1.This Act may be cited as
the Bringing Opportunities to Our
Small Business Taxpayers Act
or BOOST Act
.
<enum>I</enum><header>Tax
fairness for small businesses</header>
<section commented="no" display-inline="no-display-inline" id="id07036C1F58FF4A64A8EACBB1098DE463"><enum>101.</enum><header>Permanent
extension of expensing for small businesses</header>
<subsection commented="no" display-inline="no-display-inline" id="id6EA27F96CEEB4EC7A868C8732DC956E9"><enum>(a)</enum><header>Dollar
limitation</header><text>Paragraph (1) of section 179(b) of the Internal
Revenue Code of 1986, as amended by the Tax Increase Prevention and
Reconciliation Act of 2005, is amended by striking <quote>$25,000 ($100,000 in
the case of taxable years beginning after 2002 and before 2010)</quote> and
inserting <quote>$100,000</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id5D8279C04F564C23A44C69625799FAE0"><enum>(b)</enum><header>Reduction in
limitation</header><text>Paragraph (2) of section 179(b) of such Code, as
amended by the Tax Increase Prevention and Reconciliation Act of 2005, is
amended by striking <quote>$200,000 ($400,000 in the case of taxable years
beginning after 2002 and before 2010)</quote> and inserting
<quote>$400,000</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id32BFE38E5E6944BD8F4433406AACBD19"><enum>(c)</enum><header>Inflation
adjustments</header><text>Subparagraph (A) of section 179(b)(5) of such Code,
as amended by the Tax Increase Prevention and Reconciliation Act of 2005, is
amended by striking <quote>and before 2010</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id1D47694FE8324C258C245E3FA663E090"><enum>(d)</enum><header>Election</header><text>Paragraph
(2) of section 179(c) of such Code, as amended by the Tax Increase Prevention
and Reconciliation Act of 2005, is amended by striking <quote>and before
2010</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id85B3B5C2130E48F3870BCE0C4E2C3E95"><enum>(e)</enum><header>Computer
software</header><text>Clause (ii) of section 179(d)(1)(A), as amended by the
Tax Increase Prevention and Reconciliation Act of 2005, is amended by striking
<quote>and before 2010</quote>.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idBECC03B92D8F4D589169035416441CE9"><enum>102.</enum><header>Modification
of construction contracts exception to percentage of completion method of
accounting</header>
<subsection commented="no" display-inline="no-display-inline" id="id46C8CD988C1B4FF98DAF656376EB107C"><enum>(a)</enum><header>In
general</header><text>Clause (ii) section 460(e)(1)(B) of the Internal Revenue
Code of 1986 is amended by striking <quote>$10,000,000</quote> and inserting
<quote>$25,000,000</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE431677D24234640BEEC07739C93A7EF"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to contracts
entered into after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id12DC8938AE164C07BEB6AF1CA0D34CF4"><enum>103.</enum><header>Modification
of look-back method for certain construction contracts</header>
<subsection commented="no" display-inline="no-display-inline" id="id8519411D0FB84963BC0C0A09B48A1988"><enum>(a)</enum><header>In
general</header><text>Subparagraph (B) of section 460(b)(3) of the Internal
Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="idA9EB128CB2ED4307A956130E044872EA" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="id470FEB666CC449B1B060CB9438F9F6AC"><enum>(B)</enum><header>Look-back
method not to apply to certain contracts</header><text>Paragraph (1)(B) shall
not apply to—</text>
<clause commented="no" display-inline="no-display-inline" id="idB9391617A04C434F8200A3B342816B06"><enum>(i)</enum><text>any construction
contract which is—</text>
<subclause commented="no" display-inline="no-display-inline" id="id79043D5DB3EF4BC7AF14DA39DC0D9882"><enum>(I)</enum><text>entered into by a
taxpayer whose average annual gross receipts for the 3 taxable years preceding
the taxable year in which such contract is completed do not exceed $25,000,000,
and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idD0E5B37EC8574F8C8FC75886229F14A3"><enum>(II)</enum><text>completed within
3 years of the contract commencement date, or</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="idA72E5CFC6B254CC8B7A4576CD201368E"><enum>(ii)</enum><text>any other
contract—</text>
<subclause commented="no" display-inline="no-display-inline" id="idCDEA1DCCAF77444FB1972B7855AE2F15"><enum>(I)</enum><text>the gross price
of which (as of the completion of the contract) does not exceed the lesser of
$1,000,000 or 1 percent of the average annual gross receipts of the taxpayer
for the 3 taxable years preceding the taxable year in which the contract was
completed, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idE9D129933A73499D89E455745FEEE426"><enum>(II)</enum><text>which is
completed within 2 years of the contract commencement date.</text>
</subclause></clause><continuation-text continuation-text-level="subparagraph">For
purposes of this subparagraph, rules similar to the rules of subsections (e)(2)
and (f)(3) shall
apply.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id888EA2B362114725923AF84732B77679"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to contracts
completed in taxable years ending after the date of the enactment of this
Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idF89EB47338A448CEAAD8CEE68BDA9990"><enum>104.</enum><header> Use of cash
method of accounting for certain small businesses</header>
<subsection commented="no" display-inline="no-display-inline" id="idAE3CFFD5F64B4BB3AA22FE5BCC47C80F"><enum>(a)</enum><header>In
general</header><text>Section 446 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id7CF0A365884C4CFCAF2581336004B3B7" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id6C6E7CC9F59A447E90EB791B78D33619"><enum>(g)</enum><header>Use of cash
method of accounting by certain taxpayers</header>
<paragraph commented="no" display-inline="no-display-inline" id="id64B29A267C0340D180B242190525117C"><enum>(1)</enum><header>In
general</header><text>Notwithstanding section 471 and subject to such
regulations as the Secretary may provide, a qualifying small business taxpayer
may use the cash receipts and disbursements method of accounting.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBEC1474866CE4071BD6DA8FC8CA36084"><enum>(2)</enum><header>Qualifying
small business taxpayer</header><text>For purposes of this subsection, the term
<term>qualifying small business taxpayer</term> means a taxpayer which—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idB23FF4410D4F464AA9965DA83795DAC4"><enum>(A)</enum><text>meets the gross
receipts test under section 448(c) (determined by substituting
<quote>$10,000,000</quote> for <quote>$5,000,000</quote> each place it appears
therein),</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idAB026687B134429FB0579D29D828B50F"><enum>(B)</enum><text>is not prohibited
from using the cash receipts and disbursement method of accounting under
section 448, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id92168B1D0A364452B4BD25672F71EB5D"><enum>(C)</enum><text>meets the
requirements described in section 4.01 of Revenue Procedure
2002–28.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id3B67690CCD494FE38E8412C2A3451A08"><enum>(b)</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><enum>II</enum><header>S
corporation parity</header>
<section id="id28B798C399F44E8E940CB17CDEBBEFF2"><enum>201.</enum><header>Reduced
recognition period for built-in gains</header>
<subsection id="ID9E402A86F7054FEEA529DAD9C914E902"><enum>(a)</enum><header>In
general</header><text>Paragraph (7) of section 1374(d) of the Internal Revenue
Code of 1986 (relating to definitions and special rules) is amended to read as
follows:</text>
<quoted-block id="ID621716D14E7A46A79B5188FCA0B5B023">
<paragraph id="IDD545577F10834B4A90D6B6EE15BBA91E"><enum>(7)</enum><header>Recognition
period</header><text>The term <term>recognition period</term> means the 7-year
period beginning with the 1st day of the 1st taxable year for which the
corporation was an S corporation. For purposes of applying this section to any
amount includible in income by reason of distributions to shareholders pursuant
to section 593(e), the preceding sentence shall be applied without regard to
the duration of the recognition period in effect on the date of such
distribution.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="IDE1F424D9E6524125B3E1A387FD57F1C4"><enum>(b)</enum><header>Effective
date</header>
<paragraph id="ID908A1A62107C4028BB6AC4DEF0B611E5"><enum>(1)</enum><header>General
rule</header><text>The amendment made by this section shall apply to any
recognition period in effect on or after the date of the enactment of this
Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD363856ECACB4AAFAD59B689215EFF94"><enum>(2)</enum><header>Special
application to existing periods exceeding 7 years</header><text>Any recognition
period in effect on the date of the enactment of this Act, the length of which
is greater than 7 years, shall end on such date.</text>
</paragraph></subsection></section><section id="IDBED5906024144ADF948CB5EA915EEDC3"><enum>202.</enum><header>Modification
to S corporation passive investment income rules</header>
<subsection id="ID408B4D9E37DD43F490325EEC324F3797"><enum>(a)</enum><header>Increased
Percentage Limit</header><text>Paragraph (2) of section 1375(a) of the Internal
Revenue Code of 1986 is amended by striking <quote>25 percent</quote> and
inserting <quote>60 percent</quote>.</text>
</subsection><subsection id="ID4B91A9F746734C84A87048146EC518EB"><enum>(b)</enum><header>Repeal of
excessive passive investment income as a termination event</header>
<paragraph id="id8578FD3599A44C7DB26B8DA51626E80C"><enum>(1)</enum><header>In
general</header><text>Section 1362(d) of the Internal Revenue Code of 1986 is
amended by striking paragraph (3).</text>
</paragraph><paragraph id="ID0A9EF52417EE4D629556AB0E9AFE12AC"><enum>(2)</enum><header>Conforming
amendment</header><text>Subsection (b) of section 1375 of such Code is amended
by striking paragraphs (3) and (4) and inserting the following new
paragraph:</text>
<quoted-block id="ID39ABABA3D7C248208CC02DB25138CE70" style="OLC">
<paragraph id="ID82D47C3DAB32436B9B4860FC58950728"><enum>(3)</enum><header>Passive
investment income defined</header>
<subparagraph id="IDEAE62DF2E06040CEBEEF9D51F3A1FFA0"><enum>(A)</enum><header>In
general</header><text>Except as otherwise provided in this paragraph, the term
<term>passive investment income</term> means gross receipts derived from
royalties, rents, dividends, interest, and annuities.</text>
</subparagraph><subparagraph id="ID45541B4E93654D9FB2D45F57ED971F39"><enum>(B)</enum><header>Exception for
interest on notes from sales of inventory</header><text>The term <term>passive
investment income</term> shall not include interest on any obligation acquired
in the ordinary course of the corporation’s trade or business from its sale of
property described in section 1221(a)(1).</text>
</subparagraph><subparagraph id="ID95179DC65EDC4844A7E2E277CA286F9D"><enum>(C)</enum><header>Treatment of
certain lending or finance companies</header><text>If the S corporation meets
the requirements of section 542(c)(6) for the taxable year, the term
<term>passive investment income</term> shall not include gross receipts for the
taxable year which are derived directly from the active and regular conduct of
a lending or finance business (as defined in section 542(d)(1)).</text>
</subparagraph><subparagraph id="ID5C6A4848F4D04FC7A34301A9DC61418E"><enum>(D)</enum><header>Treatment of
certain dividends</header><text>If an S corporation holds stock in a C
corporation meeting the requirements of section 1504(a)(2), the term
<term>passive investment income</term> shall not include dividends from such C
corporation to the extent such dividends are attributable to the earnings and
profits of such C corporation derived from the active conduct of a trade or
business.</text>
</subparagraph><subparagraph id="IDE229AC7221A44C3693B2445D13012984"><enum>(E)</enum><header>Exception for
banks, etc</header><text>In the case of a bank (as defined in section 581), a
bank holding company (within the meaning of section 2(a) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(a))), or a financial holding company
(within the meaning of section 2(p) of such Act (12 U.S.C. 1841(p))), the term
<term>passive investment income</term> shall not include—</text>
<clause id="ID89E9CE1A8E3E4BBD8982162D08B061B8"><enum>(i)</enum><text>interest income
earned by such bank or company, or</text>
</clause><clause id="IDE77A886DB646412DAD4F5E30B9DA0859"><enum>(ii)</enum><text>dividends on
assets required to be held by such bank or company, including stock in the
Federal Reserve Bank, the Federal Home Loan Bank, or the Federal Agricultural
Mortgage Bank or participation certificates issued by a Federal Intermediate
Credit Bank.</text>
</clause></subparagraph><subparagraph id="IDB5FC7205C20A4D29805FE2D75C723D81"><enum>(F)</enum><header>Coordination
with section <enum-in-header>1374</enum-in-header></header><text>The amount of
passive investment income shall be determined by not taking into account any
recognized built-in gain or loss of the S corporation for any taxable year in
the recognition period. Terms used in the preceding sentence shall have the
same respective meanings as when used in section
1374.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="ID07365BEF9C4D44248EEBCACD587F07FA"><enum>(c)</enum><header>Other
Conforming Amendments</header>
<paragraph id="ID75FE1251A517427ABF0F7DDC3F5414BB"><enum>(1)</enum><text>Subparagraph (J)
of section 26(b)(2) of the Internal Revenue Code of 1986 is amended by striking
<quote>25 percent</quote> and inserting <quote>60 percent</quote>.</text>
</paragraph><paragraph id="IDBBBC7F48B263440E96582B3BE7D9B691"><enum>(2)</enum><text>Clause (i) of
section 1042(c)(4)(A) of such Code is amended by striking <quote>section
1362(d)(3)(C)</quote> and inserting <quote>section 1375(b)(3)</quote>.</text>
</paragraph><paragraph id="ID321CDD0CA762468DB2F9211DA7595BF1"><enum>(3)</enum><text>Subparagraph (B)
of section 1362(f)(1) of such Code is amended by striking <quote>or
(3)</quote>.</text>
</paragraph><paragraph id="ID74FECF741C0B468E9A2E53A3563AF441"><enum>(4)</enum><text>Clause (i) of
section 1375(b)(1)(A) of such Code is amended by striking <quote>25
percent</quote> and inserting <quote>60 percent</quote>.</text>
</paragraph><paragraph id="ID984B1B5ED271454BA09A03269A2C616C"><enum>(5)</enum><text>The heading for
section 1375 of such Code is amended by striking <quote><header-in-text>25
percent</header-in-text></quote> and inserting <quote><header-in-text>60
percent</header-in-text></quote>.</text>
</paragraph><paragraph id="ID0B2A8BBD1E1A4A7B99B21E51549EF919"><enum>(6)</enum><text>The item relating
to section 1375 in the table of sections for part III of subchapter S of
chapter 1 of such Code is amended by striking <quote>25 percent</quote> and
inserting <quote>60 percent</quote>.</text>
</paragraph></subsection><subsection id="IDDA13020086334B638263FA1D8F5C9AA6"><enum>(d)</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 display-inline="no-display-inline" id="HDE4ADCD0DF2E4E1385A48B1FDED2A2E8" section-type="subsequent-section"><enum>203.</enum><header>Nonresident aliens
allowed To be shareholders</header>
<subsection id="H066C2F8C903344A68F5C07D73D00EF09"><enum>(a)</enum><header>Nonresident
aliens allowed to be shareholders</header>
<paragraph id="H2FBCC6ADF189421887BC46CFE0E3BFA"><enum>(1)</enum><header>In
general</header><text>Paragraph (1) of section 1361(b) of the Internal Revenue
Code of 1986 (defining small business corporation) is amended—</text>
<subparagraph id="HCA322232C8D14225005E47611DE60B9"><enum>(A)</enum><text>by adding
<quote>and</quote> at the end of subparagraph (B),</text>
</subparagraph><subparagraph id="H14206C5D074A4E129B2F6DDDF2F689B1"><enum>(B)</enum><text>by striking
subparagraph (C), and</text>
</subparagraph><subparagraph id="H80AD603214F24CDEB0DD75CF03EC3E16"><enum>(C)</enum><text>by redesignating
subparagraph (D) as subparagraph (C).</text>
</subparagraph></paragraph><paragraph id="H3972A243DF3C44A896FA00BC6F8111CA"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="HB693C8669D2748EB82A4338C5E4F009E"><enum>(A)</enum><text>Paragraph (4) and
(5)(A) of section 1361(c) of such Code (relating to special rules for applying
subsection (b)) are each amended by striking <quote>subsection
(b)(1)(D)</quote> and inserting <quote>subsection (b)(1)(C)</quote>.</text>
</subparagraph><subparagraph id="HEC1D4F44B79D43BA9CB3459F369699A0"><enum>(B)</enum><text display-inline="yes-display-inline">Clause (i) of section 280G(b)(5)(A) of such
Code (relating to general rule for exemption for small business corporations,
etc.) is amended by striking <quote>but without regard to paragraph (1)(C)
thereof</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="H99E57A89B6634E9C98A94836F9DFF66"><enum>(b)</enum><header>Nonresident Alien
Shareholder Treated as Engaged in Trade or Business Within United
States</header>
<paragraph id="H8E4F83EF9A314BC6AFE6DB3D1C34E765"><enum>(1)</enum><header>In
general</header><text>Section 875 of the Internal Revenue Code of 1986 is
amended—</text>
<subparagraph id="H2216D5F8C71340CFA7C30400BC293334"><enum>(A)</enum><text>by striking
<quote>and</quote> at the end of paragraph (1),</text>
</subparagraph><subparagraph id="H4D5379265D414D9EBB00FD27BD9D00E1"><enum>(B)</enum><text>by striking the
period at the end of paragraph (2) and inserting <quote>, and</quote>,
and</text>
</subparagraph><subparagraph id="H39E495817DF041D6954487EE85378348"><enum>(C)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block id="HDAA8CB8ED33040158BC18F7315F7AFA5" style="OLC">
<paragraph id="HA0DE8AAEFA654AFCBD06221CFC008875"><enum>(3)</enum><text>a nonresident
alien individual shall be considered as being engaged in a trade or business
within the United States if the S corporation of which such individual is a
shareholder is so
engaged.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HE8E2129D40164E8187A257AF1ECA9CC6"><enum>(2)</enum><header>Pro rata share
of S corporation income</header><text display-inline="yes-display-inline">The
last sentence of section 1441(b) of such Code (relating to income items) is
amended to read as follows: <quote>In the case of a nonresident alien
individual who is a member of a domestic partnership or a shareholder of an S
corporation, the items of income referred to in subsection (a) shall be treated
as referring to items specified in this subsection included in his distributive
share of the income of such partnership or in his pro rata share of the income
of such S corporation.</quote>.</text>
</paragraph><paragraph id="H55B07672E5B4468082510963A253053B"><enum>(3)</enum><header>Application of
withholding tax on nonresident alien shareholders</header><text>Section 1446 of
such Code (relating to withholding tax on foreign partners’ share of
effectively connected income) is amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the following new
subsection:</text>
<quoted-block id="H97AD028592A0449F97A000F617DBACD1" style="OLC">
<subsection id="HD57014B7E54142F6A685893F5E237505"><enum>(f)</enum><header>S corporation
treated as partnership, etc</header><text>For purposes of this section—</text>
<paragraph id="H00E5FD7D80204F8BAE10611555BB6CA3"><enum>(1)</enum><text>an S corporation
shall be treated as a partnership,</text>
</paragraph><paragraph id="H543D52968C3A4FB6AD2E00D56BF28CBA"><enum>(2)</enum><text>the shareholders
of such corporation shall be treated as partners of such partnership,</text>
</paragraph><paragraph id="HA7F45A4999D14F7A87D6289E1C2C8E96"><enum>(3)</enum><text>any reference to
section 704 shall be treated as a reference to section 1366, and</text>
</paragraph><paragraph id="H7C7D2E6614F3408DA5FA94B4E3661E5"><enum>(4)</enum><text>no withholding tax
under subsection (a) shall be required in the case of any income realized by
such corporation and allocable to a shareholder which is an electing small
business trust (as defined in section
1361(e)).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HF121BE5352384D168FE5D7204D01241F"><enum>(4)</enum><header>Conforming
amendments</header>
<subparagraph id="HB9157EDF896640D89386AA5EFBB1FFA4"><enum>(A)</enum><text>The heading of
section 875 of such Code is amended to read as follows:</text>
<quoted-block id="HF96575ABC60040198B2303083ED2435F" style="OLC">
<section id="H828B79B0C85D4952AB002B516C941C75"><enum>875.</enum><header>Partnerships;
beneficiaries of estates and trusts; s
corporations</header>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HCBC62FFA1195495F9158612CE73BF9DA"><enum>(B)</enum><text>The heading of
section 1446 of such Code is amended to read as follows:</text>
<quoted-block id="H13400748828948AF937312A561E1A3B" style="OLC">
<section id="HF954C0CD2EA64CD79B9974F642E6F347"><enum>1446.</enum><header>Withholding
tax on foreign partners’ and s corporation shareholders’ share of effectively
connected
income</header>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H49CB578BE6234D31AB23D3132CDB7EE2"><enum>(5)</enum><header>Clerical
amendments</header>
<subparagraph id="H0352A5A0F63B4A618C00CC00D399D475"><enum>(A)</enum><text>The item relating
to section 875 in the table of sections for subpart A of part II of subchapter
N of chapter 1 of such Code is amended to read as follows:</text>
<quoted-block id="HC06EBFD137114C81A62C595DB9BE8DAD" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 875. Partnerships; beneficiaries of
estates and trusts; S
corporations.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HBB67EBA14CE04668A89DC2458C7C48DA"><enum>(B)</enum><text>The item relating
to section 1446 in the table of sections for subchapter A of chapter 3 of such
Code is amended to read as follows:</text>
<quoted-block id="H2074134F9DE642AF00A405008BCE3E21" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 1446. Withholding tax on foreign
partners’ and S corporation shareholders’ share of effectively connected
income.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HDD894B2480AA4D75B4471EE4374CF15"><enum>(C)</enum><header>Permanent
establishment of partners and s corporation shareholders</header><text>Section
894 of such Code (relating to income affected by treaty) is amended by
redesignating subsection (c) as subsection (d) and by inserting after
subsection (b) the following new subsection:</text>
<quoted-block id="HA6A0EC3497E449C0AD47FA523E2DF139" style="OLC">
<subsection id="H65F6504B24E141C9AEAC4362723818D3"><enum>(c)</enum><header>Permanent
establishment of partners and S corporation shareholders</header><text>If a
partnership or S corporation has a permanent establishment in the United States
(within the meaning of a treaty to which the United States is a party) at any
time during a taxable year of such entity, a nonresident alien individual or
foreign corporation which is a partner in such partnership, or a nonresident
alien individual who is a shareholder in such S corporation, shall be treated
as having a permanent establishment in the United States for purposes of such
treaty.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="H7D53FDDE71DC4DE898FDB8E537DD9CC4"><enum>(c)</enum><header>Application of
other withholding tax rules on nonresident alien shareholders</header>
<paragraph id="H94603E120E7C41499CD4BE15FB7C1F33"><enum>(1)</enum><header>Section
<enum-in-header>1441</enum-in-header></header><text>Section 1441 of the
Internal Revenue Code of 1986 (relating to withholding of tax on nonresident
aliens) is amended by redesignating subsection (g) as subsection (h) and by
inserting after subsection (f) the following new subsection:</text>
<quoted-block id="HE49DB948FC8B4426BB6EA8E2DB4DB5" style="OLC">
<subsection id="HCFCF6C7D35B94ED988069902B81B5B04"><enum>(g)</enum><header>S corporation
treated as partnership, etc</header><text>For purposes of this section—</text>
<paragraph id="H5B0BF0D345034869B8D1B3B9F4FC9132"><enum>(1)</enum><text>an S corporation
shall be treated as a partnership,</text>
</paragraph><paragraph id="H2426DF58B1784887B4BBC38165BC9801"><enum>(2)</enum><text>the shareholders
of such corporation shall be treated as partners of such partnership,
and</text>
</paragraph><paragraph id="H177B33142E8B410795C31DE8F63947E2"><enum>(3)</enum><text>no deduction or
withholding under subsection (a) shall be required in the case of any item of
income realized by such corporation and allocable to a shareholder which is an
electing small business trust (as defined in section
1361(e)).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H414B54B54D9E4AF7A0EF8F076600F9C7"><enum>(2)</enum><header>Section
<enum-in-header>1445</enum-in-header></header><text>Section 1445(e) of such
Code (relating to special rules relating to distributions, etc., by
corporations, partnerships, trusts, or estates) is amended by redesignating
paragraph (6) as paragraph (7) and by inserting after paragraph (5) the
following new paragraph:</text>
<quoted-block id="H1A9CA5DD5DD642E2901F75BB00AD5345" style="OLC">
<paragraph id="H138C8F4A4D414F4BA91B000006C86659"><enum>(6)</enum><header>S corporation
treated as partnership, etc</header><text>For purposes of this section—</text>
<subparagraph id="HA0868CD2679F465795107CB0017B3CE0"><enum>(A)</enum><text>an S corporation
shall be treated as a partnership, and</text>
</subparagraph><subparagraph id="H17D211E7CE774684BA3F940444C5CD73"><enum>(B)</enum><text>the shareholders
of such corporation shall be treated as partners of such partnership,
and</text>
</subparagraph><subparagraph id="H3C8FF8E3C55C43D0BBC63D7E911045D9"><enum>(C)</enum><text>no deduction or
withholding under subsection (a) shall be required in the case of any gain
realized by such corporation and allocable to a shareholder which is an
electing small business trust (as defined in section
1361(e)).</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H36B0FFAA59B347EF9D7C5C9546073E35"><enum>(d)</enum><header>Additional
conforming amendments</header>
<paragraph id="H218B387929CF4409BDA15EAC1B77FDE"><enum>(1)</enum><text>Section
1361(c)(2)(A)(i) of the Internal Revenue Code of 1986 is amended by striking
<quote>who is a citizen or resident of the United States</quote>.</text>
</paragraph><paragraph id="HD9C5AAEB54A54F9798F1B1220922457C"><enum>(2)</enum><text>Section
1361(d)(3)(B) of such Code is amended by striking <quote>who is a citizen or
resident of the United States</quote>.</text>
</paragraph><paragraph id="H0196CF4110554DA0980017338657F52D"><enum>(3)</enum><text>Section 1361(e)(2)
of such Code is amended by inserting <quote>(including a nonresident
alien)</quote> after <quote>person</quote> the first place it appears.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HC84223D15C6F4FF6ABB077F9D6DBE0CA"><enum>(e)</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="H2DEB30D27BBC4E49BD9532E9B2E2548"><enum>204.</enum><header>Expansion of S
corporation eligible shareholders to include IRAS</header>
<subsection id="H8ECBD7D3BDE144FDB301DD8B01FC84C7"><enum>(a)</enum><header>In
general</header><text>Clause (vi) of section 1361(c)(2)(A) of the Internal
Revenue Code of 1986 (relating to certain trusts permitted as shareholders) is
amended to read as follows:</text>
<quoted-block id="HF57A2E7C01FB4AA29FBC6FB592C1C6DB" style="OLC">
<clause id="H6710A551F8644494A75394C75E2E3EA9"><enum>(vi)</enum><text>A
trust which constitutes an individual retirement account under section 408(a),
including one designated as a Roth IRA under section
408A.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1D455F1959AB47A691F8AC5423334400"><enum>(b)</enum><header>Sale of stock in
IRA relating to S corporation election exempt from prohibited transaction
rules</header><text>Paragraph (16) of section 4975(d) of the Internal Revenue
Code of 1986 (relating to exemptions) is amended to read as follows:</text>
<quoted-block id="H53F8519B2CFB4E3DA410AE21516DB39C" style="OLC">
<paragraph id="H39DC3E2698D144759732385D53B23D18"><enum>(16)</enum><text>a sale of stock
held by a trust which constitutes an individual retirement account under
section 408(a) to the individual for whose benefit such account is established
if—</text>
<subparagraph id="HD0A409981D09447B8CDE369B8E4E2364"><enum>(A)</enum><text>such sale is
pursuant to an election under section 1362(a) by the issuer of such
stock,</text>
</subparagraph><subparagraph id="HB6614A8907CE4DCAB50364B3E9AD1D50"><enum>(B)</enum><text>such sale is for
fair market value at the time of sale (as established by an independent
appraiser) and the terms of the sale are otherwise at least as favorable to
such trust as the terms that would apply on a sale to an unrelated
party,</text>
</subparagraph><subparagraph id="H7703E45EFB6E43BBB29683D440AA5666"><enum>(C)</enum><text>such trust does
not pay any commissions, costs, or other expenses in connection with the sale,
and</text>
</subparagraph><subparagraph id="H6952091314274D51A121562F316CAD83"><enum>(D)</enum><text>the stock is sold
in a single transaction for cash not later than 120 days after the S
corporation election is
made.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H169C2B95758E41D3923C07A725492177"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall take effect on the
date of the enactment of this Act.</text>
</subsection></section><enum>III</enum><header>Pension plan
incentives and parity</header>
<section changed="not-changed" id="ID56A5226258AB43CFA4AAAF99C296CAC3"><enum>301.</enum><header>Credit for
qualified pension plan contributions of small employers</header>
<subsection changed="not-changed" id="ID5B00F1E94331481C907F2E5EF806A20E"><enum>(a)</enum><header>In
General</header><text>Subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to business related credits) is amended
by adding at the end the following new section:</text>
<quoted-block id="ID7399E6A09A8A4932B80AADBE8E70D3C5" style="OLC">
<section changed="not-changed" id="ID92A9F90D6DEE41DBA0772ACEADDB3C5A"><enum>45N.</enum><header>Small employer
pension plan contributions</header>
<subsection changed="not-changed" id="ID62E11F0C6692404B8605A36CC4113596"><enum>(a)</enum><header>General
Rule</header><text>For purposes of section 38, in the case of an eligible
employer, the small employer pension plan contribution credit determined under
this section for any taxable year is an amount equal to 50 percent of the
amount which would (but for subsection (f)(1)) be allowed as a deduction under
section 404 for such taxable year for qualified employer contributions made to
any qualified retirement plan on behalf of any employee who is not a highly
compensated employee.</text>
</subsection><subsection changed="not-changed" id="ID69260EBA6EF346CF88F0F5AEC6427378"><enum>(b)</enum><header>Credit Limited
to 3 Years</header><text>The credit allowable by this section shall be allowed
only with respect to the period of 3 taxable years beginning with the first
taxable year for which a credit is allowable with respect to a plan under this
section.</text>
</subsection><subsection changed="not-changed" id="ID5BFC72016EA74EFC9A2A603CC4AC55D8"><enum>(c)</enum><header>Qualified
Employer Contribution</header><text>For purposes of this section—</text>
<paragraph changed="not-changed" id="ID1618023982EB471FBE630FC59C6C9A29"><enum>(1)</enum><header>Defined
contribution plans</header><text>In the case of a defined contribution plan,
the term <term>qualified employer contribution</term> means the amount of
nonelective and matching contributions to the plan made by the employer on
behalf of any employee who is not a highly compensated employee to the extent
such amount does not exceed 3 percent of such employee’s compensation from the
employer for the year.</text>
</paragraph><paragraph changed="not-changed" id="ID631B72AFC2684BFB9D849958D15AF5F1"><enum>(2)</enum><header>Defined benefit
plans</header><text>In the case of a defined benefit plan, the term
<term>qualified employer contribution</term> means the amount of employer
contributions to the plan made on behalf of any employee who is not a highly
compensated employee to the extent that the accrued benefit of such employee
derived from employer contributions for the year does not exceed the equivalent
(as determined under regulations prescribed by the Secretary and without regard
to contributions and benefits under the <act-name parsable-cite="SSA">Social
Security Act</act-name>) of 3 percent of such employee’s compensation from the
employer for the year.</text>
</paragraph></subsection><subsection changed="not-changed" id="IDF535EE4A37394D4B83780F7BCC76D7EB"><enum>(d)</enum><header>Qualified
Retirement Plan</header>
<paragraph changed="not-changed" id="ID9D811D4EBFDD453597170870BAF42C26"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified retirement plan</term> means any
plan described in section 401(a) which includes a trust exempt from tax under
section 501(a) if the plan meets—</text>
<subparagraph changed="not-changed" id="ID27CDFCE6AD5B41C4AA9817F31E28E7C7"><enum>(A)</enum><text>the contribution
requirements of paragraph (2),</text>
</subparagraph><subparagraph changed="not-changed" id="ID97CE3F71C02846C892D8689307E4E795"><enum>(B)</enum><text>the vesting
requirements of paragraph (3), and</text>
</subparagraph><subparagraph changed="not-changed" id="IDAE0D3CEB711D4771A57E4D725A6908C0"><enum>(C)</enum><text>the distribution
requirements of paragraph (4).</text>
</subparagraph></paragraph><paragraph changed="not-changed" id="IDA079432A0B554F55BB1DA790CA0A5E37"><enum>(2)</enum><header>Contribution
requirements</header>
<subparagraph changed="not-changed" id="ID692F420FB0A94101A854C0F4DC16F1A3"><enum>(A)</enum><header>In
general</header><text>The requirements of this paragraph are met if, under the
plan—</text>
<clause changed="not-changed" id="IDFA19A88882754EB3918E15F1FC291DE1"><enum>(i)</enum><text>the employer is
required to make nonelective contributions of at least 1 percent of
compensation (or the equivalent thereof in the case of a defined benefit plan)
for each employee who is not a highly compensated employee who is eligible to
participate in the plan, and</text>
</clause><clause changed="not-changed" id="ID3393BC37818A43E999A4475A3CBA337B"><enum>(ii)</enum><text>allocations of
nonelective employer contributions, in the case of a defined contribution plan,
are either in equal dollar amounts for all employees covered by the plan or
bear a uniform relationship to the total compensation, or the basic or regular
rate of compensation, of the employees covered by the plan (and an equivalent
requirement is met with respect to a defined benefit plan).</text>
</clause></subparagraph><subparagraph changed="not-changed" id="IDAE94AA725FC04A15B0B1B3EEA7BBF9A8"><enum>(B)</enum><header>Compensation
limitation</header><text>The compensation taken into account under subparagraph
(A) for any year shall not exceed the limitation in effect for such year under
section 401(a)(17).</text>
</subparagraph></paragraph><paragraph changed="not-changed" id="ID47016CB085064E3FAD16C98B0830701B"><enum>(3)</enum><header>Vesting
requirements</header><text>The requirements of this paragraph are met if the
plan satisfies the requirements of either of the following
subparagraphs:</text>
<subparagraph changed="not-changed" id="ID4482A525097B421EACD6734721762A66"><enum>(A)</enum><header>3-year
vesting</header><text>A plan satisfies the requirements of this subparagraph if
an employee who has completed at least 3 years of service has a nonforfeitable
right to 100 percent of the employee’s accrued benefit derived from employer
contributions.</text>
</subparagraph><subparagraph changed="not-changed" id="ID35BA060A5954413AAD3BD73ACCB81649"><enum>(B)</enum><header>5-year graded
vesting</header><text>A plan satisfies the requirements of this subparagraph if
an employee has a nonforfeitable right to a percentage of the employee’s
accrued benefit derived from employer contributions determined under the
following table:</text>
<table line-rules="no-gen" table-type="subformat">
<tgroup cols="2">
<thead>
<row><entry></entry><entry colname="I50">The
nonforfeitable</entry>
</row>
<row><entry colname="I49">Years of service:</entry><entry colname="I50">percentage
is:</entry>
</row>
</thead>
<tbody>
<row><entry colname="I51">1</entry><entry colname="I52">20</entry>
</row>
<row><entry colname="I51">2</entry><entry colname="I52">40</entry>
</row>
<row><entry colname="I51">3</entry><entry colname="I52">60</entry>
</row>
<row><entry colname="I51">4</entry><entry colname="I52">80</entry>
</row>
<row><entry colname="I51">5</entry><entry colname="I52">100.</entry>
</row>
</tbody>
</tgroup>
</table>
</subparagraph></paragraph><paragraph changed="not-changed" id="ID626D9CA510AD4C008A7F7E35F8416C27"><enum>(4)</enum><header>Distribution
requirements</header><text>In the case of a profit-sharing or stock bonus plan,
the requirements of this paragraph are met if, under the plan, qualified
employer contributions are distributable only as provided in section
401(k)(2)(B).</text>
</paragraph></subsection><subsection changed="not-changed" id="ID781ED05BD842461FBFCDE54988E24DFD"><enum>(e)</enum><header>Other
Definitions</header><text>For purposes of this section—</text>
<paragraph changed="not-changed" id="ID5E6B10C6D695436F840C095C4E733EFD"><enum>(1)</enum><header>Eligible
employer</header>
<subparagraph changed="not-changed" id="ID40997EBECE7B4DBB9DEF1CB8DAEE88E7"><enum>(A)</enum><header>In
general</header><text>The term <term>eligible employer</term> means, with
respect to any year, an employer which has no more than 25 employees who
received at least $5,000 of compensation from the employer for the preceding
year.</text>
</subparagraph><subparagraph changed="not-changed" id="ID787F9A8B7AEE4E6BB00D4BCDC085D26D"><enum>(B)</enum><header>Requirement for
new qualified employer plans</header><text>Such term shall not include an
employer if, during the 3-taxable year period immediately preceding the 1st
taxable year for which the credit under this section is otherwise allowable for
a qualified employer plan of the employer, the employer or any member of any
controlled group including the employer (or any predecessor of either)
established or maintained a qualified employer plan with respect to which
contributions were made, or benefits were accrued, for substantially the same
employees as are in the qualified employer plan.</text>
</subparagraph></paragraph><paragraph changed="not-changed" id="ID3AC0F77275684BC0B344E180E5E02F36"><enum>(2)</enum><header>Highly
compensated employee</header><text>The term <term>highly compensated
employee</term> has the meaning given such term by section 414(q) (determined
without regard to section 414(q)(1)(B)(ii)).</text>
</paragraph></subsection><subsection changed="not-changed" id="IDF7A1D04375544575A7A275D638175784"><enum>(f)</enum><header>Special
Rules</header>
<paragraph changed="not-changed" id="IDAA72C85153F4428F8A25528681776A2D"><enum>(1)</enum><header>Disallowance of
deduction</header><text>No deduction shall be allowed for that portion of the
qualified employer contributions paid or incurred for the taxable year which is
equal to the credit determined under subsection (a).</text>
</paragraph><paragraph changed="not-changed" id="IDC8AC6802C69E4790AE742CF98EAA44ED"><enum>(2)</enum><header>Election not to
claim credit</header><text>This section shall not apply to a taxpayer for any
taxable year if such taxpayer elects to have this section not apply for such
taxable year.</text>
</paragraph><paragraph changed="not-changed" id="ID0156853834F445F998EA986B2410E0A4"><enum>(3)</enum><header>Aggregation
rules</header><text>All persons treated as a single employer under subsection
(a) or (b) of section 52, or subsection (n) or (o) of section 414, shall be
treated as one person. All eligible employer plans shall be treated as 1
eligible employer plan.</text>
</paragraph></subsection><subsection changed="not-changed" id="ID2DB668890BC94F07BEB5CBAA8D494ECB"><enum>(g)</enum><header>Recapture of
Credit on Forfeited Contributions</header>
<paragraph changed="not-changed" id="IDE9B845EC559D40A39D7151E78522AAC1"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), if any accrued
benefit which is forfeitable by reason of subsection (d)(3) is forfeited, the
employer’s tax imposed by this chapter for the taxable year in which the
forfeiture occurs shall be increased by 35 percent of the employer
contributions from which such benefit is derived to the extent such
contributions were taken into account in determining the credit under this
section.</text>
</paragraph><paragraph changed="not-changed" id="ID9EB5562AF4474B76A62E1D6F44441F5B"><enum>(2)</enum><header>Reallocated
contributions</header><text>Paragraph (1) shall not apply to any contribution
which is reallocated by the employer under the plan to employees who are not
highly compensated
employees.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection changed="not-changed" id="ID3C80A148F91C4073B503D1B800D70C2C"><enum>(b)</enum><header>Credit Allowed
as Part of General Business Credit</header><text>Section 38(b) of the Internal
Revenue Code of 1986 (defining current year business credit) is amended by
striking <quote>plus</quote> at the end of paragraph (29), by striking the
period at the end of paragraph (30) and inserting <quote>, plus</quote>, and by
adding at the end the following new paragraph:</text>
<quoted-block id="ID2D61D8982876442EA090CC68062BC3FE" style="OLC">
<paragraph changed="not-changed" id="ID39823A62FF85411E90ED04A2A155BD73"><enum>(31)</enum><text>in the case of
an eligible employer (as defined in section 45E(e)), the small employer pension
plan contribution credit determined under section
45M(a).</text>
</paragraph><after-quoted-block></after-quoted-block></quoted-block>
</subsection><subsection changed="not-changed" id="ID4B04D617F6644B61BE86CDDBF9624B72"><enum>(c)</enum><header>Conforming
Amendments</header>
<paragraph changed="not-changed" id="ID2686735CDD7C44DBB91FD4682ACA881B"><enum>(1)</enum><text>Subsection (c) of
section 196 of the Internal Revenue Code of 1986 is amended by striking
<quote>and</quote> at the end of paragraph (12), by striking the period at the
end of paragraph (13) and inserting <quote>, and</quote>, and by adding at the
end the following new paragraph:</text>
<quoted-block id="ID1CF850D4AFD1443EB0DD9F096D57253B" style="OLC">
<paragraph changed="not-changed" id="IDE46A50BB0D4343FF9A294C73DBE6C1C1"><enum>(14)</enum><text>the small
employer pension plan contribution credit determined under section
45E(a).</text>
</paragraph><after-quoted-block></after-quoted-block></quoted-block>
</paragraph><paragraph changed="not-changed" id="ID6620F6E11B994CED8C597BA09E51485F"><enum>(2)</enum><text>The table of
sections for subpart D of part IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new item:</text>
<quoted-block id="ID96695EFF11F54E368CEA0B734EE8BDB3" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry changed="not-changed" level="section">Sec. 45M. Small
employer pension plan
contributions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection changed="not-changed" id="ID9985E258978642AE805421E83D16AFF2"><enum>(d)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to
contributions paid or incurred in taxable years beginning after December 31,
2006.</text>
</subsection></section><section changed="not-changed" id="id863E436B49744465A2791051061246BF"><enum>302.</enum><header>Deduction for
pension contributions allowed in computing net earnings from
self-employment</header>
<subsection changed="not-changed" id="id13D3656E21374B79815B1DF968E3A1B4"><enum>(a)</enum><header>In
general</header><text>Section 1402(a) of the Internal Revenue Code of 1986
(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 display-inline="no-display-inline" id="idA58DDFF5C8C443D7BB4CEC2213C4C08C" style="OLC">
<paragraph changed="not-changed" id="id1E3748ED06B64DA6AC0E77982B0D7474"><enum>(17)</enum><text>any deduction
allowed under section 404 by reason of section 404(a)(8)(C) shall be allowed,
except that the amount of such deduction shall be determined without regard to
this
paragraph.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection changed="not-changed" id="id7F71A189F94F4CACB5A5B73E7A43E133"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section><enum>IV</enum><header>Health insurance
costs parity</header>
<section changed="not-changed" id="id952E9111296B487A85BE61BC0AAFB38F"><enum>401.</enum><header>Deduction for
health insurance costs allowed in computing net earnings from
self-employment</header>
<subsection changed="not-changed" id="id6A62DF4814614C5A8A1A5090964271FD"><enum>(a)</enum><header>In
general</header><text>Section 1402(a) of the Internal Revenue Code of 1986
(defining net earnings from self-employment), as amended by section 302, is
amended by striking <quote>and</quote> at the end of paragraph (16), by
striking the period at the end of paragraph (17) and inserting <quote>,
and</quote>, and by inserting after paragraph (17) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id763D276E279E4996AEBC86F7FD7FF56D" style="OLC">
<paragraph changed="not-changed" id="id53182F072D2A400FB83FEF7C33EB3632"><enum>(18)</enum><text>any deduction
allowed under section 162(l) shall be
allowed.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection changed="not-changed" id="id703042B3B0034D5A87C1B8AC4942C73C"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 162(l) of the Internal Revenue Code of 1986
(relating to special rule 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 changed="not-changed" commented="no" display-inline="no-display-inline" id="id1A6EF684A989406DB24A586DAB5FAB01"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section>