[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2 Engrossed in House (EH)]
1st Session
H. R. 2
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to section 201 of the concurrent
resolution on the budget for fiscal year 2004.
108th CONGRESS
1st Session
H. R. 2
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to section 201 of the concurrent
resolution on the budget for fiscal year 2004.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Jobs and Growth
Reconciliation Tax Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; references; table of contents.
TITLE I--ACCELERATION OF CERTAIN PREVIOUSLY ENACTED TAX REDUCTIONS
Sec. 101. Acceleration of increase in child tax credit.
Sec. 102. Acceleration of 15-percent individual income tax rate bracket
expansion for married taxpayers filing
joint returns.
Sec. 103. Acceleration of increase in standard deduction for married
taxpayers filing joint returns.
Sec. 104. Acceleration of 10-percent individual income tax rate bracket
expansion.
Sec. 105. Acceleration of reduction in individual income tax rates.
Sec. 106. Minimum tax relief to individuals.
TITLE II--GROWTH INCENTIVES FOR BUSINESS
Sec. 201. Increase and extension of bonus depreciation.
Sec. 202. Increased expensing for small business.
Sec. 203. 5-year carryback of certain net operating losses.
TITLE III--REDUCTIONS IN TAXES ON DIVIDENDS AND CAPITAL GAINS
Sec. 301. Reduction in capital gains rates for individuals; repeal of
5-year holding period requirement.
Sec. 302. Dividends of individuals taxed at capital gain rates.
Sec. 303. Sunset of title.
TITLE IV--CORPORATE ESTIMATED TAX PAYMENTS FOR 2003
Sec. 401. Time for payment of corporate estimated taxes.
TITLE I--ACCELERATION OF CERTAIN PREVIOUSLY ENACTED TAX REDUCTIONS
SEC. 101. ACCELERATION OF INCREASE IN CHILD TAX CREDIT.
(a) In General.--The items relating to calendar years 2001 through
2008 in the table contained in paragraph (2) of section 24(a) (relating
to per child amount) are amended to read as follows:
``2003, 2004, 2005............................ $1,000
2006, 2007, or 2008.......................... 700''.
(b) Advance Payment of Portion of Increased Credit in 2003.--
(1) In general.--Subchapter B of chapter 65 (relating to
abatements, credits, and refunds) is amended by inserting after
section 6428 the following new section:
``SEC. 6429. ADVANCE PAYMENT OF PORTION OF INCREASED CHILD CREDIT FOR
2003.
``(a) In General.--Each taxpayer who claimed a credit under section
24 on the return for the taxpayer's first taxable year beginning in
2002 shall be treated as having made a payment against the tax imposed
by chapter 1 for such taxable year in an amount equal to the child tax
credit refund amount (if any) for such taxable year.
``(b) Child Tax Credit Refund Amount.--For purposes of this
section, the child tax credit refund amount is the amount by which the
aggregate credits allowed under part IV of subchapter A of chapter 1
for such first taxable year would have been increased if--
``(1) the per child amount under section 24(a)(2) for such
year were $1,000,
``(2) only qualifying children (as defined in section
24(c)) of the taxpayer for such year who had not attained age
17 as of December 31, 2003, were taken into account, and
``(3) section 24(d)(1)(B)(ii) did not apply.
``(c) Timing of Payments.--In the case of any overpayment
attributable to this section, the Secretary shall, subject to the
provisions of this title, refund or credit such overpayment as rapidly
as possible and, to the extent practicable, before October 1, 2003. No
refund or credit shall be made or allowed under this section after
December 31, 2003.
``(d) Coordination With Child Tax Credit.--
``(1) In general.--The amount of credit which would (but
for this subsection and section 26) be allowed under section 24
for the taxpayer's first taxable year beginning in 2003 shall
be reduced (but not below zero) by the payments made to the taxpayer
under this section. 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 payment under this
section with respect to a joint return, half of such payment
shall be treated as having been made to each individual filing
such return.
``(e) No Interest.--No interest shall be allowed on any overpayment
attributable to this section.''.
(2) Clerical amendment.--The table of sections for
subchapter B of chapter 65 is amended by adding at the end the
following new item:
``Sec. 6429. Advance payment of portion of increased child
credit for 2003.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2002.
(2) Subsection (b).--The amendments made by subsection (b)
shall take effect on the date of the enactment of this Act.
SEC. 102. ACCELERATION OF 15-PERCENT INDIVIDUAL INCOME TAX RATE BRACKET
EXPANSION FOR MARRIED TAXPAYERS FILING JOINT RETURNS.
(a) In General.--The item relating to 2005 in the table contained
in subparagraph (B) of section 1(f)(8) (relating to applicable
percentage) is amended to read as follows:
``2003, 2004, and 2005................. 200''.
(b) Conforming Amendments.--
(1) Section 1(f)(8)(A) is amended by striking ``2004'' and
inserting ``2002''.
(2) Section 302(c) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 is amended by striking ``2004'' and
inserting ``2002''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 103. ACCELERATION OF INCREASE IN STANDARD DEDUCTION FOR MARRIED
TAXPAYERS FILING JOINT RETURNS.
(a) In General.--The item relating to 2005 in the table contained
in paragraph (7) of section 63(c) (relating to applicable percentage)
is amended to read as follows:
``2003, 2004, and 2005................. 200''.
(b) Conforming Amendment.--Section 301(d) of the Economic Growth
and Tax Relief Reconciliation Act of 2001 is amended by striking
``2004'' and inserting ``2002''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 104. ACCELERATION OF 10-PERCENT INDIVIDUAL INCOME TAX RATE BRACKET
EXPANSION.
(a) In General.--Clause (i) of section 1(i)(1)(B) (relating to the
initial bracket amount) is amended by striking ``($12,000 in the case
of taxable years beginning before January 1, 2008)'' and inserting
``($12,000 in the case of taxable years beginning after December 31,
2005, and before January 1, 2008)''.
(b) Inflation Adjustment.--Subparagraph (C) of section 1(i)(1) is
amended to read as follows:
``(C) Inflation adjustment.--In prescribing the
tables under subsection (f) which apply with respect to
taxable years beginning in calendar years after 2000--
``(i) the Secretary shall make no
adjustment to the $12,000 initial bracket
amount for any taxable year,
``(ii)(I) the Secretary shall make no
adjustment to the $14,000 initial bracket
amount for any taxable year beginning before
January 1, 2004,
``(II) the cost-of-living adjustment used
in making adjustments to the $14,000 initial
bracket amount for any taxable year beginning
during 2004 or 2005 shall be determined under
subsection (f)(3) by substituting `2002' for
`1992' in subparagraph (B) thereof, and
``(III) the cost-of-living adjustment used
in making adjustments to the $14,000 initial
bracket amount for any taxable year beginning
after December 31, 2008, shall be determined
under subsection (f)(3) by substituting `2007'
for `1992' in subparagraph (B) thereof, and
``(iii) the adjustments under clause (ii)
shall not apply to the amount referred to in
subparagraph (B)(iii).
If any amount after adjustment under the preceding
sentence is not a multiple of $50, such amount shall be
rounded to the next lowest multiple of $50.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
(2) Tables for 2003.--The Secretary of the Treasury shall
modify each table which has been prescribed under section 1(f)
of the Internal Revenue Code of 1986 for taxable years
beginning in 2003 and which relates to the amendment made by
this section to reflect such amendment.
SEC. 105. ACCELERATION OF REDUCTION IN INDIVIDUAL INCOME TAX RATES.
(a) In General.--The table in paragraph (2) of section 1(i)
(relating to reductions in rates after June 30, 2001) is amended to
read as follows:
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``In the case of taxable years The corresponding percentages shall be substituted for the following percentages:
beginning during calendar ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
year: 28% 31% 36% 39.6%
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001.......................... 27.5% 30.5% 35.5% 39.1%
2002.......................... 27.0% 30.0% 35.0% 38.6%
2003 and thereafter........... 25.0% 28.0% 33.0% 35.0%''.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2002.
SEC. 106. MINIMUM TAX RELIEF TO INDIVIDUALS.
(a) In General.--
(1) Subparagraph (A) of section 55(d)(1) is amended by
striking ``$49,000 in the case of taxable years beginning in
2001, 2002, 2003, and 2004'' and inserting ``$64,000 in the
case of taxable years beginning in 2003, 2004, and 2005''.
(2) Subparagraph (B) of section 55(d)(1) is amended by
striking ``$35,750 in the case of taxable years beginning in
2001, 2002, 2003, and 2004'' and inserting ``$43,250 in the
case of taxable years beginning in 2003, 2004, and 2005''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to taxable years beginning after December 31, 2002.
TITLE II--GROWTH INCENTIVES FOR BUSINESS
SEC. 201. INCREASE AND EXTENSION OF BONUS DEPRECIATION.
(a) In General.--Section 168(k) (relating to special allowance for
certain property acquired after September 10, 2001, and before
September 11, 2004) is amended by adding at the end the following new
paragraph:
``(4) 50-percent bonus depreciation for certain property.--
``(A) In general.--In the case of 50-percent bonus
depreciation property--
``(i) paragraph (1)(A) shall be applied by
substituting `50 percent' for `30 percent', and
``(ii) except as provided in paragraph
(2)(C), such property shall be treated as
qualified property for purposes of this
subsection.
``(B) 50-percent bonus depreciation property.--For
purposes of this subsection, the term `50-percent bonus
depreciation property' means property described in
paragraph (2)(A)(i)--
``(i) the original use of which commences
with the taxpayer after May 5, 2003,
``(ii) which is acquired by the taxpayer
after May 5, 2003, and before January 1, 2006,
but only if no written binding contract for the
acquisition was in effect before May 6, 2003,
and
``(iii) which is placed in service by the
taxpayer before January 1, 2006, or, in the
case of property described in paragraph (2)(B)
(as modified by subparagraph (C) of this
paragraph), before January 1, 2007.
``(C) Special rules.--Rules similar to the rules of
subparagraphs (B) and (D) of paragraph (2) shall apply
for purposes of this paragraph; except that references
to September 10, 2001, shall be treated as references
to May 5, 2003.
``(D) Automobiles.--Paragraph (2)(E) shall be
applied by substituting `$9,200' for `$4,600' in the
case of 50-percent bonus depreciation property.
``(E) Election of 30 percent bonus.--If a taxpayer
makes an election under this subparagraph with respect
to any class of property for any taxable year,
subparagraph (A)(i) shall not apply to all property in
such class placed in service during such taxable
year.''.
(b) Extension of Placed in Service Dates, Etc. for 30-Percent
Bonus Depreciation Property.--
(1) In general.--Clause (iv) of section 168(k)(2)(A) is
amended--
(A) by striking ``January 1, 2005'' and inserting
``January 1, 2006'', and
(B) by striking ``January 1, 2006'' (as in effect
before the amendment made by subparagraph (A)) and
inserting ``January 1, 2007''.
(2) Portion of basis taken into account.--
(A) Subparagraphs (B)(ii) and (D)(i) of section
168(k)(2) are each amended by striking ``September 11,
2004'' each place it appears in the text and inserting
``January 1, 2006''.
(B) Clause (ii) of section 168(k)(2)(B) is amended
by striking ``pre-september 11, 2004'' in the heading
and inserting ``pre-january 1, 2006''.
(3) Acquisition date.--Clause (iii) of section 168(k)(2)(A)
is amended by striking ``September 11, 2004'' each place it
appears and inserting ``January 1, 2006''.
(4) Election.--Clause (iii) of section 168(k)(2)(C) is
amended by adding at the end the following: ``The preceding
sentence shall be applied separately with respect to property
treated as qualified property by paragraph (4) and other
qualified property.''.
(c) Conforming Amendments.--
(1) The subsection heading for section 168(k) is amended by
striking ``September 11, 2004'' and inserting ``January 1,
2006''.
(2) The heading for clause (i) of section 1400L(b)(2)(C) is
amended by striking ``30-percent additional allowable
property'' and inserting ``Bonus depreciation property under
section 168(k)''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 202. INCREASED EXPENSING FOR SMALL BUSINESS.
(a) In General.--Paragraph (1) of section 179(b) (relating to
dollar limitation) is amended to read as follows:
``(1) Dollar limitation.--The aggregate cost which may be
taken into account under subsection (a) for any taxable year
shall not exceed $25,000 ($100,000 in the case of taxable years
beginning after 2002 and before 2008).''.
(b) Increase in Qualifying Investment at Which Phaseout Begins.--
Paragraph (2) of section 179(b) (relating to reduction in limitation)
is amended by inserting ``($400,000 in the case of taxable years
beginning after 2002 and before 2008)'' after ``$200,000''.
(c) Off-the-Shelf Computer Software.--Paragraph (1) of section
179(d) (defining section 179 property) is amended to read as follows:
``(1) Section 179 property.--For purposes of this section,
the term `section 179 property' means property--
``(A) which is--
``(i) tangible property (to which section
168 applies), or
``(ii) computer software (as defined in
section 197(e)(3)(B)) which is described in
section 197(e)(3)(A)(i), to which section 167
applies, and which is placed in service in a
taxable year beginning after 2002 and before
2008,
``(B) which is section 1245 property (as defined in
section 1245(a)(3)), and
``(C) which is acquired by purchase for use in the
active conduct of a trade or business.
Such term shall not include any property described in section
50(b) and shall not include air conditioning or heating
units.''.
(d) Adjustment of Dollar Limit and Phaseout Threshold for
Inflation.--Subsection (b) of section 179 (relating to limitations) is
amended by adding at the end the following new paragraph:
``(5) Inflation adjustments.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2003 and before
2008, the $100,000 and $400,000 amounts in paragraphs
(1) and (2) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
by substituting `calendar year 2002' for
`calendar year 1992' in subparagraph (B)
thereof.
``(B) Rounding.--
``(i) Dollar limitation.--If the amount in
paragraph (1) as increased under subparagraph
(A) is not a multiple of $1,000, such amount
shall be rounded to the nearest multiple of
$1,000.
``(ii) Phaseout amount.--If the amount in
paragraph (2) as increased under subparagraph
(A) is not a multiple of $10,000, such amount
shall be rounded to the nearest multiple of
$10,000.''.
(e) Revocation of Election.--Paragraph (2) of section 179(c)
(relating to election irrevocable) is amended to read as follows:
``(2) Revocation of election.--An election under paragraph
(1) with respect to any taxable year beginning after 2002 and
before 2008, and any specification contained in any such
election, may be revoked by the taxpayer with respect to any
property. Such revocation, once made, shall be irrevocable.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 203. 5-YEAR CARRYBACK OF CERTAIN NET OPERATING LOSSES.
(a) In General.--Subparagraph (H) of section 172(b)(1) is amended--
(1) by inserting ``5-year carryback of certain losses.--''
after ``(H)'', and
(2) by striking ``or 2002'' and inserting ``, 2002, 2003,
2004 or 2005''.
(b) Temporary Suspension of 90 Percent Limit on Certain NOL
Carrybacks.--Subclause (I) of section 56(d)(1)(A)(ii) is amended--
(1) by striking ``or 2002'' and inserting ``, 2002, 2003,
2004, or 2005'', and
(2) by striking ``and 2002'' and inserting ``, 2002, 2003,
2004, or 2005''.
(c) Technical Corrections.--
(1) Subparagraph (H) of section 172(b)(1) is amended by
striking ``a taxpayer which has''.
(2) Section 102(c)(2) of the Job Creation and Worker
Assistance Act of 2002 (Public Law 10709147) is amended by
striking ``before January 1, 2003'' and inserting ``after
December 31, 1990''.
(3)(A) Subclause (I) of section 56(d)(1)(A)(i) is amended
by striking ``attributable to carryovers''.
(B) Subclause (I) of section 56(d)(1)(A)(ii) is amended--
(i) by striking ``for taxable years'' and inserting
``from taxable years'', and
(ii) by striking ``carryforwards'' and inserting
``carryovers''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to net operating
losses for taxable years ending after December 31, 2002.
(2) Technical corrections.--The amendments made by
subsection (c) shall take effect as if included in the
amendments made by section 102 of the Job Creation and Worker
Assistance Act of 2002.
(3) Election.--In the case of a net operating loss for a
taxable year ending during 2003--
(A) any election made under section 172(b)(3) of
such Code may (notwithstanding such section) be revoked
before November 1, 2003, and
(B) any election made under section 172(j) of such
Code shall (notwithstanding such section) be treated as
timely made if made before November 1, 2003.
TITLE III--REDUCTION IN TAXES ON DIVIDENDS AND CAPITAL GAINS
SEC. 301. REDUCTION IN CAPITAL GAINS RATES FOR INDIVIDUALS; REPEAL OF
5-YEAR HOLDING PERIOD REQUIREMENT.
(a) In General.--
(1) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by
striking ``10 percent'' and inserting ``5 percent''.
(2) The following sections are each amended by striking
``20 percent'' and inserting ``15 percent'':
(A) Section 1(h)(1)(C).
(B) Section 55(b)(3)(C).
(C) Section 1445(e)(1).
(D) The second sentence of section 7518(g)(6)(A).
(E) The second sentence of section 607(h)(6)(A) of
the Merchant Marine Act, 1936.
(b) Conforming Amendments.--
(1) Section 1(h) is amended--
(A) by striking paragraphs (2) and (9),
(B) by redesignating paragraphs (3) through (8) as
paragraphs (2) through (7), respectively, and
(C) by redesignating paragraphs (10), (11), and
(12) as paragraphs (8), (9), and (10), respectively.
(2) Paragraph (3) of section 55(b) is amended by striking
``In the case of taxable years beginning after December 31,
2000, rules similar to the rules of section 1(h)(2) shall apply
for purposes of subparagraphs (B) and (C).''.
(3) Paragraph (7) of section 57(a) is amended--
(A) by striking ``42 percent'' the first place it
appears and inserting ``7 percent'', and
(B) by striking the last sentence.
(c) Transitional Rules for Taxable Years Which Include May 6,
2003.--For purposes of applying section 1(h) of the Internal Revenue
Code of 1986 in the case of a taxable year which includes May 6, 2003--
(1) The amount of tax determined under subparagraph (B) of
section 1(h)(1) of such Code shall be the sum of--
(A) 5 percent of the lesser of--
(i) the net capital gain determined by
taking into account only gain or loss properly
taken into account for the portion of the
taxable year on or after May 6, 2003
(determined without regard to collectibles gain
or loss, gain described in section
1(h)(6)(A)(i) of such Code, and section 1202
gain), or
(ii) the amount on which a tax is
determined under such subparagraph (without
regard to this subsection),
(B) 8 percent of the lesser of--
(i) the qualified 5-year gain (as defined
in section 1(h)(9) of the Internal Revenue Code
of 1986, as in effect on the day before the
date of the enactment of this Act) properly
taken into account for the portion of the
taxable year before May 6, 2003, over
(ii) the excess (if any) of--
(I) the amount on which a tax is
determined under such subparagraph
(without regard to this subsection),
over
(II) the amount on which a tax is
determined under subparagraph (A), plus
(C) 10 percent of the excess (if any) of--
(i) the amount on which a tax is determined
under such subparagraph (without regard to this
subsection), over
(ii) the sum of the amounts on which a tax
is determined under subparagraphs (A) and (B).
(2) The amount of tax determined under subparagraph (C) of
section (1)(h)(1) of such Code shall be the sum of--
(A) 15 percent of the lesser of--
(i) the excess (if any) of the amount of
net capital gain determined under subparagraph
(A)(i) of paragraph (1) of this subsection over
the amount on which a tax is determined under
subparagraph (A) of paragraph (1) of this
subsection, or
(ii) the amount on which a tax is
determined under such subparagraph (C) (without
regard to this subsection), plus
(B) 20 percent of the excess (if any) of--
(i) the amount on which a tax is determined
under such subparagraph (C) (without regard to
this subsection), over
(ii) the amount on which a tax is
determined under subparagraph (A) of this
paragraph.
(3) For purposes of applying section 55(b)(3) of such Code,
rules similar to the rules of paragraphs (1) and (2) of this
subsection shall apply.
(4) In applying this subsection with respect to any pass-
thru entity, the determination of when gains and loss are
properly taken into account shall be made at the entity level.
(5) For purposes of applying section 1(h)(11) of such Code,
as added by section 302 of this Act, to this subsection,
dividends which are qualified dividend income shall be treated
as gain properly taken into account for the portion of the
taxable year on or after May 6, 2003.
(6) Terms used in this subsection which are also used in
section 1(h) of such Code shall have the respective meanings
that such terms have in such section.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided by this
subsection, the amendments made by this section shall apply to
taxable years ending on or after May 6, 2003.
(2) Withholding.--The amendment made by subsection
(a)(2)(C) shall apply to amounts paid after the date of the
enactment of this Act.
(3) Small business stock.--The amendments made by
subsection (b)(3) shall apply to dispositions on or after May
6, 2003.
SEC. 302. DIVIDENDS OF INDIVIDUALS TAXED AT CAPITAL GAIN RATES.
(a) In General.--Section 1(h) (relating to maximum capital gains
rate), as amended by section 301, is amended by adding at the end the
following new paragraph:
``(11) Dividends taxed as net capital gain.--
``(A) In general.--For purposes of this subsection,
the term `net capital gain' means net capital gain
(determined without regard to this paragraph),
increased by qualified dividend income.
``(B) Qualified dividend income.--For purposes of
this paragraph--
``(i) In general.--The term `qualified
dividend income' means dividends received
during the taxable year from domestic
corporations.
``(ii) Certain dividends excluded.--Such
term shall not include--
``(I) any dividend from a
corporation which for the taxable year
of the corporation in which the
distribution is made, or the preceding
taxable year, is a corporation exempt
from tax under section 501 or 521,
``(II) any amount allowed as a
deduction under section 591 (relating
to deduction for dividends paid by
mutual savings banks, etc.), and
``(III) any dividend described in
section 404(k).
``(iii) Exclusion of certain dividends.--
Such term shall not include any dividend on any
share of stock--
``(I) with respect to which the
holding period requirements of section
246(c) are not met, or
``(II) to the extent that the
taxpayer is under an obligation
(whether pursuant to a short sale or
otherwise) to make related payments
with respect to positions in
substantially similar or related
property.
``(C) Special rules.--
``(i) Amounts taken into account as
investment income.--Qualified dividend income
shall not include any amount which the taxpayer
takes into account as investment income under
section 163(d)(4)(B).
``(ii) Extraordinary dividends.--If an
individual receives, with respect to any share
of stock, qualified dividend income from 1 or
more dividends which are extraordinary
dividends (within the meaning of section
1059(c)), any loss on the sale or exchange of
such share shall, to the extent of such
dividends, be treated as long-term capital
loss.
``(iii) Treatment of dividends from
regulated investment companies and real estate
investment trusts.--A dividend received from a
regulated investment company or a real estate
investment trust shall be subject to the
limitations prescribed in sections 854 and
857.''.
(b) Exclusion of Dividends From Investment Income.--Subparagraph
(B) of section 163(d)(4) (defining net investment income) is amended by
adding at the end the following flush sentence:
``Such term shall include qualified dividend income (as
defined in section 1(h)(11)(B)) only to the extent the
taxpayer elects to treat such income as investment
income for purposes of this subsection.''.
(c) Treatment of Dividends From Regulated Investment Companies.--
(1) Subsection (a) of section 854 (relating to dividends
received from regulated investment companies) is amended by
inserting ``section 1(h)(11) (relating to maximum rate of tax
on dividends and interest) and'' after ``For purposes of''.
(2) Paragraph (1) of section 854(b) (relating to other
dividends) is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
``(B) Maximum rate under section 1(h).--
``(i) In general.--If the aggregate
dividends received by a regulated investment
company during any taxable year are less than
95 percent of its gross income, then, in
computing the maximum rate under section
1(h)(11), rules similar to the rules of
subparagraph (A) shall apply.
``(ii) Gross income.--For purposes of
clause (i), in the case of 1 or more sales or
other dispositions of stock or securities, the
term `gross income' includes only the excess
of--
``(I) the net short-term capital
gain from such sales or dispositions,
over
``(II) the net long-term capital
loss from such sales or
dispositions.''.
(3) Subparagraph (C) of section 854(b)(1), as redesignated
by paragraph (2), is amended by striking ``subparagraph (A)''
and inserting ``subparagraph (A) or (B)''.
(4) Paragraph (2) of section 854(b) is amended by inserting
``the maximum rate under section 1(h)(11) and'' after ``for
purposes of''.
(5) Subsection (b) of section 854 is amended by adding at
the end the following new paragraph:
``(5) Coordination with section 1(h)(11).--For purposes of
paragraph (1)(B), an amount shall be treated as a dividend only
if the amount is qualified dividend income (within the meaning
of section 1(h)(11)(B)).''.
(d) Treatment of Dividends Received From Real Estate Investment
Trusts.--Section 857(c) (relating to restrictions applicable to
dividends received from real estate investment trusts) is amended to
read as follows:
``(c) Restrictions Applicable to Dividends Received From Real
Estate Investment Trusts.--
``(1) Section 243.--For purposes of section 243 (relating
to deductions for dividends received by corporations), a
dividend received from a real estate investment trust which
meets the requirements of this part shall not be considered a
dividend.
``(2) Section 1(h)(11).--For purposes of section 1(h)(11)
(relating to maximum rate of tax on dividends), rules similar
to the rules of section 854(b)(1)(B) shall apply to dividends
received from a real estate trust which meets the requirements
of this part.''.
(e) Conforming Amendments.--
(1) Paragraph (3) of section 1(h), as redesignated by
section 301, is amended to read as follows:
``(3) Adjusted net capital gain.--For purposes of this
subsection, the term `adjusted net capital gain' means the sum
of--
``(A) net capital gain (determined without regard
to paragraph (11)) reduced (but not below zero) by the
sum of--
``(i) unrecaptured section 1250 gain, and
``(ii) 28-percent rate gain, plus
``(B) qualified dividend income (as defined in
paragraph (11)).''.
(2) Subsection (f) of section 301 is amended adding at the
end the following new paragraph:
``(4) For taxation of dividends received by individuals at
capital gain rates, see section 1(h)(11).''.
(3) Paragraph (1) of section 306(a) is amended by adding at
the end the following new subparagraph:
``(D) Treatment as dividend.--For purposes of
section l(h)(11), any amount treated as ordinary income
under this paragraph shall be treated as a dividend
received from the corporation.''.
(4)(A) Subpart C of part II of subchapter C of chapter 1
(relating to collapsible corporations) is repealed.
(B)(i) Section 338(h) is amended by striking paragraph
(14).
(ii) Sections 467(c)(5)(C), 1255(b)(2), and 1257(d) are
each amended by striking ``, 341(e)(12),''.
(iii) The table of subparts for part II of subchapter C of
chapter 1 is amended by striking the item related to subpart C.
(5) Section 531 is amended by striking ``equal to'' and all
that follows and inserting ``equal to 15 percent of the
accumulated taxable income.''.
(6) Section 541 is amended by striking ``equal to'' and all
that follows and inserting ``equal to 15 percent of the
undistributed personal holding company income.''.
(7) Section 584(c) is amended by adding at the end the
following new flush sentence:
``The proportionate share of each participant in the amount of
dividends received by the common trust fund and to which section
1(h)(11) applies shall be considered for purposes of such paragraph as
having been received by such participant.''.
(8) Paragraph (5) of section 702(a) is amended to read as
follows:
``(5) dividends with respect to which section 1(h)(11) or
part VII of subchapter B applies,''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 303. SUNSET OF TITLE.
All provisions of, and amendments made by, this title shall not
apply to taxable years beginning after December 31, 2012, and the
Internal Revenue Code of 1986 shall be applied and administered to such
years as if such provisions and amendments had never been enacted.
TITLE IV--CORPORATE ESTIMATED TAX PAYMENTS FOR 2003
SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
Notwithstanding section 6655 of the Internal Revenue Code of 1986,
52 percent of the amount of any required installment of corporate
estimated tax which is otherwise due in September 2003 shall not be due
until October 1, 2003.
Passed the House of Representatives May 9, 2003.
Attest:
Clerk.