[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3090 Enrolled Bill (ENR)]

        H.R.3090

                      One Hundred Seventh Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

         Begun and held at the City of Washington on Wednesday,
          the twenty-third day of January, two thousand and two


                                 An Act


 
            To provide tax incentives for economic recovery.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Job Creation and 
Worker Assistance Act of 2002''.
    (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue Code of 
1986.
    (c) Table of Contents.--
Sec. 1. Short title; etc.

                      TITLE I--BUSINESS PROVISIONS

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

                    TITLE II--UNEMPLOYMENT ASSISTANCE

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

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

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

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

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

                    Subtitle B--Technical Corrections

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

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

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

           TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

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

                      TITLE I--BUSINESS PROVISIONS

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

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
        ``(1) Additional allowance.--In the case of any qualified 
    property--
            ``(A) the depreciation deduction provided by section 167(a) 
        for the taxable year in which such property is placed in 
        service shall include an allowance equal to 30 percent of the 
        adjusted basis of the qualified property, and
            ``(B) the adjusted basis of the qualified property shall be 
        reduced by the amount of such deduction before computing the 
        amount otherwise allowable as a depreciation deduction under 
        this chapter for such taxable year and any subsequent taxable 
        year.
        ``(2) Qualified property.--For purposes of this subsection--
            ``(A) In general.--The term `qualified property' means 
        property--
                ``(i)(I) to which this section applies which has a 
            recovery period of 20 years or less,
                ``(II) which is computer software (as defined in 
            section 167(f)(1)(B)) for which a deduction is allowable 
            under section 167(a) without regard to this subsection,
                ``(III) which is water utility property, or
                ``(IV) which is qualified leasehold improvement 
            property,
                ``(ii) the original use of which commences with the 
            taxpayer after September 10, 2001,
                ``(iii) which is--

                    ``(I) acquired by the taxpayer after September 10, 
                2001, and before September 11, 2004, but only if no 
                written binding contract for the acquisition was in 
                effect before September 11, 2001, or
                    ``(II) acquired by the taxpayer pursuant to a 
                written binding contract which was entered into after 
                September 10, 2001, and before September 11, 2004, and

                ``(iv) which is placed in service by the taxpayer 
            before January 1, 2005, or, in the case of property 
            described in subparagraph (B), before January 1, 2006.
            ``(B) Certain property having longer production periods 
        treated as qualified property.--
                ``(i) In general.--The term `qualified property' 
            includes property--

                    ``(I) which meets the requirements of clauses (i), 
                (ii), and (iii) of subparagraph (A),
                    ``(II) which has a recovery period of at least 10 
                years or is transportation property, and
                    ``(III) which is subject to section 263A by reason 
                of clause (ii) or (iii) of subsection (f)(1)(B) 
                thereof.

                ``(ii) Only pre-september 11, 2004, basis eligible for 
            additional allowance.--In the case of property which is 
            qualified property solely by reason of clause (i), 
            paragraph (1) shall apply only to the extent of the 
            adjusted basis thereof attributable to manufacture, 
            construction, or production before September 11, 2004.
                ``(iii) Transportation property.--For purposes of this 
            subparagraph, the term `transportation property' means 
            tangible personal property used in the trade or business of 
            transporting persons or property.
            ``(C) Exceptions.--
                ``(i) Alternative depreciation property.--The term 
            `qualified property' shall not include any property to 
            which the alternative depreciation system under subsection 
            (g) applies, determined--

                    ``(I) without regard to paragraph (7) of subsection 
                (g) (relating to election to have system apply), and
                    ``(II) after application of section 280F(b) 
                (relating to listed property with limited business 
                use).

                ``(ii) Qualified new york liberty zone leasehold 
            improvement property.--The term `qualified property' shall 
            not include any qualified New York Liberty Zone leasehold 
            improvement property (as defined in section 1400L(c)(2)).
                ``(iii) Election out.--If a taxpayer makes an election 
            under this clause with respect to any class of property for 
            any taxable year, this subsection shall not apply to all 
            property in such class placed in service during such 
            taxable year.
            ``(D) Special rules.--
                ``(i) Self-constructed property.--In the case of a 
            taxpayer manufacturing, constructing, or producing property 
            for the taxpayer's own use, the requirements of clause 
            (iii) of subparagraph (A) shall be treated as met if the 
            taxpayer begins manufacturing, constructing, or producing 
            the property after September 10, 2001, and before September 
            11, 2004.
                ``(ii) Sale-leasebacks.--For purposes of subparagraph 
            (A)(ii), if property--

                    ``(I) is originally placed in service after 
                September 10, 2001, by a person, and
                    ``(II) sold and leased back by such person within 3 
                months after the date such property was originally 
                placed in service,

            such property shall be treated as originally placed in 
            service not earlier than the date on which such property is 
            used under the leaseback referred to in subclause (II).
            ``(E) Coordination with section 280f.--For purposes of 
        section 280F--
                ``(i) Automobiles.--In the case of a passenger 
            automobile (as defined in section 280F(d)(5)) which is 
            qualified property, the Secretary shall increase the 
            limitation under section 280F(a)(1)(A)(i) by $4,600.
                ``(ii) Listed property.--The deduction allowable under 
            paragraph (1) shall be taken into account in computing any 
            recapture amount under section 280F(b)(2).
            ``(F) Deduction allowed in computing miniumum tax.--For 
        purposes of determining alternative minimum taxable income 
        under section 55, the deduction under subsection (a) for 
        qualified property shall be determined under this section 
        without regard to any adjustment under section 56.
        ``(3) Qualified leasehold improvement property.--For purposes 
    of this subsection--
            ``(A) In general.--The term `qualified leasehold 
        improvement property' means any improvement to an interior 
        portion of a building which is nonresidential real property 
        if--
                ``(i) such improvement is made under or pursuant to a 
            lease (as defined in subsection (h)(7))--

                    ``(I) by the lessee (or any sublessee) of such 
                portion, or
                    ``(II) by the lessor of such portion,

                ``(ii) such portion is to be occupied exclusively by 
            the lessee (or any sublessee) of such portion, and
                ``(iii) such improvement is placed in service more than 
            3 years after the date the building was first placed in 
            service.
            ``(B) Certain improvements not included.--Such term shall 
        not include any improvement for which the expenditure is 
        attributable to--
                ``(i) the enlargement of the building,
                ``(ii) any elevator or escalator,
                ``(iii) any structural component benefiting a common 
            area, and
                ``(iv) the internal structural framework of the 
            building.
            ``(C) Definitions and special rules.--For purposes of this 
        paragraph--
                ``(i) Commitment to lease treated as lease.--A 
            commitment to enter into a lease shall be treated as a 
            lease, and the parties to such commitment shall be treated 
            as lessor and lessee, respectively.
                ``(ii) Related persons.--A lease between related 
            persons shall not be considered a lease. For purposes of 
            the preceding sentence, the term `related persons' means--

                    ``(I) members of an affiliated group (as defined in 
                section 1504), and
                    ``(II) persons having a relationship described in 
                subsection (b) of section 267; except that, for 
                purposes of this clause, the phrase `80 percent or 
                more' shall be substituted for the phrase `more than 50 
                percent' each place it appears in such subsection.''.

    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2001, in 
taxable years ending after such date.

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

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

                    ``(I) the amount of such deduction attributable to 
                net operating losses (other than the deduction 
                attributable to carryovers described in clause 
                (ii)(I)), or
                    ``(II) 90 percent of alternative minimum taxable 
                income determined without regard to such deduction, 
                plus

                ``(ii) the lesser of--

                    ``(I) the amount of such deduction attributable to 
                the sum of carrybacks of net operating losses for 
                taxable years ending during 2001 or 2002 and 
                carryforwards of net operating losses to taxable years 
                ending during 2001 and 2002, or
                    ``(II) alternative minimum taxable income 
                determined without regard to such deduction reduced by 
                the amount determined under clause (i), and''.

        (2) Effective date.--The amendment made by this subsection 
    shall apply to taxable years ending before January 1, 2003.
    (d) Effective Date.--Except as provided in subsection (c), the 
amendments made by this section shall apply to net operating losses for 
taxable years ending after December 31, 2000.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

SEC. 201. SHORT TITLE.

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

SEC. 202. FEDERAL-STATE AGREEMENTS.

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

SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.

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

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

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

SEC. 205. FINANCING PROVISIONS.

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

SEC. 206. FRAUD AND OVERPAYMENTS.

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

SEC. 207. DEFINITIONS.

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

SEC. 208. APPLICABILITY.

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

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

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

                 ``Special Transfer in Fiscal Year 2002

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

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

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

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

             ``Subchapter Y--New York Liberty Zone Benefits

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

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

    ``(a) Expansion of Work Opportunity Tax Credit.--
        ``(1) In general.--For purposes of section 51, a New York 
    Liberty Zone business employee shall be treated as a member of a 
    targeted group.
        ``(2) New york liberty zone business employee.--For purposes of 
    this subsection--
            ``(A) In general.--The term `New York Liberty Zone business 
        employee' means, with respect to any period, any employee of a 
        New York Liberty Zone business if substantially all the 
        services performed during such period by such employee for such 
        business are performed in the New York Liberty Zone.
            ``(B) Inclusion of certain employees outside the new york 
        liberty zone.--
                ``(i) In general.--In the case of a New York Liberty 
            Zone business described in subclause (II) of subparagraph 
            (C)(i), the term `New York Liberty Zone business employee' 
            includes any employee of such business (not described in 
            subparagraph (A)) if substantially all the services 
            performed during such period by such employee for such 
            business are performed in the City of New York, New York.
                ``(ii) Limitation.--The number of employees of such a 
            business that are treated as New York Liberty Zone business 
            employees on any day by reason of clause (i) shall not 
            exceed the excess of--

                    ``(I) the number of employees of such business on 
                September 11, 2001, in the New York Liberty Zone, over
                    ``(II) the number of New York Liberty Zone business 
                employees (determined without regard to this 
                subparagraph) of such business on the day to which the 
                limitation is being applied.

            The Secretary may require any trade or business to have the 
            number determined under subclause (I) verified by the New 
            York State Department of Labor.
            ``(C) New york liberty zone business.--
                ``(i) In general.--The term `New York Liberty Zone 
            business' means any trade or business which is--

                    ``(I) located in the New York Liberty Zone, or
                    ``(II) located in the City of New York, New York, 
                outside the New York Liberty Zone, as a result of the 
                physical destruction or damage of such place of 
                business by the September 11, 2001, terrorist attack.

                ``(ii) Credit not allowed for large businesses.--The 
            term `New York Liberty Zone business' shall not include any 
            trade or business for any taxable year if such trade or 
            business employed an average of more than 200 employees on 
            business days during the taxable year.
            ``(D) Special rules for determining amount of credit.--For 
        purposes of applying subpart F of part IV of subchapter B of 
        this chapter to wages paid or incurred to any New York Liberty 
        Zone business employee--
                ``(i) section 51(a) shall be applied by substituting 
            `qualified wages' for `qualified first-year wages',
                ``(ii) the rules of section 52 shall apply for purposes 
            of determining the number of employees under subparagraph 
            (B),
                ``(iii) subsections (c)(4) and (i)(2) of section 51 
            shall not apply, and
                ``(iv) in determining qualified wages, the following 
            shall apply in lieu of section 51(b):

                    ``(I) Qualified wages.--The term `qualified wages' 
                means wages paid or incurred by the employer to 
                individuals who are New York Liberty Zone business 
                employees of such employer for work performed during 
                calendar year 2002 or 2003.
                    ``(II) Only first $6,000 of wages per calendar year 
                taken into account.--The amount of the qualified wages 
                which may be taken into account with respect to any 
                individual shall not exceed $6,000 per calendar year.

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

                    ``(I) the tentative minimum tax shall be treated as 
                being zero, and
                    ``(II) the limitation under paragraph (1) (as 
                modified by subclause (I)) shall be reduced by the 
                credit allowed under subsection (a) for the taxable 
                year (other than the New York Liberty Zone business 
                employee credit).

            ``(B) New york liberty zone business employee credit.--For 
        purposes of this subsection, the term `New York Liberty Zone 
        business employee credit' means the portion of work opportunity 
        credit under section 51 determined under section 1400L(a).''.
        (2) Conforming amendment.--Subclause (II) of section 
    38(c)(2)(A)(ii) is amended by inserting ``or the New York Liberty 
    Zone business employee credit'' after ``employment credit''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to taxable years ending after December 31, 2001.
    (c) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

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

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
              Subtitle A--General Miscellaneous Provisions

SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.

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

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

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

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

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

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

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

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

    (a) Amendments to the Internal Revenue Code of 1986.--
        (1) Special rule.--Clause (i) of section 412(l)(7)(C) (relating 
    to interest rate) is amended by adding at the end the following new 
    subclause:

                    ``(III) Special rule for 2002 and 2003.--For a plan 
                year beginning in 2002 or 2003, notwithstanding 
                subclause (I), in the case that the rate of interest 
                used under subsection (b)(5) exceeds the highest rate 
                permitted under subclause (I), the rate of interest 
                used to determine current liability under this 
                subsection may exceed the rate of interest otherwise 
                permitted under subclause (I); except that such rate of 
                interest shall not exceed 120 percent of the weighted 
                average referred to in subsection (b)(5)(B)(ii).''.

        (2) Quarterly contributions.--Subsection (m) of section 412 is 
    amended by adding at the end the following new paragraph:
        ``(7) Special rules for 2002 and 2004.--In any case in which 
    the interest rate used to determine current liability is determined 
    under subsection (l)(7)(C)(i)(III)--
            ``(A) 2002.--For purposes of applying paragraphs (1) and 
        (4)(B)(ii) for plan years beginning in 2002, the current 
        liability for the preceding plan year shall be redetermined 
        using 120 percent as the specified percentage determined under 
        subsection (l)(7)(C)(i)(II).
            ``(B) 2004.--For purposes of applying paragraphs (1) and 
        (4)(B)(ii) for plan years beginning in 2004, the current 
        liability for the preceding plan year shall be redetermined 
        using 105 percent as the specified percentage determined under 
        subsection (l)(7)(C)(i)(II).''.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
        (1) Special rule.--Clause (i) of section 302(d)(7)(C) of such 
    Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the end the 
    following new subclause:

                    ``(III) Special rule for 2002 and 2003.--For a plan 
                year beginning in 2002 or 2003, notwithstanding 
                subclause (I), in the case that the rate of interest 
                used under subsection (b)(5) exceeds the highest rate 
                permitted under subclause (I), the rate of interest 
                used to determine current liability under this 
                subsection may exceed the rate of interest otherwise 
                permitted under subclause (I); except that such rate of 
                interest shall not exceed 120 percent of the weighted 
                average referred to in subsection (b)(5)(B)(ii).''.

        (2) Quarterly contributions.--Subsection (e) of section 302 of 
    such Act (29 U.S.C. 1082) is amended by adding at the end the 
    following new paragraph:
        ``(7) Special rules for 2002 and 2004.--In any case in which 
    the interest rate used to determine current liability is determined 
    under subsection (d)(7)(C)(i)(III)--
            ``(A) 2002.--For purposes of applying paragraphs (1) and 
        (4)(B)(ii) for plan years beginning in 2002, the current 
        liability for the preceding plan year shall be redetermined 
        using 120 percent as the specified percentage determined under 
        subsection (d)(7)(C)(i)(II).
            ``(B) 2004.--For purposes of applying paragraphs (1) and 
        (4)(B)(ii) for plan years beginning in 2004, the current 
        liability for the preceding plan year shall be redetermined 
        using 105 percent as the specified percentage determined under 
        subsection (d)(7)(C)(i)(II).''.
    (c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is 
amended by adding at the end the following new subclause:
    ``(IV) In the case of plan years beginning after December 31, 2001, 
and before January 1, 2004, subclause (II) shall be applied by 
substituting `100 percent' for `85 percent'. Subclause (III) shall be 
applied for such years without regard to the preceding sentence. Any 
reference to this clause by any other sections or subsections shall be 
treated as a reference to this clause without regard to this 
subclause.''.

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

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

                   Subtitle B--Technical Corrections

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

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

                    ``(I) a duly ordained, commissioned, or licensed 
                minister of a church, or
                    ``(II) a lay person,

            as an employee of a church, a convention or association of 
            churches, including an organization described in section 
            414(e)(3)(B)(ii), shall be considered as years of service 
            for 1 employer, and
                ``(ii) all amounts contributed for annuity contracts by 
            each such church (or convention or association of churches) 
            or such organization during such years for such minister or 
            lay person shall be considered to have been contributed by 
            1 employer.
            ``(C) Foreign missionaries.--In the case of any individual 
        described in subparagraph (D) performing services outside the 
        United States, contributions and other additions for an annuity 
        contract or retirement income account described in section 
        403(b) with respect to such employee, when expressed as an 
        annual addition to such employee's account, shall not be 
        treated as exceeding the limitation of paragraph (1) if such 
        annual addition is not in excess of the greater of $3,000 or 
        the employee's includible compensation determined under section 
        403(b)(3).
            ``(D) Annual addition.--For purposes of this paragraph, the 
        term `annual addition' has the meaning given such term by 
        paragraph (2).
            ``(E) Church, convention or association of churches.--For 
        purposes of this paragraph, the terms `church' and `convention 
        or association of churches' have the same meaning as when used 
        in section 414(e).''.
        (5) Section 457(e)(5) is amended to read as follows:
        ``(5) Includible compensation.--The term `includible 
    compensation' has the meaning given to the term `participant's 
    compensation' by section 415(c)(3).''.
        (6) Section 402(g)(7)(B) is amended by striking ``2001.'' and 
    inserting ``2001).''.
    (q) Amendments Relating to Section 643 of the Act.--
        (1) Section 401(a)(31)(C)(i) is amended by inserting ``is a 
    qualified trust which is part of a plan which is a defined 
    contribution plan and'' before ``agrees''.
        (2) Section 402(c)(2) is amended by adding at the end the 
    following flush sentence:
    ``In the case of a transfer described in subparagraph (A) or (B), 
    the amount transferred shall be treated as consisting first of the 
    portion of such distribution that is includible in gross income 
    (determined without regard to paragraph (1)).''.
    (r) Amendments Relating to Section 648 of the Act.--
        (1) Section 417(e) is amended--
            (A) in paragraph (1) by striking ``exceed the dollar limit 
        under section 411(a)(11)(A)'' and inserting ``exceed the amount 
        that can be distributed without the participant's consent under 
        section 411(a)(11)'', and
            (B) in paragraph (2)(A) by striking ``exceeds the dollar 
        limit under section 411(a)(11)(A)'' and inserting ``exceeds the 
        amount that can be distributed without the participant's 
        consent under section 411(a)(11)''.
        (2) Section 205(g) of the Employee Retirement Income Security 
    Act of 1974 is amended--
            (A) in paragraph (1) by striking ``exceed the dollar limit 
        under section 203(e)(1)'' and inserting ``exceed the amount 
        that can be distributed without the participant's consent under 
        section 203(e)'', and
            (B) in paragraph (2)(A) by striking ``exceeds the dollar 
        limit under section 203(e)(1)'' and inserting ``exceeds the 
        amount that can be distributed without the participant's 
        consent under section 203(e)''.
    (s) Amendment Relating to Section 652 of the Act.--Section 
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by 
professional service employers'' and inserting ``Special rule for 
terminating plans''.
    (t) Amendments Relating to Section 657 of the Act.--Section 
404(c)(3) of the Employee Retirement Income Security Act of 1974 is 
amended--
        (1) by striking ``the earlier of'' in subparagraph (A) the 
    second place it appears, and
        (2) by striking ``if the transfer'' and inserting ``a transfer 
    that''.
    (u) Amendments Relating to Section 659 of the Act.--
        (1) Section 4980F is amended--
            (A) in subsection (e)(1) by striking ``written notice'' and 
        inserting ``the notice described in paragraph (2)'',
            (B) by amending subsection (f)(2)(A) to read as follows:
            ``(A) any defined benefit plan described in section 401(a) 
        which includes a trust exempt from tax under section 501(a), 
        or'', and
            (C) in subsection (f)(3) by striking ``significantly'' both 
        places it appears.
        (2) Section 204(h)(9) of the Employee Retirement Income 
    Security Act of 1974 is amended by striking ``significantly'' both 
    places it appears.
        (3) Section 659(c)(3)(B) of the Economic Growth and Tax Relief 
    Reconciliation Act of 2001 is amended by striking ``(or'' and 
    inserting ``(and''.
    (v) Amendments Relating to Section 661 of the Act.--
        (1) Section 412(c)(9)(B) is amended--
            (A) in clause (ii) by striking ``125 percent'' and 
        inserting ``100 percent'', and
            (B) by adding at the end the following new clause:
                ``(iv) Limitation.--A change in funding method to use a 
            prior year valuation, as provided in clause (ii), may not 
            be made unless as of the valuation date within the prior 
            plan year, the value of the assets of the plan are not less 
            than 125 percent of the plan's current liability (as 
            defined in paragraph (7)(B)).''.
        (2) Section 302(c)(9)(B) of the Employee Retirement Income 
    Security Act of 1974 is amended--
            (A) in clause (ii) by striking ``125 percent'' and 
        inserting ``100 percent'', and
            (B) by adding at the end the following new clause:
    ``(iv) A change in funding method to use a prior year valuation, as 
provided in clause (ii), may not be made unless as of the valuation 
date within the prior plan year, the value of the assets of the plan 
are not less than 125 percent of the plan's current liability (as 
defined in paragraph (7)(B)).''.
    (w) Amendments Relating to Section 662 of the Act.--
        (1) Section 404(k) is amended--
            (A) in paragraph (1) by striking ``during the taxable 
        year'',
            (B) in paragraph (2)(B) by striking ``(A)(iii)'' and 
        inserting ``(A)(iv)'',
            (C) in paragraph (4)(B) by striking ``(iii)'' and inserting 
        ``(iv)'', and
            (D) by redesignating subparagraph (B) of paragraph (4) (as 
        amended by subparagraph (C)) as subparagraph (C) of paragraph 
        (4) and by inserting after subparagraph (A) the following new 
        subparagraph:
            ``(B) Reinvestment dividends.--For purposes of subparagraph 
        (A), an applicable dividend reinvested pursuant to clause 
        (iii)(II) of paragraph (2)(A) shall be treated as paid in the 
        taxable year of the corporation in which such dividend is 
        reinvested in qualifying employer securities or in which the 
        election under clause (iii) of paragraph (2)(A) is made, 
        whichever is later.''.
        (2) Section 404(k) is amended by adding at the end the 
    following new paragraph:
        ``(7) Full vesting.--In accordance with section 411, an 
    applicable dividend described in clause (iii)(II) of paragraph 
    (2)(A) shall be subject to the requirements of section 
    411(a)(1).''.
    (x) Effective Date.--Except as provided in subsection (c), the 
amendments made by this section shall take effect as if included in the 
provisions of the Economic Growth and Tax Relief Reconciliation Act of 
2001 to which they relate.

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

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

          ``For special rules relating to dealer securities futures 
        contracts, see section 1256.''.

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

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

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

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

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

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

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

SEC. 416. OTHER TECHNICAL CORRECTIONS.

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

SEC. 417. CLERICAL AMENDMENTS.

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

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

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

    ``Sec. 4980E. Failure of employer to make comparable Archer MSA 
              contributions.''.

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

SEC. 418. ADDITIONAL CORRECTIONS.

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

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

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

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

SEC. 502. EMERGENCY DESIGNATION.

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

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

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

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

SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

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

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

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

SEC. 604. WORK OPPORTUNITY CREDIT.

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

SEC. 605. WELFARE-TO-WORK CREDIT.

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

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

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

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

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

SEC. 608. QUALIFIED ZONE ACADEMY BONDS.

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

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

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

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

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

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

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

SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

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

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

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

SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

    (a) In General.--
        (1) Section 953(e)(10) is amended--
            (A) by striking ``January 1, 2002'' and inserting ``January 
        1, 2007'', and
            (B) by striking ``December 31, 2001'' and inserting 
        ``December 31, 2006''.
        (2) Section 954(h)(9) is amended by striking ``January 1, 
    2002'' and inserting ``January 1, 2007''.
    (b) Life Insurance and Annuity Contracts.--
        (1) In general.--Subparagraph (B) of section 954(i)(4) is 
    amended to read as follows:
            ``(B) Life insurance and annuity contracts.--
                ``(i) In general.--Except as provided in clause (ii), 
            the amount of the reserve of a qualifying insurance company 
            or qualifying insurance company branch for any life 
            insurance or annuity contract shall be equal to the greater 
            of--

                    ``(I) the net surrender value of such contract (as 
                defined in section 807(e)(1)(A)), or
                    ``(II) the reserve determined under paragraph (5).

                ``(ii) Ruling request, etc.--The amount of the reserve 
            under clause (i) shall be the foreign statement reserve for 
            the contract (less any catastrophe, deficiency, 
            equalization, or similar reserves), if, pursuant to a 
            ruling request submitted by the taxpayer or as provided in 
            published guidance, the Secretary determines that the 
            factors taken into account in determining the foreign 
            statement reserve provide an appropriate means of measuring 
            income.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

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

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

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

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

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

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

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.