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Tax Legislation Additional Information:
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Report on HR 4297 | |
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Legislation
- 109th Congress
109TH CONGRESS } HOUSE OF REPRESENTATIVES { REPORT 109-304
1st Session
TAX
RELIEF EXTENSION RECONCILIATION ACT OF 2005
REPORT
together with DISSENTING VIEWS
CONTENTS
Title
I --Extensions of Certain Provisions Through
2006 A.
Allowance of Nonrefundable Personal Credits
Against Regular and Alternative Minimum Tax
Liability (sec. 101 of the bill and sec. 26 of
the Code) B.
Tax Incentives for Business Activities on
Indian Reservations 1.
Indian employment tax credit (sec. 102(a) of
the bill and sec. 45A of the Code) 2.
Accelerated depreciation for business property
on Indian reservations (sec. 102(b) of the
bill and sec. 168(j) of the Code) C.
Work Opportunity Tax Credit (sec. 103 of the
bill and sec. 51 of the Code) D.
Welfare-To-Work Tax Credit (sec. 104 of the
bill and sec. 51A of the Code) E.
Deduction for Corporate Donations of Computer
Technology and Equipment (sec. 105 of the bill
and sec. 170 of the Code) F.
Availability of Archer Medical Savings
Accounts (sec. 106 of the bill and sec. 220 of
the Code) G.
Fifteen-Year Straight-Line Cost Recovery for
Qualified Leasehold Improvements and Qualified
Restaurant Improvements (secs. 107 and 108 of
the bill and sec. 168(e)(3)(E) of the Code) H.
Taxable Income Limit on Percentage Depletion
for Oil and Natural Gas Produced from Marginal
Properties (sec. 109 of the bill and sec.
613A(c)(6)(H) of the Code) I.
Tax Incentives for Investment in the J.
Possession Tax Credit with Respect to K.
Parity in the Application of Certain Limits to
Mental Health Benefits (sec. 112 of the bill
and sec. 9812 of the Code) L.
Research Credit (sec. 113 of the bill and sec.
41 of the Code) M.
Qualified Zone Academy Bonds (sec. 114 of the
bill and sec. 1397E of the Code) N.
Above-the-Line Deduction for Certain Expenses
of Elementary and Secondary School Teachers
(sec. 115 of the bill and sec. 62 of the Code) O.
Above-the-Line Deduction for Higher Education
Expenses (sec. 116 of the bill and sec. 222 of
the Code) P.
Deduction of State and Local General Sales
Taxes (sec. 117 of the bill and sec. 164 of
the Code) Title
II --Extensions of Certain Provisions for Two
Years, and Other Modifications A.
Extension and Expansion to Petroleum Products
of Expensing for Environmental Remediation
Costs (sec. 201 of the bill and sec. 198 of
the Code) B.
Controlled Foreign Corporations 1.
Subpart F exception for active financing (sec.
202(a) of the bill and secs. 953 and 954 of
the Code) 2.
Look-through treatment of payments between
related controlled foreign corporations under
foreign personal holding company income rules
(sec. 202(b) of the bill and sec. 954(c) of
the Code) C.
Reduced Rates for Capital Gains and Dividends
of Individuals (sec. 203 of the bill and sec.
1(h) of the Code) D.
Credit for Elective Deferrals and IRA
Contributions (the "Saver's Credit")
(sec. 204 of the bill and sec. 25B of the
Code) E.
Extension of Increased Expensing for Small
Business (sec. 205 of the bill and sec. 179 of
the Code) Title
III --Other Provisions A.
Taxation of Certain Settlement Funds (sec. 301
of the bill and sec. 468B of the Code) B.
Modification of Active Business Definition
Under Section 355 (sec. 302 of the bill and
sec. 355 of the Code) C.
Qualified Veteran's Mortgage Bonds (sec. 303
of the bill and sec. 143 of the Code) D.
Capital Gains Treatment for Certain
Self-Created Musical Works (sec. 304 of the
bill and sec. 1221 of the Code) E.
Decrease Minimum Vessel Tonnage Limit to 6,000
Deadweight Tons (sec. 305 of the bill and sec.
1355 of the Code) F.
Modification of Special Arbitrage Rule for
Certain Funds (sec. 306 of the bill)
THE
AMENDMENT
TITLE
I --EXTENSIONS OF CERTAIN PROVISIONS THROUGH
2006
TITLE
II --EXTENSIONS OF CERTAIN PROVISIONS FOR 2
ADDITIONAL YEARS AND OTHER MODIFICATIONS
TITLE
III --OTHER PROVISIONS
TITLE
I --EXTENSIONS OF CERTAIN PROVISIONS THROUGH
2006
"(5)
ELECTION OF ALTERNATIVE SIMPLIFIED CREDIT. -- "(A)
IN GENERAL. --At the election of the taxpayer,
the credit determined under subsection (a)(1)
shall be equal to 12 percent of so much of the
qualified research expenses for the taxable
year as exceeds 50 percent of the average
qualified research expenses for the 3 taxable
years preceding the taxable year for which the
credit is being determined. "(B)
SPECIAL RULE IN CASE OF NO QUALIFIED RESEARCH
EXPENSES IN ANY OF 3 PRECEDING TAXABLE YEARS.
-- "(i)
TAXPAYERS TO WHICH SUBPARAGRAPH APPLIES. --The
credit under this paragraph shall be
determined under this subparagraph if the
taxpayer has no qualified research expenses in
any one of the 3 taxable years preceding the
taxable year for which the credit is being
determined. "(ii)
CREDIT RATE. --The credit determined under
this subparagraph shall be equal to 6 percent
of the qualified research expenses for the
taxable year. "(C)
ELECTION. --An election under this paragraph
shall apply to the taxable year for which made
and all succeeding taxable years unless
revoked with the consent of the Secretary. An
election under this paragraph may not be made
for any taxable year to which an election
under paragraph (4) applies.".
"(A)
2006. --In the case of a taxable year
beginning in 2006, the applicable dollar
amount shall be equal to -- "(i)
in the case of a taxpayer whose adjusted gross
income for the taxable year does not exceed
$65,000 ($130,000 in the case of a joint
return), $4,000, "(ii)
in the case of a taxpayer not described in
clause (i) whose adjusted gross income for the
taxable year does not exceed $80,000 ($160,000
in the case of a joint return), $2,000, and "(iii)
in the case of any other taxpayer,
zero.".
TITLE
II --EXTENSIONS OF CERTAIN PROVISIONS FOR 2
ADDITIONAL YEARS AND OTHER MODIFICATIONS
"(C)
any petroleum product (as defined in section
4612(a)(3)).".
"(6)
LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN
CORPORATIONS. -- "(A)
IN GENERAL. --For purposes of this subsection,
dividends, interest, rents, and royalties
received or accrued from a controlled foreign
corporation which is a related person shall
not be treated as foreign personal holding
company income to the extent attributable or
properly allocable (determined under rules
similar to the rules of subparagraphs (C) and
(D) of section 904(d)(3)) to income of the
related person which is not subpart F income.
For purposes of this subparagraph, interest
shall include factoring income which is
treated as income equivalent to interest for
purposes of paragraph (1)(E). The Secretary
shall prescribe such regulations as may be
appropriate to prevent the abuse of the
purposes of this paragraph. "(B)
APPLICATION. --Subparagraph (A) shall apply to
taxable years of foreign corporations
beginning after December 31, 2005, and before
January 1, 2009, and to taxable years of
United States shareholders with or within
which such taxable years of foreign
corporations end.".
TITLE
III --OTHER PROVISIONS
"(1)
IN GENERAL. --Except as provided in paragraph
(2), nothing in any provision of law shall be
construed as providing that an escrow account,
settlement fund, or similar fund is not
subject to current income tax. The Secretary
shall prescribe regulations providing for the
taxation of any such account or fund whether
as a grantor trust or otherwise. "(2)
EXEMPTION FROM TAX FOR CERTAIN SETTLEMENT
FUNDS. --An escrow account, settlement fund,
or similar fund shall be treated as
beneficially owned by the "(A)
it is established pursuant to a consent decree
entered by a judge of a United States District
Court, "(B)
it is created for the receipt of settlement
payments as directed by a government entity
for the sole purpose of resolving or
satisfying one or more claims asserting
liability under the Comprehensive
Environmental Response, Compensation, and
Liability Act of 1980, "(C)
the authority and control over the expenditure
of funds therein (including the expenditure of
contributions thereto and any net earnings
thereon) is with such government entity, and "(D)
upon termination, any remaining funds will be
disbursed to such government entity for use in
accordance with applicable law. For
purposes of this paragraph, the term
'government entity' means the "(3)
TERMINATION. --Paragraph (2) shall not apply
to accounts and funds established after
December 31, 2010.".
"(3)
SPECIAL RULE RELATING TO ACTIVE BUSINESS
REQUIREMENT. -- "(A)
IN GENERAL. --In the case of any distribution
made after the date of the enactment of this
paragraph and before December 31, 2010, a
corporation shall be treated as meeting the
requirement of paragraph (2)(A) if and only if
such corporation is engaged in the active
conduct of a trade or business. "(B)
AFFILIATED GROUP RULE. --For purposes of
subparagraph (A), all members of such
corporation's separate affiliated group shall
be treated as one corporation. For purposes of
the preceding sentence, a corporation's
separate affiliated group is the affiliated
group which would be determined under section
1504(a) if such corporation were the common
parent and section 1504(b) did not apply. "(C)
TRANSITION RULE. --Subparagraph (A) shall not
apply to any distribution pursuant to a
transaction which is -- "(i)
made pursuant to an agreement which was
binding on the date of the enactment of this
paragraph and at all times thereafter, "(ii)
described in a ruling request submitted to the
Internal Revenue Service on or before such
date, or "(iii)
described on or before such date in a public
announcement or in a filing with the
Securities and Exchange Commission. The
preceding sentence shall not apply if the
distributing corporation elects not to have
such sentence apply to distributions of such
corporation. Any such election, once made,
shall be irrevocable. "(D)
SPECIAL RULE FOR CERTAIN PRE-ENACTMENT
DISTRIBUTIONS. --For purposes of determining
the continued qualification under paragraph
(2)(A) of distributions made before the date
of the enactment of this paragraph as a result
of an acquisition, disposition, or other
restructuring after such date and before
December 31, 2010, such distribution shall be
treated as made after the date of the
enactment of this paragraph for purposes of
applying subparagraphs (A) through (C) of this
paragraph.".
"(B)
STATE VETERANS LIMIT. -- "(i)
IN GENERAL. --A State veterans limit for any
calendar year is the amount equal to -- "(I)
$53,750,000 for the State of |