[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3090 Engrossed Amendment House (EAH)]

                In the House of Representatives, U. S.,

                                                         March 7, 2002.

    Resolved, That the House agree to the amendment of the Senate to the bill 
(H.R. 3090) entitled ``An Act to provide tax incentives for economic recovery'', 
with the following

                  HOUSE AMENDMENT TO SENATE AMENDMENT:

            In the amendment of the Senate, strike the matter proposed 
      to be inserted by the Senate and insert the following:

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Job Creation and 
Worker Assistance Act of 2002''.
    (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue Code of 
1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.

                      TITLE I--BUSINESS PROVISIONS

Sec. 101. Special depreciation allowance for certain property acquired 
                            after September 10, 2001, and before 
                            September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 
                            years; temporary suspension of 90 percent 
                            AMT limit.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of 
                            temporary extended unemployment 
                            compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

Sec. 301. Tax benefits for area of New York City damaged in terrorist 
                            attacks on September 11, 2001.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation 
                            not to result in adjustment to basis of 
                            stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of 
                            accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by 
                            qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account 
                            certain expenses of elementary and 
                            secondary school teachers.

                   Subtitle B--Technical Corrections

Sec. 411. Amendments related to Economic Growth and Tax Relief 
                            Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of 
                            2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

Sec. 601. Allowance of nonrefundable personal credits against regular 
                            and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable 
                            resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling 
                            property.
Sec. 607. Taxable income limit on percentage depletion for oil and 
                            natural gas produced from marginal 
                            properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health 
                            benefits.
Sec. 611. Temporary special rules for taxation of life insurance 
                            companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian 
                            reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene 
                            terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population 
                            increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.

                      TITLE I--BUSINESS PROVISIONS

SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
              AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
            ``(1) Additional allowance.--In the case of any qualified 
        property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                the qualified property, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified property' 
                means property--
                            ``(i)(I) to which this section applies 
                        which has a recovery period of 20 years or 
                        less,
                            ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for which a 
                        deduction is allowable under section 167(a) 
                        without regard to this subsection,
                            ``(III) which is water utility property, or
                            ``(IV) which is qualified leasehold 
                        improvement property,
                            ``(ii) the original use of which commences 
                        with the taxpayer after September 10, 2001,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after September 10, 2001, and before 
                                September 11, 2004, but only if no 
                                written binding contract for the 
                                acquisition was in effect before 
                                September 11, 2001, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after September 
                                10, 2001, and before September 11, 
                                2004, and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2005, or, in the 
                        case of property described in subparagraph (B), 
                        before January 1, 2006.
                    ``(B) Certain property having longer production 
                periods treated as qualified property.--
                            ``(i) In general.--The term `qualified 
                        property' includes property--
                                    ``(I) which meets the requirements 
                                of clauses (i), (ii), and (iii) of 
                                subparagraph (A),
                                    ``(II) which has a recovery period 
                                of at least 10 years or is 
                                transportation property, and
                                    ``(III) which is subject to section 
                                263A by reason of clause (ii) or (iii) 
                                of subsection (f)(1)(B) thereof.
                            ``(ii) Only pre-september 11, 2004, basis 
                        eligible for additional allowance.--In the case 
                        of property which is qualified property solely 
                        by reason of clause (i), paragraph (1) shall 
                        apply only to the extent of the adjusted basis 
                        thereof attributable to manufacture, 
                        construction, or production before September 
                        11, 2004.
                            ``(iii) Transportation property.--For 
                        purposes of this subparagraph, the term 
                        `transportation property' means tangible 
                        personal property used in the trade or business 
                        of transporting persons or property.
                    ``(C) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined--
                                    ``(I) without regard to paragraph 
                                (7) of subsection (g) (relating to 
                                election to have system apply), and
                                    ``(II) after application of section 
                                280F(b) (relating to listed property 
                                with limited business use).
                            ``(ii) Qualified new york liberty zone 
                        leasehold improvement property.--The term 
                        `qualified property' shall not include any 
                        qualified New York Liberty Zone leasehold 
                        improvement property (as defined in section 
                        1400L(c)(2)).
                            ``(iii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                    ``(D) Special rules.--
                            ``(i) Self-constructed property.--In the 
                        case of a taxpayer manufacturing, constructing, 
                        or producing property for the taxpayer's own 
                        use, the requirements of clause (iii) of 
                        subparagraph (A) shall be treated as met if the 
                        taxpayer begins manufacturing, constructing, or 
                        producing the property after September 10, 
                        2001, and before September 11, 2004.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after September 10, 2001, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(E) Coordination with section 280f.--For purposes 
                of section 280F--
                            ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in section 
                        280F(d)(5)) which is qualified property, the 
                        Secretary shall increase the limitation under 
                        section 280F(a)(1)(A)(i) by $4,600.
                            ``(ii) Listed property.--The deduction 
                        allowable under paragraph (1) shall be taken 
                        into account in computing any recapture amount 
                        under section 280F(b)(2).
                    ``(F) Deduction allowed in computing miniumum 
                tax.--For purposes of determining alternative minimum 
                taxable income under section 55, the deduction under 
                subsection (a) for qualified property shall be 
                determined under this section without regard to any 
                adjustment under section 56.
            ``(3) Qualified leasehold improvement property.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified leasehold 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such improvement is made under or 
                        pursuant to a lease (as defined in subsection 
                        (h)(7))--
                                    ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                    ``(II) by the lessor of such 
                                portion,
                            ``(ii) such portion is to be occupied 
                        exclusively by the lessee (or any sublessee) of 
                        such portion, and
                            ``(iii) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(B) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component benefiting 
                        a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Commitment to lease treated as 
                        lease.--A commitment to enter into a lease 
                        shall be treated as a lease, and the parties to 
                        such commitment shall be treated as lessor and 
                        lessee, respectively.
                            ``(ii) Related persons.--A lease between 
                        related persons shall not be considered a 
                        lease. For purposes of the preceding sentence, 
                        the term `related persons' means--
                                    ``(I) members of an affiliated 
                                group (as defined in section 1504), and
                                    ``(II) persons having a 
                                relationship described in subsection 
                                (b) of section 267; except that, for 
                                purposes of this clause, the phrase `80 
                                percent or more' shall be substituted 
                                for the phrase `more than 50 percent' 
                                each place it appears in such 
                                subsection.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2001, in 
taxable years ending after such date.

SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5 
              YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.

    (a) In General.--Paragraph (1) of section 172(b) (relating to years 
to which loss may be carried) is amended by adding at the end the 
following new subparagraph:
                    ``(H) In the case of a taxpayer which has a net 
                operating loss for any taxable year ending during 2001 
                or 2002, subparagraph (A)(i) shall be applied by 
                substituting `5' for `2' and subparagraph (F) shall not 
                apply.''.
    (b) Election To Disregard 5-Year Carryback.--Section 172 (relating 
to net operating loss deduction) is amended by redesignating subsection 
(j) as subsection (k) and by inserting after subjection (i) the 
following new subsection:
    ``(j) Election To Disregard 5-Year Carryback for Certain Net 
Operating Losses.--Any taxpayer entitled to a 5-year carryback under 
subsection (b)(1)(H) from any loss year may elect to have the carryback 
period with respect to such loss year determined without regard to 
subsection (b)(1)(H). Such election shall be made in such manner as may 
be prescribed by the Secretary and shall be made by the due date 
(including extensions of time) for filing the taxpayer's return for the 
taxable year of the net operating loss. Such election, once made for 
any taxable year, shall be irrevocable for such taxable year.''.
    (c) Temporary Suspension of 90 Percent Limit on Certain NOL 
Carryovers.--
            (1) In general.--Subparagraph (A) of section 56(d)(1) 
        (relating to general rule defining alternative tax net 
        operating loss deduction) is amended to read as follows:
                    ``(A) the amount of such deduction shall not exceed 
                the sum of--
                            ``(i) the lesser of--
                                    ``(I) the amount of such deduction 
                                attributable to net operating losses 
                                (other than the deduction attributable 
                                to carryovers described in clause 
                                (ii)(I)), or
                                    ``(II) 90 percent of alternative 
                                minimum taxable income determined 
                                without regard to such deduction, plus
                            ``(ii) the lesser of--
                                    ``(I) the amount of such deduction 
                                attributable to the sum of carrybacks 
                                of net operating losses for taxable 
                                years ending during 2001 or 2002 and 
                                carryforwards of net operating losses 
                                to taxable years ending during 2001 and 
                                2002, or
                                    ``(II) alternative minimum taxable 
                                income determined without regard to 
                                such deduction reduced by the amount 
                                determined under clause (i), and''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years ending before January 1, 2003.
    (d) Effective Date.--Except as provided in subsection (c), the 
amendments made by this section shall apply to net operating losses for 
taxable years ending after December 31, 2000.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Temporary Extended Unemployment 
Compensation Act of 2002''.

SEC. 202. FEDERAL-STATE AGREEMENTS.

    (a) In General.--Any State which desires to do so may enter into 
and participate in an agreement under this title with the Secretary of 
Labor (in this title referred to as the ``Secretary''). Any State which 
is a party to an agreement under this title may, upon providing 30 
days' written notice to the Secretary, terminate such agreement.
    (b) Provisions of Agreement.--Any agreement under subsection (a) 
shall provide that the State agency of the State will make payments of 
temporary extended unemployment compensation to individuals who--
            (1) have exhausted all rights to regular compensation under 
        the State law or under Federal law with respect to a benefit 
        year (excluding any benefit year that ended before March 15, 
        2001);
            (2) have no rights to regular compensation or extended 
        compensation with respect to a week under such law or any other 
        State unemployment compensation law or to compensation under 
        any other Federal law;
            (3) are not receiving compensation with respect to such 
        week under the unemployment compensation law of Canada; and
            (4) filed an initial claim for regular compensation on or 
        after March 15, 2001.
    (c) Exhaustion of Benefits.--For purposes of subsection (b)(1), an 
individual shall be deemed to have exhausted such individual's rights 
to regular compensation under a State law when--
            (1) no payments of regular compensation can be made under 
        such law because such individual has received all regular 
        compensation available to such individual based on employment 
        or wages during such individual's base period; or
            (2) such individual's rights to such compensation have been 
        terminated by reason of the expiration of the benefit year with 
        respect to which such rights existed.
    (d) Weekly Benefit Amount, Etc.--For purposes of any agreement 
under this title--
            (1) the amount of temporary extended unemployment 
        compensation which shall be payable to any individual for any 
        week of total unemployment shall be equal to the amount of the 
        regular compensation (including dependents' allowances) payable 
        to such individual during such individual's benefit year under 
        the State law for a week of total unemployment;
            (2) the terms and conditions of the State law which apply 
        to claims for regular compensation and to the payment thereof 
        shall apply to claims for temporary extended unemployment 
        compensation and the payment thereof, except--
                    (A) that an individual shall not be eligible for 
                temporary extended unemployment compensation under this 
                title unless, in the base period with respect to which 
                the individual exhausted all rights to regular 
                compensation under the State law, the individual had 20 
                weeks of full-time insured employment or the equivalent 
                in insured wages, as determined under the provisions of 
                the State law implementing section 202(a)(5) of the 
                Federal-State Extended Unemployment Compensation Act of 
                1970 (26 U.S.C. 3304 note); and
                    (B) where otherwise inconsistent with the 
                provisions of this title or with the regulations or 
                operating instructions of the Secretary promulgated to 
                carry out this title; and
            (3) the maximum amount of temporary extended unemployment 
        compensation payable to any individual for whom a temporary 
        extended unemployment compensation account is established under 
        section 203 shall not exceed the amount established in such 
        account for such individual.
    (e) Election by States.--Notwithstanding any other provision of 
Federal law (and if State law permits), the Governor of a State that is 
in an extended benefit period may provide for the payment of temporary 
extended unemployment compensation in lieu of extended compensation to 
individuals who otherwise meet the requirements of this section. Such 
an election shall not require a State to trigger off an extended 
benefit period.

SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.

    (a) In General.--Any agreement under this title shall provide that 
the State will establish, for each eligible individual who files an 
application for temporary extended unemployment compensation, a 
temporary extended unemployment compensation account with respect to 
such individual's benefit year.
    (b) Amount in Account.--
            (1) In general.--The amount established in an account under 
        subsection (a) shall be equal to the lesser of--
                    (A) 50 percent of the total amount of regular 
                compensation (including dependents' allowances) payable 
                to the individual during the individual's benefit year 
                under such law, or
                    (B) 13 times the individual's average weekly 
                benefit amount for the benefit year.
            (2) Weekly benefit amount.--For purposes of this 
        subsection, an individual's weekly benefit amount for any week 
        is the amount of regular compensation (including dependents' 
        allowances) under the State law payable to such individual for 
        such week for total unemployment.
    (c) Special Rule.--
            (1) In general.--Notwithstanding any other provision of 
        this section, if, at the time that the individual's account is 
        exhausted, such individual's State is in an extended benefit 
        period (as determined under paragraph (2)), then, such account 
        shall be augmented by an amount equal to the amount originally 
        established in such account (as determined under subsection 
        (b)(1)).
            (2) Extended benefit period.--For purposes of paragraph 
        (1), a State shall be considered to be in an extended benefit 
        period if, at the time of exhaustion (as described in paragraph 
        (1))--
                    (A) such a period is then in effect for such State 
                under the Federal-State Extended Unemployment 
                Compensation Act of 1970; or
                    (B) such a period would then be in effect for such 
                State under such Act if section 203(d) of such Act were 
                applied as if it had been amended by striking ``5'' 
                each place it appears and inserting ``4''.

SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF 
              TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.

    (a) General Rule.--There shall be paid to each State that has 
entered into an agreement under this title an amount equal to 100 
percent of the temporary extended unemployment compensation paid to 
individuals by the State pursuant to such agreement.
    (b) Treatment of Reimbursable Compensation.--No payment shall be 
made to any State under this section in respect of any compensation to 
the extent the State is entitled to reimbursement in respect of such 
compensation under the provisions of any Federal law other than this 
title or chapter 85 of title 5, United States Code. A State shall not 
be entitled to any reimbursement under such chapter 85 in respect of 
any compensation to the extent the State is entitled to reimbursement 
under this title in respect of such compensation.
    (c) Determination of Amount.--Sums payable to any State by reason 
of such State having an agreement under this title shall be payable, 
either in advance or by way of reimbursement (as may be determined by 
the Secretary), in such amounts as the Secretary estimates the State 
will be entitled to receive under this title for each calendar month, 
reduced or increased, as the case may be, by any amount by which the 
Secretary finds that the Secretary's estimates for any prior calendar 
month were greater or less than the amounts which should have been paid 
to the State. Such estimates may be made on the basis of such 
statistical, sampling, or other method as may be agreed upon by the 
Secretary and the State agency of the State involved.

SEC. 205. FINANCING PROVISIONS.

    (a) In General.--Funds in the extended unemployment compensation 
account (as established by section 905(a) of the Social Security Act 
(42 U.S.C. 1105(a)) of the Unemployment Trust Fund (as established by 
section 904(a) of such Act (42 U.S.C. 1104(a)) shall be used for the 
making of payments to States having agreements entered into under this 
title.
    (b) Certification.--The Secretary shall from time to time certify 
to the Secretary of the Treasury for payment to each State the sums 
payable to such State under this title. The Secretary of the Treasury, 
prior to audit or settlement by the General Accounting Office, shall 
make payments to the State in accordance with such certification, by 
transfers from the extended unemployment compensation account (as so 
established) to the account of such State in the Unemployment Trust 
Fund (as so established).
    (c) Assistance to States.--There are appropriated out of the 
employment security administration account (as established by section 
901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the 
Unemployment Trust Fund, without fiscal year limitation, such funds as 
may be necessary for purposes of assisting States (as provided in title 
III of the Social Security Act (42 U.S.C. 501 et seq.)) in meeting the 
costs of administration of agreements under this title.
    (d) Appropriations for Certain Payments.--There are appropriated 
from the general fund of the Treasury, without fiscal year limitation, 
to the extended unemployment compensation account (as so established) 
of the Unemployment Trust Fund (as so established) such sums as the 
Secretary estimates to be necessary to make the payments under this 
section in respect of--
            (1) compensation payable under chapter 85 of title 5, 
        United States Code; and
            (2) compensation payable on the basis of services to which 
        section 3309(a)(1) of the Internal Revenue Code of 1986 
        applies.
Amounts appropriated pursuant to the preceding sentence shall not be 
required to be repaid.

SEC. 206. FRAUD AND OVERPAYMENTS.

    (a) In General.--If an individual knowingly has made, or caused to 
be made by another, a false statement or representation of a material 
fact, or knowingly has failed, or caused another to fail, to disclose a 
material fact, and as a result of such false statement or 
representation or of such nondisclosure such individual has received an 
amount of temporary extended unemployment compensation under this title 
to which he was not entitled, such individual--
            (1) shall be ineligible for further temporary extended 
        unemployment compensation under this title in accordance with 
        the provisions of the applicable State unemployment 
        compensation law relating to fraud in connection with a claim 
        for unemployment compensation; and
            (2) shall be subject to prosecution under section 1001 of 
        title 18, United States Code.
    (b) Repayment.--In the case of individuals who have received 
amounts of temporary extended unemployment compensation under this 
title to which they were not entitled, the State shall require such 
individuals to repay the amounts of such temporary extended 
unemployment compensation to the State agency, except that the State 
agency may waive such repayment if it determines that--
            (1) the payment of such temporary extended unemployment 
        compensation was without fault on the part of any such 
        individual; and
            (2) such repayment would be contrary to equity and good 
        conscience.
    (c) Recovery by State Agency.--
            (1) In general.--The State agency may recover the amount to 
        be repaid, or any part thereof, by deductions from any 
        temporary extended unemployment compensation payable to such 
        individual under this title or from any unemployment 
        compensation payable to such individual under any Federal 
        unemployment compensation law administered by the State agency 
        or under any other Federal law administered by the State agency 
        which provides for the payment of any assistance or allowance 
        with respect to any week of unemployment, during the 3-year 
        period after the date such individuals received the payment of 
        the temporary extended unemployment compensation to which they 
        were not entitled, except that no single deduction may exceed 
        50 percent of the weekly benefit amount from which such 
        deduction is made.
            (2) Opportunity for hearing.--No repayment shall be 
        required, and no deduction shall be made, until a determination 
        has been made, notice thereof and an opportunity for a fair 
        hearing has been given to the individual, and the determination 
        has become final.
    (d) Review.--Any determination by a State agency under this section 
shall be subject to review in the same manner and to the same extent as 
determinations under the State unemployment compensation law, and only 
in that manner and to that extent.

SEC. 207. DEFINITIONS.

    In this title, the terms ``compensation'', ``regular 
compensation'', ``extended compensation'', ``additional compensation'', 
``benefit year'', ``base period'', ``State'', ``State agency'', ``State 
law'', and ``week'' have the respective meanings given such terms under 
section 205 of the Federal-State Extended Unemployment Compensation Act 
of 1970 (26 U.S.C. 3304 note).

SEC. 208. APPLICABILITY.

    An agreement entered into under this title shall apply to weeks of 
unemployment--
            (1) beginning after the date on which such agreement is 
        entered into; and
            (2) ending before January 1, 2003.

SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.

    (a) Repeal of Certain Provisions Added by the Balanced Budget Act 
of 1997.--
            (1) In general.--The following provisions of section 903 of 
        the Social Security Act (42 U.S.C. 1103) are repealed:
                    (A) Paragraph (3) of subsection (a).
                    (B) The last sentence of subsection (c)(2).
            (2) Savings provision.--Any amounts transferred before the 
        date of enactment of this Act under the provision repealed by 
        paragraph (1)(A) shall remain subject to section 903 of the 
        Social Security Act, as last in effect before such date of 
        enactment.
    (b) Special Transfer in Fiscal Year 2002.--Section 903 of the 
Social Security Act is amended by adding at the end the following:

                 ``Special Transfer in Fiscal Year 2002

    ``(d)(1) The Secretary of the Treasury shall transfer (as of the 
date determined under paragraph (5)) from the Federal unemployment 
account to the account of each State in the Unemployment Trust Fund the 
amount determined with respect to such State under paragraph (2).
    ``(2)(A) The amount to be transferred under this subsection to a 
State account shall (as determined by the Secretary of Labor and 
certified by such Secretary to the Secretary of the Treasury) be equal 
to--
            ``(i) the amount which would have been required to have 
        been transferred under this section to such account at the 
        beginning of fiscal year 2002 if--
                    ``(I) section 209(a)(1) of the Temporary Extended 
                Unemployment Compensation Act of 2002 had been enacted 
                before the close of fiscal year 2001, and
                    ``(II) section 5402 of Public Law 105-33 (relating 
                to increase in Federal unemployment account ceiling) 
                had not been enacted,
        minus
            ``(ii) the amount which was in fact transferred under this 
        section to such account at the beginning of fiscal year 2002.
    ``(B) Notwithstanding the provisions of subparagraph (A)--
            ``(i) the aggregate amount transferred to the States under 
        this subsection may not exceed a total of $8,000,000,000; and
            ``(ii) all amounts determined under subparagraph (A) shall 
        be reduced ratably, if and to the extent necessary in order to 
        comply with the limitation under clause (i).
    ``(3)(A) Except as provided in paragraph (4), amounts transferred 
to a State account pursuant to this subsection may be used only in the 
payment of cash benefits--
            ``(i) to individuals with respect to their unemployment, 
        and
            ``(ii) which are allowable under subparagraph (B) or (C).
    ``(B)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable as--
            ``(I) regular compensation, or
            ``(II) additional compensation, upon the exhaustion of any 
        temporary extended unemployment compensation (if such State has 
        entered into an agreement under the Temporary Extended 
        Unemployment Compensation Act of 2002), for individuals 
        eligible for regular compensation under the unemployment 
        compensation law of such State.
    ``(ii) Any additional compensation under clause (i) may not be 
taken into account for purposes of any determination relating to the 
amount of any extended compensation for which an individual might be 
eligible.
    ``(C)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable to 1 or more 
categories of individuals not otherwise eligible for regular 
compensation under the unemployment compensation law of such State, 
including those described in clause (iii).
    ``(ii) The benefits paid under this subparagraph to any individual 
may not, for any period of unemployment, exceed the maximum amount of 
regular compensation authorized under the unemployment compensation law 
of such State for that same period, plus any additional compensation 
(described in subparagraph (B)(i)) which could have been paid with 
respect to that amount.
    ``(iii) The categories of individuals described in this clause 
include the following:
            ``(I) Individuals who are seeking, or available for, only 
        part-time (and not full-time) work.
            ``(II) Individuals who would be eligible for regular 
        compensation under the unemployment compensation law of such 
        State under an alternative base period.
    ``(D) Amounts transferred to a State account under this subsection 
may be used in the payment of cash benefits to individuals only for 
weeks of unemployment beginning after the date of enactment of this 
subsection.
    ``(4) Amounts transferred to a State account under this subsection 
may be used for the administration of its unemployment compensation law 
and public employment offices (including in connection with benefits 
described in paragraph (3) and any recipients thereof), subject to the 
same conditions as set forth in subsection (c)(2) (excluding 
subparagraph (B) thereof, and deeming the reference to `subsections (a) 
and (b)' in subparagraph (D) thereof to include this subsection).
    ``(5) Transfers under this subsection shall be made within 10 days 
after the date of enactment of this paragraph.''.
    (c) Limitations on Transfers.--Section 903(b) of the Social 
Security Act shall apply to transfers under section 903(d) of such Act 
(as amended by this section). For purposes of the preceding sentence, 
such section 903(b) shall be deemed to be amended as follows:
            (1) By substituting ``the transfer date described in 
        subsection (d)(5)'' for ``October 1 of any fiscal year''.
            (2) By substituting ``remain in the Federal unemployment 
        account'' for ``be transferred to the Federal unemployment 
        account as of the beginning of such October 1''.
            (3) By substituting ``fiscal year 2002 (after the transfer 
        date described in subsection (d)(5))'' for ``the fiscal year 
        beginning on such October 1''.
            (4) By substituting ``under subsection (d)'' for ``as of 
        October 1 of such fiscal year''.
            (5) By substituting ``(as of the close of fiscal year 
        2002)'' for ``(as of the close of such fiscal year)''.
    (d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 
3306(f)(2) of the Internal Revenue Code of 1986 are amended by 
inserting ``or 903(d)(4)'' before ``of the Social Security Act''.
    (2) Section 303(a)(5) of the Social Security Act is amended in the 
second proviso by inserting ``or 903(d)(4)'' after ``903(c)(2)''.
    (e) Regulations.--The Secretary of Labor may prescribe any 
operating instructions or regulations necessary to carry out this 
section and the amendments made by this section.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST 
              ATTACKS ON SEPTEMBER 11, 2001.

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

             ``Subchapter Y--New York Liberty Zone Benefits

                              ``Sec. 1400L. Tax benefits for New York 
                                        Liberty Zone.

``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.

    ``(a) Expansion of Work Opportunity Tax Credit.--
            ``(1) In general.--For purposes of section 51, a New York 
        Liberty Zone business employee shall be treated as a member of 
        a targeted group.
            ``(2) New york liberty zone business employee.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `New York Liberty Zone 
                business employee' means, with respect to any period, 
                any employee of a New York Liberty Zone business if 
                substantially all the services performed during such 
                period by such employee for such business are performed 
                in the New York Liberty Zone.
                    ``(B) Inclusion of certain employees outside the 
                new york liberty zone.--
                            ``(i) In general.--In the case of a New 
                        York Liberty Zone business described in 
                        subclause (II) of subparagraph (C)(i), the term 
                        `New York Liberty Zone business employee' 
                        includes any employee of such business (not 
                        described in subparagraph (A)) if substantially 
                        all the services performed during such period 
                        by such employee for such business are 
                        performed in the City of New York, New York.
                            ``(ii) Limitation.--The number of employees 
                        of such a business that are treated as New York 
                        Liberty zone business employees on any day by 
                        reason of clause (i) shall not exceed the 
                        excess of--
                                    ``(I) the number of employees of 
                                such business on September 11, 2001, in 
                                the New York Liberty Zone, over
                                    ``(II) the number of New York 
                                Liberty Zone business employees 
                                (determined without regard to this 
                                subparagraph) of such business on the 
                                day to which the limitation is being 
                                applied.
                        The Secretary may require any trade or business 
                        to have the number determined under subclause 
                        (I) verified by the New York State Department 
                        of Labor.
                    ``(C) New york liberty zone business.--
                            ``(i) In general.--The term `New York 
                        Liberty Zone business' means any trade or 
                        business which is--
                                    ``(I) located in the New York 
                                Liberty Zone, or
                                    ``(II) located in the City of New 
                                York, New York, outside the New York 
                                Liberty Zone, as a result of the 
                                physical destruction or damage of such 
                                place of business by the September 11, 
                                2001, terrorist attack.
                            ``(ii) Credit not allowed for large 
                        businesses.--The term `New York Liberty Zone 
                        business' shall not include any trade or 
                        business for any taxable year if such trade or 
                        business employed an average of more than 200 
                        employees on business days during the taxable 
                        year.
                    ``(D) Special rules for determining amount of 
                credit.--For purposes of applying subpart F of part IV 
                of subchapter B of this chapter to wages paid or 
                incurred to any New York Liberty Zone business 
                employee--
                            ``(i) section 51(a) shall be applied by 
                        substituting `qualified wages' for `qualified 
                        first-year wages',
                            ``(ii) the rules of section 52 shall apply 
                        for purposes of determining the number of 
                        employees under subparagraph (B),
                            ``(iii) subsections (c)(4) and (i)(2) of 
                        section 51 shall not apply, and
                            ``(iv) in determining qualified wages, the 
                        following shall apply in lieu of section 51(b):
                                    ``(I) Qualified wages.--The term 
                                `qualified wages' means wages paid or 
                                incurred by the employer to individuals 
                                who are New York Liberty Zone business 
                                employees of such employer for work 
                                performed during calendar year 2002 or 
                                2003.
                                    ``(II) Only first $6,000 of wages 
                                per calendar year taken into account.--
                                The amount of the qualified wages which 
                                may be taken into account with respect 
                                to any individual shall not exceed 
                                $6,000 per calendar year.
    ``(b) Special Allowance for Certain Property Acquired After 
September 10, 2001.--
            ``(1) Additional allowance.--In the case of any qualified 
        New York Liberty Zone property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                such property, and
                    ``(B) the adjusted basis of the qualified New York 
                Liberty Zone property shall be reduced by the amount of 
                such deduction before computing the amount otherwise 
                allowable as a depreciation deduction under this 
                chapter for such taxable year and any subsequent 
                taxable year.
            ``(2) Qualified new york liberty zone property.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified New York 
                Liberty Zone property' means property--
                            ``(i)(I) which is described in section 
                        168(k)(2)(A)(i), or
                            ``(II) which is nonresidential real 
                        property, or residential rental property, which 
                        is described in subparagraph (B),
                            ``(ii) substantially all of the use of 
                        which is in the New York Liberty Zone and is in 
                        the active conduct of a trade or business by 
                        the taxpayer in such Zone,
                            ``(iii) the original use of which in the 
                        New York Liberty Zone commences with the 
                        taxpayer after September 10, 2001,
                            ``(iv) which is acquired by the taxpayer by 
                        purchase (as defined in section 179(d)) after 
                        September 10, 2001, but only if no written 
                        binding contract for the acquisition was in 
                        effect before September 11, 2001, and
                            ``(v) which is placed in service by the 
                        taxpayer on or before the termination date.
                The term `termination date' means December 31, 2006 
                (December 31, 2009, in the case of nonresidential real 
                property and residential rental property).
                    ``(B) Eligible real property.--Nonresidential real 
                property or residential rental property is described in 
                this subparagraph only to the extent it rehabilitates 
                real property damaged, or replaces real property 
                destroyed or condemned, as a result of the September 
                11, 2001, terrorist attack. For purposes of the 
                preceding sentence, property shall be treated as 
                replacing real property destroyed or condemned if, as 
                part of an integrated plan, such property replaces real 
                property which is included in a continuous area which 
                includes real property destroyed or condemned.
                    ``(C) Exceptions.--
                            ``(i) 30 percent additional allowance 
                        property.--Such term shall not include property 
                        to which section 168(k) applies.
                            ``(ii) Alternative depreciation property.--
                        The term `qualified New York Liberty Zone 
                        property' shall not include any property 
                        described in section 168(k)(2)(C)(i).
                            ``(iii) Qualified new york liberty zone 
                        leasehold improvement property.--Such term 
                        shall not include any qualified New York 
                        Liberty Zone leasehold improvement property.
                            ``(iv) Election out.--For purposes of this 
                        subsection, rules similar to the rules of 
                        section 168(k)(2)(C)(iii) shall apply.
                    ``(D) Special rules.--For purposes of this 
                subsection, rules similar to the rules of section 
                168(k)(2)(D) shall apply, except that clause (i) 
                thereof shall be applied without regard to `and before 
                September 11, 2004'.
                    ``(E) Allowance against alternative minimum tax.--
                For purposes of this subsection, rules similar to the 
                rules of section 168(k)(2)(F) shall apply.
    ``(c) 5-Year Recovery Period for Depreciation of Certain Leasehold 
Improvements.--
            ``(1) In general.--For purposes of section 168, the term 
        `5-year property' includes any qualified New York Liberty Zone 
        leasehold improvement property.
            ``(2) Qualified new york liberty zone leasehold improvement 
        property.--For purposes of this section, the term `qualified 
        New York Liberty Zone leasehold improvement property' means 
        qualified leasehold improvement property (as defined in section 
        168(k)(3)) if--
                    ``(A) such building is located in the New York 
                Liberty Zone,
                    ``(B) such improvement is placed in service after 
                September 10, 2001, and before January 1, 2007, and
                    ``(C) no written binding contract for such 
                improvement was in effect before September 11, 2001.
            ``(3) Requirement to use straight line method.--The 
        applicable depreciation method under section 168 shall be the 
        straight line method in the case of qualified New York Liberty 
        Zone leasehold improvement property.
            ``(4) 9-year recovery period under alternative system.--For 
        purposes of section 168(g), the class life of qualified New 
        York Liberty Zone leasehold improvement property shall be 9 
        years.
    ``(d) Tax-Exempt Bond Financing.--
            ``(1) In general.--For purposes of this title, any 
        qualified New York Liberty Bond shall be treated as an exempt 
        facility bond.
            ``(2) Qualified new york liberty bond.--For purposes of 
        this subsection, the term `qualified New York Liberty Bond' 
        means any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the net proceeds (as 
                defined in section 150(a)(3)) of such issue are to be 
                used for qualified project costs,
                    ``(B) such bond is issued by the State of New York 
                or any political subdivision thereof,
                    ``(C) the Governor or the Mayor designates such 
                bond for purposes of this section, and
                    ``(D) such bond is issued after the the date of the 
                enactment of this section and before January 1, 2005.
            ``(3) Limitations on amount of bonds.--
                    ``(A) Aggregate amount designated.--The maximum 
                aggregate face amount of bonds which may be designated 
                under this subsection shall not exceed $8,000,000,000, 
                of which not to exceed $4,000,000,000 may be designated 
                by the Governor and not to exceed $4,000,000,000 may be 
                designated by the Mayor.
                    ``(B) Specific limitations.--The aggregate face 
                amount of bonds issued which are to be used for--
                            ``(i) costs for property located outside 
                        the New York Liberty Zone shall not exceed 
                        $2,000,000,000,
                            ``(ii) residential rental property shall 
                        not exceed $1,600,000,000, and
                            ``(iii) costs with respect to property used 
                        for retail sales of tangible property and 
                        functionally related and subordinate property 
                        shall not exceed $800,000,000.
                The limitations under clauses (i), (ii), and (iii) 
                shall be allocated proportionately between the bonds 
                designated by the Governor and the bonds designated by 
                the Mayor in proportion to the respective amounts of 
                bonds designated by each.
                    ``(C) Movable property.--No bonds shall be issued 
                which are to be used for movable fixtures and 
                equipment.
            ``(4) Qualified project costs.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified project 
                costs' means the cost of acquisition, construction, 
                reconstruction, and renovation of--
                            ``(i) nonresidential real property and 
                        residential rental property (including fixed 
                        tenant improvements associated with such 
                        property) located in the New York Liberty Zone, 
                        and
                            ``(ii) public utility property (as defined 
                        in section 168(i)(10)) located in the New York 
                        Liberty Zone.
                    ``(B) Costs for certain property outside zone 
                included.--Such term includes the cost of acquisition, 
                construction, reconstruction, and renovation of 
                nonresidential real property (including fixed tenant 
                improvements associated with such property) located 
                outside the New York Liberty Zone but within the City 
                of New York, New York, if such property is part of a 
                project which consists of at least 100,000 square feet 
                of usable office or other commercial space located in a 
                single building or multiple adjacent buildings.
            ``(5) Special rules.--In applying this title to any 
        qualified New York Liberty Bond, the following modifications 
        shall apply:
                    ``(A) Section 146 (relating to volume cap) shall 
                not apply.
                    ``(B) Section 147(d) (relating to acquisition of 
                existing property not permitted) shall be applied by 
                substituting `50 percent' for `15 percent' each place 
                it appears.
                    ``(C) Section 148(f)(4)(C) (relating to exception 
                from rebate for certain proceeds to be used to finance 
                construction expenditures) shall apply to the available 
                construction proceeds of bonds issued under this 
                section.
                    ``(D) Repayments of principal on financing provided 
                by the issue--
                            ``(i) may not be used to provide financing, 
                        and
                            ``(ii) must be used not later than the 
                        close of the 1st semiannual period beginning 
                        after the date of the repayment to redeem bonds 
                        which are part of such issue.
                The requirement of clause (ii) shall be treated as met 
                with respect to amounts received within 10 years after 
                the date of issuance of the issue (or, in the case of a 
                refunding bond, the date of issuance of the original 
                bond) if such amounts are used by the close of such 10 
                years to redeem bonds which are part of such issue.
                    ``(E) Section 57(a)(5) shall not apply.
            ``(6) Separate issue treatment of portions of an issue.--
        This subsection shall not apply to the portion of an issue 
        which (if issued as a separate issue) would be treated as a 
        qualified bond or as a bond that is not a private activity bond 
        (determined without regard to paragraph (1)), if the issuer 
        elects to so treat such portion.
    ``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
            ``(1) In general.--With respect to a bond described in 
        paragraph (2) issued as part of an issue 90 percent (95 percent 
        in the case of a bond described in paragraph (2)(C)) or more of 
        the net proceeds (as defined in section 150(a)(3)) of which 
        were used to finance facilities located within the City of New 
        York, New York (or property which is functionally related and 
        subordinate to facilities located within the City of New York 
        for the furnishing of water), one additional advanced refunding 
        after the date of the enactment of this section and before 
        January 1, 2005, shall be allowed under the applicable rules of 
        section 149(d) if--
                    ``(A) the Governor or the Mayor designates the 
                advance refunding bond for purposes of this subsection, 
                and
                    ``(B) the requirements of paragraph (4) are met.
            ``(2) Bonds described.--A bond is described in this 
        paragraph if such bond was outstanding on September 11, 2001, 
        and is--
                    ``(A) a State or local bond (as defined in section 
                103(c)(1)) which is a general obligation of the City of 
                New York, New York,
                    ``(B) a State or local bond (as so defined) other 
                than a private activity bond (as defined in section 
                141(a)) issued by the New York Municipal Water Finance 
                Authority or the Metropolitan Transportation Authority 
                of the State of New York, or
                    ``(C) a qualified 501(c)(3) bond (as defined in 
                section 145(a)) which is a qualified hospital bond (as 
                defined in section 145(c)) issued by or on behalf of 
                the State of New York or the City of New York, New 
                York.
            ``(3) Aggregate limit.--For purposes of paragraph (1), the 
        maximum aggregate face amount of bonds which may be designated 
        under this subsection by the Governor shall not exceed 
        $4,500,000,000 and the maximum aggregate face amount of bonds 
        which may be designated under this subsection by the Mayor 
        shall not exceed $4,500,000,000.
            ``(4) Additional requirements.--The requirements of this 
        paragraph are met with respect to any advance refunding of a 
        bond described in paragraph (2) if--
                    ``(A) no advance refundings of such bond would be 
                allowed under any provision of law after September 11, 
                2001,
                    ``(B) the advance refunding bond is the only other 
                outstanding bond with respect to the refunded bond, and
                    ``(C) the requirements of section 148 are met with 
                respect to all bonds issued under this subsection.
    ``(f) Increase in Expensing Under Section 179.--
            ``(1) In general.--For purposes of section 179--
                    ``(A) the limitation under section 179(b)(1) shall 
                be increased by the lesser of--
                            ``(i) $35,000, or
                            ``(ii) the cost of section 179 property 
                        which is qualified New York Liberty Zone 
                        property placed in service during the taxable 
                        year, and
                    ``(B) the amount taken into account under section 
                179(b)(2) with respect to any section 179 property 
                which is qualified New York Liberty Zone property shall 
                be 50 percent of the cost thereof.
            ``(2) Qualified new york liberty zone property.--For 
        purposes of this subsection, the term `qualified New York 
        Liberty Zone property' has the meaning given such term by 
        subsection (b)(2).
            ``(3) Recapture.--Rules similar to the rules under section 
        179(d)(10) shall apply with respect to any qualified New York 
        Liberty Zone property which ceases to be used in the New York 
        Liberty Zone.
    ``(g) Extension of Replacement Period for Nonrecognition of Gain.--
Notwithstanding subsections (g) and (h) of section 1033, clause (i) of 
section 1033(a)(2)(B) shall be applied by substituting `5 years' for `2 
years' with respect to property which is compulsorily or involuntarily 
converted as a result of the terrorist attacks on September 11, 2001, 
in the New York Liberty Zone but only if substantially all of the use 
of the replacement property is in the City of New York, New York.
    ``(h) New York Liberty Zone.--For purposes of this section, the 
term `New York Liberty Zone' means the area located on or south of 
Canal Street, East Broadway (east of its intersection with Canal 
Street), or Grand Street (east of its intersection with East Broadway) 
in the Borough of Manhattan in the City of New York, New York.
    ``(i) References to Governor and Mayor.--For purposes of this 
section, the terms `Governor' and `Mayor' mean the Governor of the 
State of New York and the Mayor of the City of New York, New York, 
respectively.''.
    (b) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 (relating to 
        limitation based on amount of tax) is amended by redesignating 
        paragraph (3) as paragraph (4) and by inserting after paragraph 
        (2) the following new paragraph:
            ``(3) Special rules for new york liberty zone business 
        employee credit.--
                    ``(A) In general.--In the case of the New York 
                Liberty Zone business employee credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) in applying paragraph (1) to such 
                        credit--
                                    ``(I) the tentative minimum tax 
                                shall be treated as being zero, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the New York 
                                Liberty Zone business employee credit).
                    ``(B) New york liberty zone business employee 
                credit.--For purposes of this subsection, the term `New 
                York Liberty Zone business employee credit' means the 
                portion of work opportunity credit under section 51 
                determined under section 1400L(a).''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the New York 
        Liberty Zone business employee credit'' after ``employment 
        credit''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years ending after December 31, 2001.
    (c) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                              ``Subchapter Y--New York Liberty Zone 
                                        Benefits.''.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.

    Any person required to furnish a statement under any section of 
subpart B of part III of subchapter A of chapter 61 of the Internal 
Revenue Code of 1986 for any taxable year ending after the date of the 
enactment of this Act, may electronically furnish such statement 
(without regard to any first class mailing requirement) to any 
recipient who has consented to the electronic provision of the 
statement in a manner similar to the one permitted under regulations 
issued under section 6051 of such Code or in such other manner as 
provided by the Secretary.

SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION 
              NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF 
              SHAREHOLDERS.

    (a) In General.--Subparagraph (A) of section 108(d)(7) (relating to 
certain provisions to be applied at corporate level) is amended by 
inserting before the period ``, including by not taking into account 
under section 1366(a) any amount excluded under subsection (a) of this 
section''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to discharges of 
        indebtedness after October 11, 2001, in taxable years ending 
        after such date.
            (2) Exception.--The amendment made by this section shall 
        not apply to any discharge of indebtedness before March 1, 
        2002, pursuant to a plan of reorganization filed with a 
        bankruptcy court on or before October 11, 2001.

SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF 
              ACCOUNTING.

    (a) In General.--Paragraph (5) of section 448(d) is amended to read 
as follows:
            ``(5) Special rule for certain services.--
                    ``(A) In general.--In the case of any person using 
                an accrual method of accounting with respect to amounts 
                to be received for the performance of services by such 
                person, such person shall not be required to accrue any 
                portion of such amounts which (on the basis of such 
                person's experience) will not be collected if--
                            ``(i) such services are in fields referred 
                        to in paragraph (2)(A), or
                            ``(ii) such person meets the gross receipts 
                        test of subsection (c) for all prior taxable 
                        years.
                    ``(B) Exception.--This paragraph shall not apply to 
                any amount if interest is required to be paid on such 
                amount or there is any penalty for failure to timely 
                pay such amount.
                    ``(C) Regulations.--The Secretary shall prescribe 
                regulations to permit taxpayers to determine amounts 
                referred to in subparagraph (A) using computations or 
                formulas which, based on experience, accurately reflect 
                the amount of income that will not be collected by such 
                person. A taxpayer may adopt, or request consent of the 
                Secretary to change to, a computation or formula that 
                clearly reflects the taxpayer's experience. A request 
                under the preceding sentence shall be approved if such 
                computation or formula clearly reflects the taxpayer's 
                experience.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years ending after the date of the enactment 
        of this Act.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendments made by this section to 
        change its method of accounting for its first taxable year 
        ending after the date of the enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account over a period of 4 years (or if less, the 
                number of taxable years that the taxpayer used the 
                method permitted under section 448(d)(5) of such Code 
                as in effect before the date of the enactment of this 
                Act) beginning with such first taxable year.

SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY 
              QUALIFIED PLACEMENT AGENCIES.

    (a) In General.--The matter preceding subparagraph (B) of section 
131(b)(1) (defining qualified foster care payment) is amended to read 
as follows:
            ``(1) In general.--The term `qualified foster care payment' 
        means any payment made pursuant to a foster care program of a 
        State or political subdivision thereof--
                    ``(A) which is paid by--
                            ``(i) a State or political subdivision 
                        thereof, or
                            ``(ii) a qualified foster care placement 
                        agency, and''.
    (b) Qualified Foster Individuals To Include Individuals Placed by 
Qualified Placement Agencies.--Subparagraph (B) of section 131(b)(2) 
(defining qualified foster individual) is amended to read as follows:
                    ``(B) a qualified foster care placement agency.''.
    (c) Qualified Foster Care Placement Agency Defined.--Subsection (b) 
of section 131 is amended by redesignating paragraph (3) as paragraph 
(4) and by inserting after paragraph (2) the following new paragraph:
            ``(3) Qualified foster care placement agency.--The term 
        `qualified foster care placement agency' means any placement 
        agency which is licensed or certified by--
                    ``(A) a State or political subdivision thereof, or
                    ``(B) an entity designated by a State or political 
                subdivision thereof,
        for the foster care program of such State or political 
        subdivision to make foster care payments to providers of foster 
        care.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.

    (a) Amendments to the Internal Revenue Code of 1986.--
            (1) Special rule.--Clause (i) of section 412(l)(7)(C) 
        (relating to interest rate) is amended by adding at the end the 
        following new subclause:
                                    ``(III) Special rule for 2002 and 
                                2003.--For a plan year beginning in 
                                2002 or 2003, notwithstanding subclause 
                                (I), in the case that the rate of 
                                interest used under subsection (b)(5) 
                                exceeds the highest rate permitted 
                                under subclause (I), the rate of 
                                interest used to determine current 
                                liability under this subsection may 
                                exceed the rate of interest otherwise 
                                permitted under subclause (I); except 
                                that such rate of interest shall not 
                                exceed 120 percent of the weighted 
                                average referred to in subsection 
                                (b)(5)(B)(ii).''.
            (2) Quarterly contributions.--Subsection (m) of section 412 
        is amended by adding at the end the following new paragraph:
            ``(7) Special rules for 2002 and 2004.--In any case in 
        which the interest rate used to determine current liability is 
        determined under subsection (l)(7)(C)(i)(III)--
                    ``(A) 2002.--For purposes of applying paragraphs 
                (1) and (4)(B)(ii) for plan years beginning in 2002, 
                the current liability for the preceding plan year shall 
                be redetermined using 120 percent as the specified 
                percentage determined under subsection 
                (l)(7)(C)(i)(II).
                    ``(B) 2004.--For purposes of applying paragraphs 
                (1) and (4)(B)(ii) for plan years beginning in 2004, 
                the current liability for the preceding plan year shall 
                be redetermined using 105 percent as the specified 
                percentage determined under subsection 
                (l)(7)(C)(i)(II).''.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Special rule.--Clause (i) of section 302(d)(7)(C) of 
        such Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the 
        end the following new subclause:
                                    ``(III) Special rule for 2002 and 
                                2003.--For a plan year beginning in 
                                2002 or 2003, notwithstanding subclause 
                                (I), in the case that the rate of 
                                interest used under subsection (b)(5) 
                                exceeds the highest rate permitted 
                                under subclause (I), the rate of 
                                interest used to determine current 
                                liability under this subsection may 
                                exceed the rate of interest otherwise 
                                permitted under subclause (I); except 
                                that such rate of interest shall not 
                                exceed 120 percent of the weighted 
                                average referred to in subsection 
                                (b)(5)(B)(ii).''.
            (2) Quarterly contributions.--Subsection (e) of section 302 
        of such Act (29 U.S.C. 1082) is amended by adding at the end 
        the following new paragraph:
            ``(7) Special rules for 2002 and 2004.--In any case in 
        which the interest rate used to determine current liability is 
        determined under subsection (d)(7)(C)(i)(III)--
                    ``(A) 2002.--For purposes of applying paragraphs 
                (1) and (4)(B)(ii) for plan years beginning in 2002, 
                the current liability for the preceding plan year shall 
                be redetermined using 120 percent as the specified 
                percentage determined under subsection 
                (d)(7)(C)(i)(II).
                    ``(B) 2004.--For purposes of applying paragraphs 
                (1) and (4)(B)(ii) for plan years beginning in 2004, 
                the current liability for the preceding plan year shall 
                be redetermined using 105 percent as the specified 
                percentage determined under subsection 
                (d)(7)(C)(i)(II).''.
    (c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is 
amended by adding at the end the following new subclause:
    ``(IV) In the case of plan years beginning after December 31, 2001, 
and before January 1, 2004, subclause (II) shall be applied by 
substituting `100 percent' for `85 percent'. Subclause (III) shall be 
applied for such years without regard to the preceding sentence. Any 
reference to this clause by any other sections or subsections shall be 
treated as a reference to this clause without regard to this 
subclause.''.

SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT 
              CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL 
              TEACHERS.

    (a) In General.--Section 62(a)(2) (relating to certain trade and 
business deductions of employees) is amended by adding at the end the 
following:
                    ``(D) Certain expenses of elementary and secondary 
                school teachers.--In the case of taxable years 
                beginning during 2002 or 2003, the deductions allowed 
                by section 162 which consist of expenses, not in excess 
                of $250, paid or incurred by an eligible educator in 
                connection with books, supplies (other than nonathletic 
                supplies for courses of instruction in health or 
                physical education), computer equipment (including 
                related software and services) and other equipment, and 
                supplementary materials used by the eligible educator 
                in the classroom.''.
    (b) Eligible Educator.--Section 62 is amended by adding at the end 
the following:
    ``(d) Definition; Special Rules.--
            ``(1) Eligible educator.--
                    ``(A) In general.--For purposes of subsection 
                (a)(2)(D), the term `eligible educator' means, with 
                respect to any taxable year, an individual who is a 
                kindergarten through grade 12 teacher, instructor, 
                counselor, principal, or aide in a school for at least 
                900 hours during a school year.
                    ``(B) School.--The term `school' means any school 
                which provides elementary education or secondary 
                education (kindergarten through grade 12), as 
                determined under State law.
            ``(2) Coordination with exclusions.--A deduction shall be 
        allowed under subsection (a)(2)(D) for expenses only to the 
        extent the amount of such expenses exceeds the amount 
        excludable under section 135, 529(c)(1), or 530(d)(2) for the 
        taxable year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

                   Subtitle B--Technical Corrections

SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF 
              RECONCILIATION ACT OF 2001.

    (a) Amendments Related to Section 101 of the Act.--
            (1) In general.--Subsection (b) of section 6428 is amended 
        to read as follows:
    ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
purposes of this title, the credit allowed under this section shall be 
treated as a credit allowable under subpart A of part IV of subchapter 
A of chapter 1.''.
            (2) Conforming amendments.--
                    (A) Subsection (d) of section 6428 is amended to 
                read as follows:
    ``(d) Coordination with Advance Refunds of Credit.--
            ``(1) In general.--The amount of credit which would (but 
        for this paragraph) be allowable under this section shall be 
        reduced (but not below zero) by the aggregate refunds and 
        credits made or allowed to the taxpayer under subsection (e). 
        Any failure to so reduce the credit shall be treated as arising 
        out of a mathematical or clerical error and assessed according 
        to section 6213(b)(1).
            ``(2) Joint returns.--In the case of a refund or credit 
        made or allowed under subsection (e) with respect to a joint 
        return, half of such refund or credit shall be treated as 
        having been made or allowed to each individual filing such 
        return.''.
                    (B) Paragraph (2) of section 6428(e) is amended to 
                read as follows:
            ``(2) Advance refund amount.--For purposes of paragraph 
        (1), the advance refund amount is the amount that would have 
        been allowed as a credit under this section for such first 
        taxable year if--
                    ``(A) this section (other than subsections (b) and 
                (d) and this subsection) had applied to such taxable 
                year, and
                    ``(B) the credit for such taxable year were not 
                allowed to exceed the excess (if any) of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under part IV of subchapter A of chapter 1 
                        (other than the credits allowable under subpart 
                        C thereof, relating to refundable credits).''.
    (b) Amendment Related to Section 201 of the Act.--Subparagraph (B) 
of section 24(d)(1) is amended by striking ``amount of credit allowed 
by this section'' and inserting ``aggregate amount of credits allowed 
by this subpart''.
    (c) Amendments Related to Section 202 of the Act.--
            (1) Corrections to credit for adoption expenses.--
                    (A) Paragraph (1) of section 23(a) is amended to 
                read as follows:
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter the amount of the qualified adoption expenses paid or 
        incurred by the taxpayer.''.
                    (B) Subsection (a) of section 23 is amended by 
                adding at the end the following new paragraph:
            ``(3) $10,000 credit for adoption of child with special 
        needs regardless of expenses.--In the case of an adoption of a 
        child with special needs which becomes final during a taxable 
        year, the taxpayer shall be treated as having paid during such 
        year qualified adoption expenses with respect to such adoption 
        in an amount equal to the excess (if any) of $10,000 over the 
        aggregate qualified adoption expenses actually paid or incurred 
        by the taxpayer with respect to such adoption during such 
        taxable year and all prior taxable years.''.
                    (C) Paragraph (2) of section 23(a) is amended by 
                striking the last sentence.
                    (D) Paragraph (1) of section 23(b) is amended by 
                striking ``subsection (a)(1)(A)'' and inserting 
                ``subsection (a)''.
                    (E) Subsection (i) of section 23 is amended by 
                striking ``the dollar limitation in subsection (b)(1)'' 
                and inserting ``the dollar amounts in subsections 
                (a)(3) and (b)(1)''.
                    (F) Expenses paid or incurred during any taxable 
                year beginning before January 1, 2002, may be taken 
                into account in determining the credit under section 23 
                of the Internal Revenue Code of 1986 only to the extent 
                the aggregate of such expenses does not exceed the 
                applicable limitation under section 23(b)(1) of such 
                Code as in effect on the day before the date of the 
                enactment of the Economic Growth and Tax Relief 
                Reconciliation Act of 2001.
            (2) Corrections to exclusion for employer-provided adoption 
        assistance.--
                    (A) Subsection (a) of section 137 is amended to 
                read as follows:
    ``(a) Exclusion.--
            ``(1) In general.--Gross income of an employee does not 
        include amounts paid or expenses incurred by the employer for 
        qualified adoption expenses in connection with the adoption of 
        a child by an employee if such amounts are furnished pursuant 
        to an adoption assistance program.
            ``(2) $10,000 exclusion for adoption of child with special 
        needs regardless of expenses.--In the case of an adoption of a 
        child with special needs which becomes final during a taxable 
        year, the qualified adoption expenses with respect to such 
        adoption for such year shall be increased by an amount equal to 
        the excess (if any) of $10,000 over the actual aggregate 
        qualified adoption expenses with respect to such adoption 
        during such taxable year and all prior taxable years.''.
                    (B) Paragraph (2) of section 137(b) is amended by 
                striking ``subsection (a)(1)'' and inserting 
                ``subsection (a)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2002; 
        except that the amendments made by paragraphs (1)(C), (1)(D), 
        and (2)(B) shall apply to taxable years beginning after 
        December 31, 2001.
    (d) Amendments Related to Section 205 of the Act.--
            (1) Section 45F(d)(4)(B) is amended by striking ``subpart 
        A, B, or D of this part'' and inserting ``this chapter or for 
        purposes of section 55''.
            (2) Section 38(b)(15) is amended by striking ``45F'' and 
        inserting ``45F(a)''.
    (e) Amendments Related to Section 301 of the Act.--
            (1) Section 63(c)(2) is amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (C)'' and inserting ``subparagraph (D)'',
                    (B) by striking ``or'' at the end of subparagraph 
                (B),
                    (C) by redesignating subparagraph (C) as 
                subparagraph (D),
                    (D) by inserting after subparagraph (B) the 
                following new subparagraph:
                    ``(C) one-half of the amount in effect under 
                subparagraph (A) in the case of a married individual 
                filing a separate return, or'', and
                    (E) by inserting the following flush sentence at 
                the end:
                ``If any amount determined under subparagraph (A) is 
                not a multiple of $50, such amount shall be rounded to 
                the next lowest multiple of $50.''.
            (2)(A) Section 63(c)(4) is amended by striking ``paragraph 
        (2) or (5)'' and inserting ``paragraph (2)(B), (2)(D), or 
        (5)''.
            (B) Section 63(c)(4)(B)(i) is amended by striking 
        ``paragraph (2)'' and inserting ``paragraph (2)(B), (2)(D),''.
            (C) Section 63(c)(4) is amended by striking the flush 
        sentence at the end (as added by section 301(c)(2) of Public 
        Law 107-17).
    (f) Amendment Related to Section 401 of the Act.--Section 
530(d)(4)(B)(iv) is amended by striking ``because the taxpayer elected 
under paragraph (2)(C) to waive the application of paragraph (2)'' and 
inserting ``by application of paragraph (2)(C)(i)(II)''.
    (g) Amendments Related to Section 511 of the Act.--
            (1) Section 2511(c) is amended by striking ``taxable gift 
        under section 2503,'' and inserting ``transfer of property by 
        gift,''.
            (2) Section 2101(b) is amended by striking the last 
        sentence.
    (h) Amendment Related to Section 532 of the Act.--Section 2016 is 
amended by striking ``any State, any possession of the United States, 
or the District of Columbia,''.
    (i) Amendments Relating to Section 602 of the Act.--
            (1) Subparagraph (A) of section 408(q)(3) is amended to 
        read as follows:
                    ``(A) Qualified employer plan.--The term `qualified 
                employer plan' has the meaning given such term by 
                section 72(p)(4)(A)(i); except that such term shall 
                also include an eligible deferred compensation plan (as 
                defined in section 457(b)) of an eligible employer 
                described in section 457(e)(1)(A).''.
            (2) Section 4(c) of Employee Retirement Income Security Act 
        of 1974 is amended--
                    (A) by inserting ``and part 5 (relating to 
                administration and enforcement)'' before the period at 
                the end, and
                    (B) by adding at the end the following new 
                sentence: ``Such provisions shall apply to such 
                accounts and annuities in a manner similar to their 
                application to a simplified employee pension under 
                section 408(k) of the Internal Revenue Code of 1986.''.
    (j) Amendments Relating to Section 611 of the Act.--
            (1) Section 408(k) is amended--
                    (A) in paragraph (2)(C) by striking ``$300'' and 
                inserting ``$450'', and
                    (B) in paragraph (8) by striking ``$300'' both 
                places it appears and inserting ``$450''.
            (2) Section 409(o)(1)(C)(ii) is amended--
                    (A) by striking ``$500,000'' both places it appears 
                and inserting ``$800,000'', and
                    (B) by striking ``$100,000'' and inserting 
                ``$160,000''.
            (3) Section 611(i) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 is amended by adding at the end the 
        following new paragraph:
            ``(3) Special rule.--In the case of plan that, on June 7, 
        2001, incorporated by reference the limitation of section 
        415(b)(1)(A) of the Internal Revenue Code of 1986, section 
        411(d)(6) of such Code and section 204(g)(1) of the Employee 
        Retirement Income Security Act of 1974 do not apply to a plan 
        amendment that--
                    ``(A) is adopted on or before June 30, 2002,
                    ``(B) reduces benefits to the level that would have 
                applied without regard to the amendments made by 
                subsection (a) of this section, and
                    ``(C) is effective no earlier than the years 
                described in paragraph (2).''.
    (k) Amendments Relating to Section 613 of the Act.--
            (1) Section 416(c)(1)(C)(iii) is amended by striking 
        ``Exception for frozen plan'' and inserting ``Exception for 
        plan under which no key employee (or former key employee) 
        benefits for plan year''.
            (2) Section 416(g)(3)(B) is amended by striking 
        ``separation from service'' and inserting ``severance from 
        employment''.
    (l) Amendments Relating to Sections 614 and 616 of the Act.--
            (1) Section 404(a)(12) is amended by striking ``(9),'' and 
        inserting ``(9) and subsection (h)(1)(C),''.
            (2) Section 404(n) is amended by striking ``subsection 
        (a),'' and inserting ``subsection (a) or paragraph (1)(C) of 
        subsection (h)''.
            (3) Section 402(h)(2)(A) is amended by striking ``15 
        percent'' and inserting ``25 percent''.
            (4) Section 404(a)(7)(C) is amended to read as follows:
                    ``(C) Paragraph not to apply in certain cases.--
                            ``(i) Beneficiary test.--This paragraph 
                        shall not have the effect of reducing the 
                        amount otherwise deductible under paragraphs 
                        (1), (2), and (3), if no employee is a 
                        beneficiary under more than 1 trust or under a 
                        trust and an annuity plan.
                            ``(ii) Elective deferrals.--If, in 
                        connection with 1 or more defined contribution 
                        plans and 1 or more defined benefit plans, no 
                        amounts (other than elective deferrals (as 
                        defined in section 402(g)(3))) are contributed 
                        to any of the defined contribution plans for 
                        the taxable year, then subparagraph (A) shall 
                        not apply with respect to any of such defined 
                        contribution plans and defined benefit 
                        plans.''.
    (m) Amendment Relating to Section 618 of the Act.--Section 
25B(d)(2)(A) is amended to read as follows:
                    ``(A) In general.--The qualified retirement savings 
                contributions determined under paragraph (1) shall be 
                reduced (but not below zero) by the aggregate 
                distributions received by the individual during the 
                testing period from any entity of a type to which 
                contributions under paragraph (1) may be made. The 
                preceding sentence shall not apply to the portion of 
                any distribution which is not includible in gross 
                income by reason of a trustee-to-trustee transfer or a 
                rollover distribution.''.
    (n) Amendments Relating to Section 619 of the Act.--
            (1) Section 45E(e)(1) is amended by striking ``(n)'' and 
        inserting ``(m)''.
            (2) Section 619(d) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 is amended by striking 
        ``established'' and inserting ``first effective''.
    (o) Amendments Relating to Section 631 of the Act.--
            (1) Section 402(g)(1) is amended by adding at the end the 
        following:
                    ``(C) Catch-up contributions.--In addition to 
                subparagraph (A), in the case of an eligible 
                participant (as defined in section 414(v)), gross 
                income shall not include elective deferrals in excess 
                of the applicable dollar amount under subparagraph (B) 
                to the extent that the amount of such elective 
                deferrals does not exceed the applicable dollar amount 
                under section 414(v)(2)(B)(i) for the taxable year 
                (without regard to the treatment of the elective 
                deferrals by an applicable employer plan under section 
                414(v)).''.
            (2) Section 401(a)(30) is amended by striking ``402(g)(1)'' 
        and inserting ``402(g)(1)(A)''.
            (3) Section 414(v)(2) is amended by adding at the end the 
        following:
                    ``(D) Aggregation of plans.--For purposes of this 
                paragraph, plans described in clauses (i), (ii), and 
                (iv) of paragraph (6)(A) that are maintained by the 
                same employer (as determined under subsection (b), (c), 
                (m) or (o)) shall be treated as a single plan, and 
                plans described in clause (iii) of paragraph (6)(A) 
                that are maintained by the same employer shall be 
                treated as a single plan.''.
            (4) Section 414(v)(3)(A)(i) is amended by striking 
        ``section 402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 
        408(p), 415, or 457'' and inserting ``section 401(a)(30), 
        402(h), 403(b), 408, 415(c), and 457(b)(2) (determined without 
        regard to section 457(b)(3))''.
            (5) Section 414(v)(3)(B) is amended by striking ``section 
        401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 
        403(b)(12), 408(k), 408(p), 408B, 410(b), or 416'' and 
        inserting ``section 401(a)(4), 401(k)(3), 401(k)(11), 
        403(b)(12), 408(k), 410(b), or 416''.
            (6) Section 414(v)(4)(B) is amended by inserting before the 
        period at the end the following: ``, except that a plan 
        described in clause (i) of section 410(b)(6)(C) shall not be 
        treated as a plan of the employer until the expiration of the 
        transition period with respect to such plan (as determined 
        under clause (ii) of such section)''.
            (7) Section 414(v)(5) is amended--
                    (A) by striking ``, with respect to any plan 
                year,'' in the matter preceding subparagraph (A),
                    (B) by amending subparagraph (A) to read as 
                follows:
                    ``(A) who would attain age 50 by the end of the 
                taxable year,'', and
                    (C) in subparagraph (B) by striking ``plan year'' 
                and inserting ``plan (or other applicable) year''.
            (8) Section 414(v)(6)(C) is amended to read as follows:
                    ``(C) Exception for section 457 plans.--This 
                subsection shall not apply to a participant for any 
                year for which a higher limitation applies to the 
                participant under section 457(b)(3).''.
            (9) Section 457(e) is amended by adding at the end the 
        following new paragraph:
            ``(18) Coordination with catch-up contributions for 
        individuals age 50 or older.-- In the case of an individual who 
        is an eligible participant (as defined by section 414(v)) and 
        who is a participant in an eligible deferred compensation plan 
        of an employer described in paragraph (1)(A), subsections 
        (b)(3) and (c) shall be applied by substituting for the amount 
        otherwise determined under the applicable subsection the 
        greater of--
                    ``(A) the sum of--
                            ``(i) the plan ceiling established for 
                        purposes of subsection (b)(2) (without regard 
                        to subsection (b)(3)), plus
                            ``(ii) the applicable dollar amount for the 
                        taxable year determined under section 
                        414(v)(2)(B)(i), or
                    ``(B) the amount determined under the applicable 
                subsection (without regard to this paragraph).''.
    (p) Amendments Relating to Section 632 of the Act.--
            (1) Section 403(b)(1) is amended in the matter following 
        subparagraph (E) by striking ``then amounts contributed'' and 
        all that follows and inserting the following:
            ``then contributions and other additions by such employer 
        for such annuity contract shall be excluded from the gross 
        income of the employee for the taxable year to the extent that 
        the aggregate of such contributions and additions (when 
        expressed as an annual addition (within the meaning of section 
        415(c)(2))) does not exceed the applicable limit under section 
        415. The amount actually distributed to any distributee under 
        such contract shall be taxable to the distributee (in the year 
        in which so distributed) under section 72 (relating to 
        annuities). For purposes of applying the rules of this 
        subsection to contributions and other additions by an employer 
        for a taxable year, amounts transferred to a contract described 
        in this paragraph by reason of a rollover contribution 
        described in paragraph (8) of this subsection or section 
        408(d)(3)(A)(ii) shall not be considered contributed by such 
        employer.''.
            (2) Section 403(b) is amended by striking paragraph (6).
            (3) Section 403(b)(3) is amended--
                    (A) in the first sentence by inserting the 
                following before the period at the end: ``, and which 
                precedes the taxable year by no more than five years'', 
                and
                    (B) in the second sentence by striking ``or any 
                amount received by a former employee after the fifth 
                taxable year following the taxable year in which such 
                employee was terminated''.
            (4) Section 415(c)(7) is amended to read as follows:
            ``(7) Special rules relating to church plans.--
                    ``(A) Alternative contribution limitation.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subsection, at the 
                        election of a participant who is an employee of 
                        a church or a convention or association of 
                        churches, including an organization described 
                        in section 414(e)(3)(B)(ii), contributions and 
                        other additions for an annuity contract or 
                        retirement income account described in section 
                        403(b) with respect to such participant, when 
                        expressed as an annual addition to such 
                        participant's account, shall be treated as not 
                        exceeding the limitation of paragraph (1) if 
                        such annual addition is not in excess of 
                        $10,000.
                            ``(ii) $40,000 aggregate limitation.--The 
                        total amount of additions with respect to any 
                        participant which may be taken into account for 
                        purposes of this subparagraph for all years may 
                        not exceed $40,000.
                    ``(B) Number of years of service for duly ordained, 
                commissioned, or licensed ministers or lay employees.--
                For purposes of this paragraph--
                            ``(i) all years of service by--
                                    ``(I) a duly ordained, 
                                commissioned, or licensed minister of a 
                                church, or
                                    ``(II) a lay person,
                        as an employee of a church, a convention or 
                        association of churches, including an 
                        organization described in section 
                        414(e)(3)(B)(ii), shall be considered as years 
                        of service for 1 employer, and
                            ``(ii) all amounts contributed for annuity 
                        contracts by each such church (or convention or 
                        association of churches) or such organization 
                        during such years for such minister or lay 
                        person shall be considered to have been 
                        contributed by 1 employer.
                    ``(C) Foreign missionaries.--In the case of any 
                individual described in subparagraph (D) performing 
                services outside the United States, contributions and 
                other additions for an annuity contract or retirement 
                income account described in section 403(b) with respect 
                to such employee, when expressed as an annual addition 
                to such employee's account, shall not be treated as 
                exceeding the limitation of paragraph (1) if such 
                annual addition is not in excess of the greater of 
                $3,000 or the employee's includible compensation 
                determined under section 403(b)(3).
                    ``(D) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).
                    ``(E) Church, convention or association of 
                churches.--For purposes of this paragraph, the terms 
                `church' and `convention or association of churches' 
                have the same meaning as when used in section 
                414(e).''.
            (5) Section 457(e)(5) is amended to read as follows:
            ``(5) Includible compensation.--The term `includible 
        compensation' has the meaning given to the term `participant's 
        compensation' by section 415(c)(3).''.
            (6) Section 402(g)(7)(B) is amended by striking ``2001.'' 
        and inserting ``2001).''.
    (q) Amendments Relating to Section 643 of the Act.--
            (1) Section 401(a)(31)(C)(i) is amended by inserting ``is a 
        qualified trust which is part of a plan which is a defined 
        contribution plan and'' before ``agrees''.
            (2) Section 402(c)(2) is amended by adding at the end the 
        following flush sentence:
        ``In the case of a transfer described in subparagraph (A) or 
        (B), the amount transferred shall be treated as consisting 
        first of the portion of such distribution that is includible in 
        gross income (determined without regard to paragraph (1)).''.
    (r) Amendments Relating to Section 648 of the Act.--
            (1) Section 417(e) is amended--
                    (A) in paragraph (1) by striking ``exceed the 
                dollar limit under section 411(a)(11)(A)'' and 
                inserting ``exceed the amount that can be distributed 
                without the participant's consent under section 
                411(a)(11)'', and
                    (B) in paragraph (2)(A) by striking ``exceeds the 
                dollar limit under section 411(a)(11)(A)'' and 
                inserting ``exceeds the amount that can be distributed 
                without the participant's consent under section 
                411(a)(11)''.
            (2) Section 205(g) of the Employee Retirement Income 
        Security Act of 1974 is amended--
                    (A) in paragraph (1) by striking ``exceed the 
                dollar limit under section 203(e)(1)'' and inserting 
                ``exceed the amount that can be distributed without the 
                participant's consent under section 203(e)'', and
                    (B) in paragraph (2)(A) by striking ``exceeds the 
                dollar limit under section 203(e)(1)'' and inserting 
                ``exceeds the amount that can be distributed without 
                the participant's consent under section 203(e)''.
    (s) Amendment Relating to Section 652 of the Act.--Section 
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by 
professional service employers'' and inserting ``Special rule for 
terminating plans''.
    (t) Amendments Relating to Section 657 of the Act.--Section 
404(c)(3) of the Employee Retirement Income Security Act of 1974 is 
amended--
            (1) by striking ``the earlier of'' in subparagraph (A) the 
        second place it appears, and
            (2) by striking ``if the transfer'' and inserting ``a 
        transfer that''.
    (u) Amendments Relating to Section 659 of the Act.--
            (1) Section 4980F is amended--
                    (A) in subsection (e)(1) by striking ``written 
                notice'' and inserting ``the notice described in 
                paragraph (2)'',
                    (B) by amending subsection (f)(2)(A) to read as 
                follows:
                    ``(A) any defined benefit plan described in section 
                401(a) which includes a trust exempt from tax under 
                section 501(a), or'', and
                    (C) in subsection (f)(3) by striking 
                ``significantly'' both places it appears.
            (2) Section 204(h)(9) of the Employee Retirement Income 
        Security Act of 1974 is amended by striking ``significantly'' 
        both places it appears.
            (3) Section 659(c)(3)(B) of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 is amended by striking 
        ``(or'' and inserting ``(and''.
    (v) Amendments Relating to Section 661 of the Act.--
            (1) Section 412(c)(9)(B) is amended--
                    (A) in clause (ii) by striking ``125 percent'' and 
                inserting ``100 percent'', and
                    (B) by adding at the end the following new clause:
                            ``(iv) Limitation.--A change in funding 
                        method to use a prior year valuation, as 
                        provided in clause (ii), may not be made unless 
                        as of the valuation date within the prior plan 
                        year, the value of the assets of the plan are 
                        not less than 125 percent of the plan's current 
                        liability (as defined in paragraph (7)(B)).''.
            (2) Section 302(c)(9)(B) of the Employee Retirement Income 
        Security Act of 1974 is amended--
                    (A) in clause (ii) by striking ``125 percent'' and 
                inserting ``100 percent'', and
                    (B) by adding at the end the following new clause:
    ``(iv) A change in funding method to use a prior year valuation, as 
provided in clause (ii), may not be made unless as of the valuation 
date within the prior plan year, the value of the assets of the plan 
are not less than 125 percent of the plan's current liability (as 
defined in paragraph (7)(B)).''.
    (w) Amendments Relating to Section 662 of the Act.--
            (1) Section 404(k) is amended--
                    (A) in paragraph (1) by striking ``during the 
                taxable year'',
                    (B) in paragraph (2)(B) by striking ``(A)(iii)'' 
                and inserting ``(A)(iv)'',
                    (C) in paragraph (4)(B) by striking ``(iii)'' and 
                inserting ``(iv)'', and
                    (D) by redesignating subparagraph (B) of paragraph 
                (4) (as amended by subparagraph (C)) as subparagraph 
                (C) of paragraph (4) and by inserting after 
                subparagraph (A) the following new subparagraph:
                    ``(B) Reinvestment dividends.--For purposes of 
                subparagraph (A), an applicable dividend reinvested 
                pursuant to clause (iii)(II) of paragraph (2)(A) shall 
                be treated as paid in the taxable year of the 
                corporation in which such dividend is reinvested in 
                qualifying employer securities or in which the election 
                under clause (iii) of paragraph (2)(A) is made, 
                whichever is later.''.
            (2) Section 404(k) is amended by adding at the end the 
        following new paragraph:
            ``(7) Full vesting.--In accordance with section 411, an 
        applicable dividend described in clause (iii)(II) of paragraph 
        (2)(A) shall be subject to the requirements of section 
        411(a)(1).''.
    (x) Effective Date.--Except as provided in subsection (c), the 
amendments made by this section shall take effect as if included in the 
provisions of the Economic Growth and Tax Relief Reconciliation Act of 
2001 to which they relate.

SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF 
              2000.

    (a) Amendment Related to Section 101 of the Act.--Section 
469(i)(3)(E) is amended by striking clauses (ii), (iii), and (iv) and 
inserting the following:
                            ``(ii) second to the portion of such loss 
                        to which subparagraph (C) applies,
                            ``(iii) third to the portion of the passive 
                        activity credit to which subparagraph (B) or 
                        (D) does not apply,
                            ``(iv) fourth to the portion of such credit 
                        to which subparagraph (B) applies, and''.
    (b) Amendment Related to Section 306 of the Act.--Section 
151(c)(6)(C) is amended--
            (1) by striking ``for earned income credit.--For purposes 
        of section 32, an'' and inserting ``for principal place of 
        abode requirements.--An'', and
            (2) by striking ``requirement of section 32(c)(3)(A)(ii)'' 
        and inserting ``principal place of abode requirements of 
        section 2(a)(1)(B), section 2(b)(1)(A), and section 
        32(c)(3)(A)(ii)''.
    (c) Amendment Related to Section 309 of the Act.--Subparagraph (A) 
of section 358(h)(1) is amended to read as follows:
                    ``(A) which is assumed by another person as part of 
                the exchange, and''.
    (d) Amendments Related to Section 401 of the Act.--
            (1)(A) Section 1234A is amended by inserting ``or'' after 
        the comma at the end of paragraph (1), by striking ``or'' at 
        the end of paragraph (2), and by striking paragraph (3).
            (B)(i) Section 1234B is amended in subsection (a)(1) and in 
        subsection (b) by striking ``sale or exchange'' the first place 
        it appears in each subsection and inserting ``sale, exchange, 
        or termination''.
            (ii) Section 1234B is amended by adding at the end the 
        following new subsection:
    ``(f) Cross Reference.--

                                ``For special rules relating to dealer 
securities futures contracts, see section 1256.''.
            (2) Section 1091(e) is amended--
                    (A) in the heading, by striking ``Securities.--'' 
                and inserting ``Securities and Securities Futures 
                Contracts To Sell.--'',
                    (B) by inserting after ``closing of a short sale 
                of'' the following: ``(or the sale, exchange, or 
                termination of a securities futures contract to 
                sell)'',
                    (C) in paragraph (2), by inserting after ``short 
                sale of'' the following: ``(or securities futures 
                contracts to sell)'', and
                    (D) by adding at the end the following:
``For purposes of this subsection, the term `securities futures 
contract' has the meaning provided by section 1234B(c).''.
            (3)(A) Section 1233(e)(2) is amended by striking ``and'' at 
        the end of subparagraph (C), by striking the period and 
        inserting ``; and'' at the end of subparagraph (D), and 
        inserting after subparagraph (D) the following:
                    ``(E) entering into a securities futures contract 
                (as so defined) to sell shall be considered to be a 
                short sale, and the settlement of such contract shall 
                be considered to be the closing of such short sale.''.
            (B) Section 1234B(b) is amended by inserting after ``or 
        this section,'' the following: ``or in section 1233,''.
    (e) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Community Renewal Tax 
Relief Act of 2000 to which they relate.

SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.

    (a) Amendments Related to Section 545 of the Act.--Section 
857(b)(7) is amended--
            (1) in clause (i) of subparagraph (B), by striking ``the 
        amount of which'' and inserting ``to the extent the amount of 
        the rents'', and
            (2) in subparagraph (C), by striking ``if the amount'' and 
        inserting ``to the extent the amount''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 545 of the Tax Relief Extension Act of 
1999.

SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.

    (a) Amendments Related to Section 311 of the Act.--Section 311(e) 
of the Taxpayer Relief Act of 1997 (Public Law 105-34; 111 Stat. 836) 
is amended--
            (1) in paragraph (2)(A), by striking ``recognized'' and 
        inserting ``included in gross income'', and
            (2) by adding at the end the following new paragraph:
            ``(5) Disposition of interest in passive activity.--Section 
        469(g)(1)(A) of the Internal Revenue Code of 1986 shall not 
        apply by reason of an election made under paragraph (1).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 311 of the Taxpayer Relief Act of 
1997.

SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.

    (a) Amendment Related to Section 4006 of the Act.--Section 26(b)(2) 
is amended by striking ``and'' at the end of subparagraph (P), by 
striking the period and inserting ``, and'' at the end of subparagraph 
(Q), and by adding at the end the following new subparagraph:
                    ``(R) section 138(c)(2) (relating to penalty for 
                distributions from Medicare+Choice MSA not used for 
                qualified medical expenses if minimum balance not 
                maintained).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 4006 of the Balanced Budget Act of 
1997.

SEC. 416. OTHER TECHNICAL CORRECTIONS.

    (a) Coordination of Advanced Payments of Earned Income Credit.--
            (1) Section 32(g)(2) is amended by striking ``subpart'' and 
        inserting ``part''.
            (2) The amendment made by this subsection shall take effect 
        as if included in section 474 of the Tax Reform Act of 1984.
    (b) Special Rule Related to Wash Sale Losses.--
            (1) Section 1256(f) is amended by adding at the end the 
        following new paragraph:
                    ``(5) Special rule related to losses.--Section 1091 
                (relating to loss from wash sales of stock or 
                securities) shall not apply to any loss taken into 
                account by reason of paragraph (1) of subsection 
                (a).''.
            (2) The amendment made by this subsection shall take effect 
        as if included in section 5075 of the Technical and 
        Miscellaneous Revenue Act of 1988.
    (c) Disclosure by Social Security Administration to Federal Child 
Support Agencies.--
            (1) Section 6103(l)(8) is amended--
                    (A) in the heading, by striking ``state and local'' 
                and inserting ``federal, state, and local'', and
                    (B) in subparagraph (A), by inserting ``Federal 
                or'' before ``State or local''.
            (2) The amendments made by this subsection shall take 
        effect on the date of the enactment of this Act.
    (d) Treatment of Settlements Under Partnership Audit Rules.--
            (1) The following provisions are each amended by inserting 
        ``or the Attorney General (or his delegate)'' after 
        ``Secretary'' each place it appears:
                    (A) Paragraphs (1) and (2) of section 6224(c).
                    (B) Section 6229(f)(2).
                    (C) Section 6231(b)(1)(C).
                    (D) Section 6234(g)(4)(A).
            (2) The amendments made by this subsection shall apply with 
        respect to settlement agreements entered into after the date of 
        the enactment of this Act.
    (e) Amendment Related to Procedure and Administration.--
            (1) Section 6331(k)(3) (relating to no levy while certain 
        offers pending or installment agreement pending or in effect) 
        is amended to read as follows:
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of--
                    ``(A) paragraphs (3) and (4) of subsection (i), and
                    ``(B) except in the case of paragraph (2)(C), 
                paragraph (5) of subsection (i),
        shall apply for purposes of this subsection.''.
            (2) The amendment made by this subsection shall take effect 
        on the date of the enactment of this Act.
    (f) Modified Endowment Contracts.--Paragraph (2) of section 318(a) 
of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-645) 
is repealed, and clause (ii) of section 7702A(c)(3)(A) shall read and 
be applied as if the amendment made by such paragraph had not been 
enacted.

SEC. 417. CLERICAL AMENDMENTS.

            (1) The subsection (g) of section 25B that relates to 
        termination is redesignated as subsection (h).
            (2) The second sentence of section 42(h)(3)(C) is amended 
        by striking ``the amounts described in'' and all that follows 
        through the period and inserting ``the amounts described in 
        clauses (ii) through (iv) over the aggregate housing credit 
        dollar amount allocated for such year.''.
            (3) Clause (ii) of section 42(m)(1)(B) is amended by 
        striking the second ``and'' at the end of subclause (II) and by 
        inserting ``and'' at the end of subclause (III).
            (4) Section 51A(c)(1) is amended by striking ``51(d)(10)'' 
        and inserting ``51(d)(11)''.
            (5) The flush sentence at the end of clause (ii) of section 
        56(a)(1)(A) is amended by striking ``such 1250'' and inserting 
        ``such section 1250''.
            (6) Section 151(c)(6)(B)(iii) is amended by inserting 
        ``as'' before ``such terms''.
            (7) Section 170(e)(6)(B)(i)(III) is amended by striking 
        ``2000,'' and inserting ``2000),''.
            (8) Section 172(b)(1)(F)(i) is amended--
                    (A) by striking ``3 years'' and inserting ``3 
                taxable years'', and
                    (B) by striking ``2 years'' and inserting ``2 
                taxable years''.
            (9) Section 351(h)(1) is amended by inserting a comma after 
        ``liability''.
            (10) Section 475(g)(3) is amended by striking ``sections'' 
        and inserting ``section''.
            (11) Section 529(e)(3)(B)(i) is amended by striking 
        ``subsection (b)(7)'' and inserting ``subsection (b)(6)''.
            (12) Section 741 is amended by striking ``which have 
        appreciated substantially in value''.
            (13) Section 857(b)(7)(B)(i) is amended by striking 
        ``subsection 856(d)'' and inserting ``section 856(d)''.
            (14) Subparagraph (B) of section 943(e)(4) is amended by 
        aligning the left margin of the flush language with 
        subparagraph (A).
            (15) Subparagraph (B) of section 995(b)(3) is amended by 
        striking ``International Security Assistance and Arms Export 
        Control Act of 1976'' and inserting ``Arms Export Control 
        Act''.
            (16) Section 1394(c)(2) is amended by striking 
        ``subparagraph (A)'' and inserting ``paragraph (1)''.
            (17)(A) The section heading for section 4980E is amended to 
        read as follows:

``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER MSA 
              CONTRIBUTIONS.''.

            (B) The item relating to section 4980E in the table of 
        sections for chapter 43 is amended to read as follows:

        ``Sec. 4980E. Failure of employer to make comparable Archer MSA 
                            contributions.''.
            (18) Section 6105(c)(1) is amended by striking ``any'' in 
        subparagraphs (C) and (E).
            (19)(A) Section 6227(d) is amended by striking ``subsection 
        (b)'' and inserting ``subsection (c)''.
            (B) Section 6228 is amended--
                    (i) in subsection (a)(1), by striking ``subsection 
                (b) of section 6227'' and inserting ``subsection (c) of 
                section 6227'',
                    (ii) in subsection (a)(3)(A), by striking 
                ``subsection (b) of'', and
                    (iii) in subsections (b)(1) and (b)(2)(A), by 
                striking ``subsection (c) of section 6227'' and 
                inserting ``subsection (d) of section 6227''.
            (C) Section 6231(b)(2)(B)(i) is amended by striking 
        ``section 6227(c)'' and inserting ``section 6227(d)''.
            (20) Section 1221(b)(1)(B)(i) is amended by striking 
        ``1256(b))'' and inserting ``1256(b)))''.
            (21) Section 159 of the Community Renewal Tax Relief Act of 
        2000 (114 Stat. 2763A-624) is amended by striking ``fuctions'' 
        and inserting ``functions''.
            (22) The amendment to section 170(e)(6)(B)(iv) made by 
        section 165(b)(1) of the Community Renewal Tax Relief Act of 
        2000 (114 Stat. 2763A-626) shall be applied as if it struck 
        ``in any of the grades K-12''.
            (23) Section 618(b)(2) of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 (Public Law 107-16; 115 Stat. 
        108) is amended--
                    (A) in subparagraph (A) by striking ``203(d)'' and 
                inserting ``202(f)'', and
                    (B) in subparagraphs (C), (D), and (E) by striking 
                ``203'' and inserting ``202(f)''.
            (24)(A) Section 525 of the Ticket to Work and Work 
        Incentives Improvement Act of 1999 (Public Law 106-170; 113 
        Stat. 1928) is amended by striking ``7200'' and inserting 
        ``7201''.
            (B) Section 532(c)(2) of such Act (113 Stat. 1930) is 
        amended--
                    (i) in subparagraph (D), by striking ``341(d)(3)'' 
                and inserting ``341(d)'', and
                    (ii) in subparagraph (Q), by striking 
                ``954(c)(1)(B)(iii) and inserting ``954(c)(1)(B)''.

SEC. 418. ADDITIONAL CORRECTIONS.

    (a) Amendments Related to Section 202 of the Economic Growth and 
Tax Relief Reconciliation Act of 2001.--
            (1) Subsection (h) of section 23 is amended--
                    (A) by striking ``subsection (a)(1)(B)'' and 
                inserting ``subsection (a)(3)'', and
                    (B) by adding at the end the following new flush 
                sentence:
``If any amount as increased under the preceding sentence is not a 
multiple of $10, such amount shall be rounded to the nearest multiple 
of $10.''.
            (2) Subsection (f) of section 137 is amended by adding at 
        the end the following new flush sentence:
``If any amount as increased under the preceding sentence is not a 
multiple of $10, such amount shall be rounded to the nearest multiple 
of $10.''.
    (b) Amendments Related to Section 204 of the Economic Growth and 
Tax Relief Reconciliation Act of 2001.--Section 21(d)(2) is amended--
            (1) in subparagraph (A) by striking ``$200'' and inserting 
        ``$250'', and
            (2) in subparagraph (B) by striking ``$400'' and inserting 
        ``$500''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 to which they relate.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.

    (a) In General.--Nothing in this Act (or an amendment made by this 
Act) shall be construed to alter or amend title II of the Social 
Security Act (or any regulation promulgated under that Act).
    (b) Transfers.--
            (1) Estimate of secretary.--The Secretary of the Treasury 
        shall annually estimate the impact that the enactment of this 
        Act has on the income and balances of the trust funds 
        established under section 201 of the Social Security Act (42 
        U.S.C. 401).
            (2) Transfer of funds.--If, under paragraph (1), the 
        Secretary of the Treasury estimates that the enactment of this 
        Act has a negative impact on the income and balances of the 
        trust funds established under section 201 of the Social 
        Security Act (42 U.S.C. 401), the Secretary shall transfer, not 
        less frequently than quarterly, from the general revenues of 
        the Federal Government an amount sufficient so as to ensure 
        that the income and balances of such trust funds are not 
        reduced as a result of the enactment of this Act.

SEC. 502. EMERGENCY DESIGNATION.

    Congress designates as emergency requirements pursuant to section 
252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985 
the following amounts:
            (1) An amount equal to the amount by which revenues are 
        reduced by this Act below the recommended levels of Federal 
        revenues for fiscal year 2002, the total of fiscal years 2002 
        through 2006, and the total of fiscal years 2002 through 2011, 
        provided in the conference report accompanying H. Con. Res. 83, 
        the concurrent resolution on the budget for fiscal year 2002.
            (2) Amounts equal to the amounts of new budget authority 
        and outlays provided in this Act in excess of the allocations 
        under section 302(a) of the Congressional Budget Act of 1974 to 
        the Committee on Finance of the Senate for fiscal year 2002, 
        the total of fiscal years 2002 through 2006, and the total of 
        fiscal years 2002 through 2011.

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR 
              AND MINIMUM TAX LIABILITY.

    (a) In General.--Paragraph (2) of section 26(a) is amended--
            (1) by striking ``rule for 2000 and 2001.--'' and inserting 
        ``rule for 2000, 2001, 2002, and 2003.--'', and
            (2) by striking ``during 2000 or 2001,'' and inserting 
        ``during 2000, 2001, 2002, or 2003,''.
    (b) Conforming Amendments.--
            (1) Section 904(h) is amended by striking ``during 2000 or 
        2001'' and inserting ``during 2000, 2001, 2002, or 2003''.
            (2) The amendments made by sections 201(b), 202(f), and 
        618(b) of the Economic Growth and Tax Relief Reconciliation Act 
        of 2001 shall not apply to taxable years beginning during 2002 
        and 2003.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) In General.--Section 30 is amended--
            (1) in subsection (b)(2)--
                    (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                    (B) in subparagraphs (A), (B), and (C), by striking 
                ``2002'', ``2003'', and ``2004'', respectively, and 
                inserting ``2004'', ``2005'', and ``2006'', 
                respectively, and
            (2) in subsection (e), by striking ``December 31, 2004'' 
        and inserting ``December 31, 2006''.
    (b) Conforming Amendments.--
            (1) Subparagraph (C) of section 280F(a)(1) is amended by 
        adding at the end the following new clause:
                            ``(iii) Application of subparagraph.--This 
                        subparagraph shall apply to property placed in 
                        service after August 5, 1997, and before 
                        January 1, 2007.''.
            (2) Subsection (b) of section 971 of the Taxpayer Relief 
        Act of 1997 is amended by striking ``and before January 1, 
        2005''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001.

SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE 
              RESOURCES.

    (a) In General.--Subparagraphs (A), (B), and (C) of section 
45(c)(3) are both amended by striking ``2002'' and inserting ``2004''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to facilities placed in service after December 31, 2001.

SEC. 604. WORK OPPORTUNITY CREDIT.

    (a) In General.--Subparagraph (B) of section 51(c)(4) is amended by 
striking ``2001'' and inserting ``2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after December 31, 
2001.

SEC. 605. WELFARE-TO-WORK CREDIT.

    (a) In General.--Subsection (f) of section 51A is amended by 
striking ``2001'' and inserting ``2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after December 31, 
2001.

SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING 
              PROPERTY.

    (a) In General.--Section 179A is amended--
            (1) in subsection (b)(1)(B)--
                    (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                    (B) in clauses (i), (ii), and (iii), by striking 
                ``2002'', ``2003'', and ``2004'', respectively, and 
                inserting ``2004'', ``2005'', and ``2006'', 
                respectively, and
            (2) in subsection (f), by striking ``December 31, 2004'' 
        and inserting ``December 31, 2006''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to property placed in service after December 31, 2001.

SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
              NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

    (a) In General.--Subparagraph (H) of section 613A(c)(6) is amended 
by striking ``2002'' and inserting ``2004''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2001.

SEC. 608. QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Paragraph (1) of section 1397E(e) is amended by 
striking ``2000, and 2001'' and inserting ``2000, 2001, 2002, and 
2003''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.

    (a) In General.--Paragraph (1) of section 7652(f) is amended by 
striking ``January 1, 2002'' and inserting ``January 1, 2004''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to articles brought into the United States after December 31, 
2001.

SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
              BENEFITS.

    (a) In General.--Subsection (f) of section 9812, as amended by the 
Departments of Labor, Health and Human Services, and Education, and 
Related Agencies Appropriations Act, 2002, is amended to read as 
follows:
    ``(f) Application of Section.--This section shall not apply to 
benefits for services furnished--
            ``(1) on or after September 30, 2001, and before January 
        10, 2002, and
            ``(2) after December 31, 2003.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to plan years beginning after December 31, 2000.

SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE 
              COMPANIES.

    (a) Reduction in Mutual Life Insurance Company Deductions Not To 
Apply in Certain Years.--Section 809 (relating to reduction in certain 
deductions of material life insurance companies) is amended by adding 
at the end the following:
    ``(j) Differential Earnings Rate Treated as Zero for Certain 
Years.--Notwithstanding subsection (c) or (f), the differential 
earnings rate shall be treated as zero for purposes of computing both 
the differential earnings amount and the recomputed differential 
earnings amount for a mutual life insurance company's taxable years 
beginning in 2001, 2002, or 2003.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) 
(defining cut-off year) are each amended by striking ``2002'' each 
place it appears and inserting ``2003''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 220(j) is amended by striking 
        ``1998, 1999, or 2001'' each place it appears and inserting 
        ``1998, 1999, 2001, or 2002''.
            (2) Subparagraph (A) of section 220(j)(4) is amended by 
        striking ``and 2001'' and inserting ``2001, and 2002''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2002.

SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN 
              RESERVATIONS.

    (a) Employment.--Subsection (f) of section 45A is amended by 
striking ``December 31, 2003'' and inserting ``December 31, 2004''.
    (b) Property.--Paragraph (8) of section 168(j) is amended by 
striking ``December 31, 2003'' and inserting ``December 31, 2004''.

SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

    (a) In General.--
            (1) Section 953(e)(10) is amended--
                    (A) by striking ``January 1, 2002'' and inserting 
                ``January 1, 2007'', and
                    (B) by striking ``December 31, 2001'' and inserting 
                ``December 31, 2006''.
            (2) Section 954(h)(9) is amended by striking ``January 1, 
        2002'' and inserting ``January 1, 2007''.
    (b) Life Insurance and Annuity Contracts.--
            (1) In general.--Subparagraph (B) of section 954(i)(4) is 
        amended to read as follows:
                    ``(B) Life insurance and annuity contracts.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the amount of the reserve of a 
                        qualifying insurance company or qualifying 
                        insurance company branch for any life insurance 
                        or annuity contract shall be equal to the 
                        greater of--
                                    ``(I) the net surrender value of 
                                such contract (as defined in section 
                                807(e)(1)(A)), or
                                    ``(II) the reserve determined under 
                                paragraph (5).
                            ``(ii) Ruling request, etc.--The amount of 
                        the reserve under clause (i) shall be the 
                        foreign statement reserve for the contract 
                        (less any catastrophe, deficiency, 
                        equalization, or similar reserves), if, 
                        pursuant to a ruling request submitted by the 
                        taxpayer or as provided in published guidance, 
                        the Secretary determines that the factors taken 
                        into account in determining the foreign 
                        statement reserve provide an appropriate means 
                        of measuring income.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE 
              TERMINALS.

    (a) In General.--Subsection (e) of section 4101 is hereby repealed.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2002.

SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION 
              INCREASES FOR FISCAL YEAR 2002.

    Section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3)) 
is amended by adding at the end the following:
                    ``(H) Reauthorization of grants for fiscal year 
                2002.--Notwithstanding any other provision of this 
                paragraph--
                            ``(i) any State that was a qualifying State 
                        under this paragraph for fiscal year 2001 or 
                        any prior fiscal year shall be entitled to 
                        receive from the Secretary for fiscal year 2002 
                        a grant in an amount equal to the amount 
                        required to be paid to the State under this 
                        paragraph for the most recent fiscal year in 
                        which the State was a qualifying State;
                            ``(ii) subparagraph (G) shall be applied as 
                        if `2002' were substituted for `2001'; and
                            ``(iii) out of any money in the Treasury of 
                        the United States not otherwise appropriated, 
                        there are appropriated for fiscal year 2002 
                        such sums as are necessary for grants under 
                        this subparagraph.''.

SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF PROGRAM.

    Section 403(b) of the Social Security Act (42 U.S.C. 603(b)) is 
amended--
            (1) in paragraph (2), by striking ``and 2001'' and 
        inserting ``2001, and 2002''; and
            (2) in paragraph (3)(C)(ii), by striking ``2001'' and 
        inserting ``2002''.
            Attest:

                                                                 Clerk.
107th CONGRESS

  2d Session

                               H.R. 3090

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                  HOUSE AMENDMENT TO SENATE AMENDMENT