[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4213 Engrossed in House (EH)]

111th CONGRESS
  1st Session
                                H. R. 4213

_______________________________________________________________________

                                 AN ACT


 
 To amend the Internal Revenue Code of 1986 to extend certain expiring 
                  provisions, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Tax Extenders Act 
of 2009''.
    (b) Amendment of 1986 Code.--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) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
                      TITLE I--GENERAL PROVISIONS

                   Subtitle A--Individual Tax Relief

Sec. 101. Deduction of State and local sales taxes.
Sec. 102. Additional standard deduction for State and local real 
                            property taxes.
Sec. 103. Above-the-line deduction for qualified tuition and related 
                            expenses.
Sec. 104. Deduction for certain expenses of elementary and secondary 
                            school teachers.
                    Subtitle B--Business Tax Relief

Sec. 111. Research credit.
Sec. 112. Exceptions for active financing income.
Sec. 113. Look-thru treatment of payments between related controlled 
                            foreign corporations under foreign personal 
                            holding company rules.
Sec. 114. 15-year straight-line cost recovery for qualified leasehold 
                            improvements, qualified restaurant 
                            buildings and improvements, and qualified 
                            retail improvements.
Sec. 115. 7-year recovery period for motorsports entertainment 
                            complexes.
Sec. 116. Railroad track maintenance credit.
Sec. 117. Special expensing rules for certain film and television 
                            productions.
Sec. 118. Expensing of environmental remediation costs.
Sec. 119. Mine rescue team training credit.
Sec. 120. Election to expense advanced mine safety equipment.
Sec. 121. Employer wage credit for employees who are active duty 
                            members of the uniformed services.
Sec. 122. 5-year depreciation for farming business machinery and 
                            equipment.
Sec. 123. Treatment of certain dividends and assets of regulated 
                            investment companies.
Sec. 124. Look-thru of certain regulated investment company stock in 
                            determining gross estate of nonresidents.
Sec. 125. RIC qualified investment entity treatment under FIRPTA.
Sec. 126. Suspension of limitation on percentage depletion for oil and 
                            gas from marginal wells.
                   Subtitle C--Charitable Provisions

Sec. 131. Contributions of capital gain real property made for 
                            conservation purposes.
Sec. 132. Enhanced charitable deduction for contributions of food 
                            inventory.
Sec. 133. Enhanced charitable deduction for contributions of book 
                            inventories to public schools.
Sec. 134. Enhanced charitable deduction for corporate contributions of 
                            computer technology and equipment for 
                            educational purposes.
Sec. 135. Tax-free distributions from individual retirement plans for 
                            charitable purposes.
Sec. 136. Modification of tax treatment of certain payments to 
                            controlling exempt organizations.
Sec. 137. Exclusion of gain or loss on sale or exchange of certain 
                            brownfield sites from unrelated business 
                            taxable income.
Sec. 138. Basis adjustment to stock of S corporations making charitable 
                            contributions of property.
                  Subtitle D--Miscellaneous Provisions

Sec. 141. Indian employment tax credit.
Sec. 142. Accelerated depreciation for business property on an Indian 
                            reservation.
Sec. 143. Deduction allowable with respect to income attributable to 
                            domestic production activities in Puerto 
                            Rico.
Sec. 144. Temporary increase in limit on cover over of rum excise taxes 
                            to Puerto Rico and the Virgin Islands.
Sec. 145. American Samoa economic development credit.
               TITLE II--COMMUNITY ASSISTANCE PROVISIONS

Sec. 201. Empowerment zone tax incentives.
Sec. 202. Renewal community tax incentives.
Sec. 203. New markets tax credit.
Sec. 204. Tax incentives for investment in the District of Columbia.
Sec. 205. Tax incentives for New York Liberty Zone.
Sec. 206. Tax incentives for the Gulf Opportunity Zone.
Sec. 207. Election for refundable low-income housing credit for 2010.
                 TITLE III--DISASTER RELIEF PROVISIONS

Sec. 301. Deductibility of personal casualty losses attributable to 
                            federally declared disasters.
Sec. 302. Expensing of certain qualified disaster expenses.
Sec. 303. 5-year carryback of net operating losses attributable to 
                            Federally declared disasters.
Sec. 304. Waiver of certain mortgage revenue bond requirements for 
                            residences located in Federally declared 
                            disaster areas.
Sec. 305. Expensing and special depreciation allowance for qualified 
                            disaster assistance property.
                      TITLE IV--ENERGY PROVISIONS

Sec. 401. Incentives for biodiesel and renewable diesel.
Sec. 402. Alternative motor vehicle credit for heavy hybrids.
Sec. 403. Alternative fuel credit for natural gas and liquified 
                            petroleum gas.
Sec. 404. Special rule for sales or dispositions to implement FERC or 
                            State electric restructuring policy for 
                            qualified electric utilities.
                TITLE V--FOREIGN ACCOUNT TAX COMPLIANCE

         Subtitle A--Increased Disclosure of Beneficial Owners

Sec. 501. Reporting on certain foreign accounts.
Sec. 502. Repeal of certain foreign exceptions to registered bond 
                            requirements.
       Subtitle B--Under Reporting With Respect to Foreign Assets

Sec. 511. Disclosure of information with respect to foreign financial 
                            assets.
Sec. 512. Penalties for underpayments attributable to undisclosed 
                            foreign financial assets.
Sec. 513. Modification of statute of limitations for significant 
                            omission of income in connection with 
                            foreign assets.
                Subtitle C--Other Disclosure Provisions

Sec. 521. Reporting of activities with respect to passive foreign 
                            investment companies.
Sec. 522. Secretary permitted to require financial institutions to file 
                            certain returns related to withholding on 
                            foreign transfers electronically.
            Subtitle D--Provisions Related to Foreign Trusts

Sec. 531. Clarifications with respect to foreign trusts which are 
                            treated as having a United States 
                            beneficiary.
Sec. 532. Presumption that foreign trust has United States beneficiary.
Sec. 533. Uncompensated use of trust property.
Sec. 534. Reporting requirement of United States owners of foreign 
                            trusts.
Sec. 535. Minimum penalty with respect to failure to report on certain 
                            foreign trusts.
   Subtitle E--Substitute Dividends and Dividend Equivalent Payments 
            Received by Foreign Persons Treated as Dividends

Sec. 541. Substitute dividends and dividend equivalent payments 
                            received by foreign persons treated as 
                            dividends.
                   TITLE VI--OTHER REVENUE PROVISIONS

 Subtitle A--Partnership Interests Held by Partners Providing Services

Sec. 601. Partnership interests transferred in connection with 
                            performance of services.
Sec. 602. Income of partners for performing investment management 
                            services treated as ordinary income 
                            received for performance of services.
       Subtitle B--Time for Payment of Corporate Estimated Taxes

Sec. 611. Time for payment of corporate estimated taxes.
                   Subtitle C--Tax Expenditure Study

Sec. 621. Findings.
Sec. 622. Study of extended tax expenditures.

                      TITLE I--GENERAL PROVISIONS

                   Subtitle A--Individual Tax Relief

SEC. 101. DEDUCTION OF STATE AND LOCAL SALES TAXES.

    (a) In General.--Subparagraph (I) of section 164(b)(5) is amended 
by striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 102. ADDITIONAL STANDARD DEDUCTION FOR STATE AND LOCAL REAL 
              PROPERTY TAXES.

    (a) In General.--Subparagraph (C) of section 63(c)(1) is amended by 
striking ``or 2009'' and inserting ``, 2009, or 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 103. ABOVE-THE-LINE DEDUCTION FOR QUALIFIED TUITION AND RELATED 
              EXPENSES.

    (a) In General.--Subsection (e) of section 222 is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 104. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY 
              SCHOOL TEACHERS.

    (a) In General.--Subparagraph (D) of section 62(a)(2) is amended by 
striking ``or 2009'' and inserting ``2009, or 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

                    Subtitle B--Business Tax Relief

SEC. 111. RESEARCH CREDIT.

    (a) In General.--Subparagraph (B) of section 41(h)(1) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Conforming Amendment.--Subparagraph (D) of section 45C(b)(1) is 
amended by striking ``December 31, 2009'' and inserting ``December 31, 
2010''.
    (c) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred after December 31, 2009.

SEC. 112. EXCEPTIONS FOR ACTIVE FINANCING INCOME.

    (a) In General.--Sections 953(e)(10) and 954(h)(9) are each amended 
by striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Conforming Amendment.--Section 953(e)(10) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2009, and to taxable years of United States shareholders with or 
within which any such taxable year of such foreign corporation ends.

SEC. 113. LOOK-THRU TREATMENT OF PAYMENTS BETWEEN RELATED CONTROLLED 
              FOREIGN CORPORATIONS UNDER FOREIGN PERSONAL HOLDING 
              COMPANY RULES.

    (a) In General.--Subparagraph (C) of section 954(c)(6) is amended 
by striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of foreign corporations beginning after December 31, 
2009, and to taxable years of United States shareholders with or within 
which any such taxable year of such foreign corporation ends.

SEC. 114. 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD 
              IMPROVEMENTS, QUALIFIED RESTAURANT BUILDINGS AND 
              IMPROVEMENTS, AND QUALIFIED RETAIL IMPROVEMENTS.

    (a) In General.--Clauses (iv), (v), and (ix) of section 
168(e)(3)(E) are each amended by striking ``January 1, 2010'' and 
inserting ``January 1, 2011''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2009.

SEC. 115. 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT 
              COMPLEXES.

    (a) In General.--Subparagraph (D) of section 168(i)(15) is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2009.

SEC. 116. RAILROAD TRACK MAINTENANCE CREDIT.

    (a) In General.--Subsection (f) of section 45G is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred in taxable years beginning after 
December 31, 2009.

SEC. 117. SPECIAL EXPENSING RULES FOR CERTAIN FILM AND TELEVISION 
              PRODUCTIONS.

    (a) In General.--Subsection (f) of section 181 is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to productions commencing after December 31, 2009.

SEC. 118. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    (a) In General.--Subsection (h) of section 198 is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2009.

SEC. 119. MINE RESCUE TEAM TRAINING CREDIT.

    (a) In General.--Subsection (e) of section 45N is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 120. ELECTION TO EXPENSE ADVANCED MINE SAFETY EQUIPMENT.

    (a) In General.--Subsection (g) of section 179E is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2009.

SEC. 121. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE DUTY 
              MEMBERS OF THE UNIFORMED SERVICES.

    (a) In General.--Subsection (f) of section 45P is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments made after December 31, 2009.

SEC. 122. 5-YEAR DEPRECIATION FOR FARMING BUSINESS MACHINERY AND 
              EQUIPMENT.

    (a) In General.--Clause (vii) of section 168(e)(3)(B) is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2009.

SEC. 123. TREATMENT OF CERTAIN DIVIDENDS AND ASSETS OF REGULATED 
              INVESTMENT COMPANIES.

    (a) In General.--Paragraphs (1)(C) and (2)(C) of section 871(k) are 
each amended by striking ``December 31, 2009'' and inserting ``December 
31, 2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

SEC. 124. LOOK-THRU OF CERTAIN REGULATED INVESTMENT COMPANY STOCK IN 
              DETERMINING GROSS ESTATE OF NONRESIDENTS.

    (a) In General.--Paragraph (3) of section 2105(d) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to estates of decedents dying after December 31, 2009.

SEC. 125. RIC QUALIFIED INVESTMENT ENTITY TREATMENT UNDER FIRPTA.

    (a) In General.--Clause (ii) of section 897(h)(4)(A) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after December 31, 2009.

SEC. 126. SUSPENSION OF LIMITATION ON PERCENTAGE DEPLETION FOR OIL AND 
              GAS FROM MARGINAL WELLS.

    (a) In General.--Clause (ii) of section 613A(c)(6)(H) is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

                   Subtitle C--Charitable Provisions

SEC. 131. CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE FOR 
              CONSERVATION PURPOSES.

    (a) In General.--Clause (vi) of section 170(b)(1)(E) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Contributions by Certain Corporate Farmers and Ranchers.--
Clause (iii) of section 170(b)(2)(B) is amended by striking ``December 
31, 2009'' and inserting ``December 31, 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2009.

SEC. 132. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD 
              INVENTORY.

    (a) In General.--Clause (iv) of section 170(e)(3)(C) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2009.

SEC. 133. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK 
              INVENTORIES TO PUBLIC SCHOOLS.

    (a) In General.--Clause (iv) of section 170(e)(3)(D) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2009.

SEC. 134. ENHANCED CHARITABLE DEDUCTION FOR CORPORATE CONTRIBUTIONS OF 
              COMPUTER TECHNOLOGY AND EQUIPMENT FOR EDUCATIONAL 
              PURPOSES.

    (a) In General.--Subparagraph (G) of section 170(e)(6) is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2009.

SEC. 135. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subparagraph (F) of section 408(d)(8) is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made in taxable years beginning after December 31, 
2009.

SEC. 136. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO 
              CONTROLLING EXEMPT ORGANIZATIONS.

    (a) In General.--Clause (iv) of section 512(b)(13)(E) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments received or accrued after December 31, 2009.

SEC. 137. EXCLUSION OF GAIN OR LOSS ON SALE OR EXCHANGE OF CERTAIN 
              BROWNFIELD SITES FROM UNRELATED BUSINESS TAXABLE INCOME.

    (a) In General.--Subparagraph (K) of section 512(b)(19) is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property acquired after December 31, 2009.

SEC. 138. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING CHARITABLE 
              CONTRIBUTIONS OF PROPERTY.

    (a) In General.--Paragraph (2) of section 1367(a) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2009.

                  Subtitle D--Miscellaneous Provisions

SEC. 141. INDIAN EMPLOYMENT TAX CREDIT.

    (a) In General.--Subsection (f) of section 45A is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 142. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON AN INDIAN 
              RESERVATION.

    (a) In General.--Paragraph (8) of section 168(j) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2009.

SEC. 143. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO 
              DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

    (a) In General.--Subparagraph (C) of section 199(d)(8) is amended--
            (1) by striking ``first 4 taxable years'' and inserting 
        ``first 5 taxable years'', and
            (2) by striking ``January 1, 2010'' and inserting ``January 
        1, 2011''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

SEC. 144. TEMPORARY INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAXES 
              TO PUERTO RICO AND THE VIRGIN ISLANDS.

    (a) In General.--Paragraph (1) of section 7652(f) is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distilled spirits brought into the United States after December 31, 
2009.

SEC. 145. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.

    (a) In General.--Subsection (d) of section 119 of division A of the 
Tax Relief and Health Care Act of 2006 is amended--
            (1) by striking ``first 4 taxable years'' and inserting 
        ``first 5 taxable years'', and
            (2) by striking ``January 1, 2010'' and inserting ``January 
        1, 2011''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

               TITLE II--COMMUNITY ASSISTANCE PROVISIONS

SEC. 201. EMPOWERMENT ZONE TAX INCENTIVES.

    (a) In General.--Clause (i) of section 1391(d)(1)(A) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Increased Exclusion of Gain on Stock of Empowerment Zone 
Businesses.--Subparagraph (C) of section 1202(a)(2) is amended--
            (1) by striking ``December 31, 2014'' and inserting 
        ``December 31, 2015'', and
            (2) by striking ``2014'' in the heading and inserting 
        ``2015''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2009.

SEC. 202. RENEWAL COMMUNITY TAX INCENTIVES.

    (a) In General.--Subsection (b) of section 1400E is amended--
            (1) by striking ``December 31, 2009'' in paragraphs (1)(A) 
        and (3) and inserting ``December 31, 2010'', and
            (2) by striking ``January 1, 2010'' in paragraph (3) and 
        inserting ``January 1, 2011''.
    (b) Zero-Percent Capital Gains Rate.--
            (1) Acquisition dates.--Paragraphs (2)(A)(i), (3)(A), 
        (4)(A)(i), and (4)(B)(i) of section 1400F(b) are each amended 
        by striking ``January 1, 2010'' and inserting ``January 1, 
        2011''.
            (2) Limitation on period of gains.--Paragraph (2) of 
        section 1400F(c) is amended--
                    (A) by striking ``December 31, 2014'' and inserting 
                ``December 31, 2015'', and
                    (B) by striking ``2014'' in the heading and 
                inserting ``2015''.
            (3) Clerical amendment.--Subsection (d) of section 1400F is 
        amended by striking ``and `December 31, 2014' for `December 31, 
        2014'''.
    (c) Commercial Revitalization Deduction.--Subsection (g) of section 
1400I is amended by striking ``December 31, 2009'' and inserting 
``December 31, 2010''.
    (d) Increased Expensing Under Section 179.--Subparagraph (A) of 
section 1400J(b)(1) is amended by striking ``January 1, 2010'' and 
inserting ``January 1, 2011''.
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        periods after December 31, 2009.
            (2) Acquisitions.--The amendments made by subsection (b)(1) 
        and (d) shall apply to acquisitions after December 31, 2009.
            (3) Commercial revitalization deduction.--The amendment 
        made by subsection (c) shall apply to building placed in 
        service after December 31, 2009.

SEC. 203. NEW MARKETS TAX CREDIT.

    (a) In General.--Subparagraph (F) of section 45D(f)(1) is amended 
by inserting ``and 2010'' after ``2009''.
    (b) Carryover of Unused Limitation.--Paragraph (3) of section 
45D(f) is amended by striking ``2014'' and inserting ``2015''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after 2009.

SEC. 204. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA.

    (a) In General.--Subsection (f) of section 1400 is amended by 
striking ``December 31, 2009'' each place it appears and inserting 
``December 31, 2010''.
    (b) Tax-Exempt DC Empowerment Zone Bonds.--Subsection (b) of 
section 1400A is amended by striking ``December 31, 2009'' and 
inserting ``December 31, 2010''.
    (c) Zero-Percent Capital Gains Rate.--
            (1) Acquisition dates.--Paragraphs (2)(A)(i), (3)(A), 
        (4)(A)(i), and (4)(B)(i)(I) of section 1400B(b) are each 
        amended by striking ``January 1, 2010'' and inserting ``January 
        1, 2011''.
            (2) Limitation on period of zero-percent capital gains.--
                    (A) In general.--Paragraph (2) of section 1400B(e) 
                is amended--
                            (i) by striking ``December 31, 2014'' and 
                        inserting ``December 31, 2015'', and
                            (ii) by striking ``2014'' in the heading 
                        and inserting ``2015''.
                    (B) Interests in partnership and s corporations.--
                Paragraph (2) of section 1400B(g) is amended by 
                striking ``December 31, 2014'' and inserting ``December 
                31, 2015''.
    (d) First-Time Homebuyer Credit.--Subsection (i) of section 1400C 
is amended by striking ``January 1, 2010'' and inserting ``January 1, 
2011''.
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        periods after December 31, 2009.
            (2) Tax-exempt dc empowerment zone bonds.--The amendment 
        made by subsection (b) shall apply to bonds issued after 
        December 31, 2009.
            (3) Acquisition dates for zero-percent capital gains 
        rate.--The amendments made by subsection (c)(1) shall apply to 
        property acquired or substantially improved after December 31, 
        2009.
            (4) First-time homebuyer credit.--The amendment made by 
        subsection (d) shall apply to property purchased after December 
        31, 2009.

SEC. 205. TAX INCENTIVES FOR NEW YORK LIBERTY ZONE.

    (a) Bonus Depreciation for Nonresidential Real Property and 
Residential Rental Property.--Subparagraph (A) of section 1400L(b)(2) 
is amended by striking ``December 31, 2009'' in the last sentence and 
inserting ``December 31, 2010''.
    (b) Tax-Exempt Bond Financing.--Subparagraph (D) of section 
1400L(d)(2) is amended by striking ``January 1, 2010'' and inserting 
``January 1, 2011''.
    (c) Effective Dates.--
            (1) Bonus depreciation.--The amendment made by subsection 
        (a) shall apply to property placed in service after December 
        31, 2009.
            (2) Tax-exempt bond financing.--The amendment made by 
        subsection (b) shall apply to bonds issued after December 31, 
        2009.

SEC. 206. TAX INCENTIVES FOR THE GULF OPPORTUNITY ZONE.

    (a) Work Opportunity Tax Credit for Core Disaster Area.--Paragraph 
(1) of section 201(b) of the Katrina Emergency Tax Relief Act of 2005 
is amended by striking ``4-year'' and inserting ``5-year''.
    (b) Increase in Rehabilitation Credit.--Subsection (h) of section 
1400N is amended by striking ``December 31, 2009'' and inserting 
``December 31, 2010''.
    (c) Effective Dates.--
            (1) Work opportunity tax credit.--The amendment made by 
        subsection (a) shall apply to individuals hired on or after 
        August 28, 2009.
            (2) Rehabilitation credit.--The amendment made by 
        subsection (b) shall apply to amounts paid or incurred after 
        December 31, 2009.

SEC. 207. ELECTION FOR REFUNDABLE LOW-INCOME HOUSING CREDIT FOR 2010.

    (a) In General.--Section 42 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) the 
following new subsection:
    ``(n) Election for Refundable Credits.--
            ``(1) In general.--The housing credit agency of each State 
        shall be allowed a credit in an amount equal to such State's 
        2010 low-income housing refundable credit election amount which 
        shall be payable by the Secretary as provided in paragraph (5).
            ``(2) 2010 low-income housing refundable credit election 
        amount.--For purposes of this subsection, the term `2010 low-
        income housing refundable credit election amount' means, with 
        respect to any State, such amount as the State may elect which 
        does not exceed 85 percent of the product of--
                    ``(A) the sum of--
                            ``(i) 100 percent of the State housing 
                        credit ceiling for 2010 which is attributable 
                        to amounts described in clauses (i) and (iii) 
                        of subsection (h)(3)(C), and
                            ``(ii) 40 percent of the State housing 
                        credit ceiling for 2010 which is attributable 
                        to amounts described in clauses (ii) and (iv) 
                        of such subsection, multiplied by
                    ``(B) 10.
            ``(3) Coordination with non-refundable credit.--For 
        purposes of this section, the amounts described in clauses (i) 
        through (iv) of subsection (h)(3)(C) with respect to any State 
        for 2010 shall each be reduced by so much of such amount as is 
        taken into account in determining the amount of the credit 
        allowed with respect to such State under paragraph (1).
            ``(4) Special rule for basis.--Basis of a qualified low-
        income building shall not be reduced by the amount of any 
        payment made under this subsection.
            ``(5) Payment of credit; use to finance low-income 
        buildings.--The Secretary shall pay to the housing credit 
        agency of each State an amount equal to the credit allowed 
        under paragraph (1). Rules similar to the rules of subsections 
        (c) and (d) of section 1602 of the American Recovery and 
        Reinvestment Tax Act of 2009 shall apply with respect to any 
        payment made under this paragraph, except that such subsection 
        (d) shall be applied by substituting `January 1, 2012' for 
        `January 1, 2011'.''.
    (b) Conforming Amendment.--Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ``42(n),'' after ``36A,''.

                 TITLE III--DISASTER RELIEF PROVISIONS

SEC. 301. DEDUCTIBILITY OF PERSONAL CASUALTY LOSSES ATTRIBUTABLE TO 
              FEDERALLY DECLARED DISASTERS.

    (a) In General.--Subclause (I) of section 165(h)(3)(B)(i) is 
amended by striking ``January 1, 2010'' and inserting ``January 1, 
2011''.
    (b) Extension of $500 Limitation.--Paragraph (1) of section 165(h) 
is amended by striking ``December 31, 2009'' and inserting ``December 
31, 2010''.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        losses attributable to disasters occurring after December 31, 
        2009.
            (2) Extension of $500 limitation.--The amendment made by 
        subsection (b) shall apply to taxable years beginning after 
        December 31, 2009.

SEC. 302. EXPENSING OF CERTAIN QUALIFIED DISASTER EXPENSES.

    (a) In General.--Subparagraph (A) of section 198A(b)(2) is amended 
by striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures on account of disasters occurring after December 31, 
2009.

SEC. 303. 5-YEAR CARRYBACK OF NET OPERATING LOSSES ATTRIBUTABLE TO 
              FEDERALLY DECLARED DISASTERS.

    (a) In General.--Subclause (I) of section 172(j)(1)(A)(i) is 
amended by striking ``January 1, 2010'' and inserting ``January 1, 
2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to losses attributable to disasters occurring after December 31, 2009.

SEC. 304. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS FOR 
              RESIDENCES LOCATED IN FEDERALLY DECLARED DISASTER AREAS.

    (a) In General.--Paragraph (11) of section 143(k) is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Special Rule for Residences Destroyed in Federally Declared 
Disaster Areas.--Paragraph (13) of section 143(k), as redesignated 
under subsection (c), is amended by striking ``January 1, 2010'' in 
subparagraphs (A)(i) and (B)(i) and inserting ``January 1, 2011''.
    (c) Technical Amendment.--Subsection (k) of section 143 is amended 
by redesignating the second paragraph (12) (relating to special rules 
for residences destroyed in Federally declared disasters) as paragraph 
(13).
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        bonds issued after December 31, 2009.
            (2) Residences destroyed in federally declared disaster 
        areas.--The amendments made by subsection (b) shall apply with 
        respect to disasters occurring after December 31, 2009.
            (3) Technical amendment.--The amendment made by subsection 
        (c) shall take effect as if included in section 709 of the Tax 
        Extenders and Alternative Minimum Tax Relief Act of 2008.

SEC. 305. EXPENSING AND SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED 
              DISASTER ASSISTANCE PROPERTY.

    (a) In General.--Subclause (I) of section 168(n)(2)(A)(ii) is 
amended by striking ``January 1, 2010'' and inserting ``January 1, 
2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to disasters occurring after December 31, 2009.

                      TITLE IV--ENERGY PROVISIONS

SEC. 401. INCENTIVES FOR BIODIESEL AND RENEWABLE DIESEL.

    (a) Credits for Biodiesel and Renewable Diesel Used as Fuel.--
Subsection (g) of section 40A is amended by striking ``December 31, 
2009'' and inserting ``December 31, 2010''.
    (b) Excise Tax Credits and Payments for Biodiesel and Renewable 
Diesel Fuel Mixtures.--
            (1) Paragraph (6) of section 6426(c) is amended by striking 
        ``December 31, 2009'' and inserting ``December 31, 2010''.
            (2) Subparagraph (B) of section 6427(e)(6) is amended by 
        striking ``December 31, 2009'' and inserting ``December 31, 
        2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales and uses after December 31, 2009.

SEC. 402. ALTERNATIVE MOTOR VEHICLE CREDIT FOR HEAVY HYBRIDS.

    (a) In General.--Paragraph (3) of section 30B(k) is amended by 
striking ``December 31, 2009'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property purchased after December 31, 2009.

SEC. 403. ALTERNATIVE FUEL CREDIT FOR NATURAL GAS AND LIQUIFIED 
              PETROLEUM GAS.

    (a) In General.--Paragraph (5) of section 6426(d) is amended by 
striking ``after December 31, 2009'' and all that follows and inserting 
``after--
                    ``(A) September 30, 2014, in the case of liquefied 
                hydrogen,
                    ``(B) December 31, 2010, in the case of--
                            ``(i) compressed or liquified natural gas, 
                        and
                            ``(ii) liquified petroleum gas (other than 
                        for use as fuel in a forklift), and
                    ``(C) December 31, 2009, in any other case.''.
    (b) Payment Authority.--Paragraph (6) of section 6427(e) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting a comma and by 
adding at the end the following new subparagraphs:
                    ``(E) any alternative fuel (as so defined) 
                involving compressed or liquified natural gas sold or 
                used after December 31, 2010, and
                    ``(F) any alternative fuel (as so defined) 
                involving liquified petroleum gas (other than for use 
                as fuel in a forklift) sold or used after December 31, 
                2010.''.
    (c) Conforming Amendment.--Subparagraph (C) of section 6427(e)(6) 
is amended by inserting ``(E), or (F)'' after ``subparagraph (D)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold or used after December 31, 2009.

SEC. 404. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FERC OR 
              STATE ELECTRIC RESTRUCTURING POLICY FOR QUALIFIED 
              ELECTRIC UTILITIES.

    (a) In General.--Paragraph (3) of section 451(i) is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2011''.
    (b) Effective Date.--The amendment made by this section shall apply 
to dispositions after December 31, 2009.

                TITLE V--FOREIGN ACCOUNT TAX COMPLIANCE

         Subtitle A--Increased Disclosure of Beneficial Owners

SEC. 501. REPORTING ON CERTAIN FOREIGN ACCOUNTS.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
inserting after chapter 3 the following new chapter:

  ``CHAPTER 4--TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS

``Sec. 1471. Withholdable payments to foreign financial institutions.
``Sec. 1472. Withholdable payments to other foreign entities.
``Sec. 1473. Definitions.
``Sec. 1474. Special rules.

``SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.

    ``(a) In General.--In the case of any withholdable payment to a 
foreign financial institution which does not meet the requirements of 
subsection (b), the withholding agent with respect to such payment 
shall deduct and withhold from such payment a tax equal to 30 percent 
of the amount of such payment.
    ``(b) Reporting Requirements, etc.--
            ``(1) In general.--The requirements of this subsection are 
        met with respect to any foreign financial institution if an 
        agreement is in effect between such institution and the 
        Secretary under which such institution agrees--
                    ``(A) to obtain such information regarding each 
                holder of each account maintained by such institution 
                as is necessary to determine which (if any) of such 
                accounts are United States accounts,
                    ``(B) to comply with such verification and due 
                diligence procedures as the Secretary may require with 
                respect to the identification of United States 
                accounts,
                    ``(C) in the case of any United States account 
                maintained by such institution, to report on an annual 
                basis the information described in subsection (c) with 
                respect to such account,
                    ``(D) to deduct and withhold a tax equal to 30 
                percent of--
                            ``(i) any passthru payment which is made by 
                        such institution to a recalcitrant account 
                        holder or another foreign financial institution 
                        which does not meet the requirements of this 
                        subsection, and
                            ``(ii) in the case of any passthru payment 
                        which is made by such institution to a foreign 
                        financial institution which has in effect an 
                        election under paragraph (3) with respect to 
                        such payment, so much of such payment as is 
                        allocable to accounts held by recalcitrant 
                        account holders or foreign financial 
                        institutions which do not meet the requirements 
                        of this subsection,
                    ``(E) to comply with requests by the Secretary for 
                additional information with respect to any United 
                States account maintained by such institution, and
                    ``(F) in any case in which any foreign law would 
                (but for a waiver described in clause (i)) prevent the 
                reporting of any information referred to in this 
                subsection or subsection (c) with respect to any United 
                States account maintained by such institution--
                            ``(i) to attempt to obtain a valid and 
                        effective waiver of such law from each holder 
                        of such account, and
                            ``(ii) if a waiver described in clause (i) 
                        is not obtained from each such holder within a 
                        reasonable period of time, to close such 
                        account.
        Any agreement entered into under this subsection may be 
        terminated by the Secretary upon a determination by the 
        Secretary that the foreign financial institution is out of 
        compliance with such agreement.
            ``(2) Financial institutions deemed to meet requirements in 
        certain cases.--A foreign financial institution may be treated 
        by the Secretary as meeting the requirements of this subsection 
        if--
                    ``(A) such institution--
                            ``(i) complies with such procedures as the 
                        Secretary may prescribe to ensure that such 
                        institution does not maintain United States 
                        accounts, and
                            ``(ii) meets such other requirements as the 
                        Secretary may prescribe with respect to 
                        accounts of other foreign financial 
                        institutions maintained by such institution, or
                    ``(B) such institution is a member of a class of 
                institutions with respect to which the Secretary has 
                determined that the application of this section is not 
                necessary to carry out the purposes of this section.
            ``(3) Election to be withheld upon rather than withhold on 
        payments to recalcitrant account holders and nonparticipating 
        foreign financial institutions.--In the case of a foreign 
        financial institution which meets the requirements of this 
        subsection and such other requirements as the Secretary may 
        provide and which elects the application of this paragraph--
                    ``(A) the requirements of paragraph (1)(D) shall 
                not apply,
                    ``(B) the withholding tax imposed under subsection 
                (a) shall apply with respect to any withholdable 
                payment to such institution to the extent such payment 
                is allocable to accounts held by recalcitrant account 
                holders or foreign financial institutions which do not 
                meet the requirements of this subsection, and
                    ``(C) the agreement described in paragraph (1) 
                shall--
                            ``(i) require such institution to notify 
                        the withholding agent with respect to each such 
                        payment of the institution's election under 
                        this paragraph and such other information as 
                        may be necessary for the withholding agent to 
                        determine the appropriate amount to deduct and 
                        withhold from such payment, and
                            ``(ii) include a waiver of any right under 
                        any treaty of the United States with respect to 
                        any amount deducted and withheld pursuant to an 
                        election under this paragraph.
        To the extent provided by the Secretary, the election under 
        this paragraph may be made with respect to certain classes or 
        types of accounts of the foreign financial institution.
    ``(c) Information Required To Be Reported on United States 
Accounts.--
            ``(1) In general.--The agreement described in subsection 
        (b) shall require the foreign financial institution to report 
        the following with respect to each United States account 
        maintained by such institution:
                    ``(A) The name, address, and TIN of each account 
                holder which is a specified United States person and, 
                in the case of any account holder which is a United 
                States owned foreign entity, the name, address, and TIN 
                of each substantial United States owner of such entity.
                    ``(B) The account number.
                    ``(C) The account balance or value (determined at 
                such time and in such manner as the Secretary may 
                provide).
                    ``(D) The gross receipts and gross withdrawals or 
                payments from the account (determined for such period 
                and in such manner as the Secretary may provide).
            ``(2) Election to be subject to same reporting as united 
        states financial institutions.--In the case of a foreign 
        financial institution which elects the application of this 
        paragraph--
                    ``(A) subparagraphs (C) and (D) of paragraph (1) 
                shall not apply, and
                    ``(B) the agreement described in subsection (b) 
                shall require such foreign financial institution to 
                report such information with respect to each United 
                States account maintained by such institution as such 
                institution would be required to report under sections 
                6041, 6042, 6045, and 6049 if--
                            ``(i) such institution were a United States 
                        person, and
                            ``(ii) each holder of such account which is 
                        a specified United States person or United 
                        States owned foreign entity were a natural 
                        person and citizen of the United States.
                An election under this paragraph shall be made at such 
                time, in such manner, and subject to such conditions as 
                the Secretary may provide.
            ``(3) Separate requirements for qualified intermediaries.--
        In the case of a foreign financial institution which is treated 
        as a qualified intermediary by the Secretary for purposes of 
        section 1441 and the regulations issued thereunder, the 
        requirements of this section shall be in addition to any 
        reporting or other requirements imposed by the Secretary for 
        purposes of such treatment.
    ``(d) Definitions.--For purposes of this section--
            ``(1) United states account.--
                    ``(A) In general.--The term `United States account' 
                means any financial account which is held by one or 
                more specified United States persons or United States 
                owned foreign entities.
                    ``(B) Exception for certain accounts held by 
                individuals.--Unless the foreign financial institution 
                elects to not have this subparagraph apply, such term 
                shall not include any depository account maintained by 
                such financial institution if--
                            ``(i) each holder of such account is a 
                        natural person, and
                            ``(ii) with respect to each holder of such 
                        account, the aggregate value of all depository 
                        accounts held (in whole or in part) by such 
                        holder and maintained by the same financial 
                        institution which maintains such account does 
                        not exceed $50,000.
                To the extent provided by the Secretary, financial 
                institutions which are members of the same expanded 
                affiliated group shall be treated for purposes of 
                clause (ii) as a single financial institution.
                    ``(C) Elimination of duplicative reporting 
                requirements.--Such term shall not include any 
                financial account in a foreign financial institution 
                if--
                            ``(i) such account is held by another 
                        financial institution which meets the 
                        requirements of subsection (b), or
                            ``(ii) the holder of such account is 
                        otherwise subject to information reporting 
                        requirements which the Secretary determines 
                        would make the reporting required by this 
                        section with respect to United States accounts 
                        duplicative.
            ``(2) Financial account.--The term `financial account' 
        means, with respect to any financial institution--
                    ``(A) any depository account maintained by such 
                financial institution,
                    ``(B) any custodial account maintained by such 
                financial institution, and
                    ``(C) except as otherwise provided by the 
                Secretary, any equity or debt interest in such 
                financial institution (other than interests which are 
                regularly traded on an established securities market).
        Any equity or debt interest which constitutes a financial 
        account under subparagraph (C) with respect to any financial 
        institution shall be treated for purposes of this section as 
        maintained by such financial institution.
            ``(3) United states owned foreign entity.--The term `United 
        States owned foreign entity' means any foreign entity which has 
        one or more substantial United States owners.
            ``(4) Foreign financial institution.--The term `foreign 
        financial institution' means any financial institution which is 
        a foreign entity. Except as otherwise provided by the 
        Secretary, such term shall not include a financial institution 
        which is organized under the laws of any possession of the 
        United States.
            ``(5) Financial institution.--Except as otherwise provided 
        by the Secretary, the term `financial institution' means any 
        entity that--
                    ``(A) accepts deposits in the ordinary course of a 
                banking or similar business,
                    ``(B) is engaged in the business of holding 
                financial assets for the account of others, or
                    ``(C) is engaged (or holding itself out as being 
                engaged) primarily in the business of investing, 
                reinvesting, or trading in securities (as defined in 
                section 475(c)(2) without regard to the last sentence 
                thereof), partnership interests, commodities (as 
                defined in section 475(e)(2)), or any interest 
                (including a futures or forward contract or option) in 
                such securities, partnership interests, or commodities.
            ``(6) Recalcitrant account holder.--The term `recalcitrant 
        account holder' means any account holder which--
                    ``(A) fails to comply with reasonable requests for 
                the information referred to in subsection (b)(1)(A) or 
                (c)(1)(A), or
                    ``(B) fails to provide a waiver described in 
                subsection (b)(1)(F) upon request.
            ``(7) Passthru payment.--The term `passthru payment' means 
        any withholdable payment or other payment which is attributable 
        to a withholdable payment.
    ``(e) Affiliated Groups.--
            ``(1) In general.--The requirements of subsections (b) and 
        (c)(1) shall apply--
                    ``(A) with respect to United States accounts 
                maintained by the foreign financial institution, and
                    ``(B) except as otherwise provided by the 
                Secretary, with respect to United States accounts 
                maintained by each other foreign financial institution 
                (other than any foreign financial institution which 
                meets the requirements of subsection (b)) which is a 
                member of the same expanded affiliated group as such 
                foreign financial institution.
            ``(2) Expanded affiliated group.--For purposes of this 
        section, the term `expanded affiliated group' means an 
        affiliated group as defined in section 1504(a), determined--
                    ``(A) by substituting `more than 50 percent' for 
                `at least 80 percent' each place it appears, and
                    ``(B) without regard to paragraphs (2) and (3) of 
                section 1504(b).
        A partnership or any other entity (other than a corporation) 
        shall be treated as a member of an expanded affiliated group if 
        such entity is controlled (within the meaning of section 
        954(d)(3)) by members of such group (including any entity 
        treated as a member of such group by reason of this sentence).
    ``(f) Exception for Certain Payments.--Subsection (a) shall not 
apply to any payment if the beneficial owner of such payment is--
            ``(1) any foreign government, any political subdivision of 
        a foreign government, or any wholly owned agency or 
        instrumentality of any one or more of the foregoing,
            ``(2) any international organization or any wholly owned 
        agency or instrumentality thereof,
            ``(3) any foreign central bank of issue, or
            ``(4) any other class of persons identified by the 
        Secretary for purposes of this subsection as posing a low risk 
        of tax evasion.

``SEC. 1472. WITHHOLDABLE PAYMENTS TO OTHER FOREIGN ENTITIES.

    ``(a) In General.--In the case of any withholdable payment to a 
non-financial foreign entity, if--
            ``(1) the beneficial owner of such payment is such entity 
        or any other non-financial foreign entity, and
            ``(2) the requirements of subsection (b) are not met with 
        respect to such beneficial owner,
then the withholding agent with respect to such payment shall deduct 
and withhold from such payment a tax equal to 30 percent of the amount 
of such payment.
    ``(b) Requirements for Waiver of Withholding.--The requirements of 
this subsection are met with respect to the beneficial owner of a 
payment if--
            ``(1) such beneficial owner or the payee provides the 
        withholding agent with either--
                    ``(A) a certification that such beneficial owner 
                does not have any substantial United States owners, or
                    ``(B) the name, address, and TIN of each 
                substantial United States owner of such beneficial 
                owner,
            ``(2) the withholding agent does not know, or have reason 
        to know, that any information provided under paragraph (1) is 
        incorrect, and
            ``(3) the withholding agent reports the information 
        provided under paragraph (1)(B) to the Secretary in such manner 
        as the Secretary may provide.
    ``(c) Exceptions.--Subsection (a) shall not apply to--
            ``(1) except as otherwise provided by the Secretary, any 
        payment beneficially owned by--
                    ``(A) any corporation the stock of which is 
                regularly traded on an established securities market,
                    ``(B) any corporation which is a member of the same 
                expanded affiliated group (as defined in section 
                1471(e)(2) without regard to the last sentence thereof) 
                as a corporation described in subparagraph (A),
                    ``(C) any entity which is organized under the laws 
                of a possession of the United States and which is 
                wholly owned by one or more bona fide residents (as 
                defined in section 937(a)) of such possession,
                    ``(D) any foreign government, any political 
                subdivision of a foreign government, or any wholly 
                owned agency or instrumentality of any one or more of 
                the foregoing,
                    ``(E) any international organization or any wholly 
                owned agency or instrumentality thereof,
                    ``(F) any foreign central bank of issue, or
                    ``(G) any other class of persons identified by the 
                Secretary for purposes of this subsection, and
            ``(2) any class of payments identified by the Secretary for 
        purposes of this subsection as posing a low risk of tax 
        evasion.
    ``(d) Non-Financial Foreign Entity.--For purposes of this section, 
the term `non-financial foreign entity' means any foreign entity which 
is not a financial institution (as defined in section 1471(d)(5)).

``SEC. 1473. DEFINITIONS.

    ``For purposes of this chapter--
            ``(1) Withholdable payment.--Except as otherwise provided 
        by the Secretary--
                    ``(A) In general.--The term `withholdable payment' 
                means--
                            ``(i) any payment of interest (including 
                        any original issue discount), dividends, rents, 
                        salaries, wages, premiums, annuities, 
                        compensations, remunerations, emoluments, and 
                        other fixed or determinable annual or 
                        periodical gains, profits, and income, if such 
                        payment is from sources within the United 
                        States, and
                            ``(ii) any gross proceeds from the sale or 
                        other disposition of any property of a type 
                        which can produce interest or dividends from 
                        sources within the United States.
                    ``(B) Exception for income connected with united 
                states business.--Such term shall not include any item 
                of income which is taken into account under section 
                871(b)(1) or 882(a)(1) for the taxable year.
                    ``(C) Special rule for sourcing interest paid by 
                foreign branches of domestic financial institutions.--
                Subparagraph (B) of section 861(a)(1) shall not apply.
            ``(2) Substantial united states owner.--
                    ``(A) In general.--The term `substantial United 
                States owner' means--
                            ``(i) with respect to any corporation, any 
                        specified United States person which owns, 
                        directly or indirectly, more than 10 percent of 
                        the stock of such corporation (by vote or 
                        value),
                            ``(ii) with respect to any partnership, any 
                        specified United States person which owns, 
                        directly or indirectly, more than 10 percent of 
                        the profits interests or capital interests in 
                        such partnership, and
                            ``(iii) in the case of a trust--
                                    ``(I) any specified United States 
                                person treated as an owner of any 
                                portion of such trust under subpart E 
                                of part I of subchapter J of chapter 1, 
                                and
                                    ``(II) to the extent provided by 
                                the Secretary in regulations or other 
                                guidance, any specified United States 
                                person which holds, directly or 
                                indirectly, more than 10 percent of the 
                                beneficial interests of such trust.
                    ``(B) Special rule for investment vehicles.--In the 
                case of any financial institution described in section 
                1471(d)(5)(C), clauses (i), (ii), and (iii) of 
                subparagraph (A) shall be applied by substituting `0 
                percent' for `10 percent'.
            ``(3) Specified united states person.--Except as otherwise 
        provided by the Secretary, the term `specified United States 
        person' means any United States person other than--
                    ``(A) any corporation the stock of which is 
                regularly traded on an established securities market,
                    ``(B) any corporation which is a member of the same 
                expanded affiliated group (as defined in section 
                1471(e)(2) without regard to the last sentence thereof) 
                as a corporation the stock of which is regularly traded 
                on an established securities market,
                    ``(C) any organization exempt from taxation under 
                section 501(a) or an individual retirement plan,
                    ``(D) the United States or any wholly owned agency 
                or instrumentality thereof,
                    ``(E) any State, the District of Columbia, any 
                possession of the United States, any political 
                subdivision of any of the foregoing, or any wholly 
                owned agency or instrumentality of any one or more of 
                the foregoing,
                    ``(F) any bank (as defined in section 581),
                    ``(G) any real estate investment trust (as defined 
                in section 856),
                    ``(H) any regulated investment company (as defined 
                in section 851),
                    ``(I) any common trust fund (as defined in section 
                584(a)), and
                    ``(J) any trust which--
                            ``(i) is exempt from tax under section 
                        664(c), or
                            ``(ii) is described in section 4947(a)(1).
            ``(4) Withholding agent.--The term `withholding agent' 
        means all persons, in whatever capacity acting, having the 
        control, receipt, custody, disposal, or payment of any 
        withholdable payment.
            ``(5) Foreign entity.--The term `foreign entity' means any 
        entity which is not a United States person.

``SEC. 1474. SPECIAL RULES.

    ``(a) Liability for Withheld Tax.--Every person required to deduct 
and withhold any tax under this chapter is hereby made liable for such 
tax and is hereby indemnified against the claims and demands of any 
person for the amount of any payments made in accordance with the 
provisions of this chapter.
    ``(b) Credits and Refunds.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        determination of whether any tax deducted and withheld under 
        this chapter results in an overpayment by the beneficial owner 
        of the payment to which such tax is attributable shall be made 
        as if such tax had been deducted and withheld under subchapter 
        A of chapter 3.
            ``(2) Special rule where foreign financial institution is 
        beneficial owner of payment.--
                    ``(A) In general.--In the case of any tax properly 
                deducted and withheld under section 1471 from a 
                specified financial institution payment--
                            ``(i) if the foreign financial institution 
                        referred to in subparagraph (B) with respect to 
                        such payment is entitled to a reduced rate of 
                        tax with respect to such payment by reason of 
                        any treaty obligation of the United States--
                                    ``(I) the amount of any credit or 
                                refund with respect to such tax shall 
                                not exceed the amount of credit or 
                                refund attributable to such reduction 
                                in rate, and
                                    ``(II) no interest shall be allowed 
                                or paid with respect to such credit or 
                                refund, and
                            ``(ii) if such foreign financial 
                        institution is not so entitled, no credit or 
                        refund shall be allowed or paid with respect to 
                        such tax.
                    ``(B) Specified financial institution payment.--The 
                term `specified financial institution payment' means 
                any payment if the beneficial owner of such payment is 
                a foreign financial institution.
            ``(3) Requirement to identify substantial united states 
        owners.--No credit or refund shall be allowed or paid with 
        respect to any tax properly deducted and withheld under this 
        chapter unless the beneficial owner of the payment provides the 
        Secretary such information as the Secretary may require to 
        determine whether such beneficial owner is a United States 
        owned foreign entity (as defined in section 1471(d)(3)) and the 
        identity of any substantial United States owners of such 
        entity.
    ``(c) Confidentiality of Information.--
            ``(1) In general.--For purposes of this chapter, rules 
        similar to the rules of section 3406(f) shall apply.
            ``(2) Disclosure of list of participating foreign financial 
        institutions permitted.--The identity of a foreign financial 
        institution which meets the requirements of section 1471(b) 
        shall not be treated as return information for purposes of 
        section 6103.
    ``(d) Coordination With Other Withholding Provisions.--The 
Secretary shall provide for the coordination of this chapter with other 
withholding provisions under this title, including providing for the 
proper crediting of amounts deducted and withheld under this chapter 
against amounts required to be deducted and withheld under such other 
provisions.
    ``(e) Treatment of Withholding Under Agreements.--Any tax deducted 
and withheld pursuant to an agreement described in section 1471(b) 
shall be treated for purposes of this title as a tax deducted and 
withheld by a withholding agent under section 1471(a).
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary or appropriate to carry out the 
purposes of this chapter.''.
    (b) Special Rule for Interest on Overpayments.--Subsection (e) of 
section 6611 is amended by adding at the end the following new 
paragraph:
            ``(4) Certain withholding taxes.--In the case of any 
        overpayment resulting from tax deducted and withheld under 
        chapter 3 or 4, paragraphs (1), (2), and (3) shall be applied 
        by substituting `180 days' for `45 days' each place it 
        appears.''.
    (c) Conforming Amendments.--
            (1) Section 6414 is amended by inserting ``or 4'' after 
        ``chapter 3''.
            (2) Paragraph (1) of section 6501(b) is amended by 
        inserting ``4,'' after ``chapter 3,''.
            (3) Paragraph (2) of section 6501(b) is amended--
                    (A) by inserting ``4,'' after ``chapter 3,'' in the 
                text thereof, and
                    (B) by striking ``taxes and tax imposed by chapter 
                3'' in the heading thereof and inserting ``and 
                withholding taxes''.
            (4) Paragraph (3) of section 6513(b) is amended--
                    (A) by inserting ``or 4'' after ``chapter 3'', and
                    (B) by inserting ``or 1474(b)'' after ``section 
                1462''.
            (5) Subsection (c) of section 6513 is amended by inserting 
        ``4,'' after ``chapter 3,''.
            (6) Paragraph (1) of section 6724(d) is amended by 
        inserting ``under chapter 4 or'' after ``filed with the 
        Secretary'' in the last sentence thereof.
            (7) Paragraph (2) of section 6724(d) is amended by 
        inserting ``or 4'' after ``chapter 3''.
            (8) The table of chapters of the Internal Revenue Code of 
        1986 is amended by adding at the end the following new item:

``Chapter 4. Taxes To Enforce Reporting on Certain Foreign Accounts.''.

    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        payments made after December 31, 2012.
            (2) Grandfathered treatment of outstanding obligations.--
        The amendments made by this section shall not require any 
        amount to be deducted or withheld from any payment under any 
        obligation outstanding on the date which is 2 years after the 
        date of the enactment of this Act.
            (3) Interest on overpayments.--The amendment made by 
        subsection (b) shall apply--
                    (A) in the case of such amendment's application to 
                paragraph (1) of section 6611(e) of the Internal 
                Revenue Code of 1986, to returns the due date for which 
                (determined without regard to extensions) is after the 
                date of the enactment of this Act,
                    (B) in the case of such amendment's application to 
                paragraph (2) of such section, to claims for credit or 
                refund of any overpayment filed after the date of the 
                enactment of this Act (regardless of the taxable period 
                to which such refund relates), and
                    (C) in the case of such amendment's application to 
                paragraph (3) of such section, to refunds paid after 
                the date of the enactment of this Act (regardless of 
                the taxable period to which such refund relates).

SEC. 502. REPEAL OF CERTAIN FOREIGN EXCEPTIONS TO REGISTERED BOND 
              REQUIREMENTS.

    (a) Repeal of Exception to Denial of Deduction for Interest on Non-
Registered Bonds.--
            (1) In general.--Paragraph (2) of section 163(f) is amended 
        by striking subparagraph (B) and by redesignating subparagraph 
        (C) as subparagraph (B).
            (2) Conforming amendments.--
                    (A) Subparagraph (A) of section 163(f)(2) is 
                amended by inserting ``or'' at the end of clause (ii), 
                by striking ``, or'' at the end of clause (iii) and 
                inserting a period, and by striking clause (iv).
                    (B) Subparagraph (B) of section 163(f)(2), as 
                redesignated by paragraph (1), is amended--
                            (i) by striking ``, and subparagraph (B),'' 
                        in the matter preceding clause (i), and
                            (ii) by amending clause (i) to read as 
                        follows:
                            ``(i) such obligation is of a type which 
                        the Secretary has determined by regulations to 
                        be used frequently in avoiding Federal taxes, 
                        and''.
                    (C) Sections 165(j)(2)(A) and 1287(b)(1) are each 
                amended by striking ``except that clause (iv) of 
                subparagraph (A), and subparagraph (B), of such section 
                shall not apply''.
    (b) Repeal of Treatment as Portfolio Debt.--
            (1) In general.--Paragraph (2) of section 871(h) is amended 
        to read as follows:
            ``(2) Portfolio interest.--For purposes of this subsection, 
        the term `portfolio interest' means any interest (including 
        original issue discount) which--
                    ``(A) would be subject to tax under subsection (a) 
                but for this subsection, and
                    ``(B) is paid on an obligation--
                            ``(i) which is in registered form, and
                            ``(ii) with respect to which--
                                    ``(I) the United States person who 
                                would otherwise be required to deduct 
                                and withhold tax from such interest 
                                under section 1441(a) receives a 
                                statement (which meets the requirements 
                                of paragraph (5)) that the beneficial 
                                owner of the obligation is not a United 
                                States person, or
                                    ``(II) the Secretary has determined 
                                that such a statement is not required 
                                in order to carry out the purposes of 
                                this subsection.''.
            (2) Conforming amendments.--
                    (A) Section 871(h)(3)(A) is amended by striking 
                ``subparagraph (A) or (B) of''.
                    (B) Paragraph (2) of section 881(c) is amended to 
                read as follows:
            ``(2) Portfolio interest.--For purposes of this subsection, 
        the term `portfolio interest' means any interest (including 
        original issue discount) which--
                    ``(A) would be subject to tax under subsection (a) 
                but for this subsection, and
                    ``(B) is paid on an obligation--
                            ``(i) which is in registered form, and
                            ``(ii) with respect to which--
                                    ``(I) the person who would 
                                otherwise be required to deduct and 
                                withhold tax from such interest under 
                                section 1442(a) receives a statement 
                                which meets the requirements of section 
                                871(h)(5) that the beneficial owner of 
                                the obligation is not a United States 
                                person, or
                                    ``(II) the Secretary has determined 
                                that such a statement is not required 
                                in order to carry out the purposes of 
                                this subsection.''.
    (c) Dematerialized Book Entry Systems Treated as Registered Form.--
Paragraph (3) of section 163(f) is amended by inserting ``, except that 
a dematerialized book entry system shall be treated as a book entry 
system described in such section'' before the period at the end.
    (d) Repeal of Exception to Requirement That Treasury Obligations Be 
in Registered Form.--
            (1) In general.--Subsection (g) of section 3121 of title 
        31, United States Code, is amended by striking paragraph (2) 
        and by redesignating paragraphs (3) and (4) as paragraphs (2) 
        and (3), respectively.
            (2) Conforming amendments.--Paragraph (1) of section 
        3121(g) of such title is amended--
                    (A) by adding ``or'' at the end of subparagraph 
                (A),
                    (B) by striking ``; or'' at the end of subparagraph 
                (B) and inserting a period, and
                    (C) by striking subparagraph (C).
    (e) Preservation of Exception for Excise Tax Purposes.--Paragraph 
(1) of section 4701(b) is amended to read as follows:
            ``(1) Registration-required obligation.--
                    ``(A) In general.--The term `registration-required 
                obligation' has the same meaning as when used in 
                section 163(f), except that such term shall not include 
                any obligation which--
                            ``(i) is required to be registered under 
                        section 149(a), or
                            ``(ii) is described in subparagraph (B).
                    ``(B) Certain obligations not included.--An 
                obligation is described in this subparagraph if--
                            ``(i) there are arrangements reasonably 
                        designed to ensure that such obligation will be 
                        sold (or resold in connection with the original 
                        issue) only to a person who is not a United 
                        States person,
                            ``(ii) interest on such obligation is 
                        payable only outside the United States and its 
                        possessions, and
                            ``(iii) on the face of such obligation 
                        there is a statement that any United States 
                        person who holds such obligation will be 
                        subject to limitations under the United States 
                        income tax laws.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date which is 2 years after the 
date of the enactment of this Act.

       Subtitle B--Under Reporting With Respect to Foreign Assets

SEC. 511. DISCLOSURE OF INFORMATION WITH RESPECT TO FOREIGN FINANCIAL 
              ASSETS.

    (a) In General.--Subpart A of part III of subchapter A of chapter 
61 is amended by inserting after section 6038C the following new 
section:

``SEC. 6038D. INFORMATION WITH RESPECT TO FOREIGN FINANCIAL ASSETS.

    ``(a) In General.--Any individual who, during any taxable year, 
holds any interest in a specified foreign financial asset shall attach 
to such person's return of tax imposed by subtitle A for such taxable 
year the information described in subsection (c) with respect to each 
such asset if the aggregate value of all such assets exceeds $50,000 
(or such higher dollar amount as the Secretary may prescribe).
    ``(b) Specified Foreign Financial Assets.--For purposes of this 
section, the term `specified foreign financial asset' means--
            ``(1) any financial account (as defined in section 
        1471(d)(2)) maintained by a foreign financial institution (as 
        defined in section 1471(d)(4)), and
            ``(2) any of the following assets which are not held in an 
        account maintained by a financial institution (as defined in 
        section 1471(d)(5))--
                    ``(A) any stock or security issued by a person 
                other than a United States person,
                    ``(B) any financial instrument or contract held for 
                investment that has an issuer or counterparty which is 
                other than a United States person, and
                    ``(C) any interest in a foreign entity (as defined 
                in section 1473).
    ``(c) Required Information.--The information described in this 
subsection with respect to any asset is:
            ``(1) In the case of any account, the name and address of 
        the financial institution in which such account is maintained 
        and the number of such account.
            ``(2) In the case of any stock or security, the name and 
        address of the issuer and such information as is necessary to 
        identify the class or issue of which such stock or security is 
        a part.
            ``(3) In the case of any other instrument, contract, or 
        interest--
                    ``(A) such information as is necessary to identify 
                such instrument, contract, or interest, and
                    ``(B) the names and addresses of all issuers and 
                counterparties with respect to such instrument, 
                contract, or interest.
            ``(4) The maximum value of the asset during the taxable 
        year.
    ``(d) Penalty for Failure To Disclose.--
            ``(1) In general.--If any individual fails to furnish the 
        information described in subsection (c) with respect to any 
        taxable year at the time and in the manner described in 
        subsection (a), such person shall pay a penalty of $10,000.
            ``(2) Increase in penalty where failure continues after 
        notification.--If any failure described in paragraph (1) 
        continues for more than 90 days after the day on which the 
        Secretary mails notice of such failure to the individual, such 
        individual shall pay a penalty (in addition to the penalties 
        under paragraph (1)) of $10,000 for each 30-day period (or 
        fraction thereof) during which such failure continues after the 
        expiration of such 90-day period. The penalty imposed under 
        this paragraph with respect to any failure shall not exceed 
        $50,000.
    ``(e) Presumption That Value of Specified Foreign Financial Assets 
Exceeds Dollar Threshold.--If--
            ``(1) the Secretary determines that an individual has an 
        interest in one or more specified foreign financial assets, and
            ``(2) such individual does not provide sufficient 
        information to demonstrate the aggregate value of such assets,
then the aggregate value of such assets shall be treated as being in 
excess of $50,000 (or such higher dollar amount as the Secretary 
prescribes for purposes of subsection (a)) for purposes of assessing 
the penalties imposed under this section.
    ``(f) Application to Certain Entities.--To the extent provided by 
the Secretary in regulations or other guidance, the provisions of this 
section shall apply to any domestic entity which is formed or availed 
of for purposes of holding, directly or indirectly, specified foreign 
financial assets, in the same manner as if such entity were an 
individual.
    ``(g) Reasonable Cause Exception.--No penalty shall be imposed by 
this section on any failure which is shown to be due to reasonable 
cause and not due to willful neglect. The fact that a foreign 
jurisdiction would impose a civil or criminal penalty on the taxpayer 
(or any other person) for disclosing the required information is not 
reasonable cause.
    ``(h) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance which 
provide appropriate exceptions from the application of this section in 
the case of--
            ``(1) classes of assets identified by the Secretary, 
        including any assets with respect to which the Secretary 
        determines that disclosure under this section would be 
        duplicative of other disclosures,
            ``(2) nonresident aliens, and
            ``(3) bona fide residents of any possession of the United 
        States.''.
    (b) Clerical Amendment.--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 6038C the following new item:

``Sec. 6038D. Information with respect to foreign financial assets.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 512. PENALTIES FOR UNDERPAYMENTS ATTRIBUTABLE TO UNDISCLOSED 
              FOREIGN FINANCIAL ASSETS.

    (a) In General.--Section 6662 is amended--
            (1) in subsection (b), by inserting after paragraph (5) the 
        following new paragraph:
            ``(6) Any undisclosed foreign financial asset 
        understatement.'', and
            (2) by adding at the end the following new subsection:
    ``(i) Undisclosed Foreign Financial Asset Understatement.--
            ``(1) In general.--For purposes of this section, the term 
        `undisclosed foreign financial asset understatement' means, for 
        any taxable year, the portion of the understatement for such 
        taxable year which is attributable to any transaction involving 
        an undisclosed foreign financial asset.
            ``(2) Undisclosed foreign financial asset.--For purposes of 
        this subsection, the term `undisclosed foreign financial asset' 
        means, with respect to any taxable year, any asset with respect 
        to which information was required to be provided under section 
        6038, 6038B, 6038D, 6046A, or 6048 for such taxable year but 
        was not provided by the taxpayer as required under the 
        provisions of those sections.
            ``(3) Increase in penalty for undisclosed foreign financial 
        asset understatements.--In the case of any portion of an 
        underpayment which is attributable to any undisclosed foreign 
        financial asset understatement, subsection (a) shall be applied 
        with respect to such portion by substituting `40 percent' for 
        `20 percent'.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 513. MODIFICATION OF STATUTE OF LIMITATIONS FOR SIGNIFICANT 
              OMISSION OF INCOME IN CONNECTION WITH FOREIGN ASSETS.

    (a) Extension of Statute of Limitations.--
            (1) In general.--Paragraph (1) of section 6501(e) is 
        amended by redesignating subparagraphs (A) and (B) as 
        subparagraphs (B) and (C), respectively, and by inserting 
        before subparagraph (B) (as so redesignated) the following new 
        subparagraph:
                    ``(A) General rule.--If the taxpayer omits from 
                gross income an amount properly includible therein 
                and--
                            ``(i) such amount is in excess of 25 
                        percent of the amount of gross income stated in 
                        the return, or
                            ``(ii) such amount--
                                    ``(I) is attributable to one or 
                                more assets with respect to which 
                                information is required to be reported 
                                under section 6038D (or would be so 
                                required if such section were applied 
                                without regard to the dollar threshold 
                                specified in subsection (a) thereof and 
                                without regard to any exceptions 
                                provided pursuant to subsection (h)(1) 
                                thereof), and
                                    ``(II) is in excess of $5,000,
                the tax may be assessed, or a proceeding in court for 
                collection of such tax may be begun without assessment, 
                at any time within 6 years after the return was 
                filed.''.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 6501(e)(1), as 
                redesignated by paragraph (1), is amended by striking 
                all that precedes clause (i) and inserting the 
                following:
                    ``(B) Determination of gross income.--For purposes 
                of subparagraph (A)--''.
                    (B) Paragraph (2) of section 6229(c) is amended by 
                striking ``which is in excess of 25 percent of the 
                amount of gross income stated in its return'' and 
                inserting ``and such amount is described in clause (i) 
                or (ii) of section 6501(e)(1)(A)''.
    (b) Additional Reports Subject to Extended Period.--Paragraph (8) 
of section 6501(c) is amended--
            (1) by inserting ``pursuant to an election under section 
        1295(b) or'' before ``under section 6038'',
            (2) by inserting ``1298(f),'' before ``6038'', and
            (3) by inserting ``6038D,'' after ``6038B,''.
    (c) Clarifications Related to Failure To Disclose Foreign 
Transfers.--Paragraph (8) of section 6501(c) is amended by striking 
``event'' and inserting ``tax return, event,''.
    (d) Effective Date.--The amendments made by this section shall 
apply to--
            (1) returns filed after the date of the enactment of this 
        Act; and
            (2) returns filed on or before such date if the period 
        specified in section 6501 of the Internal Revenue Code of 1986 
        (determined without regard to such amendments) for assessment 
        of such taxes has not expired as of such date.

                Subtitle C--Other Disclosure Provisions

SEC. 521. REPORTING OF ACTIVITIES WITH RESPECT TO PASSIVE FOREIGN 
              INVESTMENT COMPANIES.

    (a) In General.--Section 1298 is amended by redesignating 
subsection (f) as subsection (g) and by inserting after subsection (e) 
the following new subsection:
    ``(f) Reporting Requirement.--Except as otherwise provided by the 
Secretary, each United States person who is a shareholder of a passive 
foreign investment company shall file an annual report containing such 
information as the Secretary may require.''.
    (b) Conforming Amendment.--Subsection (e) of section 1291 is 
amended by striking ``, (d), and (f)'' and inserting ``and (d)''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act.

SEC. 522. SECRETARY PERMITTED TO REQUIRE FINANCIAL INSTITUTIONS TO FILE 
              CERTAIN RETURNS RELATED TO WITHHOLDING ON FOREIGN 
              TRANSFERS ELECTRONICALLY.

    (a) In General.--Subsection (e) of section 6011 is amended by 
adding at the end the following new paragraph:
            ``(3) Special rule for returns filed by financial 
        institutions with respect to withholding on foreign 
        transfers.--Paragraph (2)(A) shall not apply to any return 
        filed by a financial institution (as defined in section 
        1471(d)(5)) with respect to tax for which such institution is 
        made liable under section 1461 or 1474(a).''.
    (b) Conforming Amendment.--Subsection (c) of section 6724 is 
amended by inserting ``or with respect to a return described in section 
6011(e)(3)''.
    (c) Effective Date.--The amendment made by this section shall apply 
to returns the due date for which (determined without regard to 
extensions) is after the date of the enactment of this Act.

            Subtitle D--Provisions Related to Foreign Trusts

SEC. 531. CLARIFICATIONS WITH RESPECT TO FOREIGN TRUSTS WHICH ARE 
              TREATED AS HAVING A UNITED STATES BENEFICIARY.

    (a) In General.--Paragraph (1) of section 679(c) is amended by 
adding at the end the following:
        ``For purposes of subparagraph (A), an amount shall be treated 
        as accumulated for the benefit of a United States person even 
        if the United States person's interest in the trust is 
        contingent on a future event.''.
    (b) Clarification Regarding Discretion To Identify Beneficiaries.--
Subsection (c) of section 679 is amended by adding at the end the 
following new paragraph:
            ``(4) Special rule in case of discretion to identify 
        beneficiaries.--For purposes of paragraph (1)(A), if any person 
        has the discretion (by authority given in the trust agreement, 
        by power of appointment, or otherwise) of making a distribution 
        from the trust to, or for the benefit of, any person, such 
        trust shall be treated as having a beneficiary who is a United 
        States person unless--
                    ``(A) the terms of the trust specifically identify 
                the class of persons to whom such distributions may be 
                made, and
                    ``(B) none of those persons are United States 
                persons during the taxable year.''.
    (c) Clarification That Certain Agreements and Understandings Are 
Terms of the Trust.--Subsection (c) of section 679, as amended by 
subsection (b), is amended by adding at the end the following new 
paragraph:
            ``(5) Certain agreements and understandings treated as 
        terms of the trust.--For purposes of paragraph (1)(A), if any 
        United States person who directly or indirectly transfers 
        property to the trust is directly or indirectly involved in any 
        agreement or understanding (whether written, oral, or 
        otherwise) that may result in the income or corpus of the trust 
        being paid or accumulated to or for the benefit of a United 
        States person, such agreement or understanding shall be treated 
        as a term of the trust.''.

SEC. 532. PRESUMPTION THAT FOREIGN TRUST HAS UNITED STATES BENEFICIARY.

    (a) In General.--Section 679 is amended by redesignating subsection 
(d) as subsection (e) and inserting after subsection (c) the following 
new subsection:
    ``(d) Presumption That Foreign Trust Has United States 
Beneficiary.--If a United States person directly or indirectly 
transfers property to a foreign trust (other than a trust described in 
section 6048(a)(3)(B)(ii)), the Secretary may treat such trust as 
having a United States beneficiary for purposes of applying this 
section to such transfer unless such person--
            ``(1) submits such information to the Secretary as the 
        Secretary may require with respect to such transfer, and
            ``(2) demonstrates to the satisfaction of the Secretary 
        that such trust satisfies the requirements of subparagraphs (A) 
        and (B) of subsection (c)(1).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to transfers of property after the date of the enactment of this 
Act.

SEC. 533. UNCOMPENSATED USE OF TRUST PROPERTY.

    (a) In General.--Paragraph (1) of section 643(i) is amended--
            (1) by striking ``directly or indirectly to'' and inserting 
        ``(or permits the use of any other trust property) directly or 
        indirectly to or by'', and
            (2) by inserting ``(or the fair market value of the use of 
        such property)'' after ``the amount of such loan''.
    (b) Exception for Compensated Use.--Paragraph (2) of section 643(i) 
is amended by adding at the end the following new subparagraph:
                    ``(E) Exception for compensated use of property.--
                In the case of the use of any trust property other than 
                a loan of cash or marketable securities, paragraph (1) 
                shall not apply to the extent that the trust is paid 
                the fair market value of such use within a reasonable 
                period of time of such use.''.
    (c) Application to Grantor Trusts.--Subsection (c) of section 679, 
as amended by section 531, is amended by adding at the end the 
following new paragraph:
            ``(6) Uncompensated use of trust property treated as a 
        payment.--For purposes of this subsection, a loan of cash or 
        marketable securities (or the use of any other trust property) 
        directly or indirectly to or by any United States person 
        (whether or not a beneficiary under the terms of the trust) 
        shall be treated as paid or accumulated for the benefit of a 
        United States person. The preceding sentence shall not apply to 
        the extent that the United States person repays the loan at a 
        market rate of interest (or pays the fair market value of the 
        use of such property) within a reasonable period of time.''.
    (d) Conforming Amendments.--Paragraph (3) of section 643(i) is 
amended--
            (1) by inserting ``(or use of property)'' after ``If any 
        loan'',
            (2) by inserting ``or the return of such property'' before 
        ``shall be disregarded'', and
            (3) by striking ``regarding loan principal'' in the heading 
        thereof.
    (e) Effective Date.--The amendments made by this section shall 
apply to loans made, and uses of property, after the date of the 
enactment of this Act.

SEC. 534. REPORTING REQUIREMENT OF UNITED STATES OWNERS OF FOREIGN 
              TRUSTS.

    (a) In General.--Paragraph (1) of section 6048(b) is amended by 
inserting ``shall submit such information as the Secretary may 
prescribe with respect to such trust for such year and'' before ``shall 
be responsible to ensure''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 535. MINIMUM PENALTY WITH RESPECT TO FAILURE TO REPORT ON CERTAIN 
              FOREIGN TRUSTS.

    (a) In General.--Subsection (a) of section 6677 is amended--
            (1) by inserting ``the greater of $10,000 or'' before ``35 
        percent'', and
            (2) by striking the last sentence and inserting the 
        following: ``At such time as the gross reportable amount with 
        respect to any failure can be determined by the Secretary, any 
        subsequent penalty imposed under this subsection with respect 
        to such failure shall be reduced as necessary to assure that 
        the aggregate amount of such penalties do not exceed the gross 
        reportable amount (and to the extent that such aggregate amount 
        already exceeds the gross reportable amount the Secretary shall 
        refund such excess to the taxpayer).''
    (b) Effective Date.--The amendments made by this section shall 
apply to notices and returns required to be filed after December 31, 
2009.

   Subtitle E--Substitute Dividends and Dividend Equivalent Payments 
            Received by Foreign Persons Treated as Dividends

SEC. 541. SUBSTITUTE DIVIDENDS AND DIVIDEND EQUIVALENT PAYMENTS 
              RECEIVED BY FOREIGN PERSONS TREATED AS DIVIDENDS.

    (a) In General.--Section 871 is amended by redesignating subsection 
(l) as subsection (m) and by inserting after subsection (k) the 
following new subsection:
    ``(l) Treatment of Dividend Equivalent Payments.--
            ``(1) In general.--For purposes of this section, sections 
        881 and 4948(a), and chapters 3 and 4, a dividend equivalent 
        shall be treated as a dividend from sources within the United 
        States.
            ``(2) Dividend equivalent.--For purposes of this 
        subsection, the term `dividend equivalent' means--
                    ``(A) any substitute dividend,
                    ``(B) any payment made pursuant to a specified 
                notional principal contract that (directly or 
                indirectly) is contingent upon, or determined by 
                reference to, the payment of a dividend from sources 
                within the United States, and
                    ``(C) any other payment determined by the Secretary 
                to be substantially similar to a payment described in 
                subparagraph (A) or (B).
            ``(3) Specified notional principal contract.--For purposes 
        of this subsection, the term `specified notional principal 
        contract' means--
                    ``(A) any notional principal contract if--
                            ``(i) in connection with entering into such 
                        contract, any long party transfers the 
                        underlying security,
                            ``(ii) in connection with the termination 
                        of such contract, any short party transfers the 
                        underlying security to any long party,
                            ``(iii) the underlying security is not 
                        readily tradable on an established securities 
                        market,
                            ``(iv) in connection with entering into 
                        such contract, the underlying security is 
                        posted as collateral by any short party to the 
                        contract, or
                            ``(v) such contract is identified by the 
                        Secretary as a specified notional principal 
                        contract,
                    ``(B) in the case of payments made after the date 
                which is 2 years after the date of the enactment of 
                this subsection, any notional principal contract unless 
                the Secretary determines that such contract is of a 
                type which does not have the potential for tax 
                avoidance.
            ``(4) Definitions.--For purposes of paragraph (3)(A)--
                    ``(A) Long party.--The term `long party' means, 
                with respect to any underlying security of any notional 
                principal contract, any party to the contract which is 
                entitled to receive any payment pursuant to such 
                contract which is contingent upon, or determined by 
                reference to, the payment of a dividend from sources 
                within the United States with respect to such 
                underlying security.
                    ``(B) Short party.--The term `short party' means, 
                with respect to any underlying security of any notional 
                principal contract, any party to the contract which is 
                not a long party with respect to such underlying 
                security.
                    ``(C) Underlying security.--The term `underlying 
                security' means, with respect to any notional principal 
                contract, the security with respect to which the 
                dividend referred to in paragraph (2)(B) is paid. For 
                purposes of this paragraph, any index or fixed basket 
                of securities shall be treated as a single security.
            ``(5) Payments determined on gross basis.--For purposes of 
        this subsection, the term `payment' includes any gross amount 
        which is used in computing any net amount which is transferred 
        to or from the taxpayer.
            ``(6) Prevention of over-withholding.--In the case of any 
        chain of dividend equivalents one or more of which is subject 
        to tax under this section or section 881, the Secretary may 
        reduce such tax, but only to the extent that the taxpayer can 
        establish that such tax has been paid with respect to another 
        dividend equivalent in such chain. For purposes of this 
        paragraph, a dividend shall be treated as a dividend 
        equivalent.
            ``(7) Coordination with chapters 3 and 4.--For purposes of 
        chapters 3 and 4, each person that is a party to any contract 
        or other arrangement that provides for the payment of a 
        dividend equivalent shall be treated as having control of such 
        payment.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to payments made on or after the date that is 90 days after the 
date of the enactment of this Act.

                   TITLE VI--OTHER REVENUE PROVISIONS

 Subtitle A--Partnership Interests Held by Partners Providing Services

SEC. 601. PARTNERSHIP INTERESTS TRANSFERRED IN CONNECTION WITH 
              PERFORMANCE OF SERVICES.

    (a) Modification to Election To Include Partnership Interest in 
Gross Income in Year of Transfer.--Subsection (c) of section 83 is 
amended by redesignating paragraph (4) as paragraph (5) and by 
inserting after paragraph (3) the following new paragraph:
            ``(4) Partnership interests.--Except as provided by the 
        Secretary, in the case of any transfer of an interest in a 
        partnership in connection with the provision of services to (or 
        for the benefit of) such partnership--
                    ``(A) the fair market value of such interest shall 
                be treated for purposes of this section as being equal 
                to the amount of the distribution which the partner 
                would receive if the partnership sold (at the time of 
                the transfer) all of its assets at fair market value 
                and distributed the proceeds of such sale (reduced by 
                the liabilities of the partnership) to its partners in 
                liquidation of the partnership, and
                    ``(B) the person receiving such interest shall be 
                treated as having made the election under subsection 
                (b)(1) unless such person makes an election under this 
                paragraph to have such subsection not apply.''.
    (b) Conforming Amendment.--Paragraph (2) of section 83(b) is 
amended by inserting ``or subsection (c)(4)(B)'' after ``paragraph 
(1)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to interests in partnerships transferred after the date of the 
enactment of this Act.

SEC. 602. INCOME OF PARTNERS FOR PERFORMING INVESTMENT MANAGEMENT 
              SERVICES TREATED AS ORDINARY INCOME RECEIVED FOR 
              PERFORMANCE OF SERVICES.

    (a) In General.--Part I of subchapter K of chapter 1 is amended by 
adding at the end the following new section:

``SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING INVESTMENT MANAGEMENT 
              SERVICES TO PARTNERSHIP.

    ``(a) Treatment of Distributive Share of Partnership Items.--For 
purposes of this title, in the case of an investment services 
partnership interest--
            ``(1) In general.--Notwithstanding section 702(b)--
                    ``(A) any net income with respect to such interest 
                for any partnership taxable year shall be treated as 
                ordinary income, and
                    ``(B) any net loss with respect to such interest 
                for such year, to the extent not disallowed under 
                paragraph (2) for such year, shall be treated as an 
                ordinary loss.
        All items of income, gain, deduction, and loss which are taken 
        into account in computing net income or net loss shall be 
        treated as ordinary income or ordinary loss (as the case may 
        be).
            ``(2) Treatment of losses.--
                    ``(A) Limitation.--Any net loss with respect to 
                such interest shall be allowed for any partnership 
                taxable year only to the extent that such loss does not 
                exceed the excess (if any) of--
                            ``(i) the aggregate net income with respect 
                        to such interest for all prior partnership 
                        taxable years, over
                            ``(ii) the aggregate net loss with respect 
                        to such interest not disallowed under this 
                        subparagraph for all prior partnership taxable 
                        years.
                    ``(B) Carryforward.--Any net loss for any 
                partnership taxable year which is not allowed by reason 
                of subparagraph (A) shall be treated as an item of loss 
                with respect to such partnership interest for the 
                succeeding partnership taxable year.
                    ``(C) Basis adjustment.--No adjustment to the basis 
                of a partnership interest shall be made on account of 
                any net loss which is not allowed by reason of 
                subparagraph (A).
                    ``(D) Prior partnership years.--Any reference in 
                this paragraph to prior partnership taxable years shall 
                only include prior partnership taxable years to which 
                this section applies.
            ``(3) Net income and loss.--For purposes of this section--
                    ``(A) Net income.--The term `net income' means, 
                with respect to any investment services partnership 
                interest for any partnership taxable year, the excess 
                (if any) of--
                            ``(i) all items of income and gain taken 
                        into account by the holder of such interest 
                        under section 702 with respect to such interest 
                        for such year, over
                            ``(ii) all items of deduction and loss so 
                        taken into account.
                    ``(B) Net loss.--The term `net loss' means, with 
                respect to such interest for such year, the excess (if 
                any) of the amount described in subparagraph (A)(ii) 
                over the amount described in subparagraph (A)(i).
    ``(b) Dispositions of Partnership Interests.--
            ``(1) Gain.--Any gain on the disposition of an investment 
        services partnership interest shall be treated as ordinary 
        income and shall be recognized notwithstanding any other 
        provision of this subtitle.
            ``(2) Loss.--Any loss on the disposition of an investment 
        services partnership interest shall be treated as an ordinary 
        loss to the extent of the excess (if any) of--
                    ``(A) the aggregate net income with respect to such 
                interest for all partnership taxable years, over
                    ``(B) the aggregate net loss with respect to such 
                interest allowed under subsection (a)(2) for all 
                partnership taxable years.
            ``(3) Disposition of portion of interest.--In the case of 
        any disposition of an investment services partnership interest, 
        the amount of net loss which otherwise would have (but for 
        subsection (a)(2)(C)) applied to reduce the basis of such 
        interest shall be disregarded for purposes of this section for 
        all succeeding partnership taxable years.
            ``(4) Distributions of partnership property.--In the case 
        of any distribution of property by a partnership with respect 
        to any investment services partnership interest held by a 
        partner--
                    ``(A) the excess (if any) of--
                            ``(i) the fair market value of such 
                        property at the time of such distribution, over
                            ``(ii) the adjusted basis of such property 
                        in the hands of the partnership,
                shall be taken into account as an increase in such 
                partner's distributive share of the taxable income of 
                the partnership (except to the extent such excess is 
                otherwise taken into account in determining the taxable 
                income of the partnership),
                    ``(B) such property shall be treated for purposes 
                of subpart B of part II as money distributed to such 
                partner in an amount equal to such fair market value, 
                and
                    ``(C) the basis of such property in the hands of 
                such partner shall be such fair market value.
        Subsection (b) of section 734 shall be applied without regard 
        to the preceding sentence.
            ``(5) Application of section 751.--In applying section 
        751(a), an investment services partnership interest shall be 
        treated as an inventory item.
    ``(c) Investment Services Partnership Interest.--For purposes of 
this section--
            ``(1) In general.--The term `investment services 
        partnership interest' means any interest in a partnership which 
        is held (directly or indirectly) by any person if it was 
        reasonably expected (at the time that such person acquired such 
        interest) that such person (or any person related to such 
        person) would provide (directly or indirectly) a substantial 
        quantity of any of the following services with respect to 
        assets held (directly or indirectly) by the partnership:
                    ``(A) Advising as to the advisability of investing 
                in, purchasing, or selling any specified asset.
                    ``(B) Managing, acquiring, or disposing of any 
                specified asset.
                    ``(C) Arranging financing with respect to acquiring 
                specified assets.
                    ``(D) Any activity in support of any service 
                described in subparagraphs (A) through (C).
        For purposes of this paragraph, the term `specified asset' 
        means securities (as defined in section 475(c)(2) without 
        regard to the last sentence thereof), real estate held for 
        rental or investment, interests in partnerships, commodities 
        (as defined in section 475(e)(2)), or options or derivative 
        contracts with respect to any of the foregoing.
            ``(2) Exception for certain capital interests.--
                    ``(A) In general.--In the case of any portion of an 
                investment services partnership interest which is a 
                qualified capital interest, all items of income, gain, 
                loss, and deduction which are allocated to such 
                qualified capital interest shall not be taken into 
                account under subsection (a) if--
                            ``(i) allocations of items are made by the 
                        partnership to such qualified capital interest 
                        in the same manner as such allocations are made 
                        to other qualified capital interests held by 
                        partners who do not provide any services 
                        described in paragraph (1) and who are not 
                        related to the partner holding the qualified 
                        capital interest, and
                            ``(ii) the allocations made to such other 
                        interests are significant compared to the 
                        allocations made to such qualified capital 
                        interest.
                    ``(B) Special rule for no or insignificant 
                allocations to nonservice providers.--To the extent 
                provided by the Secretary in regulations or other 
                guidance, in any case in which the requirements of 
                subparagraph (A)(ii) are not satisfied, items of 
                income, gain, loss, and deduction shall not be taken 
                into account under subsection (a) to the extent that 
                such items are properly allocable under such 
                regulations or other guidance to qualified capital 
                interests.
                    ``(C) Special rule for dispositions.--In the case 
                of any investment services partnership interest any 
                portion of which is a qualified capital interest, 
                subsection (b) shall not apply to so much of any gain 
                or loss as bears the same proportion to the entire 
                amount of such gain or loss as--
                            ``(i) the distributive share of gain or 
                        loss that would have been allocable to the 
                        qualified capital interest under subparagraph 
                        (A) if the partnership sold all of its assets 
                        immediately before the disposition, bears to
                            ``(ii) the distributive share of gain or 
                        loss that would have been so allocable to the 
                        investment services partnership interest of 
                        which such qualified capital interest is a 
                        part.
                    ``(D) Qualified capital interest.--For purposes of 
                this paragraph, the term `qualified capital interest' 
                means so much of a partner's interest in the capital of 
                the partnership as is attributable to--
                            ``(i) the fair market value of any money or 
                        other property contributed to the partnership 
                        in exchange for such interest (determined 
                        without regard to section 752(a)) ,
                            ``(ii) any amounts which have been included 
                        in gross income under section 83 with respect 
                        to the transfer of such interest, and
                            ``(iii) the excess (if any) of--
                                    ``(I) any items of income and gain 
                                taken into account under section 702 
                                with respect to such interest for 
                                taxable years to which this section 
                                applies, over
                                    ``(II) any items of deduction and 
                                loss so taken into account.
                The qualified capital interest shall be reduced by 
                distributions from the partnership with respect to such 
                interest for taxable years to which this section 
                applies and by the excess (if any) of the amount 
                described in clause (iii)(II) over the amount described 
                in clause (iii)(I).
                    ``(E) Treatment of certain loans.--
                            ``(i) Proceeds of partnership loans not 
                        treated as qualified capital interest of 
                        service providing partners.--For purposes of 
                        this paragraph, an investment services 
                        partnership interest shall not be treated as a 
                        qualified capital interest to the extent that 
                        such interest is acquired in connection with 
                        the proceeds of any loan or other advance made 
                        or guaranteed, directly or indirectly, by any 
                        other partner or the partnership (or any person 
                        related to any such other partner or the 
                        partnership).
                            ``(ii) Reduction in allocations to 
                        qualified capital interests for loans from 
                        nonservice providing partners to the 
                        partnership.--For purposes of this paragraph, 
                        any loan or other advance to the partnership 
                        made or guaranteed, directly or indirectly, by 
                        a partner not providing services described in 
                        paragraph (1) to the partnership (or any person 
                        related to such partner) shall be taken into 
                        account in determining the qualified capital 
                        interests of the partners in the partnership.
            ``(3) Related persons.--A person shall be treated as 
        related to another person if the relationship between such 
        persons would result in a disallowance of losses under section 
        267 or 707(b).
    ``(d) Other Income and Gain in Connection With Investment 
Management Services.--
            ``(1) In general.--If--
                    ``(A) a person performs (directly or indirectly) 
                investment management services for any entity,
                    ``(B) such person holds (directly or indirectly) a 
                disqualified interest with respect to such entity, and
                    ``(C) the value of such interest (or payments 
                thereunder) is substantially related to the amount of 
                income or gain (whether or not realized) from the 
                assets with respect to which the investment management 
                services are performed,
        any income or gain with respect to such interest shall be 
        treated as ordinary income. Rules similar to the rules of 
        subsection (c)(2) shall apply for purposes of this subsection.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Disqualified interest.--
                            ``(i) In general.--The term `disqualified 
                        interest' means, with respect to any entity--
                                    ``(I) any interest in such entity 
                                other than indebtedness,
                                    ``(II) convertible or contingent 
                                debt of such entity,
                                    ``(III) any option or other right 
                                to acquire property described in 
                                subclause (I) or (II), and
                                    ``(IV) any derivative instrument 
                                entered into (directly or indirectly) 
                                with such entity or any investor in 
                                such entity.
                            ``(ii) Exceptions.--Such term shall not 
                        include--
                                    ``(I) a partnership interest,
                                    ``(II) except as provided by the 
                                Secretary, any interest in a taxable 
                                corporation, and
                                    ``(III) except as provided by the 
                                Secretary, stock in an S corporation.
                    ``(B) Taxable corporation.--The term `taxable 
                corporation' means--
                            ``(i) a domestic C corporation, or
                            ``(ii) a foreign corporation substantially 
                        all of the income of which is--
                                    ``(I) effectively connected with 
                                the conduct of a trade or business in 
                                the United States, or
                                    ``(II) subject to a comprehensive 
                                foreign income tax (as defined in 
                                section 457A(d)(2)).
                    ``(C) Investment management services.--The term 
                `investment management services' means a substantial 
                quantity of any of the services described in subsection 
                (c)(1).
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as is necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance to--
            ``(1) provide modifications to the application of this 
        section (including treating related persons as not related to 
        one another) to the extent such modification is consistent with 
        the purposes of this section,
            ``(2) prevent the avoidance of the purposes of this 
        section, and
            ``(3) coordinate this section with the other provisions of 
        this title.
    ``(f) Cross Reference.--For 40 percent penalty on certain 
underpayments due to the avoidance of this section, see section 
6662.''.
    (b) Income From Investment Services Partnership Interests Not 
Treated as Qualifying Income of Publicly Traded Partnerships.--
Subsection (d) of section 7704 is amended by adding at the end the 
following new paragraph:
            ``(6) Income from investment services partnership interests 
        not qualified.--
                    ``(A) In general.--Items of income and gain shall 
                not be treated as qualifying income if such items are 
                treated as ordinary income by reason of the application 
                of section 710 (relating to special rules for partners 
                providing investment management services to 
                partnership).
                    ``(B) Special rules for certain partnerships.--
                            ``(i) Certain partnerships owned by real 
                        estate investment trusts.--Subparagraph (A) 
                        shall not apply in the case of a partnership 
                        which meets each of the following requirements:
                                    ``(I) Such partnership is treated 
                                as publicly traded under this section 
                                solely by reason of interests in such 
                                partnership being convertible into 
                                interests in a real estate investment 
                                trust which is publicly traded.
                                    ``(II) 50 percent or more of the 
                                capital and profits interests of such 
                                partnership are owned, directly or 
                                indirectly, at all times during the 
                                taxable year by such real estate 
                                investment trust (determined with the 
                                application of section 267(c)).
                                    ``(III) Such partnership meets the 
                                requirements of paragraphs (2), (3), 
                                and (4) of section 856(c).
                            ``(ii) Certain partnerships owning other 
                        publicly traded partnerships.--Subparagraph (A) 
                        shall not apply in the case of a partnership 
                        which meets each of the following requirements:
                                    ``(I) Substantially all of the 
                                assets of such partnership consist of 
                                interests in one or more publicly 
                                traded partnerships (determined without 
                                regard to subsection (b)(2)).
                                    ``(II) Substantially all of the 
                                income of such partnership is ordinary 
                                income or section 1231 gain (as defined 
                                in section 1231(a)(3)).
                    ``(C) Transitional rule.--In the case of a 
                partnership which is a publicly traded partnership on 
                the date of the enactment of this paragraph, 
                subparagraph (A) shall not apply to any taxable year of 
                the partnership beginning before the date which is 10 
                years after the date of the enactment of this 
                paragraph.''.
    (c) Imposition of Penalty on Underpayments.--
            (1) In general.--Subsection (b) of section 6662, as amended 
        by section 512, is amended by inserting after paragraph (6) the 
        following new paragraph:
            ``(7) The application of subsection (d) of section 710 or 
        the regulations prescribed under section 710(e) to prevent the 
        avoidance of the purposes of section 710.''.
            (2) Amount of penalty.--
                    (A) In general.--Section 6662, as amended by 
                section 512, is amended by adding at the end the 
                following new subsection:
    ``(j) Increase in Penalty in Case of Property Transferred for 
Investment Management Services.--In the case of any portion of an 
underpayment to which this section applies by reason of subsection 
(b)(7), subsection (a) shall be applied with respect to such portion by 
substituting `40 percent' for `20 percent'.''.
                    (B) Conforming amendments.--Subparagraph (B) of 
                section 6662A(e)(2) is amended--
                            (i) by striking ``section 6662(h)'' and 
                        inserting ``subsection (h) or (i) of section 
                        6662'', and
                            (ii) by striking ``gross valuation 
                        misstatement penalty'' in the heading and 
                        inserting ``certain increased underpayment 
                        penalties''.
            (3) Special rules for application of reasonable cause 
        exception.--Subsection (c) of section 6664 is amended--
                    (A) by redesignating paragraphs (2) and (3) as 
                paragraphs (3) and (4), respectively,
                    (B) by striking ``paragraph (2)'' in paragraph (4), 
                as so redesignated, and inserting ``paragraph (3)'', 
                and
                    (C) by inserting after paragraph (1) the following 
                new paragraph:
            ``(2) Special rule for underpayments attributable to 
        investment management services.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any portion of an underpayment to which this section 
                applies by reason of subsection (b)(7) unless--
                            ``(i) the relevant facts affecting the tax 
                        treatment of the item are adequately disclosed,
                            ``(ii) there is or was substantial 
                        authority for such treatment, and
                            ``(iii) the taxpayer reasonably believed 
                        that such treatment was more likely than not 
                        the proper treatment.
                    ``(B) Rules relating to reasonable belief.--Rules 
                similar to the rules of subsection (d)(3) shall apply 
                for purposes of subparagraph (A)(iii).''.
    (d) Income and Loss From Investment Services Partnership Interests 
Taken Into Account in Determining Net Earnings From Self-Employment.--
            (1) Internal revenue code.--Section 1402(a) is amended by 
        striking ``and'' at the end of paragraph (16), by striking the 
        period at the end of paragraph (17) and inserting ``; and'', 
        and by inserting after paragraph (17) the following new 
        paragraph:
            ``(18) notwithstanding the preceding provisions of this 
        subsection, in the case of any individual engaged in the trade 
        or business of providing services described in section 
        710(c)(1) with respect to any entity, any amount treated as 
        ordinary income or ordinary loss of such individual under 
        section 710 with respect to such entity shall be taken into 
        account in determining the net earnings from self-employment of 
        such individual.''.
            (2) Social security act.--Section 211(a) of the Social 
        Security Act is amended by inserting after paragraph (16) the 
        following new paragraph:
            ``(17) Notwithstanding the preceding provisions of this 
        subsection, in the case of any individual engaged in the trade 
        or business of providing services described in section 
        710(c)(1) of the Internal Revenue Code of 1986 with respect to 
        any entity, any amount treated as ordinary income or ordinary 
        loss of such individual under section 710 of such Code with 
        respect to such entity shall be taken into account in 
        determining the net earnings from self-employment of such 
        individual.''.
    (e) Conforming Amendments.--
            (1) Subsection (d) of section 731 is amended by inserting 
        ``section 710(b)(4) (relating to distributions of partnership 
        property),'' after ``to the extent otherwise provided by''.
            (2) Section 741 is amended by inserting ``or section 710 
        (relating to special rules for partners providing investment 
        management services to partnership)'' before the period at the 
        end.
            (3) The table of sections for part I of subchapter K of 
        chapter 1 is amended by adding at the end the following new 
        item:

``Sec. 710. Special rules for partners providing investment management 
                            services to partnership.''.
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending after December 31, 2009.
            (2) Partnership taxable years which include effective 
        date.--In applying section 710(a) of the Internal Revenue Code 
        of 1986 (as added by this section) in the case of any 
        partnership taxable year which includes December 31, 2009, the 
        amount of the net income referred to in such section shall be 
        treated as being the lesser of the net income for the entire 
        partnership taxable year or the net income determined by only 
        taking into account items attributable to the portion of the 
        partnership taxable year which is after such date.
            (3) Dispositions of partnership interests.--Section 710(b) 
        of the Internal Revenue Code of 1986 (as added by this section) 
        shall apply to dispositions and distributions after December 
        31, 2009.
            (4) Other income and gain in connection with investment 
        management services.--Section 710(d) of such Code (as added by 
        this section) shall take effect on January 1, 2010.
            (5) Publicly traded partnerships.--The amendment made by 
        subsection (b) shall apply to taxable years beginning after 
        December 31, 2009.

       Subtitle B--Time for Payment of Corporate Estimated Taxes

SEC. 611. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

    The percentage under paragraph (1) of section 202(b) of the 
Corporate Estimated Tax Shift Act of 2009 in effect on the date of the 
enactment of this Act is increased by 26.5 percentage points.

                   Subtitle C--Tax Expenditure Study

SEC. 621. FINDINGS.

    Congress finds the following:
            (1) Currently, the aggregate cost of Federal tax 
        expenditures rivals, or even exceeds, the amount of total 
        Federal discretionary spending.
            (2) Given the escalating public debt, a critical 
        examination of this use of taxpayer dollars is essential.
            (3) Additionally, tax expenditures can complicate the 
        Internal Revenue Code of 1986 for taxpayers and complicate tax 
        administration for the Internal Revenue Service.
            (4) To facilitate a better understanding of tax 
        expenditures in the future, it is constructive for legislation 
        extending these provisions to include a study of such 
        provisions.     

SEC. 622. STUDY OF EXTENDED TAX EXPENDITURES.

    (a) In General.--Not later than November 30, 2010, the Chief of 
Staff of the Joint Committee on Taxation, in consultation with the 
Comptroller General of the United States, shall submit to the Committee 
on Ways and Means of the House of Representatives and the Committee on 
Finance of the Senate a report on each tax expenditure (as defined in 
section 3(3) of the Congressional Budget Impoundment Control Act of 
1974 (2 U.S.C. 622(3)) extended by this Act.
    (b) Rolling Submission of Reports.--The Chief of Staff of the Joint 
Committee on Taxation shall initially submit the reports for each such 
tax expenditure enacted in subtitle B of title I (relating to business 
tax relief) and title IV (relating to energy provisions) in order of 
the tax expenditure incurring the least aggregate cost to the greatest 
aggregate cost (determined by reference to the cost estimate of this 
Act by the Joint Committee on Taxation). Thereafter, such reports may 
be submitted in such order as the Chief of Staff determines 
appropriate.
    (c) Contents of Report.--Such reports shall contain the following:
            (1) An explanation of the tax expenditure and any relevant 
        economic, social, or other context under which it was first 
        enacted.
            (2) A description of the intended purpose of the tax 
        expenditure.
            (3) An analysis of the overall success of the tax 
        expenditure in achieving such purpose, and evidence supporting 
        such analysis.
            (4) An analysis of the extent to which further extending 
        the tax expenditure, or making it permanent, would contribute 
        to achieving such purpose.
            (5) A description of the direct and indirect beneficiaries 
        of the tax expenditure, including identifying any unintended 
        beneficiaries.
            (6) An analysis of whether the tax expenditure is the most 
        cost-effective method for achieving the purpose for which it 
        was intended, and a description of any more cost-effective 
        methods through which such purpose could be accomplished.
            (7) A description of any unintended effects of the tax 
        expenditure that are useful in understanding the tax 
        expenditure's overall value.
            (8) An analysis of how the tax expenditure could be 
        modified to better achieve its original purpose.
            (9) A brief description of any interactions (actual or 
        potential) with other tax expenditures or direct spending 
        programs in the same or related budget function worthy of 
        further study.
            (10) A description of any unavailable information the staff 
        of the Joint Committee on Taxation may need to complete a more 
        thorough examination and analysis of the tax expenditure, and 
        what must be done to make such information available.
    (d) Minimum Analysis by Deadline.--In the event the Chief of Staff 
of the Joint Committee on Taxation concludes it will not be feasible to 
complete all reports by the date specified in subsection (a), at a 
minimum, the reports for each tax expenditure enacted in subtitle B of 
title I (relating to business tax relief) and title IV (relating to 
energy provisions) shall be completed by such date.

            Passed the House of Representatives December 9, 2009.

            Attest:

                                                                 Clerk.
111th CONGRESS

  1st Session

                               H. R. 4213

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                                 AN ACT

 To amend the Internal Revenue Code of 1986 to extend certain expiring 
                  provisions, and for other purposes.