1.Short title; amendment of
1986 Code; table of contents
(a)This Act may be cited
as the Small Business Tax Relief Act
of 2010
.
(b)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)The table of contents for this Act is as follows:
Sec. 1. Short title; amendment of 1986 Code; table of
contents.
Title I—Repeal of certain information reporting
requirements
Sec. 101. Repeal of expansion of certain information reporting
requirements to corporations and to payments for property.
Title II—Revenue provisions
Subtitle A—Foreign provisions
Sec. 201. Rules to prevent splitting foreign tax credits from
the income to which they relate.
Sec. 202. Denial of foreign tax credit with respect to foreign
income not subject to United States taxation by reason of covered asset
acquisitions.
Sec. 203. Separate application of foreign tax credit
limitation, etc., to items resourced under treaties.
Sec. 204. Limitation on the amount of foreign taxes deemed paid
with respect to section 956 inclusions.
Sec. 205. Special rule with respect to certain redemptions by
foreign subsidiaries.
Sec. 206. Modification of affiliation rules for purposes of
rules allocating interest expense.
Sec. 207. Termination of special rules for interest and
dividends received from persons meeting the 80-percent foreign business
requirements.
Sec. 208. Source rules for income on guarantees.
Sec. 209. Limitation on extension of statute of limitations for
failure to notify Secretary of certain foreign transfers.
Subtitle B—Other revenue provisions
Sec. 211. Required minimum 10-year term, etc., for grantor
retained annuity trusts.
Sec. 212. Crude tall oil ineligible for cellulosic biofuel
producer credit.
Sec. 213. Increase in information return penalties.
Sec. 214. Treatment of securities of a controlled corporation
exchanged for assets in certain reorganizations.
Title III—Paygo compliance
Sec. 301. Paygo compliance.
<enum>I</enum><header>Repeal of certain
information reporting requirements</header>
<section display-inline="no-display-inline" id="H9DCF212FE5AF40948070C9A0384DD221" section-type="subsequent-section"><enum>101.</enum><header>Repeal of expansion
of certain information reporting requirements to corporations and to payments
for property</header><text display-inline="no-display-inline">Section 9006 of
the Patient Protection and Affordable Care Act is repealed. Each provision of
law amended by such section is amended to read as such provision would read if
such section had never been enacted.</text>
</section><enum>II</enum><header>Revenue
provisions</header>
<subtitle id="H860F38277498436FA9B87B25F7B19BB8"><enum>A</enum><header>Foreign
provisions</header>
<section id="H5AB8E38F615341ADA019B100841B89D2" section-type="subsequent-section"><enum>201.</enum><header>Rules to prevent
splitting foreign tax credits from the income to which they relate</header>
<subsection id="H6265C694F2904991B0D1F5912B924CC5"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subpart A of part III
of subchapter N of chapter 1 is amended by adding at the end the following new
section:</text>
<quoted-block display-inline="no-display-inline" id="H43AB049F785F4668B879FED33B8FB113" style="OLC">
<section id="HB6DD4AB697E9410EA01D7B79DE21E0AE"><enum>909.</enum><header>Suspension of
taxes and credits until related income taken into account</header>
<subsection id="HA71C645B9A54419BB0F50081BCE19B9F"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">If there is a foreign
tax credit splitting event with respect to a foreign income tax paid or accrued
by the taxpayer, such tax shall not be taken into account for purposes of this
title before the taxable year in which the related income is taken into account
under this chapter by the taxpayer.</text>
</subsection><subsection id="H1F4FF16F48154EEC9513CCC860D9EA6E"><enum>(b)</enum><header>Special rules
with respect to section 902 corporations</header><text display-inline="yes-display-inline">If there is a foreign tax credit splitting
event with respect to a foreign income tax paid or accrued by a section 902
corporation, such tax shall not be taken into account—</text>
<paragraph id="H0B3F144CAAA24BAABD52A10300D596AA"><enum>(1)</enum><text>for purposes of
section 902 or 960, or</text>
</paragraph><paragraph id="HF5DA3C539E39471DBEC5DFD717C2EBD7"><enum>(2)</enum><text>for purposes of
determining earnings and profits under section 964(a),</text>
</paragraph><continuation-text continuation-text-level="subsection">before
the taxable year in which the related income is taken into account under this
chapter by such section 902 corporation or a domestic corporation which meets
the ownership requirements of subsection (a) or (b) of section 902 with respect
to such section 902 corporation.</continuation-text></subsection><subsection id="HE21421AB5294466D9712D53A37D60CD3"><enum>(c)</enum><header>Special
rules</header><text>For purposes of this section—</text>
<paragraph id="HCC63C178230048698571C4F0223C5F4A"><enum>(1)</enum><header>Application to
partnerships, etc</header><text display-inline="yes-display-inline">In the case
of a partnership, subsections (a) and (b) shall be applied at the partner
level. Except as otherwise provided by the Secretary, a rule similar to the
rule of the preceding sentence shall apply in the case of any S corporation or
trust.</text>
</paragraph><paragraph id="H1FFD6C27CD6A41BF85009DFAB14BF99F"><enum>(2)</enum><header>Treatment of
foreign taxes after suspension</header><text display-inline="yes-display-inline">In the case of any foreign income tax not
taken into account by reason of subsection (a) or (b), except as otherwise
provided by the Secretary, such tax shall be so taken into account in the
taxable year referred to in such subsection (other than for purposes of section
986(a)) as a foreign income tax paid or accrued in such taxable year.</text>
</paragraph></subsection><subsection id="H0AB18B39C2B44932A6CA40A3F39D903F"><enum>(d)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="H7095472DCD12406AA3480A1094B5E301"><enum>(1)</enum><header>Foreign tax
credit splitting event</header><text display-inline="yes-display-inline">There
is a foreign tax credit splitting event with respect to a foreign income tax if
the related income is (or will be) taken into account under this chapter by a
covered person.</text>
</paragraph><paragraph id="HE3FF7E543FF243D78B154AE2173F32FB"><enum>(2)</enum><header>Foreign income
tax</header><text display-inline="yes-display-inline">The term <quote>foreign
income tax</quote> means any income, war profits, or excess profits tax paid or
accrued to any foreign country or to any possession of the United
States.</text>
</paragraph><paragraph id="HE3BFF53860674F99B00FA3E3145FEB92"><enum>(3)</enum><header>Related
income</header><text>The term <quote>related income</quote> means, with respect
to any portion of any foreign income tax, the income (or, as appropriate,
earnings and profits) to which such portion of foreign income tax
relates.</text>
</paragraph><paragraph id="HC77AC08420D244299E25DD2CB6F64D53"><enum>(4)</enum><header>Covered
person</header><text>The term <quote>covered person</quote> means, with respect
to any person who pays or accrues a foreign income tax (hereafter in this
paragraph referred to as the <quote>payor</quote>)—</text>
<subparagraph id="HFF9C2C7D55F540169001336FF1D832F8"><enum>(A)</enum><text>any entity in
which the payor holds, directly or indirectly, at least a 10 percent ownership
interest (determined by vote or value),</text>
</subparagraph><subparagraph id="H047083AED12A4E55B603DA19267FC7CD"><enum>(B)</enum><text>any person which
holds, directly or indirectly, at least a 10 percent ownership interest
(determined by vote or value) in the payor,</text>
</subparagraph><subparagraph id="H07A61183C00F46378D8D0A15ED1F06BF"><enum>(C)</enum><text>any person which
bears a relationship to the payor described in section 267(b) or 707(b),
and</text>
</subparagraph><subparagraph id="H1E7FE3589C984BAAA918C8954E8BA50D"><enum>(D)</enum><text>any other person
specified by the Secretary for purposes of this paragraph.</text>
</subparagraph></paragraph><paragraph id="H8625249DA02E416ABC8F8277A625520D"><enum>(5)</enum><header>Section 902
corporation</header><text>The term <quote>section 902 corporation</quote> means
any foreign corporation with respect to which one or more domestic corporations
meets the ownership requirements of subsection (a) or (b) of section
902.</text>
</paragraph></subsection><subsection id="HED26AB0C12C144E9845A35847A11ABA1"><enum>(e)</enum><header>Regulations</header><text>The
Secretary may issue such regulations or other guidance as is necessary or
appropriate to carry out the purposes of this section, including regulations or
other guidance which provides—</text>
<paragraph id="HC244D7F51F364755874DD049F613AE11"><enum>(1)</enum><text>appropriate
exceptions from the provisions of this section, and</text>
</paragraph><paragraph id="HBC17DB0A5A694860A133899E454F4B16"><enum>(2)</enum><text>for the proper
application of this section with respect to hybrid
instruments.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H4E60B8FB1B4E475ABFC5B860156BC968"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for subpart A of part III of subchapter N of chapter 1 is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="H476632B6A05B4767BDF8A5888C8621CD" style="OLC">
<toc container-level="quoted-block-container" idref="H43AB049F785F4668B879FED33B8FB113" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HB6DD4AB697E9410EA01D7B79DE21E0AE" level="section">Sec. 909. Suspension of taxes and credits until related income
taken into
account.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H49D60D19F3F24CD3BD1BA8F8B1B34E14"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to—</text>
<paragraph commented="no" id="H49E8FD1232FB46F7B21D463A15C3FE47"><enum>(1)</enum><text display-inline="yes-display-inline">foreign income taxes (as defined in section
909(d) of the Internal Revenue Code of 1986, as added by this section) paid or
accrued after December 31, 2010; and</text>
</paragraph><paragraph commented="no" id="HDA3C442A3C314F09B5449C34F32D2850"><enum>(2)</enum><text>foreign income
taxes (as so defined) paid or accrued by a section 902 corporation (as so
defined) on or before such date (and not deemed paid under section 902(a) or
960 of such Code on or before such date), but only for purposes of applying
sections 902 and 960 with respect to periods after such date.</text>
</paragraph><continuation-text continuation-text-level="subsection">Section
909(b)(2) of the Internal Revenue Code of 1986, as added by this section, shall
not apply to foreign income taxes described in paragraph (2).</continuation-text></subsection></section><section id="H8CC4EBDD5AAC4074836D97E0F229AF7A"><enum>202.</enum><header>Denial of
foreign tax credit with respect to foreign income not subject to United States
taxation by reason of covered asset acquisitions</header>
<subsection id="H9ECD5E06DE844C509DC393FAAE2D8EF3"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 901 is
amended by redesignating subsection (m) as subsection (n) and by inserting
after subsection (l) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H7609B1A845FB426591DBF1F696ECA846" style="OLC">
<subsection id="H189C316FDFEE40C591F606DCF3186854"><enum>(m)</enum><header>Denial of
foreign tax credit with respect to foreign income not subject to United States
taxation by reason of covered asset acquisitions</header>
<paragraph id="H0845E048860A4F32825BF28314F762BD"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of a
covered asset acquisition, the disqualified portion of any foreign income tax
determined with respect to the income or gain attributable to the relevant
foreign assets—</text>
<subparagraph id="H670AD80A5D5C4FD29CA82E0CD1EC5C2B"><enum>(A)</enum><text>shall not be taken
into account in determining the credit allowed under subsection (a), and</text>
</subparagraph><subparagraph id="HBBD42C3D53954AA9B0BEA9F94D59BFA3"><enum>(B)</enum><text>in the case of a
foreign income tax paid by a section 902 corporation (as defined in section
909(d)(5)), shall not be taken into account for purposes of section 902 or
960.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H3E8D3EA1097B403CB7F7060C34AC134D"><enum>(2)</enum><header>Covered asset
acquisition</header><text>For purposes of this section, the term <quote>covered
asset acquisition</quote> means—</text>
<subparagraph commented="no" id="H7482B16958B948C89CDE7DF48D81C172"><enum>(A)</enum><text>a qualified stock
purchase (as defined in section 338(d)(3)) to which section 338(a)
applies,</text>
</subparagraph><subparagraph id="HBE37D6A3E80043DE9DC1050D62D6F117"><enum>(B)</enum><text>any transaction
which—</text>
<clause id="H8D306A7C517A4EE08A6F2A0D7B59BD00"><enum>(i)</enum><text>is
treated as an acquisition of assets for purposes of this chapter, and</text>
</clause><clause id="H2D9B118D0B61423B94534DD3E05EB874"><enum>(ii)</enum><text>is treated as the
acquisition of stock of a corporation (or is disregarded) for purposes of the
foreign income taxes of the relevant jurisdiction,</text>
</clause></subparagraph><subparagraph id="HC7A1B7CA894B41C286596B97C1651400"><enum>(C)</enum><text>any acquisition of
an interest in a partnership which has an election in effect under section 754,
and</text>
</subparagraph><subparagraph id="H6B5B59F6C2C745058357134BE2322A7B"><enum>(D)</enum><text>to the extent
provided by the Secretary, any other similar transaction.</text>
</subparagraph></paragraph><paragraph id="H245051B735EE4D278A3184950D09427D"><enum>(3)</enum><header>Disqualified
portion</header><text display-inline="yes-display-inline">For purposes of this
section—</text>
<subparagraph id="HDC94E4F5DE9E44728FC914E912A6FD92"><enum>(A)</enum><header>In
general</header><text>The term <quote>disqualified portion</quote> means, with
respect to any covered asset acquisition, for any taxable year, the ratio
(expressed as a percentage) of—</text>
<clause id="H5D57DB0BE9F048CAB2D581E021351C9F"><enum>(i)</enum><text>the aggregate
basis differences (but not below zero) allocable to such taxable year under
subparagraph (B) with respect to all relevant foreign assets, divided by</text>
</clause><clause id="HCBC28B90460742C18748AD7C03EB5E33"><enum>(ii)</enum><text>the income on
which the foreign income tax referred to in paragraph (1) is determined (or, if
the taxpayer fails to substantiate such income to the satisfaction of the
Secretary, such income shall be determined by dividing the amount of such
foreign income tax by the highest marginal tax rate applicable to such income
in the relevant jurisdiction).</text>
</clause></subparagraph><subparagraph id="H53069036D1F549F0987051C00A1F7CD5"><enum>(B)</enum><header>Allocation of
basis difference</header><text>For purposes of subparagraph (A)(i)—</text>
<clause id="HF23763E4EA684458971FC21AE327E977"><enum>(i)</enum><header>In
general</header><text>The basis difference with respect to any relevant foreign
asset shall be allocated to taxable years using the applicable cost recovery
method under this chapter.</text>
</clause><clause id="HB89B22E21CA944359CB0EE57D18E0304"><enum>(ii)</enum><header>Special rule
for disposition of assets</header><text>Except as otherwise provided by the
Secretary, in the case of the disposition of any relevant foreign asset—</text>
<subclause id="H62324EE5760E4A428FB6EEF0A053CE94"><enum>(I)</enum><text>the basis
difference allocated to the taxable year which includes the date of such
disposition shall be the excess of the basis difference with respect to such
asset over the aggregate basis difference with respect to such asset which has
been allocated under clause (i) to all prior taxable years, and</text>
</subclause><subclause id="H0264F2FD449449E69F0A08916F9BDB60"><enum>(II)</enum><text>no basis
difference with respect to such asset shall be allocated under clause (i) to
any taxable year thereafter.</text>
</subclause></clause></subparagraph><subparagraph id="HE904D104A9EC47678C0E1690881ABF90"><enum>(C)</enum><header>Basis
difference</header>
<clause id="HA42865DD822E473886E78CAF14F1EC61"><enum>(i)</enum><header>In
general</header><text>The term <quote>basis difference</quote> means, with
respect to any relevant foreign asset, the excess of—</text>
<subclause id="H0EB2530EE8804557848DC5493A2FB7BB"><enum>(I)</enum><text display-inline="yes-display-inline">the adjusted basis of such asset
immediately after the covered asset acquisition, over</text>
</subclause><subclause id="H51A5621A26DD4F5482490F7A164D9D21"><enum>(II)</enum><text>the adjusted
basis of such asset immediately before the covered asset acquisition.</text>
</subclause></clause><clause id="H308DDE5393704DCDB57DE901BDACF293"><enum>(ii)</enum><header>Built-in loss
assets</header><text>In the case of a relevant foreign asset with respect to
which the amount described in clause (i)(II) exceeds the amount described in
clause (i)(I), such excess shall be taken into account under this subsection as
a basis difference of a negative amount.</text>
</clause><clause id="H61E86EA78E864B4590B8D3873C931A2B"><enum>(iii)</enum><header>Special rule
for section 338 elections</header><text>In the case of a covered asset
acquisition described in paragraph (2)(A), the covered asset acquisition shall
be treated for purposes of this subparagraph as occurring at the close of the
acquisition date (as defined in section 338(h)(2)).</text>
</clause></subparagraph></paragraph><paragraph id="H8E53DAD228584114BD028C30C01197F3"><enum>(4)</enum><header>Relevant foreign
assets</header><text>For purposes of this section, the term <quote>relevant
foreign asset</quote> means, with respect to any covered asset acquisition, any
asset (including any goodwill, going concern value, or other intangible) with
respect to such acquisition if income, deduction, gain, or loss attributable to
such asset is taken into account in determining the foreign income tax referred
to in paragraph (1).</text>
</paragraph><paragraph id="H0EE01744128B4D0899F72A0401CBA1DF"><enum>(5)</enum><header>Foreign income
tax</header><text display-inline="yes-display-inline">For purposes of this
section, the term <quote>foreign income tax</quote> means any income, war
profits, or excess profits tax paid or accrued to any foreign country or to any
possession of the United States.</text>
</paragraph><paragraph id="H87E26CBBC5EF4B6A8C824B7A07854A6B"><enum>(6)</enum><header>Taxes allowed as
a deduction, etc</header><text>Sections 275 and 78 shall not apply to any tax
which is not allowable as a credit under subsection (a) by reason of this
subsection.</text>
</paragraph><paragraph display-inline="no-display-inline" id="H4E9D07EF13C0443E9FE65BCC7B8EE845"><enum>(7)</enum><header>Regulations</header><text>The
Secretary may issue such regulations or other guidance as is necessary or
appropriate to carry out the purposes of this subsection, including to exempt
from the application of this subsection certain covered asset acquisitions, and
relevant foreign assets with respect to which the basis difference is de
minimis.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5015CCC516BC4202B4C60ECE8A8E7FE0"><enum>(b)</enum><header>Effective
date</header>
<paragraph id="H0B311FCDEDFF4897BCCBBC048DC2DD22"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to covered asset acquisitions (as defined in
section 901(m)(2) of the Internal Revenue Code of 1986, as added by this
section) after December 31, 2010.</text>
</paragraph><paragraph display-inline="no-display-inline" id="HCA94F60FE4484D59B1A4BCD38AD4635C"><enum>(2)</enum><header>Transition
rule</header><text display-inline="yes-display-inline">The amendments made by
this section shall not apply to any covered asset acquisition (as so defined)
with respect to which the transferor and the transferee are not related if such
acquisition is—</text>
<subparagraph id="H722888B7B1E3488096D437D7A3391687"><enum>(A)</enum><text>made pursuant to a
written agreement which was binding on May 20, 2010, and at all times
thereafter;</text>
</subparagraph><subparagraph id="HC85ED13AED0F4224843BFE99AE6C1362"><enum>(B)</enum><text>described in a
ruling request submitted to the Internal Revenue Service on or before such
date; or</text>
</subparagraph><subparagraph id="H2003711AEDEC4FB58AD9FD9525CC3836"><enum>(C)</enum><text>described on or
before such date in a public announcement or in a filing with the Securities
and Exchange Commission.</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H3E6A3EEE6D634C3DA81CD5959721325C"><enum>(3)</enum><header>Related
persons</header><text display-inline="yes-display-inline">For purposes of this
subsection, a person shall be treated as related to another person if the
relationship between such persons is described in section 267 or 707(b) of the
Internal Revenue Code of 1986.</text>
</paragraph></subsection></section><section commented="no" id="H8D1C005F3AC84CC1A8F4487AB051B779"><enum>203.</enum><header>Separate
application of foreign tax credit limitation, etc., to items resourced under
treaties</header>
<subsection commented="no" id="HBCE42B19878744C08391F709D76AFCE6"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (d) of
section 904 is amended by redesignating paragraph (6) as paragraph (7) and by
inserting after paragraph (5) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H7AE6343125314BBDA2E48C1F07DC3F43" style="OLC">
<paragraph commented="no" id="H5CAF372B41B84EB09C689C3C52E3CBB6"><enum>(6)</enum><header>Separate
application to items resourced under treaties</header>
<subparagraph commented="no" id="H2E024B4B0DFD474BAD7A7076F464CFAA"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">If—</text>
<clause commented="no" id="H914F81EDE15045798734BB4E30C6F719"><enum>(i)</enum><text>without regard to
any treaty obligation of the United States, any item of income would be treated
as derived from sources within the United States,</text>
</clause><clause commented="no" id="HF60F2148C88E4E94A7D0D81EDF98DD37"><enum>(ii)</enum><text>under a treaty
obligation of the United States, such item would be treated as arising from
sources outside the United States, and</text>
</clause><clause commented="no" id="H2A2CC74AED514D5098AF1FBB6A6226FE"><enum>(iii)</enum><text>the taxpayer
chooses the benefits of such treaty obligation,</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">subsections (a), (b), and (c) of
this section and sections 902, 907, and 960 shall be applied separately with
respect to each such item.</continuation-text></subparagraph><subparagraph commented="no" id="H9517BFCFFBF64E0C802526E033FA3CE8"><enum>(B)</enum><header>Coordination
with other provisions</header><text>This paragraph shall not apply to any item
of income to which subsection (h)(10) or section 865(h) applies.</text>
</subparagraph><subparagraph commented="no" id="HA13A3C49A2B34D19BB1F3F23DFF9E248"><enum>(C)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary may issue such regulations or
other guidance as is necessary or appropriate to carry out the purposes of this
paragraph, including regulations or other guidance which provides that related
items of income may be aggregated for purposes of this
paragraph.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H8D38D753AA1F402791C9F3B7F84676C6"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H1F7A7447518842D28C180EF18CBCE169" section-type="subsequent-section"><enum>204.</enum><header>Limitation on the
amount of foreign taxes deemed paid with respect to section 956
inclusions</header>
<subsection id="HDB7A4E2469084D90803A03F948D2618E"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 960 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HE728E7E537CE4EFB9B9153735C4F7E7C" style="OLC">
<subsection id="HC0F168E6DF0D44719C9DA9DD3EE257EE"><enum>(c)</enum><header>Limitation with
respect to section 956 inclusions</header>
<paragraph id="H483401FB44ED4B0685A4AB4BCB148040"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">If there is included
under section 951(a)(1)(B) in the gross income of a domestic corporation any
amount attributable to the earnings and profits of a foreign corporation which
is a member of a qualified group (as defined in section 902(b)) with respect to
the domestic corporation, the amount of any foreign income taxes deemed to have
been paid during the taxable year by such domestic corporation under section
902 by reason of subsection (a) with respect to such inclusion in gross income
shall not exceed the amount of the foreign income taxes which would have been
deemed to have been paid during the taxable year by such domestic corporation
if cash in an amount equal to the amount of such inclusion in gross income were
distributed as a series of distributions (determined without regard to any
foreign taxes which would be imposed on an actual distribution) through the
chain of ownership which begins with such foreign corporation and ends with
such domestic corporation.</text>
</paragraph><paragraph id="HB15D97C1DC604C97A6ABA452CAF490A6"><enum>(2)</enum><header>Authority to
prevent abuse</header><text display-inline="yes-display-inline">The Secretary
shall issue such regulations or other guidance as is necessary or appropriate
to carry out the purposes of this subsection, including regulations or other
guidance which prevent the inappropriate use of the foreign corporation’s
foreign income taxes not deemed paid by reason of paragraph
(1).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H29B35C405FD241D8AAF8DE1A3D7D10D9"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to acquisitions of United States property (as defined
in section 956(c) of the Internal Revenue Code of 1986) after December 31,
2010.</text>
</subsection></section><section display-inline="no-display-inline" id="H7A92BD91B26D437EB8AEE770C4A2A132"><enum>205.</enum><header>Special rule
with respect to certain redemptions by foreign subsidiaries</header>
<subsection id="H238E5995541E4003BC52DD7E5B7FB0FB"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (5) of
section 304(b) is amended by redesignating subparagraph (B) as subparagraph (C)
and by inserting after subparagraph (A) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="H3DFF232F3BD548F09915ECCBFB30B057" style="OLC">
<subparagraph id="H29185D1D1CED4EC3AE1A2E63437F1A3F"><enum>(B)</enum><header>Special rule in
case of foreign acquiring corporation</header><text display-inline="yes-display-inline">In the case of any acquisition to which
subsection (a) applies in which the acquiring corporation is a foreign
corporation, no earnings and profits shall be taken into account under
paragraph (2)(A) (and subparagraph (A) shall not apply) if more than 50 percent
of the dividends arising from such acquisition (determined without regard to
this subparagraph) would neither—</text>
<clause id="HE2C441776784455EAE9289B31E494424"><enum>(i)</enum><text>be
subject to tax under this chapter for the taxable year in which the dividends
arise, nor</text>
</clause><clause id="HBE4D80AB32FD481B9D0FBCD50440C594"><enum>(ii)</enum><text>be includible in
the earnings and profits of a controlled foreign corporation (as defined in
section 957 and without regard to section
953(c)).</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HBEE3650840854284850E2BB959067547"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to acquisitions after December 31, 2010.</text>
</subsection></section><section id="H595379CBDE0B4872807A519785F259E3"><enum>206.</enum><header>Modification of
affiliation rules for purposes of rules allocating interest expense</header>
<subsection id="H07E475F5014F43E69F9B9492B2A99347"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subparagraph (A) of
section 864(e)(5) is amended by adding at the end the
following:</text>
<quoted-block display-inline="yes-display-inline" id="H38D2E09D9EA24DFE9BE8BA6DDA42E307" style="OLC">
<text>Notwithstanding the preceding
sentence, a foreign corporation shall be treated as a member of the affiliated
group if—</text><clause id="H66EB9B250E174911938E5740B07BA4BC"><enum>(i)</enum><text display-inline="yes-display-inline">more than 50 percent of the gross income of
such foreign corporation for the taxable year is effectively connected with the
conduct of a trade or business within the United States, and</text>
</clause><clause id="H8B9C5E44F10A485AB4298A829B963067"><enum>(ii)</enum><text>at least 80
percent of either the vote or value of all outstanding stock of such foreign
corporation is owned directly or indirectly by members of the affiliated group
(determined with regard to this
sentence).</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H808F1BBFFBF44202B70340A50DFACDBA"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HE9AEE49E1A2749679FFF80E6C7D8CFD8" section-type="subsequent-section"><enum>207.</enum><header>Termination of
special rules for interest and dividends received from persons meeting the
80-percent foreign business requirements</header>
<subsection id="H71AE83F2DDE047228EBB51D3D5F44285"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">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.</text>
</subsection><subsection id="H8440F7F2669C4ACD9816C2A782CFA38D"><enum>(b)</enum><header>Grandfather rule
with respect to withholding on interest and dividends received from persons
meeting the 80-Percent foreign business requirements</header>
<paragraph id="H3A1953F0E5DD4DE59B68C74F8C003D1D"><enum>(1)</enum><header>In
general</header><text>Subparagraph (B) of section 871(i)(2) is amended to read
as follows:</text>
<quoted-block display-inline="no-display-inline" id="HA54DC90CF1B84438A28966565114CC07" style="OLC">
<subparagraph id="H25B87911941544D3A931D1DF4A50CE68"><enum>(B)</enum><text display-inline="yes-display-inline">The active foreign business percentage
of—</text>
<clause id="H30932F72EECB4AB9B4C5697E2EA15705"><enum>(i)</enum><text>any dividend paid
by an existing 80/20 company, and</text>
</clause><clause id="H75A71157DD854911A8C0AACFDE733852"><enum>(ii)</enum><text>any interest paid
by an existing 80/20
company.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HDAB760055E554120A54F86FF428E7A73"><enum>(2)</enum><header>Definitions and
special rules</header><text>Section 871 is amended by redesignating subsections
(l) and (m) as subsections (m) and (n), respectively, and by inserting after
subsection (k) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H05EC2B91D125474998A79A6A36504CA5" style="OLC">
<subsection id="H86313044905244F98B44CD4D375D8CA0"><enum>(l)</enum><header>Rules relating
to existing 80/20 companies</header><text display-inline="yes-display-inline">For purposes of this subsection and
subsection (i)(2)(B)—</text>
<paragraph id="HA34AC1BC6CE94E20975B65D7DD14316B"><enum>(1)</enum><header>Existing 80/20
company</header>
<subparagraph id="H79C4F93ABC144C64BDBD462AE46F661C"><enum>(A)</enum><header>In
general</header><text>The term <quote>existing 80/20 company</quote> means any
corporation if—</text>
<clause id="H407899DAAD6D48B3BCF1DC2ED74B759C"><enum>(i)</enum><text>such corporation
met the 80-percent foreign business requirements of section 861(c)(1) (as in
effect before the date of the enactment of this subsection) for such
corporation’s last taxable year beginning before January 1, 2011,</text>
</clause><clause id="H28785FF4764D43C08847A0D06479C582"><enum>(ii)</enum><text>such corporation
meets the 80-percent foreign business requirements of subparagraph (B) with
respect to each taxable year after the taxable year referred to in clause (i),
and</text>
</clause><clause id="H377F3AD1644D424D8F63D3C189A1400E"><enum>(iii)</enum><text>there has not
been an addition of a substantial line of business with respect to such
corporation after the date of the enactment of this subsection.</text>
</clause></subparagraph><subparagraph id="H4D9B38F57CA84BF88C062D51848B8D5D"><enum>(B)</enum><header>Foreign business
requirements</header>
<clause id="H66151899BBF94CC2BEEBF2615682FE82"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">Except as provided in
clause (iv), a corporation meets the 80-percent foreign business requirements
of this subparagraph if it is shown to the satisfaction of the Secretary that
at least 80 percent of the gross income from all sources of such corporation
for the testing period is active foreign business income.</text>
</clause><clause id="H2BF7DD8FA65542D6B109DB23EC0DDF15"><enum>(ii)</enum><header>Active foreign
business income</header><text>For purposes of clause (i), the term
<quote>active foreign business income</quote> means gross income which—</text>
<subclause id="HF0922168FBBB43BF8E8B16428CB4772F"><enum>(I)</enum><text>is derived from
sources outside the United States (as determined under this subchapter),
and</text>
</subclause><subclause id="HDF9F66B2B7034E44B3E98FA0664C1215"><enum>(II)</enum><text>is attributable
to the active conduct of a trade or business in a foreign country or possession
of the United States.</text>
</subclause></clause><clause id="HA628796584C2493E91F4C29456AFCFEA"><enum>(iii)</enum><header>Testing
period</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <quote>testing period</quote> means the 3-year period
ending with the close of the taxable year of the corporation preceding the
payment (or such part of such period as may be applicable). If the corporation
has no gross income for such 3-year period (or part thereof), the testing
period shall be the taxable year in which the payment is made.</text>
</clause><clause id="H4497C6084F804D36B41E6DC3F3DB6E8A"><enum>(iv)</enum><header>Transition
rule</header><text>In the case of a taxable year for which the testing period
includes 1 or more taxable years beginning before January 1, 2011—</text>
<subclause id="H8A57C2E0A36D4307902E6FE6B48168BA"><enum>(I)</enum><text>a corporation
meets the 80-percent foreign business requirements of this subparagraph if and
only if the weighted average of—</text>
<item id="H7BFD88DC132D438AAC6A2376B39C5339"><enum>(aa)</enum><text>the
percentage of the corporation's gross income from all sources that is active
foreign business income (as defined in subparagraph (B) of section 861(c)(1)
(as in effect before the date of the enactment of this subsection)) for the
portion of the testing period that includes taxable years beginning before
January 1, 2011, and</text>
</item><item id="H207D0C4DBA084DFB91C6C28A543C5A6C"><enum>(bb)</enum><text>the
percentage of the corporation's gross income from all sources that is active
foreign business income (as defined in clause (ii) of this subparagraph) for
the portion of the testing period, if any, that includes taxable years
beginning on or after January 1, 2011,</text>
</item><continuation-text continuation-text-level="subclause">is at
least 80 percent, and</continuation-text></subclause><subclause id="H93EC9FFB141644AFA8B3BEADF4CC41E1"><enum>(II)</enum><text>the active
foreign business percentage for such taxable year shall equal the weighted
average percentage determined under subclause (I).</text>
</subclause></clause></subparagraph></paragraph><paragraph id="HA894E2852B2C4BF1AB1934E59B37EC2B"><enum>(2)</enum><header>Active foreign
business percentage</header><text display-inline="yes-display-inline">Except as
provided in paragraph (1)(B)(iv), the term <quote>active foreign business
percentage</quote> means, with respect to any existing 80/20 company, the
percentage which—</text>
<subparagraph id="H612E2AEB24C2481C83886E0742E56D12"><enum>(A)</enum><text>the active foreign
business income of such company for the testing period, is of</text>
</subparagraph><subparagraph id="H8C80223CF83D4847BDEE3987308D7FA5"><enum>(B)</enum><text>the gross income
of such company for the testing period from all sources.</text>
</subparagraph></paragraph><paragraph id="HF38CE175F6DC43DB8004DA6BBB7A63BD"><enum>(3)</enum><header>Aggregation
rules</header><text display-inline="yes-display-inline">For purposes of
applying paragraph (1) (other than subparagraphs (A)(i) and (B)(iv) thereof)
and paragraph (2)—</text>
<subparagraph id="H21BBCEC1FF2A4C2FB6B786404F2F4206"><enum>(A)</enum><header>In
general</header><text>The corporation referred to in paragraph (1)(A) and all
of such corporation’s subsidiaries shall be treated as one corporation.</text>
</subparagraph><subparagraph id="HB80CA0E85CE84301894BBDDC452FDE06"><enum>(B)</enum><header>Subsidiaries</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the term
<quote>subsidiary</quote> means any corporation in which the corporation
referred to in subparagraph (A) owns (directly or indirectly) stock meeting the
requirements of section 1504(a)(2) (determined by substituting <quote>50
percent</quote> for <quote>80 percent</quote> each place it appears and without
regard to section 1504(b)(3)).</text>
</subparagraph></paragraph><paragraph id="HD01AA84425174E4BB44B0E46DBB2297B"><enum>(4)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary may issue such regulations or
other guidance as is necessary or appropriate to carry out the purposes of this
section, including regulations or other guidance which provide for the proper
application of the aggregation rules described in paragraph
(3).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HC02C7BFE614744D98ED50C6DAF31DBE9"><enum>(c)</enum><header>Conforming
amendments</header>
<paragraph id="H403660EE94704F2CBDA72939B57634EF"><enum>(1)</enum><text>Section 861 is
amended by striking subsection (c) and by redesignating subsections (d), (e),
and (f) as subsections (c), (d), and (e), respectively.</text>
</paragraph><paragraph id="H353318FADCDA440682856F48EACFE153"><enum>(2)</enum><text>Paragraph (9) of
section 904(h) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HDE9B44061B9547299D460DC367A4ADD3" style="OLC">
<paragraph id="H6B878A8C2B1245FE9383A33462A0DBED"><enum>(9)</enum><header>Treatment of
certain domestic corporations</header><text display-inline="yes-display-inline">In the case of any dividend treated as not
from sources within 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.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H932BD7628F4048859356F187803D5922"><enum>(3)</enum><text>Subsection (c) of
section 2104 is amended in the last sentence by striking <quote>or to a debt
obligation of a domestic corporation</quote> and all that follows and inserting
a period.</text>
</paragraph></subsection><subsection id="H65BC057097F24A5CA97BBD980DCBD0AD"><enum>(d)</enum><header>Effective
date</header>
<paragraph id="HF193C3DD65424023B25551B97A293B49"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years beginning after December 31,
2010.</text>
</paragraph><paragraph id="H33A6B94216C44FDAA5E4BA77916FF10A"><enum>(2)</enum><header>Grandfather rule
for outstanding debt obligations</header>
<subparagraph id="HDD7D8410F1E7466B85F05C580CF85509"><enum>(A)</enum><header>In
general</header><text>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.</text>
</subparagraph><subparagraph id="H033123C4AB0543219E44F68576E6F8BC"><enum>(B)</enum><header>Exception for
related party debt</header><text display-inline="yes-display-inline">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)).</text>
</subparagraph><subparagraph id="H653D6A08F3C043A586A984A18C6FB78A"><enum>(C)</enum><header>Significant
modifications treated as new issues</header><text>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.</text>
</subparagraph></paragraph></subsection></section><section id="HC48C12EA1B914460A4AA560BD4CCDD86"><enum>208.</enum><header>Source rules
for income on guarantees</header>
<subsection id="HEB24DF6869A24351AC3595E6336613E9"><enum>(a)</enum><header>Amounts sourced
within the United States</header><text display-inline="yes-display-inline">Subsection (a) of section 861 is amended by
adding at the end the following new paragraph:</text>
<quoted-block act-name="" id="H4B83340C3B5D41EB94A42FA8E329223D" style="OLC">
<paragraph id="HDF6A1E92187E4F779B1CD8FD2091AF76"><enum>(9)</enum><header>Guarantees</header><text>Amounts
received, directly or indirectly, from—</text>
<subparagraph id="HA10694F166164E00B2167B6D6C07051F"><enum>(A)</enum><text>a noncorporate
resident or domestic corporation for the provision of a guarantee of any
indebtedness of such resident or corporation, or</text>
</subparagraph><subparagraph id="H0EBE7F0E028842AF8014235B8FB59128"><enum>(B)</enum><text>any foreign person
for the provision of a guarantee of any indebtedness of such person, if such
amount is connected with income which is effectively connected (or treated as
effectively connected) with the conduct of a trade or business in the United
States.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HD80A01E47AEE463AA1E918E9BD34C6A6"><enum>(b)</enum><header>Amounts sourced
without the United States</header><text>Subsection (a) of section 862 is
amended by striking <quote>and</quote> at the end of paragraph (7), by striking
the period at the end of paragraph (8) and inserting <quote>; and</quote>, and
by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HDF952E17A46E4BADB198E79F8DC27CD4" style="OLC">
<paragraph id="HEBBDBB07549A45FFB5FF42A755829B7B"><enum>(9)</enum><text display-inline="yes-display-inline">amounts received, directly or indirectly,
from a foreign person for the provision of a guarantee of indebtedness of such
person other than amounts which are derived from sources within the United
States as provided in section
861(a)(9).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFC2ACC08E7F74AB68D00D7D8D7F66A11"><enum>(c)</enum><header>Conforming
amendment</header><text>Clause (ii) of section 864(c)(4)(B) is amended by
striking <quote>dividends or interest</quote> and inserting <quote>dividends,
interest, or amounts received for the provision of guarantees of
indebtedness</quote>.</text>
</subsection><subsection id="H5E4E2922B01A401E918EA3E3AB353305"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
guarantees issued after the date of the enactment of this Act.</text>
</subsection></section><section id="H905B89FCB16D47389ED4E719DE26B750"><enum>209.</enum><header>Limitation on
extension of statute of limitations for failure to notify Secretary of certain
foreign transfers</header>
<subsection id="H1C115DEDEC554A28AA2D1D10C333F4EE"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (8) of
section 6501(c) is amended—</text>
<paragraph id="H11F2EA60FC4C495594AD542569CAB3E2"><enum>(1)</enum><text>by striking
<quote>In the case of any information</quote> and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="HDEB4A898202F4412A5773F00E51CDFD5" style="OLC">
<subparagraph id="HAD637DC3F62F487B82BC63D2870096EF"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of any
information</text>
</subparagraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HCB70B7312A0140D5BEF3C58961B110C7"><enum>(2)</enum><text>by adding at the
end the following:</text>
<quoted-block display-inline="no-display-inline" id="H6131DBF2B69B4A9CB59D41819397319F" style="OLC">
<subparagraph id="HB7F03B54040D4E9492C9FB0049773382"><enum>(B)</enum><header>Application to
failures due to reasonable cause</header><text display-inline="yes-display-inline">If the failure to furnish the information
referred to in subparagraph (A) is due to reasonable cause and not willful
neglect, subparagraph (A) shall apply only to the item or items related to such
failure.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H5A86E6E999A245DE9E40963EDAD27163"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall take effect as if
included in section 513 of the Hiring Incentives to Restore Employment
Act.</text>
</subsection></section></subtitle><subtitle id="HADB42CCDDE794A9CB9A9076AABB9A68C"><enum>B</enum><header>Other revenue
provisions</header>
<section display-inline="no-display-inline" id="H2CD83AECB4DE4A1CA659CFDA4D81B689" section-type="subsequent-section"><enum>211.</enum><header>Required minimum
10-year term, etc., for grantor retained annuity trusts</header>
<subsection id="H403995A46213422BA0CB23163C79EF72"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (b) of
section 2702 is amended—</text>
<paragraph id="H5741476B9EAD4A769ED5950A0314299A"><enum>(1)</enum><text>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;</text>
</paragraph><paragraph id="HD272A584115A428C9531E790C4DD9543"><enum>(2)</enum><text>by striking
<quote>For purposes of</quote> and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="HBAF8BADC722C4D85813674A817564828" style="OLC">
<paragraph id="H86476B4DCFAD4828988428AA663B5A88"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes
of</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HE530B0C1D728410E8A872A540BE0B715"><enum>(3)</enum><text>by striking
<quote>paragraph (1) or (2)</quote> in paragraph (1)(C) (as so redesignated)
and inserting <quote>subparagraph (A) or (B)</quote>; and</text>
</paragraph><paragraph id="H2FCC7D0A30994BF3A67DBE22EBFEC791"><enum>(4)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HE6AEE2334EE545BF80DDEAD3341C854D" style="OLC">
<paragraph id="HFA9FFA8FFF9B4594AEDBDF22BED0F112"><enum>(2)</enum><header>Additional
requirements with respect to grantor retained annuities</header><text>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—</text>
<subparagraph id="H9E9625DBE23D4F7BA09889B387D0DAEE"><enum>(A)</enum><text>the right to
receive the fixed amounts referred to in such paragraph is for a term of not
less than 10 years,</text>
</subparagraph><subparagraph id="H07C0FC83E4394361A41F5FD7C9D850FF"><enum>(B)</enum><text>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</text>
</subparagraph><subparagraph id="HB4D6F95AFB044225A9C29675BB5F7CA0"><enum>(C)</enum><text>the remainder
interest has a value greater than zero determined as of the time of the
transfer.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HC1C8576128D2486A8D4C4D3E75326527"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to transfers
made after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H2F3BA8A1E95044EF80B8E474CA312083" section-type="subsequent-section"><enum>212.</enum><header>Crude tall oil
ineligible for cellulosic biofuel producer credit</header>
<subsection id="H0CFDEC09A384450381CDDC1F276C5D52"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Clause (iii) of
section 40(b)(6)(E) is amended—</text>
<paragraph id="H44EE3974A56045C2A124A17A4B40A599"><enum>(1)</enum><text>by striking
<quote>or</quote> at the end of subclause (I);</text>
</paragraph><paragraph id="H731E3B6FFA0C46B1A8E94BE33E9266D4"><enum>(2)</enum><text>by striking the
period at the end of subclause (II) and inserting <quote>, or</quote>;</text>
</paragraph><paragraph id="H5761ACAEFDCB436FA12F4B2F2606F0A8"><enum>(3)</enum><text>by adding at the
end the following new subclause:</text>
<quoted-block display-inline="no-display-inline" id="HCC5A958AD8F6428A9F752737A1794C5F" style="OLC">
<subclause id="H99D9F55968B14E0C8AC9DE6362924264"><enum>(III)</enum><text display-inline="yes-display-inline">such fuel has an acid number greater than
25.</text>
</subclause><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="H60516732FF274D938CE406A8CC6FD2B6"><enum>(4)</enum><text>by striking
<quote><header-in-text level="clause" style="OLC">unprocessed</header-in-text></quote> in the heading and inserting
<quote><header-in-text level="clause" style="OLC">certain</header-in-text></quote>.</text>
</paragraph></subsection><subsection id="HBC9C2C06084C4C9C802EEA2E279DC52C"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to fuels sold
or used on or after January 1, 2010.</text>
</subsection></section><section display-inline="no-display-inline" id="H662AA21A2FA84C06AE30CD6CCEDEE601" section-type="subsequent-section"><enum>213.</enum><header>Increase in
information return penalties</header>
<subsection id="H6DF693C8D0EE4811898F91323040916B"><enum>(a)</enum><header>Failure To file
correct information returns</header>
<paragraph id="H36EC48953AC3486EAD5EDD3B564AA0BC"><enum>(1)</enum><header>In
general</header><text>Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section
6721 are each amended by striking <quote>$50</quote> and inserting
<quote>$100</quote>.</text>
</paragraph><paragraph id="H4B497C6D02D64404A2E53AED55B5DA74"><enum>(2)</enum><header>Aggregate annual
limitation</header><text display-inline="yes-display-inline">Subsections
(a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by striking
<quote>$250,000</quote> and inserting <quote>$1,500,000</quote>.</text>
</paragraph></subsection><subsection id="HA9EBB252830C40F7BC851B09D7951AD6"><enum>(b)</enum><header>Reduction where
correction within 30 days</header>
<paragraph id="HFFEC0B47E30F41A7A019D7B8856676D0"><enum>(1)</enum><header>In
general</header><text>Subparagraph (A) of section 6721(b)(1) is amended by
striking <quote>$15</quote> and inserting <quote>$30</quote>.</text>
</paragraph><paragraph id="HC4B3B096F6BB431994CBD010AF40CC2D"><enum>(2)</enum><header>Aggregate annual
limitation</header><text>Subsections (b)(1)(B) and (d)(1)(B) of section 6721
are each amended by striking <quote>$75,000</quote> and inserting
<quote>$250,000</quote>.</text>
</paragraph></subsection><subsection id="H9BC60E4A94174154B1CC99383B6D5BEF"><enum>(c)</enum><header>Reduction where
correction On or before August 1</header>
<paragraph id="HE38F488B58824079ADFE2ED770F3D3A1"><enum>(1)</enum><header>In
general</header><text>Subparagraph (A) of section 6721(b)(2) is amended by
striking <quote>$30</quote> and inserting <quote>$60</quote>.</text>
</paragraph><paragraph id="H2D7ABEC1B5A243ED9A4B6BE634E555A1"><enum>(2)</enum><header>Aggregate annual
limitation</header><text display-inline="yes-display-inline">Subsections
(b)(2)(B) and (d)(1)(C) of section 6721 are each amended by striking
<quote>$150,000</quote> and inserting <quote>$500,000</quote>.</text>
</paragraph></subsection><subsection id="H035E949D2CE548B7AB5D56CF0FEA4E8F"><enum>(d)</enum><header>Aggregate annual
limitations for persons with gross receipts of not more than
$5,000,000</header>
<paragraph id="HC1AEA69EF85F4430826D2ED0392FC424"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 6721(d) is amended—</text>
<subparagraph id="HA0E108EAFCA64D178C05F34EC28104DE"><enum>(A)</enum><text>by striking
<quote>$100,000</quote> in subparagraph (A) and inserting
<quote>$500,000</quote>;</text>
</subparagraph><subparagraph id="H1A5321AF59994B759E84A82F412A0FDB"><enum>(B)</enum><text>by striking
<quote>$25,000</quote> in subparagraph (B) and inserting
<quote>$75,000</quote>; and</text>
</subparagraph><subparagraph id="H551FB0DF57234C67915F8A5359760293"><enum>(C)</enum><text>by striking
<quote>$50,000</quote> in subparagraph (C) and inserting
<quote>$200,000</quote>.</text>
</subparagraph></paragraph><paragraph commented="no" id="HB0DD1A92462446C3A30E93F760E8C4AC"><enum>(2)</enum><header>Technical
amendment</header><text>Paragraph (1) of section 6721(d) is amended by striking
<quote>such taxable year</quote> and inserting <quote>such calendar
year</quote>.</text>
</paragraph></subsection><subsection id="H87341CCFB1E64379BFBF0625FE919D99"><enum>(e)</enum><header>Penalty in case
of intentional disregard</header><text display-inline="yes-display-inline">Paragraph (2) of section 6721(e) is amended
by striking <quote>$100</quote> and inserting <quote>$250</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HD27895876C4244E195D3F1D15EC4B640"><enum>(f)</enum><header>Adjustment for
inflation</header><text>Section 6721 is amended by adding at the end the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H9362A7CDC271441D97C69C121F843E9E" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="H946C8ED1447043A8BA3120B23285A610"><enum>(f)</enum><header display-inline="yes-display-inline">Adjustment for inflation</header>
<paragraph commented="no" display-inline="no-display-inline" id="H3DAD26320EDC47C1A55B4876192AC735"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of any calendar year beginning
after 2014, 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 <quote>calendar year 2011</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H2E45C1DAA7C84613A7E51E51397DE347"><enum>(2)</enum><header>Additional
adjustments made only every fifth year</header><text>Notwithstanding paragraph
(1), in the case of any calendar year beginning after 2015 (other than every
fifth calendar after 2015), each increase determined under paragraph (1) shall
not exceed the amount of such increase determined for the preceding
year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H67037630144F4D559385C2835C970E5D"><enum>(3)</enum><header display-inline="yes-display-inline">Rounding</header><text display-inline="yes-display-inline">If any amount adjusted under paragraph
(1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H0320FDC7110348779EA63CA8BCF95CC4"><enum>(A)</enum><text display-inline="yes-display-inline">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</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H5D04738C59DB46899CABD120273C0D16"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H0FE325DB0EB34F5C9CC0CDD84AF596D7"><enum>(g)</enum><header>Failure To
furnish correct payee statements</header><text>Section 6722 is amended to read
as follows:</text>
<quoted-block display-inline="no-display-inline" id="H1B7F4A7D852941A1B79800FADF96E5A3" style="OLC">
<section id="H9F1C70BF0BDB4634A33B9772D7BCA804"><enum>6722.</enum><header>Failure to
furnish correct payee statements</header>
<subsection id="H576CB0F4B48B469F8440E8958A01D482"><enum>(a)</enum><header>Imposition of
penalty</header>
<paragraph id="HAD5E165DA0F448C2980C1D45A69FC0C2"><enum>(1)</enum><header>General
rule</header><text>In the case of each failure described in paragraph (2) by
any person with respect to a payee statement, such person shall pay a penalty
of $100 for each statement with respect to which such a failure occurs, but the
total amount imposed on such person for all such failures during any calendar
year shall not exceed $1,500,000.</text>
</paragraph><paragraph id="HB6CA30EB78CF4277B79A5508291AEC6D"><enum>(2)</enum><header>Failures subject
to penalty</header><text>For purposes of paragraph (1), the failures described
in this paragraph are—</text>
<subparagraph id="H6A4D60A2497A4B20BAB467E3E84C8216"><enum>(A)</enum><text>any failure to
furnish a payee statement on or before the date prescribed therefor to the
person to whom such statement is required to be furnished, and</text>
</subparagraph><subparagraph id="H8A1E2C8CA2EF4CE0B08BD0AF8FE93ADE"><enum>(B)</enum><text>any failure to
include all of the information required to be shown on a payee statement or the
inclusion of incorrect information.</text>
</subparagraph></paragraph></subsection><subsection id="HC8EF222A87AC475E804DA50E946CC88A"><enum>(b)</enum><header>Reduction where
correction in specified period</header>
<paragraph id="HF9AD539176444AD0ADDB8E7EC9DC476A"><enum>(1)</enum><header>Correction
within 30 days</header><text>If any failure described in subsection (a)(2) is
corrected on or before the day 30 days after the required filing date—</text>
<subparagraph id="H72C2C543BAE14C0D904AAF76D99ED48D"><enum>(A)</enum><text>the penalty
imposed by subsection (a) shall be $30 in lieu of $100, and</text>
</subparagraph><subparagraph id="HA74DC105004D482FB2FADD336F012528"><enum>(B)</enum><text>the total amount
imposed on the person for all such failures during any calendar year which are
so corrected shall not exceed $250,000.</text>
</subparagraph></paragraph><paragraph id="HF37116ECD5F24345875FF677DD90B8F9"><enum>(2)</enum><header>Failures
corrected on or before August 1</header><text>If any failure described in
subsection (a)(2) is corrected after the 30th day referred to in paragraph (1)
but on or before August 1 of the calendar year in which the required filing
date occurs—</text>
<subparagraph id="HE5C5071E1DE6469A9802E66E348E662E"><enum>(A)</enum><text>the penalty
imposed by subsection (a) shall be $60 in lieu of $100, and</text>
</subparagraph><subparagraph id="H065D4AFD2AD84587B9C0A6B8AFEAEF37"><enum>(B)</enum><text>the total amount
imposed on the person for all such failures during the calendar year which are
so corrected shall not exceed $500,000.</text>
</subparagraph></paragraph></subsection><subsection id="H4F6C50FF1D72412CAAA58EF88CCBAC74"><enum>(c)</enum><header>Exception for de
minimis failures</header>
<paragraph id="H9EF3C8B238794CEF8B9315D9DF2ECEB7"><enum>(1)</enum><header>In
general</header><text>If—</text>
<subparagraph id="HCD52D28014644820B21C156F63A55980"><enum>(A)</enum><text>a payee statement
is furnished to the person to whom such statement is required to be
furnished,</text>
</subparagraph><subparagraph id="H92286BFE6BBE48969B6ACE66AEE13226"><enum>(B)</enum><text>there is a failure
described in subsection (a)(2)(B) (determined after the application of section
6724(a)) with respect to such statement, and</text>
</subparagraph><subparagraph id="H88E6FEA5EDD9486D818AF172E9CBDE55"><enum>(C)</enum><text>such failure is
corrected on or before August 1 of the calendar year in which the required
filing date occurs,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">for
purposes of this section, such statement shall be treated as having been
furnished with all of the correct required information.</continuation-text></paragraph><paragraph id="H010DD55943684C7DAA8F25A600392B43"><enum>(2)</enum><header>Limitation</header><text>The
number of payee statements to which paragraph (1) applies for any calendar year
shall not exceed the greater of—</text>
<subparagraph id="H580069AA228746E0B7490609FA852A25"><enum>(A)</enum><text>10, or</text>
</subparagraph><subparagraph id="HA1FE0EF740F84364B0E6874C2AF19E4B"><enum>(B)</enum><text>one-half of 1
percent of the total number of payee statements required to be filed by the
person during the calendar year.</text>
</subparagraph></paragraph></subsection><subsection id="H7F16F483C2C24FB8A1858B3868FCD9CA"><enum>(d)</enum><header>Lower
limitations for persons with gross receipts of not more than
$5,000,000</header>
<paragraph id="H15D6FD11B36B441E8CACB043759060DE"><enum>(1)</enum><header>In
general</header><text>If any person meets the gross receipts test of paragraph
(2) with respect to any calendar year, with respect to failures during such
calendar year—</text>
<subparagraph id="H80B0AF0143044506BBA1C82C12071F2F"><enum>(A)</enum><text>subsection (a)(1)
shall be applied by substituting <quote>$500,000</quote> for
<quote>$1,500,000</quote>,</text>
</subparagraph><subparagraph id="H9A84C73E8D36415F9B270567BF71A9B6"><enum>(B)</enum><text>subsection
(b)(1)(B) shall be applied by substituting <quote>$75,000</quote> for
<quote>$250,000</quote>, and</text>
</subparagraph><subparagraph id="H65F5428D5C454484B186CD222F152EBB"><enum>(C)</enum><text>subsection
(b)(2)(B) shall be applied by substituting <quote>$200,000</quote> for
<quote>$500,000</quote>.</text>
</subparagraph></paragraph><paragraph id="HE2CABC96E72745C5A7D09D9D92F0897E"><enum>(2)</enum><header>Gross receipts
test</header><text>A person meets the gross receipts test of this paragraph if
such person meets the gross receipts test of section 6721(d)(2).</text>
</paragraph></subsection><subsection id="HB1BCBE29A64D4C959C1B476181055BDF"><enum>(e)</enum><header>Penalty in case
of intentional disregard</header><text>If 1 or more failures to which
subsection (a) applies are due to intentional disregard of the requirement to
furnish a payee statement (or the correct information reporting requirement),
then, with respect to each such failure—</text>
<paragraph id="HF55C7D3A3D104B079DE504FB3A283E5B"><enum>(1)</enum><text>subsections (b),
(c), and (d) shall not apply,</text>
</paragraph><paragraph id="HFE30B44AF6F34FA09DB96E20F1667D85"><enum>(2)</enum><text>the penalty
imposed under subsection (a)(1) shall be $250, or, if greater—</text>
<subparagraph id="H4A01402EC3E8455183B78A6990BE2987"><enum>(A)</enum><text>in the case of a
payee statement other than a statement required under section 6045(b), 6041A(e)
(in respect of a return required under section 6041A(b)), 6050H(d), 6050J(e),
6050K(b), or 6050L(c), 10 percent of the aggregate amount of the items required
to be reported correctly, or</text>
</subparagraph><subparagraph id="HC5D17F3384AD4F0D9F1A685B07DDD09A"><enum>(B)</enum><text>in the case of a
payee statement required under section 6045(b), 6050K(b), or 6050L(c), 5
percent of the aggregate amount of the items required to be reported correctly,
and</text>
</subparagraph></paragraph><paragraph id="H4C596701C7884EDA975C13CE9B51490C"><enum>(3)</enum><text>in the case of any
penalty determined under paragraph (2)—</text>
<subparagraph id="H5BC4114881514E2B8E3E87DFEB584635"><enum>(A)</enum><text>the $1,500,000
limitation under subsection (a) shall not apply, and</text>
</subparagraph><subparagraph id="H5910F0597E274973A71D146BD048AAD9"><enum>(B)</enum><text>such penalty shall
not be taken into account in applying such limitation to penalties not
determined under paragraph (2).</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H2AE792D393404733A257E3135BCC4B2B"><enum>(f)</enum><header display-inline="yes-display-inline">Adjustment for inflation</header>
<paragraph commented="no" display-inline="no-display-inline" id="H17CB7AA844BC4EE8A4FF5DAA6AF69684"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of any calendar year beginning
after 2014, each of the dollar amounts under subsections (a), (b), (d)(1), 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
<quote>calendar year 2011</quote> for <quote>calendar year 1992</quote> in
subparagraph (B) thereof.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HE204097289284F69A248B0C8863C28F9"><enum>(2)</enum><header>Additional
adjustments made only every fifth year</header><text>Notwithstanding paragraph
(1), in the case of any calendar year beginning after 2015 (other than every
fifth calendar after 2015), each increase determined under paragraph (1) shall
not exceed the amount of such increase determined for the preceding
year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H5064B66D8D0C4E06886C6677C1E0A84E"><enum>(3)</enum><header display-inline="yes-display-inline">Rounding</header><text display-inline="yes-display-inline">If any amount adjusted under paragraph
(1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HE6AF4668543643E58B4864B29A171BED"><enum>(A)</enum><text display-inline="yes-display-inline">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</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HB708D2DB9F7D49ED8691943DD1784AC7"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HDCB6F73447914C68B447923B9EE37DE7"><enum>(h)</enum><header>Effective
date</header><text>The amendments made by this section shall apply with respect
to information returns required to be filed on or after January 1, 2011.</text>
</subsection></section><section display-inline="no-display-inline" id="HF96CFFAD43D441D5A789B9AFB5B349CC" section-type="subsequent-section"><enum>214.</enum><header>Treatment of
securities of a controlled corporation exchanged for assets in certain
reorganizations</header>
<subsection id="H69109E53A5584BC2965E596D601FF97D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 361 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H4D7C6CFB56B24FEEBC7AAB2CF4DBFAC5" style="OLC">
<subsection id="H32E3A780A23E415A981482F47954ED4C"><enum>(d)</enum><header>Special rules
for transactions involving section 355 distributions</header><text display-inline="yes-display-inline">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—</text>
<paragraph id="HE7C8130CB9054CF2A1233555E412C254"><enum>(1)</enum><text>this section shall
be applied by substituting <quote>stock other than nonqualified preferred stock
(as defined in section 351(g)(2))</quote> for <quote>stock or
securities</quote> in subsections (a) and (b)(1), and</text>
</paragraph><paragraph id="H67DA500977444F8F9DB5861BA5B84E8C"><enum>(2)</enum><text>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))).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H045BD50EE10C4401ACEF57EB73E3B753"><enum>(b)</enum><header>Conforming
amendment</header><text>Paragraph (3) of section 361(b) is amended by striking
the last sentence.</text>
</subsection><subsection id="H29EFFFB239F94813A777014322DEC8B6"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="HF59760ACDF1C4745BC70FCDB1807CD42"><enum>(1)</enum><header>In
general</header><text>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.</text>
</paragraph><paragraph id="H0463DBE67AA949C2B3121339BC23B36C"><enum>(2)</enum><header>Transition
rule</header><text display-inline="yes-display-inline">The amendments made by
this section shall not apply to any exchange pursuant to a transaction which
is—</text>
<subparagraph id="H7CE77DFC80554DC290B9F27A946840E8"><enum>(A)</enum><text>made pursuant to
an agreement which was binding on March 15, 2010, and at all times
thereafter;</text>
</subparagraph><subparagraph id="H5B3D693B27CD4400A75E50C2047B70C8"><enum>(B)</enum><text>described in a
ruling request submitted to the Internal Revenue Service on or before such
date; or</text>
</subparagraph><subparagraph id="HD56B692693A348419004DE0D95A517B6"><enum>(C)</enum><text>described on or
before such date in a public announcement or in a filing with the Securities
and Exchange Commission.</text>
</subparagraph></paragraph></subsection></section></subtitle><enum>III</enum><header>Paygo
compliance</header>
<section id="HEAEBCC92F12A4087920A7E071A66B506"><enum>301.</enum><header>Paygo
compliance</header><text display-inline="no-display-inline">The budgetary
effects of this Act, for the purpose of complying with the Statutory
Pay-As-You-Go Act of 2010, shall be determined by reference to the latest
statement titled <quote>Budgetary Effects of PAYGO Legislation</quote> for this
Act, submitted for printing in the Congressional Record by the Chairman of the
House Budget Committee, provided that such statement has been submitted prior
to the vote on passage.</text>
</section>