S 3018 ISCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.CommentsClose CommentsPermalink

February 23, 2010CommentsClose CommentsPermalink

Mr. WYDEN (for himself and Mr. GREGG) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the ‘Bipartisan Tax Fairness and Simplification Act of 2010’.CommentsClose CommentsPermalink





(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink





(c) Table of Contents- The table of contents for this Act is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title; amendment of 1986 Code; table of contents.CommentsClose CommentsPermalink





Sec. 2. Purpose.CommentsClose CommentsPermalink

TITLE I--INDIVIDUAL INCOME TAX REFORMS

Sec. 101. 3 progressive individual income tax rates.CommentsClose CommentsPermalink





Sec. 102. Increase in basic standard deduction.CommentsClose CommentsPermalink





Sec. 103. Permanent extension of expansion of earned income credit.CommentsClose CommentsPermalink





Sec. 104. Permanent extension of expansion of dependent care credit.CommentsClose CommentsPermalink





Sec. 105. Permanent extension of child tax credit.CommentsClose CommentsPermalink





Sec. 106. Permanent repeal of limitations on personal exemptions and itemized deductions.CommentsClose CommentsPermalink





Sec. 107. Elimination of individual miscellaneous itemized deductions.CommentsClose CommentsPermalink





Sec. 108. Treatment of capital gains.CommentsClose CommentsPermalink





Sec. 109. Partial exclusion of dividends received by individuals.CommentsClose CommentsPermalink





Sec. 110. Nonrefundable personal credit for interest on State and local bonds.CommentsClose CommentsPermalink





Sec. 111. Retirement savings accounts.CommentsClose CommentsPermalink





Sec. 112. Lifetime Savings Accounts.CommentsClose CommentsPermalink





Sec. 113. Consolidation of tax credits and deductions for education expenses.CommentsClose CommentsPermalink





Sec. 114. Termination of various exclusions, exemptions, deductions, and credits.CommentsClose CommentsPermalink





Sec. 115. Simplified tax return preparation.CommentsClose CommentsPermalink

TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

Sec. 201. Corporate flat tax.CommentsClose CommentsPermalink





Sec. 202. Treatment of travel on corporate aircraft.CommentsClose CommentsPermalink





Sec. 203. Unlimited expensing of depreciable assets and inventories for certain small businesses.CommentsClose CommentsPermalink





Sec. 204. Termination of various preferential treatments.CommentsClose CommentsPermalink





Sec. 205. Pass-through business entity transparency.CommentsClose CommentsPermalink





Sec. 206. Modification of effective date of leasing provisions of the American Jobs Creation Act of 2004.CommentsClose CommentsPermalink





Sec. 207. Revaluation of LIFO inventories of large integrated oil companies.CommentsClose CommentsPermalink





Sec. 208. Modifications of foreign tax credit rules applicable to large integrated oil companies which are dual capacity taxpayers.CommentsClose CommentsPermalink





Sec. 209. Repeal of lower of cost or market value of inventory rule.CommentsClose CommentsPermalink





Sec. 210. Reinstitution of per country foreign tax credit.CommentsClose CommentsPermalink





Sec. 211. Application of rules treating inverted corporations as domestic corporations to certain transactions occurring after March 20, 2002.CommentsClose CommentsPermalink





Sec. 212. Indexing corporate interest deduction for inflation.CommentsClose CommentsPermalink





Sec. 213. Prohibition of advance refunding of bonds.CommentsClose CommentsPermalink





Sec. 214. CBO study on government spending on businesses.CommentsClose CommentsPermalink

TITLE III--REPEAL OF ALTERNATIVE MINIMUM TAX

Sec. 301. Repeal of alternative minimum tax.CommentsClose CommentsPermalink

TITLE IV--OTHER PROVISIONS

Subtitle A--Improvements in Tax Compliance

Sec. 401. Information reporting on payments to corporations.CommentsClose CommentsPermalink





Sec. 402. Additional reporting requirements by regulation.CommentsClose CommentsPermalink





Sec. 403. Increase in information return penalties.CommentsClose CommentsPermalink





Sec. 404. E-filing requirement for certain large organizations.CommentsClose CommentsPermalink





Sec. 405. Implementation of standards clarifying when employee leasing companies can be held liable for their clients’ Federal employment taxes.CommentsClose CommentsPermalink





Sec. 406. Expansion of IRS access to information in National Directory of New Hires for tax administration purposes.CommentsClose CommentsPermalink





Sec. 407. Modification of criminal penalties for willful failures involving tax payments and filing requirements.CommentsClose CommentsPermalink





Sec. 408. Penalties for failure to file certain returns electronically.CommentsClose CommentsPermalink





Sec. 409. Reporting on identification of beneficial owners of certain foreign financial accounts.CommentsClose CommentsPermalink

Subtitle B--Requiring Economic Substance

Sec. 411. Clarification of economic substance doctrine.CommentsClose CommentsPermalink





Sec. 412. Penalty for understatements attributable to transactions lacking economic substance, etc.CommentsClose CommentsPermalink





Sec. 413. Denial of deduction for interest on underpayments attributable to noneconomic substance transactions.CommentsClose CommentsPermalink

Subtitle C--Internet Gambling Taxation and Regulation

Sec. 421. Tax on Internet gambling; licensee information reporting.CommentsClose CommentsPermalink





Sec. 422. Withholding from certain gambling winnings.CommentsClose CommentsPermalink





Sec. 423. Withholding of tax on nonresident aliens.CommentsClose CommentsPermalink





Sec. 424. Territorial extent.CommentsClose CommentsPermalink





Sec. 425. Federal licensing requirement for Internet gambling operators.CommentsClose CommentsPermalink





Sec. 426. Report required.CommentsClose CommentsPermalink





Sec. 427. Effective date.CommentsClose CommentsPermalink

Subtitle D--Miscellaneous

Sec. 431. Denial of deduction for punitive damages.CommentsClose CommentsPermalink





Sec. 432. Application of medicare payroll tax to all State and local government employees.CommentsClose CommentsPermalink





Sec. 433. Corrections for CPI overstatement in cost-of-living indexation.CommentsClose CommentsPermalink

TITLE V--TECHNICAL AND CONFORMING AMENDMENTS

Sec. 501. Technical and conforming amendments.CommentsClose CommentsPermalink

SEC. 2. PURPOSE.

The purpose of this Act is to amend the Internal Revenue Code of 1986--CommentsClose CommentsPermalink





(1) to make the Federal individual income tax system simpler, fairer, and more transparent by, among other reforms--CommentsClose CommentsPermalink





(A) repealing the individual alternative minimum tax,CommentsClose CommentsPermalink





(B) increasing the basic standard deduction and maintaining itemized deductions for mortgage interest and charitable contributions, andCommentsClose CommentsPermalink





(C) reducing the number of exclusions, exemptions, deductions, and credits,CommentsClose CommentsPermalink





(2) to make the Federal corporate income tax rate a flat 24 percent, repeal the corporate alternative minimum tax, and eliminate special tax preferences that favor particular types of businesses or activities, andCommentsClose CommentsPermalink





(3) to partially offset the Federal budget deficit through the increased fiscal responsibility resulting from these reforms.CommentsClose CommentsPermalink

TITLE I--INDIVIDUAL INCOME TAX REFORMSCommentsClose CommentsPermalink

SEC. 101. 3 PROGRESSIVE INDIVIDUAL INCOME TAX RATES.

(a) Married Individuals Filing Joint Returns and Surviving Spouses- The table contained in section 1(a) is amended to read as follows:CommentsClose CommentsPermalink

‘If taxable income is:CommentsClose CommentsPermalink

The tax is:CommentsClose CommentsPermalink

Not over $75,000CommentsClose CommentsPermalink

15% of taxable income.CommentsClose CommentsPermalink

Over $75,000 but not over $140,000CommentsClose CommentsPermalink

$11,250, plus 25% of the excess over $75,000.CommentsClose CommentsPermalink

Over $140,000CommentsClose CommentsPermalink

$27,500, plus 35% of the excess over $140,000’.CommentsClose CommentsPermalink

(b) Heads of Households- The table contained in section 1(b) is amended to read as follows:CommentsClose CommentsPermalink

‘If taxable income is:CommentsClose CommentsPermalink

The tax is:CommentsClose CommentsPermalink

Not over $56,250CommentsClose CommentsPermalink

15% of taxable income.CommentsClose CommentsPermalink

Over $56,250 but not over $105,000CommentsClose CommentsPermalink

$8,437.50, plus 25% of the excess over $56,250.CommentsClose CommentsPermalink

Over $105,000CommentsClose CommentsPermalink

$20,625, plus 35% of the excess over $105,000’.CommentsClose CommentsPermalink

(c) Unmarried Individuals (Other Than Surviving Spouses and Heads of Households)- The table contained in section 1(c) is amended to read as follows:CommentsClose CommentsPermalink

‘If taxable income is:CommentsClose CommentsPermalink

The tax is:CommentsClose CommentsPermalink

Not over $37,500CommentsClose CommentsPermalink

15% of taxable income.CommentsClose CommentsPermalink

Over $37,500 but not over $70,000CommentsClose CommentsPermalink

$5,625, plus 25% of the excess over $37,500.CommentsClose CommentsPermalink

Over $70,000CommentsClose CommentsPermalink

$13,750, plus 35% of the excess over $70,000’.CommentsClose CommentsPermalink

(d) Married Individuals Filing Separate Returns- The table contained in section 1(d) is amended to read as follows:CommentsClose CommentsPermalink

‘If taxable income is:CommentsClose CommentsPermalink

The tax is:CommentsClose CommentsPermalink

Not over $37,500CommentsClose CommentsPermalink

15% of taxable income.CommentsClose CommentsPermalink

Over $37,500 but not over $70,000CommentsClose CommentsPermalink

$5,625, plus 25% of the excess over $37,500.CommentsClose CommentsPermalink

Over $70,000CommentsClose CommentsPermalink

$13,750, plus 35% of the excess over $70,000’.CommentsClose CommentsPermalink

(e) Conforming Amendments to Inflation Adjustment- Section 1(f) is amended--CommentsClose CommentsPermalink





(1) by striking ‘1993’ in paragraph (1) and inserting ‘2011’,CommentsClose CommentsPermalink





(2) by striking ‘except as provided in paragraph (8)’ in paragraph (2)(A),CommentsClose CommentsPermalink





(3) by striking ‘1992’ in paragraph (3)(B) and inserting ‘2010’,CommentsClose CommentsPermalink





(4) by striking paragraphs (7) and (8), andCommentsClose CommentsPermalink





(5) by striking ‘Phaseout of Marriage Penalty in 15-Percent Bracket;’ in the heading thereof.CommentsClose CommentsPermalink





(f) Additional Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 1 is amended by striking subsection (i).CommentsClose CommentsPermalink





(2) The Internal Revenue Code of 1986 is amended by striking ‘calendar year 1992’ each place it appears and inserting ‘calendar year 2010’.CommentsClose CommentsPermalink





(g) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 102. INCREASE IN BASIC STANDARD DEDUCTION.

(a) In General- Paragraph (2) of section 63(c) (defining standard deduction) is amended to read as follows:CommentsClose CommentsPermalink





‘(2) BASIC STANDARD DEDUCTION- For purposes of paragraph (1), the basic standard deduction is--CommentsClose CommentsPermalink





‘(A) 200 percent of the dollar amount in effect under subparagraph (C) for the taxable year in the case of--CommentsClose CommentsPermalink





‘(i) a joint return, orCommentsClose CommentsPermalink





‘(ii) a surviving spouse (as defined in section 2(a)),CommentsClose CommentsPermalink





‘(B) $22,500 in the case of a head of household (as defined in section 2(b)), orCommentsClose CommentsPermalink





‘(C) $15,000 in any other case, reduced by any deduction allowed under section 62(a)(22) for such taxable year.’.CommentsClose CommentsPermalink





(b) Conforming Amendment to Inflation Adjustment- Section 63(c)(4)(B)(i) is amended by striking ‘(2)(B), (2)(C), or’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 103. PERMANENT EXTENSION OF EXPANSION OF EARNED INCOME CREDIT.

(a) Repeal of EGTRRA Sunset- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of such Act) shall not apply to section 303 of such Act (relating to earned income tax credit).CommentsClose CommentsPermalink





(b) Effective Date- Subsection (a) shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 104. PERMANENT EXTENSION OF EXPANSION OF DEPENDENT CARE CREDIT.

(a) Repeal of EGTRRA Sunset- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of such Act) shall not apply to section 204 of such Act (relating to dependent care credit).CommentsClose CommentsPermalink





(b) Effective Date- Subsection (a) shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 105. PERMANENT EXTENSION OF CHILD TAX CREDIT.

(a) Repeal of EGTRRA Sunset- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of such Act) shall not apply to section 201 (relating to modifications to child tax credit) and 203 (relating to refunds disregarded in the administration of federal programs and federally assisted programs) of such Act.CommentsClose CommentsPermalink





(b) Effective Date- Subsection (a) shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 106. PERMANENT REPEAL OF LIMITATIONS ON PERSONAL EXEMPTIONS AND ITEMIZED DEDUCTIONS.

(a) Repeal of EGTRRA Sunset- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of such Act) shall not apply to section 102 (relating to repeal of phaseout of personal exemptions) and 103 (relating to phaseout of overall limitation on itemized deductions) of such Act.CommentsClose CommentsPermalink





(b) Effective Date- Subsection (a) shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 107. ELIMINATION OF INDIVIDUAL MISCELLANEOUS ITEMIZED DEDUCTIONS.

(a) In General- Subsection (a) of section 67 is amended to read as follows:CommentsClose CommentsPermalink





‘(a) General Rule- In the case of an individual, miscellaneous deductions shall not be allowed for any taxable year beginning after December 31, 2010.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) The heading for section 67 is amended by striking ‘2-percent floor on’ and inserting ‘treatment of’.CommentsClose CommentsPermalink





(2) The item relating to section 67 in the table of sections for part I of subchapter B of chapter 1 is amended by striking ‘2-percent floor on’ and inserting ‘Treatment of’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 108. TREATMENT OF CAPITAL GAINS.

(a) Partial Exclusion- Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting after section 139B the following new section:CommentsClose CommentsPermalink

‘SEC. 139C. CAPITAL GAINS PARTIAL EXCLUSION.

‘For any taxable year, gross income shall not include--CommentsClose CommentsPermalink





‘(1) 35 percent of so much of any gain from the sale or exchange during such taxable year of capital assets held for more than 6 months but not more than 1 year as does not exceed $500,000, plusCommentsClose CommentsPermalink





‘(2) 35 percent of any long-term capital gain for such taxable year (determined after the application of section 1202).’.CommentsClose CommentsPermalink





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





‘Sec. 139C. Capital gains partial exclusion.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 109. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED BY INDIVIDUALS.

(a) General Rule- Part III of subchapter B of chapter 1 is amended by inserting after section 115 the following new section:CommentsClose CommentsPermalink

‘SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED BY INDIVIDUALS.

‘(a) Exclusion From Gross Income- Gross income does not include 35 percent of the qualified dividend income received during the taxable year by an individual.CommentsClose CommentsPermalink





‘(b) Qualified Dividend Income- For purposes of this subsection--CommentsClose CommentsPermalink





‘(1) IN GENERAL- The term ‘qualified dividend income’ means dividends received with respect to any share of stock of--CommentsClose CommentsPermalink





‘(A) any domestic corporation, orCommentsClose CommentsPermalink





‘(B) any foreign corporation but only if such share of stock is readily tradable on an established securities market.CommentsClose CommentsPermalink





‘(2) CERTAIN DIVIDENDS EXCLUDED- Such term shall not include--CommentsClose CommentsPermalink





‘(A) any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,CommentsClose CommentsPermalink





‘(B) any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), andCommentsClose CommentsPermalink





‘(C) any dividend described in section 404(k).CommentsClose CommentsPermalink





‘(3) EXCLUSION OF DIVIDENDS OF CERTAIN FOREIGN CORPORATIONS- Such term shall not include any dividend from a foreign corporation which for the taxable year of the corporation in which the distribution was made, or the preceding taxable year, is a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or a passive foreign investment company (as defined in section 1297).CommentsClose CommentsPermalink





‘(4) COORDINATION WITH SECTION 246(c)- Such term shall not include any dividend on any share of stock--CommentsClose CommentsPermalink





‘(A) with respect to which the holding period requirements of section 246(c) are not met, orCommentsClose CommentsPermalink





‘(B) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.CommentsClose CommentsPermalink





‘(c) Special Rules-CommentsClose CommentsPermalink





‘(1) AMOUNTS TAKEN INTO ACCOUNT AS INVESTMENT INCOME- Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B).CommentsClose CommentsPermalink





‘(2) COORDINATION WITH FOREIGN TAX CREDIT AND DEDUCTION- No credit shall be allowed under section 901, and no deduction shall be allowed under this chapter, for any taxes paid or accrued with respect to any income excludable under this section.CommentsClose CommentsPermalink





‘(3) EXTRAORDINARY DIVIDENDS- If an individual receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss.CommentsClose CommentsPermalink





‘(4) CERTAIN NONRESIDENT ALIENS INELIGIBLE FOR EXCLUSION- In the case of a nonresident alien individual, subsection (a) shall apply only in determining the tax imposed for the taxable year by sections 871(b)(1) and 877(b).CommentsClose CommentsPermalink





‘(5) EXCLUSION DISREGARDED IN DETERMINING INCOME FOR CERTAIN PURPOSES- Subsection (a) shall not apply for purposes of determining amounts of income under sections 32(i), 86(b), 135(b), 137(b), 219(g), 221(b), 222(b), 408A(c)(3), 469(i), and 530(c), or subpart A of part IV of subchapter A.CommentsClose CommentsPermalink





‘(6) TREATMENT OF DIVIDENDS FROM REGULATED INVESTMENT COMPANIES AND REAL ESTATE INVESTMENT TRUSTS- A dividend from a regulated investment company or real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.’.CommentsClose CommentsPermalink





(b) Exclusion of Dividends From Investment Income- Subparagraph (B) of section 163(d)(4) (defining net investment income) is amended by adding at the end the following flush sentence:CommentsClose CommentsPermalink





‘Such term shall include qualified dividend income (as defined in section 116(b)) only to the extent the taxpayer elects to treat such income as investment income for purposes of this subsection.’.CommentsClose CommentsPermalink





(c) Treatment of Dividends From Regulated Investment Companies-CommentsClose CommentsPermalink





(1) Subsection (a) of section 854 (relating to dividends received from regulated investment companies) is amended by inserting ‘section 116 (relating to partial exclusion of dividends received by individuals) and’ after ‘For purposes of’.CommentsClose CommentsPermalink





(2) Paragraph (1) of section 854(b) (relating to other dividends) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:CommentsClose CommentsPermalink





‘(B) EXCLUSION UNDER SECTION 116-CommentsClose CommentsPermalink





‘(i) IN GENERAL- If the aggregate dividends received by a regulated investment company during any taxable year are less than 95 percent of its gross income, then, in computing the exclusion under section 116, rules similar to the rules of subparagraph (A) shall apply.CommentsClose CommentsPermalink





‘(ii) GROSS INCOME- For purposes of clause (i), in the case of 1 or more sales or other dispositions of stock or securities, the term ‘gross income’ includes only the excess of--CommentsClose CommentsPermalink





‘(I) the net short-term capital gain from such sales or dispositions, overCommentsClose CommentsPermalink





‘(II) the net long-term capital loss from such sales or dispositions.’.CommentsClose CommentsPermalink





(3) Subparagraph (C) of section 854(b)(1), as redesignated by paragraph (2), is amended by striking ‘subparagraph (A)’ and inserting ‘subparagraph (A) or (B)’.CommentsClose CommentsPermalink





(4) Paragraph (2) of section 854(b) is amended by inserting ‘the exclusion under section 116 and’ after ‘for purposes of’.CommentsClose CommentsPermalink





(5) Subsection (b) of section 854 is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(5) COORDINATION WITH SECTION 116- For purposes of paragraph (1)(B), an amount shall be treated as a dividend only if the amount is qualified dividend income (within the meaning of section 116(b)).’.CommentsClose CommentsPermalink





(d) Treatment of Dividends Received From Real Estate Investment Trusts- Section 857(c) (relating to restrictions applicable to dividends received from real estate investment trusts) is amended to read as follows:CommentsClose CommentsPermalink





‘(c) Restrictions Applicable to Dividends Received From Real Estate Investment Trusts-CommentsClose CommentsPermalink





‘(1) SECTION 243- For purposes of section 243 (relating to deductions for dividends received by corporations), a dividend received from a real estate investment trust which meets the requirements of this part shall not be considered a dividend.CommentsClose CommentsPermalink





‘(2) SECTION 116- For purposes of section 116 (relating to exclusion of dividends), rules similar to the rules of section 854(b)(1)(B) shall apply to dividends received from a real estate trust which meets the requirements of this part.’.CommentsClose CommentsPermalink





(e) Conforming Amendments-CommentsClose CommentsPermalink





(1) Subsection (f) of section 301 is amended adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(4) For partial exclusion from gross income of dividends received by individuals, see section 116.’.CommentsClose CommentsPermalink





(2) Paragraph (1) of section 306(a) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) TREATMENT AS DIVIDEND- For purposes of section 116, any amount treated as ordinary income under this paragraph shall be treated as a dividend received from the corporation.’.CommentsClose CommentsPermalink





(3)(A) Subpart C of part II of subchapter C of chapter 1 (relating to collapsible corporations) is repealed.CommentsClose CommentsPermalink





(B)(i) Section 338(h) is amended by striking paragraph (14).CommentsClose CommentsPermalink





(ii) Sections 467(c)(5)(C), 1255(b)(2), and 1257(d) are each amended by striking ‘, 341(e)(12),’.CommentsClose CommentsPermalink





(iii) The table of subparts for part II of subchapter C of chapter 1 is amended by striking the item related to subpart C.CommentsClose CommentsPermalink





(4) Section 531(a) is amended by inserting ‘90 percent (80 percent in the case of taxable years beginning after 2007) of’ after ‘equal to’.CommentsClose CommentsPermalink





(5) Section 541(a) is amended by inserting ‘90 percent (80 percent in the case of taxable years beginning after 2007) of’ after ‘equal to’.CommentsClose CommentsPermalink





(6) Section 584(c) is amended by adding at the end the following new flush sentence:CommentsClose CommentsPermalink





‘The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such paragraph as having been received by such participant.’.CommentsClose CommentsPermalink





(7) Section 643(a) is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph:CommentsClose CommentsPermalink





‘(7) EXCLUDED DIVIDENDS- There shall be included the amount of any dividends excluded from gross income under section 116 (relating to partial exclusion of dividends).’.CommentsClose CommentsPermalink





(8) Paragraph (5) of section 702(a) is amended to read as follows:CommentsClose CommentsPermalink





‘(5) dividends with respect to which section 116 or part VII of subchapter B applies,’.CommentsClose CommentsPermalink





(f) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 110. NONREFUNDABLE PERSONAL CREDIT FOR INTEREST ON STATE AND LOCAL BONDS.

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

‘SEC. 25E. INTEREST ON STATE AND LOCAL BONDS.

‘(a) In General- If a taxpayer other than a corporation holds a State or local bond on one or more interest payment dates of the bond during any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to such dates.CommentsClose CommentsPermalink





‘(b) Amount of Credit- The amount of the credit determined under this subsection with respect to any interest payment date for a State or local bond is 25 percent of the amount of interest payable by the issuer with respect to such date.CommentsClose CommentsPermalink





‘(c) State or Local Bond-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For purposes of this section, the term ‘State or local bond’ means any bond issued as part of an issue if the interest on such bond would (but for this section) be excludable from gross income under section 103.CommentsClose CommentsPermalink





‘(2) APPLICABLE RULES- For purposes of applying paragraph (1)--CommentsClose CommentsPermalink





‘(A) for purposes of section 149(b), a State or local bond shall not be treated as federally guaranteed by reason of the credit allowed under subsection (a), andCommentsClose CommentsPermalink





‘(B) for purposes of section 148, the yield on a State or local bond shall be determined without regard to the credit allowed under subsection (a).CommentsClose CommentsPermalink





‘(d) Interest Payment Date- For purposes of this section, the term ‘interest payment date’ means any date on which the holder of record of the State or local bond is entitled to a payment of interest under such bond.CommentsClose CommentsPermalink





‘(e) Special Rules-CommentsClose CommentsPermalink





‘(1) INTEREST ON STATE OR LOCAL BONDS INCLUDIBLE IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES- For purposes of this title, interest on any State or local bond shall be includible in gross income.CommentsClose CommentsPermalink





‘(2) APPLICATION OF CERTAIN RULES- Rules similar to the rules of subsections (f), (g), (h), and (i) of section 54A shall apply for purposes of the credit allowed under subsection (a).CommentsClose CommentsPermalink





‘(f) Regulations- The Secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 103(b) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(4) INTEREST FOR WHICH CREDIT IS ALLOWABLE- The interest on any State or local bond for which a credit under seciton 25E is allowable.’.CommentsClose CommentsPermalink





(2) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 25E. Interest on State and local bonds.’.CommentsClose CommentsPermalink





(c) Transitional Coordination With State Law- Except as otherwise provided by a State after the date of the enactment of this Act, the interest on any State or local bond (as defined in section 25E of the Internal Revenue Code of 1986, as added by this section) and the amount of any credit determined under such section with respect to such bond shall be treated for purposes of the income tax laws of such State as being exempt from Federal income tax.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall apply to obligations issued after December 31, 2010.CommentsClose CommentsPermalink

SEC. 111. RETIREMENT SAVINGS ACCOUNTS.

(a) In General- Section 408A (relating to Roth IRAs) is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 408A. RETIREMENT SAVINGS ACCOUNTS.

‘(a) In General- Except as provided in this section, a retirement savings account shall be treated for purposes of this title in the same manner as an individual retirement plan.CommentsClose CommentsPermalink





‘(b) Retirement Savings Account- For purposes of this title, the term ‘retirement savings account’ means an individual retirement plan (as defined in section 7701(a)(37)) which--CommentsClose CommentsPermalink





‘(1) is designated (in such manner as the Secretary may prescribe) at the time of establishment of the plan as a retirement savings account, andCommentsClose CommentsPermalink





‘(2) does not accept any contribution (other than a qualified rollover contribution) which is not in cash.CommentsClose CommentsPermalink





‘(c) Treatment of Contributions-CommentsClose CommentsPermalink





‘(1) CONTRIBUTION LIMIT- Notwithstanding subsections (a)(1) and (b)(2)(A) of section 408, the aggregate amount of contributions for any taxable year to all retirement savings accounts maintained for the benefit of an individual shall not exceed the lesser of--CommentsClose CommentsPermalink





‘(A) $5,000, orCommentsClose CommentsPermalink





‘(B) the amount of compensation includible in the individual’s gross income for such taxable year.CommentsClose CommentsPermalink





‘(2) SPECIAL RULE FOR CERTAIN MARRIED INDIVIDUALS- In the case of any individual who files a joint return for the taxable year, the amount taken into account under paragraph (1)(B) shall be increased by the excess (if any) of--CommentsClose CommentsPermalink





‘(A) the compensation includible in the gross income of such individual’s spouse for the taxable year, overCommentsClose CommentsPermalink





‘(B) the aggregate amount of contributions for the taxable year to all retirement savings accounts maintained for the benefit of such spouse.CommentsClose CommentsPermalink





‘(3) CONTRIBUTIONS PERMITTED AFTER AGE 70 1/2 - Contributions to a retirement savings account may be made even after the individual for whom the account is maintained has attained age 70 1/2 .CommentsClose CommentsPermalink





‘(4) MANDATORY DISTRIBUTION RULES NOT TO APPLY BEFORE DEATH- Notwithstanding subsections (a)(6) and (b)(3) of section 408 (relating to required distributions), the following provisions shall not apply to any retirement savings account:CommentsClose CommentsPermalink





‘(A) Section 401(a)(9)(A).CommentsClose CommentsPermalink





‘(B) The incidental death benefit requirements of section 401(a).CommentsClose CommentsPermalink





‘(5) ROLLOVER CONTRIBUTIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- No rollover contribution may be made to a retirement savings account unless it is a qualified rollover contribution.CommentsClose CommentsPermalink





‘(B) COORDINATION WITH LIMIT- A qualified rollover contribution shall not be taken into account for purposes of paragraph (1).CommentsClose CommentsPermalink





‘(6) ROLLOVERS FROM PLANS WITH TAXABLE DISTRIBUTIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Notwithstanding sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16), in the case of any contribution to which this paragraph applies--CommentsClose CommentsPermalink





‘(i) there shall be included in gross income any amount which would be includible were it not part of a qualified rollover contribution,CommentsClose CommentsPermalink





‘(ii) section 72(t) shall not apply, andCommentsClose CommentsPermalink





‘(iii) unless the taxpayer elects not to have this clause apply for any taxable year, any amount required to be included in gross income for such taxable year by reason of this paragraph for any contribution before January 1, 2011, shall be so included ratably over the 4-taxable year period beginning with such taxable year.CommentsClose CommentsPermalink





Any election under clause (iii) for any contributions during a taxable year may not be changed after the due date (including extensions of time) for filing the taxpayer’s return for such taxable year.CommentsClose CommentsPermalink





‘(B) CONTRIBUTIONS TO WHICH PARAGRAPH APPLIES- This paragraph shall apply to any qualified rollover contribution to a retirement savings account (other than a rollover contribution from another such account).CommentsClose CommentsPermalink





‘(C) CONVERSIONS OF IRAS- The conversion of an individual retirement plan (other than a retirement savings account) to a retirement savings account shall be treated for purposes of this paragraph as a contribution to which this paragraph applies.CommentsClose CommentsPermalink





‘(D) ADDITIONAL REPORTING REQUIREMENTS- Trustees and plan administrators of eligible retirement plans (as defined in section 402(c)(8)(B)) and retirement savings accounts shall report such information as the Secretary may require to ensure that amounts required to be included in gross income under subparagraph (A) are so included. Such reports shall be made at such time and in such form and manner as the Secretary may require. The Secretary may provide that such information be included as additional information in reports required under section 408(i) or 6047.CommentsClose CommentsPermalink





‘(E) SPECIAL RULES FOR CONTRIBUTIONS TO WHICH A 4-YEAR AVERAGING APPLIES- In the case of a qualified rollover contribution to which subparagraph (A)(iii) applied, the following rules shall apply:CommentsClose CommentsPermalink





‘(i) ACCELERATION OF INCLUSION-CommentsClose CommentsPermalink





‘(I) IN GENERAL- The amount required to be included in gross income for each of the first 3 taxable years in the 4-year period under subparagraph (A)(iii) shall be increased by the aggregate distributions from retirement savings accounts for such taxable year which are allocable under subsection (d)(3) to the portion of such qualified rollover contribution required to be included in gross income under subparagraph (A)(i).CommentsClose CommentsPermalink





‘(II) LIMITATION ON AGGREGATE AMOUNT INCLUDED- The amount required to be included in gross income for any taxable year under subparagraph (A)(iii) shall not exceed the aggregate amount required to be included in gross income under subparagraph (A)(iii) for all taxable years in the 4-year period (without regard to subclause (I)) reduced by amounts included for all preceding taxable years.CommentsClose CommentsPermalink





‘(ii) DEATH OF DISTRIBUTEE-CommentsClose CommentsPermalink





‘(I) IN GENERAL- If the individual required to include amounts in gross income under such subparagraph dies before all of such amounts are included, all remaining amounts shall be included in gross income for the taxable year which includes the date of death.CommentsClose CommentsPermalink





‘(II) SPECIAL RULE FOR SURVIVING SPOUSE- If the spouse of the individual described in subclause (I) acquires the individual’s entire interest in any retirement savings account to which such qualified rollover contribution is properly allocable, the spouse may elect to treat the remaining amounts described in subclause (I) as includible in the spouse’s gross income in the taxable years of the spouse ending with or within the taxable years of such individual in which such amounts would otherwise have been includible. Any such election may not be made or changed after the due date (including extensions of time) for filing the spouse’s return for the taxable year which includes the date of death.CommentsClose CommentsPermalink





‘(F) 5-year HOLDING PERIOD RULES- If--CommentsClose CommentsPermalink





‘(i) any portion of a distribution from a retirement savings account is properly allocable to a qualified rollover contribution with respect to which an amount is includible in gross income under subparagraph (A)(i),CommentsClose CommentsPermalink





‘(ii) such distribution is made during the 5-taxable year period beginning with the taxable year for which such contribution was made, andCommentsClose CommentsPermalink





‘(iii) such distribution is not described in clause (i), (ii), or (iii) of subsection (d)(2)(A),CommentsClose CommentsPermalink





then section 72(t) shall be applied as if such portion were includible in gross income.CommentsClose CommentsPermalink





‘(7) TIME WHEN CONTRIBUTIONS MADE- For purposes of this section, a taxpayer shall be deemed to have made a contribution to a retirement savings account on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).CommentsClose CommentsPermalink





‘(8) COST-OF-LIVING ADJUSTMENT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2011, the $5,000 amount under paragraph (1)(A) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(i) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





‘(B) ROUNDING RULES- If any amount after adjustment under subparagraph (A) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.CommentsClose CommentsPermalink





‘(d) Distribution Rules- For purposes of this title--CommentsClose CommentsPermalink





‘(1) EXCLUSION- Any qualified distribution from a retirement savings account shall not be includible in gross income.CommentsClose CommentsPermalink





‘(2) QUALIFIED DISTRIBUTION- For purposes of this subsection--CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘qualified distribution’ means any payment or distribution--CommentsClose CommentsPermalink





‘(i) made on or after the date on which the individual attains age 58,CommentsClose CommentsPermalink





‘(ii) made to a beneficiary (or to the estate of the individual) on or after the death of the individual,CommentsClose CommentsPermalink





‘(iii) attributable to the individual’s being disabled (within the meaning of section 72(m)(7)), orCommentsClose CommentsPermalink





‘(iv) to which section 72(t)(2)(F) applies (if such payment or distribution is made before January 1, 2014).CommentsClose CommentsPermalink





‘(B) DISTRIBUTIONS OF EXCESS CONTRIBUTIONS AND EARNINGS- The term ‘qualified distribution’ shall not include any distribution of any contribution described in section 408(d)(4) and any net income allocable to the contribution.CommentsClose CommentsPermalink





‘(3) ORDERING RULES- For purposes of applying this section and section 72 to any distribution from a retirement savings account, such distribution shall be treated as made--CommentsClose CommentsPermalink





‘(A) from contributions to the extent that the amount of such distribution, when added to all previous distributions from the retirement savings account, does not exceed the aggregate contributions to the retirement savings account, andCommentsClose CommentsPermalink





‘(B) from such contributions in the following order:CommentsClose CommentsPermalink





‘(i) Contributions other than qualified rollover contributions with respect to which an amount is includible in gross income under subsection (c)(6)(A)(i).CommentsClose CommentsPermalink





‘(ii) Qualified rollover contributions with respect to which an amount is includible in gross income under subsection (c)(6)(A)(i) on a first-in, first-out basis.CommentsClose CommentsPermalink





Any distribution allocated to a qualified rollover contribution under subparagraph (B)(ii) shall be allocated first to the portion of such contribution required to be included in gross income.CommentsClose CommentsPermalink





‘(4) AGGREGATION RULES- Section 408(d)(2) shall be applied separately with respect to retirement savings accounts and other individual retirement plans.CommentsClose CommentsPermalink





‘(e) Qualified Rollover Contribution-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For purposes of this section, the term ‘qualified rollover contribution’ means--CommentsClose CommentsPermalink





‘(A) a rollover contribution to a retirement savings account of an individual from another such account of such individual or such individual’s spouse, or from an individual retirement plan of such individual, but only if such rollover contribution meets the requirements of section 408(d)(3), andCommentsClose CommentsPermalink





‘(B) a rollover contribution described in section 402(c), 402A(c)(3)(A), 403(a)(4), 403(b)(8), or 457(e)(16).CommentsClose CommentsPermalink





‘(2) COORDINATION WITH LIMITATION ON IRA ROLLOVERS- For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a retirement savings account) to a retirement savings account.CommentsClose CommentsPermalink





‘(f) Individual Retirement Plan- For purposes of this section--CommentsClose CommentsPermalink





‘(1) a simplified employee pension or a simple retirement account may not be designated as a retirement savings account, andCommentsClose CommentsPermalink





‘(2) contributions to any such pension or account shall not be taken into account for purposes of subsection (c)(1).CommentsClose CommentsPermalink





‘(g) Compensation- For purposes of this section, the term ‘compensation’ includes earned income (as defined in section 401(c)(2)). Such term does not include any amount received as a pension or annuity and does not include any amount received as deferred compensation. Such term shall include any amount includible in the individual’s gross income under section 71 with respect to a divorce or separation instrument described in section 71(b)(2)(A). For purposes of this subsection, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in section 1402(c)(6).’.CommentsClose CommentsPermalink





(b) Roth IRAs Treated as Retirement Savings Accounts- In the case of any taxable year beginning after December 31, 2010, any Roth IRA (as defined in section 408A(b) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of this Act) shall be treated for purposes of such Code as having been designated at the time of the establishment of the plan as a retirement savings account under section 408A(b) of such Code (as amended by this section).CommentsClose CommentsPermalink





(c) Contributions to Other Individual Retirement Plans Prohibited-CommentsClose CommentsPermalink





(1) INDIVIDUAL RETIREMENT ACCOUNTS- Paragraph (1) of section 408(a) is amended to read as follows:CommentsClose CommentsPermalink





‘(1) Except in the case of a simplified employee pension, a simple retirement account, or a rollover contribution described in subsection (d)(3) or in section 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), no contribution will be accepted on behalf of any individual for any taxable year beginning after December 31, 2010. In the case of any simplified employee pension or simple retirement account, no contribution will be accepted unless it is in cash and contributions will not be accepted for the taxable year on behalf of any individual in excess of--CommentsClose CommentsPermalink





‘(A) in the case of a simplified employee pension, the amount of the limitation in effect under section 415(c)(1)(A), andCommentsClose CommentsPermalink





‘(B) in the case of a simple retirement account, the sum of the dollar amount in effect under subsection (p)(2)(A)(ii) and the employer contribution required under subparagraph (A)(iii) or (B)(i) of subsection (p)(2).’.CommentsClose CommentsPermalink





(2) INDIVIDUAL RETIREMENT ANNUITIES- Paragraph (2) of section 408(b) is amended--CommentsClose CommentsPermalink





(A) by redesignating subparagraphs (A), (B), and (C) as subparagraphs (B), (C), and (D), respectively, and by inserting before subparagraph (B), as so redesignated, the following new subparagraph:CommentsClose CommentsPermalink





‘(A) except in the case of a simplified employee pension, a simple retirement account, or a rollover contribution described in subsection (d)(3) or in section 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), a premium shall not be accepted on behalf of any individual for any taxable year beginning after December 31, 2010,’, andCommentsClose CommentsPermalink





(B) by amending subparagraph (C), as redesignated by subparagraph (A), to read as follows:CommentsClose CommentsPermalink





‘(C) the annual premium on behalf of any individual will not exceed--CommentsClose CommentsPermalink





‘(i) in the case of a simplified employee pension, the amount of the limitation in effect under section 415(c)(1)(A), andCommentsClose CommentsPermalink





‘(ii) in the case of a simple retirement account, the sum of the dollar amount in effect under subsection (p)(2)(A)(ii) and the employer contribution required under subparagraph (A)(iii) or (B)(i) of subsection (p)(2), and’.CommentsClose CommentsPermalink





(d) Conforming Amendments-CommentsClose CommentsPermalink





(1)(A) Section 219 is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 219. CONTRIBUTIONS TO CERTAIN RETIREMENT PLANS ALLOWING ONLY EMPLOYEE CONTRIBUTIONS.

‘(a) Allowance of Deduction- In the case of an individual, there shall be allowed as a deduction the amount contributed on behalf of such individual to a plan described in section 501(c)(18).CommentsClose CommentsPermalink





‘(b) Maximum Amount of Deduction- The amount allowable as a deduction under subsection (a) to any individual for any taxable year shall not exceed the lesser of--CommentsClose CommentsPermalink





‘(1) $7,000, orCommentsClose CommentsPermalink





‘(2) an amount equal to 25 percent of the compensation (as defined in section 415(c)(3)) includible in the individual’s gross income for such taxable year.CommentsClose CommentsPermalink





‘(c) Beneficiary Must Be Under Age 70 1/2 - No deduction shall be allowed under this section with respect to any contribution on behalf of an individual if such individual has attained age 70 1/2 before the close of such individual’s taxable year for which the contribution was made.CommentsClose CommentsPermalink





‘(d) Special Rules-CommentsClose CommentsPermalink





‘(1) MARRIED INDIVIDUALS- The maximum deduction under subsection (b) shall be computed separately for each individual, and this section shall be applied without regard to any community property laws.CommentsClose CommentsPermalink





‘(2) REPORTS- The Secretary shall prescribe regulations which prescribe the time and the manner in which reports to the Secretary and plan participants shall be made by the plan administrator of a qualified employer or government plan receiving qualified voluntary employee contributions.CommentsClose CommentsPermalink





‘(e) Cross Reference- For failure to provide required reports, see section 6652(g).’.CommentsClose CommentsPermalink





(B) Section 25B(d) is amended--CommentsClose CommentsPermalink





(i) in paragraph (1)(A), by striking ‘(as defined in section 219(e))’, andCommentsClose CommentsPermalink





(ii) by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(3) QUALIFIED RETIREMENT CONTRIBUTION- The term ‘qualified retirement contribution’ means--CommentsClose CommentsPermalink





‘(A) any amount paid in cash for the taxable year by or on behalf of an individual to an individual retirement plan for such individual’s benefit, andCommentsClose CommentsPermalink





‘(B) any amount contributed on behalf of any individual to a plan described in section 501(c)(18).’.CommentsClose CommentsPermalink





(C) Section 86(f)(3) is amended by striking ‘section 219(f)(1)’ and inserting ‘section 408A(g)’.CommentsClose CommentsPermalink





(D) Section 132(m)(3) is amended by inserting ‘(as in effect on the day before the date of the enactment of the Retirement Savings Account Act)’ after ‘section 219(g)(5)’.CommentsClose CommentsPermalink





(E) Subparagraphs (A), (B), and (C) of section 220(d)(4) are each amended by inserting ‘, as in effect on the day before the date of the enactment of the Retirement Savings Account Act’ at the end.CommentsClose CommentsPermalink





(F) Section 408(b) is amended in the last sentence by striking ‘section 219(b)(1)(A)’ and inserting ‘paragraph (2)(C)’.CommentsClose CommentsPermalink





(G) Section 408(p)(2)(D)(ii) is amended by inserting ‘(as in effect on the day before the date of the enactment of the Retirement Savings Account Act)’ after ‘section 219(g)(5)’.CommentsClose CommentsPermalink





(H) Section 409A(d)(2) is amended by inserting ‘(as in effect on the day before the date of the enactment of the Retirement Savings Account Act)’ after ‘subparagraph (A)(iii))’.CommentsClose CommentsPermalink





(I) Section 501(c)(18)(D)(i) is amended by striking ‘section 219(b)(3)’ and inserting ‘section 219(b)’.CommentsClose CommentsPermalink





(J) Section 6652(g) is amended by striking ‘section 219(f)(4)’ and inserting ‘section 219(d)(2)’.CommentsClose CommentsPermalink





(K) The table of sections for part VII of subchapter B of chapter 1 is amended by striking the item relating to section 219 and inserting the following new item:CommentsClose CommentsPermalink





‘Sec. 219. Contributions to certain retirement plans allowing only employee contributions.’.CommentsClose CommentsPermalink





(2)(A) Section 408(d)(4)(B) is amended to read as follows:CommentsClose CommentsPermalink





‘(B) no amount is excludable from gross income under subsection (h) or (k) of section 402 with respect to such contribution, and’.CommentsClose CommentsPermalink





(B) Section 408(d)(5)(A) is amended to read as follows:CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of any individual, if the aggregate contributions (other than rollover contributions) paid for any taxable year to an individual retirement account or for an individual retirement annuity do not exceed the dollar amount in effect under subsection (a)(1) or (b)(2)(C), as the case may be, paragraph (1) shall not apply to the distribution of any such contribution to the extent that such contribution exceeds the amount which is excludable from gross income under subsection (h) or (k) of section 402, as the case may be, for the taxable year for which the contribution was paid--CommentsClose CommentsPermalink





‘(i) if such distribution is received after the date described in paragraph (4),CommentsClose CommentsPermalink





‘(ii) but only to the extent that such excess contribution has not been excluded from gross income under subsection (h) or (k) of section 402.’.CommentsClose CommentsPermalink





(C) Section 408(d)(5) is amended by striking the last sentence.CommentsClose CommentsPermalink





(D) Section 408(d)(7) is amended to read as follows:CommentsClose CommentsPermalink





‘(7) CERTAIN TRANSFERS FROM SIMPLIFIED EMPLOYEE PENSIONS PROHIBITED UNTIL DEFERRAL TEST MET- Notwithstanding any other provision of this subsection or section 72(t), paragraph (1) and section 72(t)(1) shall apply to the transfer or distribution from a simplified employee pension of any contribution under a salary reduction arrangement described in subsection (k)(6) (or any income allocable thereto) before a determination as to whether the requirements of subsection (k)(6)(A)(iii) are met with respect to such contribution.’.CommentsClose CommentsPermalink





(E) Section 408 is amended by striking subsection (j).CommentsClose CommentsPermalink





(F)(i) Section 408 is amended by striking subsection (o).CommentsClose CommentsPermalink





(ii) Section 6693 is amended by striking subsection (b) and by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.CommentsClose CommentsPermalink





(G) Section 408(p) is amended by striking paragraph (8) and by redesignating paragraphs (9) and (10) as paragraphs (8) and (9), respectively.CommentsClose CommentsPermalink





(3)(A) Section 4973(a)(1) is amended to read as follows:CommentsClose CommentsPermalink





‘(1) an individual retirement plan,’.CommentsClose CommentsPermalink





(B) Section 4973(b) is amended to read as follows:CommentsClose CommentsPermalink





‘(b) Excess Contributions to Simplified Employee Pensions and Simple Retirement Accounts- For purposes of this section, in the case of simplified employee pensions or simple retirement accounts, the term ‘excess contributions’ means the sum of--CommentsClose CommentsPermalink





‘(1) the excess (if any) of--CommentsClose CommentsPermalink





‘(A) the amount contributed for the taxable year to the pension or account, overCommentsClose CommentsPermalink





‘(B) the amount applicable to the pension or account under subsection (a)(1) or (b)(2) of section 408, andCommentsClose CommentsPermalink





‘(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of--CommentsClose CommentsPermalink





‘(A) the distributions out of the account for the taxable year which were included in the gross income of the payee under section 408(d)(1),CommentsClose CommentsPermalink





‘(B) the distributions out of the account for the taxable year to which section 408(d)(5) applies, andCommentsClose CommentsPermalink





‘(C) the excess (if any) of the maximum amount excludable from gross income for the taxable year under subsection (h) or (k) of section 402 over the amount contributed to the pension or account for the taxable year.CommentsClose CommentsPermalink





For purposes of this subsection, any contribution which is distributed from a simplified employee pension or simple retirement account in a distribution to which section 408(d)(4) applies shall be treated as an amount not contributed.’.CommentsClose CommentsPermalink





(C) Section 4973 is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(h) Excess Contributions to Certain Individual Retirement Plans- For purposes of this section, in the case of individual retirement plans (other than retirement savings accounts, simplified employee pensions, and simple retirement accounts), the term ‘excess contribution’ means the sum of--CommentsClose CommentsPermalink





‘(1) the aggregate amount contributed for the taxable year to the individual retirement plans, andCommentsClose CommentsPermalink





‘(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of--CommentsClose CommentsPermalink





‘(A) the distributions out of the plans which were included in gross income under section 408(d)(1), andCommentsClose CommentsPermalink





‘(B) the distributions out of the plans for the taxable year to which section 408(d)(5) applies.CommentsClose CommentsPermalink





For purposes of this subsection, any contribution which is distributed from the plan in a distribution to which section 408(d)(4) applies shall be treated as an amount not contributed.’.CommentsClose CommentsPermalink





(4)(A) Sections 402(c)(8)(B), 402A(c)(3)(A)(ii), 1361(c)(2)(A), 3405(e)(1)(B), and 4973(f) are each amended by striking ‘Roth IRA’ each place it appears and inserting ‘retirement savings account’.CommentsClose CommentsPermalink





(B) Section 4973(f)(1)(A) is amended by striking ‘Roth IRAs’ and inserting ‘retirement savings accounts’.CommentsClose CommentsPermalink





(C) Paragraphs (1)(B) and (2)(B) of section 4973(f) are each amended by striking ‘sections 408A(c)(2) and (c)(3)’ and inserting ‘section 408A(c)(1)’.CommentsClose CommentsPermalink





(D) Subsection (f) of section 4973 is amended in the heading by striking ‘roth iras’ and inserting ‘retirement savings accounts’.CommentsClose CommentsPermalink





(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 112. LIFETIME SAVINGS ACCOUNTS.

(a) In General- Subchapter F of Chapter 1 (relating to exempt organizations) is amended by adding at the end the following new part:CommentsClose CommentsPermalink

‘PART IX--LIFETIME SAVINGS ACCOUNTS

‘SEC. 530A. LIFETIME SAVINGS ACCOUNTS.

‘(a) General Rule- A Lifetime Savings Account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, such account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).CommentsClose CommentsPermalink





‘(b) Lifetime Savings Account- For purposes of this section, the term ‘Lifetime Savings Account’ means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries and which is designated (in such manner as the Secretary shall prescribe) at the time of the establishment of the trust as a Lifetime Savings Account, but only if the written governing instrument creating the trust meets the following requirements:CommentsClose CommentsPermalink





‘(1) Except in the case of a qualified rollover contribution described in subsection (d)--CommentsClose CommentsPermalink





‘(A) no contribution will be accepted unless it is in cash, andCommentsClose CommentsPermalink





‘(B) contributions will not be accepted for the calendar year in excess of the contribution limit specified in subsection (c)(1).CommentsClose CommentsPermalink





‘(2) The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan.CommentsClose CommentsPermalink





‘(3) No part of the trust assets will be invested in life insurance contracts.CommentsClose CommentsPermalink





‘(4) The interest of an individual in the balance of his account is nonforfeitable.CommentsClose CommentsPermalink





‘(5) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.CommentsClose CommentsPermalink





‘(c) Treatment of Contributions and Distributions-CommentsClose CommentsPermalink





‘(1) CONTRIBUTION LIMIT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The aggregate amount of contributions (other than qualified rollover contributions described in subsection (d)) for any calendar year to all Lifetime Savings Accounts maintained for the benefit of an individual shall not exceed $2,000.CommentsClose CommentsPermalink





‘(B) COST-OF-LIVING ADJUSTMENT-CommentsClose CommentsPermalink





‘(i) IN GENERAL- In the case of any calendar year after 2011, the $2,000 amount under subparagraph (A) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(I) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





‘(ii) ROUNDING RULES- If any amount after adjustment under clause (i) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.CommentsClose CommentsPermalink





‘(2) DISTRIBUTIONS- Any distribution from a Lifetime Savings Account shall not be includible in gross income.CommentsClose CommentsPermalink





‘(d) Qualified Rollover Contribution- For purposes of this section, the term ‘qualified rollover contribution’ means a contribution to a Lifetime Savings Account--CommentsClose CommentsPermalink





‘(1) from another such account of the same beneficiary, but only if such amount is contributed not later than the 60th day after the distribution from such other account,CommentsClose CommentsPermalink





‘(2) from a Lifetime Savings Account of a spouse of the beneficiary of the account to which the contribution is made, but only if such amount is contributed not later than the 60th day after the distribution from such other account, andCommentsClose CommentsPermalink





‘(3) before January 1, 2011, from--CommentsClose CommentsPermalink





‘(A) a qualified tuition program pursuant to section 529(c)(3)(E), orCommentsClose CommentsPermalink





‘(B) a Coverdell education savings account pursuant to section 530(d)(9).CommentsClose CommentsPermalink





‘(e) Loss of Taxation Exemption of Account Where Beneficiary Engages in Prohibited Transaction- Rules similar to the rules of paragraph (2) of section 408(e) shall apply to any Lifetime Savings Account.CommentsClose CommentsPermalink





‘(f) Custodial Accounts- For purposes of this section, a custodial account or an annuity contract issued by an insurance company qualified to do business in a State shall be treated as a trust under this section if--CommentsClose CommentsPermalink





‘(1) the custodial account or annuity contract would, except for the fact that it is not a trust, constitute a trust which meets the requirements of subsection (b), andCommentsClose CommentsPermalink





‘(2) in the case of a custodial account, the assets of such account are held by a bank (as defined in section 408(n)) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section.CommentsClose CommentsPermalink





For purposes of this title, in the case of a custodial account or annuity contract treated as a trust by reason of the preceding sentence, the person holding the assets of such account or holding such annuity contract shall be treated as the trustee thereof.CommentsClose CommentsPermalink





‘(g) Reports- The trustee of a Lifetime Savings Account shall make such reports regarding such account to the Secretary and to the beneficiary of the account with respect to contributions, distributions, and such other matters as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required.’.CommentsClose CommentsPermalink





(b) Tax on Excess Contributions-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsection (a) of section 4973 (relating to tax on excess contributions to certain tax-favored accounts and annuities) is amended by striking ‘or’ at the end of paragraph (4), by inserting ‘or’ at the end of paragraph (5), and by inserting after paragraph (5) the following new paragraph:CommentsClose CommentsPermalink





‘(6) a Lifetime Savings Account (as defined in section 530A),’.CommentsClose CommentsPermalink





(2) EXCESS CONTRIBUTION- Section 4973 is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(h) Excess Contributions to Lifetime Savings Accounts- For purposes of this section--CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of Lifetime Savings Accounts (within the meaning of section 530A), the term ‘excess contributions’ means the sum of--CommentsClose CommentsPermalink





‘(A) the amount by which the amount contributed for the calendar year to such accounts (other than qualified rollover contributions (as defined in section 530A(d))) exceeds the contribution limit under section 530A(c)(1), andCommentsClose CommentsPermalink





‘(B) the amount determined under this subsection for the preceding calendar year, reduced by the excess (if any) of the maximum amount allowable as a contribution under section 530A(c)(1) for the calendar year over the amount contributed to the accounts for the calendar year.CommentsClose CommentsPermalink





‘(2) SPECIAL RULE- A contribution shall not be taken into account under paragraph (1) if such contribution (together with the amount of net income attributable to such contribution) is returned to the beneficiary before July 1 of the year following the year in which the contribution is made.’.CommentsClose CommentsPermalink





(c) Failure To Provide Reports on Lifetime Savings Accounts- Paragraph (2) of section 6693(a) (relating to failure to provide reports on individual retirement accounts or annuities) is amended by striking ‘and’ at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ‘, and’, and by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(F) section 530A(g) (relating to Lifetime Savings Accounts).’.CommentsClose CommentsPermalink





(d) Rollovers From Certain Other Tax-Free Accounts-CommentsClose CommentsPermalink





(1) QUALIFIED STATE TUITION PLANS- Paragraph (3) of section 529(c) (relating to distributions) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(E) ROLLOVERS TO LIFETIME SAVINGS ACCOUNTS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Subparagraph (A) shall not apply to the qualified portion of any distribution which, before January 1, 2012, and within 60 days of such distribution, is transferred to a Lifetime Savings Account (within the meaning of section 530A) of the designated beneficiary. This subparagraph shall only apply to distributions in accordance with the previous sentence from an account which was in existence with respect to such designated beneficiary on December 31, 2009.CommentsClose CommentsPermalink





‘(ii) QUALIFIED PORTION- For purposes of this subparagraph, the term ‘qualified portion’ means the amount equal to the sum of--CommentsClose CommentsPermalink





‘(I) the lesser of $50,000 or the amount which is in the account of the designated beneficiary on December 31, 2009,CommentsClose CommentsPermalink





‘(II) any contributions to such account for the taxable year beginning after December 31, 2009, and before January 1, 2011, andCommentsClose CommentsPermalink





‘(III) any earnings of such account for such year.CommentsClose CommentsPermalink





‘(iii) LIMITATION- The sum of the amounts taken into account under clause (ii)(II) with respect to all accounts of the designated beneficiary plus any amounts with respect to such designated beneficiary taken into account under section 530(d)(9)(B)(ii) shall not exceed the sum of $2,000 plus the earnings attributable to such amounts.’.CommentsClose CommentsPermalink





(2) COVERDELL EDUCATION SAVINGS ACCOUNTS- Subsection (d) of section 530 (relating to tax treatment of distributions) is amended by inserting at the end the following new paragraph:CommentsClose CommentsPermalink





‘(9) ROLLOVERS TO LIFETIME SAVINGS ACCOUNTS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Paragraph (1) shall not apply to the qualified portion of any amount paid or distributed from a Coverdell education savings account to the extent that the amount received is paid, before January 1, 2012, and not later than the 60th day after the date of such payment or distribution, into a Lifetime Savings Account (within the meaning of section 530A) for the benefit of the same beneficiary. This paragraph shall only apply to amounts paid or distributed in accordance with the preceding sentence from an account which was in existence with respect to such beneficiary on December 31, 2009.CommentsClose CommentsPermalink





‘(B) QUALIFIED PORTION- For purposes of this paragraph, the term ‘qualified portion’ means the amount equal to the sum of--CommentsClose CommentsPermalink





‘(i) the amount which is in the account of the beneficiary on December 31, 2009,CommentsClose CommentsPermalink





‘(ii) any contributions to such account for the taxable year beginning after December 31, 2009, and before January 1, 2011, andCommentsClose CommentsPermalink





‘(iii) any earnings of such account for such year.CommentsClose CommentsPermalink





‘(C) LIMITATION- The sum of the amounts taken into account under subparagraph (B)(ii) with respect to all accounts of the beneficiary plus any amounts with respect to such beneficiary taken into account under section 529(c)(3)(E)(ii)(II) shall not exceed the sum of $2,000 plus the earnings attributable to such amounts.’.CommentsClose CommentsPermalink





(e) Conforming Amendment- The table of parts for subchapter F of chapter 1 is amended by adding at the end the following new item:CommentsClose CommentsPermalink

‘Part IX. Lifetime Savings Accounts’.

(f) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 113. CONSOLIDATION OF TAX CREDITS AND DEDUCTIONS FOR EDUCATION EXPENSES.

(a) In General- Section 25A of the Internal Revenue Code of 1986 (relating to Hope and Lifetime Learning Credits) is amended to read as follows:CommentsClose CommentsPermalink

‘SEC. 25A. QUALIFIED TUITION AND RELATED EXPENSES CREDIT.

‘(a) Allowance of Credit-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of any eligible individual for whom an election is in effect under this section, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible individual during any academic period beginning in such taxable year) as does not exceed $10,000.CommentsClose CommentsPermalink





‘(2) APPLICABLE PERCENTAGE- For purposes of subsection (a), the applicable percentage is--CommentsClose CommentsPermalink





‘(A) for the first 2 taxable years such an election is in effect with respect to an eligible individual, 20 percent,CommentsClose CommentsPermalink





‘(B) for the next 2 such taxable years, 15 percent, andCommentsClose CommentsPermalink





‘(C) notwithstanding subparagraph (A), for any taxable year such eligible individual attends or is enrolled in only one academic period, 15 percent.CommentsClose CommentsPermalink





‘(b) Limitations-CommentsClose CommentsPermalink





‘(1) MODIFIED ADJUSTED GROSS INCOME LIMITATION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The amount which would (but for this paragraph) be taken into account under subsection (a) for the taxable year shall be reduced (but not below zero) by the amount determined under paragraph (2).CommentsClose CommentsPermalink





‘(B) AMOUNT OF REDUCTION- The amount determined under this paragraph is the amount which bears the same ratio to the amount which would be so taken into account as--CommentsClose CommentsPermalink





‘(i) the excess of--CommentsClose CommentsPermalink





‘(I) the taxpayer’s modified adjusted gross income for such taxable year, overCommentsClose CommentsPermalink





‘(II) $50,000 (twice such amount in the case of a joint return), bears toCommentsClose CommentsPermalink





‘(ii) $40,000 (twice such amount in the case of a joint return).CommentsClose CommentsPermalink





‘(C) MODIFIED ADJUSTED GROSS INCOME- The term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.CommentsClose CommentsPermalink





‘(2) CREDIT ALLOWED FOR ONLY 4 TAXABLE YEARS- An election to have this section apply with respect to any eligible individual may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such individual for any 4 prior taxable years.CommentsClose CommentsPermalink





‘(c) Definitions- For purposes of this section--CommentsClose CommentsPermalink





‘(1) ELIGIBLE INDIVIDUAL- The term ‘eligible individual’ means any individual described in paragraph (2).CommentsClose CommentsPermalink





‘(2) QUALIFIED TUITION AND RELATED EXPENSES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘qualified tuition and related expenses’ means tuition and fees required for the enrollment or attendance of--CommentsClose CommentsPermalink





‘(i) taxpayer,CommentsClose CommentsPermalink





‘(ii) the taxpayer’s spouse, orCommentsClose CommentsPermalink





‘(iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,CommentsClose CommentsPermalink





at an eligible educational institution for courses of instruction of such individual at such institution.CommentsClose CommentsPermalink





‘(B) STUDENT LOAN INTEREST-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Such term shall include so much of the interest paid on any qualified education loan of such individual as does not exceed $2,500, reduced by any amount taken into account under this section for any preceding taxable year.CommentsClose CommentsPermalink





‘(ii) QUALIFIED EDUCATION LOAN- For purposes of clause (i), the term ‘qualified education loan’ means any indebtedness incurred by the taxpayer solely to pay qualified tuition and related expenses--CommentsClose CommentsPermalink





‘(I) which are incurred on behalf of an eligible individual as of the time the indebtedness was incurred,CommentsClose CommentsPermalink





‘(II) which are paid or incurred within a reasonable period of time before or after the indebtedness is incurred, andCommentsClose CommentsPermalink





‘(III) which are attributable to education furnished during a period during which the recipient was an eligible individual.CommentsClose CommentsPermalink





Such term includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan. Such term shall not include any indebtedness owed to a person who is related (within the meaning of section 267(b) or 707(b)(1)) to the eligible individual or to any person by reason of a loan under any qualified employer plan (as defined in section 72(p)(4)) or under any contract referred to in section 72(p)(5).CommentsClose CommentsPermalink





‘(C) BOOKS- Such term shall include books required for such individual’s academic courses of instruction at the eligible educational institution.CommentsClose CommentsPermalink





‘(D) EXCEPTION FOR EDUCATION INVOLVING SPORTS, ETC- Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual’s degree program.CommentsClose CommentsPermalink





‘(E) EXCEPTION FOR NONACADEMIC FEES- Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual’s academic course of instruction.CommentsClose CommentsPermalink





‘(3) ELIGIBLE EDUCATIONAL INSTITUTION- The term ‘eligible educational institution’ means an institution--CommentsClose CommentsPermalink





‘(A) which is described in section 481 of the Higher Education Act of 1965, as in effect on the date of the enactment of the Taxpayer Relief Act of 1997, andCommentsClose CommentsPermalink





‘(B) which is eligible to participate in a program under title IV of the Higher Education Act of 1965.CommentsClose CommentsPermalink





‘(d) Special Rules-CommentsClose CommentsPermalink





‘(1) IDENTIFICATION REQUIREMENT- No credit shall be allowed under subsection (a) to a taxpayer with respect to an eligible student unless the taxpayer includes the name and taxpayer identification number of such student on the return of tax for the taxable year.CommentsClose CommentsPermalink





‘(2) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS- The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsections (a) and (b)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as--CommentsClose CommentsPermalink





‘(A) a qualified scholarship which is excludable from gross income under section 117,CommentsClose CommentsPermalink





‘(B) an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, andCommentsClose CommentsPermalink





‘(C) a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such student’s educational expenses, or attributable to such individual’s enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States.CommentsClose CommentsPermalink





‘(3) TREATMENT OF EXPENSES PAID BY DEPENDENT- If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins--CommentsClose CommentsPermalink





‘(A) no credit shall be allowed under subsection (a) to such individual for such individual’s taxable year, andCommentsClose CommentsPermalink





‘(B) qualified tuition and related expenses paid by such individual during such individual’s taxable year shall be treated for purposes of this section as paid by such other taxpayer.CommentsClose CommentsPermalink





‘(4) TREATMENT OF CERTAIN PREPAYMENTS- If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year.CommentsClose CommentsPermalink





‘(5) DENIAL OF DOUBLE BENEFIT- No credit shall be allowed under this section for any expense for which deduction is allowed under any other provision of this chapter.CommentsClose CommentsPermalink





‘(6) NO CREDIT FOR MARRIED INDIVIDUALS FILING SEPARATE RETURNS- If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.CommentsClose CommentsPermalink





‘(7) NONRESIDENT ALIENS- If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.CommentsClose CommentsPermalink





‘(e) Inflation Adjustment-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of any taxable year beginning after 2011, the $50,000 amount in subsection (b)(1)(B)(i)(II) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





‘(2) ROUNDING- If any amount as adjusted under paragraph (1) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.CommentsClose CommentsPermalink





‘(f) Regulations- The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any expense which was taken into account in determining the amount of such credit.’.CommentsClose CommentsPermalink





(b) Repeal of Deduction for Interest on Education Loans- Part VII of subchapter B of chapter 1 (relating to additional itemized deductions for individuals) is amended by striking section 221.CommentsClose CommentsPermalink





(c) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 62(a) is amended by striking paragraph (17).CommentsClose CommentsPermalink





(2) Subparagraph (A) of section 86(b)(2) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(3) Subparagraph (B) of section 72(t)(7) is amended by striking ‘section 25A(g)(2)’ and inserting ‘section 25A(d)(2)’.CommentsClose CommentsPermalink





(4) Subparagraph (A) of section 135(c)(4) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(5) Subparagraph (A) of section 137(b)(3) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(6) Paragraph (2) of section 163(h) is amended by adding ‘and’ at the end of subparagraph (D), by striking ‘, and’ at the end of subparagraph (E) and inserting a period, and by striking subparagraph (F).CommentsClose CommentsPermalink





(7) Subparagraph (A) of section 199(d)(2) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(8) Clause (ii) of section 219(g)(3)(A) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(9) Clause (iii) of section 469(i)(3)(F) is amended by striking ‘, 221’.CommentsClose CommentsPermalink





(10) Subclause (I) of section 529(c)(3)(B)(v) is amended by striking ‘section 25A(g)(2)’ and inserting ‘section 25A(d)(2)’.CommentsClose CommentsPermalink





(11) Paragraph (3) of section 529(e) is amended--CommentsClose CommentsPermalink





(A) by striking ‘(as defined in section 25A(b)(3))’ in subparagraph (A), andCommentsClose CommentsPermalink





(B) by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(C) ELIGIBLE STUDENT- For purposes of this paragraph, the term ‘eligible student’ means, with respect to any academic period, a student who--CommentsClose CommentsPermalink





‘(i) meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on the date of the enactment of the Taxpayer Relief Act of 1997, andCommentsClose CommentsPermalink





‘(ii) is carrying at least 1/2 the normal full-time workload for the course of study the student is pursuing.’.CommentsClose CommentsPermalink





(12) Subclause (I) of section 530(d)(2)(C)(i) is amended by striking ‘section 25A(g)(2)’ and inserting ‘section 25A(d)(2)’.CommentsClose CommentsPermalink





(13) Clause (iii) of section 530(d)(4)(B) is amended by striking ‘section 25A(g)(2)’ and inserting ‘section 25A(d)(2)’.CommentsClose CommentsPermalink





(14) Section 1400O is amended by adding at the end the following flush sentence:CommentsClose CommentsPermalink





‘For purposes of this section, any reference to section 25A shall be treated as a reference to such section as in effect on the day before the date of the enactment of this sentence.’.CommentsClose CommentsPermalink





(15) Subparagraph (J) of section 6213(g)(2) is amended by striking ‘section 25A(g)(1)’ and inserting ‘section 25A(d)(1)’.CommentsClose CommentsPermalink





(d) Clerical Amendments-CommentsClose CommentsPermalink





(1) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 25A and inserting the following:CommentsClose CommentsPermalink





‘25A. Qualified tuition and related expenses credit.’.CommentsClose CommentsPermalink





(2) The table of sections for part VII of subchapter B of chapter 1 is amended by striking the item relating to section 221.CommentsClose CommentsPermalink





(e) Effective Date- The amendments made by this section shall apply to expenses paid after December 31, 2010, for education furnished in academic periods beginning after such date.CommentsClose CommentsPermalink

SEC. 114. TERMINATION OF VARIOUS EXCLUSIONS, EXEMPTIONS, DEDUCTIONS, AND CREDITS.

(a) In General- Subchapter C of chapter 90 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS.

‘The following provisions shall not apply to taxable years beginning after December 31, 2010:CommentsClose CommentsPermalink





‘(1) Section 74(c) (relating to exclusion of certain employee achievement awards).CommentsClose CommentsPermalink





‘(2) Section 79 (relating to exclusion of group-term life insurance purchased for employees).CommentsClose CommentsPermalink





‘(3) Section 119 (relating to exclusion of meals or lodging furnished for the convenience of the employer).CommentsClose CommentsPermalink





‘(4) Section 125 (relating to exclusion of cafeteria plan benefits).CommentsClose CommentsPermalink





‘(5) Section 132 (relating to certain fringe benefits), except with respect to subsection (a)(5) thereof (relating to exclusion of qualified transportation fringe).CommentsClose CommentsPermalink





‘(6) Section 217 (relating to deduction for moving expenses).CommentsClose CommentsPermalink





‘(7) Section 454 (relating to deferral of tax on obligations issued at discount).CommentsClose CommentsPermalink





‘(8) Section 501(c)(9) (relating to tax-exempt status of voluntary employees’ beneficiary associations).CommentsClose CommentsPermalink





‘(9) Section 911 (relating to exclusion of earned income of citizens or residents of the United States living abroad).CommentsClose CommentsPermalink





‘(10) Section 912 (relating to exemption for certain allowances).’.CommentsClose CommentsPermalink





(b) Conforming Amendment- The table of sections for subchapter C of chapter 90 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 7875. Termination of certain provisions.’.CommentsClose CommentsPermalink

SEC. 115. SIMPLIFIED TAX RETURN PREPARATION.

Beginning on January 1, 2011, the Internal Revenue Service shall provide to any taxpayer who requests it a simplified ‘Easyfile’ pre-prepared income tax return, on paper, compact disc, or through the Internet, based on data the Internal Revenue Service receives with respect to such taxpayer (including wages, self-employment income, and dividend, capital gains, and interest income). The Internal Revenue Service shall provide with every ‘Easyfile’ a one-page summary of how the most recently available fiscal year’s tax revenue was spent, including spending on Social Security, Medicare, Medicaid, defense, and interest on the Federal debt.CommentsClose CommentsPermalink

TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMSCommentsClose CommentsPermalink

SEC. 201. CORPORATE FLAT TAX.

(a) In General- Subsection (b) of section 11 (relating to tax imposed) is amended to read as follows:CommentsClose CommentsPermalink





‘(b) Amount of Tax- The amount of tax imposed by subsection (a) shall be equal to 24 percent of the taxable income.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 280C(c)(3)(B)(ii)(II) is amended by striking ‘maximum rate of tax under section 11(b)(1)’ and inserting ‘rate of tax under section 11(b)’.CommentsClose CommentsPermalink





(2) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 1446(b)(2)(B), and 7874(e)(1)(B) are each amended by striking ‘highest rate of tax specified in section 11(b)(1)’ and inserting ‘rate of tax specified in section 11(b)’.CommentsClose CommentsPermalink





(3) Section 904(b)(3)(D)(ii) is amended by striking ‘(determined without regard to the last sentence of section 11(b)(1))’.CommentsClose CommentsPermalink





(4) Section 962 is amended by striking subsection (c) and by redesignating subsection (d) as subsection (c).CommentsClose CommentsPermalink





(5) Section 1201(a) is amended by striking ‘(determined without regard to the last 2 sentences of section 11(b)(1))’.CommentsClose CommentsPermalink





(6) Section 1561(a) is amended--CommentsClose CommentsPermalink





(A) by striking paragraph (1) and by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively,CommentsClose CommentsPermalink





(B) by striking ‘The amounts specified in paragraph (1), the’ and inserting ‘The’,CommentsClose CommentsPermalink





(C) by striking ‘paragraph (2)’ and inserting ‘paragraph (1)’,CommentsClose CommentsPermalink





(D) by striking ‘paragraph (3)’ both places it appears and inserting ‘paragraph (2)’,CommentsClose CommentsPermalink





(E) by striking ‘paragraph (4)’ and inserting ‘paragraph (3)’, andCommentsClose CommentsPermalink





(F) by striking the fourth sentence.CommentsClose CommentsPermalink





(7) Subsection (b) of section 1561 is amended to read as follows:CommentsClose CommentsPermalink





‘(b) Certain Short Taxable Years- If a corporation has a short taxable year which does not include a December 31 and is a component member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle, the amount to be used in computing the accumulated earnings credit under section 535(c) (2) and (3) of such corporation for such taxable year shall be the amount specified in subsection (a)(1) divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 202. TREATMENT OF TRAVEL ON CORPORATE AIRCRAFT.

(a) In General- Section 162 (relating to trade or business expenses) is amended by redesignating subsection (q) as subsection (r) and by inserting after subsection (p) the following new subsection:CommentsClose CommentsPermalink





‘(q) Treatment of Travel on Corporate Aircraft- The rate at which an amount allowable as a deduction under this chapter for the use of an aircraft owned by the taxpayer is determined shall not exceed the rate at which an amount paid or included in income by an employee of such taxpayer for the personal use of such aircraft is determined.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 203. UNLIMITED EXPENSING OF DEPRECIABLE ASSETS AND INVENTORIES FOR CERTAIN SMALL BUSINESSES.

(a) Unlimited Expensing- Section 179 (relating to election to expense certain depreciable business assets) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(f) Unlimited Expensing for Certain Small Business Taxpayers-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of any eligible taxpayer, this section shall be applied with respect to any taxable year without regard to subsection (b).CommentsClose CommentsPermalink





‘(2) ELIGIBLE TAXPAYER- For purposes of this subsection, a taxpayer is an eligible taxpayer with respect to any taxable year if for all prior taxable years beginning after December 31, 2010, the taxpayer (or any predecessor) met the gross receipts test of section 448(c) (determined by substituting ‘$1,000,000’ for ‘$5,000,000’ each place it appears).’.CommentsClose CommentsPermalink





(b) Clarification of Inventory Rules for Small Business- Section 471 (relating to general rule for inventories) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:CommentsClose CommentsPermalink





‘(c) Small Business Taxpayers Not Required to Use Inventories-CommentsClose CommentsPermalink





‘(1) IN GENERAL- An eligible taxpayer (as determined under section 179(f)(2)) shall not be required to use inventories under this section for a taxable year.CommentsClose CommentsPermalink





‘(2) TREATMENT OF TAXPAYERS NOT USING INVENTORIES- If an eligible taxpayer does not use inventories with respect to any property for any taxable year beginning after December 31, 2010, such property shall be treated as a material or supply which is not incidental.’.CommentsClose CommentsPermalink





(c) Effective Date and Special Rules-CommentsClose CommentsPermalink





(1) IN GENERAL- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink





(2) CHANGE IN METHOD OF ACCOUNTING- In the case of any taxpayer changing the taxpayer’s method of accounting for any taxable year under the amendments made by this section--CommentsClose CommentsPermalink





(A) such change shall be treated as initiated by the taxpayer,CommentsClose CommentsPermalink





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





(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 (not greater than 4 taxable years) beginning with such taxable year.CommentsClose CommentsPermalink

SEC. 204. TERMINATION OF VARIOUS PREFERENTIAL TREATMENTS.

(a) In General- Section 7875, as added by this Act, is amended--CommentsClose CommentsPermalink





(1) by inserting ‘(or transactions in the case of sections referred to in paragraphs (14), (15), (16), (17), and (20))’ after ‘taxable years beginning’, andCommentsClose CommentsPermalink





(2) by adding at the end the following new paragraphs:CommentsClose CommentsPermalink





‘(11) Section 43 (relating to enhanced oil recovery credit).CommentsClose CommentsPermalink





‘(12) Section 199 (relating to income attributable to domestic production activities).CommentsClose CommentsPermalink





‘(13) Section 263(c) (relating to intangible drilling and development costs in the case of oil and gas wells and geothermal wells).CommentsClose CommentsPermalink





‘(14) Section 382(l)(5) (relating to exception from net operating loss limitations for corporations in bankruptcy proceeding).CommentsClose CommentsPermalink





‘(15) Section 451(i) (relating to special rules for sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy).CommentsClose CommentsPermalink





‘(16) Section 453A (relating to special rules for nondealers), but only with respect to the dollar limitation under subsection (b)(1) thereof and subsection (b)(3) thereof (relating to exception for personal use and farm property).CommentsClose CommentsPermalink





‘(17) Section 460(e)(1) (relating to special rules for long-term home construction contracts or other short-term construction contracts).CommentsClose CommentsPermalink





‘(18) Section 613A (relating to percentage depletion in case of oil and gas wells).CommentsClose CommentsPermalink





‘(19) Section 616 (relating to development costs).CommentsClose CommentsPermalink





‘(20) Sections 861(a)(6), 862(a)(6), 863(b)(2), 863(b)(3), and 865(b) (relating to inventory property sales source rule exception).’.CommentsClose CommentsPermalink





(b) Full Tax Rate on Nuclear Decommissioning Reserve Fund- Subparagraph (B) of section 468A(e)(2) is amended to read as follows:CommentsClose CommentsPermalink





‘(B) RATE OF TAX- For purposes of subparagraph (A), the rate set forth in this subparagraph is 25 percent.’.CommentsClose CommentsPermalink





(c) Deferral of Active Income of Controlled Foreign Corporations- Section 952 (relating to subpart F income defined) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(e) Special Application of Subpart-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For taxable years beginning after December 31, 2010, notwithstanding any other provision of this subpart, the term ‘subpart F income’ means, in the case of any controlled foreign corporation, the income of such corporation derived from any foreign country.CommentsClose CommentsPermalink





‘(2) APPLICABLE RULES- Rules similar to the rules under the last sentence of subsection (a) and subsection (d) shall apply to this subsection.’.CommentsClose CommentsPermalink





(d) Depreciation on Equipment in Excess of Alternative Depreciation System- Section 168(g)(1) (relating to alternative depreciation system) is amended by striking ‘and’ at the end of subparagraph (D), by adding ‘and’ at the end of subparagraph (E), and by inserting after subparagraph (E) the following new subparagraph:CommentsClose CommentsPermalink





‘(F) notwithstanding subsection (a), any tangible property placed in service after December 31, 2010,’.CommentsClose CommentsPermalink





(e) Effective Date- The amendments made by subsections (b) and (c) shall apply to taxable years beginning after December 31, 2010.CommentsClose CommentsPermalink

SEC. 205. PASS-THROUGH BUSINESS ENTITY TRANSPARENCY.

Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives regarding the implementation of additional reporting requirements with respect to any pass-through entity with the goal of the reduction of tax avoidance through the use of such entities. In addition, the Secretary shall develop procedures to share such report data with State revenue agencies under the disclosure requirements of section 6103(d) of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink

SEC. 206. MODIFICATION OF EFFECTIVE DATE OF LEASING PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 2004.

(a) Leases to Foreign Entities- Section 849(b) of the American Jobs Creation Act of 2004 is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(5) LEASES TO FOREIGN ENTITIES- In the case of tax-exempt use property leased to a tax-exempt entity which is a foreign person or entity, the amendments made by this part shall apply to taxable years beginning after December 31, 2010, with respect to leases entered into on or before March 12, 2004.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall take effect as if included in the enactment of the American Jobs Creation Act of 2004.CommentsClose CommentsPermalink

SEC. 207. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED OIL COMPANIES.

(a) General Rule- Notwithstanding any other provision of law, if a taxpayer is an applicable integrated oil company for its last taxable year ending in calendar year 2010, the taxpayer shall--CommentsClose CommentsPermalink





(1) increase, effective as of the close of such taxable year, the value of each historic LIFO layer of inventories of crude oil, natural gas, or any other petroleum product (within the meaning of section 4611) by the layer adjustment amount, andCommentsClose CommentsPermalink





(2) decrease its cost of goods sold for such taxable year by the aggregate amount of the increases under paragraph (1).CommentsClose CommentsPermalink





If the aggregate amount of the increases under paragraph (1) exceed the taxpayer’s cost of goods sold for such taxable year, the taxpayer’s gross income for such taxable year shall be increased by the amount of such excess.CommentsClose CommentsPermalink





(b) Layer Adjustment Amount- For purposes of this section--CommentsClose CommentsPermalink





(1) IN GENERAL- The term ‘layer adjustment amount’ means, with respect to any historic LIFO layer, the product of--CommentsClose CommentsPermalink





(A) $18.75, andCommentsClose CommentsPermalink





(B) the number of barrels of crude oil (or in the case of natural gas or other petroleum products, the number of barrel-of-oil equivalents) represented by the layer.CommentsClose CommentsPermalink





(2) BARREL-OF-OIL EQUIVALENT- The term ‘barrel-of-oil equivalent’ has the meaning given such term by section 29(d)(5) (as in effect before its redesignation by the Energy Tax Incentives Act of 2005).CommentsClose CommentsPermalink





(c) Application of Requirement-CommentsClose CommentsPermalink





(1) NO CHANGE IN METHOD OF ACCOUNTING- Any adjustment required by this section shall not be treated as a change in method of accounting.CommentsClose CommentsPermalink





(2) UNDERPAYMENTS OF ESTIMATED TAX- No addition to the tax shall be made under section 6655 of the Internal Revenue Code of 1986 (relating to failure by corporation to pay estimated tax) with respect to any underpayment of an installment required to be paid with respect to the taxable year described in subsection (a) to the extent such underpayment was created or increased by this section.CommentsClose CommentsPermalink





(d) Applicable Integrated Oil Company- For purposes of this section, the term ‘applicable integrated oil company’ means an integrated oil company (as defined in section 291(b)(4) of the Internal Revenue Code of 1986) which has an average daily worldwide production of crude oil of at least 500,000 barrels for the taxable year and which had gross receipts in excess of $1,000,000,000 for its last taxable year ending during calendar year 2008. For purposes of this subsection all persons treated as a single employer under subsections (a) and (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as 1 person and, in the case of a short taxable year, the rule under section 448(c)(3)(B) shall apply.CommentsClose CommentsPermalink

SEC. 208. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.

(a) In General- Section 901 (relating to credit for taxes of foreign countries and of possessions of the United States) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:CommentsClose CommentsPermalink





‘(m) Special Rules Relating to Large Integrated Oil Companies Which Are Dual Capacity Taxpayers-CommentsClose CommentsPermalink





‘(1) GENERAL RULE- Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a large integrated oil company to a foreign country or possession of the United States for any period shall not be considered a tax--CommentsClose CommentsPermalink





‘(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, orCommentsClose CommentsPermalink





‘(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which--CommentsClose CommentsPermalink





‘(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, orCommentsClose CommentsPermalink





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





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





‘(2) DUAL CAPACITY TAXPAYER- For purposes of this subsection, the term ‘dual capacity taxpayer’ means, with respect to any foreign country or possession of the United States, a person who--CommentsClose CommentsPermalink





‘(A) is subject to a levy of such country or possession, andCommentsClose CommentsPermalink





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





‘(3) GENERALLY APPLICABLE INCOME TAX- For purposes of this subsection--CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘generally applicable income tax’ means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.CommentsClose CommentsPermalink





‘(B) EXCEPTIONS- Such term shall not include a tax unless it has substantial application, by its terms and in practice, to--CommentsClose CommentsPermalink





‘(i) persons who are not dual capacity taxpayers, andCommentsClose CommentsPermalink





‘(ii) persons who are citizens or residents of the foreign country or possession.CommentsClose CommentsPermalink





‘(4) LARGE INTEGRATED OIL COMPANY- For purposes of this subsection, the term ‘large integrated oil company’ means, with respect to any taxable year, an integrated oil company (as defined in section 291(b)(4)) which--CommentsClose CommentsPermalink





‘(A) had gross receipts in excess of $1,000,000,000 for such taxable year, andCommentsClose CommentsPermalink





‘(B) has an average daily worldwide production of crude oil of at least 500,000 barrels for such taxable year.’CommentsClose CommentsPermalink





(b) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) CONTRARY TREATY OBLIGATIONS UPHELD- The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.CommentsClose CommentsPermalink