[Congressional Record Volume 163, Number 196 (Friday, December 1, 2017)]
[Senate]
[Pages S7731-S7743]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1842. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment
intended to be proposed by him to the bill H.R. 1, to provide for
reconciliation pursuant to titles II and V of the concurrent resolution
on the budget for fiscal year 2018; which was ordered to lie on the
table; as follows:
Beginning on page 1, strike line 1 and all that follows
through page 123, line 22, and insert the following:
TITLE I
SEC. 11000. SHORT TITLE, ETC.
(a) Short Title.--This title may be cited as the ``Tax Cuts
and Jobs Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title 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.
Subtitle A--Individual Tax Reform
PART I--TAX RATE REFORM
SEC. 11001. MODIFICATION OF RATES.
(a) In General.--Section 1 is amended by adding at the end
the following new subsection:
``(j) Modifications for Taxable Years 2018 Through 2025.--
``(1) In general.--In the case of a taxable year beginning
after December 31, 2017, and before January 1, 2026--
``(A) subsection (i) shall not apply, and
``(B) this section (other than subsection (i)) shall be
applied as provided in paragraphs (2) through (7).
``(2) Rate tables.--
``(A) Married individuals filing joint returns and
surviving spouses.--The following table shall be applied in
lieu of the table contained in subsection (a):
``If taxable income is: The tax is:
10% of taxable income..................................................
$1,905, plus 12% of the excess over $19,050............................
$8,907, plus 22% of the excess over $77,400............................
$22,679, plus 24% of the excess over $140,000..........................
$65,879, plus 32% of the excess over $320,000..........................
$91,479, plus 35% of the excess over $400,000..........................
$301,479 plus 38.5% of the excess over $1,000,000......................
``(B) Heads of households.--The following table shall be
applied in lieu of the table contained in subsection (b):
``If taxable income is: The tax is:
10% of taxable income..................................................
$1,360, plus 12% of the excess over $13,600............................
$5,944, plus 22% of the excess over $51,800............................
$9,948, plus 24% of the excess over $70,000............................
$31,548, plus 32% of the excess over $160,000..........................
$44,348, plus 35% of the excess over $200,000..........................
$149,348, plus 38.5% of the excess over $500,000.......................
``(C) Unmarried individuals other than surviving spouses
and heads of households.--The following table shall be
applied in lieu of the table contained in subsection (c):
``If taxable income is: The tax is:
10% of taxable income..................................................
$952.50, plus 12% of the excess over $9,525............................
$4,453.50, plus 22% of the excess over $38,700.........................
$11,339.50, plus 24% of the excess over $70,000........................
$32,939.50, plus 32% of the excess over $160,000.......................
$45,739.50, plus 35% of the excess over $200,000.......................
$150,739.50, plus 38.5% of the excess over $500,000....................
``(D) Married individuals filing separate returns.--The
following table shall be applied in lieu of the table
contained in subsection (d):
``If taxable income is: The tax is:
10% of taxable income..................................................
$952.50, plus 12% of the excess over $9,525............................
$4,453.50, plus 22% of the excess over $38,700.........................
$11,339.50, plus 24% of the excess over $70,000........................
$32,939.50, plus 32% of the excess over $160,000.......................
$45,739.50, plus 35% of the excess over $200,000.......................
$150,739.50, plus 38.5% of the excess over $500,000....................
``(E) Estates and trusts.--The following table shall be
applied in lieu of the table contained in subsection (e):
``If taxable income is: The tax is:
10% of taxable income..................................................
$255, plus 24% of the excess over $2,550...............................
$1,839, plus 35% of the excess over $9,150.............................
$3,011.50, plus 38.5% of the excess over $12,500.......................
``(F) References to rate tables.--Any reference in this
title to a rate of tax under subsection (c) shall be treated
as a reference to the corresponding rate bracket under
subparagraph (C) of this paragraph, except that the reference
in section 3402(q)(1) to the third lowest rate of tax
applicable under subsection (c) shall be treated as a
reference to the fourth lowest rate of tax under subparagraph
(C).
``(3) Adjustments, elimination of marriage penalty; etc.--
``(A) No adjustment in 2018.--The tables contained in
paragraph (2) shall apply without adjustment for taxable
years beginning after December 31, 2017, and before January
1, 2019.
``(B) Subsequent years.--For taxable years beginning after
December 31, 2018, the Secretary shall prescribe tables which
shall apply in lieu of the tables contained in paragraph (2)
in the same manner as under paragraphs (1) and (2) of
subsection (f), except that in prescribing such tables--
``(i) subsection (f)(3) shall be applied by substituting
`calendar year 2017' for `calendar year 2016' in subparagraph
(A)(ii) thereof, and
``(ii) subsection (f)(7) shall not apply and--
``(I) the maximum taxable income in each of the rate
brackets in the table contained in paragraph (2)(A) (and the
minimum taxable income in the next higher taxable income
bracket with respect to each such bracket in such table)
shall be 200 percent of the maximum taxable income in the
corresponding rate bracket in the table contained in
paragraph (2)(C) (after any other adjustment under paragraph
(3)), and
``(II) the comparable taxable income amounts in the table
contained in paragraph (2)(D) shall be \1/2\ of the amounts
determined under subparagraph (A).
``(4) Special rules for certain children with unearned
income.--
``(A) In general.--In the case of a child to whom
subsection (g) applies for the taxable year, the rules of
subparagraphs (B) and (C) shall apply in lieu of the rule
under subsection (g)(1).
``(B) Modifications to applicable rate brackets.--In
determining the amount of tax imposed by this section for the
taxable year on a child described in subparagraph (A), the
income tax table otherwise applicable under this subsection
to the child shall be applied with the following
modifications:
``(i) 24-percent bracket.--The maximum taxable income which
is taxed at a rate below 24 percent shall not be more than
the earned taxable income of such child.
``(ii) 35-percent bracket.--The maximum taxable income
which is taxed at a rate below 35 percent shall not be more
than the sum of--
``(I) the earned taxable income of such child, plus
``(II) the minimum taxable income for the 35-percent
bracket in the table under paragraph (2)(E) (as adjusted
under paragraph (3)) for the taxable year.
``(iii) 38.5-percent bracket.--The maximum taxable income
which is taxed at a rate below 38.5 percent shall not be more
than the sum of--
``(I) the earned taxable income of such child, plus
``(II) the minimum taxable income for the 38.5-percent
bracket in the table under paragraph (2)(E) (as adjusted
under paragraph (3)) for the taxable year.
[[Page S7732]]
``(C) Coordination with capital gains rates.--For purposes
of applying section 1(h) (after the modifications under
paragraph (5))--
``(i) the maximum zero rate amount shall not be more than
the sum of--
``(I) the earned taxable income of such child, plus
``(II) the amount in effect under paragraph (5)(B)(i)(IV)
for the taxable year, and
``(ii) the maximum 15-percent rate amount shall not be more
than the sum of--
``(I) the earned taxable income of such child, plus
``(II) the amount in effect under paragraph (5)(B)(ii)(IV)
for the taxable year.
``(D) Earned taxable income.--For purposes of this
paragraph, the term `earned taxable income' means, with
respect to any child for any taxable year, the taxable income
of such child reduced (but not below zero) by the net
unearned income (as defined in subsection (g)(4)) of such
child.
``(5) Application of current income tax brackets to capital
gains brackets.--
``(A) In general.--Section 1(h)(1) shall be applied--
``(i) by substituting `below the maximum zero rate amount'
for `which would (without regard to this paragraph) be taxed
at a rate below 25 percent' in subparagraph (B)(i), and
``(ii) by substituting `below the maximum 15-percent rate
amount' for `which would (without regard to this paragraph)
be taxed at a rate below 39.6 percent' in subparagraph
(C)(ii)(I).
``(B) Maximum amounts defined.--For purposes of applying
section 1(h) with the modifications described in subparagraph
(A)--
``(i) Maximum zero rate amount.--The maximum zero rate
amount shall be--
``(I) in the case of a joint return or surviving spouse,
$77,200 (\1/2\ such amount in the case of a married
individual filing a separate return),
``(II) in the case of an individual who is a head of
household (as defined in section 2(b)), $51,700,
``(III) in the case of any other individual (other than an
estate or trust), an amount equal to \1/2\ of the amount in
effect for the taxable year under clause (i), and
``(IV) in the case of an estate or trust, $2,600.
``(ii) Maximum 15-percent rate amount.--The maximum 15-
percent rate amount shall be--
``(I) in the case of a joint return or surviving spouse,
$479,000 (\1/2\ such amount in the case of a married
individual filing a separate return),
``(II) in the case of an individual who is the head of a
household (as defined in section 2(b)), $452,400,
``(III) in the case of any other individual (other than an
estate or trust), $425,800, and
``(IV) in the case of an estate or trust, $12,700.
``(C) Inflation adjustment.--In the case of any taxable
year beginning after 2018, each of the dollar amounts in
clauses (i) and (ii) of subparagraph (B) shall be increased
by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
subsection (f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2017'
for `calendar year 2016' in subparagraph (A)(ii) thereof.
``(6) Section 15 not to apply.--Section 15 shall not apply
to any change in a rate of tax by reason of this
subsection.''.
(b) Due Diligence Tax Preparer Requirement With Respect to
Head of Household Filing Status.--Subsection (g) of section
6695 is amended to read as follows:
``(g) Failure to Be Diligent in Determining Eligibility for
Certain Tax Benefits.--Any person who is a tax return
preparer with respect to any return or claim for refund who
fails to comply with due diligence requirements imposed by
the Secretary by regulations with respect to determining--
``(1) eligibility to file as a head of household (as
defined in section 2(b)) on the return, or
``(2) eligibility for, or the amount of, the credit
allowable by section 24, 25A(a)(1), or 32,
shall pay a penalty of $500 for each such failure.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11002. INFLATION ADJUSTMENTS BASED ON CHAINED CPI.
(a) In General.--Subsection (f) of section 1 is amended by
striking paragraph (3) and by inserting after paragraph (2)
the following new paragraph:
``(3) Cost-of-living adjustment.--For purposes of this
subsection--
``(A) In general.--The cost-of-living adjustment for any
calendar year is the percentage (if any) by which--
``(i) the C-CPI-U for the preceding calendar year, exceeds
``(ii) the CPI for calendar year 2016, multiplied by the
amount determined under subparagraph (B).
``(B) Amount determined.--The amount determined under this
clause is the amount obtained by dividing--
``(i) the C-CPI-U for calendar year 2016, by
``(ii) the CPI for calendar year 2016.
``(C) Special rule for adjustments with a base year after
2016.--For purposes of any provision of this title which
provides for the substitution of a year after 2016 for `2016'
in subparagraph (A)(ii), subparagraph (A) shall be applied by
substituting `the C-CPI-U for calendar year 2016' for `the
CPI for calendar year 2016' and all that follows in clause
(ii) thereof.''.
(b) C-CPI-U.--Subsection (f) of section 1 is amended by
striking paragraph (7), by redesignating paragraph (6) as
paragraph (7), and by inserting after paragraph (5) the
following new paragraph:
``(6) C-CPI-U.--For purposes of this subsection--
``(A) In general.--The term `C-CPI-U' means the Chained
Consumer Price Index for All Urban Consumers (as published by
the Bureau of Labor Statistics of the Department of Labor).
The values of the Chained Consumer Price Index for All Urban
Consumers taken into account for purposes of determining the
cost-of-living adjustment for any calendar year under this
subsection shall be the latest values so published as of the
date on which such Bureau publishes the initial value of the
Chained Consumer Price Index for All Urban Consumers for the
month of August for the preceding calendar year.
``(B) Determination for calendar year.--The C-CPI-U for any
calendar year is the average of the C-CPI-U as of the close
of the 12-month period ending on August 31 of such calendar
year.''.
(c) Application to Permanent Tax Tables.--Section
1(f)(2)(A) is amended by inserting ``, determined by
substituting `1992' for `2016' in paragraph (3)(A)(ii)''.
(d) Application to Other Internal Revenue Code of 1986
Provisions.--
(1) The following sections are each amended by striking
``for `calendar year 1992' in subparagraph (B)'' and
inserting ``for `calendar year 2016' in subparagraph
(A)(ii)'':
(A) Section 23(h)(2).
(B) Paragraphs (1)(A)(ii) and (2)(A)(ii) of section 25A(h).
(C) Section 25B(b)(3)(B).
(D) Subsection (b)(2)(B)(ii)(II), and clauses (i) and (ii)
of subsection (j)(1)(B), of section 32.
(E) Section 36B(f)(2)(B)(ii)(II).
(F) Section 41(e)(5)(C)(i).
(G) Subsections (e)(3)(D)(ii) and (h)(3)(H)(i)(II) of
section 42.
(H) Section 45R(d)(3)(B)(ii).
(I) Section 62(d)(3)(B).
(J) Section 125(i)(2)(B).
(K) Section 135(b)(2)(B)(ii).
(L) Section 137(f)(2).
(M) Section 146(d)(2)(B).
(N) Section 147(c)(2)(H)(ii).
(O) Section 179(b)(6)(A)(ii).
(P) Subsections (b)(5)(C)(i)(II) and (g)(8)(B) of section
219.
(Q) Section 220(g)(2).
(R) Section 221(f)(1)(B).
(S) Section 223(g)(1)(B).
(T) Section 408A(c)(3)(D)(ii).
(U) Section 430(c)(7)(D)(vii)(II).
(V) Section 512(d)(2)(B).
(W) Section 513(h)(2)(C)(ii).
(X) Section 831(b)(2)(D)(ii).
(Y) Section 877A(a)(3)(B)(i)(II).
(Z) Section 2010(c)(3)(B)(ii).
(AA) Section 2032A(a)(3)(B).
(BB) Section 2503(b)(2)(B).
(CC) Section 4261(e)(4)(A)(ii).
(DD) Section 5000A(c)(3)(D)(ii).
(EE) Section 6323(i)(4)(B).
(FF) Section 6334(g)(1)(B).
(GG) Section 6601(j)(3)(B).
(HH) Section 6651(i)(1).
(II) Section 6652(c)(7)(A).
(JJ) Section 6695(h)(1).
(KK) Section 6698(e)(1).
(LL) Section 6699(e)(1).
(MM) Section 6721(f)(1).
(NN) Section 6722(f)(1).
(OO) Section 7345(f)(2).
(PP) Section 7430(c)(1).
(QQ) Section 9831(d)(2)(D)(ii)(II).
(2) Section 41(e)(5)(C)(ii) is amended--
(A) by striking ``1(f)(3)(B)'' and inserting
``1(f)(3)(A)(ii)'', and
(B) by striking ``1992'' and inserting ``2016''.
(3) Section 42(h)(6)(G) is amended--
(A) by striking ``for `calendar year 1987' '' in clause
(i)(II) and inserting ``for `calendar year 2016' in
subparagraph (A)(ii) thereof'', and
(B) by striking ``if the CPI for any calendar year'' and
all that follows in clause (ii) and inserting ``if the C-CPI-
U for any calendar year (as defined in section 1(f)(6))
exceeds the C-CPI-U for the preceding calendar year by more
than 5 percent, the C-CPI-U for the base calendar year shall
be increased such that such excess shall never be taken into
account under clause (i). In the case of a base calendar year
before 2017, the C-CPI-U for such year shall be determined by
multiplying the CPI for such year by the amount determined
under section 1(f)(3)(B).''.
(4) Section 132(f)(6)(A)(ii) is amended by striking ``for
`calendar year 1992' '' and inserting ``for `calendar year
2016' in subparagraph (A)(ii) thereof''.
(5) Section 162(o)(3) is amended by striking ``adjusted for
changes in the Consumer Price Index (as defined in section
1(f)(5)) since 1991'' and inserting ``adjusted by increasing
any such amount under the 1991 agreement by an amount equal
to--
``(A) such amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 1990' for
`calendar year 2016' in subparagraph (A)(ii) thereof''.
(6) So much of clause (ii) of section 213(d)(10)(B) as
precedes the last sentence is amended to read as follows:
[[Page S7733]]
``(ii) Medical care cost adjustment.--For purposes of
clause (i), the medical care cost adjustment for any calendar
year is the percentage (if any) by which--
``(I) the medical care component of the C-CPI-U (as defined
in section 1(f)(6)) for August of the preceding calendar
year, exceeds
``(II) such component of the CPI (as defined in section
1(f)(4)) for August of 1996, multiplied by the amount
determined under section 1(f)(3)(B).''.
(7) Section 877(a)(2) is amended by striking ``for `1992'
in subparagraph (B)'' and inserting ``for `2016' in
subparagraph (A)(ii)''.
(8) Section 911(b)(2)(D)(ii)(II) is amended by striking
``for `1992' in subparagraph (B)'' and inserting ``for `2016'
in subparagraph (A)(ii)''.
(9) Paragraph (2) of section 1274A(d) is amended to read as
follows:
``(2) Adjustment for inflation.--In the case of any debt
instrument arising out of a sale or exchange during any
calendar year after 1989, each dollar amount contained in the
preceding provisions of this section shall be increased by an
amount equal to--
``(A) such amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 1988' for
`calendar year 2016' in subparagraph (A)(ii) thereof.
Any increase under the preceding sentence shall be rounded to
the nearest multiple of $100 (or, if such increase is a
multiple of $50, such increase shall be increased to the
nearest multiple of $100).''.
(10) Section 4161(b)(2)(C)(i)(II) is amended by striking
``for `1992' in subparagraph (B)'' and inserting ``for `2016'
in subparagraph (A)(ii)''.
(11) Section 4980I(b)(3)(C)(v)(II) is amended by striking
``for `1992' in subparagraph (B)'' and inserting ``for `2016'
in subparagraph (A)(ii)''.
(12) Section 6039F(d) is amended by striking ``subparagraph
(B) thereof shall be applied by substituting `1995' for
`1992' '' and inserting ``subparagraph (A)(ii) thereof shall
be applied by substituting `1995' for `2016' ''.
(13) Section 7872(g)(5) is amended to read as follows:
``(5) Adjustment of limit for inflation.--In the case of
any loan made during any calendar year after 1986, the dollar
amount in paragraph (2) shall be increased by an amount equal
to--
``(A) such amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 1985' for
`calendar year 2016' in subparagraph (A)(ii) thereof.
Any increase under the preceding sentence shall be rounded to
the nearest multiple of $100 (or, if such increase is a
multiple of $50, such increase shall be increased to the
nearest multiple of $100).''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
PART II--DEDUCTION FOR QUALIFIED BUSINESS INCOME OF PASS-THRU ENTITIES
SEC. 11011. DEDUCTION FOR QUALIFIED BUSINESS INCOME.
(a) In General.--Part VI of subchapter B of chapter 1 is
amended by adding at the end the following new section:
``SEC. 199A. QUALIFIED BUSINESS INCOME.
``(a) In General.--In the case of a taxpayer other than a
corporation, there shall be allowed as a deduction for any
taxable year an amount equal to the lesser of--
``(1) the combined qualified business income amount of the
taxpayer, or
``(2) an amount equal to 17.4 percent of the excess (if
any) of--
``(A) the taxable income of the taxpayer for the taxable
year, over
``(B) any net capital gain (as defined in section 1(h)) of
the taxpayer for the taxable year.
``(b) Combined Qualified Business Income Amount.--For
purposes of this section--
``(1) In general.--The term `combined qualified business
income amount' means, with respect to any taxable year, an
amount equal to--
``(A) the sum of the amounts determined under paragraph (2)
for each qualified trade or business carried on by the
taxpayer, plus
``(B) 17.4 percent of the aggregate amount of the qualified
REIT dividends and qualified cooperative dividends of the
taxpayer for the taxable year.
``(2) Determination of deductible amount for each trade or
business.--The amount determined under this paragraph with
respect to any qualified trade or business is the lesser of--
``(A) 17.4 percent of the taxpayer's qualified business
income with respect to the qualified trade or business, or
``(B) 50 percent of the W-2 wages with respect to the
qualified trade or business.
``(3) Modifications to the wage limit based on taxable
income.--
``(A) Exception from wage limit.--In the case of any
taxpayer whose taxable income for the taxable year does not
exceed the threshold amount, paragraph (2) shall be applied
without regard to subparagraph (B).
``(B) Phase-in of limit for certain taxpayers.--
``(i) In general.--If--
``(I) the taxable income of a taxpayer for any taxable year
exceeds the threshold amount, but does not exceed the sum of
the threshold amount plus $50,000 ($100,000 in the case of a
joint return), and
``(II) the amount determined under paragraph (2)(B)
(determined without regard to this subparagraph) with respect
to any qualified trade or business carried on by the taxpayer
is less than the amount determined under paragraph (2)(A)
with respect such trade or business,
then paragraph (2) shall be applied with respect to such
trade or business without regard to subparagraph (B) thereof
and by reducing the amount determined under subparagraph (A)
thereof by the amount determined under clause (ii).
``(ii) Amount of reduction.--The amount determined under
this subparagraph is the amount which bears the same ratio to
the excess amount as--
``(I) the amount by which the taxpayer's taxable income for
the taxable year exceeds the threshold amount, bears to
``(II) $50,000 ($100,000 in the case of a joint return).
``(iii) Excess amount.--For purposes of clause (ii), the
excess amount is the excess of--
``(I) the amount determined under paragraph (2)(A)
(determined without regard to this paragraph), over
``(II) the amount determined under paragraph (2)(B)
(determined without regard to this paragraph).
``(4) Wages, etc.--
``(A) In general.--The term `W-2 wages' means, with respect
to any person for any taxable year of such person, the
amounts described in paragraphs (3) and (8) of section
6051(a) paid by such person with respect to employment of
employees by such person during the calendar year ending
during such taxable year.
``(B) Limitation to wages attributable to qualified
business income.--Such term shall not include any amount
which is not properly allocable to qualified business income
for purposes of subsection (c)(1).
``(C) Return requirement.--Such term shall not include any
amount which is not properly included in a return filed with
the Social Security Administration on or before the 60th day
after the due date (including extensions) for such return.
``(5) Acquisitions, dispositions, and short taxable
years.--The Secretary shall provide for the application of
this subsection in cases of a short taxable year or where the
taxpayer acquires, or disposes of, the major portion of a
trade or business or the major portion of a separate unit of
a trade or business during the taxable year.
``(c) Qualified Business Income.--For purposes of this
section--
``(1) In general.--The term `qualified business income'
means, for any taxable year, the net amount of qualified
items of income, gain, deduction, and loss with respect to
any qualified trade or business of the taxpayer.
``(2) Carryover of losses.--If the net amount of qualified
income, gain, deduction, and loss with respect to qualified
trade or businesses of the taxpayer amount for any taxable
year is less than zero, such amount shall be treated as a
loss from a qualified trade or business in the succeeding
taxable year.
``(3) Qualified items of income, gain, deduction, and
loss.--For purposes of this subsection--
``(A) In general.--The term `qualified items of income,
gain, deduction, and loss' means items of income, gain,
deduction, and loss to the extent such items are--
``(i) effectively connected with the conduct of a trade or
business within the United States (within the meaning of
section 864(c), determined by substituting `qualified trade
or business (within the meaning of section 199A)' for
`nonresident alien individual or a foreign corporation' or
for `a foreign corporation' each place it appears), and
``(ii) included or allowed in determining taxable income
for the taxable year.
``(B) Exceptions.--The following investment items shall not
be taken into account as a qualified item of income, gain,
deduction, or loss:
``(i) Any item of short-term capital gain, short-term
capital loss, long-term capital gain, or long-term capital
loss.
``(ii) Any dividend, income equivalent to a dividend, or
payment in lieu of dividends described in section
954(c)(1)(G).
``(iii) Any interest income other than interest income
which is properly allocable to a trade or business.
``(iv) Any item of gain or loss described in subparagraph
(C) or (D) of section 954(c)(1) (applied by substituting
`qualified trade or business' for `controlled foreign
corporation').
``(v) Any item of income, gain, deduction, or loss taken
into account under section 954(c)(1)(F) (determined without
regard to clause (ii) thereof and other than items
attributable to notional principal contracts entered into in
transactions qualifying under section 1221(a)(7)).
``(vi) Any amount received from an annuity which is not
received in connection with the trade or business.
``(vii) Any item of deduction or loss properly allocable to
an amount described in any of the preceding clauses.
``(4) Treatment of reasonable compensation and guaranteed
payments.--Qualified business income shall not include--
``(A) reasonable compensation paid to the taxpayer by any
qualified trade or business of the taxpayer for services
rendered with respect to the trade or business,
``(B) any guaranteed payment described in section 707(c)
paid to a partner for services
[[Page S7734]]
rendered with respect to the trade or business, and
``(C) to the extent provided in regulations, any payment
described in section 707(a) to a partner for services
rendered with respect to the trade or business.
``(d) Qualified Trade or Business.--For purposes of this
section--
``(1) In general.--The term `qualified trade or business'
means any trade or business other than a specified service
trade or business.
``(2) Specified service trade or business.--
``(A) In general.--The term `specified service trade or
business' means--
``(i) any trade or business involving the performance of
services described in section 1202(e)(3)(A), including
investing and investment management, trading, or dealing in
securities (as defined in section 475(c)(2)), partnership
interests, or commodities (as defined in section 475(e)(2)).
``(3) Exception for specified service businesses based on
taxpayer's income.--
``(A) In general.--If, for any taxable year, the taxable
income of any taxpayer is less than the sum of the threshold
amount plus $50,000 ($100,000 in the case of a joint return),
then--
``(i) the exception under paragraph (1) shall not apply to
specified service trades or businesses of the taxpayer for
the taxable year, but
``(ii) only the applicable percentage of qualified items of
income, gain, deduction, or loss, and the W-2 wages, of the
taxpayer allocable to such specified service trades or
businesses shall be taken into account in computing the
qualified business income and W-2 wages of the taxpayer for
the taxable year for purposes of applying this section.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the term `applicable percentage' means, with respect to
any taxable year, 100 percent reduced (not below zero) by the
percentage equal to the ratio of--
``(i) the taxable income of the taxpayer for the taxable
year in excess of the threshold amount, bears to
``(ii) $50,000 ($100,000 in the case of a joint return).
``(e) Other Definitions.--For purposes of this section--
``(1) Taxable income.--Taxable income shall be computed
without regard to the deduction allowable under this section.
``(2) Threshold amount.--
``(A) In general.--The term `threshold amount' means
$250,000 (200 percent of such amount in the case of a joint
return).
``(B) Inflation adjustment.--In the case of any taxable
year beginning after 2018, the dollar amount in paragraph (1)
shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins.
If any amount as increased under the preceding sentence is
not a multiple of $1,000, such amount shall be rounded to the
nearest multiple of $1,000.
``(3) Qualified reit dividend.--The term `qualified REIT
dividend' means any dividend from a real estate investment
trust received during the taxable year which--
``(A) is not a capital gain dividend, as defined in section
857(b)(3), and
``(B) is not qualified dividend income, as defined in
section 1(h)(11).
``(4) Qualified cooperative dividend.--The term `qualified
cooperative dividend' means any patronage dividend (as
defined in section 1388(a)), any per-unit retain allocation
(as defined in section 1388(f)), and any qualified written
notice of allocation (as defined in section 1388(c)), or any
similar amount received from an organization described in
subparagraph (B)(ii), which--
``(A) is includible in gross income, and
``(B) is received from--
``(i) an organization or corporation described in section
501(c)(12) or 1381(a), or
``(ii) an organization which is governed under this title
by the rules applicable to cooperatives under this title
before the enactment of subchapter T.
``(f) Special Rules.--
``(1) Application to partnerships and s corporations.--
``(A) In general.--In the case of a partnership or S
corporation--
``(i) this section shall be applied at the partner or
shareholder level,
``(ii) each partner or shareholder shall take into account
such person's allocable share of each qualified item of
income, gain, deduction, and loss, and
``(iii) each partner or shareholder shall be treated for
purposes of subsection (b) as having W-2 wages for the
taxable year in an amount equal to such person's allocable
share of the W-2 wages of the partnership or S corporation
for the taxable year (as determined under regulations
prescribed by the Secretary).
For purposes of clause (iii), a partner's or shareholder's
allocable share of W-2 wages shall be determined in the same
manner as the partner's or shareholder's allocable share of
wage expenses. For purposes of this subparagraph, in the case
of an S corporation, an allocable share shall be the
shareholder's pro rata share of an item.
``(B) Application to trusts and estates.--This section
shall not apply to any trust or estate.
``(C) Treatment of trades or business in puerto rico.--
``(i) In general.--In the case of any taxpayer with
qualified business income from sources within the
commonwealth of Puerto Rico, if all such income is taxable
under section 1 for such taxable year, then for purposes of
determining the qualified business income of such taxpayer
for such taxable year, the term `United States' shall include
the Commonwealth of Puerto Rico.
``(ii) Special rule for applying wage limitation.--In the
case of any taxpayer described in clause (i), the
determination of W-2 wages of such taxpayer with respect to
any qualified trade or business conducted in Puerto Rico
shall be made without regard to any exclusion under section
3401(a)(8) for remuneration paid for services in Puerto Rico.
``(2) Coordination with minimum tax.--For purposes of
determining alternative minimum taxable income under section
55, qualified business income shall be determined without
regard to any adjustments under sections 56 through 59.
``(3) Deduction limited to income taxes.--The deduction
under subsection (a) shall only be allowed for purposes of
this chapter.
``(4) Regulations.--The Secretary shall prescribe such
regulations as are necessary to carry out the purposes of
this section, including regulations--
``(A) for requiring or restricting the allocation of items
and wages under this section and such reporting requirements
as the Secretary determines appropriate, and
``(B) for the application of this section in the case of
tiered entities.
``(g) Termination.--This section shall not apply to taxable
years beginning after December 31, 2025.''.
(b) Accuracy-related Penalty on Determination of Applicable
Percentage.--Section 6662(d)(1) is amended by inserting at
the end the following new subparagraph:
``(C) Special rule for taxpayers claiming section 199a
deduction.--In the case of any taxpayer who claims the
deduction allowed under section 199A for the taxable year,
subparagraph (A) shall be applied by substituting `5 percent'
for `10 percent'.''.
(c) Conforming Amendments.--
(1) Section 170(b)(2)(D) is amended by striking ``, and''
at the end of clause (iv), by redesignating clause (v) as
clause (vi), and by inserting after clause (iv) the following
new clause:
``(v) section 199A, and''.
(2) Section 172(d) is amended by adding at the end the
following new paragraph:
``(8) Qualified business income deduction.--The deduction
under section 199A shall not be allowed.''.
(3) Section 246(b)(1) is amended by inserting ``199A,''
before ``243(a)(1)''.
(4) Section 613(a) is amended by inserting ``and without
the deduction under section 199A'' after ``and without the
deduction under section 199''.
(5) Section 613A(d)(1) is amended by redesignating
subparagraphs (C), (D), and (E) as subparagraphs (D), (E),
and (F), respectively, and by inserting after subparagraph
(B), the following new subparagraph:
``(C) any deduction allowable under section 199A,''.
(6) The table of sections for part VI of subchapter B of
chapter 1 is amended by inserting at the end the following
new item:
``Sec. 199A. Qualified business income.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11012. LIMITATION ON LOSSES FOR TAXPAYERS OTHER THAN
CORPORATIONS.
(a) In General.--Section 461 is amended by adding at the
end the following new subsection:
``(l) Limitation on Excess Business Losses of Noncorporate
Taxpayers.--
``(1) Limitation.--In the case of taxable year of a
taxpayer other than a corporation beginning after December
31, 2017, and before January 1, 2026--
``(A) subsection (j) (relating to limitation on excess farm
losses of certain taxpayers) shall not apply, and
``(B) any excess business loss of the taxpayer for the
taxable year shall not be allowed.
``(2) Disallowed loss carryover.--Any loss which is
disallowed under paragraph (1) shall be treated as a net
operating loss carryover to the following taxable year under
section 172.
``(3) Excess business loss.--For purposes of this
subsection--
``(A) In general.--The term `excess business loss' means
the excess (if any) of--
``(i) the aggregate deductions of the taxpayer for the
taxable year which are attributable to trades or businesses
of such taxpayer (determined without regard to whether or not
such deductions are disallowed for such taxable year under
paragraph (1)), over
``(ii) the sum of--
``(I) the aggregate gross income or gain of such taxpayer
for the taxable year which is attributable to such trades or
businesses, plus
``(II) $250,000 (200 percent of such amount in the case of
a joint return).
``(B) Adjustment for inflation.--In the case of any taxable
year beginning after December 31, 2018, the $250,000 amount
in subparagraph (A)(ii)(II) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins.
If any amount as increased under the preceding sentence is
not a multiple of $1,000,
[[Page S7735]]
such amount shall be rounded to the nearest multiple of
$1,000.
``(4) Application of subsection in case of partnerships and
s corporations.--In the case of a partnership or S
corporation--
``(A) this subsection shall be applied at the partner or
shareholder level, and
``(B) each partner's or shareholder's allocable share of
the items of income, gain, deduction, or loss of the
partnership or S corporation for any taxable year from trades
or businesses attributable to the partnership or S
corporation shall be taken into account by the partner or
shareholder in applying this subsection to the taxable year
of such partner or shareholder with or within which the
taxable year of the partnership or S corporation ends.
For purposes of this paragraph, in the case of an S
corporation, an allocable share shall be the shareholder's
pro rata share of an item.
``(5) Additional reporting.--The Secretary shall prescribe
such additional reporting requirements as the Secretary
determines appropriate to carry out the purposes of this
subsection.
``(6) Coordination with section 469.--This subsection shall
be applied after the application of section 469.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
PART III--TAX BENEFITS FOR FAMILIES AND INDIVIDUALS
SEC. 11021. INCREASE IN STANDARD DEDUCTION.
(a) In General.--Subsection (c) of section 63 is amended by
adding at the end the following new paragraph:
``(7) Special rules for taxable years 2018 through 2025.--
In the case of a taxable year beginning after December 31,
2017, and before January 1, 2026--
``(A) Increase in standard deduction.--Paragraph (2) shall
be applied--
``(i) by substituting `$18,000' for `$4,400' in
subparagraph (B), and
``(ii) by substituting `$12,000' for `$3,000' in
subparagraph (C).
``(B) Adjustment for inflation.--
``(i) In general.--Paragraph (4) shall not apply to the
dollar amounts contained in paragraphs (2)(B) and (2)(C).
``(ii) Adjustment of increased amounts.--In the case of a
taxable year beginning after 2018, the $18,000 and $12,000
amounts in subparagraph (A) shall each be increased by an
amount equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2017' for `2016' in
subparagraph (A)(ii) thereof.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11022. INCREASE IN AND MODIFICATION OF CHILD TAX CREDIT.
(a) In General.--Section 24 is amended by adding at the end
the following new subsection:
``(h) Special Rules for Taxable Years 2018 Through 2025.--
``(1) In general.--In the case of a taxable year beginning
after December 31, 2017, and before January 1, 2026, this
section shall be applied as provided in paragraphs (2)
through (7).
``(2) Credit amount.--Subsection (a) shall be applied by
substituting `$2,000' for `$1,000'.
``(3) Limitation.--In lieu of the amount determined under
subsection (b)(2), the threshold amount shall be--
``(A) in the case of a joint return, $500,000, and
``(B) in the case of an individual who is not married or a
married individual filing a separate return, $250,000.
``(4) Definition of qualifying child.--Paragraph (1) of
subsection (c) shall be applied by substituting `18' for
`17'.
``(5) Partial credit allowed for certain other
dependents.--
``(A) In general.--The credit determined under subsection
(a) (after the application of paragraph (2)) shall be
increased by $500 for each dependent of the taxpayer (as
defined in section 152) other than a qualifying child
described in subsection (c) (after the application of
paragraph (4)).
``(B) Exception for certain noncitizens.--Subparagraph (A)
shall not apply with respect to any individual who would not
be a dependent if subparagraph (A) of section 152(b)(3) were
applied without regard to all that follows `resident of the
United States'.
``(6) Portion of credit refundable.--In lieu of subsection
(d), the following provisions shall apply for purposes of the
credit allowable under this section:
``(A) In general.--The aggregate credits allowed to a
taxpayer under subpart C shall be increased by the lesser
of--
``(i) the credit which would be allowed under this section
without regard to this paragraph and the limitation under
section 26(a), or
``(ii) the amount by which the aggregate amount of credits
allowed by this subpart (determined without regard to this
paragraph) would increase if the limitation imposed by
section 26(a) were increased by an amount equal to the sum of
the taxpayer's payroll taxes for the taxable year.
``(B) Payroll taxes.--
``(i) In general.--For purposes of subparagraph (A), the
term `payroll taxes' means, with respect to any taxpayer for
any taxable year, the amount of the taxes imposed by--
``(I) section 1401 on the self-employment income of the
taxpayer for the taxable year,
``(II) section 3101 on wages received by the taxpayer
during the calendar year in which the taxable year begins,
``(III) section 3111 on wages paid by an employer with
respect to employment of the taxpayer during the calendar
year in which the taxable year begins,
``(IV) sections 3201(a) and 3211(a) on compensation
received by the taxpayer during the calendar year in which
the taxable year begins, and
``(V) section 3221(a) on compensation paid by an employer
with respect to services rendered by the taxpayer during the
calendar year in which the taxable year begins.
``(ii) Coordination with special refund of payroll taxes.--
The term `payroll taxes' shall not include any taxes to the
extent the taxpayer is entitled to a special refund of such
taxes under section 6413(c).
``(iii) Special rule.--Any amounts paid pursuant to an
agreement under section 3121(l) (relating to agreements
entered into by American employers with respect to foreign
affiliates) which are equivalent to the taxes referred to in
subclause (II) or (III) of clause (i) shall be treated as
taxes referred to in such clause.
``(C) Exception for taxpayers excluding foreign earned
income.--Subparagraph (A) shall not apply to any taxpayer for
any taxable year if such taxpayer elects to exclude any
amount from gross income under section 911 for such taxable
year.
``(7) Social security number required.--No credit shall be
allowed under subsection (d) to a taxpayer with respect to
any qualifying child unless the taxpayer includes the social
security number of such child on the return of tax for the
taxable year. For purposes of the preceding sentence, the
term `social security number' means a social security number
issued to an individual by the Social Security
Administration, but only if the social security number is
issued to a citizen of the United States or is issued
pursuant to subclause (I) (or that portion of subclause (III)
that relates to subclause (I)) of section 205(c)(2)(B)(i) of
the Social Security Act.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11023. INCREASED LIMITATION FOR CERTAIN CHARITABLE
CONTRIBUTIONS.
(a) In General.--Section 170(b)(1) is amended by
redesignating subparagraph (G) as subparagraph (H) and by
inserting after subparagraph (F) the following new
subparagraph:
``(G) Increased limitation for cash contributions.--
``(i) In general.--In the case of any contribution of cash
to an organization described in subparagraph (A), the total
amount of such contributions which may be taken into account
under subsection (a) for any taxable year beginning after
December 31, 2017, and before January 1, 2026, shall not
exceed 60 percent of the taxpayer's contribution base for
such year.
``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the applicable limitation
under clause (i) for any taxable year described in such
clause, such excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a charitable
contribution to which clause (i) applies in each of the 5
succeeding years in order of time.
``(iii) Coordination with subparagraphs (a) and (b).--
``(I) In general.--Contributions taken into account under
this subparagraph shall not be taken into account under
subparagraph (A).
``(II) Limitation reduction.--Subparagraphs (A) and (B)
shall be applied for each taxable year described in clause
(i), and each taxable year to which any contribution under
this subparagraph is carried over under clause (ii), by
reducing (but not below zero) the aggregate contribution
limitation allowed for the taxable year under each such
subparagraph by the aggregate contributions allowed under
this subparagraph for such taxable year.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions in taxable years beginning after
December 31, 2017.
SEC. 11024. INCREASED CONTRIBUTIONS TO ABLE ACCOUNTS.
(a) Increase in Limitation for Contributions From
Compensation of Individuals With Disabilities.--
(1) In general.--Section 529A(b)(2)(B) is amended to read
as follows:
``(B) except in the case of contributions under subsection
(c)(1)(C), if such contribution to an ABLE account would
result in aggregate contributions from all contributors to
the ABLE account for the taxable year exceeding the sum of--
``(i) the amount in effect under section 2503(b) for the
calendar year in which the taxable year begins, plus
``(ii) in the case of any contribution by a designated
beneficiary described in paragraph (7) before January 1,
2026, the lesser of--
``(I) compensation (as defined by section 219(f)(1))
includible in the designated beneficiary's gross income for
the preceding taxable year, or
``(II) an amount equal to the poverty line for a one-person
household, as determined for the calendar year preceding the
calendar year in which the taxable year begins.''.
(2) Eligible designated beneficiary.--Section 529A(b) is
amended by adding at the end the following:
[[Page S7736]]
``(7) Special rules related to contribution limit.--For
purposes of paragraph (2)(B)(ii)--
``(A) Designated beneficiary.--A designated beneficiary
described in this paragraph is an employee (including an
employee within the meaning of section 401(c)) with respect
to whom--
``(i) no contribution is made for the taxable year to a
defined contribution plan (within the meaning of section
414(i)) with respect to which the requirements of section
401(a) or 403(a) are met,
``(ii) no contribution is made for the taxable year to an
annuity contract described in section 403(b), and
``(iii) no contribution is made for the taxable year to an
eligible deferred compensation plan described in section
457(b).
``(B) Poverty line.--The term `poverty line' has the
meaning given such term by section 673 of the Community
Services Block Grant Act (42 U.S.C. 9902).''.
(b) Allowance of Saver's Credit for ABLE Contributions by
Account Holder.--Section 25B(d)(1) is amended by striking
``and'' at the end of subparagraph (B)(ii), by striking the
period at the end of subparagraph (C) and inserting ``,
and'', and by inserting at the end the following:
``(D) the amount of contributions made before January 1,
2026, by such individual to the ABLE account (within the
meaning of section 529A) of which such individual is the
designated beneficiary.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 11025. ROLLOVERS TO ABLE PROGRAMS FROM 529 PROGRAMS.
(a) In General.--Clause (i) of section 529(c)(3)(C) is
amended by striking ``or'' at the end of subclause (I), by
striking the period at the end of subclause (II) and
inserting ``, or'', and by adding at the end the following:
``(III) before January 1, 2026, to an ABLE account (as
defined in section 529A(e)(6)) of the designated beneficiary
or a member of the family of the designated beneficiary.
Subclause (III) shall not apply to so much of a distribution
which, when added to all other contributions made to the ABLE
account for the taxable year, exceeds the limitation under
section 529A(b)(2)(B).''.
(b) Effective Date.--The amendments made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 11026. TREATMENT OF CERTAIN INDIVIDUALS PERFORMING
SERVICES IN THE SINAI PENINSULA OF EGYPT.
(a) In General.--For purposes of the following provisions
of the Internal Revenue Code of 1986, with respect to the
applicable period, a qualified hazardous duty area shall be
treated in the same manner as if it were a combat zone (as
determined under section 112 of such Code):
(1) Section 2(a)(3) (relating to special rule where
deceased spouse was in missing status).
(2) Section 112 (relating to the exclusion of certain
combat pay of members of the Armed Forces).
(3) Section 692 (relating to income taxes of members of
Armed Forces on death).
(4) Section 2201 (relating to members of the Armed Forces
dying in combat zone or by reason of combat-zone-incurred
wounds, etc.).
(5) Section 3401(a)(1) (defining wages relating to combat
pay for members of the Armed Forces).
(6) Section 4253(d) (relating to the taxation of phone
service originating from a combat zone from members of the
Armed Forces).
(7) Section 6013(f)(1) (relating to joint return where
individual is in missing status).
(8) Section 7508 (relating to time for performing certain
acts postponed by reason of service in combat zone).
(b) Qualified Hazardous Duty Area.--For purposes of this
section, the term ``qualified hazardous duty area'' means the
Sinai Peninsula of Egypt, if as of the date of the enactment
of this section any member of the Armed Forces of the United
States is entitled to special pay under section 310 of title
37, United States Code (relating to special pay; duty subject
to hostile fire or imminent danger), for services performed
in such location. Such term includes such location only
during the period such entitlement is in effect.
(c) Applicable Period.--
(1) In general.--Except as provided in paragraph (2), the
applicable period is--
(A) the portion of the first taxable year ending after June
9, 2015, which begins on such date, and
(B) any subsequent taxable year beginning before January 1,
2026.
(2) Withholding.--In the case of subsection (a)(5), the
applicable period is--
(A) the portion of the first taxable year ending after the
date of the enactment of this Act which begins on such date,
and
(B) any subsequent taxable year beginning before January 1,
2026.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
provisions of this section shall take effect on June 9, 2015.
(2) Withholding.--Subsection (a)(5) shall apply to
remuneration paid after the date of the enactment of this
Act.
SEC. 11027. EXTENSION OF WAIVER OF LIMITATIONS WITH RESPECT
TO EXCLUDING FROM GROSS INCOME AMOUNTS RECEIVED
BY WRONGFULLY INCARCERATED INDIVIDUALS.
(a) In General.--Section 304(d) of the Protecting Americans
from Tax Hikes Act of 2015 (26 U.S.C. 139F note) is amended
by striking ``1-year'' and inserting ``2-year''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 11028. UNBORN CHILDREN ALLOWED AS 529 ACCOUNT
BENEFICIARIES.
(a) In General.--Section 529(e) is amended by adding at the
end the following new paragraph:
``(6) Treatment of unborn children.--
``(A) In general.--Nothing shall prevent an unborn child
from being treated as a designated beneficiary or an
individual under this section.
``(B) Unborn child.--For purposes of this paragraph--
``(i) In general.--The term `unborn child' means a child in
utero.
``(ii) Child in utero.--The term `child in utero' means a
member of the species homo sapiens, at any stage of
development, who is carried in the womb.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after December 31, 2017.
SEC. 11029. RELIEF FOR MISSISSIPPI RIVER DELTA FLOOD DISASTER
AREA.
(a) In General.--For purposes of this section, the term
``Mississippi River Delta flood disaster area'' means any
area--
(1) with respect to which a major disaster has been
declared by the President under section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act before
September 3, 2016, by reason of severe storms and flooding
occurring in Louisiana during August of 2016, or
(2) with respect to which a major disaster has been
declared by the President under section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act before
March 31, 2016, by reason of severe storms and flooding
occurring in Louisiana, Texas, and Mississippi during March
of 2016.
(b) Special Rules for Use of Retirement Funds With Respect
to Mississippi Delta Areas Damaged by 2016 Flooding.--
(1) Tax-favored withdrawals from retirement plans.--
(A) In general.--Section 72(t) of the Internal Revenue Code
of 1986 shall not apply to any qualified Mississippi River
Delta flooding distribution.
(B) Aggregate dollar limitation.--
(i) In general.--For purposes of this subsection, the
aggregate amount of distributions received by an individual
which may be treated as qualified Mississippi River Delta
flooding distributions for any taxable year shall not exceed
the excess (if any) of--
(I) $100,000, over
(II) the aggregate amounts treated as qualified Mississippi
River Delta flooding distributions received by such
individual for all prior taxable years.
(ii) Treatment of plan distributions.--If a distribution to
an individual would (without regard to clause (i)) be a
qualified Mississippi River Delta flooding distribution, a
plan shall not be treated as violating any requirement of
this title merely because the plan treats such distribution
as a qualified Mississippi River Delta flooding distribution,
unless the aggregate amount of such distributions from all
plans maintained by the employer (and any member of any
controlled group which includes the employer) to such
individual exceeds $100,000.
(iii) Controlled group.--For purposes of clause (ii), the
term ``controlled group'' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section
414 of the Internal Revenue Code of 1986.
(C) Amount distributed may be repaid.--
(i) In general.--Any individual who receives a qualified
Mississippi River Delta flooding distribution may, at any
time during the 3-year period beginning on the day after the
date on which such distribution was received, make one or
more contributions in an aggregate amount not to exceed the
amount of such distribution to an eligible retirement plan of
which such individual is a beneficiary and to which a
rollover contribution of such distribution could be made
under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or
457(e)(16) of the Internal Revenue Code of 1986, as the case
may be.
(ii) Treatment of repayments of distributions from eligible
retirement plans other than iras.--For purposes of this
title, if a contribution is made pursuant to clause (i) with
respect to a qualified Mississippi River Delta flooding
distribution from an eligible retirement plan other than an
individual retirement plan, then the taxpayer shall, to the
extent of the amount of the contribution, be treated as
having received the qualified Mississippi River Delta
flooding distribution in an eligible rollover distribution
(as defined in section 402(c)(4) of the Internal Revenue Code
of 1986) and as having transferred the amount to the eligible
retirement plan in a direct trustee to trustee transfer
within 60 days of the distribution.
(iii) Treatment of repayments for distributions from
iras.--For purposes of the Internal Revenue Code of 1986, if
a contribution is made pursuant to clause (i) with respect to
a qualified Mississippi River Delta flooding distribution
from an individual retirement plan (as defined by section
7701(a)(37) of the Internal Revenue Code of 1986), then, to
the extent of the amount of the contribution, the qualified
Mississippi River Delta flooding distribution shall be
treated as a distribution described in section
[[Page S7737]]
408(d)(3) of such Code and as having been transferred to the
eligible retirement plan in a direct trustee to trustee
transfer within 60 days of the distribution.
(D) Definitions.--For purposes of this paragraph--
(i) Qualified mississippi river delta flooding
distribution.--Except as provided in subparagraph (B), the
term ``qualified Mississippi River Delta flooding
distribution'' means--
(I) any distribution from an eligible retirement plan made
on or after August 11, 2016, and before January 1, 2018, to
an individual whose principal place of abode on August 11,
2016, was located in the portion of Mississippi River Delta
disaster area described in subsection (a)(1) and who has
sustained an economic loss by reason of the severe storms and
flooding giving rise to the Presidential declaration
described in subsection (a)(1), or
(II) any distribution from an eligible retirement plan made
on or after March 1, 2016, and before January 1, 2018, to an
individual whose principal place of abode on March 1, 2016,
was located in the portion of Mississippi River Delta
disaster area described in subsection (a)(2) and who has
sustained an economic loss by reason of the severe storms and
flooding giving rise to the Presidential declaration
described in subsection (a)(2).
(ii) Eligible retirement plan.--The term ``eligible
retirement plan'' shall have the meaning given such term by
section 402(c)(8)(B) of the Internal Revenue Code of 1986.
(E) Income inclusion spread over 3-year period.--
(i) In general.--In the case of any qualified Mississippi
River Delta flooding distribution, unless the taxpayer elects
not to have this subparagraph apply for any taxable year, any
amount required to be included in gross income for such
taxable year shall be so included ratably over the 3-taxable-
year period beginning with such taxable year.
(ii) Special rule.--For purposes of clause (i), rules
similar to the rules of subparagraph (E) of section
408A(d)(3) of the Internal Revenue Code of 1986 shall apply.
(F) Special rules.--
(i) Exemption of distributions from trustee to trustee
transfer and withholding rules.--For purposes of sections
401(a)(31), 402(f), and 3405 of the Internal Revenue Code of
1986, qualified Mississippi River Delta flooding
distributions shall not be treated as eligible rollover
distributions.
(ii) Qualified mississippi river delta flooding
distributions treated as meeting plan distribution
requirements.--For purposes of the Internal Revenue Code of
1986, a qualified Mississippi River Delta flooding
distribution shall be treated as meeting the requirements of
sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and
457(d)(1)(A) of the Internal Revenue Code of 1986.
(2) Provisions relating to plan amendments.--
(A) In general.--If this paragraph applies to any amendment
to any plan or annuity contract, such plan or contract shall
be treated as being operated in accordance with the terms of
the plan during the period described in subparagraph
(B)(ii)(I).
(B) Amendments to which subsection applies.--
(i) In general.--This paragraph shall apply to any
amendment to any plan or annuity contract which is made--
(I) pursuant to any provision of this section, or pursuant
to any regulation under any provision of this section; and
(II) on or before the last day of the first plan year
beginning on or after January 1, 2018, or such later date as
the Secretary prescribes.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), subclause (II)
shall be applied by substituting the date which is 2 years
after the date otherwise applied under subclause (II).
(ii) Conditions.--This paragraph shall not apply to any
amendment unless--
(I) during the period--
(aa) beginning on the date that this section or the
regulation described in clause (i)(I) takes effect (or in the
case of a plan or contract amendment not required by this
section or such regulation, the effective date specified by
the plan); and
(bb) ending on the date described in clause (i)(II) (or, if
earlier, the date the plan or contract amendment is adopted),
the plan or contract is operated as if such plan or contract
amendment were in effect; and
(II) such plan or contract amendment applies retroactively
for such period.
(c) Special Rules for Personal Casualty Losses Related to
Louisiana Severe Storms and Flooding.--
(1) In general.--If an individual has a net disaster loss
for any taxable year beginning after December 31, 2017, and
before January 1, 2026--
(A) the amount determined under section 165(h)(2)(A)(ii) of
the Internal Revenue Code of 1986 shall be equal to the sum
of--
(i) such net disaster loss, and
(ii) so much of the excess referred to in the matter
preceding clause (i) of section 165(h)(2)(A) of such Code
(reduced by the amount in clause (i) of this subparagraph) as
exceeds 10 percent of the adjusted gross income of the
individual,
(B) section 165(h)(1) of such Code shall be applied by
substituting ``$500'' for ``$500 ($100 for taxable years
beginning after December 31, 2009)'',
(C) the standard deduction determined under section 63(c)
of such Code shall be increased by the net disaster loss, and
(D) section 56(b)(1)(E) of such Code shall not apply to so
much of the standard deduction as is attributable to the
increase under subparagraph (C) of this paragraph.
(2) Net disaster loss.--For purposes of this subsection,
the term ``net disaster loss'' means the excess of qualified
disaster-related personal casualty losses over personal
casualty gains (as defined in section 165(h)(3)(A) of the
Internal Revenue Code of 1986).
(3) Qualified disaster-related personal casualty losses.--
For purposes of this paragraph, the term ``qualified
disaster-related personal casualty losses'' means losses
described in section 165(c)(3) of the Internal Revenue Code
of 1986 which arise--
(A) in the portion of the Mississippi River Delta flood
disaster area described in subsection (a)(1) on or after
August 11, 2016, and which are attributable to the severe
storms and flooding giving rise to the Presidential
declaration described in subsection (a)(1), or
(B) in the portion of the Mississippi River Delta flood
disaster area described in subsection (a)(2) on or after
March 1, 2016, and which are attributable to the severe
storms and flooding giving rise to the Presidential
declaration described in subsection (a)(2).
PART IV--EDUCATION
SEC. 11031. TREATMENT OF STUDENT LOANS DISCHARGED ON ACCOUNT
OF DEATH OR DISABILITY.
(a) In General.--Section 108(f) is amended by adding at the
end the following new paragraph:
``(5) Discharges on account of death or disability.--
``(A) In general.--In the case of an individual, gross
income for any taxable year beginning after December 31,
2017, and before January 1, 2026, does not include any amount
which (but for this subsection) would be includible in gross
income for such taxable year by reasons of the discharge (in
whole or in part) of any loan described in subparagraph (B)
if such discharge was--
``(i) pursuant to subsection (a) or (d) of section 437 of
the Higher Education Act of 1965 or the parallel benefit
under part D of title IV of such Act (relating to the
repayment of loan liability),
``(ii) pursuant to section 464(c)(1)(F) of such Act, or
``(iii) otherwise discharged on account of the death or
total and permanent disability of the student.
``(B) Loans described.--A loan is described in this
subparagraph if such loan is--
``(i) a student loan (as defined in paragraph (2)), or
``(ii) a private education loan (as defined in section
140(7) of the Consumer Credit Protection Act (15 U.S.C.
1650(7))).''.
(b) Effective Date.--The amendment made by this section
shall apply to discharges of indebtedness after December 31,
2017.
SEC. 11032. INCREASE IN DEDUCTION FOR TEACHER EXPENSES.
(a) In General.--Subparagraph (D) of section 62(a)(2) is
amended by striking ``$250'' and inserting ``$250 ($500 in
the case of taxable years beginning after December 31, 2017,
and before January 1, 2026)''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
PART V--DEDUCTIONS AND EXCLUSIONS
SEC. 11041. SUSPENSION OF DEDUCTION FOR PERSONAL EXEMPTIONS.
(a) In General.--Subsection (d) of section 151 is amended--
(1) by striking ``In the case of'' in paragraph (4) and
inserting ``Except as provided in paragraph (5), in the case
of'', and
(2) by adding at the end the following new paragraph:
``(5) Special rules for taxable years 2018 through 2025.--
In the case of a taxable year beginning after December 31,
2017, and before January 1, 2026--
``(A) Exemption amount.--The term `exemption amount' means
zero.
``(B) References.--For purposes of any other provision of
this title, the reduction of the exemption amount to zero
under subparagraph (A) shall not be taken into account in
determining whether a deduction is allowed or allowable, or
whether a taxpayer is entitled to a deduction, under this
section.''.
(b) Application to Estates and Trusts.--Section
642(b)(2)(C) is amended by adding at the end the following
new clause:
``(iii) Years when personal exemption amount is zero.--
``(I) In general.--In the case of any taxable year in which
the exemption amount under section 151(d) is zero, clause (i)
shall be applied by substituting `$4,150' for `the exemption
amount under section 151(d)'.
``(II) Inflation adjustment.--In the case of any calendar
year beginning after 2018, the $4,150 amount in subparagraph
(A) shall be increased by an amount equal to--
``(aa) such dollar amount, multiplied by
``(bb) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2017' for `2016' in
subparagraph (A)(ii) thereof.
If any increase determined under the preceding sentence is
not a multiple of $100, such increase shall be rounded to the
next lowest multiple of $100.''.
[[Page S7738]]
(c) Exception for Wage Withholding Rules.--Section 3402(a)
is amended by adding at the end the following new paragraph:
``(3) Years when personal exemption amount is zero.--
``(A) In general.--In the case of any taxable year in which
the exemption amount under section 151(d) is zero, paragraph
(2) shall be applied by substituting `$4,150' for `the amount
of one personal exemption provided in section 151(b)'.
``(B) Inflation adjustment.--In the case of any calendar
year beginning after 2018, the $4,150 amount in subparagraph
(A) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2017' for `2016' in
subparagraph (A)(ii) thereof.
If any increase determined under the preceding sentence is
not a multiple of $100, such increase shall be rounded to the
next lowest multiple of $100.''.
(d) Exception for Determining Property Exempt From Levy.--
Section 6334(d) is amended by adding at the end the following
new paragraph:
``(4) Years when personal exemption amount is zero.--
``(A) In general.--In the case of any taxable year in which
the exemption amount under section 151(d) is zero, paragraph
(2) shall not apply and for purposes of paragraph (1) the
term `exempt amount' means an amount equal to--
``(i) the sum of the amount determined under subparagraph
(B) and the standard deduction, divided by
``(ii) 52.
``(B) Amount determined.--For purposes of subparagraph (A),
the amount determined under this subparagraph is $4,150
multiplied by the number of the taxpayer's dependents for the
taxable year in which the levy occurs.
``(C) Inflation adjustment.--In the case of any taxable
year beginning after 2018, the $4,150 amount in subparagraph
(B) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2017' for `2016' in
subparagraph (A)(ii) thereof.
If any increase determined under the preceding sentence is
not a multiple of $100, such increase shall be rounded to the
next lowest multiple of $100.
``(D) Verified statement.--Unless the taxpayer submits to
the Secretary a written and properly verified statement
specifying the facts necessary to determine the proper amount
under subparagraph (A), subparagraph (A) shall be applied as
if the taxpayer were a married individual filing a separate
return with no dependents.''.
(e) Persons Required to Make Returns of Income.--Section
6012 is amended by adding at the end the following new
subsection:
``(f) Special Rule for Taxable Years 2018 Through 2025.--In
the case of a taxable year beginning after December 31, 2017,
and before January 1, 2026, subsection (a)(1) shall not
apply, and every individual who has gross income for the
taxable year shall be required to make returns with respect
to income taxes under subtitle A, except that a return shall
not be required of--
``(1) an individual who is not married (determined by
applying section 7703) and who has gross income for the
taxable year which does not exceed the standard deduction
applicable to such individual for such taxable year under
section 63, or
``(2) an individual entitled to make a joint return if--
``(A) the gross income of such individual, when combined
with the gross income of such individual's spouse, for the
taxable year does not exceed the standard deduction which
would be applicable to the taxpayer for such taxable year
under section 63 if such individual and such individual's
spouse made a joint return,
``(B) such individual and such individual's spouse have the
same household as their home at the close of the taxable
year,
``(C) such individual's spouse does not make a separate
return, and
``(D) neither such individual nor such individual's spouse
is an individual described in section 63(c)(5) who has income
(other than earned income) in excess of the amount in effect
under section 63(c)(5)(A).
The amount specified in paragraph (1) or (2)(A) shall be
increased by the amount of 1 additional standard deduction
(within the meaning of section 63(c)(3)) in the case of an
individual entitled to such deduction by reason of section
63(f)(1)(A) (relating to individuals age 65 or more), and by
the amount of each additional standard deduction to which the
individual or the individual's spouse is entitled by reason
of section 63(f)(1).''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11042. SUSPENSION OF DEDUCTION FOR STATE AND LOCAL, ETC.
TAXES.
(a) In General.--Subsection (b) of section 164 is amended
by adding at the end the following new paragraph:
``(6) Suspension of individual deductions for taxable years
2018 through 2025.--In the case of an individual and a
taxable year beginning after December 31, 2017, and before
January 1, 2026--
``(A) paragraphs (1) and (2) of subsection (a) shall not
apply to any real property or personal property taxes, other
than taxes which are paid or accrued in carrying on a trade
or business or an activity described in section 212, and
``(B) subsection (a)(3) shall not apply to any State or
local taxes.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11043. SUSPENSION OF DEDUCTION FOR HOME EQUITY INTEREST.
(a) In General.--Section 163(h)(3)(A)(ii) is amended by
inserting ``in the case of taxable years beginning before
January 1, 2018, or after December 31, 2025,'' before ``home
equity indebtedness''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years ending after December 31, 2017.
SEC. 11044. MODIFICATION OF DEDUCTION FOR PERSONAL CASUALTY
LOSSES.
(a) In General.--Subsection (h) of section 165 is amended
by adding at the end the following new paragraph:
``(5) Limitation for taxable years 2018 through 2025.--In
the case of any loss of an individual described in subsection
(c)(3) which (but for this paragraph) would be deductible in
a taxable year beginning after December 31, 2017, and before
January 1, 2026 (without regard to any election under
subsection (i), such loss shall be allowed only to the extent
it is attributable to a Federally declared disaster (as
defined in subsection (i)(5)). The preceding sentence shall
not apply to any deduction under section 172 which is carried
to such a taxable year from a taxable year beginning before
January 1, 2018.''.
(b) Effective Date.--The amendment made by this section
shall apply to losses incurred in taxable years beginning
after December 31, 2017.
SEC. 11045. SUSPENSION OF MISCELLANEOUS ITEMIZED DEDUCTIONS.
(a) In General.--Section 67 is amended by adding at the end
the following new subsection:
``(g) Suspension for Taxable Years 2018 Through 2025.--
Notwithstanding subsection (a), no miscellaneous itemized
deduction shall be allowed for any taxable year beginning
after December 31, 2017, and before January 1, 2026.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11046. SUSPENSION OF OVERALL LIMITATION ON ITEMIZED
DEDUCTIONS.
(a) In General.--Section 68 is amended by adding at the end
the following new subsection:
``(f) Section Not to Apply.--This section shall not apply
to any taxable year beginning after December 31, 2017, and
before January 1, 2026.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11047. MODIFICATION OF EXCLUSION OF GAIN FROM SALE OF
PRINCIPAL RESIDENCE.
(a) In General.--Section 121 is amended by adding at the
end the following new subsection:
``(h) Special Rules for Sales or Exchanges in Taxable Years
2018 Through 2025.--
``(1) In general.--In applying this section with respect to
sales or exchanges after December 31, 2017, and before
January 1, 2026--
``(A) `8-year' shall be substituted for `5-year' each place
it appears in subsections (a), (b)(5)(C)(ii)(I), and
(c)(1)(B)(i)(I) and paragraphs (7), (9), (10), and (12) of
subsection (d),
``(B) `5 years' shall be substituted for `2 years' each
place it appears in subsections (a), (b)(3), (b)(4),
(b)(5)(C)(ii)(III), and (c)(1)(B)(ii), and
``(C) `5-year' shall be substituted for `2-year' in
subsection (b)(3).
``(2) Exception for binding contracts.--Paragraph (1) shall
not apply to any sale or exchange with respect to which there
was a written binding contract in effect before January 1,
2018, and at all times thereafter before the sale or
exchange.''.
(b) Effective Date.--The amendment made by this section
shall apply to sales and exchanges after December 31, 2017.
SEC. 11048. SUSPENSION OF EXCLUSION FOR QUALIFIED BICYCLE
COMMUTING REIMBURSEMENT.
(a) In General.--Section 132(f) is amended by adding at the
end the following new paragraph:
``(8) Suspension of qualified bicycle commuting
reimbursement exclusion.--Paragraph (1)(D) shall not apply to
any taxable year beginning after December 31, 2017, and
before January 1, 2026.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11049. SUSPENSION OF EXCLUSION FOR QUALIFIED MOVING
EXPENSE REIMBURSEMENT.
(a) In General.--Section 132(g) is amended--
(1) by striking ``For purposes of this section, the term''
and inserting ``For purposes of this section--
``(1) In general.--The term'', and
(2) by adding at the end the following new paragraph:
``(2) Suspension for taxable years 2018 through 2025.--
Except in the case of a member of the Armed Forces of the
United States on active duty who moves pursuant to a military
order and incident to a permanent change of station,
subsection (a)(6) shall not
[[Page S7739]]
apply to any taxable year beginning after December 31, 2017,
and before January 1, 2026.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11050. SUSPENSION OF DEDUCTION FOR MOVING EXPENSES.
(a) In General.--Section 217 is amended by adding at the
end the following new subsection:
``(k) Suspension of Deduction for Taxable Years 2018
Through 2025.--Except in the case of an individual to whom
subsection (g) applies, this section shall not apply to any
taxable year beginning after December 31, 2017, and before
January 1, 2026.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11051. LIMITATION ON WAGERING LOSSES.
(a) In General.--Section 165(d) is amended by adding at the
end the following: ``For purposes of the preceding sentence,
in the case of taxable years beginning after December 31,
2017, and before January 1, 2026, the term `losses from
wagering transactions' includes any deduction otherwise
allowable under this chapter incurred in carrying on any
wagering transaction.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
PART VI--INCREASE IN ESTATE AND GIFT TAX EXEMPTION
SEC. 11061. INCREASE IN ESTATE AND GIFT TAX EXEMPTION.
(a) In General.--Section 2010(c)(3) is amended by adding at
the end the following new subparagraph:
``(C) Increase in basic exclusion amount.--In the case of
estates of decedents dying or gifts made after December 31,
2017, and before January 1, 2026, subparagraph (A) shall be
applied by substituting `$10,000,000' for `$5,000,000'.''.
(b) Conforming Amendment.--Subsection (g) of section 2001
is amended to read as follows:
``(g) Modifications to Tax Payable.--
``(1) Modifications to gift tax payable to reflect
different tax rates.--For purposes of applying subsection
(b)(2) with respect to 1 or more gifts, the rates of tax
under subsection (c) in effect at the decedent's death shall,
in lieu of the rates of tax in effect at the time of such
gifts, be used both to compute--
``(A) the tax imposed by chapter 12 with respect to such
gifts, and
``(B) the credit allowed against such tax under section
2505, including in computing--
``(i) the applicable credit amount under section
2505(a)(1), and
``(ii) the sum of the amounts allowed as a credit for all
preceding periods under section 2505(a)(2).
``(2) Modifications to estate tax payable to reflect
different basic exclusion amounts.--The Secretary shall
prescribe such regulations as may be necessary or appropriate
to carry out this section with respect to any difference
between--
``(A) the basic exclusion amount under section 2010(c)(3)
applicable at the time of the decedent's death, and
``(B) the basic exclusion amount under such section
applicable with respect to any gifts made by the decedent.''.
(c) Effective Date.--The amendments made by this section
shall apply to estates of decedents dying and gifts made
after December 31, 2017.
PART VII--TAXPAYER RIGHTS AND TAX ADMINISTRATION
SEC. 11071. EXTENSION OF TIME LIMIT FOR CONTESTING IRS LEVY.
(a) Extension of Time for Return of Property Subject to
Levy.--Subsection (b) of section 6343 is amended by striking
``9 months'' and inserting ``2 years''.
(b) Period of Limitation on Suits.--Subsection (c) of
section 6532 is amended--
(1) by striking ``9 months'' in paragraph (1) and inserting
``2 years'', and
(2) by striking ``9-month'' in paragraph (2) and inserting
``2-year''.
(c) Effective Date.--The amendments made by this section
shall apply to--
(1) levies made after the date of the enactment of this
Act, and
(2) levies made on or before such date if the 9-month
period has not expired under section 6343(b) of the Internal
Revenue Code of 1986 (without regard to this section) as of
such date.
SEC. 11072. INDIVIDUALS HELD HARMLESS ON IMPROPER LEVY ON
RETIREMENT PLANS.
(a) In General.--Section 6343 is amended by adding at the
end the following new subsection:
``(f) Individuals Held Harmless on Wrongful Levy, etc. on
Retirement Plan.--
``(1) In general.--If the Secretary determines that an
individual's account or benefit under an eligible retirement
plan (as defined in section 402(c)(8)(B)) has been levied
upon in a case to which subsection (b) or (d)(2)(A) applies
and property or an amount of money is returned to the
individual--
``(A) the individual may contribute such property or an
amount equal to the sum of--
``(i) the amount of money so returned by the Secretary, and
``(ii) interest paid under subsection (c) on such amount of
money,
into such eligible retirement plan if such contribution is
permitted by the plan, or into an individual retirement plan
(other than an endowment contract) to which a rollover
contribution of a distribution from such eligible retirement
plan is permitted, but only if such contribution is made not
later than the due date (not including extensions) for filing
the return of tax for the taxable year in which such property
or amount of money is returned, and
``(B) the Secretary shall, at the time such property or
amount of money is returned, notify such individual that a
contribution described in subparagraph (A) may be made.
``(2) Treatment as rollover.--The distribution on account
of the levy and any contribution under paragraph (1) with
respect to the return of such distribution shall be treated
for purposes of this title as if such distribution and
contribution were described in section 402(c), 402A(c)(3),
403(a)(4), 403(b)(8), 408(d)(3), 408A(d)(3), or 457(e)(16),
whichever is applicable; except that--
``(A) the contribution shall be treated as having been made
for the taxable year in which the distribution on account of
the levy occurred, and the interest paid under subsection (c)
shall be treated as earnings within the plan after the
contribution and shall not be included in gross income, and
``(B) such contribution shall not be taken into account
under section 408(d)(3)(B).
``(3) Refund, etc., of income tax on levy.--
``(A) In general.--If any amount is includible in gross
income for a taxable year by reason of a distribution on
account of a levy referred to in paragraph (1) and any
portion of such amount is treated as a rollover contribution
under paragraph (2), any tax imposed by chapter 1 on such
portion shall not be assessed, and if assessed shall be
abated, and if collected shall be credited or refunded as an
overpayment made on the due date for filing the return of tax
for such taxable year.
``(B) Exception.--Subparagraph (A) shall not apply to a
rollover contribution under this subsection which is made
from an eligible retirement plan which is not a Roth IRA or a
designated Roth account (within the meaning of section 402A)
to a Roth IRA or a designated Roth account under an eligible
retirement plan.
``(4) Interest.--Notwithstanding subsection (d), interest
shall be allowed under subsection (c) in a case in which the
Secretary makes a determination described in subsection
(d)(2)(A) with respect to a levy upon an individual
retirement plan.
``(5) Treatment of inherited accounts.--For purposes of
paragraph (1)(A), section 408(d)(3)(C) shall be disregarded
in determining whether an individual retirement plan is a
plan to which a rollover contribution of a distribution from
the plan levied upon is permitted.''.
(b) Effective Date.--The amendment made by this section
shall apply to amounts paid under subsections (b), (c), and
(d)(2)(A) of section 6343 of the Internal Revenue Code of
1986 in taxable years beginning after December 31, 2017.
SEC. 11073. MODIFICATION OF USER FEE REQUIREMENTS FOR
INSTALLMENT AGREEMENTS.
(a) In General.--Section 6159 is amended by redesignating
subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
``(f) Installment Agreement Fees.--
``(1) Limitation on fee amount.--The amount of any fee
imposed on an installment agreement under this section may
not exceed the amount of such fee as in effect on the date of
the enactment of this subsection.
``(2) Waiver or reimbursement.--In the case of any taxpayer
with an adjusted gross income, as determined for the most
recent year for which such information is available, which
does not exceed 250 percent of the applicable poverty level
(as determined by the Secretary)--
``(A) if the taxpayer has agreed to make payments under the
installment agreement by electronic payment through a debit
instrument, no fee shall be imposed on an installment
agreement under this section, and
``(B) if the taxpayer is unable to make payments under the
installment agreement by electronic payment through a debit
instrument, the Secretary shall, upon completion of the
installment agreement, pay the taxpayer an amount equal to
any such fees imposed.''.
(b) Effective Date.--The amendments made by this section
shall apply to agreements entered into on or after the date
which is 60 days after the date of the enactment of this Act.
SEC. 11074. FORM 1040SR FOR SENIORS.
(a) In General.--The Secretary of the Treasury (or the
Secretary's delegate) shall make available a form, to be
known as ``Form 1040SR'', for use by individuals to file the
return of tax imposed by chapter 1 of the Internal Revenue
Code of 1986. Such form shall be as similar as practicable to
Form 1040EZ, except that--
(1) the form shall be available only to individuals who
have attained age 65 as of the close of the taxable year,
(2) the form may be used even if income for the taxable
year includes--
(A) social security benefits (as defined in section 86(d)
of the Internal Revenue Code of 1986),
(B) distributions from qualified retirement plans (as
defined in section 4974(c) of such
[[Page S7740]]
Code), annuities or other such deferred payment arrangements,
(C) interest and dividends, or
(D) capital gains and losses taken into account in
determining adjusted net capital gain (as defined in section
1(h)(3) of such Code), and
(3) the form shall be available without regard to the
amount of any item of taxable income or the total amount of
taxable income for the taxable year.
(b) Effective Date.--The form required by subsection (a)
shall be made available for taxable years beginning after the
date of the enactment of this Act and ending before January
1, 2026.
SEC. 11075. SENSE OF THE SENATE ON IMPROVING CUSTOMER SERVICE
AND PROTECTIONS FOR TAXPAYERS BY REINSTATING
APPROPRIATE FUNDING LEVELS.
It is the sense of the Senate that politically motivated
budget cuts--
(1) are counterproductive to deficit reduction,
(2) diminish the ability of the Internal Revenue Service to
adequately serve taxpayers and protect taxpayer information,
and
(3) reduce the ability of the Internal Revenue Service to
enforce the law.
SEC. 11076. RETURN PREPARATION PROGRAMS FOR LOW-INCOME
TAXPAYERS.
(a) In General.--Chapter 77 is amended by inserting after
section 7526 the following new section:
``SEC. 7526A. RETURN PREPARATION PROGRAMS FOR LOW-INCOME
TAXPAYERS.
``(a) Volunteer Income Tax Assistance Matching Grant
Program.--
``(1) Establishment of program.--The Secretary, through the
Internal Revenue Service, shall establish a Community
Volunteer Income Tax Assistance Matching Grant Program
(hereinafter in this section referred to as the `VITA grant
program'). Except as otherwise provided in this section, the
VITA grant program shall be administered in a manner which is
substantially similar to the Community Volunteer Income Tax
Assistance matching grants demonstration program established
under title I of division D of the Consolidated
Appropriations Act, 2008.
``(2) Matching grants.--
``(A) In general.--The Secretary shall, subject to the
availability of appropriated funds, make available grants
under the VITA grant program to provide matching funds for
the development, expansion, or continuation of qualified
return preparation programs assisting low-income taxpayers
and members of underserved populations.
``(B) Application.--
``(i) In general.--Subject to clause (ii), in order to be
eligible for a grant under this section, a qualified return
preparation program shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary reasonably requires.
``(ii) Accuracy review.--In the case of any qualified
return preparation program which was awarded a grant under
this section and was subsequently subject to a field site
visit by the Internal Revenue Service (including through the
Stakeholder Partnerships, Education, and Communication
office) in which it was determined that the average accuracy
rate for preparation of tax returns through such program was
less than 90 percent, such program shall not be eligible for
any additional grants under this section unless such program
provides, as part of their application, sufficient
documentation regarding the corrective measures established
by such program to address the deficiencies identified
following the field site visit.
``(C) Priority.--In awarding grants under this section, the
Secretary shall give priority to applications--
``(i) demonstrating assistance to low-income taxpayers,
with emphasis on outreach to and services for such taxpayers,
``(ii) demonstrating taxpayer outreach and educational
activities relating to eligibility and availability of income
supports available through the Internal Revenue Code of 1986,
such as the earned income tax credit, and
``(iii) demonstrating specific outreach and focus on one or
more underserved populations.
``(D) Duration of grants.--Upon application of a qualified
return preparation program, the Secretary is authorized to
award a multi-year grant not to exceed 3 years.
``(3) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $30,000,000 per fiscal year (exclusive of costs of
administering the program) to carry out the purposes of this
section.
``(b) Use of Funds.--
``(1) In general.--Qualified return preparation programs
receiving a grant under this section may use the grant for--
``(A) ordinary and necessary costs associated with program
operation in accordance with Cost Principles Circulars as set
forth by the Office of Management and Budget, including--
``(i) for wages or salaries of persons coordinating the
activities of the program,
``(ii) to develop training materials, conduct training, and
perform quality reviews of the returns for which assistance
has been provided under the program, and
``(iii) for equipment purchases and vehicle-related
expenses associated with remote or rural tax preparation
services,
``(B) outreach and educational activities described in
subsection (a)(2)(C)(ii), and
``(C) services related to financial education and
capability, asset development, and the establishment of
savings accounts in connection with tax return preparation.
``(2) Use of grants for overhead expenses prohibited.--No
grant made under this section may be used for overhead
expenses that are not directly related to any qualified
return preparation program.
``(c) Promotion and Referral.--
``(1) Promotion.--The Secretary shall promote the benefits
of, and encourage the use of, tax preparation through
qualified return preparation programs through the use of mass
communications, referrals, and other means.
``(2) Internal revenue service referrals.--The Secretary
shall refer taxpayers to qualified return preparation
programs receiving funding under this section.
``(3) VITA grantee referral.--Qualified return preparation
programs receiving a grant under this section are encouraged
to refer, as appropriate, to local or regional Low Income
Taxpayer Clinics individuals who are eligible to receive
services at such clinics.
``(d) Definitions.--For purposes of this section--
``(1) Qualified return preparation program.--The term
`qualified return preparation program' means any program--
``(A) which provides assistance to individuals, not less
than 90 percent of whom are low-income taxpayers, in
preparing and filing Federal income tax returns,
``(B) which is administered by a qualified entity,
``(C) in which all of the volunteers who assist in the
preparation of Federal income tax returns meet the training
requirements prescribed by the Secretary, and
``(D) which uses a quality review process which reviews 100
percent of all returns.
``(2) Qualified entity.--
``(A) In general.--The term `qualified entity' means any
entity which--
``(i) is an eligible organization (as described in
subparagraph (B)),
``(ii) is in compliance with Federal tax filing and payment
requirements,
``(iii) is not debarred or suspended from Federal
contracts, grants, or cooperative agreements, and
``(iv) agrees to provide documentation to substantiate any
matching funds provided under the VITA grant program.
``(B) Eligible organization.--
``(i) In general.--Subject to clause (ii), the term
`eligible organization' means--
``(I) an institution of higher education which is described
in section 102 (other than subsection (a)(1)(C) thereof) of
the Higher Education Act of 1965 (20 U.S.C. 1088), as in
effect on the date of the enactment of this section, and
which has not been disqualified from participating in a
program under title IV of such Act,
``(II) an organization described in section 501(c) of the
Internal Revenue Code of 1986 and exempt from tax under
section 501(a) of such Code,
``(III) a local government agency, including--
``(aa) a county or municipal government agency, and
``(bb) an Indian tribe, as defined in section 4(13) of the
Native American Housing Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4103(13)), including any tribally
designated housing entity (as defined in section 4(22) of
such Act (25 U.S.C. 4103(22))), tribal subsidiary,
subdivision, or other wholly owned tribal entity, or
``(IV) a local, State, regional, or national coalition
(with one lead organization which meets the eligibility
requirements of subclause (I), (II), or (III) acting as the
applicant organization).
``(ii) Alternative eligible organization.--If no eligible
organization described in clause (i) is available to assist
the targeted population or community, the term `eligible
organization' shall include--
``(I) a State government agency, and
``(II) a Cooperative Extension Service office.
``(3) Low-income taxpayers.--The term `low-income taxpayer'
means a taxpayer who has income for the taxable year which
does not exceed an amount equal to the completed phaseout
amount under section 32(b) for a married couple filing a
joint return with three or more qualifying children, as
determined in a revenue procedure or other published
guidance.
``(4) Underserved population.--The term `underserved
population' includes populations of persons with
disabilities, persons with limited English proficiency,
Native Americans, individuals living in rural areas, members
of the Armed Forces and their spouses, and the elderly.''.
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by inserting after the item relating to section
7526 the following new item:
``7526A. Return preparation programs for low-income taxpayers.''.
SEC. 11077. FREE FILE PROGRAM.
(a) The Secretary of the Treasury, or the Secretary's
delegate, shall continue to operate the IRS Free File Program
as established by the Internal Revenue Service and published
in the Federal Register on November 4, 2002 (67 Fed. Reg.
67247), including any subsequent agreements and governing
rules established pursuant thereto.
(b) The IRS Free File Program shall continue to provide
free commercial-type online individual income tax preparation
and electronic filing services to the lowest 70 percent
[[Page S7741]]
of taxpayers by income. The number of taxpayers eligible to
receive such services each year shall be calculated by the
Internal Revenue Service annually based on prior year
aggregate taxpayer adjusted gross income data.
(c) In addition to the services described in subsection
(b), and in the same manner, the IRS Free File Program shall
continue to make available to all taxpayers (without regard
to income) a basic, online electronic fillable forms utility.
(d) The IRS Free File Program shall continue to work
cooperatively with the private sector to provide the free
individual income tax preparation and the electronic filing
services described in subsections (b) and (c).
(e) The IRS Free File Program shall work cooperatively with
State government agencies to enhance and expand the use of
the program to provide needed benefits to the taxpayer while
reducing the cost of processing returns.
(f) Nothing in this section is intended to impact the
continuity of services provided under Taxpayer Assistance
Centers, Tax Counseling for the Elderly, and Volunteer Income
Tax Assistance programs.
SEC. 11078. ATTORNEYS' FEES RELATING TO AWARDS TO
WHISTLEBLOWERS.
(a) In General.--Paragraph (21) of section 62(a) is amended
to read as follows:
``(21) Attorneys' fees relating to awards to
whistleblowers.--
``(A) In general.--Any deduction allowable under this
chapter for attorney fees and court costs paid by, or on
behalf of, the taxpayer in connection with any award under--
``(i) section 7623(b), or
``(ii) in the case of taxable years beginning after
December 31, 2017, and before January 1, 2026, any action
brought under--
``(I) section 21F of the Securities Exchange Act of 1934
(15 U.S.C. 78u-6),
``(II) a State law relating to false or fraudulent claims
that meets the requirements described in section 1909(b) of
the Social Security Act (42 U.S.C. 1396h(b)), or
``(III) section 23 of the Commodity Exchange Act (7 U.S.C.
26).
``(B) May not exceed award.--Subparagraph (A) shall not
apply to any deduction in excess of the amount includible in
the taxpayer's gross income for the taxable year on account
of such award.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 11079. CLARIFICATION OF WHISTLEBLOWER AWARDS.
(a) Definition of Proceeds.--
(1) In general.--Section 7623 is amended by adding at the
end the following new subsection:
``(c) Proceeds.--For purposes of this section, the term
`proceeds' includes--
``(1) penalties, interest, additions to tax, and additional
amounts provided under the internal revenue laws, and
``(2) any proceeds arising from laws for which the Internal
Revenue Service is authorized to administer, enforce, or
investigate, including--
``(A) criminal fines and civil forfeitures, and
``(B) violations of reporting requirements.''.
(2) Conforming amendments.--Paragraphs (1) and (2)(A) of
section 7623(b) are each amended by striking ``collected
proceeds (including penalties, interest, additions to tax,
and additional amounts) resulting from the action'' and
inserting ``proceeds collected as a result of the action''.
(b) Amount of Proceeds Determined Without Regard to
Availability.--Paragraphs (1) and (2)(A) of section 7623(b)
are each amended by inserting ``(determined without regard to
whether such proceeds are available to the Secretary)'' after
``in response to such action''.
(c) Disputed Amount Threshold.--Section 7623(b)(5)(B) is
amended by striking ``tax, penalties, interest, additions to
tax, and additional amounts'' and inserting ``proceeds''.
(d) Effective Date.--The amendments made by this section
shall apply to information provided before, on, or after the
date of the enactment of this Act with respect to which a
final determination for an award has not been made before
such date of enactment.
PART VIII--INDIVIDUAL MANDATE
SEC. 11081. ELIMINATION OF SHARED RESPONSIBILITY PAYMENT FOR
INDIVIDUALS FAILING TO MAINTAIN MINIMUM
ESSENTIAL COVERAGE.
(a) In General.--Section 5000A(c) is amended--
(1) in paragraph (2)(B)(iii), by striking ``2.5 percent''
and inserting ``Zero percent'', and
(2) in paragraph (3)--
(A) by striking ``$695'' in subparagraph (A) and inserting
``$0'', and
(B) by striking subparagraph (D).
(b) Effective Date.--The amendment made by this section
shall apply to months beginning after December 31, 2018.
Subtitle B--Alternative Minimum Tax
SEC. 12001. REPEAL OF TAX FOR CORPORATIONS.
(a) In General.--Section 55(a) is amended by striking
``There'' and inserting ``In the case of a taxpayer other
than a corporation, there''.
(b) Conforming Amendments.--
(1) Section 38(c)(6) is amended by adding at the end the
following new subparagraph:
``(E) Corporations.--In the case of a corporation, this
subsection shall be applied by treating the corporation as
having a tentative minimum tax of zero.''.
(2)(A) Section 55(b)(1) is amended to read as follows:
``(1) Amount of tentative tax.--
``(A) In general.--The tentative minimum tax for the
taxable year is the sum of--
``(i) 26 percent of so much of the taxable excess as does
not exceed $175,000, plus
``(ii) 28 percent of so much of the taxable excess as
exceeds $175,000.
The amount determined under the preceding sentence shall be
reduced by the alternative minimum tax foreign tax credit for
the taxable year.
``(B) Taxable excess.--For purposes of this subsection, the
term `taxable excess' means so much of the alternative
minimum taxable income for the taxable year as exceeds the
exemption amount.
``(C) Married individual filing separate return.--In the
case of a married individual filing a separate return,
subparagraph (A) shall be applied by substituting 50 percent
of the dollar amount otherwise applicable under clause (i)
and cause (ii) thereof. For purposes of the preceding
sentence, marital status shall be determined under section
7703.''.
(B) Section 59(a) is amended--
(i) by striking ``subparagraph (A)(i) or (B)(i) of section
55(b)(1) (whichever applies) in lieu of the highest rate of
tax specified in section 1 or 11 (whichever applies)'' in
paragraph (1)(C) and inserting ``section 55(b)(1) in lieu of
the highest rate of tax specified in section 1'', and
(ii) in paragraph (2), by striking ``means'' and all that
follows and inserting ``means the amount determined under the
first sentence of section 55(b)(1).''.
(C) Section 897(a)(2)(A) is amended by striking ``section
55(b)(1)(A)'' and inserting ``section 55(b)(1)''.
(D) Section 911(f) is amended--
(i) in paragraph (1)(B)--
(I) by striking ``section 55(b)(1)(A)(ii)'' and inserting
``section 55(b)(1)(B)'', and
(II) by striking ``section 55(b)(1)(A)(i)'' and inserting
``section 55(b)(1)(A)'', and
(ii) in paragraph (2)(B), by striking ``section
55(b)(1)(A)(ii)'' each place it appears and inserting
``section 55(b)(1)(B)''.
(3) Section 55(c)(1) is amended by striking ``, the section
936 credit allowable under section 27(b), and the Puerto Rico
economic activity credit under section 30A''.
(4) Section 55(d) is amended--
(A) by striking paragraph (2) and redesignating paragraphs
(3) and (4) as paragraphs (2) and (3), respectively,
(B) in paragraph (2) (as so redesignated), by inserting
``and'' at the end of subparagraph (B), by striking ``, and''
at the end of subparagraph (C) and inserting a period, and by
striking subparagraph (D), and
(C) in paragraph (3) (as so redesignated)--
(i) by striking ``(b)(1)(A)(i)'' in subparagraph (B)(i) and
inserting ``(b)(1)(A)'', and
(ii) by striking ``paragraph (3)'' in subparagraph (B)(iii)
and inserting ``paragraph (2)''.
(5) Section 55 is amended by striking subsection (e).
(6)(A) Section 56 is amended by striking subsections (c)
and (g).
(B) Section 847 is amended by striking the last sentence of
paragraph (9).
(C) Section 848 is amended by striking subsection (i).
(7) Section 58(a) is amended by striking paragraph (3) and
redesignating paragraph (4) as paragraph (3).
(8) Section 59 is amended by striking subsections (b) and
(f).
(9) Section 11(d) is amended by striking ``the taxes
imposed by subsection (a) and section 55'' and inserting
``the tax imposed by subsection (a)''.
(10) Section 12 is amended by striking paragraph (7).
(11) Section 168(k) is amended by striking paragraph (4).
(12) Section 882(a)(1) is amended by striking ``, 55,''.
(13) Section 962(a)(1) is amended by striking ``sections 11
and 55'' and inserting ``section 11''.
(14) Section 1561(a) is amended--
(A) by inserting ``and'' at the end of paragraph (1), by
striking ``, and'' at the end of paragraph (2) and inserting
a period, and by striking paragraph (3), and
(B) by striking the last sentence.
(15) Section 6425(c)(1)(A) is amended to read as follows:
``(A) the tax imposed by section 11 or 1201(a), or
subchapter L of chapter 1, whichever is applicable, over''.
(16) Section 6655(e)(2) is amended by striking ``and
alternative minimum taxable income'' each place it appears in
subparagraphs (A) and (B)(i).
(17) Section 6655(g)(1)(A) is amended by inserting ``plus''
at the end of clause (i), by striking clause (ii), and by
redesignating clause (iii) as clause (ii).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2017.
SEC. 12002. SUSPENSION OF TAX ON INDIVIDUALS.
(a) In General.--Section 55(a) is amended by adding at the
end the following new flush sentence:
``No tax shall be imposed by this section for any taxable
year beginning after December 31, 2017, and before January 1,
2026, and the tentative minimum tax of any taxpayer for any
such taxable year shall be zero for purposes of this
title.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2017.
[[Page S7742]]
SEC. 12003. CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.
(a) Credits Treated as Refundable.--Section 53 is amended
by adding at the end the following new subsection:
``(e) Portion of Credit Treated as Refundable.--
``(1) In general.--In the case of any taxable year
beginning in 2018, 2019, 2020, or 2021, the limitation under
subsection (c) shall be increased by the AMT refundable
credit amount for such year.
``(2) AMT refundable credit amount.--For purposes of
paragraph (1), the AMT refundable credit amount is an amount
equal to 50 percent (100 percent in the case of a taxable
year beginning in 2021) of the excess (if any) of--
``(A) the minimum tax credit determined under subsection
(b) for the taxable year, over
``(B) the minimum tax credit allowed under subsection (a)
for such year (before the application of this subsection for
such year).
``(3) Credit refundable.--For purposes of this title (other
than this section), the credit allowed by reason of this
subsection shall be treated as a credit allowed under subpart
C (and not this subpart).
``(4) Short taxable years.--In the case of any taxable year
of less than 365 days, the AMT refundable credit amount
determined under paragraph (2) with respect to such taxable
year shall be the amount which bears the same ratio to such
amount determined without regard to this paragraph as the
number of days in such taxable year bears to 365.''.
(b) Treatment of References.--Section 53(d) is amended by
adding at the end the following new paragraph:
``(3) AMT term references.--In the case of a corporation,
any references in this subsection to section 55, 56, or 57
shall be treated as a reference to such section as in effect
before the amendments made by Tax Cuts and Jobs Act.''.
(c) Conforming Amendment.--Section 1374(b)(3)(B) is amended
by striking the last sentence thereof.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2017.
(2) Conforming amendment.--The amendment made by subsection
(c) shall apply to taxable years beginning after December 31,
2021.
Subtitle C--Business-related Provisions
PART I--CORPORATE PROVISIONS
Subpart A--20.94-percent Tax Rate
SEC. 13001. 20.94-PERCENT CORPORATE TAX RATE.
(a) In General.--Subsection (b) of section 11 is amended to
read as follows:
``(b) Amount of Tax.--The amount of the tax imposed by
subsection (a) shall be 20.94 percent of taxable income.''.
(b) Conforming Amendments.--
(1) The following sections are each amended by striking
``section 11(b)(1)'' and inserting ``section 11(b)'':
(A) Section 280C(c)(3)(B)(ii)(II).
(B) Paragraphs (2)(B) and (6)(A)(ii) of section 860E(e).
(C) Section 7874(e)(1)(B)
(2)(A) Part I of subchapter P of chapter 1 is amended by
striking section 1201 (and by striking the item relating to
such section in the table of sections for such part).
(B) Section 12 is amended by striking paragraphs (4) and
(6), and by redesignating paragraph (5) as paragraph (4).
(C) Section 453A(c)(3) is amended by striking ``or 1201
(whichever is appropriate)''.
(D) Section 527(b) is amended--
(i) by striking paragraph (2), and
(ii) by striking all that precedes ``is hereby imposed''
and inserting:
``(b) Tax Imposed.--A tax''.
(E) Sections 594(a) is amended by striking ``taxes imposed
by section 11 or 1201(a)'' and inserting ``tax imposed by
section 11''.
(F) Section 691(c)(4) is amended by striking ``1201,''.
(G) Section 801(a) is amended--
(i) by striking paragraph (2), and
(ii) by striking all that precedes ``is hereby imposed''
and inserting:
``(a) Tax Imposed.--A tax''.
(H) Section 831(e) is amended by striking paragraph (1) and
by redesignating paragraphs (2) and (3) as paragraphs (1) and
(2), respectively.
(I) Sections 832(c)(5) and 834(b)(1)(D) are each amended by
striking ``sec. 1201 and following,''.
(J) Section 852(b)(3)(A) is amended by striking ``section
1201(a)'' and inserting ``section 11(b)''.
(K) Section 857(b)(3) is amended--
(i) by striking subparagraph (A) and redesignating
subparagraphs (B) through (F) as subparagraphs (A) through
(E), respectively,
(ii) in subparagraph (C), as so redesignated--
(I) by striking ``subparagraph (A)(ii)'' in clause (i)
thereof and inserting ``paragraph (1)'',
(II) by striking ``the tax imposed by subparagraph
(A)(ii)'' in clauses (ii) and (iv) thereof and inserting
``the tax imposed by paragraph (1) on undistributed capital
gain'',
(iii) in subparagraph (E), as so redesignated, by striking
``subparagraph (B) or (D)'' and inserting ``subparagraph (A)
or (C)'', and
(iv) by adding at the end the following new subparagraph:
``(F) Undistributed capital gain.--For purposes of this
paragraph, the term `undistributed capital gain' means the
excess of the net capital gain over the deduction for
dividends paid (as defined in section 561) determined with
reference to capital gain dividends only.''.
(L) Section 882(a)(1), as amended by section 12001, is
amended by striking ``or 1201(a)''.
(M) Section 904(b) is amended--
(i) by striking ``or 1201(a)'' in paragraph (2)(C),
(ii) by striking paragraph (3)(D) and inserting the
following:
``(D) Capital gain rate differential.--There is a capital
gain rate differential for any year if subsection (h) of
section 1 applies to such taxable year.'', and
(iii) by striking paragraph (3)(E) and inserting the
following:
``(E) Rate differential portion.--The rate differential
portion of foreign source net capital gain, net capital gain,
or the excess of net capital gain from sources within the
United States over net capital gain, as the case may be, is
the same proportion of such amount as--
``(i) the excess of--
``(I) the highest rate of tax set forth in subsection (a),
(b), (c), (d), or (e) of section 1 (whichever applies), over
``(II) the alternative rate of tax determined under section
1(h), bears to
``(ii) that rate referred to in subclause (I).''.
(N) Section 1374(b) is amended by striking paragraph (4).
(O) Section 1381(b) is amended by striking ``taxes imposed
by section 11 or 1201'' and inserting ``tax imposed by
section 11''.
(P) Sections 6425(c)(1)(A), as amended by section 12001,
and 6655(g)(1)(A)(i) are each amended by striking ``or
1201(a),''.
(Q) Section 7518(g)(6)(A) is amended by striking ``or
1201(a)''.
(3)(A) Section 1445(e)(1) is amended--
(i) by striking ``35 percent'' and inserting ``the highest
rate of tax in effect for the taxable year under section
11(b)'', and
(ii) by striking ``of the gain'' and inserting ``multiplied
by the gain''.
(B) Section 1445(e)(2) is amended by striking ``35 percent
of the amount'' and inserting ``the highest rate of tax in
effect for the taxable year under section 11(b) multiplied by
the amount''.
(C) Section 1445(e)(6) is amended--
(i) by striking ``35 percent'' and inserting ``the highest
rate of tax in effect for the taxable year under section
11(b)'', and
(ii) by striking ``of the amount'' and inserting
``multiplied by the amount''.
(D) Section 1446(b)(2)(B) is amended by striking ``section
11(b)(1)'' and inserting ``section 11(b)''.
(4) Section 852(b)(1) is amended by striking the last
sentence.
(5)(A) Part I of subchapter B of chapter 5 is amended by
striking section 1551 (and by striking the item relating to
such section in the table of sections for such part).
(B) Section 535(c)(5) is amended to read as follows:
``(5) Cross reference.--For limitation on credit provided
in paragraph (2) or (3) in the case of certain controlled
corporations, see section 1561.''.
(6)(A) Section 1561, as amended by section 12001, is
amended to read as follows:
``SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS CREDIT IN THE
CASE OF CERTAIN CONTROLLED CORPORATIONS.
``(a) In General.--The component members of a controlled
group of corporations on a December 31 shall, for their
taxable years which include such December 31, be limited for
purposes of this subtitle to one $250,000 ($150,000 if any
component member is a corporation described in section
535(c)(2)(B)) amount for purposes of computing the
accumulated earnings credit under section 535(c)(2) and (3).
Such amount shall be divided equally among the component
members of such group on such December 31 unless the
Secretary prescribes regulations permitting an unequal
allocation of such amount.
``(b) Certain Short Taxable Years.--If a corporation has a
short taxable year which does not include a December 31 and
is a component member of a controlled group of corporations
with respect to such taxable year, then for purposes of this
subtitle, the amount to be used in computing the accumulated
earnings credit under section 535(c)(2) and (3) of such
corporation for such taxable year shall be the amount
specified in subsection (a) with respect to such group,
divided by the number of corporations which are component
members of such group on the last day of such taxable year.
For purposes of the preceding sentence, section 1563(b) shall
be applied as if such last day were substituted for December
31.''.
(B) The table of sections for part II of subchapter B of
chapter 5 is amended by striking the item relating to section
1561 and inserting the following new item:
``Sec. 1561. Limitation on accumulated earnings credit in the case of
certain controlled corporations.''.
(7) Section 7518(g)(6)(A) is amended--
(A) by striking ``With respect to the portion'' and
inserting ``In the case of a taxpayer other than a
corporation, with respect to the portion'', and
(B) by striking ``(34 percent in the case of a
corporation)''.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years beginning after December 31, 2018.
[[Page S7743]]
(2) Withholding.--The amendments made by subsection (b)(3)
shall apply to distributions made after December 31, 2018.
(3) Certain transfers.--The amendments made by subsection
(b)(6) shall apply to transfers made after December 31, 2018.
(d) Normalization Requirements.--
(1) In general.--A normalization method of accounting shall
not be treated as being used with respect to any public
utility property for purposes of section 167 or 168 of the
Internal Revenue Code of 1986 if the taxpayer, in computing
its cost of service for ratemaking purposes and reflecting
operating results in its regulated books of account, reduces
the excess tax reserve more rapidly or to a greater extent
than such reserve would be reduced under the average rate
assumption method.
(2) Alternative method for certain taxpayers.--If, as of
the first day of the taxable year that includes the date of
enactment of this Act--
(A) the taxpayer was required by a regulatory agency to
compute depreciation for public utility property on the basis
of an average life or composite rate method, and
(B) the taxpayer's books and underlying records did not
contain the vintage account data necessary to apply the
average rate assumption method,
the taxpayer will be treated as using a normalization method
of accounting if, with respect to such jurisdiction, the
taxpayer uses the alternative method for public utility
property that is subject to the regulatory authority of that
jurisdiction.
(3) Definitions.--For purposes of this subsection--
(A) Excess tax reserve.--The term ``excess tax reserve''
means the excess of--
(i) the reserve for deferred taxes (as described in section
168(i)(9)(A)(ii) of the Internal Revenue Code of 1986) as
determined under the Internal Revenue Code of 1986 as in
effect on the day before the date of the enactment of this
Act, over
(ii) the amount which would be the balance in such reserve
if the amount of such reserve were determined by assuming
that the corporate rate reductions provided in this Act were
in effect for all prior periods.
(B) Average rate assumption method.--The average rate
assumption method is the method under which the excess in the
reserve for deferred taxes is reduced over the remaining
lives of the property as used in its regulated books of
account which gave rise to the reserve for deferred taxes.
Under such method, if timing differences for the property
reverse, the amount of the adjustment to the reserve for the
deferred taxes is calculated by multiplying--
(i) the ratio of the aggregate deferred taxes for the
property to the aggregate timing differences for the property
as of the beginning of the period in question, by
(ii) the amount of the timing differences which reverse
during such period.
(C) Alternative method.--The ``alternative method'' is the
method in which the taxpayer--
(i) computes the excess tax reserve on all public utility
property included in the plant account on the basis of the
weighted average life or composite rate used to compute
depreciation for regulatory purposes, and
(ii) reduces the excess tax reserve ratably over the
remaining regulatory life of the property.
(4) Tax increased for normalization violation.--If, for any
taxable year ending after the date of the enactment of this
Act, the taxpayer does not use a normalization method of
accounting, the taxpayer's tax for the taxable year shall be
increased by the amount by which it reduces its excess tax
reserve more rapidly than permitted under a normalization
method of accounting.
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