Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) (Title XIII--Revenue Reconciliation Act of 1993)

(B) by striking 'July 1, 1992' each place it appears and inserting 'July 1, 1995'.

'(II) in the case of the taxpayer's 6th such taxable year, 1/6 of the percentage which the aggregate qualified research expenses of the taxpayer for the 4th and 5th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

'(III) in the case of the taxpayer's 7th such taxable year, 1/3 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th and 6th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

'(IV) in the case of the taxpayer's 8th such taxable year, 1/2 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, and 7th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

'(V) in the case of the taxpayer's 9th such taxable year, 2/3 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th, and 8th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

'(VI) in the case of the taxpayer's 10th such taxable year, 5/6 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th, 8th, and 9th such taxable years is of the aggregate gross receipts of the taxpayer for such years, and

'(VII) for taxable years thereafter, the percentage which the aggregate qualified research expenses for any 5 taxable years selected by the taxpayer from among the 5th through the 10th such taxable years is of the aggregate gross receipts of the taxpayer for such selected years.'.

'(B) 10 times the aggregate adjusted bases of qualified small business stock issued by such corporation and disposed of by the taxpayer during the taxable year.

'(B) ALLOCATION OF EXCLUSION.--In the case of any joint return, the amount of gain taken into account under subsection (a) shall be allocated equally between the spouses for purposes of applying this subsection to subsequent taxable years.

'(C) MARITAL STATUS.--For purposes of this subsection, marital status shall be determined under section 7703.

'(B) except as provided in subsections (f) and (h), such stock is acquired by the taxpayer at its original issue (directly or through an underwriter)--

'(B) SPECIAL RULE FOR CERTAIN SMALL BUSINESS INVESTMENT COMPANIES.--

'(B) SIGNIFICANT REDEMPTIONS.--Stock issued by a corporation shall not be treated as qualified business stock if, during the 2-year period beginning on the date 1 year before the issuance of such stock, such corporation made 1 or more purchases of its stock with an aggregate value (as of the time of the respective purchases) exceeding 5 percent of the aggregate value of all of its stock as of the beginning of such 2-year period.

'(C) TREATMENT OF CERTAIN TRANSACTIONS.--If any transaction is treated under section 304(a) as a distribution in redemption of the stock of any corporation, for purposes of subparagraphs (A) and (B), such corporation shall be treated as purchasing an amount of its stock equal to the amount treated as such a distribution under section 304(a).

'(B) the aggregate gross assets of such corporation immediately after the issuance (determined by taking into account amounts received in the issuance) do not exceed $50,000,000, and

'(C) such corporation agrees to submit such reports to the Secretary and to shareholders as the Secretary may require to carry out the purposes of this section.

'(B) TREATMENT OF CONTRIBUTED PROPERTY.--For purposes of subparagraph (A), the adjusted basis of any property contributed to the corporation (or other property with a basis determined in whole or in part by reference to the adjusted basis of property so contributed) shall be determined as if the basis of the property contributed to the corporation (immediately after such contribution) were equal to its fair market value as of the time of such contribution.

'(B) PARENT-SUBSIDIARY CONTROLLED GROUP.--For purposes of subparagraph (A), the term 'parent-subsidiary controlled group' means any controlled group of corporations as defined in section 1563(a)(1), except that--

'(B) such corporation is an eligible corporation.

'(B) activities resulting in the payment or incurring of expenditures which may be treated as research and experimental expenditures under section 174, or

'(C) activities with respect to in-house research expenses described in section 41(b)(4),

'(B) any banking, insurance, financing, leasing, investing, or similar business,

'(C) any farming business (including the business of raising or harvesting trees),

'(D) any business involving the production or extraction of products of a character with respect to which a deduction is allowable under section 613 or 613A, and

'(E) any business of operating a hotel, motel, restaurant, or similar business.

'(B) a corporation with respect to which an election under section 936 is in effect or which has a direct or indirect subsidiary with respect to which such an election is in effect,

'(C) a regulated investment company, real estate investment trust, or REMIC, and

'(D) a cooperative.

'(B) PORTFOLIO STOCK OR SECURITIES.--A corporation shall be treated as failing to meet the requirements of paragraph (1) for any period during which more than 10 percent of the value of its assets (in excess of liabilities) consists of stock or securities in other corporations which are not subsidiaries of such corporation (other than assets described in paragraph (6)).

'(C) SUBSIDIARY.--For purposes of this paragraph, a corporation shall be considered a subsidiary if the parent owns more than 50 percent of the combined voting power of all classes of stock entitled to vote, or more than 50 percent in value of all outstanding stock, of such corporation.

'(B) are held for investment and are reasonably expected to be used within 2 years to finance research and experimentation in a qualified trade or business or increases in working capital needs of a qualified trade or business,

'(B) for purposes of applying subsection (b), such amount shall be treated as gain from a disposition of stock in the corporation issuing the stock disposed of by the pass-thru entity and the taxpayer's proportionate share of the adjusted basis of the pass-thru entity in such stock shall be taken into account.

'(B) such amount is includible in the gross income of the taxpayer by reason of the holding of an interest in such entity which was held by the taxpayer on the date on which such pass-thru entity acquired such stock and at all times thereafter before the disposition of such stock by such pass-thru entity.

'(B) any S corporation,

'(C) any regulated investment company, and

'(D) any common trust fund.

'(B) having held such stock during any continuous period immediately preceding the transfer during which it was held (or treated as held under this subsection) by the transferor.

'(B) at death, or

'(C) from a partnership to a partner of stock with respect to which requirements similar to the requirements of subsection (g) are met at the time of the transfer (without regard to the 5-year holding period requirement).

'(B) LIMITATION.--This section shall apply to gain from the sale or exchange of stock treated as qualified small business stock by reason of subparagraph (A) only to the extent of the gain which would have been recognized at the time of the transfer described in subparagraph (A) if section 351 or 368 had not applied at such time. The preceding sentence shall not apply if the stock which is treated as qualified small business stock by reason of subparagraph (A) is issued by a corporation which (as of the time of the transfer described in subparagraph (A)) is a qualified small business.

'(C) SUCCESSIVE APPLICATION.--For purposes of this paragraph, stock treated as qualified small business stock under subparagraph (A) shall be so treated for subsequent transactions or reorganizations, except that the limitation of subparagraph (B) shall be applied as of the time of the first transfer to which such limitation applied (determined after the application of the second sentence of subparagraph (B)).

'(D) CONTROL TEST.--In the case of a transaction described in section 351, this paragraph shall apply only if, immediately after the transaction, the corporation issuing the stock owns directly or indirectly stock representing control (within the meaning of section 368(c)) of the corporation whose stock was exchanged.

'(B) the basis of such stock in the hands of the taxpayer shall in no event be less than the fair market value of the property exchanged.

'(B) the taxpayer elects to recognize gain as if such stock were sold on such first day for its fair market value.

'(B) the taxpayer has acquired an option to sell substantially identical property at a fixed price, or

'(C) to the extent provided in regulations, the taxpayer has entered into any other transaction which substantially reduces the risk of loss from holding such qualified small business stock.

'(B) the exclusion provided by section 1202 shall not be allowed.'

(B) Subparagraph (B) of section 172(d)(4) is amended by inserting ', (2)(B),' after 'paragraph (1)'.

'(B) $500,000, reduced by the amount of gain excluded under subsection (a) for all preceding taxable years.

'(B) $1,000,000, reduced by the amount of gain excluded under subsection (a) for all preceding taxable years.

'(B) ALLOCATION OF GAIN.--In the case of any joint return, the amount of gain excluded under subsection (a) for any taxable year shall be allocated equally between the spouses for purposes of applying this subsection to subsequent taxable years.

'(C) MARITAL STATUS.--For purposes of this subsection, marital status shall be determined under section 7703.

'(B) any gain excluded under subsection (a) by a predecessor of any C corporation shall be treated as having been excluded by such C corporation.

'(ii) any land or property in accordance with section 147(c)(2).'

'(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.

'(ii) any other individual who does not have a qualifying child for the taxable year, if--

'(B) the cost-of-living adjustment determined under section 1(f)(3), for the calendar year in which the taxable year begins, by substituting 'calendar year 1993' for 'calendar year 1992'.', and

(B) by striking clause (ii), and

(C) by redesignating clause (iii) as clause (ii).

'(ii) phases out at 60 percent of the phaseout percentage in effect under section 32(b)(1) for such an eligible individual between the phaseout amount in effect under section 32(b)(2) for such an eligible individual and the amount of earned income at which the credit under section 32(a) phases out for such an eligible individual, or'.

'(B) QUALIFIED PROGRAM.--For purposes of subparagraph (A), the term 'qualified program' means any governmental program providing mortgage loans (other than 1st mortgage loans) or grants--

(B) by adding 'and' at the end of subparagraph (B), and

(C) by inserting after subparagraph (B) the following new subparagraph:

'(C) financing with respect to land described in subsection (i)(1)(C) and the construction of any residence thereon.'

(B) by striking the period at the end of clause (iii) and inserting ', and', and

(C) by inserting after clause (iii) the following new clause:

'(B) any annual recertification of tenant income for purposes of this subsection, if the entire building is occupied by low-income tenants.'

(C) HOME ASSISTANCE.--The amendment made by paragraph (2) shall apply to periods after the date of the enactment of this Act.

'(B) TAXPAYERS TO WHOM PARAGRAPH APPLIES.--This paragraph shall apply to a taxpayer for a taxable year if--

'(C) REAL PROPERTY TRADE OR BUSINESS.--For purposes of this paragraph, the term 'real property trade or business' means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.

'(D) SPECIAL RULES FOR SUBPARAGRAPH (B).--

'(ii) COMMERCIALLY REASONABLE FINANCING.--Clause (v) of subparagraph (B) shall not apply if the financing is on commercially reasonable terms.

'(ii) QUALIFYING SALE.--For purposes of this clause, there is a qualifying sale by a financial institution if--

'(C) TREATMENT FOR PURPOSES OF UNRELATED BUSINESS TAX.--If any qualified trust holds more than 10 percent (by value) of the interests in any pension-held REIT at any time during a taxable year, the trust shall be treated as having for such taxable year gross income from an unrelated trade or business in an amount which bears the same ratio to the aggregate dividends paid (or treated as paid) by the REIT to the trust for the taxable year of the REIT with or within which the taxable year of the trust ends (the 'REIT year') as--

'(D) PENSION-HELD REIT.--The purposes of subparagraph (C)--

'(B) CROSS REFERENCE.--For provisions making the reduction described in subparagraph (A), see section 1017.

'(B) was incurred or assumed before January 1, 1993, or if incurred or assumed on or after such date, is qualified acquisition indebtedness, and

'(C) with respect to which such taxpayer makes an election to have this paragraph apply.

(B) by striking 'SUBSECTIONS (a), (b), AND (g)' in the subsection heading and inserting 'CERTAIN PROVISIONS', and

(C) by striking 'SUBSECTIONS (a), (b), AND (g)' in the headings of paragraphs (6) and (7)(A) and inserting 'CERTAIN PROVISIONS'.

(B) the construction of such property was commenced by or for the taxpayer or a qualified person before May 13, 1993.

'(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.

'(B) LIMOUSINES.--In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.

'(B) the dollar amount in effect under subsection (a) for the calendar year,

'(B) LONG-TERM LEASE.--For purposes of subparagraph (A), the term 'long-term lease' means any long-term lease (as defined in section 4052).

'(C) SPECIAL RULES.--In the case of a long-term lease of a vehicle which is treated as the 1st retail sale of such vehicle--

'(B) there shall be excluded--

'(B) such installation is not later than the date 6 months after the date the vehicle was 1st placed in service,

'(B) the part or accessory is installed to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or

'(C) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the vehicle does not exceed $200 (or such other amount or amounts as the Secretary may by regulation prescribe).

'(B) within 2 years after the date of such 1st retail sale, such vehicle is resold by the purchaser or such purchaser makes a substantial nonexempt use of such vehicle,

(B) by striking 'such vehicle' and inserting 'such vehicle or boat'.

'(ii) FISHERIES AND WHALING.--The term 'off-highway business use' shall include any use in a vessel employed in the fisheries or in the whaling business.

'(iii) EXCEPTION FOR DIESEL FUEL.--The term 'off-highway business use' shall include the use of diesel fuel in a boat in the active conduct of--

'(B) CONTENT OF ACKNOWLEDGEMENT.--An acknowledgement meets the requirements of this subparagraph if it includes the following information:

'(C) CONTEMPORANEOUS.--For purposes of subparagraph (A), an acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of--

'(E) REGULATIONS.--The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations that may provide that some or all of the requirements of this paragraph do not apply in appropriate cases.'

'(B) LATER CALENDAR YEARS.--In prescribing tables under paragraph (1) which apply with respect to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts referred to in subparagraph (A) shall be determined under paragraph (3) by substituting '1993' for '1992'.'

(C) Subparagraph (C) of section 41(e)(5) is amended by striking '1989' each place it appears and inserting '1992'.

(D) Subparagraph (B) of section 63(c)(4) is amended by striking '1989' and inserting '1992'.

(E) Subparagraph (B) of section 68(b)(2) is amended by striking '1989' and inserting '1992'.

(F) Subparagraph (B) of section 132(f)(6) is amended by striking ', determined by substituting' and all that follows down through the period at the end thereof and inserting a period.

(G) Subparagraphs (A)(ii) and (B)(ii) of section 151(d)(4) are each amended by striking '1989' and inserting '1992'.

(H) Clause (ii) of section 513(h)(2)(C) is amended by striking '1989' and inserting '1992'.

(B) the second installment shall be paid on or before the date 1 year after the date determined under subparagraph (A), and

(C) the third installment shall be paid on or before the date 2 years after the date determined under subparagraph (A).

'(B) an applicable straddle,

'(C) any other transaction which is marketed or sold as producing capital gains from a transaction described in paragraph (1), or

'(D) any other transaction specified in regulations prescribed by the Secretary.

'(B) if the term of the conversion transaction is indefinite, the Federal short-term rates in effect under section 6621(b) during the period of the conversion transaction (compounded daily).

(B) Section 1277(d).

(B) CONFORMING AMENDMENTS.--

'(B) the price at which such person purchased such stock.

'(B) DESCRIPTION OF STOCK.--Stock is described in this subsection if such stock--

'(B) the basis of such stock is not determined in whole or in part by the reference to the adjusted basis of such stock in the hands of the person from whom acquired.'

'(B) SECTION 305(e).--This subsection shall not apply to the holder of the dividend rights which were separated from any stripped preferred stock to which section 305(e)(1) applies.'

'(B) CERTAIN PROPERTY EXCLUDED.--For purposes of subparagraph (A), there shall be excluded any inventory property if a principal purpose for acquiring such property was to avoid the provisions of this section relating to inventory items.'

(B) by striking 'applicable contribution base (as determined under subsection (x))' each place it appears and inserting 'contribution and benefit base (as determined under section 230 of the Social Security Act)', and

(C) by striking 'such applicable contribution base' and inserting 'such contribution and benefit base'.

(B) by striking 'applicable contribution base (as determined under subsection (k))' in paragraph (1) and inserting 'contribution and benefit base (as determined under section 230 of the Social Security Act)',

(C) by inserting 'and' after 'section 3121(b),', and

(D) by striking 'and (C) includes' and all that follows through '3111(b)'.

'(B) the total compensation of such employee for the taxable year is required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such employee being among the 4 highest compensated officers for the taxable year (other than the chief executive officer).

'(B) EXCEPTION FOR REMUNERATION PAYABLE ON COMMISSION BASIS.--The term 'applicable employee remuneration' shall not include any remuneration payable on a commission basis solely on account of income generated directly by the individual performance of the individual to whom such remuneration is payable.

'(C) OTHER PERFORMANCE-BASED COMPENSATION.--The term 'applicable employee remuneration' shall not include any remuneration payable solely on account of the attainment of one or more performance goals, but only if--

'(E) REMUNERATION.--For purposes of this paragraph, the term 'remuneration' includes any remuneration (including benefits) in any medium other than cash, but shall not include--

'(F) COORDINATION WITH DISALLOWED GOLDEN PARACHUTE PAYMENTS.--The dollar limitation contained in paragraph (1) shall be reduced (but not below zero) by the amount (if any) which would have been included in the applicable employee remuneration of the covered employee for the taxable year but for being disallowed under section 280G.'

(B) by striking the second sentence, and

(C) by adding at the end the following new subparagraph:

'(B) COST-OF-LIVING ADJUSTMENT.--

(B) by striking the second sentence and inserting 'The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).'

(B) ELIGIBLE PARTICIPANT.--For purposes of subparagraph (A), an eligible participant is an individual who first became a participant in the plan during a plan year beginning before the 1st plan year beginning after the earlier of--

'(B) of traveling (including lodging) from the former residence to the new place of residence.

(B) Subsection (f) of section 217 is amended to read as follows:

(D) Subsection (h) of section 217 is amended by striking paragraph (1) and redesignating the following paragraphs accordingly.

(E) Section 1001 is amended by striking subsection (f).

(F) Subsection (e) of section 1016 is amended to read as follows:

(B) Subsection (j) of section 132 (as redesignated by paragraph (2)) is amended by striking 'subsection (f)' in paragraph (4)(B)(iii) thereof and inserting 'subsection (h)'.

(C) Subsection (l) of section 132 (as redesignated by paragraph (2)) is amended by striking 'subsection (e)' and inserting 'subsections (e) and (g)'.

(D) Section 4977(c) is amended by striking 'section 132(g)(2)' and inserting 'section 132(i)(2)'.

'(ii) SEPARATE RETURNS.--In the case of a married individual (within the meaning of section 7703) who files a separate return for the taxable year for which the amount of the installment is being determined, clause (i) shall be applied by substituting '$75,000' for '$150,000'.

'(iii) SPECIAL RULE.--In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).'

'(B) $32,000 in the case of a joint return, and

'(C) zero in the case of a taxpayer who--

'(B) $44,000 in the case of a joint return, and

'(C) zero in the case of a taxpayer described in paragraph (1)(C).'

'(A) There';

(B) inserting '(i)' immediately following 'amounts equivalent to'; and

(C) striking the period and inserting the following:

', less (ii) the amounts equivalent to the aggregate increase in tax liabilities under chapter 1 of the Internal Revenue Code of 1986 which is attributable to the amendments to section 86 of such Code made by section 13215 of the Revenue Reconciliation Act of 1993.

'(B) There are hereby appropriated to the hospital insurance trust fund amounts equal to the increase in tax liabilities described in subparagraph (A)(ii). Such appropriated amounts shall be transferred from the general fund of the Treasury on the basis of estimates of such tax liabilities made by the Secretary of the Treasury. Transfers shall be made pursuant to a schedule made by the Secretary of the Treasury that takes into account estimated timing of collection of such liabilities.'

'(D) 35 percent of so much of the taxable income as exceeds $10,000,000.', and

'(B) participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office,

'(C) any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referendums, or

'(D) any direct communication with a covered executive branch official in an attempt to influence the official actions or positions of such official.

'(B) the deduction allowed by subsection (a) shall include all ordinary and necessary expenses (including, but not limited to, traveling expenses described in subsection (a)(2) and the cost of preparing testimony) paid or incurred during the taxable year in carrying on any trade or business--

'(B) LEGISLATION.--The term 'legislation' has the meaning given such term by section 4911(e)(2).

'(B) DE MINIMIS EXCEPTION.--

'(B) the Vice President,

'(C) any officer or employee of the White House Office of the Executive Office of the President, and the 2 most senior level officers of each of the other agencies in such Executive Office, and

'(D)(i) any individual serving in a position in level I of the Executive Schedule under section 5312 of title 5, United States Code, (ii) any other individual designated by the President as having Cabinet level status, and (iii) any immediate deputy of an individual described in clause (i) or (ii).

'(B) WAIVER WHERE FUTURE ADJUSTMENTS MADE.--The Secretary may waive the tax imposed by subparagraph (A)(ii) for any taxable year if the organization agrees to adjust its estimates under paragraph (1)(A)(ii) for the following taxable year to correct any failures.

'(C) TAX TREATED AS INCOME TAX.--For purposes of this title, the tax imposed by subparagraph (A) shall be treated in the same manner as a tax imposed by chapter 1 (relating to income taxes).

'(B) any gain or loss shall be taken into account for such taxable year.

'(B)(i) any security described in subsection (c)(2)(C) which is acquired (including originated) by the taxpayer in the ordinary course of a trade or business of the taxpayer and which is not held for sale, and (ii) any obligation to acquire a security described in clause (i) if such obligation is entered into in the ordinary course of such trade or business and is not held for sale, and

'(C) any security which is a hedge with respect to--

'(B) regularly offers to enter into, assume, offset, assign or otherwise terminate positions in securities with customers in the ordinary course of a trade or business.

'(B) partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust;

'(C) note, bond, debenture, or other evidence of indebtedness;

'(D) interest rate, currency, or equity notional principal contract;

'(E) evidence of an interest in, or a derivative financial instrument in, any security described in subparagraph (A), (B), (C), or (D), or any currency, including any option, forward contract, short position, and any similar financial instrument in such a security or currency; and

'(F) position which--

'(B) fails under subsection (c)(2)(F)(iii) to identify any position which is described in subsection (c)(2)(F) (without regard to clause (iii) thereof) at the time such identification is required,

(B) by striking '1092 and 1256' and inserting '475, 1092, and 1256'.

(B) such change shall be treated as made with the consent of the Secretary, and

(C) except as provided in paragraph (3), 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 ratably over the 5-taxable year period beginning with the first taxable year ending on or after December 31, 1993.

(B) QUALIFIED SECURITY.--For purposes of this paragraph, the term 'qualified security' means any security acquired--

(B) If any FSLIC assistance not credited before March 4, 1991, is with respect to a loss sustained or charge-off in a taxable year ending before March 4, 1991, for purposes of determining the amount of any net operating loss carryover to a taxable year ending on or after March 4, 1991, the provisions of this section shall apply to such assistance for purposes of determining the amount of the net operating loss for the taxable year in which such loss was sustained or debt written off. Except as provided in the preceding sentence, this section shall not apply to any FSLIC assistance with respect to a loss sustained or charge-off in a taxable year ending before March 4, 1991.

(B) by striking 'or for the first 8 months' in subclause (III), and

(C) by striking 'or for the first 11 months' in subclause (IV).

(B) by amending paragraph (8) to read as follows:

'(C) COORDINATION WITH SECTION 108.--In applying section 108(e)(8) to any case to which subparagraph (A) applies, there shall not be taken into account any indebtedness for interest described in subparagraph (B).'

(B) Section 108(e)(6) is amended by striking 'For' and inserting 'Except as provided in regulations, for'.

(B) EXCEPTION FOR TITLE 11 CASES.--The amendments made by this subsection shall not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before December 31, 1993.

'(B) CREDIT CARRYOVER REDUCTION.--The reductions described in subparagraphs (B), (C), and (G) shall be 33-1/3 cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33-1/3 cents for each dollar excluded by subsection (a).'

(B) Subparagraph (B) of section 108(b)(4) is amended by striking '(C)' in the text and heading thereof and inserting '(D)'.

(C) Subparagraph (C) of section 108(b)(4) is amended by striking '(E)' in the text and heading thereof and inserting '(G)'.

(D) Subparagraph (B) of section 108(g)(3) is amended--

'(B) LIMITATION ON AMOUNT OF WAGES TAKEN INTO ACCOUNT.--

'(D) WAGES.--

'(B) EXPENSES TAKEN INTO ACCOUNT.--For purposes of subparagraph (A), the amount determined under this subparagraph for any taxable year is the aggregate amount allowable as a deduction under this chapter to the possession corporation for such taxable year with respect to--

'(C) POSSESSION INCOME TAXES.--For purposes of this paragraph, the term 'possession income taxes' means any taxes of a possession of the United States which are treated as not being income, war profits, or excess profits taxes paid or accrued to a possession of the United States by reason of subsection (c).

'(B) CATEGORIES OF PROPERTY.--

'(B) ELECTION.--An election under subparagraph (A) shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary.

'(V) COORDINATION WITH LIMITATION ON 936 CREDIT.--Any reference in this clause to a dividend received from a corporation eligible for the credit provided by section 936 shall be treated as a reference to the portion of any such dividend for which the dividends received deduction is disallowed under clause (i) after the application of clause (ii)(I).'

'(B) any interest paid or accrued by the taxpayer with respect to any indebtedness to a person who is not a related person if--

'(iii) GUARANTEE.--Except as provided in regulations, the term 'guarantee' includes any arrangement under which a person (directly or indirectly through an entity or otherwise) assures, on a conditional or unconditional basis, the payment of another person's obligation under any indebtedness.

'(ii) NET BASIS TAX.--The term 'net basis tax' means any tax imposed by this subtitle which is not a gross basis tax.'

'(B) the amount of earnings and profits described in section 959(c)(1)(B) with respect to such shareholder, or

'(B) 25 percent of the average of the amounts of total assets held by such corporation as of the close of each quarter of such taxable year.

'(B) COORDINATION WITH SECTION 956.--The term 'passive asset' shall not include any United States property (as defined in section 956).

'(B) Section 1297(d) (relating to leasing rules).

'(C) Section 1297(e) (relating to intangible property).

'(B) the amount of the excess passive assets determined with respect to such 1 corporation shall be allocated among the controlled foreign corporations which are members of such group in proportion to their respective amounts of applicable earnings.

'(B) more than 50 percent (by vote or value) of the stock of each of the controlled foreign corporations (other than the top tier corporation) is owned (directly or indirectly) by one or more other members of the group.

'(B) amounts that would be included under subparagraph (C) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2) to the extent the earnings so described were accumulated in taxable years beginning after September 30, 1993, and then to earnings described in subsection (c)(3).

'(B) earnings and profits attributable to amounts included in gross income under section 951(a)(1)(C) (or which would have been included except for subsection (a)(3) of this section),

(B) Paragraph (2) of section 959(c) is amended to read as follows:

'(B) APPLICATION OF LOOK-THRU RULES.--For purposes of paragraph (2)(C), rules similar to the rules of subparagraph (A) of this paragraph shall apply in determining whether any income of a related person (whether or not a corporation) is passive income.

'(C) LIMITATION.--The preceding provisions of this paragraph shall only apply in the case of persons who are United States shareholders (as defined in section 951(b)) in the controlled foreign corporation.'

'(B) PRESENT VALUE.--For purposes of subparagraph (A), the present value of payments described in subparagraph (A) shall be determined in the manner provided in regulations prescribed by the Secretary--

'(B) a principal purpose of leasing the property was to avoid the provisions of this part or section 956A.

'(B) EXCEPTIONS.--Subparagraph (A) shall not apply to--

'(B) the amount of earnings and profits described in section 959(c)(1)(A) with respect to such shareholder, or

(B) by striking paragraphs (1) and (2) and inserting the following new paragraphs:

'(B) chooses to have the benefits of subpart A of this part for any taxable year in which he receives 1 or more distributions or amounts which are excludable from gross income under section 959(a) and which are attributable to amounts included in his gross income for taxable years referred to in subparagraph (A), and

'(C) for the taxable year in which such distributions or amounts are received, pays, or is deemed to have paid, or accrues income, war profits, or excess profits taxes to a foreign country or to any possession of the United States with respect to such distributions or amounts,

'(B) INCREASES IN ACCOUNT.--For each taxable year beginning after September 30, 1993, the taxpayer shall increase the amount in the excess limitation account by the excess (if any) of--

'(C) DECREASES IN ACCOUNT.--For each taxable year beginning after September 30, 1993, for which the limitation under section 904 was increased under paragraph (1), the taxpayer shall reduce the amount in the excess limitation account by the amount of such increase.

'(II) '20 percent' for '10 percent'.'

'(C) EXCEPTIONS.--Subparagraph (A)(i) shall not apply to--

(B) by striking '881(c)(3)' and inserting '881(c)(3) or (4)'.

'(B) the milling of any such timber outside the United States.

'(ii) the deficit reduction rate shall be 5.55 cents per gallon.'

(B) by striking the period at the end of subparagraph (B) and inserting ', and', and

(C) by adding at the end thereof the following new subparagraph:

'(C) the deficit reduction rate.'

'(B) BUS USES.--No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427(b)(2) (relating to school bus and intracity transportation).

'(C) ADMINISTRATIVE PROVISIONS.--For purposes of applying this title with respect to the taxes imposed by this subsection, references to any liquid subject to tax under this subsection shall be treated as including references to compressed natural gas subject to tax under this paragraph, and references to gallons shall be treated as including references to MCF with respect to such gas.'

'(B) NO EXEMPTION FROM LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAXES ON FUEL USED IN COMMERCIAL AVIATION.--In the case of fuel sold for use in commercial aviation (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) also shall not apply to so much of the tax imposed by section 4091 as is attributable to the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section. For purposes of the preceding sentence, the term 'commercial aviation' means any use of an aircraft other than in noncommercial aviation (as defined in section 4041(c)(4)).'

(B) by striking '3-CENT REDUCTION' in the paragraph heading and inserting 'REDUCTION'.

(B) METHOD OF PAYMENT.--The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe.

(C) TIME FOR PAYMENT.--The tax imposed by paragraph (1) shall be paid on or before November 30, 1993.

(B) GASOLINE.--The term 'gasoline' has the meaning given such term by section 4082 of such Code.

(C) DIESEL FUEL.--The term 'diesel fuel' has the meaning given such term by section 4092 of such Code.

(D) AVIATION FUEL.--The term 'aviation fuel' has the meaning given such term by section 4092 of such Code.

(E) SECRETARY.--The term 'Secretary' means the Secretary of the Treasury or his delegate.

(B) EXEMPT FUEL.--For purposes of subparagraph (A), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by paragraph (1) by reason of paragraph (4) or (5).

(C) CONTROLLED GROUPS.--For purposes of this paragraph--

'(B) the blender establishes the amount of the tax paid with respect to such fuel by reason of subsection (a),

'(B) APPLICABLE FRACTION.--For purposes of subparagraph (A), the applicable fraction is--

'(B) QUALIFIED ALCOHOL MIXTURE.--The term 'qualified alcohol mixture' means--

'(B) 10 PERCENT GASOHOL.--The term '10 percent gasohol' means any mixture of gasoline with alcohol if at least 10 percent of such mixture is alcohol.

'(C) 7.7 PERCENT GASOHOL.--The term '7.7 percent gasohol' means any mixture of gasoline with alcohol if at least 7.7 percent, but not 10 percent or more, of such mixture is alcohol.

'(D) 5.7 PERCENT GASOHOL.--The term '5.7 percent gasohol' means any mixture of gasoline with alcohol if at least 5.7 percent, but not 7.7 percent or more, of such mixture is alcohol.

'(B) diesel fuel.

'(B) products commonly used as additives in gasoline.

'(B) The Leaking Underground Storage Tank Fund financing rate shall not apply during any period during which the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 does not apply.

'(B) the aviation fuel in such mixture was not taxed under paragraph (2).

'(B) PERSONS DESCRIBED.--A person is described in this subparagraph if such person is--

'(B) $10 for each gallon of the dyed fuel involved.

'(B) TIME FOR FILING CLAIM.--No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the earliest quarter included in the claim.'

(B) Paragraph (1) of section 6427(i) is amended by striking 'provided in paragraphs (2), (3), and (4)' and inserting 'otherwise provided in this subsection'.

(C) Paragraph (2) of section 6427(k) is amended by striking 'or (4)' and inserting '(4), or (5)'.

(D) Paragraph (3) of section 6427(i) is amended by adding at the end thereof the following new subparagraph:

'(C) TIME FOR FILING CLAIM.--No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the earliest quarter included in the claim.'

'(C) RATE OF TAX.--

(B) by striking the last sentence and inserting the following new flush sentence:

(C) Clause (i) of section 4041(b)(2)(A) is amended by striking 'Highway Trust Fund financing'.

(B) by striking 'sections 4081(c) and 4091(c), as the case may be' and inserting 'section 4081(c)'.

'(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed--

(B) by striking '4091' each place it appears and inserting '4081'.

(B) by striking 'gasoline used to produce gasohol (as defined in section 4081(c)(1))' in subparagraph (A) and inserting 'gasoline or diesel fuel used to produce a qualified alcohol mixture (as defined in section 4081(c)(3))'.

'(B) any aviation fuel on which tax has been imposed by section 4091,

'(B) in the case of aviation fuel, any use which is exempt from the tax imposed by section 4041(c)(1) other than by reason of a prior imposition of tax.

'(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed--

'(B) in the case of fuel purchased after September 30, 1995, so much of the rate of tax specified in section 4091(b)(1) as does not exceed 4.3 cents per gallon.'

'(B) in the case of fuel used in an aircraft other than in noncommercial aviation (as so defined), zero.

(B) by striking subparagraph (F), and

(C) by redesignating subparagraph (G) as subparagraph (F).

(B) by striking ', 4081, or 4091' and inserting 'or 4081'.

'(B) in the case of diesel fuel, 17.5 cents per gallon (20 cents per gallon after September 30, 1995).

'(B) CERTAIN BUSES.--In the case of diesel fuel used in a use described in section 6427(b)(1) (after the application of section 6427(b)(3)), the Highway Trust Fund financing rate is 3 cents per gallon.

'(C) CERTAIN BOATS.--In the case of diesel fuel used in a boat described in clause (iv) of section 6421(e)(2)(B), the Highway Trust Fund financing rate is zero.

'(D) COMPRESSED NATURAL GAS.--In the case of the tax imposed by section 4041(a)(3), the Highway Trust Fund financing rate is zero.

'(E) CERTAIN OTHER NONHIGHWAY USES.--In the case of gasoline and special motor fuels used as described in paragraph (4)(D), (5)(B), or (6)(D) of subsection (c), the Highway Trust Fund financing rate is 11.5 cents per gallon; and, in the case of diesel fuel used as described in subsection (c)(6)(D), the Highway Trust Fund financing rate is 17.5 cents per gallon.

'(B) FUELS USED TO PRODUCE MIXTURES.--In the case of a rate of tax determined under section 4081(c)(2), subparagraph (A) shall be applied by substituting rates which are 10/9 of the rates otherwise applicable under clauses (i) and (ii) of subparagraph (A).

'(C) PARTIALLY EXEMPT METHANOL OR ETHANOL FUEL.--In the case of a rate of tax determined under section 4041(m), the Highway Trust Fund financing rate is the excess (if any) of the rate so determined over--

(B) by striking 'diesel fuel and' in paragraph (3), and

(C) by striking '4091' in the last sentence, as added by subtitle A, and inserting '4081'.

'(II) there is a reasonable basis for the tax treatment of such item by the taxpayer.'

'(B) the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the National Credit Union Administration, and any other Federal executive agency (as defined in section 6050M), and any successor or subunit of any of the foregoing, and

'(C) any other corporation which is a direct or indirect subsidiary of an entity referred to in subparagraph (A) but only if, by virtue of being affiliated with such entity, such other corporation is subject to supervision and examination by a Federal or State agency which regulates entities referred to in subparagraph (A).

'(B) which is held in connection with the conduct of a trade or business or an activity described in section 212.

'(B) which is created by the taxpayer.

'(B) going concern value,

'(C) any of the following intangible items:

'(E) any covenant not to compete (or other arrangement to the extent such arrangement has substantially the same effect as a covenant not to compete) entered into in connection with an acquisition (directly or indirectly) of an interest in a trade or business or substantial portion thereof, and

'(F) any franchise, trademark, or trade name.

'(B) under an existing futures contract, foreign currency contract, notional principal contract, or other similar financial contract.

'(B) Any right to receive tangible property or services under a contract or granted by a governmental unit or agency or instrumentality thereof.

'(C) Any interest in a patent or copyright.

'(D) To the extent provided in regulations, any right under a contract (or granted by a governmental unit or an agency or instrumentality thereof) if such right--

'(B) except as provided in subsection (d)(2)(B), any existing indebtedness.

'(C) SPECIAL RULE.--All persons treated as a single taxpayer under section 41(f)(1) shall be so treated for purposes of this paragraph.

'(B) TRANSACTIONS COVERED.--The transactions described in this subparagraph are--

'(B) TREATMENT OF RENEWALS.--Any renewal of a franchise, trademark, or trade name (or of a license, a permit, or other right referred to in subsection (d)(1)(D)) shall be treated as an acquisition. The preceding sentence shall only apply with respect to costs incurred in connection with such renewal.

'(C) CERTAIN AMOUNTS NOT TAKEN INTO ACCOUNT.--Any amount to which section 1253(d)(1) applies shall not be taken into account under this section.

'(B) the amount required to be capitalized under section 848 in connection with such transaction.

'(B) EXCEPTION WHERE GAIN RECOGNIZED.--If--

'(C) RELATED PERSON DEFINED.--For purposes of this paragraph--

'(E) SPECIAL RULE FOR PARTNERSHIPS.--With respect to any increase in the basis of partnership property under section 732, 734, or 743, determinations under this paragraph shall be made at the partner level and each partner shall be treated as having owned and used such partner's proportionate share of the partnership assets.

'(F) ANTI-ABUSE RULES.--The term 'amortizable section 197 intangible' does not include any section 197 intangible acquired in a transaction, one of the principal purposes of which is to avoid the requirement of subsection (c)(1) that the intangible be acquired after the date of the enactment of this section or to avoid the provisions of subparagraph (A).

'(B) COMPUTER SOFTWARE.--For purposes of this section, the term 'computer software' has the meaning given to such term by section 197(e)(3)(B); except that such term shall not include any such software which is an amortizable section 197 intangible.

'(B) the entire adjusted basis shall be taken into account in determining the depreciation deduction (if any) with respect to the property subject to the lease.'

'(B) the retiring or deceased partner was a general partner in the partnership.'

(B) by striking 'section 731, 736, or 741' each place it appears and inserting 'section 731 or 741'.

(B) Section 736 is amended by striking subsection (c).

'(B) such overpayment is refunded within 45 days after such claim is filed,

'(B) the travel of the spouse, dependent, or other individual is for a bona fide business purpose, and

'(C) such expenses would otherwise be deductible by the spouse, dependent, or other individual.'

'(B) the termination date designated by the State and local governments as provided for in their nomination, or

'(C) the date the appropriate Secretary revokes the designation.

'(B) is not complying substantially with, or fails to make progress in achieving the benchmarks set forth in, the strategic plan under subsection (f)(2).

'(B) to provide the assurances described in paragraph (3),

'(B) describes the process by which the affected community is a full partner in the process of developing and implementing the plan and the extent to which local institutions and organizations have contributed to the planning process,

'(C) identifies the amount of State, local, and private resources that will be available in the nominated area and the private/public partnerships to be used, which may include participation by, and cooperation with, universities, medical centers, and other private and public entities,

'(D) identifies the funding requested under any Federal program in support of the proposed economic, human, community, and physical development and related activities,

'(E) identifies baselines, methods, and benchmarks for measuring the success of carrying out the strategic plan, including the extent to which poor persons and families will be empowered to become economically self-sufficient, and

'(F) does not include any action to assist any establishment in relocating from one area outside the nominated area to the nominated area, except that assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary is permitted if--

'(B) has a boundary which is continuous, or, except in the case of a rural area located in more than 1 State, consists of not more than 3 noncontiguous parcels,

'(C)(i) in the case of an urban area, is located entirely within no more than 2 contiguous States, and

'(B) for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent, and

'(C) for at least 50 percent of the population census tracts within the nominated area is not less than 35 percent.

'(B) The 25 percent threshold in subsection (a)(4)(B).

'(C) The 35 percent threshold in subsection (a)(4)(C).

'(B) the Secretary of Agriculture in the case of any nominated area which is located in a rural area.

'(B) determined by the Secretary of Agriculture, after consultation with the Secretary of Commerce, to be a rural area.

'(B) INDIAN RESERVATION DEFINED.--The term 'Indian reservation' has the meaning given such term by section 168(j)(6).

'(B) any combination of political subdivisions described in subparagraph (A) recognized by the appropriate Secretary.

'(B) such term includes any trades or businesses which would qualify as an enterprise zone business (determined after the modification of subparagraph (A)) if such trades or businesses were separately incorporated.

'(B) $20,000,000 with respect to all empowerment zones and enterprise communities.

'(B) any failure to meet such requirements is corrected within a reasonable period after such failure is first discovered.

'(B) the principal user of such facility ceases to be an enterprise zone business (as defined in subsection (b)).

'(B) COORDINATION WITH PARAGRAPH (2).--The $15,000 amount in paragraph (2) shall be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section 51.

'(B) the principal place of abode of such employee while performing such services is within such empowerment zone.

'(B) any 5-percent owner (as defined in section 416(i)(1)(B)),

'(C) any individual employed by the employer for less than 90 days,

'(D) any individual employed by the employer at any facility described in section 144(c)(6)(B), and

'(E) any individual employed by the employer in a trade or business the principal activity of which is farming (within the meaning of subparagraph (A) or (B) of section 2032A(e)(5)), but only if, as of the close of the taxable year, the sum of--

'(B) the cost of section 179 property which is qualified zone property placed in service during the taxable year, and

'(B) at least 50 percent of the gross rental income from the real property is from enterprise zone businesses.

'(B) any trade or business the principal activity of which is farming (within the meaning of subparagraphs (A) or (B) of section 2032A(e)(5)), but only if, as of the close of the preceding taxable year, the sum of--

'(B) the original use of which in an empowerment zone commences with the taxpayer, and

'(C) substantially all of the use of which is in an empowerment zone and is in the active conduct of a qualified business by the taxpayer in such zone.

(B) by striking 'TARGETED JOBS CREDIT' in the subsection heading and inserting 'EMPLOYMENT CREDITS'.

(B) the amount of which is available for use by such corporation for at least 10 years,

(C) which is to be used by such corporation for qualified low-income assistance within its operational area, and

(D) which is designated by such corporation for purposes of this section.

(B) the principal purposes of which include promoting employment of, and business opportunities for, low-income individuals who are residents of the operational area, and

(C) which is selected by the Secretary of Housing and Urban Development for purposes of this section.

(B) The unemployment rate (as determined by the appropriate available data) is not less than the national unemployment rate.

(C) The median family income of residents of such area does not exceed 80 percent of the median gross income of residents of the jurisdiction of the local government which includes such area.

'(B) section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)).

'(B) qualified employee health insurance costs paid or incurred during such taxable year, over

'(B) COORDINATION WITH TARGETED JOBS CREDIT.--The term 'qualified wages' shall not include wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer if any portion of such wages is taken into account in determining the credit under section 51.

'(B) EXCEPTION FOR AMOUNTS PAID UNDER SALARY REDUCTION ARRANGEMENTS.--No amount paid or incurred for health insurance pursuant to a salary reduction arrangement shall be taken into account under subparagraph (A).

'(B) substantially all of the services performed during such period by such employee for such employer are performed within an Indian reservation, and

'(C) the principal place of abode of such employee while performing such services is on or near the reservation in which the services are performed.

'(B) any 5-percent owner (as defined in section 416(i)(1)(B)), and

'(C) any individual if the services performed by such individual for the employer involve the conduct of class I, II, or III gaming as defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703), or are performed in a building housing such gaming activity.

'(B) the tax under this chapter for the taxable year in which such employment is terminated shall be increased by the aggregate credits (if any) allowed under section 38(a) for prior taxable years by reason of wages (or qualified employee health insurance costs) taken into account with respect to such employee.

'(B) determining the amount of the tax imposed by section 55.

'(B) The credit (if any) determined under this section with respect to each such employer shall be its proportionate share of the wages and qualified employee health insurance costs giving rise to such credit.

'(C) APPLICABLE STUDENT LOAN.--For purposes of this paragraph, the term 'applicable student loan' means--

(B) in clause (ii), by striking 'under part E' and inserting 'under subpart 1 of part A, or part D or E,';

(B) in paragraph (4)--

(B) on which no tax was imposed by section 4131 of the Internal Revenue Code of 1986 (or, if such tax was imposed, was credited or refunded), and

(C) which is held on such date by any person for sale or use,

(B) METHOD OF PAYMENT.--The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

(C) TIME FOR PAYMENT.--The tax imposed by paragraph (1) shall be paid on or before the last day of the 6th month beginning after the date of the enactment of this Act.

'(B) in the case of any reimbursement through a health maintenance organization, at the same rate as health maintenance organizations are required to reimburse hospitals for such services for individuals not covered by such a plan (determined without regard to any government-supported individuals exempt from such rate), or

'(C) in the case of any reimbursement through any corporation organized under Article 43 of the New York State Insurance Law, at the same rate as any such corporation is required to reimburse hospitals for such services for individuals not covered by such a plan.

'(B) exceed the amount by which the wages (excluding tips) paid by the employer to the employee during such month are less than the total amount which would be payable (with respect to such employment) at the minimum wage rate applicable to such individual under section 6(a)(1) of the Fair Labor Standards Act of 1938 (determined without regard to section 3(m) of such Act).

'(B) CONTRACTUAL REQUIREMENTS.--A contract meets the requirements of this subparagraph if--

'(C) SPECIAL EXCEPTION.--The provisions of subparagraph (A) shall not apply to any State which on July 1, 1993, was not, pursuant to a contract, furnishing the Secretary of Health and Human Services information concerning individuals with respect to whom death certificates (or equivalent documents maintained by the State or any subdivision thereof) have been officially filed with it.'

(B) it is likely that such State will enter into such an agreement during the extension period under this paragraph.

(B) in subparagraph (B)(ii), in the matter preceding subclause (I) by inserting ', above an amount (if any) specified by the Secretary of Health and Human Services,' after 'wages'; and

(C) in subparagraph (F)--

(B) by inserting '(without regard to entitlement under section 226)' after 'individual is, or'; and

'(B) all employees of the members of an affiliated service group (as defined in section 414(m)) shall be treated as employed by a single employer, and

'(C) leased employees (as defined in section 414(n)(2)) shall be treated as employees of the person for whom they perform services to the extent they are so treated under section 414(n). '.

(C) in subparagraph (A)(iii), by striking 'by virtue of employment' and all that follows through 'calendar year or' and inserting 'by virtue of current employment status with an employer that does not have 20 or more individuals in current employment status for each working day in each of 20 or more calendar weeks in the current calendar year and';

(D) in subparagraph (A)(v), by inserting ', without regard to section 5000(d) of such Code' before the period at the end of each subparagraph;

(E) in the heading of subparagraph (B), by striking 'ACTIVE';

(F) in subparagraph (B)(i), by striking 'clause (iv)(II)) may not take into account that an active individual (as defined in clause (iv)(I))' and inserting 'clause (iv)) may not take into account that an individual (or a member of the individual's family) who is covered under the plan by virtue of the individual's current employment status with an employer';

(G) by amending clause (iv) of subparagraph (B) to read as follows:

(ii) by amending paragraph (1) of subsection (b) to read as follows: