109 HR 3841 IH: Small Employer Tax Relief Act of 2005
U.S. House of Representatives
2005-09-21
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; amendment of 1986 Code; table of contents
(a)This Act may be cited as the Small Employer Tax Relief Act of 2005
.
(b)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)The table of contents is as follows:
Sec. 1. Short title; amendment of 1986 Code; table of contents
Title I—Tax relief
Sec. 101. SECA tax deduction for health insurance costs
Sec. 102. Repeal of Federal unemployment surtax
Sec. 103. Increase in expense treatment for small businesses
Sec. 104. Increased deduction for business meal expenses
Sec. 105. Alternative minimum tax
Sec. 106. Credit for expenses for long-term training of employees in highly skilled small business trades
Sec. 107. Permanent extension of work opportunity credit and Welfare-to-Work credit
Sec. 108. Increase in contribution limits applicable to simple retirement accounts
Sec. 109. Recovery period for depreciation of replacement roof systems, qualified leasehold improvement properties, and qualified restaurant properties
Title II—Tax simplification
Sec. 201. Depreciation modifications
Sec. 202. Simplification of estimated tax rules
Sec. 203. Qualified joint ventures operated by husband and wife as co-owners
Sec. 204. Increase in Self-Employment exemption amount
Sec. 205. Standard home office deduction
Title III—S corporation reform and simplification
Sec. 301. Treatment of bank director shares
Sec. 302. Extension of time for making s corporation elections
Title IV—Taxpayer protections
Sec. 401. Taxpayer’s right to have an IRS examination take place at another site
Sec. 402. Relief from penalties for deposits of taxes made on a timely basis but not in the prescribed manner
<enum>I</enum><header>Tax relief</header>
<section id="H9293034AB9FF409BA8FEB2F8AEE6164"><enum>101.</enum><header>SECA tax deduction for health insurance costs</header>
<subsection id="H217D2C6B37384B5BA8EACDB5EC4888DA"><enum>(a)</enum><header>In general</header><text>Subsection (l) of section 162 (relating to special rules for health insurance costs of self-employed individuals) is amended by striking paragraph (4) and by redesignating paragraph (5) as paragraph (4).</text></subsection>
<subsection id="H9A377923F5EF4B2681FF43B6EDA2304"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection>
<subsection id="H7135FE6402584FA1BBB4FBF7C2B6E578"><enum>(c)</enum><header>Social security trust funds held harmless</header><text>There are hereby appropriated (out of any money in the Treasury not otherwise appropriated) for each fiscal year to each fund under the <act-name parsable-cite="SSA">Social Security Act</act-name> an amount equal to the reduction in the transfers to such fund for such fiscal year by reason of the amendment made by this section.</text></subsection></section>
<section id="H3D04B3F61FCA46D6933FC361F67F7F13"><enum>102.</enum><header>Repeal of Federal unemployment surtax</header>
<subsection id="H87B557C9AD814F4B812F99A4926BD2A0"><enum>(a)</enum><header>In general</header><text>Section 3301 (relating to rate of Federal unemployment tax) is amended—</text>
<paragraph id="H47663A546D6F4E30B8FAE6E697ED00A2"><enum>(1)</enum><text>by striking <quote>2007</quote> and inserting <quote>2005</quote>, and</text></paragraph>
<paragraph id="HEAFFDEDDE92742DE8387E9BCCB9DC160"><enum>(2)</enum><text>by striking <quote>2008</quote> and inserting <quote>2006</quote>.</text></paragraph></subsection>
<subsection id="HEE57BAA75EDD42CDB873FF3EAA239BD4"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to calendar years beginning after December 31, 2005.</text></subsection></section>
<section id="HEDC300E0E23945A9BB5193B5FB168B0"><enum>103.</enum><header>Increase in expense treatment for small businesses</header>
<subsection id="H2A21453F81AF4343B93E034D665416FA"><enum>(a)</enum><header>In general</header><text>Section 179(b)(1) (relating to dollar limitation) is amended by striking <quote>$25,000 ($100,000 in the case of taxable years beginning after 2002 and before 2008)</quote> and inserting <quote>$100,000</quote>.</text></subsection>
<subsection id="H427EBFCF8DBD4A918268AABCB5143112"><enum>(b)</enum><header>Expansion of Phase-Out of limitation</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/179">Section 179(b)(2)</external-xref> is amended by striking <quote>$200,000 ($400,000 in the case of taxable years beginning after 2002 and before 2008)</quote> and inserting <quote>$400,000</quote>.</text></subsection>
<subsection id="H24C52B4A61614E0296E2B8A0F68F3B63"><enum>(c)</enum><header>Inflation adjustments</header><text>Section 179(b)(5)(A) (relating to inflation adjustments) is amended by striking <quote>and before 2008</quote>.</text></subsection>
<subsection id="H66CB1303D12A44A083E6079C1600D3D"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2007.</text></subsection></section>
<section id="HB13684A2B92841EBAE152F682000B300"><enum>104.</enum><header>Increased deduction for business meal expenses</header>
<subsection id="H27F7AAB281F444E1867731C5F3F63F4B"><enum>(a)</enum><header>In general</header><text>Section 274(n)(1) (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by striking <quote>50 percent</quote> in the text and inserting <quote>the allowable percentage</quote>.</text></subsection>
<subsection id="H75265E8B95EE45B4842DF001FF9C491"><enum>(b)</enum><header>Allowable percentage</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/274">Section 274(n)</external-xref> is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph:</text>
<quoted-block id="HEB2615AC1AD74808A347609EA39C06B9">
<paragraph id="HEF5B1190845D4A06BEDAFEACBFBDBDB7"><enum>(2)</enum><header>Allowable percentage</header><text>For purposes of paragraph (1), the allowable percentage is—</text>
<subparagraph id="HB9E4B636F2854CAFBC267CB257AB5181"><enum>(A)</enum><text>in the case of amounts for items described in paragraph (1)(B), 50 percent, and</text></subparagraph>
<subparagraph id="H5F068E12EEA244ABAFE888E452046DDB"><enum>(B)</enum><text>in the case of expenses for food or beverages, 80 percent.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HA97D52137D76402C88975EE6293130CF"><enum>(c)</enum><header>Conforming amendments</header>
<paragraph id="H3A4D814AC8424D2E85FF8513562870AD"><enum>(1)</enum><text>The heading for subsection (n) of <external-xref legal-doc="usc" parsable-cite="usc/26/274">section 274</external-xref> is amended by striking <quote>50 <header-in-text level="subsection">Percent</header-in-text></quote> and inserting <quote><header-in-text level="subsection">Limited Percentages</header-in-text></quote>.</text></paragraph>
<paragraph id="HB3FCBD0753264CBF90DA9D23AEF9FF5B"><enum>(2)</enum><text>Subparagraph (A) of section 274(n)(4), as redesignated by this section, is amended by striking <quote>paragraph (1)</quote> and inserting <quote>paragraph (2)(A)</quote>.</text></paragraph></subsection>
<subsection id="HD09E2D99724E4438B26EF13D900F993"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2005.</text></subsection></section>
<section id="H62643386F9AF48B49EC1B2EFBD5B67"><enum>105.</enum><header>Alternative minimum tax</header>
<subsection id="HE22838370B2D4CBC83BF3D93B08002E"><enum>(a)</enum><header>Repeal of alternative minimum tax on individuals</header>
<paragraph id="H3BA35804FA414A1A907C93F100BAF00"><enum>(1)</enum><header>In general</header><text>Section 55(a) (relating to alternative minimum tax) is amended by adding at the end the following new flush sentence:</text>
<quoted-block id="H7609A6E45DB14506942228E0C19FDA"> <quoted-block-continuation-text quoted-block-continuation-text-level="section">For purposes of this title, the tentative minimum tax on any taxpayer other than a corporation for any taxable year beginning after December 31, 2009, shall be zero.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H169D4E3BA19A451F824634B8CF4BB6C"><enum>(2)</enum><header>Reduction of tax on individuals prior to repeal</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/55">Section 55</external-xref> is amended by adding at the end the following new subsection:</text>
<quoted-block id="H20DD34F6285143E192B2A5E66F1EB85">
<subsection id="H1953E2D5816D450FA3D6E5FCC14B6C82"><enum>(f)</enum><header>Phaseout of tax on individuals</header>
<paragraph id="HC29E6C7957B64D1388CD5CA500B2DDCD"><enum>(1)</enum><header>In general</header><text>The tax imposed by this section on a taxpayer other than a corporation for any taxable year beginning after December 31, 2005, and before January 1, 2010, shall be the applicable percentage of the tax which would be imposed but for this subsection.</text></paragraph>
<paragraph id="H038A43E992C243E6A0656724AA418BBE"><enum>(2)</enum><header>Applicable percentage</header><text>For purposes of paragraph (1), the applicable percentage shall be determined in accordance with the following table:</text>
<table table-type="subformat-2-Flush-Hang-Box-Right-Col-Fig" align-to-level="paragraph" frame="none" line-rules="no-gen" rule-weights="0.0.0.4.0.0" blank-lines-before="1" subformat="S6211">
<tgroup cols="2"><colspec colname="col1" coldef="txt" min-data-value="0" colwidth="275" colsep="0"/><colspec colname="col2" coldef="txt" min-data-value="0" colwidth="100" colsep="0"/><thead>
<row><entry colname="I49" align="left" rowsep="0"><bold>For taxable years beginning</bold></entry><entry colname="I50" align="right" rowsep="0"><bold>The applicable</bold></entry></row>
<row><entry colname="I49" align="left" rowsep="0"> <bold> in calendar year—</bold></entry><entry colname="I50" align="right" rowsep="0"><bold>percentage is—</bold></entry></row></thead>
<tbody>
<row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">2006</entry><entry colname="I07" align="right" rowsep="0">80</entry></row>
<row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">2007</entry><entry colname="I07" align="right" rowsep="0">60</entry></row>
<row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">2008</entry><entry colname="I07" align="right" rowsep="0">40</entry></row>
<row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">2009</entry><entry colname="I07" align="right" rowsep="0">20.</entry></row></tbody></tgroup></table> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H5F725BE5FCDF414EB3B0D640003516CA"><enum>(3)</enum><header>Effective date</header><text>The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.</text></paragraph></subsection>
<subsection id="HFF7B794A3F5746DD8DAC4CD400F4F8CA"><enum>(b)</enum><header>Nonrefundable personal credits fully allowed against alternative minimum tax</header>
<paragraph id="H9FB4C4DAD72949D48B9729B74D2936B7"><enum>(1)</enum><header>In general</header><text>Section 26(a) (relating to limitation based on amount of tax) is amended to read as follows:</text>
<quoted-block id="H371AAB974DEE4BD0A6971E7B00D675BA">
<subsection id="H1CF2FEA1E73A4DAFA52F2F7C8F7D19EA"><enum>(a)</enum><header>Limitation based on amount of tax</header><text>The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of—</text>
<paragraph id="HE8280B3DB34949989C12882EDD2F8B7"><enum>(1)</enum><text>the taxpayer’s regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27(a), and</text></paragraph>
<paragraph id="H7B0BC9B617AE44BBABE00ABEA3FC772"><enum>(2)</enum><text>the tax imposed by section 55(a) for the taxable year.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H91AA22BC4E5943898566896FA5EDCD97"><enum>(2)</enum><header>Conforming amendments</header>
<subparagraph id="H039027D7F67F453DB6998FB0251372B"><enum>(A)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/23">Section 23(b)</external-xref> is amended by striking paragraph (4).</text></subparagraph>
<subparagraph id="HCEA3A53430B94AB4ACE100CF8665261F"><enum>(B)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/24">Section 24(b)</external-xref> is amended by striking paragraph (3).</text></subparagraph>
<subparagraph id="H7EBC67E884D743C2BD74C567C000B796"><enum>(C)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/25B">Section 25B</external-xref> is amended by striking subsection (g).</text></subparagraph></paragraph>
<paragraph id="H13AA61ACDE5642789214DB0496E0A060"><enum>(3)</enum><header>Effective date</header><text>The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.</text></paragraph></subsection>
<subsection id="H930A793E854E487EA862421FEAC189E9"><enum>(c)</enum><header>Expansion of the exemption from the alternative minimum tax for small corporations</header>
<paragraph id="HA445751E52F2469D98E9E598EAEE6CB6"><enum>(1)</enum><header>In general</header><text>Section 55(e)(1)(A) (relating to exemption for small corporations) is amended to read as follows:</text>
<quoted-block id="H167D568BF6CE4BC78DABF89983250063">
<subparagraph id="H8DEBDC7974CE4798B77D5D8DA14C684E"><enum>(A)</enum><header>$10,000,000 gross receipts test</header><text>The tentative minimum tax of a corporation shall be zero for any taxable year if the corporation’s average annual gross receipts for all 3-taxable-year periods ending before such taxable year does not exceed $10,000,000. For purposes of the preceding sentence, only taxable years beginning after December 31, 200s, shall be taken into account.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H690F76C2A66F46FC9436544EDF00E286"><enum>(2)</enum><header>Gross receipts test for first 3-year period</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/55">Section 55(e)(1)(B)</external-xref> is amended to read as follows:</text>
<quoted-block id="H9772DD6F5CE6460F9CF2BDFBB919C1FA">
<subparagraph id="H7EB8B86F13E441A7BBD200DF08B6B2DC"><enum>(B)</enum><header>$7,500,000 gross receipts test for first 3-year period</header><text>Subparagraph (A) shall be applied by substituting <quote>$7,500,000</quote> for <quote>$10,000,000</quote> for the first 3-taxable-year period (or portion thereof) of the corporation which is taken into account under subparagraph (A).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H4B1072382B9D42D4B22D4F51F9006131"><enum>(3)</enum><header>Effective date</header><text>The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.</text></paragraph></subsection></section>
<section id="HAE4BBAEA61704A97BF7922E343BFC5D"><enum>106.</enum><header>Credit for expenses for long-term training of employees in highly skilled small business trades</header>
<subsection id="HD3FD4EDBD5A24F9B8C07ECF83E16E485"><enum>(a)</enum><header>In general</header><text>Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end the following new section:</text>
<quoted-block id="HD01D644C76D24E6791E47D00C303A190">
<section id="H4B7E475D3DA04E17B0DB1A79BEBAF"><enum>45N.</enum><header>Expenses for long-term training of employees in highly skilled small business trades</header>
<subsection id="H71A88121B49D47C08827C32000FB83BF"><enum>(a)</enum><header>General rule</header><text>For purposes of section 38, in the case of a small business employer, the highly skilled trades training credit determined under this section for the taxable year is $15,000 for each employee having a qualified training year ending with or within such taxable year (whether or not such employee is an employee of the taxpayer as of the close of such taxable year).</text></subsection>
<subsection id="H98BF2DB8EBA04FF5B57C25D91CB36E50"><enum>(b)</enum><header>Definitions</header><text>For purposes of this section—</text>
<paragraph id="H77A3A346908D4064AA3F93CE693169F7"><enum>(1)</enum><header>Small business employer</header>
<subparagraph id="H0E072914BCED4F14854152983C19BA1B"><enum>(A)</enum><header>In general</header><text>The term <term>small business employer</term> means, with respect to any taxable year, any employer who employed an average of 250 or fewer employees on business days during such taxable year.</text></subparagraph>
<subparagraph id="H19F7DB9DB02143848F8197E1BA72B276"><enum>(B)</enum><header>Controlled groups</header><text>For purposes of subparagraph (A), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.</text></subparagraph></paragraph>
<paragraph id="HE0D0CADAA4584F2B8B735B82A4673727"><enum>(2)</enum><header>Qualified training year</header>
<subparagraph id="HB2C45D7EDA0D4BBEB9CDBB3379D70250"><enum>(A)</enum><header>In general</header><text>The term <term>qualified training year</term> means each year during the training period in which the employee received at least 1,500 hours of training (including on-the-job training and training at multi-employer training facilities) from the taxpayer (or any predecessor) under a qualified training program as an apprentice in any highly skilled trade.</text></subparagraph>
<subparagraph id="HC2F158876B994536A3936C21F77E71F7"><enum>(B)</enum><header>Highly skilled trades</header><text>For purposes of subparagraph (A), the term <term>highly skilled trades</term> means—</text>
<clause id="H39FD73EA285B47A481B03F0012D34EC1"><enum>(i)</enum><text>precision machinists,</text></clause>
<clause id="H4CD393763BE5404C8772E04C4C4DADCD"><enum>(ii)</enum><text>die makers,</text></clause>
<clause id="HB2AEC39B44D64408AA82D0549CDCBEA3"><enum>(iii)</enum><text>mold makers,</text></clause>
<clause id="HA23AA2B530A740BB868CA990CA4DD300"><enum>(iv)</enum><text>tool and die designers,</text></clause>
<clause id="HC4B855697FCA4DD0976D806941D4D0C1"><enum>(v)</enum><text>heating, ventilating, air conditioning, refrigeration, and roofing contractors,</text></clause>
<clause id="H40883D858A964D1E9F8C816502C12959"><enum>(vi)</enum><text>the trade of masonry,</text></clause>
<clause id="H5542CB4701FD46BD8D8103A97C997C8C"><enum>(vii)</enum><text>plumbers,</text></clause>
<clause id="H7ADBCDD3FED8463184C3F22D94B25F8E"><enum>(viii)</enum><text>pipefitters,</text></clause>
<clause id="H4D99B3DFF1E24601BB222959EE10EEEB"><enum>(ix)</enum><text>patternmakers,</text></clause>
<clause id="HD4DEFF9BD08A4F65989E888B71F00B9"><enum>(x)</enum><text>foundry technicians,</text></clause>
<clause id="HEB95670028E4420C854365780935773D"><enum>(xi)</enum><text>electricians,</text></clause>
<clause id="H35D96800FDC045FD93EBFB29DB99CB4"><enum>(xii)</enum><text>recreational marine production and design workers,</text></clause>
<clause id="H16588A0669B44771002237C005DD484"><enum>(xiii)</enum><text>2-way radio technicians, and</text></clause>
<clause id="H86915CCE28274D9AADD0DC910051979B"><enum>(xiv)</enum><text>other highly skilled trades specified in regulations prescribed by the Secretary.</text></clause><continuation-text continuation-text-level="subparagraph">Such term shall not include any trade if the customary apprenticeship period for such trade is less than 2 years.</continuation-text></subparagraph>
<subparagraph id="H5BEBA7D8DDE54A77BC80275BB8E414FC"><enum>(C)</enum><header>Qualified training program</header>
<clause id="H7A34E1CA7545424DAB45480808DC5DC"><enum>(i)</enum><header>In general</header><text>The term <term>qualified training program</term> means a written plan of study and training for individuals in, or entering into, highly skilled trades.</text></clause>
<clause id="H2592084A9067421AB900F2B1D859A1D2"><enum>(ii)</enum><header>Description of programs</header><text>A plan under clause (i) must be a program described in one of the following subclauses:</text>
<subclause id="HFA174AE35510412098623F73B2930081"><enum>(I)</enum><text>An apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act (<external-xref legal-doc="usc" parsable-cite="usc/29/50">29 U.S.C. 50</external-xref>).</text></subclause>
<subclause id="HD8EF6A3D0E244A72A3EBB900E296CE71"><enum>(II)</enum><text>A program licensed, registered, or certified by the workforce investment board or apprenticeship agency or council of a State or administered in compliance with apprenticeship laws of a State.</text></subclause>
<subclause id="H0456A248D98C4C87BDA6A55DEC96BC34"><enum>(III)</enum><text>A program conducted by a vocational or technical education school, community college, or industrial or trade training organization.</text></subclause>
<subclause id="H1441F64ED30B45C2BD8F74A3F698C97"><enum>(IV)</enum><text>A program which conforms to apprentice training programs developed or administered by an employer trade group or committee.</text></subclause>
<subclause id="H723E904A09174E46A736F5EEF28B36F"><enum>(V)</enum><text>An industry sponsored or administered program which is clearly identified and commonly recognized within an industry and which meets the requirements of clause (iii).</text></subclause></clause>
<clause id="HD7C37430B28D4763A42BD700336776ED"><enum>(iii)</enum><header>Requirements</header><text>A program meets the requirements of this clause if such program—</text>
<subclause id="H8DE2BA43AA60433A93D51E4C00F3E1DB"><enum>(I)</enum><text>is accessible to individuals without discrimination on the basis of race, sex, color, religion, or national origin,</text></subclause>
<subclause id="H8CCC3B036C664A6DA17EE947F45300A4"><enum>(II)</enum><text>provides an overview of the trade, including the history and modern developments in such trade,</text></subclause>
<subclause id="H83FCE0530BC046ADABC8649540B94EAF"><enum>(III)</enum><text>provides related instruction of the fundamental, intermediate, and advanced skills, techniques, and materials of the trade,</text></subclause>
<subclause id="H183C4D4C34B8453D804C1F75265240A7"><enum>(IV)</enum><text>provides training in math, measurement, and blueprint reading skills, if such skills are required in the trade,</text></subclause>
<subclause id="H7ED28DBCC4F34DECB878866CA9E41335"><enum>(V)</enum><text>provides training on trade specific tools and equipment,</text></subclause>
<subclause id="H0E98119766B943D2B198C0E39FA5DE3B"><enum>(VI)</enum><text>provides on-the-job training which allows performance of work under close supervision of an instructor or skilled worker, and</text></subclause>
<subclause id="H34AB5FED9AD5435E80F0E607B7DEA0D8"><enum>(VII)</enum><text>provides periodic review and evaluation of participants to demonstrate proficiency in skills, including the use of tests and assessment of individual and group projects.</text></subclause></clause></subparagraph></paragraph>
<paragraph id="H25B13973667F42FA9F008F8ED96C054D"><enum>(3)</enum><header>Training period</header><text>The term <term>training period</term> means, with respect to an employee, the period—</text>
<subparagraph id="HE8382C45DCF24DEDA49BC5D0BA594149"><enum>(A)</enum><text>beginning on the date that the employee begins employment with the taxpayer as an apprentice in the highly skilled trade, and</text></subparagraph>
<subparagraph id="HE402DC993C914EB1BB63BB1D01EF4BFD"><enum>(B)</enum><text>ending on the earlier of—</text>
<clause id="HDB9EFE0859154B8392A1EBA7F607E189"><enum>(i)</enum><text>the date that such apprenticeship with the employer ends, or</text></clause>
<clause id="H17BB6274DF444FB5B02232EE3429F53F"><enum>(ii)</enum><text>the date which is 4 years after the date referred to in subparagraph (A).</text></clause></subparagraph></paragraph></subsection>
<subsection id="HBD9B5137840F4890AA47A5E123A6B5CA"><enum>(c)</enum><header>Coordination with other credits</header><text>The amount of credit otherwise allowable under sections 51(a) and 1396(a) with respect to any employee shall be reduced by the credit allowed by this section with respect to such employee.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HBD011BAE395E4E65B82951AEC1BF9EAE"><enum>(b)</enum><header>Credit made part of general business credit</header><text>Subsection (b) of <external-xref legal-doc="usc" parsable-cite="usc/26/38">section 38</external-xref> is amended by striking <quote>plus</quote> at the end of paragraph (25), by striking the period at the end of paragraph (26) and inserting <quote>, plus</quote>, and by adding at the end the following new paragraph:</text>
<quoted-block id="HAEA347A923864000A5ED9E5AF80D87C">
<paragraph id="H0E8BE621B3814647A0037FF1375600AC"><enum>(27)</enum><text>in the case of a small business employer (as defined in section 45N(b)), the highly skilled trades training credit determined under section 45N(a).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HEF53780EF9344E48B45531AC2112FE74"><enum>(c)</enum><header>Denial of double benefit</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/280C">Section 280C</external-xref> is amended by adding at the end the following new subsection:</text>
<quoted-block id="H63C49613A94B4D4494F3579F31827CE9">
<subsection id="HDABFC9FFB7B04133A05700E867ABF00"><enum>(e)</enum><header>Credit for training expenses for employees in highly skilled small business trades</header><text>No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under section 45N(a).</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HAD22BB4D712E430384888147583CF0EC"><enum>(d)</enum><header>Clerical amendment</header><text>The table of sections for subpart D of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> is amended by adding at the end the following new item:</text>
<quoted-block style="OLC" id="H2E009BBF33F8460E96ACE4A0268702C" display-inline="no-display-inline">
<toc container-level="quoted-block-container" quoted-block="no-quoted-block" lowest-level="section" idref="HD01D644C76D24E6791E47D00C303A190" regeneration="yes-regeneration" lowest-bolded-level="division-lowest-bolded">
<toc-entry idref="H4B7E475D3DA04E17B0DB1A79BEBAF" level="section">Sec. 45N. Expenses for long-term training of employees in highly skilled small business trades</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block> </subsection>
<subsection id="HFA21B259B0544DF6A8604482D915C8E8"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to expenses paid or incurred in the taxable years ending after the date of the enactment of this Act.</text></subsection></section>
<section id="H93386B237FF94304A802E9BFB533F42"><enum>107.</enum><header>Permanent extension of work opportunity credit and Welfare-to-Work credit</header>
<subsection id="H903EA86B92F146F4AF22F645A3B33E00"><enum>(a)</enum><header>Work opportunity credit</header>
<paragraph id="H8F60CCCC9B084039897667CF1940E290"><enum>(1)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/51">Section 51(c)</external-xref> is amended by striking paragraph (4).</text></paragraph>
<paragraph id="H4644CC09DEDA4677A08DFD443321BFA8"><enum>(2)</enum><header>Conforming amendment</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/51A">Section 51A(a)(5)(A)</external-xref> is amended by striking <quote>, without regard to paragraph (4) thereof</quote>.</text></paragraph></subsection>
<subsection id="H87286EBF7BBA45EC8E6414ABCC17EEC"><enum>(b)</enum><header>Welfare-to-Work credit</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/51A">Section 51A</external-xref> is amended by striking subsection (f).</text></subsection>
<subsection id="HC8B728B7380148D4004987621B99AB27"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to individuals who begin work the employer after December 31, 2005.</text></subsection></section>
<section id="HBA6C7E111BB6421BA527BEBB4DE5D77"><enum>108.</enum><header>Increase in contribution limits applicable to simple retirement accounts</header>
<subsection id="H08D796CC07984DE189EFF2316581DFAB"><enum>(a)</enum><header>In general</header><text>Subparagraph (E) of <external-xref legal-doc="usc" parsable-cite="usc/26/408">section 408(p)(2)</external-xref> is amended to read as follows:</text>
<quoted-block id="H8A3779CBD13841F38FA99913B1A6CCF">
<subparagraph id="H4298670AE03A49ECA54B347E7EA97708"><enum>(E)</enum><header>Applicable dollar amount</header><text>For purposes of subparagraph (A)(ii), the applicable dollar amount for any year beginning in any calendar year is the applicable dollar amount determined under section 402(g)(1)(B) for taxable years beginning in such calendar year.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H719A461787A243CAB08D526BDECBA972"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to years beginning after December 31, 2005.</text></subsection></section>
<section id="H9C58FB31A709427089D1B69421138DDC"><enum>109.</enum><header>Recovery period for depreciation of replacement roof systems, qualified leasehold improvement properties, and qualified restaurant properties</header>
<subsection id="H72582FAABA8C46FC8652012200413658"><enum>(a)</enum><header>Replacement roof systems</header><text>Subparagraph (E) of section 168(e)(3) (relating to classification of certain property) is amended by striking <quote>and</quote> at the end of clause (v), by striking the period at the end of clause (vi), and inserting <quote>, and</quote>, and by adding at the end the following new clause:</text>
<quoted-block id="HAD409EB8C47841E3B4ACBC34E53678FF">
<clause id="H6B6A9BBB2C1949969659A2CEB7A3B683"><enum>(vii)</enum><text>any roof system which is installed on a building after such building is placed in service by the taxpayer.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H4F655FBA16194ED186F005A69FF0CF90"><enum>(b)</enum><header>Requirement to use straight line method</header>
<paragraph id="HEBB4423A86954B18A617AB00B4B9EF4F"><enum>(1)</enum><header>In general</header><text>Paragraph (3) of section 168(b) (relating to property to which straight line method applies) is amended by adding after subparagraph (H) the following new subparagraph:</text>
<quoted-block id="HD224E88AB76B4E608CE83DAF65809246">
<subparagraph id="HDE53C90D0D484C898C34E9EA647E5283"><enum>(I)</enum><text>Property described in subsection (e)(3)(E)(vii).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="HCDB2B2E2BBD64387BDDBCB5E1371F496"><enum>(2)</enum><header>Conforming amendment</header><text>Subparagraph (A) of section 168(b)(2) of such Code is amended by inserting <quote>(other than property described in subsection (e)(3)(E)(vii))</quote> before the comma at the end.</text></paragraph></subsection>
<subsection id="HB5959469D2C24920979408D766704FAD"><enum>(c)</enum><header>Qualified leasehold improvement properties and qualified restaurant properties</header><text>Subparagraph (E) of section 168(e)(3) (relating to classification of certain property) is amended—</text>
<paragraph id="H5C5E66BB6622485DA3CCFE60F7FE2454"><enum>(1)</enum><text>in clause (iv) by striking <quote>placed in service before January 1, 2006</quote>, and</text></paragraph>
<paragraph id="H7006D5BB43D543A89CA430FC0073041D"><enum>(2)</enum><text>in clause (v) by striking <quote>placed in service before January 1, 2006</quote>. </text></paragraph></subsection>
<subsection id="H240F5BC87ECE407FAD16389D00AEAFCA"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to property placed in service after December 31, 2005.</text></subsection></section>
<enum>II</enum><header>Tax simplification</header>
<section id="H75178975D1074F0398B3C6203C8501FB"><enum>201.</enum><header>Depreciation modifications</header>
<subsection id="H189941359EFD415EAC2114236EE9923B"><enum>(a)</enum><header>Computer software eligible for expensing</header>
<paragraph id="H23DB5DBFBB274D6F00D1B100C1661930"><enum>(1)</enum><header>In general</header><text>The heading and first sentence of section 179(d)(1) (relating to section 179 property) are amended to read as follows:</text>
<quoted-block id="H930F489C74DD450496278EF376D86F8D">
<paragraph id="HEF8DEC199F164A35BDCDF33B00B5C59D"><enum>(1)</enum><header>Section 179 property</header><text>For purposes of this section, the term <term>section 179 property</term> means property—</text>
<subparagraph id="H3B835A8EAF324ABB8BEB00FCFDBFDBC9"><enum>(A)</enum><text>which is—</text>
<clause id="HE4F12F5A7E4648E9A05ECA55AF9B3740"><enum>(i)</enum><text>tangible property to which section 168 applies, or</text></clause>
<clause id="H59202B7DD0AB48A6B9B45122C45FA699"><enum>(ii)</enum><text>computer software (as defined in section 197(e)(3)(B)) to which section 167 applies,</text></clause></subparagraph>
<subparagraph id="H5B6D750621074E72B5EC3A53863C44D"><enum>(B)</enum><text>which is section 1245 property (as defined in section 1245(a)(3)), and</text></subparagraph>
<subparagraph id="H226FE7665557432AA78E8FBBA0E9F69"><enum>(C)</enum><text>which is acquired by purchase for use in the active conduct of a trade or business.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H1646B40A239C4B8F9F9B40F393473B1"><enum>(2)</enum><header>No computer software included as section 197 intangible</header>
<subparagraph id="H20D83E1DA12A495AA1FDEC00574DDB04"><enum>(A)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/197">Section 197(e)(3)(A)</external-xref> is amended to read as follows:</text>
<quoted-block id="HEDC5684978E94A259FD200D23096E410">
<subparagraph id="H173EA84C8DB841C6A9E2E07291616E4D"><enum>(A)</enum><header>In general</header><text>Any computer software.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph>
<subparagraph id="HD8B21AD856A74EDBA4DA258167B6926"><enum>(B)</enum><header>Conforming amendment</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/167">Section 167(f)(1)(B)</external-xref> is amended by striking <quote>; except that such term shall not include any such software which is an amortizable section 197 intangible</quote>.</text></subparagraph></paragraph></subsection>
<subsection id="HBECC7F07F9C34CB3B684F2DE07348F3"><enum>(b)</enum><header>2-Year applicable recovery period for depreciation of computers and peripheral equipment</header>
<paragraph id="H8922432EC7E44105B177C8FA98A3531F"><enum>(1)</enum><header>In general</header><text>Section 168(c) (relating to applicable recovery period) is amended by adding at the end the following flush sentence:</text>
<quoted-block style="OLC" id="H17F387EAA44C4523853FA42BF6C5F900" display-inline="no-display-inline"><quoted-block-continuation-text quoted-block-continuation-text-level="section">In the case of 5-year property which is a computer or peripheral equipment, the applicable recovery period shall be 2 years.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph>
<paragraph id="H3314DFF6A0F046479D64C5351CFC45C2"><enum>(2)</enum><header>Conforming amendments</header>
<subparagraph id="H2C221D26C2BA46E5A203FB4B6BEBC966"><enum>(A)</enum><text>Section 168(g)(3)(C) (relating to alternative depreciation system for certain property) is amended to read as follows:</text>
<quoted-block id="HA26C7EBB0D5E43D29F73E9D313492C6D">
<subparagraph id="HEA2B12EDA371459DB07F742F2DE0E159"><enum>(C)</enum><header>Qualified technological equipment</header>
<clause id="HFB2D39DC030B4D938CDE55A1C7A70BC"><enum>(i)</enum><header>In general</header><text>Except as provided in clause (ii), in the case of any qualified technological equipment, the recovery period used for purposes of paragraph (2) shall be 5 years.</text></clause>
<clause id="H7917E2F2D43B4979A56E4C0042505B18"><enum>(ii)</enum><header>Computers or peripheral equipment</header><text>In the case of any computer or peripheral equipment, the recovery period used for purposes of paragraph (2) shall be 2 years.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph>
<subparagraph id="HAF91A9DA52DB4B698EF1587EA800CF61"><enum>(B)</enum><text>Section 168(j)(2) (relating to depreciation of property on Indian reservations) is amended by adding at the end the following flush sentence:</text>
<quoted-block style="OLC" id="HC22F65AA4DB544998D37DBFEDBAA1F3" display-inline="no-display-inline"><quoted-block-continuation-text quoted-block-continuation-text-level="section">In the case of 5-year property which is a computer or peripheral equipment, the applicable recovery period shall be 1 year.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block> </subparagraph>
<subparagraph id="HA1B2288AA6BE40148900E2C5259EE78B"><enum>(C)</enum><text>Section 467(e)(3)(A) (relating to certain payments for the use of property or services) is amended by adding at the end the following flush sentence:</text>
<quoted-block style="OLC" id="HF30AA62E41484E65A369F52E64EF6FE7" display-inline="no-display-inline"><quoted-block-continuation-text quoted-block-continuation-text-level="section">In the case of 5-year property which is a computer or peripheral equipment, the applicable recovery period shall be 2 years.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block> </subparagraph></paragraph></subsection>
<subsection id="H6E97575093714460AD00AB57180219A5"><enum>(c)</enum><header>2-Year depreciation period for computer software</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/167">Section 167(f)(1)(A)</external-xref> is amended by striking <quote>36 months</quote> and inserting <quote>24 months</quote>.</text></subsection>
<subsection id="H96F5FA6FCACC4C5CA1FCCF735B84A377"><enum>(d)</enum><header>Adjustments on depreciation limits for luxury automobiles</header>
<paragraph id="H4ABCFE0987FA484394DF30C5B8B619A2"><enum>(1)</enum><header>In general</header><text>Section 280F(a)(1)(A) (relating to limitation on amount of depreciation for luxury automobiles) is amended—</text>
<subparagraph id="HCC6B16067F364EA18F8DF56786CE1B8"><enum>(A)</enum><text>by striking <quote>$2,560</quote> in clause (i) and inserting <quote>$6,000</quote>;</text></subparagraph>
<subparagraph id="HE978AB069452495EB4F9E20058F6BD27"><enum>(B)</enum><text>by striking <quote>$4,100</quote> in clause (ii) and inserting <quote>$9,600</quote>;</text></subparagraph>
<subparagraph id="HA83E5857DE334C21BF00FFDBD59DDFAF"><enum>(C)</enum><text>by striking <quote>$2,450</quote> in clause (iii) and inserting <quote>$5,760</quote>; and</text></subparagraph>
<subparagraph id="HD57CB33DBA5E488BA0DB6D4C6458A051"><enum>(D)</enum><text>by striking <quote>$1,475</quote> in clause (iv) and inserting <quote>$3,460</quote>.</text></subparagraph></paragraph>
<paragraph id="HF83934CA1F32439EA7DE6336EA9F01A1"><enum>(2)</enum><header>Conforming amendments</header>
<subparagraph id="HF2D3569F2C8440C8974CACF688625D3"><enum>(A)</enum><text>Section 280F(a)(1)(B)(ii) (relating to disallowed deductions allowed for years after recovery period) is amended by striking <quote>$1,475</quote> each place that it appears and inserting <quote>$3,460</quote>.</text></subparagraph>
<subparagraph id="HE52098BE398C419D91EEFE04D8445C79"><enum>(B)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/280F">Section 280F(d)(7)</external-xref> is amended—</text>
<clause id="HDC325AE316D3407FAD8719CA68C830B2"><enum>(i)</enum><text>in subparagraph (A) by striking <quote>1988</quote> and inserting <quote>2006</quote>, and</text></clause>
<clause id="H0E5A7634E0494101929574BC21E5EEF7"><enum>(ii)</enum><text>in subparagraph (B)(i)(II) by striking <quote>1987</quote> and inserting <quote>2005</quote>.</text></clause></subparagraph></paragraph></subsection>
<subsection id="H0AE487B478334D61BA025350043960C5"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to property placed in service after December 31, 2005.</text></subsection></section>
<section id="H67C7D7F580C842A997C68339E5108300"><enum>202.</enum><header>Simplification of estimated tax rules</header>
<subsection id="H54C5002AACAB42E197484EE06B917F95"><enum>(a)</enum><header>In general</header><text>Section 6654(d)(1) (relating to failure by an individual to pay estimated income tax) is amended by striking subparagraph (C).</text></subsection>
<subsection id="HDE8AA67CF2B84ACC88D0EDFC00CAE159"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section id="HFCF7FD6AB9504474BB64A6380DB61CD"><enum>203.</enum><header>Qualified joint ventures operated by husband and wife as co-owners</header>
<subsection id="H543FAE4F3F38401FBDE2A100FFFF3B6" display-inline="no-display-inline"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/761">Section 761</external-xref> of the Internal Revenue Code of 1986 (defining terms for purposes of partnerships) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:</text>
<quoted-block id="H82443C15FABE4B3DB493173785309CAB">
<subsection id="H6E0F90ADB58F41E68CDB81F3042514B7"><enum>(f)</enum><header>Qualified joint venture</header>
<paragraph id="HCE8893D89D964339ABAB03DE98E75BD"><enum>(1)</enum><header>In general</header><text>In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title—</text>
<subparagraph id="H4AB1FBE4F56E4A53975790AEA792A356"><enum>(A)</enum><text>such joint venture shall not be treated as a partnership,</text></subparagraph>
<subparagraph id="H3B48DA7D1E20416088807CA0C73C006C"><enum>(B)</enum><text>all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and</text></subparagraph>
<subparagraph id="H8300A6EF6AD24CF792ED4C5E00AB204F"><enum>(C)</enum><text>each spouse shall take into account such spouse’s respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor.</text></subparagraph></paragraph>
<paragraph id="H563D9888748C4CE6B25C381D30E8E418"><enum>(2)</enum><header>Qualified joint venture</header><text>For purposes of paragraph (1), the term <term>qualified joint venture</term> means any joint venture involving the conduct of a trade or business if—</text>
<subparagraph id="H74483E0BBB944CE7A521AF1438007B4C"><enum>(A)</enum><text>the only members of such joint venture are a husband and wife,</text></subparagraph>
<subparagraph id="H7C9681F5FF5B4CDF93EE5777D950552"><enum>(B)</enum><text>both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and</text></subparagraph>
<subparagraph id="HCCE46BA50D234180AA12A0871FD5032C"><enum>(C)</enum><text>both spouses elect the application of this subsection.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H093A9B42C42D458097B7EBB00706C66"><enum>(b)</enum><header>Net earnings from self-employment</header>
<paragraph id="HB87045DAC9484455AEE76148AEB06FBC"><enum>(1)</enum><text>Subsection (a) of section 1402 of such Code (defining net earnings from self-employment) is amended by striking <quote>and</quote> at the end of paragraph (15), by striking the period at the end of paragraph (16) and inserting <quote>; and</quote>, and by inserting after paragraph (16) the following new paragraph:</text>
<quoted-block id="H2F554AB8E71C4B6D001800D6751D2F01">
<paragraph id="HC582C4F9D24842CD8BEF4D767053E000"><enum>(17)</enum><text>notwithstanding the preceding provisions of this subsection, each spouse’s share of income or loss from a qualified joint venture shall be taken into account as provided in section 761(f) in determining net earnings from self-employment of such spouse.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph>
<paragraph id="H12B7C105C21D4863ABD9B5AA80F200AA"><enum>(2)</enum><text>Subsection (a) of section 211 of the <act-name parsable-cite="SSA">Social Security Act</act-name> (defining net earnings from self-employment) is amended by striking <quote>and</quote> at the end of paragraph (15), by striking the period at the end of paragraph (16) and inserting <quote>; and</quote>, and by inserting after paragraph (16) the following new paragraph:</text>
<quoted-block act-name="Social" id="HE619331CDAB94F2EAD03052BC4508328">
<paragraph id="HBA50E79E950C48B394100463DFBA1E75"><enum>(17)</enum><text>Notwithstanding the preceding provisions of this subsection, each spouse’s share of income or loss from a qualified joint venture shall be taken into account as provided in <external-xref legal-doc="usc" parsable-cite="usc/26/761">section 761(f)</external-xref> of the Internal Revenue Code of 1986 in determining net earnings from self-employment of such spouse.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection>
<subsection id="H98FEABBB2E5F487BA556941F6B391C72"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section id="H61AF21DAE1ED401EABCEEDA90104F6F4"><enum>204.</enum><header>Increase in Self-Employment exemption amount</header>
<subsection id="HE78D3B5B3E934F5B9B525E21F94C93B1"><enum>(a)</enum><header>In general</header><text>Paragraph (2) of section 1402(b) (defining self-employment income) is amended by striking <quote>$400</quote> and inserting <quote>$1,000</quote>.</text></subsection>
<subsection id="H8E22B403143B4A1ABFBE33CE56874510"><enum>(b)</enum><header>Adjustment for inflation</header><text>Section 1402 (definitions relating to self-employment income) is amended by adding at the end the following new subsection:</text>
<quoted-block id="H585A6BEF869C415790F1EB1D3373172E">
<subsection id="HD665D77C0A06435B963D4F288D07B22E"><enum>(l)</enum><header>Adjustment for inflation</header>
<paragraph id="H8FE6F74A09FD4C918227340743B6E063"><enum>(1)</enum><header>In general</header><text>In the case of any taxable year beginning in a calendar year after 2006, the $1,000 amount contained in subsection (b)(2) shall be increased by an amount equal to—</text>
<subparagraph id="H2D2A79C748074552AE30DE6E10097D7B"><enum>(A)</enum><text>$1,000, multiplied by</text></subparagraph>
<subparagraph id="H0D2D77093374462A8700B4EB79630095"><enum>(B)</enum><text>the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins by substituting <quote>calendar year 2005</quote> for <quote>calendar year 1992</quote> in subparagraph (B) thereof.</text></subparagraph></paragraph>
<paragraph id="H4EA9B0DF562F49D8B87203DCE41D9754"><enum>(2)</enum><header>Rounding</header><text>If any increase determined under paragraph (1) is not a multiple of $10, such increase shall be rounded to the next lowest multiple of $10.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H4CEDAD751429495EB41CE6B6FD078C5C"><enum>(c)</enum><header>Return requirements</header><text>Section 6017 (relating to self-employment tax returns) is amended by striking <quote>of $400 or more</quote> and inserting <quote>of an amount which equals or exceeds the amount in effect under section 1402(b)(2)</quote>.</text></subsection>
<subsection id="H5E9C136F6851477D008BB678C480E9BE"><enum>(d)</enum><header>Conforming amendments</header>
<paragraph id="HDCF257021849425EA531122258DD247D"><enum>(1)</enum><text>Paragraphs (3) and (4) of section 1402(e) are each amended by striking <quote>of $400 or more</quote> and inserting <quote>which equals or exceeds the amount in effect for the taxable year under subsection (b)(2)</quote>.</text></paragraph>
<paragraph id="H1904D9D8D2064466A986AE935816E62D"><enum>(2)</enum><text>Subsection (h) of <external-xref legal-doc="usc" parsable-cite="usc/26/1402">section 1402</external-xref> is amended by striking <quote>$400</quote> and inserting <quote>the amount in effect for the taxable year under subsection (b)(2)</quote>.</text></paragraph>
<paragraph id="HA1DA1E9004124266B3CEEC3682E8B39"><enum>(3)</enum><text>Subparagraph (B) of <external-xref legal-doc="usc" parsable-cite="usc/26/1402">section 1402(j)(2)</external-xref> is amended to read as follows:</text>
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<subparagraph id="H7661CD2D4D2B479898B040AE50D71EF4"><enum>(B)</enum><header>Floor</header><text>In applying paragraph (2) of subsection (b) to church employee income, <quote>$200</quote> shall be substituted for the amount in effect for the taxable year under such paragraph (2) (as adjusted by subsection (l)).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection>
<subsection id="H698C7DA8D81C4CCAB43380F671391300"><enum>(e)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2005.</text></subsection></section>
<section id="HDFFFD000115D45FC8111238113CF1EE7"><enum>205.</enum><header>Standard home office deduction</header>
<subsection id="H308797EF43764738B62172B79DF5007C"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/280A">Section 280A(c)</external-xref> is amended by adding at the end the following new paragraph:</text>
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<paragraph id="H236C73AF690C429DB475B3400B79797"><enum>(7)</enum><header>Standard home office deduction</header>
<subparagraph id="HDC2FC40FD7564B238DD6E22C55C3AD4D"><enum>(A)</enum><header>In general</header><text>The deductions allowable by this chapter by reason of being attributed to a use referred to in paragraph (5) (before the application of paragraph (5)) shall not be less than the lesser of—</text>
<clause id="HF8498BD080654D0ABA5B82E4F98CE80"><enum>(i)</enum><text>$2,500, or</text></clause>
<clause id="HF30D89802A2E4F5986CC4EF9D455F090"><enum>(ii)</enum><text>the gross income of the trade or business in which such use occurs.</text></clause></subparagraph>
<subparagraph id="H5476E7009B1C4419A3BBDD22BFEE33A4"><enum>(B)</enum><header>Inflation adjustment</header><text>In the case of any taxable year beginning in a calendar year after 2006, the $2,500 amount contained in subparagraph (A)(i) shall be increased by an amount equal to—</text>
<clause id="H490F1FFE06874D43A3D3020003B28821"><enum>(i)</enum><text>such dollar amount, multiplied by</text></clause>
<clause id="H9D3D950D53CE407300429C877E2B0348"><enum>(ii)</enum><text>the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting <quote>calendar year 2054</quote> for <quote>calendar year 1992</quote> in subparagraph (B) thereof.</text></clause><continuation-text continuation-text-level="subparagraph">Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.</continuation-text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HC6FC5B7EB77D4FFEACCB440200EA1275"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after December 31, 2005.</text></subsection></section>
<enum>III</enum><header>S corporation reform and simplification</header>
<section id="H585413565CC040D4861BAA797053859E"><enum>301.</enum><header>Treatment of bank director shares</header>
<subsection id="H520BAC3CF03849448B0916CCAB89A3C4"><enum>(a)</enum><header>In general</header><text>Section 1361 (defining S corporation) is amended by adding at the end the following new subsection:</text>
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<subsection id="H4363860841924FFA84DC24193EB25C13"><enum>(f)</enum><header>Restricted bank director stock</header>
<paragraph id="H879340FB29CA4AC99483B5CC6D78DA4D"><enum>(1)</enum><header>In general</header><text>Restricted bank director stock shall not be taken into account as outstanding stock of the S corporation in applying this subchapter (other than section 1368(f)).</text></paragraph>
<paragraph id="HAF455B98A2BD4929B19EBC1CADCB36B"><enum>(2)</enum><header>Restricted bank director stock</header><text>For purposes of this subsection, the term <term>restricted bank director stock</term> means stock in a bank (as defined in section 581), a bank holding company (within the meaning of section 2(a) of the <act-name parsable-cite="BHC65">Bank Holding Company Act of 1956</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841(a)</external-xref>)), or a financial holding company (within the meaning of section 2(p) of such Act), registered with the Federal Reserve System, if such stock—</text>
<subparagraph id="H0EE282BEFFBF42CA82D85F5705A03783"><enum>(A)</enum><text>is required to be held by an individual under applicable Federal or State law in order to permit such individual to serve as a director, and</text></subparagraph>
<subparagraph id="HC313A9AB2E1A4258BAEC102EBE75991B"><enum>(B)</enum><text>is subject to an agreement with such bank or company (or a corporation which controls (within the meaning of section 368(c)) such bank or company) pursuant to which the holder is required to sell back such stock (at the same price as the individual acquired such stock) upon ceasing to hold the office of director.</text></subparagraph></paragraph>
<paragraph id="HE166E38AA3A24AACB4BB905516651BBD"><enum>(3)</enum><header>Cross reference</header><text>For treatment of certain distributions with respect to restricted bank director stock, see section 1368(f).</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HE6FE76B0DA7E43DF8384615716891764"><enum>(b)</enum><header>Distributions</header><text>Section 1368 (relating to distributions) is amended by adding at the end the following new subsection:</text>
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<subsection id="HC8CD7B5A986A484CB0C79B303F7CED7C"><enum>(f)</enum><header>Restricted bank director stock</header><text>If a director receives a distribution (not in part or full payment in exchange for stock) from an S corporation with respect to any restricted bank director stock (as defined in section 1361(f)), the amount of such distribution—</text>
<paragraph id="H9AFEAE85C7154CD69143F6A97B0030CC"><enum>(1)</enum><text>shall be includible in gross income of the director, and</text></paragraph>
<paragraph id="H7715A946FD764C92959F0064007C5EF2"><enum>(2)</enum><text>shall be deductible by the corporation for the taxable year of such corporation in which or with which ends the taxable year in which such amount in included in the gross income of the director.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H95446200F0F14971A19015398207AF85"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2005.</text></subsection></section>
<section id="HDFC76FAC7E5645349229E291BC8B9CEF" commented="no"><enum>302.</enum><header>Extension of time for making s corporation elections</header>
<subsection id="H8502EA8C503040F1A107566854F99D99" commented="no"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Subsection (b) of section 1362 (relating to when subchapter S election made) is amended to read as follows:</text>
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<subsection id="HF8D8998F570042B490C3D58EBB6D4373"><enum>(b)</enum><header>When made</header>
<paragraph id="H925E0E1B5EA14C68B100439D1E68C777" display-inline="no-display-inline"><enum>(1)</enum><header>In general</header><text>An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the period—</text>
<subparagraph id="HDB4D07F00F04439DBB85AFB414BBBDC"><enum>(A)</enum><text>beginning on the first day of the preceding taxable year, and</text></subparagraph>
<subparagraph id="HC97A183451C14C73943ECDC69843F2EF"><enum>(B)</enum><text>ending on the due date (with extensions) for filing the return for the taxable year.</text></subparagraph> </paragraph>
<paragraph id="H07DD0F28B7BF495A8D00F991BD9CEAB0"><enum>(2)</enum><header>Certain elections treated as made for next taxable year</header><text display-inline="yes-display-inline">If—</text>
<subparagraph id="HF94DFF36780D48E1911D2504ECA16804"><enum>(A)</enum><text display-inline="yes-display-inline">an election under subsection (a) is made for any taxable year within the period described in paragraph (1), but</text></subparagraph>
<subparagraph id="H4AC18231F91A4585A3B9D84DF32F3DAE"><enum>(B)</enum><text display-inline="yes-display-inline">either—</text>
<clause id="HF434197A9DC848B9B8C728099D001D55"><enum>(i)</enum><text display-inline="yes-display-inline">on 1 or more days in such taxable year before the day on which the election was made the corporation did not meet the requirements of subsection (b) of section 1361, or</text></clause>
<clause id="H7C5D049911D54634A26FB578EB3700FD"><enum>(ii)</enum><text>1 or more of the persons who held stock in the corporation during such taxable year and before the election was made did not consent to the election,</text></clause><continuation-text continuation-text-level="subparagraph">then such election shall be treated as made for the following taxable year.</continuation-text></subparagraph></paragraph>
<paragraph id="H0BDE25E6163B45929CEBB746636538E8"><enum>(3)</enum><header>Election made after due date treated as made for following taxable year</header><text>If—</text>
<subparagraph id="H2F74CF4443294C83BE3263ECE47B8833"><enum>(A)</enum><text display-inline="yes-display-inline">a small business corporation makes an election under subsection (a) for any taxable year, and</text></subparagraph>
<subparagraph id="H7C1806419585492CB45165DACF54D400"><enum>(B)</enum><text>such election is made after the due date (with extensions) for filling the return for such year,</text></subparagraph><continuation-text continuation-text-level="paragraph">then such election shall be treated as made for the following taxable year.</continuation-text></paragraph>
<paragraph id="H7D7A43B1478B4E0DAC00B9A761BA56DD"><enum>(4)</enum><header>Authority to treat late elections, etc., as timely</header><text>If—</text>
<subparagraph id="HA695BB12848249A99840C91E797BD7E4"><enum>(A)</enum><text>an election under subsection (a) is made for any taxable year (determined without regard to paragraph (3)) after the date prescribed by this subsection for making such election for such taxable year or no such election is made for any taxable year, and</text></subparagraph>
<subparagraph id="H4936962E091A4D35B2E1DEF5439F3810"><enum>(B)</enum><text>the Secretary determines that there was reasonable cause for the failure to timely make such election,</text></subparagraph><continuation-text continuation-text-level="paragraph">the Secretary may treat such an election as timely made for such taxable year (and paragraph (3) shall not apply).</continuation-text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H508D311097EC43FBBAC002961008E82" display-inline="no-display-inline"><enum>(b)</enum><header>Revocations</header><text>Subparagraph (C) of section 1362(d)(1) of such Code is amended to read as follows:</text>
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<subparagraph id="HE856E42030894B08BBB14647DDB1C51"><enum>(C)</enum><header>When effective</header><text display-inline="yes-display-inline">Except as provided in subparagraph (D)—</text>
<clause id="HF4E8B65AA1B9450F9DE4533BD86202FA"><enum>(i)</enum><text>a revocation made on or before the due date (with extensions) for filing the return for a taxable year shall be effective on the 1st day of such taxable year unless the revocation specifies that it is to take effect on the 1st day of the taxable year in which made, and</text></clause>
<clause id="H35374DFB933F4468BCC0179015E0CEB9"><enum>(ii) </enum><text display-inline="yes-display-inline">a revocation made during a taxable year but after the due date (with extensions) for filing the return for the preceding taxable year shall be effective on the 1st day of the taxable year.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H23A7B211574640CF83D76B46B271EFF" commented="no"><enum>(c)</enum><header>Effective date</header><text>The amendment made by this section shall apply to elections for taxable years beginning after December 31, 2005.</text></subsection></section>
<enum>IV</enum><header>Taxpayer protections</header>
<section id="H02A3CC9773564DD8A1BC45C2843525D3" commented="no"><enum>401.</enum><header>Taxpayer’s right to have an IRS examination take place at another site</header>
<subsection id="HD0A9FD9337654D8BBFBD222157A38646" commented="no"><enum>(a)</enum><header>In general</header><text>Section 7605(a) (relating to time and place of examination) is amended to read as follows:</text>
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<subsection id="H765108FFBAB04375A6CDF2E9FAD09DDA"><enum>(a)</enum><header>Time and place</header>
<paragraph id="H1F981A654CE84B5EB2CD5607D8D1A926"><enum>(1)</enum><header>In general</header><text>The time and place of examination pursuant to the provisions of section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall be such time and place as may be fixed by the Secretary and as are reasonable under the circumstances. In the case of a summons under authority of paragraph (2) of section 7602, or under the corresponding authority of section 6420(e)(2), 6421(g)(2), or 6427(j)(2), the date fixed for appearance before the Secretary shall not be less than 10 days from the date of the summons.</text></paragraph>
<paragraph id="H6F9128C1FCB5418EB488A39F66FFBAD6"><enum>(2)</enum><header>Limitation</header><text>Upon request of a taxpayer, the Secretary shall conduct any examination described in paragraph (1) at a location other than the taxpayer’s residence or place of business, if such location is reasonably accessible to the Secretary and the taxpayer’s original books and records pertinent to the examination are available at such location.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="H72218ADD4CF648BDA40135EF1B7B49E4" commented="no"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to examinations occurring after the date of the enactment of this Act.</text></subsection></section>
<section id="H8F4B2047EB0C4A0987C047D8E78BE049"><enum>402.</enum><header>Relief from penalties for deposits of taxes made on a timely basis but not in the prescribed manner</header>
<subsection id="HB1F23861752341E98631F4EA007E9627"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/6656">Section 6656</external-xref> of the Internal Revenue Code of 1986 (relating to failure to make deposits of taxes) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:</text>
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<subsection id="H5DFA634821A04F999CD325B39065FE67"><enum>(e)</enum><header>Relief from penalties for deposits of taxes made on a timely basis but not in the prescribed manner</header><text>The Secretary may abate all or any portion of the penalty imposed by subsection (a) on the failure to make a deposit in the manner prescribed by the Secretary if—</text>
<paragraph id="HF58C720F18A446ADB66E4F6FD7164BE"><enum>(1)</enum><text>the deposit was made not later than the date prescribed therefor, and</text></paragraph>
<paragraph id="HA3A7B02D07D04DD793B19F21AE64E44"><enum>(2) </enum><text>such failure was due to reasonable cause and not willful neglect.</text></paragraph><continuation-text continuation-text-level="subsection">The applicable percentage under subsection (b) shall not exceed 2 percent in the case of any failure with respect to which the requirements of paragraphs (1) and (2) are met.</continuation-text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="HE9B867CFB79E4E25004F9F8D1108D4FB"><enum>(b)</enum><header>Conforming amendment</header><text>Subparagraph (A) of section 6656(b)(1) of such Code is amended by striking <quote>subparagraph (B)</quote> and inserting <quote>subparagraph (B) and subsection (e)</quote>.</text></subsection>
<subsection id="HF54EE359628940E0000072B396844137"><enum>(c)</enum><header>Effective Date</header><text>The amendments made by this section shall apply to deposits required to be made after the date of the enactment of this Act.</text></subsection></section>