II 110th CONGRESS 2d Session S. 3399 IN THE SENATE OF THE UNITED STATES July 31, 2008 Mrs. Lincoln (for herself, Mr. Smith, Ms. Cantwell, Mr. Cornyn, Mrs. Murray, Mrs. Dole, Ms. Landrieu, Mr. Chambliss, Mr. Wicker, and Mr. Vitter) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to make permanent the reduction in the rate of tax on qualified timber gain of corporations, and for other purposes.

1.

Short title

This Act may be cited as the Timber Revitalization and Economic Enhancement Act II of 2008.

2.

Permanent reduction in rate of tax on qualified timber gain of corporations

(a)

In general

Section 1201(b)(1) of the Internal Revenue Code of 1986 is amended by striking and beginning on or before the date which is 1 year after such date. (b)

Conforming amendment

Paragraph (3) of section 1201(b) of the Internal Revenue Code of 1986 is amended to read as follows: (3)

Computation for taxable years in which rate first applies

In the case of any taxable year which includes the date set forth in paragraph (1), the qualified timber gain for such year shall not exceed the qualified timber gain properly taken into account for the portion of the year after such date. . (c)

Effective date

The amendments made by this section shall take effect as if included in the amendment made by section 15311(a) of the Food, Conservation, and Energy Act of 2008.

3.

Permanent timber REIT modernization

(a)

In general

Section 856(c)(5)(H) of the Internal Revenue Code of 1986 is amended by striking clause (iii). (b)

Conforming amendment

Section 856(c) of the Internal Revenue Code of 1986 is amended by striking paragraph (8). (c)

Effective date

The amendments made by this section shall take effect as if included in the amendment made by section 15312 of the Food, Conservation, and Energy Act of 2008.

4.

Permanent qualification of mineral royalty income for timber REITs

(a)

In general

Section 856(c)(2)(I) of the Internal Revenue Code of 1986 is amended by striking the first taxable year beginning after the date of the enactment of this subparagraph and inserting any taxable year. (b)

Effective date

The amendment made by this section shall take effect as if included in the amendment made by section 15313(a) of the Food, Conservation, and Energy Act of 2008.

5.

Permanent modifcation of prohibited transaction rules for timber property

(a)

In general

(1)Section 857(b)(6)(D)(v) of the Internal Revenue Code of 1986 is amended by striking , in the case of a sale on or before the termination date,. (2)Section 857(b)(6)(H) of such Code is amended by striking In the case of a sale on or before the termination date, the sale and inserting The sale. (3)Section 857(b)(6) of such Code is amended by striking subparagraph (I). (b)

Effective date

The amendments made by this section shall take effect as if included in the amendments made by section 15315 of the Food, Conservation, and Energy Act of 2008.