1.
(a)This Act may be cited
as the Economic Recovery and
Middle-Class Tax Relief Act of 2009
.
(b)
Sec. 1. Short title.
Title I—Incentives for economic growth
Subtitle A—Income tax reductions
Sec. 101. 2003 tax reductions made permanent.
Sec. 102. 5 percent reduction in individual income tax
rates.
Sec. 103. Repeal of alternative minimum tax on
individuals.
Sec. 104. Reduction in corporate marginal income tax
rates.
Subtitle B—Reduction of income taxes on capital
assets
Sec. 111. Indexing of certain assets for purposes of
determining gain or loss.
Sec. 112. Reduced capital gains rate for
corporations.
Subtitle C—Other provisions related to businesses
Sec. 121. Repeal of certain limitations on the expensing of
section 179 property.
Sec. 122. Research credit made permanent.
Sec. 123. 7-year carryback of net operating losses.
Subtitle D—Other provisions relating to
individuals
Sec. 131. Child tax credit increased and made
permanent.
Sec. 132. Distributions not required from individual retirement
plans at age 70½.
Sec. 133. No IRA distribution during 2009 included in gross
income.
Title II—Across-the-board rescissions in non-defense
discretionary spending for fiscal year 2009
Sec. 201. Across-the-board rescissions in non-defense
discretionary spending for fiscal year 2009.
Title III—Increased incentives for education
Sec. 301. Increased deduction for qualified higher education
expenses.
Sec. 302. Increased deduction for interest on student
loans.
<enum>I</enum><header>Incentives for
economic growth</header>
<subtitle id="H0EC7DE76FCC74FF98F41B5A40049F4E"><enum>A</enum><header>Income tax
reductions</header>
<section id="HE324FCF0DDB84F339E8920E0223CE2D5"><enum>101.</enum><header>2003 tax
reductions made permanent</header><text display-inline="no-display-inline">Section 303 of the Jobs and Growth Tax
Relief Reconciliation Act of 2003 is hereby repealed.</text>
</section><section id="H8E119E1CBEBE411CA68ECDC048081386"><enum>102.</enum><header>5 percent
reduction in individual income tax rates</header>
<subsection id="HC8154A545C47494EA9ADFB680B0447D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 1 of the
Internal Revenue Code of 1986 (relating to tax imposed on individuals) is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H1A5ABF1E24DE4902A6D6E78A65EAAC1" style="OLC">
<subsection id="H40C1FAA32134481CBE94FFA1932E4827"><enum>(j)</enum><header>Rate reductions
after 2007</header>
<paragraph id="H1A1DD57558C841F3AF914C249500F93D"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of
taxable years beginning in a calendar year after 2007, the reduced percentage
specified in the following table shall be substituted for the otherwise
applicable tax rate in the tables under subsections (a), (b), (c), (d), and
(e).</text>
<table align-to-level="section" blank-lines-before="1" colsep="0" frame="none" line-rules="no-gen" rowsep="0" rule-weights="0.0.0.0.0.0" table-template-name="Entry: 2 text, bold hds" table-type="">
<tgroup cols="2" grid-typeface="1.1" rowsep="0" thead-tbody-ldg-size="0.10.12"><colspec coldef="txt" colname="column1" colsep="0" colwidth="230pts" min-data-value="190" rowsep="0"></colspec><colspec coldef="txt-no-ldr-no-spread" colname="column2" colsep="0" colwidth="95pts" min-data-value="95" rowsep="0"></colspec>
<tbody>
<row><entry colname="column1" leader-modify="clr-ldr" rowsep="0" stub-definition="txt-clr" stub-hierarchy="1"><bold>Otherwise applicable tax
rate</bold></entry><entry colname="column2" leader-modify="clr-ldr"><bold>Reduced percentage</bold></entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">10</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">9.5</entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">15</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">14.25</entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">25</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">23.75</entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">28</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">26.6</entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">33</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">31.35</entry>
</row>
<row><entry colname="column1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="2">35</entry><entry colname="column2" leader-modify="clr-ldr" rowsep="0">33.25</entry>
</row>
</tbody>
</tgroup>
</table>
</paragraph><paragraph id="H2E27A948B27D49620004A700CD7B8B0"><enum>(2)</enum><header>Adjustment of
tables</header><text>The Secretary shall adjust the tables prescribed under
subsection (f) to carry out this subsection.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8D5B98B8633E4F68BBFECBC0B010804C"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this subsection shall apply to taxable years beginning after December 31,
2007.</text>
</subsection><subsection id="H8F5E0C6A28A447CCA538EBA9A822C4F0"><enum>(c)</enum><header>Repeal of EGTRRA
sunset of rate reductions</header><text display-inline="yes-display-inline">Title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to the amendments made by
section 101 of such Act.</text>
</subsection></section><section id="H61E29A94205044199DF300B8331D5CEB"><enum>103.</enum><header>Repeal of
alternative minimum tax on individuals</header>
<subsection id="H91A45A6EDE034D19A266B3D544FC3252"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 55(a) of the
Internal Revenue Code of 1986 (relating to alternative minimum tax imposed) is
amended by adding at the end the following new flush sentence:</text>
<quoted-block display-inline="no-display-inline" id="H28F1B3FC9B62410A9666C422C6273EBA" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="subsection">For
purposes of this title, the tentative minimum tax on any taxpayer other than a
corporation for any taxable year beginning after December 31, 2008, shall be
zero.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HD6889AF74CA84A93875400606072C773"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2008.</text>
</subsection></section><section id="H1D4C3E4240AC4A5197BCDE6FB73032C1" section-type="subsequent-section"><enum>104.</enum><header>Reduction in
corporate marginal income tax rates</header>
<subsection id="H57D4521FB83E45669110F847791B4E00"><enum>(a)</enum><header>General
rule</header><text display-inline="yes-display-inline">Paragraph (1) of section
11(b) of the Internal Revenue Code of 1986 is amended—</text>
<paragraph display-inline="no-display-inline" id="H2AE733A073CB487DA34CA7B6236C88FD"><enum>(1)</enum><text>by inserting
<quote>and</quote> at the end of subparagraph (A),</text>
</paragraph><paragraph id="H2DF5B5011321462E87D5F72035330007"><enum>(2)</enum><text>by striking
<quote>but does not exceed $75,000,</quote> in subparagraph (B) and inserting a
period,</text>
</paragraph><paragraph id="H6BE5383A9CD645B3ADE31DF48666107"><enum>(3)</enum><text>by
striking subparagraphs (C) and (D), and</text>
</paragraph><paragraph id="HFCCB8CB2B1FA421889C7C6F3D3104EF8"><enum>(4)</enum><text>by striking the
last 2 sentences.</text>
</paragraph></subsection><subsection id="H3BF895CA12AE41F3BBE1A53328ECA63E"><enum>(b)</enum><header>Personal service
corporations</header><text>Paragraph (2) of section 11(b) of such Code is
amended by striking <quote>35 percent</quote> and inserting <quote>25
percent</quote>.</text>
</subsection><subsection id="H95BC0F2000A5480D9DA22090FB56A5C"><enum>(c)</enum><header>Conforming
amendments</header><text display-inline="yes-display-inline">Paragraphs (1) and
(2) of section 1445(e) of such Code are each amended by striking <quote>35
percent</quote> and inserting <quote>25 percent</quote>.</text>
</subsection><subsection id="HB571E2DB87E847FB006131160223E455"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2008, except that the amendments made by
subsection (c) shall take effect on the date of the enactment of this
Act.</text>
</subsection></section></subtitle><subtitle id="H3AF6AE04827D416980365D7F07A1DB98"><enum>B</enum><header>Reduction of
income taxes on capital assets</header>
<section display-inline="no-display-inline" id="HB6BA784342B44FF9AEE94C00C5646CE"><enum>111.</enum><header>Indexing of
certain assets for purposes of determining gain or loss</header>
<subsection id="H7B84B38BB93142F28CD984351B123D47"><enum>(a)</enum><header>In
General</header><text>Part II of subchapter O of chapter 1 (relating to basis
rules of general application) is amended by redesignating section 1023 as
section 1024 and by inserting after section 1022 the following new
section:</text>
<quoted-block id="H857C45636476437493550428D114C25" style="OLC">
<section id="H29A271C8419D4BE892A900E849284E05"><enum>1023.</enum><header>Indexing of
certain assets for purposes of determining gain or loss</header>
<subsection id="H47F39E25EAD1474EBAA22340D34E1205"><enum>(a)</enum><header>General
rule</header>
<paragraph id="H88E25F9A370B475A9F0017EDA04959FD"><enum>(1)</enum><header>Indexed basis
substituted for adjusted basis</header><text>Solely for purposes of determining
gain or loss on the sale or other disposition by a taxpayer (other than a
corporation) of an indexed asset which has been held for more than 3 years, the
indexed basis of the asset shall be substituted for its adjusted basis.</text>
</paragraph><paragraph id="H94FEB9E252F44878A5EFA94349B3FE4"><enum>(2)</enum><header>Exception for
depreciation, etc</header><text>The deductions for depreciation, depletion, and
amortization shall be determined without regard to the application of paragraph
(1) to the taxpayer or any other person.</text>
</paragraph><paragraph id="H815B7A986362473DA8367F93D2BE9E1"><enum>(3)</enum><header>Written
documentation requirement</header><text>Paragraph (1) shall apply only with
respect to indexed assets for which the taxpayer has written documentation of
the original purchase price paid or incurred by the taxpayer to acquire such
asset.</text>
</paragraph></subsection><subsection id="H0137CF46BFDD4602AB8705CCF53745EB"><enum>(b)</enum><header>Indexed
asset</header>
<paragraph id="HF16A218843774E55871F9501C077FC7E"><enum>(1)</enum><header>In
general</header><text>For purposes of this section, the term <term>indexed
asset</term> means—</text>
<subparagraph id="HBE9F548D053041F88FCD30E88C796C58"><enum>(A)</enum><text>common stock in a
C corporation (other than a foreign corporation), or</text>
</subparagraph><subparagraph id="H56C054FE0A414006ACC398493B937416"><enum>(B)</enum><text>tangible
property,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">which is a
capital asset or property used in the trade or business (as defined in section
1231(b)).</continuation-text></paragraph><paragraph id="HE54988F1A9EB4C94BA9B63E99979FAF8"><enum>(2)</enum><header>Stock in certain
foreign corporations included</header><text>For purposes of this
section—</text>
<subparagraph id="H3684CB8D78C544159E79A81CC45F751F"><enum>(A)</enum><header>In
general</header><text>The term <term>indexed asset</term> includes common stock
in a foreign corporation which is regularly traded on an established securities
market.</text>
</subparagraph><subparagraph id="H026BC5C8F65E4BF5A4E8ED8A0E0FA3"><enum>(B)</enum><header>Exception</header><text>Subparagraph
(A) shall not apply to—</text>
<clause id="H6E8A32A208E64B9B91502CB693D0B1E4"><enum>(i)</enum><text>stock of a foreign
investment company,</text>
</clause><clause id="HC21581524C814FAA8B7119901BB4C380"><enum>(ii)</enum><text>stock in a
passive foreign investment company (as defined in section 1296),</text>
</clause><clause id="H3112989CAAC544CCA209035DB90045A2"><enum>(iii)</enum><text>stock in a
foreign corporation held by a United States person who meets the requirements
of section 1248(a)(2), and</text>
</clause><clause id="HD0AF42E7A5EA45008DAC412CA5FA1DB"><enum>(iv)</enum><text>stock in a foreign
personal holding company.</text>
</clause></subparagraph><subparagraph id="H6E2FCE77CBF142C2B01793ED783900D"><enum>(C)</enum><header>Treatment of
American depository receipts</header><text>An American depository receipt for
common stock in a foreign corporation shall be treated as common stock in such
corporation.</text>
</subparagraph></paragraph></subsection><subsection id="H7C59674F48EE4A60B6ACD1E7C4F3AAF5"><enum>(c)</enum><header>Indexed
basis</header><text>For purposes of this section—</text>
<paragraph id="H1DE0C0C59BEF49A8B72FFA28236C0007"><enum>(1)</enum><header>General
rule</header><text>The indexed basis for any asset is—</text>
<subparagraph id="H04F24825F1C444009EFDCA5F02028D7"><enum>(A)</enum><text>the adjusted basis
of the asset, increased by</text>
</subparagraph><subparagraph id="HB2D4A1CC96C74CE5BEE7E29878A624D2"><enum>(B)</enum><text>the applicable
inflation adjustment.</text>
</subparagraph></paragraph><paragraph id="H1440DD926ADC4B779C4BD8D94BFBD237"><enum>(2)</enum><header>Applicable
inflation adjustment</header><text>The applicable inflation adjustment for any
asset is an amount equal to—</text>
<subparagraph id="H1B730FDE7E344F94BCDBFA4800F54330"><enum>(A)</enum><text>the adjusted basis
of the asset, multiplied by</text>
</subparagraph><subparagraph id="H9A47ED4856284F8581D81955AA239930"><enum>(B)</enum><text>the percentage (if
any) by which—</text>
<clause id="H3FFF9357D8E64AE3A4003998E775B7CF"><enum>(i)</enum><text>the gross domestic
product deflator for the last calendar quarter ending before the asset is
disposed of, exceeds</text>
</clause><clause id="H229D0DB59B76427793BFF8E9EAB0000"><enum>(ii)</enum><text>the gross domestic
product deflator for the last calendar quarter ending before the asset was
acquired by the taxpayer.</text>
</clause></subparagraph><continuation-text continuation-text-level="paragraph">The
percentage under subparagraph (B) shall be rounded to the nearest
<fraction>1/10</fraction> of 1 percentage point.</continuation-text></paragraph><paragraph id="H85AF72A584114C0697C1DC26300B2C5"><enum>(3)</enum><header>Gross domestic
product deflator</header><text>The gross domestic product deflator for any
calendar quarter is the implicit price deflator for the gross domestic product
for such quarter (as shown in the last revision thereof released by the
Secretary of Commerce before the close of the following calendar
quarter).</text>
</paragraph></subsection><subsection id="H60498F0B460C4810BE6F5C580057F0F"><enum>(d)</enum><header>Suspension of
holding period where diminished risk of loss; treatment of short sales</header>
<paragraph id="HF58D882BD4A64481B84F4676E4985BA7"><enum>(1)</enum><header>In
general</header><text>If the taxpayer (or a related person) enters into any
transaction which substantially reduces the risk of loss from holding any
asset, such asset shall not be treated as an indexed asset for the period of
such reduced risk.</text>
</paragraph><paragraph id="H787A2956038749B0ADE784D3001EAD73"><enum>(2)</enum><header>Short
sales</header>
<subparagraph id="H5660DB297B81494F00B4E847835C7CB2"><enum>(A)</enum><header>In
general</header><text>In the case of a short sale of an indexed asset with a
short sale period in excess of 3 years, for purposes of this title, the amount
realized shall be an amount equal to the amount realized (determined without
regard to this paragraph) increased by the applicable inflation adjustment. In
applying subsection (c)(2) for purposes of the preceding sentence, the date on
which the property is sold short shall be treated as the date of acquisition
and the closing date for the sale shall be treated as the date of
disposition.</text>
</subparagraph><subparagraph id="H768C492E68BB4A5F8C1CCC09E856A8C1"><enum>(B)</enum><header>Short sale
period</header><text>For purposes of subparagraph (A), the short sale period
begins on the day that the property is sold and ends on the closing date for
the sale.</text>
</subparagraph></paragraph></subsection><subsection id="HE22AFBA310BE45D900D20A25972A2C8"><enum>(e)</enum><header>Treatment of
regulated investment companies and real estate investment trusts</header>
<paragraph id="H29A934540676443DB127E75FB65D638C"><enum>(1)</enum><header>Adjustments at
entity level</header>
<subparagraph id="H7885E78061024851B27121ACDCE6281"><enum>(A)</enum><header>In
general</header><text>Except as otherwise provided in this paragraph, the
adjustment under subsection (a) shall be allowed to any qualified investment
entity (including for purposes of determining the earnings and profits of such
entity).</text>
</subparagraph><subparagraph id="HA85587A4942541FA9692267833F23B7"><enum>(B)</enum><header>Exception for
corporate shareholders</header><text>Under regulations—</text>
<clause id="H0DCEF7BFD9C84B16BB8B2EDFD699B530"><enum>(i)</enum><text>in
the case of a distribution by a qualified investment entity (directly or
indirectly) to a corporation—</text>
<subclause id="H59F5B5B0C3854E699600023FB0968859"><enum>(I)</enum><text>the determination
of whether such distribution is a dividend shall be made without regard to this
section, and</text>
</subclause><subclause id="H2AF71691B2674FC1911EF791EFFE9D10"><enum>(II)</enum><text>the amount
treated as gain by reason of the receipt of any capital gain dividend shall be
increased by the percentage by which the entity’s net capital gain for the
taxable year (determined without regard to this section) exceeds the entity’s
net capital gain for such year determined with regard to this section,
and</text>
</subclause></clause><clause id="H94E6574D9392400BA9D6A15E1516679E"><enum>(ii)</enum><text>there shall be
other appropriate adjustments (including deemed distributions) so as to ensure
that the benefits of this section are not allowed (directly or indirectly) to
corporate shareholders of qualified investment entities.</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of the preceding sentence, any amount includible in gross income under
section 852(b)(3)(D) shall be treated as a capital gain dividend and an S
corporation shall not be treated as a corporation.</continuation-text></subparagraph><subparagraph id="H50DF7977E5A841FC8BB1BED8C39C27E4"><enum>(C)</enum><header>Exception for
qualification purposes</header><text>This section shall not apply for purposes
of sections 851(b) and 856(c).</text>
</subparagraph><subparagraph id="HCD2D54EAFD404B78A21F2661D0EC24B2"><enum>(D)</enum><header>Exception for
certain taxes imposed at entity level</header>
<clause id="H5EEFF41561A544F7B9F2893B6CF550D0"><enum>(i)</enum><header>Tax on failure
to distribute entire gain</header><text>If any amount is subject to tax under
section 852(b)(3)(A) for any taxable year, the amount on which tax is imposed
under such section shall be increased by the percentage determined under
subparagraph (B)(i)(II). A similar rule shall apply in the case of any amount
subject to tax under paragraph (2) or (3) of section 857(b) to the extent
attributable to the excess of the net capital gain over the deduction for
dividends paid determined with reference to capital gain dividends only. The
first sentence of this clause shall not apply to so much of the amount subject
to tax under section 852(b)(3)(A) as is designated by the company under section
852(b)(3)(D).</text>
</clause><clause id="HB119B480D1CB4C42902046486EA9311F"><enum>(ii)</enum><header>Other
taxes</header><text>This section shall not apply for purposes of determining
the amount of any tax imposed by paragraph (4), (5), or (6) of section
857(b).</text>
</clause></subparagraph></paragraph><paragraph id="H928B390CE3AA41C991E27E2D6BBCAA6"><enum>(2)</enum><header>Adjustments to
interests held in entity</header>
<subparagraph id="HC201958454ED4CA6B8E47C62A4E0ACE9"><enum>(A)</enum><header>Regulated
investment companies</header><text>Stock in a regulated investment company
(within the meaning of section 851) shall be an indexed asset for any calendar
quarter in the same ratio as—</text>
<clause id="H446DBE14F3634598AD5C87D19000C2A8"><enum>(i)</enum><text>the average of the
fair market values of the indexed assets held by such company at the close of
each month during such quarter, bears to</text>
</clause><clause id="HA52C1CA9DAE943FD876861A25D6C19D5"><enum>(ii)</enum><text>the average of
the fair market values of all assets held by such company at the close of each
such month.</text>
</clause></subparagraph><subparagraph id="H14A20038D1244492A347D75ED79B0047"><enum>(B)</enum><header>Real estate
investment trusts</header><text>Stock in a real estate investment trust (within
the meaning of section 856) shall be an indexed asset for any calendar quarter
in the same ratio as—</text>
<clause id="HFA648FC39CFE4E3590F75308364492C4"><enum>(i)</enum><text>the fair market
value of the indexed assets held by such trust at the close of such quarter,
bears to</text>
</clause><clause id="H9F6E6B54B97042C6AC5000D783FD5DA5"><enum>(ii)</enum><text>the fair market
value of all assets held by such trust at the close of such quarter.</text>
</clause></subparagraph><subparagraph id="H2E50EE4119CF45FA9B414FAA3F632278"><enum>(C)</enum><header>Ratio of 80
percent or more</header><text>If the ratio for any calendar quarter determined
under subparagraph (A) or (B) would (but for this subparagraph) be 80 percent
or more, such ratio for such quarter shall be 100 percent.</text>
</subparagraph><subparagraph id="H1C92AD83763D4EFBBE66220032C107C"><enum>(D)</enum><header>Ratio of 20
percent or less</header><text>If the ratio for any calendar quarter determined
under subparagraph (A) or (B) would (but for this subparagraph) be 20 percent
or less, such ratio for such quarter shall be zero.</text>
</subparagraph><subparagraph id="H053D3436AE6E4DD581AD96A81161D32E"><enum>(E)</enum><header>Look-thru of
partnerships</header><text>For purposes of this paragraph, a qualified
investment entity which holds a partnership interest shall be treated (in lieu
of holding a partnership interest) as holding its proportionate share of the
assets held by the partnership.</text>
</subparagraph></paragraph><paragraph id="H38F0C10375D1477DBC36F718C51C452E"><enum>(3)</enum><header>Treatment of
return of capital distributions</header><text>Except as otherwise provided by
the Secretary, a distribution with respect to stock in a qualified investment
entity which is not a dividend and which results in a reduction in the adjusted
basis of such stock shall be treated as allocable to stock acquired by the
taxpayer in the order in which such stock was acquired.</text>
</paragraph><paragraph id="H80040E3E3EFC4B71B884B54015402C3"><enum>(4)</enum><header>Qualified
investment entity</header><text>For purposes of this subsection, the term
<term>qualified investment entity</term> means—</text>
<subparagraph id="HF80F5FAB559746FBB6DECC00CE586D36"><enum>(A)</enum><text>a regulated
investment company (within the meaning of section 851), and</text>
</subparagraph><subparagraph id="H4AA4F3A06D794AB0A1507C1000B1D736"><enum>(B)</enum><text>a real estate
investment trust (within the meaning of section 856).</text>
</subparagraph></paragraph></subsection><subsection id="HD112BA2472ED4E2FA1ADE64590E3BDE5"><enum>(f)</enum><header>Other pass-thru
entities</header>
<paragraph id="H4A760B1D02D948859CBB180746A54502"><enum>(1)</enum><header>Partnerships</header>
<subparagraph id="H819AB48578AE43B7AD5489A20068B4B7"><enum>(A)</enum><header>In
general</header><text>In the case of a partnership, the adjustment made under
subsection (a) at the partnership level shall be passed through to the
partners.</text>
</subparagraph><subparagraph id="HA16F167A2DAC46689F00AFCA608850D3"><enum>(B)</enum><header>Special rule in
the case of section 754 elections</header><text>In the case of a transfer of an
interest in a partnership with respect to which the election provided in
section 754 is in effect—</text>
<clause id="H51F40FF58F76495B8CD21559F4027F7D"><enum>(i)</enum><text>the adjustment
under section 743(b)(1) shall, with respect to the transferor partner, be
treated as a sale of the partnership assets for purposes of applying this
section, and</text>
</clause><clause id="H1A2947E2F5464C2E8C533386EEA0DF4E"><enum>(ii)</enum><text>with respect to
the transferee partner, the partnership’s holding period for purposes of this
section in such assets shall be treated as beginning on the date of such
adjustment.</text>
</clause></subparagraph></paragraph><paragraph id="HC323CD7BC6284BFD9C25F79DEDBC7EF"><enum>(2)</enum><header>S
corporations</header><text>In the case of an S corporation, the adjustment made
under subsection (a) at the corporate level shall be passed through to the
shareholders. This section shall not apply for purposes of determining the
amount of any tax imposed by section 1374 or 1375.</text>
</paragraph><paragraph id="H271BE9789FAE43D58242C7DA007B513F"><enum>(3)</enum><header>Common trust
funds</header><text>In the case of a common trust fund, the adjustment made
under subsection (a) at the trust level shall be passed through to the
participants.</text>
</paragraph><paragraph id="H15A1A7D3F57040A1B7A6BCBB5F62388C"><enum>(4)</enum><header>Indexing
adjustment disregarded in determining loss on sale of interest in
entity</header><text>Notwithstanding the preceding provisions of this
subsection, for purposes of determining the amount of any loss on a sale or
exchange of an interest in a partnership, S corporation, or common trust fund,
the adjustment made under subsection (a) shall not be taken into account in
determining the adjusted basis of such interest.</text>
</paragraph></subsection><subsection id="HA37615FE7EF54398B900DBFE12606740"><enum>(g)</enum><header>Dispositions
between related persons</header>
<paragraph id="H3EF67A09581C404E8C74005FB6922F7E"><enum>(1)</enum><header>In
general</header><text>This section shall not apply to any sale or other
disposition of property between related persons except to the extent that the
basis of such property in the hands of the transferee is a substituted
basis.</text>
</paragraph><paragraph id="HD5333328EADF49E8A5D9C815A0CEB4AB"><enum>(2)</enum><header>Related persons
defined</header><text>For purposes of this section, the term <term>related
persons</term> means—</text>
<subparagraph id="HFFE617536D1C4568BA199EA265C537A5"><enum>(A)</enum><text>persons bearing a
relationship set forth in section 267(b), and</text>
</subparagraph><subparagraph id="H5512E752F99549BFB7221594E1FE3683"><enum>(B)</enum><text>persons treated as
single employer under subsection (b) or (c) of section 414.</text>
</subparagraph></paragraph></subsection><subsection id="HF89F49F1C5D64651B25058FE5D922367"><enum>(h)</enum><header>Transfers To
increase indexing adjustment</header><text>If any person transfers cash, debt,
or any other property to another person and the principal purpose of such
transfer is to secure or increase an adjustment under subsection (a), the
Secretary may disallow part or all of such adjustment or increase.</text>
</subsection><subsection id="HFDF5ACF1F561436D994ECB4FB63D7C2B"><enum>(i)</enum><header>Special
rules</header><text>For purposes of this section—</text>
<paragraph id="H455C2F9F16F84002933C4160BB22B6A4"><enum>(1)</enum><header>Treatment of
improvements, etc</header><text>If there is an addition to the adjusted basis
of any tangible property or of any stock in a corporation during the taxable
year by reason of an improvement to such property or a contribution to capital
of such corporation—</text>
<subparagraph id="H02FE937B5494471EBC52FAD07FC3881F"><enum>(A)</enum><text>such addition
shall never be taken into account under subsection (c)(1)(A) if the aggregate
amount thereof during the taxable year with respect to such property or stock
is less than $1,000, and</text>
</subparagraph><subparagraph id="HD206F0A09467457685F1913517745299"><enum>(B)</enum><text>such addition
shall be treated as a separate asset acquired at the close of such taxable year
if the aggregate amount thereof during the taxable year with respect to such
property or stock is $1,000 or more.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">A rule
similar to the rule of the preceding sentence shall apply to any other portion
of an asset to the extent that separate treatment of such portion is
appropriate to carry out the purposes of this section.</continuation-text></paragraph><paragraph id="H21ADC093F0CD493780D1BE234A6B727"><enum>(2)</enum><header>Assets which are
not indexed assets throughout holding period</header><text>The applicable
inflation adjustment shall be appropriately reduced for periods during which
the asset was not an indexed asset.</text>
</paragraph><paragraph id="HB8B59A1EAD5D4961BF07919D74028FB6"><enum>(3)</enum><header>Treatment of
certain distributions</header><text>A distribution with respect to stock in a
corporation which is not a dividend shall be treated as a disposition.</text>
</paragraph><paragraph id="HB64BE11DF6174C15AA12E66049F3CB77"><enum>(4)</enum><header>Section cannot
increase ordinary loss</header><text>To the extent that (but for this
paragraph) this section would create or increase a net ordinary loss to which
section 1231(a)(2) applies or an ordinary loss to which any other provision of
this title applies, such provision shall not apply. The taxpayer shall be
treated as having a long-term capital loss in an amount equal to the amount of
the ordinary loss to which the preceding sentence applies.</text>
</paragraph><paragraph id="HA681FC8A267947CBBB30A8E93E53077D"><enum>(5)</enum><header>Acquisition date
where there has been prior application of subsection
<enum-in-header>(a)(1)</enum-in-header> with respect to the
taxpayer</header><text>If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer, the date of
acquisition of such asset by the taxpayer shall be treated as not earlier than
the date of the most recent such prior application.</text>
</paragraph></subsection><subsection id="H9B6F5CBBF4F04309AA80A622F4270086"><enum>(j)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this section.</text>
</subsection><subsection id="H308DCD3B0EA344149FB1F6C45771111C"><enum>(k)</enum><header>Termination</header><text>For
purposes of this section, the term <term>indexed asset</term> shall not include
any asset acquired after December 31,
2009.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5344DDAEDA0841C899BBF6C29F42C3D1"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for part II of subchapter O of
chapter 1 is amended by striking the item relating to section 1023 and by
inserting after the item relating to section 1022 the following new
items:</text>
<quoted-block id="HB8FD295758004D669E00BD118C41D7D0" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 1022. Indexing of certain assets for
purposes of determining gain or loss.</toc-entry>
<toc-entry level="section">Sec. 1023. Cross
references.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFB3C7E656CF24A3F9BFFE9FBBE3FB448"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to sales and
other dispositions of indexed assets after the date of the enactment of this
Act, in taxable years ending after such date.</text>
</subsection></section><section id="H700B82250E7A4E979BBEF5D1007C6716"><enum>112.</enum><header>Reduced capital
gains rate for corporations</header>
<subsection id="HB2D664E9B82D4770BB21461B53DAEEED"><enum>(a)</enum><header>In
general</header><text>Section 1201 of the Internal Revenue Code of 1986 is
amended by striking <quote>35 percent</quote> both places it appears and
inserting <quote>15 percent</quote>.</text>
</subsection><subsection id="HEE30661DDBC44BF68E16EBA47D804FE6"><enum>(b)</enum><header>Alternative
minimum tax</header><text>Section 55(b) of such Code is amended by adding at
the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H2502C0327E834CCF9D448C9E95CBC8F8" style="OLC">
<paragraph id="H0D28CF550C9441019037A1F2369D8FFA"><enum>(5)</enum><header>Maximum rate of
tax on net capital gain of corporations</header><text>The amount determined
under paragraph (1)(B)(i) shall not exceed the sum of—</text>
<subparagraph id="H57B0CDFCBC924479BAE993E4C73D27EE"><enum>(A)</enum><text>the amount
determined under such paragraph computed at the rates and in the same manner as
if this paragraph had not been enacted on the taxable excess reduced by the net
capital gain, plus</text>
</subparagraph><subparagraph id="HB8FD1B08D900458D8701FE16573CF910"><enum>(B)</enum><text>the amount
determined under section
1201.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE5150885691340D5B442329DA445D654"><enum>(c)</enum><header>Technical
amendments</header>
<paragraph id="HDF1AEC2223454BEBB9296BC9E13FA0FA"><enum>(1)</enum><text>Section 1445(e)(1)
of such Code, as amended by section 104, is amended by striking <quote>25
percent (or, to the extent provided in regulations, 15 percent)</quote> and
inserting <quote>15 percent</quote>.</text>
</paragraph><paragraph id="HB6A7ADE2B47F417B917F62415309327D"><enum>(2)</enum><text>Section 1445(e)(2)
of such Code, as so amended, is amended by striking <quote>25 percent</quote>
and inserting <quote>15 percent</quote>.</text>
</paragraph><paragraph id="HFE92F5C52FCF4DB1954719A8903AC4B"><enum>(3)</enum><text>Section
7518(g)(6)(A) of such Code is amended by striking <quote>(34 percent in the
case of a corporation)</quote>.</text>
</paragraph><paragraph id="H48F0EC604B20433C90CCB2ADA5EE97D0"><enum>(4)</enum><text>Section
607(h)(6)(A) of the Merchant Marine Act, 1936 is amended by striking <quote>(34
percent in the case of a corporation)</quote>.</text>
</paragraph></subsection><subsection display-inline="no-display-inline" id="HCFE5E9D2F7594A7AB28EA090D340979C"><enum>(d)</enum><header>Effective
date</header>
<paragraph id="H87B56C5677444658B0FEF499419383C4"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years beginning after December 31,
2008.</text>
</paragraph><paragraph id="HFEBE865F9AE8464E82AA4BEC026FE135"><enum>(2)</enum><header>Withholding</header><text>The
amendment made by subsection (c)(2) shall apply to amounts paid after the date
of the enactment of this Act.</text>
</paragraph></subsection></section></subtitle><subtitle id="H0B78E6644BA34429894CEF63A2CC311C"><enum>C</enum><header>Other provisions
related to businesses</header>
<section display-inline="no-display-inline" id="HD542DF0B4874420CBFD057BA8BF5EB40"><enum>121.</enum><header>Repeal of
certain limitations on the expensing of section 179 property</header>
<subsection id="HA7CEF3E62D9C42388D6300EA00005270"><enum>(a)</enum><header>In
general</header><text>Section 179 of the Internal Revenue Code of 1986 is
amended by striking subsection (b) and by redesignating subsections (c), (d),
and (e) as subsections (b), (c), and (d), respectively.</text>
</subsection><subsection id="H16D78D18474B43B28E8EF7A282F75EB"><enum>(b)</enum><header>Expensing of
section 1250 property</header><text>Subparagraph (B) of section 179(c)(1) of
such Code, as redesignated by subsection (a), is amended by inserting <quote>or
section 1250 property (as defined in section 1250(c))</quote> after
<quote>section 1245 property (as defined in section 1245(a)(3))</quote>.</text>
</subsection><subsection id="H78E81C4855184E6C97FC7900F2CCCE00"><enum>(c)</enum><header>Conforming
amendments</header>
<paragraph id="H4FC5A8BE03AA4509BA2D7FE6F3A6741F"><enum>(1)</enum><text>Subsection (c) of
section 179 of such Code, as redesignated by subsection (a), is amended by
striking paragraphs (6) and (8), and by redesignating paragraphs (7), (9), and
(10) as paragraphs (6), (7), and (8), respectively.</text>
</paragraph><paragraph id="HA128E8C4A23F480F9C60A2BC9E59DD86"><enum>(2)</enum><text>Paragraph (6) of
section 179(c) of such Code, as redesignated by paragraph (1) and subsection
(a), is amended by striking <quote>paragraphs (2) and (6)</quote> and inserting
<quote>paragraph (2)</quote>.</text>
</paragraph><paragraph id="H4F6D2A6141A54E21B3E9006C92570085"><enum>(3)</enum><text>Section 179 of
such Code, as amended by subsection (a), is amended by striking subsection
(d).</text>
</paragraph><paragraph id="H6B460E0BC8F6496F93BF2F6F119000E1"><enum>(4)</enum><text>Sections
42(d)(2)(B)(i), 1397D(d)(1), 1400B(b)(4)(A)(i), and 1400F(b)(4)(A)(i) of such
Code are each amended by striking <quote>section 179(d)(2)</quote> and
inserting <quote>section 179(c)(2)</quote>.</text>
</paragraph><paragraph id="HD3914A285E1E4E898816BCE583D41B1F"><enum>(5)</enum><text>Subclause (I) of
section 42(d)(2)(D)(iii) of such Code is amended—</text>
<subparagraph id="HD38067782CDE46C2AE31DBECFF05925B"><enum>(A)</enum><text>by striking
<quote>section 179(d)</quote> and inserting <quote>section 179(c)</quote>,
and</text>
</subparagraph><subparagraph id="HC294EF6DC4F948E9A3BE27C1C10BD4B"><enum>(B)</enum><text>by striking
<quote>section 179(d)(7)</quote> and inserting <quote>section
179(c)(6)</quote>.</text>
</subparagraph></paragraph><paragraph id="H5E1BD8F7B69F4D48BF2878769044E1D6"><enum>(6)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HE50DE9C8AC054A0EBCF3755AB682488"><enum>(A)</enum><text>Subpart B of part III of
subchapter U of chapter 1 of such Code is hereby repealed.</text>
</subparagraph><subparagraph id="H36E66CF7492E4163B104C37BAE6BC042" indent="up1"><enum>(B)</enum><text>The table of subparts for such part
III is amended by striking the item relating to subpart B.</text>
</subparagraph></paragraph><paragraph id="H26BDC22F3E59427390E2BBB7FDAB929"><enum>(7)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H4BB7BBD9962D49DCAFF1BE2807F0B9C3"><enum>(A)</enum><text>Part III of subchapter X
of chapter 1 of such Code is amended by striking section 1400J.</text>
</subparagraph><subparagraph id="HB97BC81538F6496FAC390059272E7195" indent="up1"><enum>(B)</enum><text>The table of sections for such part is
amended by striking the item relating to section 1400J.</text>
</subparagraph><subparagraph id="H60570C41265C4EBA81070647773073C4" indent="up1"><enum>(C)</enum><text>Paragraph (3) of section 1400E(b) of
such Code is amended by striking <quote>sections 1400F and 1400J</quote> and
inserting <quote>section 1400F</quote>.</text>
</subparagraph></paragraph><paragraph id="H22FC52FA44CE46A9BFC3857F661B9FE7"><enum>(8)</enum><text>Clause (iv) of
section 1400L(b)(2)(A) of such Code is amended by striking <quote>section
179(d)</quote> and inserting <quote>section 179(c)</quote>.</text>
</paragraph><paragraph id="H3BF7F04EC59E47C5A688A9E5849BE4B8"><enum>(9)</enum><text>Section 1400L of
such Code is amended by striking subsection (f).</text>
</paragraph></subsection><subsection id="H6B7A90C8DE4A4B9884ABC4C3C9774EE5"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service in taxable years beginning after December 31, 2008.</text>
</subsection></section><section id="H64C4B83565FD45E38BA0CD97D3E9EF06"><enum>122.</enum><header>Research credit
made permanent</header>
<subsection id="HA9ED8F7C64554CFBB002FA88DF5FC22F"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 41 of the
Internal Revenue Code of 1986 (relating to credit for increasing research
activities) is amended by striking subsection (h).</text>
</subsection><subsection id="H7974D8CFD6CA488999359BA5526B50B3"><enum>(b)</enum><header>Conforming
amendment</header><text>Paragraph (1) of section 45C(b) of such Code is amended
by striking subparagraph (D).</text>
</subsection><subsection id="HF0A54B56934146F9B9FD415665E42498"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to amounts
paid or incurred after December 31, 2009.</text>
</subsection></section><section id="HD18077172F1B4FFB8670880029E803EC"><enum>123.</enum><header>7-year
carryback of net operating losses</header>
<subsection id="H01CC0F1E25614053A7502D9B4FA875A9"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Clause (i) section
172(b)(1)(A) of the Internal Revenue Code of 1986 is amended by striking
<quote>2 taxable years</quote> and inserting <quote>7 taxable
years</quote>.</text>
</subsection><subsection id="HC55AA2ED2D08498EAFDE039BAFAFB326"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph id="H6697D2ABA9C041A7A5989F629110DA62"><enum>(1)</enum><text>Paragraph (1) of
section 172(b) of such Code is amended by striking subparagraphs (F), (G), (H),
(I), and (J).</text>
</paragraph><paragraph id="H7F2F626724F5468E925190EB6800DAE3"><enum>(2)</enum><text>Section 172 of
such Code is amended by striking subsections (i), (j), and (k) and by
redesignating subsection (l) as subsection (i).</text>
</paragraph></subsection><subsection id="H427E0AB0327948E894D13B49C0874B2F"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="H08B89132DC494454BD94ED3FC71D5EE7"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Except as provided in
paragraph (2), the amendments made by this section shall apply to net operating
losses for taxable years ending after December 31, 2007.</text>
</paragraph><paragraph id="HCD85F22AFFE64B76A27CDB00974E3EB5"><enum>(2)</enum><header>Election</header><text>In
the case of a net operating loss for a taxable year ending during 2008, any
election made under section 172(b)(3) of the Internal Revenue Code of 1986 may
(notwithstanding such section) be revoked before January 1, 2010.</text>
</paragraph></subsection></section></subtitle><subtitle id="HA5ADB2C8E47A43CDB4F16B3D00F4859"><enum>D</enum><header>Other provisions
relating to individuals</header>
<section id="H86003FB0CBB74A72BA3F546CCC28009B"><enum>131.</enum><header>Child tax
credit increased and made permanent</header>
<subsection id="HBD8A580286674C08B63F42349975A16D"><enum>(a)</enum><header>Increased
credit</header><text display-inline="yes-display-inline">Subsection (a) of
section 24 of the Internal Revenue Code of 1986 is amended by striking
<quote>$1,000</quote> and inserting <quote>$5,000</quote>.</text>
</subsection><subsection id="HED3B555D68184C00B13EFA89A3A687D5"><enum>(b)</enum><header>Increased credit
not refundable</header><text>Subparagraph (A) of section 24(d)(1) of such Code
is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H1316292DDC3D43FDA4D7A67C758B0735" style="OLC">
<subparagraph id="H8BE49EEB0D8D4785BE00CCE3795E5702"><enum>(A)</enum><text display-inline="yes-display-inline">the credit which would be allowed under
this section—</text>
<clause id="H3DD0B3B35D8F4129BC0089B5DDE6EBBD"><enum>(i)</enum><text>without regard to
this subsection and the limitation under section 26(a)(2) or subsection (b)(3),
as the case may be, and</text>
</clause><clause id="H0430E303E65C42B08B6C8BC98B00D2CB"><enum>(ii)</enum><text>if subsection (a)
were applied by substituting <quote>$1,000</quote> for <quote>$5,000</quote>,
or</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HC286D18B6EA94544A800CA9DFB21DDD0"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.</text>
</subsection></section><section id="H1717FDAE5B134404B3BBDEF9AED71BAC"><enum>132.</enum><header>Distributions
not required from individual retirement plans at age 70½</header><text display-inline="no-display-inline">Paragraph (9) of section 401(a) of the
Internal Revenue Code of 1986 (relating to required distributions) is amended
by adding at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HFAEAF64240A44D5B8E00C5B177EBFEB3" style="OLC">
<subparagraph id="HDB0D6910B1FB4FDA90FCA32C1594E4EE"><enum>(I)</enum><header>Exception for
individual retirement plans</header><text display-inline="yes-display-inline">The requirements of this paragraph shall
not apply to any individual retirement plan for any calendar year after
2009.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H6BA521C1ABE740B7B8EE1541B788F497"><enum>133.</enum><header>No IRA
distribution during 2009 included in gross income</header><text display-inline="no-display-inline">Subsection (d) of section 408 of the
Internal Revenue Code of 1986 (relating to individual retirement accounts) is
amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H622EEC40798C4E5882B628DF7176CCE0" style="OLC">
<paragraph id="H7A2C42F7B15F4C06BF8B917D6B71B3A5"><enum>(10)</enum><header>Distributions
during 2009</header>
<subparagraph id="HFD95C904C54447A28B4FA2A696F6AD48"><enum>(A)</enum><header>In
general</header><text>Gross income of an individual for the taxable year does
not include any distribution during 2009 from an individual retirement plan
(other than a plan described in subsection (k) or (p)) to the extent such
distribution is otherwise includible in gross income.</text>
</subparagraph><subparagraph id="H88349863A80B4FAD8CA06686DF8206E8"><enum>(B)</enum><header>Application of
section 72</header><text display-inline="yes-display-inline">Notwithstanding
section 72, in determining the extent to which an amount is treated as
otherwise includible in gross income for purposes of subparagraph (A), the
aggregate amount distributed from an individual retirement plan shall be
treated as includible in gross income to the extent that such amount does not
exceed the aggregate amount which would have been so includible if all amounts
from all individual retirement plans were distributed. Proper adjustments shall
be made in applying section 72 to other distributions in such taxable year and
subsequent taxable
years.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section></subtitle><enum>II</enum><header>Across-the-board
rescissions in non-defense discretionary spending for fiscal year 2009</header>
<section id="H3132AA80B5DF49FBB3DD5500C4FEC425"><enum>201.</enum><header>Across-the-board
rescissions in non-defense discretionary spending for fiscal year 2009</header>
<subsection id="H2CDA0280891C4C45B3F3075982DAF666"><enum>(a)</enum><header>Across-the-board
rescissions</header><text>There is hereby rescinded an amount equal to 1
percent of—</text>
<paragraph id="H7EC090E0CD6941D6B8A7AF81BAAB3F2"><enum>(1)</enum><text>the budget
authority provided (or obligation limitation imposed) for fiscal year 2009 for
any non-defense discretionary account in any fiscal year 2009 appropriation
Act;</text>
</paragraph><paragraph id="H9B49FE4B9D23410AA72403A2F0B0D370"><enum>(2)</enum><text>the budget
authority provided in any advance appropriation for fiscal year 2009 for any
non-defense discretionary account in any prior fiscal year appropriation Act;
and</text>
</paragraph><paragraph id="HDE141DA946984A54AA88F300F61D3F4B"><enum>(3)</enum><text>the contract
authority provided in fiscal year 2009 for any program that is subject to a
limitation contained in any fiscal year 2009 appropriation Act for any
non-defense discretionary account.</text>
</paragraph></subsection><subsection id="HABBA929417E7438E87E56CE3A4A06407"><enum>(b)</enum><header>Non-defense
discretionary account</header><text>For purposes of subsection (a), the term
<term>non-defense discretionary account</term> means any discretionary account,
other than—</text>
<paragraph id="H9175C0AB211C42B3A8BABAF062BB0065"><enum>(1)</enum><text>any account
included in a Department of Defense Appropriations Act;</text>
</paragraph><paragraph id="HE4992CCB7D284F07990092DDC7CE7209"><enum>(2)</enum><text>any account
included in a Military Quality of Life and Veterans Affairs Appropriations Act;
or</text>
</paragraph><paragraph id="H4E4BD6D54B4C485FB2DE0097EC74F761"><enum>(3)</enum><text>any account for
Department of Energy defense activities included in an Energy and Water
Development Appropriations Act.</text>
</paragraph></subsection><subsection id="H03D26FB5E14F4AE1876EB7079BABA097"><enum>(c)</enum><header>Proportionate
application</header><text>Any rescission made by subsection (a) shall be
applied proportionately—</text>
<paragraph id="H1B6B384914304248B62B90B45083D07B"><enum>(1)</enum><text>to each
discretionary account and each item of budget authority described in such
subsection; and</text>
</paragraph><paragraph id="H416924768BFE4F35BF1D95D25E47027B"><enum>(2)</enum><text>within each such
account and item, to each program, project, and activity (with programs,
projects, and activities as delineated in the appropriation Act or accompanying
reports for the relevant fiscal year covering such account or item, or for
accounts and items not included in appropriation Acts, as delineated in the
most recently submitted President's budget).</text>
</paragraph></subsection><subsection id="H415F5433C72A4F41BBA98B696CF6E7F5"><enum>(d)</enum><header>Subsequent
appropriation laws</header><text>In the case of any fiscal year 2009
appropriation Act enacted after the enactment of this section, any rescission
required by subsection (a) shall take effect immediately after the enactment of
such Act.</text>
</subsection><subsection id="H2BB9A171E6874C34AE6300BA9F007450"><enum>(e)</enum><header>OMB
report</header><text>Within 30 days after the enactment of this section (or, if
later, 30 days after the enactment of any fiscal year 2009 appropriation Act),
the Director of the Office of Management and Budget shall submit to the
Committees on Appropriations of the House of Representatives and the Senate a
report specifying the account and amount of each rescission made pursuant to
subsection (a).</text>
</subsection></section><enum>III</enum><header>Increased
incentives for education</header>
<section id="H837F978AAD914AAB8442B500C2C6BCC1"><enum>301.</enum><header>Increased
deduction for qualified higher education expenses</header>
<subsection id="HC8ADCB339317420B8D8DB06835967883"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (2) of
section 222(b) of the Internal Revenue Code of 1986 (relating to dollar
limitations on qualified tuition and related expenses) is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="H1EF3219EED4E4176B4ACB2FBD366956B" style="OLC">
<paragraph id="H5F9AB551C5D940D60079F748EA5467A3"><enum>(2)</enum><header>Dollar
limitations</header>
<subparagraph id="H808E1D0B48F74947A5AA10E6E567F148"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of any
taxable year beginning after 2008, the applicable dollar amount shall be equal
to—</text>
<clause id="HBE487732D37548168D6B1418A3AB3EE3"><enum>(i)</enum><text>in
the case of a taxpayer whose adjusted gross income for the taxable year does
not exceed $75,000 ($150,000 in the case of a joint return), $6,000,</text>
</clause><clause id="H432570240CAB40D395D2ED7FAE494ED5"><enum>(ii)</enum><text>in the case of a
taxpayer not described in clause (i) whose adjusted gross income for the
taxable year does not exceed $90,000 ($180,000 in the case of a joint return),
$2,000, and</text>
</clause><clause id="H469B4E4AC5954795BDFB7D3660883147"><enum>(iii)</enum><text>in the case of
any other taxpayer, zero.</text>
</clause></subparagraph><subparagraph id="H3C15E048FF5748109634261C92D718FB"><enum>(B)</enum><header>Adjusted gross
income</header><text display-inline="yes-display-inline">For purposes of this
paragraph, adjusted gross income shall be determined—</text>
<clause id="H038869B47A9346519CBDEBA4397E4E5"><enum>(i)</enum><text>without regard to
this section and sections 199, 911, 931, and 933, and</text>
</clause><clause id="H071D4BC324BD444A8D15FF1648CC881F"><enum>(ii)</enum><text>after application
of sections 86, 135, 137, 219, 221, and
469.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HC0026CC0CCA340B8B82B554836AA37E3"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2008.</text>
</subsection></section><section id="H1DD4F1FDCEB84E3FAEECF4131F62AB26"><enum>302.</enum><header>Increased
deduction for interest on student loans</header>
<subsection id="HD4DD243C69554376BF7BF3741572624"><enum>(a)</enum><header>Increased
deduction</header><text display-inline="yes-display-inline">Paragraph (1) of
section 223(b) of the Internal Revenue Code of 1986 (relating to interest on
education loans) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HADDA2FA8F63E43B79B05CDE600DD661B" style="OLC">
<paragraph id="HF167ACC8ACEA4AA100CCEEC39DCF3BFC"><enum>(1)</enum><header>Maximum
deduction</header><text display-inline="yes-display-inline">Except as provided
in paragraph (2), the deduction allowed by subsection (a) for the taxable year
shall not exceed
$3,750.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H327BBA26A611442A89CADA7D4F337BEE"><enum>(b)</enum><header>Expanded income
eligibility</header><text>Subclause (II) of section 223(b)(2)(B)(i) of such
Code is amended by striking <quote>$50,000 ($100,000</quote> and inserting
<quote>$75,000 ($150,000</quote>.</text>
</subsection><subsection id="H5BCFB3A7516D46848F6CDC88D4C032A8"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.</text>
</subsection></section>