[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4849 Engrossed in House (EH)]

111th CONGRESS
  2d Session
                                H. R. 4849

_______________________________________________________________________

                                 AN ACT


 
 To amend the Internal Revenue Code of 1986 to provide tax incentives 
    for small business job creation, extend the Build America Bonds 
program, provide other infrastructure job creation tax incentives, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``Small Business and 
Infrastructure Jobs Tax Act of 2010''.
    (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; etc.
                 TITLE I--SMALL BUSINESS TAX INCENTIVES

                     Subtitle A--General Provisions

Sec. 101. Temporary exclusion of 100 percent of gain on certain small 
                            business stock.
       Subtitle B--Limitations and Reporting on Certain Penalties

Sec. 111. Limitation on penalty for failure to disclose certain 
                            information.
Sec. 112. Annual reports on penalties and certain other enforcement 
                            actions.
                      Subtitle C--Other Provisions

Sec. 121. Nonrecourse small business investment company loans from the 
                            Small Business Administration treated as 
                            amounts at risk.
Sec. 122. Increase in amount allowed as deduction for start-up 
                            expenditures.
                  TITLE II--INFRASTRUCTURE INCENTIVES

Sec. 201. Extension of Build America Bonds.
Sec. 202. Exempt-facility bonds for sewage and water supply facilities.
Sec. 203. Extension of exemption from alternative minimum tax treatment 
                            for certain tax-exempt bonds.
Sec. 204. Elective payments in lieu of low income housing credits.
Sec. 205. Extension and additional allocations of recovery zone bond 
                            authority.
Sec. 206. Allowance of new markets tax credit against alternative 
                            minimum tax.
                     TITLE III--REVENUE PROVISIONS

Sec. 301. Limitation on treaty benefits for certain deductible 
                            payments.
Sec. 302. Treatment of securities of a controlled corporation exchanged 
                            for assets in certain reorganizations.
Sec. 303. Repeal of special rules for interest and dividends received 
                            from persons meeting the 80-percent foreign 
                            business requirements.
Sec. 304. Information reporting for rental property expense payments.
Sec. 305. Application of levy to payments to Federal vendors relating 
                            to property.
Sec. 306. Application of continuous levy to tax liabilities of certain 
                            Federal contractors.
Sec. 307. Required minimum 10-year term, etc., for grantor retained 
                            annuity trusts.
Sec. 308. Increase in information return penalties.
Sec. 309. Crude tall oil ineligible for cellulosic biofuel producer 
                            credit.
Sec. 310. Time for payment of corporate estimated taxes.
 TITLE IV--EXTENSION OF EMERGENCY CONTINGENCY FUND FOR STATE TEMPORARY 
                 ASSISTANCE FOR NEEDY FAMILIES PROGRAMS

Sec. 401. One-year extension of the Emergency Contingency Fund for 
                            State Temporary Assistance for Needy 
                            Families Programs.

                 TITLE I--SMALL BUSINESS TAX INCENTIVES

                     Subtitle A--General Provisions

SEC. 101. TEMPORARY EXCLUSION OF 100 PERCENT OF GAIN ON CERTAIN SMALL 
              BUSINESS STOCK.

    (a) In General.--Subsection (a) of section 1202 is amended by 
adding at the end the following new paragraph:
            ``(4) Special 100 percent exclusion.--In the case of 
        qualified small business stock acquired after March 15, 2010, 
        and before January 1, 2012--
                    ``(A) paragraph (1) shall be applied by 
                substituting `100 percent' for `50 percent',
                    ``(B) paragraph (2) shall not apply, and
                    ``(C) paragraph (7) of section 57(a) shall not 
                apply.''.
    (b) Conforming Amendments.--Paragraph (3) of section 1202(a) is 
amended--
            (1) by striking ``after the date of the enactment of this 
        paragraph and before January 1, 2011'' and inserting ``after 
        February 17, 2009, and before March 16, 2010''; and
            (2) by striking ``Special rules for 2009 and 2010'' in the 
        heading and inserting ``Special 75 percent exclusion''.
    (c) Effective Date.--The amendments made by this section shall 
apply to stock acquired after March 15, 2010.

       Subtitle B--Limitations and Reporting on Certain Penalties

SEC. 111. LIMITATION ON PENALTY FOR FAILURE TO DISCLOSE CERTAIN 
              INFORMATION.

    (a) In General.--Subsection (b) of section 6707A is amended to read 
as follows:
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the amount of the penalty under subsection (a) with 
        respect to any reportable transaction shall be 75 percent of 
        the decrease in tax shown on the return as a result of such 
        transaction (or which would have resulted from such transaction 
        if such transaction were respected for Federal tax purposes).
            ``(2) Maximum penalty.--The amount of the penalty under 
        subsection (a) with respect to any reportable transaction for 
        any taxable year shall not exceed--
                    ``(A) in the case of a listed transaction, $200,000 
                ($100,000 in the case of a natural person), or
                    ``(B) in the case of any other reportable 
                transaction, $50,000 ($10,000 in the case of a natural 
                person).
            ``(3) Minimum penalty.--The amount of the penalty under 
        subsection (a) with respect to any transaction for any taxable 
        year shall not be less than $10,000 ($5,000 in the case of a 
        natural person).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to penalties assessed after December 31, 2006.

SEC. 112. ANNUAL REPORTS ON PENALTIES AND CERTAIN OTHER ENFORCEMENT 
              ACTIONS.

    (a) In General.--The Commissioner of Internal Revenue, in 
consultation with the Secretary of the Treasury, shall submit to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate an annual report on the penalties 
assessed by the Internal Revenue Service during the preceding year 
under each of the following provisions of the Internal Revenue Code of 
1986:
            (1) Section 6662A (relating to accuracy-related penalty on 
        understatements with respect to reportable transactions).
            (2) Section 6700(a) (relating to promoting abusive tax 
        shelters).
            (3) Section 6707 (relating to failure to furnish 
        information regarding reportable transactions).
            (4) Section 6707A (relating to failure to include 
        reportable transaction information with return).
            (5) Section 6708 (relating to failure to maintain lists of 
        advisees with respect to reportable transactions).
    (b) Additional Information.--The report required under subsection 
(a) shall also include information on the following with respect to 
each year:
            (1) Any action taken under section 330(b) of title 31, 
        United States Code, with respect to any reportable transaction 
        (as defined in section 6707A(c) of the Internal Revenue Code of 
        1986).
            (2) Any extension of the time for assessment of tax 
        enforced, or assessment of any amount under such an extension, 
        under paragraph (10) of section 6501(c) of the Internal Revenue 
        Code of 1986.
    (c) Date of Report.--The first report required under subsection (a) 
shall be submitted not later than December 31, 2010.

                      Subtitle C--Other Provisions

SEC. 121. NONRECOURSE SMALL BUSINESS INVESTMENT COMPANY LOANS FROM THE 
              SMALL BUSINESS ADMINISTRATION TREATED AS AMOUNTS AT RISK.

    (a) In General.--Subparagraph (B) of section 465(b)(6) is amended 
to read as follows:
                    ``(B) Qualified nonrecourse financing.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `qualified 
                        nonrecourse financing' means any financing--
                                    ``(I) which is qualified real 
                                property financing or qualified SBIC 
                                financing,
                                    ``(II) except to the extent 
                                provided in regulations, with respect 
                                to which no person is personally liable 
                                for repayment, and
                                    ``(III) which is not convertible 
                                debt.
                            ``(ii) Qualified real property financing.--
                        The term `qualified real property financing' 
                        means any financing which--
                                    ``(I) is borrowed by the taxpayer 
                                with respect to the activity of holding 
                                real property,
                                    ``(II) is secured by real property 
                                used in such activity, and
                                    ``(III) is borrowed by the taxpayer 
                                from a qualified person or represents a 
                                loan from any Federal, State, or local 
                                government or instrumentality thereof, 
                                or is guaranteed by any Federal, State, 
                                or local government.
                            ``(iii) Qualified sbic financing.--The term 
                        `qualified SBIC financing' means any financing 
                        which--
                                    ``(I) is borrowed by a small 
                                business investment company (within the 
                                meaning of section 301 of the Small 
                                Business Investment Act of 1958), and
                                    ``(II) is borrowed from, or 
                                guaranteed by, the Small Business 
                                Administration under the authority of 
                                section 303(b) of such Act.''.
    (b) Conforming Amendments.--Subparagraph (A) of section 465(b)(6) 
is amended--
            (1) by striking ``in the case of an activity of holding 
        real property,''; and
            (2) by striking ``which is secured by real property used in 
        such activity''.
    (c) Effective Date.--The amendments made by this section shall 
apply to loans and guarantees made after the date of the enactment of 
this Act.

SEC. 122. INCREASE IN AMOUNT ALLOWED AS DEDUCTION FOR START-UP 
              EXPENDITURES.

    (a) In General.--Subsection (b) of section 195 is amended by adding 
at the end the following new paragraph:
            ``(3) Increased limitation for taxable years beginning in 
        2010 or 2011.--In the case of any taxable year beginning in 
        2010 or 2011, paragraph (1)(A)(ii) shall be applied--
                    ``(A) by substituting `$20,000' for `$5,000', and
                    ``(B) by substituting `$75,000' for `$50,000'.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

                  TITLE II--INFRASTRUCTURE INCENTIVES

SEC. 201. EXTENSION OF BUILD AMERICA BONDS.

    (a) In General.--Subparagraph (B) of section 54AA(d)(1) is amended 
by striking ``January 1, 2011'' and inserting ``April 1, 2013''.
    (b) Extension of Payments to Issuers.--
            (1) In general.--Subsection (a) of section 6431 is amended 
        by striking ``January 1, 2011'' and inserting ``April 1, 
        2013''.
            (2) Conforming amendments.--Subsection (g) of section 54AA 
        is amended--
                    (A) by striking ``January 1, 2011'' and inserting 
                ``April 1, 2013''; and
                    (B) by striking ``Qualified Bonds Issued Before 
                2011'' in the heading and inserting ``Certain Qualified 
                Bonds''.
    (c) Reduction in Percentage of Payments to Issuers.--Subsection (b) 
of section 6431 is amended--
            (1) by striking ``The Secretary'' and inserting the 
        following:
            ``(1) In general.--The Secretary'';
            (2) by striking ``35 percent'' and inserting ``the 
        applicable percentage''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means the 
        percentage determined in accordance with the following table:


----------------------------------------------------------------------------------------------------------------
  ``In the case of a qualified bond issued during calendar
                           year:                                        The applicable percentage is:
----------------------------------------------------------------------------------------------------------------
2009 or 2010...............................................  35 percent
2011.......................................................  33 percent
2012.......................................................  31 percent
2013.......................................................  30 percent''.
----------------------------------------------------------------------------------------------------------------

    (d) Current Refundings Permitted.--Subsection (g) of section 54AA 
is amended by adding at the end the following new paragraph:
            ``(3) Treatment of current refunding bonds.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified build America bond' includes any 
                bond (or series of bonds) issued to refund a qualified 
                build America bond if--
                            ``(i) the average maturity date of the 
                        issue of which the refunding bond is a part is 
                        not later than the average maturity date of the 
                        bonds to be refunded by such issue,
                            ``(ii) the amount of the refunding bond 
                        does not exceed the outstanding amount of the 
                        refunded bond, and
                            ``(iii) the refunded bond is redeemed not 
                        later than 90 days after the date of the 
                        issuance of the refunding bond.
                    ``(B) Applicable percentage.--In the case of a 
                refunding bond referred to in subparagraph (A), the 
                applicable percentage with respect to such bond under 
                section 6431(b) shall be the lowest percentage 
                specified in paragraph (2) of such section.
                    ``(C) Determination of average maturity.--For 
                purposes of subparagraph (A)(i), average maturity shall 
                be determined in accordance with section 
                147(b)(2)(A).''.
    (e) Clarification Related to Levees and Flood Control Projects.--
Subparagraph (A) of section 54AA(g)(2) is amended by inserting 
``(including capital expenditures for levees and other flood control 
projects)'' after ``capital expenditures''.

SEC. 202. EXEMPT-FACILITY BONDS FOR SEWAGE AND WATER SUPPLY FACILITIES.

    (a) Bonds for Water and Sewage Facilities Exempt From Volume Cap on 
Private Activity Bonds.--
            (1) In general.--Paragraph (3) of section 146(g) is amended 
        by inserting ``(4), (5),'' after ``(2),''.
            (2) Conforming amendment.--Paragraphs (2) and (3)(B) of 
        section 146(k) are both amended by striking ``(4), (5), (6),'' 
        and inserting ``(6)''.
    (b) Tax-exempt Issuance by Indian Tribal Governments.--
            (1) In general.--Subsection (c) of section 7871 is amended 
        by adding at the end the following new paragraph:
            ``(4) Exception for bonds for water and sewage 
        facilities.--Paragraph (2) shall not apply to an exempt 
        facility bond 95 percent or more of the net proceeds (as 
        defined in section 150(a)(3)) of which are to be used to 
        provide facilities described in paragraph (4) or (5) of section 
        142(a).''.
            (2) Conforming amendment.--Paragraph (2) of section 7871(c) 
        is amended by striking ``paragraph (3)'' and inserting 
        ``paragraphs (3) and (4)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 203. EXTENSION OF EXEMPTION FROM ALTERNATIVE MINIMUM TAX TREATMENT 
              FOR CERTAIN TAX-EXEMPT BONDS.

    (a) In General.--Clause (vi) of section 57(a)(5)(C) is amended--
            (1) by striking ``January 1, 2011'' in subclause (I) and 
        inserting ``January 1, 2012''; and
            (2) by striking ``and 2010'' in the heading and inserting 
        ``, 2010, and 2011''.
    (b) Adjusted Current Earnings.--Clause (iv) of section 56(g)(4)(B) 
is amended--
            (1) by striking ``January 1, 2011'' in subclause (I) and 
        inserting ``January 1, 2012''; and
            (2) by striking ``and 2010'' in the heading and inserting 
        ``, 2010, and 2011''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2010.

SEC. 204. ELECTIVE PAYMENTS IN LIEU OF LOW INCOME HOUSING CREDITS.

    (a) In General.--Chapter 65 (relating to abatements, credits, and 
refunds) is amended by adding at the end the following new subchapter:

               ``Subchapter C--Direct Payment Provisions

``Sec. 6451. Elective payments in lieu of low income housing credit for 
                            bond-financed buildings.

``SEC. 6451. ELECTIVE PAYMENTS IN LIEU OF LOW INCOME HOUSING CREDIT FOR 
              BOND-FINANCED BUILDINGS.

    ``(a) In General.--Any person making an election under this section 
with respect to any qualified bond-financed low-income building 
originally placed in service by such person during the taxable year 
shall be treated as making a payment, against the tax imposed by 
subtitle A for the taxable year, equal to the direct payment amount 
with respect to such building. Such payment shall be treated as made on 
the later of the due date of the return of such tax or the date on 
which such return is filed.
    ``(b) Qualified Bond-financed Low-income Building.--For purposes of 
this section, the term `qualified bond-financed low-income building' 
means any qualified low-income building to which paragraph (1) of 
section 42(h) does not apply by reason of paragraph (4)(B) of such 
section.
    ``(c) Direct Payment Amount.--For purposes of this section, the 
term `direct payment amount' means, with respect to any building, 25.5 
percent of the qualified basis of such building.
    ``(d) Special Rules for Certain Non-taxpayers.--
            ``(1) Denial of payment.--Subsection (a) shall not apply 
        with respect to any building placed in service by--
                    ``(A) any governmental entity, or
                    ``(B) any organization described in section 501(c) 
                or 401(a) and exempt from tax under section 501(a).
            ``(2) Special rules for partnerships and s corporations.--
        In the case of property originally placed in service by a 
        partnership or an S corporation--
                    ``(A) the election under subsection (a) may be made 
                only by such partnership or S corporation,
                    ``(B) such partnership or S corporation shall be 
                treated as making the payment referred to in subsection 
                (a) only to the extent of the proportionate share of 
                such partnership or S corporation as is owned by 
                persons who would be treated as making such payment if 
                the building were placed in service by such persons, 
                and
                    ``(C) the return required to be made by such 
                partnership or S corporation under section 6031 or 6037 
                (as the case may be) shall be treated as a return of 
                tax for purposes of subsection (a).
For purposes of subparagraph (B), rules similar to the rules of section 
168(h)(6) (other than subparagraph (F) thereof) shall apply.
    ``(e) Coordination With Low Income Housing Credit.--In the case of 
any property with respect to which an election is made under this 
section, no credit shall be determined under section 42 with respect to 
such building for any taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Other definitions.--Terms used in this section which 
        are also used in section 42 shall have the same meaning for 
        purposes of this section as when used in such section.
            ``(2) Application of recapture rules, etc.--Except as 
        otherwise provided by the Secretary, rules similar to the rules 
        of section 42 shall apply, including the recapture rules of 
        section 42(j).
            ``(3) Provision of information.--A person shall not be 
        treated as having elected the application of this section 
        unless the taxpayer provides such information as the Secretary 
        may require for purposes of verifying the proper amount to be 
        treated as a payment under subsection (a) and evaluating the 
        effectiveness of this section.
            ``(4) Exclusion from gross income.--Any credit or refund 
        allowed or made by reason of this section shall not be 
        includible in gross income or alternative minimum taxable 
        income.
    ``(g) Termination.--Subsection (a) shall not apply with respect to 
any building placed in service during a taxable year beginning after 
December 31, 2010.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 6211(b)(4) is amended by 
        inserting ``and subchapter C of chapter 65 (including any 
        payment treated as made under such subchapter)'' after 
        ``6431''.
            (2) Subparagraph (B) of section 6425(c)(1) is amended--
                    (A) by striking ``the credits'' and inserting ``the 
                sum of--
                            ``(i) the credits'';
                    (B) by striking the period at the end of clause (i) 
                thereof (as amended by this paragraph) and inserting 
                ``, plus''; and
                    (C) by adding at the end the following new clause:
                            ``(ii) the credits allowed (and payments 
                        treated as made) under subchapter C.''.
            (3) Paragraph (3) of section 6654(f) is amended--
                    (A) by striking ``the credits'' and inserting ``the 
                sum of--
                    ``(A) the credits'';
                    (B) by striking the period at the end of 
                subparagraph (A) thereof (as amended by this paragraph) 
                and inserting ``, and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) the credits allowed (and payments treated as 
                made) under subchapter C of chapter 65.''.
            (4) Subparagraph (B) of section 6655(g)(1) is amended--
                    (A) by striking ``the credits'' and inserting ``the 
                sum of--
                            ``(i) the credits'';
                    (B) by striking the period at the end of clause (i) 
                thereof (as amended by this paragraph) and inserting 
                ``, plus''; and
                    (C) by adding at the end the following new clause:
                            ``(ii) the credits allowed (and payments 
                        treated as made) under subchapter C of chapter 
                        65.''.
            (5) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``, or from the provisions 
        of subchapter C of chapter 65 of such Code'' before the period 
        at the end.
            (6) The table of subchapters for chapter 65 is amended by 
        adding at the end the following new item:

                subchapter c. direct payment provisions

    (c) Effective Date.--The amendments made by this section shall 
apply to buildings placed in service after the date of the enactment of 
this Act.

SEC. 205. EXTENSION AND ADDITIONAL ALLOCATIONS OF RECOVERY ZONE BOND 
              AUTHORITY.

    (a) Extension of Recovery Zone Bond Authority.--Section 1400U-
2(b)(1) and section 1400U-3(b)(1)(B) are each amended by striking 
``January 1, 2011'' and inserting ``January 1, 2012''.
    (b) Additional Allocations of Recovery Zone Bond Authority Based on 
Unemployment.--Section 1400U-1 is amended by adding at the end the 
following new subsection:
    ``(c) Allocation of 2010 Recovery Zone Bond Limitations Based on 
Unemployment.--
            ``(1) In general.--The Secretary shall allocate the 2010 
        national recovery zone economic development bond limitation and 
        the 2010 national recovery zone facility bond limitation among 
        the States in the proportion that each such State's 2009 
        unemployment number bears to the aggregate of the 2009 
        unemployment numbers for all of the States.
            ``(2) Minimum allocation.--The Secretary shall adjust the 
        allocations under paragraph (1) for each State to the extent 
        necessary to ensure that no State (prior to any reduction under 
        paragraph (3)) receives less than 0.9 percent of the 2010 
        national recovery zone economic development bond limitation and 
        0.9 percent of the 2010 national recovery zone facility bond 
        limitation.
            ``(3) Allocations by states.--
                    ``(A) In general.--Each State with respect to which 
                an allocation is made under paragraph (1) shall 
                reallocate such allocation among the counties and large 
                municipalities (as defined in subsection (a)(3)(B)) in 
                such State in the proportion that each such county's or 
                municipality's 2009 unemployment number bears to the 
                aggregate of the 2009 unemployment numbers for all the 
                counties and large municipalities (as so defined) in 
                such State.
                    ``(B) 2010 allocation reduced by amount of previous 
                allocation.--Each State shall reduce (but not below 
                zero)--
                            ``(i) the amount of the 2010 national 
                        recovery zone economic development bond 
                        limitation allocated to each county or large 
                        municipality (as so defined) in such State by 
                        the amount of the national recovery zone 
                        economic development bond limitation allocated 
                        to such county or large municipality under 
                        subsection (a)(3)(A) (determined without regard 
                        to any waiver thereof), and
                            ``(ii) the amount of the 2010 national 
                        recovery zone facility bond limitation 
                        allocated to each county or large municipality 
                        (as so defined) in such State by the amount of 
                        the national recovery zone facility bond 
                        limitation allocated to such county or large 
                        municipality under subsection (a)(3)(A) 
                        (determined without regard to any waiver 
                        thereof).
                    ``(C) Waiver of suballocations.--A county or 
                municipality may waive any portion of an allocation 
                made under this paragraph. A State may by law treat a 
                county or municipality as waiving any portion of an 
                allocation made under this paragraph if there is a 
                reasonable expectation that such allocation would not 
                otherwise be used.
                    ``(D) Special rule for a municipality in a 
                county.--In the case of any large municipality any 
                portion of which is in a county, such portion shall be 
                treated as part of such municipality and not part of 
                such county.
            ``(4) 2009 unemployment number.--For purposes of this 
        subsection, the term `2009 unemployment number' means, with 
        respect to any State, county or municipality, the number of 
        individuals in such State, county, or municipality who were 
        determined to be unemployed by the Bureau of Labor Statistics 
        for December 2009.
            ``(5) 2010 national limitations.--
                    ``(A) Recovery zone economic development bonds.--
                The 2010 national recovery zone economic development 
                bond limitation is $10,000,000,000. Any allocation of 
                such limitation under this subsection shall be treated 
                for purposes of section 1400U-2 in the same manner as 
                an allocation of national recovery zone economic 
                development bond limitation.
                    ``(B) Recovery zone facility bonds.--The 2010 
                national recovery zone facility bond limitation is 
                $15,000,000,000. Any allocation of such limitation 
                under this subsection shall be treated for purposes of 
                section 1400U-3 in the same manner as an allocation of 
                national recovery zone facility bond limitation.''.
    (c) Authority of State to Waive Certain 2009 Allocations.--
Subparagraph (A) of section 1400U-1(a)(3) is amended by adding at the 
end the following: ``A State may by law treat a county or municipality 
as waiving any portion of an allocation made under this subparagraph if 
there is a reasonable expectation that such allocation would not 
otherwise be used.''.

SEC. 206. ALLOWANCE OF NEW MARKETS TAX CREDIT AGAINST ALTERNATIVE 
              MINIMUM TAX.

    (a) In General.--Subparagraph (B) of section 38(c)(4) is amended by 
redesignating clauses (v) through (viii) as clauses (vi) through (ix), 
respectively, and by inserting after clause (iv) the following new 
clause:
                            ``(v) the credit determined under section 
                        45D, but only with respect to credits 
                        determined with respect to qualified equity 
                        investments (as defined in section 45D(b)) 
                        initially made before January 1, 2012,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to qualified equity investments (as defined in section 45D(b) of 
the Internal Revenue Code of 1986) initially made after March 15, 2010.

                     TITLE III--REVENUE PROVISIONS

SEC. 301. LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE 
              PAYMENTS.

    (a) In General.--Section 894 (relating to income affected by 
treaty) is amended by adding at the end the following new subsection:
    ``(d) Limitation on Treaty Benefits for Certain Deductible 
Payments.--
            ``(1) In general.--In the case of any deductible related-
        party payment, any withholding tax imposed under chapter 3 (and 
        any tax imposed under subpart A or B of this part) with respect 
        to such payment may not be reduced under any treaty of the 
        United States unless any such withholding tax would be reduced 
        under a treaty of the United States if such payment were made 
        directly to the foreign parent corporation.
            ``(2) Deductible related-party payment.--For purposes of 
        this subsection, the term `deductible related-party payment' 
        means any payment made, directly or indirectly, by any person 
        to any other person if the payment is allowable as a deduction 
        under this chapter and both persons are members of the same 
        foreign controlled group of entities.
            ``(3) Foreign controlled group of entities.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `foreign controlled 
                group of entities' means a controlled group of entities 
                the common parent of which is a foreign corporation.
                    ``(B) Controlled group of entities.--The term 
                `controlled group of entities' means a controlled group 
                of corporations as defined in section 1563(a)(1), 
                except that--
                            ``(i) `more than 50 percent' shall be 
                        substituted for `at least 80 percent' each 
                        place it appears therein, and
                            ``(ii) the determination shall be made 
                        without regard to subsections (a)(4) and (b)(2) 
                        of section 1563.
                A partnership or any other entity (other than a 
                corporation) shall be treated as a member of a 
                controlled group of entities 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).
            ``(4) Foreign parent corporation.--For purposes of this 
        subsection, the term `foreign parent corporation' means, with 
        respect to any deductible related-party payment, the common 
        parent of the foreign controlled group of entities referred to 
        in paragraph (3)(A).
            ``(5) Regulations.--The Secretary may prescribe such 
        regulations or other guidance as are necessary or appropriate 
        to carry out the purposes of this subsection, including 
        regulations or other guidance which provide for--
                    ``(A) the treatment of two or more persons as 
                members of a foreign controlled group of entities if 
                such persons would be the common parent of such group 
                if treated as one corporation, and
                    ``(B) the treatment of any member of a foreign 
                controlled group of entities as the common parent of 
                such group if such treatment is appropriate taking into 
                account the economic relationships among such 
                entities.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments made after the date of the enactment of this Act.

SEC. 302. TREATMENT OF SECURITIES OF A CONTROLLED CORPORATION EXCHANGED 
              FOR ASSETS IN CERTAIN REORGANIZATIONS.

    (a) In General.--Section 361 (relating to nonrecognition of gain or 
loss to corporations; treatment of distributions) is amended by adding 
at the end the following new subsection:
    ``(d) Special Rules for Transactions Involving Section 355 
Distributions.--In the case of a reorganization described in section 
368(a)(1)(D) with respect to which stock or securities of the 
corporation to which the assets are transferred are distributed in a 
transaction which qualifies under section 355--
            ``(1) this section shall be applied by substituting `stock 
        other than nonqualified preferred stock (as defined in section 
        351(g)(2))' for `stock or securities' in subsections (a) and 
        (b)(1), and
            ``(2) the first sentence of subsection (b)(3) shall apply 
        only to the extent that the sum of the money and the fair 
        market value of the other property transferred to such 
        creditors does not exceed the adjusted bases of such assets 
        transferred (reduced by the amount of the liabilities assumed 
        (within the meaning of section 357(c))).''.
    (b) Conforming Amendment.--Paragraph (3) of section 361(b) is 
amended by striking the last sentence.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to exchanges after 
        the date of the enactment of this Act.
            (2) Transition rule.--The amendments made by this section 
        shall not apply to any exchange pursuant to a transaction which 
        is--
                    (A) made pursuant to an agreement which was binding 
                on March 15, 2010, and at all times thereafter;
                    (B) described in a ruling request submitted to the 
                Internal Revenue Service on or before such date; or
                    (C) described on or before such date in a public 
                announcement or in a filing with the Securities and 
                Exchange Commission.

SEC. 303. REPEAL OF SPECIAL RULES FOR INTEREST AND DIVIDENDS RECEIVED 
              FROM PERSONS MEETING THE 80-PERCENT FOREIGN BUSINESS 
              REQUIREMENTS.

    (a) Repeal of Special Rule Treating Interest as United States 
Source.--Paragraph (1) of section 861(a) is amended by striking 
subparagraph (A) and by redesignating subparagraphs (B) and (C) as 
subparagraphs (A) and (B), respectively.
    (b) Repeal of Exception to Tax on Dividends Received by Nonresident 
Aliens.--Paragraph (2) of section 871(i) is amended by striking 
subparagraph (B) and by redesignating subparagraphs (C) and (D) as 
subparagraphs (B) and (C), respectively.
    (c) Conforming Amendments.--
            (1) Section 861 is amended by striking subsection (c) and 
        by redesignating subsections (d), (e), and (f) as subsections 
        (c), (d), and (e), respectively.
            (2) Paragraph (9) of section 904(h) is amended to read as 
        follows:
            ``(9) Treatment of certain domestic corporations.--In the 
        case of any dividend treated as not from sources with the 
        United States under section 861(a)(2)(A), the corporation 
        paying such dividend shall be treated for purposes of this 
        subsection as a United States-owned foreign corporation.''.
            (3) Subsection (c) of section 2104 is amended in the last 
        sentence by striking ``or to a debt obligation of a domestic 
        corporation'' and all that follows and inserting a period.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2010.
            (2) Grandfather rule for outstanding debt obligations.--
                    (A) In general.--The amendments made by this 
                section shall not apply to payments of interest on 
                obligations issued before the date of the enactment of 
                this Act.
                    (B) Exception for related party debt.--Subparagraph 
                (A) shall not apply to any interest which is payable to 
                a related person (determined under rules similar to the 
                rules of section 954(d)(3)).
                    (C) Significant modifications treated as new 
                issues.--For purposes of subparagraph (A), a 
                significant modification of the terms of any obligation 
                (including any extension of the term of such 
                obligation) shall be treated as a new issue.

SEC. 304. INFORMATION REPORTING FOR RENTAL PROPERTY EXPENSE PAYMENTS.

    (a) In General.--Section 6041 is amended by adding at the end the 
following new subsection:
    ``(h) Treatment of Rental Property Expense Payments.--
            ``(1) In general.--For purposes of subsection (a), a person 
        receiving rental income from real estate (other than a 
        qualified residence) shall be considered to be engaged in a 
        trade or business of renting property.
            ``(2) Qualified residence.--For purposes of paragraph (1), 
        the term `qualified residence' means--
                    ``(A) the principal residence (within the meaning 
                of section 121) of the taxpayer, and
                    ``(B) 1 other residence of the taxpayer which is 
                selected by the taxpayer for purposes of this 
                subsection for the taxable year and which is used by 
                the taxpayer as a residence (within the meaning of 
                section 280A(d)(1)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments made after December 31, 2010.

SEC. 305. APPLICATION OF LEVY TO PAYMENTS TO FEDERAL VENDORS RELATING 
              TO PROPERTY.

    (a) In General.--Section 6331(h)(3) is amended by striking ``goods 
or services'' and inserting ``property, goods, or services''.
    (b) Effective Date.--The amendment made by this section shall apply 
to levies approved after the date of the enactment of this Act.

SEC. 306. APPLICATION OF CONTINUOUS LEVY TO TAX LIABILITIES OF CERTAIN 
              FEDERAL CONTRACTORS.

    (a) In General.--Subsection (f) of section 6330 is amended by 
striking ``or'' at the end of paragraph (2), by inserting ``or'' at the 
end of paragraph (3), and by inserting after paragraph (3) the 
following new paragraph:
            ``(4) the Secretary has served a Federal contractor 
        levy,''.
    (b) Federal Contractor Levy.--Subsection (h) of section 6330 is 
amended--
            (1) by striking all that precedes ``any levy in connection 
        with the collection'' and inserting the following:
    ``(h) Definitions Related to Exceptions.--For purposes of 
subsection (f)--
            ``(1) Disqualified employment tax levy.--A disqualified 
        employment tax levy is''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Federal contractor levy.--A Federal contractor levy 
        is any levy if the person whose property is subject to the levy 
        (or any predecessor thereof) is a Federal contractor.''.
    (c) Conforming Amendment.--The heading of subsection (f) of section 
6330 is amended by striking ``Jeopardy and State Refund Collection'' 
and inserting ``Exceptions''.
    (d) Effective Date.--The amendments made by this section shall 
apply to levies issued after December 31, 2010.

SEC. 307. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR GRANTOR RETAINED 
              ANNUITY TRUSTS.

    (a) In General.--Subsection (b) of section 2702 is amended--
            (1) by redesignating paragraphs (1), (2) and (3) as 
        subparagraphs (A), (B), and (C), respectively, and by moving 
        such subparagraphs (as so redesignated) 2 ems to the right;
            (2) by striking ``For purposes of'' and inserting the 
        following:
            ``(1) In general.--For purposes of'';
            (3) by striking ``paragraph (1) or (2)'' in paragraph 
        (1)(C) (as so redesignated) and inserting ``subparagraph (A) or 
        (B)''; and
            (4) by adding at the end the following new paragraph:
            ``(2) Additional requirements with respect to grantor 
        retained annuities.--For purposes of subsection (a), in the 
        case of an interest described in paragraph (1)(A) (determined 
        without regard to this paragraph) which is retained by the 
        transferor, such interest shall be treated as described in such 
        paragraph only if--
                    ``(A) the right to receive the fixed amounts 
                referred to in such paragraph is for a term of not less 
                than 10 years,
                    ``(B) such fixed amounts, when determined on an 
                annual basis, do not decrease relative to any prior 
                year during the first 10 years of the term referred to 
                in subparagraph (A), and
                    ``(C) the remainder interest has a value greater 
                than zero determined as of the time of the transfer.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to transfers made after the date of the enactment of this Act.

SEC. 308. INCREASE IN INFORMATION RETURN PENALTIES.

    (a) Failure to File Correct Information Returns.--
            (1) In general.--Subsections (a)(1), (b)(1)(A), and 
        (b)(2)(A) of section 6721 are each amended by striking ``$50'' 
        and inserting ``$100''.
            (2) Aggregate annual limitation.--Subsections (a)(1), 
        (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by 
        striking ``$250,000'' and inserting ``$1,500,000''.
    (b) Reduction Where Correction Within 30 Days.--
            (1) In general.--Subparagraph (A) of section 6721(b)(1) is 
        amended by striking ``$15'' and inserting ``$30''.
            (2) Aggregate annual limitation.--Subsections (b)(1)(B) and 
        (d)(1)(B) of section 6721 are each amended by striking 
        ``$75,000'' and inserting ``$250,000''.
    (c) Reduction Where Correction on or Before August 1.--
            (1) In general.--Subparagraph (A) of section 6721(b)(2) is 
        amended by striking ``$30'' and inserting ``$60''.
            (2) Aggregate annual limitation.--Subsections (b)(2)(B) and 
        (d)(1)(C) of section 6721 are each amended by striking 
        ``$150,000'' and inserting ``$500,000''.
    (d) Aggregate Annual Limitations for Persons With Gross Receipts of 
Not More Than $5,000,000.--Paragraph (1) of section 6721(d) is 
amended--
            (1) by striking ``$100,000'' in subparagraph (A) and 
        inserting ``$500,000'';
            (2) by striking ``$25,000'' in subparagraph (B) and 
        inserting ``$75,000''; and
            (3) by striking ``$50,000'' in subparagraph (C) and 
        inserting ``$200,000''.
    (e) Penalty in Case of Intentional Disregard.--Paragraph (2) of 
section 6721(e) is amended by striking ``$100'' and inserting ``$250''.
    (f) Adjustment for Inflation.--Section 6721 is amended by adding at 
the end the following new subsection:
    ``(f) Adjustment for Inflation.--
            ``(1) In general.--For each fifth calendar year beginning 
        after 2012, each of the dollar amounts under subsections (a), 
        (b), (d) (other than paragraph (2)(A) thereof), and (e) shall 
        be increased by such dollar amount multiplied by the cost-of-
        living adjustment determined under section 1(f)(3) determined 
        by substituting `calendar year 2011' for `calendar year 1992' 
        in subparagraph (B) thereof.
            ``(2) Rounding.--If any amount adjusted under paragraph 
        (1)--
                    ``(A) is not less than $75,000 and is not a 
                multiple of $500, such amount shall be rounded to the 
                next lowest multiple of $500, and
                    ``(B) is not described in subparagraph (A) and is 
                not a multiple of $10, such amount shall be rounded to 
                the next lowest multiple of $10.''.
    (g) Effective Date.--The amendments made by this section shall 
apply with respect to information returns required to be filed on or 
after January 1, 2011.

SEC. 309. CRUDE TALL OIL INELIGIBLE FOR CELLULOSIC BIOFUEL PRODUCER 
              CREDIT.

    (a) In General.--Section 40(B)(6)(E) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new clause:
                            ``(iv) Exclusion of certain processed fuels 
                        with a high acid content.--The term `cellulosic 
                        biofuel' shall not include any processed fuel 
                        with an acid number greater than 25. For 
                        purposes of the preceding sentence, the term 
                        `processed fuel' means any fuel other than a 
                        fuel--
                                    ``(I) more than 4 percent of which 
                                (determined by weight) is any 
                                combination of water and sediment, or
                                    ``(II) the ash content of which is 
                                more than 1 percent (determined by 
                                weight).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to fuels sold or used on or after January 1, 2010.

SEC. 310. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

    (a) Shift From 2015 to 2014.--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 4.5 
percentage points.
    (b) Shift From 2016 to 2015.--The percentage under paragraph (2) of 
section 561 of the Hiring Incentives to Restore Employment Act in 
effect on the date of the enactment of this Act is increased by 3.5 
percentage points.
    (c) Shift From 2020 to 2019.--The percentage under paragraph (3) of 
section 561 of the Hiring Incentives to Restore Employment Act in 
effect on the date of the enactment of this Act is increased by 1.25 
percentage points.

 TITLE IV--EXTENSION OF EMERGENCY CONTINGENCY FUND FOR STATE TEMPORARY 
                 ASSISTANCE FOR NEEDY FAMILIES PROGRAMS

SEC. 401. ONE-YEAR EXTENSION OF THE EMERGENCY CONTINGENCY FUND FOR 
              STATE TEMPORARY ASSISTANCE FOR NEEDY FAMILIES PROGRAMS.

    (a) In General.--Section 403(c) of the Social Security Act (42 
U.S.C. 603(c)) is amended--
            (1) in paragraph (2)(A), by inserting ``, and for fiscal 
        year 2011, $2,500,000,000'' before ``for payment'';
            (2) by striking paragraph (2)(B) and inserting the 
        following:
                    ``(B) Availability and use of funds.--
                            ``(i) Fiscal years 2009 and 2010.--The 
                        amounts appropriated to the Emergency Fund 
                        under subparagraph (A) for fiscal year 2009 
                        shall remain available through fiscal year 2010 
                        and shall be used to make grants to States in 
                        each of fiscal years 2009 and 2010 in 
                        accordance with the requirements of paragraph 
                        (3).
                            ``(ii) Fiscal year 2011.--Subject to clause 
                        (iii), the amounts appropriated to the 
                        Emergency Fund under subparagraph (A) for 
                        fiscal year 2011 shall remain available through 
                        fiscal year 2012 and shall be used to make 
                        grants to States based on expenditures in 
                        fiscal year 2011 for benefits and services 
                        provided in fiscal year 2011 in accordance with 
                        the requirements of paragraph (3).
                            ``(iii) Reservation of funds.--Of the 
                        amounts appropriated to the Emergency Fund 
                        under subparagraph (A) for fiscal year 2011, 
                        $500,000 shall be placed in reserve for use in 
                        fiscal year 2012, and shall be used to award 
                        grants for any expenditures described in this 
                        subsection incurred by States after September 
                        30, 2011.'';
            (3) in paragraph (2)(C), by striking ``2010'' and inserting 
        ``2012'';
            (4) in paragraph (3)--
                    (A) in clause (i) of each of subparagraphs (A), 
                (B), and (C)--
                            (i) by striking ``year 2009 or 2010'' and 
                        inserting ``years 2009 through 2011'';
                            (ii) by striking ``and'' at the end of 
                        subclause (I);
                            (iii) by striking the period at the end of 
                        subclause (II) and inserting ``; and''; and
                            (iv) by adding at the end the following:
                                    ``(III) if the quarter is in fiscal 
                                year 2011, has provided the Secretary 
                                with such information as the Secretary 
                                may find necessary in order to make the 
                                determinations, or take any other 
                                action, described in paragraph 
                                (5)(C).''; and
                    (B) in subparagraph (C), by adding at the end the 
                following:
                            ``(iv) Limitation on expenditures for 
                        subsidized employment.--An expenditure for 
                        subsidized employment shall be taken into 
                        account under clause (ii) only if the 
                        expenditure is used to subsidize employment 
                        for--
                                    ``(I) a member of a needy family 
                                (without regard to whether the family 
                                is receiving assistance under the State 
                                program funded under this part); or
                                    ``(II) an individual who has 
                                exhausted (or, within 60 days, will 
                                exhaust) all rights to receive 
                                unemployment compensation under Federal 
                                and State law, and who is a member of a 
                                needy household (regardless of whether 
                                the household includes a child).'';
            (5) by striking paragraph (5) and inserting the following:
            ``(5) Limitations on payments; adjustment authority.--
                    ``(A) Fiscal years 2009 and 2010.--The total amount 
                payable to a single State under subsection (b) and this 
                subsection for fiscal years 2009 and 2010 combined 
                shall not exceed 50 percent of the annual State family 
                assistance grant.
                    ``(B) Fiscal year 2011.--Subject to subparagraph 
                (C), the total amount payable to a single State under 
                subsection (b) and this subsection for fiscal year 2011 
                shall not exceed 30 percent of the annual State family 
                assistance grant.
                    ``(C) Adjustment authority.--If the Secretary 
                determines that the Emergency Fund is at risk of being 
                depleted before September 30, 2011, or that funds are 
                available to accommodate additional State requests 
                under this subsection, the Secretary may, through 
                program instructions issued without regard to the 
                requirements of section 553 of title 5, United States 
                Code--
                            ``(i) specify priority criteria for 
                        awarding grants to States during fiscal year 
                        2011; and
                            ``(ii) adjust the percentage limitation 
                        applicable under subparagraph (B) with respect 
                        to the total amount payable to a single State 
                        for fiscal year 2011.''; and
            (6) in paragraph (6), by inserting ``or for expenditures 
        described in paragraph (3)(C)(iv)'' before the period.
    (b) Conforming Amendments.--Section 2101 of division B of the 
American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is 
amended--
            (1) in subsection (a)(2)--
                    (A) by striking ``2010'' and inserting ``2011''; 
                and
                    (B) by striking all that follows ``repealed'' and 
                inserting a period; and
            (2) in subsection (d)(1), by striking ``2010'' and 
        inserting ``2011''.
    (c) Program Guidance.--The Secretary of Health and Human Services 
shall issue program guidance, without regard to the requirements of 
section 553 of title 5, United States Code, which ensures that the 
funds provided under the amendments made by this section for subsidized 
employment do not support any subsidized employment position the annual 
salary of which is greater than, at State option--
            (1) 200 percent of the poverty line (within the meaning of 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981, including any revision required by such section 673(2)) 
        for a family of 4; or
            (2) the median wage in any jurisdiction operating a program 
        with funds provided pursuant to the amendments.

            Passed the House of Representatives March 24, 2010.

            Attest:

                                                                 Clerk.
111th CONGRESS

  2d Session

                               H. R. 4849

_______________________________________________________________________

                                 AN ACT

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
    for small business job creation, extend the Build America Bonds 
program, provide other infrastructure job creation tax incentives, and 
                          for other purposes.