[House Report 107-367]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-367

======================================================================



 
 PROVIDING FOR CONSIDERATION OF THE SENATE AMENDMENT TO THE BILL H.R. 
            3090, ECONOMIC SECURITY AND RECOVERY ACT OF 2001

                                _______
                                

   March 6, 2002.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

Ms. Pryce of Ohio, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 360]

    The Committee on Rules, having had under consideration 
House Resolution 360, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                summary of provisions of the resolution

    The resolution provides for a motion offered by the 
chairman of the Committee on Ways and Means or his designee to 
take from the Speaker's table the bill H.R. 3090, to provide 
tax incentives for economic recovery, with the Senate amendment 
thereto, and concur in the Senate amendment with the amendment 
printed in this report. The rule waives all points of order 
against the motion. The rule provides that the Senate amendment 
and the motion shall be considered as read. The rule provides 
one hour of debate in the House equally divided and controlled 
by the chairman and ranking minority member of the Committee on 
Ways and Means. Finally, the rule provides that the previous 
question shall be considered as ordered on the motion to final 
adoption without intervening motion.
    The waiver of all points of order applies to the motion and 
therefore applies to the amendment printed in this report as 
part of the motion.
    The waiver of all points of order includes a waiver of 
section 302 (prohibiting consideration of legislation providing 
new budget authority in excess of a committee's allocation of 
such authority), section 306 (prohibiting consideration of 
legislation within the Budget Committee's jurisdiction, unless 
reported by the Budget Committee), and section 401 (prohibiting 
consideration of legislation providing new entitlement 
authority which becomes effective during the current fiscal 
year) of the Congressional Budget Act of 1974.

                            committee votes

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee Record Vote No. 63

    Date: March 6, 2002.
    Measure: H.R. 3090.
    Motion by: Mr. Frost.
    Summary of motion: To make in order the amendment by 
Representative Gekas to amend the Internal Revenue Code of 1986 
to exclude unemployment compensation from gross income. Applies 
to taxable years beginning after December 31, 2000.
    Results: Defeated 4 to 8.
    Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; 
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; 
Frost--Yea; Hall--Yea; Slaughter--Yea; Hastings (FL)--Yea; 
Dreier--Nay.

              summary of amendment included in the motion

Job creation business provisions

    Special depreciation allowance for certain property--30% 
expensing of the value of capital assets with (1) MACRS lives 
of 20 years or less, (2) leasehold improvements, and (3) 
purchased software with one-year placed in service extension 
for certain property subject to a long production period. It 
will conform AMT depreciation for property eligible for the 
special depreciation allowance (sunset after 36 months).
    The amendment would provide a 5-year carryback of net 
operating losses and would waive the AMT 90% limitation on the 
allowance of losses (including losses carried forward into tax 
years ending in 2001 and 2002) (sunset after 24 months).

Unemployment assistance provisions

    The amendment would provide an additional 13 weeks of 
temporary extended unemployment benefits for those who 
exhausted their regular benefits in any State with an insured 
unemployment rate of at least 4%. Provides for $8 billion in 
Special Reed Act transfers.

Tax benefits for reconstruction of New York City

    The Work Opportunity Tax Credit would be expanded and 
targeted to include certain employees in New York City--for 
employers with 200 or fewer employees and individuals working 
in or relocated from the Liberty Zone as a targeted group 
eligible for a modified WOTC. (40% on first 6,000; allow 
against AMT) (sunset 12/31/03)
    The amendment also provides 30% bonus depreciation for 
property placed in service in the Liberty Zone, $8 billion in 
tax exempt private activity bonds for rebuilding the portion of 
the City damaged in the 9/11/01 terrorist attack, allows a 
total of $9 billion in advance refunding of tax exempt bonds, 
increases Section 179 expensing to $35,000, allows 
involuntarily converted properties to be replaced over 5 years, 
and provides 5-year life for leasehold improvements in the 
Liberty Zone.

Miscellaneous and technical provisions

    --The amendment would allow form 1099 to provided 
electronically.
    --Would reverse the Supreme Court's decision in Gitilitz v. 
Commissioner (relating to subchapter S corporations).
    --Limit use of non-accrual experience method of accounting 
to amount to be received for the performance of qualified 
professional services.
    --Exclusion for foster care payments to apply to payments 
by qualified placement agencies.
    --Temporary increase in the highest specified percentage 
applied to the interest rate used in determining additional 
required contributions to defined benefit pension plans and 
PBGC variable rate premiums.
    --Above-the-line deduction for teacher classroom expenses 
capped at $250 annually for 2002 and 2003.

Extends the following expiring provisions

    --Treatment of nonrefundable personal credits under the 
individual alternative minimum tax.
    --Tax credit for electric vehicles.
    --Tax credit for electricity production from alternative 
energy sources.
    --Work opportunity tax credit.
    --Welfare-to-work tax credit.
    --Deductions for qualified clean-fuel vehicle property and 
qualified clean-fuel refueling property.
    --Suspension of 100 percent-of-net-income limitation on 
percentage depletion for oil and gas from marginal wells.
    --Authority to issue qualified zone academy bonds.
    --Temporary increase in limit on cover of run excise tax 
revenues to Puerto Rico and the Virgin Islands.
    --Tax on failure to comply with mental health parity 
requirements applicable to group health plans.
    --Suspension of section 809 related to the reduction in 
policyholder dividends for mutual life insurance companies.
    --Archer medical savings account.
    --Accelerated depreciation and employment tax credit for 
incentives on tribal lands.
    --Temporary Assistance for Needy Families (TANF) 
supplemental grants and contingency fund.

                text of amendment included in the motion

  In the amendment of the Senate, strike the matter proposed to 
be inserted by the Senate and insert the following:

SECTION 1. SHORT TITLE; ETC.

  (a) Short Title.--This Act may be cited as the ``Job Creation 
and Worker Assistance Act of 2002''.
  (b) References to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment 
or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
  (c) Table of Contents.--

Sec. 1. Short title; etc.

                      TITLE I--BUSINESS PROVISIONS

Sec. 101. Special depreciation allowance for certain property acquired 
          after September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 years; 
          temporary suspension of 90 percent AMT limit.

                    TITLE II--UNEMPLOYMENT ASSISTANCE

Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of 
          temporary extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

Sec. 301. Tax benefits for area of New York City damaged in terrorist 
          attacks on September 11, 2001.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation 
          not to result in adjustment to basis of stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of 
          accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by 
          qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account 
          certain expenses of elementary and secondary school teachers.

                    Subtitle B--Technical Corrections

Sec. 411. Amendments related to Economic Growth and Tax Relief 
          Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of 
          2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.

           TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

Sec. 601. Allowance of nonrefundable personal credits against regular 
          and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable 
          resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling 
          property.
Sec. 607. Taxable income limit on percentage depletion for oil and 
          natural gas produced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health 
          benefits.
Sec. 611. Temporary special rules for taxation of life insurance 
          companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian 
          reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene 
          terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population 
          increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.

                      TITLE I--BUSINESS PROVISIONS

SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
                    AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 
                    2004.

  (a) In General.--Section 168 (relating to accelerated cost 
recovery system) is amended by adding at the end the following 
new subsection:
  ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
          ``(1) Additional allowance.--In the case of any 
        qualified property--
                  ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which 
                such property is placed in service shall 
                include an allowance equal to 30 percent of the 
                adjusted basis of the qualified property, and
                  ``(B) the adjusted basis of the qualified 
                property shall be reduced by the amount of such 
                deduction before computing the amount otherwise 
                allowable as a depreciation deduction under 
                this chapter for such taxable year and any 
                subsequent taxable year.
          ``(2) Qualified property.--For purposes of this 
        subsection--
                  ``(A) In general.--The term `qualified 
                property' means property--
                          ``(i)(I) to which this section 
                        applies which has a recovery period of 
                        20 years or less,
                          ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for 
                        which a deduction is allowable under 
                        section 167(a) without regard to this 
                        subsection,
                          ``(III) which is water utility 
                        property, or
                          ``(IV) which is qualified leasehold 
                        improvement property,
                          ``(ii) the original use of which 
                        commences with the taxpayer after 
                        September 10, 2001,
                          ``(iii) which is--
                                  ``(I) acquired by the 
                                taxpayer after September 10, 
                                2001, and before September 11, 
                                2004, but only if no written 
                                binding contract for the 
                                acquisition was in effect 
                                before September 11, 2001, or
                                  ``(II) acquired by the 
                                taxpayer pursuant to a written 
                                binding contract which was 
                                entered into after September 
                                10, 2001, and before September 
                                11, 2004, and
                          ``(iv) which is placed in service by 
                        the taxpayer before January 1, 2005, 
                        or, in the case of property described 
                        in subparagraph (B), before January 1, 
                        2006.
                  ``(B) Certain property having longer 
                production periods treated as qualified 
                property.--
                          ``(i) In general.--The term 
                        `qualified property' includes 
                        property--
                                  ``(I) which meets the 
                                requirements of clauses (i), 
                                (ii), and (iii) of subparagraph 
                                (A),
                                  ``(II) which has a recovery 
                                period of at least 10 years or 
                                is transportation property, and
                                  ``(III) which is subject to 
                                section 263A by reason of 
                                clause (ii) or (iii) of 
                                subsection (f)(1)(B) thereof.
                          ``(ii) Only pre-september 11, 2004, 
                        basis eligible for additional 
                        allowance.--In the case of property 
                        which is qualified property solely by 
                        reason of clause (i), paragraph (1) 
                        shall apply only to the extent of the 
                        adjusted basis thereof attributable to 
                        manufacture, construction, or 
                        production before September 11, 2004.
                          ``(iii) Transportation property.--For 
                        purposes of this subparagraph, the term 
                        `transportation property' means 
                        tangible personal property used in the 
                        trade or business of transporting 
                        persons or property.
                  ``(C) Exceptions.--
                          ``(i) Alternative depreciation 
                        property.--The term `qualified 
                        property' shall not include any 
                        property to which the alternative 
                        depreciation system under subsection 
                        (g) applies, determined--
                                  ``(I) without regard to 
                                paragraph (7) of subsection (g) 
                                (relating to election to have 
                                system apply), and
                                  ``(II) after application of 
                                section 280F(b) (relating to 
                                listed property with limited 
                                business use).
                          ``(ii) Qualified new york liberty 
                        zone leasehold improvement property.--
                        The term `qualified property' shall not 
                        include any qualified New York Liberty 
                        Zone leasehold improvement property (as 
                        defined in section 1400L(c)(2)).
                          ``(iii) Election out.--If a taxpayer 
                        makes an election under this clause 
                        with respect to any class of property 
                        for any taxable year, this subsection 
                        shall not apply to all property in such 
                        class placed in service during such 
                        taxable year.
                  ``(D) Special rules.--
                          ``(i) Self-constructed property.--In 
                        the case of a taxpayer manufacturing, 
                        constructing, or producing property for 
                        the taxpayer's own use, the 
                        requirements of clause (iii) of 
                        subparagraph (A) shall be treated as 
                        met if the taxpayer begins 
                        manufacturing, constructing, or 
                        producing the property after September 
                        10, 2001, and before September 11, 
                        2004.
                          ``(ii) Sale-leasebacks.--For purposes 
                        of subparagraph (A)(ii), if property--
                                  ``(I) is originally placed in 
                                service after September 10, 
                                2001, by a person, and
                                  ``(II) sold and leased back 
                                by such person within 3 months 
                                after the date such property 
                                was originally placed in 
                                service,
                        such property shall be treated as 
                        originally placed in service not 
                        earlier than the date on which such 
                        property is used under the leaseback 
                        referred to in subclause (II).
                  ``(E) Coordination with section 280f.--For 
                purposes of section 280F--
                          ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in 
                        section 280F(d)(5)) which is qualified 
                        property, the Secretary shall increase 
                        the limitation under section 
                        280F(a)(1)(A)(i) by $4,600.
                          ``(ii) Listed property.--The 
                        deduction allowable under paragraph (1) 
                        shall be taken into account in 
                        computing any recapture amount under 
                        section 280F(b)(2).
                  ``(F) Deduction allowed in computing minimum 
                tax.--For purposes of determining alternative 
                minimum taxable income under section 55, the 
                deduction under subsection (a) for qualified 
                property shall be determined under this section 
                without regard to any adjustment under section 
                56.
          ``(3) Qualified leasehold improvement property.--For 
        purposes of this subsection--
                  ``(A) In general.--The term `qualified 
                leasehold improvement property' means any 
                improvement to an interior portion of a 
                building which is nonresidential real property 
                if--
                          ``(i) such improvement is made under 
                        or pursuant to a lease (as defined in 
                        subsection (h)(7))--
                                  ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                  ``(II) by the lessor of such 
                                portion,
                          ``(ii) such portion is to be occupied 
                        exclusively by the lessee (or any 
                        sublessee) of such portion, and
                          ``(iii) such improvement is placed in 
                        service more than 3 years after the 
                        date the building was first placed in 
                        service.
                  ``(B) Certain improvements not included.--
                Such term shall not include any improvement for 
                which the expenditure is attributable to--
                          ``(i) the enlargement of the 
                        building,
                          ``(ii) any elevator or escalator,
                          ``(iii) any structural component 
                        benefiting a common area, and
                          ``(iv) the internal structural 
                        framework of the building.
                  ``(C) Definitions and special rules.--For 
                purposes of this paragraph--
                          ``(i) Commitment to lease treated as 
                        lease.--A commitment to enter into a 
                        lease shall be treated as a lease, and 
                        the parties to such commitment shall be 
                        treated as lessor and lessee, 
                        respectively.
                          ``(ii) Related persons.--A lease 
                        between related persons shall not be 
                        considered a lease. For purposes of the 
                        preceding sentence, the term `related 
                        persons' means--
                                  ``(I) members of an 
                                affiliated group (as defined in 
                                section 1504), and
                                  ``(II) persons having a 
                                relationship described in 
                                subsection (b) of section 267; 
                                except that, for purposes of 
                                this clause, the phrase `80 
                                percent or more' shall be 
                                substituted for the phrase 
                                `more than 50 percent' each 
                                place it appears in such 
                                subsection.''
  (b) Effective Date.--The amendments made by this section 
shall apply to property placed in service after September 10, 
2001, in taxable years ending after such date.

SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5 
                    YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT 
                    LIMIT.

  (a) In General.--Paragraph (1) of section 172(b) (relating to 
years to which loss may be carried) is amended by adding at the 
end the following new subparagraph:
                  ``(H) In the case of a taxpayer which has a 
                net operating loss for any taxable year ending 
                during 2001 or 2002, subparagraph (A)(i) shall 
                be applied by substituting `5' for `2' and 
                subparagraph (F) shall not apply.''.
  (b) Election To Disregard 5-Year Carryback.--Section 172 
(relating to net operating loss deduction) is amended by 
redesignating subsection (j) as subsection (k) and by inserting 
after subsection (i) the following new subsection:
  ``(j) Election To Disregard 5-Year Carryback for Certain Net 
Operating Losses.--Any taxpayer entitled to a 5-year carryback 
under subsection (b)(1)(H) from any loss year may elect to have 
the carryback period with respect to such loss year determined 
without regard to subsection (b)(1)(H). Such election shall be 
made in such manner as may be prescribed by the Secretary and 
shall be made by the due date (including extensions of time) 
for filing the taxpayer's return for the taxable year of the 
net operating loss. Such election, once made for any taxable 
year, shall be irrevocable for such taxable year.''.
  (c) Temporary Suspension of 90 Percent Limit on Certain NOL 
Carryovers.--
          (1) In general.--Subparagraph (A) of section 56(d)(1) 
        (relating to general rule defining alternative tax net 
        operating loss deduction) is amended to read as 
        follows:
                  ``(A) the amount of such deduction shall not 
                exceed the sum of--
                          ``(i) the lesser of--
                                  ``(I) the amount of such 
                                deduction attributable to net 
                                operating losses (other than 
                                the deduction attributable to 
                                carryovers described in clause 
                                (ii)(I)), or
                                  ``(II) 90 percent of 
                                alternative minimum taxable 
                                income determined without 
                                regard to such deduction, plus
                          ``(ii) the lesser of--
                                  ``(I) the amount of such 
                                deduction attributable to the 
                                sum of carrybacks of net 
                                operating losses for taxable 
                                years ending during 2001 or 
                                2002 and carryforwards of net 
                                operating losses to taxable 
                                years ending during 2001 and 
                                2002, or
                                  ``(II) alternative minimum 
                                taxable income determined 
                                without regard to such 
                                deduction reduced by the amount 
                                determined under clause (i), 
                                and''.
          (2) Effective date.--The amendment made by this 
        subsection shall apply to taxable years ending before 
        January 1, 2003.
  (d) Effective Date.--Except as provided in subsection (c), 
the amendments made by this section shall apply to net 
operating losses for taxable years ending after December 31, 
2000.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

SEC. 201. SHORT TITLE.

  This title may be cited as the ``Temporary Extended 
Unemployment Compensation Act of 2002''.

SEC. 202. FEDERAL-STATE AGREEMENTS.

  (a) In General.--Any State which desires to do so may enter 
into and participate in an agreement under this title with the 
Secretary of Labor (in this title referred to as the 
``Secretary''). Any State which is a party to an agreement 
under this title may, upon providing 30 days' written notice to 
the Secretary, terminate such agreement.
  (b) Provisions of Agreement.--Any agreement under subsection 
(a) shall provide that the State agency of the State will make 
payments of temporary extended unemployment compensation to 
individuals who--
          (1) have exhausted all rights to regular compensation 
        under the State law or under Federal law with respect 
        to a benefit year (excluding any benefit year that 
        ended before March 15, 2001);
          (2) have no rights to regular compensation or 
        extended compensation with respect to a week under such 
        law or any other State unemployment compensation law or 
        to compensation under any other Federal law;
          (3) are not receiving compensation with respect to 
        such week under the unemployment compensation law of 
        Canada; and
          (4) filed an initial claim for regular compensation 
        on or after March 15, 2001.
  (c) Exhaustion of Benefits.--For purposes of subsection 
(b)(1), an individual shall be deemed to have exhausted such 
individual's rights to regular compensation under a State law 
when--
          (1) no payments of regular compensation can be made 
        under such law because such individual has received all 
        regular compensation available to such individual based 
        on employment or wages during such individual's base 
        period; or
          (2) such individual's rights to such compensation 
        have been terminated by reason of the expiration of the 
        benefit year with respect to which such rights existed.
  (d) Weekly Benefit Amount, Etc.--For purposes of any 
agreement under this title--
          (1) the amount of temporary extended unemployment 
        compensation which shall be payable to any individual 
        for any week of total unemployment shall be equal to 
        the amount of the regular compensation (including 
        dependents' allowances) payable to such individual 
        during such individual's benefit year under the State 
        law for a week of total unemployment;
          (2) the terms and conditions of the State law which 
        apply to claims for regular compensation and to the 
        payment thereof shall apply to claims for temporary 
        extended unemployment compensation and the payment 
        thereof, except--
                  (A) that an individual shall not be eligible 
                for temporary extended unemployment 
                compensation under this title unless, in the 
                base period with respect to which the 
                individual exhausted all rights to regular 
                compensation under the State law, the 
                individual had 20 weeks of full-time insured 
                employment or the equivalent in insured wages, 
                as determined under the provisions of the State 
                law implementing section 202(a)(5) of the 
                Federal-State Extended Unemployment 
                Compensation Act of 1970 (26 U.S.C. 3304 note); 
                and
                  (B) where otherwise inconsistent with the 
                provisions of this title or with the 
                regulations or operating instructions of the 
                Secretary promulgated to carry out this title; 
                and
          (3) the maximum amount of temporary extended 
        unemployment compensation payable to any individual for 
        whom a temporary extended unemployment compensation 
        account is established under section 203 shall not 
        exceed the amount established in such account for such 
        individual.
  (e) Election by States.--Notwithstanding any other provision 
of Federal law (and if State law permits), the Governor of a 
State that is in an extended benefit period may provide for the 
payment of temporary extended unemployment compensation in lieu 
of extended compensation to individuals who otherwise meet the 
requirements of this section. Such an election shall not 
require a State to trigger off an extended benefit period.

SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.

  (a) In General.--Any agreement under this title shall provide 
that the State will establish, for each eligible individual who 
files an application for temporary extended unemployment 
compensation, a temporary extended unemployment compensation 
account with respect to such individual's benefit year.
  (b) Amount in Account.--
          (1) In general.--The amount established in an account 
        under subsection (a) shall be equal to the lesser of--
                  (A) 50 percent of the total amount of regular 
                compensation (including dependents' allowances) 
                payable to the individual during the 
                individual's benefit year under such law, or
                  (B) 13 times the individual's average weekly 
                benefit amount for the benefit year.
          (2) Weekly benefit amount.--For purposes of this 
        subsection, an individual's weekly benefit amount for 
        any week is the amount of regular compensation 
        (including dependents' allowances) under the State law 
        payable to such individual for such week for total 
        unemployment.
  (c) Special Rule.--
          (1) In general.--Notwithstanding any other provision 
        of this section, if, at the time that the individual's 
        account is exhausted, such individual's State is in an 
        extended benefit period (as determined under paragraph 
        (2)), then, such account shall be augmented by an 
        amount equal to the amount originally established in 
        such account (as determined under subsection (b)(1)).
          (2) Extended benefit period.--For purposes of 
        paragraph (1), a State shall be considered to be in an 
        extended benefit period if, at the time of exhaustion 
        (as described in paragraph (1))--
                  (A) such a period is then in effect for such 
                State under the Federal-State Extended 
                Unemployment Compensation Act of 1970; or
                  (B) such a period would then be in effect for 
                such State under such Act if section 203(d) of 
                such Act were applied as if it had been amended 
                by striking ``5'' each place it appears and 
                inserting ``4''.

SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF 
                    TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.

  (a) General Rule.--There shall be paid to each State that has 
entered into an agreement under this title an amount equal to 
100 percent of the temporary extended unemployment compensation 
paid to individuals by the State pursuant to such agreement.
  (b) Treatment of Reimbursable Compensation.--No payment shall 
be made to any State under this section in respect of any 
compensation to the extent the State is entitled to 
reimbursement in respect of such compensation under the 
provisions of any Federal law other than this title or chapter 
85 of title 5, United States Code. A State shall not be 
entitled to any reimbursement under such chapter 85 in respect 
of any compensation to the extent the State is entitled to 
reimbursement under this title in respect of such compensation.
  (c) Determination of Amount.--Sums payable to any State by 
reason of such State having an agreement under this title shall 
be payable, either in advance or by way of reimbursement (as 
may be determined by the Secretary), in such amounts as the 
Secretary estimates the State will be entitled to receive under 
this title for each calendar month, reduced or increased, as 
the case may be, by any amount by which the Secretary finds 
that the Secretary's estimates for any prior calendar month 
were greater or less than the amounts which should have been 
paid to the State. Such estimates may be made on the basis of 
such statistical, sampling, or other method as may be agreed 
upon by the Secretary and the State agency of the State 
involved.

SEC. 205. FINANCING PROVISIONS.

  (a) In General.--Funds in the extended unemployment 
compensation account (as established by section 905(a) of the 
Social Security Act (42 U.S.C. 1105(a)) ofthe Unemployment 
Trust Fund (as established by section 904(a) of such Act (42 U.S.C. 
1104(a)) shall be used for the making of payments to States having 
agreements entered into under this title.
  (b) Certification.--The Secretary shall from time to time 
certify to the Secretary of the Treasury for payment to each 
State the sums payable to such State under this title. The 
Secretary of the Treasury, prior to audit or settlement by the 
General Accounting Office, shall make payments to the State in 
accordance with such certification, by transfers from the 
extended unemployment compensation account (as so established) 
to the account of such State in the Unemployment Trust Fund (as 
so established).
  (c) Assistance to States.--There are appropriated out of the 
employment security administration account (as established by 
section 901(a) of the Social Security Act (42 U.S.C. 1101(a)) 
of the Unemployment Trust Fund, without fiscal year limitation, 
such funds as may be necessary for purposes of assisting States 
(as provided in title III of the Social Security Act (42 U.S.C. 
501 et seq.)) in meeting the costs of administration of 
agreements under this title.
  (d) Appropriations for Certain Payments.--There are 
appropriated from the general fund of the Treasury, without 
fiscal year limitation, to the extended unemployment 
compensation account (as so established) of the Unemployment 
Trust Fund (as so established) such sums as the Secretary 
estimates to be necessary to make the payments under this 
section in respect of--
          (1) compensation payable under chapter 85 of title 5, 
        United States Code; and
          (2) compensation payable on the basis of services to 
        which section 3309(a)(1) of the Internal Revenue Code 
        of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall 
not be required to be repaid.

SEC. 206. FRAUD AND OVERPAYMENTS.

  (a) In General.--If an individual knowingly has made, or 
caused to be made by another, a false statement or 
representation of a material fact, or knowingly has failed, or 
caused another to fail, to disclose a material fact, and as a 
result of such false statement or representation or of such 
nondisclosure such individual has received an amount of 
temporary extended unemployment compensation under this title 
to which he was not entitled, such individual--
          (1) shall be ineligible for further temporary 
        extended unemployment compensation under this title in 
        accordance with the provisions of the applicable State 
        unemployment compensation law relating to fraud in 
        connection with a claim for unemployment compensation; 
        and
          (2) shall be subject to prosecution under section 
        1001 of title 18, United States Code.
  (b) Repayment.--In the case of individuals who have received 
amounts of temporary extended unemployment compensation under 
this title to which they were not entitled, the State shall 
require such individuals to repay the amounts of such temporary 
extended unemployment compensation to the State agency, except 
that the State agency may waive such repayment if it determines 
that--
          (1) the payment of such temporary extended 
        unemployment compensation was without fault on the part 
        of any such individual; and
          (2) such repayment would be contrary to equity and 
        good conscience.
  (c) Recovery by State Agency.--
          (1) In general.--The State agency may recover the 
        amount to be repaid, or any part thereof, by deductions 
        from any temporary extended unemployment compensation 
        payable to such individual under this title or from any 
        unemployment compensation payable to such individual 
        under any Federal unemployment compensation law 
        administered by the State agency or under any other 
        Federal law administered by the State agency which 
        provides for the payment of any assistance or allowance 
        with respect to any week of unemployment, during the 3-
        year period after the date such individuals received 
        the payment of the temporary extended unemployment 
        compensation to which they were not entitled, except 
        that no single deduction may exceed 50 percent of the 
        weekly benefit amount from which such deduction is 
        made.
          (2) Opportunity for hearing.--No repayment shall be 
        required, and no deduction shall be made, until a 
        determination has been made, notice thereof and an 
        opportunity for a fair hearing has been given to the 
        individual, and the determination has become final.
  (d) Review.--Any determination by a State agency under this 
section shall be subject to review in the same manner and to 
the same extent as determinations under the State unemployment 
compensation law, and only in that manner and to that extent.

SEC. 207. DEFINITIONS.

  In this title, the terms ``compensation'', ``regular 
compensation'', ``extended compensation'', ``additional 
compensation'', ``benefit year'', ``base period'', ``State'', 
``State agency'', ``State law'', and ``week'' have the 
respective meanings given such terms under section 205 of the 
Federal-State Extended Unemployment Compensation Act of 1970 
(26 U.S.C. 3304 note).

SEC. 208. APPLICABILITY.

  An agreement entered into under this title shall apply to 
weeks of unemployment--
          (1) beginning after the date on which such agreement 
        is entered into; and
          (2) ending before January 1, 2003.

SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.

  (a) Repeal of Certain Provisions Added by the Balanced Budget 
Act of 1997.--
          (1) In general.--The following provisions of section 
        903 of the Social Security Act (42 U.S.C. 1103) are 
        repealed:
                  (A) Paragraph (3) of subsection (a).
                  (B) The last sentence of subsection (c)(2).
          (2) Savings provision.--Any amounts transferred 
        before the date of enactment of this Act under the 
        provision repealed by paragraph (1)(A) shall remain 
        subject to section 903 of the Social Security Act, as 
        last in effect before such date of enactment.
  (b) Special Transfer in Fiscal Year 2002.--Section 903 of the 
Social Security Act is amended by adding at the end the 
following:

                 ``Special Transfer in Fiscal Year 2002

  ``(d)(1) The Secretary of the Treasury shall transfer (as of 
the date determined under paragraph (5)) from the Federal 
unemployment account to the account of each State in the 
Unemployment Trust Fund the amount determined with respect to 
such State under paragraph (2).
  ``(2)(A) The amount to be transferred under this subsection 
to a State account shall (as determined by the Secretary of 
Labor and certified by such Secretary to the Secretary of the 
Treasury) be equal to--
          ``(i) the amount which would have been required to 
        have been transferred under this section to such 
        account at the beginning of fiscal year 2002 if--
                  ``(I) section 209(a)(1) of the Temporary 
                Extended Unemployment Compensation Act of 2002 
                had been enacted before the close of fiscal 
                year 2001, and
                  ``(II) section 5402 of Public Law 105-33 
                (relating to increase in Federal unemployment 
                account ceiling) had not been enacted, minus
          ``(ii) the amount which was in fact transferred under 
        this section to such account at the beginning of fiscal 
        year 2002.
  ``(B) Notwithstanding the provisions of subparagraph (A)--
          ``(i) the aggregate amount transferred to the States 
        under this subsection may not exceed a total of 
        $8,000,000,000; and
          ``(ii) all amounts determined under subparagraph (A) 
        shall be reduced ratably, if and to the extent 
        necessary in order to comply with the limitation under 
        clause (i).
  ``(3)(A) Except as provided in paragraph (4), amounts 
transferred to a State account pursuant to this subsection may 
be used only in the payment of cash benefits--
          ``(i) to individuals with respect to their 
        unemployment, and
          ``(ii) which are allowable under subparagraph (B) or 
        (C).
  ``(B)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable as--
          ``(I) regular compensation, or
          ``(II) additional compensation, upon the exhaustion 
        of any temporary extended unemployment compensation (if 
        such State has entered into an agreement under the 
        Temporary Extended Unemployment Compensation Act of 
        2002), for individuals eligible for regular 
        compensation under the unemployment compensation law of 
        such State.
  ``(ii) Any additional compensation under clause (i) may not 
be taken into account for purposes of any determination 
relating to the amount of any extended compensation for which 
an individual might be eligible.
  ``(C)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable to 1 or 
more categories of individuals not otherwise eligible for 
regular compensation under the unemployment compensation law of 
such State, including those described in clause (iii).
  ``(ii) The benefits paid under this subparagraph to any 
individual may not, for any period of unemployment, exceed the 
maximum amount of regular compensation authorized under the 
unemployment compensation law of such State for that same 
period, plus any additional compensation (described in 
subparagraph (B)(i)) which could have been paid with respect to 
that amount.
  ``(iii) The categories of individuals described in this 
clause include the following:
          ``(I) Individuals who are seeking, or available for, 
        only part-time (and not full-time) work.
          ``(II) Individuals who would be eligible for regular 
        compensation under the unemployment compensation law of 
        such State under an alternative base period.
  ``(D) Amounts transferred to a State account under this 
subsection may be used in the payment of cash benefits to 
individuals only for weeks of unemployment beginning after the 
date of enactment of this subsection.
  ``(4) Amounts transferred to a State account under this 
subsection may be used for the administration of its 
unemployment compensation law and public employment offices 
(including in connection with benefits described in paragraph 
(3) and any recipients thereof), subject to the same conditions 
as set forth in subsection (c)(2) (excluding subparagraph (B) 
thereof, and deeming the reference to `subsections (a) and (b)' 
in subparagraph (D) thereof to include this subsection).
  ``(5) Transfers under this subsection shall be made within 10 
days after the date of enactment of this paragraph.''.
  (c) Limitations on Transfers.--Section 903(b) of the Social 
Security Act shall apply to transfers under section 903(d) of 
such Act (as amended by this section). For purposes of the 
preceding sentence, such section 903(b) shall be deemed to be 
amended as follows:
          (1) By substituting ``the transfer date described in 
        subsection (d)(5)'' for ``October 1 of any fiscal 
        year''.
          (2) By substituting ``remain in the Federal 
        unemployment account'' for ``be transferred to the 
        Federal unemployment account as of the beginning of 
        such October 1''.
          (3) By substituting ``fiscal year 2002 (after the 
        transfer date described in subsection (d)(5))'' for 
        ``the fiscal year beginning on such October 1''.
          (4) By substituting ``under subsection (d)'' for ``as 
        of October 1 of such fiscal year''.
          (5) By substituting ``(as of the close of fiscal year 
        2002)'' for ``(as of the close of such fiscal year)''.
  (d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 
3306(f)(2) of the Internal Revenue Code of 1986 are amended by 
inserting ``or 903(d)(4)'' before ``of the Social Security 
Act''.
  (2) Section 303(a)(5) of the Social Security Act is amended 
in the second proviso by inserting ``or 903(d)(4)'' after 
``903(c)(2)''.
  (e) Regulations.--The Secretary of Labor may prescribe any 
operating instructions or regulations necessary to carry out 
this section and the amendments made by this section.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST 
                    ATTACKS ON SEPTEMBER 11, 2001.

  (a) In General.--Chapter 1 is amended by adding at the end 
the following new subchapter:

             ``Subchapter Y--New York Liberty Zone Benefits

        ``Sec. 1400L. Tax benefits for New York Liberty Zone.

``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.

  ``(a) Expansion of Work Opportunity Tax Credit.--
          ``(1) In general.--For purposes of section 51, a New 
        York Liberty Zone business employee shall be treated as 
        a member of a targeted group.
          ``(2) New york liberty zone business employee.--For 
        purposes of this subsection--
                  ``(A) In general.--The term `New York Liberty 
                Zone business employee' means, with respect to 
                any period, any employee of a New York Liberty 
                Zone business if substantially all the services 
                performed during such period by such employee 
                for such business are performed in the New York 
                Liberty Zone.
                  ``(B) Inclusion of certain employees outside 
                the new york liberty zone.--
                          ``(i) In general.--In the case of a 
                        New York Liberty Zone business 
                        described in subclause (II) of 
                        subparagraph (C)(i), the term `New York 
                        Liberty Zone business employee' 
                        includes any employee of such business 
                        (not described in subparagraph (A)) if 
                        substantially all the services 
                        performed during such period by such 
                        employee for such business are 
                        performed in the City of New York, New 
                        York.
                          ``(ii) Limitation.--The number of 
                        employees of such a business that are 
                        treated as New York Liberty zone 
                        business employees on any day by reason 
                        of clause (i) shall not exceed the 
                        excess of--
                                  ``(I) the number of employees 
                                of such business on September 
                                11, 2001, in the New York 
                                Liberty Zone, over
                                  ``(II) the number of New York 
                                Liberty Zone business employees 
                                (determined without regard to 
                                this subparagraph) of such 
                                business on the day to which 
                                the limitation is being 
                                applied.
                        The Secretary may require any trade or 
                        business to have the number determined 
                        under subclause (I) verified by the New 
                        York State Department of Labor.
                  ``(C) New york liberty zone business.--
                          ``(i) In general.--The term `New York 
                        Liberty Zone business' means any trade 
                        or business which is--
                                  ``(I) located in the New York 
                                Liberty Zone, or
                                  ``(II) located in the City of 
                                New York, New York, outside the 
                                New York Liberty Zone, as a 
                                result of the physical 
                                destruction or damage of such 
                                place of business by the 
                                September 11, 2001, terrorist 
                                attack.
                          ``(ii) Credit not allowed for large 
                        businesses.--The term `New York Liberty 
                        Zone business' shall not include any 
                        trade or business for any taxable year 
                        if such trade or business employed an 
                        average of more than 200 employees on 
                        business days during the taxable year.
                  ``(D) Special rules for determining amount of 
                credit.--For purposes of applying subpart F of 
                part IV of subchapter B of this chapter to 
                wages paid or incurred to any New York Liberty 
                Zone business employee--
                          ``(i) section 51(a) shall be applied 
                        by substituting `qualified wages' for 
                        `qualified first-year wages',
                          ``(ii) the rules of section 52 shall 
                        apply for purposes of determining the 
                        number of employees under subparagraph 
                        (B),
                          ``(iii) subsections (c)(4) and (i)(2) 
                        of section 51 shall not apply, and
                          ``(iv) in determining qualified 
                        wages, the following shall apply in 
                        lieu of section 51(b):
                                  ``(I) Qualified wages.--The 
                                term `qualified wages' means 
                                wages paid or incurred by the 
                                employer to individuals who are 
                                New York Liberty Zone business 
                                employees of such employer for 
                                work performed during calendar 
                                year 2002 or 2003.
                                  ``(II) Only first $6,000 of 
                                wages per calendar year taken 
                                into account.--The amount of 
                                the qualified wages which may 
                                be taken into account with 
                                respect to any individual shall 
                                not exceed $6,000 per calendar 
                                year.
  ``(b) Special Allowance for Certain Property Acquired After 
September 10, 2001.--
          ``(1) Additional allowance.--In the case of any 
        qualified New York Liberty Zone property--
                  ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which 
                such property is placed in service shall 
                include an allowance equal to 30 percent of the 
                adjusted basis of such property, and
                  ``(B) the adjusted basis of the qualified New 
                York Liberty Zone property shall be reduced by 
                the amount of such deduction before computing 
                the amount otherwise allowable as a 
                depreciation deduction under this chapter for 
                such taxable year and any subsequent taxable 
                year.
          ``(2) Qualified new york liberty zone property.--For 
        purposes of this subsection--
                  ``(A) In general.--The term `qualified New 
                York Liberty Zone property' means property--
                          ``(i)(I) which is described in 
                        section 168(k)(2)(A)(i), or
                          ``(II) which is nonresidential real 
                        property, or residential rental 
                        property, which is described in 
                        subparagraph (B),
                          ``(ii) substantially all of the use 
                        of which is in the New York Liberty 
                        Zone and is in the active conduct of a 
                        trade or business by the taxpayer in 
                        such Zone,
                          ``(iii) the original use of which in 
                        the New York Liberty Zone commences 
                        with the taxpayer after September 10, 
                        2001,
                          ``(iv) which is acquired by the 
                        taxpayer by purchase (as defined in 
                        section 179(d)) after September 10, 
                        2001, but only if no written binding 
                        contract for the acquisition was in 
                        effect before September 11, 2001, and
                          ``(v) which is placed in service by 
                        the taxpayer on or before the 
                        termination date.
                The term `termination date' means December 31, 
                2006 (December 31, 2009, in the case of 
                nonresidential real property and residential 
                rental property).
                  ``(B) Eligible real property.--Nonresidential 
                real property or residential rental property is 
                described in this subparagraph only to the 
                extent it rehabilitates real property damaged, 
                or replaces real property destroyed or 
                condemned, as a result of the September 11, 
                2001, terrorist attack. For purposes of the 
                preceding sentence, property shall be treated 
                as replacing real property destroyed or 
                condemned if, as part of an integrated plan, 
                such property replaces real property which is 
                included in a continuous area which includes 
                real property destroyed or condemned.
                  ``(C) Exceptions.--
                          ``(i) 30 percent additional allowance 
                        property.--Such term shall not include 
                        property to which section 168(k) 
                        applies.
                          ``(ii) Alternative depreciation 
                        property.--The term `qualified New York 
                        Liberty Zone property' shall not 
                        include any property described in 
                        section 168(k)(2)(C)(i).
                          ``(iii) Qualified new york liberty 
                        zone leasehold improvement property.--
                        Such term shall not include any 
                        qualified New York Liberty Zone 
                        leasehold improvement property.
                          ``(iv) Election out.--For purposes of 
                        this subsection, rules similar to the 
                        rules of section 168(k)(2)(C)(iii) 
                        shall apply.
                  ``(D) Special rules.--For purposes of this 
                subsection, rules similar to the rules of 
                section 168(k)(2)(D) shall apply, except that 
                clause (i) thereof shall be applied without 
                regard to `and before September 11, 2004'.
                  ``(E) Allowance against alternative minimum 
                tax.--For purposes of this subsection, rules 
                similar to the rules of section 168(k)(2)(F) 
                shall apply.
  ``(c) 5-Year Recovery Period for Depreciation of Certain 
Leasehold Improvements.--
          ``(1) In general.--For purposes of section 168, the 
        term `5-year property' includes any qualified New York 
        Liberty Zone leasehold improvement property.
          ``(2) Qualified new york liberty zone leasehold 
        improvement property.--For purposes of this section, 
        the term `qualified New York Liberty Zone leasehold 
        improvement property' means qualified leasehold 
        improvement property (as defined in section 168(k)(3)) 
        if--
                  ``(A) such building is located in the New 
                York Liberty Zone,
                  ``(B) such improvement is placed in service 
                after September 10, 2001, and before January 1, 
                2007, and
                  ``(C) no written binding contract for such 
                improvement was in effect before September 11, 
                2001.
          ``(3) Requirement to use straight line method.--The 
        applicable depreciation method under section 168 shall 
        be the straight line method in the case of qualified 
        New York Liberty Zone leasehold improvement property.
          ``(4) 9-year recovery period under alternative 
        system.--For purposes of section 168(g), the class life 
        of qualified New York Liberty Zone leasehold 
        improvement property shall be 9 years.
  ``(d) Tax-Exempt Bond Financing.--
          ``(1) In general.--For purposes of this title, any 
        qualified New York Liberty Bond shall be treated as an 
        exempt facility bond.
          ``(2) Qualified new york liberty bond.--For purposes 
        of this subsection, the term `qualified New York 
        Liberty Bond' means any bond issued as part of an issue 
        if--
                  ``(A) 95 percent or more of the net proceeds 
                (as defined in section 150(a)(3)) of such issue 
                are to be used for qualified project costs,
                  ``(B) such bond is issued by the State of New 
                York or any political subdivision thereof,
                  ``(C) the Governor or the Mayor designates 
                such bond for purposes of this section, and
                  ``(D) such bond is issued after the date of 
                the enactment of this section and before 
                January 1, 2005.
          ``(3) Limitations on amount of bonds.--
                  ``(A) Aggregate amount designated.--The 
                maximum aggregate face amount of bonds which 
                may be designated under this subsection shall 
                not exceed $8,000,000,000, of which not to 
                exceed $4,000,000,000 may be designated by the 
                Governor and not to exceed $4,000,000,000 may 
                be designated by the Mayor.
                  ``(B) Specific limitations.--The aggregate 
                face amount of bonds issued which are to be 
                used for--
                          ``(i) costs for property located 
                        outside the New York Liberty Zone shall 
                        not exceed $2,000,000,000,
                          ``(ii) residential rental property 
                        shall not exceed $1,600,000,000, and
                          ``(iii) costs with respect to 
                        property used for retail sales of 
                        tangible property and functionally 
                        related and subordinate property shall 
                        not exceed $800,000,000.
                The limitations under clauses (i), (ii), and 
                (iii) shall be allocated proportionately 
                between the bonds designated by the Governor 
                and the bonds designated by the Mayor in 
                proportion to the respective amounts of bonds 
                designated by each.
                  ``(C) Movable property.--No bonds shall be 
                issued which are to be used for movable 
                fixtures and equipment.
          ``(4) Qualified project costs.--For purposes of this 
        subsection--
                  ``(A) In general.--The term `qualified 
                project costs' means the cost of acquisition, 
                construction, reconstruction, and renovation 
                of--
                          ``(i) nonresidential real property 
                        and residential rental property 
                        (including fixed tenant improvements 
                        associated with such property) located 
                        in the New York Liberty Zone, and
                          ``(ii) public utility property (as 
                        defined in section 168(i)(10)) located 
                        in the New York Liberty Zone.
                  ``(B) Costs for certain property outside zone 
                included.--Such term includes the cost of 
                acquisition, construction, reconstruction, and 
                renovation of nonresidential real property 
                (including fixed tenant improvements associated 
                with such property) located outside the New 
                York Liberty Zone but within the City of New 
                York, New York, if such property is part of a 
                project which consists of at least 100,000 
                square feet of usable office or other 
                commercial space located in a single building 
                or multiple adjacent buildings.
          ``(5) Special rules.--In applying this title to any 
        qualified New York Liberty Bond, the following 
        modifications shall apply:
                  ``(A) Section 146 (relating to volume cap) 
                shall not apply.
                  ``(B) Section 147(d) (relating to acquisition 
                of existing property not permitted) shall be 
                applied by substituting `50 percent' for `15 
                percent' each place it appears.
                  ``(C) Section 148(f)(4)(C) (relating to 
                exception from rebate for certain proceeds to 
                be used to finance construction expenditures) 
                shall apply to the available construction 
                proceeds of bonds issued under this section.
                  ``(D) Repayments of principal on financing 
                provided by the issue--
                          ``(i) may not be used to provide 
                        financing, and
                          ``(ii) must be used not later than 
                        the close of the 1st semiannual period 
                        beginning after the date of the 
                        repayment to redeem bonds which are 
                        part of such issue.
                The requirement of clause (ii) shall be treated 
                as met with respect to amounts received within 
                10 years after the date of issuance of the 
                issue (or, in the case of a refunding bond, the 
                date of issuance of the original bond) if such 
                amounts are used by the close of such 10 years 
                to redeem bonds which are part of such issue.
                  ``(E) Section 57(a)(5) shall not apply.
          ``(6) Separate issue treatment of portions of an 
        issue.--This subsection shall not apply to the portion 
        of an issue which (if issued as a separate issue) would 
        be treated as a qualified bond or as a bond that is not 
        a private activity bond (determined without regard to 
        paragraph (1)), if the issuer elects to so treat such 
        portion.
  ``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
          ``(1) In general.--With respect to a bond described 
        in paragraph (2) issued as part of an issue 90 percent 
        (95 percent in the case of a bond described in 
        paragraph (2)(C)) or more of the net proceeds (as 
        defined in section 150(a)(3)) of which were used to 
        finance facilities located within the City of New York, 
        New York (or property which is functionally related and 
        subordinate to facilities located within the City of 
        New York for the furnishing of water), one additional 
        advanced refunding after the date of the enactment of 
        this section and before January 1, 2005, shall be 
        allowed under the applicable rules of section 149(d) 
        if--
                  ``(A) the Governor or the Mayor designates 
                the advance refunding bond for purposes of this 
                subsection, and
                  ``(B) the requirements of paragraph (4) are 
                met.
          ``(2) Bonds described.--A bond is described in this 
        paragraph if such bond was outstanding on September 11, 
        2001, and is--
                  ``(A) a State or local bond (as defined in 
                section 103(c)(1)) which is a general 
                obligation of the City of New York, New York,
                  ``(B) a State or local bond (as so defined) 
                other than a private activity bond (as defined 
                in section 141(a)) issued by the New York 
                Municipal Water Finance Authority or the 
                Metropolitan Transportation Authority of the 
                State of New York, or
                  ``(C) a qualified 501(c)(3) bond (as defined 
                in section 145(a)) which is a qualified 
                hospital bond (as defined in section 145(c)) 
                issued by or on behalf of the State of New York 
                or the City of New York, New York.
          ``(3) Aggregate limit.--For purposes of paragraph 
        (1), the maximum aggregate face amount of bonds which 
        may be designated under this subsection by the Governor 
        shall not exceed $4,500,000,000 and the maximum 
        aggregate face amount of bonds which may be designated 
        under this subsection by the Mayor shall not exceed 
        $4,500,000,000.
          ``(4) Additional requirements.--The requirements of 
        this paragraph are met with respect to any advance 
        refunding of a bond described in paragraph (2) if--
                  ``(A) no advance refundings of such bond 
                would be allowed under any provision of law 
                after September 11, 2001,
                  ``(B) the advance refunding bond is the only 
                other outstanding bond with respect to the 
                refunded bond, and
                  ``(C) the requirements of section 148 are met 
                with respect to all bonds issued under this 
                subsection.
  ``(f) Increase in Expensing Under Section 179.--
          ``(1) In general.--For purposes of section 179--
                  ``(A) the limitation under section 179(b)(1) 
                shall be increased by the lesser of--
                          ``(i) $35,000, or
                          ``(ii) the cost of section 179 
                        property which is qualified New York 
                        Liberty Zone property placed in service 
                        during the taxable year, and
                  ``(B) the amount taken into account under 
                section 179(b)(2) with respect to any section 
                179 property which is qualified New York 
                Liberty Zone property shall be 50 percent of 
                the cost thereof.
          ``(2) Qualified new york liberty zone property.--For 
        purposes of this subsection, the term `qualified New 
        York Liberty Zone property' has the meaning given such 
        term by subsection (b)(2).
          ``(3) Recapture.--Rules similar to the rules under 
        section 179(d)(10) shall apply with respect to any 
        qualified New York Liberty Zone property which ceases 
        to be used in the New York Liberty Zone.
  ``(g) Extension of Replacement Period for Nonrecognition of 
Gain.--Notwithstanding subsections (g) and (h) of section 1033, 
clause (i) of section 1033(a)(2)(B) shall be applied by 
substituting `5 years' for `2 years' with respect to property 
which is compulsorily or involuntarily converted as a result of 
the terrorist attacks on September 11, 2001, in the New York 
Liberty Zone but only if substantially all of the use of the 
replacement property is in the City of New York, New York.
  ``(h) New York Liberty Zone.--For purposes of this section, 
the term `New York Liberty Zone' means the area located on or 
south of Canal Street, East Broadway (east of its intersection 
with Canal Street), or Grand Street (east of its intersection 
with East Broadway) in the Borough of Manhattan in the City of 
New York, New York.
  ``(i) References to Governor and Mayor.--For purposes of this 
section, the terms `Governor' and `Mayor' mean the Governor of 
the State of New York and the Mayor of the City of New York, 
New York, respectively.''.
  (b) Credit Allowed Against Regular and Minimum Tax.--
          (1) In general.--Subsection (c) of section 38 
        (relating to limitation based on amount of tax) is 
        amended by redesignating paragraph (3) as paragraph (4) 
        and by inserting after paragraph (2) the following new 
        paragraph:
          ``(3) Special rules for new york liberty zone 
        business employee credit.--
                  ``(A) In general.--In the case of the New 
                York Liberty Zone business employee credit--
                          ``(i) this section and section 39 
                        shall be applied separately with 
                        respect to such credit, and
                          ``(ii) in applying paragraph (1) to 
                        such credit--
                                  ``(I) the tentative minimum 
                                tax shall be treated as being 
                                zero, and
                                  ``(II) the limitation under 
                                paragraph (1) (as modified by 
                                subclause (I)) shall be reduced 
                                by the credit allowed under 
                                subsection (a) for the taxable 
                                year (other than the New York 
                                Liberty Zone business employee 
                                credit).
                  ``(B) New york liberty zone business employee 
                credit.--For purposes of this subsection, the 
                term `New York Liberty Zone business employee 
                credit' means the portion of work opportunity 
                credit under section 51 determined under 
                section 1400L(a).''.
          (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the New 
        York Liberty Zone business employee credit'' after 
        ``employment credit''.
          (3) Effective date.--The amendments made by this 
        subsection shall apply to taxable years ending after 
        December 31, 2001.
  (c) Clerical Amendment.--The table of subchapters for chapter 
1 is amended by adding at the end the following new item:

        ``Subchapter Y--New York Liberty Zone Benefits.''.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.

  Any person required to furnish a statement under any section 
of subpart B of part III of subchapter A of chapter 61 of the 
Internal Revenue Code of 1986 for any taxable year ending after 
the date of the enactment of this Act, may electronically 
furnish such statement (without regard to any first class 
mailing requirement) to any recipient who has consented to the 
electronic provision of the statement in a manner similar to 
the one permitted under regulations issued under section 6051 
of such Code or in such other manner as provided by the 
Secretary.

SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION 
                    NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF 
                    SHAREHOLDERS.

  (a) In General.--Subparagraph (A) of section 108(d)(7) 
(relating to certain provisions to be applied at corporate 
level) is amended by inserting before the period ``, including 
by not taking into account under section 1366(a) any amount 
excluded under subsection (a) of this section''.
  (b) Effective Date.--
          (1) In general.--Except as provided in paragraph (2), 
        the amendment made by this section shall apply to 
        discharges of indebtedness after October 11, 2001, in 
        taxable years ending after such date.
          (2) Exception.--The amendment made by this section 
        shall not apply to any discharge of indebtedness before 
        March 1, 2002, pursuant to a plan of reorganization 
        filed with a bankruptcy court on or before October 11, 
        2001.

SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF 
                    ACCOUNTING.

  (a) In General.--Paragraph (5) of section 448(d) is amended 
to read as follows:
          ``(5) Special rule for certain services.--
                  ``(A) In general.--In the case of any person 
                using an accrual method of accounting with 
                respect to amounts to be received for the 
                performance of services by such person, such 
                person shall not be required to accrue any 
                portion of such amounts which (on the basis of 
                such person's experience) will not be collected 
                if--
                          ``(i) such services are in fields 
                        referred to in paragraph (2)(A), or
                          ``(ii) such person meets the gross 
                        receipts test of subsection (c) for all 
                        prior taxable years.
                  ``(B) Exception.--This paragraph shall not 
                apply to any amount if interest is required to 
                be paid on such amount or there is any penalty 
                for failure to timely pay such amount.
                  ``(C) Regulations.--The Secretary shall 
                prescribe regulations to permit taxpayers to 
                determine amounts referred to in subparagraph 
                (A) using computations or formulas which, based 
                on experience, accurately reflect the amount of 
                income that will not be collected by such 
                person. A taxpayer may adopt, or request 
                consent of the Secretary to change to, a 
                computation or formula that clearly reflects 
                the taxpayer's experience. A request under the 
                preceding sentence shall be approved if such 
                computation or formula clearly reflects the 
                taxpayer's experience.''.
  (b) Effective Date.--
          (1) In general.--The amendments made by this section 
        shall apply to taxable years ending after the date of 
        the enactment of this Act.
          (2) Change in method of accounting.--In the case of 
        any taxpayer required by the amendments made by this 
        section to change its method of accounting for its 
        first taxable year ending after the date of the 
        enactment of this Act--
                  (A) such change shall be treated as initiated 
                by the taxpayer,
                  (B) such change shall be treated as made with 
                the consent of the Secretary of the Treasury, 
                and
                  (C) the net amount of the adjustments 
                required to be taken into account by the 
                taxpayer under section 481 of the Internal 
                Revenue Code of 1986 shall be taken into 
                account over a period of 4 years (or if less, 
                the number of taxable years that the taxpayer 
                used the method permitted under section 
                448(d)(5) of such Code as in effect before the 
                date of the enactment of this Act) beginning 
                with such first taxable year.

SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY 
                    QUALIFIED PLACEMENT AGENCIES.

  (a) In General.--The matter preceding subparagraph (B) of 
section 131(b)(1) (defining qualified foster care payment) is 
amended to read as follows:
          ``(1) In general.--The term `qualified foster care 
        payment' means any payment made pursuant to a foster 
        care program of a State or political subdivision 
        thereof--
                  ``(A) which is paid by--
                          ``(i) a State or political 
                        subdivision thereof, or
                          ``(ii) a qualified foster care 
                        placement agency, and''.
  (b) Qualified Foster Individuals To Include Individuals 
Placed by Qualified Placement Agencies.--Subparagraph (B) of 
section 131(b)(2) (defining qualified foster individual) is 
amended to read as follows:
                  ``(B) a qualified foster care placement 
                agency.''.
  (c) Qualified Foster Care Placement Agency Defined.--
Subsection (b) of section 131 is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph 
(2) the following new paragraph:
          ``(3) Qualified foster care placement agency.--The 
        term `qualified foster care placement agency' means any 
        placement agency which is licensed or certified by--
                  ``(A) a State or political subdivision 
                thereof, or
                  ``(B) an entity designated by a State or 
                political subdivision thereof,
        for the foster care program of such State or political 
        subdivision to make foster care payments to providers 
        of foster care.''.
  (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.

  (a) Amendments to the Internal Revenue Code of 1986.--
          (1) Special rule.--Clause (i) of section 412(l)(7)(C) 
        (relating to interest rate) is amended by adding at the 
        end the following new subclause:
                                  ``(III) Special rule for 2002 
                                and 2003.--For a plan year 
                                beginning in 2002 or 2003, 
                                notwithstanding subclause (I), 
                                in the case that the rate of 
                                interest used under subsection 
                                (b)(5) exceeds the highest rate 
                                permitted under subclause (I), 
                                the rate of interest used to 
                                determine current liability 
                                under this subsection may 
                                exceed the rate of interest 
                                otherwise permitted under 
                                subclause (I); except that such 
                                rate of interest shall not 
                                exceed 120 percent of the 
                                weighted average referred to in 
                                subsection (b)(5)(B)(ii).''.
          (2) Quarterly contributions.--Subsection (m) of 
        section 412 is amended by adding at the end the 
        following new paragraph:
          ``(7) Special rules for 2002 and 2004.--In any case 
        in which the interest rate used to determine current 
        liability is determined under subsection 
        (l)(7)(C)(i)(III)--
                  ``(A) 2002.--For purposes of applying 
                paragraphs (1) and (4)(B)(ii) for plan years 
                beginning in 2002, the current liability for 
                the preceding plan year shall be redetermined 
                using 120 percent as the specified percentage 
                determined under subsection (l)(7)(C)(i)(II).
                  ``(B) 2004.--For purposes of applying 
                paragraphs (1) and (4)(B)(ii) for plan years 
                beginning in 2004, the current liability for 
                the preceding plan year shall be redetermined 
                using 105 percent as the specified percentage 
                determined under subsection 
                (l)(7)(C)(i)(II).''.
  (b) Amendments to the Employee Retirement Income Security Act 
of 1974.--
          (1) Special rule.--Clause (i) of section 302(d)(7)(C) 
        of such Act (29 U.S.C. 1082(d)(7)(C)) is amended by 
        adding at the end the following new subclause:
                                  ``(III) Special rule for 2002 
                                and 2003.--For a plan year 
                                beginning in 2002 or 2003, 
                                notwithstanding subclause (I), 
                                in the case that the rate of 
                                interest used under subsection 
                                (b)(5) exceeds the highest rate 
                                permitted under subclause (I), 
                                the rate of interest used to 
                                determine current liability 
                                under this subsection may 
                                exceed the rate of interest 
                                otherwise permitted under 
                                subclause (I); except that such 
                                rate of interest shall not 
                                exceed 120 percent of the 
                                weighted average referred to in 
                                subsection (b)(5)(B)(ii).''.
          (2) Quarterly contributions.--Subsection (e) of 
        section 302 of such Act (29 U.S.C. 1082) is amended by 
        adding at the end the following new paragraph:
          ``(7) Special rules for 2002 and 2004.--In any case 
        in which the interest rate used to determine current 
        liability is determined under subsection 
        (d)(7)(C)(i)(III)--
                  ``(A) 2002.--For purposes of applying 
                paragraphs (1) and (4)(B)(ii) for plan years 
                beginning in 2002, the current liability for 
                the preceding plan year shall be redetermined 
                using 120 percent as the specified percentage 
                determined under subsection (d)(7)(C)(i)(II).
                  ``(B) 2004.--For purposes of applying 
                paragraphs (1) and (4)(B)(ii) for plan years 
                beginning in 2004, the current liability for 
                the preceding plan year shall be redetermined 
                using 105 percent as the specified percentage 
                determined under subsection 
                (d)(7)(C)(i)(II).''.
  (c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended by adding at the end the following 
new subclause:
  ``(IV) In the case of plan years beginning after December 31, 
2001, and before January 1, 2004, subclause (II) shall be 
applied by substituting `100 percent' for `85 percent'. 
Subclause (III) shall be applied for such years without regard 
to the preceding sentence. Any reference to this clause by any 
other sections or subsections shall be treated as a reference 
to this clause without regard to this subclause.''.

SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT 
                    CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL 
                    TEACHERS.

  (a) In General.--Section 62(a)(2) (relating to certain trade 
and business deductions of employees) is amended by adding at 
the end the following:
                  ``(D) Certain expenses of elementary and 
                secondary school teachers.--In the case of 
                taxable years beginning during 2002 or 2003, 
                the deductions allowed by section 162 which 
                consist of expenses, not in excess of $250, 
                paid or incurred by an eligible educator in 
                connection with books, supplies (other than 
                nonathletic supplies for courses of instruction 
                in health or physical education), computer 
                equipment (including related software and 
                services) and other equipment, and 
                supplementary materials used by the eligible 
                educator in the classroom.''.
  (b) Eligible Educator.--Section 62 is amended by adding at 
the end the following:
  ``(d) Definition; Special Rules.--
          ``(1) Eligible educator.--
                  ``(A) In general.--For purposes of subsection 
                (a)(2)(D), the term `eligible educator' means, 
                with respect to any taxable year, an individual 
                who is a kindergarten through grade 12 teacher, 
                instructor, counselor, principal, or aide in a 
                school for at least 900 hours during a school 
                year.
                  ``(B) School.--The term `school' means any 
                school which provides elementary education or 
                secondary education (kindergarten through grade 
                12), as determined under State law.
          ``(2) Coordination with exclusions.--A deduction 
        shall be allowed under subsection (a)(2)(D) for 
        expenses only to the extent the amount of such expenses 
        exceeds the amount excludable under section 135, 
        529(c)(1), or 530(d)(2) for the taxable year.''.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

                   Subtitle B--Technical Corrections

SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF 
                    RECONCILIATION ACT OF 2001.

  (a) Amendments Related to Section 101 of the Act.--
          (1) In general.--Subsection (b) of section 6428 is 
        amended to read as follows:
  ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
purposes of this title, the credit allowed under this section 
shall be treated as a credit allowable under subpart A of part 
IV of subchapter A of chapter 1.''.
          (2) Conforming amendments.--
                  (A) Subsection (d) of section 6428 is amended 
                to read as follows:
  ``(d) Coordination with Advance Refunds of Credit.--
          ``(1) In general.--The amount of credit which would 
        (but for this paragraph) be allowable under this 
        section shall be reduced (but not below zero) by the 
        aggregate refunds and credits made or allowed to the 
        taxpayer under subsection (e). Any failure to so reduce 
        the credit shall be treated as arising out of a 
        mathematical or clerical error and assessed according 
        to section 6213(b)(1).
          ``(2) Joint returns.--In the case of a refund or 
        credit made or allowed under subsection (e) with 
        respect to a joint return, half of such refund or 
        credit shall be treated as having been made or allowed 
        to each individual filing such return.''.
                  (B) Paragraph (2) of section 6428(e) is 
                amended to read as follows:
          ``(2) Advance refund amount.--For purposes of 
        paragraph (1), the advance refund amount is the amount 
        that would have been allowed as a credit under this 
        section for such first taxable year if--
                  ``(A) this section (other than subsections 
                (b) and (d) and this subsection) had applied to 
                such taxable year, and
                  ``(B) the credit for such taxable year were 
                not allowed to exceed the excess (if any) of--
                          ``(i) the sum of the regular tax 
                        liability (as defined in section 26(b)) 
                        plus the tax imposed by section 55, 
                        over
                          ``(ii) the sum of the credits 
                        allowable under part IV of subchapter A 
                        of chapter 1 (other than the credits 
                        allowable under subpart C thereof, 
                        relating to refundable credits).''
  (b) Amendment Related to Section 201 of the Act.--
Subparagraph (B) of section 24(d)(1) is amended by striking 
``amount of credit allowed by this section'' and inserting 
``aggregate amount of credits allowed by this subpart''.
  (c) Amendments Related to Section 202 of the Act.--
          (1) Corrections to credit for adoption expenses.--
                  (A) Paragraph (1) of section 23(a) is amended 
                to read as follows:
          ``(1) In general.--In the case of an individual, 
        there shall be allowed as a credit against the tax 
        imposed by this chapter the amount of the qualified 
        adoption expenses paid or incurred by the taxpayer.''
                  (B) Subsection (a) of section 23 is amended 
                by adding at the end the following new 
                paragraph:
          ``(3) $10,000 credit for adoption of child with 
        special needs regardless of expenses.--In the case of 
        an adoption of a child with special needs which becomes 
        final during a taxable year, the taxpayer shall be 
        treated as having paid during such year qualified 
        adoption expenses with respect to such adoption in an 
        amount equal to the excess (if any) of $10,000 over the 
        aggregate qualified adoption expenses actually paid or 
        incurred by the taxpayer with respect to such adoption 
        during such taxable year and all prior taxable years.''
                  (C) Paragraph (2) of section 23(a) is amended 
                by striking the last sentence.
                  (D) Paragraph (1) of section 23(b) is amended 
                by striking ``subsection (a)(1)(A)'' and 
                inserting ``subsection (a)''.
                  (E) Subsection (i) of section 23 is amended 
                by striking ``the dollar limitation in 
                subsection (b)(1)'' and inserting ``the dollar 
                amounts in subsections (a)(3) and (b)(1)''.
                  (F) Expenses paid or incurred during any 
                taxable year beginning before January 1, 2002, 
                may be taken into account in determining the 
                credit under section 23 of the Internal Revenue 
                Code of 1986 only to the extent the aggregate 
                of such expenses does not exceed the applicable 
                limitation under section 23(b)(1) of such Code 
                as in effect on the day before the date of the 
                enactment of the Economic Growth and Tax Relief 
                Reconciliation Act of 2001.
          (2) Corrections to exclusion for employer-provided 
        adoption assistance.--
                  (A) Subsection (a) of section 137 is amended 
                to read as follows:
  ``(a) Exclusion.--
          ``(1) In general.--Gross income of an employee does 
        not include amounts paid or expenses incurred by the 
        employer for qualified adoption expenses in connection 
        with the adoption of a child by an employee if such 
        amounts are furnished pursuant to an adoption 
        assistance program.
          ``(2) $10,000 exclusion for adoption of child with 
        special needs regardless of expenses.--In the case of 
        an adoption of a child with special needs which becomes 
        final during a taxable year, the qualified adoption 
        expenses with respect to such adoption for such year 
        shall be increased by an amount equal to the excess (if 
        any) of $10,000 over the actual aggregate qualified 
        adoption expenses with respect to such adoption during 
        such taxable year and all prior taxable years.''
                  (B) Paragraph (2) of section 137(b) is 
                amended by striking ``subsection (a)(1)'' and 
                inserting ``subsection (a)''.
          (3) Effective date.--The amendments made by this 
        subsection shall apply to taxable years beginning after 
        December 31, 2002; except that the amendments made by 
        paragraphs (1)(C), (1)(D), and (2)(B) shall apply to 
        taxable years beginning after December 31, 2001.
  (d) Amendments Related to Section 205 of the Act.--
          (1) Section 45F(d)(4)(B) is amended by striking 
        ``subpart A, B, or D of this part'' and inserting 
        ``this chapter or for purposes of section 55''.
          (2) Section 38(b)(15) is amended by striking ``45F'' 
        and inserting ``45F(a)''.
  (e) Amendments Related to Section 301 of the Act.--
          (1) Section 63(c)(2) is amended--
                  (A) in subparagraph (A), by striking 
                ``subparagraph (C)'' and inserting 
                ``subparagraph (D)'',
                  (B) by striking ``or'' at the end of 
                subparagraph (B),
                  (C) by redesignating subparagraph (C) as 
                subparagraph (D),
                  (D) by inserting after subparagraph (B) the 
                following new subparagraph:
                  ``(C) one-half of the amount in effect under 
                subparagraph (A) in the case of a married 
                individual filing a separate return, or'', and
                  (E) by inserting the following flush sentence 
                at the end:
                ``If any amount determined under subparagraph 
                (A) is not a multiple of $50, such amount shall 
                be rounded to the next lowest multiple of 
                $50.''
          (2)(A) Section 63(c)(4) is amended by striking 
        ``paragraph (2) or (5)'' and inserting ``paragraph 
        (2)(B), (2)(D), or (5)''.
          (B) Section 63(c)(4)(B)(i) is amended by striking 
        ``paragraph (2)'' and inserting ``paragraph (2)(B), 
        (2)(D),''.
          (C) Section 63(c)(4) is amended by striking the flush 
        sentence at the end (as added by section 301(c)(2) of 
        Public Law 107-17).
  (f) Amendment Related to Section 401 of the Act.--Section 
530(d)(4)(B)(iv) is amended by striking ``because the taxpayer 
elected under paragraph (2)(C) to waive the application of 
paragraph (2)'' and inserting ``by application of paragraph 
(2)(C)(i)(II)''.
  (g) Amendments Related to Section 511 of the Act.--
          (1) Section 2511(c) is amended by striking ``taxable 
        gift under section 2503,'' and inserting ``transfer of 
        property by gift,''.
          (2) Section 2101(b) is amended by striking the last 
        sentence.
  (h) Amendment Related to Section 532 of the Act.--Section 
2016 is amended by striking ``any State, any possession of the 
United States, or the District of Columbia,''.
  (i) Amendments Relating to Section 602 of the Act.--
          (1) Subparagraph (A) of section 408(q)(3) is amended 
        to read as follows:
                  ``(A) Qualified employer plan.--The term 
                `qualified employer plan' has the meaning given 
                such term by section 72(p)(4)(A)(i); except 
                that such term shall also include an eligible 
                deferred compensation plan (as defined in 
                section 457(b)) of an eligible employer 
                described in section 457(e)(1)(A).''.
          (2) Section 4(c) of Employee Retirement Income 
        Security Act of 1974 is amended--
                  (A) by inserting ``and part 5 (relating to 
                administration and enforcement)'' before the 
                period at the end, and
                  (B) by adding at the end the following new 
                sentence: ``Such provisions shall apply to such 
                accounts and annuities in a manner similar to 
                their application to a simplified employee 
                pension under section 408(k) of the Internal 
                Revenue Code of 1986.''.
  (j) Amendments Relating to Section 611 of the Act.--
          (1) Section 408(k) is amended--
                  (A) in paragraph (2)(C) by striking ``$300'' 
                and inserting ``$450'', and
                  (B) in paragraph (8) by striking ``$300'' 
                both places it appears and inserting ``$450''.
          (2) Section 409(o)(1)(C)(ii) is amended--
                  (A) by striking ``$500,000'' both places it 
                appears and inserting ``$800,000'', and
                  (B) by striking ``$100,000'' and inserting 
                ``$160,000''.
          (3) Section 611(i) of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 is amended by adding 
        at the end the following new paragraph:
          ``(3) Special rule.--In the case of plan that, on 
        June 7, 2001, incorporated by reference the limitation 
        of section 415(b)(1)(A) of the Internal Revenue Code of 
        1986, section 411(d)(6) of such Code and section 
        204(g)(1) of the Employee Retirement Income Security 
        Act of 1974 do not apply to a plan amendment that--
                  ``(A) is adopted on or before June 30, 2002,
                  ``(B) reduces benefits to the level that 
                would have applied without regard to the 
                amendments made by subsection (a) of this 
                section, and
                  ``(C) is effective no earlier than the years 
                described in paragraph (2).''.
  (k) Amendments Relating to Section 613 of the Act.--
          (1) Section 416(c)(1)(C)(iii) is amended by striking 
        ``Exception for frozen plan'' and inserting ``Exception 
        for plan under which no key employee (or former key 
        employee) benefits for plan year''.
          (2) Section 416(g)(3)(B) is amended by striking 
        ``separation from service'' and inserting ``severance 
        from employment''.
  (l) Amendments Relating to Sections 614 and 616 of the Act.--
          (1) Section 404(a)(12) is amended by striking 
        ``(9),'' and inserting ``(9) and subsection 
        (h)(1)(C),''.
          (2) Section 404(n) is amended by striking 
        ``subsection (a),'' and inserting ``subsection (a) or 
        paragraph (1)(C) of subsection (h)''.
          (3) Section 402(h)(2)(A) is amended by striking ``15 
        percent'' and inserting ``25 percent''.
          (4) Section 404(a)(7)(C) is amended to read as 
        follows:
                  ``(C) Paragraph not to apply in certain 
                cases.--
                          ``(i) Beneficiary test.--This 
                        paragraph shall not have the effect of 
                        reducing the amount otherwise 
                        deductible under paragraphs (1), (2), 
                        and (3), if no employee is a 
                        beneficiary under more than 1 trust or 
                        under a trust and an annuity plan.
                          ``(ii) Elective deferrals.--If, in 
                        connection with 1 or more defined 
                        contribution plans and 1 or more 
                        defined benefit plans, no amounts 
                        (other than elective deferrals (as 
                        defined in section 402(g)(3))) are 
                        contributed to any of the defined 
                        contribution plans for the taxable 
                        year, then subparagraph (A) shall not 
                        apply with respect to any of such 
                        defined contribution plans and defined 
                        benefit plans.''.
  (m) Amendment Relating to Section 618 of the Act.--Section 
25B(d)(2)(A) is amended to read as follows:
                  ``(A) In general.--The qualified retirement 
                savings contributions determined under 
                paragraph (1) shall be reduced (but not below 
                zero) by the aggregate distributions received 
                by the individual during the testing period 
                from any entity of a type to which 
                contributions under paragraph (1) may be made. 
                The preceding sentence shall not apply to the 
                portion of any distribution which is not 
                includible in gross income by reason of a 
                trustee-to-trustee transfer or a rollover 
                distribution.''.
  (n) Amendments Relating to Section 619 of the Act.--
          (1) Section 45E(e)(1) is amended by striking ``(n)'' 
        and inserting ``(m)''.
          (2) Section 619(d) of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 is amended by 
        striking ``established'' and inserting ``first 
        effective''.
  (o) Amendments Relating to Section 631 of the Act.--
          (1) Section 402(g)(1) is amended by adding at the end 
        the following:
                  ``(C) Catch-up contributions.--In addition to 
                subparagraph (A), in the case of an eligible 
                participant (as defined in section 414(v)), 
                gross income shall not include elective 
                deferrals in excess of the applicable dollar 
                amount under subparagraph (B) to the extent 
                that the amount of such elective deferrals does 
                not exceed the applicable dollar amount under 
                section 414(v)(2)(B)(i) for the taxable year 
                (without regard to the treatment of the 
                elective deferrals by an applicable employer 
                plan under section 414(v)).''.
          (2) Section 401(a)(30) is amended by striking 
        ``402(g)(1)'' and inserting ``402(g)(1)(A)''.
          (3) Section 414(v)(2) is amended by adding at the end 
        the following:
                  ``(D) Aggregation of plans.--For purposes of 
                this paragraph, plans described in clauses (i), 
                (ii), and (iv) of paragraph (6)(A) that are 
                maintained by the same employer (as determined 
                under subsection (b), (c), (m) or (o)) shall be 
                treated as a single plan, and plans described 
                in clause (iii) of paragraph (6)(A) that are 
                maintained by the same employer shall be 
                treated as a single plan.''.
          (4) Section 414(v)(3)(A)(i) is amended by striking 
        ``section 402(g), 402(h), 403(b), 404(a), 404(h), 
        408(k), 408(p), 415, or 457'' and inserting ``section 
        401(a)(30), 402(h), 403(b), 408, 415(c), and 457(b)(2) 
        (determined without regard to section 457(b)(3))''.
          (5) Section 414(v)(3)(B) is amended by striking 
        ``section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 
        401(k)(12), 403(b)(12), 408(k), 408(p), 408B, 410(b), 
        or 416'' and inserting ``section 401(a)(4), 401(k)(3), 
        401(k)(11), 403(b)(12), 408(k), 410(b), or 416''.
          (6) Section 414(v)(4)(B) is amended by inserting 
        before the period at the end the following: ``, except 
        that a plan described in clause (i) of section 
        410(b)(6)(C) shall not be treated as a plan of the 
        employer until the expiration of the transition 
        period with respect to such plan (as determined under 
        clause (ii) of such section)''.
          (7) Section 414(v)(5) is amended--
                  (A) by striking ``, with respect to any plan 
                year,'' in the matter preceding subparagraph 
                (A),
                  (B) by amending subparagraph (A) to read as 
                follows:
                  ``(A) who would attain age 50 by the end of 
                the taxable year,'', and
                  (C) in subparagraph (B) by striking ``plan 
                year'' and inserting ``plan (or other 
                applicable) year''.
          (8) Section 414(v)(6)(C) is amended to read as 
        follows:
                  ``(C) Exception for section 457 plans.--This 
                subsection shall not apply to a participant for 
                any year for which a higher limitation applies 
                to the participant under section 457(b)(3).''.
          (9) Section 457(e) is amended by adding at the end 
        the following new paragraph:
          ``(18) Coordination with catch-up contributions for 
        individuals age 50 or older.--In the case of an 
        individual who is an eligible participant (as defined 
        by section 414(v)) and who is a participant in an 
        eligible deferred compensation plan of an employer 
        described in paragraph (1)(A), subsections (b)(3) and 
        (c) shall be applied by substituting for the amount 
        otherwise determined under the applicable subsection 
        the greater of--
                  ``(A) the sum of--
                          ``(i) the plan ceiling established 
                        for purposes of subsection (b)(2) 
                        (without regard to subsection (b)(3)), 
                        plus
                          ``(ii) the applicable dollar amount 
                        for the taxable year determined under 
                        section 414(v)(2)(B)(i), or
                  ``(B) the amount determined under the 
                applicable subsection (without regard to this 
                paragraph).''.
  (p) Amendments Relating to Section 632 of the Act.--
          (1) Section 403(b)(1) is amended in the matter 
        following subparagraph (E) by striking ``then amounts 
        contributed'' and all that follows and inserting the 
        following:
          ``then contributions and other additions by such 
        employer for such annuity contract shall be excluded 
        from the gross income of the employee for the taxable 
        year to the extent that the aggregate of such 
        contributions and additions (when expressed as an 
        annual addition (within the meaning of section 
        415(c)(2))) does not exceed the applicable limit under 
        section 415. The amount actually distributed to any 
        distributee under such contract shall be taxable to the 
        distributee (in the year in which so distributed) under 
        section 72 (relating to annuities). For purposes of 
        applying the rules of this subsection to contributions 
        and other additions by an employer for a taxable year, 
        amounts transferred to a contract described in this 
        paragraph by reason of a rollover contribution 
        described in paragraph (8) of this subsection or 
        section 408(d)(3)(A)(ii) shall not be considered 
        contributed by such employer.''.
          (2) Section 403(b) is amended by striking paragraph 
        (6).
          (3) Section 403(b)(3) is amended--
                  (A) in the first sentence by inserting the 
                following before the period at the end: ``, and 
                which precedes the taxable year by no more than 
                five years'', and
                  (B) in the second sentence by striking ``or 
                any amount received by a former employee after 
                the fifth taxable year following the taxable 
                year in which such employee was terminated''.
          (4) Section 415(c)(7) is amended to read as follows:
          ``(7) Special rules relating to church plans.--
                  ``(A) Alternative contribution limitation.--
                          ``(i) In general.--Notwithstanding 
                        any other provision of this subsection, 
                        at the election of a participant who is 
                        an employee of a church or a convention 
                        or association of churches, including 
                        an organization described in section 
                        414(e)(3)(B)(ii), contributions and 
                        other additions for an annuity contract 
                        or retirement income account described 
                        in section 403(b) with respect to such 
                        participant, when expressed as an 
                        annual addition to such participant's 
                        account, shall be treated as not 
                        exceeding the limitation of paragraph 
                        (1) if such annual addition is not in 
                        excess of $10,000.
                          ``(ii) $40,000 aggregate 
                        limitation.--The total amount of 
                        additions with respect to any 
                        participant which may be taken into 
                        account for purposes of this 
                        subparagraph for all years may not 
                        exceed $40,000.
                  ``(B) Number of years of service for duly 
                ordained, commissioned, or licensed ministers 
                or lay employees.--For purposes of this 
                paragraph--
                          ``(i) all years of service by--
                                  ``(I) a duly ordained, 
                                commissioned, or licensed 
                                minister of a church, or
                                  ``(II) a lay person,
                        as an employee of a church, a 
                        convention or association of churches, 
                        including an organization described in 
                        section 414(e)(3)(B)(ii), shall be 
                        considered as years of service for 1 
                        employer, and
                          ``(ii) all amounts contributed for 
                        annuity contracts by each such church 
                        (or convention or association of 
                        churches) or such organization during 
                        such years for such minister or lay 
                        person shall be considered to have been 
                        contributed by 1 employer.
                  ``(C) Foreign missionaries.--In the case of 
                any individual described in subparagraph (D) 
                performing services outside the United States, 
                contributions and other additions for an 
                annuity contract or retirement income account 
                described in section 403(b) with respect to 
                such employee, when expressed as an annual 
                addition to such employee's account, shall not 
                be treated as exceeding the limitation of 
                paragraph (1) if such annual addition is not in 
                excess of the greater of $3,000 or the 
                employee's includible compensation determined 
                under section 403(b)(3).
                  ``(D) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the 
                meaning given such term by paragraph (2).
                  ``(E) Church, convention or association of 
                churches.--For purposes of this paragraph, the 
                terms `church' and `convention or association 
                of churches' have the same meaning as when used 
                in section 414(e).''.
          (5) Section 457(e)(5) is amended to read as follows:
          ``(5) Includible compensation.--The term `includible 
        compensation' has the meaning given to the term 
        `participant's compensation' by section 415(c)(3).''.
          (6) Section 402(g)(7)(B) is amended by striking 
        ``2001.'' and inserting ``2001).''.
  (q) Amendments Relating to Section 643 of the Act.--
          (1) Section 401(a)(31)(C)(i) is amended by inserting 
        ``is a qualified trust which is part of a plan which is 
        a defined contribution plan and'' before ``agrees''.
          (2) Section 402(c)(2) is amended by adding at the end 
        the following flush sentence:
        ``In the case of a transfer described in subparagraph 
        (A) or (B), the amount transferred shall be treated as 
        consisting first of the portion of such distribution 
        that is includible in gross income (determined without 
        regard to paragraph (1)).''.
  (r) Amendments Relating to Section 648 of the Act.--
          (1) Section 417(e) is amended--
                  (A) in paragraph (1) by striking ``exceed the 
                dollar limit under section 411(a)(11)(A)'' and 
                inserting ``exceed the amount that can be 
                distributed without the participant's consent 
                under section 411(a)(11)'', and
                  (B) in paragraph (2)(A) by striking ``exceeds 
                the dollar limit under section 411(a)(11)(A)'' 
                and inserting ``exceeds the amount that can be 
                distributed without the participant's consent 
                under section 411(a)(11)''.
          (2) Section 205(g) of the Employee Retirement Income 
        Security Act of 1974 is amended--
                  (A) in paragraph (1) by striking ``exceed the 
                dollar limit under section 203(e)(1)'' and 
                inserting ``exceed the amount that can be 
                distributed without the participant's consent 
                under section 203(e)'', and
                  (B) in paragraph (2)(A) by striking ``exceeds 
                the dollar limit under section 203(e)(1)'' and 
                inserting ``exceeds the amount that can be 
                distributed without the participant's consent 
                under section 203(e)''.
  (s) Amendment Relating to Section 652 of the Act.--Section 
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by 
professional service employers'' and inserting ``Special rule 
for terminating plans''.
  (t) Amendments Relating to Section 657 of the Act.--Section 
404(c)(3) of the Employee Retirement Income Security Act of 
1974 is amended--
          (1) by striking ``the earlier of'' in subparagraph 
        (A) the second place it appears, and
          (2) by striking ``if the transfer'' and inserting ``a 
        transfer that''.
  (u) Amendments Relating to Section 659 of the Act.--
          (1) Section 4980F is amended--
                  (A) in subsection (e)(1) by striking 
                ``written notice'' and inserting ``the notice 
                described in paragraph (2)'',
                  (B) by amending subsection (f)(2)(A) to read 
                as follows:
                  ``(A) any defined benefit plan described in 
                section 401(a) which includes a trust exempt 
                from tax under section 501(a), or'', and
                  (C) in subsection (f)(3) by striking 
                ``significantly'' both places it appears.
          (2) Section 204(h)(9) of the Employee Retirement 
        Income Security Act of 1974 is amended by striking 
        ``significantly'' both places it appears.
          (3) Section 659(c)(3)(B) of the Economic Growth and 
        Tax Relief Reconciliation Act of 2001 is amended by 
        striking ``(or'' and inserting ``(and''.
  (v) Amendments Relating to Section 661 of the Act.--
          (1) Section 412(c)(9)(B) is amended--
                  (A) in clause (ii) by striking ``125 
                percent'' and inserting ``100 percent'', and
                  (B) by adding at the end the following new 
                clause:
                          ``(iv) Limitation.--A change in 
                        funding method to use a prior year 
                        valuation, as provided in clause (ii), 
                        may not be made unless as of the 
                        valuation date within the prior plan 
                        year, the value of the assets of the 
                        plan are not less than 125 percent of 
                        the plan's current liability (as 
                        defined in paragraph (7)(B)).''.
          (2) Section 302(c)(9)(B) of the Employee Retirement 
        Income Security Act of 1974 is amended--
                  (A) in clause (ii) by striking ``125 
                percent'' and inserting ``100 percent'', and
                  (B) by adding at the end the following new 
                clause:
  ``(iv) A change in funding method to use a prior year 
valuation, as provided in clause (ii), may not be made unless 
as of the valuation date within the prior plan year, the value 
of the assets of the plan are not less than 125 percent of the 
plan's current liability (as defined in paragraph (7)(B)).''.
  (w) Amendments Relating to Section 662 of the Act.--
          (1) Section 404(k) is amended--
                  (A) in paragraph (1) by striking ``during the 
                taxable year'',
                  (B) in paragraph (2)(B) by striking 
                ``(A)(iii)'' and inserting ``(A)(iv)'',
                  (C) in paragraph (4)(B) by striking ``(iii)'' 
                and inserting ``(iv)'', and
                  (D) by redesignating subparagraph (B) of 
                paragraph (4) (as amended by subparagraph (C)) 
                as subparagraph (C) of paragraph (4) and by 
                inserting after subparagraph (A) the following 
                new subparagraph:
                  ``(B) Reinvestment dividends.--For purposes 
                of subparagraph (A), an applicable dividend 
                reinvested pursuant to clause (iii)(II) of 
                paragraph (2)(A) shall be treated as paid in 
                the taxable year of the corporation in which 
                such dividend is reinvested in qualifying 
                employer securities or in which the election 
                under clause (iii) of paragraph (2)(A) is made, 
                whichever is later.''.
          (2) Section 404(k) is amended by adding at the end 
        the following new paragraph:
          ``(7) Full vesting.--In accordance with section 411, 
        an applicable dividend described in clause (iii)(II) of 
        paragraph (2)(A) shall be subject to the requirements 
        of section 411(a)(1).''.
  (x) Effective Date.--Except as provided in subsection (c), 
the amendments made by this section shall take effect as if 
included in the provisions of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 to which they relate.

SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF 
                    2000.

  (a) Amendment Related to Section 101 of the Act.--Section 
469(i)(3)(E) is amended by striking clauses (ii), (iii), and 
(iv) and inserting the following:
                          ``(ii) second to the portion of such 
                        loss to which subparagraph (C) applies,
                          ``(iii) third to the portion of the 
                        passive activity credit to which 
                        subparagraph (B) or (D) does not apply,
                          ``(iv) fourth to the portion of such 
                        credit to which subparagraph (B) 
                        applies, and''.
  (b) Amendment Related to Section 306 of the Act.--Section 
151(c)(6)(C) is amended--
          (1) by striking ``for earned income credit.--For 
        purposes of section 32, an'' and inserting ``for 
        principal place of abode requirements.--An'', and
          (2) by striking ``requirement of section 
        32(c)(3)(A)(ii)'' and inserting ``principal place of 
        abode requirements of section 2(a)(1)(B), section 
        2(b)(1)(A), and section 32(c)(3)(A)(ii)''.
  (c) Amendment Related to Section 309 of the Act.--
Subparagraph (A) of section 358(h)(1) is amended to read as 
follows:
                  ``(A) which is assumed by another person as 
                part of the exchange, and''.
  (d) Amendments Related to Section 401 of the Act.--
          (1)(A) Section 1234A is amended by inserting ``or'' 
        after the comma at the end of paragraph (1), by 
        striking ``or'' at the end of paragraph (2), and by 
        striking paragraph (3).
          (B)(i) Section 1234B is amended in subsection (a)(1) 
        and in subsection (b) by striking ``sale or exchange'' 
        the first place it appears in each subsection and 
        inserting ``sale, exchange, or termination''.
          (ii) Section 1234B is amended by adding at the end 
        the following new subsection:
  ``(f) Cross Reference.--

          ``For special rules relating to dealer securities futures 
        contracts, see section 1256.''
          (2) Section 1091(e) is amended--
                  (A) in the heading, by striking 
                ``Securities.--'' and inserting ``Securities 
                and Securities Futures Contracts To Sell.--'',
                  (B) by inserting after ``closing of a short 
                sale of'' the following: ``(or the sale, 
                exchange, or termination of a securities 
                futures contract to sell)'',
                  (C) in paragraph (2), by inserting after 
                ``short sale of'' the following: ``(or 
                securities futures contracts to sell)'', and
                  (D) by adding at the end the following:
``For purposes of this subsection, the term `securities futures 
contract' has the meaning provided by section 1234B(c).''.
          (3)(A) Section 1233(e)(2) is amended by striking 
        ``and'' at the end of subparagraph (C), by striking the 
        period and inserting ``; and'' at the end of 
        subparagraph (D), and inserting after subparagraph (D) 
        the following:
                  ``(E) entering into a securities futures 
                contract (as so defined) to sell shall be 
                considered to be a short sale, and the 
                settlement of such contract shall be considered 
                to be the closing of such short sale.''.
          (B) Section 1234B(b) is amended by inserting after 
        ``or this section,'' the following: ``or in section 
        1233,''.
  (e) Effective Date.--The amendments made by this section 
shall take effect as if included in the provisions of the 
Community Renewal Tax Relief Act of 2000 to which they relate.

SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.

  (a) Amendments Related to Section 545 of the Act.--Section 
857(b)(7) is amended--
          (1) in clause (i) of subparagraph (B), by striking 
        ``the amount of which'' and inserting ``to the extent 
        the amount of the rents'', and
          (2) in subparagraph (C), by striking ``if the 
        amount'' and inserting ``to the extent the amount''.
  (b) Effective Date.--The amendments made by this section 
shall take effect as if included in section 545 of the Tax 
Relief Extension Act of 1999.

SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.

  (a) Amendments Related to Section 311 of the Act.--Section 
311(e) of the Taxpayer Relief Act of 1997 (Public Law 105-34; 
111 Stat. 836) is amended--
          (1) in paragraph (2)(A), by striking ``recognized'' 
        and inserting ``included in gross income'', and
          (2) by adding at the end the following new paragraph:
          ``(5) Disposition of interest in passive activity.--
        Section 469(g)(1)(A) of the Internal Revenue Code of 
        1986 shall not apply by reason of an election made 
        under paragraph (1).''.
  (b) Effective Date.--The amendments made by this section 
shall take effect as if included in section 311 of the Taxpayer 
Relief Act of 1997.

SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.

  (a) Amendment Related to Section 4006 of the Act.--Section 
26(b)(2) is amended by striking ``and'' at the end of 
subparagraph (P), by striking the period and inserting ``, 
and'' at the end of subparagraph (Q), and by adding at the end 
the following new subparagraph:
                  ``(R) section 138(c)(2) (relating to penalty 
                for distributions from Medicare+Choice MSA not 
                used for qualified medical expenses if minimum 
                balance not maintained).''.
  (b) Effective Date.--The amendment made by this section shall 
take effect as if included in section 4006 of the Balanced 
Budget Act of 1997.

SEC. 416. OTHER TECHNICAL CORRECTIONS.

  (a) Coordination of Advanced Payments of Earned Income 
Credit.--
          (1) Section 32(g)(2) is amended by striking 
        ``subpart'' and inserting ``part''.
          (2) The amendment made by this subsection shall take 
        effect as if included in section 474 of the Tax Reform 
        Act of 1984.
  (b) Special Rule Related to Wash Sale Losses.--
          (1) Section 1256(f) is amended by adding at the end 
        the following new paragraph:
                  ``(5) Special rule related to losses.--
                Section 1091 (relating to loss from wash sales 
                of stock or securities) shall not apply to any 
                loss taken into account by reason of paragraph 
                (1) of subsection (a).''.
          (2) The amendment made by this subsection shall take 
        effect as if included in section 5075 of the Technical 
        and Miscellaneous Revenue Act of 1988.
  (c) Disclosure by Social Security Administration to Federal 
Child Support Agencies.--
          (1) Section 6103(l)(8) is amended--
                  (A) in the heading, by striking ``state and 
                local'' and inserting ``federal, state, and 
                local'', and
                  (B) in subparagraph (A), by inserting 
                ``Federal or'' before ``State or local''.
          (2) The amendments made by this subsection shall take 
        effect on the date of the enactment of this Act.
  (d) Treatment of Settlements Under Partnership Audit Rules.--
          (1) The following provisions are each amended by 
        inserting ``or the Attorney General (or his delegate)'' 
        after ``Secretary'' each place it appears:
                  (A) Paragraphs (1) and (2) of section 
                6224(c).
                  (B) Section 6229(f)(2).
                  (C) Section 6231(b)(1)(C).
                  (D) Section 6234(g)(4)(A).
          (2) The amendments made by this subsection shall 
        apply with respect to settlement agreements entered 
        into after the date of the enactment of this Act.
  (e) Amendment Related to Procedure and Administration.--
          (1) Section 6331(k)(3) (relating to no levy while 
        certain offers pending or installment agreement pending 
        or in effect) is amended to read as follows:
          ``(3) Certain rules to apply.--Rules similar to the 
        rules of--
                  ``(A) paragraphs (3) and (4) of subsection 
                (i), and
                  ``(B) except in the case of paragraph (2)(C), 
                paragraph (5) of subsection (i),
        shall apply for purposes of this subsection.''.
          (2) The amendment made by this subsection shall take 
        effect on the date of the enactment of this Act.
  (f) Modified Endowment Contracts.--Paragraph (2) of section 
318(a) of the Community Renewal Tax Relief Act of 2000 (114 
Stat. 2763A-645) is repealed, and clause (ii) of section 
7702A(c)(3)(A) shall read and be applied as if the amendment 
made by such paragraph had not been enacted.

SEC. 417. CLERICAL AMENDMENTS.

          (1) The subsection (g) of section 25B that relates to 
        termination is redesignated as subsection (h).
          (2) The second sentence of section 42(h)(3)(C) is 
        amended by striking ``the amounts described in'' and 
        all that follows through the period and inserting ``the 
        amounts described in clauses (ii) through (iv) over the 
        aggregate housing credit dollar amount allocated for 
        such year.''
          (3) Clause (ii) of section 42(m)(1)(B) is amended by 
        striking the second ``and'' at the end of subclause 
        (II) and by inserting ``and'' at the end of subclause 
        (III).
          (4) Section 51A(c)(1) is amended by striking 
        ``51(d)(10)'' and inserting ``51(d)(11)''.
          (5) The flush sentence at the end of clause (ii) of 
        section 56(a)(1)(A) is amended by striking ``such 
        1250'' and inserting ``such section 1250''.
          (6) Section 151(c)(6)(B)(iii) is amended by inserting 
        ``as'' before ``such terms''.
          (7) Section 170(e)(6)(B)(i)(III) is amended by 
        striking ``2000,'' and inserting ``2000),''.
          (8) Section 172(b)(1)(F)(i) is amended--
                  (A) by striking ``3 years'' and inserting ``3 
                taxable years'', and
                  (B) by striking ``2 years'' and inserting ``2 
                taxable years''.
          (9) Section 351(h)(1) is amended by inserting a comma 
        after ``liability''.
          (10) Section 475(g)(3) is amended by striking 
        ``sections'' and inserting ``section''.
          (11) Section 529(e)(3)(B)(i) is amended by striking 
        ``subsection (b)(7)'' and inserting ``subsection 
        (b)(6)''.
          (12) Section 741 is amended by striking ``which have 
        appreciated substantially in value''.
          (13) Section 857(b)(7)(B)(i) is amended by striking 
        ``subsection 856(d)'' and inserting ``section 856(d)''.
          (14) Subparagraph (B) of section 943(e)(4) is amended 
        by aligning the left margin of the flush language with 
        subparagraph (A).
          (15) Subparagraph (B) of section 995(b)(3) is amended 
        by striking ``International Security Assistance and 
        Arms Export Control Act of 1976'' and inserting ``Arms 
        Export Control Act''.
          (16) Section 1394(c)(2) is amended by striking 
        ``subparagraph (A)'' and inserting ``paragraph (1)''.
          (17)(A) The section heading for section 4980E is 
        amended to read as follows:

``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER MSA 
                    CONTRIBUTIONS.''.

          (B) The item relating to section 4980E in the table 
        of sections for chapter 43 is amended to read as 
        follows:

    ``Sec. 4980E. Failure of employer to make comparable Archer MSA 
              contributions.''.
          (18) Section 6105(c)(1) is amended by striking 
        ``any'' in subparagraphs (C) and (E).
          (19)(A) Section 6227(d) is amended by striking 
        ``subsection (b)'' and inserting ``subsection (c)''.
          (B) Section 6228 is amended--
                  (i) in subsection (a)(1), by striking 
                ``subsection (b) of section 6227'' and 
                inserting ``subsection (c) of section 6227'',
                  (ii) in subsection (a)(3)(A), by striking 
                ``subsection (b) of'', and
                  (iii) in subsections (b)(1) and (b)(2)(A), by 
                striking ``subsection (c) of section 6227'' and 
                inserting ``subsection (d) of section 6227''.
          (C) Section 6231(b)(2)(B)(i) is amended by striking 
        ``section 6227(c)'' and inserting ``section 6227(d)''.
          (20) Section 1221(b)(1)(B)(i) is amended by striking 
        ``1256(b))'' and inserting ``1256(b)))''.
          (21) Section 159 of the Community Renewal Tax Relief 
        Act of 2000 (114 Stat. 2763A-624) is amended by 
        striking ``fuctions'' and inserting ``functions''.
          (22) The amendment to section 170(e)(6)(B)(iv) made 
        by section 165(b)(1) of the Community Renewal Tax 
        Relief Act of 2000 (114 Stat. 2763A-626) shall be 
        applied as if it struck ``in any of the grades K-12''.
          (23) Section 618(b)(2) of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 (Public Law 107-16; 
        115 Stat. 108) is amended--
                  (A) in subparagraph (A) by striking 
                ``203(d)'' and inserting ``202(f)'', and
                  (B) in subparagraphs (C), (D), and (E) by 
                striking ``203'' and inserting ``202(f)''.
          (24)(A) Section 525 of the Ticket to Work and Work 
        Incentives Improvement Act of 1999 (Public Law 106-170; 
        113 Stat. 1928) is amended by striking ``7200'' and 
        inserting ``7201''.
          (B) Section 532(c)(2) of such Act (113 Stat. 1930) is 
        amended--
                  (i) in subparagraph (D), by striking 
                ``341(d)(3)'' and inserting ``341(d)'', and
                  (ii) in subparagraph (Q), by striking 
                ``954(c)(1)(B)(iii) and inserting 
                ``954(c)(1)(B)''.

SEC. 418. ADDITIONAL CORRECTIONS.

  (a) Amendments Related to Section 202 of the Economic Growth 
and Tax Relief Reconciliation Act of 2001.--
          (1) Subsection (h) of section 23 is amended--
                  (A) by striking ``subsection (a)(1)(B)'' and 
                inserting ``subsection (a)(3)'', and
                  (B) by adding at the end the following new 
                flush sentence:
``If any amount as increased under the preceding sentence is 
not a multiple of $10, such amount shall be rounded to the 
nearest multiple of $10.''
          (2) Subsection (f) of section 137 is amended by 
        adding at the end the following new flush sentence:
``If any amount as increased under the preceding sentence is 
not a multiple of $10, such amount shall be rounded to the 
nearest multiple of $10.''
  (b) Amendments Related to Section 204 of the Economic Growth 
and Tax Relief Reconciliation Act of 2001.--Section 21(d)(2) is 
amended--
          (1) in subparagraph (A) by striking ``$200'' and 
        inserting ``$250'', and
          (2) in subparagraph (B) by striking ``$400'' and 
        inserting ``$500''.
  (c) Effective Date.--The amendments made by this section 
shall take effect as if included in the provisions of the 
Economic Growth and Tax Relief Reconciliation Act of 2001 to 
which they relate.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.

  (a) In General.--Nothing in this Act (or an amendment made by 
this Act) shall be construed to alter or amend title II of the 
Social Security Act (or any regulation promulgated under that 
Act).
  (b) Transfers.--
          (1) Estimate of secretary.--The Secretary of the 
        Treasury shall annually estimate the impact that the 
        enactment of this Act has on the income and balances of 
        the trust funds established under section 201 of the 
        Social Security Act (42 U.S.C. 401).
          (2) Transfer of funds.--If, under paragraph (1), the 
        Secretary of the Treasury estimates that the enactment 
        of this Act has a negative impact on the income and 
        balances of the trust funds established under section 
        201 of the Social Security Act (42 U.S.C. 401), the 
        Secretary shall transfer, not less frequently than 
        quarterly, from the general revenues of the Federal 
        Government an amount sufficient so as to ensure that 
        the income and balances of such trust funds are not 
        reduced as a result of the enactment of this Act.

SEC. 502. EMERGENCY DESIGNATION.

  Congress designates as emergency requirements pursuant to 
section 252(e) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 the following amounts:
          (1) An amount equal to the amount by which revenues 
        are reduced by this Act below the recommended levels of 
        Federal revenues for fiscal year 2002, the total of 
        fiscal years 2002 through 2006, and the total of fiscal 
        years 2002 through 2011, provided in the conference 
        report accompanying H. Con. Res. 83, the concurrent 
        resolution on the budget for fiscal year 2002.
          (2) Amounts equal to the amounts of new budget 
        authority and outlays provided in this Act in excess of 
        the allocations under section 302(a) of the 
        Congressional Budget Act of 1974 to the Committee on 
        Finance of the Senate for fiscal year 2002, the total 
        of fiscal years 2002 through 2006, and the total of 
        fiscal years 2002 through 2011.

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR 
                    AND MINIMUM TAX LIABILITY.

  (a) In General.--Paragraph (2) of section 26(a) is amended--
          (1) by striking ``rule for 2000 and 2001.--'' and 
        inserting ``rule for 2000, 2001, 2002, and 2003.--'', 
        and
          (2) by striking ``during 2000 or 2001,'' and 
        inserting ``during 2000, 2001, 2002, or 2003,''.
  (b) Conforming Amendments.--
          (1) Section 904(h) is amended by striking ``during 
        2000 or 2001'' and inserting ``during 2000, 2001, 2002, 
        or 2003''.
          (2) The amendments made by sections 201(b), 202(f), 
        and 618(b) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 shall not apply to taxable 
        years beginning during 2002 and 2003.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

  (a) In General.--Section 30 is amended--
          (1) in subsection (b)(2)--
                  (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                  (B) in subparagraphs (A), (B), and (C), by 
                striking ``2002'', ``2003'', and ``2004'', 
                respectively, and inserting ``2004'', ``2005'', 
                and ``2006'', respectively, and
          (2) in subsection (e), by striking ``December 31, 
        2004'' and inserting ``December 31, 2006''.
  (b) Conforming Amendments.--
          (1) Subparagraph (C) of section 280F(a)(1) is amended 
        by adding at the end the following new clause:
                          ``(iii) Application of 
                        subparagraph.--This subparagraph shall 
                        apply to property placed in service 
                        after August 5, 1997, and before 
                        January 1, 2007.''.
          (2) Subsection (b) of section 971 of the Taxpayer 
        Relief Act of 1997 is amended by striking ``and before 
        January 1, 2005''.
  (c) Effective Date.--The amendments made by this section 
shall apply to property placed in service after December 31, 
2001.

SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE 
                    RESOURCES.

  (a) In General.--Subparagraphs (A), (B), and (C) of section 
45(c)(3) are both amended by striking ``2002'' and inserting 
``2004''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to facilities placed in service after December 31, 
2001.

SEC. 604. WORK OPPORTUNITY CREDIT.

  (a) In General.--Subparagraph (B) of section 51(c)(4) is 
amended by striking ``2001'' and inserting ``2003''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to individuals who begin work for the employer 
after December 31, 2001.

SEC. 605. WELFARE-TO-WORK CREDIT.

  (a) In General.--Subsection (f) of section 51A is amended by 
striking ``2001'' and inserting ``2003''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to individuals who begin work for the employer 
after December 31, 2001.

SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING 
                    PROPERTY.

  (a) In General.--Section 179A is amended--
          (1) in subsection (b)(1)(B)--
                  (A) by striking ``December 31, 2001,'' and 
                inserting ``December 31, 2003,'', and
                  (B) in clauses (i), (ii), and (iii), by 
                striking ``2002'', ``2003'', and ``2004'', 
                respectively, and inserting ``2004'', ``2005'', 
                and ``2006'', respectively, and
          (2) in subsection (f), by striking ``December 31, 
        2004'' and inserting ``December 31, 2006''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to property placed in service after December 31, 
2001.

SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
                    NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

  (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
amended by striking ``2002'' and inserting ``2004''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 608. QUALIFIED ZONE ACADEMY BONDS.

  (a) In General.--Paragraph (1) of section 1397E(e) is amended 
by striking ``2000, and 2001'' and inserting ``2000, 2001, 
2002, and 2003''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to obligations issued after the date of the 
enactment of this Act.

SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.

  (a) In General.--Paragraph (1) of section 7652(f) is amended 
by striking ``January 1, 2002'' and inserting ``January 1, 
2004''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to articles brought into the United States after 
December 31, 2001.

SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
                    BENEFITS.

  (a) In General.--Subsection (f) of section 9812, as amended 
by the Departments of Labor, Health and Human Services, and 
Education, and Related Agencies Appropriations Act, 2002, is 
amended to read as follows:
  ``(f) Application of Section.--This section shall not apply 
to benefits for services furnished--
          ``(1) on or after September 30, 2001, and before 
        January 10, 2002, and
          ``(2) after December 31, 2003.''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to plan years beginning after December 31, 2000.

SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE 
                    COMPANIES.

  (a) Reduction in Mutual Life Insurance Company Deductions Not 
To Apply in Certain Years.--Section 809 (relating to reduction 
in certain deductions of material life insurance companies) is 
amended by adding at the end the following:
  ``(j) Differential Earnings Rate Treated as Zero for Certain 
Years.--Notwithstanding subsection (c) or (f), the differential 
earnings rate shall be treated as zero for purposes of 
computing both the differential earnings amount and the 
recomputed differential earnings amount for a mutual life 
insurance company's taxable years beginning in 2001, 2002, or 
2003.''.
  (b) Effective Date.--The amendment made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

  (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) 
(defining cut-off year) are each amended by striking ``2002'' 
each place it appears and inserting ``2003''.
  (b) Conforming Amendments.--
          (1) Paragraph (2) of section 220(j) is amended by 
        striking ``1998, 1999, or 2001'' each place it appears 
        and inserting ``1998, 1999, 2001, or 2002''.
          (2) Subparagraph (A) of section 220(j)(4) is amended 
        by striking ``and 2001'' and inserting ``2001, and 
        2002''.
  (c) Effective Date.--The amendments made by this section 
shall take effect on January 1, 2002.

SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN 
                    RESERVATIONS.

  (a) Employment.--Subsection (f) of section 45A is amended by 
striking ``December 31, 2003'' and inserting ``December 31, 
2004''.
  (b) Property.--Paragraph (8) of section 168(j) is amended by 
striking ``December 31, 2003'' and inserting ``December 31, 
2004''.

SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

  (a) In General.--
          (1) Section 953(e)(10) is amended--
                  (A) by striking ``January 1, 2002'' and 
                inserting ``January 1, 2007'', and
                  (B) by striking ``December 31, 2001'' and 
                inserting ``December 31, 2006''.
          (2) Section 954(h)(9) is amended by striking 
        ``January 1, 2002'' and inserting ``January 1, 2007''.
  (b) Life Insurance and Annuity Contracts.--
          (1) In general.--Subparagraph (B) of section 
        954(i)(4) is amended to read as follows:
                  ``(B) Life insurance and annuity contracts.--
                          ``(i) In general.--Except as provided 
                        in clause (ii), the amount of the 
                        reserve of a qualifying insurance 
                        company or qualifying insurance company 
                        branch for any life insurance or 
                        annuity contract shall be equal to the 
                        greater of--
                                  ``(I) the net surrender value 
                                of such contract (as defined in 
                                section 807(e)(1)(A)), or
                                  ``(II) the reserve determined 
                                under paragraph (5).
                          ``(ii) Ruling request, etc.--The 
                        amount of the reserve under clause (i) 
                        shall be the foreign statement reserve 
                        for the contract (less any catastrophe, 
                        deficiency, equalization, or similar 
                        reserves), if, pursuant to a ruling 
                        request submitted by the taxpayer or as 
                        provided in published guidance, the 
                        Secretary determines that the factors 
                        taken into account in determining the 
                        foreign statement reserve provide an 
                        appropriate means of measuring 
                        income.''.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE 
                    TERMINALS.

  (a) In General.--Subsection (e) of section 4101 is hereby 
repealed.
  (b) Effective Date.--The amendment made by subsection (a) 
shall take effect on January 1, 2002.

SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION 
                    INCREASES FOR FISCAL YEAR 2002.

  Section 403(a)(3) of the Social Security Act (42 U.S.C. 
603(a)(3)) is amended by adding at the end the following:
                  ``(H) Reauthorization of grants for fiscal 
                year 2002.--Notwithstanding any other provision 
                of this paragraph--
                          ``(i) any State that was a qualifying 
                        State under this paragraph for fiscal 
                        year 2001 or any prior fiscal year 
                        shall be entitled to receive from the 
                        Secretary for fiscal year 2002 a grant 
                        in an amount equal to the amount 
                        required to be paid to the State under 
                        this paragraph for the most recent 
                        fiscal year in which the State was a 
                        qualifying State;
                          ``(ii) subparagraph (G) shall be 
                        applied as if `2002' were substituted 
                        for `2001'; and
                          ``(iii) out of any money in the 
                        Treasury of the United States not 
                        otherwise appropriated, there are 
                        appropriated for fiscal year 2002 such 
                        sums as are necessary for grants under 
                        this subparagraph.''.

SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF PROGRAM.

  Section 403(b) of the Social Security Act (42 U.S.C. 603(b)) 
is amended--
          (1) in paragraph (2), by striking ``and 2001'' and 
        inserting ``2001, and 2002''; and
          (2) in paragraph (3)(C)(ii), by striking ``2001'' and 
        inserting ``2002''.

                                  
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