H9302 CONGRESSIONAL RECORD — HOUSE November 15, 2017 Lewis (MN) Paulsen Sires On rollcall Vote No. 634, on passage of and in 2014 was elevated to the status of a Lieu, Ted Payne Slaughter H.R. 2331, the Connected Government Act, as Major Strategic Partner; and Lipinski Pearce Smith (MO) Whereas the 100th Anniversary of the Bal- LoBiondo Pelosi Smith (NE) amended, if I had been present, I would have Loebsack Perlmutter four Declaration offers an opportunity for re- Smith (NJ) voted ‘‘yes.’’ commitment to strengthening the relation- Lofgren Perry Smith (TX) On rollcall Vote No. 635, on passage of Long Peters ship between the United States and Israel; Smith (WA) H.R. 3821, to designate the ‘‘Zachary Loudermilk Peterson Smucker Now, therefore, be it Love Pingree Soto Addington Post Office,’’ if I had been present, Resolved by the House of Representatives (the Lowenthal Pittenger Speier I would have voted ‘‘yes.’’ Senate concurring), That Congress— Lowey Poe (TX) Stefanik (1) affirms its commitment to maintaining Lucas Poliquin On rollcall Vote No. 636, on passage of Stewart the strongest of bilateral ties with the State Luetkemeyer Polis H.R. 2672, to designate the ‘‘Sgt. Douglas J. Stivers of Israel; Lujan Grisham, Posey Riney Post Office,’’ if I had been present, I Suozzi (2) recognizes the importance of the estab- M. Price (NC) would have voted ‘‘yes.’’ Luja´ n, Ben Ray Quigley Swalwell (CA) lishment of the modern State of Israel as a Lynch Raskin Takano PERSONAL EXPLANATION secure and democratic homeland for the Jew- MacArthur Ratcliffe Taylor Ms. GRANGER. Mr. Speaker, I was unable ish people, without prejudice to the rights of Maloney, Reed Tenney Thompson (CA) to make votes. Had I been present, I would all people to live within or alongside Israel Carolyn B. Reichert in peace; and Maloney, Sean Rice (NY) Thompson (MS) have voted ‘‘yea’’ on rollcall No. 635 and (3) supports efforts to continue to increase Marchant Rice (SC) Thompson (PA) ‘‘yea’’ on rollcall No. 636. Thornberry economic, security and cultural ties between Marino Richmond f Marshall Roby Tiberi the United States and Israel. Massie Roe (TN) Tipton RECOGNIZING THE DEEP AND AMENDMENT OFFERED BY MR. ROYCE OF Titus Mast Rogers (AL) ABIDING FRIENDSHIP BETWEEN CALIFORNIA Matsui Rogers (KY) Tonko McCarthy Rohrabacher Torres THE UNITED STATES AND Mr. ROYCE of California. Mr. Speak- McCaul Rokita Trott ISRAEL er, I have an amendment at the desk. McClintock Rooney, Francis Tsongas The SPEAKER pro tempore. The Mr. ROYCE of California. Mr. Speak- McCollum Rooney, Thomas Turner Clerk will report the amendment. McEachin J. Upton er, I ask unanimous consent that the The Clerk read as follows: McHenry Ros-Lehtinen Valadao Committee on Foreign Affairs be dis- Page 3, line 3, strike ‘‘, without prejudice McKinley Rosen Vargas charged from further consideration of McMorris Roskam Veasey to the rights of all people to live within or Rodgers Ross Vela the concurrent resolution (H. Con. Res. alongside Israel in peace’’ and insert ‘‘that McNerney Rothfus Vela´ zquez 92) recognizing the deep and abiding upholds full and equal rights for all of its McSally Rouzer Visclosky friendship between the United States citizens’’. Meadows Roybal-Allard Wagner and Israel, and ask for its immediate Meehan Royce (CA) Walberg The amendment was agreed to. Meeks Ruiz Walden consideration in the House. The concurrent resolution, as amend- Meng Ruppersberger Walker The Clerk read the title of the con- ed, was agreed to. Messer Rush Walorski current resolution. A motion to reconsider was laid on Mitchell Rutherford Walters, Mimi Moolenaar Ryan (OH) The SPEAKER pro tempore. Is there the table. Walz Mooney (WV) Sa´ nchez Wasserman objection to the request of the gen- f Moore Sanford Schultz tleman from California? Moulton Sarbanes Waters, Maxine TAX CUTS AND JOBS ACT Mullin Scalise There was no objection. Watson Coleman Murphy (FL) Schakowsky The text of the concurrent resolution Mr. BRADY of Texas. Mr. Speaker, Weber (TX) Nadler Schiff is as follows: pursuant to House Resolution 619, I call Napolitano Schneider Webster (FL) Welch H. CON. RES. 92 up the bill (H.R. 1) to provide for rec- Neal Schrader onciliation pursuant to title II of the Newhouse Schweikert Wenstrup Whereas the Jewish people have had a Noem Scott (VA) Westerman homeland in modern-day Israel for more concurrent resolution on the budget for Williams Nolan Scott, Austin than 3,000 years; fiscal year 2018, and ask for its imme- Norcross Scott, David Wilson (FL) Wilson (SC) Whereas, on November 2, 1917, United King- diate consideration. Norman Sensenbrenner The Clerk read the title of the bill. Nunes Serrano Wittman dom Foreign Secretary Lord Arthur Balfour O’Halleran Sessions Womack wrote to Lord Walter Rothschild, to be de- The SPEAKER pro tempore. Pursu- O’Rourke Sewell (AL) Woodall clared to the Zionist Federation, a letter de- ant to House Resolution 619, in lieu of Olson Shea-Porter Yarmuth claring, on behalf of the Government of the the amendment in the nature of a sub- Palazzo Sherman Yoder United Kingdom, support for a home for the Pallone Shimkus Yoho stitute recommended by the Com- Jewish people in the former Ottoman district mittee on Ways and Means printed in Palmer Shuster Young (AK) of Palestine; Panetta Simpson Young (IA) the bill, an amendment in the nature of Pascrell Sinema Zeldin Whereas this letter, known as the Balfour Declaration, was ratified by the League of a substitute consisting of the text of NOT VOTING—10 Nations on July 24, 1922; Rules Committee Print 115–39 is adopt- Barton Hudson Renacci Whereas, on September 21, 1922, President ed, and the bill, as amended, is consid- Bridenstine Johnson, Sam Russell Warren G. Harding signed House Joint Reso- ered read. Buchanan McGovern lution 322, after unanimous support from the The text of the bill, as amended, is as Granger Pocan House of Representatives and the Senate, fa- follows: b 1648 voring the establishment, in the former H.R. 1 Ottoman district of Palestine, of a national Be it enacted by the Senate and House of Rep- So (two-thirds being in the affirma- home for the Jewish people; resentatives of the United States of America in tive) the rules were suspended and the Whereas the Balfour Declaration clearly Congress assembled, bill was passed. recognized and sought to uphold the ‘‘civil The result of the vote was announced and religious rights of the existing non-Jew- SECTION 1. SHORT TITLE; ETC. (a) SHORT TITLE.—This Act may be cited as as above recorded. ish communities in Palestine,’’ as well as the ‘‘rights and political status enjoyed by Jews the ‘‘Tax Cuts and Jobs Act’’. A motion to reconsider was laid on (b) AMENDMENT OF 1986 CODE.—Except as oth- in any other country’’; the table. erwise expressly provided, whenever in this Act Whereas the Balfour Declaration was a sig- an amendment or repeal is expressed in terms of PERSONAL EXPLANATION nificant part of the chain of events that led an amendment to, or repeal of, a section or Mr. MCGOVERN. Mr. Speaker, I was un- to the establishment of the modern State of other provision, the reference shall be consid- avoidably absent on Wednesday, November Israel on May 14, 1948; ered to be made to a section or other provision Whereas since Israel’s founding, it has been 15, 2017. of the Internal Revenue Code of 1986. a strong and steadfast ally to the United On rollcall Vote No. 632, the Motion on Or- (c) TABLE OF CONTENTS.—The table of con- dering the Previous Question on the Rule pro- States, and the relationship is built on a mu- tents for this Act is as follows: tual commitment to shared values; viding for consideration of H.R. 1, if I had Sec. 1. Short title; etc. Whereas Israel serves as a beacon for de- been present, I would have voted ‘‘no.’’ mocracy by holding free and transparent TITLE I—TAX REFORM FOR INDIVIDUALS On rollcall Vote No. 633, on passage of H. elections and promoting the free exchange of Subtitle A—Simplification and Reform of Rates, Res. 619, the Rule providing for consideration ideas; Standard Deduction, and Exemptions of H.R. 1, if I had been present, I would have Whereas in April 1998, the United States Sec. 1001. Reduction and simplification of indi- voted ‘‘no.’’ designated Israel as a Major Non-NATO ally vidual income tax rates.

VerDate Sep 11 2014 05:26 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00046 Fmt 7634 Sfmt 6343 E:\CR\FM\A15NO7.027 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9303 Sec. 1002. Enhancement of standard deduction. Sec. 1506. Modification of nondiscrimination Subtitle F—Energy Credits Sec. 1003. Repeal of deduction for personal ex- rules to protect older, longer serv- Sec. 3501. Modifications to credit for electricity emptions. ice participants. produced from certain renewable Sec. 1004. Maximum rate on business income of Subtitle G—Estate, Gift, and Generation- resources. individuals. skipping Transfer Taxes Sec. 3502. Modification of the energy invest- Sec. 1005. Conforming amendments related to Sec. 1601. Increase in credit against estate, gift, ment tax credit. simplification of individual in- and generation-skipping transfer Sec. 3503. Extension and phaseout of residential come tax rates. tax. energy efficient property. Subtitle B—Simplification and Reform of Family Sec. 1602. Repeal of estate and generation-skip- Sec. 3504. Repeal of enhanced oil recovery cred- and Individual Tax Credits ping transfer taxes. it. Sec. 3505. Repeal of credit for producing oil and Sec. 1101. Enhancement of child tax credit and TITLE II—ALTERNATIVE MINIMUM TAX gas from marginal wells. new family tax credit. REPEAL Sec. 3506. Modifications of credit for production Sec. 1102. Repeal of nonrefundable credits. Sec. 2001. Repeal of alternative minimum tax. Sec. 1103. Refundable credit program integrity. from advanced nuclear power fa- Sec. 1104. Procedures to reduce improper claims TITLE III—BUSINESS TAX REFORM cilities. of earned income credit. Subtitle A—Tax Rates Subtitle G—Bond Reforms Sec. 1105. Certain income disallowed for pur- Sec. 3001. Reduction in corporate tax rate. Sec. 3601. Termination of private activity poses of the earned income tax Subtitle B—Cost Recovery bonds. credit. Sec. 3101. Increased expensing. Sec. 3602. Repeal of advance refunding bonds. Subtitle C—Simplification and Reform of Sec. 3603. Repeal of tax credit bonds. Subtitle C—Small Business Reforms Education Incentives Sec. 3604. No tax exempt bonds for professional Sec. 3201. Expansion of section 179 expensing. stadiums. Sec. 1201. American opportunity tax credit. Sec. 3202. Small business accounting method re- Sec. 1202. Consolidation of education savings form and simplification. Subtitle H—Insurance rules. Sec. 3203. Small business exception from limita- Sec. 3701. Net operating losses of life insurance Sec. 1203. Reforms to discharge of certain stu- tion on deduction of business in- companies. dent loan indebtedness. terest. Sec. 3702. Repeal of small life insurance com- Sec. 1204. Repeal of other provisions relating to Sec. 3204. Modification of treatment of S cor- pany deduction. education. poration conversions to C cor- Sec. 3703. Surtax on life insurance company Sec. 1205. Rollovers between qualified tuition porations. taxable income. programs and qualified ABLE Sec. 3704. Adjustment for change in computing programs. Subtitle D—Reform of Business-related Exclusions, Deductions, etc. reserves. Subtitle D—Simplification and Reform of Sec. 3705. Repeal of special rule for distribu- Sec. 3301. Interest. Deductions tions to shareholders from pre- Sec. 3302. Modification of net operating loss de- 1984 policyholders surplus ac- Sec. 1301. Repeal of overall limitation on duction. count. itemized deductions. Sec. 3303. Like-kind exchanges of real property. Sec. 1302. Mortgage interest. Sec. 3304. Revision of treatment of contributions Sec. 3706. Modification of proration rules for Sec. 1303. Repeal of deduction for certain taxes to capital. property and casualty insurance not paid or accrued in a trade or Sec. 3305. Repeal of deduction for local lob- companies. business. bying expenses. Sec. 3707. Modification of discounting rules for Sec. 1304. Repeal of deduction for personal cas- Sec. 3306. Repeal of deduction for income at- property and casualty insurance ualty losses. tributable to domestic production companies. Sec. 1305. Limitation on wagering losses. activities. Sec. 3708. Repeal of special estimated tax pay- Sec. 1306. Charitable contributions. Sec. 3307. Entertainment, etc. expenses. ments. Sec. 1307. Repeal of deduction for tax prepara- Sec. 3308. Unrelated business taxable income in- Subtitle I—Compensation tion expenses. creased by amount of certain Sec. 3801. Modification of limitation on exces- Sec. 1308. Repeal of medical expense deduction. fringe benefit expenses for which sive employee remuneration. Sec. 1309. Repeal of deduction for alimony pay- deduction is disallowed. Sec. 3802. Excise tax on excess tax-exempt orga- ments. Sec. 3309. Limitation on deduction for FDIC nization executive compensation. Sec. 1310. Repeal of deduction for moving ex- premiums. Sec. 3803. Treatment of qualified equity grants. penses. Sec. 3310. Repeal of rollover of publicly traded TITLE IV—TAXATION OF FOREIGN INCOME Sec. 1311. Termination of deduction and exclu- securities gain into specialized AND FOREIGN PERSONS sions for contributions to medical small business investment compa- savings accounts. nies. Subtitle A—Establishment of Participation Ex- Sec. 1312. Denial of deduction for expenses at- Sec. 3311. Certain self-created property not emption System for Taxation of Foreign In- tributable to the trade or business treated as a capital asset. come of being an employee. Sec. 3312. Repeal of special rule for sale or ex- Sec. 4001. Deduction for foreign-source portion Subtitle E—Simplification and Reform of change of patents. of dividends received by domestic Exclusions and Taxable Compensation Sec. 3313. Repeal of technical termination of corporations from specified 10-per- partnerships. cent owned foreign corporations. Sec. 1401. Limitation on exclusion for employer- Sec. 3314. Recharacterization of certain gains Sec. 4002. Application of participation exemp- provided housing. in the case of partnership profits tion to investments in United Sec. 1402. Exclusion of gain from sale of a prin- interests held in connection with States property. cipal residence. performance of investment serv- Sec. 4003. Limitation on losses with respect to Sec. 1403. Repeal of exclusion, etc., for em- ices. specified 10-percent owned foreign ployee achievement awards. Sec. 3315. Amortization of research and experi- corporations. Sec. 1404. Sunset of exclusion for dependent mental expenditures. Sec. 4004. Treatment of deferred foreign income care assistance programs. Sec. 3316. Uniform treatment of expenses in upon transition to participation Sec. 1405. Repeal of exclusion for qualified mov- contingency fee cases. exemption system of taxation. ing expense reimbursement. Subtitle E—Reform of Business Credits Sec. 1406. Repeal of exclusion for adoption as- Subtitle B—Modifications Related to Foreign sistance programs. Sec. 3401. Repeal of credit for clinical testing Tax Credit System expenses for certain drugs for rare Subtitle F—Simplification and Reform of Sec. 4101. Repeal of section 902 indirect foreign diseases or conditions. Savings, Pensions, Retirement tax credits; determination of sec- Sec. 3402. Repeal of employer-provided child tion 960 credit on current year Sec. 1501. Repeal of special rule permitting re- care credit. basis. characterization of Roth IRA con- Sec. 3403. Repeal of rehabilitation credit. Sec. 4102. Source of income from sales of inven- tributions as traditional IRA con- Sec. 3404. Repeal of work opportunity tax cred- tory determined solely on basis of tributions. it. production activities. Sec. 1502. Reduction in minimum age for allow- Sec. 3405. Repeal of deduction for certain un- able in-service distributions. used business credits. Subtitle C—Modification of Subpart F Sec. 1503. Modification of rules governing hard- Sec. 3406. Termination of new markets tax cred- Provisions ship distributions. it. Sec. 4201. Repeal of inclusion based on with- Sec. 1504. Modification of rules relating to Sec. 3407. Repeal of credit for expenditures to drawal of previously excluded hardship withdrawals from cash provide access to disabled individ- subpart F income from qualified or deferred arrangements. uals. investment. Sec. 1505. Extended rollover period for the roll- Sec. 3408. Modification of credit for portion of Sec. 4202. Repeal of treatment of foreign base over of plan loan offset amounts employer social security taxes company oil related income as in certain cases. paid with respect to employee tips. subpart F income.

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Sec. 4203. Inflation adjustment of de minimis ‘‘(1) 12 PERCENT BRACKET.—12 percent of so ‘‘(B) the C-CPI-U transition multiple. exception for foreign base com- much of the taxable income as does not exceed ‘‘(4) C-CPI-U TRANSITION MULTIPLE.—For pany income. the 25-percent bracket threshold amount, purposes of this subsection, the term ‘C-CPI-U Sec. 4204. Look-thru rule for related controlled ‘‘(2) 25 PERCENT BRACKET.—25 percent of so transition multiple’ means the amount obtained foreign corporations made perma- much of the taxable income as exceeds the 25- by dividing— nent. percent bracket threshold amount but does not ‘‘(A) the C-CPI-U for calendar year 2016, by Sec. 4205. Modification of stock attribution exceed the 35-percent bracket threshold amount, ‘‘(B) the CPI for calendar year 2016. rules for determining status as a plus ‘‘(5) C-CPI-U.—For purposes of this sub- controlled foreign corporation. ‘‘(3) 35 PERCENT BRACKET.—35 percent of so section— Sec. 4206. Elimination of requirement that cor- much of taxable income as exceeds the 35-per- ‘‘(A) IN GENERAL.—The term ‘C-CPI-U’ means poration must be controlled for 30 cent bracket threshold amount but does not ex- the Chained Consumer Price Index for All days before subpart F inclusions ceed the 39.6 percent bracket threshold amount. Urban Consumers (as published by the Bureau apply. ‘‘(4) 39.6 PERCENT BRACKET.—39.6 percent of so of Labor Statistics of the Department of Labor). Subtitle D—Prevention of Base Erosion much of taxable income as exceeds the 39.6-per- The values of the Chained Consumer Price Sec. 4301. Current year inclusion by United cent bracket threshold amount. Index for All Urban Consumers taken into ac- States shareholders with foreign ‘‘(b) BRACKET THRESHOLD AMOUNTS.—For count for purposes of determining the cost-of- high returns. purposes of this section— living adjustment for any calendar year under Sec. 4302. Limitation on deduction of interest ‘‘(1) 25-PERCENT BRACKET THRESHOLD this subsection shall be the latest values so pub- by domestic corporations which AMOUNT.—The term ‘25-percent bracket thresh- lished as of the date on which such Bureau pub- are members of an international old amount’ means— lishes the initial value of the Chained Consumer ‘‘(A) in the case of a joint return or surviving financial reporting group. Price Index for All Urban Consumers for the Sec. 4303. Excise tax on certain payments from spouse, $90,000, month of August for the preceding calendar ‘‘(B) in the case of an individual who is the domestic corporations to related year. head of a household (as defined in section 2(b)), foreign corporations; election to ‘‘(B) DETERMINATION FOR CALENDAR YEAR.— $67,500, treat such payments as effectively The C-CPI-U for any calendar year is the aver- ‘‘(C) in the case of any other individual (other connected income. age of the C-CPI-U as of the close of the 12- than an estate or trust), an amount equal to 1⁄2 month period ending on August 31 of such cal- Subtitle E—Provisions Related to Possessions of of the amount in effect for the taxable year the United States endar year. under subparagraph (A), and ‘‘(6) CPI.—For purposes of this subsection— Sec. 4401. Extension of deduction allowable ‘‘(D) in the case of an estate or trust, $2,550. ‘‘(A) IN GENERAL.—The term ‘Consumer Price with respect to income attrib- ‘‘(2) 35-PERCENT BRACKET THRESHOLD Index’ means the last Consumer Price Index for utable to domestic production ac- AMOUNT.—The term ‘35-percent bracket thresh- All Urban Consumers published by the Depart- tivities in Puerto Rico. old amount’ means— ment of Labor. For purposes of the preceding ‘‘(A) in the case of a joint return or surviving Sec. 4402. Extension of temporary increase in sentence, the revision of the Consumer Price spouse, $260,000, limit on cover over of rum excise Index which is most consistent with the Con- ‘‘(B) in the case of a married individual filing taxes to Puerto Rico and the Vir- sumer Price Index for calendar year 1986 shall a separate return, an amount equal to 1⁄2 of the gin Islands. be used. Sec. 4403. Extension of American Samoa eco- amount in effect for the taxable year under sub- ‘‘(B) DETERMINATION FOR CALENDAR YEAR.— nomic development credit. paragraph (A), and The CPI for any calendar year is the average of ‘‘(C) in the case of any other individual (other Subtitle F—Other International Reforms the Consumer Price Index as of the close of the than an estate or trust), $200,000, and Sec. 4501. Restriction on insurance business ex- ‘‘(D) in the case of an estate or trust, $9,150. 12-month period ending on August 31 of such ception to passive foreign invest- ‘‘(3) 39.6-PERCENT BRACKET THRESHOLD calendar year. ment company rules. AMOUNT.—The term ‘39.6-percent bracket ‘‘(d) SPECIAL RULES FOR CERTAIN CHILDREN TITLE V—EXEMPT ORGANIZATIONS threshold amount’ means— WITH UNEARNED INCOME.— Subtitle A—Unrelated Business Income Tax ‘‘(A) in the case of a joint return or surviving ‘‘(1) IN GENERAL.—In the case of any child to whom this subsection applies for any taxable Sec. 5001. Clarification of unrelated business spouse, $1,000,000, year— income tax treatment of entities ‘‘(B) in the case of any other individual (other 1 ‘‘(A) the 25-percent bracket threshold amount treated as exempt from taxation than an estate or trust), an amount equal to ⁄2 shall not be more than the taxable income of under section 501(a). of the amount in effect for the taxable year such child for the taxable year reduced by the Sec. 5002. Exclusion of research income limited under subparagraph (A), and net unearned income of such child, and to publicly available research. ‘‘(C) in the case of an estate or trust, $12,500. ‘‘(c) INFLATION ADJUSTMENT.— ‘‘(B) the 35-percent bracket threshold amount Subtitle B—Excise Taxes ‘‘(1) IN GENERAL.—In the case of any taxable shall not be more than the sum of— Sec. 5101. Simplification of excise tax on private year beginning after 2018, each dollar amount in ‘‘(i) the taxable income of such child for the foundation investment income. subsections (b) and (e)(3) (other than any taxable year reduced by the net unearned in- Sec. 5102. Private operating foundation require- amount determined by reference to such a dollar come of such child, plus ments relating to operation of art amount) shall be increased by an amount equal ‘‘(ii) the dollar amount in effect under sub- museum. to— section (b)(2)(D) for the taxable year. Sec. 5103. Excise tax based on investment in- ‘‘(A) such dollar amount, multiplied by ‘‘(C) the 39.6-percent bracket threshold come of private colleges and uni- ‘‘(B) the cost-of-living adjustment determined amount shall not be more than the sum of— versities. under this subsection for the calendar year in ‘‘(i) the taxable income of such child for the Sec. 5104. Exception from private foundation which the taxable year begins by substituting taxable year reduced by the net unearned in- excess business holding tax for ‘2017’ for ‘2016’ in paragraph (2)(A)(ii). come of such child, plus independently-operated philan- If any increase determined under the preceding ‘‘(ii) the dollar amount in effect under sub- thropic business holdings. sentence is not a multiple of $100, such increase section (b)(3)(C). Subtitle C—Requirements for Organizations shall be rounded to the next lowest multiple of ‘‘(2) CHILD TO WHOM SUBSECTION APPLIES.— Exempt From Tax $100. This subsection shall apply to any child for any Sec. 5201. 501(c)(3) organizations permitted to ‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur- taxable year if— make statements relating to polit- poses of this subsection— ‘‘(A) such child— ical campaign in ordinary course ‘‘(A) IN GENERAL.—The cost-of-living adjust- ‘‘(i) has not attained age 18 before the close of of activities. ment for any calendar year is the percentage (if the taxable year, or Sec. 5202. Additional reporting requirements for any) by which— ‘‘(ii) has attained age 18 before the close of donor advised fund sponsoring or- ‘‘(i) the C-CPI-U for the preceding calendar the taxable year and is described in paragraph ganizations. year, exceeds (3), ‘‘(ii) the normalized CPI for calendar year ‘‘(B) either parent of such child is alive at the TITLE I—TAX REFORM FOR INDIVIDUALS 2016. close of the taxable year, and Subtitle A—Simplification and Reform of ‘‘(B) SPECIAL RULE FOR ADJUSTMENTS WITH A ‘‘(C) such child does not file a joint return for Rates, Standard Deduction, and Exemptions BASE YEAR AFTER 2016.—For purposes of any pro- the taxable year. SEC. 1001. REDUCTION AND SIMPLIFICATION OF vision which provides for the substitution of a ‘‘(3) CERTAIN CHILDREN WHOSE EARNED INCOME INDIVIDUAL INCOME TAX RATES. year after 2016 for ‘2016’ in subparagraph DOES NOT EXCEED ONE-HALF OF INDIVIDUAL’S (a) IN GENERAL.—Section 1 is amended by (A)(ii), subparagraph (A) shall be applied by SUPPORT.—A child is described in this para- striking subsection (i) and by striking all that substituting ‘C-CPI-U’ for ‘normalized CPI’ in graph if— precedes subsection (h) and inserting the fol- clause (ii). ‘‘(A) such child— lowing: ‘‘(3) NORMALIZED CPI.—For purposes of this ‘‘(i) has not attained age 19 before the close of ‘‘SEC. 1. TAX IMPOSED. subsection, the normalized CPI for any calendar the taxable year, or ‘‘(a) IN GENERAL.—There is hereby imposed on year is the product of— ‘‘(ii) is a student (within the meaning of sec- the income of every individual a tax equal to the ‘‘(A) the CPI for such calendar year, multi- tion 7706(f)(2)) who has not attained age 24 be- sum of— plied by fore the close of the taxable year, and

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00048 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9305 ‘‘(B) such child’s earned income (as defined in ‘‘(iii) in the case of any other individual ‘‘(C) an individual making a return under sec- section 911(d)(2)) for such taxable year does not (other than an estate or trust), an amount equal tion 443(a)(1) for a period of less than 12 months exceed one-half of the amount of the individ- to 1⁄2 of the amount in effect for the taxable year on account of a change in his annual account- ual’s support (within the meaning of section under clause (i), and ing period, or 7706(c)(1)(D) after the application of section ‘‘(iv) in the case of an estate or trust, $2,600. ‘‘(D) an estate or trust, common trust fund, or 7706(f)(5) (without regard to subparagraph (A) ‘‘(B) 20-PERCENT RATE THRESHOLD.—The 20- partnership, thereof)) for such taxable year. percent rate threshold shall be— the standard deduction shall be zero. ‘‘(4) NET UNEARNED INCOME.—For purposes of ‘‘(i) in the case of a joint return or surviving ‘‘(4) UNMARRIED INDIVIDUAL.—For purposes of this subsection— spouse, $479,000 (1⁄2 such amount in the case of this section, the term ‘unmarried individual’ ‘‘(A) IN GENERAL.—The term ‘net unearned in- a married individual filing a separate return), means any individual who— come’ means the excess of— ‘‘(ii) in the case of an individual who is the ‘‘(A) is not married as of the close of the tax- ‘‘(i) the portion of the adjusted gross income head of a household (as defined in section 2(b)), able year (as determined by applying section for the taxable year which is not attributable to $452,400, 7703), earned income (as defined in section 911(d)(2)), ‘‘(iii) in the case of any other individual ‘‘(B) is not a surviving spouse (as defined in over (other than an estate or trust), $425,800, and section 2(a)) for the taxable year, and ‘‘(ii) the sum of— ‘‘(iv) in the case of an estate or trust, $12,700. ‘‘(C) is not a dependent of another taxpayer ‘‘(I) the amount in effect for the taxable year ‘‘(C) INFLATION ADJUSTMENT.—In the case of for a taxable year beginning in the calendar under section 63(c)(2)(A) (relating to limitation any taxable year beginning after 2018, each of year in which the individual’s taxable year be- on standard deduction in the case of certain de- the dollar amounts in subparagraphs (A) and gins. pendents), plus (B) shall be increased by an amount equal to— ‘‘(5) INFLATION ADJUSTMENTS.— ‘‘(II) The greater of the amount described in ‘‘(i) such dollar amount, multiplied by ‘‘(A) STANDARD DEDUCTION AMOUNT.—In the subclause (I) or, if the child itemizes his deduc- ‘‘(ii) the cost-of-living adjustment determined case of any taxable year beginning after 2019, tions for the taxable year, the amount of the under subsection (c)(2)(A) for the calendar year the dollar amount in paragraph (1)(A) shall be itemized deductions allowed by this chapter for in which the taxable year begins, determined by increased by an amount equal to— the taxable year which are directly connected substituting ‘calendar year 2017’ for ‘calendar ‘‘(i) such dollar amount, multiplied by with the production of the portion of adjusted year 2016’ in clause (ii) thereof.’’. ‘‘(ii) the cost-of-living adjustment determined gross income referred to in clause (i). (c) APPLICATION OF SECTION 15.— under section 1(c)(2)(A) for the calendar year in ‘‘(B) LIMITATION BASED ON TAXABLE IN- (1) IN GENERAL.—Subsection (a) of section 15 which the taxable year begins, determined by COME.—The amount of the net unearned income is amended by striking ‘‘by this chapter’’ and substituting ‘calendar year 2018’ for ‘calendar for any taxable year shall not exceed the indi- inserting ‘‘by section 11 (or by reference to any year 2016’ in clause (ii) thereof. vidual’s taxable income for such taxable year. such rates)’’. ‘‘(B) LIMITATION AMOUNT IN CASE OF CERTAIN ‘‘(e) PHASEOUT OF 12-PERCENT RATE.— (2) CONFORMING AMENDMENTS.— DEPENDENTS.—In the case of any taxable year ‘‘(1) IN GENERAL.—The amount of tax imposed (A) Section 15 is amended by striking sub- beginning after 2017, each of the dollar amounts by this section (determined without regard to sections (d) and (f) and by redesignating sub- in paragraph (2) shall be increased by an this subsection) shall be increased by 6 percent section (e) as subsection (d). amount equal to— of the excess (if any) of— (B) Section 15(d), as redesignated by subpara- ‘‘(i) such dollar amount, multiplied by ‘‘(A) adjusted gross income, over graph (A), is amended by striking ‘‘section 1 or ‘‘(ii)(I) in the case of the dollar amount in ‘‘(B) the applicable dollar amount. 11(b)’’ and inserting ‘‘section 11(b)’’. paragraph (2)(A), under section 1(c)(2)(A) for ‘‘(2) LIMITATION.—The increase determined (C) Section 6013(c) is amended by striking the calendar year in which the taxable year be- under paragraph (1) with respect to any tax- ‘‘sections 15, 443, and 7851(a)(1)(A)’’ and insert- gins determined by substituting ‘calendar year payer for any taxable year shall not exceed 27.6 ing ‘‘sections 443 and 7851(a)(1)(A)’’. 1987’ for ‘calendar year 2016’ in clause (ii) there- percent of the lesser of— (3) APPLICATION TO THIS ACT.—Section 15 of of, and ‘‘(A) the taxpayer’s taxable income for such the Internal Revenue Code of 1986 shall not ‘‘(II) in the case of the dollar amount in para- taxable year, or apply to any change in a rate of tax imposed by graph (2)(B), under section 1(c)(2)(A) for the ‘‘(B) the 25-percent bracket threshold amount chapter 1 of such Code which occurs by reason calendar year in which the taxable year begins in effect with respect to the taxpayer for such of any amendment made by this Act (other than determined by substituting ‘calendar year 1997’ taxable year. the amendments made by section 3001). for ‘calendar year 2016’ in clause (ii) thereof. ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur- (d) EFFECTIVE DATE.— If any increase determined under this para- poses of this subsection, the term ‘applicable (1) IN GENERAL.—The amendments made by graph is not a multiple of $100, such increase dollar amount’ means— this section shall apply to taxable years begin- shall be rounded to the next lowest multiple of ‘‘(A) in the case of a joint return or a sur- ning after December 31, 2017. $100.’’. viving spouse, $1,200,000, (2) SUBSECTION (c).—The amendments made ‘‘(B) in the case of a married individual filing (b) CONFORMING AMENDMENTS.— by subsection (c) shall take effect on the date of (1) Section 63(b) is amended by striking ‘‘, a separate return, an amount equal to 1⁄2 of the the enactment of this Act. amount in effect for the taxable year under sub- minus—’’ and all that follows and inserting paragraph (A), and SEC. 1002. ENHANCEMENT OF STANDARD DEDUC- ‘‘minus the standard deduction’’. ‘‘(C) in the case of any other individual, TION. (2) Section 63 is amended by striking sub- $1,000,000. (a) INCREASE IN STANDARD DEDUCTION.—Sec- sections (f) and (g). ‘‘(4) ESTATES AND TRUSTS.—Paragraph (1) tion 63(c) is amended to read as follows: (3) Section 1398(c) is amended— shall not apply in the case of an estate or ‘‘(c) STANDARD DEDUCTION.—For purposes of (A) by striking ‘‘BASIC’’ in the heading there- trust.’’. this subtitle— of, (b) APPLICATION OF CURRENT INCOME TAX ‘‘(1) IN GENERAL.—Except as otherwise pro- (B) by striking ‘‘BASIC STANDARD’’ in the BRACKETS TO CAPITAL GAINS BRACKETS.— vided in this subsection, the term ‘standard de- heading of paragraph (3) and inserting ‘‘STAND- (1) IN GENERAL.— duction’ means— ARD’’, and (A) 0-PERCENT CAPITAL GAINS BRACKET.—Sec- ‘‘(A) $24,400, in the case of a joint return (or (C) by striking ‘‘basic’’ in paragraph (3). tion 1(h)(1) is amended by striking ‘‘which a surviving spouse (as defined in section 2(a)), (4) Section 3402(m)(3) is amended by striking would (without regard to this paragraph) be ‘‘(B) three-quarters of the amount in effect ‘‘(including the additional standard deduction taxed at a rate below 25 percent’’ in subpara- under subparagraph (A) for the taxable year, in under section 63(c)(3) for the aged and blind)’’. graph (B)(i) and inserting ‘‘below the 15-percent the case of the head of a household (as defined (5) Section 6014(b)(4) is amended by striking rate threshold’’. in section 2(b)), and ‘‘section 63(c)(5)’’ and inserting ‘‘section (B) 15-PERCENT CAPITAL GAINS BRACKET.—Sec- ‘‘(C) one-half of the amount in effect under 63(c)(2)’’. tion 1(h)(1)(C)(ii)(I) is amended by striking subparagraph (A) for the taxable year, in any (c) EFFECTIVE DATE.—The amendment made ‘‘which would (without regard to this para- other case. by this section shall apply to taxable years be- graph) be taxed at a rate below 39.6 percent’’ ‘‘(2) LIMITATION ON STANDARD DEDUCTION IN ginning after December 31, 2017. and inserting ‘‘below the 20-percent rate thresh- THE CASE OF CERTAIN DEPENDENTS.—In the case SEC. 1003. REPEAL OF DEDUCTION FOR PER- old’’. of an individual who is a dependent of another SONAL EXEMPTIONS. (2) RATE THRESHOLDS DEFINED.—Section 1(h) taxpayer for a taxable year beginning in the (a) IN GENERAL.—Part V of subchapter B of is amended by adding at the end the following calendar year in which the individual’s taxable chapter 1 is hereby repealed. new paragraph: year begins, the standard deduction applicable (b) DEFINITION OF DEPENDENT RETAINED.— ‘‘(12) RATE THRESHOLDS DEFINED.—For pur- to such individual for such individual’s taxable Section 152, prior to repeal by subsection (a), is poses of this subsection— year shall not exceed the greater of— hereby redesignated as section 7706 and moved ‘‘(A) 15-PERCENT RATE THRESHOLD.—The 15- ‘‘(A) $500, or to the end of chapter 79. percent rate threshold shall be— ‘‘(B) the sum of $250 and such individual’s (c) APPLICATION TO ESTATES AND TRUSTS.— ‘‘(i) in the case of a joint return or surviving earned income (within the means of section 32). Subsection (b) of section 642 is amended— spouse, $77,200 (1⁄2 such amount in the case of a ‘‘(3) CERTAIN INDIVIDUALS, ETC., NOT ELIGIBLE (1) by striking paragraph (2)(C), married individual filing a separate return), FOR STANDARD DEDUCTION.—In the case of— (2) by striking paragraph (3), and ‘‘(ii) in the case of an individual who is the ‘‘(A) a married individual filing a separate re- (3) by striking ‘‘DEDUCTION FOR PERSONAL head of a household (as defined in section 2(b)), turn where either spouse itemizes deductions, EXEMPTION’’ in the heading thereof and insert- $51,700, ‘‘(B) a nonresident alien individual, ing ‘‘BASIC DEDUCTION’’.

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(d) APPLICATION TO NONRESIDENT ALIENS.— (5) Section 36B(d)(1) is amended by striking (30) Section 891 is amended by striking ‘‘under Section 873(b) is amended by striking paragraph ‘‘equal to the number of individuals for whom section 151 and’’. (3). the taxpayer is allowed a deduction under sec- (31) Section 904(b) is amended by striking (e) MODIFICATION OF WAGE WITHHOLDING tion 151 (relating to allowance of deduction for paragraph (1). RULES.— personal exemptions) for the taxable year’’ and (32) Section 931(b)(1) is amended by striking (1) IN GENERAL.—Section 3402(a) is amended inserting ‘‘the sum of 1 (2 in the case of a joint ‘‘(other than the deduction under section 151, by striking paragraph (2). return) plus the number of the taxpayer’s de- relating to personal exemptions)’’. (2) CONFORMING AMENDMENT.—Section 3402(a) pendents for the taxable year’’. (33) Section 933 is amended— is amended— (6) Section 36B(e)(1) is amended by striking ‘‘1 (A) by striking ‘‘(other than the deduction (A) by redesignating subparagraphs (A) and or more individuals for whom a taxpayer is al- under section 151, relating to personal exemp- tions)’’ in paragraph (1), and (B) of paragraph (1) as paragraphs (1) and (2) lowed a deduction under section 151 (relating to (B) by striking ‘‘(other than the deduction for and moving such redesignated paragraphs 2 ems allowance of deduction for personal exemptions) to the left, and personal exemptions under section 151)’’ in for the taxable year (including the taxpayer or paragraph (2). (B) by striking all that precedes ‘‘otherwise his spouse)’’ and inserting ‘‘1 or more of the tax- provided in this section’’ and inserting the fol- (34) Section 1212(b)(2)(B)(ii) is amended to payer, the taxpayer’s spouse, or any dependent read as follows: lowing: of the taxpayer’’. ‘‘(a) REQUIREMENT OF WITHHOLDING.—Except ‘‘(ii) in the case of an estate or trust, the de- (7) Section 42(i)(3)(D)(ii)(I) is amended— duction allowed for such year under section as’’. (A) by striking ‘‘section 152’’ and inserting (3) NUMBER OF EXEMPTIONS.—Section 642(b).’’. ‘‘section 7706’’, and (35) Section 1361(c)(1)(C) is amended by strik- 3402(f)(1) is amended— (B) by striking the period at the end and in- (A) in subparagraph (A), by striking ‘‘an indi- ing ‘‘section 152(f)(1)(C)’’ and inserting ‘‘section serting a comma. vidual described in section 151(d)(2)’’ and insert- 7706(f)(1)(C)’’. (8) Section 72(t)(2)(D)(i)(III) is amended by (36) Section 1402(a) is amended by striking ing ‘‘a dependent of any other taxpayer’’, and striking ‘‘section 152’’ and inserting ‘‘section (B) in subparagraph (C), by striking ‘‘with re- paragraph (7). 7706’’. (37) Section 2032A(c)(7)(D) is amended by spect to whom, on the basis of facts existing at (9) Section 72(t)(7)(A)(iii) is amended by strik- striking ‘‘section 152(f)(2)’’ and inserting ‘‘sec- the beginning of such day, there may reason- ing ‘‘section 152(f)(1)’’ and inserting ‘‘section tion 7706(f)(2)’’. ably be expected to be allowable an exemption 7706(f)(1)’’. (38) Section 3402(m)(1) is amended by striking under section 151(c)’’ and inserting ‘‘who, on (10) Section 105(b) is amended— ‘‘other than the deductions referred to in section the basis of facts existing at the beginning of (A) by striking ‘‘as defined in section 152’’ and 151 and’’. such day, is reasonably expected to be a depend- inserting ‘‘as defined in section 7706’’, (39) Section 3402(r)(2) is amended by striking ent of the employee’’. (B) by striking ‘‘section 152(f)(1)’’ and insert- ‘‘the sum of—’’ and all that follows and insert- (f) MODIFICATION OF RETURN REQUIREMENT.— ing ‘‘section 7706(f)(1)’’ and ing ‘‘the standard deduction in effect under sec- (1) IN GENERAL.—Paragraph (1) of section tion 63(c)(1)(B).’’. 6012(a) is amended to read as follows: (C) by striking ‘‘section 152(e)’’ and inserting ‘‘section 7706(e)’’. (40) Section 5000A(b)(3)(A) is amended by ‘‘(1) Every individual who has gross income striking ‘‘section 152’’ and inserting ‘‘section for the taxable year, except that a return shall (11) Section 105(c)(1) is amended by striking ‘‘section 152’’ and inserting ‘‘section 7706’’. 7706’’. not be required of— (41) Section 5000A(c)(4)(A) is amended by ‘‘(A) an individual who is not married (deter- (12) Section 125(e)(1)(D) is amended by strik- ing ‘‘section 152’’ and inserting ‘‘section 7706’’. striking ‘‘the number of individuals for whom mined by applying section 7703) and who has the taxpayer is allowed a deduction under sec- gross income for the taxable year which does not (13) Section 132(h)(2)(B) is amended— (A) by striking ‘‘section 152(f)(1)’’ and insert- tion 151 (relating to allowance of deduction for exceed the standard deduction applicable to personal exemptions) for the taxable year’’ and such individual for such taxable year under sec- ing ‘‘section 7706(f)(1)’’, and (B) by striking ‘‘section 152(e)’’ and inserting inserting ‘‘the sum of 1 (2 in the case of a joint tion 63, or return) plus the number of the taxpayer’s de- ‘‘(B) an individual entitled to make a joint re- ‘‘section 7706(e)’’. (14) Section 139D(c)(5) is amended by striking pendents for the taxable year’’. turn if— (42) Section 6013(b)(3)(A) is amended— ‘‘(i) the gross income of such individual, when ‘‘section 152’’ and inserting ‘‘section 7706’’. (A) by striking ‘‘had less than the exemption (15) Section 162(l)(1)(D) is amended by striking combined with the gross income of such individ- amount of gross income’’ in clause (ii) and in- ual’s spouse, for the taxable year does not ex- ‘‘section 152(f)(1)’’ and inserting ‘‘section serting ‘‘had no gross income’’, ceed the standard deduction which would be ap- 7706(f)(1)’’. (B) by striking ‘‘had gross income of the ex- plicable to the taxpayer for such taxable year (16) Section 170(g)(1) is amended by striking emption amount or more’’ in clause (iii) and in- under section 63 if such individual and such in- ‘‘section 152’’ and inserting ‘‘section 7706’’. serting ‘‘had any gross income’’, and dividual’s spouse made a joint return, (17) Section 170(g)(3) is amended by striking (C) by striking the flush language following ‘‘(ii) such individual and such individual’s ‘‘section 152(d)(2)’’ and inserting ‘‘section clause (iii). spouse have the same household as their home 7706(d)(2)’’. (43) Section 6103(l)(21)(A)(iii) is amended to at the close of the taxable year, (18) Section 172(d) is amended by striking read as follows: ‘‘(iii) such individual’s spouse does not make paragraph (3). ‘‘(iii) the number of the taxpayer’s depend- a separate return, and (19) Section 220(b)(6) is amended by striking ents,’’. ‘‘(iv) neither such individual nor such individ- ‘‘with respect to whom a deduction under sec- (44) Section 6213(g)(2) is amended by striking ual’s spouse is an individual described in section tion 151 is allowable to’’ and inserting ‘‘who is subparagraph (H). 63(c)(2) who has income (other than earned in- a dependent of’’. (45) Section 6334(d)(2) is amended to read as come) in excess of the amount in effect under (20) Section 220(d)(2)(A) is amended by strik- follows: ‘‘(2) EXEMPT AMOUNT.— section 63(c)(2)(A).’’. ing ‘‘section 152’’ and inserting ‘‘section 7706’’. ‘‘(A) IN GENERAL.—For purposes of paragraph (2) BANKRUPTCY ESTATES.—Paragraph (8) of (21) Section 223(b)(6) is amended by striking (1), the term ‘exempt amount’ means an amount section 6012(a) is amended by striking ‘‘the sum ‘‘with respect to whom a deduction under sec- tion 151 is allowable to’’ and inserting ‘‘who is equal to— of the exemption amount plus the basic stand- ‘‘(i) the standard deduction, divided by a dependent of’’. ard deduction under section 63(c)(2)(D)’’ and in- ‘‘(ii) 52. (22) Section 223(d)(2)(A) is amended by strik- serting ‘‘the standard deduction in effect under ‘‘(B) VERIFIED STATEMENT.—Unless the tax- section 63(c)(1)(B)’’. ing ‘‘section 152’’ and inserting ‘‘section 7706’’. payer submits to the Secretary a written and (g) CONFORMING AMENDMENTS.— (23) Section 401(h) is amended by striking properly verified statement specifying the facts (1) Section 2(a)(1)(B) is amended by striking ‘‘section 152(f)(1)’’ in the last sentence and in- necessary to determine the proper amount under ‘‘a dependent’’ and all that follows through serting ‘‘section 7706(f)(1)’’. subparagraph (A), subparagraph (A) shall be ‘‘section 151’’ and inserting ‘‘a dependent who (24) Section 402(l)(4)(D) is amended by striking applied as if the taxpayer were a married indi- (within the meaning of section 7706, determined ‘‘section 152’’ and inserting ‘‘section 7706’’. vidual filing a separate return with no depend- without regard to subsections (b)(1), (b)(2) and (25) Section 409A(a)(2)(B)(ii)(I) is amended by ents.’’. (d)(1)(B) thereof) is a son, stepson, daughter, or striking ‘‘section 152(a)’’ and inserting ‘‘section (46) Section 7702B(f)(2)(C)(iii) is amended by stepdaughter of the taxpayer’’. 7706(a)’’. striking ‘‘section 152(d)(2)’’ and inserting ‘‘sec- (2) Section 36B(b)(2)(A) is amended by striking (26) Section 501(c)(9) is amended by striking tion 7706(d)(2)’’. ‘‘section 152’’ and inserting ‘‘section 7706’’. ‘‘section 152(f)(1)’’ and inserting ‘‘section (47) Section 7703(a) is amended by striking (3) Section 36B(b)(3)(B) is amended by striking 7706(f)(1)’’. ‘‘part V of subchapter B of chapter 1 and’’. ‘‘unless a deduction is allowed under section 151 (27) Section 529(e)(2)(B) is amended by strik- (48) Section 7703(b)(1) is amended by striking for the taxable year with respect to a depend- ing ‘‘section 152(d)(2)’’ and inserting ‘‘section ‘‘section 152(f)(1)’’ and all that follows and in- ent’’ in the flush matter at the end and insert- 7706(d)(2)’’. serting ‘‘section 7706(f)(1),’’. ing ‘‘unless the taxpayer has a dependent for (28) Section 703(a)(2) is amended by striking (49) Section 7706(a), as redesignated by this the taxable year’’. subparagraph (A) and by redesignating sub- section, is amended by striking ‘‘this subtitle’’ (4) Section 36B(c)(1)(D) is amended by striking paragraphs (B) through (F) as subparagraphs and inserting ‘‘subtitle A’’. ‘‘with respect to whom a deduction under sec- (A) through (E), respectively. (50)(A) Section 7706(d)(1)(B), as redesignated tion 151 is allowable to another taxpayer’’ and (29) Section 874 is amended by striking sub- by this section, is amended by striking ‘‘the ex- inserting ‘‘who is a dependent of another tax- section (b) and by redesignating subsection (c) emption amount (as defined in section 151(d))’’ payer’’. as subsection (b). and inserting ‘‘$4,150’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00050 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9307 (B) Section 7706(d), as redesignated by this ‘‘(A) any item of short-term capital gain, ‘‘(ii) the applicable percentage (as defined in section, is amended by adding at the end the short-term capital loss, long-term capital gain, subsection (f)) with respect to such activity for following new paragraph: or long-term capital loss, such taxable year is at least 10 percent, ‘‘(6) INFLATION ADJUSTMENT.—In the case of ‘‘(B) any dividend, income equivalent to a then subparagraph (A) shall not apply and the any calendar year beginning after 2018, the dividend, or payment in lieu of dividends de- capital percentage with respect to such activity $4,150 amount in paragraph (1)(B) shall be in- scribed in section 954(c)(1)(G), shall be equal to such applicable percentage. creased by an amount equal to— ‘‘(C) any interest income other than interest ‘‘(C) SPECIFIED SERVICE ACTIVITY.—The term ‘‘(A) such dollar amount, multiplied by income which is properly allocable to a trade or ‘specified service activity’ means any activity ‘‘(B) the cost-of-living adjustment determined business, involving the performance of services described under section 1(c)(2)(A) for such calendar year, ‘‘(D) any item of gain or loss described in sub- in section 1202(e)(3)(A), including investing, determined by substituting ‘calendar year 2017’ paragraph (C) or (D) of section 954(c)(1) (ap- trading, or dealing in securities (as defined in for ‘calendar year 2016’ in clause (ii) thereof. plied by substituting ‘business activity’ for ‘con- section 475(c)(2)), partnership interests, or com- If any increase determined under the preceding trolled foreign corporation’), modities (as defined in section 475(e)(2)). sentence is not a multiple of $100, such increase ‘‘(E) any item of income, gain, deduction, or ‘‘(4) REDUCTION IN CAPITAL PERCENTAGE IN shall be rounded to the next lowest multiple of loss taken into account under section CERTAIN CASES.—The capital percentage (deter- $100.’’. 954(c)(1)(F) (determined without regard to mined after the application of paragraphs (2) (51) The table of sections for chapter 79 is clause (ii) thereof and other than items attrib- and (3)) with respect to any active business ac- amended by adding at the end the following utable to notional principal contracts entered tivity shall not exceed 1 minus the quotient (not new item: into in transactions qualifying under section greater than 1) of— ‘‘Sec. 7706. Dependent defined.’’. 1221(a)(7)), ‘‘(A) any amounts described in subsection (h) EFFECTIVE DATE.—The amendments made ‘‘(F) any amount received from an annuity (c)(2) which are taken into account in deter- by this section shall apply to taxable years be- which is not received in connection with the mining the net business income derived from ginning after December 31, 2017. trade or business of the business activity, and such activity, divided by SEC. 1004. MAXIMUM RATE ON BUSINESS INCOME ‘‘(G) any item of deduction or loss properly al- ‘‘(B) such net business income. OF INDIVIDUALS. locable to an amount described in any of the ‘‘(f) APPLICABLE PERCENTAGE.—For purposes (a) IN GENERAL.—Part I of subchapter A of preceding subparagraphs. of this section— chapter 1 is amended by inserting after section ‘‘(4) APPLICATION OF RESTRICTIONS APPLICA- ‘‘(1) IN GENERAL.—The term ‘applicable per- 3 the following new section: BLE TO DETERMINING TAXABLE INCOME.—Net centage’ means, with respect to any active busi- business income or loss shall be appropriately ness activity for any taxable year, the quotient ‘‘SEC. 4. 25 PERCENT MAXIMUM RATE ON BUSI- NESS INCOME OF INDIVIDUALS. adjusted so as only to take into account any (not greater than 1) of— ‘‘(A) the specified return on capital with re- ‘‘(a) REDUCTION IN TAX TO ACHIEVE 25 PER- amount of income, gain, deduction, or loss to spect to such activity for such taxable year, di- CENT MAXIMUM RATE.—The tax imposed by sec- the extent such amount affects the determina- tion 1 shall be reduced by the sum of— tion of taxable income for the taxable year. vided by ‘‘(1) 10 percent of the lesser of— ‘‘(5) CARRYOVER BUSINESS LOSS.—For purposes ‘‘(B) the taxpayer’s net business income de- ‘‘(A) qualified business income, or of subsection (b)(2)(C), the carryover business rived from such activity for such taxable year. ‘‘(B) the excess (if any) of— loss determined for any taxable year is the ex- ‘‘(2) SPECIFIED RETURN ON CAPITAL.—The term ‘‘(i) taxable income reduced by net capital cess (if any) of the sum described in subsection ‘specified return on capital’ means, with respect gain (as defined in section 1(h)(11)(A)), over (b)(2) over the sum described in subsection (b)(1) to any active business activity referred to in ‘‘(ii) the maximum dollar amount for the 25- for such taxable year. paragraph (1), the excess of— percent rate bracket which applies to the tax- ‘‘(d) PASSIVE AND ACTIVE BUSINESS ACTIV- ‘‘(A) the product of— payer under section 1 for the taxable year, and ITY.—For purposes of this section— ‘‘(i) the deemed rate of return for the taxable ‘‘(2) 4.6 percent of the excess (if any) of— ‘‘(1) PASSIVE BUSINESS ACTIVITY.—The term year, multiplied by ‘‘(A) the lesser of— ‘passive business activity’ means any passive ac- ‘‘(ii) the asset balance with respect to such ac- ‘‘(i) qualified business income, or tivity as defined in section 469(c) determined tivity for such taxable year, over ‘‘(ii) the excess (if any) determined under without regard to paragraphs (3) and (6)(B) ‘‘(B) an amount equal to the interest which is paragraph (1)(B), over thereof. paid or accrued, and for which a deduction is ‘‘(B) the excess of— ‘‘(2) ACTIVE BUSINESS ACTIVITY.—The term allowed under this chapter, with respect to such ‘‘(i) the maximum dollar amount for the 35- ‘active business activity’ means any business ac- activity for such taxable year. percent rate bracket which applies to the tax- tivity which is not a passive business activity. ‘‘(3) DEEMED RATE OF RETURN.—The term payer under section 1 for the taxable year, over ‘‘(3) BUSINESS ACTIVITY.—The term ‘business ‘deemed rate of return’ means, with respect to ‘‘(ii) the maximum dollar amount for the 25- activity’ means any activity (within the mean- any taxable year, the Federal short-term rate percent rate bracket which applies to the tax- ing of section 469) which involves the conduct of (determined under section 1274(d) for the month payer under section 1 for the taxable year. any trade or business. in which or with which such taxable year ends) ‘‘(b) QUALIFIED BUSINESS INCOME.—For pur- ‘‘(e) CAPITAL PERCENTAGE.—For purposes of plus 7 percentage points. poses of this section, the term ‘qualified business this section— ‘‘(4) ASSET BALANCE.— income’ means the excess (if any) of— ‘‘(1) IN GENERAL.—Except as otherwise pro- ‘‘(A) IN GENERAL.—The asset balance with re- ‘‘(1) the sum of— vided in this section, the term ‘capital percent- spect to any active business activity referred to ‘‘(A) 100 percent of any net business income age’ means 30 percent. in paragraph (1) for any taxable year equals the derived from any passive business activity, plus ‘‘(2) INCREASED PERCENTAGE FOR CAPITAL-IN- taxpayer’s adjusted basis of any property de- ‘‘(B) the capital percentage of any net busi- TENSIVE BUSINESS ACTIVITIES.—In the case of a scribed in section 1221(a)(2) which is used in ness income derived from any active business ac- taxpayer who elects the application of this connection with such activity as of the end of tivity, over paragraph with respect to any active business the taxable year (determined without regard to ‘‘(2) the sum of— activity (other than a specified service activity), sections 168(k) and 179). ‘‘(A) 100 percent of any net business loss de- the capital percentage shall be equal to the ap- ‘‘(B) APPLICATION TO ACTIVITIES CARRIED ON rived from any passive business activity, plicable percentage (as defined in subsection (f)) THROUGH PARTNERSHIPS AND S CORPORATIONS.— ‘‘(B) except as provided in subsection for each taxable year with respect to which such In the case of any active business activity car- (e)(3)(A), 30 percent of any net business loss de- election applies. Any election made under this ried on through a partnership or S corporation, rived from any active business activity, plus paragraph shall apply to the taxable year for the taxpayer shall take into account such tax- ‘‘(C) any carryover business loss determined which such election is made and each of the 4 payer’s distributive or pro rata share (as the for the preceding taxable year. subsequent taxable years. Such election shall be case may be) of the asset balance with respect to ‘‘(c) DETERMINATION OF NET BUSINESS INCOME made not later than the due date (including ex- such activity as determined with respect to such OR LOSS.—For purposes of this section— tensions) for the return of tax for the taxable partnership or S corporation under subpara- ‘‘(1) IN GENERAL.—Net business income or loss year for which such election is made, and, once graph (A) (applied by substituting ‘the partner- shall be determined with respect to any business made, may not be revoked. ship’s or S corporation’s adjusted basis’ for ‘the activity by appropriately netting items of in- ‘‘(3) TREATMENT OF SPECIFIED SERVICE ACTIVI- taxpayer’s adjusted basis’). come, gain, deduction, and loss with respect to TIES.— ‘‘(g) REDUCED RATE FOR SMALL BUSINESSES such business activity. ‘‘(A) IN GENERAL.—In the case of any active WITH NET ACTIVE BUSINESS INCOME.— ‘‘(2) WAGES, ETC.—Any wages (as defined in business activity which is a specified service ac- ‘‘(1) IN GENERAL.—The tax imposed by section section 3401), payments described in subsection tivity— 1 shall be reduced by 3 percent of the excess (if (a) or (c) of section 707, or directors’ fees re- ‘‘(i) the capital percentage shall be 0 percent, any) of— ceived by the taxpayer which are properly at- and ‘‘(A) the least of— tributable to any business activity shall be ‘‘(ii) subsection (b)(2)(B) shall be applied by ‘‘(i) qualified active business income, taken into account under paragraph (1) as an substituting ‘0 percent’ for ‘30 percent’. ‘‘(ii) taxable income reduced by net capital item of income with respect to such business ac- ‘‘(B) EXCEPTION FOR CAPITAL-INTENSIVE SPECI- gain (as defined in section 1(h)(11)(A)), or tivity. FIED SERVICE ACTIVITIES.—If— ‘‘(iii) the 9-percent bracket threshold amount, ‘‘(3) EXCEPTION FOR CERTAIN INVESTMENT-RE- ‘‘(i) the taxpayer elects the application of this over LATED ITEMS.—There shall not be taken into ac- subparagraph with respect to such activity for ‘‘(B) the excess (if any) of taxable income over count under paragraph (1)— any taxable year, and the applicable threshold amount.

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‘‘(2) PHASE-IN OF RATE REDUCTION.—In the (as defined in paragraph (6)) shall each be in- in 1983 or 1984, clause (i) shall be applied by case of any taxable year beginning before Janu- creased by specified dividend income. substituting the calendar year in which such ary 1, 2022, paragraph (1) shall be applied by ‘‘(B) SPECIFIED DIVIDEND INCOME.—For pur- base period ends for 1987.’’. substituting for ‘3 percent’— poses of this paragraph, the term ‘specified divi- (5) Section 42(e)(3)(D)(ii) is amended by strik- ‘‘(A) in the case of any taxable year beginning dend income’ means— ing ‘‘section 1(f)(3) for such calendar year by after December 31, 2017, and before January 1, ‘‘(i) in the case of any dividend received from substituting ‘calendar year 2008’ for ‘calendar 2020, ‘1 percent’, and a real estate investment trust, the portion of year 1992’ in subparagraph (B) thereof’’ and in- ‘‘(B) in the case of any taxable year beginning such dividend which is neither— serting ‘‘section 1(c)(2)(A) for such calendar after December 31, 2019, and before January 1, ‘‘(I) a capital gain dividend (as defined in sec- year by substituting ‘calendar year 2008’ for 2022, ‘2 percent’. tion 852(b)(3)), nor ‘calendar year 2016’ in clause (ii) thereof’’. ‘‘(3) QUALIFIED ACTIVE BUSINESS INCOME.—For ‘‘(II) taken into account in determining quali- (6) Section 42(h)(3)(H)(i)(II) is amended by purposes of this subsection, the term ‘qualified fied dividend income (as defined in paragraph striking ‘‘section 1(f)(3) for such calendar year active business income’ means the excess (if (11)), and by substituting ‘calendar year 2001’ for ‘cal- any) of— ‘‘(ii) any dividend which is includible in gross endar year 1992’ in subparagraph (B) thereof’’ ‘‘(A) any net business income derived from income and which is received from an organiza- and inserting ‘‘section 1(c)(2)(A) for such cal- any active business activity, over tion or corporation described in section endar year by substituting ‘calendar year 2001’ ‘‘(B) any net business loss derived from any 501(c)(12) or 1381(a).’’. for ‘calendar year 2016’ in clause (ii) thereof’’. active business activity. (c) CLERICAL AMENDMENT.—The table of sec- (7) Section 45R(d)(3)(B)(ii) is amended by ‘‘(4) 9-PERCENT BRACKET THRESHOLD tions for part I of subchapter A of chapter 1 is striking ‘‘section 1(f)(3) for the calendar year, AMOUNT.—For purposes of this subsection, the amended by inserting after the item relating to determined by substituting ‘calendar year 2012’ term ‘9-percent bracket threshold amount’ section 3 the following new item: for ‘calendar year 1992’ in subparagraph (B) means— ‘‘Sec. 4. 25 percent maximum rate on business thereof’’ and inserting ‘‘ ‘section 1(c)(2)(A) for ‘‘(A) in the case of a joint return or surviving income of individuals.’’. such calendar year, determined by substituting spouse, $75,000, ‘‘calendar year 2012’’ for ‘‘calendar year 2016’’ (d) EFFECTIVE DATE.—The amendments made ‘‘(B) in the case of an individual who is the by this section shall apply to taxable years be- in clause (ii) thereof’ ’’. head of a household (as defined in section 2(b)), (8) Section 125(i)(2) is amended— ginning after December 31, 2017. 3⁄4 of the amount in effect for the taxable year (A) by striking ‘‘section 1(f)(3) for the cal- (e) TRANSITION RULE.—In the case of any tax- under subparagraph (A), and endar year in which the taxable year begins by able year which includes December 31, 2017, the ‘‘(C) in the case of any other individual, 1⁄2 of substituting ‘calendar year 2012’ for ‘calendar amendment made by subsection (a) shall apply the amount in effect for the taxable year under year 1992’ in subparagraph (B) thereof’’ in sub- with respect to such taxable year adjusted— subparagraph (A). paragraph (B) and inserting ‘‘section 1(c)(2)(A) (1) so as to apply with respect to the rates of ‘‘(5) APPLICABLE THRESHOLD AMOUNT.—For for the calendar year in which the taxable year tax in effect under section 1 of the Internal Rev- purposes of this subsection, the term ‘applicable begins’’, and enue Code of 1986 with respect to such taxable threshold amount’ means— (B) by striking ‘‘$50’’ both places it appears in year (and so as to achieve a 25 percent effective ‘‘(A) in the case of a joint return or surviving the last sentence and inserting ‘‘$100’’. spouse, $150,000, rate of tax on the business income (determined (9) Section 162(o)(3) is amended by inserting ‘‘(B) in the case of an individual who is the without regard to paragraph (2)) in the same ‘‘as in effect before enactment of the Tax Cuts head of a household (as defined in section 2(b)), manner as such amendment applies to taxable and Jobs Act’’ after ‘‘section 1(f)(5)’’. years beginning after such date with respect to 3⁄4 of the amount in effect for the taxable year (10) Section 220(g)(2) is amended by striking under subparagraph (A), and the rates of tax in effect for such years), and ‘‘section 1(f)(3) for the calendar year in which (2) by reducing the amount of the reduction in ‘‘(C) in the case of any other individual, 1⁄2 of the taxable year begins by substituting ‘cal- the amount in effect for the taxable year under tax (as otherwise determined under paragraph endar year 1997’ for ‘calendar year 1992’ in sub- subparagraph (A). (1)) by the amount which bears the same propor- paragraph (B) thereof’’ and inserting ‘‘section ‘‘(6) ESTATES AND TRUSTS.—Paragraph (1) tion to the amount of such reduction as the 1(c)(2)(A) for the calendar year in which the shall not apply to any estate or trust. number of days in the taxable year which are taxable year begins, determined by substituting ‘‘(7) INFLATION ADJUSTMENT.—In the case of before January 1, 2018, bears to the number of ‘calendar year 1997’ for ‘calendar year 2016’ in any taxable year beginning after 2018, the dollar days in the entire taxable year. clause (ii) thereof’’. amounts in paragraphs (4)(A) and (5)(A) shall SEC. 1005. CONFORMING AMENDMENTS RELATED (11) Section 223(g)(1) is amended by striking each be increased by an amount equal to— TO SIMPLIFICATION OF INDIVIDUAL all that follows subparagraph (A) and inserting ‘‘(A) such dollar amount, multiplied by INCOME TAX RATES. the following: ‘‘(B) the cost-of-living adjustment determined (a) AMENDMENTS RELATED TO MODIFICATION ‘‘(B) the cost-of-living adjustment determined under subsection (c)(2)(A) for the calendar year OF INFLATION ADJUSTMENT.— under section 1(c)(2)(A) for the calendar year in in which the taxable year begins, determined by (1) Section 32(b)(2)(B)(ii)(II) is amended by which the taxable year begins, determined— substituting ‘calendar year 2017’ for ‘calendar striking ‘‘section 1(f)(3) for the calendar year in ‘‘(i) by substituting for ‘calendar year 2016’ in year 2016’ in clause (ii) thereof. which the taxable year begins determined by clause (ii) thereof— If any increase determined under the preceding substituting ‘calendar year 2008’ for ‘calendar ‘‘(I) except as provided in clause (ii), ‘cal- sentence is not a multiple of $100, such increase year 1992’ in subparagraph (B) thereof’’ and in- endar year 1997’, and shall be rounded to the next lowest multiple of serting ‘‘section 1(c)(2)(A) for the calendar year ‘‘(II) in the case of each dollar amount in sub- $100. in which the taxable year begins determined by section (c)(2)(A), ‘calendar year 2003’, and ‘‘(h) REGULATIONS.—The Secretary may issue substituting ‘calendar year 2008’ for ‘calendar ‘‘(ii) by substituting ‘March 31’ for ‘August 31’ such regulations or other guidance as may be year 2016’ in clause (ii) thereof’’. in paragraphs (5)(B) and (6)(B) of section 1(c). necessary or appropriate to carry out the pur- (2) Section 32(j)(1)(B) is amended— The Secretary shall publish the dollar amounts poses of this section, including regulations or (A) in the matter preceding clause (i), by as adjusted under this subsection for taxable other guidance— striking ‘‘section 1(f)(3)’’ and inserting ‘‘section years beginning in any calendar year no later ‘‘(1) which ensures that no amount is taken 1(c)(2)(A)’’, than June 1 of the preceding calendar year.’’. into account under subsection (f)(4) with respect (B) in clause (i), by striking ‘‘for ‘calendar (12) Section 430(c)(7)(D)(vii)(II) is amended by to more than one activity, and year 1992’ in subparagraph (B) thereof’’ and in- striking ‘‘section 1(f)(3) for the calendar year, ‘‘(2) which treats all specified service activities serting ‘‘for ‘calendar year 2016’ in clause (ii) determined by substituting ‘calendar year 2009’ of the taxpayer as a single business activity for thereof’’, and for ‘calendar year 1992’ in subparagraph (B) purposes of this section to the extent that such (C) in clause (ii), by striking ‘‘for ‘calendar thereof’’ and inserting ‘‘section 1(c)(2)(A) for activities would be treated as a single employer year 1992’ in subparagraph (B) of such section the calendar year, determined by substituting under subsection (a) or (b) of section 52 or sub- 1’’ and inserting ‘‘for ‘calendar year 2016’ in ‘calendar year 2009’ for ‘calendar year 2016’ in section (m) or (o) of section 414. clause (ii) thereof’’. clause (ii) thereof’’. ‘‘(i) REFERENCES.—Any reference in this title (3) Section 36B(b)(3)(A)(ii)(II) is amended by (13) Section 512(d)(2)(B) is amended by strik- to section 1 shall be treated as including a ref- striking ‘‘consumer price index’’ and inserting ing ‘‘section 1(f)(3) for the calendar year in erence to this section unless the context of such ‘‘C-CPI-U (as defined in section 1(c))’’. which the taxable year begins, by substituting reference clearly indicates otherwise.’’. (4) Section 41(e)(5)(C) is amended to read as ‘calendar year 1994’ for ‘calendar year 1992’ in (b) 25 PERCENT RATE FOR CERTAIN DIVIDENDS follows: subparagraph (B) thereof’’and inserting ‘‘sec- OF REAL ESTATE INVESTMENT TRUSTS AND CO- ‘‘(C) COST-OF-LIVING ADJUSTMENT DEFINED.— tion 1(c)(2)(A) for the calendar year in which OPERATIVES.—Section 1(h), as amended by the ‘‘(i) IN GENERAL.—The cost-of-living adjust- the taxable year begins, determined by sub- preceding provisions of this Act, is amended by ment for any calendar year is the cost-of-living stituting ‘calendar year 1994’ for ‘calendar year adding at the end the following new paragraph: adjustment for such calendar year determined 2016’ in clause (ii) thereof’’. ‘‘(13) 25 PERCENT RATE FOR CERTAIN DIVIDENDS under section 1(c)(2)(A), by substituting ‘cal- (14) Section 513(h)(2)(C)(ii) is amended by OF REAL ESTATE INVESTMENT TRUSTS AND CO- endar year 1987’ for ‘calendar year 2016’ in striking ‘‘section 1(f)(3) for the calendar year in OPERATIVES.— clause (ii) thereof. which the taxable year begins by substituting ‘‘(A) IN GENERAL.—For purposes of this sub- ‘‘(ii) SPECIAL RULE WHERE BASE PERIOD ENDS ‘calendar year 1987’ for ‘calendar year 1992’ in section, net capital gain (as defined in para- IN A CALENDAR YEAR OTHER THAN 1983 OR 1984.— subparagraph (B) thereof’’ and inserting ‘‘sec- graph (11)) and unrecaptured section 1250 gain If the base period of any taxpayer does not end tion 1(c)(2)(A) for the calendar year in which

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00052 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9309 the taxable year begins, determined by sub- (24) Section 4980I(b)(3)(C)(v)(II) is amended— mined by substituting ‘calendar year 2015’ for stituting ‘calendar year 1987’ for ‘calendar year (A) by striking ‘‘section 1(f)(3)’’ and inserting ‘calendar year 1992’ in subparagraph (B) there- 2016’ in clause (ii) thereof’’. ‘‘section 1(c)(2)(A)’’, of’’ and inserting ‘‘section 1(c)(2)(A) for the cal- (15) Section 831(b)(2)(D)(ii) is amended by (B) by striking ‘‘subparagraph (B)’’ and in- endar year, determined by substituting ‘cal- striking ‘‘section 1(f)(3) for such calendar year serting ‘‘clause (ii)’’, and endar year 2015’ for ‘calendar year 2016’ in by substituting ‘calendar year 2013’ for ‘cal- (C) by striking ‘‘1992’’ and inserting ‘‘2016’’. clause (ii) thereof’’. endar year 1992’ in subparagraph (B) thereof’’ (25) Section 5000A(c)(3)(D)(ii) is amended— (38) Section 7430(c)(1) is amended by striking and inserting ‘‘section 1(c)(2)(A) for such cal- (A) by striking ‘‘section 1(f)(3)’’ and inserting ‘‘section 1(f)(3) for such calendar year, by sub- endar year by substituting ‘calendar year 2013’ ‘‘section 1(c)(2)(A)’’, stituting ‘calendar year 1995’ for ‘calendar year for ‘calendar year 2016’ in clause (ii) thereof’’. (B) by striking ‘‘subparagraph (B)’’ and in- 1992’ in subparagraph (B) thereof’’ in the flush (16) Section 877A(a)(3)(B)(i)(II) is amended by serting ‘‘clause (ii)’’, and text at the end and inserting ‘‘section 1(c)(2)(A) striking ‘‘section 1(f)(3) for the calendar year in (C) by striking ‘‘1992’’ and inserting ‘‘2016’’. for such calendar year, determined by sub- which the taxable year begins, by substituting (26) Section 6039F(d) is amended by striking stituting ‘calendar year 1995’ for ‘calendar year ‘calendar year 2007’ for ‘calendar year 1992’ in ‘‘section 1(f)(3), except that subparagraph (B) 2016’ in clause (ii) thereof’’. subparagraph (B) thereof’’ and inserting ‘‘sec- thereof’’ and inserting ‘‘section 1(c)(2)(A), ex- (39) Section 7872(g)(5) is amended to read as tion 1(c)(2)(A) for the calendar year in which cept that clause (ii) thereof’’. follows: the taxable year begins, determined by sub- (27) Section 6323(i)(4)(B) is amended by strik- ‘‘(5) INFLATION ADJUSTMENT.— stituting ‘calendar year 2007’ for ‘calendar year ing ‘‘section 1(f)(3) for the calendar year, deter- ‘‘(A) IN GENERAL.—In the case of any loan 2016’ in clause (ii) thereof’’. mined by substituting ‘calendar year 1996’ for made during any calendar year after 2018 to (17) Section 911(b)(2)(D)(ii)(II) is amended by ‘calendar year 1992’ in subparagraph (B) there- which paragraph (1) applies, the adjusted dollar striking ‘‘section 1(f)(3) for the calendar year in of’’ and inserting ‘‘section 1(c)(2)(A) for the cal- amount shall be increased by an amount equal which the taxable year begins, determined by endar year, determined by substituting ‘cal- to— substituting ‘2004’ for ‘1992’ in subparagraph endar year 1996’ for ‘calendar year 2016’ in ‘‘(i) such adjusted dollar amount, multiplied (B) thereof’’ and inserting ‘‘section 1(c)(2)(A) clause (ii) thereof’’. by for the calendar year in which the taxable year (28) Section 6334(g)(1)(B) is amended by strik- ‘‘(ii) the cost-of-living adjustment determined begins, determined by substituting ‘calendar ing ‘‘section 1(f)(3) for such calendar year, by under section 1(c)(2)(A) for such calendar year, year 2004’ for ‘calendar year 2016’ in clause (ii) substituting ‘calendar year 1998’ for ‘calendar determined by substituting ‘calendar year 2017’ thereof’’. year 1992’ in subparagraph (B) thereof’’ and in- for ‘calendar year 2016’ in clause (ii) thereof. (18) Section 1274A(d)(2) is amended to read as serting ‘‘section 1(c)(2)(A) for such calendar ‘‘(B) ADJUSTED DOLLAR AMOUNT.—For pur- follows: year, determined by substituting ‘calendar year poses of this paragraph, the term ‘adjusted dol- ‘‘(2) INFLATION ADJUSTMENT.— 1999’ for ‘calendar year 2016’ in clause (ii) there- lar amount’ means the dollar amount in para- ‘‘(A) IN GENERAL.—In the case of any debt in- of’’. strument arising out of a sale or exchange dur- graph (2) as in effect for calendar year 2018. (29) Section 6601(j)(3)(B) is amended by strik- ‘‘(C) ROUNDING.—Any increase under sub- ing any calendar year after 2018, each adjusted ing ‘‘section 1(f)(3) for such calendar year by paragraph (A) shall be rounded to the nearest dollar amount shall be increased by an amount substituting ‘calendar year 1997’ for ‘calendar multiple of $100.’’. equal to— year 1992’ in subparagraph (B) thereof’’ and in- ‘‘(i) such adjusted dollar amount, multiplied (40) Section 219(b)(5)(C)(i)(II) is amended by serting ‘‘section 1(c)(2)(A) for such calendar by striking ‘‘section 1(f)(3) for the calendar year in ‘‘(ii) the cost-of-living adjustment determined year by substituting ‘calendar year 1997’ for which the taxable year begins, determined by under section 1(c)(2)(A) for such calendar year, ‘calendar year 2016’ in clause (ii) thereof’’. substituting ‘calendar year 2007’ for ‘calendar determined by substituting ‘calendar year 2017’ (30) Section 6651(i)(1) is amended by striking year 1992’ in subparagraph (B) thereof’’ and in- for ‘calendar year 2016’ in clause (ii) thereof. ‘‘section 1(f)(3) determined by substituting ‘cal- serting ‘‘section 1(c)(2)(A) for the calendar year ‘‘(B) ADJUSTED DOLLAR AMOUNTS.—For pur- endar year 2013’ for ‘calendar year 1992’ in sub- in which the taxable year begins, determined by poses of this paragraph, the term ‘adjusted dol- paragraph (B) thereof’’ and inserting ‘‘section substituting ‘calendar year 2007’ for ‘calendar lar amount’ means the dollar amounts in sub- 1(c)(2)(A) determined by substituting ‘calendar year 2016’ in clause (ii) thereof’’. sections (b) and (c), in each case as in effect for year 2013’ for ‘calendar year 2016’ in clause (ii) (41) Section 219(g)(8)(B) is amended by strik- calendar year 2018. thereof’’. ing ‘‘section 1(f)(3) for the calendar year in ‘‘(C) ROUNDING.—Any increase under sub- (31) Section 6721(f)(1) is amended— which the taxable year begins, determined by paragraph (A) shall be rounded to the nearest (A) by striking ‘‘section 1(f)(3)’’ and inserting substituting ‘calendar year 2005’ for ‘calendar multiple of $100.’’. ‘‘section 1(c)(2)(A)’’, year 1992’ in subparagraph (B) thereof’’ and in- (19) Section 2010(c)(3)(B)(ii) is amended by (B) by striking ‘‘subparagraph (B)’’ and in- serting ‘‘section 1(c)(2)(A) for the calendar year striking ‘‘section 1(f)(3) for such calendar year serting ‘‘clause (ii)’’, and in which the taxable year begins, determined by by substituting ‘calendar year 2010’ for ‘cal- (C) by striking ‘‘1992’’ and inserting ‘‘2016’’. substituting ‘calendar year 2005’ for ‘calendar endar year 1992’ in subparagraph (B) thereof’’ (32) Section 6722(f)(1) is amended— year 2016’ in clause (ii) thereof’’. and inserting ‘‘section 1(c)(2)(A) for such cal- (A) by striking ‘‘section 1(f)(3)’’ and inserting (b) OTHER CONFORMING AMENDMENTS.— endar year, determined by substituting ‘cal- ‘‘section 1(c)(2)(A)’’, (1) Section 36B(b)(3)(B)(ii)(I)(aa) is amended endar year 2010’ for ‘calendar year 2016’ in (B) by striking ‘‘subparagraph (B)’’ and in- to read as follows: clause (ii) thereof’’. serting ‘‘clause (ii)’’, and ‘‘(aa) who is described in section 1(b)(1)(B) (20) Section 2032A(a)(3)(B) is amended by (C) by striking ‘‘1992’’ and inserting ‘‘2016’’. and who does not have any dependents for the striking ‘‘section 1(f)(3) for such calendar year (33) Section 6652(c)(7)(A) is amended by strik- taxable year,’’. by substituting ‘calendar year 1997’ for ‘cal- ing ‘‘section 1(f)(3) determined by substituting (2) Section 486B(b)(1) is amended— endar year 1992’ in subparagraph (B) thereof’’ ‘calendar year 2013’ for ‘calendar year 1992’ in (A) by striking ‘‘maximum rate in effect’’ and and inserting ‘‘section 1(c)(2)(A) for such cal- subparagraph (B) thereof’’ and inserting ‘‘sec- inserting ‘‘highest rate specified’’, and endar year, determined by substituting ‘cal- tion 1(c)(2)(A) determined by substituting ‘cal- (B) by striking ‘‘section 1(e)’’ and inserting endar year 1997’ for ‘calendar year 2016’ in endar year 2013’ for ‘calendar year 2016’ in ‘‘section 1’’. clause (ii) thereof’’. clause (ii) thereof’’. (3) Section 511(b)(1) is amended by striking (21) Section 2503(b)(2)(B) is amended by strik- (34) Section 6695(h)(1) is amended by striking ‘‘section 1(e)’’ and inserting ‘‘section 1’’. ing ‘‘section 1(f)(3) for such calendar year by ‘‘section 1(f)(3) determined by substituting ‘cal- (4) Section 641(a) is amended by striking ‘‘sec- substituting ‘calendar year 1997’ for ‘calendar endar year 2013’ for ‘calendar year 1992’ in sub- tion 1(e) shall apply to the taxable income’’ and year 1992’ in subparagraph (B) thereof’’ and in- paragraph (B) thereof’’ and inserting ‘‘section inserting ‘‘section 1 shall apply to the taxable serting ‘‘section 1(c)(2)(A) for the calendar year, 1(c)(2)(A) determined by substituting ‘calendar income’’. determined by substituting ‘calendar year 1997’ year 2013’ for ‘calendar year 2016’ in clause (ii) (5) Section 641(c)(2)(A) is amended to read as for ‘calendar year 2016’ in clause (ii) thereof’’. thereof’’. follows: (22) Section 4161(b)(2)(C)(i)(II) is amended by (35) Section 6698(e)(1) is amended by striking ‘‘(A) Except to the extent provided in section striking ‘‘section 1(f)(3) for such calendar year, ‘‘section 1(f)(3) determined by substituting ‘cal- 1(h), the rate of tax shall be treated as being the determined by substituting ‘2004’ for ‘1992’ in endar year 2013’ for ‘calendar year 1992’ in sub- highest rate of tax set forth in section 1(a).’’. subparagraph (B) thereof’’ and inserting ‘‘sec- paragraph (B) thereof’’ and inserting ‘‘section (6) Section 646(b) is amended to read as fol- tion 1(c)(2)(A) for such calendar year, deter- 1(c)(2)(A) determined by substituting ‘calendar lows: mined by substituting ‘calendar year 2004’ for year 2013’ for ‘calendar year 2016’ in clause (ii) ‘‘(b) TAXATION OF INCOME OF TRUST.—Except ‘calendar year 2016’ in clause (ii) thereof’’. thereof’’. as provided in subsection (f)(1)(B)(ii), there is (23) Section 4261(e)(4)(A)(ii) is amended by (36) Section 6699(e)(1) is amended by striking hereby imposed on the taxable income of an striking ‘‘section 1(f)(3) for such calendar year ‘‘section 1(f)(3) determined by substituting ‘cal- electing Settlement Trust a tax at the rate speci- by substituting the year before the last non- endar year 2013’ for ‘calendar year 1992’ in sub- fied in section 1(a)(1). Such tax shall be in lieu indexed year for ‘calendar year 1992’ in sub- paragraph (B) thereof’’ and inserting ‘‘section of the income tax otherwise imposed by this paragraph (B) thereof’’ and inserting ‘‘section 1(c)(2)(A) determined by substituting ‘calendar chapter on such income.’’. 1(c)(2)(A) for such calendar year, determined by year 2013’ for ‘calendar year 2016’ in clause (ii) (7) Section 685(c) is amended by striking ‘‘Sec- substituting the year before the last nonindexed thereof’’. tion 1(e)’’ and inserting ‘‘Section 1’’. year for ‘calendar year 2016’ in clause (ii) there- (37) Section 7345(f)(2) is amended by striking (8) Section 904(b)(3)(E)(ii)(I) is amended by of’’. ‘‘section 1(f)(3) for the calendar year, deter- striking ‘‘set forth in subsection (a), (b), (c), (d),

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or (e) of section 1 (whichever applies)’’ and in- (b) ELIMINATION OF MARRIAGE PENALTY.— section 30D (and by striking the item relating to serting ‘‘the highest rate of tax specified in sec- Section 24(b)(2) is amended— such section in the table of sections for such tion 1’’. (1) by striking ‘‘$110,000’’ in subparagraph (A) subpart). (9) Section 1398(c)(2) is amended by striking and inserting ‘‘$230,000’’, (2) CONFORMING AMENDMENTS.— ‘‘subsection (d) of’’. (2) by inserting ‘‘and’’ at the end of subpara- (A) Section 38(b) is amended by striking para- (10) Section 3402(p)(1)(B) is amended by strik- graph (A), graph (35). ing ‘‘any percentage applicable to any of the 3 (3) by striking ‘‘$75,000 in the case of an indi- (B) Section 1016(a) is amended by striking lowest income brackets in the table under sec- vidual who is not married’’ and all that follows paragraph (37). tion 1(c),’’ and inserting ‘‘12 percent, 25 per- through the period at the end and inserting (C) Section 6501(m) is amended by striking cent,’’. ‘‘one-half of the amount in effect under sub- ‘‘30D(e)(4),’’. (11) Section 3402(q)(1) is amended by striking paragraph (A) for the taxable year in the case (d) EFFECTIVE DATE.— ‘‘the product of third lowest rate of tax applica- of any other individual.’’. (1) IN GENERAL.—Except as provided in para- ble under section 1(c) and’’ and inserting ‘‘25 (c) CREDIT REFUNDABLE UP TO $1,000 PER graphs (2) and (3), the amendments made by percent of’’. CHILD.— this section shall apply to taxable years begin- (12) Section 3402(r)(3) is amended by striking (1) IN GENERAL.—Section 24(d)(1)(A) is amend- ning after December 31, 2017. ‘‘the amount of tax which would be imposed by ed by striking all that follows ‘‘under this sec- (2) SUBSECTION (b).—The amendment made by section 1(c) (determined without regard to any tion’’ and inserting the following: ‘‘deter- subsection (c) shall apply to taxable years end- rate of tax in excess of the fourth lowest rate of mined— ing after December 31, 2017. tax applicable under section 1(c)) on an amount ‘‘(i) without regard to this subsection and the (3) SUBSECTION (c).—The amendments made of taxable income equal to’’ and inserting ‘‘an limitation under section 26(a), by subsection (d) shall apply to vehicles placed amount equal to the product of 25 percent multi- ‘‘(ii) without regard to subsection (a)(2), and in service in taxable years beginning after De- plied by’’. ‘‘(iii) by substituting ‘$1,000’ for ‘$1,600’ in cember 31, 2017. subsection (a)(1), or’’. (13) Section 3406(a)(1) is amended by striking SEC. 1103. REFUNDABLE CREDIT PROGRAM IN- ‘‘the product of the fourth lowest rate of tax ap- (2) INFLATION ADJUSTMENT.—Section 24(d) is TEGRITY. amended by inserting after paragraph (2) the plicable under section 1(c) and’’ and inserting (a) IDENTIFICATION REQUIREMENTS FOR CHILD following new paragraph: ‘‘25 percent of’’. AND FAMILY TAX CREDIT.— ‘‘(3) INFLATION ADJUSTMENT.—In the case of (14) Section 6103(e)(1)(A)(iii) is amended by in- (1) IN GENERAL.—Section 24(e) is amended to any taxable year beginning in a calendar year serting ‘‘(as in effect on the day before the date read as follows: after 2017, the $1,000 amount in paragraph of the enactment of the Tax Cuts and Jobs Act)’’ ‘‘(e) IDENTIFICATION REQUIREMENTS.— (1)(A)(iii) shall be increased by an amount equal after ‘‘section 1(g)’’. ‘‘(1) REQUIREMENTS FOR QUALIFYING CHILD.— (c) EFFECTIVE DATE.—The amendments made to— No credit shall be allowed under this section to ‘‘(A) such dollar amount, multiplied by by this section shall apply to taxable years be- a taxpayer with respect to any qualifying child ‘‘(B) the cost-of-living adjustment under sec- ginning after December 31, 2017. unless the taxpayer includes the name and so- tion 1(c)(2)(A) for such calendar year. Subtitle B—Simplification and Reform of Any increase determined under the preceding cial security number of such qualifying child on Family and Individual Tax Credits sentence shall be rounded to the next highest the return of tax for the taxable year. The pre- ceding sentence shall not prevent a qualifying SEC. 1101. ENHANCEMENT OF CHILD TAX CREDIT multiple of $100 and shall not exceed the amount AND NEW FAMILY TAX CREDIT. in effect under subsection (a)(2).’’. child from being treated as a dependent de- (a) INCREASE IN CREDIT AMOUNT AND ADDI- (d) EFFECTIVE DATE.—The amendments made scribed in subsection (a)(2). TION OF OTHER DEPENDENTS.— by this section shall apply to taxable years be- ‘‘(2) OTHER IDENTIFICATION REQUIREMENTS.— (1) IN GENERAL.—Section 24(a) is amended to ginning after December 31, 2017. No credit shall be allowed under this section with respect to any individual unless the tax- read as follows: SEC. 1102. REPEAL OF NONREFUNDABLE CRED- ‘‘(a) ALLOWANCE OF CREDIT.—There shall be ITS. payer identification number of such individual is included on the return of tax for the taxable allowed as a credit against the tax imposed by (a) REPEAL OF SECTION 22.— this chapter for the taxable year an amount (1) IN GENERAL.—Subpart A of part IV of sub- year and such identifying number was issued equal to the sum of— chapter A of chapter 1 is amended by striking before the due date for filing the return for the ‘‘(1) with respect to each qualifying child of section 22 (and by striking the item relating to taxable year. the taxpayer, $1,600, and such section in the table of sections for such ‘‘(3) SOCIAL SECURITY NUMBER.—For purposes ‘‘(2) for taxable years beginning before Janu- subpart). of this subsection, the term ‘social security num- ary 1, 2023, with respect to the taxpayer (each (2) CONFORMING AMENDMENT.— ber’ means a social security number issued by spouse in the case of a joint return) and each (A) Section 86(f) is amended by striking para- the Social Security Administration (but only if dependent of the taxpayer to whom paragraph graph (1) and by redesignating paragraphs (2), the social security number is issued to a citizen (1) does not apply, $300.’’. (3), and (4) as paragraphs (1), (2), and (3), re- of the United States or pursuant to subclause (I) (2) CONFORMING AMENDMENTS.— spectively. (or that portion of subclause (III) that relates to (A) Section 24(c) is amended— (B)(i) Subsections (c)(3)(B) and (d)(4)(A) of subclause (I)) of section 205(c)(2)(B)(i) of the So- (i) by redesignating paragraphs (1) and (2) as section 7706, as redesignated by this Act, are cial Security Act)).’’. paragraphs (2) and (3), respectively, each amended by striking ‘‘(as defined in sec- (2) OMISSIONS TREATED AS MATHEMATICAL OR (ii) by striking ‘‘152(c)’’ in paragraph (2) (as tion 22(e)(3)’’. CLERICAL ERROR.— so redesignated) and inserting ‘‘7706(c)’’, (ii) Section 7706(f), as redesignated by this (A) IN GENERAL.—Section 6213(g)(2)(I) is (iii) by inserting before paragraph (2) (as so Act, is amended by redesignating paragraph (7) amended to read as follows: redesignated) the following new paragraph: as paragraph (8) and by inserting after para- ‘‘(I) an omission of a correct social security ‘‘(1) DEPENDENT.— graph (6) the following new paragraph: number, or a correct TIN, required under section ‘‘(A) IN GENERAL.—The term ‘dependent’ shall ‘‘(7) PERMANENT AND TOTAL DISABILITY DE- 24(e) (relating to child tax credit), to be included have the meaning given such term by section FINED.—An individual is permanently and to- on a return,’’. 7706. tally disabled if he is unable to engage in any (b) SOCIAL SECURITY NUMBER MUST BE PRO- ‘‘(B) CERTAIN INDIVIDUALS NOT TREATED AS substantial gainful activity by reason of any VIDED.— DEPENDENTS.—In the case of an individual with medically determinable physical or mental im- (1) IN GENERAL.—Section 25A(f)(1)(A), as respect to whom a credit under this section is al- pairment which can be expected to result in amended by section 1201 of this Act, is amended lowable to another taxpayer for a taxable year death or which has lasted or can be expected to by striking ‘‘taxpayer identification number’’ beginning in the calendar year in which the in- last for a continuous period of not less than 12 each place it appears and inserting ‘‘social secu- dividual’s taxable year begins, the amount ap- months. An individual shall not be considered to rity number’’. plicable to such individual under subsection (a) be permanently and totally disabled unless he (2) OMISSION TREATED AS MATHEMATICAL OR for such individual’s taxable year shall be furnishes proof of the existence thereof in such CLERICAL ERROR.—Section 6213(g)(2)(J) is zero.’’, form and manner, and at such times, as the Sec- amended by striking ‘‘TIN’’ and inserting ‘‘so- (iv) in paragraph (3) (as so redesignated)— retary may require.’’. cial security number and employer identification (I) by striking ‘‘term ‘qualifying child’ ’’ and (iii) Section 415(c)(3)(C)(i) is amended by strik- number’’. inserting ‘‘terms ‘qualifying child’ and ‘depend- ing ‘‘22(e)(3)’’ and inserting ‘‘7706(f)(7)’’. (c) INDIVIDUALS PROHIBITED FROM ENGAGING ent’ ’’, and (iv) Section 422(c)(6) is amended by striking IN EMPLOYMENT IN UNITED STATES NOT ELIGI- (II) by striking ‘‘152(b)(3)’’ and inserting ‘‘22(e)(3)’’ and inserting ‘‘7706(f)(7)’’. BLE FOR EARNED INCOME TAX CREDIT.—Section ‘‘7706(b)(3)’’, and (b) TERMINATION OF SECTION 25.—Section 25, 32(m) is amended— (v) in the heading by striking ‘‘QUALIFYING’’ as amended by section 3601, is amended by add- (1) by striking ‘‘(other than:’’ and all that fol- and inserting ‘‘DEPENDENT; QUALIFYING’’. ing at the end the following new subsection: lows through ‘‘of the Social Security Act)’’, and (B) The heading for section 24 is amended by ‘‘(k) TERMINATION.—No credit shall be al- (2) by inserting before the period at the end inserting ‘‘AND FAMILY’’ after ‘‘CHILD’’. lowed under this section with respect to any the following: ‘‘, but only if, in the case of sub- (C) The table of sections for subpart A of part mortgage credit certificate issued after December section (c)(1)(E), the social security number is IV of subchapter A of chapter 1 is amended by 31, 2017.’’. issued to a citizen of the United States or pursu- striking the item relating to section 24 and in- (c) REPEAL OF SECTION 30D.— ant to subclause (I) (or that portion of subclause serting the following new item: (1) IN GENERAL.—Subpart B of part IV of sub- (III) that relates to subclause (I)) of section ‘‘Sec. 24. Child and family tax credit.’’. chapter A of chapter 1 is amended by striking 205(c)(2)(B)(i) of the Social Security Act’’.

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(d) EFFECTIVE DATE.—The amendments made ning in such taxable year) as does not exceed ‘‘(i) the taxpayer, by this section shall apply to taxable years be- $2,000, plus ‘‘(ii) the taxpayer’s spouse, or ginning after December 31, 2017. ‘‘(2) 25 percent of so much of such expenses so ‘‘(iii) any dependent of the taxpayer, SEC. 1104. PROCEDURES TO REDUCE IMPROPER paid as exceeds the dollar amount in effect at an eligible educational institution for courses CLAIMS OF EARNED INCOME CREDIT. under paragraph (1) but does not exceed twice of instruction of such individual at such institu- (a) CLARIFICATION REGARDING DETERMINA- such dollar amount. tion. ‘‘(B) EXCEPTION FOR EDUCATION INVOLVING TION OF SELF-EMPLOYMENT INCOME WHICH IS ‘‘(b) PORTION OF CREDIT REFUNDABLE.—40 SPORTS, ETC.—Such term does not include ex- TREATED AS EARNED INCOME.—Section percent of the credit allowable under subsection 32(c)(2)(B) is amended by striking ‘‘and’’ at the (a)(1) (determined without regard to this sub- penses with respect to any course or other edu- end of clause (v), by striking the period at the section and section 26(a) and after application cation involving sports, games, or hobbies, un- end of clause (vi) and inserting ‘‘, and’’, and by of all other provisions of this section) shall be less such course or other education is part of the adding at the end the following new clause: treated as a credit allowable under subpart C individual’s degree program. ‘‘(C) EXCEPTION FOR NONACADEMIC FEES.— ‘‘(vii) in determining the taxpayer’s net earn- (and not under this part). The preceding sen- Such term does not include student activity fees, ings from self-employment under subparagraph tence shall not apply to any taxpayer for any athletic fees, insurance expenses, or other ex- (A)(ii) there shall not fail to be taken into ac- taxable year if such taxpayer is a child to whom penses unrelated to an individual’s academic count any deduction which is allowable to the section 1(d) applies for such taxable year. course of instruction. taxpayer under this subtitle.’’. ‘‘(c) LIMITATION BASED ON MODIFIED AD- ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— (b) REQUIRED QUARTERLY REPORTING OF JUSTED GROSS INCOME.— The term ‘eligible educational institution’ means WAGES OF EMPLOYEES.—Section 6011 is amended ‘‘(1) IN GENERAL.—The amount allowable as a an institution— by adding at the end the following new sub- credit under subsection (a) for any taxable year shall be reduced (but not below zero) by an ‘‘(A) which is described in section 481 of the section: Higher Education Act of 1965 (20 U.S.C. 1088), ‘‘(i) EMPLOYER REPORTING OF WAGES.—Every amount which bears the same ratio to the as in effect on August 5, 1997, and person required to deduct and withhold from an amount so allowable (determined without regard to this subsection and subsection (b) but after ‘‘(B) which is eligible to participate in a pro- employee a tax under section 3101 or 3402 shall gram under title IV of such Act. include on each return or statement submitted application of all other provisions of this sec- tion) as— ‘‘(f) SPECIAL RULES.— with respect to such tax, the name and address ‘‘(1) IDENTIFICATION REQUIREMENTS.— of such employee and the amount of wages for ‘‘(A) the excess of— ‘‘(i) the taxpayer’s modified adjusted gross in- ‘‘(A) STUDENT.—No credit shall be allowed such employee on which such tax was with- come for such taxable year, over under subsection (a) to a taxpayer with respect held.’’. ‘‘(ii) $80,000 (twice such amount in the case of to the qualified tuition and related expenses of (c) EFFECTIVE DATE.— a joint return), bears to an individual unless the taxpayer includes the (1) IN GENERAL.—Except as provided in para- ‘‘(B) $10,000 (twice such amount in the case of name and taxpayer identification number of graph (2), the amendments made by this section a joint return). such individual on the return of tax for the tax- shall apply to taxable years ending after the ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For able year, and such taxpayer identification date of the enactment of this Act. purposes of this subsection, the term ‘modified number was issued on or before the due date for (2) REPORTING.—The Secretary of the Treas- adjusted gross income’ means the adjusted gross filing such return. ury, or his designee, may delay the application income of the taxpayer for the taxable year in- ‘‘(B) TAXPAYER.—No credit shall be allowed of the amendment made by subsection (b) for creased by any amount excluded from gross in- under this section if the identifying number of such period as such Secretary (or designee) de- come under section 911, 931, or 933. the taxpayer was issued after the due date for termines to be reasonable to allow persons ade- ‘‘(d) OTHER LIMITATIONS.— filing the return for the taxable year. quate time to modify electronic (or other) sys- ‘‘(1) CREDIT ALLOWED ONLY FOR 5 TAXABLE ‘‘(C) INSTITUTION.—No credit shall be allowed tems to permit such person to comply with the YEARS.—An election to have this section apply under this section unless the taxpayer includes requirements of such amendment. may not be made for any taxable year if such an the employer identification number of any insti- SEC. 1105. CERTAIN INCOME DISALLOWED FOR election (by the taxpayer or any other indi- tution to which qualified tuition and related ex- PURPOSES OF THE EARNED INCOME vidual) is in effect with respect to such student penses were paid with respect to the individual. TAX CREDIT. for any 5 prior taxable years. ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS, (a) SUBSTANTIATION REQUIREMENT.—Section ‘‘(2) CREDIT ALLOWED ONLY FOR FIRST 5 YEARS ETC.—The amount of qualified tuition and re- 32 is amended by adding at the end the fol- OF POSTSECONDARY EDUCATION.— lated expenses otherwise taken into account lowing new subsection: ‘‘(A) IN GENERAL.—No credit shall be allowed under subsection (a) with respect to an indi- ‘‘(n) INCONSISTENT INCOME REPORTING.—If the under subsection (a) for a taxable year with re- vidual for an academic period shall be reduced earned income of a taxpayer claimed on a return spect to the qualified tuition and related ex- (before the application of subsection (c)) by the for purposes of this section is not substantiated penses of an eligible student if the student has sum of any amounts paid for the benefit of such by statements or returns under sections 6051, completed (before the beginning of such taxable individual which are allocable to such period 6052, 6041(a), or 6050W with respect to such tax- year) the first 5 years of postsecondary edu- as— payer, the Secretary may require such taxpayer cation at an eligible educational institution. ‘‘(A) a qualified scholarship which is exclud- to provide books and records to substantiate ‘‘(B) FIFTH YEAR LIMITATIONS.—In the case of able from gross income under section 117, such income, including for the purpose of pre- an eligible student with respect to whom an ‘‘(B) an educational assistance allowance venting fraud.’’. election has been in effect for 4 preceding tax- under chapter 30, 31, 32, 34, or 35 of title 38, (b) EXCLUSION OF UNSUBSTANTIATED AMOUNT able years for purposes of the fifth taxable United States Code, or under chapter 1606 of FROM EARNED INCOME.—Section 32(c)(2) is year— title 10, United States Code, and amended by adding at the end the following ‘‘(i) the amount of the credit allowed under ‘‘(C) a payment (other than a gift, bequest, new subparagraph: this section for the taxable year shall not exceed devise, or inheritance within the meaning of sec- ‘‘(C) EXCLUSION.—In the case of a taxpayer an amount equal to 50 percent of the credit oth- tion 102(a)) for such individual’s educational with respect to which there is an inconsistency erwise determined with respect to such student expenses, or attributable to such individual’s described in subsection (n) who fails to substan- under this section (without regard to this sub- enrollment at an eligible educational institution, tiate such inconsistency to the satisfaction of paragraph), and which is excludable from gross income under the Secretary, the term ‘earned income’ shall not ‘‘(ii) the amount of the credit determined any law of the United States. include amounts to the extent of such inconsist- under subsection (b) and allowable under sub- ‘‘(3) TREATMENT OF EXPENSES PAID BY DE- ency.’’. part C shall not exceed an amount equal to 40 PENDENT.—If an individual is a dependent of (c) EFFECTIVE DATE.—The amendments made percent of the amount determined with respect another taxpayer for a taxable year beginning by this section shall apply to taxable years end- to such student under clause (i). in the calendar year in which such individuals ing after the date of the enactment of this Act. ‘‘(e) DEFINITIONS.—For purposes of this sec- taxable year begins— Subtitle C—Simplification and Reform of tion— ‘‘(A) no credit shall be allowed under sub- Education Incentives ‘‘(1) ELIGIBLE STUDENT.— The term ‘eligible section (a) to such individual for such individ- student’ means, with respect to any academic ual’s taxable year, and SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. period, a student who— ‘‘(B) qualified tuition and related expenses (a) IN GENERAL.—Section 25A is amended to ‘‘(A) meets the requirements of section paid by such individual during such individ- read as follows: 484(a)(1) of the Higher Education Act of 1965 (20 ual’s taxable year shall be treated for purposes ‘‘SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT. U.S.C. 1091(a)(1)), as in effect on August 5, 1997, of this section as paid by such other taxpayer. ‘‘(a) IN GENERAL.—In the case of an indi- and ‘‘(4) TREATMENT OF CERTAIN PREPAYMENTS.— vidual, there shall be allowed as a credit against ‘‘(B) is carrying at least 1⁄2 the normal full- If qualified tuition and related expenses are the tax imposed by this chapter for the taxable time work load for the course of study the stu- paid by the taxpayer during a taxable year for year an amount equal to the sum of— dent is pursuing. an academic period which begins during the ‘‘(1) 100 percent of so much of the qualified ‘‘(2) QUALIFIED TUITION AND RELATED EX- first 3 months following such taxable year, such tuition and related expenses paid by the tax- PENSES.— academic period shall be treated for purposes of payer during the taxable year (for education ‘‘(A) IN GENERAL.—The term ‘qualified tuition this section as beginning during such taxable furnished to any eligible student for whom an and related expenses’ means tuition, fees, and year. election is in effect under this section for such course materials, required for enrollment or at- ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit taxable year during any academic period begin- tendance of— shall be allowed under this section for any

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amount for which a deduction is allowed under (7) Section 6211(b)(4)(A) is amended by strik- ‘‘(6) TREATMENT OF UNBORN CHILDREN.— any other provision of this chapter. ing ‘‘subsection (i)(6)’’ and inserting ‘‘sub- ‘‘(A) IN GENERAL.—Nothing shall prevent an ‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS FIL- section (b)’’. unborn child from being treated as a designated ING SEPARATE RETURNS.—If the taxpayer is a (8) Section 6213(g)(2)(J) is amended by striking beneficiary or an individual under this section. married individual (within the meaning of sec- ‘‘TIN required under section 25A(g)(1)’’ and in- ‘‘(B) UNBORN CHILD.—For purposes of this tion 7703), this section shall apply only if the serting ‘‘TIN, and employer identification num- paragraph— taxpayer and the taxpayer’s spouse file a joint ber, required under section 25A(f)(1)’’. ‘‘(i) IN GENERAL.—The term ‘unborn child’ return for the taxable year. (9) Section 6213(g)(2)(Q) is amended to read as means a child in utero. ‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is follows: ‘‘(ii) CHILD IN UTERO.—The term ‘child in a nonresident alien individual for any portion ‘‘(Q) an omission of information required by utero’ means a member of the species homo sapi- of the taxable year, this section shall apply only section 25A(f)(8)(B) or an entry on the return ens, at any stage of development, who is carried if such individual is treated as a resident alien claiming the credit determined under section in the womb.’’. of the United States for purposes of this chapter 25A(a) for a taxable year for which the credit is (f) EFFECTIVE DATES.— by reason of an election under subsection (g) or disallowed under section 25A(f)(8)(A).’’. (1) IN GENERAL.—Except as otherwise provided (h) of section 6013. (10) Section 1004(c) of division B of the Amer- in this subsection, the amendments made by this ‘‘(8) RESTRICTIONS ON TAXPAYERS WHO IM- ican Recovery and Reinvestment Tax Act of 2009 section shall apply to contributions made after PROPERLY CLAIMED CREDIT IN PRIOR YEAR.— is amended— December 31, 2017. ‘‘(A) TAXPAYERS MAKING PRIOR FRAUDULENT (A) in paragraph (1)— (i) by striking ‘‘section 25A(i)(6)’’ each place it (2) ROLLOVERS TO QUALIFIED TUITION PRO- OR RECKLESS CLAIMS.— GRAMS.—The amendments made by subsection ‘‘(i) IN GENERAL.—No credit shall be allowed appears and inserting ‘‘section 25A(b)’’, and (ii) by striking ‘‘with respect to taxable years (b) shall apply to distributions after December under this section for any taxable year in the 31, 2017. disallowance period. beginning after 2008 and before 2018’’ each place SEC. 1203. REFORMS TO DISCHARGE OF CERTAIN ‘‘(ii) DISALLOWANCE PERIOD.—For purposes of it appears and inserting ‘‘with respect to each STUDENT LOAN INDEBTEDNESS. clause (i), the disallowance period is— taxable year’’, ‘‘(I) the period of 10 taxable years after the (B) in paragraph (2), by striking ‘‘Section (a) TREATMENT OF STUDENT LOANS DIS- most recent taxable year for which there was a 25A(i)(6)’’ and inserting ‘‘Section 25A(b)’’, and CHARGED ON ACCOUNT OF DEATH OR DIS- final determination that the taxpayer’s claim of (C) in paragraph (3)(C), by striking ‘‘sub- ABILITY.—Section 108(f) is amended by adding credit under this section was due to fraud, and section (i)(6)’’ and inserting ‘‘subsection (b)’’. at the end the following new paragraph: ‘‘(II) the period of 2 taxable years after the (11) The table of sections for subpart A of part ‘‘(5) DISCHARGES ON ACCOUNT OF DEATH OR most recent taxable year for which there was a IV of subchapter A of chapter 1 is amended by DISABILITY.— final determination that the taxpayer’s claim of striking the item relating to section 25A and in- ‘‘(A) IN GENERAL.—In the case of an indi- credit under this section was due to reckless or serting the following new item: vidual, gross income does not include any intentional disregard of rules and regulations ‘‘Sec. 25A. American opportunity tax credit.’’. amount which (but for this subsection) would be (but not due to fraud). (c) EFFECTIVE DATE.—The amendments made includible in gross income by reasons of the dis- ‘‘(B) TAXPAYERS MAKING IMPROPER PRIOR by this section shall apply to taxable years be- charge (in whole or in part) of any loan de- CLAIMS.—In the case of a taxpayer who is de- ginning after December 31, 2017. scribed in subparagraph (B) if such discharge nied credit under this section for any taxable SEC. 1202. CONSOLIDATION OF EDUCATION SAV- was— year as a result of the deficiency procedures INGS RULES. ‘‘(i) pursuant to subsection (a) or (d) of sec- under subchapter B of chapter 63, no credit (a) NO NEW CONTRIBUTIONS TO COVERDELL tion 437 of the Higher Education Act of 1965 or shall be allowed under this section for any sub- EDUCATION SAVINGS ACCOUNT.—Section the parallel benefit under part D of title IV of sequent taxable year unless the taxpayer pro- 530(b)(1)(A) is amended to read as follows: such Act (relating to the repayment of loan li- vides such information as the Secretary may re- ‘‘(A) Except in the case of rollover contribu- ability), quire to demonstrate eligibility for such credit. tions, no contribution will be accepted after De- ‘‘(ii) pursuant to section 464(c)(1)(F) of such ‘‘(g) INFLATION ADJUSTMENT.— cember 31, 2017.’’. Act, or ‘‘(1) IN GENERAL.—In the case of a taxable (b) LIMITED DISTRIBUTION ALLOWED FOR ELE- ‘‘(iii) otherwise discharged on account of the year beginning after 2018, the $80,000 amount in MENTARY AND SECONDARY TUITION.— death or total and permanent disability of the subsection (c)(1)(A)(ii) shall each be increased (1) IN GENERAL.—Section 529(c) is amended by student. by an amount equal to— adding at the end the following new paragraph: ‘‘(B) LOANS DESCRIBED.—A loan is described REATMENT OF ELEMENTARY AND SEC- ‘‘(A) such dollar amount, multiplied by ‘‘(7) T in this subparagraph if such loan is— ONDARY TUITION.—Any reference in this sub- ‘‘(B) the cost-of-living adjustment determined ‘‘(i) a student loan (as defined in paragraph section to the term ‘qualified higher education under section 1(c)(2)(A) for the calendar year in (2)), or expense’ shall include a reference to expenses which the taxable year begins, determined by ‘‘(ii) a private education loan (as defined in for tuition in connection with enrollment at an substituting ‘calendar year 2017’ for ‘calendar section 140(7) of the Consumer Credit Protection elementary or secondary school.’’. year 2016’ in clause (ii) thereof. Act (15 U.S.C. 1650(7))).’’. (2) LIMITATION.—Section 529(e)(3)(A) is ‘‘(2) ROUNDING.—If any amount as adjusted (b) EXCLUSION FROM GROSS INCOME FOR PAY- amended by adding at the end the following: under paragraph (1) is not a multiple of $1,000, MENTS MADE UNDER INDIAN HEALTH SERVICE ‘‘The amount of cash distributions from all such amount shall be rounded to the next lowest LOAN REPAYMENT PROGRAM.— qualified tuition programs described in sub- multiple of $1,000. (1) IN GENERAL.—Section 108(f)(4) is amended section (b)(1)(A)(ii) with respect to a beneficiary ‘‘(h) REGULATIONS.—The Secretary may pre- by inserting ‘‘under section 108 of the Indian during any taxable year, shall, in the aggregate, scribe such regulations or other guidance as Health Care Improvement Act,’’ after ‘‘338I of include not more than $10,000 in expenses for may be necessary or appropriate to carry out such Act,’’. tuition incurred during the taxable year in con- this section, including regulations providing for (2) CLERICAL AMENDMENT.—The heading for nection with the enrollment or attendance of the a recapture of the credit allowed under this sec- section 108(f)(4) is amended by striking ‘‘AND beneficiary as an elementary or secondary tion in cases where there is a refund in a subse- CERTAIN’’ and inserting ‘‘, INDIAN HEALTH SERV- school student at a public, private, or religious quent taxable year of any amount which was ICE LOAN REPAYMENT PROGRAM, AND CERTAIN’’. school.’’. taken into account in determining the amount (c) EFFECTIVE DATES.— (c) ROLLOVERS TO QUALIFIED TUITION PRO- of such credit.’’. (1) SUBSECTION (a).—The amendment made by (b) CONFORMING AMENDMENTS.— GRAMS PERMITTED.—Section 530(d)(5) is amend- ed by inserting ‘‘, or into (by purchase or con- subsection (a)(1) shall apply to discharges of in- (1) Section 72(t)(7)(B) is amended by striking debtedness after December 31, 2017. ‘‘section 25A(g)(2)’’ and inserting ‘‘section tribution) a qualified tuition program (as de- fined in section 529),’’ after ‘‘into another (2) SUBSECTION (b).—The amendments made 25A(f)(2)’’. by subsection (b) shall apply to amounts re- (2) Section 529(c)(3)(B)(v)(I) is amended by Coverdell education savings account’’. ceived in taxable years beginning after Decem- striking ‘‘section 25A(g)(2)’’ and inserting ‘‘sec- (d) DISTRIBUTIONS FROM QUALIFIED TUITION ber 31, 2017. tion 25A(f)(2)’’. PROGRAMS FOR CERTAIN EXPENSES ASSOCIATED (3) Section 529(e)(3)(B)(i) is amended by strik- WITH REGISTERED APPRENTICESHIP PROGRAMS.— SEC. 1204. REPEAL OF OTHER PROVISIONS RE- ing ‘‘section 25A(b)(3)’’ and inserting ‘‘section Section 529(e)(3) is amended by adding at the LATING TO EDUCATION. 25A(d)’’. end the following new subparagraph: (a) IN GENERAL.—Subchapter B of chapter 1 is (4) Section 530(d)(2)(C) is amended— ‘‘(C) CERTAIN EXPENSES ASSOCIATED WITH REG- amended— (A) by striking ‘‘section 25A(g)(2)’’ in clause ISTERED APPRENTICESHIP PROGRAMS.—The term (1) in part VII by striking sections 221 and 222 (i)(I) and inserting ‘‘section 25A(f)(2)’’, and ‘qualified higher education expenses’ shall in- (and by striking the items relating to such sec- (B) by striking ‘‘HOPE AND LIFETIME LEARNING clude books, supplies, and equipment required tions in the table of sections for such part), CREDITS’’ in the heading and inserting ‘‘AMER- for the enrollment or attendance of a designated (2) in part VII by striking sections 135 and 127 ICAN OPPORTUNITY TAX CREDIT’’. beneficiary in an apprenticeship program reg- (and by striking the items relating to such sec- (5) Section 530(d)(4)(B)(iii) is amended by istered and certified with the Secretary of Labor tions in the table of sections for such part), and striking ‘‘section 25A(g)(2)’’ and inserting ‘‘sec- under section 1 of the National Apprenticeship (3) by striking subsection (d) of section 117. tion 25A(d)(4)(B)’’. Act (29 U.S.C. 50).’’. (b) CONFORMING AMENDMENT RELATING TO (6) Section 6050S(e) is amended by striking (e) UNBORN CHILDREN ALLOWED AS ACCOUNT SECTION 221.— ‘‘subsection (g)(2)’’ and inserting ‘‘subsection BENEFICIARIES.—Section 529(e) is amended by (1) Section 62(a) is amended by striking para- (f)(2)’’. adding at the end the following new paragraph: graph (17).

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(2) Section 74(d) is amended by striking Subclause (III) shall not apply to so much of a (2) CONFORMING AMENDMENTS.— ‘‘221,’’. distribution which, when added to all other con- (A) Section 108(h)(2) is by striking ‘‘for (3) Section 86(b)(2)(A) is amended by striking tributions made to the ABLE account for the ‘$1,000,000 ($500,000’ in clause (ii) thereof’’ and ‘‘221,’’. taxable year, exceeds the limitation under sec- inserting ‘‘for ‘$500,000 ($250,000’ in paragraph (4) Section 219(g)(3)(A)(ii) is amended by strik- tion 529A(b)(2)(B).’’. (2)(A), and ‘$1,000,000’ for ‘$500,000’ in para- ing ‘‘221,’’. (b) EFFECTIVE DATE.—The amendments made graph (2)(B), thereof’’. (5) Section 163(h)(2) is amended by striking by this section shall apply to distributions after (B) Section 163(h) is amended by striking sub- subparagraph (F). December 31, 2017. paragraphs (E) and (F) in paragraph (4). (6) Section 6050S(a) is amended— Subtitle D—Simplification and Reform of (b) TAXPAYERS LIMITED TO 1 QUALIFIED RESI- (A) by inserting ‘‘or’’ at the end of paragraph Deductions DENCE.—Section 163(h)(4)(A)(i) is amended to (1), read as follows: SEC. 1301. REPEAL OF OVERALL LIMITATION ON (B) by striking ‘‘or’’ at the end of paragraph ‘‘(i) IN GENERAL.—The term ‘qualified resi- ITEMIZED DEDUCTIONS. (2), and dence’ means the principal residence (within the (a) IN GENERAL.—Part 1 of subchapter B of (C) by striking paragraph (3). meaning of section 121) of the taxpayer.’’. chapter 1 is amended by striking section 68 (and (7) Section 6050S(e) is amended by striking all (c) EFFECTIVE DATES.— the item relating to such section in the table of that follows ‘‘thereof)’’ and inserting a period. (1) IN GENERAL.—The amendments made by (c) CONFORMING AMENDMENTS RELATED TO sections for such part). this section shall apply to interest paid or ac- (b) EFFECTIVE DATE.—The amendments made SECTION 222.— crued in taxable years beginning after December (1) Section 62(a) is amended by striking para- by this section shall apply to taxable years be- 31, 2017, with respect to indebtedness incurred graph (18). ginning after December 31, 2017. before, on, or after such date. (2) Section 74(d)(2)(B) is amended by striking SEC. 1302. MORTGAGE INTEREST. (2) TREATMENT OF GRANDFATHERED INDEBTED- ‘‘222,’’. (a) MODIFICATION OF LIMITATIONS.— NESS.—For application of the amendments made (3) Section 86(b)(2)(A) is amended by striking (1) IN GENERAL.—Section 163(h)(3) is amended by this section to grandfathered indebtedness, ‘‘222,’’. to read as follows: see paragraph (3)(C) of section 163(h) of the In- (4) Section 219(g)(3)(A)(ii) is amended by strik- ‘‘(3) QUALIFIED RESIDENCE INTEREST.—For ternal Revenue Code of 1986, as amended by this ing ‘‘222,’’. purposes of this subsection— section. (d) CONFORMING AMENDMENTS RELATING TO ‘‘(A) IN GENERAL.—The term ‘qualified resi- SEC. 1303. REPEAL OF DEDUCTION FOR CERTAIN SECTION 127.— dence interest’ means any interest which is paid TAXES NOT PAID OR ACCRUED IN A (1) Section 125(f)(1) is amended by striking or accrued during the taxable year on indebted- TRADE OR BUSINESS. ‘‘127,’’. ness which— (a) IN GENERAL.—Section 164(b)(5) is amended (2) Section 132(j)(8) is amended by striking ‘‘(i) is incurred in acquiring, constructing, or to read as follows: ‘‘which are not excludable from gross income substantially improving any qualified residence ‘‘(5) LIMITATION IN CASE OF INDIVIDUALS.—In under section 127’’. (determined as of the time the interest is ac- the case of a taxpayer other than a corpora- (3) Section 414(n)(3)(C) is amended by striking crued) of the taxpayer, and tion— ‘‘127,’’. ‘‘(ii) is secured by such residence. ‘‘(A) foreign real property taxes (other than (4) Section 414(t)(2) is amended by striking Such term also includes interest on any indebt- taxes which are paid or accrued in carrying on ‘‘127,’’. edness secured by such residence resulting from a trade or business or an activity described in (5) Section 3121(a)(18) is amended by striking the refinancing of indebtedness meeting the re- section 212) shall not be taken into account ‘‘127,’’. quirements of the preceding sentence (or this under subsection (a)(1), (6) Section 3231(e) is amended by striking sentence); but only to the extent the amount of ‘‘(B) the aggregate amount of taxes (other paragraph (6). the indebtedness resulting from such refi- than taxes which are paid or accrued in car- (7) Section 3306(b)(13) is amended by ‘‘127,’’. nancing does not exceed the amount of the refi- rying on a trade or business or an activity de- (8) Section 3401(a)(18) is amended by striking nanced indebtedness. scribed in section 212) taken into account under ‘‘127,’’. ‘‘(B) LIMITATION.—The aggregate amount of subsection (a)(1) for any taxable year shall not (9) Section 6039D(d)(1) is amended by striking indebtedness taken into account under subpara- exceed $10,000 ($5,000 in the case of a married ‘‘, 127’’. graph (A) for any period shall not exceed individual filing a separate return), (e) CONFORMING AMENDMENTS RELATING TO $500,000 (half of such amount in the case of a ‘‘(C) subsection (a)(2) shall only apply to SECTION 117(d).— married individual filing a separate return). taxes which are paid or accrued in carrying on (1) Section 117(c)(1) is amended— ‘‘(C) TREATMENT OF INDEBTEDNESS INCURRED a trade or business or an activity described in (A) by striking ‘‘subsections (a) and (d)’’ and ON OR BEFORE NOVEMBER 2, 2017.— section 212, and inserting ‘‘subsection (a)’’, and ‘‘(i) IN GENERAL.—In the case of any pre-No- ‘‘(D) subsection (a)(3) shall not apply to State (B) by striking ‘‘or qualified tuition reduc- vember 2, 2017, indebtedness, this paragraph and local taxes.’’. tion’’. shall apply as in effect immediately before the (b) EFFECTIVE DATE.—The amendments made (2) Section 414(n)(3)(C) is amended by striking enactment of the Tax Cuts and Jobs Act. by this section shall apply to taxable years be- ‘‘117(d),’’. ‘‘(ii) PRE-NOVEMBER 2, 2017, INDEBTEDNESS.— ginning after December 31, 2017. (3) Section 414(t)(2) is amended by striking For purposes of this subparagraph, the term SEC. 1304. REPEAL OF DEDUCTION FOR PER- ‘‘117(d),’’. ‘pre-November 2, 2017, indebtedness’ means— SONAL CASUALTY LOSSES. (f) CONFORMING AMENDMENTS RELATED TO ‘‘(I) any principal residence acquisition in- (a) IN GENERAL.—Section 165(c) is amended by SECTION 135.— debtedness which was incurred on or before No- inserting ‘‘and’’ at the end of paragraph (1), by (1) Section 74(d)(2)(B) is amended by striking vember 2, 2017, or striking ‘‘; and’’ at the end of paragraph (2) ‘‘135,’’. ‘‘(II) any principal residence acquisition in- and inserting a period, and by striking para- (2) Section 86(b)(2)(A) is amended by striking debtedness which is incurred after November 2, graph (3). ‘‘135,’’. 2017, to refinance indebtedness described in (b) CONFORMING AMENDMENTS.— (3) Section 219(g)(3)(A)(ii) is amended by strik- clause (i) (or refinanced indebtedness meeting (1) Section 165(h) is amended to read as fol- ing ‘‘135,’’. the requirements of this clause) to the extent lows: (g) EFFECTIVE DATES.— (immediately after the refinancing) the principal ‘‘(h) SPECIAL RULE WHERE PERSONAL CAS- (1) IN GENERAL.—Except as otherwise provided amount of the indebtedness resulting from the UALTY GAINS EXCEED PERSONAL CASUALTY in this subsection, the amendments made by this refinancing does not exceed the principal LOSSES.— section shall apply to taxable years beginning amount of the refinanced indebtedness (imme- ‘‘(1) IN GENERAL.—If the personal casualty after December 31, 2017. diately before the refinancing). gains for any taxable year exceed the personal (2) AMENDMENTS RELATING TO SECTION ‘‘(iii) LIMITATION ON PERIOD OF REFI- casualty losses for such taxable year— 117(d).—The amendments made by subsections NANCING.—clause (ii)(II) shall not apply to any ‘‘(A) all such gains shall be treated as gains (a)(3) and (e) shall apply to amounts paid or in- indebtedness after— from sales or exchanges of capital assets, and curred after December 31, 2017. ‘‘(I) the expiration of the term of the original ‘‘(B) all such losses shall be treated as losses SEC. 1205. ROLLOVERS BETWEEN QUALIFIED TUI- indebtedness, or from sales or exchanges of capital assets. TION PROGRAMS AND QUALIFIED ‘‘(II) if the principal of such original indebt- ‘‘(2) DEFINITIONS OF PERSONAL CASUALTY GAIN ABLE PROGRAMS. edness is not amortized over its term, the expira- AND PERSONAL CASUALTY LOSS.—For purposes of (a) ROLLOVERS FROM QUALIFIED TUITION tion of the term of the 1st refinancing of such this subsection— PROGRAMS TO QUALIFIED ABLE PROGRAMS.— indebtedness (or if earlier, the date which is 30 ‘‘(A) PERSONAL CASUALTY LOSS.—The term Section 529(c)(3)(C)(i) is amended by striking years after the date of such 1st refinancing). ‘personal casualty loss’ means any loss of prop- ‘‘or’’ at the end of subclause (I), by striking the ‘‘(iv) BINDING CONTRACT EXCEPTION.—In the erty not connected with a trade or business or a period at the end of subclause (II) and inserting case of a taxpayer who enters into a written transaction entered into for profit, if such loss ‘‘, or’’, and by adding at the end the following binding contract before November 2, 2017, to arises from fire, storm, shipwreck, or other cas- new subclause: close on the purchase of a principal residence ualty, or from theft. ‘‘(III) to an ABLE account (as defined in sec- before January 1, 2018, and who purchases such ‘‘(B) PERSONAL CASUALTY GAIN.—The term tion 529A(e)(6)) of the designated beneficiary or residence before April 1, 2018, subparagraphs ‘personal casualty gain’ means the recognized a member of the family of the designated bene- (A) and (B) shall be applied by substituting gain from any involuntary conversion of prop- ficiary. ‘April 1, 2018’ for ‘November 2, 2017’.’’. erty which is described in subparagraph (A)

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00057 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9314 CONGRESSIONAL RECORD — HOUSE November 15, 2017 arising from fire, storm, shipwreck, or other cas- applicable limitation under clause (i), such ex- (1)(A) shall be treated as amounts paid for med- ualty, or from theft.’’. cess shall be treated (in a manner consistent ical care if— (2) Section 165 is amended by striking sub- with the rules of subsection (d)(1)) as a chari- ‘‘(A) the medical care referred to in paragraph section (k). table contribution to which clause (i) applies in (1)(A) is provided by a physician in a licensed (3)(A) Section 165(l)(1) is amended by striking each of the 5 succeeding years in order of time. hospital (or in a medical care facility which is ‘‘a loss described in subsection (c)(3)’’ and in- ‘‘(iii) COORDINATION WITH SUBPARAGRAPHS (A) related to, or the equivalent of, a licensed hos- serting ‘‘an ordinary loss described in subsection AND (B).— pital), and (c)(2)’’. ‘‘(I) IN GENERAL.—Contributions taken into ‘‘(B) there is no significant element of per- (B) Section 165(l) is amended— account under this subparagraph shall not be sonal pleasure, recreation, or vacation in the (i) by striking paragraph (5), taken into account under subparagraph (A). travel away from home. (ii) by redesignating paragraphs (2), (3), and ‘‘(II) LIMITATION REDUCTION.—Subparagraphs The amount taken into account under the pre- (4) as paragraphs (3), (4), and (5), respectively, (A) and (B) shall be applied by reducing (but ceding sentence shall not exceed $50 for each and not below zero) the aggregate contribution limi- night for each individual. (iii) by inserting after paragraph (1) the fol- tation allowed for the taxable year under each ‘‘(3) PHYSICIAN.—The term ‘physician’ has the lowing new paragraph: such subparagraph by the aggregate contribu- meaning given to such term by section 1861(r) of ‘‘(2) LIMITATIONS.— tions allowed under this subparagraph for such the Social Security Act (42 U.S.C. 1395x(r)). ‘‘(A) DEPOSIT MAY NOT BE FEDERALLY IN- taxable year.’’. ‘‘(4) CONTRACTS COVERING OTHER THAN MED- SURED.—No election may be made under para- (b) DENIAL OF DEDUCTION FOR COLLEGE ATH- ICAL CARE.—In the case of an insurance con- graph (1) with respect to any loss on a deposit LETIC EVENT SEATING RIGHTS.—Section 170(l)(1) tract under which amounts are payable for in a qualified financial institution if part or all is amended to read as follows: other than medical care referred to in subpara- of such deposit is insured under Federal law. ‘‘(1) IN GENERAL.—No deduction shall be al- graphs (A), (B) and (C) of paragraph (1)— ‘‘(B) DOLLAR LIMITATION.—With respect to lowed under this section for any amount de- ‘‘(A) no amount shall be treated as paid for each financial institution, the aggregate amount scribed in paragraph (2).’’. insurance to which paragraph (1)(D) applies of losses attributable to deposits in such finan- (c) CHARITABLE MILEAGE RATE ADJUSTED FOR unless the charge for such insurance is either cial institution to which an election under para- INFLATION.—Section 170(i) is amended by strik- separately stated in the contract, or furnished graph (1) may be made by the taxpayer for any ing ‘‘shall be 14 cents per mile’’ and inserting to the policyholder by the insurance company in taxable year shall not exceed $20,000 ($10,000 in ‘‘shall be a rate which takes into account the a separate statement, the case of a separate return by a married indi- variable cost of operating an automobile’’. ‘‘(B) the amount taken into account as the vidual). The limitation of the preceding sentence (d) REPEAL OF SUBSTANTIATION EXCEPTION IN amount paid for such insurance shall not exceed shall be reduced by the amount of any insur- CASE OF CONTRIBUTIONS REPORTED BY DONEE.— such charge, and ance proceeds under any State law which can Section 170(f)(8) is amended by striking subpara- ‘‘(C) no amount shall be treated as paid for reasonably be expected to be received with re- graph (D) and by redesignating subparagraph such insurance if the amount specified in the spect to losses on deposits in such institution.’’. (E) as subparagraph (D). contract (or furnished to the policyholder by the (4) Section 172(b)(1)(E)(ii), prior to amendment (e) EFFECTIVE DATE.—The amendments made insurance company in a separate statement) as under title III, is amended by striking subclause by this section shall apply to contributions made the charge for such insurance is unreasonably (I) and by redesignating subclauses (II) and in taxable years beginning after December 31, large in relation to the total charges under the (III) as subclauses (I) and (II), respectively. 2017. contract. (5) Section 172(d)(4)(C) is amended by striking ‘‘(5) CERTAIN PRE-PAID CONTRACTS.—Subject SEC. 1307. REPEAL OF DEDUCTION FOR TAX to the limitations of paragraph (4), premiums ‘‘paragraph (2) or (3) of section 165(c)’’ and in- PREPARATION EXPENSES. paid during the taxable year by a taxpayer be- serting ‘‘section 165(c)(2)’’. (a) IN GENERAL.—Section 212 is amended by fore he attains the age of 65 for insurance cov- (6) Section 274(f) is amended by striking ‘‘CAS- adding ‘‘or’’ at the end of paragraph (1), by ering medical care (within the meaning of sub- UALTY LOSSES,’’ in the heading thereof. striking ‘‘; or’’ at the end of paragraph (2) and paragraphs (A), (B), and (C) of paragraph (1)) (7) Section 280A(b) is amended by striking inserting a period, and by striking paragraph for the taxpayer, his spouse, or a dependent ‘‘CASUALTY LOSSES,’’ in the heading thereof. (3). after the taxpayer attains the age of 65 shall be (8) Section 873(b), as amended by the pre- (b) EFFECTIVE DATE.—The amendments made treated as expenses paid during the taxable year ceding provisions of this Act, is amended by by this section shall apply to taxable years be- for insurance which constitutes medical care if striking paragraph (1) and by redesignating ginning after December 31, 2017. paragraphs (2) and (3) as paragraphs (1) and premiums for such insurance are payable (on a SEC. 1308. REPEAL OF MEDICAL EXPENSE DEDUC- level payment basis) under the contract for a pe- (2), respectively. TION. (9) Section 504(b) of the Disaster Tax Relief riod of 10 years or more or until the year in (a) IN GENERAL.—Part VII of subchapter B is which the taxpayer attains the age of 65 (but in and Airport and Airway Extension Act of 2017 is amended by striking by striking section 213 (and amended by adding at the end the following no case for a period of less than 5 years). by striking the item relating to such section in ‘‘(6) COSMETIC SURGERY.— new paragraph: the table of sections for such subpart). ‘‘(4) COORDINATION WITH TAX REFORM.—This ‘‘(A) IN GENERAL.—The term ‘medical care’ (b) CONFORMING AMENDMENTS.— subsection shall be applied without regard to does not include cosmetic surgery or other simi- (1)(A) Section 105(f) is amended to read as fol- the amendments made by section 1304 of the Tax lar procedures, unless the surgery or procedure lows: Cuts and Jobs Act.’’. is necessary to ameliorate a deformity arising ‘‘(f) MEDICAL CARE.—For purposes of this sec- (c) EFFECTIVE DATE.—The amendments made from, or directly related to, a congenital abnor- tion— by this section shall apply to taxable years be- mality, a personal injury resulting from an acci- ‘‘(1) IN GENERAL.—The term ‘medical care’ ginning after December 31, 2017. dent or trauma, or disfiguring disease. means amounts paid— ‘‘(B) COSMETIC SURGERY DEFINED .—For pur- SEC. 1305. LIMITATION ON WAGERING LOSSES. ‘‘(A) for the diagnosis, cure, mitigation, treat- poses of this paragraph, the term ‘cosmetic sur- (a) IN GENERAL.—Section 165(d) is amended by ment, or prevention of disease, or for the pur- gery’ means any procedure which is directed at adding at the end the following: ‘‘For purposes pose of affecting any structure or function of improving the patient’s appearance and does of the preceding sentence, the term ‘losses from the body, not meaningfully promote the proper function of wagering transactions’ includes any deduction ‘‘(B) for transportation primarily for and es- the body or prevent or treat illness or disease. otherwise allowable under this chapter incurred sential to medical care referred to in subpara- ‘‘(7) ELIGIBLE LONG-TERM CARE PREMIUMS.— in carrying on any wagering transaction.’’. graph (A), ‘‘(A) IN GENERAL.—For purposes of this sec- FFECTIVE DATE.—The amendments made (b) E ‘‘(C) for qualified long-term care services (as tion, the term ‘eligible long-term care premiums’ by this section shall apply to taxable years be- defined in section 7702B(c)), or means the amount paid during a taxable year ginning after December 31, 2017. ‘‘(D) for insurance (including amounts paid for any qualified long-term care insurance con- SEC. 1306. CHARITABLE CONTRIBUTIONS. as premiums under part B of title XVIII of the tract (as defined in section 7702B(b)) covering (a) INCREASED LIMITATION FOR CASH CON- Social Security Act, relating to supplementary an individual, to the extent such amount does TRIBUTIONS.—Section 170(b)(1) is amended by re- medical insurance for the aged) covering med- not exceed the limitation determined under the designating subparagraph (G) as subparagraph ical care referred to in subparagraphs (A) and following table: (H) and by inserting after subparagraph (F) the (B) or for any qualified long-term care insur- following new subparagraph: ance contract (as defined in section 7702B(b)). ‘‘In the case of an indi- ‘‘(G) INCREASED LIMITATION FOR CASH CON- In the case of a qualified long-term care insur- vidual with an attained age before the close of the The limitation is: TRIBUTIONS.— ance contract (as defined in section 7702B(b)), taxable year of: ‘‘(i) IN GENERAL.—In the case of any contribu- only eligible long-term care premiums (as de- tion of cash to an organization described in sub- fined in paragraph (7)) shall be taken into ac- 40 or less $200 More than 40 but not more $375 paragraph (A), the total amount of such con- count under subparagraph (D). than 50 tributions which may be taken into account ‘‘(2) AMOUNTS PAID FOR CERTAIN LODGING More than 50 but not more $750 under subsection (a) for any taxable year shall AWAY FROM HOME TREATED AS PAID FOR MED- than 60 More than 60 but not more $2,000 not exceed 60 percent of the taxpayer’s contribu- ICAL CARE.—Amounts paid for lodging (not lav- than 70 tion base for such year. ish or extravagant under the circumstances) More than 70 $2,500 ‘‘(ii) CARRYOVER.—If the aggregate amount of while away from home primarily for and essen- contributions described in clause (i) exceeds the tial to medical care referred to in paragraph ‘‘(B) INDEXING.—

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‘‘(i) IN GENERAL.—In the case of any taxable extent such distributions do not exceed the ex- enue Code of 1986 as in effect before the date of year beginning after 1997, each dollar amount in cess of— the enactment of this Act) executed after Decem- subparagraph (A) shall be increased by the med- ‘‘(i) the expenses paid by the taxpayer during ber 31, 2017, and ical care cost adjustment of such amount for the taxable year, not compensated for by insur- (2) any divorce or separation instrument (as such calendar year. Any increase determined ance or otherwise, for medical care (as defined so defined) executed on or before such date and under the preceding sentence shall be rounded in 105(f)) of the taxpayer, his spouse, or a de- modified after such date if the modification ex- to the nearest multiple of $10. pendent (as defined in section 7706, determined pressly provides that the amendments made by ‘‘(ii) MEDICAL CARE COST ADJUSTMENT.—For without regard to subsections (b)(1), (b)(2), and this section apply to such modification. purposes of clause (i), the medical care cost ad- (d)(1)(B) thereof), over SEC. 1310. REPEAL OF DEDUCTION FOR MOVING justment for any calendar year is the adjust- ‘‘(ii) 10 percent of the taxpayer’s adjusted EXPENSES. ment prescribed by the Secretary, in consulta- gross income.’’. (a) IN GENERAL.—Part VII of subchapter B is tion with the Secretary of Health and Human (3) Section 162(l) is amended by striking para- amended by striking by striking section 217 (and Services, for purposes of such clause. To the ex- graph (3). by striking the item relating to such section in tent that CPI (as defined section 1(c)), or any (4) Section 402(l) is amended by striking para- the table of sections for such subpart). component thereof, is taken into account in de- graph (7) and redesignating paragraph (8) as (b) RETENTION OF MOVING EXPENSES FOR termining such adjustment, such adjustment paragraph (7). MEMBERS OF ARMED FORCES.—Section 134(b) is shall be determined by taking into account C- (5) Section 220(f) is amended by striking para- amended by adding at the end the following CPI-U (as so defined), or the corresponding graph (6). new paragraph: component thereof, in lieu of such CPI (or com- (6) Section 223(f) is amended by striking para- ‘‘(7) MOVING EXPENSES.—The term ‘qualified ponent thereof), but only with respect to the graph (6). military benefit’ includes any benefit described portion of such adjustment which relates to pe- (7) Section 7702B(e) is amended by striking in section 217(g) (as in effect before the enact- riods after December 31, 2017. paragraph (2). ment of the Tax Cuts And Jobs Act).’’. ‘‘(8) CERTAIN PAYMENTS TO RELATIVES TREAT- (8) Section 7706(f)(7), as redesignated by this (c) CONFORMING AMENDMENTS.— ED AS NOT PAID FOR MEDICAL CARE.—An amount Act, is amended by striking ‘‘sections 105(b), (1) Section 62(a) is amended by striking para- paid for a qualified long-term care service (as 132(h)(2)(B), and 213(d)(5)’’ and inserting ‘‘sec- graph (15). defined in section 7702B(c)) provided to an indi- tions 105(b) and 132(h)(2)(B)’’. (2) Section 274(m)(3) is amended by striking vidual shall be treated as not paid for medical (c) EFFECTIVE DATE.—The amendments made ‘‘(other than section 217)’’. care if such service is provided— by this section shall apply to taxable years be- (3) Section 3121(a) is amended by striking ‘‘(A) by the spouse of the individual or by a ginning after December 31, 2017. paragraph (11). relative (directly or through a partnership, cor- SEC. 1309. REPEAL OF DEDUCTION FOR ALIMONY (4) Section 3306(b) is amended by striking poration, or other entity) unless the service is PAYMENTS. paragraph (9). provided by a licensed professional with respect (a) IN GENERAL.—Part VII of subchapter B is (5) Section 3401(a) is amended by striking to such service, or amended by striking by striking section 215 (and paragraph (15). ‘‘(B) by a corporation or partnership which is by striking the item relating to such section in (6) Section 7872(f) is amended by striking related (within the meaning of section 267(b) or the table of sections for such subpart). paragraph (11). 707(b)) to the individual. (b) CONFORMING AMENDMENTS.— (d) EFFECTIVE DATE.—The amendments made For purposes of this paragraph, the term ‘rel- (1) CORRESPONDING REPEAL OF PROVISIONS by this section shall apply to taxable years be- ative’ means an individual bearing a relation- PROVIDING FOR INCLUSION OF ALIMONY IN GROSS ginning after December 31, 2017. ship to the individual which is described in any INCOME.— SEC. 1311. TERMINATION OF DEDUCTION AND EX- of subparagraphs (A) through (G) of section (A) Subsection (a) of section 61 is amended by CLUSIONS FOR CONTRIBUTIONS TO 7706(d)(2). This paragraph shall not apply for striking paragraph (8) and by redesignating MEDICAL SAVINGS ACCOUNTS. purposes of subsection (b) with respect to reim- paragraphs (9) through (15) as paragraphs (8) (a) TERMINATION OF INCOME TAX DEDUC- bursements through insurance.’’. through (14), respectively. TION.—Section 220 is amended by adding at the (B) Section 72(t)(2)(D)(i)(III) is amended by (B) Part II of subchapter B of chapter 1 is end the following new subsection: striking ‘‘section 213(d)(1)(D)’’ and inserting amended by striking section 71 (and by striking ‘‘(k) TERMINATION.—No deduction shall be al- ‘‘section 105(f)(1)(D)’’. the item relating to such section in the table of lowed under subsection (a) with respect to any (C) Section 104(a) is amended by striking ‘‘sec- sections for such part). taxable year beginning after December 31, tion 213(d)(1)’’ in the last sentence and inserting (C) Subpart F of part I of subchapter J of 2017.’’. ‘‘section 105(f)(1)’’. chapter 1 is amended by striking section 682 (b) TERMINATION OF EXCLUSION FOR EM- (D) Section 105(b) is amended by striking ‘‘sec- (and by striking the item relating to such sec- PLOYER-PROVIDED CONTRIBUTIONS.—Section 106 tion 213(d)’’ and inserting ‘‘section 105(f)’’. tion in the table of sections for such subpart). is amended by striking subsection (b). (E) Section 139D is amended by striking ‘‘sec- (2) RELATED TO REPEAL OF SECTION 215.— (c) CONFORMING AMENDMENTS.— tion 213’’ and inserting ‘‘section 223’’. (A) Section 62(a) is amended by striking para- (1) Section 62(a) is amended by striking para- (F) Section 162(l)(2) is amended by striking graph (10). graph (16). ‘‘section 213(d)(10)’’ and inserting ‘‘section (B) Section 3402(m)(1) is amended by striking (2) Section 106(d) is amended by striking para- 105(f)(7)’’. ‘‘(other than paragraph (10) thereof)’’. graph (2), by redesignating paragraph (3) as (G) Section 220(d)(2)(A) is amended by striking (3) RELATED TO REPEAL OF SECTION 71.— paragraph (6), and by inserting after paragraph ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. (A) Section 121(d)(3) is amended— (1) the following new paragraphs: (H) Section 223(d)(2)(A) is amended by strik- (i) by striking ‘‘(as defined in section ‘‘(2) NO CONSTRUCTIVE RECEIPT.—No amount ing ‘‘section 213(d)’’ and inserting ‘‘section 71(b)(2))’’ in subparagraph (B), and shall be included in the gross income of any em- 105(f)’’. (ii) by adding at the end the following new ployee solely because the employee may choose (I) Section 419A(f)(2) is amended by striking subparagraph: between the contributions referred to in para- ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. ‘‘(C) DIVORCE OR SEPARATION INSTRUMENT.— graph (1) and employer contributions to another (J) Section 501(c)(26)(A) is amended by strik- For purposes of this paragraph, the term ‘di- health plan of the employer. ing ‘‘section 213(d)’’ and inserting ‘‘section vorce or separation instrument’ means— ‘‘(3) SPECIAL RULE FOR DEDUCTION OF EM- 105(f)’’. ‘‘(i) a decree of divorce or separate mainte- PLOYER CONTRIBUTIONS.—Any employer con- (K) Section 2503(e) is amended by striking nance or a written instrument incident to such tribution to a health savings account (as so de- ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. a decree, fined), if otherwise allowable as a deduction (L) Section 4980B(c)(4)(B)(i)(I) is amended by ‘‘(ii) a written separation agreement, or under this chapter, shall be allowed only for the striking ‘‘section 213(d)’’ and inserting ‘‘section ‘‘(iii) a decree (not described in clause (i)) re- taxable year in which paid. 105(f)’’. quiring a spouse to make payments for the sup- ‘‘(4) EMPLOYER HEALTH SAVINGS ACCOUNT CON- (M) Section 6041(f) is amended by striking port or maintenance of the other spouse.’’. TRIBUTION REQUIRED TO BE SHOWN ON RETURN.— ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. (B) Section 220(f)(7) is amended by striking Every individual required to file a return under (N) Section 7702B(a)(2) is amended by striking ‘‘subparagraph (A) of section 71(b)(2)’’ and in- section 6012 for the taxable year shall include on ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. serting ‘‘clause (i) of section 121(d)(3)(C)’’. such return the aggregate amount contributed (O) Section 7702B(a)(4) is amended by striking (C) Section 223(f)(7) is amended by striking by employers to the health savings accounts (as ‘‘section 213(d)(1)(D)’’ and inserting ‘‘section ‘‘subparagraph (A) of section 71(b)(2)’’ and in- so defined) of such individual or such individ- 105(f)(1)(D)’’. serting ‘‘clause (i) of section 121(d)(3)(C)’’. ual’s spouse for such taxable year. (P) Section 7702B(d)(5) is amended by striking (D) Section 382(l)(3)(B)(iii) is amended by ‘‘(5) HEALTH SAVINGS ACCOUNT CONTRIBUTIONS ‘‘section 213(d)(10)’’ and inserting ‘‘section striking ‘‘section 71(b)(2)’’ and inserting ‘‘sec- NOT PART OF COBRA COVERAGE.—Paragraph (1) 105(f)(7)’’. tion 121(d)(3)(C)’’. shall not apply for purposes of section 4980B.’’. (Q) Section 9832(d)(3) is amended by striking (E) Section 408(d)(6) is amended by striking (3) Section 223(b)(4) is amended by striking ‘‘section 213(d)’’ and inserting ‘‘section 105(f)’’. ‘‘subparagraph (A) of section 71(b)(2)’’ and in- subparagraph (A), by redesignating subpara- (2) Section 72(t)(2)(B) is amended to read as serting ‘‘clause (i) of section 121(d)(3)(C)’’. graphs (B) and (C) as subparagraphs (A) and follows: (c) EFFECTIVE DATE.—The amendments made (B), respectively, and by striking the second ‘‘(B) MEDICAL EXPENSES.—Distributions made by this section shall apply to— sentence thereof. to an individual (other than distributions de- (1) any divorce or separation instrument (as (4) Section 223(b)(5) is amended by striking scribed in subparagraph (A), (C), or (D) to the defined in section 71(b)(2) of the Internal Rev- ‘‘under paragraph (3))’’ and all that follows

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through ‘‘shall be divided equally between savings account of an employee who is not a ‘‘(3) LIMITATION FOR HIGHLY COMPENSATED them’’ and inserting the following: ‘‘under highly compensated employee (as defined in sec- EMPLOYEES.— paragraph (3)) shall be divided equally between tion 414(q)), highly compensated employees shall ‘‘(A) REDUCED FOR EXCESS COMPENSATION.—In the spouses’’. not be treated as comparable participating em- the case of an individual whose compensation (5) Section 223(c) is amended by striking para- ployees. for the taxable year exceeds the amount in effect graph (5). ‘‘(e) CONTROLLED GROUPS.—For purposes of under section 414(q)(1)(B)(i) for the calendar in (6) Section 3231(e) is amended by striking this section, all persons treated as a single em- which such taxable year begins, the $50,000 paragraph (10). ployer under subsection (b), (c), (m), or (o) of amount under paragraph (1) shall be reduced (7) Section 3306(b) is amended by striking section 414 shall be treated as 1 employer. (but not below zero) by an amount equal to 50 paragraph (17). ‘‘(f) DEFINITIONS.—Terms used in this section percent of such excess. For purposes of the pre- (8) Section 3401(a) is amended by striking which are also used in section 223 have the re- ceding sentence, the term ‘compensation’ means paragraph (21). spective meanings given such terms in section wages (as defined in section 3121(a) (without re- (9) Chapter 43 is amended by striking section 223. gard to the contribution and benefit base limita- 4980E (and by striking the item relating to such ‘‘(g) REGULATIONS.—The Secretary shall issue tion in section 3121(a)(1)). section in the table of sections for such chapter). regulations to carry out the purposes of this sec- ‘‘(B) EXCLUSION DENIED FOR 5-PERCENT OWN- (10) Section 4980G is amended to read as fol- tion.’’. ERS.—In the case of an individual who is a 5- lows: (11) Section 6051(a) is amended by striking percent owner (as defined in section ‘‘SEC. 4980G. FAILURE OF EMPLOYER TO MAKE paragraph (11). 416(i)(1)(B)(i)) of the employer at any time dur- COMPARABLE HEALTH SAVINGS AC- (12) Section 6051(a)(14)(A) is amended by ing the taxable year, the amount under para- COUNT CONTRIBUTIONS. striking ‘‘paragraphs (11) and (12)’’ and insert- graph (1) shall be zero.’’. ‘‘(a) IN GENERAL.—In the case of an employer ing ‘‘paragraph (12)’’. (b) EFFECTIVE DATE.—The amendment made who makes a contribution to the health savings (d) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years be- account of any employee during a calendar by this section shall apply to taxable years be- ginning after December 31, 2017. year, there is hereby imposed a tax on the fail- ginning after December 31, 2017. SEC. 1402. EXCLUSION OF GAIN FROM SALE OF A ure of such employer to meet the requirements of SEC. 1312. DENIAL OF DEDUCTION FOR EXPENSES PRINCIPAL RESIDENCE. subsection (d) for such calendar year. ATTRIBUTABLE TO THE TRADE OR (a) REQUIREMENT THAT RESIDENCE BE PRIN- ‘‘(b) AMOUNT OF TAX.—The amount of the tax BUSINESS OF BEING AN EMPLOYEE. CIPAL RESIDENCE FOR 5 YEARS DURING 8-YEAR imposed by subsection (a) on any failure for any (a) IN GENERAL.—Part IX of subchapter B of PERIOD.—Subsection (a) of section 121 is amend- calendar year is the amount equal to 35 percent chapter 1 is amended by inserting after the item ed— of the aggregate amount contributed by the em- relating to section 262 the following new item: (1) by striking ‘‘5-year period’’ and inserting ployer to health savings accounts of employees ‘‘SEC. 262A. EXPENSES ATTRIBUTABLE TO BEING ‘‘8-year period’’, and for taxable years of such employees ending with AN EMPLOYEE. (2) by striking ‘‘2 years’’ and inserting ‘‘5 or within such calendar year. ‘‘(a) IN GENERAL.—Except as otherwise pro- years’’. ‘‘(c) WAIVER BY SECRETARY.—In the case of a vided in this section, no deduction shall be al- failure which is due to reasonable cause and not (b) APPLICATION TO ONLY 1 SALE OR EX- lowed with respect to any trade or business of CHANGE EVERY 5 YEARS.—Paragraph (3) of sec- to willful neglect, the Secretary may waive part the taxpayer which consists of the performance or all of the tax imposed by subsection (a) to the tion 121(b) is amended to read as follows: of services by the taxpayer as an employee. ‘‘(3) APPLICATION TO ONLY 1 SALE OR EX- extent that the payment of such tax would be ‘‘(b) EXCEPTION FOR ABOVE-THE-LINE DEDUC- excessive relative to the failure involved. CHANGE EVERY 5 YEARS.—Subsection (a) shall TIONS.—Subsection (a) shall not apply to any not apply to any sale or exchange by the tax- ‘‘(d) EMPLOYER REQUIRED TO MAKE COM- deduction allowable (determined without regard payer if, during the 5-year period ending on the PARABLE HEALTH SAVINGS ACCOUNT CONTRIBU- to subsection (a)) in determining adjusted gross date of such sale or exchange, there was any TIONS FOR ALL PARTICIPATING EMPLOYEES.— income.’’. ‘‘(1) IN GENERAL.—An employer meets the re- other sale or exchange by the taxpayer to which (b) REPEAL OF CERTAIN ABOVE-THE-LINE subsection (a) applied.’’. quirements of this subsection for any calendar TRADE AND BUSINESS DEDUCTIONS OF EMPLOY- year if the employer makes available comparable (c) PHASEOUT BASED ON MODIFIED ADJUSTED EES.— GROSS INCOME.—Section 121 is amended by add- contributions to the health savings accounts of (1) IN GENERAL.—Section 62(a)(2) is amended— all comparable participating employees for each ing at the end the following new subsection: (A) by striking subparagraphs (B), (C), and ‘‘(h) PHASEOUT BASED ON MODIFIED ADJUSTED coverage period during such calendar year. (D), and ‘‘(2) COMPARABLE CONTRIBUTIONS.— GROSS INCOME.— (B) by redesignating subparagraph (E) as sub- ‘‘(1) IN GENERAL.—If the average modified ad- ‘‘(A) IN GENERAL.—For purposes of paragraph paragraph (B). (1), the term ‘comparable contributions’ means justed gross income of the taxpayer for the tax- (2) CONFORMING AMENDMENTS.— able year and the 2 preceding taxable years ex- contributions— (A) Section 62 is amended by striking sub- ‘‘(i) which are the same amount, or ceeds $250,000 (twice such amount in the case of sections (b) and (d) and by redesignating sub- a joint return), the amount which would (but ‘‘(ii) which are the same percentage of the an- sections (c) and (e) as subsections (b) and (c), nual deductible limit under the high deductible for this subsection) be excluded from gross in- respectively. come under subsection (a) for such taxable year health plan covering the employees. (B) Section 62(a)(20) is amended by striking ‘‘(B) PART-YEAR EMPLOYEES.—In the case of shall be reduced (but not below zero) by the ‘‘subsection (e)’’ and inserting ‘‘subsection (c)’’. amount of such excess. an employee who is employed by the employer (c) CONTINUED EXCLUSION OF WORKING CON- for only a portion of the calendar year, a con- ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For DITION FRINGE BENEFITS.—Section 132(d) is purposes of this subsection, the term ‘modified tribution to the health savings account of such amended by inserting ‘‘(determined without re- employee shall be treated as comparable if it is adjusted gross income’ means, with respect to gard to section 262A)’’ after ‘‘section 162’’. any taxable year, adjusted gross income deter- an amount which bears the same ratio to the (d) EFFECTIVE DATE.—The amendments made comparable amount (determined without regard mined after application of this section (but by this section shall apply to taxable years be- without regard to subsection (b)(1) and this sub- to this subparagraph) as such portion bears to ginning after December 31, 2017. the entire calendar year. section). ‘‘(3) COMPARABLE PARTICIPATING EMPLOY- Subtitle E—Simplification and Reform of ‘‘(3) SPECIAL RULE FOR JOINT RETURNS.—In EES.— Exclusions and Taxable Compensation the case of a joint return, the average modified ‘‘(A) IN GENERAL.—For purposes of paragraph SEC. 1401. LIMITATION ON EXCLUSION FOR EM- adjusted gross income of the taxpayer shall be (1), the term ‘comparable participating employ- PLOYER-PROVIDED HOUSING. determined without regard to any taxable year ees’ means all employees— (a) IN GENERAL.—Section 119 is amended by with respect to which the taxpayer did not file ‘‘(i) who are eligible individuals covered under adding at the end the following new subsection: a joint return.’’. any high deductible health plan of the em- ‘‘(e) LIMITATION ON EXCLUSION OF LODGING.— (d) CONFORMING AMENDMENTS.— ployer, and ‘‘(1) IN GENERAL.—The aggregate amount ex- (1) The following provisions of section 121 are ‘‘(ii) who have the same category of coverage. cluded from gross income of the taxpayer under each amended by striking ‘‘5-year period’’ each ‘‘(B) CATEGORIES OF COVERAGE.—For purposes subsections (a) and (d) with respect to lodging place it appears therein and inserting ‘‘8-year of subparagraph (B), the categories of coverage for any taxable year shall not exceed $50,000 period’’: are self-only and family coverage. (half such amount in the case of a married indi- (A) Subsection (b)(5)(C)(ii)(I). ‘‘(4) PART-TIME EMPLOYEES.— vidual filing a separate return). (B) Subsection (c)(1)(B)(i)(I). ‘‘(A) IN GENERAL .—Paragraph (3) shall be ap- ‘‘(2) LIMITATION TO 1 HOME.—Subsections (a) (C) Subsection (d)(7)(B). plied separately with respect to part-time em- and (d) (separately and in combination) shall (D) Subparagraphs (A) and (B) of subsection ployees and other employees. not apply with respect to more than 1 residence (d)(9). ‘‘(B) PART-TIME EMPLOYEE.—For purposes of of the taxpayer at any given time. In the case of (E) Subsection (d)(10). subparagraph (A), the term ‘part-time employee’ a joint return, the preceding sentence shall (F) Subsection (d)(12)(A). means any employee who is customarily em- apply separately to each spouse for any period (2) Section 121(c)(1)(B)(ii) is amended by strik- ployed for fewer than 30 hours per week. during which each spouse resides separate from ing ‘‘2 years’’ and inserting ‘‘5 years’’: ‘‘(5) SPECIAL RULE FOR NON-HIGHLY COM- the other spouse in a residence which is pro- (e) EFFECTIVE DATE.—The amendments made PENSATED EMPLOYEES.—For purposes of apply- vided in connection with the employment of by this section shall apply to sales and ex- ing this section to a contribution to a health each spouse, respectively. changes after December 31, 2017.

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SEC. 1403. REPEAL OF EXCLUSION, ETC., FOR EM- (b) APPLICATION TO GOVERNMENTAL SECTION ticipant’s accrued benefit under the plan is re- PLOYEE ACHIEVEMENT AWARDS. 457(b) PLANS.—Clause (i) of section 457(d)(1)(A) duced in order to repay a loan from the plan. (a) IN GENERAL.—Section 74 is amended by is amended by inserting ‘‘(in the case of a plan ‘‘(iv) LIMITATION.—This subparagraph shall striking subsection (c). maintained by an employer described in sub- not apply to any plan loan offset amount unless (b) REPEAL OF LIMITATION ON DEDUCTION.— section (e)(1)(A), age 59 1⁄2)’’ before the comma such plan loan offset amount relates to a loan Section 274 is amended by striking subsection at the end. to which section 72(p)(1) does not apply by rea- (j). (c) EFFECTIVE DATE.—The amendments made son of section 72(p)(2). (c) CONFORMING AMENDMENTS.— by this section shall apply to plan years begin- ‘‘(v) QUALIFIED EMPLOYER PLAN.—For pur- (1) Section 102(c)(2) is amended by striking the ning after December 31, 2017. poses of this subsection, the term ‘qualified em- first sentence. ployer plan’ has the meaning given such term by (2) Section 414(n)(3)(C) is amended by striking SEC. 1503. MODIFICATION OF RULES GOVERNING section 72(p)(4).’’. ‘‘274(j),’’. HARDSHIP DISTRIBUTIONS. (b) CONFORMING AMENDMENT.—Subparagraph (3) Section 414(t)(2) is amended by striking (a) IN GENERAL.—Not later than 1 year after (A) of section 402(c)(3) is amended by striking ‘‘274(j),’’. the date of the enactment of this Act, the Sec- (4) Section 3121(a)(20) is amended by striking retary of the Treasury shall modify Treasury ‘‘subparagraph (B)’’ and inserting ‘‘subpara- ‘‘74(c)’’. Regulation section 1.401(k)–1(d)(3)(iv)(E) to— graphs (B) and (C)’’. (5) Section 3231(e)(5) is amended by striking (1) delete the 6-month prohibition on contribu- (c) EFFECTIVE DATE.—The amendments made ‘‘74(c),’’. tions imposed by paragraph (2) thereof, and by this section shall apply to taxable years be- (6) Section 3306(b)(16) is amended by striking (2) make any other modifications necessary to ginning after December 31, 2017. ‘‘74(c),’’. carry out the purposes of section SEC. 1506. MODIFICATION OF NONDISCRIMINA- (7) Section 3401(a)(19) is amended by striking 401(k)(2)(B)(i)(IV) of the Internal Revenue Code TION RULES TO PROTECT OLDER, ‘‘74(c),’’. of 1986. LONGER SERVICE PARTICIPANTS. (d) EFFECTIVE DATE.—The amendments made (b) EFFECTIVE DATE.—The revised regulations (a) IN GENERAL.—Section 401 is amended— by this section shall apply to taxable years be- under this section shall apply to plan years be- (1) by redesignating subsection (o) as sub- ginning after December 31, 2017. ginning after December 31, 2017. section (p), and SEC. 1404. SUNSET OF EXCLUSION FOR DEPEND- SEC. 1504. MODIFICATION OF RULES RELATING (2) by inserting after subsection (n) the fol- ENT CARE ASSISTANCE PROGRAMS. TO HARDSHIP WITHDRAWALS FROM lowing new subsection: (a) IN GENERAL.—Section 129 is amended by CASH OR DEFERRED ARRANGE- ‘‘(o) SPECIAL RULES FOR APPLYING NON- adding at the end the following new subsection: MENTS. DISCRIMINATION RULES TO PROTECT OLDER, ‘‘(f) TERMINATION.—Subsection (a) shall not (a) IN GENERAL.—Section 401(k) is amended by LONGER SERVICE AND GRANDFATHERED PARTICI- apply to taxable years beginning after December adding at the end the following: PANTS.— 31, 2022.’’. ‘‘(14) SPECIAL RULES RELATING TO HARDSHIP ‘‘(1) TESTING OF DEFINED BENEFIT PLANS WITH (b) EFFECTIVE DATE.—The amendment made WITHDRAWALS.—For purposes of paragraph CLOSED CLASSES OF PARTICIPANTS.— by this section shall take effect on the date of (2)(B)(i)(IV)— ‘‘(A) BENEFITS, RIGHTS, OR FEATURES PRO- the enactment of this Act. ‘‘(A) AMOUNTS WHICH MAY BE WITHDRAWN.— VIDED TO CLOSED CLASSES.—A defined benefit SEC. 1405. REPEAL OF EXCLUSION FOR QUALI- The following amounts may be distributed upon plan which provides benefits, rights, or features FIED MOVING EXPENSE REIMBURSE- hardship of the employee: to a closed class of participants shall not fail to MENT. ‘‘(i) Contributions to a profit-sharing or stock satisfy the requirements of subsection (a)(4) by (a) IN GENERAL.—Section 132(a) is amended by bonus plan to which section 402(e)(3) applies. reason of the composition of such closed class or striking paragraph (6). ‘‘(ii) Qualified nonelective contributions (as the benefits, rights, or features provided to such (b) CONFORMING AMENDMENTS.— defined in subsection (m)(4)(C)). closed class, if— (1) Section 82 is amended by striking ‘‘Except ‘‘(iii) Qualified matching contributions de- ‘‘(i) for the plan year as of which the class as provided in section 132(a)(6), there’’ and in- scribed in paragraph (3)(D)(ii)(I). closes and the 2 succeeding plan years, such serting ‘‘There’’. ‘‘(iv) Earnings on any contributions described benefits, rights, and features satisfy the require- (2) Section 132 is amended by striking sub- in clause (i), (ii), or (iii). ments of subsection (a)(4) (without regard to section (g). ‘‘(B) NO REQUIREMENT TO TAKE AVAILABLE this subparagraph but taking into account the (3) Section 132(l) is amended by striking by LOAN.—A distribution shall not be treated as rules of subparagraph (I)), striking ‘‘subsections (e) and (g)’’ and inserting failing to be made upon the hardship of an em- ‘‘(ii) after the date as of which the class was ‘‘subsection (e)’’. ployee solely because the employee does not take closed, any plan amendment which modifies the (c) EFFECTIVE DATE.—The amendments made any available loan under the plan.″.’’. closed class or the benefits, rights, and features by this section shall apply to taxable years be- (b) CONFORMING AMENDMENT.—Section provided to such closed class does not discrimi- ginning after December 31, 2017. 401(k)(2)(B)(i)(IV) is amended to read as fol- nate significantly in favor of highly com- SEC. 1406. REPEAL OF EXCLUSION FOR ADOPTION lows: pensated employees, and ASSISTANCE PROGRAMS. ‘‘(IV) subject to the provisions of paragraph ‘‘(iii) the class was closed before April 5, 2017, (a) IN GENERAL.—Part III of subchapter B of (14), upon hardship of the employee, or″.’’. or the plan is described in subparagraph (C). chapter 1 is amended by striking section 137 (c) EFFECTIVE DATE.—The amendments made ‘‘(B) AGGREGATE TESTING WITH DEFINED CON- (and by striking the item relating to such sec- by this section shall apply to plan years begin- TRIBUTION PLANS PERMITTED ON A BENEFITS tion in the table of sections for such part). ning after December 31, 2017. BASIS.— (b) CONFORMING AMENDMENTS.— ‘‘(i) IN GENERAL.—For purposes of determining (1) Sections 414(n)(3)(C), 414(t)(2), 74(d)(2)(B), SEC. 1505. EXTENDED ROLLOVER PERIOD FOR compliance with subsection (a)(4) and section 86(b)(2)(A), 219(g)(3)(A)(ii) are each amended by THE ROLLOVER OF PLAN LOAN OFF- SET AMOUNTS IN CERTAIN CASES. 410(b), a defined benefit plan described in clause striking ‘‘, 137’’. (2) Section 1016(a), as amended by the pre- (a) IN GENERAL.—Paragraph (3) of section (iii) may be aggregated and tested on a benefits ceding provision of this Act, is amended by 402(c) is amended by adding at the end the fol- basis with 1 or more defined contribution plans, striking paragraph (26). lowing new subparagraph: including with the portion of 1 or more defined (3) Section 6039D(d)(1), as amended by the ‘‘(C) ROLLOVER OF CERTAIN PLAN LOAN OFFSET contribution plans which— preceding provisions of this Act, is amended— AMOUNTS.— ‘‘(I) provides matching contributions (as de- (A) by striking ‘‘, or 137’’, and ‘‘(i) IN GENERAL.—In the case of a qualified fined in subsection (m)(4)(A)), (B) by inserting ‘‘or’’ before ‘‘125’’. plan loan offset amount, paragraph (1) shall not ‘‘(II) provides annuity contracts described in (c) EFFECTIVE DATE.—The amendments made apply to any transfer of such amount made section 403(b) which are purchased with match- by this section shall apply to taxable years be- after the due date (including extensions) for fil- ing contributions or nonelective contributions, ginning after December 31, 2017. ing the return of tax for the taxable year in or Subtitle F—Simplification and Reform of which such amount is treated as distributed ‘‘(III) consists of an employee stock ownership Savings, Pensions, Retirement from a qualified employer plan. plan (within the meaning of section 4975(e)(7)) ‘‘(ii) QUALIFIED PLAN LOAN OFFSET AMOUNT.— or a tax credit employee stock ownership plan SEC. 1501. REPEAL OF SPECIAL RULE PERMIT- TING RECHARACTERIZATION OF For purposes of this subparagraph, the term (within the meaning of section 409(a)). ROTH IRA CONTRIBUTIONS AS TRA- ‘qualified plan loan offset amount’ means a ‘‘(ii) SPECIAL RULES FOR MATCHING CONTRIBU- DITIONAL IRA CONTRIBUTIONS. plan loan offset amount which is treated as dis- TIONS.—For purposes of clause (i), if a defined (a) IN GENERAL.—Section 408A(d) is amended tributed from a qualified employer plan to a benefit plan is aggregated with a portion of a by striking paragraph (6) and by redesignating participant or beneficiary solely by reason of— defined contribution plan providing matching paragraph (7) as paragraph (6). ‘‘(I) the termination of the qualified employer contributions— (b) EFFECTIVE DATE.—The amendments made plan, or ‘‘(I) such defined benefit plan must also be ag- by this section shall apply to taxable years be- ‘‘(II) the failure to meet the repayment terms gregated with any portion of such defined con- ginning after December 31, 2017. of the loan from such plan because of the sepa- tribution plan which provides elective deferrals SEC. 1502. REDUCTION IN MINIMUM AGE FOR AL- ration from service of the participant (whether described in subparagraph (A) or (C) of section LOWABLE IN-SERVICE DISTRIBU- due to layoff, cessation of business, termination 402(g)(3), and TIONS. of employment, or otherwise). ‘‘(II) such matching contributions shall be (a) IN GENERAL.—Section 401(a)(36) is amend- ‘‘(iii) PLAN LOAN OFFSET AMOUNT.—For pur- treated in the same manner as nonelective con- ed by striking ‘‘age 62’’ and inserting ‘‘age 59 poses of clause (ii), the term ‘plan loan offset tributions, including for purposes of applying 1⁄2’’. amount’ means the amount by which the par- the rules of subsection (l).

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‘‘(iii) PLANS DESCRIBED.—A defined benefit ‘‘(G) RULES RELATING TO AVERAGE BENEFIT.— 410(b)(2)(A)(i) (determined by applying the rules plan is described in this clause if— For purposes of subparagraph (E)— of paragraph (1)(I)), ‘‘(I) the plan provides benefits to a closed ‘‘(i) the average benefit provided to partici- ‘‘(iii) after the date as of which the class was class of participants, pants under the plan will be treated as having closed, any plan amendment to the defined con- ‘‘(II) for the plan year as of which the class remained the same between the 2 dates described tribution plan which modifies the closed class or closes and the 2 succeeding plan years, the plan in subparagraph (E)(ii) if the benefit formula the allocations, benefits, rights, and features satisfies the requirements of section 410(b) and applicable to such participants has not changed provided to such closed class does not discrimi- subsection (a)(4) (without regard to this sub- between such dates, and nate significantly in favor of highly com- paragraph but taking into account the rules of ‘‘(ii) if the benefit formula applicable to 1 or pensated employees, and subparagraph (I)), more participants under the plan has changed ‘‘(iv) the class was closed before April 5, 2017, ‘‘(III) after the date as of which the class was between such 2 dates, then the average benefit or the defined benefit plan under clause (i) is closed, any plan amendment which modifies the under the plan shall be considered to have in- described in paragraph (1)(C) (as applied for closed class or the benefits provided to such creased by more than 50 percent only if— purposes of paragraph (1)(B)(iii)(IV)). closed class does not discriminate significantly ‘‘(I) the total amount determined under sec- ‘‘(B) AGGREGATION WITH PLANS INCLUDING in favor of highly compensated employees, and tion 430(b)(1)(A)(i) for all participants benefit- MATCHING CONTRIBUTIONS.— ‘‘(IV) the class was closed before April 5, 2017, ting under the plan for the plan year in which ‘‘(i) IN GENERAL.—With respect to 1 or more defined contribution plans described in subpara- or the plan is described in subparagraph (C). the 5-year period described in subparagraph (E) graph (A), for purposes of determining compli- ‘‘(C) PLANS DESCRIBED.—A plan is described ends, exceeds in this subparagraph if, taking into account ‘‘(II) the total amount determined under sec- ance with subsection (a)(4) and section 410(b), the portion of such plans which provides make- any predecessor plan— tion 430(b)(1)(A)(i) for all such participants for whole contributions or other nonelective con- ‘‘(i) such plan has been in effect for at least such plan year, by using the benefit formula in tributions may be aggregated and tested on a 5 years as of the date the class is closed, and effect for each such participant for the first benefits basis with the portion of 1 or more other ‘‘(ii) during the 5-year period preceding the plan year in such 5-year period, by more than 50 date the class is closed, there has not been a defined contribution plans which— percent. ‘‘(I) provides matching contributions (as de- substantial increase in the coverage or value of In the case of a CSEC plan (as defined in sec- the benefits, rights, or features described in sub- fined in subsection (m)(4)(A)), tion 414(y)), the normal cost of the plan (as de- ‘‘(II) provides annuity contracts described in paragraph (A) or in the coverage or benefits termined under section 433(j)(1)(B)) shall be section 403(b) which are purchased with match- under the plan described in subparagraph used in lieu of the amount determined under ing contributions or nonelective contributions, (B)(iii) (whichever is applicable). section 430(b)(1)(A)(i). or ‘‘(D) DETERMINATION OF SUBSTANTIAL IN- ‘‘(H) TREATMENT AS SINGLE PLAN.—For pur- ‘‘(III) consists of an employee stock ownership CREASE FOR BENEFITS, RIGHTS, AND FEATURES.— poses of subparagraphs (E) and (G), a plan de- plan (within the meaning of section 4975(e)(7)) In applying subparagraph (C)(ii) for purposes of scribed in section 413(c) shall be treated as a or a tax credit employee stock ownership plan subparagraph (A)(iii), a plan shall be treated as single plan rather than as separate plans main- (within the meaning of section 409(a)). having had a substantial increase in coverage or tained by each participating employer. ‘‘(ii) SPECIAL RULES FOR MATCHING CONTRIBU- value of the benefits, rights, or features de- ‘‘(I) SPECIAL RULES.—For purposes of sub- TIONS.—Rules similar to the rules of paragraph scribed in subparagraph (A) during the applica- paragraphs (A)(i) and (B)(iii)(II), the following (1)(B)(ii) shall apply for purposes of clause (i). ble 5-year period only if, during such period— rules shall apply: ‘‘(C) SPECIAL RULES FOR TESTING DEFINED ‘‘(i) the number of participants covered by ‘‘(i) In applying section 410(b)(6)(C), the clos- CONTRIBUTION PLAN FEATURES PROVIDING such benefits, rights, or features on the date ing of the class of participants shall not be MATCHING CONTRIBUTIONS TO CERTAIN OLDER, such period ends is more than 50 percent greater treated as a significant change in coverage LONGER SERVICE PARTICIPANTS.—In the case of a than the number of such participants on the under section 410(b)(6)(C)(i)(II). defined contribution plan which provides bene- first day of the plan year in which such period ‘‘(ii) 2 or more plans shall not fail to be eligi- fits, rights, or features to a closed class of par- began, or ble to be aggregated and treated as a single plan ticipants whose accruals under a defined benefit ‘‘(ii) such benefits, rights, and features have solely by reason of having different plan years. plan have been reduced or eliminated, the plan been modified by 1 or more plan amendments in ‘‘(iii) Changes in the employee population shall not fail to satisfy the requirements of sub- such a way that, as of the date the class is shall be disregarded to the extent attributable to section (a)(4) solely by reason of the composition closed, the value of such benefits, rights, and individuals who become employees or cease to be of the closed class or the benefits, rights, or fea- features to the closed class as a whole is sub- employees, after the date the class is closed, by tures provided to such closed class if the defined stantially greater than the value as of the first reason of a merger, acquisition, divestiture, or contribution plan and defined benefit plan oth- day of such 5-year period, solely as a result of similar event. erwise meet the requirements of subparagraph such amendments. ‘‘(iv) Aggregation and all other testing meth- (A) but for the fact that the make-whole con- ‘‘(E) DETERMINATION OF SUBSTANTIAL IN- odologies otherwise applicable under subsection tributions under the defined contribution plan CREASE FOR AGGREGATE TESTING ON BENEFITS (a)(4) and section 410(b) may be taken into ac- are made in whole or in part through matching BASIS.—In applying subparagraph (C)(ii) for count. contributions. purposes of subparagraph (B)(iii)(IV), a plan The rule of clause (ii) shall also apply for pur- ‘‘(D) SPUN-OFF PLANS.—For purposes of this shall be treated as having had a substantial in- poses of determining whether plans to which paragraph, if a portion of a defined contribu- crease in coverage or benefits during the appli- subparagraph (B)(i) applies may be aggregated tion plan described in subparagraph (A) or (C) cable 5-year period only if, during such period— and treated as 1 plan for purposes of deter- is spun off to another employer, the treatment ‘‘(i) the number of participants benefitting mining whether such plans meet the require- under subparagraph (A) or (C) of the spun-off under the plan on the date such period ends is ments of subsection (a)(4) and section 410(b). plan shall continue with respect to the other em- more than 50 percent greater than the number of ‘‘(J) SPUN-OFF PLANS.—For purposes of this ployer if such plan continues to comply with the such participants on the first day of the plan paragraph, if a portion of a defined benefit plan requirements of clauses (ii) (if the original plan year in which such period began, or described in subparagraph (A) or (B)(iii) is spun was still within the 3-year period described in ‘‘(ii) the average benefit provided to such par- off to another employer and the spun-off plan such clause at the time of the spin off) and (iii) ticipants on the date such period ends is more continues to satisfy the requirements of— of subparagraph (A), as determined for purposes than 50 percent greater than the average benefit ‘‘(i) subparagraph (A)(i) or (B)(iii)(II), which- of subparagraph (A) or (C), whichever is appli- provided on the first day of the plan year in ever is applicable, if the original plan was still cable. which such period began. within the 3-year period described in such sub- ‘‘(3) DEFINITIONS.—For purposes of this sub- ‘‘(F) CERTAIN EMPLOYEES DISREGARDED.—For paragraph at the time of the spin off, and section— purposes of subparagraphs (D) and (E), any in- ‘‘(ii) subparagraph (A)(ii) or (B)(iii)(III), ‘‘(A) MAKE-WHOLE CONTRIBUTIONS.—Except as crease in coverage or value or in coverage or whichever is applicable, otherwise provided in paragraph (2)(C), the term benefits, whichever is applicable, which is at- the treatment under subparagraph (A) or (B) of ‘make-whole contributions’ means nonelective tributable to such coverage and value or cov- the spun-off plan shall continue with respect to allocations for each employee in the class which erage and benefits provided to employees— such other employer. are reasonably calculated, in a consistent man- ‘‘(i) who became participants as a result of a ‘‘(2) TESTING OF DEFINED CONTRIBUTION ner, to replace some or all of the retirement ben- merger, acquisition, or similar event which oc- PLANS.— efits which the employee would have received curred during the 7-year period preceding the ‘‘(A) TESTING ON A BENEFITS BASIS.—A defined under the defined benefit plan and any other date the class is closed, or contribution plan shall be permitted to be tested plan or qualified cash or deferred arrangement ‘‘(ii) who became participants by reason of a on a benefits basis if— under subsection (k)(2) if no change had been merger of the plan with another plan which had ‘‘(i) such defined contribution plan provides made to such defined benefit plan and such been in effect for at least 5 years as of the date make-whole contributions to a closed class of other plan or arrangement. For purposes of the of the merger, participants whose accruals under a defined preceding sentence, consistency shall not be re- shall be disregarded, except that clause (ii) shall benefit plan have been reduced or eliminated, quired with respect to employees who were sub- apply for purposes of subparagraph (D) only if, ‘‘(ii) for the plan year of the defined contribu- ject to different benefit formulas under the de- under the merger, the benefits, rights, or fea- tion plan as of which the class eligible to receive fined benefit plan. tures under 1 plan are conformed to the bene- such make-whole contributions closes and the 2 ‘‘(B) REFERENCES TO CLOSED CLASS OF PAR- fits, rights, or features of the other plan pro- succeeding plan years, such closed class of par- TICIPANTS.—References to a closed class of par- spectively. ticipants satisfies the requirements of section ticipants and similar references to a closed class

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00062 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9319 shall include arrangements under which 1 or (1)(B)(iii)(IV), and (2)(A)(iv) of section 401(o) of ‘‘(1) section 2056A(b)(1)(A) shall not apply to more classes of participants are closed, except the Internal Revenue Code of 1986 (as added by distributions made after the 10-year period be- that 1 or more classes of participants closed on this section), a closed class of participants shall ginning on such date, and different dates shall not be aggregated for pur- be treated as being closed before April 5, 2017, if ‘‘(2) section 2056A(b)(1)(B) shall not apply poses of determining the date any such class the plan sponsor’s intention to create such after such date.’’. was closed. closed class is reflected in formal written docu- (2) CONFORMING AMENDMENTS.—Section ‘‘(C) HIGHLY COMPENSATED EMPLOYEE.—The ments and communicated to participants before 1014(b) is amended— term ‘highly compensated employee’ has the such date. (A) in paragraph (6), by striking ‘‘was includ- meaning given such term in section 414(q).″.’’. (C) CERTAIN POST-ENACTMENT PLAN AMEND- ible in determining’’ and all that follows (b) PARTICIPATION REQUIREMENTS.—Para- MENTS.—A plan shall not be treated as failing to through the end and inserting ‘‘was includible graph (26) of section 401(a) is amended by add- be eligible for the application of section (or would have been includible without regard ing at the end the following new subparagraph: 401(o)(1)(A), 401(o)(1)(B)(iii), or 401(a)(26) of to section 2210) in determining the value of the ‘‘(I) PROTECTED PARTICIPANTS.— such Code (as added by this section) to such decedent’s gross estate under chapter 11 of sub- ‘‘(i) IN GENERAL.—A plan shall be deemed to plan solely because in the case of— satisfy the requirements of subparagraph (A) (i) such section 401(o)(1)(A), the plan was title B’’ , if— amended before the date of the enactment of (B) in paragraph (9), by striking ‘‘required to ‘‘(I) the plan is amended— this Act to eliminate 1 or more benefits, rights, be included’’ through ‘‘Code of 1939’’ and insert- ‘‘(aa) to cease all benefit accruals, or or features, and is further amended after such ing ‘‘required to be included (or would have ‘‘(bb) to provide future benefit accruals only date of enactment to provide such previously been required to be included without regard to to a closed class of participants, eliminated benefits, rights, or features to a section 2210) in determining the value of the de- ‘‘(II) the plan satisfies subparagraph (A) closed class of participants, or cedent’s gross estate under chapter 11 of subtitle (without regard to this subparagraph) as of the (ii) such section 401(o)(1)(B)(iii) or section B’’, and effective date of the amendment, and 401(a)(26), the plan was amended before the (C) in paragraph (10), by striking ‘‘Property ‘‘(III) the amendment was adopted before date of the enactment of this Act to cease all includible in the gross estate’’ and inserting April 5, 2017, or the plan is described in clause benefit accruals, and is further amended after ‘‘Property includible (or which would have been (ii). such date of enactment to provide benefit accru- includible without regard to section 2210) in the ‘‘(ii) PLANS DESCRIBED.—A plan is described in als to a closed class of participants. Any such gross estate’’. this clause if the plan would be described in section shall only apply if the plan otherwise (3) CLERICAL AMENDMENT.—The table of sec- subsection (o)(1)(C), as applied for purposes of meets the requirements of such section and in tions for subchapter C of chapter 11 is amended subsection (o)(1)(B)(iii)(IV) and by treating the applying such section, the date the class of par- by adding at the end the following new item: effective date of the amendment as the date the ticipants is closed shall be the effective date of class was closed for purposes of subsection the later amendment. ‘‘Sec. 2210. Termination.’’. (o)(1)(C). Subtitle G—Estate, Gift, and Generation- (b) GENERATION-SKIPPING TRANSFER TAX RE- ‘‘(iii) SPECIAL RULES.—For purposes of clause skipping Transfer Taxes PEAL.— (i)(II), in applying section 410(b)(6)(C), the SEC. 1601. INCREASE IN CREDIT AGAINST ES- (1) IN GENERAL.—Subchapter G of chapter 13 amendments described in clause (i) shall not be TATE, GIFT, AND GENERATION-SKIP- of subtitle B of such Code is amended by adding treated as a significant change in coverage PING TRANSFER TAX. at the end the following new section: under section 410(b)(6)(C)(i)(II). (a) IN GENERAL.—Section 2010(c)(3) is amend- ‘‘SEC. 2664. TERMINATION. ‘‘(iv) SPUN-OFF PLANS.—For purposes of this ed by striking ‘‘$5,000,000’’ and inserting ‘‘This chapter shall not apply to generation- subparagraph, if a portion of a plan described ‘‘$10,000,000’’. skipping transfers after December 31, 2024.’’. in clause (i) is spun off to another employer, the (b) EFFECTIVE DATE.—The amendments made treatment under clause (i) of the spun-off plan by this section shall apply to estates of dece- (2) CLERICAL AMENDMENT.—The table of sec- shall continue with respect to the other em- dents dying, generation-skipping transfers, and tions for subchapter G of chapter 13 of such ployer.’’. gifts made, after December 31, 2017. Code is amended by adding at the end the fol- (c) EFFECTIVE DATE.— SEC. 1602. REPEAL OF ESTATE AND GENERATION- lowing new item: (1) IN GENERAL.—Except as provided in para- SKIPPING TRANSFER TAXES. ‘‘Sec. 2664. Termination.’’. graph (2), the amendments made by this section (a) ESTATE TAX REPEAL.— (c) CONFORMING AMENDMENTS RELATED TO (1) IN GENERAL.—Subchapter C of chapter 11 shall take effect on the date of the enactment of GIFT TAX.— this Act, without regard to whether any plan is amended by adding at the end the following (1) COMPUTATION OF GIFT TAX.—Section 2502 modifications referred to in such amendments new section: is amended by adding at the end the following are adopted or effective before, on, or after such ‘‘SEC. 2210. TERMINATION. new subsection: date of enactment. ‘‘(a) IN GENERAL.—Except as provided in sub- (2) SPECIAL RULES.— section (b), this chapter shall not apply to the ‘‘(d) GIFTS MADE AFTER 2024.— (A) ELECTION OF EARLIER APPLICATION.—At estates of decedents dying after December 31, ‘‘(1) IN GENERAL.—In the case of a gift made the election of the plan sponsor, the amend- 2024. after December 31, 2024, subsection (a) shall be ments made by this section shall apply to plan ‘‘(b) CERTAIN DISTRIBUTIONS FROM QUALIFIED applied by substituting ‘subsection (d)(2)’ for years beginning after December 31, 2013. DOMESTIC TRUSTS.—In applying section 2056A ‘section 2001(c)’ and ‘such subsection’ for ‘such (B) CLOSED CLASSES OF PARTICIPANTS.—For with respect to the surviving spouse of a dece- section’. purposes of paragraphs (1)(A)(iii), dent dying on or before December 31, 2024— ‘‘(2) RATE SCHEDULE.—

‘‘If the amount with respect to which the tentative tax to be computed is: ...... The tentative tax is: Not over $10,000 ...... 18% of such amount. Over $10,000 but not over $20,000 ...... $1,800, plus 20% of the ex- cess over $10,000. Over $20,000 but not over $40,000 ...... $3,800, plus 22% of the ex- cess over $20,000. Over $40,000 but not over $60,000 ...... $8,200, plus 24% of the ex- cess over $40,000. Over $60,000 but not over $80,000 ...... $13,000, plus 26% of the ex- cess over $60,000. Over $80,000 but not over $100,000 ...... $18,200, plus 28% of the ex- cess over $80,000. Over $100,000 but not over $150,000 ...... $23,800, plus 30% of the ex- cess over $100,000. Over $150,000 but not over $250,000 ...... $38,800, plus 32% of the ex- cess of $150,000. Over $250,000 but not over $500,000 ...... $70,800, plus 34% of the ex- cess over $250,000. Over $500,000 ...... $155,800, plus 35% of the excess of $500,000.’’. (2) LIFETIME GIFT EXEMPTION.—Section 2505 is tentative tax which would be determined under ‘‘(2) INFLATION ADJUSTMENT.— amended by adding at the end the following the rate schedule set forth in section 2502(a)(2) ‘‘(A) IN GENERAL.—In the case of any cal- new subsection: if the amount with respect to which such ten- endar year after 2024, the dollar amount in sub- ‘‘(d) GIFTS MADE AFTER 2024.— tative tax is to be computed were $10,000,000’ for section (a)(1) (after application of this sub- ‘‘(1) IN GENERAL.—In the case of a gift made ‘the applicable credit amount in effect under section) shall be increased by an amount equal after December 31, 2024, subsection (a)(1) shall section 2010(c) which would apply if the donor to— be applied by substituting ‘the amount of the died as of the end of the calendar year’. ‘‘(i) such dollar amount, multiplied by

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00063 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9320 CONGRESSIONAL RECORD — HOUSE November 15, 2017 ‘‘(ii) the cost-of-living adjustment determined (4) Section 12 is amended by striking para- (27) Subsections (b) and (c) of section 666 are under section 1(c)(2)(A) of such calendar year graph (7). each amended by striking ‘‘(other than the tax by substituting ‘calendar year 2011’ for ‘cal- (5) Section 26(a) is amended to read as fol- imposed by section 55)’’. endar year 2016’ in clause (ii) thereof. lows: (28) Section 848 is amended by striking sub- ‘‘(B) ROUNDING.—If any amount as adjusted ‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.— section (i). under paragraph (1) is not a multiple of $10,000, The aggregate amount of credits allowed by this (29) Section 860E(a) is amended by striking such amount shall be rounded to the nearest subpart for the taxable year shall not exceed the paragraph (4). multiple of $10,000.’’. taxpayer’s regular tax liability for the taxable (30) Section 871(b)(1) is amended by striking (3) OTHER CONFORMING AMENDMENTS RELATED year.’’. ‘‘or 55’’. TO GIFT TAX.—Section 2801 is amended by add- (6) Section 26(b)(2) is amended by striking sub- (31) Section 882(a)(1) is amended by striking ing at the end the following new subsection: paragraph (A). ‘‘55,’’. ‘‘(g) GIFTS RECEIVED AFTER 2024.—In the case (7) Section 26 is amended by striking sub- (32) Section 897(a) is amended to read as fol- of a gift received after December 31, 2024, sub- section (c). lows: section (a)(1) shall be applied by substituting (8) Section 38(c) is amended— ‘‘(a) TREATMENT AS EFFECTIVELY CONNECTED ‘section 2502(a)(2)’ for ‘section 2001(c) as in ef- (A) by striking paragraphs (1) through (5), WITH UNITED STATES TRADE OR BUSINESS.—For fect on the date of such receipt’.’’. (B) by redesignating paragraph (6) as para- purposes of this title, gain or loss of a non- (d) EFFECTIVE DATE.—The amendments made graph (2), resident alien individual or a foreign corpora- by this section shall apply to estates of dece- (C) by inserting before paragraph (2) (as so re- tion from the disposition of a United States real dents dying, generation-skipping transfers, and designated) the following new paragraph: property interest shall be taken into account— gifts made, after December 31, 2024. ‘‘(1) IN GENERAL.—The credit allowed under ‘‘(1) in the case of a nonresident alien indi- subsection (a) for any taxable year shall not ex- vidual, under section 871(b)(1), or TITLE II—ALTERNATIVE MINIMUM TAX ceed the excess (if any) of— ‘‘(2) in the case of a foreign corporation, REPEAL ‘‘(A) the sum of— under section 882(a)(1), SEC. 2001. REPEAL OF ALTERNATIVE MINIMUM ‘‘(i) so much of the regular tax liability as as if the taxpayer were engaged in a trade or TAX. does not exceed $25,000, plus business within the United States during the (a) IN GENERAL.—Subchapter A of chapter 1 is ‘‘(ii) 75 percent of so much of the regular tax taxable year and as if such gain or loss were ef- amended by striking part VI (and by striking liability as exceeds $25,000, over fectively connected with such trade or busi- the item relating to such part in the table of ‘‘(B) the sum of the credits allowable under ness.’’. parts for subchapter A). subparts A and B of this part.’’, and (33) Section 904(k) is amended to read as fol- (b) CREDIT FOR PRIOR YEAR MINIMUM TAX LI- (D) by striking ‘‘subparagraph (B) of para- lows: ABILITY.— graph (1)’’ each place it appears in paragraph ‘‘(k) CROSS REFERENCE.—For increase of limi- (1) LIMITATION.—Subsection (c) of section 53 is (2) (as so redesignated) and inserting ‘‘clauses tation under subsection (a) for taxes paid with amended to read as follows: (i) and (ii) of paragraph (1)(A)’’. respect to amounts received which were included ‘‘(c) LIMITATION.—The credit allowable under (9) Section 39(a) is amended— in the gross income of the taxpayer for a prior subsection (a) shall not exceed the regular tax (A) by striking ‘‘or the eligible small business taxable year as a United States shareholder liability of the taxpayer reduced by the sum of credits’’ in paragraph (3)(A), and with respect to a controlled foreign corporation, the credits allowed under subparts A, B, and (B) by striking paragraph (4). see section 960(b).’’. (10) Section 45D(g)(4)(B) is amended by strik- D.’’. (34) Section 911(f) is amended to read as fol- ing ‘‘or for purposes of section 55’’. (2) CREDITS TREATED AS REFUNDABLE.—Sec- lows: (11) Section 54(c)(1) is amended to read as fol- tion 53 is amended by adding at the end the fol- ‘‘(f) DETERMINATION OF TAX LIABILITY.— lows: lowing new subsection: ‘‘(1) IN GENERAL.—If, for any taxable year, ‘‘(1) regular tax liability (as defined in section ‘‘(e) PORTION OF CREDIT TREATED AS REFUND- any amount is excluded from gross income of a 26(b)), over’’. ABLE.— taxpayer under subsection (a), then, notwith- (12) Section 54A(c)(1)(A) is amended to read as ‘‘(1) IN GENERAL.—In the case of any taxable standing section 1, if such taxpayer has taxable year beginning in 2019, 2020, 2021, or 2022, the follows: ‘‘(A) regular tax liability (as defined in sec- income for such taxable year, the tax imposed limitation under subsection (c) shall be in- by section 1 for such taxable year shall be equal creased by the AMT refundable credit amount tion 26(b)), over’’. (13) Section 148(b)(3) is amended to read as to the excess (if any) of— for such year. follows: ‘‘(A) the tax which would be imposed by sec- ‘‘(2) AMT REFUNDABLE CREDIT AMOUNT.—For ‘‘(3) TAX-EXEMPT BONDS NOT TREATED AS IN- tion 1 for such taxable year if the taxpayer’s purposes of paragraph (1), the AMT refundable VESTMENT PROPERTY.—The term ‘investment taxable income were increased by the amount credit amount is an amount equal to 50 percent property’ does not include any tax-exempt excluded under subsection (a) for such taxable (100 percent in the case of a taxable year begin- bond.’’. year, over ning in 2022) of the excess (if any) of— (14) Section 168(k)(2) is amended by striking ‘‘(B) the tax which would be imposed by sec- ‘‘(A) the minimum tax credit determined under subparagraph (G). tion 1 for such taxable year if the taxpayer’s subsection (b) for the taxable year, over (15) Section 168(k) is amended by striking taxable income were equal to the amount ex- ‘‘(B) the minimum tax credit allowed under paragraph (4). cluded under subsection (a) for such taxable subsection (a) for such year (before the applica- (16) Section 168(k)(5) is amended by striking year. tion of this subsection for such year). subparagraph (E). For purposes of this paragraph, the amount ex- ‘‘(3) CREDIT REFUNDABLE.—For purposes of (17) Section 168(m)(2)(B)(i) is amended by cluded under subsection (a) shall be reduced by this title (other than this section), the credit al- striking ‘‘(determined without regard to para- the aggregate amount of any deductions or ex- lowed by reason of this subsection shall be treat- graph (4) thereof)’’. clusions disallowed under subsection (d)(6) with ed as a credit allowed under subpart C (and not (18) Section 168(m)(2) is amended by striking respect to such excluded amount. this subpart). subparagraph (D). ‘‘(2) TREATMENT OF CAPITAL GAIN EXCESS.— ‘‘(4) SHORT TAXABLE YEARS.—In the case of (19) Section 173 is amended by striking sub- ‘‘(A) IN GENERAL.—In applying section 1(h) any taxable year of less than 365 days, the AMT section (b). for purposes of determining the tax under para- refundable credit amount determined under (20) Section 263(c) is amended by striking graph (1)(A) for any taxable year in which, paragraph (2) with respect to such taxable year ‘‘section 59(e) or 291’’ and inserting ‘‘section without regard to this subsection, the taxpayer’s shall be the amount which bears the same ratio 291’’. net capital gain exceeds taxable income (here- to such amount determined without regard to (21) Section 263A(c) is amended by striking after in this subparagraph referred to as the this paragraph as the number of days in such paragraph (6) and by redesignating paragraph capital gain excess)— taxable year bears to 365.’’. (7) (as amended) as paragraph (6). ‘‘(i) the taxpayer’s net capital gain (deter- (3) TREATMENT OF REFERENCES.—Section 53(d) (22) Section 382(l) is amended by striking mined without regard to section 1(h)(11)) shall is amended by adding at the end the following paragraph (7) and by redesignating paragraph be reduced (but not below zero) by such capital new paragraph: (8) as paragraph (7). gain excess, ‘‘(3) AMT TERM REFERENCES.—Any references (23) Section 443 is amended by striking sub- ‘‘(ii) the taxpayer’s qualified dividend income in this subsection to section 55, 56, or 57 shall be section (d) and by redesignating subsection (e) shall be reduced by so much of such capital gain treated as a reference to such section as in effect as subsection (d). excess as exceeds the taxpayer’s net capital gain before its repeal by the Tax Cuts and Jobs Act.’’. (24) Section 616 is amended by striking sub- (determined without regard to section 1(h)(11) (c) CONFORMING AMENDMENTS RELATED TO section (e). and the reduction under clause (i)), and AMT REPEAL.— (25) Section 617 is amended by striking sub- ‘‘(iii) adjusted net capital gain, unrecaptured (1) Section 2(d) is amended by striking ‘‘sec- section (i). section 1250 gain, and 28-percent rate gain shall tions 1 and 55’’ and inserting ‘‘section 1’’. (26) Section 641(c) is amended— each be determined after increasing the amount (2) Section 5(a) is amended by striking para- (A) in paragraph (2) by striking subparagraph described in section 1(h)(4)(B) by such capital graph (4). (B) and by redesignating subparagraphs (C) and gain excess. (3) Section 11(d) is amended by striking ‘‘the (D) as subparagraphs (B) and (C), respectively, ‘‘(B) DEFINITIONS.—Terms used in this para- taxes imposed by subsection (a) and section 55’’ and graph which are also used in section 1(h) shall and inserting ‘‘the tax imposed by subsection (B) in paragraph (3), by striking ‘‘paragraph have the respective meanings given such terms (a)’’. (2)(C)’’ and inserting ‘‘paragraph (2)(B)’’. by section 1(h).’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00064 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9321 (35) Section 962(a)(1) is amended— or to the highest rate in effect under this section case of certain controlled corporations, see sec- (A) by striking ‘‘sections 1 and 55’’ and insert- (or any similar reference) shall be determined tion 1561.’’. ing ‘‘section 1’’, and without regard to the rate imposed with respect (6)(A) Section 1561, as amended by the pre- (B) by striking ‘‘sections 11 and 55’’ and in- to personal service corporations (as so de- ceding provisions of this Act, is amended to read serting ‘‘section 11’’. fined).’’. as follows: (36) Section 1016(a) is amended by striking (b) CONFORMING AMENDMENTS.— ‘‘SEC. 1561. LIMITATION ON ACCUMULATED EARN- paragraph (20). (1)(A) Part I of subchapter P of chapter 1 is INGS CREDIT IN THE CASE OF CER- (37) Section 1202(a)(4) is amended by inserting amended by striking section 1201 (and by strik- TAIN CONTROLLED CORPORATIONS. ‘‘and’’ at the end of subparagraph (A), by strik- ing the item relating to such section in the table ‘‘(a) IN GENERAL.—The component members of ing ‘‘, and’’ and inserting a period at the end of of sections for such part). a controlled group of corporations on a Decem- subparagraph (B), and by striking subpara- (B) Section 12 is amended by striking para- ber 31 shall, for their taxable years which in- graph (C). graph (4). clude such December 31, be limited for purposes (38) Section 1374(b)(3)(B) is amended by strik- (C) Section 527(b) is amended— of this subtitle to one $250,000 ($150,000 if any ing the last sentence thereof. (i) by striking paragraph (2), and component member is a corporation described in (39) Section 1561(a) is amended— (ii) by striking all that precedes ‘‘is hereby im- section 535(c)(2)(B)) amount for purposes of (A) by inserting ‘‘and’’ at the end of para- posed’’ and inserting: computing the accumulated earnings credit graph (1), by striking ‘‘, and’’ at the end of ‘‘(b) TAX IMPOSED.—A tax’’. under section 535(c)(2) and (3). Such amount paragraph (2) and inserting a period, and by (D) Section 594(a) is amended by striking shall be divided equally among the component striking paragraph (3), and ‘‘taxes imposed by section 11 or 1201(a)’’ and in- members of such group on such December 31 un- (B) by striking the last sentence. serting ‘‘tax imposed by section 11’’. less the Secretary prescribes regulations permit- (40) Section 6015(d)(2)(B) is amended by strik- (E) Section 691(c)(4) is amended by striking ting an unequal allocation of such amount. ing ‘‘or 55’’. ‘‘1201,’’. ‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a (41) Section 6211(b)(4)(A) is amended by (F) Section 801(a) is amended— corporation has a short taxable year which does striking‘‘, 168(k)(4)’’. (i) by striking paragraph (2), and not include a December 31 and is a component (42) Section 6425(c)(1)(A) is amended to read (ii) by striking all that precedes ‘‘is hereby im- member of a controlled group of corporations as follows: posed’’ and inserting: with respect to such taxable year, then for pur- ‘‘(a) TAX IMPOSED.—A tax’’. ‘‘(A) the tax imposed under section 11 or sub- poses of this subtitle, the amount to be used in (G) Section 831(e) is amended by striking chapter L of chapter 1, whichever is applicable, computing the accumulated earnings credit paragraph (1) and by redesignating paragraphs over’’. under section 535(c)(2) and (3) of such corpora- (2) and (3) as paragraphs (1) and (2), respec- (43) Section 6654(d)(2) is amended— tion for such taxable year shall be the amount tively. (A) in clause (i) of subparagraph (B), by strik- specified in subsection (a) with respect to such (H) Sections 832(c)(5) and 834(b)(1)(D) are ing ‘‘, alternative minimum taxable income,’’, group, divided by the number of corporations each amended by striking ‘‘sec. 1201 and fol- and which are component members of such group on lowing,’’. (B) in clause (i) of subparagraph (C), by strik- the last day of such taxable year. For purposes ing ‘‘, alternative minimum taxable income,’’. (I) Section 852(b)(3)(A) is amended by striking ‘‘section 1201(a)’’ and inserting ‘‘section of the preceding sentence, section 1563(b) shall (44) Section 6655(e)(2)(B)(i) is amended by be applied as if such last day were substituted striking ‘‘The taxable income and alternative 11(b)(1)’’. (J) Section 857(b)(3) is amended— for December 31.’’. minimum taxable income shall’’ and inserting (i) by striking subparagraph (A) and redesig- (B) The table of sections for part II of sub- ‘‘Taxable income shall’’. nating subparagraphs (B) through (F) as sub- chapter B of chapter 5 is amended by striking (45) Section 6655(g)(1)(A) is amended by add- paragraphs (A) through (E), respectively, the item relating to section 1561 and inserting ing ‘‘plus’’ at the end of clause (i), by striking (ii) in subparagraph (C), as so redesignated— the following new item: clause (ii), and by redesignating clause (iii) as (I) by striking ‘‘subparagraph (A)(ii)’’ in ‘‘Sec. 1561. Limitation on accumulated earnings clause (ii). clause (i) thereof and inserting ‘‘paragraph credit in the case of certain con- (46) Section 6662(e)(3)(C) is amended by strik- (1)’’, trolled corporations.’’. ing ‘‘the regular tax (as defined in section (II) by striking ‘‘the tax imposed by subpara- (7) Section 7518(g)(6)(A) is amended— 55(c))’’ and inserting ‘‘the regular tax liability graph (A)(ii)’’ in clauses (ii) and (iv) thereof (A) by striking ‘‘With respect to the portion’’ (as defined in section 26(b))’’. and inserting ‘‘the tax imposed by paragraph (1) and inserting ‘‘In the case of a taxpayer other (d) EFFECTIVE DATES.— on undistributed capital gain’’, than a corporation, with respect to the por- (1) IN GENERAL.—Except as otherwise provided (iii) in subparagraph (E), as so redesignated, tion’’, and in this subsection, the amendments made by this by striking ‘‘subparagraph (B) or (D)’’ and in- (B) by striking ‘‘(34 percent in the case of a section shall apply to taxable years beginning serting ‘‘subparagraph (A) or (C)’’, and corporation)’’. after December 31, 2017. (iv) by adding at the end the following new (c) REDUCTION IN DIVIDEND RECEIVED DEDUC- (2) PRIOR ELECTIONS WITH RESPECT TO CERTAIN subparagraph: TIONS TO REFLECT LOWER CORPORATE INCOME TAX PREFERENCES.—So much of the amendment ‘‘(F) UNDISTRIBUTED CAPITAL GAIN.—For pur- TAX RATES.— made by subsection (a) as relates to the repeal poses of this paragraph, the term ‘undistributed (1) DIVIDENDS RECEIVED BY CORPORATIONS.— of section 59(e) of the Internal Revenue Code of capital gain’ means the excess of the net capital (A) IN GENERAL.—Section 243(a)(1) is amended 1986 shall apply to amounts paid or incurred gain over the deduction for dividends paid (as by striking ‘‘70 percent’’ and inserting ‘‘50 per- after December 31, 2017. defined in section 561) determined with reference cent’’. (3) TREATMENT OF NET OPERATING LOSS to capital gain dividends only.’’. (B) DIVIDENDS FROM 20-PERCENT OWNED COR- CARRYBACKS.—For purposes of section 56(d) of (K) Section 882(a)(1) is amended by striking ‘‘, PORATIONS.—Section 243(c)(1) is amended— the Internal Revenue Code of 1986 (as in effect or 1201(a)’’. (i) by striking ‘‘80 percent’’ and inserting ‘‘65 before its repeal), the amount of any net oper- (L) Section 1374(b) is amended by striking percent’’, and ating loss which may be carried back from a paragraph (4). (ii) by striking ‘‘70 percent’’ and inserting ‘‘50 taxable year beginning after December 31, 2017, (M) Section 1381(b) is amended by striking percent’’. to taxable years beginning before January 1, ‘‘taxes imposed by section 11 or 1201’’ and in- (C) CONFORMING AMENDMENT.—The heading 2018, shall be determined without regard to any serting ‘‘tax imposed by section 11’’. for section 243(c) is amended by striking ‘‘RE- adjustments under section 56(d)(2)(A) of such (N) Section 6655(g)(1)(A)(i) is amended by TENTION OF 80-PERCENT DIVIDEND RECEIVED DE- Code (as so in effect). striking ‘‘or 1201(a),’’. DUCTION’’ and inserting ‘‘INCREASED PERCENT- TITLE III—BUSINESS TAX REFORM (O) Section 7518(g)(6)(A) is amended by strik- AGE’’. ing ‘‘or 1201(a)’’. (2) DIVIDENDS RECEIVED FROM FSC.—Section Subtitle A—Tax Rates (2) Section 1445(e)(1) is amended by striking 245(c)(1)(B) is amended— SEC. 3001. REDUCTION IN CORPORATE TAX RATE. ‘‘35 percent (or, to the extent provided in regula- (A) by striking ‘‘70 percent’’ and inserting ‘‘50 (a) IN GENERAL.—Section 11(b) is amended to tions, 20 percent)’’ and inserting ‘‘20 percent’’. percent’’, and read as follows: (3) Section 1445(e)(2) is amended by striking (B) by striking ‘‘80 percent’’ and inserting ‘‘65 ‘‘(b) AMOUNT OF TAX.— ‘‘35 percent’’ and inserting ‘‘20 percent’’. percent’’. ‘‘(1) IN GENERAL.—Except as otherwise pro- (4) Section 1445(e)(6) is amended by striking (3) LIMITATION ON AGGREGATE AMOUNT OF DE- vided in this subsection, the amount of the tax ‘‘35 percent (or, to the extent provided in regula- DUCTIONS.—Section 246(b)(3) is amended— imposed by subsection (a) shall be 20 percent of tions, 20 percent)’’ and inserting ‘‘20 percent’’. (A) by striking ‘‘80 percent’’ in subparagraph taxable income. (5)(A) Part I of subchapter B of chapter 5 is (A) and inserting ‘‘65 percent’’, and ‘‘(2) SPECIAL RULE FOR PERSONAL SERVICE amended by striking section 1551 (and by strik- (B) by striking ‘‘70 percent’’ in subparagraph CORPORATIONS.— ing the item relating to such section in the table (B) and inserting ‘‘50 percent’’. ‘‘(A) IN GENERAL.—In the case of a personal of sections for such part). (4) REDUCTION IN DEDUCTION WHERE PORT- service corporation (as defined in section (B) Section 12 is amended by striking para- FOLIO STOCK IS DEBT-FINANCED.—Section 448(d)(2)), the amount of the tax imposed by graph (6). 246A(a)(1) is amended— subsection (a) shall be 25 percent of taxable in- (C) Section 535(c)(5) is amended to read as fol- (A) by striking ‘‘70 percent’’ and inserting ‘‘50 come. lows: percent’’, and ‘‘(B) REFERENCES TO CORPORATE RATE.—Any ‘‘(5) CROSS REFERENCE.—For limitation on (B) by striking ‘‘80 percent’’ and inserting ‘‘65 reference to the rate imposed under this section credit provided in paragraph (2) or (3) in the percent’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00065 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9322 CONGRESSIONAL RECORD — HOUSE November 15, 2017

(5) INCOME FROM SOURCES WITHIN THE UNITED date of the enactment of this Act, the taxpayer (1) Section 168(k)(2)(B)(i)(III), as amended, is STATES.—Section 861(a)(2) is amended— does not use a normalization method of account- amended by inserting ‘‘binding’’ before ‘‘con- (A) by striking ‘‘100/70th’’ and inserting ‘‘100/ ing, the taxpayer’s tax for the taxable year shall tract’’. 50th’’ in subparagraph (B), and be increased by the amount by which it reduces (2) Section 168(k)(5) is amended by— (B) in the flush sentence at the end— its excess tax reserve more rapidly than per- (A) by striking ‘‘January 1, 2020’’ in subpara- (i) by striking ‘‘100/80th’’ and inserting ‘‘100/ mitted under a normalization method of ac- graph (A) and inserting ‘‘January 1, 2023’’, 65th’’, and counting. (B) by striking ‘‘50 percent’’ in subparagraph (ii) by striking ‘‘100/70th’’ and inserting ‘‘100/ Subtitle B—Cost Recovery (A)(i) and inserting ‘‘100 percent’’, and 50th’’. (C) by striking subparagraph (F). (d) EFFECTIVE DATE.— SEC. 3101. INCREASED EXPENSING. (3) Section 168(k)(6) is amended to read as fol- (1) IN GENERAL.—Except as otherwise provided (a) 100 PERCENT EXPENSING.—Section lows: in this subsection, the amendments made by this 168(k)(1)(A) is amended by striking ‘‘50 percent’’ ‘‘(6) PHASE DOWN.—In the case of qualified section shall apply to taxable years beginning and inserting ‘‘100 percent’’. property acquired by the taxpayer before Sep- after December 31, 2017. (b) EXTENSION THROUGH JANUARY 1, 2023.— tember 28, 2017, and placed in service by the tax- (2) CERTAIN CONFORMING AMENDMENTS.—The Section 168(k)(2) is amended— payer after September 27, 2017, paragraph (1)(A) amendments made by paragraphs (2), (3), and (1) in subparagraph (A)(iii), by striking ‘‘Jan- shall be applied by substituting for ‘100 per- (4) of subsection (b) shall apply to distributions uary 1, 2020’’ and inserting ‘‘January 1, 2023’’, cent’— after December 31, 2017. (2) in subparagraph (B)(i)(II), by striking ‘‘(A) ‘50 percent’ in the case of— (e) NORMALIZATION REQUIREMENTS.— ‘‘January 1, 2021’’ and inserting ‘‘January 1, ‘‘(i) property placed in service before January (1) IN GENERAL.—A normalization method of 2024’’, 1, 2018, and accounting shall not be treated as being used (3) in subparagraph (B)(i)(III), by striking ‘‘(ii) property described in subparagraph (B) with respect to any public utility property for ‘‘January 1, 2020’’ and inserting ‘‘January 1, or (C) of paragraph (2) which is placed in serv- purposes of section 167 or 168 of the Internal 2023’’, ice in 2018, Revenue Code of 1986 if the taxpayer, in com- (4) in subparagraph (B)(ii), by striking ‘‘Janu- ‘‘(B) ‘40 percent’ in the case of— puting its cost of service for ratemaking pur- ary 1, 2020’’ in each place it appears and insert- ‘‘(i) property placed in service in 2018 (other poses and reflecting operating results in its reg- ing ‘‘January 1, 2023’’, and than property described in subparagraph (B) or ulated books of account, reduces the excess tax (5) in subparagraph (E)(i), by striking ‘‘Janu- (C) of paragraph (2)), and reserve more rapidly or to a greater extent than ary 1, 2020’’ and replacing it with ‘‘January 1, ‘‘(ii) property described in subparagraph (B) such reserve would be reduced under the aver- 2023’’. or (C) of paragraph (2) which is placed in serv- age rate assumption method. (c) APPLICATION TO USED PROPERTY.— ice in 2019, and (2) ALTERNATIVE METHOD FOR CERTAIN TAX- (1) IN GENERAL.—Section 168(k)(2)(A)(ii) is ‘‘(C) ‘30 percent’ in the case of— PAYERS.—If, as of the first day of the taxable amended to read as follows: ‘‘(i) property placed in service in 2019 (other year that includes the date of enactment of this ‘‘(ii) the original use of which begins with the than property described in subparagraph (B) or Act— taxpayer or the acquisition of which by the tax- (C) of paragraph (2)), and (A) the taxpayer was required by a regulatory payer meets the requirements of clause (ii) of ‘‘(ii) property described in subparagraph (B) agency to compute depreciation for public util- subparagraph (E), and’’. or (C) of paragraph (2) which is placed in serv- ity property on the basis of an average life or (2) ACQUISITION REQUIREMENTS.—Section ice in 2020.’’. composite rate method, and 168(k)(2)(E)(ii) is amended to read as follows: (4) The heading of section 168(k) is amended (B) the taxpayer’s books and underlying ‘‘(ii) ACQUISITION REQUIREMENTS.—An acqui- by striking ‘‘SPECIAL ALLOWANCE FOR CERTAIN records did not contain the vintage account sition of property meets the requirements of this PROPERTY ACQUIRED AFTER DECEMBER 31, 2007, data necessary to apply the average rate as- clause if— AND BEFORE JANUARY 1, 2020’’ and inserting sumption method, ‘‘(I) such property was not used by the tax- ‘‘FULL EXPENSING OF CERTAIN PROPERTY’’. the taxpayer will be treated as using a normal- payer at any time prior to such acquisition, and (5) Section 460(c)(6)(B)(ii) is amended by strik- ization method of accounting if, with respect to ‘‘(II) the acquisition of such property meets ing ‘‘January 1, 2020 (January 1, 2021 in the such jurisdiction, the taxpayer uses the alter- the requirements of paragraphs (2)(A), (2)(B), case of property described in section native method for public utility property that is (2)(C), and (3) of section 179(d).’’, 168(k)(2)(B))’’ and inserting ‘‘January 1, 2023 subject to the regulatory authority of that juris- (3) ANTI-ABUSE RULES.—Section 168(k)(2)(E) is (January 1, 2024 in the case of property de- diction. further amended by amending clause (iii)(I) to scribed in section 168(k)(2)(B))’’. (3) DEFINITIONS.—For purposes of this sub- read as follows: (g) EFFECTIVE DATE.— section— ‘‘(I) property is used by a lessor of such prop- (1) IN GENERAL.—Except at provided by para- (A) EXCESS TAX RESERVE.—The term ‘‘excess erty and such use is the lessor’s first use of such graph (2), the amendments made by this section tax reserve’’ means the excess of— property,’’. shall apply to property which— (i) the reserve for deferred taxes (as described (d) EXCEPTION FOR CERTAIN TRADES AND (A) is acquired after September 27, 2017, and in section 168(i)(9)(A)(ii) of the Internal Rev- BUSINESSES NOT SUBJECT TO LIMITATION ON IN- (B) is placed in service after such date. enue Code of 1986 as in effect on the day before TEREST EXPENSE.—Section 168(k)(2), as amended For purposes of the preceding sentence, property the date of the enactment of this Act), over by section 2001, is amended by inserting after shall not be treated as acquired after the date (ii) the amount which would be the balance in subparagraph (F) the following new subpara- on which a written binding contract is entered such reserve if the amount of such reserve were graph: into for such acquisition. determined by assuming that the corporate rate ‘‘(G) EXCEPTION FOR PROPERTY OF CERTAIN (2) SPECIFIED PLANTS.—The amendments made reductions provided in this Act were in effect for BUSINESSES NOT SUBJECT TO LIMITATION ON IN- by subsection (f)(2) shall apply to specified all prior periods. TEREST EXPENSE.—The term ‘qualified property’ plants planted or grafted after September 27, (B) AVERAGE RATE ASSUMPTION METHOD.—The shall not include any property used in— 2017. average rate assumption method is the method ‘‘(i) a trade or business described in subpara- (3) TRANSITION RULE.—In the case of any tax- under which the excess in the reserve for de- graph (B) or (C) of section 163(j)(7), or payer’s first taxable year ending after September ferred taxes is reduced over the remaining lives ‘‘(ii) a trade or business that has had floor 27, 2017, the taxpayer may elect (at such time of the property as used in its regulated books of plan financing indebtedness (as defined in para- and in such form and manner as the Secretary account which gave rise to the reserve for de- graph (9) of section 163(j)), if the floor plan fi- of the Treasury, or his designee, may provide) to ferred taxes. Under such method, if timing dif- nancing interest related to such indebtedness apply section 168 of the Internal Revenue Code ferences for the property reverse, the amount of was taken into account under paragraph (1)(C) of 1986 without regard to the amendments made the adjustment to the reserve for the deferred of such section.’’. by this section. taxes is calculated by multiplying— (e) COORDINATION WITH SECTION 280F.—Sec- (4) LIMITATION ON NET OPERATING LOSS (i) the ratio of the aggregate deferred taxes for tion 168(k)(2)(F) is amended— CARRYBACKS ATTRIBUTABLE TO FULL EXPENS- the property to the aggregate timing differences (1) by striking ‘‘$8,000’’ in clauses (i) and (iii) ING.—In the case of any taxable year which in- for the property as of the beginning of the pe- and inserting ‘‘$16,000’’, and cludes any portion of the period beginning on riod in question, by (2) in clause (iii)— September 28, 2017, and ending on December 31, (ii) the amount of the timing differences (A) by striking ‘‘placed in service by the tax- 2017, the amount of any net operating loss for which reverse during such period. payer after December 31, 2017’’ and inserting such taxable year which may be treated as a net (C) ALTERNATIVE METHOD.—The ‘‘alternative ‘‘acquired by the taxpayer before September 28, operating loss carryback (including any such method’’ is the method in which the taxpayer— 2017, and placed in service by the taxpayer after carryback attributable to any specified liability (i) computes the excess tax reserve on all pub- September 27, 2017’’, and loss under section 172(b)(1)(C), any corporate lic utility property included in the plant ac- (B) by redesignating subclauses (I) and (II) as equity reduction interest loss under section count on the basis of the weighted average life subclauses (II) and (III) respectively, and in- 172(b)(1)(D), any eligible loss under section or composite rate used to compute depreciation serting before clause (II), as so redesignated, the 172(b)(1)(E), and any farming loss under section for regulatory purposes, and following new subclause: 172(b)(1)(F)) shall be determined without regard (ii) reduces the excess tax reserve ratably over ‘‘(I) in the case of a passenger automobile to the amendments made by this section. For the remaining regulatory life of the property. placed in service before January 1, 2018, purposes of this paragraph, terms which are (4) TAX INCREASED FOR NORMALIZATION VIOLA- ‘$8,000’,’’. used in section 172 of the Internal Revenue Code TION.—If, for any taxable year ending after the (f) CONFORMING AMENDMENTS.— of 1986 (determined without regard to the

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00066 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9323 amendments made by section 3302) shall have service after November 2, 2017. For purposes of the cash receipts and disbursements method of the same meaning as when used in such section. the preceding sentence, property shall not be accounting under section 448(a)(3)) which meets Subtitle C—Small Business Reforms treated as acquired after the date on which a the gross receipts test of section 448(c) for any written binding contract is entered into for such taxable year, this section shall not apply with SEC. 3201. EXPANSION OF SECTION 179 EXPENS- ING. acquisition. respect to such taxpayer for such taxable year. SEC. 3202. SMALL BUSINESS ACCOUNTING METH- ‘‘(2) APPLICATION OF GROSS RECEIPTS TEST TO (a) INCREASED DOLLAR LIMITATIONS.— OD REFORM AND SIMPLIFICATION. INDIVIDUALS, ETC.— In the case of any taxpayer (1) IN GENERAL.—Section 179(b) is amended— (a) MODIFICATION OF LIMITATION ON CASH which is not a corporation or a partnership, the (A) by inserting ‘‘($5,000,000, in the case of METHOD OF ACCOUNTING.— gross receipts test of section 448(c) shall be ap- taxable years beginning before January 1, (1) INCREASED LIMITATION.—So much of sec- plied in the same manner as if each trade or 2023)’’ after ‘‘$500,000’’ in paragraph (1), and tion 448(c) as precedes paragraph (2) is amended business of such taxpayer were a corporation or (B) by inserting ‘‘($20,000,000, in the case of to read as follows: partnership. taxable years beginning before January 1, ‘‘(c) GROSS RECEIPTS TEST.—For purposes of ‘‘(3) COORDINATION WITH SECTION 481.—Any 2023)’’ after ‘‘$2,000,000’’ in paragraph (2). this section— change in method of accounting made pursuant (2) INFLATION ADJUSTMENT.—Section 179(b)(6) ‘‘(1) IN GENERAL.—A corporation or partner- to this subsection shall be treated for purposes is amended to read as follows: ship meets the gross receipts test of this sub- of section 481 as initiated by the taxpayer and ‘‘(6) INFLATION ADJUSTMENT.— section for any taxable year if the average an- made with the consent of the Secretary.’’. ‘‘(A) IN GENERAL.—In the case of a taxable nual gross receipts of such entity for the 3-tax- (2) CONFORMING AMENDMENT.—Section year beginning after 2015 (2018 in the case of the able-year period ending with the taxable year 263A(b)(2) is amended to read as follows: $5,000,000 and $20,000,000 amounts in subsection which precedes such taxable year does not ex- ‘‘(2) PROPERTY ACQUIRED FOR RESALE.—Real (b)), each dollar amount in subsection (b) shall ceed $25,000,000.’’. or personal property described in section be increased by an amount equal to such dollar (2) APPLICATION OF EXCEPTION ON ANNUAL 1221(a)(1) which is acquired by the taxpayer for amount multiplied by— BASIS.—Section 448(b)(3) is amended to read as resale.’’. ‘‘(i) in the case of the $500,000 and $2,000,000 follows: (c) EXEMPTION FROM INVENTORIES.—Section amounts in subsection (b), the cost-of-living ad- ‘‘(3) ENTITIES WHICH MEET GROSS RECEIPTS 471 is amended by redesignating subsection (c) justment determined under section 1(c)(2) for the TEST.—Paragraphs (1) and (2) of subsection (a) as subsection (d) and by inserting after sub- calendar year in which the taxable year begins, shall not apply to any corporation or partner- section (b) the following new subsection: determined by substituting ‘calendar year 2014’ ship for any taxable year if such entity (or any ‘‘(c) EXEMPTION FOR CERTAIN SMALL BUSI- for ‘calendar year 2016’ in subparagraph (A)(ii) predecessor) meets the gross receipts test of sub- NESSES.— thereof, and section (c) for such taxable year.’’. ‘‘(1) IN GENERAL.—In the case of any taxpayer ‘‘(ii) in the case of the $5,000,000 and (3) INFLATION ADJUSTMENT.—Section 448(c) is (other than a tax shelter prohibited from using $20,000,000 amounts in subsection (b), the cost- amended by adding at the end the following the cash receipts and disbursements method of of-living adjustment determined under section new paragraph: accounting under section 448(a)(3)) which meets 1(c)(2) for the calendar year in which the tax- ‘‘(4) ADJUSTMENT FOR INFLATION.—In the case the gross receipts test of section 448(c) for any able year begins, determined by substituting of any taxable year beginning after December taxable year— ‘calendar year 2017’ for ‘calendar year 2016’ in 31, 2018, the dollar amount in paragraph (1) ‘‘(A) subsection (a) shall not apply with re- subparagraph (A)(ii) thereof. shall be increased by an amount equal to— spect to such taxpayer for such taxable year, ‘‘(B) ROUNDING.—The amount of any increase ‘‘(A) such dollar amount, multiplied by and under subparagraph (A) shall be rounded to the ‘‘(B) the cost-of-living adjustment determined ‘‘(B) the taxpayer’s method of accounting for nearest multiple of $10,000 ($100,000 in the case under section 1(c)(2) for the calendar year in inventory for such taxable year shall not be of the $5,000,000 and $20,000,000 amounts in sub- which the taxable year begins, by substituting treated as failing to clearly reflect income if section (b)).’’. ‘calendar year 2017’ for ‘calendar year 2016’ in such method either— (b) APPLICATION TO QUALIFIED ENERGY EFFI- subparagraph (A)(ii) thereof. ‘‘(i) treats inventory as non-incidental mate- CIENT HEATING AND AIR-CONDITIONING PROP- If any amount as increased under the preceding rials and supplies, or ERTY.— sentence is not a multiple of $1,000,000, such ‘‘(ii) conforms to such taxpayer’s method of (1) IN GENERAL.—Section 179(f)(2) is amended amount shall be rounded to the nearest multiple accounting reflected in an applicable financial by striking ‘‘and’’ at the end of subparagraph of $1,000,000.’’. statement of the taxpayer with respect to such (B), by striking the period at the end of sub- (4) COORDINATION WITH SECTION 481.—Section taxable year or, if the taxpayer does not have paragraph (C) and inserting ‘‘, and’’, and by 448(d)(7) is amended to read as follows: any applicable financial statement with respect adding at the end the following new subpara- ‘‘(7) COORDINATION WITH SECTION 481.—Any to such taxable year, the books and records of graph: change in method of accounting made pursuant the taxpayer prepared in accordance with the ‘‘(D) qualified energy efficient heating and to this section shall be treated for purposes of taxpayer’s accounting procedures. air-conditioning property.’’. section 481 as initiated by the taxpayer and ‘‘(2) APPLICABLE FINANCIAL STATEMENT.—For (2) QUALIFIED ENERGY EFFICIENT HEATING AND made with the consent of the Secretary.’’. purposes of this subsection, the term ‘applicable AIR-CONDITIONING PROPERTY.—Section 179(f) is (5) APPLICATION OF EXCEPTION TO CORPORA- financial statement’ means— amended by adding at the end the following TIONS ENGAGED IN FARMING.— ‘‘(A) a financial statement which is certified new paragraph: (A) IN GENERAL.—Section 447(c) is amended— as being prepared in accordance with generally ‘‘(3) QUALIFIED ENERGY EFFICIENT HEATING (i) by inserting ‘‘for any taxable year’’ after accepted accounting principles and which is— AND AIR-CONDITIONING PROPERTY.—For purposes ‘‘not being a corporation’’ in the matter pre- ‘‘(i) a 10-K (or successor form), or annual of this subsection— ceding paragraph (1), and statement to shareholders, required to be filed (ii) by amending paragraph (2) to read as fol- ‘‘(A) IN GENERAL.—The term ‘qualified energy by the taxpayer with the United States Securi- efficient heating and air-conditioning property’ lows: ties and Exchange Commission, ‘‘(2) a corporation which meets the gross re- means any section 1250 property— ‘‘(ii) an audited financial statement of the ceipts test of section 448(c) for such taxable ‘‘(i) with respect to which depreciation (or taxpayer which is used for— year.’’. ‘‘(I) credit purposes, amortization in lieu of depreciation) is allow- (B) COORDINATION WITH SECTION 481.—Section ‘‘(II) reporting to shareholders, partners, or able, 447(f) is amended to read as follows: other proprietors, or to beneficiaries, or ‘‘(ii) which is installed as part of a building’s ‘‘(f) COORDINATION WITH SECTION 481.—Any ‘‘(III) any other substantial nontax purpose, heating, cooling, ventilation, or hot water sys- change in method of accounting made pursuant but only if there is no statement of the taxpayer tem, and to this section shall be treated for purposes of described in clause (i), or ‘‘(iii) which is within the scope of Standard section 481 as initiated by the taxpayer and ‘‘(iii) filed by the taxpayer with any other 90.1–2007 or any successor standard. made with the consent of the Secretary.’’. Federal or State agency for nontax purposes, TANDARD 90 1 2007 ‘‘(B) S . – .—The term ‘Standard (C) CONFORMING AMENDMENTS.—Section 447 is but only if there is no statement of the taxpayer 90.1–2007’ means Standard 90.1–2007 of the amended— described in clause (i) or (ii), or American Society of Heating, Refrigerating and (i) by striking subsections (d), (e), (h), and (i), ‘‘(B) a financial statement of the taxpayer Air-Conditioning Engineers and the Illu- and which— minating Engineering Society of North America (ii) by redesignating subsections (f) and (g) ‘‘(i) is used for a purpose described in sub- (as in effect on the day before the date of the (as amended by subparagraph (B)) as sub- clause (I), (II), or (III) of subparagraph (A)(ii), adoption of Standard 90.1–2010 of such Soci- sections (d) and (e), respectively. or eties).’’. (b) EXEMPTION FROM UNICAP REQUIRE- ‘‘(ii) filed by the taxpayer with any regulatory (c) EFFECTIVE DATE.— MENTS.— or governmental body (whether domestic or for- (1) INCREASED DOLLAR LIMITATIONS.—The (1) IN GENERAL.—Section 263A is amended by eign) specified by the Secretary, amendments made by subsection (a) shall apply redesignating subsection (i) as subsection (j) and but only if there is no statement of the taxpayer to taxable years beginning after December 31, by inserting after subsection (h) the following described in subparagraph (A). 2017. new subsection: ‘‘(3) APPLICATION OF GROSS RECEIPTS TEST TO (2) APPLICATION TO QUALIFIED ENERGY EFFI- ‘‘(i) EXEMPTION FOR CERTAIN SMALL BUSI- INDIVIDUALS, ETC.—In the case of any taxpayer CIENT HEATING AND AIR-CONDITIONING PROP- NESSES.— which is not a corporation or a partnership, the ERTY.—The amendments made by subsection (b) ‘‘(1) IN GENERAL.—In the case of any taxpayer gross receipts test of section 448(c) shall be ap- shall apply to property acquired and placed in (other than a tax shelter prohibited from using plied in the same manner as if each trade or

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business of such taxpayer were a corporation or TION.—Section 481 is amended by adding at the ‘‘(i) 30 percent of the adjusted taxable income partnership. end the following new subsection: of the partnership, over ‘‘(4) COORDINATION WITH SECTION 481.—Any ‘‘(d) ADJUSTMENTS ATTRIBUTABLE TO CONVER- ‘‘(ii) the amount (if any) by which the busi- change in method of accounting made pursuant SION FROM S CORPORATION TO C CORPORA- ness interest of the partnership, reduced by floor to this subsection shall be treated for purposes TION.— plan financing interest, exceeds the business in- of section 481 as initiated by the taxpayer and ‘‘(1) IN GENERAL.—In the case of an eligible terest income of the partnership. made with the consent of the Secretary.’’. terminated S corporation, any adjustment re- ‘‘(C) APPLICATION TO S CORPORATIONS.—Rules (d) EXEMPTION FROM PERCENTAGE COMPLE- quired by subsection (a)(2) which is attributable similar to the rules of subparagraphs (A) and TION FOR LONG-TERM CONTRACTS.— to such corporation’s revocation described in (B) shall apply with respect to any S corpora- (1) IN GENERAL.—Section 460(e)(1)(B) is paragraph (2)(A)(ii) shall be taken into account tion and its shareholders. amended— ratably during the 6-taxable year period begin- ‘‘(4) BUSINESS INTEREST.—For purposes of this (A) by inserting ‘‘(other than a tax shelter ning with the year of change. subsection, the term ‘business interest’ means prohibited from using the cash receipts and dis- ‘‘(2) ELIGIBLE TERMINATED S CORPORATION.— any interest paid or accrued on indebtedness bursements method of accounting under section For purposes of this subsection, the term ‘eligi- properly allocable to a trade or business. Such 448(a)(3))’’ after ‘‘taxpayer’’ in the matter pre- ble terminated S corporation’ means any C cor- term shall not include investment interest (with- ceding clause (i), and poration— in the meaning of subsection (d)). (B) by amending clause (ii) to read as follows: ‘‘(A) which— ‘‘(5) BUSINESS INTEREST INCOME.—For pur- ‘‘(ii) who meets the gross receipts test of sec- ‘‘(i) was an S corporation on the day before poses of this subsection, the term ‘business inter- tion 448(c) for the taxable year in which such the date of the enactment of the Tax Cuts and est income’ means the amount of interest includ- contract is entered into.’’. Jobs Act, and ible in the gross income of the taxpayer for the (2) CONFORMING AMENDMENTS.—Section 460(e) ‘‘(ii) during the 2-year period beginning on taxable year which is properly allocable to a is amended by striking paragraphs (2) and (3), the date of such enactment makes a revocation trade or business. Such term shall not include by redesignating paragraphs (4), (5), and (6) as of its election under section 1362(a), and investment income (within the meaning of sub- paragraphs (3), (4), and (5), respectively, and by ‘‘(B) the owners of the stock of which, deter- section (d)). inserting after paragraph (1) the following new mined on the date such revocation is made, are ‘‘(6) ADJUSTED TAXABLE INCOME.—For pur- paragraph: the same owners (and in identical proportions) poses of this subsection, the term ‘adjusted tax- ‘‘(2) RULES RELATED TO GROSS RECEIPTS as on the date of such enactment.’’. able income’ means the taxable income of the TEST.— (b) CASH DISTRIBUTIONS FOLLOWING POST- taxpayer— ‘‘(A) APPLICATION OF GROSS RECEIPTS TEST TO TERMINATION TRANSITION PERIOD FROM S COR- ‘‘(A) computed without regard to— INDIVIDUALS, ETC.— For purposes of paragraph PORATION STATUS.—Section 1371 is amended by ‘‘(i) any item of income, gain, deduction, or (1)(B)(ii), in the case of any taxpayer which is adding at the end the following new subsection: loss which is not properly allocable to a trade or not a corporation or a partnership, the gross re- ‘‘(f) CASH DISTRIBUTIONS FOLLOWING POST- business, ceipts test of section 448(c) shall be applied in TERMINATION TRANSITION PERIOD.—In the case ‘‘(ii) any business interest or business interest the same manner as if each trade or business of of a distribution of money by an eligible termi- income, such taxpayer were a corporation or partner- nated S corporation (as defined in section ‘‘(iii) the amount of any net operating loss de- ship. 481(d)) after the post-termination transition pe- duction under section 172, and ‘‘(B) COORDINATION WITH SECTION 481.—Any riod, the accumulated adjustments account shall ‘‘(iv) any deduction allowable for deprecia- change in method of accounting made pursuant be allocated to such distribution, and the dis- tion, amortization, or depletion, and to paragraph (1)(B)(ii) shall be treated as initi- tribution shall be chargeable to accumulated ‘‘(B) computed with such other adjustments as ated by the taxpayer and made with the consent earnings and profits, in the same ratio as the the Secretary may provide. of the Secretary. Such change shall be effected amount of such accumulated adjustments ac- ‘‘(7) TRADE OR BUSINESS.—For purposes of this on a cut-off basis for all similarly classified con- count bears to the amount of such accumulated subsection, the term ‘trade or business’ shall not tracts entered into on or after the year of earnings and profits.’’. include— change.’’. ‘‘(A) the trade or business of performing serv- (e) EFFECTIVE DATE.— Subtitle D—Reform of Business-related Exclusions, Deductions, etc. ices as an employee, (1) IN GENERAL.—Except as otherwise provided ‘‘(B) a real property trade or business (as such in this subsection, the amendments made by this SEC. 3301. INTEREST. term is defined in section 469(c)(7)(C)), or section shall apply to taxable years beginning (a) IN GENERAL.—Section 163(j) is amended to ‘‘(C) the trade or business of the furnishing or after December 31, 2017. read as follows: sale of— (2) PRESERVATION OF SUSPENSE ACCOUNT ‘‘(j) LIMITATION ON BUSINESS INTEREST.— ‘‘(i) electrical energy, water, or sewage dis- RULES WITH RESPECT TO ANY EXISTING SUSPENSE ‘‘(1) IN GENERAL.—In the case of any taxpayer posal services, ACCOUNTS.—So much of the amendments made for any taxable year, the amount allowed as a ‘‘(ii) gas or steam through a local distribution by subsection (a)(5)(C) as relate to section 447(i) deduction under this chapter for business inter- system, or of the Internal Revenue Code of 1986 shall not est shall not exceed the sum of— ‘‘(iii) transportation of gas or steam by pipe- apply with respect to any suspense account es- ‘‘(A) the business interest income of such tax- line, tablished under such section before the date of payer for such taxable year, if the rates for such furnishing or sale, as the the enactment of this Act. ‘‘(B) 30 percent of the adjusted taxable income case may be, have been established or approved (3) EXEMPTION FROM PERCENTAGE COMPLETION of such taxpayer for such taxable year, plus by a State or political subdivision thereof, by FOR LONG-TERM CONTRACTS.—The amendments ‘‘(C) the floor plan financing interest of such any agency or instrumentality of the United made by subsection (d) shall apply to contracts taxpayer for such taxable year. States, or by a public service or public utility entered into after December 31, 2017, in taxable The amount determined under subparagraph commission or other similar body of any State or years ending after such date. (B) (after any increases in such amount under political subdivision thereof. SEC. 3203. SMALL BUSINESS EXCEPTION FROM paragraph (3)(A)(iii)) shall not be less than ‘‘(8) CARRYFORWARD OF DISALLOWED INTER- LIMITATION ON DEDUCTION OF zero. EST.—For carryforward of interest disallowed BUSINESS INTEREST. ‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI- under paragraph (1), see subsection (o). (a) IN GENERAL.—Section 163(j)(2), as amend- NESSES.—For exemption for certain small busi- ‘‘(9) FLOOR PLAN FINANCING INTEREST DE- ed by section 3301, is amended to read as fol- nesses, see the amendment made by section 3203 FINED.—For purposes of this subsection— lows: of the Tax Cuts and Jobs Act. ‘‘(A) IN GENERAL.—The term ‘floor plan fi- ‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI- ‘‘(3) APPLICATION TO PARTNERSHIPS, ETC.— nancing interest’ means interest paid or accrued NESSES.—In the case of any taxpayer (other ‘‘(A) IN GENERAL.—In the case of any partner- on floor plan financing indebtedness. than a tax shelter prohibited from using the ship— ‘‘(B) FLOOR PLAN FINANCING INDEBTEDNESS.— cash receipts and disbursements method of ac- ‘‘(i) this subsection shall be applied at the The term ‘floor plan financing indebtedness’ counting under section 448(a)(3)) which meets partnership level and any deduction for busi- means indebtedness— the gross receipts test of section 448(c) for any ness interest shall be taken into account in de- ‘‘(i) used to finance the acquisition of motor taxable year, paragraph (1) shall not apply to termining the non-separately stated taxable in- vehicles held for sale to retail customers, and such taxpayer for such taxable year. In the case come or loss of the partnership, ‘‘(ii) secured by the inventory so acquired. of any taxpayer which is not a corporation or a ‘‘(ii) the adjusted taxable income of each part- ‘‘(C) MOTOR VEHICLE.—The term ‘motor vehi- partnership, the gross receipts test of section ner of such partnership shall be determined cle’ means a motor vehicle that is any of the fol- 448(c) shall be applied in the same manner as if without regard to such partner’s distributive lowing: such taxpayer were a corporation or partner- share of the non-separately stated taxable in- ‘‘(i) An automobile. ship.’’. come or loss of such partnership, and ‘‘(ii) A truck. (b) EFFECTIVE DATE.—The amendment made ‘‘(iii) the amount determined under paragraph ‘‘(iii) A recreational vehicle. by this section shall apply to taxable years be- (1)(B) with respect to each partner of such part- ‘‘(iv) A motorcycle. ginning after December 31, 2017. nership shall be increased by such partner’s dis- ‘‘(v) A boat. SEC. 3204. MODIFICATION OF TREATMENT OF S tributive share of such partnership’s excess ‘‘(vi) Farm machinery or equipment. CORPORATION CONVERSIONS TO C amount. ‘‘(vii) Construction machinery or equipment.’’. CORPORATIONS. ‘‘(B) EXCESS AMOUNT.—The term ‘excess (b) CARRYFORWARD OF DISALLOWED BUSINESS (a) ADJUSTMENTS ATTRIBUTABLE TO CONVER- amount’ means, with respect to any partner- INTEREST.—Section 163, after amendment by sec- SION FROM S CORPORATION TO C CORPORA- ship, the excess (if any) of— tion 4302(a) and before amendment by section

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00068 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9325 4302(b), is amended by inserting after subsection ‘‘(II) the raising or harvesting of trees bearing For purposes of the preceding sentence, the term (n) the following new subsection: fruit, nuts, or other crops, or ornamental trees. ‘indefinite net operating loss’ means any net op- ‘‘(o) CARRYFORWARD OF DISALLOWED BUSI- For purposes of subclause (II), an evergreen tree erating loss arising in a taxable year beginning NESS INTEREST.—The amount of any business in- which is more than 6 years old at the time sev- after December 31, 2017.’’. terest not allowed as a deduction for any tax- ered from the roots shall not be treated as an or- (e) EFFECTIVE DATE.— able year by reason of subsection (j) shall be namental tree.’’. (1) CARRYFORWARDS AND CARRYBACKS.—The treated as business interest paid or accrued in (B) Section 172 is amended by striking sub- amendments made by subsections (a) and (b) the succeeding taxable year. Business interest sections (f), (g), and (h). shall apply to net operating losses arising in paid or accrued in any taxable year (determined (c) LIMITATION OF NET OPERATING LOSS TO 90 taxable years beginning after December 31, 2017. without regard to the preceding sentence) shall PERCENT OF TAXABLE INCOME.— (2) NET OPERATING LOSS LIMITED TO 90 PER- not be carried past the 5th taxable year fol- (1) IN GENERAL.—Section 172(a) is amended to CENT OF TAXABLE INCOME.—The amendments lowing such taxable year, determined by treat- read as follows: made by subsection (c) shall apply to taxable ing business interest as allowed as a deduction ‘‘(a) DEDUCTION ALLOWED.—There shall be al- years beginning after December 31, 2017. on a first-in, first-out basis.’’. lowed as a deduction for the taxable year an (3) ANNUAL INCREASE IN CARRYOVER (c) TREATMENT OF CARRYFORWARD OF DIS- amount equal to the lesser of— AMOUNTS.—The amendments made by subsection ALLOWED BUSINESS INTEREST IN CERTAIN COR- ‘‘(1) the aggregate of the net operating loss (d) shall apply to amounts carried to taxable PORATE ACQUISITIONS.— carryovers to such year, plus the net operating years beginning after December 31, 2017. (1) IN GENERAL.—Section 381(c) is amended by loss carrybacks to such year, or (4) SPECIAL RULE FOR NET DISASTER LOSSES.— inserting after paragraph (19) the following new ‘‘(2) 90 percent of taxable income computed Notwithstanding paragraph (1), the amend- paragraph: without regard to the deduction allowable under ments made by subsection (b) shall not apply to ‘‘(20) CARRYFORWARD OF DISALLOWED INTER- this section. the portion of the net operating loss for any tax- For purposes of this subtitle, the term ‘net oper- EST.—The carryover of disallowed interest de- able year which is a net disaster loss to which scribed in section 163(o) to taxable years ending ating loss deduction’ means the deduction al- section 504(b) of the Disaster Tax Relief and after the date of distribution or transfer.’’. lowed by this subsection.’’. Airport and Airway Extension Act of 2017 ap- (2) COORDINATION OF LIMITATION WITH (2) APPLICATION OF LIMITATION.—Section plies. CARRYBACKS AND CARRYOVERS.—Section 382(d) is amended by adding at the end the fol- SEC. 3303. LIKE-KIND EXCHANGES OF REAL PROP- 172(b)(2) is amended by striking ‘‘shall be com- lowing new paragraph: ERTY. puted—’’ and all that follows and inserting ‘‘(3) APPLICATION TO CARRYFORWARD OF DIS- (a) IN GENERAL.—Section 1031(a)(1) is amend- ‘‘shall— ALLOWED INTEREST.—The term ‘pre-change loss’ ed by striking ‘‘property’’ each place it appears ‘‘(A) be computed with the modifications spec- shall include any carryover of disallowed inter- and inserting ‘‘real property’’. ified in subsection (d) other than paragraphs est described in section 163(o) under rules simi- (b) CONFORMING AMENDMENTS.— (1), (4), and (5) thereof, and by determining the lar to the rules of paragraph (1).’’. (1) Paragraph (2) of section 1031(a) is amend- amount of the net operating loss deduction (3) CONFORMING AMENDMENT.—Section ed to read as follows: without regard to the net operating loss for the 382(k)(1) is amended by inserting after the first ‘‘(2) EXCEPTION FOR REAL PROPERTY HELD FOR loss year or for any taxable year thereafter, sentence the following: ‘‘Such term shall include SALE.—This subsection shall not apply to any ‘‘(B) not be considered to be less than zero, any corporation entitled to use a carryforward exchange of real property held primarily for and of disallowed interest described in section sale.’’. ‘‘(C) not exceed the amount determined under (2) Section 1031 is amended by striking sub- 381(c)(20).’’ subsection (a)(2) for such prior taxable year.’’. (d) EFFECTIVE DATE.—The amendments made sections (e) and (i). (3) CONFORMING AMENDMENT.—Section (3) Section 1031, as amended by paragraph (2), by this section shall apply to taxable years be- 172(d)(6) is amended by striking ‘‘and’’ at the ginning after December 31, 2017. is amended by inserting after subsection (d) the end of subparagraph (A), by striking the period following new subsection: SEC. 3302. MODIFICATION OF NET OPERATING at the end of subparagraph (B) and inserting ‘‘; LOSS DEDUCTION. ‘‘(e) APPLICATION TO CERTAIN PARTNER- and’’, and by adding at the end the following SHIPS.—For purposes of this section, an interest (a) INDEFINITE CARRYFORWARD OF NET OPER- new subparagraph: ATING LOSSES.—Section 172(b)(1)(A)(ii) is in a partnership which has in effect a valid ‘‘(C) subsection (a)(2) shall be applied by sub- election under section 761(a) to be excluded from amended by striking ‘‘to each of the 20 taxable stituting ‘real estate investment trust taxable in- years’’ and inserting ‘‘to each taxable year’’. the application of all of subchapter K shall be come (as defined in section 857(b)(2) but without treated as an interest in each of the assets of (b) REPEAL OF NET OPERATING LOSS regard to the deduction for dividends paid (as CARRYBACKS OTHER THAN 1-YEAR CARRYBACK such partnership and not as an interest in a defined in section 561))’ for ‘taxable income’.’’. partnership.’’. OF ELIGIBLE DISASTER LOSSES.— (d) ANNUAL INCREASE OF INDEFINITE CARRY- (1) IN GENERAL.—Section 172(b)(1)(A)(i) is (4) Section 1031(h) is amended to read as fol- OVER AMOUNTS.—Section 172(b) is amended by lows: amended to read as follows: redesignating paragraph (3) as paragraph (4) ‘‘(i) in the case of any portion of a net oper- ‘‘(h) SPECIAL RULES FOR FOREIGN REAL PROP- and by inserting after paragraph (2) the fol- ERTY.—Real property located in the United ating loss for the taxable year which is an eligi- lowing new paragraph: ble disaster loss with respect to the taxpayer, States and real property located outside the ‘‘(3) ANNUAL INCREASE OF INDEFINITE CARRY- United States are not property of a like kind.’’. shall be a net operating loss carryback to the OVER AMOUNTS.—For purposes of paragraph taxable year preceding the taxable year of such (5) The heading of section 1031 is amended by (2)— striking ‘‘PROPERTY’’ and inserting ‘‘REAL PROP- loss, and’’. ‘‘(A) the amount of any indefinite net oper- ERTY’’. (2) CONFORMING AMENDMENTS.— ating loss which is carried to the next suc- (A) Section 172(b)(1) is amended by striking (6) The table of sections for part III of sub- ceeding taxable year after the loss year (within chapter O of chapter 1 is amended by striking subparagraphs (B) through (F) and inserting the meaning of paragraph (2)) shall be increased the following: the item relating to section 1031 and inserting by an amount equal to— the following new item: ‘‘(B) ELIGIBLE DISASTER LOSS.— ‘‘(i) the amount of the loss which may be so ‘‘(i) IN GENERAL.—For purposes of subpara- carried over to such succeeding taxable year ‘‘Sec. 1031. Exchange of real property held for graph (A)(i), the term ‘eligible disaster loss’ (determined without regard to this paragraph), productive use or investment.’’. (c) EFFECTIVE DATE.— means— multiplied by (1) IN GENERAL.—Except as otherwise provided ‘‘(I) in the case of a taxpayer which is a small ‘‘(ii) the sum of— business, net operating losses attributable to ‘‘(I) the annual Federal short-term rate (de- in this subsection, the amendments made by this federally declared disasters (as defined by sec- termined under section 1274(d)) for the last section shall apply to exchanges completed after tion 165(i)(5)), and month ending before the beginning of such tax- December 31, 2017. (2) TRANSITION RULE.—The amendments made ‘‘(II) in the case of a taxpayer engaged in the able year, plus trade or business of farming, net operating ‘‘(II) 4 percentage points, and by this section shall not apply to any exchange losses attributable to such federally declared ‘‘(B) the amount of any indefinite net oper- if— disasters. ating loss which is carried to any succeeding (A) the property disposed of by the taxpayer ‘‘(ii) SMALL BUSINESS.—For purposes of this taxable year (after such next succeeding taxable in the exchange is disposed of on or before De- subparagraph, the term ‘small business’ means a year) shall be an amount equal to— cember 31 2017, or corporation or partnership which meets the ‘‘(i) the excess of— (B) the property received by the taxpayer in gross receipts test of section 448(c) (determined ‘‘(I) the amount of the loss carried to the prior the exchange is received on or before December by substituting ‘$5,000,000’ for ‘$25,000,000’ each taxable year (after any increase under this 31, 2017. place it appears therein) for the taxable year in paragraph with respect to such amount), over SEC. 3304. REVISION OF TREATMENT OF CON- which the loss arose (or, in the case of a sole ‘‘(II) the amount by which such loss was re- TRIBUTIONS TO CAPITAL. proprietorship, which would meet such test if duced under paragraph (2) by reason of the tax- (a) INCLUSION OF CONTRIBUTIONS TO CAP- such proprietorship were a corporation). able income for such prior taxable year, multi- ITAL.—Part II of subchapter B of chapter 1 is ‘‘(iii) TRADE OR BUSINESS OF FARMING.—For plied by amended by inserting after section 75 the fol- purposes of this subparagraph, the trade or ‘‘(ii) a percentage equal to 100 percent plus lowing new section: business of farming shall include the trade or the percentage determined under subparagraph ‘‘SEC. 76. CONTRIBUTIONS TO CAPITAL. business of— (A)(ii) with respect to such succeeding taxable ‘‘(a) IN GENERAL.—Gross income includes any ‘‘(I) operating a nursery or sod farm, or year. contribution to the capital of any entity.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00069 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9326 CONGRESSIONAL RECORD — HOUSE November 15, 2017

‘‘(b) TREATMENT OF CONTRIBUTIONS IN EX- (and by striking the item relating to such sec- pensation to an employee on the taxpayer’s re- CHANGE FOR STOCK, ETC.— tion in the table of sections for such part). turn of tax under this chapter and as wages to ‘‘(1) IN GENERAL.—In the case of any con- (b) CONFORMING AMENDMENTS.— such employee for purposes of chapter 24 (relat- tribution of money or other property to a cor- (1) Sections 74(d)(2)(B), 86(b)(2)(A), ing to withholding of income tax at source on poration in exchange for stock of such corpora- 137(b)(3)(A), 219(g)(3)(A)(ii), and 246(b)(1) are wages).’’. tion— each amended by striking ‘‘199,’’. (2) EXPENSES INCLUDIBLE IN INCOME OF PER- ‘‘(A) such contribution shall not be treated for (2) Section 170(b)(2)(D), as amended by the SONS WHO ARE NOT EMPLOYEES.—Paragraph (9) purposes of subsection (a) as a contribution to preceding provisions of this Act, is amended by of section 274(e) is amended by striking ‘‘to the the capital of such corporation (and shall not be striking clause (iv), by redesignating clause (v) extent that the expenses’’ and inserting ‘‘to the includible in the gross income of such corpora- as clause (iv), and by inserting ‘‘and’’ at the extent that the expenses do not exceed the tion), and end of clause (iii). amount of the expenses that’’. ‘‘(B) no gain or loss shall be recognized to (3) Section 172(d) is amended by striking para- (c) EXCEPTIONS FOR REIMBURSED EXPENSES.— such corporation upon the issuance of such graph (7). Paragraph (3) of section 274(e) is amended to stock. (4) Section 613(a) is amended by striking ‘‘and read as follows: ‘‘(2) TREATMENT LIMITED TO VALUE OF without the deduction under section 199’’. ‘‘(3) REIMBURSED EXPENSES.— STOCK.—For purposes of this subsection, a con- (5) Section 613A(d)(1) is amended by striking ‘‘(A) IN GENERAL.—Expenses paid or incurred tribution of money or other property to a cor- by the taxpayer, in connection with the per- poration shall be treated as being in exchange subparagraph (B) and by redesignating sub- paragraphs (C), (D), and (E) as subparagraphs formance by him of services for another person for stock of such corporation only to the extent (whether or not such other person is the tax- that the fair market value of such money and (B), (C), and (D), respectively. (6) Section 1402(a) is amended by adding payer’s employer), under a reimbursement or other property does not exceed the fair market other expense allowance arrangement with such value of such stock. ‘‘and’’ at the end of paragraph (15) and by striking paragraph (16). other person, but this paragraph shall apply— ‘‘(3) APPLICATION TO ENTITIES OTHER THAN ‘‘(i) where the services are performed for an (c) EFFECTIVE DATE.—The amendments made CORPORATIONS.—In the case of any entity other employer, only if the employer has not treated than a corporation, rules similar to the rules of by this section shall apply to taxable years be- ginning after December 31, 2017. such expenses in the manner provided in para- paragraphs (1) and (2) shall apply in the case of graph (2), or any contribution of money or other property to SEC. 3307. ENTERTAINMENT, ETC. EXPENSES. ‘‘(ii) where the services are performed for a such entity in exchange for any interest in such (a) DENIAL OF DEDUCTION.—Subsection (a) of person other than an employer, only if the tax- entity. section 274 is amended to read as follows: payer accounts (to the extent provided by sub- ‘‘(c) TREASURY STOCK TREATED AS STOCK.— ‘‘(a) ENTERTAINMENT, AMUSEMENT, RECRE- section (d)) to such person. Any reference in this section to stock shall be ATION, AND OTHER FRINGE BENEFITS .— ‘‘(B) EXCEPTION.—Except as provided by the treated as including a reference to treasury ‘‘(1) IN GENERAL.—No deduction otherwise al- Secretary, subparagraph (A) shall not apply— stock.’’. lowable under this chapter shall be allowed for ‘‘(i) in the case of an arrangement in which (b) BASIS OF CORPORATION IN CONTRIBUTED amounts paid or incurred for any of the fol- the person other than the employer is an entity PROPERTY.— lowing items: described in section 168(h)(2)(A), or (1) CONTRIBUTIONS TO CAPITAL.—Subsection ‘‘(A) ACTIVITY.—With respect to an activity ‘‘(ii) to any other arrangement designated by (c) of section 362 is amended to read as follows: which is of a type generally considered to con- the Secretary as having the effect of avoiding ‘‘(c) CONTRIBUTIONS TO CAPITAL.—If property stitute entertainment, amusement, or recreation. other than money is transferred to a corporation the limitation under subparagraph (A).’’. ‘‘(B) MEMBERSHIP DUES.—With respect to (d) 50 PERCENT LIMITATION ON MEALS AND EN- as a contribution to the capital of such corpora- membership in any club organized for business, TERTAINMENT EXPENSES.—Subsection (n) of sec- tion (within the meaning of section 76) then the pleasure, recreation or other social purposes. tion 274 is amended to read as follows: basis of such property shall be the greater of— ‘‘(n) LIMITATION ON CERTAIN EXPENSES.— ‘‘(1) the basis determined in the hands of the ‘‘(C) AMENITY.—With respect to a de minimis ‘‘(1) IN GENERAL.—The amount allowable as a transferor, increased by the amount of gain rec- fringe (as defined in section 132(e)(1)) that is deduction under this chapter for any expense ognized to the transferor on such transfer, or primarily personal in nature and involving ‘‘(2) the amount included in gross income by property or services that are not directly related for food or beverages (pursuant to subsection such corporation under section 76 with respect to the taxpayer’s trade or business. (e)(1)) or business meals (pursuant to subsection to such contribution.’’. ‘‘(D) FACILITY.—With respect to a facility or (k)(1)) shall not exceed 50 percent of the amount (2) CONTRIBUTIONS IN EXCHANGE FOR STOCK.— portion thereof used in connection with an ac- of such expense or item which would (but for Paragraph (2) of section 362(a) is amended by tivity referred to in subparagraph (A), member- this paragraph) be allowable as a deduction striking ‘‘contribution to capital’’ and inserting ship dues or similar amounts referred to in sub- under this chapter. ‘‘contribution in exchange for stock of such cor- paragraph (B), or an amenity referred to in sub- ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not poration (determined under rules similar to the paragraph (C). apply to any expense if— rules of paragraphs (2) and (3) of section ‘‘(E) QUALIFIED TRANSPORTATION FRINGE AND ‘‘(A) such expense is described in paragraph 76(b))’’. PARKING FACILITY.—Which is a qualified trans- (2), (3), (6), (7), or (8) of subsection (e), (c) CONFORMING AMENDMENTS.— portation fringe (as defined in section 132(f)) or ‘‘(B) in the case of an expense for food or bev- (1) Section 108(e) is amended by striking para- which is a parking facility used in connection erages, such expense is excludable from the graph (6). with qualified parking (as defined in section gross income of the recipient under section 132 (2) Part III of subchapter B of chapter 1 is 132(f)(5)(C)). by reason of subsection (e) thereof (relating to de minimis fringes) or under section 119 (relating amended by striking section 118 (and by striking ‘‘(F) ON-PREMISES ATHLETIC FACILITY.—Which the item relating to such section in the table of is an on-premises athletic facility as defined in to meals and lodging furnished for convenience sections for such part). section 132(j)(4)(B). of employer), or (3) The table of sections for part II of sub- ‘‘(C) in the case of an employer who pays or ‘‘(2) SPECIAL RULES.—For purposes of apply- reimburses moving expenses of an employee, chapter B of chapter 1 is amended by inserting ing paragraph (1), an activity described in sec- after the item relating to section 75 the following such expenses are includible in the income of tion 212 shall be treated as a trade or business. new item: the employee under section 82. ‘‘(3) REGULATIONS.—Under the regulations ‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT ‘‘Sec. 76. Contributions to capital.’’. prescribed to carry out this section, the Sec- TO FEDERAL HOURS OF SERVICE.—In the case of (d) EFFECTIVE DATE.—The amendments made retary shall include regulations— any expenses for food or beverages consumed by this section shall apply to contributions ‘‘(A) defining entertainment, amenities, recre- made, and transactions entered into, after the while away from home (within the meaning of ation, amusement, and facilities for purposes of date of the enactment of this Act. section 162(a)(2)) by an individual during, or in- this subsection, cident to, the period of duty subject to the hours SEC. 3305. REPEAL OF DEDUCTION FOR LOCAL ‘‘(B) providing for the appropriate allocation LOBBYING EXPENSES. of service limitations of the Department of of depreciation and other costs with respect to (a) IN GENERAL.—Section 162(e) is amended by Transportation, paragraph (1) shall be applied facilities used for parking or for on-premises striking paragraphs (2) and (7) and by redesig- by substituting ‘80 percent’ for ‘50 percent’.’’. athletic facilities, and nating paragraphs (3), (4), (5), (6), and (8) as (e) CONFORMING AMENDMENTS.— paragraphs (2), (3), (4), (5), and (6), respec- ‘‘(C) specifying arrangements a primary pur- (1) Section 274(d) is amended— tively. pose of which is the avoidance of this sub- (A) by striking paragraph (2) and redesig- (b) CONFORMING AMENDMENT.—Section section.’’. nating paragraphs (3) and (4) as paragraphs (2) 6033(e)(1)(B)(ii) is amended by striking ‘‘section (b) EXCEPTION FOR CERTAIN EXPENSES IN- and (3), respectively, and 162(e)(5)(B)(ii)’’ and inserting ‘‘section CLUDIBLE IN INCOME OF RECIPIENT.— (B) in the flush material following paragraph 162(e)(4)(B)(ii)’’. (1) EXPENSES TREATED AS COMPENSATION.— (3) (as so redesignated)— (c) EFFECTIVE DATE.—The amendments made Paragraph (2) of section 274(e) is amended to (i) by striking ‘‘, entertainment, amusement, by this section shall apply to amounts paid or read as follows: recreation, or’’ in item (B), and incurred after December 31, 2017. ‘‘(2) EXPENSES TREATED AS COMPENSATION.— (ii) by striking ‘‘(D) the business relationship SEC. 3306. REPEAL OF DEDUCTION FOR INCOME Expenses for goods, services, and facilities, to to the taxpayer of persons entertained, using ATTRIBUTABLE TO DOMESTIC PRO- the extent that the expenses do not exceed the the facility or property, or receiving the gift’’ DUCTION ACTIVITIES. amount of the expenses which are treated by the and inserting ‘‘(D) the business relationship to (a) IN GENERAL.—Part VI of subchapter B of taxpayer, with respect to the recipient of the en- the taxpayer of the person receiving the ben- chapter 1 is amended by striking section 199 tertainment, amusement, or recreation, as com- efit’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00070 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9327 (2) Section 274(e) is amended by striking para- Reform and Consumer Protection Act (12 U.S.C. SEC. 3314. RECHARACTERIZATION OF CERTAIN graph (4) and redesignating paragraphs (5), (6), 5365). GAINS IN THE CASE OF PARTNER- (7), (8), and (9) as paragraphs (4), (5), (6), (7), ‘‘(6) AGGREGATION RULE.— SHIP PROFITS INTERESTS HELD IN CONNECTION WITH PERFORMANCE and (8), respectively. ‘‘(A) IN GENERAL.—Members of an expanded OF INVESTMENT SERVICES. (3) Section 274(k)(2)(A) is amended by striking affiliated group shall be treated as a single tax- (a) IN GENERAL.—Part IV of subchapter O of ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), (7), or payer for purposes of applying this subsection. chapter 1 is amended— ‘‘(B) EXPANDED AFFILIATED GROUP.—For pur- (8)’’. (1) by redesignating section 1061 as section (4) Section 274 is amended by striking sub- poses of this paragraph, the term ‘expanded af- 1062, and section (l). filiated group’ means an affiliated group as de- (2) by inserting after section 1060 the fol- (5) Section 274(m)(1)(B)(ii) is amended by fined in section 1504(a), determined— lowing new section: striking ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), ‘‘(i) by substituting ‘more than 50 percent’ for (7), or (8)’’. ‘at least 80 percent’ each place it appears, and ‘‘SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNECTION WITH PERFORMANCE (f) EFFECTIVE DATE.—The amendments made ‘‘(ii) without regard to paragraphs (2) and (3) OF SERVICES. of section 1504(b). by this section shall apply to amounts paid or ‘‘(a) IN GENERAL.—If one or more applicable incurred after December 31, 2017. A partnership or any other entity (other than a partnership interests are held by a taxpayer at SEC. 3308. UNRELATED BUSINESS TAXABLE IN- corporation) shall be treated as a member of an any time during the taxable year, the excess (if COME INCREASED BY AMOUNT OF expanded affiliated group if such entity is con- any) of— CERTAIN FRINGE BENEFIT EX- trolled (within the meaning of section 954(d)(3)) ‘‘(1) the taxpayer’s net long-term capital gain PENSES FOR WHICH DEDUCTION IS by members of such group (including any entity DISALLOWED. with respect to such interests for such taxable treated as a member of such group by reason of year, over (a) IN GENERAL.—Section 512(a) is amended by this sentence).’’. adding at the end the following new paragraph: ‘‘(2) the taxpayer’s net long-term capital gain (b) EFFECTIVE DATE.—The amendments made with respect to such interests for such taxable ‘‘(6) INCREASE IN UNRELATED BUSINESS TAX- by this section shall apply to taxable years be- year computed by applying paragraphs (3) and ABLE INCOME BY DISALLOWED FRINGE.—Unre- ginning after December 31, 2017. (4) of sections 1222 by substituting ‘3 years’ for lated business taxable income of an organization SEC. 3310. REPEAL OF ROLLOVER OF PUBLICLY shall be increased by any amount for which a ‘1 year’, TRADED SECURITIES GAIN INTO shall be treated as short-term capital gain. deduction is not allowable under this chapter by SPECIALIZED SMALL BUSINESS IN- ‘‘(b) SPECIAL RULE.—To the extent provided reason of section 274 and which is paid or in- VESTMENT COMPANIES. by the Secretary, subsection (a) shall not apply curred by such organization for any qualified (a) IN GENERAL.—Part III of subchapter O of to income or gain attributable to any asset not transportation fringe (as defined in section chapter 1 is amended by striking section 1044 held for portfolio investment on behalf of third 132(f)), any parking facility used in connection (and by striking the item relating to such sec- party investors. with qualified parking (as defined in section tion in the table of sections of such part). ‘‘(c) APPLICABLE PARTNERSHIP INTEREST.—For 132(f)(5)(C)), or any on-premises athletic facility (b) CONFORMING AMENDMENTS.—Section purposes of this section— (as defined in section 132(j)(4)(B)). The pre- 1016(a)(23) is amended— ‘‘(1) IN GENERAL.—Except as provided in this ceding sentence shall not apply to the extent the (1) by striking ‘‘1044,’’, and paragraph or paragraph (4), the term ‘applica- (2) by striking ‘‘1044(d),’’. amount paid or incurred is directly connected ble partnership interest’ means any interest in a (c) EFFECTIVE DATE.—The amendments made with an unrelated trade or business which is partnership which, directly or indirectly, is by this section shall apply to sales after Decem- regularly carried on by the organization. The transferred to (or is held by) the taxpayer in ber 31, 2017. Secretary may issue such regulations or other connection with the performance of substantial guidance as may be necessary or appropriate to SEC. 3311. CERTAIN SELF-CREATED PROPERTY services by the taxpayer, or any other related NOT TREATED AS A CAPITAL ASSET. carry out the purposes of this paragraph, in- person, in any applicable trade or business. The (a) PATENTS, ETC.—Section 1221(a)(3) is cluding regulations or other guidance providing previous sentence shall not apply to an interest amended by inserting ‘‘a patent, invention, for the appropriate allocation of depreciation held by a person who is employed by another model or design (whether or not patented), a se- and other costs with respect to facilities used for entity that is conducting a trade or business cret formula or process,’’ before ‘‘a copyright’’. parking or for on-premises athletic facilities. (other than an applicable trade or business) and ’’. (b) CONFORMING AMENDMENT.—Section only provides services to such other entity. (b) EFFECTIVE DATE.—The amendment made 1231(b)(1)(C) is amended by inserting ‘‘a patent, ‘‘(2) APPLICABLE TRADE OR BUSINESS.—The invention, model or design (whether or not pat- by this section shall apply to amounts paid or term ‘applicable trade or business’ means any ented), a secret formula or process,’’ before ‘‘a incurred after December 31, 2017. activity conducted on a regular, continuous, copyright’’. SEC. 3309. LIMITATION ON DEDUCTION FOR FDIC and substantial basis which, regardless of (c) EFFECTIVE DATE.—The amendments made PREMIUMS. whether the activity is conducted in one or more by this section shall apply to dispositions after (a) IN GENERAL.—Section 162 is amended by entities, consists, in whole or in part, of— December 31, 2017. redesignating subsection (q) as subsection (r) ‘‘(A) raising or returning capital, and and by inserting after subsection (p) the fol- SEC. 3312. REPEAL OF SPECIAL RULE FOR SALE ‘‘(B) either— lowing new subsection: OR EXCHANGE OF PATENTS. ‘‘(i) investing in (or disposing of) specified as- ‘‘(q) DISALLOWANCE OF FDIC PREMIUMS PAID (a) IN GENERAL.—Part IV of subchapter P of sets (or identifying specified assets for such in- BY CERTAIN LARGE FINANCIAL INSTITUTIONS.— chapter 1 is amended by striking section 1235 vesting or disposition), or ‘‘(1) IN GENERAL.—No deduction shall be al- (and by striking the item relating to such sec- ‘‘(ii) developing specified assets. lowed for the applicable percentage of any tion in the table of sections of such part). ‘‘(3) SPECIFIED ASSET.—The term ‘specified FDIC premium paid or incurred by the tax- (b) CONFORMING AMENDMENTS.— asset’ means securities (as defined in section payer. (1) Section 483(d) is amended by striking para- 475(c)(2) without regard to the last sentence ‘‘(2) EXCEPTION FOR SMALL INSTITUTIONS.— graph (4). thereof), commodities (as defined in section Paragraph (1) shall not apply to any taxpayer (2) Section 901(l)(5) is amended by striking 475(e)(2)), real estate held for rental or invest- for any taxable year if the total consolidated as- ‘‘without regard to section 1235 or any similar ment, cash or cash equivalents, options or deriv- sets of such taxpayer (determined as of the close rule’’ and inserting ‘‘without regard to any pro- ative contracts with respect to any of the fore- of such taxable year) do not exceed vision which treats a disposition as a sale or ex- going, and an interest in a partnership to the $10,000,000,000. change of a capital asset held for more than 1 extent of the partnership’s proportionate inter- ‘‘(3) APPLICABLE PERCENTAGE.—For purposes year or any similar provision’’. est in any of the foregoing. of this subsection, the term ‘applicable percent- (3) Section 1274(c)(3) is amended by striking ‘‘(4) EXCEPTIONS.—The term ‘applicable part- age’ means, with respect to any taxpayer for subparagraph (E) and redesignating subpara- nership interest’ shall not include— any taxable year, the ratio (expressed as a per- graph (F) as subparagraph (E). ‘‘(A) any interest in a partnership directly or centage but not greater than 100 percent) (c) EFFECTIVE DATE.—The amendments made indirectly held by a corporation, or which— by this section shall apply to dispositions after ‘‘(B) any capital interest in the partnership ‘‘(A) the excess of— December 31, 2017. which provides the taxpayer with a right to ‘‘(i) the total consolidated assets of such tax- SEC. 3313. REPEAL OF TECHNICAL TERMINATION share in partnership capital commensurate payer (determined as of the close of such taxable OF PARTNERSHIPS. with— year), over (a) IN GENERAL.—Paragraph (1) of section ‘‘(i) the amount of capital contributed (deter- ‘‘(ii) $10,000,000,000, bears to 708(b) is amended— mined at the time of receipt of such partnership ‘‘(B) $40,000,000,000. (1) by striking ‘‘, or’’ at the end of subpara- interest), or ‘‘(4) FDIC PREMIUMS.—For purposes of this graph (A) and all that follows and inserting a ‘‘(ii) the value of such interest subject to tax subsection, the term ‘FDIC premium’ means any period, and under section 83 upon the receipt or vesting of assessment imposed under section 7(b) of the (2) by striking ‘‘only if—’’ and all that follows such interest. Federal Deposit Insurance Act (12 U.S.C. through ‘‘no part of any business’’ and insert- ‘‘(5) THIRD PARTY INVESTOR.—The term ‘third 1817(b)). ing the following: ‘‘only if no part of any busi- party investor’ means a person who— ‘‘(5) TOTAL CONSOLIDATED ASSETS.—For pur- ness’’. ‘‘(A) holds an interest in the partnership poses of this subsection, the term ‘total consoli- (b) EFFECTIVE DATE.—The amendments made which does not constitute property held in con- dated assets’ has the meaning given such term by this section shall apply to partnership tax- nection with an applicable trade or business; under section 165 of the Dodd-Frank Wall Street able years beginning after December 31, 2017. and

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‘‘(B) is not (and has not been) actively en- which are paid or incurred by the taxpayer dur- (c) EFFECTIVE DATE.—The amendments made gaged, and is (and was) not related to a person ing such taxable year in connection with the by this section shall apply to amounts paid or so engaged, in (directly or indirectly) providing taxpayer’s trade or business. incurred in taxable years beginning after De- substantial services described in paragraph (1) ‘‘(c) SPECIAL RULES.— cember 31, 2017. for such partnership or any applicable trade or ‘‘(1) LAND AND OTHER PROPERTY.—This sec- SEC. 3402. REPEAL OF EMPLOYER-PROVIDED business. tion shall not apply to any expenditure for the CHILD CARE CREDIT. ‘‘(d) TRANSFER OF APPLICABLE PARTNERSHIP acquisition or improvement of land, or for the (a) IN GENERAL.—Subpart D of part IV of sub- INTEREST TO RELATED PERSON.— acquisition or improvement of property to be chapter A of chapter 1 is amended by striking ‘‘(1) IN GENERAL.—If a taxpayer transfers any used in connection with the research or experi- section 45F (and by striking the item relating to applicable partnership interest, directly or indi- mentation and of a character which is subject to such section in the table of sections for such rectly, to a person related to the taxpayer, the the allowance under section 167 (relating to al- subpart). taxpayer shall include in gross income (as short lowance for depreciation, etc.) or section 611 (re- (b) CONFORMING AMENDMENTS.— term capital gain) the excess (if any) of— lating to allowance for depletion); but for pur- (1) Section 38(b) is amended by striking para- ‘‘(A) so much of the taxpayer’s long-term cap- poses of this section allowances under section graph (15). ital gains with respect to such interest for such 167, and allowances under section 611, shall be (2) Section 1016(a) is amended by striking taxable year attributable to the sale or exchange considered as expenditures. paragraph (28). of any asset held for not more than 3 years as ‘‘(2) EXPLORATION EXPENDITURES.—This sec- (c) EFFECTIVE DATE.— is allocable to such interest, over tion shall not apply to any expenditure paid or (1) IN GENERAL.—Except as otherwise provided ‘‘(B) any amount treated as short term capital incurred for the purpose of ascertaining the ex- in this subsection, the amendments made by this gain under subsection (a) with respect to the istence, location, extent, or quality of any de- section shall apply to taxable years beginning transfer of such interest. posit of ore or other mineral (including oil and after December 31, 2017. ‘‘(2) RELATED PERSON.—For purposes of this gas). (2) BASIS ADJUSTMENTS.—The amendment paragraph, a person is related to the taxpayer ‘‘(3) SOFTWARE DEVELOPMENT.—For purposes made by subsection (b)(2) shall apply to credits if— of this section, any amount paid or incurred in determined for taxable years beginning after De- ‘‘(A) the person is a member of the taxpayer’s connection with the development of any soft- cember 31, 2017. family within the meaning of section 318(a)(1), ware shall be treated as a research or experi- SEC. 3403. REPEAL OF REHABILITATION CREDIT. or mental expenditure. (a) IN GENERAL.—Subpart E of part IV of sub- ‘‘(B) the person performed a service within the ‘‘(d) TREATMENT UPON DISPOSITION, RETIRE- chapter A of chapter 1 is amended by striking current calendar year or the preceding three MENT, OR ABANDONMENT.—If any property with section 47 (and by striking the item relating to calendar years in any applicable trade or busi- respect to which specified research or experi- such section in the table of sections for such ness in which or for which the taxpayer per- mental expenditures are paid or incurred is dis- subpart). formed a service. posed, retired, or abandoned during the period (b) CONFORMING AMENDMENTS.— ‘‘(e) REPORTING.—The Secretary shall require during which such expenditures are allowed as (1) Section 170(f)(14)(A) is amended by insert- such reporting (at the time and in the manner an amortization deduction under this section, ing ‘‘(as in effect before its repeal by the Tax prescribed by the Secretary) as is necessary to no deduction shall be allowed with respect to Cuts and Jobs Act)’’ after ‘‘section 47’’. carry out the purposes of this section. such expenditures on account of such disposi- (2) Section 170(h)(4) is amended— ‘‘(f) REGULATIONS.—The Secretary shall issue tion, retirement, or abandonment and such am- (A) by striking ‘‘(as defined in section such regulations or other guidance as is nec- ortization deduction shall continue with respect 47(c)(3)(B))’’ in subparagraph (C)(ii), and essary or appropriate to carry out the purposes to such expenditures.’’. (B) by adding at the end the following new of this section’’. (b) CLERICAL AMENDMENT.—The table of sec- subparagraph: OORDINATION ITH ECTION tions for part VI of subchapter B of chapter 1 is (b) C W S 83.—Sub- ‘‘(D) REGISTERED HISTORIC DISTRICT.—The section (e) of section 83 is amended by striking amended by striking the item relating to section term ‘registered historic district’ means— ‘‘or’’ at the end of paragraph (4), by striking the 174 and inserting the following new item: ‘‘(i) any district listed in the National Reg- period at the end of paragraph (5) and inserting ‘‘Sec. 174. Amortization of research and experi- ister, and ‘‘, or’’, and by adding at the end the following mental expenditures.’’. ‘‘(ii) any district— new paragraph: (c) EFFECTIVE DATE.—The amendments made ‘‘(I) which is designated under a statute of ‘‘(6) a transfer of an applicable partnership by this section shall apply to amounts paid or the appropriate State or local government, if interest to which section 1061 applies.’’. incurred in taxable years beginning after De- such statute is certified by the Secretary of the (c) CLERICAL AMENDMENT.—The table of sec- cember 31, 2022. Interior to the Secretary as containing criteria tions for part IV of subchapter O of chapter 1 is SEC. 3316. UNIFORM TREATMENT OF EXPENSES which will substantially achieve the purpose of amended by striking the item relating to 1061 IN CONTINGENCY FEE CASES. preserving and rehabilitating buildings of his- and inserting the following new items: (a) IN GENERAL.—Section 162, as amended by toric significance to the district, and ‘‘Sec. 1061. Partnership interests held in con- the preceding provisions of this Act, is amended ‘‘(II) which is certified by the Secretary of the nection with performance of serv- by redesignating subsection (r) as subsection (s) Interior to the Secretary as meeting substan- ices. and by inserting after subsection (q) the fol- tially all of the requirements for the listing of ‘‘Sec. 1062. Cross references.’’. lowing new subsection: districts in the National Register.’’. (d) EFFECTIVE DATE.—The amendments made ‘‘(r) EXPENSES IN CONTINGENCY FEE CASES.— (3) Section 469(i)(3) is amended by striking by this section shall apply to taxable years be- No deduction shall be allowed under subsection subparagraph (B). ginning after December 31, 2017. (a) to a taxpayer for any expense— (4) Section 469(i)(6)(B) is amended— SEC. 3315. AMORTIZATION OF RESEARCH AND EX- ‘‘(1) paid or incurred in the course of the (A) by striking ‘‘in the case of—’’ and all that PERIMENTAL EXPENDITURES. trade or business of practicing law, and follows and inserting ‘‘in the case of any credit (a) IN GENERAL.—Section 174 is amended to ‘‘(2) resulting from a case for which the tax- determined under section 42 for any taxable read as follows: payer is compensated primarily on a contingent year.’’, and ‘‘SEC. 174. AMORTIZATION OF RESEARCH AND EX- basis, (B) by striking ‘‘, REHABILITATION CREDIT,’’ in PERIMENTAL EXPENDITURES. until such time as such contingency is re- the heading thereof. ‘‘(a) IN GENERAL.—In the case of a taxpayer’s solved.’’. (5) Section 469(k)(1) is amended by striking ‘‘, specified research or experimental expenditures (b) EFFECTIVE DATE.—The amendment made or any rehabilitation credit determined under for any taxable year— by this section shall apply to expenses and costs section 47,’’. ‘‘(1) except as provided in paragraph (2), no paid or incurred in taxable years beginning (c) EFFECTIVE DATE.— deduction shall be allowed for such expendi- after the date of the enactment of this Act. (1) IN GENERAL.—Except as provided in para- tures, and Subtitle E—Reform of Business Credits graph (2), the amendments made by this section ‘‘(2) the taxpayer shall— SEC. 3401. REPEAL OF CREDIT FOR CLINICAL shall apply to amounts paid or incurred after ‘‘(A) charge such expenditures to capital ac- TESTING EXPENSES FOR CERTAIN December 31, 2017. count, and DRUGS FOR RARE DISEASES OR CON- (2) TRANSITION RULE.—In the case of qualified ‘‘(B) be allowed an amortization deduction of DITIONS. rehabilitation expenditures (within the meaning such expenditures ratably over the 5-year period (a) IN GENERAL.—Subpart D of part IV of sub- of section 47 of the Internal Revenue Code of (15-year period in the case of any specified re- chapter A of chapter 1 is amended by striking 1986 as in effect before its repeal) with respect to search or experimental expenditures which are section 45C (and by striking the item relating to any building— attributable to foreign research (within the such section in the table of sections for such (A) owned or leased (as permitted by section meaning of section 41(d)(4)(F))) beginning with subpart). 47 of the Internal Revenue Code of 1986 as in ef- the midpoint of the taxable year in which such (b) CONFORMING AMENDMENTS.— fect before its repeal) by the taxpayer at all expenditures are paid or incurred. (1) Section 38(b) is amended by striking para- times after December 31, 2017, and ‘‘(b) SPECIFIED RESEARCH OR EXPERIMENTAL graph (12). (B) with respect to which the 24-month period EXPENDITURES.—For purposes of this section, (2) Section 280C is amended by striking sub- selected by the taxpayer under section the term ‘specified research or experimental ex- section (b). 47(c)(1)(C) of such Code begins not later than penditures’ means, with respect to any taxable (3) Section 6501(m) is amended by striking the end of the 180-day period beginning on the year, research or experimental expenditures ‘‘45C(d)(4),’’. date of the enactment of this Act,

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the amendments made by this section shall poses of section 6053(c)(5), any reference to sec- (g) PHASEOUT OF 30 PERCENT CREDIT RATE apply to such expenditures paid or incurred tion 6053(c)(3)(B) contained therein shall be FOR FUEL CELL AND SMALL WIND ENERGY PROP- after the end of the taxable year in which the treated as including a reference to this para- ERTY.—Section 48(a) is amended by adding at 24-month period referred to in subparagraph (B) graph. the end the following new paragraph: ends. ‘‘(3) FOOD OR BEVERAGE ESTABLISHMENT.—For ‘‘(7) PHASEOUT FOR QUALIFIED FUEL CELL SEC. 3404. REPEAL OF WORK OPPORTUNITY TAX purposes of this subsection, the term ‘food or PROPERTY AND QUALIFIED SMALL WIND ENERGY CREDIT. beverage establishment’ means any trade or PROPERTY.— (a) IN GENERAL.—Subpart F of part IV of sub- business (or portion thereof) which would be a ‘‘(A) IN GENERAL.—In the case of qualified chapter A of chapter 1 is amended by striking large food or beverage establishment (as defined fuel cell property or qualified small wind energy section 51 (and by striking the item relating to in section 6053(c)(4)) if such section were ap- property, the construction of which begins be- such section in the table of sections for such plied without regard to subparagraph (C) there- fore January 1, 2022, the energy percentage de- subpart). of.’’. termined under paragraph (2) shall be equal (b) CLERICAL AMENDMENT.—The heading of (c) EFFECTIVE DATE.—The amendments made to— such subpart F (and the item relating to such by this section shall apply to taxable years be- ‘‘(i) in the case of any property the construc- subpart in the table of subparts for part IV of ginning after December 31, 2017. tion of which begins after December 31, 2019, subchapter A of chapter 1) are each amended by Subtitle F—Energy Credits and before January 1, 2021, 26 percent, and striking ‘‘Rules for Computing Work Oppor- ‘‘(ii) in the case of any property the construc- SEC. 3501. MODIFICATIONS TO CREDIT FOR ELEC- tion of which begins after December 31, 2020, tunity Credit’’ and inserting ‘‘Special Rules’’. TRICITY PRODUCED FROM CERTAIN (c) EFFECTIVE DATE.—The amendments made RENEWABLE RESOURCES. and before January 1, 2022, 22 percent. ‘‘(B) PLACED IN SERVICE DEADLINE.—In the by this section shall apply to amounts paid or (a) TERMINATION OF INFLATION ADJUST- case of any qualified fuel cell property or quali- incurred to individuals who begin work for the MENT.—Section 45(b)(2) is amended— fied small wind energy property, the construc- employer after December 31, 2017. (1) by striking ‘‘The 1.5 cent amount’’ and in- tion of which begins before January 1, 2022, and SEC. 3405. REPEAL OF DEDUCTION FOR CERTAIN serting the following: which is not placed in service before January 1, UNUSED BUSINESS CREDITS. ‘‘(A) IN GENERAL.—The 1.5 cent amount’’, and 2024, the energy percentage determined under (a) IN GENERAL.—Part VI of subchapter B of (2) by adding at the end the following new paragraph (2) shall be equal to 10 percent.’’. chapter 1 is amended by striking section 196 subparagraph: (h) PHASEOUT FOR FIBER-OPTIC SOLAR ENERGY (and by striking the item relating to such sec- ‘‘(B) TERMINATION.—Subparagraph (A) shall PROPERTY.—Subparagraphs (A) and (B) of sec- tion in the table of sections for such part). not apply with respect to any electricity or re- tion 48(a)(6) are each amended by inserting ‘‘or (b) EFFECTIVE DATE.—The amendments made fined coal produced at a facility the construc- (3)(A)(ii)’’ after ‘‘paragraph (3)(A)(i)’’. by this section shall apply to taxable years be- tion of which begins after the date of the enact- (i) TERMINATION OF SOLAR ENERGY PROP- ginning after December 31, 2017. ment of this subparagraph.’’. ERTY.—Section 48(a)(3)(A)(i) is amended by in- (b) SPECIAL RULE FOR DETERMINATION OF BE- SEC. 3406. TERMINATION OF NEW MARKETS TAX serting ‘‘, the construction of which begins be- GINNING OF CONSTRUCTION.—Section 45(e) is CREDIT. fore January 1, 2028, and’’ after ‘‘equipment’’. amended by adding at the end the following (a) IN GENERAL.—Section 45D(f) is amended— (j) TERMINATION OF GEOTHERMAL ENERGY new paragraph: (1) by striking ‘‘2019’’ in paragraph (1)(G) and PROPERTY.—Section 48(a)(3)(A)(iii) is amended ‘‘(12) SPECIAL RULE FOR DETERMINING BEGIN- inserting ‘‘2017’’, and by inserting ‘‘, the construction of which begins NING OF CONSTRUCTION.—For purposes of sub- (2) by striking ‘‘2024’’ in paragraph (3) and before January 1, 2028, and’’ after ‘‘equipment’’. section (d), the construction of any facility, inserting ‘‘2022’’. (k) SPECIAL RULE FOR DETERMINATION OF BE- modification, improvement, addition, or other (b) EFFECTIVE DATE.—The amendments made GINNING OF CONSTRUCTION.—Section 48(c) is by this section shall apply to calendar years be- property shall not be treated as beginning before amended by adding at the end the following ginning after December 31, 2017. any date unless there is a continuous program new paragraph: of construction which begins before such date SEC. 3407. REPEAL OF CREDIT FOR EXPENDI- ‘‘(5) SPECIAL RULE FOR DETERMINING BEGIN- and ends on the date that such property is TURES TO PROVIDE ACCESS TO DIS- NING OF CONSTRUCTION.—The construction of ABLED INDIVIDUALS. placed in service.’’. any facility, modification, improvement, addi- (a) IN GENERAL.—Subpart D of part IV of sub- (c) EFFECTIVE DATES.— tion, or other property shall not be treated as chapter A of chapter 1 is amended by striking (1) TERMINATION OF INFLATION ADJUSTMENT.— beginning before any date unless there is a con- section 44 (and by striking the item relating to The amendments made by subsection (a) shall tinuous program of construction which begins such section in the table of sections for such apply to taxable years ending after the date of before such date and ends on the date that such subpart). the enactment of this Act. property is placed in service.’’. (2) SPECIAL RULE FOR DETERMINATION OF BE- (b) CONFORMING AMENDMENT.—Section 38(b) (l) EFFECTIVE DATE.— is amended by striking paragraph (7). GINNING OF CONSTRUCTION.—The amendment (1) IN GENERAL.—Except as otherwise provided (c) EFFECTIVE DATE.—The amendments made made by subsection (b) shall apply to taxable in this subsection, the amendments made by this by this section shall apply to taxable years be- years beginning before, on, or after the date of section shall apply to periods after December 31, ginning after December 31, 2017. the enactment of this Act. 2016, under rules similar to the rules of section SEC. 3408. MODIFICATION OF CREDIT FOR POR- SEC. 3502. MODIFICATION OF THE ENERGY IN- 48(m) of the Internal Revenue Code of 1986 (as TION OF EMPLOYER SOCIAL SECU- VESTMENT TAX CREDIT. in effect on the day before the date of the enact- RITY TAXES PAID WITH RESPECT TO (a) EXTENSION OF SOLAR ENERGY PROPERTY.— ment of the Revenue Reconciliation Act of 1990). EMPLOYEE TIPS. Section 48(a)(3)(A)(ii) is amended by striking (2) EXTENSION OF COMBINED HEAT AND POWER (a) CREDIT DETERMINED WITH RESPECT TO ‘‘periods ending before January 1, 2017’’ and in- SYSTEM PROPERTY.—The amendment made by MINIMUM WAGE AS IN EFFECT.—Section serting ‘‘property the construction of which be- subsection (d) shall apply to property placed in 45B(b)(1)(B) is amended by striking ‘‘as in effect gins before January 1, 2022’’. service after December 31, 2016. on January 1, 2007, and’’. (b) EXTENSION OF QUALIFIED FUEL CELL (3) PHASEOUTS AND TERMINATIONS.—The (b) INFORMATION RETURN REQUIREMENT.— PROPERTY.—Section 48(c)(1)(D) is amended by amendments made by subsections (g), (h), (i), Section 45B is amended by redesignating sub- striking ‘‘for any period after December 31, and (j) shall take effect on the date of the en- sections (c) and (d) as subsections (d) and (e), 2016’’ and inserting ‘‘the construction of which actment of this Act. respectively, and by inserting after subsection does not begin before January 1, 2022’’. (4) SPECIAL RULE FOR DETERMINATION OF BE- (b) the following new subsection: (c) EXTENSION OF QUALIFIED MICROTURBINE GINNING OF CONSTRUCTION.—The amendment ‘‘(c) INFORMATION RETURN REQUIREMENT.— PROPERTY.—Section 48(c)(2)(D) is amended by made by subsection (k) shall apply to taxable ‘‘(1) IN GENERAL.—No credit shall be deter- striking ‘‘for any period after December 31, years beginning before, on, or after the date of mined under subsection (a) with respect to any 2016’’ and inserting ‘‘the construction of which the enactment of this Act. food or beverage establishment of any taxpayer does not begin before January 1, 2022’’. SEC. 3503. EXTENSION AND PHASEOUT OF RESI- for any taxable year unless such taxpayer has, (d) EXTENSION OF COMBINED HEAT AND POWER DENTIAL ENERGY EFFICIENT PROP- with respect to the calendar year which ends in SYSTEM PROPERTY.—Section 48(c)(3)(A)(iv) is ERTY. or with such taxable year— amended by striking ‘‘which is placed in service (a) EXTENSION.—Section 25D(h) is amended by ‘‘(A) made a report to the Secretary showing before January 1, 2017’’ and inserting ‘‘the con- striking ‘‘December 31, 2016 (December 31, 2021, the information described in section 6053(c)(1) struction of which begins before January 1, in the case of any qualified solar electric prop- with respect to such food or beverage establish- 2022’’. erty expenditures and qualified solar water ment, and (e) EXTENSION OF QUALIFIED SMALL WIND EN- heating property expenditures)’’ and inserting ‘‘(B) furnished written statements to each em- ERGY PROPERTY.—Section 48(c)(4)(C) is amended ‘‘December 31, 2021’’. ployee of such food or beverage establishment by striking ‘‘for any period after December 31, (b) PHASEOUT.— showing the information described in section 2016’’ and inserting ‘‘the construction of which (1) IN GENERAL.—Paragraphs (3), (4), and (5) 6053(c)(2). does not begin before January 1, 2022’’. of section 25D(a) are amended by striking ‘‘30 ‘‘(2) ALLOCATION OF 10 PERCENT OF GROSS RE- (f) EXTENSION OF THERMAL ENERGY PROP- percent’’ each place it appears and inserting CEIPTS.—For purposes of determining the infor- ERTY.—Section 48(a)(3)(A)(vii) is amended by ‘‘the applicable percentage’’. mation referred to in subparagraphs (A) and striking ‘‘periods ending before January 1, 2017’’ (2) CONFORMING AMENDMENT.—Section 25D(g) (B), section 6053(c)(3)(A)(i) shall be applied by and inserting ‘‘property the construction of of such Code is amended by striking ‘‘para- substituting ‘10 percent’ for ‘8 percent’. For pur- which begins before January 1, 2022’’. graphs (1) and (2) of’’.

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(c) EFFECTIVE DATE.—The amendments made all (or any portion specified in such election) of (1) by striking ‘‘which is not a qualified bond by this section shall apply to property placed in such credit, (within the meaning of section 141)’’, and service after December 31, 2016. the eligible project partner specified in such (2) by striking ‘‘WHICH IS NOT A QUALIFIED SEC. 3504. REPEAL OF ENHANCED OIL RECOVERY election (and not the qualified public entity) BOND’’ in the heading thereof. CREDIT. shall be treated as the taxpayer for purposes of (b) CONFORMING AMENDMENTS.— (a) IN GENERAL.—Subpart D of part IV of sub- this title with respect to such credit (or such (1) Subpart A of part IV of subchapter B of chapter A of chapter 1 is amended by striking portion thereof). chapter 1 is amended by striking sections 142, section 43 (and by striking the item relating to ‘‘(2) DEFINITIONS.—For purposes of this sub- 143, 144, 145, 146, and 147 (and by striking each such section in the table of sections for such section— of the items relating to such sections in the table subpart). ‘‘(A) QUALIFIED PUBLIC ENTITY.—The term of sections for such subpart). (b) CONFORMING AMENDMENTS.— ‘qualified public entity’ means— (2) Section 25 is amended by adding at the end (1) Section 38(b) is amended by striking para- ‘‘(i) a Federal, State, or local government enti- the following new subsection: graph (6). ty, or any political subdivision, agency, or in- ‘‘(j) COORDINATION WITH REPEAL OF PRIVATE (2) Section 6501(m) is amended by striking strumentality thereof; ACTIVITY BONDS.—Any reference to section 143, ‘‘43,’’. ‘‘(ii) a mutual or cooperative electric company 144, or 146 shall be treated as a reference to such (c) EFFECTIVE DATE.—The amendments made described in section 501(c)(12) or section section as in effect before its repeal by the Tax by this section shall apply to taxable years be- 1381(a)(2); or Cuts and Jobs Act.’’. ginning after December 31, 2017. ‘‘(iii) a not-for-profit electric utility which has (3) Section 26(b)(2) is amended by striking sub- SEC. 3505. REPEAL OF CREDIT FOR PRODUCING or had received a loan or loan guarantee under paragraph (D). OIL AND GAS FROM MARGINAL the Rural Electrification Act of 1936. (4) Section 141(b) is amended by striking para- WELLS. ‘‘(B) ELIGIBLE PROJECT PARTNER.—The term graphs (5) and (9). (a) IN GENERAL.—Subpart D of part IV of sub- ‘eligible project partner’ means— (5) Section 141(d) is amended by striking para- chapter A of chapter 1 is amended by striking ‘‘(i) any person responsible for, or partici- graph (5). (6) Section 141 is amended by striking sub- section 45I (and by striking the item relating to pating in, the design or construction of the ad- section (e). such section in the table of sections for such vanced nuclear power facility to which the cred- (7) Section 148(f)(4) is amended— subpart). it under subsection (a) relates; (A) by striking ‘‘(determined in accordance (b) CONFORMING AMENDMENT.—Section 38(b) ‘‘(ii) any person who participates in the provi- with section 147(b)(2)(A))’’ in the flush matter is amended by striking paragraph (19). sion of the nuclear steam supply system to the following subparagraph (A)(ii) and inserting (c) EFFECTIVE DATE.—The amendments made advanced nuclear power facility to which the ‘‘(determined by taking into account the respec- by this section shall apply to taxable years be- credit under subsection (a) relates; tive issue prices of the bonds issued as part of ginning after December 31, 2017. ‘‘(iii) any person who participates in the pro- SEC. 3506. MODIFICATIONS OF CREDIT FOR PRO- the issue)’’, and vision of nuclear fuel to the advanced nuclear (B) by striking the last sentence of subpara- DUCTION FROM ADVANCED NU- power facility to which the credit under sub- CLEAR POWER FACILITIES. graph (D)(v). section (a) relates; or (a) TREATMENT OF UNUTILIZED LIMITATION (8) Clause (iv) of section 148(f)(4)(C) is amend- ‘‘(iv) any person who has an ownership inter- AMOUNTS.—Section 45J(b) is amended— ed to read as follows: est in such facility. (1) in paragraph (4), by inserting ‘‘or any ‘‘(iv) CONSTRUCTION ISSUE.—For purposes of ‘‘(3) SPECIAL RULES.— amendment to’’ after ‘‘enactment of’’; and this subparagraph— (2) by adding at the end the following new ‘‘(A) APPLICATION TO PARTNERSHIPS.—In the ‘‘(I) IN GENERAL.—The term ‘construction paragraph: case of a credit under subsection (a) which is issue’ means any issue if at least 75 percent of ‘‘(5) ALLOCATION OF UNUTILIZED LIMITA- determined at the partnership level— the available construction proceeds of such issue TION.— ‘‘(i) for purposes of paragraph (1)(A), a quali- are to be used for construction expenditures. ‘‘(A) IN GENERAL.—Any unutilized national fied public entity shall be treated as the tax- ‘‘(II) CONSTRUCTION.—The term ‘construction’ megawatt capacity limitation shall be allocated payer with respect to such entity’s distributive includes reconstruction and rehabilitation.’’. by the Secretary under paragraph (3) as rapidly share of such credit; and (9) Section 149(b)(3) is amended by striking as is practicable after December 31, 2020— ‘‘(ii) the term ‘eligible project partner’ shall subparagraph (C). ‘‘(i) first to facilities placed in service on or include any partner of the partnership. (10) Section 149(e)(2) is amended— before such date to the extent that such facili- ‘‘(B) TAXABLE YEAR IN WHICH CREDIT TAKEN (A) by striking subparagraphs (C), (D), and ties did not receive an allocation equal to their INTO ACCOUNT.—In the case of any credit (or (F) and by redesignating subparagraphs (E) and full nameplate capacity; and portion thereof) with respect to which an elec- (G) as subparagraphs (C) and (D), respectively, ‘‘(ii) then to facilities placed in service after tion is made under paragraph (1), such credit and such date in the order in which such facilities shall be taken into account in the first taxable (B) by striking the second sentence. are placed in service. year of the eligible project partner ending with, (11) Section 149(f)(6) is amended— ‘‘(B) UNUTILIZED NATIONAL MEGAWATT CAPAC- or after, the qualified public entity’s taxable (A) by striking subparagraph (B), and ITY LIMITATION.—The term ‘unutilized national year with respect to which the credit was deter- (B) by striking ‘‘For purposes of this sub- megawatt capacity limitation’ means the excess mined. section’’ and all that follows through ‘‘The (if any) of— ‘‘(C) TREATMENT OF TRANSFER UNDER PRIVATE term’’ and inserting the following: ‘‘For pur- ‘‘(i) 6,000 megawatts, over USE RULES.—For purposes of section 141(b)(1), poses of this subsection, the term’’. ‘‘(ii) the aggregate amount of national mega- any benefit derived by an eligible project part- (12) Section 150(e)(3) is amended to read as watt capacity limitation allocated by the Sec- ner in connection with an election under this follows: retary before January 1, 2021, reduced by any subsection shall not be taken into account as a ‘‘(3) PUBLIC APPROVAL REQUIREMENT.—A bond amount of such limitation which was allocated private business use.’’. shall not be treated as part of an issue which to a facility which was not placed in service be- (2) SPECIAL RULE FOR PROCEEDS OF TRANSFERS meets the requirements of paragraph (1) unless fore such date. FOR MUTUAL OR COOPERATIVE ELECTRIC COMPA- such bond satisfies the requirements of section ‘‘(C) COORDINATION WITH OTHER PROVI- NIES.—Section 501(c)(12) of such Code is amend- 147(f)(2) (as in effect before its repeal by the Tax SIONS.—In the case of any unutilized national ed by adding at the end the following new sub- Cuts and Jobs Act).’’. megawatt capacity limitation allocated by the paragraph: (13) Section 269A(b)(3) is amended by striking Secretary pursuant to this paragraph— ‘‘(I) In the case of a mutual or cooperative ‘‘144(a)(3)’’ and inserting ‘‘414(n)(6)(A)’’. ‘‘(i) such allocation shall be treated for pur- electric company described in this paragraph or (14) Section 414(m)(5) is amended by striking poses of this section in the same manner as an an organization described in section 1381(a)(2), ‘‘section 144(a)(3)’’ and inserting ‘‘subsection allocation of national megawatt capacity limita- income received or accrued in connection with (n)(6)(A)’’. tion; and an election under section 45J(e)(1) shall be treat- (15) Section 414(n)(6)(A) is amended to read as ‘‘(ii) subsection (d)(1)(B) shall not apply to ed as an amount collected from members for the follows: any facility which receives such allocation.’’. sole purpose of meeting losses and expenses.’’. ‘‘(A) RELATED PERSONS.—A person is a related (b) TRANSFER OF CREDIT BY CERTAIN PUBLIC (c) EFFECTIVE DATES.— person to another person if— ENTITIES.— (1) TREATMENT OF UNUTILIZED LIMITATION ‘‘(i) the relationship between such persons (1) IN GENERAL.—Section 45J is amended— AMOUNTS.—The amendment made by subsection would result in a disallowance of losses under (A) by redesignating subsection (e) as sub- (a) shall take effect on the date of the enact- section 267 or 707(b), or section (f); and ment of this Act. ‘‘(ii) such persons are members of the same controlled group of corporations (as defined in (B) by inserting after subsection (d) the fol- (2) TRANSFER OF CREDIT BY CERTAIN PUBLIC section 1563(a), except that ‘more than 50 per- lowing new subsection: ENTITIES.—The amendments made by subsection ‘‘(e) TRANSFER OF CREDIT BY CERTAIN PUBLIC (b) shall apply to taxable years beginning after cent’ shall be substituted for ‘at least 80 percent’ ENTITIES.— the date of the enactment of this Act. each place it appears therein).’’. ‘‘(1) IN GENERAL.—If, with respect to a credit (16) Section 6045(e)(4)(B) is amended by insert- under subsection (a) for any taxable year— Subtitle G—Bond Reforms ing ‘‘(as in effect before its repeal by the Tax ‘‘(A) the taxpayer would be a qualified public SEC. 3601. TERMINATION OF PRIVATE ACTIVITY Cuts and Jobs Act)’’ after ‘‘section 143(m)(3)’’. entity; and BONDS. (17) Section 6654(f)(1) is amended by inserting ‘‘(B) such entity elects the application of this (a) IN GENERAL.—Paragraph (1) of section ‘‘(as in effect before its repeal by the Tax Cuts paragraph for such taxable year with respect to 103(b) is amended— and Jobs Act)’’ after ‘‘section 143(m)’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00074 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9331 (18) Section 7871(c) is amended— the item relating to such section in the table of SEC. 3704. ADJUSTMENT FOR CHANGE IN COM- (A) by striking paragraphs (2) and (3), and sections for such part). PUTING RESERVES. (B) by striking ‘‘TAX-EXEMPT BONDS.—’’ and (3) Section 381 is amended by striking sub- (a) IN GENERAL.—Paragraph (1) of section all that follows through ‘‘Subsection (a) of sec- section (d). 807(f) is amended to read as follows: tion 103’’ and inserting the following: ‘‘TAX-EX- (4) Section 805(a)(4)(B)(ii) is amended to read ‘‘(1) TREATMENT AS CHANGE IN METHOD OF AC- EMPT BONDS.—Subsection (a) of section 103’’. as follows: COUNTING.—If the basis for determining any (c) EFFECTIVE DATE.—The amendments made ‘‘(ii) the deduction allowed under section item referred to in subsection (c) as of the close by this section shall apply to bonds issued after 172,’’. of any taxable year differs from the basis for December 31, 2017. (5) Section 805(a) is amended by striking para- such determination as of the close of the pre- SEC. 3602. REPEAL OF ADVANCE REFUNDING graph (5). ceding taxable year, then so much of the dif- BONDS. (6) Section 953(b)(1)(B) is amended to read as ference between— ‘‘(A) the amount of the item at the close of the (a) IN GENERAL.—Paragraph (1) of section follows: 149(d) is amended by striking ‘‘as part of an taxable year, computed on the new basis, and ‘‘(B) So much of section 805(a)(8) as relates to ‘‘(B) the amount of the item at the close of the issue described in paragraph (2), (3), or (4).’’ the deduction allowed under section 172.’’. taxable year, computed on the old basis, and inserting ‘‘to advance refund another (c) EFFECTIVE DATE.—The amendments made as is attributable to contracts issued before the bond.’’. by this section shall apply to losses arising in taxable year shall be taken into account under (b) CONFORMING AMENDMENTS.— taxable years beginning after December 31, 2017. section 481 as adjustments attributable to a (1) Section 149(d) is amended by striking para- SEC. 3702. REPEAL OF SMALL LIFE INSURANCE change in method of accounting initiated by the graphs (2), (3), (4), and (6) and by redesignating COMPANY DEDUCTION. taxpayer and made with the consent of the Sec- paragraphs (5) and (7) as paragraphs (2) and (a) IN GENERAL.—Part I of subchapter L of retary.’’. (3). chapter 1 is amended by striking section 806 (b) EFFECTIVE DATE.—The amendments made (2) Section 148(f)(4)(C) is amended by striking (and by striking the item relating to such sec- by this section shall apply to taxable years be- clause (xiv) and by redesignating clauses (xv) to tion in the table of sections for such part). ginning after December 31, 2017. (xvii) as clauses (xiv) to (xvi). (b) CONFORMING AMENDMENTS.— SEC. 3705. REPEAL OF SPECIAL RULE FOR DIS- (c) EFFECTIVE DATE.—The amendments made (1) Section 453B(e) is amended— TRIBUTIONS TO SHAREHOLDERS by this section shall apply to advance refunding FROM PRE-1984 POLICYHOLDERS bonds issued after December 31, 2017. (A) by striking ‘‘(as defined in section 806(b)(3))’’ in paragraph (2)(B), and SURPLUS ACCOUNT. SEC. 3603. REPEAL OF TAX CREDIT BONDS. (B) by adding at the end the following new (a) IN GENERAL.—Subpart D of part I of sub- (a) IN GENERAL.—Part IV of subchapter A of paragraph: chapter L is amended by striking section 815 chapter 1 is amended by striking subparts H, I, ‘‘(3) NONINSURANCE BUSINESS.— (and by striking the item relating to such sec- and J (and by striking the items relating to such ‘‘(A) IN GENERAL.—For purposes of this sub- tion in the table of sections for such subpart). (b) CONFORMING AMENDMENT.—Section 801 is subparts in the table of subparts for such part). section, the term ‘noninsurance business’ means (b) PAYMENTS TO ISSUERS.—Subchapter B of amended by striking subsection (c). any activity which is not an insurance business. chapter 65 is amended by striking section 6431 (c) EFFECTIVE DATE.—The amendments made ‘‘(B) CERTAIN ACTIVITIES TREATED AS INSUR- (and by striking the item relating to such sec- by this section shall apply to taxable years be- ANCE BUSINESSES.—For purposes of subpara- tion in the table of sections for such sub- ginning after December 31, 2017. graph (A), any activity which is not an insur- chapter). (d) PHASED INCLUSION OF REMAINING BALANCE ance business shall be treated as an insurance (c) CONFORMING AMENDMENTS.— OF POLICYHOLDERS SURPLUS ACCOUNTS.—In the (1) Part IV of subchapter U of chapter 1 is business if— case of any stock life insurance company which amended by striking section 1397E (and by strik- ‘‘(i) it is of a type traditionally carried on by has a balance (determined as of the close of ing the item relating to such section in the table life insurance companies for investment pur- such company’s last taxable year beginning be- of sections for such part). poses, but only if the carrying on of such activ- fore January 1, 2018) in an existing policy- (2) Section 54(l)(3)(B) is amended by inserting ity (other than in the case of real estate) does holders surplus account (as defined in section ‘‘(as in effect before its repeal by the Tax Cuts not constitute the active conduct of a trade or 815 of the Internal Revenue Code of 1986, as in and Jobs Act)’’ after ‘‘section 1397E(I)’’. business, or effect before its repeal), the tax imposed by sec- (3) Section 6211(b)(4)(A) is amended by strik- ‘‘(ii) it involves the performance of adminis- tion 801 of such Code for the first 8 taxable ing ‘‘, and 6431’’ and inserting ‘‘and’’ before trative services in connection with plans pro- years beginning after December 31, 2017, shall be ‘‘36B’’. viding life insurance, pension, or accident and the amount which would be imposed by such (4) Section 6401(b)(1) is amended by striking health benefits.’’. section for such year on the sum of— ‘‘G, H, I, and J’’ and inserting ‘‘and G’’. (2) Section 465(c)(7)(D)(v)(II) is amended by (1) life insurance company taxable income for (d) EFFECTIVE DATE.—The amendments made striking ‘‘section 806(b)(3)’’ and inserting ‘‘sec- such year (within the meaning of such section by this section shall apply to bonds issued after tion 453B(e)(3)’’. 801 but not less than zero), plus December 31, 2017. (3) Section 801(a)(2) is amended by striking (2) 1⁄8 of such balance. SEC. 3604. NO TAX EXEMPT BONDS FOR PROFES- subparagraph (C). SEC. 3706. MODIFICATION OF PRORATION RULES SIONAL STADIUMS. (4) Section 804 is amended by striking FOR PROPERTY AND CASUALTY IN- (a) IN GENERAL.—Section 103(b), as amended ‘‘means—’’ and all that follows and inserting SURANCE COMPANIES. by this Act, is further amended by adding at the ‘‘means the general deductions provided in sec- (a) IN GENERAL.—Section 832(b)(5)(B) is end the following new paragraph: tion 805.’’. amended by striking ‘‘15 percent’’ and inserting ‘‘(4) PROFESSIONAL STADIUM BOND.—Any pro- (5) Section 805(a)(4)(B), as amended by section ‘‘26.25 percent’’. fessional stadium bond.’’. 3701, is amended by striking clause (i) and by re- (b) EFFECTIVE DATE.—The amendment made (b) PROFESSIONAL STADIUM BOND DEFINED.— designating clauses (ii), (iii), and (iv) as clauses by this section shall apply to taxable years be- Subsection (c) of section 103 is amended by add- (i), (ii), and (iii), respectively. ginning after December 31, 2017. ing at the end the following new paragraph: (6) Section 805(b)(2)(A) is amended by striking SEC. 3707. MODIFICATION OF DISCOUNTING ‘‘(3) PROFESSIONAL STADIUM BOND.—The term clause (iii) and by redesignating clauses (iv) and RULES FOR PROPERTY AND CAS- ‘professional stadium bond’ means any bond (v) as clauses (iii) and (iv), respectively. UALTY INSURANCE COMPANIES. issued as part of an issue any proceeds of which (7) Section 842(c) is amended by striking para- (a) MODIFICATION OF RATE OF INTEREST USED are used to finance or refinance capital expendi- graph (1) and by redesignating paragraphs (2) TO DISCOUNT UNPAID LOSSES.—Paragraph (2) of tures allocable to a facility (or appurtenant real and (3) as paragraphs (1) and (2), respectively. section 846(c) is amended to read as follows: ‘‘(2) DETERMINATION OF ANNUAL RATE.—The property) which, during at least 5 days during (8) Section 953(b)(1), as amended by section annual rate determined by the Secretary under any calendar year, is used as a stadium or 3701, is amended by striking subparagraph (A) this paragraph for any calendar year shall be a arena for professional sports exhibitions, games, and by redesignating subparagraphs (B) and (C) rate determined on the basis of the corporate or training.’’. as subparagraphs (A) and (B), respectively. bond yield curve (as defined in section (c) EFFECTIVE DATE.—The amendments made (c) EFFECTIVE DATE.—The amendments made 430(h)(2)(D)(i)).’’. by this section shall apply to bonds issued after by this section shall apply to taxable years be- (b) MODIFICATION OF COMPUTATIONAL RULES November 2, 2017. ginning after December 31, 2017. FOR LOSS PAYMENT PATTERNS.—Section Subtitle H—Insurance SEC. 3703. SURTAX ON LIFE INSURANCE COM- 846(d)(3) is amended by striking subparagraphs SEC. 3701. NET OPERATING LOSSES OF LIFE IN- PANY TAXABLE INCOME. (B) through (G) and inserting the following new SURANCE COMPANIES. (a) IN GENERAL.—Section 801(a)(1) is amend- subparagraphs: (a) IN GENERAL.—Section 805(b) is amended by ed— ‘‘(B) TREATMENT OF CERTAIN LOSSES.—Losses striking paragraph (4) and by redesignating (1) by striking ‘‘consist of a tax’’ and insert which would have been treated as paid in the paragraph (5) as paragraph (4). ‘‘consist of the sum of— last year of the period applicable under sub- (b) CONFORMING AMENDMENTS.— ‘‘(A) a tax’’, and paragraph (A)(i) or (A)(ii) shall be treated as (1) Part I of subchapter L of chapter 1 is (2) by striking the period at the end and in- paid in the following manner: amended by striking section 810 (and by striking serting ‘‘, and’’, and ‘‘(i) 3-YEAR LOSS PAYMENT PATTERN.— the item relating to such section in the table of (3) by adding at the end the following new ‘‘(I) IN GENERAL.—The period taken into ac- sections for such part). subparagraph: count under subparagraph (A)(i) shall be ex- (2) Part III of subchapter L of chapter 1 is ‘‘(B) a tax equal to 8 percent of the life insur- tended to the extent required under subclause amended by striking section 844 (and by striking ance company taxable income.’’. (II).

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‘‘(II) COMPUTATION OF EXTENSION.—The (B) Paragraphs (5)(G) and (6)(G) of section ‘‘(2) COVERED EMPLOYEE.—For purposes of amount of losses which would have been treated 162(m) are each amended by striking ‘‘(F) and this section, the term ‘covered employee’ means as paid in the 3d year after the accident year (G)’’ and inserting ‘‘(D) and (E)’’. any employee (including any former employee) shall be treated as paid in such 3d year and (b) EXPANSION OF APPLICABLE EMPLOYER.— of an applicable tax-exempt organization if the each subsequent year in an amount equal to the Section 162(m)(2) is amended to read as follows: employee— average of the losses treated as paid in the 1st ‘‘(2) PUBLICLY HELD CORPORATION.—For pur- ‘‘(A) is one of the 5 highest compensated em- and 2d years after the accident year (or, if less- poses of this subsection, the term ‘publicly held ployees of the organization for the taxable year, er, the portion of the unpaid losses not thereto- corporation’ means any corporation which is an or fore taken into account). To the extent such un- issuer (as defined in section 3 of the Securities ‘‘(B) was a covered employee of the organiza- paid losses have not been treated as paid before Exchange Act of 1934 (15 U.S.C. 78c))— tion (or any predecessor) for any preceding tax- the 18th year after the accident year, they shall ‘‘(A) the securities of which are required to be able year beginning after December 31, 2016. be treated as paid in such 18th year. registered under section 12 of such Act (15 ‘‘(3) REMUNERATION.—For purposes of this ‘‘(ii) 10-YEAR LOSS PAYMENT PATTERN.— U.S.C. 78l), or section, the term ‘remuneration’ means wages ‘‘(I) IN GENERAL.—The period taken into ac- ‘‘(B) that is required to file reports under sec- (as defined in section 3401(a)), except that such count under subparagraph (A)(ii) shall be ex- tion 15(d) of such Act (15 U.S.C. 78o(d)).’’. term shall not include any designated Roth con- tended to the extent required under subclause (c) MODIFICATION OF DEFINITION OF COVERED tribution (as defined in section 402A(c)). (II). EMPLOYEES.—Section 162(m)(3) is amended— ‘‘(4) REMUNERATION FROM RELATED ORGANIZA- ‘‘(II) COMPUTATION OF EXTENSION.—The (1) in subparagraph (A), by striking ‘‘as of the TIONS.— amount of losses which would have been treated close of the taxable year, such employee is the ‘‘(A) IN GENERAL.—Remuneration of a covered as paid in the 10th year after the accident year chief executive officer of the taxpayer or is’’ and employee paid by an applicable tax-exempt or- shall be treated as paid in such 10th year and inserting ‘‘such employee is the principal execu- ganization shall include any remuneration paid each subsequent year in an amount equal to the tive officer or principal financial officer of the with respect to employment of such employee by amount of the average of the losses treated as taxpayer at any time during the taxable year, or any related person or governmental entity. paid in the 7th, 8th, and 9th years after the ac- was’’, ‘‘(B) RELATED ORGANIZATIONS.—A person or cident year (or, if lesser, the portion of the un- (2) in subparagraph (B)— governmental entity shall be treated as related paid losses not theretofore taken into account). (A) by striking ‘‘4’’ and inserting ‘‘3’’, and to an applicable tax-exempt organization if such (B) by striking ‘‘(other than the chief execu- To the extent such unpaid losses have not been person or governmental entity— tive officer)’’ and inserting ‘‘(other than the treated as paid before the 25th year after the ac- ‘‘(i) controls, or is controlled by, the organiza- principal executive officer or principal financial cident year, they shall be treated as paid in tion, officer)’’, and such 25th year.’’. ‘‘(ii) is controlled by one or more persons that (3) by striking ‘‘or’’ at the end of subpara- (c) REPEAL OF HISTORICAL PAYMENT PATTERN control the organization, graph (A), by striking the period at the end of ELECTION.—Section 846 is amended by striking ‘‘(iii) is a supported organization (as defined subparagraph (B) and inserting ‘‘, or’’, and by subsection (e) and by redesignating subsections in section 509(f)(2)) during the taxable year with adding at the end the following: (f) and (g) as subsections (e) and (f), respec- respect to the organization, ‘‘(C) was a covered employee of the taxpayer tively. ‘‘(iv) is a supporting organization described in (or any predecessor) for any preceding taxable (d) EFFECTIVE DATE.—The amendments made section 509(a)(3) during the taxable year with by this section shall apply to taxable years be- year beginning after December 31, 2016. respect to the organization, or Such term shall include any employee who ginning after December 31, 2017. ‘‘(v) in the case of an organization that is a would be described in subparagraph (B) if the (e) TRANSITIONAL RULE.—For the first taxable voluntary employees’ beneficiary association de- reporting described in such subparagraph were year beginning after December 31, 2017— scribed in section 501(a)(9), establishes, main- required as so described.’’. (1) the unpaid losses and the expenses unpaid tains, or makes contributions to such voluntary (d) SPECIAL RULE FOR REMUNERATION PAID TO (as defined in paragraphs (5)(B) and (6) of sec- employees’ beneficiary association. BENEFICIARIES, ETC.—Section 162(m)(4), as tion 832(b) of the Internal Revenue Code of 1986) ‘‘(C) LIABILITY FOR TAX.—In any case in amended by subsection (a), is amended by add- at the end of the preceding taxable year, and which remuneration from more than one em- ing at the end the following new subparagraph: (2) the unpaid losses as defined in sections ployer is taken into account under this para- ‘‘(F) SPECIAL RULE FOR REMUNERATION PAID 807(c)(2) and 805(a)(1) of such Code at the end graph in determining the tax imposed by sub- TO BENEFICIARIES, ETC.—Remuneration shall not of the preceding taxable year, section (a), each such employer shall be liable fail to be applicable employee remuneration shall be determined as if the amendments made for such tax in an amount which bears the same merely because it is includible in the income of, by this section had applied to such unpaid ratio to the total tax determined under sub- or paid to, a person other than the covered em- losses and expenses unpaid in the preceding tax- section (a) with respect to such remuneration ployee, including after the death of the covered able year and by using the interest rate and loss as— employee.’’. payment patterns applicable to accident years ‘‘(i) the amount of remuneration paid by such ending with calendar year 2018, and any adjust- (e) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years be- employer with respect to such employee, bears to ment shall be taken into account ratably in such ‘‘(ii) the amount of remuneration paid by all ginning after December 31, 2017. first taxable year and the 7 succeeding taxable such employers to such employee. SEC. 3802. EXCISE TAX ON EXCESS TAX-EXEMPT years. For subsequent taxable years, such ‘‘(5) EXCESS PARACHUTE PAYMENT.—For pur- amendments shall be applied with respect to ORGANIZATION EXECUTIVE COM- PENSATION. poses determining the tax imposed by subsection such unpaid losses and expenses unpaid by (a) IN GENERAL.—Subchapter D of chapter 42 (a)(2)— using the interest rate and loss payment pat- is amended by adding at the end the following ‘‘(A) IN GENERAL.—The term ‘excess parachute terns applicable to accident years ending with new section: payment’ means an amount equal to the excess calendar year 2018. of any parachute payment over the portion of ‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANI- SEC. 3708. REPEAL OF SPECIAL ESTIMATED TAX ZATION EXECUTIVE COMPENSATION. the base amount allocated to such payment. PAYMENTS. ‘‘(B) PARACHUTE PAYMENT.—The term ‘para- ‘‘(a) TAX IMPOSED.—There is hereby imposed (a) IN GENERAL.—Part III of subchapter L of a tax equal to 20 percent of the sum of— chute payment’ means any payment in the na- chapter 1 is amended by striking section 847 ‘‘(1) so much of the remuneration paid (other ture of compensation to (or for the benefit of) a (and by striking the item relating to such sec- than any excess parachute payment) by an ap- covered employee if— tion in the table of sections for such part). plicable tax-exempt organization for the taxable ‘‘(i) such payment is contingent on such em- (b) EFFECTIVE DATE.—The amendments made year with respect to employment of any covered ployee’s separation from employment with the by this section shall apply to taxable years be- employee in excess of $1,000,000, plus employer, and ginning after December 31, 2017. ‘‘(2) any excess parachute payment paid by ‘‘(ii) the aggregate present value of the pay- Subtitle I—Compensation such an organization to any covered employee. ments in the nature of compensation to (or for SEC. 3801. MODIFICATION OF LIMITATION ON EX- ‘‘(b) LIABILITY FOR TAX.—The employer shall the benefit of) such individual which are con- CESSIVE EMPLOYEE REMUNERA- be liable for the tax imposed under subsection tingent on such separation equals or exceeds an TION. (a). amount equal to 3 times the base amount. (a) REPEAL OF PERFORMANCE-BASED COM- ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For Such term does not include any payment de- PENSATION AND COMMISSION EXCEPTIONS FOR purposes of this section— scribed in section 280G(b)(6) (relating to exemp- LIMITATION ON EXCESSIVE EMPLOYEE REMU- ‘‘(1) APPLICABLE TAX-EXEMPT ORGANIZA- tion for payments under qualified plans) or any NERATION.— TION.—The term ‘applicable tax-exempt organi- payment made under or to an annuity contract (1) IN GENERAL.—Section 162(m)(4) is amended zation’ means any organization that for the tax- described in section 403(b) or a plan described in by striking subparagraphs (B) and (C) and by able year— section 457(b). redesignating subparagraphs (D), (E), (F), and ‘‘(A) is exempt from taxation under section ‘‘(C) BASE AMOUNT.—Rules similar to the rules (G) as subparagraphs (B), (C), (D), and (E), re- 501(a), of 280G(b)(3) shall apply for purposes of deter- spectively. ‘‘(B) is a farmers’ cooperative organization de- mining the base amount. (2) CONFORMING AMENDMENTS.— scribed in section 521(b)(1), ‘‘(D) PROPERTY TRANSFERS; PRESENT VALUE.— (A) Paragraphs (5)(E) and (6)(D) of section ‘‘(C) has income excluded from taxation under Rules similar to the rules of paragraphs (3) and 162(m) are each amended by striking ‘‘subpara- section 115(1), or (4) of section 280G(d) shall apply. graphs (B), (C), and (D)’’ and inserting ‘‘sub- ‘‘(D) is a political organization described in ‘‘(6) COORDINATION WITH DEDUCTION LIMITA- paragraph (B)’’. section 527(e)(1). TION.—Remuneration the deduction for which is

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00076 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9333 not allowed by reason of section 162(m) shall not ‘‘(I) no stock of such corporation (or any ‘‘(i) the qualified employee has made an elec- be taken into account for purposes of this sec- predecessor of such corporation) is readily tion under subsection (b) with respect to such tion. tradable on an established securities market (as qualified stock, ‘‘(d) REGULATIONS.—The Secretary shall pre- determined under paragraph (1)(B)(iii)) during ‘‘(ii) any stock of the corporation which scribe such regulations as may be necessary to any preceding calendar year, and issued the qualified stock is readily tradable on prevent avoidance of the purposes of this section ‘‘(II) such corporation has a written plan an established securities market (as determined through the performance of services other than under which, in such calendar year, not less under paragraph (1)(B)(iii)) at any time before as an employee.’’. than 80 percent of all employees who provide the election is made, or (b) CLERICAL AMENDMENT.—The table of sec- services to such corporation in the United States ‘‘(iii) such corporation purchased any of its tions for subchapter D of chapter 42 is amended (or any possession of the United States) are outstanding stock in the calendar year pre- by adding at the end the following new item: granted stock options, or restricted stock units, ceding the calendar year which includes the ‘‘Sec. 4960. Tax on excess exempt organization with the same rights and privileges to receive first time the rights of the employee in such executive compensation.’’. qualified stock. stock are transferable or are not subject to a (c) EFFECTIVE DATE.—The amendments made ‘‘(ii) SAME RIGHTS AND PRIVILEGES.—For pur- substantial risk of forfeiture, unless— by this section shall apply to taxable years be- poses of clause (i)(II)— ‘‘(I) not less than 25 percent of the total dollar ginning after December 31, 2017. ‘‘(I) except as provided in subclauses (II) and amount of the stock so purchased is deferral (III), the determination of rights and privileges stock, and SEC. 3803. TREATMENT OF QUALIFIED EQUITY ‘‘(II) the determination of which individuals GRANTS. with respect to stock shall be determined in a from whom deferral stock is purchased is made (a) IN GENERAL.— similar manner as provided under section on a reasonable basis. (1) ELECTION TO DEFER INCOME.—Section 83 is 423(b)(5), ‘‘(C) DEFINITIONS AND SPECIAL RULES RELATED amended by adding at the end the following ‘‘(II) employees shall not fail to be treated as TO LIMITATION ON STOCK REDEMPTIONS.— new subsection: having the same rights and privileges to receive ‘‘(i) DEFERRAL STOCK.—For purposes of this ‘‘(i) QUALIFIED EQUITY GRANTS.— qualified stock solely because the number of paragraph, the term ‘deferral stock’ means stock ‘‘(1) IN GENERAL.—For purposes of this sub- shares available to all employees is not equal in title, if qualified stock is transferred to a quali- with respect to which an election is in effect amount, so long as the number of shares avail- under this subsection. fied employee who makes an election with re- able to each employee is more than a de minimis ‘‘(ii) DEFERRAL STOCK WITH RESPECT TO ANY spect to such stock under this subsection— amount, and INDIVIDUAL NOT TAKEN INTO ACCOUNT IF INDI- ‘‘(A) except as provided in subparagraph (B), ‘‘(III) rights and privileges with respect to the VIDUAL HOLDS DEFERRAL STOCK WITH LONGER no amount shall be included in income under exercise of an option shall not be treated as the DEFERRAL PERIOD.—Stock purchased by a cor- subsection (a) for the first taxable year in which same as rights and privileges with respect to the poration from any individual shall not be treat- the rights of the employee in such stock are settlement of a restricted stock unit. ed as deferral stock for purposes of clause (iii) transferable or are not subject to a substantial ‘‘(iii) EMPLOYEE.—For purposes of clause if such individual (immediately after such pur- risk of forfeiture, whichever is applicable, and (i)(II), the term ‘employee’ shall not include any chase) holds any deferral stock with respect to ‘‘(B) an amount equal to the amount which employee described in section 4980E(d)(4) or any which an election has been in effect under this would be included in income of the employee excluded employee. subsection for a longer period than the election under subsection (a) (determined without regard ‘‘(iv) SPECIAL RULE FOR CALENDAR YEARS BE- with respect to the stock so purchased. to this subsection) shall be included in income FORE 2018.—In the case of any calendar year be- ‘‘(iii) PURCHASE OF ALL OUTSTANDING DEFER- for the taxable year of the employee which in- ginning before January 1, 2018, clause (i)(II) RAL STOCK.—The requirements of subclauses (I) cludes the earliest of— shall be applied without regard to whether the and (II) of subparagraph (B)(iii) shall be treat- ‘‘(i) the first date such qualified stock becomes rights and privileges with respect to the quali- ed as met if the stock so purchased includes all transferable (including transferable to the em- fied stock are the same. of the corporation’s outstanding deferral stock. ployer), ‘‘(3) QUALIFIED EMPLOYEE; EXCLUDED EM- ‘‘(iv) REPORTING.—Any corporation which has ‘‘(ii) the date the employee first becomes an PLOYEE.—For purposes of this subsection— outstanding deferral stock as of the beginning of excluded employee, ‘‘(A) IN GENERAL.—The term ‘qualified em- any calendar year and which purchases any of ‘‘(iii) the first date on which any stock of the ployee’ means any individual who— its outstanding stock during such calendar year corporation which issued the qualified stock be- ‘‘(i) is not an excluded employee, and shall include on its return of tax for the taxable comes readily tradable on an established securi- ‘‘(ii) agrees in the election made under this year in which, or with which, such calendar ties market (as determined by the Secretary, but subsection to meet such requirements as deter- year ends the total dollar amount of its out- not including any market unless such market is mined by the Secretary to be necessary to ensure standing stock so purchased during such cal- recognized as an established securities market that the withholding requirements of the cor- endar year and such other information as the by the Secretary for purposes of a provision of poration under chapter 24 with respect to the Secretary may require for purposes of admin- this title other than this subsection), qualified stock are met. istering this paragraph. ‘‘(iv) the date that is 5 years after the first ‘‘(B) EXCLUDED EMPLOYEE.—The term ‘ex- ‘‘(5) CONTROLLED GROUPS.—For purposes of date the rights of the employee in such stock are cluded employee’ means, with respect to any this subsection, all corporations which are mem- transferable or are not subject to a substantial corporation, any individual— bers of the same controlled group of corpora- risk of forfeiture, whichever occurs earlier, or ‘‘(i) who was a 1-percent owner (within the tions (as defined in section 1563(a)) shall be ‘‘(v) the date on which the employee revokes meaning of section 416(i)(1)(B)(ii)) at any time treated as one corporation. (at such time and in such manner as the Sec- during the 10 preceding calendar years, ‘‘(6) NOTICE REQUIREMENT.—Any corporation retary may provide) the election under this sub- ‘‘(ii) who is or has been at any prior time— that transfers qualified stock to a qualified em- section with respect to such stock. ‘‘(I) the chief executive officer of such cor- ployee shall, at the time that (or a reasonable UALIFIED STOCK.— ‘‘(2) Q poration or an individual acting in such a ca- period before) an amount attributable to such ‘‘(A) IN GENERAL.—For purposes of this sub- pacity, or stock would (but for this subsection) first be in- section, the term ‘qualified stock’ means, with ‘‘(II) the chief financial officer of such cor- cludible in the gross income of such employee— respect to any qualified employee, any stock in poration or an individual acting in such a ca- ‘‘(A) certify to such employee that such stock a corporation which is the employer of such em- pacity, is qualified stock, and ployee, if— ‘‘(iii) who bears a relationship described in ‘‘(B) notify such employee— ‘‘(i) such stock is received— section 318(a)(1) to any individual described in ‘‘(i) that the employee may elect to defer in- ‘‘(I) in connection with the exercise of an op- come on such stock under this subsection, and subclause (I) or (II) of clause (ii), or tion, or ‘‘(ii) that, if the employee makes such an elec- ‘‘(iv) who has been for any of the 10 preceding ‘‘(II) in settlement of a restricted stock unit, tion— and taxable years one of the 4 highest compensated ‘‘(I) the amount of income recognized at the ‘‘(ii) such option or restricted stock unit was officers of such corporation determined with re- end of the deferral period will be based on the provided by the corporation— spect to each such taxable year on the basis of value of the stock at the time at which the ‘‘(I) in connection with the performance of the shareholder disclosure rules for compensa- rights of the employee in such stock first become services as an employee, and tion under the Securities Exchange Act of 1934 transferable or not subject to substantial risk of ‘‘(II) during a calendar year in which such (as if such rules applied to such corporation). forfeiture, notwithstanding whether the value of corporation was an eligible corporation. ‘‘(4) ELECTION.— the stock has declined during the deferral pe- ‘‘(B) LIMITATION.—The term ‘qualified stock’ ‘‘(A) TIME FOR MAKING ELECTION.—An elec- riod, shall not include any stock if the employee may tion with respect to qualified stock shall be ‘‘(II) the amount of such income recognized at sell such stock to, or otherwise receive cash in made under this subsection no later than 30 the end of the deferral period will be subject to lieu of stock from, the corporation at the time days after the first time the rights of the em- withholding under section 3401(i) at the rate de- that the rights of the employee in such stock ployee in such stock are transferable or are not termined under section 3402(t), and first become transferable or not subject to a sub- subject to a substantial risk of forfeiture, which- ‘‘(III) the responsibilities of the employee (as stantial risk of forfeiture. ever occurs earlier, and shall be made in a man- determined by the Secretary under paragraph ‘‘(C) ELIGIBLE CORPORATION.—For purposes of ner similar to the manner in which an election (3)(A)(ii)) with respect to such withholding. subparagraph (A)(ii)(II)— is made under subsection (b). ‘‘(7) RESTRICTED STOCK UNITS.—This section ‘‘(i) IN GENERAL.—The term ‘eligible corpora- ‘‘(B) LIMITATIONS.—No election may be made (other than this subsection), including any elec- tion’ means, with respect to any calendar year, under this section with respect to any qualified tion under subsection (b), shall not apply to re- any corporation if— stock if— stricted stock units.’’.

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(2) DEDUCTION BY EMPLOYER.—Subsection (h) each such failure, but the total amount imposed ‘‘(B) dividends described in subparagraph (B) of section 83 is amended by striking ‘‘or (d)(2)’’ on such person for all such failures during any of such section (determined without regard to and inserting ‘‘(d)(2), or (i)’’. calendar year shall not exceed $50,000.’’. section 245(a)(12)). (b) WITHHOLDING.— (f) EFFECTIVE DATES.— ‘‘(4) TREATMENT OF DISTRIBUTIONS FROM (1) TIME OF WITHHOLDING.—Section 3401 is (1) IN GENERAL.—Except as provided in para- EARNINGS BEFORE 1987.— amended by adding at the end the following graph (2), the amendments made by this section ‘‘(A) IN GENERAL.—In the case of any divi- new subsection: shall apply to stock attributable to options exer- dend paid out of earnings and profits of the ‘‘(i) QUALIFIED STOCK FOR WHICH AN ELEC- cised, or restricted stock units settled, after De- specified 10-percent owned foreign corporation TION ISINEFFECT UNDER SECTION 83(i).—For cember 31, 2017. (computed in accordance with sections 964(a) purposes of subsection (a), qualified stock (as (2) REQUIREMENT TO PROVIDE NOTICE.—The and 986) accumulated in taxable years begin- defined in section 83(i)) with respect to which amendments made by subsection (e) shall apply ning before January 1, 1987— an election is made under section 83(i) shall be to failures after December 31, 2017. ‘‘(i) paragraphs (1), (2), and (3) shall be ap- treated as wages— (g) TRANSITION RULE.—Until such time as the plied without regard to the phrase ‘post-1986’ ‘‘(1) received on the earliest date described in Secretary (or the Secretary’s delegate) issue reg- each place it appears, and section 83(i)(1)(B), and ulations or other guidance for purposes of im- ‘‘(ii) paragraph (2) shall be applied by sub- ‘‘(2) in an amount equal to the amount in- plementing the requirements of paragraph stituting ‘after the date specified in section cluded in income under section 83 for the tax- (2)(C)(i)(II) of section 83(i) of the Internal Rev- 316(a)(1)’ for ‘in taxable years beginning after able year which includes such date.’’. enue Code of 1986 (as added by this section), or December 31, 1986’. (2) AMOUNT OF WITHHOLDING.—Section 3402 is the requirements of paragraph (6) of such sec- ‘‘(B) DIVIDENDS PAID FIRST OUT OF POST-1986 amended by adding at the end the following tion, a corporation shall be treated as being in EARNINGS.—Dividends shall be treated as paid new subsection: compliance with such requirements (respec- out of post-1986 undistributed earnings to the ‘‘(t) RATE OF WITHHOLDING FOR CERTAIN tively) if such corporation complies with a rea- extent thereof. STOCK.—In the case of any qualified stock (as sonable good faith interpretation of such re- ‘‘(5) TREATMENT OF CERTAIN DIVIDENDS IN EX- defined in section 83(i)) with respect to which quirements. CESS OF UNDISTRIBUTED EARNINGS.—In the case of any dividend from the specified 10-percent an election is made under section 83(i)— TITLE IV—TAXATION OF FOREIGN INCOME owned foreign corporation which is in excess of ‘‘(1) the rate of tax under subsection (a) shall AND FOREIGN PERSONS not be less than the maximum rate of tax in ef- undistributed earnings (as determined under Subtitle A—Establishment of Participation fect under section 1, and paragraph (2) after taking into account the ‘‘(2) such stock shall be treated for purposes of Exemption System for Taxation of Foreign modifications described in clauses (i) and (ii) of section 3501(b) in the same manner as a non- Income paragraph (4)(A)), the foreign-source portion of cash fringe benefit.’’. SEC. 4001. DEDUCTION FOR FOREIGN-SOURCE such dividend is an amount which bears the (c) COORDINATION WITH OTHER DEFERRED PORTION OF DIVIDENDS RECEIVED same ratio to such dividend as— BY DOMESTIC CORPORATIONS FROM COMPENSATION RULES.— ‘‘(A) the portion of the earnings and profits SPECIFIED 10-PERCENT OWNED FOR- described in subparagraph (B) which is attrib- (1) ELECTION TO APPLY DEFERRAL TO STATU- EIGN CORPORATIONS. TORY OPTIONS.— utable to neither income described in paragraph (a) IN GENERAL.—Part VIII of subchapter B of (3)(A) nor dividends described in paragraph (A) INCENTIVE STOCK OPTIONS.—Section 422(b) chapter 1 is amended by inserting after section (3)(B), bears to is amended by adding at the end the following: 245 the following new section: ‘‘Such term shall not include any option if an ‘‘(B) the earnings and profits of such corpora- election is made under section 83(i) with respect ‘‘SEC. 245A. DEDUCTION FOR FOREIGN-SOURCE tion for the taxable year in which such distribu- PORTION OF DIVIDENDS RECEIVED tion is made (computed as of the close of the to the stock received in connection with the ex- BY DOMESTIC CORPORATIONS FROM ercise of such option.’’. SPECIFIED 10-PERCENT OWNED FOR- taxable year without diminution by reason of (B) EMPLOYEE STOCK PURCHASE PLANS.—Sec- EIGN CORPORATIONS. any distributions made during the taxable year). tion 423(a) is amended by adding at the end the ‘‘(a) IN GENERAL.—In the case of any divi- ‘‘(d) DISALLOWANCE OF FOREIGN TAX CREDIT, following flush sentence: dend received from a specified 10-percent owned ETC.— ‘‘The preceding sentence shall not apply to any foreign corporation by a domestic corporation ‘‘(1) IN GENERAL.—No credit shall be allowed share of stock with respect to which an election which is a United States shareholder with re- under section 901 for any taxes paid or accrued is made under section 83(i).’’. spect to such foreign corporation, there shall be (or treated as paid or accrued) with respect to (2) EXCLUSION FROM DEFINITION OF NON- allowed as a deduction an amount equal to the any dividend for which a deduction is allowed QUALIFIED DEFERRED COMPENSATION PLAN.— foreign-source portion of such dividend. under this section. ‘‘(2) DENIAL OF DEDUCTION.—No deduction Subsection (d) of section 409A is amended by ‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN shall be allowed under this chapter for any tax adding at the end the following new paragraph: CORPORATION.—For purposes of this section, the ‘‘(7) TREATMENT OF QUALIFIED STOCK.—An ar- term ‘specified 10-percent owned foreign cor- for which credit is not allowable under section rangement under which an employee may re- poration’ means any foreign corporation with 901 by reason of paragraph (1) (determined by ceive qualified stock (as defined in section respect to which any domestic corporation is a treating the taxpayer as having elected the ben- 83(i)(2)) shall not be treated as a nonqualified United States shareholder. Such term shall not efits of subpart A of part III of subchapter N). ‘‘(e) REGULATIONS.—The Secretary may pre- deferred compensation plan solely because of an include any passive foreign investment company scribe such regulations or other guidance as employee’s election, or ability to make an elec- (within the meaning of subpart D of part VI of may be necessary or appropriate to carry out tion, to defer recognition of income under sec- subchapter P) that is not a controlled foreign the provisions of this section.’’. tion 83(i).’’. corporation. (b) APPLICATION OF HOLDING PERIOD RE- (d) INFORMATION REPORTING.—Section 6051(a) ‘‘(c) FOREIGN-SOURCE PORTION.—For purposes is amended by striking ‘‘and’’ at the end of QUIREMENT.—Section 246(c) is amended— of this section— (1) by striking ‘‘or 245’’ in paragraph (1) and paragraph (13), by striking the period at the end ‘‘(1) IN GENERAL.—The foreign-source portion of paragraph (14) and inserting a comma, and inserting ‘‘245, or 245A’’, and of any dividend is an amount which bears the (2) by adding at the end the following new by inserting after paragraph (14) the following same ratio to such dividend as— paragraph: new paragraphs: ‘‘(A) the post-1986 undistributed foreign earn- ‘‘(5) SPECIAL RULES FOR FOREIGN SOURCE POR- ‘‘(15) the amount excludable from gross in- ings of the specified 10-percent owned foreign TION OF DIVIDENDS RECEIVED FROM SPECIFIED 10- come under subparagraph (A) of section 83(i)(1), corporation, bears to PERCENT OWNED FOREIGN CORPORATIONS.— ‘‘(16) the amount includible in gross income ‘‘(B) the total post-1986 undistributed earn- ‘‘(A) 6-MONTH HOLDING PERIOD REQUIRE- under subparagraph (B) of section 83(i)(1) with ings of such foreign corporation. MENT.—For purposes of section 245A— respect to an event described in such subpara- ‘‘(2) POST-1986 UNDISTRIBUTED EARNINGS.—The ‘‘(i) paragraph (1)(A) shall be applied— graph which occurs in such calendar year, and term ‘post-1986 undistributed earnings’ means ‘‘(I) by substituting ‘180 days’ for ‘45 ‘‘(17) the aggregate amount of income which is the amount of the earnings and profits of the days’each place it appears, and being deferred pursuant to elections under sec- specified 10-percent owned foreign corporation ‘‘(II) by substituting ‘361-day period’ for ‘91- tion 83(i), determined as of the close of the cal- (computed in accordance with sections 964(a) day period’, and endar year.’’. and 986) accumulated in taxable years begin- ‘‘(ii) paragraph (2) shall not apply. (e) PENALTY FOR FAILURE OF EMPLOYER TO ning after December 31, 1986— ‘‘(B) STATUS MUST BE MAINTAINED DURING PROVIDE NOTICE OF TAX CONSEQUENCES.—Sec- ‘‘(A) as of the close of the taxable year of the HOLDING PERIOD.—For purposes of applying tion 6652 is amended by adding at the end the specified 10-percent owned foreign corporation paragraph (1) with respect to section 245A, the following new subsection: in which the dividend is distributed, and taxpayer shall be treated as holding the stock ‘‘(o) FAILURE TO PROVIDE NOTICE UNDER SEC- ‘‘(B) without diminution by reason of divi- referred to in paragraph (1) for any period only TION 83(i).—In the case of each failure to pro- dends distributed during such taxable year. if— vide a notice as required by section 83(i)(6), at ‘‘(3) POST-1986 UNDISTRIBUTED FOREIGN EARN- ‘‘(i) the specified 10-percent owned foreign the time prescribed therefor, unless it is shown INGS.—The term ‘post-1986 undistributed foreign corporation referred to in section 245A(a) is a that such failure is due to reasonable cause and earnings’ means the portion of the post-1986 un- specified 10-percent owned foreign corporation not to willful neglect, there shall be paid, on no- distributed earnings which is attributable to nei- for such period, and tice and demand of the Secretary and in the ther— ‘‘(ii) the taxpayer is a United States share- same manner as tax, by the person failing to ‘‘(A) income described in subparagraph (A) of holder with respect to such specified 10-percent provide such notice, an amount equal to $100 for section 245(a)(5), nor owned foreign corporation for such period.’’.

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(c) APPLICATION OF RULES GENERALLY APPLI- PORTION OF DIVIDEND FOR PURPOSES OF DETER- retary may prescribe, proper adjustments shall CABLE TO DEDUCTIONS FOR DIVIDENDS RE- MINING LOSS.— be made in the adjusted basis of the taxpayer’s CEIVED.— (1) IN GENERAL.—Section 961 is amended by stock in the specified 10-percent owned foreign (1) TREATMENT OF DIVIDENDS FROM CERTAIN adding at the end the following new subsection: corporation to which the transfer is made, and CORPORATIONS.—Section 246(a)(1) is amended by ‘‘(d) BASIS IN SPECIFIED 10-PERCENT OWNED in the transferee’s adjusted basis in the property striking ‘‘and 245’’ and inserting ‘‘245, and FOREIGN CORPORATION REDUCED BY NONTAXED transferred, to reflect amounts included in gross 245A’’. PORTION OF DIVIDEND FOR PURPOSES OF DETER- income under this section.’’. (2) COORDINATION WITH SECTION 1059.—Section MINING LOSS.—If a domestic corporation re- (2) AMOUNTS RECOGNIZED UNDER SECTION 367 1059(b)(2)(B) is amended by striking ‘‘or 245’’ ceived a dividend from a specified 10-percent ON TRANSFER OF FOREIGN BRANCH WITH PRE- and inserting ‘‘245, or 245A’’. owned foreign corporation (as defined in section VIOUSLY DEDUCTED LOSSES TREATED AS UNITED (d) COORDINATION WITH FOREIGN TAX CREDIT 245A) in any taxable year, solely for purposes of STATES SOURCE.—Section 367(a)(3)(C) is amend- LIMITATION.—Section 904(b) is amended by add- determining loss on any disposition of stock of ed by striking ‘‘outside’’ in the last sentence and ing at the end the following new paragraph: such foreign corporation in such taxable year or inserting ‘‘within’’. ‘‘(5) TREATMENT OF DIVIDENDS FOR WHICH DE- any subsequent taxable year, the basis of such (3) CLERICAL AMENDMENT.—The table of sec- DUCTION IS ALLOWED UNDER SECTION 245A.—For domestic corporation in such stock shall be re- tions for part II of subchapter B of chapter 1 is purposes of subsection (a), in the case of a duced (but not below zero) by the amount of amended by adding at the end the following United States shareholder with respect to a any deduction allowable to such domestic cor- new item: specified 10-percent owned foreign corporation, poration under section 245A with respect to such ‘‘Sec. 91. Certain foreign branch losses trans- such shareholder’s taxable income from sources stock except to the extent such basis was re- ferred to specified 10-percent without the United States (and entire taxable duced under section 1059 by reason of a divi- owned foreign corporations.’’. income) shall be determined without regard to— dend for which such a deduction was allow- (4) EFFECTIVE DATE.—The amendments made ‘‘(A) the foreign-source portion of any divi- able.’’. by this subsection shall apply to transfers after dend received from such foreign corporation, (2) EFFECTIVE DATE.—The amendments made December 31, 2017. and by this subsection shall apply to distributions SEC. 4004. TREATMENT OF DEFERRED FOREIGN ‘‘(B) any deductions properly allocable or ap- made after December 31, 2017. INCOME UPON TRANSITION TO PAR- portioned to— (b) TREATMENT OF FOREIGN BRANCH LOSSES TICIPATION EXEMPTION SYSTEM OF TAXATION. ‘‘(i) income (other than subpart F income (as TRANSFERRED TO SPECIFIED 10-PERCENT OWNED N ENERAL defined in section 952) and foreign high return FOREIGN CORPORATIONS.— (a) I G .—Section 965 is amended to amounts (as defined in section 951A(b)) with re- (1) IN GENERAL.—Part II of subchapter B of read as follows: spect to stock of such specified 10-percent owned chapter 1 is amended by adding at the end the ‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN foreign corporation, or following new section: INCOME UPON TRANSITION TO PAR- TICIPATION EXEMPTION SYSTEM OF ‘‘(ii) such stock (to the extent income with re- ‘‘SEC. 91. CERTAIN FOREIGN BRANCH LOSSES spect to such stock is other than subpart F in- TAXATION. TRANSFERRED TO SPECIFIED 10- ‘‘(a) TREATMENT OF DEFERRED FOREIGN IN- come (as so defined) or foreign high return PERCENT OWNED FOREIGN COR- COME AS SUBPART F INCOME.—In the case of the amounts (as so defined)). PORATIONS. last taxable year of a deferred foreign income Any term which is used in section 245A and in ‘‘(a) IN GENERAL.—If a domestic corporation corporation which begins before January 1, this paragraph shall have the same meaning for transfers substantially all of the assets of a for- 2018, the subpart F income of such foreign cor- purposes of this paragraph as when used in eign branch (within the meaning of section poration (as otherwise determined for such tax- such section.’’. 367(a)(3)(C)) to a specified 10-percent owned for- able year under section 952) shall be increased (e) CONFORMING AMENDMENTS.— eign corporation (as defined in section 245A) by the greater of— (1) Section 245(a)(4) is amended by striking with respect to which it is a United States ‘‘(1) the accumulated post-1986 deferred for- ‘‘section 902(c)(1)’’ and inserting ‘‘section shareholder after such transfer, such domestic eign income of such corporation determined as 245A(c)(2) applied by substituting ‘qualified 10- corporation shall include in gross income for the percent owned foreign corporation’ for ‘specified of November 2, 2017, or taxable year which includes such transfer an ‘‘(2) the accumulated post-1986 deferred for- 10-percent owned foreign corporation’ each amount equal to the transferred loss amount eign income of such corporation determined as place it appears’’. with respect to such transfer. of December 31, 2017. (2) Section 951(b) is amended by striking ‘‘sub- ‘‘(b) TRANSFERRED LOSS AMOUNT.—For pur- ‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN part’’ and inserting ‘‘title’’. poses of this section, the term ‘transferred loss GROSS INCOME OF UNITED STATES SHARE- (3) Section 957(a) is amended by striking ‘‘sub- amount’ means, with respect to any transfer of HOLDERS OF SPECIFIED FOREIGN CORPORATIONS part’’ in the matter preceding paragraph (1) and substantially all of the assets of a foreign WITH DEFICITS IN EARNINGS AND PROFITS.— inserting ‘‘title’’. branch, the excess (if any) of— ‘‘(1) IN GENERAL.—In the case of a taxpayer (4) The table of sections for part VIII of sub- ‘‘(1) the sum of losses— which is a United States shareholder with re- chapter B of chapter 1 is amended by inserting ‘‘(A) which were incurred by the foreign spect to at least one deferred foreign income cor- after section 245 the following new item: branch after December 31, 2017, and before the poration and at least one E&P deficit foreign ‘‘Sec. 245A. Deduction for foreign-source por- transfer, and corporation, the amount which would (but for tion of dividends received by do- ‘‘(B) with respect to which a deduction was this subsection) be taken into account under mestic corporations from specified allowed to the taxpayer, over section 951(a)(1) by reason of subsection (a) as 10-percent owned foreign corpora- ‘‘(2) the sum of— such United States shareholder’s pro rata share tions.’’. ‘‘(A) any taxable income of such branch for a of the subpart F income of each deferred foreign (f) EFFECTIVE DATE.—The amendments made taxable year after the taxable year in which the income corporation shall be reduced (but not by this section shall apply to distributions made loss was incurred and through the close of the below zero) by the amount of such United States after (and, in the case of the amendments made taxable year of the transfer, and shareholder’s aggregate foreign E&P deficit by subsection (d), deductions with respect to ‘‘(B) any amount which is recognized under which is allocated under paragraph (2) to such taxable years ending after) December 31, 2017. section 904(f)(3) on account of the transfer. deferred foreign income corporation. SEC. 4002. APPLICATION OF PARTICIPATION EX- ‘‘(c) REDUCTION FOR RECOGNIZED GAINS.— ‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P EMPTION TO INVESTMENTS IN ‘‘(1) IN GENERAL.—In the case of a transfer DEFICIT.—The aggregate foreign E&P deficit of UNITED STATES PROPERTY. not described in section 367(a)(3)(C), the trans- any United States shareholder shall be allocated (a) IN GENERAL.—Section 956(a) is amended in ferred loss amount shall be reduced (but not among the deferred foreign income corporations the matter preceding paragraph (1) by inserting below zero) by the amount of gain recognized by of such United States shareholder in an amount ‘‘(other than a corporation)’’ after ‘‘United the taxpayer on account of the transfer (other which bears the same proportion to such aggre- States shareholder’’. than amounts taken into account under sub- gate as— (b) REGULATORY AUTHORITY TO PREVENT section (c)(2)(B)). ‘‘(A) such United States shareholder’s pro ABUSE.—Section 956(e) is amended by striking ‘‘(2) COORDINATION WITH RECOGNITION UNDER rata share of the accumulated post-1986 deferred ‘‘including regulations to prevent’’ and insert- SECTION 367.—In the case of a transfer described foreign income of each such deferred foreign in- ing ‘‘including regulations— in section 367(a)(3)(C), the transferred loss come corporation, bears to ‘‘(1) to address United States shareholders amount shall not exceed the excess (if any) of— ‘‘(B) the aggregate of such United States that are partnerships with corporate partners, ‘‘(A) the excess of the amount described in shareholder’s pro rata share of the accumulated and section 367(a)(3)(C)(i) over the amount described post-1986 deferred foreign income of all deferred ‘‘(2) to prevent’’. in section 367(a)(3)(C)(ii) with respect to such foreign income corporations of such United (c) EFFECTIVE DATE.—The amendments made transfer, over States shareholder. by this section shall apply to taxable years of ‘‘(B) the amount of gain recognized under sec- ‘‘(3) DEFINITIONS RELATED TO E&P DEFICITS.— foreign corporations beginning after December tion 367(a)(3)(C) with respect to such transfer. For purposes of this subsection— 31, 2017. ‘‘(d) SOURCE OF INCOME.—Amounts included ‘‘(A) AGGREGATE FOREIGN E&P DEFICIT.—The SEC. 4003. LIMITATION ON LOSSES WITH RE- in gross income under this section shall be treat- term ‘aggregate foreign E&P deficit’ means, SPECT TO SPECIFIED 10-PERCENT ed as derived from sources within the United with respect to any United States shareholder, OWNED FOREIGN CORPORATIONS. States. the aggregate of such shareholder’s pro rata (a) BASIS IN SPECIFIED 10-PERCENT OWNED ‘‘(e) BASIS ADJUSTMENTS.—Consistent with shares of the specified E&P deficits of the E&P FOREIGN CORPORATION REDUCED BY NONTAXED such regulations or other guidance as the Sec- deficit foreign corporations of such shareholder.

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‘‘(B) E&P DEFICIT FOREIGN CORPORATION.— of such United States shareholder which is held ‘‘(B) CASH POSITION.—For purposes of this The term ‘E&P deficit foreign corporation’ by other includible corporations in such affili- paragraph, the cash position of any specified means, with respect to any taxpayer, any speci- ated group. Notwithstanding the preceding sen- foreign corporation is the sum of— fied foreign corporation with respect to which tence, the group ownership percentage of the ‘‘(i) cash held by such foreign corporation, such taxpayer is a United States shareholder, common parent of the affiliated group is 100 per- ‘‘(ii) the net accounts receivable of such for- if— cent. Any term used in this subparagraph which eign corporation, plus ‘‘(i) such specified foreign corporation has a is also used in section 1504 shall have the same ‘‘(iii) the fair market value of the following deficit in post-1986 earnings and profits, and meaning as when used in such section. assets held by such corporation: ‘‘(ii) as of November 2, 2017— ‘‘(c) APPLICATION OF PARTICIPATION EXEMP- ‘‘(I) Actively traded personal property for ‘‘(I) such corporation was a specified foreign TION TO INCLUDED INCOME.— which there is an established financial market. corporation, and ‘‘(1) IN GENERAL.—In the case of a United ‘‘(II) Commercial paper, certificates of deposit, ‘‘(II) such taxpayer was a United States States shareholder of a deferred foreign income the securities of the Federal government and of shareholder of such corporation. corporation, there shall be allowed as a deduc- any State or foreign government. ‘‘(C) SPECIFIED E&P DEFICIT.—The term ‘speci- tion for the taxable year in which an amount is ‘‘(III) Any foreign currency. fied E&P deficit’ means, with respect to any included in the gross income of such United ‘‘(IV) Any obligation with a term of less than E&P deficit foreign corporation, the amount of States shareholder under section 951(a)(1) by one year. the deficit referred to in subparagraph (B). reason of this section an amount equal to the ‘‘(V) Any asset which the Secretary identifies ‘‘(4) NETTING AMONG UNITED STATES SHARE- sum of— as being economically equivalent to any asset HOLDERS IN SAME AFFILIATED GROUP.— ‘‘(A) the United States shareholder’s 7 percent described in this subparagraph. ‘‘(A) IN GENERAL.—In the case of any affili- rate equivalent percentage of the excess (if any) ‘‘(C) NET ACCOUNTS RECEIVABLE.—For pur- ated group which includes at least one E&P net of— poses of this paragraph, the term ‘net accounts receivable’ means, with respect to any specified surplus shareholder and one E&P net deficit ‘‘(i) the amount so included as gross income, foreign corporation, the excess (if any) of— shareholder, the amount which would (but for over ‘‘(i) such corporation’s accounts receivable, this paragraph) be taken into account under ‘‘(ii) the amount of such United States share- over section 951(a)(1) by reason of subsection (a) by holder’s aggregate foreign cash position, plus ‘‘(ii) such corporation’s accounts payable (de- each such E&P net surplus shareholder shall be ‘‘(B) the United States shareholder’s 14 per- termined consistent with the rules of section reduced (but not below zero) by such share- cent rate equivalent percentage of so much of 461). holder’s applicable share of the affiliated the amount described in subparagraph (A)(ii) as ‘‘(D) PREVENTION OF DOUBLE COUNTING.— group’s aggregate unused E&P deficit. does not exceed the amount described in sub- ‘‘(B) E&P NET SURPLUS SHAREHOLDER.—For ‘‘(i) IN GENERAL.—The applicable percentage paragraph (A)(i). purposes of this paragraph, the term ‘E&P net of each specified cash position of a specified for- ‘‘(2) 7 AND 14 PERCENT RATE EQUIVALENT PER- surplus shareholder’ means any United States eign corporation shall not be taken into account CENTAGES.—For purposes of this subsection— shareholder which would (determined without by— ‘‘(A) 7 PERCENT RATE EQUIVALENT PERCENT- regard to this paragraph) take into account an ‘‘(I) the United States shareholder referred to AGE.—The term ‘7 percent rate equivalent per- amount greater than zero under section in clause (ii) with respect to such position, or centage’ means, with respect to any United 951(a)(1) by reason of subsection (a). ‘‘(II) any United States shareholder which is States shareholder for any taxable year, the per- ‘‘(C) E&P NET DEFICIT SHAREHOLDER.—For an includible corporation in the same affiliated centage which would result in the amount to purposes of this paragraph, the term ‘E&P net group as such United States shareholder re- which such percentage applies being subject to a deficit shareholder’ means any United States ferred to in clause (ii). 7 percent rate of tax determined by only taking shareholder if— ‘‘(ii) SPECIFIED CASH POSITION.—For purposes into account a deduction equal to such percent- ‘‘(i) the aggregate foreign E&P deficit with re- of this subparagraph, the term ‘specified cash age of such amount and the highest rate of tax spect to such shareholder (as defined in para- position’ means— specified in section 11 for such taxable year. In graph (3)(A)), exceeds ‘‘(I) amounts described in subparagraph ‘‘(ii) the amount which would (but for this the case of any taxable year of a United States (B)(ii) to the extent such amounts are receivable subsection) be taken into account by such shareholder to which section 15 applies, the from another specified foreign corporation with shareholder under section 951(a)(1) by reason of highest rate of tax under section 11 before the respect to any United States shareholder, subsection (a). effective date of the change in rates and the ‘‘(II) amounts described in subparagraph highest rate of tax under section 11 after the ef- ‘‘(D) AGGREGATE UNUSED E&P DEFICIT.—For (B)(iii)(I) to the extent such amounts consist of purposes of this paragraph— fective date of such change shall each be taken an equity interest in another specified foreign ‘‘(i) IN GENERAL.—The term ‘aggregate unused into account under the preceding sentence in corporation with respect to any United States E&P deficit’ means, with respect to any affili- the same proportions as the portion of such tax- shareholder, and ated group, the lesser of— able year which is before and after such effec- ‘‘(III) amounts described in subparagraph ‘‘(I) the sum of the excesses described in sub- tive date, respectively. (B)(iii)(IV) to the extent that another specified paragraph (C), determined with respect to each ‘‘(B) 14 PERCENT RATE EQUIVALENT PERCENT- foreign corporation with respect to any United E&P net deficit shareholder in such group, or AGE.—The term ‘14 percent rate equivalent per- States shareholder is obligated to repay such ‘‘(II) the amount determined under subpara- centage’ means, with respect to any United amount. graph (E)(ii). States shareholder for any taxable year, the per- ‘‘(iii) APPLICABLE PERCENTAGE.—For purposes ‘‘(ii) REDUCTION WITH RESPECT TO E&P NET centage determined under subparagraph (A) ap- of this subparagraph, the term ‘applicable per- DEFICIT SHAREHOLDERS WHICH ARE NOT WHOLLY plied by substituting ‘14 percent rate of tax’ for centage’ means— OWNED BY THE AFFILIATED GROUP.—If the group ‘7 percent rate of tax’. ‘‘(I) with respect to each specified cash posi- ownership percentage of any E&P net deficit ‘‘(3) AGGREGATE FOREIGN CASH POSITION.—For tion described in subclause (I) or (III) of clause shareholder is less than 100 percent, the amount purposes of this subsection— (ii), the pro rata share of the United States of the excess described in subparagraph (C) ‘‘(A) IN GENERAL.—The term ‘aggregate for- shareholder referred to in clause (ii) with re- which is taken into account under clause (i)(I) eign cash position’ means, with respect to any spect to the specified foreign corporation re- with respect to such E&P net deficit shareholder United States shareholder, one-third of the sum ferred to in such clause, and shall be such group ownership percentage of of— ‘‘(II) with respect to each specified cash posi- such amount. ‘‘(i) the aggregate of such United States tion described in clause (ii)(II), the ratio (ex- ‘‘(E) APPLICABLE SHARE.—For purposes of this shareholder’s pro rata share of the cash position pressed as a percentage and not in excess of 100 paragraph, the term ‘applicable share’ means, of each specified foreign corporation of such percent) of the United States shareholder’s pro with respect to any E&P net surplus share- United States shareholder determined as of No- rata share of the cash position of the specified holder in any affiliated group, the amount vember 2, 2017, foreign corporation referred to in such clause di- which bears the same proportion to such group’s ‘‘(ii) the aggregate described in clause (i) de- vided by the amount of such specified cash posi- aggregate unused E&P deficit as— termined as of the close of the last taxable year tion. ‘‘(i) the product of— of each such specified foreign corporation which For purposes of this subparagraph, a separate ‘‘(I) such shareholder’s group ownership per- ends before November 2, 2017, and applicable percentage shall be determined under centage, multiplied by ‘‘(iii) the aggregate described in clause (i) de- each of subclauses (I) and (II) with respect to ‘‘(II) the amount which would (but for this termined as of the close of the taxable year of each specified foreign corporation referred to in paragraph) be taken into account under section each such specified foreign corporation which clause (ii) with respect to which a specified cash 951(a)(1) by reason of subsection (a) by such precedes the taxable year referred to in clause position is determined for the specified foreign shareholder, bears to (ii). corporation referred to in clause (i). ‘‘(ii) the aggregate amount determined under In the case of any foreign corporation which did ‘‘(iv) REDUCTION WITH RESPECT TO AFFILIATED clause (i) with respect to all E&P net surplus not exist as of the determination date described GROUP MEMBERS NOT WHOLLY OWNED BY THE AF- shareholders in such group. in clause (ii) or (iii), this subparagraph shall be FILIATED GROUP.—For purposes of clause (i)(II), ‘‘(F) GROUP OWNERSHIP PERCENTAGE.—For applied separately to such foreign corporation in the case of an includible corporation the purposes of this paragraph, the term ‘group by not taking into account such clause and by group ownership percentage of which is less ownership percentage’ means, with respect to substituting ‘one-half (100 percent in the case than 100 percent (as determined under sub- any United States shareholder in any affiliated that both clauses (ii) and (iii) are disregarded)’ section (b)(4)(F)), the amount not take into ac- group, the percentage of the value of the stock for ‘one-third’. count by reason of such clause shall be the

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The preceding sentence shall not foreign corporation, shall be determined as of ‘‘(f) DETERMINATIONS OF PRO RATA SHARE.— For purposes of this section, the determination apply to the sale of substantially all the assets the end of the taxable year described in sub- of a taxpayer to a buyer if such buyer enters section (a). of any United States shareholder’s pro rata share of any amount with respect to any speci- into an agreement with the Secretary under ‘‘(H) ANTI-ABUSE.—If the Secretary determines fied foreign corporation shall be determined which such buyer is liable for the remaining in- that the principal purpose of any transaction stallments due under this subsection in the same was to reduce the aggregate foreign cash posi- under rules similar to the rules of section 951(a)(2) by treating such amount in the same manner as if such buyer were the taxpayer. tion taken into account under this subsection, ‘‘(4) PRORATION OF DEFICIENCY TO INSTALL- manner as subpart F income (and by treating such transaction shall be disregarded for pur- MENTS.—If an election is made under paragraph such specified foreign corporation as a con- poses of this subsection. (1) to pay the net tax liability under this section trolled foreign corporation). ‘‘(d) DEFERRED FOREIGN INCOME CORPORA- in installments and a deficiency has been as- ‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, TION; ACCUMULATED POST-1986 DEFERRED FOR- sessed with respect to such net tax liability, the ETC.— EIGN INCOME.—For purposes of this section— ‘‘(1) IN GENERAL.—No credit shall be allowed deficiency shall be prorated to the installments ‘‘(1) DEFERRED FOREIGN INCOME CORPORA- under section 901 for the applicable percentage payable under paragraph (1). The part of the TION.—The term ‘deferred foreign income cor- of any taxes paid or accrued (or treated as paid deficiency so prorated to any installment the poration’ means, with respect to any United or accrued) with respect to any amount for date for payment of which has not arrived shall States shareholder, any specified foreign cor- which a deduction is allowed under this section. be collected at the same time as, and as a part poration of such United States shareholder ‘‘(2) APPLICABLE PERCENTAGE.—For purposes of, such installment. The part of the deficiency which has accumulated post-1986 deferred for- of this subsection, the term ‘applicable percent- so prorated to any installment the date for pay- eign income (as of the date referred to in para- age’ means the amount (expressed as a percent- ment of which has arrived shall be paid upon graph (1) or (2) of subsection (a), whichever is age) equal to the sum of— notice and demand from the Secretary. This applicable with respect to such foreign corpora- ‘‘(A) 80 percent of the ratio of— subsection shall not apply if the deficiency is tion) greater than zero. ‘‘(i) the excess to which subsection (c)(1)(A) due to negligence, to intentional disregard of ‘‘(2) ACCUMULATED POST-1986 DEFERRED FOR- applies, divided by rules and regulations, or to fraud with intent to EIGN INCOME.—The term ‘accumulated post-1986 ‘‘(ii) the sum of such excess plus the amount evade tax. deferred foreign income’ means the post-1986 to which subsection (c)(1)(B) applies, plus ‘‘(5) ELECTION.—Any election under para- earnings and profits except to the extent such ‘‘(B) 60 percent of the ratio of— graph (1) shall be made not later than the due earnings— ‘‘(i) the amount to which subsection (c)(1)(B) date for the return of tax for the taxable year ‘‘(A) are attributable to income of the speci- applies, divided by described in subsection (a) and shall be made in fied foreign corporation which is effectively con- ‘‘(ii) the sum described in subparagraph such manner as the Secretary may provide. nected with the conduct of a trade or business (A)(ii). ‘‘(6) NET TAX LIABILITY UNDER THIS SECTION.— within the United States and subject to tax ‘‘(3) DENIAL OF DEDUCTION.—No deduction For purposes of this subsection— ‘‘(A) IN GENERAL.—The net tax liability under under this chapter, or shall be allowed under this chapter for any tax this section with respect to any United States ‘‘(B) if distributed, would be excluded from for which credit is not allowable under section shareholder is the excess (if any) of— the gross income of a United States shareholder 901 by reason of paragraph (1) (determined by ‘‘(i) such taxpayer’s net income tax for the under section 959. treating the taxpayer as having elected the ben- taxable year in which an amount is included in To the extent provided in regulations or other efits of subpart A of part III of subchapter N). the gross income of such United States share- guidance prescribed by the Secretary, in the ‘‘(4) COORDINATION WITH SECTION 78.—With re- holder under section 951(a)(1) by reason of this case of any controlled foreign corporation which spect to the taxes treated as paid or accrued by has shareholders which are not United States section, over a domestic corporation with respect to amounts ‘‘(ii) such taxpayer’s net income tax for such shareholders, accumulated post-1986 deferred which are includible in gross income of such do- taxable year determined— foreign income shall be appropriately reduced mestic corporation by reason of this section, sec- ‘‘(I) without regard to this section, and by amounts which would be described in sub- tion 78 shall apply only to so much of such taxes ‘‘(II) without regard to any income, deduc- paragraph (B) if such shareholders were United as bears the same proportion to the amount of tion, or credit, properly attributable to a divi- States shareholders. such taxes as— dend received by such United States shareholder ‘‘(3) POST-1986 EARNINGS AND PROFITS.—The ‘‘(A) the excess of— from any deferred foreign income corporation. term ‘post-1986 earnings and profits’ means the ‘‘(i) the amounts which are includible in gross ‘‘(B) NET INCOME TAX.—The term ‘net income earnings and profits of the foreign corporation income of such domestic corporation by reason tax’ means the regular tax liability reduced by (computed in accordance with sections 964(a) of this section, over the credits allowed under subparts A, B, and D and 986) accumulated in taxable years begin- ‘‘(ii) the deduction allowable under subsection of part IV of subchapter A. ning after December 31, 1986, and determined— (c) with respect to such amounts, bears to ‘‘(i) SPECIAL RULES FOR S CORPORATION ‘‘(A) as of the date referred to in paragraph ‘‘(B) such amounts. SHAREHOLDERS.— (1) or (2) of subsection (a), whichever is applica- ‘‘(5) EXTENSION OF FOREIGN TAX CREDIT CAR- ‘‘(1) IN GENERAL.—In the case of any S cor- ble with respect to such foreign corporation, RYOVER PERIOD.—With respect to any taxes paid poration which is a United States shareholder of

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a deferred foreign income corporation, each ‘‘(7) ANNUAL REPORTING OF NET TAX LIABIL- a domestic corporation any item of income shareholder of such S corporation may elect to ITY.— under section 951(a)(1) with respect to any con- defer payment of such shareholder’s net tax li- ‘‘(A) IN GENERAL.—Any shareholder of an S trolled foreign corporation with respect to which ability under this section with respect to such S corporation which makes an election under such domestic corporation is a United States corporation until the shareholder’s taxable year paragraph (1) shall report the amount of such shareholder, such domestic corporation shall be which includes the triggering event with respect shareholder’s deferred net tax liability on such deemed to have paid so much of such foreign to such liability. Any net tax liability payment shareholder’s return of tax for the taxable year corporation’s foreign income taxes as are prop- of which is deferred under the preceding sen- for which such election is made and on the re- erly attributable to such item of income. tence shall be assessed on the return as an addi- turn of tax for each taxable year thereafter ‘‘(b) SPECIAL RULES FOR DISTRIBUTIONS FROM tion to tax in the shareholder’s taxable year until such amount has been fully assessed on PREVIOUSLY TAXED EARNINGS AND PROFITS.— which includes such triggering event. such returns. For purposes of this subpart— ‘‘(2) TRIGGERING EVENT.— ‘‘(B) DEFERRED NET TAX LIABILITY.—For pur- ‘‘(1) IN GENERAL.—If any portion of a distribu- ‘‘(A) IN GENERAL.—In the case of any share- poses of this paragraph, the term ‘deferred net tion from a controlled foreign corporation to a holder’s net tax liability under this section with tax liability’ means, with respect to any taxable domestic corporation which is a United States respect to any S corporation, the triggering year, the amount of net tax liability payment of shareholder with respect to such controlled for- event with respect to such liability is whichever which has been deferred under paragraph (1) eign corporation is excluded from gross income of the following occurs first: and which has not been assessed on a return of under section 959(a), such domestic corporation ‘‘(i) Such corporation ceases to be an S cor- tax for any prior taxable year. shall be deemed to have paid so much of such poration (determined as of the first day of the ‘‘(C) FAILURE TO REPORT.—In the case of any foreign corporation’s foreign income taxes as— first taxable year that such corporation is not failure to report any amount required to be re- ‘‘(A) are properly attributable to such portion, an S corporation). ported under subparagraph (A) with respect to and ‘‘(ii) A liquidation or sale of substantially all any taxable year before the due date for the re- ‘‘(B) have not been deemed to have to been the assets of such S corporation (including in a turn of tax for such taxable year, there shall be paid by such domestic corporation under this title 11 or similar case), a cessation of business assessed on such return as an addition to tax 5 section for the taxable year or any prior taxable by such S corporation, such S corporation percent of such amount. year. ceases to exist, or any similar circumstance. ‘‘(8) ELECTION.—Any election under para- ‘‘(2) TIERED CONTROLLED FOREIGN CORPORA- ‘‘(iii) A transfer of any share of stock in such graph (1)— TIONS.—If section 959(b) applies to any portion S corporation by the taxpayer (including by rea- ‘‘(A) shall be made by the shareholder of the of a distribution from a controlled foreign cor- son of death, or otherwise). S corporation not later than the due date for poration to another controlled foreign corpora- ‘‘(B) PARTIAL TRANSFERS OF STOCK.—In the such shareholder’s return of tax for the taxable tion, such controlled foreign corporation shall case of a transfer of less than all of the tax- year which includes the close of the taxable be deemed to have paid so much of such other payer’s shares of stock in the S corporation, year of such S corporation in which the amount controlled foreign corporation’s foreign income such transfer shall only be a triggering event described in subsection (a) is taken into ac- taxes as— with respect to so much of the taxpayer’s net count, and ‘‘(A) are properly attributable to such portion, tax liability under this section with respect to ‘‘(B) shall be made in such manner as the Sec- and such S corporation as is properly allocable to retary may provide. ‘‘(B) have not been deemed to have been paid such stock. ‘‘(j) REPORTING BY S CORPORATION.—Each S by a domestic corporation under this section for ‘‘(C) TRANSFER OF LIABILITY.—A transfer de- corporation which is a United States share- the taxable year or any prior taxable year.’’, scribed in clause (iii) shall not be treated as a holder of a deferred foreign income corporation (2) and by adding after subsection (c) (as so triggering event if the transferee enters into an shall report in its return of tax under section redesignated) the following new subsections: agreement with the Secretary under which such 6037(a) the amount includible in its gross income ‘‘(d) FOREIGN INCOME TAXES.—The term ‘for- transferee is liable for net tax liability with re- for such taxable year by reason of this section eign income taxes’ means any income, war prof- spect to such stock in the same manner as if and the amount of the deduction allowable by its, or excess profits taxes paid or accrued to such transferee were the taxpayer. subsection (c). Any copy provided to a share- any foreign country or possession of the United ‘‘(3) NET TAX LIABILITY.—A shareholder’s net holder under section 6037(b) shall include a States. tax liability under this section with respect to statement of such shareholder’s pro rata share ‘‘(e) REGULATIONS.—The Secretary may pre- any S corporation is the net tax liability under of such amounts. scribe such regulations or other guidance as this section which would be determined under ‘‘(k) INCLUSION OF DEFERRED FOREIGN IN- may be necessary or appropriate to carry out subsection (h)(6) if the only subpart F income COME UNDER THIS SECTION NOT TO TRIGGER RE- the provisions of this section.’’. taken into account by such shareholder by rea- CAPTURE OF OVERALL FOREIGN LOSS, ETC.—For (c) CONFORMING AMENDMENTS.— son of this section were allocations from such S purposes of sections 904(f)(1) and 907(c)(4), in (1) Section 78 is amended to read as follows: corporation. the case of a United States shareholder of a de- ‘‘SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN ‘‘(4) ELECTION TO PAY DEFERRED LIABILITY IN ferred foreign income corporation, such United TAX CREDIT. INSTALLMENTS.—In the case of a taxpayer which States shareholder’s taxable income from sources ‘‘If a domestic corporation chooses to have the elects to defer payment under paragraph (1)— without the United States and combined foreign benefits of subpart A of part III of subchapter N ‘‘(A) subsection (h) shall be applied separately oil and gas income shall be determined without (relating to foreign tax credit) for any taxable with respect to the liability to which such elec- regard to this section. year, an amount equal to the taxes deemed to be tion applies, ‘‘(l) REGULATIONS.—The Secretary may pre- paid by such corporation under subsections (a) ‘‘(B) an election under subsection (h) with re- scribe such regulations or other guidance as and (b) of section 960 for such taxable year shall spect to such liability shall be treated as timely may be necessary or appropriate to carry out be treated for purposes of this title (other than made if made not later than the due date for the the provisions of this section.’’. sections 959, 960, and 961) as an item of income return of tax for the taxable year in which the (b) CLERICAL AMENDMENT.—The table of sec- required to be included in the gross income of triggering event with respect to such liability oc- tions for subpart F of part III of subchapter N such domestic corporation under section 951(a) curs, of chapter 1 is amended by striking the item re- for such taxable year.’’. ‘‘(C) the first installment under subsection (h) lating to section 965 and inserting the following: (2) Section 245(a)(10)(C) is amended by strik- with respect to such liability shall be paid not ‘‘Sec. 965. Treatment of deferred foreign income ing ‘‘sections 902, 907, and 960’’ and inserting later than such due date (but determined with- upon transition to participation ‘‘sections 907 and 960’’. out regard to any extension of time for filing the exemption system of taxation.’’. (3) Sections 535(b)(1) and 545(b)(1) are each return), and Subtitle B—Modifications Related to Foreign amended by striking ‘‘section 902(a) or ‘‘(D) if the triggering event with respect to Tax Credit System 960(a)(1)’’ and inserting ‘‘section 960’’. any net tax liability is described in paragraph SEC. 4101. REPEAL OF SECTION 902 INDIRECT (4) Section 814(f)(1) is amended— (2)(A)(ii), an election under subsection (h) with FOREIGN TAX CREDITS; DETERMINA- (A) by striking subparagraph (B), and respect to such liability may be made only with TION OF SECTION 960 CREDIT ON (B) by striking all that precedes ‘‘No income’’ the consent of the Secretary. CURRENT YEAR BASIS. and inserting the following: ‘‘(5) JOINT AND SEVERAL LIABILITY OF S COR- (a) REPEAL OF SECTION 902 INDIRECT FOREIGN ‘‘(1) TREATMENT OF FOREIGN TAXES.—’’. PORATION.—If any shareholder of an S corpora- TAX CREDITS.—Subpart A of part III of sub- (5) Section 865(h)(1)(B) is amended by striking tion elects to defer payment under paragraph chapter N of chapter 1 is amended by striking ‘‘sections 902, 907, and 960’’ and inserting ‘‘sec- (1), such S corporation shall be jointly and sev- section 902. tions 907 and 960’’. erally liable for such payment and any penalty, (b) DETERMINATION OF SECTION 960 CREDIT ON (6) Section 901(a) is amended by striking ‘‘sec- addition to tax, or additional amount attrib- CURRENT YEAR BASIS.—Section 960 is amended— tions 902 and 960’’ and inserting ‘‘section 960’’. utable thereto. (1) by striking subsection (c), by redesignating (7) Section 901(e)(2) is amended by striking ‘‘(6) EXTENSION OF LIMITATION ON COLLEC- subsection (b) as subsection (c), by striking all ‘‘but is not limited to—’’ and all that follows TION.—Notwithstanding any other provision of that precedes subsection (c) (as so redesignated) through ‘‘that portion’’ and inserting ‘‘but is law, any limitation on the time period for the and inserting the following: not limited to, that portion’’. collection of a liability deferred under this sub- ‘‘SEC. 960. DEEMED PAID CREDIT FOR SUBPART F (8) Section 901(f) is amended by striking ‘‘sec- section shall not be treated as beginning before INCLUSIONS. tions 902 and 960’’ and inserting ‘‘section 960’’. the date of the triggering event with respect to ‘‘(a) IN GENERAL.—For purposes of this sub- (9) Section 901(j)(1)(A) is amended by striking such liability. part, if there is included in the gross income of ‘‘902 or’’.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00082 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9339 (10) Section 901(j)(1)(B) is amended by striking (35) The table of sections for subpart A of part and inserting ‘‘and the foreign base company ‘‘sections 902 and 960’’ and inserting ‘‘section III of subchapter N of chapter 1 is amended by services income’’. 960’’. striking the item relating to section 902. (4) Section 954(b) is amended by striking para- (11) Section 901(k)(2) is amended by striking (36) The table of sections for subpart F of part graph (6). ‘‘section 853, 902, or 960’’ and inserting ‘‘section III of subchapter N of chapter 1 is amended by (5) Section 954 is amended by striking sub- 853 or 960’’. striking the item relating to section 960 and in- section (g). (12) Section 901(k)(6) is amended by striking serting the following: (c) EFFECTIVE DATE.—The amendments made ‘‘902 or’’. ‘‘Sec. 960. Deemed paid credit for subpart F in- by this section shall apply to taxable years of (13) Section 901(m)(1) is amended by striking clusions.’’. foreign corporations beginning after December ‘‘relevant foreign assets—’’ and all that follows (d) EFFECTIVE DATE.—The amendments made 31, 2017, and to taxable years of United States and inserting ‘‘relevant foreign assets shall not by this section shall apply to taxable years be- shareholders in which or with which such tax- be taken into account in determining the credit ginning after December 31, 2017. able years of foreign corporations end. allowed under subsection (a).’’. SEC. 4203. INFLATION ADJUSTMENT OF DE MINI- (14) Section 904(d)(1) is amended by striking SEC. 4102. SOURCE OF INCOME FROM SALES OF INVENTORY DETERMINED SOLELY MIS EXCEPTION FOR FOREIGN BASE ‘‘sections 902, 907, and 960’’ and inserting ‘‘sec- ON BASIS OF PRODUCTION ACTIVI- COMPANY INCOME. tions 907 and 960’’. TIES. (a) IN GENERAL.—Section 954(b)(3) is amended (15) Section 904(d)(6)(A) is amended by strik- (a) IN GENERAL.—Section 863(b) is amended by by adding at the end the following new sub- ing ‘‘sections 902, 907, and 960’’ and inserting adding at the end the following: ‘‘Gains, profits, paragraph: ‘‘sections 907 and 960’’. and income from the sale or exchange of inven- ‘‘(D) INFLATION ADJUSTMENT.—In the case of (16) Section 904(h)(10)(A) is amended by strik- tory property described in paragraph (2) shall be any taxable year beginning after 2017, the dollar ing ‘‘sections 902, 907, and 960’’ and inserting allocated and apportioned between sources amount in subparagraph (A)(ii) shall be in- ‘‘sections 907 and 960’’. within and without the United States solely on creased by an amount equal to— (17) Section 904 is amended by striking sub- the basis of the production activities with re- ‘‘(i) such dollar amount, multiplied by section (k). (18) Section 905(c)(1) is amended by striking spect to the property.’’. ‘‘(ii) the cost-of-living adjustment determined (b) EFFECTIVE DATE.—The amendment made the last sentence. under section 1(c)(2)(A) for the calendar year in (19) Section 905(c)(2)(B)(i) is amended to read by this section shall apply to taxable years be- which the taxable year begins. as follows: ginning after December 31, 2017. Any increase determined under the preceding ‘‘(i) shall be taken into account for the tax- Subtitle C—Modification of Subpart F sentence shall be rounded to the nearest mul- able year to which such taxes relate, and’’. Provisions tiple of $50,000.’’. (b) EFFECTIVE DATE.—The amendments made (20) Section 906(a) is amended by striking ‘‘(or SEC. 4201. REPEAL OF INCLUSION BASED ON deemed, under section 902, paid or accrued dur- WITHDRAWAL OF PREVIOUSLY EX- by this section shall apply to taxable years of ing the taxable year)’’. CLUDED SUBPART F INCOME FROM foreign corporations beginning after December (21) Section 906(b) is amended by striking QUALIFIED INVESTMENT. 31, 2017, and to taxable years of United States paragraphs (4) and (5). (a) IN GENERAL.—Subpart F of part III of sub- shareholders in which or with which such tax- (22) Section 907(b)(2)(B) is amended by strik- chapter N of chapter 1 is amended by striking able years of foreign corporations end. ing ‘‘902 or’’. section 955. SEC. 4204. LOOK-THRU RULE FOR RELATED CON- (23) Section 907(c)(3) is amended— (b) CONFORMING AMENDMENTS.— TROLLED FOREIGN CORPORATIONS (A) by striking subparagraph (A) and redesig- (1)(A) Section 951(a)(1)(A) is amended to read MADE PERMANENT. nating subparagraphs (B) and (C) as subpara- as follows: (a) IN GENERAL.—Paragraph (6) of section graphs (A) and (B), respectively, and ‘‘(A) his pro rata share (determined under 954(c) is amended by striking subparagraph (C). (B) by striking ‘‘section 960(a)’’ in subpara- paragraph (2)) of the corporation’s subpart F (b) EFFECTIVE DATE.—The amendments made graph (A) (as so redesignated) and inserting income for such year, and’’. by this section shall apply to taxable years of ‘‘section 960’’. (B) Section 851(b)(3) is amended by striking foreign corporations beginning after December (24) Section 907(c)(5) is amended by striking ‘‘section 951(a)(1)(A)(i)’’ in the flush language 31, 2019, and to taxable years of United States ‘‘902 or’’. at the end and inserting ‘‘section 951(a)(1)(A)’’. shareholders in which or with which such tax- (25) Section 907(f)(2)(B)(i) is amended by strik- (C) Section 952(c)(1)(B)(i) is amended by strik- able years of foreign corporations end. ing ‘‘902 or’’. ing ‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘sec- SEC. 4205. MODIFICATION OF STOCK ATTRIBU- (26) Section 908(a) is amended by striking ‘‘902 tion 951(a)(1)(A)’’. TION RULES FOR DETERMINING STA- or’’. (D) Section 953(c)(1)(C) is amended by striking TUS AS A CONTROLLED FOREIGN (27) Section 909(b) is amended— ‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘section CORPORATION. (A) by striking ‘‘section 902 corporation’’ in 951(a)(1)(A)’’. (a) IN GENERAL.—Section 958(b) is amended— the matter preceding paragraph (1) and insert- (2) Section 951(a) is amended by striking para- (1) by striking paragraph (4), and ing ‘‘10/50 corporation’’, graph (3). (2) by striking ‘‘Paragraphs (1) and (4)’’ in (B) by striking ‘‘902 or’’ in paragraph (1), (3) Section 953(d)(4)(B)(iv)(II) is amended by the last sentence and inserting ‘‘Paragraph (C) by striking ‘‘by such section 902 corpora- striking ‘‘or amounts referred to in clause (ii) or (1)’’. tion’’ and all that follows in the matter fol- (iii) of section 951(a)(1)(A)’’. (b) APPLICATION OF CERTAIN REPORTING RE- lowing paragraph (2) and inserting ‘‘by such 10/ (4) Section 964(b) is amended by striking ‘‘, QUIREMENTS.—Section 6038(e)(2) is amended by 50 corporation or a domestic corporation which 955,’’. striking ‘‘except that—’’ and all that follows is a United States shareholder with respect to (5) Section 970 is amended by striking sub- through ‘‘in applying subparagraph (C)’’ and such 10/50 corporation.’’, and section (b). inserting ‘‘except that in applying subpara- (D) by striking ‘‘SECTION 902 CORPORATIONS’’ (6) The table of sections for subpart F of part graph (C)’’. in the heading thereof and inserting ‘‘10/50 COR- III of subchapter N of chapter 1 is amended by (c) EFFECTIVE DATE.—The amendments made PORATIONS’’. by this section shall apply to taxable years of (28) Section 909(d)(5) is amended to read as striking the item relating to section 955. (c) EFFECTIVE DATE.—The amendments made foreign corporations beginning after December follows: 31, 2017, and to taxable years of United States ‘‘(5) 10/50 CORPORATION.—The term ‘10/50 cor- by this section shall apply to taxable years of shareholders in which or with which such tax- poration’ means any foreign corporation with foreign corporations beginning after December able years of foreign corporations end. respect to which one or more domestic corpora- 31, 2017, and to taxable years of United States tions is a United States shareholder.’’. shareholders in which or with which such tax- SEC. 4206. ELIMINATION OF REQUIREMENT THAT (29) Section 958(a)(1) is amended by striking able years of foreign corporations end. CORPORATION MUST BE CON- TROLLED FOR 30 DAYS BEFORE SUB- SEC. 4202. REPEAL OF TREATMENT OF FOREIGN ‘‘960(a)(1)’’ and inserting ‘‘960’’. PART F INCLUSIONS APPLY. (30) Section 959(d) is amended by striking BASE COMPANY OIL RELATED IN- (a) IN GENERAL.—Section 951(a)(1) is amended ‘‘Except as provided in section 960(a)(3), any’’ COME AS SUBPART F INCOME. (a) IN GENERAL.—Section 954(a) is amended by by striking ‘‘for an uninterrupted period of 30 and inserting ‘‘Any’’. days or more’’ and inserting ‘‘at any time’’. (31) Section 959(e) is amended by striking striking paragraph (5), by striking the comma at (b) EFFECTIVE DATE.—The amendment made ‘‘section 960(b)’’ and inserting ‘‘section 960(c)’’. the end of paragraph (3) and inserting a period, by this section shall apply to taxable years of (32) Section 1291(g)(2)(A) is amended by strik- and by inserting ‘‘and’’ at the end of paragraph foreign corporations beginning after December ing ‘‘any distribution—’’ and all that follows (2). 31, 2017, and to taxable years of United States through ‘‘but only if’’ and inserting ‘‘any dis- (b) CONFORMING AMENDMENTS.— shareholders with or within which such taxable tribution, any withholding tax imposed with re- (1) Section 952(c)(1)(B)(iii) is amended by years of foreign corporations end. spect to such distribution, but only if’’. striking subclause (I) and by redesignating sub- (33) Section 6038(c)(1)(B) is amended by strik- clauses (II) through (V) as subclauses (I) Subtitle D—Prevention of Base Erosion ing ‘‘sections 902 (relating to foreign tax credit through (IV), respectively. SEC. 4301. CURRENT YEAR INCLUSION BY UNITED for corporate stockholder in foreign corporation) (2) Section 954(b)(4) is amended by striking the STATES SHAREHOLDERS WITH FOR- and 960 (relating to special rules for foreign tax last sentence. EIGN HIGH RETURNS. credit)’’ and inserting ‘‘section 960’’. (3) Section 954(b)(5) is amended by striking (a) IN GENERAL.—Subpart F of part III of sub- (34) Section 6038(c)(4) is amended by striking ‘‘the foreign base company services income, and chapter N of chapter 1 is amended by inserting subparagraph (C). the foreign base company oil related income’’ after section 951 the following new section:

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00083 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9340 CONGRESSIONAL RECORD — HOUSE November 15, 2017 ‘‘SEC. 951A. FOREIGN HIGH RETURN AMOUNT IN- States shareholder (determined without regard cluding regulations or other guidance which CLUDED IN GROSS INCOME OF to this subclause), provide for the treatment of property if— UNITED STATES SHAREHOLDERS. ‘‘(IV) any gross income excluded from the for- ‘‘(A) such property is transferred, or held, ‘‘(a) IN GENERAL.—Each person who is a eign personal holding company income (as de- temporarily, or United States shareholder of any controlled for- fined in section 954) of such corporation by rea- ‘‘(B) the avoidance of the purposes of this eign corporation for any taxable year of such son of subsection (c)(2)(C), (h), or (i) of section paragraph is a factor in the transfer or holding United States shareholder shall include in gross 954, of such property. income for such taxable year 50 percent of such ‘‘(V) any gross income excluded from the in- ‘‘(e) COMMODITIES GROSS INCOME.—For pur- shareholder’s foreign high return amount for surance income (as defined in section 953) of poses of this section— such taxable year. such corporation by reason of section 953(a)(2), ‘‘(1) COMMODITIES GROSS INCOME.—The term ‘‘(b) FOREIGN HIGH RETURN AMOUNT.—For ‘‘(VI) any gross income excluded from foreign ‘commodities gross income’ means, with respect purposes of this section— base company income (as defined in section 954) to any corporation— ‘‘(1) IN GENERAL.—The term ‘foreign high re- or insurance income (as defined in section 953) ‘‘(A) gross income of such corporation from turn amount’ means, with respect to any United of such corporation by reason of section the disposition of commodities which are pro- States shareholder for any taxable year of such 954(b)(4), duced or extracted by such corporation (or a United States shareholder, the excess (if any) ‘‘(VII) any dividend received from a related partnership in which such corporation is a part- of— person (as defined in section 954(d)(3)), and ‘‘(A) such shareholder’s net CFC tested in- ‘‘(VIII) any commodities gross income of such ner), and come for such taxable year, over corporation, over ‘‘(B) gross income of such corporation from ‘‘(B) the excess (if any) of— ‘‘(ii) the deductions (including taxes) properly the disposition of property which gives rise to ‘‘(i) the applicable percentage of the aggregate allocable to such gross income under rules simi- income described in subparagraph (A). of such shareholder’s pro rata share of the lar to the rules of section 954(b)(5) (or which ‘‘(2) COMMODITY.—The term ‘commodity’ qualified business asset investment of each con- would be so properly allocable if such corpora- means any commodity described in section trolled foreign corporation with respect to which tion had such gross income). 475(e)(2)(A) or section 475(e)(2)(D) (determined such shareholder is a United States shareholder ‘‘(B) TESTED LOSS.—The term ‘tested loss’ without regard to clause (i) thereof and by sub- for such taxable year (determined for each tax- means, with respect to any controlled foreign stituting ‘a commodity described in subpara- able year of each such controlled foreign cor- corporation for any taxable year of such con- graph (A)’ for ‘such a commodity’ in clause (ii) poration which ends in or with such taxable trolled foreign corporation, the excess (if any) of thereof). year of such United States shareholder), over the amount described in subparagraph (A)(ii) ‘‘(f) TAXABLE YEARS FOR WHICH PERSONS ARE ‘‘(ii) the amount of interest expense taken into over the amount described in subparagraph TREATED AS UNITED STATES SHAREHOLDERS OF account under subsection (c)(2)(A)(ii) in deter- (A)(i). CONTROLLED FOREIGN CORPORATIONS.—For pur- mining the shareholder’s net CFC tested income ‘‘(d) QUALIFIED BUSINESS ASSET INVEST- poses of this section— for the taxable year. MENT.—For purposes of this section— ‘‘(1) IN GENERAL.—A United States share- ‘‘(2) APPLICABLE PERCENTAGE.—The term ‘ap- ‘‘(1) IN GENERAL.—The term ‘qualified busi- holder of a controlled foreign corporation shall plicable percentage’ means, with respect to any ness asset investment’ means, with respect to be treated as a United States shareholder of taxable year, the Federal short-term rate (deter- any controlled foreign corporation for any tax- such controlled foreign corporation for any tax- mined under section 1274(d) for the month in able year of such controlled foreign corporation, able year of such United States shareholder if— which or with which such taxable year ends) the aggregate of the corporation’s adjusted ‘‘(A) a taxable year of such controlled foreign plus 7 percentage points. bases (determined as of the close of such taxable corporation ends in or with such taxable year of ‘‘(c) NET CFC TESTED INCOME.—For purposes year and after any adjustments with respect to such person, and of this section— such taxable year) in specified tangible prop- ‘‘(B) such person owns (within the meaning of ‘‘(1) IN GENERAL.—The term ‘net CFC tested erty— section 958(a)) stock in such controlled foreign income’ means, with respect to any United ‘‘(A) used in a trade or business of the cor- corporation on the last day, in such taxable States shareholder for any taxable year of such poration, and year of such foreign corporation, on which the United States shareholder, the excess (if any) ‘‘(B) of a type with respect to which a deduc- foreign corporation is a controlled foreign cor- of— tion is allowable under section 168. poration. ‘‘(A) the aggregate of such shareholder’s pro ‘‘(2) SPECIFIED TANGIBLE PROPERTY.—The ‘‘(2) TREATMENT AS A CONTROLLED FOREIGN rata share of the tested income of each con- term ‘specified tangible property’ means any CORPORATION.—Except for purposes of para- trolled foreign corporation with respect to which tangible property to the extent such property is graph (1)(B) and the application of section such shareholder is a United States shareholder used in the production of tested income or tested 951(a)(2) to this section pursuant to subsection for such taxable year of such United States loss. (g), a foreign corporation shall be treated as a shareholder (determined for each taxable year of ‘‘(3) PARTNERSHIP PROPERTY.—For purposes of controlled foreign corporation for any taxable such controlled foreign corporation which ends this subsection, if a controlled foreign corpora- year of such foreign corporation if such foreign in or with such taxable year of such United tion holds an interest in a partnership at the corporation is a controlled foreign corporation States shareholder), over close of such taxable year of the controlled for- at any time during such taxable year. ‘‘(B) the aggregate of such shareholder’s pro eign corporation, such controlled foreign cor- ‘‘(g) DETERMINATION OF PRO RATA SHARE.— rata share of the tested loss of each controlled poration shall take into account under para- For purposes of this section, pro rata shares foreign corporation with respect to which such graph (1) the controlled foreign corporation’s shall be determined under the rules of section shareholder is a United States shareholder for distributive share of the aggregate of the part- 951(a)(2) in the same manner as such section ap- such taxable year of such United States share- nership’s adjusted bases (determined as of such plies to subpart F income. holder (determined for each taxable year of such date in the hands of the partnership) in tangible controlled foreign corporation which ends in or property held by such partnership to the extent ‘‘(h) COORDINATION WITH SUBPART F.— with such taxable year of such United States such property— ‘‘(1) TREATMENT AS SUBPART F INCOME FOR shareholder). ‘‘(A) is used in the trade or business of the CERTAIN PURPOSES.—Except as otherwise pro- ‘‘(2) TESTED INCOME; TESTED LOSS.—For pur- partnership, vided by the Secretary any foreign high return poses of this section— ‘‘(B) is of a type with respect to which a de- amount included in gross income under sub- ‘‘(A) TESTED INCOME.—The term ‘tested in- duction is allowable under section 168, and section (a) shall be treated in the same manner come’ means, with respect to any controlled for- ‘‘(C) is used in the production of tested income as an amount included under section eign corporation for any taxable year of such or tested loss (determined with respect to such 951(a)(1)(A) for purposes of applying sections controlled foreign corporation, the excess (if controlled foreign corporation’s distributive 168(h)(2)(B), 535(b)(10), 851(b), 904(h)(1), 959, any) of— share of income or loss with respect to such 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), ‘‘(i) the gross income of such corporation de- property). 1248(d)(1), 6501(e)(1)(C), 6654(d)(2)(D), and termined without regard to— For purposes of this paragraph, the controlled 6655(e)(4). ‘‘(I) any item of income which is effectively foreign corporation’s distributive share of the ‘‘(2) ENTIRE FOREIGN HIGH RETURN AMOUNT connected with the conduct by such corporation adjusted basis of any property shall be the con- TAKEN INTO ACCOUNT FOR PURPOSES OF CERTAIN of a trade or business within the United States trolled foreign corporation’s distributive share SECTIONS.—For purposes of applying paragraph if subject to tax under this chapter, of income and loss with respect to such prop- (1) with respect to sections 168(h)(2)(B), 851(b), ‘‘(II) any gross income taken into account in erty. 959, 961, 962, 1248(b)(1), and 1248(d)(1), the for- determining the subpart F income of such cor- ‘‘(4) DETERMINATION OF ADJUSTED BASIS.—For eign high return amount included in gross in- poration, purposes of this subsection, the adjusted basis in come under subsection (a) shall be determined ‘‘(III) except as otherwise provided by the Sec- any property shall be determined without regard by substituting ‘100 percent’ for ‘50 percent’ in retary, any amount excluded from the foreign to any provision of this title (or any other provi- such subsection. personal holding company income (as defined in sion of law) which is enacted after the date of ‘‘(3) ALLOCATION OF FOREIGN HIGH RETURN section 954) of such corporation by reason of the enactment of this section. AMOUNT TO CONTROLLED FOREIGN CORPORA- section 954(c)(6) but only to the extent that any ‘‘(5) REGULATIONS.—The Secretary shall issue TIONS.—For purposes of the sections referred to deduction allowable for the payment or accrual such regulations or other guidance as the Sec- in paragraph (1), with respect to any controlled of such amount does not result in a reduction in retary determines appropriate to prevent the foreign corporation any pro rata amount from the foreign high return amount of any United avoidance of the purposes of this subsection, in- which is taken into account in determining the

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foreign high return amount included in gross in- (B) NO CARRYOVER OF EXCESS TAXES.—Section ‘‘(1) IN GENERAL.—In the case of any domestic come of a United States shareholder under sub- 904(c) is amended by adding at the end the fol- corporation which is a member of any inter- section (a), the portion of such foreign high re- lowing: ‘‘This subsection shall not apply to national financial reporting group, the deduc- turn amount which is treated as being with re- taxes paid or accrued with respect to amounts tion under this chapter for interest paid or ac- spect to such controlled foreign corporation is— described in subsection (d)(1)(A).’’ crued during the taxable year shall not exceed ‘‘(A) in the case of a controlled foreign cor- (3) GROSS UP FOR DEEMED PAID FOREIGN TAX the sum of— poration with tested loss, zero, and CREDIT.—Section 78, as amended by the pre- ‘‘(A) the allowable percentage of 110 percent ‘‘(B) in the case of a controlled foreign cor- ceding provisions of this Act, is amended— of the excess (if any) of — poration with tested income, the portion of such (A) by striking ‘‘any taxable year, an ‘‘(i) the amount of such interest so paid or ac- foreign high return amount which bears the amount’’ and inserting ‘‘any taxable year— crued, over same ratio to such foreign high return amount ‘‘(1) an amount’’, and ‘‘(ii) the amount described in subparagraph as— (B) by striking the period at the end and in- (B), plus serting ‘‘, and ‘‘(i) such United States shareholder’s pro rata ‘‘(B) the amount of interest includible in gross ‘‘(2) an amount equal to the taxes deemed to amount of the tested income of such controlled income of such corporation for such taxable be paid by such corporation under section 960(d) foreign corporation, bears to year. for such taxable year (determined by sub- ‘‘(ii) the aggregate amount determined under ‘‘(2) INTERNATIONAL FINANCIAL REPORTING stituting ‘100 percent’ for ‘80 percent’ in such subsection (c)(1)(A) with respect to such United GROUP.— section) shall be treated for purposes of this title States shareholder. ‘‘(A) For purposes of this subsection, the term (other than sections 959, 960, and 961) as an in- ‘‘(4) COORDINATION WITH SUBPART F TO DENY ‘international financial reporting group’ means, crease in the foreign high return amount of such DOUBLE BENEFIT OF LOSSES.—In the case of any with respect to any reporting year, any group of domestic corporation under section 951A for United States shareholder of any controlled for- entities which— such taxable year.’’. eign corporation, the amount included in gross ‘‘(i) includes— income under section 951(a)(1)(A) shall be deter- (c) CONFORMING AMENDMENTS.— (1) Section 170(b)(2)(D) is amended by striking ‘‘(I) at least one foreign corporation engaged mined by increasing the earnings and profits of ‘‘computed without regard to’’ and all that fol- in a trade or business within the United States, such controlled foreign corporation (solely for lows and inserting ‘‘computed— or purposes of determining such amount) by an ‘‘(i) without regard to— ‘‘(II) at least one domestic corporation and amount that bears the same ratio (not greater ‘‘(I) this section, one foreign corporation, than 1) to such shareholder’s pro rata share of ‘‘(II) part VIII (except section 248), ‘‘(ii) prepares consolidated financial state- the tested loss of such controlled foreign cor- ‘‘(III) any net operating loss carryback to the ments with respect to such year, and poration as— taxable year under section 172, ‘‘(iii) reports in such statements average an- ‘‘(A) the aggregate amount determined under ‘‘(IV) any capital loss carryback to the tax- nual gross receipts (determined in the aggregate subsection (c)(1)(A) with respect to such share- able year under section 1212(a)(1), and with respect to all entities which are part of holder, bears to ‘‘(ii) by substituting ‘100 percent’ for ‘50 per- such group) for the 3-reporting-year period end- ‘‘(B) the aggregate amount determined under cent’ in section 951A(a).’’. ing with such reporting year in excess of subsection (c)(1)(B) with respect to such share- (2) Section 246(b)(1) is amended by— $100,000,000. holder.’’. (A) striking ‘‘and without regard to’’ and in- ‘‘(B) RULES RELATING TO DETERMINATION OF (b) FOREIGN TAX CREDIT.— serting ‘‘without regard to’’, and AVERAGE GROSS RECEIPTS.—For purposes of sub- (1) APPLICATION OF DEEMED PAID FOREIGN TAX (B) by striking the period at the end and in- paragraph (A)(iii), rules similar to the rules of CREDIT.—Section 960, as amended by the pre- serting ‘‘, and by substituting ‘100 percent’ for section 448(c)(3) shall apply. ceding provisions of this Act, is amended by re- ‘50 percent’ in section 951A(a).’’. ‘‘(3) ALLOWABLE PERCENTAGE.—For purposes designating subsections (d) and (e) as sub- (3) Section 469(i)(3)(F) is amended by striking of this subsection— sections (e) and (f), respectively, and by insert- ‘‘determined without regard to’’ and all that fol- ‘‘(A) IN GENERAL.—The term ‘allowable per- ing after subsection (c) the following new sub- lows and inserting ‘‘determined— centage’ means, with respect to any domestic section: ‘‘(i) without regard to— corporation for any taxable year, the ratio (ex- ‘‘(d) DEEMED PAID CREDIT FOR TAXES PROP- ‘‘(I) any amount includible in gross income pressed as a percentage and not greater than ERLY ATTRIBUTABLE TO TESTED INCOME.— under section 86, 100 percent) of— ‘‘(1) IN GENERAL.—For purposes of this sub- ‘‘(II) the amounts allowable as a deduction part, if any amount is includible in the gross in- under section 219, and ‘‘(i) such corporation’s allocable share of the ‘‘(III) any passive activity loss or any loss al- come of a domestic corporation under section international financial reporting group’s re- lowable by reason of subsection (c)(7), and 951A, such domestic corporation shall be deemed ported net interest expense for the reporting ‘‘(ii) by substituting ‘100 percent’ for ‘50 per- to have paid foreign income taxes equal to 80 year of such group which ends in or with such cent’ in section 951A(a).’’. taxable year of such corporation, over percent of— (4) Section 856(c)(2) is amended by striking ‘‘(A) such domestic corporation’s foreign high ‘‘(ii) such corporation’s reported net interest ‘‘and’’ at the end of subparagraph (H), by add- expense for such reporting year of such group. return percentage, multiplied by ing ‘‘and’’ at the end of subparagraph (I), and ‘‘(B) the aggregate tested foreign income taxes ‘‘(B) REPORTED NET INTEREST EXPENSE.—The by inserting after subparagraph (I) the fol- paid or accrued by controlled foreign corpora- term ‘reported net interest expense’ means— lowing new subparagraph: ‘‘(i) with respect to any international finan- tions with respect to which such domestic cor- ‘‘(J) amounts includible in gross income under poration is a United States shareholder. cial reporting group for any reporting year, the section 951A(a);’’. excess of— ‘‘(2) FOREIGN HIGH RETURN PERCENTAGE.—For (5) Section 856(c)(3)(D) is amended by striking ‘‘(I) the aggregate amount of interest expense purposes of paragraph (1), the term ‘foreign ‘‘dividends or other distributions on, and gain’’ reported in such group’s consolidated financial high return percentage’ means, with respect to and inserting ‘‘dividends, other distributions on, statements for such taxable year, over any domestic corporation, the ratio (expressed amounts includible in gross income under sec- ‘‘(II) the aggregate amount of interest income as a percentage) of— tion 951A(a) with respect to, and gain’’. reported in such group’s consolidated financial ‘‘(A) such corporation’s foreign high return (6) The table of sections for subpart F of part statements for such taxable year, and amount (as defined in section 951A(b)), divided III of subchapter N of chapter 1 is amended by ‘‘(ii) with respect to any domestic corporation by inserting after the item relating to section 951 for any reporting year, the excess of— ‘‘(B) the aggregate amount determined under the following new item: section 951A(c)(1)(A) with respect to such cor- ‘‘(I) the amount of interest expense of such ‘‘Sec. 951A. Foreign high return amount in- poration. corporation reported in the books and records of cluded in gross income of United ‘‘(3) TESTED FOREIGN INCOME TAXES.—For the international financial reporting group States shareholders.’’. purposes of paragraph (1), the term ‘tested for- which are used in preparing such group’s con- (d) EFFECTIVE DATE.—The amendments made solidated financial statements for such taxable eign income taxes’ means, with respect to any by this section shall apply to taxable years of year, over domestic corporation which is a United States foreign corporations beginning after December ‘‘(II) the amount of interest income of such shareholder of a controlled foreign corporation, 31, 2017, and to taxable years of United States corporation reported in such books and records. the foreign income taxes paid or accrued by shareholders in which or with which such tax- ‘‘(C) ALLOCABLE SHARE OF REPORTED NET IN- such foreign corporation which are properly at- able years of foreign corporations end. tributable to gross income described in section TEREST EXPENSE.—With respect to any domestic SEC. 4302. LIMITATION ON DEDUCTION OF INTER- corporation which is a member of any inter- 951A(c)(2)(A)(i).’’. EST BY DOMESTIC CORPORATIONS (2) APPLICATION OF FOREIGN TAX CREDIT LIMI- WHICH ARE MEMBERS OF AN INTER- national financial reporting group, such cor- TATION.— NATIONAL FINANCIAL REPORTING poration’s allocable share of such group’s re- (A) SEPARATE BASKET FOR FOREIGN HIGH RE- GROUP. ported net interest expense for any reporting TURN AMOUNT.—Section 904(d)(1) is amended by (a) IN GENERAL.—Section 163 is amended by year is the portion of such expense which bears redesignating subparagraphs (A) and (B) as redesignating subsection (n) as subsection (p) the same ratio to such expense as— subparagraphs (B) and (C), respectively, and by and by inserting after subsection (m) the fol- ‘‘(i) the EBITDA of such corporation for such inserting before subparagraph (B) (as so redes- lowing new subsection: reporting year, bears to ignated) the following new subparagraph: ‘‘(n) LIMITATION ON DEDUCTION OF INTEREST ‘‘(ii) the EBITDA of such group for such re- ‘‘(A) any amount includible in gross income BY DOMESTIC CORPORATIONS IN INTERNATIONAL porting year. under section 951A,’’. FINANCIAL REPORTING GROUPS.— ‘‘(D) EBITDA.—

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‘‘(i) IN GENERAL.—The term ‘EBITDA’ means, United States shall be limited in a manner con- 882(g) shall have the same meaning as when with respect to any reporting year, earnings be- sistent with the principles of this subsection. used in such section and rules similar to the fore interest, taxes, depreciation, and amortiza- ‘‘(C) CONSOLIDATED GROUPS.—For purposes of rules of paragraphs (5) and (6) of such section tion— this subsection, the members of any group that shall apply for purposes of this section.’’. ‘‘(I) as determined in the international finan- file (or are required to file) a consolidated re- (2) DENIAL OF DEDUCTION FOR TAX IMPOSED.— cial reporting group’s consolidated financial turn with respect to the tax imposed by chapter Section 275(a) is amended by inserting after statements for such year, or 1 for a taxable year shall be treated as a single paragraph (6) the following new paragraph: ‘‘(II) for purposes of subparagraph (A)(i), as corporation. ‘‘(7) Taxes imposed by section 4491.’’. determined in the books and records of the ‘‘(7) REGULATIONS.—The Secretary may issue (3) CLERICAL AMENDMENT.—The table of sub- international financial reporting group which such regulations or other guidance as are nec- chapters for chapter 36 is amended by adding at are used in preparing such statements if not de- essary or appropriate to carry out the purposes the end the following new item: termined in such statements. of this subsection.’’. ‘‘SUBCHAPTER E. TAX ON CERTAIN AMOUNTS TO ‘‘(ii) TREATMENT OF DISREGARDED ENTITIES.— (b) CARRYFORWARD OF DISALLOWED INTER- FOREIGN AFFILIATES.’’. The EBITDA of any domestic corporation shall EST.— (b) ELECTION TO TREAT CERTAIN PAYMENTS not fail to include the EBITDA of any entity (1) IN GENERAL.—Section 163(o) is amended to FROM DOMESTIC CORPORATIONS TO RELATED which is disregarded for purposes of this chap- read as follows: FOREIGN CORPORATIONS AS EFFECTIVELY CON- ter. ‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED NECTED INCOME.—Section 882 is amended by ‘‘(iii) TREATMENT OF INTRA-GROUP DISTRIBU- INTEREST.—The amount of any interest not al- adding at the end the following new subsection: TIONS.—The EBITDA of any domestic corpora- lowed as a deduction for any taxable year by tion shall be determined without regard to any reason of subsection (j)(1) or (n)(1) (whichever ‘‘(g) ELECTION TO TREAT CERTAIN PAYMENTS distribution received by such corporation from imposes the lower limitation with respect to such FROM DOMESTIC CORPORATIONS TO RELATED any other member of the international financial taxable year) shall be treated as interest (and as FOREIGN CORPORATIONS AS EFFECTIVELY CON- reporting group. business interest for purposes of subsection NECTED INCOME.— ‘‘(1) IN GENERAL.—In the case of any specified ‘‘(E) SPECIAL RULES FOR NON-POSITIVE (j)(1)) paid or accrued in the succeeding taxable amount paid or incurred by a domestic corpora- EBITDA.— year. Interest paid or accrued in any taxable ‘‘(i) NON-POSITIVE GROUP EBITDA.—In the case year (determined without regard to the pre- tion to a foreign corporation which is a member of any international financial reporting group ceding sentence) shall not be carried past the of the same international financial reporting the EBITDA of which is zero or less, paragraph 5th taxable year following such taxable year, group as such domestic corporation and which (1) shall not apply to any member of such group determined by treating interest as allowed as a has elected to be subject to the provisions of this the EBITDA of which is above zero. deduction on a first-in, first-out basis.’’. subsection— ‘‘(ii) NON-POSITIVE ENTITY EBITDA.—In the (2) TREATMENT OF CARRYFORWARD OF DIS- ‘‘(A) such amount shall be taken into account case of any group member the EBITDA of which ALLOWED INTEREST IN CERTAIN CORPORATE AC- (other than for purposes of sections 245, 245A, is zero or less, paragraph (1) shall be applied QUISITIONS.—For rules related to the and 881) in the taxable year of such foreign cor- without regard to subparagraph (A) thereof. carryforward of disallowed interest in certain poration during which such amount is paid or ‘‘(4) CONSOLIDATED FINANCIAL STATEMENT.— corporate acquisitions, see the amendments incurred as if— For purposes of this subsection, the term ‘con- made by section 3301(c). ‘‘(i) such foreign corporation were engaged in solidated financial statement’ means any con- (c) EFFECTIVE DATE.—The amendments made a trade or business within the United States, solidated financial statement described in para- by this section shall apply to taxable years be- ‘‘(ii) such foreign corporation had a perma- graph (2)(A)(ii) if such statement is— ginning after December 31, 2017. nent establishment in the United States during ‘‘(A) a financial statement which is certified SEC. 4303. EXCISE TAX ON CERTAIN PAYMENTS the taxable year, and as being prepared in accordance with generally FROM DOMESTIC CORPORATIONS TO ‘‘(iii) such payment were effectively connected accepted accounting principles, international fi- RELATED FOREIGN CORPORATIONS; with the conduct of a trade or business within nancial reporting standards, or any other com- ELECTION TO TREAT SUCH PAY- the United States and were attributable to such parable method of accounting identified by the MENTS AS EFFECTIVELY CON- permanent establishment, NECTED INCOME. Secretary, and which is— ‘‘(B) for purposes of subsection (c)(1)(A), no (a) EXCISE TAX ON CERTAIN AMOUNTS FROM ‘‘(i) a 10-K (or successor form), or annual deduction shall be allowed with respect to such DOMESTIC CORPORATIONS TO FOREIGN AFFILI- statement to shareholders, required to be filed amount and such subsection shall be applied ATES.— with the United States Securities and Exchange without regard to such amount, and (1) IN GENERAL.—Chapter 36 is amended by Commission, ‘‘(C) the foreign corporation shall be allowed adding at the end the following new subchapter: ‘‘(ii) an audited financial statement which is a deduction (for the taxable year referred to in used for— ‘‘Subchapter E—Tax on Certain Amounts to subparagraph (A)) equal to the deemed expenses ‘‘(I) credit purposes, Foreign Affiliates with respect to such amount. ‘‘(II) reporting to shareholders, partners, or ‘‘Sec. 4491. Imposition of tax on certain ‘‘(2) SPECIFIED AMOUNT.—For purposes of this other proprietors, or to beneficiaries, or amounts from domestic corpora- subsection— ‘‘(III) any other substantial nontax purpose, tions to foreign affiliates. ‘‘(A) IN GENERAL.—The term ‘specified but only if there is no statement described in ‘‘SEC. 4491. IMPOSITION OF TAX ON CERTAIN amount’ means any amount which is, with re- clause (i), or AMOUNTS FROM DOMESTIC COR- spect to the payor, allowable as a deduction or ‘‘(iii) filed with any other Federal or State PORATIONS TO FOREIGN AFFILI- includible in costs of goods sold, inventory, or agency for nontax purposes, but only if there is ATES. the basis of a depreciable or amortizable asset. no statement described in clause (i) or (ii), or ‘‘(a) IN GENERAL.—There is hereby imposed on ‘‘(B) EXCEPTIONS.—The term ‘specified ‘‘(B) a financial statement which— each specified amount paid or incurred by a do- amount’ shall not include— ‘‘(i) is used for a purpose described in sub- mestic corporation to a foreign corporation ‘‘(i) interest, clause (I), (II), or (III) of subparagraph (A)(ii), which is a member of the same international fi- ‘‘(ii) any amount paid or incurred for the ac- or nancial reporting group as such domestic cor- quisition of any security described in section ‘‘(ii) filed with any regulatory or govern- poration a tax equal to the highest rate of tax 475(c)(2) (determined without regard to the last mental body (whether domestic or foreign) speci- in effect under section 11 multiplied by such sentence thereof) or any commodity described in fied by the Secretary, amount. section 475(e)(2), but only if there is no statement described in ‘‘(b) BY WHOM PAID.—The tax imposed by ‘‘(iii) except as provided in subparagraph (C), subparagraph (A). subsection (a) shall be paid by the domestic cor- any amount with respect to which tax is im- ‘‘(5) REPORTING YEAR.—For purposes of this poration described in such subsection. posed under section 881(a), and subsection, the term ‘reporting year’ means, ‘‘(c) EXCEPTION FOR EFFECTIVELY CONNECTED ‘‘(iv) in the case of a payor which has elected with respect to any international financial re- INCOME.—Subsection (a) shall not apply to so to use a services cost method for purposes of sec- porting group, the year with respect to which much of any specified amount as is effectively tion 482, any amount paid or incurred for serv- the consolidated financial statements are pre- connected with the conduct of a trade or busi- ices if such amount is the total services cost pared. ness within the United States if such amount is with no markup. ‘‘(6) APPLICATION TO CERTAIN ENTITIES.— subject to tax under chapter 1. In the case of ‘‘(C) AMOUNTS NOT TREATED AS EFFECTIVELY ‘‘(A) PARTNERSHIPS.—Except as otherwise pro- any amount which is treated as effectively con- CONNECTED TO EXTENT OF GROSS-BASIS TAX.— vided by the Secretary in paragraph (7), this nected with the conduct of a trade or business Subparagraph (B)(iii) shall only apply to so subsection shall apply to any partnership which within the United States by reason of section much of any specified amount as bears the pro- is a member of any international financial re- 882(g), the preceding sentence shall apply to portion to such amount as— porting group under rules similar to the rules of such amount only if the domestic corporation ‘‘(i) the rate of tax imposed under section section 163(j)(3). provides to the Secretary (at such time and in 881(a) with respect to such amount, bears to ‘‘(B) FOREIGN CORPORATIONS ENGAGED IN such form and manner as the Secretary may ‘‘(ii) 30 percent. TRADE OR BUSINESS WITHIN THE UNITED provide) a copy of the election made under sec- ‘‘(3) DEEMED EXPENSES.— STATES.—Except as otherwise provided by the tion 882(g) by the foreign corporation referred to ‘‘(A) IN GENERAL.—The deemed expenses with Secretary in paragraph (8), any deduction for in subsection (a). respect to any specified amount received by a interest paid or accrued by a foreign corporation ‘‘(d) DEFINITIONS AND SPECIAL RULES.—Terms foreign corporation during any reporting year is engaged in a trade or business within the used in this section that are also used in section the amount of expenses such that the net income

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ratio of such foreign corporation with respect to incurring, or receiving such amounts from such (2) REPORTING BY DOMESTIC GROUP MEM- such amount (taking into account only such trade or business if such trade or business were BERS.— specified amount and such deemed expenses) is a domestic corporation. (A) IN GENERAL .—Subpart A of part III of equal to the net income ratio of the inter- ‘‘(7) JOINT AND SEVERAL LIABILITY OF MEM- subchapter A of chapter 61 is amended by in- national financial reporting group determined BERS OF INTERNAL FINANCIAL REPORTING serting after section 6038D the following new for such reporting year with respect to the prod- GROUP.—In the case of any underpayment with section: uct line to which the specified amount relates. respect to any taxable year of a foreign corpora- ‘‘SEC. 6038E. INFORMATION WITH RESPECT TO ‘‘(B) NET INCOME RATIO.—For purposes of this tion which is a member of an international fi- CERTAIN PAYMENTS FROM DOMES- paragraph, the term ‘net income ratio’ means nancial accounting group, each domestic cor- TIC CORPORATIONS TO RELATED the ratio of— poration which is a member of such group at FOREIGN CORPORATIONS. ‘‘(i) net income determined without regard to any time during such taxable year shall be ‘‘(a) IN GENERAL.—In the case of any domestic interest income, interest expense, and income jointly and severally liable for— corporation which pays or incurs any amount to taxes, divided by ‘‘(A) so much of such underpayment as does which section 882(g)(1) applies, such person ‘‘(ii) revenues. not exceed the excess (if any) of such under- shall— ‘‘(C) METHOD OF DETERMINATION.—Amounts payment over the amount of such underpayment ‘‘(1) make a return according to the forms and described in subparagraph (B) shall be deter- determined without regard to this subsection, regulations prescribed the Secretary, setting mined with respect to the international finan- and forth the information described in subsection cial reporting group on the basis of the consoli- ‘‘(B) any penalty, addition to tax, or addi- (b), and dated financial statements referred to in para- tional amount attributable to the amount de- ‘‘(2) maintain (at the location, in the manner, graph (4)(A)(i) and the books and records of the scribed in subparagraph (A). and to the extent prescribed in regulations) such members of the international financial reporting ‘‘(8) FOREIGN TAX CREDIT ALLOWED.—The records as may be appropriate to determine li- group which are used in preparing such state- credit allowed under section 906(a) with respect ability for tax pursuant to paragraphs (1) and ments, taking into account only revenues and to amounts taken into account in income under (7) of section 882(g). expenses of the members of such group (other paragraph (1)(A) shall be limited to 80 percent ‘‘(b) REQUIRED INFORMATION.—The informa- than the members of such group which are (or of the amount of taxes paid or accrued and de- tion described in this subsection is— are treated as) a domestic corporation for pur- termined without regard to section 906(b)(1). ‘‘(1) the name and taxpayer identification poses of this subsection) derived from, or in- ‘‘(9) ELECTION.—Any election under para- number of the common parent of the inter- curred with respect to— graph (1)— national financial reporting group in which ‘‘(i) persons who are not members of such ‘‘(A) shall be made at such time and in such such domestic corporation is a member, and group, and form and manner as the Secretary may provide, ‘‘(2) with respect to any person who receives ‘‘(ii) members of such group which are (or are and an amount described in subsection (a) from such treated as) a domestic corporation for purposes ‘‘(B) shall apply for the taxable year for domestic corporation— of this subsection. which made and all subsequent taxable years ‘‘(A) the name and taxpayer identification ‘‘(4) INTERNATIONAL FINANCIAL REPORTING unless revoked with the consent of the Sec- number of such person, GROUP.—For purposes of this subsection— retary. ‘‘(B) the aggregate amounts received by such ‘‘(A) IN GENERAL.—The term ‘international fi- ‘‘(10) REGULATIONS.—The Secretary may issue person, nancial reporting group’ means any group of such regulations or other guidance as are nec- ‘‘(C) the product lines to which such amounts entities, with respect to any specified amount, if essary or appropriate to carry out the purposes relate, the aggregate amounts relating to each such amount is paid or incurred during a re- of this subsection, including regulations or other such product line, and the net income ratio for porting year of such group with respect to guidance— each such product line (determined under sec- which— ‘‘(A) to provide for the proper determination tion 882(g)(3)(B) with respect to the inter- ‘‘(i) such group prepares consolidated finan- of product lines, and national financial reporting group), and cial statements (within the meaning of section ‘‘(B) to prevent the avoidance of the purposes ‘‘(D) a summary of any changes in financial 163(n)(4)) with respect to such year, and of this subsection through the use of conduit accounting methods that affect the computation ‘‘(ii) the average annual aggregate payment transactions or by other means.’’. of any net income ratios described in subpara- amount of such group for the 3-reporting-year (c) REPORTING REQUIREMENTS.— graph (C). period ending with such reporting year exceeds (1) REPORTING BY FOREIGN CORPORATION.— ‘‘(c) DEFINITIONS AND SPECIAL RULES.—Terms $100,000,000. Section 6038C(b) is amended to read as follows: used in this paragraph that are also used in sec- ‘‘(B) ANNUAL AGGREGATE PAYMENT AMOUNT.— ‘‘(b) REQUIRED INFORMATION.— tion 882(g) shall have the same meaning as The term ‘annual aggregate payment amount’ ‘‘(1) IN GENERAL.—The information described when used in such section and rules similar to means, with respect to any reporting year of the in this subsection is— the rules of paragraphs (5) and (6) of such sec- group referred to in subparagraph (A)(i), the ‘‘(A) the information described in section tion shall apply for purposes of this para- aggregate specified amounts to which paragraph 6038A(b), and graph.’’. (1) applies (or would apply if such group were ‘‘(B) such other information as the Secretary (B) CLERICAL AMENDMENT.—The table of sec- an international financial reporting group). may prescribe by regulations relating to any tions for subpart A of part III of subchapter A ‘‘(C) APPLICATION OF CERTAIN RULES.—Rules item not directly connected with a transaction of chapter 61 is amended by inserting after the similar to the rules of subparagraphs (A), (B), for which information is required under sub- item relating to section 6038D the following new and (D) of section 448(c)(3) shall apply for pur- paragraph (A). item: poses of this paragraph. ‘‘(2) CERTAIN PAYMENTS FROM RELATED DO- ‘‘(5) TREATMENT OF PARTNERSHIPS.—Any spec- MESTIC CORPORATIONS.— ‘‘Sec. 6038E. Information with respect to certain ified amount paid, incurred, or received by a ‘‘(A) IN GENERAL.—In the case of any report- payments from domestic corpora- partnership which is a member of any inter- ing corporation that receives during the taxable tions to related foreign corpora- national financial reporting group (and any year any amount to which section 882(g)(1) ap- tions.’’. amount treated as paid, incurred, or received by plies, the information described in this sub- (d) EFFECTIVE DATE.—The amendments made a partnership under this paragraph) shall be section shall include, with respect to each mem- by this section shall apply to amounts paid or treated for purposes of this subsection as ber of the international financial reporting incurred after December 31, 2018. amounts paid, incurred, or received, respec- group from which any such amount is re- Subtitle E—Provisions Related to Possessions tively, by each partner of such partnership in ceived— of the United States an amount equal to such partner’s distributive ‘‘(i) the name and taxpayer identification SEC. 4401. EXTENSION OF DEDUCTION ALLOW- share of the items of income, gain, deduction, or number of such member, ABLE WITH RESPECT TO INCOME AT- loss to which such amounts relate. ‘‘(ii) the aggregate amounts received from TRIBUTABLE TO DOMESTIC PRODUC- ‘‘(6) TREATMENT OF AMOUNTS IN CONNECTION such member, TION ACTIVITIES IN PUERTO RICO. WITH UNITED STATES TRADE OR BUSINESS.—Any ‘‘(iii) the product lines to which such amounts (a) IN GENERAL.—Section 199(d)(8)(C), prior to specified amount paid, incurred, or received by relate, the aggregate amounts relating to each its repeal by this Act, is amended— a foreign corporation in connection with the such product line, and the net income ratio for (1) by striking ‘‘first 11 taxable years’’ and in- conduct of a trade or business within the United each such product line (determined under sec- serting ‘‘first 12 taxable years’’, and States (other than a trade or business it is tion 882(g)(3)(B) with respect to the inter- (2) by striking ‘‘January 1, 2017’’ and insert- deemed to conduct pursuant to this subsection) national financial reporting group), and ing ‘‘January 1, 2018’’. shall be treated for purposes of this subsection ‘‘(iv) a summary of any changes in financial (b) EFFECTIVE DATE.—The amendments made as an amount paid, incurred, or received, re- accounting methods that affect the computation by this section shall apply to taxable years be- spectively, by a domestic corporation. For pur- of any net income ratio described in clause (iii). ginning after December 31, 2016. poses of the preceding sentence, a foreign cor- ‘‘(B) DEFINITIONS AND SPECIAL RULES.—Terms SEC. 4402. EXTENSION OF TEMPORARY INCREASE poration shall be deemed to pay, incur, and re- used in this paragraph that are also used in sec- IN LIMIT ON COVER OVER OF RUM ceive amounts with respect to a trade or busi- tion 882(g) shall have the same meaning as EXCISE TAXES TO PUERTO RICO AND ness it conducts within the United States (other when used in such section and rules similar to THE VIRGIN ISLANDS. than a trade or business it is deemed to conduct the rules of paragraphs (5) and (6) of such sec- (a) IN GENERAL.—Section 7652(f)(1) is amend- pursuant to this subsection) to the extent such tion shall apply for purposes of this para- ed by striking ‘‘January 1, 2017’’ and inserting foreign corporation would be treated as paying, graph.’’. ‘‘January 1, 2023’’.

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(b) EFFECTIVE DATE.—The amendment made ‘‘(i) as reported to the applicable insurance which operates an art museum as a substantial by this section shall apply to distilled spirits regulatory body in the applicable financial activity unless such museum is open during nor- brought into the United States after December statement described in paragraph (4)(A) (or, if mal business hours to the public for at least 31, 2016. less, the amount required by applicable law or 1,000 hours during the taxable year.’’. SEC. 4403. EXTENSION OF AMERICAN SAMOA ECO- regulation), or (b) EFFECTIVE DATE.—The amendments made NOMIC DEVELOPMENT CREDIT. ‘‘(ii) as determined under regulations pre- by this section shall apply to taxable years be- (a) IN GENERAL.—Section 119(d) of division A scribed by the Secretary. ginning after December 31, 2017. of the Tax Relief and Health Care Act of 2006 is ‘‘(4) OTHER DEFINITIONS AND RULES.—For pur- SEC. 5103. EXCISE TAX BASED ON INVESTMENT amended— poses of this subsection— INCOME OF PRIVATE COLLEGES AND (1) by striking ‘‘January 1, 2017’’ each place it ‘‘(A) APPLICABLE FINANCIAL STATEMENT.—The UNIVERSITIES. appears and inserting ‘‘January 1, 2023’’, term ‘applicable financial statement’ means a (a) IN GENERAL.—Chapter 42 is amended by (2) by striking ‘‘first 11 taxable years’’ in statement for financial reporting purposes adding at the end the following new subchapter: paragraph (1) and inserting ‘‘first 17 taxable which— ‘‘Subchapter H—Excise Tax Based on Invest- years’’, and ‘‘(i) is made on the basis of generally accepted ment Income of Private Colleges and Uni- (3) by striking ‘‘first 5 taxable years’’ in para- accounting principles, versities ‘‘(ii) is made on the basis of international fi- graph (2) and inserting ‘‘first 11 taxable years’’. ‘‘Sec. 4969. Excise tax based on investment in- nancial reporting standards, but only if there is (b) TREATMENT OF CERTAIN REFERENCES.— come of private colleges and uni- no statement that meets the requirement of Section 119(e) of division A of the Tax Relief versities. and Health Care Act of 2006 is amended by add- clause (i), or ‘‘SEC. 4969. EXCISE TAX BASED ON INVESTMENT ing at the end the following: ‘‘References in this ‘‘(iii) except as otherwise provided by the Sec- retary in regulations, is the annual statement INCOME OF PRIVATE COLLEGES AND subsection to section 199 of the Internal Rev- UNIVERSITIES. which is required to be filed with the applicable enue Code of 1986 shall be treated as references ‘‘(a) TAX IMPOSED.—There is hereby imposed insurance regulatory body, but only if there is to such section as in effect before its repeal by on each applicable educational institution for no statement which meets the requirements of the Tax Cuts and Jobs Act.’’. the taxable year a tax equal to 1.4 percent of the clause (i) or (ii). (c) EFFECTIVE DATE.—The amendments made net investment income of such institution for the ‘‘(B) APPLICABLE INSURANCE REGULATORY by this section shall apply to taxable years be- taxable year. BODY.—The term ‘applicable insurance regu- ginning after December 31, 2016. ‘‘(b) APPLICABLE EDUCATIONAL INSTITUTION.— latory body’ means, with respect to any insur- Subtitle F—Other International Reforms For purposes of this subchapter— ance business, the entity established by law to ‘‘(1) IN GENERAL.—The term ‘applicable edu- SEC. 4501. RESTRICTION ON INSURANCE BUSI- license, authorize, or regulate such business and cational institution’ means an eligible edu- NESS EXCEPTION TO PASSIVE FOR- to which the statement described in subpara- EIGN INVESTMENT COMPANY RULES. cational institution (as defined in section graph (A) is provided.’’. (a) IN GENERAL.—Section 1297(b)(2)(B) is 25A(e)(3))— (c) EFFECTIVE DATE.—The amendments made ‘‘(A) which has at least 500 students during amended to read as follows: by this section shall apply to taxable years be- ‘‘(B) derived in the active conduct of an in- the preceding taxable year, ginning after December 31, 2017. surance business by a qualifying insurance cor- ‘‘(B) which is not described in the first sen- poration (as defined in subsection (f)),’’. TITLE V—EXEMPT ORGANIZATIONS tence of section 511(a)(2)(B), and (b) QUALIFYING INSURANCE CORPORATION DE- Subtitle A—Unrelated Business Income Tax ‘‘(C) the aggregate fair market value of the as- FINED.—Section 1297 is amended by adding at SEC. 5001. CLARIFICATION OF UNRELATED BUSI- sets of which at the end of the preceding taxable the end the following new subsection: NESS INCOME TAX TREATMENT OF year (other than those assets which are used di- ‘‘(f) QUALIFYING INSURANCE CORPORATION.— ENTITIES TREATED AS EXEMPT rectly in carrying out the institution’s exempt For purposes of subsection (b)(2)(B)— FROM TAXATION UNDER SECTION purpose) is at least $250,000 per student of the ‘‘(1) IN GENERAL.—The term ‘qualifying insur- 501(a). institution. ance corporation’ means, with respect to any (a) IN GENERAL.—Section 511 is amended by ‘‘(2) STUDENTS.—For purposes of paragraph taxable year, a foreign corporation— adding at the end the following new subsection: (1), the number of students of an institution ‘‘(A) which would be subject to tax under sub- ‘‘(d) ORGANIZATIONS AND TRUSTS EXEMPT shall be based on the daily average number of chapter L if such corporation were a domestic FROM TAXATION NOT SOLELY BY REASON OF full-time students attending such institution corporation, and SECTION 501(a).—For purposes of subsections (with part-time students taken into account on ‘‘(B) the applicable insurance liabilities of (a)(2) and (b)(2), an organization or trust shall a full-time student equivalent basis). which constitute more than 25 percent of its not fail to be treated as exempt from taxation ‘‘(c) NET INVESTMENT INCOME.—For purposes total assets, determined on the basis of such li- under this subtitle by reason of section 501(a) of this section, net investment income shall be abilities and assets as reported on the corpora- solely because such organization is also so ex- determined under rules similar to the rules of tion’s applicable financial statement for the last empt, or excludes amounts from gross income, by section 4940(c). year ending with or within the taxable year. reason of any other provision of this title.’’. ‘‘(d) ASSETS AND NET INVESTMENT INCOME OF ‘‘(2) ALTERNATIVE FACTS AND CIRCUMSTANCES (b) EFFECTIVE DATE.—The amendments made RELATED ORGANIZATIONS.— TEST FOR CERTAIN CORPORATIONS.—If a corpora- by this section shall apply to taxable years be- ‘‘(1) IN GENERAL.—For purposes of subsections tion fails to qualify as a qualified insurance cor- ginning after December 31, 2017. (b)(1)(C) and (c), the assets and net investment poration under paragraph (1) solely because the SEC. 5002. EXCLUSION OF RESEARCH INCOME income of any related organization shall be percentage determined under paragraph (1)(B) LIMITED TO PUBLICLY AVAILABLE treated as the assets and net investment income is 25 percent or less, a United States person that RESEARCH. of the eligible educational institution. owns stock in such corporation may elect to (a) IN GENERAL.—Section 512(b)(9) is amended ‘‘(2) RELATED ORGANIZATION.—For purposes of treat such stock as stock of a qualifying insur- by striking ‘‘from research’’ and inserting ‘‘from this subsection, the term ‘related organization’ ance corporation if— such research’’. means, with respect to an eligible educational ‘‘(A) the percentage so determined for the cor- (b) EFFECTIVE DATE.—The amendments made institution, any organization which— poration is at least 10 percent, and by this section shall apply to taxable years be- ‘‘(A) controls, or is controlled by, such institu- ‘‘(B) under regulations provided by the Sec- ginning after December 31, 2017. tion, retary, based on the applicable facts and cir- Subtitle B—Excise Taxes ‘‘(B) is controlled by one or more persons that control such institution, or cumstances— SEC. 5101. SIMPLIFICATION OF EXCISE TAX ON ‘‘(i) the corporation is predominantly engaged PRIVATE FOUNDATION INVESTMENT ‘‘(C) is a supported organization (as defined in an insurance business, and INCOME. in section 509(f)(3)), or an organization de- ‘‘(ii) such failure is due solely to runoff-re- (a) RATE REDUCTION.—Section 4940(a) is scribed in section 509(a)(3), during the taxable lated or rating-related circumstances involving amended by striking ‘‘2 percent’’ and inserting year with respect to such institution.’’. such insurance business. ‘‘1.4 percent’’. (b) CLERICAL AMENDMENT.—The table of sub- ‘‘(3) APPLICABLE INSURANCE LIABILITIES.—For (b) REPEAL OF SPECIAL RULES FOR CERTAIN chapters for chapter 42 is amended by adding at purposes of this subsection— PRIVATE FOUNDATIONS.—Section 4940 is amend- the end the following new item: ‘‘(A) IN GENERAL.—The term ‘applicable insur- ed by striking subsection (e). ‘‘SUBCHAPTER H—EXCISE TAX BASED ON INVEST- ance liabilities’ means, with respect to any life (c) EFFECTIVE DATE.—The amendments made MENT INCOME OF PRIVATE COLLEGES AND UNI- or property and casualty insurance business— by this section shall apply to taxable years be- VERSITIES’’. ‘‘(i) loss and loss adjustment expenses, and ginning after December 31, 2017. (c) EFFECTIVE DATE.—The amendments made ‘‘(ii) reserves (other than deficiency, contin- SEC. 5102. PRIVATE OPERATING FOUNDATION RE- by this section shall apply to taxable years be- gency, or unearned premium reserves) for life QUIREMENTS RELATING TO OPER- ginning after December 31, 2017. and health insurance risks and life and health ATION OF ART MUSEUM. SEC. 5104. EXCEPTION FROM PRIVATE FOUNDA- insurance claims with respect to contracts pro- (a) IN GENERAL.—Section 4942(j) is amended TION EXCESS BUSINESS HOLDING viding coverage for mortality or morbidity risks. by adding at the end the following new para- TAX FOR INDEPENDENTLY-OPER- ‘‘(B) LIMITATIONS ON AMOUNT OF LIABIL- graph: ATED PHILANTHROPIC BUSINESS ITIES.—Any amount determined under clause (i) ‘‘(6) ORGANIZATION OPERATING ART MUSEUM.— HOLDINGS. or (ii) of subparagraph (A) shall not exceed the For purposes of this section, the term ‘operating (a) IN GENERAL.—Section 4943 is amended by lesser of such amount— foundation’ shall not include an organization adding at the end the following new subsection:

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00088 Fmt 7634 Sfmt 6333 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9345 ‘‘(g) EXCEPTION FOR CERTAIN HOLDINGS LIM- ‘‘(s) SPECIAL RULE RELATING TO POLITICAL fair, and uncompetitive in the world. ITED TO INDEPENDENTLY-OPERATED PHILAN- CAMPAIGN STATEMENTS OF ORGANIZATIONS DE- Today it is impacting nearly every as- THROPIC BUSINESS.— SCRIBED IN SUBSECTION (c)(3).— pect of Americans’ lives, and not for ‘‘(1) IN GENERAL.—Subsection (a) shall not ‘‘(1) IN GENERAL.—For purposes of subsection the better. apply with respect to the holdings of a private (c)(3) and sections 170(c)(2), 2055, 2106, 2522, and foundation in any business enterprise which for 4955, an organization shall not fail to be treated The overwhelming complexity of to- the taxable year meets— as organized and operated exclusively for a pur- day’s system forces American tax- ‘‘(A) the ownership requirements of paragraph pose described in subsection (c)(3), nor shall it payers to spend billions of hours and (2), be deemed to have participated in, or intervened billions of dollars every year just filing ‘‘(B) the all profits to charity distribution re- in any political campaign on behalf of (or in op- their taxes. Trillions of dollars in quirement of paragraph (3), and position to) any candidate for public office, sole- carve-outs and loopholes give favor- ‘‘(C) the independent operation requirements ly because of the content of any statement itism to Washington special interests of paragraph (4). which— while hardworking Americans get ‘‘(2) OWNERSHIP.—The ownership require- ‘‘(A) is made in the ordinary course of the or- ments of this paragraph are met if— ganization’s regular and customary activities in nothing but frustration. ‘‘(A) 100 percent of the voting stock in the carrying out its exempt purpose, and With some of the highest tax rates in business enterprise is held by the private foun- ‘‘(B) results in the organization incurring not the world for our businesses, we are dation at all times during the taxable year, and more than de minimis incremental expenses. seeing good-paying American jobs and ‘‘(B) all the private foundation’s ownership ‘‘(2) TERMINATION.—Paragraph (1) shall not manufacturing plants move overseas interests in the business enterprise were ac- apply to taxable years beginning after December one after the other. quired not by purchase. 31, 2023.’’. Today, with the Tax Cuts and Jobs ‘‘(3) ALL PROFITS TO CHARITY.— (b) EFFECTIVE DATE.—The amendments made Act, we change all of this. With this ‘‘(A) IN GENERAL.—The all profits to charity by this section shall apply to taxable years be- distribution requirement of this paragraph is ginning after December 31, 2018. bill, we have an opportunity to deliver met if the business enterprise, not later than 120 SEC. 5202. ADDITIONAL REPORTING REQUIRE- the most transformational tax over- days after the close of the taxable year, distrib- MENTS FOR DONOR ADVISED FUND haul in a generation. But make no mis- utes an amount equal to its net operating in- SPONSORING ORGANIZATIONS. take, this bill is not about us. It is not come for such taxable year to the private foun- (a) IN GENERAL.—Section 6033(k) is amended about Congress. This bill is about—for dation. by striking ‘‘and’’ at the end of paragraph (2), the first time in decades—providing the ‘‘(B) NET OPERATING INCOME.—For purposes by striking the period at the end of paragraph American people with a simple and fair of this paragraph, the net operating income of (3), and by adding at the end the following new any business enterprise for any taxable year is paragraphs: tax system, so much so that nine out of an amount equal to the gross income of the busi- ‘‘(4) indicate the average amount of grants ten Americans will be able to file using ness enterprise for the taxable year, reduced by made from such funds during such taxable year a simple postcard-style system. It is the sum of— (expressed as a percentage of the value of assets about finally rewarding hard work, ‘‘(i) the deductions allowed by chapter 1 for held in such funds at the beginning of such tax- growing jobs and paychecks, and allow- the taxable year which are directly connected able year), and ing Americans to keep more of their with the production of such income, ‘‘(5) indicate whether the organization has a hard-earned money to use on whatever ‘‘(ii) the tax imposed by chapter 1 on the busi- policy with respect to donor advised funds (as so is important to them. ness enterprise for the taxable year, and defined) for frequency and minimum level of dis- ‘‘(iii) an amount for a reasonable reserve for tributions. So if you are one of the millions of working capital and other business needs of the Such organization shall include with such re- Americans who is sick of today’s Tax business enterprise. turn a copy of any policy described in para- Code, you are going to see a remark- ‘‘(4) INDEPENDENT OPERATION.—The inde- graph (5).’’. able difference. You will see the stand- pendent operation requirements of this para- (b) EFFECTIVE DATE.—The amendment made ard deduction doubled, increasing to graph are met if, at all times during the taxable by this section shall apply for returns filed for protect more of every paycheck from year— taxable years beginning after December 31, 2017. taxes. You will have a larger child tax ‘‘(A) no substantial contributor (as defined in The SPEAKER pro tempore. The bill section 4958(c)(3)(C)) to the private foundation, credit, providing more support as you or family member of such a contributor (deter- shall be debatable for 4 hours, equally raise a family and care for your loved mined under section 4958(f)(4)) is a director, of- divided and controlled by the chair and ones. More Americans will get help ficer, trustee, manager, employee, or contractor ranking minority member of the Com- raising their kids. of the business enterprise (or an individual hav- mittee on Ways and Means. You will have peace of mind when it ing powers or responsibilities similar to any of The gentleman from Texas (Mr. comes to life’s most important invest- the foregoing), BRADY) and the gentleman from Massa- ments because this bill preserves tax ‘‘(B) at least a majority of the board of direc- chusetts (Mr. NEAL) each will control 2 benefits to help you afford your home, tors of the private foundation are not— hours. ‘‘(i) also directors or officers of the business to pay your property taxes, and put enterprise, or The Chair recognizes the gentleman your kids through college. ‘‘(ii) members of the family (determined under from Texas. So if you are a typical middle-income section 4958(f)(4)) of a substantial contributor GENERAL LEAVE family of four making $59,000 a year, (as defined in section 4958(c)(3)(C)) to the pri- Mr. BRADY of Texas. Mr. Speaker, I you are going to get a tax cut of nearly vate foundation, and ask unanimous consent that all Mem- $1,200. More than that, you are going to ‘‘(C) there is no loan outstanding from the bers may have 5 legislative days within enjoy the benefits of a strong, healthy, business enterprise to a substantial contributor (as so defined) to the private foundation or a which to revise and extend their re- and growing American economy. You family member of such contributor (as so deter- marks and to include extraneous mate- are going to see more jobs on Main mined). rial on H.R. 1, the bill currently under Street. ‘‘(5) CERTAIN DEEMED PRIVATE FOUNDATIONS consideration. With this bill, our small businesses EXCLUDED.—This subsection shall not apply to— The SPEAKER pro tempore. Is there will finally have low tax rates and a ‘‘(A) any fund or organization treated as a objection to the request of the gen- fair Tax Code that works with them as private foundation for purposes of this section tleman from Texas? they grow and create jobs. You are by reason of subsection (e) or (f), There was no objection. going to see our larger businesses—our ‘‘(B) any trust described in section 4947(a)(1) (relating to charitable trusts), and Mr. BRADY of Texas. Mr. Speaker, I iconic American brands and our major ‘‘(C) any trust described in section 4947(a)(2) yield myself such time as I may con- manufacturers—win throughout the (relating to split-interest trusts).’’. sume. world and create new, good-paying jobs (b) EFFECTIVE DATE.—The amendments made Mr. Speaker, today the full House be- right here at home because, with this by this section shall apply to taxable years be- gins consideration of H.R. 1, the Tax bill, we are going to have one of the ginning after December 31, 2017. Cuts and Jobs Act, historic tax reform most modern and one of the most com- Subtitle C—Requirements for Organizations legislation that will revitalize our petitive Tax Codes on the planet. That Exempt From Tax economy and provide lasting tax relief includes lowering our corporate rate SEC. 5201. 501(c)(3) ORGANIZATIONS PERMITTED to Americans of all walks of life. from 35 to 20 percent, which beats TO MAKE STATEMENTS RELATING TO Over 30 years have gone by since the POLITICAL CAMPAIGN IN ORDINARY many of our international competitors. COURSE OF ACTIVITIES. last overhaul of our Nation’s tax sys- Not only are you going to see jobs (a) IN GENERAL.—Section 501 is amended by tem. In that time, our Tax Code has be- stop leaving the United States, you are adding at the end the following new subsection: come one of the most complicated, un- going to see our Nation become a 21st

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00089 Fmt 7634 Sfmt 0634 E:\CR\FM\A15NO7.031 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9346 CONGRESSIONAL RECORD — HOUSE November 15, 2017 century magnet for job creation and what Republicans are doing in the older in America. So their decision is: business investment. United States Senate. They are going Let’s take away the ability of individ- With the Tax Cuts and Jobs Act, the to lose their healthcare to pay for a tax uals to deduct those expenses. American people will see and help lead cut for people at the very top. They also want to write off a very the way in launching a new era of Made Let me just walk you through some important consideration for the middle in America innovation. In the end, the of these provisions because I think that class in their ability to deduct real Tax Cuts and Jobs Act is a striking al- they deserve our attention and the property tax costs up to $10,000. ternative to the broken Tax Code we magnifying glass of critical analysis. Contrast this with what these tax have today. It represents a bold path We are being asked tonight to borrow cuts do for the wealthy. forward that will allow us as a country $2.3 trillion to pay for this tax cut. H.R. 1 repeals the estate tax, which is to break out of the slow-growth status This is from people who regularly lec- paid by a small number of families in quo once and for all. ture the American electorate on the America. They are going to repeal it. I Mr. Speaker, the American people need for fiscal austerity and balanced guess the slogan becomes: We are rich, have waited years—decades—for a fair, budgets. and we are not going to take it any- simple, and competitive Tax Code. When Barack Obama was President, more. That is not a tax on Conrad Hil- Right now, in this moment, we stand the budget should be balanced. When ton; it is a tax on Paris Hilton. That is on the doorstep of delivering the most Bill Clinton was President, the budget what we should be considering with the sweeping tax overhaul since President should be balanced. But in the inter- greater efforts on their side to further Reagan’s reforms in 1986. Like Presi- vening period of time, apparently, we concentrate wealth. dent Reagan back then, President don’t have to balance the budget. By the way, there is an issue I have Trump is now putting his full support Also, $2.3 trillion is being added to worked on for decades here, success- behind this effort. the debt and deficits. We are wit- fully, because 27 million middle class Let’s pass this historic bill and take nessing what they are attempting to do families no longer pay the alternative another step forward in delivering bold, because they are going to scale back minimum tax. But guess what they are pro-growth, pro-family tax reform for the tax benefit for buying a new home going to do? They are going to elimi- Americans throughout this Nation. by lowering the cap on mortgage inter- nate it for 4.5 million of the richest Mr. Speaker, I reserve the balance of est deduction to $500,000. That is going families in America. They are going to my time. to lower home values. take away that payment. Mr. NEAL. Mr. Speaker, I yield my- H.R. 1 repeals the new markets tax This is a missed opportunity, Mr. self such time as I may consume. credit. The historic tax credit that has Speaker. This could have been done the Mr. Speaker, I am delighted the transformed American cities is being way Chairman BRADY indicated in 1986: chairman mentioned President Reagan. eliminated. They beat up on the munic- hearings, markups, a genuine effort to But he made it sound as though Presi- ipal bond market. find common ground on this. dent Reagan did tax reform on his own. As a former mayor, I have some On our side, I have waited all these Tax reform in 1986 was done in a bipar- knowledge of the municipal bond mar- years to do this. Tonight and tomor- tisan manner. I guess we just leave out ket. row, what you are witnessing is that Speaker O’Neill and we just leave out They are getting rid of the private they need a victory. That is what this Chairman Rostenkowski and we just activity bonds. Years ago, I raised the is about. It is a victory in search of a leave out Senator Bradley or Congress- cap so that we might do more interven- policy. man Gephardt. The reason that they tion and innovation in terms of re- Mr. Speaker, I reserve the balance of are left out is because even though it building our airports across the coun- my time. was accomplished in 1986, it started in try. Private activity bonds are a key Mr. BRADY of Texas. Mr. Speaker, I 1982 when Mr. Gephardt and Mr. Brad- for financing affordable housing. It is yield myself 10 seconds. ley introduced the first tax reform act. going to go by the wayside if they have Mr. Speaker, I will note that, in the b 1700 their way. It is going to have a pro- district of my good friend from Massa- What happened in those intervening found impact on the housing market. chusetts, the average family of four years? They eliminate several deductions making $87,000 will see a tax cut of The Ways and Means Committee and exclusions that help pay for college $2,032. took testimony from 50 witnesses. education, including a deduction for in- Mr. Speaker, I yield 2 minutes to the They held 30 markups and an untold terest on student loans. gentleman from Illinois (Mr. ROSKAM), number of hearings. Pay attention to this number. Stu- chairman of the Tax Policy Sub- Contrast that with what we did in dent debt in America is at $1.3 trillion, committee and a leader in the tax re- the Ways and Means Committee: not and they are taking away the ability of form effort. one witness, not one hearing, not one students to deduct that interest on Mr. ROSKAM. Mr. Speaker, my opportunity to hear from renowned those loans. friend from Massachusetts said this is economists, labor leaders, or individ- They also impose a new tax on uni- a missed opportunity. This is no missed uals who would have great knowledge versities and colleges. opportunity. What we are witnessing is not just of what happened in 1986, but They repeal the above-the-line deduc- the seizing of an opportunity. what could happen in this Chamber. In- tion for teachers’ out-of-pocket ex- During the debate, our friends on the stead, we are going forward with this penses. You know, those teachers who, other side of the aisle, in 25 hours of ill-considered effort. in September, might be short some markup last week, offered amendment This is a missed opportunity. This is school supplies and they are good after amendment after amendment. I a bad deal for millions of Americans in enough to pack the car up and bring it think it was about 25 amendments. the middle class. The legislation puts to school? We give them a $250 deduc- Do you know what every one of the the wealthy, the well-connected, and tion. They are going to take it away. amendments did, Mr. Speaker? It re- the strong, once again, at the top. They create a health tax, an Alz- stored the status quo. It put something Thirty-six million Americans are going heimer’s tax, by repealing the medical back in, put another thing back in, de- to receive a tax increase. expense deduction. This change basi- fended something else, and so forth. When they talk about tax simplifica- cally scraps a family’s ability to re- There was no comprehensive offer of an tion, take a look at the phase-ins and ceive financial relief when dealing with amendment in the nature of a sub- phase-outs of this measure. That is serious medical conditions. stitute that would have been trans- hardly simplification. It is greater Think of it this way: We celebrate formational. complexity. annually the increases in life expect- There is no exclusion here. We de- Oh, by the way, the corporate rate is ancy in America—80 for a male, 81 for bated. We are now here, and for the made permanent. The individual issues a female. But if we are going to cele- first time since 1986, we are on the cusp phase out after 5 years. brate that, we also have to acknowl- of seizing an opportunity and having a Consider this: 13 million people will edge something else: more dementia transformational moment. lose their health insurance based on and more Alzheimer’s as people grow Here is the transformation:

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00090 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.091 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9347 When the Tax Code was last amended abilities. According to the Congres- Will this plan make the American 30 years ago—think about it—the inter- sional Budget Office, by not paying for economy boom again? net didn’t exist as a commercial enter- tax cuts for the wealthy, Republicans Will this plan create jobs in Amer- prise. Yes, it has fully developed, and would trigger automatic cuts to Medi- ica? we have got a Tax Code that was built care, slashing $25 billion from Medicare Will this plan increase paychecks? for yesterday. in 2018 alone. Will this plan put more money in the The global nature of supply chains But the $25 billion cut to Medicare is pockets of hardworking Americans? were nowhere nearly as intricately just the beginning. The same Repub- Will this plan make the Tax Code interlinked, yet we have got a Tax lican budget that cleared the way for fairer and simpler? Code that was built for yesterday. $1.5 trillion in tax cuts for the super- The answer I came to and I think The shared economy—Airbnb, Uber, wealthy proposed cutting Medicare and that Americans will come to, Mr. Lyft, all of those things—didn’t exist, Medicaid by, no coincidence, $1.5 tril- Speaker, is a resounding ‘‘yes.’’ yet we have got a Tax Code that was lion. b 1715 built for yesterday. Now, Senate Republicans want to pay for additional tax cuts by repealing a Mr. NEAL. Mr. Speaker, this bill Who does the status quo benefit, Mr. phases out the deductions that benefit Speaker? It benefits the few. It benefits key part of the Affordable Care Act. This change would increase the number middle-income families. the privileged. It benefits the folks at Mr. Speaker, I yield 2 minutes to the of uninsured Americans by 13 million the top of the economic scale of things. gentleman from Illinois (Mr. SCHNEI- So what this is doing is proposing a and increase premiums by 10 percent. Middle class families, people with DER). very different approach. It says we are Mr. SCHNEIDER. Mr. Speaker, we disabilities, and seniors struggling to going to make the United States the absolutely must reform our outdated most competitive jurisdiction in the afford healthcare should not foot the bill for billionaires to get a tax cut. I and overly complex Tax Code, but the world by giving business tax relief and current bill this House is considering is welcoming back commercial enterprise urge my colleagues to make the healthy choice for Americans and vote not the way to do it. I have heard from and growth and prosperity and inge- constituents and local elected officials nuity and investment—that does what? against the Republican tax scam. Mr. BRADY of Texas. Mr. Speaker, I about how this plan will hurt them and It creates paychecks and it expands op- yield 3 minutes to the gentleman from their communities. portunities. Washington (Mr. REICHERT), chairman Rather than lifting our economy and Kids graduated from college of the Trade Subcommittee and a making our local communities strong- shouldn’t have to grub around piecing champion for working families. er, this bill before us is an unfair and together two jobs and living in their Mr. REICHERT. Mr. Speaker, I thank fiscally reckless step backwards. My parents’ basement. How absurd. We can the chairman for yielding and for his constituents are deeply concerned with do much better. We are the biggest, leadership in bringing this tough piece the restrictions placed on the State best economy in the world, and it is of legislation. I mean tough in the and local tax, or SALT, deduction. This time we acted like it. sense that it has taken years to put puts a real burden on the residents of This is transformational. To lean this together and at least 40 hearings States like Illinois. back and away from this and say, oh, on the legislation that is presented One in three Illinois taxpayers uses this Tax Code is a natural disaster; it today. the SALT deduction. Let’s be clear. is too big and too overwhelming and we Mr. Speaker, when I travel my dis- The SALT deduction is not a tax break can’t deal with it is nonsense. We fun- trict from the suburbs of Auburn, for the very wealthy. It is used by the damentally reject that. Washington, to the orchards of Chelan, hardworking families we need to be We are going to be measured in the I hear the same thing from middle-in- helping with tax reform, not hurting. future, Mr. Speaker, by this moment. I come, hardworking families, from the I am also profoundly concerned about thank Chairman BRADY for his leader- apple grower in Wenatchee, the tech what this reform means for our grow- ship in creating this crescendo, because entrepreneur in Issaquah, and the ing debt. An additional $2.3 trillion in now is the time to act. Let’s not defend growing family in Maple Valley, Wash- debt is irresponsible in the extreme, the status quo. Let’s move forward, and ington: They want to keep more of burdening our children and our grand- let’s transform this economy. their hard-earned money, plan for the children with the consequences. Mr. NEAL. Mr. Speaker, I am for future, and they want to have some Now, with the most recent Senate maintaining the status quo by allowing certainty in their future. They want to version, the GOP is taking aim at the students to deduct their student inter- care for those they love. Affordable Care Act, repealing the indi- est loans. They deserve a plan that gives them vidual mandate without a workable re- Mr. Speaker, I yield 2 minutes to the the opportunity at their first job or a placement to further reduce enroll- gentlewoman from Illinois (Ms. SCHA- better job. They deserve a chance to ment in the individual health insur- KOWSKY). decide how they want to spend their ance markets, making coverage more Ms. SCHAKOWSKY. Mr. Speaker, ev- money. expensive for millions of Americans eryone knows that the Republican tax It is their money. Why wouldn’t they and their families. scam gives massive tax cuts to million- deserve that chance? There are things we can do to im- aires and billionaires and corporations, They want a Tax Code that is sim- prove the ACA. For example, delaying and they do it, in part, by increasing pler, fairer, and that works for them. the looming taxes on medical devices healthcare costs for millions of Ameri- They want the same bright future for and health insurance premiums has cans. Over 36 million middle class their children. broad bipartisan support. We should be households will see a tax hike under This is a bill that is not just a tax focused on solutions like these that im- this bill. bill, but it is a bill that reignites, in prove, not dismantle, the ACA. Families with big medical bills will my opinion, the belief in the American Despite our willingness to work take the hardest hit. That is because Dream. across the aisle, there was virtually no Americans will no longer be able to de- In the Eighth District of Washington bipartisan engagement on the plan this duct major medical expenses such as State, the median income family of House is rushing to vote on. It is not cancer treatment or Alzheimer’s from four will receive a tax cut of $3,654. In too late to change course. their Federal income taxes. Washington State, 21,875 new jobs will I urge my colleagues to take the time This is a middle class tax hike. Seven be created. for full deliberation in a complete and in ten households using the medical ex- This plan will change lives. It will bipartisan process. Together, we can pense deduction make under $75,000 a energize our economy and get our econ- produce real tax reform that is fiscally year. Repealing the deduction would omy booming again. responsible, prioritizes the middle especially hurt seniors who use it for As we went through this process, I class, and grows our economy for the long-term care expenses. asked myself several questions over the next generation. The bill takes a second swipe at last few years, to be honest with you. Mr. BRADY of Texas. Mr. Speaker, I American seniors and people with dis- Here are the questions: yield 3 minutes to the gentleman from

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00091 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.093 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9348 CONGRESSIONAL RECORD — HOUSE November 15, 2017 Nebraska (Mr. SMITH), chairman of the Mr. NEAL. Mr. Speaker, more than Mr. PAULSEN. Mr. Speaker, for the Human Resources Subcommittee and a 100,000 Nebraska households making first time in a generation, middle-in- champion for agriculture. under $137,000 a year will see a tax in- come and hardworking Americans are Mr. SMITH of Nebraska. Mr. Speak- crease under this bill. closer to a Tax Code that works for er, I thank Chairman BRADY for the Mr. Speaker, I yield 2 minutes to the them rather than against them. time and for his leadership as we con- gentleman from Massachusetts (Mr. It has been 31 long years since we tinue our efforts to pass this historic CAPUANO), my good friend from Somer- last reformed our broken tax system, legislation. ville, Massachusetts. and, in that time, our Tax Code has be- Mr. Speaker, after nearly 7 years of Mr. CAPUANO. Mr. Speaker, I thank come one of the most complicated, un- work in the Ways and Means Com- the gentleman for yielding. I am a fair, and uncompetitive in the world. It mittee and more than 31 years since former tax lawyer. My wife is a prac- has led to a stagnant economy and our last true tax reform, many hear- ticing CPA. We have heard this before: sluggish growth. American businesses ings along the way, it is time to pass simplification is going to help. It has of all sizes have some of the highest historic comprehensive tax reform. Our never put a single accountant out of tax rates in the world, sending our current Tax Code is antiquated, as we business, and it won’t do it now. It is jobs, our manufacturing, our research, know. It is complex, and it ignores another part of the big scam going on. and our headquarters overseas. many of the improvements and com- Why? Sure, I will probably get a tax And you know, the economic recov- petitiveness, which have been adopted break out of this; some of my constitu- ery hasn’t been all that great since the by every other major economy world- ents will. But what do we get in re- Great Recession—not that great for a wide. turn? We don’t get healthcare. We lot of Americans. Half the population The time for tax reform is now. Oth- don’t get better roads. We don’t get is living paycheck to paycheck. Many ers have already outlined many of the better education. But we do provide a either have or are at risk of having a highlights of this bill, but I think they $5,000 to $10,000 debt for our children. lower standard of living than their par- warrant mentioning again. We do tell our seniors: Too bad if you ents. Young people, like my daughter’s Simplified compliance and rates for have a heart attack or cancer; no more generation, will go backwards if this individuals and families means more medical deductions for you. We tell our country is not fundamentally more than 95 percent of Americans will be current graduate students: Too bad, no competitive. And then seniors and able to file their returns on a postcard. deductions for you. And on and on and those baby boomers preparing for re- Lower rates for small businesses recog- on. tirement, who have a lifetime of sav- nize the important role they play as And by the way, we have a new provi- ings, are now at risk without a growing job creators in our economy. A 20 per- sion in here that I like to call the ‘‘Dy- economy. cent top corporate tax rate and nasty Protection Act.’’ Why? Because The reforms in this bill today will transitioning to a territorial system if you have a dynasty, if you are worth help real people with tax cuts aimed to will ensure our businesses remain com- $30-, $40-, $50-, $100 million, your chil- help middle-income families that want petitive with the rest of the world. dren get to keep it all. Not because to save for the future and improve In addition to lower rates, expanded they have done anything, but because their own standard of living. The bill expensing will further encourage entre- they won the genetic lottery. Good for focuses on helping small businesses, preneurs to invest in capital to grow them. Main Street Minnesota businesses with their businesses, and full repeal of the And then if they do get up off their a simpler, clearer, and fairer Tax Code death tax, including the continuation butt and get a job, maybe start a hedge that is critical for job creation. It low- of step-up in basis, will ensure our Na- fund with all the money they inherited, ers small business rates to 25 percent tion’s farmers, ranchers, and small they get another tax credit by not and even provides a 9 percent rate for manufacturers can continue creating touching the special tax deals—you the smallest Main Street startups. opportunity for generations to come have the hedge fund managers. And if Modernizing the Tax Code is essen- without the threat of double taxation. they earn a little extra money, they tial to allowing American businesses of Our Tax Code shouldn’t reward busi- get to keep more of it because there is all sizes to compete around the world nesses and investors because they hired no alternative minimum tax left. and bring those jobs home. We need to accountants and lawyers to help them I know that President Trump will be able to sell where the customers are, avoid taxes, and the estate tax does ex- particularly appreciate that provision and 95 percent of the world’s customers actly that right now. I think it is because we all know—the only tax re- are outside the United States. The equally important to praise what the turn we have seen—the AMT cost him international reforms in this bill will bill leaves alone in the Tax Code. With $31 million. So thank you from the incentivize businesses to bring their our impending entitlement crisis, we rich. money home to invest in our commu- want Americans to save everything Now, I don’t have any problem with nities. they can for retirement. This bill people being wealthy. I represent many And importantly, this bill includes leaves those incentives intact. of them. They don’t want this tax cut bipartisan legislation that I authored, It also excludes a proposal, which had because they know it is bad for Amer- the Empowering Employees through initially been included in the bill, to ica. Stock Ownership Act, which helps apply self-employment taxes to rental The SPEAKER pro tempore. The those entrepreneurs and startups at- income. This could have had serious re- time of the gentleman has expired. tract and retain talent. Hardworking percussions for ag land rental, and I am Mr. NEAL. Mr. Speaker, I yield an taxpayers, Mr. Speaker, deserve a Tax glad it was dropped. And I particularly additional 15 seconds to the gentleman Code that is simpler, flatter, and fairer appreciate how this bill continues the from Massachusetts. so that every American family and em- deductibility of State and local taxes Mr. CAPUANO. Mr. Speaker, as a ployer can file their taxes without hav- for businesses, including farmers and final insult, the corporate tax you have ing to hire an Army of lawyers and ac- ranchers. encourages businesses to send jobs off- countants. U.S. producers have made great shore by not taxing profits made off- Mr. Speaker, we have a choice. The strides in increasing production on a shore when they expand jobs, if they choice is Americans. We can either per-acre basis, but land remains a pri- do. They will do it offshore, not here in truly grow the economy and put our- mary input as they work to feed the America. selves back on the path to real pros- world. Ensuring the property tax on Mr. BRADY of Texas. Mr. Speaker, perity, or we can continue the actual land and production remains deduct- Massachusetts will gain 24,000 jobs; trend we have right now of weak eco- ible as business cost is vital to their families will see a $3,000 increase in nomic growth, which only benefits the continued success. their paychecks. few and the privileged and will do noth- This is the moment to finally provide Mr. Speaker, I yield 3 minutes to the ing for regular folks when the next eco- the tax relief Americans have been gentleman from Minnesota (Mr. PAUL- nomic downturn hits. asking for and to make our country SEN), a key member of our committee Tax reform for me is about one thing competitive again. I urge the passage and a leader in technology and em- and one thing only. It is about restor- of this progrowth bill. ployee stock options. ing hope for a prosperous future for

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00092 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.095 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9349 ourselves, our parents, and, most im- tion’s very confusing and complicated Mr. Speaker, I thank Mr. NEAL for portantly, our children. I want to tax system. Just ask anybody who has his tireless leadership pointing out the thank the chairman for his guiding filed their taxes on their own. trail of broken promises that are in leadership through this effort. But we are closer to changing that this bill for middle class families, who Mr. NEAL. Mr. Speaker, 40 percent of day with H.R. 1, the Tax Cuts and Jobs will pay dearly with higher costs for Mr. PAULSEN’s constituents claim the Act. And with this budget, with the healthcare, home ownership, and, in SALT deduction, a benefit of over budget passed in both Chambers and many cases, Federal taxes. $15,000. They are lucky to break even following last week’s productive mark- I would like to zero in for a minute after this tax bill. up in our House Ways and Means Com- during National Apprenticeship Week Mr. Speaker, I yield 2 minutes to the mittee, tax relief is on the horizon. on the broken promise that the bill gentleman from Wisconsin (Mr. KIND), With this legislation, Republicans represents to growing the U.S. econ- a valued member of the Ways and clearly recognize the need to do some- omy, which has a shortage of skilled Means Committee. thing about our heavy tax burden workers. The obliteration of the stu- Mr. KIND. Mr. Speaker, there are weighing down the hardworking Ameri- dent loan interest deduction, which certain phrases that we have learned to cans and holding back job creators. will add $24 billion to the cost of higher grow to accept with great suspicion: We also recognize the need to bring education; the taxation of graduate The check is in the mail. It is not you; simplicity to the Tax Code. In our tax students’ tuition waivers, 60 percent of it is me. Don’t worry, I will respect you reform plan, we will help low- and mid- which are concentrated in STEM cur- in the morning. I have had just a few dle-income Americans see more of ricula; and the elimination of tax-free drinks; I am fine with driving. their hard-earned paychecks by low- employer-funded tuition assistance, to And now we have to add to that: ering the tax rates and nearly doubling enhance workplace skills, often using Don’t worry. Large tax cuts for the the standard deduction for individuals apprenticeship programs, moves this most wealthy will pay for themselves, and married couples. country in exactly the wrong direction and I am a fiscally conservative Repub- b 1730 to close the skills gap in our work- lican who cares about debt and deficits. force, which we all know every Member The Joint Committee on Taxation For instance, for an average middle in this body has heard about from em- has determined that, with interest pay- class family of four, that translates to ployers back home. ments, this bill will add over $2.3 tril- a $1,200 tax cut. Now, I will tell you, Indeed, America’s CEOs told the lion, with a T, to our national debt that is real money. President last February at a White over the next 10 years. That is why last We also establish a new family credit House manufacturing summit: Jobs week, in committee, I was offering an that raises the child tax credit and in- exist, skills don’t. amendment that would expand the en- troduces new credits for family mem- In fact, the Trump’s Labor Depart- dangered species list to include fiscally bers and other dependents. ment reported 6.1 million job openings conservative Republicans because your The Tax Code will also become less in the month of September, a near vote on this bill will make you extinct. confusing, making it possible for most record high. And what is unfortunate is, unlike Americans to file their taxes on a sin- Sadly, this antigrowth tax bill robs past tax cuts that weren’t paid for, we gle postcard. American job seekers and employers of have run out of time. We no longer Our plan, rightly, provides tax relief the tools to fill those jobs, ironically, have the luxury of time to recover for job creators, empowering entre- during National Apprenticeship Week. from a huge fiscal mistake, not with 70 preneurs and small businesses to con- Mr. Speaker, I urge the Members of million baby boomers beginning their tinue opening, operating, and expand- this body to vote ‘‘no.’’ massive retirement—10,000 a day join- ing on Main Street. Mr. BRADY of Texas. Mr. Speaker, I ing Social Security and Medicare. For my home State of Tennessee, yield 3 minutes to the gentleman from Those programs and the solvency of H.R. 1 will allow families to see an esti- Pennsylvania (Mr. MEEHAN), one of the Social Security and Medicare will be in mated $2,200 increase in wages. Again, key members of our Tax Policy Sub- jeopardy with another $2.3 trillion of that is real money. committee and a champion for working debt over the next 10 years. The SPEAKER pro tempore. The men and women. And what is unfortunate, it didn’t time of the gentlewoman has expired. Mr. MEEHAN. Mr. Speaker, I rise have to be this way. There was bipar- Mr. BRADY of Texas. Mr. Speaker, I today to urge my colleagues to take tisan interest in simplifying the Code, yield an additional 15 seconds to the advantage of this historic opportunity making it more competitive, broad- gentlewoman. that we have before us. ening the base, making it fair for work- Mrs. BLACK. According to the non- As I travel across my district, I hear ing families and small businesses and partisan Tax Foundation, this bill from families that are struggling to get family farmers, but doing it in a fis- would also mean 20,000 new jobs for my ahead. I hear from families that can’t cally responsible way. State. This will provide a welcome jolt make ends meet most months. They Asking 34 million Americans to ac- to our economy, which is badly needed don’t have a whole lot left over. In cept a tax increase to pay for a 43 per- following eight lackluster years under fact, 63 percent of American families cent marginal rate reduction to the the Obama administration. don’t have $500 to handle an emer- largest companies is hardly respon- Without question, enacting tax re- gency. I hear from businesses that say sible, and it is hardly fair. I encourage form is a challenge, but the benefits of they would love to be able to hire, ex- my colleagues to let us take a different seeing it through will be felt for gen- pand, or buy that new piece of equip- approach and reject this bill. erations to come. ment, but they just don’t have the cash Mr. BRADY of Texas. Mr. Speaker, I Mr. Speaker, I am proud to support to do it. yield 2 minutes to the gentlewoman this legislation, and I urge my col- Our Tax Code is taking too many dol- from Tennessee (Mrs. BLACK), the chair leagues to do the same. We cannot miss lars from Pennsylvania and sending it of the Budget Committee who cleared this historic opportunity. to Washington. It is sending good-pay- the path for this progrowth tax reform. Mr. NEAL. Mr. Speaker, over 350,000 ing, middle class jobs overseas and it is Mrs. BLACK. Mr. Speaker, I thank Tennessee households making under holding our economy back, making it the chairman for his endless hours of $132,000 will see a tax increase with this harder for so many to get ahead. work listening to everyday people, lis- bill. This is our chance to change the sta- tening to small businesses, listening to Mr. Speaker, I yield 2 minutes to the tus quo. We have an opportunity to large businesses, listening to how what gentleman from Connecticut (Mr. jump-start our economy and let more we put in this bill was going to affect COURTNEY), a leader on the Higher Edu- hardworking families keep what they the American people who, at the end of cation Subcommittee and well known earn. the day, are going to be the winners. nationally as a spokesperson on edu- We rewrite the Tax Code for Amer- So it has been more than three dec- cation issues. ican job creators, taking away the in- ades since Congress has worked with Mr. COURTNEY. Mr. Speaker, I rise centives to send jobs overseas and dol- the White House to modernize our Na- in strong opposition to H.R. 1. lars offshore. Putting those dollars to

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00093 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.096 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9350 CONGRESSIONAL RECORD — HOUSE November 15, 2017 work will put more Americans to work important to people who face floods We have worked hours—literally hun- as businesses expand and invest here at and fires. dreds of hours—on this legislation, and home—American tax cuts for American They change the rules so that we I commend Chairman BRADY and the workers with American jobs. don’t have adequate indexing for infla- staff of the Ways and Means Com- We give these small businesses a tion, so everybody is pushed into a mittee for all of their hard work. break—the mom-and-pop shops that higher tax bracket by inflation, except Mr. Speaker, we have gone through employ Pennsylvanians. We give entre- those at the very top; they are pro- this bill line by line. I have personally preneurs, who have so much innovation tected. fought for policies and ideas in this bill and creativity, a wider cushion to take But look at the effect on our Nation’s to make sure that it works for fami- a risk. We are putting more money in economy. This is a job-killing, deficit- lies, to make sure that it increases the pockets of hardworking families. exploding, growth-reducing disaster. wages, and creates more opportunity We are doubling the standard deduc- Look at what happened to Kansas. for folks all across America. tion, which means that 94 percent of These policies have already devastated My goal in this was two-fold. Number taxpayers won’t need to itemize at all. one of our States. one, I wanted to strengthen families. Let me say that again: 94 percent of You are going to be taking $1.5 tril- Number two, I wanted to create a taxpayers won’t even need to itemize lion out of the money available for stronger future for America. This tax at all. business investment. The Federal Gov- reform package puts us well on our By expanding the child tax credit and ernment will come in and borrow all of way to achieving these goals and creating a new $300 credit for parents that money, leaving less money for fac- achieving some remarkable wins for and nondependent children, we put an tories, farms, and homes. the American people. additional $1,800 back in the pockets of As RON KIND pointed out, there is an I say this because this plan simplifies every family of four. That is money extra $800 billion of interest on top of the Tax Code. It simplifies it to the that they can use as they see fit. We that just in the next 10 years. Keep in point that most people can file their have streamlined the maze of edu- mind, this increase in our debt is for- taxes on a form the size of a postcard. cation tax credits, and included in my ever. Your grandchildren will be paying It also gives significantly lower rates. bipartisan bill are apprenticeship pro- taxes on this debt. It dramatically expands the child tax grams that can now be made afford- Look at the chart. We had the poli- credit. It keeps the child care credit. It able. cies of Ronald Reagan from 1988—when protects flexible spending benefits. The taxpayers I hear from say they his 1986 law became effective—through These provisions for working families want to pay less in taxes, not more. If 1993, and we had 2.67 percent growth. In are important to me. My home State of limiting some deductions and lowering 1994, we got Clinton tax policies and we South Dakota has the highest rate of your rates means your tax bill is lower exploded to over 4 percent annual working families in the Nation. The at the end of the year, that is a good growth. Then with George W. Bush, we moms and dads in my State aren’t deal for taxpayers. dropped to 1.7 percent growth. Then working just for fun. They are working We owe it to the hardworking, tax- when we adopted Obama tax policies, to pay the bills to provide for their paying families we represent to deliver which are in force today, we are back families. They need money to put food that. up to 2.2 percent economic growth. on the table and to put a roof over I urge my colleagues to support the Which policies give you economic their kids’ heads. These provisions are Tax Cuts and Jobs Act. growth? going to help them pay their bills, take Mr. NEAL. Mr. Speaker, all of those Let’s look internationally. You can care of their kids, go to work, and projects in Philadelphia are about to manufacture and pay zero percent on maybe, just maybe, get a little extra come to an end with the abolition of the profits you earn by a factory, but money that they can take their kids the historic tax credit. only if it is a foreign factory. off for a weekend and do something fun Mr. Speaker, I yield 3 minutes to the The SPEAKER pro tempore. The together. That is important. gentleman from California (Mr. SHER- time of the gentleman has expired. When these kids grow up, I want MAN), who, incidentally, is a CPA and a Mr. NEAL. Mr. Speaker, I yield an tax attorney. additional 15 seconds to the gentleman. them to be able to find good, high-pay- Mr. SHERMAN. Mr. Speaker, by 2027, Mr. SHERMAN. Finally, Mr. Zandi, ing jobs. So I fought hard to make sure roughly one-third of middle class fami- one of the top economists in the coun- that our farmers, our ranchers, and our lies will be paying more in taxes, and try, testified before our Financial small businesses could thrive under that average family will be paying Services Committee that this bill this new Tax Code. We got some pretty $1,300 more. means double-digit declines in the big wins for those folks. The personal exemption, worth $4,150 value of homes in American metropoli- In this bill, we fully and permanently per person in a family, that is $21,000 tan areas. repeal the death tax—that un-Amer- for a family of five, and they take it What effect does that have on the ican, unfair double tax. We give people away. economy? Who is going to go out and better expensing tools and we drive The moving expense deduction, if you spend in the middle class when they down the rate for small businesses. If have to move to keep your job, you are told that the equity in their home we are going to make sure that our don’t get to deduct that. But if you has been virtually wiped out? kids can thrive, we need to create op- move a factory to China, you get to de- So you can vote against this bill be- portunities for them to make sure that duct all of the moving expenses. cause it is unfair, or you can vote they can do it right here in America, The student loan debt, they won’t let against this bill because it will be a and this tax reform package lets hard- you deduct it. crushing weight on our economy, but working job creators do that better. As for the effect on simplicity, my don’t engage in the fantasy that you Mr. Speaker, I understand that no CPA and tax law homeboys are going can cut taxes and make it up through tax reform plan is going to be perfect to be rolling in big dollars. Just from ‘‘economic growth.’’ in everybody’s eyes, but this proposal the provisions that define the dif- Mr. BRADY of Texas. Mr. Speaker, is a strong step forward. It reflects ference between personal service in- under tax reform, California will grow real, sustainable policy changes that come, passive income, active business 111,000 new jobs, and paychecks will in- are going to let people keep more income, the litigation and planning op- crease by nearly $3,000. money in their pockets. portunities—talk about complexity—it Mr. Speaker, I yield 3 minutes to the I have heard from many throughout is all there, and my homeboys love it. gentlewoman from South Dakota (Mrs. this debate, who have spoken up We currently deduct extraordinary NOEM), a champion of family-owned against these tax cuts and these re- medical expenses. That is important to farms and businesses. forms—people who trust the govern- those with disabilities and families Mrs. NOEM. Mr. Speaker, I thank the ment with this money more than they with children with special needs. They chairman for yielding. trust the American people. wipe it out. Mr. Speaker, today I rise in support Mr. Speaker, I fundamentally dis- The extraordinary casualty loss de- of H.R. 1, the Tax Cuts and Jobs Act of agree. The American people deserve duction, they wipe out. That is very 2017. more control over their paychecks.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00094 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.098 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9351 They have worked hard to earn that Mr. Speaker, I urge my colleagues to Mr. Speaker, we will work together money. They have taken time away defeat this bill, and let’s start over in for a mutually accepted solution to from their families to earn that money. a bipartisan way. make sure we exempt work colleges to They ought to be the ones deciding Mr. BRADY of Texas. Mr. Speaker, use their endowments to provide tui- how, where, and when to spend it. the gentleman’s constituents in Vir- tion-free education. So for the purposes of strengthening ginia’s District 11, with average house- Mr. BARR. Mr. Speaker, I thank the families and offering folks a stronger hold earnings of $136,000, with two kids, gentleman. future here in America, I urge my col- will see a tax cut of $5,008. Mr. NEAL. Mr. Speaker, I yield 2 leagues to support H.R. 1. Mr. Speaker, I yield 2 minutes to the minutes to the gentlewoman from Cali- Mr. NEAL. Mr. Speaker, 38,000 South gentleman from Kentucky (Mr. BARR). fornia (Ms. LEE), a well-regarded cham- Dakota households making less than Mr. BARR. Mr. Speaker, I rise today pion of middle-income people. $113,000 a year will see a tax increase to engage in a colloquy. Ms. LEE. Mr. Speaker, I thank the under this legislation. Mr. Speaker, I want to first commend gentleman for yielding and also for his Mr. Speaker, I yield 2 minutes to the Chairman BRADY and the Ways and tremendous leadership on the Ways and highly regarded gentleman from Vir- Means Committee for their out- Means Committee and for really telling standing work on the Tax Cuts and ginia (Mr. CONNOLLY), the son of Mas- the truth. Jobs Act, which will provide tax relief sachusetts and my friend. Mr. Speaker, I rise in strong opposi- to millions of hardworking families Mr. CONNOLLY. Mr. Speaker, I tion to this bill, H.R. 1, which really is and businesses. thank my good friend, the gentleman a tax scam. Republicans are really try- I would like to address a small provi- ing to pull a fast one on the American from Massachusetts (Mr. NEAL) for sion in the bill that inadvertently im- yielding me this time. people. pacts Berea College, a small private This bill would steal from the hard- Mr. Speaker, you can put all the lip- college in Berea, Kentucky, that is a earned paychecks of millions of mid- stick you want on this pig, and it is member of the federally recognized dle-income families to line the pockets still a pig. Work Colleges Consortium. of billionaires and corporations. In Let’s be honest, this isn’t tax reform. Work colleges, by definition, do not fact, 80 percent of the tax breaks would This is a cut on taxes for corporate charge their students tuition, and they go to the top 1 percent. It also elimi- America, the corporate friends and my also require their students to hold jobs. nates student loan deductions and friends on the other side of the aisle, For over 125 years, Berea College has eradicates medical expense deductions. and they had to squeeze all kinds of fulfilled its mission of providing a tui- If this isn’t cruel enough, this bill things in to justify it and pay for it. tion-free education to students with makes it easier for corporations to ship That is why the middle class is going limited economic resources, primarily jobs overseas, so people will actually to suffer. That is why their kids in col- from Appalachia, and who are often lose their jobs. This tax plan does noth- lege are going to start losing their abil- first-generation college students. Berea ing to create better jobs or better ity to deduct interest on student loans, pairs its strong academics with a stu- wages or a better future for the middle and they are going to pay taxes on dent labor program, honoring the dig- class. It does just the opposite. waived tuition when they get a teach- nity and utility of all work. In my home State of California, one ing assistant position or a benefit from Berea could not fulfill its unique and in five middle-income families will see the university. special mission of providing free tui- a tax hike next year. The State and b 1745 tion to all students without a healthy local tax deduction would be particu- endowment. The Tax Cuts and Jobs Act That is why your local municipalities larly hard on my State, where 6.1 mil- includes a 1.4 percent excise tax on pri- are going to lose tax exemption for pri- lion households will see a tax increase. vate college endowments over $500,000 Public sector jobs, like firefighters, vate activity bonds that fund tens of per student. There are two federally will lose their jobs, not to mention the billions of dollars of public improve- recognized work colleges with endow- vital services our most vulnerable will ments all over the United States. ments above this level, including Berea That is why 8.8 million Americans need. These will be cut. College in my district. This bill really is a disgrace. Stealing are going to lose the ability to deduct I was pleased to learn that the Sen- from families who need help the most medical costs. Good luck to families ate version of the bill exempts schools to give more to donors—millionaires who have to put people in nursing with fewer than 500 tuition-paying stu- and billionaires and corporations—this homes for long-term care, patients suf- dents from the excise tax. This provi- is really a new low. fering dementia. How will they work sion would effectively exempt work Thirty-six million middle-income that financing out when they lose this colleges from the tax, because they do households, working families, will pay deduction, and how will they feel when not charge tuition. more in taxes. they know the reason they are losing I understand it was never the com- We can’t forget, also, that this tax this deduction is to finance a corporate mittee’s intent for this legislation to scam sets the stage, really, for a heart- tax rate? negatively impact work colleges that less $1.5 trillion cut to Medicare and What about homeowners losing the use their endowments to provide tui- Medicaid, as we saw in the Republican ability to deduct mortgage interest or tion-free education. In fact, I under- budget. to have it capped artificially so cor- stand the intended purpose of the ex- We need to reject this mean-spirited porate America can get the biggest tax cise tax is to encourage colleges to use tax scam and vote ‘‘no’’ and then come cut in history? their endowments to keep college costs back and look at how we can support And, by the way, they get to con- down. In this case, Berea College uses middle-income families, working fami- tinue to deduct State and local taxes its endowments to defray 100 percent of lies, so everyone has a chance and an and other kinds of financial interest- the cost of tuition. opportunity at the American Dream. related expenses, but not you, not you Mr. Speaker, I thank the chairman Mr. BRADY of Texas. Mr. Speaker, I the middle class. for his willingness to work with me on would note that the constituents in It adds $1.5 trillion, and that is with a solution in conference, either acced- California’s 13th District, a median dynamic scoring. Dynamic scoring is ing to the Senate position or another family of four earning $107,000 will see another way of saying: We kind of mutually accepted solution that ex- a tax cut of $2,589. fudged the real number. It is more than empts work colleges and allows them Mr. Speaker, I yield 2 minutes to the that, at least $200 billion more than to continue their unique mission. gentleman from West Virginia (Mr. that. Mr. BRADY of Texas. Will the gen- MCKINLEY). I thought my friends on the other tleman yield? Mr. MCKINLEY. Mr. Speaker, I side of the aisle were fiscal hawks dedi- Mr. BARR. I yield to the gentleman thank the gentleman for this oppor- cated to making sure we didn’t have from Texas. tunity to discuss the historic preserva- deficits. Mr. BRADY of Texas. Mr. Speaker, I tion tax credits that historically have This is an inconsistent bill. This is wish to thank the gentleman from Ken- stimulated nearly $150 billion in pri- going to harm middle class America. tucky for his leadership here. vate sector investment.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00095 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.100 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9352 CONGRESSIONAL RECORD — HOUSE November 15, 2017 As we have discussed over the last breaks for corporations. They will see But, Mr. Speaker, I have done the month, the tax credit is critically im- increased debt and taxes. math. I have looked at this bill inside portant for economic development and This bill says: Good luck, students. and out, and it delivers a simplified revitalization, especially in small, Building an economy that will not Code where $1,600 is left in the pockets rural areas of this country. Without allow you to pay off the $1.3 trillion of of my constituents in western New the credit, projects that transform existing student debt but, instead, will York. That is $1,600 that they earned communities in all 50 States, from add $2.3 trillion in deficit, this bill was that the government won’t have to West Virginia to Texas, to Wisconsin, created for you. take from them anymore; $1,600, Mr. simply will not happen. Just yesterday, the President’s chief Speaker, that will allow them, as sen- Mr. Speaker, the chairman’s word economic strategist was surprised ior citizens, to go visit their grandkids means something to me, so I am asking when the CEOs gathered admitted they in the South because New York State for his commitment to continue work- would not be investing their tax cuts in has driven them out of New York State ing with me to ensure that the Federal jobs and wages. with its high tax policies at the State historic preservation tax credit is pre- The SPEAKER pro tempore (Mr. capital. That is $1,600 that maybe they served in the final tax reform package. GARRETT). The time of the gentle- can go on a trip with their family and Mr. BRADY of Texas. Will the gen- woman has expired. experience a little relaxation because Mr. NEAL. Mr. Speaker, I yield an tleman yield? of the hard work that generated those additional 30 seconds to the gentle- Mr. MCKINLEY. I yield to the gen- moneys and those dollars in their pock- woman. tleman from Texas. ets. Mr. BRADY of Texas. Mr. Speaker, I Ms. CLARK of Massachusetts. Mr. Speaker, he should not have been sur- Mr. Speaker, these are the people thank Mr. MCKINLEY for his passion prised. Corporations are already sitting whom we represent, the Perrys. Mr. about making sure our smaller commu- on record amounts of cash while gen- and Mrs. Perry are hardworking people nities can revitalize and grow and erations of hardworking Americans of western New York, and those are about the role of the historic preserva- have had to pay for tax experiments their two beautiful children. What this tion tax credit in doing that. I commit like this based on disproven economic is going to allow them to do is get a to working with him and continuing to theories. little bit more of their money kept in work with him on this issue because I Let’s not repeat the mistakes of the their pocket so they can spend a little know the importance of it. past. Let’s reject this bill and work to- bit more time with their kids and Mr. MCKINLEY. Mr. Speaker, I gether to create bipartisan tax reform enjoy the fruits of their labor. thank the chairman and I look forward that is fair and benefits all families. b 1800 to working with him as well. We have Mr. BRADY of Texas. Mr. Speaker, Mr. Speaker, I know my colleagues had a good working relationship over because of the Tax Cuts and Jobs Act, on the other side advocate because the years. I want to continue this proc- in the Fifth District of Massachusetts, there is another issue with tax reform ess because I understand this process. I a median household of four earning that I want to highlight real quick. will be voting to continue the process $143,000 will see a tax cut of $5,208. The easy approach of government is in anticipation that it will be in the Mr. Speaker, I yield 3 minutes to the to spend more money, develop more final bill. gentleman from New York (Mr. REED), programs, and maybe give a little bit Mr. NEAL. Mr. Speaker, I yield 2 one of our key leaders on tax reform on in regards to a government welfare minutes to the gentlewoman from Mas- the Ways and Means Committee. sachusetts (Ms. CLARK), a valued mem- Mr. REED. Mr. Speaker, I thank the check. But what this Tax Code and re- ber of our delegation. chairman for all of his hard work in form does is deliver a job opportunity Ms. CLARK of Massachusetts. Mr. putting this bill together. for these people, and I don’t know a Speaker, I thank our ranking member Mr. Speaker, this bill has been in the better program in America that serves for yielding and for all of his incredible process for over 7 years in regards to more people than an honest day’s work work on this bill. the time I spent on the committee. and an honest paycheck and an honest Mr. Speaker, we were promised tax There have been multiple hearings on job, and that is what this Tax Code will reform, but that is not what we are see- the issue of tax reform, well over 40- do. ing in this bill. In fact, you don’t have plus. There have been hours upon hours Mr. NEAL. Madam Speaker, correc- to dig far into this 429-page bill to see of debate. tion. Not one hearing was held on this that it is a con, a cynical bait and There were efforts done by our tax bill. Thirty-eight thousand people switch for families at home. former chairman, Dave Camp. I know in Mr. REED’s district will lose the stu- When this bill was released just 2 my colleagues on the other side of the dent loan interest deduction. weeks ago, I started getting calls from aisle have recognized, during our com- Madam Speaker, I yield 1 minute to families at home wanting to know how mittee markup process, the hard work the gentlewoman from Ohio (Ms. KAP- it would affect them. We dug into it, that Chairman Camp did with rewrit- TUR), a real champion of the working and I want to share just a few of those ing the entire Code from the bottom class in America. examples, but it didn’t take long to see up. Ms. KAPTUR. Madam Speaker, I why it was developed in secret and why These issues have been out there for want to thank the gentleman from it is being rushed to a vote. the American people and for the people Massachusetts, Ranking Member RICH- On page 254, Republicans propose get- from across the country to look at, to ARD NEAL, for his exceptional leader- ting rid of a program that helps vet- digest. Now is the time to rise in sup- ship in trying to fix this horrendous erans find work when they come home. port of this legislation, Mr. Speaker, bill. 300,000 veterans have been helped by because what we have before you is a Madam Speaker, the GOP-led tax and the work opportunity tax credit. The new Tax Code for the 21st century. deficit disaster rewards the big cor- repeal of this provision to reduce taxes Mr. Speaker, we have a Tax Code porations and billionaires. It will ac- for the very wealthiest is a coldhearted that is going to, for once in 31 years, celerate job outsourcing. Indeed, 50 way to say thank you for your service. put our corporations on the multi- percent of the tax benefits go to the On page 113, this tax scam sends a national level across the world in a top 1 percent. bill to 9 million households who have competitive position by lowering the This tax scam locks in—get this—a extremely high medical costs. Tax rates and getting to a 21st century tax- $621,500 tax bonus to each billionaire in breaks for billionaires are expensive; ing program on a territorial basis. the billionaire class, the top one-tenth we get that. Under this plan, Ameri- Most importantly, Mr. Speaker, we of 1 percent. Do you really think they cans who live in nursing homes, have a deliver tax relief. I know the folks on need it? sick child, high medical costs will foot the other side aren’t going to agree Meanwhile, this tax scam raids the bill. with this because they are going to say money from the pockets of 38 million On pages 95 and 97, students get this is a Tax Code for the rich, this is middle class taxpayers, likely those added to the list of Americans who will a Tax Code, tax reform for the rich and caring for their sick relatives or trying be forced to pay for the GOP’s tax the almighty 1 percent. to help their kids in college. Do you

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00096 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.102 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9353 really think the one-tenth of 1 percent Senate bill does not include the repeal nating private activity bonds, and they need more? of these vital education permits. don’t get the benefit of their municipal Money-trading Wall Street Mr. Chairman, I would like your as- bonds rate. megabanks like Goldman Sachs and surances that the current status of I have another question. What do you J.P. Morgan, already making billions, these education benefits will be pro- have against teachers? They reach in will get more tax bonuses courtesy of tected during conference debate. I am their pocket at the beginning of school the middle class. requesting you continue to work with to help out with school supplies. They The SPEAKER pro tempore (Ms. CHE- my office as we, together, address this lose the deduction. NEY). The time of the gentlewoman has issue. I have another question. What do you expired. Mr. RODNEY DAVIS of Illinois. Will have against people who have a loved Mr. NEAL. I yield the gentlewoman the gentleman yield? one with Alzheimer’s? They can’t de- an additional 30 seconds. Mr. TURNER. I yield to the gen- duct the cost of that medical care. Ms. KAPTUR. This job outsourcing tleman from Illinois. The SPEAKER pro tempore. The gen- tax bill of the rich, by the rich, and for Mr. RODNEY DAVIS of Illinois. It is tleman will suspend. the rich, well, if it walks like a duck a privilege to be able to work with the Members are reminded to address and quacks like a duck, it must be a gentleman on this issue, and, Mr. their remarks to the Chair. duck, and this duck belongs in a Chairman, it is a privilege to work Mr. WELCH. Well, I have another swamp, which voters may have thought with you. question for the Chair, and I ask it of they were draining in the last election. With eight colleges and universities the leadership. Well, folks, this bill makes the in my district, I cannot ignore the im- What happened to democracy? We swamp wider and deeper, and the fat pact that eliminating this section that were promised an open process. And ducks will be even fatter and happier in Mr. TURNER eloquently explained—the there was a model for this. It was it. impact it may have on the students President Reagan and Dan Rosten- I urge my colleagues to vote for the and the employees in my district at all kowski, 4 months of actual hearings, middle class, not the billionaire donor of those institutions. witnesses testifying about the bill. class. Vote ‘‘no.’’ Drain the swamp. The University of Illinois, the largest This was written in secret. Oh, by the Mr. BRADY of Texas. Madam Speak- university in my district, provided $184 way, no amendments. er, I am proud the Tax Cuts and Jobs million in tuition waivers to 1,387 fac- Now, we could ask 435 Members of Act for that family of four in Ohio, in ulty and staff last year alone; 1,100 of Congress whether we should stick it to the Ninth District, a $64,000 household, those employees made less than $75,000. the students like we are doing in this will see a tax cut of $1,284. I am worried, too, that that is going bill, and 435 of us would all stand up for Madam Speaker, I yield 1 minute to to have a tremendous impact on grad- the students. But you know what? Not the gentleman from Ohio (Mr. TURNER). uate students. I am worried it is going a single one of us is given the oppor- Mr. TURNER. Madam Speaker, I to have an impact on the custodians tunity to ask the question: Do we want thank the chairman for working dili- and the assistants in the Registrar’s to stick it to our students who want to gently to create the Tax Cuts and Jobs Office who are just working at these in- get a welding degree or a college de- Act that will give a tax break to the stitutions to be able to send their son gree? middle class. or daughter to college. So I look for- That is disgraceful, it is inexcusable, After speaking to both Speaker PAUL ward to working with Mr. TURNER and it is within the control of the majority, RYAN and Ways and Means Committee Mr. Chairman and working toward a and they are denying us the oppor- member TOM REED, I believe that an solution. tunity. unintended consequence of this bill Mr. BRADY of Texas. Will the gen- Here is the big deal that we know. would hinder middle class Americans tleman yield? This bill was written by and for the pursuing a higher education degree in Mr. TURNER. I yield to the gen- donor class that has flooded and con- an attempt to better their lives. These tleman. taminated this political process with consequences will affect the education Mr. BRADY of Texas. Madam Speak- billions of dollars in our campaigns. of employees of universities, graduate er, I would like to thank Mr. TURNER Madam Speaker, I say defeat this students, and employees receiving em- and Mr. DAVIS for raising this impor- bill. ployer-provided education benefits. tant issue. On the committee, Rep- Mr. BRADY of Texas. Madam Speak- Madam Speaker, under current law, resentatives MEEHAN and LYNN JENKINS er, the Tax Cuts and Jobs Act for fami- higher education institutions can pro- led the discussion and share your senti- lies of four in Vermont, making $89,000, vide tax-free tuition waivers or reim- ments. will see a tax cut of $2,030. bursement to employees, spouses, and I have a keen interest in this issue. I Madam Speaker, I yield 3 minutes to dependents. will work with you toward a positive the gentlewoman from Indiana (Mrs. Secondly, many universities provide solution on tuition assistance in con- WALORSKI), one of our key leaders graduate students, including Ph.D. ference with the Senate. championing for small business. candidates, with tuition relief and sti- Mr. NEAL. Madam Speaker, I yield 2 Madam Speaker, I also ask unani- pends, which they can utilize while minutes to the gentleman from mous consent that the gentleman from pursuing their degree. Several of my Vermont (Mr. WELCH), who is a son of Illinois (Mr. ROSKAM) be permitted to constituents, including my niece, Springfield, Massachusetts, and a very control the balance of my time. Sarah Schiavone, who is a Ph.D. stu- distinguished gentleman. The SPEAKER pro tempore. Is there dent, would be impacted by this. Mr. WELCH. Madam Speaker, I have objection to the request of the gen- Thirdly, employer-provided edu- a few questions for the authors of this tleman from Texas? cation incentives are currently not bill. There was no objection. taxed. I offered two amendments, What do you have against students? Mrs. WALORSKI. Madam Speaker, I amendments 20 and 21, to H.R. 1 that You are imposing an opportunity tax. thank the chairman for all of his work. would have kept these qualified tuition A young Vermonter who wants to get a Madam Speaker, I can’t tell you how reduction benefits and currently would certificate in welding, or get a degree grateful I am to cast a vote to move have provided for them to continue. from our community college, and gets our Tax Code one step closer to its first The SPEAKER pro tempore. The tuition assistance from an employer, overhaul in 31 years. time of the gentleman has expired. they have to pay taxes on that. If they We know the Tax Code is broken. The Mr. BRADY of Texas. Madam Speak- borrow money from the Vermont Stu- American people know the Tax Code is er, I inadvertently cut the gentleman dent Assistance Corporation, they have broken. They are reminded every time short. I yield the gentleman an addi- to pay more because they can’t deduct they look at their paycheck. The Tax tional 2 minutes. that interest. Cuts and Jobs Act will deliver Mr. TURNER. I know the Senate is By the way, the Vermont Student As- progrowth tax reform to the families, working on their version of the tax re- sistance Corporation has to charge farmers, manufacturers, and workers form package, and, as of today, the higher interest because we are elimi- in my district.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00097 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.104 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9354 CONGRESSIONAL RECORD — HOUSE November 15, 2017 For families, we are delivering tax trillion that they will cut from Med- And this is a commonality we both un- cuts so that hardworking Hoosiers can icaid, from Medicare. derstand, economic growth is our only keep more of their hard-earned money. Madam Speaker, Medicaid is for the path. Because if it is not, are you on We are enhancing the child tax credit, children. There are literally millions of your side ready to do fairly draconian preserving the Adoption tax credit, en- children on there. cuts? couraging retirement savings, and You heard one of my colleagues go If we actually look at some of the streamlining 15 different education tax down. We are losing 20 veterans to sui- data that has come from the Tax Foun- incentives. cide every single day. No mention of dation, the Tax Foundation’s modeling We are delivering a Tax Code so sim- that. Yet they will cut the veterans says $1 trillion of additional taxes, but ple that most Americans can file taxes program designed to help them to pay almost $300 billion in additional pay- on a postcard. In my district, 80 per- for this tax cut. roll taxes over the 10 years. cent of filers already take the standard Not to mention the student loan in- I have already heard a couple people deduction. They will be able to keep terest rate. Young people across this get behind the microphone here and even more of their money, because the country, you need to rise up. Seniors, use the term that the trillion and a standard deduction is doubled, and we need to rise up. half is dynamically scored. No. That is most itemizers will now be able to save The SPEAKER pro tempore. The a static score. All dynamic scoring is— time, money, and stress by taking the time of the gentleman has expired. so we all have a commonality—you cal- double standard deduction instead. Mr. NEAL. I yield the gentleman an culate back in the size of the economy. No one is ever excited to file their additional 15 seconds. You loop back in the size of the econ- taxes, but I am all for a simpler, Mr. DAVID SCOTT of Georgia. We omy, and you can’t have it both ways. quicker process that makes it much need to rise up and stand and fight for You either support dynamic scoring or more pain-free. this country. Let our minds go back to you oppose it for global warming. You H.R. 1 helps job creators grow. Small 1770, in Boston, at the harbor, when oppose it for immigration. You oppose businesses get a lower rate and more they threw the tea over that founded it for the stimulus, because we actu- simplicity. Family businesses passed the foundation of our great democracy. ally, as a body, every March, when CBO down for generations won’t have to I ask the American people to stand brings us the numbers, they give us a worry about the estate tax anymore, up and help us Democrats defeat this number that has been dynamically and America will be a more attractive dangerous bill. scored. place to do business. The SPEAKER pro tempore. Mem- I know we all want what is best for Our antiquated Tax Code keeps in- bers are reminded to address their re- this Nation, but as I dig through the vestment in jobs out. This bill marks to the Chair. math, if we get the economic growth incentivizes companies to bring profits b 1815 that I believe this tax model, so many back, to locate facilities here, and to of the very difficult decisions we as a grow American jobs and raise wages. Mr. ROSKAM. Madam Speaker, the body have to make over the next dec- Madam Speaker, I was so proud to good news is that the good people of ade get much easier. Let’s hope we get vote for this bill in the Ways and Georgia’s 13th District median house- there. Means Committee, and I am proud to hold income, family of four, at $80,000 Mr. NEAL. Madam Speaker, I appre- be a part of this House that is deliv- would receive a $1,700 tax break. ciate the gentleman’s sincerity as we ering yet another crucial step toward Madam Speaker, I yield 3 minutes to proceed to watch them borrow $2.3 tril- tax cuts, simplicity, and fairness. the gentleman from Arizona (Mr. lion on the deficit. Madam Speaker, I urge all of my col- SCHWEIKERT), former treasurer of one Madam Speaker, I yield 2 minutes to leagues to support this bill. of the largest counties in our country. the gentleman from Michigan (Mr. KIL- Mr. NEAL. Madam Speaker, the Uni- Mr. SCHWEIKERT. Madam Speaker, DEE), from a well-known family. versity of Notre Dame is about to get this is one of those moments where— Mr. KILDEE. Madam Speaker, I slugged with a new tax, and the clock and forgive me, but I sometimes feel thank the gentleman for yielding me is running out. like I live and work in a math-free time and for his incredible leadership Madam Speaker, I yield 2 minutes to zone, because you can’t intellectually on this subject. the gentleman from Georgia (Mr. have it both ways, where you are talk- You can’t have it both ways. I just DAVID SCOTT), who has been a cham- ing about the great difficulties coming, heard it said. You can’t have it both pion of the working class. and then when you bring in the actual ways. So what I suspect will happen Mr. DAVID SCOTT of Georgia. data and you actually start to look at after I get done, as has been the case Madam Speaker, I thank Ranking the charts that we all see, it isn’t in with every one of the speakers on this Member NEAL. I appreciate this time. the future, it is right on the cusp of us, side, the gentleman on the other side Madam Speaker, my heart is heavy and that is the debt and entitlement will say that residents in my home- tonight, and it is heavy because we are crisis. town will get a tax break of X, $1,000. faced with the absolute, most dan- If we do not start to get some eco- I would ask the gentleman if he gerous, destructive, and deceitful tax nomic growth, we are in so much trou- would add to that the amount of the reform bill in the history of this Con- ble. If you really care about Medicare, debt that is being borne by each one of gress. Now, let me tell you why. Medicaid, the children, this education those families. Because the way I have On the other side, you have heard program, this health research, where is got it calculated, it costs a family of Member after Member on the other side the money coming from? four about $20,000 for your debt that get up and tell you: This is going to get It is on the cusp. This is less than a you are willing to levy against our a tax cut, we are going to give the decade away. In just a few years, we children and grandchildren in order to wealthy a tax cut, we are going to give cross 100 percent of GDP, and that is give the richest 1 percent of Americans the corporations a tax cut. But none of publicly held, and then the ability to a massive tax break. them have told you, or the American sell the bonds if we do not get eco- You can’t deny the math that almost people, how they are going to pay for nomic growth. all the benefit goes to the people at the it. But if you look at the last 30 years in top. The top 1 percent are huge bene- And the great tragedy is, the most the charts and the data—and I am ficiaries. You can’t deny the math that deceitful thing about what my col- sorry, I know this is small and I know 5,400 families will get a massive tax leagues on the other side are doing to it is math, so it is uncomfortable for a break. You can’t deny the math that the American people is they are doing lot of people in this body. If you actu- says that every single American will these tax cuts for the wealthy, the tax ally look across here and you see, this take on additional debt; a family of cuts for the corporations, on the backs is entitlements to GDP, when we have four, $20,000 in debt. of the poor, the middle class. Let me been in times of economic expansion, I also was intrigued by the colloquy tell you why. all of a sudden our ability to finance, where Members came to ask the leader- They won’t tell you that they are to maintain the promises we have ship if they will work with them to paying for this tax cut because on—$1.5 made as a society, if the math works. take out egregious elements of this tax

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00098 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.105 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9355 proposal. We get this sort of ‘‘Yes, I Supporters of this bill have called it more jobs and, according to the non- will work with the gentleman’’ answer. a middle class tax cut. That is not partisan Tax Foundation, it will de- I have a question: Why did you put it true. The lion’s share of the money liver average American households a in in the first place? Why are you cut- goes to corporations and households pay raise of at least 21⁄2 percent. ting brownfield tax credits? Why are making $1 million or more, not to the With this legislation, a typical fam- you cutting new market tax credits? family struggling paycheck to pay- ily of four earning $59,000, the median Why are you cutting historic tax cred- check. household income, will receive a $1,182 its in the first place? Why did you put What this bill gives to the middle tax cut. it in in the first place? class in one hand, it takes it away with Madam Speaker, that is not a tax cut You just wrote the bill. You just the other with devastating con- for the rich. That is a tax cut for low- wrote it. It makes no sense. It makes sequences for households with high and middle-income hardworking Amer- no sense. medical costs, student loans, or high icans, and that is a fact. We can’t pass debts to our children in State and local taxes. This will benefit people like Jared order to finance tax breaks for the peo- Supporters of this bill have claimed from Frankfort, Kentucky, who told ple at the very top. that it will keep companies from mov- me: ‘‘The extra income from the tax The SPEAKER pro tempore. The ing jobs overseas, create new jobs here cut will enable us to have some breath- Chair would like to remind all Mem- at home, raise wages for American ing room.’’ bers that they should address their re- workers. That is not true. While this It will also help constituents who are marks to the Chair and not to others in bill cuts corporate tax rates, it creates living paycheck to paycheck, who have the Chamber. new incentives for shipping our jobs told me they would use these tax cuts Mr. ROSKAM. Madam Speaker, I abroad. to save for a rainy day, make car re- yield myself 30 seconds. Finally, does anyone really believe pairs, occasionally go to a restaurant, Madam Speaker, the good news is it that tax cuts for corporations and the and invest in higher education for their is not just $1,000 for the gentleman’s rich will trickle down to the rest of us? kids. district, it is $1,200. It didn’t work in the Reagan admin- I heard from my constituent in Lex- Let’s go right to this student issue. It istration. It didn’t work in the Bush ington named Gary, who told me: ‘‘It was the Obama administration that administration. It didn’t work in Kan- doesn’t matter how I plan to use my proposed in the 2017 budget for the sas, and it is not going to work today. elimination of the student deduction. I Make no mistake, this massive tax money. By definition, it is my money think the sanctimonious need to just cut for corporations and the rich will to begin with. Trust me to spend it in walk out of the Chamber. increase deficits and the national debt the way that applies for me.’’ The other thing is, at a tax rate of 15 by trillions of dollars, sticking the rest Gary, you are absolutely right, it is percent, an annual $2,500 above-the-line of us, especially our kids, with the bill. your money. deduction is a $375 tax break. We are Madam Speaker, this massive tax cut Tax relief is not about handouts. It is proposing something far greater than for corporations and the wealthy is not simply about allowing the American that with doubling the standard deduc- a middle class tax cut. It won’t create people to keep more of the hard-earned tion, lowering the rates and so forth. jobs or raise wages. It isn’t simple, it income that they made. Madam Speaker, let’s just take the isn’t reform, and it certainly won’t pay On behalf of all of the hardworking student deduction and chuck it in the for itself. people of central Kentucky, I urge my garbage. If we want to increase economic colleagues to vote for Gary and to vote Madam Speaker, I yield 1 minute to growth, let’s give a real break to the for all other taxpayers who deserve to the gentlewoman from Missouri (Mrs. middle class and the small businesses. keep more of what they earned. Vote WAGNER). They will put that money right back ‘‘yes.’’ Mrs. WAGNER. Madam Speaker, it is into the economy. That is the way to Mr. NEAL. Madam Speaker, I yield 2 about time we get something real done create jobs and boost wages. minutes to the gentleman from Ohio for the American people. The people of Madam Speaker, I urge my col- (Mr. RYAN), who is well known and well Missouri’s Second District sent me to leagues to reject this giveaway to the regarded as he addresses national eco- Washington to secure their jobs and to rich and to start over with a bipartisan nomic issues. keep a little more of their hard-earned bill that truly benefits the middle Mr. RYAN of Ohio. Madam Speaker, I money, and at long last we are finally class. thank the gentleman for his leadership doing just that. Mr. ROSKAM. Madam Speaker, my on this. I vote ‘‘yes’’ to fix our broken tax friends on the other side of the aisle The last time there was tax reform system. I vote ‘‘yes’’ to help reignite need to make a decision: Do they want was 31 years ago. Since then, 96 percent the American economy. I vote ‘‘yes’’ to to lionize Ronald Reagan or criticize of income growth went to the top 10 make it a little bit easier for that sin- Ronald Reagan? percent of the people in the country. gle mother of two, that firefighter, I will leave it to them to decide Ninety-six percent went to the top 10 that teacher, that shopowner, that which. percent. The top 1 percent control 90 family of four, that veteran. I vote Madam Speaker, I yield 2 minutes to percent of the wealth in this country. ‘‘yes’’ for bigger paychecks, better sav- the gentleman from Kentucky (Mr. Sixty-three percent of average fami- ings, and a more secure future. BARR). lies in the United States of America I ran for Congress to fight for the Mr. BARR. Madam Speaker, I rise could not withstand a $500 emergency. people of Missouri and to ensure that today to adamantly dispute this false We have pensions collapsing, we have every hardworking American can real- narrative that the Tax Cuts and Jobs communities that have eroded, wiped ize their own American Dream. Act is only intended to benefit the out, and the Republican plan to fix all Mr. NEAL. Madam Speaker, I yield 2 wealthiest Americans and does not of this is to go to the Chinese Govern- minutes to the gentleman from Penn- benefit the middle class. ment, borrow $2.3 trillion and bring it sylvania (Mr. MICHAEL F. DOYLE), a When you hear this fiction from the back to the United States and give it conscience of the House and a cham- other side of the aisle, remember these to the wealthiest people in this coun- pion of all things Pittsburgh. facts: this bill lowers tax rates on low- try. Mr. MICHAEL F. DOYLE of Pennsyl- and middle-income Americans. It takes That is not going to fix a damn thing vania. Madam Speaker, I rise today in the lowest 10 percent bracket to zero. in the United States. It is not going to opposition to this terrible bill. Many of It doubles the standard deduction, help Flint, or Springfield, or Youngs- my colleagues have called it a scam, meaning hardworking Americans can town, or Pittsburgh, or Gary. I am and they are absolutely right. immediately take home more of their talking about Gary, Indiana, will get Supporters of this bill have said that paychecks. Specifically, the first hammered from this thing. everyone gets a tax cut. That is not $24,000 of family income will be com- true. Millions of Americans get a tax pletely tax free under this plan. b 1830 increase; more and more each year, in By slashing our noncompetitive cor- We have tried this before, and many fact. porate tax rate, this bill will result in of you were here. President Bush did

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00099 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.107 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9356 CONGRESSIONAL RECORD — HOUSE November 15, 2017 this. He said: We are going to cut taxes tisan. We have learned over the years, Tax Code—a machinist in Poplar Bluff, for the wealthy. It is going to lead to if you do something strictly on a par- Missouri, working 40 hours a week is growth. Wages are going to go up. tisan basis, it isn’t going to work. It is fearful to work harder because the We had the most stagnant decade of going to fall apart. It will come back to more money that they make, the less growth since the Great Depression, and you. I am telling you, learn from our that they will have percentagewise it ended in a complete economic col- mistakes. Work with us. under our current Tax Code. That is lapse. This is a canard. This economic There hasn’t been a single hearing on simply not right, Madam Speaker. philosophy stinks. It doesn’t work, and this bill. Back in southeast Missouri, a cotton it hammers working class people. Is the public out there confused? farmer in Hayti has worked for decades To put a little salt in the wound, They should be because they haven’t to build his family farm hoping to pass Madam Speaker, you keep the deduc- been informed about what this bill it on to his daughter. Yet, under the tion that allows a corporation to does. current system, his daughter would outsource jobs from our communities It was rushed through in 1 week. It have to sell portions of the farm or to other countries. takes more than a week to name a post take out a massive loan to continue The SPEAKER pro tempore. The office around here. the family operation. time of the gentleman has expired. What is the deal? What is going on The status quo in our Tax Code is Mr. NEAL. Madam Speaker, I yield here? No one really understands the rigged against the American taxpayer. an additional 30 seconds to the gen- consequences of this bill, but I can tell They can’t afford an army of lawyers, tleman. you what it does. accountants, and lobbyists to find all Mr. RYAN of Ohio. Madam Speaker, It will greatly reduce taxes for cor- of the loopholes and the bailouts avail- the only place this is going to create a porate America. It will reduce taxes for able only to a select few. job is in Beijing, China. the wealthy. The status quo are tax rates for busi- Mr. ROSKAM. Madam Speaker, as So where do you think the money is nesses that are so high that the Amer- you know, the good news is, according going to come from to pay for Social ican companies are not able to grow, to the Joint Committee on Taxation, 70 Security? to pay for our roads and hire new workers, or be competitive percent of the individual tax relief goes highways? to pay for our education? to with other countries around the world. to families earning under $200,000, ac- pay for Medicare? If you haven’t The other side of the aisle was argu- cording to their publication on Novem- guessed, it is going to come from the ing to keep a broken Tax Code that is ber 13. middle class. There is no other way we punishing hardworking taxpayers. All Madam Speaker, I yield 1 minute to can pay for this. of the grandstanding leaves us with one So I will be kind and say maybe they question that needs to be answered for the gentleman from Florida (Mr. RUTH- are being overoptimistic. Maybe they the American people: What do these ERFORD). Mr. RUTHERFORD. Madam Speaker, don’t really understand what is going tax cuts mean for you? It means that I thank the gentleman for yielding. on there, but don’t believe it. You are the hardworking family in southeast Madam Speaker, I think no one in going to pay more taxes. It is going to Missouri will keep more of their pay- this Chamber can dispute when I say come out of your hide. check. And when I sit down, the Member Instead of being penalized for suc- that America’s Tax Code is broken. I from Nebraska is going to say that, in cess, this bill is about employees. It is rise today to stand with my colleagues my district, you are going to get $1,200 about wages. It is about getting to in support of progrowth tax reform be- more or $1,700 more. No. You are going keep more of what you earn. For fami- cause our Tax Cuts and Jobs Act works to pay more. You are not going to get lies and couples, the first $24,000 you for the middle class. more money back. earn under this bill will be tax free. For too long, a complex Tax Code, In California, 6 million people will You get to keep it. You get to decide high rates, and burdensome regulations lose their tax deductions, the State in- how to spend your own money, not the have held back opportunities for hard- come tax deduction. What does that government. working families. The Tax Cuts and mean? That means you are going to It means that the small businesses Jobs Act offers much-needed tax relief pay taxes twice on your earned income. and family farms won’t feel the sting of for low-income and middle-income In California, homeowners are going to the IRS and the death tax when trag- Americans. get hit hard. I don’t see how anyone edy strikes their family. It focuses on middle class tax cuts from California can vote for this bill. It means that lobbyists and special that allow hardworking Floridians to Education will be more expensive; interests become the losers. We close keep more of their paychecks so that student loans will not be deductible. loopholes in handouts that the hard- they can save for their children’s col- This bill will hurt our Nation’s ability working taxpayer can’t get. lege fund, so that they can invest in to compete. We are ending a Tax Code that isn’t their retirement, so that they can What does that mean? It means lower built for the everyday American. We enjoy vacations with their family. pay. It means layoffs. are making it simple and fair. It means Florida families know how to spend This tax overhaul is a big lie. We that America can now compete and win their money better than the govern- should oppose this bill and start over again. ment, and this plan allows them to and do it right. With this bill, we lower the business keep more of the money that they earn Mr. ROSKAM. Madam Speaker, the rate to historic levels. We are making instead of waiting for tax returns and good news is it is not $1,200. It is not our economy healthy again. We know deductions to give them their money $1,700. It is $1,900 for the median house- from history that a healthy economy back. hold in California’s Ninth District. takes care of itself. It is more stable This bill is profamily. It is Madam Speaker, I yield 4 minutes to and sustainable. It provides for full em- probusiness, and it will give our econ- the gentleman from Missouri (Mr. ployment, better jobs, and higher omy a boost. Nothing will address our SMITH), a great friend of agriculture wages. debt more than growth. and a great friend of small business. Former President John F. Kennedy Madam Speaker, I urge my col- Mr. SMITH of Missouri. Madam knew this when he said: ‘‘Our true leagues to support this bill. Speaker, a lot has been said today on choice is not between tax reduction, on Mr. NEAL. Madam Speaker, I yield 2 the floor about the Tax Cuts and Jobs the one hand, and the avoidance of minutes to the gentleman from Cali- Act from my friends on the other side large Federal deficits on the other. It is fornia (Mr. MCNERNEY), well-known as of the aisle. They think that this bill increasingly clear that no matter what a champion of America’s middle class. before us will make losers of the Amer- party is in power, so long as our na- Mr. MCNERNEY. Madam Speaker, I ican workers or of the American econ- tional security needs keep rising, an want to thank the ranking member of omy. The truth is the status quo—our economy hampered by restrictive tax the committee for his hard work on current broken Tax Code—is causing rates will never produce enough rev- this. He has been a great voice. our workers and our economy to lose. enue to balance our budget just as it Madam Speaker, this is a harmful Back in southeast Missouri—I will will never produce enough jobs or and deceitful bill. It is strictly par- give you an example under the current enough profits.’’

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00100 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.109 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9357 The SPEAKER pro tempore. The Mr. ROSKAM. Madam Speaker, if You have heard from my Republican time of the gentleman has expired. you are in California’s 36th District friends over the course of the past cou- Mr. ROSKAM. Madam Speaker, I and your median household income is ple days about how much this will save yield an additional 30 seconds to the $58,000, it looks like a tax cut of $1,090. the average American family, but not gentleman. I am informed that our friends on the about the 36 million people and fami- Mr. SMITH of Missouri. Madam other side have more time, and my sug- lies who will experience a tax hike. Speaker, surely, the lesson of the last gestion is that our friends use some of What they aren’t telling you is what decade is that budget deficits are not their time to get back in balance. is going to happen the moment this bill caused by wild-eyed spenders but by I reserve the balance of my time. is passed. Luckily for the American slow economic growth and periodic re- Mr. NEAL. Madam Speaker, how public, one of the chief economic advis- cessions. Any new recession would much time do I have remaining? ers to the President has said so. He break all deficit records. The SPEAKER pro tempore. The gen- said that after this bill is done, they This bill makes the American work- tleman from Massachusetts has 1 hour are turning directly toward welfare er, the American family, the American 161⁄4 minutes remaining. cuts, Social Security, Medicare, and farmer, the American small businesses, Mr. NEAL. Madam Speaker, I just Medicaid. So when you hear questions and the American economy winners happen to have the nephew of former about how much this bill is going to once again. President Kennedy here who is going to save you, ask how about your retire- Madam Speaker, I urge all of my col- set the record straight on that quote ment. These cuts go right to Social Se- leagues to vote ‘‘yes’’ on the Tax Cuts that was attributed to President Ken- curity. and Jobs Act. nedy just a few moments ago. The SPEAKER pro tempore. The Mr. NEAL. Madam Speaker, 28,000 Madam Speaker, I yield 2 minutes to time of the gentleman has expired. people will use the student loan inter- the gentleman from Massachusetts Mr. NEAL. Madam Speaker, I yield est deduction in Missouri’s Eighth Dis- the gentleman from Massachusetts an (MR. KENNEDY), a very good member of trict, claiming nearly $33 million in de- the Massachusetts congressional dele- additional 30 seconds. Mr. KENNEDY. Madam Speaker, ask ductions. gation and my friend. Madam Speaker, I yield 2 minutes to them how much more money that Mr. KENNEDY. Madam Speaker, I the gentleman from California (Mr. $1,000 is going to save you when your thank my friend and mentor in the RUIZ), a medical man and Congress- healthcare benefits are taken away. By House, the dean of our delegation from man. the way, that clause just got added Mr. RUIZ. Madam Speaker, I thank Massachusetts (Mr. NEAL), for his lead- over in the Senate. ership on this issue and so many oth- Ranking Member NEAL for the oppor- Ask them how much more some sav- tunity to speak on this bill. ers. ings might go for one family when you The fact is I do want to simplify our Madam Speaker, I am always heart- gut and shred a social safety net that Tax Code and I do want tax reform, a ened by the quotes of President Ken- has powered the greatest expansion of tax reform that relieves the burden on nedy offered by any Member of this economic growth that this country has our middle class, our seniors, our vet- body. I would like to think that they ever seen. erans, and our students. But let’s just would seek to emulate him not just on That is what your bill does. That is see how this bill fares with the middle the marginal tax cuts that were put what this bill means. That is what this class, seniors, veterans, and students. forth some 50 years ago, but also on his bill is about. It is about the values en- My middle class constituents in Cali- stance on immigration, on civil rights, visioned of an America, about a tax fornia will be double-taxed on their in- and on Russia. structure that should reflect the values come, but big corporations will get tax b 1845 of the American family, not the values of corporate balance sheets. relief. But those are issues for another day, Veterans in my district will find it The SPEAKER pro tempore. Mem- Madam Speaker. harder to find work or a home because bers are reminded to address their re- The issue today is a vote that we will this bill eliminates tax credits for hir- marks to the Chair. take on this floor tomorrow to rewrite ing veterans and harms efforts to end Mr. NEAL. Madam Speaker, I yield 2 an American Tax Code that will touch veterans’ homelessness. minutes to the gentleman from Mary- Middle class homeowners across Cali- every single American life. land (Mr. RASKIN). Congressman fornia will see the value of their homes True tax reform is complicated, it is RASKIN is a well-known champion of decrease by as much as 10 percent. cumbersome, and, above all else, it is civil liberties and a scholar of the law. Students will get hit with the largest deeply personal. But this bill is none of Mr. RASKIN. Madam Speaker, as my relative tax increase in this bill. those things. It is a massive, perma- friends across the aisle prepare their Seniors will see a Medicare cut by $25 nent handout to corporations passed statistics about my congressional dis- billion a year. That is over $100 billion off on American families. It is a terri- trict where 500 people rallied against of Medicare cuts over the next 4 years. fyingly precise attack on patients with the tax plan this last weekend, I want And 38 million middle class families chronic illness, a heartless roadblock to invite them to come to my district will see their taxes increase. They al- for low-income students, and a choice and to debate me and several other ways point to this family of four earn- to value inherited wealth more than members of our caucus. I am happy to ing $59,000 getting a certain amount of hard-earned income. come to the gentleman’s district and tax cuts, but 38 million middle class It is a gift to corporations paid to the debate it, too, because the American families will see their taxes increase, richest among us, and it is paid for by people should be able to be part of this all this while giving tax breaks to mil- long nights, by double shifts, by vaca- decision. lionaires, billionaires, and corporations tions not taken, and of hardworking When the majority voted to throw 30 who ship jobs overseas and raise the American families sacrificing for their million Americans off of their health deficit by $1.44 trillion within 10 years. hope for a better tomorrow. insurance plans, they went over to the In fact, nearly 80 percent of the tax You are asking them to fortify your White House where they celebrated cuts in this bill go to millionaires, bil- tax cuts and stock options with their like it was Mardi Gras, the Super Bowl, lionaires, and multinational corpora- classrooms, your corporate profits with and Herbert Hoover’s birthday all put tions that ship jobs overseas. their roads and bridges, your balance together. When millions of middle class The bottom line is this bill raises sheets with their hard-earned retire- Americans rebelled and defeated that taxes on the middle class and gives tax ment and healthcare benefits. monstrosity of a bill, Donald Trump breaks to billionaires. This is irrespon- For all the talk about the boost to pointed at them and said that they had sible and unacceptable. corporate profits, 80 percent of the all voted for a mean bill; and he was Madam Speaker, I urge my col- stocks in this country are owned by 10 right. leagues to oppose this bill and protect percent of Americans. Ask yourself Now like lambs to the slaughter, Medicare, protect the middle class, who is going to actually be the bene- they are about to vote for another protect seniors, protect veterans, and ficiary of all that money. That is what mean bill, a tax scam written by cor- protect students. this bill does. porate lobbyists in the dark of night

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00101 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.110 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9358 CONGRESSIONAL RECORD — HOUSE November 15, 2017 now moving through Congress at the State and local tax deductions on in- Let’s send a signal that we don’t stand speed of light. come. It will restrict the mortgage in- for the status quo. We stand for growth While our poor colleagues grimly terest deduction. and economic opportunity for the walk the plank for the billionaires, It is estimated that 47 million tax- American people. Let us bring relief to Wall Street tycoons, and the Trump payers face a tax hike. Almost half of the middle class. Support this bill. Cabinet, who are getting ready to any tax cuts will go to the richest 1 Mr. NEAL. Madam Speaker, I yield 3 laugh all the way to the bank when percent. Residents of my State of Cali- minutes to the gentlewoman from Ala- middle class Americans rebel again fornia will face the largest net tax in- bama (Ms. SEWELL). Congresswoman this week, next week, and the week crease totaling $12.1 billion in 2027 SEWELL is an attorney and a Marshall after that, and this tax scam bites the alone. Scholar. dust, President Trump can turn around Madam Speaker, I call on the Presi- Ms. SEWELL of Alabama. Madam again and call this monstrosity not dent of the United States of America to Speaker, our Tax Code is a statement only mean, but greedy. show his tax income and to show his of our values, and I can tell you that This mean and greedy tax scam puts tax plan. He needs to let us know what this tax bill doesn’t reflect my values $1.5 trillion on America’s credit card so he is all about and what his taxes are. nor those of the American people. This the sons and daughters of the middle From the very beginning, he said he bill favors the wealthy over the middle class can pay the rest of their lives for couldn’t show them at the time that he class, it favors corporations over the a gigantic corporate tax cut in a period was asked when he was first inaugu- working families, and it favors special of record corporate profits. rated into this Presidency, but time interests over everyday Americans. One-third of the windfall raining has passed. It is time for the President Madam Speaker, this tax bill raises down on corporate investors will go to show us his tax returns, rather than taxes for 36 million middle class Amer- abroad because more than one-third of coming up with a tax scam asking ev- icans, and it cashes a check for $2.3 corporate wealth is owned by foreign erybody else to pay up, to pay more, trillion worth of debt that will be left investors. That is more than $500 bil- and saying that this is a middle class for our children and grandchildren to lion that goes not even to our own rich tax cut when it is not. pay. This tax bill gives permanent tax people but to Saudi Arabia, China, and We want to know more about him cuts for corporations and multi- other foreign investor havens, and it and his plan. So with my 1 minute, my nationals while making the tax cuts will not go to Medicare or Medicaid or 2 minutes, whatever it is, this evening for regular taxpayers temporary. other public purposes at home. is all about saying a message to the This tax bill preserves tax deductions Then they move to the so-called ter- President. for certain industries but does away ritorial tax system so that corporate Even though I will be cautioned that with tax cuts in the Code that help ev- profits moved abroad will escape our I am not to talk to the President, I am eryday Americans. It eliminates the normal system, giving incentive to calling on the President: Show your deduction for State and local taxes. It record job flight. Somebody tell Donald tax returns. also limits mortgage interest deduc- Trump about this because this tax The SPEAKER pro tempore. Mem- tions and limits the medical expense scam puts foreign jobs first. bers are reminded to address their re- deduction affecting 9 million house- The SPEAKER pro tempore. The marks to the Chair. holds. time of the gentleman has expired. Mr. ROSKAM. Madam Speaker, there The independent group, the Tax Pol- Mr. NEAL. Madam Speaker, I yield is a message for California’s 43rd Dis- icy Center, estimates that almost half the gentleman from Maryland an addi- trict, and that is a benefit of $1,395 if of the tax cuts, 47 percent of the tax tional 1 minute. H.R. 1 is passed into law. cuts, will go to the top 1 percent. Mr. RASKIN. In the meantime, Madam Speaker, I yield 11⁄2 minutes Madam Speaker, this bill devastates Madam Speaker, 34 million middle to the gentleman from Illinois (Mr. education. Education is truly the in- class Americans get hit with a tax in- LAHOOD). vestment in our human capital, our crease. Good-bye to the healthcare de- Mr. LAHOOD. Madam Speaker, I workforce. It eliminates deductions for duction. Good-bye to the college loan want to thank my colleague from Illi- interest on student loans. It eliminates interest deduction. Farewell to a mean- nois for his commitment and dedica- deductions for teachers who buy sup- ingful State and local tax deduction— tion to this terrific bill that we have plies. It eliminates lifetime learning oh, and farewell to the estate tax before the House tonight. credits, and it eliminates employer tui- which applies only to billionaires and Madam Speaker, the people of Illi- tion assistance. the richest millionaires in the country, nois are unfortunately all too familiar This bill adds a special tax on the en- 2 out of 1,000 families. Where is the de- with high taxes and the burden they dowments of colleges and universities mocracy? Where is the legislative proc- put on families and our local busi- which will reduce scholarships and in- ess? nesses. At the Federal level, things crease the cost of college for average, When we had a bipartisan bill in 1986, have become just as bad with a Tax everyday Americans. we took more than 2 years. It passed Code that is over 74,000 pages long and Cities and towns will be decimated by with overwhelming support. Now this riddled with loopholes. this bill. This bill eliminates tax incen- tax scam has had no hearings, no ex- Over 30 years have passed since the tives such as private activity bonds, perts, and no citizen testimony. What a last time Congress passed comprehen- new markets tax credits, and historic scandal it is. We do need tax reform, sive tax reform, and you can see the ef- tax credits which dramatically affect but we don’t need a corporate tax scam fects of our outdated Tax Code every- the ability to build libraries and hos- imposed against the middle class. where. We have stagnant hiring, stag- pitals, and to fund roads, bridges, and Mr. NEAL. Madam Speaker, I yield 2 nant wages, and a stagnant economy broadband infrastructure. These are minutes to the gentlewoman from Cali- that is holding back our middle class critical investments, Madam Speaker, fornia (Ms. MAXINE WATERS), who is instead of helping them get ahead. in the public service that spur eco- the ranking member of the Financial H.R. 1, the Tax Cuts and Jobs Act, is nomic growth. Services Committee. our chance to change all of this. By Madam Speaker, this tax bill has it Ms. MAXINE WATERS of California. simplifying our Tax Code and bringing backwards. This Congress should value Madam Speaker, I rise today in opposi- real relief to everyday families, we can, its constituents first, not Wall Street, tion to H.R. 1, which is just a continu- once again, jump-start the American and not special interests—its constitu- ation of Republicans’ relentless attack economy and get it back to working for ents first. on working families. This is not a tax the middle class. Madam Speaker, I urge my col- plan; it is a tax scam. The choice before us is a simple one: leagues to vote against this tax bill be- This President won’t disclose how he Do we support this bill and support the cause it doesn’t represent the values is going to benefit from this tax scam. middle class, or do we embrace the sta- that our constituents sent us here to He has disrespected us all. This tax tus quo? That is why I urge my col- this hallowed place, Congress, to rep- scam will eliminate the student loan leagues on both sides of the aisle to resent. We should be representing them interest deduction. It will eliminate come together and vote for this bill. and not the special interests.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00102 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.112 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9359 Mr. ROSKAM. Madam Speaker, I What I did was talk to people in my annual benefit from the State and local yield myself 30 seconds to just do a district and looked at their rates and tax deduction. quick, little cleanup. said: Let’s look at your taxes and kind In the case of the gentlewoman from There was a discussion a minute ago of work them through. California, 37 percent of her constitu- by the gentlewoman from Alabama I found that people in the lower-in- ents enjoy an $18,200 State and local where she was talking about teachers, come rate in my district got relief. tax deduction benefit. for example. Let’s get right to that. People in the middle-income rate got Madam Speaker, in closing, more Teachers won’t be harmed by shifting relief. This happened right across the than anything else, this is, as I opened the status quo because what they are board to everyone we kept talking to. with, a missed opportunity. getting right now is a $250 deduction So I would say that, before you come We all know what is wrong with this which is worth about $37 at the 15 per- down and yell and scream and try and Tax Code. We could have found areas of cent tax rate, receipts that they have scare people on something you might compromise emphasizing the middle to keep all year long in an envelope have heard from a talking head, actu- class and middle-income earners. We and apply it at the end in terms of ally work with your people. It works. understand that the Tax Code that doing their taxes. Madam Speaker, if this bill is en- American corporations use is not com- We say: Dump that. Let’s get away acted, it will result in economic growth petitive now internationally, but we from that. Let’s double their standard across the country, especially in my wanted some relief for middle-income deduction, lower their rates, and give home State of California. The lower people. them some real money. rates for individuals, families, busi- So here is where the investment Madam Speaker, I yield 4 minutes to nesses, and the tax simplicity and cer- could have taken place. We could have the gentlewoman from California (Mrs. tainty offered by this bill will provide begun an investment in human capital. MIMI WALTERS). net tax relief to the middle class and You have heard it tonight. We should Madam Speaker, I ask unanimous our country’s job creators. all be alarmed by labor participation consent that the gentleman from Texas We expect this bill to create nearly 1 rates in America. We all should be (Mr. BRADY) control the balance of my million jobs nationwide, and nearly 10 alarmed by what has happened in the time. percent of those in California. post-war period where, at one time, it The SPEAKER pro tempore. Is there While the bill makes commendable was 63 percent, and now it is 63.8 per- objection to the request of the gen- strides toward a fair, simpler Tax Code, cent. tleman from Illinois? I am concerned about how the bill It is about technology; it is about There was no objection. could impact some of my constituents globalization, for sure; but it is also Mrs. MIMI WALTERS of California. as a result of the high level of income about skill set. Eighteen thousand pre- Madam Speaker, I rise to engage the taxes imposed on them by our State cision manufacturing jobs in New Eng- gentleman from Texas (Mr. BRADY) in a government. land go unanswered, the smallest geo- colloquy. I would ask the Chairman of the graphic region of the country. The De- Madam Speaker, tax reform will re- Ways and Means Committee if he can partment of Labor reported this week sult in economic growth across the assure me that we continue our work that 6 million jobs in America go unan- country, especially in my home State and ensure the families in my district swered. It is part of a skill set issue. of California. I thank the gentleman are protected from such unintended You know what else we need to be for his dedication to this important ef- consequences and that they will be able concerned about? fort. to fully enjoy the benefits of this bill. Two million people in America are Madam Speaker, my home State is Mr. BRADY of Texas. Will the gentle- addicted to opioids. That is what we uniquely positioned in this tax debate. woman yield? should be concerned about as well as Due to the liberal tax-and-spend poli- Mrs. MIMI WALTERS of California. I getting them back into the workplace cies enacted by the California State yield to the gentleman. through the trampoline effect, where Legislature, my district in Orange Mr. BRADY of Texas. Madam Speak- they hit it and bounce back up into the County is one of the most expensive er, I thank both the gentlewoman and mainstream. But that is not what we places to live in this country. Cali- the gentleman for stepping forward and did. fornia has the highest personal income being such strong advocates for tax- Without any hearings, without any tax rate in the country, reaching a payers in a State that taxes its fami- chance for the minority to participate, crushing 12.3 percent. The median lies and businesses, I think, almost be- in terms of substance, we moved for- home price in my district is almost yond belief. ward. $800,000. California also has the highest Our goal in tax reform is to achieve I want to say to the last two speak- gas tax in the country. tax relief for families and individuals ers, they are sincere enough. We have While this bill makes important re- across the country, regardless of where heard now four different people come forms that will grow our economy, I you live, and across all incomes, while, to the well of this House on the other have serious concerns that some of my at the same time, unleashing the eco- side and say to the chairperson of our constituents may be worse off. As Sac- nomic engine for American economic committee and a friend: Are you going ramento continues to confiscate more growth. to fix this after the bill leaves here? and more of California’s hard-earned California, by the way, under tax re- Four different people asked for a fix. paychecks, we must ensure that Wash- form, is the number one job creator I want to tell you, based on long expe- ington does not put similar tax burdens under the new Tax Code. rience in this House, the path gets on our constituents. So I agree with the gentleman and more narrow as it leaves this House. It I ask the chairman of the Ways and the gentlewoman. There are still some doesn’t grow more expansive. It will be Means Committee to assure me that we areas where we want to make and will harder to fix these things because of will ensure that individuals and fami- make improvements in this bill. If they the budget score that was embraced. lies in my district are protected from will work with us to continue to move In 2001, we were promised widespread such unintended outcomes. this process forward, I am happy to economic growth when President Bush Mr. KNIGHT. Will the gentlewoman commit to working with both of them took the Clinton surplus and offered yield? to ensure we reach a positive outcome $1.3 trillion worth of tax cuts. When Mrs. MIMI WALTERS of California. I for their constituents and families as you look at the distribution tables, yield to the gentleman from California. we reconcile our differences with the they were right about one thing: every- Senate. body did get a tax cut. But then you b 1900 Madam Speaker, I reserve the bal- look at those tables and you say: Let Mr. KNIGHT. Madam Speaker, if you ance of my time. me examine who got what. want to demonize or scare people, you Mr. NEAL. Madam Speaker, I yield In 2003, we came back and the Presi- come down and yell and scream and myself such time as I may consume. dent proposed $1 trillion worth of tax raise your hand and you say things Madam Speaker, 33 percent of Mr. cuts based on the premise of economic that they haven’t looked into. KNIGHT’s constituents derive a $16,000 growth, which didn’t happen.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00103 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.114 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE H9360 CONGRESSIONAL RECORD — HOUSE November 15, 2017 By the way, in 2004, there was repa- are repealing; and we are asking that actually time to do it. Everyone says triation, which may be the granddaddy loved ones who have Alzheimer’s and they want a fairer, flatter, simpler Tax of them all. Well, we are going to repa- being cared for at home to give up that Code, as long as you keep every special triate those holdings offshore at 51⁄4 medical deduction to pay for all of interest provision in this big, fat, percent on the premise of job growth. that, it makes no sense whatsoever. messed-up Tax Code. And there was none. But there is an opportunity, Madam Everyone says they want to give peo- We had this opportunity to do this Speaker, to reverse course. ple back more of what they earned and together, as I described with worker In my years here, I can tell you this: get Main Street businesses going, as participation rates, understanding that Anybody who thinks that the United long as you don’t change anything in most families now are not having large States Senate is going to accommodate the Tax Code. As long as the lobbyists numbers of children any longer. This their wishes, when they see the goal- win and the American people lose, they should have been about immigration post and the goal line of a handful of are willing to talk about it. reform attached to it as well. We all Members of this House, they are mak- House Republicans are actually act- know skilled workers from overseas are ing a miscalculation. ing on tax reform for the first time in going to be an important part of the We have heard tonight they are going 31 years. American economy, and we should be to do something about state and local In Washington, they sneer at that embracing that, along with sensible tax deduction, they are going to do family of four back home making tax policies based upon some relief for something about the historic tax cred- $59,000 a year. That is the average the middle class. it, and they are going to revisit these household. Under our tax reform, they Instead, we are taking away the abil- issues. pay $1,182 less that they keep in their ity of American students to deduct in- Do you know how difficult that is pocket. Washington makes fun of that. terest on their loans to pay for a tax going to be, Madam Speaker? That is real money for families. cut for people at the top? That is going to be nearly impossible. A firefighter making $48,000 a year We are taking away a medical ex- On top of that, they are going to go keeps over $1,300. That single mom pense deduction for people who have back and try to appeal the Affordable working hard every day making $30,000 Alzheimer’s disease to pay for the tax Care Act again and take 13 million peo- a year has a $700 larger refund than she cut for people at the top? ple away from their insurance so that gets today. We are assessing universities and col- we can have a tax cut that further con- That Main Street startup business leges a new, special tax to pay for tax centrates wealth for a handful of peo- working I don’t know how many hours, cuts for people at the top? ple in America? making $62,000 a year—that was my We could have had this conversation. This is the House of Representatives, Chamber of Commerce member right We acknowledge what President Madam Speaker, not the House of there—in that startup business, they Reagan and Speaker O’Neill did be- Lords. We don’t serve here by peerage. keep $3,007 more than they do today. cause it was based upon good will and We are not entitled to anything here. Washington just laughs at that. But it commonality and not needing just a Most of us come from pretty modest is real money for real people. political victory. Day after day they backgrounds. That is the principle we In my district, a family of four mak- plowed through with 450 witnesses in should be honoring in this tax debate ing $90,000—two teachers—keeps $2,176 front of the Ways and Means Com- as we discuss who is about to pay what more every year of their life from this. mittee. and what the rewards ought to be for My friends on the Democrat side now How many witnesses did we have in the hardworking men and women. worry about the debt. I remember the This is last note I am going to ex- front of the Ways and Means Com- first year Democrats took control of press before I yield back my time. mittee? the House, they doubled the deficit. Zero. What about those 1 million veterans The second year, they tripled it. The How many hearings did we have on who have served us honorably in Iraq third year, it went to $1 trillion. It this tax bill? and Afghanistan? stayed that way until the American New veterans, what about them? Zero. people gave the House back to Repub- Are we going to eventually cut their We saw the manager’s amendment licans. benefits with Social Security and and were given 20 minutes to review it. They love spending money and rais- Medicare and Medicaid and put it all I don’t mean 25 minutes. I mean 20 ing the deficit when they let Wash- on the chopping block as we attempt to minutes. Back to regular order. We ington grow, but when it is time to further concentrate wealth in America, should scrap this bill. grow jobs and paychecks, all of a sud- particularly for unearned income, by To those who are vulnerable on the den they are worried about the debt. the way? other side, I would not be trusting of That is where we are heading. The truth of the matter is we want to the idea that these issues are going to We should honor the skills of those keep this debt and deficits going. Don’t be fixed after you cast this vote tomor- men and women who get up every day change anything. Keep this slow- row morning. There will be an oppor- and strive and work hard in this coun- growth economy, keep spending, and I tunity to go back and redo this if the try with a sense of purpose and great guarantee you debts and deficits will other side would say: Let’s find a patriotism. That is what we should be grow. meaningful path to cooperation be- acknowledging in this debate. We are talking about growing jobs, tween the two parties. I am looking forward to tomorrow growing paychecks, and getting back That is all we are asking for on this morning, when we conclude this debate to a balanced budget by getting this side: include us in this discussion so we and spend the 2 hours discussing more economy moving in a big way. might invest in community colleges, of what we have witnessed here to- At the end of the day, it is time to vocational education, internship pro- night. There will be more than enough end the status quo in Washington, D.C. grams, skill set training, and answer enthusiasm on our side. They will be Americans deserve a fair, flatter Tax the call of globalization. lined up to RFK Stadium to participate Code, one that closes loopholes and We still have innovation and cre- tomorrow morning in this debate. That ends special interest deductions so that ativity that far surpasses the rest of is how important this is to the future Americans can keep more of what they the world. There is nothing we can’t of the American people. earn, so their paychecks can raise and answer in America without those Madam Speaker, I reserve the bal- our businesses can compete and win healthy investments that we need. ance of my time. anywhere in the world, especially here Instead, when you look at these dis- Mr. BRADY of Texas. Madam Speak- at home America. tribution tables that are proposed as to er, I yield myself such time as I may It is time our jobs start coming back who is going to get what; taking away consume. to America, rather than watching them the alternative minimum tax for the Madam Speaker, Washington is just go: our jobs, research, manufacturing 4.5 million families that pay it; asking hilarious. patents, our headquarters. That era is students to give up their student inter- Lawmakers back home tell everyone over, and it starts with H.R. 1, the Tax est deduction; the estate tax, which we they are for tax reform, until it comes Cuts and Jobs Act.

VerDate Sep 11 2014 03:57 Nov 16, 2017 Jkt 079060 PO 00000 Frm 00104 Fmt 7634 Sfmt 0634 E:\CR\FM\K15NO7.115 H15NOPT1 SSpencer on DSKBBV9HB2PROD with HOUSE November 15, 2017 CONGRESSIONAL RECORD — HOUSE H9361 We will continue this debate tomor- Our Tax Cuts and Jobs Act, H.R. 1, truth is that, for many years, Congress row, Madam Speaker, so we will con- will deliver significant tax reductions has thrown up the white flag in defeat tinue to deliver tax reform and tax for low- and middle-income earners, against K Street lobbyists, and they cuts for the American people. and it will help Americans in every settled for preserving the status quo. Madam Speaker, I reserve the bal- level of our economy. The bill, which However, tomorrow, we have a rare op- ance of my time. draws from 6 years of intensive work portunity to finally deliver a tax bill The SPEAKER pro tempore. Pursu- and expert analysis from more than 40 that puts working families first. The ant to clause 1(c) of rule XIX, further different congressional hearings, low- Tax Cuts and Jobs Act would be the consideration of H.R. 1 is postponed. ers individual income taxes by consoli- biggest overhaul to our Tax Code in 30 f dating the existing seven brackets into years. four and doubling the standard deduc- To quickly summarize, this bill b 1915 tion for everyone. would collapse our tax brackets from HISTORIC TAX REFORM FOR THE It also establishes a new family tax seven to four; it would double the AMERICAN PEOPLE credit. It provides higher education standard deduction and get rid of many The SPEAKER pro tempore. Under benefits. It repeals the death tax. It lobbyist loopholes; and it would slash the Speaker’s announced policy of Jan- preserves deductions for mortgage in- the corporate tax rate to 20 percent, uary 3, 2017, the gentleman from Lou- terest and charitable donations and which would allow America to compete property taxes, and it incentivizes sav- isiana (Mr. JOHNSON) is recognized for and to win. 60 minutes as the designee of the ma- ing for retirement. The nonpartisan Tax Foundation jority leader. Tax returns will become incredibly found that, if we passed this bill into simple for the first time in my lifetime law, American workers would see a 3 GENERAL LEAVE because 9 out of 10 Americans will be percent increase in their wages, and Mr. JOHNSON of Louisiana. Madam able to complete their annual filing on our country would see nearly 1 million Speaker, I ask unanimous consent that a form the size of a postcard. full-time jobs created. all Members have 5 legislative days to The bill’s business tax reforms are Madam Speaker, yesterday, my office revise and extend their remarks and in- equally seismic because we are going received a letter from a constituent of clude any extraneous material in the to slash our draconian corporate tax mine that said: ‘‘As a manufacturer RECORD. from 35 percent, the highest in the and constituent, I urge you to support The SPEAKER pro tempore. Is there world, to 20 percent, and we are going tax reform and legislation that will fix objection to the request of the gen- to institute the lowest rates for small our Tax Code that has held manufac- tleman from Louisiana? business job creators since World War turers back for far too long.’’ This is There was no objection. II. U.S. companies will finally be al- just an example of the many letters I Mr. JOHNSON of Louisiana. Madam lowed to compete again on a level play- have received in favor of this reform ef- Speaker, we have heard a lot in this de- ing field and bring their jobs and oper- fort. bate today. One thing is abundantly ations back home from overseas. In addition to letters of support that clear. Virtually every hardworking cit- The independent Tax Foundation es- I have received, studies show that, if izen in this country recognizes our gen- timated that our plan will result in the we pass this bill, a typical household uine need for tax reform. creation of approximately 975,000 full- would see their taxes cut nearly $2,000. Let me summarize some of the facts time American jobs and an increase in Let’s think for a second what this that have been presented today. family incomes of 4.4 percent, on aver- means. Instead of the IRS taking it, The burdensome 70,000-page U.S. Tax age. In Louisiana, for example, that families could spend it on their chil- Code has grown to be unreasonably would mean 13,293 new jobs and $1,857 dren. They could put it in their sav- complex, increasingly unfair, and filled of additional after-tax income for our ings, or they could pay off debts. with special interest loopholes. Amer- average middle class families. I am supporting this bill so we no ican companies are taxed at the high- The American people have long de- longer hold manufacturers back from est rate in the industrialized world, served a simpler, fairer, and effective success. I am supporting this bill be- and the government takes even more system that rewards hard work and al- cause it would make life simpler and from our small-business owners and lows taxpayers to keep and invest more easier for job creators, savers, and our entrepreneurs. As a result, our eco- of what they earn. Our plan will finally hardworking families. nomic growth is stagnant, companies provide that relief and spark the dra- Last week, in this body, I addressed have gradually shifted their manufac- matic economic growth our Nation has the fact that there are certain provi- turing and operations overseas, and so desperately needed. sions within this bill that my col- families are struggling just to keep up. The Tax Cuts and Jobs Act is about leagues and I may differ on, and I noted Today, the hurdles in our system more than just smart legislation. It is that that is just always going to be the seem almost insurmountable for hard- about a revival of that American case, but I also suggested that we ask working people as they are afforded Dream I referenced. That has one agen- ourselves three questions. fewer and fewer opportunities for eco- da that should unite every single one of The first question was: Does this bill nomic mobility. us, and we hope all of our colleagues cut taxes for the vast majority of hard- For previous generations, it was a will support this historic landmark working American families? different deal. We had the American piece of legislation tomorrow. The second was: Will it bring back Dream. The American Dream was de- Madam Speaker, I yield to the gen- jobs? fined by a simple promise: if you were tleman from North Carolina (Mr. And the third question was: Will this willing to work hard and sacrifice and BUDD), a great American small-busi- bill simplify the tax filing process for play by the rules, you could make a ness owner himself. working families next year and in the better life for yourself and your family. Mr. BUDD. Madam Speaker, I thank years to come? But today, our outdated Tax Code has my friend, the gentleman from Lou- Madam Speaker, the answer to all pushed that dream beyond the grasp of isiana, for yielding. three of those questions was ‘‘yes.’’ I more and more people. Madam Speaker, as my colleagues in urge my colleagues to vote tomorrow The good news is we can fix this this body know very well, it has been in favor of the Tax Cuts and Jobs Act. problem, and we are going to do that in many years since we have reformed our Last year, President Trump promised this Chamber tomorrow. For the first Tax Code. Over the last few decades, to cut taxes for working families, and time in over 30 years, Congress has a Congress has cut some taxes here and that is exactly what this bill will do. historic opportunity to pass landmark there, but we are overdue for meaning- Mr. JOHNSON of Louisiana. Madam tax reform that will be a turboboost to ful tax reform. Speaker, I yield to the gentleman from this economy, and it is going to lead us Hardworking taxpayers in North Texas (Mr. ARRINGTON). to a fairer system, as we said so many Carolina are right to ask why it has Mr. ARRINGTON. Madam Speaker, I times, with more jobs and bigger pay- been so long since we have even re- thank my dear friend and distinguished checks for everyone. formed our Tax Code. The unfortunate colleague from the State of Louisiana

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