113 HR 505 IH: Balancing Act
U.S. House of Representatives
2013-02-05
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; table of
contents
(a)This Act may be cited
as the Balancing
Act
.
(b)The table of
contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Title I—Repeal Sequester
Sec. 101. Repeal of section 251A sequestration to enforce
budget goal.
Title II—Close Tax Loopholes to Achieve Balance
Subtitle A—28 Percent Limitation on Certain Deductions and
Exclusions
Sec. 201. 28 percent limitation on certain deductions and
exclusions.
Subtitle B—Tax carried interest in investment partnerships as
ordinary income
Sec. 211. Partnership interests transferred in connection with
performance of services.
Sec. 212. Special rules for partners providing investment
management services to partnerships.
Subtitle C—Dual capacity taxpayers
Sec. 221. Modifications of foreign tax credit rules applicable
to dual capacity taxpayers.
Sec. 222. Separate basket treatment taxes paid on foreign oil
and gas income.
Subtitle D—Close Exclusion of Foreign-Earned Income
Loophole
Sec. 231. Repeal of foreign earned income
exclusion.
Subtitle E—Close S Corporation Loophole
Sec. 241. Employment tax treatment of professional service
businesses.
Subtitle F—Limitation on Mortgage Interest Deduction With
Respect to Boats
Sec. 251. Mortgage interest deduction allowed with respect to
boats only if boat is used as the principal residence of the
taxpayer.
Title III—Ending Corporate Subsidies
Subtitle A—End Fossil Fuel Subsidies
Sec. 301. Termination of various tax expenditures relating to
fossil fuels.
Sec. 302. Termination of alternative fuel vehicle refueling
property credit with respect to fossil fuels.
Sec. 303. Uniform seven-year amortization for geological and
geophysical expenditures.
Sec. 304. Repeal of domestic manufacturing deduction for hard
mineral mining.
Sec. 305. Limitation on deduction for income attributable to
domestic production of oil, natural gas, or primary products
thereof.
Sec. 306. Termination of last-in, first-out method of inventory
for oil, natural gas, and coal companies.
Sec. 307. Repeal of percentage depletion for coal and hard
mineral fossil fuels.
Sec. 308. Termination of capital gains treatment for royalties
from coal.
Sec. 309. Increase in oil spill liability trust fund financing
rate.
Sec. 310. Denial of deduction for removal costs and damages for
certain oil spills.
Sec. 311. Tax on crude oil and natural gas produced from the
outer Continental Shelf in the Gulf of Mexico.
Subtitle B—Ending Excessive Corporate Tax Deductions for Stock
Options
Sec. 331. Consistent treatment of stock options by
corporations.
Sec. 332. Application of executive pay deduction
limit.
Subtitle C—Reduce Deduction of Corporate Meals and
Entertainment
Sec. 341. Reduction in business meals and entertainment tax
deduction.
Title IV—Close International Tax System Loopholes
Subtitle A—Reformation of U.S. international tax
system
Sec. 401. Allocation of expenses and taxes on basis of
repatriation of foreign income.
Sec. 402. Excess income from transfers of intangibles to
low-taxed affiliates treated as subpart F income.
Sec. 403. Limitations on income shifting through intangible
property transfers.
Sec. 404. Limitation on earnings stripping by expatriated
entities.
Sec. 405. Prevention of avoidance of tax through reinsurance
with non-taxed affiliates.
Subtitle B—Reinsurance
Sec. 411. Prevention of avoidance of tax through reinsurance
with non-taxed affiliates.
Subtitle C—Close loophole for corporate jet
depreciation
Sec. 421. General aviation aircraft treated as 7-year
property.
Title V—Close Estate Tax Loopholes
Sec. 501. Valuation rules for certain transfers of nonbusiness
assets; limitation on minority discounts.
Sec. 502. Consistent basis reporting between estate and person
acquiring property from decedent.
Sec. 503. Required minimum 10-year term, etc., for grantor
retained annuity trusts.
Sec. 504. Limitation on GST exemption of perpetual dynasty
trusts.
Title VI—Cut Pentagon Waste to Achieve Balance
Subtitle A—Smarter Approach to nuclear
Expenditures
Sec. 601. Short title.
Sec. 602. Findings.
Sec. 603. Reduction in nuclear forces.
Sec. 604. Reports required.
Subtitle B—Limiting Excessive Contractor
Compensation
Sec. 611. Limitation on allowable compensation
costs.
Subtitle C—Relocate Troops From Europe to the United
States
Sec. 615. Relocation to United States military installations of
members of the United States Armed Forces assigned to permanent duty in
Europe.
Subtitle D—Additional reduction in armed forces end strength
levels
Sec. 621. Additional Army and Marine Corps end strength
reductions through retirement and separation.
Subtitle E—Procurement of certain submarines, carriers, and
aircraft
Sec. 631. Limitation on procurement of Virginia class
submarines.
Sec. 632. Limitation on procurement of one Ford class aircraft
carrier.
Sec. 633. Authority for procurement of F/A–18E and F/A–18F
aircraft.
Sec. 634. Prohibition on procurement of V–22 Osprey
aircraft.
Subtitle F—Limit Military Bands
Sec. 641. Limitation on expenditures for military musical
units.
Subtitle G—Reduction in Number of General and Flag
Officers
Sec. 651. Return of maximum number of general and flag officers
to Cold War levels.
Subtitle H—Audit the Pentagon
Sec. 661. Purposes.
Sec. 662. Findings.
Sec. 663. Spending reductions for agencies without clean
audits.
Sec. 664. Report on Department of Defense reporting
requirements.
Sec. 665. Sense of Congress in implementation of defense budget
reductions.
Title VII—Invest in Job Creation
Subtitle A—Making Work Pay Extension
Sec. 701. One-year extension of making work pay
credit.
Subtitle B—Support for Teachers and School
Modernization
Part I—Preventing teacher layoffs and supporting the creation of
additional jobs in public early childhood, elementary, and secondary
education
Sec. 711. Purpose.
Sec. 712. Grants for the outlying areas and the Secretary of
the Interior; availability of funds.
Sec. 713. State allocation.
Sec. 714. State application.
Sec. 715. State reservation and responsibilities.
Sec. 716. Local educational agencies.
Sec. 717. Early learning.
Sec. 718. Maintenance of effort.
Sec. 719. Reporting.
Sec. 720. Definitions.
Sec. 721. Authorization of appropriations.
Part II—Elementary and secondary schools
Sec. 731. Purpose.
Sec. 732. Authorization of appropriations.
Sec. 733. Allocation of funds.
Sec. 734. State use of funds.
Sec. 735. State and local applications.
Sec. 736. Use of funds.
Sec. 737. Private schools.
Sec. 738. Additional provisions.
Part III—Community College modernization
Sec. 739. Federal assistance for community college
modernization.
Part IV—General provisions
Sec. 740. Definitions.
Sec. 741. Buy American.
Subtitle C—Transportation Infrastructure
Investments
Part I—Immediate transportation infrastructure
investments
Sec. 751. Immediate transportation infrastructure
investments.
Part II—Building and upgrading infrastructure for long-Term
development
Subpart A—Immediate transportation infrastructure
investments
Sec. 761. Short title.
Sec. 762. Findings and purpose.
Sec. 763. Definitions.
Subpart B—American Infrastructure Financing
Authority
Sec. 765. Establishment and general authority of
AIFA.
Sec. 766. Voting members of the Board of Directors.
Sec. 767. Chief executive officer of AIFA.
Sec. 768. Powers and duties of the Board of
Directors.
Sec. 769. Senior management.
Sec. 770. Special Inspector General for AIFA.
Sec. 771. Other personnel.
Sec. 772. Compliance.
Subpart C—Terms and limitations on direct loans and loan
guarantees
Sec. 773. Eligibility criteria for assistance from AIFA and
terms and limitations of loans.
Sec. 774. Loan terms and repayment.
Sec. 775. Compliance and enforcement.
Sec. 776. Audits; reports to the President and
Congress.
Subpart D—Funding of AIFA
Sec. 777. Administrative fees.
Sec. 778. Efficiency of AIFA.
Sec. 779. Funding.
Subpart E—Extension of exemption from alternative minimum tax
treatment for certain tax-Exempt bonds
Sec. 780. Extension of exemption from alternative minimum tax
treatment for certain tax-exempt bonds.
<enum>I</enum><header>Repeal
Sequester</header>
<section id="H04FF4283071F4D90B2399EE78968F0E5"><enum>101.</enum><header>Repeal of
section 251A sequestration to enforce budget goal</header><text display-inline="no-display-inline">Section 251A of the Balanced Budget and
Emergency Deficit Control Act of 1985 is repealed.</text>
</section><enum>II</enum><header>Close Tax
Loopholes to Achieve Balance</header>
<subtitle id="H1B041D97A0764E0F9E553A5200CB7057"><enum>A</enum><header>28
Percent Limitation on Certain Deductions and Exclusions</header>
<section id="H81258B18204F4AE1B8DECDC56D1FF49C"><enum>201.</enum><header>28 percent
limitation on certain deductions and exclusions</header>
<subsection id="H114CAAD4327246B0B3649770BC2B4576"><enum>(a)</enum><header>In
general</header><text>Part I of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
section:</text>
<quoted-block id="HFE46E65832CA4D3AB683624EC0ABB15F" style="OLC">
<section id="H01E212957F6F40CF903B8F1467023480"><enum>69.</enum><header>Limitation on
certain deductions and exclusions</header>
<subsection id="H5F0923D687914E3986FD3C2091F2F1B0"><enum>(a)</enum><header>In
general</header><text>In the case of an individual for any taxable year,
if—</text>
<paragraph id="H03DA587E66C44CFC9FCFB8FB7C947482"><enum>(1)</enum><text>the taxpayer’s
adjusted gross income is above—</text>
<subparagraph id="HC72367849D3A4FCE8DF69CFFE1CE2FFF"><enum>(A)</enum><text>$250,000 in the
case of a joint return within the meaning of section 6013,</text>
</subparagraph><subparagraph id="H920A47E2EEBA4A29859E3C457E60E9A6"><enum>(B)</enum><text>$225,000 in the
case of a head of household return,</text>
</subparagraph><subparagraph id="H64B546B66E09400ABF4BEC8CB5025FB9"><enum>(C)</enum><text>$125,000 in the
case of a married filing separately return, or</text>
</subparagraph><subparagraph id="H371E1F71C2854E91987603347E878D3F"><enum>(D)</enum><text>$200,000 in all
other cases; and</text>
</subparagraph></paragraph><paragraph id="H6E863E0D3C7C4749B55A14596AFEB550"><enum>(2)</enum><text>the taxpayer’s
adjusted taxable income for such taxable year exceeds the minimum marginal rate
amount, then the tax imposed under section 1 with respect to such taxpayer for
such taxable year shall be increased by the amount determined under subsection
(b). If the taxpayer is subject to tax under section 55,</text>
</paragraph><continuation-text continuation-text-level="subsection">then in
lieu of an increase in tax under section 1, the tax imposed under section 55
with respect to such taxpayer for such taxable year shall be increased by the
amount determined under subsection (c).</continuation-text></subsection><subsection id="H97786BC89B2F4A04964F4B98C3F04B5B"><enum>(b)</enum><header>Additional
amount</header><text>The amount determined under this subsection with respect
to any taxpayer for any taxable year is the excess (if any) of—</text>
<paragraph id="HA34F8AF484C743579FFFDF858A0BA198"><enum>(1)</enum><text>the tax which
would be imposed under section 1 with respect to such taxpayer for such taxable
year if <quote>adjusted taxable income</quote> were substituted for
<quote>taxable income</quote> each place it appears therein, over</text>
</paragraph><paragraph id="H0BC3EDDC8B9947D4A7AE9D4C8CBF38AB"><enum>(2)</enum><text>the sum of—</text>
<subparagraph id="H36234FB16730467681F77AD6DA083972"><enum>(A)</enum><text>the tax which
would be imposed under such section with respect to such taxpayer for such
taxable year on the greater of—</text>
<clause id="H9B409328D80F498AAD7D4FE30B2A2987"><enum>(i)</enum><text>taxable income,
or</text>
</clause><clause id="HA64641529B1646359A6B3C1FC53CB376"><enum>(ii)</enum><text>the minimum
marginal rate amount, plus</text>
</clause></subparagraph><subparagraph id="H8C5DC653BBDC4AB895C3E09182887B3A"><enum>(B)</enum><text>28 percent of the
excess (if any) of the taxpayer’s adjusted taxable income over the greater
of—</text>
<clause id="HA5FE48CC8A144294917108C085805EE3"><enum>(i)</enum><text>the taxpayer’s
taxable income, or</text>
</clause><clause id="H6B3AEE35C1DD464A827D725365CE9400"><enum>(ii)</enum><text>the minimum
marginal rate amount.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HE24E28C940A348EF8D11E678DB258333"><enum>(c)</enum><header>Additional AMT
amount</header>
<paragraph id="H52018908CF5D4792B5F0ADBB3D1274E7"><enum>(1)</enum><text>The amount
determined under this subsection with respect to any taxpayer for any taxable
year is the additional amount computed under subsection (b) multiplied by the
ratio that—</text>
<subparagraph id="H767EE215C4DE45738C6D7D2B5529E420"><enum>(A)</enum><text>the result
of—</text>
<clause id="H1B298D03CC064F7AB7C16D3EFA1767E2"><enum>(i)</enum><text>all itemized
deductions (before the application of section 68), plus</text>
</clause><clause id="HC198A8C326164E498A473AB17E8608FE"><enum>(ii)</enum><text>the specified
above-the-line deductions and specified exclusions, minus</text>
</clause><clause id="H765B8B4F7F844ED189523CE2B5115C44"><enum>(iii)</enum><text>the amount of
deductions disallowed under section 56(b)(1)(A) and (B), minus</text>
</clause><clause id="HC24C3D67ED3844C8B0D4A9D26E4EB8BA"><enum>(iv)</enum><text>the
non-preference disallowed deductions, bears to—</text>
</clause></subparagraph><subparagraph id="H434E1F5BB5064AC6BE487C6E2A4F733D"><enum>(B)</enum><text>the sum of—</text>
<clause id="H5C56E6FA4DBA4117BB7BA4B667A128A0"><enum>(i)</enum><text>the total of
itemized deductions (after the application of section 68), plus</text>
</clause><clause id="HA7DF993A318649329E73E75FD5F1D3BB"><enum>(ii)</enum><text>the specified
above-the-line deductions and specified exclusions.</text>
</clause></subparagraph></paragraph><paragraph id="H38917577014744B6A5E893AA8F1139E3"><enum>(2)</enum><text>If the top of the
AMT exemption phase-out range for the taxpayer exceeds the minimum marginal
rate amount for the taxpayer and if the taxpayer’s alternative minimum taxable
income does not exceed the top of the AMT exemption phase-out range, the
taxpayer must increase its additional AMT amount by 7 percent of the excess
of—</text>
<subparagraph id="H737A6B1E0ACE45ADA911A95F04C8DEA1"><enum>(A)</enum><text>the lesser
of—</text>
<clause id="H1382B790510B4C16A101F5D80E8BF157"><enum>(i)</enum><text>the top of the AMT
exemption phase-out range, or</text>
</clause><clause id="H4AF9258B1D0B468BBFAB1A431E465C25"><enum>(ii)</enum><text>the taxpayer’s
alternative minimum taxable income, computed—</text>
<subclause id="H3AAEF5D090AC48D991B962C6ECFBF558"><enum>(I)</enum><text>without regard to
any itemized deduction or any specified above-the-line deduction, and</text>
</subclause><subclause id="H0E5187D1CD844E40B2B8E7A5E348EADE"><enum>(II)</enum><text>by including the
amount of any specified exclusion; over</text>
</subclause></clause></subparagraph><subparagraph id="H458C35D4D0A446D29CCFBFFF57D74FD1"><enum>(B)</enum><text>the greater
of—</text>
<clause id="HB9BD0105573D45A795C058CD6520F18F"><enum>(i)</enum><text>the taxpayer’s
alternative minimum taxable income, or</text>
</clause><clause id="H0C2750BE78E14C8DAEA34ABDB7F0315A"><enum>(ii)</enum><text>the minimum
marginal rate amount.</text>
</clause></subparagraph></paragraph></subsection><subsection id="H9E85CE4F2EC143BFB91AEBA706B285C7"><enum>(d)</enum><header>Minimum marginal
rate amount</header><text>For purposes of this section, the term <quote>minimum
marginal rate amount</quote> means, with respect to any taxpayer for any
taxable year, the highest amount of the taxpayer’s taxable income which would
be subject to a marginal rate of tax under section 1 that is less than 36
percent with respect to such taxable year.</text>
</subsection><subsection id="HAAE25261473F4884B83F0FE8434696C5"><enum>(e)</enum><header>Adjusted taxable
income</header><text>For purposes of this section—</text>
<paragraph id="H760BC42B7AEA415D9842BA2392C64B36"><enum>(1)</enum><header>In
general</header><text>The term <quote>adjusted taxable income</quote> means
taxable income computed—</text>
<subparagraph id="H70AA9DCC17D0464C996682FC95B3372A"><enum>(A)</enum><text>without regard to
any itemized deduction or any specified above-the-line deduction, and</text>
</subparagraph><subparagraph id="H1BE3DC9AF1374F1693BE8BFB7077BEB5"><enum>(B)</enum><text>by including in
gross income any specified exclusion.</text>
</subparagraph></paragraph><paragraph id="H9C459CE6964E47DEB8AA7BED7ECAC26C"><enum>(2)</enum><header>Specified
above-the-line deduction</header><text>The term <quote>specified above-the-line
deduction</quote> means—</text>
<subparagraph id="H51305D241D7A44209F8994D9F3A0C452"><enum>(A)</enum><text>the deduction
provided under section 162(l) (relating to special rules for health insurance
costs of self-employed individuals),</text>
</subparagraph><subparagraph id="H2F2FC81850AC4940ACBA236A597FE4B1"><enum>(B)</enum><text>the deduction
provided under section 199 (relating to income attributable to domestic
production activities), and</text>
</subparagraph><subparagraph id="H3D834C79E79845D6A0D3FC15B2DC232F"><enum>(C)</enum><text>the deductions
provided under the following paragraphs of section 62(a):</text>
<clause id="H9FA7A4C74E2F415DAA57E32F42D77E9C"><enum>(i)</enum><text>Paragraph (2)
(relating to certain trade and business deductions of employees), other than
subparagraph (A) thereof.</text>
</clause><clause id="HADB16688CBF44218951CB6A16FC92231"><enum>(ii)</enum><text>Paragraph (15)
(relating to moving expenses).</text>
</clause><clause id="HA9F220C4C66A41FD887A3DBCE7CB16B7"><enum>(iii)</enum><text>Paragraph (16)
(relating to Archer MSAs).</text>
</clause><clause id="HDD37DF73075F485195310C7C02A42217"><enum>(iv)</enum><text>Paragraph (17)
(relating to interest on education loans).</text>
</clause><clause id="H91349A7EB352424CA30085DFEAD109C1"><enum>(v)</enum><text>Paragraph (18)
(relating to higher education expenses).</text>
</clause><clause id="HD2D3CEFAD51C43BEBB65E640240CDA78"><enum>(vi)</enum><text>Paragraph (19)
(relating to health savings accounts).</text>
</clause></subparagraph></paragraph><paragraph id="H46EECF235EAC46E59CBD2C800CF0D857"><enum>(3)</enum><header>Specified
exclusion</header><text>The term <quote>specified exclusion</quote>
means—</text>
<subparagraph id="HB877040BED2C42BC8D03C577A92558CD"><enum>(A)</enum><text>any interest
excluded under section 103,</text>
</subparagraph><subparagraph id="H957BAE51538245AC81B18D1B75B78E23"><enum>(B)</enum><text>any exclusion with
respect to the cost described in section 6051(a)(14) (without regard to
subparagraph (B) thereof), and</text>
</subparagraph><subparagraph id="H857B6B066AEC42529012708169D10589"><enum>(C)</enum><text>any foreign earned
income excluded under section 911.</text>
</subparagraph></paragraph></subsection><subsection id="H6A66CDFAD38049B8A45F0469DD18602E"><enum>(f)</enum><header>Non-Preference
disallowed deductions</header><text>For purposes of this section, the term
<quote>AMT-allowed deductions</quote> means all itemized deductions disallowed
by section 68 multiplied by the ratio that—</text>
<paragraph id="H63DC8E8D1A7342ABA04E9AA63F142D01"><enum>(1)</enum><text>a taxpayer’s
itemized deductions for the taxable year that are subject to section 68 (that
is, not including those excluded under section 68(c)) and that are not limited
under section 56(b)(1)(A) or (B), bears to</text>
</paragraph><paragraph id="H6F5BEA4A4BE44F84A36EE1F0AC9750FB"><enum>(2)</enum><text>the taxpayer’s
itemized deductions for the taxable year that are subject to section 68 (that
is, not including those excluded under section 68(c)).</text>
</paragraph></subsection><subsection id="HD4EFA41684C44232A40F9710792C37EF"><enum>(g)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be appropriate to carry out
this section, including regulations which provide appropriate adjustments to
the additional AMT
amount.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H4F637FA995C0475A880912DBE4A8F473"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning on or after January 1, 2013.</text>
</subsection></section></subtitle><subtitle id="HE32CA3F3F43F4F93BABB7515FA57CA33"><enum>B</enum><header>Tax carried
interest in investment partnerships as ordinary income</header>
<section id="H389CC490B8834F05BD994B110E351CFC"><enum>211.</enum><header>Partnership
interests transferred in connection with performance of services</header>
<subsection id="H6253BBF49BD04984BA52922060D1027B"><enum>(a)</enum><header>Modification to
election To include partnership interest in gross income in year of
transfer</header><text>Subsection (c) of section 83 of the Internal Revenue
Code of 1986 is amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:</text>
<quoted-block id="HE4D5DDD3F2484DB492AC048E8455A1E7" style="OLC">
<paragraph id="HECBD9E7FF01F4496AD631DD4DA77875F"><enum>(4)</enum><header>Partnership
interests</header><text>Except as provided by the Secretary—</text>
<subparagraph id="H416E0FCFE3644EABA607B8C88C07B3E7"><enum>(A)</enum><header>In
general</header><text>In the case of any transfer of an interest in a
partnership in connection with the provision of services to (or for the benefit
of) such partnership—</text>
<clause id="H9932A3DE7BDD4C419929608A1C5F697E"><enum>(i)</enum><text>the fair market
value of such interest shall be treated for purposes of this section as being
equal to the amount of the distribution which the partner would receive if the
partnership sold (at the time of the transfer) all of its assets at fair market
value and distributed the proceeds of such sale (reduced by the liabilities of
the partnership) to its partners in liquidation of the partnership, and</text>
</clause><clause id="H7C3FAF9ED0FA408A88C96C76BEE2E489"><enum>(ii)</enum><text>the person
receiving such interest shall be treated as having made the election under
subsection (b)(1) unless such person makes an election under this paragraph to
have such subsection not apply.</text>
</clause></subparagraph><subparagraph id="H5D7309D7996A46FCA530A48C95EBBE04"><enum>(B)</enum><header>Election</header><text>The
election under subparagraph (A)(ii) shall be made under rules similar to the
rules of subsection
(b)(2).</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFC32AB1EA4A54F1881E690D0FCBC6585"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to interests
in partnerships transferred after December 31, 2012.</text>
</subsection></section><section id="HF3B1D5F1ED8C413C9C1C6F7F5646C123"><enum>212.</enum><header>Special rules
for partners providing investment management services to partnerships</header>
<subsection id="H89236C4A4B6D44D4A109E5BC3B450B6A"><enum>(a)</enum><header>In
general</header><text>Part I of subchapter K of chapter 1 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
section:</text>
<quoted-block id="H939BE603C0264F5490D33832821B06FC" style="OLC">
<section id="H378FABFEE3A54893AAEF6F601E58FA80"><enum>710.</enum><header>Special rules
for partners providing investment management services to partnerships</header>
<subsection id="H4D9F759928D64FAFBF1AEA66F028192F"><enum>(a)</enum><header>Treatment of
distributive share of partnership items</header><text>For purposes of this
title, in the case of an investment services partnership interest—</text>
<paragraph id="H635CDE9E22A041AA8AE67E881EF3BAC7"><enum>(1)</enum><header>In
general</header><text>Notwithstanding section 702(b)—</text>
<subparagraph id="H20A2279A07F8456B83126817F198F0A2"><enum>(A)</enum><text>an amount equal to
the net capital gain with respect to such interest for any partnership taxable
year shall be treated as ordinary income, and</text>
</subparagraph><subparagraph id="HD45B8993577F4463BE496E6C9DE84D7C"><enum>(B)</enum><text>subject to the
limitation of paragraph (2), an amount equal to the net capital loss with
respect to such interest for any partnership taxable year shall be treated as
an ordinary loss.</text>
</subparagraph></paragraph><paragraph id="H9AADF07CD1C948ECBC44DDDD1E29EBE1"><enum>(2)</enum><header>Recharacterization
of losses limited to recharacterized gains</header><text>The amount treated as
ordinary loss under paragraph (1)(B) for any taxable year shall not exceed the
excess (if any) of—</text>
<subparagraph id="H66C970A09E8849B299C36C323271AF47"><enum>(A)</enum><text>the aggregate
amount treated as ordinary income under paragraph (1)(A) with respect to the
investment services partnership interest for all preceding partnership taxable
years to which this section applies, over</text>
</subparagraph><subparagraph id="H41CE7E77746D4D05A37FB8C6B47E3B9C"><enum>(B)</enum><text>the aggregate
amount treated as ordinary loss under paragraph (1)(B) with respect to such
interest for all preceding partnership taxable years to which this section
applies.</text>
</subparagraph></paragraph><paragraph id="H5ECDCBFCF9B84276B90CC92FED0A5D76"><enum>(3)</enum><header>Allocation to
items of gain and loss</header>
<subparagraph id="HE5690A78C62B43809380C80A3C1599DF"><enum>(A)</enum><header>Net capital
gain</header><text>The amount treated as ordinary income under paragraph (1)(A)
shall be allocated ratably among the items of long-term capital gain taken into
account in determining such net capital gain.</text>
</subparagraph><subparagraph id="H730D55C79B3947C5B0B97A3F1CB06D7F"><enum>(B)</enum><header>Net capital
loss</header><text>The amount treated as ordinary loss under paragraph (1)(B)
shall be allocated ratably among the items of long-term capital loss and
short-term capital loss taken into account in determining such net capital
loss.</text>
</subparagraph></paragraph><paragraph id="HBBB098AEE1CF4B89A2C599F0A230F5D8"><enum>(4)</enum><header>Terms relating
to capital gains and losses</header><text>For purposes of this section—</text>
<subparagraph id="H623110BBE5684E8A9D0B7546FDF1D9D8"><enum>(A)</enum><header>In
general</header><text>Net capital gain, long-term capital gain, and long-term
capital loss, with respect to any investment services partnership interest for
any taxable year, shall be determined under section 1222, except that such
section shall be applied—</text>
<clause id="HFF9322164A784F5F9949F744F2B7250E"><enum>(i)</enum><text>without regard to
the recharacterization of any item as ordinary income or ordinary loss under
this section,</text>
</clause><clause id="HE241C8B00C1C4C8FB435AC98B4C679FB"><enum>(ii)</enum><text>by only taking
into account items of gain and loss taken into account by the holder of such
interest under section 702 with respect to such interest for such taxable
year,</text>
</clause><clause id="H4D2AD2D939DE4B96A7F69E74A4EA3EB5"><enum>(iii)</enum><text>by treating
property which is taken into account in determining gains and losses to which
section 1231 applies as capital assets held for more than 1 year, and</text>
</clause><clause id="H77C41D0530C54C72B640113238B43C6C"><enum>(iv)</enum><text>without regard to
section 1202.</text>
</clause></subparagraph><subparagraph id="H6DAC43F6D4864176BFB98F2F391D2613"><enum>(B)</enum><header>Net capital
loss</header><text>The term <quote>net capital loss</quote> means the excess of
the losses from sales or exchanges of capital assets over the gains from such
sales or exchanges. Rules similar to the rules of clauses (i) through (iv) of
subparagraph (A) shall apply for purposes of the preceding sentence.</text>
</subparagraph></paragraph><paragraph id="H821F366B112045C99C05A98CDB0D9DBB"><enum>(5)</enum><header>Special rules
for dividends</header>
<subparagraph id="HE55D9E588E3045ECB734943447101794"><enum>(A)</enum><header>Individuals</header><text>Any
dividend allocated to any investment services partnership interest shall not be
treated as qualified dividend income for purposes of section 1(h).</text>
</subparagraph><subparagraph id="H40E29D22016B43EA8F0A6D5C91EFFB1B"><enum>(B)</enum><header>Corporations</header><text>No
deduction shall be allowed under section 243 or 245 with respect to any
dividend allocated to any investment services partnership interest.</text>
</subparagraph></paragraph></subsection><subsection id="H980FBA02CCEE4D4E847A17D246D1A133"><enum>(b)</enum><header>Dispositions of
partnership interests</header>
<paragraph id="H023E54EBFD3D470CA5CA9B3B6670E7A3"><enum>(1)</enum><header>Gain</header>
<subparagraph id="H48D162A4B52C45E799C6C7535B591E28"><enum>(A)</enum><header>In
general</header><text>Any gain on the disposition of an investment services
partnership interest shall be—</text>
<clause id="H6A215D3B04C946D6985387C050AD9267"><enum>(i)</enum><text>treated as
ordinary income, and</text>
</clause><clause id="H37622464BEB0432E956E9935C1096D04"><enum>(ii)</enum><text>recognized
notwithstanding any other provision of this subtitle.</text>
</clause></subparagraph><subparagraph id="H7AC1DD4CE92248B8B23184AA5D7ACEFD"><enum>(B)</enum><header>Exceptions;
Certain transfers to charities and related persons</header><text>Subparagraph
(A) shall not apply to—</text>
<clause id="H57A4099500214DABB503CBDEAD82419A"><enum>(i)</enum><text>a
disposition by gift,</text>
</clause><clause id="H070AB7778FC248A2AC3C00664D3E1BED"><enum>(ii)</enum><text>a
transfer at death, or</text>
</clause><clause id="HAA0F94E9CA4C41CAA4F61DA93F0B5B17"><enum>(iii)</enum><text>other
disposition identified by the Secretary as a disposition with respect to which
it would be inconsistent with the purposes of this section to apply
subparagraph (A), if such gift, transfer, or other disposition is to an
organization described in section 170(b)(1)(A) (other than any organization
described in section 509(a)(3) or any fund or account described in section
4966(d)(2)) or a person with respect to whom the transferred interest is an
investment services partnership interest.</text>
</clause></subparagraph></paragraph><paragraph id="H204C5C426BA14CDC9A8FAD1BFDA71F19"><enum>(2)</enum><header>Loss</header><text>Any
loss on the disposition of an investment services partnership interest shall be
treated as an ordinary loss to the extent of the excess (if any) of—</text>
<subparagraph id="H30F2DAC340394239B51CB645687936D1"><enum>(A)</enum><text>the aggregate
amount treated as ordinary income under subsection (a) with respect to such
interest for all partnership taxable years to which this section applies,
over</text>
</subparagraph><subparagraph id="HCDBF975B4D224033BA3A2726FD609031"><enum>(B)</enum><text>the aggregate
amount treated as ordinary loss under subsection (a) with respect to such
interest for all partnership taxable years to which this section
applies.</text>
</subparagraph></paragraph><paragraph id="H6304A3E2DFCD4C92B5CBE61D39A1DE23"><enum>(3)</enum><header>Election with
respect to certain exchanges</header><text>Paragraph (1)(A)(ii) shall not apply
to the contribution of an investment services partnership interest to a
partnership in exchange for an interest in such partnership if—</text>
<subparagraph id="HD059A4D45DE64E44990962564A3E272D"><enum>(A)</enum><text>the taxpayer makes
an irrevocable election to treat the partnership interest received in the
exchange as an investment services partnership interest, and</text>
</subparagraph><subparagraph id="HA55E5CDCB6134CE2AAAA53CA204C54DA"><enum>(B)</enum><text>the taxpayer
agrees to comply with such reporting and recordkeeping requirements as the
Secretary may prescribe.</text>
</subparagraph></paragraph><paragraph id="H4B71C47CC11E49928E5111E4557BA43C"><enum>(4)</enum><header>Distributions of
partnership property</header>
<subparagraph id="H78EC18DD562F4BCCB35D048A8E6081D2"><enum>(A)</enum><header>In
general</header><text>In the case of any distribution of property by a
partnership with respect to any investment services partnership interest held
by a partner, the partner receiving such property shall recognize gain equal to
the excess (if any) of—</text>
<clause id="H0B56BF0CF6D9444F9353855CD5F753A9"><enum>(i)</enum><text>the fair market
value of such property at the time of such distribution, over</text>
</clause><clause id="H23F3BDEE7BB84A95BAD40ED2D773D48C"><enum>(ii)</enum><text>the adjusted
basis of such property in the hands of such partner (determined without regard
to subparagraph (C)).</text>
</clause></subparagraph><subparagraph id="HF525BD9B71A14392AD3C3F382D855FB5"><enum>(B)</enum><header>Treatment of
gain as ordinary income</header><text>Any gain recognized by such partner under
subparagraph (A) shall be treated as ordinary income to the same extent and in
the same manner as the increase in such partner’s distributive share of the
taxable income of the partnership would be treated under subsection (a) if,
immediately prior to the distribution, the partnership had sold the distributed
property at fair market value and all of the gain from such disposition were
allocated to such partner. For purposes of applying paragraphs (2) and (3) of
subsection (a), any gain treated as ordinary income under this subparagraph
shall be treated as an amount treated as ordinary income under subsection
(a)(1)(A).</text>
</subparagraph><subparagraph id="H3A1CC616BEED43A5944EF19F4E6F0935"><enum>(C)</enum><header>Adjustment of
basis</header><text>In the case a distribution to which subparagraph (A)
applies, the basis of the distributed property in the hands of the distributee
partner shall be the fair market value of such property.</text>
</subparagraph><subparagraph id="HAEFEA34484FD465991CF3AF318BF9EA3"><enum>(D)</enum><header>Special rules
with respect to mergers, divisions, and technical terminations</header><text>In
the case of a taxpayer which satisfies requirements similar to the requirements
of subparagraphs (A) and (B) of paragraph (3), this paragraph and paragraph
(1)(A)(ii) shall not apply to the distribution of a partnership interest if
such distribution is in connection with a contribution (or deemed contribution)
of any property of the partnership to which section 721 applies pursuant to a
transaction described in paragraph (1)(B) or (2) of section 708(b).</text>
</subparagraph></paragraph></subsection><subsection id="H25FC66CF641A45C2A16B20D30C947E02"><enum>(c)</enum><header>Investment
services partnership interest</header><text>For purposes of this
section—</text>
<paragraph id="H86B6553C0B7643F4A2D14B635559BC49"><enum>(1)</enum><header>In
general</header><text>The term <quote>investment services partnership
interest</quote> means any interest in an investment partnership acquired or
held by any person in connection with the conduct of a trade or business
described in paragraph (2) by such person (or any person related to such
person). An interest in an investment partnership held by any person—</text>
<subparagraph id="H4EB73EE3CE8347F68C686D5994737CB6"><enum>(A)</enum><text>shall not be
treated as an investment services partnership interest for any period before
the first date on which it is so held in connection with such a trade or
business,</text>
</subparagraph><subparagraph id="H499C59A8DAEC4482BEC213123DA7C267"><enum>(B)</enum><text>shall not cease to
be an investment services partnership interest merely because such person holds
such interest other than in connection with such a trade or business,
and</text>
</subparagraph><subparagraph id="H5FB249BA0BE04613A074438C2302170A"><enum>(C)</enum><text>shall be treated
as an investment services partnership interest if acquired from a related
person in whose hands such interest was an investment services partnership
interest.</text>
</subparagraph></paragraph><paragraph id="H056A2A4EF27E45C89ED0C5C747F990F3"><enum>(2)</enum><header>Businesses to
which this section applies</header><text>A trade or business is described in
this paragraph if such trade or business primarily involves the performance of
any of the following services with respect to assets held (directly or
indirectly) by the investment partnership referred to in paragraph (1):</text>
<subparagraph id="HC76BF8BA48D3412797F44519E115FBA9"><enum>(A)</enum><text>Advising as to the
advisability of investing in, purchasing, or selling any specified
asset.</text>
</subparagraph><subparagraph id="H05D5E82B108C4583B200F257F062A84D"><enum>(B)</enum><text>Managing,
acquiring, or disposing of any specified asset.</text>
</subparagraph><subparagraph id="HB1EB4505E1034C9EB3A7A2EA095FC32B"><enum>(C)</enum><text>Arranging
financing with respect to acquiring specified assets.</text>
</subparagraph><subparagraph id="H61D5B5803F8E4709B77FA253E0EFBE8C"><enum>(D)</enum><text>Any activity in
support of any service described in subparagraphs (A) through (C).</text>
</subparagraph></paragraph><paragraph id="HC7478ACE19AE43AB85DBF701DDC9A0AE"><enum>(3)</enum><header>Investment
partnership</header>
<subparagraph id="H347D4E0808A547FDBB31E850F154CE9B"><enum>(A)</enum><header>In
general</header><text>The term <quote>investment partnership</quote> means any
partnership if, at the end of any calendar quarter ending after December 31,
2012—</text>
<clause id="HB322ECF3A612484CAAD099EBDDB8BCB3"><enum>(i)</enum><text>substantially all
of the assets of the partnership are specified assets (determined without
regard to any section 197 intangible within the meaning of section 197(d)),
and</text>
</clause><clause id="HDB52E846C3D240B8A8A8AE861DD5E835"><enum>(ii)</enum><text>more than half of
the contributed capital of the partnership is attributable to contributions of
property by one or more persons in exchange for interests in the partnership
which (in the hands of such persons) constitute property held for the
production of income.</text>
</clause></subparagraph><subparagraph id="HB7315E90890848D9AA294830785DC541"><enum>(B)</enum><header>Special rules
for determining if property held for the production of
income</header><text>Except as otherwise provided by the Secretary, for
purposes of determining whether any interest in a partnership constitutes
property held for the production of income under subparagraph (A)(ii)—</text>
<clause id="H3D09245DE0EF429B9F76435F8CD7C8A7"><enum>(i)</enum><text>any election under
subsection (e) or (f) of section 475 shall be disregarded, and</text>
</clause><clause id="H982AA951154244158D4398F72766229C"><enum>(ii)</enum><text>paragraph (5)(B)
shall not apply.</text>
</clause></subparagraph><subparagraph id="HC90FA2E7E948481E82688ED9A86EB3F5"><enum>(C)</enum><header>Antiabuse
rules</header><text>The Secretary may issue regulations or other guidance which
prevent the avoidance of the purposes of subparagraph (A), including
regulations or other guidance which treat convertible and contingent debt (and
other debt having the attributes of equity) as a capital interest in the
partnership.</text>
</subparagraph><subparagraph id="H10C9E3CFEDDD460C93596688834BB9E6"><enum>(D)</enum><header>Controlled
groups of entities</header>
<clause id="H14FB797E07094EB9AFDFCA77D841A239"><enum>(i)</enum><header>In
general</header><text>In the case of a controlled group of entities, if an
interest in the partnership received in exchange for a contribution to the
capital of the partnership by any member of such controlled group would (in the
hands of such member) constitute property not held for the production of
income, then any interest in such partnership held by any member of such group
shall be treated for purposes of subparagraph (A) as constituting (in the hands
of such member) property not held for the production of income.</text>
</clause><clause id="H80B6295CF7354A388534F99C72614BDC"><enum>(ii)</enum><header>Controlled
group of entities</header><text>For purposes of clause (i), the term
<quote>controlled group of entities</quote> means a controlled group of
corporations as defined in section 1563(a)(1), applied without regard to
subsections (a)(4) and (b)(2) of section 1563. A partnership or any other
entity (other than a corporation) shall be treated as a member of a controlled
group of entities if such entity is controlled (within the meaning of section
954(d)(3)) by members of such group (including any entity treated as a member
of such group by reason of this sentence).</text>
</clause></subparagraph></paragraph><paragraph id="H7B7A60A86EA44345BCB0DF621900E202"><enum>(4)</enum><header>Specified
asset</header><text>The term <quote>specified asset</quote> means securities
(as defined in section 475(c)(2) without regard to the last sentence thereof),
real estate held for rental or investment, interests in partnerships,
commodities (as defined in section 475(e)(2)), cash or cash equivalents, or
options or derivative contracts with respect to any of the foregoing.</text>
</paragraph><paragraph id="HB9A48CE725BD4A998E0E07C33DBDC668"><enum>(5)</enum><header>Related
persons</header>
<subparagraph id="H8312C2597ED344DD8991C2F430F86FAD"><enum>(A)</enum><header>In
general</header><text>A person shall be treated as related to another person if
the relationship between such persons is described in section 267(b) or
707(b).</text>
</subparagraph><subparagraph id="HFA89C57EB8BF4751B892A2D8A874D6DC"><enum>(B)</enum><header>Attribution of
partner services</header><text>Any service described in paragraph (2) which is
provided by a partner of a partnership shall be treated as also provided by
such partnership.</text>
</subparagraph></paragraph></subsection><subsection id="HC4CAF0328F0C4258968B8394002A2510"><enum>(d)</enum><header>Exception for
certain capital interests</header>
<paragraph id="H0B743D1FFB974532B952E88FF86345D8"><enum>(1)</enum><header>In
general</header><text>In the case of any portion of an investment services
partnership interest which is a qualified capital interest, all items of gain
and loss (and any dividends) which are allocated to such qualified capital
interest shall not be taken into account under subsection (a) if—</text>
<subparagraph id="HA6D3F937E3CF4FE0BBA2C89F4983F571"><enum>(A)</enum><text>allocations of
items are made by the partnership to such qualified capital interest in the
same manner as such allocations are made to other qualified capital interests
held by partners who do not provide any services described in subsection (c)(2)
and who are not related to the partner holding the qualified capital interest,
and</text>
</subparagraph><subparagraph id="H16A16DA2A2864465BF32B62526D1FF7D"><enum>(B)</enum><text>the allocations
made to such other interests are significant compared to the allocations made
to such qualified capital interest.</text>
</subparagraph></paragraph><paragraph id="HD5F02EE81E474B24BA2191C8CE1BD67F"><enum>(2)</enum><header>Authority to
provide exceptions to allocation requirements</header><text>To the extent
provided by the Secretary in regulations or other guidance—</text>
<subparagraph id="HD527F05314D042EEB909208C4A3036DC"><enum>(A)</enum><header>Allocations to
portion of qualified capital interest</header><text>Paragraph (1) may be
applied separately with respect to a portion of a qualified capital
interest.</text>
</subparagraph><subparagraph id="HDB815F4B7FC342129CF937CE5F63F47A"><enum>(B)</enum><header>No or
insignificant allocations to nonservice providers</header><text>In any case in
which the requirements of paragraph (1)(B) are not satisfied, items of gain and
loss (and any dividends) shall not be taken into account under subsection (a)
to the extent that such items are properly allocable under such regulations or
other guidance to qualified capital interests.</text>
</subparagraph><subparagraph id="H37223DE0A3BB4AD7B5B0FAF883EAA1CF"><enum>(C)</enum><header>Allocations to
service providers’ qualified capital interests which are less than other
allocations</header><text>Allocations shall not be treated as failing to meet
the requirement of paragraph (1)(A) merely because the allocations to the
qualified capital interest represent a lower return than the allocations made
to the other qualified capital interests referred to in such paragraph.</text>
</subparagraph></paragraph><paragraph id="HD649DB8261EC45849E7F06584251CE5D"><enum>(3)</enum><header>Special rule for
changes in services and capital contributions</header><text>In the case of an
interest in a partnership which was not an investment services partnership
interest and which, by reason of a change in the services with respect to
assets held (directly or indirectly) by the partnership or by reason of a
change in the capital contributions to such partnership, becomes an investment
services partnership interest, the qualified capital interest of the holder of
such partnership interest immediately after such change shall not, for purposes
of this subsection, be less than the fair market value of such interest
(determined immediately before such change).</text>
</paragraph><paragraph id="H871561588DE3495C9D44A23A4F2FE520"><enum>(4)</enum><header>Special rule for
tiered partnerships</header><text>Except as otherwise provided by the
Secretary, in the case of tiered partnerships, all items which are allocated in
a manner which meets the requirements of paragraph (1) to qualified capital
interests in a lower-tier partnership shall retain such character to the extent
allocated on the basis of qualified capital interests in any upper-tier
partnership.</text>
</paragraph><paragraph id="HE0E7D52D90664920BDB53159F61C5E99"><enum>(5)</enum><header>Exception for
no-self-charged carry and management fee provisions</header><text>Except as
otherwise provided by the Secretary, an interest shall not fail to be treated
as satisfying the requirement of paragraph (1)(A) merely because the
allocations made by the partnership to such interest do not reflect the cost of
services described in subsection (c)(2) which are provided (directly or
indirectly) to the partnership by the holder of such interest (or a related
person).</text>
</paragraph><paragraph id="H6E8EE492D2C6403E8E1C02B5810F2A5B"><enum>(6)</enum><header>Special rule for
dispositions</header><text>In the case of any investment services partnership
interest any portion of which is a qualified capital interest, subsection (b)
shall not apply to so much of any gain or loss as bears the same proportion to
the entire amount of such gain or loss as—</text>
<subparagraph id="H733CB6A70ECA42848D7462FA3375DB5E"><enum>(A)</enum><text>the distributive
share of gain or loss that would have been allocated to the qualified capital
interest (consistent with the requirements of paragraph (1)) if the partnership
had sold all of its assets at fair market value immediately before the
disposition, bears to</text>
</subparagraph><subparagraph id="H2FAFD21243FD4E4D8D0C00C02ED1FC10"><enum>(B)</enum><text>the distributive
share of gain or loss that would have been so allocated to the investment
services partnership interest of which such qualified capital interest is a
part.</text>
</subparagraph></paragraph><paragraph id="H9B7E3EBF2FCF48CA9E4AAAF395EB0536"><enum>(7)</enum><header>Qualified
capital interest</header><text>For purposes of this subsection—</text>
<subparagraph id="H0C479F4B6AA8474AA4184E3E31D51637"><enum>(A)</enum><header>In
general</header><text>The term <quote>qualified capital interest</quote> means
so much of a partner’s interest in the capital of the partnership as is
attributable to—</text>
<clause id="H4C8A41A5E6FF4FB39B8C43BCFC62B3AE"><enum>(i)</enum><text>the fair market
value of any money or other property contributed to the partnership in exchange
for such interest (determined without regard to section 752(a)),</text>
</clause><clause id="HA768E413E7E24AEA824265B16031DC5E"><enum>(ii)</enum><text>any amounts which
have been included in gross income under section 83 with respect to the
transfer of such interest, and</text>
</clause><clause id="H144AB2CE32494900B11CB7BFB448146A"><enum>(iii)</enum><text>the excess (if
any) of—</text>
<subclause id="H5893FB2B34AC40ED9D50110C366F3A78"><enum>(I)</enum><text>any items of
income and gain taken into account under section 702 with respect to such
interest, over</text>
</subclause><subclause id="HB86B1621CC77475792289930B164E9C1"><enum>(II)</enum><text>any items of
deduction and loss so taken into account.</text>
</subclause></clause></subparagraph><subparagraph id="H56A93D945B734102A4A172DF535515A5"><enum>(B)</enum><header>Adjustment to
qualified capital interest</header>
<clause id="H2D3C17A12F4E4551A11012214262E5CF"><enum>(i)</enum><header>Distributions
and losses</header><text>The qualified capital interest shall be reduced by
distributions from the partnership with respect to such interest and by the
excess (if any) of the amount described in subparagraph (A)(iii)(II) over the
amount described in subparagraph (A)(iii)(I).</text>
</clause><clause id="HFB9E5E03DF2444BDB10CF50F296A326D"><enum>(ii)</enum><header>Special rule
for contributions of property</header><text>In the case of any contribution of
property described in subparagraph (A)(i) with respect to which the fair market
value of such property is not equal to the adjusted basis of such property
immediately before such contribution, proper adjustments shall be made to the
qualified capital interest to take into account such difference consistent with
such regulations or other guidance as the Secretary may provide.</text>
</clause></subparagraph><subparagraph id="H5E4282C2D75541A8BCF28A53015CC6C2"><enum>(C)</enum><header>Technical
terminations, etc., disregarded</header><text>No increase or decrease in the
qualified capital interest of any partner shall result from a termination,
merger, consolidation, or division described in section 708, or any similar
transaction.</text>
</subparagraph></paragraph><paragraph id="H884C885F5EAA4555B936D9D68B44BEB7"><enum>(8)</enum><header>Treatment of
certain loans</header>
<subparagraph id="H36311933F9914D658B39C57311F9F6C6"><enum>(A)</enum><header>Proceeds of
partnership loans not treated as qualified capital interest of service
providing partners</header><text>For purposes of this subsection, an investment
services partnership interest shall not be treated as a qualified capital
interest to the extent that such interest is acquired in connection with the
proceeds of any loan or other advance made or guaranteed, directly or
indirectly, by any other partner or the partnership (or any person related to
any such other partner or the partnership). The preceding sentence shall not
apply to the extent the loan or other advance is repaid before January 1, 2013
unless such repayment is made with the proceeds of a loan or other advance
described in the preceding sentence.</text>
</subparagraph><subparagraph id="HE5B144C36259403183E823E3E2B06D82"><enum>(B)</enum><header>Reduction in
allocations to qualified capital interests for loans from nonservice-providing
partners to the partnership</header><text>For purposes of this subsection, any
loan or other advance to the partnership made or guaranteed, directly or
indirectly, by a partner not providing services described in subsection (c)(2)
to the partnership (or any person related to such partner) shall be taken into
account in determining the qualified capital interests of the partners in the
partnership.</text>
</subparagraph></paragraph></subsection><subsection id="HBD0D65893B5F465C8F782E6DA9F7892C"><enum>(e)</enum><header>Other income and
gain in connection with investment management services</header>
<paragraph id="HC01F6CB6876D467DB450D4DE64802BA1"><enum>(1)</enum><header>In
general</header><text>If—</text>
<subparagraph id="H25C97E0D9A4A49DA8065512D5BEB6AEB"><enum>(A)</enum><text>a person performs
(directly or indirectly) investment management services for any investment
entity,</text>
</subparagraph><subparagraph id="H60AE775EB16443A090CEFA0C8B2EB3A9"><enum>(B)</enum><text>such person holds
(directly or indirectly) a disqualified interest with respect to such entity,
and</text>
</subparagraph><subparagraph id="HE1D633FF8B3B42CA9FDDC3FAAFD8A6EF"><enum>(C)</enum><text>the value of such
interest (or payments thereunder) is substantially related to the amount of
income or gain (whether or not realized) from the assets with respect to which
the investment management services are performed, any income or gain with
respect to such interest shall be treated as ordinary income. Rules similar to
the rules of subsections (a)(5) and (d) shall apply for purposes of this
subsection.</text>
</subparagraph></paragraph><paragraph id="HFE87E669D22E452CADB316B9A2A914CE"><enum>(2)</enum><header>Definitions</header><text>For
purposes of this subsection—</text>
<subparagraph id="H281B2DCF38DE40258BAAF56ED46F97F7"><enum>(A)</enum><header>Disqualified
interest</header>
<clause id="H32273BCDBD28435FA51D3B77F649E7E4"><enum>(i)</enum><header>In
general</header><text>The term <quote>disqualified interest</quote> means, with
respect to any investment entity—</text>
<subclause id="H9F5816A5C04D40BBA2F944731D46CB5A"><enum>(I)</enum><text>any interest in
such entity other than indebtedness,</text>
</subclause><subclause id="H8C82B72B37394912BCA76AB4987D4E1A"><enum>(II)</enum><text>convertible or
contingent debt of such entity,</text>
</subclause><subclause id="H9F3F51F5CED0481A9539CBCB48A9B795"><enum>(III)</enum><text>any option or
other right to acquire property described in subclause (I) or (II), and</text>
</subclause><subclause id="H2A841A55F90046979B75150469983388"><enum>(IV)</enum><text>any derivative
instrument entered into (directly or indirectly) with such entity or any
investor in such entity.</text>
</subclause></clause><clause id="H2B8FB416DD8E4105BA30D5339B29E644"><enum>(ii)</enum><header>Exceptions</header><text>Such
term shall not include—</text>
<subclause id="HBBD4AB51A3744023AFA4FA534B989305"><enum>(I)</enum><text>a partnership
interest,</text>
</subclause><subclause id="H16E2A7B28894434CA7AE898EEDB9B953"><enum>(II)</enum><text>except as
provided by the Secretary, any interest in a taxable corporation, and</text>
</subclause><subclause id="H8195DB2B8B964AC8959889E0540B611A"><enum>(III)</enum><text>except as
provided by the Secretary, stock in an S corporation.</text>
</subclause></clause></subparagraph><subparagraph id="HD510B72DF9344DBAA9A624CB10B8148D"><enum>(B)</enum><header>Taxable
corporation</header><text>The term <quote>taxable corporation</quote>
means—</text>
<clause id="H65E82B0B23AD42F5BC9F43F859DF40B8"><enum>(i)</enum><text>a
domestic C corporation, or</text>
</clause><clause id="H6EB3F381634540348C9C4C4F388C4644"><enum>(ii)</enum><text>a
foreign corporation substantially all of the income of which is—</text>
<subclause id="H800AA1EDA3C24BDC9D464F36A9FB9D3E"><enum>(I)</enum><text>effectively
connected with the conduct of a trade or business in the United States,
or</text>
</subclause><subclause id="HEF9F0AB5155245309286A1B5BB81DF07"><enum>(II)</enum><text>subject to a
comprehensive foreign income tax (as defined in section 457A(d)(2)).</text>
</subclause></clause></subparagraph><subparagraph id="H24B6E8FB166E4191BE7459FF6CE519A3"><enum>(C)</enum><header>Investment
management services</header><text>The term <quote>investment management
services</quote> means a substantial quantity of any of the services described
in subsection (c)(2).</text>
</subparagraph><subparagraph id="H85F034EC9ADA4012A98C4B8D8321038B"><enum>(D)</enum><header>Investment
entity</header><text>The term <quote>investment entity</quote> means any entity
which, if it were a partnership, would be an investment partnership.</text>
</subparagraph></paragraph></subsection><subsection id="HDF15D915368F4D94A757D77EBF6C1C1F"><enum>(f)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations or other guidance as is necessary or
appropriate to carry out the purposes of this section, including regulations or
other guidance to—</text>
<paragraph id="H06209A4383E74539B51CAB9BFC4E5FEF"><enum>(1)</enum><text>provide
modifications to the application of this section (including treating related
persons as not related to one another) to the extent such modification is
consistent with the purposes of this section, and</text>
</paragraph><paragraph id="H08C342938B3748F1AFBDB248F04692C4"><enum>(2)</enum><text>coordinate this
section with the other provisions of this title.</text>
</paragraph></subsection><subsection id="H1C387B3A761345EB96D6AE6075275AB3"><enum>(g)</enum><header>Cross
reference</header><text>For 40 percent penalty on certain underpayments due to
the avoidance of this section, see section
6662.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA24B80395C5F444E80F2DFC5458AF805"><enum>(b)</enum><header>Application of
section 751 to indirect dispositions of investment services partnership
interests</header>
<paragraph id="H6F63F1C2CC584B429EDB415B4703084D"><enum>(1)</enum><header>In
general</header><text>Subsection (a) of section 751 of the Internal Revenue
Code of 1986 is amended by striking <quote>or</quote> at the end of paragraph
(1), by inserting <quote>or</quote> at the end of paragraph (2), and by
inserting after paragraph (2) the following new paragraph:</text>
<quoted-block id="H4DDA3192168A420DA3F4A5EC3FBE0911" style="OLC">
<paragraph id="HD16633DC64424603BC0496575CF61F91"><enum>(3)</enum><text>investment
services partnership interests held by the
partnership,</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HB62DC71D28074DF183F57061741D81AF"><enum>(2)</enum><header>Certain
distributions treated as sales or exchanges</header><text>Subparagraph (A) of
<external-xref legal-doc="usc" parsable-cite="usc/26/751">section 751(b)(1)</external-xref> of the Internal Revenue Code of 1986 is amended by striking
<quote>or</quote> at the end of clause (i), by inserting <quote>or</quote> at
the end of clause (ii), and by inserting after clause (ii) the following new
clause:</text>
<quoted-block id="H4726BAC83A8C406890790F821E35F9B9" style="OLC">
<clause id="H2DAE20D459634D799FBE835E3D2740E1"><enum>(iii)</enum><text>investment
services partnership interests held by the
partnership,</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HD28AAFA8EB734919B52201D974C99AE4"><enum>(3)</enum><header>Application of
special rules in the case of tiered partnerships</header><text>Subsection (f)
of <external-xref legal-doc="usc" parsable-cite="usc/26/751">section 751</external-xref> of the Internal Revenue Code of 1986 is amended by striking
<quote>or</quote> at the end of paragraph (1), by inserting <quote>or</quote>
at the end of paragraph (2), and by inserting after paragraph (2) the following
new paragraph:</text>
<quoted-block id="H5B09D829F5CE44C1BB01FA7F2C541079" style="OLC">
<paragraph id="H55451CFD41BF495788A4CA913F972978"><enum>(3)</enum><text>investment
services partnership interests held by the
partnership,</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HBBBA632E7B574FFDABC2F3F15F01E04E"><enum>(4)</enum><header>Investment
services partnership interests; qualified capital
interests</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/751">Section 751</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block id="H2A84439649C64F7EA8A9769C332AF413" style="OLC">
<subsection id="HA18E0E07046F4219BCCF604DD06C2A57"><enum>(g)</enum><header>Investment
services partnership interests</header><text>For purposes of this
section—</text>
<paragraph id="H1679973C55484C8285916CD98BFF69D7"><enum>(1)</enum><header>In
general</header><text>The term <quote>investment services partnership
interest</quote> has the meaning given such term by section 710(c).</text>
</paragraph><paragraph id="HB7AEFDFADD784B31BAF4703FA1E3E3E0"><enum>(2)</enum><header>Adjustments for
qualified capital interests</header><text>The amount to which subsection (a)
applies by reason of paragraph (3) thereof shall not include so much of such
amount as is attributable to any portion of the investment services partnership
interest which is a qualified capital interest (determined under rules similar
to the rules of section 710(d)).</text>
</paragraph><paragraph id="H85EE244FEA204978B098702A79130BB6"><enum>(3)</enum><header>Recognition of
gains</header><text>Any gain with respect to which subsection (a) applies by
reason of paragraph (3) thereof shall be recognized notwithstanding any other
provision of this title.</text>
</paragraph><paragraph id="H5A48C829AB2843BF9A2CA0EACD30FE0E"><enum>(4)</enum><header>Coordination
with inventory items</header><text>An investment services partnership interest
held by the partnership shall not be treated as an inventory item of the
partnership.</text>
</paragraph><paragraph id="H973427ED39174A26948B527999D4FC1F"><enum>(5)</enum><header>Prevention of
double counting</header><text>Under regulations or other guidance prescribed by
the Secretary, subsection (a)(3) shall not apply with respect to any amount to
which section 710
applies.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H5E48A023C6C5452EA482D80E4A713169"><enum>(c)</enum><header>Treatment for
purposes of section 7704</header><text>Subsection (d) of section 7704 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
paragraph:</text>
<quoted-block id="H1C60C846ED6B4947BA8D27F415C11818" style="OLC">
<paragraph id="HCFEE443C170941BB8C937AB0827DDBC1"><enum>(6)</enum><header>Income from
certain carried interests not qualified</header>
<subparagraph id="H80E983693C4B40CDA0ECD23CB0C7D5AF"><enum>(A)</enum><header>In
general</header><text>Specified carried interest income shall not be treated as
qualifying income.</text>
</subparagraph><subparagraph id="HB9EC7AA296A548A4A540B5858AD3CB39"><enum>(B)</enum><header>Specified
carried interest income</header><text>For purposes of this paragraph—</text>
<clause id="HB7E4F63721BF4BAEBB277097649AFA7E"><enum>(i)</enum><header>In
general</header><text>The term <quote>specified carried interest income</quote>
means—</text>
<subclause id="HFFF96311130E4A628090600D71E34321"><enum>(I)</enum><text>any item of income
or gain allocated to an investment services partnership interest (as defined in
section 710(c)) held by the partnership,</text>
</subclause><subclause id="H3F4D73E20D6344D89AC5CCA038C68CB4"><enum>(II)</enum><text>any gain on the
disposition of an investment services partnership interest (as so defined) or a
partnership interest to which (in the hands of the partnership) section 751
applies, and</text>
</subclause><subclause id="H8FDE8F2B1F6A41BF84CC8EEB7A387809"><enum>(III)</enum><text>any income or
gain taken into account by the partnership under subsection (b)(4) or (e) of
section 710.</text>
</subclause></clause><clause id="HCEFEB3552BA94016948815AB0961C036"><enum>(ii)</enum><header>Exception for
qualified capital interests</header><text>A rule similar to the rule of section
710(d) shall apply for purposes of clause (i).</text>
</clause></subparagraph><subparagraph id="H6721509CED514635A9703D3936B21C38"><enum>(C)</enum><header>Coordination
with other provisions</header><text>Subparagraph (A) shall not apply to any
item described in paragraph (1)(E) (or so much of paragraph (1)(F) as relates
to paragraph (1)(E)).</text>
</subparagraph><subparagraph id="H7409C1611F05443E88386383DF7DB566"><enum>(D)</enum><header>Special rules
for certain partnerships</header>
<clause id="H1D36E29A78584916A8ECDCCA3004BA9F"><enum>(i)</enum><header>Certain
partnerships owned by real estate investment trusts</header><text>Subparagraph
(A) shall not apply in the case of a partnership which meets each of the
following requirements:</text>
<subclause id="HEF1124F200474123BBC4ADA27A3DBB2E"><enum>(I)</enum><text>Such partnership
is treated as publicly traded under this section solely by reason of interests
in such partnership being convertible into interests in a real estate
investment trust which is publicly traded.</text>
</subclause><subclause id="H2F85CE239252438688DDBF6489FE8BDB"><enum>(II)</enum><text>Fifty percent or
more of the capital and profits interests of such partnership are owned,
directly or indirectly, at all times during the taxable year by such real
estate investment trust (determined with the application of section
267(c)).</text>
</subclause><subclause id="H5968A0E8975E4C3BB1D9D0964002DC88"><enum>(III)</enum><text>Such partnership
meets the requirements of paragraphs (2), (3), and (4) of section
856(c).</text>
</subclause></clause><clause id="HF929136B54674E0FADB9435BBC93FA08"><enum>(ii)</enum><header>Certain
partnerships owning other publicly traded
partnerships</header><text>Subparagraph (A) shall not apply in the case of a
partnership which meets each of the following requirements:</text>
<subclause id="H9D5C1718F28D496F874F95DDF917EEFA"><enum>(I)</enum><text>Substantially all
of the assets of such partnership consist of interests in one or more publicly
traded partnerships (determined without regard to subsection (b)(2)).</text>
</subclause><subclause id="HA09C57D8C2764464B5D29F136C911200"><enum>(II)</enum><text>Substantially all
of the income of such partnership is ordinary income or section 1231 gain (as
defined in section 1231(a)(3)).</text>
</subclause></clause></subparagraph><subparagraph id="H669C5CE976154458941A0280154C800A"><enum>(E)</enum><header>Transitional
rule</header><text>Subparagraph (A) shall not apply to any taxable year of the
partnership beginning before the date which is 10 years after January 1,
2013.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HCB1520291B1140D6AA0592470DE416E7"><enum>(d)</enum><header>Imposition of
penalty on underpayments</header>
<paragraph id="HD7C68112AFCA42608EB3CBE3904900DA"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 6662 of the Internal Revenue
Code of 1986 is amended by inserting after paragraph (7) the following new
paragraph:</text>
<quoted-block id="HBA7A707047FF4B4F9E054C4E97691783" style="OLC">
<paragraph id="H4644704B9BB44DD7A7E05A8CF0405166"><enum>(8)</enum><text>The application of
section 710(e) or the regulations or other guidance prescribed under section
710(h) to prevent the avoidance of the purposes of section
710.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H851F8B098414429C87D28ADC67C7A3C8"><enum>(2)</enum><header>Amount of
penalty</header>
<subparagraph id="H03AEB88B30B745B78722309F4A77F0FD"><enum>(A)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/6662">Section 6662</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block id="HD4F99D2C5FCB4813AD622B688EFB45E7" style="OLC">
<subsection id="HEA7A1E64F37C4067BC9425C6139BF9DE"><enum>(k)</enum><header>Increase in
penalty in case of property transferred for investment management
services</header><text>In the case of any portion of an underpayment to which
this section applies by reason of subsection (b)(8), subsection (a) shall be
applied with respect to such portion by substituting <quote>40 percent</quote>
for <quote>20
percent</quote>.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HA5CCD71077B648CF8B8A8746056A6BF9"><enum>(B)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">Subparagraph (B) of
section 6662A(e)(2) is amended by striking <quote>or (i)</quote> and inserting
<quote>, (i), or (k)</quote>.</text>
</subparagraph></paragraph><paragraph id="H6DD7B4224C7E4AAFBBED46894C57BB82"><enum>(3)</enum><header>Special rules
for application of reasonable cause exception</header><text display-inline="yes-display-inline">Subsection (c) of section 6664 is
amended—</text>
<subparagraph id="HADC20A12136245C2BFFBC1A39CAAA1FF"><enum>(A)</enum><text>by redesignating
paragraphs (3) and (4) as paragraphs (4) and (5), respectively;</text>
</subparagraph><subparagraph id="HB4649F28B92C4A36B77CCB17450C94CE"><enum>(B)</enum><text>by striking
<quote>paragraph (3)</quote> in paragraph (5)(A), as so redesignated, and
inserting <quote>paragraph (4)</quote>; and</text>
</subparagraph><subparagraph id="H9C29C83B63EC4CD288BEFA479DAC12AF"><enum>(C)</enum><text>by inserting after
paragraph (2) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HF9EFAB569AF04BFB98BCF1E951461830" style="OLC">
<paragraph id="HD85F72D832B54AD28F47754DD2E6A4F0"><enum>(3)</enum><header>Special rule for
underpayments attributable to investment management services</header>
<subparagraph id="H06820C5B848C428BA66B5A7B8438B379"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) shall
not apply to any portion of an underpayment to which section 6662 applies by
reason of subsection (b)(8) unless—</text>
<clause id="HC1CEE03528144E9D933129CDD73F8FB5"><enum>(i)</enum><text>the relevant facts
affecting the tax treatment of the item are adequately disclosed,</text>
</clause><clause id="H6D606DB4C7F34481A549103117253749"><enum>(ii)</enum><text>there is or was
substantial authority for such treatment, and</text>
</clause><clause id="H4BD6C4FD594545E6837C5F051DF7D6CB"><enum>(iii)</enum><text>the taxpayer
reasonably believed that such treatment was more likely than not the proper
treatment.</text>
</clause></subparagraph><subparagraph id="H64315E2A989F41E4A3DA65770A74136F"><enum>(B)</enum><header>Rules relating
to reasonable belief</header><text>Rules similar to the rules of subsection
(d)(3) shall apply for purposes of subparagraph
(A)(iii).</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="H61533C370229408FB86CE0A96EB833DD"><enum>(e)</enum><header>Income and loss
from investment services partnership interests taken into account in
determining net earnings from self-Employment</header>
<paragraph id="HF833283F18B14FA2B4B0A33A7731C83B"><enum>(1)</enum><header>Internal revenue
code</header>
<subparagraph id="H9B97EA4387184978843805E6E7E328D3"><enum>(A)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/1402">Section 1402(a)</external-xref> of the Internal Revenue Code of 1986 is
amended by striking <quote>and</quote> at the end of paragraph (16), by
striking the period at the end of paragraph (17) and inserting <quote>;
and</quote>, and by inserting after paragraph (17) the following new
paragraph:</text>
<quoted-block id="HC0652D1916774E17B368F7E19ED776E1" style="OLC">
<paragraph id="HD93412AFF26A464A8473438CD946C90F"><enum>(18)</enum><text>notwithstanding
the preceding provisions of this subsection, in the case of any individual
engaged in the trade or business of providing services described in section
710(c)(2) with respect to any entity, investment services partnership income or
loss (as defined in subsection (m)) of such individual with respect to such
entity shall be taken into account in determining the net earnings from
self-employment of such
individual.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H33A4D2A5DB8B40319EDB620A199EDE47"><enum>(B)</enum><header>Investment
services partnership income or loss</header><text>Section 1402 of the Internal
Revenue Code is amended by adding at the end the following new
subsection:</text>
<quoted-block id="H8169AC5EC4894D95B34A9D9209EA6E1D" style="OLC">
<subsection id="H0EDEE5B558DE4132B6935EAA2A7A80FF"><enum>(m)</enum><header>Investment
services partnership income or loss</header><text>For purposes of subsection
(a)—</text>
<paragraph id="H07A9DF927CED4DBB8FC61A63CC6F7384"><enum>(1)</enum><header>In
general</header><text>The term <quote>investment services partnership income or
loss</quote> means, with respect to any investment services partnership
interest (as defined in section 710(c)), the net of—</text>
<subparagraph id="H7C9BED302C1F410A828DD2A832821E97"><enum>(A)</enum><text>the amounts
treated as ordinary income or ordinary loss under subsections (b) and (e) of
section 710 with respect to such interest,</text>
</subparagraph><subparagraph id="HFF63E13A63A3418BB11744FE5B7543AD"><enum>(B)</enum><text>all items of
income, gain, loss, and deduction allocated to such interest, and</text>
</subparagraph><subparagraph id="HADF3F9ED0BEA41778C84A76DE1220E55"><enum>(C)</enum><text>the amounts
treated as realized from the sale or exchange of property other than a capital
asset under section 751 with respect to such interest.</text>
</subparagraph></paragraph><paragraph id="HCD19B6F5FDBD4A9B9D2D38591F4123DB"><enum>(2)</enum><header>Exception for
qualified capital interests</header><text>A rule similar to the rule of section
710(d) shall apply for purposes of applying paragraph
(1)(B)(ii).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H6D4BDEDA08914A8297A6A6F6298BFC62"><enum>(2)</enum><header>Social security
Act</header><text>Section 211(a) of the Social Security Act is amended by
striking <quote>and</quote> at the end of paragraph (15), by striking the
period at the end of paragraph (16) and inserting <quote>; and</quote>, and by
inserting after paragraph (16) the following new paragraph:</text>
<quoted-block id="H4FA3C6B2141945BBA85F49611C32CB54" style="OLC">
<paragraph id="H4E4D0F53773D48F0B7E65E99BC7C35E1"><enum>(17)</enum><text>Notwithstanding
the preceding provisions of this subsection, in the case of any individual
engaged in the trade or business of providing services described in section
710(c)(2) of the Internal Revenue Code of 1986 with respect to any entity,
investment services partnership income or loss (as defined in section 1402(m)
of such Code) shall be taken into account in determining the net earnings from
self-employment of such
individual.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HB994A16080B6411B838076AFE3397DFC"><enum>(f)</enum><header>Conforming
amendments</header>
<paragraph id="HBFF35472A18A4E61B1E97B41148EF0D9"><enum>(1)</enum><text>Subsection (d) of
<external-xref legal-doc="usc" parsable-cite="usc/26/731">section 731</external-xref> of the Internal Revenue Code of 1986 is amended by inserting
<quote>section 710(b)(4) (relating to distributions of partnership
property),</quote> after <quote>to the extent otherwise provided
by</quote>.</text>
</paragraph><paragraph id="H09B312F698DB440FAE39B4856B1EF3FE"><enum>(2)</enum><text>Section 741 of the
Internal Revenue Code of 1986 is amended by inserting <quote>or section 710
(relating to special rules for partners providing investment management
services to partnerships)</quote> before the period at the end.</text>
</paragraph><paragraph id="H605FC80E719349E5ADA54E0840359BD3"><enum>(3)</enum><text>The table of
sections for part I of subchapter K of chapter 1 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new item:</text>
<quoted-block id="H6DD097A1F2B74A20BF15FE65E028DA83" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 710. Special rules for partners
providing investment management services to
partnerships.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H28ECE9733D994715B5E5F382237C6A08"><enum>(g)</enum><header>Effective
date</header>
<paragraph id="H5DBA45FD2CAD408B98475504FA214340"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the
amendments made by this section shall apply to taxable years ending after
December 31, 2012.</text>
</paragraph><paragraph id="H04FF336348B34EE7A6302090FF929BBD"><enum>(2)</enum><header>Partnership
taxable years which include effective date</header><text>In applying section
710(a) of the Internal Revenue Code of 1986 (as added by this section) in the
case of any partnership taxable year which includes January 1, 2013, the amount
of the net income referred to in such section shall be treated as being the
lesser of the net income for the entire partnership taxable year or the net
income determined by only taking into account items attributable to the portion
of the partnership taxable year which is after such date.</text>
</paragraph><paragraph id="H3ED59D3C5F204BE5A70A47DDFBD609DC"><enum>(3)</enum><header>Dispositions of
partnership interests</header>
<subparagraph id="H4F60D754151E46E1823C3D96B8153B68"><enum>(A)</enum><header>In
general</header><text>Section 710(b) of such Code (as added by this section)
shall apply to dispositions and distributions after December 31, 2012.</text>
</subparagraph><subparagraph id="H53EA3B86D70B4A2E9432FBD0CB2CCD05"><enum>(B)</enum><header>Indirect
dispositions</header><text>The amendments made by subsection (b) shall apply to
transactions after December 31, 2012.</text>
</subparagraph></paragraph><paragraph id="HC08485010157446F970850DF53CA6E47"><enum>(4)</enum><header>Other income and
gain in connection with investment management services</header><text>Section
710(e) of such Code (as added by this section) shall take effect on January 1,
2013.</text>
</paragraph></subsection></section></subtitle><subtitle id="H64C8D69390BF47D5B3A2F74E184D95ED"><enum>C</enum><header>Dual capacity
taxpayers</header>
<section id="H08BA4524E1E6427EB8716E73371D13FD"><enum>221.</enum><header>Modifications
of foreign tax credit rules applicable to dual capacity taxpayers</header>
<subsection id="HE8C3411C4E1C444FBFC6F607FCD15159"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/901">Section 901</external-xref> of the Internal Revenue Code of 1986
(relating to credit for taxes of foreign countries and of possessions of the
United States) is amended by redesignating subsection (n) as subsection (o) and
by inserting after subsection (m) the following new subsection:</text>
<quoted-block id="H0988142F43A44F4BAD2E393BA62911F4" style="OLC">
<subsection id="H22D03F243FCF461BAEAD9DDA104A10FA"><enum>(n)</enum><header>Special rules
relating to dual capacity taxpayers</header>
<paragraph id="H841C67A526984B9AA8FF32C247284834"><enum>(1)</enum><header>General
rule</header><text>Notwithstanding any other provision of this chapter, any
amount paid or accrued by a dual capacity taxpayer or any member of the
worldwide affiliated group of which such dual capacity taxpayer is also a
member to any foreign country or to any possession of the United States for any
period shall not be considered a tax to the extent such amount exceeds the
amount (determined in accordance with regulations) which would have been
required to be paid if the taxpayer were not a dual capacity taxpayer.</text>
</paragraph><paragraph id="H142FBD6E23A8411BB78F863D0DD9B864"><enum>(2)</enum><header>Dual capacity
taxpayer</header><text>For purposes of this subsection, the term <quote>dual
capacity taxpayer</quote> means, with respect to any foreign country or
possession of the United States, a person who—</text>
<subparagraph id="H72F0C94DA1244937B5ECC53044CE8342"><enum>(A)</enum><text>is subject to a
levy of such country or possession, and</text>
</subparagraph><subparagraph id="H1114857339E1489182516044C2C836F6"><enum>(B)</enum><text>receives (or will
receive) directly or indirectly a specific economic benefit (as determined in
accordance with regulations) from such country or possession.</text>
</subparagraph></paragraph><paragraph id="H564943C94C6F41B291F9668094171BCD"><enum>(3)</enum><header>Regulations</header><text>The
Secretary may issue such regulations or other guidance as is necessary or
appropriate to carry out the purposes of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HCFB5BBD1AC12458F9A623018284121BF"><enum>(b)</enum><header>Contrary treaty
obligations upheld</header><text>The amendments made by this section shall not
apply to the extent contrary to any treaty obligation of the United
States.</text>
</subsection><subsection id="H8C9291E0980944C7A5D232BB0251871A"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to amounts
that, if such amounts were an amount of tax paid or accrued, would be
considered paid or accrued in taxable years beginning after December 31,
2012.</text>
</subsection></section><section id="HF6E9221416C74CE1BBA46E321DD91FA5"><enum>222.</enum><header>Separate basket
treatment taxes paid on foreign oil and gas income</header>
<subsection id="H0EE04280F6EC4F9FA91C403B92586137"><enum>(a)</enum><header>Separate basket
for foreign tax credit</header><text>Paragraph (1) of section 904(d) of the
Internal Revenue Code of 1986 is amended by striking <quote>and</quote> at the
end of subparagraph (A), by striking the period at the end of subparagraph (B)
and inserting <quote>, and</quote>, and by adding at the end the
following:</text>
<quoted-block id="H81F3F0866C8F44188F7AFA24AE8933A5" style="OLC">
<subparagraph id="H72C8D6ED9F5D4831B44436E50C8904D8"><enum>(C)</enum><text>combined foreign
oil and gas income (as defined in section
907(b)(1)).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA5D3CC1A668347799CA6584E5B4A678C"><enum>(b)</enum><header>Coordination</header><text>Section
904(d)(2) of such Code is amended by redesignating subparagraphs (J) and (K) as
subparagraphs (K) and (L) and by inserting after subparagraph (I) the
following:</text>
<quoted-block id="H70C1F95AB78349AABA248113E4F145EF" style="OLC">
<subparagraph id="H5EB96E43D197435CBA9BC3A266908F05"><enum>(J)</enum><header>Coordination
with combined foreign oil and gas income</header><text>For purposes of this
section, passive category income and general category income shall not include
combined foreign oil and gas income (as defined in section
907(b)(1)).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HBA985D780D01404CB15DDC390A337C88"><enum>(c)</enum><header>Conforming
amendments</header>
<paragraph id="H8FE3E87DA45D4AB090561060AB57EBD2"><enum>(1)</enum><text>Section 907(a) is
hereby repealed.</text>
</paragraph><paragraph id="H7AF5474D6F604B99B8FDC1D873FE7E56"><enum>(2)</enum><text>Section 907(c)(4)
is hereby repealed.</text>
</paragraph><paragraph id="H7EF81D44FE9D47E391361B53AEBDEA68"><enum>(3)</enum><text>Section 907(f) is
hereby repealed.</text>
</paragraph></subsection><subsection id="H682898FCE2BB43C6A286AA351044C496"><enum>(d)</enum><header>Effective
dates</header>
<paragraph id="H56865E87B0944EE3BF376D93681D49E2"><enum>(1)</enum><header>In
general</header><text>The amendments made by this section shall apply to
taxable years beginning after December 31, 2012.</text>
</paragraph><paragraph id="H811D0DF9CD1840CA8F077A03BF1E80D7"><enum>(2)</enum><header>Transitional
rules</header>
<subparagraph id="HCCB3217FD8924401811616B2D6131FA5"><enum>(A)</enum><header>Carryovers</header><text>Any
unused foreign oil and gas taxes which under section 907(f) of such Code (as in
effect before the amendment made by subsection (c)(3)) would have been
allowable as a carryover to the taxpayer’s first taxable year beginning after
December 31, 2012 (without regard to the limitation of paragraph (2) of such
section 907(f) for first taxable year) shall be allowed as carryovers under
section 904(c) of such Code in the same manner as if such taxes were unused
taxes under such section 904(c) with respect to foreign oil and gas extraction
income.</text>
</subparagraph><subparagraph id="H5E958237DC3541E8BF64BBD0CA8138B6"><enum>(B)</enum><header>Losses</header><text>The
amendment made by subsection (c)(2) shall not apply to foreign oil and gas
extraction losses arising in taxable years beginning on or before the date of
the enactment of this Act.</text>
</subparagraph></paragraph></subsection></section></subtitle><subtitle id="HBF78D8C830BC4C1DA73C400B1B91D26D"><enum>D</enum><header>Close Exclusion of
Foreign-Earned Income Loophole</header>
<section id="HA51D617F1319405A8885652581AF846E"><enum>231.</enum><header>Repeal of
foreign earned income exclusion</header>
<subsection id="H69454DD8ED1B4893B848669E22CF07A7"><enum>(a)</enum><header>In
general</header><text>Subsection (a) of section 911 of the Internal Revenue
Code of 1986 is amended by striking <quote>for any taxable year—</quote> and
all that follows through the end and inserting <quote>for any taxable year the
housing cost amount of such individual.</quote>.</text>
</subsection><subsection id="H978635F2493642A0B103FC5C63DAED2F"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph id="H21299CF05CE14495AC5D6ECBB57E0241"><enum>(1)</enum><text>Subsection (f) of
section 86 of such Code is amended by inserting <quote>and</quote> at the end
of paragraph (2), by striking <quote>, and</quote> at the end of paragraph (3)
and inserting a period, and by striking paragraph (4).</text>
</paragraph><paragraph id="H268AF9C63F5C4FAEBF03B95C10BA790A"><enum>(2)</enum><text display-inline="yes-display-inline">Section 1401(a) of such Code is amended by
striking paragraph (11).</text>
</paragraph><paragraph id="HFFD8D5F4A0314564BFA1D3FD147D189D"><enum>(3)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H23C99566998F45CCA8D8D99D56C54E2E"><enum>(A)</enum><text display-inline="yes-display-inline">Clause (i) of section 1411(a)(1)(B) of such
Code is amended by striking <quote>modified</quote>.</text>
</subparagraph><subparagraph id="HE0FDF59F8F484EF8B156E2B539712E40"><enum>(B)</enum><text display-inline="yes-display-inline">Section 1411 of such Code is amended by
striking subsection (d) and by redesignating subsection (e) as subsection
(d).</text>
</subparagraph></paragraph></subsection><subsection id="HF44012DE51B740ADBD0B786ACFD0ECF5"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section></subtitle><subtitle id="H4E1530ED74D24A3AB16F9E2AAAE37468"><enum>E</enum><header>Close S
Corporation Loophole</header>
<section id="H203FFCD768564184BA4AC00E05D5E00B"><enum>241.</enum><header>Employment tax
treatment of professional service businesses</header>
<subsection id="HD8098BA94B9246648BE07930D8E5ED3D"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/1402">Section 1402</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block id="H9E771F70CC5C44728509A416A98EEEB3" style="OLC">
<subsection id="H4347B440B0D948C6B1607CFF6916DE52"><enum>(m)</enum><header>Special rules
for professional service businesses</header>
<paragraph id="H97111EE270074681AC426DBA62AAEB8A"><enum>(1)</enum><header>Shareholders
providing services to specified s corporations</header>
<subparagraph id="H7C1413A0E88F45D888286165EECE141F"><enum>(A)</enum><header>In
general</header><text>In the case of an applicable shareholder who provides
substantial services with respect to a professional service business referred
to in subparagraph (C) of a specified S corporation—</text>
<clause id="HC8180E9907E549EDBD50625DA76498B1"><enum>(i)</enum><text>such shareholder
shall be treated as engaged in the trade or business of such professional
service business with respect to items of income or loss described in section
1366 which are attributable to such business, and</text>
</clause><clause id="H041A5193DC89456F870D8D8B21EB049E"><enum>(ii)</enum><text>such
shareholder’s net earnings from self-employment shall include such
shareholder’s pro rata share of such items of income or loss, except that in
computing such pro rata share of such items the exceptions provided in
subsection (a) shall apply.</text>
</clause></subparagraph><subparagraph id="H70539345B428479997D3AE1BEFB06F25"><enum>(B)</enum><header>Treatment of
family members</header><text>Except as otherwise provided by the Secretary, the
applicable shareholder’s pro rata share of items referred to in subparagraph
(A) shall be increased by the pro rata share of such items of each member of
such applicable shareholder’s family (within the meaning of section 318(a)(1))
who does not provide substantial services with respect to such professional
service business.</text>
</subparagraph><subparagraph id="H62D7A495B8204A50B8F951EA39E6EEE7"><enum>(C)</enum><header>Specified s
corporation</header><text>For purposes of this subsection, the term
<quote>specified S corporation</quote> means—</text>
<clause id="HB07597B707624AFFA1C8593F42A44111"><enum>(i)</enum><text>any S corporation
which is a partner in a partnership which is engaged in a professional service
business if substantially all of the activities of such S corporation are
performed in connection with such partnership, and</text>
</clause><clause id="H8EA9DED605864AC3934D3C0CE934FCDE"><enum>(ii)</enum><text>any other S
corporation which is engaged in a professional service business if 75 percent
or more of the gross income of such business is attributable to service of 3 or
fewer shareholders of such corporation.</text>
</clause></subparagraph><subparagraph id="H001F31E7ABCC47F0B4060AAD6D6BFAEF"><enum>(D)</enum><header>Applicable
shareholder</header><text>For purposes of this paragraph, the term
<quote>applicable shareholder</quote> means any shareholder whose modified
adjusted gross income for the taxable year exceeds—</text>
<clause id="H57CE2AAFCC424CBDBF97E996B13D1B3F"><enum>(i)</enum><text>in
the case of a shareholder making a joint return under section 6013 or a
surviving spouse (as defined in section 2(a)), $250,000,</text>
</clause><clause id="H540F09C78EBB44E5B84AB78C5E65DBE4"><enum>(ii)</enum><text>in the case of a
married shareholder (as defined in section 7703) filing a separate return, half
of the dollar amount determined under clause (i), and</text>
</clause><clause id="HD75452129AF34850BBE8638FFC4CA169"><enum>(iii)</enum><text>in any other
case, $200,000.</text>
</clause></subparagraph></paragraph><paragraph id="HDF0DAED8A723470C988268E90F7D8C8F"><enum>(2)</enum><header>Partners</header>
<subparagraph id="H308086103BBD4AECB4E268625BF2A402"><enum>(A)</enum><header>In
general</header><text>In the case of any partnership which is engaged in a
professional service business, subsection (a)(13) shall not apply to any
applicable partner who provides substantial services with respect to such
professional service business.</text>
</subparagraph><subparagraph id="H60FBA58C53514313B8FF67E821DBDAE3"><enum>(B)</enum><header>Applicable
partner</header><text>For purposes of this paragraph, the term
<quote>applicable partner</quote> means any partner whose modified adjusted
gross income for the taxable year exceeds—</text>
<clause id="HFCBF03699D754D4B9701F2AE5D624145"><enum>(i)</enum><text>in
the case of a partner making a joint return under section 6013 or a surviving
spouse (as defined in section 2(a)), $250,000,</text>
</clause><clause id="HC1D1624ECB5C4CA9965151444E850E8F"><enum>(ii)</enum><text>in the case of a
married partner (as defined in section 7703) filing a separate return, half of
the dollar amount determined under clause (i), and</text>
</clause><clause id="H02A11D69B1A64B34BC6A55E464964378"><enum>(iii)</enum><text>in any other
case, $200,000.</text>
</clause></subparagraph></paragraph><paragraph id="H3263100168654882B42832CA7FB21789"><enum>(3)</enum><header>Professional
service business</header><text>For purposes of this subsection, the term
<quote>professional service business</quote> means any trade or business (or
portion thereof) providing services in the fields of health, law, lobbying,
engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, investment advice or management, or brokerage
services.</text>
</paragraph><paragraph id="H97FA01CB3EAA48B2951A471151EF0C84"><enum>(4)</enum><header>Modified
adjusted gross income</header><text>For purposes of this subsection, the term
<quote>modified adjusted gross income</quote> means adjusted gross
income—</text>
<subparagraph id="HF9EC16EEE17846EB8A1F9286E81A66C0"><enum>(A)</enum><text>determined without
regard to any deduction allowed under section 164(f), and</text>
</subparagraph><subparagraph id="H1623B1F525364F56BAE1FB1408CFCF65"><enum>(B)</enum><text>increased by the
amount excluded from gross income under section 911(a)(1).</text>
</subparagraph></paragraph><paragraph id="H0B6BB300FF5B4946957B86FB7DC12470"><enum>(5)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this subsection, including regulations which
prevent the avoidance of the purposes of this subsection through tiered
entities or otherwise.</text>
</paragraph><paragraph id="H98E3B79360F14BAA935C57F828FC0D86"><enum>(6)</enum><header>Cross
reference</header><text>For employment tax treatment of wages paid to
shareholders of S corporations, see subtitle
C.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5FD93AB04FF442E6B4DDB3AA938897B9"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 211 of the Social Security Act is amended by
adding at the end the following new subsection:</text>
<quoted-block id="H578281A905C54F65BEB71EC10975BCB0" style="OLC">
<subsection id="H1D60A9F8F0584BEFB208EDEAF51B754B"><enum>(l)</enum><header>Special rules
for professional service businesses</header>
<paragraph id="H0B2530261B164F3CB43386B50E9467D9"><enum>(1)</enum><header>Shareholders
providing services to specified s corporations</header>
<subparagraph id="H7E65D5CFD2C3406F8AEF77ACF585C670"><enum>(A)</enum><header>In
general</header><text>In the case of an applicable shareholder who provides
substantial services with respect to a professional service business referred
to in subparagraph (C) of a specified S corporation—</text>
<clause id="HE235334C47154DB18BCF88A8835D04B3"><enum>(i)</enum><text>such shareholder
shall be treated as engaged in the trade or business of such professional
service business with respect to items of income or loss described in section
1366 of the Internal Revenue Code of 1986 which are attributable to such
business, and</text>
</clause><clause id="H2678BF16216F40A7AB3EBAC683157910"><enum>(ii)</enum><text>such
shareholder’s net earnings from self-employment shall include such
shareholder’s pro rata share of such items of income or loss, except that in
computing such pro rata share of such items the exceptions provided in
subsection (a) shall apply.</text>
</clause></subparagraph><subparagraph id="H663E1FD4A7714BD2983B6293C13CEAF1"><enum>(B)</enum><header>Treatment of
family members</header><text>Except as otherwise provided by the Secretary of
the Treasury, the applicable shareholder’s pro rata share of items referred to
in subparagraph (A) shall be increased by the pro rata share of such items of
each member of such applicable shareholder’s family (within the meaning of
<external-xref legal-doc="usc" parsable-cite="usc/26/318">section 318(a)(1)</external-xref> of the Internal Revenue Code of 1986) who does not provide
substantial services with respect to such professional service business.</text>
</subparagraph><subparagraph id="HCCF2A7D92EC542A89B49692C663D4D54"><enum>(C)</enum><header>Specified s
corporation</header><text>For purposes of this subsection, the term
<quote>specified S corporation</quote> means—</text>
<clause id="H9C67B01FA3E54C698982F89CE8ABAAFC"><enum>(i)</enum><text>any S corporation
(as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/1361">section 1361(a)</external-xref> of the Internal Revenue Code of 1986) which is a
partner in a partnership which is engaged in a professional service business if
substantially all of the activities of such S corporation are performed in
connection with such partnership, and</text>
</clause><clause id="H110F9CE685BC40E0AC4DF3ED3C39E64D"><enum>(ii)</enum><text>any other S
corporation (as so defined) which is engaged in a professional service business
if 75 percent or more of the gross income of such business is attributable to
service of 3 or fewer shareholders of such corporation.</text>
</clause></subparagraph><subparagraph id="H16FD49A12E12487EA78C6ADC38B848D4"><enum>(D)</enum><header>Applicable
shareholder</header><text>For purposes of this paragraph, the term
<quote>applicable shareholder</quote> means any shareholder whose modified
adjusted gross income for the taxable year exceeds—</text>
<clause id="H7064CB5C10E8442F9FA8914756EA5624"><enum>(i)</enum><text>in
the case of a shareholder making a joint return under section 6013 of the
Internal Revenue Code of 1986 or a surviving spouse (as defined in section 2(a)
of such Code), $250,000,</text>
</clause><clause id="H656C3365B3404D20A8AB9280389E3B5D"><enum>(ii)</enum><text>in the case of a
married shareholder (as defined in section 7703 of such Code) filing a separate
return, half of the dollar amount determined under clause (i), and</text>
</clause><clause id="H17C815CF16914E279E3C530FC0A298D8"><enum>(iii)</enum><text>in any other
case, $200,000.</text>
</clause></subparagraph></paragraph><paragraph id="H2B3F959A9F7D4E20B6E4108784098364"><enum>(2)</enum><header>Partners</header>
<subparagraph id="H72F7451DCEBB4599A85C94E389679248"><enum>(A)</enum><header>In
general</header><text>In the case of any partnership which is engaged in a
professional service business, subsection (a)(12) shall not apply to any
applicable partner who provides substantial services with respect to such
professional service business.</text>
</subparagraph><subparagraph id="H5B5F2F4C3BC6468F8FD3A41AB227B06E"><enum>(B)</enum><header>Applicable
partner</header><text>For purposes of this paragraph, the term
<quote>applicable partner</quote> means any partner whose modified adjusted
gross income for the taxable year exceeds—</text>
<clause id="HCD49BC09050F464A9DF1D2AA9A809BD4"><enum>(i)</enum><text>in
the case of a partner making a joint return under section 6013 of the Internal
Revenue Code of 1986 or a surviving spouse (as defined in section 2(a) of such
Code), $250,000,</text>
</clause><clause id="HEBDF2ACFE3C54165BC3609E32D962F0F"><enum>(ii)</enum><text>in the case of a
married partner (as defined in section 7703 of such Code) filing a separate
return, half of the dollar amount determined under clause (i), and</text>
</clause><clause id="H174ECCAE23CF490A9CA5C30F6CA594DD"><enum>(iii)</enum><text>in any other
case, $200,000.</text>
</clause></subparagraph></paragraph><paragraph id="HDD7B48035D1745CDB869F9EBE248FB4C"><enum>(3)</enum><header>Professional
service business</header><text>For purposes of this subsection, the term
<quote>professional service business</quote> means any trade or business (or
portion thereof) providing services in the fields of health, law, lobbying,
engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, investment advice or management, or brokerage
services.</text>
</paragraph><paragraph id="H242797B16A754E5690D24DB42B08F7A8"><enum>(4)</enum><header>Modified
adjusted gross income</header><text>For purposes of this subsection, the term
<quote>modified adjusted gross income</quote> means adjusted gross income as
determined under <external-xref legal-doc="usc" parsable-cite="usc/26/62">section 62</external-xref> of the Internal Revenue Code of 1986—</text>
<subparagraph id="H9629CDC595094757B2A6030B052A218C"><enum>(A)</enum><text>determined without
regard to any deduction allowed under section 164(f) of such Code, and</text>
</subparagraph><subparagraph id="HD2F39F28AC8745898B0188AB40FC818C"><enum>(B)</enum><text>increased by the
amount excluded from gross income under section 911(a)(1) of such
Code.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H37D1793DB5444D6B800F74F809455EFF"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2012.</text>
</subsection></section></subtitle><subtitle id="H2C3D86EF1ECF4C5884857F18AE5AD880"><enum>F</enum><header>Limitation on
Mortgage Interest Deduction With Respect to Boats</header>
<section id="H594EBAD611574DC0BC8DB5780F8A0677"><enum>251.</enum><header>Mortgage
interest deduction allowed with respect to boats only if boat is used as the
principal residence of the taxpayer</header>
<subsection id="HBFA47B1A7CC846818C3394231E54DC2B"><enum>(a)</enum><header>In
general</header><text>Subclause (ii) of section 163(h)(4)(A) of the Internal
Revenue Code of 1986 is amended by inserting <quote>(other than a boat)</quote>
after <quote>1 other residence of the taxpayer</quote>.</text>
</subsection><subsection id="HFA141A41EA99439994EE1F6A971CB9E8"><enum>(b)</enum><header>Effective
date</header>
<paragraph id="H9E5E068ABFE84A89A66C44E22F288DB0"><enum>(1)</enum><header>In
general</header><text>The amendment made by this section shall apply to
indebtedness incurred after the date of the enactment of this Act.</text>
</paragraph><paragraph id="H8C7928D4235A4992903043501178961D"><enum>(2)</enum><header>Special rule for
refinancings</header><text>For purposes of this subsection, indebtedness
resulting from the refinancing of indebtedness shall be treated as incurred on
the date the refinanced indebtedness was incurred (taking into account the
application of this paragraph in the case of multiple refinancings) but only to
the extent the indebtedness resulting from such refinancing does not exceed the
refinanced indebtedness.</text>
</paragraph></subsection></section></subtitle><enum>III</enum><header>Ending Corporate
Subsidies</header>
<subtitle id="HB4C50616EE514CC08D42B25BC6A19EE1"><enum>A</enum><header>End Fossil Fuel
Subsidies</header>
<section id="H0D5D42EFA7C84F0D819650FFD877F4E1" section-type="subsequent-section"><enum>301.</enum><header>Termination of
various tax expenditures relating to fossil fuels</header>
<subsection id="HA0A31A06636C46B09E9EE1B04E84A9BF"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subchapter C of
<external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/90">chapter 90</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:</text>
<quoted-block act-name="" id="H82F1AE0D6033411F8CC09CABDE6ECA2A" style="OLC">
<section id="H70073C92F7634CE5BB155393E2135F92"><enum>7875.</enum><header>Termination of
certain provisions relating to fossil fuel incentives</header>
<subsection id="HD416F853EF2348E48804967FB6250813"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The following
provisions shall not apply to taxable years beginning after the date of the
enactment of the <short-title>Balancing
Act</short-title>:</text>
<paragraph id="HDECACD89BF0D4F42B8DA63B4BA85EE50"><enum>(1)</enum><text display-inline="yes-display-inline">Section 43 (relating to enhanced oil
recovery credit).</text>
</paragraph><paragraph id="H3C7AEA5E868D4C4D85397A771C3A28CD"><enum>(2)</enum><text>Section 45I
(relating to credit for producing oil and natural gas from marginal
wells).</text>
</paragraph><paragraph id="H135EFFEAE5D8445FB9D1356F63C11852"><enum>(3)</enum><text display-inline="yes-display-inline">Section 45K (relating to credit for
producing fuel from a nonconventional source).</text>
</paragraph><paragraph id="H7CAFE6EF3820455192F4763579EB53AC"><enum>(4)</enum><text>Section 193
(relating to tertiary injectants).</text>
</paragraph><paragraph id="H6DC71571C4B14F1DA0C3DAF0A155AD5B"><enum>(5)</enum><text>Section 199(d)(9)
(relating to special rule for taxpayers with oil related qualified production
activities income).</text>
</paragraph><paragraph id="H1777B5C8167E4B4A9D6727491DF4E15B"><enum>(6)</enum><text>Section 461(i)(2)
(relating to special rule for spudding of oil or natural gas wells).</text>
</paragraph><paragraph id="HD23782A663174918B2A9BDC075987272"><enum>(7)</enum><text>Section 469(c)(3)
(relating to working interests in oil and natural gas property).</text>
</paragraph><paragraph id="H825C20E2F22947D79FBEC6782BF898A9"><enum>(8)</enum><text display-inline="yes-display-inline">Section 613A (relating to limitations on
percentage depletion in case of oil and natural gas wells).</text>
</paragraph><paragraph id="H0BCB9C26107F4225B5B81EC013F1663C"><enum>(9)</enum><text display-inline="yes-display-inline">Section 617 (relating to deduction and
recapture of certain mining exploration expenditures).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H068AA88D3D2E44009E834922BC09095B"><enum>(10)</enum><text display-inline="yes-display-inline">Section 7704(d)(1)(E) (relating to
qualifying income).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H3919EAACA46948DAA8A7FD5A79073D02"><enum>(b)</enum><header>Provisions
relating to property</header><text display-inline="yes-display-inline">The
following provisions shall not apply to property placed in service after the
date of the enactment of the <short-title>Balancing
Act</short-title>:</text>
<paragraph id="H088B43B828754158A86BEA002DFFE454"><enum>(1)</enum><text display-inline="yes-display-inline">Subparagraphs (C)(iii) and (E)(viii) of
section 168(e)(3) (relating to classification of certain property).</text>
</paragraph><paragraph id="H501A3F511648469F9C7116D4AB0BF844"><enum>(2)</enum><text display-inline="yes-display-inline">Section 169 (relating to amortization of
pollution control facilities) with respect to any atmospheric pollution control
facility.</text>
</paragraph><paragraph commented="no" id="H2E3B8663838041D29A98286C29C59CB2"><enum>(3)</enum><text>Section 179C
(relating to election to expense certain refineries).</text>
</paragraph></subsection><subsection id="H48DAC9A6F114498E9EA3ED3E522CDC73"><enum>(c)</enum><header>Provisions
relating to costs and expenses</header><text>The following provisions shall not
apply to costs or expenses paid or incurred after the date of the enactment of
the <short-title>Balancing Act</short-title>:</text>
<paragraph commented="no" id="HB4A06DE5CD65481292E73742EA9E50D1"><enum>(1)</enum><text>Section 179B
(relating to deduction for capital costs incurred in complying with
Environmental Protection Agency sulfur regulations).</text>
</paragraph><paragraph id="HD5CD5B02673E40CF8CED8E86BEAB017F"><enum>(2)</enum><text>Section 198
(relating to expensing of environmental remediation costs).</text>
</paragraph><paragraph id="H1D7FF100E24646FBB6DF47FC0EFAFD8D"><enum>(3)</enum><text display-inline="yes-display-inline">Section 263(c) (relating to intangible
drilling and development costs) with respect to costs in the case of oil and
natural gas wells.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H60D115A6C8074D848121FA64E10C3B04"><enum>(4)</enum><text display-inline="yes-display-inline">Section 468 (relating to special rules for
mining and solid waste reclamation and closing costs).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H514DB558E28C4BB992754B5E54F07114"><enum>(d)</enum><header display-inline="yes-display-inline">5-Year carryback for marginal oil and
natural gas well production credit</header><text>Section 39(a)(3) (relating to
5-year carryback for marginal oil and natural gas well production credit) shall
not apply to credits determined in taxable years beginning after the date of
the enactment of the <short-title>Balancing
Act</short-title>.</text>
</subsection><subsection commented="no" id="H1312BC4E7DD84E59BA0D83B3AFC94567"><enum>(e)</enum><header>Credit for
carbon dioxide sequestration</header><text>Section 45Q (relating to credit for
carbon dioxide sequestration) shall not apply to carbon dioxide captured after
the date of the enactment of the <short-title>Balancing
Act</short-title>.</text>
</subsection><subsection commented="no" id="HD64B08D7B00C484FB13D9995947781A5"><enum>(f)</enum><header>Allocated
credits</header><text>No new credits shall be certified under section 48A
(relating to qualifying advanced coal project credit) or section 48B (relating
to qualifying gasification project credit) after the date of the enactment of
the <short-title>Balancing Act</short-title>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HC89FE234A8ED48B19D79C582AECA9D2D"><enum>(g)</enum><header display-inline="yes-display-inline">Arbitrage bonds</header><text>Section
148(b)(4) (relating to safe harbor for prepaid natural gas) shall not apply to
obligations issued after the date of the enactment of the
<short-title>Balancing
Act</short-title>.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H00CFC558C8C7436BAC5CD39D69902564"><enum>(b)</enum><header>Conforming
amendment</header><text>The table of sections for subchapter C of chapter 90 is
amended by adding at the end the following new item:</text>
<quoted-block id="H492F3F6F4A2B4FC5AC6B12D6BE698C9D" style="OLC">
<toc>
<toc-entry idref="H70073C92F7634CE5BB155393E2135F92" level="section">Sec. 7875. Termination of certain
provisions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H01ABF595D87943E889955864B851B389"><enum>302.</enum><header>Termination of
alternative fuel vehicle refueling property credit with respect to fossil
fuels</header>
<subsection id="HA398DF4CC474486981FE9D3FF124530E"><enum>(a)</enum><header>In
general</header><text>Paragraph (2) of section 30C(c) of the Internal Revenue
Code of 1986 is amended—</text>
<paragraph id="HEC8E4E58F1724CA9A7BC6A7645935EF5"><enum>(1)</enum><text>by striking
<quote>, natural gas, compressed natural gas, liquefied natural gas, liquefied
petroleum gas,</quote> in subparagraph (A),</text>
</paragraph><paragraph id="H18736904BFFC4FB69611756BE5D90984"><enum>(2)</enum><text>by striking
subparagraph (B), and</text>
</paragraph><paragraph id="H5AA79E7D18D0435B87305A088F90AC45"><enum>(3)</enum><text>by redesignating
subparagraph (C) as subparagraph (B).</text>
</paragraph></subsection><subsection id="H68BE6FC0B9634B04ACC54675A0F65CBD"><enum>(b)</enum><header>Technical
amendment</header><text>Paragraph (2) of section 30C(g) of the Internal Revenue
Code of 1986 is amended by striking the second period.</text>
</subsection><subsection id="H54D0A31D9DCD48398096356D567FA5D8"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service after December 31, 2012.</text>
</subsection></section><section id="H114A2E215B9B445E8769B5C18F32FF47"><enum>303.</enum><header>Uniform
seven-year amortization for geological and geophysical expenditures</header>
<subsection commented="no" display-inline="no-display-inline" id="H9653914D2C8F475C92FE652C77545A21"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/167">Section 167(h)</external-xref> of the Internal Revenue Code of 1986 is
amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H7C42D584335742A6AF065AD054303695"><enum>(1)</enum><text>by striking
<quote>24-month period</quote> each place it appears in paragraphs (1) and (4)
and inserting <quote>7-year period</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H5FA76B85F9674DAC8B5017DE62917A17"><enum>(2)</enum><text>by striking
paragraph (5).</text>
</paragraph></subsection><subsection id="H470331ECBBAF4D658A3BAA8C8C65B3B2"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to amounts
paid or incurred after the date of the enactment of this Act.</text>
</subsection></section><section id="H349206AA1D564F08AEAD93A6D1FB57EE"><enum>304.</enum><header>Repeal of
domestic manufacturing deduction for hard mineral mining</header>
<subsection id="H3D303B55D88E408F8294A6719D5EE9F1"><enum>(a)</enum><header>In
general</header><text>Subparagraph (B) of section 199(c)(4) of the Internal
Revenue Code of 1986 is amended by striking <quote>and</quote> at the end of
clause (ii), by striking the period at the end of clause (iii) and inserting
<quote>, and</quote>, and by adding at the end the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="H662C2AF7D92F48ACA88F8A9777BCE21B" style="OLC">
<clause id="H08BA777CA60B4E9D86B562F5DAA54AEA"><enum>(iv)</enum><text>the mining of any
hard
mineral.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H82F12DA0EBAD480EBD3988E005F817A4"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HFEB26090ED864D6293BC8FB04F75B8E1"><enum>305.</enum><header>Limitation on
deduction for income attributable to domestic production of oil, natural gas,
or primary products thereof</header>
<subsection id="H4258B03E8DEA47ABB1A6D6FE2DAD96C2"><enum>(a)</enum><header>Denial of
deduction</header><text>Paragraph (4) of section 199(c) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HF0AC4CED82E648DCB6A4BE707C4281DC" style="OLC">
<subparagraph id="H3D78CA9387824E83A7B6FC25E9C1CEBA"><enum>(E)</enum><header>Special rule for
oil, natural gas, and coal income</header><text>The term <term>domestic
production gross receipts</term> shall not include gross receipts from the
production, refining, processing, transportation, or distribution of oil,
natural gas, or coal, or any primary product (within the meaning of subsection
(d)(9))
thereof.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H17EAFBFF4BBC4A8A81591874F86EBFB6"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H3A3660C426364DA2B44170E6C5BB022F" section-type="subsequent-section"><enum>306.</enum><header>Termination of
last-in, first-out method of inventory for oil, natural gas, and coal
companies</header>
<subsection id="HCDD1693F4B5D40A5AC2BE79B2436A828"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 472 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HDCECA3652F2A40B693EA46EC408FE277" style="OLC">
<subsection id="HD81E0D1453424D7297CD02E07158BCC4"><enum>(h)</enum><header>Termination for
oil, natural gas, and coal companies</header><text display-inline="yes-display-inline">Subsection (a) shall not apply to any
taxpayer that is in the trade or business of the production, refining,
processing, transportation, or distribution of oil, natural gas, or coal for
any taxable year beginning after December 31,
2012.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H9689D2D0E61B49CD8A006FFE4889632C"><enum>(b)</enum><header>Additional
termination</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/473">Section 473</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H3EBE0443CCC64E229B9FD454F99001FE" style="OLC">
<subsection id="H8BB4C1A9A2C54187BFB3A8B75FA6C83F"><enum>(h)</enum><header>Termination for
oil, natural gas, and coal companies</header><text display-inline="yes-display-inline">This section shall not apply to any
taxpayer that is in the trade or business of the production, refining,
processing, transportation, or distribution of oil, natural gas, or coal for
any taxable year beginning after December 31,
2012.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H18B99C8C9BAA4F60A1147E07C032A984"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H84A168942EDC4C00B9BDF76EEF49B356"><enum>307.</enum><header>Repeal of
percentage depletion for coal and hard mineral fossil fuels</header>
<subsection id="HF1D2D70E198D46C9AD77D4174513A4CB"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/613">Section 613</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H3C39072375CB451199464780C1D9ACF1" style="OLC">
<subsection id="HE1808AAB8247460795F2D1C0DFA4FD23"><enum>(f)</enum><header>Termination with
respect to coal and hard mineral fossil fuels</header><text>In the case of
coal, lignite, and oil shale (other than oil shale described in subsection
(b)(5)), the allowance for depletion shall be computed without reference to
this section for any taxable year beginning after the date of the enactment of
the <short-title>Balancing
Act</short-title>.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H4807BDAAF38449F0998C8DC6E2AD179A"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph id="HDA707C6D48A946EE846B5FB646ED6A94"><enum>(1)</enum><header>Coal and
lignite</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/613">Section 613(b)(4)</external-xref> of the Internal Revenue Code of 1986 is
amended by striking <quote>coal, lignite,</quote>.</text>
</paragraph><paragraph id="H55EFCA12E1F54518A762B16A042D1BBC"><enum>(2)</enum><header>Oil
shale</header><text>Section 613(b)(2) of such Code is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="HC6E4E93D7877452099131C4A81866D6D" style="OLC">
<paragraph id="H42A172AE12B642F4966FF42DC403B66C"><enum>(2)</enum><header>15
percent</header><text>If, from deposits in the United States, gold, silver,
copper, and iron
ore.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H24314EB7FC464E5B83B1E09B25039FFB"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H25487C9F92C341FC95261C0293464D5A"><enum>308.</enum><header>Termination of
capital gains treatment for royalties from coal</header>
<subsection id="H5D76DE76DECA4780AF8ECC4C124DFE02"><enum>(a)</enum><header>In
general</header><text>Subsection (c) of section 631 of the Internal Revenue
Code of 1986 is amended—</text>
<paragraph id="H6829ADD51503465EA8AE5A1E4B813B2C"><enum>(1)</enum><text>by striking
<quote>coal (including lignite), or iron ore</quote> and inserting <quote>iron
ore</quote>,</text>
</paragraph><paragraph id="H8741C9BAF15047C2991FDEEFF9DA2A6A"><enum>(2)</enum><text>by striking
<quote>coal or iron ore</quote> each place it appears and inserting <quote>iron
ore</quote>,</text>
</paragraph><paragraph id="HFA8AE05C26D54BED928ECF32529C27FD"><enum>(3)</enum><text>by striking
<quote>iron ore or coal</quote> each place it appears and inserting <quote>iron
ore</quote>, and</text>
</paragraph><paragraph id="H3DDB63F89744484EAF300469D677BB86"><enum>(4)</enum><text>by striking
<quote><header-in-text level="subsection" style="OLC">coal
or</header-in-text></quote> in the heading.</text>
</paragraph></subsection><subsection id="H29856DB7C86448C182746B792E473F00"><enum>(b)</enum><header>Conforming
amendment</header><text>The heading of section 631 of the Internal Revenue Code
of 1986 is amended by striking <quote><header-in-text level="section" style="OLC">, coal,</header-in-text></quote>.</text>
</subsection><subsection id="H3C35B678012F4CA2809738A81A5A8FAB"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
dispositions after the date of the enactment of this Act.</text>
</subsection></section><section id="H74188A5D82804441AAB7768EF7E2D6E7"><enum>309.</enum><header>Increase in oil
spill liability trust fund financing rate</header>
<subsection id="H381ABAC2916D4EC9825C12AA46ACF15E"><enum>(a)</enum><header>In
general</header><text>Subparagraph (B) of section 4611(c)(2) of the Internal
Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HD205D83F6EF9438CBE97D361D38832FE" style="OLC">
<subparagraph id="HE3D66FEFF73B4CA8B24D84FB4A50D6E6"><enum>(B)</enum><text>the Oil Spill
Liability Trust Fund financing rate is—</text>
<clause id="HBD1B951F5581483FABF09A82B88430EB"><enum>(i)</enum><text>in
the case of crude oil received or petroleum products entered before January 1,
2013, 8 cents a barrel,</text>
</clause><clause id="H18BD3062DC754471BEE41B51F3429A39"><enum>(ii)</enum><text>in the case of
crude oil received or petroleum products entered after December 31, 2012, and
before January 1, 2017, 9 cents a barrel, and</text>
</clause><clause id="H08710019C5C844339C9E94AB8A47725B"><enum>(iii)</enum><text>in the case of
crude oil received or petroleum products entered after December 31, 2016, 10
cents a
barrel.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8C1BD076298C411DBAA8F21719CA0035"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to crude oil
received and petroleum products entered after the date of the enactment of this
Act.</text>
</subsection></section><section id="H3C7F8F67A8C84BA99390D61B1664B1D6" section-type="subsequent-section"><enum>310.</enum><header>Denial of deduction
for removal costs and damages for certain oil spills</header>
<subsection id="H5AF478B359A54C26B96CD7BC36D21263"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Part IX of subchapter
B of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="HA7A0712B500946D1AEF6A8A60D98899C" style="OLC">
<section id="HC4205C901DE04D8D98D8819A503D0A60"><enum>280I.</enum><header>Expenses for
removal costs and damages relating to certain oil spill liability</header><text display-inline="no-display-inline">No deduction shall be allowed under this
chapter for any amount paid or incurred with respect to any costs or damages
for which the taxpayer is liable under section 1002 of the Oil Pollution Act of
1990 (33 U.S.C.
2702).</text>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H6D1FCE3D720746728FE58492FFDFC0A0"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for part IX of subchapter B of chapter 1 of such Code is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="H987F6F4FA907449F8CF08944F14FAD4E" style="OLC">
<toc container-level="quoted-block-container" idref="HA7A0712B500946D1AEF6A8A60D98899C" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HC4205C901DE04D8D98D8819A503D0A60" level="section">Sec. 280I. Expenses for removal costs and damages relating to
certain oil spill
liability.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H1D286A2DBC6745D4BABC256E0DE70626"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply with respect
to any liability arising in taxable years ending after the date of the
enactment of this Act.</text>
</subsection></section><section id="H4D09DE7820764F1CADB0A21AC7B29D2A"><enum>311.</enum><header>Tax on crude
oil and natural gas produced from the outer Continental Shelf in the Gulf of
Mexico</header>
<subsection id="H7DA74EA307AE4F19AF5D19AC05AEE6EB"><enum>(a)</enum><header>In
general</header><text>Subtitle E of the Internal Revenue Code of 1986 is
amended by adding at the end the following new chapter:</text>
<quoted-block display-inline="no-display-inline" id="H264FC56ABB8F4CA7BB475D59497CDA39" style="OLC">
<chapter id="H620F5339E206424AB4282A763FDAEF97"><enum>56</enum><header>Tax on severance
of crude oil and natural gas from the outer Continental Shelf in the Gulf of
Mexico</header>
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 5896. Imposition of
tax.</toc-entry>
<toc-entry level="section">Sec. 5897. Taxable crude oil or natural
gas and removal price.</toc-entry>
<toc-entry level="section">Sec. 5898. Special rules and
definitions.</toc-entry>
</toc>
<section id="H1D830B1E9FCE40E697CC93F47B81A8C3"><enum>5896.</enum><header>Imposition of
tax</header>
<subsection id="H65AF483325C04870900A7D53264605C3"><enum>(a)</enum><header>In
general</header><text>In addition to any other tax imposed under this title,
there is hereby imposed a tax equal to 13 percent of the removal price of any
taxable crude oil or natural gas removed from the premises during any taxable
period.</text>
</subsection><subsection id="HE47F7C0BE2A947779CCF85F43BE3E3EB"><enum>(b)</enum><header>Credit for
Federal royalties paid</header>
<paragraph id="HE4A6BFC7864F4212AFD6A9F1994E8CC9"><enum>(1)</enum><header>In
general</header><text>There shall be allowed as a credit against the tax
imposed by subsection (a) with respect to the production of any taxable crude
oil or natural gas an amount equal to the aggregate amount of royalties paid
under Federal law with respect to such production.</text>
</paragraph><paragraph id="HCA3F6A1BF5514725B744B9680D294131"><enum>(2)</enum><header>Limitation</header><text>The
aggregate amount of credits allowed under paragraph (1) to any taxpayer for any
taxable period shall not exceed the amount of tax imposed by subsection (a) for
such taxable period.</text>
</paragraph></subsection><subsection id="HE771DC60C4FD4C8CA4D1367720BCC234"><enum>(c)</enum><header>Tax paid by
producer</header><text>The tax imposed by this section shall be paid by the
producer of the taxable crude oil or natural gas.</text>
</subsection></section><section id="H4BBA9A3C02314703AED9D32E79C61A09"><enum>5897.</enum><header>Taxable crude
oil or natural gas and removal price</header>
<subsection id="H913AB7E255AA4DB49E53ABA606465679"><enum>(a)</enum><header>Taxable crude
oil or natural gas</header><text>For purposes of this chapter, the term
<term>taxable crude oil or natural gas</term> means crude oil or natural gas
which is produced from Federal submerged lands on the outer Continental Shelf
in the Gulf of Mexico pursuant to a lease entered into with the United States
which authorizes the production.</text>
</subsection><subsection id="H28EE9DD202D54773B79526942F16E023"><enum>(b)</enum><header>Removal
price</header><text>For purposes of this chapter—</text>
<paragraph id="H46659C783BA64D74AC1E4E150DA1FEE1"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the term
<term>removal price</term> means—</text>
<subparagraph id="HE9578884DA634D6A927374566C5CEB2A"><enum>(A)</enum><text>in the case of
taxable crude oil, the amount for which a barrel of such crude oil is sold,
and</text>
</subparagraph><subparagraph id="H4B3F672119144EB1A58506A47240E698"><enum>(B)</enum><text>in the case of
taxable natural gas, the amount per 1,000 cubic feet for which such natural gas
is sold.</text>
</subparagraph></paragraph><paragraph id="H05747F50F9EE4E258992DD09F9486E16"><enum>(2)</enum><header>Sales between
related persons</header><text>In the case of a sale between related persons,
the removal price shall not be less than the constructive sales price for
purposes of determining gross income from the property under section
613.</text>
</paragraph><paragraph id="H3C029B47753D4207B132F9EFB04C67CD"><enum>(3)</enum><header>Oil or natural
gas removed from property before sale</header><text>If crude oil or natural gas
is removed from the property before it is sold, the removal price shall be the
constructive sales price for purposes of determining gross income from the
property under section 613.</text>
</paragraph><paragraph id="HE409240A4EE3485DACFB534E6DC926AF"><enum>(4)</enum><header>Refining begun
on property</header><text>If the manufacture or conversion of crude oil into
refined products begins before such oil is removed from the property—</text>
<subparagraph id="H7A032ED94C804A8EBEBDFFF43F97EC43"><enum>(A)</enum><text>such oil shall be
treated as removed on the day such manufacture or conversion begins, and</text>
</subparagraph><subparagraph id="HBEA053133ACE48D5BDC4AE4800D35B62"><enum>(B)</enum><text>the removal price
shall be the constructive sales price for purposes of determining gross income
from the property under section 613.</text>
</subparagraph></paragraph><paragraph id="H3A1C1A17F4BD458F9A7D15C476AC7C09"><enum>(5)</enum><header>Property</header><text>The
term <term>property</term> has the meaning given such term by section
614.</text>
</paragraph></subsection></section><section id="H54A49A601E8E47EDAC9139657F7883AB"><enum>5898.</enum><header>Special rules
and definitions</header>
<subsection id="H8B81F8AE465340798D7A7AE760239D0F"><enum>(a)</enum><header>Administrative
requirements</header>
<paragraph id="H41240D83BB604FF39B8FCE161486D884"><enum>(1)</enum><header>Withholding and
deposit of tax</header><text>The Secretary shall provide for the withholding
and deposit of the tax imposed under section 5896 on a quarterly basis.</text>
</paragraph><paragraph id="HB71B564CA6AB4762B0E90AF071D4AFC5"><enum>(2)</enum><header>Records and
information</header><text>Each taxpayer liable for tax under section 5896 shall
keep such records, make such returns, and furnish such information (to the
Secretary and to other persons having an interest in the taxable crude oil or
natural gas) with respect to such oil as the Secretary may by regulations
prescribe.</text>
</paragraph><paragraph id="HAD3643435B71491E80B04DF4C89FD4FD"><enum>(3)</enum><header>Taxable periods;
return of tax</header>
<subparagraph id="H510BF7BB9B1C4D3485C61C6C74490FE9"><enum>(A)</enum><header>Taxable
period</header><text>Except as provided by the Secretary, each calendar year
shall constitute a taxable period.</text>
</subparagraph><subparagraph id="HCD9FCE2087C14B61A75AC08FEA0C3EBC"><enum>(B)</enum><header>Returns</header><text>The
Secretary shall provide for the filing, and the time for filing, of the return
of the tax imposed under section 5896.</text>
</subparagraph></paragraph></subsection><subsection id="HAD263EBE78074464B146D3FB57E0FA24"><enum>(b)</enum><header>Definitions</header><text>For
purposes of this chapter—</text>
<paragraph id="H43D4D874BB2E4464A5DAB84F89D151D2"><enum>(1)</enum><header>Producer</header><text>The
term <term>producer</term> means the holder of the economic interest with
respect to the crude oil or natural gas.</text>
</paragraph><paragraph id="H658E879C0FAD4E75B091D91307A93316"><enum>(2)</enum><header>Crude
oil</header><text>The term <term>crude oil</term> includes crude oil
condensates and natural gasoline.</text>
</paragraph><paragraph id="HABBBDA3FBC9548FCA3A6D5A8D24C2832"><enum>(3)</enum><header>Premises and
crude oil product</header><text>The terms <term>premises</term> and <term>crude
oil product</term> have the same meanings as when used for purposes of
determining gross income from the property under section 613.</text>
</paragraph></subsection><subsection id="HB5ACA49C3BF04EC18D9051FBE2918E98"><enum>(c)</enum><header>Adjustment of
removal price</header><text>In determining the removal price of oil or natural
gas from a property in the case of any transaction, the Secretary may adjust
the removal price to reflect clearly the fair market value of oil or natural
gas removed.</text>
</subsection><subsection id="H93BE9BDA26914F4E9AF6772C81D4BADC"><enum>(d)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this
chapter.</text>
</subsection></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFB2933C222B84361B337AC3D33C38337"><enum>(b)</enum><header>Deductibility of
tax</header><text>The first sentence of section 164(a) is amended by inserting
after paragraph (6) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H198A93A95065442B92012C11ED89BB30" style="OLC">
<paragraph id="H7F04D123FC7E46CEA38477F5FA3F8F26"><enum>(7)</enum><text>The tax imposed by
section 5896(a) (after application of section 5896(b)) on the severance of
crude oil or natural gas from the outer Continental Shelf in the Gulf of
Mexico.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HDC9BE8429A57434D8A7D421641D65F36"><enum>(c)</enum><header>Clerical
amendment</header><text>The table of chapters for subtitle E is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="H9EC0BA737F314C41BB3578B2C04C0B3F" style="tax">
<toc regeneration="no-regeneration">
<toc-entry level="chapter">Chapter 56. Tax on severance of crude oil
and natural gas from the outer Continental Shelf in the Gulf of
Mexico.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H27CE45958B3748168F9B1CC54F98CD44"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to crude oil
or natural gas removed after December 31, 2012.</text>
</subsection></section></subtitle><subtitle id="H041AF2B830664A22BA6C774ED566DB30"><enum>B</enum><header>Ending Excessive
Corporate Tax Deductions for Stock Options</header>
<section commented="no" display-inline="no-display-inline" id="H58BD3A70075941AAA3C770FB4451968A" section-type="subsequent-section"><enum>331.</enum><header display-inline="yes-display-inline">Consistent treatment of stock options by
corporations</header>
<subsection commented="no" display-inline="no-display-inline" id="H89AF77C9E27D4E6C89D02908628F3180"><enum>(a)</enum><header display-inline="yes-display-inline">Consistent treatment for wage
deduction</header>
<paragraph commented="no" display-inline="no-display-inline" id="HDC12C61EE8984C3E95A309BF49FF2A21"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 83(h) is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HBEE075E888BB43479FE2D4F05D303FE8"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>In the case of</quote>
and inserting:</text>
<quoted-block display-inline="no-display-inline" id="H0B70DD408A5445AE95EA57D2EF856048" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="HF4EDE01551774FE48D672ACA203B8B91"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case
of</text>
</paragraph><after-quoted-block>, and</after-quoted-block></quoted-block>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HC23280DA1B6F4C13BC13217BD5BF2514"><enum>(B)</enum><text display-inline="yes-display-inline">by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HD45BB3B250494218AECECC98D1938825" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="H3D9A0292BB264573BD216CAEA97B4A94"><enum>(2)</enum><header display-inline="yes-display-inline">Stock options</header><text display-inline="yes-display-inline">In the case of property transferred to a
person in connection with a stock option, any deduction related to such stock
option shall be allowed only under section 162(q) and paragraph (1) shall not
apply.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF32FD9CDFAF8469FB34F466E0798FAC6"><enum>(2)</enum><header display-inline="yes-display-inline">Treatment of compensation paid with stock
options</header><text display-inline="yes-display-inline">Section 162 is
amended by redesignating subsection (q) as subsection (r) and by inserting
after subsection (p) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H4515F4314C134067ADD6B2AD26AD5F73" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="H42CEB207D7C842538BDA2241221276F0"><enum>(q)</enum><header display-inline="yes-display-inline">Treatment of compensation paid with stock
options</header>
<paragraph commented="no" display-inline="no-display-inline" id="HEB94FA08358547F9AFB25CBA88117EF4"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of compensation for personal
services that is paid with stock options, the deduction under subsection (a)(1)
shall not exceed the amount the taxpayer has treated as compensation cost with
respect to such stock options for the purpose of ascertaining income, profit,
or loss in a report or statement to shareholders, partners, or other
proprietors (or to beneficiaries), and shall be taken into account in the same
period that such compensation cost is recognized for such purpose.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H124D762FB5144CD1894ED51AB1FDE1AA"><enum>(2)</enum><header display-inline="yes-display-inline">Special rules for controlled
groups</header><text display-inline="yes-display-inline">The Secretary may
prescribe rules for the application of paragraph (1) in cases where the stock
option is granted by—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H9CD5047093284C76A7B5C40509065453"><enum>(A)</enum><text display-inline="yes-display-inline">a parent or subsidiary corporation (within
the meaning of section 424) of the taxpayer, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H025B62DEDA3E4C2D92FD14C749C761B0"><enum>(B)</enum><text display-inline="yes-display-inline">another
corporation.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HC2262CB4128343C6976F1528DB15EBE6"><enum>(b)</enum><header display-inline="yes-display-inline">Consistent treatment for research tax
credit</header><text display-inline="yes-display-inline">Section 41(b)(2)(D) is
amended by inserting at the end the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="H4F5B8A6088314487B8670B3949F89240" style="OLC">
<clause commented="no" display-inline="no-display-inline" id="H20DBF867B8EC45ACA3DE2346DBCC9187"><enum>(iv)</enum><header display-inline="yes-display-inline">Special rule for stock
options</header><text display-inline="yes-display-inline">The amount which may
be treated as wages for any taxable year in connection with the issuance of a
stock option shall not exceed the amount allowed for such taxable year as a
compensation deduction under section 162(q) with respect to such stock
option.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H1160039128E547F6878837567CEB192C"><enum>(c)</enum><header display-inline="yes-display-inline">Application of amendments</header><text display-inline="yes-display-inline">The amendments made by this section shall
apply to stock options exercised after the date of the enactment of this Act,
except that—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H65FE198FABA541388A9273ACED17735E"><enum>(1)</enum><text display-inline="yes-display-inline">such amendments shall not apply to stock
options that were granted before such date and that vested in taxable periods
beginning on or before June 15, 2005,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HC85D92D1BA494970BB51E1A61F6677CE"><enum>(2)</enum><text display-inline="yes-display-inline">for stock options that were granted before
such date of enactment and vested during taxable periods beginning after June
15, 2005, and ending before such date of enactment, a deduction under section
162(q) of the Internal Revenue Code of 1986 (as added by subsection (a)(2))
shall be allowed in the first taxable period of the taxpayer that ends after
such date of enactment,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HA4803EBA880D47A896B2111FB691F097"><enum>(3)</enum><text display-inline="yes-display-inline">for public entities reporting as small
business issuers and for non-public entities required to file public reports of
financial condition, paragraphs (1) and (2) shall be applied by substituting
<quote>December 15, 2005</quote> for <quote>June 15, 2005</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H993DD83A5B924FF0A3CBE6EEC60260B2"><enum>(4)</enum><text display-inline="yes-display-inline">no deduction shall be allowed under section
83(h) or section 162(q) of such Code with respect to any stock option the
vesting date of which is changed to accelerate the time at which the option may
be exercised in order to avoid the applicability of such amendments.</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="H24160B6DC3574AB1A911D9D868F2A85A" section-type="subsequent-section"><enum>332.</enum><header display-inline="yes-display-inline">Application of executive pay deduction
limit</header>
<subsection commented="no" display-inline="no-display-inline" id="HB095F0D5749D491780353F818A18BF5F"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subparagraph (D) of section 162(m)(4) of
the Internal Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H371ED65C65FF4E92A25A50D75798ECBA" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="HF74BCECB3F1B4C4A9FB5AE07CF0EF034"><enum>(D)</enum><header display-inline="yes-display-inline">Stock option compensation</header><text display-inline="yes-display-inline">The term <term>applicable employee
remuneration</term> shall include any compensation deducted under subsection
(q), and such compensation shall not qualify as performance-based compensation
under subparagraph
(C).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H12A87FAE13FE48978E9DC3360111EA53"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to stock options exercised or granted after the date
of the enactment of this Act.</text>
</subsection></section></subtitle><subtitle id="HF2777178347B48269D824243279A46BC"><enum>C</enum><header>Reduce Deduction
of Corporate Meals and Entertainment</header>
<section id="H36E3A1354CC64865AA2B3DB6FDC57157"><enum>341.</enum><header>Reduction in
business meals and entertainment tax deduction</header>
<subsection id="H619BD51E28264D6D8079762B3580BB8F"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/274">Section 274(n)(1)</external-xref> of the Internal Revenue Code of 1986
(relating to only 50 percent of meal and entertainment expenses allowed as
deduction) is amended by striking <quote>50 percent</quote> and inserting
<quote>25 percent</quote>.</text>
</subsection><subsection id="HCC5A7ED02EB34B3090124FF111794AC6"><enum>(b)</enum><header>Conforming
amendment</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/274">Section 274(n)</external-xref> of the Internal Revenue Code of 1986 is
amended by striking paragraph (3).</text>
</subsection><subsection id="HD96D75C44088460E86AA2B526D425249"><enum>(c)</enum><header>Clerical
amendment</header><text>The heading for section 274(n) of the Internal Revenue
Code of 1986 is amended by striking <quote><header-in-text level="subsection" style="OLC">Only 50 Percent</header-in-text></quote> and inserting
<quote><header-in-text level="subsection" style="OLC">Only 25
Percent</header-in-text></quote>.</text>
</subsection><subsection id="HD99373162C204DEA82846361E58F9BF9"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2012.</text>
</subsection></section></subtitle><enum>IV</enum><header>Close
International Tax System Loopholes</header>
<subtitle id="HFFE14F8AF3E7454396F5CC67D8F90023"><enum>A</enum><header>Reformation of
U.S. international tax system</header>
<section display-inline="no-display-inline" id="H630D9AFD469A446D814BFF4F87043CFA" section-type="subsequent-section"><enum>401.</enum><header>Allocation of
expenses and taxes on basis of repatriation of foreign income</header>
<subsection id="H476E83952EE841A3A01368EAC6E6B3B5"><enum>(a)</enum><header>In
general</header><text>Part III of subchapter N of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after subpart G the following new
subpart:</text>
<quoted-block display-inline="no-display-inline" id="H96D976BF454F4338A7344CA04C0FA316" style="OLC">
<subpart id="H46952C30E69D4ECF802899B85E08371A"><enum>H</enum><header>Special Rules for
Allocation of Foreign-Related Deductions and Foreign Tax Credits</header>
<toc container-level="subpart-container" idref="H46952C30E69D4ECF802899B85E08371A" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HDAEC2DE953A64BEE8F3FB16C8675829E" level="section">Sec. 975. Deductions allocated to deferred foreign income may
not offset United States source income.</toc-entry>
<toc-entry idref="H7949B06F4E794EE78354EFC90C5A0646" level="section">Sec. 976. Amount of foreign taxes computed on overall
basis.</toc-entry>
<toc-entry idref="H0AF1ACE5D7444AE295F7448FCAE75D3F" level="section">Sec. 977. Application of subpart.</toc-entry>
</toc>
<section id="HDAEC2DE953A64BEE8F3FB16C8675829E"><enum>975.</enum><header>Deductions
allocated to deferred foreign income may not offset United States source
income</header>
<subsection id="H5AE6F64A940F4BA39AD587328A4F1747"><enum>(a)</enum><header>Current year
deductions</header><text display-inline="yes-display-inline">For purposes of
this chapter, foreign-related deductions for any taxable year—</text>
<paragraph id="HBA9F882DE2D843AFBB8E0260915642F9"><enum>(1)</enum><text>shall be taken
into account for such taxable year only to the extent that such deductions are
allocable to currently-taxed foreign income, and</text>
</paragraph><paragraph id="H8681DE97054F48F3A948F37FD75C68F1"><enum>(2)</enum><text>to the extent not
so allowed, shall be taken into account in subsequent taxable years as provided
in subsection (b).</text>
</paragraph><continuation-text continuation-text-level="subsection">Foreign-related deductions shall be
allocated to currently taxed foreign income in the same proportion which
currently taxed foreign income bears to the sum of currently taxed foreign
income and deferred foreign income.</continuation-text></subsection><subsection id="H9826F3905C8D40388C729B0C5ABD05B9"><enum>(b)</enum><header>Deductions
related to repatriated deferred foreign income</header>
<paragraph id="H5754733DE4F94D9C97D3B6736FE95EEB"><enum>(1)</enum><header>In
general</header><text>If there is repatriated foreign income for a taxable
year, the portion of the previously deferred deductions allocated to the
repatriated foreign income shall be taken into account for the taxable year as
a deduction allocated to income from sources outside the United States. Any
such amount shall not be included in foreign-related deductions for purposes of
applying subsection (a) to such taxable year.</text>
</paragraph><paragraph id="H2DE854617EC84B78B290328324616204"><enum>(2)</enum><header>Portion of
previously deferred deductions</header><text>For purposes of paragraph (1), the
portion of the previously deferred deductions allocated to repatriated foreign
income is—</text>
<subparagraph id="H62BFD912811D4D4B96F849B11FD131DC"><enum>(A)</enum><text>the amount which
bears the same proportion to such deductions, as</text>
</subparagraph><subparagraph id="H5B2834BB9A284B55A7245D2DF924B492"><enum>(B)</enum><text>the repatriated
income bears to the previously deferred foreign income.</text>
</subparagraph></paragraph></subsection><subsection id="H95CCB87D13184EAABC69DBCC77594C43"><enum>(c)</enum><header>Definitions and
special rule</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph id="H4CA0B273EAAC4AADB0D79EF16295C53A"><enum>(1)</enum><header>Foreign-related
deductions</header><text>The term <term>foreign-related deductions</term> means
the total amount of deductions and expenses which would be allocated or
apportioned to gross income from sources without the United States for the
taxable year if both the currently-taxed foreign income and deferred foreign
income were taken into account.</text>
</paragraph><paragraph display-inline="no-display-inline" id="H5FA36078BB2D4D399B2EDE11E0D50CF7"><enum>(2)</enum><header>Currently-taxed
foreign income</header><text>The term <term>currently-taxed foreign
income</term> means the amount of gross income from sources without the United
States for the taxable year (determined without regard to repatriated foreign
income for such year).</text>
</paragraph><paragraph display-inline="no-display-inline" id="H665DEAF2B51A4338A5F373361FDB3C6D"><enum>(3)</enum><header>Deferred foreign
income</header><text>The term <term>deferred foreign income</term> means the
excess of—</text>
<subparagraph id="H93700D390D684BB5BD646AC20CE0CB95"><enum>(A)</enum><text display-inline="yes-display-inline">the amount that would be includible in
gross income under subpart F of this part for the taxable year if—</text>
<clause id="H92A690471EED43E6B3541625C88A8F29"><enum>(i)</enum><text>all controlled
foreign corporations were treated as one controlled foreign corporation,
and</text>
</clause><clause id="H59EC59AED6AC4771A11ECA5442CBC42A"><enum>(ii)</enum><text>all earnings and
profits of all controlled foreign corporations were subpart F income (as
defined in section 952), over</text>
</clause></subparagraph><subparagraph id="HC0192A47C56C4C509BF7FF2E98253C18"><enum>(B)</enum><text>the sum of—</text>
<clause id="H4C2F9670062541E2B50A96ABD4CA626C"><enum>(i)</enum><text>all dividends
received during the taxable year from controlled foreign corporations,
plus</text>
</clause><clause id="H42E0E3B43FF844AD87F11F596F9CD97F"><enum>(ii)</enum><text>amounts
includible in gross income under section 951(a).</text>
</clause></subparagraph></paragraph><paragraph id="H8FA45125902D432A93462852B8E20AF7"><enum>(4)</enum><header>Previously
deferred foreign income</header><text display-inline="yes-display-inline">The
term <term>previously deferred foreign income</term> means the aggregate amount
of deferred foreign income for all prior taxable years to which this part
applies, determined as of the beginning of the taxable year, reduced by the
repatriated foreign income for all such prior taxable years.</text>
</paragraph><paragraph id="H742534B679A0484EA36F36EB44517810"><enum>(5)</enum><header>Repatriated
foreign income</header><text>The term <term>repatriated foreign income</term>
means the amount included in gross income on account of distributions out of
previously deferred foreign income.</text>
</paragraph><paragraph id="HBD54DBA27C82473BA22E5D9151C5B987"><enum>(6)</enum><header>Previously
deferred deductions</header><text display-inline="yes-display-inline">The term
<term>previously deferred deductions</term> means the aggregate amount of
foreign-related deductions not taken into account under subsection (a) for all
prior taxable years (determined as of the beginning of the taxable year),
reduced by any amounts taken into account under subsection (b) for such prior
taxable years.</text>
</paragraph><paragraph id="H00C702D117CD4452936ADB1261D8D3A6"><enum>(7)</enum><header>Treatment of
certain foreign taxes</header>
<subparagraph id="HC60EFD2E2E6A4B20A52B17E6F8C8CCB2"><enum>(A)</enum><header>Paid by
controlled foreign corporation</header><text display-inline="yes-display-inline">Section 78 shall not apply for purposes of
determining currently-taxed foreign income and deferred foreign income.</text>
</subparagraph><subparagraph id="H8DB8E77940904729B32AAB31738D53E2"><enum>(B)</enum><header>Paid by
taxpayer</header><text>For purposes of determining currently-taxed foreign
income, gross income from sources without the United States shall be reduced by
the aggregate amount of taxes described in the applicable paragraph of section
901(b) which are paid by the taxpayer (without regard to sections 902 and 960)
during the taxable year.</text>
</subparagraph></paragraph><paragraph id="HDB9AAE7634F14640825D691E0AB87DB0"><enum>(8)</enum><header>Coordination
with section 976</header><text>In determining currently-taxed foreign income
and deferred foreign income, the amount of deemed foreign tax credits shall be
determined with regard to section 976.</text>
</paragraph></subsection></section><section id="H7949B06F4E794EE78354EFC90C5A0646"><enum>976.</enum><header>Amount of
foreign taxes computed on overall basis</header>
<subsection id="HF526B5A6A4B047C1BAB28DBD8BC51E58"><enum>(a)</enum><header>Current year
allowance</header><text display-inline="yes-display-inline">For purposes of
this chapter, the amount taken into account as foreign income taxes for any
taxable year shall be an amount which bears the same ratio to the total foreign
income taxes for that taxable year as—</text>
<paragraph id="H50B2E845835A4C01B37C4940368350BB"><enum>(1)</enum><text>the
currently-taxed foreign income for such taxable year, bears to</text>
</paragraph><paragraph id="H2090A3342EA743F6BF9E8A378C1B6A49"><enum>(2)</enum><text>the sum of the
currently-taxed foreign income and deferred foreign income for such
year.</text>
</paragraph><continuation-text continuation-text-level="subsection">The
portion of the total foreign income taxes for any taxable year not taken into
account under the preceding sentence for a taxable year shall only be taken
into account as provided in subsection (b) (and shall not be taken into account
for purposes of applying sections 902 and 960).</continuation-text></subsection><subsection display-inline="no-display-inline" id="H78D6F745EC5C4CB2A07FC43564E6ED71"><enum>(b)</enum><header>Allowance
related to repatriated deferred foreign income</header>
<paragraph id="H6AEAC66E7B2E4EF1A19C8D0FC2970C46"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">If there is
repatriated foreign income for any taxable year, the portion of the previously
deferred foreign income taxes paid or accrued during such taxable year shall be
taken into account for the taxable year as foreign taxes paid or accrued. Any
such taxes so taken into account shall not be included in foreign income taxes
for purposes of applying subsection (a) to such taxable year.</text>
</paragraph><paragraph id="HE45EFF99A12B4EA4B5A25A6BB322F5FA"><enum>(2)</enum><header>Portion of
previously deferred foreign income taxes</header><text>For purposes of
paragraph (1), the portion of the previously deferred foreign income taxes
allocated to repatriated deferred foreign income is—</text>
<subparagraph id="H7D50BD2C362F4B98B27F58692F1A0245"><enum>(A)</enum><text>the amount which
bears the same proportion to such taxes, as</text>
</subparagraph><subparagraph id="HAF97B080823E454EB33C04E926B18312"><enum>(B)</enum><text>the repatriated
deferred income bears to the previously deferred foreign income.</text>
</subparagraph></paragraph></subsection><subsection id="H8482ADA2680747E9927FC587B155D989"><enum>(c)</enum><header>Definitions and
special rule</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph id="H975D737FE2B84B63BEF575B821720409"><enum>(1)</enum><header>Previously
deferred foreign income taxes</header><text display-inline="yes-display-inline">The term <term>previously deferred foreign
income taxes</term> means the aggregate amount of total foreign income taxes
not taken into account under subsection (a) for all prior taxable years
(determined as of the beginning of the taxable year), reduced by any amounts
taken into account under subsection (b) for such prior taxable years.</text>
</paragraph><paragraph id="H1B1BD79823FC498DAE25EAE3D7CC577D"><enum>(2)</enum><header>Total foreign
income taxes</header><text display-inline="yes-display-inline">The term
<term>total foreign income taxes</term> means the sum of foreign income taxes
paid or accrued during the taxable year (determined without regard to section
904(c)) plus the increase in foreign income taxes that would be paid or accrued
during the taxable year under sections 902 and 960 if—</text>
<subparagraph id="H126D23DBA9D54EB0B77D472B642F4BCE"><enum>(A)</enum><text>all controlled
foreign corporations were treated as one controlled foreign corporation,
and</text>
</subparagraph><subparagraph id="HB1871A2B1551454BABFCB38066429672"><enum>(B)</enum><text>all earnings and
profits of all controlled foreign corporations were subpart F income (as
defined in section 952).</text>
</subparagraph></paragraph><paragraph id="H4EA39D1A47D44EC5B2295D2FF1A505FB"><enum>(3)</enum><header>Foreign income
taxes</header><text display-inline="yes-display-inline">The term <term>foreign
income taxes</term> means any income, war profits, or excess profits taxes paid
by the taxpayer to any foreign country or possession of the United
States.</text>
</paragraph><paragraph id="H99691D941427426B9858ED9B67200C96"><enum>(4)</enum><header>Currently-taxed
foreign income and deferred foreign income</header><text display-inline="yes-display-inline">The terms <term>currently-taxed foreign
income</term> and <term>deferred foreign income</term> have the meanings given
such terms by section 975(c)).</text>
</paragraph></subsection></section><section id="H0AF1ACE5D7444AE295F7448FCAE75D3F"><enum>977.</enum><header>Application of
subpart</header><text display-inline="no-display-inline">This subpart—</text>
<paragraph id="H1B28D9C836F241438FF1D34853D974AB"><enum>(1)</enum><text>shall be applied
before subpart A, and</text>
</paragraph><paragraph id="HC568C5FC6FE0485ABF4AF543443C41A2"><enum>(2)</enum><text>shall be applied
separately with respect to the categories of income specified in section
904(d)(1).</text>
</paragraph></section></subpart><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE2D66F3687A44E249A3F79F99758BDCA"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of subparts for part III of subpart N of
chapter 1 of such Code is amended by inserting after the item relating to
subpart G the following new item:</text>
<quoted-block display-inline="no-display-inline" id="H5784D45893FC423F98FE97478E35E025" style="OLC">
<toc container-level="quoted-block-container" idref="H96D976BF454F4338A7344CA04C0FA316" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H46952C30E69D4ECF802899B85E08371A" level="subpart">Subpart H. Special Rules for Allocation of Foreign-Related
Deductions and Foreign Tax
Credits.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3350E9C4CCEA4809A3F0426DDDC43D0E"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after the date of the
enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H890F3F429E3E483E8A75A25A3E6C5434" section-type="subsequent-section"><enum>402.</enum><header>Excess income from
transfers of intangibles to low-taxed affiliates treated as subpart F
income</header>
<subsection id="H838024ABD9B849D5BB42632AAB2B44D8"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) of
section 954 of such Code is amended by inserting after paragraph (3) the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HFC87F2354ABC4D2191F5594B619CCD50" style="OLC">
<paragraph id="HA9D61F07AD9B4E33A47C417E1EE49E60"><enum>(4)</enum><text display-inline="yes-display-inline">the foreign base company excess intangible
income for the taxable year (determined under subsection (f) and reduced as
provided in subsection (b)(5)),
and</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8817128909774A7A8A076716F676A1A8"><enum>(b)</enum><header>Foreign base
company excess intangible income</header><text>Section 954 of such Code is
amended by inserting after subsection (e) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H86FB748A497F4B08BA9B8506923D44B3" style="OLC">
<subsection id="H82882BE16B374C9D844C6C557BE14E7D"><enum>(f)</enum><header>Foreign base
company excess intangible income</header><text display-inline="yes-display-inline">For purposes of subsection (a)(4) and this
subsection:</text>
<paragraph id="HAED5B0B4122C4BB898E6BD921D701DF6"><enum>(1)</enum><header>Foreign base
company excess intangible income defined</header>
<subparagraph id="H37728AD76B1B410CA135DD96EE72A871"><enum>(A)</enum><header>In
general</header><text>The term <quote>foreign base company excess intangible
income</quote> means, with respect to any covered intangible, the excess
of—</text>
<clause id="H3FD17C3AC75D477B98D15B7B28CCA299"><enum>(i)</enum><text>the sum of—</text>
<subclause id="H977ED5BE598A4F20B221FDA75DCC773B"><enum>(I)</enum><text>gross income from
the sale, lease, license, or other disposition of property in which such
covered intangible is used directly or indirectly, and</text>
</subclause><subclause id="H427BC87A8B97493A9B8E6B4B184966EC"><enum>(II)</enum><text>gross income from
the provision of services related to such covered intangible or in connection
with property in which such covered intangible is used directly or indirectly,
over</text>
</subclause></clause><clause id="H95A34E901EDF4120A59F4C3C7072A527"><enum>(ii)</enum><text>150 percent of
the costs properly allocated and apportioned to the gross income taken into
account under clause (i) other than expenses for interest and taxes and any
expenses which are not directly allocable to such gross income.</text>
</clause></subparagraph><subparagraph commented="no" id="HED35672F8D4C45B49FA3F21941563EBF"><enum>(B)</enum><header>Same country
income not taken into account</header><text>If—</text>
<clause id="HB74E9B051021474997E148916BA91235"><enum>(i)</enum><text>the sale, lease,
license, or other disposition of the property referred to in subparagraph
(A)(i)(I) is for use, consumption, or disposition in the country under the laws
of which the controlled foreign corporation is created or organized, or</text>
</clause><clause id="H6B9ABF294DF54D6694986BC987D561FA"><enum>(ii)</enum><text>the services
referred to in subparagraph (A)(i)(II) are performed in such country,</text>
</clause><continuation-text continuation-text-level="subparagraph">the
gross income from such sale, lease, license, or other disposition, or provision
of services, shall not be taken into account under subparagraph (A)(i).</continuation-text></subparagraph></paragraph><paragraph id="H819640C58A844D7FBF621C366D40DF4E"><enum>(2)</enum><header>Exception based
on effective foreign income tax rate</header>
<subparagraph id="HEE909CA9A5E94008A3EBE2908D429EC2"><enum>(A)</enum><header>In
general</header><text>Foreign base company excess intangible income shall not
include the applicable percentage of any item of income received by a
controlled foreign corporation if the taxpayer establishes to the satisfaction
of the Secretary that such income was subject to an effective rate of income
tax imposed by a foreign country in excess of 5 percent.</text>
</subparagraph><subparagraph id="H36466584C7804C9B99F13FCC21EDE288"><enum>(B)</enum><header>Applicable
percentage</header><text>For purposes of subparagraph (A), the term
<quote>applicable percentage</quote> means the ratio (expressed as a
percentage), not greater than 100 percent, of—</text>
<clause id="H73D7BB0C27B343179A90271699B08D60"><enum>(i)</enum><text>the number of
percentage points by which the effective rate of income tax referred to in
subparagraph (A) exceeds 5 percentage points, over</text>
</clause><clause id="HA2B94DC812B6438089DBEDCD2392E1AD"><enum>(ii)</enum><text>10 percentage
points.</text>
</clause></subparagraph><subparagraph id="H3AFA5B1F49414D248FF3C185C798AB03"><enum>(C)</enum><header>Treatment of
losses in determining effective rate of foreign income tax</header><text>For
purposes of determining the effective rate of income tax imposed by any foreign
country—</text>
<clause id="H71B1C8F36AA940DAA92F8699690B4496"><enum>(i)</enum><text>such effective
rate shall be determined without regard to any losses carried to the relevant
taxable year, and</text>
</clause><clause id="H7C6951A637FB4B36BCA8FE10B6627324"><enum>(ii)</enum><text>to the extent the
income with respect to such intangible reduces losses in the relevant taxable
year, such effective rate shall be treated as being the effective rate which
would have been imposed on such income without regard to such losses.</text>
</clause></subparagraph></paragraph><paragraph id="H47E96CC5B7B945B9BF526FEBBADD022C"><enum>(3)</enum><header>Covered
intangible</header><text>The term <quote>covered intangible</quote> means, with
respect to any controlled foreign corporation, any intangible property (as
defined in section 936(h)(3)(B))—</text>
<subparagraph id="HAB1CDA05838741C8A1280EFF13762B6B"><enum>(A)</enum><text>which is sold,
leased, licensed, or otherwise transferred (directly or indirectly) to such
controlled foreign corporation from a related person, or</text>
</subparagraph><subparagraph id="H09CFB3B04167465894D2731595FEC56D"><enum>(B)</enum><text>with respect to
which such controlled foreign corporation and one or more related persons has
(directly or indirectly) entered into any shared risk or development agreement
(including any cost sharing agreement).</text>
</subparagraph></paragraph><paragraph id="HBFECF291F35A457A81D9F12D085AD40D"><enum>(4)</enum><header>Related
person</header><text>The term <quote>related person</quote> has the meaning
given such term in subsection
(d)(3).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H7A7F6CE1C37341B88D0CDD72911F57A4"><enum>(c)</enum><header>Separate basket
for foreign tax credit</header><text display-inline="yes-display-inline">Subsection (d) of section 904 of such Code
is amended by redesignating paragraph (7) as paragraph (8) and by inserting
after paragraph (6) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HAF83430A57AE41BA953AA26C90FDA242" style="OLC">
<paragraph id="H21B3186669E34D858AF7E484034F0F66"><enum>(6)</enum><header>Separate
application to foreign base company excess intangible income</header>
<subparagraph id="H4D3EAE94DDC8491FBBC75C426124B0C2"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsections (a), (b),
and (c) of this section and sections 902, 907, and 960 shall be applied
separately with respect to each item of income which is taken into account
under section 954(a)(4) as foreign base company excess intangible
income.</text>
</subparagraph><subparagraph id="H458B5B2CABE744C4A48D9FA4D66E0F13"><enum>(B)</enum><header>Regulations</header><text>The
Secretary may issue such regulations or other guidance as is necessary or
appropriate to carry out the purposes of this subsection, including regulations
or other guidance which provides that related items of income may be aggregated
for purposes of this
paragraph.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H027FAD65F1944F7BABC06E414E802DAF"><enum>(d)</enum><header>Conforming
amendments</header>
<paragraph id="HE73C8D0306EC45DABAC5705DDF54228F"><enum>(1)</enum><text>Paragraph (4) of
section 954(b) of such Code is amended by inserting <quote>foreign base company
excess intangible income described in subsection (a)(4) or</quote> before
<quote>foreign base company oil-related income</quote> in the last sentence
thereof.</text>
</paragraph><paragraph id="H306473E233C34DD58FED674B54ED9518"><enum>(2)</enum><text>Subsection (b) of
section 954 of such Code is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H17632811B4D642249E627A3019CD7412" style="OLC">
<paragraph id="HBBDA20FAE00A4183B26321030FDE3FA4"><enum>(7)</enum><header>Foreign base
company excess intangible income not treated as another kind of base company
income</header><text display-inline="yes-display-inline">Income of a
corporation which is foreign base company excess intangible income shall not be
considered foreign base company income of such corporation under paragraph (2),
(3), or (5) of subsection
(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HFEE26BBA5FD5451B984F300CAB3F2643"><enum>(e)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H7EFA06DAA0C8416CB6332BF105C4A073"><enum>403.</enum><header>Limitations on
income shifting through intangible property transfers</header>
<subsection id="H68550A7F432241079DF8F04005F86E77"><enum>(a)</enum><header>Clarification of
definition of intangible asset</header><text>Clause (vi) of section
936(h)(3)(B) of such Code is amended by inserting <quote>(including any section
197 intangible described in subparagraph (A), (B), or (C)(i) of subsection
(d)(1) of such section)</quote> after <quote>item</quote>.</text>
</subsection><subsection id="H77E2C27BBF134691B97733519F8E4845"><enum>(b)</enum><header>Clarification of
allowable valuation methods</header>
<paragraph id="H05C1C3CBC99D4FD7837429265607D3A3"><enum>(1)</enum><header>Foreign
corporations</header><text>Paragraph (2) of section 367(d) of such Code is
amended by adding at the end the following new subparagraph:</text>
<quoted-block act-name="" id="H37053B32ADEE409A9CEF5EBDA8C3F419" style="OLC">
<subparagraph id="H6C29B8FF31964647B0DA1907FFBE7924"><enum>(D)</enum><header>Regulatory
authority</header><text>For purposes of the last sentence of subparagraph (A),
the Secretary may require—</text>
<clause id="H153E3877E0B44842991AB73E79BF8EAF"><enum>(i)</enum><text>the valuation of
transfers of intangible property on an aggregate basis, or</text>
</clause><clause id="HE7432B98F98B43A0BA28E04249371C48"><enum>(ii)</enum><text>the valuation of
such a transfer on the basis of the realistic alternatives to such a
transfer,</text>
</clause><continuation-text continuation-text-level="subparagraph">in any
case in which the Secretary determines that such basis is the most reliable
means of valuation of such
transfers.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HD424C929E7464F5096996A217033F19C"><enum>(2)</enum><header>Allocation among
taxpayers</header><text>Section 482 of such Code is amended by adding at the
end the following: <quote>For purposes of the preceding sentence, the Secretary
may require the valuation of transfers of intangible property on an aggregate
basis or the valuation of such a transfer on the basis of the realistic
alternatives to such a transfer, in any case in which the Secretary determines
that such basis is the most reliable means of valuation of such
transfers.</quote>.</text>
</paragraph></subsection><subsection id="H63A0889C79C0406BB9F3120BC6849672"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="H690C74EF2E3E4067BE46AC565686AAC0"><enum>(1)</enum><header>In
general</header><text>The amendments made by this section shall apply to
transfers in taxable years beginning after the date of the enactment of this
Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HB0B87012432A4A02AE8B4B16CA61835D"><enum>(2)</enum><header>No
inference</header><text>Nothing in the amendment made by subsection (a) shall
be construed to create any inference with respect to the application of section
936(h)(3) of the Internal Revenue Code of 1986, or the authority of the
Secretary of the Treasury to provide regulations for such application, on or
before the date of the enactment of such amendment.</text>
</paragraph></subsection></section><section id="HFC33AFC8E93442B58BD2238FAE459BA8"><enum>404.</enum><header>Limitation on
earnings stripping by expatriated entities</header>
<subsection id="H2393D8E3691C4FEF8B284DC0841B4D67"><enum>(a)</enum><header>In
general</header><text>Subsection (j) of section 163 of such Code is
amended—</text>
<paragraph id="HABB665E0F1474B8698EEE8BE6956124B"><enum>(1)</enum><text>by redesignating
paragraph (9) as paragraph (10), and</text>
</paragraph><paragraph id="HDC56F6BCF1464CAFBD1A7B2B010A877E"><enum>(2)</enum><text>by inserting after
paragraph (8) the following new paragraph:</text>
<quoted-block act-name="" id="H883B9BD09416489EB6ED1CDB4ABF0736" style="OLC">
<paragraph id="H3670B8D52D384E58A1864F2B43D1E99D"><enum>(9)</enum><header>Special rules
for expatriated entities</header>
<subparagraph id="H1E1DC1DF3BDA452AB1D1CE305A166CF1"><enum>(A)</enum><header>In
general</header><text>In the case of a corporation to which this subsection
applies which is an expatriated entity, this subsection shall apply to such
corporation with the following modifications:</text>
<clause id="HAEE7FCB17D154EE0A49424C1DC51A8D9"><enum>(i)</enum><text>Paragraph (2)(A)
shall be applied without regard to clause (ii) thereof.</text>
</clause><clause id="H0AC771C6FD884509854AE706BAE14CF1"><enum>(ii)</enum><text>Paragraph (1)(B)
shall be applied—</text>
<subclause id="HCAEC0059496A4E24B5D75017451D3B25"><enum>(I)</enum><text>without regard to
the parenthetical, and</text>
</subclause><subclause id="HF23E2489C339480A96C49E65E257A37C"><enum>(II)</enum><text>by substituting
<quote>in the 1st succeeding taxable year and in the 2nd through 10th
succeeding taxable years to the extent not previously taken into account under
this subparagraph</quote> for <quote>in the succeeding taxable
year</quote>.</text>
</subclause></clause><clause id="H6D4173F3300E4D4E868833456B549A34"><enum>(iii)</enum><text>Paragraph (2)(B)
shall be applied—</text>
<subclause id="H92F7F38FCFC24EAD99A528B0CBD23D39"><enum>(I)</enum><text>without regard to
clauses (ii) and (iii), and</text>
</subclause><subclause id="HF55EE6E232F04E068CD980A15B6D2DFF"><enum>(II)</enum><text>by substituting
<quote>25 percent of the adjusted taxable income of the corporation for such
taxable year</quote> for the matter of clause (i)(II) thereof.</text>
</subclause></clause></subparagraph><subparagraph id="H0685B1688FC641D69F64E42349389312"><enum>(B)</enum><header>Expatriated
entity</header><text>For purposes of this paragraph—</text>
<clause id="HE6D9F3995D994B2FB5E036BF26B23463"><enum>(i)</enum><header>In
general</header><text>With respect to a corporation and a taxable year, the
term <term>expatriated entity</term> has the meaning given such term by section
7874(a)(2), determined as if such section and the regulations under such
section as in effect on the first day of such taxable year applied to all
taxable years of the corporation beginning after July 10, 1989.</text>
</clause><clause id="H09DE8966B9EB4B84A48597D3336C2B84"><enum>(ii)</enum><header>Exception for
surrogates treated as a domestic corporation</header><text>The term
<term>expatriated entity</term> does not include a surrogate foreign
corporation which is treated as a domestic corporation by reason of section
7874(b).</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HE1AC01EA4256483094691E8B21C32467"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H77FD52A2F6AD4553BBB9FD0ECACAA32B" section-type="subsequent-section"><enum>405.</enum><header>Prevention of
avoidance of tax through reinsurance with non-taxed affiliates</header>
<subsection commented="no" display-inline="no-display-inline" id="H683B99E4230E4FC195267FE94FC0D686"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Part III of subchapter L of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the end the following
new section:</text>
<quoted-block display-inline="no-display-inline" id="H0B4D6A3C7A13411D85DBD4E4CFF67DDE" style="OLC">
<section id="H3E5D3FCE57AA40B198D5CA687F4D2EB2"><enum>849.</enum><header>Special rules
for reinsurance of non-life contracts with non-taxed affiliates</header>
<subsection id="H13A563CE0536401295630570C5791F2B"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The taxable income
under section 831(a) or the life insurance company taxable income under section
801(b) (as the case may be) of an insurance company shall be determined by not
taking into account—</text>
<paragraph id="H1867E77411AF4C80A996AE74CFBC11F5"><enum>(1)</enum><text>any non-taxed
reinsurance premium,</text>
</paragraph><paragraph id="H6F6395F931884BC2A4E7090BE69B2CFB"><enum>(2)</enum><text display-inline="yes-display-inline">any additional amount paid by such
insurance company with respect to the reinsurance for which such non-taxed
reinsurance premium is paid, to the extent such additional amount is properly
allocable to such non-taxed reinsurance premium, and</text>
</paragraph><paragraph id="H77467287C70E47738F489C4F1013A2B9"><enum>(3)</enum><text display-inline="yes-display-inline">any return premium, ceding commission,
reinsurance recovered, or other amount received by such insurance company with
respect to the reinsurance for which such non-taxed reinsurance premium is
paid, to the extent such return premium, ceding commission, reinsurance
recovered, or other amount is properly allocable to such non-taxed reinsurance
premium.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HED3C338C6E174630877A7925BBED8436"><enum>(b)</enum><header display-inline="yes-display-inline">Non-Taxed reinsurance
premiums</header><text display-inline="yes-display-inline">For purposes of this
section—</text>
<paragraph id="H822EF2A9F0C6429C97B9DAAC4C42065D"><enum>(1)</enum><header>In
general</header><text>The term <term>non-taxed reinsurance premium</term> means
any reinsurance premium paid directly or indirectly to an affiliated
corporation with respect to reinsurance of risks (other than excepted risks),
to the extent that the income attributable to the premium is not subject to tax
under this subtitle (either as the income of the affiliated corporation or as
amounts included in gross income by a United States shareholder under section
951).</text>
</paragraph><paragraph id="H486FABE2B6794E04955A6D99B7E3DEE4"><enum>(2)</enum><header>Excepted
risks</header><text>The term <quote>excepted risks</quote> means any risk with
respect to which reserves described in section 816(b)(1) are
established.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H97769D1FA55D40A7B9A25327E847A741"><enum>(c)</enum><header display-inline="yes-display-inline">Affiliated corporations</header><text display-inline="yes-display-inline">For purposes of this section, a corporation
shall be treated as affiliated with an insurance company if both corporations
would be members of the same controlled group of corporations (as defined in
section 1563(a)) if section 1563 were applied—</text>
<paragraph id="H7671E358696546A7B332F3FA914E45F5"><enum>(1)</enum><text>by substituting
<quote>at least 50 percent</quote> for <quote>at least 80 percent</quote> each
place it appears in subsection (a)(1), and</text>
</paragraph><paragraph id="H7AA4BE01BA66441286D87EDD2DFD9CA4"><enum>(2)</enum><text>without regard to
subsections (a)(4), (b)(2)(C), (b)(2)(D), and (e)(3)(C).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H55BB22876C9341E5820BEE4688632ACD"><enum>(d)</enum><header display-inline="yes-display-inline">Election To treat reinsurance income as
effectively connected</header>
<paragraph commented="no" display-inline="no-display-inline" id="H26521D87CD0A4D469E9ED0D3609F3129"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">A specified affiliated corporation may
elect for any taxable year to treat specified reinsurance income as—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H31908F7F6FE14149A753F06A9B63C9EC"><enum>(A)</enum><text display-inline="yes-display-inline">income effectively connected with the
conduct of a trade or business in the United States, and</text>
</subparagraph><subparagraph id="H4735D48BA7CC4D7F9B8C8D1F52071E19"><enum>(B)</enum><text>for purposes of
any treaty between the United States and any foreign country, income
attributable to a permanent establishment in the United States.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H58D4D410BD6F4B1E9E630CFA4D3D4174"><enum>(2)</enum><header display-inline="yes-display-inline">Effect of election</header><text display-inline="yes-display-inline">In the case of any specified reinsurance
income with respect to which the election under this subsection applies—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HDCAD99EAA0734896ABC6EDF90FEF41DB"><enum>(A)</enum><header display-inline="yes-display-inline">Deduction allowed for reinsurance
premiums</header><text display-inline="yes-display-inline">For exemption from
subsection (a), see definition of non-taxed reinsurance premiums in subsection
(b).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HCD82B9715405452A9D12B79651B0F771"><enum>(B)</enum><header display-inline="yes-display-inline">Exception from excise tax</header><text display-inline="yes-display-inline">The tax imposed by section 4371 shall not
apply with respect to any income treated as effectively connected with the
conduct of a trade or business in the United States under paragraph (1).</text>
</subparagraph><subparagraph id="H2BB825F859EC41F79A86C19637317D2F"><enum>(C)</enum><header>Taxation under
this subchapter</header><text>Such income shall be subject to tax under this
subchapter to the same extent and in the same manner as if such income were the
income of a domestic insurance company.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HB2636893F07742B39191BA5BF1628C85"><enum>(D)</enum><header display-inline="yes-display-inline">Coordination with foreign tax credit
provisions</header><text display-inline="yes-display-inline">For purposes of
subpart A of part III of subchapter N and sections 78 and 960—</text>
<clause commented="no" display-inline="no-display-inline" id="H2CF82E0E38BF4CE78D87235F7CDEA7E1"><enum>(i)</enum><text display-inline="yes-display-inline">such specified reinsurance income shall be
treated as derived from sources without the United States, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HF65ED317540245409FD900E52C3D37C4"><enum>(ii)</enum><text display-inline="yes-display-inline">subsections (a), (b), and (c) of section
904 and sections 902, 907, and 960 shall be applied separately with respect to
each item of such income.</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">The Secretary may issue
regulations or other guidance which provide that related items of specified
reinsurance income may be aggregated for purposes of applying clause
(ii).</continuation-text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H5EA70E1750204A49A045B68DA2185FED"><enum>(3)</enum><header display-inline="yes-display-inline">Specified affiliated
corporation</header><text display-inline="yes-display-inline">For purposes of
this subsection, the term <term>specified affiliated corporation</term> means
any affiliated corporation which is a foreign corporation and which meets such
requirements as the Secretary shall prescribe to ensure that tax on the
specified reinsurance income of such corporation is properly determined and
paid.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H6A6142C7F6FB403C9F9851B16625EA76"><enum>(4)</enum><header display-inline="yes-display-inline">Specified reinsurance income</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term
<term>specified reinsurance income</term> means all income of a specified
affiliated corporation which is attributable to reinsurance with respect to
which subsection (a) would (but for the election under this subsection)
apply.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H7A630AD7001D4924A64F3F90624641AF"><enum>(5)</enum><header display-inline="yes-display-inline">Rules related to election</header><text display-inline="yes-display-inline">Any election under paragraph (1)
shall—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HFDF1E969BB974717BE2E70B46A384138"><enum>(A)</enum><text display-inline="yes-display-inline">be made at such time and in such form and
manner as the Secretary may provide, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H2F6C664593F3453DAC4922EE871FEC3F"><enum>(B)</enum><text display-inline="yes-display-inline">apply for the taxable year for which made
and all subsequent taxable years unless revoked with the consent of the
Secretary.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HB58DFAF83BD14E05B64AF372B8372E7A"><enum>(e)</enum><header display-inline="yes-display-inline">Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such
regulations or other guidance as may be appropriate to carry out, or to prevent
the avoidance of the purposes of, this section, including regulations or other
guidance which provide for the application of this section to alternative
reinsurance transactions, fronting transactions, conduit and reciprocal
transactions, and any economically equivalent
transactions.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H2FC103A532864E28852A640969D57649"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for part III of subchapter L of chapter 1 of such Code is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="HAE443D72721F4139BC087A98E245FDE8" style="OLC">
<toc container-level="quoted-block-container" idref="H0B4D6A3C7A13411D85DBD4E4CFF67DDE" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H3E5D3FCE57AA40B198D5CA687F4D2EB2" level="section">Sec. 849. Special rules for reinsurance of non-life contracts
with non-taxed
affiliates.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H117CD7AADCC848B08095ACBDB619E178"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2012.</text>
</subsection></section></subtitle><subtitle id="HC31C966326AF428A915ABE929DF8D7EA"><enum>B</enum><header>Reinsurance</header>
<section id="HE7433A4E123D4B9CA7D6FD9A10B0BA48" section-type="subsequent-section"><enum>411.</enum><header>Prevention of
avoidance of tax through reinsurance with non-taxed affiliates</header>
<subsection commented="no" display-inline="no-display-inline" id="H4A47D213A94F4A868A2C44786564B734"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Part III of subchapter L of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the end the following
new section:</text>
<quoted-block display-inline="no-display-inline" id="HAF1306607E3D4BC0ACCD1E36D28B33D8" style="OLC">
<section id="HC34A3071CE4D4A59B4F0555B66188B2A"><enum>849.</enum><header>Special rules
for reinsurance of non-life contracts with non-taxed affiliates</header>
<subsection id="H0281A91683E14FDBB04A03DBC631750B"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The taxable income
under section 831(a) or the life insurance company taxable income under section
801(b) (as the case may be) of an insurance company shall be determined by not
taking into account—</text>
<paragraph id="H24DF6984264C429CB6B83C0BA71102F4"><enum>(1)</enum><text>any non-taxed
reinsurance premium,</text>
</paragraph><paragraph id="H9B3ED715D3E44C339B4EBB339EE95B1C"><enum>(2)</enum><text display-inline="yes-display-inline">any additional amount paid by such
insurance company with respect to the reinsurance for which such non-taxed
reinsurance premium is paid, to the extent such additional amount is properly
allocable to such non-taxed reinsurance premium, and</text>
</paragraph><paragraph id="H47A537DFAFB2490380A16873FA453FF8"><enum>(3)</enum><text display-inline="yes-display-inline">any return premium, ceding commission,
reinsurance recovered, or other amount received by such insurance company with
respect to the reinsurance for which such non-taxed reinsurance premium is
paid, to the extent such return premium, ceding commission, reinsurance
recovered, or other amount is properly allocable to such non-taxed reinsurance
premium.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H50505DEE54D74742A094E3C4F54CC3A4"><enum>(b)</enum><header display-inline="yes-display-inline">Non-Taxed reinsurance
premiums</header><text display-inline="yes-display-inline">For purposes of this
section—</text>
<paragraph id="H97D5B1F868A2478E90C3F84CF7AE2BC7"><enum>(1)</enum><header>In
general</header><text>The term <term>non-taxed reinsurance premium</term> means
any reinsurance premium paid directly or indirectly to an affiliated
corporation with respect to reinsurance of risks (other than excepted risks),
to the extent that the income attributable to the premium is not subject to tax
under this subtitle (either as the income of the affiliated corporation or as
amounts included in gross income by a United States shareholder under section
951).</text>
</paragraph><paragraph id="H1E05E69E35614BF79038342507100358"><enum>(2)</enum><header>Excepted
risks</header><text>The term <quote>excepted risks</quote> means any risk with
respect to which reserves described in section 816(b)(1) are
established.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HEAD0A9584AF44282BB3B4044707961E3"><enum>(c)</enum><header display-inline="yes-display-inline">Affiliated corporations</header><text display-inline="yes-display-inline">For purposes of this section, a corporation
shall be treated as affiliated with an insurance company if both corporations
would be members of the same controlled group of corporations (as defined in
section 1563(a)) if section 1563 were applied—</text>
<paragraph id="HAF458EA203B846E387700113C5589F1D"><enum>(1)</enum><text>by substituting
<quote>at least 50 percent</quote> for <quote>at least 80 percent</quote> each
place it appears in subsection (a)(1), and</text>
</paragraph><paragraph id="H92EAB3A1B5F14B19A8D4EC65E60D8DA1"><enum>(2)</enum><text>without regard to
subsections (a)(4), (b)(2)(C), (b)(2)(D), and (e)(3)(C).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H61C0386B6A7240EBBC4CC89D0BD00944"><enum>(d)</enum><header display-inline="yes-display-inline">Election To treat reinsurance income as
effectively connected</header>
<paragraph commented="no" display-inline="no-display-inline" id="H11544DB6F2DD4E4585E6FAD5A4E0A38E"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">A specified affiliated corporation may
elect for any taxable year to treat specified reinsurance income as—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H3F396E686DF84F3EAEC4E2039482FEF1"><enum>(A)</enum><text display-inline="yes-display-inline">income effectively connected with the
conduct of a trade or business in the United States, and</text>
</subparagraph><subparagraph id="H1FE0F41E45E041728EFFC36DD85F04BF"><enum>(B)</enum><text>for purposes of
any treaty between the United States and any foreign country, income
attributable to a permanent establishment in the United States.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HA032D1F7962F4858AD3D9C7AD8CA1DD5"><enum>(2)</enum><header display-inline="yes-display-inline">Effect of election</header><text display-inline="yes-display-inline">In the case of any specified reinsurance
income with respect to which the election under this subsection applies—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H66B11702E22943B296CD81EC3FC6A4D2"><enum>(A)</enum><header display-inline="yes-display-inline">Deduction allowed for reinsurance
premiums</header><text display-inline="yes-display-inline">For exemption from
subsection (a), see definition of non-taxed reinsurance premiums in subsection
(b).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H4FDB7E1308F8495FA6902C9DA73F5020"><enum>(B)</enum><header display-inline="yes-display-inline">Exception from excise tax</header><text display-inline="yes-display-inline">The tax imposed by section 4371 shall not
apply with respect to any income treated as effectively connected with the
conduct of a trade or business in the United States under paragraph (1).</text>
</subparagraph><subparagraph id="H54C77FB1B4D143E8A1C7F4B63100F359"><enum>(C)</enum><header>Taxation under
this subchapter</header><text>Such income shall be subject to tax under this
subchapter to the same extent and in the same manner as if such income were the
income of a domestic insurance company.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HE1BAC648A8024E499F150591DAD33361"><enum>(D)</enum><header display-inline="yes-display-inline">Coordination with foreign tax credit
provisions</header><text display-inline="yes-display-inline">For purposes of
subpart A of part III of subchapter N and sections 78 and 960—</text>
<clause commented="no" display-inline="no-display-inline" id="HF691F722312846ECB9BF94E6ED808C05"><enum>(i)</enum><text display-inline="yes-display-inline">such specified reinsurance income shall be
treated as derived from sources without the United States, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H760C570220B04434B972A9DE133E6276"><enum>(ii)</enum><text display-inline="yes-display-inline">subsections (a), (b), and (c) of section
904 and sections 902, 907, and 960 shall be applied separately with respect to
each item of such income.</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">The Secretary may issue
regulations or other guidance which provide that related items of specified
reinsurance income may be aggregated for purposes of applying clause
(ii).</continuation-text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H954626D913C848529EBECD79CC6AA816"><enum>(3)</enum><header display-inline="yes-display-inline">Specified affiliated
corporation</header><text display-inline="yes-display-inline">For purposes of
this subsection, the term <term>specified affiliated corporation</term> means
any affiliated corporation which is a foreign corporation and which meets such
requirements as the Secretary shall prescribe to ensure that tax on the
specified reinsurance income of such corporation is properly determined and
paid.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H360BE847FF91478AB0E85927A15B4197"><enum>(4)</enum><header display-inline="yes-display-inline">Specified reinsurance income</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term
<term>specified reinsurance income</term> means all income of a specified
affiliated corporation which is attributable to reinsurance with respect to
which subsection (a) would (but for the election under this subsection)
apply.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H13DA462D731E402B81C7030AA41B7015"><enum>(5)</enum><header display-inline="yes-display-inline">Rules related to election</header><text display-inline="yes-display-inline">Any election under paragraph (1)
shall—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HED7CB4DA96BA42D9BE17FE14F936850A"><enum>(A)</enum><text display-inline="yes-display-inline">be made at such time and in such form and
manner as the Secretary may provide, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H5FB9B95B38D9493B804C7D9C0887C8EF"><enum>(B)</enum><text display-inline="yes-display-inline">apply for the taxable year for which made
and all subsequent taxable years unless revoked with the consent of the
Secretary.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HB0C95BCD56D843DFADAA5B9047C081E6"><enum>(e)</enum><header display-inline="yes-display-inline">Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such
regulations or other guidance as may be appropriate to carry out, or to prevent
the avoidance of the purposes of, this section, including regulations or other
guidance which provide for the application of this section to alternative
reinsurance transactions, fronting transactions, conduit and reciprocal
transactions, and any economically equivalent
transactions.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE29F7EFAB7E0425A9C213AFF8AEA53E6"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for part III of subchapter L of chapter 1 of such Code is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="HF973BE1781DC45C1959A3843CA7CB8B6" style="OLC">
<toc container-level="quoted-block-container" idref="HAF1306607E3D4BC0ACCD1E36D28B33D8" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HC34A3071CE4D4A59B4F0555B66188B2A" level="section">Sec. 849. Special rules for reinsurance of non-life contracts
with non-taxed
affiliates.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H43362D5CDC5346A493B345A82B50DAE6"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2012.</text>
</subsection></section></subtitle><subtitle id="HB33F65575BB8438392C9D36B81A25698"><enum>C</enum><header>Close loophole for
corporate jet depreciation</header>
<section id="H91F7B54DCC0A427E85FD2A4C5598C283"><enum>421.</enum><header>General
aviation aircraft treated as 7-year property</header>
<subsection id="HB4F2CB53926F4342AD06A1B4BBE17D2B"><enum>(a)</enum><header>In
general</header><text>Subparagraph (C) of section 168(e)(3) of the Internal
Revenue Code of 1986 (relating to classification of certain property) is
amended by striking <quote>and</quote> at the end of clause (iv), by
redesignating clause (v) as clause (vi), and by inserting after clause (iv) the
following new clause:</text>
<quoted-block id="H4BDCDE6D390140F695A38EDCD374ABA9" style="OLC">
<subsection id="HBF4DC1D5CCE64CF594F507CD86CF3FDB"><enum>(v)</enum><text>any general
aviation aircraft,
and</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFA2A335FDA8A427CB0AAC6A53CDB7930"><enum>(b)</enum><header>Class
life</header><text>Paragraph (3) of section 168(g) Internal Revenue Code of
1986 is amended by inserting after subparagraph (E) the following new
subparagraph:</text>
<quoted-block id="H78B14AE27CD84A77A73F575A22445C27" style="OLC">
<subparagraph id="H28121FF1B7804DC5AC9F79892E9E8734"><enum>(F)</enum><text>General aviation
aircraft. In the case of any general aviation aircraft, the recovery period
used for purposes of paragraph (2) shall be 12
years.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HEE2B2EBFBB05407383DD17CEA1FDA6C2"><enum>(c)</enum><header>General aviation
aircraft</header><text>Subsection (i) of section 168 Internal Revenue Code of
1986 is amended by inserting after paragraph (19) the following new
paragraph:</text>
<quoted-block id="H7AF816A19EA449D88020DF92BF0D6D28" style="OLC">
<paragraph id="HEBCC326CDFF54EFA919AF5A9F9C1A5F5"><enum>(20)</enum><header>General
aviation aircraft</header><text>The term <quote>general aviation
aircraft</quote> means any airplane or helicopter (including airframes and
engines) not used in commercial or contract carrying of passengers or freight,
but which primarily engages in the carrying of
passengers.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5069DB9A0C9F492AA7D8CEB964C74E4F"><enum>(d)</enum><header>Effective
date</header><text>This section shall be effective for property placed in
service after December 31, 2012.</text>
</subsection></section></subtitle><enum>V</enum><header>Close
Estate Tax Loopholes</header>
<section display-inline="no-display-inline" id="H2937FD933A8E47C8B35E2D62E48DDAC3" section-type="subsequent-section"><enum>501.</enum><header>Valuation rules for
certain transfers of nonbusiness assets; limitation on minority
discounts</header>
<subsection id="H0F760FEA82C3496E953FE59AA48CDD4C"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/2031">Section 2031</external-xref> of the Internal Revenue Code of 1986 is
amended by redesignating subsection (d) as subsection (f) and by inserting
after subsection (c) the following new subsections:</text>
<quoted-block id="H53D8FAF4727C4F0ABC6DC4A9D1F9476E">
<subsection id="HA577E305CA9A41209045D10BD811D56A"><enum>(d)</enum><header>Valuation rules
for certain transfers of nonbusiness assets</header><text>For purposes of this
chapter and chapter 12—</text>
<paragraph id="H49640DE71B2E4C179FAD2C47C45C947F"><enum>(1)</enum><header>In
general</header><text>In the case of the transfer of any interest in an entity
other than an interest which is actively traded (within the meaning of section
1092)—</text>
<subparagraph id="H7B7501EBC41F4F2F958059C6CC0687D5"><enum>(A)</enum><text>the value of any
nonbusiness assets held by the entity shall be determined as if the transferor
had transferred such assets directly to the transferee (and no valuation
discount shall be allowed with respect to such nonbusiness assets), and</text>
</subparagraph><subparagraph id="HB937860795654E8A99B11C2371999C7E"><enum>(B)</enum><text>the nonbusiness
assets shall not be taken into account in determining the value of the interest
in the entity.</text>
</subparagraph></paragraph><paragraph id="HB964952D49B049CE9B372C18A4BAFB38"><enum>(2)</enum><header>Nonbusiness
assets</header><text>For purposes of this subsection—</text>
<subparagraph id="H3BB92497721847D6BF1C8711334AD8AB"><enum>(A)</enum><header>In
general</header><text>The term <term>nonbusiness asset</term> means any asset
which is not used in the active conduct of 1 or more trades or
businesses.</text>
</subparagraph><subparagraph id="H43CB97A726EC4D948F549CE2DD76A66D"><enum>(B)</enum><header>Exception for
certain passive assets</header><text>Except as provided in subparagraph (C), a
passive asset shall not be treated for purposes of subparagraph (A) as used in
the active conduct of a trade or business unless—</text>
<clause id="H6BF08BED421A437797DA91203A1DA631"><enum>(i)</enum><text>the asset is
property described in paragraph (1) or (4) of section 1221(a) or is a hedge
with respect to such property, or</text>
</clause><clause id="H7E43E37CD149432BB4842F50140F03DC"><enum>(ii)</enum><text>the asset is real
property used in the active conduct of 1 or more real property trades or
businesses (within the meaning of section 469(c)(7)(C)) in which the transferor
materially participates and with respect to which the transferor meets the
requirements of section 469(c)(7)(B)(ii).</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of clause (ii), material participation shall be determined under the
rules of section 469(h), except that section 469(h)(3) shall be applied without
regard to the limitation to farming activity.</continuation-text></subparagraph><subparagraph id="H0A0418E5D08444AAAE0B699DC58CACDE"><enum>(C)</enum><header>Exception for
working capital</header><text>Any asset (including a passive asset) which is
held as a part of the reasonably required working capital needs of a trade or
business shall be treated as used in the active conduct of a trade or
business.</text>
</subparagraph></paragraph><paragraph id="HD5E2E95D85BA47F3A4657F459476AC2D"><enum>(3)</enum><header>Passive
asset</header><text>For purposes of this subsection, the term <term>passive
asset</term> means any—</text>
<subparagraph id="HC0D93E9522E04BF19CA3C2810887E861"><enum>(A)</enum><text>cash or cash
equivalents,</text>
</subparagraph><subparagraph id="H8CE1EF119A5D4FB09BA2311437371932"><enum>(B)</enum><text>except to the
extent provided by the Secretary, stock in a corporation or any other equity,
profits, or capital interest in any entity,</text>
</subparagraph><subparagraph id="HC0204714A0484196912250000F728630"><enum>(C)</enum><text>evidence of
indebtedness, option, forward or futures contract, notional principal contract,
or derivative,</text>
</subparagraph><subparagraph id="HF884142DFE214A78AC6E3C1D782576E0"><enum>(D)</enum><text>asset described in
clause (iii), (iv), or (v) of section 351(e)(1)(B),</text>
</subparagraph><subparagraph id="HC4EB6F99C39D4740B3FEFCC1D933683C"><enum>(E)</enum><text>annuity,</text>
</subparagraph><subparagraph id="H3C56FDF5BE2048CEA0D6B4892EC93BA1"><enum>(F)</enum><text>real property used
in 1 or more real property trades or businesses (as defined in section
469(c)(7)(C)),</text>
</subparagraph><subparagraph id="H9062511F06494DA0BF013BB9EADE6D25"><enum>(G)</enum><text>asset (other than
a patent, trademark, or copyright) which produces royalty income,</text>
</subparagraph><subparagraph id="H1D32293B42EE42AC8255FD24B93C2EA8"><enum>(H)</enum><text>commodity,</text>
</subparagraph><subparagraph id="HE645E709C4A4467BA0B0529C2D167842"><enum>(I)</enum><text>collectible
(within the meaning of section 401(m)), or</text>
</subparagraph><subparagraph id="HF306FE75AC4F4F20AB527E338710E3C5"><enum>(J)</enum><text>any other asset
specified in regulations prescribed by the Secretary.</text>
</subparagraph></paragraph><paragraph id="H12F815E3335C4E2FBFE6595AAE82146B"><enum>(4)</enum><header>Look-thru
rules</header>
<subparagraph id="HC58457A2B0334B219E156E2C695AEB66"><enum>(A)</enum><header>In
general</header><text>If a nonbusiness asset of an entity consists of a
10-percent interest in any other entity, this subsection shall be applied by
disregarding the 10-percent interest and by treating the entity as holding
directly its ratable share of the assets of the other entity. This subparagraph
shall be applied successively to any 10-percent interest of such other entity
in any other entity.</text>
</subparagraph><subparagraph id="H15CB51AF63D54A4D80B88AFE1DE1AEF5"><enum>(B)</enum><header>10-percent
interest</header><text>The term <term>10-percent interest</term> means—</text>
<clause id="HF843903BDA584C89B18D48426A776064"><enum>(i)</enum><text>in
the case of an interest in a corporation, ownership of at least 10 percent (by
vote or value) of the stock in such corporation,</text>
</clause><clause id="HEB6DF2109C8C4E09B6BA0C1F8796C556"><enum>(ii)</enum><text>in the case of an
interest in a partnership, ownership of at least 10 percent of the capital or
profits interest in the partnership, and</text>
</clause><clause id="H9BC35044CF524971BB24F0AF4B7EE41B"><enum>(iii)</enum><text>in any other
case, ownership of at least 10 percent of the beneficial interests in the
entity.</text>
</clause></subparagraph><subparagraph id="HEE19B109605C4C9DA50C5182A16E5248"><enum>(C)</enum><header>Exception for
actively traded interests</header><text display-inline="yes-display-inline">Subparagraph (A) shall not apply to any
nonbusiness asset which consists of an interest which is actively traded
(within the meaning of section 1092).</text>
</subparagraph></paragraph><paragraph id="H61E760BC59A2415B8933005BC97862DB"><enum>(5)</enum><header>Coordination
with subsection <enum-in-header>(b)</enum-in-header></header><text>Subsection
(b) shall apply after the application of this subsection.</text>
</paragraph></subsection><subsection id="H004204E6C46A4C41B8F6239E923B698E"><enum>(e)</enum><header>Limitation on
minority discounts</header><text>For purposes of this chapter and chapter 12,
in the case of the transfer of any interest in an entity other than an interest
which is actively traded (within the meaning of section 1092), no discount
shall be allowed by reason of the fact that the transferee does not have
control of such entity if the transferee and members of the family (as defined
in section 2032A(e)(2)) of the transferee have control of such entity
(determined immediately after such
transfer).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA0F2226321DD4DDF9E3A72F9D66150CA"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to transfers
after the date of the enactment of this Act.</text>
</subsection></section><section id="HBE330F32774A44BC96236C67A4EB5048"><enum>502.</enum><header>Consistent
basis reporting between estate and person acquiring property from
decedent</header>
<subsection id="HEEDCC1CA04474951AB0A992B6B48EA8D"><enum>(a)</enum><header>Consistent use
of basis</header>
<paragraph id="H87C376C22412427383E0535AEF83F8DB"><enum>(1)</enum><header>Property
acquired from a decedent</header><text>Section 1014 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H11E9CDAE47904E4BB3F080775DCD8DC5" style="OLC">
<subsection id="H54FC785B031342478B9427A09B882FB6"><enum>(f)</enum><header>Basis must be
consistent with estate tax return</header>
<paragraph id="H38A543C705D840DDA8A10684DBC061CC"><enum>(1)</enum><header>In
general</header><text>For purposes of this section, the value used to determine
the basis of any interest in property in the hands of the person acquiring such
property shall not exceed the value of such interest as finally determined for
purposes of chapter 11.</text>
</paragraph><paragraph id="H9DA42663AAA044C3B9A704D3AA444ED5"><enum>(2)</enum><header>Special rule
where no final determination</header><text>In any case in which the final value
of property has not been determined under chapter 11 and there has been a
statement furnished under section 6035(a), the value used to determine the
basis of any interest in property in the hands of the person acquiring such
property shall not exceed the amount reported on any statement furnished under
section 6035(a).</text>
</paragraph><paragraph id="H9515CFA0D7EA478E901836BCA1C82B42"><enum>(3)</enum><header>Regulations</header><text>The
Secretary may by regulations provide exceptions to the application of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H05A4224910D74D5AB23C70A3CFFDE65B"><enum>(2)</enum><header>Property
acquired by gifts and transfers in trust</header><text>Section 1015 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H3D635F6D994D4D89BA796B9B9EF314C2" style="OLC">
<subsection id="HE4B330BFF20F43AA90B68E25AC6E0714"><enum>(f)</enum><header>Basis must be
consistent gift tax return</header>
<paragraph id="H42C4BE36D1E94D50A791C9D22968AE95"><enum>(1)</enum><header>In
general</header><text>For purposes of this section, the value used to determine
the basis of any interest in property in the hands of the person acquiring such
property shall not exceed the value of such interest as finally determined for
purposes of chapter 12.</text>
</paragraph><paragraph id="H5562F81ACE1C437D8CDB2D8F54C011BF"><enum>(2)</enum><header>Special rule
where no final determination</header><text>In any case in which the final value
of property has not been determined under chapter 12 and there has been a
statement furnished under section 6035(b), the value used to determine the
basis of any interest in property in the hands of the person acquiring such
property shall not exceed the amount reported on any statement furnished under
section 6035(b).</text>
</paragraph><paragraph id="H862B70B7768C4A888FCA496891CF6586"><enum>(3)</enum><header>Regulations</header><text>The
Secretary may by regulations provide exceptions to the application of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H6ADFA63263654929A553D2B252A12129"><enum>(b)</enum><header>Information
reporting</header>
<paragraph id="HEC8FF512725D4B9DBE9D7BFB8687EF9A"><enum>(1)</enum><header>In
general</header><text>Subpart A of part III of subchapter A of chapter 61 of
the Internal Revenue Code of 1986 is amended by inserting after section 6034A
the following new section:</text>
<quoted-block display-inline="no-display-inline" id="H08E176F2F9B34FE59A009A7FEE364367" style="OLC">
<section id="HE4B16162A45D47948A9DF06F0BDC8A1C"><enum>6035.</enum><header>Basis
information to persons acquiring property from decedent or by gift</header>
<subsection id="H921815C01BE648B49271F75A90877AE9"><enum>(a)</enum><header>Information with
respect to property acquired from decedents</header>
<paragraph id="HD5FAD1BBB0C04A0D8B0D437D5F5677B3"><enum>(1)</enum><header>In
general</header><text>The executor of any estate required to file a return
under section 6018(a) shall furnish to the Secretary and to each person
acquiring any interest in property included in the decedent's gross estate for
Federal estate tax purposes a statement identifying the value of each interest
in such property as reported on such return and such other information with
respect to such interest as the Secretary may prescribe.</text>
</paragraph><paragraph id="H123854317710444AA14244FDCC4EAA24"><enum>(2)</enum><header>Statements by
beneficiaries</header><text>Each person required to file a return under section
6018(b) shall furnish to the Secretary and to each other person who holds a
legal or beneficial interest in the property to which such return relates a
statement identifying the information described in paragraph (1).</text>
</paragraph><paragraph id="H4B7E917F70AA4FF4A4A38E9AAD396151"><enum>(3)</enum><header>Time for
furnishing statement</header>
<subparagraph id="HCD33638ACC884F408C26CFCE1407C9E3"><enum>(A)</enum><header>In
general</header><text>Each statement required to be furnished under paragraph
(1) or (2) shall be furnished at such time as the Secretary may prescribe, but
in no case at a time later than the earlier of—</text>
<clause id="H2AA13989B6A04FE68AB4BBB4CAF9DFE8"><enum>(i)</enum><text>the date which is
30 days after the date on which the return under section 6018 was required to
be filed (including extensions, if any), or</text>
</clause><clause id="H0FFD0F862F784E0387C7B2FC1AEBC438"><enum>(ii)</enum><text>the date which is
30 days after the date such return is filed.</text>
</clause></subparagraph><subparagraph id="H4BFE265E4D6547D7AE6A18429828871C"><enum>(B)</enum><header>Adjustments</header><text>In
any case in which there is an adjustment to the information required to be
included on a statement filed under paragraph (1) or (2) after such statement
has been filed, a supplemental statement under such paragraph shall be filed
not later than the date which is 30 days after such adjustment is made.</text>
</subparagraph></paragraph></subsection><subsection id="H1AC6CB6DA2114A1790F7B7481CCA59DE"><enum>(b)</enum><header>Information with
respect to property acquired by gift</header>
<paragraph id="H2382AB24CC9C4D73A3F14854F134DD89"><enum>(1)</enum><header>In
general</header><text>Each person making a transfer by gift who is required to
file a return under section 6019 with respect to such transfer shall furnish to
the Secretary and to each person acquiring any interest in property by reason
of such transfer a statement identifying the value of each interest in such
property as reported on such return and such other information with respect to
such interest as the Secretary may prescribe.</text>
</paragraph><paragraph id="H5434465562D94687A3748F17A344472B"><enum>(2)</enum><header>Time for
furnishing statement</header>
<subparagraph id="H2B6144B953734D74A47CCF2EC6141A6C"><enum>(A)</enum><header>In
general</header><text>Each statement required to be furnished under paragraph
(1) shall be furnished at such time as the Secretary may prescribe, but in no
case at a time later than the earlier of—</text>
<clause id="H836D20E5514F4A538FD00A2C02C1340A"><enum>(i)</enum><text>the date which is
30 days after the date on which the return under section 6019 was required to
be filed (including extensions, if any), or</text>
</clause><clause id="H388A34F590AF4C41A0EE879E75DCB861"><enum>(ii)</enum><text>the date which is
30 days after the date such return is filed.</text>
</clause></subparagraph><subparagraph id="HC834C52AB47E4A95BA465CD83B138411"><enum>(B)</enum><header>Adjustments</header><text>In
any case in which there is an adjustment to the information required to be
included on a statement filed under paragraph (1) after such statement has been
filed, a supplemental statement under such paragraph shall be filed not later
than the date which is 30 days after such adjustment is made.</text>
</subparagraph></paragraph></subsection><subsection commented="no" id="H28489E7C5BD24041A120AEBABE29FF4F"><enum>(c)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as necessary to carry out this
section, including regulations relating to—</text>
<paragraph id="H0A3E90D0B51741758608ED28C6558685"><enum>(1)</enum><text>the application of
this section to property with regard to which no estate or gift tax return is
required to be filed, and</text>
</paragraph><paragraph id="H20D01330FED3419BBA3B56DC5684D111"><enum>(2)</enum><text>situations in
which the surviving joint tenant or other recipient may have better information
than the executor regarding the basis or fair market value of the
property.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H3760427DEB184708BA93113EA878854B"><enum>(2)</enum><header>Penalty for
failure to file</header>
<subparagraph id="H8F11FBDD004A43CA9DB39F7D64BB8B1F"><enum>(A)</enum><header>Return</header><text>Section
6724(d)(1) of the Internal Revenue Code of 1986 is amended by striking
<quote>and</quote> at the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting <quote>, and</quote>, and by adding
at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="H753CFF5183D747858E606373F5A0212A" style="OLC">
<subparagraph id="H90337DE74DD84A1EB96DF212701F8BD1"><enum>(D)</enum><text>any statement
required to be filed with the Secretary under section
6035.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HF3F233659CF74DB290AC19B8719306CB"><enum>(B)</enum><header>Statement</header><text>Section
6724(d)(2) of such Code is amended by striking <quote>or</quote> at the end of
subparagraph (GG), by striking the period at the end of subparagraph (HH) and
inserting <quote>, or</quote>, and by adding at the end the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HC5F58235E0174BECAF770350D4479CFB" style="OLC">
<subparagraph id="HD63BFB77B0C7468C80D55D684B0E0102"><enum>(II)</enum><text>section 6035
(other than a statement described in paragraph
(1)(D)).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H72C0918366804B2A9305DF417AE98C52"><enum>(3)</enum><header>Clerical
amendment</header><text>The table of sections for subpart A of part III of
subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/61">chapter 61</external-xref> of the Internal Revenue Code of 1986 is amended by
inserting after the item relating to section 6034A the following new
item:</text>
<quoted-block id="H7DB05E74C6454E058EAF31908ED081EC" style="OLC">
<toc>
<toc-entry idref="HE4B16162A45D47948A9DF06F0BDC8A1C" level="section">Sec. 6035. Basis information to persons acquiring property from
decedent or by
gift.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="HEE3F417E58164345892D2D92C1052F39"><enum>(c)</enum><header>Penalty for
inconsistent reporting</header>
<paragraph commented="no" id="H5B1A11FADF2B48AA9DD6E3E2FFA2825C"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 6662 of the Internal Revenue
Code of 1986 is amended by inserting after paragraph (7) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H61B88496E92349CD9F4D8C7C7ADF302F" style="OLC">
<paragraph commented="no" id="H98614B63CBFB4741804C01B8F74FAD31"><enum>(8)</enum><text>Any inconsistent
estate or gift
basis.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="H0876C549EF2E4A3B85257BBD9521CE41"><enum>(2)</enum><header>Inconsistent
basis reporting</header><text>Section 6662 of such Code is amended by adding at
the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H564D771DAAD04AAEBF3DCD2161A9F4D3" style="OLC">
<subsection commented="no" id="H67DC33A31CC346A0B07032A87644A8D2"><enum>(k)</enum><header>Inconsistent
estate or gift basis reporting</header><text>For purposes of this section, the
term <term>inconsistent estate or gift basis</term> means the portion of the
understatement which is attributable to—</text>
<paragraph commented="no" id="HB00860238B5547DD8C828497AE91E6AA"><enum>(1)</enum><text>in the case of
property acquired from a decedent, a basis determination with respect to such
property which is not consistent with the value of such property as determined
under section 1014(f), and</text>
</paragraph><paragraph commented="no" id="H94E0F27E1FE2480A88ADFBDBB22C8B5A"><enum>(2)</enum><text>in the case of
property acquired by gift, a basis determination with respect to such property
which is not consistent with the value of such property as determined under
section
1015(f).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H07E79575DF8741189E7341013508DFC6"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to transfers
for which returns are filed after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HDCEF72734FED4D73AC351BB936A52288" section-type="subsequent-section"><enum>503.</enum><header>Required minimum
10-year term, etc., for grantor retained annuity trusts</header>
<subsection id="HC4CF68577C5D4260846870DC9A69164D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (b) of
<external-xref legal-doc="usc" parsable-cite="usc/26/2702">section 2702</external-xref> of the Internal Revenue Code of 1986 is amended—</text>
<paragraph id="H0DAAD22BA22047A3B608602F982B9AC7"><enum>(1)</enum><text>by redesignating
paragraphs (1), (2) and (3) as subparagraphs (A), (B), and (C), respectively,
and by moving such subparagraphs (as so redesignated) 2 ems to the
right;</text>
</paragraph><paragraph id="H6B7DD38A8598452195DF571F008BDE44"><enum>(2)</enum><text>by striking
<quote>For purposes of</quote> and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="HC70CEB36AEF7460C9A0CC62B9E91A24B" style="OLC">
<paragraph id="HA96B7FB785E543198E08F073FE71F688"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes
of</text>
</paragraph><after-quoted-block>; </after-quoted-block></quoted-block>
</paragraph><paragraph id="H1600EE498F3F42448322A0DF08317F26"><enum>(3)</enum><text>by striking
<quote>paragraph (1) or (2)</quote> in paragraph (1)(C) (as so redesignated)
and inserting <quote>subparagraph (A) or (B)</quote>; and</text>
</paragraph><paragraph id="H677BDF5F61AE451A90679A62BA99E5E2"><enum>(4)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HBB0A1574327A4EFFBE0775CF85793814" style="OLC">
<paragraph id="H274481F285DD4121B304D112416A7A1A"><enum>(2)</enum><header>Additional
requirements with respect to grantor retained annuities</header><text>For
purposes of subsection (a), in the case of an interest described in paragraph
(1)(A) (determined without regard to this paragraph) which is retained by the
transferor, such interest shall be treated as described in such paragraph only
if—</text>
<subparagraph id="H32933A5AA10E48EFA00448665DAA4E83"><enum>(A)</enum><text>the right to
receive the fixed amounts referred to in such paragraph is for a term of not
less than 10 years,</text>
</subparagraph><subparagraph id="HA886649B863C462AB8B5817F3C58972C"><enum>(B)</enum><text>such fixed
amounts, when determined on an annual basis, do not decrease relative to any
prior year during the first 10 years of the term referred to in subparagraph
(A), and</text>
</subparagraph><subparagraph id="H172346CBBEE34E78A1C714C13B6B000B"><enum>(C)</enum><text>the remainder
interest has a value greater than zero determined as of the time of the
transfer.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H6B17591343EB4C9EBDED232FEE75DA8D"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to transfers
made after the date of the enactment of this Act.</text>
</subsection></section><section id="HA218DA20481946E181FB32814D3B7AF8"><enum>504.</enum><header>Limitation on
GST exemption of perpetual dynasty trusts</header>
<subsection id="HD24431181C3A44C5B1A05481DF41D6FA"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 2642 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HF9F91063698E4E38ACFAFAD906C48B56" style="OLC">
<subsection id="H4D23F5FE44964D1787CBDB1E7075D8F6"><enum>(h)</enum><header>Expiration of
GST exemption 90 years after establishment of trust</header>
<paragraph id="HDE3F632C88CF44A5BC8DB951C2227ACA"><enum>(1)</enum><header>In
general</header><text>In the case of any generation-skipping transfer made from
a trust after the date which is 90 years after the date on which such trust is
created, the inclusion ratio with respect to any property transferred in such
transfer shall be 1.</text>
</paragraph><paragraph id="H3D130CED8B004EF78D47BB935040CAFB"><enum>(2)</enum><header>Special
rules</header><text display-inline="yes-display-inline">For purposes of this
subsection—</text>
<subparagraph id="H6A2C704F61794FDEA781505C016E1AD6"><enum>(A)</enum><header>Date of creation
of certain deemed separate trusts</header><text display-inline="yes-display-inline">In the case of any portion of a trust which
is treated as a separate trust under section 2654(b)(1), such separate trust
shall be treated as created on the date of the first transfer described in such
section with respect to such separate trust.</text>
</subparagraph><subparagraph id="H2B98184CA66F47EE86F7FE45FF098CB6"><enum>(B)</enum><header>Date of creation
of pour-over trusts</header><text>In the case of any generation-skipping
transfer of property which involves the transfer of property from 1 trust to
another trust, the date of the creation of the transferee trust shall be
treated as being the earlier of—</text>
<clause id="H7E6A669C3176479AB5CD6B8662CE3854"><enum>(i)</enum><text>the date of the
creation of such transferee trust, or</text>
</clause><clause id="HE521F1057FDE468AB7A6DDFB249F4374"><enum>(ii)</enum><text>the date of the
creation of the transferor trust.</text>
</clause><continuation-text continuation-text-level="subparagraph">In the
case of multiple transfers to which the preceding sentence applies, the date of
the creation of the transferor trust shall be determined under the preceding
sentence before the application of the preceding sentence to determine the date
of the creation of the transferee trust.</continuation-text></subparagraph><subparagraph id="HBF5D9EB69F694D54A93EFA1C7AAD5B73"><enum>(C)</enum><header>Exception for
certain transfers for education and medical expenses</header><text>Subparagraph
(B) shall not apply to the transfer of property from 1 trust to another trust
if—</text>
<clause id="H6B4D91292D544E40B71CF59E92917C66"><enum>(i)</enum><text>such transfer is
described in section 2642(c)(2), and</text>
</clause><clause id="HC1AAEA8099FC470BA81E77AA6C42073A"><enum>(ii)</enum><text>the individual
referred to in such section with respect to the transferee trust was also a
beneficiary of the transferor trust.</text>
</clause></subparagraph></paragraph><paragraph id="H1B793AA088DA4007AAD16351987A150D"><enum>(3)</enum><header>Regulations</header><text>The
Secretary may prescribe such regulations or other guidance as may be necessary
or appropriate to carry out this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H0B1E73DFA3F841C2989E9991736865FD"><enum>(b)</enum><header>Effective
date</header>
<paragraph id="H9793A7B083D546C9AB57E763A0F72F68"><enum>(1)</enum><header>In
general</header><text>The amendments made this section shall apply to—</text>
<subparagraph id="H03374E5E21F34E778BAB480EA13C5C27"><enum>(A)</enum><text>trusts created
after the date of the enactment of this Act, and</text>
</subparagraph><subparagraph id="H16ED691524E4455DA0B2388B858CC0CE"><enum>(B)</enum><text>generation-skipping
transfers made from trusts created on or before such date, but only to the
extent such transfer is made out of corpus added to the trust after such date
(or out of income attributable to corpus so added).</text>
</subparagraph></paragraph><paragraph id="HB85BC349D18B40179F10493928D3BAA4"><enum>(2)</enum><header>Determination of
date of creation</header><text>For purposes of this subsection, the rules of
sections 2642(h)(2) (as added by this section) and 2654(b) of the Internal
Revenue Code of 1986 shall apply for purposes of determining the date of the
creation of any trust.</text>
</paragraph><paragraph id="H8E2FE5F350E340D89A9D1C0254927C13"><enum>(3)</enum><header>Exceptions</header><text>The
Secretary of the Treasury, or his designee, shall issue regulations or other
guidance which provide exceptions to the application of the amendments made by
this section which are substantially similar to the relevant exceptions under
paragraph (2) of section 1433(b) of the Tax Reform Act of 1986.</text>
</paragraph></subsection></section><enum>VI</enum><header>Cut Pentagon
Waste to Achieve Balance</header>
<subtitle commented="no" id="H0471DADC70D84A65A876A1083AF28DA7"><enum>A</enum><header>Smarter Approach
to nuclear Expenditures</header>
<section commented="no" id="HBA1E680E921A480385F582B20C0DF19F" section-type="subsequent-section"><enum>601.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>Smarter Approach to Nuclear
Expenditures Act</short-title></quote>.</text>
</section><section commented="no" id="HAA69927C755049648A38D27DFDC93BBD"><enum>602.</enum><header>Findings</header><text display-inline="no-display-inline">Congress finds the following:</text>
<paragraph commented="no" id="H989FBBAC1E4942149FF9EB3B75E6D2C2"><enum>(1)</enum><text display-inline="yes-display-inline">The Berlin Wall fell in 1989, the U.S.S.R.
no longer exists, and the Cold War is over. The nature of threats to the
national security and military interests of the United States has changed.
However, the United States continues to maintain an enormous arsenal of nuclear
weapons and delivery systems that were devised with the Cold War in
mind.</text>
</paragraph><paragraph commented="no" id="H49E8391260544C2B918B8C5F409F1550"><enum>(2)</enum><text display-inline="yes-display-inline">The current nuclear arsenal of the United
States includes approximately 5,000 total nuclear warheads, of which
approximately 2,000 are deployed with three delivery components: long-range
strategic bomber aircraft, land-based intercontinental ballistic missiles, and
submarine-launched ballistic missiles. The bomber fleet of the United States
comprises 93 B–52 and 20 B–2 aircraft. The United States maintains 450
intercontinental ballistic missiles. The United States also maintains 14
Ohio-class submarines, up to 12 of which are deployed at sea. Each of these
submarines is armed with up to 96 independently targetable nuclear
warheads.</text>
</paragraph><paragraph commented="no" id="H5E21646A107A4F13A5FD2A0C0B2CDA96"><enum>(3)</enum><text display-inline="yes-display-inline">This Cold War-based approach to nuclear
security comes at significant cost. Over the next 10 years, the United States
will spend hundreds of billions of dollars maintaining its nuclear force. A
substantial decrease in the nuclear arsenal of the United States is prudent for
both the budget and national security.</text>
</paragraph><paragraph commented="no" id="HE83FECB30E5D4956AB25895281C8E4D6"><enum>(4)</enum><text display-inline="yes-display-inline">The national security interests of the
United States can be well served by reducing the total number of deployed
nuclear warheads and their delivery systems, as suggested by the Department of
Defense’s January 2012 strategic guidance titled <quote>Sustaining U.S. Global
Leadership: Priorities for 21st Century Defense</quote>. Furthermore, a number
of arms control, nuclear, and national security experts have urged the United
States to reduce the number of deployed nuclear warheads to no more than
1,000.</text>
</paragraph><paragraph commented="no" id="HCCFA5339A17E451B8564FC94DBB4AC35"><enum>(5)</enum><text display-inline="yes-display-inline">Economic security and national security are
linked and both will be well served by smart defense spending. Admiral Mike
Mullen, Chairman of the Joint Chiefs of Staff, stated on June 24, 2010, that
<quote>Our national debt is our biggest national security threat</quote> and on
August 2, 2011, stated that <quote>I haven’t changed my view that the
continually increasing debt is the biggest threat we have to our national
security.</quote>.</text>
</paragraph><paragraph commented="no" id="H6D4B97A1ADF746C495A3F0EE74BFCC11"><enum>(6)</enum><text display-inline="yes-display-inline">The Government Accountability Office has
found that there is significant waste in the construction of the nuclear
facilities of the National Nuclear Security Administration of the Department of
Energy.</text>
</paragraph></section><section commented="no" id="H6D1A7A6FB1FC4A1FAFD72436BCC29C39"><enum>603.</enum><header>Reduction in
nuclear forces</header>
<subsection commented="no" id="H79AEAB6FD54447A8BBAC214B3194CCAC"><enum>(a)</enum><header>Prohibition on
use of B–2 and B–52 aircraft for nuclear missions</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense
may be obligated or expended to arm a B–2 or B–52 aircraft with a nuclear
weapon.</text>
</subsection><subsection commented="no" id="HBAD9845A0FD94CB8A49F839C3F529600"><enum>(b)</enum><header>Prohibition on
new long-Range penetrating bomber aircraft</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
any of fiscal years 2014 through 2024 for the Department of Defense may be
obligated or expended for the research, development, test, and evaluation or
procurement of a long-range penetrating bomber aircraft.</text>
</subsection><subsection commented="no" id="HDF8913C64357416BAB32E51295F64F1C"><enum>(c)</enum><header>Prohibition on
F–35 nuclear mission</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense or
the Department of Energy may be used to make the F–35 Joint Strike Fighter
aircraft capable of carrying nuclear weapons.</text>
</subsection><subsection commented="no" id="HB44CDBAA41D347EC836AA99D7FF28070"><enum>(d)</enum><header>Termination of
B61 LEP</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense or the Department of Energy may be obligated or
expended for the B61 life extension program.</text>
</subsection><subsection commented="no" id="HC0E35CF3493045C89C776ED9960FB055"><enum>(e)</enum><header>Termination of
W78 LEP</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense or the Department of Energy may be obligated or
expended for the W78 life extension program.</text>
</subsection><subsection commented="no" id="H8FF65398257D4E1E9E3F81572A3E4079"><enum>(f)</enum><header>Reduction of
nuclear-Armed submarines</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
beginning in fiscal year 2014, the forces of the Navy shall include not more
than eight operational ballistic-missile submarines available for
deployment.</text>
</subsection><subsection commented="no" id="HDF65719E01D541999139390C1A72906B"><enum>(g)</enum><header>Limitation on
SSBN–X submarines</header><text display-inline="yes-display-inline">Notwithstanding any other provision of
law—</text>
<paragraph commented="no" id="HBBA14A6FFFA746B6BFE1323055833074"><enum>(1)</enum><text display-inline="yes-display-inline">none of the funds authorized to be
appropriated or otherwise made available for any of fiscal years 2014 through
2024 for the Department of Defense may be obligated or expended for the
procurement of an SSBN–X submarine; and</text>
</paragraph><paragraph commented="no" id="H1602502961944D6C8F218852269A4589"><enum>(2)</enum><text display-inline="yes-display-inline">none of the funds authorized to be
appropriated or otherwise made available for fiscal year 2025 or any fiscal
year thereafter for the Department of Defense may be obligated or expended for
the procurement of more than eight such submarines.</text>
</paragraph></subsection><subsection commented="no" id="HCD806E20DF8C4E8A9F43592B43765812"><enum>(h)</enum><header>Reduction of
ICBMs</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended to maintain more than
200 intercontinental ballistic missiles.</text>
</subsection><subsection commented="no" id="H9B2660C571C54E71B149C515F8E06E8D"><enum>(i)</enum><header>Reduction of
SLBMs</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended to maintain more than
250 submarine-launched ballistic missiles.</text>
</subsection><subsection commented="no" id="H5989E178210E4C64B7D14E321AA806D8"><enum>(j)</enum><header>Prohibition on
new ICBM</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended for the research,
development, test, and evaluation or procurement of a new intercontinental
ballistic missile.</text>
</subsection><subsection commented="no" id="HA104DED6CE094487BF73C9D6C16F2CA9"><enum>(k)</enum><header>Termination of
MOX fuel plant project</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense or
the Department of Energy may be obligated or expended for the Mixed Oxide (MOX)
Fuel Fabrication Facility project.</text>
</subsection><subsection commented="no" id="H0CE80098B5C24440A9BD6708B889C36E"><enum>(l)</enum><header>Termination of
CMRR project</header><text display-inline="yes-display-inline">Notwithstanding
section 4215 of the Atomic Energy Defense Act or any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense or
the Department of Energy may be obligated or expended for the Chemistry and
Metallurgy Research Replacement nuclear facility.</text>
</subsection><subsection commented="no" id="H73FE866578E740388364340EB0587089"><enum>(m)</enum><header>Termination of
UPF</header><text display-inline="yes-display-inline">Notwithstanding any other
provision of law, none of the funds authorized to be appropriated or otherwise
made available for fiscal year 2014 or any fiscal year thereafter for the
Department of Defense or the Department of Energy may be obligated or expended
for the Uranium Processing Facility located at the Y–12 National Security
Complex.</text>
</subsection><subsection commented="no" id="H6A32ABB6B4314C2FBCFDE76884502B91"><enum>(n)</enum><header>Termination of
MEADS</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended for the medium extended
air defense system.</text>
</subsection></section><section commented="no" id="H0E5D8225861E4CD78208198C7A542B94"><enum>604.</enum><header>Reports
required</header>
<subsection commented="no" id="H85C289BC9BCD452FB766D831F344D119"><enum>(a)</enum><header>Initial
report</header><text display-inline="yes-display-inline">Not later than 180
days after the date of the enactment of this Act, the Secretary of Defense and
the Secretary of Energy shall jointly submit to the appropriate committees of
Congress a report outlining the plan of each Secretary to carry out section
603.</text>
</subsection><subsection commented="no" id="H29EC8B950F74404BB2C494D12DA719D4"><enum>(b)</enum><header>Annual
report</header><text display-inline="yes-display-inline">Not later than March
1, 2014, and each year thereafter, the Secretary of Defense and the Secretary
of Energy shall jointly submit to the appropriate committees of Congress a
report outlining the plan of each Secretary to carry out section 603, including
any updates to previously submitted reports.</text>
</subsection><subsection commented="no" id="H313E4AF31A2843A38BC3AC8D74A7E2E8"><enum>(c)</enum><header>Annual nuclear
weapons accounting</header><text display-inline="yes-display-inline">Not later
than September 30, 2014, and each year thereafter, the President shall transmit
to the appropriate committees of Congress a report containing a comprehensive
accounting by the Director of the Office of Management and Budget of the
amounts obligated and expended by the Federal Government for each nuclear
weapon and related nuclear program during—</text>
<paragraph commented="no" id="H200533B875C34C6F8363051E58FB723C"><enum>(1)</enum><text display-inline="yes-display-inline">the fiscal year covered by the report;
and</text>
</paragraph><paragraph commented="no" id="HE330A22F934A4CFDA8D416FC074B83EF"><enum>(2)</enum><text display-inline="yes-display-inline">the life cycle of such weapon or
program.</text>
</paragraph></subsection><subsection commented="no" id="H67184CBF3EEF499EB4DE038C800C9E4B"><enum>(d)</enum><header>Appropriate
committees of Congress defined</header><text>In this section, the term
<term>appropriate committees of Congress</term> means—</text>
<paragraph commented="no" id="HAB678B02D50C4DEBB9B056E6838175D1"><enum>(1)</enum><text display-inline="yes-display-inline">the Committee on Armed Services, the
Committee on Foreign Relations, the Committee on Appropriations, and the
Committee on Energy and Natural Resources of the Senate; and</text>
</paragraph><paragraph commented="no" id="HD64ACA5ED552432CA9192DB9A260E8E6"><enum>(2)</enum><text display-inline="yes-display-inline">the Committee on Armed Services, the
Committee on Foreign Affairs, the Committee on Appropriations, the Committee on
Energy and Commerce, and the Committee on Natural Resources of the House of
Representatives.</text>
</paragraph></subsection></section></subtitle><subtitle commented="no" id="HEA9F21856AF44224921486117159E921"><enum>B</enum><header>Limiting Excessive
Contractor Compensation</header>
<section commented="no" id="HBF39687B05CD4C2A8A2B22F050E24012"><enum>611.</enum><header>Limitation on
allowable compensation costs</header>
<subsection commented="no" id="H19A83E28B7194FED9549D7775B15518D"><enum>(a)</enum><header>Limitation</header>
<paragraph commented="no" id="HAD0F60F40A914D43AA5C5FB56D56AD8B"><enum>(1)</enum><header>Civilian
contracts</header><text><external-xref legal-doc="usc" parsable-cite="usc/41/4304">Section 4304(a)(16)</external-xref> of title 41, United States Code, is
amended to read as follows:</text>
<quoted-block act-name="" id="H70CA18576E414FFFA05BF723578D7560" style="OLC">
<paragraph commented="no" id="HBD050ECF27A84043A23800C789FD3742"><enum>(16)</enum><text>Costs of
compensation of contractor and subcontractor employees for a fiscal year,
regardless of the contract funding source, to the extent that such compensation
exceeds the rate payable for level I of the Executive Schedule under section
5312 of title
5.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="HC57E1618B8254F429ACA42ECF0ACC049"><enum>(2)</enum><header>Defense
contracts</header><text><external-xref legal-doc="usc" parsable-cite="usc/10/2324">Section 2324(e)(1)(P)</external-xref> of title 10, United States Code,
is amended to read as follows:</text>
<quoted-block act-name="" id="H71EA1DFA0D934F4DAD14850F8A8BDDD3" style="OLC">
<subparagraph commented="no" id="H6EA6C8AC78CE4349974D639D859142D1" indent="up1"><enum>(P)</enum><text>Costs of compensation of contractor
and subcontractor employees for a fiscal year, regardless of the contract
funding source, to the extent that such compensation exceeds the rate payable
for level I of the Executive Schedule under section 5312 of title
5.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="HE355427BD19F4C0EAA048516F49950D9"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph commented="no" id="H1FEC21EDE9AB4282B4AA2BDF9239D36B"><enum>(1)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/41/1127">Section 1127</external-xref> of title 41, United States Code, is hereby
repealed.</text>
</paragraph><paragraph commented="no" id="H2461F6AA87EE41F798ED4509348CDE31"><enum>(2)</enum><header>Clerical
amendment</header><text>The table of sections at the beginning of chapter 11 of
title 41, United States Code, is amended by striking the item relating to
section 1127.</text>
</paragraph></subsection></section></subtitle><subtitle commented="no" id="H6DE09D006465419FBF6752D2EC007E71"><enum>C</enum><header>Relocate Troops
From Europe to the United States</header>
<section commented="no" id="H17D38C45C9844057B05B0E7B34D2FD2D"><enum>615.</enum><header>Relocation to
United States military installations of members of the United States Armed
Forces assigned to permanent duty in Europe</header>
<subsection commented="no" id="H80BFE363D61D45B7A62B0F0F0B9D628C"><enum>(a)</enum><header>Relocation
required</header><text display-inline="yes-display-inline">Not later than one
year after the date of the enactment of this Act, the Secretary of Defense
shall complete the relocation to military installations in the United States of
at least 10,000 members of the Armed Forces of the United States who, as of the
date of the enactment of this Act, are assigned to permanent duty ashore in
Europe. The members relocated shall not be replaced by the assignment of other
members of the Armed Forces of the United States to permanent duty ashore in
Europe.</text>
</subsection><subsection commented="no" id="HBFD7D4D65FFC4AD9839820F324F16445"><enum>(b)</enum><header>Exclusion of
certain members</header><text display-inline="yes-display-inline">For purposes
of complying with this section, the Secretary of Defense shall not select
members of the Armed Forces performing the following assignments for relocation
to the United States:</text>
<paragraph commented="no" id="H3D139865752D4653A766C36638F9B234"><enum>(1)</enum><text>Members assigned
to permanent duty ashore in Iceland, Greenland, and the Azores.</text>
</paragraph><paragraph commented="no" id="HA0C50B1653B6483FAECE26345FD4FD61"><enum>(2)</enum><text>Members performing
duties in Europe for more than 179 days under a military-to-military contact
program under <external-xref legal-doc="usc" parsable-cite="usc/10/168">section 168</external-xref> of title 10, United States Code.</text>
</paragraph></subsection><subsection commented="no" id="HADBBCC63F186492EA0056DA5DCB44FA2"><enum>(c)</enum><header>Exceptions;
waiver</header><text display-inline="yes-display-inline">This section shall not
apply in the event of a declaration of war or an armed attack on any European
member nation of the North Atlantic Treaty Organization. The President may
waive operation of this section if the President declares an emergency and
immediately informs the Congress of the waiver and the reasons therefor.</text>
</subsection><subsection commented="no" id="H5D9E2647C50043428EADA29905B7FDB9"><enum>(d)</enum><header>Conforming
amendment to permanent ceiling on United States military presence in
Europe</header><text>Section 1002(c)(1) of the Department of Defense
Authorization Act, 1985 (<external-xref legal-doc="usc" parsable-cite="usc/22/1928">22 U.S.C. 1928</external-xref> note) is amended by striking
<quote>100,000</quote> and inserting <quote>60,000</quote>.</text>
</subsection></section></subtitle><subtitle commented="no" id="H30867195F9BC491C8771FD7B09B34201"><enum>D</enum><header>Additional
reduction in armed forces end strength levels</header>
<section commented="no" id="H2A94FA989ECE4DD4A18C6FDECFF9316B" section-type="subsequent-section"><enum>621.</enum><header>Additional Army and
Marine Corps end strength reductions through retirement and separation</header>
<subsection commented="no" id="HC27890B9FDB9431AB28810F564480281"><enum>(a)</enum><header>Army</header><text display-inline="yes-display-inline">In addition to the reductions in end
strength levels of active duty members of the Army otherwise required to be
achieved during fiscal years 2013 through 2017, the Secretary of the Army shall
reduce the end strength numbers for active duty personnel as of the end of
fiscal year 2017 by an additional 20,000.</text>
</subsection><subsection commented="no" id="H166A1D7D97F04E948FD9EF17EFBD6A49"><enum>(b)</enum><header>Marine
Corps</header><text>In addition to the reductions in end strength levels of
active duty members of the Marine Corps otherwise required to be achieved
during fiscal years 2013 through 2017, the Secretary of the Navy shall reduce
the end strength numbers for active duty personnel as of the end of fiscal year
2017 by an additional 7,000.</text>
</subsection><subsection commented="no" id="H3E9CDFF3173F45F19F938477B7B46427"><enum>(c)</enum><header>Methods of
achieving reductions</header><text display-inline="yes-display-inline">To
achieve the personnel reductions required by subsections (a) and (b), the
Secretary of the Army and the Secretary of the Navy shall rely on the
retirement and separation of members of the Army and Marine Corps, including as
a result of the use of enhanced selective early retirement boards and early
discharges under <external-xref legal-doc="usc" parsable-cite="usc/10/638a">section 638a</external-xref> of title 10, United States Code, as reinstated by
section 502 of the National Defense Authorization Act for Fiscal Year 2013
(<external-xref legal-doc="public-law" parsable-cite="pl/112/239">Public Law 112–239</external-xref>).</text>
</subsection></section></subtitle><subtitle commented="no" id="H6B74503329734408B2F9EDB66E4D7A09"><enum>E</enum><header>Procurement of
certain submarines, carriers, and aircraft</header>
<section commented="no" id="HCDEA7A1F421F477DB8B717A03C631355"><enum>631.</enum><header>Limitation on
procurement of Virginia class submarines</header><text display-inline="no-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal years 2014 through 2024 for the Department of Defense may be obligated
or expended to procure more than one Virginia class submarine per fiscal
year.</text>
</section><section commented="no" id="H98C90414816D42F4AD83EFA9FBE689AF"><enum>632.</enum><header>Limitation on
procurement of one Ford class aircraft carrier</header>
<subsection id="HF0476837DEF8470481D592279BD973D6"><enum>(a)</enum><header>Limitation</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense
may be obligated or expended to procure the Ford class aircraft carrier
designated CVN–80.</text>
</subsection><subsection id="HC348181BBDE042C89A84F4D888B12D1E"><enum>(b)</enum><header>Effect on
requirement for 11 operational aircraft carriers</header><text display-inline="yes-display-inline">Subsection (a) applies even in the event
that the number of operational aircraft carriers for the naval combat forces of
the Navy becomes less than 11, notwithstanding <external-xref legal-doc="usc" parsable-cite="usc/10/5065">section 5065(b)</external-xref> of title 10,
United States Code.</text>
</subsection></section><section commented="no" id="HB487734A8E8548ACB324FC482A620649"><enum>633.</enum><header>Authority for
procurement of F/A–18E and F/A–18F aircraft</header>
<subsection commented="no" id="H2802248CD19945A5A977C0B167791A50"><enum>(a)</enum><header>Replacement of
planned procurement of F–35C aircraft</header>
<paragraph commented="no" id="H19CFB48C3C1F4C13A9723C8A26BA3983"><enum>(1)</enum><header>Limitation on
procurement</header><text display-inline="yes-display-inline">Notwithstanding
any other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended to procure the 237 F–35C
aircraft that the Secretary of the Navy planned to procure as of the date on
which the budget of the President was submitted to Congress under section
1105(a) of title 31, United States Code, for fiscal year 2013.</text>
</paragraph><paragraph commented="no" id="HD15CDC58888148D8BC64A766FD7D40A1"><enum>(2)</enum><header>Authority for
procurement</header><text display-inline="yes-display-inline">Of the funds
authorized to be appropriated or otherwise made available for fiscal year 2014
or any fiscal year thereafter for the Department of Defense, the Secretary of
the Navy may procure not more than a total of 240 F/A–18E and F/A–18F
aircraft.</text>
</paragraph></subsection><subsection commented="no" id="HEA0F631882C744CBA06B9600DA4BAB92"><enum>(b)</enum><header>Replacement of
procurement of F–35B aircraft</header>
<paragraph commented="no" id="H976EB02C3248499A846BBE5804975AD1"><enum>(1)</enum><header>Limitation on
procurement</header><text display-inline="yes-display-inline">Notwithstanding
any other provision of law, none of the funds authorized to be appropriated or
otherwise made available for fiscal year 2014 or any fiscal year thereafter for
the Department of Defense may be obligated or expended to procure more than 200
F–35B aircraft.</text>
</paragraph><paragraph commented="no" id="HBF262561C0F0441598851A63A95E03E4"><enum>(2)</enum><header>Authority for
procurement</header><text display-inline="yes-display-inline">Of the funds
authorized to be appropriated or otherwise made available for fiscal year 2014
or any fiscal year thereafter for the Department of Defense, the Secretary of
the Navy may procure not more than a total of 220 F/A–18E and F/A–18F
aircraft.</text>
</paragraph></subsection></section><section commented="no" id="H93F1F2D9307D443BA89F3AA9884B2BBF"><enum>634.</enum><header>Prohibition on
procurement of V–22 Osprey aircraft</header><text display-inline="no-display-inline">Notwithstanding any other provision of law,
none of the funds authorized to be appropriated or otherwise made available for
fiscal year 2014 or any fiscal year thereafter for the Department of Defense
may be obligated or expended for the procurement of V–22 Osprey
aircraft.</text>
</section></subtitle><subtitle commented="no" id="HA43E920991DF46D8B9D328B932B5ECC1"><enum>F</enum><header>Limit Military
Bands</header>
<section commented="no" id="H84F6976835A545D7A84C59C7FA6CAF38"><enum>641.</enum><header>Limitation on
expenditures for military musical units</header><text display-inline="no-display-inline">Amounts expended for any fiscal year for
military musical units (as defined in <external-xref legal-doc="usc" parsable-cite="usc/10/974">section 974</external-xref> of title 10, United States
Code) may not exceed $200,000,000.</text>
</section></subtitle><subtitle commented="no" id="H66A1F4E5054C41A993C797C57A96CA1F"><enum>G</enum><header>Reduction in
Number of General and Flag Officers</header>
<section commented="no" id="HA84C2EE2C1B342748ADC5C1CB24A97EB" section-type="subsequent-section"><enum>651.</enum><header>Return of maximum
number of general and flag officers to Cold War levels</header><text display-inline="no-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/10/526">Section 526</external-xref> of title 10, United States Code,
is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H0FF8A46591614A8C93B6A659B2EF7E11" style="OLC">
<subsection commented="no" id="H2E86632E1E3F4E218EAFD2AF35436DB1"><enum>(i)</enum><header>Additional
limitation stated as ratio of members on active duty</header><text display-inline="yes-display-inline">Notwithstanding any other provision of this
section, the number of general officers on active duty in the Army, Air Force,
or Marine Corps, and the number of flag officers on active duty in the Navy,
may not exceed six general officers or flag officers for each 10,000 members of
that armed force on active
duty.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section></subtitle><subtitle id="HE2A669BA99E14151850AC657C2FB90AB"><enum>H</enum><header>Audit the
Pentagon</header>
<section id="H373B22B2F9D743C2A90E8D8B19474AB8"><enum>661.</enum><header>Purposes</header><text display-inline="no-display-inline">The purposes of this subtitle are as
follows:</text>
<paragraph id="H6BFC2E3457304305A8ADBF6271163B38"><enum>(1)</enum><text>To strengthen
American national security by ensuring that—</text>
<subparagraph id="HBD87AFB816FD4B7A83E4565A5BBFD20A"><enum>(A)</enum><text>military planning,
operations, weapons development, and a long-term national security strategy are
connected to sound financial controls; and</text>
</subparagraph><subparagraph id="H8C67F6787AE54BD68CCAD4A5064A8AF0"><enum>(B)</enum><text>defense dollars
are spent efficiently.</text>
</subparagraph></paragraph><paragraph id="HB78D64CD1A674C6DAAC647DA02561E8B"><enum>(2)</enum><text>To instill a
culture of accountability at the Department of Defense that supports the vast
majority of dedicated members of the Armed Forces and civilians who want to
ensure proper accounting and prevent waste, fraud, and abuse.</text>
</paragraph></section><section id="H929B23E0AC2846BD8807433E3DB940D1"><enum>662.</enum><header>Findings</header><text display-inline="no-display-inline">Congress finds the following:</text>
<paragraph id="H4DB02ED95B6B4584AE67992CE0E0AA1D"><enum>(1)</enum><text>The 2011 Financial
Report of the United States Government found that 32 of 35 major Federal
agencies received clean audit opinions. Two more, the Department of Homeland
Security and the Department of State, received <quote>qualified</quote> audit
opinions but are making progress. Only the Department of Defense had a
<quote>disclaimer</quote> because it lacked any auditable reporting or
accounting available for independent review.</text>
</paragraph><paragraph id="H48593E2695DA4B0C9B8903F65BEADA56"><enum>(2)</enum><text>The financial
management of the Department of Defense has been on the
<quote>High-Risk</quote> list of the Government Accountability Office (GAO).
The GAO found that the Department is not consistently able to <quote>control
costs; ensure basic accountability; anticipate future costs and claims on the
budget; measure performance; maintain funds control; and prevent and detect
fraud, waste, and abuse</quote>.</text>
</paragraph><paragraph id="HC584F1B141514129B7E6D811520A1D60"><enum>(3)</enum><text>At a September
2010 hearing of the Senate, the Government Accountability Office stated that
past expenditures by the Department of Defense of $5,800,000,000 to improve
financial information, and billions of dollars more of anticipated expenditures
on new information technology systems for that purpose, may not suffice to
achieve full audit readiness of the financial statement of the Department. At
that hearing, the Government Accountability Office could not predict when the
Department would achieve full audit readiness of such statements.</text>
</paragraph><paragraph id="H35C50E759D904BDB8D90FE63EA9F2B6C"><enum>(4)</enum><text>Section 9 of
article I of the Constitution of the United States requires all agencies of the
Federal Government, including the Department of Defense, to publish <quote>a
regular statement and account of the receipts and expenditures of all public
money</quote>.</text>
</paragraph><paragraph id="HCCF9F67BB40A47A7A0C7B8CE07112BE7"><enum>(5)</enum><text>Section 303(d) of
the Chief Financial Officers Act of 1990 (<external-xref legal-doc="public-law" parsable-cite="pl/101/576">Public Law 101–576</external-xref>) required that
financial statements be prepared and independently audited for the Department
of the Army by March 31, 1992, and for the Department of the Air Force by March
31, 1993. Neither the Department of the Army nor the Department of the Air
Force has complied.</text>
</paragraph><paragraph id="H1C336847BF7049E69DFCC81EC0E8895B"><enum>(6)</enum><text>Section 3515 of
title 31, United States Code, requires the agencies of the Federal Government,
including the Department of Defense, to present auditable financial statements
beginning not later than March 1, 1997. The Department has not complied with
this law.</text>
</paragraph><paragraph id="H9E8C7D1A59534EE987EF5B092A166B8C"><enum>(7)</enum><text>The Federal
Financial Management Improvement Act of 1996 (<external-xref legal-doc="usc" parsable-cite="usc/31/3512">31 U.S.C. 3512</external-xref> note) requires
financial systems acquired by the Federal Government, including the Department
of Defense, to be able to provide information to leaders to manage and control
the cost of government. The Department has not complied with this law.</text>
</paragraph><paragraph id="H0E31D30F2CE04344B4388CEB60229429"><enum>(8)</enum><text>The National
Defense Authorization Act for Fiscal Year 2002 (<external-xref legal-doc="public-law" parsable-cite="pl/107/107">Public Law 107–107</external-xref>) requires
the Secretary of Defense to report to Congress annually on the reliability of
the financial statements of the Department of Defense, to minimize resources
spent on producing unreliable financial statements, and to use resources saved
to improve financial management policies, procedures, and internal
controls.</text>
</paragraph><paragraph id="HAAB04190DC8F45D5B8901A9D706B7AE1"><enum>(9)</enum><text>In 2005, the
Department of Defense created a Financial Improvement and Audit Readiness
(FIAR) Plan, overseen by a directorate within the office of the Under Secretary
of Defense (Comptroller), to improve Department business processes with the
goal of producing timely, reliable, and accurate financial information that
could generate an audit-ready annual financial statement. In December 2005,
that directorate, known as the FIAR Directorate, issued the first of a series
of semiannual reports on the status of the Financial Improvement and Audit
Readiness Plan.</text>
</paragraph><paragraph id="H99044DD99C9F4233ABD47207197A881E"><enum>(10)</enum><text>The National
Defense Authorization Act for Fiscal Year 2010 (<external-xref legal-doc="public-law" parsable-cite="pl/111/84">Public Law 111–84</external-xref>) requires
regular status reports on the Financial Improvement and Audit Readiness Plan
described in paragraph (9), and codified as a statutory requirement the goal of
the Plan in ensuring that Department of Defense financial statements are
validated as ready for audit not later than September 30, 2017.</text>
</paragraph></section><section id="H78B79E09AE6C4E0DA97D6E5981C6FFDB"><enum>663.</enum><header>Spending
reductions for agencies without clean audits</header>
<subsection id="H94BC09A7539D49D683A209B35F563EB6"><enum>(a)</enum><header>Applicability</header>
<paragraph id="HD0B9DF634C1B4E0CB5F4BF13E2B7ECC2"><enum>(1)</enum><header>In
general</header><text>Subject to paragraph (2), this section applies to each
Federal agency identified by the Director of the Office of Management and
Budget as required to have an audited financial statement under section 3515 of
title 31, United States Code.</text>
</paragraph><paragraph id="HA212DDA8466A4233B8D77A14FE0056C8"><enum>(2)</enum><header>Applicability to
military departments and defense agencies</header><text>For purposes of
paragraph (1), in the case of the Department of Defense, each military
department and each Defense Agency shall be treated as a separate Federal
agency.</text>
</paragraph></subsection><subsection id="H846EA053AF0D46C39DD0B7C1E9007B53"><enum>(b)</enum><header>Definitions</header><text>In
this section, the terms <quote>financial statement</quote> and <quote>external
independent auditor</quote> have the meanings given those terms in section
3521(e) of title 31, United States Code.</text>
</subsection><subsection id="H5E06058811BB43EB816D4A97F5692D59"><enum>(c)</enum><header>Adjustments for
financial accountability</header>
<paragraph id="HEC1820B7BE614B52968CC61BFF5F9619"><enum>(1)</enum><header>Reduction
required</header><text>If a Federal agency has not submitted a financial
statement for a fiscal year by March 1 of the next fiscal year, or if such
financial statement has not received either an unqualified or a qualified audit
opinion by an independent external auditor by such date, the discretionary
budget authority available for the Federal agency for the then current fiscal
year is reduced by 5 percent, with the reduction applied proportionately to
each account (other than an account listed in subsection (d) or an account for
which a waiver is made under subsection (e)).</text>
</paragraph><paragraph id="HC23CD8FBC1EC4EBEBD372613775FC865"><enum>(2)</enum><header>Treatment of
reduction</header><text>An amount equal to the total amount of any reduction
made under paragraph (2) shall be retained in the general fund of the Treasury
for the purposes of deficit reduction.</text>
</paragraph></subsection><subsection id="H392082BD7077490FA7F89041D409B3AA"><enum>(d)</enum><header>Accounts
excluded</header><text>The following accounts are excluded from any reductions
referred to in subsection (c)(1):</text>
<paragraph id="H562AC3AF8D694ACAA1A64327FFA97CA8"><enum>(1)</enum><text>Military
personnel, reserve personnel, and National Guard personnel accounts of the
Department of Defense.</text>
</paragraph><paragraph id="HFA054B824F71480B87AEDAF28FBAF4B5"><enum>(2)</enum><text>The Defense Health
Program account of the Department of Defense.</text>
</paragraph></subsection><subsection id="H00DC1B788F5A4CE19DD149F126194729"><enum>(e)</enum><header>Waiver</header><text>The
President may waive subsection (c)(1) with respect to an account if the
President certifies that applying the subsection to that account would harm
national security or members of the Armed Forces who are serving in a combat
zone.</text>
</subsection><subsection id="H8927E06C310342E48BB399764B3D4126"><enum>(f)</enum><header>Report</header><text>Not
later than 60 days after an adjustment is made under subsection (c), the
Director of the Office of Management and Budget shall submit to Congress a
report describing the amount of the adjustment and the affected
accounts.</text>
</subsection></section><section id="H4828FE88FDDB4C72BBB5DBFE3467C4A2"><enum>664.</enum><header>Report on
Department of Defense reporting requirements</header><text display-inline="no-display-inline">Not later than 180 days after the date of
the enactment of this Act, the Under Secretary of Defense (Comptroller) shall
submit to Congress a report setting forth the following:</text>
<paragraph id="H59F8513DCA61440FBA4882738E70D2C8"><enum>(1)</enum><text>A
list of each report of the Department of Defense required by law to be
submitted to Congress which, in the opinion of the Under Secretary, would no
longer be necessary if the financial statements of the Department of Defense
were audited with an unqualified opinion.</text>
</paragraph><paragraph id="H285268BC521B419482697D81219B202E"><enum>(2)</enum><text>A
list of each report of the Department required by law to be submitted to
Congress which, in the opinion of the Under Secretary, interferes with the
capacity of the Department to achieve an audit of the financial statements of
the Department with an unqualified opinion.</text>
</paragraph></section><section id="H771DD96910FF45D587C24D6258495FBB"><enum>665.</enum><header>Sense of
Congress in implementation of defense budget reductions</header><text display-inline="no-display-inline">It is the sense of Congress that—</text>
<paragraph id="HD69BD9D28B944B68A835180F32918934"><enum>(1)</enum><text>as the overall
defense budget is cut, congressional defense committees and the Department of
Defense should not endanger members of the Armed Forces by reducing wounded
warrior accounts or vital protection (such as body armor) for members of the
Armed Forces in harm’s way;</text>
</paragraph><paragraph id="H38071A20410B47F194C35F2F913ED21A"><enum>(2)</enum><text>the valuation of
legacy assets by the Department of Defense should be simplified without
compromising essential controls or generally accepted government auditing
standards; and</text>
</paragraph><paragraph id="HC84A58D97F424B4C93785FC99A4EE9BF"><enum>(3)</enum><text>nothing in this
subtitle should be construed to require or permit the declassification of
accounting details about classified defense programs, and, as required by law,
the Department of Defense should ensure financial accountability in such
programs using proven practices, including using auditors with security
clearances.</text>
</paragraph></section></subtitle><enum>VII</enum><header>Invest in Job
Creation</header>
<subtitle id="HD0960A38A5044F118E2ECA4269C5450D"><enum>A</enum><header>Making Work Pay
Extension</header>
<section id="HF2243F4C98B04E589A44123A324A1FB9"><enum>701.</enum><header>One-year
extension of making work pay credit</header>
<subsection id="H929E7015303A47C5A94361BBB5DB1366"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (e) of
<external-xref legal-doc="usc" parsable-cite="usc/26/36A">section 36A</external-xref> of the Internal Revenue Code of 1986 is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="H0265794324694CDC8279176D03678451" style="OLC">
<subsection id="H856D6F3CC7DE49A4A409DE5423925D21"><enum>(e)</enum><header>Termination</header><text display-inline="yes-display-inline">This section shall not apply to taxable
years—</text>
<paragraph id="H091707D4A34B4DA19DF5B102A6F61BC2"><enum>(1)</enum><text>beginning after
December 31, 2010, and before January 1, 2013, or</text>
</paragraph><paragraph id="HD5B022C4B0E441CDAE638F3FAF1022B9"><enum>(2)</enum><text>beginning after
December 31,
2013.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB53BA97F55124A729870C845484C901E"><enum>(b)</enum><header>Treatment of
possessions</header><text>Paragraph (1) of section 1001(b) of the American
Recovery and Reinvestment Tax Act of 2009 is amended by striking <quote>2009
and 2010</quote> both places it appears and inserting <quote>2009, 2010, and
2013</quote>.</text>
</subsection><subsection id="H862DBEFB844A485DBC178357F7330A51"><enum>(c)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2012.</text>
</subsection></section></subtitle><subtitle id="H8FAFE2BE886F439CA95FCFBA9C947B2E"><enum>B</enum><header>Support for
Teachers and School Modernization</header>
<part id="H3E16EAF6EE4445F8B5CD442FD7432D9B"><enum>I</enum><header>Preventing teacher
layoffs and supporting the creation of additional jobs in public early
childhood, elementary, and secondary education</header>
<section id="H6A4BC5A0908845E0A8C19C9A726DCBA5"><enum>711.</enum><header>Purpose</header><text display-inline="no-display-inline">The purpose of this part is to provide funds
to States to prevent teacher layoffs and support the creation of additional
jobs in public early childhood, elementary, and secondary education in the
2012–2013 and 2013–2014 school years.</text>
</section><section id="H7D5B2E0B6F0A47AEBADC84233F3A4C79"><enum>712.</enum><header>Grants for the
outlying areas and the Secretary of the Interior; availability of
funds</header>
<subsection id="H859775DD839D4B76BD5E879098D51E50"><enum>(a)</enum><header>Reservation of
funds</header><text>From the amount appropriated to carry out this subtitle
under
<internal-xref idref="HDB9E802967184227942C856E1656CFE0" legis-path="721.">section 721</internal-xref>, the Secretary—</text>
<paragraph id="H94B0726821CA44568F67E85493BEDA66"><enum>(1)</enum><text>shall reserve up
to one-half of one percent to provide assistance to the outlying areas on the
basis of their respective needs, as determined by the Secretary, for activities
consistent with this part under such terms and conditions as the Secretary may
determine;</text>
</paragraph><paragraph id="HCF69777133034969944DF7AEBA5982C1"><enum>(2)</enum><text>shall reserve up
to one-half of one percent to provide assistance to the Secretary of the
Interior to carry out activities consistent with this part, in schools operated
or funded by the Bureau of Indian Education; and</text>
</paragraph><paragraph id="H0CA5E141A2B742D4A3E0E4E838577A16"><enum>(3)</enum><text>may reserve up to
$2,000,000 for administration and oversight of this subtitle, including program
evaluation.</text>
</paragraph></subsection><subsection id="H532BB35DB80C4762AE22B40568D2A3A9"><enum>(b)</enum><header>Availability of
funds</header><text>Funds made available under
<internal-xref idref="HDB9E802967184227942C856E1656CFE0" legis-path="721.">section 721</internal-xref> shall remain available to the
Secretary until September 30, 2014.</text>
</subsection></section><section id="H47C0A6405FF44A49BB32F99BEF59BF32"><enum>713.</enum><header>State
allocation</header>
<subsection id="H1F0A9883C6D9442B919F6AFAD6D37BE9"><enum>(a)</enum><header>Allocation</header><text>After
reserving funds under section
<internal-xref idref="H859775DD839D4B76BD5E879098D51E50" legis-path="712.(a)">section 712(a)</internal-xref>, the Secretary shall
allocate the remaining funds appropriated under
<internal-xref idref="HDB9E802967184227942C856E1656CFE0" legis-path="721.">section 721</internal-xref> to States, of which—</text>
<paragraph id="H2560EAB460F842228B276D23AA4F08C3"><enum>(1)</enum><text>60 percent shall
be allocated to States on the basis of their relative population of individuals
aged 5 through 17; and</text>
</paragraph><paragraph id="HE6AC64F6CFB646A6A05F9FBBEC1742CE"><enum>(2)</enum><text>40 percent shall
be allocated to States on the basis of their relative total population.</text>
</paragraph></subsection><subsection id="H60DB5325177E4223AE72ABB8410E3105"><enum>(b)</enum><header>Awards</header><text>The
Secretary shall award a State’s allocation under subsection (a) to the Governor
of the State only if the Secretary has approved the State’s application under
<internal-xref idref="H397B19376B9743C0A7DEA464AC9BFFDF" legis-path="714.">section 714</internal-xref>.</text>
</subsection><subsection id="H8F52FF2C3D3E4648B488E66605C46D00"><enum>(c)</enum><header>Alternate
distribution of funds</header>
<paragraph id="H2502C31A17BC4FB39F39E5FC95B96D43"><enum>(1)</enum><header>In
general</header><text>If, within 30 days after the date of enactment of this
Act, a Governor has not submitted an approvable application to the Secretary,
the Secretary shall, consistent with paragraph (2), provide for funds allocated
to that State to be distributed to another entity or other entities in the
State for the support of early childhood, elementary, and secondary education,
under such terms and conditions as the Secretary may establish.</text>
</paragraph><paragraph id="HFD1F7BFE768A46BDA395B6152ECA8770"><enum>(2)</enum><header>Maintenance of
effort</header>
<subparagraph id="HF65C481135B949ACBE3557E0A79945BD"><enum>(A)</enum><header>Governor
assurance</header><text>The Secretary shall not allocate funds under paragraph
(1) unless the Governor of the State provides an assurance to the Secretary
that the State will for fiscal years 2013 and 2014 meet the requirements of
section 718.</text>
</subparagraph><subparagraph id="H9DC88FDF0A8242DDAF3492FEBC3EC97A"><enum>(B)</enum><header>Allocations to
other entities</header><text>Notwithstanding subparagraph (A), the Secretary
may allocate up to 50 percent of the funds that are available to the State
under paragraph (1) to another entity or entities in the State, provided that
the State educational agency submits data to the Secretary demonstrating that
the State will for fiscal year 2013 meet the requirements of
<internal-xref idref="HFD59549F16344840ACA91397FAD43730" legis-path="718.(a)">section 718(a)</internal-xref> or the Secretary otherwise
determines that the State will meet those requirements, or such comparable
requirements as the Secretary may establish, for that year.</text>
</subparagraph></paragraph><paragraph id="H483294488BA943DC909AA44CCCFE7084"><enum>(3)</enum><header>Requirements</header><text>An
entity that receives funds under paragraph (1) shall use those funds in
accordance with the requirements of this subtitle.</text>
</paragraph></subsection><subsection id="HA4B87F909BB1413F9E0C7D488DA73E19"><enum>(d)</enum><header>Reallocation</header><text>If
a State does not receive funding under this part or only receives a portion of
its allocation under subsection (c), the Secretary shall reallocate the State’s
entire allocation or the remaining portion of its allocation, as the case may
be, to the remaining States in accordance with subsection (a).</text>
</subsection></section><section id="H397B19376B9743C0A7DEA464AC9BFFDF"><enum>714.</enum><header>State
application</header><text display-inline="no-display-inline">The Governor of a
State desiring to receive a grant under this subtitle shall submit an
application to the Secretary within 30 days of the date of enactment of this
Act, in such manner, and containing such information as the Secretary may
reasonably require to determine the State’s compliance with applicable
provisions of law.</text>
</section><section id="HD03282A63D4D4BFAAEE3A1F1EB74AFE2"><enum>715.</enum><header>State
reservation and responsibilities</header>
<subsection id="HDCA75C3DAC914F58B724AE678F564986"><enum>(a)</enum><header>Reservation</header><text>Each
State receiving a grant under
<internal-xref idref="H60DB5325177E4223AE72ABB8410E3105" legis-path="713.(b)">section 713(b)</internal-xref> may reserve—</text>
<paragraph id="H5C127DFF55BA4FEB965157156485B688"><enum>(1)</enum><text>not more than 10
percent of the grant funds for awards to State-funded early learning programs;
and</text>
</paragraph><paragraph id="H9F427F16BA2F478A9D1AE196B620C3A4"><enum>(2)</enum><text>not more than 2
percent of the grant funds for the administrative costs of carrying out its
responsibilities under this subtitle.</text>
</paragraph></subsection><subsection id="HFAA4C5ABB7AC424882017BE0483402DC"><enum>(b)</enum><header>State
responsibilities</header><text>Each State receiving a grant under this part
shall, after reserving any funds under
<internal-xref idref="HDCA75C3DAC914F58B724AE678F564986" legis-path="715.(a)">subsection (a)</internal-xref>—</text>
<paragraph id="HE9EDFDA30B60422FA4F3B77FC9D0F7F8"><enum>(1)</enum><text>use the remaining
grant funds only for awards to local educational agencies for the support of
early childhood, elementary, and secondary education; and</text>
</paragraph><paragraph id="H47CDE57255594BD1A0BD3AD21D17DC60"><enum>(2)</enum><text>distribute those
funds, through subgrants, to its local educational agencies by
distributing—</text>
<subparagraph id="H2D394B5E8B2849B3BA6C6E03379EF177"><enum>(A)</enum><text>60 percent on the
basis of the local educational agencies’ relative shares of enrollment;
and</text>
</subparagraph><subparagraph id="H2418341245E7402CBA7AF4F72A3A941C"><enum>(B)</enum><text>40 percent on the
basis of the local educational agencies’ relative shares of funds received
under part A of title I of the Elementary and Secondary Education Act of 1965
for fiscal year 2012; and</text>
</subparagraph></paragraph><paragraph id="H0D7BFACA3B694F878167489D8642A8F0"><enum>(3)</enum><text>make those funds
available to local educational agencies no later than 100 days after receiving
a grant from the Secretary.</text>
</paragraph></subsection><subsection id="H024C44E605BB4298889CB54EA5E0C355"><enum>(c)</enum><header>Prohibitions</header><text>A
State shall not use funds received under this subtitle to directly or
indirectly—</text>
<paragraph id="H6344EFE1F70045758752794C3D54675A"><enum>(1)</enum><text>establish,
restore, or supplement a rainy-day fund;</text>
</paragraph><paragraph id="HEDFA469E39BC47F5A953314DE27A9EBB"><enum>(2)</enum><text>supplant State
funds in a manner that has the effect of establishing, restoring, or
supplementing a rainy-day fund;</text>
</paragraph><paragraph id="H5E7369F4F56F4F318F961D441C0FC426"><enum>(3)</enum><text>reduce or retire
debt obligations incurred by the State; or</text>
</paragraph><paragraph id="H2D4C13F1B7474415B42A393D2C030380"><enum>(4)</enum><text>supplant State
funds in a manner that has the effect of reducing or retiring debt obligations
incurred by the State.</text>
</paragraph></subsection></section><section id="H242BA9AA290C43E9BF2EE608F18FEDEA"><enum>716.</enum><header>Local
educational agencies</header><text display-inline="no-display-inline">Each
local educational agency that receives a subgrant under this part—</text>
<paragraph id="HB212BC3866FE4CC0B824403AB4E15CD7"><enum>(1)</enum><text>shall use the
subgrant funds only for compensation and benefits and other expenses, such as
support services, necessary to retain existing employees, recall or rehire
former employees, or hire new employees to provide early childhood, elementary,
or secondary educational and related services;</text>
</paragraph><paragraph id="HAD3C3954216C4C92801F43774224450E"><enum>(2)</enum><text>shall obligate
those funds not later than September 30, 2014; and</text>
</paragraph><paragraph id="H57167751457240A0B71D057E070DAB25"><enum>(3)</enum><text>may not use those
funds for general administrative expenses or for other support services or
expenditures, as those terms are defined by the National Center for Education
Statistics in the Common Core of Data, as of the date of enactment of this
Act.</text>
</paragraph></section><section id="HF8A138F609904F819B12C30E22E3ADCE"><enum>717.</enum><header>Early
learning</header><text display-inline="no-display-inline">Each State-funded
early learning program that receives funds under this subtitle shall—</text>
<paragraph id="HF3DBD7AECFC446CFBD5AB12B7B6F2802"><enum>(1)</enum><text>use those funds
only for compensation, benefits, and other expenses, such as support services,
necessary to retain early childhood educators, recall or rehire former early
childhood educators, or hire new early childhood educators to provide early
learning services; and</text>
</paragraph><paragraph id="HD92B9C91223A4707A82D9F6BBB951687"><enum>(2)</enum><text>obligate those
funds not later than September 30, 2014.</text>
</paragraph></section><section id="H7EE3BA715A82485BB8F793A33B08D9B0"><enum>718.</enum><header>Maintenance of
effort</header>
<subsection id="HFD59549F16344840ACA91397FAD43730"><enum>(a)</enum><header>Requirement</header><text>The
Secretary shall not allocate funds to a State under this subtitle unless the
State provides an assurance to the Secretary that—</text>
<paragraph id="H89380ED727134769B5E7CD6FD50FD091"><enum>(1)</enum><text>for State fiscal
year 2013—</text>
<subparagraph id="HE5BE0987E2CF48E8833CD6767AD9821D"><enum>(A)</enum><text>the State will
maintain State support for early childhood, elementary, and secondary education
(in the aggregate or on the basis of expenditure per pupil) and for public
institutions of higher education (not including support for capital projects or
for research and development or tuition and fees paid by students) at not less
than the level of such support for each of the two categories for State fiscal
year 2012; or</text>
</subparagraph><subparagraph id="H23679CFDEDFC43C1A7C573D6AA7124E4"><enum>(B)</enum><text>the State will
maintain State support for early childhood, elementary, and secondary education
and for public institutions of higher education (not including support for
capital projects or for research and development or tuition and fees paid by
students) at a percentage of the total revenues available to the State that is
equal to or greater than the percentage provided for State fiscal year 2012;
and</text>
</subparagraph></paragraph><paragraph id="H56CF13592D3549B3AEFF39A047C56D76"><enum>(2)</enum><text>for State fiscal
year 2014—</text>
<subparagraph id="HA92F94DE48634957991FE73AA6FAAAA5"><enum>(A)</enum><text>the State will
maintain State support for early childhood, elementary, and secondary education
(in the aggregate or on the basis of expenditure per pupil) and for public
institutions of higher education (not including support for capital projects or
for research and development or tuition and fees paid by students) at not less
than the level of such support for each of the two categories for State fiscal
year 2013; or</text>
</subparagraph><subparagraph id="H28E0AB09F22140B0A376325A1971E2F8"><enum>(B)</enum><text>the State will
maintain State support for early childhood, elementary, and secondary education
and for public institutions of higher education (not including support for
capital projects or for research and development or tuition and fees paid by
students) at a percentage of the total revenues available to the State that is
equal to or greater than the percentage provided for State fiscal year
2013.</text>
</subparagraph></paragraph></subsection><subsection id="HADB3DC8E88DC4E2B894FC64473A94701"><enum>(b)</enum><header>Waiver</header><text>The
Secretary may waive the requirements of this section if the Secretary
determines that a waiver would be equitable due to—</text>
<paragraph id="H32273A5F1A9A4422918DFE44452D7C0D"><enum>(1)</enum><text>exceptional or
uncontrollable circumstances, such as a natural disaster; or</text>
</paragraph><paragraph id="HB7438B6A3A8C41BEB2163FAD4A410D48"><enum>(2)</enum><text>a
precipitous decline in the financial resources of the State.</text>
</paragraph></subsection></section><section id="HFCCE2E1B35BF4BB380E082AE759D5AC1"><enum>719.</enum><header>Reporting</header><text display-inline="no-display-inline">Each State that receives a grant under this
part shall submit, on an annual basis, a report to the Secretary that
contains—</text>
<paragraph id="H57BB07DA6395458F998262520A839E16"><enum>(1)</enum><text>a
description of how funds received under this part were expended or obligated;
and</text>
</paragraph><paragraph id="HB32AA62B3FBD409B88A5FDA4316BC523"><enum>(2)</enum><text>an estimate of the
number of jobs supported by the State using funds received under this
subtitle.</text>
</paragraph></section><section id="HD970571D715A4D7199E03928F31306FA"><enum>720.</enum><header>Definitions</header><text display-inline="no-display-inline">In this part:</text>
<paragraph id="HCCC2F4A6B16D44169512EEF42D958903"><enum>(1)</enum><header>ESEA
definitions</header><text>Except as otherwise provided, the terms <quote>local
educational agency</quote>, <quote>outlying area</quote>,
<quote>Secretary</quote>, <quote>State</quote>, and <quote>State educational
agency</quote> have the meanings given those terms in section 9101 of the
Elementary and Secondary Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/7801">20 U.S.C. 7801</external-xref>).</text>
</paragraph><paragraph id="HDA9FBA5C021A4FD5939EC6D05D631CCA"><enum>(2)</enum><header>State</header><text>The
term <quote>State</quote> does not include an outlying area.</text>
</paragraph><paragraph id="H62A6D1384E2344E6B5995A9C799B657C"><enum>(3)</enum><header>Early child
educator</header><text>The term <quote>early childhood educator</quote> means
an individual who—</text>
<subparagraph id="HB8D22DDB58A1485796971E10D8366E97"><enum>(A)</enum><text>works directly
with children in a State-funded early learning program in a low-income
community;</text>
</subparagraph><subparagraph id="HED37C6F9368D42F09F6D9C3ADC4CE62F"><enum>(B)</enum><text>is involved
directly in the care, development, and education of infants, toddlers, or young
children age five and under; and</text>
</subparagraph><subparagraph id="H7562454248674ECD8083786412489189"><enum>(C)</enum><text>has completed a
baccalaureate or advanced degree in early childhood development or early
childhood education, or in a field related to early childhood education.</text>
</subparagraph></paragraph><paragraph id="HCB728DDA8ACF404DA9398728AD71C784"><enum>(4)</enum><header>State-funded
early learning program</header><text>The term <quote>State-funded early
learning program</quote> means a program that provides educational services to
children from birth to kindergarten entry and receives funding from a
State.</text>
</paragraph></section><section id="HDB9E802967184227942C856E1656CFE0"><enum>721.</enum><header>Authorization
of appropriations</header><text display-inline="no-display-inline">There are
authorized to be appropriated, and there are appropriated, $30,000,000,000 to
carry out this part for fiscal year 2013.</text>
</section></part><part id="HFC9C3DC217A04CC6BB25B409B9B30AD9"><enum>II</enum><header>Elementary and
secondary schools</header>
<section id="HB50F08DFEC324369B73E5531C3208AE4"><enum>731.</enum><header>Purpose</header><text display-inline="no-display-inline">The purpose of this part is to provide
assistance for the modernization, renovation, and repair of elementary and
secondary school buildings in public school districts across America in order
to support the achievement of improved educational outcomes in those
schools.</text>
</section><section id="H8B0B6330678144328FBA02FF430B0522"><enum>732.</enum><header>Authorization
of appropriations</header><text display-inline="no-display-inline">There are
authorized to be appropriated, and there are appropriated, $25,000,000,000 to
carry out this part, which shall be available for obligation by the Secretary
until September 30, 2014.</text>
</section><section id="H2BA6BBAFA0124EFAB213015434D9E150"><enum>733.</enum><header>Allocation of
funds</header>
<subsection id="H77A95E243A4344AF9856354C78410679"><enum>(a)</enum><header>Reservations</header><text>Of
the amount made available to carry out this part, the Secretary shall
reserve—</text>
<paragraph id="HE2F5B46DB7F9409591FFC4C6A0F4ADBE"><enum>(1)</enum><text>one-half of one
percent for the Secretary of the Interior to carry out modernization,
renovation, and repair activities described in
<internal-xref idref="H29C3143AA9C34317936A07CCC92FE5D1" legis-path="736.">section 736</internal-xref> in schools operated or funded by
the Bureau of Indian Education;</text>
</paragraph><paragraph id="HAA1986E6DD9140F2A4A318E089D141AD"><enum>(2)</enum><text>one-half of one
percent to make grants to the outlying areas for modernization, renovation, and
repair activities described in
<internal-xref idref="H29C3143AA9C34317936A07CCC92FE5D1" legis-path="736.">section 736</internal-xref>; and</text>
</paragraph><paragraph id="H2512595A906B490B8E6DF93590DB1DBD"><enum>(3)</enum><text>such funds as the
Secretary determines are needed to conduct a survey, by the National Center for
Education Statistics, of the school construction, modernization, renovation,
and repair needs of the public schools of the United States.</text>
</paragraph></subsection><subsection id="H8DEDAC5A66BF4D28AD0FCADED5920E35"><enum>(b)</enum><header>State
allocation</header><text>After reserving funds under subsection (a), the
Secretary shall allocate the remaining amount among the States in proportion to
their respective allocations under part A of title I of the Elementary and
Secondary Education Act of 1965 (in this part referred to as the
<quote>ESEA</quote>) (<external-xref legal-doc="usc" parsable-cite="usc/20/6311">20 U.S.C. 6311 et seq.</external-xref>) for fiscal year 2013, except
that—</text>
<paragraph id="H02EC0C091BD741A0AAC2EBFD9B9084F7"><enum>(1)</enum><text>the Secretary
shall allocate 40 percent of such remaining amount to the 100 local educational
agencies with the largest numbers of children aged 5–17 living in poverty, as
determined using the most recent data available from the Department of Commerce
that are satisfactory to the Secretary, in proportion to those agencies’
respective allocations under part A of title I of the ESEA for fiscal year
2013; and</text>
</paragraph><paragraph id="H226997C2C4F446AAAEF391658C0F2156"><enum>(2)</enum><text>the allocation to
any State shall be reduced by the aggregate amount of the allocations under
paragraph (1) to local educational agencies in that State.</text>
</paragraph></subsection><subsection id="H4E3CDE201A3E41BEB95B0F393138B4B6"><enum>(c)</enum><header>Remaining
allocation</header>
<paragraph id="H37BFD45280804851BCD5A8D643E2AE0E"><enum>(1)</enum><header>States</header><text>If
a State does not apply for its allocation under subsection (b) (or applies for
less than the full allocation for which it is eligible) or does not use that
allocation in a timely manner, the Secretary may—</text>
<subparagraph id="HC6292789F79946BDB8ACD37D93C1BDCC"><enum>(A)</enum><text>reallocate all or
a portion of that allocation to the other States in accordance with subsection
(b); or</text>
</subparagraph><subparagraph id="HBB6F7271E2B1470B97B2E3D1A42F7F7E"><enum>(B)</enum><text>use all or a
portion of that allocation to make direct allocations to local educational
agencies within the State based on their respective allocations under part A of
title I of the ESEA for fiscal year 2013 or such other method as the Secretary
may determine.</text>
</subparagraph></paragraph><paragraph id="H0C3460603C724D619AF0E8216C9E453B"><enum>(2)</enum><header>Local
educational agencies</header><text>If a local educational agency does not apply
for its allocation under subsection (b)(1), applies for less than the full
allocation for which it is eligible, or does not use that allocation in a
timely manner, the Secretary may reallocate all or a portion of its allocation
to the State in which that agency is located.</text>
</paragraph></subsection></section><section id="H390AD583DBA24C9FBB058A62D3783063"><enum>734.</enum><header>State use of
funds</header>
<subsection id="HC73DC7401AEF4855861C450350A2CB98"><enum>(a)</enum><header>Reservation</header><text>Each
State that receives a grant under this part may reserve not more than one
percent of the State’s allocation under
<internal-xref idref="H8DEDAC5A66BF4D28AD0FCADED5920E35" legis-path="733.(b)">section 733(b)</internal-xref> for the purpose of
administering the grant, except that no State may reserve more than $750,000
for this purpose.</text>
</subsection><subsection id="H21662C1D27954365810D12E4D3C9EC56"><enum>(b)</enum><header>Funds to local
educational agencies</header>
<paragraph id="HD364402F97564DB5967CC65EF12DA8F5"><enum>(1)</enum><header>Formula
subgrants</header><text>From the grant funds that are not reserved under
subsection (a), a State shall allocate at least 50 percent to local educational
agencies, including charter schools that are local educational agencies, that
did not receive funds under
<internal-xref idref="H02EC0C091BD741A0AAC2EBFD9B9084F7" legis-path="733.(b)(1)">section 733(b)(1)</internal-xref> from the Secretary,
in accordance with their respective allocations under part A of title I of the
ESEA for fiscal year 2013, except that no such local educational agency shall
receive less than $10,000.</text>
</paragraph><paragraph id="HBAA74F1682504F27AADA315614D93F51"><enum>(2)</enum><header>Additional
subgrants</header><text>The State shall use any funds remaining, after
reserving funds under subsection (a) and allocating funds under paragraph (1),
for subgrants to local educational agencies that did not receive funds under
<internal-xref idref="H02EC0C091BD741A0AAC2EBFD9B9084F7" legis-path="733.(b)(1)">section 733(b)(1)</internal-xref>, including charter
schools that are local educational agencies, to support modernization,
renovation, and repair projects that the State determines, using objective
criteria, are most needed in the State, with priority given to projects in
rural local educational agencies.</text>
</paragraph></subsection><subsection id="H80813D1410D8441C967B92475818A5EC"><enum>(c)</enum><header>Remaining
funds</header><text>If a local educational agency does not apply for an
allocation under subsection (b)(1), applies for less than its full allocation,
or fails to use that allocation in a timely manner, the State may reallocate
any unused portion to other local educational agencies in accordance with
subsection (b).</text>
</subsection></section><section id="H4339CFAD58E340808BBB980416FB593B"><enum>735.</enum><header>State and local
applications</header>
<subsection id="H3912B4D062D54B3992D6E687729123CC"><enum>(a)</enum><header>State
application</header><text>A State that desires to receive a grant under this
part shall submit an application to the Secretary at such time, in such manner,
and containing such information and assurances as the Secretary may require,
which shall include—</text>
<paragraph id="H9EFCF5B13BEA4BC1A07E8E7971F0671E"><enum>(1)</enum><text>an identification
of the State agency or entity that will administer the program under this part;
and</text>
</paragraph><paragraph id="H1D636097F2774DCD82067A91BF6E7C9B"><enum>(2)</enum><text>the State’s
process for determining how the grant funds will be distributed and
administered, including—</text>
<subparagraph id="HA0FCFBBB502742C18338CB1B12B42E6C"><enum>(A)</enum><text>how the State will
determine the criteria and priorities in making subgrants under
<internal-xref idref="HBAA74F1682504F27AADA315614D93F51" legis-path="734.(b)(2)">section 734(b)(2)</internal-xref>;</text>
</subparagraph><subparagraph id="HA4A2A4E65FFC426DBEE78A3B938C409E"><enum>(B)</enum><text>any additional
criteria the State will use in determining which projects it will fund under
that section;</text>
</subparagraph><subparagraph id="HF05F43D7AA584038920AE107919A5FE9"><enum>(C)</enum><text>a description of
how the State will consider—</text>
<clause id="H8216BFB49BA94067AD33C4493D2730BA"><enum>(i)</enum><text>the
needs of local educational agencies for assistance under this part;</text>
</clause><clause id="HA3F889673C4549C9AE289A899BF95C83"><enum>(ii)</enum><text>the
impact of potential projects on job creation in the State;</text>
</clause><clause id="HF97552EBB6C44EBD8C33037F0D48EA82"><enum>(iii)</enum><text>the fiscal
capacity of local educational agencies applying for assistance;</text>
</clause><clause id="HDAD6BD2E0ADD49FAA5AE5B8C60F75F40"><enum>(iv)</enum><text>the
percentage of children in those local educational agencies who are from
low-income families; and</text>
</clause><clause id="HACB8E40B2A2F4F4B96BF80299A634836"><enum>(v)</enum><text>the
potential for leveraging assistance provided by the program under this part
through matching or other financing mechanisms;</text>
</clause></subparagraph><subparagraph id="H1843745ECBF64AC7A98BCDE2BFA269A7"><enum>(D)</enum><text>a description of
how the State will ensure that the local educational agencies receiving
subgrants meet the requirements of this part;</text>
</subparagraph><subparagraph id="H701AEF908F3E42E094A8E384E33023BE"><enum>(E)</enum><text>a description of
how the State will ensure that the State and its local educational agencies
meet the deadlines established in
<internal-xref idref="HD2BF4D9055294E56AED535675D203CBC" legis-path="738.">section 738</internal-xref>;</text>
</subparagraph><subparagraph id="HCC0D925714834841AD0B0774D36F8D54"><enum>(F)</enum><text>a description of
how the State will give priority to the use of green practices that are
certified, verified, or consistent with any applicable provisions of—</text>
<clause id="HEBB0FE773080402EB763D8BC8C4030F0"><enum>(i)</enum><text>the
LEED Green Building Rating System;</text>
</clause><clause id="HA64ECF3452E54BFC939F288B828B8494"><enum>(ii)</enum><text>Energy
Star;</text>
</clause><clause id="H3E75180AE4E7442BACC23B692488C994"><enum>(iii)</enum><text>the CHPS
Criteria;</text>
</clause><clause id="H2A3A761BE7314C25BEDA4C714F0C80FC"><enum>(iv)</enum><text>Green Globes;
or</text>
</clause><clause id="H0FFBF99254294F7C8C73A92283239A22"><enum>(v)</enum><text>an
equivalent program adopted by the State or another jurisdiction with authority
over the local educational agency;</text>
</clause></subparagraph><subparagraph id="H9A725C46C0454ABFAF65D25138D48F6E"><enum>(G)</enum><text>a description of
the steps that the State will take to ensure that local educational agencies
receiving subgrants under this part will adequately maintain any facilities
that are modernized, renovated, or repaired with such subgrant funds;
and</text>
</subparagraph><subparagraph id="HA41816E0948C43179FD8B096E911C0AF"><enum>(H)</enum><text>such additional
information and assurances as the Secretary may require.</text>
</subparagraph></paragraph></subsection><subsection id="H8788B38DC3494B1392B1D4E6FBCDE3AF"><enum>(b)</enum><header>Local
application</header><text>A local educational agency that is eligible under
<internal-xref idref="H02EC0C091BD741A0AAC2EBFD9B9084F7" legis-path="733.(b)(1)">section 733(b)(1)</internal-xref> that desires to
receive a grant under this part shall submit an application to the Secretary at
such time, in such manner, and containing such information and assurances as
the Secretary may require, which shall include—</text>
<paragraph id="H95A497E759D7435489A730C0CF114D77"><enum>(1)</enum><text>a
description of how the local educational agency will meet the deadlines and
requirements of this part;</text>
</paragraph><paragraph id="H14540D9A4D3744298913BAB82EC4F37C"><enum>(2)</enum><text>a
description of the steps that the local educational agency will take to
adequately maintain any facilities that are modernized, renovated, or repaired
with funds under this part; and</text>
</paragraph><paragraph id="H83D849D9203D469793428937A55BD315"><enum>(3)</enum><text>such additional
information and assurances as the Secretary may require.</text>
</paragraph></subsection></section><section id="H29C3143AA9C34317936A07CCC92FE5D1"><enum>736.</enum><header>Use of
funds</header>
<subsection id="H6C0DE4AD25534C418614CA3920A81BDE"><enum>(a)</enum><header>In
general</header><text>Funds awarded to local educational agencies under this
part shall be used only for either or both of the following modernization,
renovation, or repair activities in facilities that are used for elementary or
secondary education or for early learning programs:</text>
<paragraph id="H6D479C382FAF4C39A2E53457E998DC96"><enum>(1)</enum><text>Direct payments
for school modernization, renovation, or repair.</text>
</paragraph><paragraph id="H1A1CA183F95D487A8B84A920A8D639C7"><enum>(2)</enum><text>To pay interest on
bonds or payments for other financing instruments that are newly issued for the
purpose of financing school modernization, renovation, or repair.</text>
</paragraph></subsection><subsection id="H1D205BABE89D4435AB02BE4EDECE919D"><enum>(b)</enum><header>Supplement, not
supplant</header><text>Funds made available under this part shall be used to
supplement, and not supplant, other Federal, State, and local funds that would
otherwise be expended to modernize, renovate, or repair eligible school
facilities.</text>
</subsection><subsection id="H93A1CE4DA9DC41C5A451BA7086F0A3E8"><enum>(c)</enum><header>Prohibition</header><text>Funds
awarded to local educational agencies under this part may not be used
for—</text>
<paragraph id="HD6CB041BF7EC445A89B0164D09A4569C"><enum>(1)</enum><text>new
construction;</text>
</paragraph><paragraph id="H5366724F185A4DADBEC4C8AD9FF346CF"><enum>(2)</enum><text>payment of routine
maintenance costs; or</text>
</paragraph><paragraph id="HAD450262B31B4387B1B7CF8CD5605D55"><enum>(3)</enum><text>modernization,
renovation, or repair of stadiums or other facilities primarily used for
athletic contests or exhibitions or other events for which admission is charged
to the general public.</text>
</paragraph></subsection></section><section id="H33EEC8DE07884EF7901AE76FCDB0C0B6"><enum>737.</enum><header>Private
schools</header>
<subsection id="HAC4642AAEFE24233963AD2383C2CFD1D"><enum>(a)</enum><header>In
general</header><text>Section 9501 of the ESEA (<external-xref legal-doc="usc" parsable-cite="usc/20/7881">20 U.S.C. 7881</external-xref>) shall apply to
this part in the same manner as it applies to activities under that Act, except
that—</text>
<paragraph id="H5D5D865ADBF24246BE346A4A33094B15"><enum>(1)</enum><text>such section 9501
shall not apply with respect to the title to any real property modernized,
renovated, or repaired with assistance provided under this part;</text>
</paragraph><paragraph id="H8A77DD80AC8B486F9D5E512E6364D0DC"><enum>(2)</enum><text>educational
services or other benefits funded under this part for private schools shall be
provided only to private, nonprofit elementary or secondary schools with a rate
of child poverty of at least 40 percent and may include only—</text>
<subparagraph id="H3F30BDCBCC6C4B909C62FA96701EC171"><enum>(A)</enum><text>modifications of
school facilities necessary to meet the standards applicable to public schools
under the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.);</text>
</subparagraph><subparagraph id="H7207CD1CD8004475991D279918079F4E"><enum>(B)</enum><text>modifications of
school facilities necessary to meet the standards applicable to public schools
under section 504 of the Rehabilitation Act of 1973 (<external-xref legal-doc="usc" parsable-cite="usc/29/794">29 U.S.C. 794</external-xref>); and</text>
</subparagraph><subparagraph id="H5657F0DFF72843FFA176B81F365DBB32"><enum>(C)</enum><text>asbestos or
polychlorinated biphenyls abatement or removal from school facilities;
and</text>
</subparagraph></paragraph><paragraph id="HDC33584DA7354F62A412F367C56AAEE7"><enum>(3)</enum><text>expenditures for
services provided using funds made available under
<internal-xref idref="H29C3143AA9C34317936A07CCC92FE5D1" legis-path="736.">section 736</internal-xref> shall be considered equal for
purposes of section 9501(a)(4) of the ESEA if the per-pupil expenditures for
services described in paragraph (2) for students enrolled in private, nonprofit
elementary and secondary schools that have child-poverty rates of at least 40
percent are consistent with the per-pupil expenditures under this part for
children enrolled in the public schools of the local educational agency
receiving funds under this part.</text>
</paragraph></subsection><subsection id="HE777C8BC68F7457BAAAE148415A82225"><enum>(b)</enum><header>Remaining
funds</header><text>If the expenditure for services described in subsection
(a)(2) is less than the amount calculated under subsection (a)(3) because of
insufficient need for those services, the remainder shall be available to the
local educational agency for modernization, renovation, or repair of its school
facilities.</text>
</subsection><subsection id="H47D606DD6A4048D48F231E66EE175878"><enum>(c)</enum><header>Application</header><text>If
any provision of this section, or the application thereof, to any person or
circumstance is judicially determined to be invalid, the remainder of the
section and the application to other persons or circumstances shall not be
affected thereby.</text>
</subsection></section><section id="HD2BF4D9055294E56AED535675D203CBC"><enum>738.</enum><header>Additional
provisions</header>
<subsection id="HA39701DF6F414598A4536BD25B05DB98"><enum>(a)</enum><header>24-Month period
of availability</header><text>Funds appropriated under
<internal-xref idref="H8B0B6330678144328FBA02FF430B0522" legis-path="732.">section 732</internal-xref> shall be available for obligation
by local educational agencies receiving grants from the Secretary under
<internal-xref idref="H02EC0C091BD741A0AAC2EBFD9B9084F7" legis-path="733.(b)(1)">section 733(b)(1)</internal-xref>, by States reserving
funds under
<internal-xref idref="HC73DC7401AEF4855861C450350A2CB98" legis-path="734.(a)">section 734(a)</internal-xref>, and by local educational
agencies receiving subgrants under
<internal-xref idref="HD364402F97564DB5967CC65EF12DA8F5" legis-path="734.(b)(1)">section 734(b)(1)</internal-xref> only during the
period that ends 24 months after the date of enactment of this Act.</text>
</subsection><subsection id="HF31BC669844A4CC992DE4B62BC6B1D4E"><enum>(b)</enum><header>36-Month period
of availability</header><text>Funds appropriated under
<internal-xref idref="H8B0B6330678144328FBA02FF430B0522" legis-path="732.">section 732</internal-xref> shall be available for obligation
by local educational agencies receiving subgrants under
<internal-xref idref="HBAA74F1682504F27AADA315614D93F51" legis-path="734.(b)(2)">section 734(b)(2)</internal-xref> only during the
period that ends 36 months after the date of enactment of this Act.</text>
</subsection><subsection id="HAF37FCEE845E41E385EE661E7C1150F0"><enum>(c)</enum><header>Applicability of
GEPA</header><text>Section 439 of the General Education Provisions Act (20
U.S.C. 1232b) shall apply to funds available under this part.</text>
</subsection><subsection id="H1D701BF7B98C47A0908C12761B9E6261"><enum>(d)</enum><header>Limitation</header><text>For
purposes of
<internal-xref idref="H02EC0C091BD741A0AAC2EBFD9B9084F7" legis-path="733.(b)(1)">section 733(b)(1)</internal-xref>, Hawaii, the District
of Columbia, and the Commonwealth of Puerto Rico are not local educational
agencies.</text>
</subsection></section></part><part id="H30906F15B4414648BBDB1CC22F31B2B2"><enum>III</enum><header>Community
College modernization</header>
<section id="HDDD8504B9B0344DF99C7777876AA8CC1"><enum>739.</enum><header>Federal
assistance for community college modernization</header>
<subsection id="H96A80E64C26C469895513BFB0961CACB"><enum>(a)</enum><header>In
general</header>
<paragraph id="H79E924BE23D840ABB0FE25F00C820217"><enum>(1)</enum><header>Grant
program</header><text>From the amounts made available under
<internal-xref idref="H1FB72978775D4BDBBE8D30C5B967FB19" legis-path="739.(h)">subsection (h)</internal-xref>, the Secretary shall award
grants to States to modernize, renovate, or repair existing facilities at
community colleges.</text>
</paragraph><paragraph id="H2901E431F5824E02B5512FCAE8697197"><enum>(2)</enum><header>Allocation</header>
<subparagraph id="H7EBC9F3748EF41D5B7CE0213A496CAAC"><enum>(A)</enum><header>Reservations</header><text>Of
the amount made available to carry out this section, the Secretary shall
reserve—</text>
<clause id="HA42BA4192FCB4EAA94DC04E0B75A2DBC"><enum>(i)</enum><text>up
to 0.25 percent for grants to institutions that are eligible under section 316
of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1059c">20 U.S.C. 1059c</external-xref>) to provide for
modernization, renovation, and repair activities described in this section;
and</text>
</clause><clause id="HD0C7247402F84431A0591072ADCABE28"><enum>(ii)</enum><text>up
to 0.25 percent for grants to the outlying areas to provide for modernization,
renovation, and repair activities described in this section.</text>
</clause></subparagraph><subparagraph id="HC9D46C8B2B314D7F8BA7E85724628ED8"><enum>(B)</enum><header>Allocation</header><text>After
reserving funds under
<internal-xref idref="H7EBC9F3748EF41D5B7CE0213A496CAAC" legis-path="739.(a)(2)(A)">subparagraph (A)</internal-xref>, the Secretary
shall allocate to each State that has an application approved by the Secretary
an amount that bears the same relation to any remaining funds as the total
number of students in such State who are enrolled in institutions described in
section 740(b)(1)(A) plus the number of students who are estimated to be
enrolled in and pursuing a degree or certificate that is not a bachelor’s,
master’s, professional, or other advanced degree in institutions described in
section 740(b)(1)(B), based on the proportion of degrees or certificates
awarded by such institutions that are not bachelor’s, master’s, professional,
or other advanced degrees, as reported to the Integrated Postsecondary Data
System bears to the estimated total number of such students in all States,
except that no State shall receive less than $2,500,000.</text>
</subparagraph><subparagraph id="H22BEF58B710A41879F5FD899451D11A0"><enum>(C)</enum><header>Reallocation</header><text>Amounts
not allocated under this section to a State because the State either did not
submit an application under subsection (b), the State submitted an application
that the Secretary determined did not meet the requirements of such subsection,
or the State cannot demonstrate to the Secretary a sufficient demand for
projects to warrant the full allocation of the funds, shall be proportionately
reallocated under this paragraph to the other States that have a demonstrated
need for, and are receiving, allocations under this section.</text>
</subparagraph><subparagraph id="H42C901032DBD472F8D6830C39AD2E4E6"><enum>(D)</enum><header>State
administration</header><text>A State that receives a grant under this section
may use not more than one percent of that grant to administer it, except that
no State may use more than $750,000 of its grant for this purpose.</text>
</subparagraph></paragraph><paragraph id="HD6B5DBFA13F942E39825B86591359E96"><enum>(3)</enum><header>Supplement, not
supplant</header><text>Funds made available under this section shall be used to
supplement, and not supplant, other Federal, State, and local funds that would
otherwise be expended to modernize, renovate, or repair existing community
college facilities.</text>
</paragraph></subsection><subsection id="H1BDB891F91FD4686B3721CC40D15C28A"><enum>(b)</enum><header>Application</header><text>A
State that desires to receive a grant under this section shall submit an
application to the Secretary at such time, in such manner, and containing such
information and assurances as the Secretary may require. Such application shall
include a description of—</text>
<paragraph id="HFA947FCF37354F6A990CDE506D993B05"><enum>(1)</enum><text>how the funds
provided under this section will improve instruction at community colleges in
the State and will improve the ability of those colleges to educate and train
students to meet the workforce needs of employers in the State;</text>
</paragraph><paragraph id="H70158FC22EE24762818A68BB1469EE43"><enum>(2)</enum><text>the projected
start of each project and the estimated number of persons to be employed in the
project; and</text>
</paragraph><paragraph id="H98B8C7C2D9B34AFAA72DFB1D83D9DE07"><enum>(3)</enum><text>the cost of each
project and the total amount of funds requested for each project and for all
projects.</text>
</paragraph></subsection><subsection id="H7145B0349EFC41398EFD576AF22AB2DA"><enum>(c)</enum><header>Prohibited uses
of funds</header>
<paragraph id="HC2E09387680F403B9756641D5C442947"><enum>(1)</enum><header>In
general</header><text>No funds awarded under this section may be used
for—</text>
<subparagraph id="H6E58D18357AA4618BAEB5DA27E4FF5F1"><enum>(A)</enum><text>payment of routine
maintenance costs;</text>
</subparagraph><subparagraph id="HB0947B99DA0349F18AD7F06EF6E6BC9C"><enum>(B)</enum><text>construction,
modernization, renovation, or repair of stadiums or other facilities primarily
used for athletic contests or exhibitions or other events for which admission
is charged to the general public; or</text>
</subparagraph><subparagraph id="HADBA13DCE8264C92915AD2A87881C329"><enum>(C)</enum><text>construction,
modernization, renovation, or repair of facilities—</text>
<clause id="H9982B550791C4A9D94C853861DF2B5C2"><enum>(i)</enum><text>used
for sectarian instruction, religious worship, or a school or department of
divinity; or</text>
</clause><clause id="H1B2FDB7743484F22AC5355D89624F3AB"><enum>(ii)</enum><text>in
which a substantial portion of the functions of the facilities are subsumed in
a religious mission.</text>
</clause></subparagraph></paragraph><paragraph id="H37452D4222FC458CB3E4400D7E8BC7B7"><enum>(2)</enum><header>Four-year
institutions</header><text>No funds awarded to a four-year public institution
of higher education under this section may be used for any facility, service,
or program of the institution that is not available to students who are
pursuing a degree or certificate that is not a bachelor’s, master’s,
professional, or other advanced degree.</text>
</paragraph></subsection><subsection id="HAA76B32C6A2B484BA146E58E5A808B9D"><enum>(d)</enum><header>Green
projects</header><text>In providing assistance to community college projects
under this section, the State shall consider the extent to which a community
college’s project involves activities that are certified, verified, or
consistent with the applicable provisions of—</text>
<paragraph id="H6E60DF5EBDC94AACB011374E4E78B929"><enum>(1)</enum><text>the LEED Green
Building Rating System;</text>
</paragraph><paragraph id="H531A59C03D324DAC9BB6C8F8D1B6C92F"><enum>(2)</enum><text>Energy
Star;</text>
</paragraph><paragraph id="H0AD194A0CC204A20B46AA29DE02059EB"><enum>(3)</enum><text>the CHPS Criteria,
as applicable;</text>
</paragraph><paragraph id="HC3E64B4E31804A6A9D9E23C4B9264A28"><enum>(4)</enum><text>Green Globes;
or</text>
</paragraph><paragraph id="H11441E427370483799F6AC46CBF9CA72"><enum>(5)</enum><text>an equivalent
program adopted by the State or the State higher education agency that includes
a verifiable method to demonstrate compliance with such program.</text>
</paragraph></subsection><subsection id="HE2883B632B3C4F1CA2D4E5712D33932E"><enum>(e)</enum><header>Application of
GEPA</header><text>Section 439 of the General Education Provisions Act (20
U.S.C. 1232b) shall apply to funds available under this section.</text>
</subsection><subsection id="H6E25ADED70DC432D8D555B304D948EB3"><enum>(f)</enum><header>Reports by the
states</header><text>Each State that receives a grant under this section shall,
not later than September 30, 2013, and annually thereafter for each fiscal year
in which the State expends funds received under this section, submit to the
Secretary a report that includes—</text>
<paragraph id="HCD172E8FE4C24884AC292E2D62A3F0E5"><enum>(1)</enum><text>a
description of the projects for which the grant was, or will be, used;</text>
</paragraph><paragraph id="H0777892FA540426E9D15BC413A63EB85"><enum>(2)</enum><text>a
description of the amount and nature of the assistance provided to each
community college under this section; and</text>
</paragraph><paragraph id="H9E7D8D9C5F5E4952BD23F994521F9B6D"><enum>(3)</enum><text>the number of jobs
created by the projects funded under this section.</text>
</paragraph></subsection><subsection id="HCD2A3908807646B8903BB3D1CF703965"><enum>(g)</enum><header>Report by the
secretary</header><text>The Secretary shall submit to the authorizing
committees (as defined in section 103 of the Higher Education Act of 1965; 20
U.S.C. 1003) an annual report on the grants made under this section, including
the information described in subsection (f).</text>
</subsection><subsection id="H1FB72978775D4BDBBE8D30C5B967FB19"><enum>(h)</enum><header>Availability of
funds</header>
<paragraph id="H080770E9424F4031994DADFCE352C32A"><enum>(1)</enum><text>There are
authorized to be appropriated, and there are appropriated, to carry out this
section (in addition to any other amounts appropriated to carry out this
section and out of any money in the Treasury not otherwise appropriated),
$5,000,000,000 for fiscal year 2013.</text>
</paragraph><paragraph id="H45932D54D5854A3FAD373738563F22BE"><enum>(2)</enum><text>Funds appropriated
under this subsection shall be available for obligation by community colleges
only during the period that ends 36 months after the date of enactment of this
Act.</text>
</paragraph></subsection></section></part><part id="H1A7D04FC92014275B05247D9C6D3AA62"><enum>IV</enum><header>General
provisions</header>
<section id="HE6307B83C64140D7A00C7BCF667EF2BF"><enum>740.</enum><header>Definitions</header>
<subsection id="HD0259C9904AE4F5FA1F5583A7667EA82"><enum>(a)</enum><header>ESEA
terms</header><text>Except as otherwise provided, in this subtitle, the terms
<quote>local educational agency</quote>, <quote>Secretary</quote>, and
<quote>State educational agency</quote> have the meanings given those terms in
section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C.
7801).</text>
</subsection><subsection id="HA8A3AC17B3C2427ABB50478E12999E7C"><enum>(b)</enum><header>Additional
definitions</header><text>The following definitions apply to this title:</text>
<paragraph id="HD661340057D54FE68021F643881FEE81"><enum>(1)</enum><header>Community
college</header><text>The term <quote>community college</quote> means—</text>
<subparagraph id="H05CE96B0483C421E8FB5FC4901B712B8"><enum>(A)</enum><text>a junior or
community college, as that term is defined in section 312(f) of the Higher
Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1058">20 U.S.C. 1058(f)</external-xref>); or</text>
</subparagraph><subparagraph id="H6C166F5E67CF49DC8FA4E93BFF86792D"><enum>(B)</enum><text>an institution of
higher education (as defined in section 101 of the Higher Education Act of 1965
(<external-xref legal-doc="usc" parsable-cite="usc/20/1001">20 U.S.C. 1001</external-xref>)) that awards a significant number of degrees and certificates,
as determined by the Secretary, that are not—</text>
<clause id="H510D70C8596A436AA6C6EE490F8D226E"><enum>(i)</enum><text>bachelor’s degrees
(or an equivalent); or</text>
</clause><clause id="H607C75EC013B433E8A787D5AF283063B"><enum>(ii)</enum><text>master’s,
professional, or other advanced degrees.</text>
</clause></subparagraph></paragraph><paragraph id="HF408B632A9EE4599B04A4D709D83D568"><enum>(2)</enum><header>CHPS
criteria</header><text>The term <quote>CHPS Criteria</quote> means the green
building rating program developed by the Collaborative for High Performance
Schools.</text>
</paragraph><paragraph id="HFF3B2B4673454EA3990344881550A3E3"><enum>(3)</enum><header>Energy
star</header><text>The term <quote>Energy Star</quote> means the Energy Star
program of the United States Department of Energy and the United States
Environmental Protection Agency.</text>
</paragraph><paragraph id="H7969884E762146D8823E575E977516D8"><enum>(4)</enum><header>Green
globes</header><text>The term <quote>Green Globes</quote> means the Green
Building Initiative environmental design and rating system referred to as Green
Globes.</text>
</paragraph><paragraph id="HF73F1E35632147FB93F70AD4AD0F5CF9"><enum>(5)</enum><header>Leed green
building rating system</header><text>The term <quote>LEED Green Building Rating
System</quote> means the United States Green Building Council Leadership in
Energy and Environmental Design green building rating standard referred to as
the LEED Green Building Rating System.</text>
</paragraph><paragraph id="HF274046EA95B45B6B76131F7BFF0B12E"><enum>(6)</enum><header>Modernization,
renovation, and repair</header><text>The term <quote>modernization, renovation,
and repair</quote> means—</text>
<subparagraph id="HA15A7060D1CC4404AEC95D5948879F89"><enum>(A)</enum><text>comprehensive
assessments of facilities, including indoor air-quality assessments, to
identify—</text>
<clause id="H4E69B6D49BDA48F69E72A5D94F1817AA"><enum>(i)</enum><text>facility
conditions or deficiencies that could adversely affect student and staff
health, safety, performance, or productivity or energy, water, or materials
efficiency; and</text>
</clause><clause id="H1FF32E14DDE945058F366B1727F9E4F7"><enum>(ii)</enum><text>needed facility
improvements;</text>
</clause></subparagraph><subparagraph id="H937D86E961F84A16B5F2FEE270B621D0"><enum>(B)</enum><text>repairing,
replacing, or installing roofs (which may be extensive, intensive, or
semi-intensive <quote>green</quote> roofs); electrical wiring; water supply and
plumbing systems, sewage systems, storm water runoff systems, lighting systems
(or components of such systems); or building envelope, windows, ceilings,
flooring, or doors, including security doors;</text>
</subparagraph><subparagraph id="HE7DF09A781544A63A4CEE502F746DAB8"><enum>(C)</enum><text>repairing,
replacing, or installing heating, ventilation, or air conditioning systems, or
components of those systems (including insulation) to improve energy
efficiency;</text>
</subparagraph><subparagraph id="H25A74A7948D4403BA9536B45BD86A6F7"><enum>(D)</enum><text>compliance with
fire, health, seismic, and safety codes, including professional installation of
fire and life safety alarms, and modernizations, renovations, and repairs that
ensure that facilities are prepared for such emergencies as acts of terrorism,
campus violence, and natural disasters, such as improving building
infrastructure to accommodate security measures and installing or upgrading
technology to ensure that a school or incident is able to respond to such
emergencies;</text>
</subparagraph><subparagraph id="H2F72849D620242E69B5577299ACA0A61"><enum>(E)</enum><text>making
modifications necessary to make educational facilities accessible in compliance
with the Americans with Disabilities Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/42/12101">42 U.S.C. 12101 et seq.</external-xref>) and
section 504 of the Rehabilitation Act of 1973 (<external-xref legal-doc="usc" parsable-cite="usc/29/794">29 U.S.C. 794</external-xref>), except that such
modifications shall not be the primary use of a grant or subgrant;</text>
</subparagraph><subparagraph id="HD56E834C80564E7BB63D177202B60123"><enum>(F)</enum><text>abatement,
removal, or interim controls of asbestos, polychlorinated biphenyls, mold,
mildew, or lead-based hazards, including lead-based paint hazards;</text>
</subparagraph><subparagraph id="H7269FA55DA3F46F38CA156C3B5A1662A"><enum>(G)</enum><text>retrofitting
necessary to increase energy efficiency;</text>
</subparagraph><subparagraph id="HD595D0F8499F444D953C91933776E07B"><enum>(H)</enum><text>measures, such as
selection and substitution of products and materials, and implementation of
improved maintenance and operational procedures, such as <quote>green
cleaning</quote> programs, to reduce or eliminate potential student or staff
exposure to—</text>
<clause id="H091224C7D19642CD944899F2A7347074"><enum>(i)</enum><text>volatile organic
compounds;</text>
</clause><clause id="HB289335EFFC14A3EB4A2D6DB59454BEF"><enum>(ii)</enum><text>particles such as
dust and pollens; or</text>
</clause><clause id="H701949E134574587AEF967B9A7035D46"><enum>(iii)</enum><text>combustion
gases;</text>
</clause></subparagraph><subparagraph id="HA5C262DD775F49D294ED3DE39FC7ABF7"><enum>(I)</enum><text>modernization,
renovation, or repair necessary to reduce the consumption of coal, electricity,
land, natural gas, oil, or water;</text>
</subparagraph><subparagraph id="HAC765AE2518F45FDAB84B28E81B555D5"><enum>(J)</enum><text>installation or
upgrading of educational technology infrastructure;</text>
</subparagraph><subparagraph id="HB9861428DCAE4B558FD6233983AAC72E"><enum>(K)</enum><text>installation or
upgrading of renewable energy generation and heating systems, including solar,
photovoltaic, wind, biomass (including wood pellet and woody biomass),
waste-to-energy, solar-thermal, and geothermal systems, and energy
audits;</text>
</subparagraph><subparagraph id="H0F6D966758E348C28E7CF9CAE6AC62D8"><enum>(L)</enum><text>modernization,
renovation, or repair activities related to energy efficiency and renewable
energy, and improvements to building infrastructures to accommodate bicycle and
pedestrian access;</text>
</subparagraph><subparagraph id="H1DB345F7D02149419DB118076FC6CE7D"><enum>(M)</enum><text>ground
improvements, storm water management, landscaping, and environmental clean-up
when necessary;</text>
</subparagraph><subparagraph id="H4BD56179DF104A719BDB005B815FBDE3"><enum>(N)</enum><text>other
modernization, renovation, or repair to—</text>
<clause id="HDFF758F239DA4B309084621E98B4C7AA"><enum>(i)</enum><text>improve teachers’
ability to teach and students’ ability to learn;</text>
</clause><clause id="H59948F9C53A241489A9AB5AF38C80AE1"><enum>(ii)</enum><text>ensure the health
and safety of students and staff; or</text>
</clause><clause id="HE77040F1BB52461EB21B9495837A2428"><enum>(iii)</enum><text>improve
classroom, laboratory, and vocational facilities in order to enhance the
quality of science, technology, engineering, and mathematics instruction;
and</text>
</clause></subparagraph><subparagraph id="H82F402E3793A4A99A85D7C58F3240F8D"><enum>(O)</enum><text>required
environmental remediation related to facilities modernization, renovation, or
repair activities described in subparagraphs (A) through (N).</text>
</subparagraph></paragraph><paragraph id="H570755B44A974955B8488BADB73BF14C"><enum>(7)</enum><header>Outlying
area</header><text>The term <quote>outlying area</quote> means the U.S. Virgin
Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana
Islands, and the Republic of Palau.</text>
</paragraph><paragraph id="HE204F5EA31054F189F2BBBEE0187C8A4"><enum>(8)</enum><header>State</header><text>The
term <quote>State</quote> means each of the 50 States of the United States, the
Commonwealth of Puerto Rico, and the District of Columbia.</text>
</paragraph></subsection></section><section id="H4D7F462E65FE4A1B9CBE5FC3D4DD2A1F"><enum>741.</enum><header>Buy
American</header><text display-inline="no-display-inline">Section 1605 of
division A of the American Recovery and Reinvestment Act of 2009 (Public Law
111–5) applies to funds made available under this title.</text>
</section></part></subtitle><subtitle commented="no" id="H345F3B0069334A73BE81111F514686CD"><enum>C</enum><header>Transportation
Infrastructure Investments</header>
<part id="H211B2E939D2C45088A777E4CE1FA1BB4"><enum>I</enum><header>Immediate
transportation infrastructure investments</header>
<section commented="no" id="H4944E1BE67914AC98576D04FC92017B4"><enum>751.</enum><header>Immediate
transportation infrastructure investments</header>
<subsection commented="no" id="HB936528B7E464090B63132BAA9CA80A5"><enum>(a)</enum><header>Grants-In-Aid
for airports</header>
<paragraph commented="no" id="H00C690BE4324433EB523EE2DD0DC216D"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $6,000,000,000 to carry out airport improvement under subchapter
I of chapter 471 and subchapter I of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/475">chapter 475</external-xref> of title 49, United States
Code.</text>
</paragraph><paragraph commented="no" id="H528E4C20288E4833ADD2B0F7BD72B71D"><enum>(2)</enum><header>Federal share;
limitation on obligations</header><text>The Federal share payable of the costs
for which a grant is made under this subsection, shall be 100 percent. The
amount made available under this subsection shall not be subject to any
limitation on obligations for the Grants-In-Aid for Airports program set forth
in any Act or in title 49, United States Code.</text>
</paragraph><paragraph commented="no" id="H98E9448640D64E0BAE6E7D504EA93BE3"><enum>(3)</enum><header>Distribution of
funds</header><text>Funds provided to the Secretary under this subsection shall
not be subject to apportionment formulas, special apportionment categories, or
minimum percentages under chapter 471 of such title.</text>
</paragraph><paragraph commented="no" id="H618BAF395882476B9A85193775EB1B39"><enum>(4)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="H29AB9B7A3D424D378B81F80AE71B131B"><enum>(5)</enum><header>Administrative
expenses</header><text>Of the funds made available under this subsection, 0.3
percent shall be available to the Secretary for administrative expenses, shall
remain available for obligation until September 30, 2015, and may be used in
conjunction with funds otherwise provided for the administration of the
Grants-In-Aid for Airports program.</text>
</paragraph></subsection><subsection commented="no" id="H0F06F835F5F24932A88FA7CDE460B943"><enum>(b)</enum><header>Next generation
air traffic control advancements</header>
<paragraph commented="no" id="H3B1953A116754503A4EB646B985445F9"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $3,000,000,000 for necessary Federal Aviation Administration
capital, research, and operating costs to carry out Next Generation air traffic
control system advancements.</text>
</paragraph><paragraph commented="no" id="H9F919C9A8F5D4E03ADE67FFC0AFCB58C"><enum>(2)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this
Act.</text>
</paragraph></subsection><subsection commented="no" id="HE4A01D10DBC84632B9CAAE459CD238F6"><enum>(c)</enum><header>Highway
infrastructure investment</header>
<paragraph commented="no" id="HE4EA54D12BB648F1B28FC07ECB9FB171"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $81,000,000,000 for restoration, repair, construction and other
activities eligible under <external-xref legal-doc="usc" parsable-cite="usc/23/133">section 133(b)</external-xref> of title 23, United States Code, and
for passenger and freight rail transportation and port infrastructure projects
eligible for assistance under <external-xref legal-doc="usc" parsable-cite="usc/23/601">section 601(a)(8)</external-xref> of title 23.</text>
</paragraph><paragraph commented="no" id="H93A852E91D1544BA8C0C00CC11E46931"><enum>(2)</enum><header>Federal share;
limitation on obligations</header><text>The Federal share payable on account of
any project or activity carried out with funds made available under this
subsection shall be, at the option of the recipient, up to 100 percent of the
total cost thereof. The amount made available under this subsection shall not
be subject to any limitation on obligations for Federal-aid highways and
highway safety construction programs set forth in any Act or in title 23,
United States Code.</text>
</paragraph><paragraph commented="no" id="HCED6DE50D3A145C09A250F2852BC5D89"><enum>(3)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="HE830F77F6EEA49E1B7D18780B11CF174"><enum>(4)</enum><header>Distribution of
funds</header><text>Of the funds provided in this subsection, after making the
set-asides required by paragraphs (9), (10), (11), (12), and (15), 50 percent
of the funds shall be apportioned to States using the formula set forth in
<external-xref legal-doc="usc" parsable-cite="usc/23/104">section 104(b)(3)</external-xref> of title 23, United States Code, and the remaining funds
shall be apportioned to States in the same ratio as the obligation limitation
for fiscal year 2010 was distributed among the States in accordance with the
formula specified in section 120(a)(6) of division A of Public Law
111–117.</text>
</paragraph><paragraph commented="no" id="H54C810321B964788AA56FF82E3BC2357"><enum>(5)</enum><header>Apportionment</header><text>Apportionments
under paragraph (4) shall be made not later than 30 days after the date of the
enactment of this Act.</text>
</paragraph><paragraph commented="no" id="H1726390229E54CE3937568A0AECBF348"><enum>(6)</enum><header>Redistribution</header>
<subparagraph commented="no" id="HF25BE42CE895484BBFDE27AAF89A830B"><enum>(A)</enum><text>The Secretary
shall, 180 days following the date of apportionment, withdraw from each State
an amount equal to 50 percent of the funds apportioned under paragraph (4) to
that State (excluding funds suballocated within the State) less the amount of
funding obligated (excluding funds suballocated within the State), and the
Secretary shall redistribute such amounts to other States that have had no
funds withdrawn under this subparagraph in the manner described in section
120(c) of division A of <external-xref legal-doc="public-law" parsable-cite="pl/111/117">Public Law 111–117</external-xref>.</text>
</subparagraph><subparagraph commented="no" id="H55966DB98F414CE6B717EBF2CA1BCE7C"><enum>(B)</enum><text>One year following
the date of apportionment, the Secretary shall withdraw from each recipient of
funds apportioned under paragraph (4) any unobligated funds, and the Secretary
shall redistribute such amounts to States that have had no funds withdrawn
under this paragraph (excluding funds suballocated within the State) in the
manner described in section 120(c) of division A of <external-xref legal-doc="public-law" parsable-cite="pl/111/117">Public Law 111–117</external-xref>.</text>
</subparagraph><subparagraph commented="no" id="H93217E45F89A49EC8B3CFCEBA24C125D"><enum>(C)</enum><text>At the request of
a State, the Secretary may provide an extension of the one-year period only to
the extent that the Secretary determines that the State has encountered extreme
conditions that create an unworkable bidding environment or other extenuating
circumstances. Before granting an extension, the Secretary shall notify in
writing the Committee on Transportation and Infrastructure and the Committee on
Environment and Public Works, providing a thorough justification for the
extension.</text>
</subparagraph></paragraph><paragraph commented="no" id="HC4A8C0167CB641ECB6E69B5E873C0A7B"><enum>(7)</enum><header>Puerto Rico and
territorial highway programs</header><text display-inline="yes-display-inline">Of the funds provided under this
subsection, $315,000,000 shall be set aside for the Puerto Rico highway program
and $135,000,000 shall be for the territorial highway program authorized under
<external-xref legal-doc="usc" parsable-cite="usc/23/165">section 165</external-xref> of title 23, United States Code.</text>
</paragraph><paragraph commented="no" id="H20B15F8D40674143A2D45090F266AE81"><enum>(8)</enum><header>Federal lands
and Indian reservations</header><text>Of the funds provided under this
subsection, $1,650,000,000 shall be set aside for investments in transportation
at Indian reservations and Federal lands in accordance with the
following:.</text>
<subparagraph commented="no" id="H30CD796DA0C8475E9DF4ED3B046D5D31"><enum>(A)</enum><text>Of the funds set
aside by this paragraph, $930,000,000 shall be for the Indian Reservation Roads
program, $510,000,000 shall be for the Park Roads and Parkways program,
$180,000,000 shall be for the Forest Highway Program, and $30,000,000 shall be
for the Refuge Roads program.</text>
</subparagraph><subparagraph commented="no" id="H6EDC4C9CFBBF45499D453C4845B104D0"><enum>(B)</enum><text>For investments at
Indian reservations and Federal lands, priority shall be given to capital
investments, and to projects and activities that can be completed within 2
years of enactment of this Act.</text>
</subparagraph><subparagraph commented="no" id="HFC3C717890DB4843B27EC8BBFE145072"><enum>(C)</enum><text>One year following
the enactment of this Act, to ensure the prompt use of the funding provided for
investments at Indian reservations and Federal lands, the Secretary shall have
the authority to redistribute unobligated funds within the respective program
for which the funds were appropriated.</text>
</subparagraph><subparagraph commented="no" id="H84361EA0F0A64AF6B711CC06DC9DF13A"><enum>(D)</enum><text>Up to four percent
of the funding provided for Indian Reservation Roads may be used by the
Secretary of the Interior for program management and oversight and
project-related administrative expenses.</text>
</subparagraph></paragraph><paragraph commented="no" id="H51D5A99D787B415995C73DFF38CD4CBA"><enum>(9)</enum><header>Job
training</header><text>Of the funds provided under this subsection,
$150,000,000 shall be set aside for the development and administration of
transportation training programs under section 140(b) title 23, United States
Code.</text>
<subparagraph commented="no" id="H1DB64754365E4600809E64BE4BFF8882"><enum>(A)</enum><text>Funds set aside
under this subsection shall be competitively awarded and used for the purpose
of providing training, apprenticeship (including Registered Apprenticeship),
skill development, and skill improvement programs, as well as summer
transportation institutes and may be transferred to, or administered in
partnership with, the Secretary of Labor and shall demonstrate to the Secretary
of Transportation program outcomes, including—</text>
<clause commented="no" id="H21D8012D6EB1449C944B3303433BDA82"><enum>(i)</enum><text>impact on areas
with transportation workforce shortages;</text>
</clause><clause commented="no" id="H29D3086E57F443A784C17EE15F207563"><enum>(ii)</enum><text>diversity of
training participants;</text>
</clause><clause commented="no" id="HC4BED6E662074E7C8F4DAB9EC7C11160"><enum>(iii)</enum><text>number of
participants obtaining certifications or credentials required for specific
types of employment;</text>
</clause><clause commented="no" id="HEC95ECD9CF0A4D18B4ED48BD7E95BE7E"><enum>(iv)</enum><text>employment
outcome metrics, such as job placement and job retention rates, established in
consultation with the Secretary of Labor and consistent with metrics used by
programs under the Workforce Investment Act;</text>
</clause><clause commented="no" id="H254DB32E735946A7B5D04FF7F3C9A8CE"><enum>(v)</enum><text>to the extent
practical, evidence that the program did not preclude workers that participate
in training or apprenticeship activities under the program from being referred
to, or hired on, projects funded under this chapter; and</text>
</clause><clause commented="no" id="H7D721B6800714BC49952B7358DBAD9A2"><enum>(vi)</enum><text>identification of
areas of collaboration with the Department of Labor programs, including
co-enrollment.</text>
</clause></subparagraph><subparagraph commented="no" id="H94743AA4FA1A4BD1B2D89EFA158762F0"><enum>(B)</enum><text>To be eligible to
receive a competitively awarded grant under this subsection, a State must
certify that at least 0.1 percent of the amounts apportioned under the Surface
Transportation Program and Bridge Program will be obligated in the first fiscal
year after enactment of this act for job training activities consistent with
<external-xref legal-doc="usc" parsable-cite="usc/23/140">section 140(b)</external-xref> of title 23, United States Code.</text>
</subparagraph></paragraph><paragraph commented="no" id="H149B4B8619F94254B43D1A0F828B6E27"><enum>(10)</enum><header>Disadvantaged
business enterprises</header><text>Of the funds provided under this subsection,
$30,000,000 shall be set aside for training programs and assistance programs
under <external-xref legal-doc="usc" parsable-cite="usc/23/140">section 140(c)</external-xref> of title 23, United States Code. Funds set aside under
this paragraph should be allocated to businesses that have proven success in
adding staff while effectively completing projects.</text>
</paragraph><paragraph commented="no" id="H30D93050B2CF4690AFCD5EC4F39B4EB6"><enum>(11)</enum><header>State planning
and oversight expenses</header><text>Of amounts apportioned under paragraph (4)
of this subsection, a State may use up to 0.5 percent for activities related to
projects funded under this subsection, including activities eligible under
sections <external-xref legal-doc="usc" parsable-cite="usc/23/134">134</external-xref> and <external-xref legal-doc="usc" parsable-cite="usc/23/135">135</external-xref> of title 23, United States Code, State administration of
subgrants, and State oversight of subrecipients.</text>
</paragraph><paragraph commented="no" id="HD8CA47A11F734AC79277DB8FD9368DF2"><enum>(12)</enum><header>Conditions</header>
<subparagraph commented="no" id="HE0F66F2878F64A20B55FEB40EBE2172A"><enum>(A)</enum><text>Funds made
available under this subsection shall be administered as if apportioned under
<external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/23/1">chapter 1</external-xref> of title 23, United States Code, except for funds made available for
investments in transportation at Indian reservations and Federal lands, and for
the territorial highway program, which shall be administered in accordance with
<external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/23/2">chapter 2</external-xref> of title 23, United States Code, and except for funds made available
for disadvantaged business enterprises bonding assistance, which shall be
administered in accordance with <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/3">chapter 3</external-xref> of title 49, United States
Code.</text>
</subparagraph><subparagraph commented="no" id="H9512BC94C0B54115872DFF3307D192BD"><enum>(B)</enum><text>Funds made
available under this subsection shall not be obligated for the purposes
authorized under <external-xref legal-doc="usc" parsable-cite="usc/23/115">section 115(b)</external-xref> of title 23, United States Code.</text>
</subparagraph><subparagraph commented="no" id="H4AAB8FC14BE848CFACA919D7AFD64CC7"><enum>(C)</enum><text>Funding provided
under this subsection shall be in addition to any and all funds provided for
fiscal years 2011 and 2012 in any other Act for <quote>Federal-aid
Highways</quote> and shall not affect the distribution of funds provided for
<quote>Federal-aid Highways</quote> in any other Act.</text>
</subparagraph><subparagraph commented="no" id="HDDF5A7A40D3E40B39FB1C768BBB1BA69"><enum>(D)</enum><text>Section 1101(b) of
<external-xref legal-doc="public-law" parsable-cite="pl/109/59">Public Law 109–59</external-xref> shall apply to funds apportioned under this
subsection.</text>
</subparagraph></paragraph><paragraph commented="no" id="H29F9717A40D843C9BAC5427523D67576"><enum>(13)</enum><header>Oversight</header><text>The
Administrator of the Federal Highway Administration may set aside up to 0.15
percent of the funds provided under this subsection to fund the oversight by
the Administrator of projects and activities carried out with funds made
available to the Federal Highway Administration in this Act, and such funds
shall be available through September 30, 2015.</text>
</paragraph></subsection><subsection commented="no" id="H0595535673844C78AC5BC9601E7E0147"><enum>(d)</enum><header>Capital
assistance for high speed rail corridors and intercity passenger rail
service</header>
<paragraph commented="no" id="HA9ABCC2081F14090B381D3C833BD114B"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $12,000,000,000 for grants for high-speed rail projects as
authorized under sections <external-xref legal-doc="usc" parsable-cite="usc/49/26104">26104</external-xref> and <external-xref legal-doc="usc" parsable-cite="usc/49/26106">26106</external-xref> of title 49, United States Code,
capital investment grants to support intercity passenger rail service as
authorized under <external-xref legal-doc="usc" parsable-cite="usc/49/24406">section 24406</external-xref> of title 49, United States Code, and congestion
grants as authorized under <external-xref legal-doc="usc" parsable-cite="usc/49/24105">section 24105</external-xref> of title 49, United States Code, and
to enter into cooperative agreements for these purposes as authorized, except
that the Administrator of the Federal Railroad Administration may retain up to
one percent of the funds provided under this heading to fund the award and
oversight by the Administrator of grants made under this subsection, which
retained amount shall remain available for obligation until September 30,
2015.</text>
</paragraph><paragraph commented="no" id="H6C55FD9023ED43AFAF20297156D2C74D"><enum>(2)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="H5A21DD8C74B6408DA819DEA6C1CA81B6"><enum>(3)</enum><header>Federal
share</header><text>The Federal share payable of the costs for which a grant or
cooperative agreements is made under this subsection shall be, at the option of
the recipient, up to 100 percent.</text>
</paragraph><paragraph commented="no" id="H8946B219039340DD8FD0B3045C72A5E3"><enum>(4)</enum><header>Interim
guidance</header><text>The Secretary shall issue interim guidance to applicants
covering application procedures and administer the grants provided under this
subsection pursuant to that guidance until final regulations are issued.</text>
</paragraph><paragraph commented="no" id="H900CECF941564EAFA9CAB262693C265A"><enum>(5)</enum><header>Intercity
passenger rail corridors</header><text>Not less than 85 percent of the funds
provided under this subsection shall be for cooperative agreements that lead to
the development of entire segments or phases of intercity or high-speed rail
corridors.</text>
</paragraph><paragraph commented="no" id="HB47C64C9FE49461D9A997B860DEB5EA1"><enum>(6)</enum><header>Conditions</header>
<subparagraph commented="no" id="H23B33441C5A44D8A9A1B91FA5B954B2F"><enum>(A)</enum><text>In addition to the
provisions of title 49, United States Code, that apply to each of the
individual programs funded under this subsection, subsections 24402(a)(2),
24402(i), and 24403(a) and (c) of title 49, United States Code, shall also
apply to the provision of funds provided under this subsection.</text>
</subparagraph><subparagraph commented="no" id="H1A36B3F8FEE94962B1FA27A663D7D75D"><enum>(B)</enum><text>A project need not
be in a State rail plan developed under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/227">chapter 227</external-xref> of title 49, United States
Code, to be eligible for assistance under this subsection.</text>
</subparagraph><subparagraph commented="no" id="HB3137C19607948A389EDF2DBA57BB7A6"><enum>(C)</enum><text>Recipients of
grants under this paragraph shall conduct all procurement transactions using
such grant funds in a manner that provides full and open competition, as
determined by the Secretary, in compliance with existing labor
agreements.</text>
</subparagraph></paragraph></subsection><subsection commented="no" id="H33D037665D3446ABB6D80818C0406C15"><enum>(e)</enum><header>Capital grants
to the national railroad passenger corporation</header>
<paragraph commented="no" id="H7A6B672C60804806B8ECFF8331FADFE9"><enum>(1)</enum><header>In
general</header><text>There is made available $6,000,000,000 to enable the
Secretary of Transportation to make capital grants to the National Railroad
Passenger Corporation (Amtrak), as authorized by section 101(c) of the
Passenger Rail Investment and Improvement Act of 2008 (Public Law
110–432).</text>
</paragraph><paragraph commented="no" id="H423F1A43B5B54F429AFA9E83F1DB46FB"><enum>(2)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="HE1CB6E561C7447969E72E70DE3507D2B"><enum>(3)</enum><header>Project
priority</header><text>The priority for the use of funds shall be given to
projects for the repair, rehabilitation, or upgrade of railroad assets or
infrastructure, and for capital projects that expand passenger rail capacity
including the rehabilitation of rolling stock.</text>
</paragraph><paragraph commented="no" id="H7ABFD6AA710C4882BDA7DA7E322A2F95"><enum>(4)</enum><header>Conditions</header>
<subparagraph commented="no" id="HC0BEA3BCFBF8407BB35F2369E782686D"><enum>(A)</enum><text>None of the funds
under this subsection shall be used to subsidize the operating losses of
Amtrak.</text>
</subparagraph><subparagraph commented="no" id="H6674DC511CC84C8EAEB40E545F0583FC"><enum>(B)</enum><text>The funds provided
under this subsection shall be awarded not later than 90 days after the date of
enactment of this Act.</text>
</subparagraph><subparagraph commented="no" id="HABBC827A417C4569850F6EEF1A9A8725"><enum>(C)</enum><text>The Secretary
shall take measures to ensure that projects funded under this subsection shall
be completed within 2 years of enactment of this Act, and shall serve to
supplement and not supplant planned expenditures for such activities from other
Federal, State, local and corporate sources. The Secretary shall certify to the
House and Senate Committees on Appropriations in writing compliance with the
preceding sentence.</text>
</subparagraph></paragraph><paragraph commented="no" id="H71848129CB624569A5C1CFA0C84D8BFB"><enum>(5)</enum><header>Oversight</header><text>The
Administrator of the Federal Railroad Administration may set aside 0.5 percent
of the funds provided under this subsection to fund the oversight by the
Administrator of projects and activities carried out with funds made available
in this subsection, and such funds shall be available through September 30,
2015.</text>
</paragraph></subsection><subsection commented="no" id="H8F3C2C7F07CB4D1F8E431AE7335CCB61"><enum>(f)</enum><header>Transit capital
assistance</header>
<paragraph commented="no" id="H9E5B39FB7F9A400B97E460DDCE72729D"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $9,000,000,000 for grants for transit capital assistance grants
as defined by <external-xref legal-doc="usc" parsable-cite="usc/49/5302">section 5302(a)(3)</external-xref> of title 49, United States Code.
Notwithstanding any provision of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/53">chapter 53</external-xref> of title 49, however, a recipient
of funding under this subsection may use up to 10 percent of the amount
provided for the operating costs of equipment and facilities for use in public
transportation or for other eligible activities.</text>
</paragraph><paragraph commented="no" id="HE8D96F420E2841C7892C46A86EECC875"><enum>(2)</enum><header>Federal share;
limitation on obligations</header><text display-inline="yes-display-inline">The
applicable requirements of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/53">chapter 53</external-xref> of title 49, United States Code, shall
apply to funding provided under this subsection, except that the Federal share
of the costs for which any grant is made under this subsection shall be, at the
option of the recipient, up to 100 percent. The amount made available under
this subsection shall not be subject to any limitation on obligations for
transit programs set forth in any Act or <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/53">chapter 53</external-xref> of title 49.</text>
</paragraph><paragraph commented="no" id="H39C9D34DB4B043E0BC3DBCB777421CF8"><enum>(3)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="H22850E308333482BABE5489A4C164898"><enum>(4)</enum><header>Distribution of
funds</header><text>The Secretary of Transportation shall—</text>
<subparagraph commented="no" id="H3C42AEB40FE94BA998A4082FDD8D1D6F"><enum>(A)</enum><text>provide 80 percent
of the funds appropriated under this subsection for grants under section 5307
of title 49, United States Code, and apportion such funds in accordance with
section 5336 of such title;</text>
</subparagraph><subparagraph commented="no" id="H8E5398ACD7714E6EAFCD6DC308A4EC3C"><enum>(B)</enum><text>provide 10 percent
of the funds appropriated under this subsection in accordance with section 5340
of such title; and</text>
</subparagraph><subparagraph commented="no" id="HD05088B0958B4EABB2E71DD2D0B75CFB"><enum>(C)</enum><text>provide 10 percent
of the funds appropriated under this subsection for grants under section 5311
of title 49, United States Code, and apportion such funds in accordance with
such section.</text>
</subparagraph></paragraph><paragraph commented="no" id="HF98F58D85C0D4EA39DF9E0FFEA150716"><enum>(5)</enum><header>Apportionment</header><text>The
funds apportioned under this subsection shall be apportioned not later than 21
days after the date of the enactment of this Act.</text>
</paragraph><paragraph commented="no" id="HD8030C48A0AA4AA1A2D40564FB46AEC1"><enum>(6)</enum><header>Redistribution</header>
<subparagraph commented="no" id="H81D2262E6CD14F6B8C282568E0E240C7"><enum>(A)</enum><text>The Secretary
shall, 180 days following the date of apportionment, withdraw from each
urbanized area or State an amount equal to 50 percent of the funds apportioned
to such urbanized areas or States less the amount of funding obligated, and the
Secretary shall redistribute such amounts to other urbanized areas or States
that have had no funds withdrawn under this proviso utilizing whatever method
he deems appropriate to ensure that all funds redistributed under this proviso
shall be utilized promptly.</text>
</subparagraph><subparagraph commented="no" id="HA12FD2BE721440A98F2A3501F456316A"><enum>(B)</enum><text>One year following
the date of apportionment, the Secretary shall withdraw from each urbanized
area or State any unobligated funds, and the Secretary shall redistribute such
amounts to other urbanized areas or States that have had no funds withdrawn
under this proviso utilizing whatever method the Secretary deems appropriate to
ensure that all funds redistributed under this proviso shall be utilized
promptly.</text>
</subparagraph><subparagraph commented="no" id="HC7D8FB54836D4D01BBC97BF93167D2C5"><enum>(C)</enum><text>At the request of
an urbanized area or State, the Secretary of Transportation may provide an
extension of such 1-year period if the Secretary determines that the urbanized
area or State has encountered an unworkable bidding environment or other
extenuating circumstances. Before granting an extension, the Secretary shall
notify in writing the Committee on Transportation and Infrastructure and the
Committee on Banking, Housing and Urban Affairs, providing a thorough
justification for the extension.</text>
</subparagraph></paragraph><paragraph commented="no" id="H4220BD6D87294A259B37F1E6254767C4"><enum>(7)</enum><header>Conditions</header>
<subparagraph commented="no" id="H18FC252D05E54F86B1BA56171FA68BF4"><enum>(A)</enum><text>Of the funds
provided for <external-xref legal-doc="usc" parsable-cite="usc/49/5311">section 5311</external-xref> of title 49, United States Code, 2.5 percent shall be
made available for section 5311(c)(1).</text>
</subparagraph><subparagraph commented="no" id="HA93A979B7073491AA16E2F6482101FBA"><enum>(B)</enum><text>Section 1101(b) of
<external-xref legal-doc="public-law" parsable-cite="pl/109/59">Public Law 109–59</external-xref> shall apply to funds appropriated under this
subsection.</text>
</subparagraph><subparagraph commented="no" id="HF8F40459BBA04D7F8B6401CD9916CFB7"><enum>(C)</enum><text>The funds
appropriated under this subsection shall not be comingled with any prior year
funds.</text>
</subparagraph></paragraph><paragraph commented="no" id="H13614411901247BCA82D7107B97EF5C7"><enum>(8)</enum><header>Oversight</header><text>Notwithstanding
any other provision of law, 0.3 percent of the funds provided for grants under
section 5307 and section 5340, and 0.3 percent of the funds provided for grants
under section 5311, shall be available for administrative expenses and program
management oversight, and such funds shall be available through September 30,
2015.</text>
</paragraph></subsection><subsection commented="no" id="H6C3C771A037E4F6C89017F2193F8C863"><enum>(g)</enum><header>State of good
repair</header>
<paragraph commented="no" id="HC85D5DAFB67D4E18B68AC18965DF8BE4"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $18,000,000,000 for capital expenditures as authorized by
<external-xref legal-doc="usc" parsable-cite="usc/49/5309">section 5309(b)(5)</external-xref> of title 49, United States Code.</text>
</paragraph><paragraph commented="no" id="HADF6257A1A874C8DBC2CD7FEAA5EFC30"><enum>(2)</enum><header>Federal
share</header><text>The applicable requirements of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/53">chapter 53</external-xref> of title 49,
United States Code, shall apply, except that the Federal share of the costs for
which a grant is made under this subsection shall be, at the option of the
recipient, up to 100 percent.</text>
</paragraph><paragraph commented="no" id="HEDF2B576A38C44A6AC98C548F0B40ACB"><enum>(3)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="H940E46DC116946D0AE4109CA22EAE7D3"><enum>(4)</enum><header>Distribution of
funds</header>
<subparagraph commented="no" id="H19ACCE3BE4B543FF90328B9B09D107F1"><enum>(A)</enum><text>The Secretary of
Transportation shall apportion not less than 75 percent of the funds under this
subsection for the modernization of fixed guideway systems, pursuant to the
formula set forth in section 5336(b) title 49, United States Code, other than
subsection (b)(2)(A)(ii).</text>
</subparagraph><subparagraph commented="no" id="HFAFBC52AB19143BB98B7C82D6AE0BAD4"><enum>(B)</enum><text>Of the funds
appropriated under this subsection, not less than 25 percent shall be available
for the restoration or replacement of existing public transportation assets
related to bus systems, pursuant to the formula set forth in section 5336 other
than subsection (b).</text>
</subparagraph></paragraph><paragraph commented="no" id="H300BDFCDBBBE4E189888DA4BA0CBEDFB"><enum>(5)</enum><header>Apportionment</header><text>The
funds made available under this subsection shall be apportioned not later than
30 days after the date of the enactment of this Act.</text>
</paragraph><paragraph commented="no" id="HD960591FA46642B4A7426D182505C8A9"><enum>(6)</enum><header>Redistribution</header>
<subparagraph commented="no" id="H859CBC0790E74A99863B6B3C52627B59"><enum>(A)</enum><text>The Secretary
shall, 180 days following the date of apportionment, withdraw from each
urbanized area an amount equal to 50 percent of the funds apportioned to such
urbanized area less the amount of funding obligated, and the Secretary shall
redistribute such amounts to other urbanized areas that have had no funds
withdrawn under this paragraph utilizing whatever method the Secretary deems
appropriate to ensure that all funds redistributed under this paragraph shall
be utilized promptly.</text>
</subparagraph><subparagraph commented="no" id="H18C392AD9E07430AA3F72648371184ED"><enum>(B)</enum><text>One year following
the date of apportionment, the Secretary shall withdraw from each urbanized
area any unobligated funds, and the Secretary shall redistribute such amounts
to other urbanized areas that have had no funds withdrawn under this paragraph,
utilizing whatever method the Secretary deems appropriate to ensure that all
funds redistributed under this paragraph shall be utilized promptly.</text>
</subparagraph><subparagraph commented="no" id="H8A8805B2A7FF44E19003EB95275059BA"><enum>(C)</enum><text>At the request of
an urbanized area, the Secretary may provide an extension of the 1-year period
if the Secretary finds that the urbanized area has encountered an unworkable
bidding environment or other extenuating circumstances. Before granting an
extension, the Secretary shall notify the Committee on Transportation and
Infrastructure and the Committee on Banking, Housing, and Urban Affairs,
providing a thorough justification for the extension.</text>
</subparagraph></paragraph><paragraph commented="no" id="HCB8FBFF2B5074D0783319885BDA4A25C"><enum>(7)</enum><header>Conditions</header>
<subparagraph commented="no" id="HBD0D246C9ABC4956A9AC6DAEEDB89D37"><enum>(A)</enum><text>The provisions of
section 1101(b) of <external-xref legal-doc="public-law" parsable-cite="pl/109/59">Public Law 109–59</external-xref> shall apply to funds made available under
this subsection.</text>
</subparagraph><subparagraph commented="no" id="H5AA49C46A6B84C77AA0DC61A99E2161B"><enum>(B)</enum><text>The funds
appropriated under this subsection shall not be commingled with any prior year
funds.</text>
</subparagraph></paragraph><paragraph commented="no" id="H0F6BFD35F977491B8F322876305ABA58"><enum>(8)</enum><header>Oversight</header><text>Notwithstanding
any other provision of law, 0.3 percent of the funds under this subsection
shall be available for administrative expenses and program management oversight
and shall remain available for obligation until September 30, 2015.</text>
</paragraph></subsection><subsection commented="no" id="H5190BAC0F4BF4048B23E2CAA5ACB8031"><enum>(h)</enum><header>Transportation
infrastructure grants and financing</header>
<paragraph commented="no" id="H91BE57BDD0F7444082C65AAF2B37E05A"><enum>(1)</enum><header>In
general</header><text>There is made available to the Secretary of
Transportation $15,000,000,000 for capital investments in surface
transportation infrastructure. The Secretary shall distribute funds provided
under this subsection as discretionary grants to be awarded to State and local
governments or transit agencies on a competitive basis for projects that will
have a significant impact on the Nation, a metropolitan area, or a
region.</text>
</paragraph><paragraph commented="no" id="H143655D9B5204ECEB9A2674A5635A23B"><enum>(2)</enum><header>Federal share;
limitation on obligations</header><text>The Federal share payable of the costs
for which a grant is made under this subsection, shall be 100 percent.</text>
</paragraph><paragraph commented="no" id="H963FAD45E00347CCBA362EC727A37E75"><enum>(3)</enum><header>Availability</header><text>The
amounts made available under this subsection shall be available for obligation
until the date that is two years after the date of the enactment of this Act.
The Secretary shall obligate amounts totaling not less than 50 percent of the
funds made available within one year of enactment and obligate remaining
amounts not later than two years after enactment.</text>
</paragraph><paragraph commented="no" id="HCD9514CF19744CACAE5F7452397EEEA2"><enum>(4)</enum><header>Project
eligibility</header><text>Projects eligible for funding provided under this
subsection include—</text>
<subparagraph commented="no" id="H39503C28E3DF4FD497CA55B3DEFD6F93"><enum>(A)</enum><text>highway or bridge
projects eligible under title 23, United States Code, including interstate
rehabilitation, improvements to the rural collector road system, the
reconstruction of overpasses and interchanges, bridge replacements, seismic
retrofit projects for bridges, and road realignments;</text>
</subparagraph><subparagraph commented="no" id="HEE58C145A74444E6A04FD40851E2D375"><enum>(B)</enum><text>public
transportation projects eligible under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/49/53">chapter 53</external-xref> of title 49, United States
Code, including investments in projects participating in the New Starts or
Small Starts programs that will expedite the completion of those projects and
their entry into revenue service;</text>
</subparagraph><subparagraph commented="no" id="H498FFC28F17E443ABB3BF18688143598"><enum>(C)</enum><text>passenger and
freight rail transportation projects; and</text>
</subparagraph><subparagraph commented="no" id="H42DEE1A0A4CD40098EF73B2B4EDC8337"><enum>(D)</enum><text>port
infrastructure investments, including projects that connect ports to other
modes of transportation and improve the efficiency of freight movement.</text>
</subparagraph></paragraph><paragraph commented="no" id="H2FB6C642A9074B849C9B5904FFB32446"><enum>(5)</enum><header>TIFIA
program</header><text display-inline="yes-display-inline">The Secretary may
transfer to the Federal Highway Administration funds made available under this
subsection for the purpose of paying the subsidy and administrative costs of
projects eligible for Federal credit assistance under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/23/6">chapter 6</external-xref> of title 23,
United States Code, if the Secretary finds that such use of the funds would
advance the purposes of this subsection.</text>
</paragraph><paragraph commented="no" id="HEC05F663701C4A5ABCB157BF8D8990AD"><enum>(6)</enum><header>Project
priority</header><text>The Secretary shall give priority to projects that are
expected to be completed within 3 years of the date of the enactment of this
Act.</text>
</paragraph><paragraph commented="no" id="H3D0C7EE807AA49239575B8B2E59AFC48"><enum>(7)</enum><header>Deadline for
issuance of competition criteria</header><text>The Secretary shall publish
criteria on which to base the competition for any grants awarded under this
subsection not later than 90 days after enactment of this Act. The Secretary
shall require applications for funding provided under this subsection to be
submitted not later than 180 days after the publication of the criteria, and
announce all projects selected to be funded from such funds not later than 1
year after the date of the enactment of the Act.</text>
</paragraph><paragraph commented="no" id="H3378491A91224A7AA61E4E2F1B598B05"><enum>(8)</enum><header>Applicability of
title 40</header><text>Each project conducted using funds provided under this
subsection shall comply with the requirements of subchapter IV of chapter 31 of
title 40, United States Code.</text>
</paragraph><paragraph commented="no" id="HFC6B82B2D8F5499D9F6C7786CA5444E8"><enum>(9)</enum><header>Administrative
expenses</header><text>The Secretary may retain up to one half of one percent
of the funds provided under this subsection, and may transfer portions of those
funds to the Administrators of the Federal Highway Administration, the Federal
Transit Administration, the Federal Railroad Administration and the Maritime
Administration, to fund the award and oversight of grants made under this
subsection. Funds retained shall remain available for obligation until
September 30, 2015.</text>
</paragraph></subsection><subsection commented="no" id="H5BDAD4AD90984A65AA9EDE43FE7A7F51"><enum>(i)</enum><header>Local
hiring</header>
<paragraph commented="no" id="HE58E471DA5E7465E805008E7B2CA0AB5"><enum>(1)</enum><header>In
general</header><text>In the case of the funding made available under
subsections (a) through (h) of this section, the Secretary of Transportation
may establish standards under which a contract for construction may be
advertised that contains requirements for the employment of individuals
residing in or adjacent to any of the areas in which the work is to be
performed to perform construction work required under the contract, provided
that—</text>
<subparagraph commented="no" id="HDA4020AACDBD4B56824C4E42D65A5C46"><enum>(A)</enum><text>all or part of the
construction work performed under the contract occurs in an area designated by
the Secretary as an area of high unemployment, using data reported by the
United States Department of Labor, Bureau of Labor Statistics;</text>
</subparagraph><subparagraph commented="no" id="H28B6943F5ECF446AB73DBD0E9B08398B"><enum>(B)</enum><text>the estimated cost
of the project of which the contract is a part is greater than $10,000,000,
except that the estimated cost of the project in the case of construction
funded under subsection (c) shall be greater than $50,000,000; and</text>
</subparagraph><subparagraph commented="no" id="H9DAD21A7267049D395C6AFB81C82A25E"><enum>(C)</enum><text>the recipient may
not require the hiring of individuals who do not have the necessary skills to
perform work in any craft or trade; provided that the recipient may require the
hiring of such individuals if the recipient establishes reasonable provisions
to train such individuals to perform any such work under the contract
effectively.</text>
</subparagraph></paragraph><paragraph commented="no" id="H5D88A74DD8B4481FA7442D8CE31ED6EB"><enum>(2)</enum><header>Project
standards</header><text display-inline="yes-display-inline">Any standards
established by the Secretary under this section shall ensure that any
requirements specified under subsection (c)(9)—</text>
<subparagraph commented="no" id="HBC8A3E6522E147B29A4E98CA53239087"><enum>(A)</enum><text>do not compromise
the quality of the project;</text>
</subparagraph><subparagraph id="H666B8CD794F548D783E01518A8FC5266"><enum>(B)</enum><text>are reasonable in
scope and application;</text>
</subparagraph><subparagraph id="H09CCDB4E3B1F477D91A3F16BEA2AD959"><enum>(C)</enum><text>do not
unreasonably delay the completion of the project; and</text>
</subparagraph><subparagraph id="H299421B25F87419494EFBDBCB664DFE6"><enum>(D)</enum><text>do not
unreasonably increase the cost of the project.</text>
</subparagraph></paragraph><paragraph commented="no" id="HD0B4B75C113F4428AC608535B59CCB33"><enum>(3)</enum><header>Implementing
regulations</header><text>The Secretary shall promulgate final regulations to
implement the authority of this subsection.</text>
</paragraph></subsection><subsection commented="no" id="H41561485D5AE4C0B9D3B9A151C43AF35"><enum>(j)</enum><header>Administrative
provisions</header>
<paragraph commented="no" id="HCC88EC60224D416D94A8D54C3EC10D89"><enum>(1)</enum><header>Applicability of
title 40</header><text>Each project conducted using funds provided under this
subtitle shall comply with the requirements of subchapter IV of chapter 31 of
title 40, United States Code.</text>
</paragraph><paragraph commented="no" id="HCA010785CBC5458D9536CE5BA8DFAF9E"><enum>(2)</enum><header>Buy
American</header><text>Section 1605 of division A of the American Recovery and
Reinvestment Act of 2009 (<external-xref legal-doc="public-law" parsable-cite="pl/111/5">Public Law 111–5</external-xref>) applies to each project conducted
using funds provided under this subtitle.</text>
</paragraph></subsection></section></part><part id="H76F7D5837AD2466E96F7C7E3F07E0AE9"><enum>II</enum><header>Building and
upgrading infrastructure for long-Term development</header>
<subpart id="H02BBA57D150141DE82E69D14F30D6F0C"><enum>A</enum><header>Immediate
transportation infrastructure investments</header>
<section id="H5D7D5AA9915C4F2E8061B31921DD4DAC"><enum>761.</enum><header>Short
title</header><text display-inline="no-display-inline">This part may be cited
as the <quote>Building and Upgrading Infrastructure for Long-Term Development
Act</quote>.</text>
</section><section id="H5C3320FABD1248FA9CD961FE50061393"><enum>762.</enum><header>Findings and
purpose</header>
<subsection id="HD92C77DD9CE64DC88BE82A213496C592"><enum>(a)</enum><header>Findings</header><text>Congress
finds that—</text>
<paragraph id="HAD8741A1965B4347904AB16727198EE7"><enum>(1)</enum><text>infrastructure has
always been a vital element of the economic strength of the United States and a
key indicator of the international leadership of the United States;</text>
</paragraph><paragraph id="HA5175C685B4549C089983341F6631E36"><enum>(2)</enum><text>the Erie Canal,
the Hoover Dam, the railroads, and the interstate highway system are all
testaments to American ingenuity and have helped propel and maintain the United
States as the world’s largest economy;</text>
</paragraph><paragraph id="HB14F459DE5754835A22AF45D0214E777"><enum>(3)</enum><text>according to the
World Economic Forum’s Global Competitiveness Report, the United States fell to
second place in 2009, and dropped to fourth place overall in 2010, however, in
the <quote>Quality of overall infrastructure</quote> category of the same
report, the United States ranked twenty-third in the world;</text>
</paragraph><paragraph id="H8E676B9EF5DA468099F9A583F5C7DACB"><enum>(4)</enum><text>according to the
World Bank’s 2010 Logistic Performance Index, the capacity of countries to
efficiently move goods and connect manufacturers and consumers with
international markets is improving around the world, and the United States now
ranks seventh in the world in logistics-related infrastructure behind countries
from both Europe and Asia;</text>
</paragraph><paragraph id="H6597C5CA367A424CAC64F80FE18E3694"><enum>(5)</enum><text>according to a
January 2009 report from the University of Massachusetts/Alliance for American
Manufacturing entitled <quote>Employment, Productivity and Growth,</quote>
infrastructure investment is a <quote>highly effective engine of job
creation</quote>;</text>
</paragraph><paragraph id="HB06FA496BB0544689406D1E0B84F4CA3"><enum>(6)</enum><text>according to the
American Society of Civil Engineers, the current condition of the
infrastructure in the United States earns a grade point average of D, and an
estimated $2,200,000,000,000 investment is needed over the next 5 years to
bring American infrastructure up to adequate condition;</text>
</paragraph><paragraph id="H8667588C6B2F49DEB8D1A19A95D19F9C"><enum>(7)</enum><text>according to the
National Surface Transportation Policy and Revenue Study Commission,
$225,000,000,000 is needed annually from all sources for the next 50 years to
upgrade the United States surface transportation system to a state of good
repair and create a more advanced system;</text>
</paragraph><paragraph id="H963B8AB3F8DC4663BF3D483FA7F45A53"><enum>(8)</enum><text>the current
infrastructure financing mechanisms of the United States, both on the Federal
and State level, will fail to meet current and foreseeable demands and will
create large funding gaps;</text>
</paragraph><paragraph id="HABFBF36D88AD4029AA4E74056138C128"><enum>(9)</enum><text>published reports
state that there may not be enough demand for municipal bonds to maintain the
same level of borrowing at the same rates, resulting in significantly decreased
infrastructure investment at the State and local level;</text>
</paragraph><paragraph id="HC653386720514327B8FCC9083116FDD0"><enum>(10)</enum><text>current funding
mechanisms are not readily scalable and do not—</text>
<subparagraph id="H229BA0C47CF84DA09E54300AE98C4142"><enum>(A)</enum><text>serve large
in-State or cross jurisdiction infrastructure projects, projects of regional or
national significance, or projects that cross sector silos;</text>
</subparagraph><subparagraph id="H2B984275EFA142988BA37932066D91EC"><enum>(B)</enum><text>sufficiently
catalyze private sector investment; or</text>
</subparagraph><subparagraph id="H27114DB4E100481E867251EABC35D34D"><enum>(C)</enum><text>ensure the optimal
return on public resources;</text>
</subparagraph></paragraph><paragraph id="H15FDC2380ECC4906B70EE9745CC3D2C4"><enum>(11)</enum><text>although grant
programs of the United States Government must continue to play a central role
in financing the transportation, environment, and energy infrastructure needs
of the United States, current and foreseeable demands on existing Federal,
State, and local funding for infrastructure expansion clearly exceed the
resources to support these programs by margins wide enough to prompt serious
concerns about the United States ability to sustain long-term economic
development, productivity, and international competitiveness;</text>
</paragraph><paragraph id="H0895DD7DB25E490C8384F1212BE579B0"><enum>(12)</enum><text>the capital
markets, including pension funds, private equity funds, mutual funds, sovereign
wealth funds, and other investors, have a growing interest in infrastructure
investment and represent hundreds of billions of dollars of potential
investment; and</text>
</paragraph><paragraph id="HF8086A5035544EB3884198DD8D221AC1"><enum>(13)</enum><text>the establishment
of a United States Government-owned, independent, professionally managed
institution that could provide credit support to qualified infrastructure
projects of regional and national significance, making transparent merit-based
investment decisions based on the commercial viability of infrastructure
projects, would catalyze the participation of significant private investment
capital.</text>
</paragraph></subsection><subsection id="H9E22A2155892456D8AE0EAC37AFE637F"><enum>(b)</enum><header>Purpose</header><text>The
purpose of this part is to facilitate investment in, and long-term financing
of, economically viable infrastructure projects of regional or national
significance in a manner that both complements existing Federal, State, local,
and private funding sources for these projects and introduces a merit-based
system for financing such projects, in order to mobilize significant private
sector investment, create jobs, and ensure United States competitiveness
through an institution that limits the need for ongoing Federal funding.</text>
</subsection></section><section id="H91C13DEB02214165902EBF5E97CE430B"><enum>763.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this part, the following
definitions shall apply:</text>
<paragraph id="HFDE99B5208C6497C92248E728CB15701"><enum>(1)</enum><header>AIFA</header><text>The
term <term>AIFA</term> means the American Infrastructure Financing Authority
established under this part.</text>
</paragraph><paragraph id="H5F8CC079F57C4F59AC9BC188283FFB2B"><enum>(2)</enum><header>Blind
trust</header><text>The term <term>blind trust</term> means a trust in which
the beneficiary has no knowledge of the specific holdings and no rights over
how those holdings are managed by the fiduciary of the trust prior to the
dissolution of the trust.</text>
</paragraph><paragraph id="H55D80206C728437B96BDE55524611FEE"><enum>(3)</enum><header>Board of
directors</header><text>The term <term>Board of Directors</term> means Board of
Directors of AIFA.</text>
</paragraph><paragraph id="H287EC442508748E1A8DEA97BDD737BC0"><enum>(4)</enum><header>Chairperson</header><text>The
term <term>Chairperson</term> means the Chairperson of the Board of Directors
of AIFA.</text>
</paragraph><paragraph id="HC4FE12F734314AD49DF58BF4D558292F"><enum>(5)</enum><header>Chief executive
officer</header><text>The term <term>chief executive officer</term> means the
chief executive officer of AIFA, appointed under section 767.</text>
</paragraph><paragraph id="H467D2805FD1C4193BD4478D7429A375D"><enum>(6)</enum><header>Cost</header><text>The
term <term>cost</term> has the same meaning as in section 502 of the Federal
Credit Reform Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/2/661a">2 U.S.C. 661a</external-xref>).</text>
</paragraph><paragraph id="H51CF0106543F4FADB4E604C548DA90C1"><enum>(7)</enum><header>Direct
loan</header><text>The term <term>direct loan</term> has the same meaning as in
section 502 of the Federal Credit Reform Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/2/661a">2 U.S.C. 661a</external-xref>).</text>
</paragraph><paragraph id="H92A51E2D80674719B083A91970449F85"><enum>(8)</enum><header>Eligible
entity</header><text>The term <term>eligible entity</term> means an individual,
corporation, partnership (including a public-private partnership), joint
venture, trust, State, or other non-Federal governmental entity, including a
political subdivision or any other instrumentality of a State, or a revolving
fund.</text>
</paragraph><paragraph id="H6A29CAB5B7A44F0EB0145D513570B291"><enum>(9)</enum><header>Infrastructure
project</header>
<subparagraph id="H8A5E0B7C71BD4C038E3684DD1785AB30"><enum>(A)</enum><header>In
general</header><text>The term <term>eligible infrastructure project</term>
means any non-Federal transportation, water, or energy infrastructure project,
or an aggregation of such infrastructure projects, as provided in this
part.</text>
</subparagraph><subparagraph id="HC48FFC2D8BE74862B7E73C680D188256"><enum>(B)</enum><header>Transportation
infrastructure project</header><text>The term <term>transportation
infrastructure project</term> means the construction, alteration, or repair,
including the facilitation of intermodal transit, of the following
subsectors:</text>
<clause id="HE896C58EFB044F94BCCF5B48159CC75C"><enum>(i)</enum><text>Highway or
road.</text>
</clause><clause id="H3FF09C1C62794E62A73B3571011D7250"><enum>(ii)</enum><text>Bridge.</text>
</clause><clause id="H3488AE19BD14467FA63DFBFF3BE6B994"><enum>(iii)</enum><text>Mass
transit.</text>
</clause><clause id="H2F4B60C280C04667B6384A3F128DEDAD"><enum>(iv)</enum><text>Inland
waterways.</text>
</clause><clause id="HF6C0A66E5D844B5FA9A045CAAC5BC515"><enum>(v)</enum><text>Commercial
ports.</text>
</clause><clause id="H2EDB5D38893D4515B3F4E565431D49A9"><enum>(vi)</enum><text>Airports.</text>
</clause><clause id="HD1E8F3D6764B46C7B541D6E6F7E61F5F"><enum>(vii)</enum><text>Air traffic
control systems.</text>
</clause><clause id="H2DD7D1B0530B42698721DCBB8F1B6B00"><enum>(viii)</enum><text>Passenger rail,
including high-speed rail.</text>
</clause><clause id="HE5C62AC3A0A84A28B47B90835D2135C2"><enum>(ix)</enum><text>Freight rail
systems.</text>
</clause></subparagraph><subparagraph id="H33666306A02A44D99AC8427F4A2C7984"><enum>(C)</enum><header>Water
infrastructure project</header><text>The term <term>water infrastructure
project</term> means the construction, consolidation, alteration, or repair of
the following subsectors:</text>
<clause id="H05854FDD6D2948F3A87E897D251E2F8A"><enum>(i)</enum><text>Waterwaste
treatment facility.</text>
</clause><clause id="H05FDEFF84E0C47038DCDB549E9AEA67F"><enum>(ii)</enum><text>Storm water
management system.</text>
</clause><clause id="H739D6A3AC9CE42648A294AEEB0A9C49E"><enum>(iii)</enum><text>Dam.</text>
</clause><clause id="H61F8588A91D74A2B8D087B8559D7F8F3"><enum>(iv)</enum><text>Solid waste
disposal facility.</text>
</clause><clause id="H674027DA440A47C1B8E6A4E6610D299C"><enum>(v)</enum><text>Drinking water
treatment facility.</text>
</clause><clause id="H5473F3A52B964E86955B2463DF36763F"><enum>(vi)</enum><text>Levee.</text>
</clause><clause id="H70C5FBA869114402AC1FF98CFB54FE4A"><enum>(vii)</enum><text>Open space
management system.</text>
</clause></subparagraph><subparagraph id="HA6CD977B2D834C67866F816451A5A2FB"><enum>(D)</enum><header>Energy
infrastructure project</header><text>The term <term>energy infrastructure
project</term> means the construction, alteration, or repair of the following
subsectors:</text>
<clause id="HAB50A39283D84BF99A2351B88E8B7394"><enum>(i)</enum><text>Pollution reduced
energy generation.</text>
</clause><clause id="H65ADF5743E694AF2B3F615FD96B21287"><enum>(ii)</enum><text>Transmission and
distribution.</text>
</clause><clause id="HFA8FAFB929764EE19B606402312D7416"><enum>(iii)</enum><text>Storage.</text>
</clause><clause id="H84F92AB88AC64A5D8245220B8A101FB1"><enum>(iv)</enum><text>Energy efficiency
enhancements for buildings, including public and commercial buildings.</text>
</clause></subparagraph><subparagraph id="H3CF532F2090E41A88B058A36F6D2020D"><enum>(E)</enum><header>Board authority
to modify subsectors</header><text>The Board of Directors may make
modifications, at the discretion of the Board, to the subsectors described in
this paragraph by a vote of not fewer than 5 of the voting members of the Board
of Directors.</text>
</subparagraph></paragraph><paragraph id="H28E907EB58954EDF84199393D75A53E8"><enum>(10)</enum><header>Investment
prospectus</header>
<subparagraph id="HEF1B6C72F2EE4A1B88C42D8BC4DE7B4B"><enum>(A)</enum><text>The term
<term>investment prospectus</term> means the processes and publications
described below that will guide the priorities and strategic focus for the
Bank’s investments. The investment prospectus shall follow rulemaking
procedures under <external-xref legal-doc="usc" parsable-cite="usc/5/553">section 553</external-xref> of title 5, United States Code.</text>
</subparagraph><subparagraph id="H7F945955E64E476982A3E99A76DB594C"><enum>(B)</enum><text>The Bank shall
publish a detailed description of its strategy in an Investment Prospectus
within one year of the enactment of this subchapter. The Investment Prospectus
shall—</text>
<clause id="HA98AF9CD3A3D40F6B327E012B0E1B434"><enum>(i)</enum><text>specify what the
Bank shall consider significant to the economic competitiveness of the United
States or a region thereof in a manner consistent with the primary
objective;</text>
</clause><clause id="HA047C29126C448D59194318E4312A026"><enum>(ii)</enum><text>specify the
priorities and strategic focus of the Bank in forwarding its strategic
objectives and carrying out the Bank strategy;</text>
</clause><clause id="H758557C9E9B143F09C4533EF665D21AD"><enum>(iii)</enum><text>specify the
priorities and strategic focus of the Bank in promoting greater efficiency in
the movement of freight;</text>
</clause><clause id="H9207A5EC7CDA4C2397F073395081CF2D"><enum>(iv)</enum><text>specify the
priorities and strategic focus of the Bank in promoting the use of innovation
and best practices in the planning, design, development and delivery of
projects;</text>
</clause><clause id="H1D7A0D19750E41AF887CB73757AA32EF"><enum>(v)</enum><text>describe in detail
the framework and methodology for calculating application qualification scores
and associated ranges as specified in this subchapter, along with the data to
be requested from applicants and the mechanics of calculations to be applied to
that data to determine qualification scores and ranges;</text>
</clause><clause id="H71AE3DEAAFC5478F9BBC0C7C1C6E95B7"><enum>(vi)</enum><text>describe how
selection criteria will be applied by the Chief Executive Officer in
determining the competitiveness of an application and its qualification score
and range relative to other current applications and previously funded
applications; and</text>
</clause><clause id="H8CA9B2E8122C494F85FF42D1B22419E4"><enum>(vii)</enum><text>describe how the
qualification score and range methodology and project selection framework are
consistent with maximizing the Bank goals in both urban and rural areas.</text>
</clause></subparagraph><subparagraph id="H6027C88F43ED4BC0B65A4889480A5EB9"><enum>(C)</enum><text>The Investment
Prospectus and any subsequent updates thereto shall be approved by a majority
vote of the Board of Directors prior to publication.</text>
</subparagraph><subparagraph id="H9C904F9BF59945E590B9BC32A24FE147"><enum>(D)</enum><text>The Bank shall
update the Investment Prospectus on every biennial anniversary of its original
publication.</text>
</subparagraph></paragraph><paragraph id="HAE67BB94B4A54814AF70ECF1995FBB6A"><enum>(11)</enum><header>Investment-grade
rating</header><text>The term <term>investment-grade rating</term> means a
rating of BBB minus, Baa3, or higher assigned to an infrastructure project by a
ratings agency.</text>
</paragraph><paragraph id="HB2D9AC4D1B5C4E1098598DD8836EF9AB"><enum>(12)</enum><header>Loan
guarantee</header><text>The term <term>loan guarantee</term> has the same
meaning as in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a).</text>
</paragraph><paragraph id="HF32538CBDDB84520BD5235DE887A575F"><enum>(13)</enum><header>Public-private
partnership</header><text>The term <term>public-private partnership</term>
means any eligible entity—</text>
<subparagraph id="H2FFEC0F0F6ED42D6BBBB2A3F500ABA5D"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="H581EB1FA191243958FAA8E835216FF88"><enum>(i)</enum><text>which is undertaking the
development of all or part of an infrastructure project that will have a public
benefit, pursuant to requirements established in one or more contracts between
the entity and a State or an instrumentality of a State; or</text>
</clause><clause id="HBB678251416947D9AC379B7FC49B87D2" indent="up1"><enum>(ii)</enum><text>the activities of which, with
respect to such an infrastructure project, are subject to regulation by a State
or any instrumentality of a State;</text>
</clause></subparagraph><subparagraph id="H579B57A411CA453592F760561EAEFCBE"><enum>(B)</enum><text>which owns,
leases, or operates or will own, lease, or operate, the project in whole or in
part; and</text>
</subparagraph><subparagraph id="H5AA737C8736C4D918BDB54854094A277"><enum>(C)</enum><text>the participants
in which include not fewer than 1 nongovernmental entity with significant
investment and some control over the project or project vehicle.</text>
</subparagraph></paragraph><paragraph id="H37BD4929977E4B7A8EE1D2F2010C23FA"><enum>(14)</enum><header>Rural
infrastructure project</header><text>The term <term>rural infrastructure
project</term> means an infrastructure project in a rural area, as that term is
defined in section 343(a)(13)(A) of the Consolidated Farm and Rural Development
Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1991">7 U.S.C. 1991(a)(13)(A)</external-xref>).</text>
</paragraph><paragraph id="H887F0B5709B641EE977C01363BC109FF"><enum>(15)</enum><header>Secretary</header><text>Unless
the context otherwise requires, the term <term>Secretary</term> means the
Secretary of the Treasury or the designee thereof.</text>
</paragraph><paragraph id="H36EFD4CBAC72441791F2E45A0BD2862A"><enum>(16)</enum><header>Senior
management</header><text>The term <term>senior management</term> means the
chief financial officer, chief risk officer, chief compliance officer, general
counsel, chief lending officer, and chief operations officer of AIFA
established under section 769, and such other officers as the Board of
Directors may, by majority vote, add to senior management.</text>
</paragraph><paragraph id="H53C801E3F6B943E085A4F555E1E578A0"><enum>(17)</enum><header>State</header><text>The
term <term>State</term> includes the District of Columbia, Puerto Rico, Guam,
American Samoa, the Virgin Islands, the Commonwealth of Northern Mariana
Islands, and any other territory of the United States.</text>
</paragraph></section></subpart><subpart id="HD8FD041FAE684A428A908BA1F3C7576F"><enum>B</enum><header>American
Infrastructure Financing Authority</header>
<section id="HA28AAC12386E49AF9E1BE1F0C47D9776"><enum>765.</enum><header>Establishment
and general authority of AIFA</header>
<subsection id="HBDB3F3A3AE444B8A81EC2B29A57E9E15"><enum>(a)</enum><header>Establishment of
AIFA</header><text>The American Infrastructure Financing Authority is
established as a wholly owned Government corporation.</text>
</subsection><subsection id="HF8B7FE24DF8647F0A9411C0B7F32F694"><enum>(b)</enum><header>General
authority of AIFA</header><text>AIFA shall provide direct loans and loan
guarantees to facilitate infrastructure projects that are both economically
viable and of regional or national significance, and shall have such other
authority, as provided in this part.</text>
</subsection><subsection id="HA62FB4730AC84781B73FB131D05CD470"><enum>(c)</enum><header>Incorporation</header>
<paragraph id="HB060D6E21DBE42D3BBD061830A938920"><enum>(1)</enum><header>In
general</header><text>The Board of Directors first appointed shall be deemed
the incorporator of AIFA, and the incorporation shall be held to have been
effected from the date of the first meeting of the Board of Directors.</text>
</paragraph><paragraph id="H08B1342D8DF74CF3B9C9ED5D049704B5"><enum>(2)</enum><header>Corporate
office</header><text>AIFA shall—</text>
<subparagraph id="H73735DC9BD1E41F487B9FAA8DD4709B0"><enum>(A)</enum><text>maintain an office
in Washington, DC; and</text>
</subparagraph><subparagraph id="H4F1F5138694C48FAB4E65623B962172B"><enum>(B)</enum><text>for purposes of
venue in civil actions, be considered to be a resident of Washington,
DC.</text>
</subparagraph></paragraph></subsection><subsection id="HD83E289FAA8D4BD393DAB44305E5736F"><enum>(d)</enum><header>Responsibility
of the secretary</header><text>The Secretary shall take such action as may be
necessary to assist in implementing AIFA, and in carrying out the purpose of
this part.</text>
</subsection><subsection id="HF04D23B7F1B94183A3004D82E475EF01"><enum>(e)</enum><header>Rule of
construction</header><text><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/91">Chapter 91</external-xref> of title 31, United States Code, does not
apply to AIFA, unless otherwise specifically provided in this part.</text>
</subsection></section><section id="HF327EEAC473342C6A6F4EC4AB3661E57"><enum>766.</enum><header>Voting members
of the Board of Directors</header>
<subsection id="H8044E5EDF1B4435D8E791630D6412711"><enum>(a)</enum><header>Voting
membership of the board of directors</header>
<paragraph id="H54805581D0F240C3958117C2E328EDF4"><enum>(1)</enum><header>In
general</header><text>AIFA shall have a Board of Directors consisting of 7
voting members appointed by the President, by and with the advice and consent
of the Senate, not more than 4 of whom shall be from the same political
party.</text>
</paragraph><paragraph id="H41D6046619F2485B82F6932A01EF76C4"><enum>(2)</enum><header>Chairperson</header><text>One
of the voting members of the Board of Directors shall be designated by the
President to serve as Chairperson thereof.</text>
</paragraph><paragraph id="H52AAEDB70B1441E5BE30C51490EEBC72"><enum>(3)</enum><header>Congressional
recommendations</header><text>Not later than 30 days after the date of
enactment of this Act, the majority leader of the Senate, the minority leader
of the Senate, the Speaker of the House of Representatives, and the minority
leader of the House of Representatives shall each submit a recommendation to
the President for appointment of a member of the Board of Directors, after
consultation with the appropriate committees of Congress.</text>
</paragraph></subsection><subsection id="H6617464B1AE54C46940BC7B06FAA50D7"><enum>(b)</enum><header>Voting
rights</header><text>Each voting member of the Board of Directors shall have an
equal vote in all decisions of the Board of Directors.</text>
</subsection><subsection id="HD8645C1FF5F34354A41D00099AC0400E"><enum>(c)</enum><header>Qualifications
of voting members</header><text>Each voting member of the Board of Directors
shall—</text>
<paragraph id="HB0900E99353F40BE8D952FDDE5CB4CC3"><enum>(1)</enum><text>be a citizen of
the United States; and</text>
</paragraph><paragraph id="H2E633C1F53AC49C0A56197846C424FB6"><enum>(2)</enum><text>have significant
demonstrated expertise in—</text>
<subparagraph id="H051213978C0A40FDAB90B10760404BC3"><enum>(A)</enum><text>the management and
administration of a financial institution relevant to the operation of AIFA; or
a public financial agency or authority;</text>
</subparagraph><subparagraph id="HFC54E7ABBFDD46DD90A2F6FE0CAD054D"><enum>(B)</enum><text>the financing,
development, or operation of infrastructure projects; or</text>
</subparagraph><subparagraph id="H38227729943947A4AD580B182E7B4946"><enum>(C)</enum><text>analyzing the
economic benefits of infrastructure investment.</text>
</subparagraph></paragraph></subsection><subsection id="H410324ACA5604CD1AA7B7971AC12BD53"><enum>(d)</enum><header>Terms</header>
<paragraph id="H0A1CE4A1C6B04510ACD5E32A103D00AF"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this part, each voting
member of the Board of Directors shall be appointed for a term of 4
years.</text>
</paragraph><paragraph id="HFED87A7693F64BE38C8D368E108EEF22"><enum>(2)</enum><header>Initial
staggered terms</header><text>Of the voting members first appointed to the
Board of Directors—</text>
<subparagraph id="H47D0805515B8400E95E36C3E135BFEFC"><enum>(A)</enum><text>the initial
Chairperson and 3 of the other voting members shall each be appointed for a
term of 4 years; and</text>
</subparagraph><subparagraph id="H57953F646AA64B05A38A844DF456FA61"><enum>(B)</enum><text>the remaining 3
voting members shall each be appointed for a term of 2 years.</text>
</subparagraph></paragraph><paragraph id="HFEC0FFA09F5846BC8B66CF2E9AE264FF"><enum>(3)</enum><header>Date of initial
nominations</header><text>The initial nominations for the appointment of all
voting members of the Board of Directors shall be made not later than 60 days
after the date of enactment of this Act.</text>
</paragraph><paragraph id="H9F299F47483E4545B0650AF92F424FE0"><enum>(4)</enum><header>Beginning of
term</header><text>The term of each of the initial voting members appointed
under this section shall commence immediately upon the date of appointment,
except that, for purposes of calculating the term limits specified in this
subsection, the initial terms shall each be construed as beginning on January
22 of the year following the date of the initial appointment.</text>
</paragraph><paragraph id="HEA287B045CAF40BD95EE5D8F0759F19E"><enum>(5)</enum><header>Vacancies</header><text>A
vacancy in the position of a voting member of the Board of Directors shall be
filled by the President, and a member appointed to fill a vacancy on the Board
of Directors occurring before the expiration of the term for which the
predecessor was appointed shall be appointed only for the remainder of that
term.</text>
</paragraph></subsection><subsection id="H13F1A5F1B67B424699FC1B01338336AD"><enum>(e)</enum><header>Meetings</header>
<paragraph id="H6F0F21C8B5C74C9D950153CC82F11A20"><enum>(1)</enum><header>Open to the
public; notice</header><text>Except as provided in paragraph (3), all meetings
of the Board of Directors shall be—</text>
<subparagraph id="HE17C80D9BB484AF6A2020D9893BEFB02"><enum>(A)</enum><text>open to the
public; and</text>
</subparagraph><subparagraph id="H7B9C5282235A4F93956AAA341E326B5E"><enum>(B)</enum><text>preceded by
reasonable public notice.</text>
</subparagraph></paragraph><paragraph id="HF753DBEA34AA499297636B740493FE81"><enum>(2)</enum><header>Frequency</header><text>The
Board of Directors shall meet not later than 60 days after the date on which
all members of the Board of Directors are first appointed, at least quarterly
thereafter, and otherwise at the call of either the Chairperson or 5 voting
members of the Board of Directors.</text>
</paragraph><paragraph id="HB286665908AE44098D7AC05BA84C3D5C"><enum>(3)</enum><header>Exception for
closed meetings</header><text>The voting members of the Board of Directors may,
by majority vote, close a meeting to the public if, during the meeting to be
closed, there is likely to be disclosed proprietary or sensitive information
regarding an infrastructure project under consideration for assistance under
this part. The Board of Directors shall prepare minutes of any meeting that is
closed to the public, and shall make such minutes available as soon as
practicable, not later than 1 year after the date of the closed meeting, with
any necessary redactions to protect any proprietary or sensitive
information.</text>
</paragraph><paragraph id="HB62F368169EF46ED8C1813510804F15E"><enum>(4)</enum><header>Quorum</header><text>For
purposes of meetings of the Board of Directors, 5 voting members of the Board
of Directors shall constitute a quorum.</text>
</paragraph></subsection><subsection id="HE2FF49A595704F458B0A2FD38F24A04F"><enum>(f)</enum><header>Compensation of
members</header><text>Each voting member of the Board of Directors shall be
compensated at a rate equal to the daily equivalent of the annual rate of basic
pay prescribed for level III of the Executive Schedule under section 5314 of
title 5, United States Code, for each day (including travel time) during which
the member is engaged in the performance of the duties of the Board of
Directors.</text>
</subsection><subsection id="H09D2572E05004EF285F10A72092A5E5C"><enum>(g)</enum><header>Conflicts of
interest</header><text>A voting member of the Board of Directors may not
participate in any review or decision affecting an infrastructure project under
consideration for assistance under this part, if the member has or is
affiliated with an entity who has a financial interest in such project.</text>
</subsection></section><section id="HCDACE208EF8D4402BB1D44CF9D41B658"><enum>767.</enum><header>Chief executive
officer of AIFA</header>
<subsection id="H5397B850275349E5ABC679C017A9FFC4"><enum>(a)</enum><header>In
general</header><text>The chief executive officer of AIFA shall be a nonvoting
member of the Board of Directors, who shall be responsible for all activities
of AIFA, and shall support the Board of Directors as set forth in this part and
as the Board of Directors deems necessary or appropriate.</text>
</subsection><subsection id="H6DD6D604CFF74403B6C9F3DF2F12DB70"><enum>(b)</enum><header>Appointment and
tenure of the chief executive officer</header>
<paragraph id="H46A306715BA74476B3952BEFCC3C6563"><enum>(1)</enum><header>In
general</header><text>The President shall appoint the chief executive officer,
by and with the advice and consent of the Senate.</text>
</paragraph><paragraph id="H1E0614FAD04D4B758C9469963672D0A6"><enum>(2)</enum><header>Term</header><text>The
chief executive officer shall be appointed for a term of 6 years.</text>
</paragraph><paragraph id="H7F8F5762A05B40AB8ECE4619FF5157EE"><enum>(3)</enum><header>Vacancies</header><text>Any
vacancy in the office of the chief executive officer shall be filled by the
President, and the person appointed to fill a vacancy in that position
occurring before the expiration of the term for which the predecessor was
appointed shall be appointed only for the remainder of that term.</text>
</paragraph></subsection><subsection id="HB730AA8D78374698B39F260EF1B8AB6D"><enum>(c)</enum><header>Qualifications</header><text>The
chief executive officer—</text>
<paragraph id="HC91215227EEF47A7899CBBBE6CBD6C3D"><enum>(1)</enum><text>shall have
significant expertise in management and administration of a financial
institution, or significant expertise in the financing and development of
infrastructure projects, or significant expertise in analyzing the economic
benefits of infrastructure investment; and</text>
</paragraph><paragraph id="H39956F01BFA94339AEB74B71E21DC6D1"><enum>(2)</enum><text>may not—</text>
<subparagraph id="HB8F1A71460354C5692F80D9001007435"><enum>(A)</enum><text>hold any other
public office;</text>
</subparagraph><subparagraph id="HE5E121220E6F4B5B9CA1247D78619753"><enum>(B)</enum><text>have any financial
interest in an infrastructure project then being considered by the Board of
Directors, unless that interest is placed in a blind trust; or</text>
</subparagraph><subparagraph id="H468041ACBCA349239FF876C4812D6B40"><enum>(C)</enum><text>have any financial
interest in an investment institution or its affiliates or any other entity
seeking or likely to seek financial assistance for any infrastructure project
from AIFA, unless any such interest is placed in a blind trust for the tenure
of the service of the chief executive officer plus 2 additional years.</text>
</subparagraph></paragraph></subsection><subsection id="H666F1CD7E462499E99E2697466A45FBD"><enum>(d)</enum><header>Responsibilities</header><text>The
chief executive officer shall have such executive functions, powers, and duties
as may be prescribed by this part, the bylaws of AIFA, or the Board of
Directors, including—</text>
<paragraph id="HA834D64A8EC44099B835DC8D316475C1"><enum>(1)</enum><text>responsibility for
the development and implementation of the strategy of AIFA, including—</text>
<subparagraph id="HC6EB7D1B59824241A1CA505726EAF1F2"><enum>(A)</enum><text>the development
and submission to the Board of Directors of the investment prospectus, the
annual business plans and budget;</text>
</subparagraph><subparagraph id="H351D7E89E3B84C12AF5D967364E42636"><enum>(B)</enum><text>the development
and submission to the Board of Directors of a long-term strategic plan;
and</text>
</subparagraph><subparagraph id="H1F63521CE53D4E428C11291445190689"><enum>(C)</enum><text>the development,
revision, and submission to the Board of Directors of internal policies;
and</text>
</subparagraph></paragraph><paragraph id="HB2E3642332AE48C1A12ECEFCD4973EBE"><enum>(2)</enum><text>responsibility for
the management and oversight of the daily activities, decisions, operations,
and personnel of AIFA, including—</text>
<subparagraph id="HE550A386504D458CA207A5F43F420001"><enum>(A)</enum><text>the appointment of
senior management, subject to approval by the voting members of the Board of
Directors, and the hiring and termination of all other AIFA personnel;</text>
</subparagraph><subparagraph id="HA7851BB6A02A4C80AC0A5BF648827FBE"><enum>(B)</enum><text>requesting the
detail, on a reimbursable basis, of personnel from any Federal agency having
specific expertise not available from within AIFA, following which request the
head of the Federal agency may detail, on a reimbursable basis, any personnel
of such agency reasonably requested by the chief executive officer;</text>
</subparagraph><subparagraph id="H851F5FF6240A45D78C12EF470AD66A32"><enum>(C)</enum><text>assessing and
recommending in the first instance, for ultimate approval or disapproval by the
Board of Directors, compensation and adjustments to compensation of senior
management and other personnel of AIFA as may be necessary for carrying out the
functions of AIFA;</text>
</subparagraph><subparagraph id="H8D9B2161F9D74A09A28141C9C07C13A8"><enum>(D)</enum><text>ensuring, in
conjunction with the general counsel of AIFA, that all activities of AIFA are
carried out in compliance with applicable law;</text>
</subparagraph><subparagraph id="H2F301D9AA91D4DD7B49333D9CE51185E"><enum>(E)</enum><text>overseeing the
involvement of AIFA in all projects, including—</text>
<clause id="H35FBC94B05BD4D059EA4F17C889C9480"><enum>(i)</enum><text>developing
eligible projects for AIFA financial assistance;</text>
</clause><clause id="HFF9192E69E564E20B1634A0EA3A426F8"><enum>(ii)</enum><text>determining the
terms and conditions of all financial assistance packages;</text>
</clause><clause id="H2E7BB2A324D44F8BA8A4C7B6EC2D9BDA"><enum>(iii)</enum><text>monitoring all
infrastructure projects assisted by AIFA, including responsibility for ensuring
that the proceeds of any loan made, guaranteed, or participated in are used
only for the purposes for which the loan or guarantee was made;</text>
</clause><clause id="HC1CD79036D9946C79289A47E06E17EB1"><enum>(iv)</enum><text>preparing and
submitting for approval by the Board of Directors the documents required under
paragraph (1); and</text>
</clause><clause id="HF80C35851C964BEDBE3DACBBDEF97A56"><enum>(v)</enum><text>ensuring the
implementation of decisions of the Board of Directors; and</text>
</clause></subparagraph><subparagraph id="H71EC1D08FCF943A099510481F196B8E4"><enum>(F)</enum><text>such other
activities as may be necessary or appropriate in carrying out this part.</text>
</subparagraph></paragraph></subsection><subsection id="H922CE6464DF84B8A89A4B1777FB9E0EB"><enum>(e)</enum><header>Compensation</header>
<paragraph id="H49B43E14B06E4F57AB481F799583471B"><enum>(1)</enum><header>In
general</header><text>Any compensation assessment or recommendation by the
chief executive officer under this section shall be without regard to the
provisions of chapter 51 or subchapter III of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/53">chapter 53</external-xref> of title 5, United
States Code.</text>
</paragraph><paragraph id="H8F19257BD39643BEB2BA168CE20D034D"><enum>(2)</enum><header>Considerations</header><text>The
compensation assessment or recommendation required under this subsection shall
take into account merit principles, where applicable, as well as the education,
experience, level of responsibility, geographic differences, and retention and
recruitment needs in determining compensation of personnel.</text>
</paragraph></subsection></section><section id="H96AF8F19CF9F40F6B15293B4EAEBCBB0"><enum>768.</enum><header>Powers and
duties of the Board of Directors</header><text display-inline="no-display-inline">The Board of Directors shall—</text>
<paragraph id="HD5CD28ABFFEF4428B4741351CA79A17C"><enum>(1)</enum><text>as soon as is
practicable after the date on which all members are appointed, approve or
disapprove senior management appointed by the chief executive officer;</text>
</paragraph><paragraph id="H0CEB4C4675804573BD1F6637A07FAD1E"><enum>(2)</enum><text>not later than 180
days after the date on which all members are appointed—</text>
<subparagraph id="H3E9C857BD29F41878B2022C3009C4402"><enum>(A)</enum><text>develop and
approve the bylaws of AIFA, including bylaws for the regulation of the affairs
and conduct of the business of AIFA, consistent with the purpose, goals,
objectives, and policies set forth in this part;</text>
</subparagraph><subparagraph id="HAA733562A50B41AE8BE3FB6A4B0EF0E7"><enum>(B)</enum><text>establish
subcommittees, including an audit committee that is composed solely of members
of the Board of Directors who are independent of the senior management of
AIFA;</text>
</subparagraph><subparagraph id="H0F56B9F663A14A978AE13AEFD4F4EC3D"><enum>(C)</enum><text>develop and
approve, in consultation with senior management, a conflict-of-interest policy
for the Board of Directors and for senior management;</text>
</subparagraph><subparagraph id="H1D1FA71E0824442AB7680994ADE583D8"><enum>(D)</enum><text>approve or
disapprove internal policies that the chief executive officer shall submit to
the Board of Directors, including—</text>
<clause id="H6E4A2DCB54794174AF4AD400F4D2AE79"><enum>(i)</enum><text>policies regarding
the loan application and approval process, including—</text>
<subclause id="H72DD158C855C4567ACC0E02B57D1CE9C"><enum>(I)</enum><text>disclosure and
application procedures to be followed by entities in the course of nominating
infrastructure projects for assistance under this part;</text>
</subclause><subclause id="HB7962F8F7027475DA251F13EEDA73C85"><enum>(II)</enum><text>guidelines for
the selection and approval of projects;</text>
</subclause><subclause id="H1F44F2E3E9784E099B62C18FEC88AD97"><enum>(III)</enum><text>specific
criteria for determining eligibility for project selection, consistent with
title II; and</text>
</subclause><subclause id="HB5A29D2C11114422855DC7213CC02CC3"><enum>(IV)</enum><text>standardized
terms and conditions, fee schedules, or legal requirements of a contract or
program, so as to carry out this part; and</text>
</subclause></clause><clause id="HCEEAD96E85EF406BB3FF718D9C606DC5"><enum>(ii)</enum><text>operational
guidelines; and</text>
</clause></subparagraph><subparagraph id="H627433E794D4475ABEAACEB1835D2A9E"><enum>(E)</enum><text>approve or
disapprove a multi-year or 1-year business plan and budget for AIFA;</text>
</subparagraph></paragraph><paragraph id="H8F93D9B19C144CCDAD67117A1E0A94C6"><enum>(3)</enum><text>ensure that AIFA
is at all times operated in a manner that is consistent with this part,
by—</text>
<subparagraph id="H683CA3DEDB814A9291BDB6B08FA4FC3E"><enum>(A)</enum><text>monitoring and
assessing the effectiveness of AIFA in achieving its strategic goals;</text>
</subparagraph><subparagraph id="H828D554F3A4041C582D323EE43EA65A3"><enum>(B)</enum><text>periodically
reviewing internal policies;</text>
</subparagraph><subparagraph id="H8F2D9EA4B7924578B9E72295F4A4983C"><enum>(C)</enum><text>reviewing and
approving annual business plans, annual budgets, and long-term strategies
submitted by the chief executive officer;</text>
</subparagraph><subparagraph id="H500D27EA9B484DC192B33212E4F07C12"><enum>(D)</enum><text>reviewing and
approving annual reports submitted by the chief executive officer;</text>
</subparagraph><subparagraph id="HB6FD2A7F72AB43F2A37E3FE40B2965A7"><enum>(E)</enum><text>engaging one or
more external auditors, as set forth in this part; and</text>
</subparagraph><subparagraph id="HB2D89980B6624B5988666D765DDC91B1"><enum>(F)</enum><text>reviewing and
approving all changes to the organization of senior management;</text>
</subparagraph></paragraph><paragraph id="HEEAF916AB62C45209EA77ECBF60B5857"><enum>(4)</enum><text>appoint and fix,
by a vote of 5 of the 7 voting members of the Board of Directors, and without
regard to the provisions of chapter 51 or subchapter III of chapter 53 of title
5, United States Code, the compensation and adjustments to compensation of all
AIFA personnel, provided that in appointing and fixing any compensation or
adjustments to compensation under this paragraph, the Board shall—</text>
<subparagraph id="HAE4911652BE049EEAAB26C1E67FBCB63"><enum>(A)</enum><text>consult with, and
seek to maintain comparability with, other comparable Federal personnel;</text>
</subparagraph><subparagraph id="H3D98B1E4D4B14B04B2B1D76F0EB6D127"><enum>(B)</enum><text>consult with the
Office of Personnel Management; and</text>
</subparagraph><subparagraph id="H5AF9BA28FFC64A169BF729D8E39D5396"><enum>(C)</enum><text>carry out such
duties consistent with merit principles, where applicable, as well as the
education, experience, level of responsibility, geographic differences, and
retention and recruitment needs in determining compensation of
personnel;</text>
</subparagraph></paragraph><paragraph id="HFA240416433546AC90214D199EE310C9"><enum>(5)</enum><text>establish such
other criteria, requirements, or procedures as the Board of Directors may
consider to be appropriate in carrying out this part;</text>
</paragraph><paragraph id="H1DE92F898E83480C8367261B8861E248"><enum>(6)</enum><text>serve as the
primary liaison for AIFA in interactions with Congress, the Executive Branch,
and State and local governments, and to represent the interests of AIFA in such
interactions and others;</text>
</paragraph><paragraph id="HC0B759A2BAFA4352A82256BEE1E74107"><enum>(7)</enum><text>approve by a vote
of 5 of the 7 voting members of the Board of Directors any changes to the
bylaws or internal policies of AIFA;</text>
</paragraph><paragraph id="H1CC557F6308E4558A82EE34234020FB5"><enum>(8)</enum><text>have the authority
and responsibility—</text>
<subparagraph id="H71E2824CD4B543C4A6D183CE795BFB04"><enum>(A)</enum><text>to oversee
entering into and carry out such contracts, leases, cooperative agreements, or
other transactions as are necessary to carry out this part with—</text>
<clause id="H104018DD5DC647CC9DEE2E59D3D8DC14"><enum>(i)</enum><text>any
Federal department or agency;</text>
</clause><clause id="HF07D370FA6704D23AA07B52F0E225F3D"><enum>(ii)</enum><text>any
State, territory, or possession (or any political subdivision thereof,
including State infrastructure banks) of the United States; and</text>
</clause><clause id="H895BABDF412645A9AC7BB9A7D686A549"><enum>(iii)</enum><text>any individual,
public-private partnership, firm, association, or corporation;</text>
</clause></subparagraph><subparagraph id="H30BCD88047634E7F8A21298B99C04A56"><enum>(B)</enum><text>to approve of the
acquisition, lease, pledge, exchange, and disposal of real and personal
property by AIFA and otherwise approve the exercise by AIFA of all of the usual
incidents of ownership of property, to the extent that the exercise of such
powers is appropriate to and consistent with the purposes of AIFA;</text>
</subparagraph><subparagraph id="HF919E2D2E996426AA4C94559BB05E9E1"><enum>(C)</enum><text>to determine the
character of, and the necessity for, the obligations and expenditures of AIFA,
and the manner in which the obligations and expenditures will be incurred,
allowed, and paid, subject to this part and other Federal law specifically
applicable to wholly owned Federal corporations;</text>
</subparagraph><subparagraph id="H87AD66CA782B46CEA738003ED0D17A83"><enum>(D)</enum><text>to execute, in
accordance with applicable bylaws and regulations, appropriate
instruments;</text>
</subparagraph><subparagraph id="H85EB5FD9B5F446B1BDA9D4000BC02B92"><enum>(E)</enum><text>to approve other
forms of credit enhancement that AIFA may provide to eligible projects, as long
as the forms of credit enhancements are consistent with the purposes of this
part and terms set forth in title II;</text>
</subparagraph><subparagraph id="H6B9EEB4EBDD5495C99DED51F30EB91F5"><enum>(F)</enum><text>to exercise all
other lawful powers which are necessary or appropriate to carry out, and are
consistent with, the purposes of AIFA;</text>
</subparagraph><subparagraph id="H989806C5E1C04457A792CE2D70BA77FD"><enum>(G)</enum><text>to sue or be sued
in the corporate capacity of AIFA in any court of competent
jurisdiction;</text>
</subparagraph><subparagraph id="H7E6A485E68364F39826594E8AEDA27B7"><enum>(H)</enum><text>to indemnify the
members of the Board of Directors and officers of AIFA for any liabilities
arising out of the actions of the members and officers in such capacity, in
accordance with, and subject to the limitations contained in this part;</text>
</subparagraph><subparagraph id="H46E1A331541C47C7A666F00497C141F3"><enum>(I)</enum><text>to review all
financial assistance packages to all eligible infrastructure projects, as
submitted by the chief executive officer and to approve, postpone, or deny the
same by majority vote;</text>
</subparagraph><subparagraph id="H291F8CFEC4ED468EA73E69AE295FC1C3"><enum>(J)</enum><text>to review all
restructuring proposals submitted by the chief executive officer, including
assignation, pledging, or disposal of the interest of AIFA in a project,
including payment or income from any interest owned or held by AIFA, and to
approve, postpone, or deny the same by majority vote; and</text>
</subparagraph><subparagraph id="H09C2AD7AD36D405D8AC02058CDAED3CC"><enum>(K)</enum><text>to enter into
binding commitments, as specified in approved financial assistance
packages;</text>
</subparagraph></paragraph><paragraph id="H51E5D8957C0042C38DECA3AF20331769"><enum>(9)</enum><text>delegate to the
chief executive officer those duties that the Board of Directors deems
appropriate, to better carry out the powers and purposes of the Board of
Directors under this section; and</text>
</paragraph><paragraph id="H98D360122EA54111BCEC8CB9E6D745E6"><enum>(10)</enum><text>to approve a
maximum aggregate amount of outstanding obligations of AIFA at any given time,
taking into consideration funding, and the size of AIFA’s addressable market
for infrastructure projects.</text>
</paragraph></section><section id="H1FD417A22EF848379E121D0EA40B7A78"><enum>769.</enum><header>Senior
management</header>
<subsection id="H8A5518ECAC264DC3AD08CCAB659B5DCB"><enum>(a)</enum><header>In
general</header><text>Senior management shall support the chief executive
officer in the discharge of the responsibilities of the chief executive
officer.</text>
</subsection><subsection id="H6CC4482CC26742C79A4D61A4C1E72E81"><enum>(b)</enum><header>Appointment of
senior management</header><text>The chief executive officer shall appoint such
senior managers as are necessary to carry out the purpose of AIFA, as approved
by a majority vote of the voting members of the Board of Directors.</text>
</subsection><subsection id="H7D80B9144F9D46869C3FB0BBB108696C"><enum>(c)</enum><header>Term</header><text>Each
member of senior management shall serve at the pleasure of the chief executive
officer and the Board of Directors.</text>
</subsection><subsection id="HEC729661D05E4E6CA4E17F50A33E2E07"><enum>(d)</enum><header>Removal of
senior management</header><text>Any member of senior management may be removed,
either by a majority of the voting members of the Board of Directors upon
request by the chief executive officer, or otherwise by vote of not fewer than
5 voting members of the Board of Directors.</text>
</subsection><subsection id="H998DA360B6FB456397E64D8C7A161EDC"><enum>(e)</enum><header>Senior
management</header>
<paragraph id="H68C3468A8DF841EAAF56E2A65B93B0A7"><enum>(1)</enum><header>In
general</header><text>Each member of senior management shall report directly to
the chief executive officer, other than the Chief Risk Officer, who shall
report directly to the Board of Directors.</text>
</paragraph><paragraph id="HE6F6CA078CC942B28D95C19D91BA02CC"><enum>(2)</enum><header>Duties and
responsibilities</header>
<subparagraph id="H77C754835D51465C9B57AA92B736F59D"><enum>(A)</enum><header>Chief financial
officer</header><text>The Chief Financial Officer shall be responsible for all
financial functions of AIFA, provided that, at the discretion of the Board of
Directors, specific functions of the Chief Financial Officer may be delegated
externally.</text>
</subparagraph><subparagraph id="H83B2DC95D3104925AC3FEE5CF8338575"><enum>(B)</enum><header>Chief risk
officer</header><text>The Chief Risk Officer shall be responsible for all
functions of AIFA relating to—</text>
<clause id="H828D3649842848E686164E61AC52492B"><enum>(i)</enum><text>the
creation of financial, credit, and operational risk management guidelines and
policies;</text>
</clause><clause id="HCE9ED07E5CA249059BD02850ED1B3156"><enum>(ii)</enum><text>credit analysis
for infrastructure projects;</text>
</clause><clause id="HAAB1816DEDFA4CBF93DBF0AB158C30C7"><enum>(iii)</enum><text>the creation of
conforming standards for infrastructure finance agreements;</text>
</clause><clause id="H10C1DE8C33E3469CA0AA1B3E932C1015"><enum>(iv)</enum><text>the
monitoring of the financial, credit, and operational exposure of AIFA;
and</text>
</clause><clause id="H5D460CA8DA1641B980E27C1B1F0DCD94"><enum>(v)</enum><text>risk
management and mitigation actions, including by reporting such actions, or
recommendations of such actions to be taken, directly to the Board of
Directors.</text>
</clause></subparagraph><subparagraph id="HD9DF3A86AEA64A5D8A25D952A4EFCFCC"><enum>(C)</enum><header>Chief compliance
officer</header><text>The Chief Compliance Officer shall be responsible for all
functions of AIFA relating to internal audits, accounting safeguards, and the
enforcement of such safeguards and other applicable requirements.</text>
</subparagraph><subparagraph id="HCE31E0E2C6BF437A9C756FA2AAEED51F"><enum>(D)</enum><header>General
counsel</header><text>The General Counsel shall be responsible for all
functions of AIFA relating to legal matters and, in consultation with the chief
executive officer, shall be responsible for ensuring that AIFA complies with
all applicable law.</text>
</subparagraph><subparagraph id="H958F6E566A554F7B9E889B72164FAB30"><enum>(E)</enum><header>Chief operations
officer</header><text>The Chief Operations Officer shall be responsible for all
operational functions of AIFA, including those relating to the continuing
operations and performance of all infrastructure projects in which AIFA retains
an interest and for all AIFA functions related to human resources.</text>
</subparagraph><subparagraph id="H8F3920C8BEBF4309A62CE247A11C3F6C"><enum>(F)</enum><header>Chief lending
officer</header><text>The Chief Lending Officer shall be responsible
for—</text>
<clause id="HBE33AE9F9C474E10BF72EA554D7EBBC5"><enum>(i)</enum><text>all
functions of AIFA relating to the development of project pipeline, financial
structuring of projects, selection of infrastructure projects to be reviewed by
the Board of Directors, preparation of infrastructure projects to be presented
to the Board of Directors, and set aside for rural infrastructure
projects;</text>
</clause><clause id="HAD66BB476CC742B188FC269D6A02B0C1"><enum>(ii)</enum><text>the
creation and management of—</text>
<subclause id="H45965DB2C096440992DCDD43A377ED3C"><enum>(I)</enum><text>a
Center for Excellence to provide technical assistance to public sector
borrowers in the development and financing of infrastructure projects;
and</text>
</subclause><subclause id="HDFCF285393B4409CA825E6A4EB78339E"><enum>(II)</enum><text>an Office of
Rural Assistance to provide technical assistance in the development and
financing of rural infrastructure projects; and</text>
</subclause></clause><clause id="HDBD7450A8F1D4BF3A8D514806E48FD27"><enum>(iii)</enum><text>the
establishment of guidelines to ensure diversification of lending activities by
region, infrastructure project type, and project size.</text>
</clause></subparagraph></paragraph></subsection><subsection id="H0EB48AB6D0B54D67925C8B3F1DBEF6FD"><enum>(f)</enum><header>Changes to
senior management</header><text>The Board of Directors, in consultation with
the chief executive officer, may alter the structure of the senior management
of AIFA at any time to better accomplish the goals, objectives, and purposes of
AIFA, provided that the functions of the Chief Financial Officer set forth in
subsection (e) remain separate from the functions of the Chief Risk Officer set
forth in subsection (e).</text>
</subsection><subsection id="H2395FDA648704D3BB90AEB659BCF3F79"><enum>(g)</enum><header>Conflicts of
interest</header><text>No individual appointed to senior management may—</text>
<paragraph id="H12C4DEEF52004FE48C3FCFDE2D7DAC72"><enum>(1)</enum><text>hold any other
public office;</text>
</paragraph><paragraph id="HE9F7F7A3C59E474CB397D5D0EA258721"><enum>(2)</enum><text>have any financial
interest in an infrastructure project then being considered by the Board of
Directors, unless that interest is placed in a blind trust; or</text>
</paragraph><paragraph id="H7CFD7330B7204F3D8446A476DA2E355D"><enum>(3)</enum><text>have any financial
interest in an investment institution or its affiliates, AIFA or its
affiliates, or other entity then seeking or likely to seek financial assistance
for any infrastructure project from AIFA, unless any such interest is placed in
a blind trust during the term of service of that individual in a senior
management position, and for a period of 2 years thereafter.</text>
</paragraph></subsection></section><section id="H281F1FB7A2BC4BA4ABF2DECFAC4D3F73"><enum>770.</enum><header>Special
Inspector General for AIFA</header>
<subsection id="HC55BBAEC962A45B3904601AD01878B26"><enum>(a)</enum><header>In
general</header><text>During the first 5 operating years of AIFA, the Office of
the Inspector General of the Department of the Treasury shall have
responsibility for AIFA.</text>
</subsection><subsection id="HC57B656D56A44FD6A989E01A547A44AB"><enum>(b)</enum><header>Office of the
special inspector general</header><text>Effective 5 years after the date of
enactment of the commencement of the operations of AIFA, there is established
the Office of the Special Inspector General for AIFA.</text>
</subsection><subsection id="HD600E0C554B24EEE9DC9C613F3E348EF"><enum>(c)</enum><header>Appointment of
Inspector General; Removal</header>
<paragraph id="HB994C055C8FD43549C470B4270029DB7"><enum>(1)</enum><header>Head of
office</header><text>The head of the Office of the Special Inspector General
for AIFA shall be the Special Inspector General for AIFA (in this part referred
to as the <quote>Special Inspector General</quote>), who shall be appointed by
the President, by and with the advice and consent of the Senate.</text>
</paragraph><paragraph id="HECD6DA4848F04AFABAA5E56FB2A31A87"><enum>(2)</enum><header>Basis of
appointment</header><text>The appointment of the Special Inspector General
shall be made on the basis of integrity and demonstrated ability in accounting,
auditing, financial analysis, law, management analysis, public administration,
or investigations.</text>
</paragraph><paragraph id="H1AC3970F678B4F2BAC90E715C45BA1BD"><enum>(3)</enum><header>Timing of
nomination</header><text>The nomination of an individual as Special Inspector
General shall be made as soon as is practicable after the effective date under
subsection (b).</text>
</paragraph><paragraph id="H2717E261C59449519BBED7BE60EDC2D6"><enum>(4)</enum><header>Removal</header><text>The
Special Inspector General shall be removable from office in accordance with the
provisions of <external-xref legal-doc="usc-act" parsable-cite="usc-act/Inspector General Act of 1978 /3">section 3(b)</external-xref> of the Inspector General Act of 1978 (5 U.S.C.
App.).</text>
</paragraph><paragraph id="HE43081A14F414BCF8518101C1BE688FF"><enum>(5)</enum><header>Rule of
construction</header><text>For purposes of <external-xref legal-doc="usc" parsable-cite="usc/5/7324">section 7324</external-xref> of title 5, United
States Code, the Special Inspector General shall not be considered an employee
who determines policies to be pursued by the United States in the nationwide
administration of Federal law.</text>
</paragraph><paragraph id="H1ED0B8355DB74311AFFA67607ED3766F"><enum>(6)</enum><header>Rate of
pay</header><text>The annual rate of basic pay of the Special Inspector General
shall be the annual rate of basic pay for an Inspector General under section
3(e) of the Inspector General Act of 1978 (5 U.S.C. App.).</text>
</paragraph></subsection><subsection id="H0E0A9E029A1D456B85C9FDA6AB270BE5"><enum>(d)</enum><header>Duties</header>
<paragraph id="HDE71971A601440128A89A22624FF2979"><enum>(1)</enum><header>In
general</header><text>It shall be the duty of the Special Inspector General to
conduct, supervise, and coordinate audits and investigations of the business
activities of AIFA.</text>
</paragraph><paragraph id="H885E034DD9C740E78A99960D6A671D27"><enum>(2)</enum><header>Other systems,
procedures, and controls</header><text>The Special Inspector General shall
establish, maintain, and oversee such systems, procedures, and controls as the
Special Inspector General considers appropriate to discharge the duty under
paragraph (1).</text>
</paragraph><paragraph id="H5B6CAC37121E4A0F91CC2C19D119AC40"><enum>(3)</enum><header>Additional
duties</header><text>In addition to the duties specified in paragraphs (1) and
(2), the Inspector General shall also have the duties and responsibilities of
inspectors general under the Inspector General Act of 1978.</text>
</paragraph></subsection><subsection id="H4ECC2809F5BC4E31B85ABB6947CE6E6D"><enum>(e)</enum><header>Powers and
authorities</header>
<paragraph id="H072352D93955440F8ED720C77E48A306"><enum>(1)</enum><header>In
general</header><text>In carrying out the duties specified in subsection (c),
the Special Inspector General shall have the authorities provided in section 6
of the Inspector General Act of 1978.</text>
</paragraph><paragraph id="H2948182AD6BD40D79E14445BE682AE94"><enum>(2)</enum><header>Additional
authority</header><text>The Special Inspector General shall carry out the
duties specified in subsection (c)(1) in accordance with section 4(b)(1) of the
Inspector General Act of 1978.</text>
</paragraph></subsection><subsection id="H05C6C15C173B405AAA486898E55A2960"><enum>(f)</enum><header>Personnel,
facilities, and other resources</header>
<paragraph id="HF1DDD478E69846E8B0EDDB5ADE24ABD4"><enum>(1)</enum><header>Additional
officers</header>
<subparagraph id="H0D336EC12547433194972361830D5220"><enum>(A)</enum><text>The Special
Inspector General may select, appoint, and employ such officers and employees
as may be necessary for carrying out the duties of the Special Inspector
General, subject to the provisions of title 5, United States Code, governing
appointments in the competitive service, and the provisions of chapter 51 and
subchapter III of chapter 53 of such title, relating to classification and
General Schedule pay rates.</text>
</subparagraph><subparagraph id="H96AE72C96D004FFC994B95406AB01CD7"><enum>(B)</enum><text>The Special
Inspector General may exercise the authorities of subsections (b) through (i)
of <external-xref legal-doc="usc" parsable-cite="usc/5/3161">section 3161</external-xref> of title 5, United States Code (without regard to subsection
(a) of that section).</text>
</subparagraph></paragraph><paragraph id="HC1E2217E29DD47E4AA9BD8DD098617E9"><enum>(2)</enum><header>Retention of
services</header><text>The Special Inspector General may obtain services as
authorized by <external-xref legal-doc="usc" parsable-cite="usc/5/3109">section 3109</external-xref> of title 5, United States Code, at daily rates not
to exceed the equivalent rate prescribed for grade GS–15 of the General
Schedule by section 5332 of such title.</text>
</paragraph><paragraph id="H15EEA13AA53F4AC9A1CE07E266DD58B4"><enum>(3)</enum><header>Ability to
contract for audits, studies, and other services</header><text>The Special
Inspector General may enter into contracts and other arrangements for audits,
studies, analyses, and other services with public agencies and with private
persons, and make such payments as may be necessary to carry out the duties of
the Special Inspector General.</text>
</paragraph><paragraph id="H4718877CCFE647DFB0C09031A858D46D"><enum>(4)</enum><header>Request for
information</header>
<subparagraph id="H5F87D25CA3D04D82A3CA57255354461D"><enum>(A)</enum><header>In
general</header><text>Upon request of the Special Inspector General for
information or assistance from any department, agency, or other entity of the
Federal Government, the head of such entity shall, insofar as is practicable
and not in contravention of any existing law, furnish such information or
assistance to the Special Inspector General, or an authorized designee.</text>
</subparagraph><subparagraph id="H8E9D1F5F4C714FC7AC550B3BD82A3F4B"><enum>(B)</enum><header>Refusal to
comply</header><text>Whenever information or assistance requested by the
Special Inspector General is, in the judgment of the Special Inspector General,
unreasonably refused or not provided, the Special Inspector General shall
report the circumstances to the Secretary of the Treasury, without
delay.</text>
</subparagraph></paragraph></subsection><subsection id="H3DF6C956FCC74EBDA8AD36343E80F4B2"><enum>(g)</enum><header>Reports</header>
<paragraph id="HCCFD857E51654792B384561B68BB78AE"><enum>(1)</enum><header>Annual
report</header><text>Not later than 1 year after the confirmation of the
Special Inspector General, and every calendar year thereafter, the Special
Inspector General shall submit to the President a report summarizing the
activities of the Special Inspector General during the previous 1-year period
ending on the date of such report.</text>
</paragraph><paragraph id="H8CFF74251CBF4610A2E7F4B887AF55BF"><enum>(2)</enum><header>Public
disclosures</header><text>Nothing in this subsection shall be construed to
authorize the public disclosure of information that is—</text>
<subparagraph id="HE22CDFDC7D1143C7B47BA49BE16A27C2"><enum>(A)</enum><text>specifically
prohibited from disclosure by any other provision of law;</text>
</subparagraph><subparagraph id="H830DF14237574EF5BC159E754BD2AE2B"><enum>(B)</enum><text>specifically
required by Executive order to be protected from disclosure in the interest of
national defense or national security or in the conduct of foreign affairs;
or</text>
</subparagraph><subparagraph id="H60941D48716D4DC0B6E0900F8C581E52"><enum>(C)</enum><text>a part of an
ongoing criminal investigation.</text>
</subparagraph></paragraph></subsection></section><section id="H3F4D71A3EFF7425FAF6B130E0370AB85"><enum>771.</enum><header>Other
personnel</header><text display-inline="no-display-inline">Except as otherwise
provided in the bylaws of AIFA, the chief executive officer, in consultation
with the Board of Directors, shall appoint, remove, and define the duties of
such qualified personnel as are necessary to carry out the powers, duties, and
purpose of AIFA, other than senior management, who shall be appointed in
accordance with section 769.</text>
</section><section id="HD25380F51FAE4A22B621BAC35198D059"><enum>772.</enum><header>Compliance</header><text display-inline="no-display-inline">The provision of assistance by the Board of
Directors pursuant to this part shall not be construed as superseding any
provision of State law or regulation otherwise applicable to an infrastructure
project.</text>
</section></subpart><subpart id="H2AE7F7D5AD2144B284A55F02C96C97ED"><enum>C</enum><header>Terms and
limitations on direct loans and loan guarantees </header>
<section id="H361E751E6C8C42DF989966083C75EC1A"><enum>773.</enum><header>Eligibility
criteria for assistance from AIFA and terms and limitations of loans</header>
<subsection id="H0044E882B138486794CA232FFB504D9E"><enum>(a)</enum><header>In
general</header><text>Any project whose use or purpose is private and for which
no public benefit is created shall not be eligible for financial assistance
from AIFA under this part. Financial assistance under this part shall only be
made available if the applicant for such assistance has demonstrated to the
satisfaction of the Board of Directors that the infrastructure project for
which such assistance is being sought—</text>
<paragraph id="H72C9627B66174F13B271A20C843E844C"><enum>(1)</enum><text>is not for the
refinancing of an existing infrastructure project; and</text>
</paragraph><paragraph id="HC982A7B4DEBF4A5F8CF6F8A707149E12"><enum>(2)</enum><text>meets—</text>
<subparagraph id="HA6306691894444BCBFE6707C0232DE45"><enum>(A)</enum><text>any pertinent
requirements set forth in this part;</text>
</subparagraph><subparagraph id="H9F57537ABCEC48F881C0E466CCB458B6"><enum>(B)</enum><text>any criteria
established by the Board of Directors or chief executive officer in accordance
with this part; and</text>
</subparagraph><subparagraph id="H2040520DDDD548AE96B4579E93A9315A"><enum>(C)</enum><text>the definition of
a transportation infrastructure project, water infrastructure project, or
energy infrastructure project.</text>
</subparagraph></paragraph></subsection><subsection id="HE55076EE3066473BAD33E961E30AAD69"><enum>(b)</enum><header>Considerations</header><text>The
criteria established by the Board of Directors pursuant to this part shall
provide adequate consideration of—</text>
<paragraph id="HA131E8609C5344A89519994106525D76"><enum>(1)</enum><text>the economic,
financial, technical, environmental, and public benefits and costs of each
infrastructure project under consideration for financial assistance under this
part, prioritizing infrastructure projects that—</text>
<subparagraph id="H89E14B027B2747BB9196FF93B3789853"><enum>(A)</enum><text>contribute to
regional or national economic growth;</text>
</subparagraph><subparagraph id="HBD5F6B1320EA4B45A2AC2E7B669F2B92"><enum>(B)</enum><text>offer value for
money to taxpayers;</text>
</subparagraph><subparagraph id="HD4F8B8D8FACF4F96A1B6FD3831C0A757"><enum>(C)</enum><text>demonstrate a
clear and significant public benefit;</text>
</subparagraph><subparagraph id="H6CEF14DAD40C4EA3A618242B47E9F8DC"><enum>(D)</enum><text>lead to job
creation; and</text>
</subparagraph><subparagraph id="HEC8B3D6E7D544BF5AE135EFF5FD56629"><enum>(E)</enum><text>mitigate
environmental concerns;</text>
</subparagraph></paragraph><paragraph id="HAAA8819273CF4D18B9A0ECD4BC3B17C9"><enum>(2)</enum><text>the means by which
development of the infrastructure project under consideration is being
financed, including—</text>
<subparagraph id="H6C0BFD41D54C4D7DA8E67B44C8058C88"><enum>(A)</enum><text>the terms,
conditions, and structure of the proposed financing;</text>
</subparagraph><subparagraph id="H0809363174C34F98A46581D1B50D3FDE"><enum>(B)</enum><text>the credit
worthiness and standing of the project sponsors, providers of equity, and
cofinanciers;</text>
</subparagraph><subparagraph id="H7C45F1D6099E4542AAC1E1D2813EE650"><enum>(C)</enum><text>the financial
assumptions and projections on which the infrastructure project is based;
and</text>
</subparagraph><subparagraph id="H3BB273254D5A4C619A0A05DFA660BFD5"><enum>(D)</enum><text>whether there is
sufficient State or municipal political support for the successful completion
of the infrastructure project;</text>
</subparagraph></paragraph><paragraph id="H895A23635B054856AEDEB2D390D22953"><enum>(3)</enum><text>the likelihood
that the provision of assistance by AIFA will cause such development to proceed
more promptly and with lower costs than would be the case without such
assistance;</text>
</paragraph><paragraph id="H18CB18F13335464FA2692C1605997A31"><enum>(4)</enum><text>the extent to
which the provision of assistance by AIFA maximizes the level of private
investment in the infrastructure project or supports a public-private
partnership, while providing a significant public benefit;</text>
</paragraph><paragraph id="H894D6E2EA1764662B653DB2B1674A091"><enum>(5)</enum><text>the extent to
which the provision of assistance by AIFA can mobilize the participation of
other financing partners in the infrastructure project;</text>
</paragraph><paragraph id="H1FB3D5E9FE634361889C800828FA7748"><enum>(6)</enum><text>the technical and
operational viability of the infrastructure project;</text>
</paragraph><paragraph id="HBC1DD40778324264BB5A7FD6C3893CFC"><enum>(7)</enum><text>the proportion of
financial assistance from AIFA;</text>
</paragraph><paragraph id="HC0A4A23319F04D959465506E26CF6B70"><enum>(8)</enum><text>the geographic
location of the project in an effort to have geographic diversity of projects
funded by AIFA;</text>
</paragraph><paragraph id="H963265B60120400EB4567CFA49BAE085"><enum>(9)</enum><text>the size of the
project and its impact on the resources of AIFA;</text>
</paragraph><paragraph id="H5D838F52424A40A98A7B52D09CC2B2F9"><enum>(10)</enum><text>the
infrastructure sector of the project, in an effort to have projects from more
than one sector funded by AIFA; and</text>
</paragraph><paragraph id="HB42023F12C1E4A35A0840A3A6A8F3EB2"><enum>(11)</enum><text>encourages use of
innovative procurement, asset management, or financing to minimize the
all-in-life-cycle cost, and improve the cost-effectiveness of a project.</text>
</paragraph></subsection><subsection id="HC355E6F195944C08B539E0CC9908AC18"><enum>(c)</enum><header>Application</header>
<paragraph id="H55419C555AEE49E5B3BC6C2410A39F79"><enum>(1)</enum><header>In
general</header><text>Any eligible entity seeking assistance from AIFA under
this part for an eligible infrastructure project shall submit an application to
AIFA at such time, in such manner, and containing such information as the Board
of Directors or the chief executive officer may require.</text>
</paragraph><paragraph id="HB342CC0AE5A94B278F2DD80C4AE56F71"><enum>(2)</enum><header>Review of
applications</header><text>AIFA shall review applications for assistance under
this part on an ongoing basis. The chief executive officer, working with the
senior management, shall prepare eligible infrastructure projects for review
and approval by the Board of Directors.</text>
</paragraph><paragraph id="H990E81F6455642A0B3AFC928F71270E8"><enum>(3)</enum><header>Dedicated
revenue sources</header><text>The Federal credit instrument shall be repayable,
in whole or in part, from tolls, user fees, or other dedicated revenue sources
that also secure the infrastructure project obligations.</text>
</paragraph></subsection><subsection id="H0A26B968D68F4864B63A7398D072D4E0"><enum>(d)</enum><header>Eligible
infrastructure project costs</header>
<paragraph id="H14F68532752B4C3397E019C05D37D923"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), to be eligible for
assistance under this part, an infrastructure project shall have project costs
that are reasonably anticipated to equal or exceed $100,000,000.</text>
</paragraph><paragraph id="HC11833CCE1D84413A647939552D4C1DD"><enum>(2)</enum><header>Rural
infrastructure projects</header><text>To be eligible for assistance under this
part a rural infrastructure project shall have project costs that are
reasonably anticipated to equal or exceed $25,000,000.</text>
</paragraph></subsection><subsection id="H3854143D97DF45068592CA15B128DEEA"><enum>(e)</enum><header>Loan eligibility
and maximum amounts</header>
<paragraph id="HA4E124309FA9448897725C4C03A71779"><enum>(1)</enum><header>In
general</header><text>The amount of a direct loan or loan guarantee under this
part shall not exceed the lesser of 50 percent of the reasonably anticipated
eligible infrastructure project costs or, if the direct loan or loan guarantee
does not receive an investment grade rating, the amount of the senior project
obligations.</text>
</paragraph><paragraph id="H9CDEE069A8164F1CB1587F0F7517FA87"><enum>(2)</enum><header>Maximum annual
loan and loan guarantee volume</header><text>The aggregate amount of direct
loans and loan guarantees made by AIFA in any single fiscal year may not
exceed—</text>
<subparagraph id="HA7D06CE78A044EE1B621765C5735F0F0"><enum>(A)</enum><text>during the first 2
fiscal years of the operations of AIFA, $10,000,000,000;</text>
</subparagraph><subparagraph id="HFFB18082E70E4404AA6879F29E919E0D"><enum>(B)</enum><text>during fiscal
years 3 through 9 of the operations of AIFA, $20,000,000,000; or</text>
</subparagraph><subparagraph id="HCDABA184AA9540CC8553A17D0AD72DBE"><enum>(C)</enum><text>during any fiscal
year thereafter, $50,000,000,000.</text>
</subparagraph></paragraph></subsection><subsection id="H0C1F1EC13B204F4BAE313EA8698DA24A"><enum>(f)</enum><header>State and local
permits required</header><text>The provision of assistance by the Board of
Directors pursuant to this part shall not be deemed to relieve any recipient of
such assistance, or the related infrastructure project, of any obligation to
obtain required State and local permits and approvals.</text>
</subsection></section><section id="H67C58C6F8849425FB2F390E066721DF0"><enum>774.</enum><header>Loan terms and
repayment</header>
<subsection id="H2C4482993D9D4793924F542B459D7853"><enum>(a)</enum><header>In
general</header><text>A direct loan or loan guarantee under this part with
respect to an eligible infrastructure project shall be on such terms, subject
to such conditions, and contain such covenants, representations, warranties,
and requirements (including requirements for audits) as the chief executive
officer determines appropriate.</text>
</subsection><subsection id="H2AD80C05E7B74BE699506A8468613C94"><enum>(b)</enum><header>Terms</header><text>A
direct loan or loan guarantee under this part—</text>
<paragraph id="HC275A5EC66DE4F059219757CFBD211FA"><enum>(1)</enum><text>shall—</text>
<subparagraph id="H04F91A2EB31546BF864D894CFA728668"><enum>(A)</enum><text>be payable, in
whole or in part, from tolls, user fees, or other dedicated revenue sources
that also secure the senior project obligations (such as availability payments
and dedicated State or local revenues); and</text>
</subparagraph><subparagraph id="HF88C0244AE95484D9832E10FC6CA2F70"><enum>(B)</enum><text>include a rate
covenant, coverage requirement, or similar security feature supporting the
project obligations; and</text>
</subparagraph></paragraph><paragraph id="H0973C57CA81D43EA9FFA3772BB913822"><enum>(2)</enum><text>may have a lien on
revenues described in paragraph (1), subject to any lien securing project
obligations.</text>
</paragraph></subsection><subsection id="H904C968CDFB54838A2A93C27B64DB0A6"><enum>(c)</enum><header>Base interest
rate</header><text>The base interest rate on a direct loan under this part
shall be not less than the yield on United States Treasury obligations of a
similar maturity to the maturity of the direct loan.</text>
</subsection><subsection id="H29D80315C46F40D0BD7476EF8FC42284"><enum>(d)</enum><header>Risk
assessment</header><text>Before entering into an agreement for assistance under
this part, the chief executive officer, in consultation with the Director of
the Office of Management and Budget and considering rating agency preliminary
or final rating opinion letters of the project under this section, shall
estimate an appropriate Federal credit subsidy amount for each direct loan and
loan guarantee, taking into account such letter, as well as any comparable
market rates available for such a loan or loan guarantee, should any exist. The
final credit subsidy cost for each loan and loan guarantee shall be determined
consistent with the Federal Credit Reform Act, <external-xref legal-doc="usc" parsable-cite="usc/2/661a">2 U.S.C. 661a et seq.</external-xref></text>
</subsection><subsection id="HB4C51BBE3C724DBCB6EE3C303798C390"><enum>(e)</enum><header>Credit
fee</header><text>With respect to each agreement for assistance under this
part, the chief executive officer may charge a credit fee to the recipient of
such assistance to pay for, over time, all or a portion of the Federal credit
subsidy determined under subsection (d), with the remainder paid by the account
established for AIFA; provided, that the source of fees paid under this section
shall not be a loan or debt obligation guaranteed by the Federal Government. In
the case of a direct loan, such credit fee shall be in addition to the base
interest rate established under subsection (c).</text>
</subsection><subsection id="HA3C18898390C452491CD34D1BA29104E"><enum>(f)</enum><header>Maturity
date</header><text>The final maturity date of a direct loan or loan guaranteed
by AIFA under this part shall be not later than 35 years after the date of
substantial completion of the infrastructure project, as determined by the
chief executive officer.</text>
</subsection><subsection id="HB97967B5FF50486DAFAF6E98DE9BC391"><enum>(g)</enum><header>Rating opinion
letter</header>
<paragraph id="HAE2C65C99B194ECB9237517B3D1EB5B1"><enum>(1)</enum><header>In
general</header><text>The chief executive officer shall require each applicant
for assistance under this part to provide a rating opinion letter from at least
1 ratings agency, indicating that the senior obligations of the infrastructure
project, which may be the Federal credit instrument, have the potential to
achieve an investment-grade rating.</text>
</paragraph><paragraph id="H0B01EDEE7D664A5DA9A514C1671778F0"><enum>(2)</enum><header>Rural
infrastructure projects</header><text>With respect to a rural infrastructure
project, a rating agency opinion letter described in paragraph (1) shall not be
required, except that the loan or loan guarantee shall receive an internal
rating score, using methods similar to the ratings agencies generated by AIFA,
measuring the proposed direct loan or loan guarantee against comparable direct
loans or loan guarantees of similar credit quality in a similar sector.</text>
</paragraph></subsection><subsection id="HE7C2E2C6B6454A2F9743215E1DB2F3CC"><enum>(h)</enum><header>Investment-Grade
rating requirement</header>
<paragraph id="HD67B60EBAAB940D295F2807F8DECF0DB"><enum>(1)</enum><header>Loans and loan
guarantees</header><text>The execution of a direct loan or loan guarantee under
this part shall be contingent on the senior obligations of the infrastructure
project receiving an investment-grade rating.</text>
</paragraph><paragraph id="H887C1EE60ABE4995921798F01FECCC2B"><enum>(2)</enum><header>Rating of aifa
overall portfolio</header><text>The average rating of the overall portfolio of
AIFA shall be not less than investment grade after 5 years of operation.</text>
</paragraph></subsection><subsection id="H89E111A8F91543B7B570C5EDEB513A9B"><enum>(i)</enum><header>Terms and
repayment of direct loans</header>
<paragraph id="H111464ED124147EDA46E1427501A9662"><enum>(1)</enum><header>Schedule</header><text>The
chief executive officer shall establish a repayment schedule for each direct
loan under this part, based on the projected cash flow from infrastructure
project revenues and other repayment sources.</text>
</paragraph><paragraph id="H6D477E13D6F34CE1901DAFE402340E62"><enum>(2)</enum><header>Commencement</header><text>Scheduled
loan repayments of principal or interest on a direct loan under this part shall
commence not later than 5 years after the date of substantial completion of the
infrastructure project, as determined by the chief executive officer of
AIFA.</text>
</paragraph><paragraph id="HB283A9E6D11847A3BC7DC3ACEBFAC93B"><enum>(3)</enum><header>Deferred
payments of direct loans</header>
<subparagraph id="H92CAD7C6F8BA49BE98A83CA3A38C0082"><enum>(A)</enum><header>Authorization</header><text>If,
at any time after the date of substantial completion of an infrastructure
project assisted under this part, the infrastructure project is unable to
generate sufficient revenues to pay the scheduled loan repayments of principal
and interest on the direct loan under this part, the chief executive officer
may allow the obligor to add unpaid principal and interest to the outstanding
balance of the direct loan, if the result would benefit the taxpayer.</text>
</subparagraph><subparagraph id="HAD30762A22904155B3592D93126D2392"><enum>(B)</enum><header>Interest</header><text>Any
payment deferred under subparagraph (A) shall—</text>
<clause id="H9E75613B7FDF4F85BE0AC300BE810219"><enum>(i)</enum><text>continue to accrue
interest, in accordance with the terms of the obligation, until fully repaid;
and</text>
</clause><clause id="HA65F2F364C844FDFB1B89890B85987BA"><enum>(ii)</enum><text>be
scheduled to be amortized over the remaining term of the loan.</text>
</clause></subparagraph><subparagraph id="H9008FB318BB449619C27CF7F003F0C92"><enum>(C)</enum><header>Criteria</header>
<clause id="H4ED92B3541F442A58784D17FA2E24A06"><enum>(i)</enum><header>In
general</header><text>Any payment deferral under subparagraph (A) shall be
contingent on the infrastructure project meeting criteria established by the
Board of Directors.</text>
</clause><clause id="HC7579767E36A45B68593712068725E12"><enum>(ii)</enum><header>Repayment
standards</header><text>The criteria established under clause (i) shall include
standards for reasonable assurance of repayment.</text>
</clause></subparagraph></paragraph><paragraph id="H81BB4B22D85A44DA9C87EB06C3924FBB"><enum>(4)</enum><header>Prepayment of
direct loans</header>
<subparagraph id="H5C8C0655F2404F7EA8AEBA1730029FE5"><enum>(A)</enum><header>Use of excess
revenues</header><text>Any excess revenues that remain after satisfying
scheduled debt service requirements on the infrastructure project obligations
and direct loan and all deposit requirements under the terms of any trust
agreement, bond resolution, or similar agreement securing project obligations
under this part may be applied annually to prepay the direct loan, without
penalty.</text>
</subparagraph><subparagraph id="H3785CD5E861F4E10BE4206B84448B939"><enum>(B)</enum><header>Use of proceeds
of refinancing</header><text>A direct loan under this part may be prepaid at
any time, without penalty, from the proceeds of refinancing from non-Federal
funding sources.</text>
</subparagraph></paragraph><paragraph id="H0D63150D4203478582FD25439B1B8BFB"><enum>(5)</enum><header>Sale of direct
loans</header>
<subparagraph id="H0BCF3BBE346A446888232C399C766856"><enum>(A)</enum><header>In
general</header><text>As soon as is practicable after substantial completion of
an infrastructure project assisted under this part, and after notifying the
obligor, the chief executive officer may sell to another entity, or reoffer
into the capital markets, a direct loan for the infrastructure project, if the
chief executive officer determines that the sale or reoffering can be made on
favorable terms for the taxpayer.</text>
</subparagraph><subparagraph id="HBBCBB78762EC412287AAA5BE8DEEC05E"><enum>(B)</enum><header>Consent of
obligor</header><text>In making a sale or reoffering under subparagraph (A),
the chief executive officer may not change the original terms and conditions of
the direct loan, without the written consent of the obligor.</text>
</subparagraph></paragraph></subsection><subsection id="H80C747B308FB498AA6BF8279E872B221"><enum>(j)</enum><header>Loan
guarantees</header>
<paragraph id="HE530167F44BF462090DEA608A2AF401B"><enum>(1)</enum><header>Terms</header><text>The
terms of a loan guaranteed by AIFA under this part shall be consistent with the
terms set forth in this section for a direct loan, except that the rate on the
guaranteed loan and any payment, pre-payment, or refinancing features shall be
negotiated between the obligor and the lender, with the consent of the chief
executive officer.</text>
</paragraph><paragraph id="H04DA9BCD616145A0A01623642F7A291D"><enum>(2)</enum><header>Guaranteed
lender</header><text>A guaranteed lender shall be limited to those lenders
meeting the definition of that term in <external-xref legal-doc="usc" parsable-cite="usc/23/601">section 601(a)</external-xref> of title 23, United
States Code.</text>
</paragraph></subsection><subsection id="HA7B765A2325047F39DFC11D069DE2100"><enum>(k)</enum><header>Compliance with
FCRA; in general</header><text>Direct loans and loan guarantees authorized by
this part shall be subject to the provisions of the Federal Credit Reform Act
of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/2/661">2 U.S.C. 661 et seq.</external-xref>), as amended.</text>
</subsection></section><section id="HD0EE2FF25570432AAD2D1DAB562473BE"><enum>775.</enum><header>Compliance and
enforcement</header>
<subsection id="HBC54A64D5D9744DEA82D1C5B9D1833FD"><enum>(a)</enum><header>Credit
agreement</header><text>Notwithstanding any other provision of law, each
eligible entity that receives assistance under this part from AIFA shall enter
into a credit agreement that requires such entity to comply with all applicable
policies and procedures of AIFA, in addition to all other provisions of the
loan agreement.</text>
</subsection><subsection id="HB2200E9A4AC540AE9F614A3573A30D42"><enum>(b)</enum><header>AIFA authority
on noncompliance</header><text>In any case in which a recipient of assistance
under this part is materially out of compliance with the loan agreement, or any
applicable policy or procedure of AIFA, the Board of Directors may take action
to cancel unutilized loan amounts, or to accelerate the repayment terms of any
outstanding obligation.</text>
</subsection><subsection id="HDE7948C04D4F44D0A6057ADF5780EF71"><enum>(c)</enum><text>Nothing in this
part is intended to affect existing provisions of law applicable to the
planning, development, construction, or operation of projects funded under the
Act.</text>
</subsection></section><section id="H824C5C6D43FD403CB82D7A4BE3C7AE6D"><enum>776.</enum><header>Audits; reports
to the President and Congress</header>
<subsection id="H79721D6FE9C4451EA6B92AB4FB0796D3"><enum>(a)</enum><header>Accounting</header><text>The
books of account of AIFA shall be maintained in accordance with generally
accepted accounting principles, and shall be subject to an annual audit by
independent public accountants of nationally recognized standing appointed by
the Board of Directors.</text>
</subsection><subsection id="HE3F2EC6E1F1F4E0484F60D7F27A1323C"><enum>(b)</enum><header>Reports</header>
<paragraph id="H9108043A8E9B4E90907DA8734AD707E0"><enum>(1)</enum><header>Board of
directors</header><text>Not later than 90 days after the last day of each
fiscal year, the Board of Directors shall submit to the President and Congress
a complete and detailed report with respect to the preceding fiscal year,
setting forth—</text>
<subparagraph id="HCED5AE0D91574983B2D55142CC8DAE9D"><enum>(A)</enum><text>a summary of the
operations of AIFA, for such fiscal year;</text>
</subparagraph><subparagraph id="H18CC9F17F9854D94A0090226B8319407"><enum>(B)</enum><text>a schedule of the
obligations of AIFA and capital securities outstanding at the end of such
fiscal year, with a statement of the amounts issued and redeemed or paid during
such fiscal year;</text>
</subparagraph><subparagraph id="H4970448447B94258B51E9F8C1C0C91D7"><enum>(C)</enum><text>the status of
infrastructure projects receiving funding or other assistance pursuant to this
part during such fiscal year, including all nonperforming loans, and including
disclosure of all entities with a development, ownership, or operational
interest in such infrastructure projects;</text>
</subparagraph><subparagraph id="H17D44B0E58CD40938DEC0D09377B00E5"><enum>(D)</enum><text>a description of
the successes and challenges encountered in lending to rural communities,
including the role of the Center for Excellence and the Office of Rural
Assistance established under this part; and</text>
</subparagraph><subparagraph id="HAAECE78EAC164A2AAE1D2A3F3C9FB05B"><enum>(E)</enum><text>an assessment of
the risks of the portfolio of AIFA, prepared by an independent source.</text>
</subparagraph></paragraph><paragraph id="HDE4FD9A4BAC04E218ABD2A4592DF2277"><enum>(2)</enum><header>GAO</header><text>Not
later than 5 years after the date of enactment of this part, the Comptroller
General of the United States shall conduct an evaluation of, and shall submit
to Congress a report on, activities of AIFA for the fiscal years covered by the
report that includes an assessment of the impact and benefits of each funded
infrastructure project, including a review of how effectively each such
infrastructure project accomplished the goals prioritized by the infrastructure
project criteria of AIFA.</text>
</paragraph></subsection><subsection id="HFB91123685D84DBF9ADCAC42D9B6CAA4"><enum>(c)</enum><header>Books and
records</header>
<paragraph id="H61FADC739E18424C93EA7E1355B0DC9D"><enum>(1)</enum><header>In
general</header><text>AIFA shall maintain adequate books and records to support
the financial transactions of AIFA, with a description of financial
transactions and infrastructure projects receiving funding, and the amount of
funding for each such project maintained on a publically accessible
database.</text>
</paragraph><paragraph id="H66B691168F5E4B44BD1E2583C5AA1764"><enum>(2)</enum><header>Audits by the
Secretary and GAO</header><text>The books and records of AIFA shall at all
times be open to inspection by the Secretary of the Treasury, the Special
Inspector General, and the Comptroller General of the United States.</text>
</paragraph></subsection></section></subpart><subpart id="HD956B0E1757544DCBDF3DCF35A0B366E"><enum>D</enum><header>Funding of
AIFA</header>
<section id="HE58E222BF00548F1846AD8ECC7BCB66A"><enum>777.</enum><header>Administrative
fees</header>
<subsection id="HE22EC639F58845369C8219337864587B"><enum>(a)</enum><header>In
general</header><text>In addition to fees that may be collected under section
774(e), the chief executive officer shall establish and collect fees from
eligible funding recipients with respect to loans and loan guarantees under
this part that—</text>
<paragraph id="H9393CC02DC404C26B46F7881A2479818"><enum>(1)</enum><text>are sufficient to
cover all or a portion of the administrative costs to the Federal Government
for the operations of AIFA, including the costs of expert firms, including
counsel in the field of municipal and project finance, and financial advisors
to assist with underwriting, credit analysis, or other independent reviews, as
appropriate;</text>
</paragraph><paragraph id="HF8214A2DD21943B0BF0B4E6FCEA555BF"><enum>(2)</enum><text>may be in the form
of an application or transaction fee, or other form established by the CEO;
and</text>
</paragraph><paragraph id="HDE7E5018A35A478BAC719E59F2B34C5D"><enum>(3)</enum><text>may be based on
the risk premium associated with the loan or loan guarantee, taking into
consideration—</text>
<subparagraph id="H886884CE270047369CA402FAD2E00286"><enum>(A)</enum><text>the price of
United States Treasury obligations of a similar maturity;</text>
</subparagraph><subparagraph id="H71D08D209250497FBFBCC399837681F9"><enum>(B)</enum><text>prevailing market
conditions;</text>
</subparagraph><subparagraph id="H55D21DAADACF4FBA95C26C29CEDAEAF7"><enum>(C)</enum><text>the ability of the
infrastructure project to support the loan or loan guarantee; and</text>
</subparagraph><subparagraph id="HD65A22670B76480AB98C0B41D721B6C8"><enum>(D)</enum><text>the total amount
of the loan or loan guarantee.</text>
</subparagraph></paragraph></subsection><subsection id="H104E592C4D1442CB804EDEDCD137F5C0"><enum>(b)</enum><header>Availability of
amounts</header><text>Amounts collected under subsections (a)(1), (a)(2), and
(a)(3) shall be available without further action; provided further, that the
source of fees paid under this section shall not be a loan or debt obligation
guaranteed by the Federal Government.</text>
</subsection></section><section id="H0C278E5F756A41299ED6D6C62588160F"><enum>778.</enum><header>Efficiency of
AIFA</header><text display-inline="no-display-inline">The chief executive
officer shall, to the extent possible, take actions consistent with this part
to minimize the risk and cost to the taxpayer of AIFA activities. Fees and
premiums for loan guarantee or insurance coverage will be set at levels that
minimize administrative and Federal credit subsidy costs to the Government, as
defined in Section 502 of the Federal Credit Reform Act of 1990, as amended, of
such coverage, while supporting achievement of the program’s objectives,
consistent with policies as set forth in the Business Plan.</text>
</section><section id="H0465AC41DE37430BAE45E1D6319B7AE1"><enum>779.</enum><header>Funding</header><text display-inline="no-display-inline">There is hereby appropriated to AIFA to
carry out this part, for the cost of direct loans and loan guarantees subject
to the limitations under section 773, and for administrative costs,
$10,000,000,000, to remain available until expended; provided, that such costs,
including the costs of modifying such loans, shall be as defined in section 502
of the Federal Credit Reform Act of 1990, as amended; provided further, that of
this amount, not more than $25,000,000 for each of fiscal years 2013 through
2014, and not more than $50,000,000 for fiscal year 2015 may be used for
administrative costs of AIFA; provided further, that not more than 5 percent of
such amount shall be used to offset subsidy costs associated with rural
projects. Amounts authorized shall be available without further action.</text>
</section></subpart><subpart id="HAB434C1656BE4106A92A8741252CAF90"><enum>E</enum><header>Extension of
exemption from alternative minimum tax treatment for certain tax-Exempt
bonds</header>
<section id="H5B05F18C76E24C26AA4D237406041A41"><enum>780.</enum><header>Extension of
exemption from alternative minimum tax treatment for certain tax-exempt
bonds</header>
<subsection id="H2D13111D0AE043FDB71203A6D6A3DE76"><enum>(a)</enum><header>In
general</header><text>Clause (vi) of section 57(a)(5)(C) of the Internal
Revenue Code of 1986 is amended—</text>
<paragraph id="H30C27F8E3CA64CE5A569AB5356BBD7C2"><enum>(1)</enum><text>by striking
<quote>January 1, 2011</quote> in subclause (I) and inserting <quote>January 1,
2014</quote>; and</text>
</paragraph><paragraph id="H847352ED53AE44B99741A5D347F4384A"><enum>(2)</enum><text>by striking
<quote><header-in-text level="clause" style="OLC">and
2010</header-in-text></quote> in the heading and inserting
<quote><header-in-text level="clause" style="OLC">, 2010, 2011, 2012 and
2013</header-in-text></quote>.</text>
</paragraph></subsection><subsection id="HD162FB997CBC4043A096F9E47700037A"><enum>(b)</enum><header>Adjusted current
earnings</header><text>Clause (iv) of section 56(g)(4)(B) of the Internal
Revenue Code of 1986 is amended—</text>
<paragraph id="HAB62AB01F0F84039BDF5B384C479BFE2"><enum>(1)</enum><text>by striking
<quote>January 1, 2011</quote> in subclause (I) and inserting <quote>January 1,
2014</quote>; and</text>
</paragraph><paragraph id="HFADE0650AF2944E9ABF9FC146B372568"><enum>(2)</enum><text>by striking
<quote><header-in-text level="subclause" style="OLC">AND
2010</header-in-text></quote> in the heading and inserting
<quote><header-in-text level="subclause" style="OLC">, 2010, 2011, 2012 and
2013</header-in-text></quote>.</text>
</paragraph></subsection><subsection id="H410FDCC738204651B274BE7F68D168FC"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
obligations issued after December 31, 2010.</text>
</subsection></section></subpart></part></subtitle>