Taxpayer Certainty and Disaster Tax Relief Act of 2019
Summary
This is House Report 116-379 of the 116th Congress, 2d Session, titled Taxpayer Certainty and Disaster Tax Relief Act of 2019, a report of the Committee on Ways and Means on H.R. 3301, together with dissenting views, committed to the Committee of the Whole House on the State of the Union and ordered to be printed January 21, 2020. The contents list a summary and background section, legislative history, and an explanation of the bill beginning with Title I, Extension of Certain Expiring Provisions. Listed provisions include the exclusion from gross income of discharge of qualified principal residence indebtedness and the treatment of mortgage insurance premiums as qualified residence interest.
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“Taxpayer Certainty and Disaster Tax Relief Act of 2019.”
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1
116TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
2d Session 116–379
TAXPAYER CERTAINTY AND DISASTER TAX
RELIEF ACT OF 2019
R E P O R T
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ON
H.R. 3301
TOGETHER WITH
DISSENTING VIEWS
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116TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
2d Session 116–379
TAXPAYER CERTAINTY AND DISASTER TAX
RELIEF ACT OF 2019
R E P O R T
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ON
H.R. 3301
together with
DISSENTING VIEWS
JANUARY 21, 2020.—Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed
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U.S. GOVERNMENT PUBLISHING OFFICE
39–389 WASHINGTON : 2020
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CONTENTS
Page
TAXPAYER CERTAINTY AND DISASTER TAX RELIEF ACT OF 2019
REPORT ........................................................................................................ 1
I. SUMMARY AND BACKGROUND ................................................................. 16
A. Purpose and Summary ........................................................................ 16
B. Background and Need for Legislation ................................................ 16
C. Legislative History .............................................................................. 17
II. EXPLANATION OF THE BILL ...................................................................... 17
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS .............. 17
A. Tax Relief and Support for Families and Individuals ...................... 17
1. Exclusion from gross income of discharge of qualified principal
residence indebtedness (sec. 101 of the bill and sec.
108(a)(1)(E) of the Code) ............................................................. 17
2. Treatment of mortgage insurance premiums as qualified resi-
dence interest (sec. 102 of the bill and sec. 163(h) of the
Code) ............................................................................................ 19
3. Reduction in medical expense deduction floor (sec. 103 of
the bill and sec. 213 of the Code) .............................................. 20
4. Deduction of qualified tuition and related expenses (sec. 104
of the bill and sec. 222 of the Code) .......................................... 21
5. Black lung disability trust fund excise tax (sec. 105 of the
bill and sec. 4121 of the Code) ................................................... 23
B. Incentives for Employment, Economic Growth, and Community
Development ........................................................................................... 23
1. Indian employment tax credit (sec. 111 of the bill and sec.
45A of the Code) .......................................................................... 23
2. Railroad track maintenance credit (sec. 112 of the bill and
sec. 45G of the Code) .................................................................. 25
3. Mine rescue team training credit (sec. 113 of the bill and
sec. 45N of the Code) .................................................................. 28
4. Seven-year recovery period for motorsports entertainment
complexes (sec. 114 of the bill and sec. 168(i)(15) of the
Code) ............................................................................................ 29
5. Accelerated depreciation for business property on Indian res-
ervations (sec. 115 of the bill and sec. 168(j) of the Code) ...... 31
6. Expensing rules for certain productions (sec. 116 of the bill
and sec. 181 of the Code) ............................................................ 32
7. Empowerment zone tax incentives (sec. 117 of the bill and
secs. 1391, 1394, 1396, 1397A, and 1397B of the Code) .......... 35
8. American Samoa economic development credit (sec. 118 of
the bill) ......................................................................................... 41
C. Incentives for Energy Production, Efficiency, and Green Economy
Jobs ......................................................................................................... 43
1. Biodiesel and renewable diesel (sec. 121 of the bill and sec.
40A of the Code) .......................................................................... 43
2. Second generation biofuel producer credit (sec. 122 of the
bill and sec. 40 of the Code) ....................................................... 46
3. Nonbusiness energy property (sec. 123 of the bill and sec.
25C of the Code) .......................................................................... 47
4. Qualified fuel cell motor vehicles (sec. 124 of the bill and
sec. 30B of the Code) .................................................................. 49
5. Alternative fuel refueling property credit (sec. 125 of the bill
and sec. 30C of the Code) ........................................................... 49
6. Extension of credit for electric motorcycles (sec. 126 of the
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bill and sec. 30D of the Code) .................................................... 50
(III)
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IV
Page
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS—Con-
tinued
C. Incentives for Energy Production, Efficiency, and Green Economy
Jobs—Continued
7. Credit for electricity produced from certain renewable re-
sources (sec. 127 of the bill and sec. 45 of the Code) ............... 51
8. Energy-efficient homes credit (sec. 129 of the bill and sec.
45L of the Code) .......................................................................... 52
9. Special allowance for second generation biofuel plant property
(sec. 130 of the bill and sec. 168(l) of the Code) ....................... 53
10. Energy-efficient commercial buildings deduction (sec. 131 of
the bill and sec. 179D of the Code) ............................................ 56
11. Special rule for sales or dispositions to implement FERC
or State electric restructuring policy for qualified electric
utilities (sec. 132 of the bill and sec. 451(k) of the Code) ........ 58
12. Extension and clarification of excise tax credits relating to
alternative fuels (sec. 133 of the bill and secs. 6426 and
6427 of the Code) ........................................................................ 60
13. Oil spill liability trust fund rate (sec. 134 of the bill and
sec. 4611 of the Code) ................................................................. 63
D. Certain Provisions Expiring at the End of 2019 ............................... 64
1. New markets tax credit (sec. 141 of the bill and sec. 45D
of the Code) .................................................................................. 64
2. Employer credit for paid family and medical leave (sec. 142
of the bill and sec. 45S of the Code) .......................................... 66
3. Work opportunity credit (sec. 143 of the bill and sec. 51
of the Code) .................................................................................. 68
4. Certain provisions related to beer, wine, and distilled spirits
(sec. 144 of the bill and secs. 263A, 5001, 5041, 5051, 5212,
5415, and 5555 of the Code) ....................................................... 74
5. Look-through rule for related controlled foreign corporations
(sec. 145 of the bill and sec. 954(c)(6) of the Code) .................. 81
6. Credit for health insurance costs of eligible individuals (sec.
146 of the bill and sec. 35 of the Code) ..................................... 82
TITLE II—ESTATE AND GIFT TAX ............................................................. 85
1. Reduction of unified credit against estate tax (sec. 201 of
the bill and sec. 2010 of the Code) ............................................ 85
TITLE III—DISASTER TAX RELIEF ............................................................ 87
1. Definitions (sec. 301 of the bill) .................................................... 87
2. Special disaster-related rules for use of retirement funds (sec.
302 of the bill and sec. 72 of the Code) ..................................... 87
3. Disaster related employment relief (sec. 303 of the bill and
sec. 38 of the Code) ..................................................................... 91
4. Temporary suspension of limitation on charitable contributions
(sec. 304(a) of the bill and sec. 170 of the Code) ...................... 92
5. Special rules for qualified disaster-related personal casualty
losses (sec. 304(b) of the bill and sec. 165 of the Code) ........... 95
6. Special rule for determining earned income (sec. 304(c) of
the bill and secs. 24 and 32 of the Code) .................................. 96
7. Automatic extension of filing deadlines in case of certain tax-
payers affected by Federally declared disasters (sec. 305 of
the bill and sec. 7508A of the Code ........................................... 97
8. Modification of the tax rate for the excise tax on investment
income of private foundations (sec. 306 of the bill and sec.
4940 of the Code) ........................................................................ 100
9. Additional low-income housing tax credit allocations for quali-
fied 2017 and 2018 California disaster areas (sec. 307 of
the bill and sec. 42 of the Code) ................................................ 101
10. Treatment of certain possessions (sec. 308 of the bill) ............. 103
III. VOTES OF THE COMMITTEE ...................................................................... 104
A. Committee Estimate of Budgetary Effects ........................................ 114
B. Statement Regarding New Budget Authority and Tax Expendi-
tures Budget Authority ......................................................................... 121
C. Cost Estimate Prepared by the Congressional Budget Office .......... 121
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Page
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE
HOUSE .......................................................................................................... 127
A. Committee Oversight Findings and Recommendations .................... 127
B. Statement of General Performance Goals and Objectives ................ 127
C. Information Relating to Unfunded Mandates ................................... 127
D. Applicability of House Rule XXI, Clause 5(b) ................................... 127
E. Tax Complexity Analysis ..................................................................... 128
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tar-
iff Benefits .............................................................................................. 128
G. Duplication of Federal Programs ....................................................... 128
H. Hearings ............................................................................................... 128
VI. CHANGES IN EXISTING LAW MADE BY THE BILL ............................... 128
A. Changes in Existing Law Proposed by the Bill ................................. 128
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116TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
2nd Session 116–379
TAXPAYER CERTAINTY AND DISASTER TAX RELIEF ACT
OF 2019
JANUARY 21, 2020.—Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. NEAL, from the Committee on Ways and Means,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3301]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3301) to amend the Internal Revenue Code of 1986 to ex-
tend certain expiring provisions, to provide disaster relief, and for
other purposes, having considered the same, report favorably there-
on with an amendment and recommend that the bill as amended
do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Taxpayer Certainty and Disaster
Tax Relief Act of 2019’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:
Sec. 1. Short title; etc.
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Tax Relief and Support for Families and Individuals
Sec. 101. Exclusion from gross income of discharge of qualified principal residence indebtedness.
Sec. 102. Treatment of mortgage insurance premiums as qualified residence interest.
Sec. 103. Reduction in medical expense deduction floor.
Sec. 104. Deduction of qualified tuition and related expenses.
Sec. 105. Black lung disability trust fund excise tax.
Subtitle B—Incentives for Employment, Economic Growth, and Community Development
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Sec. 111. Indian employment credit.
Sec. 112. Railroad track maintenance credit.
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Sec. 113. Mine rescue team training credit.
Sec. 114. 7-year recovery period for motorsports entertainment complexes.
Sec. 115. Accelerated depreciation for business property on Indian reservations.
Sec. 116. Expensing rules for certain productions.
Sec. 117. Empowerment zone tax incentives.
Sec. 118. American Samoa economic development credit.
Subtitle C—Incentives for Energy Production, Efficiency, and Green Economy Jobs
Sec. 121. Biodiesel and renewable diesel.
Sec. 122. Second generation biofuel producer credit.
Sec. 123. Nonbusiness energy property.
Sec. 124. Qualified fuel cell motor vehicles.
Sec. 125. Alternative fuel refueling property credit.
Sec. 126. 2-wheeled plug-in electric vehicle credit.
Sec. 127. Credit for electricity produced from certain renewable resources.
Sec. 128. Production credit for Indian coal facilities.
Sec. 129. Energy efficient homes credit.
Sec. 130. Special allowance for second generation biofuel plant property.
Sec. 131. Energy efficient commercial buildings deduction.
Sec. 132. Special rule for sales or dispositions to implement FERC or State electric restructuring policy for
qualified electric utilities.
Sec. 133. Extension and clarification of excise tax credits relating to alternative fuels.
Sec. 134. Oil spill liability trust fund rate.
Subtitle D—Certain Provisions Expiring at the End of 2019
Sec. 141. New markets tax credit.
Sec. 142. Employer credit for paid family and medical leave.
Sec. 143. Work opportunity credit.
Sec. 144. Certain provisions related to beer, wine, and distilled spirits.
Sec. 145. Look-thru rule for related controlled foreign corporations.
Sec. 146. Credit for health insurance costs of eligible individuals.
TITLE II—ESTATE AND GIFT TAX
Sec. 201. Reduction of unified credit against estate tax.
TITLE III—DISASTER TAX RELIEF
Sec. 301. Definitions.
Sec. 302. Special disaster-related rules for use of retirement funds.
Sec. 303. Employee retention credit for employers affected by qualified disasters.
Sec. 304. Other disaster-related tax relief provisions.
Sec. 305. Automatic extension of filing deadlines in case of certain taxpayers affected by Federally declared dis-
asters.
Sec. 306. Modification of the tax rate for the excise tax on investment income of private foundations.
Sec. 307. Additional low-income housing credit allocations for qualified 2017 and 2018 California disaster areas.
Sec. 308. Treatment of certain possessions.
(c) AMENDMENT OF 1986 CODE.—Except as otherwise expressly provided, when-
ever 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.
TITLE I—EXTENSION OF CERTAIN EXPIRING
PROVISIONS
Subtitle A—Tax Relief and Support for Families
and Individuals
SEC. 101. EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESI-
DENCE INDEBTEDNESS.
(a) IN GENERAL.—Section 108(a)(1)(E) is amended by striking ‘‘January 1, 2018’’
each place it appears and inserting ‘‘January 1, 2021’’.
(b) CONFORMING AMENDMENT.—Section 108(h)(2) is amended by inserting ‘‘and
determined without regard to the substitution described in section
163(h)(3)(F)(i)(II)’’ after ‘‘clause (ii) thereof’’.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to dis-
charges of indebtedness after December 31, 2017.
SEC. 102. TREATMENT OF MORTGAGE INSURANCE PREMIUMS AS QUALIFIED RESIDENCE IN-
TEREST.
(a) IN GENERAL.—Section 163(h)(3)(E)(iv)(I) is amended by striking ‘‘December 31,
2017’’ and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to
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amounts paid or incurred after December 31, 2017.
SEC. 103. REDUCTION IN MEDICAL EXPENSE DEDUCTION FLOOR.
(a) IN GENERAL.—Section 213(f) is amended to read as follows:
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‘‘(f) TEMPORARY SPECIAL RULE.—In the case of taxable years beginning before Jan-
uary 1, 2021, subsection (a) shall be applied with respect to a taxpayer by sub-
stituting ‘7.5 percent’ for ‘10 percent’.’’.
(b) ALTERNATIVE MINIMUM TAX.—Section 56(b)(1) is amended by striking subpara-
graph (B) and by redesignating subparagraphs (C), (D), (E), and (F), as subpara-
graphs (B), (C), (D), and (E), respectively.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to tax-
able years ending after December 31, 2018.
SEC. 104. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.
(a) IN GENERAL.—Section 222(e) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable
years beginning after December 31, 2017.
SEC. 105. BLACK LUNG DISABILITY TRUST FUND EXCISE TAX.
(a) IN GENERAL.—Section 4121(e)(2)(A) is amended by striking ‘‘December 31,
2018’’ and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply on and
after the first day of the first calendar month beginning after the date of the enact-
ment of this Act.
Subtitle B—Incentives for Employment, Economic
Growth, and Community Development
SEC. 111. INDIAN EMPLOYMENT CREDIT.
(a) IN GENERAL.—Section 45A(f) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable
years beginning after December 31, 2017.
SEC. 112. RAILROAD TRACK MAINTENANCE CREDIT.
(a) IN GENERAL.—Section 45G(f) is amended by striking ‘‘January 1, 2018’’ and
inserting ‘‘January 1, 2021’’.
(b) SAFE HARBOR ASSIGNMENTS.—Any assignment, including related expenditures
paid or incurred, under section 45G(b)(2) of the Internal Revenue Code of 1986 for
a taxable year beginning on or after January 1, 2018, and before January 1, 2019,
shall be treated as effective as of the close of such taxable year if made pursuant
to a written agreement entered into no later than 90 days following the date of the
enactment of this Act.
(c) EFFECTIVE DATE.—The amendment made by this section shall apply to expend-
itures paid or incurred during taxable years beginning after December 31, 2017.
SEC. 113. MINE RESCUE TEAM TRAINING CREDIT.
(a) IN GENERAL.—Section 45N(e) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable
years beginning after December 31, 2017.
SEC. 114. 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT COMPLEXES.
(a) IN GENERAL.—Section 168(i)(15)(D) is amended by striking ‘‘December 31,
2017’’ and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prop-
erty placed in service after December 31, 2017.
SEC. 115. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN RESERVA-
TIONS.
(a) IN GENERAL.—Section 168(j)(9) is amended by striking ‘‘December 31, 2017’’
and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prop-
erty placed in service after December 31, 2017.
SEC. 116. EXPENSING RULES FOR CERTAIN PRODUCTIONS.
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(a) IN GENERAL.—Section 181(g) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to produc-
tions commencing after December 31, 2017.
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SEC. 117. EMPOWERMENT ZONE TAX INCENTIVES.
(a) IN GENERAL.—Section 1391(d)(1)(A)(i) is amended by striking ‘‘December 31,
2017’’ and inserting ‘‘December 31, 2020’’.
(b) TREATMENT OF CERTAIN TERMINATION DATES SPECIFIED IN NOMINATIONS.—In
the case of a designation of an empowerment zone the nomination for which in-
cluded a termination date which is contemporaneous with the date specified in sub-
paragraph (A)(i) of section 1391(d)(1) of the Internal Revenue Code of 1986 (as in
effect before the enactment of this Act), subparagraph (B) of such section shall not
apply with respect to such designation if, after the date of the enactment of this
section, the entity which made such nomination amends the nomination to provide
for a new termination date in such manner as the Secretary of the Treasury (or the
Secretary’s designee) may provide.
(c) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to tax-
able years beginning after December 31, 2017.
SEC. 118. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.
(a) IN GENERAL.—Section 119(d) of division A of the Tax Relief and Health Care
Act of 2006 is amended—
(1) by striking ‘‘January 1, 2018’’ each place it appears and inserting ‘‘January
1, 2021’’,
(2) by striking ‘‘first 12 taxable years’’ in paragraph (1) and inserting ‘‘first
15 taxable years’’,
(3) by striking ‘‘first 6 taxable years’’ in paragraph (2) and inserting ‘‘first 9
taxable years’’, and
(4) by adding at the end the following flush sentence:
‘‘In the case of a corporation described in subsection (a)(2), the Internal Revenue
Code of 1986 shall be applied and administered without regard to the amendments
made by section 401(d)(1) of the Tax Technical Corrections Act of 2018.’’.
(b) CONFORMING AMENDMENT.—Section 119(e) of division A of the Tax Relief and
Health Care Act of 2006 is amended by inserting ‘‘(as in effect before its repeal)’’
after ‘‘section 199 of the Internal Revenue Code of 1986’’.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to tax-
able years beginning after December 31, 2017.
Subtitle C—Incentives for Energy Production,
Efficiency, and Green Economy Jobs
SEC. 121. BIODIESEL AND RENEWABLE DIESEL.
(a) INCOME TAX CREDIT.—
(1) IN GENERAL.—Section 40A(g) is amended by striking ‘‘December 31, 2017’’
and inserting ‘‘December 31, 2020’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
fuel sold or used after December 31, 2017.
(b) EXCISE TAX INCENTIVES.—
(1) TERMINATION.—
(A) IN GENERAL.—Section 6426(c)(6) is amended by striking ‘‘December
31, 2017’’ and inserting ‘‘December 31, 2020’’.
(B) PAYMENTS.—Section 6427(e)(6)(B) is amended by striking ‘‘December
31, 2017’’ and inserting ‘‘December 31, 2020’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to fuel sold or used after December 31, 2017.
(3) SPECIAL RULE.—Notwithstanding any other provision of law, in the case
of any biodiesel mixture credit properly determined under section 6426(c) of the
Internal Revenue Code of 1986 for the period beginning on January 1, 2018,
and ending with the close of the last calendar quarter beginning before the date
of the enactment of this Act, such credit shall be allowed, and any refund or
payment attributable to such credit (including any payment under section
6427(e) of such Code) shall be made, only in such manner as the Secretary of
the Treasury (or the Secretary’s delegate) shall provide. Such Secretary shall
issue guidance within 30 days after the date of the enactment of this Act pro-
viding for a one-time submission of claims covering periods described in the pre-
ceding sentence. Such guidance shall provide for a 180-day period for the sub-
mission of such claims (in such manner as prescribed by such Secretary) to
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begin not later than 30 days after such guidance is issued. Such claims shall
be paid by such Secretary not later than 60 days after receipt. If such Secretary
has not paid pursuant to a claim filed under this subsection within 60 days
after the date of the filing of such claim, the claim shall be paid with interest
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5
from such date determined by using the overpayment rate and method under
section 6621 of such Code.
SEC. 122. SECOND GENERATION BIOFUEL PRODUCER CREDIT.
(a) IN GENERAL.—Section 40(b)(6)(J)(i) is amended by striking ‘‘January 1, 2018’’
and inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to quali-
fied second generation biofuel production after December 31, 2017.
SEC. 123. NONBUSINESS ENERGY PROPERTY.
(a) IN GENERAL.—Section 25C(g)(2) is amended by striking ‘‘December 31, 2017’’
and inserting ‘‘December 31, 2020’’.
(b) TECHNICAL AMENDMENT.—Section 25C(d)(3) is amended—
(1) by striking ‘‘an energy factor of at least 2.0’’ in subparagraph (A) and in-
serting ‘‘a Uniform Energy Factor of at least 2.2’’, and
(2) by striking ‘‘an energy factor’’ in subparagraph (D) and inserting ‘‘a Uni-
form Energy Factor’’.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to prop-
erty placed in service after December 31, 2017.
SEC. 124. QUALIFIED FUEL CELL MOTOR VEHICLES.
(a) IN GENERAL.—Section 30B(k)(1) is amended by striking ‘‘December 31, 2017’’
and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prop-
erty purchased after December 31, 2017.
SEC. 125. ALTERNATIVE FUEL REFUELING PROPERTY CREDIT.
(a) IN GENERAL.—Section 30C(g) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prop-
erty placed in service after December 31, 2017.
SEC. 126. 2-WHEELED PLUG-IN ELECTRIC VEHICLE CREDIT.
(a) IN GENERAL.—Section 30D(g)(3)(E)(ii) is amended by striking ‘‘January 1,
2018’’ and inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to vehi-
cles acquired after December 31, 2017.
SEC. 127. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.
(a) IN GENERAL.—The following provisions of section 45(d) are each amended by
striking ‘‘January 1, 2018’’ each place it appears and inserting ‘‘January 1, 2021’’:
(1) Paragraph (2)(A).
(2) Paragraph (3)(A).
(3) Paragraph (4)(B).
(4) Paragraph (6).
(5) Paragraph (7).
(6) Paragraph (9).
(7) Paragraph (11)(B).
(b) EXTENSION OF ELECTION TO TREAT QUALIFIED FACILITIES AS ENERGY PROP-
ERTY.—Section 48(a)(5)(C)(ii) is amended by striking ‘‘January 1, 2018 (January 1,
2020, in the case of any facility which is described in paragraph (1) of section 45(d))’’
and inserting ‘‘January 1, 2021’’.
(c) APPLICATION OF EXTENSION TO WIND FACILITIES.—
(1) IN GENERAL.—Section 45(d)(1) is amended by striking ‘‘January 1, 2020’’
and inserting ‘‘January 1, 2021’’.
(2) APPLICATION OF PHASEOUT PERCENTAGE.—Sections 45(b)(5)(C) and
48(a)(5)(E)(iii) are each amended by striking ‘‘and before January 1, 2020,’’.
(d) EFFECTIVE DATE.—The amendments made by this section shall take effect on
January 1, 2018.
SEC. 128. PRODUCTION CREDIT FOR INDIAN COAL FACILITIES.
(a) IN GENERAL.—Section 45(e)(10)(A) is amended by striking ‘‘12-year period’’
each place it appears and inserting ‘‘15-year period’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to coal
produced after December 31, 2017.
SEC. 129. ENERGY EFFICIENT HOMES CREDIT.
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(a) IN GENERAL.—Section 45L(g) is amended by striking ‘‘December 31, 2017’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to homes
acquired after December 31, 2017.
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SEC. 130. SPECIAL ALLOWANCE FOR SECOND GENERATION BIOFUEL PLANT PROPERTY.
(a) IN GENERAL.—Section 168(l)(2)(D) is amended by striking ‘‘January 1, 2018’’
and inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prop-
erty placed in service after December 31, 2017.
SEC. 131. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
(a) IN GENERAL.—Section 179D(h) is amended by striking ‘‘December 31, 2017’’
and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATES.—The amendment made by subsection (a) shall apply to
property placed in service after December 31, 2017.
SEC. 132. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FERC OR STATE ELEC-
TRIC RESTRUCTURING POLICY FOR QUALIFIED ELECTRIC UTILITIES.
(a) IN GENERAL.—Section 451(k)(3) is amended by striking ‘‘January 1, 2018’’ and
inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to disposi-
tions after December 31, 2017.
SEC. 133. EXTENSION AND CLARIFICATION OF EXCISE TAX CREDITS RELATING TO ALTER-
NATIVE FUELS.
(a) EXTENSION.—
(1) IN GENERAL.—Sections 6426(d)(5) and 6426(e)(3) are each amended by
striking ‘‘December 31, 2017’’ and inserting ‘‘December 31, 2020’’.
(2) OUTLAY PAYMENTS FOR ALTERNATIVE FUELS.—Section 6427(e)(6)(C) is
amended by striking ‘‘December 31, 2017’’ and inserting ‘‘December 31, 2020’’.
(3) SPECIAL RULE.—Notwithstanding any other provision of law, in the case
of any alternative fuel credit properly determined under section 6426(d) of the
Internal Revenue Code of 1986 for the period beginning on January 1, 2018,
and ending with the close of the last calendar quarter beginning before the date
of the enactment of this Act, such credit shall be allowed, and any refund or
payment attributable to such credit (including any payment under section
6427(e) of such Code) shall be made, only in such manner as the Secretary of
the Treasury (or the Secretary’s delegate) shall provide. Such Secretary shall
issue guidance within 30 days after the date of the enactment of this Act pro-
viding for a one-time submission of claims covering periods described in the pre-
ceding sentence. Such guidance shall provide for a 180-day period for the sub-
mission of such claims (in such manner as prescribed by such Secretary) to
begin not later than 30 days after such guidance is issued. Such claims shall
be paid by such Secretary not later than 60 days after receipt. If such Secretary
has not paid pursuant to a claim filed under this subsection within 60 days
after the date of the filing of such claim, the claim shall be paid with interest
from such date determined by using the overpayment rate and method under
section 6621 of such Code.
(4) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to fuel sold or used after December 31, 2017.
(b) CLARIFICATION OF RULES REGARDING ALTERNATIVE FUEL MIXTURE CREDIT.—
(1) IN GENERAL.—Paragraph (2) of section 6426(e) is amended by striking
‘‘mixture of alternative fuel’’ and inserting ‘‘mixture of alternative fuel (other
than a fuel described in subparagraph (A), (C), or (F) of subsection (d)(2))’’.
(2) EFFECTIVE DATE.—The amendment made by this section shall apply to—
(A) fuel sold or used on or after the date of the enactment of this Act,
and
(B) fuel sold or used before such date of enactment, but only to the extent
that credits and claims of credit under section 6426(e) of the Internal Rev-
enue Code of 1986 with respect to such sale or use have not been paid or
allowed as of such date.
SEC. 134. OIL SPILL LIABILITY TRUST FUND RATE.
(a) IN GENERAL.—Section 4611(f)(2) is amended by striking ‘‘December 31, 2018’’
and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply on and
after the first day of the first calendar month beginning after the date of the enact-
ment of this Act.
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Subtitle D—Certain Provisions Expiring at the
End of 2019
SEC. 141. NEW MARKETS TAX CREDIT.
(a) IN GENERAL.—Section 45D(f)(1) is amended by striking ‘‘and’’ at the end of
subparagraph (F), by striking the period at the end of subparagraph (G) and insert-
ing ‘‘, and’’, and by adding at the end the following new subparagraph:
‘‘(H) $5,000,000,000 for 2020.’’.
(b) CARRYOVER OF UNUSED LIMITATION.—Section 45D(f)(3) is amended by striking
‘‘2024’’ and inserting ‘‘2025’’.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to cal-
endar years beginning after December 31, 2019.
SEC. 142. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL LEAVE.
(a) IN GENERAL.—Section 45S(i) is amended by striking ‘‘December 31, 2019’’ and
inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to wages
paid in taxable years beginning after December 31, 2019.
SEC. 143. WORK OPPORTUNITY CREDIT.
(a) IN GENERAL.—Section 51(c)(4) is amended by striking ‘‘December 31, 2019’’
and inserting ‘‘December 31, 2020’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to individ-
uals who begin work for the employer after December 31, 2019.
SEC. 144. CERTAIN PROVISIONS RELATED TO BEER, WINE, AND DISTILLED SPIRITS.
(a) EXEMPTION FOR AGING PROCESS OF BEER, WINE, AND DISTILLED SPIRITS.—
(1) IN GENERAL.—Section 263A(f)(4)(B) is amended by striking ‘‘December 31,
2019’’ and inserting ‘‘December 31, 2020’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
interest costs paid or accrued after December 31, 2019.
(b) REDUCED RATE OF EXCISE TAX ON BEER.—
(1) IN GENERAL.—Paragraphs (1)(C) and (2)(A) of section 5051(a) are each
amended by striking ‘‘January 1, 2020’’ and inserting ‘‘January 1, 2021’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to beer removed after December 31, 2019.
(c) TRANSFER OF BEER BETWEEN BONDED FACILITIES.—
(1) IN GENERAL.—Section 5414(b)(3) is amended by striking ‘‘December 31,
2019’’ and inserting ‘‘December 31, 2020’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
calendar quarters beginning after December 31, 2019.
(d) REDUCED RATE OF EXCISE TAX ON CERTAIN WINE.—
(1) IN GENERAL.—Section 5041(c)(8)(A) is amended by striking ‘‘January 1,
2020’’ and inserting ‘‘January 1, 2021’’.
(2) CONFORMING AMENDMENT.—The heading of section 5041(c)(8) is amended
by striking ‘‘SPECIAL RULE FOR 2018 AND 2019’’ and inserting ‘‘TEMPORARY SPE-
CIAL RULE’’.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to wine removed after December 31, 2019.
(e) ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR APPLICATION OF EXCISE
TAXES.—
(1) IN GENERAL.—Paragraphs (1) and (2) of section 5041(b) are each amended
by striking ‘‘January 1, 2020’’ and inserting ‘‘January 1, 2021’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to wine removed after December 31, 2019.
(f) DEFINITION OF MEAD AND LOW ALCOHOL BY VOLUME WINE.—
(1) IN GENERAL.—Section 5041(h)(3) is amended by striking ‘‘December 31,
2019’’ and inserting ‘‘December 31, 2020’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
wine removed after December 31, 2019.
(g) REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED SPIRITS.—
(1) IN GENERAL.—Section 5001(c)(4) is amended by striking ‘‘December 31,
2019’’ and inserting ‘‘December 31, 2020’’.
(2) CONFORMING AMENDMENT.—The heading of section 5001(c) is amended by
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striking ‘‘REDUCED RATE FOR 2018 AND 2019’’ and inserting ‘‘TEMPORARY RE-
DUCED RATE’’.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply
to distilled spirits removed after December 31, 2019.
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(h) BULK DISTILLED SPIRITS.—
(1) IN GENERAL.—Section 5212 is amended by striking ‘‘January 1, 2020’’ and
inserting ‘‘January 1, 2021’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
distilled spirits transferred in bond after December 31, 2019.
(i) SIMPLIFICATION OF RULES REGARDING RECORDS, STATEMENTS, AND RETURNS.—
(1) IN GENERAL.—Section 5555(a) is amended by striking ‘‘January 1, 2020’’
and inserting ‘‘January 1, 2021’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to
calendar quarters beginning after December 31, 2019.
SEC. 145. LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN CORPORATIONS.
(a) IN GENERAL.—Section 954(c)(6)(C) is amended by striking ‘‘January 1, 2020’’
and inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable
years of foreign corporations beginning after December 31, 2019, and to taxable
years of United States shareholders with or within which such taxable years of for-
eign corporations end.
SEC. 146. CREDIT FOR HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.
(a) IN GENERAL.—Section 35(b)(1)(B) is amended by striking ‘‘January 1, 2020’’
and inserting ‘‘January 1, 2021’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to months
beginning after December 31, 2019.
TITLE II—ESTATE AND GIFT TAX
SEC. 201. REDUCTION OF UNIFIED CREDIT AGAINST ESTATE TAX.
(a) IN GENERAL.—Section 2010(c)(3)(C) is amended by striking ‘‘January 1, 2026’’
and inserting ‘‘January 1, 2023’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to estates
of decedents dying and gifts made after December 31, 2022.
TITLE III—DISASTER TAX RELIEF
SEC. 301. DEFINITIONS.
For purposes of this title—
(1) QUALIFIED DISASTER AREA.—
(A) IN GENERAL.—The term ‘‘qualified disaster area’’ means any area with
respect to which a major disaster was declared, during the period beginning
on January 1, 2018, and ending on the date which is 60 days after the date
of the enactment of this Act, by the President under section 401 of the Rob-
ert T. Stafford Disaster Relief and Emergency Assistance Act if the incident
period of the disaster with respect to which such declaration is made begins
on or before the date of the enactment of this Act.
(B) DENIAL OF DOUBLE BENEFIT.—Such term shall not include the Cali-
fornia wildfire disaster area (as defined in section 20101 of subdivision 2
of division B of the Bipartisan Budget Act of 2018).
(2) QUALIFIED DISASTER ZONE.—The term ‘‘qualified disaster zone’’ means that
portion of any qualified disaster area which was determined by the President,
during the period beginning on January 1, 2018, and ending on the date which
is 60 days after the date of the enactment of this Act, to warrant individual or
individual and public assistance from the Federal Government under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act by reason of the
qualified disaster with respect to such disaster area.
(3) QUALIFIED DISASTER.—The term ‘‘qualified disaster’’ means, with respect
to any qualified disaster area, the disaster by reason of which a major disaster
was declared with respect to such area.
(4) INCIDENT PERIOD.—The term ‘‘incident period’’ means, with respect to any
qualified disaster, the period specified by the Federal Emergency Management
Agency as the period during which such disaster occurred (except that for pur-
poses of this title such period shall not be treated as beginning before January
1, 2018, or ending after the date which is 30 days after the date of the enact-
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ment of this Act).
SEC. 302. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.
(a) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.—
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(1) IN GENERAL.—Section 72(t) of the Internal Revenue Code of 1986 shall not
apply to any qualified disaster distribution.
(2) AGGREGATE DOLLAR LIMITATION.—
(A) IN GENERAL.—For purposes of this subsection, the aggregate amount
of distributions received by an individual which may be treated as qualified
disaster distributions for any taxable year shall not exceed the excess (if
any) of—
(i) $100,000, over
(ii) the aggregate amounts treated as qualified disaster distributions
received by such individual for all prior taxable years.
(B) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an indi-
vidual would (without regard to subparagraph (A)) be a qualified disaster
distribution, a plan shall not be treated as violating any requirement of the
Internal Revenue Code of 1986 merely because the plan treats such dis-
tribution as a qualified disaster distribution, unless the aggregate amount
of such distributions from all plans maintained by the employer (and any
member of any controlled group which includes the employer) to such indi-
vidual exceeds $100,000.
(C) CONTROLLED GROUP.—For purposes of subparagraph (B), the term
‘‘controlled group’’ means any group treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of
1986.
(D) SPECIAL RULE FOR INDIVIDUALS AFFECTED BY MORE THAN ONE DIS-
ASTER.—The limitation of subparagraph (A) shall be applied separately with
respect to distributions made with respect to each qualified disaster.
(3) AMOUNT DISTRIBUTED MAY BE REPAID.—
(A) IN GENERAL.—Any individual who receives a qualified disaster dis-
tribution may, at any time during the 3-year period beginning on the day
after the date on which such distribution was received, make 1 or more con-
tributions in an aggregate amount not to exceed the amount of such dis-
tribution to an eligible retirement plan of which such individual is a bene-
ficiary and to which a rollover contribution of such distribution could be
made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of
the Internal Revenue Code of 1986, as the case may be.
(B) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIRE-
MENT PLANS OTHER THAN IRAS.—For purposes of the Internal Revenue Code
of 1986, if a contribution is made pursuant to subparagraph (A) with re-
spect to a qualified disaster distribution from an eligible retirement plan
other than an individual retirement plan, then the taxpayer shall, to the
extent of the amount of the contribution, be treated as having received the
qualified disaster distribution in an eligible rollover distribution (as defined
in section 402(c)(4) of such Code) and as having transferred the amount to
the eligible retirement plan in a direct trustee to trustee transfer within 60
days of the distribution.
(C) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM IRAS.—For pur-
poses of the Internal Revenue Code of 1986, if a contribution is made pur-
suant to subparagraph (A) with respect to a qualified disaster distribution
from an individual retirement plan (as defined by section 7701(a)(37) of
such Code), then, to the extent of the amount of the contribution, the quali-
fied disaster distribution shall be treated as a distribution described in sec-
tion 408(d)(3) of such Code and as having been transferred to the eligible
retirement plan in a direct trustee to trustee transfer within 60 days of the
distribution.
(4) DEFINITIONS.—For purposes of this subsection—
(A) QUALIFIED DISASTER DISTRIBUTION.—Except as provided in paragraph
(2), the term ‘‘qualified disaster distribution’’ means any distribution from
an eligible retirement plan made—
(i) on or after the first day of the incident period of a qualified dis-
aster and before the date which is 180 days after the date of the enact-
ment of this Act, and
(ii) to an individual whose principal place of abode at any time dur-
ing the incident period of such qualified disaster is located in the quali-
fied disaster area with respect to such qualified disaster and who has
sustained an economic loss by reason of such qualified disaster.
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(B) ELIGIBLE RETIREMENT PLAN.—The term ‘‘eligible retirement plan’’
shall have the meaning given such term by section 402(c)(8)(B) of the Inter-
nal Revenue Code of 1986.
(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.—
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(A) IN GENERAL.—In the case of any qualified disaster distribution, unless
the taxpayer elects not to have this paragraph apply for any taxable year,
any amount required to be included in gross income for such taxable year
shall be so included ratably over the 3-taxable-year period beginning with
such taxable year.
(B) SPECIAL RULE.—For purposes of subparagraph (A), rules similar to
the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue
Code of 1986 shall apply.
(6) SPECIAL RULES.—
(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER
AND WITHHOLDING RULES.—For purposes of sections 401(a)(31), 402(f), and
3405 of the Internal Revenue Code of 1986, qualified disaster distributions
shall not be treated as eligible rollover distributions.
(B) QUALIFIED DISASTER DISTRIBUTIONS TREATED AS MEETING PLAN DIS-
TRIBUTION REQUIREMENTS.—For purposes the Internal Revenue Code of
1986, a qualified disaster distribution shall be treated as meeting the re-
quirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and
457(d)(1)(A) of such Code.
(b) RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES.—
(1) RECONTRIBUTIONS.—
(A) IN GENERAL.—Any individual who received a qualified distribution
may, during the applicable period, make 1 or more contributions in an ag-
gregate amount not to exceed the amount of such qualified distribution to
an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal
Revenue Code of 1986) of which such individual is a beneficiary and to
which a rollover contribution of such distribution could be made under sec-
tion 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), of such Code, as the case may
be.
(B) TREATMENT OF REPAYMENTS.—Rules similar to the rules of subpara-
graphs (B) and (C) of subsection (a)(3) shall apply for purposes of this sub-
section.
(2) QUALIFIED DISTRIBUTION.—For purposes of this subsection, the term
‘‘qualified distribution’’ means any distribution—
(A) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the
extent such distribution relates to financial hardship), 403(b)(11)(B), or
72(t)(2)(F), of the Internal Revenue Code of 1986,
(B) which was to be used to purchase or construct a principal residence
in a qualified disaster area, but which was not so used on account of the
qualified disaster with respect to such area, and
(C) which was received during the period beginning on the date which is
180 days before the first day of the incident period of such qualified dis-
aster and ending on the date which is 30 days after the last day of such
incident period.
(3) APPLICABLE PERIOD.—For purposes of this subsection, the term ‘‘applicable
period’’ means, in the case of a principal residence in a qualified disaster area
with respect to any qualified disaster, the period beginning on the first day of
the incident period of such qualified disaster and ending on the date which is
180 days after the date of the enactment of this Act.
(c) LOANS FROM QUALIFIED PLANS.—
(1) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBUTIONS.—In the case
of any loan from a qualified employer plan (as defined under section 72(p)(4)
of the Internal Revenue Code of 1986) to a qualified individual made during the
180-day period beginning on the date of the enactment of this Act—
(A) clause (i) of section 72(p)(2)(A) of such Code shall be applied by sub-
stituting ‘‘$100,000’’ for ‘‘$50,000’’, and
(B) clause (ii) of such section shall be applied by substituting ‘‘the present
value of the nonforfeitable accrued benefit of the employee under the plan’’
for ‘‘one-half of the present value of the nonforfeitable accrued benefit of the
employee under the plan’’.
(2) DELAY OF REPAYMENT.—In the case of a qualified individual (with respect
to any qualified disaster) with an outstanding loan (on or after the first day of
the incident period of such qualified disaster) from a qualified employer plan
(as defined in section 72(p)(4) of the Internal Revenue Code of 1986)—
(A) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2)
of such Code for any repayment with respect to such loan occurs during the
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period beginning on the first day of the incident period of such qualified dis-
aster and ending on the date which is 180 days after the last day of such
incident period, such due date shall be delayed for 1 year (or, if later, until
the date which is 180 days after the date of the enactment of this Act),
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(B) any subsequent repayments with respect to any such loan shall be ap-
propriately adjusted to reflect the delay in the due date under subpara-
graph (A) and any interest accruing during such delay, and
(C) in determining the 5-year period and the term of a loan under sub-
paragraph (B) or (C) of section 72(p)(2) of such Code, the period described
in subparagraph (A) of this paragraph shall be disregarded.
(3) QUALIFIED INDIVIDUAL.—For purposes of this subsection, the term ‘‘quali-
fied individual’’ means any individual—
(A) whose principal place of abode at any time during the incident period
of any qualified disaster is located in the qualified disaster area with re-
spect to such qualified disaster, and
(B) who has sustained an economic loss by reason of such qualified dis-
aster.
(d) PROVISIONS RELATING TO PLAN AMENDMENTS.—
(1) IN GENERAL.—If this subsection applies to any amendment to any plan or
annuity contract, such plan or contract shall be treated as being operated in ac-
cordance with the terms of the plan during the period described in paragraph
(2)(B)(i).
(2) AMENDMENTS TO WHICH SUBSECTION APPLIES.—
(A) IN GENERAL.—This subsection shall apply to any amendment to any
plan or annuity contract which is made—
(i) pursuant to any provision of this section, or pursuant to any regu-
lation issued by the Secretary or the Secretary of Labor under any pro-
vision of this section, and
(ii) on or before the last day of the first plan year beginning on or
after January 1, 2020, or such later date as the Secretary may pre-
scribe.
In the case of a governmental plan (as defined in section 414(d) of the In-
ternal Revenue Code of 1986), clause (ii) shall be applied by substituting
the date which is 2 years after the date otherwise applied under clause (ii).
(B) CONDITIONS.—This subsection shall not apply to any amendment un-
less—
(i) during the period—
(I) beginning on the date that this section or the regulation de-
scribed in subparagraph (A)(i) takes effect (or in the case of a plan
or contract amendment not required by this section or such regula-
tion, the effective date specified by the plan), and
(II) ending on the date described in subparagraph (A)(ii) (or, if
earlier, the date the plan or contract amendment is adopted),
the plan or contract is operated as if such plan or contract amendment were
in effect, and
(ii) such plan or contract amendment applies retroactively for such
period.
SEC. 303. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY QUALIFIED DISAS-
TERS.
(a) IN GENERAL.—For purposes of section 38 of the Internal Revenue Code of
1986, in the case of an eligible employer, the 2018 qualified disaster employee reten-
tion credit shall be treated as a credit listed at the end of subsection (b) of such
section. For purposes of this subsection, the 2018 qualified disaster employee reten-
tion credit for any taxable year is an amount equal to 40 percent of the qualified
wages with respect to each eligible employee of such employer for such taxable year.
The amount of qualified wages with respect to any employee which may be taken
into account under this subsection by the employer for any taxable year shall not
exceed $6,000 (reduced by the amount of qualified wages with respect to such em-
ployee which may be so taken into account for any prior taxable year).
(b) DEFINITIONS.—For purposes of this section—
(1) ELIGIBLE EMPLOYER.—The term ‘‘eligible employer’’ means any employer—
(A) which conducted an active trade or business in a qualified disaster
zone at any time during the incident period of the qualified disaster with
respect to such qualified disaster zone, and
(B) with respect to whom the trade or business described in subparagraph
(A) is inoperable at any time during the period beginning on the first day
of the incident period of such qualified disaster and ending on the date of
the enactment of this Act, as a result of damage sustained by reason of
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such qualified disaster.
(2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible employee’’ means with respect to
an eligible employer an employee whose principal place of employment with
such eligible employer (determined immediately before the qualified disaster re-
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12
ferred to in paragraph (1)) was in the qualified disaster zone referred to in such
paragraph.
(3) QUALIFIED WAGES.—The term ‘‘qualified wages’’ means wages (as defined
in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to
section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with
respect to an eligible employee at any time on or after the date on which the
trade or business described in paragraph (1) first became inoperable at the prin-
cipal place of employment of the employee (determined immediately before the
qualified disaster referred to in such paragraph) and before the earlier of—
(A) the date on which such trade or business has resumed significant op-
erations at such principal place of employment, or
(B) the date which 150 days after the last day of the incident period of
the qualified disaster referred to in paragraph (1).
Such term shall include wages paid without regard to whether the employee
performs no services, performs services at a different place of employment than
such principal place of employment, or performs services at such principal place
of employment before significant operations have resumed.
(c) CERTAIN RULES TO APPLY.—For purposes of this subsection, rules similar to
the rules of sections 51(i)(1), 52, and 280C(a), of the Internal Revenue Code of 1986,
shall apply.
(d) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—An employee shall
not be treated as an eligible employee for purposes of this subsection for any period
with respect to any employer if such employer is allowed a credit under section 51
of the Internal Revenue Code of 1986 with respect to such employee for such period.
SEC. 304. OTHER DISASTER-RELATED TAX RELIEF PROVISIONS.
(a) TEMPORARY INCREASE IN LIMITATION ON QUALIFIED CONTRIBUTIONS.—
(1) SUSPENSION OF CURRENT LIMITATION.—Except as otherwise provided in
paragraph (2), qualified contributions shall be disregarded in applying sub-
sections (b) and (d) of section 170 of the Internal Revenue Code of 1986.
(2) APPLICATION OF INCREASED LIMITATION.—For purposes of section 170 of
the Internal Revenue Code of 1986—
(A) INDIVIDUALS.—In the case of an individual—
(i) LIMITATION.—Any qualified contribution shall be allowed as a de-
duction only to the extent that the aggregate of such contributions does
not exceed the excess of the taxpayer’s contribution base (as defined in
subparagraph (H) of section 170(b)(1) of such Code) over the amount of
all other charitable contributions allowed under section 170(b)(1) of
such Code.
(ii) CARRYOVER.—If the aggregate amount of qualified contributions
made in the contribution year (within the meaning of section 170(d)(1)
of such Code) exceeds the limitation of clause (i), such excess shall be
added to the excess described in section 170(b)(1)(G)(ii).
(B) CORPORATIONS.—In the case of a corporation—
(i) LIMITATION.—Any qualified contribution shall be allowed as a de-
duction only to the extent that the aggregate of such contributions does
not exceed the excess of the taxpayer’s taxable income (as determined
under paragraph (2) of section 170(b) of such Code) over the amount
of all other charitable contributions allowed under such paragraph.
(ii) CARRYOVER.—If the aggregate amount of qualified contributions
made in the contribution year (within the meaning of section 170(d)(2)
of such Code) exceeds the limitation of clause (i), such excess shall be
appropriately taken into account under section 170(d)(2) subject to the
limitations thereof.
(3) QUALIFIED CONTRIBUTIONS.—
(A) IN GENERAL.—For purposes of this subsection, the term ‘‘qualified con-
tribution’’ means any charitable contribution (as defined in section 170(c)
of the Internal Revenue Code of 1986) if—
(i) such contribution—
(I) is paid, during the period beginning on January 1, 2018, and
ending on the date which is 60 days after the date of the enact-
ment of this Act, in cash to an organization described in section
170(b)(1)(A) of such Code, and
(II) is made for relief efforts in one or more qualified disaster
areas,
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(ii) the taxpayer obtains from such organization contemporaneous
written acknowledgment (within the meaning of section 170(f)(8) of
such Code) that such contribution was used (or is to be used) for relief
efforts described in clause (i)(II), and
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13
(iii) the taxpayer has elected the application of this subsection with
respect to such contribution.
(B) EXCEPTION.—Such term shall not include a contribution by a donor
if the contribution is—
(i) to an organization described in section 509(a)(3) of the Internal
Revenue Code of 1986, or
(ii) for the establishment of a new, or maintenance of an existing,
donor advised fund (as defined in section 4966(d)(2) of such Code).
(C) APPLICATION OF ELECTION TO PARTNERSHIPS AND S CORPORATIONS.—
In the case of a partnership or S corporation, the election under subpara-
graph (A)(iii) shall be made separately by each partner or shareholder.
(b) SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY
LOSSES.—
(1) IN GENERAL.—If an individual has a net disaster loss for any taxable
year—
(A) the amount determined under section 165(h)(2)(A)(ii) of the Internal
Revenue Code of 1986 shall be equal to the sum of—
(i) such net disaster loss, and
(ii) so much of the excess referred to in the matter preceding clause
(i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause
(i) of this subparagraph) as exceeds 10 percent of the adjusted gross in-
come of the individual,
(B) section 165(h)(1) of such Code shall be applied by substituting ‘‘$500’’
for ‘‘$500 ($100 for taxable years beginning after December 31, 2009)’’,
(C) the standard deduction determined under section 63(c) of such Code
shall be increased by the net disaster loss, and
(D) section 56(b)(1)(E) of such Code shall not apply to so much of the
standard deduction as is attributable to the increase under subparagraph
(C) of this paragraph.
(2) NET DISASTER LOSS.—For purposes of this subsection, the term ‘‘net dis-
aster loss’’ means the excess of qualified disaster-related personal casualty
losses over personal casualty gains (as defined in section 165(h)(3)(A) of the In-
ternal Revenue Code of 1986).
(3) QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES.—For purposes
of this subsection, the term ‘‘qualified disaster-related personal casualty losses’’
means losses described in section 165(c)(3) of the Internal Revenue Code of 1986
which arise in a qualified disaster area on or after the first day of the incident
period of the qualified disaster to which such area relates, and which are attrib-
utable to such qualified disaster.
(c) SPECIAL RULE FOR DETERMINING EARNED INCOME.—
(1) IN GENERAL.—In the case of a qualified individual, if the earned income
of the taxpayer for the applicable taxable year is less than the earned income
of the taxpayer for the preceding taxable year, the credits allowed under sec-
tions 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election
of the taxpayer, be determined by substituting—
(A) such earned income for the preceding taxable year, for
(B) such earned income for the applicable taxable year.
(2) QUALIFIED INDIVIDUAL.—For purposes of this subsection—
(A) IN GENERAL.—The term ‘‘qualified individual’’ means any individual
whose principal place of abode at any time during the incident period of any
qualified disaster was located—
(i) in the qualified disaster zone with respect to such qualified dis-
aster, or
(ii) in the qualified disaster area with respect to such qualified dis-
aster (but outside the qualified disaster zone with respect to such quali-
fied disaster) and such individual was displaced from such principal
place of abode by reason of such qualified disaster.
(B) HURRICANE SANDY.—The term ‘‘qualified individual’’ includes any in-
dividual whose principal place of abode at any time during the period begin-
ning on October 29, 2012, and ending on November 3, 2012, was located—
(i) in that portion of the area described in clause (ii) which was deter-
mined by the President to warrant individual or individual and public
assistance from the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act by reason of Hurricane
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Sandy, or
(ii) in the area with respect to which a major disaster was declared
by the President under section 401 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act by reason of Hurricane Sandy
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14
and such individual was displaced from such principal place of abode
by reason of Hurricane Sandy.
(3) APPLICABLE TAXABLE YEAR.—The term ‘‘applicable taxable year’’ means—
(A) in the case of a qualified individual other than an individual de-
scribed in subparagraph (B), any taxable year which includes any portion
of the incident period of the qualified disaster to which the qualified dis-
aster area referred to in paragraph (2)(A) relates, or
(B) in the case of a qualified individual described in subparagraph (B) of
paragraph (2), any taxable year which includes any portion of the period
described in such subparagraph.
(4) EARNED INCOME.—For purposes of this subsection, the term ‘‘earned in-
come’’ has the meaning given such term under section 32(c) of the Internal Rev-
enue Code of 1986.
(5) SPECIAL RULES.—
(A) APPLICATION TO JOINT RETURNS.—For purposes of paragraph (1), in
the case of a joint return for an applicable taxable year—
(i) such paragraph shall apply if either spouse is a qualified indi-
vidual, and
(ii) the earned income of the taxpayer for the preceding taxable year
shall be the sum of the earned income of each spouse for such pre-
ceding taxable year.
(B) UNIFORM APPLICATION OF ELECTION.—Any election made under para-
graph (1) shall apply with respect to both sections 24(d) and 32 of the Inter-
nal Revenue Code of 1986.
(C) ERRORS TREATED AS MATHEMATICAL ERROR.—For purposes of section
6213 of the Internal Revenue Code of 1986, an incorrect use on a return
of earned income pursuant to paragraph (1) shall be treated as a mathe-
matical or clerical error.
(D) NO EFFECT ON DETERMINATION OF GROSS INCOME, ETC.—Except as
otherwise provided in this subsection, the Internal Revenue Code of 1986
shall be applied without regard to any substitution under paragraph (1).
(E) EXTENSION OF PERIOD OF LIMITATION FOR CERTAIN INDIVIDUALS AF-
FECTED BY HURRICANE SANDY.—
(i) IN GENERAL.—In the case of an individual described in paragraph
(2)(B), the period of limitation prescribed by section 6511(a) of the In-
ternal Revenue Code of 1986 for any applicable taxable year shall be
extended until the date prescribed by law (including extensions) for fil-
ing the return of tax for the taxable year that includes the date of the
enactment of this Act, and section 6511(b)(2) of such Code shall not
apply to any claim of credit or refund with respect to the return for
such applicable tax year.
(ii) AMENDMENTS, ETC. RESTRICTED TO CHANGES TO EARNED IN-
COME.—Clause (i) shall apply only with respect to amendments to the
return of tax, and claims for credit or refund, relating to a change in
the earned income of the individual.
SEC. 305. AUTOMATIC EXTENSION OF FILING DEADLINES IN CASE OF CERTAIN TAXPAYERS
AFFECTED BY FEDERALLY DECLARED DISASTERS.
(a) IN GENERAL.—Section 7508A is amended by adding at the end the following
new subsection:
‘‘(d) MANDATORY 60-DAY EXTENSION.—
‘‘(1) IN GENERAL.—In the case of any qualified taxpayer, the period—
‘‘(A) beginning on the earliest incident date specified in the declaration
to which the disaster area referred to in paragraph (2) relates, and
‘‘(B) ending on the date which is 60 days after the latest incident date
so specified,
shall be disregarded in the same manner as a period specified under subsection
(a).
‘‘(2) QUALIFIED TAXPAYER.—For purposes of this subsection, the term ‘quali-
fied taxpayer’ means—
‘‘(A) any individual whose principal residence (for purposes of section
1033(h)(4)) is located in a disaster area,
‘‘(B) any taxpayer if the taxpayer’s principal place of business (other than
the business of performing services as an employee) is located in a disaster
area,
‘‘(C) any individual who is a relief worker affiliated with a recognized gov-
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ernment or philanthropic organization and who is assisting in a disaster
area,
‘‘(D) any taxpayer whose records necessary to meet a deadline for an act
described in section 7508(a)(1) are maintained in a disaster area,
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15
‘‘(E) any individual visiting a disaster area who was killed or injured as
a result of the disaster, and
‘‘(F) solely with respect to a joint return, any spouse of an individual de-
scribed in any preceding subparagraph of this paragraph.
‘‘(3) DISASTER AREA.—For purposes of this subsection, the term ‘disaster area’
has the meaning given such term under subparagraph (B) of section 165(i)(5)
with respect to a Federally declared disaster (as defined in subparagraph (A)
of such section).
‘‘(4) APPLICATION TO RULES REGARDING PENSIONS.—In the case of any person
described in subsection (b), a rule similar to the rule of paragraph (1) shall
apply for purposes of subsection (b) with respect to—
‘‘(A) making contributions to a qualified retirement plan (within the
meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B),
or 404(m)(2),
‘‘(B) making distributions under section 408(d)(4),
‘‘(C) recharacterizing contributions under section 408A(d)(6), and
‘‘(D) making a rollover under section 402(c), 403(a)(4), 403(b)(8), or
408(d)(3).
‘‘(5) COORDINATION WITH PERIODS SPECIFIED BY THE SECRETARY.—Any period
described in paragraph (1) with respect to any person (including by reason of
the application of paragraph (4)) shall be in addition to (or concurrent with, as
the case may be) any period specified under subsection (a) or (b) with respect
to such person.’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to feder-
ally declared disasters declared after the date of the enactment of this Act.
SEC. 306. MODIFICATION OF THE TAX RATE FOR THE EXCISE TAX ON INVESTMENT INCOME
OF PRIVATE FOUNDATIONS.
(a) IN GENERAL.—Section 4940(a) is amended by striking ‘‘2 percent’’ and insert-
ing ‘‘1.39 percent’’.
(b) ELIMINATION OF REDUCED TAX WHERE FOUNDATION MEETS CERTAIN DISTRIBU-
TION REQUIREMENTS.—Section 4940 of such Code is amended by striking subsection
(e).
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to tax-
able years beginning after the date of the enactment of this Act.
SEC. 307. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS FOR QUALIFIED 2017
AND 2018 CALIFORNIA DISASTER AREAS.
(a) IN GENERAL.—For purposes of section 42 of the Internal Revenue Code of
1986, the State housing credit ceiling for California for calendar year 2019 shall be
increased by the lesser of—
(1) the aggregate housing credit dollar amount allocated by the State housing
credit agencies of California for such calendar year to buildings located in quali-
fied 2017 and 2018 California disaster areas, or
(2) 50 percent of the sum of the State housing credit ceilings for California
for calendar years 2017 and 2018.
(b) ALLOCATIONS TREATED AS MADE FIRST FROM ADDITIONAL ALLOCATION FOR
PURPOSES OF DETERMINING CARRYOVER.—For purposes of determining the unused
State housing credit ceiling for any calendar year under section 42(h)(3)(C) of the
Internal Revenue Code of 1986, any increase in the State housing credit ceiling
under subsection (a) shall be treated as an amount described in clause (ii) of such
section.
(c) DEFINITIONS.—For purposes of this section—
(1) QUALIFIED 2017 AND 2018 CALIFORNIA DISASTER AREAS.—The term ‘‘qualified
2017 and 2018 California disaster areas’’ means any area in California which
was determined by the President (before January 1, 2019) to warrant individual
or individual and public assistance from the Federal Government under the
Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of
a major disaster the incident period of which begins or ends in calendar year
2017 or 2018. Notwithstanding section 301, for purposes of the preceding sen-
tence, the term ‘‘incident period’’ means the period specified by the Federal
Emergency Management Agency as the period during which the disaster oc-
curred.
(2) OTHER DEFINITIONS.—Terms used in this section which are also used in
section 42 of the Internal Revenue Code of 1986 shall have the same meaning
in this section as in such section 42.
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SEC. 308. TREATMENT OF CERTAIN POSSESSIONS.
(a) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary
of the Treasury shall pay to each possession of the United States which has a mirror
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16
code tax system amounts equal to the loss (if any) to that possession by reason of
the application of the provisions of this title. Such amounts shall be determined by
the Secretary of the Treasury based on information provided by the government of
the respective possession.
(b) PAYMENTS TO OTHER POSSESSIONS.—The Secretary of the Treasury shall pay
to each possession of the United States which does not have a mirror code tax sys-
tem amounts estimated by the Secretary of the Treasury as being equal to the ag-
gregate benefits (if any) that would have been provided to residents of such posses-
sion by reason of the provisions of this title if a mirror code tax system had been
in effect in such possession. The preceding sentence shall not apply unless the re-
spective possession has a plan, which has been approved by the Secretary of the
Treasury, under which such possession will promptly distribute such payments to
its residents.
(c) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term ‘‘mirror
code tax system’’ means, with respect to any possession of the United States, the
income tax system of such possession if the income tax liability of the residents of
such possession under such system is determined by reference to the income tax
laws of the United States as if such possession were the United States.
(d) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United
States Code, the payments under this section shall be treated in the same manner
as a refund due from a credit provision referred to in subsection (b)(2) of such sec-
tion.
I. SUMMARY AND BACKGROUND
A. PURPOSE AND SUMMARY
The bill, H.R. 3301, the ‘‘Taxpayer Certainty and Disaster Relief
Act of 2019’’ as amended and ordered reported by the Committee
on Ways and Means on June 20 2019, (1) extends certain expired
and expiring tax provisions, (2) reduces the unified credit against
the estate tax effective January 1, 2023, (3) provides tax relief for
areas affected by certain natural disasters occurring on or after
January 1, 2018, and (4) makes certain other changes.
B. BACKGROUND AND NEED FOR LEGISLATION
The responsible stewardship of temporary tax policy is essential
to sound tax administration. Temporary tax policy can be used to
address a one-time need, to provide transition rules for new policy,
and for other valid purposes. However, certainty in tax policy is im-
portant. Uncertainty can reduce consumer confidence, increase vol-
atility in the stock market, and threaten investment and job
growth in crucial sectors across our economy, including defense,
healthcare, finance, and infrastructure.
H.R. 3301 extends 26 provisions that expired in 2017 and 2018.
It also prospectively extends six provisions set to expire at the end
of 2019. Some of the temporary provisions extended in this bill en-
hance support for families and individuals. Others provide incen-
tives for employment, economic growth, and community develop-
ment. Finally, certain provisions in this bill extend incentives for
energy production, efficiency, and green economy jobs. The costs of
extending these provisions are offset by a reduction to the unified
credit against the estate tax, effective January 1, 2023.
In addition to the extensions of certain provisions as described
above, H.R. 3301 provides critical tax relief for communities that
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have been hurt by natural disasters. This relief not only addresses
disasters that occurred in 2018, but also extends to disasters that
occur up to 30 days after the date of enactment of the legislation.
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17
C. LEGISLATIVE HISTORY
Background
H.R. 3301, the ‘‘Taxpayer Certainty and Disaster Tax Relief Act
of 2019,’’ was introduced on June 18, 2019 by Mr. Thompson of
California, and was referred to the Committee on Ways and Means.
Committee hearings
The Subcommittee on Select Revenue Measures held a hearing
on Temporary Policy in the Internal Revenue Code on Tuesday,
March 12, 2019. The Committee heard testimony from Mark Mazur
of the Urban-Brookings Tax Policy Center, Pam Olson of
PricewaterhouseCoopers, Chye-Ching Huang of the Center on
Budget and Policy Priorities, Judy K. Sakaki of Sonoma State Uni-
versity and Kyle Pomerleau of the Tax Foundation.
In addition, the Committee on Ways and Means held a hearing
on the 2017 Tax Law and Who It Left Behind on March 27, 2019.
Witnesses included Nancy Abromowitz of the American University
Washington College of Law, Elise Gould of the Economic Policy In-
stitute, Douglas Holtz-Eakin of the American Action Forum, Jason
Oh of the University of California Los Angeles, and Christopher
Shelton of the Communications Workers of America.
A number of Members of Congress also testified on many of the
provisions contained in H. R. 3301 at the Committee’s Member Day
Hearing held on June 4, 2019.
Committee action
The Committee on Ways and Means marked up H.R. 3301 on
June 20, 2019, and ordered the bill, as amended, favorably reported
(with a quorum being present) by a vote of 25 yeas and 17 nays.
II. EXPLANATION OF THE BILL
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS
A. TAX RELIEF AND SUPPORT FOR FAMILIES AND INDIVIDUALS
1. EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED
PRINCIPAL RESIDENCE INDEBTEDNESS (SEC. 101 OF THE BILL AND
SEC. 108(a)(1)(E) OF THE CODE)
PRESENT LAW 1
In general
Gross income includes income that is realized by a debtor from
the discharge of indebtedness,2 subject to certain exceptions for
debtors in Title 11 bankruptcy cases, insolvent debtors, certain stu-
dent loans, certain farm indebtedness, and certain real property
business indebtedness.3 In cases involving discharges of indebted-
ness that are excluded from gross income under the exceptions to
the general rule, taxpayers generally reduce certain tax attributes,
1 All discussions of Present Law in this report refer to present law as of the date of the mark-
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up (i.e., June 20, 2019) and do not reflect subsequent law changes.
2 A debt cancellation that constitutes a gift or bequest is not treated as income to the donee
debtor. Sec. 102.
3 Secs. 61(a)(11) and 108.
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18
including basis in property, by the amount of the discharge of in-
debtedness.
The amount of discharge of indebtedness excluded from income
by an insolvent debtor not in a Title 11 bankruptcy case cannot ex-
ceed the amount by which the debtor is insolvent. In the case of
a discharge due to bankruptcy or where the debtor is insolvent, any
reduction in basis may not exceed the excess of the aggregate bases
of properties held by the taxpayer immediately after the discharge
over the aggregate of the liabilities of the taxpayer immediately
after the discharge.4
For all taxpayers, the amount of discharge of indebtedness gen-
erally is equal to the difference between the adjusted issue price of
the debt being cancelled and the amount used to satisfy the debt.
These rules generally apply to the exchange of an old obligation for
a new obligation, including a modification of indebtedness that is
treated as an exchange (a debt-for-debt exchange).
Qualified principal residence indebtedness
An exclusion from gross income is provided for any discharge of
indebtedness income by reason of a discharge (in whole or in part)
of qualified principal residence indebtedness. Qualified principal
residence indebtedness means acquisition indebtedness (within the
meaning of section 163(h)(3)(B), except that the dollar limitation is
$2 million) with respect to the taxpayer’s principal residence.5 Ac-
quisition indebtedness with respect to a principal residence gen-
erally means indebtedness which is incurred in the acquisition,
construction, or substantial improvement of the principal residence
of the individual and is secured by the residence. It also includes
refinancing of such indebtedness to the extent the amount of the
indebtedness resulting from such refinancing does not exceed the
amount of the refinanced indebtedness. For these purposes, the
term ‘‘principal residence’’ has the same meaning as under section
121.
If immediately before the discharge, only a portion of a dis-
charged indebtedness is qualified principal residence indebtedness,
the exclusion applies only to so much of the amount discharged as
exceeds the portion of the debt which is not qualified principal resi-
dence indebtedness. For example, assume that a principal resi-
dence is secured by an indebtedness of $1 million, of which
$700,000 is qualified principal residence indebtedness. If the resi-
dence is sold for $600,000 and $400,000 debt is discharged, then
only $100,000 of the amount discharged may be excluded from
gross income under the qualified principal residence indebtedness
exclusion.
The basis of the individual’s principal residence is reduced by the
amount excluded from income under the provision.
The qualified principal residence indebtedness exclusion does not
apply to a taxpayer in a Title 11 case; instead, the general exclu-
sion rules apply. In the case of an insolvent taxpayer not in a Title
11 case, the qualified principal residence indebtedness exclusion
applies unless the taxpayer elects to have the general exclusion
rules apply instead.
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4 Sec. 1017.
5 Sec. 108(h)(2).
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19
The exclusion does not apply to the discharge of a loan if the dis-
charge is on account of services performed for the lender or any
other factor not directly related to a decline in the value of the resi-
dence or to the financial condition of the taxpayer.
The exclusion for qualified principal residence indebtedness is ef-
fective for discharges of indebtedness before January 1, 2018.
REASONS FOR CHANGE
The Committee believes that taxpayers restructuring their acqui-
sition indebtedness on a principal residence or losing their prin-
cipal residence in a foreclosure are likely, due to their economic cir-
cumstances, to lack the necessary liquidity to pay taxes on the re-
sulting discharge of indebtedness. Therefore, the Committee be-
lieves the exclusion from gross income for discharges of qualified
principal residence indebtedness should be extended.
EXPLANATION OF PROVISION
The provision extends for three additional years (through Decem-
ber 31, 2020) the exclusion from gross income for discharges of
qualified principal residence indebtedness. The provision also pro-
vides for an exclusion from gross income in the case of those tax-
payers whose qualified principal residence indebtedness was dis-
charged on or after January 1, 2021, if the discharge was subject
to a written arrangement entered into prior to January 1, 2021.
EFFECTIVE DATE
The provision generally applies to discharges of indebtedness
after December 31, 2017.
2. TREATMENT OF MORTGAGE INSURANCE PREMIUMS AS QUALIFIED
RESIDENCE INTEREST (SEC. 102 OF THE BILL AND SEC. 163(h) OF THE
CODE)
PRESENT LAW
In general
Qualified residence interest is deductible notwithstanding the
general rule that personal interest is nondeductible.6
Acquisition indebtedness
Qualified residence interest is interest on acquisition indebted-
ness with respect to a principal and a second residence of the tax-
payer. The maximum amount of acquisition indebtedness is
$750,000 ($375,000 in the case of married taxpayers filing sepa-
rately). Acquisition indebtedness means debt that is incurred in ac-
quiring, constructing, or substantially improving a qualified resi-
dence of the taxpayer, and that is secured by the residence.
Qualified mortgage insurance
Certain premiums paid or accrued for qualified mortgage insur-
ance by a taxpayer during the taxable year in connection with ac-
quisition indebtedness on a qualified residence of the taxpayer are
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treated as interest that is qualified residence interest and thus de-
6 Sec. 163(h).
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20
ductible. The amount allowable as a deduction is phased out rat-
ably by 10 percent for each $1,000 (or fraction thereof) by which
the taxpayer’s adjusted gross income exceeds $100,000 ($500 and
$50,000, respectively, in the case of a married individual filing a
separate return). Thus, the deduction is not allowed if the tax-
payer’s adjusted gross income exceeds $109,000 ($54,000 in the
case of married individual filing a separate return).
For this purpose, qualified mortgage insurance means mortgage
insurance provided by the Department of Veterans Affairs, the Fed-
eral Housing Administration, or the Rural Housing Service, and
private mortgage insurance (defined in section two of the Home-
owners Protection Act of 1998 as in effect on the date of enactment
of the provision).
Amounts paid for qualified mortgage insurance that are properly
allocable to periods after the close of the taxable year are treated
as paid in the period to which they are allocated. No deduction is
allowed for the unamortized balance if the mortgage is paid before
the end of its term (except in the case of qualified mortgage insur-
ance provided by the Department of Veterans Affairs or Rural
Housing Service).
The deduction does not apply with respect to any mortgage in-
surance contract issued before January 1, 2007. The deduction is
disallowed for any amount paid or accrued after December 31,
2017, or properly allocable to any period after that date.
Information reporting rules apply to mortgage insurance pre-
miums for premiums paid or accrued during periods to which the
deductibility provision applies.7
REASONS FOR CHANGE
The Committee believes that permitting the deduction of mort-
gage insurance premiums is consistent with the policy underlying
the home mortgage interest deduction, i.e., encouraging home own-
ership. Therefore, the Committee believes the deduction for quali-
fied mortgage insurance premiums should be extended.
EXPLANATION OF PROVISION
The provision extends the deduction for qualified mortgage insur-
ance premiums for three years (with respect to contracts entered
into after December 31, 2006). Thus, the provision applies to
amounts paid or accrued in 2018, 2019, and 2020 (and not properly
allocable to any period after December 31, 2020).
EFFECTIVE DATE
The provision applies to amounts paid or accrued after December
31, 2017.
3. REDUCTION IN MEDICAL EXPENSE DEDUCTION FLOOR (SEC. 103 OF
THE BILL AND SEC. 213 OF THE CODE)
PRESENT LAW
For taxable years ending before January 1, 2019, individuals
may claim an itemized deduction for unreimbursed medical ex-
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penses paid during the taxable year, but only to the extent that the
7 Sec. 6050H(h) and Treas. Reg. sec. 1.6050H-3.
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21
expenses exceed 7.5 percent of adjusted gross income (‘‘AGI’’) for
purposes of regular tax and the alternative minimum tax (‘‘AMT’’).8
For taxable years ending after December 31, 2018, the 7.5-percent
threshold is increased to 10 percent.
REASONS FOR CHANGE
The Committee believes that the itemized deduction for unreim-
bursed medical expenses serves the purpose of allowing taxpayers
to offset the cost of unexpected medical expenses that may impose
an economic hardship. The Committee believes that extending the
availability of the deduction to more taxpayer expenses is con-
sistent with that purpose. Therefore, the Committee believes that
the reduced threshold of 7.5 percent of AGI should be extended.
EXPLANATION OF PROVISION
The provision extends for two years the threshold for deducting
medical expenses of 7.5 percent of AGI. The 7.5-percent threshold
applies for purposes of the AMT as well as the regular tax. The
provision applies for taxable years beginning before January 1,
2021.
EFFECTIVE DATE
The provision applies to taxable years ending after December 31,
2018.
4. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES (SEC.
104 OF THE BILL AND SEC. 222 OF THE CODE)
PRESENT LAW
An individual is allowed a deduction for qualified tuition and re-
lated expenses for higher education paid by the individual during
the taxable year.9 The deduction is allowed in computing adjusted
gross income. The term qualified tuition and related expenses is de-
fined in the same manner as for the American Opportunity and
Lifetime Learning credits, and includes tuition and fees required
for the enrollment or attendance of the taxpayer, the taxpayer’s
spouse, or any dependent of the taxpayer with respect to whom the
taxpayer is allowed a deduction for a personal exemption,10 at an
eligible institution of higher education for courses of instruction of
such individual at such institution.11 The expenses must be in con-
nection with enrollment at an institution of higher education dur-
ing the taxable year, or with an academic period beginning during
8 Sec. 213. The threshold was amended by the Patient Protection and Affordable Care Act
(Pub. L. No. 111-148). For taxable years beginning after December 31, 2012, the threshold was
10 percent for regular tax purposes and AMT purposes. A temporary special rule applied in the
case of a taxpayer who attained age 65 (or, in the case of a married taxpayer, if either the tax-
payer or the taxpayer’s spouse attained age 65) before the close of the taxable year, in which
case the threshold was 7.5 percent for regular tax purposes. The 2017 Tax Act (Pub. L. No. 115-
97) reduced the floor to 7.5 percent for all taxpayers for taxable years beginning after December
31, 2016, and ending before January 1, 2019.
9 Sec. 222.
10 Notwithstanding that the exemption amount is zero for taxable years beginning after De-
cember 31, 2017, and before January 1, 2026, the reduction of the exemption amount to zero
is not taken into account in determining whether a deduction for a personal exemption is still
allowed or allowable. Sec. 151(d)(5)(B).
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11 The deduction generally is not available for expenses with respect to a course or education
involving sports, games, or hobbies, and is not available for student activity fees, athletic fees,
insurance expenses, or other expenses unrelated to an individual’s academic course of instruc-
tion. Secs. 222(d)(1) and 25A(f).
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22
the taxable year or during the first three months of the next tax-
able year. The deduction is not available for tuition and related ex-
penses paid for elementary or secondary education.
The maximum deduction is $4,000 for an individual whose ad-
justed gross income for the taxable year does not exceed $65,000
($130,000 in the case of a joint return), or $2,000 for an individual
whose adjusted gross income does not exceed $80,000 ($160,000 in
the case of a joint return). No deduction is allowed for an indi-
vidual whose adjusted gross income exceeds the relevant adjusted
gross income limitations, for a married individual who does not file
a joint return, or for an individual with respect to whom a personal
exemption deduction is allowable to another taxpayer for the tax-
able year.
The amount of qualified tuition and related expenses must be re-
duced by certain scholarships, educational assistance allowances,
and other amounts paid for the benefit of such individual,12 as well
as by the amount of such expenses taken into account for purposes
of determining any exclusion from gross income of (1) income from
certain U.S. savings bonds used to pay higher education tuition
and fees and (2) income from a Coverdell education savings ac-
count.13 Additionally, such expenses must be reduced by the earn-
ings portion (but not the return of principal) of distributions from
a qualified tuition program if an exclusion under section 529 is
claimed with respect to expenses eligible for the qualified tuition
deduction. No deduction is allowed for any expense for which a de-
duction is otherwise allowed or with respect to an individual for
whom an American Opportunity or Lifetime Learning credit is
elected for such taxable year.
The deduction is not available for taxable years beginning after
December 31, 2017.
REASONS FOR CHANGE
The Committee believes that the deduction for qualified tuition
mitigates the effect of rising tuition costs on students and their
families. The Committee further believes that the deduction pro-
vides an important financial incentive for individuals to pursue
higher education. Therefore, the Committee believes the qualified
tuition deduction should be extended.
EXPLANATION OF PROVISION
The provision extends the qualified tuition deduction for three
years, through 2020.
EFFECTIVE DATE
The provision applies to taxable years beginning after December
31, 2017.
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12 Secs. 222(d)(1) and 25A(g)(2).
13 Sec. 222(c). These reductions are the same as those that apply to the American Opportunity
and Lifetime Learning credits.
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23
5. BLACK LUNG DISABILITY TRUST FUND EXCISE TAX (SEC. 105 OF THE
BILL AND SEC. 4121 OF THE CODE)
PRESENT LAW
Before January 1, 2019, coal extracted from mines was taxed at
either $1.10 per ton if from an underground mine, or $0.55 per ton
if from a surface mine.14 The total amount of tax was not to exceed
4.4 percent of the price at which such ton of coal was sold by the
producer.
After December 31, 2018, the ‘‘temporary increase termination
date,’’ the tax rates declined to rates of $0.50 for underground
mines, and $0.25 for surface mines. After the temporary increase
termination date, the total amount of tax is not to exceed two per-
cent of the price at which such ton of coal is sold by the producer.
REASONS FOR CHANGE
The Government Accountability Office has reported that the ex-
penditures of the Black Lung Disability Trust Fund have consist-
ently exceed revenues.15 The Committee believes that the Black
Lung Disability Trust Fund should be provided with a level of
funding sufficient to cover its expenditures.
EXPLANATION OF PROVISION
The provision reinstates the increased rates on coal through De-
cember 31, 2020. Coal extracted will be taxed at $1.10 per ton if
from an underground mine, or $0.55 per ton if from a surface mine.
The total amount of tax cannot exceed 4.4 percent of the price at
which such ton of coal is sold by the producer.
EFFECTIVE DATE
The provision applies on and after the first day of the first cal-
endar month beginning after the date of enactment.
B. INCENTIVES FOR EMPLOYMENT, ECONOMIC GROWTH, AND
COMMUNITY DEVELOPMENT
1. INDIAN EMPLOYMENT TAX CREDIT (SEC. 111 OF THE BILL AND SEC.
45A OF THE CODE)
PRESENT LAW
In general, a credit against income tax liability is allowed to em-
ployers for the first $20,000 of qualified wages and qualified em-
ployee health insurance costs paid or incurred by the employer
with respect to certain employees.16 The credit is equal to 20 per-
cent of the excess of eligible employee qualified wages and health
insurance costs during the current year over the amount of such
wages and costs incurred by the employer during 1993. The credit
is an incremental credit, such that an employer’s current-year
qualified wages and qualified employee health insurance costs (up
to $20,000 per employee) are eligible for the credit only to the ex-
tent that the sum of such costs exceeds the sum of comparable
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14 Sec. 4121.
15 Government Accountability Office, Black Lung Benefits Program: Options for Improving
Trust Fund Finances, (GAO 18-351, May 2018).
16 Sec. 45A.
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24
costs paid during 1993. No deduction is allowed for the portion of
the wages equal to the amount of the credit.17
Qualified wages means wages paid or incurred by an employer
for services performed by a qualified employee. A qualified em-
ployee means any employee who is an enrolled member of an In-
dian tribe or the spouse of an enrolled member of an Indian tribe,
who performs substantially all of the services within an Indian res-
ervation, and whose principal place of abode while performing such
services is on or near the reservation in which the services are per-
formed. An ‘‘Indian reservation’’ is a reservation as defined in sec-
tion 3(d) of the Indian Financing Act of 1974 18 or section 4(10) of
the Indian Child Welfare Act of 1978.19 For purposes of the pre-
ceding sentence, section 3(d) is applied by treating ‘‘former Indian
reservations in Oklahoma’’ as including only lands that are (1)
within the jurisdictional area of an Oklahoma Indian tribe as de-
termined by the Secretary of the Interior, and (2) recognized by
such Secretary as an area eligible for trust land status under 25
C.F.R. Part 151 (as in effect on August 5, 1997).
An employee is not treated as a qualified employee for any tax-
able year of the employer if the total amount of wages paid or in-
curred by the employer with respect to such employee during the
taxable year exceeds an amount determined at an annual rate of
$30,000 (which after adjustment for inflation is $45,000 for 2017).20
In addition, an employee will not be treated as a qualified em-
ployee under certain specific circumstances, such as where the em-
ployee is related to the employer (in the case of an individual em-
ployer) or to one of the employer’s specified shareholders, owners,
partners, grantors, beneficiaries, or fiduciaries, or is a dependent
thereof.21 Similarly, an employee will not be treated as a qualified
employee where the employee has more than a five percent owner-
ship interest in the employer. Finally, an employee will not be con-
sidered a qualified employee to the extent the employee’s services
relate to gaming activities or are performed in a building housing
such activities.
The wage credit is available for wages paid or incurred in taxable
years beginning on or before December 31, 2017.
REASONS FOR CHANGE
To further encourage employment on Indian reservations, the
Committee believes the Indian employment credit should be ex-
tended.
EXPLANATION OF PROVISION
The provision extends the Indian employment credit for three
years (through taxable years beginning before January 1, 2021).
EFFECTIVE DATE
The provision applies to taxable years beginning after December
31, 2017.
17 Sec. 280C(a).
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18 Pub. L. No. 93–262.
19 Pub. L. No. 95–608.
20 See Instructions for Form 8845, Indian Employment Credit (2017).
21 Sec. 51(i)(1).
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25
2. RAILROAD TRACK MAINTENANCE CREDIT (SEC. 112 OF THE BILL AND
SEC. 45G OF THE CODE)
PRESENT LAW
In general
A business tax credit is allowed for 50 percent of qualified rail-
road track maintenance expenditures paid or incurred by an eligi-
ble taxpayer during taxable years beginning before January 1, 2018
(the ‘‘railroad track maintenance credit’’ or ‘‘credit’’).22 For purposes
of calculating the credit, all members of a controlled group of cor-
porations or a group of businesses under common control are treat-
ed as a single taxpayer, and each member’s credit is determined on
a proportionate basis to each member’s share of the aggregate
qualified railroad track maintenance expenditures taken into ac-
count by the group for the credit.23 The credit may reduce a tax-
payer’s tax liability below its tentative minimum tax.24
Limitation
The railroad track maintenance credit is limited to the product
of $3,500 times the number of miles of railroad track 25 (1) owned
or leased by an eligible taxpayer as of the close of its taxable
year,26 and (2) assigned to the eligible taxpayer by a Class II or
Class III railroad that owns or leases such track at the close of the
taxable year.27 Amounts that exceed the limitation are not carried
over to another taxable year.28
Assignments
Each mile of railroad track may be taken into account only once,
either by the owner of such mile or by the owner’s assignee, in com-
puting the per-mile limitation.29 Any assignment of a mile of rail-
road track may be made only once per taxable year of the Class
II or Class III railroad, and is treated as made at the close of such
taxable year.30 Such assignment is taken into account for the tax-
22 Sec. 45G(a) and (f). An eligible taxpayer generally claims the railroad track maintenance
credit by filing Form 8900, Qualified Railroad Track Maintenance Credit. If a taxpayer’s only
source of the credit is a partnership or S corporation, the taxpayer may report the credit directly
on Form 3800, General Business Credit (see Part III, line 4g).
23 Sec. 45G(e)(2) and Treas. Reg. sec. 1.45G–1(f). See also Notice 2013–20, 2013–15 I.R.B. 902,
April 8, 2013; and Field Attorney Advice 20151601F, December 19, 2014.
24 Sec. 38(c)(4).
25 Double track is treated as multiple lines of railroad track, rather than as a single line of
railroad track (i.e., one mile of single track is one mile, but one mile of double track is two
miles). Treas. Reg. sec. 1.45G–1(b)(9).
26 A Class II or Class III owns railroad track if the railroad track is subject to the allowance
for depreciation under section 167 by such Class II or Class III railroad. Treas. Reg. sec. 1.45G–
1(b)(2). Railroad track generally has a seven-year MACRS recovery period. Sec. 168(e)(3)(C)(i)
and asset class 40.4 of Rev. Proc. 87–56, 1987–2 C.B. 674. Alternatively, railroad structures and
similar improvements (e.g., bridges, elevated structures, fences, etc.) generally have a 20-year
MACRS recovery period (see asset class 40.2 of Rev. Proc. 87–56), while railroad grading and
tunnel bores have a 50-year recovery period (see sec. 168(c)). The term ‘‘railroad grading or tun-
nel bore’’ means all improvements resulting from excavations (including tunneling), construction
of embankments, clearings, diversions of roads and streams, sodding of slopes, and from similar
work necessary to provide, construct, reconstruct, alter, protect, improve, replace, or restore a
roadbed or right-of-way for railroad track. Sec. 168(e)(4).
27 Sec. 45G(b)(1).
28 Treas. Reg. sec. 1.45G–1(c)(2)(iii).
29 Sec. 45G(b)(2). See also Treas. Reg. sec. 1.45G–1(d).
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30 An assignor must file Form 8900 with its timely filed (including extensions) Federal income
tax return for the taxable year for which it assigns any mile of eligible railroad track, even if
it is not itself claiming the railroad track maintenance credit for that taxable year. Treas. Reg.
Continued
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26
able year of the assignee that includes the date that such assign-
ment is treated as effective. However, assignments, including re-
lated expenditures paid or incurred, for taxable years ending after
January 1, 2017, and before January 1, 2018, are treated as effec-
tive as of the close of such taxable year if made pursuant to a writ-
ten agreement entered into no later than May 10, 2018.31
Eligible taxpayer
An eligible taxpayer means any Class II or Class III railroad,
and any person (including a Class I railroad) 32 who transports
property using the rail facilities 33 of a Class II or Class III railroad
or who furnishes railroad-related property 34 or services 35 to a
Class II or Class III railroad, but only with respect to miles of rail-
road track assigned to such person by such railroad under the pro-
vision.36
The terms Class II or Class III railroad have the meanings given
by the Surface Transportation Board without regard to the con-
trolled group rules under section 45G(e)(2).37
Qualified railroad track maintenance expenditures
Qualified railroad track maintenance expenditures are defined as
gross expenditures (whether or not otherwise chargeable to capital
account 38) for maintaining railroad track (including roadbed,
bridges, and related track structures) owned or leased as of Janu-
ary 1, 2015, by a Class II or Class III railroad, determined without
regard to any consideration for such expenditure given by the Class
II or Class III railroad which made the assignment of such track.39
sec. 1.45G–1(d)(4). Both the assignor and the assignee must attach a statement to Form 8900
detailing the information required by Treas. Reg. sec. 1.45G–1(d)(4).
31 Bipartisan Budget Act of 2018, Pub. L. No. 115–123, Division D, Title I, Subtitle B, sec.
40302(b)(2), February 9, 2018.
32 The Surface Transportation Board currently classifies a Class I railroad as a carrier with
annual operating revenue of $447,621,226 or more. The seven Class I railroads are BNSF Rail-
way Company, Kansas City Southern Railway Company, Union Pacific Railway Company, Soo
Line Railroad Company (Canadian Pacific’s U.S. operations), CSX Transportation Inc., Norfolk
Southern Railway Company, and Grand Trunk Corporation (Canadian National’s U.S. oper-
ations). See the Surface Transportation Board FAQs—Economic and Industry Information,
available at https://www.stb.gov/stb/faqs.html.
33 Rail facilities of a Class II or Class III railroad are railroad yards, tracks, bridges, tunnels,
wharves, docks, stations, and other related assets that are used in the transport of freight by
a railroad and owned or leased by that railroad. Treas. Reg. sec. 1.45G–1(b)(6).
34 Railroad-related property is property that is unique to railroads and provided directly to a
Class II or Class III railroad. See Treas. Reg. sec. 1.45G–1(b)(7) for a detailed description.
35 Railroad-related services are services that are provided directly to, and are unique to, a rail-
road and that relate to railroad shipping, loading and unloading of railroad freight, or repairs
of rail facilities or railroad-related property. See Treas. Reg. sec. 1.45G–1(b)(8) for a detailed de-
scription.
36 Sec. 45G(c).
37 Sec. 45G(e)(1) and Treas. Reg. sec. 1.45G–1(b)(1). The Surface Transportation Board cur-
rently classifies a Class II railroad as a carrier with annual operating revenue of less than
$447,621,226 but in excess of $35,809,698, and a Class III railroad as a carrier with annual op-
erating revenue of $35,809,698 or less. See the Surface Transportation Board FAQs—Economic
and Industry Information, available at https://www.stb.gov/stb/faqs.html.
38 All or some of the qualified railroad track maintenance expenditures may be required to
be capitalized under section 263(a) as a tangible or intangible asset. See, e.g., Treas. Reg. sec.
1.263(a)–4(d)(8), which requires the capitalization of amounts paid or incurred by a taxpayer to
produce or improve real property owned by another (except to the extent the taxpayer is selling
services at fair market value to produce or improve the real property) if the real property can
reasonably be expected to produce significant economic benefits for the taxpayer. The basis of
the tangible or intangible asset includes the capitalized amount of the qualified railroad track
maintenance expenditures. Treas. Reg. sec. 1.45G–1(e)(1). Note that for purposes of Treas. Reg.
sec. 1.263(a)–4(d)(8), real property includes property that is affixed to real property and that
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will ordinarily remain affixed for an indefinite period of time. Treas. Reg. sec. 1.263(a)–
4(d)(8)(iii). Intangible assets described in Treas. Reg. sec. 1.263(a)–4(d)(8) are generally depre-
ciable ratably over 25 years. See Treas. Reg. sec. 1.167(a)–3.
39 Sec. 45G(d); Treas. Reg. sec. 1.45G–1(b)(5).
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27
However, consideration received directly or indirectly from persons
other than the Class II or Class III railroad does reduce the
amount of qualified railroad track maintenance expenditures.40
Any amount that an assignee pays an assignor in exchange for an
assignment of one or more miles of eligible railroad is treated as
qualified railroad track maintenance expenditures paid or incurred
by the assignee at the time and to the extent the assignor pays or
incurs qualified railroad track maintenance expenditures.41
BASIS ADJUSTMENT
Basis of the railroad track must be reduced (but not below zero)
by an amount equal to 100 percent of the taxpayer’s qualified rail-
road track maintenance tax credit determined for the taxable
year.42 The basis reduction is taken into account before the depre-
ciation deduction with respect to such railroad track is determined
for the taxable year for which the railroad track maintenance cred-
it is allowable.43 If all or some of the qualified railroad track main-
tenance expenditures paid or incurred by an eligible taxpayer dur-
ing the taxable year is capitalized under section 263(a) to more
than one asset, whether tangible or intangible, the reduction to the
basis of these assets is allocated among each of the assets subject
to the reduction in proportion to the unadjusted basis of each asset
at the time the qualified railroad track maintenance expenditures
are paid or incurred during that taxable year.44
REASONS FOR CHANGE
The Committee believes that Class II and Class III railroads are
an important part of the nation’s railway system. Therefore, the
Committee believes that this incentive for railroad track mainte-
nance expenditures should be extended.
EXPLANATION OF PROVISION
The provision extends the present law credit for three years, for
qualified railroad track maintenance expenditures paid or incurred
during taxable years beginning before January 1, 2021.
EFFECTIVE DATE
The provision generally applies to expenditures paid or incurred
during taxable years beginning after December 31, 2017.
The provision also provides a safe harbor that treats assign-
ments, including related expenditures paid or incurred, for taxable
years beginning on or after January 1, 2018, and before January
1, 2019, as effective as of the close of such taxable year if made
pursuant to a written agreement entered into no later than 90 days
following the date of enactment.
40 Treas. Reg. sec. 1.45G–1(c)(3)(ii).
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41 Treas. Reg. sec. 1.45G–1(c)(3).
42 Sec. 45G(e)(3). See also sec. 1016(a)(29) and Treas. Reg. Sec. 1.45G–1(e).
43 Treas. Reg. sec. 1.45G–1(e)(2).
44 Ibid.
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28
3. MINE RESCUE TEAM TRAINING CREDIT (SEC. 113 OF THE BILL AND
SEC. 45N OF THE CODE)
PRESENT LAW
An eligible employer may claim a general business credit against
income tax with respect to each qualified mine rescue team em-
ployee equal to the lesser of (1) 20 percent of the amount paid or
incurred by the taxpayer during the taxable year with respect to
the training program costs of the qualified mine rescue team em-
ployee (including the wages of the employee while attending the
program) or (2) $10,000.45
A qualified mine rescue team employee is any full-time employee
of the taxpayer who is a miner eligible for more than six months
of a taxable year to serve as a mine rescue team member by virtue
of either having completed the initial 20-hour course of instruction
prescribed by the Mine Safety and Health Administration’s Office
of Educational Policy and Development, or receiving at least 40
hours of refresher training in such instruction.46
An eligible employer is any taxpayer which employs individuals
as miners in underground mines in the United States.47 The term
‘‘wages’’ has the meaning given to such term by section 3306(b) 48
(determined without regard to any dollar limitation contained in
that section).49
No deduction is allowed for the portion of the expenses otherwise
deductible that is equal to the amount of the credit.50 The credit
does not apply to taxable years beginning after December 31,
2017.51 Additionally, the credit is not allowable for purposes of
computing the alternative minimum tax.52
REASONS FOR CHANGE
The Committee believes that mine rescue teams help ensure the
safety of those operating in and around a mine in the event of an
accident. Therefore, the Committee believes that this incentive for
costs incurred to train mine rescue teams should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for three years through taxable
years beginning before January 1, 2021.
EFFECTIVE DATE
The provision applies to taxable years beginning after December
31, 2017.
45 Sec. 45N(a).
46 Sec. 45N(b).
47 Sec. 45N(c).
48 Section 3306(b) defines wages for purposes of Federal Unemployment Tax.
49 Sec. 45N(d).
50 Sec. 280C(e).
51 Sec. 45N(e).
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52 Sec. 38(c). Note that the corporate alternative minimum tax was repealed for taxable years
beginning after December 31, 2017. See An Act to Provide for Reconciliation Pursuant to Titles
II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, Pub. L. No. 115–
97, sec. 12001, December 22, 2017.
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29
4. SEVEN-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT
COMPLEXES (SEC. 114 OF THE BILL AND SEC. 168(i)(15) OF THE CODE)
PRESENT LAW
In general
A taxpayer generally must capitalize the cost of property used in
a trade or business or held for the production of income and recover
such cost over time through annual deductions for depreciation or
amortization.53 The period for depreciation or amortization gen-
erally begins when the asset is placed in service by the taxpayer.54
Tangible property generally is depreciated under the modified ac-
celerated cost recovery system (‘‘MACRS’’), which determines de-
preciation for different types of property based on an assigned ap-
plicable depreciation method, recovery period, and convention.55
The applicable recovery period for an asset is determined in part
by statute and in part by historic Treasury guidance.56 The ‘‘type
of property’’ of an asset is used to determine the ‘‘class life’’ of the
asset, which in turn dictates the applicable recovery period for the
asset.
The MACRS recovery periods applicable to most tangible per-
sonal property range from three to 20 years. The depreciation
methods generally applicable to tangible personal property are the
200-percent and 150-percent declining balance methods,57 switch-
ing to the straight line method for the first taxable year where
using the straight line method with respect to the adjusted basis
as of the beginning of that year yields a larger depreciation allow-
ance.
Real property
The recovery periods for most real property are 39 years for non-
residential real property and 27.5 years for residential rental prop-
erty.58 The straight line depreciation method is required for the
aforementioned real property.59 In addition, nonresidential real
53 See secs. 263(a) and 167. In general, only the tax owner of property (i.e., the taxpayer with
the benefits and burdens of ownership) is entitled to claim tax benefits such as cost recovery
deductions with respect to the property. In addition, where property is not used exclusively in
a taxpayer’s business, the amount eligible for a deduction must be reduced by the amount re-
lated to personal use. See, e.g., sec. 280A.
54 See Treas. Reg. secs. 1.167(a)–10(b), –3, –14, and 1.197–2(f). See also Treas. Reg. sec.
1.167(a)–11(e)(1)(i).
55 Sec. 168.
56 Exercising authority granted by Congress, the Secretary issued Rev. Proc. 87–56, 1987–2
C.B. 674, laying out the framework of recovery periods for enumerated classes of assets. The
Secretary clarified and modified the list of asset classes in Rev. Proc. 88–22, 1988–1 C.B. 785.
In November 1988, Congress revoked the Secretary’s authority to modify the class lives of depre-
ciable property. Rev. Proc. 87–56, as modified, remains in effect except to the extent that the
Congress has, since 1988, statutorily modified the recovery period for certain depreciable assets,
effectively superseding any administrative guidance with regard to such property.
57 Under the declining balance method, the depreciation rate is determined by dividing the
appropriate percentage (here 150 or 200) by the appropriate recovery period. This leads to accel-
erated depreciation when the declining balance percentage is greater than 100. The table below
illustrates depreciation for an asset with a cost of $1,000 and a seven-year recovery period under
the 200-percent declining balance method, the 150-percent declining balance method, and the
straight line method.
Recovery method Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total
200-percent declining balance 285.71 204.08 145.77 104.12 86.77 86.77 86.77 1,000.00
150-percent declining balance 214.29 168.37 132.29 121.26 121.26 121.26 121.26 1,000.00
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Straight-line 142.86 142.86 142.86 142.86 142.86 142.86 142.86 1,000.00
* Details may not add to totals due to rounding.
58 Sec. 168(c).
59 Sec. 168(b)(3).
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30
and residential rental property are both subject to the mid-month
convention, which treats all property placed in service during any
month (or disposed of during any month) as placed in service (or
disposed of) on the mid-point of such month.60 All other property
generally is subject to the half-year convention, which treats all
property placed in service during any taxable year (or disposed of
during any taxable year) as placed in service (or disposed of) on the
mid-point of such taxable year.61
Land improvements (such as roads and fences) are generally re-
covered using the 150-percent declining balance method, a recovery
period of 15 years, and the half-year convention.62 An exception ex-
ists for the theme and amusement park industry, whose assets are
generally assigned a recovery period of seven years by asset class
80.0 of Rev. Proc. 87–56.63 Racetrack facilities are excluded from
the definition of theme and amusement park facilities classified
under asset class 80.0.64
Although racetrack facilities are excluded from asset class 80.0,
the statute assigns a recovery period of seven years to motorsports
entertainment complexes placed in service before January 1,
2018.65 For this purpose, a motorsports entertainment complex
means a racing track facility which (1) is permanently situated on
land, and (2) during the 36-month period following its placed-in-
service date, hosts one or more racing events for automobiles, (of
any type) trucks, or motorcycles which are open to the public for
the price of admission.66
A motorsports entertainment complex also includes ancillary fa-
cilities, land improvements (e.g., parking lots, sidewalks, water-
ways, bridges, fences, and landscaping), support facilities (e.g., food
and beverage retailing, souvenir vending, and other nonlodging ac-
commodations), and appurtenances associated with such facilities
and related attractions and amusements (e.g., ticket booths, race
track surfaces, suites and hospitality facilities, grandstands and
viewing structures, props, walls, facilities that support the delivery
60 Sec. 168(d)(2) and (d)(4)(B).
61 Sec. 168(d)(1) and (d)(4)(A). However, if substantial property is placed in service during the
last three months of a taxable year, a special rule requires use of the mid-quarter convention,
which treats all property placed in service (or disposed of) during any quarter as placed in serv-
ice (or disposed of) on the mid-point of such quarter. Sec. 168(d)(3) and (d)(4)(C). Nonresidential
real property, residential rental property, and railroad grading or tunnel bore are not taken into
account for purposes of the mid-quarter convention.
62 Sec. 168(b)(2)(A) and asset class 00.3 of Rev. Proc. 87–56. Under the 150-percent declining
balance method, the depreciation rate is determined by dividing 150 percent by the appropriate
recovery period, switching to the straight-line method for the first taxable year where using the
straight-line method with respect to the adjusted basis as of the beginning of that year will yield
a larger depreciation allowance. Sec. 168(b)(2) and (b)(1)(B).
63 This asset class includes assets used in the provision of rides, attractions, and amusements
in activities defined as theme and amusement parks, and includes appurtenances associated
with a ride, attraction, amusement or theme setting within the park such as ticket booths, fa-
cades, shop interiors, and props, special purpose structures, and buildings other than ware-
houses, administration buildings, hotels, and motels. It also includes all land improvements for
or in support of park activities (e.g., parking lots, sidewalks, waterways, bridges, fences, land-
scaping, etc.) and support functions (e.g., food and beverage retailing, souvenir vending and
other nonlodging accommodations) if owned by the park and provided exclusively for the benefit
of park patrons. Theme and amusement parks are defined as combinations of amusements,
rides, and attractions which are permanently situated on park land and open to the public for
the price of admission. This asset class is a composite of all assets used in this industry except
transportation equipment (general purpose trucks, cars, airplanes, etc., which are included in
asset classes with the prefix 00.2), assets used in the provision of administrative services (asset
classes with the prefix 00.1), and warehouses, administration buildings, hotels and motels.
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64 See Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in the
108th Congress (JCS–5–05), May 2005, p. 328.
65 Sec. 168(e)(3)(C)(ii) and (i)(15)(D).
66 Sec. 168(i)(15)(A).
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31
of entertainment services, other special purpose structures, fa-
cades, shop interiors, and buildings).67 Such ancillary and support
facilities must be (1) owned by the taxpayer who owns the motor-
sports entertainment complex, and (2) provided for the benefit of
patrons of the motorsports entertainment complex.
A motorsports entertainment complex does not include any trans-
portation equipment, administrative services assets, warehouses,
administrative buildings, hotels, or motels.68
REASONS FOR CHANGE
The Committee believes that certain depreciation incentives en-
courage State and local economic development. Therefore, the Com-
mittee believes that the seven-year recovery period for motorsports
entertainment complex property should be extended.
EXPLANATION OF PROVISION
The provision extends the seven-year recovery period for motor-
sports entertainment complexes for three years to apply to property
placed in service before January 1, 2021.
EFFECTIVE DATE
The provision applies to property placed in service after Decem-
ber 31, 2017.
5. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN
RESERVATIONS (SEC. 115 OF THE BILL AND SEC. 168(j) OF THE CODE)
PRESENT LAW
With respect to certain property used in connection with the con-
duct of a trade or business within an Indian reservation, deprecia-
tion deductions under section 168(j) are determined using the fol-
lowing recovery periods:
3-year property ................................................................................................................ 2 years
5-year property ................................................................................................................ 3 years
7-year property ................................................................................................................ 4 years
10-year property .............................................................................................................. 6 years
15-year property .............................................................................................................. 9 years
20-year property .............................................................................................................. 12 years
Nonresidential real property .......................................................................................... 22 years 69
‘‘Qualified Indian reservation property’’ eligible for accelerated
depreciation includes property described in the table above which
is (1) used by the taxpayer predominantly in the active conduct of
a trade or business within an Indian reservation; (2) not used or
located outside the reservation on a regular basis; (3) not acquired
(directly or indirectly) by the taxpayer from a person who is related
to the taxpayer; 70 and (4) is not property placed in service for pur-
poses of conducting or housing certain gaming activities.71
Certain ‘‘qualified infrastructure property’’ may be eligible for the
accelerated depreciation, even if located outside an Indian reserva-
67 Sec. 168(i)(15)(B).
68 Sec. 168(i)(15)(C).
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69 Section 168(j)(2) does not provide shorter recovery periods for water utility property, resi-
dential rental property, or railroad grading and tunnel bores.
70 For these purposes, the term ‘‘related persons’’ is defined in section 465(b)(3)(C).
71 Sec. 168(j)(4)(A).
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32
tion, provided that the purpose of such property is to connect with
qualified infrastructure property located within the reservation
(e.g., roads, power lines, water systems, railroad spurs, and com-
munications facilities).72
An ‘‘Indian reservation’’ means a reservation as defined in sec-
tion 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)) 73
or section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C.
1903(10)).74 For purposes of the preceding sentence, section 3(d) is
applied by treating ‘‘former Indian reservations in Oklahoma’’ as
including only lands that are (1) within the jurisdictional area of
an Oklahoma Indian tribe as determined by the Secretary of the
Interior, and (2) recognized by such Secretary as an area eligible
for trust land status under 25 C.F.R. Part 151 (as in effect on Au-
gust 5, 1997).75
The depreciation deduction allowed for regular tax purposes is
also allowed for purposes of the alternative minimum tax.76
The accelerated depreciation for qualified Indian reservation
property is available with respect to property placed in service be-
fore January 1, 2018.77 A taxpayer may annually make an irrev-
ocable election out of section 168(j) on a class-by-class basis.78
REASONS FOR CHANGE
To further encourage economic development within and expand
employment opportunities on Indian reservations, the Committee
believes accelerated depreciation for qualified Indian reservation
property should be extended.
EXPLANATION OF PROVISION
The provision extends for three years the accelerated deprecia-
tion for qualified Indian reservation property to apply to property
placed in service before January 1, 2021.
EFFECTIVE DATE
The provision applies to property placed in service after Decem-
ber 31, 2017.
6. EXPENSING RULES FOR CERTAIN PRODUCTIONS (SEC. 116 OF THE
BILL AND SEC. 181 OF THE CODE)
PRESENT LAW
Under section 181, a taxpayer may elect 79 to deduct up to $15
million of the aggregate production costs of any qualified film, tele-
vision or live theatrical production, commencing prior to January
1, 2018,80 in the year the costs are paid or incurred by the tax-
72 Sec. 168(j)(4)(C).
73 Pub. L. No. 93–262.
74 Pub. L. No. 95–608.
75 Sec. 168(j)(6).
76 Sec. 168(j)(3). Note that the corporate alternative minimum tax was repealed for taxable
years beginning after December 31, 2017. See An Act to Provide for Reconciliation Pursuant to
Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, Pub. L. No.
115–97, sec. 12001, December 22, 2017.
77 Sec. 168(j)(9).
78 Sec. 168(j)(8).
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79 See Treas. Reg. sec. 1.181–2 for rules on making (and revoking) an election under section
181.
80 For purposes of determining whether a production is eligible for section 181 expensing, a
qualified film or television production is treated as commencing on the first date of principal
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33
payer, in lieu of capitalizing the costs and recovering them through
depreciation allowances once the production is placed in service.81
The dollar limitation is increased to $20 million if a significant
amount of the production costs are incurred in areas eligible for
designation as a low-income community or eligible for designation
by the Delta Regional Authority as a distressed county or isolated
area of distress.82
A section 181 election may only be made by an owner of the pro-
duction.83 An owner of a production is any person that is required
under section 263A to capitalize the costs of producing the produc-
tion into the cost basis of the production, or that would be required
to do so if section 263A applied to that person.84 In addition, the
aggregate production costs of a qualified production that is co-pro-
duced include all production costs, regardless of funding source, in
determining if the applicable dollar limit is exceeded. Thus, the
term ‘‘aggregate production costs’’ means all production costs paid
or incurred by any person, whether paid or incurred directly by an
owner or indirectly on behalf of an owner.85 The costs of the pro-
duction in excess of the applicable dollar limitation are capitalized
and recovered under the taxpayer’s method of accounting for the
recovery of such property once placed in service.86
A qualified film, television, or live theatrical production means
any production of a motion picture (whether released theatrically
or directly to video cassette or any other format), television pro-
gram, or live staged play if at least 75 percent of the total com-
pensation expended on the production is for services performed in
the United States by actors, directors, producers, and other rel-
evant production personnel.87 Solely for purposes of this rule, the
photography. The date on which a qualified live theatrical production commences is the date
of the first public performance of such production for a paying audience.
81 Sec. 181(a)(2)(A). See Treas. Reg. sec. 1.181–1 for rules on determining eligible production
costs. Eligible production costs under section 181 include participations and residuals paid or
incurred. Treas. Reg. sec. 1.181–1(a)(3)(i). The special rule in section 167(g)(7) that allows tax-
payers using the income forecast method of depreciation to include participations and residuals
that have not met the economic performance requirements in the adjusted basis of the property
for the taxable year the property is placed in service does not apply for purposes of section 181.
Treas. Reg. sec. 1.181–1(a)(8). Thus, under section 181, a taxpayer may only include participa-
tions and residuals actually paid or incurred in eligible production costs. Further, production
costs do not include the cost of obtaining a production after its initial release or broadcast. See
Treas. Reg. sec. 1.181–1(a)(3). For this purpose, ‘‘initial release or broadcast’’ means the first
commercial exhibition or broadcast of a production to an audience. Treas. Reg. sec. 1.181–1(a)(7).
Thus, e.g., a taxpayer may not expense the purchase of an existing film library under section
181. See T.D. 9551, 76 Fed. Reg. 64816, October 19, 2011.
82 Sec. 181(a)(2)(B).
83 Treas. Reg. sec. 1.181–1(a).
84 Treas. Reg. sec. 1.181–1(a)(2)(i).
85 Treas. Reg. sec. 1.181–1(a)(4). See Treas. Reg. sec. 1.181–2(c)(3) for the information required
to be provided to the Internal Revenue Service when more than one person will claim deductions
under section 181 for a production (to ensure that the applicable deduction limitation is not ex-
ceeded).
86 See Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in the
110th Congress (JCS–1–09), March 2009, p. 448; and Treas. Reg. sec. 1.181–1(c)(2). A production
is generally considered to be placed in service at the time of initial release, broadcast, or live
staged performance (i.e., at the time of the first commercial exhibition, broadcast, or live staged
performance of a production to an audience). See, e.g., Rev. Rul. 79–285, 1979–2 C.B. 91; and
Priv. Ltr. Rul. 9010011, March 9, 1990. See also, Treas. Reg. sec. 1.181–1(a)(7). However, a pro-
duction generally may not be considered to be placed in service if it is only exhibited, broad-
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casted or performed for a limited test audience in advance of the commercial exhibition, broad-
cast, or performance to general audiences. See Priv. Ltr. Rul. 9010011 and Treas. Reg. sec.
1.181–1(a)(7).
87 Sec. 181(d)(3)(A).
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34
term ‘‘compensation’’ does not include participations and residuals
(as defined in section 167(g)(7)(B)).88
Each episode of a television series is treated as a separate pro-
duction, and only the first 44 episodes of a particular series qualify
under the provision.89 Qualified productions do not include sexually
explicit productions as referenced by section 2257 of title 18 of the
U.S. Code.90
A qualified live theatrical production is defined as a live staged
production of a play (with or without music) which is derived from
a written book or script and is produced or presented by a commer-
cial entity in any venue which has an audience capacity of not
more than 3,000, or a series of venues the majority of which have
an audience capacity of not more than 3,000.91 In addition, quali-
fied live theatrical productions include any live staged production
which is produced or presented by a taxable entity no more than
10 weeks annually in any venue which has an audience capacity
of not more than 6,500.92 In general, in the case of multiple live-
staged productions, each such live-staged production is treated as
a separate production. Similar to the exclusion for sexually explicit
productions from the definition of qualified film or television pro-
ductions, qualified live theatrical productions do not include stage
performances that would be excluded by section 2257(h)(1) of title
18 of the U.S. Code, if such provision were extended to live stage
performances.93
For purposes of recapture under section 1245, any deduction al-
lowed under section 181 is treated as if it were a deduction allow-
able for amortization.94 Thus, the deduction under section 181 may
be subject to recapture as ordinary income in the taxable year in
which (1) the taxpayer revokes a section 181 election, (2) the pro-
duction fails to meet the requirements of section 181, or (3) the tax-
payer sells or otherwise disposes of the production.95
REASONS FOR CHANGE
To further encourage investment in and financing of domestic
film, television, and certain live theatrical productions, the Com-
mittee believes that section 181 should be extended.
EXPLANATION OF PROVISION
The provision extends the special treatment for qualified film,
television, and live theatrical productions under section 181 for
three years to qualified productions commencing prior to January
1, 2021.
88 Sec. 181(d)(3)(B). Participations and residuals are defined as, with respect to any property,
costs the amount of which by contract varies with the amount of income earned in connection
with such property. See also Treas. Reg. sec. 1.181–3(c).
89 Sec. 181(d)(2)(B).
90 Sec. 181(d)(2)(C).
91 Sec. 181(e)(2)(A).
92 Sec. 181(e)(2)(D).
93 Sec. 181(e)(2)(E).
94 Sec. 1245(a)(2)(C). For a discussion of the recapture rules applicable to depreciation and am-
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ortization deductions, see Joint Committee on Taxation, Background and Present Law Relating
to Cost Recovery and Domestic Production Activities, (JCX–19–12) February 27, 2012, pp. 45–
46.
95 See Treas. Reg. sec. 1.181–4.
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35
EFFECTIVE DATE
The provision applies to productions commencing after December
31, 2017.
7. EMPOWERMENT ZONE TAX INCENTIVES (SEC. 117 OF THE BILL AND
SECS. 1391, 1394, 1396, 1397A, AND 1397B OF THE CODE)
PRESENT LAW
The Omnibus Budget Reconciliation Act of 1993 (‘‘OBRA 93’’) 96
authorized the designation of nine empowerment zones (‘‘Round I
empowerment zones’’) to provide tax incentives for businesses to lo-
cate within certain targeted areas 97 designated by the Secretaries
of the Department of Housing and Urban Development (‘‘HUD’’)
and the U.S. Department of Agriculture (‘‘USDA’’). The first em-
powerment zones were established in large rural areas and large
cities. OBRA 93 also authorized the designation of 95 enterprise
communities,98 which were located in smaller rural areas and cit-
ies.99
The Taxpayer Relief Act of 1997 100 authorized the designation of
two additional urban Round I empowerment zones, and 20 addi-
tional empowerment zones (‘‘Round II empowerment zones’’). The
Community Renewal Tax Relief Act of 2000 (‘‘2000 Community Re-
newal Act’’) 101 authorized a total of 10 new empowerment zones
(‘‘Round III empowerment zones’’), bringing the total number of au-
thorized, and not relinquished, empowerment zones to 41.102 In ad-
dition, the 2000 Community Renewal Act conformed the tax incen-
tives that are available to businesses in the Round I, Round II, and
Round III empowerment zones, and extended the empowerment
zone incentives through December 31, 2009. Subsequent legisla-
96 Pub. L. No. 103–66.
97 The targeted areas are those that have pervasive poverty, high unemployment, and general
economic distress, and that satisfy certain eligibility criteria, including specified poverty rates
and population and geographic size limitations.
98 Sec. 1391(b)(1).
99 Enterprise communities were eligible for only one tax benefit: tax-exempt bond financing.
For tax purposes, the areas designated as enterprise communities continued as such for the ten-
year period starting 1995 and ending at the end of 2004. However, after 2004 the enterprise
communities may still be eligible for other Federal benefits (e.g., grants and preferences).
100 Pub. L. No. 105–34.
101 Pub. L. No. 106–554. The 2000 Community Renewal Act also authorized the designation
of 40 ‘‘renewal communities’’ within which special tax incentives were available. The tax incen-
tives were generally available through December 31, 2009 when the renewal community des-
ignation expired. One of the tax incentives involving the exclusion of capital gain from the sale
or exchange of a qualified community asset continued through 2014.
102 The urban part of the program is administered by HUD and the rural part of the program
is administered by the USDA. The eight urban Round I empowerment zones are Atlanta, GA;
Baltimore, MD; Chicago, IL; Cleveland, OH; Detroit, MI; Los Angeles, CA; New York, NY; and
Philadelphia, PA/Camden, NJ. Atlanta relinquished its empowerment zone designation in Round
III. The three rural Round I empowerment zones are Kentucky Highlands, KY; Mid-Delta, MI;
and Rio Grande Valley, TX. The 15 urban Round II empowerment zones are Boston, MA; Cin-
cinnati, OH; Columbia, SC; Columbus, OH; Cumberland County, NJ; El Paso, TX; Gary/Ham-
mond/East Chicago, IN; Ironton, OH/Huntington, WV; Knoxville, TN; Miami/Dade County, FL;
Minneapolis, MN; New Haven, CT; Norfolk/Portsmouth, VA; Santa Ana, CA; and St. Louis, Mis-
souri/East St. Louis, IL. The five rural Round II empowerment zones are Desert Communities,
CA; Griggs-Steele, ND; Oglala Sioux Tribe, SD; Southernmost Illinois Delta, IL; and Southwest
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Georgia United, GA. The eight urban Round III empowerment zones are Fresno, CA; Jackson-
ville, FL; Oklahoma City, OK; Pulaski County, AR; San Antonio, TX; Syracuse, NY; Tucson, AZ;
and Yonkers, NY. The two rural Round III empowerment zones are Aroostook County, ME; and
Futuro, TX.
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36
tion, most recently the Bipartisan Budget Act of 2018, extended the
empowerment zone incentives through December 31, 2017.103
The tax incentives available within the designated empowerment
zones include a Federal income tax credit for employers who hire
qualifying employees (the ‘‘wage credit’’), increased expensing of
qualifying depreciable property, tax-exempt bond financing, and de-
ferral of capital gains tax on the sale of qualified assets sold and
replaced.
The following is a description of the empowerment zone tax in-
centives as in effect through 2017.
Wage credit
A 20-percent wage credit is available to employers for the first
$15,000 of qualified wages paid to each employee (i.e., a maximum
credit of $3,000 with respect to each qualified employee) who (1) is
a resident of the empowerment zone, and (2) performs substantially
all employment services within the empowerment zone in a trade
or business of the employer.104
The wage credit rate applies to qualifying wages paid before Jan-
uary 1, 2018. Wages paid to a qualified employee who earns more
than $15,000 are eligible for the wage credit (although only the
first $15,000 of wages is eligible for the credit). The wage credit is
available with respect to a qualified full-time or part-time employee
(employed for at least 90 days), regardless of the number of other
employees who work for the employer. In general, any taxable busi-
ness carrying out activities in the empowerment zone may claim
the wage credit.105
An employer’s deduction otherwise allowed for wages paid is re-
duced by the amount of wage credit claimed for that taxable
year.106 Wages are not to be taken into account for purposes of the
wage credit if taken into account in determining the employer’s
work opportunity tax credit under section 51.107 In addition, the
$15,000 cap is reduced by any wages taken into account in com-
puting the work opportunity tax credit.108 The wage credit may be
used to offset up to 25 percent of the employer’s alternative min-
imum tax liability.109
103 Pub. L. No. 111–312, sec. 753 (2010); Pub. L. No. 112–240, sec. 327(a) (2013); Pub. L. No.
113–295, sec. 139 (2014); Pub. L. No. 114–113, Div. Q, sec. 171(a) (2015); and Pub. L. No. 115–
123, sec. 40311 (2018). The empowerment zone tax incentives may expire earlier than December
31, 2017 if a State or local government provided for an expiration date in the nomination of
an empowerment zone, or the appropriate Secretary revokes an empowerment zone’s designa-
tion. The State or local government may, however, amend the nomination to provide for a new
termination date.
104 Sec. 1396. The $15,000 limit is annual, not cumulative, such that the limit is the first
$15,000 of wages paid in a calendar year which ends with or within the taxable year.
105 However, the wage credit is not available for wages paid in connection with certain busi-
ness activities described in section 144(c)(6)(B), including a golf course, country club, massage
parlor, hot tub facility, suntan facility, racetrack, liquor store, or certain farming activities. In
addition, wages are not eligible for the wage credit if paid to: (1) a person who owns more than
five percent of the stock (or capital or profits interests) of the employer, (2) certain relatives of
the employer, or (3) if the employer is a corporation or partnership, certain relatives of a person
who owns more than 50 percent of the business.
106 Sec. 280C(a).
107 Sec. 1396(c)(3)(A).
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108 Sec. 1396(c)(3)(B).
109 Sec. 38(c)(2). The corporate alternative minimum tax is repealed for taxable years begin-
ning after December 31, 2017. However, the full amount of the minimum tax credit will be al-
lowed in taxable years beginning before 2022.
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37
Increased section 179 expensing limitation
An enterprise zone business 110 is allowed up to an additional
$35,000 of section 179 expensing for qualified zone property placed
in service before January 1, 2018.111 For taxable years beginning
in 2017, the total amount that may be expensed is $545,000.112
The section 179 expensing allowed to a taxpayer is reduced (but
not below zero) by the amount by which the cost of qualifying prop-
erty placed in service during the taxable year exceeds a specified
dollar amount.113 However, an enterprise zone business is only re-
quired to take into account 50 percent of the cost of qualified zone
property placed in service during the year in determining whether
the cost of qualifying property exceeds the specified dollar
amount.114
The term ‘‘qualified zone property’’ is defined as depreciable tan-
gible property (including buildings) provided that (i) the property
is acquired by the taxpayer by purchase (from an unrelated party)
after the date on which the designation of the empowerment zone
took effect, (ii) the original use of the property in an empowerment
zone commences with the taxpayer, and (iii) substantially all of the
use of the property is in an empowerment zone in the active con-
duct of a qualified trade or business by the taxpayer in such
zone.115 Special rules are provided in the case of property that is
substantially renovated by the taxpayer.116
An enterprise zone business means any qualified business entity
and any qualified proprietorship. A qualified business entity means
any corporation or partnership if for such year: (1) every trade or
business of such entity is the active conduct of a qualified business
within an empowerment zone; (2) at least 50 percent of the total
gross income of such entity is derived from the active conduct of
110 Sec. 1397C. The term ‘‘enterprise zone business’’ is separate and distinct from the term
‘‘enterprise community.’’ Enterprise community, for purposes of the Code, means the areas des-
ignated as such under section 1391. Sec. 1393(b). Note, however, that for purposes of section
1394 relating to tax-exempt enterprise zone facility bonds, references to empowerment zones
shall be treated as including references to enterprise communities. Sec. 1394(b)(3).
111 Sec. 1397A. Note that an Act to Provide for Reconciliation Pursuant to Titles II and V of
the Concurrent Resolution on the Budget for Fiscal Year 2018 provides 100-percent bonus depre-
ciation for qualified property acquired and placed in service after September 27, 2017, and be-
fore January 1, 2023. The 100-percent allowance is phased down by 20 percent per calendar
year for qualified property placed in service after December 31, 2022. Qualified property in-
cludes MACRS property with an applicable recovery period of 20 years or less, and therefore
generally includes qualified zone property other than buildings.
112 $510,000 section 179(b)(1) limitation + $35,000 increase for qualified zone property =
$545,000 maximum dollar limitation. See sec. 179(b)(1) and Section 3.25 of Rev. Proc. 2016–55,
2016–45 I.R.B. 707. For taxable years beginning after 2017, the relevant dollar amount under
section 179(b)(1) is $1,000,000 (indexed for inflation for taxable years beginning after 2018). See
also Section 3.25 of Rev. Proc. 2018–18, 2018–10 I.R.B. 392.
113 For taxable years beginning in 2017, the relevant dollar amount is $2,030,000. Sec.
179(b)(2) and Section 3.25 of Rev. Proc. 2016–55, 2016–45 I.R.B. 707. For taxable years begin-
ning after 2017, the relevant dollar amount under section 179(b)(2) is $2,500,000 (indexed for
inflation for taxable years beginning after 2018). See also Section 3.25 of Rev. Proc. 2018–18,
2018–10 I.R.B. 392.
114 Sec. 1397A(a)(2). For example, assume that during 2017 a calendar year taxpayer in an
enterprise zone business purchased and placed in service $4,500,000 of section 179 property that
is qualified zone property. The $510,000 section 179(b)(1) dollar amount for 2017 is increased
to $545,000 (by the lesser of $35,000 or $4,500,000). That amount is reduced by the excess sec-
tion 179 property cost amount of $220,000 ((50 percent × $4,500,000) ¥ $2,030,000)). The tax-
payer’s expensing limitation is $325,000 ($545,000 ¥ $220,000). If the taxpayer had not been
an enterprise zone business, its expensing limitation would be zero because the taxpayer would
have been fully phased out.
115 Sec. 1397D(a)(1). Note, however, that to be eligible for the increased section 179 expensing,
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the qualified zone property has to also meet the definition of section 179 property (e.g., building
property would only qualify if it constitutes qualified real property under section 179(f) (prior
to amendments by Pub. L. Nos. 115–97 and 115–141)).
116 Sec. 1397D(a)(2).
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38
such business; (3) a substantial portion of the use of the tangible
property of such entity (whether owned or leased) is within an em-
powerment zone; (4) a substantial portion of the intangible prop-
erty of such entity is used in the active conduct of any such busi-
ness; (5) a substantial portion of the services performed for such
entity by its employees are performed in an empowerment zone; (6)
at least 35 percent of its employees are residents of an empower-
ment zone; (7) less than five percent of the average of the aggre-
gate unadjusted bases of the property of such entity is attributable
to collectibles other than collectibles that are held primarily for
sale to customers in the ordinary course of such business; and (8)
less than five percent of the average of the aggregate unadjusted
bases of the property of such entity is attributable to nonqualified
financial property.117
A qualified proprietorship is any qualified business carried on by
an individual as a proprietorship if for such year: (1) at least 50
percent of the total gross income of such individual from such busi-
ness is derived from the active conduct of such business in an em-
powerment zone; (2) a substantial portion of the use of the tangible
property of such individual in such business (whether owned or
leased) is within an empowerment zone; (3) a substantial portion
of the intangible property of such business is used in the active
conduct of such business; (4) a substantial portion of the services
performed for such individual in such business by employees of
such business are performed in an empowerment zone; (5) at least
35 percent of such employees are residents of an empowerment
zone; (6) less than five percent of the average of the aggregate
unadjusted bases of the property of such individual which is used
in such business is attributable to collectibles other than collect-
ibles that are held primarily for sale to customers in the ordinary
course of such business; and (7) less than five percent of the aver-
age of the aggregate unadjusted bases of the property of such indi-
vidual which is used in such business is attributable to non-
qualified financial property.118
A qualified business is defined as any trade or business other
than a trade or business that consists predominantly of the devel-
opment or holding of intangibles for sale or license or any business
prohibited in connection with the empowerment zone employment
credit.119 In addition, the leasing of real property that is located
within the empowerment zone is treated as a qualified business
only if (1) the leased property is not residential rental property,
and (2) at least 50 percent of the gross rental income from the real
property is from enterprise zone businesses. The rental of tangible
personal property is not a qualified business unless at least 50 per-
cent of the rental of such property is by enterprise zone businesses
or by residents of an empowerment zone.
117 Sec. 1397C(b).
118 Sec. 1397C(c). For these purposes, the term ‘‘employee’’ includes the proprietor.
119 Sec. 1397C(d). Excluded businesses include any private or commercial golf course, country
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club, massage parlor, hot tub facility, sun tan facility, racetrack or other facility used for gam-
bling, or any store the principal business of which is the sale of alcoholic beverages for off-prem-
ises consumption. Sec. 144(c)(6). Also, a qualified business does not include certain large farms.
Sec. 1397C(d)(5)(B).
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Expanded tax-exempt financing for certain zone facilities
States or local governments can issue enterprise zone facility
bonds to raise funds to provide an enterprise zone business with
qualified zone property.120 These bonds can be used in areas des-
ignated enterprise communities as well as areas designated em-
powerment zones. To qualify, 95 percent (or more) of the net pro-
ceeds from the bond issue must be used to finance: (1) qualified
zone property whose principal user is an enterprise zone business,
and (2) certain land functionally related and subordinate to such
property.
The term enterprise zone business is the same as that used for
purposes of the increased section 179 deduction limitation (dis-
cussed above) with certain modifications for start-up businesses.
First, an employee is considered a resident of an empowerment
zone for purposes of the 35-percent in-zone employment require-
ment if they are a resident of an empowerment zone, an enterprise
community, or a qualified low-income community within an appli-
cable nominating jurisdiction.121 The applicable nominating juris-
diction means, with respect to any empowerment zone or enterprise
community, any local government that nominated such community
for designation under section 1391. The definition of a qualified
low-income community is similar to the definition of a low income
community provided in section 45D(e) (concerning eligibility for the
new markets tax credit). A ‘‘qualified low-income community’’ is a
population census tract with either (1) a poverty rate of at least 20
percent, or (2) median family income which does not exceed 80 per-
cent of the greater of metropolitan area median family income or
statewide median family income (for a nonmetropolitan census
tract, does not exceed 80 percent of statewide median family in-
come). In the case of a population census tract located within a
high migration rural county, low-income is defined by reference to
85 percent (as opposed to 80 percent) of statewide median family
income. For this purpose, a high migration rural county is any
county that, during the 20-year period ending with the year in
which the most recent census was conducted, has a net out-migra-
tion of inhabitants from the county of at least 10 percent of the
population of the county at the beginning of such period.
The Secretary is authorized to designate ‘‘targeted populations’’
as qualified low-income communities. For this purpose, a ‘‘targeted
population’’ is defined by reference to section 103(20) of the Riegle
Community Development and Regulatory Improvement Act of
1994 122 (the ‘‘Act’’) to mean individuals, or an identifiable group of
individuals, including an Indian tribe, who are low-income persons
or otherwise lack adequate access to loans or equity investments.
Section 103(17) of the Act provides that ‘‘low-income’’ means (1) for
a targeted population within a metropolitan area, less than 80 per-
cent of the area median family income; and (2) for a targeted popu-
lation within a nonmetropolitan area, less than the greater of (a)
80 percent of the area median family income, or (b) 80 percent of
the statewide nonmetropolitan area median family income.
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120 Sec. 1394.
121 Pub. L. No. 114–113, Div. Q, sec. 171 (2015) (effective for bonds issued after 2015).
122 Pub. L. No. 103–325.
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40
Second, a business will be treated as an enterprise zone business
during a start-up period if (1) at the beginning of the period, it is
reasonable to expect the business to be an enterprise zone business
by the end of the start-up period, and (2) the business makes bona
fide efforts to be an enterprise zone business. The start-up period
is the period that ends with the start of the first tax year beginning
more than two years after the later of (1) the issue date of the bond
issue financing the qualified zone property, and (2) the date this
property is first placed in service (or, if earlier, the date that is
three years after the issue date).123
Third, a business that qualifies as an enterprise zone business at
the end of the start-up period must continue to qualify during a
testing period that ends three tax years after the start-up period
ends. After the three-year testing period, a business will continue
to be treated as an enterprise zone business as long as 35 percent
of its employees are residents of an empowerment zone, enterprise
community, or a qualified low-income community within an appli-
cable nominating jurisdiction.
The face amount of the bonds may not exceed $60 million for an
empowerment zone in a rural area, $130 million for an empower-
ment zone in an urban area with zone population of less than
100,000, and $230 million for an empowerment zone in an urban
area with zone population of at least 100,000.
Elective rollover of capital gain from the sale or exchange of
any qualified empowerment zone asset
Taxpayers can elect to defer recognition of gain on the sale of a
qualified empowerment zone asset held for more than one year and
replaced within 60 days by another qualified empowerment zone
asset in the same zone.124 A qualified empowerment zone asset
generally means stock or a partnership interest acquired at origi-
nal issue for cash in an enterprise zone business, or tangible prop-
erty originally used in an enterprise zone business by the taxpayer.
The deferral is accomplished by reducing the basis of the replace-
ment asset by the amount of the gain recognized on the sale of the
asset.
REASONS FOR CHANGE
To further encourage economic development within and expand
employment opportunities in empowerment zones, the Committee
believes that the empowerment zone tax incentives should be ex-
tended.
EXPLANATION OF PROVISION
The provision extends for three years, through December 31,
2020, the period for which the designation of an empowerment zone
is in effect, thus extending for three years the empowerment zone
tax incentives, including the wage credit, increased section 179 ex-
pensing for qualifying property, tax-exempt bond financing, and de-
ferral of capital gains tax on the sale of qualified assets replaced
with other qualified assets. In the case of a designation of an em-
powerment zone the nomination for which included a termination
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123 Sec. 1394(b)(3).
124 Sec. 1397B.
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41
date which is December 31, 2017, termination shall not apply with
respect to such designation if the entity which made such nomina-
tion amends the nomination to provide for a new termination date
in such manner as the Secretary may provide.
EFFECTIVE DATE
The provision applies to taxable years beginning after December
31, 2017.
8. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT (SEC. 118 OF
THE BILL)
PRESENT LAW
Since 2006, certain domestic corporations have been entitled to
an economic development credit with respect to operations in
American Samoa. The credit is not part of the Code but is com-
puted based on the rules of former sections 30A, 199, and 936.
For taxable years beginning before January 1, 2011, as originally
enacted, the credit was limited to domestic corporations that were
existing credit claimants with respect to American Samoa who had
elected the application of section 936 for its last taxable year begin-
ning before January 1, 2006. The credit is based on the corpora-
tion’s economic activity-based limitation with respect to American
Samoa. An existing claimant is a domestic corporation that (1) was
engaged in the active conduct of a trade or business within Amer-
ican Samoa on October 13, 1995, and (2) elected the benefits of the
possession tax credit 125 in an election in effect for its taxable year
that included October 13, 1995.126 A corporation that added a sub-
stantial new line of business (other than in a qualifying acquisition
of all the assets of a trade or business of an existing credit claim-
ant) ceased to be an existing credit claimant as of the close of the
125 For taxable years beginning before January 1, 2006, certain domestic corporations with
business operations in the U.S. possessions were eligible for the possession tax credit. Secs.
27(b) and 936. This credit offset the U.S. tax imposed on certain income related to operations
in the U.S. possessions. Subject to certain limitations, the amount of the possession tax credit
allowed to any domestic corporation equaled the portion of that corporation’s U.S. tax that was
attributable to the corporation’s non-U.S. source taxable income from (1) the active conduct of
a trade or business within a U.S. possession, (2) the sale or exchange of substantially all of the
assets that were used in such a trade or business, or (3) certain possessions investment. No de-
duction or foreign tax credit was allowed for any possessions or foreign tax paid or accrued with
respect to taxable income that was taken into account in computing the credit under section
936. Under the economic activity-based limit, the amount of the credit could not exceed an
amount equal to the sum of (1) 60 percent of the taxpayer’s qualified possession wages and allo-
cable employee fringe benefit expenses, (2) 15 percent of depreciation allowances with respect
to short-life qualified tangible property, plus 40 percent of depreciation allowances with respect
to medium-life qualified tangible property, plus 65 percent of depreciation allowances with re-
spect to long-life qualified tangible property, and (3) in certain cases, a portion of the taxpayer’s
possession income taxes. A taxpayer could elect, instead of the economic activity-based limit, a
limit equal to the applicable percentage of the credit that otherwise would have been allowable
with respect to possession business income, beginning in 1998, the applicable percentage was
40 percent.
To qualify for the possession tax credit for a taxable year, a domestic corporation was required
to satisfy two conditions. First, the corporation was required to derive at least 80 percent of its
gross income for the three-year period immediately preceding the close of the taxable year from
sources within a possession. Second, the corporation was required to derive at least 75 percent
of its gross income for that same period from the active conduct of a possession business. Sec.
936(a)(2). The section 936 credit generally expired for taxable years beginning after December
31, 2005.
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126 A corporation will qualify as an existing credit claimant if it acquired all the assets of a
trade or business of a corporation that (1) actively conducted that trade or business in a posses-
sion on October 13, 1995, and (2) had elected the benefits of the possession tax credit in an elec-
tion in effect for the taxable year that included October 13, 1995.
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42
taxable year ending before the date on which that new line of busi-
ness was added.
The amount of the credit allowed to a qualifying domestic cor-
poration under the provision is equal to the sum of the amounts
used in computing the corporation’s economic activity-based limita-
tion with respect to American Samoa, except that no credit is al-
lowed for the amount of any American Samoa income taxes. Thus,
for any qualifying corporation the amount of the credit equals the
sum of (1) 60 percent of the corporation’s qualified American
Samoa wages and allocable employee fringe benefit expenses and
(2) 15 percent of the corporation’s depreciation allowances with re-
spect to short-life qualified American Samoa tangible property, plus
40 percent of the corporation’s depreciation allowances with respect
to medium-life qualified American Samoa tangible property, plus
65 percent of the corporation’s depreciation allowances with respect
to long-life qualified American Samoa tangible property.
The section 936(c) rule denying a credit or deduction for any pos-
sessions or foreign tax paid with respect to taxable income taken
into account in computing the credit under section 936 does not
apply with respect to the credit allowed by the provision.
For taxable years beginning after December 31, 2011, the credit
rules are modified in two ways. First, domestic corporations with
operations in American Samoa are allowed the credit even if those
corporations are not existing credit claimants. Second, the credit is
available to a domestic corporation (either an existing credit claim-
ant or a new credit claimant) only if the corporation has qualified
production activities income (as defined in section 199(c) by sub-
stituting ‘‘American Samoa’’ for ‘‘the United States’’ in each place
that the latter term appears).
In the case of a corporation that is an existing credit claimant
with respect to American Samoa and that elected the application
of section 936 for its last taxable year beginning before January 1,
2006, the credit applies to the first 12 taxable years of the corpora-
tion which begin after December 31, 2005, and before January 1,
2018. For any other corporation, the credit applies to the first six
taxable years of that corporation which begin after December 31,
2011, and before January 1, 2018.
REASONS FOR CHANGE
To further encourage economic development in American Samoa,
the Committee believes the American Samoa economic development
credit should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for three years to apply (a) in
the case of a corporation that is an existing credit claimant with
respect to American Samoa and that elected the application of sec-
tion 936 for its last taxable year beginning before January 1, 2006,
to the first 15 taxable years of the corporation which begin after
December 31, 2005, and before January 1, 2021, and (b) in the case
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of any other corporation, to the first nine taxable years of the cor-
poration which begin after December 31, 2011 and before January
1, 2021.
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For purposes of this credit, the Code is applied without regard
to the repeal of sections 30A and 936 in 2018,127 or the repeal of
section 199 in 2017.128
EFFECTIVE DATE
The provision is effective for taxable years beginning after De-
cember 31, 2017.
C. INCENTIVES FOR ENERGY PRODUCTION, EFFICIENCY, AND GREEN
ECONOMY JOBS
1. BIODIESEL AND RENEWABLE DIESEL (SEC. 121 OF THE BILL AND SEC.
40A OF THE CODE)
PRESENT LAW
Biodiesel
Present law provides an income tax credit for biodiesel fuels (the
‘‘biodiesel fuels credit’’). The biodiesel fuels credit is the sum of
three credits: (1) the biodiesel mixture credit, (2) the biodiesel cred-
it, and (3) the small agri-biodiesel producer credit. The biodiesel
fuels credit is treated as a general business credit. The amount of
the biodiesel fuels credit is includible in gross income. The biodiesel
fuels credit is coordinated to take into account benefits from the
biodiesel excise tax credit and payment provisions discussed below.
The credit does not apply to fuel sold or used after December 31,
2017.
Biodiesel is monoalkyl esters of long chain fatty acids derived
from plant or animal matter that meet (1) the registration require-
ments established by the EPA under section 211 of the Clean Air
Act (42 U.S.C. sec. 7545) and (2) the requirements of the American
Society of Testing and Materials (‘‘ASTM’’) D6751. Agri-biodiesel is
biodiesel derived solely from virgin oils including oils from corn,
soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds,
safflowers, flaxseeds, rice bran, mustard seeds, camelina, or animal
fats.
Biodiesel may be taken into account for purposes of the credit
only if the taxpayer obtains a certification (in such form and man-
ner as prescribed by the Secretary) from the producer or importer
of the biodiesel that identifies the product produced and the per-
centage of biodiesel and agri-biodiesel in the product.
Biodiesel mixture credit
The biodiesel mixture credit is $1.00 for each gallon of biodiesel
(including agri-biodiesel) used by the taxpayer in the production of
a qualified biodiesel mixture. A qualified biodiesel mixture is a
mixture of biodiesel and diesel fuel that is (1) sold by the taxpayer
producing such mixture to any person for use as a fuel, or (2) used
as a fuel by the taxpayer producing such mixture. The sale or use
must be in the trade or business of the taxpayer and is to be taken
into account for the taxable year in which such sale or use occurs.
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127 See The Consolidated Appropriations Act 2018, Pub. L. No. 115–141, Division U, Title IV,
at sec. 401(d)(1)(C) (the repeal of section 936) and sec. 401(d)(1)(D)(viii)(I) (definition of intan-
gible property added to section 367(d)) (March 23, 2018).
128 Pub. L. 115–97, section 13305(a).
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No credit is allowed with respect to any casual off-farm production
of a qualified biodiesel mixture.
Per IRS guidance a mixture need only contain 1/10th of one per-
cent of diesel fuel to be a qualified mixture. Thus, a qualified bio-
diesel mixture can contain 99.9 percent biodiesel and 0.1 percent
diesel fuel.
Biodiesel credit (B–100)
The biodiesel credit is $1.00 for each gallon of biodiesel that is
not in a mixture with diesel fuel (100 percent biodiesel or B–100)
and which during the taxable year is (1) used by the taxpayer as
a fuel in a trade or business or (2) sold by the taxpayer at retail
to a person and placed in the fuel tank of such person’s vehicle.
Small agri-biodiesel producer credit
The Code provides a small agri-biodiesel producer income tax
credit, in addition to the biodiesel and biodiesel mixture credits.
The credit is 10 cents per gallon for up to 15 million gallons of agri-
biodiesel produced by small producers, defined generally as persons
whose agri-biodiesel production capacity does not exceed 60 million
gallons per year. The agri-biodiesel must (1) be sold by such pro-
ducer to another person (a) for use by such other person in the pro-
duction of a qualified biodiesel mixture in such person’s trade or
business (other than casual off-farm production), (b) for use by such
other person as a fuel in a trade or business, or, (c) who sells such
agri-biodiesel at retail to another person and places such agri-bio-
diesel in the fuel tank of such other person; or (2) used by the pro-
ducer for any purpose described in (a), (b), or (c).
Biodiesel mixture excise tax credit
The Code also provides an excise tax credit for biodiesel mix-
tures. The credit is $1.00 for each gallon of biodiesel used by the
taxpayer in producing a biodiesel mixture for sale or use in a trade
or business of the taxpayer. A biodiesel mixture is a mixture of bio-
diesel and diesel fuel that (1) is sold by the taxpayer producing
such mixture to any person for use as a fuel or (2) is used as a fuel
by the taxpayer producing such mixture. No credit is allowed un-
less the taxpayer obtains a certification (in such form and manner
as prescribed by the Secretary) from the producer of the biodiesel
that identifies the product produced and the percentage of biodiesel
and agri-biodiesel in the product.
The credit is not available for any sale or use for any period after
December 31, 2017. This excise tax credit is coordinated with the
income tax credit for biodiesel such that credit for the same bio-
diesel cannot be claimed for both income and excise tax purposes.
Payments with respect to biodiesel fuel mixtures
If any person produces a biodiesel fuel mixture in such person’s
trade or business, the Secretary is to pay such person an amount
equal to the biodiesel mixture credit. The biodiesel fuel mixture
credit must first be taken against tax liability for taxable fuels. To
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the extent the biodiesel fuel mixture credit exceeds such tax liabil-
ity, the excess may be received as a payment. Thus, if the person
has no section 4081 liability, the credit is refundable. The Sec-
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45
retary is not required to make payments with respect to biodiesel
fuel mixtures sold or used after December 31, 2017.
Renewable diesel
Renewable diesel is liquid fuel that (1) is derived from biomass
(as defined in section 45K(c)(3)), (2) meets the registration require-
ments for fuels and fuel additives established by the EPA under
section 211 of the Clean Air Act, and (3) meets the requirements
of the ASTM D975 or D396, or equivalent standard established by
the Secretary. ASTM D975 provides standards for diesel fuel suit-
able for use in diesel engines. ASTM D396 provides standards for
fuel oil intended for use in fuel-oil burning equipment, such as fur-
naces. Renewable diesel also includes fuel derived from biomass
that meets the requirements of a Department of Defense specifica-
tion for military jet fuel or an ASTM specification for aviation tur-
bine fuel.
For purposes of the Code, renewable diesel is generally treated
the same as biodiesel. In the case of renewable diesel that is avia-
tion fuel, kerosene is treated as though it were diesel fuel for pur-
poses of a qualified renewable diesel mixture. Like biodiesel, the in-
centive may be taken as an income tax credit, an excise tax credit,
or as a payment from the Secretary. The incentive for renewable
diesel is $1.00 per gallon. There is no small producer credit for re-
newable diesel. The incentives for renewable diesel expired after
December 31, 2017.
REASONS FOR CHANGE
To encourage the domestic production of biodiesel fuel, the Com-
mittee believes that the income tax credit, excise tax credit, and
payment provisions for biodiesel and renewable diesel should be ex-
tended.
EXPLANATION OF PROVISION
The provision extends the present-law income tax credit, excise
tax credit and payment provisions for biodiesel and renewable die-
sel through December 31, 2020. The provision creates a special rule
to address claims regarding excise tax credits and claims for pay-
ment for fuel sold or used during the period beginning on January
1, 2018, through the close of the last calendar quarter beginning
before the date of enactment. In particular, the provision directs
the Secretary to issue guidance within 30 days of the date of enact-
ment. Such guidance is to provide for a one-time submission of
claims covering those periods. The guidance is to provide for a 180-
day period for the submission of such claims (in such manner as
prescribed by the Secretary) to begin no later than 30 days after
such guidance is issued. Such claims shall be paid by the Secretary
of the Treasury not later than 60 days after receipt. If the claim
is not paid within 60 days of the date of the filing, the claim shall
be paid with interest from such date determined by using the over-
payment rate and method under section 6621.
EFFECTIVE DATE
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The provision applies to fuel sold or used after December 31,
2017.
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2. SECOND GENERATION BIOFUEL PRODUCER CREDIT (SEC. 122 OF THE
BILL AND SEC. 40 OF THE CODE)
PRESENT LAW
The second generation biofuel producer credit is a nonrefundable
income tax credit that a producer may claim for each gallon of
qualified second generation biofuel production for the taxable year.
The amount of the credit per gallon is $1.01. The provision does not
apply to qualified second generation biofuel production after De-
cember 31, 2017.
‘‘Qualified second generation biofuel production’’ is any second
generation biofuel which is produced by the taxpayer and which,
during the taxable year, is: (1) sold by the taxpayer to another per-
son (a) for use by such other person in the production of a qualified
second generation biofuel mixture in such person’s trade or busi-
ness (other than casual off-farm production), (b) for use by such
other person as a fuel in a trade or business, or (c) who sells such
second generation biofuel at retail to another person and places
such cellulosic biofuel in the fuel tank of such other person; or (2)
used by the producer for any purpose described in (1)(a), (b), or
(c).129 Special rules apply for fuel derived from algae.
‘‘Second generation biofuel’’ means any liquid fuel that (1) is pro-
duced in the United States and used as fuel in the United States,
(2) is derived by or from qualified feedstocks and (3) meets the reg-
istration requirements for fuels and fuel additives established by
the Environmental Protection Agency (‘‘EPA’’) under section 211 of
the Clean Air Act. ‘‘Qualified feedstock’’ means any lignocellulosic
or hemicellulosic matter that is available on a renewable or recur-
ring basis, and any cultivated algae, cyanobacteria or lemna. Sec-
ond generation biofuel does not include fuels that (1) are more than
four percent (determined by weight) water and sediment in any
combination, (2) have an ash content of more than one percent (de-
termined by weight), or (3) have an acid number greater than 25
(‘‘unprocessed or excluded fuels’’). It also does not include any alco-
hol with a proof of less than 150.
The second generation biofuel producer credit cannot be claimed
unless the taxpayer is registered by the Internal Revenue Service
(‘‘IRS’’) as a producer of second generation biofuel. Second genera-
tion biofuel eligible for the section 40 credit is precluded from
qualifying as biodiesel, renewable diesel, or alternative fuel for pur-
poses of the applicable income tax credit, excise tax credit, or pay-
ment provisions relating to those fuels.
Because it is a credit under section 40(a), the second generation
biofuel producer credit is part of the general business credits in
section 38. However, the credit can only be carried forward three
taxable years after the termination of the credit. The credit is also
allowable against the alternative minimum tax. Under section 87,
the credit is included in gross income.
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129 In addition, for fuels derived from algae, cyanobacterial or lemna, a special rule provides
that qualified second generation biofuel includes fuel that is sold by the taxpayer to another
person for refining by such other person into a fuel that meets the registration requirements
for fuels and fuel additives under section 211 of the Clean Air Act.
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47
REASONS FOR CHANGE
To further encourage the domestic production of second genera-
tion biofuels, the Committee believes that the second generation
biofuel producer credit should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for three years, through Decem-
ber 31, 2020.
EFFECTIVE DATE
The provision applies to qualified second generation biofuel pro-
duction after December 31, 2017.
3. NONBUSINESS ENERGY PROPERTY (SEC. 123 OF THE BILL AND SEC.
25C OF THE CODE)
PRESENT LAW
A 10-percent credit is available for the purchase of qualified en-
ergy efficiency improvements to existing homes.130 A qualified en-
ergy efficiency improvement is any energy efficient building enve-
lope component (1) that is installed in or on a dwelling located in
the United States and owned and used by the taxpayer as the tax-
payer’s principal residence, (2) the original use of which commences
with the taxpayer, and (3) that reasonably can be expected to re-
main in use for at least five years. The credit is nonrefundable.
Energy efficient building envelope components are building enve-
lope components that meet (1) the applicable Energy Star program
requirements, in the case of a roof or roof products, (2) version 6.0
Energy Star program requirements, in the case of an exterior win-
dow, a skylights, or an exterior door, and (3) the prescriptive cri-
teria for such components established by the 2009 International
Energy Conservation Code, as in effect on the date of enactment
of the American Recovery and Reinvestment Tax Act of 2009, in
the case of any other component.
Building envelope components are (1) insulation materials or sys-
tems which are specifically and primarily designed to reduce the
heat loss or gain for a dwelling when installed in or on such dwell-
ing unit, (2) exterior windows (including skylights), (3) exterior
doors, and (4) metal or asphalt roofs installed on a dwelling unity,
but only if such roof has appropriate pigmented coatings or cooling
granules that are specifically and primarily designed to reduce the
heat gain for a dwelling.
Additionally, credits are also available for the purchase of spe-
cific energy efficient property originally placed in service by the
taxpayer during the taxable year. The allowable credit for the pur-
chase of certain property is (1) $50 for each advanced main air cir-
culating fan, (2) $150 for each qualified natural gas, propane, or oil
furnace or hot water boiler, and (3) $300 for each item of energy
efficient building property.
An advanced main air circulating fan is a fan used in a natural
gas, propane, or oil furnace and which has an annual electricity use
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of no more than two percent of the total annual energy use of the
130 Sec. 25C.
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48
furnace (as determined in the standard Department of Energy test
procedures).
A qualified natural gas, propane, or oil furnace or hot water boil-
er is a natural gas, propane, or oil furnace or hot water boiler with
an annual fuel utilization efficiency rate of at least 95.
Energy-efficient building property is: (1) an electric heat pump
water heater which yields an energy factor of at least 2.0 in the
standard Department of Energy test procedure, (2) an electric heat
pump which achieves the highest efficiency tier established by the
Consortium for Energy Efficiency, as in effect on January 1,
2009,131 (3) a central air conditioner which achieves the highest ef-
ficiency tier established by the Consortium for Energy Efficiency as
in effect on January 1, 2009,132 (4) a natural gas, propane, or oil
water heater which has an energy factor of at least 0.82 or thermal
efficiency of at least 90 percent, and (5) a stove which burns bio-
mass fuel to heat a dwelling unit located in the United States and
used as a residence by the taxpayer, or to heat water for use in
such dwelling unity, and which has a thermal efficiency rating of
at least 75 percent. Biomass fuel is any plant-derived fuel available
on a renewable or recurring basis, including agricultural crops and
trees, wood and wood waste and residues (including wood pellets),
plants (including aquatic plants), grasses, residues, and fibers.
Generally, the credit is available for property placed in service
prior to January 1, 2018. The maximum credit for a taxpayer for
all taxable years is $500, and no more than $200 of such credit
may be attributable to expenditures on windows.
The taxpayer’s basis in the property is reduced by the amount of
the credit. Special proration rules apply in the case of jointly owned
property, condominiums, and tenant-stockholders in cooperative
housing corporations. If less than 80 percent of the property is used
for nonbusiness purposes, only that portion of expenditures that is
used for nonbusiness purposes is taken into account.
For purposes of determining the amount of expenditures made by
any individual with respect to any dwelling unit, expenditures
which are made from subsidized energy financing are not taken
into account. The term ‘‘subsidized energy financing’’ means financ-
ing provided under a Federal, State, or local program a principal
purpose of which is to provide subsidized financing for projects de-
signed to conserve or produce energy.
REASONS FOR CHANGE
The Committee believes that it is in the national interest to con-
serve energy and that many existing homes continue to be inad-
equately insulated and have inefficient heating, ventilation, and
cooling equipment. Therefore, the Committee believes that the non-
business energy efficient property credit should be extended.
131 These standards are a seasonal energy efficiency ratio (‘‘SEER’’) greater than or equal to
15, an energy efficiency ratio (‘‘EER’’) greater than or equal to 12.5, and heating seasonal per-
formance factor (‘‘HSPF’’) greater than or equal to 8.5 for split heat pumps, and SEER greater
than or equal to 14, EER greater than or equal to 12, and HSPF greater than or equal to 8.0
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for packaged heat pumps.
132 These standards are a SEER greater than or equal to 16 and EER greater than or equal
to 13 for split systems, and SEER greater than or equal to 14 and EER greater than or equal
to 12 for packaged systems.
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49
EXPLANATION OF PROVISION
The provision extends the nonbusiness energy property credit for
three years, through December 31, 2020. The provision also up-
dates the credit’s requirements to reflect the fact that the Depart-
ment of Energy has replaced the energy factor previously used to
measure efficiency with a new standard called the uniform energy
factor.
EFFECTIVE DATE
The provision is effective for property placed in service after De-
cember 31, 2017.
4. QUALIFIED FUEL CELL MOTOR VEHICLES (SEC. 124 OF THE BILL AND
SEC. 30B OF THE CODE)
PRESENT LAW
A credit is available through 2017 for vehicles propelled by
chemically combining oxygen with hydrogen and creating electricity
(‘‘fuel cell vehicles’’).133 The base credit is $4,000 for vehicles weigh-
ing 8,500 pounds or less. Heavier vehicles can get up to a $40,000
credit, depending on their weight. An additional $1,000 to $4,000
credit is available to cars and light trucks to the extent their fuel
economy exceeds the 2002 base fuel economy set forth in the Code.
REASONS FOR CHANGE
The Committee believes that further investments in advanced
technology vehicles are necessary to transform automotive trans-
portation in the United States to be cleaner, more fuel efficient,
and less reliant on petroleum fuels. Therefore, the Committee be-
lieves the credit for fuel cell motor vehicles should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for fuel cell vehicles for three
years, through December 31, 2020.
EFFECTIVE DATE
The provision applies to property purchased after December 31,
2017.
5. ALTERNATIVE FUEL REFUELING PROPERTY CREDIT (SEC. 125 OF THE
BILL AND SEC. 30C OF THE CODE)
PRESENT LAW
Taxpayers may claim a 30-percent credit for the cost of installing
qualified clean-fuel vehicle refueling property to be used in a trade
or business of the taxpayer or installed at the principal residence
of the taxpayer.134 The credit may not exceed $30,000 per taxable
year per location, in the case of qualified refueling property used
in a trade or business and $1,000 per taxable year per location, in
the case of qualified refueling property installed on property which
is used as a principal residence.
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133 Sec. 30B.
134 Sec. 30C.
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50
Qualified refueling property is property (not including a building
or its structural components) for the storage or dispensing of a
clean-burning fuel or electricity into the fuel tank or battery of a
motor vehicle propelled by such fuel or electricity, but only if the
storage or dispensing of the fuel or electricity is at the point of de-
livery into the fuel tank or battery of the motor vehicle. The origi-
nal use of such property must begin with the taxpayer.
Clean-burning fuels are any fuel at least 85 percent of the vol-
ume of which consists of ethanol, natural gas, compressed natural
gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. In
addition, any mixture of biodiesel and diesel fuel, determined with-
out regard to any use of kerosene and containing at least 20 per-
cent biodiesel, qualifies as a clean fuel.
Credits for qualified refueling property used in a trade or busi-
ness are part of the general business credit and may be carried
back for one year and forward for 20 years. Credits for residential
qualified refueling property cannot exceed for any taxable year the
difference between the taxpayer’s regular tax (reduced by certain
other credits) and the taxpayer’s tentative minimum tax. Gen-
erally, in the case of qualified refueling property sold to a tax-ex-
empt entity, the taxpayer selling the property may claim the credit.
A taxpayer’s basis in qualified refueling property is reduced by
the amount of the credit. In addition, no credit is available for
property used outside the United States or for which an election to
expense has been made under section 179.
The credit is available for property placed in service before Janu-
ary 1, 2018.
REASONS FOR CHANGE
The Committee believes that further investments in advanced
technology vehicles and related infrastructure are necessary to
transform automotive transportation in the United States to be
cleaner, more fuel efficient, and less reliant on petroleum fuels.
Therefore, the Committee believes the credit for alternative fuel re-
fueling property should be extended.
EXPLANATION OF PROVISION
The provision extends for three years the 30-percent credit for al-
ternative fuel refueling property, through December 31, 2020.
EFFECTIVE DATE
The provision applies to property placed in service after Decem-
ber 31, 2017.
6. EXTENSION OF CREDIT FOR ELECTRIC MOTORCYCLES (SEC. 126 OF
THE BILL AND SEC. 30D OF THE CODE)
PRESENT LAW
In general, for vehicles acquired before 2018, a 10-percent credit
is available for qualifying plug-in electric motorcycles.135 Quali-
fying electric motorcycles must have a battery capacity of at least
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135 Sec. 30D(g). The credit lapsed and was not available for vehicles placed in service in cal-
endar year 2014. Before 2014, the credit was also available for qualified vehicles having 3-
wheels.
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51
2.5 kilowatt-hours, be manufactured primarily for use on public
streets, roads, and highways, and be capable of achieving speeds of
at least 45 miles per hour. The maximum credit for any qualifying
vehicle is $2,500.
REASONS FOR CHANGE
The Committee believes that further investments in advanced
technology vehicles are necessary to transform automotive trans-
portation in the United States to be cleaner, more fuel efficient,
and less reliant on petroleum fuels. Therefore, the Committee be-
lieves the credit for electric motorcycles should be extended.
EXPLANATION OF PROVISION
The provision extends the electric motorcycles credit for three
years, through December 31, 2020.
EFFECTIVE DATE
The provision applies to vehicles acquired after December 31,
2017.
7. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE
RESOURCES (SEC. 127 OF THE BILL AND SEC. 45 OF THE CODE)
PRESENT LAW
Renewable electricity production credit
An income tax credit is allowed for the production of electricity
from qualified energy resources at qualified facilities (the ‘‘renew-
able electricity production credit’’).136 Qualified energy resources
comprise wind, closed-loop biomass, open-loop biomass, geothermal
energy, municipal solid waste, qualified hydropower production,
and marine and hydrokinetic renewable energy. Qualified facilities
are, generally, facilities that generate electricity using qualified en-
ergy resources. To be eligible for the credit, electricity produced
from qualified energy resources at qualified facilities must be sold
by the taxpayer to an unrelated person.
SUMMARY OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES
Credit amount for 2019 1 (cents per
Eligible electricity production activity (sec. 45) Expiration 2
kilowatt-hour)
Wind ....................................................................................... 2.5 December 31, 2019
Closed-loop biomass ............................................................. 2.5 December 31, 2017
Open-loop biomass (including agricultural livestock waste 1.2 December 31, 2017
nutrient facilities).
Geothermal ............................................................................. 2.5 December 31, 2017
Municipal solid waste (including landfill gas facilities and 1.2 December 31, 2017
trash combustion facilities).
Qualified hydropower ............................................................. 1.2 December 31, 2017
Marine and hydrokinetic ........................................................ 1.2 December 31, 2017
1 In general, the credit is available for electricity produced during the first 10 years after a facility has been placed in service. For wind
facilities, the credit is reduced by 20 percent for facilities the construction of which begins in calendar year 2017, by 40 percent for facilities
the construction of which begins in calendar year 2018, and by 60 percent for facilities the construction of which begins in calendar year
2019.
2 Expires for property the construction of which begins after this date.
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136 Sec. 45. In addition to the renewable electricity production credit, section 45 also provides
income tax credits for the production of Indian coal and refined coal at qualified facilities.
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52
Election to claim energy credit in lieu of renewable electricity
production credit
A taxpayer may make an irrevocable election to have certain
property which is part of a qualified renewable electricity produc-
tion facility be treated as energy property eligible for a 30 percent
investment credit under section 48. For wind facilities, the credit
is reduced by 20 percent for facilities the construction of which be-
gins in calendar year 2017, by 40 percent for facilities the construc-
tion of which begins in calendar year 2018, and by 60 percent for
facilities the construction of which begins in calendar year 2019.
For purposes of the investment credit, qualified facilities are facili-
ties otherwise eligible for the renewable electricity production cred-
it with respect to which no credit under section 45 has been al-
lowed. A taxpayer electing to treat a facility as energy property
may not claim the renewable electricity production credit. The eli-
gible basis for the investment credit for taxpayers making this elec-
tion is the basis of the depreciable (or amortizable) property that
is part of a facility capable of generating electricity eligible for the
renewable electricity production credit.
REASONS FOR CHANGE
The Committee believes that extending the existing incentives
for the production of electricity from renewable resources will help
limit the environmental consequences of continued reliance on
power generated using fossil fuels.
EXPLANATION OF PROVISION
For renewable power facilities, the provision extends for three
years (one year in the case of wind facilities), through December
31, 2020, the beginning of construction deadline for the renewable
electricity production credit and the election to claim the energy
credit in lieu of the electricity production credit. For wind facilities
the construction of which begins in calendar year 2020, the credit
is reduced by 60 percent.
EFFECTIVE DATE
The provision takes effect January 1, 2018.
8. ENERGY-EFFICIENT HOMES CREDIT (SEC. 129 OF THE BILL AND SEC.
45L OF THE CODE)
PRESENT LAW
A credit is available to an eligible contractor for each qualified
new energy-efficient home that is constructed by the eligible con-
tractor and acquired by a person from such eligible contractor for
use as a residence during the taxable year. To qualify as a new en-
ergy-efficient home, the home must be: (1) a dwelling located in the
United States, (2) substantially completed after August 8, 2005,
and (3) certified in accordance with guidance prescribed by the Sec-
retary to have a projected level of annual heating and cooling en-
ergy consumption that meets the standards for either a 30-percent
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or 50-percent reduction in energy usage, compared to a comparable
dwelling constructed in accordance with the standards of chapter
4 of the 2006 International Energy Conservation Code as in effect
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53
(including supplements) on January 1, 2006, and any applicable
Federal minimum efficiency standards for equipment. With respect
to homes that meet the 30-percent standard, one-third of such 30-
percent savings must come from the building envelope, and with
respect to homes that meet the 50-percent standard, one-fifth of
such 50-percent savings must come from the building envelope.
Manufactured homes that conform to Federal manufactured
home construction and safety standards are eligible for the credit
provided all the criteria for the credit are met. The eligible con-
tractor is the person who constructed the home, or in the case of
a manufactured home, the producer of such home.
The credit equals $1,000 in the case of a new home that meets
the 30-percent standard and $2,000 in the case of a new home that
meets the 50-percent standard. Only manufactured homes are eligi-
ble for the $1,000 credit.
In lieu of meeting the standards of chapter 4 of the 2006 Inter-
national Energy Conservation Code, manufactured homes certified
by a method prescribed by the Administrator of the Environmental
Protection Agency under the Energy Star Labeled Homes program
are eligible for the $1,000 credit provided criteria (1) and (2), above,
are met.
The credit applies to homes that are purchased prior to January
1, 2018.
REASONS FOR CHANGE
The Committee believes that it is in the national interest to con-
serve energy. The Committee further recognizes that residential
energy use for heating and cooling represents a significant share
of national energy consumption and accordingly believes that meas-
ures to reduce heating and cooling energy requirements have the
potential to reduce national energy consumption. The Committee
also recognizes that the most cost-effective time to achieve home
energy efficiency is when the home is under construction. There-
fore, the Committee believes the credit for energy-efficient homes
should be extended.
EXPLANATION OF PROVISION
The provision extends the credit for three years, to homes that
are acquired prior to January 1, 2021.
EFFECTIVE DATE
The provision applies to homes acquired after December 31,
2017.
9. SPECIAL ALLOWANCE FOR SECOND GENERATION BIOFUEL PLANT
PROPERTY (SEC. 130 OF THE BILL AND SEC. 168(l) OF THE CODE)
PRESENT LAW
In general
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A taxpayer generally must capitalize the cost of property used in
a trade or business or held for the production of income and recover
such cost over time through annual deductions for depreciation or
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54
amortization.137 The period for depreciation or amortization gen-
erally begins when the asset is placed in service by the taxpayer.138
Tangible property generally is depreciated under the modified ac-
celerated cost recovery system (‘‘MACRS’’), which determines de-
preciation for different types of property based on an assigned ap-
plicable depreciation method, recovery period,139 and convention.140
Special depreciation allowance for second generation biofuel
plant property
An additional first-year depreciation deduction is allowed equal
to 50 percent of the adjusted basis of qualified second generation
biofuel plant property for the taxable year in which the property
is placed in service.141 In order to qualify, the property generally
must be placed in service before January 1, 2018.142
The additional first-year depreciation deduction is allowed for
both regular tax and alternative minimum tax purposes,143 but is
not allowed in computed earnings and profits.144 The additional
first-year depreciation deduction is subject to the general rules re-
garding whether a cost is subject to capitalization under section
263A. The basis of the property and the depreciation allowances in
the year of purchase and later years are appropriately adjusted to
reflect the additional first-year depreciation deduction.145
Qualified property
Qualified second generation biofuel plant property means depre-
ciable property used in the U.S. solely to produce any liquid fuel
that (1) is derived by, or from, qualified feedstocks, and (2) meets
the registration requirements for fuels and fuel additives estab-
lished by the Environmental Protection Agency (‘‘EPA’’) under sec-
tion 211 of the Clean Air Act.146 Qualified feedstock means any
lignocellulosic or hemicellulosic matter that is available on a re-
newable or recurring basis,147 and any cultivated algae,
137 See secs. 263(a) and 167. In general, only the tax owner of property (i.e., the taxpayer with
the benefits and burdens of ownership) is entitled to claim tax benefits such as cost recovery
deductions with respect to the property. In addition, where property is not used exclusively in
a taxpayer’s business, the amount eligible for a deduction must be reduced by the amount re-
lated to personal use. See, e.g., sec. 280A.
138 See Treas. Reg. secs. 1.167(a)–10(b), 1.167(a)–3, 1.167(a)–14, and 1.197–2(f). See also
Treas. Reg. sec. 1.167(a)–11(e)(1)(i).
139 The applicable recovery period for an asset is determined in part by statute and in part
by historic Treasury guidance. Exercising authority granted by Congress, the Secretary issued
Rev. Proc. 87–56, 1987–2 C.B. 674, laying out the framework of recovery periods for enumerated
classes of assets. The Secretary clarified and modified the list of asset classes in Rev. Proc. 88–
22, 1988–1 C.B. 785. In November 1988, Congress revoked the Secretary’s authority to modify
the class lives of depreciable property. Rev. Proc. 87–56, as modified, remains in effect except
to the extent that the Congress has, since 1988, statutorily modified the recovery period for cer-
tain depreciable assets, effectively superseding any administrative guidance with regard to such
property.
140 Sec. 168.
141 Sec. 168(l).
142 Sec. 168(l)(2)(D).
143 Sec. 168(l)(5). Note that the corporate minimum tax was repealed for taxable years begin-
ning after December 31, 2017. See an Act to Provide for Reconciliation Pursuant to Titles II
and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, Pub. L. No. 115–97,
sec. 2001, December 22, 2017.
144 Sec. 312(k)(3).
145 Sec. 168(l)(1)(B).
146 Secs. 168(l)(2)(A) and 40(b)(6)(E).
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147 For example, lignocellulosic or hemicellulosic matter that is available on a renewable or
recurring basis includes bagasse (from sugar cane), corn stalks, and switchgrass. See Joint Com-
mittee on Taxation, General Explanation of Tax Legislation Enacted in the 109th Congress
(JCS–1–07), January 2007, p. 722.
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55
cyanobacteria, or lemna.148 Second generation biofuel does not in-
clude any alcohol with a proof of less than 150 or certain unproc-
essed fuel.149 Unprocessed fuels are fuels that (1) are more than
four percent (determined by weight) water and sediment in any
combination, (2) have an ash content of more than one percent (de-
termined by weight), or (3) have an acid number greater than
25.150
In order for such property to qualify for the additional first-year
depreciation deduction, it must also meet the following require-
ments: (1) the original use of the property must commence with the
taxpayer; and (2) the property must be (i) acquired by purchase (as
defined under section 179(d)) by the taxpayer, and (ii) placed in
service before January 1, 2018.151 Property that is manufactured,
constructed, or produced by the taxpayer for use by the taxpayer
qualifies if the taxpayer begins the manufacture, construction, or
production of the property before January 1, 2018 (and all other re-
quirements are met).152 Property that is manufactured, con-
structed, or produced for the taxpayer by another person under a
contract that is entered into prior to the manufacture, construction,
or production of the property is considered to be manufactured,
constructed, or produced by the taxpayer.
Exceptions
Property not eligible for the additional first-year depreciation de-
duction under section 168(l) includes (1) any property to which the
additional first-year depreciation allowance under section 168(k)
applies,153 (2) any property required to be depreciated under the al-
ternative depreciation system of section 168(g),154 (3) any property
any portion of which is financed with the proceeds of a tax-exempt
obligation under section 103,155 and (4) any property with respect
to which the taxpayer has elected 50-percent expensing under sec-
tion 179C (relating to election to expense certain refineries).156
A taxpayer may elect out of the additional first-year depreciation
for any class of property for any taxable year.157
In addition, recapture rules apply if the property ceases to be
qualified second generation biofuel plant property.158
REASONS FOR CHANGE
The Committee acknowledges that encouraging the manufac-
turing of biofuels (including algae-based fuels) in the United States
is important for fostering innovative new technology, encouraging
energy independence, supporting the commercial production of
these fuels, and creating manufacturing jobs in the United States.
Therefore, the Committee believes the special depreciation allow-
148 Sec. 40(b)(6)(F).
149 Sec. 40(b)(6)(E)(ii) and (iii).
150 Sec. 40(b)(6)(E)(iii).
151 Sec. 168(l)(2). Requirements relating to actions taken before 2007 are not described herein
since they have little (if any) remaining effect.
152 Sec. 168(l)(4) and (k)(2)(E).
153 Sec. 168(l)(3)(A).
154 Sec. 168(l)(3)(B).
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155 Sec. 168(l)(3)(C).
156 Sec. 168(l)(7).
157 Sec. 168(l)(3)(D).
158 Sec. 168(l)(6).
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56
ance for second generation biofuel plant property should be ex-
tended.
EXPLANATION OF PROVISION
The provision extends the special depreciation allowance for
three years, to qualified second generation biofuel plant property
placed in service prior to January 1, 2021.
EFFECTIVE DATE
The provision applies to property placed in service after Decem-
ber 31, 2017.
10. ENERGY-EFFICIENT COMMERCIAL BUILDINGS DEDUCTION (SEC. 131
OF THE BILL AND SEC. 179D OF THE CODE)
PRESENT LAW
In general
Section 179D provides an election under which a taxpayer may
take an immediate deduction equal to energy-efficient commercial
building property expenditures made by the taxpayer. Energy-effi-
cient commercial building property is defined as property (1) which
is installed on or in any building located in the United States that
is within the scope of Standard 90.1–2007 of the American Society
of Heating, Refrigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America (‘‘ASHRAE/
IESNA’’), (2) which is installed as part of (i) the interior lighting
systems, (ii) the heating, cooling, ventilation, and hot water sys-
tems, or (iii) the building envelope, and (3) which is certified as
being installed as part of a plan designed to reduce the total an-
nual energy and power costs with respect to the interior lighting
systems, heating, cooling, ventilation, and hot water systems of the
building by 50 percent or more in comparison to a reference build-
ing which meets the minimum requirements of Standard 90.1–2007
(as in effect before the date of the adoption of ASHRAE/IESNA
Standard 90.1–2010). The deduction is limited to an amount equal
to $1.80 per square foot of the property for which such expendi-
tures are made. The deduction is allowed in the year in which the
property is placed in service.
Certain certification requirements must be met in order to qual-
ify for the deduction. The Secretary, in consultation with the Sec-
retary of Energy, will promulgate regulations that describe meth-
ods of calculating and verifying energy and power costs using quali-
fied computer software based on the provisions of the 2005 Cali-
fornia Nonresidential Alternative Calculation Method Approval
Manual.
The Secretary is granted authority to prescribe procedures for
the inspection and testing for compliance of buildings that are com-
parable, given the difference between commercial and residential
buildings, to the requirements in the Mortgage Industry National
Accreditation Procedures for Home Energy Rating Systems.159 In-
dividuals qualified to determine compliance shall only be those rec-
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159 See IRS Notice 2006–52, 2006–1 C.B. 1175, June 2, 2006; IRS Notice 2008–40, 2008–14
I.R.B. 725 March 11, 2008.
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57
ognized by one or more organizations certified by the Secretary for
such purposes.
For energy-efficient commercial building property expenditures
made by a public entity, such as public schools, the deduction may
be allocated to the person primarily responsible for designing the
property in lieu of the public entity.
If a deduction is allowed under this section, the basis of the prop-
erty is reduced by the amount of the deduction.
The deduction applies to property placed in service prior to Janu-
ary 1, 2018.
Partial allowance of deduction
(1) System-specific deductions
In the case of a building that does not meet the overall building
requirement of 50-percent energy savings, a partial deduction is al-
lowed with respect to each separate building system that comprises
energy efficient property and which is certified by a qualified pro-
fessional as meeting or exceeding the applicable system-specific
savings targets established by the Secretary. The applicable sys-
tem-specific savings targets to be established by the Secretary are
those that would result in a total annual energy savings with re-
spect to the whole building of 50 percent, if each of the separate
systems met the system specific target. The separate building sys-
tems are (1) the interior lighting system, (2) the heating, cooling,
ventilation and hot water systems, and (3) the building envelope.
The maximum allowable deduction is $0.60 per square foot for each
separate system.
(2) Interim rules for lighting systems
In general, in the case of system-specific partial deductions, no
deduction is allowed until the Secretary establishes system-specific
targets.160 However, in the case of lighting system retrofits, until
such time as the Secretary issues final regulations, the system-spe-
cific energy savings target for the lighting system is deemed to be
met by a reduction in lighting power density of 40 percent (50 per-
cent in the case of a warehouse) of the minimum requirements in
Table 9.3.1.1 or Table 9.3.1.2 of ASHRAE/IESNA Standard 90.1–
2007. Also, in the case of a lighting system that reduces lighting
power density by 25 percent, a partial deduction of 30 cents per
square foot is allowed. A pro-rated partial deduction is allowed in
the case of a lighting system that reduces lighting power density
between 25 percent and 40 percent. Certain lighting level and
lighting control requirements must also be met in order to qualify
for the partial lighting deductions under the interim rule.
160 IRS Notice 2008–40, supra, set a target of a 10-percent reduction in total energy and power
costs with respect to the building envelope, and 20 percent each with respect to the interior
lighting system and the heating, cooling, ventilation and hot water systems. IRS Notice 2012–
26 (2012–17 I.R.B. 847 April 23, 2012) established new targets of 10-percent reduction in total
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energy and power costs with respect to the building envelope, 25 percent with respect to the
interior lighting system and 15 percent with respect to the heating, cooling, ventilation and hot
water systems, effective beginning March 12, 2012. The targets from Notice 2008–40 may be
used until December 31, 2013, but the targets of Notice 2012–26 apply thereafter.
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58
REASONS FOR CHANGE
The Committee believes that it is in the national interest to con-
serve energy. The Committee further recognizes that commercial
buildings consume a significant amount of energy resources and
that reductions in commercial energy use have the potential to re-
duce national energy consumption. Therefore, the Committee be-
lieves that the energy efficient commercial building deduction
should be extended.
EXPLANATION OF PROVISION
The provision extends the deduction for three years, through De-
cember 31, 2020.
EFFECTIVE DATE
The provision applies to property placed in service after Decem-
ber 31, 2017.
11. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FERC
OR STATE ELECTRIC RESTRUCTURING POLICY FOR QUALIFIED ELEC-
TRIC UTILITIES (SEC. 132 OF THE BILL AND SEC. 451(k) OF THE CODE)
PRESENT LAW
A taxpayer selling property generally realizes gain to the extent
the sales price (and any other consideration received) exceeds the
taxpayer’s basis in the property.161 The realized gain is subject to
current income tax 162 unless the recognition of the gain is deferred
or excluded from income under a special tax provision.163
One such special tax provision permits taxpayers to elect to rec-
ognize gain from qualifying electric transmission transactions rat-
ably over an eight-year period beginning in the year of sale if the
amount realized from such sale is used to purchase exempt utility
property within the applicable period 164 (the ‘‘reinvestment prop-
erty’’).165 If the amount realized exceeds the amount used to pur-
chase reinvestment property, any realized gain is recognized to the
extent of such excess in the year of the qualifying electric trans-
mission transaction.
A qualifying electric transmission transaction is the sale or other
disposition of property used by a qualified electric utility to an
independent transmission company prior to January 1, 2018.166 A
qualified electric utility is defined as an electric utility, which as
of the date of the qualifying electric transmission transaction, is
vertically integrated in that it is both (1) a transmitting utility (as
defined in the Federal Power Act 167 ) with respect to the trans-
161 See sec. 1001.
162 See secs. 61 and 451.
163 See, e.g., secs. 453, 1031, and 1033.
164 The applicable period for a taxpayer to reinvest the proceeds is four years after the close
of the taxable year in which the qualifying electric transmission transaction occurs.
165 Sec. 451(k).
166 Sec. 451(k)(3).
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167 Sec. 3(23), 16 U.S.C. sec. 796, defines ‘‘transmitting utility’’ as any electric utility, quali-
fying cogeneration facility, qualifying small power production facility, or Federal power mar-
keting agency that owns or operates electric power transmission facilities that are used for the
sale of electric energy at wholesale.
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59
mission facilities to which the election applies, and (2) an electric
utility (as defined in the Federal Power Act 168 ).169
In general, an independent transmission company is defined as:
(1) an independent transmission provider 170 approved by the Fed-
eral Energy Regulatory Commission (‘‘FERC’’); (2) a person (i) who
the FERC determines under section 203 of the Federal Power
Act 171 (or by declaratory order) is not a ‘‘market participant’’ and
(ii) whose transmission facilities are placed under the operational
control of a FERC-approved independent transmission provider no
later than four years after the close of the taxable year in which
the transaction occurs; or (3) in the case of facilities subject to the
jurisdiction of the Public Utility Commission of Texas, (i) a person
which is approved by that Commission as consistent with Texas
State law regarding an independent transmission organization, or
(ii) a political subdivision, or affiliate thereof, whose transmission
facilities are under the operational control of an organization de-
scribed in (i).172
Exempt utility property is defined as: (1) property used in the
trade or business of (i) generating, transmitting, distributing, or
selling electricity or (ii) producing, transmitting, distributing, or
selling natural gas; or (2) stock in a controlled corporation whose
principal trade or business consists of the activities described in
(1).173 Exempt utility property does not include any property that
is located outside of the United States.174
If a taxpayer is a member of an affiliated group of corporations
filing a consolidated return, the reinvestment property may be pur-
chased by any member of the affiliated group (in lieu of the tax-
payer).175
REASONS FOR CHANGE
The Committee believes that the ‘‘unbundling’’ of electric trans-
mission assets held by vertically integrated utilities, with the
transmission assets ultimately placed under the ownership or con-
trol of independent transmission providers (or other similarly-ap-
proved operators), continues to be an important policy. To continue
facilitating the implementation of this policy, the Committee be-
lieves it is appropriate to assist taxpayers in moving forward with
industry restructuring by continuing to provide a tax deferral for
gain associated with certain dispositions of electric transmission
assets. The Committee believes this provision will encourage the
sale of transmission property from electric utilities to independent
transmission companies to improve transmission management and
facilitate competitive transmission markets.
168 Sec. 3(22), 16 U.S.C. sec. 796, defines ‘‘electric utility’’ as any person or State agency (in-
cluding any municipality) that sells electric energy; such term includes the Tennessee Valley
Authority, but does not include any Federal power marketing agency.
169 Sec. 451(k)(6).
170 For example, a regional transmission organization, an independent system operator, or an
independent transmission company.
171 16 U.S.C. sec. 824b.
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172 Sec. 451(k)(4).
173 Sec. 451(k)(5).
174 Sec. 451(k)(5)(C).
175 Sec. 451(k)(7).
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60
EXPLANATION OF PROVISION
The provision extends for three years, through December 31,
2020, the deferral provision for qualifying electric transmission
transactions.
EFFECTIVE DATE
The provision applies to dispositions after December 31, 2017.
12. EXTENSION AND CLARIFICATION OF EXCISE TAX CREDITS RELATING
TO ALTERNATIVE FUELS (SEC. 133 OF THE BILL AND SECS. 6426 AND
6427 OF THE CODE)
PRESENT LAW
The Code provides two per-gallon excise tax credits with respect
to alternative fuel: the alternative fuel credit, and the alternative
fuel mixture credit. For this purpose, the term ‘‘alternative fuel’’
means liquefied petroleum gas, P Series fuels (as defined by the
Secretary of Energy under 42 U.S.C. sec. 13211(2)), compressed or
liquefied natural gas, liquefied hydrogen, liquid fuel derived from
coal through the Fischer-Tropsch process (‘‘coal-to-liquids’’), com-
pressed or liquefied gas derived from biomass, or liquid fuel derived
from biomass. Such term does not include ethanol, methanol, or
biodiesel. ‘‘Alternative fuel’’ also does not include fuel (including
lignin, wood residues, or spent pulping liquors) derived from the
production of paper or pulp.
For coal-to-liquids produced after December 30, 2009, the fuel
must be certified as having been derived from coal produced at a
gasification facility that separates and sequesters 75 percent of
such facility’s total carbon dioxide emissions.
The alternative fuel credit is allowed against section 4041 liabil-
ity, and the alternative fuel mixture credit is allowed against sec-
tion 4081 liability.176 Neither credit is allowed unless the taxpayer
is registered with the Secretary. The alternative fuel credit is gen-
erally 50 cents per gallon (or applicable gasoline or diesel gallon
equivalents 177) of alternative fuel sold by the taxpayer for use as
a motor fuel in a motor vehicle or motorboat, sold for use in avia-
tion or so used by the taxpayer.
The alternative fuel mixture credit is 50 cents per gallon of alter-
native fuel used in producing an alternative fuel mixture for sale
or use in a trade or business of the taxpayer. An ‘‘alternative fuel
mixture’’ is a mixture of alternative fuel and taxable fuel (gasoline,
diesel fuel or kerosene) that contains at least 1/10 of one percent
taxable fuel.178 The mixture must be sold by the taxpayer pro-
176 Relating to the excise tax imposed upon removal of gasoline, aviation gasoline, diesel fuel
and kerosene.
177 With respect to any nonliquid alternative fuel (e.g., compressed natural gas), ‘‘gasoline gal-
lon equivalent’’ means the amount of such fuel having a Btu (British thermal unit) content of
124,800 (higher heating value). For liquefied petroleum gas, the credit is determined by ref-
erence to the energy equivalent of a gallon gasoline, and for liquidized natural gas, it is the
energy equivalent of a gallon of diesel.
178 It has been argued that, for purposes of the alternative fuel mixture credit, butane is lique-
fied petroleum gas. The term ‘‘liquefied petroleum gas’’ is not defined for purposes of section
6426. Butane is a gasoline blendstock under section 48.4081–1(c)(3)(i) of the Treasury regula-
tions and, therefore, is gasoline for purposes of section 4083. In Revenue Ruling 2018–2, the
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Internal Revenue Service determined that butane is not an alternative fuel but is a gasoline
blendstock as defined in the regulations. As a result, a mixture of butane and gasoline is a mix-
ture of two taxable fuels. The IRS held that it is not an alternative fuel mixture and does not
qualify for the alternative fuel mixture credit.
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61
ducing such mixture to any person for use as a fuel, or used by the
taxpayer producing the mixture as a fuel. The credits expired after
December 31, 2017.
A person may file a claim for payment equal to the amount of
the alternative fuel credit (but not the alternative fuel mixture
credit). The alternative fuel credit must first be applied to the ap-
plicable excise tax liability under section 4041, and any excess
credit may be taken as a payment. The payment provision for alter-
native fuel expired after December 31, 2017.
REASONS FOR CHANGE
The alternative fuel mixture credit first appeared as part of the
Senate Finance Committee’s markup of the Energy Tax Incentives
Act of 2005 179 and was enacted as part of the Safe, Efficient Trans-
portation Equity Act: A Legacy for Users in 2005.180 The alter-
native fuel mixture credit is part of a suite of incentives intended
to reduce U.S. reliance on conventional gasoline, diesel, and ker-
osene by focusing on alternative fuels, thereby lessening U.S. de-
pendence on foreign oil.181
More than a decade after its enactment, in late 2016 or early
2017, promotional literature appeared urging taxpayers to assert
on amended returns that butane (a standard component chemical
present in all gasoline), when blended with gasoline, constituted an
alternative fuel mixture. The theory behind this aggressive tax po-
sition is that the butane in the mixture was a form of liquefied pe-
troleum gas, an alternative fuel.182 The Code does not provide a
definition of liquefied petroleum gas for purposes of the alternative
fuel mixture credit. The use of butane as an ingredient in gasoline
predates the enactment of the alternative fuel mixture credit by
many years and Congress never intended to incentivize such a
widespread and established practice in the production of conven-
tional gasoline necessary to meet environmental and performance
standards.
Others have claimed that butane mixed with propane is an alter-
native fuel mixture, asserting that butane is the taxable fuel com-
ponent of the mixture. However, the presence of butane in propane
does not further the goals of the mixture credit and the amount
that can be added to propane for sale is significantly limited by in-
179 Joint Committee on Taxation, Description of Provisions of the ‘‘Energy Policy Tax Incentives
Act of 2005,’’ (JCX–44–05, June 14, 2005) at p. 46.
180 Pub. L. No. 109–59, sec. 11113.
181 For example, see, H. Rpt. No. 110-658, at page 76: Alternative fuels are a significant com-
ponent of establishing the nation’s independence from foreign oil. The fuel incentives were not
intended to subsidize fuels with no nexus to the United States. The Committee is aware of situa-
tions in which foreign-produced fuel is imported into the United States, mixed with a small
amount of diesel fuel, in order to qualify for the credit for qualified biodiesel fuel mixtures, and
then the fuel is exported. This practice does not contribute to establishing the country’s fuel
independence, therefore, the provision denies the fuel credits and payments to such fuel.
182 Taxpayers have filed several lawsuits recently challenging the IRS position that mixtures
of butane and gasoline do not qualify for the alternative fuel mixture credit. See Rev. Rul. 2018–
2, 2018–2 I.R.B. 277. The Committee is also aware of disputes regarding the meaning of com-
pressed natural gas (‘‘CNG’’). IRS Chief Counsel issued informal advice on the meaning of ‘‘com-
pressed natural gas’’ for purposes of section 6426. FSA No. 20151001F (March 6, 2016) https://
www.irs.gov/pub/irs-lafa/151001f.pdf. The advice notes that CNG is generally defined as natural
gas in its gaseous form that is contained under pressure of approximately 2,400 to 3600 psi (per
square inch) and of the quality required for use as a fuel in vehicles. The Committee is aware
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that some taxpayers argue that lower levels of pressure sufficient to get any natural gas through
a pipeline from the wellhead should qualify as CNG for purposes of the alternative fuel mixture
credit. This interpretation is not consistent with Congressional intent to subsidize fuel capable
of being used as a substitute for traditional motor vehicle fuel.
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62
dustry standards.183 It is the understanding of the Committee that
butane is being added in minor amounts to the propane sold simply
to qualify for the alternative mixture credit. Such practice does not
further the goals of energy independence.
It is the Committee’s understanding that if the taxpayers’ claims
(including lawsuits) are successful, the government stands to lose
tens of billions of dollars in revenue resulting from amended re-
turns seeking to retroactively take advantage of the unintended
loophole for prior years, and also an additional estimated $5 billion
per year from any prospective extensions of the alternative fuel
mixture credit if this issue is not addressed.
For the foregoing reasons, the Committee has determined that it
must close this unintended loophole to protect the public fisc and
to prevent a windfall resulting from erroneous interpretations of
the law. The Committee believes that once the loophole is properly
closed, it is appropriate to extend the incentives. Such an extension
will encourage the use and development of alternative motor fuels
as substitutes for traditional motor fuels, and will reduce reliance
on traditional motor fuels by displacing a significant portion of that
traditional volume with alternative fuels included as part of an al-
ternative fuel mixture.
EXPLANATION OF PROVISION
The provision extends the alternative fuel credit and related pay-
ment provisions, and the alternative fuel mixture credit through
December 31, 2020.
The provision creates a special rule to address claims regarding
excise tax credits and claims for payment for alternative fuel sold
or used during the period beginning on January 1, 2018, through
the close of the last calendar quarter beginning before the date of
enactment. In particular, the provision directs the Secretary to
issue guidance within 30 days of the date of enactment. Such guid-
ance is to provide for a one-time submission of claims covering
those periods. The guidance is to provide for a 180-day period for
the submission of such claims (in such manner as prescribed by the
Secretary) to begin no later than 30 days after such guidance is
issued. Such claims shall be paid by the Secretary of the Treasury
not later than 60 days after receipt. If the claim is not paid within
60 days of the date of the filing, the claim shall be paid with inter-
est from such date determined by using the overpayment rate and
method under section 6621.
The provision also makes it clear that for purposes of the alter-
native fuel mixtures credit, an alternative fuel mixture is not a
mixture that includes liquefied petroleum gas, compressed or lique-
fied natural gas, or compressed or liquefied gas derived from bio-
mass.
183 Propane for sale must adhere to commercial and international grades and standards for
purity. U.S. Energy Information Administration, Hydrocarbon Gas Liquids (HGL): Recent Mar-
ket Trends and Issues (November 2014) at 24 (https://www.eia.gov/analysis/hgl/pdf/hgl.pdf). It is
understood that in an effort to qualify for the mixture credit while still remaining within re-
quired standards, in practice only a minimum amount of butane (generally one-tenth of one per-
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cent) is added to the propane. ‘‘Propane is consumed in the United States primarily in residen-
tial and commercial buildings for water heating, cooking, and seasonally as a fuel for space heat-
ing, located in regions where natural gas supply is limited or unavailable.’’ Ibid. Unlike the al-
ternative fuel credit, the mixture credit is not limited to transportation applications.
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63
EFFECTIVE DATE
The provision generally applies to fuel sold or used after Decem-
ber 31, 2017. The clarification applies to fuel sold or used on or
after the date of enactment and fuel sold or used before such date
of enactment, but only to the extent that credits and claims of cred-
it under section 6426(e) (relating to the alternative fuel mixture
credit) with respect to such sale or use have not been paid or al-
lowed as of such date.
13. OIL SPILL LIABILITY TRUST FUND RATE (SEC. 134 OF THE BILL AND
SEC. 4611 OF THE CODE)
PRESENT LAW
Prior to its expiration, the Oil Spill Liability Trust Fund financ-
ing rate (‘‘oil spill tax’’) was nine cents per barrel. It generally ap-
plies to crude oil received at a U.S. refinery and to petroleum prod-
ucts entered into the United States for consumption, use, or
warehousing.184 The oil spill tax also applies to certain uses and
the exportation of domestic crude oil.185 If any domestic crude oil
is used in or exported from the United States, and before such use
or exportation no oil spill tax was imposed on such crude oil, then
the oil spill tax is imposed on such crude oil. The tax does not
apply to any use of crude oil for extracting oil or natural gas on
the premises where such crude oil was produced.
For crude oil received at a refinery, the operator of the U.S. re-
finery is liable for the tax. For imported petroleum products, the
person entering the product for consumption, use, or warehousing
is liable for the tax. For certain uses and exports, the person using
or exporting the crude oil is liable for the tax. No tax is imposed
with respect to any petroleum product if the person who would be
liable for such tax establishes that a prior oil spill tax has been im-
posed with respect to such product.
The tax does not apply to any periods after December 31, 2018.
REASONS FOR CHANGE
The Committee believes it is appropriate to reinstate the oil spill
tax to provide funding for expenditures from the Oil Spill Liability
Trust Fund.
EXPLANATION OF PROVISION
The provision extends the oil spill tax through December 31,
2020.
EFFECTIVE DATE
The provision applies beginning on the first day of the first cal-
endar month beginning after the date of enactment of this Act.
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184 The term ‘‘crude oil’’ includes crude oil condensates and natural gasoline. The term ‘‘petro-
leum product’’ includes crude oil.
185 The term ‘‘domestic crude oil’’ means any crude oil produced from a well located in the
United States.
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64
D. CERTAIN PROVISIONS EXPIRING AT THE END OF 2019
1. NEW MARKETS TAX CREDIT (SEC. 141 OF THE BILL AND SEC. 45D OF
THE CODE)
PRESENT LAW
Section 45D provides a new markets tax credit for qualified eq-
uity investments made to acquire stock in a corporation, or a cap-
ital interest in a partnership, that is a qualified community devel-
opment entity (‘‘CDE’’).186 The amount of the credit allowable to
the investor (either the original purchaser or a subsequent holder)
is (1) a five-percent credit for the year in which the equity interest
is purchased from the CDE and for each of the following two years,
and (2) a six-percent credit for each of the following four years.187
The credit is determined by applying the applicable percentage
(five or six percent) to the amount paid to the CDE for the invest-
ment at its original issue, and is available to the taxpayer who
holds the qualified equity investment on the date of the initial in-
vestment or on the respective anniversary date that occurs during
the taxable year.188 The credit is recaptured if at any time during
the seven-year period that begins on the date of the original issue
of the investment the entity (1) ceases to be a qualified CDE, (2)
the proceeds of the investment cease to be used as required, or (3)
the equity investment is redeemed.189
A qualified CDE is any domestic corporation or partnership: (1)
whose primary mission is serving or providing investment capital
for low-income communities or low-income persons; (2) that main-
tains accountability to residents of low-income communities by
their representation on any governing board of or any advisory
board to the CDE; and (3) that is certified by the Secretary as
being a qualified CDE.190 A qualified equity investment means
stock (other than nonqualified preferred stock) in a corporation or
a capital interest in a partnership that is acquired at its original
issue directly (or through an underwriter) from a CDE for cash,
and includes an investment of a subsequent purchaser if such in-
vestment was a qualified equity investment in the hands of the
prior holder.191 Substantially all of the investment proceeds must
be used by the CDE to make qualified low-income community in-
vestments and the investment must be designated as a qualified
equity investment by the CDE. For this purpose, qualified low-in-
come community investments include: (1) capital or equity invest-
ments in, or loans to, qualified active low-income community busi-
nesses; (2) certain financial counseling and other services to busi-
nesses and residents in low-income communities; (3) the purchase
from another CDE of any loan made by such entity that is a quali-
fied low-income community investment; or (4) an equity investment
in, or loan to, another CDE.192
186 Section 45D was added by section 121(a) of the Community Renewal Tax Relief Act of
2000, Pub. L. No. 106–554.
187 Sec. 45D(a)(2).
188Sec. 45D(a)(3).
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189 Sec. 45D(g).
190 Sec. 45D(c).
191Sec. 45D(b).
192 Sec. 45D(d).
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65
A ‘‘low-income community’’ is a population census tract with ei-
ther (1) a poverty rate of at least 20 percent, or (2) median family
income which does not exceed 80 percent of the greater of metro-
politan area median family income or statewide median family in-
come (for a non-metropolitan census tract, does not exceed 80 per-
cent of statewide median family income). In the case of a popu-
lation census tract located within a high migration rural county,
low-income is defined by reference to 85 percent (as opposed to 80
percent) of statewide median family income.193 For this purpose, a
high migration rural county is any county that, during the 20-year
period ending with the year in which the most recent census was
conducted, has a net out-migration of inhabitants from the county
of at least 10 percent of the population of the county at the begin-
ning of such period.
The Secretary is authorized to designate ‘‘targeted populations’’’
as low-income communities for purposes of the new markets tax
credit.194 For this purpose, a ‘‘targeted population’’ is defined by
reference to section 103(20) of the Riegle Community Development
and Regulatory Improvement Act of 1994 195 (the ‘‘Act’’) to mean in-
dividuals, or an identifiable group of individuals, including an In-
dian tribe, who are low-income persons or otherwise lack adequate
access to loans or equity investments. Section 103(17) of the Act
provides that ‘‘low-income’’ means (1) for a targeted population
within a metropolitan area, less than 80 percent of the area me-
dian family income, and (2) for a targeted population within a non-
metropolitan area, less than the greater of 80 percent of the area
median family income or 80 percent of the statewide non-metropoli-
tan area median family income. A targeted population is not re-
quired to be within any census tract. In addition, a population cen-
sus tract with a population of less than 2,000 is treated as a low-
income community for purposes of the credit if such tract is within
an empowerment zone, the designation of which is in effect under
section 1391, and is contiguous to one or more low-income commu-
nities.
A qualified active low-income community business is defined as
a business that satisfies, with respect to a taxable year, the fol-
lowing requirements: (1) at least 50 percent of the total gross in-
come of the business is derived from the active conduct of trade or
business activities in any low-income community; (2) a substantial
portion of the tangible property of the business is used in a low-
income community; (3) a substantial portion of the services per-
formed for the business by its employees is performed in a low-in-
come community; and (4) less than five percent of the average of
the aggregate unadjusted bases of the property of the business is
attributable to certain financial property or to certain collect-
ibles.196
The maximum annual amount of qualified equity investments is
$3.5 billion for calendar years 2010 through 2019. No amount of
unused allocation limitation may be carried to any calendar year
after 2024.
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193 Sec. 45D(e).
194 Sec. 45D(e)(2).
195 Pub. L. No. 103–325.
196 Sec. 45D(d)(2).
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66
REASONS FOR CHANGE
The Committee believes that the new markets tax credit has
proven to be an effective means of providing needed capital to busi-
nesses in low-income communities. Therefore, the Committee be-
lieves that the new markets tax credit should be extended, and
that up to $5 billion in qualified equity investments should be per-
mitted for the 2020 calendar year.
EXPLANATION OF PROVISION
This provision extends the new markets tax credit for one year,
through 2020, permitting up to $5 billion in qualified equity invest-
ments for the 2020 calendar year. The provision also extends for
one year, through 2025, the carryover period for unused new mar-
kets tax credits.
EFFECTIVE DATE
The provision applies to calendar years beginning after December
31, 2019.
2. EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL LEAVE (SEC. 142
OF THE BILL AND SEC. 45S OF THE CODE)
PRESENT LAW
For wages paid in taxable years beginning after December 31,
2017, and before January 1, 2020, ‘‘eligible employers’’’ may claim
a general business credit equal to 12.5 percent of the amount of eli-
gible wages (based on the normal hourly wage rate) paid to ‘‘quali-
fying employees’’’ during any period in which such employees are
on ‘‘family and medical leave’’ if the rate of payment under the pro-
gram is 50 percent of the wages normally paid to an employee for
actual services performed for the employer.197 The credit is in-
creased by 0.25 percentage points (but not above 25 percent) for
each percentage point by which the rate of payment exceeds 50 per-
cent. The maximum amount of family and medical leave that may
be taken into account with respect to any qualifying employee for
any taxable year is 12 weeks.
An ‘‘eligible employer’’ is one which has in place a written policy
that allows all qualifying full-time employees not less than two
weeks of annual paid family and medical leave, and which allows
all less-than-full-time qualifying employees a commensurate
amount of leave (on a pro rata basis) compared to the leave pro-
vided to full-time employees. The policy must also provide that the
rate of payment under the program is not less than 50 percent of
the wages normally paid to any such employee for services per-
formed for the employer.
In addition, in order to be an eligible employer, the employer is
prohibited from certain practices or acts which are also prohibited
under the FMLA, regardless of whether the employer is subject to
the FMLA. Specifically, the employer must provide paid family and
medical leave in compliance with a written policy that ensures that
the employer will not interfere with, restrain, or deny the exercise
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197 Wages for this purpose are Federal Unemployment Tax Act wages defined in section
3306(b), without regard to the dollar limitation, but do not include amounts taken into account
for purposes of determining any other credit under subpart D of the Code.
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67
of or the attempt to exercise, any right provided under the policy
and will not discharge or in any other manner discriminate against
any individual for opposing any practice prohibited by the policy.
A ‘‘qualifying employee’’ means any individual who is an em-
ployee under tax rules and principles and is defined in section 3(e)
of the Fair Labor Standards Act of 1938,198 as amended, who has
been employed by the employer for one year or more, and who for
the preceding year, had compensation not in excess of 60 percent
of the compensation threshold in such year for highly compensated
employees.199 For 2019, this 60 percent amount is $72,000.
‘‘Family and medical leave’’ for purposes of section 45S is gen-
erally defined as leave described under sections 102(a)(1)(A)–(E) or
102(a)(3) of the FMLA.200 If an employer provides paid leave as va-
cation leave, personal leave, or other medical or sick leave 201 (un-
less the medical or sick leave is specifically for one or more of the
‘‘family and medical leave’’ purposes defined above), such paid
leave would not be considered to be family and medical leave. In
addition, leave paid for by a State or local government or required
by State or local law (including such leave required to be paid by
the employer) is not taken into account in determining the amount
of paid family and medical leave provided by the employer that is
eligible for the credit.
The Secretary will make determinations as to whether an em-
ployer or an employee satisfies the applicable requirements for an
eligible employer or qualifying employee, based on information pro-
vided by the employer that the Secretary determines to be nec-
essary or appropriate.
REASONS FOR CHANGE
The Committee believes that the paid family and medical leave
tax credit is an important means to help incentivize employers to
protect the wages of lower-paid employees experiencing certain
family and medical events that necessitate time off from work.
Therefore, the Committee believes that the credit should be ex-
tended for the 2020 taxable year.
EXPLANATION OF PROVISION
The provision extends the paid family and medical leave credit
for one year (for wages paid in taxable years beginning after De-
cember 31, 2019, and before January 1, 2021).
198 Pub. L. No. 75–718 (June 25, 1938); 29 U.S.C. sec. 201, et seq.
199 Sec. 414(q)(1)(B) ($120,000 for 2018).
200 FMLA section 102(a)(1) provides leave for FMLA purposes due to (A) the birth of a son
or daughter of the employee and in order to care for such son or daughter; (B) the placement
of a son or daughter with the employee for adoption or foster care; (C) caring for the spouse,
or a son, daughter, or parent, of the employee, if such spouse, son, daughter, or parent has a
serious health condition; (D) a serious health condition that makes the employee unable to per-
form the functions of the employee’s position; (E) any qualifying exigency (as the Secretary of
Labor shall, by regulation, determine) arising out of the fact that the spouse, or a son, daughter,
or parent of the employee is on covered active duty (or has been notified of an impending call
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or order to covered active duty) in the Armed Forces. In addition, FMLA section 102(a)(3) pro-
vides leave for FMLA purposes due to the need of an employee who is a spouse, son, daughter,
parent, or next-of-kin of an eligible service member to care for such service member.
201 These terms mean these types of leave within the meaning of FMLA section 102(d)(2).
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68
EFFECTIVE DATE
The provision applies to wages paid in taxable years beginning
after December 31, 2019.
3. WORK OPPORTUNITY CREDIT (SEC. 143 OF THE BILL AND SEC. 51 OF
THE CODE)
PRESENT LAW
In general
The work opportunity tax credit is available on an elective basis
for employers hiring individuals from one or more of ten targeted
groups. The amount of the credit available to an employer is deter-
mined by the amount of qualified wages paid by the employer. Gen-
erally, qualified wages consist of wages attributable to service ren-
dered by a member of a targeted group during the one-year period
beginning with the day the individual begins work for the employer
(two years in the case of an individual in the long-term family as-
sistance recipient category).
Targeted groups eligible for the credit
Generally, an employer is eligible for the credit only for qualified
wages paid to members of a targeted group.
(1) Families receiving TANF
An eligible recipient is an individual certified by the designated
local agency (e.g., a State employment security agency) as being a
member of a family eligible to receive benefits under the Tem-
porary Assistance for Needy Families Program (‘‘TANF’’) for a pe-
riod of at least nine months, part of which is during the 18-month
period ending on the hiring date. For these purposes, members of
the family are defined to include only those individuals taken into
account for purposes of determining eligibility for the TANF.
(2) Qualified veteran
A qualified veteran is a veteran in one of five categories, certified
by the designated local agency as: (1) a member of a family eligible
to receive assistance under a supplemental nutritional assistance
program (for at least a three month period during the year prior
to the hiring date); (2) entitled to compensation for a service con-
nected disability and hired within one year of discharge; (3) enti-
tled to compensation for a service connected disability and unem-
ployed for an aggregate of at least six months during the one year
period ending on the hiring date; (4) unemployed for at least four
weeks but less than six months (whether or not consecutive) during
the one-year period ending on the date of hiring; or (5) unemployed
for at least six months (whether or not consecutive) during the one-
year period ending on the date of hiring.
A veteran is an individual who has served on active duty (other
than for training) in the Armed Forces for more than 180 days or
who has been discharged or released from active duty in the Armed
Forces for a service-connected disability. However, any individual
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who has served for a period of more than 90 days during which the
individual was on active duty (other than for training) is not a
qualified veteran if any of this active duty occurred during the 60-
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69
day period ending on the date the individual was hired by the em-
ployer. This latter rule is intended to prevent employers who hire
current members of the armed services (or those departed from
service within the last 60 days) from receiving the credit.
(3) Qualified ex-felon
A qualified ex-felon is an individual certified by the designated
local agency as (1) having been convicted of a felony under any
State or Federal law; and (2) having a hiring date within one year
of release from prison or the date of conviction.
(4) Designated community resident
A designated community resident is an individual certified by the
designated local agency as being at least age 18 but not yet age 40
on the hiring date and as having a principal place of abode within
an empowerment zone, enterprise community, renewal community
or a rural renewal community. For these purposes, a rural renewal
county is a county outside a metropolitan statistical area (as de-
fined by the Office of Management and Budget) which had a net
population loss during the five-year periods 1990–1994 and 1995–
1999. Qualified wages do not include wages paid or incurred for
services performed while the individual’s principal place of abode
is outside an empowerment zone, enterprise community, renewal
community or a rural renewal community.
(5) Vocational rehabilitation referral
A vocational rehabilitation referral is an individual who is cer-
tified by the designated local agency as an individual who has a
physical or mental disability that constitutes a substantial handi-
cap to employment and who has been referred to the employer
while receiving, or after completing vocational rehabilitation serv-
ices: (1) under an individualized, written plan for employment
under a State plan approved under the Rehabilitation Act of 1973;
(2) under a rehabilitation plan for veterans carried out under
Chapter 31 of Title 38, U.S. Code; or (3) under an individual work
plan developed and implemented by an employment network pur-
suant to subsection (g) of section 1148 of the Social Security Act.
Certification is provided by the designated local agency upon assur-
ances from the vocational rehabilitation agency that the employee
has met the above conditions.
(6) Qualified summer youth employee
A qualified summer youth employee is an individual: (1) who per-
forms services during any 90-day period between May 1 and Sep-
tember 15; (2) who is certified by the designated local agency as
being 16 or 17 years of age on the hiring date; (3) who has not been
an employee of that employer before; and (4) who is certified by the
designated local agency as having a principal place of abode within
an empowerment zone, enterprise community, or renewal commu-
nity. As with designated community residents, no credit is avail-
able on wages paid or incurred for service performed while the in-
dividual’s principal place of abode is outside an empowerment zone,
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enterprise community, or renewal community. If, after the end of
the 90-day period, the employer continues to employ a youth who
was certified during the 90-day period as a member of another tar-
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70
geted group, the limit on qualified first-year wages will take into
account wages paid to the youth while a qualified summer youth
employee.
(7) Qualified supplemental nutrition assistance program ben-
efits recipient
A qualified supplemental nutrition assistance program benefits
recipient is an individual at least age 18 but not yet age 40 cer-
tified by the designated local agency as being a member of a family
receiving assistance under a food and nutrition program under the
Food and Nutrition Act of 2008 for a period of at least six months
ending on the hiring date. In the case of families that cease to be
eligible for food and nutrition assistance under section 6(o) of the
Food and Nutrition Act of 2008, the six-month requirement is re-
placed with a requirement that the family has been receiving food
and nutrition assistance for at least three of the five months end-
ing on the date of hire. For these purposes, members of the family
are defined to include only those individuals taken into account for
purposes of determining eligibility for a food and nutrition assist-
ance program under the Food and Nutrition Act of 2008.
(8) Qualified SSI recipient
A qualified SSI recipient is an individual designated by the des-
ignated local agency as receiving supplemental security income
(‘‘SSI’’) benefits under Title XVI of the Social Security Act for any
month ending within the 60-day period ending on the hiring date.
(9) Long-term family assistance recipient
A qualified long-term family assistance recipient is an individual
certified by the designated local agency as being: (1) a member of
a family that has received family assistance for at least 18 consecu-
tive months ending on the hiring date; (2) a member of a family
that has received such family assistance for a total of at least 18
months (whether or not consecutive) after August 5, 1997 (the date
of enactment of the welfare-to-work tax credit) if the individual is
hired within two years after the date that the 18-month total is
reached; or (3) a member of a family who is no longer eligible for
family assistance because of either Federal or State time limits, if
the individual is hired within two years after the Federal or State
time limits made the family ineligible for family assistance.
(10) Long-term unemployment recipient
A qualified long-term unemployment recipient is an individual
certified by the designated local agency as being in a period of un-
employment which: (1) is 27 consecutive weeks or more; and (2) in-
cludes a period in which the individual was receiving unemploy-
ment compensation under State or Federal law.
Qualified wages
Generally, qualified wages are defined as cash wages paid by the
employer to a member of a targeted group. The employer’s deduc-
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tion for wages is reduced by the amount of the credit.202
202 Sec. 280C(a).
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71
For purposes of the credit, generally, wages are defined by ref-
erence to the Federal Unemployment Tax Act (FUTA) definition of
wages as contained in section 3306(b) of the Code (without regard
to the dollar limitation therein contained). Special rules apply in
the case of certain agricultural labor and certain railroad labor.
Calculation of the credit
The credit available to an employer for qualified wages paid to
members of all targeted groups except for long-term family assist-
ance recipients equals 40 percent (25 percent for employment of
400 hours or less) of qualified first-year wages. Generally, qualified
first-year wages are qualified wages (not in excess of $6,000) attrib-
utable to service rendered by a member of a targeted group during
the one-year period beginning with the day the individual began
work for the employer. Therefore, the maximum credit per em-
ployee is $2,400 (40 percent of the first $6,000 of qualified first-
year wages).
The general $6,000 limitation on qualified first-year wages is dif-
ferent for certain targeted groups: (1) qualified summer youth em-
ployees; (2) qualified veterans who are entitled to compensation for
a service connected disability, and who are hired within one year
of discharge; (3) qualified veterans who are entitled to compensa-
tion for a service connected disability, and who have been unem-
ployed for an aggregate of at least six months during the one year
period ending on the hiring date; (4) qualified veterans unemployed
for at least six months (whether or not consecutive) during the one-
year period ending on the date of hiring; and (5) long-term family
assistance recipients. The maximum credit (and limitation on
qualified wages) per employee for members of these the first four
of these groups are, respectively: (1) $1,200 (40 percent of the first
$3,000 of qualified first-year wages); (2) $4,800 (40 percent of the
first $12,000 of qualified first-year wages); (3) $9,600 (40 percent
of the first $24,000 of qualified first-year wages); and (4) $5,600 (40
percent of the first $14,000 of qualified first-year wages);
In the case of long-term family assistance recipients, the credit
equals 40 percent (25 percent for employment of 400 hours or less)
of $10,000 for qualified first-year wages and 50 percent of the first
$10,000 of qualified second-year wages. Generally, qualified second-
year wages are qualified wages (not in excess of $10,000) attrib-
utable to service rendered by a member of the long-term family as-
sistance category during the one-year period beginning on the day
after the one-year period beginning with the day the individual
began work for the employer. Therefore, the maximum credit per
employee is $9,000 (40 percent of the first $10,000 of qualified first-
year wages plus 50 percent of the first $10,000 of qualified second-
year wages). Except for long-term family assistance recipients, no
credit is allowed for second-year wages.
Certification rules
Generally, an individual is not treated as a member of a targeted
group unless: (1) on or before the day on which an individual be-
gins work for an employer, the employer has received a certifi-
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cation from a designated local agency that such individual is a
member of a targeted group; or (2) on or before the day an indi-
vidual is offered employment with the employer, a pre-screening
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72
notice is completed by the employer with respect to such individual,
and not later than the 28th day after the individual begins work
for the employer, the employer submits such notice, signed by the
employer and the individual under penalties of perjury, to the des-
ignated local agency as part of a written request for certification.
For these purposes, a pre-screening notice is a document (in such
form as the Secretary may prescribe) which contains information
provided by the individual on the basis of which the employer be-
lieves that the individual is a member of a targeted group.
An otherwise qualified unemployed veteran is treated as certified
by the designated local agency as having aggregate periods of un-
employment (whichever is applicable under the qualified veterans
rules described above) if such veteran is certified by such agency
as being in receipt of unemployment compensation under a State
or Federal law for such applicable periods. The Secretary of the
Treasury is authorized to provide alternative methods of certifi-
cation for unemployed veterans.
Minimum employment period
No credit is allowed for qualified wages paid to employees who
work less than 120 hours in the first year of employment.
Qualified tax-exempt organizations employing qualified veterans
The credit is not available to qualified tax-exempt organizations
other than those employing qualified veterans. If a qualified tax-
exempt organization employs a qualified veteran (as described
above) a tax credit against the FICA taxes of the organization is
allowed on the wages of the qualified veteran which are paid for
the veteran’s services in furtherance of the activities related to the
function or purpose constituting the basis of the organization’s ex-
emption under section 501.203
The credit available to such tax-exempt employer for qualified
wages paid to a qualified veteran equals 26 percent (16.25 percent
for employment of 400 hours or less) of qualified first-year wages.
The amount of qualified first-year wages eligible for the credit is
the same as those for non-tax-exempt employers (i.e., $6,000,
$12,000, $14,000 or $24,000, depending on the category of qualified
veteran).
A qualified tax-exempt organization means an employer that is
described in section 501(c) and exempt from tax under section
501(a).
The Social Security Trust Funds are held harmless from the ef-
fects of this provision by a transfer from the Treasury General
Fund.
Treatment of possessions
The VOW to Hire Heroes Act of 2011 (the ‘‘VOW Act’’) 204 pro-
vided a reimbursement mechanism for the U.S. possessions (Amer-
ican Samoa, Guam, the Commonwealth of the Northern Mariana
Islands, the Commonwealth of Puerto Rico, and the United States
Virgin Islands). The Secretary of the Treasury is to pay to each
mirror code possession (Guam, the Commonwealth of the Northern
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203 Sec. 3111(e).
204 Pub. L. No. 112–56.
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73
Mariana Islands, and the United States Virgin Islands) an amount
equal to the loss to that possession as a result of the VOW Act
changes to the qualified veterans rules.205 Similarly, the Secretary
of the Treasury is to pay to each non-mirror Code possession
(American Samoa and the Commonwealth of Puerto Rico) the
amount that the Secretary estimates as being equal to the loss to
that possession that would have occurred as a result of the VOW
Act changes if a mirror code tax system had been in effect in that
possession. The Secretary will make this payment to a non-mirror
Code possession only if that possession establishes to the satisfac-
tion of the Secretary that the possession has implemented (or, at
the discretion of the Secretary, will implement) an income tax ben-
efit that is substantially equivalent to the qualified veterans credit
allowed under the VOW Act modifications.
An employer that is allowed a credit against U.S. tax under the
VOW Act with respect to a qualified veteran must reduce the
amount of the credit claimed by the amount of any credit (or, in
the case of a non-mirror Code possession, another tax benefit) that
the employer claims against its possession income tax.
Other rules
The work opportunity tax credit is not allowed for wages paid to
a relative or dependent of the taxpayer. No credit is allowed for
wages paid to an individual who is a more than 50-percent owner
of the entity. Similarly, wages paid to replacement workers during
a strike or lockout are not eligible for the work opportunity tax
credit. Wages paid to any employee during any period for which the
employer received on-the-job training program payments with re-
spect to that employee are not eligible for the work opportunity tax
credit. The work opportunity tax credit generally is not allowed for
wages paid to individuals who had previously been employed by the
employer. In addition, many other technical rules apply.
The work opportunity tax credit is not available for individuals
who begin work for an employer after December 31, 2019.
REASONS FOR CHANGE
To further encourage employment of individuals in certain tar-
geted groups, the Committee believes that the work opportunity
tax credit should be extended.
EXPLANATION OF PROVISION
The provision extends for one year the work opportunity tax
credit making it available with respect to individuals who begin
work for an employer on or before December 31, 2020.
205 Prior to enactment of the VOW Act there were two categories of qualified veterans to
whom wages paid by an employer were eligible for the credit. Employers who hired veterans
who were eligible to receive assistance under a supplemental nutritional assistance program
were entitled to a maximum credit of 40 percent of $6,000 of qualified first-year wages paid to
such individual. Employers who hired veterans who were entitled to compensation for a service-
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connected disability were entitled to a maximum wage credit of 40 percent of $12,000 of quali-
fied first-year wages paid to such individual. The VOW Act expanded the work opportunity cred-
it with respect to qualified veterans resulting in the present-law treatment of qualified veterans
described above.
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74
EFFECTIVE DATE
The provision generally applies to individuals who begin work for
the employer after December 31, 2019.
4. CERTAIN PROVISIONS RELATED TO BEER, WINE, AND DISTILLED
SPIRITS (SEC. 144 OF THE BILL AND SECS. 263A, 5001, 5041, 5051, 5212,
5415, AND 5555 OF THE CODE)
Exemption for aging process of beer, wine, and distilled spirits
PRESENT LAW
The uniform capitalization (‘‘UNICAP’’) rules require certain di-
rect and indirect costs allocable to real property or tangible per-
sonal property produced by the taxpayer to be included in either
inventory or capitalized into the basis of such property, as applica-
ble.206 For real or personal property acquired by the taxpayer for
resale, section 263A generally requires certain direct and indirect
costs allocable to such property to be included in inventory.
In the case of interest expense, the uniform capitalization rules
apply only to interest paid or incurred during the property’s pro-
duction period 207 and that is allocable to property produced by the
taxpayer or acquired for resale which (1) is either real property or
property with a class life of at least 20 years, (2) has an estimated
production period exceeding two years, or (3) has an estimated pro-
duction period exceeding one year and a cost exceeding
$1,000,000.208 The production period with respect to any property
is the period beginning on the date on which production of the
property begins,209 and, except as described below, ending on the
date on which the property is ready to be placed in service or held
for sale.210
For interest costs paid or accrued after December 31, 2017, and
before January 1, 2020, the aging period for beer,211 wine,212 or
distilled spirits 213 is excluded from the production period as deter-
mined for purposes of the UNICAP interest capitalization rules.
Thus, producers of beer, wine, or distilled spirits (other than spirits
unfit for beverage purposes) are able to deduct interest expenses
(subject to any other applicable limitation) attributable to a shorter
production period that does not include the aging period of the
beer, wine, or distilled spirits. In the case of interest costs paid or
accrued after December 31, 2019, the production period as deter-
206 Sec. 263A.
207 See Treas. Reg. sec. 1.263A–12.
208 Sec. 263A(f).
209 In the case of tangible personal property, the production period begins on the first date
the taxpayer’s accumulated production expenditures, including planning and design expendi-
tures, are at least five percent of the taxpayer’s total estimated accumulated production expendi-
tures for the property unit. Treas. Reg. sec. 1.263A–12(c)(3). Thus, the production period may
begin before physical production activity has commenced. See Treas. Reg. sec. 1.263A–12(c)(3).
For example, in the case of the beer, wine, and distilled spirits industry, the production period
may include time spent planning and designing ingredients, production space, or production per-
sonnel.
210 Sec. 263A(f)(5)(B). The production period for a unit of property produced for sale ends on
the date that the unit is ready to be held for sale and all production activities reasonably ex-
pected to be undertaken by, or for, the taxpayer or a related person are complete. Treas. Reg.
sec. 1.263A–12(d)(1).
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211 As defined in section 5052(a).
212 As defined in section 5041(a).
213 As defined in section 5002(a)(8), except such spirits that are unfit for use for beverage pur-
poses.
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75
mined for purposes of the UNICAP interest capitalization rules will
include the aging period for beer, wine, or distilled spirits.
REASONS FOR CHANGE
The Committee believes that extending the exception to the in-
terest capitalization rules for the alcoholic beverage industry will
continue to simplify tax administration and taxpayer compli-
ance.214
EXPLANATION OF PROVISION
The provision extends for one year, through December 31, 2020,
the exclusion of the aging period for beer, wine, or distilled spirits
from the production period as determined for purposes of the
UNICAP interest capitalization rules.
EFFECTIVE DATE
The provision applies to interest costs paid or accrued after De-
cember 31, 2019.
REDUCED RATE OF EXCISE TAX ON BEER AND TRANSFER OF BEER
BETWEEN BONDED FACILITIES
PRESENT LAW
In general
Federal excise taxes are imposed at different rates on distilled
spirits, wine, and beer and are imposed on these products when
produced or imported. Generally, these excise taxes are adminis-
tered and enforced by the Alcohol and Tobacco Tax and Trade Bu-
reau (‘‘TTB’’), except the taxes on imported bottled distilled spirits,
wine, and beer are collected by the Customs and Border Protection
Bureau (the ‘‘CBP’’) of the Department of Homeland Security
(under delegation by the Secretary of the Treasury).
Liability for the excise tax on beer arises when the alcohol is pro-
duced or imported but is not payable until the beer is removed
from the brewery or customs custody for consumption or sale. Gen-
erally, beer may be transferred between commonly owned brew-
eries without payment of tax; however, tax liability follows these
products. Imported bulk beer may be released from customs cus-
tody without payment of tax and transferred in bond to a brewery,
which becomes liable for the tax on such beer. Beer may be ex-
ported without payment of tax and may be withdrawn from a brew-
ery without payment of tax or free of tax for certain authorized
uses, including industrial uses and non-beverage uses.215
Notwithstanding the current, temporary rates described below,
the rate of tax on beer is $18 per barrel (31 gallons).216 Small
brewers are eligible for a reduced tax rate of $7 per barrel on the
first 60,000 barrels of beer domestically produced and removed
each year.217 Small brewers are defined as brewers producing
214 Note that taxpayers in the alcoholic beverage industry that meet the $25 million gross re-
ceipts test of section 448(c) are exempt from all uniform capitalization rules under section 263A,
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including the interest capitalization rules. See sec. 263A(i).
215 Sec. 5053.
216 Sec. 5051.
217 Sec. 5051(a)(2).
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76
fewer than two million barrels of beer during a calendar year. The
lower rates for small producers reduce the effective per-gallon tax
rate from approximately 58 cents per gallon to approximately 22.6
cents per gallon for this beer.
In the case of a controlled group, the two million barrel limita-
tion for small brewers is applied to the controlled group, and the
60,000 barrels eligible for the reduced rate of tax, are apportioned
among the brewers who are component members of such group.
The term ‘‘controlled group’’ has the meaning assigned to it by sec-
tion 1563(a), except that the phrase ‘‘more than 50 percent’’ is sub-
stituted for the phrase ‘‘at least 80 percent’’ in each place it ap-
pears in section 1563(a).
Individuals may produce limited quantities of beer for personal
or family use without payment of tax during each calendar year.
The limit is 200 gallons per calendar year for households of two or
more adults and 100 gallons per calendar year for single-adult
households.
For calendar years 2018 and 2019, the rate of tax on beer is tem-
porarily lowered to $16 per barrel on the first six million barrels
brewed by the brewer or imported by the importer. In general, in
the case of a controlled group of brewers, the six million barrel lim-
itation is applied and apportioned at the level of the controlled
group. Beer brewed or imported in excess of the six million barrel
limit continues to be taxed at $18 per barrel. In the case of small
brewers, such brewers are taxed at a rate of $3.50 per barrel on
the first 60,000 barrels domestically produced, and $16 per barrel
on any further barrels produced.
Transfer rules and removals without tax
Certain removals or transfers of beer are exempt from tax. Beer
may be transferred without payment of the tax between bonded
premises under certain conditions specified in the regulations.218
The tax liability accompanies the beer that is transferred in bond.
However, beer may only be transferred without payment of tax be-
tween breweries if both breweries are owned by the same brewer.
The shared ownership requirement of section 5414 is temporarily
relaxed for calendar years 2018 and 2019. Thus, a brewer may
transfer beer from one brewery to another without payment of tax,
provided that: (1) the breweries are owned by the same person; (2)
one brewery owns a controlling interest in the other; (3) the same
person or persons have a controlling interest in both breweries; or
(4) the proprietors of the transferring and receiving premises are
independent of each other, and the transferor has divested itself of
all interest in the beer so transferred, and the transferee has ac-
cepted responsibility for payment of the tax.
For purposes of transferring the tax liability pursuant to (4)
above, such relief from liability is effective from the time of re-
moval from the transferor’s bonded premises, or from the time of
divestment, whichever is later.
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218 Sec. 5414.
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77
REASONS FOR CHANGE
The Committee believes that extending these provisions will con-
tinue to encourage growth and increased employment in the beer
industry.
EXPLANATION OF PROVISION
The provision extends for one year the temporary rate schedule
on beer.
The provision extends for one year the temporary rules regarding
shared ownership.
EFFECTIVE DATE
The provision to extend the temporary rate schedule applies to
beer removed after December 31, 2019.
The provision to extend the temporary rules regarding shared
ownership applies to calendar quarters beginning after December
31, 2019.
REDUCED RATE OF EXCISE TAX ON CERTAIN WINE, ADJUSTMENT OF
ALCOHOL CONTENT LEVEL FOR APPLICATION OF EXCISE TAXES, AND
DEFINITION OF MEAD AND LOW ALCOHOL BY VOLUME WINE
PRESENT LAW
In general
Excise taxes are imposed on wine according to the wine’s alcohol
content and carbonation levels. Notwithstanding temporary
changes to alcohol content allowances described below, the fol-
lowing table outlines the rates of tax on wine.
Tax (and Code Section) Tax Rates
Wines (sec. 5041)
‘‘Still wines’’ 219 not more than 14 percent alcohol .......................... $1.07 per wine gallon 220
‘‘Still wines’’ more than 14 percent, but not more than 21 percent, $1.57 per wine gallon
alcohol.
‘‘Still wines’’ more than 21 percent, but not more than 24 percent, $3.15 per wine gallon
alcohol.
‘‘Still wines’’ more than 24 percent alcohol ...................................... $13.50 per proof gallon (taxed as distilled spir-
its)
Champagne and other sparkling wines .............................................. $3.40 per wine gallon
Artificially carbonated wines ............................................................... $3.30 per wine gallon
Liability for the excise taxes on wine arises when the wine is pro-
duced or imported, but is not payable until the wine is removed
from the bonded wine cellar or winery, or from customs control, for
consumption or sale. Generally, bulk and bottled wine may be
transferred between bonded premises; however, the tax liability on
such wine becomes the responsibility of the transferee. Bulk nat-
ural wine may be released from customs custody without payment
of tax and transferred in bond to a winery. Wine may be exported
without payment of tax and may be withdrawn from a wine cellar
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219A ‘‘still wine’’ is a non-effervescent or minimally effervescent wine containing no more than
0.392 grams of carbon dioxide per hundred milliliters of wine. Champagne wine typically con-
tains more than twice that amount.
220A wine gallon is a U.S. liquid gallon.
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78
or winery without payment of tax or free of tax for certain author-
ized uses, including industrial uses and non-beverage uses.221
Credits and exemptions for certain wine producers
Notwithstanding the current temporary credits described below,
domestic wine producers having aggregate annual production not
exceeding 250,000 gallons (‘‘small domestic producers’’) receive a
credit against the wine excise tax equal to 90 cents per gallon (the
amount of a wine tax increase enacted in 1990) on the first 100,000
gallons of wine domestically produced and removed during a cal-
endar year.222 The credit is reduced (but not below zero) by one
percent for each 1,000 gallons produced in excess of 150,000 gal-
lons; the credit may not be applied to the tax liability on sparkling
wines. In the case of a controlled group, the 250,000 gallon limita-
tion for wineries is applied to the controlled group, and the 100,000
gallons eligible for the credit, are apportioned among the wineries
who are component members of such group. The term ‘‘controlled
group’’ has the meaning assigned to it by sec. 1563(a), except that
the phrase ‘‘more than 50 percent’’ is substituted for the phrase ‘‘at
least 80 percent’’ in each place it appears in sec 1563(a).
The credit against the wine excise tax for small domestic pro-
ducers is temporarily modified for calendar year 2018 and 2019 in
several ways. First, the 250,000 wine gallon domestic production
limitation is removed (thus making the credit available for all wine
producers and importers). Second, under the modifications, the
credit may be applied to the tax liability on sparkling wine. Third,
with respect to wine produced in, or imported into, the United
States during a calendar year, the credit amount is modified to (1)
$1.00 per wine gallon for the first 30,000 wine gallons of wine,
plus, (2) 90 cents per wine gallon on the next 100,000 wine gallons
of wine, plus (3) 53.5 cents per wine gallon on the next 620,000
wine gallons of wine.223 Finally, there is no phase-out of the credit
with additional production.
Other temporary changes
Alcohol-by-volume levels of the first two tiers of the excise tax on
wine are temporarily modified for calendar years 2018 and 2019,
by changing 14 percent to 16 percent. Thus, a wine producer or im-
porter may temporarily produce or import ‘‘still wine’’ that has an
alcohol-by-volume level of up to 16 percent and remain subject to
the lowest rate of $1.07 per wine gallon.
Mead and certain sparkling, low alcohol-by-volume wines are
temporarily designated to be taxed at the lowest rate applicable to
‘‘still wine,’’ $1.07 per wine gallon of wine for calendar years 2018
and 2019. Mead is defined as a wine that contains not more than
0.64 grams of carbon dioxide per hundred milliliters of wine,224
which is derived solely from honey and water, contains no fruit
product or fruit flavoring, and contains less than 8.5 percent alco-
hol-by-volume. The sparkling wines eligible to be taxed at the low-
est rate are those wines that contain more than 0.64 grams of car-
221 Sec. 5042.
222 Sec. 5041(c).
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223 The credit rate for hard cider is tiered at the same level of production or importation, but
is equal to 6.2 cents, 5.6 cents, and 3.3 cents, respectively.
224 The Secretary is authorized to prescribe tolerances to this limitation as may be reasonably
necessary in good commercial practice.
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79
bon dioxide per hundred milliliters of wine,225 which are derived
primarily from grapes or grape juice concentrate and water, which
contain no fruit flavoring other than grape, and which contain less
than 8.5 percent alcohol by volume.
REASONS FOR CHANGE
The Committee believes that extending these provisions will con-
tinue to encourage growth and increased employment in the wine
industry.
EXPLANATION OF PROVISION
The provision extends for one year the temporary modifications
to the credit against the wine excise tax.
The provision extends for one year the temporary modification to
the alcohol-by-volume levels for purposes of the excise tax.
The provision extends for one year the temporary rates on mead
and certain sparkling, low alcohol-by-volume wines.
EFFECTIVE DATE
The provisions apply to wine removed after December 31, 2019.
REDUCED RATE OF EXCISE TAX ON CERTAIN DISTILLED SPIRITS AND
BULK DISTILLED SPIRITS
PRESENT LAW
Notwithstanding the current, temporary rates described below,
distilled spirits are taxed at a rate of $13.50 per proof gallon.226 Li-
ability for the excise tax on distilled spirits arises when the alcohol
is produced or imported but is not determined and payable until
bottled distilled spirits are removed from the bonded premises of
the distilled spirits plant where they are produced, or customs cus-
tody. Generally, bulk distilled spirits may be transferred in bond
between bonded premises; however, tax liability follows these prod-
ucts. Imported bulk distilled spirits may be released from customs
custody without payment of tax and transferred in bond to a dis-
tillery. Distilled spirits be exported without payment of tax and
may be withdrawn from a distillery without payment of tax or free
of tax for certain authorized uses, including industrial uses and
non-beverage uses.
For calendar years 2018 and 2019, there is a temporary tax rate
schedule for distilled spirits based on annual quantity produced or
imported. The rate of tax is lowered to $2.70 per proof gallon on
the first 100,000 proof gallons of distilled spirits produced, $13.34
for all proof gallons in excess of that amount but below 22,130,000
proof gallons, and $13.50 for amounts thereafter. Rules prevent
members of the same controlled group from receiving the lower
rate on more than 100,000 proof gallons of distilled spirits. Addi-
tionally, importers of distilled spirits are eligible for the temporary
lower rates subject to documentation of the annual total production
of the producer.
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225 The Secretary is authorized to prescribe tolerances to this limitation as may be reasonably
necessary in good commercial practice.
226 Secs. 5001, 5006, 5043, and 5054.
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80
Additionally, for calendar years 2018 and 2019, distillers may
transfer spirits in bond in containers other than bulk containers
without payment of tax.
REASONS FOR CHANGE
The Committee believes that extending these provisions will con-
tinue to encourage growth and increased employment in the dis-
tilled spirits industry.
EXPLANATION OF PROVISION
The provision extends for one year the temporary rate schedule
on distilled spirits and the eligibility of that rate schedule for im-
porters.
The provision extends for one year the allowance for distillers to
transfer spirits in bond in containers other than bulk containers
without payment of tax.
EFFECTIVE DATE
The provision to extend the temporary rate schedule applies to
distilled spirits removed after December 31, 2019.
The provision to extend the allowance for distillers to transfer
spirits in bond in containers other than bulk containers without
payment of tax applies to distilled spirits transferred in bond after
December 31, 2019.
SIMPLIFICATION OF RULES REGARDING RECORDS, STATEMENTS, AND
RETURNS FOR CRAFT BEVERAGE MODERNIZATION AND TAX REFORM
PRESENT LAW
The Code requires those liable for taxation on alcoholic beverages
to keep such records, render such statements, make such returns,
and comply with such rules and regulations as prescribed by the
Secretary.227 For calendar quarters beginning after February 9,
2018, and before January 1, 2020, the Secretary shall permit a uni-
fied system for any records, statements, and returns required to be
kept, rendered, or made for any beer produced in a brewery for
which tax is imposed, including any beer which has been removed
for consumption on the premises of the brewery.
REASONS FOR CHANGE
The Committee believes that extending this provision will con-
tinue to simplify recordkeeping for brewers.
EXPLANATION OF PROVISION
The provision extends for one year the Secretary’s permission of
a unified system for any records, statements, and returns required
to be kept, rendered, or made for any beer produced in a brewery
for which tax is imposed, including any beer which has been re-
moved for consumption on the premises of the brewery.
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227 Sec. 5555(a).
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81
EFFECTIVE DATE
The provision applies to calendar quarters beginning December
31, 2019.
5. LOOK-THROUGH RULE FOR RELATED CONTROLLED FOREIGN
CORPORATIONS (SEC. 145 OF THE BILL AND SEC. 954(c)(6) OF THE CODE)
PRESENT LAW
In general
The rules of subpart F 228 require U.S. shareholders with a 10-
percent or greater interest in a controlled foreign corporation
(‘‘CFC’’) to include certain income of the CFC (referred to as ‘‘sub-
part F income’’) on a current basis for U.S. tax purposes.229
Subpart F income includes foreign base company income.230 One
category of foreign base company income is foreign personal hold-
ing company income, which includes passive income such as divi-
dends, interest, rents, and royalties, among other types of in-
come.231 There are several exceptions to these rules. For example,
foreign personal holding company income does not include divi-
dends and interest received by a CFC from a related corporation
organized and operating in the same foreign country in which the
CFC is organized, or rents and royalties received by a CFC from
a related corporation for the use of property within the country in
which the CFC is organized.232 Interest, rent, and royalty pay-
ments do not qualify for this exclusion to the extent that such pay-
ments reduce the subpart F income of the payor.
In addition, subpart F income of a CFC does not include any
item of income from sources within the United States that is effec-
tively connected with the conduct by such CFC of a trade or busi-
ness within the United States (‘‘ECI’’) unless such item is exempt
from taxation (or is subject to a reduced rate of tax) pursuant to
a tax treaty.233
The ‘‘CFC look-through’’ rule
Section 954(c)(6), colloquially referred to as the ‘‘CFC look-
through’’ rule, provides that dividends, interest (including factoring
income that is treated as equivalent to interest under section
954(c)(1)(E)), rents, and royalties received or accrued by one CFC
from a related CFC are not treated as foreign personal holding
company income to the extent attributable or properly allocable to
income of the payor that is neither subpart F income nor treated
as ECI. For this purpose, a related CFC is a CFC that controls or
is controlled by the other CFC, or a CFC that is controlled by the
same person or persons that control the other CFC. Ownership of
more than 50 percent of the CFC’s stock (by vote or value) con-
stitutes control for these purposes.
The Secretary is authorized to prescribe regulations that are nec-
essary or appropriate to carry out the look-through rule, including
228 Secs. 951–964.
229 Sec. 951(a).
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230 Secs. 952(a)(2) and 954.
231 Sec. 954(c)(1).
232 Sec. 954(c)(3).
233 Sec. 952(b).
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82
such regulations as may be necessary or appropriate to prevent the
abuse of the purposes of such rule.
The look-through rule applies to taxable years of foreign corpora-
tions beginning after December 31, 2005, and before January 1,
2020, and to taxable years of U.S. shareholders with or within
which such taxable years of foreign corporations end.234
REASONS FOR CHANGE
The Committee believes that the CFC look-through rule stream-
lines the financing of the overseas operations of U.S. multinational
companies by allowing the redeployment of active foreign earnings
of one CFC in a related CFC without the imposition of an income
inclusion under subpart F. Furthermore, the Committee believes
that not extending the CFC look-through rule would be a policy
change that would cause U.S. multinational companies to incur cer-
tain administrative and transaction costs in restructuring existing
and future financings of their overseas operations conducted
through CFCs. Finally, the CFC look-through rule prevents the af-
firmative use of related party transactions among related CFCs to
convert income that is not subpart F income of one CFC into sub-
part F income of a related CFC. Absent the CFC look-through rule,
such transactions in some cases may have the effect of reducing the
total U.S. tax payable on foreign earnings. Accordingly, the Com-
mittee believes that the CFC look-through rule should be extended.
EXPLANATION OF PROVISION
The provision extends for one year the application of the look-
through rule, to taxable years of foreign corporations beginning be-
fore January 1, 2021, and to taxable years of U.S. shareholders
with or within which such taxable years of foreign corporations
end.
EFFECTIVE DATE
The provision applies to taxable years of foreign corporations be-
ginning after December 31, 2019, and to taxable years of U.S.
shareholders with or within which such taxable years of foreign
corporations end.
6. CREDIT FOR HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS
(SEC. 146 OF THE BILL AND SEC. 35 OF THE CODE)
PRESENT LAW
Eligible coverage months
For months beginning before January 1, 2020, in the case of an
eligible individual, a refundable tax credit is provided for 72.5 per-
cent of the individual’s premiums for qualified health insurance of
the individual and qualifying family members for each eligible cov-
234 See section 144 of the Protecting Americans from Tax Hikes Act of 2015 (Division Q of
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Pub. L. No. 114–113), H.R. 2029 (the ‘‘PATH Act of 2015’’), which extended section 954(c)(6) for
five years. Congress has previously extended the application of section 954(c)(6) several times,
most recently in the Tax Increase Prevention Act of 2014, Pub. L. No. 113–295; Pub. L. No. 107–
147, sec. 614, 2002; Pub. L. No. 106–170, sec. 503, 1999; Pub. L. No. 105–277, 1998.
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83
erage month beginning in the taxable year.235 The credit is com-
monly referred to as the health coverage tax credit. The credit is
available only with respect to amounts paid by the individual for
qualified health insurance. Advance monthly payments paid di-
rectly to the health plan administrator are available.236
Eligibility for the credit is determined on a monthly basis. In
general, an eligible coverage month is any month if (1) the month
begins before January 1, 2020, and (2) as of the first day of the
month, the individual is an eligible individual, is covered by quali-
fied health insurance, the premium for which is paid by the indi-
vidual, does not have other specified coverage, and is not impris-
oned under Federal, State, or local authority. In the case of a joint
return, the eligibility requirements are met if at least one spouse
satisfies the requirements.
Eligible individuals
An eligible individual is an individual who is (1) an eligible
Trade Adjustment Assistance (‘‘TAA’’) recipient, (2) an eligible al-
ternative TAA recipient, or (3) an eligible Pension Benefit Guar-
anty Corporation (‘‘PBGC’’) pension recipient. In general, an indi-
vidual is an eligible TAA recipient for a month if the individual (1)
receives for any day of the month a trade readjustment allowance
under the Trade Act of 1974 or would be eligible to receive such
an allowance but for the requirement that the individual exhaust
unemployment benefits before being eligible to receive an allow-
ance and (2) with respect to such allowance, is covered under a re-
quired certification. An individual is an eligible alternative TAA re-
cipient for a month if the individual participates in a certain pro-
gram under the Trade Act of 1974 and receives a related benefit
for the month. Generally, an individual is an eligible PBGC pen-
sion recipient for any month if the individual (1) is age 55 or over
as of the first day of the month and (2) receives a benefit for the
month, any portion of which is paid by the PBGC. A person who
may be claimed as a dependent on another person’s tax return is
not an eligible individual. In addition, an otherwise eligible indi-
vidual is not eligible for the credit for a month if, as of the first
day of the month, the individual has certain specified coverage,
such as certain employer-provided coverage or coverage under cer-
tain governmental health programs.
Qualified health insurance
Qualified health insurance eligible for the credit is: (1) coverage
under a COBRA continuation provision; 237 (2) State-based continu-
ation coverage provided by the State under a State law that re-
quires such coverage; (3) coverage offered through a qualified State
high risk pool; (4) coverage under a health insurance program of-
fered to State employees or a comparable program; (5) coverage
through an arrangement entered into by a State and a group
health plan, an issuer of health insurance coverage, an adminis-
trator, or an employer; (6) coverage offered through a State ar-
235 Qualifying family members are the individual’s spouse and any dependent for whom the
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individual is entitled to claim a dependency exemption. Any individual who has certain specified
coverage is not a qualifying family member.
236 Sec. 7527.
237 COBRA continuation provision is defined by section 9832(d)(1).
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84
rangement with a private sector health care coverage purchasing
pool; (7) coverage under a State-operated health plan that does not
receive any Federal financial participation; (8) coverage under a
group health plan that is available through the employment of the
eligible individual’s spouse; (9) coverage under individual health in-
surance 238 (other than coverage purchased through an American
Health Benefit Exchange); 239 and (10) coverage under an employee
benefit plan funded by a voluntary employee beneficiary association
(‘‘VEBA’’) 240 established pursuant to an order of a bankruptcy
court (or by agreement with an authorized representative).241
Qualified health insurance does not include any State-based cov-
erage (i.e., coverage described in (2)–(7) in the preceding para-
graph) unless the State has elected to have such coverage treated
as qualified health insurance and such coverage meets certain con-
sumer-protection requirements.242 Such State coverage must pro-
vide that each qualifying individual is guaranteed enrollment if the
individual pays the premium for enrollment or provides a qualified
health insurance costs eligibility certificate and pays the remainder
of the premium. In addition, the State-based coverage cannot im-
pose any pre-existing condition limitation with respect to qualifying
individuals. State-based coverage cannot require a qualifying indi-
vidual to pay a premium or contribution that is greater than the
premium or contribution for a similarly situated individual who is
not a qualified individual. Finally, benefits under the State-based
coverage must be the same as (or substantially similar to) benefits
provided to similarly situated individuals who are not qualifying
individuals.
A qualifying individual for this purpose is an eligible individual
who seeks to enroll in the State-based coverage and who has aggre-
gate periods of creditable coverage 243 of three months or longer,
does not have other specified coverage, and is not imprisoned. How-
ever, State-based coverage that satisfies any or all of the consumer-
protection requirements for State-based coverage with respect to all
eligible individuals is also qualified health insurance for purposes
of the health coverage tax credit.244
Qualified health insurance does not include coverage under a
flexible spending or similar arrangement or any insurance if sub-
stantially all of the coverage is for excepted benefits.
REASONS FOR CHANGE
The Committee believes that the health coverage tax credit
should be extended for 12 months, through 2020, so that health
coverage continues to be affordable for eligible TAA recipients, al-
ternative TAA recipients, and PBGC recipients.
238 For this purpose, ‘‘individual health insurance’’ means any insurance that constitutes med-
ical care offered to individuals other than in connection with a group health plan. Such term
does not include Federal- or State-based health insurance coverage.
239 The premium assistance credit is provided for eligible individuals and families who pur-
chase health insurance through an American Health Benefit Exchange. See sec. 36B.
240 See section 501(c)(9) for the definition of a VEBA.
241 See 11 U.S.C. sec. 1114.
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242 For guidance on how a State elects a health program to be qualified health insurance for
purposes of the credit, see Rev. Proc. 2004–12, 2004–1 C.B. 528.
243 Creditable coverage is determined under section 9801(c).
244 See Q&A–10 of Notice 2005–50, 2005–2 C.B. 14.
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85
EXPLANATION OF PROVISION
The provision extends the availability of the health coverage tax
credit for 12 months, by amending the definition of eligible cov-
erage month to include months beginning before January 1, 2021,
if the requirements for an eligible coverage month are otherwise
met.
EFFECTIVE DATE
The provision is effective for months beginning after December
31, 2019.
TITLE II—ESTATE AND GIFT TAX
1. REDUCTION OF UNIFIED CREDIT AGAINST ESTATE TAX (SEC. 201 OF
THE BILL AND SEC. 2010 OF THE CODE)
PRESENT LAW
In general
A gift tax is imposed on certain lifetime transfers, and an estate
tax is imposed on certain transfers at death. A generation-skipping
transfer tax generally is imposed on transfers, either directly or in
trust or similar arrangement, to a ‘‘skip person’’ (i.e., a beneficiary
in a generation more than one generation younger than that of the
transferor). Transfers subject to the generation-skipping transfer
tax include direct skips, taxable terminations, and taxable distribu-
tions.
Income tax rules determine the recipient’s tax basis in property
acquired from a decedent or by gift. Gifts and bequests generally
are excluded from the recipient’s gross income.245
Unified credit (exemption) and tax rates
Unified credit
A unified credit is available with respect to taxable transfers by
gift and at death.246 The unified credit offsets tax, computed using
the applicable estate and gift tax rates, on a specified amount of
transfers, referred to as the applicable exclusion amount, or exemp-
tion amount. Exemption used during life to offset taxable gifts re-
duces the amount of exemption that remains at death to offset the
value of a decedent’s estate. An election is available under which
exemption that is not used by a decedent may be used by the dece-
dent’s surviving spouse (exemption portability).
For decedents dying and gifts made before January 1, 2018, the
basic exclusion amount that is used to determine the unified credit
is $5 million, indexed for inflation occurring after 2011. Public Law
115–97, however, temporarily increases the basic exclusion amount
for estates of decedents dying and gifts made after December 31,
2017 and before January 1, 2026. This is accomplished by doubling
the basic exclusion amount provided in section 2010(c)(3) of the
Code from $5 million to $10 million. The $10 million amount is in-
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245 Sec. 102.
246 Sec. 2010.
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86
dexed for inflation occurring after 2011. For 2019, the basic exclu-
sion amount is $11,400,000.247
The temporary increase in the basic exclusion amount expires for
decedents dying and gifts made after December 31, 2025. At that
time, the basic exclusion amount returns to $5 million, indexed for
inflation occurring after 2011.
Common tax rate table
A common tax-rate table with a top marginal tax rate of 40 per-
cent is used to compute gift tax and estate tax. The 40-percent rate
applies to transfers in excess of $1 million (to the extent not ex-
empt). Because the 2019 exemption amount shields the first $11.4
million in gifts and bequests from tax, transfers in excess of the ex-
emption amount generally are subject to tax at the highest mar-
ginal rate (40 percent).
Generation-skipping transfer tax exemption and rate
The generation-skipping transfer tax is a separate tax that can
apply in addition to either the gift tax or the estate tax. The tax
rate and exemption amount for generation-skipping transfer tax
purposes, however, are set by reference to the estate tax rules.
Generation-skipping transfer tax is imposed using a flat rate equal
to the highest estate tax rate (40 percent). Tax is imposed on cu-
mulative generation-skipping transfers in excess of the generation-
skipping transfer tax exemption amount in effect for the year of the
transfer. The generation-skipping transfer tax exemption for a
given year is equal to the estate tax exemption amount in effect for
that year ($11.4 million for 2019).
REASONS FOR CHANGE
The Committee believes that it is appropriate to return to the
pre-Public Law 115–97 basic exclusion amount in order to require
the wealthiest estates to pay their fair share, without increasing
the tax burden on lower- or middle-income Americans.
EXPLANATION OF PROVISION
The provision accelerates by three years the expiration of the in-
crease in the estate and gift tax exemption. As a result, the basic
exclusion amount returns to $5 million (indexed for inflation occur-
ring after 2011) for decedents dying and gifts made after December
31, 2022.
247 Rev. Proc. 2018–57, 2018–49 I.R.B. 827, p. 835 (December 3, 2018). As a conforming
amendment to the increase in the basic exclusion amount, Public Law 115–97 also amends sec-
tion 2001(g) (regarding computation of estate tax). This conforming amendment, which was en-
acted as a permanent provision, provides that the Secretary shall prescribe regulations as may
be necessary or appropriate to carry out the purposes of section 2001 with respect to differences
between the basic exclusion amount in effect at the time of the decedent’s death and at the time
of any gifts made by the decedent. The purpose of the regulatory authority is to address the
computation of the estate tax where (1) a decedent dies in a year in which the basic exclusion
amount is lower than the basic exclusion amount that was in effect when the decedent made
taxable gifts during his or her life, and (2) such taxable gifts exceeded the basic exclusion
amount in effect at the time of the decedent’s death. Because the temporary increase in the
basic exclusion amount under Public Law 115–97 does not apply for estates of decedents dying
after December 31, 2025, it was expected that such guidance would prevent the estate tax com-
putation under section 2001(g) from recapturing, or ‘‘clawing back,’’ all or a portion of the benefit
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of the increased basic exclusion amount used to offset gift tax for certain decedents who make
large taxable gifts between January 1, 2018, and December 31, 2025, and die after December
31, 2025. In November 2018, the IRS issued proposed regulations pursuant to this regulatory
authority. See REG–106706–18, 26 C.F.R. Part 20 (November 23, 2018).
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87
EFFECTIVE DATE
The provision is effective for estates of decedents dying and gifts
made after December 31, 2022.
TITLE III—DISASTER TAX RELIEF
1. DEFINITIONS (SEC. 301 OF THE BILL)
The provisions below provide temporary tax relief to those areas
affected by certain major disasters declared in 2018 and some por-
tion of 2019. The provisions use the terms ‘‘qualified disaster area,’’
‘‘qualified disaster zone,’’ ‘‘qualified disaster,’’ and ‘‘incident period.’’
As used in the bill, ‘‘qualified disaster area’’ refers to an area with
respect to which a major disaster has been declared by the Presi-
dent during the period beginning on January 1, 2018, and ending
on the date which is 60 days after the date of enactment of the bill,
under section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (the ‘‘Stafford Act’’), if the incident pe-
riod of the disaster with respect to which such declaration is made
begins on or before the date of the enactment of the bill. However,
the ‘‘California wildfire disaster area,’’ as defined in the Bipartisan
Budget Act of 2018,248 is not a qualified disaster area. A ‘‘qualified
disaster zone’’ refers to that portion of the applicable ‘‘qualified dis-
aster area,’’ as described above, which has been determined by the
President to warrant individual or individual and public assistance
from the Federal government under the Stafford Act by reason of
the applicable qualified disaster. A ‘‘qualified disaster’’ means, with
respect to the applicable qualified disaster area, the disaster by
reason of which a major disaster was declared with respect to such
area. ‘‘Incident period’’ means, with respect to the applicable quali-
fied disaster, the period specified by the Federal Emergency Man-
agement Agency as the period during which such disaster occurred,
except that such period shall not be treated as beginning before
January 1, 2018, or ending after the date which is 30 days after
the date of enactment of this bill.
2. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS
(SEC. 302 OF THE BILL AND SEC. 72 OF THE CODE)
PRESENT LAW
Distributions from tax-favored retirement plans
A distribution from a qualified retirement plan, a tax-sheltered
annuity plan (a ‘‘section 403(b) plan’’), an eligible deferred com-
pensation plan of a State or local government employer (a ‘‘govern-
mental section 457(b) plan’’), or an individual retirement arrange-
ment (an ‘‘IRA’’) generally is included in income for the year dis-
tributed.249 These plans are referred to collectively as ‘‘eligible re-
tirement plans.’’ In addition, unless an exception applies, a dis-
tribution from a qualified retirement plan, a section 403(b) plan, or
an IRA received before age 591⁄2 is subject to a 10-percent addi-
248 Pub. L. No. 115–123, sec. 20102.
249 Secs. 401(a), 403(a), 403(b), 457(b) and 408. Under section 3405, distributions from these
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plans are generally subject to income tax withholding unless the recipient elects otherwise. In
addition, certain distributions from a qualified retirement plan, a section 403(b) plan, or a gov-
ernmental section 457(b) plan are subject to mandatory income tax withholding at a 20-percent
rate unless the distribution is rolled over.
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88
tional tax (referred to as the ‘‘early withdrawal tax’’) on the amount
includible in income.250
In general, a distribution from an eligible retirement plan may
be rolled over to another eligible retirement plan within 60 days,
in which case the amount rolled over generally is not includible in
income. The IRS has the authority to waive the 60-day requirement
if failure to waive the requirement would be against equity or good
conscience, including cases of casualty, disaster, or other events be-
yond the reasonable control of the individual.
The terms of a qualified retirement plan, section 403(b) plan, or
governmental section 457(b) plan generally determine when dis-
tributions are permitted. However, in some cases, restrictions may
apply to distributions before an employee’s termination of employ-
ment, referred to as ‘‘in-service’’ distributions. Despite such restric-
tions, an in-service distribution may be permitted in the case of fi-
nancial hardship or an unforeseeable emergency.
Loans from tax-favored retirement plans
Employer-sponsored retirement plans may provide loans to par-
ticipants. Unless the loan satisfies certain requirements in both
form and operation, the amount of a retirement plan loan is a
deemed distribution from the retirement plan. Among the require-
ments that the loan must satisfy are that the loan amount must
not exceed the lesser of 50 percent of the participant’s account bal-
ance or $50,000 (generally taking into account outstanding bal-
ances of previous loans), and the loan’s terms must provide for a
repayment period of not more than five years (except for a loan
specifically to purchase a home) and for level amortization of loan
payments to be made not less frequently than quarterly.251 Thus,
if an employee stops making payments on a loan before the loan
is repaid, a deemed distribution of the outstanding loan balance
generally occurs. A deemed distribution of an unpaid loan balance
is generally taxed as though an actual distribution occurred, in-
cluding being subject to a 10-percent early distribution tax, if appli-
cable. A deemed distribution is not eligible for rollover to another
eligible retirement plan. Subject to the limit on the amount of
loans, which precludes any additional loan that would cause the
limit to be exceeded, the rules relating to loans do not limit the
number of loans an employee may obtain from a plan.
Tax-favored retirement plan compliance
Tax-favored retirement plans are generally required to be oper-
ated in accordance with the terms of the plan document, and
amendments to reflect changes to the plan generally must be
adopted within a limited period.
REASONS FOR CHANGE
When a disaster occurs, taxpayers living or working in the af-
fected areas may experience damage to their homes and personal
property, in some cases significant. As a result, they may need ac-
cess to their financial resources to recover from the consequences
of such events to repair such damage and to pay for immediate liv-
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250 Sec. 72(t). Under present law, the 10-percent early withdrawal tax does not apply to dis-
tributions from a governmental section 457(b) plan.
251 Sec. 72(p).
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89
ing expenses. The Committee believes that when a major Federal
disaster is declared under the Stafford Act, affected taxpayers of
qualified disasters should be able to take distributions or loans
from their retirement accounts for such purposes.
EXPLANATION OF PROVISION
Distributions and recontributions
Under the provision, an exception to the 10-percent early with-
drawal tax applies in the case of ‘‘qualified disaster distributions’’’
from a qualified retirement plan, a section 403(b) plan, or an IRA.
In addition, as discussed further, income attributable to a qualified
disaster distribution may be included in income ratably over three
years, and the amount of a qualified disaster distribution may be
recontributed to an eligible retirement plan within three years.
A ‘‘qualified disaster distribution’’ is any distribution from a
qualified retirement plan, section 403(b) plan, or governmental sec-
tion 457(b) plan, made on or after the first day of the incident pe-
riod of a qualified disaster and before the date which is 180 days
after the date of enactment, to an individual whose principal place
of abode at any time during the incident period is located in the
qualified disaster area and who has sustained an economic loss by
reason of such disaster, regardless of whether a distribution other-
wise would be permissible.252
A plan is not treated as violating any Code requirement merely
because it treats a distribution as a qualified disaster distribution,
provided that the aggregate amount of such distributions from
plans maintained by the employer and members of the employer’s
controlled group or affiliated service group does not exceed
$100,000 for each qualified disaster. The total amount of distribu-
tions to an individual from all eligible retirement plans that may
be treated as qualified disaster distributions with respect to each
qualified disaster is $100,000. Thus, a plan is not treated as vio-
lating any Code requirement merely because an individual might
receive total distributions in excess of $100,000, taking into account
distributions from plans of other employers or IRAs, or because an
individual may have been affected by more than one qualified dis-
aster.
Any amount required to be included in income as a result of a
qualified disaster distribution is included in income ratably over
the three-year period beginning with the year of distribution unless
the individual elects not to have ratable inclusion apply.
Any portion of a qualified disaster distribution may, at any time
during the three-year period beginning the day after the date on
which the distribution was received, be recontributed to an eligible
retirement plan to which a rollover can be made. Any amount re-
contributed within the three-year period is treated as a rollover
and thus is not includible in income. For example, if an individual
receives a qualified disaster distribution in 2019, that amount is in-
cluded in income, generally ratably over the year of the distribution
and the following two years but is not subject to the 10-percent
early withdrawal tax. If, in 2021, the amount of the qualified dis-
aster distribution is recontributed to an eligible retirement plan,
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252 A qualified disaster distribution is subject to income tax withholding unless the recipient
elects otherwise. Mandatory 20-percent withholding does not apply.
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90
the individual may file an amended return to claim a refund of the
tax attributable to the amount previously included in income. In
addition, if, under the ratable inclusion provision, a portion of the
distribution has not yet been included in income at the time of the
contribution, the remaining amount is not includible in income.
Recontributions of withdrawals for purchase of a home
Any individual who received a qualified disaster distribution 253
during the period beginning on the date which is 180 days before
the first day of the incident period of the qualified disaster and
ending on the date which is 30 days after the last day of such inci-
dent period, which was to be used to purchase or construct a prin-
cipal residence in a qualified disaster area, but which was not so
purchased or constructed on account of the qualified disaster, may,
during the ‘‘applicable period,’’ make one or more contributions in
an aggregate amount not to exceed the amount of such qualified
distribution to an eligible retirement plan of which such individual
is a beneficiary and to which a rollover contribution of such dis-
tribution could be made.254 The ‘‘applicable period’’ is, in the case
of a principal residence in a qualified disaster area with respect to
any qualified disaster, the period beginning on the first day of the
incident period of such qualified disaster and ending on the date
which is 180 days after the date of enactment. A plan is not treated
as violating any Code requirement merely because it repays such
distributions as provided above, provided that the aggregate
amount of such repayments from plans maintained by the employer
and members of the employer’s controlled group or affiliated service
group does not exceed $100,000.
Loans
In the case of a ‘‘qualified individual’’ who obtained a loan from
a qualified employer plan 255 made during the 180-day period be-
ginning on the date of enactment, in lieu of the permitted max-
imum loan amount as the lesser of 50 percent of the participant’s
account balance or $50,000, the permitted maximum loan amount
is the lesser of ‘‘the present value of the nonforfeitable accrued ben-
efit of the employee under the plan’’ (rather than ‘‘one-half of the
present value of the nonforfeitable accrued benefit of the employee
under the plan’’) or $100,000, and the loan is not treated as a dis-
tribution.256 For this purpose, a ‘‘qualified individual’’ is an indi-
vidual whose principal place of abode, during any portion of the in-
cident period of any qualified disaster, was located in the qualified
disaster area and who sustained an economic loss by reason of the
qualified disaster.
In the case of such a qualified individual (with respect to a quali-
fied disaster) with an outstanding loan (on or after the first day of
the incident period of such qualified disaster), from a qualified em-
ployer plan, if the due date for any repayment with respect to such
a loan 257 occurs during the period beginning on the first day of the
incident period of such qualified disaster and ending on the date
253 As described in sections 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such dis-
tribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F).
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254 Under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may be.
255 As defined under section 72(p)(4).
256 See section 72(p)(2)(A).
257 See section 72(p)(2).
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91
which is 180 days after the last day of such incident period, the
due date is delayed for one year (or, if later, until the date which
is 180 days after the date of enactment) and any subsequent repay-
ments will be appropriately adjusted to reflect the delay in any re-
payment date noted above and any interest accruing during such
delay, but the repayment delay is disregarded in determining the
5-year period and the term of the loan.258
Plan amendments
A plan amendment made pursuant to the provision (or a regula-
tion issued thereunder) may be retroactively effective if, in addition
to the requirements described below, the amendment is made on or
before the last day of the first plan year beginning after January
1, 2020 (or in the case of a governmental plan, January 1, 2022),
or a later date prescribed by the Secretary. In addition, the plan
is treated as operated in accordance with plan terms during the pe-
riod beginning with the date the provision or regulation takes ef-
fect (or the date specified by the plan if the amendment is not re-
quired by the provision or regulation) and ending on the last per-
missible date for the amendment (or, if earlier, the date the amend-
ment is adopted). For an amendment to be retroactively effective,
it must apply retroactively for that period, and the plan must be
operated in accordance with the amendment during that period.
EFFECTIVE DATE
The provision is effective on the date of enactment.
3. DISASTER RELATED EMPLOYMENT RELIEF (SEC. 303 OF THE BILL AND
SEC. 38 OF THE CODE)
PRESENT LAW
The Code provides an employer credit for employers affected by
Hurricane Katrina, Hurricane Rita, and Hurricane Wilma,259 for
employers affected by Hurricane Harvey, Hurricane Irma, and
Hurricane Maria,260 and for employers affected by certain Cali-
fornia wildfires for which a major disaster had been declared by
the President between January 1, 2017, through January 18, 2018.
There is not a generally applicable employer tax credit for wages
paid in connection with other disaster areas.
REASONS FOR CHANGE
The Committee desires to provide targeted relief to employers af-
fected by qualified disasters in order to encourage them to retain
their workforce, both to assist in the employer’s recovery and so
that the employees dealing with the hardship of a disaster may
continue to receive salaries.
258 Under section 72(p)(2)(B) or (C).
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259 Sec. 1400R. This provision was repealed by the Consolidated Appropriations Act, Pub L.
No. 115–141, sec. 401(d)(6)(A).
260 Section 503 of the Disaster Tax Relief and Airport and Airway Extension Act of 2017, Pub.
L. No. 115–63.
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EXPLANATION OF PROVISION
The provision provides a credit of 40 percent of the qualified
wages (up to a maximum of $6,000 in qualified wages per em-
ployee) paid by an eligible employer to an eligible employee.
An eligible employer is any employer that (1) conducted an active
trade or business in a qualified disaster zone at any time during
the applicable incident period of the applicable qualified disaster
with respect to such qualified disaster zone and (2) with respect to
which the trade or business described in (1) is inoperable on any
day during the period beginning on the first day of the applicable
incident period of the applicable qualified disaster and ending on
the date of the enactment of this bill, as a result of damage sus-
tained by reason of the applicable qualified disaster.
An eligible employee is, with respect to an eligible employer, an
employee whose principal place of employment, determined imme-
diately before the applicable qualified disaster, with such eligible
employer was in the applicable qualified disaster zone. An em-
ployee may not be treated as an eligible employee for any period
with respect to an employer if such employer is allowed a credit
under section 51, the work opportunity credit, with respect to the
employee for the period.
Qualified wages are wages (as defined in section 51(c)(1) of the
Code, but without regard to section 3306(b)(2)(B) of the Code) paid
or incurred by an eligible employer with respect to an eligible em-
ployee during the period (1) beginning on the date on which the
trade or business first became inoperable at the principal place of
employment of the employee immediately before the applicable
qualified disaster and (2) ending on the earlier of (i) the date on
which such trade or business has resumed significant operations at
such principal place of employment or (ii) the date which is 150
days after the last day of the applicable incident period. Qualified
wages include wages paid without regard to whether the employee
performs no services, performs services at a different place of em-
ployment than such principal place of employment, or performs
services at such principal place of employment before significant
operations have resumed.
The credit is treated as a current year business credit under sec-
tion 38(b) and therefore is subject to the tax liability limitations of
section 38(c). Rules similar to sections 51(i)(1), 52, and 280C(a)
apply to the credit.
EFFECTIVE DATE
The provision is effective on the date of enactment.
4. TEMPORARY SUSPENSION OF LIMITATION ON CHARITABLE
CONTRIBUTIONS (SEC. 304(a) OF THE BILL AND SEC. 170 OF THE CODE)
PRESENT LAW
In general
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In general, an income tax deduction is permitted for charitable
contributions, subject to certain limitations that depend on the type
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93
of taxpayer, the property contributed, and the donee organiza-
tion.261
Charitable contributions of cash are deductible in the amount
contributed. In general, contributions of capital gain property to a
qualified charity are deductible at fair market value with certain
exceptions. Capital gain property means any capital asset or prop-
erty used in the taxpayer’s trade or business the sale of which at
its fair market value, at the time of contribution, would have re-
sulted in gain that would have been long-term capital gain. Con-
tributions of other appreciated property generally are deductible at
the donor’s basis in the property. Contributions of depreciated
property generally are deductible at the fair market value of the
property.
Percentage limitations
Contributions by individuals
For individuals, in any taxable year, the amount deductible as a
charitable contribution is limited to a percentage of the taxpayer’s
contribution base. The applicable percentage of the contribution
base varies depending on the type of donee organization and prop-
erty contributed. The contribution base is defined as the taxpayer’s
adjusted gross income computed without regard to any net oper-
ating loss carryback.
Contributions by an individual taxpayer of property (other than
appreciated capital gain property) to a charitable organization de-
scribed in section 170(b)(1)(A) (e.g., public charities, private founda-
tions other than private non-operating foundations, and certain
governmental units) may not exceed 50 percent of the taxpayer’s
contribution base. Contributions of this type of property to nonop-
erating private foundations and certain other organizations gen-
erally may be deducted up to 30 percent of the taxpayer’s contribu-
tion base.
For contributions taken into account for taxable years beginning
after December 31, 2017 and before January 1, 2026, section
170(b)(1)(G) increases the percentage limit for contributions by an
individual taxpayer of cash to an organization described in section
170(b)(1)(A) to 60 percent. The 60-percent limit does not apply to
noncash contributions. The 60-percent limit is intended to be ap-
plied after, and reduced by, the amount of noncash contributions
to organizations described in section 170(b)(1)(A).
Contributions of appreciated capital gain property to charitable
organizations described in section 170(b)(1)(A) generally are de-
ductible up to 30 percent of the taxpayer’s contribution base. An in-
dividual may elect, however, to bring all these contributions of ap-
preciated capital gain property for a taxable year within the 50-
percent limitation category by reducing the amount of the contribu-
tion deduction by the amount of the appreciation in the capital
gain property. Contributions of appreciated capital gain property to
charitable organizations described in section 170(b)(1)(B) (e.g., pri-
vate nonoperating foundations) are deductible up to 20 percent of
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the taxpayer’s contribution base.
261 Sec. 170.
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94
Contributions by corporations
For corporations, in any taxable year, charitable contributions
are not deductible to the extent the aggregate contributions exceed
10 percent of the corporation’s taxable income computed without
regard to net operating loss or capital loss carrybacks.
For purposes of determining whether a corporation’s aggregate
charitable contributions in a taxable year exceed the applicable
percentage limitation, contributions of capital gain property are
taken into account after other charitable contributions.
Carryforward of excess contributions
Charitable contributions that exceed the applicable percentage
limitation may be carried forward for up to five years.262 The
amount that may be carried forward from a taxable year (‘‘con-
tribution year’’) to a succeeding taxable year may not exceed the
applicable percentage of the contribution base for the succeeding
taxable year less the sum of contributions made in the succeeding
taxable year plus contributions made in taxable years prior to the
contribution year and treated as paid in the succeeding taxable
year under this provision.
REASONS FOR CHANGE
Charities play a critical role in providing relief to citizens and
communities that are affected by natural disasters. The Committee
believes it is important to ensure that charities have sufficient re-
sources to provide such relief by encouraging taxpayers to donate
to charities that are on the front lines of providing disaster relief.
The provision furthers this goal by suspending the charitable per-
centage limits for certain charitable contributions to public char-
ities of cash that will be used to provide disaster relief.
EXPLANATION OF PROVISION
Under the provision, in the case of an individual, the deduction
for qualified contributions is allowed up to the amount by which
the taxpayer’s contribution base exceeds the deduction for other
charitable contributions. Contributions in excess of this amount are
carried over to succeeding taxable years as contributions described
in section 170(b)(1)(G)(ii) (generally relating to cash contributions
to public charities).
In the case of a corporation, the deduction for qualified contribu-
tions is allowed up to the amount by which the corporation’s tax-
able income (as computed under section 170(b)(2)) exceeds the de-
duction for other charitable contributions. Contributions in excess
of this amount are carried over to succeeding taxable years, subject
to the limitations of section 170(d)(2).
In applying subsections (b) and (d) of section 170 to determine
the deduction for other contributions, qualified contributions are
not taken into account (except to the extent qualified contributions
are carried over to succeeding taxable years under the rules de-
scribed above).
Qualified contributions are cash contributions paid during the
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period beginning on January 1, 2018, and ending on the date which
262 Sec. 170(d).
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95
is 60 days after the date of enactment, to a charitable organization
described in section 170(b)(1)(A), other than contributions to (i) a
supporting organization described in section 509(a)(3) or (ii) for the
establishment of a new, or maintenance of an existing, donor ad-
vised fund (as defined in section 4966(d)(2)). Contributions of
noncash property, such as securities, are not qualified contribu-
tions. Under the provision, qualified contributions must be to an or-
ganization described in section 170(b)(1)(A); thus, contributions to,
for example, a charitable remainder trust generally are not quali-
fied contributions, unless the charitable remainder interest is paid
in cash to an eligible charity during the applicable time period.
Qualified contributions must be made for relief efforts in one or
more qualified disaster areas. Taxpayers must substantiate that
the contribution is made for this purpose. A taxpayer must elect to
have the contributions treated as qualified contributions.
EFFECTIVE DATE
The provision is effective on the date of enactment.
5. SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CAS-
UALTY LOSSES (SEC. 304(b) OF THE BILL AND SEC. 165 OF THE CODE)
PRESENT LAW
An individual taxpayer may claim an itemized deduction for a
personal casualty loss only if such loss was attributable to a dis-
aster declared by the President under section 401 of the Stafford
Act.263 All other personal casualty losses are deductible only to the
extent that such losses do not exceed the individual’s personal cas-
ualty gains. Personal casualty losses are deductible only if they ex-
ceed $100 per casualty. In addition, aggregate net losses are de-
ductible only to the extent they exceed 10 percent of the individual
taxpayer’s adjusted gross income.
REASONS FOR CHANGE
The Committee believes that allowing taxpayers in qualified dis-
aster areas a greater ability to take a personal casualty loss will
assist in the taxpayers in recovering from the hardship caused by
the applicable disaster.
EXPLANATION OF PROVISION
Under the provision, in the case of a personal casualty loss which
arose in a qualified disaster area on or after the first day of the
incident period of the applicable qualified disaster and which were
attributable to such qualified disaster, such losses are deductible
without regard to whether aggregate net losses exceed 10 percent
of a taxpayer’s adjusted gross income. In order to be deductible,
however, such losses must exceed $500 per casualty. Finally, such
losses may be claimed in addition to the standard deduction and
may be claimed by tax payers subject to the alternative minimum
tax.
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263 165(h)(5).
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EFFECTIVE DATE
The provision is effective on the date of enactment.
6. SPECIAL RULE FOR DETERMINING EARNED INCOME (SEC. 304(c) OF
THE BILL AND SECS. 24 AND 32 OF THE CODE)
PRESENT LAW
The Code provides eligible taxpayers with an earned income tax
credit and a child credit. In general, the earned income tax credit
is a refundable credit for low-income workers.264 The amount of the
credit depends on the earned income of the taxpayer and whether
the taxpayer has one, more than one, or no qualifying children.
Earned income generally includes wages, salaries, tips, and other
employee compensation, plus net earnings from self-employment.
Taxpayers with incomes below certain threshold amounts are eli-
gible for a $2,000 credit for each qualifying child.265 In some cir-
cumstances, all or a portion of the otherwise allowable credit is
treated as a refundable credit (the ‘‘additional child tax credit’’).
Generally, the amount of the additional child tax credit equals 15
percent of the taxpayer’s earned income in excess of $2,500, capped
at $1,400 (indexed for inflation).
REASONS FOR CHANGE
A qualified disaster may negatively affect taxpayers eligible to
claim the earned income tax credit or child tax credit by tempo-
rarily preventing them from working, causing a loss in earned in-
come. This could reduce the amount of such taxpayers’ credits,
through no fault of their own, during a time when they are suf-
fering the hardship associated with recovering from disasters. The
Committee believes that allowing such taxpayers to use prior year
earned income for purposes of these credits is reasonable, just, and
will aid in disaster recovery.
EXPLANATION OF PROVISION
In general
The provision permits qualified individuals to elect to calculate
their earned income tax credit and additional child tax credit for
an applicable taxable year using their earned income from the prior
taxable year. Qualified individuals are permitted to make the elec-
tion with respect to an applicable taxable year only if their earned
income for such taxable year is less than their earned income for
the preceding taxable year.
Qualified individuals are (1) individuals who, at any time during
the incident period of a qualified disaster, had their principal place
of abode in the applicable qualified disaster zone, or (2) individuals
who during any portion of such incident period were not in the ap-
plicable qualified disaster zone but whose principal place of abode
was in the applicable qualified disaster area and were displaced
from such principal place of abode by reason of the qualified dis-
aster. An applicable taxable year is any taxable year which in-
cludes any portion of the incident period of a qualified disaster.
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264 Sec. 32.
265 Sec. 24.
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97
For purposes of the provision, in the case of a joint return for a
taxable year which includes an applicable taxable year, the provi-
sion applies if either spouse is a qualified individual. In such cases,
the earned income which is attributable to the taxpayer for the pre-
ceding taxable year is the sum of the earned income which is at-
tributable to each spouse for such preceding taxable year.
Any election to use the prior year’s earned income under the pro-
vision applies with respect to both the earned income credit and
additional child tax credit. For administrative purposes, the incor-
rect use on a return of earned income pursuant to an election
under this provision is treated as a mathematical or clerical error.
An election under the provision is disregarded for purposes of cal-
culating gross income in the election year.
Hurricane Sandy
The provision provides a similar rule for individuals affected by
Hurricane Sandy. Such individuals can elect to calculate their
earned income tax credit and additional child tax credit for the tax-
able year that includes the dates of Hurricane Sandy (October 29,
2012 through November 3, 2012, hereinafter ‘‘Hurricane Sandy pe-
riod’’) using their earned income for the prior taxable year if it is
greater than their earned income for the year that includes Hurri-
cane Sandy.
Qualified individuals affected by Hurricane Sandy are those indi-
viduals whose principal place of abode during the Hurricane Sandy
period, was located in (i) the portion of the area determined by the
President to warrant individual or individual and public assistance
under the Stafford Act by reason of Hurricane Sandy or (ii) in the
area for which a major disaster was declared by the President
under section 401 of the Stafford Act by reason of Hurricane Sandy
and such individual was displaced from the individual’s principal
place of abode.
The provision extends the statute of limitations for individuals
affected by Hurricane Sandy to make any claims for credit or re-
fund relating to a change in the earned income of such individuals.
EFFECTIVE DATE
The provision is effective on the date of enactment.
7. AUTOMATIC EXTENSION OF FILING DEADLINES IN CASE OF CERTAIN
TAXPAYERS AFFECTED BY FEDERALLY DECLARED DISASTERS (SEC.
305 OF THE BILL AND SEC. 7508A OF THE CODE)
PRESENT LAW
General time limits for filing tax returns
Individuals generally must file their Federal income tax returns
by April 15 of the year following the close of a taxable year.266
Present law also provides that the Secretary may grant reasonable
extensions of time for filing such returns.267 Treasury regulations
provide, upon application on the proper form, an automatic six-
month extension (until October 15 for calendar-year individuals) for
any individual timely filing that form and paying the amount of tax
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266 Sec. 6072.
267 Sec. 6081.
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98
estimated to be due.268 In general, individuals must make quar-
terly estimated tax payments by April 15, June 15, September 15,
and January 15 of the following taxable year. Wage withholding is
considered to be a payment of estimated taxes.
Suspension of time periods
In general, the Secretary may specify a period of up to one year
that may be disregarded for performing various acts under the In-
ternal Revenue Code, such as filing tax returns, paying taxes, or
filing a claim for credit or refund of tax, for any taxpayer deter-
mined by the Secretary to be affected by a Federally declared dis-
aster or a terroristic or military action with respect to any tax li-
ability of the taxpayer.269 In addition, the period specified by the
Secretary may be disregarded in determining the amount of any in-
terest, penalty, additional amount, or addition to tax, and the
amount of any credit or refund.
There are special rules provided for pensions and other employee
benefit plans. The Secretary may prescribe a period of up to one
year which may be disregarded in determining the date by which
any action by a pension or other employee benefit plan, or by any
sponsor, administrator, participant, beneficiary, or other person
with respect to such plan, affected by a Federally declared disaster
or a terroristic or military action would be required or permitted
to be completed. A plan is not treated as operating in a manner in-
consistent with its terms or in violation of its terms merely due to
disregarding any such periods.
The suspension of time may apply to the following acts:
1. Filing any return of income, estate, gift, employment, or excise
tax;
2. Payment of any income, estate, or gift, employment, or excise
tax or any installment thereof or of any other liability to the
United States in respect thereof;
3. Filing a petition with the Tax Court for redetermination of a
deficiency, or for review of a decision rendered by the Tax Court;
4. Allowance of a credit or refund of any tax;
5. Filing a claim for credit or refund of any tax;
6. Bringing suit upon any such claim for credit or refund;
7. Assessment of any tax;
8. Giving or making any notice or demand for the payment of
any tax, or with respect to any liability to the United States in re-
spect of any tax;
9. Collection of the amount of any liability in respect of any tax;
10. Bringing suit by the United States in respect of any liability
in respect of any tax; and
11. Any other act required or permitted under the internal rev-
enue laws specified in regulations prescribed by the Secretary of
the Treasury.270
268 Treas. Reg. sec. 1.6081–4.
269 Sec. 7508A.
270 Sec. 7508(a)(1). Under Treasury regulations, an additional act was added to this list with
respect to affected pension plans and affected taxpayers with respect to such plans: Making con-
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tributions to a qualified retirement plan (within the meaning of section 4974(c)) under section
219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2); making distributions under section 408(d)(4); re-
characterizing contributions under section 408A(d)(6); or making a rollover under section 402(c),
403(a)(4), 403(b)(8), or 408(d)(3). Treas. Reg. sec. 301.7508A–1(c)(1)(iii).
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99
REASONS FOR CHANGE
The Committee believes that the certainty and additional time
provided by an automatic extension of filing deadlines for tax-
payers affected by Federally declared disasters will ease the burden
of tax compliance for taxpayers dealing with the hardship of dis-
aster recovery.
EXPLANATION OF PROVISION
The provision provides to qualified taxpayers in the case of a
Federally declared disaster a mandatory 60-day period that is dis-
regarded in determining whether the acts listed above were per-
formed in the time prescribed; the amount of interest, penalty, ad-
ditional amount, or addition to tax; and the amount of credit or re-
fund. The 60-day period begins on the earliest incident date speci-
fied in the declaration of the relevant disaster and ends on the date
which is 60 days after the latest incident date so specified. A dis-
aster area is the geographic area of a Federally declared disaster,
which is any disaster subsequently determined by the President to
warrant assistance by the Federal government under the Stafford
Act.271
Qualified taxpayers are (1) any individual whose principal resi-
dence is located in a disaster area, (2) any taxpayer if the tax-
payer’s principal place of business (other than the business of per-
forming services as an employee) is located in a disaster area, (3)
any individual who is a relief worker affiliated with a recognized
government or philanthropic organization and who is assisting in
a disaster area, (4) any taxpayer whose records necessary to meet
a deadline for the acts listed above are maintained in a disaster
area, (5) any individual visiting a disaster area who was killed or
injured as a result of the disaster, and (6) solely with respect to a
joint return, any spouse of an individual who is a qualified tax-
payer.
In the case of a pension or other employee benefit plan, or any
sponsor, administrator, participant, beneficiary or other person
with respect to such a plan,272 the provision provides that a rule
similar to the mandatory 60-day period rule described above ap-
plies with respect to any of the following actions:
1. Making contributions to a section 401(a) qualified retire-
ment plan, a section 403(a) annuity, a section 403(b) tax-shel-
tered annuity, or a section 408 individual retirement account
or annuity (IRA);
2. Making distributions of contributions to an IRA prior to
the due date for filing the individual’s tax return for the year
in which the contribution was made;
3. Recharacterizing IRA contributions by making a trustee-
to-trustee transfer from a traditional IRA to a Roth IRA, or
vice versa, before the due date (including extensions) for the
individual’s income tax return for that year;273 or
271 Sec. 165(i)(5).
272 For this purpose, a definition similar to the definition of ‘‘qualified taxpayer’’ is intended
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to generally apply.
273 In the case of a recharacterization, the contribution will be treated as having been made
to the transferee IRA (and not the original, transferor IRA) as of the date of the original con-
Continued
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100
4. Making a rollover.274
The mandatory 60-day period provided under the provision is in
addition to, or concurrent with as the case may be, any period of
suspension provided by the Secretary.
EFFECTIVE DATE
The provision applies to Federally declared disasters declared
after the date of enactment.
8. MODIFICATION OF THE TAX RATE FOR THE EXCISE TAX ON INVEST-
MENT INCOME OF PRIVATE FOUNDATIONS (SEC. 306 OF THE BILL AND
SEC. 4940 OF THE CODE)
PRESENT LAW
Excise tax on the net investment income of private foundations
Under section 4940(a), private foundations that are recognized as
exempt from Federal income tax under section 501(a) (other than
exempt operating foundations 275) are subject to a two-percent ex-
cise tax on their net investment income. Net investment income
generally includes interest, dividends, rents, royalties (and income
from similar sources), and capital gain net income, and is reduced
by expenses incurred to earn this income. The two-percent rate of
tax is reduced to one-percent in any year in which a foundation ex-
ceeds the average historical level of its charitable distributions.
Specifically, the excise tax rate is reduced if the foundation’s quali-
fying distributions (generally, amounts paid to accomplish exempt
purposes) 276 equal or exceed the sum of (1) the amount of the foun-
dation’s assets for the taxable year multiplied by the average per-
centage of the foundation’s qualifying distributions over the five
taxable years immediately preceding the taxable year in question,
and (2) one percent of the net investment income of the foundation
for the taxable year.277 In addition, the foundation cannot have
been subject to tax in any of the five preceding years for failure to
meet minimum qualifying distribution requirements in section
4942.
Private foundations that are not exempt from tax under section
501(a), such as certain charitable trusts, are subject to an excise
tax under section 4940(b). The tax is equal to the excess of the sum
of the excise tax that would have been imposed under section
4940(a) if the foundation were tax exempt and the amount of the
tax on unrelated business income that would have been imposed if
the foundation were tax exempt, over the income tax imposed on
the foundation under subtitle A of the Code.
tribution. Pursuant to section 13611 of Pub. L. No. 115–97, this rule does not apply to a conver-
sion contribution to a Roth IRA effective for taxable years beginning after December 31, 2017.
274 Such actions are those provided under Treas. Reg. sec. 301.7508A–1(c)(1)(iii), described
above.
275 Sec. 4940(d)(1). Exempt operating foundations generally include organizations such as mu-
seums or libraries that devote their assets to operating charitable programs but have difficulty
meeting the ‘‘public support’’ tests necessary not to be classified as a private foundation. To be
an exempt operating foundation, an organization must: (1) be an operating foundation (as de-
fined in section 4942(j)(3)); (2) be publicly supported for at least 10 taxable years; (3) have a
governing body no more than 25 percent of whom are disqualified persons and that is broadly
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representative of the general public; and (4) have no officers who are disqualified persons. Sec.
4940(d)(2).
276 Sec. 4942(g).
277 Sec. 4940(e).
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101
Private foundations are required to make a minimum amount of
qualifying distributions each year to avoid tax under section 4942.
The minimum amount of qualifying distributions a foundation has
to make to avoid tax under section 4942 is reduced by the amount
of section 4940 excise taxes paid.278
REASONS FOR CHANGE
Under the present-law, two-tier private foundation excise tax
rate structure, a foundation must carefully manage the timing and
amount of its grant making to minimize its excise tax burden.
Compliance can be costly and consume resources that otherwise
would have been used for grant making or other charitable activity.
In addition, to qualify for the lower, one-percent tax rate in a
year, a foundation must ensure that its distributions for the year
exceed a historical, average level of distributions. This structure
creates an incentive for foundations to limit distributions in any
one year, because a significant increase in distributions will raise
the foundation’s average level of distributions, making it more dif-
ficult to qualify for the reduced rate in future years. As a result,
a foundation that might have been inclined to distribute an unusu-
ally large amount in a time of public need, such as during the re-
sponse to a natural disaster, has a disincentive to do so.
For these reasons, the Committee believes it is appropriate to re-
place the present-law, two-tier private foundation excise tax rate
structure with a simplified structure that uses a single tax rate of
1.39 percent, the revenue-neutral rate.
EXPLANATION OF PROVISION
The provision replaces the two rates of excise tax on tax-exempt
private foundations with a single rate of tax of 1.39 percent. Thus,
under the provision, a tax-exempt private foundation generally is
subject to an excise tax of 1.39 percent on its net investment in-
come. A taxable private foundation is subject to an excise tax equal
to the excess (if any) of the sum of the 1.39-percent net investment
income excise tax and the amount of the tax on unrelated business
income (both calculated as if the foundation were tax-exempt), over
the income tax imposed on the foundation. The provision repeals
the special reduced excise tax rate for private foundations that ex-
ceed their historical level of qualifying distributions.
EFFECTIVE DATE
The provision is effective for taxable years beginning after the
date of enactment.
9. ADDITIONAL LOW-INCOME HOUSING TAX CREDIT ALLOCATIONS FOR
QUALIFIED 2017 AND 2018 CALIFORNIA DISASTER AREAS (SEC. 307 OF
THE BILL AND SEC. 42 OF THE CODE)
PRESENT LAW
In general
The low-income housing tax credit may be claimed over a 10-year
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period for the cost of building rental housing occupied by tenants
278 Sec. 4942(d)(2).
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102
having incomes below specified levels. The amount of the credit for
any taxable year in the credit period is the applicable percentage
of the qualified basis of each qualified low-income building. The
qualified basis of any qualified low-income building for any taxable
year equals the applicable fraction of the eligible basis of the build-
ing.
The credit percentage for newly constructed or substantially re-
habilitated housing that is not Federally subsidized is adjusted
monthly by the IRS so that the 10 annual installments of the credit
have a present value of 70 percent of the total qualified basis. The
credit percentage for newly constructed or substantially rehabili-
tated housing that is Federally subsidized and for existing housing
that is substantially rehabilitated is calculated to have a present
value of 30 percent of qualified basis. These are referred to as the
70-percent credit and 30-percent credit, respectively.
Credit ceiling
Credits are first allocated from the Federal government to each
State according to population, then allocated by each State to de-
velopers according to State determined Qualified Allocation Plans
(‘‘QAPs’’). QAPs must set forth selection criterion to be used to de-
termine housing priorities; give preference to projects serving the
lowest income tenants for the longest periods of time, and which
are located in qualified census tracts that contribute to a concerted
community revitalization plan; and provide a procedure for moni-
toring noncompliance and notifying the IRS of any noncompli-
ance.279
In addition to other requirements, a low-income housing credit is
allowable only if the owner of a qualified building receives a hous-
ing credit allocation from the State or local housing credit agency.
The total amount of housing credits available for allocation by each
State is limited by a ceiling. For determining the current-year
State dollar amount of the ceiling in any calendar year, the greater
of (1) $1.75 multiplied by the State population, or (2) $2,000,000 is
taken into account, with both amounts indexed for inflation. For
2019, the indexed amount is $2.76 per resident with a minimum
annual cap of $3,166,875 for certain States with small popu-
lations.280 These limits do not apply in the case of projects that
also receive financing with proceeds of tax-exempt bonds issued
subject to the private activity bond volume limit.
Carryover allocation rule
A low-income housing credit is allowable only if the owner of a
qualified building receives a housing credit allocation from the
State or local housing credit agency. In general, the allocation must
be made not later than the close of the calendar year in which the
building is placed in service. One exception to this rule is a carry-
over allocation. In the case of a carryover allocation, an allocation
may be made to a building that has not yet been placed in service,
provided that: (1) more than 10 percent of the taxpayer’s reason-
ably expected basis in the project (as of the close of the second cal-
endar year following the calendar year of the allocation) is incurred
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279 Sec. 42(m).
280 These amounts include a temporary increase enacted in the Consolidated Appropriations
Act of 2018, Pub. L. No. 115–141.
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103
as of the later of six months after the allocation is made or the end
of the calendar year in which the allocation is made; and (2) the
building is placed in service not later than the close of the second
calendar year following the calendar year of the allocation.
REASONS FOR CHANGE
The Committee is concerned that many homes of low-income
families were destroyed in the 2017 and 2018 wildfires in Cali-
fornia. Therefore, the Committee wishes to promote the construc-
tion or rehabilitation of affordable housing in affected areas of Cali-
fornia by providing the state with additional low-income housing
credits.
EXPLANATION OF PROVISION
Under the provision, in calendar year 2019, the State housing
credit ceiling is increased for California. The California credit ceil-
ing is increased by the amount of the aggregate housing credits al-
located by the State housing credit agencies of California for 2019
to buildings located in qualified 2017 and 2018 California disaster
areas,281 up to the average amount of the State’s housing credit
ceiling in 2017 and 2018.282
The provision also specifies that allocations are treated as made
first from these additional amounts for purposes of determining the
unused State housing credit ceiling to be carried over in a calendar
year.
EFFECTIVE DATE
The provision is effective upon enactment.
10. TREATMENT OF CERTAIN POSSESSIONS (SEC. 308 OF THE BILL)
PRESENT LAW
Citizens of the United States are generally subject to Federal in-
come tax on their worldwide income, including those citizens in the
U.S. possessions or territories. Residents of the U.S. possessions
are generally subject to the Federal income tax system based on
their status as U.S. citizens or residence in the possessions, with
certain special rules for determining residence and source of in-
come specific to the possession. Broadly, a bona fide individual resi-
dent of a possession is exempt from U.S. tax on income derived
from sources within that possession but is subject to U.S. tax on
U.S.-source and non-possession-source income.283
The application of the Federal tax rules to the possessions varies
from one possession to another. Three possessions, Guam, the
Northern Mariana Islands, and the U.S. Virgin Islands, are re-
ferred to as mirror Code possessions because the Code serves as
the internal tax law of those possessions (substituting the par-
ticular possessions for the United States wherever the Code refers
to the United States). A resident of one of those possessions gen-
281 Qualified 2017 and 2018 California disaster areas are those which are determined by the
President to warrant assistance from the Federal government under the Stafford Act by reason
of a disaster which begins or ends in calendar year 2017 or 2018, as specified by the Federal
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Emergency Management Agency.
282 This average amount is 50% of the sum of the State housing credit ceiling for California
for calendar years 2017 and 2018.
283 See secs. 932, 933, and 937.
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104
erally files a single tax return only with the possession of which
the individual is a resident, and not with the United States. Amer-
ican Samoa and Puerto Rico, by contrast, are non-mirror Code pos-
sessions. These two possessions have their own internal tax laws,
and a resident of either American Samoa or Puerto Rico may be re-
quired to file income tax returns with both the possessions of resi-
dence and the United States.
REASONS FOR CHANGE
The Committee recognizes the importance of providing funding to
all of the possessions, the citizens of which are U.S. citizens or na-
tionals, in order to assist in disaster recovery.
EXPLANATION OF PROVISION
The provision requires the Secretary to make a payment to the
mirror Code possessions in an amount equal to the loss in revenue
by reason of the temporary disaster-related tax relief allowable by
reason of Title III of the bill to residents of such possessions
against their income tax. This amount will be determined by the
Secretary based on information provided by the governments of the
respective possessions.
The provision requires the Secretary to make a payment to the
non-mirror Code possessions in an amount estimated by the Sec-
retary as the aggregate benefits (if any) of the temporary disaster-
related tax relief that would have been provided to residents of
such possessions if a mirror code tax system had been in effect in
such possession. Accordingly, the amount of each payment to a
non-mirror Code possession will be an estimate of the aggregate
benefit that would be allowed to the possession’s residents if the
temporary tax relief provided by Title III of the bill to U.S. resi-
dents were provided by the possession to its residents. This pay-
ment will not be made unless the possession has a plan that has
been approved by the Secretary under which the possession will
promptly distribute the payments to its residents.
EFFECTIVE DATE
The provision is effective on the date of enactment.
III. VOTES OF THE COMMITTEE
Pursuant to clause 3(b) of rule XIII of the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means in its consideration of
H.R. 3301, the ‘‘Taxpayer Certainty and Disaster Tax Relief Act of
2019,’’ on June 20, 2019.
An amendment to the amendment in the nature of a substitute
offered by Representative Schweikert, which would make perma-
nent the current individual tax rates, was defeated by a roll call
vote of 16 yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
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Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
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Representative Yea Nay Present Representative Yea Nay Present
Mr. Blumenauer ........................ ......... ......... ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... X .............
An amendment to the amendment in the nature of a substitute
offered by Representative Smith of Missouri, which would make
permanent the increased child tax credit, was defeated by a roll
call vote of 16 yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... ......... ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... X .............
An amendment to the amendment in the nature of a substitute
offered by Representative Marchant, which would permanently
lower the threshold for an itemized medical expense deduction from
10 percent of adjusted gross income to 7.5 percent, was defeated by
a roll call vote of 16 yeas to 25 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
SSpencer on DSKBBXCHB2PROD with REPORTS
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
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Representative Yea Nay Present Representative Yea Nay Present
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... X .............
An amendment to the amendment in the nature of a substitute
offered by Representative Reed, which would make permanent the
family and medical leave tax credit, was defeated by a roll call vote
of 17 yeas to 23 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... X ......... ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Rice, which would make permanent in-
creased standard deduction, was defeated by a roll call vote of 16
yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
SSpencer on DSKBBXCHB2PROD with REPORTS
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
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Representative Yea Nay Present Representative Yea Nay Present
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Estes, which would make permanent the
railroad maintenance tax credit at 30% (instead of 50%) of eligible
expenses, was withdrawn.
An amendment to the amendment in the nature of a substitute
offered by Representative Smith of Nebraska, which would extend
and phase out certain biodiesel and renewable diesel tax provi-
sions, was withdrawn.
An amendment to the amendment in the nature of a substitute
offered by Representative Estes, which would make permanent the
tax treatment of certain income earned by controlled foreign cor-
porations, was defeated by a roll call vote of 16 yeas to 22 nays.
The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... ......... .............
Mr. Panetta ............................... ......... X .............
SSpencer on DSKBBXCHB2PROD with REPORTS
Ms. Murphy ............................... ......... ......... .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
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An amendment to the amendment in the nature of a substitute
offered by Representative Walorski, which would permanently re-
peal the 2.3 percent excise tax on medical devices, was defeated by
a roll call vote of 16 yeas to 22 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... ......... .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... ......... .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Kelly, which would permanently repeal
the 40 percent excise tax on high-cost employer-sponsored health
coverage, was defeated by a roll call vote of 16 yeas to 23 nays. The
vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. X ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... ......... ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... ......... ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
SSpencer on DSKBBXCHB2PROD with REPORTS
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
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An amendment to the amendment in the nature of a substitute
offered by Representative Holding was ruled nongermane. Mr.
Holding moved to appeal the ruling of the Chair. A motion was
made by Representative Thompson to table the appeal of the ruling
of the Chair. The motion passed by a roll call vote of 23 yeas to
16 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... X ......... ............. Mr. Brady ................................. ......... X .............
Mr. Lewis .................................. X ......... ............. Mr. Nunes ................................. ......... X .............
Mr. Doggett ............................... X ......... ............. Mr. Buchanan .......................... ......... X .............
Mr. Thompson ........................... X ......... ............. Mr. Smith ................................. ......... X .............
Mr. Larson ................................. X ......... ............. Mr. Marchant ........................... ......... ......... .............
Mr. Blumenauer ........................ X ......... ............. Mr. Reed ................................... ......... X .............
Mr. Kind .................................... X ......... ............. Mr. Kelly ................................... ......... X .............
Mr. Pascrell ............................... X ......... ............. Mr. Holding .............................. ......... X .............
Mr. Davis .................................. X ......... ............. Mr. Smith ................................. ......... X .............
Ms. Sanchez .............................. X ......... ............. Mr. Rice .................................... ......... X .............
Mr. Higgins ............................... X ......... ............. Mr. Schweikert ......................... ......... X .............
Ms. Sewell ................................. X ......... ............. Ms. Walorski ............................. ......... X .............
Ms. DelBene .............................. X ......... ............. Mr. LaHood (IL) ........................ ......... X .............
Ms. Chu (CA) ............................ X ......... ............. Mr. Wenstrup ............................ ......... X .............
Ms. Moore ................................. ......... ......... ............. Mr. Arrington ............................ ......... X .............
Mr. Kildee .................................. X ......... ............. Mr. Ferguson ............................ ......... X .............
Mr. Boyle ................................... X ......... ............. Mr. Estes .................................. ......... X .............
Mr. Beyer ................................... X ......... .............
Mr. Evans .................................. X ......... .............
Mr. Schneider ............................ X ......... .............
Mr. Suozzi ................................. X ......... .............
Mr. Panetta ............................... X ......... .............
Ms. Murphy ............................... X ......... .............
Mr. Gomez ................................. X ......... .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Nunes, which would make permanent
the 100% expensing, was defeated by a roll call vote of 17 yeas to
23 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. X ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... ......... ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
SSpencer on DSKBBXCHB2PROD with REPORTS
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
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An amendment to the amendment in the nature of a substitute
offered by Representative Schweikert, which would make certain
technical corrections to legislation enacted in 2017, was defeated by
a roll call vote of 17 yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. X ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Ferguson was ruled nongermane. Mr.
Ferguson moved to appeal the ruling of the Chair and Mr. Thomp-
son moved to table the appeal. The motion to table the appeal
passed by a roll call vote of 24 yeas to 16 nays. The vote was as
follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... X ......... ............. Mr. Brady ................................. ......... X .............
Mr. Lewis .................................. X ......... ............. Mr. Nunes ................................. ......... X .............
Mr. Doggett ............................... X ......... ............. Mr. Buchanan .......................... ......... X .............
Mr. Thompson ........................... X ......... ............. Mr. Smith ................................. ......... X .............
Mr. Larson ................................. X ......... ............. Mr. Marchant ........................... ......... X .............
Mr. Blumenauer ........................ X ......... ............. Mr. Reed ................................... ......... ......... .............
Mr. Kind .................................... X ......... ............. Mr. Kelly ................................... ......... X .............
Mr. Pascrell ............................... X ......... ............. Mr. Holding .............................. ......... X .............
Mr. Davis .................................. X ......... ............. Mr. Smith ................................. ......... X .............
Ms. Sanchez .............................. X ......... ............. Mr. Rice .................................... ......... X .............
Mr. Higgins ............................... X ......... ............. Mr. Schweikert ......................... ......... X .............
Ms. Sewell ................................. X ......... ............. Ms. Walorski ............................. ......... X .............
Ms. DelBene .............................. X ......... ............. Mr. LaHood (IL) ........................ ......... X .............
Ms. Chu (CA) ............................ X ......... ............. Mr. Wenstrup ............................ ......... X .............
Ms. Moore ................................. X ......... ............. Mr. Arrington ............................ ......... X .............
Mr. Kildee .................................. X ......... ............. Mr. Ferguson ............................ ......... X .............
Mr. Boyle ................................... X ......... ............. Mr. Estes .................................. ......... X .............
Mr. Beyer ................................... X ......... .............
Mr. Evans .................................. X ......... .............
Mr. Schneider ............................ X ......... .............
Mr. Suozzi ................................. X ......... .............
Mr. Panetta ............................... X ......... .............
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Ms. Murphy ............................... X ......... .............
Mr. Gomez ................................. X ......... .............
Mr. Horsford .............................. ......... ......... .............
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An amendment to the amendment in the nature of a substitute
offered by Representative Smith of Missouri, which would make
certain expenses eligible under section 529, was defeated by a roll
call vote of 16 yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
An amendment to the amendment in the nature of a substitute
offered by Representative Smith of Missouri, which would prevent
an increase in the death tax, was defeated by a roll call vote of 16
yeas to 24 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. ......... ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
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Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... ......... .............
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An amendment to the amendment in the nature of a substitute
offered by Representative Rice, which would modify the low-income
housing credit allocation for certain disaster areas, was defeated by
a roll call vote of 17 yeas to 25 nays. The vote was as follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. X ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sanchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X .............
Mr. Evans .................................. ......... X .............
Mr. Schneider ............................ ......... X .............
Mr. Suozzi ................................. ......... X .............
Mr. Panetta ............................... ......... X .............
Ms. Murphy ............................... ......... X .............
Mr. Gomez ................................. ......... X .............
Mr. Horsford .............................. ......... X .............
An amendment to the amendment in the nature of a substitute
offered by Representative Doggett, which would strike the produc-
tion credit for Indian coal facilities, passed by a voice vote (with a
quorum being present).
An amendment to the amendment in the nature of a substitute
offered by Representative Brady, which would clarify the alter-
native fuel mixture tax credit without a retroactive tax increase,
failed by a voice vote (with a quorum being present).
An amendment to the amendment in the nature of a substitute
offered by Representative Wenstrup, which would make permanent
the modernization of the taxation of craft beverages, was with-
drawn.
An amendment to the amendment in the nature of a substitute
offered by Representative Schweikert, which would provide tax in-
centives for certain energy-producing activities, was withdrawn.
An amendment to the amendment in the nature of a substitute
offered by Representative Brady, which would modify the discharge
of acquisition indebtedness not includible in gross income, was de-
feated by a roll call vote of 17 yeas to 25 nays. The vote was as
follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... ......... X ............. Mr. Brady ................................. X ......... .............
Mr. Lewis .................................. ......... X ............. Mr. Nunes ................................. X ......... .............
Mr. Doggett ............................... ......... X ............. Mr. Buchanan .......................... X ......... .............
Mr. Thompson ........................... ......... X ............. Mr. Smith ................................. X ......... .............
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Mr. Larson ................................. ......... X ............. Mr. Marchant ........................... X ......... .............
Mr. Blumenauer ........................ ......... X ............. Mr. Reed ................................... X ......... .............
Mr. Kind .................................... ......... X ............. Mr. Kelly ................................... X ......... .............
Mr. Pascrell ............................... ......... X ............. Mr. Holding .............................. X ......... .............
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Representative Yea Nay Present Representative Yea Nay Present
Mr. Davis .................................. ......... X ............. Mr. Smith ................................. X ......... .............
Ms. Sánchez .............................. ......... X ............. Mr. Rice .................................... X ......... .............
Mr. Higgins ............................... ......... X ............. Mr. Schweikert ......................... X ......... .............
Ms. Sewell ................................. ......... X ............. Ms. Walorski ............................. X ......... .............
Ms. DelBene .............................. ......... X ............. Mr. LaHood (IL) ........................ X ......... .............
Ms. Chu (CA) ............................ ......... X ............. Mr. Wenstrup ............................ X ......... .............
Ms. Moore ................................. ......... X ............. Mr. Arrington ............................ X ......... .............
Mr. Kildee .................................. ......... X ............. Mr. Ferguson ............................ X ......... .............
Mr. Boyle ................................... ......... X ............. Mr. Estes .................................. X ......... .............
Mr. Beyer ................................... ......... X
Mr. Evans .................................. ......... X
Mr. Schneider ............................ ......... X
Mr. Suozzi ................................. ......... X
Mr. Panetta ............................... ......... X
Ms. Murphy ............................... ......... X
Mr. Gomez ................................. ......... X
Mr. Horsford .............................. ......... X ............. .
An amendment to the amendment in the nature of a substitute
offered by Representative Smith of Nebraska, which would strike
the extension of the wind energy production tax credit, was with-
drawn.
The Chairman’s Amendment to the amendment in the nature of
a substitute as amended was agreed to by voice vote (with a
quorum being present).
H.R. 3301 was ordered favorably reported to the House of Rep-
resentatives as amended by an amendment in the nature of a sub-
stitute by a roll call vote of 25 yeas to 17 nays. The vote was as
follows:
Representative Yea Nay Present Representative Yea Nay Present
Mr. Neal .................................... X ......... ............. Mr. Brady ................................. ......... X .............
Mr. Lewis .................................. X ......... ............. Mr. Nunes ................................. ......... X .............
Mr. Doggett ............................... X ......... ............. Mr. Buchanan .......................... ......... X .............
Mr. Thompson ........................... X ......... ............. Mr. Smith ................................. ......... X .............
Mr. Larson ................................. X ......... ............. Mr. Marchant ........................... ......... X .............
Mr. Blumenauer ........................ X ......... ............. Mr. Reed ................................... ......... X .............
Mr. Kind .................................... X ......... ............. Mr. Kelly ................................... ......... X .............
Mr. Pascrell ............................... X ......... ............. Mr. Holding .............................. ......... X .............
Mr. Davis .................................. X ......... ............. Mr. Smith (MO) ........................ ......... X .............
Ms. Sánchez .............................. X ......... ............. Mr. Rice .................................... ......... X .............
Mr. Higgins ............................... X ......... ............. Mr. Schweikert ......................... ......... X .............
Ms. Sewell ................................. X ......... ............. Ms. Walorski ............................. ......... X .............
Ms. DelBene .............................. X ......... ............. Mr. LaHood ............................... ......... X .............
Ms. Chu .................................... X ......... ............. Mr. Wenstrup ............................ ......... X .............
Ms. Moore ................................. X ......... ............. Mr. Arrington ............................ ......... X .............
Mr. Kildee .................................. X ......... ............. Mr. Ferguson ............................ ......... X .............
Mr. Boyle ................................... X ......... ............. Mr. Estes .................................. ......... X .............
Mr. Beyer ................................... X .........
Mr. Evans .................................. X ......... .............
Mr. Schneider ............................ X ......... .............
Mr. Suozzi ................................. X ......... .............
Mr. Panetta ............................... X ......... .............
Ms. Murphy ............................... X ......... .............
Mr. Gomez ................................. X ......... .............
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Mr. Horsford .............................. X ......... .............
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IV. BUDGET EFFECTS OF THE BILL
A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS
In compliance with clause 3(d) of rule XIII of the Rules of the
House of Representatives, the following statement is made con-
cerning the effects on the budget of the bill.
The bill is estimated to decrease Federal fiscal year budget re-
ceipts by $4.894 billion dollars for the period 2019 through 2029.
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Insert offset folio 149 here HR379.003
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Insert offset folio 150 here HR379.004
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Insert offset folio 151 here HR379.005
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