[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3152 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 3152

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
             for distressed areas, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            October 3 (legislative day, September 22), 2000

  Mr. Roth (for himself, Mr. Moynihan, Mr. Grassley, Mr. Baucus, Mr. 
 Hatch, Mr. Rockefeller, Mr. Murkowski, Mr. Breaux, Mr. Jeffords, Mr. 
 Conrad, Mr. Mack, Mr. Graham, Mr. Thompson, Mr. Kerrey, Mr. Robb, and 
Mr. Bryan) introduced the following bill; which was read the first time

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax incentives 
             for distressed areas, and for other purposes.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Community Renewal 
and New Markets Act of 2000''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.
             TITLE I--INCENTIVES FOR DISTRESSED COMMUNITIES

         Subtitle A--Designation and Treatment of Renewal Zones

Sec. 101. Designation and treatment of renewal zones.
      Subtitle B--Modification of Incentives for Empowerment Zones

Sec. 111. Extension of empowerment zone treatment through 2009.
Sec. 112. 15 percent employment credit for all empowerment zones
Sec. 113. Increased expensing under section 179.
Sec. 114. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 115. Empowerment zone capital gain.
Sec. 116. Funding for Round II empowerment zones.
         Subtitle C--Modification of Tax Incentives for DC Zone

Sec. 121. Extension of DC zone through 2006.
Sec. 122. Extension of DC zero percent capital gains rate.
Sec. 123. Gross income test for DC zone businesses.
Sec. 124. Expansion of DC homebuyer tax credit.
                   Subtitle D--New Markets Tax Credit

Sec. 131. New markets tax credit.
       Subtitle E--Modification of Tax Incentives for Puerto Rico

Sec. 141. Modification of Puerto Rico economic activity tax credit.
              Subtitle F--Individual Development Accounts

Sec. 151. Definitions.
Sec. 152. Structure and administration of qualified individual 
                            development account programs.
Sec. 153. Procedures for opening an individual development account and 
                            qualifying for matching funds.
Sec. 154. Contributions to individual development accounts.
Sec. 155. Deposits by qualified individual development account 
                            programs.
Sec. 156. Withdrawal procedures.
Sec. 157. Certification and termination of qualified individual 
                            development account programs.
Sec. 158. Reporting, monitoring, and evaluation.
Sec. 159. Account funds of program participants disregarded for 
                            purposes of certain means-tested Federal 
                            programs.
Sec. 160. Matching funds for individual development accounts provided 
                            through a tax credit for qualified 
                            financial institutions.
Sec. 161. Designation of earned income tax credit payments for deposit 
                            to individual development accounts.
                   Subtitle G--Additional Incentives

Sec. 171. Exclusion of certain amounts received under the National 
                            Health Service Corps Scholarship Program 
                            and the F. Edward Hebert Armed Forces 
                            Health Professions Scholarship and 
                            Financial Assistance Program.
Sec. 172. Extension of enhanced deduction for corporate donations of 
                            computer technology.
Sec. 173. Extension of adoption tax credit.
Sec. 174. Tax treatment of Alaska Native Settlement Trusts.
Sec. 175. Treatment of Indian tribal governments under Federal 
                            Unemployment Tax Act.
Sec. 176. Increase in social services block grant for FY 2001.
            TITLE II--TAX INCENTIVES FOR AFFORDABLE HOUSING

                 Subtitle A--Low-Income Housing Credit

Sec. 201. Modification of State ceiling on low-income housing credit.
Sec. 202. Modification to rules relating to basis of building which is 
                            eligible for credit.
                       Subtitle B--Historic Homes

Sec. 211. Tax credit for renovating historic homes.
               Subtitle C--Forgiven Mortgage Obligations

Sec. 221. Exclusion from gross income for certain forgiven mortgage 
                            obligations.
                   Subtitle D--Mortgage Revenue Bonds

Sec. 231. Increase in purchase price limitation under mortgage subsidy 
                            bond rules based on median family income.
Sec. 232. Mortgage financing for residences located in presidentially 
                            declared disaster areas.
              Subtitle E--Property and Casualty Insurance

Sec. 241. Exemption from income tax for State-created organizations 
                            providing property and casualty insurance 
                            for property for which such coverage is 
                            otherwise unavailable.
      TITLE III--TAX INCENTIVES FOR URBAN AND RURAL INFRASTRUCTURE

Sec. 301. Increase in State ceiling on private activity bonds.
Sec. 302. Modifications to expensing of environmental remediation 
                            costs.
Sec. 303. Broadband internet access tax credit.
Sec. 304. Credit to holders of qualified Amtrak bonds.
Sec. 305. Clarification of contribution in aid of construction.
Sec. 306. Recovery period for depreciation of certain leasehold 
                            improvements.
                    TITLE IV--TAX RELIEF FOR FARMERS

Sec. 401. Farm, fishing, and ranch risk management accounts.
Sec. 402. Written agreement relating to exclusion of certain farm 
                            rental income from net earnings from self-
                            employment.
Sec. 403. Treatment of conservation reserve program payments as rentals 
                            from real estate.
Sec. 404. Exemption of agricultural bonds from State volume cap.
Sec. 405. Modifications to section 512(b)(13).
Sec. 406. Charitable deduction for contributions of food inventory.
Sec. 407. Income averaging for farmers and fishermen not to increase 
                            alternative minimum tax liability.
Sec. 408. Cooperative marketing includes value-added processing through 
                            animals.
Sec. 409. Declaratory judgment relief for section 521 cooperatives.
Sec. 410. Small ethanol producer credit.
Sec. 411. Payment of dividends on stock of cooperatives without 
                            reducing patronage dividends.
          TITLE V--TAX INCENTIVES FOR THE PRODUCTION OF ENERGY

Sec. 501. Election to expense geological and geophysical expenditures.
Sec. 502. Election to expense delay rental payments
Sec. 503. 5-year net operating loss carryback for losses attributable 
                            to operating mineral interests of 
                            independent oil and gas producers.
Sec. 504. Temporary suspension of percentage of depletion deduction 
                            limitation based on 65 percent of taxable 
                            income.
Sec. 505. Tax credit for marginal domestic oil and natural gas well 
                            production.
Sec. 506. Natural gas gathering lines treated as 7-year property.
Sec. 507. Clarification of treatment of pipeline transportation income.
               TITLE VI--TAX INCENTIVES FOR CONSERVATION

Sec. 601. Exclusion of 50 percent of gain on sales of land or interests 
                            in land or water to eligible entities for 
                            conservation purposes.
Sec. 602. Expansion of estate tax exclusion for real property subject 
                            to qualified conservation easement.
Sec. 603. Tax exclusion for cost-sharing payments under partners for 
                            wildlife program.
Sec. 604. Incentive for certain energy efficient property used in 
                            business.
Sec. 605. Extension and modification of tax credit for electricity 
                            produced from biomass.
Sec. 606. Tax credit for certain energy efficient motor vehicles.
                  TITLE VII--ADDITIONAL TAX PROVISIONS

Sec. 701. Limitation on use of nonaccrual experience method of 
                            accounting.
Sec. 702. Repeal of section 530(d) of the Revenue Act of 1978.
Sec. 703. Expansion of exemption from personal holding company tax for 
                            lending or finance companies.
Sec. 704. Charitable contribution deduction for certain expenses 
                            incurred in support of Native Alaskan 
                            subsistence whaling.
Sec. 705. Imposition of excise tax on persons who acquire structured 
                            settlement payments in factoring 
                            transactions.

             TITLE I--INCENTIVES FOR DISTRESSED COMMUNITIES

         Subtitle A--Designation and Treatment of Renewal Zones

SEC. 101. DESIGNATION AND TREATMENT OF RENEWAL ZONES.

    (a) In General.--Chapter 1 is amended by adding at the end the 
following new subchapter:

       ``Subchapter X--Designation and Treatment of Renewal Zones

                              ``Sec. 1400E. Designation and treatment 
                                        of renewal zones.

``SEC. 1400E. DESIGNATION AND TREATMENT OF RENEWAL ZONES.

    ``(a) Treatment of Designation.--For purposes of this title, any 
area designated as a renewal zone under this section shall be treated 
as an empowerment zone.
    ``(b) Designation.--
            ``(1) Renewal zone defined.--For purposes of this title, 
        the term `renewal zone' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as a renewal zone (hereafter in 
                this section referred to as a `nominated area'), and
                    ``(B) which the appropriate Secretary designates as 
                a renewal zone.
            ``(2) Number of designations.--
                    ``(A) In general.--The appropriate Secretaries may 
                designate not more than 30 nominated areas as renewal 
                zones.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under subparagraph (A), at least 6 
                must be areas--
                            ``(i) which are within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 50,000, or
                            ``(ii) which satisfy the requirements of 
                        section 1393(a)(2).
            ``(3) Areas designated based on degree of poverty, etc.--
                    ``(A) In general.--Except as otherwise provided in 
                this section, the nominated areas designated as renewal 
                zones under this subsection shall be those nominated 
                areas with the highest average ranking with respect to 
                the criteria described in subparagraphs (B), (C), and 
                (D) of subsection (d)(3). For purposes of the preceding 
                sentence, an area shall be ranked within each such 
                criterion on the basis of the amount by which the area 
                exceeds such criterion, with the area which exceeds 
                such criterion by the greatest amount given the highest 
                ranking.
                    ``(B) Exception where inadequate course of action, 
                etc.--An area shall not be designated under 
                subparagraph (A) if the appropriate Secretary 
                determines that the course of action described in 
                subsection (e)(2) with respect to such area is 
                inadequate.
                    ``(C) Priority for 1 nominated area in each 
                state.--For purposes of this subchapter, 1 nominated 
                area within each State without any area designated as 
                an empowerment zone under section 1391 or 1400 shall be 
                treated for purposes of this paragraph as having the 
                highest average with respect to the criteria described 
                in subparagraphs (B), (C), and (D) of subsection 
                (d)(3).
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Housing and Urban Development shall prescribe by 
                regulation not later than 4 months after the date of 
                the enactment of this section, after consultation with 
                the Secretary of Agriculture--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A),
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a renewal 
                        zone, and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (e).
                    ``(B) Time limitations.--The appropriate 
                Secretaries may designate nominated areas as renewal 
                zones only during the period beginning on the first day 
                of the first month following the month in which the 
                regulations described in subparagraph (A) are 
                prescribed and ending on December 31, 2001.
                    ``(C) Procedural rules.--The appropriate Secretary 
                shall not make any designation of a nominated area as a 
                renewal zone under paragraph (2) unless--
                            ``(i) the local governments and the States 
                        in which the nominated area is located have the 
                        authority--
                                    ``(I) to nominate such area for 
                                designation as a renewal zone,
                                    ``(II) to make the State and local 
                                commitments described in subsection 
                                (e), and
                                    ``(III) to provide assurances 
                                satisfactory to the appropriate 
                                Secretary that such commitments will be 
                                fulfilled,
                            ``(ii) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the 
                        appropriate Secretary shall by regulation 
                        prescribe, and
                            ``(iii) the appropriate Secretary 
                        determines that any information furnished is 
                        reasonably accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(c) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a renewal 
        zone shall remain in effect during the period beginning on 
        January 1, 2002, and ending on the earliest of--
                    ``(A) December 31, 2009,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the appropriate Secretary revokes 
                such designation.
            ``(2) Revocation of designation.--The appropriate Secretary 
        may revoke the designation under this section of an area if 
        such Secretary determines that the local government or the 
        State in which the area is located--
                    ``(A) has modified the boundaries of the area, or
                    ``(B) is not complying substantially with, or fails 
                to make progress in achieving, the State or local 
                commitments, respectively, described in subsection (e).
    ``(d) Area and Eligibility Requirements.--
            ``(1) In general.--The appropriate Secretary may designate 
        a nominated area as a renewal zone under subsection (b) only if 
        the area meets the requirements of paragraphs (2) and (3) of 
        this subsection.
            ``(2) Area requirements.--A nominated area meets the 
        requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous, and
                    ``(C) the area--
                            ``(i) has a population of not more than 
                        200,000 and at least--
                                    ``(I) 4,000 if any portion of such 
                                area (other than a rural area described 
                                in subsection (b)(2)(B)(i)) is located 
                                within a metropolitan statistical area 
                                (within the meaning of section 
                                143(k)(2)(B)) which has a population of 
                                50,000 or greater, or
                                    ``(II) 1,000 in any other case, or
                            ``(ii) is entirely within an Indian 
                        reservation (as determined by the Secretary of 
                        the Interior).
            ``(3) Eligibility requirements.--A nominated area meets the 
        requirements of this paragraph if the State and the local 
        governments in which it is located certify in writing (and the 
        appropriate Secretary, after such review of supporting data as 
        such Secretary deems appropriate, accepts such certification) 
        that--
                    ``(A) the area is one of pervasive poverty, 
                unemployment, and general distress,
                    ``(B) the unemployment rate in the area, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate,
                    ``(C) the poverty rate for each population census 
                tract within the nominated area is at least 20 percent, 
                and
                    ``(D) in the case of an urban area, at least 70 
                percent of the households living in the area have 
                incomes below 80 percent of the median income of 
                households within the jurisdiction of the local 
                government (determined in the same manner as under 
                section 119(b)(2) of the Housing and Community 
                Development Act of 1974).
            ``(4) Consideration of other factors.--The appropriate 
        Secretary, in selecting any nominated area for designation as a 
        renewal zone under this section--
                    ``(A) shall take into account--
                            ``(i) the extent to which such area has a 
                        high incidence of crime,
                            ``(ii) if such area has census tracts 
                        identified in the May 12, 1998, report of the 
                        General Accounting Office regarding the 
                        identification of economically distressed 
                        areas, or
                            ``(iii) if such area (or portion thereof) 
                        has previously been designated as an enterprise 
                        community under section 1391, and
                    ``(B) with respect to 1 of the areas to be 
                designated under subsection (b)(2)(B), may, in lieu of 
                any criteria described in paragraph (3), take into 
                account the existence of outmigration from the area.
    ``(e) Required State and Local Commitments.--
            ``(1) In general.--The appropriate Secretary may designate 
        any nominated area as a renewal zone under subsection (b) only 
        if the local government and the State in which the area is 
        located agree in writing that, during any period during which 
        the area is a renewal zone, such governments will follow a 
        specified course of action which meets the requirements of 
        paragraph (2) and is designed to reduce the various burdens 
        borne by employers or employees in such area.
            ``(2) Course of action.--
                    ``(A) In general.--A course of action meets the 
                requirements of this paragraph if such course of action 
                is a written document, signed by a State (or local 
                government) and neighborhood organizations, which 
                evidences a partnership between such State or 
                government and community-based organizations and which 
                commits each signatory to specific and measurable 
                goals, actions, and timetables. Such course of action 
                shall include at least 4 of the following:
                            ``(i) A reduction of tax rates or fees 
                        applying within the renewal zone.
                            ``(ii) An increase in the level of 
                        efficiency of local services within the renewal 
                        zone.
                            ``(iii) Crime reduction strategies, such as 
                        crime prevention (including the provision of 
                        crime prevention services by nongovernmental 
                        entities).
                            ``(iv) Actions to reduce, remove, simplify, 
                        or streamline governmental requirements 
                        applying within the renewal zone.
                            ``(v) Involvement in the program by private 
                        entities, organizations, neighborhood 
                        organizations, and community groups, 
                        particularly those in the renewal zone, 
                        including a commitment from such private 
                        entities to provide jobs and job training for, 
                        and technical, financial, or other assistance 
                        to, employers, employees, and residents from 
                        the renewal zone.
                            ``(vi) The gift (or sale at below fair 
                        market value) of surplus real property (such as 
                        land, homes, and commercial or industrial 
                        structures) in the renewal zone to neighborhood 
                        organizations, community development 
                        corporations, or private companies.
                    ``(B) Recognition of past efforts.--For purposes of 
                this section, in evaluating the course of action agreed 
                to by any State or local government, the appropriate 
                Secretary shall take into account the past efforts of 
                such State or local government in reducing the various 
                burdens borne by employers and employees in the area 
                involved.
    ``(f) Coordination With Treatment of Enterprise Communities.--For 
purposes of this title, the designation under section 1391 of any area 
as an enterprise community shall cease to be in effect as of the date 
that the designation of any portion of such area as a renewal zone 
takes effect.
    ``(g) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Appropriate secretary.--The term `appropriate 
        Secretary' has the meaning given such term by section 
        1393(a)(1).
            ``(2) Governments.--If more than one government seeks to 
        nominate an area as a renewal zone, any reference to, or 
        requirement of, this section shall apply to all such 
        governments.
            ``(3) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State, and
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                appropriate Secretary.
            ``(4) Application of rules relating to census tracts.--The 
        rules of section 1392(b)(4) shall apply.
            ``(5) Census data.--Population and poverty rate shall be 
        determined by using 1990 census data.''.
    (b) Audit and Report.--Not later than January 31 of 2004, 2007, and 
2010, the Comptroller General of the United States shall, pursuant to 
an audit of the renewal zone program established under section 1400E of 
the Internal Revenue Code of 1986 (as added by subsection (a)), report 
to Congress on such program and its effect on poverty, unemployment, 
and economic growth within the designated renewal zones.
    (c) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

     ``Subchapter X. Designation and Treatment of Renewal Zones.''.

      Subtitle B--Modification of Incentives for Empowerment Zones

SEC. 111. EXTENSION OF EMPOWERMENT ZONE TREATMENT THROUGH 2009.

    Subparagraph (A) of section 1391(d)(1) (relating to period for 
which designation is in effect) is amended to read as follows:
                    ``(A)(i) in the case of an empowerment zone, 
                December 31, 2009, or
                    ``(ii) in the case of an enterprise community, the 
                close of the 10th calendar year beginning on or after 
                such date of designation,''.

SEC. 112. 15 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT ZONES

    (a) 15 Percent Credit.--Subsection (b) of section 1396 (relating to 
empowerment zone employment credit) is amended--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) In general.--Except as provided in paragraph (2), the 
        applicable percentage is 15 percent.'',
            (2) by inserting ``and thereafter'' after ``2005'' in the 
        table contained in paragraph (2), and
            (3) by striking the items relating to calendar years 2006 
        and 2007 in such table.
    (b) All Empowerment Zones Eligible for Credit.--Section 1396 is 
amended by striking subsection (e).
    (c) Conforming Amendment.--Subsection (d) of section 1400 is 
amended to read as follows:
    ``(d) Special Rule for Application of Employment Credit.--With 
respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment 
zone employment credit) shall be applied by substituting `the District 
of Columbia' for `such empowerment zone'.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid or incurred after December 31, 2001.

SEC. 113. INCREASED EXPENSING UNDER SECTION 179.

    (a) In General.--Subparagraph (A) of section 1397A(a)(1) is amended 
by striking ``$20,000'' and inserting ``$35,000''.
    (b) Expensing for Property Used in Developable Sites.--Section 
1397A is amended by striking subsection (c).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 114. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE FACILITY BONDS.

    (a) In General.--Paragraph (3) of section 1394(f) (relating to 
bonds for empowerment zones designated under section 1391(g)) is 
amended to read as follows:
            ``(3) Empowerment zone facility bond.--For purposes of this 
        subsection, the term `empowerment zone facility bond' means any 
        bond which would be described in subsection (a) if--
                    ``(A) in the case of obligations issued before 
                January 1, 2002, only empowerment zones designated 
                under section 1391(g) were taken into account under 
                sections 1397C and 1397D, and
                    ``(B) in the case of obligations issued after 
                December 31, 2001, all empowerment zones (other than 
                the District of Columbia) were taken into account under 
                sections 1397C and 1397D.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2001.

SEC. 115. EMPOWERMENT ZONE CAPITAL GAIN.

    (a) In General.--Part III of subchapter U of chapter 1 is amended--
            (1) by redesignating subpart C as subpart D;
            (2) by redesignating sections 1397B and 1397C as sections 
        1397C and 1397D, respectively; and
            (3) by inserting after subpart B the following new subpart:

               ``Subpart C--Empowerment Zone Capital Gain

                              ``Sec. 1397B. Empowerment zone capital 
                                        gain.

``SEC. 1397B. EMPOWERMENT ZONE CAPITAL GAIN.

    ``(a) General Rule.--Gross income shall not include qualified 
capital gain from the sale or exchange of any qualified empowerment 
zone asset held for more than 5 years.
    ``(b) Per Taxpayer Limitation.--
            ``(1) In general.--The amount of eligible gain which may be 
        taken into account under subsection (a) for the taxable year 
        with respect to any taxpayer shall not exceed $25,000,000, 
        reduced by the aggregate amount of eligible gain taken into 
        account under subsection (a) for prior taxable years with 
        respect to such taxpayer.
            ``(2) Eligible gain.--For purposes of this subsection, 
        `eligible gain'' means any gain from the sale or exchange of a 
        qualified empowerment zone asset held for more than 5 years.
            ``(3) Treatment of married individuals.--
                    ``(A) Separate returns.--In the case of a separate 
                return by a married individual, paragraph (1) shall be 
                applied by substituting `$12,500,000' for 
                `$25,000,000'.
                    ``(B) Allocation of exclusion.--In the case of a 
                joint return, the amount of gain taken into account 
                under subsection (a) shall be allocated equally between 
                the spouses for purposes of applying this subsection to 
                subsequent taxable years.
                    ``(C) Marital status.--For purposes of this 
                subsection, marital status shall be determined under 
                section 7703.
            ``(4) Treatment of corporate taxpayers.--For purposes of 
        this subsection--
                    ``(A) all corporations which are members of the 
                same controlled group of corporations (within the 
                meaning of section 52(a)) shall be treated as 1 
                taxpayer, and
                    ``(B) any gain excluded under subsection (a) by a 
                predecessor of any C corporation shall be treated as 
                having been excluded by such C corporation.
    ``(c) Qualified Empowerment Zone Asset.--For purposes of this 
section--
            ``(1) In general.--The term `qualified empowerment zone 
        asset' means--
                    ``(A) any qualified empowerment zone stock,
                    ``(B) any qualified empowerment zone partnership 
                interest, and
                    ``(C) any qualified empowerment zone business 
                property.
            ``(2) Qualified empowerment zone stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified empowerment zone 
                stock' means any stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer after the date of the enactment of 
                        this section (December 31, 2001, in the case of 
                        a renewal zone) and before January 1, 2010, at 
                        its original issue (directly or through an 
                        underwriter) from the corporation solely in 
                        exchange for cash,
                            ``(ii) as of the time such stock was 
                        issued, such corporation was an enterprise zone 
                        business (or, in the case of a new corporation, 
                        such corporation was being organized for 
                        purposes of being an enterprise zone business), 
                        and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as an enterprise zone 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified empowerment zone partnership interest.--The 
        term `qualified empowerment zone partnership interest' means 
        any capital or profits interest in a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after the date of the enactment of this section 
                (December 31, 2001, in the case of a renewal zone) and 
                before January 1, 2010, from the partnership solely in 
                exchange for cash,
                    ``(B) as of the time such interest was acquired, 
                such partnership was an enterprise zone business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being an enterprise 
                zone business), and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as an enterprise zone business.
        A rule similar to the rule of section 1202(c)(3) shall apply 
        for purposes of this paragraph.
            ``(4) Qualified empowerment zone business property.--
                    ``(A) In general.--The term `qualified empowerment 
                zone business property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) after the date of the enactment of 
                        this section (December 31, 2001, in the case of 
                        a renewal zone) and before January 1, 2010,
                            ``(ii) the original use of such property in 
                        the empowerment zone commences with the 
                        taxpayer, and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in an enterprise zone business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved by the taxpayer before January 1, 
                        2010, and
                            ``(ii) any land on which such property is 
                        located.
                The determination of whether a property is 
                substantially improved shall be made under clause (ii) 
                of section 1400B(b)(4)(B), except that `the date of the 
                enactment of this section' shall be substituted for 
                `December 31, 1997' in such clause.
    ``(c) Qualified Capital Gain.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified capital gain' means any gain 
        recognized on the sale or exchange of--
                    ``(A) a capital asset, or
                    ``(B) property used in the trade or business (as 
                defined in section 1231(b)).
            ``(2) Gain before effective date or after 2014 not 
        qualified.--The term `qualified capital gain' shall not include 
        any gain attributable to periods before the date of the 
        enactment of this section (January 1, 2002, in the case of a 
        renewal zone) or after December 31, 2014.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of section 1400B(e) shall apply 
        for purposes of this subsection.
    ``(d) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of paragraphs (5), (6), and (7) of subsection (b), 
and subsections (f) and (g), of section 1400B shall apply; except that 
for such purposes section 1400B(g)(2) shall be applied by 
substituting--
            ``(1) `the day after the date of the enactment of section 
        1397B' for `January 1, 1998', and
            ``(2) `December 31, 2014' for `December 31, 2011'.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the avoidance of the purposes of this 
section.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1394(b) is amended--
                    (A) by striking ``section 1397C'' and inserting 
                ``section 1397D''; and
                    (B) by striking ``section 1397C(a)(2)'' and 
                inserting ``section 1397D(a)(2)''.
            (2) Paragraph (3) of section 1394(b) is amended--
                    (A) by striking ``section 1397B'' each place it 
                appears and inserting ``section 1397C''; and
                    (B) by striking ``section 1397B(d)'' and inserting 
                ``section 1397C(d)''.
            (3) Sections 1400(e) and 1400B(c) are each amended by 
        striking ``section 1397B'' each place it appears and inserting 
        ``section 1397C''.
            (4) The table of subparts for part III of subchapter U of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Subpart C. Empowerment zone capital 
                                        gain.
                              ``Subpart D. General provisions.''.
            (5) The table of sections for subpart D of such part III is 
        amended to read as follows:

                              ``Sec. 1397C. Enterprise zone business 
                                        defined.
                              ``Sec. 1397D. Qualified zone property 
                                        defined.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified empowerment zone assets acquired after the date of 
the enactment of this Act.

SEC. 116. FUNDING FOR ROUND II EMPOWERMENT ZONES.

    (a) Entitlement.--Section 2007(a)(1) of the Social Security Act (42 
U.S.C. 1397f(a)(1)) is amended--
            (1) in subparagraph (A), by striking ``in the State; and'' 
        and inserting ``that is in the State and is designated pursuant 
        to section 1391(b) of the Internal Revenue Code of 1986;''; and
            (2) by adding after subparagraph (B) the following new 
        subparagraphs:
                    ``(C)(i) 1 grant under this section for each 
                qualified empowerment zone that is in an urban area in 
                the State and is designated pursuant to section 1391(g) 
                of such Code; and
                    ``(ii) 1 grant under this section for each 
                qualified empowerment zone that is in a rural area in 
                the State and is designated pursuant to section 1391(g) 
                of such Code; and
                    ``(D) 1 grant under this section for each qualified 
                enterprise community that is in the State, is 
                designated pursuant to section 1391(b)(1) of such Code, 
                and is in existence on the date of enactment of this 
                subparagraph.''.
    (b) Amount of Grants.--Section 2007(a)(2) of the Social Security 
Act (42 U.S.C. 1397f(a)(2)) is amended--
            (1) in the heading of subparagraph (A), by inserting 
        ``Original'' before ``Empowerment'';
            (2) in subparagraph (A), in the matter preceding clause 
        (i), by inserting ``referred to in paragraph (1)(A)'' after 
        ``empowerment zone'';
            (3) by redesignating subparagraph (C) as subparagraph (F); 
        and
            (4) by inserting after subparagraph (B) the following new 
        subparagraphs:
                    ``(C) Additional empowerment grants.--The amount of 
                the grant to a State under this section for a qualified 
                empowerment zone referred to in paragraph (1)(C) shall 
                be--
                            ``(i) if the zone is in an urban area, 
                        $5,000,000 for fiscal year 2001; or
                            ``(ii) if the zone is in a rural area, 
                        $2,000,000 for fiscal year 2001.
                    ``(D) Additional enterprise community grants.--The 
                amount of the grant to a State under this section for a 
                qualified enterprise community referred to in paragraph 
                (1)(D) shall be $250,000.''.
    (c) Timing of Grants.--Section 2007(a)(3) of the Social Security 
Act (42 U.S.C. 1397f(a)(3)) is amended--
            (1) in the heading of subparagraph (A), by inserting 
        ``Original'' before ``Qualified'';
            (2) in subparagraph (A), in the matter preceding clause 
        (i), by inserting ``referred to in paragraph (1)(A)'' after 
        ``empowerment zone''; and
            (3) by adding after subparagraph (B) the following new 
        subparagraphs:
                    ``(C) Additional qualified empowerment zones.--With 
                respect to each qualified empowerment zone referred to 
                in paragraph (1)(C), the Secretary shall make 1 grant 
                under this section to the State in which the zone lies, 
                on January 1, 2002.
                    ``(D) Additional qualified enterprise 
                communities.--With respect to each qualified enterprise 
                community referred to in paragraph (1)(D), the 
                Secretary shall make 1 grant under this section to the 
                State in which the community lies on January 1, 
                2002.''.
    (d) Funding.--Section 2007(a)(4) of the Social Security Act (42 
U.S.C. 1397f(a)(4)) is amended--
            (1) by striking ``(4) Funding.--$1,000,000,000'' and 
        inserting the following:
            ``(4) Funding.--
                    ``(A) Original grants.--$1,000,000,000'';
            (2) by inserting ``for empowerment zones and enterprise 
        communities described in subparagraphs (A) and (B) of paragraph 
        (1)'' before the period; and
            (3) by adding after and below the end the following new 
        subparagraphs:
                    ``(B) Additional empowerment zone grants.--
                $85,000,000 shall be made available to the Secretary 
                for grants under this section for empowerment zones 
                referred to in paragraph (1)(C).
                    ``(C) Additional enterprise community grants.--
                $22,000,000 shall be made available to the Secretary 
                for grants under this section for enterprise 
                communities referred to in paragraph (1)(D).''.
    (e) Direct Funding for Indian Tribes.--
            (1) In general.--Section 2007(a) of the Social Security Act 
        (42 U.S.C. 1397f(a)) is amended by adding at the end the 
        following new paragraph:
            ``(5) Direct funding for indian tribes.--
                    ``(A) In general.--The Secretary may make a grant 
                under this section directly to the governing body of an 
                Indian tribe if--
                            ``(i) the tribe is identified in the 
                        strategic plan of a qualified empowerment zone 
                        or qualified enterprise community as the entity 
                        that assumes sole or primary responsibility for 
                        carrying out activities and projects under the 
                        grant; and
                            ``(ii) the grant is to be used for 
                        activities and projects that are--
                                    ``(I) included in the strategic 
                                plan of the qualified empowerment zone 
                                or qualified enterprise community, 
                                consistent with this section; and
                                    ``(II) approved by the Secretary of 
                                Agriculture, in the case of a qualified 
                                empowerment zone or qualified 
                                enterprise community in a rural area, 
                                or the Secretary of Housing and Urban 
                                Development, in the case of a qualified 
                                empowerment zone or qualified 
                                enterprise community in an urban area.
                    ``(B) Rules of interpretation.--
                            ``(i) If grant under this section is made 
                        directly to the governing body of an Indian 
                        tribe under subparagraph (A), the tribe shall 
                        be considered a State for purposes of this 
                        section.
                            ``(ii) This subparagraph shall not be 
                        construed as making applicable to this section 
                        the provisions of the Indian Self-Determination 
                        and Education Assistance Act.''.
            (2) Definitions.--Section 2007(f) of such Act (42 U.S.C. 
        1397f(f)) is amended by adding at the end the following new 
        paragraph:
            ``(7) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community, including any Alaska Native village or regional or 
        village corporation as defined in or established pursuant to 
        the Alaska Native Claims Settlement Act, which is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians.''.

         Subtitle C--Modification of Tax Incentives for DC Zone

SEC. 121. EXTENSION OF DC ZONE THROUGH 2006.

    (a) In General.--The following provisions are amended by striking 
``2002'' each place it appears and inserting ``2006'':
            (1) Section 1400(f).
            (2) Section 1400A(b).
    (b) Zero Capital Gains Rate.--Section 1400B (relating to zero 
percent capital gains rate) is amended--
            (1) by striking ``2003'' each place it appears and 
        inserting ``2007'', and
            (2) by striking ``2007'' each place it appears and 
        inserting ``2011''.

SEC. 122. EXTENSION OF DC ZERO PERCENT CAPITAL GAINS RATE.

    (a) In General.--Section 1400B (relating to zero percent capital 
gains rate) is amended by adding at the end the following new 
subsection:
    ``(h) Extension to Entire District of Columbia.--In applying this 
section to any stock or partnership interest which is originally issued 
after December 31, 2000, or any tangible property acquired by the 
taxpayer by purchase after December 31, 2000--
            ``(1) subsection (d) shall be applied without regard to 
        paragraph (2) thereof, and
            ``(2) subsections (e)(2) and (g)(2) shall be applied by 
        substituting `January 1, 2001' for `January 1, 1998'.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2001.

SEC. 123. GROSS INCOME TEST FOR DC ZONE BUSINESSES.

    (a) In General.--Section 1400B(c) (defining DC Zone business) is 
amended by adding ``and'' at the end of paragraph (1), by striking 
paragraph (2), and by redesignating paragraph (3) as paragraph (2).
    (b) Effective Date.--The amendment made by this section shall apply 
to stock and partnership interests originally issued after, and 
property originally acquired by the taxpayer after, December 31, 2000.

SEC. 124. EXPANSION OF DC HOMEBUYER TAX CREDIT.

    (a) Extension.--Section 1400C(i) (relating to application of 
section) is amended by striking ``2002'' and inserting ``2004''.
    (b) Expansion of Income Limitation.--Section 1400C(b)(1) (relating 
to limitation based on modified adjusted gross income) is amended--
            (1) by striking ``$110,000'' in subparagraph (A)(i) and 
        inserting ``$140,000'', and
            (2) by inserting ``($40,000 in the case of a joint 
        return)'' after ``$20,000'' in subparagraph (B).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                   Subtitle D--New Markets Tax Credit

SEC. 131. NEW MARKETS TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits) is amended by adding at the end 
the following new section:

``SEC. 45D. NEW MARKETS TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of a taxpayer who holds a qualified equity investment on a 
        credit allowance date of such investment which occurs during 
        the taxable year, the new markets tax credit determined under 
        this section for such taxable year is an amount equal to the 
        applicable percentage of the amount paid to the qualified 
        community development entity for such investment at its 
        original issue.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 5 percent with respect to the first three 
                credit allowance dates, and
                    ``(B) 6 percent with respect to the remainder of 
                the credit allowance dates.
            ``(3) Credit allowance date.--For purposes of paragraph 
        (1), the term `credit allowance date' means, with respect to 
        any qualified equity investment--
                    ``(A) the date on which such investment is 
                initially made, and
                    ``(B) each of the six anniversary dates of such 
                date thereafter.
    ``(b) Qualified Equity Investment.--For purposes of this section--
            ``(1) In general.--The term `qualified equity investment' 
        means any equity investment in a qualified community 
        development entity if--
                    ``(A) such investment is acquired by the taxpayer 
                at its original issue (directly or through an 
                underwriter) solely in exchange for cash,
                    ``(B) substantially all of such cash is used by the 
                qualified community development entity to make 
                qualified low-income community investments, and
                    ``(C) such investment is designated for purposes of 
                this section by the qualified community development 
                entity.
        Such term shall not include any equity investment issued by a 
        qualified community development entity more than 5 years after 
        the date that such entity receives an allocation under 
        subsection (f). Any allocation not used within such 5-year 
        period may be reallocated by the Secretary under subsection 
        (f).
            ``(2) Limitation.--The maximum amount of equity investments 
        issued by a qualified community development entity which may be 
        designated under paragraph (1)(C) by such entity shall not 
        exceed the portion of the limitation amount allocated under 
        subsection (f) to such entity.
            ``(3) Safe harbor for determining use of cash.--The 
        requirement of paragraph (1)(B) shall be treated as met if at 
        least 85 percent of the aggregate gross assets of the qualified 
        community development entity are invested in qualified low-
        income community investments.
            ``(4) Treatment of subsequent purchasers.--The term 
        `qualified equity investment' includes any equity investment 
        which would (but for paragraph (1)(A)) be a qualified equity 
        investment in the hands of the taxpayer if such investment was 
        a qualified equity investment in the hands of a prior holder.
            ``(5) Redemptions.--A rule similar to the rule of section 
        1202(c)(3) shall apply for purposes of this subsection.
            ``(6) Equity investment.--The term `equity investment' 
        means--
                    ``(A) any stock (other than nonqualified preferred 
                stock as defined in section 351(g)(2)) in an entity 
                which is a corporation, and
                    ``(B) any capital interest in an entity which is a 
                partnership.
    ``(c) Qualified Community Development Entity.--For purposes of this 
section--
            ``(1) In general.--The term `qualified community 
        development entity' means any domestic corporation or 
        partnership if--
                    ``(A) the primary mission of the entity is serving, 
                or providing investment capital for, low-income 
                communities or low-income persons,
                    ``(B) the entity maintains accountability to 
                residents of low-income communities through their 
                representation on any governing board of the entity or 
                on any advisory boards to the entity, and
                    ``(C) the entity is certified by the Secretary for 
                purposes of this section as being a qualified community 
                development entity.
            ``(2) Special rules for certain organizations.--The 
        requirements of paragraph (1) shall be treated as met by--
                    ``(A) any specialized small business investment 
                company (as defined in section 1044(c)(3)), and
                    ``(B) any community development financial 
                institution (as defined in section 103 of the Community 
                Development Banking and Financial Institutions Act of 
                1994 (12 U.S.C. 4702)).
    ``(d) Qualified Low-Income Community Investments.--For purposes of 
this section--
            ``(1) In general.--The term `qualified low-income community 
        investment' means--
                    ``(A) any capital or equity investment in, or loan 
                to, any qualified active low-income community business,
                    ``(B) the purchase from another community 
                development entity of any loan made by such entity 
                which is a qualified low-income community investment,
                    ``(C) financial counseling and other services 
                specified in regulations prescribed by the Secretary to 
                businesses located in, and residents of, low-income 
                communities, and
                    ``(D) any equity investment in, or loan to, any 
                qualified community development entity.
            ``(2) Qualified active low-income community business.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `qualified active low-income community 
                business' means, with respect to any taxable year, any 
                corporation (including a nonprofit corporation) or 
                partnership if for such year--
                            ``(i) at least 50 percent of the total 
                        gross income of such entity is derived from the 
                        active conduct of a qualified business within 
                        any low-income community,
                            ``(ii) a substantial portion of the use of 
                        the tangible property of such entity (whether 
                        owned or leased) is within any low-income 
                        community,
                            ``(iii) a substantial portion of the 
                        services performed for such entity by its 
                        employees are performed in any low-income 
                        community,
                            ``(iv) less than 5 percent of the average 
                        of the aggregate unadjusted bases of the 
                        property of such entity is attributable to 
                        collectibles (as defined in section 408(m)(2)) 
                        other than collectibles that are held primarily 
                        for sale to customers in the ordinary course of 
                        such business, and
                            ``(v) less than 5 percent of the average of 
                        the aggregate unadjusted bases of the property 
                        of such entity is attributable to nonqualified 
                        financial property (as defined in section 
                        1397C(e)).
                    ``(B) Proprietorship.--Such term shall include any 
                business carried on by an individual as a proprietor if 
                such business would meet the requirements of 
                subparagraph (A) were it incorporated.
                    ``(C) Portions of business may be qualified active 
                low-income community business.--The term `qualified 
                active low-income community business' includes any 
                trades or businesses which would qualify as a qualified 
                active low-income community business if such trades or 
businesses were separately incorporated.
            ``(3) Qualified business.--For purposes of this subsection, 
        the term `qualified business' has the meaning given to such 
        term by section 1397C(d); except that--
                    ``(A) in lieu of applying paragraph (2)(B) thereof, 
                the rental to others of real property located in any 
                low-income community shall be treated as a qualified 
                business if there are substantial improvements located 
                on such property, and
                    ``(B) paragraph (3) thereof shall not apply.
    ``(e) Low-Income Community.--For purposes of this section--
            ``(1) In general.--The term `low-income community' means 
        any population census tract if--
                    ``(A) the poverty rate for such tract is at least 
                20 percent, or
                    ``(B)(i) in the case of a tract not located within 
                a metropolitan area, the median family income for such 
                tract does not exceed 80 percent of statewide median 
                family income, or
                    ``(ii) in the case of a tract located within a 
                metropolitan area, the median family income for such 
                tract does not exceed 80 percent of the greater of 
                statewide median family income or the metropolitan area 
                median family income.
            ``(2) Targeted areas.--The Secretary may designate any area 
        within any census tract as a low-income community if--
                    ``(A) the boundary of such area is continuous,
                    ``(B) the area would satisfy the requirements of 
                paragraph (1) if it were a census tract, and
                    ``(C) an inadequate access to investment capital 
                exists in such area.
            ``(3) Areas not within census tracts.--In the case of an 
        area which is not tracted for population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census for purposes of defining poverty areas) shall be used 
        for purposes of determining poverty rates and median family 
        income.
    ``(f) National Limitation on Amount of Investments Designated.--
            ``(1) In general.--There is a new markets tax credit 
        limitation for each calendar year. Such limitation is--
                    ``(A) $1,000,000,000 for 2002, and
                    ``(B) $1,500,000,000 for 2003, 2004, 2005, and 
                2006.
            ``(2) Allocation of limitation.--The limitation under 
        paragraph (1) shall be allocated by the Secretary among 
        qualified community development entities selected by the 
        Secretary. In making allocations under the preceding sentence, 
        the Secretary shall give priority to any entity--
                    ``(A) with a record of having successfully provided 
                capital or technical assistance to disadvantaged 
                businesses or communities, or
                    ``(B) which intends to satisfy the requirement 
                under subsection (b)(1)(B) by making qualified low-
                income community investments in 1 or more businesses in 
                which persons unrelated to such entity (within the 
                meaning of section 267(b) or 707(b)(1)) hold the 
                majority equity interest.
            ``(3) Carryover of unused limitation.--If the new markets 
        tax credit limitation for any calendar year exceeds the 
        aggregate amount allocated under paragraph (2) for such year, 
        such limitation for the succeeding calendar year shall be 
        increased by the amount of such excess. No amount may be 
        carried under the preceding sentence to any calendar year after 
        2013.
    ``(g) Recapture of Credit In Certain Cases.--
            ``(1) In general.--If, at any time during the 7-year period 
        beginning on the date of the original issue of a qualified 
        equity investment in a qualified community development entity, 
        there is a recapture event with respect to such investment, 
        then the tax imposed by this chapter for the taxable year in 
        which such event occurs shall be increased by the credit 
        recapture amount.
            ``(2) Credit recapture amount.--For purposes of paragraph 
        (1), the credit recapture amount is an amount equal to the sum 
        of--
                    ``(A) the aggregate decrease in the credits allowed 
                to the taxpayer under section 38 for all prior taxable 
                years which would have resulted if no credit had been 
                determined under this section with respect to such 
                investment, plus
                    ``(B) interest at the underpayment rate established 
                under section 6621 on the amount determined under 
                subparagraph (A) for each prior taxable year for the 
                period beginning on the due date for filing the return 
                for the prior taxable year involved.
        No deduction shall be allowed under this chapter for interest 
        described in subparagraph (B).
            ``(3) Recapture event.--For purposes of paragraph (1), 
        there is a recapture event with respect to an equity investment 
        in a qualified community development entity if--
                    ``(A) such entity ceases to be a qualified 
                community development entity,
                    ``(B) the proceeds of the investment cease to be 
                used as required of subsection (b)(1)(B), or
                    ``(C) such investment is redeemed by such entity.
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit under this chapter or for purposes 
                of section 55.
    ``(h) Basis Reduction.--The basis of any qualified equity 
investment shall be reduced by the amount of any credit determined 
under this section with respect to such investment. This subsection 
shall not apply for purposes of sections 1202, 1397B, and 1400B.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which limit the credit for investments which are 
        directly or indirectly subsidized by other Federal tax benefits 
        (including the credit under section 42 and the exclusion from 
        gross income under section 103),
            ``(2) which prevent the abuse of the purposes of this 
        section,
            ``(3) which provide rules for determining whether the 
        requirement of subsection (b)(1)(B) is treated as met,
            ``(4) which impose appropriate reporting requirements, and
            ``(5) which apply the provisions of this section to newly 
        formed entities.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 is amended by 
        striking ``plus'' at the end of paragraph (11), by striking the 
        period at the end of paragraph (12) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(13) the new markets tax credit determined under section 
        45D(a).''.
            (2) Limitation on carryback.--Subsection (d) of section 39 
        is amended by adding at the end the following new paragraph:
            ``(9) No carryback of new markets tax credit before january 
        1, 2002.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit under section 
        45D may be carried back to a taxable year ending before January 
        1, 2002.''.
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 is 
amended by striking ``and'' at the end of paragraph (7), by striking 
the period at the end of paragraph (8) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(9) the new markets tax credit determined under section 
        45D(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

                              ``Sec. 45D. New markets tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2001.
    (f) Regulations on Allocation of National Limitation.--Not later 
than 120 days after the date of the enactment of this Act, the 
Secretary of the Treasury or the Secretary's delegate shall prescribe 
regulations which specify--
            (1) how entities shall apply for an allocation under 
        section 45D(f)(2) of the Internal Revenue Code of 1986, as 
        added by this section;
            (2) the competitive procedure through which such 
        allocations are made; and
            (3) the actions that such Secretary or delegate shall take 
        to ensure that such allocations are properly made to 
        appropriate entities.
    (g) Audit and Report.--Not later than January 31 of 2004 and 2007, 
the Comptroller General of the United States shall, pursuant to an 
audit of the new markets tax credit program established under section 
45D of the Internal Revenue Code of 1986 (as added by subsection (a)), 
report to Congress on such program, including all qualified community 
development entities that receive an allocation under the new markets 
credit under such section.

       Subtitle E--Modification of Tax Incentives for Puerto Rico

SEC. 141. MODIFICATION OF PUERTO RICO ECONOMIC ACTIVITY TAX CREDIT.

    (a) Corporations Eligible To Claim Credit.--Section 30A(a)(2) 
(defining qualified domestic corporation) is amended to read as 
follows:
            ``(2) Qualified domestic corporation.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--A domestic corporation shall be 
                treated as a qualified domestic corporation for a 
                taxable year if it is actively conducting within Puerto 
                Rico during the taxable year--
                            ``(i) a line of business with respect to 
                        which the domestic corporation is an existing 
                        credit claimant under section 936(j)(9), or
                            ``(ii) with respect to taxable years ending 
                        after December 31, 2000, an eligible line of 
                        business not described in clause (i) with 
                        respect to which the domestic corporation is an 
                        existing credit claimant under section 
                        936(j)(9) (determined without regard to 
                        subparagraph (B) thereof).
                    ``(B) Limitation to lines of business.--A domestic 
                corporation shall be treated as a qualified domestic 
                corporation under subparagraph (A) only with respect to 
                the lines of business described in subparagraph (A) 
                which it is actively conducting in Puerto Rico during 
                the taxable year.
                    ``(C) Exception for corporations electing reduced 
                credit.--A domestic corporation shall not be treated as 
                a qualified domestic corporation if such corporation 
                (or any predecessor) had an election in effect under 
                section 936(a)(4)(B)(iii) for any taxable year 
                beginning after December 31, 1996.''.
    (b) Application on Separate Line of Business Basis; Eligible Line 
of Business.--Section 30A is amended by redesignating subsection (g) as 
subsection (h) and by inserting after subsection (f) the following new 
subsection:
    ``(g) Application on Line of Business Basis; Eligible Lines of 
Business.--For purposes of this section--
            ``(1) Application to separate line of business.--
                    ``(A) In general.--In determining the amount of the 
                credit under subsection (a), this section shall be 
                applied separately with respect to each substantial 
                line of business of the qualified domestic corporation 
                described in subsection (a)(2)(A)(ii).
                    ``(B) Allocation.--The Secretary shall prescribe 
                rules necessary to carry out the purposes of this 
                paragraph, including rules--
                            ``(i) for the allocation of items of 
                        income, gain, deduction, and loss for purposes 
                        of determining taxable income under subsection 
                        (a), and
                            ``(ii) for the allocation of wages, fringe 
                        benefit expenses, and depreciation allowances 
                        for purposes of applying the limitations under 
                        subsection (d).
            ``(2) Eligible line of business.--The term `eligible line 
        of business' means a substantial line of business established 
        by a qualified domestic corporation described in subsection 
        (a)(2)(A)(ii) after December 31, 2000.''.
    (c) Modification of Base Period Cap for Existing Claimants.--The 
last sentence of section 30A(a)(1) (relating to allowance of credit) is 
amended--
            (1) by striking ``In'' and inserting ``With respect to any 
        qualified domestic corporation described in paragraph 
        (2)(A)(i), in'',
            (2) by inserting ``the greater of'' after ``exceed'', and
            (3) by inserting ``, or such income multiplied by the ratio 
        of the average number of full-time employees of such taxpayers 
        during the taxable year to the average number of such full-time 
        employees in 1995 and 1996'' after ``section 936(j)''.
    (d) Credit Taken Over 5-Year Period.--Section 30A, as amended by 
subsection (b), is amended by redesignating subsection (h) as 
subsection (i) and by inserting after subsection (g) the following new 
subsection:
    ``(h) Credit Taken Over 5-Year Period.--In the case of any 
qualified domestic corporation described in paragraph (2)(A)(ii), the 
aggregate amount of the credit otherwise determined under subsection 
(a) for any taxable year shall be allowed ratably over the 5-taxable 
year period beginning with such taxable year.''.
    (e) Conforming Amendments.--
            (1) Section 30A(a)(3) is amended by striking ``an existing 
        credit claimant'' and inserting ``a qualified domestic 
        corporation''.
            (2) Section 30A(b) is amended by striking ``within a 
        possession'' each place it appears and inserting ``within 
        Puerto Rico''.
            (3) Section 30A(d) is amended by striking ``possession'' 
        each place it appears.
            (4) Section 30A(f) is amended to read as follows:
    ``(f) Definitions.--For purposes of this section--
            ``(1) Qualified income taxes.--The qualified income taxes 
        for any taxable year allocable to nonsheltered income shall be 
        determined in the same manner as under section 936(i)(3).
            ``(2) Qualified wages.--The qualified wages for any taxable 
        year shall be determined in the same manner as under section 
        936(i)(1).
            ``(3) Other terms.--Any term used in this section which is 
        also used in section 936 shall have the same meaning given such 
        term by section 936.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2000.

              Subtitle F--Individual Development Accounts

SEC. 151. DEFINITIONS.

    As used in this subtitle:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means an individual who--
                            (i) has attained the age of 18 years;
                            (ii) is a citizen or legal resident of the 
                        United States; and
                            (iii) is a member of a household--
                                    (I) the gross income of which does 
                                not exceed 60 percent of the national 
                                median family income (as published by 
                                the Bureau of the Census), as adjusted 
                                for family size; and
                                    (II) the net worth of which does 
                                not exceed $10,000.
                    (B) Household.--The term ``household'' means all 
                individuals who share use of a dwelling unit as primary 
                quarters for living and eating separate from other 
                individuals.
                    (C) Determination of net worth.--
                            (i) In general.--For purposes of 
                        subparagraph (A)(iii)(II), the net worth of a 
                        household is the amount equal to--
                                    (I) the aggregate fair market value 
                                of all assets that are owned in whole 
                                or in part by any member of a 
                                household, minus
                                    (II) the obligations or debts of 
                                any member of the household.
                            (ii) Certain assets disregarded.--For 
                        purposes of determining the net worth of a 
                        household, a household's assets shall not be 
                        considered to include--
                                    (I) the primary dwelling unit;
                                    (II) 1 motor vehicle owned by the 
                                household; and
                                    (III) the sum of all contributions 
                                by an eligible individual (including 
                                earnings thereon) to any Individual 
                                Development Account, plus the matching 
                                deposits made on behalf of such 
                                individual (including earnings thereon) 
                                in any parallel account.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an account established for an 
        eligible individual as part of a qualified individual 
        development account program, but only if the written governing 
        instrument creating the account meets the following 
        requirements:
                    (A) The sole owner of the account is the eligible 
                individual.
                    (B) No contribution will be accepted unless it is 
                in cash, by check, by electronic fund transfer, or by 
                electronic money order.
                    (C) The holder of the account is a qualified 
                financial institution, a qualified nonprofit 
                organization, or an Indian tribe.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    (E) Except as provided in section 156(b), any 
                amount in the account may be paid out only for the 
                purpose of paying the qualified expenses of the 
                eligible individual.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an eligible individual 
        as part of a qualified individual development account program, 
        the sole owner of which is a qualified financial institution, a 
        qualified nonprofit organization, or an Indian tribe.
            (4) Qualified financial institution.--
                    (A) In general.--The term ``qualified financial 
                institution'' means any person authorized to be a 
                trustee of any individual retirement account under 
                section 408(a)(2).
                    (B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a person 
                described in subparagraph (A) from collaborating with 1 
                or more contractual affiliates, qualified nonprofit 
                organizations, or Indian tribes to carry out an 
                individual development account program established 
                under section 152.
            (5) Qualified nonprofit organization.--The term ``qualified 
        nonprofit organization'' means--
                    (A) any organization described in section 501(c)(3) 
                of the Internal Revenue Code of 1986 and exempt from 
                taxation under section 501(a) of such Code;
                    (B) any community development financial institution 
                certified by the Community Development Financial 
                Institution Fund; or
                    (C) any credit union chartered under Federal or 
                State law and certified by the National Credit Union 
                Administration,
        that meets standards for financial management and fiduciary 
        responsibility as defined by the Secretary or an organization 
        designated by the Secretary.
            (6) Indian tribe.--The term ``Indian tribe'' means any 
        Indian tribe as defined in section 4(12) of the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4103(12), and includes any tribal subsidiary, 
        subdivision, or other wholly owned tribal entity.
            (7) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established under section 152 under which--
                    (A) Individual Development Accounts and parallel 
                accounts are held by a qualified financial institution, 
                a qualified nonprofit organization, or an Indian tribe; 
                and
                    (B) additional activities determined by the 
                Secretary, or an organization designated by the 
                Secretary, as necessary to responsibly develop and 
                administer accounts, including recruiting, providing 
                financial education and other training to account 
                holders, and regular program monitoring, are carried 
                out by such qualified financial institution, qualified 
                nonprofit organization, or Indian tribe.
            (8) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) or distributed out of an 
                Individual Development Account and a parallel account 
                established for an eligible individual if such amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of such individual or such 
                        individual's spouse or dependents;
                            (ii) is paid by the qualified financial 
                        institution, qualified nonprofit organization, 
                        or Indian tribe directly to the person to whom 
                        the amount is due or to another Individual 
                        Development Account; and
                            (iii) is paid after the holder of the 
                        Individual Development Account has completed a 
                        financial education course as required under 
                        section 153(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following:
                                    (I) Qualified higher education 
                                expenses.
                                    (II) Qualified first-time homebuyer 
                                costs.
                                    (III) Qualified business 
                                capitalization or expansion costs.
                                    (IV) Qualified rollovers.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 72(t)(7) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating postsecondary vocational 
                                educational schools as eligible 
                                educational institutions.
                                    (II) Postsecondary vocational 
                                education school.--The term 
                                ``postsecondary vocational educational 
                                school'' means an area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined in 
                                section 521(33) of such Act), as such 
                                sections are in effect on the date of 
                                the enactment of this Act.
                                    (III) Coordination with other 
                                benefits.--The amount of qualified 
                                higher education expenses for any 
                                taxable year shall be reduced as 
                                provided in section 25A(g)(2) of such 
                                Code and by the amount of such expenses 
                                for which a credit or exclusion is 
                                allowed under chapter 1 of such Code 
                                for such taxable year.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8) of such 
                        Code without regard to subparagraph (B) 
                        thereof) with respect to a principal residence 
                        (within the meaning of section 121 of such 
                        Code) for a qualified first-time homebuyer (as 
                        defined in section 72(t)(8) of such Code).
                            (iv) Qualified business capitalization or 
                        expansion costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization or 
                                expansion costs'' means qualified 
                                expenditures for the capitalization or 
                                expansion of a qualified business 
                                pursuant to a qualified business plan.
                                    (II) Qualified expenditures.--The 
                                term ``qualified expenditures'' means 
                                expenditures included in a qualified 
                                business plan, including capital, 
                                plant, equipment, working capital, 
                                inventory expenses, attorney and 
                                accounting fees, and other costs 
                                normally associated with starting or 
                                expanding a business.
                                    (III) Qualified business.--The term 
                                ``qualified business'' means any 
                                business that does not contravene any 
                                law.
                                    (IV) Qualified business plan.--The 
                                term ``qualified business plan'' means 
                                a business plan which meets such 
                                requirements as the Secretary or an 
                                organization designated by the 
                                Secretary may specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means, with respect to 
                        any distribution from an Individual Development 
                        Account, the payment, within 120 days of such 
                        distribution, of all or a portion of such 
                        distribution to such account or to another 
                        Individual Development Account established in 
                        another qualified financial institution, 
                        qualified nonprofit organization, or Indian 
                        tribe for the benefit of the eligible 
                        individual, or, if such individual is deceased, 
                        the spouse, any dependent, or other named 
                        beneficiary of the deceased. Rules similar to 
                        the rules of section 408(d)(3) of such Code 
                        (other than subparagraph (C) thereof) shall 
                        apply for purposes of this clause.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 152. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution, qualified nonprofit 
organization, or Indian tribe may establish 1 or more qualified 
individual development account programs which meet the requirements of 
this subtitle.
    (b) Basic Program Structure.--
            (1) In general.--All qualified individual development 
        account programs shall consist of the following 2 components:
                    (A) An Individual Development Account to which an 
                eligible individual may contribute money in accordance 
                with section 154.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 155.
            (2) Tailored ida programs.--A qualified financial 
        institution, qualified nonprofit organization, or Indian tribe 
        may tailor its qualified individual development account program 
        to allow matching funds to be spent on 1 or more of the 
        categories of qualified expenses.
    (c) Tax Treatment of Accounts.--Any account described in 
subparagraph (B) of subsection (b)(1) is exempt from taxation under the 
Internal Revenue Code of 1986 unless such account has ceased to be such 
an account by reason of section 156(c) or the termination of the 
qualified individual development account program under section 157(b).

SEC. 153. PROCEDURES FOR OPENING AN INDIVIDUAL DEVELOPMENT ACCOUNT AND 
              QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual must open an 
Individual Development Account with a qualified financial institution, 
qualified nonprofit organization, or Indian tribe and contribute money 
in accordance with section 154 to qualify for matching funds in a 
parallel account.
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw 
        matching funds to pay for qualified expenses, holders of 
        Individual Development Accounts must complete a financial 
        education course offered by a qualified financial institution, 
        a qualified nonprofit organization, an Indian tribe, or a 
        government entity.
            (2) Standard and applicability of course.--The Secretary or 
        an organization designated by the Secretary, in consultation 
        with representatives of qualified individual development 
        account programs and financial educators, shall establish 
        minimum performance standards for financial education courses 
        offered under paragraph (1) and a protocol to exempt eligible 
        individuals from the requirement under paragraph (1) because of 
        hardship or lack of need.

SEC. 154. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Except in the case of a qualified rollover, 
individual contributions to an Individual Development Account will not 
be accepted for the taxable year in excess of the lesser of--
            (1) $2,000; or
            (2) an amount equal to the sum of--
                    (A) the compensation (as defined in section 
                219(f)(1) of the Internal Revenue Code of 1986) 
                includible in the individual's gross income for such 
                taxable year; and
                    (B) in the case of an eligible individual who has 
                retired on disability (within the meaning of section 22 
                of the Internal Revenue Code of 1986) before the close 
                of the taxable year, any amount received as a 
                disability benefit and excluded from the individual's 
                gross income for such taxable year.
    (b) Proof of Compensation and Status as an Eligible Individual.--
Federal W-2 forms and other forms specified by the Secretary proving 
the eligible individual's wages and other compensation (including 
amounts described in subsection (a)(2)(B)) and the status of the 
individual as an eligible individual shall be presented at the time of 
the establishment of the Individual Development Account and at least 
once annually thereafter.
    (c) Deemed Withdrawals of Excess Contributions.--If the individual 
for whose benefit an Individual Development Account is established 
contributes an amount in excess of the amount allowed under subsection 
(a) and fails to withdraw the excess contribution plus the amount of 
net income attributable to such excess contribution on or before the 
day prescribed by law (including extensions of time) for filing such 
individual's return of tax for the taxable year, such excess 
contribution and net income shall be deemed to have been withdrawn on 
such day by such individual for purposes other than to pay qualified 
expenses.
    (d) Cross Reference.--

                                For designation of earned income tax 
credit payments for deposit to an Individual Development Account, see 
section 32(o) of the Internal Revenue Code of 1986.

SEC. 155. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT 
              PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution, 
qualified nonprofit organization, or Indian tribe shall deposit all 
matching funds for each Individual Development Account into a parallel 
account at a qualified financial institution, qualified nonprofit 
organization, or Indian tribe.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution, qualified nonprofit organization, or 
        Indian tribe shall not less than annually (or upon a proper 
        withdrawal request under section 156, if necessary) deposit 
        into the parallel account with respect to each eligible 
        individual the following:
                    (A) A dollar-for-dollar match for the first $300 
                contributed by the eligible individual into an 
                Individual Development Account with respect to any 
                taxable year.
                    (B) Any matching funds provided by State, local, or 
                private sources in accordance to the matching ratio set 
                by those sources.
            (2) Cross reference.--

                                For allowance of tax credit for 
Individual Development Account subsidies, including matching funds, see 
section 30B of the Internal Revenue Code of 1986.
    (c) Forfeiture of Matching Funds.--Matching funds that are 
forfeited under section 156(b) shall be used by the qualified financial 
institution, qualified nonprofit organization, or Indian tribe to pay 
matches for other Individual Development Account contributions by 
eligible individuals.
    (d) Uniform Accounting Regulations.--To ensure proper recordkeeping 
and determination of the tax credit under section 30C of the Internal 
Revenue Code of 1986, the Secretary shall prescribe regulations with 
respect to accounting for matching funds from all possible sources in 
the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution, qualified nonprofit organization, or Indian tribe shall 
report the balances in any Individual Development Account and parallel 
account of an eligible individual on not less than an annual basis.

SEC. 156. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--To withdraw money from an 
eligible individual's Individual Development Account to pay qualified 
expenses of such individual or such individual's spouse or dependents, 
the qualified financial institution, qualified nonprofit organization, 
or Indian tribe shall directly transfer such funds from the Individual 
Development Account, and, if applicable, from the parallel account 
electronically to the vendor or other Individual Development Account. 
If the vendor is not equipped to receive funds electronically, the 
qualified financial institution, qualified nonprofit organization, or 
Indian tribe may issue such funds by paper check to the vendor.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account holder may unilaterally withdraw funds from the 
Individual Development Account for purposes other than to pay qualified 
expenses, but shall forfeit the corresponding matching funds and 
interest earned on the matching funds by doing so, unless such 
withdrawn funds are recontributed to such Account by September 30 
following the withdrawal.
    (c) Deemed Withdrawals From Accounts of Noneligible Individuals.--
If the individual for whose benefit an Individual Development Account 
is established ceases to be an eligible individual, such account shall 
cease to be an Individual Development Account as of the first day of 
the taxable year of such individual and any balance in such account 
shall be deemed to have been withdrawn on such first day by such 
individual for purposes other than to pay qualified expenses.
    (d) Tax Treatment of Matching Funds.--Any amount withdrawn from a 
parallel account shall not be includible in an eligible individual's 
gross income.

SEC. 157. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 152, a qualified 
financial institution, qualified nonprofit organization, or Indian 
tribe shall certify to the Secretary, or an organization designated by 
the Secretary, on forms prescribed by the Secretary or such 
organization and accompanied by any documentation required by the 
Secretary or such organization, that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 152(b)(1) are operating pursuant to all the provisions 
        of this subtitle; and
            (2) the qualified financial institution, qualified 
        nonprofit organization, or Indian tribe agrees to implement an 
        information system necessary to monitor the cost and outcomes 
        of the qualified individual development account program.
    (b) Authority To Terminate Qualified IDA Program.--If the 
Secretary, or an organization designated by the Secretary, determines 
that a qualified financial institution, qualified nonprofit 
organization, or Indian tribe under this subtitle is not operating a 
qualified individual development account program in accordance with the 
requirements of this subtitle (and has not implemented any corrective 
recommendations directed by the Secretary or such organization), the 
Secretary or such organization shall terminate such institution's, 
nonprofit organization's, or Indian tribe's authority to conduct the 
program. If the Secretary, or an organization designated by the 
Secretary, is unable to identify a qualified financial institution, 
qualified nonprofit organization, or Indian tribe to assume the 
authority to conduct such program, then any account established for the 
benefit of any eligible individual under such program shall cease to be 
an Individual Development Account as of the first day of such 
termination and any balance in such account shall be deemed to have 
been withdrawn on such first day by such individual for purposes other 
than to pay qualified expenses.

SEC. 158. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions, Qualified 
Nonprofit Organizations, and Indian Tribes.--Each qualified financial 
institution, qualified nonprofit organization, or Indian tribe that 
establishes a qualified individual development account program under 
section 152 shall report annually to the Secretary, directly or through 
an organization designated by the Secretary, within 90 days after the 
end of each calendar year on--
            (1) the number of eligible individuals making contributions 
        into Individual Development Accounts;
            (2) the amounts contributed into Individual Development 
        Accounts and deposited into parallel accounts for matching 
        funds;
            (3) the amounts withdrawn from Individual Development 
        Accounts and parallel accounts, and the purposes for which such 
        amounts were withdrawn;
            (4) the balances remaining in Individual Development 
        Accounts and parallel accounts; and
            (5) such other information needed to help the Secretary, or 
        an organization designated by the Secretary, monitor the cost 
        and outcomes of the qualified individual development account 
        program.
    (b) Responsibilities of the Secretary or Designated Organization.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of the enactment of this Act, the Secretary, or an 
        organization designated by the Secretary, shall develop and 
        implement a protocol and process to monitor the cost and 
        outcomes of the qualified individual development account 
        programs established under section 152.
            (2) Annual reports.--In each year after the date of the 
        enactment of this Act, the Secretary, or an organization 
        designated by the Secretary, shall submit a progress report to 
        Congress on the status of such qualified individual development 
        account programs. Such report shall include from a 
        representative sample of qualified financial institutions, 
        qualified nonprofit organizations, and Indian tribes a report 
        on--
                    (A) the characteristics of participants, including 
                age, gender, race or ethnicity, marital status, number 
                of children, employment status, and monthly income;
                    (B) individual level data on deposits, withdrawals, 
                balances, uses of Individual Development Accounts, and 
                participant characteristics;
                    (C) the characteristics of qualified individual 
                development account programs, including match rate, 
                economic education requirements, permissible uses of 
                accounts, staffing of programs in full time employees, 
                and the total costs of programs; and
                    (D) process information on program implementation 
                and administration, especially on problems encountered 
                and how problems were solved.

SEC. 159. ACCOUNT FUNDS OF PROGRAM PARTICIPANTS DISREGARDED FOR 
              PURPOSES OF CERTAIN MEANS-TESTED FEDERAL PROGRAMS.

    Notwithstanding any other provision of Federal law that requires 
consideration of 1 or more financial circumstances of an individual, 
for the purposes of determining eligibility to receive, or the amount 
of, any assistance or benefit authorized by such provision to be 
provided to or for the benefit of such individual, an amount equal to 
the sum of--
            (1) all contributions by an eligible individual (including 
        earnings thereon) to any Individual Development Account; plus
            (2) the matching deposits made on behalf of such individual 
        (including earnings thereon) in any parallel account,
shall be disregarded for such purpose with respect to any period during 
which the individual participates in a qualified individual development 
account program established under section 152.

SEC. 160. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS PROVIDED 
              THROUGH A TAX CREDIT FOR QUALIFIED FINANCIAL 
              INSTITUTIONS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to other credits) is amended by inserting after section 30A 
the following new section:

``SEC. 30B. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT FOR 
              QUALIFIED FINANCIAL INSTITUTIONS.

    ``(a) Determination of Amount.--There shall be allowed as a credit 
against the applicable tax for the taxable year an amount equal to the 
individual development account investment provided by a qualified 
financial institution during the taxable year under an individual 
development account program established under section 152 of the 
Community Renewal and New Markets Act of 2000.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the tax imposed under this chapter (other than the 
        taxes imposed under the provisions described in subparagraphs 
        (C) through (Q) of section 26(b)(2)), over
            ``(2) the credits allowable under subpart B (other than 
        this section) and subpart D of this part.
    ``(c) Individual Development Account Investment.--For purposes of 
this section, the term `individual development account investment' 
means, with respect to an individual development account program of a 
qualified financial institution in any taxable year, an amount equal to 
the sum of--
            ``(1) 90 percent of the aggregate amount of dollar-for-
        dollar matches under such program by such institution under 
        section 155(b)(1)(A) of the Community Renewal and New Markets 
        Act of 2000 for such taxable year, plus
            ``(2) an amount equal to the sum of the costs incurred, 
        directly or indirectly, with respect to each Individual 
        Development Account opened after the date of the enactment of 
        this section, not to exceed $100 per Account.
    ``(d) Other Definitions.--For purposes of this section, the terms 
`Individual Development Account' and `qualified financial institution' 
have the meanings given such terms by section 151 of the Community 
Renewal and New Markets Act of 2000.
    ``(e) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including 
regulations providing for a recapture of the credit allowed under this 
section in cases where there is a forfeiture under section 156(b) of 
the Community Renewal and New Markets Act of 2000 in a subsequent 
taxable year of any amount which was taken into account in determining 
the amount of such credit.
    ``(f) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2005.''.
    (b) Conforming Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 30A the following new item:

``Sec. 30B. Individual development account investment credit for 
                            qualified financial institutions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 161. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR DEPOSIT 
              TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Section 32 (relating to earned income credit) is 
amended by adding at the end the following new subsection:
    ``(o) Designation of Credit for Deposit to Individual Development 
Account.--
            ``(1) In general.--With respect to the return of any 
        eligible individual (as defined in section 151(1) of the 
        Community Renewal and New Markets Act of 2000) for the taxable 
        year of the tax imposed by this chapter, such individual may 
        designate that a specified portion (not less than $1) of any 
        overpayment of tax for such taxable year which is attributable 
        to the credit allowed under this section shall be deposited by 
        the Secretary into an Individual Development Account (as 
        defined in section 151(2) of such Act) of such individual. The 
        Secretary shall so deposit such portion designated under this 
        paragraph.
            ``(2) Manner and time of designation.--A designation under 
        paragraph (1) may be made with respect to any taxable year--
                    ``(A) at the time of filing the return of the tax 
                imposed by this chapter for such taxable year, or
                    ``(B) at any other time (after the time of filing 
                the return of the tax imposed by this chapter for such 
                taxable year) specified in regulations prescribed by 
                the Secretary.
        Such designation shall be made in such manner as the Secretary 
        prescribes by regulations.
            ``(3) Portion attributable to earned income tax credit.--
        For purposes of paragraph (1), an overpayment for any taxable 
        year shall be treated as attributable to the credit allowed 
        under this section for such taxable year to the extent that 
        such overpayment does not exceed the credit so allowed.
            ``(4) Overpayments treated as refunded.--For purposes of 
        this title, any portion of an overpayment of tax designated 
        under paragraph (1) shall be treated as being refunded to the 
        taxpayer as of the last date prescribed for filing the return 
        of tax imposed by this chapter (determined without regard to 
        extensions) or, if later, the date the return is filed.
            ``(5) Termination.--This subsection shall not apply to any 
        taxable year beginning after December 31, 2005.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2001.

                   Subtitle G--Additional Incentives

SEC. 171. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL 
              HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM AND THE F. 
              EDWARD HEBERT ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP 
              AND FINANCIAL ASSISTANCE PROGRAM.

    (a) In General.--Section 117(c) (relating to the exclusion from 
gross income amounts received as a qualified scholarship) is amended--
            (1) by striking ``Subsections (a)'' and inserting the 
        following:
            ``(1) In general.--Except as provided in paragraph (2), 
        subsections (a)'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exceptions.--Paragraph (1) shall not apply to any 
        amount received by an individual under--
                    ``(A) the National Health Service Corps Scholarship 
                Program under section 338A(g)(1)(A) of the Public 
                Health Service Act, or
                    ``(B) the Armed Forces Health Professions 
                Scholarship and Financial Assistance program under 
                subchapter I of chapter 105 of title 10, United States 
                Code.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to amounts received in taxable years beginning after December 31, 
1993.

SEC. 172. EXTENSION OF ENHANCED DEDUCTION FOR CORPORATE DONATIONS OF 
              COMPUTER TECHNOLOGY.

    (a) Expansion of Computer Technology Donations to Public 
Libraries.--
            (1) In general.--Paragraph (6) of section 170(e) (relating 
        to special rule for contributions of computer technology and 
        equipment for elementary or secondary school purposes) is 
        amended by striking ``qualified elementary or secondary 
        educational contribution'' each place it occurs in the headings 
        and text and inserting ``qualified computer contribution''.
            (2) Expansion of eligible donees.--Clause (i) of section 
        170(e)(6)(B) (relating to qualified elementary or secondary 
        educational contribution) is amended by striking ``or'' at the 
        end of subclause (I), by adding ``or'' at the end of subclause 
        (II), and by inserting after subclause (II) the following new 
        subclause:
                                    ``(III) a public library (within 
                                the meaning of section 213(2)(A) of the 
                                Library Services and Technology Act (20 
                                U.S.C. 9122(2)(A)), as in effect on the 
                                date of the enactment of the Community 
                                Renewal and New Markets Act of 2000, 
                                established and maintained by an entity 
                                described in subsection (c)(1),''.
    (b) Conforming Amendments.--
            (1) Section 170(e)(6)(B)(iv) is amended by striking ``in 
        any grades of the K-12''.
            (2) The heading of paragraph (6) of section 170(e) is 
        amended by striking ``elementary or secondary school purposes'' 
        and inserting ``educational purposes''.
    (c) Extension of Deduction.--Section 170(e)(6)(F) (relating to 
termination) is amended by striking ``December 31, 2000'' and inserting 
``December 31, 2003''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made on and after the date of the enactment of 
this Act.

SEC. 173. EXTENSION OF ADOPTION TAX CREDIT.

    Section 23(d)(2)(B) (defining eligible child) is amended by 
striking ``2001'' and inserting ``2003''.

SEC. 174. TAX TREATMENT OF ALASKA NATIVE SETTLEMENT TRUSTS.

    (a) Treatment of Alaska Native Settlement Trusts.--Subpart A of 
part I of subchapter J of chapter 1 (relating to general rules for 
taxation of trusts and estates) is amended by adding at the end the 
following new section:

``SEC. 646. TAX TREATMENT OF ALASKA NATIVE SETTLEMENT TRUSTS.

    ``(a) In General.--Except as otherwise provided in this section, 
the provisions of this subchapter and section 1(e) shall apply to all 
Settlement Trusts.
    ``(b) Taxation of Income of Trust.--Except as provided in 
subsection (f)(1)(B)(ii)--
            ``(1) In general.--The amount of tax imposed on an electing 
        Settlement Trust under section 1(e) shall be determined using 
        the rate of 15 percent.
            ``(2) Capital gain.--In the case of an electing Settlement 
        Trust with a net capital gain for the taxable year, a tax is 
        imposed on such gain at the rate of tax which would apply to 
        such gain if the taxpayer were subject to a tax on ordinary 
        income at a rate of 15 percent.
    ``(c) One Time Election.--
            ``(1) In general.--A Settlement Trust may elect to have the 
        provisions of this section apply to the trust and its 
        beneficiaries.
            ``(2) Time and method of election.--An election under 
        paragraph (1) shall be made by the trustee of such trust--
                    ``(A) on or before the due date (including 
                extensions) for filing the Settlement Trust's return of 
                tax for the first taxable year of such trust ending 
                after the date of the enactment of this section, and
                    ``(B) by attaching to such return of tax a 
                statement specifically providing for such election.
            ``(3) Period election in effect.--Except as provided in 
        subsection (f), an election under this subsection--
                    ``(A) shall apply to the first taxable year 
                described in paragraph (2)(A) and all subsequent 
                taxable years, and
                    ``(B) may not be revoked once it is made.
    ``(d) Contributions to Trust.--
            ``(1) Beneficiaries of electing trust not taxed on 
        contributions.--In the case of an electing Settlement Trust, no 
        amount shall be includible in gross income of a beneficiary of 
        such trust by reason of a contribution to such trust made 
        during the taxable year.
            ``(2) Earnings and profits.--The earnings and profits of 
        the sponsoring Native Corporation of a Settlement Trust shall 
        not be reduced on account of any contribution to such 
        Settlement Trust.
    ``(e) Tax Treatment of Distributions to Beneficiaries.--Amounts 
distributed by an electing Settlement Trust during any taxable year 
shall be considered as having the following characteristics in the 
hands of the recipient beneficiary:
            ``(1) First, as amounts excludable from gross income for 
        the taxable year to the extent of the taxable income of such 
        trust for such taxable year (decreased by any income tax paid 
        by the trust with respect to the income) plus any amount 
        excluded from gross income of the trust under section 103.
            ``(2) Second, as amounts excludable from gross income to 
        the extent of the amount described in paragraph (1) for all 
        taxable years for which an election was in effect under 
        subsection (c) with respect to the trust, and not previously 
        taken into account under paragraph (1).
            ``(3) Third, for purposes of this title other than 
        subsections (b) and (d) of section 301 and section 311(b), as 
        amounts distributed by the sponsoring Native Corporation with 
        respect to its stock (within the meaning of section 301(a)) 
        during such taxable year and taxable to the recipient 
        beneficiary as amounts described in section 301(c)(1), to the 
        extent of current and accumulated earnings and profits of the 
        sponsoring Native Corporation as of the close of such taxable 
        year after proper adjustment is made for all distributions made 
        by the sponsoring Native Corporation during such taxable year.
            ``(4) Fourth, as amounts distributed by the trust in excess 
        of the distributable net income of such trust for such taxable 
        year.
    ``(f) Special Rules Where Transfer Restrictions Modified.--
            ``(1) Transfer of beneficial interests.--If, at any time, a 
        beneficial interest in an electing Settlement Trust may be 
        disposed of to a person in a manner which would not be 
        permitted by section 7(h) of the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1606(h)) if the interest were 
        Settlement Common Stock--
                    ``(A) no election may be made under subsection (c) 
                with respect to such trust, and
                    ``(B) if such an election is in effect as of such 
                time--
                            ``(i) such election shall cease to apply as 
                        of the first day of the taxable year in which 
                        such disposition is first permitted,
                            ``(ii) the provisions of this section shall 
                        not apply to such trust for such taxable year 
                        and all taxable years thereafter, and
                            ``(iii) the distributable net income of 
                        such trust shall be increased by the current 
                        and accumulated earnings and profits of the 
                        sponsoring Native Corporation as of the close 
                        of such taxable year after proper adjustment is 
                        made for all distributions made by the 
                        sponsoring Native Corporation during such 
                        taxable year.
                In no event shall the increase under clause (iii) 
                exceed the fair market value of the trust's assets as 
                of the date the beneficial interest of the trust first 
                becomes disposable. The earnings and profits of the 
                sponsoring Native Corporation shall be adjusted as of 
                the last day of such taxable year by the amount of 
                earnings and profits so included in the distributable 
                net income of the trust.
            ``(2) Stock in Corporation.--If--
                    ``(A) the Settlement Common Stock in the sponsoring 
                Native Corporation may be disposed of to a person in 
                any manner not permitted by section 7(h) of the Alaska 
                Native Claims Settlement Act (43 U.S.C. 1606(h)), and
                    ``(B) at any time after such disposition of stock 
                is first permitted, such corporation transfers assets 
                to a Settlement Trust,
        paragraph (1)(B) shall be applied to such trust on and after 
        the date of the transfer in the same manner as if the trust 
        permitted dispositions of beneficial interests in the trust in 
        a manner not permitted by such section 7(h).
            ``(3) Certain distributions.--For purposes of this section, 
        the surrender of an interest in a Native Corporation or an 
        electing Settlement Trust in order to accomplish the whole or 
        partial redemption of the interest of a shareholder or 
        beneficiary in such corporation or trust, or to accomplish the 
        whole or partial liquidation of such corporation or trust, 
        shall be deemed to be a disposition permitted by section 7(h) 
        of the Alaska Native Claims Settlement Act (43 U.S.C. 1606(h)).
    ``(g) Taxable Income.--For purposes of this title, the taxable 
income of an electing Settlement Trust shall be determined under 
section 641(b) without regard to any deduction under section 651 or 
661.
    ``(h) Definitions.--For purposes of this section--
            ``(1) Electing settlement trust.--The term `electing 
        Settlement Trust' means a Settlement Trust which has made the 
        election, effective for the taxable year, described in 
        subsection (c).
            ``(2) Native corporation.--The term `Native Corporation' 
        has the meaning given such term by section 3(m) of the Alaska 
        Native Claims Settlement Act (43 U.S.C. 1602(m)).
            ``(3) Settlement common stock.--The term `Settlement Common 
        Stock' has the meaning given such term by section 3(p) of the 
        Alaska Native Claims Settlement Act (43 U.S.C. 1602(p)).
            ``(4) Settlement trust.--The term `Settlement Trust' has 
        the meaning given such term by section 3(t) of the Alaska 
        Native Claims Settlement Act (43 U.S.C. 1602(t)).
            ``(5) Sponsoring native corporation.--The term `sponsoring 
        Native Corporation' means the Native Corporation which 
        transfers assets to an electing Settlement Trust.
    ``(i) Cross Reference.--

                                ``For information required with respect 
to electing Settlement Trusts and sponsoring Native Corporations, see 
section 6039H.''
    (b) Reporting.--Subpart A of part III of subchapter A of chapter 61 
of subtitle F (relating to information concerning persons subject to 
special provisions) is amended by inserting after section 6039G the 
following new section:

``SEC. 6039H. INFORMATION WITH RESPECT TO ALASKA NATIVE SETTLEMENT 
              TRUSTS AND SPONSORING NATIVE CORPORATIONS.

    ``(a) Requirement.--The fiduciary of an electing Settlement Trust 
(as defined in section 646(h)(1)) shall include with the return of 
income of the trust a statement containing the information required 
under subsection (c).
    ``(b) Application With Other Requirements.--The filing of any 
statement under this section shall be in lieu of the reporting 
requirement under section 6034A to furnish any statement to a 
beneficiary regarding amounts distributed to such beneficiary (and such 
other reporting requirements as the Secretary deems appropriate).
    ``(c) Required Information.--The information required under this 
subsection shall include--
            ``(1) the amount of distributions made during the taxable 
        year to each beneficiary,
            ``(2) the treatment of such distribution under the 
        applicable provision of section 646, including the amount that 
        is excludable from the recipient beneficiary's gross income 
        under section 646, and
            ``(3) the amount (if any) of any distribution during such 
        year that is deemed to have been made by the sponsoring Native 
        Corporation (as defined in section 646(h)(5)).
    ``(d) Sponsoring Native Corporation.--
            ``(1) In general.--The electing Settlement Trust shall, on 
        or before the date on which the statement under subsection (a) 
        is required to be filed, furnish such statement to the 
        sponsoring Native Corporation (as so defined).
            ``(2) Distributees.--The sponsoring Native Corporation 
        shall furnish each recipient of a distribution described in 
        section 646(e)(3) a statement containing the amount deemed to 
        have been distributed to such recipient by such corporation for 
        the taxable year.''.
    (c) Clerical Amendment.--
            (1) The table of sections for subpart A of part I of 
        subchapter J of chapter 1 is amended by adding at the end the 
        following new item:

                              ``Sec. 646. Electing Alaska Native 
                                        Settlement Trusts.''.
            (2) The table of sections for subpart A of part III of 
        subchapter A of chapter 61 of subtitle F is amended by 
        inserting after the item relating to section 6039G the 
        following new item:

                              ``Sec. 6039H. Information with respect to 
                                        Alaska Native Settlement Trusts 
                                        and sponsoring Native 
                                        Corporations.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act and to contributions made to electing Settlement Trusts for such 
year or any subsequent year.

SEC. 175. TREATMENT OF INDIAN TRIBAL GOVERNMENTS UNDER FEDERAL 
              UNEMPLOYMENT TAX ACT.

    (a) In General.--Section 3306(c)(7) (defining employment) is 
amended--
            (1) by inserting ``or in the employ of an Indian tribe,'' 
        after ``service performed in the employ of a State, or any 
        political subdivision thereof,''; and
            (2) by inserting ``or Indian tribes'' after ``wholly owned 
        by one or more States or political subdivisions''.
    (b) Payments in Lieu of Contributions.--Section 3309 (relating to 
State law coverage of services performed for nonprofit organizations or 
governmental entities) is amended--
            (1) in subsection (a)(2) by inserting ``, including an 
        Indian tribe,'' after ``the State law shall provide that a 
        governmental entity'';
            (2) in subsection (b)(3)(B) by inserting ``, or of an 
        Indian tribe'' after ``of a State or political subdivision 
        thereof'';
            (3) in subsection (b)(3)(E) by inserting ``or tribal'' 
        after ``the State''; and
            (4) in subsection (b)(5) by inserting ``or of an Indian 
        tribe'' after ``an agency of a State or political subdivision 
        thereof''.
    (c) State Law Coverage.--Section 3309 (relating to State law 
coverage of services performed for nonprofit organizations or 
governmental entities) is amended by adding at the end the following 
new subsection:
    ``(d) Election by Indian Tribe.--The State law shall provide that 
an Indian tribe may make contributions for employment as if the 
employment is within the meaning of section 3306 or make payments in 
lieu of contributions under this section, and shall provide that an 
Indian tribe may make separate elections for itself and each 
subdivision, subsidiary, or business enterprise wholly owned by such 
Indian tribe. State law may require a tribe to post a payment bond or 
take other reasonable measures to assure the making of payments in lieu 
of contributions under this section. Notwithstanding the requirements 
of section 3306(a)(6), if, within 90 days of having received a notice 
of delinquency, a tribe fails to make contributions, payments in lieu 
of contributions, or payment of penalties or interest (at amounts or 
rates comparable to those applied to all other employers covered under 
the State law) assessed with respect to such failure, or if the tribe 
fails to post a required payment bond, then service for the tribe shall 
not be excepted from employment under section 3306(c)(7) until any such 
failure is corrected. This subsection shall apply to an Indian tribe 
within the meaning of section 4(e) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450b(e)).''.
    (d) Definitions.--Section 3306 (relating to definitions) is amended 
by adding at the end the following new subsection:
    ``(u) Indian Tribe.--For purposes of this chapter, the term `Indian 
tribe' has the meaning given to such term by section 4(e) of the Indian 
Self-Determination and Education Assistance Act (25 U.S.C. 450b(e)), 
and includes any subdivision, subsidiary, or business enterprise wholly 
owned by such an Indian tribe.''.
    (e) Effective Date; Transition Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to service performed on or after the date of the 
        enactment of this Act.
            (2) Transition rule.--For purposes of the Federal 
        Unemployment Tax Act, service performed in the employ of an 
        Indian tribe (as defined in section 3306(u) of the Internal 
        Revenue Code of 1986 (as added by this section)) shall not be 
        treated as employment (within the meaning of section 3306 of 
        such Code) if--
                    (A) it is service which is performed before the 
                date of the enactment of this Act and with respect to 
                which the tax imposed under the Federal Unemployment 
                Tax Act has not been paid, and
                    (B) such Indian tribe reimburses a State 
                unemployment fund for unemployment benefits paid for 
                service attributable to such tribe for such period.

SEC. 176. INCREASE IN SOCIAL SERVICES BLOCK GRANT FOR FY 2001.

    (a) In General.--Section 2003(c) of the Social Security Act (42 
U.S.C. 1397b(c)) is amended--
            (1) in paragraph (10), by striking ``and'' at the end;
            (2) in paragraph (11), by striking ``2001'' and inserting 
        ``2002'';
            (3) by redesignating paragraph (11) (as so amended) as 
        paragraph (12); and
            (4) by inserting after paragraph (10), the following new 
        paragraph:
            ``(11) $2,400,000,000 for the fiscal year 2001; and''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect October 1, 2000.

            TITLE II--TAX INCENTIVES FOR AFFORDABLE HOUSING

                 Subtitle A--Low-Income Housing Credit

SEC. 201. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clauses (i) and (ii) of section 42(h)(3)(C) 
(relating to State housing credit ceiling) are amended to read as 
follows:
                            ``(i) the unused State housing credit 
                        ceiling (if any) of such State for the 
                        preceding calendar year,
                            ``(ii) the greater of--
                                    ``(I) $1.75 multiplied by the State 
                                population, or
                                    ``(II) $2,000,000,''.
    (b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar 
amount for agencies) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Cost-of-living adjustment.--In the case of a 
                calendar year after 2001, each of the dollar amounts 
                contained in subparagraph (C)(ii) shall be increased by 
                an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year by substituting `calendar year 
                        2000' for `calendar year 1992' in subparagraph 
                        (B) thereof.
                If any increase determined under the preceding sentence 
                is not a multiple of 5 cents ($5,000 in the case of the 
                dollar amount in subparagraph (C)(ii)(II)), such 
                increase shall be rounded to the nearest multiple 
                thereof.''.
    (c) Conforming Amendments.--
            (1) Section 42(h)(3)(C), as amended by subsection (a), is 
        amended--
                    (A) by striking ``clause (ii)'' in the matter 
                following clause (iv) and inserting ``clause (i)'', and
                    (B) by striking ``clauses (i)'' in the matter 
                following clause (iv) and inserting ``clauses (ii)''.
            (2) Section 42(h)(3)(D)(ii) is amended--
                    (A) by striking ``subparagraph (C)(ii)'' and 
                inserting ``subparagraph (C)(i)'', and
                    (B) by striking ``clauses (i)'' in subclause (II) 
                and inserting ``clauses (ii)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

SEC. 202. MODIFICATION TO RULES RELATING TO BASIS OF BUILDING WHICH IS 
              ELIGIBLE FOR CREDIT.

    (a) Certain Native American Housing Assistance Disregarded in 
Determining Whether Building Is Federally Subsidized for Purposes of 
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2) 
(relating to determination of whether building is federally subsidized) 
is amended--
            (1) in clause (i), by inserting ``or the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' after 
        ``this subparagraph)'', and
            (2) in the subparagraph heading, by inserting ``or native 
        american housing assistance'' after ``home assistance''.
    (b) Effective Date.--The amendments made by this section shall 
apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 2000, and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to any building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.

                       Subtitle B--Historic Homes

SEC. 211. TAX CREDIT FOR RENOVATING HISTORIC HOMES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25A the following new section:

``SEC. 25B. HISTORIC HOMEOWNERSHIP REHABILITATION CREDIT.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to 20 percent of the qualified 
rehabilitation expenditures made by the taxpayer with respect to a 
qualified historic home.
    ``(b) Dollar Limitation.--The credit allowed by subsection (a) with 
respect to any residence of a taxpayer shall not exceed $20,000 
($10,000 in the case of a married individual filing a separate return).
    ``(c) Carryforward of Credit Unused by Reason of Limitation Based 
on Tax Liability.--If the credit allowable under subsection (a) for any 
taxable year exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under this 
subpart (other than this section), such excess shall be carried to the 
succeeding taxable year (but not for more than 10 taxable years 
succeeding the first taxable year in which the credit under this 
section is allowed to the taxpayer) and added to the credit allowable 
under subsection (a) for such succeeding taxable year.
    ``(d) Qualified Rehabilitation Expenditure.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rehabilitation 
        expenditure' means any amount properly chargeable to capital 
        account--
                    ``(A) in connection with the certified 
                rehabilitation of a qualified historic home, and
                    ``(B) for property for which depreciation would be 
                allowable under section 168 if the qualified historic 
                home were used in a trade or business.
            ``(2) Certain expenditures not included.--
                    ``(A) Exterior.--Such term shall not include any 
                expenditure in connection with the rehabilitation of a 
                building unless at least 5 percent of the total 
                expenditures made in the rehabilitation process are 
                allocable to the rehabilitation of the exterior of such 
                building.
                    ``(B) Other rules to apply.--Rules similar to the 
                rules of clauses (ii) and (iii) of section 47(c)(2)(B) 
                shall apply.
            ``(3) Mixed use or multifamily building.--If only a portion 
        of a building is used as the principal residence of the 
        taxpayer, only qualified rehabilitation expenditures which are 
        properly allocable to such portion shall be taken into account 
        under this section.
    ``(e) Certified Rehabilitation.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `certified rehabilitation' has the meaning 
        given such term by section 47(c)(2)(C).
            ``(2) Factors to be considered in the case of targeted area 
        residences, etc.--
                    ``(A) In general.--For purposes of applying section 
                47(c)(2)(C) under this section with respect to the 
                rehabilitation of a building to which this paragraph 
                applies, consideration shall be given to--
                            ``(i) the feasibility of preserving 
                        existing architectural and design elements of 
                        the interior of such building,
                            ``(ii) the risk of further deterioration or 
                        demolition of such building in the event that 
                        certification is denied because of the failure 
                        to preserve such interior elements, and
                            ``(iii) the effects of such deterioration 
                        or demolition on neighboring historic 
                        properties.
                    ``(B) Buildings to which this paragraph applies.--
                This paragraph shall apply with respect to any 
                building--
                            ``(i) any part of which is a targeted area 
                        residence within the meaning of section 
                        143(j)(1), or
                            ``(ii) which is located within an 
                        enterprise community or empowerment zone as 
                        designated under section 1391,
                but shall not apply with respect to any building which 
                is listed in the National Register.
            ``(3) Approved state program.--The term `certified 
        rehabilitation' includes a certification made by--
                    ``(A) a State Historic Preservation Officer who 
                administers a State Historic Preservation Program 
                approved by the Secretary of the Interior pursuant to 
                section 101(b)(1) of the National Historic Preservation 
                Act, as in effect on July 21, 1999, or
                    ``(B) a local government, certified pursuant to 
                section 101(c)(1) of the National Historic Preservation 
                Act, as in effect on July 21, 1999, and authorized by a 
                State Historic Preservation Officer, or the Secretary 
                of the Interior where there is no approved State 
                program),
        subject to such terms and conditions as may be specified by the 
        Secretary of the Interior for the rehabilitation of buildings 
        within the jurisdiction of such officer (or local government) 
        for purposes of this section.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified historic home.--The term `qualified 
        historic home' means a certified historic structure--
                    ``(A) which has been substantially rehabilitated, 
                and
                    ``(B) which (or any portion of which)--
                            ``(i) is owned by the taxpayer, and
                            ``(ii) is used (or will, within a 
                        reasonable period, be used) by such taxpayer as 
                        his principal residence.
            ``(2) Substantially rehabilitated.--The term `substantially 
        rehabilitated' has the meaning given such term by section 
        47(c)(1)(C); except that, in the case of any building described 
        in subsection (e)(2), clause (i)(I) thereof shall not apply.
            ``(3) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
            ``(4) Certified historic structure.--
                    ``(A) In general.--The term `certified historic 
                structure' means any building (and its structural 
                components) which--
                            ``(i) is listed in the National Register, 
                        or
                            ``(ii) is located in a registered historic 
                        district (as defined in section 47(c)(3)(B)) 
                        within which only qualified census tracts (or 
                        portions thereof) are located, and is certified 
                        by the Secretary of the Interior to the 
                        Secretary as being of historic significance to 
                        the district.
                    ``(B) Certain structures included.--Such term 
                includes any building (and its structural components) 
                which is designated as being of historic significance 
                under a statute of a State or local government, if such 
                statute is certified by the Secretary of the Interior 
                to the Secretary as containing criteria which will 
                substantially achieve the purpose of preserving and 
                rehabilitating buildings of historic significance.
                    ``(C) Qualified census tracts.--For purposes of 
                subparagraph (A)(ii)--
                            ``(i) In general.--The term `qualified 
                        census tract' means a census tract in which the 
                        median family income is less than twice the 
                        statewide median family income.
                            ``(ii) Data used.--The determination under 
                        clause (i) shall be made on the basis of the 
                        most recent decennial census for which data are 
                        available.
            ``(5) Rehabilitation not complete before certification.--A 
        rehabilitation shall not be treated as complete before the date 
        of the certification referred to in subsection (e).
            ``(6) Lessees.--A taxpayer who leases his principal 
        residence shall, for purposes of this section, be treated as 
        the owner thereof if the remaining term of the lease (as of the 
        date determined under regulations prescribed by the Secretary) 
        is not less than such minimum period as the regulations 
        require.
            ``(7) Tenant-stockholder in cooperative housing 
        corporation.--If the taxpayer holds stock as a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        stockholder shall be treated as owning the house or apartment 
        which the taxpayer is entitled to occupy as such stockholder.
            ``(8) Allocation of expenditures relating to exterior of 
        building containing cooperative or condominium units.--The 
        percentage of the total expenditures made in the rehabilitation 
        of a building containing cooperative or condominium residential 
        units allocated to the rehabilitation of the exterior of the 
        building shall be attributed proportionately to each 
        cooperative or condominium residential unit in such building 
        for which a credit under this section is claimed.
    ``(g) When Expenditures Taken Into Account.--In the case of a 
building other than a building to which subsection (h) applies, 
qualified rehabilitation expenditures shall be treated for purposes of 
this section as made on the date the rehabilitation is completed.
    ``(h) Allowance of Credit for Purchase of Rehabilitated Historic 
Home.--
            ``(1) In general.--In the case of a qualified purchased 
        historic home, the taxpayer shall be treated as having made (on 
        the date of purchase) the qualified rehabilitation expenditures 
        made by the seller of such home. For purposes of the preceding 
        sentence, expenditures made by the seller shall be deemed to be 
        qualified rehabilitation expenditures if such expenditures, if 
        made by the purchaser, would be qualified rehabilitation 
        expenditures.
            ``(2) Qualified purchased historic home.--For purposes of 
        this subsection, the term `qualified purchased historic home' 
        means any substantially rehabilitated certified historic 
        structure purchased by the taxpayer if--
                    ``(A) the taxpayer is the first purchaser of such 
                structure after the date rehabilitation is completed, 
                and the purchase occurs within 5 years after such date,
                    ``(B) the structure (or a portion thereof) will, 
                within a reasonable period, be the principal residence 
                of the taxpayer,
                    ``(C) no credit was allowed to the seller under 
                this section or section 47 with respect to such 
                rehabilitation, and
                    ``(D) the taxpayer is furnished with such 
                information as the Secretary determines is necessary to 
                determine the credit under this subsection.
    ``(i) Historic Rehabilitation Mortgage Credit Certificate.--
            ``(1) In general.--The taxpayer may elect, in lieu of the 
        credit otherwise allowable under this section, to receive a 
        historic rehabilitation mortgage credit certificate. An 
        election under this paragraph shall be made--
                    ``(A) in the case of a building to which subsection 
                (h) applies, at the time of purchase, or
                    ``(B) in any other case, at the time rehabilitation 
                is completed.
            ``(2) Historic rehabilitation mortgage credit 
        certificate.--For purposes of this subsection, the term 
        `historic rehabilitation mortgage credit certificate' means a 
        certificate--
                    ``(A) issued to the taxpayer, in accordance with 
                procedures prescribed by the Secretary, with respect to 
                a certified rehabilitation,
                    ``(B) the face amount of which shall be equal to 
                the credit which would (but for this subsection) be 
                allowable under subsection (a) to the taxpayer with 
                respect to such rehabilitation,
                    ``(C) which may only be transferred by the taxpayer 
                to a lending institution (including a non-depository 
                institution) in connection with a loan--
                            ``(i) that is secured by the building with 
                        respect to which the credit relates, and
                            ``(ii) the proceeds of which may not be 
                        used for any purpose other than the acquisition 
                        or rehabilitation of such building, and
                    ``(D) in exchange for which such lending 
                institution provides the taxpayer--
                            ``(i) a reduction in the rate of interest 
                        on the loan which results in interest payment 
                        reductions which are substantially equivalent 
                        on a present value basis to the face amount of 
                        such certificate, or
                            ``(ii) if the taxpayer so elects with 
                        respect to a specified amount of the face 
                        amount of such a certificate relating to a 
                        building--
                                    ``(I) which is a targeted area 
                                residence within the meaning of section 
                                143(j)(1), or
                                    ``(II) which is located in an 
                                enterprise community or empowerment 
                                zone as designated under section 1391,
                        a payment which is substantially equivalent to 
                        such specified amount to be used to reduce the 
                        taxpayer's cost of purchasing the building (and 
                        only the remainder of such face amount shall be 
                        taken into account under clause (i)).
            ``(3) Method of discounting.--The present value under 
        paragraph (2)(D)(i) shall be determined--
                    ``(A) for a period equal to the term of the loan 
                referred to in subparagraph (D)(i),
                    ``(B) by using the convention that any payment on 
                such loan in any taxable year within such period is 
                deemed to have been made on the last day of such 
                taxable year,
                    ``(C) by using a discount rate equal to 65 percent 
                of the average of the annual Federal mid-term rate and 
                the annual Federal long-term rate applicable under 
                section 1274(d)(1) to the month in which the taxpayer 
                makes an election under paragraph (1) and compounded 
                annually, and
                    ``(D) by assuming that the credit allowable under 
                this section for any year is received on the last day 
                of such year.
            ``(4) Use of certificate by lender.--The amount of the 
        credit specified in the certificate shall be allowed to the 
        lender only to offset the regular tax (as defined in section 
        55(c)) of such lender. The lender may carry forward all unused 
        amounts under this subsection until exhausted.
            ``(5) Historic rehabilitation mortgage credit certificate 
        not treated as taxable income.--Notwithstanding any other 
        provision of law, no benefit accruing to the taxpayer through 
        the use of an historic rehabilitation mortgage credit 
        certificate shall be treated as taxable income for purposes of 
        this title.
    ``(j) Recapture.--
            ``(1) In general.--If, before the end of the 5-year period 
        beginning on the date on which the rehabilitation of the 
        building is completed (or, if subsection (h) applies, the date 
        of purchase of such building by the taxpayer, or, if subsection 
        (i) applies, the date of the loan)--
                    ``(A) the taxpayer disposes of such taxpayer's 
                interest in such building, or
                    ``(B) such building ceases to be used as the 
                principal residence of the taxpayer,
        the taxpayer's tax imposed by this chapter for the taxable year 
        in which such disposition or cessation occurs shall be 
        increased by the recapture percentage of the credit allowed 
        under this section for all prior taxable years with respect to 
        such rehabilitation.
            ``(2) Recapture percentage.--For purposes of paragraph (1), 
        the recapture percentage shall be determined in accordance with 
        the following table:

``If the disposition or cessation   The recapture percentage is--
        occurs within--
    (i) One full year after the taxpayer becomes                   100 
        entitled to the credit.
    (ii) One full year after the close of the                       80 
        period described in clause (i).
    (iii) One full year after the close of the                      60 
        period described in clause (ii).
    (iv) One full year after the close of the                       40 
        period described in clause (iii).
    (v) One full year after the close of the                        20.
        period described in clause (iv).
    ``(k) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property (including any purchase under subsection (h) and any 
transfer under subsection (i)), the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(l) Denial of Double Benefit.--No credit shall be allowed under 
this section for any amount for which credit is allowed under section 
47.
    ``(m) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations where less than all of a building is used as a 
principal residence and where more than 1 taxpayer use the same 
dwelling unit as their principal residence.''.
    (b) Conforming Amendments.--
            (1) Section 23(c) is amended by striking ``section 1400C'' 
        and inserting ``sections 25B and 1400C''.
            (2) Section 25(e)(1)(C) is amended by striking ``23'' and 
        inserting ``23, 25B,''.
            (3) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (26), by striking the period at the end of 
        paragraph (27) and inserting ``, and'', and by adding at the 
        end the following new item:
            ``(28) to the extent provided in section 25B(k).''.
            (4) Section 1400C(d) is amended by inserting ``and section 
        25B'' after ``this section''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25A the following new item:

                              ``Sec. 25B. Historic homeownership 
                                        rehabilitation credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred in taxable years beginning after 
December 31, 2001.

               Subtitle C--Forgiven Mortgage Obligations

SEC. 221. EXCLUSION FROM GROSS INCOME FOR CERTAIN FORGIVEN MORTGAGE 
              OBLIGATIONS.

    (a) In General.--Paragraph (1) of section 108(a) (relating to 
exclusion from gross income) is amended by striking ``or'' at the end 
of both subparagraphs (A) and (C), by striking the period at the end of 
subparagraph (D) and inserting ``, or'', and by inserting after 
subparagraph (D) the following new subparagraph:
                    ``(E) in the case of an individual, the 
                indebtedness discharged is qualified residential 
                indebtedness.''.
    (b) Qualified Residential Indebtedness Shortfall.--Section 108 
(relating to discharge of indebtedness) is amended by adding at the end 
the following new subsection:
    ``(h) Qualified Residential Indebtedness.--
            ``(1) Limitations.--The amount excluded under subparagraph 
        (E) of subsection (a)(1) with respect to any qualified 
        residential indebtedness shall not exceed the excess (if any) 
        of--
                    ``(A) the outstanding principal amount of such 
                indebtedness (immediately before the discharge), over
                    ``(B) the sum of--
                            ``(i) the amount realized from the sale of 
                        the real property securing such indebtedness 
                        reduced by the cost of such sale, and
                            ``(ii) the outstanding principal amount of 
                        any other indebtedness secured by such 
                        property.
            ``(2) Qualified residential indebtedness.--
                    ``(A) In general.--The term `qualified residential 
                indebtedness' means indebtedness which--
                            ``(i) was incurred or assumed by the 
                        taxpayer in connection with real property used 
                        as the principal residence of the taxpayer 
                        (within the meaning of section 121) and is 
                        secured by such real property,
                            ``(ii) is incurred or assumed to acquire, 
                        construct, reconstruct, or substantially 
                        improve such real property, and
                            ``(iii) with respect to which such taxpayer 
                        makes an election to have this paragraph apply.
                    ``(B) Refinanced indebtedness.--Such term shall 
                include indebtedness resulting from the refinancing of 
                indebtedness under subparagraph (A)(ii), but only to 
                the extent the refinanced indebtedness does not exceed 
                the amount of the indebtedness being refinanced.
                    ``(C) Exceptions.--Such term shall not include 
                qualified farm indebtedness or qualified real property 
                business indebtedness.''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 108(a) is amended--
                    (A) by striking ``and (D)'' in subparagraph (A) and 
                inserting ``(D), and (E)'', and
                    (B) by amending subparagraph (B) to read as 
                follows:
                    ``(B) Insolvency exclusion takes precedence over 
                qualified farm exclusion; qualified real property 
                business exclusion; and qualified residential shortfall 
                exclusion.--Subparagraphs (C), (D), and (E) of 
                paragraph (1) shall not apply to a discharge to the 
                extent the taxpayer is insolvent.''.
            (2) Paragraph (1) of section 108(b) is amended by striking 
        ``or (C)'' and inserting ``(C), or (E)''.
            (3) Subsection (c) of section 121 is amended by adding at 
        the end the following new paragraph:
            ``(3) Special rule relating to discharge of indebtedness.--
        The amount of gain which (but for this paragraph) would be 
        excluded from gross income under subsection (a) with respect to 
        a principal residence shall be reduced by the amount excluded 
        from gross income under section 108(a)(1)(E) with respect to 
        such residence.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges after the date of the enactment of this Act.

                   Subtitle D--Mortgage Revenue Bonds

SEC. 231. INCREASE IN PURCHASE PRICE LIMITATION UNDER MORTGAGE SUBSIDY 
              BOND RULES BASED ON MEDIAN FAMILY INCOME.

    (a) In General.--Paragraph (1) of section 143(e) (relating to 
purchase price requirement) is amended to read as follows:
            ``(1) In general.--An issue meets the requirements of this 
        subsection only if the acquisition cost of each residence the 
        owner-financing of which is provided under the issue does not 
        exceed the greater of--
                    ``(A) 90 percent of the average area purchase price 
                applicable to the residence, or
                    ``(B) 3.5 times the applicable median family income 
                (as defined in subsection (f)(4)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after the date of the enactment of this Act.

SEC. 232. MORTGAGE FINANCING FOR RESIDENCES LOCATED IN PRESIDENTIALLY 
              DECLARED DISASTER AREAS.

    (a) In General.--Paragraph (11) of section 143(k) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(11) Special rules for residences located in disaster 
        areas.--
                    ``(A) Home improvement loans for repairs.--In the 
                case of financing provided by a qualified home 
                improvement loan for the repair of damage to a 
                residence located in a disaster area which was 
                sustained as a result of the disaster--
                            ``(i) the limitation under paragraph (4) 
                        shall be increased (but not above $100,000) to 
                        the extent such loan is for the repair of such 
                        damage, and
                            ``(ii) subsection (f) (relating to income 
                        requirement) shall be applied as if such 
                        residence were a targeted area residence.
                    ``(B) Purchase of replacement home.--In the case of 
                financing provided to acquire a residence located in a 
                disaster area by mortgagors whose prior residence was 
                in such area and was destroyed or otherwise rendered 
                uninhabitable as a result of the disaster--
                            ``(i) subsection (d) (relating to 3-year 
                        requirement) shall not apply, and
                            ``(ii) subsections (e) and (f) (relating to 
                        purchase price requirement and income 
                        requirement) shall be applied as if such 
                        residence were a targeted area residence.
                    ``(C) Financing must be provided within 2 years 
                after disaster declaration.--This paragraph shall apply 
                only to financing provided within 2 years after the 
                date of the disaster declaration.
                    ``(D) Disaster area.--For purposes of this 
                paragraph, the term `disaster area' means an area 
                determined by the President to warrant assistance from 
                the Federal Government under the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act (as in 
                effect on the date of the enactment of the Taxpayer 
                Relief Act of 1997) and with respect to which the 
                Federal share of disaster payments exceeds 75 percent.
                    ``(E) Application of paragraph.--This paragraph 
                shall apply only with respect to bonds issued after 
                December 31, 2000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after December 31, 2000.

              Subtitle E--Property and Casualty Insurance

SEC. 241. EXEMPTION FROM INCOME TAX FOR STATE-CREATED ORGANIZATIONS 
              PROVIDING PROPERTY AND CASUALTY INSURANCE FOR PROPERTY 
              FOR WHICH SUCH COVERAGE IS OTHERWISE UNAVAILABLE.

    (a) In General.--Subsection (c) of section 501 (relating to 
exemption from tax on corporations, certain trusts, etc.) is amended by 
adding at the end the following new paragraph:
            ``(28)(A) Any association created before January 1, 1999, 
        by State law and organized and operated exclusively to provide 
        property and casualty insurance coverage for property located 
        within the State for which the State has determined that 
        coverage in the authorized insurance market is limited or 
        unavailable at reasonable rates, if--
                    ``(i) no part of the net earnings of which inures 
                to the benefit of any private shareholder or 
                individual,
                    ``(ii) except as provided in clause (v), no part of 
                the assets of which may be used for, or diverted to, 
                any purpose other than--
                            ``(I) to satisfy, in whole or in part, the 
                        liability of the association for, or with 
                        respect to, claims made on policies written by 
                        the association,
                            ``(II) to invest in investments authorized 
                        by applicable law,
                            ``(III) to pay reasonable and necessary 
                        administration expenses in connection with the 
                        establishment and operation of the association 
                        and the processing of claims against the 
                        association, or
                            ``(IV) to make remittances pursuant to 
                        State law to be used by the State to provide 
                        for the payment of claims on policies written 
                        by the association, purchase reinsurance 
                        covering losses under such policies, or to 
                        support governmental programs to prepare for or 
                        mitigate the effects of natural catastrophic 
                        events,
                    ``(iii) the State law governing the association 
                permits the association to levy assessments on 
                insurance companies authorized to sell property and 
                casualty insurance in the State, or on property and 
                casualty insurance policyholders with insurable 
                interests in property located in the State to fund 
                deficits of the association, including the creation of 
                reserves,
                    ``(iv) the plan of operation of the association is 
                subject to approval by the chief executive officer or 
                other official of the State, by the State legislature, 
                or both, and
                    ``(v) the assets of the association revert upon 
                dissolution to the State, the State's designee, or an 
                entity designated by the State law governing the 
                association, or State law does not permit the 
                dissolution of the association.
            ``(B)(i) An entity described in clause (ii) shall be 
        disregarded as a separate entity and treated as part of the 
        association described in subparagraph (A) from which it 
        receives remittances described in clause (ii) if an election is 
        made within 30 days after the date that such association is 
        determined to be exempt from tax.
            ``(ii) An entity is described in this clause if it is an 
        entity or fund created before January 1, 1999, pursuant to 
        State law and organized and operated exclusively to receive, 
        hold, and invest remittances from an association described in 
        subparagraph (A) and exempt from tax under subsection (a), to 
        make disbursements to pay claims on insurance contracts issued 
        by such association, and to make disbursements to support 
        governmental programs to prepare for or mitigate the effects of 
        natural catastrophic events.''.
    (b) Unrelated Business Taxable Income.--Subsection (a) of section 
512 (relating to unrelated business taxable income) is amended by 
adding at the end the following new paragraph:
            ``(6) Special rule applicable to organizations described in 
        section 501(c)(28).--In the case of an organization described 
        in section 501(c)(28), the term `unrelated business taxable 
        income' means taxable income for a taxable year computed 
        without the application of section 501(c)(28) if at the end of 
        the immediately preceding taxable year the organization's net 
        equity exceeded 15 percent of the total coverage in force under 
        insurance contracts issued by the organization and outstanding 
        at the end of such preceding year.''.
    (c) Transitional Rule.--No income or gain shall be recognized by an 
association as a result of a change in status to that of an association 
described by section 501(c)(28) of the Internal Revenue Code of 1986, 
as amended by subsection (a).
    (d) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

      TITLE III--TAX INCENTIVES FOR URBAN AND RURAL INFRASTRUCTURE

SEC. 301. INCREASE IN STATE CEILING ON PRIVATE ACTIVITY BONDS.

    (a) In General.--Paragraphs (1) and (2) of section 146(d) (relating 
to State ceiling) are amended to read as follows:
            ``(1) In general.--The State ceiling applicable to any 
        State for any calendar year shall be the greater of--
                    ``(A) an amount equal to $75 multiplied by the 
                State population, or
                    ``(B) $225,000.000.
            ``(2) Cost-of-living adjustment.--In the case of a calendar 
        year after 2001, each of the dollar amounts contained in 
        paragraph (1) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2000' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $5 ($5,000 in the case of the dollar amount in 
        paragraph (1)(B)), such increase shall be rounded to the 
        nearest multiple thereof.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to calendar years after 2000.

SEC. 302. MODIFICATIONS TO EXPENSING OF ENVIRONMENTAL REMEDIATION 
              COSTS.

    (a) Expensing Not Limited to Sites in Targeted Areas.--Subsection 
(c) of section 198 is amended to read as follows:
    ``(c) Qualified Contaminated Site.--For purposes of this section--
            ``(1) In general.--The term `qualified contaminated site' 
        means any area--
                    ``(A) which is held by the taxpayer for use in a 
                trade or business or for the production of income, or 
                which is property described in section 1221(a)(1) in 
                the hands of the taxpayer, and
                    ``(B) at or on which there has been a release (or 
                threat of release) or disposal of any hazardous 
                substance.
            ``(2) National priorities listed sites not included.--Such 
        term shall not include any site which is on, or proposed for, 
        the national priorities list under section 105(a)(8)(B) of the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (as in effect on the date of the 
        enactment of this section).
            ``(3) Taxpayer must receive statement from state 
        environmental agency.--An area shall be treated as a qualified 
        contaminated site with respect to expenditures paid or incurred 
        during any taxable year only if the taxpayer receives a 
        statement from the appropriate agency of the State in which 
        such area is located that such area meets the requirement of 
        paragraph (1)(B).
            ``(4) Appropriate state agency.--For purposes of paragraph 
        (3), the chief executive officer of each State may, in 
        consultation with the Administrator of the Environmental 
        Protection Agency, designate the appropriate State 
        environmental agency within 60 days of the date of the 
        enactment of this section. If the chief executive officer of a 
        State has not designated an appropriate environmental agency 
        within such 60-day period, the appropriate environmental agency 
        for such State shall be designated by the Administrator of the 
        Environmental Protection Agency.''.
    (b) Extension of Termination Date.--Subsection (h) of section 198 
is amended by striking ``2001'' and inserting ``2003''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after the date of the enactment 
of this Act.

SEC. 303. BROADBAND INTERNET ACCESS TAX CREDIT.

    (a) In General.--Subpart E of part IV of chapter 1 (relating to 
rules for computing investment credit) is amended by inserting after 
section 48 the following new section:

``SEC. 48A. BROADBAND CREDIT.

    ``(a) General Rule.--For purposes of section 46, the broadband 
credit for any taxable year is the sum of--
            ``(1) the current generation broadband credit, plus
            ``(2) the next generation broadband credit.
    ``(b) Current Generation Broadband Credit; Next Generation 
Broadband Credit.--For purposes of this section--
            ``(1) Current generation broadband credit.--The current 
        generation broadband credit for any taxable year is equal to 10 
        percent of the qualified expenditures incurred with respect to 
        qualified equipment offering current generation broadband 
        services to rural subscribers or underserved subscribers and 
        taken into account with respect to such taxable year.
            ``(2) Next generation broadband credit.--The next 
        generation broadband credit for any taxable year is equal to 20 
        percent of the qualified expenditures incurred with respect to 
        qualified equipment offering next generation broadband services 
        to all rural subscribers, all underserved subscribers, or any 
        other residential subscribers and taken into account with 
        respect to such taxable year.
    ``(c) When Expenditures Taken Into Account.--For purposes of this 
section--
            ``(1) In general.--Qualified expenditures with respect to 
        qualified equipment shall be taken into account with respect to 
        the first taxable year in which current generation broadband 
        services or next generation broadband services are offered by 
        the taxpayer through such equipment to subscribers.
            ``(2) Offer of services.--For purposes of paragraph (1), 
        the offer of current generation broadband services or next 
        generation broadband services through qualified equipment 
        occurs when such class of service is purchased by and provided 
        to at least 10 percent of the subscribers described in 
        subsection (b) which such equipment is capable of serving 
        through the legal or contractual area access rights or 
        obligations of the taxpayer.
    ``(d) Special Allocation Rules.--
            ``(1) Current generation broadband services.--For purposes 
        of determining the current generation broadband credit under 
        subsection (a)(1), if the qualified equipment is capable of 
        serving both the subscribers described under subsection (b)(1) 
        and other subscribers, the qualified expenditures shall be 
        multiplied by a fraction--
                    ``(A) the numerator of which is the sum of the 
                total potential subscriber populations within the rural 
                areas and the underserved areas which the equipment is 
                capable of serving, and
                    ``(B) the denominator of which is the total 
                potential subscriber population of the area which the 
                equipment is capable of serving.
            ``(2) Next generation broadband services.--For purposes of 
        determining the next generation broadband credit under 
        subsection (a)(2), if the qualified equipment is capable of 
        serving both the subscribers described under subsection (b)(2) 
        and other subscribers, the qualified expenditures shall be 
        multiplied by a fraction--
                    ``(A) the numerator of which is the sum of--
                            ``(i) the total potential subscriber 
                        populations within the rural areas and 
                        underserved areas, plus
                            ``(ii) the total potential subscriber 
                        population of the area consisting only of 
                        residential subscribers not described in clause 
                        (i),
                which the equipment is capable of serving, and
                    ``(B) the denominator of which is the total 
                potential subscriber population of the area which the 
                equipment is capable of serving.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Antenna.--The term `antenna' means any device used to 
        transmit or receive signals through the electromagnetic 
        spectrum, including satellite equipment.
            ``(2) Cable operator.--The term `cable operator' has the 
        meaning given such term by section 602(5) of the Communications 
        Act of 1934 (47 U.S.C. 522(5)).
            ``(3) Commercial mobile service carrier.--The term 
        `commercial mobile service carrier' means any person authorized 
        to provide commercial mobile radio service as defined in 
        section 20.3 of title 47, Code of Federal Regulations.
            ``(4) Current generation broadband service.--The term 
        `current generation broadband service' means the transmission 
        of signals at a rate of at least 1,500,000 bits per second to 
        the subscriber and at least 200,000 bits per second from the 
        subscriber.
            ``(5) Next generation broadband service.--The term `next 
        generation broadband service' means the transmission of signals 
        at a rate of at least 22,000,000 bits per second to the 
        subscriber and at least 10,000,000 bits per second from the 
        subscriber.
            ``(6) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means a person or entity who purchases broadband 
        services which are delivered to the permanent place of business 
        of such person or entity.
            ``(7) Open video system operator.--The term `open video 
        system operator' means any person authorized to provide service 
        under section 653 of the Communications Act of 1934 (47 U.S.C. 
        573).
            ``(8) Other wireless carrier.--The term `other wireless 
        carrier' means any person (other than a telecommunications 
        carrier, commercial mobile service carrier, cable operator, 
        open video system operator, or satellite carrier) providing 
        current generation broadband services or next generation 
        broadband service to subscribers through the radio transmission 
        of energy.
            ``(9) Packet switching.--The term `packet switching' means 
        controlling or routing the path of a digitized transmission 
        signal which is assembled into packets or cells.
            ``(10) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means equipment capable of providing current generation 
                broadband services or next generation broadband 
                services at any time to each subscriber who is 
                utilizing such services.
                    ``(B) Only certain investment taken into account.--
                Except as provided in subparagraph (C), equipment shall 
                be taken into account under subparagraph (A) only to 
                the extent it--
                            ``(i) extends from the last point of 
                        switching to the outside of the unit, building, 
                        dwelling, or office owned or leased by a 
                        subscriber in the case of a telecommunications 
                        carrier,
                            ``(ii) extends from the customer side of 
                        the mobile telephone switching office to a 
                        transmission/receive antenna (including such 
                        antenna) owned or leased by a subscriber in the 
                        case of a commercial mobile service carrier,
                            ``(iii) extends from the customer side of 
                        the headend to the outside of the unit, 
                        building, dwelling, or office owned or leased 
                        by a subscriber in the case of a cable operator 
                        or open video system operator, or
                            ``(iv) extends from a transmission/receive 
                        antenna (including such antenna) which 
                        transmits and receives signals to or from 
                        multiple subscribers to a transmission/receive 
                        antenna (including such antenna) on the outside 
                        of the unit, building, dwelling, or office 
                        owned or leased by a subscriber in the case of 
                        a satellite carrier or other wireless carrier, 
                        unless such other wireless carrier is also a 
                        telecommunications carrier.
                    ``(C) Packet switching equipment.--Packet switching 
                equipment, regardless of location, shall be taken into 
                account under subparagraph (A) only if it is deployed 
                in connection with equipment described in subparagraph 
                (B) and it is uniquely designed to perform the function 
                of packet switching for current generation broadband 
                services or next generation broadband services, but 
                only if such packet switching is the last in a series 
                of such functions performed in the transmission of a 
                signal to a subscriber or the first in a series of such 
                functions performed in the transmission of a signal 
                from a subscriber.
            ``(11) Qualified expenditure.--
                    ``(A) In general.--The term `qualified expenditure' 
                means any amount--
                            ``(i) chargeable to capital account with 
                        respect to the purchase and installation of 
                        qualified equipment (including any upgrades 
                        thereto) for which depreciation is allowable 
                        under section 168, and
                            ``(ii) incurred--
                                    ``(I) with respect to the provision 
                                of current generation broadband 
                                service, after December 31, 2000, and 
                                before January 1, 2004, and
                                    ``(II) with respect to the 
                                provision of next generation broadband 
                                service, after December 31, 2001, and 
                                before January 1, 2005.
                    ``(B) Certain satellite expenditures excluded.--
                Such term shall not include any expenditure with 
                respect to the launching of any satellite equipment.
            ``(12) Residential subscriber.--The term `residential 
        subscriber' means an individual who purchases broadband 
        services which are delivered to such individual's dwelling.
            ``(13) Rural subscriber.--
                    ``(A) In general.--The term `rural subscriber' 
                means a residential subscriber residing in a dwelling 
                located in a rural area or nonresidential subscriber 
                maintaining a permanent place of business located in a 
                rural area.
                    ``(B) Rural area.--The term `rural area' means any 
                census tract which--
                            ``(i) is not within 10 miles of any 
                        incorporated or census designated place 
                        containing more than 25,000 people, and
                            ``(ii) is not within a county or county 
                        equivalent which has an overall population 
                        density of more than 500 people per square mile 
                        of land.
            ``(14) Satellite carrier.--The term `satellite carrier' 
        means any person using the facilities of a satellite or 
        satellite service licensed by the Federal Communications 
        Commission and operating in the Fixed-Satellite Service under 
        part 25 of title 47 of the Code of Federal Regulations or the 
        Direct Broadcast Satellite Service under part 100 of title 47 
        of such Code to establish and operate a channel of 
        communications for point-to-multipoint distribution of signals, 
        and owning or leasing a capacity or service on a satellite in 
        order to provide such point-to-multipoint distribution.
            ``(15) Subscriber.--The term `subscriber' means a person 
        who purchases current generation broadband services or next 
        generation broadband services.
            ``(16) Telecommunications carrier.--The term 
        `telecommunications carrier' has the meaning given such term by 
        section 3(44) of the Communications Act of 1934 (47 U.S.C. 153 
        (44)), but--
                    ``(A) includes all members of an affiliated group 
                of which a telecommunications carrier is a member, and
                    ``(B) does not include a commercial mobile service 
                carrier.
            ``(17) Total potential subscriber population.--The term 
        `total potential subscriber population' means, with respect to 
        any area and based on the most recent census data, the total 
        number of potential residential subscribers residing in 
        dwellings located in such area and potential nonresidential 
        subscribers maintaining permanent places of business located in 
        such area.
            ``(18) Underserved subscriber.--
                    ``(A) In general.--The term `underserved 
                subscriber' means a residential subscriber residing in 
                a dwelling located in an underserved area or 
                nonresidential subscriber maintaining a permanent place 
                of business located in an underserved area.
                    ``(B) Underserved area.--The term `underserved 
                area' means any census tract--
                            ``(i) the poverty level of which is at 
                        least 30 percent (based on the most recent 
                        census data),
                            ``(ii) the median family income of which 
                        does not exceed--
                                    ``(I) in the case of a census tract 
                                located in a metropolitan statistical 
                                area, 70 percent of the greater of the 
                                metropolitan area median family income 
                                or the statewide median family income, 
                                and
                                    ``(II) in the case of a census 
                                tract located in a nonmetropolitan 
                                statistical area, 70 percent of the 
                                nonmetropolitan statewide median family 
                                income, or
                            ``(iii) which is located in an empowerment 
                        zone or enterprise community designated under 
                        section 1391.
    ``(f) Designation of Census Tracts.--The Secretary shall, not later 
than 90 days after the date of the enactment of this section, designate 
and publish those census tracts meeting the criteria described in 
paragraphs (13)(B) and (18)(B) of subsection (e), and such tracts shall 
remain so designated for the period ending with the applicable 
termination date described in subsection (e)(11)(A)(ii).''.
    (b) Credit To Be Part of Investment Credit.--Section 46 (relating 
to the amount of investment credit) is amended by striking ``and'' at 
the end of paragraph (2), by striking the period at the end of 
paragraph (3) and inserting ``, and'', and by adding at the end the 
following new paragraph:
            ``(4) the broadband credit.''.
    (c) Special Rule for Mutual or Cooperative Telephone Companies.--
Section 501(c)(12)(B) (relating to list of exempt organizations) is 
amended by striking ``or'' at the end of clause (iii), by striking the 
period at the end of clause (iv) and inserting ``, or'', and by adding 
at the end the following new clause:
                            ``(v) from sources not described in 
                        subparagraph (A), but only to the extent such 
                        income does not in any year exceed an amount 
                        equal to the credit for qualified expenditures 
                        which would be determined under section 48A for 
                        such year if the mutual or cooperative 
                        telephone company was not exempt from 
                        taxation.''.
    (d) Conforming Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 48 the following new item:

``Sec. 48A. Broadband credit.''.
    (e) Regulatory Matters.--No Federal or State agency or 
instrumentality shall adopt regulations or ratemaking procedures that 
would have the effect of confiscating any credit or portion thereof 
allowed under section 48A of the Internal Revenue Code of 1986 (as 
added by this section) or otherwise subverting the purpose of this 
section.
    (f) Study and Report.--
            (1) Sense of congress.--It is the sense of Congress that in 
        order to maintain competitive neutrality, the credit allowed 
        under section 48A of the Internal Revenue Code of 1986 (as 
        added by this section) should be administered in such a manner 
        so as to ensure that each class of provider receives the same 
        level of financial incentive to deploy current generation 
        broadband services and next generation broadband services.
            (2) Study and report.--The Secretary of the Treasury shall, 
        within 180 days after the effective date of this section, study 
        the impact of the credit allowed under section 48A of the 
        Internal Revenue Code of 1986 (as added by this section) on the 
        relative competitiveness of potential classes of providers of 
        current generation broadband services and next generation 
        broadband services, and shall report to Congress the findings 
        of such study, together with any legislative or regulatory 
        proposals determined to be necessary to ensure that the 
        purposes of such credit can be furthered without impacting 
        competitive neutrality among such classes of providers.
    (g) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to expenditures 
        incurred after December 31, 2000.
            (2) Special rule.--The amendments made by subsection (c) 
        shall apply to amounts received after December 31, 2000.

SEC. 304. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 (relating to 
credits against tax) is amended by adding at the end the following new 
subpart:

``Subpart H--Nonrefundable Credit for Holders of Qualified Amtrak Bonds

                              ``Sec. 54. Credit to holders of qualified 
                                        Amtrak bonds.

``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified Amtrak bond on a credit allowance date of such bond which 
occurs during the taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for such taxable year an amount 
equal to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified Amtrak bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified Amtrak bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined under regulations 
        prescribed by the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than this subpart and subpart C).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Amtrak Bond.--For purposes of this part--
            ``(1) In general.--The term `qualified Amtrak bond' means 
        any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are--
                            ``(i) to be used for any qualified project, 
                        or
                            ``(ii) to be pledged to secure payments and 
                        other obligations incurred by the National 
                        Railroad Passenger Corporation in connection 
                        with any qualified project,
                    ``(B) the bond is issued by the National Railroad 
                Passenger Corporation,
                    ``(C) the issuer--
                            ``(i) designates such bond for purposes of 
                        this section,
                            ``(ii) certifies that it meets the State 
                        contribution requirement of paragraph (2) with 
                        respect to such project, and
                            ``(iii) certifies that it has obtained the 
                        written approval of the Secretary of 
                        Transportation for such project,
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 20 years, and
                    ``(E) the payment of principal with respect to such 
                bond is guaranteed by the National Railroad Passenger 
                Corporation.
            ``(2) State contribution requirement.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(C)(ii), the State contribution requirement of this 
                paragraph is met with respect to any qualified project 
                if the National Railroad Passenger Corporation has a 
                written binding commitment from 1 or more States to 
                make matching contributions not later than the date of 
                issuance of the issue of not less than 20 percent of 
                the cost of the qualified project.
                    ``(B) Use of state matching contributions.--The 
                matching contributions described in subparagraph (A) 
                with respect to each qualified project shall be used--
                            ``(i) in the case of an amount not to 
                        exceed 20 percent of the cost of such project, 
                        to redeem bonds which are a part of the issue 
                        with respect to such project, and
                            ``(ii) in the case of any remaining amount, 
                        at the election of the National Railroad 
                        Passenger Corporation and the contributing 
                        State--
                                    ``(I) to fund the qualified 
                                project,
                                    ``(II) to redeem such bonds, or
                                    ``(III) for the purposes of 
                                subclauses (I) and (II).
                    ``(C) State matching contributions may not include 
                federal funds.--For purposes of this paragraph, State 
                matching contributions shall not be derived, directly 
                or indirectly, from Federal funds, including any 
                transfers from the Highway Trust Fund under section 
                9503.
                    ``(D) No state contribution requirement for certain 
                qualified project.--With respect to the qualified 
                project described in subsection (e)(2)(B), the State 
                contribution requirement of this paragraph is zero.
            ``(3) Qualified project.--The term `qualified project' 
        means--
                    ``(A) the acquisition, financing, or refinancing 
                (as described in paragraph (1)(A)(ii)) of equipment, 
                rolling stock, and other capital improvements for the 
                northeast rail corridor between Washington, D.C. and 
                Boston, Massachusetts (including the project described 
                in subsection (e)(2)(B)),
                    ``(B) the acquisition, financing, or refinancing 
                (as so described) of equipment, rolling stock, and 
                other capital improvements for the improvement of train 
                speeds or safety (or both) on the high-speed rail 
                corridors designated under section 104(d)(2) of title 
                23, United States Code, and
                    ``(C) the acquisition, financing, or refinancing 
                (as so described) of equipment, rolling stock, and 
                other capital improvements for other intercity 
                passenger rail corridors, including station 
                rehabilitation or construction, track or signal 
                improvements, or the elimination of grade crossings.
    ``(e) Limitations on Amount of Bonds Designated.--
            ``(1) In general.--There is a qualified Amtrak bond 
        limitation for each fiscal year. Such limitation is--
                    ``(A) $1,000,000,000 for each of the fiscal years 
                2001 through 2010, and
                    ``(B) except as provided in paragraph (5), zero 
                after fiscal year 2010.
            ``(2) Bonds for rail corridors.--
                    ``(A) In general.--Not more than $3,000,000,000 of 
                the limitation under paragraph (1) may be designated 
                for any 1 rail corridor described in subparagraph (A) 
                or (B) of subsection (d)(3).
                    ``(B) Specific qualified project allocation.--Of 
                the amount described in subparagraph (A), the Secretary 
                of Transportation shall allocate $92,000,000 for the 
                acquisition and installation of platform facilities, 
                performance of railroad force account work necessary to 
                complete improvements below street grade, and any other 
                necessary improvements related to construction at the 
                railroad station at the James A. Farley Post Office 
                Building in New York City, New York.
            ``(3) Bonds for other projects.--Not more than 10 percent 
        of the limitation under paragraph (1) for any fiscal year may 
        be allocated to qualified projects described in subsection 
        (d)(3)(C).
            ``(4) Bonds for alaska railroad.--The Secretary of 
        Transportation may allocate to the Alaska Railroad a portion of 
        the qualified Amtrak limitation for any fiscal year in order to 
        allow the Alaska Railroad to issue bonds which meet the 
        requirements of this section for use in financing any project 
        described in subsection (d)(3)(C). For purposes of this 
        section, the Alaska Railroad shall be treated in the same 
        manner as the National Passenger Railroad Corporation.
            ``(5) Carryover of unused limitation.--If for any fiscal 
        year--
                    ``(A) the limitation amount under paragraph (1), 
                exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (d)(1)(C)(i),
        the limitation amount under paragraph (1) for the following 
        fiscal year (through fiscal year 2014) shall be increased by 
        the amount of such excess.
            ``(6) Preference for greater state participation.--In 
        selecting qualified projects for allocation of the qualified 
        Amtrak bond limitation under this subsection, the Secretary of 
        Transportation shall give preference to any project with a 
        State matching contribution rate exceeding 20 percent.
    ``(f) Other Definitions.--For purposes of this subpart--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(3) State.--The term `State' includes the District of 
        Columbia.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(h) Special Rules Relating to Arbitrage.--
            ``(1) In general.--A bond shall not be treated as failing 
        to meet the requirements of subsection (d)(1) solely by reason 
        of the fact that proceeds of the issue of which such bond is a 
        part are invested for a temporary period (but not more than 36 
        months) until such proceeds are needed for the purpose for 
        which such issue was issued.
            ``(2) Reasonable expectation and binding commitment 
        requirements.--Paragraph (1) shall apply to an issue only if, 
        as of the date of issuance, the issuer reasonably expects--
                    ``(A) that at least 95 percent of the proceeds of 
                the issue will be spent for 1 or more qualified 
                projects within the 3-year period beginning on such 
                date,
                    ``(B) to incur a binding commitment with a third 
                party to spend at least 10 percent of the proceeds of 
                the issue, or to commence preliminary engineering or 
                construction, with respect to such projects within the 
                6-month period beginning on such date, and
                    ``(C) that the remaining proceeds of the issue will 
                be spent with due diligence with respect to such 
                projects.
            ``(3) Earnings on proceeds.--Any earnings on proceeds 
        during the temporary period shall be treated as proceeds of the 
        issue for purposes of applying subsection (d)(1) and paragraph 
        (1) of this subsection.
    ``(i) Use of Trust Account.--
            ``(1) In general.--The amount of any matching contribution 
        with respect to a qualified project described in subsection 
        (d)(2)(B)(i) or (d)(2)(B)(ii)(II) and the temporary period 
        investment earnings on proceeds of the issue with respect to 
        such project described in subsection (h)(1), and any earnings 
        thereon, shall be held in a trust account by a trustee 
        independent of the National Railroad Passenger Corporation to 
        be used to redeem bonds which are part of such issue.
            ``(2) Use of remaining funds in trust account.--Upon the 
        repayment of the principal of all qualified Amtrak bonds issued 
        under this section, any remaining funds in the trust account 
        described in paragraph (1) shall be available to the trustee 
        described in paragraph (1) to meet any remaining obligations 
        under any guaranteed investment contract used to secure 
        earnings sufficient to repay the principal of such bonds.
    ``(j) Other Special Rules.--
            ``(1) Partnership; s corporation; and other pass-thru 
        entities.--Under regulations prescribed by the Secretary, in 
        the case of a partnership, trust, S corporation, or other pass-
        thru entity, rules similar to the rules of section 41(g) shall 
        apply with respect to the credit allowable under subsection 
        (a).
            ``(2) Bonds held by regulated investment companies.--If any 
        qualified Amtrak bond is held by a regulated investment 
        company, the credit determined under subsection (a) shall be 
        allowed to shareholders of such company under procedures 
        prescribed by the Secretary.
            ``(3) Credits may be stripped.--Under regulations 
        prescribed by the Secretary--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a qualified 
                Amtrak bond and the entitlement to the credit under 
                this section with respect to such bond. In case of any 
                such separation, the credit under this section shall be 
                allowed to the person who on the credit allowance date 
                holds the instrument evidencing the entitlement to the 
                credit and not to the holder of the bond.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the qualified Amtrak bond 
                as if it were a stripped bond and to the credit under 
                this section as if it were a stripped coupon.
            ``(4) Treatment for estimated tax purposes.--Solely for 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a qualified Amtrak 
        bond on a credit allowance date shall be treated as if it were 
        a payment of estimated tax made by the taxpayer on such date.
            ``(5) Credit may be transferred.--Nothing in any law or 
        rule of law shall be construed to limit the transferability of 
        the credit allowed by this section through sale and repurchase 
        agreements.
            ``(6) Reporting.--Issuers of qualified Amtrak bonds shall 
        submit reports similar to the reports required under section 
        149(e).''.
    (b) Reporting.--Subsection (d) of section 6049 (relating to returns 
regarding payments of interest) is amended by adding at the end the 
following new paragraph:
            ``(8) Reporting of credit on qualified amtrak bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(g) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(f)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for part IV of subchapter A of 
        chapter 1 is amended by adding at the end the following new 
        item:

                              ``Subpart H. Nonrefundable Credit for 
                                        Holders of Qualified Amtrak 
                                        Bonds.''.
            (2) Section 6401(b)(1) is amended by striking ``and G'' and 
        inserting ``G, and H''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after September 30, 2000.
    (e) Multi-Year Capital Spending Plan and Oversight.--
            (1) Amtrak capital spending plan.--
                    (A) In general.--The National Railroad Passenger 
                Corporation shall annually submit to the President and 
                Congress a multi-year capital spending plan, as 
                approved by the Board of Directors of the Corporation.
                    (B) Contents of plan.--Such plan shall identify the 
                capital investment needs of the Corporation over a 
                period of not less than 5 years and the funding sources 
                available to finance such needs and shall prioritize 
                such needs according to corporate goals and strategies.
                    (C) Initial submission date.--The first plan shall 
                be submitted before the issuance of any qualified 
                Amtrak bonds pursuant to section 54 of the Internal 
                Revenue Code of 1986 (as added by this section).
            (2) Oversight of amtrak trust account and qualified 
        projects.--
                    (A) Trust account oversight.--The Secretary of the 
                Treasury shall annually report to Congress as to 
                whether the amount deposited in the trust account 
                established by the National Passenger Railroad 
                Corporation under section 54(i) of such Code (as so 
                added) is sufficient to fully repay at maturity the 
                principal of any outstanding qualified Amtrak bonds 
                issued pursuant to section 54 of such Code (as so 
                added).
                    (B) Project oversight.--The National Railroad 
                Passenger Corporation shall contract for an annual 
                independent assessment of the costs and benefits of the 
                qualified projects financed by such qualified Amtrak 
                bonds, including an assessment of the investment 
                evaluation process of the Corporation. The annual 
                assessment shall be included in the plan submitted 
                under paragraph (1).
    (f) Protection of Highway Trust Fund.--
            (1) Certification by the secretary of the treasury.--The 
        issuance of any qualified Amtrak bonds by the National 
        Passenger Railroad Corporation pursuant to section 54 of the 
        Internal Revenue Code of 1986 (as added by this section) is 
        conditioned on certification by the Secretary of the Treasury, 
        after consultation with the Secretary of Transportation, within 
        30 days of a request by the issuer, that with respect to funds 
        of the Highway Trust Fund described under paragraph (2), the 
        issuer either--
                    (A) has not received such funds during fiscal years 
                commencing with fiscal year 2001 and ending before the 
                fiscal year the bonds are issued, or
                    (B) has repaid to the Highway Trust Fund any such 
                funds which were received during such fiscal years.
            (2) Applicability.--This subsection shall apply to funds 
        received directly or indirectly from the Highway Trust Fund 
        established under section 9503 of the Internal Revenue Code of 
        1986, except for funds authorized to be expended under section 
        9503(c) of such Code, as in effect on the date of the enactment 
        of this Act.
            (3) No retroactive effect.--Nothing in this subsection 
        shall adversely affect the entitlement of the holders of 
        qualified Amtrak bonds to the tax credit allowed pursuant to 
        section 54 of the Internal Revenue Code of 1986 (as so added) 
        or to repayment of principal upon maturity.

SEC. 305. CLARIFICATION OF CONTRIBUTION IN AID OF CONSTRUCTION.

    (a) In General.--Subparagraph (A) of section 118(c)(3) (relating to 
definitions) is amended to read as follows:
                    ``(A) Contribution in aid of construction.--The 
                term `contribution in aid of construction' shall be 
                defined by regulations prescribed by the Secretary, 
                except that such term--
                            ``(i) shall include amounts paid as 
                        customer connection fees (including amounts 
                        paid to connect the customer's line to or 
                        extend a main water or sewer line), and
                            ``(ii) shall not include amounts paid as 
                        service charges for starting or stopping 
                        services.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received after the date of the enactment of this Act.

SEC. 306. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN LEASEHOLD 
              IMPROVEMENTS.

    (a) 15-Year Recovery Period.--Subparagraph (E) of section 168(e)(3) 
(relating to 15-year property) is amended by striking ``and'' at the 
end of clause (ii), by striking the period at the end of clause (iii) 
and inserting ``, and'', and by adding at the end the following new 
clause:
                            ``(iv) any qualified leasehold improvement 
                        property.''.
    (b) Qualified Leasehold Improvement Property.--Subsection (e) of 
section 168 is amended by adding at the end the following new 
paragraph:
            ``(6) Qualified leasehold improvement property.--
                    ``(A) In general.--The term `qualified leasehold 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such improvement is made under or 
                        pursuant to a lease (as defined in subsection 
                        (h)(7))--
                                    ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                    ``(II) by the lessor of such 
                                portion,
                            ``(ii) the original use of such improvement 
                        begins with the lessee and after December 31, 
                        2006,
                            ``(iii) such portion is to be occupied 
                        exclusively by the lessee (or any sublessee) of 
                        such portion, and
                            ``(iv) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(B) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component benefiting 
                        a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Commitment to lease treated as 
                        lease.--A commitment to enter into a lease 
                        shall be treated as a lease, and the parties to 
                        such commitment shall be treated as lessor and 
                        lessee, respectively, if the lease is in effect 
                        at the time the property is placed in service.
                            ``(ii) Related persons.--A lease between 
                        related persons shall not be considered a 
                        lease. For purposes of the preceding sentence, 
                        the term `related persons' means--
                                    ``(I) members of an affiliated 
                                group (as defined in section 1504), and
                                    ``(II) persons having a 
                                relationship described in subsection 
                                (b) of section 267(b) or 707(b)(1); 
                                except that, for purposes of this 
                                clause, the phrase `80 percent or more' 
                                shall be substituted for the phrase 
                                `more than 50 percent' each place it 
                                appears in such subsections.''.
    (c) Requirement To Use Straight Line Method.--Paragraph (3) of 
section 168(b) is amended by adding at the end the following new 
subparagraph:
                    ``(G) Qualified leasehold improvement property 
                described in subsection (e)(6).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to qualified leasehold improvement property placed in service 
after December 31, 2006.

                    TITLE IV--TAX RELIEF FOR FARMERS

SEC. 401. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    (a) In General.--Subpart C of part II of subchapter E of chapter 1 
(relating to taxable year for which deductions taken) is amended by 
inserting after section 468B the following new section:

``SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual engaged in 
an eligible farming business or commercial fishing, there shall be 
allowed as a deduction for any taxable year the amount paid in cash by 
the taxpayer during the taxable year to a Farm, Fishing, and Ranch Risk 
Management Account (hereinafter referred to as the `FFARRM Account').
    ``(b) Limitation.--
            ``(1) Contributions.--The amount which a taxpayer may pay 
        into the FFARRM Account for any taxable year shall not exceed 
        20 percent of so much of the taxable income of the taxpayer 
        (determined without regard to this section) which is 
        attributable (determined in the manner applicable under section 
        1301) to any eligible farming business or commercial fishing.
            ``(2) Distributions.--Distributions from a FFARRM Account 
        may not be used to purchase, lease, or finance any new fishing 
        vessel, add capacity to any fishery, or otherwise contribute to 
        the overcapitalization of any fishery. The Secretary of 
        Commerce shall implement regulations to enforce this paragraph.
    ``(c) Eligible Businesses.--For purposes of this section--
            ``(1) Eligible farming business.--The term `eligible 
        farming business' means any farming business (as defined in 
        section 263A(e)(4)) which is not a passive activity (within the 
        meaning of section 469(c)) of the taxpayer.
            ``(2) Commercial fishing.--The term `commercial fishing' 
        has the meaning given such term by section (3) of the Magnuson-
        Stevens Fishery Conservation and Management Act (16 U.S.C. 
        1802) but only if such fishing is not a passive activity 
        (within the meaning of section 469(c)) of the taxpayer.
    ``(d) FFARRM Account.--For purposes of this section--
            ``(1) In general.--The term `FFARRM Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of the taxpayer, but only if the written governing 
        instrument creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deduction under subsection (a) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) All income of the trust is distributed 
                currently to the grantor.
                    ``(E) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        FFARRM Account shall be treated for purposes of this title as 
        the owner of such Account and shall be subject to tax thereon 
        in accordance with subpart E of part I of subchapter J of this 
chapter (relating to grantors and others treated as substantial 
owners).
    ``(e) Inclusion of Amounts Distributed.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there shall be includible in the gross income of the taxpayer 
        for any taxable year--
                    ``(A) any amount distributed from a FFARRM Account 
                of the taxpayer during such taxable year, and
                    ``(B) any deemed distribution under--
                            ``(i) subsection (f)(1) (relating to 
                        deposits not distributed within 5 years),
                            ``(ii) subsection (f)(2) (relating to 
                        cessation in eligible farming business), and
                            ``(iii) subparagraph (B) or (C) of 
                        subsection (f)(3) (relating to prohibited 
                        transactions and pledging account as security).
            ``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
                    ``(A) any distribution to the extent attributable 
                to income of the Account, and
                    ``(B) the distribution of any contribution paid 
                during a taxable year to a FFARRM Account to the extent 
                that such contribution exceeds the limitation 
                applicable under subsection (b) if requirements similar 
                to the requirements of section 408(d)(4) are met.
        For purposes of subparagraph (A), distributions shall be 
        treated as first attributable to income and then to other 
        amounts.
    ``(f) Special Rules.--
            ``(1) Tax on deposits in account which are not distributed 
        within 5 years.--
                    ``(A) In general.--If, at the close of any taxable 
                year, there is a nonqualified balance in any FFARRM 
                Account--
                            ``(i) there shall be deemed distributed 
                        from such Account during such taxable year an 
                        amount equal to such balance, and
                            ``(ii) the taxpayer's tax imposed by this 
                        chapter for such taxable year shall be 
                        increased by 10 percent of such deemed 
                        distribution.
                The preceding sentence shall not apply if an amount 
                equal to such nonqualified balance is distributed from 
                such Account to the taxpayer before the due date 
                (including extensions) for filing the return of tax 
                imposed by this chapter for such year (or, if earlier, 
                the date the taxpayer files such return for such year).
                    ``(B) Nonqualified balance.--For purposes of 
                subparagraph (A), the term `nonqualified balance' means 
                any balance in the Account on the last day of the 
                taxable year which is attributable to amounts deposited 
                in such Account before the 4th preceding taxable year.
                    ``(C) Ordering rule.--For purposes of this 
                paragraph, distributions from a FFARRM Account (other 
                than distributions of current income) shall be treated 
                as made from deposits in the order in which such 
                deposits were made, beginning with the earliest 
                deposits.
            ``(2) Cessation in eligible business.--At the close of the 
        first disqualification period after a period for which the 
        taxpayer was engaged in an eligible farming business or 
        commercial fishing, there shall be deemed distributed from the 
        FFARRM Account of the taxpayer an amount equal to the balance 
        in such Account (if any) at the close of such disqualification 
        period. For purposes of the preceding sentence, the term 
        `disqualification period' means any period of 2 consecutive 
        taxable years for which the taxpayer is not engaged in an 
        eligible farming business or commercial fishing.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 220(f)(8) (relating to treatment on 
                death).
                    ``(B) Section 408(e)(2) (relating to loss of 
                exemption of account where individual engages in 
                prohibited transaction).
                    ``(C) Section 408(e)(4) (relating to effect of 
                pledging account as security).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
            ``(4) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        FFARRM Account on the last day of a taxable year if such 
        payment is made on account of such taxable year and is made on 
        or before the due date (without regard to extensions) for 
        filing the return of tax for such taxable year.
            ``(5) Individual.--For purposes of this section, the term 
        `individual' shall not include an estate or trust.
            ``(6) Deduction not allowed for self-employment tax.--The 
        deduction allowable by reason of subsection (a) shall not be 
        taken into account in determining an individual's net earnings 
        from self-employment (within the meaning of section 1402(a)) 
        for purposes of chapter 2.
    ``(g) Reports.--The trustee of a FFARRM Account shall make such 
reports regarding such Account to the Secretary and to the person for 
whose benefit the Account is maintained with respect to contributions, 
distributions, and such other matters as the Secretary may require 
under regulations. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to such persons at 
such time and in such manner as may be required by such regulations.''.
    (b) Tax on Excess Contributions.--
            (1) Subsection (a) of section 4973 (relating to tax on 
        excess contributions to certain tax-favored accounts and 
        annuities) is amended by striking ``or'' at the end of 
        paragraph (3), by redesignating paragraph (4) as paragraph (5), 
        and by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) a FFARRM Account (within the meaning of section 
        468C(d)), or''.
            (2) Section 4973 is amended by adding at the end the 
        following new subsection:
    ``(g) Excess Contributions to FFARRM Accounts.--For purposes of 
this section, in the case of a FFARRM Account (within the meaning of 
section 468C(d)), the term `excess contributions' means the amount by 
which the amount contributed for the taxable year to the Account 
exceeds the amount which may be contributed to the Account under 
section 468C(b) for such taxable year. For purposes of this subsection, 
any contribution which is distributed out of the FFARRM Account in a 
distribution to which section 468C(e)(2)(B) applies shall be treated as 
an amount not contributed.''.
            (3) The section heading for section 4973 is amended to read 
        as follows:

``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES, 
              ETC.''.

            (4) The table of sections for chapter 43 is amended by 
        striking the item relating to section 4973 and inserting the 
        following new item:

                              ``Sec. 4973. Excess contributions to 
                                        certain accounts, annuities, 
                                        etc.''.
    (c) Tax on Prohibited Transactions.--
            (1) Subsection (c) of section 4975 (relating to tax on 
        prohibited transactions) is amended by adding at the end the 
        following new paragraph:
            ``(6) Special rule for ffarrm accounts.--A person for whose 
        benefit a FFARRM Account (within the meaning of section 
        468C(d)) is established shall be exempt from the tax imposed by 
        this section with respect to any transaction concerning such 
        account (which would otherwise be taxable under this section) 
        if, with respect to such transaction, the account ceases to be 
        a FFARRM Account by reason of the application of section 
        468C(f)(3)(A) to such account.''.
            (2) Paragraph (1) of section 4975(e) is amended by 
        redesignating subparagraphs (E) and (F) as subparagraphs (F) 
        and (G), respectively, and by inserting after subparagraph (D) 
        the following new subparagraph:
                    ``(E) a FFARRM Account described in section 
                468C(d),''.
    (d) Failure To Provide Reports on FFARRM Accounts.--Paragraph (2) 
of section 6693(a) (relating to failure to provide reports on certain 
tax-favored accounts or annuities) is amended by redesignating 
subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, 
and by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) section 468C(g) (relating to FFARRM 
                Accounts),''.
    (e) Clerical Amendment.--The table of sections for subpart C of 
part II of subchapter E of chapter 1 is amended by inserting after the 
item relating to section 468B the following new item:

                              ``Sec. 468C. Farm, Fishing and Ranch Risk 
                                        Management Accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 402. WRITTEN AGREEMENT RELATING TO EXCLUSION OF CERTAIN FARM 
              RENTAL INCOME FROM NET EARNINGS FROM SELF-EMPLOYMENT.

    (a) Internal Revenue Code.--Section 1402(a)(1)(A) (relating to net 
earnings from self-employment) is amended by striking ``an 
arrangement'' and inserting ``a lease agreement''.
    (b) Social Security Act.--Section 211(a)(1)(A) of the Social 
Security Act is amended by striking ``an arrangement'' and inserting 
``a lease agreement''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 403. TREATMENT OF CONSERVATION RESERVE PROGRAM PAYMENTS AS RENTALS 
              FROM REAL ESTATE.

    (a) In General.--Section 1402(a)(1) (defining net earnings from 
self-employment) is amended by inserting ``and including payments under 
section 1233(2) of the Food Security Act of 1985 (16 U.S.C. 3833(2))'' 
after ``crop shares''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments made after December 31, 2000.

SEC. 404. EXEMPTION OF AGRICULTURAL BONDS FROM STATE VOLUME CAP.

    (a) In General.--Section 146(g) (relating to exception for certain 
bonds) is amended by striking ``and'' at the end of paragraph (3), by 
striking the period at the end of paragraph (4) and inserting ``, 
and'', and by inserting after paragraph (4) the following new 
paragraph:
            ``(5) any qualified small issue bond described in section 
        144(a)(12)(B)(ii).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 2000.

SEC. 405. MODIFICATIONS TO SECTION 512(B)(13).

    (a) In General.--Paragraph (13) of section 512(b) is amended by 
redesignating subparagraph (E) as subparagraph (F) and by inserting 
after subparagraph (D) the following new paragraph:
                    ``(E) Paragraph to apply only to excess payments.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply only to the portion of a specified 
                        payment received by the controlling 
                        organization that exceeds the amount which 
                        would have been paid if such payment met the 
                        requirements prescribed under section 482.
                            ``(ii) Addition to tax for valuation 
                        misstatements.--The tax imposed by this chapter 
                        on the controlling organization shall be 
                        increased by an amount equal to 20 percent of 
                        such excess.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to payments received or accrued after December 31, 2000.
            (2) Payments subject to binding contract transition rule.--
        If the amendments made by section 1041 of the Taxpayer Relief 
        Act of 1997 did not apply to any amount received or accrued in 
        the first 2 taxable years beginning on or after the date of the 
        enactment of this Act under any contract described in 
        subsection (b)(2) of such section, such amendments also shall 
        not apply to amounts received or accrued under such contract 
        before January 1, 2001.

SEC. 406. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by adding at the end the following new paragraph:
            ``(7) Special rule for contributions of food inventory.--
        For purposes of this section--
                    ``(A) Contributions by non-corporate taxpayers.--In 
                the case of a charitable contribution of food by a 
                taxpayer in a farming business (as defined in section 
                263A(e)(4)), paragraph (3)(A) shall be applied without 
                regard to whether or not the contribution is made by a 
                corporation.
                    ``(B) Limit on reduction.--In the case of a 
                charitable contribution of food which is a qualified 
                contribution (within the meaning of paragraph (3)(A), 
                as modified by subparagraph (A) of this paragraph)--
                            ``(i) paragraph (3)(B) shall not apply, and
                            ``(ii) the reduction under paragraph (1)(A) 
                        for such contribution shall be no greater than 
                        the amount (if any) by which the amount of such 
                        contribution exceeds twice the basis of such 
                        food.
                    ``(C) Determination of basis.--For purposes of this 
                paragraph, if a taxpayer uses the cash method of 
                accounting, the basis of any qualified contribution of 
                such taxpayer shall be deemed to be 50 percent of the 
                fair market value of such contribution.
                    ``(D) Determination of fair market value.--In the 
                case of a charitable contribution of food which is a 
                qualified contribution (within the meaning of paragraph 
                (3), as modified by subparagraphs (A) and (B) of this 
                paragraph) and which, solely by reason of internal 
                standards of the taxpayer, lack of market, or similar 
                circumstances, or which is produced by the taxpayer 
                exclusively for the purposes of transferring the food 
                to an organization described in paragraph (3)(A), 
                cannot or will not be sold, the fair market value of 
                such contribution shall be determined--
                            ``(i) without regard to such internal 
                        standards, such lack of market, such 
                        circumstances, or such exclusive purpose, and
                            ``(ii) if applicable, by taking into 
                        account the price at which the same or similar 
                        food items are sold by the taxpayer at the time 
                        of the contribution (or, if not so sold at such 
                        time, in the recent past).
                    ``(E) Termination.--This paragraph shall not apply 
                to any contribution made during any taxable year 
                beginning after December 31, 2003.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 407. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO INCREASE 
              ALTERNATIVE MINIMUM TAX LIABILITY.

    (a) In General.--Section 55(c) (defining regular tax) is amended by 
redesignating paragraph (2) as paragraph (3) and by inserting after 
paragraph (1) the following new paragraph:
            ``(2) Coordination with income averaging for farmers and 
        fishermen.--Solely for purposes of this section, section 1301 
        (relating to averaging of farm and fishing income) shall not 
        apply in computing the regular tax.''.
    (b) Allowing Income Averaging for Fishermen.--
            (1) In general.--Section 1301(a) is amended by striking 
        ``farming business'' and inserting ``farming business or 
        fishing business''.
            (2) Definition of elected farm income.--
                    (A) In general.--Clause (i) of section 
                1301(b)(1)(A) is amended by inserting ``or fishing 
                business'' before the semicolon.
                    (B) Conforming amendment.--Subparagraph (B) of 
                section 1301(b)(1) is amended by inserting ``or fishing 
                business'' after ``farming business'' both places it 
                occurs.
            (3) Definition of fishing business.--Section 1301(b) is 
        amended by adding at the end the following new paragraph:
            ``(4) Fishing business.--The term `fishing business' means 
        the conduct of commercial fishing as defined in section 3 of 
        the Magnuson-Stevens Fishery Conservation and Management Act 
        (16 U.S.C. 1802).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 408. COOPERATIVE MARKETING INCLUDES VALUE-ADDED PROCESSING THROUGH 
              ANIMALS.

    (a) In General.--Section 1388 (relating to definitions and special 
rules) is amended by adding at the end the following new subsection:
    ``(k) Cooperative Marketing Includes Value-Added Processing Through 
Animals.--For purposes of section 521 and this subchapter, the term 
`marketing the products of members or other producers' includes feeding 
the products of members or other producers to cattle, hogs, fish, 
chickens, or other animals and selling the resulting animals or animal 
products.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 409. DECLARATORY JUDGMENT RELIEF FOR SECTION 521 COOPERATIVES.

    (a) In General.--Section 7428(a)(1) (relating to declaratory 
judgments of tax exempt organizations) is amended by striking ``or'' at 
the end of subparagraph (B) and by adding at the end the following new 
subparagraph:
                    ``(D) with respect to the initial qualification or 
                continuing qualification of a cooperative as described 
                in section 521(b) which is exempt from tax under 
                section 521(a), or''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to pleadings filed after the date of the enactment 
of this Act but only with respect to determinations (or requests for 
determinations) made after January 1, 2000.

SEC. 410. SMALL ETHANOL PRODUCER CREDIT.

    (a) Allocation of Alcohol Fuels Credit to Patrons of a 
Cooperative.--Section 40(g) (relating to alcohol used as fuel) is 
amended by adding at the end the following new paragraph:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--In the case of a 
                        cooperative organization described in section 
                        1381(a), any portion of the credit determined 
                        under subsection (a)(3) for the taxable year 
                        may, at the election of the organization, be 
                        apportioned pro rata among patrons of the 
organization on the basis of the quantity or value of business done 
with or for such patrons for the taxable year.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons under 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) with respect to 
                        the organization for the taxable year,
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron for which the patronage 
                        dividends for the taxable year described in 
                        subparagraph (A) are included in gross income, 
                        and
                            ``(iii) shall be included in gross income 
                        of such patrons for the taxable year in the 
                        manner and to the extent provided in section 
                        87.
                    ``(C) Special rules for decrease in credits for 
                taxable year.--If the amount of the credit of a 
                cooperative organization determined under subsection 
                (a)(3) for a taxable year is less than the amount of 
                such credit shown on the return of the cooperative 
                organization for such year, an amount equal to the 
                excess of--
                            ``(i) such reduction, over
                            ``(ii) the amount not apportioned to such 
                        patrons under subparagraph (A) for the taxable 
                        year,
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Such increase shall not be 
                treated as tax imposed by this chapter for purposes of 
                determining the amount of any credit under this subpart 
                or subpart A, B, E, or G.''.
    (b) Improvements to Small Ethanol Producer Credit.--
            (1) Small ethanol producer credit not a passive activity 
        credit.--Clause (i) of section 469(d)(2)(A) is amended by 
        striking ``subpart D'' and inserting ``subpart D, other than 
        section 40(a)(3),''.
            (2) Allowing credit against minimum tax.--
                    (A) In general.--Subsection (c) of section 38 
                (relating to limitation based on amount of tax) is 
                amended by redesignating paragraph (3) as paragraph (4) 
                and by inserting after paragraph (2) the following new 
                paragraph:
            ``(3) Special rules for small ethanol producer credit.--
                    ``(A) In general.--In the case of the small ethanol 
                producer credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the small 
                                ethanol producer credit).
                    ``(B) Small ethanol producer credit.--For purposes 
                of this subsection, the term `small ethanol producer 
                credit' means the credit allowable under subsection (a) 
                by reason of section 40(a)(3).''.
                    (B) Conforming amendment.--Subclause (II) of 
                section 38(c)(2)(A)(ii) is amended by striking 
                ``(other'' and all that follows through ``credit)'' and 
                inserting ``(other than the empowerment zone employment 
                credit or the small ethanol producer credit)''.
            (3) Small ethanol producer credit not added back to income 
        under section 87.--Section 87 (relating to income inclusion of 
        alcohol fuel credit) is amended to read as follows:

``SEC. 87. ALCOHOL FUEL CREDIT.

    ``Gross income includes an amount equal to the sum of--
            ``(1) the amount of the alcohol mixture credit determined 
        with respect to the taxpayer for the taxable year under section 
        40(a)(1), and
            ``(2) the alcohol credit determined with respect to the 
        taxpayer for the taxable year under section 40(a)(2).''.
    (c) Conforming Amendment.--Section 1388 (relating to definitions 
and special rules for cooperative organizations), as amended by section 
408, is amended by adding at the end the following new subsection:
    ``(l) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(g)(6).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 411. PAYMENT OF DIVIDENDS ON STOCK OF COOPERATIVES WITHOUT 
              REDUCING PATRONAGE DIVIDENDS.

    (a) In General.--Subsection (a) of section 1388 (relating to 
patronage dividend defined) is amended by adding at the end the 
following new sentence: ``For purposes of paragraph (3), net earnings 
shall not be reduced by amounts paid during the year as dividends on 
capital stock or other proprietary capital interests of the 
organization to the extent that the articles of incorporation or bylaws 
of such organization or other contract with patrons provide that such 
dividends are in addition to amounts otherwise payable to patrons which 
are derived from business done with or for patrons during the taxable 
year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions in taxable years beginning after the date of the 
enactment of this Act.

                       TITLE V--ENERGY PROVISIONS

SEC. 501. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 263 (relating to capital expenditures) is 
amended by adding at the end the following new subsection:
    ``(j) Geological and Geophysical Expenditures for Domestic Oil and 
Gas Wells.--Notwithstanding subsection (a), a taxpayer may elect to 
treat geological and geophysical expenses incurred in connection with 
the exploration for, or development of, oil or gas within the United 
States (as defined in section 638) as expenses which are not chargeable 
to capital account. Any expenses so treated shall be allowed as a 
deduction in the taxable year in which paid or incurred.''.
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``263(j),'' after ``263(i),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred in taxable years beginning after 
December 31, 2001.

SEC. 502. ELECTION TO EXPENSE DELAY RENTAL PAYMENTS

    (a) In General.--Section 263 (relating to capital expenditures), as 
amended by section 501(a), is amended by adding at the end the 
following new subsection:
    ``(k) Delay Rental Payments for Domestic Oil and Gas Wells.--
            ``(1) In general.--Notwithstanding subsection (a), a 
        taxpayer may elect to treat delay rental payments incurred in 
        connection with the development of oil or gas within the United 
        States (as defined in section 638) as payments which are not 
        chargeable to capital account. Any payments so treated shall be 
        allowed as a deduction in the taxable year in which paid or 
        incurred.
            ``(2) Delay rental payments.--For purposes of paragraph 
        (1), the term `delay rental payment' means an amount paid for 
        the privilege of deferring development of an oil or gas 
        well.''.
    (b) Conforming Amendment.--Section 263A(c)(3), as amended by 
section 501(b), is amended by inserting ``263(k),'' after ``263(j),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made or incurred in taxable years beginning after 
December 31, 2001.

SEC. 503. 5-YEAR NET OPERATING LOSS CARRYBACK FOR LOSSES ATTRIBUTABLE 
              TO OPERATING MINERAL INTERESTS OF INDEPENDENT OIL AND GAS 
              PRODUCERS.

    (a) In General.--Paragraph (1) of section 172(b) (relating to years 
to which loss may be carried) is amended by adding at the end the 
following new subparagraph:
                    ``(H) Losses on operating mineral interests of 
                independent oil and gas producers.--In the case of a 
                taxpayer--
                            ``(i) which has an eligible oil and gas 
                        loss (as defined in subsection (j)) for a 
                        taxable year, and
                            ``(ii) which is not an integrated oil 
                        company (as defined in section 291(b)(4)),
                such eligible oil and gas loss shall be a net operating 
                loss carryback to each of the 5 taxable years preceding 
                the taxable year of such loss.''.
    (b) Eligible Oil and Gas Loss.--Section 172 is amended by 
redesignating subsection (j) as subsection (k) and by inserting after 
subsection (i) the following new subsection:
    ``(j) Eligible Oil and Gas Loss.--For purposes of this section--
            ``(1) In general.--The term `eligible oil and gas loss' 
        means the lesser of--
                    ``(A) the amount which would be the net operating 
                loss for the taxable year if only income and deductions 
                attributable to operating mineral interests (as defined 
                in section 614(d)) in oil and gas wells are taken into 
                account, or
                    ``(B) the amount of the net operating loss for such 
                taxable year.
            ``(2) Coordination with subsection (b)(2).--For purposes of 
        applying subsection (b)(2), an eligible oil and gas loss for 
        any taxable year shall be treated in a manner similar to the 
        manner in which a specified liability loss is treated.
            ``(3) Election.--Any taxpayer entitled to a 5-year 
        carryback under subsection (b)(1)(H) from any loss year may 
        elect to have the carryback period with respect to such loss 
        year determined without regard to subsection (b)(1)(H).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to net operating losses for taxable years beginning after 
December 31, 2001.

SEC. 504. TEMPORARY SUSPENSION OF PERCENTAGE OF DEPLETION DEDUCTION 
              LIMITATION BASED ON 65 PERCENT OF TAXABLE INCOME.

    (a) In General.--Section 613A(d)(1) (relating to limitation based 
on taxable income) is amended by adding at the end the following new 
sentence: ``This paragraph shall not apply for taxable years beginning 
after December 31, 2000, and before January 1, 2004.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 505. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND NATURAL GAS WELL 
              PRODUCTION.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business credits), as amended by section 131(a), is 
amended by adding at the end the following new section:

``SEC. 45E. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL WELLS.

    ``(a) General Rule.--For purposes of section 38, the marginal well 
production credit for any taxable year is an amount equal to the 
product of--
            ``(1) the credit amount, and
            ``(2) the qualified crude oil production and the qualified 
        natural gas production which is attributable to the taxpayer.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount is--
                    ``(A) $3 per barrel of qualified crude oil 
                production, and
                    ``(B) 50 cents per 1,000 cubic feet of qualified 
                natural gas production.
            ``(2) Reduction as oil and gas prices increase.--
                    ``(A) In general.--The $3 and 50 cents amounts 
                under paragraph (1) shall each be reduced (but not 
                below zero) by an amount which bears the same ratio to 
                such amount (determined without regard to this 
                paragraph) as--
                            ``(i) the excess (if any) of the applicable 
                        reference price over $14 ($1.56 for qualified 
                        natural gas production), bears to
                            ``(ii) $3 ($0.33 for qualified natural gas 
                        production).
                The applicable reference price for a taxable year is 
                the reference price for the calendar year preceding the 
                calendar year in which the taxable year begins.
                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2001, 
                each of the dollar amounts contained in subparagraph 
                (A) shall be increased to an amount equal to such 
                dollar amount multiplied by the inflation adjustment 
                factor for such calendar year (determined under section 
                43(b)(3)(B) by substituting `2000' for `1990').
                    ``(C) Reference price.--For purposes of this 
                paragraph, the term `reference price' means, with 
                respect to any calendar year--
                            ``(i) in the case of qualified crude oil 
                        production, the reference price determined 
                        under section 29(d)(2)(C), and
                            ``(ii) in the case of qualified natural gas 
                        production, the Secretary's estimate of the 
                        annual average wellhead price per 1,000 cubic 
                        feet for all domestic natural gas.
    ``(c) Qualified Crude Oil and Natural Gas Production.--For purposes 
of this section--
            ``(1) In general.--The terms `qualified crude oil 
        production' and `qualified natural gas production' mean 
        domestic crude oil or natural gas which is produced from a 
        marginal well.
            ``(2) Limitation on amount of production which may 
        qualify.--
                    ``(A) In general.--Crude oil or natural gas 
                produced during any taxable year from any well shall 
                not be treated as qualified crude oil production or 
                qualified natural gas production to the extent 
                production from the well during the taxable year 
                exceeds 1,095 barrels or barrel equivalents.
                    ``(B) Proportionate reductions.--
                            ``(i) Short taxable years.--In the case of 
                        a short taxable year, the limitations under 
                        this paragraph shall be proportionately reduced 
                        to reflect the ratio which the number of days 
                        in such taxable year bears to 365.
                            ``(ii) Wells not in production entire 
                        year.--In the case of a well which is not 
                        capable of production during each day of a 
                        taxable year, the limitations under this 
                        paragraph applicable to the well shall be 
                        proportionately reduced to reflect the ratio 
                        which the number of days of production bears to 
                        the total number of days in the taxable year.
            ``(3) Definitions.--
                    ``(A) Marginal well.--The term `marginal well' 
                means a domestic well--
                            ``(i) the production from which during the 
                        taxable year is treated as marginal production 
                        under section 613A(c)(6), or
                            ``(ii) which, during the taxable year--
                                    ``(I) has average daily production 
                                of not more than 25 barrel equivalents, 
                                and
                                    ``(II) produces water at a rate not 
                                less than 95 percent of total well 
                                effluent.
                    ``(B) Crude oil, etc.--The terms `crude oil', 
                `natural gas', `domestic', and `barrel' have the 
                meanings given such terms by section 613A(e).
                    ``(C) Barrel equivalent.--The term `barrel 
                equivalent' means, with respect to natural gas, a 
                conversion ratio of 6,000 cubic feet of natural gas to 
                1 barrel of crude oil.
    ``(d) Other Rules.--
            ``(1) Production attributable to the taxpayer.--In the case 
        of a marginal well in which there is more than one owner of 
        operating interests in the well and the crude oil or natural 
        gas production exceeds the limitation under subsection (c)(2), 
        qualifying crude oil production or qualifying natural gas 
        production attributable to the taxpayer shall be determined on 
        the basis of the ratio which taxpayer's revenue interest in the 
        production bears to the aggregate of the revenue interests of 
        all operating interest owners in the production.
            ``(2) Operating interest required.--Any credit under this 
        section may be claimed only on production which is attributable 
        to the holder of an operating interest.
            ``(3) Production from nonconventional sources excluded.--In 
        the case of production from a marginal well which is eligible 
        for the credit allowed under section 29 for the taxable year, 
        no credit shall be allowable under this section unless the 
        taxpayer elects not to claim credit under section 29 with 
        respect to the well.''.
    (b) Credit Treated as Business Credit.--Section 38(b), as amended 
by section 131(b)(1), is amended by striking ``plus'' at the end of 
paragraph (12), by striking the period at the end of paragraph (13) and 
inserting ``, plus'', and by adding at the end of the following new 
paragraph:
            ``(14) the marginal oil and gas well production credit 
        determined under section 45E(a).''.
    (c) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 (relating to 
        limitation based on amount of tax), as amended by section 
        410(b)(2)(A), is amended by redesignating paragraph (4) as 
        paragraph (5) and by inserting after paragraph (3) the 
        following new paragraph:
            ``(4) Special rules for marginal oil and gas well 
        production credit.--
                    ``(A) In general.--In the case of the marginal oil 
                and gas well production credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the marginal 
                                oil and gas well production credit).
                    ``(B) Marginal oil and gas well production 
                credit.--For purposes of this subsection, the term 
                `marginal oil and gas well production credit' means the 
                credit allowable under subsection (a) by reason of 
                section 45E(a).''.
            (2) Conforming amendments.--
                    (A) Subclause (II) of section 38(c)(2)(A)(ii), as 
                amended by section 410(b)(2)(B), is amended by striking 
                ``or the small ethanol producer credit'' and inserting 
                ``, the small ethanol producer credit, or the marginal 
                oil and gas well production credit''.
                    (B) Subclause (II) of section 38(c)(3)(A)(ii), as 
                added by section 410(b)(2)(A), is amended by inserting 
                ``or the marginal oil and gas well production credit'' 
                after ``the small ethanol producer credit''.
    (d) Carryback.--Subsection (a) of section 39 (relating to carryback 
and carryforward of unused credits generally) is amended by adding at 
the end the following new paragraph--
            ``(3) 10-year carryback for marginal oil and gas well 
        production credit.--In the case of the marginal oil and gas 
        well production credit--
                    ``(A) this section shall be applied separately from 
                the business credit (other than the marginal oil and 
                gas well production credit),
                    ``(B) paragraph (1) shall be applied by 
                substituting `10 taxable year' for `1 taxable year' in 
                subparagraph (A) thereof, and
                    ``(C) paragraph (2) shall be applied--
                            ``(i) by substituting `31 taxable years' 
                        for `21 taxable years' in subparagraph (A) 
                        thereof, and
                            ``(ii) by substituting `30 taxable years' 
                        for `20 taxable years' in subparagraph (B) 
                        thereof.''.
    (e) Coordination With Section 29.--Section 29(a) is amended by 
striking ``There'' and inserting ``At the election of the taxpayer, 
there''.
    (f) Clerical Amendment--The table of sections for subpart D of part 
IV of subchapter A of chapter 1, as amended by section 131(d), is 
amended by adding at the end the following item:

                              ``Sec. 45E. Credit for producing oil and 
                                        gas from marginal wells.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to production in taxable years beginning after December 31, 2000.

SEC. 506. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR PROPERTY.

    (a) In General.--Subparagraph (C) of section 168(e)(3) (relating to 
classification of certain property) is amended by redesignating clause 
(ii) as clause (iii) and by inserting after clause (i) the following 
new clause:
                            ``(ii) any natural gas gathering line, 
                        and''.
    (b) Natural Gas Gathering Line.--Subsection (i) of section 168 is 
amended by adding at the end the following new paragraph:
            ``(15) Natural gas gathering line.--The term `natural gas 
        gathering line' means--
                    ``(A) the pipe, equipment, and appurtenances 
                determined to be a gathering line by the Federal Energy 
                Regulatory Commission, or
                    ``(B) the pipe, equipment, and appurtenances used 
                to deliver natural gas from the wellhead or a common 
                point to the point at which such gas first reaches--
                            ``(i) a gas processing plant,
                            ``(ii) an interconnection with a 
                        transmission pipeline certificated by the 
                        Federal Energy Regulatory Commission as an 
                        interstate transmission pipeline,
                            ``(iii) an interconnection with an 
                        intrastate transmission pipeline, or
                            ``(iv) a direct interconnection with a 
                        local distribution company, a gas storage 
                        facility, or an industrial consumer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service on or after the date of the 
enactment of this Act.

SEC. 507. CLARIFICATION OF TREATMENT OF PIPELINE TRANSPORTATION INCOME.

    (a) In General.--Section 954(g)(1) (defining foreign base company 
oil related income) is amended by striking ``or'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, or'', and by inserting after subparagraph (B) the 
following new subparagraph:
                    ``(C) the pipeline transportation of oil or gas 
                within such foreign country.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of controlled foreign corporations beginning after 
December 31, 2001, and taxable years of United States shareholders with 
or within which such taxable years of controlled foreign corporations 
end.

                   TITLE VI--CONSERVATION PROVISIONS

SEC. 601. EXCLUSION OF 50 PERCENT OF GAIN ON SALES OF LAND OR INTERESTS 
              IN LAND OR WATER TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by inserting 
after section 121 the following new section:

``SEC. 121A. 50-PERCENT EXCLUSION OF GAIN ON SALES OF LAND OR INTERESTS 
              IN LAND OR WATER TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    ``(a) Exclusion.--Gross income shall not include 50 percent of any 
gain from the sale of land or an interest in land or water (determined 
without regard to any improvements) to an eligible entity if--
            ``(1) such land or interest in land or water was owned by 
        the taxpayer or a member of the taxpayer's family (as defined 
        in section 2032A(e)(2)) at all times during the 3-year period 
        ending on the date of the sale, and
            ``(2) such land or interest in land or water is being 
        acquired by an eligible entity which provides the taxpayer, at 
        the time of acquisition, a written letter of intent which shall 
        include the following statement: `The purchaser's intent is 
        that this acquisition will serve 1 or more of the conservation 
        purposes specified in clause (i), (ii), or (iii) of section 
        170(h)(4)(A).'
    ``(b) Eligible Entity.--For purposes of this section, the term 
`eligible entity' means--
            ``(1) any agency of the United States or of any State or 
        local government, or
            ``(2) any other organization that--
                    ``(A) is organized and at all times operated 
                principally for 1 or more of the conservation purposes 
                specified in clause (i), (ii), or (iii) of section 
                170(h)(4)(A), and
                    ``(B) is described in section 170(h)(3).
    ``(c) Stock in Holding Corporations.--For purposes of this section, 
the term `land or an interest in land or water' shall include stock in 
any corporation, if the fair market value of the corporation's land or 
interests in land or water equals or exceeds 90 percent of the fair 
market value of all of such corporation's assets at all times during 
the 3-year period ending on the date of the sale.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 121 the following new item:

``Sec. 121A. 50-percent exclusion of gain on sales of land or interests 
                            in land or water to eligible entities for 
                            conservation purposes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales occurring on or after December 31, 2003.

SEC. 602. EXPANSION OF ESTATE TAX EXCLUSION FOR REAL PROPERTY SUBJECT 
              TO QUALIFIED CONSERVATION EASEMENT.

    (a) Repeal of Certain Restrictions on Where Land Is Located.--
Clause (i) of section 2031(c)(8)(A) (defining land subject to a 
qualified conservation easement) is amended to read as follows:
                            ``(i) which is located in the United States 
                        or any possession of the United States,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 2001.

SEC. 603. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER PARTNERS FOR 
              WILDLIFE PROGRAM.

    (a) In General.--Section 126(a) (relating to certain cost-sharing 
payments) is amended by redesignating paragraph (10) as paragraph (11) 
and by inserting after paragraph (9) the following new paragraph:
            ``(10) The Partners for Fish and Wildlife Program 
        authorized by the Fish and Wildlife Act of 1956 (16 U.S.C. 742a 
        et seq.).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to payments received after the date of the enactment of this Act.

SEC. 604. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN 
              BUSINESS.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
adding at the end the following new section:

``SEC. 199. ENERGY PROPERTY DEDUCTION.

    ``(a) Deduction Allowed.--
            ``(1) In general.--There shall be allowed as a deduction 
        for the taxable year an amount equal to the amount of energy 
        efficient commercial building expenditures made by the taxpayer 
        for the taxable year.
            ``(2) Maximum amount of deduction.--The amount of energy 
        efficient commercial building property expenditures taken into 
        account under paragraph (1) shall not exceed an amount equal to 
        the product of--
                    ``(A) $2.25, and
                    ``(B) the square footage of the building with 
                respect to which the expenditures are made.
            ``(3) Year deduction allowed.--The deduction under 
        paragraph (1) shall be allowed in the taxable year in which the 
        construction of the building is completed.
    ``(b) Energy Efficient Commercial Building Property Expenditures.--
For purposes of this section, the term `energy efficient commercial 
building property expenditures' means an amount paid or incurred for 
energy efficient commercial building property installed on or in 
connection with new construction or reconstruction of property--
            ``(1) for which depreciation is allowable under section 
        167,
            ``(2) which is located in the United States, and
            ``(3) the construction or erection of which is completed by 
        the taxpayer.
Such property includes all residential rental property, including low-
rise multifamily structures and single family housing property which is 
not within the scope of Standard 90.1-1999 (as described in subsection 
(c)(1)). Such term includes expenditures for labor costs properly 
allocable to the onsite preparation, assembly, or original installation 
of the property.
    ``(c) Energy Efficient Commercial Building Property.--For purposes 
of subsection (b)--
            ``(1) In general.--The term `energy efficient commercial 
        building property' means any property which reduces total 
        annual energy and power costs with respect to the lighting, 
        heating, cooling, ventilation, and hot water supply systems of 
        the building by 50 percent or more in comparison to a reference 
        building which meets the requirements of Standard 90.1-1999 of 
        the American Society of Heating, Refrigerating, and Air 
        Conditioning Engineers and the Illuminating Engineering Society 
        of North America using methods of calculation under paragraph 
        (2) and certified by qualified professionals as provided under 
        subsection (f).
            ``(2) Methods of calculation.--The Secretary, in 
        consultation with the Secretary of Energy, shall promulgate 
        regulations which describe in detail methods for calculating 
        and verifying energy and power consumption and cost, taking 
        into consideration the provisions of the 1998 California 
        Nonresidential ACM Manual. These procedures shall meet the 
        following requirements:
                    ``(A) In calculating tradeoffs and energy 
                performance, the regulations shall prescribe the costs 
                per unit of energy and power, such as kilowatt hour, 
                kilowatt, gallon of fuel oil, and cubic foot or Btu of 
                natural gas, which may be dependent on time of usage.
                    ``(B) The calculational methodology shall require 
                that compliance be demonstrated for a whole building. 
                If some systems of the building, such as lighting, are 
                designed later than other systems of the building, the 
                method shall provide that either--
                            ``(i) the expenses taken into account under 
                        subsection (a) shall not occur until the date 
                        designs for all energy-using systems of the 
                        building are completed,
                            ``(ii) the energy performance of all 
                        systems and components not yet designed shall 
                        be assumed to comply minimally with the 
                        requirements of such Standard 90.1-1999, or
                            ``(iii) the expenses taken into account 
                        under subsection (a) shall be a fraction of 
                        such expenses based on the performance of less 
                        than all energy-using systems in accordance 
                        with subparagraph (C).
                    ``(C) The expenditures in connection with the 
                design of subsystems in the building, such as the 
                envelope, the heating, ventilation, air conditioning 
                and water heating system, and the lighting system shall 
                be allocated to the appropriate building subsystem 
                based on system-specific energy cost savings targets in 
                regulations promulgated by the Secretary of Energy 
                which are equivalent, using the calculation 
                methodology, to the whole building requirement of 50 
                percent savings.
                    ``(D) The calculational methods under this 
                paragraph need not comply fully with section 11 of such 
                Standard 90.1-1999.
                    ``(E) The calculational methods shall be fuel 
                neutral, such that the same energy efficiency features 
                shall qualify a building for the deduction under this 
                subsection regardless of whether the heating source is 
                a gas or oil furnace or an electric heat pump.
                    ``(F) The calculational methods shall provide 
                appropriate calculated energy savings for design 
                methods and technologies not otherwise credited in 
                either such Standard 90.1-1999 or in the 1998 
                California Nonresidential ACM Manual, including the 
                following:
                            ``(i) Natural ventilation.
                            ``(ii) Evaporative cooling.
                            ``(iii) Automatic lighting controls such as 
                        occupancy sensors, photocells, and timeclocks.
                            ``(iv) Daylighting.
                            ``(v) Designs utilizing semi-conditioned 
                        spaces that maintain adequate comfort 
                        conditions without air conditioning or without 
                        heating.
                            ``(vi) Improved fan system efficiency, 
                        including reductions in static pressure.
                            ``(vii) Advanced unloading mechanisms for 
                        mechanical cooling, such as multiple or 
                        variable speed compressors.
                            ``(viii) The calculational methods may take 
                        into account the extent of commissioning in the 
                        building, and allow the taxpayer to take into 
                        account measured performance that exceeds 
                        typical performance.
            ``(3) Computer software.--
                    ``(A) In general.--Any calculation under this 
                subsection shall be prepared by qualified computer 
                software.
                    ``(B) Qualified computer software.--For purposes of 
                this paragraph, the term `qualified computer software' 
                means software--
                            ``(i) for which the software designer has 
                        certified that the software meets all 
                        procedures and detailed methods for calculating 
                        energy and power consumption and costs as 
                        required by the Secretary,
                            ``(ii) which provides such forms as 
                        required to be filed by the Secretary in 
                        connection with energy efficiency of property 
                        and the deduction allowed under this section, 
                        and
                            ``(iii) which provides a notice form which 
                        summarizes the energy efficiency features of 
                        the building and its projected annual energy 
                        costs.
    ``(d) Allocation of Deduction for Public Property.--In the case of 
energy efficient commercial building property installed on or in public 
property, the Secretary shall promulgate regulations to allow the 
allocation of the deduction to the person primarily responsible for 
designing the property in lieu of the public entity which is the owner 
of such property. Such person shall be treated as the taxpayer for 
purposes of this section.
    ``(e) Notice to Owner.--The qualified individual shall provide an 
explanation to the owner of the building regarding the energy 
efficiency features of the building and its projected annual energy 
costs as provided in the notice under subsection (c)(3)(B)(iii).
    ``(f) Certification.--
            ``(1) In general.--Except as provided in this subsection, 
        the Secretary, in consultation with the Secretary of Energy, 
        shall establish requirements for certification and compliance 
        procedures after examining the requirements for energy 
        consultants and home energy ratings providers specified by the 
        Mortgage Industry National Accreditation Procedures for Home 
        Energy Rating Systems.
            ``(2) Qualified individuals.--Individuals qualified to 
        determine compliance shall be only those individuals who are 
        recognized by an organization certified by the Secretary for 
        such purposes.
            ``(3) Proficiency of qualified individuals.--The Secretary 
        shall consult with nonprofit organizations and State agencies 
        with expertise in energy efficiency calculations and 
        inspections to develop proficiency tests and training programs 
        to qualify individuals to determine compliance.
    ``(g) Basis Reduction.--For purposes of this subtitle, if a 
deduction is allowed under this section with respect to any energy 
efficient commercial building property, the basis of such property 
shall be reduced by the amount of the deduction so allowed.
    ``(h) Termination.--This section shall not apply with respect to 
any taxable year beginning after December 31, 2003.''.
    (b) Conforming Amendment.--Section 1016(a), as amended by section 
211(b), is amended by striking ``and'' at the end of paragraph (27), by 
striking the period at the end of paragraph (28) and inserting ``, 
and'', and by inserting the following new paragraph:
            ``(29) for amounts allowed as a deduction under section 
        199(a).''.
    (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by adding at the end the following 
new item:

                              ``Sec. 199. Energy property deduction.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 605. EXTENSION AND MODIFICATION OF TAX CREDIT FOR ELECTRICITY 
              PRODUCED FROM BIOMASS.

    (a) Extension and Modification of Placed-in-Service Rules.--
            (1) In general.--Section 45(c)(3) is amended by adding at 
        the end the following new subparagraphs:
                    ``(D) Biomass facility.--In the case of a facility 
                using biomass (other than closed-loop biomass) to 
                produce electricity, the term `qualified facility' 
                means any facility owned by the taxpayer which is 
                originally placed in service before January 1, 2002.
                    ``(E) Landfill gas facility.--
                            ``(i) In general.--In the case of a 
                        facility using landfill gas to produce 
                        electricity, the term `qualified facility' 
                        means any facility of the taxpayer which is 
                        originally placed in service after December 31, 
                        1999, and before January 1, 2002.
                            ``(ii) Special rule.--In the case of a 
                        facility using landfill gas, such term shall 
                        include equipment and housing (not including 
                        wells and related systems required to collect 
                        and transmit gas to the production facility) 
                        required to generate electricity which are 
                        owned by the taxpayer and so placed in service.
                    ``(F) Special rule.--In the case of a qualified 
                facility described in subparagraph (D) or (E), the 
                period referred to in subsection (a)(2)(A)(ii) shall be 
                applied by substituting `3-year' for `10-year' and 
                shall be treated as beginning no earlier than January 
                1, 2001.''.
            (2) Closed-loop biomass facility.--Section 45(c)(3)(B) 
        (relating to closed-loop biomass facility) is amended by 
        striking ``owned by the taxpayer'' and all that follows and 
        inserting ``owned by the taxpayer which is--''
                            ``(i) originally placed in service after 
                        December 31, 1992, and before January 1, 2002, 
                        or
                            ``(ii) originally placed in service before 
                        December 31, 1992, and modified to use closed-
                        loop biomass to co-fire with coal after such 
                        date and before January 1, 2002.''.
    (b) Expansion of Qualified Energy Resources.--
            (1) In general.--Section 45(c)(1) (defining qualified 
        energy resources) is amended by striking ``and'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C) and inserting a comma, and by adding at the 
        end the following new subparagraphs:
                    ``(D) biomass (other than closed-loop biomass), and
                    ``(E) landfill gas.''.
            (2) Definitions.--Section 45(c) is amended by adding at the 
        end the following new paragraphs:
            ``(5) Biomass.--The term `biomass' means any solid, 
        nonhazardous, cellulosic waste material which is segregated 
        from other waste materials and which is derived from--
                    ``(A) any of the following forest-related 
                resources: mill residues, precommercial thinnings, 
                slash, and brush, but not including old-growth timber,
                    ``(B) urban sources, including waste pallets, 
                crates, and dunnage, manufacturing and construction 
                wood wastes, and landscape or right-of-way tree 
                trimmings, but not including unsegregated municipal 
                solid waste (garbage), paper that is commonly recycled, 
                or pressure treated, chemically treated, or lead 
                painted wood wastes, or
                    ``(C) agriculture sources, including orchard tree 
                crops, vineyard, grain, legumes, sugar, and other crop 
                by-products or residues.
            ``(6) Landfill gas.--The term `landfill gas' means gas from 
        the decomposition of any household solid waste, commercial 
        solid waste, and industrial solid waste disposed of in a 
        municipal solid waste landfill unit (as such terms are defined 
        in regulations promulgated under subtitle D of the Solid Waste 
        Disposal Act (42 U.S.C. 6941 et seq.)).''.
    (c) Special Rules.--Section 45(d) (relating to definitions and 
special rules) is amended by adding at the end the following new 
paragraph:
            ``(8) Denial of double benefit.--No credit shall be allowed 
        under this section with respect to a facility for any taxable 
        year if the credit under section 29 is allowed in such year or 
        has been allowed in any preceding taxable year with respect to 
        any fuel produced from such facility.''.
    (d) Conforming Amendment.--Section 29(d) (relating to other 
definitions and special rules) is amended by adding at the end the 
following new paragraph:
            ``(9) Denial of double benefit.--No credit shall be allowed 
        under this section with respect to any fuel produced from a 
        facility for any taxable year if the credit under section 45 is 
        allowed in such year or has been allowed in any preceding 
        taxable year with respect to such facility.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 606. TAX CREDIT FOR CERTAIN ENERGY EFFICIENT MOTOR VEHICLES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1, 
as amended by section 160(a), is amended by adding at the end the 
following new section:

``SEC. 30C. CREDIT FOR HYBRID VEHICLES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of the credit amounts for each qualified hybrid 
vehicle placed in service during the taxable year.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount for each qualified 
        hybrid vehicle with a rechargeable energy storage system that 
        provides the applicable percentage of the maximum available 
        power shall be the amount specified in the following table:

  ``Applicable percentage                                 Credit amount
        Not less than 5 percent but less than 10 percent.......   $500 
        Not less than 10 percent but less than 20 percent...... $1,000 
        Not less than 20 percent but less than 30 percent...... $1,500 
        Not less than 30 percent............................... $2,000.
            ``(2) Increase in credit amount for regenerative braking 
        system.--In the case of a qualified hybrid vehicle that 
        actively employs a regenerative braking system which supplies 
        to the rechargeable energy storage system the applicable 
        percentage of the energy available from braking in a typical 60 
        miles per hour to 0 miles per hour braking event, the credit 
        amount determined under this section shall be increased by the 
        amount specified in the following table:

  ``Applicable percentage                                 Credit amount
        Not less than 20 percent but less than 40 percent......   $250 
        Not less than 40 percent but less than 60 percent......   $500 
        Not less than 60 percent............................... $1,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle' means an automobile that meets all applicable 
        regulatory requirements and that can draw propulsion energy 
        from both of the following onboard sources of stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system.
            ``(2) Maximum available power.--The term `maximum available 
        power' means the maximum value of the sum of the heat engine 
        and electric drive system power or other nonheat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(3) Automobile.--The term `automobile' has the meaning 
        given such term by section 4064(b)(1) (without regard to 
        subparagraphs (B) and (C) thereof). A vehicle shall not fail to 
        be treated as an automobile solely by reason of weight if such 
        vehicle is rated at 8,500 pounds gross vehicle weight rating or 
        less.
    ``(d) Application With Other Credits.--The credit allowed by 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and the preceding 
        sections of this subpart, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(e) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        subsection (d)).
            ``(2) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit.
            ``(3) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under this section with 
        respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30,
                    ``(B) any property referred to in section 50(b), or
                    ``(C) any property taken into account under section 
                179 or 179A.
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
    ``(f) Regulations.--
            ``(1) Treasury.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this section.
            ``(2) Environmental protection agency.--The Administrator 
        of the Environmental Protection Agency, in coordination with 
        the Secretary of Transportation and consistent with the laws 
        administered by such agency for automobiles, shall timely 
        prescribe such regulations as may be necessary or appropriate 
        solely for the purpose of specifying the testing and 
        calculation procedures to determine whether a vehicle meets the 
        qualifications for a credit under this section.
    ``(g) Application of Section.--This section shall apply to any 
qualified hybrid vehicles placed in service after December 31, 2003, 
and before January 1, 2005.''
    (b) Conforming Amendments.--
            (1) Section 53(d)(1)(B)(iii) is amended by inserting ``or 
        not allowed under section 30C solely by reason of the 
        application of section 30C(d)(2)'' after ``section 
        30(b)(3)(B)''.
            (2) Section 55(c)(2) is amended by inserting ``30C(d),'' 
        after ``30(b)(3),''.
            (3) Subsection (a) of section 1016, as amended by section 
        604(b), is amended by striking ``and'' at the end of paragraph 
        (28), by striking the period at the end of paragraph (29) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(30) to the extent provided in section 30C(e)(1).''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1, as amended by section 160(b), is 
        amended by adding at the end the following new item:

                              ``Sec. 30C. Credit for hybrid 
                                        vehicles.''.

                  TITLE VII--ADDITIONAL TAX PROVISIONS

SEC. 701. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF 
              ACCOUNTING.

    (a) In General.--Section 448(d)(5) (relating to special rule for 
services) is amended--
            (1) by inserting ``in fields described in paragraph 
        (2)(A)'' after ``services by such person'', and
            (2) by inserting ``certain personal'' before ``services'' 
        in the heading.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years ending after the date of the enactment 
        of this Act.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendments made by this section to 
        change its method of accounting for its first taxable year 
        ending after the date of the enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account over a period (not greater than 4 taxable 
                years) beginning with such first taxable year.

SEC. 702. REPEAL OF SECTION 530(D) OF THE REVENUE ACT OF 1978.

    (a) In General.--Section 530(d) of the Revenue Act of 1978 (as 
added by section 1706 of the Tax Reform Act of 1986) is repealed.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to periods ending after the date of the enactment of this Act.

SEC. 703. EXPANSION OF EXEMPTION FROM PERSONAL HOLDING COMPANY TAX FOR 
              LENDING OR FINANCE COMPANIES.

    (a) In General.--Paragraph (6) of section 542(c) (defining personal 
holding company) is amended--
            (1) by striking ``rents,'' in subparagraph (B), and
            (2) by adding ``and'' at the end of subparagraph (B),
            (3) by striking subparagraph (C), and
            (4) by redesignating subparagraph (D) as subparagraph (C).
    (b) Exception for Lending or Finance Companies Determined on 
Affiliated Group Basis.--Subsection (d) of section 542 is amended by 
striking paragraphs (1) and (2) and inserting the following new 
paragraphs:
            ``(1) Lending or finance business defined.--For purposes of 
        subsection (c)(6), the term `lending or finance business' means 
        a business of--
                    ``(A) making loans,
                    ``(B) purchasing or discounting accounts 
                receivable, notes, or installment obligations,
                    ``(C) engaging in leasing (including entering into 
                leases and purchasing, servicing, and disposing of 
                leases and leased assets),
                    ``(D) rendering services or making facilities 
                available in the ordinary course of a lending or 
                finance business,
                    ``(E) rendering services or making facilities 
                available in connection with activities described in 
                subparagraphs (A), (B), and (C) carried on by the 
                corporation rendering services or making facilities 
                available, or
                    ``(F) rendering services or making facilities 
                available to another corporation which is engaged in 
                the lending or finance business (within the meaning of 
                this paragraph), if such services or facilities are 
                related to the lending or finance business (within such 
                meaning) of such other corporation and such other 
                corporation and the corporation rendering services or 
                making facilities available are members of the same 
                affiliated group (as defined in section 1504).
            ``(2) Exception determined on an affiliated group basis.--
        In the case of a lending or finance company which is a member 
        of an affiliated group (as defined in section 1504), such 
        company shall be treated as meeting the requirements of 
        subsection (c)(6) if such group (determined by taking into 
        account only members of such group which are engaged in a 
        lending or finance business) meets such requirements.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 704. CHARITABLE CONTRIBUTION DEDUCTION FOR CERTAIN EXPENSES 
              INCURRED IN SUPPORT OF NATIVE ALASKAN SUBSISTENCE 
              WHALING.

    (a) In General.--Section 170 (relating to charitable, etc., 
contributions and gifts) is amended by redesignating subsection (m) as 
subsection (n) and by inserting after subsection (l) the following new 
subsection:
    ``(m) Expenses Paid by Certain Whaling Captains in Support of 
Native Alaskan Subsistence Whaling.--
            ``(1) In general.--In the case of an individual who is 
        recognized by the Alaska Eskimo Whaling Commission as a whaling 
        captain charged with the responsibility of maintaining and 
        carrying out sanctioned whaling activities and who engages in 
        such activities during the taxable year, the amount described 
        in paragraph (2) (to the extent such amount does not exceed 
        $7,500 for the taxable year) shall be treated for purposes of 
        this section as a charitable contribution.
            ``(2) Amount described.--
                    ``(A) In general.--The amount described in this 
                paragraph is the aggregate of the reasonable and 
                necessary whaling expenses paid by the taxpayer during 
                the taxable year in carrying out sanctioned whaling 
                activities.
                    ``(B) Whaling expenses.--For purposes of 
                subparagraph (A), the term `whaling expenses' includes 
                expenses for--
                            ``(i) the acquisition and maintenance of 
                        whaling boats, weapons, and gear used in 
                        sanctioned whaling activities,
                            ``(ii) the supplying of food for the crew 
                        and other provisions for carrying out such 
                        activities, and
                            ``(iii) storage and distribution of the 
                        catch from such activities.
            ``(3) Sanctioned whaling activities.--For purposes of this 
        subsection, the term `sanctioned whaling activities' means 
subsistence bowhead whale hunting activities conducted pursuant to the 
management plan of the Alaska Eskimo Whaling Commission.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to taxable years ending after December 31, 2000.

SEC. 705. IMPOSITION OF EXCISE TAX ON PERSONS WHO ACQUIRE STRUCTURED 
              SETTLEMENT PAYMENTS IN FACTORING TRANSACTIONS.

    (a) In General.--Subtitle E is amended by adding at the end the 
following new chapter:

       ``CHAPTER 55--STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

        ``Sec. 5891. Structured settlement factoring transactions.

``SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANSACTIONS.

    ``(a) Imposition of Tax.--There is hereby imposed on any person who 
acquires directly or indirectly structured settlement payment rights in 
a structured settlement factoring transaction a tax equal to 40 percent 
of the factoring discount as determined under subsection (c)(4) with 
respect to such factoring transaction.
    ``(b) Exception for Certain Approved Transactions.--
            ``(1) In general.--The tax under subsection (a) shall not 
        apply in the case of a structured settlement factoring 
        transaction in which the transfer of structured settlement 
        payment rights is approved in advance in a qualified order.
            ``(2) Qualified order.--For purposes of this section, the 
        term `qualified order' means a final order, judgment, or decree 
        which--
                    ``(A) finds that the transfer described in 
                paragraph (1)--
                            ``(i) does not contravene any Federal or 
                        State statute or the order of any court or 
                        responsible administrative authority, and
                            ``(ii) is in the best interest of the 
                        payee, taking into account the welfare and 
                        support of the payee's dependents, and
                    ``(B) is issued--
                            ``(i) under the authority of an applicable 
                        State statute by an applicable State court, or
                            ``(ii) by the responsible administrative 
                        authority (if any) which has exclusive 
                        jurisdiction over the underlying action or 
                        proceeding which was resolved by means of the 
                        structured settlement.
            ``(3) Applicable state statute.--For purposes of this 
        section, the term `applicable State statute' means a statute 
        providing for the entry of an order, judgment, or decree 
        described in paragraph (2)(A) which is enacted by--
                    ``(A) the State in which the payee of the 
                structured settlement is domiciled, or
                    ``(B) if there is no statute described in 
                subparagraph (A), the State in which either the party 
                to the structured settlement (including an assignee 
                under a qualified assignment under section 130) or the 
                person issuing the funding asset for the structured 
                settlement is domiciled or has its principal place of 
                business.
            ``(4) Applicable state court.--For purposes of this 
        section--
                    ``(A) In general.--The term `applicable State 
                court' means, with respect to any applicable State 
                statute, a court of the State which enacted such 
                statute.
                    ``(B) Special rule.--In the case of an applicable 
                State statute described in paragraph (3)(B), such term 
                also includes a court of the State in which the payee 
                of the structured settlement is domiciled.
            ``(5) Qualified order dispositive.--A qualified order shall 
        be treated as dispositive for purposes of the exception under 
        this subsection.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Structured settlement.--The term `structured 
        settlement' means an arrangement--
                    ``(A) which is established by--
                            ``(i) suit or agreement for the periodic 
                        payment of damages excludable from the gross 
                        income of the recipient under section 
                        104(a)(2), or
                            ``(ii) agreement for the periodic payment 
                        of compensation under any workers' compensation 
                        act excludable from the gross income of the 
                        recipient under section 104(a)(1), and
                    ``(B) under which the periodic payments are--
                            ``(i) of the character described in 
                        subparagraphs (A) and (B) of section 130(c)(2), 
                        and
                            ``(ii) payable by a person who is a party 
                        to the suit or agreement or to the workers' 
                        compensation claim or by a person who has 
                        assumed the liability for such periodic 
                        payments under a qualified assignment in 
                        accordance with section 130.
            ``(2) Structured settlement payment rights.--The term 
        `structured settlement payment rights' means rights to receive 
        payments under a structured settlement.
            ``(3) Structured settlement factoring transaction.--
                    ``(A) In general.--The term `structured settlement 
                factoring transaction' means a transfer of structured 
                settlement payment rights (including portions of 
                structured settlement payments) made for consideration 
                by means of sale, assignment, pledge, or other form of 
                encumbrance or alienation for consideration.
                    ``(B) Exception.--Such term shall not include--
                            ``(i) the creation or perfection of a 
                        security interest in structured settlement 
                        payment rights under a blanket security 
                        agreement entered into with an insured 
                        depository institution in the absence of any 
                        action to redirect the structured 
settlement payments to such institution (or agent or successor thereof) 
or otherwise to enforce such blanket security interest as against the 
structured settlement payment rights, or
                            ``(ii) a subsequent transfer of structured 
                        settlement payment rights acquired in a 
                        structured settlement factoring transaction.
            ``(4) Factoring discount.--The term `factoring discount' 
        means an amount equal to the excess of--
                    ``(A) the aggregate undiscounted amount of 
                structured settlement payments being acquired in the 
                structured settlement factoring transaction, over
                    ``(B) the total amount actually paid by the 
                acquirer to the person from whom such structured 
                settlement payments are acquired.
            ``(5) Responsible administrative authority.--The term 
        `responsible administrative authority' means the administrative 
        authority which had jurisdiction over the underlying action or 
        proceeding which was resolved by means of the structured 
        settlement.
            ``(6) State.--The term `State' includes any possession of 
        the United States.
    ``(d) Coordination With Other Provisions.--
            ``(1) In general.--If the applicable requirements of 
        sections 72, 104(a) (1) and (2), 130, and 461(h) were satisfied 
        at the time the structured settlement was entered into, the 
        subsequent occurrence of a structured settlement factoring 
        transaction shall not affect the application of the provisions 
        of such sections to the parties to the structured settlement 
        (including an assignee under a qualified assignment under 
        section 130) in any taxable year.
            ``(2) No withholding of tax.--The provisions of section 
        3405 regarding withholding of tax shall not apply to the person 
        making the payments in the event of a structured settlement 
        factoring transaction.''.
    (b) Clerical Amendments.--The table of chapters for subtitle E is 
amended by adding at the end the following new item:

                              ``Chapter 55. Structured settlement 
                                        factoring transactions.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section (other 
        than the provisions of section 5891(d) of the Internal Revenue 
        Code of 1986, as added by this section) shall apply to 
        structured settlement factoring transactions (as defined in 
        section 5891(c) of such Code as adopted by this section) 
        entered into on or after the 30th day following the date of the 
        enactment of this Act.
            (2) Clarification of existing law.--Section 5891(d) of such 
        Code (as so added) shall apply to transactions entered into 
        before, on, or after such 30th day.
            (3) Transition rule.--In the case of a structured 
        settlement factoring transaction entered into during the period 
        beginning on the 30th day following the date of the enactment 
        of this Act and ending on July 1, 2002, no tax shall be imposed 
        under section 5891(a) of such Code if--
                    (A) the structured settlement payee is domiciled in 
                a State (or possession of the United States) which has 
                not enacted a statute providing that the structured 
                settlement factoring transaction is ineffective unless 
                the transaction has been approved by an order, 
                judgment, or decree of a court (or where applicable, a 
                responsible administrative authority) which finds that 
                such transaction--
                            (i) does not contravene any Federal or 
                        State statute or the order of any court (or 
                        responsible administrative authority), and
                            (ii) is in the best interest of the 
                        structured settlement payee or is appropriate 
                        in light of a hardship faced by the payee, and
                    (B) the person acquiring the structured settlement 
                payment rights discloses to the structured settlement 
                payee in advance of the structured settlement factoring 
                transaction the amounts and due dates of the payments 
                to be transferred, the aggregate amount to be 
                transferred, the consideration to be received by the 
                structured settlement payee for the transferred 
                payments, the discounted present value of the 
                transferred payments including the present value as 
                determined in the manner described in section 7520 of 
                such Code, and the expenses required under the terms of 
                the structured settlement factoring transaction to be 
                paid by the structured settlement payee or deducted 
                from the proceeds of such transaction.
                                 <all>