Job Creation and Worker Assistance Act of 2002:
H.R. 3090, Public Law No. 107-147
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the twenty-third day of January, two thousand and two
An Act
To provide tax incentives for economic recovery.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Job Creation and
Worker Assistance Act of 2002''.
(b) References to Internal Revenue Code of 1986.--Except as
otherwise expressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered to be
made to a section or other provision of the Internal Revenue Code of
1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired
after
September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 years;
temporary suspension of 90 percent AMT limit.
TITLE II--UNEMPLOYMENT ASSISTANCE
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of
temporary
extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
Sec. 301. Tax benefits for area of New York City damaged in terrorist
attacks on September 11, 2001.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation
not to
result in adjustment to basis of stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of
accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by
qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account
certain
expenses of elementary and secondary school teachers.
Subtitle B--Technical Corrections
Sec. 411. Amendments related to Economic Growth and Tax Relief
Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of
2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Sec. 601. Allowance of nonrefundable personal credits against regular
and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable
resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling
property.
Sec. 607. Taxable income limit on percentage depletion for oil and
natural gas produced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health
benefits.
Sec. 611. Temporary special rules for taxation of life insurance
companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian
reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene
terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population
increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.
TITLE I--BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED
AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.
(a) In General.--Section 168 (relating to accelerated cost recovery
system) is amended by adding at the end the following new subsection:
``(k) Special Allowance for Certain Property Acquired After
September 10, 2001, and Before September 11, 2004.--
``(1) Additional allowance.--In the case of any qualified
property--
``(A) the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in
service shall include an allowance equal to 30 percent of the
adjusted basis of the qualified property, and
``(B) the adjusted basis of the qualified property shall be
reduced by the amount of such deduction before computing the
amount otherwise allowable as a depreciation deduction under
this chapter for such taxable year and any subsequent taxable
year.
``(2) Qualified property.--For purposes of this subsection--
``(A) In general.--The term `qualified property' means
property--
``(i)(I) to which this section applies which has a
recovery period of 20 years or less,
``(II) which is computer software (as defined in
section 167(f)(1)(B)) for which a deduction is allowable
under section 167(a) without regard to this subsection,
``(III) which is water utility property, or
``(IV) which is qualified leasehold improvement
property,
``(ii) the original use of which commences with the
taxpayer after September 10, 2001,
``(iii) which is--
``(I) acquired by the taxpayer after September 10,
2001, and before September 11, 2004, but only if no
written binding contract for the acquisition was in
effect before September 11, 2001, or
``(II) acquired by the taxpayer pursuant to a
written binding contract which was entered into after
September 10, 2001, and before September 11, 2004, and
``(iv) which is placed in service by the taxpayer
before January 1, 2005, or, in the case of property
described in subparagraph (B), before January 1, 2006.
``(B) Certain property having longer production periods
treated as qualified property.--
``(i) In general.--The term `qualified property'
includes property--
``(I) which meets the requirements of clauses (i),
(ii), and (iii) of subparagraph (A),
``(II) which has a recovery period of at least 10
years or is transportation property, and
``(III) which is subject to section 263A by reason
of clause (ii) or (iii) of subsection (f)(1)(B)
thereof.
``(ii) Only pre-september 11, 2004, basis eligible for
additional allowance.--In the case of property which is
qualified property solely by reason of clause (i),
paragraph (1) shall apply only to the extent of the
adjusted basis thereof attributable to manufacture,
construction, or production before September 11, 2004.
``(iii) Transportation property.--For purposes of this
subparagraph, the term `transportation property' means
tangible personal property used in the trade or business of
transporting persons or property.
``(C) Exceptions.--
``(i) Alternative depreciation property.--The term
`qualified property' shall not include any property to
which the alternative depreciation system under subsection
(g) applies, determined--
``(I) without regard to paragraph (7) of subsection
(g) (relating to election to have system apply), and
``(II) after application of section 280F(b)
(relating to listed property with limited business
use).
``(ii) Qualified new york liberty zone leasehold
improvement property.--The term `qualified property' shall
not include any qualified New York Liberty Zone leasehold
improvement property (as defined in section 1400L(c)(2)).
``(iii) Election out.--If a taxpayer makes an election
under this clause with respect to any class of property for
any taxable year, this subsection shall not apply to all
property in such class placed in service during such
taxable year.
``(D) Special rules.--
``(i) Self-constructed property.--In the case of a
taxpayer manufacturing, constructing, or producing property
for the taxpayer's own use, the requirements of clause
(iii) of subparagraph (A) shall be treated as met if the
taxpayer begins manufacturing, constructing, or producing
the property after September 10, 2001, and before September
11, 2004.
``(ii) Sale-leasebacks.--For purposes of subparagraph
(A)(ii), if property--
``(I) is originally placed in service after
September 10, 2001, by a person, and
``(II) sold and leased back by such person within 3
months after the date such property was originally
placed in service,
such property shall be treated as originally placed in
service not earlier than the date on which such property is
used under the leaseback referred to in subclause (II).
``(E) Coordination with section 280f.--For purposes of
section 280F--
``(i) Automobiles.--In the case of a passenger
automobile (as defined in section 280F(d)(5)) which is
qualified property, the Secretary shall increase the
limitation under section 280F(a)(1)(A)(i) by $4,600.
``(ii) Listed property.--The deduction allowable under
paragraph (1) shall be taken into account in computing any
recapture amount under section 280F(b)(2).
``(F) Deduction allowed in computing miniumum tax.--For
purposes of determining alternative minimum taxable income
under section 55, the deduction under subsection (a) for
qualified property shall be determined under this section
without regard to any adjustment under section 56.
``(3) Qualified leasehold improvement property.--For purposes
of this subsection--
``(A) In general.--The term `qualified leasehold
improvement property' means any improvement to an interior
portion of a building which is nonresidential real property
if--
``(i) such improvement is made under or pursuant to a
lease (as defined in subsection (h)(7))--
``(I) by the lessee (or any sublessee) of such
portion, or
``(II) by the lessor of such portion,
``(ii) such portion is to be occupied exclusively by
the lessee (or any sublessee) of such portion, and
``(iii) such improvement is placed in service more than
3 years after the date the building was first placed in
service.
``(B) Certain improvements not included.--Such term shall
not include any improvement for which the expenditure is
attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefiting a common
area, and
``(iv) the internal structural framework of the
building.
``(C) Definitions and special rules.--For purposes of this
paragraph--
``(i) Commitment to lease treated as lease.--A
commitment to enter into a lease shall be treated as a
lease, and the parties to such commitment shall be treated
as lessor and lessee, respectively.
``(ii) Related persons.--A lease between related
persons shall not be considered a lease. For purposes of
the preceding sentence, the term `related persons' means--
``(I) members of an affiliated group (as defined in
section 1504), and
``(II) persons having a relationship described in
subsection (b) of section 267; except that, for
purposes of this clause, the phrase `80 percent or
more' shall be substituted for the phrase `more than 50
percent' each place it appears in such subsection.''.
(b) Effective Date.--The amendments made by this section shall
apply to property placed in service after September 10, 2001, in
taxable years ending after such date.
SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5
YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.
(a) In General.--Paragraph (1) of section 172(b) (relating to years
to which loss may be carried) is amended by adding at the end the
following new subparagraph:
``(H) In the case of a taxpayer which has a net operating
loss for any taxable year ending during 2001 or 2002,
subparagraph (A)(i) shall be applied by substituting `5' for
`2' and subparagraph (F) shall not apply.''.
(b) Election To Disregard 5-Year Carryback.--Section 172 (relating
to net operating loss deduction) is amended by redesignating subsection
(j) as subsection (k) and by inserting after subjection (i) the
following new subsection:
``(j) Election To Disregard 5-Year Carryback for Certain Net
Operating Losses.--Any taxpayer entitled to a 5-year carryback under
subsection (b)(1)(H) from any loss year may elect to have the carryback
period with respect to such loss year determined without regard to
subsection (b)(1)(H). Such election shall be made in such manner as may
be prescribed by the Secretary and shall be made by the due date
(including extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once made for
any taxable year, shall be irrevocable for such taxable year.''.
(c) Temporary Suspension of 90 Percent Limit on Certain NOL
Carryovers.--
(1) In general.--Subparagraph (A) of section 56(d)(1) (relating
to general rule defining alternative tax net operating loss
deduction) is amended to read as follows:
``(A) the amount of such deduction shall not exceed the sum
of--
``(i) the lesser of--
``(I) the amount of such deduction attributable to
net operating losses (other than the deduction
attributable to carryovers described in clause
(ii)(I)), or
``(II) 90 percent of alternative minimum taxable
income determined without regard to such deduction,
plus
``(ii) the lesser of--
``(I) the amount of such deduction attributable to
the sum of carrybacks of net operating losses for
taxable years ending during 2001 or 2002 and
carryforwards of net operating losses to taxable years
ending during 2001 and 2002, or
``(II) alternative minimum taxable income
determined without regard to such deduction reduced by
the amount determined under clause (i), and''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years ending before January 1, 2003.
(d) Effective Date.--Except as provided in subsection (c), the
amendments made by this section shall apply to net operating losses for
taxable years ending after December 31, 2000.
TITLE II--UNEMPLOYMENT ASSISTANCE
SEC. 201. SHORT TITLE.
This title may be cited as the ``Temporary Extended Unemployment
Compensation Act of 2002''.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) In General.--Any State which desires to do so may enter into
and participate in an agreement under this title with the Secretary of
Labor (in this title referred to as the ``Secretary''). Any State which
is a party to an agreement under this title may, upon providing 30
days' written notice to the Secretary, terminate such agreement.
(b) Provisions of Agreement.--Any agreement under subsection (a)
shall provide that the State agency of the State will make payments of
temporary extended unemployment compensation to individuals who--
(1) have exhausted all rights to regular compensation under the
State law or under Federal law with respect to a benefit year
(excluding any benefit year that ended before March 15, 2001);
(2) have no rights to regular compensation or extended
compensation with respect to a week under such law or any other
State unemployment compensation law or to compensation under any
other Federal law;
(3) are not receiving compensation with respect to such week
under the unemployment compensation law of Canada; and
(4) filed an initial claim for regular compensation on or after
March 15, 2001.
(c) Exhaustion of Benefits.--For purposes of subsection (b)(1), an
individual shall be deemed to have exhausted such individual's rights
to regular compensation under a State law when--
(1) no payments of regular compensation can be made under such
law because such individual has received all regular compensation
available to such individual based on employment or wages during
such individual's base period; or
(2) such individual's rights to such compensation have been
terminated by reason of the expiration of the benefit year with
respect to which such rights existed.
(d) Weekly Benefit Amount, Etc.--For purposes of any agreement
under this title--
(1) the amount of temporary extended unemployment compensation
which shall be payable to any individual for any week of total
unemployment shall be equal to the amount of the regular
compensation (including dependents' allowances) payable to such
individual during such individual's benefit year under the State
law for a week of total unemployment;
(2) the terms and conditions of the State law which apply to
claims for regular compensation and to the payment thereof shall
apply to claims for temporary extended unemployment compensation
and the payment thereof, except--
(A) that an individual shall not be eligible for temporary
extended unemployment compensation under this title unless, in
the base period with respect to which the individual exhausted
all rights to regular compensation under the State law, the
individual had 20 weeks of full-time insured employment or the
equivalent in insured wages, as determined under the provisions
of the State law implementing section 202(a)(5) of the Federal-
State Extended Unemployment Compensation Act of 1970 (26 U.S.C.
3304 note); and
(B) where otherwise inconsistent with the provisions of
this title or with the regulations or operating instructions of
the Secretary promulgated to carry out this title; and
(3) the maximum amount of temporary extended unemployment
compensation payable to any individual for whom a temporary
extended unemployment compensation account is established under
section 203 shall not exceed the amount established in such account
for such individual.
(e) Election by States.--Notwithstanding any other provision of
Federal law (and if State law permits), the Governor of a State that is
in an extended benefit period may provide for the payment of temporary
extended unemployment compensation in lieu of extended compensation to
individuals who otherwise meet the requirements of this section. Such
an election shall not require a State to trigger off an extended
benefit period.
SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.
(a) In General.--Any agreement under this title shall provide that
the State will establish, for each eligible individual who files an
application for temporary extended unemployment compensation, a
temporary extended unemployment compensation account with respect to
such individual's benefit year.
(b) Amount in Account.--
(1) In general.--The amount established in an account under
subsection (a) shall be equal to the lesser of--
(A) 50 percent of the total amount of regular compensation
(including dependents' allowances) payable to the individual
during the individual's benefit year under such law, or
(B) 13 times the individual's average weekly benefit amount
for the benefit year.
(2) Weekly benefit amount.--For purposes of this subsection, an
individual's weekly benefit amount for any week is the amount of
regular compensation (including dependents' allowances) under the
State law payable to such individual for such week for total
unemployment.
(c) Special Rule.--
(1) In general.--Notwithstanding any other provision of this
section, if, at the time that the individual's account is
exhausted, such individual's State is in an extended benefit period
(as determined under paragraph (2)), then, such account shall be
augmented by an amount equal to the amount originally established
in such account (as determined under subsection (b)(1)).
(2) Extended benefit period.--For purposes of paragraph (1), a
State shall be considered to be in an extended benefit period if,
at the time of exhaustion (as described in paragraph (1))--
(A) such a period is then in effect for such State under
the Federal-State Extended Unemployment Compensation Act of
1970; or
(B) such a period would then be in effect for such State
under such Act if section 203(d) of such Act were applied as if
it had been amended by striking ``5'' each place it appears and
inserting ``4''.
SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF
TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.
(a) General Rule.--There shall be paid to each State that has
entered into an agreement under this title an amount equal to 100
percent of the temporary extended unemployment compensation paid to
individuals by the State pursuant to such agreement.
(b) Treatment of Reimbursable Compensation.--No payment shall be
made to any State under this section in respect of any compensation to
the extent the State is entitled to reimbursement in respect of such
compensation under the provisions of any Federal law other than this
title or chapter 85 of title 5, United States Code. A State shall not
be entitled to any reimbursement under such chapter 85 in respect of
any compensation to the extent the State is entitled to reimbursement
under this title in respect of such compensation.
(c) Determination of Amount.--Sums payable to any State by reason
of such State having an agreement under this title shall be payable,
either in advance or by way of reimbursement (as may be determined by
the Secretary), in such amounts as the Secretary estimates the State
will be entitled to receive under this title for each calendar month,
reduced or increased, as the case may be, by any amount by which the
Secretary finds that the Secretary's estimates for any prior calendar
month were greater or less than the amounts which should have been paid
to the State. Such estimates may be made on the basis of such
statistical, sampling, or other method as may be agreed upon by the
Secretary and the State agency of the State involved.
SEC. 205. FINANCING PROVISIONS.
(a) In General.--Funds in the extended unemployment compensation
account (as established by section 905(a) of the Social Security Act
(42 U.S.C. 1105(a)) of the Unemployment Trust Fund (as established by
section 904(a) of such Act (42 U.S.C. 1104(a)) shall be used for the
making of payments to States having agreements entered into under this
title.
(b) Certification.--The Secretary shall from time to time certify
to the Secretary of the Treasury for payment to each State the sums
payable to such State under this title. The Secretary of the Treasury,
prior to audit or settlement by the General Accounting Office, shall
make payments to the State in accordance with such certification, by
transfers from the extended unemployment compensation account (as so
established) to the account of such State in the Unemployment Trust
Fund (as so established).
(c) Assistance to States.--There are appropriated out of the
employment security administration account (as established by section
901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the
Unemployment Trust Fund, without fiscal year limitation, such funds as
may be necessary for purposes of assisting States (as provided in title
III of the Social Security Act (42 U.S.C. 501 et seq.)) in meeting the
costs of administration of agreements under this title.
(d) Appropriations for Certain Payments.--There are appropriated
from the general fund of the Treasury, without fiscal year limitation,
to the extended unemployment compensation account (as so established)
of the Unemployment Trust Fund (as so established) such sums as the
Secretary estimates to be necessary to make the payments under this
section in respect of--
(1) compensation payable under chapter 85 of title 5, United
States Code; and
(2) compensation payable on the basis of services to which
section 3309(a)(1) of the Internal Revenue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall not be
required to be repaid.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) In General.--If an individual knowingly has made, or caused to
be made by another, a false statement or representation of a material
fact, or knowingly has failed, or caused another to fail, to disclose a
material fact, and as a result of such false statement or
representation or of such nondisclosure such individual has received an
amount of temporary extended unemployment compensation under this title
to which he was not entitled, such individual--
(1) shall be ineligible for further temporary extended
unemployment compensation under this title in accordance with the
provisions of the applicable State unemployment compensation law
relating to fraud in connection with a claim for unemployment
compensation; and
(2) shall be subject to prosecution under section 1001 of title
18, United States Code.
(b) Repayment.--In the case of individuals who have received
amounts of temporary extended unemployment compensation under this
title to which they were not entitled, the State shall require such
individuals to repay the amounts of such temporary extended
unemployment compensation to the State agency, except that the State
agency may waive such repayment if it determines that--
(1) the payment of such temporary extended unemployment
compensation was without fault on the part of any such individual;
and
(2) such repayment would be contrary to equity and good
conscience.
(c) Recovery by State Agency.--
(1) In general.--The State agency may recover the amount to be
repaid, or any part thereof, by deductions from any temporary
extended unemployment compensation payable to such individual under
this title or from any unemployment compensation payable to such
individual under any Federal unemployment compensation law
administered by the State agency or under any other Federal law
administered by the State agency which provides for the payment of
any assistance or allowance with respect to any week of
unemployment, during the 3-year period after the date such
individuals received the payment of the temporary extended
unemployment compensation to which they were not entitled, except
that no single deduction may exceed 50 percent of the weekly
benefit amount from which such deduction is made.
(2) Opportunity for hearing.--No repayment shall be required,
and no deduction shall be made, until a determination has been
made, notice thereof and an opportunity for a fair hearing has been
given to the individual, and the determination has become final.
(d) Review.--Any determination by a State agency under this section
shall be subject to review in the same manner and to the same extent as
determinations under the State unemployment compensation law, and only
in that manner and to that extent.
SEC. 207. DEFINITIONS.
In this title, the terms ``compensation'', ``regular
compensation'', ``extended compensation'', ``additional compensation'',
``benefit year'', ``base period'', ``State'', ``State agency'', ``State
law'', and ``week'' have the respective meanings given such terms under
section 205 of the Federal-State Extended Unemployment Compensation Act
of 1970 (26 U.S.C. 3304 note).
SEC. 208. APPLICABILITY.
An agreement entered into under this title shall apply to weeks of
unemployment--
(1) beginning after the date on which such agreement is entered
into; and
(2) ending before January 1, 2003.
SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.
(a) Repeal of Certain Provisions Added by the Balanced Budget Act
of 1997.--
(1) In general.--The following provisions of section 903 of the
Social Security Act (42 U.S.C. 1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) Savings provision.--Any amounts transferred before the date
of enactment of this Act under the provision repealed by paragraph
(1)(A) shall remain subject to section 903 of the Social Security
Act, as last in effect before such date of enactment.
(b) Special Transfer in Fiscal Year 2002.--Section 903 of the
Social Security Act is amended by adding at the end the following:
``Special Transfer in Fiscal Year 2002
``(d)(1) The Secretary of the Treasury shall transfer (as of the
date determined under paragraph (5)) from the Federal unemployment
account to the account of each State in the Unemployment Trust Fund the
amount determined with respect to such State under paragraph (2).
``(2)(A) The amount to be transferred under this subsection to a
State account shall (as determined by the Secretary of Labor and
certified by such Secretary to the Secretary of the Treasury) be equal
to--
``(i) the amount which would have been required to have been
transferred under this section to such account at the beginning of
fiscal year 2002 if--
``(I) section 209(a)(1) of the Temporary Extended
Unemployment Compensation Act of 2002 had been enacted before
the close of fiscal year 2001, and
``(II) section 5402 of Public Law 105-33 (relating to
increase in Federal unemployment account ceiling) had not been
enacted,
minus
``(ii) the amount which was in fact transferred under this
section to such account at the beginning of fiscal year 2002.
``(B) Notwithstanding the provisions of subparagraph (A)--
``(i) the aggregate amount transferred to the States under this
subsection may not exceed a total of $8,000,000,000; and
``(ii) all amounts determined under subparagraph (A) shall be
reduced ratably, if and to the extent necessary in order to comply
with the limitation under clause (i).
``(3)(A) Except as provided in paragraph (4), amounts transferred
to a State account pursuant to this subsection may be used only in the
payment of cash benefits--
``(i) to individuals with respect to their unemployment, and
``(ii) which are allowable under subparagraph (B) or (C).
``(B)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable as--
``(I) regular compensation, or
``(II) additional compensation, upon the exhaustion of any
temporary extended unemployment compensation (if such State has
entered into an agreement under the Temporary Extended Unemployment
Compensation Act of 2002), for individuals eligible for regular
compensation under the unemployment compensation law of such State.
``(ii) Any additional compensation under clause (i) may not be
taken into account for purposes of any determination relating to the
amount of any extended compensation for which an individual might be
eligible.
``(C)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable to 1 or more
categories of individuals not otherwise eligible for regular
compensation under the unemployment compensation law of such State,
including those described in clause (iii).
``(ii) The benefits paid under this subparagraph to any individual
may not, for any period of unemployment, exceed the maximum amount of
regular compensation authorized under the unemployment compensation law
of such State for that same period, plus any additional compensation
(described in subparagraph (B)(i)) which could have been paid with
respect to that amount.
``(iii) The categories of individuals described in this clause
include the following:
``(I) Individuals who are seeking, or available for, only part-
time (and not full-time) work.
``(II) Individuals who would be eligible for regular
compensation under the unemployment compensation law of such State
under an alternative base period.
``(D) Amounts transferred to a State account under this subsection
may be used in the payment of cash benefits to individuals only for
weeks of unemployment beginning after the date of enactment of this
subsection.
``(4) Amounts transferred to a State account under this subsection
may be used for the administration of its unemployment compensation law
and public employment offices (including in connection with benefits
described in paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (excluding
subparagraph (B) thereof, and deeming the reference to `subsections (a)
and (b)' in subparagraph (D) thereof to include this subsection).
``(5) Transfers under this subsection shall be made within 10 days
after the date of enactment of this paragraph.''.
(c) Limitations on Transfers.--Section 903(b) of the Social
Security Act shall apply to transfers under section 903(d) of such Act
(as amended by this section). For purposes of the preceding sentence,
such section 903(b) shall be deemed to be amended as follows:
(1) By substituting ``the transfer date described in subsection
(d)(5)'' for ``October 1 of any fiscal year''.
(2) By substituting ``remain in the Federal unemployment
account'' for ``be transferred to the Federal unemployment account
as of the beginning of such October 1''.
(3) By substituting ``fiscal year 2002 (after the transfer date
described in subsection (d)(5))'' for ``the fiscal year beginning
on such October 1''.
(4) By substituting ``under subsection (d)'' for ``as of
October 1 of such fiscal year''.
(5) By substituting ``(as of the close of fiscal year 2002)''
for ``(as of the close of such fiscal year)''.
(d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and
3306(f)(2) of the Internal Revenue Code of 1986 are amended by
inserting ``or 903(d)(4)'' before ``of the Social Security Act''.
(2) Section 303(a)(5) of the Social Security Act is amended in the
second proviso by inserting ``or 903(d)(4)'' after ``903(c)(2)''.
(e) Regulations.--The Secretary of Labor may prescribe any
operating instructions or regulations necessary to carry out this
section and the amendments made by this section.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST
ATTACKS ON SEPTEMBER 11, 2001.
(a) In General.--Chapter 1 is amended by adding at the end the
following new subchapter:
``Subchapter Y--New York Liberty Zone Benefits
``Sec. 1400L. Tax benefits for New York Liberty Zone.
``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
``(a) Expansion of Work Opportunity Tax Credit.--
``(1) In general.--For purposes of section 51, a New York
Liberty Zone business employee shall be treated as a member of a
targeted group.
``(2) New york liberty zone business employee.--For purposes of
this subsection--
``(A) In general.--The term `New York Liberty Zone business
employee' means, with respect to any period, any employee of a
New York Liberty Zone business if substantially all the
services performed during such period by such employee for such
business are performed in the New York Liberty Zone.
``(B) Inclusion of certain employees outside the new york
liberty zone.--
``(i) In general.--In the case of a New York Liberty
Zone business described in subclause (II) of subparagraph
(C)(i), the term `New York Liberty Zone business employee'
includes any employee of such business (not described in
subparagraph (A)) if substantially all the services
performed during such period by such employee for such
business are performed in the City of New York, New York.
``(ii) Limitation.--The number of employees of such a
business that are treated as New York Liberty Zone business
employees on any day by reason of clause (i) shall not
exceed the excess of--
``(I) the number of employees of such business on
September 11, 2001, in the New York Liberty Zone, over
``(II) the number of New York Liberty Zone business
employees (determined without regard to this
subparagraph) of such business on the day to which the
limitation is being applied.
The Secretary may require any trade or business to have the
number determined under subclause (I) verified by the New
York State Department of Labor.
``(C) New york liberty zone business.--
``(i) In general.--The term `New York Liberty Zone
business' means any trade or business which is--
``(I) located in the New York Liberty Zone, or
``(II) located in the City of New York, New York,
outside the New York Liberty Zone, as a result of the
physical destruction or damage of such place of
business by the September 11, 2001, terrorist attack.
``(ii) Credit not allowed for large businesses.--The
term `New York Liberty Zone business' shall not include any
trade or business for any taxable year if such trade or
business employed an average of more than 200 employees on
business days during the taxable year.
``(D) Special rules for determining amount of credit.--For
purposes of applying subpart F of part IV of subchapter B of
this chapter to wages paid or incurred to any New York Liberty
Zone business employee--
``(i) section 51(a) shall be applied by substituting
`qualified wages' for `qualified first-year wages',
``(ii) the rules of section 52 shall apply for purposes
of determining the number of employees under subparagraph
(B),
``(iii) subsections (c)(4) and (i)(2) of section 51
shall not apply, and
``(iv) in determining qualified wages, the following
shall apply in lieu of section 51(b):
``(I) Qualified wages.--The term `qualified wages'
means wages paid or incurred by the employer to
individuals who are New York Liberty Zone business
employees of such employer for work performed during
calendar year 2002 or 2003.
``(II) Only first $6,000 of wages per calendar year
taken into account.--The amount of the qualified wages
which may be taken into account with respect to any
individual shall not exceed $6,000 per calendar year.
``(b) Special Allowance for Certain Property Acquired After
September 10, 2001.--
``(1) Additional allowance.--In the case of any qualified New
York Liberty Zone property--
``(A) the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in
service shall include an allowance equal to 30 percent of the
adjusted basis of such property, and
``(B) the adjusted basis of the qualified New York Liberty
Zone property shall be reduced by the amount of such deduction
before computing the amount otherwise allowable as a
depreciation deduction under this chapter for such taxable year
and any subsequent taxable year.
``(2) Qualified new york liberty zone property.--For purposes
of this subsection--
``(A) In general.--The term `qualified New York Liberty
Zone property' means property--
``(i)(I) which is described in section 168(k)(2)(A)(i),
or
``(II) which is nonresidential real property, or
residential rental property, which is described in
subparagraph (B),
``(ii) substantially all of the use of which is in the
New York Liberty Zone and is in the active conduct of a
trade or business by the taxpayer in such Zone,
``(iii) the original use of which in the New York
Liberty Zone commences with the taxpayer after September
10, 2001,
``(iv) which is acquired by the taxpayer by purchase
(as defined in section 179(d)) after September 10, 2001,
but only if no written binding contract for the acquisition
was in effect before September 11, 2001, and
``(v) which is placed in service by the taxpayer on or
before the termination date.
The term `termination date' means December 31, 2006 (December
31, 2009, in the case of nonresidential real property and
residential rental property).
``(B) Eligible real property.--Nonresidential real property
or residential rental property is described in this
subparagraph only to the extent it rehabilitates real property
damaged, or replaces real property destroyed or condemned, as a
result of the September 11, 2001, terrorist attack. For
purposes of the preceding sentence, property shall be treated
as replacing real property destroyed or condemned if, as part
of an integrated plan, such property replaces real property
which is included in a continuous area which includes real
property destroyed or condemned.
``(C) Exceptions.--
``(i) 30 percent additional allowance property.--Such
term shall not include property to which section 168(k)
applies.
``(ii) Alternative depreciation property.--The term
`qualified New York Liberty Zone property' shall not
include any property described in section 168(k)(2)(C)(i).
``(iii) Qualified new york liberty zone leasehold
improvement property.--Such term shall not include any
qualified New York Liberty Zone leasehold improvement
property.
``(iv) Election out.--For purposes of this subsection,
rules similar to the rules of section 168(k)(2)(C)(iii)
shall apply.
``(D) Special rules.--For purposes of this subsection,
rules similar to the rules of section 168(k)(2)(D) shall apply,
except that clause (i) thereof shall be applied without regard
to `and before September 11, 2004'.
``(E) Allowance against alternative minimum tax.--For
purposes of this subsection, rules similar to the rules of
section 168(k)(2)(F) shall apply.
``(c) 5-Year Recovery Period for Depreciation of Certain Leasehold
Improvements.--
``(1) In general.--For purposes of section 168, the term `5-
year property' includes any qualified New York Liberty Zone
leasehold improvement property.
``(2) Qualified new york liberty zone leasehold improvement
property.--For purposes of this section, the term `qualified New
York Liberty Zone leasehold improvement property' means qualified
leasehold improvement property (as defined in section 168(k)(3))
if--
``(A) such building is located in the New York Liberty
Zone,
``(B) such improvement is placed in service after September
10, 2001, and before January 1, 2007, and
``(C) no written binding contract for such improvement was
in effect before September 11, 2001.
``(3) Requirement to use straight line method.--The applicable
depreciation method under section 168 shall be the straight line
method in the case of qualified New York Liberty Zone leasehold
improvement property.
``(4) 9-year recovery period under alternative system.--For
purposes of section 168(g), the class life of qualified New York
Liberty Zone leasehold improvement property shall be 9 years.
``(d) Tax-Exempt Bond Financing.--
``(1) In general.--For purposes of this title, any qualified
New York Liberty Bond shall be treated as an exempt facility bond.
``(2) Qualified new york liberty bond.--For purposes of this
subsection, the term `qualified New York Liberty Bond' means any
bond issued as part of an issue if--
``(A) 95 percent or more of the net proceeds (as defined in
section 150(a)(3)) of such issue are to be used for qualified
project costs,
``(B) such bond is issued by the State of New York or any
political subdivision thereof,
``(C) the Governor or the Mayor designates such bond for
purposes of this section, and
``(D) such bond is issued after the date of the enactment
of this section and before January 1, 2005.
``(3) Limitations on amount of bonds.--
``(A) Aggregate amount designated.--The maximum aggregate
face amount of bonds which may be designated under this
subsection shall not exceed $8,000,000,000, of which not to
exceed $4,000,000,000 may be designated by the Governor and not
to exceed $4,000,000,000 may be designated by the Mayor.
``(B) Specific limitations.--The aggregate face amount of
bonds issued which are to be used for--
``(i) costs for property located outside the New York
Liberty Zone shall not exceed $2,000,000,000,
``(ii) residential rental property shall not exceed
$1,600,000,000, and
``(iii) costs with respect to property used for retail
sales of tangible property and functionally related and
subordinate property shall not exceed $800,000,000.
The limitations under clauses (i), (ii), and (iii) shall be
allocated proportionately between the bonds designated by the
Governor and the bonds designated by the Mayor in proportion to
the respective amounts of bonds designated by each.
``(C) Movable property.--No bonds shall be issued which are
to be used for movable fixtures and equipment.
``(4) Qualified project costs.--For purposes of this
subsection--
``(A) In general.--The term `qualified project costs' means
the cost of acquisition, construction, reconstruction, and
renovation of--
``(i) nonresidential real property and residential
rental property (including fixed tenant improvements
associated with such property) located in the New York
Liberty Zone, and
``(ii) public utility property (as defined in section
168(i)(10)) located in the New York Liberty Zone.
``(B) Costs for certain property outside zone included.--
Such term includes the cost of acquisition, construction,
reconstruction, and renovation of nonresidential real property
(including fixed tenant improvements associated with such
property) located outside the New York Liberty Zone but within
the City of New York, New York, if such property is part of a
project which consists of at least 100,000 square feet of
usable office or other commercial space located in a single
building or multiple adjacent buildings.
``(5) Special rules.--In applying this title to any qualified
New York Liberty Bond, the following modifications shall apply:
``(A) Section 146 (relating to volume cap) shall not apply.
``(B) Section 147(d) (relating to acquisition of existing
property not permitted) shall be applied by substituting `50
percent' for `15 percent' each place it appears.
``(C) Section 148(f)(4)(C) (relating to exception from
rebate for certain proceeds to be used to finance construction
expenditures) shall apply to the available construction
proceeds of bonds issued under this section.
``(D) Repayments of principal on financing provided by the
issue--
``(i) may not be used to provide financing, and
``(ii) must be used not later than the close of the 1st
semiannual period beginning after the date of the repayment
to redeem bonds which are part of such issue.
The requirement of clause (ii) shall be treated as met with
respect to amounts received within 10 years after the date of
issuance of the issue (or, in the case of a refunding bond, the
date of issuance of the original bond) if such amounts are used
by the close of such 10 years to redeem bonds which are part of
such issue.
``(E) Section 57(a)(5) shall not apply.
``(6) Separate issue treatment of portions of an issue.--This
subsection shall not apply to the portion of an issue which (if
issued as a separate issue) would be treated as a qualified bond or
as a bond that is not a private activity bond (determined without
regard to paragraph (1)), if the issuer elects to so treat such
portion.
``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
``(1) In general.--With respect to a bond described in
paragraph (2) issued as part of an issue 90 percent (95 percent in
the case of a bond described in paragraph (2)(C)) or more of the
net proceeds (as defined in section 150(a)(3)) of which were used
to finance facilities located within the City of New York, New York
(or property which is functionally related and subordinate to
facilities located within the City of New York for the furnishing
of water), one additional advanced refunding after the date of the
enactment of this section and before January 1, 2005, shall be
allowed under the applicable rules of section 149(d) if--
``(A) the Governor or the Mayor designates the advance
refunding bond for purposes of this subsection, and
``(B) the requirements of paragraph (4) are met.
``(2) Bonds described.--A bond is described in this paragraph
if such bond was outstanding on September 11, 2001, and is--
``(A) a State or local bond (as defined in section
103(c)(1)) which is a general obligation of the City of New
York, New York,
``(B) a State or local bond (as so defined) other than a
private activity bond (as defined in section 141(a)) issued by
the New York Municipal Water Finance Authority or the
Metropolitan Transportation Authority of the State of New York,
or
``(C) a qualified 501(c)(3) bond (as defined in section
145(a)) which is a qualified hospital bond (as defined in
section 145(c)) issued by or on behalf of the State of New York
or the City of New York, New York.
``(3) Aggregate limit.--For purposes of paragraph (1), the
maximum aggregate face amount of bonds which may be designated
under this subsection by the Governor shall not exceed
$4,500,000,000 and the maximum aggregate face amount of bonds which
may be designated under this subsection by the Mayor shall not
exceed $4,500,000,000.
``(4) Additional requirements.--The requirements of this
paragraph are met with respect to any advance refunding of a bond
described in paragraph (2) if--
``(A) no advance refundings of such bond would be allowed
under any provision of law after September 11, 2001,
``(B) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
``(C) the requirements of section 148 are met with respect
to all bonds issued under this subsection.
``(f) Increase in Expensing Under Section 179.--
``(1) In general.--For purposes of section 179--
``(A) the limitation under section 179(b)(1) shall be
increased by the lesser of--
``(i) $35,000, or
``(ii) the cost of section 179 property which is
qualified New York Liberty Zone property placed in service
during the taxable year, and
``(B) the amount taken into account under section 179(b)(2)
with respect to any section 179 property which is qualified New
York Liberty Zone property shall be 50 percent of the cost
thereof.
``(2) Qualified new york liberty zone property.--For purposes
of this subsection, the term `qualified New York Liberty Zone
property' has the meaning given such term by subsection (b)(2).
``(3) Recapture.--Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified New York
Liberty Zone property which ceases to be used in the New York
Liberty Zone.
``(g) Extension of Replacement Period for Nonrecognition of Gain.--
Notwithstanding subsections (g) and (h) of section 1033, clause (i) of
section 1033(a)(2)(B) shall be applied by substituting `5 years' for `2
years' with respect to property which is compulsorily or involuntarily
converted as a result of the terrorist attacks on September 11, 2001,
in the New York Liberty Zone but only if substantially all of the use
of the replacement property is in the City of New York, New York.
``(h) New York Liberty Zone.--For purposes of this section, the
term `New York Liberty Zone' means the area located on or south of
Canal Street, East Broadway (east of its intersection with Canal
Street), or Grand Street (east of its intersection with East Broadway)
in the Borough of Manhattan in the City of New York, New York.
``(i) References to Governor and Mayor.--For purposes of this
section, the terms `Governor' and `Mayor' mean the Governor of the
State of New York and the Mayor of the City of New York, New York,
respectively.''.
(b) Credit Allowed Against Regular and Minimum Tax.--
(1) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax) is amended by redesignating
paragraph (3) as paragraph (4) and by inserting after paragraph (2)
the following new paragraph:
``(3) Special rules for new york liberty zone business employee
credit.--
``(A) In general.--In the case of the New York Liberty Zone
business employee credit--
``(i) this section and section 39 shall be applied
separately with respect to such credit, and
``(ii) in applying paragraph (1) to such credit--
``(I) the tentative minimum tax shall be treated as
being zero, and
``(II) the limitation under paragraph (1) (as
modified by subclause (I)) shall be reduced by the
credit allowed under subsection (a) for the taxable
year (other than the New York Liberty Zone business
employee credit).
``(B) New york liberty zone business employee credit.--For
purposes of this subsection, the term `New York Liberty Zone
business employee credit' means the portion of work opportunity
credit under section 51 determined under section 1400L(a).''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ``or the New York Liberty
Zone business employee credit'' after ``employment credit''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after December 31, 2001.
(c) Clerical Amendment.--The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
``Subchapter Y--New York Liberty Zone Benefits.''.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.
Any person required to furnish a statement under any section of
subpart B of part III of subchapter A of chapter 61 of the Internal
Revenue Code of 1986 for any taxable year ending after the date of the
enactment of this Act, may electronically furnish such statement
(without regard to any first class mailing requirement) to any
recipient who has consented to the electronic provision of the
statement in a manner similar to the one permitted under regulations
issued under section 6051 of such Code or in such other manner as
provided by the Secretary.
SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION
NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF
SHAREHOLDERS.
(a) In General.--Subparagraph (A) of section 108(d)(7) (relating to
certain provisions to be applied at corporate level) is amended by
inserting before the period ``, including by not taking into account
under section 1366(a) any amount excluded under subsection (a) of this
section''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply to discharges of
indebtedness after October 11, 2001, in taxable years ending after
such date.
(2) Exception.--The amendment made by this section shall not
apply to any discharge of indebtedness before March 1, 2002,
pursuant to a plan of reorganization filed with a bankruptcy court
on or before October 11, 2001.
SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF
ACCOUNTING.
(a) In General.--Paragraph (5) of section 448(d) is amended to read
as follows:
``(5) Special rule for certain services.--
``(A) In general.--In the case of any person using an
accrual method of accounting with respect to amounts to be
received for the performance of services by such person, such
person shall not be required to accrue any portion of such
amounts which (on the basis of such person's experience) will
not be collected if--
``(i) such services are in fields referred to in
paragraph (2)(A), or
``(ii) such person meets the gross receipts test of
subsection (c) for all prior taxable years.
``(B) Exception.--This paragraph shall not apply to any
amount if interest is required to be paid on such amount or
there is any penalty for failure to timely pay such amount.
``(C) Regulations.--The Secretary shall prescribe
regulations to permit taxpayers to determine amounts referred
to in subparagraph (A) using computations or formulas which,
based on experience, accurately reflect the amount of income
that will not be collected by such person. A taxpayer may
adopt, or request consent of the Secretary to change to, a
computation or formula that clearly reflects the taxpayer's
experience. A request under the preceding sentence shall be
approved if such computation or formula clearly reflects the
taxpayer's experience.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of
this Act.
(2) Change in method of accounting.--In the case of any
taxpayer required by the amendments made by this section to change
its method of accounting for its first taxable year ending after
the date of the enactment of this Act--
(A) such change shall be treated as initiated by the
taxpayer,
(B) such change shall be treated as made with the consent
of the Secretary of the Treasury, and
(C) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of the Internal
Revenue Code of 1986 shall be taken into account over a period
of 4 years (or if less, the number of taxable years that the
taxpayer used the method permitted under section 448(d)(5) of
such Code as in effect before the date of the enactment of this
Act) beginning with such first taxable year.
SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY
QUALIFIED PLACEMENT AGENCIES.
(a) In General.--The matter preceding subparagraph (B) of section
131(b)(1) (defining qualified foster care payment) is amended to read
as follows:
``(1) In general.--The term `qualified foster care payment'
means any payment made pursuant to a foster care program of a State
or political subdivision thereof--
``(A) which is paid by--
``(i) a State or political subdivision thereof, or
``(ii) a qualified foster care placement agency, and''.
(b) Qualified Foster Individuals To Include Individuals Placed by
Qualified Placement Agencies.--Subparagraph (B) of section 131(b)(2)
(defining qualified foster individual) is amended to read as follows:
``(B) a qualified foster care placement agency.''.
(c) Qualified Foster Care Placement Agency Defined.--Subsection (b)
of section 131 is amended by redesignating paragraph (3) as paragraph
(4) and by inserting after paragraph (2) the following new paragraph:
``(3) Qualified foster care placement agency.--The term
`qualified foster care placement agency' means any placement agency
which is licensed or certified by--
``(A) a State or political subdivision thereof, or
``(B) an entity designated by a State or political
subdivision thereof,
for the foster care program of such State or political subdivision
to make foster care payments to providers of foster care.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) Special rule.--Clause (i) of section 412(l)(7)(C) (relating
to interest rate) is amended by adding at the end the following new
subclause:
``(III) Special rule for 2002 and 2003.--For a plan
year beginning in 2002 or 2003, notwithstanding
subclause (I), in the case that the rate of interest
used under subsection (b)(5) exceeds the highest rate
permitted under subclause (I), the rate of interest
used to determine current liability under this
subsection may exceed the rate of interest otherwise
permitted under subclause (I); except that such rate of
interest shall not exceed 120 percent of the weighted
average referred to in subsection (b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (m) of section 412 is
amended by adding at the end the following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case in which
the interest rate used to determine current liability is determined
under subsection (l)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying paragraphs (1) and
(4)(B)(ii) for plan years beginning in 2002, the current
liability for the preceding plan year shall be redetermined
using 120 percent as the specified percentage determined under
subsection (l)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying paragraphs (1) and
(4)(B)(ii) for plan years beginning in 2004, the current
liability for the preceding plan year shall be redetermined
using 105 percent as the specified percentage determined under
subsection (l)(7)(C)(i)(II).''.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) Special rule.--Clause (i) of section 302(d)(7)(C) of such
Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the end the
following new subclause:
``(III) Special rule for 2002 and 2003.--For a plan
year beginning in 2002 or 2003, notwithstanding
subclause (I), in the case that the rate of interest
used under subsection (b)(5) exceeds the highest rate
permitted under subclause (I), the rate of interest
used to determine current liability under this
subsection may exceed the rate of interest otherwise
permitted under subclause (I); except that such rate of
interest shall not exceed 120 percent of the weighted
average referred to in subsection (b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (e) of section 302 of
such Act (29 U.S.C. 1082) is amended by adding at the end the
following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case in which
the interest rate used to determine current liability is determined
under subsection (d)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying paragraphs (1) and
(4)(B)(ii) for plan years beginning in 2002, the current
liability for the preceding plan year shall be redetermined
using 120 percent as the specified percentage determined under
subsection (d)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying paragraphs (1) and
(4)(B)(ii) for plan years beginning in 2004, the current
liability for the preceding plan year shall be redetermined
using 105 percent as the specified percentage determined under
subsection (d)(7)(C)(i)(II).''.
(c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is
amended by adding at the end the following new subclause:
``(IV) In the case of plan years beginning after December 31, 2001,
and before January 1, 2004, subclause (II) shall be applied by
substituting `100 percent' for `85 percent'. Subclause (III) shall be
applied for such years without regard to the preceding sentence. Any
reference to this clause by any other sections or subsections shall be
treated as a reference to this clause without regard to this
subclause.''.
SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT
CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL
TEACHERS.
(a) In General.--Section 62(a)(2) (relating to certain trade and
business deductions of employees) is amended by adding at the end the
following:
``(D) Certain expenses of elementary and secondary school
teachers.--In the case of taxable years beginning during 2002
or 2003, the deductions allowed by section 162 which consist of
expenses, not in excess of $250, paid or incurred by an
eligible educator in connection with books, supplies (other
than nonathletic supplies for courses of instruction in health
or physical education), computer equipment (including related
software and services) and other equipment, and supplementary
materials used by the eligible educator in the classroom.''.
(b) Eligible Educator.--Section 62 is amended by adding at the end
the following:
``(d) Definition; Special Rules.--
``(1) Eligible educator.--
``(A) In general.--For purposes of subsection (a)(2)(D),
the term `eligible educator' means, with respect to any taxable
year, an individual who is a kindergarten through grade 12
teacher, instructor, counselor, principal, or aide in a school
for at least 900 hours during a school year.
``(B) School.--The term `school' means any school which
provides elementary education or secondary education
(kindergarten through grade 12), as determined under State law.
``(2) Coordination with exclusions.--A deduction shall be
allowed under subsection (a)(2)(D) for expenses only to the extent
the amount of such expenses exceeds the amount excludable under
section 135, 529(c)(1), or 530(d)(2) for the taxable year.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
Subtitle B--Technical Corrections
SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF
RECONCILIATION ACT OF 2001.
(a) Amendments Related to Section 101 of the Act.--
(1) In general.--Subsection (b) of section 6428 is amended to
read as follows:
``(b) Credit Treated as Nonrefundable Personal Credit.--For
purposes of this title, the credit allowed under this section shall be
treated as a credit allowable under subpart A of part IV of subchapter
A of chapter 1.''.
(2) Conforming amendments.--
(A) Subsection (d) of section 6428 is amended to read as
follows:
``(d) Coordination with Advance Refunds of Credit.--
``(1) In general.--The amount of credit which would (but for
this paragraph) be allowable under this section shall be reduced
(but not below zero) by the aggregate refunds and credits made or
allowed to the taxpayer under subsection (e). Any failure to so
reduce the credit shall be treated as arising out of a mathematical
or clerical error and assessed according to section 6213(b)(1).
``(2) Joint returns.--In the case of a refund or credit made or
allowed under subsection (e) with respect to a joint return, half
of such refund or credit shall be treated as having been made or
allowed to each individual filing such return.''.
(B) Paragraph (2) of section 6428(e) is amended to read as
follows:
``(2) Advance refund amount.--For purposes of paragraph (1),
the advance refund amount is the amount that would have been
allowed as a credit under this section for such first taxable year
if--
``(A) this section (other than subsections (b) and (d) and
this subsection) had applied to such taxable year, and
``(B) the credit for such taxable year were not allowed to
exceed the excess (if any) of--
``(i) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55, over
``(ii) the sum of the credits allowable under part IV
of subchapter A of chapter 1 (other than the credits
allowable under subpart C thereof, relating to refundable
credits).''.
(b) Amendment Related to Section 201 of the Act.--Subparagraph (B)
of section 24(d)(1) is amended by striking ``amount of credit allowed
by this section'' and inserting ``aggregate amount of credits allowed
by this subpart''.
(c) Amendments Related to Section 202 of the Act.--
(1) Corrections to credit for adoption expenses.--
(A) Paragraph (1) of section 23(a) is amended to read as
follows:
``(1) In general.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this chapter the
amount of the qualified adoption expenses paid or incurred by the
taxpayer.''.
(B) Subsection (a) of section 23 is amended by adding at
the end the following new paragraph:
``(3) $10,000 credit for adoption of child with special needs
regardless of expenses.--In the case of an adoption of a child with
special needs which becomes final during a taxable year, the
taxpayer shall be treated as having paid during such year qualified
adoption expenses with respect to such adoption in an amount equal
to the excess (if any) of $10,000 over the aggregate qualified
adoption expenses actually paid or incurred by the taxpayer with
respect to such adoption during such taxable year and all prior
taxable years.''.
(C) Paragraph (2) of section 23(a) is amended by striking
the last sentence.
(D) Paragraph (1) of section 23(b) is amended by striking
``subsection (a)(1)(A)'' and inserting ``subsection (a)''.
(E) Subsection (i) of section 23 is amended by striking
``the dollar limitation in subsection (b)(1)'' and inserting
``the dollar amounts in subsections (a)(3) and (b)(1)''.
(F) Expenses paid or incurred during any taxable year
beginning before January 1, 2002, may be taken into account in
determining the credit under section 23 of the Internal Revenue
Code of 1986 only to the extent the aggregate of such expenses
does not exceed the applicable limitation under section
23(b)(1) of such Code as in effect on the day before the date
of the enactment of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
(2) Corrections to exclusion for employer-provided adoption
assistance.--
(A) Subsection (a) of section 137 is amended to read as
follows:
``(a) Exclusion.--
``(1) In general.--Gross income of an employee does not include
amounts paid or expenses incurred by the employer for qualified
adoption expenses in connection with the adoption of a child by an
employee if such amounts are furnished pursuant to an adoption
assistance program.
``(2) $10,000 exclusion for adoption of child with special
needs regardless of expenses.--In the case of an adoption of a
child with special needs which becomes final during a taxable year,
the qualified adoption expenses with respect to such adoption for
such year shall be increased by an amount equal to the excess (if
any) of $10,000 over the actual aggregate qualified adoption
expenses with respect to such adoption during such taxable year and
all prior taxable years.''.
(B) Paragraph (2) of section 137(b) is amended by striking
``subsection (a)(1)'' and inserting ``subsection (a)''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2002;
except that the amendments made by paragraphs (1)(C), (1)(D), and
(2)(B) shall apply to taxable years beginning after December 31,
2001.
(d) Amendments Related to Section 205 of the Act.--
(1) Section 45F(d)(4)(B) is amended by striking ``subpart A, B,
or D of this part'' and inserting ``this chapter or for purposes of
section 55''.
(2) Section 38(b)(15) is amended by striking ``45F'' and
inserting ``45F(a)''.
(e) Amendments Related to Section 301 of the Act.--
(1) Section 63(c)(2) is amended--
(A) in subparagraph (A), by striking ``subparagraph (C)''
and inserting ``subparagraph (D)'',
(B) by striking ``or'' at the end of subparagraph (B),
(C) by redesignating subparagraph (C) as subparagraph (D),
(D) by inserting after subparagraph (B) the following new
subparagraph:
``(C) one-half of the amount in effect under subparagraph
(A) in the case of a married individual filing a separate
return, or'', and
(E) by inserting the following flush sentence at the end:
``If any amount determined under subparagraph (A) is not a
multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.''.
(2)(A) Section 63(c)(4) is amended by striking ``paragraph (2)
or (5)'' and inserting ``paragraph (2)(B), (2)(D), or (5)''.
(B) Section 63(c)(4)(B)(i) is amended by striking ``paragraph
(2)'' and inserting ``paragraph (2)(B), (2)(D),''.
(C) Section 63(c)(4) is amended by striking the flush sentence
at the end (as added by section 301(c)(2) of Public Law 107-17).
(f) Amendment Related to Section 401 of the Act.--Section
530(d)(4)(B)(iv) is amended by striking ``because the taxpayer elected
under paragraph (2)(C) to waive the application of paragraph (2)'' and
inserting ``by application of paragraph (2)(C)(i)(II)''.
(g) Amendments Related to Section 511 of the Act.--
(1) Section 2511(c) is amended by striking ``taxable gift under
section 2503,'' and inserting ``transfer of property by gift,''.
(2) Section 2101(b) is amended by striking the last sentence.
(h) Amendment Related to Section 532 of the Act.--Section 2016 is
amended by striking ``any State, any possession of the United States,
or the District of Columbia,''.
(i) Amendments Relating to Section 602 of the Act.--
(1) Subparagraph (A) of section 408(q)(3) is amended to read as
follows:
``(A) Qualified employer plan.--The term `qualified
employer plan' has the meaning given such term by section
72(p)(4)(A)(i); except that such term shall also include an
eligible deferred compensation plan (as defined in section
457(b)) of an eligible employer described in section
457(e)(1)(A).''.
(2) Section 4(c) of Employee Retirement Income Security Act of
1974 is amended--
(A) by inserting ``and part 5 (relating to administration
and enforcement)'' before the period at the end, and
(B) by adding at the end the following new sentence: ``Such
provisions shall apply to such accounts and annuities in a
manner similar to their application to a simplified employee
pension under section 408(k) of the Internal Revenue Code of
1986.''.
(j) Amendments Relating to Section 611 of the Act.--
(1) Section 408(k) is amended--
(A) in paragraph (2)(C) by striking ``$300'' and inserting
``$450'', and
(B) in paragraph (8) by striking ``$300'' both places it
appears and inserting ``$450''.
(2) Section 409(o)(1)(C)(ii) is amended--
(A) by striking ``$500,000'' both places it appears and
inserting ``$800,000'', and
(B) by striking ``$100,000'' and inserting ``$160,000''.
(3) Section 611(i) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by adding at the end the
following new paragraph:
``(3) Special rule.--In the case of plan that, on June 7, 2001,
incorporated by reference the limitation of section 415(b)(1)(A) of
the Internal Revenue Code of 1986, section 411(d)(6) of such Code
and section 204(g)(1) of the Employee Retirement Income Security
Act of 1974 do not apply to a plan amendment that--
``(A) is adopted on or before June 30, 2002,
``(B) reduces benefits to the level that would have applied
without regard to the amendments made by subsection (a) of this
section, and
``(C) is effective no earlier than the years described in
paragraph (2).''.
(k) Amendments Relating to Section 613 of the Act.--
(1) Section 416(c)(1)(C)(iii) is amended by striking
``Exception for frozen plan'' and inserting ``Exception for plan
under which no key employee (or former key employee) benefits for
plan year''.
(2) Section 416(g)(3)(B) is amended by striking ``separation
from service'' and inserting ``severance from employment''.
(l) Amendments Relating to Sections 614 and 616 of the Act.--
(1) Section 404(a)(12) is amended by striking ``(9),'' and
inserting ``(9) and subsection (h)(1)(C),''.
(2) Section 404(n) is amended by striking ``subsection (a),''
and inserting ``subsection (a) or paragraph (1)(C) of subsection
(h)''.
(3) Section 402(h)(2)(A) is amended by striking ``15 percent''
and inserting ``25 percent''.
(4) Section 404(a)(7)(C) is amended to read as follows:
``(C) Paragraph not to apply in certain cases.--
``(i) Beneficiary test.--This paragraph shall not have
the effect of reducing the amount otherwise deductible
under paragraphs (1), (2), and (3), if no employee is a
beneficiary under more than 1 trust or under a trust and an
annuity plan.
``(ii) Elective deferrals.--If, in connection with 1 or
more defined contribution plans and 1 or more defined
benefit plans, no amounts (other than elective deferrals
(as defined in section 402(g)(3))) are contributed to any
of the defined contribution plans for the taxable year,
then subparagraph (A) shall not apply with respect to any
of such defined contribution plans and defined benefit
plans.''.
(m) Amendment Relating to Section 618 of the Act.--Section
25B(d)(2)(A) is amended to read as follows:
``(A) In general.--The qualified retirement savings
contributions determined under paragraph (1) shall be reduced
(but not below zero) by the aggregate distributions received by
the individual during the testing period from any entity of a
type to which contributions under paragraph (1) may be made.
The preceding sentence shall not apply to the portion of any
distribution which is not includible in gross income by reason
of a trustee-to-trustee transfer or a rollover distribution.''.
(n) Amendments Relating to Section 619 of the Act.--
(1) Section 45E(e)(1) is amended by striking ``(n)'' and
inserting ``(m)''.
(2) Section 619(d) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by striking ``established''
and inserting ``first effective''.
(o) Amendments Relating to Section 631 of the Act.--
(1) Section 402(g)(1) is amended by adding at the end the
following:
``(C) Catch-up contributions.--In addition to subparagraph
(A), in the case of an eligible participant (as defined in
section 414(v)), gross income shall not include elective
deferrals in excess of the applicable dollar amount under
subparagraph (B) to the extent that the amount of such elective
deferrals does not exceed the applicable dollar amount under
section 414(v)(2)(B)(i) for the taxable year (without regard to
the treatment of the elective deferrals by an applicable
employer plan under section 414(v)).''.
(2) Section 401(a)(30) is amended by striking ``402(g)(1)'' and
inserting ``402(g)(1)(A)''.
(3) Section 414(v)(2) is amended by adding at the end the
following:
``(D) Aggregation of plans.--For purposes of this
paragraph, plans described in clauses (i), (ii), and (iv) of
paragraph (6)(A) that are maintained by the same employer (as
determined under subsection (b), (c), (m) or (o)) shall be
treated as a single plan, and plans described in clause (iii)
of paragraph (6)(A) that are maintained by the same employer
shall be treated as a single plan.''.
(4) Section 414(v)(3)(A)(i) is amended by striking ``section
402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 408(p), 415, or
457'' and inserting ``sections 401(a)(30), 402(h), 403(b), 408,
415(c), and 457(b)(2) (determined without regard to section
457(b)(3))''.
(5) Section 414(v)(3)(B) is amended by striking ``section
401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12),
403(b)(12), 408(k), 408(p), 408B, 410(b), or 416'' and inserting
``section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k),
410(b), or 416''.
(6) Section 414(v)(4)(B) is amended by inserting before the
period at the end the following: ``, except that a plan described
in clause (i) of section 410(b)(6)(C) shall not be treated as a
plan of the employer until the expiration of the transition period
with respect to such plan (as determined under clause (ii) of such
section)''.
(7) Section 414(v)(5) is amended--
(A) by striking ``, with respect to any plan year,'' in the
matter preceding subparagraph (A),
(B) by amending subparagraph (A) to read as follows:
``(A) who would attain age 50 by the end of the taxable
year,'', and
(C) in subparagraph (B) by striking ``plan year'' and
inserting ``plan (or other applicable) year''.
(8) Section 414(v)(6)(C) is amended to read as follows:
``(C) Exception for section 457 plans.--This subsection
shall not apply to a participant for any year for which a
higher limitation applies to the participant under section
457(b)(3).''.
(9) Section 457(e) is amended by adding at the end the
following new paragraph:
``(18) Coordination with catch-up contributions for individuals
age 50 or older.--In the case of an individual who is an eligible
participant (as defined by section 414(v)) and who is a participant
in an eligible deferred compensation plan of an employer described
in paragraph (1)(A), subsections (b)(3) and (c) shall be applied by
substituting for the amount otherwise determined under the
applicable subsection the greater of--
``(A) the sum of--
``(i) the plan ceiling established for purposes of
subsection (b)(2) (without regard to subsection (b)(3)),
plus
``(ii) the applicable dollar amount for the taxable
year determined under section 414(v)(2)(B)(i), or
``(B) the amount determined under the applicable subsection
(without regard to this paragraph).''.
(p) Amendments Relating to Section 632 of the Act.--
(1) Section 403(b)(1) is amended in the matter following
subparagraph (E) by striking ``then amounts contributed'' and all
that follows and inserting the following:
``then contributions and other additions by such employer for
such annuity contract shall be excluded from the gross income of
the employee for the taxable year to the extent that the aggregate
of such contributions and additions (when expressed as an annual
addition (within the meaning of section 415(c)(2))) does not exceed
the applicable limit under section 415. The amount actually
distributed to any distributee under such contract shall be taxable
to the distributee (in the year in which so distributed) under
section 72 (relating to annuities). For purposes of applying the
rules of this subsection to contributions and other additions by an
employer for a taxable year, amounts transferred to a contract
described in this paragraph by reason of a rollover contribution
described in paragraph (8) of this subsection or section
408(d)(3)(A)(ii) shall not be considered contributed by such
employer.''.
(2) Section 403(b) is amended by striking paragraph (6).
(3) Section 403(b)(3) is amended--
(A) in the first sentence by inserting the following before
the period at the end: ``, and which precedes the taxable year
by no more than five years'', and
(B) in the second sentence by striking ``or any amount
received by a former employee after the fifth taxable year
following the taxable year in which such employee was
terminated''.
(4) Section 415(c)(7) is amended to read as follows:
``(7) Special rules relating to church plans.--
``(A) Alternative contribution limitation.--
``(i) In general.--Notwithstanding any other provision
of this subsection, at the election of a participant who is
an employee of a church or a convention or association of
churches, including an organization described in section
414(e)(3)(B)(ii), contributions and other additions for an
annuity contract or retirement income account described in
section 403(b) with respect to such participant, when
expressed as an annual addition to such participant's
account, shall be treated as not exceeding the limitation
of paragraph (1) if such annual addition is not in excess
of $10,000.
``(ii) $40,000 aggregate limitation.--The total amount
of additions with respect to any participant which may be
taken into account for purposes of this subparagraph for
all years may not exceed $40,000.
``(B) Number of years of service for duly ordained,
commissioned, or licensed ministers or lay employees.--For
purposes of this paragraph--
``(i) all years of service by--
``(I) a duly ordained, commissioned, or licensed
minister of a church, or
``(II) a lay person,
as an employee of a church, a convention or association of
churches, including an organization described in section
414(e)(3)(B)(ii), shall be considered as years of service
for 1 employer, and
``(ii) all amounts contributed for annuity contracts by
each such church (or convention or association of churches)
or such organization during such years for such minister or
lay person shall be considered to have been contributed by
1 employer.
``(C) Foreign missionaries.--In the case of any individual
described in subparagraph (D) performing services outside the
United States, contributions and other additions for an annuity
contract or retirement income account described in section
403(b) with respect to such employee, when expressed as an
annual addition to such employee's account, shall not be
treated as exceeding the limitation of paragraph (1) if such
annual addition is not in excess of the greater of $3,000 or
the employee's includible compensation determined under section
403(b)(3).
``(D) Annual addition.--For purposes of this paragraph, the
term `annual addition' has the meaning given such term by
paragraph (2).
``(E) Church, convention or association of churches.--For
purposes of this paragraph, the terms `church' and `convention
or association of churches' have the same meaning as when used
in section 414(e).''.
(5) Section 457(e)(5) is amended to read as follows:
``(5) Includible compensation.--The term `includible
compensation' has the meaning given to the term `participant's
compensation' by section 415(c)(3).''.
(6) Section 402(g)(7)(B) is amended by striking ``2001.'' and
inserting ``2001).''.
(q) Amendments Relating to Section 643 of the Act.--
(1) Section 401(a)(31)(C)(i) is amended by inserting ``is a
qualified trust which is part of a plan which is a defined
contribution plan and'' before ``agrees''.
(2) Section 402(c)(2) is amended by adding at the end the
following flush sentence:
``In the case of a transfer described in subparagraph (A) or (B),
the amount transferred shall be treated as consisting first of the
portion of such distribution that is includible in gross income
(determined without regard to paragraph (1)).''.
(r) Amendments Relating to Section 648 of the Act.--
(1) Section 417(e) is amended--
(A) in paragraph (1) by striking ``exceed the dollar limit
under section 411(a)(11)(A)'' and inserting ``exceed the amount
that can be distributed without the participant's consent under
section 411(a)(11)'', and
(B) in paragraph (2)(A) by striking ``exceeds the dollar
limit under section 411(a)(11)(A)'' and inserting ``exceeds the
amount that can be distributed without the participant's
consent under section 411(a)(11)''.
(2) Section 205(g) of the Employee Retirement Income Security
Act of 1974 is amended--
(A) in paragraph (1) by striking ``exceed the dollar limit
under section 203(e)(1)'' and inserting ``exceed the amount
that can be distributed without the participant's consent under
section 203(e)'', and
(B) in paragraph (2)(A) by striking ``exceeds the dollar
limit under section 203(e)(1)'' and inserting ``exceeds the
amount that can be distributed without the participant's
consent under section 203(e)''.
(s) Amendment Relating to Section 652 of the Act.--Section
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by
professional service employers'' and inserting ``Special rule for
terminating plans''.
(t) Amendments Relating to Section 657 of the Act.--Section
404(c)(3) of the Employee Retirement Income Security Act of 1974 is
amended--
(1) by striking ``the earlier of'' in subparagraph (A) the
second place it appears, and
(2) by striking ``if the transfer'' and inserting ``a transfer
that''.
(u) Amendments Relating to Section 659 of the Act.--
(1) Section 4980F is amended--
(A) in subsection (e)(1) by striking ``written notice'' and
inserting ``the notice described in paragraph (2)'',
(B) by amending subsection (f)(2)(A) to read as follows:
``(A) any defined benefit plan described in section 401(a)
which includes a trust exempt from tax under section 501(a),
or'', and
(C) in subsection (f)(3) by striking ``significantly'' both
places it appears.
(2) Section 204(h)(9) of the Employee Retirement Income
Security Act of 1974 is amended by striking ``significantly'' both
places it appears.
(3) Section 659(c)(3)(B) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by striking ``(or'' and
inserting ``(and''.
(v) Amendments Relating to Section 661 of the Act.--
(1) Section 412(c)(9)(B) is amended--
(A) in clause (ii) by striking ``125 percent'' and
inserting ``100 percent'', and
(B) by adding at the end the following new clause:
``(iv) Limitation.--A change in funding method to use a
prior year valuation, as provided in clause (ii), may not
be made unless as of the valuation date within the prior
plan year, the value of the assets of the plan are not less
than 125 percent of the plan's current liability (as
defined in paragraph (7)(B)).''.
(2) Section 302(c)(9)(B) of the Employee Retirement Income
Security Act of 1974 is amended--
(A) in clause (ii) by striking ``125 percent'' and
inserting ``100 percent'', and
(B) by adding at the end the following new clause:
``(iv) A change in funding method to use a prior year valuation, as
provided in clause (ii), may not be made unless as of the valuation
date within the prior plan year, the value of the assets of the plan
are not less than 125 percent of the plan's current liability (as
defined in paragraph (7)(B)).''.
(w) Amendments Relating to Section 662 of the Act.--
(1) Section 404(k) is amended--
(A) in paragraph (1) by striking ``during the taxable
year'',
(B) in paragraph (2)(B) by striking ``(A)(iii)'' and
inserting ``(A)(iv)'',
(C) in paragraph (4)(B) by striking ``(iii)'' and inserting
``(iv)'', and
(D) by redesignating subparagraph (B) of paragraph (4) (as
amended by subparagraph (C)) as subparagraph (C) of paragraph
(4) and by inserting after subparagraph (A) the following new
subparagraph:
``(B) Reinvestment dividends.--For purposes of subparagraph
(A), an applicable dividend reinvested pursuant to clause
(iii)(II) of paragraph (2)(A) shall be treated as paid in the
taxable year of the corporation in which such dividend is
reinvested in qualifying employer securities or in which the
election under clause (iii) of paragraph (2)(A) is made,
whichever is later.''.
(2) Section 404(k) is amended by adding at the end the
following new paragraph:
``(7) Full vesting.--In accordance with section 411, an
applicable dividend described in clause (iii)(II) of paragraph
(2)(A) shall be subject to the requirements of section
411(a)(1).''.
(x) Effective Date.--Except as provided in subsection (c), the
amendments made by this section shall take effect as if included in the
provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 to which they relate.
SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF
2000.
(a) Amendment Related to Section 101 of the Act.--Section
469(i)(3)(E) is amended by striking clauses (ii), (iii), and (iv) and
inserting the following:
``(ii) second to the portion of such loss to which
subparagraph (C) applies,
``(iii) third to the portion of the passive activity
credit to which subparagraph (B) or (D) does not apply,
``(iv) fourth to the portion of such credit to which
subparagraph (B) applies, and''.
(b) Amendment Related to Section 306 of the Act.--Section
151(c)(6)(C) is amended--
(1) by striking ``for earned income credit.--For purposes of
section 32, an'' and inserting ``for principal place of abode
requirements.--An'', and
(2) by striking ``requirement of section 32(c)(3)(A)(ii)'' and
inserting ``principal place of abode requirements of section
2(a)(1)(B), section 2(b)(1)(A), and section 32(c)(3)(A)(ii)''.
(c) Amendment Related to Section 309 of the Act.--Subparagraph (A)
of section 358(h)(1) is amended to read as follows:
``(A) which is assumed by another person as part of the
exchange, and''.
(d) Amendments Related to Section 401 of the Act.--
(1)(A) Section 1234A is amended by inserting ``or'' after the
comma at the end of paragraph (1), by striking ``or'' at the end of
paragraph (2), and by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection (a)(1) and in
subsection (b) by striking ``sale or exchange'' the first place it
appears in each subsection and inserting ``sale, exchange, or
termination''.
(ii) Section 1234B is amended by adding at the end the
following new subsection:
``(f) Cross Reference.--
``For special rules relating to dealer securities futures
contracts, see section 1256.''.
(2) Section 1091(e) is amended--
(A) in the heading, by striking ``Securities.--'' and
inserting ``Securities and Securities Futures Contracts To
Sell.--'',
(B) by inserting after ``closing of a short sale of'' the
following: ``(or the sale, exchange, or termination of a
securities futures contract to sell)'',
(C) in paragraph (2), by inserting after ``short sale of''
the following: ``(or securities futures contracts to sell)'',
and
(D) by adding at the end the following:
``For purposes of this subsection, the term `securities futures
contract' has the meaning provided by section 1234B(c).''.
(3)(A) Section 1233(e)(2) is amended by striking ``and'' at the
end of subparagraph (C), by striking the period and inserting ``;
and'' at the end of subparagraph (D), and inserting after
subparagraph (D) the following:
``(E) entering into a securities futures contract (as so
defined) to sell shall be considered to be a short sale, and
the settlement of such contract shall be considered to be the
closing of such short sale.''.
(B) Section 1234B(b) is amended by inserting after ``or this
section,'' the following: ``or in section 1233,''.
(e) Effective Date.--The amendments made by this section shall take
effect as if included in the provisions of the Community Renewal Tax
Relief Act of 2000 to which they relate.
SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.
(a) Amendments Related to Section 545 of the Act.--Section
857(b)(7) is amended--
(1) in clause (i) of subparagraph (B), by striking ``the amount
of which'' and inserting ``to the extent the amount of the rents'',
and
(2) in subparagraph (C), by striking ``if the amount'' and
inserting ``to the extent the amount''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in section 545 of the Tax Relief Extension Act of
1999.
SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 311 of the Act.--Section 311(e)
of the Taxpayer Relief Act of 1997 (Public Law 105-34; 111 Stat. 836)
is amended--
(1) in paragraph (2)(A), by striking ``recognized'' and
inserting ``included in gross income'', and
(2) by adding at the end the following new paragraph:
``(5) Disposition of interest in passive activity.--Section
469(g)(1)(A) of the Internal Revenue Code of 1986 shall not apply
by reason of an election made under paragraph (1).''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in section 311 of the Taxpayer Relief Act of
1997.
SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.
(a) Amendment Related to Section 4006 of the Act.--Section 26(b)(2)
is amended by striking ``and'' at the end of subparagraph (P), by
striking the period and inserting ``, and'' at the end of subparagraph
(Q), and by adding at the end the following new subparagraph:
``(R) section 138(c)(2) (relating to penalty for
distributions from Medicare+Choice MSA not used for qualified
medical expenses if minimum balance not maintained).''.
(b) Effective Date.--The amendment made by this section shall take
effect as if included in section 4006 of the Balanced Budget Act of
1997.
SEC. 416. OTHER TECHNICAL CORRECTIONS.
(a) Coordination of Advanced Payments of Earned Income Credit.--
(1) Section 32(g)(2) is amended by striking ``subpart'' and
inserting ``part''.
(2) The amendment made by this subsection shall take effect as
if included in section 474 of the Tax Reform Act of 1984.
(b) Special Rule Related to Wash Sale Losses.--
(1) Section 1256(f) is amended by adding at the end the
following new paragraph:
``(5) Special rule related to losses.--Section 1091
(relating to loss from wash sales of stock or securities) shall
not apply to any loss taken into account by reason of paragraph
(1) of subsection (a).''.
(2) The amendment made by this subsection shall take effect as
if included in section 5075 of the Technical and Miscellaneous
Revenue Act of 1988.
(c) Disclosure by Social Security Administration to Federal Child
Support Agencies.--
(1) Section 6103(l)(8) is amended--
(A) in the heading, by striking ``state and local'' and
inserting ``federal, state, and local'', and
(B) in subparagraph (A), by inserting ``Federal or'' before
``State or local''.
(2) The amendments made by this subsection shall take effect on
the date of the enactment of this Act.
(d) Treatment of Settlements Under Partnership Audit Rules.--
(1) The following provisions are each amended by inserting ``or
the Attorney General (or his delegate)'' after ``Secretary'' each
place it appears:
(A) Paragraphs (1) and (2) of section 6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
(2) The amendments made by this subsection shall apply with
respect to settlement agreements entered into after the date of the
enactment of this Act.
(e) Amendment Related to Procedure and Administration.--
(1) Section 6331(k)(3) (relating to no levy while certain
offers pending or installment agreement pending or in effect) is
amended to read as follows:
``(3) Certain rules to apply.--Rules similar to the rules of--
``(A) paragraphs (3) and (4) of subsection (i), and
``(B) except in the case of paragraph (2)(C), paragraph (5)
of subsection (i),
shall apply for purposes of this subsection.''.
(2) The amendment made by this subsection shall take effect on
the date of the enactment of this Act.
(f) Modified Endowment Contracts.--Paragraph (2) of section 318(a)
of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-645)
is repealed, and clause (ii) of section 7702A(c)(3)(A) shall read and
be applied as if the amendment made by such paragraph had not been
enacted.
SEC. 417. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B that relates to
termination is redesignated as subsection (h).
(2) The second sentence of section 42(h)(3)(C) is amended by
striking ``the amounts described in'' and all that follows through
the period and inserting ``the amounts described in clauses (ii)
through (iv) over the aggregate housing credit dollar amount
allocated for such year.''.
(3) Clause (ii) of section 42(m)(1)(B) is amended by striking
the second ``and'' at the end of subclause (II) and by inserting
``and'' at the end of subclause (III).
(4) Section 51A(c)(1) is amended by striking ``51(d)(10)'' and
inserting ``51(d)(11)''.
(5) The flush sentence at the end of clause (ii) of section
56(a)(1)(A) is amended by striking ``such 1250'' and inserting
``such section 1250''.
(6) Section 151(c)(6)(B)(iii) is amended by inserting ``as''
before ``such terms''.
(7) Section 170(e)(6)(B)(i)(III) is amended by striking
``2000,'' and inserting ``2000),''.
(8) Section 172(b)(1)(F)(i) is amended--
(A) by striking ``3 years'' and inserting ``3 taxable
years'', and
(B) by striking ``2 years'' and inserting ``2 taxable
years''.
(9) Section 351(h)(1) is amended by inserting a comma after
``liability''.
(10) Section 475(g)(3) is amended by striking ``sections'' and
inserting ``section''.
(11) Section 529(e)(3)(B)(i) is amended by striking
``subsection (b)(7)'' and inserting ``subsection (b)(6)''.
(12) Section 741 is amended by striking ``which have
appreciated substantially in value''.
(13) Section 857(b)(7)(B)(i) is amended by striking
``subsection 856(d)'' and inserting ``section 856(d)''.
(14) Subparagraph (B) of section 943(e)(4) is amended by
aligning the left margin of the flush language with subparagraph
(A).
(15) Subparagraph (B) of section 995(b)(3) is amended by
striking ``International Security Assistance and Arms Export
Control Act of 1976'' and inserting ``Arms Export Control Act''.
(16) Section 1394(c)(2) is amended by striking ``subparagraph
(A)'' and inserting ``paragraph (1)''.
(17)(A) The section heading for section 4980E is amended to
read as follows:
``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER MSA
CONTRIBUTIONS.''.
(B) The item relating to section 4980E in the table of sections
for chapter 43 is amended to read as follows:
``Sec. 4980E. Failure of employer to make comparable Archer MSA
contributions.''.
(18) Section 6105(c)(1) is amended by striking ``any'' in
subparagraphs (C) and (E).
(19)(A) Section 6227(d) is amended by striking ``subsection
(b)'' and inserting ``subsection (c)''.
(B) Section 6228 is amended--
(i) in subsection (a)(1), by striking ``subsection (b) of
section 6227'' and inserting ``subsection (c) of section
6227'',
(ii) in subsection (a)(3)(A), by striking ``subsection (b)
of'', and
(iii) in subsections (b)(1) and (b)(2)(A), by striking
``subsection (c) of section 6227'' and inserting ``subsection
(d) of section 6227''.
(C) Section 6231(b)(2)(B)(i) is amended by striking ``section
6227(c)'' and inserting ``section 6227(d)''.
(20) Section 1221(b)(1)(B)(i) is amended by striking
``1256(b))'' and inserting ``1256(b)))''.
(21) Section 159 of the Community Renewal Tax Relief Act of
2000 (114 Stat. 2763A-624) is amended by striking ``fuctions'' and
inserting ``functions''.
(22) The amendment to section 170(e)(6)(B)(iv) made by section
165(b)(1) of the Community Renewal Tax Relief Act of 2000 (114
Stat. 2763A-626) shall be applied as if it struck ``in any of the
grades K-12''.
(23) Section 618(b)(2) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (Public Law 107-16; 115 Stat. 108) is
amended--
(A) in subparagraph (A) by striking ``203(d)'' and
inserting ``202(f)'', and
(B) in subparagraphs (C), (D), and (E) by striking ``203''
and inserting ``202(f)''.
(24)(A) Section 525 of the Ticket to Work and Work Incentives
Improvement Act of 1999 (Public Law 106-170; 113 Stat. 1928) is
amended by striking ``7200'' and inserting ``7201''.
(B) Section 532(c)(2) of such Act (113 Stat. 1930) is amended--
(i) in subparagraph (D), by striking ``341(d)(3)'' and
inserting ``341(d)'', and
(ii) in subparagraph (Q), by striking ``954(c)(1)(B)(iii)
and inserting ``954(c)(1)(B)''.
SEC. 418. ADDITIONAL CORRECTIONS.
(a) Amendments Related to Section 202 of the Economic Growth and
Tax Relief Reconciliation Act of 2001.--
(1) Subsection (h) of section 23 is amended--
(A) by striking ``subsection (a)(1)(B)'' and inserting
``subsection (a)(3)'', and
(B) by adding at the end the following new flush sentence:
``If any amount as increased under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest multiple
of $10.''.
(2) Subsection (f) of section 137 is amended by adding at the
end the following new flush sentence:
``If any amount as increased under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest multiple
of $10.''.
(b) Amendments Related to Section 204 of the Economic Growth and
Tax Relief Reconciliation Act of 2001.--Section 21(d)(2) is amended--
(1) in subparagraph (A) by striking ``$200'' and inserting
``$250'', and
(2) in subparagraph (B) by striking ``$400'' and inserting
``$500''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001 to which they relate.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) In General.--Nothing in this Act (or an amendment made by this
Act) shall be construed to alter or amend title II of the Social
Security Act (or any regulation promulgated under that Act).
(b) Transfers.--
(1) Estimate of secretary.--The Secretary of the Treasury shall
annually estimate the impact that the enactment of this Act has on
the income and balances of the trust funds established under
section 201 of the Social Security Act (42 U.S.C. 401).
(2) Transfer of funds.--If, under paragraph (1), the Secretary
of the Treasury estimates that the enactment of this Act has a
negative impact on the income and balances of the trust funds
established under section 201 of the Social Security Act (42 U.S.C.
401), the Secretary shall transfer, not less frequently than
quarterly, from the general revenues of the Federal Government an
amount sufficient so as to ensure that the income and balances of
such trust funds are not reduced as a result of the enactment of
this Act.
SEC. 502. EMERGENCY DESIGNATION.
Congress designates as emergency requirements pursuant to section
252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985
the following amounts:
(1) An amount equal to the amount by which revenues are reduced
by this Act below the recommended levels of Federal revenues for
fiscal year 2002, the total of fiscal years 2002 through 2006, and
the total of fiscal years 2002 through 2011, provided in the
conference report accompanying H. Con. Res. 83, the concurrent
resolution on the budget for fiscal year 2002.
(2) Amounts equal to the amounts of new budget authority and
outlays provided in this Act in excess of the allocations under
section 302(a) of the Congressional Budget Act of 1974 to the
Committee on Finance of the Senate for fiscal year 2002, the total
of fiscal years 2002 through 2006, and the total of fiscal years
2002 through 2011.
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR
AND MINIMUM TAX LIABILITY.
(a) In General.--Paragraph (2) of section 26(a) is amended--
(1) by striking ``rule for 2000 and 2001.--'' and inserting
``rule for 2000, 2001, 2002, and 2003.--'', and
(2) by striking ``during 2000 or 2001,'' and inserting ``during
2000, 2001, 2002, or 2003,''.
(b) Conforming Amendments.--
(1) Section 904(h) is amended by striking ``during 2000 or
2001'' and inserting ``during 2000, 2001, 2002, or 2003''.
(2) The amendments made by sections 201(b), 202(f), and 618(b)
of the Economic Growth and Tax Relief Reconciliation Act of 2001
shall not apply to taxable years beginning during 2002 and 2003.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) In General.--Section 30 is amended--
(1) in subsection (b)(2)--
(A) by striking ``December 31, 2001,'' and inserting
``December 31, 2003,'', and
(B) in subparagraphs (A), (B), and (C), by striking
``2002'', ``2003'', and ``2004'', respectively, and inserting
``2004'', ``2005'', and ``2006'', respectively, and
(2) in subsection (e), by striking ``December 31, 2004'' and
inserting ``December 31, 2006''.
(b) Conforming Amendments.--
(1) Subparagraph (C) of section 280F(a)(1) is amended by adding
at the end the following new clause:
``(iii) Application of subparagraph.--This subparagraph
shall apply to property placed in service after August 5,
1997, and before January 1, 2007.''.
(2) Subsection (b) of section 971 of the Taxpayer Relief Act of
1997 is amended by striking ``and before January 1, 2005''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2001.
SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE
RESOURCES.
(a) In General.--Subparagraphs (A), (B), and (C) of section
45(c)(3) are both amended by striking ``2002'' and inserting ``2004''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to facilities placed in service after December 31, 2001.
SEC. 604. WORK OPPORTUNITY CREDIT.
(a) In General.--Subparagraph (B) of section 51(c)(4) is amended by
striking ``2001'' and inserting ``2003''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals who begin work for the employer after December 31,
2001.
SEC. 605. WELFARE-TO-WORK CREDIT.
(a) In General.--Subsection (f) of section 51A is amended by
striking ``2001'' and inserting ``2003''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals who begin work for the employer after December 31,
2001.
SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING
PROPERTY.
(a) In General.--Section 179A is amended--
(1) in subsection (b)(1)(B)--
(A) by striking ``December 31, 2001,'' and inserting
``December 31, 2003,'', and
(B) in clauses (i), (ii), and (iii), by striking ``2002'',
``2003'', and ``2004'', respectively, and inserting ``2004'',
``2005'', and ``2006'', respectively, and
(2) in subsection (f), by striking ``December 31, 2004'' and
inserting ``December 31, 2006''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to property placed in service after December 31, 2001.
SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND
NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.
(a) In General.--Subparagraph (H) of section 613A(c)(6) is amended
by striking ``2002'' and inserting ``2004''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2001.
SEC. 608. QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Paragraph (1) of section 1397E(e) is amended by
striking ``2000, and 2001'' and inserting ``2000, 2001, 2002, and
2003''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to obligations issued after the date of the enactment of this
Act.
SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) In General.--Paragraph (1) of section 7652(f) is amended by
striking ``January 1, 2002'' and inserting ``January 1, 2004''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to articles brought into the United States after December 31,
2001.
SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS.
(a) In General.--Subsection (f) of section 9812, as amended by the
Departments of Labor, Health and Human Services, and Education, and
Related Agencies Appropriations Act, 2002, is amended to read as
follows:
``(f) Application of Section.--This section shall not apply to
benefits for services furnished--
``(1) on or after September 30, 2001, and before January 10,
2002, and
``(2) after December 31, 2003.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to plan years beginning after December 31, 2000.
SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE
COMPANIES.
(a) Reduction in Mutual Life Insurance Company Deductions Not To
Apply in Certain Years.--Section 809 (relating to reduction in certain
deductions of material life insurance companies) is amended by adding
at the end the following:
``(j) Differential Earnings Rate Treated as Zero for Certain
Years.--Notwithstanding subsection (c) or (f), the differential
earnings rate shall be treated as zero for purposes of computing both
the differential earnings amount and the recomputed differential
earnings amount for a mutual life insurance company's taxable years
beginning in 2001, 2002, or 2003.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Paragraphs (2) and (3)(B) of section 220(i)
(defining cut-off year) are each amended by striking ``2002'' each
place it appears and inserting ``2003''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 220(j) is amended by striking
``1998, 1999, or 2001'' each place it appears and inserting ``1998,
1999, 2001, or 2002''.
(2) Subparagraph (A) of section 220(j)(4) is amended by
striking ``and 2001'' and inserting ``2001, and 2002''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2002.
SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN
RESERVATIONS.
(a) Employment.--Subsection (f) of section 45A is amended by
striking ``December 31, 2003'' and inserting ``December 31, 2004''.
(b) Property.--Paragraph (8) of section 168(j) is amended by
striking ``December 31, 2003'' and inserting ``December 31, 2004''.
SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) In General.--
(1) Section 953(e)(10) is amended--
(A) by striking ``January 1, 2002'' and inserting ``January
1, 2007'', and
(B) by striking ``December 31, 2001'' and inserting
``December 31, 2006''.
(2) Section 954(h)(9) is amended by striking ``January 1,
2002'' and inserting ``January 1, 2007''.
(b) Life Insurance and Annuity Contracts.--
(1) In general.--Subparagraph (B) of section 954(i)(4) is
amended to read as follows:
``(B) Life insurance and annuity contracts.--
``(i) In general.--Except as provided in clause (ii),
the amount of the reserve of a qualifying insurance company
or qualifying insurance company branch for any life
insurance or annuity contract shall be equal to the greater
of--
``(I) the net surrender value of such contract (as
defined in section 807(e)(1)(A)), or
``(II) the reserve determined under paragraph (5).
``(ii) Ruling request, etc.--The amount of the reserve
under clause (i) shall be the foreign statement reserve for
the contract (less any catastrophe, deficiency,
equalization, or similar reserves), if, pursuant to a
ruling request submitted by the taxpayer or as provided in
published guidance, the Secretary determines that the
factors taken into account in determining the foreign
statement reserve provide an appropriate means of measuring
income.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE
TERMINALS.
(a) In General.--Subsection (e) of section 4101 is hereby repealed.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2002.
SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION
INCREASES FOR FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3))
is amended by adding at the end the following:
``(H) Reauthorization of grants for fiscal year 2002.--
Notwithstanding any other provision of this paragraph--
``(i) any State that was a qualifying State under this
paragraph for fiscal year 2001 or any prior fiscal year
shall be entitled to receive from the Secretary for fiscal
year 2002 a grant in an amount equal to the amount required
to be paid to the State under this paragraph for the most
recent fiscal year in which the State was a qualifying
State;
``(ii) subparagraph (G) shall be applied as if `2002'
were substituted for `2001'; and
``(iii) out of any money in the Treasury of the United
States not otherwise appropriated, there are appropriated
for fiscal year 2002 such sums as are necessary for grants
under this subparagraph.''.
SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF PROGRAM.
Section 403(b) of the Social Security Act (42 U.S.C. 603(b)) is
amended--
(1) in paragraph (2), by striking ``and 2001'' and inserting
``2001, and 2002''; and
(2) in paragraph (3)(C)(ii), by striking ``2001'' and inserting
``2002''.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
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