1.Short
title; amendments to 1986 Code; table of contents
(a)This Act may be cited
as the Heartland, Habitat, Harvest,
and Horticulture Act of 2007
.
(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 for this Act is as follows:
Sec. 1. Short title; amendments
to 1986 Code; table of contents.
TITLE I—Supplemental agricultural disaster assistance from the
Agriculture Disaster Relief Trust Fund
Sec. 101. Supplemental agriculture disaster
assistance.
TITLE II—Conservation provisions
Subtitle A—Land and species preservation
provisions
Sec. 201. Conservation reserve tax credit.
Sec. 202. Exclusion of Conservation Reserve Program payments
from SECA tax for certain individuals.
Sec. 203. Permanent extension of special rule encouraging
contributions of capital gain real property for conservation
purposes.
Sec. 204. Tax credit for recovery and restoration of endangered
species.
Sec. 205. Deduction for endangered species recovery
expenditures.
Sec. 206. Exclusion for certain payments and programs relating
to fish and wildlife.
Sec. 207. Credit for easements granted under certain Department
of Agriculture conservation programs.
Subtitle B—Timber provisions
Sec. 211. Forest conservation bonds.
Sec. 212. Deduction for qualified timber gain.
Sec. 213. Excise tax not applicable to section 1203 deduction
of real estate investment trusts.
Sec. 214. Timber REIT
modernization.
Sec. 215. Mineral royalty income qualifying income for timber
REITs.
Sec. 216. Modification of taxable REIT subsidiary asset test
for timber REITs.
Sec. 217. Safe harbor for timber property.
TITLE III—Energy provisions
Subtitle A—Electricity generation
Sec. 301. Credit for residential and business wind
property.
Sec. 302. Landowner incentive to encourage electric
transmission build-out.
Sec. 303. Exception to reduction of renewable electricity
credit.
Subtitle B—Alcohol fuel
Sec. 311. Expansion of special allowance to cellulosic biomass
alcohol fuel plant property.
Sec. 312. Credit for production of cellulosic biomass
alcohol.
Sec. 313. Extension of small ethanol producer
credit.
Sec. 314. Credit for producers of fossil free
alcohol.
Sec. 315. Modification of alcohol credit.
Sec. 316. Calculation of volume of alcohol for fuel
credits.
Sec. 317. Ethanol tariff extension.
Sec. 318. Elimination and reductions of duty drawback on
certain imported ethanol.
Subtitle C—Biodiesel and renewable diesel fuel
Sec. 321. Extension and modification of credit for biodiesel
and renewable diesel used as fuel.
Sec. 322. Treatment of qualified alcohol fuel mixtures and
qualified biodiesel fuel mixtures as taxable fuels.
Subtitle D—Alternative fuel
Sec. 331. Extension and modification of alternative fuel
credit.
Sec. 332. Extension of alternative fuel vehicle refueling
property credit.
TITLE IV—Agricultural provisions
Sec. 401. Increase in loan limits on agricultural
bonds.
Sec. 402. Modification of installment sale rules for certain
farm property.
Sec. 403. Allowance of section 1031 treatment for exchanges
involving certain mutual ditch, reservoir, or irrigation company
stock.
Sec. 404. Credit to holders of rural renaissance
bonds.
Sec. 405. Agricultural chemicals security credit.
Sec. 406. Credit for drug safety and effectiveness testing for
minor animal species.
Sec. 407. Certain farming business machinery and equipment
treated as 5-year property.
Sec. 408. Expensing of broadband Internet access
expenditures.
Sec. 409. Credit for energy efficient motors.
TITLE V—Revenue raising provisions
Subtitle A—Miscellaneous revenue provisions
Sec. 501. Limitation on farming losses of certain
taxpayers.
Sec. 502. Modification to optional method of computing net
earnings from self-employment.
Sec. 503. Information reporting for Commodity Credit
Corporation transactions.
Sec. 504. Modification of section 1031 treatment for certain
real estate.
Sec. 505. Modification of effective date of leasing provisions
of the American Jobs Creation Act of 2004.
Sec. 506. Time for payment of corporate estimated
taxes.
Sec. 507. Ineligibility of collectibles for nontaxable like
kind exchange treatment.
Sec. 508. Denial of deduction for certain fines, penalties, and
other amounts.
Sec. 509. Increase in information return penalties.
Subtitle B—Economic substance doctrine
Sec. 511. Clarification of economic substance
doctrine.
Sec. 512. Penalty for understatements attributable to
transactions lacking economic substance, etc.
Sec. 513. Denial of deduction for interest on underpayments
attributable to noneconomic substance transactions.
<enum>I</enum><header>Supplemental
agricultural disaster assistance from the Agriculture Disaster Relief Trust
Fund</header>
<section id="idC92FB351FFAD426BADCA179FA38DE8B4" section-type="subsequent-section"><enum>101.</enum><header>Supplemental
agriculture disaster assistance</header>
<subsection id="idB4725C503BD7464AB84D019515D8792D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The Trade Act of 1974
(19 U.S.C. 2101 et seq.) is amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="idB6CBF78D34114C169056274E0248EC4E" style="OLC">
<title id="idBA361FAA15B7482AA9F7490AF7F16975"><enum>IX</enum><header>Supplemental
agriculture disaster assistance</header>
<section id="id03DADC6F4E77408F9907BD75EA7AD9B6"><enum>901.</enum><header>Permanent
authority for supplemental revenue assistance</header>
<subsection id="id10C3B93A87D340FE928CC0D59AEB21A1"><enum>(a)</enum><header>Definitions</header><text display-inline="yes-display-inline">In this section:</text>
<paragraph id="idEE2FD4B4EC7F4975B5EF420C5B03DCF5"><enum>(1)</enum><header>Actual
production history yield</header><text>The term <term>actual production history
yield</term> means the weighted average actual production history for each
insurable commodity or noninsurable commodity, as calculated under the Federal
Crop Insurance Act (7 U.S.C. 1501 et seq.) or the noninsured crop disaster
assistance program, respectively.</text>
</paragraph><paragraph id="IDbfaf42b7a67d4ab08126f70b6d40c38c"><enum>(2)</enum><header>Counter-cyclical
program payment yield</header><text>The term <term>counter-cyclical program
payment yield</term> means the weighted average payment yield established under
section 1102 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C.
7912).</text>
</paragraph><paragraph id="IDCF80C7678E1F46BC864FA8EDCFF0E9D8"><enum>(3)</enum><header>Disaster
county</header>
<subparagraph id="idDF52141DB72E4C2E94E102B7A977FCFC"><enum>(A)</enum><header>In
general</header><text>The term <term>disaster county</term> means a county
included in the geographic area covered by a qualifying natural disaster
declaration.</text>
</subparagraph><subparagraph id="id53D94BFDF52348D89B65C59F98C2CA5D"><enum>(B)</enum><header>Inclusion</header><text>The
term <term>disaster county</term> includes—</text>
<clause id="id2BA5DF453B77491687C9A097B59A0448"><enum>(i)</enum><text>a
county contiguous to a county described in subparagraph (A); and</text>
</clause><clause id="id88F64AFE505540B196046C5D363B866C"><enum>(ii)</enum><text>any farm in
which, during a calendar year, the total loss of production of the farm
relating to weather is greater than 50 percent of the normal production of the
farm, as determined by the Secretary.</text>
</clause></subparagraph></paragraph><paragraph id="ID2e50850a93db456881165f923ee8a831"><enum>(4)</enum><header>Eligible
producer on a farm</header>
<subparagraph id="id2FC2CDA859B24FD1BB78ED25CA827A75"><enum>(A)</enum><header>In
general</header><text>The term <term>eligible producer on a farm</term> means
an individual or entity described in subparagraph (B) that, as determined by
the Secretary, assumes the production and market risks associated with the
agricultural production of crops or livestock.</text>
</subparagraph><subparagraph id="id2B4B211AA5A9441AB6A2F853FCDBBDD9"><enum>(B)</enum><header>Description</header><text>An
individual or entity referred to in subparagraph (A) is—</text>
<clause id="idF2A32BA5AA25436A981F2EFF81FA11A6"><enum>(i)</enum><text>a
citizen of the United States;</text>
</clause><clause id="idB149BE9DA1B54A50AB1147EAC6E38A7A"><enum>(ii)</enum><text>a resident
alien;</text>
</clause><clause id="idE425E421742A43C1A4475294DC754323"><enum>(iii)</enum><text>a partnership
of citizens of the United States; or</text>
</clause><clause id="idD63E4CE0EBC74620ADB02D40A50EB79A"><enum>(iv)</enum><text>a corporation,
limited liability corporation, or other farm organizational structure organized
under State law.</text>
</clause></subparagraph></paragraph><paragraph id="IDf614101b7a364ae4a0b33598c38ad7d2"><enum>(5)</enum><header>Farm</header>
<subparagraph id="id21D7816753AA41558A172CC0E60B609B"><enum>(A)</enum><header>In
general</header><text>The term <term>farm</term> means, in relation to an
eligible producer on a farm, the sum of all crop acreage in all counties
that—</text>
<clause id="id40E35F1DFBF940EC949C81583261BAAA"><enum>(i)</enum><text>is used for
grazing by the eligible producer; or</text>
</clause><clause id="id997E07FABFE843AB8D0F703B75B66561"><enum>(ii)</enum><text>is planted or
intended to be planted for harvest by the eligible producer.</text>
</clause></subparagraph><subparagraph id="id46115A0638E54E178A8AED7BE5DF700C"><enum>(B)</enum><header>Aquaculture</header><text>In
the case of aquaculture, the term <term>farm</term> means, in relation to an
eligible producer on a farm, all fish being produced in all counties that are
intended to be harvested for sale by the eligible producer.</text>
</subparagraph><subparagraph id="id6CCECABCF40249E3AC4590510F18C342"><enum>(C)</enum><header>Honey</header><text>In
the case of honey, the term <term>farm</term> means, in relation to an eligible
producer on a farm, all bees and beehives in all counties that are intended to
be harvested for a honey crop by the eligible producer.</text>
</subparagraph></paragraph><paragraph id="idB971A689E7E845B2BDFE27EAAC22ABF0"><enum>(6)</enum><header>Farm-raised
fish</header><text>The term <term>farm-raised fish</term> means any aquatic
species (including any species of finfish, mollusk, crustacean, or other
aquatic invertebrate, amphibian, reptile, or aquatic plant) that is propagated
and reared in a controlled or semicontrolled environment.</text>
</paragraph><paragraph id="IDf84bd507435c4607995d1e06ec8fed72"><enum>(7)</enum><header>Insurable
commodity</header><text>The term <term>insurable commodity</term> means an
agricultural commodity (excluding livestock) for which the producer on a farm
is eligible to obtain a policy or plan of insurance under the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.).</text>
</paragraph><paragraph id="IDfe6d76783491413b80109e683374d775"><enum>(8)</enum><header>Livestock</header><text>The
term <term>livestock</term> includes—</text>
<subparagraph id="ID3ea458983b0641dfac31dfd27d9d86f2"><enum>(A)</enum><text>cattle (including
dairy cattle);</text>
</subparagraph><subparagraph id="IDdc7f5a7db0f5401bbd909e881f20e7c7"><enum>(B)</enum><text>bison;</text>
</subparagraph><subparagraph id="ID8c333539be414228a3e94fac76615e05"><enum>(C)</enum><text>poultry;</text>
</subparagraph><subparagraph id="IDe9b510f768ba47c6884e8b55aeed5715"><enum>(D)</enum><text>sheep;</text>
</subparagraph><subparagraph id="ID3c07e9bcc1284e1f95fa280234f1a9b3"><enum>(E)</enum><text>swine;</text>
</subparagraph><subparagraph id="idDC7B60134910423C9FD1CD1542F87983"><enum>(F)</enum><text>horses;
and</text>
</subparagraph><subparagraph id="ID4fe3169efce44feead3de1161fb2ed78"><enum>(G)</enum><text>other livestock,
as determined by the Secretary.</text>
</subparagraph></paragraph><paragraph id="IDefb63c8e311146378e9be5f5142c7dee"><enum>(9)</enum><header>Moving 5-year
olympic average county yield</header><text>The term <term>moving 5-year Olympic
average county yield</term> means the weighted average yield obtained from the
5 most recent years of yield data provided by the National Agriculture
Statistics Service obtained from data after dropping the highest and the lowest
yields.</text>
</paragraph><paragraph id="ID912cdfbb43fb49cab511dc026d080c76"><enum>(10)</enum><header>Noninsurable
commodity</header><text>The term <term>noninsurable commodity</term> means a
crop for which the eligible producers on a farm are eligible to obtain
assistance under the noninsured crop assistance program.</text>
</paragraph><paragraph id="id1D687B3C6BA3468684DD130F2257A4AF"><enum>(11)</enum><header>Noninsured
crop assistance program</header><text>The term <term>noninsured crop assistance
program</term> means the program carried out under section 196 of the Federal
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333).</text>
</paragraph><paragraph id="IDB81B3B3775354568991EC44DB1055136"><enum>(12)</enum><header>Qualifying
natural disaster declaration</header><text>The term <term>qualifying natural
disaster declaration</term> means a natural disaster declared by the Secretary
for production losses under section 321(a) of the
<act-name parsable-cite="CFRDA">Consolidated Farm and Rural Development
Act</act-name> (7 U.S.C. 1961(a)).</text>
</paragraph><paragraph id="id88F0522FBFD5426187EF1B1809228BBC"><enum>(13)</enum><header>Secretary</header><text>The
term <term>Secretary</term> means the Secretary of Agriculture.</text>
</paragraph><paragraph id="ID914346B62C5D497EA7E427F09091F8FA"><enum>(14)</enum><header>State</header><text>The
term <term>State</term> means—</text>
<subparagraph id="ID1AA0C8024B5B488EA17F81A36FBC1821"><enum>(A)</enum><text>a State;</text>
</subparagraph><subparagraph id="ID792A8B98FE9C42679797E3F1D68FC25F"><enum>(B)</enum><text>the District of
Columbia;</text>
</subparagraph><subparagraph id="ID28D43A31F3264D79A65D4436F400AF2F"><enum>(C)</enum><text>the Commonwealth
of Puerto Rico; and</text>
</subparagraph><subparagraph id="ID4912258B462B4AAD8DC29F5610699D3D"><enum>(D)</enum><text>any other
territory or possession of the United States.</text>
</subparagraph></paragraph><paragraph id="id02E2CB1462A94DE685EA6B170A24FB4D"><enum>(15)</enum><header>Trust
Fund</header><text>The term <term>Trust Fund</term> means the Agriculture
Disaster Relief Trust Fund established under section 902.</text>
</paragraph><paragraph commented="no" id="ID93f9ab0dc66b4101885f470664382353"><enum>(16)</enum><header>United
States</header><text>The term <term>United States</term> when used in a
geographical sense, means all of the States.</text>
</paragraph></subsection><subsection id="id4BC205AEE99D4CBEA279FA52B957D642"><enum>(b)</enum><header>Supplemental
revenue assistance payments</header>
<paragraph id="IDdb1b83c902a14e72bc5d924850b4c0d2"><enum>(1)</enum><header>In
general</header><text>The Secretary shall use such sums as are necessary from
the Trust Fund to make crop disaster assistance payments to eligible producers
on farms in disaster counties that have incurred crop production losses or crop
quality losses, or both, during the crop year.</text>
</paragraph><paragraph id="IDe970ca4f7255495ca4054da570ad9286"><enum>(2)</enum><header>Amount</header>
<subparagraph id="idB819278C7C7946D084CE8718005328C5"><enum>(A)</enum><header>In
general</header><text>Subject to subparagraph (B), the Secretary shall provide
crop disaster assistance payments under this section to an eligible producer on
a farm in an amount equal to 52 percent of the difference between—</text>
<clause id="idBE88265AB25342C7BD6E1C199053DF66"><enum>(i)</enum><text>the disaster
assistance program guarantee, as described in paragraph (3); and</text>
</clause><clause id="id391A3B4FE54945578452FC6DFD5A9859"><enum>(ii)</enum><text>the total farm
revenue for a farm, as described in paragraph (4).</text>
</clause></subparagraph><subparagraph id="id745BC0D803EA4C018BEE93A7DB5D471D"><enum>(B)</enum><header>Limitation</header><text>The
disaster assistance program guarantee for a crop used to calculate the payments
for a farm under subparagraph (A)(i) may not be greater than 90 percent of the
sum of the expected revenue, as described in paragraph (5) for each of the
crops on a farm, as determined by the Secretary.</text>
</subparagraph></paragraph><paragraph id="ID94932cc73e714586bb5d7d5562d2a6f0"><enum>(3)</enum><header>Supplemental
revenue assistance program guarantee</header>
<subparagraph id="id3D9441DC82B44CD58129ECE80EEBB6DC"><enum>(A)</enum><header>In
general</header><text>Except as otherwise provided in this paragraph, the
supplemental assistance program guarantee shall be the sum obtained by
adding—</text>
<clause id="idA7FA2BB29E8846B299CFB15609FEF707"><enum>(i)</enum><text>for each
insurable commodity on the farm, the product obtained by multiplying—</text>
<subclause id="id7823F572E1734EA6A07A7200A44EFD8D"><enum>(I)</enum><text>the greatest
of—</text>
<item id="id18A15C8B5B8B46888D2155C512D25E56"><enum>(aa)</enum><text>the actual
production history yield;</text>
</item><item id="id4F6BAE0E66D741089CFD684709BAA9D9"><enum>(bb)</enum><text>85
percent of the moving 5-year Olympic average county yield; and</text>
</item><item id="id4FF7736A939E4510B0B0956DF8E67E01"><enum>(cc)</enum><text>the
counter-cyclical program payment yield for each crop;</text>
</item></subclause><subclause id="id4BD2FB96AC3F40FDA0DA845A457D19AA"><enum>(II)</enum><text>the percentage
of the crop insurance yield guarantee;</text>
</subclause><subclause id="id0AB8E688BE74407D8C77653CA93B63C2"><enum>(III)</enum><text>the percentage
of crop insurance price elected by the eligible producer;</text>
</subclause><subclause id="id1D444246C111452ABDA1BD1F6B9CCA49"><enum>(IV)</enum><text>the crop
insurance price; and</text>
</subclause><subclause id="idFC9166DC989246759B9F69FE9D15D341"><enum>(V)</enum><text>115 percent;
and</text>
</subclause></clause><clause id="id843D9DA164904DF38AEB012568FEE572"><enum>(ii)</enum><text>for each
noninsurable commodity on a farm, the product obtained by multiplying—</text>
<subclause id="idC3E7155D7D694D2DAE2C84BD12C63AD3"><enum>(I)</enum><text>the weighted
noninsured crop assistance program yield guarantee;</text>
</subclause><subclause id="id1D82F1A48F314FD991DD0270D83D49EF"><enum>(II)</enum><text>except as
provided in subparagraph (B), 100 percent of the noninsured crop assistance
program established price; and</text>
</subclause><subclause id="id75CE4381B97C4F378600816320EA9D67"><enum>(III)</enum><text>115
percent.</text>
</subclause></clause></subparagraph><subparagraph id="id50B52DC1FD16484BA5E9DA0B39E1F642"><enum>(B)</enum><header>Supplemental
buy-up noninsured assistance program</header><text>Beginning on the date that
the Secretary makes available supplemental buy-up coverage under the noninsured
assistance program in accordance with subsection (h), the percentage described
in subclause (II) of subparagraph (A)(ii) shall be equal to the percentage of
the noninsured assistance program price guarantee elected by the
producer.</text>
</subparagraph><subparagraph id="ID00eac705407240bd9f763752e30b1554"><enum>(C)</enum><header>Adjustment
insurance guarantee</header><text>Notwithstanding subparagraph (A), in the case
of an insurable commodity for which a plan of insurance provides for an
adjustment in the guarantee, such as in the case of prevented planting, the
adjusted insurance guarantee shall be the basis for determining the disaster
assistance program guarantee for the insurable commodity.</text>
</subparagraph><subparagraph id="ID6b8be42e2cbb48d8b9a63516359d5cc2"><enum>(D)</enum><header>Adjusted
assistance level</header><text>Notwithstanding subparagraph (A), in the case of
a noninsurable commodity for which the noninsured crop assistance program
provides for an adjustment in the level of assistance, such as in the case of
prevented harvesting, the adjusted assistance level shall be the basis for
determining the disaster assistance program guarantee for the noninsurable
commodity.</text>
</subparagraph><subparagraph id="ID34faed017d884191b7f474e135c7fcf7"><enum>(E)</enum><header>Equitable
treatment for non-yield based policies</header><text>The Secretary shall
establish equitable treatment for non-yield based policies and plans of
insurance, such as the Adjusted Gross Revenue Lite insurance program.</text>
</subparagraph><subparagraph id="ID84d93b3786c3429691ef7b4822fab6f1"><enum>(F)</enum><header>Public managed
land</header><text>Notwithstanding subparagraph (A), if rangeland is managed by
a Federal agency and the carrying capacity of the managed rangeland is reduced
as a result of a disaster in the preceding year that was the basis for a
qualifying natural disaster declaration—</text>
<clause id="id799CF4006A76446B9A3F1F8429DFFCA7"><enum>(i)</enum><text>the calculation
for the supplemental assistance program guarantee determined under subparagraph
(A) as the guarantee applies to the managed rangeland shall be not less than 75
percent of the guarantee for the preceding year; and</text>
</clause><clause id="idC119371B01FC48FAA0459F403C3C627F"><enum>(ii)</enum><text>the requirement
for a designation by the Secretary for the current year is waived.</text>
</clause></subparagraph></paragraph><paragraph id="IDffc6c4e0051f41648172ea052e177359"><enum>(4)</enum><header>Farm
revenue</header>
<subparagraph id="id3EDEFE10A81A42D1878A147102227E75"><enum>(A)</enum><header>In
general</header><text>For purposes of this subsection, the total farm revenue
for a farm, shall equal the sum obtained by adding—</text>
<clause id="idAE3676D1DC4641CA832980D699B103D8"><enum>(i)</enum><text>the estimated
actual value for grazing and for each crop produced on a farm by using the
product obtained by multiplying—</text>
<subclause id="id4F989A92477843A8920E1B71B7DB1B50"><enum>(I)</enum><text>the actual crop
acreage grazed or harvested by an eligible producer on a farm;</text>
</subclause><subclause id="id15A66C081CC64FAD97C65D04E7B0A498"><enum>(II)</enum><text>the estimated
actual yield of the grazing land or crop production; and</text>
</subclause><subclause id="id69B71B33A8DE4941B65EEC652B706F1E"><enum>(III)</enum><text>subject to
subparagraphs (B) and (C), the average market price received or value of the
production during the first 5 months of the marketing year for the county in
which the farm or portion of a farm is located;</text>
</subclause></clause><clause id="id7AF933E35A5747239B5EA6BF877A7C28"><enum>(ii)</enum><text>20 percent of
amount of any direct payments made to the producer under section 1103 of the
Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7913);</text>
</clause><clause id="idA061242F33D44D709E72ED8CE0E4C4ED"><enum>(iii)</enum><text>the amount of
payments for prevented planting on a farm;</text>
</clause><clause id="IDe6ad46d9ffaa4182bfc2a369a81843ec"><enum>(iv)</enum><text>the amount of
crop insurance indemnities received by an eligible producer on a farm for each
crop on a farm, including indemnities for grazing losses;</text>
</clause><clause id="ID570d813785494f9a9548a821ea58e1f8"><enum>(v)</enum><text>the amount of
payments an eligible producer on a farm received under the noninsured crop
assistance program for each crop on a farm, including grazing losses;
and</text>
</clause><clause id="IDebbf2bbc09eb4c7ea6ef0f784e126a09"><enum>(vi)</enum><text>the value of any
other natural disaster assistance payments provided by the Federal Government
to an eligible producer on a farm for each crop on a farm for the same loss for
which the eligible producer is seeking assistance.</text>
</clause></subparagraph><subparagraph id="ID4f11fd2ed22b4104a59d4f14595cfddd"><enum>(B)</enum><header>Adjustment</header><text>The
Secretary shall adjust the average market price received by the eligible
producer on a farm—</text>
<clause id="id8747AF25355E4EC0BC760C9DC54F05CB"><enum>(i)</enum><text>to reflect the
average quality discounts applied to the local or regional market price of a
crop, hay, or forage due to a reduction in the intrinsic characteristics of the
production resulting from adverse weather, as determined annually by the State
office of the Farm Service Agency; and</text>
</clause><clause id="IDde0be4969e244105ac011d302d5cc2b1"><enum>(ii)</enum><text>to account for a
crop the value of which is reduced due to excess moisture resulting from a
disaster-related condition.</text>
</clause></subparagraph><subparagraph id="idBE8FE44D02CC450CA9F11D3F88408A80"><enum>(C)</enum><header>Maximum amount
for certain crops</header><text>With respect to a crop for which an eligible
producer on a farm receives assistance under the noninsured crop assistance
program, the average market price received or value of the production during
the first 5 months of the marketing year for the county in which the farm or
portion of a farm is located shall be an amount not more than 100 percent of
the price of the crop established under the noninsured crop assistance
program.</text>
</subparagraph></paragraph><paragraph id="ID55473ae292eb4659aeb339beaae5a049"><enum>(5)</enum><header>Expected
revenue</header><text>The expected revenue for each crop on a farm shall equal
the sum obtained by adding—</text>
<subparagraph id="id2D611377E7194F6C90462A33D17D577E"><enum>(A)</enum><text>the expected
value of grazing;</text>
</subparagraph><subparagraph id="idAF363EC6E95945C6A7FBE6A691ADF37A"><enum>(B)</enum><text>the product
obtained by multiplying—</text>
<clause id="id3F297C7C498048CBBF0FF5DC49838D8F"><enum>(i)</enum><text>the greatest
of—</text>
<subclause id="id82D46E2155B3476A8D06AE6C8A01A44E"><enum>(I)</enum><text>the actual
production history yield of the eligible producer on a farm;</text>
</subclause><subclause id="id7496F209CE944A039F0DEAE9257941E9"><enum>(II)</enum><text>the moving
5-year Olympic average county yield; and</text>
</subclause><subclause id="id3446C0D6D64E4E289A1856C5A5411711"><enum>(III)</enum><text>the
counter-cyclical program payment yield;</text>
</subclause></clause><clause id="idA3C5AE19F7204E6A88480B30D69A6236"><enum>(ii)</enum><text>the acreage
planted or intended to be planted for each crop; and</text>
</clause><clause id="id6AF8EDF1C29140799B6DE583210EA446"><enum>(iii)</enum><text>100 percent of
the insurance price guarantee; and</text>
</clause></subparagraph><subparagraph id="id898EA440992845758168640A523DDFA3"><enum>(C)</enum><text>the product
obtained by multiplying—</text>
<clause id="idC9721D4A9B7E40169B56F9B4D7F65B96"><enum>(i)</enum><text>100 percent of
the noninsured crop assistance program yield; and</text>
</clause><clause id="id3345503B8BA741F3A1F9760279EAA5A6"><enum>(ii)</enum><text>100 percent of
the noninsured crop assistance program price for each of the crops on a
farm.</text>
</clause></subparagraph></paragraph></subsection><subsection id="id8D7BB38B3E21475FA9DD8540FCB228AB"><enum>(c)</enum><header>Livestock
indemnity payments</header>
<paragraph id="ID7047d697d0224201b0c62ff62d29e61b"><enum>(1)</enum><header>In
general</header><text>The Secretary shall use such sums as are necessary from
the Trust Fund to make livestock indemnity payments to eligible producers on
farms that have incurred livestock death losses in excess of the normal
mortality due to adverse weather, as determined by the Secretary, during the
calendar year, including losses due to hurricanes, floods, blizzards, disease,
wildfires, extreme heat, and extreme cold.</text>
</paragraph><paragraph id="IDa09f13eba43e480392b43cb675e05939"><enum>(2)</enum><header>Payment
rates</header><text>Indemnity payments to an eligible producer on a farm under
paragraph (1) shall be made at a rate of 75 percent of the market value of the
applicable livestock on the day before the date of death of the livestock, as
determined by the Secretary.</text>
</paragraph></subsection><subsection id="IDd8288cfd10904dcfad0ba8a7bad6fefa"><enum>(d)</enum><header>Emergency
assistance for livestock, honey bees, and farm-raised fish</header>
<paragraph id="ID7691bd8da9c743f7a30d12bb3d08892b"><enum>(1)</enum><header>In
general</header><text>The Secretary shall use up to $35,000,000 per year from
the Trust Fund to provide emergency relief to eligible producers of livestock,
honey bees, and farm-raised fish to aid in the reduction of losses due to
adverse weather or other environmental conditions, such as blizzards and
wildfires, as determined by the Secretary, that are not covered under the
authority of the Secretary to make qualifying natural disaster
declarations.</text>
</paragraph><paragraph id="idA9059C7D92B3453AB6AE0273579007ED"><enum>(2)</enum><header>Use of
funds</header><text>Funds made available under this subsection shall be used to
reduce losses caused by feed or water shortages, disease, or other factors as
determined by the Secretary.</text>
</paragraph><paragraph id="id1784A955D512406D82AD16C22F1737F9"><enum>(3)</enum><header>Availability of
funds</header><text>Any funds made available under this subsection and not used
in a crop year shall remain available until expended.</text>
</paragraph></subsection><subsection id="id12647BAA890E4EBDB8A99114786BDAB9"><enum>(e)</enum><header>Tree assistance
program</header>
<paragraph id="IDDC62C5064AD24D7C8F51FB1BC5B86609"><enum>(1)</enum><header>Definitions</header><text>In
this subsection:</text>
<subparagraph id="ID96B947455C8D43F88B57B92175D406AE"><enum>(A)</enum><header>Eligible
orchardist</header><text>The term <term>eligible orchardist</term> means a
person that—</text>
<clause id="id4A03686A5CD14C40A10611362F5F114D"><enum>(i)</enum><text>produces annual
crops from trees for commercial purposes; or</text>
</clause><clause id="idADBD6BDCCF66473FBFEE68944A91BD85"><enum>(ii)</enum><text>produces
nursery, ornamental, fruit, nut, or Christmas trees for commercial sale.</text>
</clause></subparagraph><subparagraph id="ID6F20904D63DF4CEE8EE1DF44AF4F5ACF"><enum>(B)</enum><header>Natural
disaster</header><text>The term <term>natural disaster</term> means plant
disease, insect infestation, drought, fire, freeze, flood, earthquake,
lightning, or other occurrence, as determined by the Secretary.</text>
</subparagraph><subparagraph id="ID677A25333D4746EC846C65092A087D28"><enum>(C)</enum><header>Tree</header><text>The
term <term>tree</term> includes a tree, bush, and vine.</text>
</subparagraph></paragraph><paragraph id="ID1C043740022A45E297843FB253343DF6"><enum>(2)</enum><header>Eligibility</header>
<subparagraph id="ID9271E08DC8274022A1D4F2C610CC8BFD"><enum>(A)</enum><header>Loss</header><text>Subject
to subparagraph (B), the Secretary shall provide assistance under paragraph (3)
to eligible orchardists that planted trees for commercial purposes but lost the
trees as a result of a natural disaster, as determined by the Secretary.</text>
</subparagraph><subparagraph id="ID31C2A3A507FC46DCA39A15E10949541F"><enum>(B)</enum><header>Limitation</header><text>An
eligible orchardist shall qualify for assistance under subparagraph (A) only if
the tree mortality of the eligible orchardist, as a result of damaging weather
or related condition, exceeds 15 percent (adjusted for normal
mortality).</text>
</subparagraph></paragraph><paragraph id="ID17ce93decb484714a9f20b6229af8b6e"><enum>(3)</enum><header>Assistance</header><text>The
assistance provided by the Secretary to eligible orchardists for losses
described in paragraph (2) shall consist of—</text>
<subparagraph id="IDe1e07d896f234a5e9a4f3a497573ee93"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="id2EE3BBDAE11F4D49B98819B96752F866"><enum>(i)</enum><text>reimbursement of 75
percent of the cost of replanting trees lost due to a natural disaster, as
determined by the Secretary, in excess of 15 percent mortality (adjusted for
normal mortality); or</text>
</clause><clause id="idEA2FBBC96F6147568CEEBC0740EED7C6" indent="up1"><enum>(ii)</enum><text>at the option of the Secretary,
sufficient seedlings to reestablish a stand; and</text>
</clause></subparagraph><subparagraph id="ID75328ff2aa4447ecaa2bc60f2cc9ad0e"><enum>(B)</enum><text>reimbursement of
50 percent of the cost of pruning, removal, and other costs incurred by an
eligible orchardist to salvage existing trees or, in the case of tree
mortality, to prepare the land to replant trees as a result of damage or tree
mortality due to a natural disaster, as determined by the Secretary, in excess
of 15 percent damage or mortality (adjusted for normal tree damage and
mortality).</text>
</subparagraph></paragraph></subsection><subsection id="H30110EDEC18F4C7CA988019C07356939"><enum>(f)</enum><header>Pest and disease
management and disaster prevention</header>
<paragraph id="HFC6ABEBE4101436B86F8E5C767DCF6EE"><enum>(1)</enum><header>Definitions</header><text display-inline="yes-display-inline">In this subsection:</text>
<subparagraph id="H3C392111103647CBAD6263A223ECD9AC"><enum>(A)</enum><header>Early pest
detection and surveillance</header><text display-inline="yes-display-inline">The term <term>early pest detection and
surveillance</term> means the full range of activities undertaken to find newly
introduced pests, whether the pests are new to the United States or new to
certain areas of the United States, before—</text>
<clause id="idF875C25CC4B8409297CAFCF50EFC40F1"><enum>(i)</enum><text display-inline="yes-display-inline">the pests become established; or</text>
</clause><clause id="idFCDB7FD67FA54E8FB01EE8607A44DEED"><enum>(ii)</enum><text display-inline="yes-display-inline">the pest infestations become too large and
costly to eradicate or control.</text>
</clause></subparagraph><subparagraph id="H1B431410807A45AA93C47900004CD23C"><enum>(B)</enum><header>Pest</header><text display-inline="yes-display-inline">The term <quote>pest</quote> has the
meaning given the term <quote>plant pest</quote> in section 403 of the Plant
Protection Act (7 U.S.C. 7702).</text>
</subparagraph><subparagraph id="H98BF51C5464244C4A8A5565410F5D73"><enum>(C)</enum><header>Specialty
crop</header><text>The term <quote>specialty crop</quote> has the meaning given
the term in section 3 of the Specialty Crops Competitiveness Act of 2004 (7
U.S.C. 1621 note; Public Law 108–465).</text>
</subparagraph><subparagraph id="H06944067A84C4505A6E1A9C99114809B"><enum>(D)</enum><header>State department
of agriculture</header><text display-inline="yes-display-inline">The term
<term>State department of agriculture</term> means an agency of a State that
has a legal responsibility to perform early pest detection and surveillance
activities.</text>
</subparagraph></paragraph><paragraph id="HC4E76DC75322430BBB000057275F8615"><enum>(2)</enum><header>Establishment</header><text>The
Secretary shall establish a program—</text>
<subparagraph id="HD76B06C90DA04F4EA7B9F414C3FE4286"><enum>(A)</enum><text display-inline="yes-display-inline">to conduct early pest detection and
surveillance activities in cooperation with State departments of
agriculture;</text>
</subparagraph><subparagraph id="H117ECE8FDEAF41929DDCD24F9DE8153"><enum>(B)</enum><text>to determine and
prioritize pest and disease threats to domestic production of specialty
crops;</text>
</subparagraph><subparagraph id="H15FF684F15B84E5FBA9D4692A96C4E43"><enum>(C)</enum><text display-inline="yes-display-inline">to create an audit-based certification
approach to protect against the spread of plant pests and to facilitate the
interstate movement of plants and plant products; and</text>
</subparagraph><subparagraph id="idCA648A5808B24A52890CFE3D834C8FC4"><enum>(D)</enum><text>to prevent
potential damage from crop disasters caused by pests and diseases.</text>
</subparagraph></paragraph><paragraph id="H2329C04B684B43AFACA108005FF8B9B8"><enum>(3)</enum><header>Early pest
detection and surveillance improvement program</header>
<subparagraph id="HEFFE6BF5E6CF43CA82F0B0165308DE14"><enum>(A)</enum><header>Cooperative
agreements</header><text>The Secretary shall enter into cooperative agreements
with State departments of agriculture to provide grants to the State
departments of agriculture for early pest detection and surveillance
activities.</text>
</subparagraph><subparagraph display-inline="no-display-inline" id="HF992E8DF01534A3F9048F15864D3200"><enum>(B)</enum><header>Application</header>
<clause display-inline="no-display-inline" id="idD213460F7FDA4937BD383D49579AEBE7"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">A State department of
agriculture seeking to enter into a cooperative agreement under this subsection
shall submit to the Secretary an application containing such information as the
Secretary may require.</text>
</clause><clause display-inline="no-display-inline" id="id229A619354D04F368A426D8B84AEF50A"><enum>(ii)</enum><header>Notification</header><text display-inline="yes-display-inline">The Secretary shall notify applicants
of—</text>
<subclause id="H4678118FB0264683A08DC00BA06EBD9"><enum>(I)</enum><text display-inline="yes-display-inline">the requirements to be imposed on a State
department of agriculture for auditing of, and reporting on, the use of any
funds provided by the Secretary under the cooperative agreement;</text>
</subclause><subclause id="H714FE6046BE04133939676E3EC19755C"><enum>(II)</enum><text display-inline="yes-display-inline">the criteria to be used to ensure that
early pest detection and surveillance activities supported under the
cooperative agreement are based on sound scientific data or thorough risk
assessments; and</text>
</subclause><subclause id="HFA62D767CD2F41CAA3F1791B7EADECDE"><enum>(III)</enum><text>the means of
identifying pathways of pest introductions.</text>
</subclause></clause></subparagraph><subparagraph display-inline="no-display-inline" id="HDA33F7FC02184ACEA2CBDDE0738BEFB"><enum>(C)</enum><header>Use of
funds</header>
<clause id="H2882A00C55DF41848053F200332CBD9C"><enum>(i)</enum><header>Pest detection
and surveillance activities</header><text>A State department of agriculture
that receives funds under this subsection shall use the funds to carry out
early pest detection and surveillance activities approved by the Secretary to
prevent the introduction or spread of a pest.</text>
</clause><clause id="H2A44CCD5517344E88400C462B812F24D"><enum>(ii)</enum><header>Subagreements</header><text display-inline="yes-display-inline">A State department of agriculture may use
funds received under this subsection to enter into subagreements with political
subdivisions in the State that have legal responsibilities relating to
agricultural pest and disease surveillance.</text>
</clause></subparagraph><subparagraph display-inline="no-display-inline" id="H8F770EE21969420E8B6FB537BDB0FA00"><enum>(D)</enum><header>Special funding
considerations</header><text display-inline="yes-display-inline">Subject to the
availability of funds under paragraph (9), the Secretary shall provide funds to
a State department of agriculture that the Secretary determines is in a State
that has a high risk of being affected by 1 or more pest, based on—</text>
<clause id="H9202E48FE4DE43A58B45EF95A1A2CA83"><enum>(i)</enum><text display-inline="yes-display-inline">the number of international airports and
maritime facilities in the State;</text>
</clause><clause id="HBDCCE81E564E45DCA7A7DD9CEEA261A1"><enum>(ii)</enum><text>the volume of
international passenger and cargo entry into the State;</text>
</clause><clause id="HDF06F2ADE54945B7B6A8AFBBFD427B99"><enum>(iii)</enum><subclause commented="no" display-inline="yes-display-inline" id="id9FA180D135414BCAB22F8F531466F8D4"><enum>(I)</enum><text>the geographic location
of the State; and</text>
</subclause><subclause id="id07A2ED871D554F7C9C9568FA15D36EAD" indent="up1"><enum>(II)</enum><text>whether the location is conducive to
agricultural pest and disease establishment due to the climate or crop
diversity of the State;</text>
</subclause></clause><clause id="H557912F0B4AB4E45B92B2592B8E975A0"><enum>(iv)</enum><subclause commented="no" display-inline="yes-display-inline" id="id8E942215706248938C0F3DB84A5F5090"><enum>(I)</enum><text display-inline="yes-display-inline">the types of agricultural commodities or
plants produced in the State; and</text>
</subclause><subclause id="id29B2E1DA0A3E4AD4BB3C1CF4782A3288" indent="up1"><enum>(II)</enum><text display-inline="yes-display-inline">whether the commodities or plants produced
are conducive to agricultural pest and disease establishment due to the climate
or crop diversity of the State;</text>
</subclause></clause><clause id="HDDF2D6005CB84521BE007577B736C470"><enum>(v)</enum><text display-inline="yes-display-inline">whether the Secretary has declared an
emergency in the State pursuant to section 442 of the Plant Protection Act (7
U.S.C. 7772) due to an agricultural pest or disease of Federal concern;
and</text>
</clause><clause id="HBDB09BECBAA84D618C15D4008CABFCCC"><enum>(vi)</enum><text>such other
factors as the Secretary considers appropriate.</text>
</clause></subparagraph><subparagraph commented="no" id="H7E0F7EEE1D504EC7854566D0AB00B869"><enum>(E)</enum><header>Cost-share</header>
<clause commented="no" id="HED1464D6863E4782BC3D0000AB40A392"><enum>(i)</enum><header>Federal cost
share; form of non-Federal cost share</header><text>Except as provided in
clause (ii), a cooperative agreement entered into under subparagraph (A) shall
provide that—</text>
<subclause id="H324FC2F534504614BB52E40021A63678"><enum>(I)</enum><text>the Federal share
of carrying out the cooperative agreement shall not exceed 75 percent of the
total cost;</text>
</subclause><subclause commented="no" id="HFA6C165880E14647AC54FEC27F96EFA"><enum>(II)</enum><text>the non-Federal
share of the cost of carrying out the agreement may be provided in-kind;
and</text>
</subclause><subclause commented="no" id="H72C1C0D5F29F48C5B4ECF4A099B900F7"><enum>(III)</enum><text>any in-kind
costs may include indirect costs as considered appropriate by the
Secretary.</text>
</subclause></clause><clause commented="no" id="HD0C350BA5DB44BC8A6106B2F0063C400"><enum>(ii)</enum><header>Ability to
provide funds</header><text>The Secretary shall not take the ability to provide
non-Federal costs to carry out a cooperative agreement entered into under
subparagraph (A) into consideration in deciding whether to enter into a
cooperative agreement with a State department of agriculture.</text>
</clause><clause commented="no" id="HCE467590A28849B9A5C6892F96FA44A8"><enum>(iii)</enum><header>Special
funding considerations</header><text>The non-Federal share of carrying out
subparagraph (D) shall not exceed 40 percent of the total costs of carrying out
that subparagraph.</text>
</clause></subparagraph><subparagraph display-inline="no-display-inline" id="HF874DA1B55BD491BA1D058928136009F"><enum>(F)</enum><header>Reporting
requirement</header><text>Not later than 180 days after the date of completion
of an early pest detection and surveillance activity conducted by a State
department of agriculture using funds provided under this subsection, the State
department of agriculture shall submit to the Secretary a report that describes
the purposes and results of the activities, including any activities conducted
pursuant to a subagreement referred to in subparagraph (C)(ii).</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HDCD389A380B24C5389BF09573548F58"><enum>(4)</enum><header>Threat
identification and mitigation program</header>
<subparagraph id="H382938A63E284427B4FAB8D2948CB7B0"><enum>(A)</enum><header>In
general</header><text>In conducting the program established under paragraph
(2), the Secretary shall—</text>
<clause id="H3C704E2A888944C191945CE6F4923C71"><enum>(i)</enum><text>develop risk
assessments of the existing and potential threat to the specialty crop industry
in the United States from pests and disease;</text>
</clause><clause id="HD84BB6B0F901467698A3373B6BE726F"><enum>(ii)</enum><text>prepare a list
that prioritizes pest and disease threats to the specialty crop
industry;</text>
</clause><clause commented="no" id="H208C27569C3E48F8BDC101D459543CF"><enum>(iii)</enum><text display-inline="yes-display-inline">develop action plans, in consultation with
State departments of agriculture and other State or regional resource
partnerships, that effectively address pest and disease threats to the
specialty crop industry, including pathway analysis, domestic and offshore
mitigation measures, and comprehensive exclusion measures at ports of entry and
other key distribution centers, in addition to strategies to employ if a pest
or disease is introduced;</text>
</clause><clause id="H5EFF30CC3E4B46FCA416AD187923CDF9"><enum>(iv)</enum><text>implement the
action plans as soon as the action plans are developed to test the
effectiveness of the action plans and help prevent new foreign and domestic
pest and disease threats from being introduced or widely disseminated in the
United States; and</text>
</clause><clause id="HA2E5CA85DA23401984A5D57461A57035"><enum>(v)</enum><text display-inline="yes-display-inline">collaborate with the nursery industry,
research institutions, and other appropriate entities to develop a nursery pest
risk management system—</text>
<subclause id="idAF1893F6316D49C39372F98AFC26B230"><enum>(I)</enum><text display-inline="yes-display-inline">to identify nursery pests and
diseases;</text>
</subclause><subclause id="idE6795835F31240F7B5A09793BA60C858"><enum>(II)</enum><text display-inline="yes-display-inline">to prevent the introduction, establishment,
and spread of the pests and diseases; and</text>
</subclause><subclause id="id447DDCDF5C514C398B83C632979EAD16"><enum>(III)</enum><text display-inline="yes-display-inline">to reduce the risk of, prioritize,
mitigate, and eradicate the pests and diseases.</text>
</subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HDA5D4D1A1C224C979B31ECFEC15E561B"><enum>(B)</enum><header>Reports</header><text display-inline="yes-display-inline">Not later than 1 year after the date of
enactment of this title, and annually thereafter, the Secretary shall update
and submit to Congress the priority list and action plans described in
subparagraph (A), including an accounting of funds expended on the action
plans.</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H9BAF53C72A9A4F4594875B6D03D60323"><enum>(5)</enum><header>Audit-based
approach to specialty crop phytosanitary certification</header><text display-inline="yes-display-inline">In conducting the program established under
paragraph (2), the Secretary shall provide funds and technical assistance to
specialty crop growers, organizations representing specialty crop growers, and
State and local agencies working with specialty crop growers and organizations
for the development and implementation of certification systems based on
audit-based approaches (such as best management practices or nursery pest risk
management systems) to address plant pests and mitigate the risk of plant pests
in the movement of plants and plant products.</text>
</paragraph><paragraph id="H1FCD6F8969B94506A5A1005934BC6B72"><enum>(6)</enum><header>Cooperative
agreements</header><text display-inline="yes-display-inline">The Secretary may
enter into cooperative agreements with other Federal departments or agencies,
States or political subdivisions of States, national governments, local
governments of other nations, domestic or international organizations, domestic
or international associations, and other persons to carry out this
subsection.</text>
</paragraph><paragraph id="H3066989CD5D4474E8CF9D602A05EB1D9"><enum>(7)</enum><header>Consultation</header><text display-inline="yes-display-inline">The Secretary shall consult with the
National Plant Board, State departments of agriculture, and specialty crop
grower organizations to establish funding priorities under this subsection for
each fiscal year.</text>
</paragraph><paragraph commented="no" id="H342F4D255711436D872F5DEE9800F9F6"><enum>(8)</enum><header>Administrative
costs</header><text display-inline="yes-display-inline">Not more than 5 percent
of the funds provided under this subsection may be used for administrative
costs.</text>
</paragraph><paragraph id="HC5D891CE615548D2A5C3E7FC841EEB8F"><enum>(9)</enum><header>Funding</header><text>The
Secretary shall use from the Trust Fund to carry out this subsection—</text>
<subparagraph id="HB0CCC2BC75404121B7F8B28F00CB64DC"><enum>(A)</enum><text>$10,000,000 for
fiscal year 2008;</text>
</subparagraph><subparagraph id="HEDDBD8D967B84E0EBA6198F314BB05D5"><enum>(B)</enum><text>$15,000,000 for
fiscal year 2009;</text>
</subparagraph><subparagraph id="HBB8FE625A1984D558945E5B160410A2"><enum>(C)</enum><text>$30,000,000 for
fiscal year 2010;</text>
</subparagraph><subparagraph id="H75C3681A2DAC4B59B7006D4934A01E9F"><enum>(D)</enum><text>$45,000,000 for
fiscal year 2011; and</text>
</subparagraph><subparagraph id="H56578D5BA28C4164B8DB7F1462026C16"><enum>(E)</enum><text>$60,000,000 for
fiscal year 2012.</text>
</subparagraph></paragraph></subsection><subsection id="id42FF6EFC051346489B7917F15736EDD3"><enum>(g)</enum><header>Risk management
purchase requirement</header>
<paragraph id="IDac272bf4ae18420eaad295151cd1605e"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the
eligible producers on a farm shall not be eligible for assistance under this
section with respect to losses to an insurable commodity or noninsurable
commodity if the eligible producers on the farm—</text>
<subparagraph id="id07ECC47CFE624442AFC1F38DEE33C6D3"><enum>(A)</enum><text>in the case of an
insurable commodity, did not obtain a policy or plan of insurance for the
insurable commodity under the Federal Crop Insurance Act (7 U.S.C. 1501 et
seq.) (excluding a crop insurance pilot program under that Act) for the crop
incurring the losses; or</text>
</subparagraph><subparagraph id="idA0E0489A881841DE826E994AB9D47316"><enum>(B)</enum><text>in the case of a
noninsurable commodity, did not file the required paperwork, and pay the
administrative fee by the applicable State filing deadline, for the
noninsurable commodity under the noninsured crop assistance program for the
crop incurring the losses.</text>
</subparagraph></paragraph><paragraph id="id5747E63ECC7747E4A2BE240875478928"><enum>(2)</enum><header>Minimum</header><text>To
be considered to have obtained insurance under paragraph (1), an eligible
producer on a farm shall have obtained a policy or plan of insurance with not
less than 50 percent yield coverage at 55 percent of the insurable price for
each crop grazed, planted, or intended to be planted for harvest on a whole
farm.</text>
</paragraph><paragraph id="IDc3a5bb6798af44278498cb17b4632261"><enum>(3)</enum><header>Waiver</header><text>With
respect to eligible producers that are limited resource, minority, or beginning
farmers or ranchers, as determined by the Secretary, the Secretary may—</text>
<subparagraph id="id0060D4F5FF6043D594D59AF901F9C8FC"><enum>(A)</enum><text>waive paragraph
(1); and</text>
</subparagraph><subparagraph id="id381D0169546E4F17BD390A0A10DEAE75"><enum>(B)</enum><text>provide disaster
assistance under this section at a level that the Secretary determines to be
equitable and appropriate.</text>
</subparagraph></paragraph><paragraph id="ID501f40631d2141eeb4d83a59dcaeeb1d"><enum>(4)</enum><header>Equitable
relief</header><text>The Secretary may provide equitable relief to eligible
producers on a farm that unintentionally fail to meet the requirements of
paragraph (1) for 1 or more crops on a farm on a case-by-case basis, as
determined by the Secretary.</text>
</paragraph></subsection><subsection id="id5F65B5845DA846398750156AEDAC2040"><enum>(h)</enum><header>Supplemental
buy-up noninsured assistance program</header>
<paragraph id="ID4aa6785a46204e618e763e87b07c6e82"><enum>(1)</enum><header>In
general</header><text>The Secretary shall establish a program under which
eligible producers on a farm may purchase under the noninsured crop assistance
program additional yield and price coverage for a crop, including a forage,
hay, or honey crop, of—</text>
<subparagraph id="id33A76F868427445F9AF4004BC7BDFB7A"><enum>(A)</enum><text>60 or 65 percent
(as elected by the producers on the farm) of the yield established for the crop
under the program; and</text>
</subparagraph><subparagraph id="id2C806E5DB17444A3A1CEAAADF770A9F4"><enum>(B)</enum><text>100 percent of
the price established for the crop under the program.</text>
</subparagraph></paragraph><paragraph id="ID3054b94b0e7e4a108cf09809049c5d25"><enum>(2)</enum><header>Fees</header><text>The
Secretary shall establish and collect fees from eligible producers on a farm
participating in the program established under paragraph (1) to offset all of
the costs of the program, as determined by the Secretary.</text>
</paragraph></subsection><subsection id="idD37B68940EF34AD6A9169F2CDB0EC000"><enum>(i)</enum><header>Payment
limitations</header>
<paragraph id="ID7a683a4afac740429d963a9daf355fb8"><enum>(1)</enum><header>In
general</header><text>The total amount of disaster assistance that an eligible
producer on a farm may receive under this section may not exceed
$100,000.</text>
</paragraph><paragraph id="ID6a26e06d56da4d7cbd724fad3e456a79"><enum>(2)</enum><header>AGI
limitation</header><text>Section 1001D of the Food Security Act of 1985 (7
U.S.C. 1308–3a or any successor provision) shall apply with respect to
assistance provided under this section.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idB4608626DFD649B78BE90AFAC286CE0F"><enum>(j)</enum><header display-inline="yes-display-inline">Period of effectiveness</header><text display-inline="yes-display-inline">This section shall be effective only for
losses that are incurred as the result of a disaster, adverse weather, or other
environmental condition that occurs on or before September 30, 2012, as
determined by the Secretary.</text>
</subsection></section><section id="id093F13056F07474EB4A127818FBD9970"><enum>902.</enum><header>Agriculture
Disaster Relief Trust Fund</header>
<subsection id="id8F44865491964BF0BCFC6203FB24E643"><enum>(a)</enum><header>Creation of
trust fund</header><text>There is established in the Treasury of the United
States a trust fund to be known as the <quote>Agriculture Disaster Relief Trust
Fund</quote>, consisting of such amounts as may be appropriated or credited to
such Trust Fund as provided in this section.</text>
</subsection><subsection id="id986E6D6B97854B7DA46BD678FEDAEC3F"><enum>(b)</enum><header>Transfer to
Trust Fund</header>
<paragraph id="id16260B85D3EE442E9E6D11990793D0A3"><enum>(1)</enum><header>In
general</header><text>There are appropriated to the Agriculture Disaster Relief
Trust Fund amounts equivalent to 3.34 percent of the amounts received in the
general fund of the Treasury of the United States during fiscal years 2008
through 2012 attributable to the duties collected on articles entered, or
withdrawn from warehouse, for consumption under the Harmonized Tariff Schedule
of the United States.</text>
</paragraph><paragraph id="id3982122B8FCC4C34B7AC460471090278"><enum>(2)</enum><header>Amounts based
on estimates</header><text>The amounts appropriated under this section shall be
transferred at least monthly from the general fund of the Treasury of the
United States to the Agriculture Disaster Relief Trust Fund on the basis of
estimates made by the Secretary of the Treasury. Proper adjustments shall be
made in the amounts subsequently transferred to the extent prior estimates were
in excess of or less than the amounts required to be transferred.</text>
</paragraph></subsection><subsection id="id929D539ED9CC4D098376279AF09E4810"><enum>(c)</enum><header>Administration</header>
<paragraph id="idA5FB3FD18A914BDABA6FADD6F2AF1B03"><enum>(1)</enum><header>Reports</header><text>The
Secretary of the Treasury shall be the trustee of the Agriculture Disaster
Relief Trust Fund and shall submit an annual report to Congress each year on
the financial condition and the results of the operations of such Trust Fund
during the preceding fiscal year and on its expected condition and operations
during the 5 fiscal years succeeding such fiscal year. Such report shall be
printed as a House document of the session of Congress to which the report is
made.</text>
</paragraph><paragraph id="idA6A56EB72E6040AA90DFDE857A3DCC3F"><enum>(2)</enum><header>Investment</header>
<subparagraph id="id6319B16070554780BF28BDC0C422BAE7"><enum>(A)</enum><header>In
general</header><text>The Secretary of the Treasury shall invest such portion
of the Agriculture Disaster Relief Trust Fund as is not in his judgment
required to meet current withdrawals. Such investments may be made only in
interest bearing obligations of the United States. For such purpose, such
obligations may be acquired—</text>
<clause id="id87E03057DAD44C628F86E5F620C275AA"><enum>(i)</enum><text>on original issue
at the issue price, or</text>
</clause><clause id="id605D3B3EE83144DB9DBE1061CB30E245"><enum>(ii)</enum><text>by purchase of
outstanding obligations at the market price.</text>
</clause></subparagraph><subparagraph id="id3ADDC26A96C747DB9AD4DCE570C262E3"><enum>(B)</enum><header>Sale of
obligations</header><text>Any obligation acquired by the Agriculture Disaster
Relief Trust Fund may be sold by the Secretary of the Treasury at the market
price.</text>
</subparagraph><subparagraph id="idB4EFD1202CC34352AB8ED5299C314818"><enum>(C)</enum><header>Interest on
certain proceeds</header><text>The interest on, and the proceeds from the sale
or redemption of, any obligations held in the Agriculture Disaster Relief Trust
Fund shall be credited to and form a part of such Trust Fund.</text>
</subparagraph></paragraph></subsection><subsection id="id7660C0C414284813888DE2326273B31B"><enum>(d)</enum><header>Expenditures
from trust fund</header><text>Amounts in the Agriculture Disaster Relief Trust
Fund shall be available for the purposes of making expenditures to meet those
obligations of the United States incurred under section 901.</text>
</subsection><subsection id="idCB4C828975EE40F8A352C938EBE310F4"><enum>(e)</enum><header>Authority to
borrow</header>
<paragraph id="idE2D3E1220C97459D8052B2E42393988A"><enum>(1)</enum><header>In
general</header><text>There are authorized to be appropriated, and are
appropriated, to the Agriculture Disaster Relief Trust Fund, as repayable
advances, such sums as may be necessary to carry out the purposes of such Trust
Fund.</text>
</paragraph><paragraph id="idCDEAB96D12334482BCA9237BA010CBAA"><enum>(2)</enum><header>Repayment of
advances</header>
<subparagraph id="idA805D1A1D7924A1185C5B0E6EE822026"><enum>(A)</enum><header>In
general</header><text>Advances made to the Agriculture Disaster Relief Trust
Fund shall be repaid, and interest on such advances shall be paid, to the
general fund of the Treasury when the Secretary determines that moneys are
available for such purposes in such Trust Fund.</text>
</subparagraph><subparagraph id="idA664E3059F69466F8B192FD25FE43D6D"><enum>(B)</enum><header>Rate of
interest</header><text>Interest on advances made pursuant to this subsection
shall be—</text>
<clause id="id26B42E699D4E4848B1C29F2A00189943"><enum>(i)</enum><text>at a rate
determined by the Secretary of the Treasury (as of the close of the calendar
month preceding the month in which the advance is made) to be equal to the
current average market yield on outstanding marketable obligations of the
United States with remaining periods to maturity comparable to the anticipated
period during which the advance will be outstanding, and</text>
</clause><clause id="id2DB91BAE4D8B48E8BF4E55DCB409D35C"><enum>(ii)</enum><text>compounded
annually.</text>
</clause></subparagraph></paragraph></subsection></section>.
(b)Section 442(c) of the Plant Protection Act (7 U.S.C.
7772(c)) is amended by striking of longer than 60 days
.
<enum>II</enum><header>Conservation
provisions</header>
<subtitle id="idD588847F15B04AA7A3E6D12FD3FAF3DE"><enum>A</enum><header>Land and species
preservation provisions</header>
<section commented="no" display-inline="no-display-inline" id="id7D1F38C7BA724795A7A59BB7691189FC" section-type="subsequent-section"><enum>201.</enum><header display-inline="yes-display-inline">Conservation reserve tax credit</header>
<subsection commented="no" display-inline="no-display-inline" id="idF6BFAD435C494F2D8BBB696A142121B2"><enum>(a)</enum><header display-inline="yes-display-inline">Allowance of credit</header><text>Subpart B
of part IV of subchapter A of chapter 1 is amended by adding at the end the
following new section:</text>
<quoted-block display-inline="no-display-inline" id="id19278CAB9F19405D9B14B537B6316AFD" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id94929A063B274A2BB067AD9A0E0E7361"><enum>30D.</enum><header>Conservation
reserve credit</header>
<subsection commented="no" display-inline="no-display-inline" id="idC40660B4E07F47869EAE787620E9F843"><enum>(a)</enum><header>In
general</header><text>There shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount equal to the rental
value of any land enrolled in the conservation reserve program.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idAEE17C10C6794A5E8A35BA7EA885B141"><enum>(b)</enum><header>Limitations</header>
<paragraph commented="no" display-inline="no-display-inline" id="id6A7804E190DC4E928B8CE9C2CA33EDE7"><enum>(1)</enum><header display-inline="yes-display-inline">Limitation based on amount of
tax</header><text display-inline="yes-display-inline">The credit allowed under
this section for any taxable year shall not exceed the excess of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id644739B88EF54CD3A653A4A85CCEC89E"><enum>(A)</enum><text display-inline="yes-display-inline">the regular tax liability for the taxable
year reduced by the sum of the credits allowable under subpart A and sections
27, 30, 30B, and 30C, over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFA09E26DBF864A9EB805E0FC8625F0C2"><enum>(B)</enum><text display-inline="yes-display-inline">the tentative minimum tax for the taxable
year.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id9A32275618734F1B87BB0B6DD0CD8170"><enum>(2)</enum><header>Limitation
based on allocated portion of national limitation</header><text>The credit
allowed under subsection (a) for any taxpayer for any taxable year shall not
exceed the excess of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id3E39DC9772EA4678AEEF35ECF0B349CD"><enum>(A)</enum><text>the amount of the
national credit limitation allocated to such taxpayer under subsection (c) for
the fiscal year in which such taxable year ends and all prior fiscal years,
over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB3F94A109D3741A8BF3781E6A71C3421"><enum>(B)</enum><text>the credit
allowed under subsection (a) for all prior taxable years.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idF0013A21BE4143B1804AEACF5F89EF9D"><enum>(c)</enum><header display-inline="yes-display-inline">Conservation reserve credit
limitation</header>
<paragraph commented="no" display-inline="no-display-inline" id="id1D6FF87F94A84A56A344DA9940C97D11"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">There is a conservation reserve credit
limitation for each fiscal year of the United States. Such limitation
is—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id5F84AC728EDD4ADAAEB3EC2D5CDEC4AD"><enum>(A)</enum><text display-inline="yes-display-inline">$750,000,000 for each of fiscal years 2008
through 2012, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id7ADE9BB59D0E4413ACB87A71B01B29FF"><enum>(B)</enum><text display-inline="yes-display-inline">zero thereafter.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id50728B6F6EFC4E0BA4B197F1A7CE6378"><enum>(2)</enum><header>Allocation</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id9A391692029042B4B26A99FDAD5D7C39"><enum>(A)</enum><header>In
general</header><text>The Secretary, in consultation with the Secretary of
Agriculture, shall allocate the conservation reserve credit limitation to
taxpayers—</text>
<clause commented="no" display-inline="no-display-inline" id="idA74C516E5334472A845D5E875D303679"><enum>(i)</enum><text>who are owners or
operators of land enrolled in the conservation reserve program, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idE434A82528CD4012AE1E4BD5CABE2406"><enum>(ii)</enum><text>who have entered
into an agreement with the Secretary of Agriculture to receive an allocation
under this paragraph in lieu of a rental payment for such year under section
1234 of the Food Security Act of 1985.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id67EF46F0833C4970938BEC4747086C13"><enum>(B)</enum><header>Allocation
limitation</header><text>The Secretary may not allocate more than $50,000 to
any 1 taxpayer for any fiscal year.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id6B2C85B3C03B4D5094E939622CD78733"><enum>(3)</enum><header>Carryforward of
limitation</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id18730BD591B24E1CB89AFE8588AE48FF"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If for any fiscal year the limitation under
paragraph (1) (after the application of this paragraph) exceeds the amount
allocated to all eligible taxpayers for such fiscal year, the limitation amount
for the following fiscal year shall be increased by the amount of such
excess.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFD1DE80192144E5ABBA2A82E7603F599"><enum>(B)</enum><header>Special rule
for 2012</header><text display-inline="yes-display-inline">Notwithstanding
subparagraph (A), no amount of the conservation reserve credit limitation may
be carried to any fiscal year following fiscal year 2012.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id4117672C6F7E4EA3B111495A26A70FF1"><enum>(d)</enum><header>Carryforward</header><text>If
the amount of the credit allowable under subsection (a) for any taxpayer for
any taxable year (determined without regard to subsection (b)(1)) exceeds the
limitation under subsection (b)(1), such excess may be carried forward to the
succeeding taxable year and added to the credit allowable under subsection (a)
for such succeeding taxable year.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idEAB62C5E1F764EA88832E800AD7FFB34"><enum>(e)</enum><header display-inline="yes-display-inline">Other definitions and special
rules</header><text>For purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id781B593C74E141CC8E511CDA0B44AE5D"><enum>(1)</enum><header>Conservation
reserve program</header><text>For purposes of this subsection, the term
<term>conservation reserve program</term> means the conservation reserve
program established under subchapter B of chapter 1 of subtitle D of title XII
of the Food Security Act of 1985.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id8CB6892B680243FA8AF03A8CB9C4D090"><enum>(2)</enum><header display-inline="yes-display-inline">Denial of double benefit</header><text display-inline="yes-display-inline">No deduction or other credit shall be
allowed under this chapter for any amount with respect to which a credit is
allowed under subsection (a).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idF1A1EDDE863E4AA6813011874DFA9727"><enum>(3)</enum><header>Recapture of
allocation</header><text>If a taxpayer terminates a contract under the
conservation reserve program before the end of the fiscal year with respect to
which an allocation under subsection (c)(2) is made, the Secretary shall
recapture the amount of the credit allowed under this section which bears the
same ratio to the amount so allocated as the number of days in the fiscal year
during which the contract was not in effect bears to 365.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idAFF740F77D474E01B36968B1FDDF0D34"><enum>(4)</enum><header>Treatment of
credit under income tax and self-employment income
tax</header><text>Notwithstanding any agreement between the taxpayer and the
Secretary of Agriculture, for purposes of this chapter and chapter 2, the
amount of any credit received under this section shall not be treated as
income.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id771EDED5734F4D62A7EF35A25E0BF41F"><enum>(b)</enum><header>Conforming
amendment</header><text>The table of sections for subpart B of part IV of
subchapter A of chapter 1 is amended by inserting after the item relating to
section 30C the following new item:</text>
<quoted-block id="id593C323E57A146728D1FCB4F4448758C" style="OLC">
<toc>
<toc-entry level="section">Sec. 30D. Conservation reserve
credit.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idCD8055738AEA418783647E7470D7AE96"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years ending after the date of the enactment of this Act.</text>
</subsection></section><section id="idF52606B7FA0941ECA4807D78E9B4D3CA"><enum>202.</enum><header>Exclusion of
Conservation Reserve Program payments from SECA tax for certain
individuals</header>
<subsection id="ID591844C6E58C400DAE48DCA6BB68B551"><enum>(a)</enum><header>Internal
Revenue Code</header><text>Section 1402(a)(1) (defining net earnings from
self-employment) is amended by inserting <quote>, and including payments under
section 1233(2) of the Food Security Act of 1985 (16 U.S.C. 3833(2)) to
individuals receiving benefits under section 202 or 223 of the Social Security
Act</quote> after <quote>crop shares</quote>.</text>
</subsection><subsection id="IDE1916D92BA3A4F1EA9FCF75925AE8100"><enum>(b)</enum><header><act-name parsable-cite="SSA">Social Security Act</act-name></header><text>Section
211(a)(1) of the <act-name parsable-cite="SSA">Social Security Act</act-name>
is amended by inserting <quote>, and including payments under section 1233(2)
of the Food Security Act of 1985 (16 U.S.C. 3833(2)) to individuals receiving
benefits under section 202 or 223</quote> after <quote>crop
shares</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDCCA8E08822A945C3B4A518B69DF55DD2"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to payments
made after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id30BB20D2DDE14E4FBF3532D037E8045A"><enum>203.</enum><header>Permanent
extension of special rule encouraging contributions of capital gain real
property for conservation purposes</header>
<subsection id="idC3D30D1C0C044CFEB596B9A0D5C8486E"><enum>(a)</enum><header>In
general</header>
<paragraph id="id07376B819FDD4A91B38BDD9ED53C02BA"><enum>(1)</enum><header>Individuals</header><text>Subparagraph
(E) of section 170(b)(1) (relating to contributions of qualified conservation
contributions) is amended by striking clause (vi).</text>
</paragraph><paragraph id="idD1F6AA5D0C27489F8D67617E9361D96A"><enum>(2)</enum><header>Corporations</header><text>Subparagraph
(B) of section 170(b)(2) (relating to qualified conservation contributions by
certain corporate farmers and ranchers) is amended by striking clause
(iii).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idA29DA04C1EE24CCF9CB8A8C956506A0B"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
contributions made in taxable years beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id829791BD168E45A99DFC05721FDD8BA9" section-type="subsequent-section"><enum>204.</enum><header display-inline="yes-display-inline">Tax credit for recovery and restoration of
endangered species</header>
<subsection commented="no" display-inline="no-display-inline" id="id2D23E7BC78F84899B71344F48D9E943E"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subpart B of part IV of subchapter A of
chapter 1, as amended by this Act, is amended by adding at the end the
following new section:</text>
<quoted-block display-inline="no-display-inline" id="id916AB00338254A8BBE0EFBD514AC8A3F" style="OLC">
<section commented="no" display-inline="no-display-inline" id="idD382157EE3A24E3E8AD0F6A3D94D30CB" section-type="subsequent-section"><enum>30E.</enum><header display-inline="yes-display-inline">Endangered species recovery and restoration
credit</header>
<subsection commented="no" display-inline="no-display-inline" id="id78AC1B3D67FF4FDF9AC773AF180208A8"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of an eligible taxpayer, there
shall be allowed as a credit against the tax imposed by this chapter for the
taxable year an amount equal to the sum of—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idDC4C3921ED4442AC987E6E5556017805"><enum>(1)</enum><text display-inline="yes-display-inline">the habitat protection easement credit,
plus</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id09EE43D559054298B33D3646018F303C"><enum>(2)</enum><text display-inline="yes-display-inline">the habitat restoration credit.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id4BEE9A60693445C3A2605EC3C9698069"><enum>(b)</enum><header display-inline="yes-display-inline">Limitation</header>
<paragraph commented="no" display-inline="no-display-inline" id="idAF32E3A398C44230B0E2822B5F1FBD13"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The credit allowed under subsection (a) for
any taxpayer for any taxable year shall not exceed the endangered species
recovery credit limitation allocated to the eligible taxpayer under subsection
(f) for the calendar year in which the taxpayer's taxable year ends.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idEB298D2896FF45118170AE9EAE7CD464"><enum>(2)</enum><header display-inline="yes-display-inline">Carryforwards</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id3BEDB3D4E7824EEBA595550F484C16C7"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If the amount of the credit allowable under
subsection (a) for any taxpayer for any taxable year (determined without regard
to paragraph (1)) exceeds the endangered species recovery credit limitation
allocated under subsection (f) to such taxpayer for the calendar year in which
the taxpayer's taxable year ends, such excess may be carried forward to the
next taxable year for which an allocation is made to such taxpayer under
subsection (f). Any amount carried to another taxable year under this
subparagraph shall be treated as added to the credit allowable under subsection
(a)(1) or (a)(2), whichever is appropriate, for such taxable year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idAACB7B9806CA40AB8726A2032DC7D216"><enum>(B)</enum><header display-inline="yes-display-inline">Carryforward of allocation
amount</header><text display-inline="yes-display-inline">If the amount of the
endangered species recovery credit limitation allocated to a taxpayer for any
calendar year under subsection (f) exceeds the amount of the credit allowed to
the taxpayer under subsection (a) for the taxable year ending in such calendar
year, such excess may be carried forward to the next taxable year of the
taxpayer. Any amount carried to another taxable year under this subparagraph
shall be treated as allocated to the taxpayer for use in such taxable year
under subsection (f).</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id5D1965069E294372AD3CBA03494CE499"><enum>(c)</enum><header display-inline="yes-display-inline">Eligible taxpayer; qualified
agreements</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idE9105AC685D1499F939E922271D3DE4A"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>eligible taxpayer</term>
means—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idDFB572A790F942D0ACC6870286A2F6D5"><enum>(A)</enum><text display-inline="yes-display-inline">a taxpayer who—</text>
<clause commented="no" display-inline="no-display-inline" id="idD321F1EBD1364F259CE1249CA35398F7"><enum>(i)</enum><text display-inline="yes-display-inline">owns real property which contains the
habitat of a qualified species, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idC200A876516B43EA864198629A4CD976"><enum>(ii)</enum><text display-inline="yes-display-inline">enters into a qualified perpetual habitat
protection agreement, a qualified 30-year habitat protection agreement, or a
qualified habitat protection agreement with respect to such real property,
and</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id234B085E62D9414BA48674F377B5D3F6"><enum>(B)</enum><text display-inline="yes-display-inline">any other taxpayer who—</text>
<clause commented="no" display-inline="no-display-inline" id="idBE64DADDFA674C3F975B16D0CEA3DF14"><enum>(i)</enum><text display-inline="yes-display-inline">is a party to a qualified perpetual habitat
protection agreement, a qualified 30-year habitat protection agreement, or a
qualified habitat protection agreement, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idF8F49673B8CE4A87AC243FACD51A1CBC"><enum>(ii)</enum><text display-inline="yes-display-inline">as part of any such agreement, agrees to
assume responsibility for costs paid or incurred as a result of implementing
such agreement.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idE43F732C76D54BF18DB96D03CFD0F65F"><enum>(2)</enum><header display-inline="yes-display-inline">Qualified perpetual habitat protection
agreement</header><text display-inline="yes-display-inline">The term
<term>qualified perpetual habitat protection agreement</term> means an
agreement—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id5347F74C4F5341079D0E6C887982F4CF"><enum>(A)</enum><text display-inline="yes-display-inline">under which a taxpayer described in
paragraph (1)(A) grants to the appropriate Secretary, the Secretary of
Agriculture, the Secretary of Defense, or a State an easement in perpetuity for
the protection of the habitat of a qualified species, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id24646B01419C401AA2A1995ACB259E64"><enum>(B)</enum><text display-inline="yes-display-inline">which meets the requirements of paragraph
(5).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCD2B022DC02C459588400C229E7256C5"><enum>(3)</enum><header display-inline="yes-display-inline">Qualified 30-year habitat protection
agreement</header><text display-inline="yes-display-inline">The term
<term>qualified 30-year habitat protection agreement</term> means an agreement
not described in paragraph (2)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id8807DBA53BDC4CA082DC53303C8C7F99"><enum>(A)</enum><text display-inline="yes-display-inline">under which a taxpayer described in
paragraph (1)(A) grants to the appropriate Secretary, the Secretary of
Agriculture, the Secretary of Defense, or a State an easement for a period of
30 years or greater for the protection of the habitat of a qualified species,
and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA022D3A36EAF4441B64E0DC4018942B7"><enum>(B)</enum><text display-inline="yes-display-inline">which meets the requirements of paragraph
(5).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB1F5A0DCCCF54BBFA8840A5A6DA6D46B"><enum>(4)</enum><header display-inline="yes-display-inline">Qualified habitat protection
agreement</header><text display-inline="yes-display-inline">The term
<term>qualified habitat protection agreement</term> means an agreement—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idDB9CA61AAFD94843A7F2E1C3825BE0DC"><enum>(A)</enum><text display-inline="yes-display-inline">under which a taxpayer described in
paragraph (1)(A) enters into an agreement not described in paragraph (2) or (3)
with the appropriate Secretary, the Secretary of Agriculture, the Secretary of
Defense, or a State to protect the habitat of a qualified species for a
specified period of time, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id7D6989252104424F9D2E949248AAA8F0"><enum>(B)</enum><text display-inline="yes-display-inline">which meets the requirements of paragraph
(5).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id27125AE51FE9435897A53961E93E4367"><enum>(5)</enum><header display-inline="yes-display-inline">Requirements</header><text display-inline="yes-display-inline">An agreement meets the requirements of this
paragraph if the agreement—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id607B6E8C8E664EB9AFB43151106FBF5F"><enum>(A)</enum><text display-inline="yes-display-inline">is consistent with any recovery plan which
is applicable and which has been approved for a qualified species under section
4 of the Endangered Species Act of 1973,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idCF86C1552A1C44B4B0238F63AFD4D924"><enum>(B)</enum><text display-inline="yes-display-inline">includes a habitat management plan agreed
to by the appropriate Secretary and the eligible taxpayer, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFF072B718127463E9A6B5716DD43B2F4"><enum>(C)</enum><text>requires that
technical assistance with respect to the duties under the habitat management
plan be provided to the taxpayer by the appropriate Secretary or an entity
approved by the appropriate Secretary.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idA56E5C4A0499440BB4F3F75B789AAD17"><enum>(d)</enum><header display-inline="yes-display-inline">Habitat protection easement credit</header>
<paragraph commented="no" display-inline="no-display-inline" id="id9659A6AE202842529D5B7462E9449B8F"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of subsection (a)(1), the
habitat protection easement credit for any taxable year is an amount equal
to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id6055AA24A46047608D0B59D0F1EF984C"><enum>(A)</enum><text display-inline="yes-display-inline">in the case of a taxpayer described in
subsection (c)(1)(A) who has entered into a qualified perpetual habitat
protection agreement during such taxable year, 100 percent of the excess (if
any) of—</text>
<clause commented="no" display-inline="no-display-inline" id="idC0E03387C66642B893106B77D71352CD"><enum>(i)</enum><text display-inline="yes-display-inline">the fair market value of the real property
with respect to which the qualified perpetual habitat protection agreement is
made, determined on the day before such agreement is entered into, over</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idB6210BB6FF374B2596B777FB575500B6"><enum>(ii)</enum><text display-inline="yes-display-inline">the fair market value of such property,
determined on the day after such agreement is entered into,</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFA025F490BE0480CAACCF079ABAEA3B9"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of a taxpayer described in
subsection (c)(1)(A) who has entered into a qualified 30-year habitat
protection agreement during such taxable year, 75 percent of such excess,
and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF574824E815F43D48FCF1C4A29132411"><enum>(C)</enum><text display-inline="yes-display-inline">in the case of any other taxpayer,
zero.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idEAF0C1BFF58140AFAB0944CC309F1FCE"><enum>(2)</enum><header display-inline="yes-display-inline">Reduction for amount received for
easement</header><text display-inline="yes-display-inline">The amount
determined under paragraph (1) shall be reduced by any amount received by the
taxpayer in connection with the easement.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB1F4F669033C4F3487AEEB80BBB88593"><enum>(3)</enum><header display-inline="yes-display-inline">Limitation based on amount of
tax</header><text display-inline="yes-display-inline">The credit allowed under
subsection (a)(1) for any taxable year shall not exceed the sum of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id4416F31EE1E24DD1A30AD3342FCB4E45"><enum>(A)</enum><text display-inline="yes-display-inline">the taxpayer's regular tax liability for
the taxable year reduced by the sum of the credits allowable under subpart A
and sections 27, 30, 30B, 30C, and 30D, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD020FD69D76A4B5CB773C50D3622162B"><enum>(B)</enum><text display-inline="yes-display-inline">the tax imposed by section 55(a) for the
taxable year.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id6AFFF82D93884C2EA70B4BF8AFC741EE"><enum>(4)</enum><header display-inline="yes-display-inline">Carryforward of unused credit</header><text display-inline="yes-display-inline">If the credit allowable under subsection
(a)(1) for any taxable year exceeds the limitation imposed by paragraph (3) for
such taxable year, such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a)(1) for such succeeding
taxable year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idEC826F9DD381442B9C9CE6BC6F7F16DD"><enum>(5)</enum><header display-inline="yes-display-inline">Qualified appraisals required</header><text display-inline="yes-display-inline">No amount shall be taken into account under
this subsection unless the eligible taxpayer includes with the taxpayer's
return for the taxable year a qualified appraisal (within the meaning of
section 170(f)(11)(E)) of the real property.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id13287F3834724107BFDDDAA9C016A903"><enum>(e)</enum><header display-inline="yes-display-inline">Habitat restoration credit</header>
<paragraph commented="no" display-inline="no-display-inline" id="idA3796D5E462D414A9E20C2B27FA2ED94"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of subsection (a)(2), the
habitat restoration credit for any taxable year shall be an amount equal
to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id0880FD2F81834F6597BF2D115CB6BB64"><enum>(A)</enum><text display-inline="yes-display-inline">in the case of a qualified perpetual
habitat protection agreement, 100 percent of the costs paid or incurred by an
eligible taxpayer during such taxable year pursuant to the habitat management
plan under such agreement,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id6A863FDBE686471391CCFACFB09581B2"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of a qualified 30-year habitat
protection agreement, 75 percent of the costs paid or incurred by an eligible
taxpayer during such taxable year pursuant to the habitat management plan under
such agreement, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id2D66F89ECFF64EA8A46C0ABEEC61FAA5"><enum>(C)</enum><text display-inline="yes-display-inline">in the case of a qualified habitat
protection agreement, 50 percent of the costs paid or incurred by an eligible
taxpayer during such taxable year pursuant to the habitat management plan under
such agreement.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD195186B2B474D24BD898F9B4348D5EB"><enum>(2)</enum><header display-inline="yes-display-inline">Limitation based on amount of
tax</header><text display-inline="yes-display-inline">The credit allowed under
subsection (a)(2) for any taxable year shall not exceed the excess (if any)
of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id812F452020C14E77AB78DCA3EAC05EC6"><enum>(A)</enum><text display-inline="yes-display-inline">the regular tax liability for the taxable
year reduced by the sum of the credits allowable under subpart A, sections 27,
30, 30B, 30C, 30D, and subsection (a)(1), over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD6F1D071E15A4A2EB64E0D0B28072601"><enum>(B)</enum><text display-inline="yes-display-inline">the tentative minimum tax for the taxable
year.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2E43806F525F48AD83E2F0CAB847E2E5"><enum>(3)</enum><header display-inline="yes-display-inline">Carryforward of unused credit</header><text display-inline="yes-display-inline">If the credit allowable under subsection
(a)(2) for any taxable year exceeds the limitation imposed by paragraph (2) for
such taxable year, such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a)(2) for such succeeding
taxable year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id9E7DCE99247846DD871E2ACC5A09B860"><enum>(4)</enum><header display-inline="yes-display-inline">Special rules</header>
<subparagraph commented="no" display-inline="no-display-inline" id="idDC96F98D7398420988B0DB899903DC01"><enum>(A)</enum><header display-inline="yes-display-inline">Certain costs not included</header><text display-inline="yes-display-inline">No amount shall be taken into account with
respect to any cost which is paid or incurred by a taxpayer to comply with any
requirement of a Federal, State, or local government (other than costs required
under an agreement described in subsection (c)).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9D9E256141964DD4BCB675BE9FF1648D"><enum>(B)</enum><header display-inline="yes-display-inline">Subsidized financing</header><text display-inline="yes-display-inline">For purposes of paragraph (1), the amount
of costs paid or incurred by an eligible taxpayer pursuant to any habitat
management plan described in subsection (c)(5)(B) shall be reduced by the
amount of any financing provided under any Federal or State program a principal
purpose of which is to subsidize financing for the conservation of the habitat
of a qualified species.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id0C4E9A44E43F44DF861998C87E0311DB"><enum>(f)</enum><header display-inline="yes-display-inline">Endangered species recovery credit
limitation</header>
<paragraph commented="no" display-inline="no-display-inline" id="id8BE8507059654348B82A46C4D6C42C0F"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">There is an endangered species recovery
credit limitation for each calendar year. Such limitation is—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id841D1CBE18304564A9CB42FF7727CED3"><enum>(A)</enum><text display-inline="yes-display-inline">for 2008, 2009, 2010, 2011, and
2012—</text>
<clause commented="no" display-inline="no-display-inline" id="id31114EF16109422699B655D06D244A4B"><enum>(i)</enum><text>with respect to
allocations described in paragraph (2)(A)—</text>
<subclause commented="no" display-inline="no-display-inline" id="id9DAE5416C39D4489B8255860E0D77267"><enum>(I)</enum><text display-inline="yes-display-inline">$5,000,000 with respect to qualified
perpetual habitat protection agreements,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id069CFCB15BB4471EA32113CCCB8F0E85"><enum>(II)</enum><text display-inline="yes-display-inline">$2,000,000 with respect to qualified
30-year habitat protection agreements, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idF003316F66FE4EBB85E1059538B8C07E"><enum>(III)</enum><text display-inline="yes-display-inline">$1,000,000 with respect to qualified
habitat protection agreements, and</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="idD8AB3577B24B471D8A0AD0B413C4A61B"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to allocations described in
paragraph (2)(B)—</text>
<subclause commented="no" display-inline="no-display-inline" id="id1E36F037DF79446E89FCBB9BF0C00F64"><enum>(I)</enum><text display-inline="yes-display-inline">$290,000,000 with respect to qualified
perpetual habitat protection agreements,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idB69EEA591980463A8E22DE0F01DC31BC"><enum>(II)</enum><text display-inline="yes-display-inline">$55,000,000 with respect to qualified
30-year habitat protection agreements, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idD21EC6AF665747FAAC7F84214E5E9382"><enum>(III)</enum><text display-inline="yes-display-inline">$35,000,000 with respect to qualified
habitat protection agreements, and</text>
</subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id587505C2AF1B430DAFFA167AD73220BF"><enum>(B)</enum><text display-inline="yes-display-inline">except as provided in paragraph (3), zero
thereafter.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCCE4CA56659746279880DED109E4BFB3"><enum>(2)</enum><header display-inline="yes-display-inline">Allocation of limitation</header>
<subparagraph commented="no" display-inline="no-display-inline" id="idEC197CC0391846DFA26027DDCB44719E"><enum>(A)</enum><header>Allocations in
coordination with the Secretary of Agriculture</header><text>The limitations
described in paragraph (1)(A)(i) shall be allocated to eligible taxpayers by
the Secretary in consultation with the Secretary of Agriculture.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB8DF4A40DC42413CAAC246FE51F5D4C7"><enum>(B)</enum><header>Other
allocations</header>
<clause commented="no" display-inline="no-display-inline" id="idB9213A071A47448BB413D93BE8281CF5"><enum>(i)</enum><header>In
general</header><text>The limitations described in paragraph (1)(A)(ii) shall
be allocated to eligible taxpayers in consultation with the Secretary of the
Interior and the Secretary of Commerce.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id5D79059C9B66472AB761DF79FD5937B2"><enum>(ii)</enum><header display-inline="yes-display-inline">Establishment of allocation
program</header><text display-inline="yes-display-inline">Not later than 180
days after the date of the enactment of this Act, the Secretary, in
consultation with the Secretary of the Interior and the Secretary of Commerce,
shall, by regulation, establish a program to process applications from eligible
taxpayers and to determine how to best allocate the credit limitations under
clause (i) taking into account the considerations described in clause
(iii).</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idCF462A69E560482FA1065326BCEDE899"><enum>(iii)</enum><header display-inline="yes-display-inline">Considerations</header><text display-inline="yes-display-inline">In accepting applications to make
allocations to eligible taxpayers under this section, priority shall be given
to taxpayers with agreements—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID78d08e2a800d49d4aac13b098ebc2b9e"><enum>(I)</enum><text display-inline="yes-display-inline">relating to habitats that will
significantly increase the likelihood of recovering and delisting a species as
an endangered species or a threatened species (as defined under section 2 of
the Endangered Species Act of 1973),</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="idE179D07014D849E4B8CF33A294B0E5BE"><enum>(II)</enum><text display-inline="yes-display-inline">that are cost-effective and maximize the
benefits to a qualified species per dollar expended,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDc0b41aa351574e8da4cbdb8d9f12b109"><enum>(III)</enum><text display-inline="yes-display-inline">relating to habitats of species which have
a federally approved recovery plan pursuant to section 4 of the Endangered
Species Act of 1973,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDbb9c549cbe134e82b4b8c748cd9227f4"><enum>(IV)</enum><text display-inline="yes-display-inline">relating to habitats with the potential to
contribute significantly to the improvement of the status of a qualified
species,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID052dffcb22d14afc9013b5a5a6a4e0dc"><enum>(V)</enum><text display-inline="yes-display-inline">relating to habitats with the potential to
contribute significantly to the eradication or control of invasive species that
are imperiling a qualified species,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID68d909208e2b4a08b40f7de472d46f69"><enum>(VI)</enum><text display-inline="yes-display-inline">with habitat management plans that will
manage multiple qualified species,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID0f3e5740978e48989a62493fdeca7315"><enum>(VII)</enum><text display-inline="yes-display-inline">with habitat management plans that will
create adjacent or proximate habitat for the recovery of a qualified
species,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDa4b4b34049f34c8da55e51ba43a11ef2"><enum>(VIII)</enum><text display-inline="yes-display-inline">relating to habitats for qualified species
with an urgent need for protection,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDabe634275c9d4d9b96b3680c25b76a20"><enum>(IX)</enum><text display-inline="yes-display-inline">with habitat management plans that assist
in preventing the listing of a species as endangered or threatened under the
Endangered Species Act of 1973 or a similar State law,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID35354c785cca468eae12c76efed30b23"><enum>(X)</enum><text display-inline="yes-display-inline">with habitat management plans that may
resolve conflicts between the protection of qualified species and otherwise
lawful human activities, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID6a3816e2036949cc840977e055d5b289"><enum>(XI)</enum><text display-inline="yes-display-inline">with habitat management plans that may
resolve conflicts between the protection of a qualified species and military
training or other military operations.</text>
</subclause></clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idE341430BBE4F44C8A51E88B9A9B52A69"><enum>(3)</enum><header display-inline="yes-display-inline">Carryover of unused
limitation</header><text display-inline="yes-display-inline">If for any
calendar year any of the limitations under paragraph (1) (after the application
of this paragraph) exceeds the amount allocated to eligible taxpayers for such
calendar year, such limitation amount for the following calendar year shall be
increased by the amount of such excess.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id5CE67B5AFCAF4F8589E2A8A76AA6F36D"><enum>(g)</enum><header display-inline="yes-display-inline">Other definitions and special
rules</header>
<paragraph commented="no" display-inline="no-display-inline" id="id26B816AB6C1046CB9FBC7F2761860704"><enum>(1)</enum><header display-inline="yes-display-inline">Appropriate Secretary</header><text display-inline="yes-display-inline">The term <term>appropriate Secretary</term>
has the meaning given to the term <term>Secretary</term> under section 3(15) of
the Endangered Species Act of 1973.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD01338E173D94CB0814241CBE4EB6317"><enum>(2)</enum><header display-inline="yes-display-inline">Habitat management plan</header><text display-inline="yes-display-inline">The term <term>habitat management
plan</term> means, with respect to any habitat, a plan which—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id59E17C8844374D75AEFDFB0F646F6188"><enum>(A)</enum><text display-inline="yes-display-inline">identifies one or more qualified species to
which the plan applies,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD9B03DAA1A9C4761A69D0DAED5CD167D"><enum>(B)</enum><text>is designed
to—</text>
<clause commented="no" display-inline="no-display-inline" id="idEAB020E14CEA4F76B5A1E4CE181DAB70"><enum>(i)</enum><text display-inline="yes-display-inline">restore or enhance the habitat of the
qualified species, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id694BDA45377249F8BBF484F0040AEED9"><enum>(ii)</enum><text display-inline="yes-display-inline">reduce threats to the qualified species
through the management of the habitat,</text>
</clause></subparagraph><subparagraph id="ID85cdcea038ff489f83c9d6e2dc843875"><enum>(C)</enum><text>describes the
current condition of the habitat to be restored or enhanced,</text>
</subparagraph><subparagraph id="id1E3208D1F869425EA4F77E53D421ACB9"><enum>(D)</enum><text>describes the
threats to the qualified species that are intended to be reduced through the
plan,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8FAA2335F4F4441EA493CC37D49D9E9B"><enum>(E)</enum><text display-inline="yes-display-inline">describes the management practices to be
undertaken by the taxpayer,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB0A88B762B694069A4A75B17D17DC348"><enum>(F)</enum><text display-inline="yes-display-inline">provides a schedule of deadlines for
undertaking such management practices and the expected responses of the habitat
and the species,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idE7A1288819584658911180D030D6305D"><enum>(G)</enum><text display-inline="yes-display-inline">requires monitoring of the management
practices and the status of the qualified species and its habitat, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8907EA8D2DB642E0869DC546CDFAC3A6"><enum>(H)</enum><text display-inline="yes-display-inline">describes the technical assistance to be
provided to the taxpayer and identifies the entity that will provide such
assistance.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id1A2E76CCA12E43CC86972035B5A4C53C"><enum>(3)</enum><header display-inline="yes-display-inline">Qualified species</header><text display-inline="yes-display-inline">The term <term>qualified species</term>
means—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idA2049C8D0CE14F8AA96875042D388BF4"><enum>(A)</enum><text display-inline="yes-display-inline">any species listed as an endangered species
or threatened species under the Endangered Species Act of 1973, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id67118B335ADF412EA4C0D7971E3C8D1A"><enum>(B)</enum><text display-inline="yes-display-inline">any species for which a finding has been
made under section 4(b)(3) of the Endangered Species Act of 1973 that listing
under such Act may be warranted.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id279C6D57609C45BF8D7CF3D70393346F"><enum>(4)</enum><header display-inline="yes-display-inline">Taking</header><text display-inline="yes-display-inline">The term <term>taking</term> has the
meaning given to such term under the Endangered Species Act of 1973.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id395F3912C9E94B19876A1977FA4E665D"><enum>(5)</enum><header display-inline="yes-display-inline">Reduction in basis</header><text display-inline="yes-display-inline">For purposes of this subtitle—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idA101DB0BA85A4E259E2ABD485D666A08"><enum>(A)</enum><header>Habitat
protection easement credit</header><text display-inline="yes-display-inline">The basis of any property for which a
credit is allowed under subsection (a)(1) shall be reduced by the amount of
basis which is allocated, under regulations prescribed by the Secretary, to the
easement granted as part of a qualified perpetual habitat protection agreement
or a qualified 30-year habitat protection agreement.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id14138A09117C4A4E90EF31DFD47686D2"><enum>(B)</enum><header>Habitat
restoration credit</header><text>If a credit is allowed under subsection (a)(2)
for any expenditure with respect to any property, the increase in the basis of
such property which would (but for this subparagraph) result from such
expenditure shall be reduced by the amount of the credit so allowed.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id684DA155B1BC4F8A9BD62D9DF4B2E89E"><enum>(6)</enum><header display-inline="yes-display-inline">Denial of double benefit</header><text display-inline="yes-display-inline">No deduction or other credit shall be
allowed under this chapter for any amount with respect to which a credit is
allowed under subsection (a).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id202EEB4BBBE141798556C5CC053EF247"><enum>(7)</enum><header display-inline="yes-display-inline">Certification</header><text display-inline="yes-display-inline">No credit shall be allowed under subsection
(a) unless the appropriate Secretary certifies that any agreement described in
subsection (c) will contribute to the recovery of a qualified species.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idA2CC20359CAB45179DF6A4831D388287"><enum>(8)</enum><header display-inline="yes-display-inline">Request for authorization of incidental
takings</header><text display-inline="yes-display-inline">The Secretary shall
request the appropriate Secretary to consider whether to authorize under the
Endangered Species Act of 1973 takings by an eligible taxpayer of a qualified
species to which an agreement described in subsection (c) relates if the
takings are incidental to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id3AC350B0696E457EBF1F79288138F71F"><enum>(A)</enum><text display-inline="yes-display-inline">the restoration, enhancement, or management
of the habitat pursuant to the habitat management plan under the agreement,
or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFFE5B716E19C44479AD73571581A4732"><enum>(B)</enum><text display-inline="yes-display-inline">the use of the property to which the
agreement pertains at any time after the expiration of the easement or the
specified period described in subsection (c)(4)(A), but only if such use will
leave the qualified species at least as well off on the property as it was
before the agreement was made.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBAC86DB767524738B4CC2017DE8EEFB6"><enum>(9)</enum><header display-inline="yes-display-inline">Recapture</header><text display-inline="yes-display-inline">The Secretary shall, by regulations,
provide for recapturing the benefit under any credit allowable under subsection
(a) if the Secretary determines that—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idBEE67C96C19948008E915E0F93C0A777"><enum>(A)</enum><text display-inline="yes-display-inline">the taxpayer has failed to carry out the
duties of the taxpayer under the terms of a qualified perpetual habitat
protection agreement, a qualified 30-year habitat protection agreement, or a
qualified habitat protection agreement, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD4339B00887E4295A406079470781834"><enum>(B)</enum><text display-inline="yes-display-inline">there are no other available means to
remediate such
failure.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID6ceb0b8b1a31443caf9c328dcadd4662"><enum>(b)</enum><header display-inline="yes-display-inline">GAO Study</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID1e995e3fa73e4dd481e3d40d02c44cb0"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The Comptroller General of the United
States shall undertake a study on the effectiveness of the credit allowed under
section 30E of the Internal Revenue Code of 1986 (as added by this Act).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC11EB8FF2147438CA23E1E5C48D28232"><enum>(2)</enum><header display-inline="yes-display-inline">Issues to be studied</header><text display-inline="yes-display-inline">The study under paragraph (1) shall—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idBB052DF1C9A94DE58BAEB9D5F873554A"><enum>(A)</enum><text display-inline="yes-display-inline">evaluate—</text>
<clause id="ID62d66b41c5434cdca1653451c3bb38e6"><enum>(i)</enum><text>the
contributions that habitat management plans established under such credit have
made in restoring or enhancing species habitat and reducing threats to species,
and</text>
</clause><clause id="id7469F5AAA91E4D46A202790E26C4D855"><enum>(ii)</enum><text>the
implementation of the credit allocation program established in section
30E(f)(2) of such Code (as so added), and</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idDAD880F65E814141A7CE493BE154B1B6"><enum>(B)</enum><text display-inline="yes-display-inline">include recommendations for improving the
effectiveness of such credit.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id5DD14CBF205D490AB7AD4AAE5060D863"><enum>(3)</enum><header display-inline="yes-display-inline">Reports</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id04CD0D0C7BBD4D329BD67E48D4C7EE37"><enum>(A)</enum><header display-inline="yes-display-inline">Interim
report</header><text display-inline="yes-display-inline">Not later than 3 years
after the date of the enactment of this Act, the Comptroller General of the
United States shall submit to Congress an interim report on the study conducted
under paragraph (1).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id3ED426110F6F431CB03A301B15E673AB"><enum>(B)</enum><header display-inline="yes-display-inline">Final report</header><text display-inline="yes-display-inline">Not later than 5 years after the date of
the enactment of this Act, the Comptroller General of the United States shall
submit to Congress a final report on the study conducted under paragraph
(1).</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id5CC36F28DB674BB3947C0B6D6D223C2D"><enum>(c)</enum><header display-inline="yes-display-inline">Conforming amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="idEB22F00BD38348148F3C61E7D2832730"><enum>(1)</enum><text display-inline="yes-display-inline">Section 1016(a) is amended by striking
<quote>and</quote> at the end of paragraph (36), by striking the period at the
end of paragraph (37) and inserting <quote>, and</quote>, and by inserting
after paragraph (37) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id8F44BED78C174374ADDD372B6A918246" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="idB4F883485CA446A3A0A5966794CD101B"><enum>(38)</enum><text display-inline="yes-display-inline">to the extent provided in section
30E(g)(5).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0D6A724C89C447F397F5AF74644E21ED"><enum>(2)</enum><text display-inline="yes-display-inline">The table of sections for subpart B of part
IV of subchapter A of chapter 1, as amended by this Act, is amended by
inserting after the item relating to section 30D the following new item:</text>
<quoted-block display-inline="no-display-inline" id="id35243233-a6c5-4704-b94d-0fbaf72b4534" style="OLC">
<toc>
<toc-entry bold="off" level="section">Sec. 30E. Endangered species
recovery and restoration
credit.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id7B03E8ED8E3E46F69246AA2BD08CFB34"><enum>(d)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id4C48B91A7B914A0A8634554E579F4819"><enum>205.</enum><header>Deduction for
endangered species recovery expenditures</header>
<subsection commented="no" display-inline="no-display-inline" id="id21CB12958B3E439E8313789DFDEF8649"><enum>(a)</enum><header display-inline="yes-display-inline">Deduction for endangered species recovery
expenditures</header>
<paragraph commented="no" display-inline="no-display-inline" id="idC8EBF907116040C9B562D37731E6CC80"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Paragraph (1) of section 175(c) (relating
to definitions) is amended by inserting after the first sentence the following
new sentence: <quote>Such term shall include expenditures paid or incurred for
the purpose of achieving site-specific management actions recommended in
recovery plans approved pursuant to the Endangered Species Act of
1973.</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id507655E03B024D778E63FB917422A389"><enum>(2)</enum><header display-inline="yes-display-inline">Conforming amendments</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id9232AD183BEB4B75AE4EB68873347527"><enum>(A)</enum><text display-inline="yes-display-inline">Section 175 is amended by inserting
<quote>, or for endangered species recovery</quote> after <quote>prevention of
erosion of land used in farming</quote> each place it appears in subsections
(a) and (c).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id01395E4E1C6649E5B6B333B010434523"><enum>(B)</enum><text display-inline="yes-display-inline">The heading of section 175 is amended by
inserting <quote><header-in-text level="section" style="OLC">; endangered
species recovery expenditures</header-in-text></quote> before the
period.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idAA4669CDE22941469342995BE7D0874B"><enum>(C)</enum><text display-inline="yes-display-inline">The item relating to section 175 in the
table of sections for part VI of subchapter B of chapter 1 is amended by
inserting <quote>; endangered species recovery expenditures</quote> before the
period.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id27E74979F7C740989C79451B1F4F9ABA"><enum>(b)</enum><header display-inline="yes-display-inline">Limitations</header><text display-inline="yes-display-inline">Paragraph (3) of section 175(c) (relating
to additional limitations) is amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id9D2C7E09DB7E4AF5BB3F7F0E7786D39D"><enum>(1)</enum><text display-inline="yes-display-inline">in the heading, by inserting
<quote><header-in-text level="paragraph" style="OLC">or endangered species
recovery plan</header-in-text></quote> after <quote><header-in-text level="paragraph" style="OLC">conservation plan</header-in-text></quote>,
and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB26E9CCA092E4635BF19424DB688FAAF"><enum>(2)</enum><text display-inline="yes-display-inline">in subparagraph (A)(i), by inserting
<quote>or the recovery plan approved pursuant to the Endangered Species Act of
1973</quote> after <quote>Department of Agriculture</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id6725AFCFCE5944848091691A3A2DC76D"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to expenditures paid or incurred after the date of the
enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id0E994F13A96247A1B4E6C9670814D558"><enum>206.</enum><header>Exclusion for
certain payments and programs relating to fish and wildlife</header>
<subsection commented="no" display-inline="no-display-inline" id="id7CEFC3C1901F4B1B8ADCA888EAE49EFF"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subsection (a) of section 126 (relating to
certain cost-sharing payments) is amended by redesignating paragraph (10) as
paragraph (13) and by inserting after paragraph (9) the following new
paragraphs:</text>
<quoted-block display-inline="no-display-inline" id="idEE8784E57F45460781C808748FBF4CCB" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id9D38113681CD4B0BBC67C648A250D4D0"><enum>(10)</enum><text display-inline="yes-display-inline">The Partners for Fish and Wildlife Program
authorized by the Partners for Fish and Wildlife Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBEC7CAE313514ACEA2474BD63EC4F1BB"><enum>(11)</enum><text display-inline="yes-display-inline">The Landowner Incentive Program, the State
Wildlife Grants Program, and the Private Stewardship Grants Program authorized
by the Fish and Wildlife Act of 1956.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCF95F7006FD44D71AED09195C1A1B07A"><enum>(12)</enum><text display-inline="yes-display-inline">The Forest Health Protection Program and
the program related to integrated pest management authorized by the Cooperative
Forestry Assistance Act of
1978.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id0DE55CADB7F346C980381884D02BD09F"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to payments received after the date of the enactment
of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id4DF6D132E3A3436690D994F190991428" section-type="subsequent-section"><enum>207.</enum><header display-inline="yes-display-inline">Credit for easements granted under certain
Department of Agriculture conservation programs</header>
<subsection commented="no" display-inline="no-display-inline" id="id8DD9FEE3D70A44F486A974D5696D081A"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subpart B of part IV of subchapter A of
chapter 1, as amended by this Act, is amended by adding at the end the
following new section:</text>
<quoted-block display-inline="no-display-inline" id="id5E0AFD20CA29468790BD30F5F4450D74" style="OLC">
<section commented="no" display-inline="no-display-inline" id="idEDD974C6E1DC4E649003E7E4732E87E6" section-type="subsequent-section"><enum>30F.</enum><header display-inline="yes-display-inline">Agriculture conservation easement
credit</header>
<subsection commented="no" display-inline="no-display-inline" id="idDACA70BBA86C4C7F95EE34FD22EAB0D6"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">There shall be allowed as a credit against
the tax imposed by this chapter for the taxable year an amount equal to the sum
of—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idEA105F1BE1B9461998492E61EEB770C2"><enum>(1)</enum><text display-inline="yes-display-inline">the wetlands reserve conservation credit,
plus</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id16DF7E20D850490A88577FC82167A8B7"><enum>(2)</enum><text display-inline="yes-display-inline">the working grassland protection
credit.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id81718AC298484F318F316A04C4D9BBD0"><enum>(b)</enum><header>Limitations</header>
<paragraph commented="no" display-inline="no-display-inline" id="idE515B21ED30A4009AF3A5B8D9D618F73"><enum>(1)</enum><header display-inline="yes-display-inline">Limitation based on amount of
tax</header><text display-inline="yes-display-inline">The credit allowed under
this section for any taxable year shall not exceed the excess of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id13E972FD18514D0CB2ABA1D702DCD0AF"><enum>(A)</enum><text display-inline="yes-display-inline">the regular tax liability for the taxable
year reduced by the sum of the credits allowable under subpart A and sections
27, 30, 30B, 30C, 30D, 30E(a)(1), and 30E(a)(2), over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9C633098020C45FAA6471552492D3643"><enum>(B)</enum><text display-inline="yes-display-inline">the tentative minimum tax for the taxable
year.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2C4615F26E0B45D5A79D5CE91C9C0AE2"><enum>(2)</enum><header>Limitation
based on allocated portion of national limitation</header><text>The credit
allowed under subsection (a) for any taxpayer for any taxable year shall not
exceed the excess of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idEB5C773031AE4DA68E3E4BB3DBEC50B8"><enum>(A)</enum><text>the amount of the
national credit limitation allocated to such taxpayer under subsection (e) for
such taxable year and all prior taxable years, over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9459BD2CF8D1493C824BA761F7735461"><enum>(B)</enum><text>the credit
allowed under subsection (a) for all prior taxable years.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id67000D97C5B347779D88DD0BC66EBC49"><enum>(c)</enum><header>Wetlands
reserve conservation credit</header>
<paragraph commented="no" display-inline="no-display-inline" id="idDF7AD737AE8747858DCE2E8EE9FE5B6D"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of
subsection (a)(1), in the case of a wetlands reserve eligible taxpayer, the
wetlands reserve conservation credit for any taxable year is an amount equal to
the applicable percentage of the wetlands reserve easement value.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCB364C5EF307451C90F841B0756A00BE"><enum>(2)</enum><header>Wetlands
reserve eligible taxpayer</header><text>For purposes of this section, the term
<term>wetlands reserve eligible taxpayer</term> means any taxpayer who—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id9B51E4E0134341AE8006694B5D01A31D"><enum>(A)</enum><text>has granted an
easement to the Secretary of Agriculture under the wetlands reserve program,
and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB8220CE738E244C2A63798C748172851"><enum>(B)</enum><text>who has entered
into an agreement with the Secretary of Agriculture to receive an allocation
under subsection (e)(2) in lieu of a payment under section 1237A(f) of the Food
Security Act of 1985.</text>
</subparagraph></paragraph><paragraph id="idBD012F9C634D419CB42A9E0E7865912F"><enum>(3)</enum><header>Applicable
percentage</header><text>For purposes of paragraph (1), the term
<term>applicable percentage</term> means the percentage equal to—</text>
<subparagraph id="idF7A53CD4F1C84EADB29111CFAF8BC884"><enum>(A)</enum><text>100 percent,
minus</text>
</subparagraph><subparagraph id="id20A57AB5217B43DE8F2C2DFB50F81500"><enum>(B)</enum><text>the highest
percentage of tax which would apply under section 1 or 11 with respect to the
taxpayer if the taxable income of the taxpayer were increased by an amount
equal to the wetlands reserve easement value.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC2E0EF7D3AF24F3EAF94E523EEC0EF3A"><enum>(4)</enum><header>Wetlands
reserve easement value</header><text display-inline="yes-display-inline">For
purposes of this section, the term <term>wetlands reserve easement value</term>
means the lesser of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idB40DA601FEC84B67B0E1E9ADD70C0910"><enum>(A)</enum><text>the product
of—</text>
<clause commented="no" display-inline="no-display-inline" id="id3008D237CF294A5E8768501FE5AD2C22"><enum>(i)</enum><text>the wetlands
reserve geographic area rate for the area in which the real property to which
the easement pertains is located, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idA6E90FE2E4F9401B9D538E3F6C252E32"><enum>(ii)</enum><text>the number of
acres to which the easement applies, or</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id647AB9A2CD04482593BADBBC3E56BDAE"><enum>(B)</enum><text>the value of any
payment to which the taxpayer would be entitled with respect to such easement
under section 1237A(f) of the Food Security Act of 1985 if the taxpayer had not
entered into an agreement described in paragraph (2)(B).</text>
</subparagraph></paragraph><paragraph id="id88204A7EF8194207939361BA2EF75C68"><enum>(5)</enum><header>Wetlands
reserve geographic area rate</header><text>For purposes of paragraph (4)(A)(i),
the wetlands reserve geographic area rate shall be the rate per acre,
determined by the Secretary in consultation with the Secretary of Agriculture,
appropriate for easements granted under the wetlands reserve program in
different geographic areas.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id23B06A1F7C1A457C8DA6EA2A72DFBE4A"><enum>(d)</enum><header>Working
grassland protection credit</header>
<paragraph commented="no" display-inline="no-display-inline" id="id9B309C5FA3804927BFE5EA04419107D6"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of
subsection (a)(2), in the case of any working grassland eligible taxpayer, the
working grassland protection credit for any taxable year is an amount equal to
the applicable percentage of the working grassland easement value.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id9409758EA33E4E8F9825925C6DE8AA55"><enum>(2)</enum><header>Working
grassland eligible taxpayer</header><text>For purposes of this section, the
term <term>working grassland eligible taxpayer</term> means any taxpayer
who—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id4B76A623854E49799E4247C9D9B1CF19"><enum>(A)</enum><text>has granted an
easement under the working grassland protection program to an eligible easement
holder, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id098FBCDB1EDF4B29B4FEC0ED0F2045E4"><enum>(B)</enum><text>who has entered
into an agreement with the Secretary of Agriculture to receive an allocation
under subsection (e)(2) in lieu of a payment under section 1238P(b) of the Food
Security Act of 1985.</text>
</subparagraph></paragraph><paragraph id="idD6A90C88C89D4F728DC566AC78AFE3A1"><enum>(3)</enum><header>Applicable
percentage</header><text>For purposes of paragraph (1), the term
<term>applicable percentage</term> means the percentage equal to—</text>
<subparagraph id="idE409350B8A934B8B89D819C7D9476063"><enum>(A)</enum><text>100 percent,
minus</text>
</subparagraph><subparagraph id="id0C0E8389C8E84A3ABE8E72791447F67A"><enum>(B)</enum><text>the highest
percentage of tax which would apply under section 1 or 11 with respect to the
taxpayer if the taxable income of the taxpayer were increased by an amount
equal to the working grassland easement value.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id20DC87328A2245DDA24318C2295AE0E9"><enum>(4)</enum><header>Working
grassland easement value</header><text display-inline="yes-display-inline">For
purposes of this section, the term <term>working grassland easement
value</term> means—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id6C955839E7434D40A87463C575131B84"><enum>(A)</enum><text display-inline="yes-display-inline">in the case of a permanent conservation
easement (within the meaning of section 1238N of the Food Security Act of
1985), the lesser of—</text>
<clause commented="no" display-inline="no-display-inline" id="id3D2B41BDEA9B46A887D37CF8B121FEE5"><enum>(i)</enum><text>the product
of—</text>
<subclause commented="no" display-inline="no-display-inline" id="id7F66E9A2BFD24C2A8D0DE0A06CB4BD44"><enum>(I)</enum><text>the working
grassland protection geographic area rate for the area in which the real
property to which the easement pertains is located, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id5045674053364278A8EB7FBE6FF5A69F"><enum>(II)</enum><text>the number of
acres to which the easement applies, or</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="id4F5881681A6C4AD095BE0A88417DDD39"><enum>(ii)</enum><text display-inline="yes-display-inline">the value of any payment to which the
taxpayer would be entitled in return for such easement under section
1238P(b)(1)(A)(i) of the Food Security Act of 1985 if the taxpayer had not
entered into an agreement described in paragraph (2)(B), and</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id3E16486E6BB3433FA49ECBC3DC9F1B84"><enum>(B)</enum><text>in the case of a
30-year conservation easement (within the meaning of section 1238N of such
Act), the lesser of—</text>
<clause commented="no" display-inline="no-display-inline" id="id6FFCC49DD3914ED3A692DE4EA9BE91BE"><enum>(i)</enum><text>30 percent of the
lesser of the amount determined under clause (i) or (ii) of subparagraph (A),
or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id1C0F89FC130E4535999357E9BC754A9C"><enum>(ii)</enum><text display-inline="yes-display-inline">the value of any payment to which the
taxpayer would be entitled in return for such easement under section
1238P(b)(1)(A)(ii) of such Act if the taxpayer had not entered into an
agreement described in paragraph (2)(B).</text>
</clause></subparagraph></paragraph><paragraph id="id90C4628EC2CC44D090F229178066A5E6"><enum>(5)</enum><header>Working
grassland protection geographic area rate</header><text>For purposes of
paragraph (4)(A)(i)(I), the working grassland protection geographic area rate
shall be the rate, determined by the Secretary in consultation with the
Secretary of Agriculture, appropriate for easements granted under the working
grassland protection program in different geographic areas.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id9C621BEBF2744C0981E7CC3D539B5CF1"><enum>(e)</enum><header display-inline="yes-display-inline">National conservation credit
limitation</header>
<paragraph commented="no" display-inline="no-display-inline" id="idFB660A730A174F65B3CF61C8AB189813"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The aggregate credits allowed under
subsection (a) for all taxpayers shall not exceed $1,000,000,000.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id03D543B4603748568269D7658543FFED"><enum>(2)</enum><header>Allocation</header><text>The
Secretary, in consultation with the Secretary of Agriculture, shall allocate
the credit limitation under paragraph (1) to taxpayers who grant easements
under the wetlands reserve program and the working grassland protection
program.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idDB4565F14E124C7CA6A56D0D6895B5EB"><enum>(3)</enum><header>Limitation on
allocation</header><text>No amount of the credit limitation may be allocated to
any taxpayer for any taxable year which ends after September 30, 2012.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id23A5C1330FA149589BE3110E3D556CC0"><enum>(f)</enum><header>Carryforward</header><text>If
the amount of the credit allowable under subsection (a) for any taxpayer for
any taxable year (determined without regard to subsection (b)(1)) exceeds the
limitation under subsection (b)(1), such excess may be carried forward to the
succeeding taxable year and added to the credit allowable under subsection (a)
for such succeeding taxable year.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE939C377C80F499EA4243E04783CF985"><enum>(g)</enum><header display-inline="yes-display-inline">Other definitions and special
rules</header><text>For purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idBAD853C987D44616BBE4F98D11B79981"><enum>(1)</enum><header>Wetlands
reserve program</header><text>The term <term>wetlands reserve program</term>
means the wetlands reserve program established under subchapter C of chapter 1
of subtitle D of title XII of the Food Security Act of 1985.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7106AF91A44C4EBC9214076A45F1FA26"><enum>(2)</enum><header>Working
grassland protection program</header><text>The term <term>working grassland
protection program</term> means the grassland reserve program established under
subchapter C of chapter 2 of subtitle D of title XII of the Food Security Act
of 1985.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idA7762B1BFADF4BE6A8F68C9DFDEAD73F"><enum>(3)</enum><header>Eligible
easement holder</header><text>The term <term>eligible easement holder</term>
means the Secretary of Agriculture or a State.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id3AD4674DF669487CAFF515B4E500877E"><enum>(4)</enum><header display-inline="yes-display-inline">Denial of double benefit</header><text display-inline="yes-display-inline">No deduction or other credit shall be
allowed under this chapter for any amount with respect to which a credit is
allowed under subsection (a).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id24C6B51533D74E0BBC994B92C229B82B"><enum>(5)</enum><header display-inline="yes-display-inline">Reduction in basis</header><text display-inline="yes-display-inline">For purposes of this subtitle, the basis of
any property for which a credit is allowed under subsection (a) shall be
reduced by the amount of basis which is allocated, under regulations prescribed
by the Secretary, to the easement granted under the wetlands reserve program or
the working grassland protection program.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id799D5DA36AF54EDEA1E366CAF448E11F"><enum>(6)</enum><header display-inline="yes-display-inline">Recapture</header><text display-inline="yes-display-inline">The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable under subsection
(a) if the Secretary, in consultation with the Secretary of Agriculture,
determines that—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idC4935621414941B187A2AEAD00AE4382"><enum>(A)</enum><text display-inline="yes-display-inline">the eligible taxpayer has failed to carry
out the duties of the taxpayer under the terms of the easement, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id30970E9BFDE849A0989B89F1FA870F30"><enum>(B)</enum><text display-inline="yes-display-inline">there are no other available means to
remediate such
failure.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id647F39312BE7450E8BC2D91ECF281D9B"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="id9A826B9BAF8C44D4AFE1E9D98075683C"><enum>(1)</enum><text display-inline="yes-display-inline">Section 1016(a), as amended by this Act, is
amended by striking <quote>and</quote> at the end of paragraph (37), by
striking the period at the end of paragraph (38) and inserting <quote>,
and</quote>, and by inserting after paragraph (38) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idBE1DCC1F8B9B47728A673696ADFA5DC0" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id47ECCDD7DB194601A0B777DF443958BD"><enum>(39)</enum><text display-inline="yes-display-inline">to the extent provided in section
30F(g)(5).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id690169A764AD468AAAD973010A1CF562"><enum>(2)</enum><text display-inline="yes-display-inline">The table of sections for subpart B of part
IV of subchapter A of chapter 1, as amended by this Act, is amended by
inserting after the item relating to section 30E the following new item:</text>
<quoted-block id="id8e897e57-6057-4536-ae02-9c92f474ec83" style="OLC">
<toc>
<toc-entry idref="idEDD974C6E1DC4E649003E7E4732E87E6" level="section">Sec. 30F. Agriculture conservation easement
credit.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idA00A552CC1984345B27A3A0789B478B9"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to easements granted after September 30, 2007, in
taxable years ending after such date.</text>
</subsection></section></subtitle><subtitle id="idA0135DD80AEF489298CA2DA7FA26137F"><enum>B</enum><header>Timber
provisions</header>
<section id="H70563E15A08D47B1A3263B93B6B5768"><enum>211.</enum><header>Forest
conservation bonds</header>
<subsection id="HA051329EB6EA441195A627D4CD5BBFF8"><enum>(a)</enum><header>Tax-Exempt bond
financing</header>
<paragraph id="H6BAD3EBE9E164D94B9650382DEE8E311"><enum>(1)</enum><header>In
general</header><text>For purposes of the Internal Revenue Code of 1986, any
qualified forest conservation bond shall be treated as an exempt facility bond
under section 142 of such Code.</text>
</paragraph><paragraph id="HC043003E5F944218B76EE622C2588456"><enum>(2)</enum><header>Qualified forest
conservation bond</header><text>For purposes of this section, the term
<term>qualified forest conservation bond</term> means any bond issued as part
of an issue if—</text>
<subparagraph id="H8000FFA65EE64175A6A4405EA98F9301"><enum>(A)</enum><text>95 percent or more
of the net proceeds (as defined in section 150(a)(3) of such Code) of such
issue are to be used for qualified project costs, and</text>
</subparagraph><subparagraph id="H2FC6FBEC31514028ACD11D76F8C0B3B9"><enum>(B)</enum><text>such bond is
issued before the date which is 36 months after the date of the enactment of
this Act.</text>
</subparagraph></paragraph><paragraph id="H462E203DEFC540A58C767600C6D88512"><enum>(3)</enum><header>Limitation on
aggregate amount issued</header>
<subparagraph id="HBC334C43E21045929DB135DEE6B061CB"><enum>(A)</enum><header>In
general</header><text>The maximum aggregate face amount of bonds which may be
issued under this subsection shall not exceed $1,500,000,000 for all projects
(excluding refunding bonds).</text>
</subparagraph><subparagraph id="IDc7b8f2944cd04907a79827425f910bad"><enum>(B)</enum><header>Enforcement of
limitation</header><text>An issue shall not be treated as an issue described in
paragraph (2) if the aggregate face amount of bonds issued pursuant to such
issue for any qualified projects costs (when added to the aggregate face amount
of bonds previously so issued for such costs) exceeds the amount allocated
under subparagraph (C).</text>
</subparagraph><subparagraph id="H4D55A298C75F4DEF9EC91C736F75C579"><enum>(C)</enum><header>Initial
allocation of limitation</header><text>The limitation described in subparagraph
(A) shall be allocated by the Secretary of the Treasury among qualified
organizations as follows:</text>
<clause id="HB6F5CAB31744481FA6F3C97C8619005B"><enum>(i)</enum><text>35
percent for qualified project costs with respect to the cost of acquisition by
any qualified organization in the Pacific Northwest region.</text>
</clause><clause id="H9ECF22A4E1A543809719006968D49520"><enum>(ii)</enum><text>30
percent for qualified project costs with respect to the cost of acquisition by
any qualified organization in the Western region.</text>
</clause><clause id="H5E790E3C504348959301BF3440F5ADF8"><enum>(iii)</enum><text>17.5 percent for
qualified project costs with respect to the cost of acquisition by any
qualified organization in the Southeast region.</text>
</clause><clause id="H8CE26AF9EDB0497100DB4498E8E016F7"><enum>(iv)</enum><text>17.5 percent for
qualified project costs with respect to the cost of acquisition by any
qualified organization in the Northeast region.</text>
</clause></subparagraph><subparagraph id="H23D4BEAD8DAA4F2F882D6ECA94F99288"><enum>(D)</enum><header>Secondary
allocation procedure</header><text>If for the period ending on the last day of
the 24th month after the date of the enactment of this Act, the limitation
amount for any region under subparagraph (C) exceeds the amount of bonds
allocated by the Secretary of the Treasury during such period, the Secretary of
the Treasury may allocate such excess among qualified organizations in any
other region in such manner as the Secretary of the Treasury determines
appropriate.</text>
</subparagraph><subparagraph id="HBFA49AB1D0364BA993B91E80013A106"><enum>(E)</enum><header>Regions</header><text>For
purposes of this paragraph—</text>
<clause id="H6A15B81E2EC447B1B079B2AFBED7BF3"><enum>(i)</enum><header>Pacific Northwest
region</header><text>The term <term>Pacific Northwest region</term> means
Region 6 as defined by the United States Forest Service of the Department of
Agriculture under section 200.2 of title 36, Code of Federal
Regulations.</text>
</clause><clause id="H6168A4304793484581D4C0BD33C6862"><enum>(ii)</enum><header>Western
region</header><text>The term <term>Western region</term> means Regions 1, 2,
3, 4, 5, and 10 (as so defined).</text>
</clause><clause id="HB55BBA5C11CD443990F2B9FA5923F705"><enum>(iii)</enum><header>Southeast
region</header><text>The term <term>Southeast region</term> means Region 8 (as
so defined).</text>
</clause><clause id="H7B9CAC0B01E84101861B12A901933CE"><enum>(iv)</enum><header>Northeast
region</header><text>The term <term>Northeast region</term> means Region 9 (as
so defined).</text>
</clause></subparagraph></paragraph><paragraph id="HBCAC589AA51B47DF914F6734C26C302E"><enum>(4)</enum><header>Qualified
project costs</header><text>For purposes of this subsection, the term
<term>qualified project costs</term> means the costs of acquisition by a
qualified organization from an unrelated person of forests and forest land
which, at the time of acquisition or immediately thereafter, are subject to a
conservation restriction described in subsection (c)(2).</text>
</paragraph><paragraph id="H5D7A48E5979E46459BFFC1FEDF6E57EF"><enum>(5)</enum><header>Special
rules</header><text>In applying the Internal Revenue Code of 1986 to any
qualified forest conservation bond, the following modifications shall
apply:</text>
<subparagraph id="HE6CA3EF368244CA4A085DACAB019B6DF"><enum>(A)</enum><text>Section 146 of
such Code (relating to volume cap) shall not apply.</text>
</subparagraph><subparagraph id="HC333F5AE98B646A891E644D87C1F0916"><enum>(B)</enum><text>For purposes of
section 147(b) of such Code (relating to maturity may not exceed 120 percent of
economic life), the land and standing timber acquired with proceeds of
qualified forest conservation bonds shall have an economic life of 35
years.</text>
</subparagraph><subparagraph id="H636F96939F8A440F9CA683CEEC6E0309"><enum>(C)</enum><text>Subsections (c)
and (d) of section 147 of such Code (relating to limitations on acquisition of
land and existing property) shall not apply.</text>
</subparagraph></paragraph><paragraph id="H09A7559B56F44BDFA658CCC447A5C3C3"><enum>(6)</enum><header>Treatment of
current refunding bonds</header><text>Paragraphs (2)(B) and (3) shall not apply
to any bond (or series of bonds) issued to refund a qualified forest
conservation bond issued before the date which is 36 months after the date of
the enactment of this Act, if—</text>
<subparagraph id="H066EB3CB98D745B5B2EE6332BD94B0E2"><enum>(A)</enum><text>the average
maturity date of the issue of which the refunding bond is a part is not later
than the average maturity date of the bonds to be refunded by such
issue,</text>
</subparagraph><subparagraph id="HCD0890C82487401EBC88D557A4579C49"><enum>(B)</enum><text>the amount of the
refunding bond does not exceed the outstanding amount of the refunded bond,
and</text>
</subparagraph><subparagraph id="HB473813452A0486C9010FBC98DC0089"><enum>(C)</enum><text>the net proceeds of
the refunding bond are used to redeem the refunded bond not later than 90 days
after the date of the issuance of the refunding bond.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">For purposes
of subparagraph (A), average maturity shall be determined in accordance with
section 147(b)(2)(A) of such Code.</continuation-text></paragraph><paragraph id="HB79EB90B7F514F8EA400C8443029D974"><enum>(7)</enum><header>Effective
date</header><text>This subsection shall apply to obligations issued on or
after the date which is 180 days after the date of the enactment of this
Act.</text>
</paragraph></subsection><subsection id="H4AE385074DA644F2005FCE2D54919EDD"><enum>(b)</enum><header>Items from
qualified harvesting activities not subject to tax or taken into
account</header>
<paragraph id="HF64F832A3A0549FB85E2E2E9100A29"><enum>(1)</enum><header>In
general</header><text>Income, gains, deductions, losses, or credits from a
qualified harvesting activity conducted by a qualified organization shall not
be subject to tax or taken into account under subtitle A of the Internal
Revenue Code of 1986.</text>
</paragraph><paragraph id="H23E8015860D84E5AB1314098BDE4017E"><enum>(2)</enum><header>Limitation</header><text>The
amount of income excluded from gross income under paragraph (1) for any taxable
year shall not exceed the amount used by the qualified organization to make
debt service payments during such taxable year for qualified forest
conservation bonds.</text>
</paragraph><paragraph id="HD5372444B2DE46C7003C390707CE10F8"><enum>(3)</enum><header>Qualified
harvesting activity</header><text>For purposes of paragraph (1)—</text>
<subparagraph id="H5803A7E301F24C80BDD628B03CCE33CE"><enum>(A)</enum><header>In
general</header><text>The term <term>qualified harvesting activity</term> means
the sale, lease, or harvesting, of standing timber—</text>
<clause id="H1CA126460EFF4F7A8182EF48F637F222"><enum>(i)</enum><text>on
land owned by a qualified organization which was acquired with proceeds of
qualified forest conservation bonds, and</text>
</clause><clause id="HE53B3F13D81F41CD9E134493D953C3FE"><enum>(ii)</enum><text>pursuant to a
qualified conservation plan adopted by the qualified organization.</text>
</clause></subparagraph><subparagraph id="H7B1CB07FA8DC4E02B838E581BBC2956"><enum>(B)</enum><header>Exceptions</header>
<clause id="HB4DAE2DFFB2941FEAE834DF1F200A455"><enum>(i)</enum><header>Cessation as
qualified organization</header><text>The term <term>qualified harvesting
activity</term> shall not include any sale, lease, or harvesting for any period
during which the organization ceases to qualify as a qualified
organization.</text>
</clause><clause id="HE724D1BC4E4A48DDB244D563D3F49200"><enum>(ii)</enum><header>Exceeding
limits on harvesting</header><text>The term <term>qualified harvesting
activity</term> shall not include any sale, lease, or harvesting of standing
timber on land acquired with proceeds of qualified forest conservation bonds to
the extent that—</text>
<subclause id="H1D83E3BA58C441CBBE74F68B9185A4F2"><enum>(I)</enum><text>the average annual
area of timber harvested from such land exceeds 2.5 percent of the total area
of such land, or</text>
</subclause><subclause id="H2B88370B8B714E59AFA8A4B7FC3DD87"><enum>(II)</enum><text>the quantity of
timber removed from such land exceeds the quantity which can be removed from
such land annually in perpetuity on a sustained-yield basis with respect to
such land.</text>
</subclause><continuation-text continuation-text-level="clause">The limitations
under subclauses (I) and (II) shall not apply to post-fire restoration and
rehabilitation or sanitation harvesting of timber stands which are
substantially damaged by fire, windthrow, or other catastrophes, or which are
in imminent danger from insect or disease attack.</continuation-text></clause></subparagraph></paragraph><paragraph id="H6D0F1C078CD4402400A6FFCF3DD82D1"><enum>(4)</enum><header>Termination</header><text>This
subsection shall not apply to any qualified harvesting activity of a qualified
organization occurring after the date on which—</text>
<subparagraph id="id932B0B04901B4025B27CFAD6078468DD"><enum>(A)</enum><text>there is no
outstanding qualified forest conservation bond with respect to such qualified
organization, or</text>
</subparagraph><subparagraph id="id49F868E1CCB1455AB116329F1451C561"><enum>(B)</enum><text>any such bond
ceases to be a tax-exempt bond.</text>
</subparagraph></paragraph><paragraph id="H9CD7CA503E094E08B1499019757820DB"><enum>(5)</enum><header>Partial
recapture of benefits if harvesting limit exceeded</header><text>If, as of the
date that this subsection ceases to apply under paragraph (4)(B), the average
annual area of timber harvested from the land exceeds the requirement of
subclause (I) or (II) of paragraph (3)(B)(ii), the tax imposed by chapter 1 of
the Internal Revenue Code of 1986 shall be increased, under rules prescribed by
the Secretary of the Treasury, by the sum of the tax benefits attributable to
such excess and interest at the underpayment rate under section 6621 of such
Code for the period of the underpayment.</text>
</paragraph></subsection><subsection id="HEF615D56FD7E4237816FA630144724DF"><enum>(c)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="H1546AA1FAFF84EB499CEBB0021F43D07"><enum>(1)</enum><header>Qualified
conservation plan</header><text>The term <term>qualified conservation
plan</term> means a multiple land use program or plan which—</text>
<subparagraph id="H6F17E270C5584283B277F01EF88988E1"><enum>(A)</enum><text>is designed and
administered primarily for the purposes of protecting and enhancing wildlife
and fish, timber, scenic attributes, recreation, and soil and water quality of
the forest and forest land,</text>
</subparagraph><subparagraph id="HC20CAC78F5FA4105004722D101DE4932"><enum>(B)</enum><text>mandates that
conservation of forest and forest land is the single-most significant use of
the forest and forest land, and</text>
</subparagraph><subparagraph id="H6FBFF92BDD9B43BC99D30012CC6032C2"><enum>(C)</enum><text>requires that
timber harvesting be consistent with—</text>
<clause id="H40710092124C48868D9B735E147D7500"><enum>(i)</enum><text>restoring and
maintaining reference conditions for the region’s ecotype,</text>
</clause><clause id="H3361927B10424881AF4713E0E62F2F19"><enum>(ii)</enum><text>restoring and
maintaining a representative sample of young, mid, and late successional forest
age classes,</text>
</clause><clause id="H5E9835F81A31487DAD6F4D2022504C9D"><enum>(iii)</enum><text>maintaining or
restoring the resources’ ecological health for purposes of preventing damage
from fire, insect, or disease,</text>
</clause><clause id="HF994F460D6C84C2FA92900104E8C1109"><enum>(iv)</enum><text>maintaining or
enhancing wildlife or fish habitat, or</text>
</clause><clause id="HD193BBC751244950A4292EFCA1694190"><enum>(v)</enum><text>enhancing research
opportunities in sustainable renewable resource uses.</text>
</clause></subparagraph></paragraph><paragraph id="HD2291AD10AA14F9883891D3C0096E7B"><enum>(2)</enum><header>Conservation
restriction</header><text>The conservation restriction described in this
paragraph is a restriction which—</text>
<subparagraph id="H7D3E1612AA224EC00081AD0706C0E323"><enum>(A)</enum><text>is granted in
perpetuity to an unrelated person which is described in section 170(h)(3) of
such Code and which, in the case of a nongovernmental unit, is organized and
operated for conservation purposes,</text>
</subparagraph><subparagraph id="H43B03FB0407646E500794F313EA18F17"><enum>(B)</enum><text>meets the
requirements of clause (ii) or (iii)(II) of section 170(h)(4)(A) of such
Code,</text>
</subparagraph><subparagraph id="H4EA8F8A55B274D08A699411328B89500"><enum>(C)</enum><text>obligates the
qualified organization to pay the costs incurred by the holder of the
conservation restriction in monitoring compliance with such restriction,
and</text>
</subparagraph><subparagraph id="H541B51DCDFFE4F069680E9C252719C18"><enum>(D)</enum><text>requires an
increasing level of conservation benefits to be provided whenever circumstances
allow it.</text>
</subparagraph></paragraph><paragraph id="H20A786804C7B4FE2871F00868C39E611"><enum>(3)</enum><header>Qualified
organization</header><text>The term <term>qualified organization</term> means a
nonprofit organization—</text>
<subparagraph id="H05888411E23B4500ABD5189384221CC2"><enum>(A)</enum><text>substantially all
the activities of which are charitable, scientific, or educational, including
acquiring, protecting, restoring, managing, and developing forest lands and
other renewable resources for the long-term charitable, educational,
scientific, and public benefit,</text>
</subparagraph><subparagraph id="H630141A062B24B349E4852044FF5DBF2"><enum>(B)</enum><text>which periodically
conducts educational programs designed to inform the public of environmentally
sensitive forestry management and conservation techniques,</text>
</subparagraph><subparagraph id="HA27279FD4FB048B980617440537CAC69"><enum>(C)</enum><text>which has at all
times a board of directors—</text>
<clause id="HF461CB5172ED4D169B52C342822B345D"><enum>(i)</enum><text>at
least 20 percent of the members of which are representatives of the
conservation community,</text>
</clause><clause id="H52E2BFB489D645DC9C18DF340448E071"><enum>(ii)</enum><text>at
least 20 percent of the members of which are public officials, and</text>
</clause><clause id="HBD759C8BEE384285B3BD87D69EB9ABBB"><enum>(iii)</enum><text>not more than
one-third of the members of which are individuals who are or were at any time
within 5 years before the beginning of a term of membership on the board, an
employee of, independent contractor with respect to, officer of, director of,
or held a material financial interest in, a commercial forest products
enterprise with which the qualified organization has a contractual or other
financial arrangement,</text>
</clause></subparagraph><subparagraph id="HD2D9BBCAF6824D01BD1200EC98673E3C"><enum>(D)</enum><text>the bylaws of
which require at least two-thirds of the members of the board of directors to
vote affirmatively to approve the qualified conservation plan and any change
thereto, and</text>
</subparagraph><subparagraph id="H92B3864F715146449DAC5C534B21001F"><enum>(E)</enum><text>upon dissolution,
is required to dedicate its assets to—</text>
<clause id="HB0B3F80521E74CF5A0E7C991B19DA294"><enum>(i)</enum><text>an
organization described in section 501(c)(3) of such Code which is organized and
operated for conservation purposes, or</text>
</clause><clause id="HF0082BBFFC3841558E87DF88BF09CE1"><enum>(ii)</enum><text>a
governmental unit described in section 170(c)(1) of such Code.</text>
</clause></subparagraph></paragraph><paragraph id="H6D7143E11DC844FE00EDDD15B196BB3D"><enum>(4)</enum><header>Unrelated
person</header><text>The term <term>unrelated person</term> means a person who
is not a related person.</text>
</paragraph><paragraph id="H94814CA4538446C2A69626E624C6239E"><enum>(5)</enum><header>Related
person</header><text>A person shall be treated as related to another person
if—</text>
<subparagraph id="H6790B6DA74D9463EA4260068BC0663B3"><enum>(A)</enum><text>such person bears
a relationship to such other person described in section 267(b) (determined
without regard to paragraph (9) thereof), or 707(b)(1), of such Code,
determined by substituting <quote>25 percent</quote> for <quote>50
percent</quote> each place it appears therein, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HA22BF507DAB3443997364D044465C200"><enum>(B)</enum><text>in the case such
other person is a non-profit organization, if such person controls directly or
indirectly more than 25 percent of the governing body of such
organization.</text>
</subparagraph></paragraph></subsection></section><section id="id7ACE1AF67DB943F1A82BF3E7D955521E"><enum>212.</enum><header>Deduction for
qualified timber gain</header>
<subsection id="idAF2DEADDAEB84F16A5E171014ED1D92E"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Part I of subchapter
P of chapter 1 is amended by adding at the end the following new
section:</text>
<quoted-block display-inline="no-display-inline" id="id78D2EDC2EC8845E9A87A850AD3E55EDF" style="OLC">
<section id="id7176AD9B3CC24A428D787663D6B12472"><enum>1203.</enum><header>Deduction for
qualified timber gain</header>
<subsection id="id1645D4530F98449BA8B38CD785E2FCFB"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of a
taxpayer which elects the application of this section for a taxable year, there
shall be allowed a deduction against gross income in an amount equal to 60
percent of the lesser of—</text>
<paragraph id="id39356880F310450BA1734578856F39DF"><enum>(1)</enum><text display-inline="yes-display-inline">the taxpayer's qualified timber gain for
such year, or</text>
</paragraph><paragraph id="id66B2C0C8AAA44BBEAB598985F3DB28BB"><enum>(2)</enum><text display-inline="yes-display-inline">the taxpayer's net capital gain for such
year.</text>
</paragraph></subsection><subsection id="id0D4C8E95104D421ABCB578EF77BF6C46"><enum>(b)</enum><header>Qualified
timber gain</header><text display-inline="yes-display-inline">For purposes of
this section, the term <term>qualified timber gain</term> means, with respect
to any taxpayer for any taxable year, the excess (if any) of—</text>
<paragraph id="idD1D18E317C70438DBAE7E78DB856F132"><enum>(1)</enum><text display-inline="yes-display-inline">the sum of the taxpayer's gains described
in subsections (a) and (b) of section 631 for such year, over</text>
</paragraph><paragraph id="id5C49F6ABEB52453C98B2C6ADF1213DEC"><enum>(2)</enum><text display-inline="yes-display-inline">the sum of the taxpayer's losses described
in such subsections for such year.</text>
</paragraph></subsection><subsection id="id4E0F86F857B641949A2F44F85053C9A4"><enum>(c)</enum><header>Special rules
for pass-thru entities</header>
<paragraph id="idE14F584BFBF94629A7D050AA2BAE8C40"><enum>(1)</enum><text display-inline="yes-display-inline">In the case of any qualified timber gain of
a pass-thru entity (as defined in section 1(h)(10)) other than a real estate
investment trust, the election under this section shall be made separately by
each taxpayer subject to tax on such gain.</text>
</paragraph><paragraph id="id3993261F907B4BE69B377FEE648345C6"><enum>(2)</enum><text display-inline="yes-display-inline">In the case of any qualified timber gain of
a real estate investment trust, the election under this section shall be made
by the real estate investment trust.</text>
</paragraph></subsection><subsection id="idD45AA90F3C37461C974F535E215F7442"><enum>(d)</enum><header>Election</header><text display-inline="yes-display-inline">An election under this section may be made
only with respect to the first taxable year beginning after the date of the
enactment of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id4B95E1BFBBAD46E3872ECD2000551DA3"><enum>(b)</enum><header>Coordination
with maximum capital gains rates</header>
<paragraph id="idE402EFF1687F4DB2B70045AA86357FCC"><enum>(1)</enum><header>Taxpayers other
than corporations</header><text display-inline="yes-display-inline">Paragraph
(2) of section 1(h) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id8AA288C14E1040F4B0661E07876D4D3C" style="OLC">
<paragraph id="id2147F9B020F149BAB36255753BE452A3"><enum>(2)</enum><header>Reduction of
net capital gain</header><text display-inline="yes-display-inline">For purposes
of this subsection, the net capital gain for any taxable year shall be reduced
(but not below zero) by the sum of—</text>
<subparagraph id="id5639C0B8DEE447DABD930EF075309B89"><enum>(A)</enum><text display-inline="yes-display-inline">the amount which the taxpayer takes into
account as investment income under section 163(d)(4)(B)(iii), and</text>
</subparagraph><subparagraph id="idFF00EA9DDF9A4DFC983F4D1A962E2D8C"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of a taxable year with respect
to which an election is in effect under section 1203, the lesser of—</text>
<clause id="id3EE679FA2AFD422386BC7AB9920425ED"><enum>(i)</enum><text display-inline="yes-display-inline">the amount described in paragraph (1) of
section 1203(a), or</text>
</clause><clause id="id23E93701422E426EB35359F9AC1F938B"><enum>(ii)</enum><text display-inline="yes-display-inline">the amount described in paragraph (2) of
such
section.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id5DF56C5F56834D41BF42CF84621A3D04"><enum>(2)</enum><header>Corporations</header><text display-inline="yes-display-inline">Section 1201 is amended by redesignating
subsection (b) as subsection (c) and inserting after subsection (a) the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idA26B9789B22A41BAA79A9574B1703091" style="OLC">
<subsection id="idFB51279171DC4ECEB0E401613E18F1AF"><enum>(b)</enum><header>Qualified
timber gain not taken into account</header><text display-inline="yes-display-inline">For purposes of this section, in the case
of a corporation with respect to which an election is in effect under section
1203, the net capital gain for any taxable year shall be reduced (but not below
zero) by the corporation's qualified timber gain (as defined in section
1203(b)).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="id1AB5901762544795AA8B6C8FD038F048"><enum>(c)</enum><header>Deduction
allowed whether or not individual itemizes other deductions</header><text display-inline="yes-display-inline">Subsection (a) of section 62 is amended by
inserting before the last sentence the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id2CF4FEE67F6A4031A5ABEB321AC3EA74" style="OLC">
<paragraph id="idB62842DC5E5C45678028DA5731526683"><enum>(22)</enum><header>Qualified
timber gains</header><text display-inline="yes-display-inline">The deduction
allowed by section
1203.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idFE6E580118AE40CDA9FC7B5E9B6A1F1A"><enum>(d)</enum><header>Deduction
allowed in computing adjusted current earnings</header><text display-inline="yes-display-inline">Subparagraph (C) of section 56(g)(4) is
amended by adding at the end the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="id67CF5706EE794722A291552BF0C3A2A2" style="OLC">
<clause id="idEFE6D2BD15D04293AB30A1D26A71B010"><enum>(vii)</enum><header>Deduction for
qualified timber gain</header><text display-inline="yes-display-inline">Clause
(i) shall not apply to any deduction allowed under section
1203.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id0B81016ABD8A4D4D83A8A7E38419ADE7"><enum>(e)</enum><header>Deduction
allowed in computing taxable income of electing small business
trusts</header><text display-inline="yes-display-inline">Subparagraph (C) of
section 641(c)(2) is amended by inserting after clause (iii) the following new
clause:</text>
<quoted-block display-inline="no-display-inline" id="idCC7ACCEED0DE4CCC9A5AE0F19EEF656E" style="OLC">
<clause id="idD2D45AFF33764978B071C9225E1E8E9D"><enum>(iv)</enum><text display-inline="yes-display-inline">The deduction allowed under section
1203.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idA8635E203B3C44189D4B2EB831761956"><enum>(f)</enum><header>Treatment of
qualified timber gain of real estate investment trusts</header><text display-inline="yes-display-inline">Paragraph (3) of section 857(b) is amended
by inserting after subparagraph (F) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id6582DB87902B41EB8FC52CC1D3C61801" style="OLC">
<subparagraph id="id8A3EB59393C847C0B3038A3E98C131AE"><enum>(G)</enum><header>Treatment of
qualified timber gain</header><text display-inline="yes-display-inline">For
purposes of this part, in the case of a real estate investment trust with
respect to which an election is in effect under section 1203—</text>
<clause id="id70902EE37F234EC68CA98D51B7F96B16"><enum>(i)</enum><header>Reduction of
net capital gain</header><text display-inline="yes-display-inline">The net
capital gain of the real estate investment trust for any taxable year shall be
reduced (but not below zero) by the real estate investment trust's qualified
timber gain (as defined in section 1203(b)).</text>
</clause><clause id="idD97C07010FA44A30B65B7ECE7EC4E717"><enum>(ii)</enum><header>Adjustment to
shareholder’s basis attributable to deduction for qualified timber
gains</header>
<subclause id="id657687A63F434BED80B36402F60A8B38"><enum>(I)</enum><header>In
general</header><text display-inline="yes-display-inline">The adjusted basis of
shares in the hands of the shareholder shall be increased by the amount of the
deduction allowable under section 1203(a) as provided in subclauses (II) and
(III).</text>
</subclause><subclause id="id176960752B324D1E9094237DB3B377BB"><enum>(II)</enum><header>Allocation of
basis increase for distributions made during taxable year</header><text display-inline="yes-display-inline">For any taxable year of a real estate
investment trust for which an election is in effect under section 1203, in the
case of a distribution made with respect to shares during such taxable year of
amounts attributable to the deduction allowable under section 1203(a), the
adjusted basis of such shares shall be increased by the amount of such
distributions.</text>
</subclause><subclause id="id2292D59822E441719751413B74F82870"><enum>(III)</enum><header>Allocation of
excess</header><text display-inline="yes-display-inline">If the deduction
allowable under section 1203(a) for a taxable year exceeds the amount of
distributions described in subclause (II), the excess shall be allocated to
every shareholder of the real estate investment trust at the close of the
trust’s taxable year in the same manner as if a distribution of such excess
were made with respect to such shares.</text>
</subclause><subclause id="id822FD74D36854C6298A016FD5CC58030"><enum>(IV)</enum><header>Designations</header><text display-inline="yes-display-inline">To the extent provided in regulations, a
real estate investment trust shall designate the amounts described in
subclauses (II) and (III) in a manner similar to the designations provided with
respect to capital gains described in subparagraphs (C) and (D).</text>
</subclause><subclause id="id8F8AA2F951B1478BA5D95E172A2B11C4"><enum>(V)</enum><header>Definitions</header><text display-inline="yes-display-inline">As used in this subparagraph, the terms
<quote>share</quote> and <quote>shareholder</quote> shall include beneficial
interests and holders of beneficial interests, respectively.</text>
</subclause></clause><clause id="idA3FC030BE46B400A90BB90EB398FF2BB"><enum>(iii)</enum><header>Earnings and
profits deduction for qualified timber gains</header><text display-inline="yes-display-inline">The deduction allowable under section
1203(a) for a taxable year shall be allowed as a deduction in computing the
earnings and profits of the real estate investment trust for such taxable year.
The earnings and profits of any such shareholder which is a corporation shall
be appropriately adjusted in accordance with regulations prescribed by the
Secretary.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idB9457814D599498ABF98D461ABE843D4"><enum>(g)</enum><header>Loss
attributable to basis adjustment for deduction for qualified timber gain of
real estate investment trusts</header>
<paragraph id="id98324245B3AB49A19583BFE5005F6340"><enum>(1)</enum><text display-inline="yes-display-inline">Section 857(b)(8) is amended by
redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D),
respectively, and by inserting after subparagraph (A) the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id378705476B254B40AD5C0287F2004B21" style="OLC">
<subparagraph id="idA40EECB4DB0B49638943C94D38E320EA"><enum>(B)</enum><header>Loss
attributable to basis adjustment for deduction for qualified timber
gain</header><text>If—</text>
<clause id="id77BFBC68CB514A49A22129C22C9BD7B1"><enum>(i)</enum><text display-inline="yes-display-inline">a shareholder of a real estate investment
trust receives a basis adjustment provided under subsection (b)(3)(G)(ii),
and</text>
</clause><clause id="idB1377EE4F8D646E4B932CD50FCCC6A6D"><enum>(ii)</enum><text display-inline="yes-display-inline">the taxpayer has held such share or
interest for 6 months or less,</text>
</clause><continuation-text continuation-text-level="subparagraph">then
any loss on the sale or exchange of such share or interest shall, to the extent
of the amount described in clause (i), be
disallowed.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id2BDBC2D001F74F7CBB01FFBE593DF531"><enum>(2)</enum><text display-inline="yes-display-inline">Subparagraph (D) of section 857(b)(8), as
redesignated by paragraph (1), is amended by striking <quote>subparagraph
(A)</quote> and inserting <quote>subparagraphs (A) and (B)</quote>.</text>
</paragraph></subsection><subsection id="id94F369BBE39D44E881BB75ADA111FEF6"><enum>(h)</enum><header>Conforming
amendments</header>
<paragraph id="id134431A24A2542AC9A89C4E8BDC172AE"><enum>(1)</enum><text display-inline="yes-display-inline">Subparagraph (B) of section 172(d)(2) is
amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id30DC30C622FD4831AAFDF7FD6F199BCE" style="OLC">
<subparagraph id="idE030261E386947769062EB99EF481458"><enum>(B)</enum><text display-inline="yes-display-inline">the exclusion under section 1202, and the
deduction under section 1203, shall not be
allowed.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idE1551A9279B04743AAA6C7A0E30DD7A4"><enum>(2)</enum><text display-inline="yes-display-inline">Paragraph (4) of section 642(c) is amended
by striking the first sentence and inserting <quote>To the extent that the
amount otherwise allowable as a deduction under this subsection consists of
gain described in section 1202(a) or qualified timber gain (as defined in
section 1203(b)), proper adjustment shall be made for any exclusion allowable
to the estate or trust under section 1202 and for any deduction allowable to
the estate or trust under section 1203.</quote></text>
</paragraph><paragraph id="id9E033AD2C49B466F834C67DCAA491901"><enum>(3)</enum><text display-inline="yes-display-inline">Paragraph (3) of section 643(a) is amended
by striking the last sentence and inserting <quote>The exclusion under section
1202 and the deduction under section 1203 shall not be taken into
account.</quote>.</text>
</paragraph><paragraph id="idFAD28554FFA8458D83A6277BE208076C"><enum>(4)</enum><text display-inline="yes-display-inline">Subparagraph (C) of section 643(a)(6) is
amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id45D15527A1DB487E83A5EAFBA0FE6675" style="OLC">
<subparagraph id="idFFD3DB09A671412DBCB6F9A82AC97FF3"><enum>(C)</enum><text display-inline="yes-display-inline">Paragraph (3) shall not apply to a foreign
trust. In the case of such a trust—</text>
<clause id="idBB50608F3A8F4A12B31D8AF0D8962008"><enum>(i)</enum><text display-inline="yes-display-inline">there shall be included gains from the sale
or exchange of capital assets, reduced by losses from such sales or exchanges
to the extent such losses do not exceed gains from such sales or exchanges,
and</text>
</clause><clause id="id7B13259A1F7643B890DE81BBE69C64D5"><enum>(ii)</enum><text display-inline="yes-display-inline">the deduction under section 1203 shall not
be taken into
account.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idA114F585503D46B5A2ADA34EC8B9C76A"><enum>(5)</enum><text display-inline="yes-display-inline">Paragraph (4) of section 691(c) is amended
by inserting <quote>1203,</quote> after <quote>1202,</quote>.</text>
</paragraph><paragraph id="id40135319F266410E8CE48335266505B6"><enum>(6)</enum><text display-inline="yes-display-inline">Paragraph (2) of section 871(a) is amended
by inserting <quote>or 1203,</quote> after <quote>1202,</quote>.</text>
</paragraph><paragraph id="id852038212CAB4DF0930A9EB76F6158FC"><enum>(7)</enum><text display-inline="yes-display-inline">The table of sections for part I of
subchapter P of chapter 1 is amended by adding at the end the following new
item:</text>
<toc regeneration="no-regeneration">
<toc-entry level="section"><quote>Sec. 1203. Deduction for qualified
timber gain.</quote>.</toc-entry>
</toc>
</paragraph></subsection><subsection id="idE4711B7C19C14090B6ED8750ED56A42C"><enum>(i)</enum><header>Effective
date</header><text display-inline="yes-display-inline">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="H35D391E8A989457AA1B3B7357CA09DF0"><enum>213.</enum><header>Excise tax not
applicable to section 1203 deduction of real estate investment trusts</header>
<subsection id="H7899DAC686144D7AA48BB59D968455DA"><enum>(a)</enum><header>In
general</header>
<paragraph id="id226FBA2950CD402489EC0CB232A02CEC"><enum>(1)</enum><header>Ordinary
income</header><text display-inline="yes-display-inline">Subparagraph (B) of
section 4981(e)(1) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HD61E8A7C129E4C998436F9B3FDD6447" style="OLC">
<subparagraph id="HDCB9E01460244B60A4C1DE658515CFA0"><enum>(B)</enum><text display-inline="yes-display-inline">by not taking into account—</text>
<clause id="id829C2E73D3F24DF4908EB9992CE44293"><enum>(i)</enum><text display-inline="yes-display-inline">any gain or loss from the sale or exchange
of capital assets (determined without regard to any reduction that would be
applied for purposes of section 857(b)(3)(G)(i)), and</text>
</clause><clause id="id36D74B342F574F0495964EA04CC212BB"><enum>(ii)</enum><text display-inline="yes-display-inline">any deduction allowable under section 1203,
and</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id62F4F7DC8ED24FE0A29E56A8ABC66262"><enum>(2)</enum><header>Capital gain
net income</header><text>Section 4981(e)(2) is amended by adding at the end the
following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idBB8785913329470D895F9C28F4CD425F" style="OLC">
<subparagraph id="id5D9BC8A822A043D18CFA1ACCE2F9821E"><enum>(D)</enum><header>Qualified
timber gain</header><text>The amount determined under subparagraph (A) shall be
determined without regard to any reduction that would be applied for purposes
of section 857(b)(3)(G)(i) but shall be reduced for any deduction allowable
under section 1203 for such calendar
year.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HD10BF31CD3C741C8AF12709D16083475"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="id7F686EB22EFA47A4AEC7006B7ED6E6A1"><enum>214.</enum><header>Timber REIT
modernization</header>
<subsection id="id2B9A74EC9952419ABA5A1B9A13CA39F4"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 856(c)(5) is
amended by adding after subparagraph (G) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id0E102ECED3A94E8A8FC0B1A156F5A4E9" style="OLC">
<subparagraph id="id01D4822BCEDB448E9B4886AD712DDB70"><enum>(H)</enum><header>Treatment of
timber gains</header>
<clause id="id71A6561802134CB3AC8DB0E6E60AA9C2"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">Gain from the sale of
real property described in paragraph (2)(D) and (3)(C) shall include gain which
is—</text>
<subclause id="id946576A49A144A258AFA9116F379EA2B"><enum>(I)</enum><text display-inline="yes-display-inline">recognized by an election under section
631(a) from timber owned by the real estate investment trust, the cutting of
which is provided by a taxable REIT subsidiary of the real estate investment
trust;</text>
</subclause><subclause id="idF321774CE7304FC1A87B873583557154"><enum>(II)</enum><text display-inline="yes-display-inline">recognized under section 631(b); or</text>
</subclause><subclause id="id5FF00A1559424343B4B7638BF90D0B26"><enum>(III)</enum><text display-inline="yes-display-inline">income which would constitute gain under
subclause (I) or (II) but for the failure to meet the 1-year holding period
requirement.</text>
</subclause></clause><clause id="id7333539A85364770BD749CE65AF8EF67"><enum>(ii)</enum><header>Special
rules</header>
<subclause id="idE557FBF99CA4419C9FFC29B4381FE36E"><enum>(I)</enum><text display-inline="yes-display-inline">For purposes of this subtitle, cut timber,
the gain of which is recognized by a real estate investment trust pursuant to
an election under section 631(a) described in clause (i)(I) or so much of
clause (i)(III) as relates to clause (i)(I), shall be deemed to be sold to the
taxable REIT subsidiary of the real estate investment trust on the first day of
the taxable year.</text>
</subclause><subclause id="idF894371BFD6E43F2BB68AB68A55D2FD3"><enum>(II)</enum><text display-inline="yes-display-inline">For purposes of this subtitle, income
described in this subparagraph shall not be treated as gain from the sale of
property described in section 1221(a)(1).</text>
</subclause></clause><clause id="idB40F27F3588241CA90A25426662EF43F"><enum>(iii)</enum><header>Termination</header><text display-inline="yes-display-inline">This subparagraph shall not apply to
dispositions after the termination
date.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id0F7A537305564DD8AF60C2F6F2EFDE45"><enum>(b)</enum><header>Termination
date</header><text>Subsection (c) of section 856 is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id0E41465BDE514BA58153D0728B828DF5" style="OLC">
<paragraph id="idBE23E29E6370412EBB34B749BCC86D22"><enum>(8)</enum><header>Termination
date</header><text>For purposes of this subsection, the term <term>termination
date</term> means the last day of the first taxable year beginning after the
date of the enactment of this
paragraph.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id8850D5D8356E47EDB43B8D42E6DAE55F"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
subsection (a) shall apply to dispositions in taxable years beginning after the
date of the enactment of this Act.</text>
</subsection></section><section id="idA25CAC14152C425AA8B5535E80FC40ED"><enum>215.</enum><header>Mineral
royalty income qualifying income for timber REITs</header>
<subsection id="idA744418D2A144587AF46573F0232BF66"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 856(c)(2) is
amended by striking <quote>and</quote> at the end of subparagraph (G), by
inserting <quote>and</quote> at the end of subparagraph (H), and by adding
after subparagraph (H) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idCBE7A72218F44B1A95BE30F941ABE347" style="OLC">
<subparagraph id="id2581937550484233995EAB6A645D3D4A"><enum>(I)</enum><text display-inline="yes-display-inline">mineral royalty income earned in the first
taxable year beginning after the date of the enactment of this subparagraph
from real property owned by a timber real estate investment trust held, or once
held, in connection with the trade or business of producing timber by such real
estate investment
trust;</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idD924EB1B660C4A6691B305B673A84711"><enum>(b)</enum><header>Timber real
estate investment trust</header><text display-inline="yes-display-inline">Section 856(c)(5), as amended by this Act,
is amended by adding after subparagraph (H) the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id71C5E9D4AF5644C9913179D9808AAB3A" style="OLC">
<subparagraph id="idB887C8CF9DDC4ED8B5CB70EAC61AE7CC"><enum>(I)</enum><header>Timber real
estate investment trust</header><text display-inline="yes-display-inline">The
term <term>timber real estate investment trust</term> means a real estate
investment trust in which more than 50 percent in value of its total assets
consists of real property held in connection with the trade or business of
producing
timber.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idE08908142F5C4CEF991CA93EF60319D9"><enum>(c)</enum><header>Effective
date</header><text>The amendments by this section shall apply to taxable years
beginning after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id744D46BD95B04D8BA8D1A1D9D341FE25"><enum>216.</enum><header>Modification
of taxable REIT subsidiary asset test for timber REITs</header>
<subsection id="id7D73DF2E7508438291CBDE6B4D2AA419"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section
856(c)(4)(B)(ii) is amended by inserting <quote>(in the case of a quarter which
closes on or before the termination date, 25 percent in the case of a timber
real estate investment trust)</quote> after <quote>not more than 20 percent of
the value of its total assets is represented by securities of one or more
taxable REIT subsidiaries</quote>.</text>
</subsection><subsection commented="no" id="id1ACA65EF501B4D9A8585010A80F1C536"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">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="id8E652083CD51443094112990B8B66BE8"><enum>217.</enum><header>Safe harbor
for timber property</header>
<subsection id="idC84C9E5ECDDD4010AA66E79380E840E9"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 857(b)(6)
(relating to income from prohibited transactions) is amended by adding at the
end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id11A61BABAA114AE08563BCAB7FF5B156" style="OLC">
<subparagraph id="id5D7BA31846804FA9937AFF2B83F62460"><enum>(G)</enum><header>Special rules
for sales to qualified organizations</header>
<clause id="id7C74545EBB4E4158A31833416FC77670"><enum>(i)</enum><header>In
general</header><text>In the case of sale of a real estate asset (as defined in
section 856(c)(5)(B)) to a qualified organization (as defined in section
170(h)(3)) exclusively for conservation purposes (within the meaning of section
170(h)(1)(C)), subparagraph (D) shall be applied—</text>
<subclause id="id9064A4AFDDD24775B92FFE3F737AB55D"><enum>(I)</enum><text>by substituting
<quote>2 years</quote> for <quote>4 years</quote> in clause (i), and</text>
</subclause><subclause id="idDB15A1525CD3439A8E66528687EC42BE"><enum>(II)</enum><text>by substituting
<quote>2-year period</quote> for <quote>4-year period</quote> in clauses (ii)
and (iii).</text>
</subclause></clause><clause id="id32347D28C70E403C88F655F328DA7D22"><enum>(ii)</enum><header>Termination</header><text>This
subparagraph shall not apply to sales after the termination
date.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idFFBC27091D0744F091FCB1B50B569F80"><enum>(b)</enum><header>Prohibited
transactions</header><text display-inline="yes-display-inline">Section
857(b)(6)(D)(v) is amended by inserting <quote>or, in the case of a sale on or
before the termination date, a taxable REIT subsidiary</quote> after
<quote>independent contractor (as defined in section 856(d)(3)) from whom the
trust itself does not derive or receive any income</quote>.</text>
</subsection><subsection id="id2566D3ED8F894015A26D25E61A201A0C"><enum>(c)</enum><header>Sales that are
not prohibited transactions</header><text display-inline="yes-display-inline">Section 857(b)(6), as amended by subsection
(a), is amended by adding at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id7C4938B537CB438B87FADD931DCB6F70" style="OLC">
<subparagraph id="idC43C72AB8B114D759005BB061DD0E447"><enum>(H)</enum><header>Sales of
property that are not a prohibited transaction</header><text display-inline="yes-display-inline">In the case of a sale on or before the
termination date, the sale of property which is not a prohibited transaction
through application of subparagraph (D) shall be considered property held for
investment or for use in a trade or business and not property described in
section 1221(a)(1) for all purposes of this
subtitle.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idC276DF0E6F9B4A9389AA346E458CB929"><enum>(d)</enum><header>Termination
date</header><text>Section 857(b)(6), as amended by subsections (a) and (c), is
amended by adding at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idCCF6E8C6A5784C899637CD37CFF64AC9" style="OLC">
<subparagraph id="idDEF91D8A700C4E50A94C590F44F9516B"><enum>(I)</enum><header>Termination
date</header><text>For purposes of this paragraph, the term <term>termination
date</term> means the last day of the first taxable year beginning after the
date of the enactment of this
subparagraph.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id87C6CC8B9E7645AB8819E15768CB0ADE"><enum>(e)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to dispositions in taxable years beginning after the
date of the enactment of this Act.</text>
</subsection></section></subtitle><enum>III</enum><header>Energy
provisions</header>
<subtitle id="id39DF81435A6F4F7D9A16BB9CFF7A75C7"><enum>A</enum><header>Electricity
generation</header>
<section id="id6FF9D9437A2343FA85A4911B3511FFD3"><enum>301.</enum><header>Credit for
residential and business wind property</header>
<subsection id="idED0B05E1C8F14CBDBA14A24AE12B1FD3"><enum>(a)</enum><header>Residential
wind property</header>
<paragraph commented="no" id="id21450E937AA14015AA25668D089AF303"><enum>(1)</enum><header>In
general</header><text>Section 25D(a) (relating to allowance of credit) is
amended by striking <quote>and</quote> at the end of paragraph (2), by striking
the period at the end of paragraph (3) and inserting <quote>, and</quote>, and
by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id3ADC5E227FF64F4AA0A2872FA55001DF" style="OLC">
<paragraph id="ID8DBD7D39F8A748CEA7CA80002FE00227"><enum>(4)</enum><text>30 percent of the
qualified small wind energy property expenditures made by the taxpayer during
such
year.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="id3242E10E655644D5B375F5EDBBD17845"><enum>(2)</enum><header>Limitation</header><text>Section
25D(b)(1) (relating to maximum credit) is amended by striking
<quote>and</quote> at the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting <quote>, and</quote>, and by adding
at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idA25E0768FB4340E0985B99ABDBF4E40F" style="OLC">
<subparagraph id="IDBC92D61F1E094A329F91D4A7FD405514"><enum>(D)</enum><text>$4,000 with
respect to any qualified small wind energy property
expenditures.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="id9AC700099CE547C9972F594BC4AD80E3"><enum>(3)</enum><header>Qualified small
wind energy property expenditures</header>
<subparagraph commented="no" id="id7B503930DDD34C34874F22CEDD4F01F7"><enum>(A)</enum><header>In
general</header><text>Section 25D(d) (relating to definitions) is amended by
adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id069C29611C234F19B03ADCB1A319446B" style="OLC">
<paragraph id="ID2FF5E9F734AF414AA5A1D4F2C0C042B9"><enum>(4)</enum><header>Qualified small
wind energy property expenditure</header><text>The term <term>qualified small
wind energy property expenditure</term> means an expenditure for qualified
small wind energy property (as defined in section 48(c)(3)(A)) installed on or
in connection with a dwelling unit located in the United States and used as a
residence by the
taxpayer.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph commented="no" id="id657A4A0804D645F2945E78C51E5D0AC4"><enum>(B)</enum><header>No double
benefit</header><text>Section 45(d)(1) (relating to wind facility) is amended
by adding at the end the following new sentence: <quote>Such term shall not
include any facility with respect to which any qualified small wind energy
property expenditure (as defined in subsection (d)(4) of section 25D) is taken
into account in determining the credit under such section.</quote>.</text>
</subparagraph></paragraph><paragraph commented="no" id="id8791716A81BD45AE861B1DF5986C9F6A"><enum>(4)</enum><header>Maximum
expenditures in case of joint occupancy</header><text>Section 25D(e)(4)(A)
(relating to maximum expenditures) is amended by striking <quote>and</quote> at
the end of clause (ii), by striking the period at the end of clause (iii) and
inserting <quote>, and</quote>, and by adding at the end the following new
clause:</text>
<quoted-block display-inline="no-display-inline" id="id2664A07B144E4497B801CAD9D5B2F837" style="OLC">
<clause commented="no" id="id01DFA23BDE7E444BBAFE72B0FF0AB86E"><enum>(iv)</enum><text>$1,667 in the
case of wind turbines for which qualified small wind energy property
expenditures are
made.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="idEFC710EF691B4C469F5ECFADA226D294"><enum>(b)</enum><header>Business wind
property</header>
<paragraph commented="no" id="idC44694E536AE458F898D7B499A3FB8C4"><enum>(1)</enum><header>In
general</header><text>Section 48(a)(3)(A) (defining energy property) is amended
by striking <quote>or</quote> at the end of clause (iii), by adding
<quote>or</quote> at the end of clause (iv), and by inserting after clause (iv)
the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="idE52E1EFACB414EC89DC92B45390C56FC" style="OLC">
<clause commented="no" id="id9E68BC35102540FAB79D24194F9CBED0"><enum>(v)</enum><text>qualified small
wind energy
property,</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="idC7123C81BB8E4C6A87186BDEE91D0336"><enum>(2)</enum><header>30 percent
credit</header><text>Section 48(a)(2)(A)(i) is amended by striking
<quote>and</quote> at the end of subclause (II) and by inserting after
subclause (III) the following new subclause:</text>
<quoted-block display-inline="no-display-inline" id="id2874F8BDFA7645DCA84651E8220C8123" style="OLC">
<subclause commented="no" id="id13236264CDEE4ED2BA4BB2AF24C66F31"><enum>(IV)</enum><text>qualified small
wind energy property,
and</text>
</subclause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="idA2A9402E6FF84AD28F0127C867D917C8"><enum>(3)</enum><header>Qualified small
wind energy property</header><text>Section 48(c) is amended—</text>
<subparagraph commented="no" id="id22910E7A6B8E4D88B21BA29E69BDFB51"><enum>(A)</enum><text>by inserting
<quote><header-in-text level="subsection" style="OLC">; qualified small wind
energy property</header-in-text></quote> after <quote><header-in-text level="subsection" style="OLC">qualified microturbine
property</header-in-text></quote> in the heading,</text>
</subparagraph><subparagraph commented="no" id="id019451C4BA5F4D92AD34B5BEDC0D3EDC"><enum>(B)</enum><text>by striking
<quote>For purposes of this subsection</quote> and inserting <quote>For
purposes of this section</quote>,</text>
</subparagraph><subparagraph commented="no" id="id554AC8CFC61141FC8572A79A91A760C7"><enum>(C)</enum><text>by striking
<quote>paragraph (1)</quote> in paragraphs (1)(B) and (2)(B) and inserting
<quote>subsection (a)(1)</quote>, and</text>
</subparagraph><subparagraph commented="no" id="id7C4D0E5ACB8C4F1E8C4485E15DB81C33"><enum>(D)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block act-name="" id="id7A647D39043345B997B0BA49B219BC69" style="OLC">
<paragraph id="idACD448F899A64D23941860F76C212047"><enum>(3)</enum><header>Qualified small
wind energy property</header>
<subparagraph id="id6E49C72FD36F41E7A54CA1A9BD0AC626"><enum>(A)</enum><header>In
general</header><text>The term <term>qualified small wind energy
property</term> means property which uses a qualifying small wind turbine to
generate electricity.</text>
</subparagraph><subparagraph id="idD00CBF83246C4EAA991BC4F813044505"><enum>(B)</enum><header>Limitation</header><text>In
the case of qualified small wind energy property placed in service during the
taxable year, the credit otherwise determined under subsection (a)(1) for such
year with respect to such property shall not exceed $4,000 with respect to any
taxpayer.</text>
</subparagraph><subparagraph id="idFCD731690B9C45AE9088034F039282C6"><enum>(C)</enum><header>Qualifying
small wind turbine</header><text>The term <term>qualifying small wind
turbine</term> means a wind turbine which—</text>
<clause id="id55DC75A49A3E4D289E294088D2C52CD4"><enum>(i)</enum><text>has a nameplate
capacity of not more than 100 kilowatts, and</text>
</clause><clause id="idC8E2D24107A244CE9E6B3FB6BB9CC597"><enum>(ii)</enum><text>meets the
performance standards of the American Wind Energy Association.</text>
</clause></subparagraph><subparagraph id="id80564AA506C24F44818CFB1B25959F9D"><enum>(D)</enum><header>Termination</header><text>The
term <term>qualified small wind energy property</term> shall not include any
property for any period after December 31,
2008.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph commented="no" id="idCF016CD95327498188548B00AA2C04A8"><enum>(4)</enum><header>Conforming
amendment</header><text>Section 48(a)(1) is amended by striking
<quote>paragraphs (1)(B) and (2)(B)</quote> and inserting <quote>paragraphs
(1)(B), (2)(B), and (3)(B)</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID6667780435C94DAE88DAB258012B90C9"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
expenditures after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id2BC1B5E528AA430E90A76661445D0104"><enum>302.</enum><header>Landowner
incentive to encourage electric transmission build-out</header>
<subsection commented="no" display-inline="no-display-inline" id="id8B2BC9AF38D14A6D8838D5AD277F2C2B"><enum>(a)</enum><header>In
general</header><text>Part III of subchapter B of chapter 1 (relating to items
specifically excluded from gross income) is amended by inserting after section
139A the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id2FD8790C65004FD6BBD2CB8A06C7DB76" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id9C464A951F994AAD9E0172B2BB0870EB"><enum>139B.</enum><header> Electric
transmission easement payments</header>
<subsection commented="no" display-inline="no-display-inline" id="id9BB861037B8B4D09B5C83A0D0AF108AD"><enum>(a)</enum><header>In
general</header><text>Gross income shall not include any qualified electric
transmission easement payment.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id2F39C4B91614423785F64B79163922B0"><enum>(b)</enum><header>Qualified
electric transmission easement payment</header><text>For purposes of this
section, the term <term>qualified electric transmission payment</term> means
any payment which is made—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idE25278CDCF36451D8925CE0A501CE087"><enum>(1)</enum><text>by an electric
utility or electric transmission entity pursuant to an easement or other
agreement granted by the payee (or any predecessor of such payee), and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id79499F32C6634D4DB570E73D4061FF52"><enum>(2)</enum><text>for the right of
such entity (or any successors of such entity) to locate on such payee's
property transmission lines and equipment used to transmit electricity at 230
or more kilovolts, primarily from qualified facilities described in section
45(d) (without regard to any placed in service date or the last sentence of
paragraph (4) thereof) or energy property (as defined in section 48(a)(3))
placed in service after the date of the enactment of this section.</text>
</paragraph></subsection><subsection id="ID2cf37a6a3ec645fa8aa775f659394c6e"><enum>(c)</enum><header>No increase in
basis</header><text>Notwithstanding any other provision of this subtitle, no
increase in the basis or adjusted basis of any property shall result from any
amount excluded under this subsection with respect to such property.</text>
</subsection><subsection id="ID00283ed226a54ad9bbfa3dfe1d41d445"><enum>(d)</enum><header>Denial of
double benefit</header><text>Notwithstanding any other provision of this
subtitle, no deduction or credit shall be allowed (to the person for whose
benefit a qualified electric transmission easement payment is made) for, or by
reason of, any expenditure to the extent of the amount excluded under this
section with respect to such
expenditure.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id92CEE6296CC5454DB084419652B3B194"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for such part III is amended by
inserting after the item relating to section 139A the following new
item:</text>
<quoted-block display-inline="no-display-inline" id="idDB21E169D3524F2CA6FAEE635864CC30" style="OLC">
<toc>
<toc-entry bold="off" level="section">Sec. 139B. Electric
transmission easement
payments.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id6DC5BCA7560F402AA3F7CADBCEF63C82"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to payments
received after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idEE96976353104DEC9E1049447261D6A2"><enum>303.</enum><header>Exception to
reduction of renewable electricity credit</header>
<subsection commented="no" display-inline="no-display-inline" id="id014318F695CE4285BA598B90D0C7A0E2"><enum>(a)</enum><header>In
general</header><text>Section 45(b)(3) (relating to credit reduced for grants,
tax-exempt bonds, subsidized energy financing, and other credits) is amended by
adding after the last sentence the following: <quote>This paragraph shall not
apply with respect to any loans, loan guarantees, or grants issued by the
Secretary of Agriculture under authority granted by section 9006 of the Farm
Security and Rural Investment Act of 2002.</quote></text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idBFF1D2AFAF9E4834B27175B733E89349"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to facilities
placed in service after the date of the enactment of this Act.</text>
</subsection></section></subtitle><subtitle id="id42842C3D9B0B453AB86627BC3872087C"><enum>B</enum><header>Alcohol
fuel</header>
<section commented="no" display-inline="no-display-inline" id="idBCDC6259E3BD4B97868094B6B4D33E57"><enum>311.</enum><header>Expansion of
special allowance to cellulosic biomass alcohol fuel plant property</header>
<subsection commented="no" display-inline="no-display-inline" id="id4EBB0EE7396F472EBF12D260E9D2EC05"><enum>(a)</enum><header>In
general</header><text>Paragraph (3) of section 168(l) (relating to special
allowance for cellulosic biomass ethanol plant property) is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="id9F45844C76F5445EB18A07B4EA2F5569" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id9ADDEE9EC751458D8292CDD4418DD95C"><enum>(3)</enum><header>Cellulosic
biomass alcohol</header><text>For purposes of this subsection, the term
<term>cellulosic biomass alcohol</term> means any alcohol produced from any
lignocellulosic or hemicellulosic matter that is available on a renewable or
recurring
basis.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id25A81AF0F0F342FE9BB058FC9EB349BA"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="id802765ACD19347F385E2AB2FD5D892A6"><enum>(1)</enum><text>Subsection (l) of
section 168 is amended by striking <quote>cellulosic biomass ethanol</quote>
each place it appears and inserting <quote>cellulosic biomass
alcohol</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2922AF61857C41079F187F2FE0014F01"><enum>(2)</enum><text>The heading of
section 168(l) is amended by striking <quote><header-in-text level="subsection" style="OLC">cellulosic biomass ethanol</header-in-text></quote> and inserting
<quote><header-in-text level="subsection" style="OLC">cellulosic biomass
alcohol</header-in-text></quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCDC14F199B914696BA7AFD1A43584E95"><enum>(3)</enum><text>The heading of
paragraph (2) of section 168(l) is amended by striking <quote><header-in-text level="paragraph" style="OLC">cellulosic biomass
ethanol</header-in-text></quote> and inserting <quote><header-in-text level="paragraph" style="OLC">cellulosic biomass
alcohol</header-in-text></quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id0E47A3833DE943858C6864E2B0A8AFB9"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service after the date of the enactment of this Act, in taxable years
ending after such date.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id5A5A1E8393BB4C5FB83CE6C290279650"><enum>312.</enum><header>Credit for
production of cellulosic biomass alcohol</header>
<subsection id="idEF837A4BFCD845F29C5E77E170130030"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) of
section 40 (relating to alcohol used as fuel) is amended by striking
<quote>plus</quote> at the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting <quote>, plus</quote>, and by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idCA0B94D135884D559080D8B0FE4602CB" style="OLC">
<paragraph id="id6A17C6C962004049889DBEB77C44E753"><enum>(4)</enum><text display-inline="yes-display-inline">the small cellulosic alcohol producer
credit.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id22197FFEEB53414A9429C52A73790EA9"><enum>(b)</enum><header>Small
cellulosic alcohol producer credit</header>
<paragraph id="id14477F46EBF244E18AC1FFE90A664847"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 40 is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idB4EEC846636B40D186816D7A5620133C" style="OLC">
<paragraph id="idF7204EB434284212B1294A668948021F"><enum>(6)</enum><header>Small
cellulosic alcohol producer credit</header>
<subparagraph id="id498780788921484C9CD597DF6924D9B7"><enum>(A)</enum><header>In
general</header><text>In addition to any other credit allowed under this
section, there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the applicable amount for each
gallon of not more than 60,000,000 gallons of qualified cellulosic alcohol
production.</text>
</subparagraph><subparagraph id="id4247EF41C25144E0978BEA0A1263836C"><enum>(B)</enum><header>Applicable
amount</header><text>For purposes of subparagraph (A), the applicable amount
means the excess of—</text>
<clause id="id493C7E81A8754E35AC75AD211483B47B"><enum>(i)</enum><text>$1.28,
over</text>
</clause><clause id="idE8F40A94A8E14A87886DC7AAE2ECB3E0"><enum>(ii)</enum><text>the sum
of—</text>
<subclause id="id6E9B344FD8174CE98CDD30BD0A171113"><enum>(I)</enum><text>the amount of the
credit in effect for alcohol which is ethanol under subsection (b)(1) (without
regard to subsection (b)(3)) at the time of the qualified cellulosic alcohol
production, plus</text>
</subclause><subclause id="id2960EE3C0A2B4653B4ADA16759BEAAC6"><enum>(II)</enum><text>the amount of
the credit in effect under subsection (b)(4) at the time of such
production.</text>
</subclause></clause></subparagraph><subparagraph id="idBE7227B03E6642CCA2FE46351DC660BD"><enum>(C)</enum><header>Qualified
cellulosic alcohol production</header><text>For purposes of this section, the
term <term>qualified cellulosic alcohol production</term> means any cellulosic
biomass alcohol which is produced by an eligible small cellulosic alcohol
producer and which during the taxable year—</text>
<clause id="id53315357ED5B417790FFA63F2BA2EDDA"><enum>(i)</enum><text>is sold by the
taxpayer to another person—</text>
<subclause id="idD6D9A98211074BB9BA1443BE5526306C"><enum>(I)</enum><text>for use by such
other person in the production of a qualified alcohol mixture in such other
person's trade or business (other than casual off-farm production),</text>
</subclause><subclause id="id6DC6518A3BF14E67858D151E85FBA2D8"><enum>(II)</enum><text>for use by such
other person as a fuel in a trade or business, or</text>
</subclause><subclause id="id24F8FACFA137434683943FC13FF98E36"><enum>(III)</enum><text>who sells such
cellulosic biomass alcohol at retail to another person and places such
cellulosic biomass alcohol in the fuel tank of such other person, or</text>
</subclause></clause><clause id="idD28B7F3D0E0E4314A854927210F24410"><enum>(ii)</enum><text>is used or sold
by the taxpayer for any purpose described in clause (i).</text>
</clause></subparagraph><subparagraph id="idEDF24E6DD9314FF1ADF61F64F91280B0"><enum>(D)</enum><header>Additional
distillation excluded</header><text>The qualified cellulosic alcohol production
of any taxpayer for any taxable year shall not include any alcohol which is
purchased by the taxpayer and with respect to which such producer increases the
proof of the alcohol by additional distillation.</text>
</subparagraph><subparagraph id="id2357068C2E3C47C0ACD5410B68E999A3"><enum>(E)</enum><header>Application of
paragraph</header><text>This paragraph shall apply with respect to qualified
cellulosic alcohol production after December 31, 2007, and before April 1,
2015.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id260A0D1494094EC09807854DF152ECE8"><enum>(2)</enum><header>Termination
date not to apply</header><text>Subsection (e) of section 40 (relating to
termination) is amended—</text>
<subparagraph id="id63659154FC0949818979CD58D33ED072"><enum>(A)</enum><text>by inserting
<quote>or subsection (b)(6)(E)</quote> after <quote>by reason of paragraph
(1)</quote> in paragraph (2), and</text>
</subparagraph><subparagraph id="id9FD206C491FA4F16BD7054632080E7FA"><enum>(B)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id3B09B24EBE74452195DBE7882C679324" style="OLC">
<paragraph id="idF9C2BFF437A641D8A81B2FF5DDD5FF8E"><enum>(3)</enum><header>Exception for
small cellulosic alcohol producer credit</header><text>Paragraph (1) shall not
apply to the portion of the credit allowed under this section by reason of
subsection
(a)(4).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="id44A9872C74B3446789ACB2577BB4CF63"><enum>(c)</enum><header>Eligible small
cellulosic alcohol producer</header><text>Section 40 is amended by adding at
the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idCAC6F051ADA344A7A4BFF60C972C37CC" style="OLC">
<subsection id="idA9E7F2F8D57648C6A9061564AE9190EC"><enum>(i)</enum><header>Definitions and
special rules for small cellulosic alcohol producer</header><text>For purposes
of this section—</text>
<paragraph id="id157D509A85FE43989B04E6FEB0024451"><enum>(1)</enum><header>In
general</header><text>The term <term>eligible small cellulosic alcohol
producer</term> means a person, who at all times during the taxable year, has a
productive capacity for cellulosic biomass alcohol not in excess of 60,000,000
gallons.</text>
</paragraph><paragraph id="id6069EEC64B2247908F7ED55BA149B2B2"><enum>(2)</enum><header>Cellulosic
biomass alcohol</header>
<subparagraph id="idDEB540FDC62942BF88BE55F9E4706868"><enum>(A)</enum><header>In
general</header><text>The term <term>cellulosic biomass alcohol</term> has the
meaning given such term under section 168(l)(3), but does not include any
alcohol with a proof of less than 150.</text>
</subparagraph><subparagraph id="idA9827A43DE66460C9505CECFF3DCEC58"><enum>(B)</enum><header>Determination
of proof</header><text>The determination of the proof of any alcohol shall be
made without regard to any added denaturants.</text>
</subparagraph></paragraph><paragraph id="id19890B747AE641E1A240875BFB493DB1"><enum>(3)</enum><header>Aggregation
rule</header><text>For purposes of the 60,000,000 gallon limitation under
paragraph (1) and subsection (b)(6)(A), all members of the same controlled
group of corporations (within the meaning of section 267(f)) and all persons
under common control (within the meaning of section 52(b) but determined by
treating an interest of more than 50 percent as a controlling interest) shall
be treated as 1 person.</text>
</paragraph><paragraph id="idFEDFE3B9229944219A14FDAE2F708E82"><enum>(4)</enum><header>Partnership, S
corporations, and other pass-thru entities</header><text>In the case of a
partnership, trust, S corporation, or other pass-thru entity, the limitation
contained in paragraph (1) shall be applied at the entity level and at the
partner or similar level.</text>
</paragraph><paragraph id="id805731B4AC534E7E88DF491096DFC2A2"><enum>(5)</enum><header>
Allocation</header><text>For purposes of this subsection, in the case of a
facility in which more than 1 person has an interest, productive capacity shall
be allocated among such persons in such manner as the Secretary may
prescribe.</text>
</paragraph><paragraph id="id90FB1E0476B64D32B8864FED578D2417"><enum>(6)</enum><header>Regulations</header><text>The
Secretary may prescribe such regulations as may be necessary to prevent the
credit provided for in subsection (a)(4) from directly or indirectly
benefitting any person with a direct or indirect productive capacity of more
than 60,000,000 gallons of cellulosic biomass alcohol during the taxable
year.</text>
</paragraph><paragraph id="id9731B8036958400CBC9721E815EA18CF"><enum>(7)</enum><header>Allocation of
small cellulosic producer credit to patrons of cooperative</header><text>Rules
similar to the rules under subsection (g)(6) shall apply for purposes of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id4AF23552620141AA9EDAEDC30F1EFA05"><enum>(d)</enum><header>Alcohol not
used as a fuel, etc</header>
<paragraph id="idB0CA61AAE4D749CEB44D0DE39279C4CA"><enum>(1)</enum><header>In
general</header><text>Paragraph (3) of section 40(d) is amended by
redesignating subparagraph (D) as subparagraph (E) and by inserting after
subparagraph (C) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idE2DFDA4DFC3343C89DACE4EF3AB51E3F" style="OLC">
<subparagraph id="id1AAF9ECD583D4CC6B86A35E414A924C2"><enum>(D)</enum><header>Small
cellulosic alcohol producer credit</header><text>If—</text>
<clause id="idD0F4F9E52E9D45FBBEDDDE5F5CBFD02A"><enum>(i)</enum><text>any credit is
allowed under subsection (a)(4), and</text>
</clause><clause id="idF5A45BAB3C3F4900B516F3507CECD3EE"><enum>(ii)</enum><text>any person does
not use such fuel for a purpose described in subsection (b)(6)(C),</text>
</clause><continuation-text continuation-text-level="subparagraph">then
there is hereby imposed on such person a tax equal to the applicable amount for
each gallon of such cellulosic biomass
alcohol.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id33F95C58A0C2416B8DE095F7B18E6A6B"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="idD9272155E7A649FAA716235710D98506"><enum>(A)</enum><text>Subparagraph (C)
of section 40(d)(3) is amended by striking <quote><header-in-text level="subparagraph" style="OLC">producer</header-in-text></quote> in the
heading and inserting <quote><header-in-text level="subparagraph" style="OLC">small ethanol producer</header-in-text></quote>.</text>
</subparagraph><subparagraph id="id4670038E3D44485991C67E9E6E1E9559"><enum>(B)</enum><text>Subparagraph (E)
of section 40(d)(3), as redesignated by paragraph (1), is amended by striking
<quote>or (C)</quote> and inserting <quote>(C), or (D)</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="idBFE044AE3468425E8718B2CA6F5530D6"><enum>(e)</enum><header>Alcohol
produced in the United States</header><text>Section 40(d), as amended by this
section, is amended by adding at the end the following new paragraph:</text>
<quoted-block act-name="" id="idBC5A3786326442529B69D894DEE109EA" style="OLC">
<paragraph id="idBCB5C93924BA48128E064DDC0D02EA20"><enum>(6)</enum><header>Special rule
for small cellulosic alcohol producers</header><text>No small cellulosic
alcohol producer credit shall be determined under subsection (a) with respect
to any alcohol unless such alcohol is produced in the United
States.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id69EB398988444576B3F57920962D9B62"><enum>(f)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to fuel
produced after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id3BC7675E378F43719596798B1B9BD543"><enum>313.</enum><header>Extension of
small ethanol producer credit</header><text display-inline="no-display-inline">Paragraph (1) of section 40(e) (relating to
termination) is amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id8A9F969E24D540AD84ED8352147BBE7B"><enum>(1)</enum><text>in subparagraph
(A), by inserting <quote>(December 31, 2012, in the case of the credit allowed
by reason of subsection (a)(3))</quote> after <quote>December 31, 2010</quote>,
and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id81AB80FA311545C2B6632CD4285443B0"><enum>(2)</enum><text>in subparagraph
(B), by inserting <quote>(January 1, 2013, in the case of the credit allowed by
reason of subsection (a)(3))</quote> after <quote>January 1,
2011</quote>.</text>
</paragraph></section><section commented="no" display-inline="no-display-inline" id="id6DDC02F81BD646169D9BCF9E0A096F36"><enum>314.</enum><header>Credit for
producers of fossil free alcohol</header>
<subsection id="id566A761383BD44BB9E839234B803ABDB"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) of
section 40 (relating to alcohol used as fuel), as amended by this Act, is
amended by striking <quote>plus</quote> at the end of paragraph (3), by
striking the period at the end of paragraph (4) and inserting <quote>,
plus</quote>, and by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id9AB6409841B846EFAD46BF9CB49F861B" style="OLC">
<paragraph id="idF2A764CF68F644C8B09BCB87F29D72D2"><enum>(5)</enum><text display-inline="yes-display-inline">the small fossil free alcohol producer
credit.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idC14D9C839D9B442CB7F14CCA60ADE5C1"><enum>(b)</enum><header>Small fossil
free alcohol producer credit</header><text>Subsection (b) of section 40, as
amended by this Act, is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id0266054791284F358C164967EB35E995" style="OLC">
<paragraph id="id3DCEE3DD799545ED903BB9C28170438D"><enum>(7)</enum><header>Small fossil
free alcohol producer credit</header>
<subparagraph id="id90438A8F8B834E40B36AFBE3F95EC02C"><enum>(A)</enum><header>In
general</header><text>In addition to any other credit allowed under this
section, there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to 25 cents for each gallon of not
more than 60,000,000 gallons of qualified fossil free alcohol
production.</text>
</subparagraph><subparagraph id="idB57D101B78ED4384BCABFF50B39A7D9D"><enum>(B)</enum><header>Qualified
fossil free alcohol production</header><text>For purposes of this section, the
term <term>qualified fossil free alcohol production</term> means alcohol which
is produced by an eligible small fossil free alcohol producer at a fossil free
alcohol production facility and which during the taxable year—</text>
<clause id="id93D9D92756B14628B47590AD152A87D4"><enum>(i)</enum><text>is sold by the
taxpayer to another person—</text>
<subclause id="id9DC3D567EB354BFB8566F3AE791BAE2B"><enum>(I)</enum><text>for use by such
other person in the production of a qualified alcohol mixture in such other
person's trade or business (other than casual off-farm production),</text>
</subclause><subclause id="idC8A75D354C614B0DBBFC1BD72E8F19F5"><enum>(II)</enum><text>for use by such
other person as a fuel in a trade or business, or</text>
</subclause><subclause id="idE92E1205FC0A43F49C177E5305FA3934"><enum>(III)</enum><text>who sells such
alcohol at retail to another person and places such alcohol in the fuel tank of
such other person, or</text>
</subclause></clause><clause id="id1C26C34C78894E4DA270B6B37F2D064F"><enum>(ii)</enum><text>is used or sold
by the taxpayer for any purpose described in clause (i).</text>
</clause></subparagraph><subparagraph id="id2F5CC47040B1454CAC2D5DB827E5674D"><enum>(C)</enum><header>Additional
distillation excluded</header><text>The qualified fossil free alcohol
production of any taxpayer for any taxable year shall not include any alcohol
which is purchased by the taxpayer and with respect to which such producer
increases the proof of the alcohol by additional
distillation.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id0692BC203B474B8DA241557E079E1E7A"><enum>(c)</enum><header>Eligible small
fossil free alcohol producer</header><text>Section 40, as amended by this Act,
is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idD1A2866F8E3F4DA8915F00272F5D7073" style="OLC">
<subsection id="id45FBD1C7A33A4372B76A3A6D474C45AB"><enum>(j)</enum><header>Definitions and
special rules for small fossil free alcohol producer</header><text>For purposes
of this section—</text>
<paragraph id="id4DD4F58185EE4E5082ABA8A5BAC0663A"><enum>(1)</enum><header>In
general</header><text>The term <term>eligible small fossil free alcohol
producer</term> means a person, who at all times during the taxable year, has a
productive capacity for alcohol from all fossil free alcohol production
facilities of the taxpayer which is not in excess of 60,000,000 gallons.</text>
</paragraph><paragraph id="id8E301F50F75840EEA97EE179CFC6CB13"><enum>(2)</enum><header>Fossil free
alcohol production facility</header><text>The term <term>fossil free alcohol
production facility</term> means any facility at which 90 percent of the energy
used in the production of alcohol is produced from biomass (as defined in
section 45K(c)(3)).</text>
</paragraph><paragraph id="id558836A08E6349C086CB52F9DF043066"><enum>(3)</enum><header>Aggregation
rule</header><text>For purposes of the 60,000,000 gallon limitation under
paragraph (1) and subsection (b)(7)(A), all members of the same controlled
group of corporations (within the meaning of section 267(f)) and all persons
under common control (within the meaning of section 52(b) but determined by
treating an interest of more than 50 percent as a controlling interest) shall
be treated as 1 person.</text>
</paragraph><paragraph id="idEA63A86B60FF4CEE9CB812E19D31B595"><enum>(4)</enum><header>Partnership, S
corporations, and other pass-thru entities</header><text>In the case of a
partnership, trust, S corporation, or other pass-thru entity, the limitation
contained in paragraph (1) shall be applied at the entity level and at the
partner or similar level.</text>
</paragraph><paragraph id="id286DE520AD1D4DB19C0E90E70FAFF1A3"><enum>(5)</enum><header>
Allocation</header><text>For purposes of this subsection, in the case of a
facility in which more than 1 person has an interest, productive capacity shall
be allocated among such persons in such manner as the Secretary may
prescribe.</text>
</paragraph><paragraph id="idA84353B97672405F96A0ADB06F16495B"><enum>(6)</enum><header>Regulations</header><text>The
Secretary may prescribe such regulations as may be necessary to prevent the
credit provided for in subsection (a)(5) from directly or indirectly
benefitting any person with a direct or indirect productive capacity of more
than 60,000,000 gallons of alcohol from fossil free alcohol production
facilities during the taxable year.</text>
</paragraph><paragraph id="id78FA9ACFFD1D40DE85BA7A03EFF77F70"><enum>(7)</enum><header>Allocation of
small fossil free alcohol producer credit to patrons of
cooperative</header><text>Rules similar to the rules under subsection (g)(6)
shall apply for purposes of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id599E3F5B1860421D8577445E4CBF9C58"><enum>(d)</enum><header>Alcohol not
used as a fuel, etc</header>
<paragraph id="id7E14C3E2624E4E658BAC93EE7B914F5E"><enum>(1)</enum><header>In
general</header><text>Paragraph (3) of section 40(d), as amended by this Act,
is amended by redesignating subparagraph (E) as subparagraph (F) and by
inserting after subparagraph (D) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idC2DC845EB9D743EE97B93AD9A310100F" style="OLC">
<subparagraph id="id1BD6162C603C4EF18D6F259771C723A1"><enum>(E)</enum><header>Small fossil
free alcohol producer credit</header><text>If—</text>
<clause id="id14A582C3D1924CD192A04FC1539F6EBB"><enum>(i)</enum><text>any credit is
allowed under subsection (a)(5), and</text>
</clause><clause id="id3DCF63FCB18D43C49E38BC18DCA4BB07"><enum>(ii)</enum><text>any person does
not use such fuel for a purpose described in subsection (b)(7)(B),</text>
</clause><continuation-text continuation-text-level="subparagraph">then
there is hereby imposed on such person a tax equal to 25 cents for each gallon
of such
alcohol.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idA61A7D3266624974BA79C2B810E34CFA"><enum>(2)</enum><header>Conforming
amendment</header><text>Subparagraph (F) of section 40(d)(3), as redesignated
by paragraph (1) and amended by this Act, is amended by striking <quote>or
(D)</quote> and inserting <quote>(D), or (E)</quote>.</text>
</paragraph></subsection><subsection id="id6B7815570F234FE3AB4BB029515A7617"><enum>(e)</enum><header>Alcohol
produced in the United States</header><text>Section 40(d)(6), as added by
section 312 of this Act, is amended—</text>
<paragraph id="id634B269455484AD9AFEE82F9341C9361"><enum>(1)</enum><text>by inserting
<quote>or small fossil free alcohol producer credit</quote> after
<quote>cellulosic alcohol producer credit</quote>, and</text>
</paragraph><paragraph id="id5D0D4A1261584CCA9A270B00C511FD74"><enum>(2)</enum><text>by inserting
<quote><header-in-text level="section" style="OLC">and fossil
free</header-in-text></quote> after <quote><header-in-text level="section" style="OLC">cellulosic</header-in-text></quote> in the heading.</text>
</paragraph></subsection><subsection id="idEC69ED4F122D44FEBF214221BDF950A9"><enum>(f)</enum><header>Termination</header><text>Paragraph
(1) of section 40(e), as amended by this Act, is amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id63091438B4BD4FA1837A16008DC4248A"><enum>(1)</enum><text>in subparagraph
(A), by striking <quote>(December 31, 2012, in the case of the credit allowed
by reason of subsection (a)(3))</quote> and inserting <quote>(December 31,
2012, in the case of the credits allowed by reason of paragraphs (3) and (5) of
subsection (a))</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id11F6E2A76FBC4F0D9D1243B7FA3B14A9"><enum>(2)</enum><text>in subparagraph
(B), by striking <quote>(January 1, 2013, in the case of the credit allowed by
reason of subsection (a)(3))</quote> and inserting <quote>(January 1, 2013, in
the case of the credits allowed by reason of paragraphs (3) and (5) of
subsection (a))</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id792E8C47FDCA4938A5921381C76B250C"><enum>(g)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to fuel
produced after December 31, 2007.</text>
</subsection></section><section id="id5AC1C62CF3D9445E99CF9F4723F1D22B"><enum>315.</enum><header>Modification
of alcohol credit</header>
<subsection id="id5E99A43EECA94746A8F2FC5A0EA2F07C"><enum>(a)</enum><header>Income tax
credit</header><text>Subsection (h) of section 40 (relating to reduced credit
for ethanol blenders) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id87FD71BA61544B62835D1979B363FD90" style="OLC">
<paragraph id="idD7B6A8DB963A4C7AAE9C5E504D19E82A"><enum>(3)</enum><header>Reduced amount
after sale of 7,500,000,000 gallons</header>
<subparagraph id="id8C3A84CDF73D4DBEBD5C774FEAFECC5E"><enum>(A)</enum><header>In
general</header><text>In the case of any calendar year beginning after the date
described in subparagraph (B), the last row in the table in paragraph (2) shall
be applied by substituting <quote>46 cents</quote> for <quote>51
cents</quote>.</text>
</subparagraph><subparagraph id="idB95CD33CA2154E28AC56632062AF48FC"><enum>(B)</enum><header>Date
described</header><text>The date described in this subparagraph is the first
date on which 7,500,000,000 gallons of ethanol (including cellulosic ethanol)
have been produced in or imported into the United States after the date of the
enactment of this paragraph, as certified by the Secretary, in consultation
with the Administrator of the Environmental Protection
Agency.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idE3A2DBAAAA8F40CBB8DF8CBB47F3DC4C"><enum>(b)</enum><header>Excise tax
credit</header>
<paragraph id="id6B89718612D941D2ABD9BAA45B968388"><enum>(1)</enum><header>In
general</header><text>Paragraph (2) of section 6426(b) (relating to alcohol
fuel mixture credit) is amended by adding at the end the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id2B97D3C88A054B4D9875FE7A2CF73515" style="OLC">
<subparagraph id="idC3C612B5E9344922A2A310E24E72C3D2"><enum>(C)</enum><header>Reduced amount
after sale of 7,500,000,000 gallons</header><text>In the case of any alcohol
fuel mixture produced in a calendar year beginning after the date described in
section 40(h)(3)(B), subparagraph (A) shall be applied by substituting
<quote>46 cents</quote> for <quote>51
cents</quote>.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id496BEC26795048F6886878359668D309"><enum>(2)</enum><header>Conforming
amendment</header><text>Subparagraph (A) of section 6426(b)(2) is amended by
striking <quote>subparagraph (B)</quote> and inserting <quote>subparagraphs (B)
and (C)</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idE3D29E3B97474FA8B2B9B1AA9EDA4E6F"><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><section commented="no" display-inline="no-display-inline" id="idA802077BC7D0404DA1F5730F52F266A2"><enum>316.</enum><header>Calculation of
volume of alcohol for fuel credits</header>
<subsection id="id7173D11982ED46E48A2B6942E18EF1FD"><enum>(a)</enum><header>In
general</header><text>Paragraph (4) of section 40(d) (relating to volume of
alcohol) is amended by striking <quote>the volume of alcohol</quote> and all
that follows and inserting <quote>the volume of alcohol shall not include any
denaturant added to such alcohol.</quote>.</text>
</subsection><subsection id="idC025ECBAE62544A7BF555B6649D9C2C2"><enum>(b)</enum><header>Conforming
amendment for excise tax credit</header><text>Section 6426(b) (relating to
alcohol fuel mixture credit) is amended by redesignating paragraph (5) as
paragraph (6) and by inserting after paragraph (4) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id6F9D66166D1D43B198EA03A958DA2005" style="OLC">
<paragraph id="id513CF80D18184E189F7D3FEF0466A5A9"><enum>(5)</enum><header>Volume of
alcohol</header><text>For purposes of determining under subsection (a) the
number of gallons of alcohol with respect to which a credit is allowable under
subsection (a), the volume of alcohol shall not include any denaturant added to
such
alcohol.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idFCC7DC2C7F4A4DCBBCD72B87A260E51A"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to fuel sold
or used after December 31, 2007.</text>
</subsection></section><section id="idA5DF15A19AD2417B8DF6A21E56E265A2"><enum>317.</enum><header>Ethanol tariff
extension</header><text display-inline="no-display-inline">Headings 9901.00.50
and 9901.00.52 of the Harmonized Tariff Schedule of the United States are each
amended in the effective period column by striking <quote>1/1/2009</quote> and
inserting <quote>1/1/2011</quote>.</text>
</section><section id="idB1C3248086F44C17BF22327487FEDEAE"><enum>318.</enum><header>Elimination
and reductions of duty drawback on certain imported ethanol</header>
<subsection id="id1CE6BFD6A339459691EF2223FCFB9FA1"><enum>(a)</enum><header>In
general</header><text>Section 313(p) of the Tariff Act of 1930 (19 U.S.C.
1313(p)) is amended by adding at the end the following paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id34CEF48D34004FFFA2D96A3427B8926B" style="OLC">
<paragraph id="idF7D382804054468B96BC5825AD985C2A"><enum>(5)</enum><header>Special rules
for ethyl alcohol</header><text>For purposes of this subsection and subsections
(b) and (j), ethyl alcohol or a mixture of ethyl alcohol (whether imported with
payment of duty or made in the United States), may not be substituted for a
finished petroleum product for purposes of claiming a duty drawback unless the
exported finished petroleum product contains ethyl
alcohol.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id7165C2D7ECD045F2ABCF268E5517ECAC"><enum>(b)</enum><header>Limitations on,
and Reductions of, Drawbacks</header><text display-inline="yes-display-inline">Section 313 of the Tariff Act of 1930 (19
U.S.C. 1313) is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="id7980369027BE4AE58EC80DC9A00F0108" style="OLC">
<subsection id="idD4E1D13CA6B641BC9719E4E9E0794619"><enum>(z)</enum><header>Limitations on,
and reductions of, drawbacks</header>
<paragraph id="id906228C988BA402B8A635746DBACF800"><enum>(1)</enum><header>Limitations</header>
<subparagraph id="id35CE81CBBF2B49789912737BD5875389"><enum>(A)</enum><header>In
general</header><text>Ethyl alcohol or mixture containing ethyl alcohol
described in subparagraph (B) may be treated as being of the same kind and
quality under subsection (b) of this section or may be treated as being
commercially interchangeable with any other ethyl alcohol or mixture containing
ethyl alcohol under subsection (j)(2) of this section, only if the other ethyl
alcohol or mixture—</text>
<clause id="idB98D9829D47042C89EFD2596158F3283"><enum>(i)</enum><text>if imported, is
subject to the additional duty under subheading 9901.00.50 of the Harmonized
Tariff Schedule of the United States; or</text>
</clause><clause id="id4258BC72DBB24AB3BBB71D6D81C50BEE"><enum>(ii)</enum><text>if domestic, is
subject to Federal excise tax under section 4041 or 4081 of the Internal
Revenue Code of 1986 in an amount equal to or greater than the amount of
drawback claimed.</text>
</clause></subparagraph><subparagraph id="id6BF4654E64564670AEF069AC4A18A54A"><enum>(B)</enum><header>Ethyl alcohol
or mixture containing ethyl alcohol described</header><text>Ethyl alcohol or
mixture containing ethyl alcohol described in this subparagraph means—</text>
<clause id="id3F11DEDAA221498AA03C9F06F8AFEE79"><enum>(i)</enum><text>ethyl alcohol
classifiable under subheading 2207.10.60 or 2207.20.00 of the Harmonized Tariff
Schedule of the United States, or</text>
</clause><clause id="idE5F84259734C4E09BD51C80620B27470"><enum>(ii)</enum><text>a mixture
containing ethyl alcohol classifiable under heading 2710 or 3824 of the
Harmonized Tariff Schedule of the United States,</text>
</clause><continuation-text continuation-text-level="subparagraph">which,
if imported would be subject to additional duty under subheading 9901.00.50 of
such Schedule.</continuation-text></subparagraph></paragraph><paragraph id="IDe6f33c928cdb49249cf5c04520facb15"><enum>(2)</enum><header>Reduction of
drawback</header><text>For purposes of subsections (b), (j)(2), and (p) of this
section, the amount of the refund as drawback under this section shall be
reduced by an amount equal to any Federal tax credit or refund of any Federal
tax paid on the merchandise with respect to which the drawback is
claimed.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id342F1B82B5754C86BFA9C42651204E65"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section apply to articles
exported on or after the date that is 15 days after the date of the enactment
of this Act.</text>
</subsection></section></subtitle><subtitle id="idE66D8329398B4FF683945E63ABAC0E9C"><enum>C</enum><header>Biodiesel and
renewable diesel fuel</header>
<section commented="no" display-inline="no-display-inline" id="idB291D44759064471B3C34B3228D36253"><enum>321.</enum><header>Extension and
modification of credit for biodiesel and renewable diesel used as fuel</header>
<subsection commented="no" display-inline="no-display-inline" id="idB9A8390C7A9D41DDA093EC167E956139"><enum>(a)</enum><header>Extension</header>
<paragraph commented="no" display-inline="no-display-inline" id="id446150BCE1264EF2B0A7A7F75841F7FB"><enum>(1)</enum><header>Income tax
credits for biodiesel and renewable diesel and small agri-biodiesel producer
credit</header><text>Section 40A(g) (relating to termination) is amended by
striking <quote>December 31, 2008</quote> and inserting <quote>December 31,
2010 (December 31, 2012, in the case of the credit allowed by reason of
subsection (a)(3))</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id211B23EAF6C345808E478DE3DA63F4EC"><enum>(2)</enum><header>Excise tax
credit</header><text>Section 6426(c)(6) (relating to termination) is amended by
striking <quote>2008</quote> and inserting <quote>2010</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id69260D0F5EE9498DA091EF4F7E401190"><enum>(3)</enum><header>Fuels not used
for taxable purposes</header><text>Section 6427(e)(5)(B) (relating to
termination) is amended by striking <quote>2008</quote> and inserting
<quote>2010</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id7C872331D6184B0EB05410090463490A"><enum>(b)</enum><header>Modification of
credit for renewable diesel</header><text>Section 40A(f) (relating to renewable
diesel) is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id7E4BAB13156143B88A740D0EDA736C9C" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id1B703790CBE046D19129C95BBDAFB801"><enum>(4)</enum><header>Special rule
for co-processed renewable diesel</header><text>In the case of a taxpayer which
produces renewable diesel through the co-processing of biomass and petroleum at
any facility, this subsection shall not apply to so much of the renewable
diesel produced at such facility and sold or used during the taxable year in a
mixture described in subsection (b)(1)(B) as exceeds 60,000,000
gallons.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idD93C260C57924888A34DC0446E201FB3"><enum>(c)</enum><header>Modification
relating to definition of agri-biodiesel</header><text>Paragraph (2) of section
40A(d) (relating to agri-biodiesel) is amended by striking <quote>and mustard
seeds</quote> and inserting <quote>mustard seeds, and camelina</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id11312539BDFD4990B52E030B21056DD5"><enum>(d)</enum><header>Effective
dates</header><text>The amendments made by this section shall apply to fuel
sold or used after the date of the enactment of this Act.</text>
</subsection></section><section id="id43F46B875C0E431B9B78A28E121F54B9"><enum>322.</enum><header>Treatment of
qualified alcohol fuel mixtures and qualified biodiesel fuel mixtures as
taxable fuels</header>
<subsection id="id5AF51264B7FC4C6D8734B52F3021C163"><enum>(a)</enum><header>In
general</header>
<paragraph id="id934B47298C9F452A8EF3B6BE19E14357"><enum>(1)</enum><header>Qualified
alcohol fuel mixtures</header><text>Paragraph (2) of section 4083(a) (relating
to gasoline) is amended—</text>
<subparagraph id="id07486DAE855A467D881D543335CB917F"><enum>(A)</enum><text>by striking
<quote>and</quote> at the end of subparagraph (A),</text>
</subparagraph><subparagraph id="id4D31371055B1418D91457B62D56896BC"><enum>(B)</enum><text>by redesignating
subparagraph (B) as subparagraph (C), and</text>
</subparagraph><subparagraph id="id26AEA26C034D4CF0A845F3213EDEFFD9"><enum>(C)</enum><text>by inserting
after subparagraph (A) the following new subparagraph:</text>
<quoted-block act-name="" id="id78E8202C9693459688299A1FA42A9583" style="OLC">
<subparagraph id="id1A2D545F0D324DF59FA5342BDFDEB207"><enum>(B)</enum><text>includes any
qualified mixture (as defined in section 40(b)(1)(B)),
and</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="idFAF8A478D16042CDB2B12F145D5E4409"><enum>(2)</enum><header>Qualified
biodiesel fuel mixtures</header><text>Subparagraph (A) of section 4083(a)(3)
(relating to diesel fuel) is amended by striking <quote>and</quote> at the end
of clause (ii), by redesignating clause (iii) as clause (iv), and inserting
after clause (ii) the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="id1F304ED4C6AA4417A7D5B9F63072349C" style="OLC">
<clause id="id17897189925B475F95440991B5E68EB3"><enum>(iii)</enum><text>any qualified
biodiesel mixture (as defined in section 40A(b)(1)(B)),
and</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="id158C982772074133930FA576B7FD9C33"><enum>(b)</enum><header>Modification of
biodiesel certification requirement</header><text>Paragraph (4) of section
40A(b) is amended by striking <quote>which identifies</quote> and all that
follows and
inserting</text>
<quoted-block display-inline="yes-display-inline" id="idD135F3A793A4406F88DB8942F9623C54" style="OLC">
<text>which—</text><subparagraph id="idC523CC2D7FE74AB5BDCD618EB4C49620"><enum>(A)</enum><text>identifies the
product produced and the percentage of biodiesel and agri-biodiesel in the
product, and</text>
</subparagraph><subparagraph id="idA6C65C0A511C41D0AD3E71D9A6421CD7"><enum>(B)</enum><text>documents that
the biodiesel was independently tested and meets the requirements of ASTM
D6751.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id8C7A55332C014C6E941FEB524EF6836A"><enum>(c)</enum><header>Information
reporting requirement for producers of qualified mixtures</header><text>Section
4101(d) (relating to information reporting) is amended to read as
follows:</text>
<quoted-block act-name="" id="idF682C5351AD84C2888E9129D9808DFCB" style="OLC">
<subsection id="idB2F6A3D168C947A28AD9999C75D241F5"><enum>(d)</enum><header>Information
reporting</header><text>The Secretary—</text>
<paragraph id="id3EAC6E8811184D4E8FB7BE3E33A4EC39"><enum>(1)</enum><text>may
require—</text>
<subparagraph id="id2A7BB962D8634E3DA8714D92C405228A"><enum>(A)</enum><text>information
reporting by any person registered under this section, and</text>
</subparagraph><subparagraph id="id623228044A1E4872AB01D150E864FFA9"><enum>(B)</enum><text>information
reporting by such other persons as the Secretary deems necessary to carry out
this part, and</text>
</subparagraph></paragraph><paragraph id="idCEADF492E9624E66B0409A12A56F54F4"><enum>(2)</enum><text>shall require
information reporting by any person registered under this section and producing
any qualified mixture (as defined in section 40(b)(1)(B)) or any qualified
biodiesel mixture (as defined in section 40A(b)(1)(B)).</text>
</paragraph><continuation-text continuation-text-level="subsection">Any
person who is required to report under this subsection and who has 25 or more
reportable transactions in a month shall file such report in electronic
format.</continuation-text></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idB644EE0E384F4A3AA69EB849BD4EF54E"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to fuels
removed, entered, or sold after December 31, 2007.</text>
</subsection></section></subtitle><subtitle id="id26A45514C07A4FBBB4A5F9751E6D29B2"><enum>D</enum><header>Alternative
fuel</header>
<section commented="no" id="id684D8F188BDB44E7A4497DA8E9339F0B"><enum>331.</enum><header>Extension and
modification of alternative fuel credit</header>
<subsection commented="no" id="id86303A6D85694AAE9BC275FCE9DC7663"><enum>(a)</enum><header>Extension</header>
<paragraph commented="no" id="id8A71FA406C114D139714A33CB1F63EFF"><enum>(1)</enum><header>Alternative
fuel credit</header><text>Paragraph (4) of section 6426(d) (relating to
alternative fuel credit) is amended by striking <quote>September 30,
2009</quote> and inserting <quote>December 31, 2010</quote>.</text>
</paragraph><paragraph commented="no" id="id3CA99BBBECE048CCAA1886E43DD19D71"><enum>(2)</enum><header>Alternative
fuel mixture credit</header><text>Paragraph (3) of section 6426(e) (relating to
alternative fuel mixture credit) is amended by striking <quote>September 30,
2009</quote> and inserting <quote>December 31, 2010</quote>.</text>
</paragraph><paragraph commented="no" id="idE3F6B374A6E24BB79D7E2623B2252FB7"><enum>(3)</enum><header>Payments</header><text>Subparagraph
(C) of section 6427(e)(5) (relating to termination) is amended by striking
<quote>September 30, 2009</quote> and inserting <quote>December 31,
2010</quote>.</text>
</paragraph></subsection><subsection commented="no" id="idA783423AEFF04C089407266DEDAC8006"><enum>(b)</enum><header>Modifications</header>
<paragraph commented="no" id="id57ABC68E00444030AEC3C7105CFDEF77"><enum>(1)</enum><header>Alternative
fuel to include compressed or liquified biomass gas</header><text>Paragraph (2)
of section 6426(d) (relating to alternative fuel credit) is amended by striking
<quote>and</quote> at the end of subparagraph (E), by redesignating
subparagraph (F) as subparagraph (G), and by inserting after subparagraph (E)
the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id1788E2C43D444BD1B8CA34FCF6DEA31C" style="OLC">
<subparagraph commented="no" id="idB1D4B2759981416FBAF98BDB910C68FE"><enum>(F)</enum><text>compressed or
liquefied biomass gas,
and</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="idA59F7F6ABC8D47B6B4AB9A0B94780624"><enum>(2)</enum><header>Credit allowed
for aviation use of fuel</header><text>Paragraph (1) of section 6426(d) is
amended by inserting <quote>sold by the taxpayer for use as a fuel in
aviation,</quote> after <quote>motorboat,</quote>.</text>
</paragraph></subsection><subsection id="id00FBE43B9806491299B03A30955B05AE"><enum>(c)</enum><header>Carbon capture
requirement for certain fuels</header>
<paragraph id="idB8BC1138780147E19CD00BEEA90E2AA5"><enum>(1)</enum><header>In
general</header><text>Subsection (d) of section 6426, as amended by subsection
(a), is amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id952F7E5EAF33498AA5A6549A5432EF4C" style="OLC">
<paragraph id="idDCA83DD036434F1999A85FC0B34FFECD"><enum>(4)</enum><header>Carbon capture
requirement</header>
<subparagraph id="id31D2EE89FB6A4BF795DE5F39E79D1D16"><enum>(A)</enum><header>In
general</header><text>The requirements of this paragraph are met if the fuel is
certified, under such procedures as required by the Secretary, as having been
derived from coal produced at a gasification facility which separates and
sequesters not less than the applicable percentage of such facility's total
carbon dioxide emissions.</text>
</subparagraph><subparagraph id="id30D5B7C173FC43DC9278076F479E2238"><enum>(B)</enum><header>Applicable
percentage</header><text>For purposes of subparagraph (A), the applicable
percentage is—</text>
<clause id="id01D0BFD3950C4870AA835E2F3D32D19A"><enum>(i)</enum><text>50 percent in the
case of fuel produced after the date of the enactment of this paragraph and on
or before the earlier of—</text>
<subclause id="id03779CAF679D4500903DD195723B3A74"><enum>(I)</enum><text>the date the
Secretary makes a determination under subparagraph (C), or</text>
</subclause><subclause id="idF241C52AC8794EBF9A95A12B76C28D70"><enum>(II)</enum><text>December 30,
2010, and</text>
</subclause></clause><clause id="idBB7AC74F15E84BA3A53BE3A80614E98E"><enum>(ii)</enum><text>75 percent in
the case of fuel produced after the date on which the applicable percentage
under clause (i) ceases to apply.</text>
</clause></subparagraph><subparagraph id="idCB393C62C865431DB37C02D1A8F80AE1"><enum>(C)</enum><header>Determination
to increase applicable percentage before December 31, 2010</header><text>If the
Secretary, after considering the recommendations of the Carbon Sequestration
Capability Panel, finds that the applicable percentage under subparagraph (B)
should be 75 percent for fuel produced before December 31, 2010, the Secretary
shall make a determination under this subparagraph. Any determination made
under this subparagraph shall be made not later than 30 days after the
Secretary receives from the Carbon Sequestration Panel the report required
under section 331(c)(3)(D) of the <short-title>Heartland,
Habitat, Harvest, and Horticulture Act of
2007</short-title>.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id550659311C4E47DF8A9E504386E40233"><enum>(2)</enum><header>Conforming
amendment</header><text>Subparagraph (E) of section 6426(d)(2) is amended by
inserting <quote>which meets the requirements of paragraph (4) and which
is</quote> after <quote>any liquid fuel</quote>.</text>
</paragraph><paragraph id="id1E99F5B108FE4D19A2D24BCD79593EB4"><enum>(3)</enum><header>Carbon
sequestration capability panel</header>
<subparagraph id="idA121E320893C4DA8AB341559C6E6786E"><enum>(A)</enum><header>Establishment
of panel</header><text>There is established a panel to be known as the
<quote>Carbon Sequestration Capability Panel</quote> (hereafter in this
paragraph referred to as the <quote>Panel</quote>).</text>
</subparagraph><subparagraph id="idA5286587FC734D6DA32E7DB2BA531524"><enum>(B)</enum><header>Membership</header><text>The
Panel shall be composed of—</text>
<clause id="id668A2E222F7A47AFA76C3164373A8635"><enum>(i)</enum><text>1
individual appointed by the National Academy of Sciences,</text>
</clause><clause id="id9ACCBF2589EA406B9BDD94002BFE916D"><enum>(ii)</enum><text>1
individual appointed by the Chairman of the Committee on Finance of the Senate,
in consultation with the Ranking Member of the Committee, and</text>
</clause><clause id="idA445DB6F556147638B8F563EE125C4CA"><enum>(iii)</enum><text>1
individual appointed jointly by the individuals appointed under clauses (i) and
(ii).</text>
</clause></subparagraph><subparagraph id="id6D8C244DFE65491BAB9F7BB62156A079"><enum>(C)</enum><header>Study</header><text>The
Panel shall study the appropriate percentage of carbon dioxide for separation
and sequestration under section 6426(d)(4) of the Internal Revenue Code of 1986
consistent with the purposes of such section. The panel shall consider—</text>
<clause id="idE1A60B9D9B884C99A3A727C221DB0035"><enum>(i)</enum><text>whether it is
feasible to separate and sequester 75 percent of the carbon dioxide emissions
of a facility, and</text>
</clause><clause id="idB1B8424B85F845B7A5E4AA58B489DE5C"><enum>(ii)</enum><text>costs and other
factors associated with separating and sequestering such percentage of carbon
dioxide emissions.</text>
</clause></subparagraph><subparagraph id="idD4EEC9F76B384D11A9395B086F5C2B24"><enum>(D)</enum><header>Report</header><text>Not
later than 6 months after the date of the enactment of this Act, the Panel
shall report to the Secretary of Treasury, the Committee on Finance of the
Senate, and the Committee on Ways and Means of the House of Representatives on
the study under subparagraph (C) .</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idC367692EEDC84E5587388CEAD1552F7B"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to fuel sold
or used after the date of the enactment of this Act.</text>
</subsection></section><section id="id12FE5711D5CB441B8E79429000A58367"><enum>332.</enum><header>Extension of
alternative fuel vehicle refueling property credit</header><text display-inline="no-display-inline">Paragraph
(2) of section 30C(g) (relating to termination) is amended by striking
<quote>December 31, 2009</quote> and inserting <quote>December 31,
2010</quote>.</text>
</section></subtitle><enum>IV</enum><header>Agricultural
provisions</header>
<section id="idC5301C3A96AF4FB9B17B6F5756793413"><enum>401.</enum><header>Increase in
loan limits on agricultural bonds</header>
<subsection id="H42EDB1A0D96D4EA1ACB307C1F3435BE"><enum>(a)</enum><header>In
general</header><text>Subparagraph (A) of section 147(c)(2) (relating to
exception for first-time farmers) is amended by striking
<quote>$250,000</quote> and inserting <quote>$450,000</quote>.</text>
</subsection><subsection id="id2A66BC5CB48548E1854167DFC574A3E6"><enum>(b)</enum><header>Inflation
adjustment</header><text>Section 147(c)(2) is amended by adding at the end the
following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idB331C738E19A443690DBBAA17D9D9F62" style="OLC">
<subparagraph id="ID1bd1de4859584847814764ceceb783f8"><enum>(H)</enum><header>Adjustments for
inflation</header><text>In the case of any calendar year after 2008, the dollar
amount in subparagraph (A) shall be increased by an amount equal to—</text>
<clause id="ID0533805e7da04d62a426d055359383ea"><enum>(i)</enum><text>such dollar
amount, multiplied by</text>
</clause><clause id="ID696317ad968a4633afe114f403b1e01e"><enum>(ii)</enum><text>the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year, determined by substituting <quote>calendar year 2007</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</clause><continuation-text continuation-text-level="subparagraph">If any
amount as increased under the preceding sentence is not a multiple of $100,
such amount shall be rounded to the nearest multiple of
$100.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id79BC7E354DF7485CACB9BAD50D254B84"><enum>(c)</enum><header>Modification of
substantial farmland definition</header><text>Section 147(c)(2)(E) (defining
substantial farmland) is amended by striking <quote>unless</quote> and all that
follows through the period and inserting <quote>unless such parcel is smaller
than 30 percent of the median size of a farm in the county in which such parcel
is located.</quote>.</text>
</subsection><subsection id="idD9DD7311A8DC482B99D6CB36758DE426"><enum>(d)</enum><header>Conforming
amendment</header><text>Section 147(c)(2)(C)(i)(II) is amended by striking
<quote>$250,000</quote> and inserting <quote>the amount in effect under
subparagraph (A)</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H42CFB2BA26AF426BBAF2136F8E368D94"><enum>(e)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to bonds
issued after the date of the enactment of this Act.</text>
</subsection></section><section id="id92F72EE514384A649D4A350D00B129FF"><enum>402.</enum><header>Modification
of installment sale rules for certain farm property</header>
<subsection id="id60391CD7B0824D72B52767F0054314C7"><enum>(a)</enum><header>In
general</header><text>Section 453(i) (relating to recognition of recapture
income in year of disposition) is amended by adding at the end the following
new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idC407C785167744FE9E1F35852A1C4B93" style="OLC">
<paragraph id="idF1282431B27947BD99919AF00EB55041"><enum>(3)</enum><header>Exception for
certain farm property</header><text>Paragraph (1) shall not apply to any
installment sale of any single purpose agricultural or horticultural structure
or any tree or vine bearing fruit or nuts eligible for classification as
10-year property under section
168(e)(3)(D).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idA9ECA2F045614FF48FC20753A1ED11C5"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
installment sales occurring after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id71D68D3AA87741FFA451DD561146A864"><enum>403.</enum><header>Allowance of
section 1031 treatment for exchanges involving certain mutual ditch, reservoir,
or irrigation company stock</header>
<subsection commented="no" display-inline="no-display-inline" id="id6636BB0816594E9E82A1799C9E3B3D65"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 1031 (relating to exchange of
property held for productive use or investment) is amended by adding at the end
the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idB2CAE19DFC8649F0B98B2F27838CA347" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID0785ac1b704a46f5abdaff2ebbc3d31a"><enum>(i)</enum><header display-inline="yes-display-inline">Special rules for mutual ditch, reservoir,
or irrigation company stock</header><text display-inline="yes-display-inline">For purposes of subsection (a)(2)(B), the
term <term>stocks</term> shall not include shares in a mutual ditch, reservoir,
or irrigation company if at the time of the exchange—</text>
<paragraph commented="no" display-inline="no-display-inline" id="IDa58500c74e264a09a5eae45fd862ad4e"><enum>(1)</enum><text display-inline="yes-display-inline">the mutual ditch, reservoir, or irrigation
company is an organization described in section 501(c)(12)(A) (determined
without regard to the percentage of its income that is collected from its
members for the purpose of meeting losses and expenses), and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDe9b3ee6348274f0e91b291953cb92909"><enum>(2)</enum><text display-inline="yes-display-inline">the shares in such company have been
recognized by the highest court of the State in which such company was
organized or by applicable State statute as constituting or representing real
property or an interest in real
property.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id20DBADE4B7A34C8A816813EF1A33F695"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to exchanges completed after the date of the enactment
of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id38CB9CAD5FAC4BC8A8F22CB8DCC525F8"><enum>404.</enum><header>Credit to
holders of rural renaissance bonds</header>
<subsection id="idBB58742C1B30427F9116CD3DF414C700"><enum>(a)</enum><header>In
General</header><text>Subpart H of part IV of subchapter A of chapter 1
(relating to credits against tax) is amended by adding at the end the following
new section:</text>
<quoted-block id="id69A71D10D4614B06A89365C059F5A7CD" style="OLC">
<section id="id9EC335EE8E874D08925875085A37B25B"><enum>54A.</enum><header>Credit to
holders of rural renaissance bonds</header>
<subsection id="idCB792C3BF4824693A54EBB8002D235EE"><enum>(a)</enum><header>Allowance of
Credit</header><text>In the case of a taxpayer who holds a rural renaissance
bond on 1 or more credit allowance dates of the bond occurring during any
taxable year, there shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the sum of the credits
determined under subsection (b) with respect to such dates.</text>
</subsection><subsection id="id3B3DB33A6651481EBC82E0716987B810"><enum>(b)</enum><header>Amount of
Credit</header>
<paragraph id="idBCEBBC2FD41D4DD595368D55CFAFE3FF"><enum>(1)</enum><header>In
general</header><text>The amount of the credit determined under this subsection
with respect to any credit allowance date for a rural renaissance bond is 25
percent of the annual credit determined with respect to such bond.</text>
</paragraph><paragraph id="id8D82A5867F1043B79D9AFCE57C6FDEF4"><enum>(2)</enum><header>Annual
credit</header><text>The annual credit determined with respect to any rural
renaissance bond is the product of—</text>
<subparagraph id="id643A2D3518DE46D48101686F0D6F9F5D"><enum>(A)</enum><text>the credit rate
determined by the Secretary under paragraph (3) for the day on which such bond
was sold, multiplied by</text>
</subparagraph><subparagraph id="id66021369E84D4F50976DF9F8F8FB3057"><enum>(B)</enum><text>the outstanding
face amount of the bond.</text>
</subparagraph></paragraph><paragraph id="id4FFC994F32094861A93F45ACC45B3AFB"><enum>(3)</enum><header>Determination</header><text>For
purposes of paragraph (2), with respect to any rural renaissance bond, the
Secretary shall determine daily or caused to be determined daily a credit rate
which shall apply to the first day on which there is a binding, written
contract for the sale or exchange of the bond. The credit rate for any day is
the credit rate which the Secretary or the Secretary’s designee estimates will
permit the issuance of rural renaissance bonds with a specified maturity or
redemption date without discount and without interest cost to the qualified
issuer.</text>
</paragraph><paragraph id="id0B67AC9652D84624A533CEE518F09101"><enum>(4)</enum><header>Credit
allowance date</header><text>For purposes of this section, the term
<term>credit allowance date</term> means—</text>
<subparagraph id="id29992D3B302546B5B80BBAED4EEE0893"><enum>(A)</enum><text>March 15,</text>
</subparagraph><subparagraph id="id7822AB59E72442DD8D03EAD83BD65AED"><enum>(B)</enum><text>June 15,</text>
</subparagraph><subparagraph id="id1739FC4F50E24F64B078AE46C98203FD"><enum>(C)</enum><text>September 15,
and</text>
</subparagraph><subparagraph id="id51822ECF46C245129FA3239802406B38"><enum>(D)</enum><text>December
15.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Such term
also includes the last day on which the bond is outstanding.</continuation-text></paragraph><paragraph id="id1A623B6D6AB74DA38E784A12D10BEF8F"><enum>(5)</enum><header>Special rule
for issuance and redemption</header><text>In the case of a bond which is issued
during the 3-month period ending on a credit allowance date, the amount of the
credit determined under this subsection with respect to such credit allowance
date shall be a ratable portion of the credit otherwise determined based on the
portion of the 3-month period during which the bond is outstanding. A similar
rule shall apply when the bond is redeemed or matures.</text>
</paragraph></subsection><subsection id="idC580A325A81F4A5EB17BD93073C0D680"><enum>(c)</enum><header>Limitation
Based on Amount of Tax</header><text>The credit allowed under subsection (a)
for any taxable year shall not exceed the excess of—</text>
<paragraph id="id9EB0784A6C4D4278A768A89FCEA2DF63"><enum>(1)</enum><text>the sum of the
regular tax liability (as defined in section 26(b)) plus the tax imposed by
section 55, over</text>
</paragraph><paragraph id="id3CD00105F7B349AAB70CB912648F9083"><enum>(2)</enum><text>the sum of the
credits allowable under this part (other than subpart C, section 1400N(l), and
this section).</text>
</paragraph></subsection><subsection id="id8DDA57BDD95846EA94CEC80D2DC81AE6"><enum>(d)</enum><header>Rural
Renaissance Bond</header><text>For purposes of this section—</text>
<paragraph id="id5E47F9B62E6C4431BB4EF0AF96AF58A6"><enum>(1)</enum><header>In
general</header><text>The term <term>rural renaissance bond</term> means any
bond issued as part of an issue if—</text>
<subparagraph id="idCEE72E2B360A48BA98874E8407FCDEEB"><enum>(A)</enum><text>the bond is
issued by a qualified issuer pursuant to an allocation by the Secretary to such
issuer of a portion of the national rural renaissance bond limitation under
subsection (f)(2),</text>
</subparagraph><subparagraph id="idC5E3C44098EC4EDC8B5E187CB9791266"><enum>(B)</enum><text>95 percent or
more of the proceeds from the sale of such issue are to be used for capital
expenditures incurred by qualified borrowers for 1 or more qualified
projects,</text>
</subparagraph><subparagraph id="id0599C3C2A5CA4790B6403D3F25F2F092"><enum>(C)</enum><text>the qualified
issuer designates such bond for purposes of this section and the bond is in
registered form,</text>
</subparagraph><subparagraph id="idD85E68D63AEB4CCEBAD131B3653E45B7"><enum>(D)</enum><text>the issue meets
the requirements of subsection (h), and</text>
</subparagraph><subparagraph id="id6E01CB9F6BCC42D1825ADDC016A7F2A3"><enum>(E)</enum><text>such bond is not
a federally guaranteed bond (within the meaning of section 149(b)(2)).</text>
</subparagraph></paragraph><paragraph id="idA39C2641AC954C8DA43827DFE5519A77"><enum>(2)</enum><header>Qualified
project; special use rules</header>
<subparagraph id="idA5B4C8F0422F43DD888ED3974553504E"><enum>(A)</enum><header>In
general</header><text>The term <term>qualified project</term> means 1 or more
projects described in subparagraph (B) located in a rural area.</text>
</subparagraph><subparagraph id="idD045E9C30E95453F8B1B25B8C09293EB"><enum>(B)</enum><header>Projects
described</header><text>A project described in this subparagraph is a project
eligible for assistance under—</text>
<clause id="idBF0D049B79C24B8D8FB36A9096FA6BAD"><enum>(i)</enum><text>the utilities
programs described in section 381E(d)(2) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 2009d(d)(2)),</text>
</clause><clause id="idAC930F71AD8448FBA4222B8D5A5C2028"><enum>(ii)</enum><text>the distance
learning or telemedicine programs authorized pursuant to chapter 1 of subtitle
D of title XXIII of the Food, Agriculture, Conservation, and Trade Act of 1990
(7 U.S.C. 950aaa et seq.),</text>
</clause><clause id="id56B74BF8FFC74456ADA6C79EBD995EFC"><enum>(iii)</enum><text>the rural
electric programs authorized pursuant to the Rural Electrification Act of 1936
(7 U.S.C. 901 et seq.),</text>
</clause><clause id="idD2CB464B17A64175B629452A29513F7D"><enum>(iv)</enum><text>the rural
telephone programs authorized pursuant to the Rural Electrification Act of 1936
(7 U.S.C. 901 et seq.),</text>
</clause><clause id="id91E655A107E344089EC99CC5ED69A835"><enum>(v)</enum><text>the broadband
access programs authorized pursuant to title VI of the Rural Electrification
Act of 1936 (7 U.S.C. 950bb et seq.), and</text>
</clause><clause id="id796239B22E2E468C85F5466D28C0BDB5"><enum>(vi)</enum><text>the rural
community facility programs as described in section 381E(d)(1) of the
Consolidated Farm and Rural Development Act (7 U.S.C. 2009d(d)(1)).</text>
</clause></subparagraph><subparagraph id="idE5AA7CAB967B40B68497F3A5E9F4EB17"><enum>(C)</enum><header>Refinancing
rules</header><text>For purposes of paragraph (1)(B), a qualified project may
be refinanced with proceeds of a rural renaissance bond only if the
indebtedness being refinanced (including any obligation directly or indirectly
refinanced by such indebtedness) was originally incurred by a qualified
borrower after the date of the enactment of this section.</text>
</subparagraph><subparagraph id="id0B5F51A1E3274A2895EDAAE14CFAA26D"><enum>(D)</enum><header>Reimbursement</header><text>For
purposes of paragraph (1)(B), a rural renaissance bond may be issued to
reimburse a qualified borrower for amounts paid after the date of the enactment
of this section with respect to a qualified project, but only if—</text>
<clause id="id0209066ED005433DBCF76D6D1A4E4165"><enum>(i)</enum><text>prior to the
payment of the original expenditure, the qualified borrower declared its intent
to reimburse such expenditure with the proceeds of a rural renaissance
bond,</text>
</clause><clause id="id1DA60D0187DB425CA8DDD4136F268977"><enum>(ii)</enum><text>not later than
60 days after payment of the original expenditure, the qualified issuer adopts
an official intent to reimburse the original expenditure with such proceeds,
and</text>
</clause><clause id="idC70B0139BA594471B965641A6C838EC8"><enum>(iii)</enum><text>the
reimbursement is made not later than 18 months after the date the original
expenditure is paid.</text>
</clause></subparagraph><subparagraph id="id8F19C6D2289E49D09A4B653E6C3A19F9"><enum>(E)</enum><header>Treatment of
changes in use</header><text>For purposes of paragraph (1)(B), the proceeds of
an issue shall not be treated as used for a qualified project to the extent
that a qualified borrower or qualified issuer takes any action within its
control which causes such proceeds not to be used for a qualified project. The
Secretary shall prescribe regulations specifying remedial actions that may be
taken (including conditions to taking such remedial actions) to prevent an
action described in the preceding sentence from causing a bond to fail to be a
rural renaissance bond.</text>
</subparagraph><subparagraph id="id044D2C41560B41BA8923F778E0BAE390"><enum>(F)</enum><header>Treatment of
other subsidies</header><text>For purposes of subparagraph (B), a qualified
project does not include any portion of a project financed by grants or
subsidized financing provided (directly or indirectly) under a Federal program,
including any State or local obligation used to provide financing for such
portion the interest on which is exempt from tax under section 103.</text>
</subparagraph></paragraph></subsection><subsection id="id939E70C9C00F463E845034349B1F98B7"><enum>(e)</enum><header>Maturity
Limitations</header>
<paragraph id="idC92762B2F03E4819BF7074B2FBC3177D"><enum>(1)</enum><header>Duration of
term</header><text>A bond shall not be treated as a rural renaissance bond if
the maturity of such bond exceeds the maximum term determined by the Secretary
under paragraph (2) with respect to such bond.</text>
</paragraph><paragraph id="id7E69EC0ECBE341A894E6779B1BDEB8A1"><enum>(2)</enum><header>Maximum
term</header><text>During each calendar month, the Secretary shall determine
the maximum term permitted under this paragraph for bonds issued during the
following calendar month. Such maximum term shall be the term which the
Secretary estimates will result in the present value of the obligation to repay
the principal on the bond being equal to 50 percent of the face amount of such
bond. Such present value shall be determined without regard to the requirements
of paragraph (3) and using as a discount rate the average annual interest rate
of tax-exempt obligations having a term of 10 years or more which are issued
during the month. If the term as so determined is not a multiple of a whole
year, such term shall be rounded to the next highest whole year.</text>
</paragraph><paragraph id="id18C7016C06F94E9F81D673527F63BDEE"><enum>(3)</enum><header>Ratable
principal amortization required</header><text>A bond shall not be treated as a
rural renaissance bond unless it is part of an issue which provides for an
equal amount of principal to be paid by the qualified issuer during each
calendar year that the issue is outstanding.</text>
</paragraph></subsection><subsection id="idCA5A02BC278245498FE6A7F670A7894E"><enum>(f)</enum><header>Limitation on
Amount of Bonds Designated</header>
<paragraph id="id72CC883B3AC6466EAB3B1719750FE289"><enum>(1)</enum><header>National
limitation</header><text>There is a national rural renaissance bond limitation
of $400,000,000.</text>
</paragraph><paragraph id="id2645B2E7E3384F97B804A68070665B70"><enum>(2)</enum><header>Allocation by
Secretary</header>
<subparagraph id="idC6A6DAF870AF42BAA31F14930D22C3DA"><enum>(A)</enum><header>In
general</header><text>In accordance with subparagraph (B), the Secretary shall
allocate the amount described in paragraph (1) among at least 20 qualified
projects, or such lesser number of qualified projects with proper applications
filed after 12 months after the adoption of the selection process under
subparagraph (B).</text>
</subparagraph><subparagraph id="idFD2BC7AAEF0B4149ACBB12F450AB143A"><enum>(B)</enum><header>Selection
process</header><text>In consultation with the Secretary of Agriculture, the
Secretary shall adopt a process to select projects described in subparagraph
(A). Under such process, the Secretary shall not allocate more than 15 percent
of the allocation under subparagraph (A) to qualified projects within a single
State.</text>
</subparagraph></paragraph></subsection><subsection id="id391294BE8DE2468E81214E30EA1DF8A2"><enum>(g)</enum><header>Credit Included
in Gross Income</header><text>Gross income includes the amount of the credit
allowed to the taxpayer under this section (determined without regard to
subsection (c)) and the amount so included shall be treated as interest
income.</text>
</subsection><subsection id="id6B7A1D51D3A847A7A8F1FF7A4852A9B0"><enum>(h)</enum><header>Special Rules
Relating to Expenditures</header>
<paragraph id="id937D1409A440483AB195A05DA78AA791"><enum>(1)</enum><header>In
general</header><text>An issue shall be treated as meeting the requirements of
this subsection if, as of the date of issuance, the qualified issuer reasonably
expects—</text>
<subparagraph id="idFDD0C8F4D7BA4E9D9172EAE741180190"><enum>(A)</enum><text>at least 95
percent of the proceeds from the sale of the issue are to be spent for 1 or
more qualified projects within the 5-year period beginning on the date of
issuance of the rural renaissance bond,</text>
</subparagraph><subparagraph id="id5380CD6BA2304111A7CED74882A6EE7C"><enum>(B)</enum><text>a binding
commitment with a third party to spend at least 10 percent of the proceeds from
the sale of the issue will be incurred within the 6-month period beginning on
the date of issuance of the rural renaissance bond or, in the case of a rural
renaissance bond the proceeds of which are to be loaned to 2 or more qualified
borrowers, such binding commitment will be incurred within the 6-month period
beginning on the date of the loan of such proceeds to a qualified borrower,
and</text>
</subparagraph><subparagraph id="id62ECB53E339D482096666329611690E9"><enum>(C)</enum><text>such projects
will be completed with due diligence and the proceeds from the sale of the
issue will be spent with due diligence.</text>
</subparagraph></paragraph><paragraph id="idC7E159365E834C339390143DABCF8AC2"><enum>(2)</enum><header>Extension of
period</header><text>Upon submission of a request prior to the expiration of
the period described in paragraph (1)(A), the Secretary may extend such period
if the qualified issuer establishes that the failure to satisfy the 5-year
requirement is due to reasonable cause and the related projects will continue
to proceed with due diligence.</text>
</paragraph><paragraph id="id7217970980C440B68A72A2772845F62C"><enum>(3)</enum><header>Failure to
spend required amount of bond proceeds within 5 years</header><text>To the
extent that less than 95 percent of the proceeds of such issue are expended by
the close of the 5-year period beginning on the date of issuance (or if an
extension has been obtained under paragraph (2), by the close of the extended
period), the qualified issuer shall redeem all of the nonqualified bonds within
90 days after the end of such period. For purposes of this paragraph, the
amount of the nonqualified bonds required to be redeemed shall be determined in
the same manner as under section 142.</text>
</paragraph></subsection><subsection id="id2A68A28445EB4857AD711E5326785543"><enum>(i)</enum><header>Special Rules
Relating to Arbitrage</header><text>A bond which is part of an issue shall not
be treated as a rural renaissance bond unless, with respect to the issue of
which the bond is a part, the qualified issuer satisfies the arbitrage
requirements of section 148 with respect to proceeds of the issue.</text>
</subsection><subsection id="idF01D5F0AEC074EF482EC35B5DC238FF1"><enum>(j)</enum><header>Definitions and
special rules relating to issuers and borrowers</header><text>For purposes of
this section—</text>
<paragraph id="id67EF88D5BC5B4429ADFE6C6B83C0EB5B"><enum>(1)</enum><header>Qualified
issuer</header><text>The term <term>qualified issuer</term> means—</text>
<subparagraph id="idEAD249D436934175AC28D5E5CAA00E3C"><enum>(A)</enum><text>a rural
renaissance bond lender,</text>
</subparagraph><subparagraph id="id59E29B8C6DC0462487AD6ED9AE9F9669"><enum>(B)</enum><text>a cooperative
electric company, or</text>
</subparagraph><subparagraph id="idB2BCC746F7514CC48A0DAACF3E287097"><enum>(C)</enum><text>a governmental
body.</text>
</subparagraph></paragraph><paragraph id="id43BA538D419A451AA044128C7934C216"><enum>(2)</enum><header>Qualified
borrower</header><text>The term <term>qualified borrower</term> means—</text>
<subparagraph id="id4F1B8598FCF14495B1ED9DAEB2CAF074"><enum>(A)</enum><text>a mutual or
cooperative electric company described in section 501(c)(12) or 1381(a)(2)(C),
or</text>
</subparagraph><subparagraph id="idEED7E0A0827144F88BA41F50FC3EE3E2"><enum>(B)</enum><text>a governmental
body.</text>
</subparagraph></paragraph><paragraph id="idB0A77B05316F4E2DA29F8BB6527DC795"><enum>(3)</enum><header>Rural
renaissance bond lender</header><text>The term <term>rural renaissance bond
lender</term> means a lender which is a cooperative which is owned by, or has
outstanding loans to, 100 or more cooperative electric companies and is in
existence on February 1, 2002, and shall include any affiliated entity which is
controlled by such lender.</text>
</paragraph><paragraph id="id65D82EF2F0614B0EA97EC40A7A164DB0"><enum>(4)</enum><header>Cooperative
electric company</header><text>The term <term>cooperative electric
company</term> means a mutual or cooperative electric company described in
section 501(c)(12) or section 1381(a)(2)(C), or a not-for-profit electric
utility which has received a loan or loan guarantee under the Rural
Electrification Act.</text>
</paragraph><paragraph id="id0A2BD4D1346D4E76ACCB82276B0E5FBF"><enum>(5)</enum><header>Governmental
body</header><text>The term <term>governmental body</term> means any State,
territory, possession of the United States, the District of Columbia, Indian
tribal government, and any political subdivision thereof.</text>
</paragraph></subsection><subsection id="idC335C055201243D286EFB313F552DBFD"><enum>(k)</enum><header>Special Rules
Relating to Pool Bonds</header><text>No portion of a pooled financing bond may
be allocable to loan unless the borrower has entered into a written loan
commitment for such portion prior to the issue date of such issue.</text>
</subsection><subsection id="id01F6EE5882C241F1AD0A2592CF144D02"><enum>(l)</enum><header>Other
Definitions and Special Rules</header><text>For purposes of this
section—</text>
<paragraph id="idD4DEFAE8EAC44C3488B87A076DE33DA9"><enum>(1)</enum><header>Bond</header><text>The
term <term>bond</term> includes any obligation.</text>
</paragraph><paragraph id="id75263ACA19334D8CBB2D5BB36BE90B2E"><enum>(2)</enum><header>Pooled
financing bond</header><text>The term <term>pooled financing bond</term> shall
have the meaning given such term by section 149(f)(4)(A).</text>
</paragraph><paragraph id="id64CAAAA9D8884C9EA18377B549108023"><enum>(3)</enum><header>Rural
area</header><text display-inline="yes-display-inline">The term <term>rural
area</term> shall have the meaning given such term by section
1393(a)(2).</text>
</paragraph><paragraph id="idDED4FC497C354AD99C381D99DA63607A"><enum>(4)</enum><header>Partnership; s
corporation; and other pass-thru entities</header>
<subparagraph id="id4296CEC41EC94B40B591163CD8ADDAEB"><enum>(A)</enum><header>In
general</header><text>Under regulations prescribed by the Secretary, in the
case of a partnership, trust, S corporation, or other pass-thru entity, rules
similar to the rules of section 41(g) shall apply with respect to the credit
allowable under subsection (a).</text>
</subparagraph><subparagraph id="idE6312EA16F49498CACF618AD23303964"><enum>(B)</enum><header>No basis
adjustment</header><text>In the case of a bond held by a partnership or an S
corporation, rules similar to the rules under section 1397E(i) shall
apply.</text>
</subparagraph></paragraph><paragraph id="id69442CAC80414DB0BBB6E51E5BAD5892"><enum>(5)</enum><header>Bonds held by
regulated investment companies</header><text>If any rural renaissance bond is
held by a regulated investment company, the credit determined under subsection
(a) shall be allowed to shareholders of such company under procedures
prescribed by the Secretary.</text>
</paragraph><paragraph id="id52296D62BA974C3BA09B6BE2D9B68600"><enum>(6)</enum><header>Reporting</header><text>Issuers
of rural renaissance bonds shall submit reports similar to the reports required
under section 149(e).</text>
</paragraph><paragraph id="id9716B7CE5533455E99DA7710220D061D"><enum>(7)</enum><header>Termination</header><text>This
section shall not apply with respect to any bond issued after December 31,
2008.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idF1C0BBDB5B384FF88C02DEAC6B66BCC4"><enum>(b)</enum><header>Reporting</header><text>Subsection
(d) of section 6049 (relating to returns regarding payments of interest) is
amended by adding at the end the following new paragraph:</text>
<quoted-block id="id07C878D4408E405EA1000E0D9184393B" style="OLC">
<paragraph id="id67A5E93C94434F15BAA7312690B50931"><enum>(9)</enum><header>Reporting of
credit on rural renaissance bonds</header>
<subparagraph id="id7C3603E5DE704CB7893146DE8713FD10"><enum>(A)</enum><header>In
general</header><text>For purposes of subsection (a), the term
<term>interest</term> includes amounts includible in gross income under section
54A(g) and such amounts shall be treated as paid on the credit allowance date
(as defined in section 54A(b)(4)).</text>
</subparagraph><subparagraph id="id7E46136BF8C04569A1F93A6C85F80644"><enum>(B)</enum><header>Reporting to
corporations, etc</header><text>Except as otherwise provided in regulations, in
the case of any interest described in subparagraph (A), subsection (b)(4) shall
be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i)
of such subsection.</text>
</subparagraph><subparagraph id="idCA4E79BEF59848CEA97EDA6393913788"><enum>(C)</enum><header>Regulatory
authority</header><text>The Secretary may prescribe such regulations as are
necessary or appropriate to carry out the purposes of this paragraph, including
regulations which require more frequent or more detailed
reporting.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idAE1FC183C02B41CB97F1B922968A6AB8"><enum>(c)</enum><header>Conforming
Amendments</header>
<paragraph id="id6EED4EC8686F48568EBA90CF276D9450"><enum>(1)</enum><text>The table of
sections for subpart H of part IV of subchapter A of chapter 1 is amended by
adding at the end the following new item:</text>
<quoted-block id="id7E9E9C0F003A44348F9E94CB5EC07CF5" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 54A. Credit to holders of rural
renaissance
bonds.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idC0DF84EF47C04D58B1C3638AA49612D2"><enum>(2)</enum><text>Section 54(c)(2)
is amended by inserting <quote>section 54A,</quote> after <quote>subpart
C,</quote>.</text>
</paragraph></subsection><subsection id="id8862DE2FD695432682A0FE7F076F1562"><enum>(d)</enum><header>Issuance of
Regulations</header><text>The Secretary of Treasury shall issue regulations
required under section 54A (as added by this section) not later than 120 days
after the date of the enactment of this Act.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id0AD9273F9A994B308C389A4D5FC0B902"><enum>(e)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to bonds
issued after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idAE65F8DCC1294502A032BD6CA8AFC64E"><enum>405.</enum><header>Agricultural
chemicals security credit</header>
<subsection id="HAC02C4AC1ADE49989C6904DE767FEFB"><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 display-inline="no-display-inline" id="H57AA10D3C021462DB7EAAFB11B267750" style="OLC">
<section id="HFD7ABF113824484584C668F58D993300"><enum>45O.</enum><header>Agricultural
chemicals security credit</header>
<subsection id="HF7247BF241264FAFBFC69E6C385D5BF"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of
section 38, in the case of an eligible agricultural business, the agricultural
chemicals security credit determined under this section for the taxable year is
30 percent of the qualified security expenditures for the taxable year.</text>
</subsection><subsection id="H670CCB9BEC5E4642A226355BCBFD278"><enum>(b)</enum><header>Facility
limitation</header><text>The amount of the credit determined under subsection
(a) with respect to any facility for any taxable year shall not exceed—</text>
<paragraph id="HB14FD53516B54A8EBC004EEC506664D1"><enum>(1)</enum><text>$100,000, reduced
by</text>
</paragraph><paragraph id="H0CC3CC37AF21494E9E385F48A0D1F7C2"><enum>(2)</enum><text>the aggregate
amount of credits determined under subsection (a) with respect to such facility
for the 5 prior taxable years.</text>
</paragraph></subsection><subsection id="HB1D4255C51D443318E3E73F8CBF35F1B"><enum>(c)</enum><header>Annual
limitation</header><text>The amount of the credit determined under subsection
(a) with respect to any taxpayer for any taxable year shall not exceed
$2,000,000.</text>
</subsection><subsection id="H4238F52E55444D79A9F9E19F568CF3EB"><enum>(d)</enum><header>Qualified
chemical security expenditure</header><text>For purposes of this section, the
term <term>qualified chemical security expenditure</term> means, with respect
to any eligible agricultural business for any taxable year, any amount paid or
incurred by such business during such taxable year for—</text>
<paragraph id="H158DE5CB0F3E4EFC9660BBDB1C752C96"><enum>(1)</enum><text>employee security
training and background checks,</text>
</paragraph><paragraph id="H090BD8A8CDAB48379D9C8BAACC69D277"><enum>(2)</enum><text>limitation and
prevention of access to controls of specified agricultural chemicals stored at
the facility,</text>
</paragraph><paragraph id="H7DD4AE7106ED4462BA3024E4040097FA"><enum>(3)</enum><text>tagging, locking
tank valves, and chemical additives to prevent the theft of specified
agricultural chemicals or to render such chemicals unfit for illegal
use,</text>
</paragraph><paragraph id="H09DF52368E3342259600F3325EC323D8"><enum>(4)</enum><text>protection of the
perimeter of specified agricultural chemicals,</text>
</paragraph><paragraph id="H14EFCB581FE84330BB74FDF7B075A5D2"><enum>(5)</enum><text>installation of
security lighting, cameras, recording equipment, and intrusion detection
sensors,</text>
</paragraph><paragraph id="H8C6E968B667E48AE86D94091D77E6800"><enum>(6)</enum><text>implementation of
measures to increase computer or computer network security,</text>
</paragraph><paragraph id="H47923A094D474197A5FD2306D3649F18"><enum>(7)</enum><text>conducting a
security vulnerability assessment,</text>
</paragraph><paragraph id="HAA44569A49254520A37231238305D299"><enum>(8)</enum><text>implementing a
site security plan, and</text>
</paragraph><paragraph id="HBBD61FC127CE457C89DDCA618BAD82BA"><enum>(9)</enum><text>such other
measures for the protection of specified agricultural chemicals as the
Secretary may identify in regulation.</text>
</paragraph><continuation-text continuation-text-level="subsection">Amounts
described in the preceding sentence shall be taken into account only to the
extent that such amounts are paid or incurred for the purpose of protecting
specified agricultural chemicals.</continuation-text></subsection><subsection id="HAFC9A16A4DCC4D38BAE6A4050005B3FD"><enum>(e)</enum><header>Eligible
agricultural business</header><text>For purposes of this section, the term
<term>eligible agricultural business</term> means any person in the trade or
business of—</text>
<paragraph id="HA9EEFB3D4F834600B7CE8319AF1CDB08"><enum>(1)</enum><text>selling
agricultural products, including specified agricultural chemicals, at retail
predominantly to farmers and ranchers, or</text>
</paragraph><paragraph id="HAD3EE5080A37404C9F8F37371B9FD09C"><enum>(2)</enum><text>manufacturing,
formulating, distributing, or aerially applying specified agricultural
chemicals.</text>
</paragraph></subsection><subsection id="H379538D983964511BE09B429E69B3D95"><enum>(f)</enum><header>Specified
agricultural chemical</header><text>For purposes of this section, the term
<term>specified agricultural chemical</term> means—</text>
<paragraph id="HB3D3AA85417242C387C400CF2F4C00AA"><enum>(1)</enum><text>any fertilizer
commonly used in agricultural operations which is listed under—</text>
<subparagraph id="H9D27C5F351F44AB783BA8ED3136C452D"><enum>(A)</enum><text>section 302(a)(2)
of the Emergency Planning and Community Right-to-Know Act of 1986,</text>
</subparagraph><subparagraph id="H846F7AFEB0424EA8BB36C4BBEA28B9CD"><enum>(B)</enum><text>section 101 of
part 172 of title 49, Code of Federal Regulations, or</text>
</subparagraph><subparagraph id="HC58517D2919048219796780217EF6C59"><enum>(C)</enum><text>part 126, 127, or
154 of title 33, Code of Federal Regulations, and</text>
</subparagraph></paragraph><paragraph id="HBEDBC82364154669BBE625F01197F6CC"><enum>(2)</enum><text>any pesticide (as
defined in section 2(u) of the Federal Insecticide, Fungicide, and Rodenticide
Act), including all active and inert ingredients thereof, which is customarily
used on crops grown for food, feed, or fiber.</text>
</paragraph></subsection><subsection id="H154645FDD08D4C7980E8BD33A0D7D4B8"><enum>(g)</enum><header>Controlled
groups</header><text>Rules similar to the rules of paragraphs (1) and (2) of
section 41(f) shall apply for purposes of this section.</text>
</subsection><subsection id="HD1FA96608FF64F38B7A7C5D419DD888"><enum>(h)</enum><header>Regulations</header><text>The
Secretary may prescribe such regulations as may be necessary or appropriate to
carry out the purposes of this section, including regulations which—</text>
<paragraph id="HBB4C33E1CCDD42DE8D7200F178E24D8E"><enum>(1)</enum><text>provide for the
proper treatment of amounts which are paid or incurred for purpose of
protecting any specified agricultural chemical and for other purposes,
and</text>
</paragraph><paragraph id="H44EC10762CF84D949C1EC8E9B5420995"><enum>(2)</enum><text>provide for the
treatment of related properties as one facility for purposes of subsection
(b).</text>
</paragraph></subsection><subsection id="HF1D1E300058F4F9999953201C31D1357"><enum>(i)</enum><header>Termination</header><text>This
section shall not apply to any amount paid or incurred after December 31,
2012.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HCA7D9B73387F4C7B8EC43B53B432EA02"><enum>(b)</enum><header>Credit allowed
as part of general business credit</header><text>Section 38(b) is amended by
striking <quote>plus</quote> at the end of paragraph (30), by striking the
period at the end of paragraph (31) and inserting <quote>, plus</quote>, and by
adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H8B7F022832584F02B3C8C877317B6761" style="OLC">
<paragraph id="H80BC789952674EF1004EE285A56EAA2"><enum>(32)</enum><text>in the case of an
eligible agricultural business (as defined in section 45O(e)), the agricultural
chemicals security credit determined under section
45O(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8C1F2821222442AA95C0C7326C729DA"><enum>(c)</enum><header>Denial of double
benefit</header><text>Section 280C is amended by adding at the end the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HF06DCF4D5E2D48AAA3680840F855A3E8" style="OLC">
<subsection id="H61736604FEE84B488354D82ED7C0D8F5"><enum>(f)</enum><header>Credit for
security of agricultural chemicals</header><text>No deduction shall be allowed
for that portion of the expenses otherwise allowable as a deduction taken into
account in determining the credit under section 45O for the taxable year which
is equal to the amount of the credit determined for such taxable year under
section
45O(a).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB740FD0187AF4EC6BD6D6C9BEAEC74FC"><enum>(d)</enum><header>Clerical
amendment</header><text>The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding at the end the following new
item:</text>
<quoted-block display-inline="no-display-inline" id="H13E181828F85445F82E905189EBB00D5" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 45O. Agricultural chemicals security
credit.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H41AF501B86BD4F20B704A8C579324470"><enum>(e)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to amounts
paid or incurred after the date of the enactment of this Act.</text>
</subsection></section><section id="idFE87EEFF70A34E108F2A98409D680BB1"><enum>406.</enum><header>Credit for
drug safety and effectiveness testing for minor animal species</header>
<subsection id="id274280557C9849DAB436B095B036ECDF"><enum>(a)</enum><header>In
general</header><text>Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits), as amended by this Act, is amended by
adding at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id8BC6D2ED98634406BDD79FEDCAC160FA" style="OLC">
<section id="ID719d1b938f8d4a999b0ea9350d35088f"><enum>45P.</enum><header>Drug safety
and effectiveness testing for minor animal species</header>
<subsection id="ID0126c3df4c9a4148806e1e8d9b0391a0"><enum>(a)</enum><header>Allowance of
credit</header><text>For purposes of section 38, in the case of an eligible
taxpayer, the drug safety and effectiveness testing for minor animal species
credit determined under this section for the taxable year shall be an amount
equal to 50 percent of the qualified safety and effectiveness testing expenses
paid or incurred by the taxpayer during the taxable year.</text>
</subsection><subsection id="id994CD6936B514444B465D3C1C35B8FFE"><enum>(b)</enum><header>Eligible
taxpayer</header><text>For purposes of this section, the term <term>eligible
taxpayer</term> any taxpayer—</text>
<paragraph id="id501F588DF42A48FE850919F498396358"><enum>(1)</enum><text>which—</text>
<subparagraph id="idBF7C9572ACDD44A8909BBB23BA06AF8B"><enum>(A)</enum><text>applies for the
designation of a new animal drug for use on a minor animal species under
section 573 of the Federal Food, Drug, and Cosmetic Act, or</text>
</subparagraph><subparagraph id="idFD1E10CCD80F4AD59A368A0DFD9205CC"><enum>(B)</enum><text>owns animals
which are the subject of safety and effectiveness testing, and</text>
</subparagraph></paragraph><paragraph id="id99DF83D1661A4FE489D04CEBF684F94B"><enum>(2)</enum><text>which elects the
application of this section for the taxable year.</text>
</paragraph></subsection><subsection id="ID8e2c82f881ea4e979e3e823999680bb4"><enum>(c)</enum><header>Qualified
safety and effectiveness testing expenses</header><text>For purposes of this
section—</text>
<paragraph id="ID1d3a6193df1549df989efa0e0f82bbf5"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified safety and effectiveness testing
expenses</term> means the sum of the following amounts which are paid or
incurred by the eligible taxpayer during the taxable year in carrying on any
trade or business of such taxpayer:</text>
<subparagraph id="ID73e33737e78c4089b332d3c74071a374"><enum>(A)</enum><text>In-house safety
and effectiveness testing expenses.</text>
</subparagraph><subparagraph id="IDfc805fbf1bcf4e618454c31f446aa754"><enum>(B)</enum><text>Contract safety
and effectiveness testing expenses.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Such term
does not include any amount to the extent such amount is funded by any grant,
contract, or otherwise by another person (or any governmental entity).</continuation-text></paragraph><paragraph id="IDfb14a75bdcb44dd48d43f31f02ebabe0"><enum>(2)</enum><header>In-house safety
and effectiveness testing expenses</header>
<subparagraph id="IDcfa10a1200c34f5fad6fc3823c65c34f"><enum>(A)</enum><header>In
general</header><text>The term <term>in-house safety and effectiveness testing
expenses</term> means—</text>
<clause id="IDc71e45cfe85145618e1b83514a5a415e"><enum>(i)</enum><text>any wages paid or
incurred to an employee for qualified services performed by such
employee,</text>
</clause><clause id="ID8e0956c3bcc84816912f7df86b255a14"><enum>(ii)</enum><text>any amount paid
or incurred for supplies used in the conduct of safety and effectiveness
testing, and</text>
</clause><clause id="ID129e46ec791d47dc8cd06bcaf0346f3c"><enum>(iii)</enum><text>under
regulations prescribed by the Secretary, any amount paid or incurred to another
person for the right to use computers in the conduct of safety and
effectiveness testing.</text>
</clause><continuation-text continuation-text-level="subparagraph">Clause
(iii) shall not apply to any amount to the extent that the taxpayer (or any
person with whom the taxpayer must aggregate expenditures under rules specified
under subsection (f)(2)) receives or accrues any amount from any other person
for the right to use substantially identical personal property.</continuation-text></subparagraph><subparagraph id="ID8c3c062a9a3a4c08a3906222e0195871"><enum>(B)</enum><header>Qualified
services</header><text>The term <term>qualified services</term> means services
consisting of—</text>
<clause id="ID6501c85bae8747aca911a1da1e00c01e"><enum>(i)</enum><text>engaging in
safety and effectiveness testing, or</text>
</clause><clause id="ID9a4ef3578cfa4fa98262ecc7fd9cf8d6"><enum>(ii)</enum><text>engaging in the
direct supervision or direct support of such testing.</text>
</clause><continuation-text continuation-text-level="subparagraph">If
substantially all of the services performed by an individual for the taxpayer
during the taxable year consists of services meeting the requirements of clause
(i) or (ii), the term <term>qualified services</term> means all of the services
performed by such individual for the taxpayer during the taxable year.</continuation-text></subparagraph><subparagraph id="ID49f8d149f10f49e2a1c7497015e7f418"><enum>(C)</enum><header>Wages and
supplies</header><text>The terms <term>wages</term> and <term>supplies</term>
have the meanings given such terms by section 41(b).</text>
</subparagraph></paragraph><paragraph id="IDbfe5a93f62144d5d84793fa80af02854"><enum>(3)</enum><header>Contract safety
and effectiveness testing expenses</header>
<subparagraph id="id6D0D771D7E3E47BB813BE2B49E53BAA1"><enum>(A)</enum><header>In
general</header><text>The term <term>contract safety and effectiveness testing
expenses</term> means any amount paid or incurred by the taxpayer to any person
(other than an employee of the taxpayer) for safety and effectiveness
testing.</text>
</subparagraph><subparagraph id="ID830a596cde0c4c0a869d77bc335f4c7d"><enum>(B)</enum><header>Prepaid
amounts</header><text>If any contract safety and effectiveness testing expenses
paid or incurred during any taxable year are attributable to safety and
effectiveness testing to be conducted after the close of such taxable year,
such amount shall be treated as paid or incurred during the period during which
the safety and effectiveness testing is conducted.</text>
</subparagraph></paragraph></subsection><subsection id="ID9c4309c0c3e54b00a475c92c431447c5"><enum>(d)</enum><header>Safety and
effectiveness testing</header><text>For purposes of this section—</text>
<paragraph id="idCE3167815F6745D08CE58591120FE4FA"><enum>(1)</enum><header>In
general</header><text>The term <term>safety and effectiveness testing</term>
means any testing which—</text>
<subparagraph id="id505C80A8FEA64AD0BE3F8D0A94490832"><enum>(A)</enum><text>is related to the
use of a new animal drug for use on a minor animal species for which it was
designated under section 573 of the Federal Food, Drug, and Cosmetic
Act,</text>
</subparagraph><subparagraph id="id22F139A20C184B9BB10F9ABD9435D28B"><enum>(B)</enum><text>is carried out
under an exemption for such new animal drug under section 512(j) of such Act
(or regulations issued under such section),</text>
</subparagraph><subparagraph id="id61AD397769644392B79817B0DF0CC593"><enum>(C)</enum><text>occurs—</text>
<clause id="id57871C44F5DE423DB3D6D804877E19D2"><enum>(i)</enum><text>after the date on
which the application for designation of such new animal drug under section 573
of such Act is filed, and</text>
</clause><clause id="id174944CE584A4D1B9112674F82F91329"><enum>(ii)</enum><text>before the date
on which such application is approved under section 512(c) of such Act,
and</text>
</clause></subparagraph><subparagraph id="idB8621C1994184C709D8F45866C3BBA59"><enum>(D)</enum><text>which is
conducted by or on behalf of an eligible taxpayer.</text>
</subparagraph></paragraph><paragraph id="idEF38E4D436DF4DFA977ADCDF70F745E7"><enum>(2)</enum><header>Minor animal
species</header>
<subparagraph id="id85B059B5CF88453F844F318FD00C3BA7"><enum>(A)</enum><header>In
general</header><text>The term <term>minor animal species</term> means animals,
other than humans, which are not major animal species.</text>
</subparagraph><subparagraph id="id49C01662811A4D08B4D3E7DF65256E71"><enum>(B)</enum><header>Major animal
species</header><text>The term <term>major animal species</term> means cattle,
horses, swine, chickens, turkeys, dogs, cats, and any other species as
determined by the Secretary, after consultation with the Secretary of
Agriculture.</text>
</subparagraph></paragraph></subsection><subsection id="ID0931027ab9bc4371a67e23fa7878cdd4"><enum>(e)</enum><header>Treatment of
qualified safety and effectiveness testing expenses</header>
<paragraph id="id0F398E5C579A4C1BA9F6C5B1732806C0"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), any qualified safety
and effectiveness testing expenses for a taxable year to which an election
under this section applies shall not be taken into account for purposes of
determining the credit allowable under section 41 for such taxable year.</text>
</paragraph><paragraph id="id5457B6C4955B4783B33B09625F96577D"><enum>(2)</enum><header>Treated as base
period research expenses</header><text>Any qualified safe and effectiveness
testing expenses for any taxable year which are qualified research expenses
(within the meaning of section 41(b)) shall be taken into account in
determining base period research expenses for purposes of applying section 41
to subsequent taxable years.</text>
</paragraph></subsection><subsection id="id3BEF191A687C4E79964670A57F12944B"><enum>(f)</enum><header>Special
rules</header>
<paragraph id="idA6A996245EB74C4C9956A4C88EFDFE67"><enum>(1)</enum><header>Limitation</header><text>No
credit shall be allowed under this section with respect to any safety and
effectiveness testing conducted by a corporation to which an election under
section 936 applies.</text>
</paragraph><paragraph id="id8C4AB01AA668401F9059EDD4E60C5448"><enum>(2)</enum><header>Aggregation of
expenditures and allocations of credit</header><text>Rules similar to the rules
of paragraphs (1) and (2) of section 41(f) and section 41(g) shall apply for
purposes of this
section.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idA323398CDA5A43018644404A01C29FA5"><enum>(b)</enum><header>Credit allowed
as part of general business credit</header><text>Section 38(b), as amended by
this Act, is amended by striking <quote>plus</quote> at the end of paragraph
(31), by striking the period at the end of paragraph (32) and inserting
<quote>, plus</quote>, and by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idB20646D77DC34C04A7D7AB4F7D0F44BE" style="OLC">
<paragraph id="idD3B845F19366478AA3977887B97EB19D"><enum>(33)</enum><text>the drug safety
and effectiveness testing for minor animal species credit determined under
section
45P(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idD4ECBB5A3F8B489ABB43FB6538AAE6C3"><enum>(c)</enum><header>Denial of
double benefit</header><text>Section 280C, as amended by this Act, is amended
by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id31CEE631237B4786840F3C9BEBFE7C01" style="OLC">
<subsection id="id4A5EDF1825754027B6687ACF7D730E4F"><enum>(g)</enum><header>Drug safety and
effectiveness testing for minor animal species credit</header>
<paragraph id="ID0a9dda9d1a8b4f5a8aa20a28f5107e03"><enum>(1)</enum><header>In
general</header><text>No deduction shall be allowed for that portion of the
qualified safety and effectiveness testing expenses (as defined in section
45P(c)(1)) otherwise allowable as a deduction for the taxable year which is
equal to the amount of the credit determined for such taxable year under
section 45P(a).</text>
</paragraph><paragraph id="IDad93f5f579f54bf7ae16abf39394d863"><enum>(2)</enum><header>Similar rule
where taxpayer capitalizes rather than deducts
expenses</header><text>If—</text>
<subparagraph id="ID5ebe7a9753a74a7d8ebdd1c341da7b60"><enum>(A)</enum><text>the amount of the
credit determined for the taxable year under section 45P(a), exceeds</text>
</subparagraph><subparagraph id="IDc8744330994043df9d392a534f3699d9"><enum>(B)</enum><text>the amount
allowable as a deduction for such taxable year for qualified safety and
effectiveness testing expenses (determined without regard to paragraph
(1)),</text>
</subparagraph><continuation-text continuation-text-level="paragraph">the amount
chargeable to capital account for the taxable year for such expenses shall be
reduced by the amount of such excess.</continuation-text></paragraph><paragraph id="ID98a8db84b16a410db4a25eae512e0228"><enum>(3)</enum><header>Controlled
groups</header><text>Paragraph (3) of subsection (b) shall apply for purposes
of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id7CB8D6C7B0744708BB0F9A45C29B9D33"><enum>(d)</enum><header>Clerical
amendment</header><text>The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended by adding at the
end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="id5F071610B7F740E9B7838ACAD7E0C233" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 45P. Drug safety and effectiveness
testing for minor animal
species.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idDE44CB7A478F4792B1CCD82F64F0BCFC"><enum>(e)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to amounts
paid or incurred after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H8C45A3FC644B4723BBBEFAA344B2C231" section-type="subsequent-section"><enum>407.</enum><header>Certain farming
business machinery and equipment treated as 5-year property</header>
<subsection id="HABDA46BF3330434B949608786BB06DEA"><enum>(a)</enum><header>In
general</header><text>Section 168(e)(3)(B) (defining 5-year property) is
amended by striking <quote>and</quote> at the end of clause (v), by striking
the period at the end of clause (vi)(III) and inserting <quote>, and</quote>,
and by inserting after clause (vi) the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="H68A9734213A04B63944B9960F7A0CDB4" style="OLC">
<clause id="H3A9FBA423E9B42BB00A729765E5E5815"><enum>(vii)</enum><text>any machinery or
equipment (other than any grain bin, cotton ginning asset, fence, or other land
improvement) which is used in a farming business (as defined in section
263A(e)(4)), the original use of which commences with the taxpayer after the
date of the enactment of this clause, and which is placed in service before
January 1,
2010.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H46E8A46153B94B88A4F9411C4734ED51"><enum>(b)</enum><header>Alternative
system</header><text>The table contained in section 168(g)(3)(B) (relating to
special rule for certain property assigned to classes) is amended by inserting
after the item relating to subparagraph (B)(iii) the following:</text>
<quoted-block display-inline="no-display-inline" id="H5A611A47D7F54795BE2555F719A2B4DE" style="OLC">
<table align-to-level="section" blank-lines-before="1" colsep="0" frame="none" line-rules="no-gen" rowsep="0" rule-weights="0.0.0.0.0.0" table-template-name="Flush/hang, 1 text, 1 num, bold hds" table-type="Leaderwork">
<tgroup cols="2" rowsep="0"><colspec coldef="txt" colname="column1" colwidth="260.25pt" min-data-value="55"></colspec><colspec coldef="fig" colname="column2" colwidth="73.50pt" min-data-value="5"></colspec>
<tbody>
<row><entry align="left" colname="column1" rowsep="0" stub-definition="txt-ldr">(B)(vii)</entry><entry align="right" colname="column2" leader-modify="clr-ldr" rowsep="0">10</entry>
</row>
</tbody>
</tgroup></table>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H3108917B5D374D249891FCDDA893EB4"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service after the date of the enactment of this Act.</text>
</subsection></section><section id="ID5F70278E33694E83A7E1719E03EC226D"><enum>408.</enum><header>Expensing of
broadband Internet access expenditures</header>
<subsection id="IDA6E68CA6F8654403B840D7530E3EF6E1"><enum>(a)</enum><header>In
General</header><text>Part VI of subchapter B of chapter 1 (relating to
itemized deductions for individuals and corporations) is amended by inserting
after section 190 the following new section:</text>
<quoted-block id="IDB0F9987E4B1545F4902C633E8CF093FE" style="OLC">
<section id="ID58CA177FCD0F47B2866A1A0ABDB8A464"><enum>191.</enum><header>Broadband
expenditures</header>
<subsection id="IDA64815C68D9F4CC8A81C6D7FA3F32E05"><enum>(a)</enum><header>Treatment of
Expenditures</header>
<paragraph id="IDBC1E9BD1C93D40468E130FE5C0856C4D"><enum>(1)</enum><header>In
general</header><text>A taxpayer may elect to treat any qualified broadband
expenditure which is paid or incurred by the taxpayer as an expense which is
not chargeable to a capital account. Any expenditure which is so treated shall
be allowed as a deduction.</text>
</paragraph><paragraph id="IDA2E8DBE7421646A2AE7ECF7F1DF505CB"><enum>(2)</enum><header>Election</header><text>An
election under paragraph (1) shall be made at such time and in such manner as
the Secretary may prescribe by regulation.</text>
</paragraph></subsection><subsection id="IDE04E7323F9804A4BB7E459F13D571FBD"><enum>(b)</enum><header>Qualified
Broadband Expenditures</header><text>For purposes of this section—</text>
<paragraph id="IDB4CFF4F4B3124A68BB9CEDC322A0EE57"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified broadband expenditure</term>
means, with respect to any taxable year, any direct or indirect costs incurred
after the date of the enactment of this section, and on or before the first
December 31 which is 3 years after such date, and properly taken into account
with respect to—</text>
<subparagraph id="ID6E9820665B144A74897170178D8DC289"><enum>(A)</enum><text>the purchase or
installation of qualified equipment (including any upgrades thereto),
and</text>
</subparagraph><subparagraph id="ID71EE31D6FBCC4A3D9BB8EF298A73FD3F"><enum>(B)</enum><text>the connection of
such qualified equipment to any qualified subscriber.</text>
</subparagraph></paragraph><paragraph id="ID46D75343C720462293C89E6889BBFDC1"><enum>(2)</enum><header>Certain
satellite expenditures excluded</header><text>Such term shall not include any
costs incurred with respect to the launching of any satellite equipment.</text>
</paragraph><paragraph id="IDE7AA7FCC15E84369B810DEC3FA6EFD81"><enum>(3)</enum><header>Leased
equipment</header><text>Such term shall include so much of the purchase price
paid by the lessor of qualified equipment subject to a lease described in
subsection (c)(2)(B) as is attributable to expenditures incurred by the lessee
which would otherwise be described in paragraph (1).</text>
</paragraph><paragraph id="id67F50844B4384C8EB670ADD86C16D57E"><enum>(4)</enum><header>Limitation with
regard to current generation broadband services</header><text>Only 50 percent
of the amounts taken into account under paragraph (1) with respect to qualified
equipment through which current generation broadband services are provided
shall be treated as qualified broadband expenditures.</text>
</paragraph></subsection><subsection id="ID32189437B92E4AB5A9DE67C661BD6095"><enum>(c)</enum><header>When
Expenditures Taken Into Account</header><text>For purposes of this
section—</text>
<paragraph id="ID3904FC824BBC4E5099189118961EC729"><enum>(1)</enum><header>In
general</header><text>Qualified broadband expenditures with respect to
qualified equipment shall be taken into account with respect to the first
taxable year in which—</text>
<subparagraph id="ID876AC643CA1242F68C7019F05061C119"><enum>(A)</enum><text>current
generation broadband services are provided through such equipment to qualified
subscribers, or</text>
</subparagraph><subparagraph id="ID34D8FF2B3C3F4438A0BCCA75B2F44A93"><enum>(B)</enum><text>next generation
broadband services are provided through such equipment to qualified
subscribers.</text>
</subparagraph></paragraph><paragraph id="ID4A799BC9B52E4ED1B54E7B7A9C3A3B38"><enum>(2)</enum><header>Limitation</header>
<subparagraph id="IDC49898EC40DE4F3E99DE4203E81EE4D3"><enum>(A)</enum><header>In
general</header><text>Qualified expenditures shall be taken into account under
paragraph (1) only with respect to qualified equipment—</text>
<clause id="ID9CABCC4F0FFC494B9FEA062F1BB47CDA"><enum>(i)</enum><text>the original use
of which commences with the taxpayer, and</text>
</clause><clause id="IDF1F7D37EC36F470BBE06D92615B91AA6"><enum>(ii)</enum><text>which is placed
in service after the date of the enactment of this Act.</text>
</clause></subparagraph><subparagraph id="IDF11374452FE849CE8BD07222F72C76A9"><enum>(B)</enum><header>Sale-leasebacks</header><text>For
purposes of subparagraph (A), if property—</text>
<clause id="ID815BC744A86141EEB73CA537F3A39B3E"><enum>(i)</enum><text>is originally
placed in service after the date of the enactment of this Act by any person,
and</text>
</clause><clause id="ID720D174FF7914581ACFD901FF8EBE737"><enum>(ii)</enum><text>sold and leased
back by such person within 3 months after the date such property was originally
placed in service,</text>
</clause><continuation-text continuation-text-level="subparagraph">such
property shall be treated as originally placed in service not earlier than the
date on which such property is used under the leaseback referred to in clause
(ii).</continuation-text></subparagraph></paragraph></subsection><subsection id="IDA2490AFE7AD148299D65EB24C85B396B"><enum>(d)</enum><header>Special
Allocation Rules</header>
<paragraph id="IDAC81538932A049899CD61BD8B436E3F0"><enum>(1)</enum><header>Current
generation broadband services</header><text>For purposes of determining the
amount of qualified broadband expenditures under subsection (a)(1) with respect
to qualified equipment through which current generation broadband services are
provided, if the qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified broadband expenditures shall
be multiplied by a fraction—</text>
<subparagraph id="IDA12C41D1A73943388735E3C4B309F4EA"><enum>(A)</enum><text>the numerator of
which is the sum of the number of potential qualified subscribers within the
rural areas and the underserved areas which the equipment is capable of serving
with current generation broadband services, and</text>
</subparagraph><subparagraph id="ID9CD762EA562442909145EEA61F93B7A9"><enum>(B)</enum><text>the denominator
of which is the total potential subscriber population of the area which the
equipment is capable of serving with current generation broadband
services.</text>
</subparagraph></paragraph><paragraph id="IDEE3E1FE6EEB341FCBB834C15ED7B2445"><enum>(2)</enum><header>Next generation
broadband services</header><text>For purposes of determining the amount of
qualified broadband expenditures under subsection (a)(1) with respect to
qualified equipment through which next generation broadband services are
provided, if the qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified broadband expenditures shall
be multiplied by a fraction—</text>
<subparagraph id="IDC140EC705356400F811235A4FB08D44F"><enum>(A)</enum><text>the numerator of
which is the sum of—</text>
<clause id="IDD5EEE7C35EBB4D9B8B075E7A243D4607"><enum>(i)</enum><text>the number of
potential qualified subscribers within the rural areas and underserved areas,
plus</text>
</clause><clause id="ID519CA228AF474C80A2EB7B77CC108085"><enum>(ii)</enum><text>the number of
potential qualified subscribers within the area consisting only of residential
subscribers not described in clause (i),</text>
</clause><continuation-text continuation-text-level="subparagraph">which
the equipment is capable of serving with next generation broadband services,
and</continuation-text></subparagraph><subparagraph id="IDA2EA292AAE754CF6BB7005784FDDC6E6"><enum>(B)</enum><text>the denominator
of which is the total potential subscriber population of the area which the
equipment is capable of serving with next generation broadband services.</text>
</subparagraph></paragraph></subsection><subsection id="IDF5D0CE17749D45478A1D4E59ECF49357"><enum>(e)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="ID93E8F37BF89A48AC8DD3402CC6582D12"><enum>(1)</enum><header>Antenna</header><text>The
term <term>antenna</term> means any device used to transmit or receive signals
through the electromagnetic spectrum, including satellite equipment.</text>
</paragraph><paragraph id="ID2BC3C33DC29F4C7EA8D109DC847CAB4B"><enum>(2)</enum><header>Cable
operator</header><text>The term <term>cable operator</term> has the meaning
given such term by section 602(5) of the <act-name parsable-cite="CA34">Communications Act of 1934</act-name> (47 U.S.C.
522(5)).</text>
</paragraph><paragraph id="ID7C012C186AF8477FA2E453476EA019DB"><enum>(3)</enum><header>Commercial
mobile service carrier</header><text>The term <term>commercial mobile service
carrier</term> means any person authorized to provide commercial mobile radio
service as defined in section 20.3 of title 47, Code of Federal
Regulations.</text>
</paragraph><paragraph id="IDAD4E1D96EDA84A84A20C3D279AC9085E"><enum>(4)</enum><header>Current
generation broadband service</header><text>The term <term>current generation
broadband service</term> means the transmission of signals at a rate of at
least 5,000,000 bits per second to the subscriber and at least 1,000,000 bits
per second from the subscriber.</text>
</paragraph><paragraph id="ID1C0CF4A935C64DAC860E06F2AC680930"><enum>(5)</enum><header>Multiplexing or
demultiplexing</header><text>The term <term>multiplexing</term> means the
transmission of 2 or more signals over a single channel, and the term
<term>demultiplexing</term> means the separation of 2 or more signals
previously combined by compatible multiplexing equipment.</text>
</paragraph><paragraph id="ID639655A255644D5084530BDF3248430C"><enum>(6)</enum><header>Next generation
broadband service</header><text>The term <term>next generation broadband
service</term> means the transmission of signals at a rate of at least
100,000,000 bits per second to the subscriber and at least 20,000,000 bits per
second from the subscriber.</text>
</paragraph><paragraph id="IDEE812A8E326F46C186ABB657CE0D7A0B"><enum>(7)</enum><header>Nonresidential
subscriber</header><text>The term <term>nonresidential subscriber</term> means
any person who purchases broadband services which are delivered to the
permanent place of business of such person.</text>
</paragraph><paragraph id="ID110AD866FFC4407A9642EE7720E9BF05"><enum>(8)</enum><header>Open video
system operator</header><text>The term <term>open video system operator</term>
means any person authorized to provide service under section 653 of the
<act-name parsable-cite="CA34">Communications Act of 1934</act-name> (47 U.S.C.
573).</text>
</paragraph><paragraph id="ID5048033941AA441289C50DC573446F14"><enum>(9)</enum><header>Other wireless
carrier</header><text>The term <term>other wireless carrier</term> means any
person (other than a telecommunications carrier, commercial mobile service
carrier, cable operator, open video system operator, or satellite carrier)
providing current generation broadband services or next generation broadband
service to subscribers through the radio transmission of energy.</text>
</paragraph><paragraph id="ID74C09AFD147C432FAE288F9D8A38290B"><enum>(10)</enum><header>Packet
switching</header><text>The term <term>packet switching</term> means
controlling or routing the path of any digitized transmission signal which is
assembled into packets or cells.</text>
</paragraph><paragraph id="ID05524B9A745546959A82AE18C357DC3A"><enum>(11)</enum><header>Provider</header><text>The
term <term>provider</term> means, with respect to any qualified
equipment—</text>
<subparagraph id="ID5027F52802FE422883C50B8E9E04C357"><enum>(A)</enum><text>a cable
operator,</text>
</subparagraph><subparagraph id="ID3A918AE912BD4F42956BAABD9F4E7225"><enum>(B)</enum><text>a commercial
mobile service carrier,</text>
</subparagraph><subparagraph id="ID4B02B718C10B4AB78E48E541CB44300D"><enum>(C)</enum><text>an open video
system operator,</text>
</subparagraph><subparagraph id="ID29013093C222469D97D1BFE20DD5A9C4"><enum>(D)</enum><text>a satellite
carrier,</text>
</subparagraph><subparagraph id="IDB6B638268EE74D38866C7111C3424F41"><enum>(E)</enum><text>a
telecommunications carrier, or</text>
</subparagraph><subparagraph id="ID87024E2E02784A4F8E8EDE126D2D5446"><enum>(F)</enum><text>any other
wireless carrier,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">providing
current generation broadband services or next generation broadband services to
subscribers through such qualified equipment.</continuation-text></paragraph><paragraph id="ID98793F18EC0548858F7400BD68B3CD8C"><enum>(12)</enum><header>Provision of
services</header><text>A provider shall be treated as providing services to 1
or more subscribers if—</text>
<subparagraph id="ID601829C52CE6405A9E6C6C76C50AEC10"><enum>(A)</enum><text>such a subscriber
has been passed by the provider’s equipment and can be connected to such
equipment for a standard connection fee,</text>
</subparagraph><subparagraph id="ID0DC656A0D3F94D1A9B320C5861379799"><enum>(B)</enum><text>the provider is
physically able to deliver current generation broadband services or next
generation broadband services, as applicable, to such a subscriber without
making more than an insignificant investment with respect to such
subscriber,</text>
</subparagraph><subparagraph id="ID9591454530AF469090F48A1EF2AF0BFF"><enum>(C)</enum><text>the provider has
made reasonable efforts to make such subscribers aware of the availability of
such services,</text>
</subparagraph><subparagraph id="ID711C22F46C0942DE80474BB932C9299F"><enum>(D)</enum><text>such services
have been purchased by 1 or more such subscribers, and</text>
</subparagraph><subparagraph id="ID23BC52AE2A214003B52A21F8B60DCF5C"><enum>(E)</enum><text>such services are
made available to such subscribers at average prices comparable to those at
which the provider makes available similar services in any areas in which the
provider makes available such services.</text>
</subparagraph></paragraph><paragraph id="IDFF76B009171344B9969D3AB722113F5D"><enum>(13)</enum><header>Qualified
equipment</header>
<subparagraph id="IDCA0F54C4CC1846B1BEA3E5ECD5BA568D"><enum>(A)</enum><header>In
general</header><text>The term <term>qualified equipment</term> means equipment
which provides current generation broadband services or next generation
broadband services—</text>
<clause id="IDE04258CA05924EBA9F522B6F0ABC434B"><enum>(i)</enum><text>at least a
majority of the time during periods of maximum demand to each subscriber who is
utilizing such services, and</text>
</clause><clause id="ID12FA7883AFB442E5886D87B0436746F9"><enum>(ii)</enum><text>in a manner
substantially the same as such services are provided by the provider to
subscribers through equipment with respect to which no deduction is allowed
under subsection (a)(1).</text>
</clause></subparagraph><subparagraph id="IDC2EED13B7EED465C837A2BB084472584"><enum>(B)</enum><header>Only certain
investment taken into account</header><text>Except as provided in subparagraph
(C) or (D), equipment shall be taken into account under subparagraph (A) only
to the extent it—</text>
<clause id="ID1F2DEEAC69834E088A87939DDCDE5084"><enum>(i)</enum><text>extends from the
last point of switching to the outside of the unit, building, dwelling, or
office owned or leased by a subscriber in the case of a telecommunications
carrier or broadband-over-powerline operator,</text>
</clause><clause id="ID33BEDE5C9A894646A768EEFA3F5320D2"><enum>(ii)</enum><text>extends from the
customer side of the mobile telephone switching office to a
transmission/receive antenna (including such antenna) owned or leased by a
subscriber in the case of a commercial mobile service carrier,</text>
</clause><clause id="IDD3BB9BDF689D4776B4D120BFAE9458EC"><enum>(iii)</enum><text>extends from
the customer side of the headend to the outside of the unit, building,
dwelling, or office owned or leased by a subscriber in the case of a cable
operator or open video system operator, or</text>
</clause><clause id="IDE1A2A278D3E746C3AFDB9FF1CAE820FE"><enum>(iv)</enum><text>extends from a
transmission/receive antenna (including such antenna) which transmits and
receives signals to or from multiple subscribers, to a transmission/receive
antenna (including such antenna) on the outside of the unit, building,
dwelling, or office owned or leased by a subscriber in the case of a satellite
carrier or other wireless carrier, unless such other wireless carrier is also a
telecommunications carrier.</text>
</clause></subparagraph><subparagraph id="ID8875A3C42AA94B88B6A93069830F9CFD"><enum>(C)</enum><header>Packet
switching equipment</header><text>Packet switching equipment, regardless of
location, shall be taken into account under subparagraph (A) only if it is
deployed in connection with equipment described in subparagraph (B) and is
uniquely designed to perform the function of packet switching for current
generation broadband services or next generation broadband services, but only
if such packet switching is the last in a series of such functions performed in
the transmission of a signal to a subscriber or the first in a series of such
functions performed in the transmission of a signal from a subscriber.</text>
</subparagraph><subparagraph id="ID17C3D2ACFE954FA7AC11691BF85C85F2"><enum>(D)</enum><header>Multiplexing
and demultiplexing equipment</header><text>Multiplexing and demultiplexing
equipment shall be taken into account under subparagraph (A) only to the extent
it is deployed in connection with equipment described in subparagraph (B) and
is uniquely designed to perform the function of multiplexing and demultiplexing
packets or cells of data and making associated application adaptions, but only
if such multiplexing or demultiplexing equipment is located between packet
switching equipment described in subparagraph (C) and the subscriber’s
premises.</text>
</subparagraph></paragraph><paragraph id="ID0C4B17BE413F4919A9FF2A575C0DCAB2"><enum>(14)</enum><header>Qualified
subscriber</header><text>The term <term>qualified subscriber</term>
means—</text>
<subparagraph id="IDAB030F4EAF6E44EA8E3BA88D55C13DD7"><enum>(A)</enum><text>with respect to
the provision of current generation broadband services—</text>
<clause id="ID0B67DDCF75AD45A88CEBD58ECE511655"><enum>(i)</enum><text>any
nonresidential subscriber maintaining a permanent place of business in a rural
area or underserved area, or</text>
</clause><clause id="ID95E1E44D29F44012990E3CC8104E62DD"><enum>(ii)</enum><text>any residential
subscriber residing in a dwelling located in a rural area or underserved area
which is not a saturated market, and</text>
</clause></subparagraph><subparagraph id="ID885480DEE01D4B36A6F502C744E2FEF8"><enum>(B)</enum><text>with respect to
the provision of next generation broadband services—</text>
<clause id="IDEFCE5E839FFE480894F15D0EDC87B394"><enum>(i)</enum><text>any
nonresidential subscriber maintaining a permanent place of business in a rural
area or underserved area, or</text>
</clause><clause id="IDA3B41939891A405C9A80D96904605D94"><enum>(ii)</enum><text>any residential
subscriber.</text>
</clause></subparagraph></paragraph><paragraph id="IDA88589DF74DF4F328B7011AE18754487"><enum>(15)</enum><header>Residential
subscriber</header><text>The term <term>residential subscriber</term> means any
individual who purchases broadband services which are delivered to such
individual’s dwelling.</text>
</paragraph><paragraph id="ID4584BC74F2F1469096EA124B3EA3EF85"><enum>(16)</enum><header>Rural
area</header><text>The term <term>rural area</term> means any census tract
which—</text>
<subparagraph id="ID4D929F2828AD4A0CA82DDEDA2F8004CF"><enum>(A)</enum><text>is not within 10
miles of any incorporated or census designated place containing more than
25,000 people, and</text>
</subparagraph><subparagraph id="IDFC727C1E7694484EA18594E0EB83C081"><enum>(B)</enum><text>is not within a
county or county equivalent which has an overall population density of more
than 500 people per square mile of land.</text>
</subparagraph></paragraph><paragraph id="ID8D97AEC92DCB4546BA91563769DF1EE2"><enum>(17)</enum><header>Rural
subscriber</header><text>The term <term>rural subscriber</term> means any
residential subscriber residing in a dwelling located in a rural area or
nonresidential subscriber maintaining a permanent place of business located in
a rural area.</text>
</paragraph><paragraph id="ID38F3DCB7CB6C439682CE440E8013CCDE"><enum>(18)</enum><header>Satellite
carrier</header><text>The term <term>satellite carrier</term> means any person
using the facilities of a satellite or satellite service licensed by the
Federal Communications Commission and operating in the Fixed-Satellite Service
under part 25 of title 47 of the Code of Federal Regulations or the Direct
Broadcast Satellite Service under part 100 of title 47 of such Code to
establish and operate a channel of communications for distribution of signals,
and owning or leasing a capacity or service on a satellite in order to provide
such point-to-multipoint distribution.</text>
</paragraph><paragraph id="IDBCE5D85284D7461294C07969E0528BC9"><enum>(19)</enum><header>Saturated
market</header><text>The term <term>saturated market</term> means any census
tract in which, as of the date of the enactment of this section—</text>
<subparagraph id="ID96842486238340C785D5BAD1C2CC9686"><enum>(A)</enum><text>current
generation broadband services have been provided by a single provider to 85
percent or more of the total number of potential residential subscribers
residing in dwellings located within such census tract, and</text>
</subparagraph><subparagraph id="ID44C6644F74134B6FB030BB3D041E19D0"><enum>(B)</enum><text>such services can
be utilized—</text>
<clause id="ID135E1E7E0A1C4E7A9B095852274EAE54"><enum>(i)</enum><text>at least a
majority of the time during periods of maximum demand by each such subscriber
who is utilizing such services, and</text>
</clause><clause id="IDACEB595FE33043AABFA466FBACD79401"><enum>(ii)</enum><text>in a manner
substantially the same as such services are provided by the provider to
subscribers through equipment with respect to which no deduction is allowed
under subsection (a)(1).</text>
</clause></subparagraph></paragraph><paragraph id="IDD32C984A04444C189E4E15F775B39516"><enum>(20)</enum><header>Subscriber</header><text>The
term <term>subscriber</term> means any person who purchases current generation
broadband services or next generation broadband services.</text>
</paragraph><paragraph id="ID5BF54B4EE0F747A7A11001F83CF8DC6D"><enum>(21)</enum><header>Telecommunications
carrier</header><text>The term <term>telecommunications carrier</term> has the
meaning given such term by section 3(44) of the <act-name parsable-cite="CA34">Communications Act of 1934</act-name> (47 U.S.C. 153(44)),
but—</text>
<subparagraph id="IDA77F133BCE98470D96FF7A2480CA8488"><enum>(A)</enum><text>includes all
members of an affiliated group of which a telecommunications carrier is a
member, and</text>
</subparagraph><subparagraph id="IDA6FC27F98BD64614995DC8CFF58720C1"><enum>(B)</enum><text>does not include
a commercial mobile service carrier.</text>
</subparagraph></paragraph><paragraph id="ID59B9F1CC2C2A46E5ADA7A91B057488F4"><enum>(22)</enum><header>Total
potential subscriber population</header><text>The term <term>total potential
subscriber population</term> means, with respect to any area and based on the
most recent census data, the total number of potential residential subscribers
residing in dwellings located in such area and potential nonresidential
subscribers maintaining permanent places of business located in such
area.</text>
</paragraph><paragraph id="IDFDFC04D5CD694A7E8F3473FD4087E32B"><enum>(23)</enum><header>Underserved
area</header><text>The term <term>underserved area</term> means—</text>
<subparagraph id="ID84C43816ACCE46BCAE4C125469CA841C"><enum>(A)</enum><text>any census tract
which is located in—</text>
<clause id="ID143D5C5EA07E492AA6134C88D3A28D84"><enum>(i)</enum><text>an empowerment
zone or enterprise community designated under section 1391, or</text>
</clause><clause id="IDA4D22513145D46D89B483948081A2A45"><enum>(ii)</enum><text>the District of
Columbia Enterprise Zone established under section 1400, or</text>
</clause></subparagraph><subparagraph id="IDE1F7FF540B2443C18A0184E04F6CE730"><enum>(B)</enum><text>any census
tract—</text>
<clause id="ID38D64A13B85B4466944F3CDE3576CDEC"><enum>(i)</enum><text>the poverty level
of which is at least 30 percent (based on the most recent census data),
and</text>
</clause><clause id="ID01B329EB2D754FB8849FA24FE8BA04AC"><enum>(ii)</enum><text>the median
family income of which does not exceed—</text>
<subclause id="ID859B8F9A41274BB0AD912109A1B34A32"><enum>(I)</enum><text>in the case of a
census tract located in a metropolitan statistical area, 70 percent of the
greater of the metropolitan area median family income or the statewide median
family income, and</text>
</subclause><subclause id="ID144A08740A064C7B931A7C2B0B27634A"><enum>(II)</enum><text>in the case of a
census tract located in a nonmetropolitan statistical area, 70 percent of the
nonmetropolitan statewide median family income.</text>
</subclause></clause></subparagraph></paragraph><paragraph id="ID39C5F6C1A5764E85861513D90F94659B"><enum>(24)</enum><header>Underserved
subscriber</header><text>The term <term>underserved subscriber</term> means any
residential subscriber residing in a dwelling located in an underserved area or
nonresidential subscriber maintaining a permanent place of business located in
an underserved area.</text>
</paragraph></subsection><subsection id="IDA6832FC6B1E944CB95DD6438A621E6C8"><enum>(f)</enum><header>Special
Rules</header>
<paragraph id="ID2BFC95CC965E468198A31304AFE9AC55"><enum>(1)</enum><header>Property used
outside the united states, etc., not qualified</header><text>No expenditures
shall be taken into account under subsection (a)(1) with respect to the portion
of the cost of any property referred to in section 50(b) or with respect to the
portion of the cost of any property specified in an election under section
179.</text>
</paragraph><paragraph id="ID1D00573F3C374669B66ED4B0A08B4EB8"><enum>(2)</enum><header>Basis
reduction</header>
<subparagraph id="ID911256F3F4754748A09E0CF50FDAC312"><enum>(A)</enum><header>In
general</header><text>For purposes of this title, the basis of any property
shall be reduced by the portion of the cost of such property taken into account
under subsection (a)(1).</text>
</subparagraph><subparagraph id="IDBC284C77D23C41668C738A787E206AE7"><enum>(B)</enum><header>Ordinary income
recapture</header><text>For purposes of section 1245, the amount of the
deduction allowable under subsection (a)(1) with respect to any property which
is of a character subject to the allowance for depreciation shall be treated as
a deduction allowed for depreciation under section 167.</text>
</subparagraph></paragraph><paragraph id="ID9F6BBE7BCD554D5084FAF88550971850"><enum>(3)</enum><header>Coordination
with section 38</header><text>No credit shall be allowed under section 38 with
respect to any amount for which a deduction is allowed under subsection
(a)(1).</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID22EA0B6C186D4D93A4BBE2600F9F269E"><enum>(b)</enum><header>Special Rule
for Mutual or Cooperative Telephone Companies</header><text>Section 512(b)
(relating to modifications) is amended by adding at the end the following new
paragraph:</text>
<quoted-block id="ID80799F09CF66404891F4AA4C3F338C42" style="OLC">
<paragraph id="ID7066E7A460684F19B83C2388EB7A8ED0"><enum>(20)</enum><header>Special rule
for mutual or cooperative telephone companies</header><text>A mutual or
cooperative telephone company which for the taxable year satisfies the
requirements of section 501(c)(12)(A) may elect to reduce its unrelated
business taxable income for such year, if any, by an amount that does not
exceed the qualified broadband expenditures which would be taken into account
under section 191 for such year by such company if such company was not exempt
from taxation. Any amount which is allowed as a deduction under this paragraph
shall not be allowed as a deduction under section 191 and the basis of any
property to which this paragraph applies shall be reduced under section
1016(a)(40).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="IDF821EC14883447728C33EC10F60BDEC5"><enum>(c)</enum><header>Conforming
Amendments</header>
<paragraph id="ID4997BAF9F2CF41A3BAAFCB96A2F5BAB7"><enum>(1)</enum><text>Section 263(a)(1)
(relating to capital expenditures) is amended by striking <quote>or</quote> at
the end of subparagraph (J), by striking the period at the end of subparagraph
(K) and inserting <quote>, or</quote>, and by adding at the end the following
new subparagraph:</text>
<quoted-block id="ID81FF54E4F4D44CF793B44DB86C939DE1" style="OLC">
<subparagraph id="IDA89815D2C3CB476A993562A776B00395"><enum>(L)</enum><text>expenditures for
which a deduction is allowed under section
191.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="ID6E2B633F8D4D4675BDE424B6C5F47B19"><enum>(2)</enum><text>Section 1016(a),
as amended by this Act, is amended by striking <quote>and</quote> at the end of
paragraph (38), by striking the period at the end of paragraph (39) and
inserting <quote>, and</quote>, and by adding at the end the following new
paragraph:</text>
<quoted-block id="IDB6C3645D367D4B7D802C439C3E9E3AB1" style="OLC">
<paragraph id="ID08E57C2126A04F5FB249CF67856E3490"><enum>(40)</enum><text>to the extent
provided in section
191(f)(2).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="IDEBAA6755EF164710A01DAE7DC318B5E1"><enum>(3)</enum><text>The table of
sections for part VI of subchapter A of chapter 1 is amended by inserting after
the item relating to section 190 the following new item:</text>
<quoted-block id="IDDB5B5A5DA1E54E59A6ACF62549EB858A" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 191. Broadband
expenditures.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="ID865ED9A316364C7B9287E2DE0E26C39F"><enum>(d)</enum><header>Designation of
Census Tracts</header>
<paragraph id="IDA64462CB9AD64E568A38E54356BA2B02"><enum>(1)</enum><header>In
general</header><text>The Secretary of the Treasury shall, not later than 90
days after the date of the enactment of this Act, designate and publish those
census tracts meeting the criteria described in paragraphs (16), (22), and (23)
of section 191(e) of the Internal Revenue Code of 1986 (as added by this
section). In making such designations, the Secretary of the Treasury shall
consult with such other departments and agencies as the Secretary determines
appropriate.</text>
</paragraph><paragraph id="ID39E71C185AE849459A0DCDE72069613E"><enum>(2)</enum><header>Saturated
market</header>
<subparagraph id="IDB12CC34CE00F452F87B6442CE160145A"><enum>(A)</enum><header>In
general</header><text>For purposes of designating and publishing those census
tracts meeting the criteria described in subsection (e)(19) of such section
191—</text>
<clause id="ID934005A7BC5B452F8A78AEC5D2C6565E"><enum>(i)</enum><text>the
Secretary of the Treasury shall prescribe not later than 30 days after the date
of the enactment of this Act the form upon which any provider which takes the
position that it meets such criteria with respect to any census tract shall
submit a list of such census tracts (and any other information required by the
Secretary) not later than 60 days after the date of the publication of such
form, and</text>
</clause><clause id="ID9DCA0DB5B59243ACB079355CD114B7B7"><enum>(ii)</enum><text>the Secretary of
the Treasury shall publish an aggregate list of such census tracts and the
applicable providers not later than 30 days after the last date such
submissions are allowed under clause (i).</text>
</clause></subparagraph><subparagraph id="ID33601CA6508B4B9391C5545DDAB655E1"><enum>(B)</enum><header>No subsequent
lists required</header><text>The Secretary of the Treasury shall not be
required to publish any list of census tracts meeting such criteria subsequent
to the list described in subparagraph (A)(ii).</text>
</subparagraph></paragraph></subsection><subsection id="ID553663CEBECF4AD79A3C87D4DEB5A41F"><enum>(e)</enum><header>Other
Regulatory Matters</header>
<paragraph id="IDD4325ED7A43A4EA5832A3DE464738713"><enum>(1)</enum><header>Prohibition</header><text>No
Federal or State agency or instrumentality shall adopt regulations or
ratemaking procedures that would have the effect of eliminating or reducing any
deduction or portion thereof allowed under section 191 of the Internal Revenue
Code of 1986 (as added by this section) or otherwise subverting the purpose of
this section.</text>
</paragraph><paragraph id="IDF544043FC4D14737AB469620DD6EEB2E"><enum>(2)</enum><header>Treasury
regulatory authority</header><text>It is the intent of Congress in providing
the election to deduct qualified broadband expenditures under section 191 of
the Internal Revenue Code of 1986 (as added by this section) to provide
incentives for the purchase, installation, and connection of equipment and
facilities offering expanded broadband access to the Internet for users in
certain low income and rural areas of the United States, as well as to
residential users nationwide, in a manner that maintains competitive neutrality
among the various classes of providers of broadband services. Accordingly, the
Secretary of the Treasury shall prescribe such regulations as may be necessary
or appropriate to carry out the purposes of section 191 of such Code,
including—</text>
<subparagraph id="IDF082A59BF99E4E109CAE1224169A661F"><enum>(A)</enum><text>regulations to
determine how and when a taxpayer that incurs qualified broadband expenditures
satisfies the requirements of section 191 of such Code to provide broadband
services, and</text>
</subparagraph><subparagraph id="ID9BD1EC5449934269B40089FA6C5A991E"><enum>(B)</enum><text>regulations
describing the information, records, and data taxpayers are required to provide
the Secretary to substantiate compliance with the requirements of section 191
of such Code.</text>
</subparagraph></paragraph></subsection></section><section id="ID7ab1931797f64162b5e9d5591ee64bac"><enum>409.</enum><header>Credit for
energy efficient motors</header>
<subsection id="IDd6abcad9672f469892ad57257ac4f223"><enum>(a)</enum><header>In
general</header><text>Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits), as amended by this Act, is amended by
inserting at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id27DA379C8D144D96B8C5A25CEFD51244" style="OLC">
<section id="IDbbe95203872e4a4885c7ae07c2d1b8f5"><enum>45Q.</enum><header>Credit for
energy efficient motors</header>
<subsection id="ID04748c10835f49f6ad77bba41ddab5f1"><enum>(a)</enum><header>In
general</header><text>For purposes of section 38, the energy efficient motors
credit determined under this section for any taxable year is an amount equal to
the lesser of —</text>
<paragraph id="id7DC0772295C146859BFA2936EA271978"><enum>(1)</enum><text>$15 per
horsepower generated by qualified energy efficient motors the original use of
which begins with the taxpayer during such taxable year, or</text>
</paragraph><paragraph id="id91B1CBDDACCB4807BDB99C2B0EEE3A64"><enum>(2)</enum><text>$1,250,000.</text>
</paragraph></subsection><subsection id="id8D4E2574C54B4D1BA59443E346053DEA"><enum>(b)</enum><header>Qualified
energy efficient motor</header><text>The term <term>qualified energy efficient
motor</term> means a general- or definite-purpose electric motor of 500
horsepower or less which meets or exceeds the efficiency levels specified in
Tables 12–12 or 12–13 of the National Electrical Manufacturers Association MG–1
(2006).</text>
</subsection><subsection id="ID7ee4058f18894b7fbecec6174e857e6e"><enum>(c)</enum><header>Special
rules</header>
<paragraph id="ID475b0e7494ec4a878a936c38e3568345"><enum>(1)</enum><header>Basis
reduction</header><text>The basis of any property for which a credit is
allowable under subsection (a) shall be reduced by the amount of such
credit.</text>
</paragraph><paragraph id="IDc6916f0830504b38b5c1b9a2bcd667a7"><enum>(2)</enum><header>Recapture</header><text>The
Secretary shall, by regulations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to any property which ceases
to be property eligible for such credit.</text>
</paragraph><paragraph id="ID093b0d5bb94445d391d39cd94a54dcc2"><enum>(3)</enum><header>Property used
outside United States, etc., certain depreciable property not
qualified</header><text>No credit shall be allowed under subsection (a) with
respect to any property referred to in section 50(b) or with respect to the
portion of the cost of any property taken into account under section
179.</text>
</paragraph></subsection><subsection id="IDfd889d0226484ce5a216d30decf6d2c2"><enum>(d)</enum><header>Termination</header><text>This
section shall not apply to any property placed in service after the date which
is 3 years after the date of the enactment of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id0E91D0DD5C024E83AEA0A25FD97997AB"><enum>(b)</enum><header>Credit allowed
as part of general business credit</header><text>Section 38(b), as amended by
this Act, is amended by striking <quote>plus</quote> at the end of paragraph
(32), by striking the period at the end of paragraph (33) and inserting
<quote>, plus</quote>, and by adding at the end the following new
paragraph:</text>
<quoted-block act-name="" id="id415DD6C086AB4F6DA0A52400574DB295" style="OLC">
<paragraph id="id902835A1C0014DC6857F00DBCD1257F1"><enum>(34)</enum><text>the credit for
energy efficient motors determined under section
45Q(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id1D575FEB93AE432485D226777241BF25"><enum>(c)</enum><header>Conforming
amendments</header>
<paragraph id="id6F2835858BF34EC3A11788BD9EA268A9"><enum>(1)</enum><text>Section 1016(a),
as amended by this Act, is amended by striking <quote>and</quote> at the end of
paragraph (39), by striking the period at the end of paragraph (40) and
inserting <quote>, and</quote>, and by adding at the end the following new
paragraph:</text>
<quoted-block id="id235C34F1A2944E1B8A23CFA8DB9AE651" style="OLC">
<paragraph id="idB7FD905635B4460DBD9B8EC750D66C24"><enum>(41)</enum><text>to the extent
provided in section
45Q(c)(1).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id74A98AE6B32F46B6AB5296BF8011677F"><enum>(2)</enum><text>The table of
sections for subpart D of part IV of subchapter A of chapter 1, as amended by
this Act, is amended by adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="id40A2530B3A91485FB18F67CA48A0D9B3" style="OLC">
<toc>
<toc-entry bold="off" level="section">Sec. 45Q. Credit for energy
efficient
motors.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID19171f455b774e76b28243901470f9d1"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service after the date of the enactment of this Act.</text>
</subsection></section><enum>V</enum><header>Revenue raising
provisions</header>
<subtitle id="idC232F441F9E24E4FA8680A7781CA2931"><enum>A</enum><header>Miscellaneous
revenue provisions</header>
<section id="id753E52F18CE445E1B2253FCB06D159B9"><enum>501.</enum><header>Limitation on
farming losses of certain taxpayers</header>
<subsection id="id5CBB7E41851D4499AD36D6B46109FB3D"><enum>(a)</enum><header>In
general</header><text>Section 461 (relating to general rule for taxable year of
deduction) is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idB8783B334590448E9DA51C75BF72BBED" style="OLC">
<subsection id="id8B0FB2EE61D847B191924051D7F36DD9"><enum>(j)</enum><header>Limitation on
farming losses of certain taxpayers</header>
<paragraph id="id6243A7438DB244B78DCC5218B16E0192"><enum>(1)</enum><header>In
general</header><text>If an applicable taxpayer has a farming loss for the
taxable year, such loss shall be allowed for such taxable year only to the
extent such loss does not exceed $200,000.</text>
</paragraph><paragraph id="id9CAF56EE7C6849A994B13009B6D2F358"><enum>(2)</enum><header>Farming
loss</header><text>For purposes of this subsection, the term <term>farming
loss</term> means the excess of the deductions of the taxpayer for the taxable
year which are attributable to farming businesses (as defined in section
263A(e)(4)) of such taxpayer over income or gain of such taxpayer for the
taxable year which is attributable to such deductions.</text>
</paragraph><paragraph id="idDCC6C530496D47BE8807381C63D36B77"><enum>(3)</enum><header>Disallowed loss
carried to next year</header><text>Any loss which is disallowed under paragraph
(1) shall be treated as a deduction of the taxpayer attributable to farming
businesses in the next taxable year.</text>
</paragraph><paragraph id="id177AB3D31D984056A52F030A7EAC38E9"><enum>(4)</enum><header>Applicable
taxpayer</header><text>For purposes of this subsection, the term
<term>applicable taxpayer</term> means, with respect to any taxable year, any
individual, partnership, estate, or trust which receives agriculture program
payments or Commodity Credit Corporation loans in such taxable
year.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id055F985771C94C98898D81A1024D09B8"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="ID24D6C8B4896E44DCA5DD5929E0471414" section-type="subsequent-section"><enum>502.</enum><header>Modification to
optional method of computing net earnings from self-employment</header>
<subsection commented="no" display-inline="no-display-inline" id="ID7C9F3D78D3D346CBAF8D4E0D6197734F"><enum>(a)</enum><header>Amendments to
the Internal Revenue Code of 1986</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID9BF20F080EA94D36851B02F181BA0694"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The matter following
paragraph (17) of section 1402(a) is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID60F267AE202D4F5EBF6DCF420321B9EF"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>$2,400</quote> each
place it appears and inserting <quote>the upper limit</quote>, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID821ED6513FE14A529255894B8BC982AB"><enum>(B)</enum><text display-inline="yes-display-inline">by striking <quote>$1,600</quote> each
place it appears and inserting <quote>the lower limit</quote>.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID9623F70EA41449AAA36E9CD80EF49E3C"><enum>(2)</enum><header>Definitions</header><text display-inline="yes-display-inline">Section 1402 is amended by adding at the
end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="IDE66CBE8481084E6DABA1763D1C5A88A7" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="IDD19C4365DEEF457DAD4BDA07CDF5F86F"><enum>(l)</enum><header>Upper and lower
limits</header><text display-inline="yes-display-inline">For purposes of
subsection (a)—</text>
<paragraph commented="no" display-inline="no-display-inline" id="ID0AB63E999ED240A0931A1EAB056694AD"><enum>(1)</enum><header>Lower
limit</header><text display-inline="yes-display-inline">The lower limit for any
taxable year is the sum of the amounts required under section 213(d) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> for a quarter of
coverage in effect with respect to each calendar quarter ending with or within
such taxable year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID86CCC86EDBDB4A7FAACE05B397148A90"><enum>(2)</enum><header>Upper
limit</header><text display-inline="yes-display-inline">The upper limit for any
taxable year is the amount equal to 150 percent of the lower limit for such
taxable
year.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID55B372A3B4DE4ECBBC082E2957A599F2"><enum>(b)</enum><header>Amendments to
the <act-name parsable-cite="SSA">Social Security Act</act-name></header>
<paragraph commented="no" display-inline="no-display-inline" id="IDF025ED2DED504EA9B8EC32A443820925"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The matter following
paragraph (16) of section 211(a) of the <act-name parsable-cite="SSA">Social
Security Act</act-name> is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID83E009D62CB2493088295BC172F89E72"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>$2,400</quote> each
place it appears and inserting <quote>the upper limit</quote>, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID965085267F0746D2803C0D98CD9DAE8C"><enum>(B)</enum><text display-inline="yes-display-inline">by striking <quote>$1,600</quote> each
place it appears and inserting <quote>the lower limit</quote>.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID9CA8AD2F99364E2BAD5094AB746E4FD9"><enum>(2)</enum><header>Definitions</header><text display-inline="yes-display-inline">Section 211 of such Act is amended by
adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="ID733FA8F77C254EACB82AB3C7184E8308" other-style="archaic" style="other">
<subsection commented="no" display-inline="no-display-inline" id="IDD84D3D96144548308DB306A0B0DBFE9E"><enum>(k)</enum><header>Upper and lower limits</header><text display-inline="yes-display-inline">For purposes of subsection (a)—</text>
<paragraph commented="no" display-inline="no-display-inline" id="ID1B5896461A1448A4A87386DF3CE8E601"><enum>(1)</enum><text display-inline="yes-display-inline">The lower limit for any taxable year is the
sum of the amounts required under section 213(d) for a quarter of coverage in
effect with respect to each calendar quarter ending with or within such taxable
year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDB022B121F1DD438F92F09197407E69B5"><enum>(2)</enum><text display-inline="yes-display-inline">The upper limit for any taxable year is the
amount equal to 150 percent of the lower limit for such taxable
year.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID16FCC5693C1B4D0DBD1973C3080F17B3"><enum>(3)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">Section 212 of such
Act is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID49029A028F2547A288D30EA40B0EC3AB"><enum>(A)</enum><text display-inline="yes-display-inline">in subsection (b), by striking
<quote>For</quote> and inserting <quote>Except as provided in subsection (c),
for</quote>; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID9A393E9DEC7C44929F180CBC86FA1A8D"><enum>(B)</enum><text display-inline="yes-display-inline">by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="IDF935A5CA56EF4EB69E4EC5FC95CFA41E" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="IDCB46760126C04366BE5895CAE4ECD11A"><enum>(c)</enum><text display-inline="yes-display-inline">For the purpose of determining average
indexed monthly earnings, average monthly wage, and quarters of coverage in the
case of any individual who elects the option described in clause (ii) or (iv)
in the matter following section 211(a)(16) for any taxable year that does not
begin with or during a particular calendar year and end with or during such
year, the self-employment income of such individual deemed to be derived during
such taxable year shall be allocated to the two calendar years, portions of
which are included within such taxable year, in the same proportion to the
total of such deemed self-employment income as the sum of the amounts
applicable under section 213(d) for the calendar quarters ending with or within
each such calendar year bears to the lower limit for such taxable year
specified in section
211(k)(1).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDDE8291CA231E4B61B872094D5C7E8373"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2007.</text>
</subsection></section><section id="id9D772E30F5F84326BD656B278FAE78F8"><enum>503.</enum><header>Information
reporting for Commodity Credit Corporation transactions</header>
<subsection id="id2CA8DD4D0D934B63966919D97865EC5F"><enum>(a)</enum><header>In
general</header><text>Subpart A of part III of subchapter A of chapter 61
(relating to information concerning persons subject to special provisions) is
amended by inserting after section 6039I the following new section:</text>
<quoted-block act-name="" id="id6EEB42C230694F998D227506D7F709C9" style="OLC">
<section id="id129DFAC00DC742DCB6E9A926B92B656E"><enum>6039J.</enum><header>Information
reporting with respect to Commodity Credit Corporation transactions</header>
<subsection id="id7A39FB86322C4A2D9A39CC5C569E76B0"><enum>(a)</enum><header>Requirement of
reporting</header><text>The Commodity Credit Corporation, through the Secretary
of Agriculture, shall make a return, according to the forms and regulations
prescribed by the Secretary of the Treasury, setting forth any market gain
realized by a taxpayer during the taxable year in relation to the repayment of
a loan issued by the Commodity Credit Corporation, without regard to the manner
in which such loan was repaid.</text>
</subsection><subsection id="id6274B8496A6C432FBFCCA3CE42CC888A"><enum>(b)</enum><header>Statements To
be furnished to persons with respect to whom information is
required</header><text>The Secretary of Agriculture shall furnish to each
person whose name is required to be set forth in a return required under
subsection (a) a written statement showing the amount of market gain reported
in such
return.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id0EE9ED6A247C40AD893036DE68310F84"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for subpart A of part III of
subchapter A of chapter 61 is amended by inserting after the item relating to
section 6039I the following new item:</text>
<quoted-block display-inline="no-display-inline" id="idA325F4C59813403CA13F752BF66C4FCA" style="OLC">
<toc>
<toc-entry bold="off" level="section">Sec. 6039J. Information
reporting with respect to Commodity Credit Corporation
transactions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idB7ADA1EA4D9F415A9DC985EBED062811"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to loans
repaid on or after January 1, 2007.</text>
</subsection></section><section id="idDCCAE0DAC8534793BEAFD612B5D25DFA"><enum>504.</enum><header>Modification
of section 1031 treatment for certain real estate</header>
<subsection id="idF759D9458730436B8ED302802534897C"><enum>(a)</enum><header>In
general</header><text>Section 1031 (relating to exchange of property held for
productive use or investment), as amended by this Act, is amended by adding at
the end the following new subsection:</text>
<quoted-block act-name="" id="idE22108CBEBEB44C6B185D9BAA00C9A26" style="OLC">
<subsection id="id8BCBFE9BE4BC409286179DBE1DAD458E"><enum>(j)</enum><header>Special rule
for agricultural real property</header>
<paragraph id="id796ED0B6674540E79A11CC76709A4246"><enum>(1)</enum><header>In
general</header><text>Unimproved agricultural real property and improved real
property are not property of a like kind.</text>
</paragraph><paragraph id="idC4C6E9F5B07B489083B6AB356A80CFF7"><enum>(2)</enum><header>Unimproved
agricultural real property</header><text>For purposes of this subsection, the
term <term>unimproved agricultural real property</term> means real
property—</text>
<subparagraph id="id59D8ABD16FF049A79542D5B64B1D0394"><enum>(A)</enum><text>which is
unimproved;</text>
</subparagraph><subparagraph id="id1261EB8FD009422789421E908707D8F2"><enum>(B)</enum><text>which is used for
farming purposes (within the meaning of section 2032A(e)(5)); and</text>
</subparagraph><subparagraph id="idB96E0DCD5BC843638ED5524C47AEDBAB"><enum>(C)</enum><text>with respect to
which a taxpayer receives, in the taxable year in which an exchange of such
property is made, any agriculture program payments or Commodity Credit
Corporation loans.</text>
</subparagraph></paragraph><paragraph id="id5D8B6A456C9D467183232CB9B61439A5"><enum>(3)</enum><header>Exception</header><text>Paragraph
(1) shall not apply with respect to any unimproved agricultural real property
which, not later than the date of the exchange, is permanently retired from any
program under which any payment, loan, or benefit described in paragraph (2)(C)
is
made.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id6E0C02749EDD49ABA7FFF7DD59F180DC"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to exchanges
completed after the date of the enactment of this Act.</text>
</subsection></section><section id="id7C437A8C38AF48D2AE80E1F74AFE09E4"><enum>505.</enum><header>Modification
of effective date of leasing provisions of the American Jobs Creation Act of
2004</header>
<subsection id="ID93447EC3C58B4A32B0BF9A13C73547B5"><enum>(a)</enum><header>Leases to
Foreign Entities</header><text>Section 849(b) of the American Jobs Creation Act
of 2004 is amended by adding at the end the following new paragraph:</text>
<quoted-block id="ID85DB77FDD40D4AE998DE09F3539DED92" style="OLC">
<paragraph id="IDB45BB51398C947B380A9E126F61B4364"><enum>(5)</enum><header>Leases to
foreign entities</header><text>In the case of tax-exempt use property leased to
a tax-exempt entity which is a foreign person or entity, the amendments made by
this part shall apply to taxable years beginning after December 31, 2006, with
respect to leases entered into on or before March 12,
2004.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDF486095357FC4735B95D42A96B38BFB3"><enum>(b)</enum><header>Effective
Date</header><text>The amendment made by this section shall take effect as if
included in the enactment of the American Jobs Creation Act of 2004.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="HBB3D5D00961A4128A375C5AB61085BC" section-type="subsequent-section"><enum>506.</enum><header>Time for payment of
corporate estimated taxes</header><text display-inline="no-display-inline">The
percentage under subparagraph (B) of section 401(1) of the Tax Increase
Prevention and Reconciliation Act of 2005 in effect on the date of the
enactment of this Act is increased by 7.00 percentage points.</text>
</section><section id="idD74DE10E942540D8A72BA21F8A6A4790"><enum>507.</enum><header>Ineligibility
of collectibles for nontaxable like kind exchange treatment</header>
<subsection id="idBC27B845E7204B189D8A2718BEDA6BAA"><enum>(a)</enum><header>In
general</header><text>Section 1031(a)(2) (relating to exception) is amended by
striking <quote>or</quote> at the end of subparagraph (E), by striking the
period at the end of subparagraph (F) and inserting <quote>, or</quote>, and by
inserting after subparagraph (F) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id156E7BBEB2944B96991537D451376537" style="OLC">
<subparagraph id="idDEF5C85C579F466085AA9CFE727008B1"><enum>(G)</enum><text>collectibles (as
defined in section
408(m)(2)).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id49C82C7D269644789F0C05278FFCD784"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to exchanges
completed after the date of the enactment of this Act.</text>
</subsection></section><section id="ID5D58236DE55A464B9E5AEF85D6FC6D24"><enum>508.</enum><header>Denial of
deduction for certain fines, penalties, and other amounts</header>
<subsection id="IDA3B5A4492A5246F5BB4D1C1E6D1B6436"><enum>(a)</enum><header>In
General</header><text>Subsection (f) of section 162 (relating to trade or
business expenses) is amended to read as follows:</text>
<quoted-block id="IDA5E08A0D031C4484A92545EB01D44A41" style="OLC">
<subsection id="IDB235EC3D495D4EFB856962DDB69D8561"><enum>(f)</enum><header>Fines,
Penalties, and Other Amounts</header>
<paragraph id="ID9326FD3BE6274D7A88BF29C0FE921690"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), no deduction
otherwise allowable shall be allowed under this chapter for any amount paid or
incurred (whether by suit, agreement, or otherwise) to, or at the direction of,
a government or entity described in paragraph (4) in relation to—</text>
<subparagraph id="IDA5822C144A6E4C7E980071F19B12BF95"><enum>(A)</enum><text>the violation of
any law, or</text>
</subparagraph><subparagraph id="ID43990A03822E45998E84673D740A0891"><enum>(B)</enum><text>an investigation
or inquiry into the potential violation of any law which is initiated by such
government or entity.</text>
</subparagraph></paragraph><paragraph id="ID35951FB1E3FF43EA9170CDAE545E214B"><enum>(2)</enum><header>Exception for
amounts constituting restitution or paid to come into compliance with
law</header><text>Paragraph (1) shall not apply to any amount which—</text>
<subparagraph id="ID0C30E74007EC4F70A730446472BCBF0D"><enum>(A)</enum><text>the taxpayer
establishes—</text>
<clause id="ID927BB898A3714042A891119D75CAD168"><enum>(i)</enum><text>constitutes
restitution (or remediation of property) for damage or harm caused by, or which
may be caused by, the violation of any law or the potential violation of any
law, or</text>
</clause><clause id="IDCACC50EE73FC4BD49EF9A4C3B9E87174"><enum>(ii)</enum><text>is paid to come
into compliance with any law which was violated or involved in the
investigation or inquiry, and</text>
</clause></subparagraph><subparagraph id="ID4A9AE1FAF26E4F11AA30A6611FD5B264"><enum>(B)</enum><text>is identified as
an amount described in clause (i) or (ii) of subparagraph (A), as the case may
be, in the court order or settlement agreement, except that the requirement of
this subparagraph shall not apply in the case of any settlement agreement which
requires the taxpayer to pay or incur an amount not greater than
$1,000,000.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">A taxpayer
shall not meet the requirements of subparagraph (A) solely by reason of an
identification under subparagraph (B). This paragraph shall not apply to any
amount paid or incurred as reimbursement to the government or entity for the
costs of any investigation or litigation unless such amount is paid or incurred
for a cost or fee regularly charged for any routine audit or other customary
review performed by the government or entity.</continuation-text></paragraph><paragraph id="ID4D9CC98BEF2147D7A65DF5DC95B4F510"><enum>(3)</enum><header>Exception for
amounts paid or incurred as the result of certain court
orders</header><text>Paragraph (1) shall not apply to any amount paid or
incurred by order of a court in a suit in which no government or entity
described in paragraph (4) is a party.</text>
</paragraph><paragraph id="IDBB44E3B243BC49AB9B48ADB77D2E9BB7"><enum>(4)</enum><header>Certain
nongovernmental regulatory entities</header><text>An entity is described in
this paragraph if it is—</text>
<subparagraph id="ID6184D147CE294C78AC1875972FC51E4F"><enum>(A)</enum><text>a nongovernmental
entity which exercises self-regulatory powers (including imposing sanctions) in
connection with a qualified board or exchange (as defined in section
1256(g)(7)), or</text>
</subparagraph><subparagraph id="IDA12F73E7B0D045BD8D28F3B366F51AEC"><enum>(B)</enum><text>to the extent
provided in regulations, a nongovernmental entity which exercises
self-regulatory powers (including imposing sanctions) as part of performing an
essential governmental function.</text>
</subparagraph></paragraph><paragraph id="ID1F62DDFF84144E72B58528828B1689F1"><enum>(5)</enum><header>Exception for
taxes due</header><text>Paragraph (1) shall not apply to any amount paid or
incurred as taxes
due.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID701EFC5A3E2741D7B00DA3FA121706E9"><enum>(b)</enum><header>Reporting of
Deductible Amounts</header>
<paragraph id="IDAAD62B8A82B34583B02BC8C70D47902A"><enum>(1)</enum><header>In
general</header><text>Subpart B of part III of subchapter A of chapter 61 is
amended by inserting after section 6050V the following new section:</text>
<quoted-block id="ID6E126EBBBFDB4EF59F002520170C729E" style="OLC">
<section id="ID04DF6428594F4A1BA8AD8E493AD2743D"><enum>6050W.</enum><header>Information
With respect to certain fines, penalties, and other amounts</header>
<subsection id="ID9A6EC62C09C94C99BB2CB5788E512E9A"><enum>(a)</enum><header>Requirement of
Reporting</header>
<paragraph id="ID1990091BC71E4E5FB4B42B9D5F77ACE7"><enum>(1)</enum><header>In
general</header><text>The appropriate official of any government or entity
which is described in section 162(f)(4) which is involved in a suit or
agreement described in paragraph (2) shall make a return in such form as
determined by the Secretary setting forth—</text>
<subparagraph id="ID70C40F61B7584598A28A52730A43E24D"><enum>(A)</enum><text>the amount
required to be paid as a result of the suit or agreement to which paragraph (1)
of section 162(f) applies,</text>
</subparagraph><subparagraph id="ID5B37AFCB72494D78B57A135B44A7545B"><enum>(B)</enum><text>any amount
required to be paid as a result of the suit or agreement which constitutes
restitution or remediation of property, and</text>
</subparagraph><subparagraph id="IDCD1ABCA869EC47EC8E6477291CAA6A76"><enum>(C)</enum><text>any amount
required to be paid as a result of the suit or agreement for the purpose of
coming into compliance with any law which was violated or involved in the
investigation or inquiry.</text>
</subparagraph></paragraph><paragraph id="IDBF01643D892F4E96BA246DB79649651E"><enum>(2)</enum><header>Suit or
agreement described</header>
<subparagraph id="IDC856B393B5F142B98D61D7621AC3DDC5"><enum>(A)</enum><header>In
general</header><text>A suit or agreement is described in this paragraph
if—</text>
<clause id="IDA2DDBA5FBFA44711BD34CF327142790F"><enum>(i)</enum><text>it is—</text>
<subclause id="ID509D95E48C3F4988B8B8E248AC161E30"><enum>(I)</enum><text>a suit with
respect to a violation of any law over which the government or entity has
authority and with respect to which there has been a court order, or</text>
</subclause><subclause id="IDC769258C8DE44E978A3E56EF1FD40349"><enum>(II)</enum><text>an agreement
which is entered into with respect to a violation of any law over which the
government or entity has authority, or with respect to an investigation or
inquiry by the government or entity into the potential violation of any law
over which such government or entity has authority, and</text>
</subclause></clause><clause id="ID569F2C28D82F48119B830EFE453890FF"><enum>(ii)</enum><text>the aggregate
amount involved in all court orders and agreements with respect to the
violation, investigation, or inquiry is $600 or more.</text>
</clause></subparagraph><subparagraph id="IDBA7B1D4D6AE24283A9E92D7A33EE00D4"><enum>(B)</enum><header>Adjustment of
reporting threshold</header><text>The Secretary may adjust the $600 amount in
subparagraph (A)(ii) as necessary in order to ensure the efficient
administration of the internal revenue laws.</text>
</subparagraph></paragraph><paragraph id="ID0D825793E6CE467AABCAF2B53900990A"><enum>(3)</enum><header>Time of
filing</header><text>The return required under this subsection shall be filed
not later than—</text>
<subparagraph id="IDE4061BFE55464D53905107E321CF8AA0"><enum>(A)</enum><text>30 days after the
date on which a court order is issued with respect to the suit or the date the
agreement is entered into, as the case may be, or</text>
</subparagraph><subparagraph id="ID7AAD743C25FD4C88B75AF11E6A146243"><enum>(B)</enum><text>the date
specified by the Secretary.</text>
</subparagraph></paragraph></subsection><subsection id="IDD0E12FD9724F4E62AE6015E45955D0F6"><enum>(b)</enum><header>Statements To
Be Furnished to Individuals Involved in the Settlement</header><text>Every
person required to make a return under subsection (a) shall furnish to each
person who is a party to the suit or agreement a written statement
showing—</text>
<paragraph id="ID4CC03F705C844A6582EEC637A1F78DAC"><enum>(1)</enum><text>the name of the
government or entity, and</text>
</paragraph><paragraph id="IDFB6F4E6F9E1145AD9038F80FDEEEF73B"><enum>(2)</enum><text>the information
supplied to the Secretary under subsection (a)(1).</text>
</paragraph><continuation-text continuation-text-level="subsection">The
written statement required under the preceding sentence shall be furnished to
the person at the same time the government or entity provides the Secretary
with the information required under subsection (a).</continuation-text></subsection><subsection id="IDDA6097E96CB041C9A312740EC1D30363"><enum>(c)</enum><header>Appropriate
Official Defined</header><text>For purposes of this section, the term
<term>appropriate official</term> means the officer or employee having control
of the suit, investigation, or inquiry or the person appropriately designated
for purposes of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="ID590D9CF4DC5242C88A38DFAFB4EC8415"><enum>(2)</enum><header>Conforming
amendment</header><text>The table of sections for subpart B of part III of
subchapter A of chapter 61 is amended by inserting after the item relating to
section 6050V the following new item:</text>
<quoted-block id="ID4330D0CEDD7044F58DCDCE5A75076600" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 6050W. Information with respect to
certain fines, penalties, and other
amounts.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="IDEEFD6A4338A149FE885EA4650DF1988E"><enum>(c)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to amounts
paid or incurred on or after the date of the enactment of this Act, except that
such amendments shall not apply to amounts paid or incurred under any binding
order or agreement entered into before such date. Such exception shall not
apply to an order or agreement requiring court approval unless the approval was
obtained before such date.</text>
</subsection></section><section id="ID178DC281DA9B428FAA5BD2FB3A8F4F45"><enum>509.</enum><header>Increase in
information return penalties</header>
<subsection id="ID58384F23E108451381C7087685FCBD5A"><enum>(a)</enum><header>Failure To File
Correct Information Returns</header>
<paragraph id="IDFE6C689D381D4703AFC9289FC1573AD9"><enum>(1)</enum><header>In
general</header><text>Section 6721(a)(1) is amended—</text>
<subparagraph id="ID89799E73D1EA42D7889193DB133BF0FF"><enum>(A)</enum><text>by striking
<quote>$50</quote> and inserting <quote>$250</quote>, and</text>
</subparagraph><subparagraph id="ID7F8922E2DB9A4A9F849F07B2BA099AB1"><enum>(B)</enum><text>by striking
<quote>$250,000</quote> and inserting <quote>$3,000,000</quote>.</text>
</subparagraph></paragraph><paragraph id="IDDE7BCE97AF00453AB06D961B5CFDC2C2"><enum>(2)</enum><header>Reduction where
correction in specified period</header>
<subparagraph id="ID273BD32D90774DEE97CD4E3A0C5AF0B7"><enum>(A)</enum><header>Correction
within 30 days</header><text>Section 6721(b)(1) is amended—</text>
<clause id="ID200F441C4A064AC7BEAA026FB34D6619"><enum>(i)</enum><text>by
striking <quote>$15</quote> and inserting <quote>$50</quote>,</text>
</clause><clause id="ID280B0A878625426CA52C8A5174F606E7"><enum>(ii)</enum><text>by
striking <quote>$50</quote> and inserting <quote>$250</quote>, and</text>
</clause><clause id="ID22EFE2697E2942E0B76A922136117CEF"><enum>(iii)</enum><text>by striking
<quote>$75,000</quote> and inserting <quote>$500,000</quote>.</text>
</clause></subparagraph><subparagraph id="IDC025869227704B55B52B8BA0BC78FB85"><enum>(B)</enum><header>Failures
corrected on or before August 1</header><text>Section 6721(b)(2) is
amended—</text>
<clause id="ID7F5E6CDAEBE545159CA148FA906F000B"><enum>(i)</enum><text>by
striking <quote>$30</quote> and inserting <quote>$100</quote>,</text>
</clause><clause id="ID0EB28425961E4540ACBD78BE6BDA8CEF"><enum>(ii)</enum><text>by
striking <quote>$50</quote> and inserting <quote>$250</quote>, and</text>
</clause><clause id="ID6DA60CC352ED4BE89A8EF5CAE8B0079D"><enum>(iii)</enum><text>by striking
<quote>$150,000</quote> and inserting <quote>$1,500,000</quote>.</text>
</clause></subparagraph></paragraph><paragraph id="ID61DE072B041249AD827F5C748E27F949"><enum>(3)</enum><header>Lower
limitation for persons with gross receipts of not more than
$5,000,000</header><text>Section 6721(d)(1) is amended—</text>
<subparagraph id="ID37B8717ECF6C477DA7488429BAE5EA58"><enum>(A)</enum><text>in subparagraph
(A)—</text>
<clause id="ID7A7A1DBE32D74F57A659AF7069D41D30"><enum>(i)</enum><text>by
striking <quote>$100,000</quote> and inserting <quote>$1,000,000</quote>,
and</text>
</clause><clause id="ID6121A83C2A3B46E987123189F069A952"><enum>(ii)</enum><text>by
striking <quote>$250,000</quote> and inserting
<quote>$3,000,000</quote>,</text>
</clause></subparagraph><subparagraph id="IDEF7F8047A3E142629742345BA45E725E"><enum>(B)</enum><text>in subparagraph
(B)—</text>
<clause id="IDCADA235062794B76B399E7B846175DCD"><enum>(i)</enum><text>by
striking <quote>$25,000</quote> and inserting <quote>$175,000</quote>,
and</text>
</clause><clause id="IDE42FF63EE2AD438083110CEA006BD936"><enum>(ii)</enum><text>by
striking <quote>$75,000</quote> and inserting <quote>$500,000</quote>,
and</text>
</clause></subparagraph><subparagraph id="IDD4B688BC318748918467053607A4EBFE"><enum>(C)</enum><text>in subparagraph
(C)—</text>
<clause id="IDB2F702E376694AA1BAB4726B2A56B56E"><enum>(i)</enum><text>by
striking <quote>$50,000</quote> and inserting <quote>$500,000</quote>,
and</text>
</clause><clause id="ID77A2285C00044C9492E26BDB21612C8E"><enum>(ii)</enum><text>by
striking <quote>$150,000</quote> and inserting
<quote>$1,500,000</quote>.</text>
</clause></subparagraph></paragraph><paragraph id="ID11AA0338AE5F44879F2CB8A1F2132BE2"><enum>(4)</enum><header>Penalty in case
of intentional disregard</header><text>Section 6721(e) is amended—</text>
<subparagraph id="ID06402FB496B54BA7BDFBBD7DA5FC50EA"><enum>(A)</enum><text>by striking
<quote>$100</quote> in paragraph (2) and inserting <quote>$500</quote>,
and</text>
</subparagraph><subparagraph id="ID852DF61AD89E4C708DFEDE494CC1AD04"><enum>(B)</enum><text>by striking
<quote>$250,000</quote> in paragraph (3)(A) and inserting
<quote>$3,000,000</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="ID9396184E7D5E4E12BE0A171F0A71CD7E"><enum>(b)</enum><header>Failure to
Furnish Correct Payee Statements</header>
<paragraph id="IDC86E3B08CC624FF1877E0D6BE0AB9E2E"><enum>(1)</enum><header>In
general</header><text>Section 6722(a) is amended—</text>
<subparagraph id="ID0ECFF9148F534FC7A347B46A63393109"><enum>(A)</enum><text>by striking
<quote>$50</quote> and inserting <quote>$250</quote>, and</text>
</subparagraph><subparagraph id="ID7DD6CCA5F85542CB87CE839044697804"><enum>(B)</enum><text>by striking
<quote>$100,000</quote> and inserting <quote>$1,000,000</quote>.</text>
</subparagraph></paragraph><paragraph id="ID86AF641616FF4DFFA7E33E5BBCEACD4C"><enum>(2)</enum><header>Penalty in case
of intentional disregard</header><text>Section 6722(c) is amended—</text>
<subparagraph id="ID65172E92D1AD4FC794D07F2E0DAF10E3"><enum>(A)</enum><text>by striking
<quote>$100</quote> in paragraph (1) and inserting <quote>$500</quote>,
and</text>
</subparagraph><subparagraph id="ID1FDDA6AE2BDB47DB8A904638DB35F512"><enum>(B)</enum><text>by striking
<quote>$100,000</quote> in paragraph (2)(A) and inserting
<quote>$1,000,000</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="ID78B6B8B9591D4ADEA98BE9F2A4B8DAC1"><enum>(c)</enum><header>Failure To
Comply With Other Information Reporting Requirements</header><text>Section 6723
is amended—</text>
<paragraph id="ID20E2AF191D9E489981331F3FB1B52F9B"><enum>(1)</enum><text>by striking
<quote>$50</quote> and inserting <quote>$250</quote>, and</text>
</paragraph><paragraph id="IDB78814FFEE6C418EB8AF81FFFBD67EED"><enum>(2)</enum><text>by striking
<quote>$100,000</quote> and inserting <quote>$1,000,000</quote>.</text>
</paragraph></subsection><subsection id="IDD5DB63739E854C138C57EE77F6EA81F1"><enum>(d)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply with respect
to information returns required to be filed on or after January 1, 2008.</text>
</subsection></section></subtitle><subtitle id="idBDD9A878626D4309957103E118236108"><enum>B</enum><header>Economic
substance doctrine</header>
<section id="ID04E7319EFAAD4BA49743B904FC47CD2B"><enum>511.</enum><header>Clarification
of economic substance doctrine</header>
<subsection id="ID311667A9C834444996B3F05D1CBDF0C5"><enum>(a)</enum><header>In
General</header><text>Section 7701 is amended by redesignating subsection (p)
as subsection (q) and by inserting after subsection (o) the following new
subsection:</text>
<quoted-block id="IDA7CD3FAF892C4048850179DEC939741A" style="OLC">
<subsection id="IDE407B2D2AD0D46E29CE6C80791457D00"><enum>(p)</enum><header>Clarification
of Economic Substance Doctrine; Etc</header>
<paragraph id="ID71898F5CF2ED4664A0FEF2F3DF55D79B"><enum>(1)</enum><header>General
rules</header>
<subparagraph id="ID9B7A1799A9C141E4B8F53ADF84B543DC"><enum>(A)</enum><header>In
general</header><text>In any case in which a court determines that the economic
substance doctrine is relevant for purposes of this title to a transaction (or
series of transactions), such transaction (or series of transactions) shall
have economic substance only if the requirements of this paragraph are
met.</text>
</subparagraph><subparagraph id="IDC259FD3ADF91482EB4E859E25F874D62"><enum>(B)</enum><header>Definition of
economic substance</header><text>For purposes of subparagraph (A)—</text>
<clause id="ID19A982A4838D483C8C800A22FCD80D2B"><enum>(i)</enum><header>In
general</header><text>A transaction has economic substance only if—</text>
<subclause id="IDE25016AD2F874EF883C1CA8E9EE93A5F"><enum>(I)</enum><text>the transaction
changes in a meaningful way (apart from Federal tax effects) the taxpayer’s
economic position, and</text>
</subclause><subclause id="ID49470CA43FBC45B88C270B1521D298CC"><enum>(II)</enum><text>subject to
clause (iii), the taxpayer has a substantial purpose (other than a Federal tax
purpose) for entering into such transaction.</text>
</subclause></clause><clause id="ID34A8F58754784626A22E936CB3EDA3DD"><enum>(ii)</enum><header>Special rule
where taxpayer relies on profit potential</header><text>A transaction shall not
be treated as having economic substance solely by reason of having a potential
for profit unless the present value of the reasonably expected pre-Federal tax
profit from the transaction is substantial in relation to the present value of
the expected net Federal tax benefits that would be allowed if the transaction
were respected. In determining pre-Federal tax profit, there shall be taken
into account fees and other transaction expenses and to the extent provided by
the Secretary, foreign taxes.</text>
</clause><clause id="id6159FAD4967641DE94A93E3476E062E0"><enum>(iii)</enum><header>Special rules
for determining whether non-Federal tax purpose</header><text>For purposes of
clause (i)(II)—</text>
<subclause id="id3257EA2F2F074E75BB0C5A12732F23C0"><enum>(I)</enum><text>a purpose of
achieving a financial accounting benefit shall not be taken into account in
determining whether a transaction has a substantial purpose (other than a
Federal tax purpose) if the origin of such financial accounting benefit is a
reduction of Federal tax, and</text>
</subclause><subclause id="idC96AE4ECC9E74498BAC3178EC8E43737"><enum>(II)</enum><text>the taxpayer
shall not be treated as having a substantial purpose (other than a Federal tax
purpose) with respect to a transaction if the only such purpose is the
reduction of non-Federal taxes and the transaction will result in a reduction
of Federal taxes substantially equal to, or greater than, the reduction in
non-Federal taxes because of similarities between the laws imposing the
taxes.</text>
</subclause></clause></subparagraph></paragraph><paragraph id="ID1E0FF0BF26D0483CA56CE2848DBC225B"><enum>(2)</enum><header>Definitions and
special rules</header><text>For purposes of this subsection—</text>
<subparagraph id="IDC96DB00F55794B84B44AA3DEF61C93F1"><enum>(A)</enum><header>Economic
substance doctrine</header><text>The term <term>economic substance
doctrine</term> means the common law doctrine under which tax benefits under
subtitle A with respect to a transaction are not allowable if the transaction
does not have economic substance or lacks a business purpose.</text>
</subparagraph><subparagraph id="IDE6616A077DBA4131AE3D0F33EB3576D2"><enum>(B)</enum><header>Exception for
personal transactions of individuals</header><text>In the case of an
individual, this subsection shall apply only to transactions entered into in
connection with a trade or business or an activity engaged in for the
production of income.</text>
</subparagraph></paragraph><paragraph id="IDA8B93874DB614330BD1A5BD55D5B5A82"><enum>(3)</enum><header>Other
provisions not affected</header><text>Except as specifically provided in this
subsection, the provisions of this subsection shall not be construed as
altering or supplanting any other rule of law or provision of this title, and
the requirements of this subsection shall be construed as being in addition to
any such other rule of law or provision of this title.</text>
</paragraph><paragraph id="ID07661859E21C4FA081F98C2744B44F4C"><enum>(4)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this subsection. Such regulations may include
exemptions from the application of this
subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID091FA003CE4649E688962CA87E6EC671"><enum>(b)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to
transactions entered into after the date of the enactment of this Act.</text>
</subsection></section><section id="ID06ABA0C3E5FF4BE89591F9F283743136"><enum>512.</enum><header>Penalty for
understatements attributable to transactions lacking economic substance,
etc</header>
<subsection id="ID3C3D4E2F1D06420FAB80607D9A381D8F"><enum>(a)</enum><header>In
General</header><text>Subchapter A of chapter 68 is amended by inserting after
section 6662A the following new section:</text>
<quoted-block id="ID27E8BB4344AA4642BE7928BD5A0A7AB7" style="OLC">
<section id="IDA495CF55506E44FA96AD57E46622C955"><enum>6662B.</enum><header>Penalty for
understatements attributable to transactions lacking economic substance,
etc</header>
<subsection id="IDAF2F3222029F4CA3B1E0D2B06F274521"><enum>(a)</enum><header>Imposition of
Penalty</header><text>If a taxpayer has an noneconomic substance transaction
understatement for any taxable year, there shall be added to the tax an amount
equal to 30 percent of the amount of such understatement.</text>
</subsection><subsection id="ID69CAAD11CAF04DB68280B1A51561196E"><enum>(b)</enum><header>Reduction of
Penalty for Disclosed Transactions</header><text>Subsection (a) shall be
applied by substituting <quote>20 percent</quote> for <quote>30 percent</quote>
with respect to the portion of any noneconomic substance transaction
understatement with respect to which the relevant facts affecting the tax
treatment of the item are adequately disclosed in the return or a statement
attached to the return.</text>
</subsection><subsection id="ID3978719A0D2C447B8C744D6D7B085313"><enum>(c)</enum><header>Noneconomic
Substance Transaction Understatement</header><text>For purposes of this
section—</text>
<paragraph id="IDD3157C12AFEF43CD945F639DAFBF0EEB"><enum>(1)</enum><header>In
general</header><text>The term <term>noneconomic substance transaction
understatement</term> means any amount which would be an understatement under
section 6662A(b)(1) if section 6662A were applied by taking into account items
attributable to noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.</text>
</paragraph><paragraph id="IDB6B2380A661041FB8D440546BADD57CC"><enum>(2)</enum><header>Noneconomic
substance transaction</header><text>The term <term>noneconomic substance
transaction</term> means any transaction if there is a lack of economic
substance (within the meaning of section 7701(p)(1)(B)) for the transaction
giving rise to the claimed benefit.</text>
</paragraph></subsection><subsection id="ID5156BAEE6E6A42488A649270A1568C0F"><enum>(d)</enum><header>Rules
Applicable to Assertion, Compromise, and Collection of Penalty</header>
<paragraph id="id4B5200AA44C445CB9BBDB7F81C452024"><enum>(1)</enum><header>In
general</header><text>Only the Chief Counsel for the Internal Revenue Service
may assert a penalty imposed under this section or may compromise all or any
portion of such penalty. The Chief Counsel may delegate the authority under
this paragraph only to an individual holding the position of chief of a branch
within the Office of the Chief Counsel for the Internal Revenue Service.</text>
</paragraph><paragraph id="idA38CDA7251154703B6476D4B105F50FF"><enum>(2)</enum><header>Specific
requirements</header>
<subparagraph id="idFCF0149762A54E89B5A2728F1531FC87"><enum>(A)</enum><header>Assertion of
penalty</header><text>The Chief Counsel for the Internal Revenue Service (or
the Chief Counsel's delegate under paragraph (1)) shall not assert a penalty
imposed under this section unless, before the assertion of the penalty, the
taxpayer is provided—</text>
<clause id="id31FAE6C071CC4E7199268F29C89342D7"><enum>(i)</enum><text>a
notice of intent to assert the penalty, and</text>
</clause><clause id="idD5690973984C45B1A0D67D927C063951"><enum>(ii)</enum><text>an opportunity
to provide to the Commissioner (or the Chief Counsel's delegate under paragraph
(1)) a written response to the proposed penalty within a reasonable period of
time after such notice.</text>
</clause></subparagraph><subparagraph id="idEA7D4D9DAD8C40AEA04469248F6CA591"><enum>(B)</enum><header>Compromise of
penalty</header><text>A compromise shall not result in a reduction in the
penalty imposed by this section in an amount greater than the amount which
bears the same ratio to the amount of the penalty determined without regard to
the compromise as—</text>
<clause id="idB9F15830B2BC48809A3AEE9636104FFB"><enum>(i)</enum><text>the reduction
under the compromise in the noneconomic substance transaction understatement to
which the penalty relates, bears to</text>
</clause><clause id="id9EC74BE1AD57420887C8D09DAA936CBC"><enum>(ii)</enum><text>the amount of
the noneconomic substance transaction understatement determined without regard
to the compromise.</text>
</clause></subparagraph></paragraph><paragraph id="idA4CBAC1A602C4066B1EC2166AFE2146B"><enum>(3)</enum><header>Rules relating
to relevancy requirement</header>
<subparagraph id="id93461D9997F4453592490569D2D64DAE"><enum>(A)</enum><header>Determination
of relevance by Chief Counsel</header><text>The Chief Counsel for the Internal
Revenue Service (or the Chief Counsel's delegate under paragraph (1)) may
assert, compromise, or collect a penalty imposed by this section with respect
to a noneconomic substance transaction even if there has not been a court
determination that the economic substance doctrine was relevant for purposes of
this title to the transaction if the Chief Counsel (or delegate) determines
that either was so relevant.</text>
</subparagraph><subparagraph id="idDE38A0B8A12F408FA85CF30889FD7116"><enum>(B)</enum><header>Final order of
court</header><text>If there is a final order of a court that determines that
the economic substance doctrine was not relevant for purposes of this title to
a transaction (or series of transactions), any penalty imposed under this
section with respect to the transaction (or series of transactions) shall be
rescinded.</text>
</subparagraph></paragraph><paragraph id="IDC3635C055DF1411C819A0D6726617ED8"><enum>(4)</enum><header>Applicable
rules</header><text>The rules of paragraphs (2) and (3) of section 6707A(d)
shall apply to a compromise under paragraph (1).</text>
</paragraph></subsection><subsection id="ID12EB186D9D864C158A0353B110063AF7"><enum>(e)</enum><header>Coordination
With Other Penalties</header><text>Except as otherwise provided in this part,
the penalty imposed by this section shall be in addition to any other penalty
imposed by this title.</text>
</subsection><subsection id="ID6799F63CAC304D579F0933CAD8430374"><enum>(f)</enum><header>Cross
References</header>
<toc regeneration="no-regeneration">
<toc-entry level="paragraph">(1) For coordination of penalty with
understatements under section 6662 and other special rules, see section
6662A(e).</toc-entry>
<toc-entry level="paragraph">(2) For reporting of penalty imposed
under this section to the Securities and Exchange Commission, see section
6707A(e).</toc-entry>
</toc>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="IDEC9192D947B34D4AB15E02423E90CFB3"><enum>(b)</enum><header>Coordination
With Other Understatements and Penalties</header>
<paragraph id="ID573F6DF70A0142C3BDFC5601EAE680DD"><enum>(1)</enum><text>The second
sentence of section 6662(d)(2)(A) is amended by inserting <quote>and without
regard to items with respect to which a penalty is imposed by section
6662B</quote> before the period at the end.</text>
</paragraph><paragraph id="IDFF721A90837745B89457E243427F6177"><enum>(2)</enum><text>Subsection (e) of
section 6662A is amended—</text>
<subparagraph id="IDBD7812ADA9B4460CA926B393BAF2EF23"><enum>(A)</enum><text>in paragraph (1),
by inserting <quote>and noneconomic substance transaction
understatements</quote> after <quote>reportable transaction
understatements</quote> both places it appears,</text>
</subparagraph><subparagraph id="ID47AF6B47AFBD4139BEA94D37F0304A90"><enum>(B)</enum><text>in paragraph
(2)(A)—</text>
<clause id="idFAE5082C5D594435A906E8C474BF08FD"><enum>(i)</enum><text>by
inserting <quote>6662B or</quote> before <quote>6663</quote> in the text,
and</text>
</clause><clause id="id94ABC5CB37EA450D933CA59B531344E9"><enum>(ii)</enum><text>by
striking <quote><header-in-text level="subparagraph" style="OLC">penalty</header-in-text></quote> in the heading and inserting
<quote><header-in-text level="subparagraph" style="OLC">and economic substance
penalties</header-in-text></quote>,</text>
</clause></subparagraph><subparagraph id="ID1CAD044A0CD34713AB68E7E6643ADAF5"><enum>(C)</enum><text>in paragraph
(2)(B)—</text>
<clause id="id92630163E01041D0B71BA7F29EE7D59F"><enum>(i)</enum><text>by
inserting <quote>and section 6662B</quote> after <quote>This section</quote>,
and</text>
</clause><clause id="idE6A1731178534A928A81754E7CDCA9DB"><enum>(ii)</enum><text>by
striking <quote><header-in-text level="subparagraph" style="OLC">penalty</header-in-text></quote> in the heading and inserting
<quote><header-in-text level="subparagraph" style="OLC">and economic substance
penalties</header-in-text></quote>,</text>
</clause></subparagraph><subparagraph id="ID771AD542F72549348975A40A4B0CD352"><enum>(D)</enum><text>in paragraph (3),
by inserting <quote>or noneconomic substance transaction understatement</quote>
after <quote>reportable transaction understatement</quote>, and</text>
</subparagraph><subparagraph id="ID879652552EBC43F9A7E399FCEC00064C"><enum>(E)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block id="IDC1F8017059DF46C79137C7E8309E514E" style="OLC">
<paragraph id="ID50260C6BF733490A938B819B762617CC"><enum>(4)</enum><header>Noneconomic
substance transaction understatement</header><text>For purposes of this
subsection, the term <term>noneconomic substance transaction
understatement</term> has the meaning given such term by section
6662B(c).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="ID573FC454F0D141B99C9F39D8668416C8"><enum>(3)</enum><text>Subsection (e) of
section 6707A is amended—</text>
<subparagraph id="IDEB2013C3B06E48C1AF93430D2475A2F0"><enum>(A)</enum><text>by striking
<quote>or</quote> at the end of subparagraph (B), and</text>
</subparagraph><subparagraph id="IDFF9926E374554CE1BD96F0EF5E9AEE78"><enum>(B)</enum><text>by striking
subparagraph (C) and inserting the following new subparagraphs:</text>
<quoted-block id="ID4F1FCFC7DC3A47CC9E5B55E2ED0BB9FE" style="OLC">
<subparagraph id="IDECE0DD567CB8413ABD280969E490EB78"><enum>(C)</enum><text>is required to
pay a penalty under section 6662B with respect to any noneconomic substance
transaction, or</text>
</subparagraph><subparagraph id="IDB82EA0F81B1C4E99A9948DF2BB8A9A8C"><enum>(D)</enum><text>is required to
pay a penalty under section 6662(h) with respect to any transaction and would
(but for section 6662A(e)(2)(B)) have been subject to penalty under section
6662A at a rate prescribed under section 6662A(c) or to penalty under section
6662B,</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="ID2CC639B9CA8A4D48B3C36463B9468CBF"><enum>(c)</enum><header>Clerical
Amendment</header><text>The table of sections for part II of subchapter A of
chapter 68 is amended by inserting after the item relating to section 6662A the
following new item:</text>
<quoted-block id="IDFAD62FD7637A4DD6A3526C4F89FA3B10" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 6662B. Penalty for understatements
attributable to transactions lacking economic substance,
etc.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID8AFEC898A4484EB0B36326D2A829E083"><enum>(d)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to
transactions entered into after the date of the enactment of this Act.</text>
</subsection></section><section id="ID8AA87EA6710A412B92BD6E8EA7593F80"><enum>513.</enum><header>Denial of
deduction for interest on underpayments attributable to noneconomic substance
transactions</header>
<subsection id="IDAEA09A7BB96A452EA89C89C1EB96907B"><enum>(a)</enum><header>In
General</header><text>Section 163(m) (relating to interest on unpaid taxes
attributable to nondisclosed reportable transactions) is amended—</text>
<paragraph id="ID147FC77E6D5F4EADA306F0AD0392681D"><enum>(1)</enum><text>by striking
“attributable” and all that follows and inserting the following: “attributable
to—</text>
<quoted-block id="ID94415239F0DC4CEFA58C9FC150918558" style="OLC">
<paragraph id="ID2336863AC9234134BA8B84B3BA9E69AE"><enum>(1)</enum><text>the portion of
any reportable transaction understatement (as defined in section 6662A(b)) with
respect to which the requirement of section 6664(d)(2)(A) is not met, or</text>
</paragraph><paragraph id="ID2E76D398CFA14EE8B7A627C20F53652A"><enum>(2)</enum><text>any noneconomic
substance transaction understatement (as defined in section
6662B(c)).</text>
</paragraph><after-quoted-block>,
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="ID8EED7518BA49451F812CC3DCFFA10863"><enum>(2)</enum><text>by inserting
<quote><header-in-text level="subsection" style="OLC">and Noneconomic Substance
Transactions</header-in-text></quote> in the heading thereof after
<quote><header-in-text level="subsection" style="OLC">Transactions</header-in-text></quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID76272D4C3C5A406F8417C5091A8C6624"><enum>(b)</enum><header>Effective
Date</header><text>The amendments made by this section shall apply to
transactions after the date of the enactment of this Act in taxable years
ending after such date.</text>
</subsection></section></subtitle>
October 25, 2007
Read twice and placed on the calendar