Amendments related to the American Jobs Creation Act of 2004

(a)

Amendments related to section 102 of the Act

(1)Paragraph (1) of section 199(b) is amended by striking the employer and inserting the taxpayer. (2)Paragraph (2) of section 199(b) is amended to read as follows:

(2)

W–2 wages

For purposes of this section, the term W–2 wages means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs (3) and (8) of section 6051(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year. Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return.

(3)Subparagraph (B) of section 199(c)(1) is amended by inserting and at the end of clause (i), by striking clauses (ii) and (iii), and by inserting after clause (i) the following:

(ii)other expenses, losses, or deductions (other than the deduction allowed under this section), which are properly allocable to such receipts.

(4)Paragraph (2) of section 199(c) is amended to read as follows:

(2)

Allocation method

The Secretary shall prescribe rules for the proper allocation of items described in paragraph (1) for purposes of determining qualified production activities income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic production gross receipts.

(5)Subparagraph (A) of section 199(c)(4) is amended by striking clauses (ii) and (iii) and inserting the following new clauses:

(ii)in the case of a taxpayer engaged in the active conduct of a construction trade or business, construction of real property performed in the United States by the taxpayer in the ordinary course of such trade or business, or (iii)in the case of a taxpayer engaged in the active conduct of an engineering or architectural services trade or business, engineering or architectural services performed in the United States by the taxpayer in the ordinary course of such trade or business with respect to the construction of real property in the United States.

(6)Subparagraph (B) of section 199(c)(4) is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , or, and by adding at the end the following:

(iii)the lease, rental, license, sale, exchange, or other disposition of land.

(7)Paragraph (4) of section 199(c) is amended by adding at the end the following new subparagraphs:

(C)

Special rule for certain government contracts

Gross receipts derived from the manufacture or production of any property described in subparagraph (A)(i)(I) shall be treated as meeting the requirements of subparagraph (A)(i) if— (i)such property is manufactured or produced by the taxpayer pursuant to a contract with the Federal Government, and (ii)the Federal Acquisition Regulation requires that title or risk of loss with respect to such property be transferred to the Federal Government before the manufacture or production of such property is complete. (D)

Partnerships owned by expanded affiliated groups

For purposes of this paragraph, if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership, the partnership and all members of such group shall be treated as a single taxpayer during such period.

(8)Paragraph (1) of section 199(d) is amended to read as follows:

(1)

Application of section to pass-thru entities

(A)

Partnerships and s corporations

In the case of a partnership or S corporation— (i)this section shall be applied at the partner or shareholder level, (ii)each partner or shareholder shall take into account such person’s allocable share of each item described in subparagraph (A) or (B) of subsection (c)(1) (determined without regard to whether the items described in such subparagraph (A) exceed the items described in such subparagraph (B)), and (iii)each partner or shareholder shall be treated for purposes of subsection (b) as having W–2 wages for the taxable year in an amount equal to the lesser of— (I)such person’s allocable share of the W–2 wages of the partnership or S corporation for the taxable year (as determined under regulations prescribed by the Secretary), or (II)2 times 9 percent of so much of such person’s qualified production activities income as is attributable to items allocated under clause (ii) for the taxable year. (B)

Trusts and estates

In the case of a trust or estate— (i)the items referred to in subparagraph (A)(ii) (as determined therein) and the W–2 wages of the trust or estate for the taxable year, shall be apportioned between the beneficiaries and the fiduciary (and among the beneficiaries) under regulations prescribed by the Secretary, and (ii)for purposes of paragraph (2), adjusted gross income of the trust or estate shall be determined as provided in section 67(e) with the adjustments described in such paragraph. (C)

Regulations

The Secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the Secretary determines appropriate.

(9)Paragraph (3) of section 199(d) is amended to read as follows:

(3)

Agricultural and horticultural cooperatives

(A)

Deduction allowed to patrons

Any person who receives a qualified payment from a specified agricultural or horticultural cooperative shall be allowed for the taxable year in which such payment is received a deduction under subsection (a) equal to the portion of the deduction allowed under subsection (a) to such cooperative which is— (i)allowed with respect to the portion of the qualified production activities income to which such payment is attributable, and (ii)identified by such cooperative in a written notice mailed to such person during the payment period described in section 1382(d). (B)

Cooperative denied deduction for portion of qualified payments

The taxable income of a specified agricultural or horticultural cooperative shall not be reduced under section 1382 by reason of that portion of any qualified payment as does not exceed the deduction allowable under subparagraph (A) with respect to such payment. (C)

Taxable income of cooperatives determined without regard to certain deductions

For purposes of this section, the taxable income of a specified agricultural or horticultural cooperative shall be computed without regard to any deduction allowable under subsection (b) or (c) of section 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions). (D)

Special rule for marketing cooperatives

For purposes of this section, a specified agricultural or horticultural cooperative described in subparagraph (F)(ii) shall be treated as having manufactured, produced, grown, or extracted in whole or significant part any qualifying production property marketed by the organization which its patrons have so manufactured, produced, grown, or extracted. (E)

Qualified payment

For purposes of this paragraph, the term qualified payment means, with respect to any person, any amount which— (i)is described in paragraph (1) or (3) of section 1385(a), (ii)is received by such person from a specified agricultural or horticultural cooperative, and (iii)is attributable to qualified production activities income with respect to which a deduction is allowed to such cooperative under subsection (a). (F)

Specified agricultural or horticultural cooperative

For purposes of this paragraph, the term specified agricultural or horticultural cooperative means an organization to which part I of subchapter T applies which is engaged— (i)in the manufacturing, production, growth, or extraction in whole or significant part of any agricultural or horticultural product, or (ii)in the marketing of agricultural or horticultural products.

(10)Clause (i) of section 199(d)(4)(B) is amended— (A)by striking 50 percent and inserting more than 50 percent, and (B)by striking 80 percent and inserting at least 80 percent. (11) (A)Paragraph (6) of section 199(d) is amended to read as follows:

(6)

Coordination with minimum tax

For purposes of determining alternative minimum taxable income under section 55— (A)the deduction under this section shall be determined without regard to any adjustments under sections 56 through 59, and (B)in the case of a corporation, subsection (a)(1)(B) shall be applied by substituting alternative minimum taxable income for taxable income.

(B)Paragraph (2) of section 199(a) is amended by striking subsections (d)(1) and (d)(6) and inserting subsection (d)(1). (12)Subsection (d) of section 199 is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph:

(7)

Unrelated business taxable income

For purposes of determining the tax imposed by section 511, subsection (a)(1)(B) shall be applied by substituting unrelated business taxable income for taxable income.

(13)Subsection (d) of section 199, as amended by the preceding paragraphs of this subsection, is further amended by redesignating paragraph (8) as paragraph (9) and by inserting after paragraph (7) the following new paragraph:

(8)

Coordination with carryover of net operating loss

The deduction allowable under this section shall not be taken into account for purposes of computing taxable income under section 172(b)(2).

(14)Paragraph (9) of section 199(d), as redesignated by the preceding paragraphs of this subsection, is amended by inserting , including regulations which prevent more than 1 taxpayer from being allowed a deduction under this section with respect to any activity described in subsection (c)(4)(A)(i) before the period at the end. (15)Clause (i) of section 163(j)(6)(A) is amended by striking and at the end of subclause (II), by redesignating subclause (III) as subclause (IV), and by inserting after subclause (II) the following new subclause:

(III)any deduction allowable under section 199, and

(16)Paragraph (2) of section 170(b) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:

(C)section 199,

(17)Paragraph (1) of section 613A(d) is amended by redesignating subparagraphs (B), (C), and (D) as subparagraphs (C), (D), and (E), respectively, and by inserting after subparagraph (A) the following new subparagraph:

(B)any deduction allowable under section 199,

(18)Subsection (e) of section 102 of the American Jobs Creation Act of 2004 is amended to read as follows:

(e)

Effective date

(1)

In general

The amendments made by this section shall apply to taxable years beginning after December 31, 2004. (2)

Application to pass-thru entities, etc

In determining the deduction under section 199 of the Internal Revenue Code of 1986 (as added by this section), items arising from a taxable year of a partnership, S corporation, estate, or trust beginning before January 1, 2005, shall not be taken into account for purposes of subsection (d)(1) of such section.

(b)

Amendments related to section 231 of the Act

(1)Clause (ii) of section 1361(c)(1)(A) is amended by inserting (and their estates) after all members of the family. (2)Subparagraph (C) of section 1361(c)(1) is amended to read as follows:

(C)

Effect of adoption, etc

For purposes of this paragraph, any legally adopted child of an individual, any child who is lawfully placed with an individual for legal adoption by the individual, and any eligible foster child of an individual (within the meaning of section 152(f)(1)(C)), shall be treated as a child of such individual by blood.

(c)

Amendment related to section 235 of the Act

Subsection (b) of section 235 of the American Jobs Creation Act of 2004 is amended by striking taxable years beginning and inserting transfers. (d)

Amendments related to section 243 of the Act

(1)Paragraph (7) of section 856(c) is amended to read as follows:

(7)

Rules of application for failure to satisfy paragraph (4)

(A)

In general

A corporation, trust, or association that fails to meet the requirements of paragraph (4) (other than a failure to meet the requirements of paragraph (4)(B)(iii) which is described in subparagraph (B)(i) of this paragraph) for a particular quarter shall nevertheless be considered to have satisfied the requirements of such paragraph for such quarter if— (i)following the corporation, trust, or association’s identification of the failure to satisfy the requirements of such paragraph for a particular quarter, a description of each asset that causes the corporation, trust, or association to fail to satisfy the requirements of such paragraph at the close of such quarter of any taxable year is set forth in a schedule for such quarter filed in accordance with regulations prescribed by the Secretary, (ii)the failure to meet the requirements of such paragraph for a particular quarter is due to reasonable cause and not due to willful neglect, and (iii) (I)the corporation, trust, or association disposes of the assets set forth on the schedule specified in clause (i) within 6 months after the last day of the quarter in which the corporation, trust or association’s identification of the failure to satisfy the requirements of such paragraph occurred or such other time period prescribed by the Secretary and in the manner prescribed by the Secretary, or (II)the requirements of such paragraph are otherwise met within the time period specified in subclause (I). (B)

Rule for certain de minimis failures

A corporation, trust, or association that fails to meet the requirements of paragraph (4)(B)(iii) for a particular quarter shall nevertheless be considered to have satisfied the requirements of such paragraph for such quarter if— (i)such failure is due to the ownership of assets the total value of which does not exceed the lesser of— (I)1 percent of the total value of the trust’s assets at the end of the quarter for which such measurement is done, and (II)$10,000,000, and (ii) (I)the corporation, trust, or association, following the identification of such failure, disposes of assets in order to meet the requirements of such paragraph within 6 months after the last day of the quarter in which the corporation, trust or association’s identification of the failure to satisfy the requirements of such paragraph occurred or such other time period prescribed by the Secretary and in the manner prescribed by the Secretary, or (II)the requirements of such paragraph are otherwise met within the time period specified in subclause (I). (C)

Tax

(i)

Tax imposed

If subparagraph (A) applies to a corporation, trust, or association for any taxable year, there is hereby imposed on such corporation, trust, or association a tax in an amount equal to the greater of— (I)$50,000, or (II)the amount determined (pursuant to regulations promulgated by the Secretary) by multiplying the net income generated by the assets described in the schedule specified in subparagraph (A)(i) for the period specified in clause (ii) by the highest rate of tax specified in section 11. (ii)

Period

For purposes of clause (i)(II), the period described in this clause is the period beginning on the first date that the failure to satisfy the requirements of such paragraph (4) occurs as a result of the ownership of such assets and ending on the earlier of the date on which the trust disposes of such assets or the end of the first quarter when there is no longer a failure to satisfy such paragraph (4). (iii)

Administrative provisions

For purposes of subtitle F, the taxes imposed by this subparagraph shall be treated as excise taxes with respect to which the deficiency procedures of such subtitle apply.

(2)Subsection (m) of section 856 is amended by adding at the end the following new paragraph:

(6)

Transition rule

(A)

In general

Notwithstanding paragraph (2)(C), securities held by a trust shall not be considered securities held by the trust for purposes of subsection (c)(4)(B)(iii)(III) if such securities— (i)were held by such trust on October 22, 2004, and continuously thereafter, and (ii)would not be taken into account for purposes of such subsection by reason of paragraph (7)(C) of subsection (c) (as in effect on October 22, 2004) if the amendments made by section 243 of the American Jobs Creation Act of 2004 had never been enacted. (B)

Rule not to apply to securities held after maturity date

Subparagraph (A) shall not apply with respect to any security after the latest maturity date under the contract (as in effect on October 22, 2004) taking into account any renewal or extension permitted under the contract if such renewal or extension does not significantly modify any other terms of the contract. (C)

Successors

If the successor of a trust to which this paragraph applies acquires securities in a transaction to which section 381 applies, such trusts shall be treated as a single entity for purposes of determining the holding period of such securities under subparagraph (A)(i).

(3)Subparagraph (E) of section 857(b)(2) is amended by striking section 856(c)(7)(B)(iii), and section 856(g)(1). and inserting section 856(c)(7)(C), and section 856(g)(5). (4)Subsection (g) of section 243 of the American Jobs Creation Act of 2004 is amended to read as follows:

(g)

Effective dates

(1)

Subsections (a) and (b)

The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2000. (2)

Subsections (c) and (e)

The amendments made by subsections (c) and (e) shall apply to taxable years beginning after the date of the enactment of this Act. (3)

Subsection (d)

The amendment made by subsection (d) shall apply to transactions entered into after December 31, 2004. (4)

Subsection (f)

(A)The amendment made by paragraph (1) of subsection (f) shall apply to failures with respect to which the requirements of subparagraph (A) or (B) of section 856(c)(7) of the Internal Revenue Code of 1986 (as added by such paragraph) are satisfied after the date of the enactment of this Act. (B)The amendment made by paragraph (2) of subsection (f) shall apply to failures with respect to which the requirements of paragraph (6) of section 856(c) of the Internal Revenue Code of 1986 (as amended by such paragraph) are satisfied after the date of the enactment of this Act. (C)The amendments made by paragraph (3) of subsection (f) shall apply to failures with respect to which the requirements of paragraph (5) of section 856(g) of the Internal Revenue Code of 1986 (as added by such paragraph) are satisfied after the date of the enactment of this Act. (D)The amendment made by paragraph (4) of subsection (f) shall apply to taxable years ending after the date of the enactment of this Act. (E)The amendments made by paragraph (5) of subsection (f) shall apply to statements filed after the date of the enactment of this Act.

(e)

Amendments related to section 244 of the Act

(1)Paragraph (2) of section 181(d) is amended by striking the last sentence in subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph:

(B)

Special rules for television series

In the case of a television series— (i)each episode of such series shall be treated as a separate production, and (ii)only the first 44 episodes of such series shall be taken into account.

(2)Subparagraph (C) of section 1245(a)(2) is amended by inserting 181, after 179B,. (f)

Amendment related to section 245 of the Act

Subsection (b) of section 45G is amended to read as follows:

(b)

Limitation

The credit allowed under subsection (a) for any taxable year shall not exceed the product of— (1)$3,500, and (2)the sum of— (A)the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year, and (B)the number of miles of railroad track assigned for purposes of this subsection to the eligible taxpayer by a Class II or Class III railroad which owns or leases such railroad track as of the close of the taxable year.

Any mile which is assigned by a taxpayer under paragraph (2)(B) may not be taken into account by such taxpayer under paragraph (2)(A).

(g)

Amendments related to section 248 of the Act

(1)Subsection (c) of section 1356 is amended— (A)by striking paragraph (3), and (B)by adding at the end of paragraph (2) the following new flush sentence:

Such term shall not include any core qualifying activities.

(2)The last sentence of section 1354(b) is amended by inserting on or after only if made. (h)

Amendment related to section 301 of the Act

Section 6427 is amended by striking subsection (f). (i)

Amendment related to section 314 of the Act

Paragraph (2) of section 55(c) is amended by striking regular tax and inserting regular tax liability. (j)

Amendments related to section 322 of the Act

(1)Subparagraph (C) of section 49(a)(1) is amended by inserting and at the end of clause (i), by striking and at the end of clause (ii), and by striking clause (iii). (2) (A)Subparagraph (B) of section 194(b)(1) is amended to read as follows:

(B)

Dollar limitation

The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed— (i)except as provided in clause (ii) or (iii), $10,000, (ii)in the case of a separate return by a married individual (as defined in section 7703), $5,000, and (iii)in the case of a trust, zero.

(B)Paragraph (4) of section 194(c) is amended to read as follows:

(4)

Treatment of trusts and estates

The aggregate amount of reforestation expenditures incurred by any trust or estate shall be apportioned between the income beneficiaries and the fiduciary under regulations prescribed by the Secretary. Any amount so apportioned to a beneficiary shall be taken into account as expenditures incurred by such beneficiary in applying this section to such beneficiary.

(3)Subparagraph (C) of section 1245(a)(2) is amended by striking or 193 and inserting 193, or 194. (k)

Amendments related to section 336 of the Act

(1)Clause (iv) of section 168(k)(2)(A) is amended by striking subparagraphs (B) and (C) and inserting subparagraph (B) or (C). (2)Clause (iii) of section 168(k)(4)(B) is amended by striking and paragraph (2)(C) and inserting or paragraph (2)(C) (as so modified). (l)

Amendment related to section 402 of the Act

Paragraph (2) of section 904(g) is amended to read as follows:

(2)

Overall domestic loss

For purposes of this subsection— (A)

In general

The term overall domestic loss means— (i)with respect to any qualified taxable year, the domestic loss for such taxable year to the extent such loss offsets taxable income from sources without the United States for the taxable year or for any preceding qualified taxable year by reason of a carryback, and (ii)with respect to any other taxable year, the domestic loss for such taxable year to the extent such loss offsets taxable income from sources without the United States for any preceding qualified taxable year by reason of a carryback. (B)

Domestic loss

For purposes of subparagraph (A), the term domestic loss means the amount by which the gross income for the taxable year from sources within the United States is exceeded by the sum of the deductions properly apportioned or allocated thereto (determined without regard to any carryback from a subsequent taxable year). (C)

Qualified taxable year

For purposes of subparagraph (A), the term qualified taxable year means any taxable year for which the taxpayer chose the benefits of this subpart.

(m)

Amendment related to section 403 of the Act

Section 403 of the American Jobs Creation Act of 2004 is amended by adding at the end the following new subsection:

(d)

Transition rule

If the taxpayer elects (at such time and in such form and manner as the Secretary of the Treasury may prescribe) to have the rules of this subsection apply— (1)the amendments made by this section shall not apply to taxable years beginning after December 31, 2002, and before January 1, 2005, and (2)in the case of taxable years beginning after December 31, 2004, clause (iv) of section 904(d)(4)(C) of the Internal Revenue Code of 1986 (as amended by this section) shall be applied by substituting January 1, 2005 for January 1, 2003 both places it appears.

(n)

Amendments related to section 413 of the Act

(1)Subsection (b) of section 532 is amended by striking paragraph (2) and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively. (2)Subsection (b) of section 535 is amended by adding at the end the following new paragraph:

(10)

Controlled foreign corporations

There shall be allowed as a deduction the amount of the corporation’s income for the taxable year which is included in the gross income of a United States shareholder under section 951(a). In the case of any corporation the accumulated taxable income of which would (but for this sentence) be determined without allowance of any deductions, the deduction under this paragraph shall be allowed and shall be appropriately adjusted to take into account any deductions which reduced such inclusion.

(o)

Amendment related to section 415 of the Act

Subparagraph (D) of section 904(d)(2) is amended by inserting as in effect before its repeal after section 954(f). (p)

Amendments related to section 418 of the Act

(1)The second sentence of section 897(h)(1) is amended— (A)by striking any distribution and all that follows through any class of stock and inserting any distribution by a real estate investment trust with respect to any class of stock, and (B)by striking the taxable year and inserting the 1-year period ending on the date of the distribution. (2)Subsection (c) of section 418 of the American Jobs Creation Act of 2004 is amended by striking taxable years beginning after the date of the enactment of this Act and inserting any distribution by a real estate investment trust which is treated as a deduction for a taxable year of such trust beginning after the date of the enactment of this Act. (q)

Amendments related to section 422 of the Act

(1)Subparagraph (B) of section 965(a)(2) is amended by inserting from another controlled foreign corporation in such chain of ownership before , but only to the extent. (2)Subparagraph (A) of section 965(b)(2) is amended by inserting cash before dividends. (3)Paragraph (3) of section 965(b) is amended by adding at the end the following: The Secretary may prescribe such regulations as may be necessary or appropriate to prevent the avoidance of the purposes of this paragraph, including regulations which provide that cash dividends shall not be taken into account under subsection (a) to the extent such dividends are attributable to the direct or indirect transfer (including through the use of intervening entities or capital contributions) of cash or other property from a related person (as so defined) to a controlled foreign corporation.. (4)Paragraph (1) of section 965(c) is amended to read as follows:

(1)

Applicable financial statement

The term applicable financial statement means— (A)with respect to a United States shareholder which is required to file a financial statement with the Securities and Exchange Commission (or which is included in such a statement so filed by another person), the most recent audited annual financial statement (including the notes which form an integral part of such statement) of such shareholder (or which includes such shareholder)— (i)which was so filed on or before June 30, 2003, and (ii)which was certified on or before June 30, 2003, as being prepared in accordance with generally accepted accounting principles, and (B)with respect to any other United States shareholder, the most recent audited financial statement (including the notes which form an integral part of such statement) of such shareholder (or which includes such shareholder)— (i)which was certified on or before June 30, 2003, as being prepared in accordance with generally accepted accounting principles, and (ii)which is used for the purposes of a statement or report— (I)to creditors, (II)to shareholders, or (III)for any other substantial nontax purpose.

(5)Paragraph (2) of section 965(d) is amended by striking properly allocated and apportioned and inserting directly allocable. (6)Subsection (d) of section 965 is amended by adding at the end the following new paragraph:

(4)

Coordination with section 78

Section 78 shall not apply to any tax which is not allowable as a credit under section 901 by reason of this subsection.

(7)The last sentence of section 965(e)(1) is amended by inserting which are imposed by foreign countries and possessions of the United States and are after taxes. (8)Subsection (f) of section 965 is amended by inserting on or before before the due date. (r)

Amendments related to section 501 of the Act

(1)Subparagraph (A) of section 164(b)(5) is amended to read as follows:

(A)

Election to deduct State and local sales taxes in lieu of State and local Income taxes

At the election of the taxpayer for the taxable year, subsection (a) shall be applied— (i)without regard to the reference to State and local income taxes, and (ii)as if State and local general sales taxes were referred to in a paragraph thereof.

(2)Clause (ii) of section 56(b)(1)(A) is amended by inserting or clause (ii) of section 164(b)(5)(A) before the period at the end. (s)

Amendments related to section 708 of the Act

Section 708 of the American Jobs Creation Act of 2004 is amended— (1)in subsection (a), by striking contract commencement date and inserting construction commencement date, and (2)by redesignating subsection (d) as subsection (e) and inserting after subsection (c) the following new subsection:

(d)

Certain adjustments not to apply

Section 481 of the Internal Revenue Code of 1986 shall not apply with respect to any change in the method of accounting which is required by this section.

(t)

Amendments related to section 710 of the Act

(1)Clause (ii) of section 45(b)(4)(B) is amended by striking the date of the enactment of this Act and inserting January 1, 2005,. (2)Clause (ii) of section 45(c)(3)(A) is amended by inserting or any nonhazardous lignin waste material after cellulosic waste material. (3)Subsection (e) of section 45 is amended by striking paragraph (6). (4) (A)Paragraph (9) of section 45(e) is amended to read as follows:

(9)

Coordination with credit for producing fuel from a nonconventional source

(A)

In general

The term qualified facility shall not include any facility which produces electricity from gas derived from the biodegradation of municipal solid waste if such biodegradation occurred in a facility (within the meaning of section 29) the production from which is allowed as a credit under section 29 for the taxable year or any prior taxable year. (B)

Refined coal facilities

The term refined coal production facility shall not include any facility the production from which is allowed as a credit under section 29 for the taxable year or any prior taxable year.

(B)Subparagraph (C) of section 45(e)(8) is amended by striking and (9). (5)Subclause (I) of section 168(e)(3)(B)(vi) is amended to read as follows:

(I)is described in subparagraph (A) of section 48(a)(3) (or would be so described if solar and wind were substituted for solar in clause (i) thereof and the last sentence of such section did not apply to such subparagraph),

(6)Paragraph (4) of section 710(g) of the American Jobs Creation Act of 2004 is amended by striking January 1, 2004 and inserting January 1, 2005. (u)

Amendment related to section 801 of the Act

Paragraph (3) of section 7874(a) is amended to read as follows:

(3)

Coordination with subsection (b)

A corporation which is treated as a domestic corporation under subsection (b) shall not be treated as a surrogate foreign corporation for purposes of paragraph (2)(A).

(v)

Amendments related to section 804 of the Act

(1)Subparagraph (C) of section 877(g)(2) is amended by striking section 7701(b)(3)(D)(ii) and inserting section 7701(b)(3)(D). (2)Subsection (n) of section 7701 is amended to read as follows:

(n)

Special rules for determining when an individual is no longer a United States citizen or long-term resident

For purposes of this chapter— (1)

United States citizens

An individual who would (but for this paragraph) cease to be treated as a citizen of the United States shall continue to be treated as a citizen of the United States until such individual— (A)gives notice of an expatriating act (with the requisite intent to relinquish citizenship) to the Secretary of State, and (B)provides a statement in accordance with section 6039G (if such a statement is otherwise required). (2)

Long-term residents

A long-term resident (as defined in section 877(e)(2)) who would (but for this paragraph) be described in section 877(e)(1) shall be treated as a lawful permanent resident of the United States and as not described in section 877(e)(1) until such individual— (A)gives notice of termination of residency (with the requisite intent to terminate residency) to the Secretary of Homeland Security, and (B)provides a statement in accordance with section 6039G (if such a statement is otherwise required).

(w)

Amendment related to section 811 of the Act

Subsection (c) of section 811 of the American Jobs Creation Act of 2004 is amended by inserting and which were not filed before such date before the period at the end. (x)

Amendments related to section 812 of the Act

(1)Subsection (b) of section 6662 is amended by adding at the end the following new sentence: Except as provided in paragraph (1) or (2)(B) of section 6662A(e), this section shall not apply to the portion of any underpayment which is attributable to a reportable transaction understatement on which a penalty is imposed under section 6662A. (2)Paragraph (2) of section 6662A(e) is amended to read as follows:

(2)

Coordination with other penalties

(A)

Coordination with fraud penalty

This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6663. (B)

Coordination with gross valuation misstatement penalty

This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6662 if the rate of the penalty is determined under section 6662(h).

(3)Subsection (f) of section 812 of the American Jobs Creation Act of 2004 is amended to read as follows:

(f)

Effective Dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. (2)

Disqualified opinions

Section 6664(d)(3)(B) of the Internal Revenue Code of 1986 (as added by subsection (c)) shall not apply to the opinion of a tax advisor if— (A)the opinion was provided to the taxpayer before the date of the enactment of this Act, (B)the opinion relates to one or more transactions all of which were entered into before such date, and (C)the tax treatment of items relating to each such transaction was included on a return or statement filed by the taxpayer before such date.

(y)

Amendment related to section 814 of the Act

Subparagraph (B) of section 6501(a)(10) is amended by striking (as defined in section 6111). (z)

Amendment related to section 815 of the Act

Paragraph (1) of section 6112(b) is amended (or was required to maintain a list under subsection (a) as in effect before the enactment of the American Jobs Creation Act of 2004) after a list under subsection (a). (aa)

Amendments related to section 832 of the Act

(1)Subsection (e) of section 853 is amended to read as follows:

(e)

Treatment of certain taxes not allowed as a credit under section 901

This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of subsection (k) or (l) of such section.

(2)Clause (i) of section 901(l)(2)(C) is amended by striking if such security were stock. (bb)

Amendments related to section 833 of the Act

(1)Subsection (a) of section 734 is amended by inserting with respect to such distribution before the period at the end. (2)So much of subsection (b) of section 734 as precedes paragraph (1) is amended to read as follows:

(b)

Method of adjustment

In the case of a distribution of property to a partner by a partnership with respect to which the election provided in section 754 is in effect or with respect to which there is a substantial basis reduction, the partnership shall—

(cc)

Amendment related to section 835 of the Act

Paragraph (3) of section 860G(a) is amended— (1)in subparagraph (A)(iii)(I), by striking the obligation and inserting a reverse mortgage loan or other obligation, and (2)by striking all that follows subparagraph (C) and inserting the following:

For purposes of subparagraph (A), any obligation secured by stock held by a person as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by an interest in real property. For purposes of subparagraph (A), any obligation originated by the United States or any State (or any political subdivision, agency, or instrumentality of the United States or any State) shall be treated as principally secured by an interest in real property if more than 50 percent of such obligations which are transferred to, or purchased by, the REMIC are principally secured by an interest in real property (determined without regard to this sentence).

(dd)

Amendments related to section 836 of the Act

(1)Paragraph (1) of section 334(b) is amended by striking except that and all that follows and inserting

except that, in the hands of such distributee— (A)the basis of such property shall be the fair market value of the property at the time of the distribution in any case in which gain or loss is recognized by the liquidating corporation with respect to such property, and (B)the basis of any property described in section 362(e)(1)(B) shall be the fair market value of the property at the time of the distribution in any case in which such distributee’s aggregate adjusted basis of such property would (but for this subparagraph) exceed the fair market value of such property immediately after such liquidation.

(2)Clause (ii) of section 362(e)(2)(C) is amended to read as follows:

(ii)

Election

Any election under clause (i) shall be made at such time and in such form and manner as the Secretary may prescribe, and, once made, shall be irrevocable.

(ee)

Amendment related to section 840 of the Act

Subsection (d) of section 121 is amended— (1)by redesignating the paragraph (10) relating to property acquired from a decedent as paragraph (11) and by moving such paragraph to the end of such subsection, and (2)by amending the paragraph (10) relating to property acquired in like-kind exchange to read as follows:

(10)

Property acquired in like-kind exchange

If a taxpayer acquires property in an exchange with respect to which gain is not recognized (in whole or in part) to the taxpayer under subsection (a) or (b) of section 1031, subsection (a) shall not apply to the sale or exchange of such property by such taxpayer (or by any person whose basis in such property is determined, in whole or in part, by reference to the basis in the hands of such taxpayer) during the 5-year period beginning with the date of such acquisition.

(ff)

Amendment related to section 849 of the Act

Subsection (a) of section 849 of the American Jobs Creation Act of 2004 is amended by inserting , and in the case of property treated as tax-exempt use property other than by reason of a lease, to property acquired after March 12, 2004 before the period at the end. (gg)

Amendments related to section 853 of the Act

(1)Subparagraph (C) of section 4081(a)(2) is amended by striking for use in commercial aviation and inserting for use in commercial aviation by a person registered for such use under section 4101. (2)So much of paragraph (2) of section 4081(d) as precedes subparagraph (A) is amended to read as follows:

(2)

Aviation fuels

The rates of tax specified in clauses (ii) and (iv) of subsection (a)(2)(A) shall be 4.3 cents per gallon—

(hh)

Amendment related to section 884 of the Act

Subparagraph (B) of section 170(f)(12) is amended by adding at the end the following new clauses:

(v)Whether the donee organization provided any goods or services in consideration, in whole or in part, for the qualified vehicle. (vi)A description and good faith estimate of the value of any goods or services referred to in clause (v) or, if such goods or services consist solely of intangible religious benefits (as defined in paragraph (8)(B)), a statement to that effect.

(ii)

Amendments related to section 885 of the Act

(1)Paragraph (2) of section 26(b) is amended by striking and at the end of subparagraph (R), by striking the period at the end of subparagraph (S) and inserting , and, and by adding at the end the following new subparagraph:

(T)subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A (relating to interest and additional tax with respect to certain deferred compensation).

(2)Clause (ii) of section 409A(a)(4)(C) is amended by striking first. (3) (A)Notwithstanding section 885(d)(1) of the American Jobs Creation Act of 2004, subsection (b) of section 409A of the Internal Revenue Code of 1986 shall take effect on January 1, 2005. (B)Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance under which a nonqualified deferred compensation plan which is in violation of the requirements of section 409A(b) of such Code shall be treated as not having violated such requirements if such plan comes into conformance with such requirements during such limited period as the Secretary may specify in such guidance. (4)Subsection (f) of section 885 of the American Jobs Creation Act of 2004 is amended by striking December 31, 2004 the first place it appears and inserting January 1, 2005. (jj)

Amendments related to section 898 of the Act

(1)Paragraph (3) of section 361(b) is amended by inserting (reduced by the amount of the liabilities assumed (within the meaning of section 357(c))) before the period at the end. (2)Paragraph (1) of section 357(d) is amended by inserting section 361(b)(3), after section 358(h),. (kk)

Amendment related to section 899 of the Act

Subparagraph (A) of section 351(g)(3) is amended by adding at the end the following: If there is not a real and meaningful likelihood that dividends beyond any limitation or preference will actually be paid, the possibility of such payments will be disregarded in determining whether stock is limited and preferred as to dividends.. (ll)

Amendment related to section 902 of the Act

Paragraph (1) of section 709(b) is amended by striking taxpayer both places it appears and inserting partnership. (mm)

Amendment related to section 909 of the Act

Clause (ii) of section 451(i)(4)(B) is amended by striking the close of the period applicable under subsection (a)(2)(B) as extended under paragraph (2) and inserting December 31, 2006. (nn)

Effective date

The amendments made by this section shall take effect as if included in the provisions of the American Jobs Creation Act of 2004 to which they relate.

Clerical corrections

(a)Subparagraph (C) of section 2(b)(2) is amended by striking subparagraph (C) and inserting subparagraph (B). (b)Subparagraph (E) of section 26(b)(2) is amended by striking section 530(d)(3) and inserting section 530(d)(4). (c) (1)Subclause (II) of section 38(c)(2)(A)(ii) is amended by striking or the New York Liberty Zone business employee credit or the specified credits and inserting , the New York Liberty Zone business employee credit, and the specified credits. (2)Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking or the specified credits and inserting and the specified credits. (3)Subparagraph (B) of section 38(c)(4) is amended— (A)by striking includes and inserting means, and (B)by inserting and at the end of clause (i). (d) (1)Subparagraph (A) of section 39(a)(1) is amended by striking each of the 1 taxable years and by inserting the taxable year. (2)Subparagraph (B) of section 39(a)(3) is amended to read as follows:

(B)paragraph (1) shall be applied by substituting each of the 5 taxable years for the taxable year in subparagraph (A) thereof, and

(e)Paragraph (5) of section 43(c) is amended to read as follows:

(5)

Alaska natural gas

For purposes of paragraph (1)(D)— (A)

In general

The term Alaska natural gas means natural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well— (i)located in the area of the State of Alaska lying north of 64 degrees North latitude, determined by excluding the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)), and (ii)pursuant to the applicable State and Federal pollution prevention, control, and permit requirements from such area (including the continental shelf thereof within the meaning of section 638(1)). (B)

Natural gas

The term natural gas has the meaning given such term by section 613A(e)(2).

(f)Paragraph (2) of section 45I(a) is amended by striking qualified credit oil production and inserting qualified crude oil production. (g)Subparagraph (E) of section 50(a)(2) is amended by striking section 48(a)(5) and inserting section 48(b). (h) (1)Subsection (a) of section 62 is amended— (A)by redesignating paragraph (19) (relating to costs involving discrimination suits, etc.), as added by section 703 of the American Jobs Creation Act of 2004, as paragraph (20), and (B)by moving such paragraph after paragraph (19) (relating to health savings accounts). (2)Subsection (e) of section 62 is amended by striking subsection (a)(19) and inserting subsection (a)(20). (i)Paragraph (3) of section 167(f) is amended by striking section 197(e)(7) and inserting section 197(e)(6). (j)Subparagraph (D) of section 168(i)(15) is amended by striking This paragraph shall not apply to and inserting Such term shall not include. (k)Paragraph (2) of section 221(d) is amended by striking this Act and inserting the Taxpayer Relief Act of 1997. (l)Paragraph (8) of section 318(b) is amended by striking section 6038(d)(2) and inserting section 6038(e)(2). (m)Subparagraph (B) of section 332(d)(1) is amended by striking distribution to which section 301 applies and inserting distribution of property to which section 301 applies. (n)Paragraph (1) of section 415(l) is amended by striking individual medical account and inserting individual medical benefit account. (o)The matter following clause (iv) of section 415(n)(3)(C) is amended by striking clauses and inserting clause. (p)Paragraph (12) of section 501(c) is amended— (1)by striking subparagraph (C)(iii) in subparagraph (F) and inserting subparagraph (C)(iv), and (2)by striking subparagraph (C)(iv) in subparagraph (G) and inserting subparagraph (C)(v). (q)Clause (ii) of section 501(c)(22)(B) is amended by striking clause (ii) of paragraph (21)(B) and inserting clause (ii) of paragraph (21)(D). (r)Paragraph (1) of section 512(b) is amended by striking section 512(a)(5) and inserting subsection (a)(5). (s) (1)Subsection (b) of section 512 is amended— (A)by redesignating paragraph (18) (relating to the treatment of gain or loss on sale or exchange of certain brownfield sites), as added by section 702 of the American Jobs Creation Act of 2004, as paragraph (19), and (B)by moving such paragraph to the end of such subsection. (2)Subparagraph (E) of section 514(b)(1) is amended by striking section 512(b)(18) and inserting section 512(b)(19). (t) (1)Subsection (b) of section 530 is amended by striking paragraph (3) and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively. (2)Clause (ii) of section 530(b)(2)(A) is amended by striking paragraph (4) and inserting paragraph (3). (u)Section 881(e)(1)(C) is amended by inserting interest-related dividend received by a controlled foreign corporation after shall apply to any. (v)Clause (i) of section 954(c)(1)(C) is amended by striking paragraph (4)(A) and inserting paragraph (5)(A). (w)Subparagraph (F) of section 954(c)(1) is amended by striking Net income from notional principal contracts. after Income from notional principal contracts.—. (x)Paragraph (23) of section 1016(a) is amended by striking 1045(b)(4) and inserting 1045(b)(3). (y)Paragraph (1) of section 1256(f) is amended by striking subsection (e)(2)(C) and inserting subsection (e)(2). (z)The matter preceding clause (i) of section 1031(h)(2)(B) is amended by striking subparagraph and inserting subparagraphs. (aa)Paragraphs (1) and (2) of section 1375(d) are each amended by striking subchapter C and inserting accumulated. (bb)Each of the following provisions are amended by striking General Accounting Office each place it appears therein and inserting Government Accountability Office: (1)Clause (ii) of section 1400E(c)(4)(A). (2)Paragraph (1) of section 6050M(b). (3)Subparagraphs (A), (B)(i), and (B)(ii) of section 6103(i)(8). (4)Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section 6103(p). (5)Subsection (e) of section 8021. (cc) (1)Clause (ii) of section 1400L(b)(2)(C) is amended by striking section 168(k)(2)(C)(i) and inserting section 168(k)(2)(D)(i). (2)Clause (iv) of section 1400L(b)(2)(C) is amended by striking section 168(k)(2)(C)(iii) and inserting section 168(k)(2)(D)(iii). (3)Subparagraph (D) of section 1400L(b)(2) is amended by striking section 168(k)(2)(D) and inserting section 168(k)(2)(E). (4)Subparagraph (E) of section 1400L(b)(2) is amended by striking section 168(k)(2)(F) and inserting section 168(k)(2)(G). (5)Paragraph (5) of section 1400L(c) is amended by striking section 168(k)(2)(C)(iii) and inserting section 168(k)(2)(D)(iii). (dd)Section 3401 is amended by redesignating subsection (h) as subsection (g). (ee)Paragraph (2) of section 4161(a) is amended to read as follows:

(2)

3 percent rate of tax for electric outboard motors

In the case of an electric outboard motor, paragraph (1) shall be applied by substituting 3 percent for 10 percent.

(ff)Subparagraph (C) of section 4261(e)(4) is amended by striking imposed subsection (b) and inserting imposed by subsection (b). (gg)Subsection (a) of section 4980D is amended by striking plans and inserting plan. (hh)The matter following clause (iii) of section 6045(e)(5)(A) is amended by striking for $250,000. and all that follows through to the Treasury. and inserting for $250,000. The Secretary may by regulation increase the dollar amounts under this subparagraph if the Secretary determines that such an increase will not materially reduce revenues to the Treasury.. (ii)Subsection (p) of section 6103 is amended— (1)by striking so much of paragraph (4) as precedes subparagraph (A) and inserting the following:

(4)

Safeguards

Any Federal agency described in subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7), (j)(1), (2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11), (13), (14), or (17) or (o)(1), the Government Accountability Office, the Congressional Budget Office, or any agency, body, or commission described in subsection (d), (i)(3)(B)(i) or 7(A)(ii), or (l)(6), (7), (8), (9), (12), (15), or (16) or any other person described in subsection (l)(16), (18), (19), or (20) shall, as a condition for receiving returns or return information—

(2)by amending paragraph (4)(F)(i) to read as follows:

(i)in the case of an agency, body, or commission described in subsection (d), (i)(3)(B)(i), or (l)(6), (7), (8), (9), or (16), or any other person described in subsection (l)(16), (18), (19), or (20) return to the Secretary such returns or return information (along with any copies made therefrom) or make such returns or return information undisclosable in any manner and furnish a written report to the Secretary describing such manner,

, and

(3)by striking the first full sentence in the matter following subparagraph (F) of paragraph (4) and inserting the following: If the Secretary determines that any such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (18), (19), or (20), or the Government Accountability Office or the Congressional Budget Office, has failed to, or does not, meet the requirements of this paragraph, he may, after any proceedings for review established under paragraph (7), take such actions as are necessary to ensure such requirements are met, including refusing to disclose returns or return information to such agency, body, or commission, including an agency or any other person described in subsection (l)(16), (18), (19), or (20), or the Government Accountability Office or the Congressional Budget Office, until he determines that such requirements have been or will be met.. (jj)Clause (ii) of section 6111(b)(1)(A) is amended by striking advice or assistance and inserting aid, assistance, or advice. (kk)Section 6427 is amended by striking subsection (o) and by redesignating subsection (p) as subsection (o). (ll)Paragraph (3) of section 6662(d) is amended by striking the before 1 or more.