[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4849 Reported in House (RH)]
Union Calendar No. 257
111th CONGRESS
2d Session
H. R. 4849
[Report No. 111-447]
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 16, 2010
Mr. Levin (for himself, Mr. Rangel, Mr. Lewis of Georgia, Mr. Neal of
Massachusetts, Mr. Pomeroy, Mr. Thompson of California, Mr. Larson of
Connecticut, Mr. Kind, Mr. Pascrell, Ms. Berkley, Mr. Crowley, Mr. Van
Hollen, Ms. Schwartz, Mr. Davis of Alabama, Mr. Davis of Illinois, Mr.
Etheridge, Ms. Linda T. Sanchez of California, and Mr. Yarmuth)
introduced the following bill; which was referred to the Committee on
Ways and Means
March 19, 2010
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on March
16, 2010]
_______________________________________________________________________
A BILL
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 employment tax liability of
certain Federal contractors.
Sec. 307. Required minimum 10-year term, etc., for grantor retained
annuity trusts.
Sec. 308. Increase in information return penalties.
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 EMPLOYMENT TAX LIABILITY OF
CERTAIN FEDERAL CONTRACTORS.
(a) In General.--Section 6330(h) is amended by inserting ``or if
the person subject to the levy (or any predecessor thereof) is a
Federal contractor that was identified as owing such employment taxes
through the Federal Payment Levy Program'' before the period at the end
of the first sentence.
(b) Effective Date.--The amendment 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'', and
(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.
Union Calendar No. 257
111th CONGRESS
2d Session
H. R. 4849
[Report No. 111-447]
_______________________________________________________________________
A BILL
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.
_______________________________________________________________________
March 19, 2010
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed