Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) (Title II--Temporary Extended Unemployment Compensation Act of 2002)
Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) (Title II--Temporary Extended Unemployment Compensation Act of 2002)
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H.R. 3090, Enrolled Bill
H.R.3090
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday, the twenty-third day of January, two thousand and two
An Act
To provide tax incentives for economic recovery.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
(a) SHORT TITLE.--This Act may be cited as the 'Job Creation and Worker Assistance Act of 2002'.
(b) REFERENCES TO INTERNAL REVENUE CODE OF 1986.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.--
Sec. 1. Short title; etc.
Sec. 101. Special depreciation allowance for certain property acquired after September 10, 2001, and before September 11, 2004.
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.
Sec. 301. Tax benefits for area of New York City damaged in terrorist attacks on September 11, 2001.
Sec. 401. Allowance of electronic 1099's.
Sec. 403. Limitation on use of nonaccrual experience method of accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 411. Amendments related to Economic Growth and Tax Relief Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of 2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.
Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.
Sec. 601. Allowance of nonrefundable personal credits against regular and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health benefits.
Sec. 611. Temporary special rules for taxation of life insurance companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene terminals.
Sec. 616. Reauthorization of TANF supplemental grants fo rpopulation increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.
(a) IN GENERAL.--Section 168 (relating to accelerated cost recovery system) is amended by adding at the end the following new subsection:
'(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.--
'(1) ADDITIONAL ALLOWANCE.--In the case of any qualified property--
'(A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 30 percent of the adjusted basis of the qualified property, and
'(B) the adjusted basis of the qualified property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.
'(2) QUALIFIED PROPERTY.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified property' means property--
'(i)(I) to which this section applies which has a recovery period of 20 years or less,
'(II) which is computer software (as defined in section 167(f)(1)(B)) for which a deduction is allowable under section 167(a) without regard to this subsection,
'(III) which is water utility property, or
'(IV) which is qualified leasehold improvement property,
'(ii) the original use of which commences with the taxpayer after September 10, 2001,
'(iii) which is--
'(I) acquired by the taxpayer after September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or
'(II) acquired by the taxpayer pursuant to a written binding contract which was entered into after September 10, 2001, and before September 11, 2004, and
'(iv) which is placed in service by the taxpayer before January 1, 2005, or, in the case of property described in subparagraph (B), before January 1, 2006.
'(B) CERTAIN PROPERTY HAVING LONGER PRODUCTION PERIODS TREATED AS QUALIFIED PROPERTY.--
'(i) IN GENERAL.--The term 'qualified property' includes property--
'(I) which meets the requirements of clauses (i), (ii), and (iii) of subparagraph (A),
'(II) which has a recovery period of at least 10 years or is transportation property, and
'(III) which is subject to section 263A by reason of clause (ii) or (iii) of subsection (f)(1)(B) thereof.
'(ii) ONLY PRE-SEPTEMBER 11, 2004, BASIS ELIGIBLE FOR ADDITIONAL ALLOWANCE.--In the case of property which is qualified property solely by reason of clause (i), paragraph (1) shall apply only to the extent of the adjusted basis thereof attributable to manufacture, construction, or production before September 11, 2004.
'(iii) TRANSPORTATION PROPERTY.--For purposes of this subparagraph, the term 'transportation property' means tangible personal property used in the trade or business of transporting persons or property.
'(C) EXCEPTIONS.--
'(i) ALTERNATIVE DEPRECIATION PROPERTY.--The term 'qualified property' shall not include any property to which the alternative depreciation system under subsection (g) applies, determined--
'(I) without regard to paragraph (7) of subsection (g) (relating to election to have system apply), and
'(II) after application of section 280F(b) (relating to listed property with limited business use).
'(ii) QUALIFIED NEW YORK LIBERTY ZONE LEASEHOLD IMPROVEMENT PROPERTY.--The term 'qualified property' shall not include any qualified New York Liberty Zone leasehold improvement property (as defined in section 1400L(c)(2)).
'(iii) ELECTION OUT.--If a taxpayer makes an election under this clause with respect to any class of property for any taxable year, this subsection shall not apply to all property in such class placed in service during such taxable year.
'(D) SPECIAL RULES.--
'(i) SELF-CONSTRUCTED PROPERTY.--In the case of a taxpayer manufacturing, constructing, or producing property for the taxpayer's own use, the requirements of clause (iii) of subparagraph (A) shall be treated as met if the taxpayer begins manufacturing, constructing, or producing the property after September 10, 2001, and before September 11, 2004.
'(ii) SALE-LEASEBACKS.--For purposes of subparagraph (A)(ii), if property--
'(I) is originally placed in service after September 10, 2001, by a person, and
'(II) sold and leased back by such person within 3 months after the date such property was originally placed in service,
such property shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback referred to in subclause (II).
'(E) COORDINATION WITH SECTION 280F.--For purposes of section 280F--
'(i) AUTOMOBILES.--In the case of a passenger automobile (as defined in section 280F(d)(5)) which is qualified property, the Secretary shall increase the limitation under section 280F(a)(1)(A)(i) by $4,600.
'(ii) LISTED PROPERTY.--The deduction allowable under paragraph (1) shall be taken into account in computing any recapture amount under section 280F(b)(2).
'(F) DEDUCTION ALLOWED IN COMPUTING MINIUMUM TAX--For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified property shall be determined under this section without regard to any adjustment under section 56.
'(3) QUALIFIED LEASEHOLD IMPROVEMENT PROPERTY.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified leasehold improvement property' means any improvement to an interior portion of a building which is nonresidential real property if--
'(i) such improvement is made under or pursuant to a lease (as defined in subsection (h)(7))--
'(I) by the lessee (or any sublessee) of such portion, or
'(II) by the lessor of such portion,
'(ii) such portion is to be occupied exclusively by the lessee (or any sublessee) of such portion, and
'(iii) such improvement is placed in service more than 3 years after the date the 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,
'(iii) any structural component benefiting a common area, and
'(iv) the internal structural framework of the building.
'(C) DEFINITIONS AND SPECIAL RULES.--For purposes of this paragraph--
'(i) COMMITMENT TO LEASE TREATED AS LEASE.--A commitment to enter into a lease shall be treated as a lease, and the parties to such commitment shall be treated as lessor and lessee, respectively.
'(ii) RELATED PERSONS.--A lease between related persons shall not be considered a lease. For purposes of the preceding sentence, the term 'related persons' means--
'(I) members of an affiliated group (as defined in section 1504), and
'(II) persons having a relationship described in subsection (b) of section 267; except that, for purposes of this clause, the phrase '80 percent or more' shall be substituted for the phrase 'more than 50 percent' each place it appears in such subsection.'.
SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5 YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.
(a) IN GENERAL.--Paragraph (1) of section 172(b) (relating to years to which loss may be carried) is amended by adding at the end the following new subparagraph:
'(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK FOR CERTAIN NET OPERATING LOSSES.--Any taxpayer entitled to a 5-year carryback under subsection (b)(1)(H) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(1)(H). Such election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer's return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.'.
(c) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT ON CERTAIN NOL CARRYOVERS.--
(1) IN GENERAL.--Subparagraph (A) of section 56(d)(1) (relating to general rule defining alternative tax net operating loss deduction) is amended to read as follows:
'(A) the amount of such deduction shall not exceed the sum of--
'(i) the lesser of--
'(I) the amount of such deduction attributable to net operating losses (other than the deduction attributable to carryovers described in clause (ii)(I)), or
'(II) 90 percent of alternative minimum taxable income determined without regard to such deduction, plus
'(ii) the lesser of--
'(I) the amount of such deduction attributable to the sum of carrybacks of net operating losses for taxable years ending during 2001 or 2002 and carryforwards of net operating losses to taxable years ending during 2001 and 2002, or
'(II) alternative minimum taxable income determined without regard to such deduction reduced by the amount determined under clause (i), and'.
(d) EFFECTIVE DATE.--Except as provided in subsection (c), the amendments made by this section shall apply to net operating losses for taxable years ending after December 31, 2000.
SEC. 201. SHORT TITLE.
This title may be cited as the 'Temporary Extended Unemployment Compensation Act of 2002'.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.--Any State which desires to do so may enter into and participate in an agreement under this title with the Secretary of Labor (in this title referred to as the 'Secretary'). Any State which is a party to an agreement under this title may, upon providing 30 days' written notice to the Secretary, terminate such agreement.
(b) PROVISIONS OF AGREEMENT.--Any agreement under subsection (a) shall provide that the State agency of the State will make payments of temporary extended unemployment compensation to individuals who--
(1) have exhausted all rights to regular compensation under the State law or under Federal law with respect to a benefit year (excluding any benefit year that ended before March 15, 2001);
(2) have no rights to regular compensation or extended compensation with respect to a week under such law or any other State unemployment compensation law or to compensation under any other Federal law;
(3) are not receiving compensation with respect to such week under the unemployment compensation law of Canada; and
(4) filed an initial claim for regular compensation on or after March 15, 2001.
(c) EXHAUSTION OF BENEFITS.--For purposes of subsection (b)(1), an individual shall be deemed to have exhausted such individual's rights to regular compensation under a State law when--
(1) no payments of regular compensation can be made under such law because such individual has received all regular compensation available to such individual based on employment or wages during such individual's base period; or
(2) such individual's rights to such compensation have been terminated by reason of the expiration of the benefit year with respect to which such rights existed.
(d) WEEKLY BENEFIT AMOUNT, ETC.--For purposes of any agreement under this title--
(1) the amount of temporary extended unemployment compensation which shall be payable to any individual for any week of total unemployment shall be equal to the amount of the regular compensation (including dependents' allowances) payable to such individual during such individual's benefit year under the State law for a week of total unemployment;
(2) the terms and conditions of the State law which apply to claims for regular compensation and to the payment thereof shall apply to claims for temporary extended unemployment compensation and the payment thereof, except--
(A) that an individual shall not be eligible for temporary extended unemployment compensation under this title unless, in the base period with respect to which the individual exhausted all rights to regular compensation under the State law, the individual had 20 weeks of full-time insured employment or the equivalent in insured wages, as determined under the provisions of the State law implementing section 202(a)(5) of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note); and
(B) where otherwise inconsistent with the provisions of this title or with the regulations or operating instructions of the Secretary promulgated to carry out this title; and
(3) the maximum amount of temporary extended unemployment compensation payable to any individual for whom a temporary extended unemployment compensation account is established under section 203 shall not exceed the amount established in such account for such individual.
(e) ELECTION BY STATES.--Notwithstanding any other provision of Federal law (and if State law permits), the Governor of a State that is in an extended benefit period may provide for the payment of temporary extended unemployment compensation in lieu of extended compensation to individuals who otherwise meet the requirements of this section. Such an election shall not require a State to trigger off an extended benefit period.
SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.
(a) IN GENERAL.--Any agreement under this title shall provide that the State will establish, for each eligible individual who files an application for temporary extended unemployment compensation, a temporary extended unemployment compensation account with respect to such individual's benefit year.
(b) AMOUNT IN ACCOUNT.--
(1) IN GENERAL.--The amount established in an account under subsection (a) shall be equal to the lesser of--
(A) 50 percent of the total amount of regular compensation (including dependents' allowances) payable to the individual during the individual's benefit year under such law, or
(B) 13 times the individual's average weekly benefit amount for the benefit year.
(2) WEEKLY BENEFIT AMOUNT.--For purposes of this subsection, an individual's weekly benefit amount for any week is the amount of regular compensation (including dependents' allowances) under the State law payable to such individual for such week for total unemployment.
(c) SPECIAL RULE.--
(1) IN GENERAL.--Notwithstanding any other provision of this section, if, at the time that the individual's account is exhausted, such individual's State is in an extended benefit period (as determined under paragraph (2)), then, such account shall be augmented by an amount equal to the amount originally established in such account (as determined under subsection (b)(1)).
(2) EXTENDED BENEFIT PERIOD.--For purposes of paragraph (1), a State shall be considered to be in an extended benefit period if, at the time of exhaustion (as described in paragraph (1))--
(A) such a period is then in effect for such State under the Federal-State Extended Unemployment Compensation Act of 1970; or
(B) such a period would then be in effect for such State under such Act if section 203(d) of such Act were applied as if it had been amended by striking '5' each place it appears and inserting '4'.
(a) GENERAL RULE.--There shall be paid to each State that has entered into an agreement under this title an amount equal to 100 percent of the temporary extended unemployment compensation paid to individuals by the State pursuant to such agreement.
(b) TREATMENT OF REIMBURSABLE COMPENSATION.--No payment shall be made to any State under this section in respect of any compensation to the extent the State is entitled to reimbursement in respect of such compensation under the provisions of any Federal law other than this title or chapter 85 of title 5, United States Code. A State shall not be entitled to any reimbursement under such chapter 85 in respect of any compensation to the extent the State is entitled to reimbursement under this title in respect of such compensation.
(c) DETERMINATION OF AMOUNT.--Sums payable to any State by reason of such State having an agreement under this title shall be payable, either in advance or by way of reimbursement (as may be determined by the Secretary), in such amounts as the Secretary estimates the State will be entitled to receive under this title for each calendar month, reduced or increased, as the case may be, by any amount by which the Secretary finds that the Secretary's estimates for any prior calendar month were greater or less than the amounts which should have been paid to the State. Such estimates may be made on the basis of such statistical, sampling, or other method as may be agreed upon by the Secretary and the State agency of the State involved.
SEC. 205. FINANCING PROVISIONS.
(a) IN GENERAL.--Funds in the extended unemployment compensation account (as established by section 905(a) of the Social Security Act (42 U.S.C. 1105(a)) of the Unemployment Trust Fund (as established by section 904(a) of such Act (42 U.S.C. 1104(a)) shall be used for the making of payments to States having agreements entered into under this title.
(b) CERTIFICATION.--The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State the sums payable to such State under this title. The Secretary of the Treasury, prior to audit or settlement by the General Accounting Office, shall make payments to the State in accordance with such certification, by transfers from the extended unemployment compensation account (as so established) to the account of such State in the Unemployment Trust Fund (as so established).
(c) ASSISTANCE TO STATES.--There are appropriated out of the employment security administration account (as established by section 901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the Unemployment Trust Fund, without fiscal year limitation, such funds as may be necessary for purposes of assisting States (as provided in title III of the Social Security Act (42 U.S.C. 501 et seq.)) in meeting the costs of administration of agreements under this title.
(d) APPROPRIATIONS FOR CERTAIN PAYMENTS.--There are appropriated from the general fund of the Treasury, without fiscal year limitation, to the extended unemployment compensation account (as so established) of the Unemployment Trust Fund (as so established) such sums as the Secretary estimates to be necessary to make the payments under this section in respect of--
(1) compensation payable under chapter 85 of title 5, United States Code; and
(2) compensation payable on the basis of services to which section 3309(a)(1) of the Internal Revenue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall not be required to be repaid.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.--If an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact, and as a result of such false statement or representation or of such nondisclosure such individual has received an amount of temporary extended unemployment compensation under this title to which he was not entitled, such individual--
(1) shall be ineligible for further temporary extended unemployment compensation under this title in accordance with the provisions of the applicable State unemployment compensation law relating to fraud in connection with a claim for unemployment compensation; and
(2) shall be subject to prosecution under section 1001 of title 18, United States Code.
(b) REPAYMENT.--In the case of individuals who have received amounts of temporary extended unemployment compensation under this title to which they were not entitled, the State shall require such individuals to repay the amounts of such temporary extended unemployment compensation to the State agency, except that the State agency may waive such repayment if it determines that--
(1) the payment of such temporary extended unemployment compensation was without fault on the part of any such individual; and
(2) such repayment would be contrary to equity and good conscience.
(c) RECOVERY BY STATE AGENCY.--
(1) IN GENERAL.--The State agency may recover the amount to be repaid, or any part thereof, by deductions from any temporary extended unemployment compensation payable to such individual under this title or from any unemployment compensation payable to such individual under any Federal unemployment compensation law administered by the State agency or under any other Federal law administered by the State agency which provides for the payment of any assistance or allowance with respect to any week of unemployment, during the 3-year period after the date such individuals received the payment of the temporary extended unemployment compensation to which they were not entitled, except that no single deduction may exceed 50 percent of the weekly benefit amount from which such deduction is made.
(2) OPPORTUNITY FOR HEARING.--No repayment shall be required, and no deduction shall be made, until a determination has been made, notice thereof and an opportunity for a fair hearing has been given to the individual, and the determination has become final.
(d) REVIEW.--Any determination by a State agency under this section shall be subject to review in the same manner and to the same extent as determinations under the State unemployment compensation law, and only in that manner and to that extent.
SEC. 207. DEFINITIONS.
In this title, the terms 'compensation', 'regular compensation', 'extended compensation', 'additional compensation', 'benefit year', 'base period', 'State', 'State agency', 'State law', and 'week' have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note).
An agreement entered into under this title shall apply to weeks of unemployment--
(2) ending before January 1, 2003.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY THE BALANCED BUDGET ACT OF 1997.--
(1) IN GENERAL.--The following provisions of section 903 of the Social Security Act (42 U.S.C. 1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.--Any amounts transferred before the date of enactment of this Act under the provision repealed by paragraph (1)(A) shall remain subject to section 903 of the Social Security Act, as last in effect before such date of enactment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.--Section 903 of the Social Security Act is amended by adding at the end the following:
'Special Transfer in Fiscal Year 2002
'(d)(1) The Secretary of the Treasury shall transfer (as of the date determined under paragraph (5)) from the Federal unemployment account to the account of each State in the Unemployment Trust Fund the amount determined with respect to such State under paragraph (2).
'(2)(A) The amount to be transferred under this subsection to a State account shall (as determined by the Secretary of Labor and certified by such Secretary to the Secretary of the Treasury) be equal to--
'(I) section 209(a)(1) of the Temporary Extended Unemployment Compensation Act of 2002 had been enacted before the close of fiscal year 2001, and
'(II) section 5402 of Public Law 105-33 (relating to increase in Federal unemployment account ceiling) had not been enacted,
minus
'(ii) the amount which was in fact transferred under this section to such account at the beginning of fiscal year 2002.
'(B) Notwithstanding the provisions of subparagraph (A)--
'(i) the aggregate amount transferred to the States under this subsection may not exceed a total of $8,000,000,000; and
'(ii) all amounts determined under subparagraph (A) shall be reduced ratably, if and to the extent necessary in order to comply with the limitation under clause (i).
'(ii) which are allowable under subparagraph (B) or (C).
'(B)(i) At the option of the State, cash benefits under this paragraph may include amounts which shall be payable as--
'(II) additional compensation, upon the exhaustion of any temporary extended unemployment compensation (if such State has entered into an agreement under the Temporary Extended Unemployment Compensation Act of 2002), for individuals eligible for regular compensation under the unemployment compensation law of such State.
'(ii) Any additional compensation under clause (i) may not be taken into account for purposes of any determination relating to the amount of any extended compensation for which an individual might be eligible.
'(C)(i) At the option of the State, cash benefits under this paragraph may include amounts which shall be payable to 1 or more categories of individuals not otherwise eligible for regular compensation under the unemployment compensation law of such State, including those described in clause (iii).
'(ii) The benefits paid under this subparagraph to any individual may not, for any period of unemployment, exceed the maximum amount of regular compensation authorized under the unemployment compensation law of such State for that same period, plus any additional compensation (described in subparagraph (B)(i)) which could have been paid with respect to that amount.
'(iii) The categories of individuals described in this clause include the following:
'(I) Individuals who are seeking, or available for, only part-time (and not full-time) work.
'(II) Individuals who would be eligible for regular compensation under the unemployment compensation law of such State under an alternative base period.
'(4) Amounts transferred to a State account under this subsection may be used for the administration of its unemployment compensation law and public employment offices (including in connection with benefits described in paragraph (3) and any recipients thereof), subject to the same conditions as set forth in subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the reference to 'subsections (a) and (b)' in subparagraph (D) thereof to include this subsection).
'(5) Transfers under this subsection shall be made within 10 days after the date of enactment of this paragraph.'.
(c) LIMITATIONS ON TRANSFERS.--Section 903(b) of the Social Security Act shall apply to transfers under section 903(d) of such Act (as amended by this section). For purposes of the preceding sentence, such section 903(b) shall be deemed to be amended as follows:
(1) By substituting 'the transfer date described in subsection (d)(5)' for 'October 1 of any fiscal year'.
(2) By substituting 'remain in the Federal unemployment account' for 'be transferred to the Federal unemployment account as of the beginning of such October 1'.
(3) By substituting 'fiscal year 2002 (after the transfer date described in subsection (d)(5))' for 'the fiscal year beginning on such October 1'.
(4) By substituting 'under subsection (d)' for 'as of October 1 of such fiscal year'.
(5) By substituting '(as of the close of fiscal year 2002)' for '(as of the close of such fiscal year)'.
(d) TECHNICAL AMENDMENTS.--(1) Sections 3304(a)(4)(B) and 3306(f)(2) of the Internal Revenue Code of 1986 are amended by inserting 'or 903(d)(4)' before 'of the Social Security Act'.
(2) Section 303(a)(5) of the Social Security Act is amended in the second proviso by inserting 'or 903(d)(4)' after '903(c)(2)'.
(e) REGULATIONS.--The Secretary of Labor may prescribe any operating instructions or regulations necessary to carry out this section and the amendments made by this section.
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST ATTACKS ON SEPTEMBER 11, 2001.
(a) IN GENERAL.--Chapter 1 is amended by adding at the end the following new subchapter:
'Subchapter Y--New York Liberty Zone Benefits
'Sec. 1400L. Tax benefits for New York Liberty Zone.
'SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
'(a) EXPANSION OF WORK OPPORTUNITY TAX CREDIT.--
'(1) IN GENERAL.--For purposes of section 51, a New York Liberty Zone business employee shall be treated as a member of a targeted group.
'(2) NEW YORK LIBERTY ZONE BUSINESS EMPLOYEE.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'New York Liberty Zone business employee' means, with respect to any period, any employee of a New York Liberty Zone business if substantially all the services performed during such period by such employee for such business are performed in the New York Liberty Zone.
'(B) INCLUSION OF CERTAIN EMPLOYEES OUTSIDE THE NEW YORK LIBERTY ZONE.--
'(i) IN GENERAL.--In the case of a New York Liberty Zone business described in subclause (II) of subparagraph (C)(i), the term 'New York Liberty Zone business employee' includes any employee of such business (not described in subparagraph (A)) if substantially all the services performed during such period by such employee for such business are performed in the City of New York, New York.
'(ii) LIMITATION.--The number of employees of such a business that are treated as New York Liberty Zone business employees on any day by reason of clause (i) shall not exceed the excess of--
'(I) the number of employees of such business on September 11, 2001, in the New York Liberty Zone, over
'(II) the number of New York Liberty Zone business employees (determined without regard to this subparagraph) of such business on the day to which the limitation is being applied.
'(C) NEW YORK LIBERTY ZONE BUSINESS.--
'(i) IN GENERAL.--The term 'New York Liberty Zone business' means any trade or business which is--
'(I) located in the New York Liberty Zone, or
'(II) located in the City of New York, New York, outside the New York Liberty Zone, as a result of the physical destruction or damage of such place of business by the September 11, 2001, terrorist attack.
'(ii) CREDIT NOT ALLOWED FOR LARGE BUSINESSES.--The term 'New York Liberty Zone business' shall not include any trade or business for any taxable year if such trade or business employed an average of more than 200 employees on business days during the taxable year.
'(D) SPECIAL RULES FOR DETERMINING AMOUNT OF CREDIT.--For purposes of applying subpart F of part IV of subchapter B of this chapter to wages paid or incurred to any New York Liberty Zone business employee--
'(i) section 51(a) shall be applied by substituting 'qualified wages' for 'qualified first-year wages',
'(ii) the rules of section 52 shall apply for purposes of determining the number of employees under subparagraph (B),
'(iii) subsections (c)(4) and (i)(2) of section 51 shall not apply, and
'(iv) in determining qualified wages, the following shall apply in lieu of section 51(b):
'(I) QUALIFIED WAGES.--The term 'qualified wages' means wages paid or incurred by the employer to individuals who are New York Liberty Zone business employees of such employer for work performed during calendar year 2002 or 2003.
'(II) ONLY FIRST $6,000 OF WAGES PER CALENDAR YEAR TAKEN INTO ACCOUNT.--The amount of the qualified wages which may be taken into account with respect to any individual shall not exceed $6,000 per calendar year.
'(1) ADDITIONAL ALLOWANCE.--In the case of any qualified New York Liberty Zone property--
'(A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 30 percent of the adjusted basis of such property, and
'(B) the adjusted basis of the qualified New York Liberty Zone property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.
'(2) QUALIFIED NEW YORK LIBERTY ZONE PROPERTY.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified New York Liberty Zone property' means property--
'(i)(I) which is described in section 168(k)(2)(A)(i), or
'(II) which is nonresidential real property, or residential rental property, which is described in subparagraph (B),
'(ii) substantially all of the use of which is in the New York Liberty Zone and is in the active conduct of a trade or business by the taxpayer in such Zone,
'(iii) the original use of which in the New York Liberty Zone commences with the taxpayer after September 10, 2001,
'(iv) which is acquired by the taxpayer by purchase (as defined in section 179(d)) after September 10, 2001, but only if no written binding contract for the acquisition was in effect before September 11, 2001, and
'(v) which is placed in service by the taxpayer on or before the termination date.
The term 'termination date' means December 31, 2006 (December 31, 2009, in the case of nonresidential real property and residential rental property).
'(B) ELIGIBLE REAL PROPERTY.--Nonresidential real property or residential rental property is described in this subparagraph only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the September 11, 2001, terrorist attack. For purposes of the preceding sentence, property shall be treated as replacing real property destroyed or condemned if, as part of an integrated plan, such property replaces real property which is included in a continuous area which includes real property destroyed or condemned.
'(C) EXCEPTIONS.--
'(i) 30 PERCENT ADDITIONAL ALLOWANCE PROPERTY.--Such term shall not include property to which section 168(k) applies.
'(ii) ALTERNATIVE DEPRECIATION PROPERTY.--The term 'qualified New York Liberty Zone property' shall not include any property described in section 168(k)(2)(C)(i).
'(iii) QUALIFIED NEW YORK LIBERTY ZONE LEASEHOLD IMPROVEMENT PROPERTY.--Such term shall not include any qualified New York Liberty Zone leasehold improvement property.
'(iv) ELECTION OUT.--For purposes of this subsection, rules similar to the rules of section 168(k)(2)(C)(iii) shall apply.
'(D) SPECIAL RULES.--For purposes of this subsection, rules similar to the rules of section 168(k)(2)(D) shall apply, except that clause (i) thereof shall be applied without regard to 'and before September 11, 2004'.
'(E) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX.--For purposes of this subsection, rules similar to the rules of section 168(k)(2)(F) shall apply.
'(1) IN GENERAL.--For purposes of section 168, the term '5-year property' includes any qualified New York Liberty Zone leasehold improvement property.
'(2) QUALIFIED NEW YORK LIBERTY ZONE LEASEHOLD IMPROVEMENT PROPERTY.--For purposes of this section, the term 'qualified New York Liberty Zone leasehold improvement property' means qualified leasehold improvement property (as defined in section 168(k)(3)) if--
'(A) such building is located in the New York Liberty Zone,
'(B) such improvement is placed in service after September 10, 2001, and before January 1, 2007, and
'(C) no written binding contract for such improvement was in effect before September 11, 2001.
'(3) REQUIREMENT TO USE STRAIGHT LINE METHOD.--The applicable depreciation method under section 168 shall be the straight line method in the case of qualified New York Liberty Zone leasehold improvement property.
'(4) 9-YEAR RECOVERY PERIOD UNDER ALTERNATIVE SYSTEM.--For purposes of section 168(g), the class life of qualified New York Liberty Zone leasehold improvement property shall be 9 years.
'(d) TAX-EXEMPT BOND FINANCING.--
'(1) IN GENERAL.--For purposes of this title, any qualified New York Liberty Bond shall be treated as an exempt facility bond.
'(2) QUALIFIED NEW YORK LIBERTY BOND.--For purposes of this subsection, the term 'qualified New York Liberty Bond' means any bond issued as part of an issue if--
'(A) 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of such issue are to be used for qualified project costs,
'(B) such bond is issued by the State of New York or any political subdivision thereof,
'(C) the Governor or the Mayor designates such bond for purposes of this section, and
'(D) such bond is issued after the date of the enactment of this section and before January 1, 2005.
'(3) LIMITATIONS ON AMOUNT OF BONDS.--
'(A) AGGREGATE AMOUNT DESIGNATED.--The maximum aggregate face amount of bonds which may be designated under this subsection shall not exceed $8,000,000,000, of which not to exceed $4,000,000,000 may be designated by the Governor and not to exceed $4,000,000,000 may be designated by the Mayor.
'(B) SPECIFIC LIMITATIONS.--The aggregate face amount of bonds issued which are to be used for--
'(i) costs for property located outside the New York Liberty Zone shall not exceed $2,000,000,000,
'(ii) residential rental property shall not exceed $1,600,000,000, and
'(iii) costs with respect to property used for retail sales of tangible property and functionally related and subordinate property shall not exceed $800,000,000.
The limitations under clauses (i), (ii), and (iii) shall be allocated proportionately between the bonds designated by the Governor and the bonds designated by the Mayor in proportion to the respective amounts of bonds designated by each.
'(C) MOVABLE PROPERTY.--No bonds shall be issued which are to be used for movable fixtures and equipment.
'(4) QUALIFIED PROJECT COSTS.--For purposes of this subsection--
'(A) IN GENERAL.--The term 'qualified project costs' means the cost of acquisition, construction, reconstruction, and renovation of--
'(i) nonresidential real property and residential rental property (including fixed tenant improvements associated with such property) located in the New York Liberty Zone, and
'(ii) public utility property (as defined in section 168(i)(10)) located in the New York Liberty Zone.
'(B) COSTS FOR CERTAIN PROPERTY OUTSIDE ZONE INCLUDED.--Such term includes the cost of acquisition, construction, reconstruction, and renovation of nonresidential real property (including fixed tenant improvements associated with such property) located outside the New York Liberty Zone but within the City of New York, New York, if such property is part of a project which consists of at least 100,000 square feet of usable office or other commercial space located in a single building or multiple adjacent buildings.
'(5) SPECIAL RULES.--In applying this title to any qualified New York Liberty Bond, the following modifications shall apply:
'(A) Section 146 (relating to volume cap) shall not apply.
'(B) Section 147(d) (relating to acquisition of existing property not permitted) shall be applied by substituting '50 percent' for '15 percent' each place it appears.
'(C) Section 148(f)(4)(C) (relating to exception from rebate for certain proceeds to be used to finance construction expenditures) shall apply to the available construction proceeds of bonds issued under this section.
'(D) Repayments of principal on financing provided by the issue--
'(i) may not be used to provide financing, and
'(ii) must be used not later than the close of the 1st semiannual period beginning after the date of the repayment to redeem bonds which are part of such issue.
The requirement of clause (ii) shall be treated as met with respect to amounts received within 10 years after the date of issuance of the issue (or, in the case of a refunding bond, the date of issuance of the original bond) if such amounts are used by the close of such 10 years to redeem bonds which are part of such issue.
'(E) Section 57(a)(5) shall not apply.
'(6) SEPARATE ISSUE TREATMENT OF PORTIONS OF AN ISSUE.--This subsection shall not apply to the portion of an issue which (if issued as a separate issue) would be treated as a qualified bond or as a bond that is not a private activity bond (determined without regard to paragraph (1)), if the issuer elects to so treat such portion.
'(e) ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.--
'(1) IN GENERAL.--With respect to a bond described in paragraph (2) issued as part of an issue 90 percent (95 percent in the case of a bond described in paragraph (2)(C)) or more of the net proceeds (as defined in section 150(a)(3)) of which were used to finance facilities located within the City of New York, New York (or property which is functionally related and subordinate to facilities located within the City of New York for the furnishing of water), one additional advanced refunding after the date of the enactment of this section and before January 1, 2005, shall be allowed under the applicable rules of section 149(d) if--
'(A) the Governor or the Mayor designates the advance refunding bond for purposes of this subsection, and
'(B) the requirements of paragraph (4) are met.
'(2) BONDS DESCRIBED.--A bond is described in this paragraph if such bond was outstanding on September 11, 2001, and is--
'(A) a State or local bond (as defined in section 103(c)(1)) which is a general obligation of the City of New York, New York,
'(B) a State or local bond (as so defined) other than a private activity bond (as defined in section 141(a)) issued by the New York Municipal Water Finance Authority or the Metropolitan Transportation Authority of the State of New York, or
'(C) a qualified 501(c)(3) bond (as defined in section 145(a)) which is a qualified hospital bond (as defined in section 145(c)) issued by or on behalf of the State of New York or the City of New York, New York.
'(3) AGGREGATE LIMIT.--For purposes of paragraph (1), the maximum aggregate face amount of bonds which may be designated under this subsection by the Governor shall not exceed $4,500,000,000 and the maximum aggregate face amount of bonds which may be designated under this subsection by the Mayor shall not exceed $4,500,000,000.
'(4) ADDITIONAL REQUIREMENTS.--The requirements of this paragraph are met with respect to any advance refunding of a bond described in paragraph (2) if--
'(A) no advance refundings of such bond would be allowed under any provision of law after September 11, 2001,
'(B) the advance refunding bond is the only other outstanding bond with respect to the refunded bond, and
'(C) the requirements of section 148 are met with respect to all bonds issued under this subsection.
'(1) IN GENERAL.--For purposes of section 179--
'(A) the limitation under section 179(b)(1) shall be increased by the lesser of--
'(i) $35,000, or
'(ii) the cost of section 179 property which is qualified New York Liberty Zone property placed in service during the taxable year, and
'(B) the amount taken into account under section 179(b)(2) with respect to any section 179 property which is qualified New York Liberty Zone property shall be 50 percent of the cost thereof.
'(2) QUALIFIED NEW YORK LIBERTY ZONE PROPERTY.--For purposes of this subsection, the term 'qualified New York Liberty Zone property' has the meaning given such term by subsection (b)(2).
'(3) RECAPTURE.--Rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified New York Liberty Zone property which ceases to be used in the New York Liberty Zone.
'(g) EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN.--Notwithstanding subsections (g) and (h) of section 1033, clause (i) of section 1033(a)(2)(B) shall be applied by substituting '5 years' for '2 years' with respect to property which is compulsorily or involuntarily converted as a result of the terrorist attacks on September 11, 2001, in the New York Liberty Zone but only if substantially all of the use of the replacement property is in the City of New York, New York.
'(h) NEW YORK LIBERTY ZONE.--For purposes of this section, the term 'New York Liberty Zone' means the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York.
'(i) REFERENCES TO GOVERNOR AND MAYOR.--For purposes of this section, the terms 'Governor' and 'Mayor' mean the Governor of the State of New York and the Mayor of the City of New York, New York, respectively.'.
(b) CREDIT ALLOWED AGAINST REGULAR AND MINIMUM TAX.--
(1) IN GENERAL.--Subsection (c) of section 38 (relating to limitation based on amount of tax) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:
'(3) SPECIAL RULES FOR NEW YORK LIBERTY ZONE BUSINESS EMPLOYEE CREDIT.--
'(A) IN GENERAL.--In the case of the New York Liberty Zone business employee credit--
'(i) this section and section 39 shall be applied separately with respect to such credit, and
'(ii) in applying paragraph (1) to such credit--
'(I) the tentative minimum tax shall be treated as being zero, and
'(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the New York Liberty Zone business employee credit).
(2) CONFORMING AMENDMENT.--Subclause (II) of section 38(c)(2)(A)(ii) is amended by inserting 'or the New York Liberty Zone business employee credit' after 'employment credit'.
(3) EFFECTIVE DATE.--The amendments made by this subsection shall apply to taxable years ending after December 31, 2001.
(c) CLERICAL AMENDMENT.--The table of subchapters for chapter 1 is amended by adding at the end the following new item:
'Subchapter Y--New York Liberty Zone Benefits.'.
SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.
Any person required to furnish a statement under any section of subpart B of part III of subchapter A of chapter 61 of the Internal Revenue Code of 1986 for any taxable year ending after the date of the enactment of this Act, may electronically furnish such statement (without regard to any first class mailing requirement) to any recipient who has consented to the electronic provision of the statement in a manner similar to the one permitted under regulations issued under section 6051 of such Code or in such other manner as provided by the Secretary.
SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF SHAREHOLDERS.
(a) IN GENERAL.--Subparagraph (A) of section 108(d)(7) (relating to certain provisions to be applied at corporate level) is amended by inserting before the period ', including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section'.
(b) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendment made by this section shall apply to discharges of indebtedness after October 11, 2001, in taxable years ending after such date.
(2) EXCEPTION.--The amendment made by this section shall not apply to any discharge of indebtedness before March 1, 2002, pursuant to a plan of reorganization filed with a bankruptcy court on or before October 11, 2001.
(a) IN GENERAL.--Paragraph (5) of section 448(d) is amended to read as follows:
'(5) SPECIAL RULE FOR CERTAIN SERVICES.--
'(A) IN GENERAL.--In the case of any person using an accrual method of accounting with respect to amounts to be received for the performance of services by such person, such person shall not be required to accrue any portion of such amounts which (on the basis of such person's experience) will not be collected if--
'(i) such services are in fields referred to in paragraph (2)(A), or
'(ii) such person meets the gross receipts test of subsection (c) for all prior taxable years.
'(B) EXCEPTION.--This paragraph shall not apply to any amount if interest is required to be paid on such amount or there is any penalty for failure to timely pay such amount.
'(C) REGULATIONS.--The Secretary shall prescribe regulations to permit taxpayers to determine amounts referred to in subparagraph (A) using computations or formulas which, based on experience, accurately reflect the amount of income that will not be collected by such person. A taxpayer may adopt, or request consent of the Secretary to change to, a computation or formula that clearly reflects the taxpayer's experience. A request under the preceding sentence shall be approved if such computation or formula clearly reflects the taxpayer's experience.'.
(1) IN GENERAL.--The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.--In the case of any taxpayer required by the amendments made by this section to change its method of accounting for its first taxable year ending after the date of the enactment of this Act--
(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 of the Treasury, and
(C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account over a period of 4 years (or if less, the number of taxable years that the taxpayer used the method permitted under section 448(d)(5) of such Code as in effect before the date of the enactment of this Act) beginning with such first taxable year.
(a) IN GENERAL.--The matter preceding subparagraph (B) of section 131(b)(1) (defining qualified foster care payment) is amended to read as follows:
'(1) IN GENERAL.--The term 'qualified foster care payment' means any payment made pursuant to a foster care program of a State or political subdivision thereof--
'(A) which is paid by--
'(i) a State or political subdivision thereof, or
'(ii) a qualified foster care placement agency, and'.
'(3) QUALIFIED FOSTER CARE PLACEMENT AGENCY.--The term 'qualified foster care placement agency' means any placement agency which is licensed or certified by--
'(A) a State or political subdivision thereof, or
'(B) an entity designated by a State or political subdivision thereof,
for the foster care program of such State or political subdivision to make foster care payments to providers of foster care.'.
(d) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 2001.
SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.
(a) AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.--
(1) SPECIAL RULE.--Clause (i) of section 412(l)(7)(C) (relating to interest rate) is amended by adding at the end the following new subclause:
'(7) SPECIAL RULES FOR 2002 AND 2004.--In any case in which the interest rate used to determine current liability is determined under subsection (l)(7)(C)(i)(III)--
'(A) 2002.--For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002, the current liability for the preceding plan year shall be redetermined using 120 percent as the specified percentage determined under subsection (l)(7)(C)(i)(II).
'(B) 2004.--For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2004, the current liability for the preceding plan year shall be redetermined using 105 percent as the specified percentage determined under subsection (l)(7)(C)(i)(II).'.
(1) SPECIAL RULE.--Clause (i) of section 302(d)(7)(C) of such Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the end the following new subclause:
'(7) SPECIAL RULES FOR 2002 AND 2004.--In any case in which the interest rate used to determine current liability is determined under subsection (d)(7)(C)(i)(III)--
'(A) 2002.--For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002, the current liability for the preceding plan year shall be redetermined using 120 percent as the specified percentage determined under subsection (d)(7)(C)(i)(II).
'(B) 2004.--For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2004, the current liability for the preceding plan year shall be redetermined using 105 percent as the specified percentage determined under subsection (d)(7)(C)(i)(II).'.
(a) IN GENERAL.--Section 62(a)(2) (relating to certain trade and business deductions of employees) is amended by adding at the end the following:
'(d) DEFINITION; SPECIAL RULES.--
'(1) ELIGIBLE EDUCATOR.--
'(A) IN GENERAL.--For purposes of subsection (a)(2)(D), the term 'eligible educator' means, with respect to any taxable year, an individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.
'(B) SCHOOL.--The term 'school' means any school which provides elementary education or secondary education (kindergarten through grade 12), as determined under State law.
'(2) COORDINATION WITH EXCLUSIONS.--A deduction shall be allowed under subsection (a)(2)(D) for expenses only to the extent the amount of such expenses exceeds the amount excludable under section 135, 529(c)(1), or 530(d)(2) for the taxable year.'.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 2001.
SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.
(a) AMENDMENTS RELATED TO SECTION 101 OF THE ACT.--
(1) IN GENERAL.--Subsection (b) of section 6428 is amended to read as follows:
'(b) CREDIT TREATED AS NONREFUNDABLE PERSONAL CREDIT.--For purposes of this title, the credit allowed under this section shall be treated as a credit allowable under subpart A of part IV of subchapter A of chapter 1.'.
(2) CONFORMING AMENDMENTS.--
(A) Subsection (d) of section 6428 is amended to read as follows:
'(1) IN GENERAL.--The amount of credit which would (but for this paragraph) be allowable under this section shall be reduced (but not below zero) by the aggregate refunds and credits made or allowed to the taxpayer under subsection (e). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
'(2) JOINT RETURNS.--In the case of a refund or credit made or allowed under subsection (e) with respect to a joint return, half of such refund or credit shall be treated as having been made or allowed to each individual filing such return.'.
(B) Paragraph (2) of section 6428(e) is amended to read as follows:
'(2) ADVANCE REFUND AMOUNT.--For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such first taxable year if--
'(A) this section (other than subsections (b) and (d) and this subsection) had applied to such taxable year, and
'(B) the credit for such taxable year were not allowed to exceed the excess (if any) of--
'(i) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
'(ii) the sum of the credits allowable under part IV of subchapter A of chapter 1 (other than the credits allowable under subpart C thereof, relating to refundable credits).'.
(c) AMENDMENTS RELATED TO SECTION 202 OF THE ACT.--
(1) CORRECTIONS TO CREDIT FOR ADOPTION EXPENSES.--
(A) Paragraph (1) of section 23(a) is amended to read as follows:
'(1) IN GENERAL.--In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.'.
(B) Subsection (a) of section 23 is amended by adding at the end the following new paragraph:
'(3) $10,000 CREDIT FOR ADOPTION OF CHILD WITH SPECIAL NEEDS REGARDLESS OF EXPENSES.--In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.'.
(C) Paragraph (2) of section 23(a) is amended by striking the last sentence.
(D) Paragraph (1) of section 23(b) is amended by striking 'subsection (a)(1)(A)' and inserting 'subsection (a)'.
(E) Subsection (i) of section 23 is amended by striking 'the dollar limitation in subsection (b)(1)' and inserting 'the dollar amounts in subsections (a)(3) and (b)(1)'.
(F) Expenses paid or incurred during any taxable year beginning before January 1, 2002, may be taken into account in determining the credit under section 23 of the Internal Revenue Code of 1986 only to the extent the aggregate of such expenses does not exceed the applicable limitation under section 23(b)(1) of such Code as in effect on the day before the date of the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001.
(2) CORRECTIONS TO EXCLUSION FOR EMPLOYER-PROVIDED ADOPTION ASSISTANCE.--
(A) Subsection (a) of section 137 is amended to read as follows:
'(1) IN GENERAL.--Gross income of an employee does not include amounts paid or expenses incurred by the employer for qualified adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program.
'(2) $10,000 EXCLUSION FOR ADOPTION OF CHILD WITH SPECIAL NEEDS REGARDLESS OF EXPENSES.--In the case of an adoption of a child with special needs which becomes final during a taxable year, the qualified adoption expenses with respect to such adoption for such year shall be increased by an amount equal to the excess (if any) of $10,000 over the actual aggregate qualified adoption expenses with respect to such adoption during such taxable year and all prior taxable years.'.
(B) Paragraph (2) of section 137(b) is amended by striking 'subsection (a)(1)' and inserting 'subsection (a)'.
(3) EFFECTIVE DATE.--The amendments made by this subsection shall apply to taxable years beginning after December 31, 2002; except that the amendments made by paragraphs (1)(C), (1)(D), and (2)(B) shall apply to taxable years beginning after December 31, 2001.
(d) AMENDMENTS RELATED TO SECTION 205 OF THE ACT.--
(1) Section 45F(d)(4)(B) is amended by striking 'subpart A, B, or D of this part' and inserting 'this chapter or for purposes of section 55'.
(2) Section 38(b)(15) is amended by striking '45F' and inserting '45F(a)'.
(e) AMENDMENTS RELATED TO SECTION 301 OF THE ACT.--
(1) Section 63(c)(2) is amended--
(A) in subparagraph (A), by striking 'subparagraph (C)' and inserting 'subparagraph (D)',
(B) by striking 'or' at the end of subparagraph (B),
(C) by redesignating subparagraph (C) as subparagraph (D),
(D) by inserting after subparagraph (B) the following new subparagraph:
'(C) one-half of the amount in effect under subparagraph (A) in the case of a married individual filing a separate return, or', and
(E) by inserting the following flush sentence at the end:
'If any amount determined under subparagraph (A) is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.'.
(2)(A) Section 63(c)(4) is amended by striking 'paragraph (2) or (5)' and inserting 'paragraph (2)(B), (2)(D), or (5)'.
(B) Section 63(c)(4)(B)(i) is amended by striking 'paragraph (2)' and inserting 'paragraph (2)(B), (2)(D),'.
(C) Section 63(c)(4) is amended by striking the flush sentence at the end (as added by section 301(c)(2) of Public Law 107-17).
(g) AMENDMENTS RELATED TO SECTION 511 OF THE ACT.--
(1) Section 2511(c) is amended by striking 'taxable gift under section 2503,' and inserting 'transfer of property by gift,'.
(2) Section 2101(b) is amended by striking the last sentence.
(h) AMENDMENT RELATED TO SECTION 532 OF THE ACT.--Section 2016 is amended by striking 'any State, any possession of the United States, or the District of Columbia,'.
(i) AMENDMENTS RELATING TO SECTION 602 OF THE ACT.--
(1) Subparagraph (A) of section 408(q)(3) is amended to read as follows:
'(A) QUALIFIED EMPLOYER PLAN.--The term 'qualified employer plan' has the meaning given such term by section 72(p)(4)(A)(i); except that such term shall also include an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A).'.
(2) Section 4(c) of Employee Retirement Income Security Act of 1974 is amended--
(A) by inserting 'and part 5 (relating to administration and enforcement)' before the period at the end, and
(B) by adding at the end the following new sentence: 'Such provisions shall apply to such accounts and annuities in a manner similar to their application to a simplified employee pension under section 408(k) of the Internal Revenue Code of 1986.'.
(1) Section 408(k) is amended--
(A) in paragraph (2)(C) by striking '$300' and inserting '$450', and
(B) in paragraph (8) by striking '$300' both places it appears and inserting '$450'.
(2) Section 409(o)(1)(C)(ii) is amended--
(A) by striking '$500,000' both places it appears and inserting '$800,000', and
(B) by striking '$100,000' and inserting '$160,000'.
(3) Section 611(i) of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended by adding at the end the following new paragraph:
'(3) SPECIAL RULE.--In the case of plan that, on June 7, 2001, incorporated by reference the limitation of section 415(b)(1)(A) of the Internal Revenue Code of 1986, section 411(d)(6) of such Code and section 204(g)(1) of the Employee Retirement Income Security Act of 1974 do not apply to a plan amendment that--
'(A) is adopted on or before June 30, 2002,
'(B) reduces benefits to the level that would have applied without regard to the amendments made by subsection (a) of this section, and
'(C) is effective no earlier than the years described in paragraph (2).'.
(1) Section 416(c)(1)(C)(iii) is amended by striking 'EXCEPTION FOR FROZEN PLAN' and inserting 'EXCEPTION FOR PLAN UNDER WHICH NO KEY EMPLOYEE (OR FORMER KEY EMPLOYEE) BENEFITS FOR PLAN YEAR'.
(2) Section 416(g)(3)(B) is amended by striking 'separation from service' and inserting 'severance from employment'.
(l) AMENDMENTS RELATING TO SECTIONS 614 AND 616 OF THE ACT.--
(1) Section 404(a)(12) is amended by striking '(9),' and inserting '(9) and subsection (h)(1)(C),'.
(2) Section 404(n) is amended by striking 'subsection (a),' and inserting 'subsection (a) or paragraph (1)(C) of subsection (h)'.
(3) Section 402(h)(2)(A) is amended by striking '15 percent' and inserting '25 percent'.
(4) Section 404(a)(7)(C) is amended to read as follows:
'(C) PARAGRAPH NOT TO APPLY IN CERTAIN CASES.--
'(i) BENEFICIARY TEST.--This paragraph shall not have the effect of reducing the amount otherwise deductible under paragraphs (1), (2), and (3), if no employee is a beneficiary under more than 1 trust or under a trust and an annuity plan.
'(ii) ELECTIVE DEFERRALS.--If, in connection with 1 or more defined contribution plans and 1 or more defined benefit plans, no amounts (other than elective deferrals (as defined in section 402(g)(3))) are contributed to any of the defined contribution plans for the taxable year, then subparagraph (A) shall not apply with respect to any of such defined contribution plans and defined benefit plans.'.
(1) Section 45E(e)(1) is amended by striking '(n)' and inserting '(m)'.
(2) Section 619(d) of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended by striking 'established' and inserting 'first effective'.
(o) AMENDMENTS RELATING TO SECTION 631 OF THE ACT.--
(1) Section 402(g)(1) is amended by adding at the end the following:
'(C) CATCH-UP CONTRIBUTIONS.--In addition to subparagraph (A), in the case of an eligible participant (as defined in section 414(v)), gross income shall not include elective deferrals in excess of the applicable dollar amount under subparagraph (B) to the extent that the amount of such elective deferrals does not exceed the applicable dollar amount under section 414(v)(2)(B)(i) for the taxable year (without regard to the treatment of the elective deferrals by an applicable employer plan under section 414(v)).'.
(2) Section 401(a)(30) is amended by striking '402(g)(1)' and inserting '402(g)(1)(A)'.
(3) Section 414(v)(2) is amended by adding at the end the following:
'(D) AGGREGATION OF PLANS.--For purposes of this paragraph, plans described in clauses (i), (ii), and (iv) of paragraph (6)(A) that are maintained by the same employer (as determined under subsection (b), (c), (m) or (o)) shall be treated as a single plan, and plans described in clause (iii) of paragraph (6)(A) that are maintained by the same employer shall be treated as a single plan.'.
(4) Section 414(v)(3)(A)(i) is amended by striking 'section 402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 408(p), 415, or 457' and inserting 'sections 401(a)(30), 402(h), 403(b), 408, 415(c), and 457(b)(2) (determined without regard to section 457(b)(3))'.
(5) Section 414(v)(3)(B) is amended by striking 'section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 403(b)(12), 408(k), 408(p), 408B, 410(b), or 416' and inserting 'section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k), 410(b), or 416'.
(6) Section 414(v)(4)(B) is amended by inserting before the period at the end the following: ', except that a plan described in clause (i) of section 410(b)(6)(C) shall not be treated as a plan of the employer until the expiration of the transition period with respect to such plan (as determined under clause (ii) of such section)'.
(7) Section 414(v)(5) is amended--
(A) by striking ', with respect to any plan year,' in the matter preceding subparagraph (A),
(B) by amending subparagraph (A) to read as follows:
'(A) who would attain age 50 by the end of the taxable year,', and
(C) in subparagraph (B) by striking 'plan year' and inserting 'plan (or other applicable) year'.
(8) Section 414(v)(6)(C) is amended to read as follows:
'(C) EXCEPTION FOR SECTION 457 PLANS.--This subsection shall not apply to a participant for any year for which a higher limitation applies to the participant under section 457(b)(3).'.
(9) Section 457(e) is amended by adding at the end the following new paragraph:
'(18) COORDINATION WITH CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OLDER.--In the case of an individual who is an eligible participant (as defined by section 414(v)) and who is a participant in an eligible deferred compensation plan of an employer described in paragraph (1)(A), subsections (b)(3) and (c) shall be applied by substituting for the amount otherwise determined under the applicable subsection the greater of--
'(A) the sum of--
'(i) the plan ceiling established for purposes of subsection (b)(2) (without regard to subsection (b)(3)), plus
'(ii) the applicable dollar amount for the taxable year determined under section 414(v)(2)(B)(i), or
'(B) the amount determined under the applicable subsection (without regard to this paragraph).'.
(1) Section 403(b)(1) is amended in the matter following subparagraph (E) by striking 'then amounts contributed' and all that follows and inserting the following:
'then contributions and other additions by such employer for such annuity contract shall be excluded from the gross income of the employee for the taxable year to the extent that the aggregate of such contributions and additions (when expressed as an annual addition (within the meaning of section 415(c)(2))) does not exceed the applicable limit under section 415. The amount actually distributed to any distributee under such contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities). For purposes of applying the rules of this subsection to contributions and other additions by an employer for a taxable year, amounts transferred to a contract described in this paragraph by reason of a rollover contribution described in paragraph (8) of this subsection or section 408(d)(3)(A)(ii) shall not be considered contributed by such employer.'.
(2) Section 403(b) is amended by striking paragraph (6).
(3) Section 403(b)(3) is amended--
(A) in the first sentence by inserting the following before the period at the end: ', and which precedes the taxable year by no more than five years', and
(B) in the second sentence by striking 'or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated'.
(4) Section 415(c)(7) is amended to read as follows:
'(7) SPECIAL RULES RELATING TO CHURCH PLANS.--
'(A) ALTERNATIVE CONTRIBUTION LIMITATION.--
'(i) IN GENERAL.--Notwithstanding any other provision of this subsection, at the election of a participant who is an employee of a church or a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such participant, when expressed as an annual addition to such participant's account, shall be treated as not exceeding the limitation of paragraph (1) if such annual addition is not in excess of $10,000.
'(ii) $40,000 AGGREGATE LIMITATION.--The total amount of additions with respect to any participant which may be taken into account for purposes of this subparagraph for all years may not exceed $40,000.
'(B) NUMBER OF YEARS OF SERVICE FOR DULY ORDAINED, COMMISSIONED, OR LICENSED MINISTERS OR LAY EMPLOYEES.--For purposes of this paragraph--
'(i) all years of service by--
'(I) a duly ordained, commissioned, or licensed minister of a church, or
'(II) a lay person,
as an employee of a church, a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), shall be considered as years of service for 1 employer, and
'(ii) all amounts contributed for annuity contracts by each such church (or convention or association of churches) or such organization during such years for such minister or lay person shall be considered to have been contributed by 1 employer.
'(C) FOREIGN MISSIONARIES.--In the case of any individual described in subparagraph (D) performing services outside the United States, contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such employee, when expressed as an annual addition to such employee's account, shall not be treated as exceeding the limitation of paragraph (1) if such annual addition is not in excess of the greater of $3,000 or the employee's includible compensation determined under section 403(b)(3).
'(D) ANNUAL ADDITION.--For purposes of this paragraph, the term 'annual addition' has the meaning given such term by paragraph (2).
'(E) CHURCH, CONVENTION OR ASSOCIATION OF CHURCHES.--For purposes of this paragraph, the terms 'church' and 'convention or association of churches' have the same meaning as when used in section 414(e).'.
(5) Section 457(e)(5) is amended to read as follows:
'(5) INCLUDIBLE COMPENSATION.--The term 'includible compensation' has the meaning given to the term 'participant's compensation' by section 415(c)(3).'.
(6) Section 402(g)(7)(B) is amended by striking '2001.' and inserting '2001).'.
(q) AMENDMENTS RELATING TO SECTION 643 OF THE ACT.--
(1) Section 401(a)(31)(C)(i) is amended by inserting 'is a qualified trust which is part of a plan which is a defined contribution plan and' before 'agrees'.
(2) Section 402(c)(2) is amended by adding at the end the following flush sentence:
'In the case of a transfer described in subparagraph (A) or (B), the amount transferred shall be treated as consisting first of the portion of such distribution that is includible in gross income (determined without regard to paragraph (1)).'.
(r) AMENDMENTS RELATING TO SECTION 648 OF THE ACT.--
(1) Section 417(e) is amended--
(A) in paragraph (1) by striking 'exceed the dollar limit under section 411(a)(11)(A)' and inserting 'exceed the amount that can be distributed without the participant's consent under section 411(a)(11)', and
(B) in paragraph (2)(A) by striking 'exceeds the dollar limit under section 411(a)(11)(A)' and inserting 'exceeds the amount that can be distributed without the participant's consent under section 411(a)(11)'.
(2) Section 205(g) of the Employee Retirement Income Security Act of 1974 is amended--
(A) in paragraph (1) by striking 'exceed the dollar limit under section 203(e)(1)' and inserting 'exceed the amount that can be distributed without the participant's consent under section 203(e)', and
(B) in paragraph (2)(A) by striking 'exceeds the dollar limit under section 203(e)(1)' and inserting 'exceeds the amount that can be distributed without the participant's consent under section 203(e)'.
(t) AMENDMENTS RELATING TO SECTION 657 OF THE ACT.--Section 404(c)(3) of the Employee Retirement Income Security Act of 1974 is amended--
(1) by striking 'the earlier of' in subparagraph (A) the second place it appears, and
(2) by striking 'if the transfer' and inserting 'a transfer that'.
(u) AMENDMENTS RELATING TO SECTION 659 OF THE ACT.--
(1) Section 4980F is amended--
(A) in subsection (e)(1) by striking 'written notice' and inserting 'the notice described in paragraph (2)',
(B) by amending subsection (f)(2)(A) to read as follows:
'(A) any defined benefit plan described in section 401(a) which includes a trust exempt from tax under section 501(a), or', and
(C) in subsection (f)(3) by striking 'significantly' both places it appears.
(2) Section 204(h)(9) of the Employee Retirement Income Security Act of 1974 is amended by striking 'significantly' both places it appears.
(3) Section 659(c)(3)(B) of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended by striking '(or' and inserting '(and'.
(v) AMENDMENTS RELATING TO SECTION 661 OF THE ACT.--
(1) Section 412(c)(9)(B) is amended--
(A) in clause (ii) by striking '125 percent' and inserting '100 percent', and
(B) by adding at the end the following new clause:
'(iv) LIMITATION.--A change in funding method to use a prior year valuation, as provided in clause (ii), may not be made unless as of the valuation date within the prior plan year, the value of the assets of the plan are not less than 125 percent of the plan's current liability (as defined in paragraph (7)(B)).'.
(A) in clause (ii) by striking '125 percent' and inserting '100 percent', and
(B) by adding at the end the following new clause:
'(iv) A change in funding method to use a prior year valuation, as provided in clause (ii), may not be made unless as of the valuation date within the prior plan year, the value of the assets of the plan are not less than 125 percent of the plan's current liability (as defined in paragraph (7)(B)).'.
(1) Section 404(k) is amended--
(A) in paragraph (1) by striking 'during the taxable year',
(B) in paragraph (2)(B) by striking '(A)(iii)' and inserting '(A)(iv)',
(C) in paragraph (4)(B) by striking '(iii)' and inserting '(iv)', and
(D) by redesignating subparagraph (B) of paragraph (4) (as amended by subparagraph (C)) as subparagraph (C) of paragraph (4) and by inserting after subparagraph (A) the following new subparagraph:
'(B) REINVESTMENT DIVIDENDS.--For purposes of subparagraph (A), an applicable dividend reinvested pursuant to clause (iii)(II) of paragraph (2)(A) shall be treated as paid in the taxable year of the corporation in which such dividend is reinvested in qualifying employer securities or in which the election under clause (iii) of paragraph (2)(A) is made, whichever is later.'.
(2) Section 404(k) is amended by adding at the end the following new paragraph:
'(7) FULL VESTING.--In accordance with section 411, an applicable dividend described in clause (iii)(II) of paragraph (2)(A) shall be subject to the requirements of section 411(a)(1).'.
(x) EFFECTIVE DATE.--Except as provided in subsection (c), the amendments made by this section shall take effect as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 to which they relate.
SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF 2000.
(a) AMENDMENT RELATED TO SECTION 101 OF THE ACT.--Section 469(i)(3)(E) is amended by striking clauses (ii), (iii), and (iv) and inserting the following:
'(iii) third to the portion of the passive activity credit to which subparagraph (B) or (D) does not apply,
'(iv) fourth to the portion of such credit to which subparagraph (B) applies, and'.
(1) by striking 'FOR EARNED INCOME CREDIT..--For purposes of section 32, an' and inserting 'FOR PRINCIPAL PLACE OF ABODE REQUIREMENTS--An', and
(2) by striking 'requirement of section 32(c)(3)(A)(ii)' and inserting 'principal place of abode requirements of section 2(a)(1)(B), section 2(b)(1)(A), and section 32(c)(3)(A)(ii)'.
(c) AMENDMENT RELATED TO SECTION 309 OF THE ACT.--Subparagraph (A) of section 358(h)(1) is amended to read as follows:
(1)(A) Section 1234A is amended by inserting 'or' after the comma at the end of paragraph (1), by striking 'or' at the end of paragraph (2), and by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection (a)(1) and in subsection (b) by striking 'sale or exchange' the first place it appears in each subsection and inserting 'sale, exchange, or termination'.
(ii) Section 1234B is amended by adding at the end the following new subsection:
'For special rules relating to dealer securities futures contracts, see section 1256.'.
(2) Section 1091(e) is amended--
(A) in the heading, by striking 'SECURITIES.--' and inserting 'SECURITIES AND SECURITIES FUTURES CONTRACTS TO SELL.--',
(B) by inserting after 'closing of a short sale of' the following: '(or the sale, exchange, or termination of a securities futures contract to sell)',
(C) in paragraph (2), by inserting after 'short sale of' the following: '(or securities futures contracts to sell)', and
(D) by adding at the end the following:
(3)(A) Section 1233(e)(2) is amended by striking 'and' at the end of subparagraph (C), by striking the period and inserting '; and' at the end of subparagraph (D), and inserting after subparagraph (D) the following:
'(E) entering into a securities futures contract (as so defined) to sell shall be considered to be a short sale, and the settlement of such contract shall be considered to be the closing of such short sale.'.
(B) Section 1234B(b) is amended by inserting after 'or this section,' the following: 'or in section 1233,'.
SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.
(a) AMENDMENTS RELATED TO SECTION 545 OF THE ACT.--Section 857(b)(7) is amended--
(1) in clause (i) of subparagraph (B), by striking 'the amount of which' and inserting 'to the extent the amount of the rents', and
(2) in subparagraph (C), by striking 'if the amount' and inserting 'to the extent the amount'.
(b) EFFECTIVE DATE.--The amendments made by this section shall take effect as if included in section 545 of the Tax Relief Extension Act of 1999.
SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 311 OF THE ACT.--Section 311(e) of the Taxpayer Relief Act of 1997 (Public Law 105-34; 111 Stat. 836) is amended--
(1) in paragraph (2)(A), by striking 'recognized' and inserting 'included in gross income', and
(2) by adding at the end the following new paragraph:
'(5) DISPOSITION OF INTEREST IN PASSIVE ACTIVITY.--Section 469(g)(1)(A) of the Internal Revenue Code of 1986 shall not apply by reason of an election made under paragraph (1).'.
(b) EFFECTIVE DATE.--The amendments made by this section shall take effect as if included in section 311 of the Taxpayer Relief Act of 1997.
SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.
(a) AMENDMENT RELATED TO SECTION 4006 OF THE ACT.--Section 26(b)(2) is amended by striking 'and' at the end of subparagraph (P), by striking the period and inserting ', and' at the end of subparagraph (Q), and by adding at the end the following new subparagraph:
SEC. 416. OTHER TECHNICAL CORRECTIONS.
(a) COORDINATION OF ADVANCED PAYMENTS OF EARNED INCOME CREDIT.--
(1) Section 32(g)(2) is amended by striking 'subpart' and inserting 'part'.
(2) The amendment made by this subsection shall take effect as if included in section 474 of the Tax Reform Act of 1984.
(b) SPECIAL RULE RELATED TO WASH SALE LOSSES.--
(1) Section 1256(f) is amended by adding at the end the following new paragraph:
'(5) SPECIAL RULE RELATED TO LOSSES.--Section 1091 (relating to loss from wash sales of stock or securities) shall not apply to any loss taken into account by reason of paragraph (1) of subsection (a).'.
(2) The amendment made by this subsection shall take effect as if included in section 5075 of the Technical and Miscellaneous Revenue Act of 1988.
(c) DISCLOSURE BY SOCIAL SECURITY ADMINISTRATION TO FEDERAL CHILD SUPPORT AGENCIES.--
(1) Section 6103(l)(8) is amended--
(A) in the heading, by striking 'STATE AND LOCAL' and inserting 'FEDERAL, STATE, AND LOCAL', and
(B) in subparagraph (A), by inserting 'Federal or' before 'State or local'.
(2) The amendments made by this subsection shall take effect on the date of the enactment of this Act.
(d) TREATMENT OF SETTLEMENTS UNDER PARTNERSHIP AUDIT RULES.--
(1) The following provisions are each amended by inserting 'or the Attorney General (or his delegate)' after 'Secretary' each place it appears:
(A) Paragraphs (1) and (2) of section 6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
(2) The amendments made by this subsection shall apply with respect to settlement agreements entered into after the date of the enactment of this Act.
(e) AMENDMENT RELATED TO PROCEDURE AND ADMINISTRATION.--
(1) Section 6331(k)(3) (relating to no levy while certain offers pending or installment agreement pending or in effect) is amended to read as follows:
'(3) CERTAIN RULES TO APPLY.--Rules similar to the rules of--
'(A) paragraphs (3) and (4) of subsection (i), and
'(B) except in the case of paragraph (2)(C), paragraph (5) of subsection (i),
shall apply for purposes of this subsection.'.
(2) The amendment made by this subsection shall take effect on the date of the enactment of this Act.
(f) MODIFIED ENDOWMENT CONTRACTS.--Paragraph (2) of section 318(a) of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-645) is repealed, and clause (ii) of section 7702A(c)(3)(A) shall read and be applied as if the amendment made by such paragraph had not been enacted.
SEC. 417. CLERICAL AMENDMENTS.
(2) The second sentence of section 42(h)(3)(C) is amended by striking 'the amounts described in' and all that follows through the period and inserting 'the amounts described in clauses (ii) through (iv) over the aggregate housing credit dollar amount allocated for such year.'.
(3) Clause (ii) of section 42(m)(1)(B) is amended by striking the second 'and' at the end of subclause (II) and by inserting 'and' at the end of subclause (III).
(4) Section 51A(c)(1) is amended by striking '51(d)(10)' and inserting '51(d)(11)'.
(5) The flush sentence at the end of clause (ii) of section 56(a)(1)(A) is amended by striking 'such 1250' and inserting 'such section 1250'.
(6) Section 151(c)(6)(B)(iii) is amended by inserting 'as' before 'such terms'.
(7) Section 170(e)(6)(B)(i)(III) is amended by striking '2000,' and inserting '2000),'.
(8) Section 172(b)(1)(F)(i) is amended--
(A) by striking '3 years' and inserting '3 taxable years', and
(B) by striking '2 years' and inserting '2 taxable years'.
(9) Section 351(h)(1) is amended by inserting a comma after 'liability'.
(10) Section 475(g)(3) is amended by striking 'sections' and inserting 'section'.
(11) Section 529(e)(3)(B)(i) is amended by striking 'subsection (b)(7)' and inserting 'subsection (b)(6)'.
(12) Section 741 is amended by striking 'which have appreciated substantially in value'.
(13) Section 857(b)(7)(B)(i) is amended by striking 'subsection 856(d)' and inserting 'section 856(d)'.
(14) Subparagraph (B) of section 943(e)(4) is amended by aligning the left margin of the flush language with subparagraph (A).
(15) Subparagraph (B) of section 995(b)(3) is amended by striking 'International Security Assistance and Arms Export Control Act of 1976' and inserting 'Arms Export Control Act'.
(16) Section 1394(c)(2) is amended by striking 'subparagraph (A)' and inserting 'paragraph (1)'.
(17)(A) The section heading for section 4980E is amended to read as follows:
(19)(A) Section 6227(d) is amended by striking 'subsection (b)' and inserting 'subsection (c)'.
(B) Section 6228 is amended--
(i) in subsection (a)(1), by striking 'subsection (b) of section 6227' and inserting 'subsection (c) of section 6227',
(ii) in subsection (a)(3)(A), by striking 'subsection (b) of', and
(iii) in subsections (b)(1) and (b)(2)(A), by striking 'subsection (c) of section 6227' and inserting 'subsection (d) of section 6227'.
(C) Section 6231(b)(2)(B)(i) is amended by striking 'section 6227(c)' and inserting 'section 6227(d)'.
(20) Section 1221(b)(1)(B)(i) is amended by striking '1256(b))' and inserting '1256(b)))'.
(21) Section 159 of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-624) is amended by striking 'fuctions' and inserting 'functions'.
(22) The amendment to section 170(e)(6)(B)(iv) made by section 165(b)(1) of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-626) shall be applied as if it struck 'in any of the grades K-12'.
(23) Section 618(b)(2) of the Economic Growth and Tax Relief Reconciliation Act of 2001 (Public Law 107-16; 115 Stat. 108) is amended--
(A) in subparagraph (A) by striking '203(d)' and inserting '202(f)', and
(B) in subparagraphs (C), (D), and (E) by striking '203' and inserting '202(f)'.
(24)(A) Section 525 of the Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law 106-170; 113 Stat. 1928) is amended by striking '7200' and inserting '7201'.
(B) Section 532(c)(2) of such Act (113 Stat. 1930) is amended--
(i) in subparagraph (D), by striking '341(d)(3)' and inserting '341(d)', and
(ii) in subparagraph (Q), by striking '954(c)(1)(B)(iii) and inserting '954(c)(1)(B)'.
(a) AMENDMENTS RELATED TO SECTION 202 OF THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.--
(1) Subsection (h) of section 23 is amended--
(A) by striking 'subsection (a)(1)(B)' and inserting 'subsection (a)(3)', and
(B) by adding at the end the following new flush sentence:
(2) Subsection (f) of section 137 is amended by adding at the end the following new flush sentence:
'If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.'.
(b) AMENDMENTS RELATED TO SECTION 204 OF THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.--Section 21(d)(2) is amended--
(1) in subparagraph (A) by striking '$200' and inserting '$250', and
(2) in subparagraph (B) by striking '$400' and inserting '$500'.
(c) EFFECTIVE DATE.--The amendments made by this section shall take effect as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 to which they relate.
SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.--Nothing in this Act (or an amendment made by this Act) shall be construed to alter or amend title II of the Social Security Act (or any regulation promulgated under that Act).
(b) TRANSFERS.--
(1) ESTIMATE OF SECRETARY.--The Secretary of the Treasury shall annually estimate the impact that the enactment of this Act has on the income and balances of the trust funds established under section 201 of the Social Security Act (42 U.S.C. 401).
(2) TRANSFER OF FUNDS.--If, under paragraph (1), the Secretary of the Treasury estimates that the enactment of this Act has a negative impact on the income and balances of the trust funds established under section 201 of the Social Security Act (42 U.S.C. 401), the Secretary shall transfer, not less frequently than quarterly, from the general revenues of the Federal Government an amount sufficient so as to ensure that the income and balances of such trust funds are not reduced as a result of the enactment of this Act.
Congress designates as emergency requirements pursuant to section 252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985 the following amounts:
(2) Amounts equal to the amounts of new budget authority and outlays provided in this Act in excess of the allocations under section 302(a) of the Congressional Budget Act of 1974 to the Committee on Finance of the Senate for fiscal year 2002, the total of fiscal years 2002 through 2006, and the total of fiscal years 2002 through 2011.
SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR AND MINIMUM TAX LIABILITY.
(a) IN GENERAL..--Paragraph (2) of section 26(a) is amended--
(1) by striking 'RULE FOR 2000 AND 2001.--' and inserting 'RULE FOR 2000, 2001, 2002, AND 2003.--', and
(2) by striking 'during 2000 or 2001,' and inserting 'during 2000, 2001, 2002, or 2003,'.
(b) CONFORMING AMENDMENTS.--
(1) Section 904(h) is amended by striking 'during 2000 or 2001' and inserting 'during 2000, 2001, 2002, or 2003'.
(2) The amendments made by sections 201(b), 202(f), and 618(b) of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to taxable years beginning during 2002 and 2003.
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to taxable years beginning after December 31, 2001.
SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.--Section 30 is amended--
(1) in subsection (b)(2)--
(A) by striking 'December 31, 2001,' and inserting 'December 31, 2003,', and
(B) in subparagraphs (A), (B), and (C), by striking '2002', '2003', and '2004', respectively, and inserting '2004', '2005', and '2006', respectively, and
(2) in subsection (e), by striking 'December 31, 2004' and inserting 'December 31, 2006'.
(b) CONFORMING AMENDMENTS.--
(1) Subparagraph (C) of section 280F(a)(1) is amended by adding at the end the following new clause:
(c) EFFECTIVE DATE.--The amendments made by this section shall apply to property placed in service after December 31, 2001.
SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.
(a) IN GENERAL.--Subparagraphs (A), (B), and (C) of section 45(c)(3) are both amended by striking '2002' and inserting '2004'.
(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall apply to facilities placed in service after December 31, 2001.
SEC. 604. WORK OPPORTUNITY CREDIT.
(a) IN GENERAL.--Subparagraph (B) of section 51(c)(4) is amended by striking '2001' and inserting '2003'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to individuals who begin work for the employer after December 31, 2001.
SEC. 605. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.--Subsection (f) of section 51A is amended by striking '2001' and inserting '2003'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to individuals who begin work for the employer after December 31, 2001.
SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING PROPERTY.
(a) IN GENERAL.--Section 179A is amended--
(1) in subsection (b)(1)(B)--
(A) by striking 'December 31, 2001,' and inserting 'December 31, 2003,', and
(B) in clauses (i), (ii), and (iii), by striking '2002', '2003', and '2004', respectively, and inserting '2004', '2005', and '2006', respectively, and
(2) in subsection (f), by striking 'December 31, 2004' and inserting 'December 31, 2006'.
(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall apply to property placed in service after December 31, 2001.
SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.
(a) IN GENERAL.--Subparagraph (H) of section 613A(c)(6) is amended by striking '2002' and inserting '2004'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2001.
SEC. 608. QUALIFIED ZONE ACADEMY BONDS.
(a) IN GENERAL.--Paragraph (1) of section 1397E(e) is amended by striking '2000, and 2001' and inserting '2000, 2001, 2002, and 2003'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act.
SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.--Paragraph (1) of section 7652(f) is amended by striking 'January 1, 2002' and inserting 'January 1, 2004'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to articles brought into the United States after December 31, 2001.
SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH BENEFITS.
(a) IN GENERAL.--Subsection (f) of section 9812, as amended by the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2002, is amended to read as follows:
'(f) APPLICATION OF SECTION.--This section shall not apply to benefits for services furnished--
'(1) on or after September 30, 2001, and before January 10, 2002, and
'(2) after December 31, 2003.'.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to plan years beginning after December 31, 2000.
SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE COMPANIES.
(a) REDUCTION IN MUTUAL LIFE INSURANCE COMPANY DEDUCTIONS NOT TO APPLY IN CERTAIN YEARS.--Section 809 (relating to reduction in certain deductions of material life insurance companies) is amended by adding at the end the following:
'(j) DIFFERENTIAL EARNINGS RATE TREATED AS ZERO FOR CERTAIN YEARS.--Notwithstanding subsection (c) or (f), the differential earnings rate shall be treated as zero for purposes of computing both the differential earnings amount and the recomputed differential earnings amount for a mutual life insurance company's taxable years beginning in 2001, 2002, or 2003.'.
(b) EFFECTIVE DATE.--The amendment made by this section shall apply to taxable years beginning after December 31, 2000.
SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.--Paragraphs (2) and (3)(B) of section 220(i) (defining cut-off year) are each amended by striking '2002' each place it appears and inserting '2003'.
(b) CONFORMING AMENDMENTS.--
(1) Paragraph (2) of section 220(j) is amended by striking '1998, 1999, or 2001' each place it appears and inserting '1998, 1999, 2001, or 2002'.
(2) Subparagraph (A) of section 220(j)(4) is amended by striking 'and 2001' and inserting '2001, and 2002'.
(c) EFFECTIVE DATE.--The amendments made by this section shall take effect on January 1, 2002.
SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN RESERVATIONS.
(a) EMPLOYMENT.--Subsection (f) of section 45A is amended by striking 'December 31, 2003' and inserting 'December 31, 2004'.
(b) PROPERTY.--Paragraph (8) of section 168(j) is amended by striking 'December 31, 2003' and inserting 'December 31, 2004'.
SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.--
(1) Section 953(e)(10) is amended--
(A) by striking 'January 1, 2002' and inserting 'January 1, 2007', and
(B) by striking 'December 31, 2001' and inserting 'December 31, 2006'.
(2) Section 954(h)(9) is amended by striking 'January 1, 2002' and inserting 'January 1, 2007'.
(b) LIFE INSURANCE AND ANNUITY CONTRACTS.--
(1) IN GENERAL.--Subparagraph (B) of section 954(i)(4) is amended to read as follows:
'(B) LIFE INSURANCE AND ANNUITY CONTRACTS.--
'(i) IN GENERAL.--Except as provided in clause (ii), the amount of the reserve of a qualifying insurance company or qualifying insurance company branch for any life insurance or annuity contract shall be equal to the greater of--
'(I) the net surrender value of such contract (as defined in section 807(e)(1)(A)), or
'(II) the reserve determined under paragraph (5).
'(ii) RULING REQUEST, ETC.--The amount of the reserve under clause (i) shall be the foreign statement reserve for the contract (less any catastrophe, deficiency, equalization, or similar reserves), if, pursuant to a ruling request submitted by the taxpayer or as provided in published guidance, the Secretary determines that the factors taken into account in determining the foreign statement reserve provide an appropriate means of measuring income.'.
SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE TERMINALS.
(a) IN GENERAL.--Subsection (e) of section 4101 is hereby repealed.
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect on January 1, 2002.
SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION INCREASES FOR FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3)) is amended by adding at the end the following:
'(i) any State that was a qualifying State under this paragraph for fiscal year 2001 or any prior fiscal year shall be entitled to receive from the Secretary for fiscal year 2002 a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year in which the State was a qualifying State;
'(ii) subparagraph (G) shall be applied as if '2002' were substituted for '2001'; and
'(iii) out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal year 2002 such sums as are necessary for grants under this subparagraph.'.
Section 403(b) of the Social Security Act (42 U.S.C. 603(b)) is amended--
(2) in paragraph (3)(C)(ii), by striking '2001' and inserting '2002'.
Vice President of the United States and President of the Senate.
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