g)(4)) of such 
     child.
       ``(5) Application of current income tax brackets to capital 
     gains brackets.--
       ``(A) In general.--Section 1(h)(1) shall be applied--
       ``(i) by substituting `below the maximum zero rate amount' 
     for `which would (without regard to this paragraph) be taxed 
     at a rate below 25 percent' in subparagraph (B)(i), and
       ``(ii) by substituting `below the maximum 15-percent rate 
     amount' for `which would (without regard to this paragraph) 
     be taxed at a rate below 39.6 percent' in subparagraph 
     (C)(ii)(I).
       ``(B) Maximum amounts defined.--For purposes of applying 
     section 1(h) with the modifications described in subparagraph 
     (A)--
       ``(i) Maximum zero rate amount.--The maximum zero rate 
     amount shall be--

       ``(I) in the case of a joint return or surviving spouse, 
     $77,200 (\1/2\ such amount in the case of a married 
     individual filing a separate return),
       ``(II) in the case of an individual who is a head of 
     household (as defined in section 2(b)), $51,700,
       ``(III) in the case of any other individual (other than an 
     estate or trust), an amount equal to \1/2\ of the amount in 
     effect for the taxable year under clause (i), and
       ``(IV) in the case of an estate or trust, $2,600.

       ``(ii) Maximum 15-percent rate amount.--The maximum 15-
     percent rate amount shall be--

       ``(I) in the case of a joint return or surviving spouse, 
     $479,000 (\1/2\ such amount in the case of a married 
     individual filing a separate return),
       ``(II) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), $452,400,
       ``(III) in the case of any other individual (other than an 
     estate or trust), $425,800, and
       ``(IV) in the case of an estate or trust, $12,700.

       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2018, each of the dollar amounts in 
     clauses (i) and (ii) of subparagraph (B) shall be increased 
     by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     subsection (f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2017' 
     for `calendar year 2016' in subparagraph (A)(ii) thereof.
       ``(6) Section 15 not to apply.--Section 15 shall not apply 
     to any change in a rate of tax by reason of this 
     subsection.''.
       (b) Due Diligence Tax Preparer Requirement With Respect to 
     Head of Household Filing Status.--Subsection (g) of section 
     6695 is amended to read as follows:
       ``(g) Failure to Be Diligent in Determining Eligibility for 
     Certain Tax Benefits.--Any person who is a tax return 
     preparer with respect to any return or claim for refund who 
     fails to comply with due diligence requirements imposed by 
     the Secretary by regulations with respect to determining--
       ``(1) eligibility to file as a head of household (as 
     defined in section 2(b)) on the return, or
       ``(2) eligibility for, or the amount of, the credit 
     allowable by section 24, 25A(a)(1), or 32,
     shall pay a penalty of $500 for each such failure.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11002. INFLATION ADJUSTMENTS BASED ON CHAINED CPI.

       (a) In General.--Subsection (f) of section 1 is amended by 
     striking paragraph (3) and by inserting after paragraph (2) 
     the following new paragraph:
       ``(3) Cost-of-living adjustment.--For purposes of this 
     subsection--
       ``(A) In general.--The cost-of-living adjustment for any 
     calendar year is the percentage (if any) by which--
       ``(i) the C-CPI-U for the preceding calendar year, exceeds
       ``(ii) the CPI for calendar year 2016, multiplied by the 
     amount determined under subparagraph (B).
       ``(B) Amount determined.--The amount determined under this 
     clause is the amount obtained by dividing--
       ``(i) the C-CPI-U for calendar year 2016, by
       ``(ii) the CPI for calendar year 2016.
       ``(C) Special rule for adjustments with a base year after 
     2016.--For purposes of any provision of this title which 
     provides for the substitution of a year after 2016 for `2016' 
     in subparagraph (A)(ii), subparagraph (A) shall be applied by 
     substituting `the C-CPI-U for calendar year 2016' for `the 
     CPI for calendar year 2016' and all that follows in clause 
     (ii) thereof.''.
       (b) C-CPI-U.--Subsection (f) of section 1 is amended by 
     striking paragraph (7), by redesignating paragraph (6) as 
     paragraph (7), and by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) C-CPI-U.--For purposes of this subsection--
       ``(A) In general.--The term `C-CPI-U' means the Chained 
     Consumer Price Index for All Urban Consumers (as published by 
     the Bureau of Labor Statistics of the Department of Labor). 
     The values of the Chained Consumer Price Index for All Urban 
     Consumers taken into account for purposes of determining the 
     cost-of-living adjustment for any calendar year under this 
     subsection shall be the latest values so published as of the 
     date on which such Bureau publishes the initial value of the 
     Chained Consumer Price Index for All Urban Consumers for the 
     month of August for the preceding calendar year.
       ``(B) Determination for calendar year.--The C-CPI-U for any 
     calendar year is the average of the C-CPI-U as of the close 
     of the 12-month period ending on August 31 of such calendar 
     year.''.
       (c) Application to Permanent Tax Tables.--Section 
     1(f)(2)(A) is amended by inserting ``, determined by 
     substituting `1992' for `2016' in paragraph (3)(A)(ii)''.
       (d) Application to Other Internal Revenue Code of 1986 
     Provisions.--
       (1) The following sections are each amended by striking 
     ``for `calendar year 1992' in subparagraph (B)'' and 
     inserting ``for `calendar year 2016' in subparagraph 
     (A)(ii)'':
       (A) Section 23(h)(2).
       (B) Paragraphs (1)(A)(ii) and (2)(A)(ii) of section 25A(h).
       (C) Section 25B(b)(3)(B).
       (D) Subsection (b)(2)(B)(ii)(II), and clauses (i) and (ii) 
     of subsection (j)(1)(B), of section 32.
       (E) Section 36B(f)(2)(B)(ii)(II).
       (F) Section 41(e)(5)(C)(i).
       (G) Subsections (e)(3)(D)(ii) and (h)(3)(H)(i)(II) of 
     section 42.
       (H) Section 45R(d)(3)(B)(ii).
       (I) Section 62(d)(3)(B).
       (J) Section 125(i)(2)(B).
       (K) Section 135(b)(2)(B)(ii).
       (L) Section 137(f)(2).
       (M) Section 146(d)(2)(B).
       (N) Section 147(c)(2)(H)(ii).
       (O) Section 179(b)(6)(A)(ii).
       (P) Subsections (b)(5)(C)(i)(II) and (g)(8)(B) of section 
     219.
       (Q) Section 220(g)(2).
       (R) Section 221(f)(1)(B).
       (S) Section 223(g)(1)(B).
       (T) Section 408A(c)(3)(D)(ii).
       (U) Section 430(c)(7)(D)(vii)(II).
       (V) Section 512(d)(2)(B).
       (W) Section 513(h)(2)(C)(ii).
       (X) Section 831(b)(2)(D)(ii).
       (Y) Section 877A(a)(3)(B)(i)(II).
       (Z) Section 2010(c)(3)(B)(ii).
       (AA) Section 2032A(a)(3)(B).
       (BB) Section 2503(b)(2)(B).
       (CC) Section 4261(e)(4)(A)(ii).
       (DD) Section 5000A(c)(3)(D)(ii).
       (EE) Section 6323(i)(4)(B).
       (FF) Section 6334(g)(1)(B).
       (GG) Section 6601(j)(3)(B).
       (HH) Section 6651(i)(1).
       (II) Section 6652(c)(7)(A).
       (JJ) Section 6695(h)(1).
       (KK) Section 6698(e)(1).

[[Page S7418]]

       (LL) Section 6699(e)(1).
       (MM) Section 6721(f)(1).
       (NN) Section 6722(f)(1).
       (OO) Section 7345(f)(2).
       (PP) Section 7430(c)(1).
       (QQ) Section 9831(d)(2)(D)(ii)(II).
       (2) Section 41(e)(5)(C)(ii) is amended--
       (A) by striking ``1(f)(3)(B)'' and inserting 
     ``1(f)(3)(A)(ii)'', and
       (B) by striking ``1992'' and inserting ``2016''.
       (3) Section 42(h)(6)(G) is amended--
       (A) by striking ``for `calendar year 1987' '' in clause 
     (i)(II) and inserting ``for `calendar year 2016' in 
     subparagraph (A)(ii) thereof'', and
       (B) by striking ``if the CPI for any calendar year'' and 
     all that follows in clause (ii) and inserting ``if the C-CPI-
     U for any calendar year (as defined in section 1(f)(6)) 
     exceeds the C-CPI-U for the preceding calendar year by more 
     than 5 percent, the C-CPI-U for the base calendar year shall 
     be increased such that such excess shall never be taken into 
     account under clause (i). In the case of a base calendar year 
     before 2017, the C-CPI-U for such year shall be determined by 
     multiplying the CPI for such year by the amount determined 
     under section 1(f)(3)(B).''.
       (4) Section 132(f)(6)(A)(ii) is amended by striking ``for 
     `calendar year 1992' '' and inserting ``for `calendar year 
     2016' in subparagraph (A)(ii) thereof''.
       (5) Section 162(o)(3) is amended by striking ``adjusted for 
     changes in the Consumer Price Index (as defined in section 
     1(f)(5)) since 1991'' and inserting ``adjusted by increasing 
     any such amount under the 1991 agreement by an amount equal 
     to--
       ``(A) such amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 1990' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof''.
       (6) So much of clause (ii) of section 213(d)(10)(B) as 
     precedes the last sentence is amended to read as follows:
       ``(ii) Medical care cost adjustment.--For purposes of 
     clause (i), the medical care cost adjustment for any calendar 
     year is the percentage (if any) by which--

       ``(I) the medical care component of the C-CPI-U (as defined 
     in section 1(f)(6)) for August of the preceding calendar 
     year, exceeds
       ``(II) such component of the CPI (as defined in section 
     1(f)(4)) for August of 1996, multiplied by the amount 
     determined under section 1(f)(3)(B).''.

       (7) Section 877(a)(2) is amended by striking ``for `1992' 
     in subparagraph (B)'' and inserting ``for `2016' in 
     subparagraph (A)(ii)''.
       (8) Section 911(b)(2)(D)(ii)(II) is amended by striking 
     ``for `1992' in subparagraph (B)'' and inserting ``for `2016' 
     in subparagraph (A)(ii)''.
       (9) Paragraph (2) of section 1274A(d) is amended to read as 
     follows:
       ``(2) Adjustment for inflation.--In the case of any debt 
     instrument arising out of a sale or exchange during any 
     calendar year after 1989, each dollar amount contained in the 
     preceding provisions of this section shall be increased by an 
     amount equal to--
       ``(A) such amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 1988' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof.
     Any increase under the preceding sentence shall be rounded to 
     the nearest multiple of $100 (or, if such increase is a 
     multiple of $50, such increase shall be increased to the 
     nearest multiple of $100).''.
       (10) Section 4161(b)(2)(C)(i)(II) is amended by striking 
     ``for `1992' in subparagraph (B)'' and inserting ``for `2016' 
     in subparagraph (A)(ii)''.
       (11) Section 4980I(b)(3)(C)(v)(II) is amended by striking 
     ``for `1992' in subparagraph (B)'' and inserting ``for `2016' 
     in subparagraph (A)(ii)''.
       (12) Section 6039F(d) is amended by striking ``subparagraph 
     (B) thereof shall be applied by substituting `1995' for 
     `1992' '' and inserting ``subparagraph (A)(ii) thereof shall 
     be applied by substituting `1995' for `2016' ''.
       (13) Section 7872(g)(5) is amended to read as follows:
       ``(5) Adjustment of limit for inflation.--In the case of 
     any loan made during any calendar year after 1986, the dollar 
     amount in paragraph (2) shall be increased by an amount equal 
     to--
       ``(A) such amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 1985' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof.
     Any increase under the preceding sentence shall be rounded to 
     the nearest multiple of $100 (or, if such increase is a 
     multiple of $50, such increase shall be increased to the 
     nearest multiple of $100).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

 PART II--DEDUCTION FOR QUALIFIED BUSINESS INCOME OF PASS-THRU ENTITIES

     SEC. 11011. DEDUCTION FOR QUALIFIED BUSINESS INCOME.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 199A. QUALIFIED BUSINESS INCOME.

       ``(a) In General.--In the case of a taxpayer other than a 
     corporation, there shall be allowed as a deduction for any 
     taxable year an amount equal to the lesser of--
       ``(1) the combined qualified business income amount of the 
     taxpayer, or
       ``(2) an amount equal to 17.4 percent of the excess (if 
     any) of--
       ``(A) the taxable income of the taxpayer for the taxable 
     year, over
       ``(B) any net capital gain (as defined in section 1(h)) of 
     the taxpayer for the taxable year.
       ``(b) Combined Qualified Business Income Amount.--For 
     purposes of this section--
       ``(1) In general.--The term `combined qualified business 
     income amount' means, with respect to any taxable year, an 
     amount equal to--
       ``(A) the sum of the amounts determined under paragraph (2) 
     for each qualified trade or business carried on by the 
     taxpayer, plus
       ``(B) 17.4 percent of the aggregate amount of the qualified 
     REIT dividends and qualified cooperative dividends of the 
     taxpayer for the taxable year.
       ``(2) Determination of deductible amount for each trade or 
     business.--The amount determined under this paragraph with 
     respect to any qualified trade or business is the lesser of--
       ``(A) 17.4 percent of the taxpayer's qualified business 
     income with respect to the qualified trade or business, or
       ``(B) 50 percent of the W-2 wages with respect to the 
     qualified trade or business.
       ``(3) Modifications to the wage limit based on taxable 
     income.--
       ``(A) Exception from wage limit.--In the case of any 
     taxpayer whose taxable income for the taxable year does not 
     exceed the threshold amount, paragraph (2) shall be applied 
     without regard to subparagraph (B).
       ``(B) Phase-in of limit for certain taxpayers.--
       ``(i) In general.--If--

       ``(I) the taxable income of a taxpayer for any taxable year 
     exceeds the threshold amount, but does not exceed the sum of 
     the threshold amount plus $50,000 ($100,000 in the case of a 
     joint return), and
       ``(II) the amount determined under paragraph (2)(B) 
     (determined without regard to this subparagraph) with respect 
     to any qualified trade or business carried on by the taxpayer 
     is less than the amount determined under paragraph (2)(A) 
     with respect such trade or business,

     then paragraph (2) shall be applied with respect to such 
     trade or business without regard to subparagraph (B) thereof 
     and by reducing the amount determined under subparagraph (A) 
     thereof by the amount determined under clause (ii).
       ``(ii) Amount of reduction.--The amount determined under 
     this subparagraph is the amount which bears the same ratio to 
     the excess amount as--

       ``(I) the amount by which the taxpayer's taxable income for 
     the taxable year exceeds the threshold amount, bears to
       ``(II) $50,000 ($100,000 in the case of a joint return).

       ``(iii) Excess amount.--For purposes of clause (ii), the 
     excess amount is the excess of--

       ``(I) the amount determined under paragraph (2)(A) 
     (determined without regard to this paragraph), over
       ``(II) the amount determined under paragraph (2)(B) 
     (determined without regard to this paragraph).

       ``(4) Wages, etc.--
       ``(A) In general.--The term `W-2 wages' means, with respect 
     to any person for any taxable year of such person, the 
     amounts described in 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.
       ``(B) Limitation to wages attributable to qualified 
     business income.--Such term shall not include any amount 
     which is not properly allocable to qualified business income 
     for purposes of subsection (c)(1).
       ``(C) Return requirement.--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.
       ``(5) Acquisitions, dispositions, and short taxable 
     years.--The Secretary shall provide for the application of 
     this subsection in cases of a short taxable year or where the 
     taxpayer acquires, or disposes of, the major portion of a 
     trade or business or the major portion of a separate unit of 
     a trade or business during the taxable year.
       ``(c) Qualified Business Income.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified business income' 
     means, for any taxable year, the net amount of qualified 
     items of income, gain, deduction, and loss with respect to 
     any qualified trade or business of the taxpayer.
       ``(2) Carryover of losses.--If the net amount of qualified 
     income, gain, deduction, and loss with respect to qualified 
     trade or businesses of the taxpayer amount for any taxable 
     year is less than zero, such amount shall be treated as a 
     loss from a qualified trade or business in the succeeding 
     taxable year.
       ``(3) Qualified items of income, gain, deduction, and 
     loss.--For purposes of this subsection--
       ``(A) In general.--The term `qualified items of income, 
     gain, deduction, and loss' means items of income, gain, 
     deduction, and loss to the extent such items are--

[[Page S7419]]

       ``(i) effectively connected with the conduct of a trade or 
     business within the United States (within the meaning of 
     section 864(c), determined by substituting `qualified trade 
     or business (within the meaning of section 199A)' for 
     `nonresident alien individual or a foreign corporation' or 
     for `a foreign corporation' each place it appears), and
       ``(ii) included or allowed in determining taxable income 
     for the taxable year.
       ``(B) Exceptions.--The following investment items shall not 
     be taken into account as a qualified item of income, gain, 
     deduction, or loss:
       ``(i) Any item of short-term capital gain, short-term 
     capital loss, long-term capital gain, or long-term capital 
     loss.
       ``(ii) Any dividend, income equivalent to a dividend, or 
     payment in lieu of dividends described in section 
     954(c)(1)(G).
       ``(iii) Any interest income other than interest income 
     which is properly allocable to a trade or business.
       ``(iv) Any item of gain or loss described in subparagraph 
     (C) or (D) of section 954(c)(1) (applied by substituting 
     `qualified trade or business' for `controlled foreign 
     corporation').
       ``(v) Any item of income, gain, deduction, or loss taken 
     into account under section 954(c)(1)(F) (determined without 
     regard to clause (ii) thereof and other than items 
     attributable to notional principal contracts entered into in 
     transactions qualifying under section 1221(a)(7)).
       ``(vi) Any amount received from an annuity which is not 
     received in connection with the trade or business.
       ``(vii) Any item of deduction or loss properly allocable to 
     an amount described in any of the preceding clauses.
       ``(4) Treatment of reasonable compensation and guaranteed 
     payments.--Qualified business income shall not include--
       ``(A) reasonable compensation paid to the taxpayer by any 
     qualified trade or business of the taxpayer for services 
     rendered with respect to the trade or business,
       ``(B) any guaranteed payment described in section 707(c) 
     paid to a partner for services rendered with respect to the 
     trade or business, and
       ``(C) to the extent provided in regulations, any payment 
     described in section 707(a) to a partner for services 
     rendered with respect to the trade or business.
       ``(d) Qualified Trade or Business.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified trade or business' 
     means any trade or business other than a specified service 
     trade or business.
       ``(2) Specified service trade or business.--
       ``(A) In general.--The term `specified service trade or 
     business' means--
       ``(i) any trade or business involving the performance of 
     services described in section 1202(e)(3)(A), including 
     investing and investment management, trading, or dealing in 
     securities (as defined in section 475(c)(2)), partnership 
     interests, or commodities (as defined in section 475(e)(2)).
       ``(3) Exception for specified service businesses based on 
     taxpayer's income.--
       ``(A) In general.--If, for any taxable year, the taxable 
     income of any taxpayer is less than the sum of the threshold 
     amount plus $50,000 ($100,000 in the case of a joint return), 
     then--
       ``(i) the exception under paragraph (1) shall not apply to 
     specified service trades or businesses of the taxpayer for 
     the taxable year, but
       ``(ii) only the applicable percentage of qualified items of 
     income, gain, deduction, or loss, and the W-2 wages, of the 
     taxpayer allocable to such specified service trades or 
     businesses shall be taken into account in computing the 
     qualified business income and W-2 wages of the taxpayer for 
     the taxable year for purposes of applying this section.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the term `applicable percentage' means, with respect to 
     any taxable year, 100 percent reduced (not below zero) by the 
     percentage equal to the ratio of--
       ``(i) the taxable income of the taxpayer for the taxable 
     year in excess of the threshold amount, bears to
       ``(ii) $50,000 ($100,000 in the case of a joint return).
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Taxable income.--Taxable income shall be computed 
     without regard to the deduction allowable under this section.
       ``(2) Threshold amount.--
       ``(A) In general.--The term `threshold amount' means 
     $250,000 (200 percent of such amount in the case of a joint 
     return).
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning after 2018, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
     If any amount as increased under the preceding sentence is 
     not a multiple of $1,000, such amount shall be rounded to the 
     nearest multiple of $1,000.
       ``(3) Qualified reit dividend.--The term `qualified REIT 
     dividend' means any dividend from a real estate investment 
     trust received during the taxable year which--
       ``(A) is not a capital gain dividend, as defined in section 
     857(b)(3), and
       ``(B) is not qualified dividend income, as defined in 
     section 1(h)(11).
       ``(4) Qualified cooperative dividend.--The term `qualified 
     cooperative dividend' means any patronage dividend (as 
     defined in section 1388(a)), any per-unit retain allocation 
     (as defined in section 1388(f)), and any qualified written 
     notice of allocation (as defined in section 1388(c)), or any 
     similar amount received from an organization described in 
     subparagraph (B)(ii), which--
       ``(A) is includible in gross income, and
       ``(B) is received from--
       ``(i) an organization or corporation described in section 
     501(c)(12) or 1381(a), or
       ``(ii) an organization which is governed under this title 
     by the rules applicable to cooperatives under this title 
     before the enactment of subchapter T.
       ``(f) Special Rules.--
       ``(1) Application to partnerships and s corporations.--
       ``(A) In general.--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 qualified item of 
     income, gain, deduction, and loss, 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 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).
     For purposes of clause (iii), a partner's or shareholder's 
     allocable share of W-2 wages shall be determined in the same 
     manner as the partner's or shareholder's allocable share of 
     wage expenses. For purposes of this subparagraph, in the case 
     of an S corporation, an allocable share shall be the 
     shareholder's pro rata share of an item.
       ``(B) Application to trusts and estates.--This section 
     shall not apply to any trust or estate.
       ``(C) Treatment of trades or business in puerto rico.--
       ``(i) In general.--In the case of any taxpayer with 
     qualified business income from sources within the 
     commonwealth of Puerto Rico, if all such income is taxable 
     under section 1 for such taxable year, then for purposes of 
     determining the qualified business income of such taxpayer 
     for such taxable year, the term `United States' shall include 
     the Commonwealth of Puerto Rico.
       ``(ii) Special rule for applying wage limitation.--In the 
     case of any taxpayer described in clause (i), the 
     determination of W-2 wages of such taxpayer with respect to 
     any qualified trade or business conducted in Puerto Rico 
     shall be made without regard to any exclusion under section 
     3401(a)(8) for remuneration paid for services in Puerto Rico.
       ``(2) Coordination with minimum tax.--For purposes of 
     determining alternative minimum taxable income under section 
     55, qualified business income shall be determined without 
     regard to any adjustments under sections 56 through 59.
       ``(3) Deduction limited to income taxes.--The deduction 
     under subsection (a) shall only be allowed for purposes of 
     this chapter.
       ``(4) Regulations.--The Secretary shall prescribe such 
     regulations as are necessary to carry out the purposes of 
     this section, including regulations--
       ``(A) for requiring or restricting the allocation of items 
     and wages under this section and such reporting requirements 
     as the Secretary determines appropriate, and
       ``(B) for the application of this section in the case of 
     tiered entities.
       ``(g) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2025.''.
       (b) Accuracy-related Penalty on Determination of Applicable 
     Percentage.--Section 6662(d)(1) is amended by inserting at 
     the end the following new subparagraph:
       ``(C) Special rule for taxpayers claiming section 199a 
     deduction.--In the case of any taxpayer who claims the 
     deduction allowed under section 199A for the taxable year, 
     subparagraph (A) shall be applied by substituting `5 percent' 
     for `10 percent'.''.
       (c) Conforming Amendments.--
       (1) Section 170(b)(2)(D) is amended by striking ``, and'' 
     at the end of clause (iv), by redesignating clause (v) as 
     clause (vi), and by inserting after clause (iv) the following 
     new clause:
       ``(v) section 199A, and''.
       (2) Section 172(d) is amended by adding at the end the 
     following new paragraph:
       ``(8) Qualified business income deduction.--The deduction 
     under section 199A shall not be allowed.''.
       (3) Section 246(b)(1) is amended by inserting ``199A,'' 
     before ``243(a)(1)''.
       (4) Section 613(a) is amended by inserting ``and without 
     the deduction under section 199A'' after ``and without the 
     deduction under section 199''.
       (5) Section 613A(d)(1) is amended by redesignating 
     subparagraphs (C), (D), and (E) as subparagraphs (D), (E), 
     and (F), respectively, and by inserting after subparagraph 
     (B), the following new subparagraph:
       ``(C) any deduction allowable under section 199A,''.
       (6) The table of sections for part VI of subchapter B of 
     chapter 1 is amended by inserting at the end the following 
     new item:

``Sec. 199A. Qualified business income.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

[[Page S7420]]

  


     SEC. 11012. LIMITATION ON LOSSES FOR TAXPAYERS OTHER THAN 
                   CORPORATIONS.

       (a) In General.--Section 461 is amended by adding at the 
     end the following new subsection:
       ``(l) Limitation on Excess Business Losses of Noncorporate 
     Taxpayers.--
       ``(1) Limitation.--In the case of taxable year of a 
     taxpayer other than a corporation beginning after December 
     31, 2017, and before January 1, 2026--
       ``(A) subsection (j) (relating to limitation on excess farm 
     losses of certain taxpayers) shall not apply, and
       ``(B) any excess business loss of the taxpayer for the 
     taxable year shall not be allowed.
       ``(2) Disallowed loss carryover.--Any loss which is 
     disallowed under paragraph (1) shall be treated as a net 
     operating loss carryover to the following taxable year under 
     section 172.
       ``(3) Excess business loss.--For purposes of this 
     subsection--
       ``(A) In general.--The term `excess business loss' means 
     the excess (if any) of--
       ``(i) the aggregate deductions of the taxpayer for the 
     taxable year which are attributable to trades or businesses 
     of such taxpayer (determined without regard to whether or not 
     such deductions are disallowed for such taxable year under 
     paragraph (1)), over
       ``(ii) the sum of--

       ``(I) the aggregate gross income or gain of such taxpayer 
     for the taxable year which is attributable to such trades or 
     businesses, plus
       ``(II) $250,000 (200 percent of such amount in the case of 
     a joint return).

       ``(B) Adjustment for inflation.--In the case of any taxable 
     year beginning after December 31, 2018, the $250,000 amount 
     in subparagraph (A)(ii)(II) shall be increased by an amount 
     equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
     If any amount as increased under the preceding sentence is 
     not a multiple of $1,000, such amount shall be rounded to the 
     nearest multiple of $1,000.
       ``(4) Application of subsection in case of partnerships and 
     s corporations.--In the case of a partnership or S 
     corporation--
       ``(A) this subsection shall be applied at the partner or 
     shareholder level, and
       ``(B) each partner's or shareholder's allocable share of 
     the items of income, gain, deduction, or loss of the 
     partnership or S corporation for any taxable year from trades 
     or businesses attributable to the partnership or S 
     corporation shall be taken into account by the partner or 
     shareholder in applying this subsection to the taxable year 
     of such partner or shareholder with or within which the 
     taxable year of the partnership or S corporation ends.
     For purposes of this paragraph, in the case of an S 
     corporation, an allocable share shall be the shareholder's 
     pro rata share of an item.
       ``(5) Additional reporting.--The Secretary shall prescribe 
     such additional reporting requirements as the Secretary 
     determines appropriate to carry out the purposes of this 
     subsection.
       ``(6) Coordination with section 469.--This subsection shall 
     be applied after the application of section 469.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

          PART III--TAX BENEFITS FOR FAMILIES AND INDIVIDUALS

     SEC. 11021. INCREASE IN STANDARD DEDUCTION.

       (a) In General.--Subsection (c) of section 63 is amended by 
     adding at the end the following new paragraph:
       ``(7) Special rules for taxable years 2018 through 2025.--
     In the case of a taxable year beginning after December 31, 
     2017, and before January 1, 2026--
       ``(A) Increase in standard deduction.--Paragraph (2) shall 
     be applied--
       ``(i) by substituting `$18,000' for `$4,400' in 
     subparagraph (B), and
       ``(ii) by substituting `$12,000' for `$3,000' in 
     subparagraph (C).
       ``(B) Adjustment for inflation.--
       ``(i) In general.--Paragraph (4) shall not apply to the 
     dollar amounts contained in paragraphs (2)(B) and (2)(C).
       ``(ii) Adjustment of increased amounts.--In the case of a 
     taxable year beginning after 2018, the $18,000 and $12,000 
     amounts in subparagraph (A) shall each be increased by an 
     amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `2017' for `2016' in 
     subparagraph (A)(ii) thereof.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.

       (a) In General.--Section 24 is amended by adding at the end 
     the following new subsection:
       ``(h) Special Rules for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026, this 
     section shall be applied as provided in paragraphs (2) 
     through (8).
       ``(2) Credit amount.--Subsection (a) shall be applied by 
     substituting `$2,000' for `$1,000'.
       ``(3) Limitation.--In lieu of the amount determined under 
     subsection (b)(2), the threshold amount shall be $500,000.
       ``(4) Definition of qualifying child.--Paragraph (1) of 
     subsection (c) shall be applied by substituting `18' for 
     `17'.
       ``(5) Partial credit allowed for certain other 
     dependents.--
       ``(A) In general.--The credit determined under subsection 
     (a) (after the application of paragraph (2)) shall be 
     increased by $500 for each dependent of the taxpayer (as 
     defined in section 152) other than a qualifying child 
     described in subsection (c) (after the application of 
     paragraph (4)).
       ``(B) Exception for certain noncitizens.--Subparagraph (A) 
     shall not apply with respect to any individual who would not 
     be a dependent if subparagraph (A) of section 152(b)(3) were 
     applied without regard to all that follows `resident of the 
     United States'.
       ``(6) Maximum amount of refundable credit.--
       ``(A) In general.--Subsection (d)(1)(A) shall be applied 
     without regard to paragraphs (2) and (5) of this subsection.
       ``(B) Adjustment for inflation.--In the case of a taxable 
     year beginning after 2017, subsection (d)(1)(A) shall be 
     applied as if the $1,000 amount in subsection (a) were 
     increased (but not to exceed the amount under paragraph (2) 
     of this subsection) by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
     Any increase determined under the preceding sentence shall be 
     rounded to the next highest multiple of $100.
       ``(7) Earned income threshold for refundable credit.--
     Subsection (d)(1)(B)(i) shall be applied by substituting 
     `$2,500' for `$3,000'.
       ``(8) Social security number required.--No credit shall be 
     allowed under subsection (d) to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the social 
     security number of such child on the return of tax for the 
     taxable year. For purposes of the preceding sentence, the 
     term `social security number' means a social security number 
     issued to an individual by the Social Security 
     Administration, but only if the social security number is 
     issued to a citizen of the United States or is issued 
     pursuant to subclause (I) (or that portion of subclause (III) 
     that relates to subclause (I)) of section 205(c)(2)(B)(i) of 
     the Social Security Act.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11023. INCREASED LIMITATION FOR CERTAIN CHARITABLE 
                   CONTRIBUTIONS.

       (a) In General.--Section 170(b)(1) is amended by 
     redesignating subparagraph (G) as subparagraph (H) and by 
     inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) Increased limitation for cash contributions.--
       ``(i) In general.--In the case of any contribution of cash 
     to an organization described in subparagraph (A), the total 
     amount of such contributions which may be taken into account 
     under subsection (a) for any taxable year beginning after 
     December 31, 2017, and before January 1, 2026, shall not 
     exceed 60 percent of the taxpayer's contribution base for 
     such year.
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the applicable limitation 
     under clause (i) for any taxable year described in such 
     clause, such excess shall be treated (in a manner consistent 
     with the rules of subsection (d)(1)) as a charitable 
     contribution to which clause (i) applies in each of the 5 
     succeeding years in order of time.
       ``(iii) Coordination with subparagraphs (a) and (b).--

       ``(I) In general.--Contributions taken into account under 
     this subparagraph shall not be taken into account under 
     subparagraph (A).
       ``(II) Limitation reduction.--Subparagraphs (A) and (B) 
     shall be applied for each taxable year described in clause 
     (i), and each taxable year to which any contribution under 
     this subparagraph is carried over under clause (ii), by 
     reducing (but not below zero) the aggregate contribution 
     limitation allowed for the taxable year under each such 
     subparagraph by the aggregate contributions allowed under 
     this subparagraph for such taxable year.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2017.

     SEC. 11024. INCREASED CONTRIBUTIONS TO ABLE ACCOUNTS.

       (a) Increase in Limitation for Contributions From 
     Compensation of Individuals With Disabilities.--
       (1) In general.--Section 529A(b)(2)(B) is amended to read 
     as follows:
       ``(B) except in the case of contributions under subsection 
     (c)(1)(C), if such contribution to an ABLE account would 
     result in aggregate contributions from all contributors to 
     the ABLE account for the taxable year exceeding the sum of--
       ``(i) the amount in effect under section 2503(b) for the 
     calendar year in which the taxable year begins, plus

[[Page S7421]]

       ``(ii) in the case of any contribution by a designated 
     beneficiary described in paragraph (7) before January 1, 
     2026, the lesser of--

       ``(I) compensation (as defined by section 219(f)(1)) 
     includible in the designated beneficiary's gross income for 
     the preceding taxable year, or
       ``(II) an amount equal to the poverty line for a one-person 
     household, as determined for the calendar year preceding the 
     calendar year in which the taxable year begins.''.

       (2) Eligible designated beneficiary.--Section 529A(b) is 
     amended by adding at the end the following:
       ``(7) Special rules related to contribution limit.--For 
     purposes of paragraph (2)(B)(ii)--
       ``(A) Designated beneficiary.--A designated beneficiary 
     described in this paragraph is an employee (including an 
     employee within the meaning of section 401(c)) with respect 
     to whom--
       ``(i) no contribution is made for the taxable year to a 
     defined contribution plan (within the meaning of section 
     414(i)) with respect to which the requirements of section 
     401(a) or 403(a) are met,
       ``(ii) no contribution is made for the taxable year to an 
     annuity contract described in section 403(b), and
       ``(iii) no contribution is made for the taxable year to an 
     eligible deferred compensation plan described in section 
     457(b).
       ``(B) Poverty line.--The term `poverty line' has the 
     meaning given such term by section 673 of the Community 
     Services Block Grant Act (42 U.S.C. 9902).''.
       (b) Allowance of Saver's Credit for ABLE Contributions by 
     Account Holder.--Section 25B(d)(1) is amended by striking 
     ``and'' at the end of subparagraph (B)(ii), by striking the 
     period at the end of subparagraph (C) and inserting ``, 
     and'', and by inserting at the end the following:
       ``(D) the amount of contributions made before January 1, 
     2026, by such individual to the ABLE account (within the 
     meaning of section 529A) of which such individual is the 
     designated beneficiary.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 11025. ROLLOVERS TO ABLE PROGRAMS FROM 529 PROGRAMS.

       (a) In General.--Clause (i) of section 529(c)(3)(C) is 
     amended by striking ``or'' at the end of subclause (I), by 
     striking the period at the end of subclause (II) and 
     inserting ``, or'', and by adding at the end the following:

       ``(III) before January 1, 2026, to an ABLE account (as 
     defined in section 529A(e)(6)) of the designated beneficiary 
     or a member of the family of the designated beneficiary.

     Subclause (III) shall not apply to so much of a distribution 
     which, when added to all other contributions made to the ABLE 
     account for the taxable year, exceeds the limitation under 
     section 529A(b)(2)(B).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     SEC. 11026. TREATMENT OF CERTAIN INDIVIDUALS PERFORMING 
                   SERVICES IN THE SINAI PENINSULA OF EGYPT.

       (a) In General.--For purposes of the following provisions 
     of the Internal Revenue Code of 1986, with respect to the 
     applicable period, a qualified hazardous duty area shall be 
     treated in the same manner as if it were a combat zone (as 
     determined under section 112 of such Code):
       (1) Section 2(a)(3) (relating to special rule where 
     deceased spouse was in missing status).
       (2) Section 112 (relating to the exclusion of certain 
     combat pay of members of the Armed Forces).
       (3) Section 692 (relating to income taxes of members of 
     Armed Forces on death).
       (4) Section 2201 (relating to members of the Armed Forces 
     dying in combat zone or by reason of combat-zone-incurred 
     wounds, etc.).
       (5) Section 3401(a)(1) (defining wages relating to combat 
     pay for members of the Armed Forces).
       (6) Section 4253(d) (relating to the taxation of phone 
     service originating from a combat zone from members of the 
     Armed Forces).
       (7) Section 6013(f)(1) (relating to joint return where 
     individual is in missing status).
       (8) Section 7508 (relating to time for performing certain 
     acts postponed by reason of service in combat zone).
       (b) Qualified Hazardous Duty Area.--For purposes of this 
     section, the term ``qualified hazardous duty area'' means the 
     Sinai Peninsula of Egypt, if as of the date of the enactment 
     of this section any member of the Armed Forces of the United 
     States is entitled to special pay under section 310 of title 
     37, United States Code (relating to special pay; duty subject 
     to hostile fire or imminent danger), for services performed 
     in such location. Such term includes such location only 
     during the period such entitlement is in effect.
       (c) Applicable Period.--
       (1) In general.--Except as provided in paragraph (2), the 
     applicable period is--
       (A) the portion of the first taxable year ending after June 
     9, 2015, which begins on such date, and
       (B) any subsequent taxable year beginning before January 1, 
     2026.
       (2) Withholding.--In the case of subsection (a)(5), the 
     applicable period is--
       (A) the portion of the first taxable year ending after the 
     date of the enactment of this Act which begins on such date, 
     and
       (B) any subsequent taxable year beginning before January 1, 
     2026.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     provisions of this section shall take effect on June 9, 2015.
       (2) Withholding.--Subsection (a)(5) shall apply to 
     remuneration paid after the date of the enactment of this 
     Act.

     SEC. 11027. EXTENSION OF WAIVER OF LIMITATIONS WITH RESPECT 
                   TO EXCLUDING FROM GROSS INCOME AMOUNTS RECEIVED 
                   BY WRONGFULLY INCARCERATED INDIVIDUALS.

       (a) In General.--Section 304(d) of the Protecting Americans 
     from Tax Hikes Act of 2015 (26 U.S.C. 139F note) is amended 
     by striking ``1-year'' and inserting ``2-year''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 11028. UNBORN CHILDREN ALLOWED AS 529 ACCOUNT 
                   BENEFICIARIES.

       (a) In General.--Section 529(e) is amended by adding at the 
     end the following new paragraph:
       ``(6) Treatment of unborn children.--
       ``(A) In general.--Nothing shall prevent an unborn child 
     from being treated as a designated beneficiary or an 
     individual under this section.
       ``(B) Unborn child.--For purposes of this paragraph--
       ``(i) In general.--The term `unborn child' means a child in 
     utero.
       ``(ii) Child in utero.--The term `child in utero' means a 
     member of the species homo sapiens, at any stage of 
     development, who is carried in the womb.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2017.

     SEC. 11029. RELIEF FOR MISSISSIPPI RIVER DELTA FLOOD DISASTER 
                   AREA.

       (a) In General.--For purposes of this section, the term 
     ``Mississippi River Delta flood disaster area'' means any 
     area--
       (1) with respect to which a major disaster has been 
     declared by the President under section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act before 
     September 3, 2016, by reason of severe storms and flooding 
     occurring in Louisiana during August of 2016, or
       (2) with respect to which a major disaster has been 
     declared by the President under section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act before 
     March 31, 2016, by reason of severe storms and flooding 
     occurring in Louisiana, Texas, and Mississippi during March 
     of 2016.
       (b) Special Rules for Use of Retirement Funds With Respect 
     to Mississippi Delta Areas Damaged by 2016 Flooding.--
       (1) Tax-favored withdrawals from retirement plans.--
       (A) In general.--Section 72(t) of the Internal Revenue Code 
     of 1986 shall not apply to any qualified Mississippi River 
     Delta flooding distribution.
       (B) Aggregate dollar limitation.--
       (i) In general.--For purposes of this subsection, the 
     aggregate amount of distributions received by an individual 
     which may be treated as qualified Mississippi River Delta 
     flooding distributions for any taxable year shall not exceed 
     the excess (if any) of--

       (I) $100,000, over
       (II) the aggregate amounts treated as qualified Mississippi 
     River Delta flooding distributions received by such 
     individual for all prior taxable years.

       (ii) Treatment of plan distributions.--If a distribution to 
     an individual would (without regard to clause (i)) be a 
     qualified Mississippi River Delta flooding distribution, a 
     plan shall not be treated as violating any requirement of 
     this title merely because the plan treats such distribution 
     as a qualified Mississippi River Delta flooding 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.
       (iii) Controlled group.--For purposes of clause (ii), the 
     term ``controlled group'' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986.
       (C) Amount distributed may be repaid.--
       (i) In general.--Any individual who receives a qualified 
     Mississippi River Delta flooding 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) of the Internal Revenue Code of 1986, as the case 
     may be.
       (ii) Treatment of repayments of distributions from eligible 
     retirement plans other than iras.--For purposes of this 
     title, if a contribution is made pursuant to clause (i) with 
     respect to a qualified Mississippi River Delta flooding 
     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 Mississippi River Delta 
     flooding distribution in an eligible rollover distribution 
     (as defined in section 402(c)(4) of the Internal Revenue Code 
     of 1986) and as having

[[Page S7422]]

     transferred the amount to the eligible retirement plan in a 
     direct trustee to trustee transfer within 60 days of the 
     distribution.
       (iii) Treatment of repayments for distributions from 
     iras.--For purposes of the Internal Revenue Code of 1986, if 
     a contribution is made pursuant to clause (i) with respect to 
     a qualified Mississippi River Delta flooding distribution 
     from an individual retirement plan (as defined by section 
     7701(a)(37) of the Internal Revenue Code of 1986), then, to 
     the extent of the amount of the contribution, the qualified 
     Mississippi River Delta flooding distribution shall be 
     treated as a distribution described in section 408(d)(3) of 
     such Code and as having been transferred to the eligible 
     retirement plan in a direct trustee to trustee transfer 
     within 60 days of the distribution.
       (D) Definitions.--For purposes of this paragraph--
       (i) Qualified mississippi river delta flooding 
     distribution.--Except as provided in subparagraph (B), the 
     term ``qualified Mississippi River Delta flooding 
     distribution'' means--

       (I) any distribution from an eligible retirement plan made 
     on or after August 11, 2016, and before January 1, 2018, to 
     an individual whose principal place of abode on August 11, 
     2016, was located in the portion of Mississippi River Delta 
     disaster area described in subsection (a)(1) and who has 
     sustained an economic loss by reason of the severe storms and 
     flooding giving rise to the Presidential declaration 
     described in subsection (a)(1), or
       (II) any distribution from an eligible retirement plan made 
     on or after March 1, 2016, and before January 1, 2018, to an 
     individual whose principal place of abode on March 1, 2016, 
     was located in the portion of Mississippi River Delta 
     disaster area described in subsection (a)(2) and who has 
     sustained an economic loss by reason of the severe storms and 
     flooding giving rise to the Presidential declaration 
     described in subsection (a)(2).

       (ii) Eligible retirement plan.--The term ``eligible 
     retirement plan'' shall have the meaning given such term by 
     section 402(c)(8)(B) of the Internal Revenue Code of 1986.
       (E) Income inclusion spread over 3-year period.--
       (i) In general.--In the case of any qualified Mississippi 
     River Delta flooding distribution, unless the taxpayer elects 
     not to have this subparagraph 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.
       (ii) Special rule.--For purposes of clause (i), rules 
     similar to the rules of subparagraph (E) of section 
     408A(d)(3) of the Internal Revenue Code of 1986 shall apply.
       (F) Special rules.--
       (i) Exemption of distributions from trustee to trustee 
     transfer and withholding rules.--For purposes of sections 
     401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 
     1986, qualified Mississippi River Delta flooding 
     distributions shall not be treated as eligible rollover 
     distributions.
       (ii) Qualified mississippi river delta flooding 
     distributions treated as meeting plan distribution 
     requirements.--For purposes of the Internal Revenue Code of 
     1986, a qualified Mississippi River Delta flooding 
     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) of the Internal Revenue Code of 1986.
       (2) Provisions relating to plan amendments.--
       (A) In general.--If this paragraph 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 subparagraph 
     (B)(ii)(I).
       (B) Amendments to which subsection applies.--
       (i) In general.--This paragraph 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 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, 2018, or such later date as 
     the Secretary prescribes.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), subclause (II) 
     shall be applied by substituting the date which is 2 years 
     after the date otherwise applied under subclause (II).
       (ii) Conditions.--This paragraph shall not apply to any 
     amendment unless--

       (I) during the period--

       (aa) beginning on the date that this section or the 
     regulation described in clause (i)(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
       (bb) ending on the date described in clause (i)(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.

       (c) Special Rules for Personal Casualty Losses Related to 
     Louisiana Severe Storms and Flooding.--
       (1) In general.--If an individual has a net disaster loss 
     for any taxable year beginning after December 31, 2017, and 
     before January 1, 2026--
       (A) the amount determined under section 165(h)(2)(A)(ii) of 
     the Internal Revenue Code of 1986 shall be equal to the sum 
     of--
       (i) such net disaster loss, and
       (ii) so much of the excess referred to in the matter 
     preceding clause (i) of section 165(h)(2)(A) of such Code 
     (reduced by the amount in clause (i) of this subparagraph) as 
     exceeds 10 percent of the adjusted gross income of the 
     individual,
       (B) section 165(h)(1) of such Code shall be applied by 
     substituting ``$500'' for ``$500 ($100 for taxable years 
     beginning after December 31, 2009)'',
       (C) the standard deduction determined under section 63(c) 
     of such Code shall be increased by the net disaster loss, and
       (D) section 56(b)(1)(E) of such Code shall not apply to so 
     much of the standard deduction as is attributable to the 
     increase under subparagraph (C) of this paragraph.
       (2) Net disaster loss.--For purposes of this subsection, 
     the term ``net disaster loss'' means the excess of qualified 
     disaster-related personal casualty losses over personal 
     casualty gains (as defined in section 165(h)(3)(A) of the 
     Internal Revenue Code of 1986).
       (3) Qualified disaster-related personal casualty losses.--
     For purposes of this paragraph, the term ``qualified 
     disaster-related personal casualty losses'' means losses 
     described in section 165(c)(3) of the Internal Revenue Code 
     of 1986 which arise--
       (A) in the portion of the Mississippi River Delta flood 
     disaster area described in subsection (a)(1) on or after 
     August 11, 2016, and which are attributable to the severe 
     storms and flooding giving rise to the Presidential 
     declaration described in subsection (a)(1), or
       (B) in the portion of the Mississippi River Delta flood 
     disaster area described in subsection (a)(2) on or after 
     March 1, 2016, and which are attributable to the severe 
     storms and flooding giving rise to the Presidential 
     declaration described in subsection (a)(2).

                           PART IV--EDUCATION

     SEC. 11031. TREATMENT OF STUDENT LOANS DISCHARGED ON ACCOUNT 
                   OF DEATH OR DISABILITY.

       (a) In General.--Section 108(f) is amended by adding at the 
     end the following new paragraph:
       ``(5) Discharges on account of death or disability.--
       ``(A) In general.--In the case of an individual, gross 
     income for any taxable year beginning after December 31, 
     2017, and before January 1, 2026, does not include any amount 
     which (but for this subsection) would be includible in gross 
     income for such taxable year by reasons of the discharge (in 
     whole or in part) of any loan described in subparagraph (B) 
     if such discharge was--
       ``(i) pursuant to subsection (a) or (d) of section 437 of 
     the Higher Education Act of 1965 or the parallel benefit 
     under part D of title IV of such Act (relating to the 
     repayment of loan liability),
       ``(ii) pursuant to section 464(c)(1)(F) of such Act, or
       ``(iii) otherwise discharged on account of the death or 
     total and permanent disability of the student.
       ``(B) Loans described.--A loan is described in this 
     subparagraph if such loan is--
       ``(i) a student loan (as defined in paragraph (2)), or
       ``(ii) a private education loan (as defined in section 
     140(7) of the Consumer Credit Protection Act (15 U.S.C. 
     1650(7))).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to discharges of indebtedness after December 31, 
     2017.

     SEC. 11032. INCREASE IN DEDUCTION FOR TEACHER EXPENSES.

       (a) In General.--Subparagraph (D) of section 62(a)(2) is 
     amended by striking ``$250'' and inserting ``$250 ($500 in 
     the case of taxable years beginning after December 31, 2017, 
     and before January 1, 2026)''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                   PART V--DEDUCTIONS AND EXCLUSIONS

     SEC. 11041. SUSPENSION OF DEDUCTION FOR PERSONAL EXEMPTIONS.

       (a) In General.--Subsection (d) of section 151 is amended--
       (1) by striking ``In the case of'' in paragraph (4) and 
     inserting ``Except as provided in paragraph (5), in the case 
     of'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Special rules for taxable years 2018 through 2025.--
     In the case of a taxable year beginning after December 31, 
     2017, and before January 1, 2026--
       ``(A) Exemption amount.--The term `exemption amount' means 
     zero.
       ``(B) References.--For purposes of any other provision of 
     this title, the reduction of the exemption amount to zero 
     under subparagraph (A) shall not be taken into account in 
     determining whether a deduction is allowed or allowable, or 
     whether a taxpayer is entitled to a deduction, under this 
     section.''.
       (b) Application to Estates and Trusts.--Section 
     642(b)(2)(C) is amended by adding at the end the following 
     new clause:
       ``(iii) Years when personal exemption amount is zero.--

       ``(I) In general.--In the case of any taxable year in which 
     the exemption amount under section 151(d) is zero, clause (i) 
     shall be applied by substituting `$4,150' for `the exemption 
     amount under section 151(d)'.
       ``(II) Inflation adjustment.--In the case of any calendar 
     year beginning after 2018, the

[[Page S7423]]

     $4,150 amount in subparagraph (A) shall be increased by an 
     amount equal to--

       ``(aa) such dollar amount, multiplied by
       ``(bb) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `2017' for `2016' in 
     subparagraph (A)(ii) thereof.

     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.''.

       (c) Exception for Wage Withholding Rules.--Section 3402(a) 
     is amended by adding at the end the following new paragraph:
       ``(3) Years when personal exemption amount is zero.--
       ``(A) In general.--In the case of any taxable year in which 
     the exemption amount under section 151(d) is zero, paragraph 
     (2) shall be applied by substituting `$4,150' for `the amount 
     of one personal exemption provided in section 151(b)'.
       ``(B) Inflation adjustment.--In the case of any calendar 
     year beginning after 2018, the $4,150 amount in subparagraph 
     (A) shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `2017' for `2016' in 
     subparagraph (A)(ii) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.''.
       (d) Exception for Determining Property Exempt From Levy.--
     Section 6334(d) is amended by adding at the end the following 
     new paragraph:
       ``(4) Years when personal exemption amount is zero.--
       ``(A) In general.--In the case of any taxable year in which 
     the exemption amount under section 151(d) is zero, paragraph 
     (2) shall not apply and for purposes of paragraph (1) the 
     term `exempt amount' means an amount equal to--
       ``(i) the sum of the amount determined under subparagraph 
     (B) and the standard deduction, divided by
       ``(ii) 52.
       ``(B) Amount determined.--For purposes of subparagraph (A), 
     the amount determined under this subparagraph is $4,150 
     multiplied by the number of the taxpayer's dependents for the 
     taxable year in which the levy occurs.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2018, the $4,150 amount in subparagraph 
     (B) shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `2017' for `2016' in 
     subparagraph (A)(ii) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.
       ``(D) Verified statement.--Unless the taxpayer submits to 
     the Secretary a written and properly verified statement 
     specifying the facts necessary to determine the proper amount 
     under subparagraph (A), subparagraph (A) shall be applied as 
     if the taxpayer were a married individual filing a separate 
     return with no dependents.''.
       (e) Persons Required to Make Returns of Income.--Section 
     6012 is amended by adding at the end the following new 
     subsection:
       ``(f) Special Rule for Taxable Years 2018 Through 2025.--In 
     the case of a taxable year beginning after December 31, 2017, 
     and before January 1, 2026, subsection (a)(1) shall not 
     apply, and every individual who has gross income for the 
     taxable year shall be required to make returns with respect 
     to income taxes under subtitle A, except that a return shall 
     not be required of--
       ``(1) an individual who is not married (determined by 
     applying section 7703) and who has gross income for the 
     taxable year which does not exceed the standard deduction 
     applicable to such individual for such taxable year under 
     section 63, or
       ``(2) an individual entitled to make a joint return if--
       ``(A) the gross income of such individual, when combined 
     with the gross income of such individual's spouse, for the 
     taxable year does not exceed the standard deduction which 
     would be applicable to the taxpayer for such taxable year 
     under section 63 if such individual and such individual's 
     spouse made a joint return,
       ``(B) such individual and such individual's spouse have the 
     same household as their home at the close of the taxable 
     year,
       ``(C) such individual's spouse does not make a separate 
     return, and
       ``(D) neither such individual nor such individual's spouse 
     is an individual described in section 63(c)(5) who has income 
     (other than earned income) in excess of the amount in effect 
     under section 63(c)(5)(A).
     The amount specified in paragraph (1) or (2)(A) shall be 
     increased by the amount of 1 additional standard deduction 
     (within the meaning of section 63(c)(3)) in the case of an 
     individual entitled to such deduction by reason of section 
     63(f)(1)(A) (relating to individuals age 65 or more), and by 
     the amount of each additional standard deduction to which the 
     individual or the individual's spouse is entitled by reason 
     of section 63(f)(1).''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11042. SUSPENSION OF DEDUCTION FOR STATE AND LOCAL, ETC. 
                   TAXES.

       (a) In General.--Subsection (b) of section 164 is amended 
     by adding at the end the following new paragraph:
       ``(6) Suspension of individual deductions for taxable years 
     2018 through 2025.--In the case of an individual and a 
     taxable year beginning after December 31, 2017, and before 
     January 1, 2026--
       ``(A) paragraphs (1) and (2) of subsection (a) shall not 
     apply to any real property or personal property taxes, other 
     than taxes which are paid or accrued in carrying on a trade 
     or business or an activity described in section 212, and
       ``(B) subsection (a)(3) shall not apply to any State or 
     local taxes.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11043. SUSPENSION OF DEDUCTION FOR HOME EQUITY INTEREST.

       (a) In General.--Section 163(h)(3)(A)(ii) is amended by 
     inserting ``in the case of taxable years beginning before 
     January 1, 2018, or after December 31, 2025,'' before ``home 
     equity indebtedness''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2017.

     SEC. 11044. MODIFICATION OF DEDUCTION FOR PERSONAL CASUALTY 
                   LOSSES.

       (a) In General.--Subsection (h) of section 165 is amended 
     by adding at the end the following new paragraph:
       ``(5) Limitation for taxable years 2018 through 2025.--In 
     the case of any loss of an individual described in subsection 
     (c)(3) which (but for this paragraph) would be deductible in 
     a taxable year beginning after December 31, 2017, and before 
     January 1, 2026 (without regard to any election under 
     subsection (i), such loss shall be allowed only to the extent 
     it is attributable to a Federally declared disaster (as 
     defined in subsection (i)(5)). The preceding sentence shall 
     not apply to any deduction under section 172 which is carried 
     to such a taxable year from a taxable year beginning before 
     January 1, 2018.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to losses incurred in taxable years beginning 
     after December 31, 2017.

     SEC. 11045. SUSPENSION OF MISCELLANEOUS ITEMIZED DEDUCTIONS.

       (a) In General.--Section 67 is amended by adding at the end 
     the following new subsection:
       ``(g) Suspension for Taxable Years 2018 Through 2025.--
     Notwithstanding subsection (a), no miscellaneous itemized 
     deduction shall be allowed for any taxable year beginning 
     after December 31, 2017, and before January 1, 2026.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11046. SUSPENSION OF OVERALL LIMITATION ON ITEMIZED 
                   DEDUCTIONS.

       (a) In General.--Section 68 is amended by adding at the end 
     the following new subsection:
       ``(f) Section Not to Apply.--This section shall not apply 
     to any taxable year beginning after December 31, 2017, and 
     before January 1, 2026.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11047. MODIFICATION OF EXCLUSION OF GAIN FROM SALE OF 
                   PRINCIPAL RESIDENCE.

       (a) In General.--Section 121 is amended by adding at the 
     end the following new subsection:
       ``(h) Special Rules for Sales or Exchanges in Taxable Years 
     2018 Through 2025.--
       ``(1) In general.--In applying this section with respect to 
     sales or exchanges after December 31, 2017, and before 
     January 1, 2026--
       ``(A) `8-year' shall be substituted for `5-year' each place 
     it appears in subsections (a), (b)(5)(C)(ii)(I), and 
     (c)(1)(B)(i)(I) and paragraphs (7), (9), (10), and (12) of 
     subsection (d),
       ``(B) `5 years' shall be substituted for `2 years' each 
     place it appears in subsections (a), (b)(3), (b)(4), 
     (b)(5)(C)(ii)(III), and (c)(1)(B)(ii), and
       ``(C) `5-year' shall be substituted for `2-year' in 
     subsection (b)(3).
       ``(2) Exception for binding contracts.--Paragraph (1) shall 
     not apply to any sale or exchange with respect to which there 
     was a written binding contract in effect before January 1, 
     2018, and at all times thereafter before the sale or 
     exchange.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales and exchanges after December 31, 2017.

     SEC. 11048. SUSPENSION OF EXCLUSION FOR QUALIFIED BICYCLE 
                   COMMUTING REIMBURSEMENT.

       (a) In General.--Section 132(f) is amended by adding at the 
     end the following new paragraph:
       ``(8) Suspension of qualified bicycle commuting 
     reimbursement exclusion.--Paragraph (1)(D) shall not apply to 
     any taxable year beginning after December 31, 2017, and 
     before January 1, 2026.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11049. SUSPENSION OF EXCLUSION FOR QUALIFIED MOVING 
                   EXPENSE REIMBURSEMENT.

       (a) In General.--Section 132(g) is amended--

[[Page S7424]]

       (1) by striking ``For purposes of this section, the term'' 
     and inserting ``For purposes of this section--
       ``(1) In general.--The term'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Suspension for taxable years 2018 through 2025.--
     Except in the case of a member of the Armed Forces of the 
     United States on active duty who moves pursuant to a military 
     order and incident to a permanent change of station, 
     subsection (a)(6) shall not apply to any taxable year 
     beginning after December 31, 2017, and before January 1, 
     2026.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11050. SUSPENSION OF DEDUCTION FOR MOVING EXPENSES.

       (a) In General.--Section 217 is amended by adding at the 
     end the following new subsection:
       ``(k) Suspension of Deduction for Taxable Years 2018 
     Through 2025.--Except in the case of an individual to whom 
     subsection (g) applies, this section shall not apply to any 
     taxable year beginning after December 31, 2017, and before 
     January 1, 2026.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11051. LIMITATION ON WAGERING LOSSES.

       (a) In General.--Section 165(d) is amended by adding at the 
     end the following: ``For purposes of the preceding sentence, 
     in the case of taxable years beginning after December 31, 
     2017, and before January 1, 2026, the term `losses from 
     wagering transactions' includes any deduction otherwise 
     allowable under this chapter incurred in carrying on any 
     wagering transaction.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

           PART VI--INCREASE IN ESTATE AND GIFT TAX EXEMPTION

     SEC. 11061. INCREASE IN ESTATE AND GIFT TAX EXEMPTION.

       (a) In General.--Section 2010(c)(3) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Increase in basic exclusion amount.--In the case of 
     estates of decedents dying or gifts made after December 31, 
     2017, and before January 1, 2026, subparagraph (A) shall be 
     applied by substituting `$10,000,000' for `$5,000,000'.''.
       (b) Conforming Amendment.--Subsection (g) of section 2001 
     is amended to read as follows:
       ``(g) Modifications to Tax Payable.--
       ``(1) Modifications to gift tax payable to reflect 
     different tax rates.--For purposes of applying subsection 
     (b)(2) with respect to 1 or more gifts, the rates of tax 
     under subsection (c) in effect at the decedent's death shall, 
     in lieu of the rates of tax in effect at the time of such 
     gifts, be used both to compute--
       ``(A) the tax imposed by chapter 12 with respect to such 
     gifts, and
       ``(B) the credit allowed against such tax under section 
     2505, including in computing--
       ``(i) the applicable credit amount under section 
     2505(a)(1), and
       ``(ii) the sum of the amounts allowed as a credit for all 
     preceding periods under section 2505(a)(2).
       ``(2) Modifications to estate tax payable to reflect 
     different basic exclusion amounts.--The Secretary shall 
     prescribe such regulations as may be necessary or appropriate 
     to carry out this section with respect to any difference 
     between--
       ``(A) the basic exclusion amount under section 2010(c)(3) 
     applicable at the time of the decedent's death, and
       ``(B) the basic exclusion amount under such section 
     applicable with respect to any gifts made by the decedent.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying and gifts made 
     after December 31, 2017.

            PART VII--TAXPAYER RIGHTS AND TAX ADMINISTRATION

     SEC. 11071. EXTENSION OF TIME LIMIT FOR CONTESTING IRS LEVY.

       (a) Extension of Time for Return of Property Subject to 
     Levy.--Subsection (b) of section 6343 is amended by striking 
     ``9 months'' and inserting ``2 years''.
       (b) Period of Limitation on Suits.--Subsection (c) of 
     section 6532 is amended--
       (1) by striking ``9 months'' in paragraph (1) and inserting 
     ``2 years'', and
       (2) by striking ``9-month'' in paragraph (2) and inserting 
     ``2-year''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) levies made after the date of the enactment of this 
     Act, and
       (2) levies made on or before such date if the 9-month 
     period has not expired under section 6343(b) of the Internal 
     Revenue Code of 1986 (without regard to this section) as of 
     such date.

     SEC. 11072. INDIVIDUALS HELD HARMLESS ON IMPROPER LEVY ON 
                   RETIREMENT PLANS.

       (a) In General.--Section 6343 is amended by adding at the 
     end the following new subsection:
       ``(f) Individuals Held Harmless on Wrongful Levy, etc. on 
     Retirement Plan.--
       ``(1) In general.--If the Secretary determines that an 
     individual's account or benefit under an eligible retirement 
     plan (as defined in section 402(c)(8)(B)) has been levied 
     upon in a case to which subsection (b) or (d)(2)(A) applies 
     and property or an amount of money is returned to the 
     individual--
       ``(A) the individual may contribute such property or an 
     amount equal to the sum of--
       ``(i) the amount of money so returned by the Secretary, and
       ``(ii) interest paid under subsection (c) on such amount of 
     money,
     into such eligible retirement plan if such contribution is 
     permitted by the plan, or into an individual retirement plan 
     (other than an endowment contract) to which a rollover 
     contribution of a distribution from such eligible retirement 
     plan is permitted, but only if such contribution is made not 
     later than the due date (not including extensions) for filing 
     the return of tax for the taxable year in which such property 
     or amount of money is returned, and
       ``(B) the Secretary shall, at the time such property or 
     amount of money is returned, notify such individual that a 
     contribution described in subparagraph (A) may be made.
       ``(2) Treatment as rollover.--The distribution on account 
     of the levy and any contribution under paragraph (1) with 
     respect to the return of such distribution shall be treated 
     for purposes of this title as if such distribution and 
     contribution were described in section 402(c), 402A(c)(3), 
     403(a)(4), 403(b)(8), 408(d)(3), 408A(d)(3), or 457(e)(16), 
     whichever is applicable; except that--
       ``(A) the contribution shall be treated as having been made 
     for the taxable year in which the distribution on account of 
     the levy occurred, and the interest paid under subsection (c) 
     shall be treated as earnings within the plan after the 
     contribution and shall not be included in gross income, and
       ``(B) such contribution shall not be taken into account 
     under section 408(d)(3)(B).
       ``(3) Refund, etc., of income tax on levy.--
       ``(A) In general.--If any amount is includible in gross 
     income for a taxable year by reason of a distribution on 
     account of a levy referred to in paragraph (1) and any 
     portion of such amount is treated as a rollover contribution 
     under paragraph (2), any tax imposed by chapter 1 on such 
     portion shall not be assessed, and if assessed shall be 
     abated, and if collected shall be credited or refunded as an 
     overpayment made on the due date for filing the return of tax 
     for such taxable year.
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     rollover contribution under this subsection which is made 
     from an eligible retirement plan which is not a Roth IRA or a 
     designated Roth account (within the meaning of section 402A) 
     to a Roth IRA or a designated Roth account under an eligible 
     retirement plan.
       ``(4) Interest.--Notwithstanding subsection (d), interest 
     shall be allowed under subsection (c) in a case in which the 
     Secretary makes a determination described in subsection 
     (d)(2)(A) with respect to a levy upon an individual 
     retirement plan.
       ``(5) Treatment of inherited accounts.--For purposes of 
     paragraph (1)(A), section 408(d)(3)(C) shall be disregarded 
     in determining whether an individual retirement plan is a 
     plan to which a rollover contribution of a distribution from 
     the plan levied upon is permitted.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid under subsections (b), (c), and 
     (d)(2)(A) of section 6343 of the Internal Revenue Code of 
     1986 in taxable years beginning after December 31, 2017.

     SEC. 11073. MODIFICATION OF USER FEE REQUIREMENTS FOR 
                   INSTALLMENT AGREEMENTS.

       (a) In General.--Section 6159 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Installment Agreement Fees.--
       ``(1) Limitation on fee amount.--The amount of any fee 
     imposed on an installment agreement under this section may 
     not exceed the amount of such fee as in effect on the date of 
     the enactment of this subsection.
       ``(2) Waiver or reimbursement.--In the case of any taxpayer 
     with an adjusted gross income, as determined for the most 
     recent year for which such information is available, which 
     does not exceed 250 percent of the applicable poverty level 
     (as determined by the Secretary)--
       ``(A) if the taxpayer has agreed to make payments under the 
     installment agreement by electronic payment through a debit 
     instrument, no fee shall be imposed on an installment 
     agreement under this section, and
       ``(B) if the taxpayer is unable to make payments under the 
     installment agreement by electronic payment through a debit 
     instrument, the Secretary shall, upon completion of the 
     installment agreement, pay the taxpayer an amount equal to 
     any such fees imposed.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to agreements entered into on or after the date 
     which is 60 days after the date of the enactment of this Act.

     SEC. 11074. FORM 1040SR FOR SENIORS.

       (a) In General.--The Secretary of the Treasury (or the 
     Secretary's delegate) shall make available a form, to be 
     known as ``Form 1040SR'', for use by individuals to file the 
     return of tax imposed by chapter 1 of the Internal Revenue 
     Code of 1986. Such form shall be as similar as practicable to 
     Form 1040EZ, except that--
       (1) the form shall be available only to individuals who 
     have attained age 65 as of the close of the taxable year,

[[Page S7425]]

       (2) the form may be used even if income for the taxable 
     year includes--
       (A) social security benefits (as defined in section 86(d) 
     of the Internal Revenue Code of 1986),
       (B) distributions from qualified retirement plans (as 
     defined in section 4974(c) of such Code), annuities or other 
     such deferred payment arrangements,
       (C) interest and dividends, or
       (D) capital gains and losses taken into account in 
     determining adjusted net capital gain (as defined in section 
     1(h)(3) of such Code), and
       (3) the form shall be available without regard to the 
     amount of any item of taxable income or the total amount of 
     taxable income for the taxable year.
       (b) Effective Date.--The form required by subsection (a) 
     shall be made available for taxable years beginning after the 
     date of the enactment of this Act and ending before January 
     1, 2026.

     SEC. 11075. SENSE OF THE SENATE ON IMPROVING CUSTOMER SERVICE 
                   AND PROTECTIONS FOR TAXPAYERS BY REINSTATING 
                   APPROPRIATE FUNDING LEVELS.

       It is the sense of the Senate that politically motivated 
     budget cuts--
       (1) are counterproductive to deficit reduction,
       (2) diminish the ability of the Internal Revenue Service to 
     adequately serve taxpayers and protect taxpayer information, 
     and
       (3) reduce the ability of the Internal Revenue Service to 
     enforce the law.

     SEC. 11076. RETURN PREPARATION PROGRAMS FOR LOW-INCOME 
                   TAXPAYERS.

       (a) In General.--Chapter 77 is amended by inserting after 
     section 7526 the following new section:

     ``SEC. 7526A. RETURN PREPARATION PROGRAMS FOR LOW-INCOME 
                   TAXPAYERS.

       ``(a) Volunteer Income Tax Assistance Matching Grant 
     Program.--
       ``(1) Establishment of program.--The Secretary, through the 
     Internal Revenue Service, shall establish a Community 
     Volunteer Income Tax Assistance Matching Grant Program 
     (hereinafter in this section referred to as the `VITA grant 
     program'). Except as otherwise provided in this section, the 
     VITA grant program shall be administered in a manner which is 
     substantially similar to the Community Volunteer Income Tax 
     Assistance matching grants demonstration program established 
     under title I of division D of the Consolidated 
     Appropriations Act, 2008.
       ``(2) Matching grants.--
       ``(A) In general.--The Secretary shall, subject to the 
     availability of appropriated funds, make available grants 
     under the VITA grant program to provide matching funds for 
     the development, expansion, or continuation of qualified 
     return preparation programs assisting low-income taxpayers 
     and members of underserved populations.
       ``(B) Application.--
       ``(i) In general.--Subject to clause (ii), in order to be 
     eligible for a grant under this section, a qualified return 
     preparation program shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary reasonably requires.
       ``(ii) Accuracy review.--In the case of any qualified 
     return preparation program which was awarded a grant under 
     this section and was subsequently subject to a field site 
     visit by the Internal Revenue Service (including through the 
     Stakeholder Partnerships, Education, and Communication 
     office) in which it was determined that the average accuracy 
     rate for preparation of tax returns through such program was 
     less than 90 percent, such program shall not be eligible for 
     any additional grants under this section unless such program 
     provides, as part of their application, sufficient 
     documentation regarding the corrective measures established 
     by such program to address the deficiencies identified 
     following the field site visit.
       ``(C) Priority.--In awarding grants under this section, the 
     Secretary shall give priority to applications--
       ``(i) demonstrating assistance to low-income taxpayers, 
     with emphasis on outreach to and services for such taxpayers,
       ``(ii) demonstrating taxpayer outreach and educational 
     activities relating to eligibility and availability of income 
     supports available through the Internal Revenue Code of 1986, 
     such as the earned income tax credit, and
       ``(iii) demonstrating specific outreach and focus on one or 
     more underserved populations.
       ``(D) Duration of grants.--Upon application of a qualified 
     return preparation program, the Secretary is authorized to 
     award a multi-year grant not to exceed 3 years.
       ``(3) Aggregate limitation.--Unless otherwise provided by 
     specific appropriation, the Secretary shall not allocate more 
     than $30,000,000 per fiscal year (exclusive of costs of 
     administering the program) to carry out the purposes of this 
     section.
       ``(b) Use of Funds.--
       ``(1) In general.--Qualified return preparation programs 
     receiving a grant under this section may use the grant for--
       ``(A) ordinary and necessary costs associated with program 
     operation in accordance with Cost Principles Circulars as set 
     forth by the Office of Management and Budget, including--
       ``(i) for wages or salaries of persons coordinating the 
     activities of the program,
       ``(ii) to develop training materials, conduct training, and 
     perform quality reviews of the returns for which assistance 
     has been provided under the program, and
       ``(iii) for equipment purchases and vehicle-related 
     expenses associated with remote or rural tax preparation 
     services,
       ``(B) outreach and educational activities described in 
     subsection (a)(2)(C)(ii), and
       ``(C) services related to financial education and 
     capability, asset development, and the establishment of 
     savings accounts in connection with tax return preparation.
       ``(2) Use of grants for overhead expenses prohibited.--No 
     grant made under this section may be used for overhead 
     expenses that are not directly related to any qualified 
     return preparation program.
       ``(c) Promotion and Referral.--
       ``(1) Promotion.--The Secretary shall promote the benefits 
     of, and encourage the use of, tax preparation through 
     qualified return preparation programs through the use of mass 
     communications, referrals, and other means.
       ``(2) Internal revenue service referrals.--The Secretary 
     shall refer taxpayers to qualified return preparation 
     programs receiving funding under this section.
       ``(3) VITA grantee referral.--Qualified return preparation 
     programs receiving a grant under this section are encouraged 
     to refer, as appropriate, to local or regional Low Income 
     Taxpayer Clinics individuals who are eligible to receive 
     services at such clinics.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified return preparation program.--The term 
     `qualified return preparation program' means any program--
       ``(A) which provides assistance to individuals, not less 
     than 90 percent of whom are low-income taxpayers, in 
     preparing and filing Federal income tax returns,
       ``(B) which is administered by a qualified entity,
       ``(C) in which all of the volunteers who assist in the 
     preparation of Federal income tax returns meet the training 
     requirements prescribed by the Secretary, and
       ``(D) which uses a quality review process which reviews 100 
     percent of all returns.
       ``(2) Qualified entity.--
       ``(A) In general.--The term `qualified entity' means any 
     entity which--
       ``(i) is an eligible organization (as described in 
     subparagraph (B)),
       ``(ii) is in compliance with Federal tax filing and payment 
     requirements,
       ``(iii) is not debarred or suspended from Federal 
     contracts, grants, or cooperative agreements, and
       ``(iv) agrees to provide documentation to substantiate any 
     matching funds provided under the VITA grant program.
       ``(B) Eligible organization.--
       ``(i) In general.--Subject to clause (ii), the term 
     `eligible organization' means--

       ``(I) an institution of higher education which is described 
     in section 102 (other than subsection (a)(1)(C) thereof) of 
     the Higher Education Act of 1965 (20 U.S.C. 1088), as in 
     effect on the date of the enactment of this section, and 
     which has not been disqualified from participating in a 
     program under title IV of such Act,
       ``(II) an organization described in section 501(c) of the 
     Internal Revenue Code of 1986 and exempt from tax under 
     section 501(a) of such Code,
       ``(III) a local government agency, including--

       ``(aa) a county or municipal government agency, and
       ``(bb) an Indian tribe, as defined in section 4(13) of the 
     Native American Housing Assistance and Self-Determination Act 
     of 1996 (25 U.S.C. 4103(13)), including any tribally 
     designated housing entity (as defined in section 4(22) of 
     such Act (25 U.S.C. 4103(22))), tribal subsidiary, 
     subdivision, or other wholly owned tribal entity, or

       ``(IV) a local, State, regional, or national coalition 
     (with one lead organization which meets the eligibility 
     requirements of subclause (I), (II), or (III) acting as the 
     applicant organization).

       ``(ii) Alternative eligible organization.--If no eligible 
     organization described in clause (i) is available to assist 
     the targeted population or community, the term `eligible 
     organization' shall include--

       ``(I) a State government agency, and
       ``(II) a Cooperative Extension Service office.

       ``(3) Low-income taxpayers.--The term `low-income taxpayer' 
     means a taxpayer who has income for the taxable year which 
     does not exceed an amount equal to the completed phaseout 
     amount under section 32(b) for a married couple filing a 
     joint return with three or more qualifying children, as 
     determined in a revenue procedure or other published 
     guidance.
       ``(4) Underserved population.--The term `underserved 
     population' includes populations of persons with 
     disabilities, persons with limited English proficiency, 
     Native Americans, individuals living in rural areas, members 
     of the Armed Forces and their spouses, and the elderly.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by inserting after the item relating to section 
     7526 the following new item:

``7526A. Return preparation programs for low-income taxpayers.''.

     SEC. 11077. FREE FILE PROGRAM.

       (a) The Secretary of the Treasury, or the Secretary's 
     delegate, shall continue to operate the IRS Free File Program 
     as established by the Internal Revenue Service and published 
     in the Federal Register on November

[[Page S7426]]

     4, 2002 (67 Fed. Reg. 67247), including any subsequent 
     agreements and governing rules established pursuant thereto.
       (b) The IRS Free File Program shall continue to provide 
     free commercial-type online individual income tax preparation 
     and electronic filing services to the lowest 70 percent of 
     taxpayers by income. The number of taxpayers eligible to 
     receive such services each year shall be calculated by the 
     Internal Revenue Service annually based on prior year 
     aggregate taxpayer adjusted gross income data.
       (c) In addition to the services described in subsection 
     (b), and in the same manner, the IRS Free File Program shall 
     continue to make available to all taxpayers (without regard 
     to income) a basic, online electronic fillable forms utility.
       (d) The IRS Free File Program shall continue to work 
     cooperatively with the private sector to provide the free 
     individual income tax preparation and the electronic filing 
     services described in subsections (b) and (c).
       (e) The IRS Free File Program shall work cooperatively with 
     State government agencies to enhance and expand the use of 
     the program to provide needed benefits to the taxpayer while 
     reducing the cost of processing returns.
       (f) Nothing in this section is intended to impact the 
     continuity of services provided under Taxpayer Assistance 
     Centers, Tax Counseling for the Elderly, and Volunteer Income 
     Tax Assistance programs.

     SEC. 11078. ATTORNEYS' FEES RELATING TO AWARDS TO 
                   WHISTLEBLOWERS.

       (a) In General.--Paragraph (21) of section 62(a) is amended 
     to read as follows:
       ``(21) Attorneys' fees relating to awards to 
     whistleblowers.--
       ``(A) In general.--Any deduction allowable under this 
     chapter for attorney fees and court costs paid by, or on 
     behalf of, the taxpayer in connection with any award under--
       ``(i) section 7623(b), or
       ``(ii) in the case of taxable years beginning after 
     December 31, 2017, and before January 1, 2026, any action 
     brought under--

       ``(I) section 21F of the Securities Exchange Act of 1934 
     (15 U.S.C. 78u-6),
       ``(II) a State law relating to false or fraudulent claims 
     that meets the requirements described in section 1909(b) of 
     the Social Security Act (42 U.S.C. 1396h(b)), or
       ``(III) section 23 of the Commodity Exchange Act (7 U.S.C. 
     26).

       ``(B) May not exceed award.--Subparagraph (A) shall not 
     apply to any deduction in excess of the amount includible in 
     the taxpayer's gross income for the taxable year on account 
     of such award.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 11079. CLARIFICATION OF WHISTLEBLOWER AWARDS.

       (a) Definition of Proceeds.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsection:
       ``(c) Proceeds.--For purposes of this section, the term 
     `proceeds' includes--
       ``(1) penalties, interest, additions to tax, and additional 
     amounts provided under the internal revenue laws, and
       ``(2) any proceeds arising from laws for which the Internal 
     Revenue Service is authorized to administer, enforce, or 
     investigate, including--
       ``(A) criminal fines and civil forfeitures, and
       ``(B) violations of reporting requirements.''.
       (2) Conforming amendments.--Paragraphs (1) and (2)(A) of 
     section 7623(b) are each amended by striking ``collected 
     proceeds (including penalties, interest, additions to tax, 
     and additional amounts) resulting from the action'' and 
     inserting ``proceeds collected as a result of the action''.
       (b) Amount of Proceeds Determined Without Regard to 
     Availability.--Paragraphs (1) and (2)(A) of section 7623(b) 
     are each amended by inserting ``(determined without regard to 
     whether such proceeds are available to the Secretary)'' after 
     ``in response to such action''.
       (c) Disputed Amount Threshold.--Section 7623(b)(5)(B) is 
     amended by striking ``tax, penalties, interest, additions to 
     tax, and additional amounts'' and inserting ``proceeds''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to information provided before, on, or after the 
     date of the enactment of this Act with respect to which a 
     final determination for an award has not been made before 
     such date of enactment.

                     PART VIII--INDIVIDUAL MANDATE

     SEC. 11081. ELIMINATION OF SHARED RESPONSIBILITY PAYMENT FOR 
                   INDIVIDUALS FAILING TO MAINTAIN MINIMUM 
                   ESSENTIAL COVERAGE.

       (a) In General.--Section 5000A(c) is amended--
       (1) in paragraph (2)(B)(iii), by striking ``2.5 percent'' 
     and inserting ``Zero percent'', and
       (2) in paragraph (3)--
       (A) by striking ``$695'' in subparagraph (A) and inserting 
     ``$0'', and
       (B) by striking subparagraph (D).
       (b) Effective Date.--The amendment made by this section 
     shall apply to months beginning after December 31, 2018.

                  Subtitle B--Alternative Minimum Tax

     SEC. 12001. REPEAL OF TAX FOR CORPORATIONS.

       (a) In General.--Section 55(a) is amended by striking 
     ``There'' and inserting ``In the case of a taxpayer other 
     than a corporation, there''.
       (b) Conforming Amendments.--
       (1) Section 38(c)(6) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Corporations.--In the case of a corporation, this 
     subsection shall be applied by treating the corporation as 
     having a tentative minimum tax of zero.''.
       (2)(A) Section 55(b)(1) is amended to read as follows:
       ``(1) Amount of tentative tax.--
       ``(A) In general.--The tentative minimum tax for the 
     taxable year is the sum of--
       ``(i) 26 percent of so much of the taxable excess as does 
     not exceed $175,000, plus
       ``(ii) 28 percent of so much of the taxable excess as 
     exceeds $175,000.
     The amount determined under the preceding sentence shall be 
     reduced by the alternative minimum tax foreign tax credit for 
     the taxable year.
       ``(B) Taxable excess.--For purposes of this subsection, the 
     term `taxable excess' means so much of the alternative 
     minimum taxable income for the taxable year as exceeds the 
     exemption amount.
       ``(C) Married individual filing separate return.--In the 
     case of a married individual filing a separate return, 
     subparagraph (A) shall be applied by substituting 50 percent 
     of the dollar amount otherwise applicable under clause (i) 
     and cause (ii) thereof. For purposes of the preceding 
     sentence, marital status shall be determined under section 
     7703.''.
       (B) Section 59(a) is amended--
       (i) by striking ``subparagraph (A)(i) or (B)(i) of section 
     55(b)(1) (whichever applies) in lieu of the highest rate of 
     tax specified in section 1 or 11 (whichever applies)'' in 
     paragraph (1)(C) and inserting ``section 55(b)(1) in lieu of 
     the highest rate of tax specified in section 1'', and
       (ii) in paragraph (2), by striking ``means'' and all that 
     follows and inserting ``means the amount determined under the 
     first sentence of section 55(b)(1).''.
       (C) Section 897(a)(2)(A) is amended by striking ``section 
     55(b)(1)(A)'' and inserting ``section 55(b)(1)''.
       (D) Section 911(f) is amended--
       (i) in paragraph (1)(B)--
       (I) by striking ``section 55(b)(1)(A)(ii)'' and inserting 
     ``section 55(b)(1)(B)'', and
       (II) by striking ``section 55(b)(1)(A)(i)'' and inserting 
     ``section 55(b)(1)(A)'', and
       (ii) in paragraph (2)(B), by striking ``section 
     55(b)(1)(A)(ii)'' each place it appears and inserting 
     ``section 55(b)(1)(B)''.
       (3) Section 55(c)(1) is amended by striking ``, the section 
     936 credit allowable under section 27(b), and the Puerto Rico 
     economic activity credit under section 30A''.
       (4) Section 55(d) is amended--
       (A) by striking paragraph (2) and redesignating paragraphs 
     (3) and (4) as paragraphs (2) and (3), respectively,
       (B) in paragraph (2) (as so redesignated), by inserting 
     ``and'' at the end of subparagraph (B), by striking ``, and'' 
     at the end of subparagraph (C) and inserting a period, and by 
     striking subparagraph (D), and
       (C) in paragraph (3) (as so redesignated)--
       (i) by striking ``(b)(1)(A)(i)'' in subparagraph (B)(i) and 
     inserting ``(b)(1)(A)'', and
       (ii) by striking ``paragraph (3)'' in subparagraph (B)(iii) 
     and inserting ``paragraph (2)''.
       (5) Section 55 is amended by striking subsection (e).
       (6)(A) Section 56 is amended by striking subsections (c) 
     and (g).
       (B) Section 847 is amended by striking the last sentence of 
     paragraph (9).
       (C) Section 848 is amended by striking subsection (i).
       (7) Section 58(a) is amended by striking paragraph (3) and 
     redesignating paragraph (4) as paragraph (3).
       (8) Section 59 is amended by striking subsections (b) and 
     (f).
       (9) Section 11(d) is amended by striking ``the taxes 
     imposed by subsection (a) and section 55'' and inserting 
     ``the tax imposed by subsection (a)''.
       (10) Section 12 is amended by striking paragraph (7).
       (11) Section 168(k) is amended by striking paragraph (4).
       (12) Section 882(a)(1) is amended by striking ``, 55,''.
       (13) Section 962(a)(1) is amended by striking ``sections 11 
     and 55'' and inserting ``section 11''.
       (14) Section 1561(a) is amended--
       (A) by inserting ``and'' at the end of paragraph (1), by 
     striking ``, and'' at the end of paragraph (2) and inserting 
     a period, and by striking paragraph (3), and
       (B) by striking the last sentence.
       (15) Section 6425(c)(1)(A) is amended to read as follows:
       ``(A) the tax imposed by section 11 or 1201(a), or 
     subchapter L of chapter 1, whichever is applicable, over''.
       (16) Section 6655(e)(2) is amended by striking ``and 
     alternative minimum taxable income'' each place it appears in 
     subparagraphs (A) and (B)(i).
       (17) Section 6655(g)(1)(A) is amended by inserting ``plus'' 
     at the end of clause (i), by striking clause (ii), and by 
     redesignating clause (iii) as clause (ii).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 12002. SUSPENSION OF TAX ON INDIVIDUALS.

       (a) In General.--Section 55(a) is amended by adding at the 
     end the following new flush sentence:
     ``No tax shall be imposed by this section for any taxable 
     year beginning after December 31, 2017, and before January 1, 
     2026, and the

[[Page S7427]]

     tentative minimum tax of any taxpayer for any such taxable 
     year shall be zero for purposes of this title.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 12003. CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.

       (a) Credits Treated as Refundable.--Section 53 is amended 
     by adding at the end the following new subsection:
       ``(e) Portion of Credit Treated as Refundable.--
       ``(1) In general.--In the case of any taxable year 
     beginning in 2018, 2019, 2020, or 2021, the limitation under 
     subsection (c) shall be increased by the AMT refundable 
     credit amount for such year.
       ``(2) AMT refundable credit amount.--For purposes of 
     paragraph (1), the AMT refundable credit amount is an amount 
     equal to 50 percent (100 percent in the case of a taxable 
     year beginning in 2021) of the excess (if any) of--
       ``(A) the minimum tax credit determined under subsection 
     (b) for the taxable year, over
       ``(B) the minimum tax credit allowed under subsection (a) 
     for such year (before the application of this subsection for 
     such year).
       ``(3) Credit refundable.--For purposes of this title (other 
     than this section), the credit allowed by reason of this 
     subsection shall be treated as a credit allowed under subpart 
     C (and not this subpart).
       ``(4) Short taxable years.--In the case of any taxable year 
     of less than 365 days, the AMT refundable credit amount 
     determined under paragraph (2) with respect to such taxable 
     year shall be the amount which bears the same ratio to such 
     amount determined without regard to this paragraph as the 
     number of days in such taxable year bears to 365.''.
       (b) Treatment of References.--Section 53(d) is amended by 
     adding at the end the following new paragraph:
       ``(3) AMT term references.--In the case of a corporation, 
     any references in this subsection to section 55, 56, or 57 
     shall be treated as a reference to such section as in effect 
     before the amendments made by Tax Cuts and Jobs Act.''.
       (c) Conforming Amendment.--Section 1374(b)(3)(B) is amended 
     by striking the last sentence thereof.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2017.
       (2) Conforming amendment.--The amendment made by subsection 
     (c) shall apply to taxable years beginning after December 31, 
     2021.

                Subtitle C--Business-related Provisions

                      PART I--CORPORATE PROVISIONS

                     Subpart A--20-percent Tax Rate

     SEC. 13001. 20-PERCENT CORPORATE TAX RATE.

       (a) In General.--Subsection (b) of section 11 is amended to 
     read as follows:
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) shall be 20 percent of taxable income.''.
       (b) Conforming Amendments.--
       (1) The following sections are each amended by striking 
     ``section 11(b)(1)'' and inserting ``section 11(b)'':
       (A) Section 280C(c)(3)(B)(ii)(II).
       (B) Paragraphs (2)(B) and (6)(A)(ii) of section 860E(e).
       (C) Section 7874(e)(1)(B)
       (2)(A) Part I of subchapter P of chapter 1 is amended by 
     striking section 1201 (and by striking the item relating to 
     such section in the table of sections for such part).
       (B) Section 12 is amended by striking paragraphs (4) and 
     (6), and by redesignating paragraph (5) as paragraph (4).
       (C) Section 453A(c)(3) is amended by striking ``or 1201 
     (whichever is appropriate)''.
       (D) Section 527(b) is amended--
       (i) by striking paragraph (2), and
       (ii) by striking all that precedes ``is hereby imposed'' 
     and inserting:
       ``(b) Tax Imposed.--A tax''.
       (E) Sections 594(a) is amended by striking ``taxes imposed 
     by section 11 or 1201(a)'' and inserting ``tax imposed by 
     section 11''.
       (F) Section 691(c)(4) is amended by striking ``1201,''.
       (G) Section 801(a) is amended--
       (i) by striking paragraph (2), and
       (ii) by striking all that precedes ``is hereby imposed'' 
     and inserting:
       ``(a) Tax Imposed.--A tax''.
       (H) Section 831(e) is amended by striking paragraph (1) and 
     by redesignating paragraphs (2) and (3) as paragraphs (1) and 
     (2), respectively.
       (I) Sections 832(c)(5) and 834(b)(1)(D) are each amended by 
     striking ``sec. 1201 and following,''.
       (J) Section 852(b)(3)(A) is amended by striking ``section 
     1201(a)'' and inserting ``section 11(b)''.
       (K) Section 857(b)(3) is amended--
       (i) by striking subparagraph (A) and redesignating 
     subparagraphs (B) through (F) as subparagraphs (A) through 
     (E), respectively,
       (ii) in subparagraph (C), as so redesignated--
       (I) by striking ``subparagraph (A)(ii)'' in clause (i) 
     thereof and inserting ``paragraph (1)'',
       (II) by striking ``the tax imposed by subparagraph 
     (A)(ii)'' in clauses (ii) and (iv) thereof and inserting 
     ``the tax imposed by paragraph (1) on undistributed capital 
     gain'',
       (iii) in subparagraph (E), as so redesignated, by striking 
     ``subparagraph (B) or (D)'' and inserting ``subparagraph (A) 
     or (C)'', and
       (iv) by adding at the end the following new subparagraph:
       ``(F) Undistributed capital gain.--For purposes of this 
     paragraph, the term `undistributed capital gain' means the 
     excess of the net capital gain over the deduction for 
     dividends paid (as defined in section 561) determined with 
     reference to capital gain dividends only.''.
       (L) Section 882(a)(1), as amended by section 12001, is 
     amended by striking ``or 1201(a)''.
       (M) Section 904(b) is amended--
       (i) by striking ``or 1201(a)'' in paragraph (2)(C),
       (ii) by striking paragraph (3)(D) and inserting the 
     following:
       ``(D) Capital gain rate differential.--There is a capital 
     gain rate differential for any year if subsection (h) of 
     section 1 applies to such taxable year.'', and
       (iii) by striking paragraph (3)(E) and inserting the 
     following:
       ``(E) Rate differential portion.--The rate differential 
     portion of foreign source net capital gain, net capital gain, 
     or the excess of net capital gain from sources within the 
     United States over net capital gain, as the case may be, is 
     the same proportion of such amount as--
       ``(i) the excess of--

       ``(I) the highest rate of tax set forth in subsection (a), 
     (b), (c), (d), or (e) of section 1 (whichever applies), over
       ``(II) the alternative rate of tax determined under section 
     1(h), bears to

       ``(ii) that rate referred to in subclause (I).''.
       (N) Section 1374(b) is amended by striking paragraph (4).
       (O) Section 1381(b) is amended by striking ``taxes imposed 
     by section 11 or 1201'' and inserting ``tax imposed by 
     section 11''.
       (P) Sections 6425(c)(1)(A), as amended by section 12001, 
     and 6655(g)(1)(A)(i) are each amended by striking ``or 
     1201(a),''.
       (Q) Section 7518(g)(6)(A) is amended by striking ``or 
     1201(a)''.
       (3)(A) Section 1445(e)(1) is amended--
       (i) by striking ``35 percent'' and inserting ``the highest 
     rate of tax in effect for the taxable year under section 
     11(b)'', and
       (ii) by striking ``of the gain'' and inserting ``multiplied 
     by the gain''.
       (B) Section 1445(e)(2) is amended by striking ``35 percent 
     of the amount'' and inserting ``the highest rate of tax in 
     effect for the taxable year under section 11(b) multiplied by 
     the amount''.
       (C) Section 1445(e)(6) is amended--
       (i) by striking ``35 percent'' and inserting ``the highest 
     rate of tax in effect for the taxable year under section 
     11(b)'', and
       (ii) by striking ``of the amount'' and inserting 
     ``multiplied by the amount''.
       (D) Section 1446(b)(2)(B) is amended by striking ``section 
     11(b)(1)'' and inserting ``section 11(b)''.
       (4) Section 852(b)(1) is amended by striking the last 
     sentence.
       (5)(A) Part I of subchapter B of chapter 5 is amended by 
     striking section 1551 (and by striking the item relating to 
     such section in the table of sections for such part).
       (B) Section 535(c)(5) is amended to read as follows:
       ``(5) Cross reference.--For limitation on credit provided 
     in paragraph (2) or (3) in the case of certain controlled 
     corporations, see section 1561.''.
       (6)(A) Section 1561, as amended by section 12001, is 
     amended to read as follows:

     ``SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS CREDIT IN THE 
                   CASE OF CERTAIN CONTROLLED CORPORATIONS.

       ``(a) In General.--The component members of a controlled 
     group of corporations on a December 31 shall, for their 
     taxable years which include such December 31, be limited for 
     purposes of this subtitle to one $250,000 ($150,000 if any 
     component member is a corporation described in section 
     535(c)(2)(B)) amount for purposes of computing the 
     accumulated earnings credit under section 535(c)(2) and (3). 
     Such amount shall be divided equally among the component 
     members of such group on such December 31 unless the 
     Secretary prescribes regulations permitting an unequal 
     allocation of such amount.
       ``(b) Certain Short Taxable Years.--If a corporation has a 
     short taxable year which does not include a December 31 and 
     is a component member of a controlled group of corporations 
     with respect to such taxable year, then for purposes of this 
     subtitle, the amount to be used in computing the accumulated 
     earnings credit under section 535(c)(2) and (3) of such 
     corporation for such taxable year shall be the amount 
     specified in subsection (a) with respect to such group, 
     divided by the number of corporations which are component 
     members of such group on the last day of such taxable year. 
     For purposes of the preceding sentence, section 1563(b) shall 
     be applied as if such last day were substituted for December 
     31.''.
       (B) The table of sections for part II of subchapter B of 
     chapter 5 is amended by striking the item relating to section 
     1561 and inserting the following new item:

``Sec. 1561. Limitation on accumulated earnings credit in the case of 
              certain controlled corporations.''.
       (7) Section 7518(g)(6)(A) is amended--
       (A) by striking ``With respect to the portion'' and 
     inserting ``In the case of a taxpayer other than a 
     corporation, with respect to the portion'', and
       (B) by striking ``(34 percent in the case of a 
     corporation)''.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments

[[Page S7428]]

     made by this section shall apply to taxable years beginning 
     after December 31, 2018.
       (2) Withholding.--The amendments made by subsection (b)(3) 
     shall apply to distributions made after December 31, 2018.
       (3) Certain transfers.--The amendments made by subsection 
     (b)(6) shall apply to transfers made after December 31, 2018.
       (d) Normalization Requirements.--
       (1) In general.--A normalization method of accounting shall 
     not be treated as being used with respect to any public 
     utility property for purposes of section 167 or 168 of the 
     Internal Revenue Code of 1986 if the taxpayer, in computing 
     its cost of service for ratemaking purposes and reflecting 
     operating results in its regulated books of account, reduces 
     the excess tax reserve more rapidly or to a greater extent 
     than such reserve would be reduced under the average rate 
     assumption method.
       (2) Alternative method for certain taxpayers.--If, as of 
     the first day of the taxable year that includes the date of 
     enactment of this Act--
       (A) the taxpayer was required by a regulatory agency to 
     compute depreciation for public utility property on the basis 
     of an average life or composite rate method, and
       (B) the taxpayer's books and underlying records did not 
     contain the vintage account data necessary to apply the 
     average rate assumption method,
     the taxpayer will be treated as using a normalization method 
     of accounting if, with respect to such jurisdiction, the 
     taxpayer uses the alternative method for public utility 
     property that is subject to the regulatory authority of that 
     jurisdiction.
       (3) Definitions.--For purposes of this subsection--
       (A) Excess tax reserve.--The term ``excess tax reserve'' 
     means the excess of--
       (i) the reserve for deferred taxes (as described in section 
     168(i)(9)(A)(ii) of the Internal Revenue Code of 1986) as 
     determined under the Internal Revenue Code of 1986 as in 
     effect on the day before the date of the enactment of this 
     Act, over
       (ii) the amount which would be the balance in such reserve 
     if the amount of such reserve were determined by assuming 
     that the corporate rate reductions provided in this Act were 
     in effect for all prior periods.
       (B) Average rate assumption method.--The average rate 
     assumption method is the method under which the excess in the 
     reserve for deferred taxes is reduced over the remaining 
     lives of the property as used in its regulated books of 
     account which gave rise to the reserve for deferred taxes. 
     Under such method, if timing differences for the property 
     reverse, the amount of the adjustment to the reserve for the 
     deferred taxes is calculated by multiplying--
       (i) the ratio of the aggregate deferred taxes for the 
     property to the aggregate timing differences for the property 
     as of the beginning of the period in question, by
       (ii) the amount of the timing differences which reverse 
     during such period.
       (C) Alternative method.--The ``alternative method'' is the 
     method in which the taxpayer--
       (i) computes the excess tax reserve on all public utility 
     property included in the plant account on the basis of the 
     weighted average life or composite rate used to compute 
     depreciation for regulatory purposes, and
       (ii) reduces the excess tax reserve ratably over the 
     remaining regulatory life of the property.
       (4) Tax increased for normalization violation.--If, for any 
     taxable year ending after the date of the enactment of this 
     Act, the taxpayer does not use a normalization method of 
     accounting, the taxpayer's tax for the taxable year shall be 
     increased by the amount by which it reduces its excess tax 
     reserve more rapidly than permitted under a normalization 
     method of accounting.

     SEC. 13002. REDUCTION IN DIVIDEND RECEIVED DEDUCTIONS TO 
                   REFLECT LOWER CORPORATE INCOME TAX RATES.

       (a) Dividends Received by Corporations.--
       (1) In general.--Section 243(a)(1) is amended by striking 
     ``70 percent'' and inserting ``50 percent''.
       (2) Dividends from 20-percent owned corporations.--Section 
     243(c)(1) is amended--
       (A) by striking ``80 percent'' and inserting ``65 
     percent'', and
       (B) by striking ``70 percent'' and inserting ``50 
     percent''.
       (3) Conforming amendment.--The heading for section 243(c) 
     is amended by striking ``Retention of 80-percent Dividend 
     Received Deduction'' and inserting ``Increased Percentage''.
       (b) Dividends Received From FSC.--Section 245(c)(1)(B) is 
     amended--
       (1) by striking ``70 percent'' and inserting ``50 
     percent'', and
       (2) by striking ``80 percent'' and inserting ``65 
     percent''.
       (c) Limitation on Aggregate Amount of Deductions.--Section 
     246(b)(3) is amended--
       (1) by striking ``80 percent'' in subparagraph (A) and 
     inserting ``65 percent'', and
       (2) by striking ``70 percent'' in subparagraph (B) and 
     inserting ``50 percent''.
       (d) Reduction in Deduction Where Portfolio Stock Is Debt-
     financed.--Section 246A(a)(1) is amended--
       (1) by striking ``70 percent'' and inserting ``50 
     percent'', and
       (2) by striking ``80 percent'' and inserting ``65 
     percent''.
       (e) Income From Sources Within the United States.--Section 
     861(a)(2) is amended--
       (1) by striking ``100/70th'' and inserting ``100/50th'' in 
     subparagraph (B), and
       (2) in the flush sentence at the end--
       (A) by striking ``100/80th'' and inserting ``100/65th'', 
     and
       (B) by striking ``100/70th'' and inserting ``100/50th''.
       (f) Effective Date.--
       (1) In general.--The amendments made by this section (other 
     than subsection (c) thereof) shall apply to dividends 
     received by a corporation after December 31, 2018, in taxable 
     years ending after such date.
       (2) Limitation.--The amendments made by section 102(c) 
     shall apply to taxable years beginning after December 31, 
     2018.

     Subpart B--Dividends Paid Deduction for Domestic Corporations

     SEC. 13011. DIVIDENDS PAID DEDUCTION.

       (a) General Rule.--Part VIII of subchapter B of chapter 1 
     is amended by inserting after section 241 the following:

                 ``Subpart B--Dividends Paid Deduction

``Sec. 242. Dividends paid deduction.

     ``SEC. 242. DIVIDENDS PAID DEDUCTION.

       ``(a) Allowance of Deduction.--In the case of an eligible 
     corporation, there shall be allowed as a deduction an amount 
     equal to zero percent of the aggregate amount of applicable 
     dividends paid by the corporation during the taxable year.
       ``(b) Applicable Dividend.--For purposes of this section--
       ``(1) In general.--The term `applicable dividend' means, 
     with respect to an eligible corporation, any distribution by 
     the eligible corporation during a taxable year which is--
       ``(A) treated as a dividend for purposes of this chapter, 
     and
       ``(B) paid out of its applicable earnings and profits.
       ``(2) Ordering rule for dividend payments.--For purposes of 
     paragraph (1)(B), dividends shall be treated as paid--
       ``(A) first, out of exempt earnings and profits,
       ``(B) second, out of applicable earnings and profits, and
       ``(C) finally, out of earnings and profits not described in 
     subparagraph (A) or (B).
       ``(3) Coordination with other deductions.--Such term shall 
     not include--
       ``(A) any amount allowed as a deduction under section 591 
     (relating to deduction for dividends paid by mutual savings 
     banks, etc.), and
       ``(B) any dividend described in paragraph (2) of section 
     404(k) (relating to deduction for dividends paid on certain 
     employer securities).
       ``(4) Election to treat certain distributions paid after 
     close of year as paid during year.--For purposes of this 
     title, an eligible corporation may elect on its return of tax 
     for any taxable year to treat any distribution made on or 
     before the 15th day of the 4th month following the close of 
     the taxable year as having been made immediately before the 
     close of the taxable year. The preceding sentence shall not 
     apply for purposes of determining the time the distribution 
     was received by the shareholder to whom the distribution was 
     made.
       ``(5) Applicable earnings and profits.--
       ``(A) In general.--The term `applicable earnings and 
     profits' means, with respect to any corporation for any 
     taxable year, its earnings and profits for the taxable year 
     and its earnings and profits accumulated in prior taxable 
     years beginning after December 31, 2018. For purposes of the 
     preceding sentence, earnings and profits for the taxable year 
     shall be determined without regard to the deduction under 
     this section for the taxable year.
       ``(B) Exempt earnings and profits not treated as applicable 
     earnings and profits.--The applicable earnings and profits of 
     a corporation shall not include any exempt earnings and 
     profits (as defined in paragraph (6)).
       ``(C) Look-thru in the case of dividends received from 
     controlled foreign corporation or 10/50 corporation.--If a 
     corporation which is a United States shareholder in a 
     controlled foreign corporation, or is a shareholder in a 
     foreign corporation with respect to which the shareholder 
     meets the stock ownership requirements of section 902(a), 
     receives a dividend (other than a dividend to which 
     subparagraph (B) applies) from such controlled foreign 
     corporation or such foreign corporation, the earnings and 
     profits from such dividend shall not be treated as applicable 
     earnings and profits of the corporation receiving such 
     dividend to the extent of any portion of the dividend not 
     properly allocable (as determined under section 316, as 
     modified by section 959(c) in the case of such controlled 
     foreign corporation) to applicable earnings and profits of 
     such controlled foreign corporation or such foreign 
     corporation.
       ``(6) Exempt earnings and profits.--
       ``(A) In general.--The term `exempt earnings and profits' 
     means, with respect to any corporation for any taxable year, 
     its earnings and profits for the taxable year and its 
     earnings and profits accumulated in prior taxable years 
     beginning after December 31, 2018, which are properly 
     allocable to exempt amounts received or accrued by the 
     corporation.
       ``(B) Exempt amounts.--The term `exempt amounts' means, 
     with respect to any corporation--
       ``(i) any dividend to the extent of the deduction allowable 
     to the corporation under section 243, 245, or 245A with 
     respect to the dividend,

[[Page S7429]]

       ``(ii) any foreign-derived intangible income (as defined in 
     section 250(b)) or global intangible low-taxed income (as 
     defined in section 951A(b)) to the extent of the deduction 
     allowable to the corporation under section 250 with respect 
     to any such income,
       ``(iii) any increase in subpart F income by reason of 
     section 965 to the extent of the deduction allowable to the 
     corporation under section 965(c)(1) with respect to any such 
     income, and
       ``(iv) any other amount to the extent such amount is exempt 
     from taxation under this title.
       ``(7) Proper allocation of dividends to earnings and 
     profits.--
       ``(A) In general.--The Secretary shall prescribe rules for 
     the proper allocation of dividends to earnings and profits 
     for purposes of applying this subsection.
       ``(B) Look through rules.--For purposes of paragraph 
     (4)(C), such rules shall include rules requiring in 
     appropriate cases the look through to earnings and profits of 
     members of any affiliated group including a controlled 
     foreign corporation or foreign corporation described in such 
     paragraph where the earnings and profits of such controlled 
     foreign corporation or such foreign corporation are 
     attributable to distributions received from other members of 
     the group.
       ``(c) Eligible Corporation.--For purposes of this section, 
     the term `eligible corporation' means any domestic 
     corporation other than--
       ``(1) a regulated investment company,
       ``(2) a real estate investment trust,
       ``(3) an S corporation,
       ``(4) a corporation which is exempt from tax under section 
     501 or 521,
       ``(5) an organization taxable under subchapter T of this 
     chapter (relating to cooperative organizations),
       ``(6) a cooperative governed by the rules applicable to 
     cooperatives as in effect before the enactment of subchapter 
     T, or
       ``(7) a DISC or former DISC.
       ``(d) Reporting Requirement.--
       ``(1) In general.--Each eligible corporation which makes 
     payments of dividends during the reporting period for any 
     taxable year shall make a return, according to the forms and 
     regulations prescribed by the Secretary, setting forth--
       ``(A) the aggregate amount of such dividends,
       ``(B) the aggregate amount of such dividends with respect 
     to which the corporation is claiming a deduction under this 
     section for the taxable year,
       ``(C) the aggregate amount of such dividends which the 
     corporation paid during the period beginning on the 1st day 
     of the reporting taxable year and ending on the 15th day of 
     the 4th month of such taxable year which the corporation 
     elected under subsection (b)(4) to treat as paid in the 
     preceding taxable year,
       ``(D) the aggregate amount of such dividends which the 
     corporation paid during the period beginning on the 1st day 
     of the taxable year following the reporting taxable year and 
     ending on the 15th day of the 4th month of such following 
     taxable year which the corporation elected under subsection 
     (b)(4) to treat as paid in the reporting taxable year, and
       ``(E) such other information with respect to such dividends 
     as the Secretary shall require for the administration of this 
     section.
       ``(2) Reporting period; due date.--For purposes of this 
     subsection--
       ``(A) Reporting period.--The term `reporting period' means 
     with, respect to any taxable year, the period beginning on 
     the 1st day of the taxable year and ending on the 15th day of 
     the 4th month following the close of the taxable year.
       ``(B) Due date.--Any return under paragraph (1) with 
     respect to any taxable year shall be included with the return 
     of income tax for such taxable year.''.
       (b) Penalty for Failure to Report.--Section 6652, as 
     amended by subtitle E of this Act, is amended by adding at 
     the end the following new subsection:
       ``(r) Failure to File Returns by Corporations Eligible for 
     Dividends Paid Deduction.--
       ``(1) Penalty for failure to file return.--In the case of a 
     failure to make a return required under section 242(d) 
     containing the information required by such section by the 
     due date for the return, the eligible corporation shall pay 
     (on notice and demand by the Secretary and in the same manner 
     as tax) a penalty of $1,000 per day for each day such failure 
     continues unless it is shown that such failure is due to 
     reasonable cause. The maximum amount of the penalty under 
     this paragraph with respect to any failure for a taxable year 
     shall not exceed $250,000.
       ``(2) Eligible corporation.--For purposes of this 
     subsection, the term `eligible corporation' has the meaning 
     given such term by section 242(c).''.
       (c) Dividends Paid Deduction Allowable Only in Taxable Year 
     of Dividend Payment.--
       (1) In general.--Subsection (d) of section 172, as amended 
     by section 11011, is amended by adding at the end the 
     following new paragraph:
       ``(9) Dividends paid deduction.--The deduction under 
     section 242 shall not be allowed.''.
       (2) Treatment of carrybacks and carryovers.--Subparagraph 
     (A) of section 172(b)(2), as amended by section 13302, is 
     amended by striking ``and (5)'' and inserting ``(5), and 
     (8)''.
       (d) Other Conforming Amendments.--Part VIII of subchapter B 
     of chapter 1 is amended--
       (1) by striking the table of sections and inserting the 
     following:

            ``PART VIII--SPECIAL DEDUCTIONS FOR CORPORATIONS

             ``subpart a. allowance of special deductions.

                 ``subpart b. dividends paid deduction.

              ``subpart c. dividends received deductions.

                     ``subpart d. other deductions.

              ``Subpart A--Allowance of Special Deductions

``Sec. 241. Allowance of special deductions.'',
       (2) by inserting the following before section 243:

               ``Subpart C--Dividends Received Deductions

``Sec. 243. Dividends received by corporations.
``Sec. 245. Dividends received from certain foreign corporations.
``Sec. 245A. Deduction for foreign-source portion of dividends received 
              by domestic corporations from specified 10-percent owned 
              foreign corporations.
``Sec. 246. Rules applying to deductions for dividends received.
``Sec. 246A. Dividends received deduction reduced where portfolio stock 
              is debt financed.'', and
       (3) by inserting the following before section 248:

                     ``Subpart D--Other Deductions

``Sec. 248. Organizational expenditures.
``Sec. 249. Limitation of deduction of bond premium on repurchase.
``Sec. 250. Foreign-derived intangible income and global intangible 
              low-taxed income.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to dividends paid in taxable years of the payor 
     beginning after December 31, 2018.

     SEC. 13012. TAX EQUIVALENT TO DIVIDENDS PAID DEDUCTION FOR 
                   CERTAIN FOREIGN CORPORATIONS.

       (a) Dividends Paid Deduction.--Paragraph (1) of section 
     882(c) is amended by adding at the end the following new 
     subparagraph:
       ``(C) Special rule for dividends paid deduction.--For 
     purposes of subparagraph (A)--
       ``(i) the deduction under section 242 shall not be allowed 
     for any taxable year, and
       ``(ii) there shall be allowed, in lieu of such deduction, a 
     deduction in an amount equal to zero percent of the dividend 
     equivalent amount (as defined in section 884(b)) of the 
     foreign corporation for the taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.

     SEC. 13013. ALLOCATION OF DIVIDEND EXPENSE AMONG MEMBERS OF 
                   WORLDWIDE AFFILIATED GROUPS.

       (a) In General.--Paragraph (6) of section 864(e) is amended 
     to read as follows:
       ``(6) Allocation and apportionment of other expenses.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     expenses other than interest which are not directly allocable 
     or apportioned to any specific income producing activity 
     shall be allocated and apportioned as if all members of the 
     affiliated group were a single corporation.
       ``(B) Dividend expense.--The dividend expense of any 
     domestic corporation which is a member of an affiliated group 
     shall be allocated and apportioned to income from sources 
     without the United States in the same proportion which--
       ``(i) the aggregate amount of income treated as from 
     sources without the United States by all domestic 
     corporations which are members of such group (determined 
     without regard to such dividend expense), bears to
       ``(ii) the aggregate income of all such domestic 
     corporations from sources within and without the United 
     States (as so determined).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.

                    PART II--SMALL BUSINESS REFORMS

     SEC. 13101. MODIFICATIONS OF RULES FOR EXPENSING DEPRECIABLE 
                   BUSINESS ASSETS.

       (a) Increase in Limitation.--
       (1) Dollar limitation.--Section 179(b)(1) is amended by 
     striking ``$500,000'' and inserting ``$1,000,000''.
       (2) Reduction in limitation.--Section 179(b)(2) is amended 
     by striking ``$2,000,000'' and inserting ``$2,500,000''.
       (3) Inflation adjustments.--
       (A) In general.--Subparagraph (A) of section 179(b)(6) is 
     amended--
       (i) by striking ``2015'' and inserting ``2018'', and
       (ii) in clause (ii), by striking ``calendar year 2014'' and 
     inserting ``calendar year 2017''.
       (B) Sport utility vehicles.--Section 179(b)(6) is amended--
       (i) in subparagraph (A), by striking ``paragraphs (1) and 
     (2)'' and inserting ``paragraphs (1), (2), and (5)(A)'', and
       (ii) in subparagraph (B), by inserting ``($100 in the case 
     of any increase in the amount under paragraph (5)(A))'' after 
     ``$10,000''.
       (b) Section 179 Property to Include Qualified Real 
     Property.--
       (1) In general.--Subparagraph (B) of section 179(d)(1) is 
     amended to read as follows:
       ``(B) which is--
       ``(i) section 1245 property (as defined in section 
     1245(a)(3)), or

[[Page S7430]]

       ``(ii) qualified real property (as defined in subsection 
     (f)), and''.
       (2) Qualified real property defined.--Subsection (f) of 
     section 179 is amended to read as follows:
       ``(f) Qualified Real Property.--For purposes of this 
     subsection, the term `qualified real property' means--
       ``(1) any qualified improvement property described in 
     section 168(e)(6), and
       ``(2) any of the following improvements to nonresidential 
     real property placed in service after the date such property 
     was first placed in service:
       ``(A) Roofs.
       ``(B) Heating, ventilation, and air-conditioning property.
       ``(C) Fire protection and alarm systems.
       ``(D) Security systems.''.
       (c) Repeal of Exclusion for Certain Property.--The last 
     sentence of section 179(d)(1) is amended by inserting 
     ``(other than paragraph (2) thereof)'' after ``section 
     50(b)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service in taxable years 
     beginning after December 31, 2017.

     SEC. 13102. MODIFICATIONS OF GROSS RECEIPTS TEST FOR USE OF 
                   CASH METHOD OF ACCOUNTING BY CORPORATIONS AND 
                   PARTNERSHIPS.

       (a) Modifications of Gross Receipts Test.--
       (1) In general.--So much of section 448(c) as precedes 
     paragraph (2) is amended to read as follows:
       ``(c) Gross Receipts Test.--
       ``(1) In general.--A corporation or partnership meets the 
     gross receipts test of this subsection for any taxable year 
     if the average annual gross receipts of such entity for the 
     3-taxable-year period ending with the taxable year which 
     precedes such taxable year does not exceed the applicable 
     dollar limit.''.
       (2) Applicable dollar limit.--Subsection (c) of section 448 
     is amended by adding at the end the following new paragraph:
       ``(4) Applicable dollar limit.--
       ``(A) In general.--The applicable dollar limit is 
     $15,000,000.
       ``(B) Adjustment for inflation.--In the case of any taxable 
     year beginning after December 31, 2018, the $15,000,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2017' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof.
     If any amount as increased under the preceding sentence is 
     not a multiple of $1,000, such amount shall be rounded to the 
     next lowest multiple of $1,000.''.
       (3) Change in method of accounting.--Paragraph (7) of 
     section 448(d) is amended--
       (A) by striking ``In the case of'' and all that follows up 
     to subparagraph (A) and inserting: ``If a taxpayer changes 
     its method of accounting because the taxpayer is prohibited 
     from using the cash receipts and disbursement method of 
     accounting by reason of subsection (a) or is no longer 
     prohibited from using such method by reason of such 
     subsection--'', and
       (B) by inserting ``and'' at the end of subparagraph (A), by 
     striking ``, and'' at the end of subparagraph (B) and 
     inserting a period, and by striking subparagraph (C).
       (4) Conforming amendment.--Paragraph (3) of section 448(b) 
     is amended to read as follows:
       ``(3) Entities satisfying gross receipts test.--Paragraphs 
     (1) and (2) of subsection (a) shall not apply to any 
     corporation or partnership for any taxable year if such 
     entity meets the gross receipts test of subsection (c) for 
     the taxable year.''.
       (b) Application of Modifications to Farming Corporations.--
       (1) In general.--Paragraph (1) of section 447(d) is amended 
     to read as follows:
       ``(1) In general.--A corporation meets the requirements of 
     this subsection for any taxable year with respect to its 
     gross receipts if the corporation meets the gross receipts 
     test of section 448(c) for the taxable year.''.
       (2) Family corporations.--Paragraph (2) of section 447(d) 
     is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--In the case of a family corporation, in 
     applying section 448(c) for purposes of paragraph (1)--
       ``(i) paragraph (1) of section 448(c) shall be applied by 
     substituting the applicable family corporation limit for the 
     applicable dollar limit, and
       ``(ii) the rules of subparagraph (B) shall apply in 
     computing gross receipts.'',
       (B) Clause (i) of section 447(d)(2)(B) is amended by 
     striking ``the last sentence of paragraph (1)'' and inserting 
     ``paragraph (2) of section 448(c)'', and
       (C) by adding at the end the following new subparagraph:
       ``(D) Applicable family corporation limit.--
       ``(i) In general.--The applicable family corporation limit 
     is $25,000,000.
       ``(ii) Adjustment for inflation.--In the case of any 
     taxable year beginning after December 31, 2018, the 
     $25,000,000 amount under clause (i) shall be increased by an 
     amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2017' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof.

     If any amount as increased under the preceding sentence is 
     not a multiple of $1,000, such amount shall be rounded to the 
     next lowest multiple of $1,000.''.
       (3) Exception for certain corporations.--Subsection (c) of 
     section 447 is amended by inserting ``for any taxable year'' 
     after ``not being a corporation''.
       (4) Change in method of accounting.--Section 447(f) is 
     amended--
       (A) by striking ``In the case of'' and all that follows up 
     to paragraph (1) and inserting the following: ``If a taxpayer 
     changes its method of accounting because the taxpayer is 
     required to use an accrual method of accounting by reason of 
     subsection (a) or is no longer required to use such method by 
     reason of such subsection--'', and
       (B) by striking paragraph (2) and inserting the following:
       ``(2) such change shall be treated as initiated by the 
     taxpayer, and''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13103. CLARIFICATION OF INVENTORY ACCOUNTING RULES FOR 
                   SMALL BUSINESSES.

       (a) Clarification of Inventory Rules.--
       (1) In general.--Section 471 is amended by redesignating 
     subsection (c) as subsection (d) and by inserting after 
     subsection (b) the following new subsection:
       ``(c) Small Business Taxpayers Not Required to Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--A 
     qualified taxpayer who is not required under this subsection 
     to use inventories with respect to any property for a taxable 
     year beginning after December 31, 2017, may treat such 
     property--
       ``(A) as a non-incidental material or supply, or
       ``(B) in a manner which conforms to the taxpayer's method 
     for accounting for such property in--
       ``(i) an applicable financial statement (as defined in 
     section 451(b)(1)), or
       ``(ii) in the case of a taxpayer that does not have an 
     applicable financial statement, their books and records used 
     for purposes of determining tax imposed by this title.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means, with respect to any 
     taxable year, a taxpayer who meets the gross receipts test of 
     section 448(c) for the taxable year (or, in the case of a 
     sole proprietorship, who would meet such test if such 
     proprietorship were a corporation). Such term shall not 
     include a tax shelter prohibited from using the cash receipts 
     and disbursements method of accounting under section 
     448(a)(3).
       ``(4) Coordination with section 481.--If a taxpayer changes 
     its method of accounting because the taxpayer is not required 
     to use inventories by reason of paragraph (1) or is required 
     to use inventories because such paragraph no longer applies 
     to the taxpayer--
       ``(A) such change shall be treated as initiated by the 
     taxpayer, and
       ``(B) such change shall be treated as made with the consent 
     of the Secretary.''.
       (2) Conforming amendment.--Subsection (c) of section 263A 
     is amended by adding at the end the following new paragraph:
       ``(8) Exclusion from inventory rules.--Nothing in this 
     section shall require the use of inventories for any taxable 
     year by a qualified taxpayer (within the meaning of section 
     471(c)(3)) who is not required to use inventories under 
     section 471 for such taxable year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13104. MODIFICATION OF RULES FOR UNIFORM CAPITALIZATION 
                   OF CERTAIN EXPENSES.

       (a) In General.--Section 263A(b) is amended by striking all 
     that follows paragraph (1) and inserting the following new 
     paragraphs:
       ``(2) Property acquired for resale.--Real or personal 
     property described in section 1221(a)(1) which is acquired by 
     the taxpayer for resale.
       ``(3) Exception for small businesses.--This section shall 
     not apply to any taxpayer who meets the gross receipts test 
     under section 448(c) for the taxable year (or, in the case of 
     a sole proprietorship, who would meet such test if such 
     proprietorship were a corporation), other than a tax shelter 
     prohibited from using the cash receipts and disbursements 
     method of accounting under section 448(a)(3).
       ``(4) Films, sound recordings, books, etc.--For purposes of 
     this subsection, the term `tangible personal property' shall 
     include a film, sound recording, video tape, book, or similar 
     property.
       ``(5) Coordination with section 481.--If a taxpayer changes 
     its method of accounting because this section does not apply 
     to the taxpayer by reason of the exception under paragraph 
     (3) or this section applies to the taxpayer because such 
     exception no longer applies to the taxpayer--
       ``(A) such change shall be treated as initiated by the 
     taxpayer, and
       ``(B) such change shall be treated as made with the consent 
     of the Secretary.''.

[[Page S7431]]

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13105. INCREASE IN GROSS RECEIPTS TEST FOR CONSTRUCTION 
                   CONTRACT EXCEPTION TO PERCENTAGE OF COMPLETION 
                   METHOD.

       (a) Increase.--
       (1) In general.--Section 460(e)(1)(B) is amended--
       (A) in the matter preceding clause (i), by inserting 
     ``(other than a tax shelter prohibited from using the cash 
     receipts and disbursements method of accounting under section 
     448(a)(3))'' after ``taxpayer'', and
       (B) by striking clause (ii) and inserting the following:
       ``(ii) who meets the gross receipts test of section 448(c) 
     for the taxable year in which such contract is entered into 
     (or, in the case of a sole proprietorship, who would meet 
     such test if such proprietorship were a corporation).''.
       (2) Conforming amendments.--
       (A) Section 460(e) is amended by striking paragraphs (2) 
     and (3) and by redesignating paragraphs (4) through (6) as 
     paragraphs (2) through (4), respectively.
       (B) The last sentence of section 56(a)(3) is amended by 
     striking ``section 460(e)(6)'' and inserting ``section 
     460(e)(4)''.
       (b) Coordination With Section 481.--Section 460(e), as 
     amended by subsection (a), is amended by adding at the end 
     the following:
       ``(5) Coordination with section 481.--If a taxpayer changes 
     its method of accounting because subsections (a), (b), 
     (c)(1), and (c)(2) do not apply by reason of the exception 
     under paragraph (1)(B) or such subsections apply to the 
     taxpayer because such exception no longer applies to the 
     taxpayer--
       ``(A) such change shall be treated as initiated by the 
     taxpayer,
       ``(B) such change shall be treated as made with the consent 
     of the Secretary, and
       ``(C) such change shall be permitted only on a cut-off 
     basis for all similarly classified contracts entered into on 
     or after the year of change and no adjustments under section 
     481(a) shall be made.''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to contracts entered into after December 31, 
     2017, in taxable years ending after such date.

             PART III--COST RECOVERY AND ACCOUNTING METHODS

                        Subpart A--Cost Recovery

     SEC. 13201. TEMPORARY 100-PERCENT EXPENSING FOR CERTAIN 
                   BUSINESS ASSETS.

       (a) In General.--
       (1) 100 percent expensing.--Section 168(k) is amended--
       (A) in paragraph (1)(A), by striking ``50 percent'' and 
     inserting ``100 percent'', and
       (B) in paragraph (5)(A)(i), by striking ``50 percent'' and 
     inserting ``100 percent''.
       (2) Extension through 2022.--Section 168(k) is amended--
       (A) in the heading, by striking ``December 31, 2007, and 
     Before January 1, 2020'' and inserting ``September 27, 2017, 
     and Before January 1, 2023'',
       (B) in paragraph (2)--
       (i) in subparagraph (A)(iii), clauses (i)(III) and (ii) of 
     subparagraph (B), and subparagraph (E)(i), by striking 
     ``January 1, 2020'' each place it appears and inserting 
     ``January 1, 2023'', and
       (ii) in subparagraph (B)--

       (I) in clause (i)(II), by striking ``January 1, 2021'' and 
     inserting ``January 1, 2024'', and
       (II) in the heading of clause (ii), by striking ``pre-
     january 1, 2020'' and inserting ``pre-january 1, 2023'', and

       (C) in paragraph (5)(A), by striking ``January 1, 2020'' 
     and inserting ``January 1, 2023''.
       (3) Exception for public utilities.--Paragraph (6) of 
     section 168(k) is amended to read as follows:
       ``(6) Exception for certain public utility property.--The 
     term `qualified property' shall not include any property 
     which is primarily used in a trade or business described in 
     clause (iv) of section 163(j)(7)(A).''.
       (4) Special rule.--Section 168(k) is amended by adding at 
     the end the following new paragraph:
       ``(8) Special rule for property placed in service during 
     certain periods.--
       ``(A) In general.--In the case of qualified property placed 
     in service by the taxpayer during the first taxable year 
     ending after September 27, 2017, if the taxpayer elects to 
     have this paragraph apply for such taxable year, paragraphs 
     (1)(A) and (5)(A)(i) shall be applied by substituting `50 
     percent' for `100 percent'.
       ``(B) Form of election.--Any election under this paragraph 
     shall be made at such time and in such form and manner as the 
     Secretary may prescribe.''.
       (5) Coordination with section 280f.--Section 168(k)(2)(F) 
     is amended by striking clause (iii).
       (6) Qualified film and television and live theatrical 
     productions.--
       (A) In general.--Clause (i) of section 168(k)(2)(A), as 
     amended by section 13204, is amended--
       (i) in subclause (II), by striking ``or'',
       (ii) in subclause (III), by adding ``or'' after the comma, 
     and
       (iii) by adding at the end the following:
       ``(IV) which is a qualified film or television production 
     (as defined in subsection (d) of section 181) for which a 
     deduction would have been allowable under section 181 without 
     regard to subsections (a)(2) and (g) of such section or this 
     subsection, or
       ``(V) which is a qualified live theatrical production (as 
     defined in subsection (e) of section 181) for which a 
     deduction would have been allowable under section 181 without 
     regard to subsections (a)(2) and (g) of such section or this 
     subsection,''.
       (B) Production placed in service.--Paragraph (2) of section 
     168(k) is amended by adding at the end the following:
       ``(H) Production placed in service.--For purposes of 
     subparagraph (A)--
       ``(i) a qualified film or television production shall be 
     considered to be placed in service at the time of initial 
     release or broadcast, and
       ``(ii) a qualified live theatrical production shall be 
     considered to be placed in service at the time of the initial 
     live staged performance.''.
       (7) Conforming amendments.--
       (A) Paragraph (5) of section 168(k) is amended by striking 
     subparagraph (F).
       (B) Clause (ii) of section 460(c)(6)(B) is amended by 
     striking ``January 1, 2020 (January 1, 2021'' and inserting 
     ``January 1, 2023 (January 1, 2024''.
       (b) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by subsection (a) shall apply to property 
     placed in service after September 27, 2017, in taxable years 
     ending after such date.
       (2) Certain plants.--The amendments made by paragraphs 
     (1)(B) and (2)(C) of subsection (a) shall apply to specified 
     plants planted or grafted after September 27, 2017, in 
     taxable years ending after such date.

     SEC. 13202. MODIFICATIONS TO DEPRECIATION LIMITATIONS ON 
                   LUXURY AUTOMOBILES AND PERSONAL USE PROPERTY.

       (a) Luxury Automobiles.--
       (1) In general.--280F(a)(1)(A) is amended--
       (A) in clause (i), by striking ``$2,560'' and inserting 
     ``$10,000'',
       (B) in clause (ii), by striking ``$4,100'' and inserting 
     ``$16,000'',
       (C) in clause (iii), by striking ``$2,450'' and inserting 
     ``$9,600'', and
       (D) in clause (iv), by striking ``$1,475'' and inserting 
     ``$5,760''.
       (2) Conforming amendments.--
       (A) Clause (ii) of section 280F(a)(1)(B) is amended by 
     striking ``$1,475'' in the text and heading and inserting 
     ``$5,760''.
       (B) Paragraph (7) of section 280F(d) is amended--
       (i) in subparagraph (A), by striking ``1988'' and inserting 
     ``2018'', and
       (ii) in subparagraph (B)(i)(II), by striking ``1987'' and 
     inserting ``2017''.
       (b) Removal of Computer Equipment From Listed Property.--
       (1) In general.--Section 280F(d)(4)(A) is amended--
       (A) by inserting ``and'' at the end of clause (iii),
       (B) by striking clause (iv), and
       (C) by redesignating clause (v) as clause (iv).
       (2) Conforming amendment.--Section 280F(d)(4) is amended by 
     striking subparagraph (B) and by redesignating subparagraph 
     (C) as subparagraph (B).
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2017, in taxable years ending after such date.

     SEC. 13203. MODIFICATIONS OF TREATMENT OF CERTAIN FARM 
                   PROPERTY.

       (a) Treatment of Certain Farm Property as 5-Year 
     Property.--Clause (vii) of section 168(e)(3)(B) is amended by 
     striking ``after December 31, 2008, and which is placed in 
     service before January 1, 2010'' and inserting ``after 
     December 31, 2017''.
       (b) Repeal of Required Use of 150-Percent Declining Balance 
     Method.--Section 168(b)(2) is amended by striking 
     subparagraph (B) and by redesignating subparagraphs (C) and 
     (D) as subparagraphs (B) and (C), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2017, in taxable years ending after such date.

     SEC. 13204. APPLICABLE RECOVERY PERIOD FOR REAL PROPERTY.

       (a) Residential Rental Property and Nonresidential Real 
     Property.--
       (1) Reduction of recovery period.--The table contained in 
     section 168(c) is amended--
       (A) by striking ``27.5 years'' and inserting ``25 years'', 
     and
       (B) by striking ``39 years'' and inserting ``25 years''.
       (2) Statutory recovery period.--The table contained in 
     section 467(e)(3)(A) is amended--
       (A) by inserting ``(other than residential rental property 
     and nonresidential real property)'' after ``15-year and 20-
     year property'', and
       (B) by striking ``19 years'' and inserting ``25 years''.
       (3) Conforming amendment.--Clause (ii) of section 
     168(e)(2)(B) is amended by striking ``27.5 years'' and 
     inserting ``25 years''.
       (b) Improvements to Real Property.--
       (1) Classification of qualified improvement property as 10-
     year property.--Subparagraph (D) of section 168(e)(3) is 
     amended--
       (A) in clause (iii), by striking ``and'',
       (B) in clause (iv), by striking the period and inserting 
     ``, and'', and
       (C) by adding at the end the following new clause:
       ``(v) any qualified improvement property described in 
     subsection (e)(6).''.
       (2) Elimination of qualified leasehold improvement, 
     qualified restaurant, and

[[Page S7432]]

     qualified retail improvement property.--Subsection (e) of 
     section 168 is amended--
       (A) in subparagraph (E) of paragraph (3)--
       (i) by striking clauses (iv), (v), and (ix),
       (ii) in clause (vii), by inserting ``and'' at the end,
       (iii) in clause (viii), by striking ``, and'' and inserting 
     a period, and
       (iv) by redesignating clauses (vi), (vii), and (viii), as 
     so amended, as clauses (iv), (v), and (vi), respectively, and
       (B) by striking paragraphs (6), (7), and (8).
       (3) Application of straight line method to qualified 
     improvement property.--Paragraph (3) of section 168(b) is 
     amended--
       (A) by striking subparagraphs (G), (H), and (I), and
       (B) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) Qualified improvement property described in 
     subsection (e)(6).''.
       (4) Alternative depreciation system.--
       (A) Electing real property trade or business.--Subsection 
     (g) of section 168 is amended--
       (i) in paragraph (1)--

       (I) in subparagraph (D), by striking ``and'' at the end,
       (II) in subparagraph (E), by inserting ``and'' at the end, 
     and
       (III) by inserting after subparagraph (E) the following new 
     subparagraph:

       ``(F) any property described in paragraph (8),'', and
       (ii) by adding at the end the following new paragraph:
       ``(8) Electing real property trade or business.--The 
     property described in this paragraph shall consist of any 
     nonresidential real property, residential rental property, 
     and qualified improvement property held by an electing real 
     property trade or business (as defined in 163(j)(7)(B)).''.
       (B) Qualified improvement property.--The table contained in 
     subparagraph (B) of section 168(g)(3) is amended--
       (i) by inserting after the item relating to subparagraph 
     (D)(ii) the following new item:
  ``(D)(v)........................................................20''.

       , and

       (ii) by striking the item relating to subparagraph (E)(iv) 
     and all that follows through the item relating to 
     subparagraph (E)(ix) and inserting the following:
  ``(E)(iv).........................................................20 
  (E)(v)............................................................30 
  (E)(vi).........................................................35''.
       (C) Applicable recovery period for residential rental 
     property.--The table contained in subparagraph (C) of section 
     168(g)(2) is amended by striking clauses (iii) and (iv) and 
     inserting the following:
  ``(iii) Residential rental property.........................30 years 
  (iv) Nonresidential real property...........................40 years 
  (v) Any railroad grading or tunnel bore or water utility p50 years''.
       (5) Conforming amendments.--
       (A) Clause (i) of section 168(k)(2)(A) is amended--
       (i) in subclause (II), by inserting ``or'' after the comma,
       (ii) in subclause (III), by striking ``or'' at the end, and
       (iii) by striking subclause (IV).
       (B) Section 168 is amended--
       (i) in subsection (e), as amended by paragraph (2)(B), by 
     adding at the end the following:
       ``(6) Qualified improvement property.--
       ``(A) In general.--The term `qualified improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if such 
     improvement is placed in service after the date such building 
     was first placed in service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator, or
       ``(iii) the internal structural framework of the 
     building.''.
       (ii) in subsection (k), by striking paragraph (3).
       (c) Effective Date.--
       (1) Application.--The amendments made by this section shall 
     apply to property placed in service after December 31, 2017.
       (2) Shorter recovery period or more accelerated 
     depreciation method.--In the case of property placed in 
     service before January 1, 2018, if the amendments made by 
     this section result in--
       (A) an applicable recovery period which is less than the 
     applicable recovery period for such property before enactment 
     of such amendments, or
       (B) an applicable depreciation method which is more 
     accelerated than the applicable depreciation method for such 
     property before enactment of such amendments,
     the depreciation deduction for such property shall, for any 
     taxable year beginning after December 31, 2017, be determined 
     as if such property were placed in service on January 1, 
     2018.

     SEC. 13205. USE OF ALTERNATIVE DEPRECIATION SYSTEM FOR 
                   ELECTING FARMING BUSINESSES.

       (a) In General.--Section 168(g)(1), as amended by section 
     13204, is amended by striking ``and'' at the end of 
     subparagraph (E), by inserting ``and'' at the end of 
     subparagraph (F), and by inserting after subparagraph (F) the 
     following new subparagraph:
       ``(G) any property with a recovery period of 10 years or 
     more which is held by an electing farming business (as 
     defined in section 163(j)(7)(C)),''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13206. AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
                   EXPENDITURES.

       (a) In General.--Section 174 is amended to read as follows:

     ``SEC. 174. AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
                   EXPENDITURES.

       ``(a) In General.--In the case of a taxpayer's specified 
     research or experimental expenditures for any taxable year--
       ``(1) except as provided in paragraph (2), no deduction 
     shall be allowed for such expenditures, and
       ``(2) the taxpayer shall--
       ``(A) charge such expenditures to capital account, and
       ``(B) be allowed an amortization deduction of such 
     expenditures ratably over the 5-year period (15-year period 
     in the case of any specified research or experimental 
     expenditures which are attributable to foreign research 
     (within the meaning of section 41(d)(4)(F))) beginning with 
     the midpoint of the taxable year in which such expenditures 
     are paid or incurred.
       ``(b) Specified Research or Experimental Expenditures.--For 
     purposes of this section, the term `specified research or 
     experimental expenditures' means, with respect to any taxable 
     year, research or experimental expenditures which are paid or 
     incurred by the taxpayer during such taxable year in 
     connection with the taxpayer's trade or business.
       ``(c) Special Rules.--
       ``(1) Land and other property.--This section shall not 
     apply to any expenditure for the acquisition or improvement 
     of land, or for the acquisition or improvement of property to 
     be used in connection with the research or experimentation 
     and of a character which is subject to the allowance under 
     section 167 (relating to allowance for depreciation, etc.) or 
     section 611 (relating to allowance for depletion); but for 
     purposes of this section allowances under section 167, and 
     allowances under section 611, shall be considered as 
     expenditures.
       ``(2) Exploration expenditures.--This section shall not 
     apply to any expenditure paid or incurred for the purpose of 
     ascertaining the existence, location, extent, or quality of 
     any deposit of ore or other mineral (including oil and gas).
       ``(3) Software development.--For purposes of this section, 
     any amount paid or incurred in connection with the 
     development of any software shall be treated as a research or 
     experimental expenditure.
       ``(d) Treatment Upon Disposition, Retirement, or 
     Abandonment.--If any property with respect to which specified 
     research or experimental expenditures are paid or incurred is 
     disposed, retired, or abandoned during the period during 
     which such expenditures are allowed as an amortization 
     deduction under this section, no deduction shall be allowed 
     with respect to such expenditures on account of such 
     disposition, retirement, or abandonment and such amortization 
     deduction shall continue with respect to such 
     expenditures.''.
       (b) Change in Method of Accounting.--The amendments made by 
     subsection (a) shall be treated as a change in method of 
     accounting for purposes of section 481 of the Internal 
     Revenue Code of 1986 and--
       (1) such change shall be treated as initiated by the 
     taxpayer,
       (2) such change shall be treated as made with the consent 
     of the Secretary, and
       (3) such change shall be applied only on a cut-off basis 
     for any research or experimental expenditures paid or 
     incurred in taxable years beginning after December 31, 2025, 
     and no adjustments under section 481(a) shall be made.
       (c) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1 is amended by striking the item 
     relating to section 174 and inserting the following new item:

``Sec. 174. Amortization of research and experimental expenditures.''.
       (d) Conforming Amendments.--
       (1) Section 41(d)(1)(A) is amended by striking ``expenses 
     under section 174'' and inserting ``specified research or 
     experimental expenditures under section 174''.
       (2) Subsection (c) of section 280C is amended--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) In general.--If--
       ``(A) the amount of the credit determined for the taxable 
     year under section 41(a)(1), exceeds
       ``(B) the amount allowable as a deduction for such taxable 
     year for qualified research expenses or basic research 
     expenses,
     the amount chargeable to capital account for the taxable year 
     for such expenses shall be reduced by the amount of such 
     excess.'',
       (B) by striking paragraph (2),
       (C) by redesignating paragraphs (3) (as amended by this 
     Act) and (4) as paragraphs (2) and (3), respectively, and
       (D) in paragraph (2), as redesignated by subparagraph (C), 
     by striking ``paragraphs (1) and (2)'' and inserting 
     ``paragraph (1)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2025.

[[Page S7433]]

  


     SEC. 13207. EXPENSING OF CERTAIN COSTS OF REPLANTING CITRUS 
                   PLANTS LOST BY REASON OF CASUALTY.

       (a) In General.--Section 263A(d)(2) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Special temporary rule for citrus plants lost by 
     reason of casualty.--
       ``(i) In general.--In the case of the replanting of citrus 
     plants, subparagraph (A) shall apply to amounts paid or 
     incurred by a person (other than the taxpayer described in 
     subparagraph (A)) if--

       ``(I) the taxpayer described in subparagraph (A) has an 
     equity interest of not less than 50 percent in the replanted 
     citrus plants at all times during the taxable year in which 
     such amounts were paid or incurred and such other person 
     holds any part of the remaining equity interest, or
       ``(II) such other person acquired the entirety of such 
     taxpayer's equity interest in the land on which the lost or 
     damaged citrus plants were located at the time of such loss 
     or damage, and the replanting is on such land.

       ``(ii) Termination.--Clause (i) shall not apply to any cost 
     paid or incurred after the date which is 10 years after the 
     date of the enactment of the Tax Cuts and Jobs Act.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to costs paid or incurred after the date of the 
     enactment of this Act.

                     Subpart B--Accounting Methods

     SEC. 13221. CERTAIN SPECIAL RULES FOR TAXABLE YEAR OF 
                   INCLUSION.

       (a) Inclusion Not Later Than for Financial Accounting 
     Purposes.--Section 451 is amended by redesignating 
     subsections (b) through (i) as subsections (c) through (j), 
     respectively, and by inserting after subsection (a) the 
     following new subsection:
       ``(b) Inclusion Not Later Than for Financial Accounting 
     Purposes.--Notwithstanding part V of subchapter P--
       ``(1) Financial statement.--
       ``(A) In general.--In the case of a taxpayer the taxable 
     income of which is computed under the accrual method of 
     accounting, the amount of any portion of any item of gross 
     income shall be included in gross income not later than the 
     taxable year with respect to which such amount is taken into 
     account as income in--
       ``(i) an applicable financial statement of the taxpayer, or
       ``(ii) such other financial statement as the Secretary may 
     specify for purposes of this subsection.
       ``(B) Exception.--In the case of a taxpayer which does not 
     have a financial statement described in clause (i) or (ii) of 
     subparagraph (A) for a taxable year, such subparagraph shall 
     not apply.
       ``(2) Coordination with special rules for long-term 
     contracts.--Paragraph (1) shall not apply with respect to any 
     item of income to which section 460 applies.
       ``(3) Applicable financial statement.--For purposes of this 
     subsection, the term `applicable financial statement' means--
       ``(A) a financial statement which is certified as being 
     prepared in accordance with generally accepted accounting 
     principles and which is--
       ``(i) a 10-K (or successor form), or annual statement to 
     shareholders, required to be filed by the taxpayer with the 
     United States Securities and Exchange Commission,
       ``(ii) an audited financial statement of the taxpayer which 
     is used for--

       ``(I) credit purposes,
       ``(II) reporting to shareholders, partners, or other 
     proprietors, or to beneficiaries, or
       ``(III) any other substantial nontax purpose,

     but only if there is no statement of the taxpayer described 
     in clause (i), or
       ``(iii) filed by the taxpayer with any other Federal agency 
     for purposes other than Federal tax purposes, but only if 
     there is no statement of the taxpayer described in clause (i) 
     or (ii),
       ``(B) a financial statement which is made on the basis of 
     international financial reporting standards and is filed by 
     the taxpayer with an agency of a foreign government which is 
     equivalent to the United States Securities and Exchange 
     Commission and which has reporting standards not less 
     stringent than the standards required by such Commission, but 
     only if there is no statement of the taxpayer described in 
     subparagraph (A), or
       ``(C) a financial statement filed by the taxpayer with any 
     other regulatory or governmental body specified by the 
     Secretary, but only if there is no statement of the taxpayer 
     described in subparagraph (A) or (B).
       ``(4) Allocation of transaction price.--For purposes of 
     this subsection, in the case of a contract which contains 
     multiple performance obligations, the allocation of the 
     transaction price to each performance obligation shall be 
     equal to the amount allocated to each performance obligation 
     for purposes of including such item in revenue in the 
     applicable financial statement of the taxpayer.
       ``(5) Group of entities.--For purposes of paragraph (1), if 
     the financial results of a taxpayer are reported on the 
     applicable financial statement (as defined in paragraph (3)) 
     for a group of entities, such statement may be treated as the 
     applicable financial statement of the taxpayer.''.
       (b) Treatment of Advance Payments.--Section 451, as amended 
     by subsection (a), is amended by redesignating subsections 
     (c) through (j) as subsections (d) through (k), respectively, 
     and by inserting after subsection (b) the following new 
     subsection:
       ``(c) Treatment of Advance Payments.--
       ``(1) In general.--A taxpayer which computes taxable income 
     under the accrual method of accounting, and receives any 
     advance payment during the taxable year, shall--
       ``(A) except as provided in subparagraph (B), include such 
     advance payment in gross income for such taxable year, or
       ``(B) if the taxpayer elects the application of this 
     subparagraph with respect to the category of advance payments 
     to which such advance payment belongs, the taxpayer shall--
       ``(i) to the extent that any portion of such advance 
     payment is required under subsection (b) to be included in 
     gross income in the taxable year in which such payment is 
     received, so include such portion, and
       ``(ii) include the remaining portion of such advance 
     payment in gross income in the taxable year following the 
     taxable year in which such payment is received.
       ``(2) Election.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the election under paragraph (1)(B) shall be made 
     at such time, in such form and manner, and with respect to 
     such categories of advance payments, as the Secretary may 
     provide.
       ``(B) Period to which election applies.--An election under 
     paragraph (1)(B) shall be effective for the taxable year with 
     respect to which it is first made and for all subsequent 
     taxable years, unless the taxpayer secures the consent of the 
     Secretary to revoke such election. For purposes of this 
     title, the computation of taxable income under an election 
     made under paragraph (1)(B) shall be treated as a method of 
     accounting.
       ``(3) Taxpayers ceasing to exist.--Except as otherwise 
     provided by the Secretary, the election under paragraph 
     (1)(B) shall not apply with respect to advance payments 
     received by the taxpayer during a taxable year if such 
     taxpayer ceases to exist during (or with the close of) such 
     taxable year.
       ``(4) Advance payment.--For purposes of this subsection--
       ``(A) In general.--The term `advance payment' means any 
     payment--
       ``(i) the full inclusion of which in the gross income of 
     the taxpayer for the taxable year of receipt is a permissible 
     method of accounting under this section (determined without 
     regard to this subsection),
       ``(ii) any portion of which is included in revenue by the 
     taxpayer in a financial statement described in clause (i) or 
     (ii) of subsection (b)(1)(A) for a subsequent taxable year, 
     and
       ``(iii) which is for goods, services, or such other items 
     as may be identified by the Secretary for purposes of this 
     clause.
       ``(B) Exclusions.--Except as otherwise provided by the 
     Secretary, such term shall not include--
       ``(i) rent,
       ``(ii) insurance premiums governed by subchapter L,
       ``(iii) payments with respect to financial instruments,
       ``(iv) payments with respect to warranty or guarantee 
     contracts under which a third party is the primary obligor,
       ``(v) payments subject to section 871(a), 881, 1441, or 
     1442,
       ``(vi) payments in property to which section 83 applies, 
     and
       ``(vii) any other payment identified by the Secretary for 
     purposes of this subparagraph.
       ``(C) Receipt.--For purposes of this subsection, an item of 
     gross income is received by the taxpayer if it is actually or 
     constructively received, or if it is due and payable to the 
     taxpayer.
       ``(D) Allocation of transaction price.--For purposes of 
     this subsection, rules similar to subsection (b)(4) shall 
     apply.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
       (d) Coordination With Section 481.--
       (1) In general.--In the case of any qualified change in 
     method of accounting for the taxpayer's first taxable year 
     beginning after December 31, 2017--
       (A) such change shall be treated as initiated by the 
     taxpayer, and
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury.
       (2) Qualified change in method of accounting.--For purposes 
     of this subsection, the term ``qualified change in method of 
     accounting'' means any change in method of accounting which--
       (A) is required by the amendments made by this section, or
       (B) was prohibited under the Internal Revenue Code of 1986 
     prior to such amendments and is permitted under such Code 
     after such amendments.

          PART IV--BUSINESS-RELATED EXCLUSIONS AND DEDUCTIONS

     SEC. 13301. LIMITATION ON DEDUCTION FOR INTEREST.

       (a) In General.--Section 163(j) is amended to read as 
     follows:
       ``(j) Limitation on Business Interest.--
       ``(1) In general.--The amount allowed as a deduction under 
     this chapter for any taxable year for business interest shall 
     not exceed the sum of--
       ``(A) the business interest income of such taxpayer for 
     such taxable year, plus
       ``(B) 30 percent of the adjusted taxable income of such 
     taxpayer for such taxable year.
     The amount determined under subparagraph (B) shall not be 
     less than zero.

[[Page S7434]]

       ``(2) Carryforward of disallowed business interest.--The 
     amount of any business interest not allowed as a deduction 
     for any taxable year by reason of paragraph (1) shall be 
     treated as business interest paid or accrued in the 
     succeeding taxable year.
       ``(3) Exemption for certain small businesses.--In the case 
     of any taxpayer (other than a tax shelter prohibited from 
     using the cash receipts and disbursements method of 
     accounting under section 448(a)(3)) which meets the gross 
     receipts test of section 448(c) for any taxable year, 
     paragraph (1) shall not apply to such taxpayer for such 
     taxable year. In the case of any taxpayer which is not a 
     corporation or a partnership, the gross receipts test of 
     section 448(c) shall be applied in the same manner as if such 
     taxpayer were a corporation or partnership.
       ``(4) Application to partnerships, etc.--
       ``(A) In general.--In the case of any partnership--
       ``(i) this subsection shall be applied at the partnership 
     level and any deduction for business interest shall be taken 
     into account in determining the non-separately stated taxable 
     income or loss of the partnership, and
       ``(ii) the adjusted taxable income of each partner of such 
     partnership--

       ``(I) shall be determined without regard to such partner's 
     distributive share of the non-separately stated taxable 
     income or loss of such partnership, and
       ``(II) shall be increased by such partner's distributive 
     share of such partnership's excess taxable income.

     For purposes of clause (ii)(II), a partner's distributive 
     share of partnership excess taxable income shall be 
     determined in the same manner as the partner's distributive 
     share of nonseparately stated taxable income or loss of the 
     partnership.
       ``(B) Special rules for carryforwards.--
       ``(i) In general.--The amount of any business interest not 
     allowed as a deduction to a partnership for any taxable year 
     by reason of paragraph (1) for any taxable year--

       ``(I) shall not be treated under paragraph (2) as business 
     interest paid or accrued by the partnership in the succeeding 
     taxable year, and
       ``(II) shall, subject to clause (ii), be treated as excess 
     business interest which is allocated to each partner in the 
     same manner as the non-separately stated taxable income or 
     loss of the partnership.

       ``(ii) Treatment of excess business interest allocated to 
     partners.--If a partner is allocated any excess business 
     interest from a partnership under clause (i) for any taxable 
     year--

       ``(I) such excess business interest shall be treated as 
     business interest paid or accrued by the partner in the next 
     succeeding taxable year in which the partner is allocated 
     excess taxable income from such partnership, but only to the 
     extent of such excess taxable income, and
       ``(II) any portion of such excess business interest 
     remaining after the application of subclause (I) shall, 
     subject to the limitations of subclause (I), be treated as 
     business interest paid or accrued in succeeding taxable 
     years.

     For purposes of applying this paragraph, excess taxable 
     income allocated to a partner from a partnership for any 
     taxable year shall not be taken into account under paragraph 
     (1)(A) with respect to any business interest other than 
     excess business interest from the partnership until all such 
     excess business interest for such taxable year and all 
     preceding taxable years has been treated as paid or accrued 
     under clause (ii).
       ``(iii) Basis adjustments.--

       ``(I) In general.--The adjusted basis of a partner in a 
     partnership interest shall be reduced (but not below zero) by 
     the amount of excess business interest allocated to the 
     partner under clause (i)(II).
       ``(II) Special rule for dispositions.--If a partner 
     disposes of a partnership interest, the adjusted basis of the 
     partner in the partnership interest shall be increased 
     immediately before the disposition by the amount of the 
     excess (if any) of the amount of the basis reduction under 
     subclause (I) over the portion of any excess business 
     interest allocated to the partner under clause (i)(II) which 
     has previously been treated under clause (ii) as business 
     interest paid or accrued by the partner. The preceding 
     sentence shall also apply to transfers of the partnership 
     interest (including by reason of death) in a transaction in 
     which gain is not recognized in whole or in part. No 
     deduction shall be allowed to the transferor or transferee 
     under this chapter for any excess business interest resulting 
     in a basis increase under this subclause.

       ``(C) Excess taxable income.--The term `excess taxable 
     income' means, with respect to any partnership, the amount 
     which bears the same ratio to the partnership's adjusted 
     taxable income as--
       ``(i) the excess (if any) of--

       ``(I) the amount determined for the partnership under 
     paragraph (1)(B), over
       ``(II) the amount (if any) by which the business interest 
     of the partnership exceeds the business interest income of 
     the partnership, bears to

       ``(ii) the amount determined for the partnership under 
     paragraph (1)(B).
       ``(D) Application to s corporations.--Rules similar to the 
     rules of subparagraphs (A) and (B) shall apply with respect 
     to any S corporation and its shareholders.
       ``(5) Business interest.--For purposes of this subsection, 
     the term `business interest' means any interest paid or 
     accrued on indebtedness properly allocable to a trade or 
     business. Such term shall not include investment interest 
     (within the meaning of subsection (d)).
       ``(6) Business interest income.--For purposes of this 
     subsection, the term `business interest income' means the 
     amount of interest includible in the gross income of the 
     taxpayer for the taxable year which is properly allocable to 
     a trade or business. Such term shall not include investment 
     income (within the meaning of subsection (d)).
       ``(7) Trade or business.--For purposes of this subsection--
       ``(A) In general.--The term `trade or business' shall not 
     include--
       ``(i) the trade or business of performing services as an 
     employee,
       ``(ii) any electing real property trade or business,
       ``(iii) any electing farming business, or
       ``(iv) the trade or business of the furnishing or sale of--

       ``(I) electrical energy, water, or sewage disposal 
     services,
       ``(II) gas or steam through a local distribution system, or
       ``(III) transportation of gas or steam by pipeline,

     if the rates for such furnishing or sale, as the case may be, 
     have been established or approved by a State or political 
     subdivision thereof, by any agency or instrumentality of the 
     United States, by a public service or public utility 
     commission or other similar body of any State or political 
     subdivision thereof, or by the governing or ratemaking body 
     of an electric cooperative.
       ``(B) Electing real property trade or business.--For 
     purposes of this paragraph, the term `electing real property 
     trade or business' means any trade or business which is 
     described in section 469(c)(7)(C) and which makes an election 
     under this subparagraph. Any such election shall be made at 
     such time and in such manner as the Secretary shall 
     prescribe, and, once made, shall be irrevocable.
       ``(C) Electing farming business.--For purposes of this 
     paragraph, the term `electing farming business' means a 
     farming business (as defined in section 263A(e)(4)) which 
     makes an election under this subparagraph. Any such election 
     shall be made at such time and in such manner as the 
     Secretary shall prescribe, and, once made, shall be 
     irrevocable.
       ``(8) Adjusted taxable income.--For purposes of this 
     subsection, the term `adjusted taxable income' means the 
     taxable income of the taxpayer--
       ``(A) computed without regard to--
       ``(i) any item of income, gain, deduction, or loss which is 
     not properly allocable to a trade or business,
       ``(ii) any business interest or business interest income,
       ``(iii) the amount of any net operating loss deduction 
     under section 172, and
       ``(iv) the amount of any deduction allowed under section 
     199 or 199A, and
       ``(B) computed with such other adjustments as provided by 
     the Secretary.
       ``(9) Cross references.--
       ``(A) For requirement that an electing real property trade 
     or business use the alternative depreciation system, see 
     section 168(g)(1)(F).
       ``(B) For requirement that an electing farming business use 
     the alternative depreciation system, see section 
     168(g)(1)(G).''.
       (b) Treatment of Carryforward of Disallowed Business 
     Interest in Certain Corporate Acquisitions.--
       (1) In general.--Section 381(c) is amended by inserting 
     after paragraph (19) the following new paragraph:
       ``(20) Carryforward of disallowed business interest.--The 
     carryover of disallowed business interest described in 
     section 163(j)(2) to taxable years ending after the date of 
     distribution or transfer.''.
       (2) Application of limitation.--Section 382(d) is amended 
     by adding at the end the following new paragraph:
       ``(3) Application to carryforward of disallowed interest.--
     The term `pre-change loss' shall include any carryover of 
     disallowed interest described in section 163(n) under rules 
     similar to the rules of paragraph (1).''.
       (3) Conforming amendment.--Section 382(k)(1) is amended by 
     inserting after the first sentence the following: ``Such term 
     shall include any corporation entitled to use a carryforward 
     of disallowed interest described in section 381(c)(20).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13302. MODIFICATION OF NET OPERATING LOSS DEDUCTION.

       (a) Limitation on Deduction.--
       (1) In general.--Section 172(a) is amended to read as 
     follows:
       ``(a) Deduction Allowed.--There shall be allowed as a 
     deduction for the taxable year an amount equal to the lesser 
     of--
       ``(1) the aggregate of the net operating loss carryovers to 
     such year, plus the net operating loss carrybacks to such 
     year, or
       ``(2) 90 percent (80 percent in the case of taxable years 
     beginning after December 31, 2022) of taxable income computed 
     without regard to the deduction allowable under this section.
     For purposes of this subtitle, the term `net operating loss 
     deduction' means the deduction allowed by this subsection.''.
       (2) Coordination of limitation with carrybacks and 
     carryovers.--Section 172(b)(2) is amended by striking ``shall 
     be

[[Page S7435]]

     computed--'' and all that follows and inserting ``shall--
       ``(A) be computed with the modifications specified in 
     subsection (d) other than paragraphs (1), (4), and (5) 
     thereof, and by determining the amount of the net operating 
     loss deduction without regard to the net operating loss for 
     the loss year or for any taxable year thereafter,
       ``(B) not be considered to be less than zero, and
       ``(C) not exceed the amount determined under subsection 
     (a)(2) for such prior taxable year.''.
       (3) Conforming amendment.--Section 172(d)(6) is amended by 
     striking ``and'' at the end of subparagraph (A), by striking 
     the period at the end of subparagraph (B) and inserting ``; 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(C) subsection (a)(2) shall be applied by substituting 
     `real estate investment trust taxable income (as defined in 
     section 857(b)(2) but without regard to the deduction for 
     dividends paid (as defined in section 561))' for `taxable 
     income'.''.
       (b) Repeal of Net Operating Loss Carryback; Indefinite 
     Carryforward.--
       (1) In general.--Section 172(b)(1)(A) is amended--
       (A) by striking ``shall be a net operating loss carryback 
     to each of the 2 taxable years'' in clause (i) and inserting 
     ``except as otherwise provided in this paragraph, shall not 
     be a net operating loss carryback to any taxable year'', and
       (B) by striking ``to each of the 20 taxable years'' in 
     clause (ii) and inserting ``to each taxable year''.
       (2) Conforming amendment.--Section 172(b)(1) is amended by 
     striking subparagraphs (B) through (F).
       (c) Treatment of Farming Losses.--
       (1) Allowance of carrybacks.--Section 172(b)(1), as amended 
     by subsection (b)(2), is amended by adding at the end the 
     following new subparagraph:
       ``(B) Farming losses.--
       ``(i) In general.--In the case of any portion of a net 
     operating loss for the taxable year which is a farming loss 
     with respect to the taxpayer, such loss shall be a net 
     operating loss carryback to each of the 2 taxable years 
     preceding the taxable year of such loss.
       ``(ii) Farming loss.--For purposes of this section, the 
     term `farming loss' means the lesser of--

       ``(I) the amount which would be the net operating loss for 
     the taxable year if only income and deductions attributable 
     to farming businesses (as defined in section 263A(e)(4)) are 
     taken into account, or
       ``(II) the amount of the net operating loss for such 
     taxable year.

       ``(iii) Coordination with paragraph (2).--For purposes of 
     applying paragraph (2), a farming loss for any taxable year 
     shall be treated as a separate net operating loss for such 
     taxable year to be taken into account after the remaining 
     portion of the net operating loss for such taxable year.
       ``(iv) Election.--Any taxpayer entitled to a 2-year 
     carryback under clause (i) from any loss year may elect not 
     to have such clause apply to such loss year. Such election 
     shall be made in such manner as 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 net operating loss. Such election, once made for any 
     taxable year, shall be irrevocable for such taxable year.''.
       (2) Conforming amendments.--
       (A) Section 172 is amended by striking subsections (f), 
     (g), and (h), and by redesignating subsection (i) as 
     subsection (f).
       (B) Section 537(b)(4) is amended by inserting ``(as in 
     effect before the date of enactment of the Tax Cuts and Jobs 
     Act)'' after ``as defined in section 172(f)''.
       (d) Treatment of Certain Insurance Losses.--
       (1) Treatment of carryforwards and carrybacks.--Section 
     172(b)(1), as amended by subsections (b)(2) and (c)(1), is 
     amended by adding at the end the following new subparagraph:
       ``(C) Insurance companies.--In the case of an insurance 
     company (as defined in section 816(a)) other than a life 
     insurance company, the net operating loss for any taxable 
     year--
       ``(i) shall be a net operating loss carryback to each of 
     the 2 taxable years preceding the taxable year of such loss, 
     and
       ``(ii) shall be a net operating loss carryover to each of 
     the 20 taxable years following the taxable year of the 
     loss.''.
       (2) Exemption from limitation.--Section 172, as amended by 
     subsection (c)(2)(A), is amended by redesignating subsection 
     (f) as subsection (g) and inserting after subsection (e) the 
     following new subsection:
       ``(f) Special Rule for Insurance Companies.--In the case of 
     an insurance company (as defined in section 816(a)) other 
     than a life insurance company--
       ``(1) the amount of the deduction allowed under subsection 
     (a) shall be the aggregate of the net operating loss 
     carryovers to such year, plus the net operating loss 
     carrybacks to such year, and
       ``(2) subparagraph (C) of subsection (b)(2) shall not 
     apply.''.
       (e) Effective Date.--
       (1) Net operating loss limitation.--The amendments made by 
     subsections (a) and (d)(2) shall apply to losses arising in 
     taxable years beginning after December 31, 2017.
       (2) Carryforwards and carrybacks.--The amendments made by 
     subsections (b), (c), and (d)(1) shall apply to net operating 
     losses arising in taxable years ending after December 31, 
     2017.

     SEC. 13303. LIKE-KIND EXCHANGES OF REAL PROPERTY.

       (a) In General.--Section 1031(a)(1) is amended by striking 
     ``property'' each place it appears and inserting ``real 
     property''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1031(a) is amended to read as 
     follows:
       ``(2) Exception for real property held for sale.--This 
     subsection shall not apply to any exchange of real property 
     held primarily for sale.''.
       (2) Section 1031 is amended by striking subsections (e).
       (3) Section 1031, as amended by paragraph (2), is amended 
     by inserting after subsection (d) the following new 
     subsection:
       ``(e) Application to Certain Partnerships.--For purposes of 
     this section, an interest in a partnership which has in 
     effect a valid election under section 761(a) to be excluded 
     from the application of all of subchapter K shall be treated 
     as an interest in each of the assets of such partnership and 
     not as an interest in a partnership.''.
       (4) Section 1031(h) is amended to read as follows:
       ``(h) Special Rules for Foreign Real Property.--Real 
     property located in the United States and real property 
     located outside the United States are not property of a like 
     kind.''.
       (5) Section 1031(i) is amended to read as follows:
       ``(i) Special Rules for Mutual Ditch, Reservoir, or 
     Irrigation Company Stock.--For purposes of subsection (a), 
     shares in a mutual ditch, reservoir, or irrigation company 
     shall be treated as real property if at the time of the 
     exchange--
       ``(1) the mutual ditch, reservoir, or irrigation company is 
     an organization described in section 501(c)(12)(A) 
     (determined without regard to the percentage of its income 
     that is collected from its members for the purpose of meeting 
     losses and expenses), and
       ``(2) the shares in such company have been recognized by 
     the highest court of the State in which such company was 
     organized or by applicable State statute as constituting or 
     representing real property or an interest in real 
     property.''.
       (6) The heading of section 1031 is amended by striking 
     ``property'' and inserting ``real property''.
       (7) The table of sections for part III of subchapter O of 
     chapter 1 is amended by striking the item relating to section 
     1031 and inserting the following new item:

``Sec. 1031. Exchange of real property held for productive use or 
              investment.''.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to exchanges completed after December 31, 2017.
       (2) Transition rule.--The amendments made by this section 
     shall not apply to any exchange if--
       (A) the property disposed of by the taxpayer in the 
     exchange is disposed of on or before December 31 2017, or
       (B) the property received by the taxpayer in the exchange 
     is received on or before December 31, 2017.

     SEC. 13304. LIMITATION ON DEDUCTION BY EMPLOYERS OF EXPENSES 
                   FOR FRINGE BENEFITS.

       (a) No Deduction Allowed for Entertainment Expenses.--
       (1) In general.--Section 274(a) is amended--
       (A) in paragraph (1)(A), by striking ``unless'' and all 
     that follows through ``trade or business,'',
       (B) by striking the flush sentence at the end of paragraph 
     (1), and
       (C) by striking paragraph (2)(C).
       (2) Conforming amendments.--
       (A) Section 274(d) is amended--
       (i) by striking paragraph (2) and redesignating paragraphs 
     (3) and (4) as paragraphs (2) and (3), respectively, and
       (ii) in the flush text following paragraph (3) (as so 
     redesignated)--

       (I) by striking ``, entertainment, amusement, recreation, 
     or use of the facility or property,'' in item (B), and
       (II) by striking ``(D) the business relationship to the 
     taxpayer of persons entertained, using the facility or 
     property, or receiving the gift'' and inserting ``(D) the 
     business relationship to the taxpayer of the person receiving 
     the benefit'',

       (B) Section 274 is amended by striking subsection (l).
       (C) Section 274(n) is amended by striking ``and 
     Entertainment'' in the heading.
       (D) Section 274(n)(1) is amended to read as follows:
       ``(1) In general.--The amount allowable as a deduction 
     under this chapter for any expense for food or beverages 
     shall not exceed 50 percent of the amount of such expense 
     which would (but for this paragraph) be allowable as a 
     deduction under this chapter.''.
       (E) Section 274(n)(2) is amended--
       (i) in subparagraph (B), by striking ``in the case of an 
     expense for food or beverages,'',
       (ii) by striking subparagraph (C) and redesignating 
     subparagraphs (D) and (E) as subparagraphs (C) and (D), 
     respectively,
       (iii) by striking ``of subparagraph (E)'' the last sentence 
     and inserting ``of subparagraph (D)'', and
       (iv) by striking ``in subparagraph (D)'' in the last 
     sentence and inserting ``in subparagraph (C)''.
       (F) Clause (iv) of section 7701(b)(5)(A) is amended to read 
     as follows:

[[Page S7436]]

       ``(iv) a professional athlete who is temporarily in the 
     United States to compete in a sports event--

       ``(I) which is organized for the primary purpose of 
     benefiting an organization which is described in section 
     501(c)(3) and exempt from tax under section 501(a),
       ``(II) all of the net proceeds of which are contributed to 
     such organization, and,
       ``(III) which utilizes volunteers for substantially all of 
     the work performed in carrying out such event.''.

       (b) Only 50 Percent of Expenses for Meals Provided on or 
     Near Business Premises Allowed as Deduction.--Paragraph (2) 
     of section 274(n), as amended by subsection (a), is amended--
       (1) by striking subparagraph (B),
       (2) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (B) and (C), respectively,
       (3) by striking ``of subparagraph (D)'' in the last 
     sentence and inserting ``of subparagraph (C)'', and
       (4) by striking ``in subparagraph (C)'' in the last 
     sentence and inserting ``in subparagraph (B)''.
       (c) Treatment of Transportation Benefits.--Section 274, as 
     amended by subsection (a), is amended--
       (1) in subsection (a)--
       (A) in the heading, by striking ``or Recreation'' and 
     inserting ``Recreation, or Qualified Transportation 
     Fringes'', and
       (B) by adding at the end the following new paragraph:
       ``(4) Qualified transportation fringes.--No deduction shall 
     be allowed under this chapter for the expense of any 
     qualified transportation fringe (as defined in section 
     132(f)) provided to an employee of the taxpayer.'', and
       (2) by inserting after subsection (k) the following new 
     subsection:
       ``(l) Transportation and Commuting Benefits.--No deduction 
     shall be allowed under this chapter for any expense incurred 
     for providing any transportation, or any payment or 
     reimbursement, to an employee of the taxpayer in connection 
     with travel between the employee's residence and place of 
     employment, except as necessary for ensuring the safety of 
     the employee.''.
       (d) Elimination of Deduction for Meals Provided at 
     Convenience of Employer.--Section 274, as amended by 
     subsection (c), is amended--
       (1) by redesignating subsection (o) as subsection (p), and
       (2) by inserting after subsection (n) the following new 
     subsection:
       ``(o) Meals Provided at Convenience of Employer.--No 
     deduction shall be allowed under this chapter for--
       ``(1) any expense for the operation of a facility described 
     in section 132(e)(2), and any expense for food or beverages, 
     including under section 132(e)(1), associated with such 
     facility, or
       ``(2) any expense for meals described in section 119(a).''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts 
     incurred or paid after December 31, 2017.
       (2) Effective date for elimination of deduction for meals 
     provided at convenience of employer.--The amendments made by 
     subsection (d) shall apply to amounts incurred or paid after 
     December 31, 2025.

     SEC. 13305. REPEAL OF DEDUCTION FOR INCOME ATTRIBUTABLE TO 
                   DOMESTIC PRODUCTION ACTIVITIES.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by striking section 199 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Conforming Amendments.--
       (1) Sections 74(d)(2)(B), 86(b)(2)(A), 135(c)(4)(A), 
     137(b)(3)(A), 219(g)(3)(A)(ii), 221(b)(2)(C), 222(b)(2)(C), 
     246(b)(1), and 469(i)(3)(F)(iii) are each amended by striking 
     ``199,''.
       (2) Section 170(b)(2)(D), as amended by section 11011, is 
     amended by striking clause (iv) and by redesignating clauses 
     (v) and (vi) as redesignating clauses (iv) as clause (v), 
     respectively.
       (3) Section 172(d) is amended by striking paragraph (7).
       (4) Section 613(a) is amended by striking ``and without the 
     deduction under section 199''.
       (5) Section 613A(d)(1) is amended by striking subparagraph 
     (B) and by redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (B), (C), and (D).
       (c) Effective Date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.

     SEC. 13306. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) Denial of Deduction.--
       (1) In general.--Subsection (f) of section 162 is amended 
     to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in the following 
     paragraphs of this subsection, no deduction otherwise 
     allowable shall be allowed under this chapter for any amount 
     paid or incurred (whether by suit, agreement, or otherwise) 
     to, or at the direction of, a government or governmental 
     entity in relation to the violation of any law or the 
     investigation or inquiry by such government or entity into 
     the potential violation of any law.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     amount that--
       ``(i) the taxpayer establishes--

       ``(I) constitutes restitution (including remediation of 
     property) for damage or harm which was or may be caused by 
     the violation of any law or the potential violation of any 
     law, or
       ``(II) is paid to come into compliance with any law which 
     was violated or otherwise involved in the investigation or 
     inquiry described in paragraph (1),

       ``(ii) is identified as restitution or as an amount paid to 
     come into compliance with such law, as the case may be, in 
     the court order or settlement agreement, and
       ``(iii) in the case of any amount of restitution for 
     failure to pay any tax imposed under this title in the same 
     manner as if such amount were such tax, would have been 
     allowed as a deduction under this chapter if it had been 
     timely paid.
     The identification under clause (ii) alone shall not be 
     sufficient to make the establishment required under clause 
     (i).
       ``(B) Limitation.--Subparagraph (A) shall not apply to any 
     amount paid or incurred as reimbursement to the government or 
     entity for the costs of any investigation or litigation.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by reason of any order of a court 
     in a suit in which no government or governmental entity is a 
     party.
       ``(4) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.
       ``(5) Treatment of certain nongovernmental regulatory 
     entities.--For purposes of this subsection, the following 
     nongovernmental entities shall be treated as governmental 
     entities:
       ``(A) Any nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)).
       ``(B) To the extent provided in regulations, any 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050W the 
     following new section:

     ``SEC. 6050X. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or any entity described in section 162(f)(5) which 
     is involved in a suit or agreement described in paragraph (2) 
     shall make a return in such form as determined by the 
     Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary 
     shall adjust the $600 amount in subparagraph (A)(ii) as 
     necessary in order to ensure the efficient administration of 
     the internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed at the time the agreement is 
     entered into, as determined by the Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and

[[Page S7437]]

       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).
     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050W 
     the following new item:

``Sec. 6050X. Information with respect to certain fines, penalties, and 
              other amounts.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 13307. DENIAL OF DEDUCTION FOR SETTLEMENTS SUBJECT TO 
                   NONDISCLOSURE AGREEMENTS PAID IN CONNECTION 
                   WITH SEXUAL HARASSMENT OR SEXUAL ABUSE.

       (a) Denial of Deduction.--Section 162 is amended by 
     redesignating subsection (q) as subsection (r) and by 
     inserting after subsection (p) the following new subsection:
       ``(q) Payments Related to Sexual Harassment and Sexual 
     Abuse.--No deduction shall be allowed under this chapter 
     for--
       ``(1) any settlement or payment related to sexual 
     harassment or sexual abuse if such settlement or payment is 
     subject to a nondisclosure agreement, or
       ``(2) attorney's fees related to such a settlement or 
     payment.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act.

     SEC. 13308. UNIFORM TREATMENT OF EXPENSES IN CONTINGENCY FEE 
                   CASES.

       (a) In General.--Section 162, as amended by section 13307, 
     is amended by redesignating subsection (r) as subsection (s) 
     and by inserting after subsection (q) the following new 
     subsection:
       ``(r) Expenses in Contingency Fee Cases.--No deduction 
     shall be allowed under subsection (a) to a taxpayer for any 
     expense--
       ``(1) paid or incurred in the course of the trade or 
     business of practicing law, and
       ``(2) resulting from a case for which the taxpayer is 
     compensated primarily on a contingent basis,
     until such time as such contingency is resolved.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenses and costs paid or incurred in taxable 
     years beginning after the date of the enactment of this Act.

     SEC. 13309. REPEAL OF DEDUCTION FOR LOCAL LOBBYING EXPENSES.

       (a) In General.--Section 162(e) is amended by striking 
     paragraphs (2) and (7) and by redesignating paragraphs (3), 
     (4), (5), (6), and (8) as paragraphs (2), (3), (4), (5), and 
     (6), respectively.
       (b) Conforming Amendment.--Section 6033(e)(1)(B)(ii) is 
     amended by striking ``section 162(e)(5)(B)(ii)'' and 
     inserting ``section 162(e)(4)(B)(ii)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 13310. RECHARACTERIZATION OF CERTAIN GAINS IN THE CASE 
                   OF PARTNERSHIP PROFITS INTERESTS HELD IN 
                   CONNECTION WITH PERFORMANCE OF INVESTMENT 
                   SERVICES.

       (a) In General.--Part IV of subchapter O of chapter 1 is 
     amended--
       (1) by redesignating section 1061 as section 1062, and
       (2) by inserting after section 1060 the following new 
     section:

     ``SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNECTION WITH 
                   PERFORMANCE OF SERVICES.

       ``(a) In General.--If one or more applicable partnership 
     interests are held by a taxpayer at any time during the 
     taxable year, the excess (if any) of--
       ``(1) the taxpayer's net long-term capital gain with 
     respect to such interests for such taxable year, over
       ``(2) the taxpayer's net long-term capital gain with 
     respect to such interests for such taxable year computed by 
     applying paragraphs (3) and (4) of sections 1222 by 
     substituting `3 years' for `1 year',
     shall be treated as short-term capital gain, notwithstanding 
     section 83 or any election in effect under section 83(b).
       ``(b) Special Rule.--To the extent provided by the 
     Secretary, subsection (a) shall not apply to income or gain 
     attributable to any asset not held for portfolio investment 
     on behalf of third party investors.
       ``(c) Applicable Partnership Interest.--For purposes of 
     this section--
       ``(1) In general.--Except as provided in this paragraph or 
     paragraph (4), the term `applicable partnership interest' 
     means any interest in a partnership which, directly or 
     indirectly, is transferred to (or is held by) the taxpayer in 
     connection with the performance of substantial services by 
     the taxpayer, or any other related person, in any applicable 
     trade or business. The previous sentence shall not apply to 
     an interest held by a person who is employed by another 
     entity that is conducting a trade or business (other than an 
     applicable trade or business) and only provides services to 
     such other entity.
       ``(2) Applicable trade or business.--The term `applicable 
     trade or business' means any activity conducted on a regular, 
     continuous, and substantial basis which, regardless of 
     whether the activity is conducted in one or more entities, 
     consists, in whole or in part, of--
       ``(A) raising or returning capital, and
       ``(B) either--
       ``(i) investing in (or disposing of) specified assets (or 
     identifying specified assets for such investing or 
     disposition), or
       ``(ii) developing specified assets.
       ``(3) Specified asset.--The term `specified asset' means 
     securities (as defined in section 475(c)(2) without regard to 
     the last sentence thereof), commodities (as defined in 
     section 475(e)(2)), real estate held for rental or 
     investment, cash or cash equivalents, options or derivative 
     contracts with respect to any of the foregoing, and an 
     interest in a partnership to the extent of the partnership's 
     proportionate interest in any of the foregoing.
       ``(4) Exceptions.--The term `applicable partnership 
     interest' shall not include--
       ``(A) any interest in a partnership directly or indirectly 
     held by a corporation, or
       ``(B) any capital interest in the partnership which 
     provides the taxpayer with a right to share in partnership 
     capital commensurate with--
       ``(i) the amount of capital contributed (determined at the 
     time of receipt of such partnership interest), or
       ``(ii) the value of such interest subject to tax under 
     section 83 upon the receipt or vesting of such interest.
       ``(5) Third party investor.--The term `third party 
     investor' means a person who--
       ``(A) holds an interest in the partnership which does not 
     constitute property held in connection with an applicable 
     trade or business; and
       ``(B) is not (and has not been) actively engaged, and is 
     (and was) not related to a person so engaged, in (directly or 
     indirectly) providing substantial services described in 
     paragraph (1) for such partnership or any applicable trade or 
     business.
       ``(d) Transfer of Applicable Partnership Interest to 
     Related Person.--
       ``(1) In general.--If a taxpayer transfers any applicable 
     partnership interest, directly or indirectly, to a person 
     related to the taxpayer, the taxpayer shall include in gross 
     income (as short term capital gain) the excess (if any) of--
       ``(A) so much of the taxpayer's long-term capital gains 
     with respect to such interest for such taxable year 
     attributable to the sale or exchange of any asset held for 
     not more than 3 years as is allocable to such interest, over
       ``(B) any amount treated as short term capital gain under 
     subsection (a) with respect to the transfer of such interest.
       ``(2) Related person.--For purposes of this paragraph, a 
     person is related to the taxpayer if--
       ``(A) the person is a member of the taxpayer's family 
     within the meaning of section 318(a)(1), or
       ``(B) the person performed a service within the current 
     calendar year or the preceding three calendar years in any 
     applicable trade or business in which or for which the 
     taxpayer performed a service.
       ``(e) Reporting.--The Secretary shall require such 
     reporting (at the time and in the manner prescribed by the 
     Secretary) as is necessary to carry out the purposes of this 
     section.
       ``(f) Regulations.--The Secretary shall issue such 
     regulations or other guidance as is necessary or appropriate 
     to carry out the purposes of this section''.
       (b) Clerical Amendment.--The table of sections for part IV 
     of subchapter O of chapter 1 is amended by striking the item 
     relating to 1061 and inserting the following new items:

``Sec. 1061. Partnership interests held in connection with performance 
              of services.
``Sec. 1062. Cross references.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                        PART V--BUSINESS CREDITS

                     Subpart A--General Provisions

     SEC. 13401. MODIFICATION OF ORPHAN DRUG CREDIT.

       (a) Credit Rate.--Subsection (a) of section 45C is amended 
     by striking ``50 percent'' and inserting ``27.5 percent''.
       (b) Disclosure of Credits.--Section 45C is amended by 
     adding at the end the following new subsection:
       ``(e) Disclosure of Credits.--The Secretary shall publicly 
     disclose the identity of any taxpayer (in the case of a pass-
     thru entity, the name of the entity) to whom a credit is 
     allowed under this section, as well as the amount of such 
     credit, the drug with respect to which the qualified clinical 
     testing expenses were taken into account under this section, 
     and the rare disease or condition for which such drug was 
     being tested.''.
       (c) Election of Reduced Credit.--Subsection (b) of section 
     280C is amended by redesignating paragraph (3) as paragraph 
     (4)

[[Page S7438]]

     and by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Election of reduced credit.--
       ``(A) In general.--In the case of any taxable year for 
     which an election is made under this paragraph--
       ``(i) paragraphs (1) and (2) shall not apply, and
       ``(ii) the amount of the credit under section 45C(a) shall 
     be the amount determined under subparagraph (B).
       ``(B) Amount of reduced credit.--The amount of credit 
     determined under this subparagraph for any taxable year shall 
     be the amount equal to the excess of--
       ``(i) the amount of credit determined under section 45C(a) 
     without regard to this paragraph, over
       ``(ii) the product of--

       ``(I) the amount described in clause (i), and
       ``(II) the maximum rate of tax under section 11(b).

       ``(C) Election.--An election under this paragraph for any 
     taxable year shall be made not later than the time for filing 
     the return of tax for such year (including extensions), shall 
     be made on such return, and shall be made in such manner as 
     the Secretary shall prescribe. Such an election, once made, 
     shall be irrevocable.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13402. REHABILITATION CREDIT LIMITED TO CERTIFIED 
                   HISTORIC STRUCTURES.

       (a) In General.--Subsection (a) of section 47 is amended to 
     read as follows:
       ``(a) General Rule.--
       ``(1) In general.--For purposes of section 46, for any 
     taxable year during the 5-year period beginning in the 
     taxable year in which a qualified rehabilitated building is 
     placed in service, the rehabilitation credit for such year is 
     an amount equal to the ratable share for such year.
       ``(2) Ratable share.--For purposes of paragraph (1), the 
     ratable share for any taxable year during the period 
     described in such paragraph is the amount equal to 20 percent 
     of the qualified rehabilitation expenditures with respect to 
     the qualified rehabilitated building, as allocated ratably to 
     each year during such period.''.
       (b) Conforming Amendments.--
       (1) Section 47(c) is amended--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by amending clause (iii) to read 
     as follows:
       ``(iii) such building is a certified historic structure, 
     and'',
       (ii) by striking subparagraph (B), and
       (iii) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (B) and (C), respectively, and
       (B) in paragraph (2)(B), by amending clause (iv) to read as 
     follows:
       ``(iv) Certified historic structure.--Any expenditure 
     attributable to the rehabilitation of a qualified 
     rehabilitated building unless the rehabilitation is a 
     certified rehabilitation (within the meaning of subparagraph 
     (C)).''.
       (2) Paragraph (4) of section 145(d) is amended--
       (A) by striking ``of section 47(c)(1)(C)'' each place it 
     appears and inserting ``of section 47(c)(1)(B)'', and
       (B) by striking ``section 47(c)(1)(C)(i)'' and inserting 
     ``section 47(c)(1)(B)(i)''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts paid 
     or incurred after December 31, 2017.
       (2) Transition rule.--In the case of qualified 
     rehabilitation expenditures with respect to any building--
       (A) owned or leased by the taxpayer during the entirety of 
     the period after December 31, 2017, and
       (B) with respect to which the 24-month period selected by 
     the taxpayer under section 47(c)(1)(B) of the Internal 
     Revenue Code of 1986 (as amended by subsection (b)) begins 
     not later than 180 days after the date of the enactment of 
     this Act,
     the amendments made by this section shall apply to such 
     expenditures paid or incurred after the end of the taxable 
     year in which the 24-month period referred to in subparagraph 
     (B) ends.

     SEC. 13403. REPEAL OF DEDUCTION FOR CERTAIN UNUSED BUSINESS 
                   CREDITS.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by striking section 196 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13404. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL 
                   LEAVE.

       (a) In General.--
       (1) Allowance of credit.--Subpart D of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new section:

     ``SEC. 45S. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL 
                   LEAVE.

       ``(a) Establishment of Credit.--
       ``(1) In general.--For purposes of section 38, in the case 
     of an eligible employer, the paid family and medical leave 
     credit is an amount equal to the applicable percentage of the 
     amount of wages paid to qualifying employees during any 
     period in which such employees are on family and medical 
     leave.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means 12.5 percent 
     increased (but not above 25 percent) by 0.25 percentage 
     points for each percentage point by which the rate of payment 
     (as described under subsection (c)(1)(B)) exceeds 50 percent.
       ``(b) Limitation.--
       ``(1) In general.--The credit allowed under subsection (a) 
     with respect to any employee for any taxable year shall not 
     exceed an amount equal to the product of the normal hourly 
     wage rate of such employee for each hour (or fraction 
     thereof) of actual services performed for the employer and 
     the number of hours (or fraction thereof) for which family 
     and medical leave is taken.
       ``(2) Non-hourly wage rate.--For purposes of paragraph (1), 
     in the case of any employee who is not paid on an hourly wage 
     rate, the wages of such employee shall be prorated to an 
     hourly wage rate under regulations established by the 
     Secretary.
       ``(3) Maximum amount of leave subject to credit.--The 
     amount of family and medical leave that may be taken into 
     account with respect to any employee under subsection (a) for 
     any taxable year shall not exceed 12 weeks.
       ``(c) Eligible Employer.--For purposes of this section--
       ``(1) In general.--The term `eligible employer' means any 
     employer who has in place a policy that meets the following 
     requirements:
       ``(A) The policy provides--
       ``(i) in the case of a qualifying employee who is not a 
     part-time employee (as defined in section 4980E(d)(4)(B)), 
     not less than 2 weeks of annual paid family and medical 
     leave, and
       ``(ii) in the case of a qualifying employee who is a part-
     time employee, an amount of annual paid family and medical 
     leave that is not less than an amount which bears the same 
     ratio to the amount of annual paid family and medical leave 
     that is provided to a qualifying employee described in clause 
     (i) as--

       ``(I) the number of hours the employee is expected to work 
     during any week, bears to
       ``(II) the number of hours an equivalent qualifying 
     employee described in clause (i) is expected to work during 
     the week.

       ``(B) The policy requires that the rate of payment under 
     the program is not less than 50 percent of the wages normally 
     paid to such employee for services performed for the 
     employer.
       ``(2) Special rule for certain employers.--
       ``(A) In general.--An added employer shall not be treated 
     as an eligible employer unless such employer provides paid 
     family and medical leave in compliance with a policy which 
     ensures that the employer--
       ``(i) will not interfere with, restrain, or deny the 
     exercise of or the attempt to exercise, any right provided 
     under the policy, and
       ``(ii) will not discharge or in any other manner 
     discriminate against any individual for opposing any practice 
     prohibited by the policy.
       ``(B) Added employer; added employee.--For purposes of this 
     paragraph--
       ``(i) Added employee.--The term `added employee' means a 
     qualifying employee who is not covered by title I of the 
     Family and Medical Leave Act of 1993, as amended.
       ``(ii) Added employer.--The term `added employer' means an 
     eligible employer (determined without regard to this 
     paragraph), whether or not covered by that title I, who 
     offers paid family and medical leave to added employees.
       ``(3) Aggregation rule.--All persons which are treated as a 
     single employer under subsections (a) and (b) of section 52 
     shall be treated as a single taxpayer.
       ``(4) Treatment of benefits mandated or paid for by state 
     or local governments.--For purposes of this section, any 
     leave which is paid by a State or local government or 
     required by State or local law shall not be taken into 
     account in determining the amount of paid family and medical 
     leave provided by the employer.
       ``(5) No inference.--Nothing in this subsection shall be 
     construed as subjecting an employer to any penalty, 
     liability, or other consequence (other than ineligibility for 
     the credit allowed by reason of subsection (a) or recapturing 
     the benefit of such credit) for failure to comply with the 
     requirements of this subsection.
       ``(d) Qualifying Employees.--For purposes of this section, 
     the term `qualifying employee' means any employee (as defined 
     in section 3(e) of the Fair Labor Standards Act of 1938, as 
     amended) who--
       ``(1) has been employed by the employer for 1 year or more, 
     and
       ``(2) for the preceding year, had compensation not in 
     excess of an amount equal to 60 percent of the amount 
     applicable for such year under clause (i) of section 
     414(q)(1)(B).
       ``(e) Family and Medical Leave.--
       ``(1) In general.--Except as provided in paragraph (2), for 
     purposes of this section, the term `family and medical leave' 
     means leave for any 1 or more of the purposes described under 
     subparagraph (A), (B), (C), (D), or (E) of paragraph (1), or 
     paragraph (3), of section 102(a) of the Family and Medical 
     Leave Act of 1993, as amended, whether the leave is provided 
     under that Act or by a policy of the employer.
       ``(2) Exclusion.--If an employer provides paid leave as 
     vacation leave, personal leave, or medical or sick leave 
     (other than leave specifically for 1 or more of the purposes 
     referred to in paragraph (1)), that paid leave

[[Page S7439]]

     shall not be considered to be family and medical leave under 
     paragraph (1).
       ``(3) Definitions.--In this subsection, the terms `vacation 
     leave', `personal leave', and `medical or sick leave' mean 
     those 3 types of leave, within the meaning of section 
     102(d)(2) of that Act.
       ``(f) Wages.--For purposes of this section, the term 
     `wages' has the meaning given such term by subsection (b) of 
     section 3306 (determined without regard to any dollar 
     limitation contained in such section). Such term shall not 
     include any amount taken into account for purposes of 
     determining any other credit allowed under this subpart.
       ``(g) Election to Have Credit Not Apply.--
       ``(1) In general.--A taxpayer may elect to have this 
     section not apply for any taxable year.
       ``(2) Other rules.--Rules similar to the rules of 
     paragraphs (2) and (3) of section 51(j) shall apply for 
     purposes of this subsection.
       ``(h) Termination.--This section shall not apply to wages 
     paid in taxable years beginning after December 31, 2019.''.
       (b) Credit Part of General Business Credit.--Section 38(b) 
     is amended by striking ``plus'' at the end of paragraph (35), 
     by striking the period at the end of paragraph (36) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(37) in the case of an eligible employer (as defined in 
     section 45S(c)), the paid family and medical leave credit 
     determined under section 45S(a).''.
       (c) Credit Allowed Against AMT.--Subparagraph (B) of 
     section 38(c)(4) is amended by redesignating clauses (ix) 
     through (xi) as clauses (x) through (xii), respectively, and 
     by inserting after clause (viii) the following new clause:
       ``(ix) the credit determined under section 45S,''.
       (d) Conforming Amendments.--
       (1) Denial of double benefit.--Section 280C(a) is amended 
     by inserting ``45S(a),'' after ``45P(a),''.
       (2) Election to have credit not apply.--Section 6501(m) is 
     amended by inserting ``45S(g),'' after ``45H(g),''.
       (3) Clerical amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following new item:

``Sec. 45S. Employer credit for paid family and medical leave.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to wages paid in taxable years beginning after 
     December 31, 2017.

      Subpart B--Provisions Relating to Low-income Housing Credit

     SEC. 13411. RECONSTRUCTION OR REPLACEMENT PERIOD AFTER 
                   CASUALTY LOSS.

       (a) In General.--Subparagraph (E) of section 42(j)(4) is 
     amended by striking ``a reasonable period established by the 
     Secretary'' and inserting ``a reasonable period established 
     by the applicable housing credit agency (not to exceed 25 
     months from the date on which the casualty loss arises). The 
     determination under paragraph (1) shall not be made with 
     respect to a property the basis of which is affected by a 
     casualty loss until the period described in the preceding 
     sentence with respect to such property has expired.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to casualty losses arising after the date of the 
     enactment of this Act.

     SEC. 13412. MODIFICATION OF RIGHTS RELATING TO BUILDING 
                   PURCHASE.

       (a) In General.--Subparagraph (A) of section 42(i)(7) is 
     amended--
       (1) by striking ``a right of 1st refusal'' and inserting 
     ``an option'', and
       (2) by striking ``the property'' and inserting ``the 
     property or a partnership interest relating to the 
     property''.
       (b) Conforming Amendment.--Subparagraph (B) of section 
     42(i)(7) is amended by adding at the end the following new 
     sentence: ``In the case of a purchase of a partnership 
     interest, the minimum purchase price is an amount equal to 
     such interest's ratable share of the amount determined under 
     the first sentence of this subparagraph.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to agreements entered into or amended after the 
     date of the enactment of this Act.

     SEC. 13413. DETERMINATION OF COMMUNITY REVITALIZATION PLAN TO 
                   BE MADE BY HOUSING CREDIT AGENCY.

       (a) In General.--Subclause (III) of section 42(m)(1)(B)(ii) 
     is amended by inserting ``, as determined by the housing 
     credit agency according to criteria established by such 
     agency,'' after ``(d)(5)(C)) and''.
       (b) Criteria.--Paragraph (1) of section 42(m) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Criteria for determination relating to concerted 
     community revitalization plan.--For purposes of subparagraph 
     (B)(ii)(III), the criteria for determining whether the 
     development of a project contributes to a concerted community 
     development plan shall take into account any factors the 
     agency deems appropriate, including the extent to which the 
     proposed plan--
       ``(i) is geographically specific,
       ``(ii) outlines a clear plan for implementation and goals 
     for outcomes,
       ``(iii) includes a strategy for applying for or obtaining 
     commitments of public or private investment (or both) in 
     nonhousing infrastructure, amenities, or services, and
       ``(iv) demonstrates the need for community 
     revitalization.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to allocations of housing credit dollar amounts 
     made under qualified allocation plans (as defined in section 
     42(m)(1)(B) of the Internal Revenue Code of 1986) adopted 
     after December 31, 2017.

     SEC. 13414. PROHIBITION OF LOCAL APPROVAL AND CONTRIBUTION 
                   REQUIREMENTS.

       (a) In General.--Paragraph (1) of section 42(m), as amended 
     by section 13413, is further amended--
       (1) by striking clause (ii) of subparagraph (A) and by 
     redesignating clauses (iii) and (iv) thereof as clauses (ii) 
     and (iii), and
       (2) by adding at the end the following new subparagraph:
       ``(F) Local approval or contribution not taken into 
     account.--The selection criteria under a qualified allocation 
     plan shall not include consideration of--
       ``(i) any support or opposition with respect to the project 
     from local or elected officials, or
       ``(ii) any local government contribution to the project, 
     except to the extent such contribution is taken into account 
     as part of a broader consideration of the project's ability 
     to leverage outside funding sources, and is not prioritized 
     over any other source of outside funding.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to allocations of housing credit dollar amounts 
     made after December 31, 2017.

     SEC. 13415. SELECTION CRITERIA UNDER QUALIFIED ALLOCATION 
                   PLANS.

       (a) In General.--Subparagraph (C) of section 42(m)(1) is 
     amended by striking ``and'' at the end of clause (ix), by 
     striking the period at the end of clause (x) and inserting 
     ``, and'', and by adding at the end the following new clause:
       ``(xi) the affordable housing needs of individuals in the 
     State who are members of Indian tribes (as defined in section 
     45A(c)(6)).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to allocations of credits under section 42 of the 
     Internal Revenue Code of 1986 made after December 31, 2017.

     SEC. 13416. AFFORDABLE HOUSING TAX CREDIT.

       (a) In General.--The heading of section 42 is amended by 
     striking ``low-income'' and inserting ``affordable''.
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 42 is amended by striking 
     ``low-income'' and inserting ``affordable''.
       (2) Paragraph (5) of section 38(b) is amended by striking 
     ``low-income'' and inserting ``affordable''.
       (3) The heading of subparagraph (D) of section 469(i)(3) is 
     amended by striking ``low-income'' and inserting 
     ``affordable''.
       (4) The heading of subparagraph (B) of section 469(i)(6) is 
     amended by striking ``low-income'' and inserting 
     ``affordable''.
       (5) Paragraph (7) of section 772(a) is amended by striking 
     ``low-income'' and inserting ``affordable''.
       (6) Paragraph (5) of section 772(d) is amended by striking 
     ``low-income'' and inserting ``affordable''.
       (c) Clerical Amendment.--The item relating to section 42 in 
     the table of sections for subpart D of part IV of subchapter 
     A of chapter 1 is amended to read as follows:

``Sec. 42. Affordable housing credit.''.

    PART VI--PROVISIONS RELATED TO SPECIFIC ENTITIES AND INDUSTRIES

                   Subpart A--Partnership Provisions

     SEC. 13501. TREATMENT OF GAIN OR LOSS OF FOREIGN PERSONS FROM 
                   SALE OR EXCHANGE OF INTERESTS IN PARTNERSHIPS 
                   ENGAGED IN TRADE OR BUSINESS WITHIN THE UNITED 
                   STATES.

       (a) In General.--Section 864(c) is amended by adding at the 
     end the following:
       ``(8) Gain or loss of foreign persons from sale or exchange 
     of certain partnership interests.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subtitle, if a nonresident alien individual or foreign 
     corporation owns, directly or indirectly, an interest in a 
     partnership which is engaged in any trade or business within 
     the United States, gain or loss on the sale or exchange of 
     all (or any portion of) such interest shall be treated as 
     effectively connected with the conduct of such trade or 
     business to the extent such gain or loss does not exceed the 
     amount determined under subparagraph (B).
       ``(B) Amount treated as effectively connected.--The amount 
     determined under this subparagraph with respect to any 
     partnership interest sold or exchanged--
       ``(i) in the case of any gain on the sale or exchange of 
     the partnership interest, is--

       ``(I) the portion of the partner's distributive share of 
     the amount of gain which would have been effectively 
     connected with the conduct of a trade or business within the 
     United States if the partnership had sold all of its assets 
     at their fair market value as of the date of the sale or 
     exchange of such interest, or
       ``(II) zero if no gain on such deemed sale would have been 
     so effectively connected, and

       ``(ii) in the case of any loss on the sale or exchange of 
     the partnership interest, is--

       ``(I) the portion of the partner's distributive share of 
     the amount of loss on the deemed sale described in clause 
     (i)(I) which would have been so effectively connected, or
       ``(II) zero if no loss on such deemed sale would be have 
     been so effectively connected.

[[Page S7440]]

     For purposes of this subparagraph, a partner's distributive 
     share of gain or loss on the deemed sale shall be determined 
     in the same manner as such partner's distributive share of 
     the non-separately stated taxable income or loss of such 
     partnership.
       ``(C) Coordination with united states real property 
     interests.--If a partnership described in subparagraph (A) 
     holds any United States real property interest (as defined in 
     section 897(c)) at the time of the sale or exchange of the 
     partnership interest, then the gain or loss treated as 
     effectively connected income under subparagraph (A) shall be 
     reduced by the amount so treated with respect to such United 
     States real property interest under section 897.
       ``(D) Sale or exchange.--For purposes of this paragraph, an 
     individual or corporation shall be treated as having sold or 
     exchanged any interest in a partnership if, under any 
     provision of this subtitle, gain or loss is realized from the 
     sale or exchange of such interest.
       ``(E) Secretarial authority.--The Secretary shall prescribe 
     such regulations as the Secretary determines appropriate for 
     the application of this paragraph, including regulations 
     which provide that, notwithstanding subparagraph (D), this 
     paragraph applies in a case even if gain or loss from a sale 
     or exchange would not be realized under any other provision 
     of this subtitle.''.
       (b) Withholding Requirements.--Section 1446 is amended by 
     redesignating subsection (f) as subsection (g) and by 
     inserting after subsection (e) the following:
       ``(f) Special Rules for Withholding on Sales of Partnership 
     Interests.--
       ``(1) In general.--Except as provided in this subsection, 
     if any portion of the gain (if any) on any disposition of an 
     interest in a partnership would be treated under section 
     864(c)(8) as effectively connected with the conduct of a 
     trade or business within the United States, the transferee 
     shall be required to deduct and withhold a tax equal to 10 
     percent of the amount realized on the disposition.
       ``(2) Exception if nonforeign affidavit furnished.--
       ``(A) In general.--No person shall be required to deduct 
     and withhold any amount under paragraph (1) with respect to 
     any disposition if the transferor furnishes to the transferee 
     an affidavit by the transferor stating, under penalty of 
     perjury, the transferor's United States taxpayer 
     identification number and that the transferor is not a 
     foreign person.
       ``(B) False affidavit.--Subparagraph (A) shall not apply to 
     any disposition if--
       ``(i) the transferee has actual knowledge that the 
     affidavit is false, or the transferee receives a notice (as 
     described in section 1445(d)) from a transferor's agent or 
     transferee's agent that such affidavit or statement is false, 
     or
       ``(ii) the Secretary by regulations requires the transferee 
     to furnish a copy of such affidavit or statement to the 
     Secretary and the transferee fails to furnish a copy of such 
     affidavit or statement to the Secretary at such time and in 
     such manner as required by such regulations.
       ``(C) Rules for agents.--The rules of section 1445(d) shall 
     apply to a transferor's agent or transferee's agent with 
     respect to any affidavit described in subparagraph (A) in the 
     same manner as such rules apply with respect to the 
     disposition of a United States real property interest under 
     such section.
       ``(3) Authority of secretary to prescribe reduced amount.--
     At the request of the transferor or transferee, the Secretary 
     may prescribe a reduced amount to be withheld under this 
     section if the Secretary determines that to substitute such 
     reduced amount will not jeopardize the collection of the tax 
     imposed under this title with respect to gain treated under 
     section 864(c)(8) as effectively connected with the conduct 
     of a trade or business with in the United States.
       ``(4) Partnership to withhold amounts not withheld by the 
     transferee.--If a transferee fails to withhold any amount 
     required to be withheld under paragraph (1), the partnership 
     shall be required to deduct and withhold from distributions 
     to the transferee a tax in an amount equal to the amount the 
     transferee failed to withhold (plus interest under this title 
     on such amount).
       ``(5) Definitions.--Any term used in this subsection which 
     is also used under section 1445 shall have the same meaning 
     as when used in such section.
       ``(6) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection, including regulations providing for 
     exceptions from the provisions of this subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales and exchanges on or after November 27, 
     2017.

     SEC. 13502. MODIFY DEFINITION OF SUBSTANTIAL BUILT-IN LOSS IN 
                   THE CASE OF TRANSFER OF PARTNERSHIP INTEREST.

       (a) In General.--Paragraph (1) of section 743(d) is to read 
     as follows:
       ``(1) In general.--For purposes of this section, a 
     partnership has a substantial built-in loss with respect to a 
     transfer of an interest in the partnership if--
       ``(A) the partnership's adjusted basis in the partnership 
     property exceeds by more than $250,000 the fair market value 
     of such property, or
       ``(B) the transferee partner would be allocated a loss of 
     more than $250,000 if the partnership assets were sold for 
     cash equal to their fair market value immediately after such 
     transfer.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers of partnership interests after 
     December 31, 2017.

     SEC. 13503. CHARITABLE CONTRIBUTIONS AND FOREIGN TAXES TAKEN 
                   INTO ACCOUNT IN DETERMINING LIMITATION ON 
                   ALLOWANCE OF PARTNER'S SHARE OF LOSS.

       (a) In General.--Subsection (d) of section 704 is amended--
       (1) by striking ``A partner's distributive share'' and 
     inserting the following:
       ``(1) In general.--A partner's distributive share'',
       (2) by striking ``Any excess of such loss'' and inserting 
     the following:
       ``(2) Carryover.--Any excess of such loss'', and
       (3) by adding at the end the following new paragraph:
       ``(3) Special rules.--
       ``(A) In general.--In determining the amount of any loss 
     under paragraph (1), there shall be taken into account the 
     partner's distributive share of amounts described in 
     paragraphs (4) and (6) of section 702(a).
       ``(B) Exception.--In the case of a charitable contribution 
     of property whose fair market value exceeds its adjusted 
     basis, subparagraph (A) shall not apply to the extent of the 
     partner's distributive share of such excess.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years beginning after 
     December 31, 2017.

                      Subpart B--Insurance Reforms

     SEC. 13511. NET OPERATING LOSSES OF LIFE INSURANCE COMPANIES.

       (a) In General.--Section 805(b) is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (b) Conforming Amendments.--
       (1) Part I of subchapter L of chapter 1 is amended by 
     striking section 810 (and by striking the item relating to 
     such section in the table of sections for such part).
       (2)(A) Part III of subchapter L of chapter 1 is amended by 
     striking section 844 (and by striking the item relating to 
     such section in the table of sections for such part).
       (B) Section 831(b)(3) is amended by striking ``except as 
     provided in section 844,''
       (3) Section 381 is amended by striking subsection (d).
       (4) Section 805(a)(4)(B)(ii) is amended to read as follows:
       ``(ii) the deduction allowed under section 172,''.
       (5) Section 805(a) is amended by striking paragraph (5).
       (6) Section 805(b)(2)(A)(iv) is amended to read as follows:
       ``(iv) any net operating loss carryback to the taxable year 
     under section 172, and''.
       (7) Section 953(b)(1)(B) is amended to read as follows:
       ``(B) So much of section 805(a)(8) as relates to the 
     deduction allowed under section 172.''.
       (8) Section 1351(i)(3) is amended by striking ``or the 
     operations loss deduction under section 810,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to losses arising in taxable years beginning 
     after December 31, 2017.

     SEC. 13512. REPEAL OF SMALL LIFE INSURANCE COMPANY DEDUCTION.

       (a) In General.--Part I of subchapter L of chapter 1 is 
     amended by striking section 806 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Conforming Amendments.--
       (1) Section 453B(e) is amended--
       (A) by striking ``(as defined in section 806(b)(3))'' in 
     paragraph (2)(B), and
       (B) by adding at the end the following new paragraph:
       ``(3) Noninsurance business.--
       ``(A) In general.--For purposes of this subsection, the 
     term `noninsurance business' means any activity which is not 
     an insurance business.
       ``(B) Certain activities treated as insurance businesses.--
     For purposes of subparagraph (A), any activity which is not 
     an insurance business shall be treated as an insurance 
     business if--
       ``(i) it is of a type traditionally carried on by life 
     insurance companies for investment purposes, but only if the 
     carrying on of such activity (other than in the case of real 
     estate) does not constitute the active conduct of a trade or 
     business, or
       ``(ii) it involves the performance of administrative 
     services in connection with plans providing life insurance, 
     pension, or accident and health benefits.''.
       (2) Section 465(c)(7)(D)(v)(II) is amended by striking 
     ``section 806(b)(3)'' and inserting ``section 453B(e)(3)''.
       (3) Section 801(a)(2) is amended by striking subparagraph 
     (C).
       (4) Section 804 is amended by striking ``means--'' and all 
     that follows and inserting ``means the general deductions 
     provided in section 805.''.
       (5) Section 805(a)(4)(B), as amended by this Act, is 
     amended by striking clause (i) and by redesignating clauses 
     (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
     respectively.
       (6) Section 805(b)(2)(A), as amended by this Act, is 
     amended by striking clause (iii) and

[[Page S7441]]

     by redesignating clauses (iv) and (v) as clauses (iii) and 
     (iv), respectively.
       (7) Section 842(c) is amended by striking paragraph (1) and 
     by redesignating paragraphs (2) and (3) as paragraphs (1) and 
     (2), respectively.
       (8) Section 953(b)(1), as amended by section 13511, is 
     amended by striking subparagraph (A) and by redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13513. ADJUSTMENT FOR CHANGE IN COMPUTING RESERVES.

       (a) In General.--Paragraph (1) of section 807(f) is amended 
     to read as follows:
       ``(1) Treatment as change in method of accounting.--If the 
     basis for determining any item referred to in subsection (c) 
     as of the close of any taxable year differs from the basis 
     for such determination as of the close of the preceding 
     taxable year, then so much of the difference between--
       ``(A) the amount of the item at the close of the taxable 
     year, computed on the new basis, and
       ``(B) the amount of the item at the close of the taxable 
     year, computed on the old basis,
     as is attributable to contracts issued before the taxable 
     year shall be taken into account under section 481 as 
     adjustments attributable to a change in method of accounting 
     initiated by the taxpayer and made with the consent of the 
     Secretary.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13514. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS TO 
                   SHAREHOLDERS FROM PRE-1984 POLICYHOLDERS 
                   SURPLUS ACCOUNT.

       (a) In General.--Subpart D of part I of subchapter L is 
     amended by striking section 815 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (b) Conforming Amendment.--Section 801 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
       (d) Phased Inclusion of Remaining Balance of Policyholders 
     Surplus Accounts.--In the case of any stock life insurance 
     company which has a balance (determined as of the close of 
     such company's last taxable year beginning before January 1, 
     2018) in an existing policyholders surplus account (as 
     defined in section 815 of the Internal Revenue Code of 1986, 
     as in effect before its repeal), the tax imposed by section 
     801 of such Code for the first 8 taxable years beginning 
     after December 31, 2017, shall be the amount which would be 
     imposed by such section for such year on the sum of--
       (1) life insurance company taxable income for such year 
     (within the meaning of such section 801 but not less than 
     zero), plus
       (2) \1/8\ of such balance.

     SEC. 13515. MODIFICATION OF PRORATION RULES FOR PROPERTY AND 
                   CASUALTY INSURANCE COMPANIES.

       (a) In General.--Section 832(b)(5)(B) is amended--
       (1) by striking ``15 percent'' and inserting ``the 
     applicable percentage'', and
       (2) by inserting at the end the following new sentence: 
     ``For purposes of this subparagraph, the applicable 
     percentage is 5.25 percent divided by the highest rate in 
     effect under section 11(b).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13516. REPEAL OF SPECIAL ESTIMATED TAX PAYMENTS.

       (a) In General.--Part III of subchapter L of chapter 1 is 
     amended by striking section 847 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13517. CAPITALIZATION OF CERTAIN POLICY ACQUISITION 
                   EXPENSES.

       (a) Amortization Period.--Section 848 is amended by 
     striking ``120-month'' each place it appears in subsections 
     (a)(2) and (b)(1) and inserting ``600-month''.
       (b) Determination of Expenses.--Paragraph (1) of section 
     848(c) is amended--
       (1) by striking ``1.75 percent'' in subparagraph (A) and 
     inserting ``3.17 percent'',
       (2) by striking ``2.05 percent'' in subparagraph (B) and 
     inserting ``3.72 percent'', and
       (3) by striking ``7.7 percent'' in subparagraph (C) and 
     inserting ``13.97 percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13518. TAX REPORTING FOR LIFE SETTLEMENT TRANSACTIONS.

       (a) In General.--Subpart B of part III of subchapter A of 
     chapter 61, as amended by section 13305, is amended by adding 
     at the end the following new section:

     ``SEC. 6050Y. RETURNS RELATING TO CERTAIN LIFE INSURANCE 
                   CONTRACT TRANSACTIONS.

       ``(a) Requirement of Reporting of Certain Payments.--
       ``(1) In general.--Every person who acquires a life 
     insurance contract or any interest in a life insurance 
     contract in a reportable policy sale during any taxable year 
     shall make a return for such taxable year (at such time and 
     in such manner as the Secretary shall prescribe) setting 
     forth--
       ``(A) the name, address, and TIN of such person,
       ``(B) the name, address, and TIN of each recipient of 
     payment in the reportable policy sale,
       ``(C) the date of such sale,
       ``(D) the name of the issuer of the life insurance contract 
     sold and the policy number of such contract, and
       ``(E) the amount of each payment.
       ``(2) Statement to be furnished to persons with respect to 
     whom information is required.--Every person required to make 
     a return under this subsection shall furnish to each person 
     whose name is required to be set forth in such return a 
     written statement showing--
       ``(A) the name, address, and phone number of the 
     information contact of the person required to make such 
     return, and
       ``(B) the information required to be shown on such return 
     with respect to such person, except that in the case of an 
     issuer of a life insurance contract, such statement is not 
     required to include the information specified in paragraph 
     (1)(E).
       ``(b) Requirement of Reporting of Seller's Basis in Life 
     Insurance Contracts.--
       ``(1) In general.--Upon receipt of the statement required 
     under subsection (a)(2) or upon notice of a transfer of a 
     life insurance contract to a foreign person, each issuer of a 
     life insurance contract shall make a return (at such time and 
     in such manner as the Secretary shall prescribe) setting 
     forth--
       ``(A) the name, address, and TIN of the seller who 
     transfers any interest in such contract in such sale,
       ``(B) the investment in the contract (as defined in section 
     72(e)(6)) with respect to such seller, and
       ``(C) the policy number of such contract.
       ``(2) Statement to be furnished to persons with respect to 
     whom information is required.--Every person required to make 
     a return under this subsection shall furnish to each person 
     whose name is required to be set forth in such return a 
     written statement showing--
       ``(A) the name, address, and phone number of the 
     information contact of the person required to make such 
     return, and
       ``(B) the information required to be shown on such return 
     with respect to each seller whose name is required to be set 
     forth in such return.
       ``(c) Requirement of Reporting With Respect to Reportable 
     Death Benefits.--
       ``(1) In general.--Every person who makes a payment of 
     reportable death benefits during any taxable year shall make 
     a return for such taxable year (at such time and in such 
     manner as the Secretary shall prescribe) setting forth--
       ``(A) the name, address, and TIN of the person making such 
     payment,
       ``(B) the name, address, and TIN of each recipient of such 
     payment,
       ``(C) the date of each such payment, and
       ``(D) the gross amount of each such payment.
       ``(E) such person's estimate of the investment in the 
     contract (as defined in section 72(e)(6)) with respect to the 
     buyer.
       ``(2) Statement to be furnished to persons with respect to 
     whom information is required.--Every person required to make 
     a return under this subsection shall furnish to each person 
     whose name is required to be set forth in such return a 
     written statement showing--
       ``(A) the name, address, and phone number of the 
     information contact of the person required to make such 
     return, and
       ``(B) the information required to be shown on such return 
     with respect to each recipient of payment whose name is 
     required to be set forth in such return.
       ``(d) Definitions.--For purposes of this section:
       ``(1) Payment.--The term `payment' means, with respect to 
     any reportable policy sale, the amount of cash and the fair 
     market value of any consideration transferred in the sale.
       ``(2) Reportable policy sale.--The term `reportable policy 
     sale' has the meaning given such term in section 
     101(a)(3)(B).
       ``(3) Issuer.--The term `issuer' means any life insurance 
     company that bears the risk with respect to a life insurance 
     contract on the date any return or statement is required to 
     be made under this section.
       ``(4) Reportable death benefits.--The term `reportable 
     death benefits' means amounts paid by reason of the death of 
     the insured under a life insurance contract that has been 
     transferred in a reportable policy sale.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61, as amended by 
     section 13305, is amended by inserting after the item 
     relating to section 6050X the following new item:

``Sec. 6050Y. Returns relating to certain life insurance contract 
              transactions.''.
       (c) Conforming Amendments.--
       (1) Subsection (d) of section 6724 is amended--
       (A) by striking ``or'' at the end of clause (xxiv) of 
     paragraph (1)(B), by striking ``and'' at the end of clause 
     (xxv) of such paragraph and inserting ``or'', and by 
     inserting after such clause (xxv) the following new clause:
       ``(xxvi) section 6050Y (relating to returns relating to 
     certain life insurance contract transactions), and'', and
       (B) by striking ``or'' at the end of subparagraph (HH) of 
     paragraph (2), by striking the

[[Page S7442]]

     period at the end of subparagraph (II) of such paragraph and 
     inserting ``, or'', and by inserting after such subparagraph 
     (II) the following new subparagraph:
       ``(JJ) subsection (a)(2), (b)(2), or (c)(2) of section 
     6050Y (relating to returns relating to certain life insurance 
     contract transactions).''.
       (2) Section 6047 is amended--
       (A) by redesignating subsection (g) as subsection (h),
       (B) by inserting after subsection (f) the following new 
     subsection:
       ``(g) Information Relating to Life Insurance Contract 
     Transactions.--This section shall not apply to any 
     information which is required to be reported under section 
     6050Y.'', and
       (C) by adding at the end of subsection (h), as so 
     redesignated, the following new paragraph:
       ``(4) For provisions requiring reporting of information 
     relating to certain life insurance contract transactions, see 
     section 6050Y.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) reportable policy sales (as defined in section 
     6050Y(d)(2) of the Internal Revenue Code of 1986 (as added by 
     subsection (a)) after December 31, 2017, and
       (2) reportable death benefits (as defined in section 
     6050Y(d)(4) of such Code (as added by subsection (a)) paid 
     after December 31, 2017.

     SEC. 13519. CLARIFICATION OF TAX BASIS OF LIFE INSURANCE 
                   CONTRACTS.

       (a) Clarification With Respect to Adjustments.--Paragraph 
     (1) of section 1016(a) is amended by striking subparagraph 
     (A) and all that follows and inserting the following:
       ``(A) for--
       ``(i) taxes or other carrying charges described in section 
     266; or
       ``(ii) expenditures described in section 173 (relating to 
     circulation expenditures),
     for which deductions have been taken by the taxpayer in 
     determining taxable income for the taxable year or prior 
     taxable years; or
       ``(B) for mortality, expense, or other reasonable charges 
     incurred under an annuity or life insurance contract;''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to transactions entered into after August 25, 
     2009.

     SEC. 13520. EXCEPTION TO TRANSFER FOR VALUABLE CONSIDERATION 
                   RULES.

       (a) In General.--Subsection (a) of section 101 is amended 
     by inserting after paragraph (2) the following new paragraph:
       ``(3) Exception to valuable consideration rules for 
     commercial transfers.--
       ``(A) In general.--The second sentence of paragraph (2) 
     shall not apply in the case of a transfer of a life insurance 
     contract, or any interest therein, which is a reportable 
     policy sale.
       ``(B) Reportable policy sale.--For purposes of this 
     paragraph, the term `reportable policy sale' means the 
     acquisition of an interest in a life insurance contract, 
     directly or indirectly, if the acquirer has no substantial 
     family, business, or financial relationship with the insured 
     apart from the acquirer's interest in such life insurance 
     contract. For purposes of the preceding sentence, the term 
     `indirectly' applies to the acquisition of an interest in a 
     partnership, trust, or other entity that holds an interest in 
     the life insurance contract.''.
       (b) Conforming Amendment.--Paragraph (1) of section 101(a) 
     is amended by striking ``paragraph (2)'' and inserting 
     ``paragraphs (2) and (3)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after December 31, 2017.

               Subpart C--Banks and Financial Instruments

     SEC. 13531. LIMITATION ON DEDUCTION FOR FDIC PREMIUMS.

       (a) In General.--Section 162 is amended by redesignating 
     subsection (q) as subsection (r) and by inserting after 
     subsection (p) the following new subsection:
       ``(q) Disallowance of FDIC Premiums Paid by Certain Large 
     Financial Institutions.--
       ``(1) In general.--No deduction shall be allowed for the 
     applicable percentage of any FDIC premium paid or incurred by 
     the taxpayer.
       ``(2) Exception for small institutions.--Paragraph (1) 
     shall not apply to any taxpayer for any taxable year if the 
     total consolidated assets of such taxpayer (determined as of 
     the close of such taxable year) do not exceed 
     $10,000,000,000.
       ``(3) Applicable percentage.--For purposes of this 
     subsection, the term `applicable percentage' means, with 
     respect to any taxpayer for any taxable year, the ratio 
     (expressed as a percentage but not greater than 100 percent) 
     which--
       ``(A) the excess of--
       ``(i) the total consolidated assets of such taxpayer 
     (determined as of the close of such taxable year), over
       ``(ii) $10,000,000,000, bears to
       ``(B) $40,000,000,000.
       ``(4) FDIC premiums.--For purposes of this subsection, the 
     term `FDIC premium' means any assessment imposed under 
     section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)).
       ``(5) Total consolidated assets.--For purposes of this 
     subsection, the term `total consolidated assets' has the 
     meaning given such term under section 165 of the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (12 U.S.C. 
     5365).
       ``(6) Aggregation rule.--
       ``(A) In general.--Members of an expanded affiliated group 
     shall be treated as a single taxpayer for purposes of 
     applying this subsection.
       ``(B) Expanded affiliated group.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `expanded affiliated group' means an affiliated group as 
     defined in section 1504(a), determined--

       ``(I) by substituting `more than 50 percent' for `at least 
     80 percent' each place it appears, and
       ``(II) without regard to paragraphs (2) and (3) of section 
     1504(b).

       ``(ii) Control of non-corporate entities.--A partnership or 
     any other entity (other than a corporation) shall be treated 
     as a member of an expanded affiliated group if such entity is 
     controlled (within the meaning of section 954(d)(3)) by 
     members of such group (including any entity treated as a 
     member of such group by reason of this clause).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13532. REPEAL OF ADVANCE REFUNDING BONDS.

       (a) In General.--Paragraph (1) of section 149(d) is amended 
     by striking ``as part of an issue described in paragraph (2), 
     (3), or (4).'' and inserting ``to advance refund another 
     bond.''.
       (b) Conforming Amendments.--
       (1) Section 149(d) is amended by striking paragraphs (2), 
     (3), (4), and (6) and by redesignating paragraphs (5) and (7) 
     as paragraphs (2) and (3).
       (2) Section 148(f)(4)(C) is amended by striking clause 
     (xiv) and by redesignating clauses (xv) to (xvii) as clauses 
     (xiv) to (xvi).
       (c) Effective Date.--The amendments made by this section 
     shall apply to advance refunding bonds issued after December 
     31, 2017.

     SEC. 13533. COST BASIS OF SPECIFIED SECURITIES DETERMINED 
                   WITHOUT REGARD TO IDENTIFICATION.

       (a) In General.--Section 1012 is amended by adding at the 
     end the following new subsection:
       ``(e) Cost Basis of Specified Securities Determined Without 
     Regard to Identification.--
       ``(1) In general.--Unless the Secretary permits the use of 
     an average basis method for determining cost, in the case of 
     the sale, exchange, or other disposition of a specified 
     security (within the meaning of section 6045(g)(3)(B)), the 
     basis (and holding period) of such security shall be 
     determined on a first-in first-out basis.
       ``(2) Exception.--In the case of a sale, exchange, or other 
     disposition of a specified security by a regulated investment 
     company (as defined in section 851(a)), paragraph (1) shall 
     not apply.''.
       (b) Conforming Amendments.--
       (1) Section 1012(c)(1) is amended by striking ``the 
     conventions prescribed by regulations under this section'' 
     and inserting ``the method applicable for determining the 
     cost of such security''.
       (2) Section 1012(c)(2)(A) is amended by inserting ``(as in 
     effect prior to the enactment of the Tax Cuts and Jobs Act)'' 
     after ``this section''.
       (3) Section 6045(g)(2)(B)(i)(I) is amended by striking 
     ``unless the customer notifies the broker by means of making 
     an adequate identification of the stock sold or 
     transferred''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales, exchanges, and other dispositions after 
     December 31, 2017.

                       Subpart D--S Corporations

     SEC. 13541. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look-Through for Eligibility Purposes.--Section 
     1361(c)(2)(B)(v) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on January 1, 2018.

     SEC. 13542. CHARITABLE CONTRIBUTION DEDUCTION FOR ELECTING 
                   SMALL BUSINESS TRUSTS.

       (a) In General.--Section 641(c)(2) is amended by inserting 
     after subparagraph (D) the following new subparagraph:
       ``(E)(i) Section 642(c) shall not apply.
       ``(ii) For purposes of section 170(b)(1)(G), adjusted gross 
     income shall be computed in the same manner as in the case of 
     an individual, except that the deductions for costs which are 
     paid or incurred in connection with the administration of the 
     trust and which would not have been incurred if the property 
     were not held in such trust shall be treated as allowable in 
     arriving at adjusted gross income.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                          PART VII--EMPLOYMENT

                        Subpart A--Compensation

     SEC. 13601. MODIFICATION OF LIMITATION ON EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) Repeal of Performance-based Compensation and Commission 
     Exceptions for Limitation on Excessive Employee 
     Remuneration.--
       (1) In general.--Paragraph (4) of section 162(m) is amended 
     by striking subparagraphs (B) and (C) and by redesignating 
     subparagraphs (D), (E), (F), and (G) as subparagraphs (B), 
     (C), (D), and (E), respectively.

[[Page S7443]]

       (2) Conforming amendments.--
       (A) Paragraphs (5)(E) and (6)(D) of section 162(m) are each 
     amended by striking ``subparagraphs (B), (C), and (D)'' and 
     inserting ``subparagraph (B)''.
       (B) Paragraphs (5)(G) and (6)(G) of section 162(m) are each 
     amended by striking ``(F) and (G)'' and inserting ``(D) and 
     (E)''.
       (b) Modification of Definition of Covered Employees.--
     Paragraph (3) of section 162(m) is amended--
       (1) in subparagraph (A), by striking ``as of the close of 
     the taxable year, such employee is the chief executive 
     officer of the taxpayer or is'' and inserting ``such employee 
     is the principal executive officer or principal financial 
     officer of the taxpayer at any time during the taxable year, 
     or was'',
       (2) in subparagraph (B)--
       (A) by striking ``4'' and inserting ``3'', and
       (B) by striking ``(other than the chief executive 
     officer)'' and inserting ``(other than any individual 
     described in subparagraph (A))'', and
       (3) by striking ``or'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``, or'', and by adding at the end the following:
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2016.''.
       (c) Expansion of Applicable Employer.--
       (1) In general.--Section 162(m)(2) is amended to read as 
     follows:
       ``(2) Publicly held corporation.--For purposes of this 
     subsection, the term `publicly held corporation' means any 
     corporation which is an issuer (as defined in section 3 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c))--
       ``(A) the securities of which are required to be registered 
     under section 12 of such Act (15 U.S.C. 78l), or
       ``(B) that is required to file reports under section 15(d) 
     of such Act (15 U.S.C. 78o(d)).''.
       (2) Conforming amendment.--Section 162(m)(3), as amended by 
     subsection (b), is amended by adding at the end the following 
     flush sentence:
     ``Such term shall include any employee who would be described 
     in subparagraph (B) if the reporting described in such 
     subparagraph were required as so described.''.
       (d) Special Rule for Remuneration Paid to Beneficiaries, 
     etc.--Paragraph (4) of section 162(m), as amended by 
     subsection (a), is amended by adding at the end the following 
     new subparagraph:
       ``(F) Special rule for remuneration paid to beneficiaries, 
     etc.--Remuneration shall not fail to be applicable employee 
     remuneration merely because it is includible in the income 
     of, or paid to, a person other than the covered employee, 
     including after the death of the covered employee.''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2017.
       (2) Exception for binding contracts.--The amendments made 
     by this section shall not apply to remuneration which is 
     pursuant to a written binding contract which was in effect on 
     November 2, 2017, and which was not modified in any material 
     respect on or after such date.

     SEC. 13602. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
                   EXECUTIVE COMPENSATION.

       (a) In General.--Subchapter D of chapter 42 is amended by 
     adding at the end the following new section:

     ``SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION EXECUTIVE 
                   COMPENSATION.

       ``(a) Tax Imposed.--There is hereby imposed a tax equal to 
     20 percent of the sum of--
       ``(1) so much of the remuneration paid (other than any 
     excess parachute payment) by an applicable tax-exempt 
     organization for the taxable year with respect to employment 
     of any covered employee in excess of $1,000,000, plus
       ``(2) any excess parachute payment paid by such an 
     organization to any covered employee.
     For purposes of the preceding sentence, remuneration shall be 
     treated as paid when there is no substantial risk of 
     forfeiture of the rights to such remuneration.
       ``(b) Liability for Tax.--The employer shall be liable for 
     the tax imposed under subsection (a).
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable tax-exempt organization.--The term 
     `applicable tax-exempt organization' means any organization 
     which for the taxable year--
       ``(A) is exempt from taxation under section 501(a),
       ``(B) is a farmers' cooperative organization described in 
     section 521(b)(1),
       ``(C) has income excluded from taxation under section 
     115(1), or
       ``(D) is a political organization described in section 
     527(e)(1).
       ``(2) Covered employee.--For purposes of this section, the 
     term `covered employee' means any employee (including any 
     former employee) of an applicable tax-exempt organization if 
     the employee--
       ``(A) is one of the 5 highest compensated employees of the 
     organization for the taxable year, or
       ``(B) was a covered employee of the organization (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2016.
       ``(3) Remuneration.--For purposes of this section, the term 
     `remuneration' means wages (as defined in section 3401(a)), 
     except that such term shall not include any designated Roth 
     contribution (as defined in section 402A(c)) and shall 
     include amounts required to be included in gross income under 
     section 457(f).
       ``(4) Remuneration from related organizations.--
       ``(A) In general.--Remuneration of a covered employee by an 
     applicable tax-exempt organization shall include any 
     remuneration paid with respect to employment of such employee 
     by any related person or governmental entity.
       ``(B) Related organizations.--A person or governmental 
     entity shall be treated as related to an applicable tax-
     exempt organization if such person or governmental entity--
       ``(i) controls, or is controlled by, the organization,
       ``(ii) is controlled by one or more persons which control 
     the organization,
       ``(iii) is a supported organization (as defined in section 
     509(f)(3)) during the taxable year with respect to the 
     organization,
       ``(iv) is a supporting organization described in section 
     509(a)(3) during the taxable year with respect to the 
     organization, or
       ``(v) in the case of an organization which is a voluntary 
     employees' beneficiary association described in section 
     501(c)(9), establishes, maintains, or makes contributions to 
     such voluntary employees' beneficiary association.
       ``(C) Liability for tax.--In any case in which remuneration 
     from more than one employer is taken into account under this 
     paragraph in determining the tax imposed by subsection (a), 
     each such employer shall be liable for such tax in an amount 
     which bears the same ratio to the total tax determined under 
     subsection (a) with respect to such remuneration as--
       ``(i) the amount of remuneration paid by such employer with 
     respect to such employee, bears to
       ``(ii) the amount of remuneration paid by all such 
     employers to such employee.
       ``(5) Excess parachute payment.--For purposes of 
     determining the tax imposed by subsection (a)(2)--
       ``(A) In general.--The term `excess parachute payment' 
     means an amount equal to the excess of any parachute payment 
     over the portion of the base amount allocated to such 
     payment.
       ``(B) Parachute payment.--The term `parachute payment' 
     means any payment in the nature of compensation to (or for 
     the benefit of) a covered employee if--
       ``(i) such payment is contingent on such employee's 
     separation from employment with the employer, and
       ``(ii) the aggregate present value of the payments in the 
     nature of compensation to (or for the benefit of) such 
     individual which are contingent on such separation equals or 
     exceeds an amount equal to 3 times the base amount.

     Such term does not include any payment described in section 
     280G(b)(6) (relating to exemption for payments under 
     qualified plans) or any payment made under or to an annuity 
     contract described in section 403(b) or a plan described in 
     section 457(b).
       ``(C) Base amount.--Rules similar to the rules of 
     280G(b)(3) shall apply for purposes of determining the base 
     amount.
       ``(D) Property transfers; present value.--Rules similar to 
     the rules of paragraphs (3) and (4) of section 280G(d) shall 
     apply.
       ``(6) Coordination with deduction limitation.--Remuneration 
     the deduction for which is not allowed by reason of section 
     162(m) shall not be taken into account for purposes of this 
     section.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to prevent avoidance of the 
     tax under this section, including regulations preventing 
     employees from being misclassified as contractors or from 
     being compensated through a pass-through or other entity to 
     avoid such tax.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter D of chapter 42 is amended by adding at the end 
     the following new item:

``Sec. 4960. Tax on excess exempt organization executive 
              compensation.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13603. TREATMENT OF QUALIFIED EQUITY GRANTS.

       (a) In General.--Section 83 is amended by adding at the end 
     the following new subsection:
       ``(i) Qualified Equity Grants.--
       ``(1) In general.--For purposes of this subtitle--
       ``(A) Timing of inclusion.--If qualified stock is 
     transferred to a qualified employee who makes an election 
     with respect to such stock under this subsection, subsection 
     (a) shall be applied by including the amount determined under 
     such subsection with respect to such stock in income of the 
     employee in the taxable year determined under subparagraph 
     (B) in lieu of the taxable year described in subsection (a).
       ``(B) Taxable year determined.--The taxable year determined 
     under this subparagraph is the taxable year of the employee 
     which includes the earliest of--
       ``(i) the first date such qualified stock becomes 
     transferable (including, solely for purposes of this clause, 
     becoming transferable to the employer),

[[Page S7444]]

       ``(ii) the date the employee first becomes an excluded 
     employee,
       ``(iii) the first date on which any stock of the 
     corporation which issued the qualified stock becomes readily 
     tradable on an established securities market (as determined 
     by the Secretary, but not including any market unless such 
     market is recognized as an established securities market by 
     the Secretary for purposes of a provision of this title other 
     than this subsection),
       ``(iv) the date that is 5 years after the first date the 
     rights of the employee in such stock are transferable or are 
     not subject to a substantial risk of forfeiture, whichever 
     occurs earlier, or
       ``(v) the date on which the employee revokes (at such time 
     and in such manner as the Secretary provides) the election 
     under this subsection with respect to such stock.
       ``(2) Qualified stock.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified stock' means, with respect to any qualified 
     employee, any stock in a corporation which is the employer of 
     such employee, if--
       ``(i) such stock is received--

       ``(I) in connection with the exercise of an option, or
       ``(II) in settlement of a restricted stock unit, and

       ``(ii) such option or restricted stock unit was granted by 
     the corporation--

       ``(I) in connection with the performance of services as an 
     employee, and
       ``(II) during a calendar year in which such corporation was 
     an eligible corporation.

       ``(B) Limitation.--The term `qualified stock' shall not 
     include any stock if the employee may sell such stock to, or 
     otherwise receive cash in lieu of stock from, the corporation 
     at the time that the rights of the employee in such stock 
     first become transferable or not subject to a substantial 
     risk of forfeiture.
       ``(C) Eligible corporation.--For purposes of subparagraph 
     (A)(ii)(II)--
       ``(i) In general.--The term `eligible corporation' means, 
     with respect to any calendar year, any corporation if--

       ``(I) no stock of such corporation (or any predecessor of 
     such corporation) is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     during any preceding calendar year, and
       ``(II) such corporation has a written plan under which, in 
     such calendar year, not less than 80 percent of all employees 
     who provide services to such corporation in the United States 
     (or any possession of the United States) are granted stock 
     options, or restricted stock units, with the same rights and 
     privileges to receive qualified stock.

       ``(ii) Same rights and privileges.--For purposes of clause 
     (i)(II)--

       ``(I) except as provided in subclauses (II) and (III), the 
     determination of rights and privileges with respect to stock 
     shall be made in a similar manner as under section 423(b)(5),
       ``(II) employees shall not fail to be treated as having the 
     same rights and privileges to receive qualified stock solely 
     because the number of shares available to all employees is 
     not equal in amount, so long as the number of shares 
     available to each employee is more than a de minimis amount, 
     and
       ``(III) rights and privileges with respect to the exercise 
     of an option shall not be treated as the same as rights and 
     privileges with respect to the settlement of a restricted 
     stock unit.

       ``(iii) Employee.--For purposes of clause (i)(II), the term 
     `employee' shall not include any employee described in 
     section 4980E(d)(4) or any excluded employee.
       ``(iv) Special rule for calendar years before 2018.--In the 
     case of any calendar year beginning before January 1, 2018, 
     clause (i)(II) shall be applied without regard to whether the 
     rights and privileges with respect to the qualified stock are 
     the same.
       ``(3) Qualified employee; excluded employee.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified employee' means any 
     individual who--
       ``(i) is not an excluded employee, and
       ``(ii) agrees in the election made under this subsection to 
     meet such requirements as are determined by the Secretary to 
     be necessary to ensure that the withholding requirements of 
     the corporation under chapter 24 with respect to the 
     qualified stock are met.
       ``(B) Excluded employee.--The term `excluded employee' 
     means, with respect to any corporation, any individual--
       ``(i) who was a 1-percent owner (within the meaning of 
     section 416(i)(1)(B)(ii)) at any time during the 10 preceding 
     calendar years,
       ``(ii) who is or has been at any prior time--

       ``(I) the chief executive officer of such corporation or an 
     individual acting in such a capacity, or
       ``(II) the chief financial officer of such corporation or 
     an individual acting in such a capacity,

       ``(iii) who bears a relationship described in section 
     318(a)(1) to any individual described in subclause (I) or 
     (II) of clause (ii), or
       ``(iv) who was for any of the 10 preceding taxable years 
     one of the 4 highest compensated officers of such 
     corporation, determined with respect to each such taxable 
     year on the basis of the shareholder disclosure rules for 
     compensation under the Securities Exchange Act of 1934 (as if 
     such rules applied to such corporation).
       ``(4) Election.--
       ``(A) Time for making election.--An election with respect 
     to qualified stock shall be made under this subsection no 
     later than 30 days after the first date the rights of the 
     employee in such stock are transferable or are not subject to 
     a substantial risk of forfeiture, whichever occurs earlier, 
     and shall be made in a manner similar to the manner in which 
     an election is made under subsection (b).
       ``(B) Limitations.--No election may be made under this 
     section with respect to any qualified stock if--
       ``(i) the qualified employee has made an election under 
     subsection (b) with respect to such qualified stock,
       ``(ii) any stock of the corporation which issued the 
     qualified stock is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     at any time before the election is made, or
       ``(iii) such corporation purchased any of its outstanding 
     stock in the calendar year preceding the calendar year which 
     includes the first date the rights of the employee in such 
     stock are transferable or are not subject to a substantial 
     risk of forfeiture, unless--

       ``(I) not less than 25 percent of the total dollar amount 
     of the stock so purchased is deferral stock, and
       ``(II) the determination of which individuals from whom 
     deferral stock is purchased is made on a reasonable basis.

       ``(C) Definitions and special rules related to limitation 
     on stock redemptions.--
       ``(i) Deferral stock.--For purposes of this paragraph, the 
     term `deferral stock' means stock with respect to which an 
     election is in effect under this subsection.
       ``(ii) Deferral stock with respect to any individual not 
     taken into account if individual holds deferral stock with 
     longer deferral period.--Stock purchased by a corporation 
     from any individual shall not be treated as deferral stock 
     for purposes of subparagraph (B)(iii) if such individual 
     (immediately after such purchase) holds any deferral stock 
     with respect to which an election has been in effect under 
     this subsection for a longer period than the election with 
     respect to the stock so purchased.
       ``(iii) Purchase of all outstanding deferral stock.--The 
     requirements of subclauses (I) and (II) of subparagraph 
     (B)(iii) shall be treated as met if the stock so purchased 
     includes all of the corporation's outstanding deferral stock.
       ``(iv) Reporting.--Any corporation which has outstanding 
     deferral stock as of the beginning of any calendar year and 
     which purchases any of its outstanding stock during such 
     calendar year shall include on its return of tax for the 
     taxable year in which, or with which, such calendar year ends 
     the total dollar amount of its outstanding stock so purchased 
     during such calendar year and such other information as the 
     Secretary requires for purposes of administering this 
     paragraph.
       ``(5) Controlled groups.--For purposes of this subsection, 
     all persons treated as a single employer under section 414(b) 
     shall be treated as 1 corporation.
       ``(6) Notice requirement.--Any corporation which transfers 
     qualified stock to a qualified employee shall, at the time 
     that (or a reasonable period before) an amount attributable 
     to such stock would (but for this subsection) first be 
     includible in the gross income of such employee--
       ``(A) certify to such employee that such stock is qualified 
     stock, and
       ``(B) notify such employee--
       ``(i) that the employee may be eligible to elect to defer 
     income on such stock under this subsection, and
       ``(ii) that, if the employee makes such an election--

       ``(I) the amount of income recognized at the end of the 
     deferral period will be based on the value of the stock at 
     the time at which the rights of the employee in such stock 
     first become transferable or not subject to substantial risk 
     of forfeiture, notwithstanding whether the value of the stock 
     has declined during the deferral period,
       ``(II) the amount of such income recognized at the end of 
     the deferral period will be subject to withholding under 
     section 3401(i) at the rate determined under section 3402(t), 
     and
       ``(III) the responsibilities of the employee (as determined 
     by the Secretary under paragraph (3)(A)(ii)) with respect to 
     such withholding.

       ``(7) Restricted stock units.--This section (other than 
     this subsection), including any election under subsection 
     (b), shall not apply to restricted stock units.''.
       (b) Withholding.--
       (1) Time of withholding.--Section 3401 is amended by adding 
     at the end the following new subsection:
       ``(i) Qualified Stock for Which an Election Is in Effect 
     Under Section 83(i).--For purposes of subsection (a), 
     qualified stock (as defined in section 83(i)) with respect to 
     which an election is made under section 83(i) shall be 
     treated as wages--
       ``(1) received on the earliest date described in section 
     83(i)(1)(B), and
       ``(2) in an amount equal to the amount included in income 
     under section 83 for the taxable year which includes such 
     date.''.
       (2) Amount of withholding.--Section 3402 is amended by 
     adding at the end the following new subsection:
       ``(t) Rate of Withholding for Certain Stock.--In the case 
     of any qualified stock (as defined in section 83(i)(2)) with 
     respect to which an election is made under section 83(i)--
       ``(1) the rate of tax under subsection (a) shall not be 
     less than the maximum rate of tax in effect under section 1, 
     and

[[Page S7445]]

       ``(2) such stock shall be treated for purposes of section 
     3501(b) in the same manner as a non-cash fringe benefit.''.
       (c) Coordination With Other Deferred Compensation Rules.--
       (1) Election to apply deferral to statutory options.--
       (A) Incentive stock options.--Section 422(b) is amended by 
     adding at the end the following: ``Such term shall not 
     include any option if an election is made under section 83(i) 
     with respect to the stock received in connection with the 
     exercise of such option.''.
       (B) Employee stock purchase plans.--Section 423 is 
     amended--
       (i) by adding at the end of subsection (a) the following 
     flush sentence:
     ``The preceding sentence shall not apply to any share of 
     stock with respect to which an election is made under section 
     83(i).'', and
       (ii) in subsection (b)(5), by striking ``and'' before ``the 
     plan'' and by inserting ``, and the rules of section 83(i) 
     shall apply in determining which employees have a right to 
     make an election under such section'' before the semicolon at 
     the end.
       (2) Exclusion from definition of nonqualified deferred 
     compensation plan.--Subsection (d) of section 409A is amended 
     by adding at the end the following new paragraph:
       ``(7) Treatment of qualified stock.--An arrangement under 
     which an employee may receive qualified stock (as defined in 
     section 83(i)(2)) shall not be treated as a nonqualified 
     deferred compensation plan solely because of an employee's 
     election, or ability to make an election, to defer 
     recognition of income under section 83(i).''.
       (d) Information Reporting.--Section 6051(a) is amended by 
     striking ``and'' at the end of paragraph (13), by striking 
     the period at the end of paragraph (14) and inserting a 
     comma, and by inserting after paragraph (14) the following 
     new paragraphs:
       ``(15) the amount includible in gross income under 
     subparagraph (A) of section 83(i)(1) with respect to an event 
     described in subparagraph (B) of such section which occurs in 
     such calendar year, and
       ``(16) the aggregate amount of income which is being 
     deferred pursuant to elections under section 83(i), 
     determined as of the close of the calendar year.''.
       (e) Penalty for Failure of Employer To Provide Notice of 
     Tax Consequences.--Section 6652 is amended by adding at the 
     end the following new subsection:
       ``(p) Failure to Provide Notice Under Section 83(i).--In 
     the case of each failure to provide a notice as required by 
     section 83(i)(6), at the time prescribed therefor, unless it 
     is shown that such failure is due to reasonable cause and not 
     to willful neglect, there shall be paid, on notice and demand 
     of the Secretary and in the same manner as tax, by the person 
     failing to provide such notice, an amount equal to $100 for 
     each such failure, but the total amount imposed on such 
     person for all such failures during any calendar year shall 
     not exceed $50,000.''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to stock 
     attributable to options exercised, or restricted stock units 
     settled, after December 31, 2017.
       (2) Requirement to provide notice.--The amendments made by 
     subsection (e) shall apply to failures after December 31, 
     2017.
       (g) Transition Rule.--Until such time as the Secretary (or 
     the Secretary's delegate) issues regulations or other 
     guidance for purposes of implementing the requirements of 
     paragraph (2)(C)(i)(II) of section 83(i) of the Internal 
     Revenue Code of 1986 (as added by this section), or the 
     requirements of paragraph (6) of such section, a corporation 
     shall be treated as being in compliance with such 
     requirements (respectively) if such corporation complies with 
     a reasonable good faith interpretation of such requirements.

     SEC. 13604. INCREASE IN EXCISE TAX RATE FOR STOCK 
                   COMPENSATION OF INSIDERS IN EXPATRIATED 
                   CORPORATIONS.

       (a) In General.--Section 4985(a)(1) is amended by striking 
     ``section 1(h)(1)(C)'' and inserting ``section 1(h)(1)(D)''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to corporations first becoming expatriated 
     corporations (as defined in section 4985 of the Internal 
     Revenue Code of 1986) after the date of enactment of this 
     Act.

                      Subpart B--Retirement Plans

     SEC. 13611. CONFORMITY OF CONTRIBUTION LIMITS FOR EMPLOYER-
                   SPONSORED RETIREMENT PLANS.

       (a) 403(b) Plans.--
       (1) Elimination of special catch-up rule.--Subsection (g) 
     of section 402 is amended by striking paragraph (7) and by 
     redesignating paragraph (8) as paragraph (7).
       (2) Elimination of post termination non-elective 
     contributions.--Subsection (b) of section 403 is amended--
       (A) in paragraph (3), by striking ``for the most recent 
     period'' and all that follows through ``more than five 
     years'', and
       (B) by striking paragraph (4).
       (3) Elimination of separate 415(c) limits.--Paragraph (4) 
     of section 415(k) is amended by striking ``each employer with 
     respect to which the participant has the control required'' 
     and inserting ``the employer and each employer which is part 
     of the same controlled group or under common control''.
       (b) 457(b) Plans.--
       (1) Elimination of separate deferral limit.--Paragraph (3) 
     of section 402(g) is amended by striking ``and'' at the end 
     of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, and'', and by inserting 
     after subparagraph (D) the following new subparagraph:
       ``(E) any amount deferred under an eligible deferred 
     compensation plan (as defined in section 457(b)) of an 
     eligible employer described in section 457(e)(1)(A).''.
       (2) Taken into account under limitation for defined 
     contribution plans.--
       (A) In general.--Paragraph (2) of section 415(a) is 
     amended--
       (i) by striking ``or'' at the end of subparagraph (B), by 
     inserting ``or'' at the end of subparagraph (C), and by 
     inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) an eligible deferred compensation plan (as defined in 
     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A),'', and
       (ii) by striking ``or 408(k)'' in the flush language and 
     inserting ``408(k), or 457(b)''.
       (B) Definition.--Paragraph (1) of section 415(k) is amended 
     by striking ``or'' at the end of subparagraph (C), by 
     striking the period at the end of subparagraph (D) and 
     inserting ``, or'', and by adding at the end the following 
     new subparagraph:
       ``(E) an eligible deferred compensation plan (as defined in 
     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A).''.
       (3) Elimination of special catch-up rule.--Paragraph (3) of 
     section 457(b) is amended by inserting ``in the case of an 
     eligible employer described in subsection (e)(1)(B),'' before 
     ``which''.
       (c) Conforming Amendments.--
       (1) Section 25B(d)(1)(B) is amended--
       (A) by striking clause (ii), and
       (B) by striking ``the amount of--'' and all that follows 
     through ``any elective deferrals'' and inserting ``the amount 
     of any elective deferrals''.
       (2) Section 402A(e)(2) is amended by striking ``means--'' 
     and all that follows and inserting ``means any elective 
     deferral described in subparagraph (A), (C), or (E) of 
     section 402(g)(3).''
       (3) Section 457(e) is amended by striking paragraph (18).
       (4) Section 414(u)(2)(C) is amended by inserting ``of an 
     eligible employer described in section 457(e)(1)(B)'' after 
     ``(as defined in section 457(b))''.
       (5) Section 414(v)(2)(D) is amended--
       (A) by striking ``clauses (i), (ii), and (iv) of'', and
       (B) by striking ``, and plans described in clause (iii)'' 
     and all that follows and inserting a period.
       (6) Section 414(v)(3)(A)(i) is amended by striking 
     ``(determined without regard to section 457(b)(3))''.
       (7) Section 414(v)(6)(B) is amended by striking 
     ``subsection (u)(2)(C)'' and inserting ``section 402(g)(3)''.
       (8) Section 414(v)(6) is amended by striking subparagraph 
     (C).
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years and taxable years beginning after 
     December 31, 2017.

     SEC. 13612. REPEAL OF SPECIAL RULE PERMITTING 
                   RECHARACTERIZATION OF ROTH IRA CONTRIBUTIONS AS 
                   TRADITIONAL IRA CONTRIBUTIONS.

       (a) In General.--Section 408A(d) is amended by striking 
     paragraph (6) and by redesignating paragraph (7) as paragraph 
     (6).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13613. MODIFICATION OF RULES APPLICABLE TO LENGTH OF 
                   SERVICE AWARD PLANS.

       (a) Maximum Deferral Amount.--Clause (ii) of section 
     457(e)(11)(B) is amended by striking ``$3,000'' and inserting 
     ``$6,000''.
       (b) Cost of Living Adjustment.--Subparagraph (B) of section 
     457(e)(11) is amended by adding at the end the following:
       ``(iii) Cost of living adjustment.--In the case of taxable 
     years beginning after December 31, 2017, the Secretary shall 
     adjust the $6,000 amount under clause (ii) at the same time 
     and in the same manner as under section 415(d), except that 
     the base period shall be the calendar quarter beginning July 
     1, 2016, and any increase under this paragraph that is not a 
     multiple of $500 shall be rounded to the next lowest multiple 
     of $500.''.
       (c) Application of Limitation on Accruals.--Subparagraph 
     (B) of section 457(e)(11), as amended by subsection (b), is 
     amended by adding at the end the following:
       ``(iv) Special rule for application of limitation on 
     accruals for certain plans.--In the case of a plan described 
     in subparagraph (A)(ii) which is a defined benefit plan (as 
     defined in section 414(j)), the limitation under clause (ii) 
     shall apply to the actuarial present value of the aggregate 
     amount of length of service awards accruing with respect to 
     any year of service. Such actuarial present value with 
     respect to any year shall be calculated using reasonable 
     actuarial assumptions and methods, assuming payment will be 
     made under the most valuable form of payment under the plan 
     with payment commencing at the later of the earliest age at 
     which unreduced benefits are payable under the plan or the 
     participant's age at the time of the calculation.''.
       (d) Effective Date.--The amendments made by this Act shall 
     apply to taxable years beginning after December 31, 2017.

[[Page S7446]]

  


     SEC. 13614. EXTENDED ROLLOVER PERIOD FOR PLAN LOAN OFFSET 
                   AMOUNTS.

       (a) In General.--Paragraph (3) of section 402(c) is amended 
     by redesignating subparagraph (B) as subparagraph (C) and by 
     inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Rollover of certain plan loan offset amounts.--
       ``(i) In general.--In the case of an eligible rollover 
     distribution of a qualified plan loan offset amount, the 
     requirements of subparagraph (A) shall be treated as met if 
     such transfer occurs on or before the due date (including 
     extensions) for filing the return of tax for the taxable year 
     in which such amount is treated as distributed from a 
     qualified employer plan.
       ``(ii) Qualified plan loan offset amount.--For purposes of 
     this subparagraph, the term `qualified plan loan offset 
     amount' means a plan loan offset amount which is treated as 
     distributed from a qualified employer plan to a participant 
     or beneficiary solely by reason of--

       ``(I) the termination of the qualified employer plan, or
       ``(II) the failure to meet the repayment terms of the loan 
     from such plan because of the severance from employment of 
     the participant.

       ``(iii) Plan loan offset amount.--For purposes of clause 
     (ii), the term `plan loan offset amount' means the amount by 
     which the participant's accrued benefit under the plan is 
     reduced in order to repay a loan from the plan.
       ``(iv) Limitation.--This subparagraph shall not apply to 
     any plan loan offset amount unless such plan loan offset 
     amount relates to a loan to which section 72(p)(1) does not 
     apply by reason of section 72(p)(2).
       ``(v) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' has the 
     meaning given such term by section 72(p)(4).''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     402(c)(3) is amended by striking ``subparagraph (B)'' and 
     inserting ``subparagraphs (B) and (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan loan offset amounts which are treated as 
     distributed in taxable years beginning after December 31, 
     2017.

                    PART VIII--EXEMPT ORGANIZATIONS

     SEC. 13701. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
                   COLLEGES AND UNIVERSITIES.

       (a) In General.--Chapter 42 is amended by adding at the end 
     the following new subchapter:

   ``Subchapter H--Excise Tax Based on Investment Income of Private 
                       Colleges and Universities

``Sec. 4968. Excise tax based on investment income of private colleges 
              and universities.

     ``SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
                   COLLEGES AND UNIVERSITIES.

       ``(a) Tax Imposed.--There is hereby imposed on each 
     applicable educational institution for the taxable year a tax 
     equal to 1.4 percent of the net investment income of such 
     institution for the taxable year.
       ``(b) Applicable Educational Institution.--For purposes of 
     this subchapter--
       ``(1) In general.--The term `applicable educational 
     institution' means an eligible educational institution (as 
     defined in section 25A(f)(2))--
       ``(A) which had at least 500 tuition-paying students during 
     the preceding taxable year,
       ``(B) which is not described in the first sentence of 
     section 511(a)(2)(B) (relating to State colleges and 
     universities), and
       ``(C) the aggregate fair market value of the assets of 
     which at the end of the preceding taxable year (other than 
     those assets which are used directly in carrying out the 
     institution's exempt purpose) is at least $250,000 per 
     student of the institution.
       ``(2) Students.--For purposes of paragraph (1), the number 
     of students of an institution shall be based on the daily 
     average number of full-time students attending such 
     institution (with part-time students taken into account on a 
     full-time student equivalent basis).
       ``(c) Net Investment Income.--For purposes of this section, 
     net investment income shall be determined under rules similar 
     to the rules of section 4940(c).
       ``(d) Assets and Net Investment Income of Related 
     Organizations.--
       ``(1) In general.--For purposes of subsections (b)(1)(C) 
     and (c), assets and net investment income of any related 
     organization with respect to an educational institution shall 
     be treated as assets and net investment income, respectively, 
     of the educational institution, except that--
       ``(A) no such amount shall be taken into account with 
     respect to more than 1 educational institution, and
       ``(B) unless such organization is controlled by such 
     institution or is described in section 509(a)(3) with respect 
     to such institution for the taxable year, assets and net 
     investment income which are not intended or available for the 
     use or benefit of the educational institution shall not be 
     taken into account.
       ``(2) Related organization.--For purposes of this 
     subsection, the term `related organization' means, with 
     respect to an educational institution, any organization 
     which--
       ``(A) controls, or is controlled by, such institution,
       ``(B) is controlled by 1 or more persons which also control 
     such institution, or
       ``(C) is a supported organization (as defined in section 
     509(f)(3)), or an organization described in section 
     509(a)(3), during the taxable year with respect to such 
     institution.''.
       (b) Clerical Amendment.--The table of subchapters for 
     chapter 42 is amended by adding at the end the following new 
     item:

   ``subchapter h--excise tax based on investment income of private 
                      colleges and universities''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13702. NAME AND LOGO ROYALTIES TREATED AS UNRELATED 
                   BUSINESS TAXABLE INCOME.

       (a) In General.--Section 513 is amended by adding at the 
     end the following new subsection:
       ``(k) Name and Logo Royalties.--Any sale or licensing by an 
     organization of any name or logo of the organization 
     (including any trademark or copyright relating to such name 
     or logo) shall be treated as an unrelated trade or business 
     regularly carried on by such organization.''.
       (b) Calculation of Unrelated Business Taxable Income.--
     Subsection (b) of section 512 is amended by adding at the end 
     the following new paragraph:
       ``(20) Special rule for name and logo royalties.--
     Notwithstanding paragraph (1), (2), (3), or (5), any income 
     derived from any sale or licensing described in section 
     513(k) shall be included as an item of gross income derived 
     from an unrelated trade or business.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13703. UNRELATED BUSINESS TAXABLE INCOME SEPARATELY 
                   COMPUTED FOR EACH TRADE OR BUSINESS ACTIVITY.

       (a) In General.--Subsection (a) of section 512 is amended 
     by adding at the end the following new paragraph:
       ``(6) Special rule for organization with more than 1 
     unrelated trade or business.--In the case of any organization 
     with more than 1 unrelated trade or business--
       ``(A) unrelated business taxable income, including for 
     purposes of determining any net operating loss deduction, 
     shall be computed separately with respect to each such trade 
     or business and without regard to subsection (b)(12),
       ``(B) the unrelated business taxable income of such 
     organization shall be the sum of the unrelated business 
     taxable income so computed with respect to each such trade or 
     business, less a specific deduction under subsection (b)(12), 
     and
       ``(C) for purposes of subparagraph (B), unrelated business 
     taxable income with respect to any such trade or business 
     shall not be less than zero.''.
       (b) Effective Date.--
       (1) In general.--Except to the extent provided in paragraph 
     (2), the amendment made by this section shall apply to 
     taxable years beginning after December 31, 2017.
       (2) Carryovers of net operating losses.--If any net 
     operating loss arising in a taxable year beginning before 
     January 1, 2018, is carried over to a taxable year beginning 
     on or after such date--
       (A) subparagraph (A) of section 512(a)(6) of the Internal 
     Revenue Code of 1986, as added by this Act, shall not apply 
     to such net operating loss, and
       (B) the unrelated business taxable income of the 
     organization, after the application of subparagraph (B) of 
     such section, shall be reduced by the amount of such net 
     operating loss.

     SEC. 13704. REPEAL OF TAX-EXEMPT STATUS FOR PROFESSIONAL 
                   SPORTS LEAGUES.

       (a) In General.--Paragraph (6) of section 501(c) is 
     amended--
       (1) by striking ``, boards of trade, or professional'' and 
     all that follows through ``players)'' and inserting ``, or 
     boards of trade'', and
       (2) by adding at the end the following: ``This paragraph 
     shall not apply to any professional sports league (whether or 
     not administering a pension fund for players).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13705. MODIFICATION OF TAXES ON EXCESS BENEFIT 
                   TRANSACTIONS.

       (a) Organization Level Tax.--Subsection (a) of section 4958 
     is amended by adding at the end the following new paragraph:
       ``(3) On the organization.--In any case in which a tax is 
     imposed by paragraph (1), there is hereby imposed on the 
     organization a tax equal to 10 percent of the excess benefit, 
     unless the participation of the organization in the excess 
     benefit transaction is not willful and is due to reasonable 
     cause.''.
       (b) Minimum Standards of Organization Due Diligence.--
     Subsection (d) of section 4958 is amended by adding at the 
     end the following new paragraph:
       ``(3) Minimum standards of organization due diligence.--
       ``(A) In general.--Subsection (a)(3) shall not apply to a 
     transaction, if--
       ``(i) the organization establishes that the minimum 
     standards of due diligence described in subparagraph (B) were 
     met with respect to the transaction, or
       ``(ii) the organization establishes to the satisfaction of 
     the Secretary that other reasonable procedures were used to 
     ensure that no excess benefit was provided.

[[Page S7447]]

       ``(B) Minimum standards.--An organization shall be treated 
     as satisfying the minimum standards of due diligence 
     described in this subparagraph with respect to any 
     transaction, if--
       ``(i) the transaction was approved in advance by an 
     authorized body of the organization composed entirely of 
     individuals who did not have a conflict of interest with 
     respect to the transaction,
       ``(ii) the authorized body obtained and relied upon 
     appropriate data as to comparability prior to approval of the 
     transaction, and
       ``(iii) the authorized body adequately and concurrently 
     documented the basis for approving the transaction.
       ``(C) No presumption as to reasonableness.--Meeting the 
     requirements of clause (i) or (ii) of subparagraph (A) with 
     respect to a transaction shall not give rise to a presumption 
     of reasonableness for purposes of the taxes imposed by 
     paragraphs (1) of (2) of subsection (a) and shall not, by 
     itself, support a conclusion that a manager did not act 
     knowingly for purposes of subsection (a)(2) or that the 
     organization did not act wilfully or without reasonable cause 
     for purposes of subsection (a)(3).''.
       (c) Repeal of Exception for Manager Reliance on 
     Professional Advice.--Section 4958 is amended by adding at 
     the end the following new subsection:
       ``(g) No Safe Harbor for Reliance on Professional Advice.--
     An organization manager's reliance on a written opinion of a 
     professional with respect to elements of a transaction within 
     the professional's expertise shall not, by itself, preclude 
     the manager from being treated as participating in the 
     transaction knowingly.''.
       (d) Athletic Coaches and Investment Managers Treated as 
     Disqualified Persons.--
       (1) Athletic coaches.--
       (A) In general.--Paragraph (1) of section 4958(f) is 
     amended by striking ``and'' at the end of subparagraph (E), 
     by striking the period at the end of subparagraph (F) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(G) which involves an eligible educational institution 
     (as defined in section 25A(f)(2)), any person who performs 
     services as an athletic coach for the organization.''.
       (B) Family members.--Subparagraph (B) of section 4958(f)(1) 
     is amended by inserting ``or (G)'' after ``subparagraph 
     (A)''.
       (2) Investment advisors.--
       (A) In general.--Subparagraph (F) of section 4958(f)(1) is 
     amended--
       (i) by striking ``which involves a sponsoring organization 
     (as defined in section 4966(d)(1)),'', and
       (ii) by striking ``such sponsoring organization (as so 
     defined)'' and inserting ``the organization''.
       (B) Investment advisor definition.--Subparagraph (B) of 
     section 4958(f)(8) is amended to read as follows:
       ``(B) Investment advisor defined.--For purposes of 
     subparagraph (A), the term `investment advisor' means--
       ``(i) with respect to any organization, any person who is 
     compensated by such organization and is primarily responsible 
     for managing the investment of, or providing investment 
     advice with respect to, assets of such organization, and
       ``(ii) with respect to any sponsoring organization (as 
     defined in section 4966(d)(1)), any person (other than an 
     employee of such organization) compensated by such 
     organization for managing the investment of, or providing 
     investment advice with respect to, assets maintained in donor 
     advised funds (as defined in section 4966(d)(2)) owned by 
     such organization.''.
       (e) Application to Unions and Trade Associations.--
     Paragraph (1) of section 4958(e) is amended by inserting 
     ``(5), (6),'' after ``(4),''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13706. EXCEPTION FROM PRIVATE FOUNDATION EXCESS BUSINESS 
                   HOLDING TAX FOR INDEPENDENTLY-OPERATED 
                   PHILANTHROPIC BUSINESS HOLDINGS.

       (a) In General.--Section 4943 is amended by adding at the 
     end the following new subsection:
       ``(g) Exception for Certain Holdings Limited to 
     Independently-operated Philanthropic Business.--
       ``(1) In general.--Subsection (a) shall not apply with 
     respect to the holdings of a private foundation in any 
     business enterprise which meets the requirements of 
     paragraphs (2), (3), and (4) for the taxable year.
       ``(2) Ownership.--The requirements of this paragraph are 
     met if--
       ``(A) 100 percent of the voting stock in the business 
     enterprise is held by the private foundation at all times 
     during the taxable year, and
       ``(B) all the private foundation's ownership interests in 
     the business enterprise were acquired by means other than by 
     purchase.
       ``(3) All profits to charity.--
       ``(A) In general.--The requirements of this paragraph are 
     met if the business enterprise, not later than 120 days after 
     the close of the taxable year, distributes an amount equal to 
     its net operating income for such taxable year to the private 
     foundation.
       ``(B) Net operating income.--For purposes of this 
     paragraph, the net operating income of any business 
     enterprise for any taxable year is an amount equal to the 
     gross income of the business enterprise for the taxable year, 
     reduced by the sum of--
       ``(i) the deductions allowed by chapter 1 for the taxable 
     year which are directly connected with the production of such 
     income,
       ``(ii) the tax imposed by chapter 1 on the business 
     enterprise for the taxable year, and
       ``(iii) an amount for a reasonable reserve for working 
     capital and other business needs of the business enterprise.
       ``(4) Independent operation.--The requirements of this 
     paragraph are met if, at all times during the taxable year--
       ``(A) no substantial contributor (as defined in section 
     4958(c)(3)(C)) to the private foundation or family member (as 
     determined under section 4958(f)(4)) of such a contributor is 
     a director, officer, trustee, manager, employee, or 
     contractor of the business enterprise (or an individual 
     having powers or responsibilities similar to any of the 
     foregoing),
       ``(B) at least a majority of the board of directors of the 
     private foundation are persons who are not--
       ``(i) directors or officers of the business enterprise, or
       ``(ii) family members (as so determined) of a substantial 
     contributor (as so defined) to the private foundation, and
       ``(C) there is no loan outstanding from the business 
     enterprise to a substantial contributor (as so defined) to 
     the private foundation or to any family member of such a 
     contributor (as so determined).
       ``(5) Certain deemed private foundations excluded.--This 
     subsection shall not apply to--
       ``(A) any fund or organization treated as a private 
     foundation for purposes of this section by reason of 
     subsection (e) or (f),
       ``(B) any trust described in section 4947(a)(1) (relating 
     to charitable trusts), and
       ``(C) any trust described in section 4947(a)(2) (relating 
     to split-interest trusts).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 13707. REPEAL OF DEDUCTION FOR AMOUNTS PAID IN EXCHANGE 
                   FOR COLLEGE ATHLETIC EVENT SEATING RIGHTS.

       (a) In General.--Section 170(l)(1) is amended to read as 
     follows:
       ``(1) In general.--No deduction shall be allowed under this 
     section for any amount described in paragraph (2).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2017.

     SEC. 13708. REPEAL OF SUBSTANTIATION EXCEPTION IN CASE OF 
                   CONTRIBUTIONS REPORTED BY DONEE.

       (a) In General.--Section 170(f)(8) is amended by striking 
     subparagraph (D) and by redesignating subparagraph (E) as 
     subparagraph (D).
       (b) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2016.

                       PART IX--OTHER PROVISIONS

         Subpart A--Craft Beverage Modernization and Tax Reform

     SEC. 13801. RULE OF CONSTRUCTION.

       Nothing in this subpart, the amendments made by this 
     subpart, or any regulation promulgated under this subpart or 
     the amendments made by this subpart, shall be construed to 
     preempt, supersede, or otherwise limit or restrict any State, 
     local, or tribal law that prohibits or regulates the 
     production or sale of distilled spirits, wine, or malt 
     beverages.

     SEC. 13802. PRODUCTION PERIOD FOR BEER, WINE, AND DISTILLED 
                   SPIRITS.

       (a) In General.--Section 263A(f) is amended--
       (1) by redesignating paragraph (4) as paragraph (5), and
       (2) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Exemption for aging process of beer, wine, and 
     distilled spirits.--
       ``(A) In general.--For purposes of this subsection, the 
     production period shall not include the aging period for--
       ``(i) beer (as defined in section 5052(a)),
       ``(ii) wine (as described in section 5041(a)), or
       ``(iii) distilled spirits (as defined in section 
     5002(a)(8)), except such spirits that are unfit for use for 
     beverage purposes.
       ``(B) Termination.--This paragraph shall not apply to 
     interest costs paid or accrued after December 31, 2019.''.
       (b) Conforming Amendment.--Paragraph (5)(B)(ii) of section 
     263A(f), as redesignated by this section, is amended by 
     inserting ``except as provided in paragraph (4),'' before 
     ``ending on the date''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to interest costs paid or accrued in calendar 
     years beginning after December 31, 2017.

     SEC. 13803. REDUCED RATE OF EXCISE TAX ON BEER.

       (a) In General.--Paragraph (1) of section 5051(a) is 
     amended to read as follows:
       ``(1) In general.--
       ``(A) Imposition of tax.--A tax is hereby imposed on all 
     beer brewed or produced, and removed for consumption or sale, 
     within the United States, or imported into the United States. 
     Except as provided in paragraph (2), the rate of such tax 
     shall be the amount determined under this paragraph.
       ``(B) Rate.--Except as provided in subparagraph (B), the 
     rate of tax shall be $18 for per barrel.
       ``(C) Special rule.--In the case of beer removed after 
     December 31, 2017, and before January 1, 2020, the rate of 
     tax shall be--

[[Page S7448]]

       ``(i) $16 on the first 6,000,000 barrels of beer--

       ``(I) brewed by the brewer and removed during the calendar 
     year for consumption or sale, or
       ``(II) imported by the importer into the United States 
     during the calendar year, and

       ``(ii) $18 on any barrels of beer to which clause (i) does 
     not apply.
       ``(D) Barrel.--For purposes of this section, a barrel shall 
     contain not more than 31 gallons of beer, and any tax imposed 
     under this section shall be applied at a like rate for any 
     other quantity or for fractional parts of a barrel.''.
       (b) Reduced Rate for Certain Domestic Production.--
     Subparagraph (A) of section 5051(a)(2) is amended--
       (1) in the heading, by striking ``$7 a barrel'', and
       (2) by inserting ``($3.50 in the case of beer removed after 
     December 31, 2017, and before January 1, 2020)'' after 
     ``$7''.
       (c) Application of Reduced Tax Rate for Foreign 
     Manufacturers and Importers.--Subsection (a) of section 5051 
     is amended--
       (1) in subparagraph (C)(ii) of paragraph (1), as amended by 
     subsection (a), by inserting ``but only if the importer is an 
     electing importer under paragraph (4) and the barrels have 
     been assigned to the importer pursuant to such paragraph'' 
     after ``during the calendar year'', and
       (2) by adding at the end the following new paragraph:
       ``(4) Reduced tax rate for foreign manufacturers and 
     importers.--
       ``(A) In general.--In the case of any barrels of beer which 
     have been brewed or produced outside of the United States and 
     imported into the United States, the rate of tax applicable 
     under clause (i) of paragraph (1)(C) (referred to in this 
     paragraph as the `reduced tax rate') may be assigned by the 
     brewer (provided that the brewer makes an election described 
     in subparagraph (B)(ii)) to any electing importer of such 
     barrels pursuant to the requirements established by the 
     Secretary under subparagraph (B).
       ``(B) Assignment.--The Secretary shall, through such rules, 
     regulations, and procedures as are determined appropriate, 
     establish procedures for assignment of the reduced tax rate 
     provided under this paragraph, which shall include--
       ``(i) a limitation to ensure that the number of barrels of 
     beer for which the reduced tax rate has been assigned by a 
     brewer--

       ``(I) to any importer does not exceed the number of barrels 
     of beer brewed or produced by such brewer during the calendar 
     year which were imported into the United States by such 
     importer, and
       ``(II) to all importers does not exceed the 6,000,000 
     barrels to which the reduced tax rate applies,

       ``(ii) procedures that allow the election of a brewer to 
     assign and an importer to receive the reduced tax rate 
     provided under this paragraph,
       ``(iii) requirements that the brewer provide any 
     information as the Secretary determines necessary and 
     appropriate for purposes of carrying out this paragraph, and
       ``(iv) procedures that allow for revocation of eligibility 
     of the brewer and the importer for the reduced tax rate 
     provided under this paragraph in the case of any erroneous or 
     fraudulent information provided under clause (iii) which the 
     Secretary deems to be material to qualifying for such reduced 
     rate.
       ``(C) Controlled group.--For purposes of this section, any 
     importer making an election described in subparagraph (B)(ii) 
     shall be deemed to be a member of the controlled group of the 
     brewer, as described under paragraph (5).''.
       (d) Controlled Group and Single Taxpayer Rules.--Subsection 
     (a) of section 5051, as amended by this section, is amended--
       (1) in paragraph (2)--
       (A) by striking subparagraph (B), and
       (B) by redesignating subparagraph (C) as subparagraph (B), 
     and
       (2) by adding at the end the following new paragraph:
       ``(5) Controlled group and single taxpayer rules.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of a controlled group, the 6,000,000 barrel 
     quantity specified in paragraph (1)(C)(i) and the 2,000,000 
     barrel quantity specified in paragraph (2)(A) shall be 
     applied to the controlled group, and the 6,000,000 barrel 
     quantity specified in paragraph (1)(C)(i) and the 60,000 
     barrel quantity specified in paragraph (2)(A) shall be 
     apportioned among the brewers who are members of such group 
     in such manner as the Secretary or their delegate shall by 
     regulations prescribe. For purposes of the preceding 
     sentence, the term `controlled group' has the meaning 
     assigned to it by subsection (a) of section 1563, except that 
     for such purposes the phrase `more than 50 percent' shall be 
     substituted for the phrase `at least 80 percent' in each 
     place it appears in such subsection. Under regulations 
     prescribed by the Secretary, principles similar to the 
     principles of the preceding two sentences shall be applied to 
     a group of brewers under common control where one or more of 
     the brewers is not a corporation.
       ``(B) Foreign manufacturers and importers.--For purposes of 
     paragraph (4), in the case of a controlled group, the 
     6,000,000 barrel quantity specified in paragraph (1)(C)(i) 
     shall be applied to the controlled group and apportioned 
     among the members of such group in such manner as the 
     Secretary shall by regulations prescribe. For purposes of the 
     preceding sentence, the term `controlled group' has the 
     meaning given such term under subparagraph (A). Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of the preceding two sentences shall be 
     applied to a group of brewers under common control where one 
     or more of the brewers is not a corporation.
       ``(C) Single taxpayer.--Pursuant to rules issued by the 
     Secretary, two or more entities (whether or not under common 
     control) that produce beer marketed under a similar brand, 
     license, franchise, or other arrangement shall be treated as 
     a single taxpayer for purposes of the application of this 
     subsection.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to beer removed after December 31, 2017.

     SEC. 13804. SIMPLIFICATION OF RULES REGARDING RECORDS, 
                   STATEMENTS, AND RETURNS.

       (a) In General.--Subsection (a) of section 5555 is amended 
     by adding at the end the following: ``For calendar quarters 
     beginning after December 31, 2017, and before January 1, 
     2020, the Secretary shall permit a person to employ a unified 
     system for any records, statements, and returns required to 
     be kept, rendered, or made under this section for any beer 
     produced in the brewery for which the tax imposed by section 
     5051 has been determined, including any beer which has been 
     removed for consumption on the premises of the brewery.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any calendar quarters beginning after December 
     31, 2017.

     SEC. 13805. TRANSFER OF BEER BETWEEN BONDED FACILITIES.

       (a) In General.--Section 5414 is amended--
       (1) by striking ``Beer may be removed'' and inserting ``(a) 
     In General.--Beer may be removed'', and
       (2) by adding at the end the following:
       ``(b) Transfer of Beer Between Bonded Facilities.--
       ``(1) In general.--Beer may be removed from one brewery to 
     another bonded brewery, without payment of tax, and may be 
     mingled with beer at the receiving brewery, subject to such 
     conditions, including payment of the tax, and in such 
     containers, as the Secretary by regulations shall prescribe, 
     which shall include--
       ``(A) any removal from one brewery to another brewery 
     belonging to the same brewer,
       ``(B) any removal from a brewery owned by one corporation 
     to a brewery owned by another corporation when--
       ``(i) one such corporation owns the controlling interest in 
     the other such corporation, or
       ``(ii) the controlling interest in each such corporation is 
     owned by the same person or persons, and
       ``(C) any removal from one brewery to another brewery 
     when--
       ``(i) the proprietors of transferring and receiving 
     premises are independent of each other and neither has a 
     proprietary interest, directly or indirectly, in the business 
     of the other, and
       ``(ii) the transferor has divested itself of all interest 
     in the beer so transferred and the transferee has accepted 
     responsibility for payment of the tax.
       ``(2) Transfer of liability for tax.--For purposes of 
     paragraph (1)(C), such relief from liability shall be 
     effective from the time of removal from the transferor's 
     bonded premises, or from the time of divestment of interest, 
     whichever is later.
       ``(3) Termination.--This subsection shall not apply to any 
     calendar quarter beginning after December 31, 2019.''.
       (b) Removal From Brewery by Pipeline.--Section 5412 is 
     amended by inserting ``pursuant to section 5414 or'' before 
     ``by pipeline''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any calendar quarters beginning after December 
     31, 2017.

     SEC. 13806. REDUCED RATE OF EXCISE TAX ON CERTAIN WINE.

       (a) In General.--Section 5041(c) is amended by adding at 
     the end the following new paragraph:
       ``(8) Special rule for 2018 and 2019.--
       ``(A) In general.--In the case of wine removed after 
     December 31, 2017, and before January 1, 2020, paragraphs (1) 
     and (2) shall not apply and there shall be allowed as a 
     credit against any tax imposed by this title (other than 
     chapters 2, 21, and 22) an amount equal to the sum of--
       ``(i) $1 per wine gallon on the first 30,000 wine gallons 
     of wine, plus
       ``(ii) 90 cents per wine gallon on the first 100,000 wine 
     gallons of wine to which clause (i) does not apply, plus
       ``(iii) 53.5 cents per wine gallon on the first 620,000 
     wine gallons of wine to which clauses (i) and (ii) do not 
     apply,
     which are produced by the producer and removed during the 
     calendar year for consumption or sale, or which are imported 
     by the importer into the United States during the calendar 
     year.
       ``(B) Adjustment of credit for hard cider.--In the case of 
     wine described in subsection (b)(6), subparagraph (A) of this 
     paragraph shall be applied--
       ``(i) in clause (i) of such subparagraph, by substituting 
     `6.2 cents' for `$1',
       ``(ii) in clause (ii) of such subparagraph, by substituting 
     `5.6 cents' for `90 cents', and
       ``(iii) in clause (iii) of such subparagraph, by 
     substituting `3.3 cents' for `53.5 cents'.'',

[[Page S7449]]

       (b) Controlled Group and Single Taxpayer Rules.--Paragraph 
     (4) of section 5041(c) is amended by striking ``section 
     5051(a)(2)(B)'' and inserting ``section 5051(a)(5)''.
       (c) Allowance of Credit for Foreign Manufacturers and 
     Importers.--Subsection (c) of section 5041, as amended by 
     subsection (a), is amended--
       (1) in subparagraph (A) of paragraph (8), by inserting 
     ``but only if the importer is an electing importer under 
     paragraph (9) and the wine gallons of wine have been assigned 
     to the importer pursuant to such paragraph'' after ``into the 
     United States during the calendar year'', and
       (2) by adding at the end the following new paragraph:
       ``(9) Allowance of credit for foreign manufacturers and 
     importers.--
       ``(A) In general.--In the case of any wine gallons of wine 
     which have been produced outside of the United States and 
     imported into the United States, the credit allowable under 
     paragraph (8) (referred to in this paragraph as the `tax 
     credit') may be assigned by the person who produced such wine 
     (referred to in this paragraph as the `foreign producer'), 
     provided that such person makes an election described in 
     subparagraph (B)(ii), to any electing importer of such wine 
     gallons pursuant to the requirements established by the 
     Secretary under subparagraph (B).
       ``(B) Assignment.--The Secretary shall, through such rules, 
     regulations, and procedures as are determined appropriate, 
     establish procedures for assignment of the tax credit 
     provided under this paragraph, which shall include--
       ``(i) a limitation to ensure that the number of wine 
     gallons of wine for which the tax credit has been assigned by 
     a foreign producer--

       ``(I) to any importer does not exceed the number of wine 
     gallons of wine produced by such foreign producer during the 
     calendar year which were imported into the United States by 
     such importer, and
       ``(II) to all importers does not exceed the 750,000 wine 
     gallons of wine to which the tax credit applies,

       ``(ii) procedures that allow the election of a foreign 
     producer to assign and an importer to receive the tax credit 
     provided under this paragraph,
       ``(iii) requirements that the foreign producer provide any 
     information as the Secretary determines necessary and 
     appropriate for purposes of carrying out this paragraph, and
       ``(iv) procedures that allow for revocation of eligibility 
     of the foreign producer and the importer for the tax credit 
     provided under this paragraph in the case of any erroneous or 
     fraudulent information provided under clause (iii) which the 
     Secretary deems to be material to qualifying for such credit.
       ``(C) Controlled group.--For purposes of this section, any 
     importer making an election described in subparagraph (B)(ii) 
     shall be deemed to be a member of the controlled group of the 
     foreign producer, as described under paragraph (4).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to wine removed after December 31, 2017.

     SEC. 13807. ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR 
                   APPLICATION OF EXCISE TAX RATES.

       (a) In General.--Paragraphs (1) and (2) of section 5041(b) 
     are each amended by inserting ``(16 percent in the case of 
     wine removed after December 31, 2017, and before January 1, 
     2020'' after ``14 percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to wine removed after December 31, 2017.

     SEC. 13808. DEFINITION OF MEAD AND LOW ALCOHOL BY VOLUME 
                   WINE.

       (a) In General.--Section 5041 is amended--
       (1) in subsection (a), by striking ``Still wines'' and 
     inserting ``Subject to subsection (h), still wines'', and
       (2) by adding at the end the following new subsection:
       ``(h) Mead and Low Alcohol by Volume Wine.--
       ``(1) In general.--For purposes of subsections (a) and 
     (b)(1), mead and low alcohol by volume wine shall be deemed 
     to be still wines containing not more than 16 percent of 
     alcohol by volume.
       ``(2) Definitions.--
       ``(A) Mead.--For purposes of this section, the term `mead' 
     means a wine--
       ``(i) containing not more than 0.64 gram of carbon dioxide 
     per hundred milliliters of wine, except that the Secretary 
     shall by regulations prescribe such tolerances to this 
     limitation as may be reasonably necessary in good commercial 
     practice,
       ``(ii) which is derived solely from honey and water,
       ``(iii) which contains no fruit product or fruit flavoring, 
     and
       ``(iv) which contains less than 8.5 percent alcohol by 
     volume.
       ``(B) Low alcohol by volume wine.--For purposes of this 
     section, the term `low alcohol by volume wine' means a wine--
       ``(i) containing not more than 0.64 gram of carbon dioxide 
     per hundred milliliters of wine, except that the Secretary 
     shall by regulations prescribe such tolerances to this 
     limitation as may be reasonably necessary in good commercial 
     practice,
       ``(ii) which is derived--

       ``(I) primarily from grapes, or
       ``(II) from grape juice concentrate and water,

       ``(iii) which contains no fruit product or fruit flavoring 
     other than grape, and
       ``(iv) which contains less than 8.5 percent alcohol by 
     volume.
       ``(3) Termination.--This subsection shall not apply to wine 
     removed after December 31, 2019.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to wine removed after December 31, 2017.

     SEC. 13809. REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED 
                   SPIRITS.

       (a) In General.--Section 5001 is amended by redesignating 
     subsection (c) as subsection (d) and by inserting after 
     subsection (b) the following new subsection:
       ``(c) Reduced Rate for 2018 and 2019.--
       ``(1) In general.--In the case of a distilled spirits 
     operation, the otherwise applicable tax rate under subsection 
     (a)(1) shall be--
       ``(A) $2.70 per proof gallon on the first 100,000 proof 
     gallons of distilled spirits, and
       ``(B) $13.34 per proof gallon on the first 22,130,000 of 
     proof gallons of distilled spirits to which subparagraph (A) 
     does not apply,
     which have been distilled or processed by such operation and 
     removed during the calendar year for consumption or sale, or 
     which have been imported by the importer into the United 
     States during the calendar year.
       ``(2) Controlled groups.--
       ``(A) In general.--In the case of a controlled group, the 
     proof gallon quantities specified under subparagraphs (A) and 
     (B) of paragraph (1) shall be applied to such group and 
     apportioned among the members of such group in such manner as 
     the Secretary or their delegate shall by regulations 
     prescribe.
       ``(B) Definition.--For purposes of subparagraph (A), the 
     term `controlled group' shall have the meaning given such 
     term by subsection (a) of section 1563, except that `more 
     than 50 percent' shall be substituted for `at least 80 
     percent' each place it appears in such subsection.
       ``(C) Rules for non-corporations.--Under regulations 
     prescribed by the Secretary, principles similar to the 
     principles of subparagraphs (A) and (B) shall be applied to a 
     group under common control where one or more of the persons 
     is not a corporation.
       ``(D) Single taxpayer.--Pursuant to rules issued by the 
     Secretary, two or more entities (whether or not under common 
     control) that produce distilled spirits marketed under a 
     similar brand, license, franchise, or other arrangement shall 
     be treated as a single taxpayer for purposes of the 
     application of this subsection.
       ``(3) Termination.--This subsection shall not apply to 
     distilled spirits removed after December 31, 2019.''.
       (b) Conforming Amendment.--Section 7652(f)(2) is amended by 
     striking ``section 5001(a)(1)'' and inserting ``subsection 
     (a)(1) of section 5001, determined as if subsection (c)(1) of 
     such section did not apply''.
       (c) Application of Reduced Tax Rate for Foreign 
     Manufacturers and Importers.--Subsection (c) of section 5001, 
     as added by subsection (a), is amended--
       (1) in paragraph (1), by inserting ``but only if the 
     importer is an electing importer under paragraph (3) and the 
     proof gallons of distilled spirits have been assigned to the 
     importer pursuant to such paragraph'' after ``into the United 
     States during the calendar year'', and
       (2) by adding at the end the following new paragraph:
       ``(3) Reduced tax rate for foreign manufacturers and 
     importers.--
       ``(A) In general.--In the case of any proof gallons of 
     distilled spirits which have been produced outside of the 
     United States and imported into the United States, the rate 
     of tax applicable under paragraph (1) (referred to in this 
     paragraph as the `reduced tax rate') may be assigned by the 
     distilled sprits operation (provided that such operation 
     makes an election described in subparagraph (B)(ii)) to any 
     electing importer of such proof gallons pursuant to the 
     requirements established by the Secretary under subparagraph 
     (B).
       ``(B) Assignment.--The Secretary shall, through such rules, 
     regulations, and procedures as are determined appropriate, 
     establish procedures for assignment of the reduced tax rate 
     provided under this paragraph, which shall include--
       ``(i) a limitation to ensure that the number of proof 
     gallons of distilled spirits for which the reduced tax rate 
     has been assigned by a distilled spirits operation--

       ``(I) to any importer does not exceed the number of proof 
     gallons produced by such operation during the calendar year 
     which were imported into the United States by such importer, 
     and
       ``(II) to all importers does not exceed the 22,230,000 
     proof gallons of distilled spirits to which the reduced tax 
     rate applies,

       ``(ii) procedures that allow the election of a distilled 
     spirits operation to assign and an importer to receive the 
     reduced tax rate provided under this paragraph,
       ``(iii) requirements that the distilled spirits operation 
     provide any information as the Secretary determines necessary 
     and appropriate for purposes of carrying out this paragraph, 
     and
       ``(iv) procedures that allow for revocation of eligibility 
     of the distilled spirits operation and the importer for the 
     reduced tax rate provided under this paragraph in the case of 
     any erroneous or fraudulent information provided under clause 
     (iii) which the Secretary deems to be material to qualifying 
     for such reduced rate.
       ``(C) Controlled group.--

[[Page S7450]]

       ``(i) In general.--For purposes of this section, any 
     importer making an election described in subparagraph (B)(ii) 
     shall be deemed to be a member of the controlled group of the 
     distilled spirits operation, as described under paragraph 
     (2).
       ``(ii) Apportionment.--For purposes of this paragraph, in 
     the case of a controlled group, rules similar to section 
     5051(a)(5)(B) shall apply.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to distilled spirits removed after December 31, 
     2017.

     SEC. 13810. BULK DISTILLED SPIRITS.

       (a) In General.--Section 5212 is amended by adding at the 
     end the following sentence: ``In the case of distilled 
     spirits transferred in bond after December 31, 2017, and 
     before January 1, 2020, this section shall be applied without 
     regard to whether distilled spirits are bulk distilled 
     spirits.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply distilled spirits transferred in bond after 
     December 31, 2017.

                  Subpart B--Miscellaneous Provisions

     SEC. 13821. MODIFICATION OF TAX TREATMENT OF ALASKA NATIVE 
                   CORPORATIONS AND SETTLEMENT TRUSTS.

       (a) Exclusion for ANCSA Payments Assigned to Alaska Native 
     Settlement Trusts.--
       (1) In general.--Part III of subchapter B of chapter 1 is 
     amended by inserting before section 140 the following new 
     section:

     ``SEC. 139G. ASSIGNMENTS TO ALASKA NATIVE SETTLEMENT TRUSTS.

       ``(a) In General.--In the case of a Native Corporation, 
     gross income shall not include the value of any payments that 
     would otherwise be made, or treated as being made, to such 
     Native Corporation pursuant to, or as required by, any 
     provision of the Alaska Native Claims Settlement Act (43 
     U.S.C. 1601 et seq.), including any payment that would 
     otherwise be made to a Village Corporation pursuant to 
     section 7(j) of the Alaska Native Claims Settlement Act (43 
     U.S.C. 1606(j)), provided that any such payments--
       ``(1) are assigned in writing to a Settlement Trust, and
       ``(2) were not received by such Native Corporation prior to 
     the assignment described in paragraph (1).
       ``(b) Inclusion in Gross Income.--In the case of a 
     Settlement Trust which has been assigned payments described 
     in subsection (a), gross income shall include such payments 
     when received by such Settlement Trust pursuant to the 
     assignment and shall have the same character as if such 
     payments were received by the Native Corporation.
       ``(c) Amount and Scope of Assignment.--The amount and scope 
     of any assignment under subsection (a) shall be described 
     with reasonable particularity and may either be in a 
     percentage of one or more such payments or in a fixed dollar 
     amount.
       ``(d) Duration of Assignment; Revocability.--Any assignment 
     under subsection (a) shall specify--
       ``(1) a duration either in perpetuity or for a period of 
     time, and
       ``(2) whether such assignment is revocable.
       ``(e) Prohibition on Deduction.--Notwithstanding section 
     247, no deduction shall be allowed to a Native Corporation 
     for purposes of any amounts described in subsection (a).
       ``(f) Definitions.--For purposes of this section, the terms 
     `Native Corporation' and `Settlement Trust' have the same 
     meaning given such terms under section 646(h).''.
       (2) Conforming amendment.--The table of sections for part 
     III of subchapter B of chapter 1 is amended by inserting 
     before the item relating to section 140 the following new 
     item:

``Sec. 139G. Assignments to Alaska Native Settlement Trusts.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2016.
       (b) Deduction of Contributions to Alaska Native Settlement 
     Trusts.--
       (1) In general.--Part VIII of subchapter B of chapter 1 is 
     amended by inserting before section 248 the following new 
     section:

     ``SEC. 247. CONTRIBUTIONS TO ALASKA NATIVE SETTLEMENT TRUSTS.

       ``(a) In General.--In the case of a Native Corporation, 
     there shall be allowed a deduction for any contributions made 
     by such Native Corporation to a Settlement Trust (regardless 
     of whether an election under section 646 is in effect for 
     such Settlement Trust) for which the Native Corporation has 
     made an annual election under subsection (e).
       ``(b) Amount of Deduction.--The amount of the deduction 
     under subsection (a) shall be equal to--
       ``(1) in the case of a cash contribution (regardless of the 
     method of payment, including currency, coins, money order, or 
     check), the amount of such contribution, or
       ``(2) in the case of a contribution not described in 
     paragraph (1), the lesser of--
       ``(A) the Native Corporation's adjusted basis in the 
     property contributed, or
       ``(B) the fair market value of the property contributed.
       ``(c) Limitation and Carryover.--
       ``(1) In general.--Subject to paragraph (2), the deduction 
     allowed under subsection (a) for any taxable year shall not 
     exceed the taxable income (as determined without regard to 
     such deduction) of the Native Corporation for the taxable 
     year in which the contribution was made.
       ``(2) Carryover.--If the aggregate amount of contributions 
     described in subsection (a) for any taxable year exceeds the 
     limitation under paragraph (1), such excess shall be treated 
     as a contribution described in subsection (a) in each of the 
     15 succeeding years in order of time.
       ``(d) Definitions.--For purposes of this section, the terms 
     `Native Corporation' and `Settlement Trust' have the same 
     meaning given such terms under section 646(h).
       ``(e) Manner of Making Election.--
       ``(1) In general.--For each taxable year, a Native 
     Corporation may elect to have this section apply for such 
     taxable year on the income tax return or an amendment or 
     supplement to the return of the Native Corporation, with such 
     election to have effect solely for such taxable year.
       ``(2) Revocation.--Any election made by a Native 
     Corporation pursuant to this subsection may be revoked 
     pursuant to an amendment or supplement to the income tax 
     return which has been timely filed by such Native 
     Corporation.
       ``(f) Additional Rules.--
       ``(1) Earnings and profits.--Notwithstanding section 
     646(d)(2), in the case of a Native Corporation which claims a 
     deduction under this section for any taxable year, the 
     earnings and profits of such Native Corporation for such 
     taxable year shall be reduced by the amount of such 
     deduction.
       ``(2) Gain or loss.--No gain or loss shall be recognized by 
     the Native Corporation with respect to a contribution of 
     property for which a deduction is allowed under this section.
       ``(3) Income.--Subject to subsection (g), a Settlement 
     Trust shall include in income the amount of any deduction 
     allowed under this section in the taxable year in which the 
     Settlement Trust actually receives such contribution.
       ``(4) Period.--The holding period under section 1223 of the 
     Settlement Trust shall include the period the property was 
     held by the Native Corporation.
       ``(5) Basis.--The basis that a Settlement Trust has for 
     which a deduction is allowed under this section shall be 
     equal to the lesser of--
       ``(A) the adjusted basis of the Native Corporation in such 
     property immediately before such contribution, or
       ``(B) the fair market value of the property immediately 
     before such contribution.
       ``(6) Prohibition.--No deduction shall be allowed under 
     this section with respect to any contributions made to a 
     Settlement Trust which are in violation of subsection (a)(2) 
     or (c)(2) of section 39 of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1629e).
       ``(g) Election by Settlement Trust To Defer Income 
     Recognition.--
       ``(1) In general.--In the case of a contribution which 
     consists of property other than cash, a Settlement Trust may 
     elect to defer recognition of any income related to such 
     property until the sale or exchange of such property, in 
     whole or in part, by the Settlement Trust.
       ``(2) Treatment.--In the case of property described in 
     paragraph (1), any income or gain realized on the sale or 
     exchange of such property shall be treated as--
       ``(A) for such amount of the income or gain as is equal to 
     or less than the amount of income which would be included in 
     income at the time of contribution under subsection (f)(3) 
     but for the taxpayer's election under this subsection, 
     ordinary income, and
       ``(B) for any amounts of the income or gain which are in 
     excess of the amount of income which would be included in 
     income at the time of contribution under subsection (f)(3) 
     but for the taxpayer's election under this subsection, having 
     the same character as if this subsection did not apply.
       ``(3) Election.--
       ``(A) In general.--For each taxable year, a Settlement 
     Trust may elect to apply this subsection for any property 
     described in paragraph (1) which was contributed during such 
     year. Any property to which the election applies shall be 
     identified and described with reasonable particularity on the 
     income tax return or an amendment or supplement to the return 
     of the Settlement Trust, with such election to have effect 
     solely for such taxable year.
       ``(B) Revocation.--Any election made by a Settlement Trust 
     pursuant to this subsection may be revoked pursuant to an 
     amended income tax return which has been timely filed by such 
     Settlement Trust.
       ``(C) Certain dispositions.--
       ``(i) In general.--In the case of any property for which an 
     election is in effect under this subsection and which is 
     disposed of within the first taxable year subsequent to the 
     taxable year in which such property was contributed to the 
     Settlement Trust--

       ``(I) this section shall be applied as if the election 
     under this subsection had not been made,
       ``(II) any income or gain which would have been included in 
     the year of contribution under subsection (f)(3) but for the 
     taxpayer's election under this subsection shall be included 
     in income for the taxable year of such contribution, and
       ``(III) the Settlement Trust shall pay any increase in tax 
     resulting from such inclusion, including any applicable 
     interest, and increased by 10 percent of the amount of such 
     increase with interest.

       ``(ii) Assessment.--Notwithstanding section 6501(a), any 
     amount described in subclause (III) of clause (i) may be 
     assessed, or a proceeding in court with respect to such 
     amount may be initiated without assessment, within 4 years 
     after the date on which the return making the election under 
     this subsection for such property was filed.''.

[[Page S7451]]

       (2) Conforming amendment.--The table of sections for part 
     VIII of subchapter B of chapter 1 is amended by inserting 
     before the item relating to section 248 the following new 
     item:

``Sec. 247. Contributions to Alaska Native Settlement Trusts.''.
       (3) Permissive amendments to trust agreements establishing 
     settlement trusts.--
       (A) In general.--Notwithstanding any provision of law, 
     including any provision of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1601 et seq.), Alaska State law, or 
     the terms of any trust agreement of a Settlement Trust (as 
     defined under section 3(t) of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1602(t))), the terms of any trust 
     agreement of a Settlement Trust may, within the 1-year period 
     following the date of the enactment of this Act, be amended 
     as necessary to allow such Trust to make an election 
     described in subsection (g) of section 247 of the Internal 
     Revenue Code of 1986 (as added by paragraph (1)).
       (B) Amendment.--An amendment described in subparagraph (A) 
     shall be enacted pursuant to one or more agreements between 
     the Native Corporation that established the Settlement Trust 
     and the trustees of such Trust and shall not require any vote 
     by the beneficiaries of such Trust or the shareholders of 
     such Native Corporation.
       (C) Registration statement.--Any Settlement Trust which was 
     registered in accordance with Alaska State law prior to the 
     date of the enactment of an amendment described in 
     subparagraph (A) shall not be required to file a new or 
     amended registration statement to reflect such amendment.
       (4) Effective date.--
       (A) In general.--The amendments made by this subsection 
     shall apply to taxable years for which the period of 
     limitation on refund or credit under section 6511 of the 
     Internal Revenue Code of 1986 has not expired.
       (B) One-year waiver of statute of limitations.--If the 
     period of limitation on a credit or refund resulting from the 
     amendments made by paragraph (1) expires before the end of 
     the 1-year period beginning on the date of the enactment of 
     this Act, refund or credit of such overpayment (to the extent 
     attributable to such amendments) may, nevertheless, be made 
     or allowed if claim therefor is filed before the close of 
     such 1-year period.
       (c) Information Reporting for Deductible Contributions to 
     Alaska Native Settlement Trusts.--
       (1) In general.--Section 6039H is amended--
       (A) in the heading, by striking ``sponsoring'', and
       (B) by adding at the end the following new subsection:
       ``(e) Deductible Contributions by Native Corporations to 
     Alaska Native Settlement Trusts.--
       ``(1) In general.--Any Native Corporation (as defined in 
     subsection (m) of section 3 of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1602(m))) which has made a 
     contribution to a Settlement Trust (as defined in subsection 
     (t) of such section) to which an election under subsection 
     (e) of section 247 applies shall provide such Settlement 
     Trust with a statement regarding such election not later than 
     January 31 of the calendar year subsequent to the calendar 
     year in which the contribution was made.
       ``(2) Content of statement.--The statement described in 
     paragraph (1) shall include--
       ``(A) the total amount of contributions to which the 
     election under subsection (e) of section 247 applies,
       ``(B) for each contribution, whether such contribution was 
     in cash,
       ``(C) for each contribution which consists of property 
     other than cash, the date that such property was acquired by 
     the Native Corporation and the adjusted basis of such 
     property on the date such property was contributed to the 
     Settlement Trust,
       ``(D) the date on which each contribution was made to the 
     Settlement Trust, and
       ``(E) such information as the Secretary determines to be 
     necessary or appropriate for the identification of each 
     contribution and the accurate inclusion of income relating to 
     such contributions by the Settlement Trust.''.
       (2) Conforming amendment.--The item relating to section 
     6039H in the table of sections for subpart A of part III of 
     subchapter A of chapter 61 is amended to read as follows:

``Sec. 6039H. Information With Respect to Alaska Native Settlement 
              Trusts and Native Corporations.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2016.
       (d) Statutory Construction.--This section is remedial 
     Indian legislation enacted under the plenary authority of the 
     Congress under the Constitution of the United States to 
     regulate Indian affairs, and any ambiguities in section 139F 
     or 247 of the Internal Revenue Code of 1986, as added by this 
     Act, shall be resolved in favor of Native Corporations 
     attempting to exclude income or claim a deduction thereunder.

     SEC. 13822. AMOUNTS PAID FOR AIRCRAFT MANAGEMENT SERVICES.

       (a) In General.--Subsection (e) of section 4261 is amended 
     by adding at the end the following new paragraph:
       ``(5) Amounts paid for aircraft management services.--
       ``(A) In general.--No tax shall be imposed by this section 
     or section 4271 on any amounts paid by an aircraft owner for 
     aircraft management services related to--
       ``(i) maintenance and support of the aircraft owner's 
     aircraft, or
       ``(ii) flights on the aircraft owner's aircraft.
       ``(B) Aircraft management services.--For purposes of 
     subparagraph (A), the term `aircraft management services' 
     includes--
       ``(i) assisting an aircraft owner with administrative and 
     support services, such as scheduling, flight planning, and 
     weather forecasting,
       ``(ii) obtaining insurance,
       ``(iii) maintenance, storage and fueling of aircraft,
       ``(iv) hiring, training, and provision of pilots and crew,
       ``(v) establishing and complying with safety standards, and
       ``(vi) such other services as are necessary to support 
     flights operated by an aircraft owner.
       ``(C) Lessee treated as aircraft owner.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `aircraft owner' includes a person who leases the aircraft 
     other than under a disqualified lease.
       ``(ii) Disqualified lease.--For purposes of clause (i), the 
     term `disqualified lease' means a lease from a person 
     providing aircraft management services with respect to such 
     aircraft (or a related person (within the meaning of section 
     465(b)(3)(C)) to the person providing such services), if such 
     lease is for a term of 31 days or less.
       ``(D) Pro rata allocation.--In the case of amounts paid to 
     any person which (but for this subsection) are subject to the 
     tax imposed by subsection (a), a portion of which consists of 
     amounts described in subparagraph (A), this paragraph shall 
     apply on a pro rata basis only to the portion which consists 
     of amounts described in such subparagraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid after the date of the enactment 
     of this Act.

     SEC. 13823. OPPORTUNITY ZONES.

       (a) In General.--Chapter 1 is amended by adding at the end 
     the following:

                   ``Subchapter Z--Opportunity Zones

``Sec. 1400Z-1. Designation.
``Sec. 1400Z-2. Special rules for capital gains invested in opportunity 
              zones.

     ``SEC. 1400Z-1. DESIGNATION.

       ``(a) Qualified Opportunity Zone Defined.--For the purposes 
     of this subchapter, the term `qualified opportunity zone' 
     means a population census tract that is a low-income 
     community that is designated as a qualified opportunity zone.
       ``(b) Designation.--
       ``(1) Governor.--
       ``(A) In general.--For purposes of subsection (a), a 
     population census tract that is a low-income community is 
     designated as a qualified opportunity zone if--
       ``(i) not later than the end of the determination period, 
     the governor of the State in which the tract is located--

       ``(I) nominates the tract for designation as a qualified 
     opportunity zone, and
       ``(II) notifies the Secretary in writing of such 
     nomination, and

       ``(ii) the Secretary certifies such nomination and 
     designates such tract as a qualified opportunity zone before 
     the end of the consideration period.
       ``(B) Extension of periods.--A governor may request that 
     the Secretary extend either the determination or 
     consideration period, or both (determined without regard to 
     this subparagraph), for an additional 30 days.
       ``(C) Deemed designation if secretary fails to act.--Unless 
     the tracts are ineligible for designation, if the Secretary 
     declines in writing to make such certification and 
     designation or fails to act before the end of the 
     consideration period, such nomination shall be deemed to be 
     certified and designated, effective on the day after the last 
     day of the consideration period.
       ``(2) Secretary.--If a governor fails to make the 
     nominations and notifications by the end of the periods 
     referred to in paragraphs (1)(A) and (1)(B), the Secretary 
     shall designate and certify population census tracts that are 
     low-income communities as qualified opportunity zones, as 
     permitted by subsection (e).
       ``(c) Other Definitions.--For purposes of this subsection--
       ``(1) Low-income communities.--The term `low-income 
     community' has the same meaning as when used in section 
     45D(e).
       ``(2) Definition of periods.--
       ``(A) Consideration period.--The term `consideration 
     period' means the 30-day period beginning on the date on 
     which the Secretary receives notice under subsection 
     (b)(1)(A)(i)(II), as extended under subsection (b)(1)(B).
       ``(B) Determination period.--The term `determination 
     period' means the 90-day period beginning on the date of the 
     enactment of the Tax Cuts and Jobs Act, as extended under 
     subsection (b)(1)(B).
       ``(3) State.--For purposes of this section, the term 
     `State' includes any possession of the United States.
       ``(d) Guidance for Opportunity Zone Nominations.--When 
     considering the nomination of qualified opportunity zones, 
     governors should strive for the creation of qualified 
     opportunity zones that are geographically concentrated and 
     contiguous clusters of population census tracts and should 
     give particular consideration to areas that--

[[Page S7452]]

       ``(1) are currently the focus of mutually reinforcing 
     State, local, or private economic development initiatives to 
     attract investment and foster startup activity,
       ``(2) have demonstrated success in geographically targeted 
     development programs, such as promise zones, new market tax 
     credit, empowerment zones, and renewal communities, and
       ``(3) have recently experienced significant layoffs due to 
     business closures or relocations.
       ``(e) Number of Designations.--
       ``(1) In general.--Except as provided by paragraph (2), the 
     number of population census tracts in a State that may be 
     designated as qualified opportunity zones under this section 
     may not exceed 25 percent of the number of low-income 
     communities in the State.
       ``(2) Exception.--If the number of low-income communities 
     in a State is less than 100, then a total of 25 of such 
     tracts may be designated as qualified opportunity zones.
       ``(f) Designation of Tracts Contiguous With Low-Income 
     Communities.--
       ``(1) In general.--A population census tract that is not a 
     low-income community may be designated as a qualified 
     opportunity zone under this section if--
       ``(A) the tract is contiguous with the low-income community 
     that is designated as a qualified opportunity zone, and
       ``(B) the median family income of the tract does not exceed 
     125 percent of the median family income of the low-income 
     community with which the tract is contiguous.
       ``(2) Limitation.--Not more than 5 percent of the 
     population census tracts designated in a State as a qualified 
     opportunity zone may be designated under paragraph (1).
       ``(g) Period for Which Designation Is in Effect.--A 
     designation as a qualified opportunity zone shall remain in 
     effect for the period beginning on the date of the 
     designation and ending at the close of the 10th calendar year 
     beginning on or after such date of designation.

     ``SEC. 1400Z-2. SPECIAL RULES FOR CAPITAL GAINS INVESTED IN 
                   OPPORTUNITY ZONES.

       ``(a) In General.--In the case of gain from the sale to, or 
     exchange with, an unrelated person of any property held by 
     the taxpayer, at the election of the taxpayer--
       ``(1) gross income for the taxable year shall not include 
     so much of such gain as does not exceed the aggregate amount 
     invested by the taxpayer in a qualified opportunity fund 
     during the 180-day period beginning on the date of such sale 
     or exchange,
       ``(2) the amount of gain excluded by paragraph (1) shall be 
     included in gross income as provided by subsection (b), and
       ``(3) subsection (c) shall apply.
     No election may be made under the preceding sentence with 
     respect to a sale or exchange if an election previously made 
     with respect to such sale or exchange is in effect.
       ``(b) Deferral of Gain Invested in Opportunity Zone 
     Property.--
       ``(1) Year of inclusion.--Gain to which subsection (a)(2) 
     applies shall be included in income in the taxable year which 
     includes the earlier of--
       ``(A) the date on which such investment is sold or 
     exchanged, or
       ``(B) December 31, 2026.
       ``(2) Amount includible.--
       ``(A) In general.--The amount of gain included in gross 
     income under subsection (a)(1) shall be the excess of--
       ``(i) the lesser of the amount of gain excluded under 
     paragraph (1) or the fair market value of the property as of 
     the determined as of the date described in paragraph (1), 
     over
       ``(ii) the taxpayer's basis in the investment.
       ``(B) Determination of basis.--
       ``(i) In general.--Except as otherwise provided in this 
     clause or subsection (c), the taxpayer's basis in the 
     investment shall be zero.
       ``(ii) Increase for gain recognized under subsection 
     (a)(2).--The basis in the investment shall be increased by 
     the amount of gain recognized by reason of subsection (a)(2) 
     with respect to such property.
       ``(iii) Investments held for 5 years.--In the case of any 
     investment held for at least 5 years, the basis of such 
     investment shall be increased by an amount equal to 10 
     percent of the amount of gain deferred by reason of 
     subsection (a)(1).
       ``(iv) Investments held for 7 years.--In the case of any 
     investment held by the taxpayer for at least 7 years, in 
     addition to any adjustment made under clause (iii), the basis 
     of such property shall be increased by an amount equal to 5 
     percent of the amount of gain deferred by reason of 
     subsection (a)(1).
       ``(c) Special Rule for Investments Held for at Least 10 
     Years.--In the case of any investment held by the taxpayer 
     for at least 10 years and with respect to which the taxpayer 
     makes an election under this clause, the basis of such 
     property shall be equal to the fair market value of such 
     investment on the date that the investment is sold or 
     exchanged.
       ``(d) Qualified Opportunity Fund.--For purposes of this 
     section--
       ``(1) Qualified opportunity fund.--The term `qualified 
     opportunity fund' means any investment vehicle which is 
     organized as a corporation or a partnership for the purpose 
     of investing in qualified opportunity zone property (other 
     than another qualified opportunity fund) that holds at least 
     90 percent of its assets in qualified opportunity zone 
     property, determined--
       ``(A) on the last day of the first 6-month period of the 
     taxable year of the fund, and
       ``(B) on the last day of the taxable year of the fund.
       ``(2) Qualified opportunity zone property.--
       ``(A) In general.--The term `qualified opportunity zone 
     property' means property which is--
       ``(i) qualified opportunity zone stock,
       ``(ii) qualified opportunity zone partnership interest, or
       ``(iii) qualified opportunity zone business property.
       ``(B) Qualified opportunity zone stock.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `qualified opportunity zone stock' means any stock in a 
     domestic corporation if--

       ``(I) such stock is acquired by the taxpayer after December 
     31, 2017, at its original issue (directly or through an 
     underwriter) from the corporation solely in exchange for 
     cash,
       ``(II) as of the time such stock was issued, such 
     corporation was a qualified opportunity zone business (or, in 
     the case of a new corporation, such corporation was being 
     organized for purposes of being a qualified opportunity zone 
     business), and
       ``(III) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     qualified opportunity zone business.

       ``(ii) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(C) Qualified opportunity zone partnership interest.--The 
     term `qualified opportunity zone partnership interest' means 
     any capital or profits interest in a domestic partnership 
     if--
       ``(i) such interest is acquired by the taxpayer after 
     December 31, 2017, from the partnership solely in exchange 
     for cash,
       ``(ii) as of the time such interest was acquired, such 
     partnership was a qualified opportunity zone business (or, in 
     the case of a new partnership, such partnership was being 
     organized for purposes of being a qualified opportunity zone 
     business), and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     qualified opportunity zone business.
       ``(D) Qualified opportunity zone business property.--
       ``(i) In general.--The term `qualified opportunity zone 
     business property' means tangible property used in a trade or 
     business of the taxpayer if--

       ``(I) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2017,
       ``(II) the original use of such property in the qualified 
     opportunity zone commences with the taxpayer or the taxpayer 
     substantially improves the property, and
       ``(III) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a qualified opportunity zone.

       ``(ii) Substantial improvement.--For purposes of 
     subparagraph (A)(ii), property shall be treated as 
     substantially improved by the taxpayer only if, during any 
     30-month period beginning after the date of acquisition of 
     such property, additions to basis with respect to such 
     property in the hands of the taxpayer exceed an amount equal 
     to the adjusted basis of such property at the beginning of 
     such 30-month period in the hands of the taxpayer.
       ``(iii) Related party.--For purposes of subparagraph 
     (A)(i), the related person rule of section 179(d)(2) shall be 
     applied pursuant to paragraph (8) of this subsection in lieu 
     of the application of such rule in section 179(d)(2)(A).
       ``(3) Qualified opportunity zone business.--
       ``(A) In general.--The term `qualified opportunity zone 
     business' means a trade or business--
       ``(i) in which substantially all of the tangible property 
     owned or leased by the taxpayer is qualified opportunity zone 
     business property,
       ``(ii) which satisfies the requirements of paragraphs (2), 
     (4), and (8) of section 1397C(b), and
       ``(iii) which is not described in section 144(c)(6)(B).
       ``(B) Special rule.--For purposes of subparagraph (A), 
     tangible property that ceases to be a qualified opportunity 
     zone business property shall continue to be treated as a 
     qualified opportunity zone business property for the lesser 
     of--
       ``(i) 5 years after the date on which such tangible 
     property ceases to be so qualified, or
       ``(ii) the date on which such tangible property is no 
     longer held by the qualified opportunity zone business.
       ``(e) Applicable Rules.--
       ``(1) Treatment of investments with mixed funds.--In the 
     case of any investment in a qualified opportunity fund only a 
     portion of which consists of investments of gain to which an 
     election under subsection (a)(1) is in effect--
       ``(A) such investment shall be treated as 2 separate 
     investments, consisting of--
       ``(i) one investment that only includes amounts to which 
     the election under subsection (a)(1) applies, and
       ``(ii) a separate investment consisting of other amounts, 
     and
       ``(B) subsections (a), (b), and (c) shall only apply to the 
     investment described in subparagraph (A)(i).

[[Page S7453]]

       ``(2) Related persons.--For purposes of this section, 
     persons are related to each other if such persons are 
     described in section 267(b) or 707(b)(1), determined by 
     substituting `20 percent' for `50 percent' each place it 
     occurs in such sections.
       ``(3) Decedents.--In the case of a decedent, amounts 
     recognized under this section shall, if not properly 
     includible in the gross income of the decedent, be includible 
     in gross income as provided by section 691.
       ``(4) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including--
       ``(A) rules for the certification of qualified opportunity 
     funds for the purposes of this section, and
       ``(B) rules to prevent abuse.
       ``(f) Failure of Qualified Opportunity Fund to Maintain 
     Investment Standard.--
       ``(1) In general.--If a qualified opportunity fund fails to 
     meet the 90-percent requirement of subsection (c)(1), the 
     qualified opportunity fund shall pay a penalty for each month 
     it fails to meet the requirement in an amount equal to the 
     product of--
       ``(A) the excess of--
       ``(i) the amount equal to 90 percent of its aggregate 
     assets, over
       ``(ii) the aggregate amount of qualified opportunity zone 
     property held by the fund, multiplied by
       ``(B) the underpayment rate established under section 
     6621(a)(2) for such month.
       ``(2) Special rule for partnerships.--In the case that the 
     qualified opportunity fund is a partnership, the penalty 
     imposed by paragraph (1) shall be taken into account 
     proportionately as part of the distributive share of each 
     partner of the partnership.
       ``(3) Reasonable cause exception.--No penalty shall be 
     imposed under this subsection with respect to any failure if 
     it is shown that such failure is due to reasonable cause.''.
       (b) Basis Adjustments.--Section 1016(a) is amended by 
     striking ``and'' at the end of paragraph (36), by striking 
     the period at the end of paragraph (37) and inserting ``, 
     and'', and by inserting after paragraph (37) the following:
       ``(38) to the extent provided in subsections (b)(2) and (c) 
     of section 1400Z-2.''.
       (c) Report to Congress.--The Secretary of the Treasury, or 
     the Secretary's delegate, shall submit a report to Congress 
     on the opportunity zone incentives enacted by this section 
     beginning 5 years after the date of enactment of this Act and 
     annually thereafter. The report shall include an assessment 
     of investments held by qualified opportunity funds nationally 
     and at the State level. To the extent such information is 
     available, the report shall include the number of qualified 
     opportunity funds, the amount of assets held in qualified 
     opportunity funds, the composition of qualified opportunity 
     fund investments by asset class, the percentage of qualified 
     opportunity zone census tracts designated under subchapter Z 
     of the Internal Revenue Code of 1986 (as added by this 
     section) that have received qualified opportunity fund 
     investments. The report shall also include an assessment of 
     the impacts and outcomes of the investments in those areas on 
     economic indicators including job creation, poverty 
     reduction, and new business starts, and other metrics as 
     determined by the Secretary.
       (d) Clerical Amendment.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

                  ``subchapter z. opportunity zones''.

       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

                Subtitle D--International Tax Provisions

                     PART I--OUTBOUND TRANSACTIONS

Subpart A--Establishment of Participation Exemption System for Taxation 
                           of Foreign Income

     SEC. 14101. DEDUCTION FOR FOREIGN-SOURCE PORTION OF DIVIDENDS 
                   RECEIVED BY DOMESTIC CORPORATIONS FROM 
                   SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       (a) In General.--Part VIII of subchapter B of chapter 1 is 
     amended by inserting after section 245 the following new 
     section:

     ``SEC. 245A. DEDUCTION FOR FOREIGN SOURCE-PORTION OF 
                   DIVIDENDS RECEIVED BY DOMESTIC CORPORATIONS 
                   FROM SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--In the case of any dividend received 
     from a specified 10-percent owned foreign corporation by a 
     domestic corporation which is a United States shareholder 
     with respect to such foreign corporation, there shall be 
     allowed as a deduction an amount equal to the foreign-source 
     portion of such dividend.
       ``(b) Specified 10-percent Owned Foreign Corporation.--For 
     purposes of this section--
       ``(1) In general.--The term `specified 10-percent owned 
     foreign corporation' means any foreign corporation with 
     respect to which any domestic corporation is a United States 
     shareholder with respect to such corporation.
       ``(2) Exclusion of passive foreign investment companies.--
     Such term shall not include any corporation which is a 
     passive foreign investment company (as defined in section 
     1297) with respect to the shareholder and which is not a 
     controlled foreign corporation.
       ``(c) Foreign-source Portion.--For purposes of this 
     section--
       ``(1) In general.--The foreign-source portion of any 
     dividend from a specified 10-percent owned foreign 
     corporation is an amount which bears the same ratio to such 
     dividend as--
       ``(A) the undistributed foreign earnings of the specified 
     10-percent owned foreign corporation, bears to
       ``(B) the total undistributed earnings of such foreign 
     corporation.
       ``(2) Undistributed earnings.--The term `undistributed 
     earnings' means the amount of the earnings and profits of the 
     specified 10-percent owned foreign corporation (computed in 
     accordance with sections 964(a) and 986)--
       ``(A) as of the close of the taxable year of the specified 
     10-percent owned foreign corporation in which the dividend is 
     distributed, and
       ``(B) without diminution by reason of dividends distributed 
     during such taxable year.
       ``(3) Undistributed foreign earnings.--The term 
     `undistributed foreign earnings' means the portion of the 
     undistributed earnings which is attributable to neither--
       ``(A) income described in subparagraph (A) of section 
     245(a)(5), nor
       ``(B) dividends described in subparagraph (B) of such 
     section (determined without regard to section 245(a)(12)).
       ``(d) Disallowance of Foreign Tax Credit, etc.--
       ``(1) In general.--No credit shall be allowed under section 
     901 for any taxes paid or accrued (or treated as paid or 
     accrued) with respect to any distribution any portion of 
     which constitutes a dividend for which a deduction is allowed 
     under this section.
       ``(2) Denial of deduction.--No deduction shall be allowed 
     under this chapter for any tax for which credit is not 
     allowable under section 901 by reason of paragraph (1) 
     (determined by treating the taxpayer as having elected the 
     benefits of subpart A of part III of subchapter N).
       ``(e) Special Rules for Hybrid Dividends.--
       ``(1) In general.--Subsection (a) shall not apply to any 
     dividend received by a United States shareholder from a 
     controlled foreign corporation if the dividend is a hybrid 
     dividend.
       ``(2) Hybrid dividends of tiered corporations.--If a 
     controlled foreign corporation with respect to which a 
     domestic corporation is a United States shareholder receives 
     a hybrid dividend from any other controlled foreign 
     corporation with respect to which such domestic corporation 
     is also a United States shareholder, then, notwithstanding 
     any other provision of this title--
       ``(A) the hybrid dividend shall be treated for purposes of 
     section 951(a)(1)(A) as subpart F income of the receiving 
     controlled foreign corporation for the taxable year of the 
     controlled foreign corporation in which the dividend was 
     received, and
       ``(B) the United States shareholder shall include in gross 
     income an amount equal to the shareholder's pro rata share 
     (determined in the same manner as under section 951(a)(2)) of 
     the subpart F income described in subparagraph (A).
       ``(3) Denial of foreign tax credit, etc.--The rules of 
     subsection (d) shall apply to any hybrid dividend received 
     by, or any amount included under paragraph (2) in the gross 
     income of, a United States shareholder.
       ``(4) Hybrid dividend.--The term `hybrid dividend' means an 
     amount received from a controlled foreign corporation--
       ``(A) for which a deduction would be allowed under 
     subsection (a) but for this subsection, and
       ``(B) for which the controlled foreign corporation received 
     a deduction (or other tax benefit) from taxes imposed by any 
     foreign country.
       ``(f) Special Rule for Purging Distributions of Passive 
     Foreign Investment Companies.--Any amount which is treated as 
     a dividend under section 1291(d)(2)(B) shall not be treated 
     as a dividend for purposes of this section.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section, 
     including regulations for the treatment of United States 
     shareholders owning stock of a specified 10 percent owned 
     foreign corporation through a partnership.''.
       (b) Application of Holding Period Requirement.--Subsection 
     (c) of section 246 is amended--
       (1) by striking ``or 245'' in paragraph (1) and inserting 
     ``245, or 245A'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Special rules for foreign source portion of dividends 
     received from specified 10-percent owned foreign 
     corporations.--
       ``(A) 1-year holding period requirement.--For purposes of 
     section 245A--
       ``(i) paragraph (1)(A) shall be applied--

       ``(I) by substituting `365 days' for `45 days' each place 
     it appears, and
       ``(II) by substituting `731-day period' for `91-day 
     period', and

       ``(ii) paragraph (2) shall not apply.
       ``(B) Status must be maintained during holding period.--For 
     purposes of applying paragraph (1) with respect to section 
     245A, the taxpayer shall be treated as holding the stock 
     referred to in paragraph (1) for any period only if--
       ``(i) the specified 10-percent owned foreign corporation 
     referred to in section 245A(a) is a specified 10-percent 
     owned foreign corporation at all times during such period, 
     and

[[Page S7454]]

       ``(ii) the taxpayer is a United States shareholder with 
     respect to such specified 10-percent owned foreign 
     corporation at all times during such period.''.
       (c) Application of Rules Generally Applicable to Deductions 
     for Dividends Received.--
       (1) Treatment of dividends from certain corporations.--
     Paragraph (1) of section 246(a) is amended by striking ``and 
     245'' and inserting ``245, and 245A''.
       (2) Assets generating tax-exempt portion of dividend not 
     taken into account in allocating and apportioning deductible 
     expenses.--Paragraph (3) of section 864(e) is amended by 
     striking ``or 245(a)'' and inserting ``, 245(a), or 245A''.
       (3) Coordination with section 1059.--Subparagraph (B) of 
     section 1059(b)(2) is amended by striking ``or 245'' and 
     inserting ``245, or 245A''.
       (d) Coordination With Foreign Tax Credit Limitation.--
     Subsection (b) of section 904 is amended by adding at the end 
     the following new paragraph:
       ``(5) Treatment of dividends for which deduction is allowed 
     under section 245a.--For purposes of subsection (a), in the 
     case of a domestic corporation which is a United States 
     shareholder with respect to a specified 10-percent owned 
     foreign corporation, such domestic corporation's taxable 
     income from sources without the United States shall be 
     determined without regard to--
       ``(A) the foreign-source portion of any dividend received 
     from such foreign corporation, and
       ``(B) any deductions properly allocable to such portion.

     Any term which is used in section 245A and in this paragraph 
     shall have the same meaning for purposes of this paragraph as 
     when used in such section.''.
       (e) Conforming Amendments.--
       (1) Subsection (b) of section 951 is amended by striking 
     ``subpart'' and inserting ``title''.
       (2) Subsection (a) of section 957 is amended by striking 
     ``subpart'' in the matter preceding paragraph (1) and 
     inserting ``title''.
       (3) The table of sections for part VIII of subchapter B of 
     chapter 1 is amended by inserting after the item relating to 
     section 245 the following new item:

``Sec. 245A. Dividends received by domestic corporations from certain 
              foreign corporations.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14102. SPECIAL RULES RELATING TO SALES OR TRANSFERS 
                   INVOLVING SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       (a) Sales by United States Persons of Stock.--Section 1248 
     is amended by redesignating subsection (j) as subsection (k) 
     and by inserting after subsection (i) the following new 
     subsection:
       ``(j) Coordination With Dividends Received Deduction.--In 
     the case of the sale or exchange by a domestic corporation of 
     stock in a foreign corporation held for 1 year or more, any 
     amount received by the domestic corporation which is treated 
     as a dividend by reason of this section shall be treated as a 
     dividend for purposes of applying section 245A.''.
       (b) Basis in Specified 10-percent Owned Foreign Corporation 
     Reduced by Nontaxed Portion of Dividend for Purposes of 
     Determining Loss.--
       (1) In general.--Section 961 is amended by adding at the 
     end the following new subsection:
       ``(d) Basis in Specified 10-percent Owned Foreign 
     Corporation Reduced by Nontaxed Portion of Dividend for 
     Purposes of Determining Loss.--If a domestic corporation 
     receives a dividend from a specified 10-percent owned foreign 
     corporation (as defined in section 245A) in any taxable year, 
     solely for purposes of determining loss on any disposition of 
     stock of such foreign corporation in such taxable year or any 
     subsequent taxable year, the basis of such domestic 
     corporation in such stock shall be reduced (but not below 
     zero) by the amount of any deduction allowable to such 
     domestic corporation under section 245A with respect to such 
     stock.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to dividends received in taxable years beginning 
     after December 31, 2017.
       (c) Sale by a CFC of a Lower Tier CFC.--Section 964(e) is 
     amended by adding at the end the following new paragraph:
       ``(4) Coordination with dividends received deduction.--
       ``(A) In general.--If, for any taxable year of a controlled 
     foreign corporation beginning after December 31, 2017, any 
     amount is treated as a dividend under paragraph (1) by reason 
     of a sale or exchange by the controlled foreign corporation 
     of stock in another foreign corporation held for 1 year or 
     more, then, notwithstanding any other provision of this 
     title--
       ``(i) the foreign-source portion of such dividend shall be 
     treated for purposes of section 951(a)(1)(A) as subpart F 
     income of the selling controlled foreign corporation for such 
     taxable year,
       ``(ii) a United States shareholder with respect to the 
     selling controlled foreign corporation shall include in gross 
     income for the taxable year of the shareholder with or within 
     which such taxable year of the controlled foreign corporation 
     ends an amount equal to the shareholder's pro rata share 
     (determined in the same manner as under section 951(a)(2)) of 
     the amount treated as subpart F income under clause (i), and
       ``(iii) the deduction under section 245A(a) shall be 
     allowable to the United States shareholder with respect to 
     the subpart F income included in gross income under clause 
     (ii) in the same manner as if such subpart F income were a 
     dividend received by the shareholder from the selling 
     controlled foreign corporation.
       ``(B) Effect of loss on earnings and profits.--For purposes 
     of this title, in the case of a sale or exchange by a 
     controlled foreign corporation of stock in another foreign 
     corporation in a taxable year of the selling controlled 
     foreign corporation beginning after December 31, 2017, to 
     which this paragraph would apply if gain were recognized, the 
     earnings and profits of the selling controlled foreign 
     corporation shall not be reduced by reason of any loss from 
     such sale or exchange.
       ``(C) Foreign-source portion.--For purposes of this 
     paragraph, the foreign-source portion of any amount treated 
     as a dividend under paragraph (1) shall be determined in the 
     same manner as under section 245A(c).''.
       (d) Treatment of Foreign Branch Losses Transferred to 
     Specified 10-percent Owned Foreign Corporations.--
       (1) In general.--Part II of subchapter B of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 91. CERTAIN FOREIGN BRANCH LOSSES TRANSFERRED TO 
                   SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--If a domestic corporation transfers 
     substantially all of the assets of a foreign branch (within 
     the meaning of section 367(a)(3)(C), as in effect before the 
     date of the enactment of the Tax Cuts and Jobs Act) to a 
     specified 10-percent owned foreign corporation (as defined in 
     section 245A) with respect to which it is a United States 
     shareholder after such transfer, such domestic corporation 
     shall include in gross income for the taxable year which 
     includes such transfer an amount equal to the transferred 
     loss amount with respect to such transfer.
       ``(b) Limitation and Carryforward Based on Foreign-source 
     Dividends Received.--
       ``(1) In general.--The amount included in the gross income 
     of the taxpayer under subsection (a) for any taxable year 
     shall not exceed the amount allowed as a deduction under 
     section 245A for such taxable year (taking into account 
     dividends received from all specified 10-percent owned 
     foreign corporations with respect to which the taxpayer is a 
     United States shareholder).
       ``(2) Amounts not included carried forward.--Any amount not 
     included in gross income for any taxable year by reason of 
     paragraph (1) shall, subject to the application of paragraph 
     (1) to the succeeding taxable year, be included in gross 
     income for the succeeding taxable year.
       ``(c) Transferred Loss Amount.--For purposes of this 
     section, the term `transferred loss amount' means, with 
     respect to any transfer of substantially all of the assets of 
     a foreign branch, the excess (if any) of--
       ``(1) the sum of losses--
       ``(A) which were incurred by the foreign branch after 
     December 31, 2017, and before the transfer, and
       ``(B) with respect to which a deduction was allowed to the 
     taxpayer, over
       ``(2) the sum of--
       ``(A) any taxable income of such branch for a taxable year 
     after the taxable year in which the loss was incurred and 
     through the close of the taxable year of the transfer, and
       ``(B) any amount which is recognized under section 
     904(f)(3) on account of the transfer.
       ``(d) Reduction for Recognized Gains.--The transferred loss 
     amount shall be reduced (but not below zero) by the amount of 
     gain recognized by the taxpayer on account of the transfer 
     (other than amounts taken into account under subsection 
     (c)(2)(B)).
       ``(e) Source of Income.--Amounts included in gross income 
     under this section shall be treated as derived from sources 
     within the United States.
       ``(f) Basis Adjustments.--Consistent with such regulations 
     or other guidance as the Secretary shall prescribe, proper 
     adjustments shall be made in the adjusted basis of the 
     taxpayer's stock in the specified 10-percent owned foreign 
     corporation to which the transfer is made, and in the 
     transferee's adjusted basis in the property transferred, to 
     reflect amounts included in gross income under this 
     section.''.
       (2) Clerical amendment.--The table of sections for part II 
     of subchapter B of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 91. Certain foreign branch losses transferred to specified 10-
              percent owned foreign corporations.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to transfers after December 31, 2017.
       (e) Repeal of Active Trade or Business Exception Under 
     Section 367.--
       (1) In general.--Section 367(a) is amended by striking 
     paragraph (3) and redesignating paragraphs (4), (5), and (6) 
     as paragraphs (3), (4), and (5), respectively
       (2) Conforming amendments.--Section 367(a)(4), as 
     redesignated by paragraph (1), is amended--
       (A) by striking ``Paragraphs (2) and (3)'' and inserting 
     ``Paragraph (2)'', and
       (B) by striking ``Paragraphs (2) and (3)'' in the heading 
     and inserting ``Paragraph (2)''.

[[Page S7455]]

       (3) Effective date.--The amendments made by this subsection 
     shall apply to transfers after December 31, 2017.

     SEC. 14103. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
                   TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
                   TAXATION.

       (a) In General.--Section 965 is amended to read as follows:

     ``SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
                   TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
                   TAXATION.

       ``(a) Treatment of Deferred Foreign Income as Subpart F 
     Income.--In the case of the last taxable year of a deferred 
     income corporation which begins before January 1, 2018, the 
     subpart F income of such foreign corporation (as otherwise 
     determined for such taxable year under section 952) shall be 
     increased by the greater of--
       ``(1) the accumulated post-1986 deferred foreign income of 
     such corporation determined as of November 9, 2017, or
       ``(2) the accumulated post-1986 deferred foreign income of 
     such corporation determined as of December 31, 2017.
       ``(b) Reduction in Amounts Included in Gross Income of 
     United States Shareholders of Specified Foreign Corporations 
     With Deficits in Earnings and Profits.--
       ``(1) In general.--In the case of a taxpayer which is a 
     United States shareholder with respect to at least one 
     deferred foreign income corporation and at least one E&P 
     deficit foreign corporation, the amount which would (but for 
     this subsection) be taken into account under section 
     951(a)(1) by reason of subsection (a) as such United States 
     shareholder's pro rata share of the subpart F income of each 
     deferred foreign income corporation shall be reduced by the 
     amount of such United States shareholder's aggregate foreign 
     E&P deficit which is allocated under paragraph (2) to such 
     deferred foreign income corporation.
       ``(2) Allocation of aggregate foreign e&p deficit.--The 
     aggregate foreign E&P deficit of any United States 
     shareholder shall be allocated among the deferred foreign 
     income corporations of such United States shareholder in an 
     amount which bears the same proportion to such aggregate as--
       ``(A) such United States shareholder's pro rata share of 
     the accumulated post-1986 deferred foreign income of each 
     such deferred foreign income corporation, bears to
       ``(B) the aggregate of such United States shareholder's pro 
     rata share of the accumulated post-1986 deferred foreign 
     income of all deferred foreign income corporations of such 
     United States shareholder.
       ``(3) Definitions related to e&p deficits.--For purposes of 
     this subsection--
       ``(A) Aggregate foreign e&p deficit.--
       ``(i) In general.--The term `aggregate foreign E&P deficit' 
     means, with respect to any United States shareholder, the 
     lesser of--

       ``(I) the aggregate of such shareholder's pro rata shares 
     of the specified E&P deficits of the E&P deficit foreign 
     corporations of such shareholder, or
       ``(II) the amount determined under paragraph (2)(B).

       ``(ii) Allocation of deficit.--If the amount described in 
     clause (i)(II) is less than the amount described in clause 
     (i)(I), then the shareholder shall designate, in such form 
     and manner as the Secretary determines--

       ``(I) the amount of the specified E&P deficit which is to 
     be taken into account for each E&P deficit corporation with 
     respect to the taxpayer, and
       ``(II) in the case of an E&P deficit corporation which has 
     a qualified deficit (as defined in section 952), the portion 
     (if any) of the deficit taken into account under subclause 
     (I) which is attributable to a qualified deficit, including 
     the qualified activities to which such portion is 
     attributable.

       ``(B) E&p deficit foreign corporation.--The term `E&P 
     deficit foreign corporation' means, with respect to any 
     taxpayer, any specified foreign corporation with respect to 
     which such taxpayer is a United States shareholder, if--
       ``(i) such specified foreign corporation has a deficit in 
     post-1986 earnings and profits, and
       ``(ii) as of November 9, 2017--

       ``(I) such corporation was a specified foreign corporation, 
     and
       ``(II) such taxpayer was a United States shareholder of 
     such corporation.

       ``(C) Specified e&p deficit.--The term `specified E&P 
     deficit' means, with respect to any E&P deficit foreign 
     corporation, the amount of the deficit referred to in 
     subparagraph (B).
       ``(4) Treatment of earnings and profits in future years.--
       ``(A) Reduced earnings and profits treated as previously 
     taxed income when distributed.--For purposes of applying 
     section 959 in any taxable year beginning after December 31, 
     2017, with respect to any United States shareholder of a 
     deferred foreign income corporation, an amount equal to such 
     shareholder's reduction under paragraph (1) which is 
     allocated to such deferred foreign income corporation under 
     this subsection shall be treated as an amount which was 
     included in the gross income of such United States 
     shareholder under section 951(a).
       ``(B) E&p deficits.--For purposes of this title, a United 
     States shareholder's pro rata share of the earnings and 
     profits of any specified E&P deficit foreign corporation 
     under this subsection shall be increased by the amount of the 
     specified E&P deficit of such corporation taken into account 
     by such shareholder under paragraph (1), and, for purposes of 
     section 952, such increase shall be attributable to the same 
     activity to which the deficit so taken into account was 
     attributable.
       ``(c) Application of Participation Exemption to Included 
     Income.--
       ``(1) In general.--In the case of a United States 
     shareholder of a deferred foreign income corporation, there 
     shall be allowed as a deduction for the taxable year in which 
     an amount is included in the gross income of such United 
     States shareholder under section 951(a)(1) by reason of this 
     section an amount equal to the sum of--
       ``(A) 85.7 percent of the excess (if any) of--
       ``(i) the amount so included as gross income, over
       ``(ii) the amount of such United States shareholder's 
     aggregate foreign cash position, plus
       ``(B) 71.4 percent of so much of the amount described in 
     subparagraph (A)(ii) as does not exceed the amount described 
     in subparagraph (A)(i).
       ``(2) Aggregate foreign cash position.--For purposes of 
     this subsection--
       ``(A) In general.--The term `aggregate foreign cash 
     position' means, with respect to any United States 
     shareholder, the greater of--
       ``(i) the aggregate of such United States shareholder's pro 
     rata share of the cash position of each specified foreign 
     corporation of such United States shareholder determined as 
     of the close of the last taxable year of such specified 
     foreign corporation which begins before January 1, 2018, or
       ``(ii) one half of the sum of--

       ``(I) the aggregate described in clause (i) determined as 
     of the close of the last taxable year of each such specified 
     foreign corporation which ends before November 9, 2017, plus
       ``(II) the aggregate described in clause (i) determined as 
     of the close of the taxable year of each such specified 
     foreign corporation which precedes the taxable year referred 
     to in subclause (I).

       ``(B) Cash position.--For purposes of this paragraph, the 
     cash position of any specified foreign corporation is the sum 
     of--
       ``(i) cash and foreign currency held by such foreign 
     corporation,
       ``(ii) the net accounts receivable of such foreign 
     corporation, plus
       ``(iii) the fair market value of the following assets held 
     by such corporation:

       ``(I) Personal property which is of a type that is actively 
     traded and for which there is an established financial market 
     (other than stock in the specified foreign corporation).
       ``(II) Commercial paper, certificates of deposit, the 
     securities of the Federal government and of any State or 
     foreign government.
       ``(III) Any obligation with a term of less than one year.
       ``(IV) Any asset which the Secretary identifies as being 
     economically equivalent to any asset described in this 
     subparagraph.

       ``(C) Net accounts receivable.--For purposes of this 
     paragraph, the term `net accounts receivable' means, with 
     respect to any specified foreign corporation, the excess (if 
     any) of--
       ``(i) such corporation's accounts receivable, over
       ``(ii) such corporation's accounts payable (determined 
     consistent with the rules of section 461).
       ``(D) Prevention of double counting.--Cash positions of a 
     specified foreign corporation described in clause (ii) or 
     (iii)(III) of subparagraph (B) shall not be taken into 
     account by a United States shareholder under subparagraph (A) 
     to the extent that such United States shareholder 
     demonstrates to the satisfaction of the Secretary that such 
     amount is so taken into account by such United States 
     shareholder with respect to another specified foreign 
     corporation.
       ``(E) Cash positions of certain non-corporate entities 
     taken into account.--An entity shall be treated as a 
     specified foreign corporation of a United States shareholder 
     for purposes of determining such United States shareholder's 
     aggregate foreign cash position if--
       ``(i) such entity is a foreign entity which would be a 
     specified foreign corporation of such United States 
     shareholder if such entity were a corporation, or
       ``(ii) any interest in such entity is held by a specified 
     foreign corporation of such United States shareholder 
     (determined after application of clause (i)) and such entity 
     would be a specified foreign corporation of such United 
     States shareholder if such entity were a foreign corporation.
       ``(F) Anti-abuse.--If the Secretary determines that a 
     principal purpose of any transaction was to reduce the 
     aggregate foreign cash position taken into account under this 
     subsection, such transaction shall be disregarded for 
     purposes of this subsection.
       ``(d) Deferred Foreign Income Corporation; Accumulated 
     Post-1986 Deferred Foreign Income.--For purposes of this 
     section--
       ``(1) Deferred foreign income corporation.--The term 
     `deferred foreign income corporation' means, with respect to 
     any United States shareholder, any specified foreign 
     corporation of such United States shareholder which has 
     accumulated post-1986 deferred foreign income (as of the 
     close of the taxable year referred to in subsection (a)) 
     greater than zero.
       ``(2) Accumulated post-1986 deferred foreign income.--The 
     term `accumulated post-1986 deferred foreign income' means 
     the post-

[[Page S7456]]

     1986 earnings and profits except to the extent such 
     earnings--
       ``(A) are attributable to income of the specified foreign 
     corporation which is effectively connected with the conduct 
     of a trade or business within the United States and subject 
     to tax under this chapter, or
       ``(B) in the case of a controlled foreign corporation, if 
     distributed, would be excluded from the gross income of a 
     United States shareholder under section 959.
     To the extent provided in regulations or other guidance 
     prescribed by the Secretary, in the case of any controlled 
     foreign corporation which has shareholders which are not 
     United States shareholders, accumulated post-1986 deferred 
     foreign income shall be appropriately reduced by amounts 
     which would be described in subparagraph (B) if such 
     shareholders were United States shareholders.
       ``(3) Post-1986 earnings and profits.--The term `post-1986 
     earnings and profits' means the earnings and profits of the 
     foreign corporation (computed in accordance with sections 
     964(a) and 986, and by only taking into account periods when 
     the foreign corporation was a specified foreign corporation) 
     accumulated in taxable years beginning after December 31, 
     1986, and determined--
       ``(A) as of the date of the taxable year referred to in 
     paragraph (1) or (2) of subsection (a), whichever is 
     applicable with respect to such foreign corporation, and
       ``(B) without diminution by reason of dividends distributed 
     during the taxable year ending with or including such date.
       ``(e) Specified Foreign Corporation.--
       ``(1) In general.--For purposes of this section, the term 
     `specified foreign corporation' means--
       ``(A) any controlled foreign corporation, and
       ``(B) any section 902 corporation (as defined in section 
     909(d)(5) as in effect before the date of the enactment of 
     the Tax Cuts and Jobs Act).
       ``(2) Application to section 902 corporations.--For 
     purposes of sections 951 and 961, a section 902 corporation 
     (as so defined) shall be treated as a controlled foreign 
     corporation solely for purposes of taking into account the 
     subpart F income of such corporation under subsection (a) 
     (and for purposes of applying subsection (e)).
       ``(3) Exclusion of passive foreign investment companies.--
     Such term shall not include any corporation which is a 
     passive foreign investment company (as defined in section 
     1297) with respect to the shareholder and which is not a 
     controlled foreign corporation.
       ``(f) Determinations of Pro Rata Share.--For purposes of 
     this section, the determination of any United States 
     shareholder's pro rata share of any amount with respect to 
     any specified foreign corporation shall be determined under 
     rules similar to the rules of section 951(a)(2) by treating 
     such amount in the same manner as subpart F income (and by 
     treating such specified foreign corporation as a controlled 
     foreign corporation).
       ``(g) Disallowance of Foreign Tax Credit, etc.--
       ``(1) In general.--No credit shall be allowed under section 
     901 for the applicable percentage of any taxes paid or 
     accrued (or treated as paid or accrued) with respect to any 
     amount for which a deduction is allowed under this section.
       ``(2) Applicable percentage.--For purposes of this 
     subsection, the term `applicable percentage' means the amount 
     (expressed as a percentage) equal to the sum of--
       ``(A) 0.857 multiplied by the ratio of--
       ``(i) the excess to which subsection (c)(1)(A) applies, 
     divided by
       ``(ii) the sum of such excess plus the amount to which 
     subsection (c)(1)(B) applies, plus
       ``(B) 0.714 multiplied by the ratio of--
       ``(i) the amount to which subsection (c)(1)(B) applies, 
     divided by
       ``(ii) the sum described in subparagraph (A)(ii).
       ``(3) Denial of deduction.--No deduction shall be allowed 
     under this chapter for any tax for which credit is not 
     allowable under section 901 by reason of paragraph (1) 
     (determined by treating the taxpayer as having elected the 
     benefits of subpart A of part III of subchapter N).
       ``(4) Coordination with section 78.--Section 78 shall not 
     apply to any tax for which credit is not allowable under 
     section 901 by reason of paragraph (1).
       ``(h) Election to Pay Liability in Installments.--
       ``(1) In general.--In the case of a United States 
     shareholder of a deferred foreign income corporation, such 
     United States shareholder may elect to pay the net tax 
     liability under this section in 8 installments of the 
     following amounts:
       ``(A) 8 percent of the net tax liability in the case of 
     each of the first 5 of such installments,
       ``(B) 15 percent of the net tax liability in the case of 
     the 6th such installment,
       ``(C) 20 percent of the net tax liability in the case of 
     the 7th such installment, and
       ``(D) 25 percent of the net tax liability in the case of 
     the 8th such installment.
       ``(2) Date for payment of installments.--If an election is 
     made under paragraph (1), the first installment shall be paid 
     on the due date (determined without regard to any extension 
     of time for filing the return) for the return of tax for the 
     taxable year described in subsection (a) and each succeeding 
     installment shall be paid on the due date (as so determined) 
     for the return of tax for the taxable year following the 
     taxable year with respect to which the preceding installment 
     was made.
       ``(3) Acceleration of payment.--If there is an addition to 
     tax for failure to timely pay any installment required under 
     this subsection, a liquidation or sale of substantially all 
     the assets of the taxpayer (including in a title 11 or 
     similar case), a cessation of business by the taxpayer, or 
     any similar circumstance, then the unpaid portion of all 
     remaining installments shall be due on the date of such event 
     (or in the case of a title 11 or similar case, the day before 
     the petition is filed). The preceding sentence shall not 
     apply to the sale of substantially all the assets of a 
     taxpayer to a buyer if such buyer enters into an agreement 
     with the Secretary under which such buyer is liable for the 
     remaining installments due under this subsection in the same 
     manner as if such buyer were the taxpayer.
       ``(4) Proration of deficiency to installments.--If an 
     election is made under paragraph (1) to pay the net tax 
     liability under this section in installments and a deficiency 
     has been assessed with respect to such net tax liability, the 
     deficiency shall be prorated to the installments payable 
     under paragraph (1). The part of the deficiency so prorated 
     to any installment the date for payment of which has not 
     arrived shall be collected at the same time as, and as a part 
     of, such installment. The part of the deficiency so prorated 
     to any installment the date for payment of which has arrived 
     shall be paid upon notice and demand from the Secretary. This 
     subsection shall not apply if the deficiency is due to 
     negligence, to intentional disregard of rules and 
     regulations, or to fraud with intent to evade tax.
       ``(5) Election.--Any election under paragraph (1) shall be 
     made not later than the due date for the return of tax for 
     the taxable year described in subsection (a) and shall be 
     made in such manner as the Secretary shall provide.
       ``(6) Net tax liability under this section.--For purposes 
     of this subsection--
       ``(A) In general.--The net tax liability under this section 
     with respect to any United States shareholder is the excess 
     (if any) of--
       ``(i) such taxpayer's net income tax for the taxable year 
     in which an amount is included in the gross income of such 
     United States shareholder under section 951(a)(1) by reason 
     of this section, over
       ``(ii) such taxpayer's net income tax for such taxable year 
     determined--

       ``(I) without regard to this section, and
       ``(II) without regard to any income or deduction properly 
     attributable to a dividend received by such United States 
     shareholder from any deferred foreign income corporation.

       ``(B) Net income tax.--The term `net income tax' means the 
     regular tax liability reduced by the credits allowed under 
     subparts A, B, and D of part IV of subchapter A.
       ``(i) Special Rules for S Corporation Shareholders.--
       ``(1) In general.--In the case of any S corporation which 
     is a United States shareholder of a deferred foreign income 
     corporation, each shareholder of such S corporation may elect 
     to defer payment of such shareholder's net tax liability 
     under this section with respect to such S corporation until 
     the shareholder's taxable year which includes the triggering 
     event with respect to such liability. Any net tax liability 
     payment of which is deferred under the preceding sentence 
     shall be assessed on the return of tax as an addition to tax 
     in the shareholder's taxable year which includes such 
     triggering event.
       ``(2) Triggering event.--
       ``(A) In general.--In the case of any shareholder's net tax 
     liability under this section with respect to any S 
     corporation, the triggering event with respect to such 
     liability is whichever of the following occurs first:
       ``(i) Such corporation ceases to be an S corporation 
     (determined as of the first day of the first taxable year 
     that such corporation is not an S corporation).
       ``(ii) A liquidation or sale of substantially all the 
     assets of such S corporation (including in a title 11 or 
     similar case), a cessation of business by such S corporation, 
     such S corporation ceases to exist, or any similar 
     circumstance.
       ``(iii) A transfer of any share of stock in such S 
     corporation by the taxpayer (including by reason of death, or 
     otherwise).
       ``(B) Partial transfers of stock.--In the case of a 
     transfer of less than all of the taxpayer's shares of stock 
     in the S corporation, such transfer shall only be a 
     triggering event with respect to so much of the taxpayer's 
     net tax liability under this section with respect to such S 
     corporation as is properly allocable to such stock.
       ``(C) Transfer of liability.--A transfer described in 
     clause (iii) of subparagraph (A) shall not be treated as a 
     triggering event if the transferee enters into an agreement 
     with the Secretary under which such transferee is liable for 
     net tax liability with respect to such stock in the same 
     manner as if such transferee were the taxpayer.
       ``(3) Net tax liability.--A shareholder's net tax liability 
     under this section with respect to any S corporation is the 
     net tax liability under this section which would be 
     determined under subsection (h)(6) if the only subpart F 
     income taken into account by such shareholder by reason of 
     this section were allocations from such S corporation.

[[Page S7457]]

       ``(4) Election to pay deferred liability in installments.--
     In the case of a taxpayer which elects to defer payment under 
     paragraph (1)--
       ``(A) subsection (h) shall be applied separately with 
     respect to the liability to which such election applies,
       ``(B) an election under subsection (h) with respect to such 
     liability shall be treated as timely made if made not later 
     than the due date for the return of tax for the taxable year 
     in which the triggering event with respect to such liability 
     occurs,
       ``(C) the first installment under subsection (h) with 
     respect to such liability shall be paid not later than such 
     due date (but determined without regard to any extension of 
     time for filing the return), and
       ``(D) if the triggering event with respect to any net tax 
     liability is described in paragraph (2)(A)(ii), an election 
     under subsection (h) with respect to such liability may be 
     made only with the consent of the Secretary.
       ``(5) Joint and several liability of s corporation.--If any 
     shareholder of an S corporation elects to defer payment under 
     paragraph (1), such S corporation shall be jointly and 
     severally liable for such payment and any penalty, addition 
     to tax, or additional amount attributable thereto.
       ``(6) Extension of limitation on collection.--Any 
     limitation on the time period for the collection of a 
     liability deferred under this subsection shall not be treated 
     as beginning before the date of the triggering event with 
     respect to such liability.
       ``(7) Annual reporting of net tax liability.--
       ``(A) In general.--Any shareholder of an S corporation 
     which makes an election under paragraph (1) shall report the 
     amount of such shareholder's deferred net tax liability on 
     such shareholder's return of tax for the taxable year for 
     which such election is made and on the return of tax for each 
     taxable year thereafter until such amount has been fully 
     assessed on such returns.
       ``(B) Deferred net tax liability.--For purposes of this 
     paragraph, the term `deferred net tax liability' means, with 
     respect to any taxable year, the amount of net tax liability 
     payment of which has been deferred under paragraph (1) and 
     which has not been assessed on a return of tax for any prior 
     taxable year.
       ``(C) Failure to report.--In the case of any failure to 
     report any amount required to be reported under subparagraph 
     (A) with respect to any taxable year before the due date for 
     the return of tax for such taxable year, there shall be 
     assessed on such return as an addition to tax 5 percent of 
     such amount.
       ``(8) Election.--Any election under paragraph (1)--
       ``(A) shall be made by the shareholder of the S corporation 
     not later than the due date for such shareholder's return of 
     tax for the taxable year which includes the close of the 
     taxable year of such S corporation in which the amount 
     described in subsection (a) is taken into account, and
       ``(B) shall be made in such manner as the Secretary shall 
     provide.
       ``(j) Reporting by S Corporation.--Each S corporation which 
     is a United States shareholder of a specified foreign 
     corporation shall report in its return of tax under section 
     6037(a) the amount includible in its gross income for such 
     taxable year by reason of this section and the amount of the 
     deduction allowable by subsection (b). Any copy provided to a 
     shareholder under section 6037(b) shall include a statement 
     of such shareholder's pro rata share of such amounts.
       ``(k) Extension of Limitation on Assessment.--
     Notwithstanding section 6501, the limitation on the time 
     period for the assessment of the net tax liability under this 
     section (as defined in subsection (h)(6)) shall not expire 
     before the date that is 6 years after the return for the 
     taxable year described in such subsection was filed.
       ``(l) Recapture for Expatriated Entities.--
       ``(1) In general.--If a deduction is allowed under 
     subsection (c) to a United States shareholder and such 
     shareholder first becomes an expatriated entity at any time 
     during the 10-year period beginning on the date of the 
     enactment of the Tax Cuts and Jobs Act, then--
       ``(A) the tax imposed by this chapter shall be increased 
     for the first taxable year in which such taxpayer becomes an 
     expatriated entity by an amount equal to 35 percent of the 
     amount of the deduction allowed to the specified foreign 
     corporation under subsection (c), and
       ``(B) no credits shall be allowed against the increase in 
     tax under subparagraph (A).
       ``(2) Expatriated entity.--For purposes of this subsection, 
     the term `expatriated entity' has the same meaning given such 
     term under section 7874(a)(2), except that such term shall 
     not include an entity if the surrogate foreign corporation 
     with respect to the entity is treated as a domestic 
     corporation under section 7874(b).
       ``(m) Special Rules for United States Shareholders Which 
     Are Real Estate Investment Trusts.--
       ``(1) In general.--If a real estate investment trust is a 
     United States shareholder in 1 or more deferred foreign 
     income corporations--
       ``(A) any amount required to be taken into account under 
     section 951(a)(1) by reason of this section shall not be 
     taken into account as gross income of the real estate 
     investment trust for purposes of applying paragraphs (2) and 
     (3) of section 856(c) to any taxable year for which such 
     amount is taken into account under section 951(a)(1), and
       ``(B) if the real estate investment trust elects the 
     application of this subparagraph, notwithstanding subsection 
     (a), any amount required to be taken into account under 
     section 951(a)(1) by reason of this section shall, in lieu of 
     the taxable year in which it would otherwise be included in 
     gross income (for purposes of the computation of real estate 
     investment trust taxable income under section 857(b)), be 
     included in gross income as follows:
       ``(i) 8 percent of such amount in the case of each of the 
     taxable years in the 5-taxable year period beginning with the 
     taxable year in which such amount would otherwise be 
     included.
       ``(ii) 15 percent of such amount in the case of the 1st 
     taxable year following such period.
       ``(iii) 20 percent of such amount in the case of the 2nd 
     taxable year following such period.
       ``(iv) 25 percent of such amount in the case of the 3rd 
     taxable year following such period.
       ``(2) Rules for trusts electing deferred inclusion.--
       ``(A) Election.--Any election under paragraph (1)(B) shall 
     be made not later than the due date for the first taxable 
     year in the 5-taxable year period described in clause (i) of 
     paragraph (1)(B) and shall be made in such manner as the 
     Secretary shall provide.
       ``(B) Special rules.--If an election under paragraph (1)(B) 
     is in effect with respect to any real estate investment 
     trust, the following rules shall apply:
       ``(i) Application of participation exemption.--For purposes 
     of subsection (c)(1)--

       ``(I) the aggregate amount to which subparagraph (A) or (B) 
     of subsection (c)(1) applies shall be determined without 
     regard to the election,
       ``(II) each such aggregate amount shall be allocated to 
     each taxable year described in paragraph (1)(B) in the same 
     proportion as the amount included in the gross income of such 
     United States shareholder under section 951(a)(1) by reason 
     of this section is allocated to each such taxable year.
       ``(III) No installment payments.--The real estate 
     investment trust may not make an election under subsection 
     (g) for any taxable year described in paragraph (1)(B).

       ``(ii) Acceleration of inclusion.--If there is a 
     liquidation or sale of substantially all the assets of the 
     real estate investment trust (including in a title 11 or 
     similar case), a cessation of business by such trust, or any 
     similar circumstance, then any amount not yet included in 
     gross income under paragraph (1)(B) shall be included in 
     gross income as of the day before the date of the event and 
     the unpaid portion of any tax liability with respect to such 
     inclusion shall be due on the date of such event (or in the 
     case of a title 11 or similar case, the day before the 
     petition is filed).
       ``(n) Election Not to Apply Net Operating Loss Deduction.--
       ``(1) In general.--If a United States shareholder of a 
     deferred foreign income corporation elects the application of 
     this subsection for the taxable year described in subsection 
     (a), then the amount described in paragraph (2) shall not be 
     taken into account--
       ``(A) in determining the amount of the net operating loss 
     deduction under section 172 of such shareholder for such 
     taxable year, or
       ``(B) in determining the amount of taxable income for such 
     taxable year which may be reduced by net operating loss 
     carryovers or carrybacks to such taxable year under section 
     172.
       ``(2) Amount described.--The amount described in this 
     paragraph is the sum of--
       ``(A) the amount required to be taken into account under 
     section 951(a)(1) by reason of this section (determined after 
     the application of subsection (c)), plus
       ``(B) in the case of a domestic corporation which chooses 
     to have the benefits of subpart A of part III of subchapter N 
     for the taxable year, the taxes deemed to be paid by such 
     corporation under subsections (a) and (b) of section 960 for 
     such taxable year with respect to the amount described in 
     subparagraph (A) which are treated as a dividends under 
     section 78.
       ``(3) Election.--Any election under this subsection shall 
     be made not later than the due date (including extensions) 
     for filing the return of tax for the taxable year and shall 
     be made in such manner as the Secretary shall prescribe.
       ``(o) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section or to 
     prevent the avoidance of the purposes of this section, 
     including through a reduction in earnings and profits through 
     changes in entity classification, changes in accounting 
     methods, or otherwise.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     F of part III of subchapter N of chapter 1 is amended by 
     striking the item relating to section 965 and inserting the 
     following:

``Sec. 965. Treatment of deferred foreign income upon transition to 
              participation exemption system of taxation.''.

[[Page S7458]]

  


         Subpart B--Rules Related to Passive and Mobile Income

  CHAPTER 1--TAXATION OF FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL 
                      INTANGIBLE LOW-TAXED INCOME

     SEC. 14201. CURRENT YEAR INCLUSION OF GLOBAL INTANGIBLE LOW-
                   TAXED INCOME BY UNITED STATES SHAREHOLDERS.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 is amended by inserting after section 951 the 
     following new section:

     ``SEC. 951A. GLOBAL INTANGIBLE LOW-TAXED INCOME INCLUDED IN 
                   GROSS INCOME OF UNITED STATES SHAREHOLDERS.

       ``(a) In General.--Each person who is a United States 
     shareholder of any controlled foreign corporation for any 
     taxable year of such United States shareholder shall include 
     in gross income such shareholder's global intangible low-
     taxed income for such taxable year.
       ``(b) Global Intangible Low-taxed Income.--For purposes of 
     this section--
       ``(1) In general.--The term `global intangible low-taxed 
     income' means, with respect to any United States shareholder 
     for any taxable year of such United States shareholder, the 
     excess (if any) of--
       ``(A) such shareholder's net CFC tested income for such 
     taxable year, over
       ``(B) such shareholder's net deemed tangible income return 
     for such taxable year.
       ``(2) Net deemed tangible income return.--The term `net 
     deemed tangible income return' means, with respect to any 
     United States shareholder for any taxable year, an amount 
     equal to 10 percent of the aggregate of such shareholder's 
     pro rata share of the qualified business asset investment of 
     each controlled foreign corporation with respect to which 
     such shareholder is a United States shareholder for such 
     taxable year (determined for each taxable year of each such 
     controlled foreign corporation which ends in or with such 
     taxable year of such United States shareholder).
       ``(c) Net CFC Tested Income.--For purposes of this 
     section--
       ``(1) In general.--The term `net CFC tested income' means, 
     with respect to any United States shareholder for any taxable 
     year of such United States shareholder, the excess (if any) 
     of--
       ``(A) the aggregate of such shareholder's pro rata share of 
     the tested income of each controlled foreign corporation with 
     respect to which such shareholder is a United States 
     shareholder for such taxable year of such United States 
     shareholder (determined for each taxable year of such 
     controlled foreign corporation which ends in or with such 
     taxable year of such United States shareholder), over
       ``(B) the aggregate of such shareholder's pro rata share of 
     the tested loss of each controlled foreign corporation with 
     respect to which such shareholder is a United States 
     shareholder for such taxable year of such United States 
     shareholder (determined for each taxable year of such 
     controlled foreign corporation which ends in or with such 
     taxable year of such United States shareholder).
       ``(2) Tested income; tested loss.--For purposes of this 
     section--
       ``(A) Tested income.--The term `tested income' means, with 
     respect to any controlled foreign corporation for any taxable 
     year of such controlled foreign corporation, the excess (if 
     any) of--
       ``(i) the gross income of such corporation determined 
     without regard to--

       ``(I) any item of income described in section 952(b),
       ``(II) any gross income taken into account in determining 
     the subpart F income of such corporation,
       ``(III) any gross income excluded from the foreign base 
     company income (as defined in section 954) and the insurance 
     income (as defined in section 953) of such corporation by 
     reason of section 954(b)(4),
       ``(IV) any dividend received from a related person (as 
     defined in section 954(d)(3)), and
       ``(V) any foreign oil and gas extraction income (as defined 
     in section 907(c)(1)) of such corporation, over

       ``(ii) the deductions (including taxes) properly allocable 
     to such gross income under rules similar to the rules of 
     section 954(b)(5).
       ``(B) Tested loss.--
       ``(i) In general.--The term `tested loss' means, with 
     respect to any controlled foreign corporation for any taxable 
     year of such controlled foreign corporation, the excess (if 
     any) of the amount described in subparagraph (A)(ii) over the 
     amount described in subparagraph (A)(i).
       ``(ii) Coordination with subpart f to deny double benefit 
     of losses.--Section 952(c)(1)(A) shall be applied by 
     increasing the earnings and profits of the controlled foreign 
     corporation by the tested loss of such corporation.
       ``(d) Qualified Business Asset Investment.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified business asset 
     investment' means, with respect to any corporation for any 
     taxable year of such controlled foreign corporation, the 
     average of the aggregate of the corporation's adjusted bases 
     as of the close of each quarter of such taxable year in 
     specified tangible property --
       ``(A) used in a trade or business of the corporation, and
       ``(B) of a type with respect to which a deduction is 
     allowable under section 167.
       ``(2) Specified tangible property.--
       ``(A) In general.--The term `specified tangible property' 
     means, except as provided in subparagraph (B), any tangible 
     property used in the production of tested income.
       ``(B) Dual use property.--In the case of property used both 
     in the production of tested income and income which is not 
     tested income, such property shall be treated as specified 
     tangible property in the same proportion that the gross 
     income described in subsection (c)(1)(A) produced with 
     respect to such property bears to the total gross income 
     produced with respect to such property.
       ``(3) Determination of adjusted basis.--For purposes of 
     this subsection, notwithstanding any provision of this title 
     (or any other provision of law) which is enacted after the 
     date of the enactment of this section, the adjusted basis in 
     any property shall be determined using the alternative 
     depreciation system under section 168(g).
       ``(4) Regulations.--The Secretary shall issue such 
     regulations or other guidance as the Secretary determines 
     appropriate to prevent the avoidance of the purposes of this 
     subsection, including regulations or other guidance which 
     provide for the treatment of property if--
       ``(A) such property is transferred, or held, temporarily, 
     or
       ``(B) the avoidance of the purposes of this paragraph is a 
     factor in the transfer or holding of such property.
       ``(e) Determination of Pro Rata Share, etc.--For purposes 
     of this section--
       ``(1) In general.--The pro rata shares referred to in 
     subsections (b), (c)(1)(A), and (c)(1)(B), respectively, 
     shall be determined under the rules of section 951(a)(2) in 
     the same manner as such section applies to subpart F income 
     and shall be taken into account in the taxable year of the 
     United States shareholder in which or with which the taxable 
     year of the controlled foreign corporation ends.
       ``(2) Treatment as united states shareholder.--For purposes 
     of paragraph (1), a person shall be treated as a United 
     States shareholder of a controlled foreign corporation for 
     any taxable year only if such person owns (within the meaning 
     of section 958(a)) stock in such foreign corporation on the 
     last day, in such year, on which such foreign corporation is 
     a controlled foreign corporation.
       ``(3) Treatment as controlled foreign corporation.--A 
     foreign corporation shall be treated as a controlled foreign 
     corporation for any taxable year if such foreign corporation 
     is a controlled foreign corporation at any time during such 
     taxable year.
       ``(f) Treatment as Subpart F Income for Certain Purposes.--
       ``(1) In general.--
       ``(A) Application.--Except as provided in subparagraph (B), 
     any global intangible low-taxed income included in gross 
     income under subsection (a) shall be treated in the same 
     manner as an amount included under section 951(a)(1)(A) for 
     purposes of applying sections 168(h)(2)(B), 535(b)(10), 
     851(b), 904(h)(1), 959, 961, 962(c), 962(d), 993(a)(1)(E), 
     996(f)(1), 1248(b)(1), 1248(d)(1), 6501(e)(1)(C), 
     6654(d)(2)(D), and 6655(e)(4).
       ``(B) Exception.--The Secretary shall provide rules for the 
     application of subparagraph (A) to other provisions of this 
     title in any case in which the determination of subpart F 
     income is required to be made at the level of the controlled 
     foreign corporation.
       ``(2) Allocation of global intangible low-taxed income to 
     controlled foreign corporations.--For purposes of the 
     sections referred to in paragraph (1), with respect to any 
     controlled foreign corporation any pro rata amount from which 
     is taken into account in determining the global intangible 
     low-taxed income included in gross income of a United States 
     shareholder under subsection (a), the portion of such global 
     intangible low-taxed income which is treated as being with 
     respect to such controlled foreign corporation is--
       ``(A) in the case of a controlled foreign corporation with 
     no tested income, zero, and
       ``(B) in the case of a controlled foreign corporation with 
     tested income, the portion of such global intangible low-
     taxed income which bears the same ratio to such global 
     intangible low-taxed income as--
       ``(i) such United States shareholder's pro rata amount of 
     the tested income of such controlled foreign corporation, 
     bears to
       ``(ii) the aggregate amount described in subsection 
     (c)(1)(A) with respect to such United States shareholder.''.
       (b) Foreign Tax Credit.--
       (1) Application of deemed paid foreign tax credit.--Section 
     960 is amended adding at the end the following new 
     subsection:
       ``(d) Deemed Paid Credit for Taxes Properly Attributable to 
     Tested Income.--
       ``(1) In general.--For purposes of this subpart, if any 
     amount is includible in the gross income of a domestic 
     corporation under section 951A, such domestic corporation 
     shall be deemed to have paid foreign income taxes equal to 80 
     percent of the product of--
       ``(A) such domestic corporation's inclusion percentage, 
     multiplied by
       ``(B) the aggregate tested foreign income taxes paid or 
     accrued by controlled foreign corporations.
       ``(2) Inclusion percentage.--For purposes of paragraph (1), 
     the term `inclusion percentage' means, with respect to any 
     domestic corporation, the ratio (expressed as a percentage) 
     of--
       ``(A) such corporation's global intangible low-taxed income 
     (as defined in section 951A(b)), divided by
       ``(B) the aggregate amount described in section 
     951A(c)(1)(A) with respect to such corporation.

[[Page S7459]]

       ``(3) Tested foreign income taxes.--For purposes of 
     paragraph (1), the term `tested foreign income taxes' means, 
     with respect to any domestic corporation which is a United 
     States shareholder of a controlled foreign corporation, the 
     foreign income taxes paid or accrued by such foreign 
     corporation which are properly attributable to the tested 
     income of such foreign corporation taken into account by such 
     domestic corporation under section 951A.''.
       (2) Application of foreign tax credit limitation.--
       (A) Separate basket for global intangible low-taxed 
     income.--Section 904(d)(1) is amended by redesignating 
     subparagraphs (A) and (B) as subparagraphs (B) and (C), 
     respectively, and by inserting before subparagraph (B) (as so 
     redesignated) the following new subparagraph:
       ``(A) any amount includible in gross income under section 
     951A (other than passive category income),''.
       (B) Exclusion from general category income.--Section 
     904(d)(2)(A)(ii) is amended by inserting ``income described 
     in paragraph (1)(A) and'' before ``passive category income''.
       (C) No carryover or carryback of excess taxes.--Section 
     904(c) is amended by adding at the end the following: ``This 
     subsection shall not apply to taxes paid or accrued with 
     respect to amounts described in subsection (d)(1)(A).''.
       (c) Clerical Amendment .--The table of sections for subpart 
     F of part III of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 951 the 
     following new item:

``Sec. 951A. Global intangible low-taxed income included in gross 
              income of United States shareholders.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14202. DEDUCTION FOR FOREIGN-DERIVED INTANGIBLE INCOME 
                   AND GLOBAL INTANGIBLE LOW-TAXED INCOME.

       (a) In General.--Part VIII of subchapter B of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 250. FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL 
                   INTANGIBLE LOW-TAXED INCOME.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--In the case of a domestic corporation 
     for any taxable year, there shall be allowed as a deduction 
     an amount equal to the sum of--
       ``(A) 37.5 percent of the foreign-derived intangible income 
     of such domestic corporation for such taxable year, plus
       ``(B) 50 percent of the global intangible low-taxed income 
     amount (if any) which is included in the gross income of such 
     domestic corporation under section 951A for such taxable 
     year.
       ``(2) Limitation based on taxable income.--
       ``(A) In general.--If, for any taxable year--
       ``(i) the sum of the foreign-derived intangible income and 
     the global intangible low-taxed income amount otherwise taken 
     into account by the domestic corporation under paragraph (1), 
     exceeds
       ``(ii) the taxable income of the domestic corporation 
     (determined without regard to this section),
     then the amount of the foreign-derived intangible income and 
     the global intangible low-taxed income amount so taken into 
     account shall be reduced as provided in subparagraph (B).
       ``(B) Reduction.--For purposes of subparagraph (A)--
       ``(i) foreign-derived intangible income shall be reduced by 
     an amount which bears the same ratio to the excess described 
     in subparagraph (A) as such foreign-derived intangible income 
     bears to the sum described in subparagraph (A)(i), and
       ``(ii) the global intangible low-taxed income amount shall 
     be reduced by the remainder of such excess.
       ``(3) Reduction in deduction for taxable years after 
     2025.--In the case of any taxable year beginning after 
     December 31, 2025, paragraph (1) shall be applied by 
     substituting--
       ``(A) `21.875 percent' for `37.5 percent' in subparagraph 
     (A), and
       ``(B) `37.5 percent' for `50 percent' in subparagraph (B).
       ``(b) Foreign-derived Intangible Income.--For purposes of 
     this section--
       ``(1) In general.--The foreign-derived intangible income of 
     any domestic corporation is the amount which bears the same 
     ratio to the deemed intangible income of such corporation 
     as--
       ``(A) the foreign-derived deduction eligible income of such 
     corporation, bears to
       ``(B) the deduction eligible income of such corporation.
       ``(2) Deemed intangible income.--For purposes of this 
     subsection--
       ``(A) In general.--The term `deemed intangible income' 
     means the excess (if any) of--
       ``(i) the deduction eligible income of the domestic 
     corporation, over
       ``(ii) the deemed tangible income return of the 
     corporation.
       ``(B) Deemed tangible income return.--The term `deemed 
     tangible income return' means, with respect to any 
     corporation, an amount equal to 10 percent of the 
     corporation's qualified business asset investment (as defined 
     in section 951A(d), determined by substituting `deduction 
     eligible income' for `tested income' in paragraph (2) 
     thereof).
       ``(3) Deduction eligible income.--
       ``(A) In general.--The term `deduction eligible income' 
     means, with respect to any domestic corporation, the excess 
     (if any) of--
       ``(i) gross income of such corporation determined without 
     regard to--

       ``(I) the subpart F income of such corporation determined 
     under section 951,
       ``(II) the global intangible low-taxed income determined 
     under section 951A,
       ``(III) any financial services income (as defined in 
     section 904(d)(2)(D)) of such corporation which is not 
     described in clause (ii),
       ``(IV) any dividend received from a corporation which is a 
     controlled foreign corporation of such domestic corporation,
       ``(V) any domestic oil and gas extraction income of such 
     corporation, and
       ``(VI) any foreign branch income (as defined in section 
     904(d)(2)(J)), over

       ``(ii) the deductions (including taxes) properly allocable 
     to such gross income under rules similar to the rules of 
     section 954(b)(5).
       ``(B) Domestic oil and gas extraction income.--For purposes 
     of subparagraph (A), the term `domestic oil and gas 
     extraction income' means income described in section 
     907(c)(1), determined by substituting `within the United 
     States' for `without the United States'.
       ``(4) Foreign-derived deduction eligible income.--The term 
     `foreign-derived deduction eligible income' means, with 
     respect to any taxpayer for any taxable year, any deduction 
     eligible income of such taxpayer which is derived in 
     connection with--
       ``(A) property--
       ``(i) which is sold by the taxpayer to any person who is 
     not a United States person, and
       ``(ii) which the taxpayer establishes to the satisfaction 
     of the Secretary is for a foreign use, or
       ``(B) services provided by the taxpayer which the taxpayer 
     establishes to the satisfaction of the Secretary are provided 
     to any person, or with respect to property, not located 
     within the United States.
       ``(5) Rules relating to foreign use property or services.--
     For purposes of this subsection--
       ``(A) Foreign use.--The term `foreign use' means any use, 
     consumption, or disposition which is not within the United 
     States.
       ``(B) Property or services provided to domestic 
     intermediaries.--
       ``(i) Property.--If a taxpayer sells property to another 
     person (other than a related party) for further manufacture 
     or other modification within the United States, such property 
     shall not be treated as sold for a foreign use even if such 
     other person subsequently uses such property for a foreign 
     use.
       ``(ii) Services.--If a taxpayer provides services to 
     another person (other than a related party) located within 
     the United States, such services shall not be treated as 
     described in paragraph (4)(B) even if such other person uses 
     such services in providing services which are so described.
       ``(C) Special rules with respect to related party 
     transactions.--
       ``(i) Sales to related parties.--If property is sold to a 
     related party who is not a United States person, such sale 
     shall not be treated as for a foreign use unless such 
     property is sold by the related party to another person who 
     is an unrelated party who is not a United States person and 
     the taxpayer establishes to the satisfaction of the Secretary 
     that such property is for a foreign use.
       ``(ii) Service provided to related parties.--If a service 
     is provided to a related party who is not located in the 
     United States, such service shall be not be treated described 
     in subparagraph (A)(ii) unless the taxpayer established to 
     the satisfaction of the Secretary that such service is not 
     substantially similar to services provided by such related 
     party to persons located within the United States.
       ``(D) Related party.--For purposes of this paragraph, the 
     term `related party' means any member of an affiliated group 
     as defined in section 1504(a), determined--
       ``(i) by substituting `more than 50 percent' for `at least 
     80 percent' each place it appears, and
       ``(ii) without regard to paragraphs (2) and (3) of section 
     1504(b).
     Any person (other than a corporation) shall be treated as a 
     member of such group if such person is controlled by members 
     of such group (including any entity treated as a member of 
     such group by reason of this sentence) or controls any such 
     member. For purposes of the preceding sentence, control shall 
     be determined under the rules of section 954(d)(3).
       ``(E) Sold.--For purposes of this subsection, the terms 
     `sold', `sells', and `sale' shall include any lease, license, 
     exchange, or other disposition.
       ``(c) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section.''.
       (b) Conforming Amendments.--
       (1) Section 172(d), as amended by section 13011, is amended 
     by adding at the end the following new paragraph:
       ``(10) Deduction for foreign-derived intangible income.--
     The deduction under section 250 shall not be allowed.''.
       (2) Section 246(b)(1) is amended--
       (A) by striking ``and subsection (a) and (b) of section 
     245'' the first place it appears and

[[Page S7460]]

     inserting ``, subsection (a) and (b) of section 245, and 
     section 250'',
       (B) by striking ``and subsection (a) and (b) of section 
     245'' the second place it appears and inserting ``subsection 
     (a) and (b) of section 245, and 250''.
       (3) Section 469(i)(3)(F)(iii) is amended by striking ``and 
     222'' and inserting ``222, and 250''.
       (4) The table of sections for part VIII of subchapter B of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 250. Foreign-derived intangible income and global intangible 
              low-taxed income.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14203. SPECIAL RULES FOR TRANSFERS OF INTANGIBLE 
                   PROPERTY FROM CONTROLLED FOREIGN CORPORATIONS 
                   TO UNITED STATES SHAREHOLDERS.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 is amended by adding at the end the following new 
     section:

     ``SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO UNITED STATES 
                   SHAREHOLDERS.

       ``(a) In General.--In the case of any distribution of 
     intangible property which is held by a controlled foreign 
     corporation on the date of enactment of this section and 
     which is described in subsection (b)--
       ``(1) for purposes of part I of subchapter C and any other 
     provision of this title specified by the Secretary, the fair 
     market value of such property on the date of such 
     distribution shall be treated as not exceeding the adjusted 
     basis of such property immediately before such distribution, 
     and
       ``(2) if the distribution is to a United States shareholder 
     and is not a dividend--
       ``(A) the United States shareholder's adjusted basis in the 
     stock of the controlled foreign corporation with respect to 
     which such distribution is made shall be increased by the 
     amount (if any) of such distribution which would (but for 
     this subsection) be includible in gross income, and
       ``(B) the adjusted basis of such property in the hands of 
     such United States shareholder immediately after such 
     distribution shall be such adjusted basis immediately before 
     such distribution reduced by the amount of the increase 
     described in subparagraph (A).
       ``(b) Distribution.--A distribution is described in this 
     section if the distribution is--
       ``(1) received by a domestic corporation from a controlled 
     foreign corporation with respect to which such corporation is 
     a United States shareholder, and
       ``(2) made by the controlled foreign corporation before the 
     last day of the third taxable year of the controlled foreign 
     corporation beginning after December 31, 2017.
       ``(c) Intangible Property.--For purposes of this 
     subsection, the term `intangible property' has the meaning 
     given such term by section 936(h)(3)(B) or which is computer 
     software described in section 197(e)(3)(B).''.
       (b) Conforming Amendments.--
       (1) Section 197(f)(2)(B)(i) is amended by inserting 
     ``966(a),'' after ``731,''.
       (2) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 966. Transfers of intangible property to United States 
              shareholders.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made in taxable years of foreign 
     corporations beginning after December 31, 2017, and to 
     taxable years of United States shareholders in which or with 
     which such taxable years of foreign corporations end.

         CHAPTER 2--OTHER MODIFICATIONS OF SUBPART F PROVISIONS

     SEC. 14211. ELIMINATION OF INCLUSION OF FOREIGN BASE COMPANY 
                   OIL RELATED INCOME.

       (a) Repeal.--Subsection (a) of section 954 is amended--
       (1) by inserting ``and'' at the end of paragraph (2),
       (2) by striking the comma at the end of paragraph (3) and 
     inserting a period, and
       (3) by striking paragraph (5).
       (b) Conforming Amendments.--
       (1) Section 952(c)(1)(B)(iii) is amended by striking 
     subclause (I) and redesignating subclauses (II) through (V) 
     as subclauses (I) through (IV), respectively.
       (2) Section 954(b) is amended--
       (A) by striking the second sentence of paragraph (4),
       (B) by striking ``the foreign base company services income, 
     and the foreign base company oil related income'' in 
     paragraph (5) and inserting ``and the foreign base company 
     services income'', and
       (C) by striking paragraph (6).
       (3) Section 954 is amended by striking subsection (g).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders with or within which such taxable 
     years of foreign corporations end.

     SEC. 14212. INFLATION ADJUSTMENT OF DE MINIMIS EXCEPTION FOR 
                   FOREIGN BASE COMPANY INCOME.

       (a) In General.--Section 954(b)(3) is amended by adding at 
     the end the following new subparagraph:
       ``(D) Inflation adjustment.--In the case of any taxable 
     year beginning after 2017, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $50,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14213. REPEAL OF INCLUSION BASED ON WITHDRAWAL OF 
                   PREVIOUSLY EXCLUDED SUBPART F INCOME FROM 
                   QUALIFIED INVESTMENT.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 is amended by striking section 955.
       (b) Conforming Amendments.--
       (1)(A) Section 951(a)(1)(A) is amended to read as follows:
       ``(A) his pro rata share (determined under paragraph (2)) 
     of the corporation's subpart F income for such year, and''.
       (B) Section 851(b) is amended by striking ``section 
     951(a)(1)(A)(i)'' in the flush language at the end and 
     inserting ``section 951(a)(1)(A)''.
       (C) Section 952(c)(1)(B)(i) is amended by striking 
     ``section 951(a)(1)(A)(i)'' and inserting ``section 
     951(a)(1)(A)''.
       (D) Section 953(c)(1)(C) is amended by striking ``section 
     951(a)(1)(A)(i)'' and inserting ``section 951(a)(1)(A)''.
       (2) Section 951(a) is amended by striking paragraph (3).
       (3) Section 953(d)(4)(B)(iv)(II) is amended by striking 
     ``or amounts referred to in clause (ii) or (iii) of section 
     951(a)(1)(A)''.
       (4) Section 964(b) is amended by striking ``, 955,''.
       (5) Section 970 is amended by striking subsection (b).
       (6) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 955.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14214. MODIFICATION OF STOCK ATTRIBUTION RULES FOR 
                   DETERMINING STATUS AS A CONTROLLED FOREIGN 
                   CORPORATION.

       (a) In General.--Section 958(b) is amended--
       (1) by striking paragraph (4), and
       (2) by striking ``Paragraphs (1) and (4)'' in the last 
     sentence and inserting ``Paragraph (1)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) the last taxable year of foreign corporations beginning 
     before January 1, 2018, and each subsequent taxable year of 
     such foreign corporations, and
       (2) taxable years of United States shareholders in which or 
     with which such taxable years of foreign corporations end.

     SEC. 14215. MODIFICATION OF DEFINITION OF UNITED STATES 
                   SHAREHOLDER.

       (a) In General.--Section 951(b) is amended by inserting ``, 
     or 10 percent or more of the total value of shares of all 
     classes of stock of such foreign corporation'' after ``such 
     foreign corporation''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders with or within which such taxable 
     years of foreign corporations end.

     SEC. 14216. ELIMINATION OF REQUIREMENT THAT CORPORATION MUST 
                   BE CONTROLLED FOR 30 DAYS BEFORE SUBPART F 
                   INCLUSIONS APPLY.

       (a) In General.--Section 951(a)(1) is amended by striking 
     ``for an uninterrupted period of 30 days or more'' and 
     inserting ``at any time''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders with or within which such taxable 
     years of foreign corporations end.

     SEC. 14217. LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN 
                   CORPORATIONS MADE PERMANENT.

       (a) In General.--Paragraph (6) of section 954(c) is amended 
     by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14218. CORPORATIONS ELIGIBLE FOR DEDUCTION FOR DIVIDENDS 
                   FROM CONTROLLED FOREIGN CORPORATIONS EXEMPT 
                   FROM SUBPART F INCLUSION FOR INVESTMENT IN 
                   UNITED STATES PROPERTY.

       (a) In General.--Section 956(a) is amended by inserting 
     ``(other than a corporation)'' after ``United States 
     shareholder'' in the matter preceding paragraph (1).
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of controlled foreign 
     corporations ending after December 31, 2017, and to taxable

[[Page S7461]]

     years of United States shareholders with or within which such 
     taxable years of controlled foreign corporations end.

                 CHAPTER 3--PREVENTION OF BASE EROSION

     SEC. 14221. DENIAL OF DEDUCTION FOR INTEREST EXPENSE OF 
                   UNITED STATES SHAREHOLDERS WHICH ARE MEMBERS OF 
                   WORLDWIDE AFFILIATED GROUPS WITH EXCESS 
                   DOMESTIC INDEBTEDNESS.

       (a) In General.--Section 163 is amended by redesignating 
     subsection (n) as subsection (o) and by inserting after 
     subsection (m) the following new subsection:
       ``(n) Disallowance of Deduction for Interest Expense of 
     United States Shareholders Which Are Members of Worldwide 
     Affiliated Groups With Excess Domestic Indebtedness.--
       ``(1) In general.--In the case of any domestic corporation 
     which is a member of a worldwide affiliated group, the 
     deduction allowed under this chapter for interest paid or 
     accrued by such domestic corporation during the taxable year 
     shall be reduced by the product of--
       ``(A) the net interest expense of such domestic 
     corporation, multiplied by
       ``(B) the debt-to-equity differential percentage of such 
     worldwide affiliated group.
       ``(2) Carryforward.--Any amount disallowed under paragraph 
     (1) for any taxable year shall be treated as interest paid or 
     accrued in the succeeding taxable year.
       ``(3) Debt-to-equity differential percentage.--
       ``(A) In general.--For purposes of this subsection, the 
     term `debt-to-equity differential percentage' means, with 
     respect to any worldwide affiliated group, the percentage 
     which the excess domestic indebtedness of such group bears to 
     the total indebtedness of the domestic corporations which are 
     members of such group.
       ``(B) Excess domestic indebtedness.--For purposes of 
     subparagraph (A), the term `excess domestic indebtedness' 
     means, with respect to any worldwide affiliated group, the 
     excess (if any) of--
       ``(i) the total indebtedness of the domestic corporations 
     which are members of such group, over
       ``(ii) 110 percent of the amount which the total 
     indebtedness of such domestic corporations would be if the 
     ratio of such indebtedness to the total equity of such 
     domestic corporations equaled the ratio which--

       ``(I) the total indebtedness of such group, bears to
       ``(II) the total equity of such group.

       ``(C) Total equity.--For purposes of subparagraph (B), the 
     term `total equity' means, with respect to one or more 
     corporations, the excess (if any) of--
       ``(i) the money and all other assets of such corporations, 
     over
       ``(ii) the total indebtedness of such corporations.
       ``(D) Special rules for determining debt and equity.--
       ``(i) In general.--For purposes of this paragraph--

       ``(I) the amount taken into account with respect to any 
     asset shall be the adjusted basis thereof for purposes of 
     determining gain,
       ``(II) the amount taken into account with respect to any 
     indebtedness with original issue discount shall be its issue 
     price plus the portion of the original issue discount 
     previously accrued as determined under the rules of section 
     1272 (determined without regard to subsection (a)(7) or 
     (b)(4) thereof), and
       ``(III) there shall be such other adjustments as the 
     Secretary shall by regulations prescribe.

       ``(ii) Intragroup debt and equity interests disregarded.--
     For purposes of this paragraph, the total indebtedness, and 
     the assets, of any group of corporations shall be determined 
     by treating all members of such group as one corporation.
       ``(iii) Determination of assets of domestic group.--For 
     purposes of this paragraph, the assets of the domestic 
     corporations which are members of any worldwide affiliated 
     group shall be determined by disregarding any interest held 
     by any such domestic corporation in any foreign corporation 
     which is a member of such group.
       ``(4) Other definitions.--For purposes of this subsection--
       ``(A) Worldwide affiliated group.--The term `worldwide 
     affiliated group' means a group consisting of the includible 
     members of an affiliated group, as defined in section 
     1504(a), determined--
       ``(i) by substituting `more than 50 percent' for `at least 
     80 percent' each place it appears in such section, and
       ``(ii) without regard to paragraphs (2), (3), and (4) of 
     section 1504(b).
       ``(B) Net interest expense.--The term `net interest 
     expense' means the excess (if any) of
       ``(i) the interest paid or accrued by the taxpayer during 
     the taxable year, over
       ``(ii) the amount of interest includible in the gross 
     income of such taxpayer for such taxable year.
     The Secretary shall by regulations provide for adjustments in 
     determining the amount of net interest expense if necessary.
       ``(5) Treatment of affiliated group.--For purposes of this 
     subsection, all members of the same affiliated group (within 
     the meaning of section 1504(a) applied by substituting `more 
     than 50 percent' for `at least 80 percent' each place it 
     appears) shall be treated as one taxpayer.
       ``(6) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be appropriate to carry 
     out the purposes of this subsection, including regulations or 
     other guidance--
       ``(A) to prevent the avoidance of the purposes of this 
     subsection,
       ``(B) providing such adjustments in the case of 
     corporations which are members of an affiliated group as may 
     be appropriate to carry out the purposes of this subsection,
       ``(C) providing for the coordination of this subsection 
     with section 884,
       ``(D) providing for the reallocation of shares of 
     partnership indebtedness, or distributive shares of the 
     partnership's interest income or interest expense, and
       ``(E) providing for the coordination with the limitation 
     under subsection (j).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14222. LIMITATIONS ON INCOME SHIFTING THROUGH INTANGIBLE 
                   PROPERTY TRANSFERS.

       (a) Definition of Intangible Asset.--Section 936(h)(3)(B) 
     is amended--
       (1) by striking ``or'' at the end of clause (v),
       (2) by striking clause (vi) and inserting the following:
       ``(vi) any goodwill, going concern value, or workforce in 
     place (including its composition and terms and conditions 
     (contractual or otherwise) of its employment); or
       ``(vii) any other item the value or potential value of 
     which is not attributable to tangible property or the 
     services of any individual.'', and
       (3) by striking the flush language after clause (vii), as 
     added by paragraph (2).
       (b) Clarification of Allowable Valuation Methods.--
       (1) Foreign corporations.--Section 367(d)(2) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Regulatory authority.--For purposes of the last 
     sentence of subparagraph (A), the Secretary shall require--
       ``(i) the valuation of transfers of intangible property, 
     including intangible property transferred with other property 
     or services, on an aggregate basis, or
       ``(ii) the valuation of such a transfer on the basis of the 
     realistic alternatives to such a transfer,
     if the Secretary determines that such basis is the most 
     reliable means of valuation of such transfers.''.
       (2) Allocation among taxpayers.--Section 482 is amended by 
     adding at the end the following: ``For purposes of this 
     section, the Secretary shall require the valuation of 
     transfers of intangible property (including intangible 
     property transferred with other property or services) on an 
     aggregate basis or the valuation of such a transfer on the 
     basis of the realistic alternatives to such a transfer, if 
     the Secretary determines that such basis is the most reliable 
     means of valuation of such transfers.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to transfers in taxable years beginning after December 
     31, 2017.
       (2) No inference.--Nothing in the amendment made by 
     subsection (a) shall be construed to create any inference 
     with respect to the application of section 936(h)(3) of the 
     Internal Revenue Code of 1986, or the authority of the 
     Secretary of the Treasury to provide regulations for such 
     application, with respect to taxable years beginning before 
     January 1, 2018.

     SEC. 14223. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED IN 
                   HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES.

       (a) In General.--Part IX of subchapter B of chapter 1 is 
     amended by inserting after section 267 the following:

     ``SEC. 267A. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED IN 
                   HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES.

       ``(a) In General.--No deduction shall be allowed under this 
     chapter for any disqualified related party amount paid or 
     accrued pursuant to a hybrid transaction or by, or to, a 
     hybrid entity.
       ``(b) Disqualified Related Party Amount.--For purposes of 
     this section--
       ``(1) Disqualified related party amount.--The term 
     `disqualified related party amount' means any interest or 
     royalty paid or accrued to a related party to the extent 
     that--
       ``(A) such amount is not included in the income of such 
     related party under the tax law of the country of which such 
     related party is a resident for tax purposes or is subject to 
     tax, or
       ``(B) such related party is allowed a deduction with 
     respect to such amount under the tax law of such country.
     Such term shall not include any payment to the extent such 
     payment is included in the gross income of a United States 
     shareholder under section 951(a).
       ``(2) Related party.--The term `related party' means a 
     related person as defined in section 954(d)(3), except that 
     such section shall be applied with respect to the person 
     making the payment described in paragraph (1) in lieu of the 
     controlled foreign corporation otherwise referred to in such 
     section.
       ``(c) Hybrid Transaction.--For purposes of this section, 
     the term `hybrid transaction' means any transaction, series 
     of transactions, agreement, or instrument one or more 
     payments with respect to which are

[[Page S7462]]

     treated as interest or royalties for purposes of this chapter 
     and which are not so treated for purposes the tax law of the 
     foreign country of which the recipient of such payment is 
     resident for tax purposes or is subject to tax.
       ``(d) Hybrid Entity.--For purposes of this section, the 
     term `hybrid entity' means any entity which is either--
       ``(1) treated as fiscally transparent for purposes of this 
     chapter but not so treated for purposes of the tax law of the 
     foreign country of which the entity is resident for tax 
     purposes or is subject to tax, or
       ``(2) treated as fiscally transparent for purposes of such 
     tax law but not so treated for purposes of this chapter.
       ``(e) Regulations.--The Secretary shall issue such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this section, 
     including regulations or other guidance providing for--
       ``(1) rules for treating certain conduit arrangements which 
     involve a hybrid transaction or a hybrid entity as subject to 
     subsection (a),
       ``(2) rules for the application of this section to foreign 
     branches,
       ``(3) rules for treating certain structured transactions as 
     subject to subsection (a),
       ``(4) rules for treating a tax preference as an exclusion 
     from income for purposes of applying subsection (b)(1) if 
     such tax preference has the effect of reducing the generally 
     applicable statutory rate by 25 percent or more,
       ``(5) rules for treating the entire amount of interest or 
     royalty paid or accrued to a related party as a disqualified 
     related party amount if such amount is subject to a 
     participation exemption system or other system which provides 
     for the exclusion or deduction of a substantial portion of 
     such amount,
       ``(6) rules for determining the tax residence of a foreign 
     entity if the entity is otherwise considered a resident of 
     more than one country or of no country,
       ``(7) exceptions from subsection (a) with respect to--
       ``(A) cases in which the disqualified related party amount 
     is taxed under the laws of a foreign country other than the 
     country of which the related party is a resident for tax 
     purposes, and
       ``(B) other cases which the Secretary determines do not 
     present a risk of eroding the Federal tax base,
       ``(8) requirements for record keeping and information 
     reporting in addition to any requirements imposed by section 
     6038A.''.
       (b) Conforming Amendment.--The table of sections for part 
     IX of subchapter B of chapter 1 is amended by inserting after 
     the item relating to section 267 the following new item:

``Sec. 267A. Certain related party amounts paid or accrued in hybrid 
              transactions or with hybrid entities.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14224. TERMINATION OF SPECIAL RULES FOR DOMESTIC 
                   INTERNATIONAL SALES CORPORATIONS.

       (a) In General.--Part IV of subchapter N of chapter 1 
     (relating to domestic international sales corporations) is 
     amended by adding at the end the following new subpart:

                        ``Subpart C--Termination

``Sec. 998. Termination of domestic international sales corporation 
              provisions.

     ``SEC. 998. TERMINATION OF DOMESTIC INTERNATIONAL SALES 
                   CORPORATION PROVISIONS.

       ``(a) Termination of Election.--Any election under section 
     992(b) in effect for a corporation's last taxable year 
     beginning in 2018 shall be terminated effective for such 
     corporation's next succeeding taxable year.
       ``(b) No New Election.--No election may be made under 
     section 992(b) for any taxable year beginning after December 
     31, 2018.
       ``(c) Effect of Termination.--A shareholder of a 
     corporation whose election is terminated by reason of 
     subsection (a) shall be deemed to have received a 
     distribution to which section 995(b)(2) applies for the first 
     taxable year for which the termination is effective. Such 
     distribution (or any actual distribution after termination to 
     the extent paid out of the corporation's accumulated DISC 
     income) shall not be treated as qualified dividend income 
     (within the meaning of section 1(h)(11)(B)).''.
       (b) Conforming Amendment.--The table of contents for part 
     IV of subchapter N of chapter 1 is amended by adding at the 
     end the following new item:

                      ``subpart c--termination''.

     SEC. 14225. SHAREHOLDERS OF SURROGATE FOREIGN CORPORATIONS 
                   NOT ELIGIBLE FOR REDUCED RATE ON DIVIDENDS.

       (a) In General.--Section 1(h)(11)(C)(iii) is amended--
       (1) by striking ``shall not include any foreign 
     corporation'' and inserting ``shall not include--

       ``(I) any foreign corporation'',

       (2) by striking the period at the end and inserting ``, 
     and'', and
       (3) by adding at the end the following new subclause:

       ``(II) any corporation which is a surrogate foreign 
     corporation (as defined in section 7874(a)(2)(B)) other than 
     a foreign corporation which is treated as a domestic 
     corporation under section 7874(b).''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to dividends paid in taxable years beginning 
     after December 31, 2017.

     Subpart C--Modifications Related to Foreign Tax Credit System

     SEC. 14301. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX 
                   CREDITS; DETERMINATION OF SECTION 960 CREDIT ON 
                   CURRENT YEAR BASIS.

       (a) Repeal of Section 902 Indirect Foreign Tax Credits.--
     Subpart A of part III of subchapter N of chapter 1 is amended 
     by striking section 902.
       (b) Determination of Section 960 Credit on Current Year 
     Basis.--Section 960, as amended by section 14201, is 
     amended--
       (1) by striking subsection (c), by redesignating subsection 
     (b) as subsection (c), by striking all that precedes 
     subsection (c) (as so redesignated) and inserting the 
     following:

     ``SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLUSIONS.

       ``(a) In General.--For purposes of this subpart, if there 
     is included in the gross income of a domestic corporation any 
     item of income under section 951(a)(1) with respect to any 
     controlled foreign corporation with respect to which such 
     domestic corporation is a United States shareholder, such 
     domestic corporation shall be deemed to have paid so much of 
     such foreign corporation's foreign income taxes as are 
     properly attributable to such item of income.
       ``(b) Special Rules for Distributions From Previously Taxed 
     Earnings and Profits.--For purposes of this subpart--
       ``(1) In general.--If any portion of a distribution from a 
     controlled foreign corporation to a domestic corporation 
     which is a United States shareholder with respect to such 
     controlled foreign corporation is excluded from gross income 
     under section 959(a), such domestic corporation shall be 
     deemed to have paid so much of such foreign corporation's 
     foreign income taxes as--
       ``(A) are properly attributable to such portion, and
       ``(B) have not been deemed to have to been paid by such 
     domestic corporation under this section for the taxable year 
     or any prior taxable year.
       ``(2) Tiered controlled foreign corporations.--If section 
     959(b) applies to any portion of a distribution from a 
     controlled foreign corporation to another controlled foreign 
     corporation, such controlled foreign corporation shall be 
     deemed to have paid so much of such other controlled foreign 
     corporation's foreign income taxes as--
       ``(A) are properly attributable to such portion, and
       ``(B) have not been deemed to have been paid by a domestic 
     corporation under this section for any prior taxable year.'',
       (2) and by adding after subsection (d) (as added by section 
     14201) the following new subsections:
       ``(e) Foreign Income Taxes.--The term `foreign income 
     taxes' means any income, war profits, or excess profits taxes 
     paid or accrued to any foreign country or possession of the 
     United States.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section.''.
       (c) Conforming Amendments.--
       (1) Section 78, as amended by section 14201, is amended to 
     read as follows:

     ``SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT.

       ``If a domestic corporation chooses to have the benefits of 
     subpart A of part III of subchapter N (relating to foreign 
     tax credit) for any taxable year--
       ``(1) an amount equal to the taxes deemed to be paid by 
     such corporation under subsections (a) and (b) of section 960 
     for such taxable year shall be treated for purposes of this 
     title (other than section 960) as an item of income required 
     to be included in the gross income of such domestic 
     corporation under section 951(a), and
       ``(2) an amount equal to the aggregate tested foreign 
     income taxes deemed paid by such corporation under section 
     960(d) (determined without regard to the phrase `80 percent 
     of' in paragraph (1) thereof) shall be treated for purposes 
     of this title (other than section 960) as an addition to the 
     global intangible low-taxed income of such domestic 
     corporation under section 951A(a) for such taxable year.''.
       (2) Paragraph (4) of section 245(a) is amended to read as 
     follows:
       ``(4) Post-1986 undistributed earnings.--The term `post-
     1986 undistributed earnings' means the amount of the earnings 
     and profits of the foreign corporation (computed in 
     accordance with sections 964(a) and 986) accumulated in 
     taxable years beginning after December 31, 1986--
       ``(A) as of the close of the taxable year of the foreign 
     corporation in which the dividend is distributed, and
       ``(B) without diminution by reason of dividends distributed 
     during such taxable year.''.
       (3) Section 245(a)(10)(C) is amended by striking ``902, 
     907, and 960'' and inserting ``907 and 960''.
       (4) Sections 535(b)(1) and 545(b)(1) are each amended by 
     striking ``section 902(a) or 960(a)(1)'' and inserting 
     ``section 960''.
       (5) Section 814(f)(1) is amended--
       (A) by striking subparagraph (B), and
       (B) by striking all that precedes ``No income'' and 
     inserting the following:
       ``(1) Treatment of foreign taxes.--''.
       (6) Section 865(h)(1)(B) is amended by striking ``902, 
     907,'' and inserting ``907''.
       (7) Section 901(a) is amended by striking ``sections 902 
     and 960'' and inserting ``section 960''.

[[Page S7463]]

       (8) Section 901(e)(2) is amended by striking ``but is not 
     limited to--'' and all that follows through ``that portion'' 
     and inserting ``but is not limited to that portion''.
       (9) Section 901(f) is amended by striking ``sections 902 
     and 960'' and inserting ``section 960''.
       (10) Section 901(j)(1)(A) is amended by striking ``902 
     or''.
       (11) Section 901(j)(1)(B) is amended by striking ``sections 
     902 and 960'' and inserting ``section 960''.
       (12) Section 901(k)(2) is amended by striking ``, 902,''.
       (13) Section 901(k)(6) is amended by striking ``902 or''.
       (14) Section 901(m)(1) is amended by striking ``relevant 
     foreign assets--'' and all that follows and inserting 
     ``relevant foreign assets shall not be taken into account in 
     determining the credit allowed under subsection (a).''.
       (15) Section 904(d)(6)(A) is amended by striking ``902, 
     907,'' and inserting ``907''.
       (16) Section 904(h)(10)(A) is amended by striking 
     ``sections 902, 907, and 960'' and inserting ``sections 907 
     and 960''.
       (17) Section 904(k) is amended to read as follows:
       ``(k) Cross References.--For increase of limitation under 
     subsection (a) for taxes paid with respect to amounts 
     received which were included in the gross income of the 
     taxpayer for a prior taxable year as a United States 
     shareholder with respect to a controlled foreign corporation, 
     see section 960(c).''.
       (18) Section 905(c)(1) is amended by striking the last 
     sentence.
       (19) Section 905(c)(2)(B)(i) is amended to read as follows:
       ``(i) shall be taken into account for the taxable year to 
     which such taxes relate, and''.
       (20) Section 906(a) is amended by striking ``(or deemed, 
     under section 902, paid or accrued during the taxable 
     year)''.
       (21) Section 906(b) is amended by striking paragraphs (4) 
     and (5).
       (22) Section 907(b)(2)(B) is amended by striking ``902 
     or''.
       (23) Section 907(c)(3) is amended--
       (A) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively, and
       (B) by striking ``section 960(a)'' in subparagraph (A) (as 
     so redesignated) and inserting ``section 960''.
       (24) Section 907(c)(5) is amended by striking ``902 or''.
       (25) Section 907(f)(2)(B)(i) is amended by striking ``902 
     or''.
       (26) Section 908(a) is amended by striking ``902 or''.
       (27) Section 909(b) is amended--
       (A) by striking ``section 902 corporation'' in the matter 
     preceding paragraph (1) and inserting ``specified 10-percent 
     owned foreign corporation (as defined in section 245A(b))'',
       (B) by striking ``902 or'' in paragraph (1),
       (C) by striking ``by such section 902 corporation'' and all 
     that follows in the matter following paragraph (2) and 
     inserting ``by such specified 10-percent owned foreign 
     corporation or a domestic corporation which is a United 
     States shareholder with respect to such specified 10-percent 
     owned foreign corporation.'', and
       (D) by striking ``Section 902 Corporations'' in the heading 
     thereof and inserting ``Specified 10-percent Owned Foreign 
     Corporations''.
       (28) Section 909(d) is amended by striking paragraph (5).
       (29) Section 958(a)(1) is amended by striking ``960(a)(1)'' 
     and inserting ``960''.
       (30) Section 959(d) is amended by striking ``Except as 
     provided in section 960(a)(3), any'' and inserting ``Any''.
       (31) Section 959(e) is amended by striking ``section 
     960(b)'' and inserting ``section 960(c)''.
       (32) Section 1291(g)(2)(A) is amended by striking ``any 
     distribution--'' and all that follows through ``but only if'' 
     and inserting ``any distribution, any withholding tax imposed 
     with respect to such distribution, but only if''.
       (33) Section 6038(c)(1)(B) is amended by striking 
     ``sections 902 (relating to foreign tax credit for corporate 
     stockholder in foreign corporation) and 960 (relating to 
     special rules for foreign tax credit)'' and inserting 
     ``section 960''.
       (34) Section 6038(c)(4) is amended by striking subparagraph 
     (C).
       (35) The table of sections for subpart A of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 902.
       (36) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 960 and inserting the following:

``Sec. 960. Deemed paid credit for subpart F inclusions.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 14302. SEPARATE FOREIGN TAX CREDIT LIMITATION BASKET FOR 
                   FOREIGN BRANCH INCOME.

       (a) In General.--Section 904(d)(1), as amended by section 
     14201, is amended by redesignating subparagraphs (B) and (C) 
     as subparagraphs (C) and (D), respectively, and by inserting 
     after subparagraph (A) the following new subparagraph:
       ``(B) foreign branch income,''.
       (b) Foreign Branch Income.--
       (1) In general.--Section 904(d)(2) is amended by inserting 
     after subparagraph (I) the following new subparagraph:
       ``(J) Foreign branch income.--
       ``(i) In general.--The term `foreign branch income' means 
     the business profits of such United States person which are 
     attributable to 1 or more qualified business units (as 
     defined in section 989(a)) in 1 or more foreign countries. 
     For purposes of the preceding sentence, the amount of 
     business profits attributable to a qualified business unit 
     shall be determined under rules established by the Secretary.
       ``(ii) Exception.--Such term shall not include any income 
     which is passive category income.''.
       (2) Conforming amendment.--Section 904(d)(2)(A)(ii), as 
     amended by section 14201, is amended by striking ``income 
     described in paragraph (1)(A) and'' and inserting ``income 
     described in paragraph (1)(A), foreign branch income, and''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14303. ACCELERATION OF ELECTION TO ALLOCATE INTEREST, 
                   ETC., ON A WORLDWIDE BASIS.

       (a) In General.--Section 864(f)(6) is amended by striking 
     ``December 31, 2020'' and inserting ``December 31, 2017''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14304. SOURCE OF INCOME FROM SALES OF INVENTORY 
                   DETERMINED SOLELY ON BASIS OF PRODUCTION 
                   ACTIVITIES.

       (a) In General.--Section 863(b) is amended by adding at the 
     end the following: ``Gains, profits, and income from the sale 
     or exchange of inventory property described in paragraph (2) 
     shall be allocated and apportioned between sources within and 
     without the United States solely on the basis of the 
     production activities with respect to the property.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                     PART II--INBOUND TRANSACTIONS

     SEC. 14401. BASE EROSION AND ANTI-ABUSE TAX.

       (a) Imposition of Tax.--Subchapter A of chapter 1 is 
     amended by adding at the end the following new part:

              ``PART VII--BASE EROSION AND ANTI-ABUSE TAX

``Sec. 59A. Tax on base erosion payments of taxpayers with substantial 
              gross receipts.

     ``SEC. 59A. TAX ON BASE EROSION PAYMENTS OF TAXPAYERS WITH 
                   SUBSTANTIAL GROSS RECEIPTS.

       ``(a) Imposition of Tax.--There is hereby imposed on each 
     applicable taxpayer for any taxable year a tax equal to the 
     base erosion minimum tax amount for the taxable year. Such 
     tax shall be in addition to any other tax imposed by this 
     subtitle.
       ``(b) Base Erosion Minimum Tax Amount.--For purposes of 
     this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `base erosion minimum tax amount' means, with respect to 
     any applicable taxpayer for any taxable year, the excess (if 
     any) of--
       ``(A) an amount equal to 10 percent of the modified taxable 
     income of such taxpayer for the taxable year, over
       ``(B) an amount equal to the regular tax liability (as 
     defined in section 26(b)) of the taxpayer for the taxable 
     year, reduced (but not below zero) by the excess (if any) 
     of--
       ``(i) the credits allowed under this chapter against such 
     regular tax liability, over
       ``(ii) the credit allowed under section 38 for the taxable 
     year which is properly allocable to the research credit 
     determined under section 41(a).
       ``(2) Modifications for taxable years beginning after 
     2025.--In the case of any taxable year beginning after 
     December 31, 2025, paragraph (1) shall be applied--
       ``(A) by substituting `12.5 percent' for `10 percent' in 
     subparagraph (A) thereof, and
       ``(B) by reducing (but not below zero) the regular tax 
     liability (as defined in section 26(b)) for purposes of 
     subparagraph (B) thereof by the aggregate amount of the 
     credits allowed under this chapter against such regular tax 
     liability rather than the excess described in such 
     subparagraph.
       ``(c) Modified Taxable Income.--For purposes of this 
     section--
       ``(1) In general.--The term `modified taxable income' means 
     the taxable income of the taxpayer computed under this 
     chapter for the taxable year, determined without regard to--
       ``(A) any base erosion tax benefit with respect to any base 
     erosion payment, or
       ``(B) the base erosion percentage of any net operating loss 
     deduction allowed under section 172 for the taxable year.
       ``(2) Base erosion tax benefit.--
       ``(A) In general.--The term `base erosion tax benefit' 
     means--
       ``(i) any deduction described in subsection (d)(1) which is 
     allowed under this chapter for the taxable year with respect 
     to any base erosion payment,
       ``(ii) in the case of a base erosion payment described in 
     subsection (d)(2), any deduction allowed under this chapter 
     for the taxable year for depreciation (or amortization in 
     lieu of depreciation) with respect to the property acquired 
     with such payment, and

[[Page S7464]]

       ``(iii) in the case of a base erosion payment described in 
     subsection (d)(3), any reduction in gross receipts with 
     respect to such payment in computing gross income of the 
     taxpayer for the taxable year for purposes of this chapter.
       ``(B) Tax benefits disregarded if tax withheld on base 
     erosion payment.--
       ``(i) In general.--Except as provided in clause (ii), any 
     base erosion tax benefit attributable to any base erosion 
     payment--

       ``(I) on which tax is imposed by section 871 or 881, and
       ``(II) with respect to which tax has been deducted and 
     withheld under section 1441 or 1442,

     shall not be taken into account in computing modified taxable 
     income under paragraph (1)(A) or the base erosion percentage 
     under paragraph (4).
       ``(ii) Exception.--The amount not taken into account in 
     computing modified taxable income by reason of clause (i) 
     shall be reduced under rules similar to the rules under 
     section 163(j)(5)(B) (as in effect before the date of the 
     enactment of the Tax Cuts and Jobs Act).
       ``(3) Special rules for determining interest for which 
     deduction allowed.--For purposes of applying paragraph (1), 
     in the case of a taxpayer to which subsection (j) or (n) of 
     section 163 applies for the taxable year, the reduction in 
     the amount of interest for which a deduction is allowed by 
     reason of such subsection shall be treated as allocable first 
     to interest paid or accrued to persons who are not related 
     parties with respect to the taxpayer and then to such related 
     parties.
       ``(4) Base erosion percentage.--For purposes of paragraph 
     (1)(B)--
       ``(A) In general.--The term `base erosion percentage' 
     means, for any taxable year, the percentage determined by 
     dividing--
       ``(i) the aggregate amount of base erosion tax benefits of 
     the taxpayer for the taxable year, by
       ``(ii) the aggregate amount of the deductions allowable to 
     the taxpayer under this chapter for the taxable year.
       ``(B) Special rules.--The amount under subparagraph (A)(ii) 
     shall be determined--
       ``(i) by taking into account base erosion tax benefits 
     described in clauses (i) and (ii) of paragraph (2)(A), and
       ``(ii) by not taking into account any deduction allowed 
     under section 172, 245A, or 250 for the taxable year.
       ``(d) Base Erosion Payment.--For purposes of this section--
       ``(1) In general.--The term `base erosion payment' means 
     any amount paid or accrued by the taxpayer to a foreign 
     person which is a related party of the taxpayer and with 
     respect to which a deduction is allowable under this chapter.
       ``(2) Purchase of depreciable property.--Such term shall 
     also include any amount paid or accrued by the taxpayer to a 
     foreign person which is a related party of the taxpayer in 
     connection with the acquisition by the taxpayer from such 
     person of property of a character subject to the allowance of 
     depreciation (or amortization in lieu of depreciation).
       ``(3) Certain payments to expatriated entities.--
       ``(A) In general.--Such term shall also include any amount 
     paid or accrued by the taxpayer with respect to a person 
     described in subparagraph (B) which results in a reduction of 
     the gross receipts of the taxpayer.
       ``(B) Person described.--A person is described in this 
     subparagraph if such person is a--
       ``(i) surrogate foreign corporation which is a related 
     party of the taxpayer, but only if such person first became a 
     surrogate foreign corporation after November 9, 2017, or
       ``(ii) foreign person which is a member of the same 
     expanded affiliated group as the surrogate foreign 
     corporation.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Surrogate foreign corporation.--The term `surrogate 
     foreign corporation' has the meaning given such term by 
     section 7874(a)(2) but does not include a foreign corporation 
     treated as a domestic corporation under section 7874(b).
       ``(ii) Expanded affiliated group.--The term `expanded 
     affiliated group' has the meaning given such term by section 
     7874(c)(1).
       ``(4) Exception for certain amounts with respect to 
     services.--Paragraph (1) shall not apply to any amount paid 
     or accrued by a taxpayer for services if--
       ``(A) such services are services which meet the 
     requirements for eligibility for use of the services cost 
     method under section 482 (determined without regard to the 
     requirement that the services not contribute significantly to 
     fundamental risks of business success or failure), and
       ``(B) such amount constitutes the total services cost with 
     no markup.
       ``(e) Applicable Taxpayer.--For purposes of this section--
       ``(1) In general.--The term `applicable taxpayer' means, 
     with respect to any taxable year, a taxpayer--
       ``(A) which is a corporation other than a regulated 
     investment company, a real estate investment trust, or an S 
     corporation,
       ``(B) the average annual gross receipts of which for the 3-
     taxable-year period ending with the preceding taxable year 
     are at least $500,000,000, and
       ``(C) the base erosion percentage (as determined under 
     subsection (c)(4)) of which for the taxable year is 4 percent 
     or higher.
       ``(2) Gross receipts.--
       ``(A) Special rule for foreign persons.--In the case of a 
     foreign person the gross receipts of which are taken into 
     account for purposes of paragraph (1)(B), only gross receipts 
     which are taken into account in determining income which is 
     effectively connected with the conduct of a trade or business 
     within the United States shall be taken into account. In the 
     case of a taxpayer which is a foreign person, the preceding 
     sentence shall not apply to the gross receipts of any United 
     States person which are aggregated with the taxpayer's gross 
     receipts by reason of paragraph (3).
       ``(B) Other rules made applicable.--Rules similar to the 
     rules of subparagraphs (B), (C), and (D) of section 448(c)(3) 
     shall apply in determining gross receipts for purposes of 
     this section.
       ``(3) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) of section 52 shall be treated 
     as 1 person for purposes of this subsection and subsection 
     (c)(4), except that in applying section 1563 for purposes of 
     section 52, the exception for foreign corporations under 
     section 1563(b)(2)(C) shall be disregarded.
       ``(f) Foreign Person.--For purposes of this section, the 
     term `foreign person' has the meaning given such term by 
     section 6038A(c)(3).
       ``(g) Related Party.--For purposes of this section--
       ``(1) In general.--The term `related party' means, with 
     respect to any applicable taxpayer--
       ``(A) any 25-percent owner of the taxpayer,
       ``(B) any person who is related (within the meaning of 
     section 267(b) or 707(b)(1)) to the taxpayer or any 25-
     percent owner of the taxpayer, and
       ``(C) any other person who is related (within the meaning 
     of section 482) to the taxpayer.
       ``(2) 25-percent owner.--The term `25-percent owner' means, 
     with respect to any corporation, any person who owns at least 
     25 percent of--
       ``(A) the total voting power of all classes of stock of a 
     corporation entitled to vote, or
       ``(B) the total value of all classes of stock of such 
     corporation.
       ``(3) Section 318 to apply.--Section 318 shall apply for 
     purposes of paragraphs (1) and (2), except that--
       ``(A) `10 percent' shall be substituted for `50 percent' in 
     section 318(a)(2)(C), and
       ``(B) subparagraphs (A), (B), and (C) of section 318(a)(3) 
     shall not be applied so as to consider a United States person 
     as owning stock which is owned by a person who is not a 
     United States person.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section, 
     including regulations providing for such adjustments to the 
     application of this section as are necessary to prevent the 
     avoidance of the purposes of this section, including 
     through--
       ``(1) the use of unrelated persons, conduit transactions, 
     or other intermediaries, or
       ``(2) transactions or arrangements designed, in whole or in 
     part--
       ``(A) to characterize payments otherwise subject to this 
     section as payments not subject to this section, or
       ``(B) to substitute payments not subject to this section 
     for payments otherwise subject to this section.''.
       (b) Reporting Requirements and Penalties.--
       (1) In general.--Subsection (b) of section 6038A is amended 
     to read as follows:
       ``(b) Required Information.--
       ``(1) In general.--For purposes of subsection (a), the 
     information described in this subsection is such information 
     as the Secretary prescribes by regulations relating to--
       ``(A) the name, principal place of business, nature of 
     business, and country or countries in which organized or 
     resident, of each person which--
       ``(i) is a related party to the reporting corporation, and
       ``(ii) had any transaction with the reporting corporation 
     during its taxable year,
       ``(B) the manner in which the reporting corporation is 
     related to each person referred to in subparagraph (A), and
       ``(C) transactions between the reporting corporation and 
     each foreign person which is a related party to the reporting 
     corporation.
       ``(2) Additional information regarding base erosion 
     payments.--For purposes of subsection (a) and section 6038C, 
     if the reporting corporation or the foreign corporation to 
     whom section 6038C applies is an applicable taxpayer, the 
     information described in this subsection shall include--
       ``(A) such information as the Secretary determines 
     necessary to determine the base erosion minimum tax amount, 
     base erosion payments, and base erosion tax benefits of the 
     taxpayer for purposes of section 59A for the taxable year, 
     and
       ``(B) such other information as the Secretary determines 
     necessary to carry out such section.
     For purposes of this paragraph, any term used in this 
     paragraph which is also used in section 59A shall have the 
     same meaning as when used in such section.''.
       (2) Increase in penalty.--Paragraphs (1) and (2) of section 
     6038A(d) are each amended by striking ``$10,000'' and 
     inserting ``$25,000''.
       (c) Disallowance of Credits Against Base Erosion Tax.--
     Paragraph (2) of section

[[Page S7465]]

     26(b) is amended by inserting after subparagraph (A) the 
     following new subparagraph:
       ``(B) section 59A (relating to base erosion and anti-abuse 
     tax),''.
       (d) Conforming Amendments.--
       (1) The table of parts for subchapter A of chapter 1 is 
     amended by adding after the item relating to part VI the 
     following new item:

``Part VII. Base erosion and anti-abuse tax''.
       (2) Paragraph (1) of section 882(a), as amended by this 
     Act, is amended by inserting `` or 59A,'' after ``section 
     11,''.
       (3) Subparagraph (A) of section 6425(c)(1), as amended by 
     sections 12001 and 13001, is amended to read as follows:
       ``(A) the sum of--
       ``(i) the tax imposed by section 11, or subchapter L of 
     chapter 1, whichever is applicable, plus
       ``(ii) the tax imposed by section 59A, over''.
       (4)(A) Subparagraph (A) of section 6655(g)(1), as amended 
     by sections 12001 and 13001, is amended by striking ``plus'' 
     at the end of clause (i), by redesignating clause (ii) as 
     clause (iii), and by inserting after clause (i) the following 
     new clause:
       ``(ii) the tax imposed by section 59A, plus''.
       (B) Subparagraphs (A)(i) and (B)(i) of section 6655(e)(2), 
     as amended by section 13001, are each amended by inserting 
     ``and modified taxable income'' after ``taxable income''.
       (C) Subparagraph (B) of section 6655(e)(2) is amended by 
     adding at the end the following new clause:
       ``(iii) Modified taxable income.--The term `modified 
     taxable income' has the meaning given such term by section 
     59A(c)(1).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to base erosion payments (as defined in section 
     59A(d) of the Internal Revenue Code of 1986, as added by this 
     section) paid or accrued in taxable years beginning after 
     December 31, 2017.

                       PART III--OTHER PROVISIONS

     SEC. 14501. TAXATION OF PASSENGER CRUISE GROSS INCOME OF 
                   FOREIGN CORPORATIONS AND NONRESIDENT ALIEN 
                   INDIVIDUALS.

       (a) In General.--Section 882 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Treatment of Passenger Cruise Gross Income.--
       ``(1) In general.--For purposes of this title, the 
     effectively connected passenger cruise gross income of a 
     foreign corporation shall be treated as gross income which is 
     effectively connected with the conduct of a trade or business 
     in the United States.
       ``(2) Effectively connected passenger cruise gross 
     income.--For purposes of this subsection, the term 
     `effectively connected passenger cruise gross income' means, 
     with respect to the operation of any ship in a covered 
     voyage, the United States territorial waters percentage of 
     the gross income (determined without regard to section 
     883(a)(1)) derived from such operation, including any amount 
     received with respect to the provision of any on- or off-
     board activities, services, or sales, with respect to 
     passengers incidental to such operation (or with respect to 
     any agreement with any person with respect to the provision 
     of any such activities, services, or sales).
       ``(3) United states territorial waters percentage.--For 
     purposes of this subsection--
       ``(A) In general.--The term `United States territorial 
     waters percentage' means, with respect to the operation of 
     any ship in any covered voyage, the ratio (expressed as a 
     percentage) of--
       ``(i) the number of days during such voyage such ship was 
     operated in the territorial waters of the United States, 
     divided by
       ``(ii) the total number of days of such voyage.
       ``(B) Calendar day rule.--If a ship--
       ``(i) is operated in a covered voyage, or
       ``(ii) is operated in the territorial waters of the United 
     States during a covered voyage,
     for any portion of a calendar day, such ship shall be treated 
     as having operated in a covered voyage, or as having operated 
     in such territorial waters, respectively, for the entirety of 
     such day.
       ``(C) Territorial waters.--The territorial waters of the 
     United States shall be treated as consisting of those waters 
     which are--
       ``(i) within the international boundary line between the 
     United States and any contiguous foreign country, or
       ``(ii) within 12 nautical miles from low tide on the 
     coastline of the United States.
       ``(4) Covered voyage.--For purposes of this subsection--
       ``(A) In general.--The term `covered voyage' has the 
     meaning given such term by section 4472(1).
       ``(B) Anti-abuse rule.--Except as otherwise provided by the 
     Secretary, if passengers embark a ship in the United States 
     and more than 10 percent of such passengers disembark in the 
     United States, the operation of such ship at all times 
     between such events shall be treated as a covered voyage. 
     Nothing in the preceding sentence shall preclude any 
     operation of a ship (including any operation of a ship before 
     or after such events) which would otherwise be treated as 
     part of a covered voyage from being so treated.
       ``(5) Treatment of otherwise effectively connected 
     income.--Gross income which would, without regard to this 
     subsection, be gross income which is effectively connected 
     with the conduct of a trade or business in the United 
     States--
       ``(A) shall be so treated, and
       ``(B) shall not be taken into account as gross income under 
     paragraph (2).''.
       (b) Application to Nonresident Alien Individuals.--Section 
     871 is amended by redesignating subsection (n) as subsection 
     (o) and by inserting after subsection (m) the following new 
     subsection:
       ``(n) Treatment of Passenger Cruise Gross Income.--
       ``(1) In general.--For purposes of this title, the 
     effectively connected passenger cruise gross income of a 
     nonresident alien individual shall be treated as gross income 
     which is effectively connected with the conduct of a trade or 
     business in the United States.
       ``(2) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Definitions.--Terms used in this subsection which are 
     also used in section 882(f) shall have the same meaning as 
     when used in such section, except that section 882(f)(2) 
     shall be applied by substituting `section 872(b)(1)' for 
     `section 883(a)(1)'.
       ``(B) Treatment of otherwise effectively connected 
     income.--Rules similar to the rules of section 882(f)(5) 
     shall apply for purposes of this subsection.''.
       (c) Coordination With Reciprocal Exemptions for Shipping 
     Income.--
       (1) In general.--Section 883(a)(1) is amended by striking 
     ``Gross income'' and inserting ``Except as provided in 
     section 882(f), gross income''.
       (2) Nonresident alien individuals.--Section 872(b)(1) is 
     amended by striking ``Gross income'' and inserting ``Except 
     as provided in section 871(n), gross income''.
       (d) Coordination With Tax on Gross Transportation Income.--
     Section 887(b)(4) is amended by adding at the end the 
     following new flush text:
     ``The preceding sentence shall not apply to any United States 
     source gross transportation income which is effectively 
     connected passenger cruise gross income (within the meaning 
     of section 871(n) or 882(f)).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14502. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO 
                   PASSIVE FOREIGN INVESTMENT COMPANY RULES.

       (a) In General.--Section 1297(b)(2)(B) is amended to read 
     as follows:
       ``(B) derived in the active conduct of an insurance 
     business by a qualifying insurance corporation (as defined in 
     subsection (f)),''.
       (b) Qualifying Insurance Corporation Defined.--Section 1297 
     is amended by adding at the end the following new subsection:
       ``(f) Qualifying Insurance Corporation.--For purposes of 
     subsection (b)(2)(B)--
       ``(1) In general.--The term `qualifying insurance 
     corporation' means, with respect to any taxable year, a 
     foreign corporation--
       ``(A) which would be subject to tax under subchapter L if 
     such corporation were a domestic corporation, and
       ``(B) the applicable insurance liabilities of which 
     constitute more than 25 percent of its total assets, 
     determined on the basis of such liabilities and assets as 
     reported on the corporation's applicable financial statement 
     for the last year ending with or within the taxable year.
       ``(2) Alternative facts and circumstances test for certain 
     corporations.--If a corporation fails to qualify as a 
     qualified insurance corporation under paragraph (1) solely 
     because the percentage determined under paragraph (1)(B) is 
     25 percent or less, a United States person that owns stock in 
     such corporation may elect to treat such stock as stock of a 
     qualifying insurance corporation if--
       ``(A) the percentage so determined for the corporation is 
     at least 10 percent, and
       ``(B) under regulations provided by the Secretary, based on 
     the applicable facts and circumstances--
       ``(i) the corporation is predominantly engaged in an 
     insurance business, and
       ``(ii) such failure is due solely to runoff-related or 
     rating-related circumstances involving such insurance 
     business.
       ``(3) Applicable insurance liabilities.--For purposes of 
     this subsection--
       ``(A) In general.--The term `applicable insurance 
     liabilities' means, with respect to any life or property and 
     casualty insurance business--
       ``(i) loss and loss adjustment expenses, and
       ``(ii) reserves (other than deficiency, contingency, or 
     unearned premium reserves) for life and health insurance 
     risks and life and health insurance claims with respect to 
     contracts providing coverage for mortality or morbidity 
     risks.
       ``(B) Limitations on amount of liabilities.--Any amount 
     determined under clause (i) or (ii) of subparagraph (A) shall 
     not exceed the lesser of such amount--
       ``(i) as reported to the applicable insurance regulatory 
     body in the applicable financial statement described in 
     paragraph (4)(A) (or, if less, the amount required by 
     applicable law or regulation), or
       ``(ii) as determined under regulations prescribed by the 
     Secretary.
       ``(4) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable financial statement.--The term `applicable 
     financial statement' means a statement for financial 
     reporting purposes which--
       ``(i) is made on the basis of generally accepted accounting 
     principles,
       ``(ii) is made on the basis of international financial 
     reporting standards, but only if there is no statement that 
     meets the requirement of clause (i), or

[[Page S7466]]

       ``(iii) except as otherwise provided by the Secretary in 
     regulations, is the annual statement which is required to be 
     filed with the applicable insurance regulatory body, but only 
     if there is no statement which meets the requirements of 
     clause (i) or (ii).
       ``(B) Applicable insurance regulatory body.--The term 
     `applicable insurance regulatory body' means, with respect to 
     any insurance business, the entity established by law to 
     license, authorize, or regulate such business and to which 
     the statement described in subparagraph (A) is provided.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14503. REPEAL OF FAIR MARKET VALUE METHOD OF INTEREST 
                   EXPENSE APPORTIONMENT.

       (a) In General.--Paragraph (2) of section 864(e) is amended 
     to read as follows:
       ``(2) Gross income and fair market value methods may not be 
     used for interest.--All allocations and apportionments of 
     interest expense shall be determined using the adjusted bases 
     of assets rather than on the basis of the fair market value 
     of the assets or gross income.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 14504. MODIFICATION TO SOURCE RULES INVOLVING 
                   POSSESSIONS.

       (a) In General.--Subsection (b)(2) of Section 937 of the 
     Internal Revenue Code of 1986 is amended by inserting ``, but 
     only to the extent such income is attributable to an office 
     or fixed place of business within the United States 
     (determined under the rules of Section 864(c)(5))'' before 
     the period at the end.
       (b) Source Rules for Personal Property Sales.--Subsection 
     (j)(3) of section 865 of the Internal Revenue Code of 1986 is 
     amended by inserting ``932,'' after ``931,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.

     SEC. 14505. REPEAL OF EXCLUSION APPLICABLE TO CERTAIN 
                   PASSENGER AIRCRAFT OPERATED BY A FOREIGN 
                   CORPORATION.

       (a) In General.--Section 883 is amended--
       (1) by striking ``Gross income'' in subsection (a)(2) and 
     inserting ``Except as provided in subsection (d), gross 
     income'', and
       (2) by adding at the end the following new subsection:
       ``(d) Exception for Aircraft Operated by Foreign 
     Corporations.--
       ``(1) In general.--Subsection (a)(2) shall not apply to any 
     corporation operating a passenger airline if--
       ``(A) the corporation is organized in a foreign country the 
     residents of which are not eligible for a reduced rate of tax 
     or an exemption from tax under section 881 or 882, and
       ``(B) such foreign country has fewer than 2 arrivals and 
     departures, per week, from passenger airline carriers which--
       ``(i) are organized under the laws of the United States or 
     any State, and
       ``(ii) have annual gross operational revenues of more than 
     $1,000,000,000.
     For purposes of subparagraph (B), an aircraft that lands in 
     one country and subsequently departs from that country shall 
     be treated as having engaged in 1 arrival and departure.
       ``(2) Inflation adjustment.--In the case of any calendar 
     year beginning after 2018, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 2017' for `calendar year 2016' in 
     subparagraph (A)(ii) thereof.
     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $1,000,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                Subtitle E--Revenue Dependent Proposals

     SEC. 15001. REPEAL OF INCREASED LIMITATION ON NET OPERATING 
                   LOSSES.

       Section 172(a)(2), as amended by section 13302, is amended 
     by striking ``(80 percent, in the case of taxable years 
     beginning after December 31, 2022)''.

     SEC. 15002. REPEAL OF LIMITATION ON DEDUCTION FOR MEALS 
                   PROVIDED AT THE CONVENIENCE OF THE EMPLOYER.

       Section 274, as amended by section 13304, is amended by 
     striking subsection (o) and redesignating subsection (p) as 
     subsection (o).

     SEC. 15003. REPEAL OF REDUCED DEDUCTION FOR GLOBAL INTANGIBLE 
                   LOW-TAXED INCOME AND FOREIGN-DERIVED INTANGIBLE 
                   INCOME.

       Section 250(a), as added by section 14202, is amended by 
     striking paragraph (3).

     SEC. 15004. REPEAL OF MODIFICATIONS TO THE BASE EROSION AND 
                   ANTI-ABUSE TAX.

       Section 59A(b), as added by section 14401, is amended to 
     read as follows:
       ``(b) Base Erosion Minimum Tax Amount.--For purposes of 
     this section, the term `base erosion minimum tax amount' 
     means, with respect to any applicable taxpayer for any 
     taxable year, the excess (if any) of--
       ``(1) an amount equal to 10 percent of the modified taxable 
     income of such taxpayer for the taxable year, over
       ``(2) an amount equal to the regular tax liability (as 
     defined in section 26(b)) of the taxpayer for the taxable 
     year, reduced (but not below zero) by the excess (if any) 
     of--
       ``(A) the credits allowed under this chapter against such 
     regular tax liability, over
       ``(B) the credit allowed under section 38 for the taxable 
     year which is properly allocable to the research credit 
     determined under section 41(a).''.

     SEC. 15005. REPEAL OF AMORTIZATION OF RESEARCH AND 
                   EXPERIMENTAL EXPENDITURES.

       (a) In General.--Section 174, as amended by section 13206, 
     is amended to read as follows:

     ``SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES.

       ``(a) Treatment as Expenses.--
       ``(1) In general.--A taxpayer may treat research or 
     experimental expenditures which are paid or incurred by him 
     during the taxable year in connection with his trade or 
     business as expenses which are not chargeable to capital 
     account. The expenditures so treated shall be allowed as a 
     deduction.
       ``(2) When method may be adopted.--
       ``(A) Without consent.--A taxpayer may, without the consent 
     of the Secretary, adopt the method provided in this 
     subsection for his first taxable year for which expenditures 
     described in paragraph (1) are paid or incurred.
       ``(B) With consent.--A taxpayer may, with the consent of 
     the Secretary, adopt at any time the method provided in this 
     subsection.
       ``(3) Scope.--The method adopted under this subsection 
     shall apply to all expenditures described in paragraph (1). 
     The method adopted shall be adhered to in computing taxable 
     income for the taxable year and for all subsequent taxable 
     years unless, with the approval of the Secretary, a change to 
     a different method is authorized with respect to part or all 
     of such expenditures.
       ``(b) Amortization of Certain Research and Experimental 
     Expenditures.--
       ``(1) In general.--At the election of the taxpayer, made in 
     accordance with regulations prescribed by the Secretary, 
     research or experimental expenditures which are--
       ``(A) paid or incurred by the taxpayer in connection with 
     his trade or business,
       ``(B) not treated as expenses under subsection (a), and
       ``(C) chargeable to capital account but not chargeable to 
     property of a character which is subject to the allowance 
     under section 167 (relating to allowance for depreciation, 
     etc.) or section 611 (relating to allowance for depletion),
     may be treated as deferred expenses. In computing taxable 
     income, such deferred expenses shall be allowed as a 
     deduction ratably over such period of not less than 60 months 
     as may be selected by the taxpayer (beginning with the month 
     in which the taxpayer first realizes benefits from such 
     expenditures). Such deferred expenses are expenditures 
     properly chargeable to capital account for purposes of 
     section 1016(a)(1) (relating to adjustments to basis of 
     property).
       ``(2) Time for and scope of election.--The election 
     provided by paragraph (1) may be made for any taxable year, 
     but only if made not later than the time prescribed by law 
     for filing the return for such taxable year (including 
     extensions thereof). The method so elected, and the period 
     selected by the taxpayer, shall be adhered to in computing 
     taxable income for the taxable year for which the election is 
     made and for all subsequent taxable years unless, with the 
     approval of the Secretary, a change to a different method (or 
     to a different period) is authorized with respect to part or 
     all of such expenditures. The election shall not apply to any 
     expenditure paid or incurred during any taxable year before 
     the taxable year for which the taxpayer makes the election.
       ``(c) Land and Other Property.--This section shall not 
     apply to any expenditure for the acquisition or improvement 
     of land, or for the acquisition or improvement of property to 
     be used in connection with the research or experimentation 
     and of a character which is subject to the allowance under 
     section 167 (relating to allowance for depreciation, etc.) or 
     section 611 (relating to allowance for depletion); but for 
     purposes of this section allowances under section 167, and 
     allowances under section 611, shall be considered as 
     expenditures.
       ``(d) Exploration Expenditures.--This section shall not 
     apply to any expenditure paid or incurred for the purpose of 
     ascertaining the existence, location, extent, or quality of 
     any deposit of ore or other mineral (including oil and gas).
       ``(e) Only Reasonable Research Expenditures Eligible.--This 
     section shall apply to a research or experimental expenditure 
     only to the extent that the amount thereof is reasonable 
     under the circumstances.
       ``(f) Cross References.--
       ``(1) For adjustments to basis of property for amounts 
     allowed as deductions as deferred expenses under subsection 
     (b), see section 1016(a)(14).
       ``(2) For election of 10-year amortization of expenditures 
     allowable as a deduction under subsection (a), see section 
     59(e).''.
       (b) Change in Method of Accounting.--The amendments made by 
     subsection (a) shall be treated as a change in method of 
     accounting for purposes of section 481 of the Internal 
     Revenue Code of 1986 and--
       (1) such change shall be treated as initiated by the 
     taxpayer,
       (2) such change shall be treated as made with the consent 
     of the Secretary, and
       (3) such change shall be applied only on a cut-off basis 
     for any research or experimental expenditures paid or 
     incurred in taxable years beginning after December 31, 2025, 
     and no adjustments under section 481(a) shall be made.

[[Page S7467]]

       (c) Conforming Amendments.--
       (1) Section 41(d)(1)(A), as amended by section 13206, is 
     amended by striking ``specified research or experimental 
     expenditures under section 174'' and inserting ``expenses 
     under section 174''.
       (2) Subsection (c) of section 280C, as amended by section 
     13206, is amended--
       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively, and
       (B) by striking paragraph (1) and inserting the following:
       ``(1) In general.--No deduction shall be allowed for that 
     portion of the qualified research expenses (as defined in 
     section 41(b)) or basic research expenses (as defined in 
     section 41(e)(2)) otherwise allowable as a deduction for the 
     taxable year which is equal to the amount of the credit 
     determined for such taxable year under section 41(a).
       ``(2) Similar rule where taxpayer capitalizes rather than 
     deducts expenses.--If--
       ``(A) the amount of the credit determined for the taxable 
     year under section 41(a)(1), exceeds
       ``(B) the amount allowable as a deduction for such taxable 
     year for qualified research expenses or basic research 
     expenses (determined without regard to paragraph (1)),
     the amount chargeable to capital account for the taxable year 
     for such expenses shall be reduced by the amount of such 
     excess.'', and
       (C) in paragraph (3)(A)(i), as redesignated by subparagraph 
     (A), by striking ``paragraph (1)'' and inserting ``paragraphs 
     (1) and (2)''.
       (3) The table of sections for part VI of subchapter B of 
     chapter 1, as amended by section 13206, is amended by 
     striking the item related to section 174 and inserting the 
     following:

``Sec. 174. Research and experimental expenditures.''.

     SEC. 15006. REPORTING.

       (a) In General.--Subpart B of part III of subchapter A of 
     chapter 61, as amended by this Act, is amended by adding at 
     the end the following new section:

     ``SEC. 6050Z. TRANSACTION AFFECTING REVENUE DEPENDENT 
                   PROPOSALS.

       ``(a) Research and Experimental Expenditures.--Any taxpayer 
     who makes research and experimental expenditures (within the 
     meaning of section 174) during a taxable year shall make a 
     return according to the forms and regulations prescribed by 
     the Secretary, setting forth the aggregate amount of such 
     expenditures.
       ``(b) Foreign Related Party Payments.--Any taxpayer who 
     makes a payment to a foreign person which is a related party 
     (as such terms are defined in section 59A) of the taxpayer 
     during the taxable year shall make a return according to the 
     forms and regulations prescribed by the Secretary, setting 
     forth--
       ``(1) the amount of such payments by type and separately 
     stated, and
       ``(2) any amount paid which results in a reduction of gross 
     receipts to the taxpayer.
       ``(c) Foreign-derived Intangible Income.--Any taxpayer who 
     has foreign-derived intangible income (as defined in section 
     250(b)) for a taxable year shall make a return according to 
     the forms and regulations prescribed by the Secretary, 
     setting forth--
       ``(1) the aggregate amount of such income,
       ``(2) the amount of foreign-derived deduction eligible 
     income (as defined in section 250(b)(4)), and
       ``(3) a certification that any income described in 
     paragraph (2) does not relate to the sale of products for any 
     use, consumption, or disposition within the United States.''.
       (b) Penalty.--Section 6652, as amended by section 13603, is 
     amended by adding at the end the following new subsection:
       ``(q) Failure to File With Respect to Transactions 
     Affecting Revenue Dependent Proposals.--In the case of any 
     failure to make a return required under section 6050Z 
     containing the information required by such section on the 
     date prescribed therefor (determined with regard to any 
     extension of time for filing), unless it is shown that such 
     failure is due to reasonable cause, there shall be paid (on 
     notice and demand by the Secretary and in the same manner as 
     tax) by the person failing to file such return, an amount 
     equal to $1,000 for each day during which such failure 
     continues, but the total amount imposed under this subsection 
     with respect to any return shall not exceed $250,000.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2024.

     SEC. 15007. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply to taxable years beginning after December 31, 2025.
       (b) Revenue Requirement.--Notwithstanding subsection (a), 
     the amendments made by this subtitle shall not take effect 
     unless--
       (1) the excess of--
       (A) the cumulative aggregate on-budget Federal revenue from 
     all sources for the period beginning on October 1, 2017, and 
     ending on September 30, 2026, (as determined by the Secretary 
     of the Treasury based on amounts reported in the Financial 
     Report of the United States), over
       (B) $27,487,000,000,000, is greater than or equal to
       (2) $900,000,000,000.

                                TITLE II

     SEC. 20001. OIL AND GAS PROGRAM.

       (a) Definitions.--In this section:
       (1) Coastal plain.--The term ``Coastal Plain'' means the 
     area identified as the 1002 Area on the plates prepared by 
     the United States Geological Survey entitled ``ANWR Map - 
     Plate 1'' and ``ANWR Map - Plate 2'', dated October 24, 2017, 
     and on file with the United States Geological Survey and the 
     Office of the Solicitor of the Department of the Interior.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Bureau of Land 
     Management.
       (b) Oil and Gas Program.--
       (1) In general.--Section 1003 of the Alaska National 
     Interest Lands Conservation Act (16 U.S.C. 3143) is repealed.
       (2) Establishment.--
       (A) In general.--The Secretary shall establish and 
     administer a competitive oil and gas program for the leasing, 
     development, production, and transportation of oil and gas in 
     and from the Coastal Plain.
       (B) Purposes.--Section 303(2)(B) of the Alaska National 
     Interest Lands Conservation Act (Public Law 96-487; 94 Stat. 
     2390) is amended--
       (i) in clause (iii), by striking ``and'' at the end;
       (ii) in clause (iv), by striking the period at the end and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(v) to provide for an oil and gas program on the Coastal 
     Plain.''.
       (3) Management.--Except as otherwise provided in this 
     section, the Secretary shall manage the oil and gas program 
     on the Coastal Plain in accordance with the Naval Petroleum 
     Reserves Production Act of 1976 (42 U.S.C. 6501 et seq.) 
     (including regulations).
       (4) Royalties.--Notwithstanding the Mineral Leasing Act (30 
     U.S.C. 181 et seq.), the royalty rate for leases issued 
     pursuant to this section shall be 16.67 percent.
       (5) Receipts.--Notwithstanding the Mineral Leasing Act (30 
     U.S.C. 181 et seq.), of the amount of adjusted bonus, rental, 
     and royalty receipts derived from the oil and gas program and 
     operations on Federal land authorized under this section--
       (A) 50 percent shall be paid to the State of Alaska; and
       (B) the balance shall be deposited into the Treasury as 
     miscellaneous receipts.
       (c) 2 Lease Sales Within 10 Years.--
       (1) Requirement.--
       (A) In general.--Subject to subparagraph (B), the Secretary 
     shall conduct not fewer than 2 lease sales area-wide under 
     the oil and gas program under this section by not later than 
     10 years after the date of enactment of this Act.
       (B) Sale acreages; schedule.--
       (i) Acreages.--The Secretary shall offer for lease under 
     the oil and gas program under this section--

       (I) not fewer than 400,000 acres area-wide in each lease 
     sale; and
       (II) those areas that have the highest potential for the 
     discovery of hydrocarbons.

       (ii) Schedule.--The Secretary shall offer--

       (I) the initial lease sale under the oil and gas program 
     under this section not later than 4 years after the date of 
     enactment of this Act; and
       (II) a second lease sale under the oil and gas program 
     under this section not later than 7 years after the date of 
     enactment of this Act.

       (2) Rights-of-way.--The Secretary shall issue any rights-
     of-way or easements across the Coastal Plain for the 
     exploration, development, production, or transportation 
     necessary to carry out this section.
       (3) Surface development.--In administering this section, 
     the Secretary shall authorize up to 2,000 surface acres of 
     Federal land on the Coastal Plain to be covered by production 
     and support facilities (including airstrips and any area 
     covered by gravel berms or piers for support of pipelines) 
     during the term of the leases under the oil and gas program 
     under this section.

     SEC. 20002. LIMITATIONS ON AMOUNT OF DISTRIBUTED QUALIFIED 
                   OUTER CONTINENTAL SHELF REVENUES.

       Section 105(f)(1) of the Gulf of Mexico Energy Security Act 
     of 2006 (43 U.S.C. 1331 note; Public Law 109-432) is amended 
     by striking ``exceed $500,000,000 for each of fiscal years 
     2016 through 2055.'' and inserting the following: ``exceed--
       ``(A) $500,000,000 for each of fiscal years 2016 through 
     2019;
       ``(B) $650,000,000 for each of fiscal years 2020 and 2021; 
     and
       ``(C) $500,000,000 for each of fiscal years 2022 through 
     2055.''.

     SEC. 20003. STRATEGIC PETROLEUM RESERVE DRAWDOWN AND SALE.

       (a) Drawdown and Sale.--
       (1) In general.--Notwithstanding section 161 of the Energy 
     Policy and Conservation Act (42 U.S.C. 6241), except as 
     provided in subsections (b) and (c), the Secretary of Energy 
     shall draw down and sell from the Strategic Petroleum Reserve 
     5,000,000 barrels of crude oil during the period of fiscal 
     years 2026 through 2027.
       (2) Deposit of amounts received from sale.--Amounts 
     received from a sale under paragraph (1) shall be deposited 
     in the general fund of the Treasury during the fiscal year in 
     which the sale occurs.
       (b) Emergency Protection.--The Secretary of Energy shall 
     not draw down and sell crude oil under subsection (a) in a 
     quantity that would limit the authority to sell petroleum 
     products under subsection (h) of section 161 of the Energy 
     Policy and Conservation Act (42 U.S.C. 6241) in the full 
     quantity authorized by that subsection.

[[Page S7468]]

       (c) Limitation.--The Secretary of Energy shall not drawdown 
     or conduct sales of crude oil under subsection (a) after the 
     date on which a total of $325,000,000 has been deposited in 
     the general fund of the Treasury from sales authorized under 
     that subsection.
                                 ______
                                 
  SA 1619. Mr. DAINES (for himself and Ms. Murkowski) submitted an 
amendment intended to be proposed to amendment SA 1618 proposed by Mr. 
Hatch (for himself and Ms. Murkowski) and intended to be proposed to 
the bill H.R. 1, to provide for reconciliation pursuant to titles II 
and V of the concurrent resolution on the budget for fiscal year 2018; 
which was ordered to lie on the table; as follows:

       At the end of part IV of subtitle A of title I, insert the 
     following:

     SEC. 11033. DISTRIBUTIONS FROM 529S FOR REGISTERED 
                   APPRENTICESHIP PROGRAMS.

       (a) In General.--Section 529(e)(3) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Certain expenses associated with registered 
     apprenticeship programs.--The term `qualified higher 
     education expenses' shall include books, supplies, and 
     equipment required for the enrollment or attendance of a 
     designated beneficiary in an apprenticeship program 
     registered and certified with the Secretary of Labor under 
     section 1 of the National Apprenticeship Act (29 U.S.C. 
     50).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made and distributions paid 
     after December 31, 2017.
                                 ______
                                 
  SA 1620. Mr. INHOFE submitted an amendment intended to be proposed to 
amendment SA 1618 proposed by Mr. Hatch (for himself and Ms. Murkowski) 
and intended to be proposed to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       On page 186, line 6, insert ``provided such trade or 
     business includes the provision of electrical energy,'' after 
     ``pipeline,''.
                                 ______
                                 
  SA 1621. Mr. INHOFE submitted an amendment intended to be proposed to 
amendment SA 1618 proposed by Mr. Hatch (for himself and Ms. Murkowski) 
and intended to be proposed to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. _____. OPTION FOR STATE REGULATION OF HYDRAULIC 
                   FRACTURING.

       (a) Definitions.--In this section, the term ``Federal 
     land'' means--
       (1) public lands (as defined in section 103 of the Federal 
     Land Policy and Management Act of 1976 (43 U.S.C. 1702)); and
       (2) land under the jurisdiction of the Bureau of 
     Reclamation.
       (b) Option of State Regulation.--On payment to the 
     Secretary of the Interior of a fee of $1,000 per well, the 
     operator of a well on any Federal land within the boundaries 
     of the State may opt into the State regulatory scheme under 
     which the State shall have the sole authority to promulgate 
     or enforce any regulation, guidance, or permit requirement 
     relating to the treatment of the well by the application of 
     fluids under pressure to which propping agents may or may not 
     be added for the expressly designed purpose of initiating or 
     propagating fractures in a target geologic formation in order 
     to enhance production of oil, natural gas, or geothermal 
     production activities.
                                 ______
                                 
  SA 1622. Mr. PAUL (for himself and Mr. Kennedy) submitted an 
amendment intended to be proposed to amendment SA 1618 proposed by Mr. 
Hatch (for himself and Ms. Murkowski) and intended to be proposed to 
the bill H.R. 1, to provide for reconciliation pursuant to titles II 
and V of the concurrent resolution on the budget for fiscal year 2018; 
which was ordered to lie on the table; as follows:


       At the appropriate place, insert the following:

     SEC. 1____. FLOOR PLAN FINANCING.

       (a) Application of Interest Limitation.--
       (1) In general.--Section 163(j), as amended by section 
     13301, is amended--
       (A) in paragraph (1), by striking ``plus'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, plus'', and by inserting 
     after subparagraph (B) the following new subparagraph:
       ``(C) the floor plan financing interest of such taxpayer 
     for such taxable year.'', and
       (B) in paragraph (4)(C)(i)(II), by inserting ``, reduced by 
     the floor plan financing interest,'' after ``business 
     interest of the partnership'', and
       (C) by redesignating paragraph (9) as paragraph (10) and 
     inserting after paragraph (8) the following new paragraph:
       ``(9) Floor plan financing interest defined.--For purposes 
     of this subsection--
       ``(A) In general.--The term `floor plan financing interest' 
     means interest paid or accrued on floor plan financing 
     indebtedness.
       ``(B) Floor plan financing indebtedness.--The term `floor 
     plan financing indebtedness' means indebtedness--
       ``(i) used to finance the acquisition of motor vehicles 
     held for sale or lease, and
       ``(ii) secured by the inventory so acquired.
       ``(C) Motor vehicle.--The term `motor vehicle' means a 
     motor vehicle that is any of the following:
       ``(i) An automobile.
       ``(ii) A truck.
       ``(iii) A recreational vehicle.
       ``(iv) A motorcycle.
       ``(v) Any self-propelled vehicle designed for transporting 
     persons or property on a public street, highway, or road.
       ``(vi) A boat.
       ``(vii) Farm machinery or equipment.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2017.
       (b) Exception From 100 Percent Expensing.--
       (1) In general.--Paragraph (6) of section 168(k), as added 
     by section 13201(a)(4), is amended--
       (A) by striking ``shall not include any property'' and 
     inserting ``shall not include--
       ``(A) any property'', and
       (B) by adding at the end the following new subparagraph:
       ``(B) any property used in a trade or business that has had 
     floor plan financing indebtedness (as defined in paragraph 
     (9) of section 163(j)), if the floor plan financing interest 
     related to such indebtedness was taken into account under 
     paragraph (1)(C) of such section.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after September 27, 
     2017, in taxable years ending after such date.
                                 ______
                                 
  SA 1623. Mr. PAUL (for himself and Mr. Wicker) submitted an amendment 
intended to be proposed to amendment SA 1618 proposed by Mr. Hatch (for 
himself and Ms. Murkowski) and intended to be proposed to the bill H.R. 
1, to provide for reconciliation pursuant to titles II and V of the 
concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       At the end of subtitle D of title I, add the following:

         PART IV--REPEAL OF FOREIGN ACCOUNT TAX COMPLIANCE ACT

     SEC. 14601. REPEAL OF WITHHOLDING AND REPORTING WITH RESPECT 
                   TO CERTAIN FOREIGN ACCOUNTS.

       (a) In General.--Chapter 4 is repealed.
       (b) Conforming Amendments for Rules for Electronically 
     Filed Returns.--Section 6011(e)(4) is amended--
       (1) by inserting ``, as in effect on January 1, 2017'' 
     after ``(as defined in section 1471(d)(5)'', and
       (2) by striking ``or 1474(a)''.
       (c) Conforming Amendment Related to Substitute Dividends.--
     Section 871(m) is amended by striking ``chapters 3 and 4'' 
     both places it appears and inserting ``chapter 3''.
       (d) Other Conforming Amendments.--
       (1) Section 6414 s amended by striking ``or 4''.
       (2) Paragraph (1) of section 6501(b) is amended by striking 
     ``4,''.
       (3) Paragraph (2) of section 6501(b) is amended--
       (A) by striking ``4,'', and
       (B) by striking ``and witholding taxes'' in the heading and 
     inserting ``taxes and tax imposed by chapter 3''.
       (4) Paragraph (3) of section 6513(b) is amended--
       (A) by striking ``or 4'', and
       (B) by striking ``or 1474(b)''.
       (5) Section 6513(c) is amended by striking ``4,''.
       (6) Section 6611(e)(4) is amended by striking ``or 4''.
       (7) Paragraph (1) of section 6724(d) is amended by striking 
     ``under chapter 4 or''.
       (8) Paragraph (2) of section 6724(d) is amended by striking 
     ``or 4''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to payments made after the date of the enactment 
     of this Act.

     SEC. 14602. REPEAL OF INFORMATION REPORTING WITH RESPECT TO 
                   FOREIGN FINANCIAL ASSETS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by striking section 6038D.
       (b) Repeal of Modification of Statute of Limitations for 
     Significant Omission of Income in Connection With Foreign 
     Assets.--
       (1) Paragraph (1) of section 6501(e) is amended by striking 
     subparagraph (A) and by redesignating subparagraphs (B) and 
     (C) as subparagraphs (A) and (B), respectively.
       (2) Subparagraph (A) of section 6501(e), as redesignated by 
     paragraph (1), is amended by striking all that precedes 
     clause (i) and inserting the following:
       ``(A) General rule.--If the taxpayer omits from gross 
     income an amount properly included therein which is in excess 
     of 25 percent of the amount of gross income stated in the 
     return, the tax may be assessed, or a proceeding in court for 
     the collection of such tax may be begun without assessment, 
     at any time within 6 years after the return was filed. For 
     purposes of this subparagraph--''.

[[Page S7469]]

       (3) Paragraph (2) of section 6229(c) is amended by striking 
     ``and such amount is described in clause (i) or (ii) of 
     section 6501(e)(1)(A)'' and inserting ``which is in excess of 
     25 percent of the amount of gross income stated in its 
     return''.
       (4) Paragraph (8) of section 6501(c) is amended--
       (A) by striking ``pursuant to an election under section 
     1295(b) or'',
       (B) by striking ``1298(f)'', and
       (C) by striking ``6038D,''.
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter A of chapter 61 is amended by 
     striking the item related to section 6038D.
       (d) Effective Date.--
       (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) Returns.--The amendments made by subsection (b) shall 
     apply to returns filed after the date of the enactment of 
     this Act.

     SEC. 14603. REPEAL OF PENALTIES FOR UNDERPAYMENTS 
                   ATTRIBUTABLE TO UNDISCLOSED FOREIGN FINANCIAL 
                   ASSETS.

       (a) In General.--Section 6662 is amended--
       (1) in subsection (b), by striking paragraph (7) and 
     redesignating paragraph (8) as paragraph (7), and
       (2) by striking subsection (j) and redesignating subsection 
     (k) as subsection (j).

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 14604. REPEAL OF REPORTING OF ACTIVITIES WITH RESPECT TO 
                   PASSIVE FOREIGN INVESTMENT COMPANIES.

       (a) In General.--Section 1298 is amended by striking 
     subsection (f) and by redesignating subsection (g) as 
     subsection (f).

       (b) Conforming Amendment.--Section 1291(e) is amended by 
     striking ``and (d)'' and inserting ``, (d), and (f)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14605. REPEAL OF REPORTING REQUIREMENT FOR UNITED STATES 
                   OWNERS OF FOREIGN TRUSTS.

       (a) In General.--Paragraph (1) of section 6048(b) is 
     amended by striking ``shall submit such information as the 
     Secretary may prescribe with respect to such trust for such 
     year and''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 14606. REPEAL OF MINIMUM PENALTY WITH RESPECT TO FAILURE 
                   TO REPORT ON CERTAIN FOREIGN TRUSTS.

       (a) In General.--Section 6677(a) is amended--
       (1) by striking ``the greater of $10,000 or'', and
       (2) by striking the last sentence and inserting the 
     following: ``In no event shall the penalty under this 
     subsection with respect to any failure exceed the gross 
     reportable amount.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to notices and returns required to be filed after 
     the date of the enactment of this Act.
                                 ______
                                 
  SA 1624. Mr. HOEVEN submitted an amendment intended to be proposed to 
amendment SA 1618 proposed by Mr. Hatch (for himself and Ms. Murkowski) 
and intended to be proposed to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:
       At the end of subpart A of part V of subtitle C of title I, 
     add the following:

     SEC. 13405. EXTENSION OF REFINED COAL PRODUCTION TAX CREDIT.

       (a) Extension of Period During Which Refined Coal Can Be 
     Produced.--Section 45(e)(8) is amended by adding at the end 
     the following new subparagraph:
       ``(E) Extension of credit period for certain refined coal 
     facilities.--In the case of a refined coal production 
     facility which does not produce steel industry fuel and which 
     is placed in service before January 1, 2012, clauses (i) and 
     (ii)(II) of subparagraph (A) shall each be applied by 
     substituting `20-year period' for `10-year period'.''.
       (b) Extension of Period During Which Refined Coal 
     Facilities Can Be Qualified.--Subparagraph (B) of section 
     45(d)(8) is amended--
       (1) by striking ``placed in service after'' and inserting 
     ``placed in service--
       ``(i) after'',
       (2) by striking the period at the end and inserting ``, 
     or'', and
       (3) by adding at the end the following new clause:
       ``(ii) after December 31, 2017, and before January 1, 
     2021.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to coal produced and sold after the date of the 
     enactment of this Act, in taxable years ending after date.
                                 ______
                                 
  SA 1625. Mr. HOEVEN (for himself, Mr. Daines, and Mr. Wicker) 
submitted an amendment intended to be proposed to amendment SA 1618 
submitted by Mr. Hatch (for himself and Ms. Murkowski) and intended to 
be proposed to the bill H.R. 1, to provide for reconciliation pursuant 
to titles II and V of the concurrent resolution on the budget for 
fiscal year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. SECURE GEOLOGICAL STORAGE OF CARBON DIOXIDE.

       (a) In General.--Paragraph (2) of section 45Q(d) is amended 
     to read as follows:
       ``(2) Secure geological storage.--
       ``(A) In general.--Not later than December 31, 2018, the 
     Secretary shall establish regulations for determining 
     adequate security measures for the geological storage of 
     carbon dioxide under paragraph (1)(B) or (2)(C) of subsection 
     (a) such that the carbon dioxide does not escape into the 
     atmosphere.
       ``(B) Requirements.--The regulations established pursuant 
     to subparagraph (A) shall provide that--
       ``(i) for purposes of paragraph (1)(B) of subsection (a), 
     carbon dioxide shall be considered disposed of in secure 
     geological storage if such carbon dioxide is stored in 
     compliance with rules promulgated by the Environmental 
     Protection Agency under subpart RR of part 98 of title 40, 
     Code of Federal Regulations (as in effect on the date of the 
     enactment of this paragraph), under the Clean Air Act (42 
     U.S.C. 7401 et seq.) and rules under the Safe Drinking Water 
     Act (42 U.S.C. 300f et seq.) which are applicable to carbon 
     dioxide disposed of in secure geological storage and not used 
     as a tertiary injectant in a qualified enhanced oil or 
     natural gas recovery project, and
       ``(ii) for purposes of paragraph (2)(C) of subsection (a), 
     carbon dioxide shall be considered disposed of in secure 
     geological storage if such carbon dioxide is stored in 
     compliance with rules promulgated by the Environmental 
     Protection Agency which are applicable to carbon dioxide used 
     as a tertiary injectant in a qualified enhanced oil or 
     natural gas recovery project under--

       ``(I) subpart UU of part 98 of title 40, Code of Federal 
     Regulations (as in effect on the date of the enactment of 
     this paragraph), under the Clean Air Act, and
       ``(II) subpart C of part 146 of title 40, Code of Federal 
     Regulations (as in effect on the date of the enactment of 
     this paragraph), under the Safe Drinking Water Act, to the 
     extent such rules are applicable to Class II wells.''.

       (b) Qualified Enhanced Oil or Natural Gas Recovery 
     Project.--Paragraph (4) of section 45Q(d) is amended--
       (1) by striking ``by substituting'' and inserting 
     ``determined--
       ``(A) by substituting--'',
       (2) by striking the period and inserting ``, and'', and
       (3) by inserting at the end the following:
       ``(B) without regard to subparagraph (A)(iii) thereof.''.
                                 ______
                                 
  SA 1626. Mr. DAINES submitted an amendment intended to be proposed to 
amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. PERMANENT EXTENSION OF INDIAN COAL PRODUCTION TAX 
                   CREDIT.

       (a) In General.--Section 45(e)(10)(A) is amended by 
     striking ``per ton of Indian coal--'' and all that follows 
     and inserting the following: ``per ton of Indian coal--
       ``(i) produced by the taxpayer at an Indian coal production 
     facility, and
       ``(ii) sold (either directly by the taxpayer or after sale 
     or transfer to one or more related persons) to an unrelated 
     person.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to coal produced and sold after January 1, 2017.
                                 ______
                                 
  SA 1627. Mr. CORNYN (for himself, Mr. Inhofe, and Mr. Roberts) 
submitted an amendment intended to be proposed to amendment SA 1618 
submitted by Mr. Hatch (for himself and Ms. Murkowski) and intended to 
be proposed to the bill H.R. 1, to provide for reconciliation pursuant 
to titles II and V of the concurrent resolution on the budget for 
fiscal year 2018; which was ordered to lie on the table; as follows:

       In section 11011, after subsection (a), insert the 
     following:
       (b) Application to Publicly Traded Partnerships.--
       (1) In general.--Section 199A(b)(1)(B), as added by 
     subsection (a), is amended by striking ``and qualified 
     cooperative dividends'' and inserting ``, qualified 
     cooperative dividends, and qualified publicly traded 
     partnership income''.
       (2) Qualified publicly traded partnership income.--Section 
     199A(e), as added by subsection (a), is amended by adding at 
     the end the following new paragraph:
       ``(5) Qualified publicly traded partnership income.--The 
     term `qualified publicly traded partnership income' means, 
     with respect to any taxpayer, the sum of--

[[Page S7470]]

       ``(A) the net amount of such taxpayer's allocable share of 
     each qualified item of income, gain, deduction, and loss (as 
     defined in subsection (c)(3) and determined after the 
     application of subsection (c)(4)) from a publicly traded 
     partnership (as defined in section 7704(a)) which is not 
     treated as a corporation under section 7704(c), plus
       ``(B) any gain recognized by such taxpayer upon disposition 
     of its interest in such partnership to the extent such gain 
     is treated as an amount realized from the sale or exchange of 
     property other than a capital asset under section 751(a).''.
       (3) Conforming amendment.--Section 199A(c)(1), as added by 
     subsection (a), is amended by adding at the end the following 
     new sentence: ``Such term shall not include any qualified 
     publicly traded partnership income.''.
                                 ______
                                 
  SA 1628. Mr. CORNYN (for himself and Mr. Cassidy) submitted an 
amendment intended to be proposed to amendment SA 1618 submitted by Mr. 
Hatch (for himself and Ms. Murkowski) and intended to be proposed to 
the bill H.R. 1, to provide for reconciliation pursuant to titles II 
and V of the concurrent resolution on the budget for fiscal year 2018; 
which was ordered to lie on the table; as follows:

       At the end of subpart C of part I of subtitle D, insert the 
     following:

     SEC. 14305. EXTENSION OF CARRYOVER PERIOD FOR FOREIGN TAXES 
                   PAID IN QUALIFIED TAXABLE YEARS WITH OVERALL 
                   DOMESTIC LOSS.

       (a) In General.--Section 904(c) is amended--
       (1) by striking ``Any amount'' and inserting the following:
       ``(1) In general.--Any amount'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Extension of carryover period for foreign taxes paid 
     in qualified taxable years with overall domestic loss.--
       ``(A) In general.--If a taxpayer had an overall domestic 
     loss for any qualified taxable year beginning after December 
     31, 2006, and before January 1, 2018, then, notwithstanding 
     the 10-year carryover period under paragraph (1), the 
     taxpayer may carryover any related excess foreign taxes with 
     respect to such qualified taxable year to any succeeding 
     taxable year beginning after such period and before January 
     1, 2028, to the extent such taxes were not deemed paid or 
     accrued under this subsection in a prior taxable year.
       ``(B) Related excess foreign taxes.--For purposes of this 
     paragraph, the term `related excess foreign taxes' means, 
     with respect to any qualified taxable year described in 
     paragraph (1), an amount equal to the lesser of--
       ``(i) the sum of the foreign taxes paid or accrued to 
     foreign countries or possessions of the United States with 
     respect to such taxable year, plus the amount of any such 
     foreign taxes carried to such year under paragraph (1), or
       ``(ii) the product of--

       ``(I) the taxpayer's overall domestic loss with respect to 
     such taxable year, multiplied by
       ``(II) the proportion determined under subsection (a) for 
     such taxable year.

     For purposes of this subparagraph, foreign oil and gas taxes 
     (as defined in section 907(b)(2)) shall be taken into account 
     for a qualified taxable year to the extent that the overall 
     domestic loss for such taxable year offset combined foreign 
     oil and gas income (as defined in section 907(b)(1)).
       ``(C) Definitions.--Any term used in this paragraph which 
     is also used in subsection (g) shall have the same meaning as 
     when used in such subsection.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to carryovers from taxable years beginning before 
     January 1, 2018, to taxable years beginning after December 
     31, 2017.
                                 ______
                                 
  SA 1629. Ms. MURKOWSKI submitted an amendment intended to be proposed 
to amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the end of part VIII of subtitle C of title I, insert 
     the following:

     SEC. 13709. NONPROFIT COMMUNITY DEVELOPMENT ACTIVITIES IN 
                   REMOTE NATIVE VILLAGES. --

        (a) In General.--For purposes of subchapter F of chapter 1 
     of the Internal Revenue Code of 1986, any activity 
     substantially related to participation and investment in 
     fisheries in the Bering Sea and Aleutian Islands Management 
     Area (as defined in section 205 of the American Fisheries Act 
     (16 U.S.C. 1851 note)) carried on by an entity identified in 
     section 305(i)(1)(D) of the Magnuson-Stevens Fishery 
     Conservation and Management Act (16 U.S.C. 1855(i)(1)(D)) (as 
     in effect on the date of enactment of this section) shall be 
     considered substantially related to the exercise or 
     performance of the purpose constituting the basis of such 
     entity's exemption under section 501(a) of such Code if the 
     conduct of such activity is in furtherance of 1 or more of 
     the purposes specified in section 305(i)(1)(A) of such Act. 
     For purposes of this paragraph, activities substantially 
     related to participation or investment in fisheries include 
     the harvesting, processing, transportation, sales, and 
     marketing of fish and fish products of the Bering Sea and 
     Aleutian Islands Management Area.
       (b) Application to Certain Wholly Owned Subsidiaries.--If 
     the assets of a trade or business relating to an activity 
     described in subsection (a) of any subsidiary wholly owned by 
     an entity identified in section 305(i)(1)(D) of the Magnuson-
     Stevens Fishery Conservation and Management Act (16 U.S.C. 
     1855(i)(1)(D)) are transferred to such entity (including in 
     liquidation of such subsidiary) not later than 18 months 
     after the date of the enactment of this Act--
       (1) no gain or income resulting from such transfer shall be 
     recognized to either such subsidiary or such entity under 
     such Code, and
       (2) all income derived from such subsidiary from such 
     transferred trade or business shall be exempt from taxation 
     under such Code.
       (c) Effective Date.--This section shall be effective during 
     the existence of the western Alaska community development 
     quota program established by Section 305(i)(1) of the 
     Magnuson-Stevens Fishery Conservation and Management Act (16 
     U.S.C. 1855(i)(1)), as amended.
                                 ______
                                 
  SA 1630. Ms. MURKOWSKI submitted an amendment intended to be proposed 
to amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       Strike section 13821 and insert the following:

     SEC. 13821. MODIFICATION OF TAX TREATMENT OF ALASKA NATIVE 
                   CORPORATIONS AND SETTLEMENT TRUSTS.

       (a) Exclusion for ANCSA Payments Assigned to Alaska Native 
     Settlement Trusts.--
       (1) In general.--Part III of subchapter B of chapter 1 is 
     amended by inserting before section 140 the following new 
     section:

     ``SEC. 139G. ASSIGNMENTS TO ALASKA NATIVE SETTLEMENT TRUSTS.

       ``(a) In General.--In the case of a Native Corporation, 
     gross income shall not include the value of any payments that 
     would otherwise be made, or treated as being made, to such 
     Native Corporation pursuant to, or as required by, any 
     provision of the Alaska Native Claims Settlement Act (43 
     U.S.C. 1601 et seq.), including any payment that would 
     otherwise be made to a Village Corporation pursuant to 
     section 7(j) of the Alaska Native Claims Settlement Act (43 
     U.S.C. 1606(j)), provided that any such payments--
       ``(1) are assigned in writing to a Settlement Trust, and
       ``(2) were not received by such Native Corporation prior to 
     the assignment described in paragraph (1).
       ``(b) Inclusion in Gross Income.--In the case of a 
     Settlement Trust which has been assigned payments described 
     in subsection (a), gross income shall include such payments 
     when received by such Settlement Trust pursuant to the 
     assignment and shall have the same character as if such 
     payments were received by the Native Corporation.
       ``(c) Amount and Scope of Assignment.--The amount and scope 
     of any assignment under subsection (a) shall be described 
     with reasonable particularity and may either be in a 
     percentage of one or more such payments or in a fixed dollar 
     amount.
       ``(d) Duration of Assignment; Revocability.--Any assignment 
     under subsection (a) shall specify--
       ``(1) a duration either in perpetuity or for a period of 
     time, and
       ``(2) whether such assignment is revocable.
       ``(e) Prohibition on Deduction.--Notwithstanding section 
     247, no deduction shall be allowed to a Native Corporation 
     for purposes of any amounts described in subsection (a).
       ``(f) Definitions.--For purposes of this section, the terms 
     `Native Corporation' and `Settlement Trust' have the same 
     meaning given such terms under section 646(h).''.
       (2) Conforming amendment.--The table of sections for part 
     III of subchapter B of chapter 1 is amended by inserting 
     before the item relating to section 140 the following new 
     item:

``Sec. 139G. Assignments to Alaska Native Settlement Trusts.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2016.
       (b) Deduction of Contributions to Alaska Native Settlement 
     Trusts.--
       (1) In general.--Part VIII of subchapter B of chapter 1 is 
     amended by inserting before section 248 the following new 
     section:

     ``SEC. 247. CONTRIBUTIONS TO ALASKA NATIVE SETTLEMENT TRUSTS.

       ``(a) In General.--In the case of a Native Corporation, 
     there shall be allowed a deduction for any contributions made 
     by such Native Corporation to a Settlement Trust (regardless 
     of whether an election under section 646 is in effect for 
     such Settlement Trust) for which the Native Corporation has 
     made an annual election under subsection (e).
       ``(b) Amount of Deduction.--The amount of the deduction 
     under subsection (a) shall be equal to--
       ``(1) in the case of a cash contribution (regardless of the 
     method of payment, including currency, coins, money order, or 
     check), the amount of such contribution, or

[[Page S7471]]

       ``(2) in the case of a contribution not described in 
     paragraph (1), the lesser of--
       ``(A) the Native Corporation's adjusted basis in the 
     property contributed, or
       ``(B) the fair market value of the property contributed.
       ``(c) Limitation and Carryover.--
       ``(1) In general.--Subject to paragraph (2), the deduction 
     allowed under subsection (a) for any taxable year shall not 
     exceed the taxable income (as determined without regard to 
     such deduction) of the Native Corporation for the taxable 
     year in which the contribution was made.
       ``(2) Carryover.--If the aggregate amount of contributions 
     described in subsection (a) for any taxable year exceeds the 
     limitation under paragraph (1), such excess shall be treated 
     as a contribution described in subsection (a) in each of the 
     15 succeeding years in order of time.
       ``(d) Definitions.--For purposes of this section, the terms 
     `Native Corporation' and `Settlement Trust' have the same 
     meaning given such terms under section 646(h).
       ``(e) Manner of Making Election.--
       ``(1) In general.--For each taxable year, a Native 
     Corporation may elect to have this section apply for such 
     taxable year on the income tax return or an amendment or 
     supplement to the return of the Native Corporation, with such 
     election to have effect solely for such taxable year.
       ``(2) Revocation.--Any election made by a Native 
     Corporation pursuant to this subsection may be revoked 
     pursuant to a timely filed amendment or supplement to the 
     income tax return of such Native Corporation.
       ``(f) Additional Rules.--
       ``(1) Earnings and profits.--Notwithstanding section 
     646(d)(2), in the case of a Native Corporation which claims a 
     deduction under this section for any taxable year, the 
     earnings and profits of such Native Corporation for such 
     taxable year shall be reduced by the amount of such 
     deduction.
       ``(2) Gain or loss.--No gain or loss shall be recognized by 
     the Native Corporation with respect to a contribution of 
     property for which a deduction is allowed under this section.
       ``(3) Income.--Subject to subsection (g), a Settlement 
     Trust shall include in income the amount of any deduction 
     allowed under this section in the taxable year in which the 
     Settlement Trust actually receives such contribution.
       ``(4) Period.--The holding period under section 1223 of the 
     Settlement Trust shall include the period the property was 
     held by the Native Corporation.
       ``(5) Basis.--The basis that a Settlement Trust has for 
     which a deduction is allowed under this section shall be 
     equal to the lesser of--
       ``(A) the adjusted basis of the Native Corporation in such 
     property immediately before such contribution, or
       ``(B) the fair market value of the property immediately 
     before such contribution.
       ``(6) Prohibition.--No deduction shall be allowed under 
     this section with respect to any contributions made to a 
     Settlement Trust which are in violation of subsection (a)(2) 
     or (c)(2) of section 39 of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1629e).
       ``(g) Election by Settlement Trust To Defer Income 
     Recognition.--
       ``(1) In general.--In the case of a contribution which 
     consists of property other than cash, a Settlement Trust may 
     elect to defer recognition of any income related to such 
     property until the sale or exchange of such property, in 
     whole or in part, by the Settlement Trust.
       ``(2) Treatment.--In the case of property described in 
     paragraph (1), any income or gain realized on the sale or 
     exchange of such property shall be treated as--
       ``(A) for such amount of the income or gain as is equal to 
     or less than the amount of income which would be included in 
     income at the time of contribution under subsection (f)(3) 
     but for the taxpayer's election under this subsection, 
     ordinary income, and
       ``(B) for any amounts of the income or gain which are in 
     excess of the amount of income which would be included in 
     income at the time of contribution under subsection (f)(3) 
     but for the taxpayer's election under this subsection, having 
     the same character as if this subsection did not apply.
       ``(3) Election.--
       ``(A) In general.--For each taxable year, a Settlement 
     Trust may elect to apply this subsection for any property 
     described in paragraph (1) which was contributed during such 
     year. Any property to which the election applies shall be 
     identified and described with reasonable particularity on the 
     income tax return or an amendment or supplement to the return 
     of the Settlement Trust, with such election to have effect 
     solely for such taxable year.
       ``(B) Revocation.--Any election made by a Settlement Trust 
     pursuant to this subsection may be revoked pursuant to a 
     timely filed amendment or supplement to the income tax return 
     of such Settlement Trust.
       ``(C) Certain dispositions.--
       ``(i) In general.--In the case of any property for which an 
     election is in effect under this subsection and which is 
     disposed of within the first taxable year subsequent to the 
     taxable year in which such property was contributed to the 
     Settlement Trust--

       ``(I) this section shall be applied as if the election 
     under this subsection had not been made,
       ``(II) any income or gain which would have been included in 
     the year of contribution under subsection (f)(3) but for the 
     taxpayer's election under this subsection shall be included 
     in income for the taxable year of such contribution, and
       ``(III) the Settlement Trust shall pay any increase in tax 
     resulting from such inclusion, including any applicable 
     interest, and increased by 10 percent of the amount of such 
     increase with interest.

       ``(ii) Assessment.--Notwithstanding section 6501(a), any 
     amount described in subclause (III) of clause (i) may be 
     assessed, or a proceeding in court with respect to such 
     amount may be initiated without assessment, within 4 years 
     after the date on which the return making the election under 
     this subsection for such property was filed.''.
       (2) Conforming amendment.--The table of sections for part 
     VIII of subchapter B of chapter 1 is amended by inserting 
     before the item relating to section 248 the following new 
     item:

``Sec. 247. Contributions to Alaska Native Settlement Trusts.''.

       (3) Effective date.--
       (A) In general.--The amendments made by this subsection 
     shall apply to taxable years for which the period of 
     limitation on refund or credit under section 6511 of the 
     Internal Revenue Code of 1986 has not expired.
       (B) One-year waiver of statute of limitations.--If the 
     period of limitation on a credit or refund resulting from the 
     amendments made by paragraph (1) expires before the end of 
     the 1-year period beginning on the date of the enactment of 
     this Act, refund or credit of such overpayment (to the extent 
     attributable to such amendments) may, nevertheless, be made 
     or allowed if claim therefor is filed before the close of 
     such 1-year period.
       (c) Information Reporting for Deductible Contributions to 
     Alaska Native Settlement Trusts.--
       (1) In general.--Section 6039H is amended--
       (A) in the heading, by striking ``sponsoring'', and
       (B) by adding at the end the following new subsection:
       ``(e) Deductible Contributions by Native Corporations to 
     Alaska Native Settlement Trusts.--
       ``(1) In general.--Any Native Corporation (as defined in 
     subsection (m) of section 3 of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1602(m))) which has made a 
     contribution to a Settlement Trust (as defined in subsection 
     (t) of such section) to which an election under subsection 
     (e) of section 247 applies shall provide such Settlement 
     Trust with a statement regarding such election not later than 
     January 31 of the calendar year subsequent to the calendar 
     year in which the contribution was made.
       ``(2) Content of statement.--The statement described in 
     paragraph (1) shall include--
       ``(A) the total amount of contributions to which the 
     election under subsection (e) of section 247 applies,
       ``(B) for each contribution, whether such contribution was 
     in cash,
       ``(C) for each contribution which consists of property 
     other than cash, the date that such property was acquired by 
     the Native Corporation and the adjusted basis and fair market 
     value of such property on the date such property was 
     contributed to the Settlement Trust,
       ``(D) the date on which each contribution was made to the 
     Settlement Trust, and
       ``(E) such information as the Secretary determines to be 
     necessary or appropriate for the identification of each 
     contribution and the accurate inclusion of income relating to 
     such contributions by the Settlement Trust.''.
       (2) Conforming amendment.--The item relating to section 
     6039H in the table of sections for subpart A of part III of 
     subchapter A of chapter 61 is amended to read as follows:

``Sec. 6039H. Information With Respect to Alaska Native Settlement 
              Trusts and Native Corporations.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2016.
                                 ______
                                 
  SA 1631. Mr. ROBERTS (for himself, Mr. Thune, and Mr. Grassley) 
submitted an amendment intended to be proposed by him to the bill H.R. 
1, to provide for reconciliation pursuant to titles II and V of the 
concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       On page __, strike lines ___ through __, and insert the 
     following:
       ``(C) Electing farming business.--For purposes of this 
     paragraph, the term `electing farming business' means--
       ``(i) a farming business (as defined in section 263A(e)(4)) 
     which makes an election under this subparagraph, or
       ``(ii) any trade or business of a specified agricultural or 
     horticultural cooperative (as defined in section 199A(g)(2)) 
     with respect to which the cooperative makes an election under 
     this subparagraph.
     Any such election shall be made at such time and in such 
     manner as the Secretary shall prescribe, and, once made, 
     shall be irrevocable.''.
                                 ______
                                 
  SA 1632. Mr. ROBERTS submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for

[[Page S7472]]

reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       At the end of subpart B of part V of subtitle C of title I, 
     insert the following:

     SEC. 13417. TREATMENT OF VETERANS' PREFERENCE AS NOT 
                   VIOLATING GENERAL PUBLIC USE REQUIREMENTS.

       (a) In General.--Subparagraph (C) of section 42(g)(9) is 
     amended to read as follows:
       ``(C) who are veterans of the Armed Forces.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to buildings placed in service before, on, or 
     after the date of the enactment of this Act.

     SEC. 13418. INCREASE IN CREDIT FOR CERTAIN RURAL HOUSING.

       (a) In General.--Section 42(d)(5)(B) is amended by adding 
     at the end the following new clause:
       ``(vi) Certain new buildings in rural areas.--For purposes 
     of clause (i), a building described in subsection 
     (b)(1)(B)(i) which is located in a rural area (as defined in 
     section 520 of the Housing Act of 1949) shall be treated in 
     the same manner as a new building located in a difficult 
     development area which is designated for purposes of this 
     subparagraph.''.
       (b) Offset.--Section 42(d)(5)(B)(i) is amended by striking 
     ``130 percent'' both places it appears in subclauses (I) and 
     (II) and inserting ``125 percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to buildings placed in service after the date of 
     the enactment of this Act.
                                 ______
                                 
  SA 1633. Mr. ISAKSON (for himself, Mr. Perdue, Mr. Graham, Mr. Scott, 
Mr. Shelby, and Mr. Strange) submitted an amendment intended to be 
proposed by him to the bill H.R. 1, to provide for reconciliation 
pursuant to titles II and V of the concurrent resolution on the budget 
for fiscal year 2018; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. ___. MODIFICATIONS OF CREDIT FOR PRODUCTION FROM 
                   ADVANCED NUCLEAR POWER FACILITIES.

       (a) Treatment of Unutilized Limitation Amounts.--Section 
     45J(b) is amended--
       (1) in paragraph (4), by inserting ``or any amendment to'' 
     after ``enactment of''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Allocation of unutilized limitation.--
       ``(A) In general.--Any unutilized national megawatt 
     capacity limitation shall be allocated by the Secretary under 
     paragraph (3) as rapidly as is practicable after December 31, 
     2020--
       ``(i) first to facilities placed in service on or before 
     such date to the extent that such facilities did not receive 
     an allocation equal to their full nameplate capacity; and
       ``(ii) then to facilities placed in service after such date 
     in the order in which such facilities are placed in service.
       ``(B) Unutilized national megawatt capacity limitation.--
     The term `unutilized national megawatt capacity limitation' 
     means the excess (if any) of--
       ``(i) 6,000 megawatts, over
       ``(ii) the aggregate amount of national megawatt capacity 
     limitation allocated by the Secretary before January 1, 2021, 
     reduced by any amount of such limitation which was allocated 
     to a facility which was not placed in service before such 
     date.
       ``(C) Coordination with other provisions.--In the case of 
     any unutilized national megawatt capacity limitation 
     allocated by the Secretary pursuant to this paragraph--
       ``(i) such allocation shall be treated for purposes of this 
     section in the same manner as an allocation of national 
     megawatt capacity limitation; and
       ``(ii) subsection (d)(1)(B) shall not apply to any facility 
     which receives such allocation.''.
       (b) Transfer of Credit by Certain Public Entities.--
       (1) In general.--Section 45J is amended--
       (A) by redesignating subsection (e) as subsection (f); and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Transfer of Credit by Certain Public Entities.--
       ``(1) In general.--If, with respect to a credit under 
     subsection (a) for any taxable year--
       ``(A) the taxpayer would be a qualified public entity; and
       ``(B) such entity elects the application of this paragraph 
     for such taxable year with respect to all (or any portion 
     specified in such election) of such credit,
     the eligible project partner specified in such election (and 
     not the qualified public entity) shall be treated as the 
     taxpayer for purposes of this title with respect to such 
     credit (or such portion thereof).
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Qualified public entity.--The term `qualified public 
     entity' means--
       ``(i) a Federal, State, or local government entity, or any 
     political subdivision, agency, or instrumentality thereof;
       ``(ii) a mutual or cooperative electric company described 
     in section 501(c)(12) or section 1381(a)(2); or
       ``(iii) a not-for-profit electric utility which has or had 
     received a loan or loan guarantee under the Rural 
     Electrification Act of 1936.
       ``(B) Eligible project partner.--The term `eligible project 
     partner' means--
       ``(i) any person responsible for, or participating in, the 
     design or construction of the advanced nuclear power facility 
     to which the credit under subsection (a) relates;
       ``(ii) any person who participates in the provision of the 
     nuclear steam supply system to the advanced nuclear power 
     facility to which the credit under subsection (a) relates;
       ``(iii) any person who participates in the provision of 
     nuclear fuel to the advanced nuclear power facility to which 
     the credit under subsection (a) relates;
       ``(iv) any person who has an ownership interest in such 
     facility; or
       ``(v) any financial institution which provides financing 
     for the construction or operation of the advanced nuclear 
     power facility to which the credit under sub-section (a) 
     relates.
       ``(3) Special rules.--
       ``(A) Application to partnerships.--In the case of a credit 
     under subsection (a) which is determined at the partnership 
     level--
       ``(i) for purposes of paragraph (1)(A), a qualified public 
     entity shall be treated as the taxpayer with respect to such 
     entity's distributive share of such credit; and
       ``(ii) the term `eligible project partner' shall include 
     any partner of the partnership.
       ``(B) Taxable year in which credit taken into account.--In 
     the case of any credit (or portion thereof) with respect to 
     which an election is made under paragraph (1), such credit 
     shall be taken into account in the first taxable year of the 
     eligible project partner ending with, or after, the qualified 
     public entity's taxable year with respect to which the credit 
     was determined.
       ``(C) Treatment of transfer under private use rules.--For 
     purposes of section 141(b)(1), any benefit derived by an 
     eligible project partner in connection with an election under 
     this subsection shall not be taken into account as a private 
     business use.''.
       (2) Special rule for proceeds of transfers for mutual or 
     cooperative electric companies.--Section 501(c)(12) is 
     amended by adding at the end the following new subparagraph:
       ``(I) In the case of a mutual or cooperative electric 
     company described in this paragraph or an organization 
     described in section 1381(a)(2), income received or accrued 
     in connection with an election under section 45J(e)(1) shall 
     be treated as an amount collected from members for the sole 
     purpose of meeting losses and expenses.''.
       (c) Effective Dates.--
       (1) Treatment of unutilized limitation amounts.--The 
     amendment made by subsection (a) shall take effect on the 
     date of the enactment of this Act.
       (2) Transfer of credit by certain public entities.--The 
     amendments made by subsection (b) shall apply to taxable 
     years beginning after the date of the enactment of this Act.
                                 ______
                                 
  SA 1634. Mr. DAINES submitted an amendment intended to be proposed to 
amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the end of part VIII of subtitle A of title I, insert 
     the following:

     SEC. 11082. TAXPAYER REFUND PROGRAM.

       (a) In General.--The Secretary of the Treasury shall 
     implement a program under which taxpayers who have paid a 
     penalty under section 5000A of the Internal Revenue Code of 
     1986 for any taxable year beginning after December 31, 2013, 
     and before January 1, 2016, receive 1 payment in refund of 
     all such penalties paid, without regard to whether or not an 
     amended return is filed. Such payment shall be made not later 
     than April 15, 2018.
       (b) Waiver of Statute of Limitations.--Solely for purposes 
     of claiming the refund under subsection (a), the period 
     prescribed by section 6511(a) of the Internal Revenue Code of 
     1986 with respect to any payment of a penalty under section 
     5000A shall be extended until the date prescribed by law 
     (including extensions) for filing the return of tax for the 
     taxable year that includes December 31, 2017.
                                 ______
                                 
  SA 1635. Mr. DURBIN submitted an amendment intended to be proposed to 
amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the end of part III of subtitle D of title I, add the 
     following:

     SEC. 14___. MODIFICATIONS TO RULES RELATING TO INVERTED 
                   CORPORATIONS.

       (a) In General.--Subsection (b) of section 7874 is amended 
     to read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if--

[[Page S7473]]

       ``(A) such corporation would be a surrogate foreign 
     corporation if subsection (a)(2) were applied by substituting 
     `80 percent' for `60 percent', or
       ``(B) such corporation is an inverted domestic corporation.
       ``(2) Inverted domestic corporation.--For purposes of this 
     subsection, a foreign corporation shall be treated as an 
     inverted domestic corporation if, pursuant to a plan (or a 
     series of related transactions)--
       ``(A) the entity completes after May 8, 2014, the direct or 
     indirect acquisition of--
       ``(i) substantially all of the properties held directly or 
     indirectly by a domestic corporation, or
       ``(ii) substantially all of the assets of, or substantially 
     all of the properties constituting a trade or business of, a 
     domestic partnership, and
       ``(B) after the acquisition, either--
       ``(i) more than 50 percent of the stock (by vote or value) 
     of the entity is held--

       ``(I) in the case of an acquisition with respect to a 
     domestic corporation, by former shareholders of the domestic 
     corporation by reason of holding stock in the domestic 
     corporation, or
       ``(II) in the case of an acquisition with respect to a 
     domestic partnership, by former partners of the domestic 
     partnership by reason of holding a capital or profits 
     interest in the domestic partnership, or

       ``(ii) the management and control of the expanded 
     affiliated group which includes the entity occurs, directly 
     or indirectly, primarily within the United States, and such 
     expanded affiliated group has significant domestic business 
     activities.
       ``(3) Exception for corporations with substantial business 
     activities in foreign country of organization.--A foreign 
     corporation described in paragraph (2) shall not be treated 
     as an inverted domestic corporation if after the acquisition 
     the expanded affiliated group which includes the entity has 
     substantial business activities in the foreign country in 
     which or under the law of which the entity is created or 
     organized when compared to the total business activities of 
     such expanded affiliated group. For purposes of subsection 
     (a)(2)(B)(iii) and the preceding sentence, the term 
     `substantial business activities' shall have the meaning 
     given such term under regulations in effect on January 18, 
     2017, except that the Secretary may issue regulations 
     increasing the threshold percent in any of the tests under 
     such regulations for determining if business activities 
     constitute substantial business activities for purposes of 
     this paragraph.
       ``(4) Management and control.--For purposes of paragraph 
     (2)(B)(ii)--
       ``(A) In general.--The Secretary shall prescribe 
     regulations for purposes of determining cases in which the 
     management and control of an expanded affiliated group is to 
     be treated as occurring, directly or indirectly, primarily 
     within the United States. The regulations prescribed under 
     the preceding sentence shall apply to periods after May 8, 
     2014.
       ``(B) Executive officers and senior management.--Such 
     regulations shall provide that the management and control of 
     an expanded affiliated group shall be treated as occurring, 
     directly or indirectly, primarily within the United States if 
     substantially all of the executive officers and senior 
     management of the expanded affiliated group who exercise day-
     to-day responsibility for making decisions involving 
     strategic, financial, and operational policies of the 
     expanded affiliated group are based or primarily located 
     within the United States. Individuals who in fact exercise 
     such day-to-day responsibilities shall be treated as 
     executive officers and senior management regardless of their 
     title.
       ``(5) Significant domestic business activities.--For 
     purposes of paragraph (2)(B)(ii), an expanded affiliated 
     group has significant domestic business activities if at 
     least 25 percent of--
       ``(A) the employees of the group are based in the United 
     States,
       ``(B) the employee compensation incurred by the group is 
     incurred with respect to employees based in the United 
     States,
       ``(C) the assets of the group are located in the United 
     States, or
       ``(D) the income of the group is derived in the United 
     States,
     determined in the same manner as such determinations are made 
     for purposes of determining substantial business activities 
     under regulations referred to in paragraph (3) as in effect 
     on January 18, 2017, but applied by treating all references 
     in such regulations to `foreign country' and `relevant 
     foreign country' as references to `the United States'. The 
     Secretary may issue regulations decreasing the threshold 
     percent in any of the tests under such regulations for 
     determining if business activities constitute significant 
     domestic business activities for purposes of this 
     paragraph.''.
       (b) Conforming Amendments.--
       (1) Clause (i) of section 7874(a)(2)(B) is amended by 
     striking ``after March 4, 2003,'' and inserting ``after March 
     4, 2003, and before May 8, 2014,''.
       (2) Subsection (c) of section 7874 is amended--
       (A) in paragraph (2)--
       (i) by striking ``subsection (a)(2)(B)(ii)'' and inserting 
     ``subsections (a)(2)(B)(ii) and (b)(2)(B)(i)''; and
       (ii) by inserting ``or (b)(2)(A)'' after ``(a)(2)(B)(i)'' 
     in subparagraph (B);
       (B) in paragraph (3), by inserting ``or (b)(2)(B)(i), as 
     the case may be,'' after ``(a)(2)(B)(ii)'';
       (C) in paragraph (5), by striking ``subsection 
     (a)(2)(B)(ii)'' and inserting ``subsections (a)(2)(B)(ii) and 
     (b)(2)(B)(i)''; and
       (D) in paragraph (6), by inserting ``or inverted domestic 
     corporation, as the case may be,'' after ``surrogate foreign 
     corporation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after May 8, 2014.
                                 ______
                                 
  SA 1636. Mr. DURBIN submitted an amendment intended to be proposed to 
amendment SA 1618 submitted by Mr. Hatch (for himself and Ms. 
Murkowski) and intended to be proposed to the bill H.R. 1, to provide 
for reconciliation pursuant to titles II and V of the concurrent 
resolution on the budget for fiscal year 2018; which was ordered to lie 
on the table; as follows:

       At the end of part III of subtitle A of title I, insert the 
     following:

     SEC. 11030. MODIFICATION AND EXTENSION OF WORK OPPORTUNITY 
                   CREDIT FOR CERTAIN YOUTH EMPLOYEES.

       (a) Expansion of Credit for Summer Youth.--
       (1) Credit allowed for year-round employment.--Section 
     51(d)(7)(A) is amended--
       (A) by striking clauses (i) and (iii) and redesignating 
     clauses (ii) and (iv) as clauses (i) and (ii), respectively;
       (B) in clause (i) (as so redesignated), by striking ``(or 
     if later, on May 1 of the calendar year involved),'' and 
     inserting ``, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) who will be employed for not more than 20 hours per 
     week during any period between September 16 and April 30 in 
     which such individual is regularly attending any secondary 
     school.''.
       (2) Increase in credit amount.--Section 51(d)(7) is amended 
     by striking subparagraph (B) and by redesignating 
     subparagraph (C) as subparagraph (B).
       (3) Conforming amendments.--
       (A) Subparagraph (F) of section 51(d)(1) is amended by 
     striking ``summer''.
       (B) Paragraph (7) of section 51(d) is amended--
       (i) by striking ``summer'' each place it appears in 
     subparagraphs (A);
       (ii) in subparagraph (B), as redesignated by paragraph (2), 
     by striking ``subparagraph (A)(iv)'' and inserting 
     ``subparagraph (A)(ii)''; and
       (iii) by striking ``summer'' in the heading thereof.
       (b) Credit for At-Risk Youth.--
       (1) In general.--Paragraph (1) of section 51(d) is amended 
     by striking ``or'' at the end of subparagraph (I), by 
     striking the period at the end of subparagraph (J) and 
     inserting ``, or'' , and by adding at the end the following 
     new subparagraph:
       ``(K) an at-risk youth.''.
       (2) At-risk youth.--Paragraph (14) of section 51(d) is 
     amended to read as follows:
       ``(14) At-risk youth.--The term `at-risk youth' means any 
     individual who is certified by the designated local agency--
       ``(A) as--
       ``(i) having attained age 16 but not age 25 on the hiring 
     date,
       ``(ii) as not regularly attending any secondary, technical, 
     or post-secondary school during the 6-month period preceding 
     the hiring date,
       ``(iii) as not regularly employed during such 6-month 
     period, and
       ``(iv) as not readily employable by reason of lacking a 
     sufficient number of basic skills, or
       ``(B) as--
       ``(i) having attained age 16 but not age 21 on the hiring 
     date, and
       ``(ii) an eligible foster child (as defined in section 
     152(f)(1)(C)) who was in foster care during the 12-month 
     period ending on the hiring date.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act.
                                 ______
                                 
  SA 1637. Mr. McCONNELL (for Mr. Hoeven) proposed an amendment to the 
bill S. 254, to amend the Native American Programs Act of 1974 to 
provide flexibility and reauthorization to ensure the survival and 
continuing vitality of Native American languages; as follows:

       On page 2, strike lines 21 and 22 and insert the following:

     amended by striking ``such sums'' and all that follows 
     through the period at the end and inserting ``$13,000,000 for 
     each of fiscal years 2019 through 2023.''.
                                 ______
                                 
  SA 1638. Mr. McCONNELL (for Mr. Hoeven) proposed an amendment to the 
bill S. 669, to authorize the Secretary of the Interior to assess 
sanitation and safety conditions at Bureau of Indian Affairs facilities 
that were constructed to provide affected Columbia River Treaty tribes 
access to traditional fishing grounds and expend funds on construction 
of facilities and structures to improve those conditions, and for other 
purposes; as follows:

       At the end, add the following:

[[Page S7474]]

  


     SEC. 3. STUDY OF ASSESSMENT AND IMPROVEMENT ACTIVITIES.

       The Comptroller General of the United States, in 
     consultation with the Committee on Indian Affairs of the 
     Senate, shall--
       (1) conduct a study to evaluate whether the sanitation and 
     safety conditions on lands held by the United States for the 
     benefit of the affected Columbia River Treaty tribes (as 
     defined in section 2) have improved as a result of the 
     activities authorized in section 2; and
       (2) prepare and submit to the Committee on Indian Affairs 
     of the Senate and the Committee on Natural Resources of the 
     House of Representatives a report containing the results of 
     that study.
                                 ______
                                 
  SA 1639. Mr. GARDNER submitted an amendment intended to be proposed 
to amendment SA 1618 proposed by Mr. McConnell (for Mr. Hatch (for 
himself and Ms. Murkowski)) to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. EXCEPTION FOR EXPENDITURES IN CONNECTION WITH 
                   CERTAIN CANNABIS RELATED TRADES OR BUSINESSES.

       (a) In General.--Section 280E of the Internal Revenue Code 
     of 1986 is amended--
       (1) by striking ``drugs'' and all that follows through ``No 
     deduction'' and inserting ``drugs

       ``(a) General Rule.--Except as provided in subsection (b), 
     no deduction''; and
       (2) by adding at the end the following:

       ``(b) Exception for Certain Cannabis Related Trades or 
     Businesses.--
       ``(1) Exclusion from trafficking.--Those activities 
     undertaken in connection with a qualified cannabis trade or 
     business shall not be considered trafficking in controlled 
     substances for purposes of subsection (a).
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) Cannabis related trade or business.--The term 
     `cannabis related trade or business' means a trade or 
     business that earns cannabis related income.
       ``(B) Cannabis related income.--The term `cannabis related 
     income' means any income earned from the manufacture, 
     production, cultivation, processing, refinement, 
     transportation and delivery, distribution, testing, use, 
     sale, or exchange of cannabis or cannabis-derived materials.
       ``(C) Qualified cannabis related trade or business.--The 
     term `qualified cannabis related trade or business' means a 
     cannabis related trade or business that meets the following 
     requirements:
       ``(i) The activities giving rise to the cannabis related 
     income of the trade or business are properly regulated under 
     the laws of the State in which they are conducted.
       ``(ii) No cannabis or cannabis-derived materials owned by 
     the trade or business are sold, exchanged, provided free of 
     charge, gifted, donated, sampled, embedded in the sale of 
     another item, embedded within the provision of a service, or 
     otherwise transferred in a manner that does not give rise to 
     cannabis related income.
       ``(iii) None of the activities of the trade or business are 
     trafficking in controlled substances other than cannabis or 
     cannabis-derived materials regulated under State law.
       ``(iv) To the extent that the cannabis related trade or 
     business was in existence prior to the date of enactment of 
     this subsection, the person who held or controlled a license 
     described in paragraph (3)(A) in taxable years ending before 
     such date of enactment has not had a cannabis license revoked 
     by State licensing authorities.
       ``(3) Properly regulated.--The term `properly regulated' 
     means, with respect to a qualified cannabis related trade or 
     business, the following:
       ``(A) Persons engaged in the activities giving rise to the 
     cannabis related gross receipts are licensed by the State in 
     which they conduct such activities and such license is 
     subject to periodic renewal.
       ``(B) State licensing rules impose limitations on the 
     production and distribution of cannabis and items derived 
     from cannabis.
       ``(C) State licensing rules restrict the distribution of 
     cannabis and items derived from cannabis to minors, 
     including--
       ``(i) a minimum age on legal purchases of 18; and
       ``(ii) restrictions on advertising, marketing ,and 
     promotional activities that are at least as stringent as 
     those imposed on alcohol products in the State.
       ``(D) Sufficient books and records are employed by the 
     cannabis related trade or business--
       ``(i) to enable the seed to sale identification of all the 
     cannabis or cannabis derived materials owned or used in 
     connection with the manufacturing, production, growth, 
     processing, refinement, distribution, testing, use, sale, or 
     exchange activities of the cannabis related trade or 
     business; and
       ``(ii) to enable the association of the income of the 
     cannabis trade or business with the cannabis or cannabis 
     derived materials identified in accordance with clause (i).
       ``(E) Personal use exemptions to the State licensing 
     requirements, if any, contain limitations similar to those 
     contained in section 5053(e), applied--
       ``(i) by limiting the definition of any permissible 
     transfer to another person, whether by sale, exchange, gift, 
     sharing, concurrent use, or otherwise, to transfers between 
     the persons who constitute family members within the meaning 
     of section 267(c)(4) and who are not minors; and
       ``(ii) by substituting 8 plants for 200 gallons in each 
     place it appears for applying a household limitation 
     involving more than 1 adult and 4 plants for 100 gallons in 
     each place it appears for applying a household limitation 
     involving only 1 adult.
       ``(F) State licensing rules limit caregiver, agency, 
     designation arrangements, cooperative agreements, or any 
     other arrangement involving cannabis or cannabis derived 
     materials purporting not to involve a trade or business to 8 
     plants per patient or person per calendar year.
       ``(4) Application to persons engaged in more than one trade 
     or business.--The activities of all persons who are related 
     parties within the meaning of section 52 shall be taken into 
     account in applying this subsection.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to taxable years ending after the 
     date of the enactment of this Act.
                                 ______
                                 
  SA 1640. Mr. GARDNER submitted an amendment intended to be proposed 
to amendment SA 1618 proposed by Mr. McConnell (for Mr. Hatch (for 
himself and Ms. Murkowski)) to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       On page 307, line 6, strike ``an organization'' and insert 
     ``an organization (other than the United States Olympic 
     Committee, any organizing committee or affiliated entity for 
     an Olympic or Paralympic Games, world championship, regional 
     championship, or United States Olympic and Paralympic sport 
     national championship hosted in the United States, and any 
     organization established pursuant to the Ted Stevens Olympic 
     and Amateur Sports Act (36 U.S.C. 220501 et seq.))''.
                                 ______
                                 
  SA 1641. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment 
intended to be proposed to amendment SA 1618 proposed by Mr. McConnell 
(for Mr. Hatch (for himself and Ms. Murkowski)) to the bill H.R. 1, to 
provide for reconciliation pursuant to titles II and V of the 
concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       Strike section 11022 and insert the following:

     SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.

       (a) In General.--Section 24 is amended by adding at the end 
     the following new subsection:

       ``(h) Special Rules for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026, this 
     section shall be applied as provided in paragraphs (2) 
     through (8).
       ``(2) Credit amount.--Subsection (a) shall be applied by 
     substituting `$2,000' for `$1,000'.
       ``(3) Limitation.--In lieu of the amount determined under 
     subsection (b)(2), the threshold amount shall be--
       ``(A) in the case of a joint return, $500,000, and
       ``(B) in the case of an individual who is not married or a 
     married individual filing a separate return, $250,000.
       ``(4) Definition of qualifying child.--Paragraph (1) of 
     subsection (c) shall be applied by substituting `18' for 
     `17'.
       ``(5) Partial credit allowed for certain other 
     dependents.--
       ``(A) In general.--The credit determined under subsection 
     (a) (after the application of paragraph (2)) shall be 
     increased by $500 for each dependent of the taxpayer (as 
     defined in section 152) other than a qualifying child 
     described in subsection (c) (after the application of 
     paragraph (4)).
       ``(B) Exception for certain noncitizens.--Subparagraph (A) 
     shall not apply with respect to any individual who would not 
     be a dependent if subparagraph (A) of section 152(b)(3) were 
     applied without regard to all that follows `resident of the 
     United States'.
       ``(6) Portion of credit refundable.--Subsection 
     (d)(1)(B)(i) shall be applied by substituting--
       ``(A) `15.3 percent' for `15 percent', and
       ``(B) `$0' for `$3,000'.
       ``(7) Adjustment for inflation.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2017, the $2,000 amount in paragraph (2) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(B) Rounding.--Any increase determined under subparagraph 
     (A) shall be rounded to the next highest multiple of $100.
       ``(8) Social security number required.--No credit shall be 
     allowed under subsection (d) to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the social 
     security number of such child on the

[[Page S7475]]

     return of tax for the taxable year. For purposes of the 
     preceding sentence, the term `social security number' means a 
     social security number issued to an individual by the Social 
     Security Administration, but only if the social security 
     number is issued to a citizen of the United States or is 
     issued pursuant to subclause (I) (or that portion of 
     subclause (III) that relates to subclause (I)) of section 
     205(c)(2)(B)(i) of the Social Security Act.''.

       (b) Increase in Corporate Tax Rate.--Subsection (b) of 
     section 11, as amended by section 13001 of this Act, is 
     amended by striking ``20 percent'' and inserting ``22 
     percent''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1642. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment 
intended to be proposed to amendment SA 1618 proposed by Mr. McConnell 
(for Mr. Hatch (for himself and Ms. Murkowski)) to the bill H.R. 1, to 
provide for reconciliation pursuant to titles II and V of the 
concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       Strike section 11022 and insert the following:

     SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.

       (a) In General.--Section 24 is amended by adding at the end 
     the following new subsection:
       ``(h) Special Rules for Taxable Years 2018 Through 2025.--
       ``(1) In general.--In the case of a taxable year beginning 
     after December 31, 2017, and before January 1, 2026, this 
     section shall be applied as provided in paragraphs (2) 
     through (8).
       ``(2) Credit amount.--Subsection (a) shall be applied by 
     substituting `$2,000' for `$1,000'.
       ``(3) Limitation.--In lieu of the amount determined under 
     subsection (b)(2), the threshold amount shall be--
       ``(A) in the case of a joint return, $500,000, and
       ``(B) in the case of an individual who is not married or a 
     married individual filing a separate return, $250,000.
       ``(4) Definition of qualifying child.--Paragraph (1) of 
     subsection (c) shall be applied by substituting `18' for 
     `17'.
       ``(5) Partial credit allowed for certain other 
     dependents.--
       ``(A) In general.--The credit determined under subsection 
     (a) (after the application of paragraph (2)) shall be 
     increased by $500 for each dependent of the taxpayer (as 
     defined in section 152) other than a qualifying child 
     described in subsection (c) (after the application of 
     paragraph (4)).
       ``(B) Exception for certain noncitizens.--Subparagraph (A) 
     shall not apply with respect to any individual who would not 
     be a dependent if subparagraph (A) of section 152(b)(3) were 
     applied without regard to all that follows `resident of the 
     United States'.
       ``(6) Portion of credit refundable.--In lieu of subsection 
     (d), the following provisions shall apply for purposes of the 
     credit allowable under this section:
       ``(A) In general.--The aggregate credits allowed to a 
     taxpayer under subpart C shall be increased by the lesser 
     of--
       ``(i) the credit which would be allowed under this section 
     without regard to this paragraph and the limitation under 
     section 26(a), or
       ``(ii) the amount by which the aggregate amount of credits 
     allowed by this subpart (determined without regard to this 
     paragraph) would increase if the limitation imposed by 
     section 26(a) were increased by an amount equal to the sum of 
     the taxpayer's payroll taxes for the taxable year.
       ``(B) Payroll taxes.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     term `payroll taxes' means, with respect to any taxpayer for 
     any taxable year, the amount of the taxes imposed by--

       ``(I) section 1401 on the self-employment income of the 
     taxpayer for the taxable year,
       ``(II) section 3101 on wages received by the taxpayer 
     during the calendar year in which the taxable year begins,
       ``(III) section 3111 on wages paid by an employer with 
     respect to employment of the taxpayer during the calendar 
     year in which the taxable year begins,
       ``(IV) sections 3201(a) and 3211(a) on compensation 
     received by the taxpayer during the calendar year in which 
     the taxable year begins, and
       ``(V) section 3221(a) on compensation paid by an employer 
     with respect to services rendered by the taxpayer during the 
     calendar year in which the taxable year begins.

       ``(ii) Coordination with special refund of payroll taxes.--
     The term `payroll taxes' shall not include any taxes to the 
     extent the taxpayer is entitled to a special refund of such 
     taxes under section 6413(c).
       ``(iii) Special rule.--Any amounts paid pursuant to an 
     agreement under section 3121(l) (relating to agreements 
     entered into by American employers with respect to foreign 
     affiliates) which are equivalent to the taxes referred to in 
     subclause (II) or (III) of clause (i) shall be treated as 
     taxes referred to in such clause.
       ``(C) Exception for taxpayers excluding foreign earned 
     income.--Subparagraph (A) shall not apply to any taxpayer for 
     any taxable year if such taxpayer elects to exclude any 
     amount from gross income under section 911 for such taxable 
     year.
       ``(7) Adjustment for inflation.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2017, the $2,000 amount in paragraph (2) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins.
       ``(B) Rounding.--Any increase determined under subparagraph 
     (A) shall be rounded to the next highest multiple of $100.
       ``(8) Social security number required.--No credit shall be 
     allowed under subsection (d) to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the social 
     security number of such child on the return of tax for the 
     taxable year. For purposes of the preceding sentence, the 
     term `social security number' means a social security number 
     issued to an individual by the Social Security 
     Administration, but only if the social security number is 
     issued to a citizen of the United States or is issued 
     pursuant to subclause (I) (or that portion of subclause (III) 
     that relates to subclause (I)) of section 205(c)(2)(B)(i) of 
     the Social Security Act.''.
       (b) Increase in Corporate Tax Rate.--Subsection (b) of 
     section 11, as amended by section 13001 of this Act, is 
     amended by striking ``20 percent'' and inserting ``22 
     percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
                                 ______
                                 
  SA 1643. Mr. BROWN (for himself, Mr. Durbin, and Mrs. Feinstein) 
submitted an amendment intended to be proposed by him to the bill H.R. 
1, to provide for reconciliation pursuant to titles II and V of the 
concurrent resolution on the budget for fiscal year 2018; which was 
ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. PATRIOT EMPLOYER TAX CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1, as amended by section 13404 of this Act, is 
     amended by adding at the end the following new section:

     ``SEC. 45T. PATRIOT EMPLOYER TAX CREDIT.

       ``(a) Determination of Amount.--
       ``(1) In general.--For purposes of section 38, the Patriot 
     employer credit determined under this section with respect to 
     any taxpayer who is a Patriot employer for any taxable year 
     shall be equal to 10 percent of the qualified wages paid or 
     incurred by the Patriot employer.
       ``(2) Limitation.--The amount of qualified wages which may 
     be taken into account under paragraph (1) with respect to any 
     employee for any taxable year shall not exceed $15,000.
       ``(b) Patriot Employer.--
       ``(1) In general.--For purposes of subsection (a), the term 
     `Patriot employer' means, with respect to any taxable year, 
     any taxpayer--
       ``(A) which--
       ``(i) maintains its headquarters in the United States if 
     the taxpayer (or any predecessor) has ever been headquartered 
     in the United States, and
       ``(ii) is not (and no predecessor of which is) an 
     expatriated entity (as defined in section 7874(a)(2)) for the 
     taxable year or any preceding taxable year ending after March 
     4, 2003,
       ``(B) with respect to which no assessable payment has been 
     imposed under section 4980H with respect to any month 
     occurring during the taxable year,
       ``(C) provides employees with--
       ``(i) paid sick leave, or
       ``(ii) paid family and medical leave, and
       ``(D) in the case of--
       ``(i) a taxpayer which employs an average of more than 50 
     employees on business days during the taxable year, which--

       ``(I) provides compensation for at least 90 percent of its 
     employees for services provided by such employees during the 
     taxable year at an hourly rate (or equivalent thereof) not 
     less than an amount equal to 218 percent of the Federal 
     poverty level for an individual for the calendar year in 
     which the taxable year begins divided by 1,750,
       ``(II) meets the retirement plan requirements of subsection 
     (c) with respect to at least 90 percent of its employees 
     providing services during the taxable year who are not highly 
     compensated employees, and
       ``(III) meets the additional requirements of subparagraphs 
     (A) and (B) of paragraph (2), or

       ``(ii) any other taxpayer, which meets the requirements of 
     either subclause (I) or (II) of clause (i) for the taxable 
     year.
       ``(2) Additional requirements for large employers.--
       ``(A) United states employment.--The requirements of this 
     subparagraph are met for any taxable year if--
       ``(i) in any case in which the taxpayer increases the 
     number of employees performing substantially all of their 
     services for the taxable year outside the United States, the 
     taxpayer either--

       ``(I) increases the number of employees performing 
     substantially all of their services inside the United States 
     by an amount not less than the increase in such number for 
     employees outside the United States, or

[[Page S7476]]

       ``(II) has a percentage increase in such employees inside 
     the United States which is not less than the percentage 
     increase in such employees outside the United States,

       ``(ii) in any case in which the taxpayer decreases the 
     number of employees performing substantially all of their 
     services for the taxable year inside the United States, the 
     taxpayer either--

       ``(I) decreases the number of employees performing 
     substantially all of their services outside the United States 
     by an amount not less than the decrease in such number for 
     employees inside the United States, or
       ``(II) has a percentage decrease in employees outside the 
     United States which is not less than the percentage decrease 
     in such employees inside the United States, and

       ``(iii) there is not a decrease in the number of employees 
     performing substantially all of their services for the 
     taxable year inside the United States by reason of the 
     taxpayer contracting out such services to persons who are not 
     employees of the taxpayer.
       ``(B) Treatment of individuals in the uniformed services 
     and the disabled.--The requirements of this subparagraph are 
     met for any taxable year if--
       ``(i) the taxpayer provides differential wage payments (as 
     defined in section 3401(h)(2)) to each employee described in 
     section 3401(h)(2)(A) for any period during the taxable year 
     in an amount not less than the difference between the wages 
     which would have been received from the employer during such 
     period and the amount of pay and allowances which the 
     employee receives for service in the uniformed services 
     during such period, and
       ``(ii) the taxpayer has in place at all times during the 
     taxable year a written policy for the recruitment of 
     employees who have served in the uniformed services or who 
     are disabled.
       ``(3) Special rules for applying the minimum wage and 
     retirement plan requirements.--
       ``(A) Minimum wage.--In determining whether the minimum 
     wage requirements of paragraph (1)(D)(i)(I) are met with 
     respect to 90 percent of a taxpayer's employees for any 
     taxable year--
       ``(i) a taxpayer may elect to exclude from such 
     determination apprentices or learners that an employer may 
     exclude under the regulations under section 14(a) of the Fair 
     Labor Standards Act of 1938, and
       ``(ii) if a taxpayer meets the requirements of paragraph 
     (2)(B)(i) with respect to providing differential wage 
     payments to any employee for any period (without regard to 
     whether such requirements apply to the taxpayer), the hourly 
     rate (or equivalent thereof) for such payments shall be 
     determined on the basis of the wages which would have been 
     paid by the employer during such period if the employee had 
     not been providing service in the uniformed services.
       ``(B) Retirement plan.--In determining whether the 
     retirement plan requirements of paragraph (1)(D)(i)(II) are 
     met with respect to 90 percent of a taxpayer's employees for 
     any taxable year, a taxpayer may elect to exclude from such 
     determination--
       ``(i) employees not meeting the age or service requirements 
     under section 410(a)(1) (or such lower age or service 
     requirements as the employer provides), and
       ``(ii) employees described in section 410(b)(3).
       ``(c) Retirement Plan Requirements.--
       ``(1) In general.--The requirements of this subsection are 
     met for any taxable year with respect to an employee of the 
     taxpayer who is not a highly compensated employee if the 
     employee is eligible to participate in 1 or more applicable 
     eligible retirement plans maintained by the employer for a 
     plan year ending with or within the taxable year.
       ``(2) Applicable eligible retirement plan.--For purposes of 
     this subsection, the term `applicable eligible retirement 
     plan' means an eligible retirement plan which, with respect 
     to the plan year described in paragraph (1), is either--
       ``(A) a defined contribution plan which--
       ``(i) requires the employer to make nonelective 
     contributions of at least 5 percent of the compensation of 
     the employee, or
       ``(ii) both--

       ``(I) includes an eligible automatic contribution 
     arrangement (as defined in section 414(w)(3)) under which the 
     uniform percentage described in section 414(w)(3)(B) is at 
     least 5 percent, and
       ``(II) requires the employer to make matching contributions 
     of 100 percent of the elective deferrals (as defined in 
     section 414(u)(2)(C)) of the employee to the extent such 
     deferrals do not exceed the percentage specified by the plan 
     (not less than 5 percent) of the employee's compensation, or

       ``(B) a defined benefit plan--
       ``(i) with respect to which the accrued benefit of the 
     employee derived from employer contributions, when expressed 
     as an annual retirement benefit, is not less than the product 
     of--

       ``(I) the lesser of 2 percent multiplied by the employee's 
     years of service (determined under the rules of paragraphs 
     (4), (5), and (6) of section 411(a)) with the employer or 20 
     percent, multiplied by
       ``(II) the employee's final average pay, or

       ``(ii) which is an applicable defined benefit plan (as 
     defined in section 411(a)(13)(B))--

       ``(I) which meets the interest credit requirements of 
     section 411(b)(5)(B)(i) with respect to the plan year, and
       ``(II) under which the employee receives a pay credit for 
     the plan year which is not less than 5 percent of 
     compensation.

       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Eligible retirement plan.--The term `eligible 
     retirement plan' has the meaning given such term by section 
     402(c)(8)(B), except that in the case of an account or 
     annuity described in clause (i) or (ii) thereof, such term 
     shall only include an account or annuity which is a 
     simplified employee pension (as defined in section 408(k)).
       ``(B) Final average pay.--For purposes of paragraph 
     (2)(B)(i)(II), final average pay shall be determined using 
     the period of consecutive years (not exceeding 5) during 
     which the employee had the greatest compensation from the 
     taxpayer.
       ``(C) Alternative plan designs.--The Secretary may 
     prescribe regulations for a taxpayer to meet the requirements 
     of this subsection through a combination of defined 
     contribution plans or defined benefit plans described in 
     paragraph (1) or through a combination of both such types of 
     plans.
       ``(D) Plans must meet requirements without taking into 
     account social security and similar contributions and 
     benefits.--A rule similar to the rule of section 416(e) shall 
     apply.
       ``(d) Qualified Wages and Compensation.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified wages' means wages 
     (as defined in section 51(c), determined without regard to 
     paragraph (4) thereof) paid or incurred by the Patriot 
     employer during the taxable year to employees--
       ``(A) who perform substantially all of their services for 
     such Patriot employer inside the United States, and
       ``(B) with respect to whom--
       ``(i) in the case of a Patriot employer which employs an 
     average of more than 50 employees on business days during the 
     taxable year, the requirements of subclauses (I) and (II) of 
     subsection (b)(1)(D)(i) are met, and
       ``(ii) in the case of any other Patriot employer, the 
     requirements of either subclause (I) or (II) of subsection 
     (b)(1)(D)(i) are met.
       ``(2) Special rules for agricultural labor and railway 
     labor.--Rules similar to the rules of section 51(h) shall 
     apply.
       ``(3) Compensation.--For purposes of subsections 
     (b)(1)(D)(i)(I) and (c), the term `compensation' has the same 
     meaning as qualified wages, except that section 51(c)(2) 
     shall be disregarded in determining the amount of such wages.
       ``(e) Aggregation Rules.--For purposes of this section--
       ``(1) In general.--All persons treated as a single employer 
     under subsection (a) or (b) of section 52 shall be treated as 
     a single taxpayer.
       ``(2) Special rules for certain requirements.--For purposes 
     of applying paragraphs (1)(A) and (2)(A) of subsection (b)--
       ``(A) the determination under subsections (a) and (b) of 
     section 52 for purposes of paragraph (1) shall be made 
     without regard to section 1563(b)(2)(C) (relating to 
     exclusion of foreign corporations), and
       ``(B) if any person treated as a single taxpayer under this 
     subsection (after application of subparagraph (A)), or any 
     predecessor of such person, was an expatriated entity (as 
     defined in section 7874(a)(2)) for any taxable year ending 
     after March 4, 2003, then all persons treated as a single 
     taxpayer with such person shall be treated as expatriated 
     entities.
       ``(f) Election To Have Credit Not Apply.--
       ``(1) In general.--A taxpayer may elect to have this 
     section not apply for any taxable year.
       ``(2) Time for making election.--An election under 
     paragraph (1) for any taxable year may be made (or revoked) 
     at any time before the expiration of the 3-year period 
     beginning on the last date prescribed by law for filing the 
     return for such taxable year (determined without regard to 
     extensions).
       ``(3) Manner of making election.--An election under 
     paragraph (1) (or revocation thereof) shall be made in such 
     manner as the Secretary may by regulations prescribe.''.
       (b) Allowance as General Business Credit.--Section 38(b), 
     as amended by section 13404 of this Act, is amended by 
     striking ``plus'' at the end of paragraph (36), by striking 
     the period at the end of paragraph (37) and inserting ``, 
     plus'', and by adding at the end the following:
       ``(38) in the case of a Patriot employer (as defined in 
     section 45T(b)) for any taxable year, the Patriot employer 
     credit determined under section 45T(a).''.
       (c) Denial of Double Benefit.--Subsection (a) of section 
     280C, as amended by section 13404 of this Act, is amended by 
     inserting ``45T(a),'' after ``45S(a)''.
       (d) Adjustment to Corporate Tax Rate.--Section 11(b), as 
     amended by section 13001 of this Act, is amended by striking 
     ``20 percent'' and inserting ``25 percent''.
       (e) Effective Date.--
       (1) In general.--Except as provided under paragraph (2), 
     the amendments made by this section shall apply to taxable 
     years beginning after December 31, 2017.
       (2) Corporate tax rate.--The amendment made by subsection 
     (d) shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1644. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:


[[Page S7477]]


  

       At the appropriate place, insert the following:

     SEC. ___. STRENGTHENING THE EARNED INCOME TAX CREDIT.

       (a) In General.--
       (1) Increased credit for individuals with no qualifying 
     children.--
       (A) In general.--The table in subparagraph (A) of section 
     32(b)(2) is amended--
       (i) by striking ``$4,220'' in the second column and 
     inserting ``$9,230''; and
       (ii) by striking ``$5,280'' in the last column and 
     inserting ``$10,900''.
       (B) Inflation adjustments.--Subparagraph (B) of section 
     32(j)(1) is amended--
       (i) in clause (i)--

       (I) by inserting ``(except as provided in clause (iii))'' 
     after ``(b)(2)(A)''; and
       (II) by striking ``and'' at the end;

       (ii) in clause (ii), by striking the period at the end and 
     inserting ``, and''; and
       (iii) by adding at the end the following new clause:
       ``(iii) in the case of the $9,230 and $10,900 amounts in 
     the table in subsection (b)(2)(A), by substituting `calendar 
     year 2017' for `calendar year 2016' in subparagraph (A)(ii) 
     of such section 1.''.
       (2) Credit increase and reduction in phaseout for 
     individuals with no children.--The table contained in section 
     32(b)(1) is amended--
       (A) by striking ``7.65'' in the second column of the fourth 
     row and inserting ``15.3''; and
       (B) by striking ``7.65'' in the third column of the fourth 
     row and inserting ``15.3''.
       (3) Credit allowed for certain childless individuals over 
     age 21.--Subclause (II) of section 32(c)(1)(A)(ii) is amended 
     by striking ``age 25'' and inserting ``age 21''.
       (4) Effective dates.--The amendments made by this 
     subsection shall apply to taxable years beginning after 
     December 31, 2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``22 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1645. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. PERMANENTLY EXTEND LOWER THRESHOLD FOR MEDICAL 
                   EXPENSE DEDUCTION FOR INDIVIDUALS AGE 65 OR 
                   OLDER.

       (a) In General.--
       (1) Special rule.--Subsection (f) of section 213 of the 
     Internal Revenue Code of 1986 is amended--
       (A) by striking ``and ending before January 1, 2017,'', and
       (B) by striking ``for 2013, 2014, 2015, and 2016'' in the 
     heading.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``21 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1646. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. ENERGY CREDIT AND NEW CLEAN RENEWABLE ENERGY BONDS 
                   FOR QUALIFIED BIOGAS PROPERTY AND QUALIFIED 
                   MANURE RESOURCE RECOVERY PROPERTY.

       (a) Energy Credit for Qualified Biogas Property and 
     Qualified Manure Resource Recovery Property.--
       (1) In general.--Section 48(a)(3)(A) is amended by striking 
     ``or'' at the end of clause (vi) and by adding at the end the 
     following new clauses:
       ``(viii) qualified biogas property, or
       ``(ix) qualified manure resource recovery property,''.
       (2) 30-percent credit.--Section 48(a)(2)(A)(i) is amended 
     by striking ``and'' at the end of subclause (III), by 
     striking ``and'' at the end of subclause (IV), and by adding 
     at the end the following new subclauses:

       ``(V) qualified biogas property, and
       ``(VI) qualified manure resource recovery property, and''.

       (3) Definitions.--Section 48(c) is amended by adding at the 
     end the following new paragraphs:
       ``(5) Qualified biogas property.--
       ``(A) In general.--The term `qualified biogas property' 
     means property comprising a system which--
       ``(i) uses anaerobic digesters, or other biological, 
     chemical, thermal, or mechanical processes (alone or in 
     combination), to convert biomass (as defined in section 
     45K(c)(3)) into a gas which consists of not less than 52 
     percent methane, and
       ``(ii) captures such gas for use as a fuel.
       ``(B) Inclusion of certain cleaning and conditioning 
     equipment.--Such term shall include any property which cleans 
     and conditions the gas referred to in subparagraph (A) for 
     use as a fuel.
       ``(C) Termination.--No credit shall be determined under 
     this section with respect to any qualified biogas property 
     for any period after December 31, 2021.
       ``(6) Qualified manure resource recovery property.--
       ``(A) In general.--The term `qualified manure resource 
     recovery property' means property comprising a system which 
     uses physical, biological, chemical, thermal, or mechanical 
     processes to recover the nutrients nitrogen and phosphorus 
     from a non-treated digestate or animal manure by reducing or 
     separating at least 50 percent of the concentration of such 
     nutrients, excluding any reductions during the incineration, 
     storage, composting, or field application of the non-treated 
     digestate or animal manure.
       ``(B) Inclusion of certain processing equipment.--Such term 
     shall include--
       ``(i) any property which is used to recover the nutrients 
     referred to in subparagraph (A), such as--

       ``(I) biological reactors,
       ``(II) crystallizers,
       ``(III) reverse osmosis membranes and other water 
     purifiers,
       ``(IV) evaporators,
       ``(V) distillers,
       ``(VI) decanter centrifuges, and
       ``(VII) equipment that facilitates the process of dissolved 
     air flotation, ammonia stripping, gasification, or ozonation, 
     and

       ``(ii) any thermal drier which treats the nutrients 
     recovered by the processes referred to in subparagraph (A).
       ``(C) Termination.--No credit shall be determined under 
     this section with respect to any qualified manure resource 
     recovery property for any period after December 31, 2021.''.
       (4) Denial of double benefit for qualified biogas 
     property.--Section 45(e) is amended by adding at the end the 
     following new paragraph:
       ``(12) Coordination with energy credit for qualified biogas 
     property.--The term `qualified facility' shall not include 
     any facility which produces electricity from gas produced by 
     qualified biogas property (as defined in section 48(c)(5)) if 
     a credit is determined under section 48 with respect to such 
     property for the taxable year or any prior taxable year.''.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to periods after December 31, 2017, in taxable 
     years ending after such date, under rules similar to the 
     rules of section 48(m) of such Code (as in effect on the day 
     before the date of the enactment of the Revenue 
     Reconciliation Act of 1990).
       (b) New Clean Renewable Energy Bonds for Qualified Biogas 
     Property and Qualified Manure Resource Recovery Property.--
       (1) In general.--Section 54C(d)(1) is amended by inserting 
     ``, a qualified biogas property (as defined in section 
     48(c)(5)), or a qualified manure resource recovery property 
     (as defined in section 48(c)(6))'' before ``owned by''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
       (c) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``20.2 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1647. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 13532 and insert the following:

     SEC. 13532. MODIFICATIONS TO QUALIFIED SMALL ISSUE BONDS.

       (a) In General.--
       (1) Manufacturing facilities to include production of 
     intangible property and functionally related facilities.--
     Section 144(a)(12)(C) is amended to read as follows:
       ``(C) Manufacturing facility.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `manufacturing facility' means 
     any facility which--

       ``(I) is used in the manufacturing or production of 
     tangible personal property (including the processing 
     resulting in a change in the condition of such property),
       ``(II) is used in the creation or production of intangible 
     property which is described in section 197(d)(1)(C)(iii), or
       ``(III) is functionally related and subordinate to a 
     facility described in subclause (I) or (II) if such facility 
     is located on the same site as the facility described in 
     subclause (I) or (II).

       ``(ii) Certain facilities included.--The term 
     `manufacturing facility' includes facilities that are 
     directly related and ancillary to a manufacturing facility 
     (determined without regard to this clause) if--

       ``(I) those facilities are located on the same site as the 
     manufacturing facility, and

[[Page S7478]]

       ``(II) not more than 25 percent of the net proceeds of the 
     issue are used to provide those facilities.

       ``(iii) Limitation on office space.--A rule similar to the 
     rule of section 142(b)(2) shall apply for purposes of clause 
     (i).
       ``(iv) Limitation on refundings for certain property.--
     Subclauses (II) and (III) of clause (i) shall not apply to 
     any bond issued on or before the date of the enactment of the 
     Tax Cuts and Jobs Act, or to any bond issued to refund a bond 
     issued on or before such date (other than a bond to which 
     clause (iii) of this subparagraph (as in effect before the 
     date of the enactment of the Tax Cuts and Jobs Act applies)), 
     either directly or in a series of refundings.''.
       (2) Increase in limitations.--Section 144(a)(4) is 
     amended--
       (A) by striking ``$10,000,000'' in subparagraph (A)(i) and 
     inserting ``$30,000,000'', and
       (B) by striking ``$10,000,000'' in the heading and 
     inserting ``$30,000,000''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
       (b) Delay of Reduced Corporate Tax Rate.--
       (1) Section 13001(c) of this Act is amended by striking 
     ``December 31, 2018'' each place it appears and inserting 
     ``December 31, 2019''.
       (2) Section 13002(f) of this Act is amended by striking 
     ``December 31, 2018'' each place it appears and inserting 
     ``December 31, 2019''.
                                 ______
                                 
  SA 1648. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. EXPANSION OF QUALIFIED ZONE ACADEMY BONDS.

       (a) In General.--
       (1) Construction of a public school facility.--Subparagraph 
     (A) of section 54E(d)(3) is amended by striking 
     ``rehabilitating or repairing'' and inserting ``constructing, 
     rehabilitating, retrofitting, or repairing''.
       (2) Removal of private business contribution requirement.--
     Section 54E is amended--
       (A) in subsection (a)(3)--
       (i) in subparagraph (A), by inserting ``and'' at the end;
       (ii) by striking subparagraph (B); and
       (iii) by redesignating subparagraph (C) as subparagraph 
     (B);
       (B) by striking subsection (b) and redesignating 
     subsections (c) and (d) as subsections (b) and (c), 
     respectively; and
       (C) in paragraph (1) of subsection (b) (as so 
     redesignated)--
       (i) by striking ``and $400,000,0000'' and inserting 
     ``$400,000,000''; and
       (ii) by striking ``and, except as provided'' and all that 
     follows through the period at the end and inserting ``, and 
     $1,400,000,000 for 2018 and each year thereafter.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to obligations issued after December 31, 2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``21 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1649. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. DEDUCTION FOR DONATIONS TO NON-PROFIT ADDICTION 
                   TREATMENT CENTERS.

       (a) Deduction From Adjusted Gross Income.--
       (1) In general.--Section 62(a) is amended by adding at the 
     end the following new paragraph:
       ``(22) Donations to non-profit addiction treatment 
     centers.--In the case of an individual who does not elect to 
     itemize their deductions for the taxable year, the deduction 
     allowed by section 170 for charitable contributions made to a 
     nonprofit substance use disorder treatment facility that is 
     licensed by a State, and which is eligible to receive 
     reimbursement for services provided to individuals enrolled 
     in the Medicare program or a State Medicaid program.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``20.5 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1650. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. DEDUCTION FOR TRADE AND BUSINESS EXPENSES INCURRED 
                   BY FIREFIGHTERS AND LAW ENFORCEMENT OFFICERS.

       (a) Deduction From Adjusted Gross Income.--
       (1) In general.--Section 62(a)(2) is amended by adding at 
     the end the following new subparagraph:
       ``(F) Certain expenses of firefighters and law enforcement 
     officers.--The deductions allowed by section 162 which 
     consist of expenses paid or incurred by Federal, State, or 
     local firefighters or law enforcement officers in connection 
     with the performance of their official duties.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``20.5 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1651. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. INCREASE DEDUCTION FOR INTEREST PAID ON QUALIFIED 
                   EDUCATION LOANS.

       (a) Increase in Maximum Deduction.--
       (1) In general.--Paragraph (1) of section 221(b) is amended 
     by striking ``$2,500'' and inserting ``$5,000''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2017.
       (b) Adjustment to Corporate Tax Rate.--
       (1) In general.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``20.5 percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1652. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. IMPOSITION OF EXCISE TAX ON CORPORATIONS WITH LOW-
                   WAGE EMPLOYEES.

       (a) In General.--Subtitle D is amended by adding after 
     chapter 36 the following new chapter:

               ``CHAPTER 37--CORPORATE RESPONSIBILITY TAX

``Sec. 4511. Imposition of tax.

     ``SEC. 4511. IMPOSITION OF TAX.

       ``(a) In General.--In the case of an applicable employer 
     who employs a low-wage employee during the calendar year, 
     there is imposed a tax equal to the applicable percentage of 
     the aggregate amount of wages paid by the applicable employer 
     with respect to employment of all employees of the employer 
     during the calendar year.
       ``(b) Applicable Employer; Low-Wage Employee.--For purposes 
     of this section--
       ``(1) Applicable employer.--
       ``(A) In general.--The term `applicable employer' means, 
     with respect to any calendar year, any employer who was 
     required to make deposits of taxes under chapters 21 and 24 
     (or who would have been required to make such deposits if the 
     rules of subparagraph (C) applied for such purposes) by the 
     close of the next day for periods aggregating more than 180 
     days during the preceding calendar year.
       ``(B) Exception.--Such term shall not include a Federal or 
     other governmental entity or a church or qualified church 
     organization (as such terms are defined in section 
     3121(w)(3)).
       ``(C) Aggregation rules.--The rules of subsections (b), 
     (c), (m), and (o) of section 414 shall apply for purposes of 
     this section, except that in applying subsections (b) and (c) 
     of such section, the phrase `more than 50 percent' shall be 
     substituted for the phrase `more than 80 percent' each place 
     it appears.
       ``(2) Low-wage employee.--
       ``(A) In general.--The term `low-wage employee' means any 
     employee who receives wages from an applicable employer 
     during the calendar year in an amount less than 218 percent 
     of the Federal poverty line (within the meaning of section 
     2110(c)(5) of the Social Security Act) for an individual. 
     Rules similar to the rules of section 36B(d)(3)(B) shall 
     apply for purposes of this subparagraph.
       ``(B) Employees employed for less than entire year.--In the 
     case of any employee employed by an applicable taxpayer for 
     less than the entire calendar year, the amount

[[Page S7479]]

     described in subparagraph (A) shall be reduced by an amount 
     which bears the same ratio to such amount as--
       ``(i) the number of weeks during the calendar year in which 
     such individual was not an employee of such applicable 
     employer, bears to
       ``(ii) 52.
       ``(c) Applicable Percentage.--For purposes of subsection 
     (a)--
       ``(1) In general.--
       ``(A) Determination.--The applicable percentage shall be 
     determined as follows:


------------------------------------------------------------------------
 ``In the case of an applicable employer with a low-wage  The applicable
                   employee ratio of:                     percentage is:
------------------------------------------------------------------------
25% or less.............................................             25%
Greater than 25% but not greater than 50%...............             50%
Greater than 50%, but not greater than 75%..............             75%
Greater than 75%........................................           100%.
------------------------------------------------------------------------

       ``(B) Low-wage employee ratio.--For purposes of 
     subparagraph (A), the low-wage employee ratio with respect to 
     any applicable employer is the ratio (expressed as a 
     percentage) of--
       ``(i) the number of low-wage employees employed by the 
     applicable employer during the calendar year, to
       ``(ii) the total number of individuals employed by the 
     applicable employer during such calendar year.
       ``(2) Health and retirement offset.--
       ``(A) In general.--In the case of an applicable employer 
     who meets the requirements of subparagraph (B), the 
     applicable percentage shall be reduced (but not below zero) 
     by 25 percentage points.
       ``(B) Requirements.--An applicable employer meets the 
     requirements of this subparagraph if such applicable 
     employer--
       ``(i) offers to all full-time low-wage employees (and their 
     spouse and dependents) the opportunity to enroll for all 
     months during the calendar year in minimum essential coverage 
     under an eligible employer sponsored health plan (as defined 
     in section 5000A(f)(2)) for which--

       ``(I) the plan's share of the allowed costs of benefits 
     provided under the plan is not less than 60 percent of such 
     costs, and
       ``(II) the required contribution (within the meaning of 
     section 5000A(e)(1)(B)) of the employee does not exceed the 
     applicable percentage of the annual wages paid to the 
     employee by the applicable employer, and

       ``(ii) meets the retirement plan requirements of subsection 
     (d) for all employees who are low-wage employees.

     For purposes of clause (i)(II), the applicable percentage is 
     the percentage in effect under section 36B(c)(2)(B)(II) for 
     the plan year.
       ``(d) Retirement Plan Requirements.--
       ``(1) In general.--The requirements of this subsection are 
     met for any calendar year with respect to an employee of the 
     applicable employer who is a low-wage employee if the 
     employee is eligible to participate in one or more applicable 
     eligible retirement plans maintained by the applicable 
     employer (or any member of the group of employers treated as 
     an applicable employer under subsection (b)(1)(C)) for a plan 
     year ending with or within the calendar year.
       ``(2) Applicable eligible retirement plan.--For purposes of 
     this subsection, the term `applicable eligible retirement 
     plan' means an eligible retirement plan which, with respect 
     to the plan year described in paragraph (1), is either--
       ``(A) a defined contribution plan which requires the 
     employer to make nonelective contributions of at least 5 
     percent of the compensation of the employee, or
       ``(B) a defined benefit plan--
       ``(i) with respect to which the accrued benefit of the 
     employee derived from employer contributions, when expressed 
     as an annual retirement benefit, is not less than the product 
     of--

       ``(I) the lesser of 2 percent multiplied by the employee's 
     years of service (determined under the rules of paragraphs 
     (4), (5), and (6) of section 411(a)) with the employer or 20 
     percent, multiplied by
       ``(II) the employee's final average pay, or

       ``(ii) which is an applicable defined benefit plan (as 
     defined in section 411(a)(13)(B))--

       ``(I) which meets the interest credit requirements of 
     section 411(b)(5)(B)(i) with respect to the plan year, and
       ``(II) under which the employee receives a pay credit for 
     the plan year which is not less than 5 percent of 
     compensation.

       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Eligible retirement plan.--The term `eligible 
     retirement plan' has the meaning given such term by section 
     402(c)(8)(B), except that in the case of an account or 
     annuity described in clause (i) or (ii) thereof, such term 
     shall only include an account or annuity which is a 
     simplified employee pension (as defined in section 408(k)).
       ``(B) Final average pay.--For purposes of paragraph 
     (2)(B)(i)(II), final average pay shall be determined using 
     the period of consecutive years (not exceeding 5) during 
     which the employee had the greatest compensation from the 
     applicable employer.
       ``(C) Alternative plan designs.--The Secretary may 
     prescribe regulations for an applicable employer to meet the 
     requirements of this subsection through a combination of 
     defined contribution plans or defined benefit plans described 
     in paragraph (1) or through a combination of both such types 
     of plans.
       ``(D) Plans must meet requirements without taking into 
     account social security and similar contributions and 
     benefits.--A rule similar to the rule of section 416(e) shall 
     apply.
       ``(E) Certain employees may be excluded.--For purposes of 
     paragraph (2)(B)(ii), an employer shall not be treated as 
     failing to meet the requirements of this subsection with 
     respect to employees--
       ``(i) who have not attained the age of 21 before the close 
     of a plan year,
       ``(ii) who have less than 1 year of service with the 
     employer as of any day during the plan year,
       ``(iii) who are covered under an agreement which the 
     Secretary of Labor finds to be a collective bargaining 
     agreement if there is evidence that the benefits covered 
     under the plan were the subject of good faith bargaining 
     between employee representatives and the employer, or
       ``(iv) who are described in section 410(b)(3)(C) (relating 
     to nonresident aliens working outside the United States).
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Wages.--The term `wages' has the meaning given such 
     term by section 3121(a) (determined without regard to any 
     dollar limitation contained in such section).
       ``(2) Allocation of tax.--The Secretary shall prescribe 
     such rules as necessary for the allocation of the tax imposed 
     by subsection (a) among different entities treated as a 
     single employer under subsection (b)(1)(C).''.
       (b) Conforming Amendment.--The table of chapters of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to chapter 36 the following new item:

             ``Chapter 37--Corporate Responsibility Tax''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 1653. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 11002 and insert the following:

     SEC. 11002. ADJUSTMENT TO CORPORATE TAX RATE.

       (a) In General.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``22 percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.
       (c) Conforming Amendments Relating to Inflation 
     Adjustments.--
       (1) The following provisions, as added or amended by this 
     Act, are each amended by striking ``for `calendar year 2016' 
     in subparagraph (A)(ii) thereof'' and inserting ``for 
     `calendar year 1992' in subparagraph (B)'':
       (A) Section 1(j)(3)(B)(i).
       (B) Section 63(c)(7)(B)(ii)(II).
       (C) Section 199A(e)(2)(B)(ii).
       (D) Section 447(d)(2)(D)(ii)(II).
       (E) Section 448(c)(4)(B)(ii).
       (F) Section 461(l)(3)(B)(ii).
       (G) Section 883(d)(2)(B).
       (2) The following provisions, as added or amended by this 
     Act, are each amended by inserting ``, determined by 
     substituting `calendar year 2016' for `calendar year 1992' in 
     subparagraph (B) thereof'' after ``begins'':
       (A) Section 24(h)(6)(B)(ii).
       (B) Section 954(b)(3)(D)(ii).
       (3) The following provisions, as added or amended by this 
     Act, are each amended by striking ``for `2016' in 
     subparagraph (A)(ii) thereof'' and inserting ``for `1992' in 
     subparagraph (B)'':
       (A) Section 642(b)(2)(C)(iii)(ii)(bb).
       (B) Section 3402(a)(3)(B)(ii).
       (C) Section 6334(d)(4)(C)(ii).
       (4) Section 1(f)(2)(A) is amended by striking ``, 
     determined by substituting `1992' for `2016' in paragraph 
     (3)(A)(ii)''.
                                 ______
                                 
  SA 1654. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike sections 11049 and 11050 and and insert the 
     following:

     SEC. 11002. ADJUSTMENT TO CORPORATE TAX RATE.

       (a) In General.--Section 11(b), as amended by section 13001 
     of this Act, is amended by striking ``20 percent'' and 
     inserting ``21 percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.
                                 ______
                                 
  SA 1655. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

[[Page S7480]]

  


     SEC. __. AUTHORITY TO ISSUE GUIDANCE CLARIFYING EMPLOYMENT 
                   STATUS FOR PURPOSES OF EMPLOYMENT TAXES.

       (a) In General.--Chapter 25 is amended by adding at the end 
     the following new section:

     ``SEC. 3512. AUTHORITY TO ISSUE GUIDANCE CLARIFYING 
                   EMPLOYMENT STATUS.

       ``(a) In General.--The Secretary shall issue such 
     regulations or other guidance as the Secretary determines to 
     be necessary or appropriate to clarify the proper employment 
     status of individuals for purposes of any tax imposed by this 
     subtitle.
       ``(b) Prohibition on Retroactive Assessments.--
       ``(1) In general.--Except as provided in paragraph (2), 
     if--
       ``(A) for purposes of any tax imposed by this subtitle, the 
     taxpayer did not treat an individual as an employee for any 
     period before the reclassification date with respect to such 
     individual, and
       ``(B) in the case of periods after December 31, 1978, and 
     before such reclassification date, all Federal tax returns 
     (including information returns) required to be filed by the 
     taxpayer with respect to such individual for such period are 
     filed on a basis consistent with the taxpayer's treatment of 
     such individual as not being an employee,

     then, for purposes of applying such taxes for such period 
     before such reclassification date with respect to the 
     taxpayer, the individual shall be deemed not to be an 
     employee unless the taxpayer had no reasonable basis for not 
     treating such individual as an employee.
       ``(2) Professional services.--
       ``(A) In general.--In the case of an individual who 
     performs professional services, if--
       ``(i) for purposes of any tax imposed by this subtitle, the 
     taxpayer did not treat the individual as an employee for any 
     period, and
       ``(ii) in the case of periods after December 31, 1978, all 
     Federal tax returns (including information returns) required 
     to be filed by the taxpayer with respect to such individual 
     for such period are filed on a basis consistent with the 
     taxpayer's treatment of such individual as not being an 
     employee,

     then, for purposes of applying such taxes for such period 
     with respect to the taxpayer, the individual shall be deemed 
     not be an employee unless the taxpayer had no reasonable 
     basis for not treating such individual as an employee. For 
     purposes of this subparagraph, professional services means 
     services performed in the fields of health, law, engineering, 
     architecture, accounting, actuarial science, consulting, or 
     financial services.
       ``(B) Application to full-time life insurance salesmen.--
     For purposes of this subtitle (with the exception of chapter 
     21), an individual shall not excluded from the application of 
     subparagraph (A) due solely to treatment of such individual 
     by the taxpayer as an employee, including for purposes of tax 
     returns, to the extent required under section 3121(d)(3)(B).
       ``(3) Statutory standards providing one method of 
     satisfying the requirements of paragraphs (1) and (2).--For 
     purposes of paragraphs (1) and (2), a taxpayer shall in any 
     case be treated as having a reasonable basis for not treating 
     an individual as an employee for a period if the taxpayer's 
     treatment of such individual for such period was in 
     reasonable reliance on any of the following:
       ``(A) Judicial precedent, published rulings, technical 
     advice with respect to the taxpayer, or a letter ruling to 
     the taxpayer.
       ``(B) A past Internal Revenue Service audit of the taxpayer 
     in which there was no assessment attributable to the 
     treatment (for purposes of any tax imposed by this subtitle) 
     of the individuals holding positions substantially similar to 
     the position held by such individual.
       ``(C) Long-standing recognized practice of a significant 
     segment of the industry in which such individual was engaged.
       ``(4) Consistency required in the case of prior tax 
     treatment.--Paragraph (1) shall not apply with respect to the 
     treatment of any individual (hereafter in this paragraph 
     referred to as the reclassified individual) for purposes of 
     any tax imposed by this subtitle for any period ending after 
     December 31, 1978, if the taxpayer (or a predecessor) has 
     treated any individual holding a substantially similar 
     position as an employee for purposes of any tax imposed by 
     this subtitle for any period beginning after December 31, 
     1977, and ending before the reclassification date with 
     respect to such reclassified individual.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Reclassification date.--
       ``(A) In general.--The term `reclassification date' means, 
     with respect to any individual, the earlier of--
       ``(i) the first day of the first calendar quarter beginning 
     more than 180 days after the date of an employee 
     classification determination with respect to such individual, 
     or
       ``(ii) the effective date of the first applicable final 
     regulation issued by the Secretary under subsection (a) with 
     respect to such individual (or, if later, the first day of 
     the first calendar quarter beginning more than 180 days after 
     such regulation is issued).
       ``(B) Employee classification determination.--The term 
     `employee classification determination' means, with respect 
     to any individual, a determination by the Secretary, in 
     connection with an audit of the taxpayer which is described 
     in section 7436 and which commences after the date which is 1 
     year after the date of the enactment of this section, that a 
     class of individuals holding positions with such taxpayer 
     which are substantially similar to the position held by such 
     individual are employees.
       ``(C) First applicable final regulation.--The term `first 
     applicable final regulation' means, with respect to any 
     individual, the first final regulation (or other guidance of 
     general applicability) which sets forth the factors for 
     determining the employment status of a class of individuals 
     holding positions substantially similar to the position held 
     by such individual.
       ``(2) Employment status.--The term `employment status' 
     means the status of an individual, under the usual common law 
     rules applicable in determining the employer-employee 
     relationship, as an employee or as an independent contractor 
     (or other individual who is not an employee).
       ``(d) Continuation of Certain Special Rules.--
       ``(1) Exception for certain skilled workers.--Subsection 
     (b) shall not apply in the case of an individual who, 
     pursuant to an arrangement between the taxpayer and another 
     person, provides services for such other person as an 
     engineer, designer, drafter, computer programmer, systems 
     analyst, or other similarly skilled worker engaged in a 
     similar line of work.
       ``(2) Notice of availability of section.--An officer or 
     employee of the Internal Revenue Service shall, before or at 
     the commencement of any audit inquiry relating to the 
     employment status of one or more individuals who perform 
     services for the taxpayer, provide the taxpayer with a 
     written notice of the provisions of this section.
       ``(3) Rules relating to statutory standards.--For purposes 
     of subsection (b)(3)--
       ``(A) a taxpayer may not rely on an audit commenced after 
     December 31, 1996, for purposes of subparagraph (B) thereof 
     unless such audit included an examination for purposes of any 
     tax imposed by this subtitle whether the individual involved 
     (or any individual holding a position substantially similar 
     to the position held by the individual involved) should be 
     treated as an employee of the taxpayer,
       ``(B) in no event shall the significant segment requirement 
     of subparagraph (C) thereof be construed to require a 
     reasonable showing of the practice of more than 25 percent of 
     the industry (determined by not taking into account the 
     taxpayer), and
       ``(C) in applying the long-standing recognized practice 
     requirement of subparagraph (C) thereof--
       ``(i) such requirement shall not be construed as requiring 
     the practice to have continued for more than 10 years, and
       ``(ii) a practice shall not fail to be treated as long-
     standing merely because such practice began after 1978.
       ``(4) Availability of safe harbors.--Nothing in this 
     section shall be construed to provide that subsection (b) 
     only applies where the individual involved is otherwise an 
     employee of the taxpayer.
       ``(5) Burden of proof.--
       ``(A) In general.--If--
       ``(i) a taxpayer establishes a prima facie case that it was 
     reasonable not to treat an individual as an employee for 
     purposes of subsection (b), and
       ``(ii) the taxpayer has fully cooperated with reasonable 
     requests from the Secretary,
     then the burden of proof with respect to such treatment shall 
     be on the Secretary.
       ``(B) Exception for other reasonable basis.--In the case of 
     any issue involving whether the taxpayer had a reasonable 
     basis not to treat an individual as an employee for purposes 
     of subsection (b), subparagraph (A) shall only apply for 
     purposes of determining whether the taxpayer meets the 
     requirements of subparagraph (A), (B), or (C) of subsection 
     (b)(3).
       ``(6) Preservation of prior period safe harbor.--If--
       ``(A) an individual would (but for the treatment referred 
     to in subparagraph (B)) be deemed not to be an employee of 
     the taxpayer under subsection (b) for any prior period, and
       ``(B) such individual is treated by the taxpayer as an 
     employee for purposes of the taxes imposed by this subtitle 
     for any subsequent period,

     then, for purposes of applying such taxes for such prior 
     period with respect to the taxpayer, the individual shall be 
     deemed not to be an employee.
       ``(7) Substantially similar position.--For purposes of 
     subsection (b) and this subsection, the determination as to 
     whether an individual holds a position substantially similar 
     to a position held by another individual shall include 
     consideration of the relationship between the taxpayer and 
     such individuals.
       ``(8) Treatment of test room supervisors and proctors who 
     assist in the administration of college entrance and 
     placement exams.--
       ``(A) In general.--In the case of an individual described 
     in subparagraph (B) who is providing services as a test 
     proctor or room supervisor by assisting in the administration 
     of college entrance or placement examinations, subsection (b) 
     shall be applied to such services performed after December 
     31, 2006 (and remuneration paid for such services) without 
     regard to paragraph (4) thereof.
       ``(B) Applicability.--An individual is described in this 
     subparagraph if the individual--
       ``(i) is providing the services described in subsection (b) 
     to an organization described

[[Page S7481]]

     in section 501(c) and exempt from tax under section 501(a), 
     and
       ``(ii) is not otherwise treated as an employee of such 
     organization for purposes of this subtitle.
       ``(9) Treatment of securities broker dealers.--In 
     determining for purposes of this title whether a registered 
     representative of a securities broker-dealer is an employee 
     (as defined in section 3121(d)), no weight shall be given to 
     instructions from the service recipient which are imposed 
     only in compliance with investor protection standards imposed 
     by the Federal Government, any State government, or a 
     governing body pursuant to a delegation by a Federal or State 
     agency.
       ``(e) Statements to Independent Contractors.--
       ``(1) In general.--Each person who contracts for the 
     services of an independent contractor on a regular and 
     ongoing basis, within the scope of such person's trade or 
     business, shall provide a written statement to such 
     independent contractor notifying such independent contractor 
     of the Federal tax obligations of an independent contractor, 
     the labor and employment law protections that do not apply to 
     independent contractors, and the right of such independent 
     contractor to seek a status determination from the Internal 
     Revenue Service.
       ``(2) Independent contractor.--For purposes of this 
     subsection, the term `independent contractor' means any 
     individual who is not treated as an employee by the person 
     receiving the services referred to in paragraph (1).
       ``(3) Timing of statement.--Except as otherwise provided by 
     the Secretary, the statement required under paragraph (1) 
     shall be provided within a reasonable period before or after 
     entering into the arrangement for services referred to in 
     paragraph (1).
       ``(4) Development of model statement.--The Secretary shall 
     develop model materials for providing the statement required 
     under paragraph (1).''.
       (b) Reduced Penalty Not Applicable in Cases of 
     Noncompliance With Guidance Without Reasonable Basis.--
     Subsection (c) of section 3509 is amended--
       (1) by striking ``if such liability'' and inserting ``if--
       ``(1) such liability'', and
       (2) by striking the period at the end and inserting ``, or
       ``(2) such liability relates to an individual who is 
     treated as an employee under regulations or other guidance 
     issued by the Secretary under section 3512(a) and the 
     taxpayer lacks a reasonable basis for treating the individual 
     as other than an employee.

     In the case of a taxpayer which has received a final written 
     determination from the Internal Revenue Service holding that 
     the individual referred to in paragraph (2) (or another 
     individual who holds a position with the taxpayer 
     substantially similar to the position held by such 
     individual) is an employee, such taxpayer shall be treated 
     for purposes of paragraph (2) as lacking a reasonable basis 
     for treating such individual as other than an employee with 
     respect to periods beginning on and after the first day of 
     the first calendar quarter beginning more than 180 days after 
     the date of such written determination unless the taxpayer 
     establishes by clear and convincing evidence that the 
     taxpayer has a reasonable basis for such treatment.''.
       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 6724(d), as amended by this 
     Act, is amended by striking ``or'' at the end of subparagraph 
     (II), by striking the period at the end of subparagraph (JJ) 
     and inserting ``, or'', and by inserting after subparagraph 
     (JJ) the following new subparagraph:
       ``(KK) section 3512(e) (relating to statements to 
     independent contractors).''.
       (2) Paragraph (2) of section 7436(a) is amended by striking 
     ``subsection (a) of section 530 of the Revenue Act of 1978'' 
     and inserting ``section 3512(b)''.
       (3) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3512. Authority to issue guidance clarifying employment 
              status.''.

       (d) Termination of Section 530 of the Revenue Act of 
     1978.--The Revenue Act of 1978 is amended by striking section 
     530.
       (e) Reports on Worker Misclassification.--Beginning with 
     the first fiscal year beginning after the date the first 
     regulation or other guidance is issued for public comment 
     under section 3512(a) of the Internal Revenue Code of 1986 
     (as added by this section), the Commissioner of the Internal 
     Revenue Service shall issue the following reports:
       (1) A report each fiscal year on worker classification 
     which shall include the total number of examinations of 
     employers initiated because of suspected worker 
     classification issues, the total number of examinations that 
     included determinations on worker classification issues, the 
     amount of additional tax liabilities associated with worker 
     classification enforcement actions, the number of workers 
     reclassified as a result of these actions, the number of 
     requests for Determination of Worker Status (Form SS-8), and 
     technical guidance on how to understand the data provided in 
     the report.
       (2) A report each fiscal year in which new statistically 
     valid data is compiled and interpreted on worker 
     classification, prepared on the basis of information gathered 
     during an Employment Tax Study conducted by the National 
     Research Program (NRP) of the Internal Revenue Service. Such 
     report shall provide statistical estimates of the number of 
     employers misclassifying workers, the number of workers 
     misclassified, the industries involved, data interpretations 
     and conclusions, and a description of the impact of improper 
     worker classification on the employment tax gap.
       (f) Termination of Section 921 of the Taxpayer Relief Act 
     of 1997.--The Taxpayer Relief Act of 1997 is amended by 
     striking section 921.
       (g) Effective Dates.--
       (1) Delayed effective date of regulations and guidance.--
     Any regulation or other guidance issued under section 3512(a) 
     of the Internal Revenue Code of 1986, as added by this 
     section, shall not apply to services rendered before the date 
     which is 1 year after the date of the enactment of this Act.
       (2) Authority to issue regulations and guidance 
     immediately.--So much of the amendment made by subsection (d) 
     as relates to subsection (b) of section 530 of the Revenue 
     Act of 1978 shall take effect on the date of the enactment of 
     this Act.
       (3) Delayed termination of remainder of section 530 of the 
     revenue act of 1978.--Except as provided in paragraph (2), 
     the amendment made by subsection (d) shall apply to services 
     rendered on or after the date which is 1 year after the date 
     of the enactment of this Act.
       (4) Statements to independent contractors.--Subsection (e) 
     of section 3512 of the Internal Revenue Code of 1986, as 
     added by this section, and the amendments made by subsection 
     (c)(1) of this section shall apply to arrangements for 
     services entered into after December 31, 2017.
       (5) Application of reduced penalty.--The amendments made by 
     subsection (b) shall apply to any calendar year beginning 
     after the date of the enactment of this Act.
                                 ______
                                 
  SA 1656. Mr. BROWN submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part IX of subtitle C of title I, insert the 
     following:

                   Subpart C--Stop Price Gouging Act

     SEC. 13831. SHORT TITLE.

       This subpart may be cited as the ``Stop Price Gouging 
     Act''.

     SEC. 13832. IDENTIFICATION OF PRESCRIPTION DRUG PRICE SPIKES.

       (a) Definitions.--In this section:
       (1) Applicable entity.--The term ``applicable entity'' 
     means the holder of an application approved under subsection 
     (c) or (j) of section 505 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355) or of a license issued under 
     subsection (a) or (k) of section 351 of the Public Health 
     Service Act (42 U.S.C. 262) for a drug described in paragraph 
     (5)(A).
       (2) Average manufacturer price.--The term ``average 
     manufacturer price''--
       (A) has the same meaning given such term under section 
     1927(k)(1) of the Social Security Act (42 U.S.C. 1396r-
     8(k)(1)); or
       (B) with respect to a drug for which there is no average 
     manufacturer price as so defined, such term shall mean the 
     wholesale acquisition cost of the drug.
       (3) Commerce.--The term ``commerce'' has the meaning given 
     such term in section 4 of the Federal Trade Commission Act 
     (15 U.S.C. 44).
       (4) Inspector general.--The term ``Inspector General'' 
     means the Inspector General of the Department of Health and 
     Human Services.
       (5) Prescription drug.--
       (A) In general.--The term ``prescription drug'' means any 
     drug (as defined in section 201(g) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 321(g))), including a combination 
     product whose primary mode of action is determined under 
     section 503(g) of such Act (21 U.S.C. 353(g)) to be that of a 
     drug, and that--
       (i) is subject to section 503(b)(1) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)); and
       (ii) is covered by a Federal health care program (as 
     defined in section 1128B(f) of the Social Security Act (42 
     U.S.C. 1320a-7b(f))).
       (B) Treatment of reformulated drugs.--For purposes of this 
     section, a prescription drug with respect to which the 
     Secretary of Health and Human Services has approved any minor 
     reformulation that does not produce a meaningful therapeutic 
     benefit, the drug that was approved prior to any such 
     reformulation and the drug with any such reformulation shall 
     be considered one prescription drug.
       (6) Price spike.--
       (A) In general.--The term ``price spike'' means an increase 
     in the average manufacturer price in commerce of a 
     prescription drug for which the price spike percentage is 
     equal to or greater than applicable price increase allowance.
       (B) Price spike percentage.--The price spike percentage is 
     the percentage (if any) by which--
       (i) the average manufacturer price of a prescription drug 
     in commerce for the calendar year; exceeds
       (ii) the average manufacturer price of such prescription 
     drug in commerce for the calendar year preceding such year.

[[Page S7482]]

       (C) Applicable price increase allowance.--The applicable 
     price increase allowance for any calendar year is the 
     percentage (rounded to the nearest one-tenth of 1 percent) by 
     which the medical care consumer price index detailed 
     expenditure category for all urban consumers (United States 
     city average) for that year exceed such index for the 
     preceding calendar year.
       (7) Price spike revenue.--
       (A) In general.--The price spike revenue for any calendar 
     year is an amount equal to--
       (i) the gross price spike revenue, minus
       (ii) the adjustment amount.
       (B) Gross price spike revenue.--The gross price spike 
     revenue for any calendar year is an amount equal to the 
     product of--
       (i) an amount equal to the difference between clause (i) of 
     paragraph (6)(B) and clause (ii) of such paragraph; and
       (ii) the total number of units of the prescription drug 
     which were sold in commerce in such calendar year.
       (C) Adjustment amount.--The adjustment amount is the 
     amount, if any, of the gross price spike revenue which the 
     Inspector General has determined is due solely to an increase 
     in the cost of the inputs necessary to manufacture the 
     prescription drug subject to the price spike.

       (b) Submission by Pharmaceutical Companies of Information 
     to Inspector General.--
       (1) In general.--For each prescription drug, the applicable 
     entity shall submit to the Inspector General a quarterly 
     report that includes the following:
       (A) For each prescription drug of the applicable entity--
       (i) the total number of units of the prescription drug 
     which were sold in commerce in the preceding calendar 
     quarter;
       (ii) the average and median price per unit of such 
     prescription drug in commerce in the preceding calendar 
     quarter, disaggregated by month; and
       (iii) the gross revenues from sales of such prescription 
     drug in commerce in the preceding calendar quarter.
       (B) Such information related to increased input costs or 
     public health considerations as the applicable entity may 
     wish the Inspector General to consider in making a 
     determination under clause (ii) of subsection (c)(2)(B) or an 
     assessment in clause (iii) of such subsection for the 
     preceding calendar quarter.
       (C) Such information related to any anticipated increased 
     input costs for the subsequent calendar quarter as the 
     applicable entity may wish the Inspector General to consider 
     in making a determination under clause (ii) of subsection 
     (c)(2)(B) or an assessment in clause (iii) of such subsection 
     for such calendar quarter.
       (2) Penalty for failure to submit.--
       (A) In general.--An applicable entity described in 
     paragraph (1) that fails to submit information to the 
     Inspector General regarding a prescription drug, as required 
     by such paragraph, before the date specified in paragraph (3) 
     shall be liable for a civil penalty, as determined under 
     subparagraph (B).
       (B) Amount of penalty.--The amount of the civil penalty 
     shall be equal to the product of--
       (i) an amount, as determined appropriate by the Inspector 
     General, which is--

       (I) not less than 0.5 percent of the gross revenues from 
     sales of the prescription drug described in subparagraph (A) 
     for the preceding calendar year, and
       (II) not greater than 1 percent of the gross revenues from 
     sales of such prescription drug for the preceding calendar 
     year, and

       (ii) the number of days in the period between--

       (I) the applicable date specified in paragraph (3), and
       (II) the date on which the Inspector General receives the 
     information described in paragraph (1) from the applicable 
     entity.

       (3) Submission deadline.--An applicable entity shall submit 
     each quarterly report described in paragraph (1) not later 
     than January 17, April 18, June 15, and September 15 of each 
     calendar year.

       (c) Assessment by Inspector General.--
       (1) In general.--Not later than the last day in February of 
     each year, the Inspector General, in consultation with other 
     relevant Federal agencies (including the Federal Trade 
     Commission), shall--
       (A) complete an assessment of the information the Inspector 
     General received pursuant to subsection (b)(1) with respect 
     to sales of prescription drugs in the preceding calendar 
     year; and
       (B) in the case of any prescription drug which satisfies 
     the conditions described in paragraph (1) or (2) of 
     subsection (d), submit a recommendation to the Secretary of 
     Health and Human Services that such drug be exempted from 
     application of the tax imposed under section 4192 of the 
     Internal Revenue Code of 1986 (as added by section 13833 of 
     this Act) for such year.
       (2) Elements.--The assessment required by paragraph (1)(A) 
     shall include the following:
       (A) Identification of each price spike relating to a 
     prescription drug in the preceding calendar year.
       (B) For each price spike identified under subparagraph 
     (A)--
       (i) a determination of the price spike revenue;
       (ii) a determination regarding the accuracy of the 
     information submitted by the applicable entity regarding 
     increased input costs; and
       (iii) an assessment of the rationale of the applicable 
     entity for the price spike.

       (d) Exemption of Certain Drugs.--
       (1) In general.--The Secretary of Health and Human 
     Services, upon recommendation of the Inspector General 
     pursuant to subsection (c)(1)(B), may exempt any prescription 
     drug which has been subject to a price spike during the 
     preceding calendar year from application of the tax imposed 
     under section 4192 of the Internal Revenue Code of 1986 for 
     such year, if the Secretary determines that--
       (A) based on information submitted pursuant to subsection 
     (b)(1)(B), a for-cause price increase exemption should apply; 
     or
       (B)(i) the prescription drug which has been subject to a 
     price spike has an average manufacturer price of not greater 
     than $10 for a 30 day supply; and
       (ii) such drug is marketed by not less than 3 other holders 
     of applications approved under subsection (c) or (j) of 
     section 505 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 355), where such applications approved under such 
     subsection (j) use as a reference drug the drug so approved 
     under such subsection (c).
       (2) Clarification.--In considering, under paragraph (1)(A), 
     information submitted pursuant to subsection (b)(1)(B), the 
     Secretary--
       (A) has the discretion to determine that such information 
     does not warrant a for-cause price increase exemption; and
       (B) shall exclude from such consideration any information 
     submitted by the applicable entity threatening to curtail or 
     limit production of the prescription drug if the Secretary 
     does not grant an exemption from the application of the tax 
     under section 4192 of the Internal Revenue Code of 1986.

       (e) Inspector General Report to Internal Revenue Service.--
       (1) In general.--Subject to paragraph (3), not later than 
     the last day in February of each year, the Inspector General 
     shall transmit to the Internal Revenue Service a report on 
     the findings of the Inspector General with respect to the 
     information the Inspector General received under subsection 
     (b)(1) with respect to the preceding calendar year and the 
     assessment carried out by the Inspector General under 
     subsection (c)(1)(A) with respect to such information.
       (2) Contents.--The report transmitted under paragraph (1) 
     shall include the following:
       (A) The information received under subsection (b)(1) with 
     respect to the preceding calendar year.
       (B) The price spikes identified under subparagraph (A) of 
     subsection (c)(2).
       (C) The price spike revenue determinations made under 
     subparagraph (B)(i) of such subsection.
       (D) The determinations and assessments made under clauses 
     (ii) and (iii) of subparagraph (B) of such subsection.
       (3) Notice and opportunity for hearing.--
       (A) In general.--No report shall be transmitted to the 
     Internal Revenue Service under paragraph (1) in regards to a 
     prescription drug unless the Inspector General has provided 
     the applicable entity with--
       (i) the assessment of such drug under subsection (c)(1)(A); 
     and
       (ii) notice of their right to a hearing in regards to such 
     assessment.
       (B) Notice.--The notice required under subparagraph (A) 
     shall be provided to the applicable entity not later than 30 
     days after completion of the assessment under subsection 
     (c)(1)(A).
       (C) Request for hearing.--Subject to subparagraph (E), an 
     applicable entity may request a hearing before the Secretary 
     of Health and Human Services not later than 30 days after the 
     date on which the notice under subparagraph (B) is received.
       (D) Completion of hearing.--In the case of an applicable 
     entity which requests a hearing pursuant to subparagraph (C), 
     the Secretary of Health and Human Services shall, not later 
     than 12 months after the date on which the assessment under 
     subsection (c)(1)(A) was completed by the Inspector General--
       (i) make a final determination in regards the accuracy of 
     such assessment; and
       (ii) provide the report described in paragraph (2) to the 
     Internal Revenue Service.
       (E) Limitation.--An applicable entity may request a hearing 
     under subparagraph (C) with respect to a particular 
     prescription drug only once within a 5-year period.
       (4) Publication.--
       (A) In general.--Not later than the last day in February of 
     each year, subject to subparagraph (B), the Inspector General 
     shall make the report transmitted under paragraph (1) 
     available to the public, including on the Internet website of 
     the Inspector General, subject to subparagraph (B).
       (B) Proprietary information.--The Inspector General shall 
     ensure that any information made public in accordance with 
     subparagraph (A) excludes trade secrets and confidential 
     commercial information.

       (f) Notification.--The Secretary of the Treasury, in 
     conjunction with the Inspector General, shall notify, at such 
     time and in such manner as the Secretary of the Treasury 
     shall provide, each applicable entity in regard to any 
     prescription drug which has been determined to have been 
     subject to a price spike during the preceding calendar year 
     and the amount of the tax imposed on such applicable entity 
     pursuant to section 4192 of the Internal Revenue Code of 
     1986.

[[Page S7483]]

  


     SEC. 13833. EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT TO PRICE 
                   SPIKES.

       (a) In General.--Subchapter E of chapter 32 is amended by 
     adding at the end the following new section:

     ``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.

       ``(a) Imposition of Tax.--
       ``(1) In general.--Subject to paragraph (3), for each 
     taxable prescription drug sold by an applicable entity during 
     the calendar year, there is hereby imposed on such entity a 
     tax equal to the greater of--
       ``(A) the annual price spike tax for such prescription 
     drug, or
       ``(B) subject to paragraph (2), the cumulative price spike 
     tax for such prescription drug.
       ``(2) Limitation.--In the case of a taxable prescription 
     drug for which the applicable period (as determined under 
     subsection (c)(2)(E)(i)) is less than 2 calendar years, the 
     cumulative price spike tax shall not apply.
       ``(3) Exemption.--For any calendar year in which the 
     Secretary of Health and Human Services has provided an 
     exemption for a taxable prescription drug pursuant to section 
     13832(d) of the Stop Price Gouging Act, the amount of the tax 
     determined under paragraph (1) for such drug or device for 
     such calendar year shall be reduced to zero.

       ``(b) Annual Price Spike Tax.--
       ``(1) In general.--The amount of the annual price spike tax 
     shall be equal to the applicable percentage of the price 
     spike revenue received by the applicable entity on the sale 
     of the taxable prescription drug during the calendar year.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage shall be equal to--
       ``(A) in the case of a taxable prescription drug which has 
     been subject to a price spike percentage greater than the 
     applicable price increase allowance (as defined in section 
     13832(a)(6)(C) of the Stop Price Gouging Act) but less than 
     15 percent, 50 percent,
       ``(B) in the case of a taxable prescription drug which has 
     been subject to a price spike percentage equal to or greater 
     than 15 percent but less than 20 percent, 75 percent, and
       ``(C) in the case of a taxable prescription drug which has 
     been subject to a price spike percentage equal to or greater 
     than 20 percent, 100 percent.

       ``(c) Cumulative Price Spike Tax.--
       ``(1) In general.--The amount of the cumulative price spike 
     tax shall be equal to the applicable percentage of the 
     cumulative price spike revenue received by the applicable 
     entity on the sale of the taxable prescription drug during 
     the calendar year.
       ``(2) Applicable percentage.--
       ``(A) In general.--For purposes of paragraph (1), the 
     applicable percentage shall be equal to--
       ``(i) in the case of a taxable prescription drug which has 
     been subject to a cumulative price spike percentage greater 
     than the cumulative price increase allowance but less than 
     the first compounded percentage, 50 percent,
       ``(ii) in the case of a taxable prescription drug which has 
     been subject to a cumulative price spike percentage equal to 
     or greater than the first compounded percentage but less than 
     the second compounded percentage, 75 percent, and
       ``(iii) in the case of a taxable prescription drug which 
     has been subject to a cumulative price spike percentage equal 
     to or greater than the second compounded percentage, 100 
     percent.
       ``(B) Cumulative price spike percentage.--The cumulative 
     price spike percentage is the percentage (if any) by which--
       ``(i) the average manufacturer price of the taxable 
     prescription drug in commerce for the preceding calendar 
     year, exceeds
       ``(ii) the average manufacturer price of such prescription 
     drug in commerce for the base year.
       ``(C) Cumulative price increase allowance.--For purposes of 
     clause (i) of subparagraph (A), the cumulative price increase 
     allowance for any calendar year is the percentage (rounded to 
     the nearest one-tenth of 1 percent) by which the medical care 
     consumer price index detailed expenditure category for all 
     urban consumers (United States city average) for that year 
     exceeds such index for the preceding calendar year.
       ``(D) Compounded percentages.--For purposes of subparagraph 
     (A), the first compounded percentage and second compounded 
     percentage shall be determined in accordance with the 
     following table:


------------------------------------------------------------------------
                                                   First        Second
    ``Number of years in applicable period       compounded   compounded
                                                 percentage   percentage
------------------------------------------------------------------------
2 years.......................................        32.25        44.00
3 years.......................................        52.09        72.80
4 years.......................................        74.90       107.36
5 years.......................................       101.14      148.83.
------------------------------------------------------------------------

       ``(E) Applicable period and base year.--
       ``(i) Applicable period.--The applicable period shall be 
     the lesser of--

       ``(I) the 5 preceding calendar years,
       ``(II) all calendar years beginning after the date of 
     enactment of this section, or
       ``(III) all calendar years in which the taxable 
     prescription drug was sold in commerce.

       ``(ii) Base year.--The base year shall be the calendar year 
     immediately preceding the applicable period.
       ``(3) Cumulative price spike revenue.--For purposes of 
     paragraph (1), the cumulative price spike revenue for any 
     taxable prescription drug shall be an amount equal to--
       ``(A) an amount equal to the product of--
       ``(i) an amount (not less than zero) equal to--

       ``(I) the average manufacturer price of such prescription 
     drug in commerce for the preceding calendar year, minus
       ``(II) the average manufacturer price of such prescription 
     drug in commerce for the base year, and

       ``(ii) the total number of units of such prescription drug 
     which were sold in commerce in the preceding calendar year, 
     minus
       ``(B) an amount equal to the sum of the adjustment amounts, 
     if any, determined under section 13832(a)(7)(C) of the Stop 
     Price Gouging Act for each calendar year during the 
     applicable period.

       ``(d) Definitions.--For purposes of this section--
       ``(1) Taxable prescription drug.--The term `taxable 
     prescription drug' means a prescription drug (as defined in 
     section 13832(a)(5) of the Stop Price Gouging Act) which has 
     been identified by the Inspector General of the Department of 
     Health and Human Services, under section 13832(c)(2)(A) of 
     such Act, as being subject to a price spike.
       ``(2) Other terms.--The terms `applicable entity', `average 
     manufacturer price', `price spike', `price spike percentage', 
     and `price spike revenue' have the same meaning given such 
     terms under section 13832(a) of the Stop Price Gouging 
     Act.''.

       (b) Clerical Amendments.--
       (1) The heading of subchapter E of chapter 32 is amended by 
     striking ``Medical Devices'' and inserting ``Certain Medical 
     Devices and Prescription Drugs''.
       (2) The table of subchapters for chapter 32 is amended by 
     striking the item relating to subchapter E and inserting the 
     following new item:

   ``subchapter e. certain medical devices and prescription drugs''.

       (3) The table of sections for subchapter E of chapter 32 is 
     amended by adding at the end the following new item:

``Sec. 4192. Prescription drugs subject to price spikes.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to sales after the date of the enactment of this 
     Act.

     SEC. 13834. STUDY ON MONOPOLY MEDICAL PRODUCTS.

       (a) In General.--The Comptroller General of the United 
     States shall conduct a study that examines--
       (1) how drug manufacturers and health plans (including 
     private insurers, the Medicare program, and State Medicaid 
     programs) establish initial launch prices for newly approved 
     drugs; and
       (2) alternative methods that have been proposed for setting 
     the price of new drugs.

       (b) Study of Specific Drugs.--As part of the study 
     described in subsection (a), the Comptroller General shall 
     examine drug pricing with respect to several drugs approved 
     within the 5-year period immediately preceding the date of 
     enactment of this Act and explore potential alternative 
     approaches to establish new drug prices that could help make 
     new drugs more affordable, better reflect the clinical value 
     of such drugs in treating patients, and maintain incentives 
     for innovation.

       (c) Factors.--In conducting the study described in 
     subsection (a), the Comptroller General shall consider--
       (1) what factors drug manufacturers and health plans 
     consider in establishing initial launch prices;
       (2) how initial pricing decisions by drug manufacturers and 
     health plans affect costs and use of services for patients 
     and public programs such as the Medicare and Medicaid 
     programs;
       (3) efforts by health plans to limit costs, including 
     through benefit design or coverage limitations;
       (4) how prices change in the first few years following a 
     new drug's launch; and
       (5) recommendations manufacturers, health plans, and other 
     experts have for alternative approaches to establishing new 
     drug prices and the benefits and challenges associated with 
     such alternative approaches.

     SEC. 13835. REVENUES COLLECTED.

       There are authorized to be appropriated to the Secretary of 
     Health and Human Services such sums as are equal to any 
     increase in

[[Page S7484]]

     revenue to the Treasury by reason of the provisions of this 
     Act or the amendments made by this Act for the purposes of 
     increasing amounts available to the National Institutes of 
     Health for research and development of drugs.
                                 ______
                                 
  SA 1657. Mr. THUNE (for himself, Mr. Grassley, Mr. Roberts, Mr. 
Isakson, and Mr. Inhofe) submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       Strike section 11061 and insert the following:

     SEC. 11061. REPEAL OF ESTATE AND GENERATION-SKIPPING TRANSFER 
                   TAXES AND MODIFICATIONS OF GIFT TAX.

       (a) Repeal of Estate and Generation-skipping Transfer 
     Taxes.--
       (1) Estate tax repeal.--Subchapter C of chapter 11 of 
     subtitle B is amended by adding at the end the following new 
     section:

     ``SEC. 2210. TERMINATION.

       ``(a) In General.--Except as provided in subsection (b), 
     this chapter shall not apply to the estates of decedents 
     dying on or after the date of the enactment of the Tax Cuts 
     and Jobs Act.
       ``(b) Certain Distributions From Qualified Domestic 
     Trusts.--In applying section 2056A with respect to the 
     surviving spouse of a decedent dying before the date of the 
     enactment of the Tax Cuts and Jobs Act--
       ``(1) section 2056A(b)(1)(A) shall not apply to 
     distributions made after the 10-year period beginning on such 
     date, and
       ``(2) section 2056A(b)(1)(B) shall not apply on or after 
     such date.''.
       (2) Generation-skipping transfer tax repeal.--Subchapter G 
     of chapter 13 of subtitle B is amended by adding at the end 
     the following new section:

     ``SEC. 2664. TERMINATION.

       ``This chapter shall not apply to generation-skipping 
     transfers on or after the date of the enactment of the Tax 
     Cuts and Jobs Act.''.
       (3) Conforming amendments.--
       (A) The table of sections for subchapter C of chapter 11 is 
     amended by adding at the end the following new item:

``Sec. 2210. Termination.''.

       (B) The table of sections for subchapter G of chapter 13 is 
     amended by adding at the end the following new item:

``Sec. 2664. Termination.''.

       (4) Effective date.--The amendments made by this subsection 
     shall apply to the estates of decedents dying, and 
     generation-skipping transfers, after December 31, 2017.
       (b) Modifications of Gift Tax.--
       (1) Computation of gift tax.--Subsection (a) of section 
     2502 is amended to read as follows:
       ``(a) Computation of Tax.--
       ``(1) In general.--The tax imposed by section 2501 for each 
     calendar year shall be an amount equal to the excess of--
       ``(A) a tentative tax, computed under paragraph (2), on the 
     aggregate sum of the taxable gifts for such calendar year and 
     for each of the preceding calendar periods, over
       ``(B) a tentative tax, computed under paragraph (2), on the 
     aggregate sum of the taxable gifts for each of the preceding 
     calendar periods.
       ``(2) Rate schedule.--

                                         ...............................
``If the amount with respect to which    The tentative tax is:
 the tentative tax to be computed is:.
Not over $10,000.......................  18% of such amount.
Over $10,000 but not over $20,000......  $1,800, plus 20% of the excess
                                          over $10,000.
Over $20,000 but not over $40,000......  $3,800, plus 22% of the excess
                                          over $20,000.
Over $40,000 but not over $60,000......  $8,200, plus 24% of the excess
                                          over $40,000.
Over $60,000 but not over $80,000......  $13,000, plus 26% of the excess
                                          over $60,000.
Over $80,000 but not over $100,000.....  $18,200, plus 28% of the excess
                                          over $80,000.
Over $100,000 but not over $150,000....  $23,800, plus 30% of the excess
                                          over $100,000.
Over $150,000 but not over $250,000....  $38,800, plus 32% of the excess
                                          of $150,000.
Over $250,000 but not over $500,000....  $70,800, plus 34% of the excess
                                          over $250,000.
Over $500,000..........................  $155,800, plus 35% of the
                                          excess of $500,000.''.
 

       (2) Treatment of certain transfers in trust.--Section 2511 
     is amended by adding at the end the following new subsection:
       ``(c) Treatment of Certain Transfers in Trust.--
     Notwithstanding any other provision of this section and 
     except as provided in regulations, a transfer in trust shall 
     be treated as a taxable gift under section 2503, unless the 
     trust is treated as wholly owned by the donor or the donor's 
     spouse under subpart E of part I of subchapter J of chapter 
     1.''.
       (3) Lifetime gift exemption.--
       (A) In general.--Paragraph (1) of section 2505(a) is 
     amended to read as follows:
       ``(1) the amount of the tentative tax which would be 
     determined under the rate schedule set forth in section 
     2502(a)(2) if the amount with respect to which such tentative 
     tax is to be computed were $5,000,000, reduced by''.
       (B) Inflation adjustment.--Section 2505 is amended by 
     adding at the end the following new subsection:
       ``(d) Inflation Adjustment.--
       ``(1) In general.--In the case of any calendar year after 
     2011, the dollar amount in subsection (a)(1) shall be 
     increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2010' for `calendar year 1992' in subparagraph 
     (A)(ii) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $10,000, such amount shall be 
     rounded to the nearest multiple of $10,000.''.
       (4) Conforming amendments.--
       (A) Section 2505(a) is amended by striking the last 
     sentence.
       (B) The heading for section 2505 is amended by striking 
     ``unified''.
       (C) The item in the table of sections for subchapter A of 
     chapter 12 relating to section 2505 is amended to read as 
     follows:

``Sec. 2505. Credit against gift tax.''.

       (5) Effective date.--The amendments made by this subsection 
     shall apply to gifts made after December 31, 2017.
                                 ______
                                 
  SA 1658. Mr. THUNE submitted an amendment intended to be proposed by 
him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. DETERMINATION OF WORKER CLASSIFICATION.

       (a) In General.--Chapter 79 is amended by adding at the end 
     the following new section:

     ``SEC. 7706. DETERMINATION OF WORKER CLASSIFICATION.

       ``(a) In General.--For purposes of this title (and 
     notwithstanding any provision of this title not contained in 
     this section to the contrary), if the requirements of 
     subsections (b), (c), and (d) are met with respect to any 
     service performed by a service provider, then with respect to 
     such service--
       ``(1) the service provider shall not be treated as an 
     employee,
       ``(2) the service recipient shall not be treated as an 
     employer,
       ``(3) any payor shall not be treated as an employer, and
       ``(4) the compensation paid or received for such service 
     shall not be treated as paid or received with respect to 
     employment.
       ``(b) General Service Provider Requirements.--
       ``(1) In general.--The requirements of this subsection are 
     met with respect to any service if the service provider 
     either--
       ``(A) meets the requirements of paragraph (2) with respect 
     to such service, or
       ``(B) in the case of a service provider engaged in the 
     trade or business of selling (or soliciting the sale of) 
     goods or services, meets the requirements of paragraph (3) 
     with respect to such service.
       ``(2) General requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met with respect to any

[[Page S7485]]

     service if the service provider, in connection with 
     performing the service--
       ``(i) incurs expenses--

       ``(I) which are deductible under section 162, and
       ``(II) a significant portion of which are not reimbursed,

       ``(ii) agrees to perform the service for a particular 
     amount of time, to achieve a specific result, or to complete 
     a specific task, and
       ``(iii) satisfies not less than 1 of the factors described 
     in subparagraph (B).
       ``(B) Factors.--The factors described in this subparagraph 
     are the following:
       ``(i) The service provider has a significant investment in 
     assets or training which are applicable to the service 
     performed.
       ``(ii) The service provider is not required to perform 
     services exclusively for the service recipient or payor.
       ``(iii) The service provider has not been treated as an 
     employee by the service recipient or payor for substantially 
     the same services during the 1-year period ending with the 
     date of the commencement of services under the contract 
     described in subsection (d).
       ``(iv) The service provider is not compensated on a basis 
     which is tied primarily to the number of hours actually 
     worked.
       ``(3) Alternative requirements with respect to sales 
     persons.--In the case of a service provider engaged in the 
     trade or business of selling (or soliciting the sale of) 
     goods or services, the requirements of this paragraph are met 
     with respect to any service provided in the ordinary course 
     of such trade or business if--
       ``(A) the service provider is compensated primarily on a 
     commission basis, and
       ``(B) substantially all the compensation for such service 
     is directly related to sales of goods or services rather than 
     to the number of hours worked.
       ``(c) Place of Business or Own Equipment Requirement.--The 
     requirement of this subsection is met with respect to any 
     service if the service provider--
       ``(1) has a principal place of business,
       ``(2) does not provide the service primarily in the service 
     recipient's place of business,
       ``(3) pays a fair market rent for use of the service 
     recipient's or payor's place of business, or
       ``(4) provides the service primarily using equipment 
     supplied by the service provider.
       ``(d) Written Contract Requirement