COMMITTEE PRINT"! 113TH CONGRESS 2nd Session WMCP 1136 TAXREFORMACTOF2014 DISCUSSIONDRAFT AS RELEASED ON FEBRUARY 26, 2014 Statutory Text and Section-by-Section Summary Prepared by the Committee on Ways and Means Majority Tax Staff PRINTEDFORTHEUSEOFTHECOMMITTEEON WAYSANDMEANSBYITSSTAFF VerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00003 Fmt 6012 Sfmt 6012 I:\WAYS\IN\89455\89455.XXX 89455Congress.#13dkrause on DSKHT7XVN1PROD with LOCATORSVerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00004 Fmt 6012 Sfmt 6012 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORSU.S.GOVERNMENTPRINTINGOFFICEWASHINGTON: For sale by the Superintendent of Documents, U.S. Government Printing Office,http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,U.S. Government Printing Office. Phone 2025121800, or 8665121800 (toll-free). E-mail, gpo@custhelp.com.1 89455 COMMITTEE PRINT"! 113TH CONGRESS 2nd Session WMCP 2014 1136 TAXREFORMACTOF2014 DISCUSSIONDRAFT AS RELEASED ON FEBRUARY 26, 2014 Statutory Text and Section-by-Section Summary Prepared by the Committee on Ways and Means Majority Tax Staff PRINTEDFORTHEUSEOFTHECOMMITTEEON WAYSANDMEANSBYITSSTAFF VerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00005 Fmt 5012 Sfmt 5012 I:\WAYS\IN\89455\89455.XXX 89455Congress.#13dkrause on DSKHT7XVN1PROD with LOCATORSVerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00006 Fmt 5012 Sfmt 5012 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORSCOMMITTEEONWAYSANDMEANS DAVECAMP,Michigan,Chairman SAMJOHNSON,Texas KEVINBRADY,Texas PAULRYAN,Wisconsin DEVINNUNES,California PATRICKJ.TIBERI,Ohio DAVIDG.REICHERT,Washington CHARLESW.BOUSTANY,JR.,Louisiana PETERJ.ROSKAM,Illinois JIMGERLACH,Pennsylvania TOMPRICE,Georgia VERNBUCHANAN,Florida ADRIANSMITH,Nebraska AARONSCHOCK,Illinois LYNNJENKINS,Kansas ERIKPAULSEN,Minnesota KENNYMARCHANT,Texas DIANEBLACK,Tennessee TOMREED,NewYork TODDYOUNG,Indiana MIKEKELLY,Pennsylvania TIMGRIFFIN,Arkansas JIMRENACCI,Ohio SANDERM.LEVIN,Michigan CHARLESB.RANGEL,NewYork JIMMCDERMOTT,Washington JOHNLEWIS,Georgia RICHARDE.NEAL,Massachusetts XAVIERBECERRA,California LLOYDDOGGETT,Texas MIKETHOMPSON,California JOHNB.LARSON,Connecticut EARLBLUMENAUER,Oregon RONKIND,Wisconsin BILLPASCRELL,JR.,NewJersey JOSEPHCROWLEY,NewYork ALLYSONSCHWARTZ,Pennsylvania DANNYDAVIS,Illinois LINDASANCHEZ,California JENNIFERM.SAFAVIAN,StaffDirectorandGeneralCounsel JANICEMAYS,MinorityChiefCounsel VerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00007 Fmt 5904 Sfmt 5904 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORSVerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00008 Fmt 5904 Sfmt 5904 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORSTAXREFORMACTOF2014 DISCUSSIONDRAFT ASRELEASEDONFEBRUARY26,2014 StatutoryText VerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00009 Fmt 6598 Sfmt 5011 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORSVerDate Mar 15 201009:28 Aug 29, 2014 Jkt 089455 PO 00000 Frm 00010 Fmt 6598 Sfmt 5011 I:\WAYS\IN\89455\89455.XXX 89455dkrause on DSKHT7XVN1PROD with LOCATORS[DISCUSSION DRAFT] FEBRUARY 21, 2014113TH CONGRESS 2D SESSION H. R. llTo amend the Internal Revenue Code of 1986 to provide for comprehensive tax reform. INTHEHOUSEOFREPRESENTATIVES Mr. CAMP introduced the following bill; which was referred to the Committee on llllllllllllll ABILLTo amend the Internal Revenue Code of 1986 to provide for comprehensive tax reform.BeitenactedbytheSenateandHouseofRepresenta- 1tives of the United States of America in Congress assembled,2SECTION 1. SHORT TITLE; ETC.3(a)SHORT TITLE.ThisActmaybecitedasthe4Tax Reform Act of 2014.5(b)AMENDMENT OF 1986CODE.Exceptasother- 6wiseexpresslyprovided,wheneverinthisActanamend- 7mentorrepealisexpressedintermsofanamendment8VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)2to, or repeal of, a section or other provision, the reference1shall be considered to be made to a section or other provi- 2sion of the Internal Revenue Code of 1986.3(c)TABLE OF CONTENTS.Thetableofcontentsof4this Act is as follows: 5Sec. 1. Short title; etc. TITLEITAXREFORMFORINDIVIDUALS SubtitleAIndividualIncomeTaxRateReform Sec. 1001. Simplification of individual income tax rates. Sec. 1002. Deduction for adjusted net capital gain. Sec. 1003. Conformingamendmentsrelatedtosimplificationofindividualin-come tax rates. SubtitleBSimplificationofTaxBenefitsforFamilies Sec. 1101. Standard deduction. Sec. 1102. Increase and expansion of child tax credit. Sec. 1103. Modification of earned income tax credit. Sec. 1104. Repeal of deduction for personal exemptions. SubtitleCSimplificationofEducationIncentives Sec. 1201. American opportunity tax credit. Sec. 1202. Expansion of Pell Grant exclusion from gross income. Sec. 1203. RepealofexclusionofincomefromUnitedStatessavingsbonds used to pay higher education tuition and fees. Sec. 1204. Repeal of deduction for interest on education loans. Sec. 1205. Repeal of deduction for qualified tuition and related expenses. Sec. 1206. No new contributions to Coverdell education savings accounts. Sec. 1207. Repeal of exclusion for discharge of student loan indebtedness. Sec. 1208. Repeal of exclusion for qualified tuition reductions. Sec. 1209. Repeal of exclusion for education assistance programs. Sec. 1210. Repealofexceptionto10-percentpenaltyforhighereducationex-penses. SubtitleDRepealofCertainCreditsforIndividuals Sec. 1301. Repeal of dependent care credit. Sec. 1302. Repeal of credit for adoption expenses. Sec. 1303. Repeal of credit for nonbusiness energy property. Sec. 1304. Repeal of credit for residential energy efficient property. Sec. 1305. Repeal of credit for qualified electric vehicles. Sec. 1306. Repeal of alternative motor vehicle credit. Sec. 1307. Repeal of alternative fuel vehicle refueling property credit. Sec. 1308. Repealofcreditfornewqualifiedplug-inelectricdrivemotorvehi-cles. Sec. 1309. Repeal of credit for health insurance costs of eligible individuals. Sec. 1310. Repeal of first-time homebuyer credit. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)3SubtitleEDeductions,Exclusions,andCertainOtherProvisions Sec. 1401. Exclusion of gain from sale of a principal residence. Sec. 1402. Mortgage interest. Sec. 1403. Charitable contributions. Sec. 1404. Denialofdeductionforexpensesattributabletothetradeorbusi-ness of being an employee. Sec. 1405. Repealofdeductionfortaxesnotpaidoraccruedinatradeorbusi-ness. Sec. 1406. Repeal of deduction for personal casualty losses. Sec. 1407. Limitation on wagering losses. Sec. 1408. Repeal of deduction for tax preparation expenses. Sec. 1409. Repeal of deduction for medical expenses. Sec. 1410. Repealofdisqualificationofexpensesforover-the-counterdrugs under certain accounts and arrangements. Sec. 1411. Repealofdeductionforalimonypaymentsandcorrespondinginclu-sion in gross income. Sec. 1412. Repeal of deduction for moving expenses. Sec. 1413. Termination of deduction and exclusions for contributions to medical savings accounts. Sec. 1414. Repeal of 2-percent floor on miscellaneous itemized deductions. Sec. 1415. Repeal of overall limitation on itemized deductions. Sec. 1416. Deductionforamortizablebondpremiumallowedindeterminingad-justed gross income. Sec. 1417. Repeal of exclusion, etc., for employee achievement awards. Sec. 1418. Clarification of special rule for certain governmental plans. Sec. 1419. Limitation on exclusion for employer-provided housing. Sec. 1420. Fringe benefits. Sec. 1421. Repealofexclusionofnetunrealizedappreciationinemployersecu-rities. Sec. 1422. Consistentbasisreportingbetweenestateandpersonacquiring property from decedent. SubtitleFEmploymentTaxModifications Sec. 1501. ModificationsofdeductionforSocialSecuritytaxesincomputing net earnings from self-employment. Sec. 1502. Determination of net earnings from self-employment. Sec. 1503. RepealofexemptionfromFICAtaxesforcertainforeignworkers. Sec. 1504. Repeal of exemption from FICA taxes for certain students. Sec. 1505. OverrideofTreasuryguidanceprovidingthatcertainemployer-pro-videdsupplementalunemploymentbenefitsarenotsubjectto employment taxes. Sec. 1506. Certified professional employer organizations. SubtitleGPensionsandRetirement PART 1INDIVIDUAL RETIREMENT PLANS Sec. 1601. Elimination of income limits on contributions to Roth IRAs. Sec. 1602. No new contributions to traditional IRAs. Sec. 1603. Inflation adjustment for Roth IRA contributions. Sec. 1604. RepealofspecialrulepermittingrecharacterizationofRothIRA contributions as traditional IRA contributions. Sec. 1605. Repealofexceptionto10-percentpenaltyforfirsthomepurchases. PART 2EMPLOYER-PROVIDED PLANS VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)4Sec. 1611. Termination for new SEPs. Sec. 1612. Termination for new SIMPLE 401(k)s. Sec. 1613. Rules related to designated Roth contributions. Sec. 1614. Modifications of required distribution rules for pension plans. Sec. 1615. Reduction in minimum age for allowable in-service distributions. Sec. 1616. Modification of rules governing hardship distributions. Sec. 1617. Extendedrolloverperiodfortherolloverofplanloanoffsetamounts in certain cases. Sec. 1618. Coordinationofcontributionlimitationsfor403(b)plansandgov-ernmental 457(b) plans. Sec. 1619. Applicationof10-percentearlydistributiontaxtogovernmental457 plans. Sec. 1620. Inflation adjustments for qualified plan benefit and contribution lim-itations. Sec. 1621. Inflationadjustmentsforqualifiedplanelectivedeferrallimitations. Sec. 1622. Inflation adjustments for SIMPLE retirement accounts. Sec. 1623. Inflationadjustmentsforcatch-upcontributionsforcertainem-ployer plans. Sec. 1624. Inflationadjustmentsforgovernmentalandtax-exemptorganization plans. SubtitleHCertainProvisionsRelatedtoMembersofIndianTribes Sec. 1701. Indian general welfare benefits. Sec. 1702. Tribal Advisory Committee. Sec. 1703. Other relief for Indian tribes. TITLEIIALTERNATIVEMINIMUMTAXREPEAL Sec. 2001. Repeal of alternative minimum tax. TITLEIIIBUSINESSTAXREFORM SubtitleATaxRates Sec. 3001. 25-percent corporate tax rate. SubtitleBReformofBusiness-relatedExclusionsandDeductions Sec. 3101. Revision of treatment of contributions to capital. Sec. 3102. Repeal of deduction for local lobbying expenses. Sec. 3103. Expenditures for repairs in connection with casualty losses. Sec. 3104. Reform of accelerated cost recovery system. Sec. 3105. Repeal of amortization of pollution control facilities. Sec. 3106. Net operating loss deduction. Sec. 3107. Circulation expenditures. Sec. 3108. Amortization of research and experimental expenditures. Sec. 3109. Repealofdeductionsforsoilandwaterconservationexpenditures and endangered species recovery expenditures. Sec. 3110. Amortization of certain advertising expenses. Sec. 3111. Expensing certain depreciable business assets for small business. Sec. 3112. Repeal of election to expense certain refineries. Sec. 3113. Repeal of deduction for energy efficient commercial buildings. Sec. 3114. Repeal of election to expense advanced mine safety equipment. Sec. 3115. Repealofdeductionforexpendituresbyfarmersforfertilizer,etc. Sec. 3116. Repealofspecialtreatmentofcertainqualifiedfilmandtelevision productions. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00004 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)5Sec. 3117. Repealofspecialrulesforrecoveriesofdamagesofantitrustviola-tions, etc. Sec. 3118. Treatment of reforestation expenditures. Sec. 3119. 20-year amortization of goodwill and certain other intangibles. Sec. 3120. Treatment of environmental remediation costs. Sec. 3121. Repeal of expensing of qualified disaster expenses. Sec. 3122. Phaseoutandrepealofdeductionforincomeattributabletodomes-tic production activities. Sec. 3123. Unification of deduction for organizational expenditures. Sec. 3124. Preventionofarbitrageofdeductibleinterestexpenseandtax-ex-empt interest income. Sec. 3125. Preventionoftransferofcertainlossesfromtaxindifferentparties. Sec. 3126. Entertainment, etc. expenses. Sec. 3127. Repeal of limitation on corporate acquisition indebtedness. Sec. 3128. Denialofdeductionsandcreditsforexpendituresinillegalbusi-nesses. Sec. 3129. Limitation on deduction for FDIC premiums. Sec. 3130. Repeal of percentage depletion. Sec. 3131. Repealofpassiveactivityexceptionforworkinginterestsinoiland gas property. Sec. 3132. Repealofspecialrulesforgainorlossontimber,coal,ordomestic iron ore. Sec. 3133. Repeal of like-kind exchanges. Sec. 3134. Restrictionontradeorbusinesspropertytreatedassimilarorre-latedinservicetoinvoluntarilyconvertedpropertyindisaster areas. Sec. 3135. Repealofrolloverofpubliclytradedsecuritiesgainintospecialized small business investment companies. Sec. 3136. Terminationofspecialrulesforgainfromcertainsmallbusiness stock. Sec. 3137. Certain self-created property not treated as a capital asset. Sec. 3138. Repeal of special rule for sale or exchange of patents. Sec. 3139. Depreciationrecaptureongainfromdispositionofcertaindepre-ciable realty. Sec. 3140. Common deduction conforming amendments. SubtitleCReformofBusinessCredits Sec. 3201. Repeal of credit for alcohol, etc., used as fuel. Sec. 3202. Repeal of credit for biodiesel and renewable diesel used as fuel. Sec. 3203. Research credit modified and made permanent. Sec. 3204. Low-income housing tax credit. Sec. 3205. Repeal of enhanced oil recovery credit. Sec. 3206. Phaseoutandrepealofcreditforelectricityproducedfromcertain renewable resources. Sec. 3207. Repeal of Indian employment credit. Sec. 3208. RepealofcreditforportionofemployerSocialSecuritytaxespaid with respect to employee cash tips. Sec. 3209. Repealofcreditforclinicaltestingexpensesforcertaindrugsfor rare diseases or conditions. Sec. 3210. Repeal of credit for small employer pension plan startup costs. Sec. 3211. Repeal of employer-provided child care credit. Sec. 3212. Repeal of railroad track maintenance credit. Sec. 3213. Repeal of credit for production of low sulfur diesel fuel. Sec. 3214. Repeal of credit for producing oil and gas from marginal wells. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00005 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)6Sec. 3215. Repealofcreditforproductionfromadvancednuclearpowerfacili-ties. Sec. 3216. Repealofcreditforproducingfuelfromanonconventionalsource. Sec. 3217. Repeal of new energy efficient home credit. Sec. 3218. Repeal of energy efficient appliance credit. Sec. 3219. Repeal of mine rescue team training credit. Sec. 3220. Repeal of agricultural chemicals security credit. Sec. 3221. Repeal of credit for carbon dioxide sequestration. Sec. 3222. Repeal of credit for employee health insurance expenses of small em-ployers. Sec. 3223. Repeal of rehabilitation credit. Sec. 3224. Repeal of energy credit. Sec. 3225. Repeal of qualifying advanced coal project credit. Sec. 3226. Repeal of qualifying gasification project credit. Sec. 3227. Repeal of qualifying advanced energy project credit. Sec. 3228. Repeal of qualifying therapeutic discovery project credit. Sec. 3229. Repeal of work opportunity tax credit. Sec. 3230. Repeal of deduction for certain unused business credits. SubtitleDAccountingMethods Sec. 3301. Limitation on use of cash method of accounting. Sec. 3302. Rules for determining whether taxpayer has adopted a method of ac-counting. Sec. 3303. Certain special rules for taxable year of inclusion. Sec. 3304. Installment sales. Sec. 3305. Repeal of special rule for prepaid subscription income. Sec. 3306. Repealofspecialruleforprepaidduesincomeofcertainmember-ship organizations. Sec. 3307. Repealofspecialruleformagazines,paperbacks,andrecordsre-turned after close of the taxable year. Sec. 3308. Modification of rules for long-term contracts. Sec. 3309. Nuclear decommissioning reserve funds. Sec. 3310. Repeal of last-in, first-out method of inventory. Sec. 3311. Repeal of lower of cost or market method of inventory. Sec. 3312. Modificationofrulesforcapitalizationandinclusionininventory costs of certain expenses. Sec. 3313. Modification of income forecast method. Sec. 3314. Repeal of averaging of farm income. Sec. 3315. Treatment of patent or trademark infringement awards. Sec. 3316. Repeal of redundant rules with respect to carrying charges. Sec. 3317. Repealofrecurringitemexceptionforspuddingofoilorgaswells. SubtitleEFinancialInstruments PART 1DERIVATIVES AND HEDGES Sec. 3401. Treatment of certain derivatives. Sec. 3402. Modification of certain rules related to hedges. PART 2TREATMENT OF DEBT INSTRUMENTS Sec. 3411. Current inclusion in income of market discount. Sec. 3412. Treatment of certain exchanges of debt instruments. Sec. 3413. Coordinationwithrulesforinclusionnotlaterthanforfinancialac-counting purposes. Sec. 3414. Rules regarding certain government debt. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00006 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)7PART 3CERTAIN RULES FOR DETERMINING GAIN AND LOSS Sec. 3421. Costbasisofspecifiedsecuritiesdeterminedwithoutregardtoiden-tification. Sec. 3422. Wash sales by related parties. Sec. 3423. Nonrecognitionforderivativetransactionsbyacorporationwithre-spect to its stock. PART 4TAX FAVORED BONDS Sec. 3431. Termination of private activity bonds. Sec. 3432. Termination of credit for interest on certain home mortgages. Sec. 3433. Repeal of advance refunding bonds. Sec. 3434. Repeal of tax credit bond rules. SubtitleFInsuranceReforms Sec. 3501. Exceptiontoproratainterestexpensedisallowanceforcorporate-owned life insurance restricted to 20-percent owners. Sec. 3502. Net operating losses of life insurance companies. Sec. 3503. Repeal of small life insurance company deduction. Sec. 3504. Computation of life insurance tax reserves. Sec. 3505. Adjustment for change in computing reserves. Sec. 3506. Modificationofrulesforlifeinsuranceprorationforpurposesofde-termining the dividends received deduction. Sec. 3507. Repealofspecialrulefordistributionstoshareholdersfrompre-1984 policyholders surplus account. Sec. 3508. Modificationofprorationrulesforpropertyandcasualtyinsurance companies. Sec. 3509. RepealofspecialtreatmentofBlueCrossandBlueShieldorganiza-tions, etc. Sec. 3510. Modificationofdiscountingrulesforpropertyandcasualtyinsur-ance companies. Sec. 3511. Repeal of special estimated tax payments. Sec. 3512. Capitalization of certain policy acquisition expenses. Sec. 3513. Tax reporting for life settlement transactions. Sec. 3514. Clarification of tax basis of life insurance contracts. Sec. 3515. Exception to transfer for valuable consideration rules. SubtitleGPass-ThruandCertainOtherEntities PART 1SCORPORATIONS Sec. 3601. Reduced recognition period for built-in gains made permanent. Sec. 3602. Modifications to S corporation passive investment income rules. Sec. 3603. Expansionofqualifyingbeneficiariesofanelectingsmallbusiness trust. Sec. 3604. Charitablecontributiondeductionforelectingsmallbusinesstrusts. Sec. 3605. PermanentruleregardingbasisadjustmenttostockofScorpora-tions making charitable contributions of property. Sec. 3606. Extension of time for making S corporation elections. Sec. 3607. Relocation of C corporation definition. PART 2PARTNERSHIPS Sec. 3611. Repealofrulesrelatingtoguaranteedpaymentsandliquidatingdis-tributions. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00007 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)8Sec. 3612. Mandatoryadjustmentstobasisofpartnershippropertyincaseof transfer of partnership interests. Sec. 3613. Mandatoryadjustmentstobasisofundistributedpartnershipprop-erty. Sec. 3614. Correspondingadjustmentstobasisofpropertiesheldbypartner-ship where partnership basis adjusted. Sec. 3615. Charitablecontributionsandforeigntaxestakenintoaccountinde-termining limitation on allowance of partners share of loss. Sec. 3616. Revisions related to unrealized receivables and inventory items. Sec. 3617. Repeal of time limitation on taxing precontribution gain. Sec. 3618. Partnership interests created by gift. Sec. 3619. Repeal of technical termination. Sec. 3620. Publiclytradedpartnershipexceptionrestrictedtominingandnat-ural resources partnerships. Sec. 3621. Ordinaryincometreatmentinthecaseofpartnershipinterestsheld in connection with performance of services. Sec. 3622. Partnership audits and adjustments. PART 3REITS AND RICS Sec. 3631. Prevention of tax-free spinoffs involving REITs. Sec. 3632. ExtensionofperiodforpreventionofREITelectionfollowingrev-ocation or termination. Sec. 3633. Certainshort-lifepropertynottreatedasrealpropertyforpurposes of REIT provisions. Sec. 3634. Repeal of special rules for timber held by REITs. Sec. 3635. Limitationonfixedpercentagerentandinterestexceptionsfor REIT income tests. Sec. 3636. Repeal of preferential dividend rule for publicly offered REITs. Sec. 3637. AuthorityforalternativeremediestoaddresscertainREITdistribu-tion failures. Sec. 3638. Limitations on designation of dividends by REITs. Sec. 3639. Non-REITearningsandprofitsrequiredtobedistributedbyREIT in cash. Sec. 3640. DebtinstrumentsofpubliclyofferedREITsandmortgagestreated as real estate assets. Sec. 3641. Assetandincometestclarificationregardingancillarypersonal property. Sec. 3642. Hedging provisions. Sec. 3643. ModificationofREITearningsandprofitscalculationtoavoiddu-plicate taxation. Sec. 3644. ReductioninpercentagelimitationonassetsofREITwhichmaybe taxable REIT subsidiaries. Sec. 3645. TreatmentofcertainservicesprovidedbytaxableREITsubsidi-aries. Sec. 3646. Study relating to taxable REIT subsidiaries. Sec. 3647. Ccorporationelectiontobecome,ortransferassetsto,aRICor REIT. Sec. 3648. InterestsinRICsandREITsnotexcludedfromdefinitionofUnited States real property interests. Sec. 3649. DividendsderivedfromRICsandREITsineligiblefordeductionfor UnitedStatessourceportionofdividendsfromcertainforeign corporations. PART 4PERSONAL HOLDING COMPANIES VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00008 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)9Sec. 3661. Exclusionofdividendsfromcontrolledforeigncorporationsfromthe definitionofpersonalholdingcompanyincomeforpurposesof the personal holding company rules. SubtitleHTaxationofForeignPersons Sec. 3701. Preventionofavoidanceoftaxthroughreinsurancewithnon-taxed affiliates. Sec. 3702. Taxationofpassengercruisegrossincomeofforeigncorporations and nonresident alien individuals. Sec. 3703. Restriction on insurance business exception to passive foreign invest-ment company rules. Sec. 3704. Modification of limitation on earnings stripping. Sec. 3705. Limitation on treaty benefits for certain deductible payments. SubtitleIProvisionsRelatedtoCompensation PART 1EXECUTIVE COMPENSATION Sec. 3801. Nonqualified deferred compensation. Sec. 3802. Modification of limitation on excessive employee remuneration. Sec. 3803. Excisetaxonexcesstax-exemptorganizationexecutivecompensa-tion. Sec. 3804. Denialofdeductionasresearchexpenditureforstocktransferred pursuant to an incentive stock option. PART 2WORKER CLASSIFICATION Sec. 3811. Determination of worker classification. SubtitleJZonesandShort-TermRegionalBenefits Sec. 3821. RepealofprovisionsrelatingtoEmpowermentZonesandEnterprise Communities. Sec. 3822. Repeal of DC Zone provisions. Sec. 3823. Repeal of provisions relating to renewal communities. Sec. 3824. Repeal of various short-term regional benefits. TITLEIVPARTICIPATIONEXEMPTIONSYSTEMFORTHE TAXATIONOFFOREIGNINCOME SubtitleAEstablishmentofExemptionSystem Sec. 4001. Deductionfordividendsreceivedbydomesticcorporationsfromcer-tain foreign corporations. Sec. 4002. Limitationonlosseswithrespecttospecified10-percentownedfor-eign corporations. Sec. 4003. Treatmentofdeferredforeignincomeupontransitiontoparticipa-tion exemption system of taxation. Sec. 4004. Look-thruruleforrelatedcontrolledforeigncorporationsmadeper-manent. SubtitleBModificationsRelatedtoForeignTaxCreditSystem Sec. 4101. Repealofsection902indirectforeigntaxcredits;determinationof section 960 credit on current year basis. Sec. 4102. Foreigntaxcreditlimitationappliedbyallocatingonlydirectlyallo-cable deductions to foreign source income. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00009 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)10Sec. 4103. Passivecategoryincomeexpandedtoincludeothermobileincome. Sec. 4104. Sourceofincomefromsalesofinventorydeterminedsolelyonbasis of production activities. SubtitleCRulesRelatedtoPassiveandMobileIncome PART 1MODIFICATION OF SUBPART FPROVISIONS Sec. 4201. Subpart F income to only include low-taxed foreign income. Sec. 4202. Foreign base company sales income. Sec. 4203. Inflationadjustmentofdeminimisexceptionforforeignbasecom-pany income. Sec. 4204. Activefinancingexceptionextendedwithlimitationforlow-taxed foreign income. Sec. 4205. Repealofinclusionbasedonwithdrawalofpreviouslyexcludedsub-part F income from qualified investment. PART 2PREVENTION OF BASE EROSION Sec. 4211. Foreignintangibleincomesubjecttotaxationatreducedrate;intan-gible income treated as subpart F income. Sec. 4212. DenialofdeductionforinterestexpenseofUnitedStatesshare-holderswhicharemembersofworldwideaffiliatedgroupswith excess domestic indebtedness. TITLEVTAXEXEMPTENTITIES SubtitleAUnrelatedBusinessIncomeTax Sec. 5001. Clarificationofunrelatedbusinessincometaxtreatmentofentities treated as exempt from taxation under section 501(a). Sec. 5002. Nameandlogoroyaltiestreatedasunrelatedbusinesstaxablein-come. Sec. 5003. Unrelatedbusinesstaxableincomeseparatelycomputedforeach trade or business activity. Sec. 5004. Exclusionofresearchincomelimitedtopubliclyavailableresearch. Sec. 5005. Parityofcharitablecontributionlimitationbetweentrustsandcor-porations. Sec. 5006. Increased specific deduction. Sec. 5007. Repealofexclusionofgainorlossfromdispositionofdistressed property. Sec. 5008. Qualified sponsorship payments. SubtitleBPenalties Sec. 5101. Increase in information return penalties. Sec. 5102. Manager-levelaccuracy-relatedpenaltyonunderpaymentofunre-lated business income tax. SubtitleCExciseTaxes Sec. 5201. Modification of intermediate sanctions. Sec. 5202. Modification of taxes on self-dealing. Sec. 5203. Excisetaxonfailuretodistributewithin5yearscontributionto donor advised fund. Sec. 5204. Simplification of excise tax on private foundation investment income. Sec. 5205. Repealofexceptionforprivateoperatingfoundationfailuretodis-tribute income. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00010 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)11Sec. 5206. Excisetaxbasedoninvestmentincomeofprivatecollegesanduni-versities. SubtitleDRequirementsForOrganizationsExemptFromTax Sec. 5301. Repeal of tax-exempt status for professional sports leagues. Sec. 5302. Repealofexemptionfromtaxforcertaininsurancecompaniesand co-op health insurance issuers. Sec. 5303. In-Staterequirementforworkmenscompensationinsuranceorgani-zation. Sec. 5304. Repeal of Type II and Type III supporting organizations. TITLEVITAXADMINISTRATIONANDCOMPLIANCE SubtitleAIRSInvestigation-RelatedReforms Sec. 6001. OrganizationsrequiredtonotifySecretaryofintenttooperateas 501(c)(4). Sec. 6002. Declaratory judgments for 501(c)(4) organizations. Sec. 6003. Restrictionondonationreportingforcertain501(c)(4)organiza-tions. Sec. 6004. Mandatoryelectronicfilingforannualreturnsofexemptorganiza-tions. Sec. 6005. DutytoensurethatIRSemployeesarefamiliarwithandactinac-cord with certain taxpayer rights. Sec. 6006. TerminationofemploymentofIRSemployeesfortakingofficialac-tions for political purposes. Sec. 6007. Releaseofinformationregardingthestatusofcertaininvestigations. Sec. 6008. Review of IRS examination selection procedures. Sec. 6009. IRSemployeesprohibitedfromusingpersonalemailaccountsforof-ficial business. Sec. 6010. Moratorium on IRS conferences. Sec. 6011. Applicablestandardfordeterminationsofwhetheranorganization is operated exclusively for the promotion of social welfare. SubtitleBTaxpayerProtectionandServiceReforms Sec. 6101. ExtensionofIRSauthoritytorequiretruncatedSocialSecurity numbers on Form W-2. Sec. 6102. Free electronic filing. Sec. 6103. Pre-populated returns prohibited. Sec. 6104. Form 1040SR for seniors. Sec. 6105. IncreasedrefundandcreditthresholdforJointCommitteeonTax-ation review of C corporation return. SubtitleCTaxReturnDueDateSimplification Sec. 6201. Duedatesforreturnsofpartnerships,Scorporations,andCcor-porations. Sec. 6202. Modification of due dates by regulation. Sec. 6203. Corporations permitted statutory automatic 6-month extension of in-come tax returns. SubtitleDComplianceReforms Sec. 6301. Penalty for failure to file. Sec. 6302. Penaltyforfailuretofilecorrectinformationreturnsandprovide payee statements. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00011 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)12Sec. 6303. Clarificationof6-yearstatuteoflimitationsincaseofoverstatement of basis. Sec. 6304. Reform of rules related to qualified tax collection contracts. Sec. 6305. 100percentcontinuouslevyonpaymentstoMedicareprovidersand suppliers. Sec. 6306. Treatment of refundable credits for purposes of certain penalties. TITLEVIIEXCISETAXES Sec. 7001. Repeal of medical device excise tax. Sec. 7002. Modifications relating to oil spill liability trust fund. Sec. 7003. Modificationrelatingtoinlandwaterwaystrustfundfinancingrate. Sec. 7004. Excise tax on systemically important financial institutions. Sec. 7005. Clarificationoforphandrugexceptiontoannualfeeonbrandedpre-scription pharmaceutical manufacturers and importers. TITLEVIIIDEADWOODANDTECHNICALPROVISIONS SubtitleARepealofDeadwood Sec. 8001. Repeal of Puerto Rico economic activity credit. Sec. 8002. Repeal of making work pay credit. Sec. 8003. General business credit. Sec. 8004. Environmental tax. Sec. 8005. Annuities;certainproceedsofendowmentandlifeinsurancecon-tracts. Sec. 8006. Unemployment compensation. Sec. 8007. Flexible spending arrangements. Sec. 8008. Certaincombatzonecompensationofmembersofthearmedforces. Sec. 8009. Qualified group legal services plans. Sec. 8010. Certain reduced uniformed services retirement pay. Sec. 8011. Great plains conservation program. Sec. 8012. State legislators travel expenses away from home. Sec. 8013. Treble damage payments under the antitrust law. Sec. 8014. Phase-in of limitation on investment interest. Sec. 8015. Charitable, etc., contributions and gifts. Sec. 8016. Amortizable bond premium. Sec. 8017. Repealofdeductionforclean-fuelvehiclesandcertainrefueling property. Sec. 8018. Repealofdeductionforcapitalcostsincurredincomplyingwithen-vironmental protection agency sulfur regulations. Sec. 8019. Activities not engaged in for profit. Sec. 8020. Dividendsreceivedoncertainpreferredstock;anddividendspaidon certain preferred stock of public utilities. Sec. 8021. Acquisitions made to evade or avoid income tax. Sec. 8022. Distributions of property. Sec. 8023. Effect on earnings and profits. Sec. 8024. Basis to corporations. Sec. 8025. Tax credit employee stock ownership plans. Sec. 8026. Employee stock purchase plans. Sec. 8027. Transition rules. Sec. 8028. Limitation on deductions for certain farming. Sec. 8029. Deductions limited to amount at risk. Sec. 8030. Passive activity losses and credits limited. Sec. 8031. Adjustments required by changes in method of accounting. Sec. 8032. Exemption from tax on corporations, certain trusts, etc. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00012 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)13Sec. 8033. Requirements for exemption. Sec. 8034. Repeal of special treatment for religious broadcasting company. Sec. 8035. Repealofexclusionofgainorlossfromdispositionofbrownfield property. Sec. 8036. Accumulated taxable income. Sec. 8037. Certain provisions related to depletion. Sec. 8038. Amountsreceivedbysurvivingannuitantunderjointandsurvivor annuity contract. Sec. 8039. Income taxes of members of armed forces on death. Sec. 8040. Special rules for computing reserves. Sec. 8041. Insurance company taxable income. Sec. 8042. Capitalization of certain policy acquisition expenses. Sec. 8043. Repeal of provision on expatriation to avoid tax. Sec. 8044. Repealofcertaintransitionrulesonincomefromsourceswithout United States. Sec. 8045. Repeal of Puerto Rico and possession tax credit. Sec. 8046. Basis of property acquired from decedent. Sec. 8047. Property on which lessee has made improvements. Sec. 8048. Involuntary conversion. Sec. 8049. Property acquired during affiliation. Sec. 8050. Repealofspecialholdingperiodrulesforcertaincommodityfutures transactions. Sec. 8051. Holding period of property. Sec. 8052. Propertyusedinthetradeorbusinessandinvoluntaryconversions. Sec. 8053. Sale of patents. Sec. 8054. Gain from disposition of farmland. Sec. 8055. Transitionrulesrelatedtothetreatmentofamountsreceivedonre-tirement or sale or exchange of debt instruments. Sec. 8056. CertainruleswithrespecttodebtinstrumentsissuedbeforeJuly2, 1982. Sec. 8057. CertainruleswithrespecttostrippedbondspurchasedbeforeJuly 2, 1982. Sec. 8058. Amount and method of adjustment. Sec. 8059. Old-age, survivors, and disability insurance. Sec. 8060. Hospital insurance. Sec. 8061. Ministers,membersofreligiousorders,andchristiansciencepracti-tioners. Sec. 8062. Affiliated group defined. Sec. 8063. Credit for state death taxes. Sec. 8064. Family-owned business interest. Sec. 8065. Property within the united states. Sec. 8066. Repeal of deadwood provisions relating to employment taxes. Sec. 8067. Luxury passenger automobiles. Sec. 8068. Transportation by air. Sec. 8069. Taxes on failure to distribute income. Sec. 8070. Taxes on taxable expenditures. Sec. 8071. Definitions and special rules. Sec. 8072. Returns. Sec. 8073. Information returns. Sec. 8074. Abatements. Sec. 8075. Failure by corporation to pay estimated income tax. Sec. 8076. Repeal of 2008 recovery rebates. Sec. 8077. Repealofadvancepaymentofportionofincreasedchildcreditfor 2003. Sec. 8078. Repeal of provisions related to COBRA premium assistance. VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00013 Fmt 6652 Sfmt 6211 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)14Sec. 8079. Retirement. Sec. 8080. Annuities to surviving spouses and dependent children of judges. Sec. 8081. Merchant marine capital construction funds. Sec. 8082. Valuation tables. Sec. 8083. Definition of employee. Sec. 8084. Effective date. SubtitleBConformingAmendmentsRelatedtoMultipleSections Sec. 8101. Conforming amendments related to multiple sections.TITLE ITAX REFORM FOR1INDIVIDUALS 2Subtitle AIndividual Income Tax3Rate Reform4SEC.1001.SIMPLIFICATIONOFINDIVIDUALINCOMETAX5RATES. 6(a)IN GENERAL.Section1isamendedtoreadas7follows:8SEC. 1. TAX IMPOSED.9(a)IN GENERAL.Thereisherebyimposedonthe10incomeofeveryindividualataxequaltothesumof 11(1)10PERCENT BRACKET.10percentofso12muchofthetaxableincomeasdoesnotexceedthe1325-percent bracket threshold amount,14(2)25PERCENT BRACKET.25percentofso15muchofthetaxableincomeasexceedsthe25-per- 16cent bracket threshold amount, plus17(3)35PERCENT BRACKET.10percentofso18muchofthemodifiedadjustedgrossincome(asde- 19finedinsection2)asexceedsthe35-percentbracket20threshold amount.21VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)15(b)BRACKET THRESHOLD AMOUNTS.Forpur- 1poses of this section 2(1)25-PERCENT BRACKET THRESHOLD3AMOUNT.Theterm25-percentbracketthreshold4amount means 5(A)inthecaseofajointreturnorsur- 6viving spouse, $71,200,7(B)inthecaseofanyotherindividual8(otherthananestateortrust),one-halfofthe9dollaramountineffectundersubparagraph10(A), and11(C)inthecaseofanestateortrust,zero.12(2)35-PERCENT BRACKET THRESHOLD13AMOUNT.Theterm35-percentbracketthreshold14amount means 15(A)inthecaseofajointreturnorsur- 16viving spouse, $450,000,17(B)inthecaseofanyotherindividual18(otherthananestateortrust),$400,000,and19(C)inthecaseofanestateortrust,20$12,000.21(c) INFLATION ADJUSTMENT. 22(1)IN GENERAL.Inthecaseofanytaxable23yearbeginningafter2014,eachdollaramountin24subsections(b)(1)(A),(b)(2)(A),(b)(2)(B),25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)16(b)(2)(C), (e)(3)(A), and (e)(3)(B) shall be increased1by an amount equal to 2(A) such dollar amount, multiplied by3(B)thecost-of-livingadjustmentdeter- 4minedunderthissubsectionforthecalendar5year in which the taxable year begins.6Ifanyincreasedeterminedundertheprecedingsen- 7tenceisnotamultipleof$100,suchincreaseshall8be rounded to the next lowest multiple of $100.9(2)COST-OF-LIVING ADJUSTMENT.Forpur- 10poses of this subsection 11(A)IN GENERAL.Thecost-of-livingad- 12justmentforanycalendaryearisthepercent- 13age (if any) by which 14(i)theC-CPI-Uforthepreceding15calendar year, exceeds16(ii)thenormalizedCPIforcalendar17year 2012.18(B)SPECIAL RULE FOR ADJUSTMENTS19WITH A BASE YEAR AFTER 2012.Forpurposes20ofanyprovisionwhichprovidesforthesubsti- 21tutionofayearafter2012for2012insub- 22paragraph(A)(ii),subparagraph(A)shallbe23appliedbysubstitutingC-CPI-Ufornormal- 24ized CPI in clause (ii).25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)17(3)NORMALIZED CPI.Forpurposesofthis1subsection,thenormalizedCPIforanycalendar2year is the product of 3(A)theCPIforsuchcalendaryear,mul- 4tiplied by5(B) the C-CPI-U transition multiple.6(4)C-CPI-UTRANSITION MULTIPLE.For7purposesofthissubsection,thetermC-CPI-Utran- 8sitionmultiplemeanstheamountobtainedbydivid- 9ing 10(A)theC-CPI-Uforcalendaryear2013,11by12(B) the CPI for calendar year 2013.13(5)C-CPI-U.Forpurposesofthissub- 14section 15(A)IN GENERAL.ThetermC-CPI-U16meanstheChainedConsumerPriceIndexfor17AllUrbanConsumers(aspublishedbytheBu- 18reauofLaborStatisticsoftheDepartmentof19Labor).ThevaluesoftheChainedConsumer20PriceIndexforAllUrbanConsumerstaken21intoaccountforpurposesofdeterminingthe22cost-of-livingadjustmentforanycalendaryear23underthissubsectionshallbethelatestvalues24sopublishedasofthedateonwhichsuchBu- 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)18reaupublishestheinitialvalueoftheChained1ConsumerPriceIndexforAllUrbanCon- 2sumersforthemonthofAugustforthepre- 3ceding calendar year.4(B)DETERMINATION FOR CALENDAR5YEAR.TheC-CPI-Uforanycalendaryearis6theaverageoftheC-CPI-Uasofthecloseof7the12-monthperiodendingonAugust31of8such calendar year.9(6) CPI.For purposes of this subsection 10(A)IN GENERAL.ThetermConsumer11PriceIndexmeansthelastConsumerPrice12IndexforAllUrbanConsumerspublishedby13theDepartmentofLabor.Forpurposesofthe14precedingsentence,therevisionoftheCon- 15sumerPriceIndexwhichismostconsistent16withtheConsumerPriceIndexforcalendar17year 1986 shall be used.18(B)DETERMINATION FOR CALENDAR19YEAR.TheCPIforanycalendaryearisthe20averageoftheConsumerPriceIndexasofthe21closeofthe12-monthperiodendingonAugust2231 of such calendar year.23(d) SPECIAL RULES FOR CERTAIN CHILDREN WITH24UNEARNED INCOME. 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)19(1)IN GENERAL.Inthecaseofanychildto1whomthissubsectionappliesforanytaxableyear 2(A)the25-percentbracketthreshold3amountshallnotbemorethanthetaxablein- 4comeofsuchchildforthetaxableyearreduced5bythenetunearnedincomeofsuchchild,and6(B)the35-percentbracketthreshold7amount shall not be more than the sum of 8(i)thetaxableincomeofsuchchild9forthetaxableyearreducedbythenetun- 10earned income of such child, plus11(ii)thedollaramountineffectunder12subsection (b)(2)(C) for the taxable year.13(2)CHILD TO WHOM SUBSECTION APPLIES. 14Thissubsectionshallapplytoanychildforanytax- 15able year if 16(A) such child 17(i)hasnotattainedage18before18the close of the taxable year, or19(ii)hasattainedage18beforethe20closeofthetaxableyearandisdescribed21in paragraph (3),22(B)eitherparentofsuchchildisaliveat23the close of the taxable year, and24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)20(C)suchchilddoesnotfileajointreturn1for the taxable year.2(3)CERTAIN CHILDREN WHOSE EARNED IN- 3COME DOES NOT EXCEED ONE-HALF OF INDI- 4VIDUALS SUPPORT.Achildisdescribedinthis5paragraph if 6(A) such child 7(i)hasnotattainedage19before8the close of the taxable year, or9(ii)isastudent(withinthemeaning10of section 7705(f)(2)) who has not attained11age24beforethecloseofthetaxableyear,12and13(B)suchchildsearnedincome(asde- 14finedinsection911(d)(2))forsuchtaxable15yeardoesnotexceedone-halfoftheamountof16theindividualssupport(withinthemeaningof17section7705(c)(1)(D)aftertheapplicationof18section7705(f)(5)(withoutregardtosubpara- 19graph (A) thereof)) for such taxable year.20(4)NET UNEARNED INCOME.Forpurposes21of this subsection 22(A)IN GENERAL.Thetermnetun- 23earned income means the excess of 24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)21(i)theportionoftheadjustedgross1incomeforthetaxableyearwhichisnot2attributabletoearnedincome(asdefined3in section 911(d)(2)), over4(ii) the sum of 5(I)theamountineffectforthe6taxableyearundersection63(c)(4)(A)7(relatingtolimitationonstandardde- 8ductioninthecaseofcertaindepend- 9ents) , plus10(II)thegreateroftheamount11describedinsubclause(I)or,ifthe12childitemizeshisdeductionsforthe13taxableyear,theamountofthe14itemizeddeductionsallowedbythis15chapterforthetaxableyearwhichare16directlyconnectedwiththeproduction17oftheportionofadjustedgrossin- 18come referred to in clause (i).19(B)LIMITATION BASED ON TAXABLE IN- 20COME.Theamountofthenetunearnedin- 21comeforanytaxableyearshallnotexceedthe22individualstaxableincomeforsuchtaxable23year.24(e) PHASEOUT OF 10-PERCENT RATE. 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)22(1)IN GENERAL.Theamountoftaximposed1bythissection(determinedwithoutregardtothis2subsection)shallbeincreasedby5percentoftheex- 3cess (if any) of 4(A)modifiedadjustedgrossincome,over5(B) the applicable dollar amount.6(2)LIMITATION.Theincreasedetermined7underparagraph(1)withrespecttoanytaxpayer8foranytaxableyearshallnotexceed15percentof9the lesser of 10(A)thetaxpayerstaxableincomefor11such taxable year, or12(B)the25-percentbracketthreshold13amountineffectwithrespecttothetaxpayer14for such taxable year.15(3)APPLICABLE DOLLAR AMOUNT.Forpur- 16posesofthissubsection,thetermapplicabledollar17amount means 18(A)inthecaseofajointreturnorasur- 19viving spouse, $300,000,20(B)inthecaseofanyotherindividual,21$250,000.22(4)ESTATES AND TRUSTS.Paragraph(1)23shall not apply in the case of an estate or trust.24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)23(f) DETERMINATION OF HIGHEST RATE.For pur- 1posesofanyprovisionoflawwhichreferstothehighest2rateoftaxspecifiedinthissection(oranysubsectionof3thissection),suchhighestrateshallbetreatedasbeing435 percent..5(b)MODIFIED ADJUSTED GROSS INCOME.Section62isamendedbystrikingsubsection(b),byredesignating7subsections(c),(d),and(e),assubsections(d),(e),and8(f),respectively,andbyinsertingaftersubsection(a)the9following new subsections:10(b)MODIFIED ADJUSTED GROSS INCOME.For11purposes of section 1 12(1)IN GENERAL.Thetermmodifiedad- 13justedgrossincomemeansadjustedgrossincome 14(A) increased by 15(i)anyamountexcludedfromgross16incomeundersections911,931,and933,17(ii) the excess (if any) of 18(I)amountsofinterestreceived19oraccruedbythetaxpayerduringthe20taxableyearwhichareexemptfrom21tax, over22(II)amountsdisallowedasade- 23ductionbyreasonofsection24163(d)(1)(A) or 171(a)(2),25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)24(iii)anyexclusionfromgrossincome1withrespecttothecostdescribedinsec- 2tion6051(a)(14)(withoutregardtosub- 3paragraphs (A) and (B) thereof),4(iv)anydeductionallowableunder5section162(l)(relatingtospecialrulesfor6healthinsurancecostsofself-employedin- 7dividuals),8(v)anyannualaddition(asdefined9insection415(c)(2))toadefinedcontribu- 10tionplanwhichisnotincludiblein,or11whichisdeductiblefrom,thegrossincome12of the individual for the taxable year,13(vi)anydeductionallowableunder14section 223, and15(vii) the excess (if any) of 16(I) the social security benefits of17theindividualforthetaxableyear(as18defined in section 86(d)), over19(II)theamountincludedinthe20grossincomeofsuchindividualfor21suchtaxableyearundersection86,22and23(B) decreased by 24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)25(i)anydeductionallowedundersec- 1tion170(andinthecaseofanestateor2trust,anydeductionallowedundersection3642(c)), and4(ii)qualifieddomesticmanufacturing5income.6(2)DETERMINATION OF ADJUSTED GROSS IN- 7COME IN CASE OF ESTATES AND TRUSTS.Forpur- 8posesofthissubsection,theadjustedgrossincome9ofanestateortrustshallbecomputedinthesame10mannerasinthecaseofanindividual,except11that 12(A)thedeductionsforcostswhichare13paidorincurredinconnectionwiththeadmin- 14istrationoftheestateortrustandwhichwould15nothavebeenincurredifthepropertywerenot16held in such trust or estate, and17(B)thedeductionsallowableundersec- 18tions 642(b), 651, and 661,19shallbetreatedasallowableinarrivingatadjusted20grossincome.Underregulations,appropriateadjust- 21mentsshallbemadeintheapplicationofpartIof22subchapter J of this chapter to take into account the23application of this paragraph.24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)26(c)QUALIFIED DOMESTIC MANUFACTURING IN- 1COME. 2(1)IN GENERAL.Forpurposesofsubsection3(b),thetermqualifieddomesticmanufacturingin- 4comeforanytaxableyearmeansanamountequal5to the excess (if any) of 6(A)thetaxpayersdomesticmanufac- 7turinggrossreceiptsforsuchtaxableyear,over8(B) the sum of 9(i)thecostofgoodssoldthatareal- 10locable to such receipts, and11(ii)otherexpenses,losses,ordeduc- 12tions,whichareproperlyallocabletosuch13receipts.14(2)ALLOCATION METHOD.TheSecretary15shallprescriberulesfortheproperallocationof16itemsdescribedinparagraph(1)forpurposesofde- 17terminingqualifieddomesticmanufacturingincome.18Suchrulesshallprovidefortheproperallocationof19itemswhetherornotsuchitemsaredirectlyallo- 20cable to domestic manufacturing gross receipts.21(3)SPECIAL RULES FOR DETERMINING22COSTS. 23(A)IN GENERAL.Forpurposesofdeter- 24miningcostsunderclause(i)ofparagraph25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)27(1)(B),anyitemorservicebroughtintothe1UnitedStatesshallbetreatedasacquiredby2purchase,anditscostshallbetreatedasnot3lessthanitsvalueimmediatelyafteritentered4theUnitedStates.Asimilarruleshallapplyin5determiningtheadjustedbasisofleasedor6rentedpropertywheretheleaseorrentalgives7rise to domestic manufacturing gross receipts.8(B)EXPORTS FOR FURTHER MANUFAC- 9TURE.Inthecaseofanypropertydescribed10insubparagraph(A)thathadbeenexportedby11thetaxpayerforfurthermanufacture,thein- 12creaseincostoradjustedbasisundersubpara- 13graph(A)shallnotexceedthedifferencebe- 14tweenthevalueofthepropertywhenexported15andthevalueofthepropertywhenbrought16backintotheUnitedStatesafterthefurther17manufacture.18(4)DOMESTIC MANUFACTURING GROSS RE- 19CEIPTS.For purposes of this subsection 20(A)IN GENERAL.Thetermdomestic21manufacturinggrossreceiptsmeansthegross22receiptsofthetaxpayerwhicharederived23from 24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)28(i)anylease,rental,license,sale,ex- 1change,orotherdispositionoftangible2personalpropertywhichwasmanufac- 3tured,produced,grown,orextractedby4thetaxpayerinwholeorinsignificantpart5within the United States, or6(ii) in the case of a taxpayer engaged7intheactiveconductofaconstruction8tradeorbusiness,constructionofreal9propertyperformedintheUnitedStates10bythetaxpayerintheordinarycourseof11suchtradeorbusinessifsuchrealprop- 12ertyisplacedinserviceafterDecember1331, 2014.14(B)EXCEPTIONS.Suchtermshallnot15includegrossreceiptsofthetaxpayerwhichare16derived from 17(i)thesaleoffoodandbeverages18preparedbythetaxpayerataretailestab- 19lishment,20(ii)thetransmissionordistribution21ofelectricity,naturalgas,orpotablewater,22and23(iii)thelease,rental,license,sale,24exchange, or other disposition of land.25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)29(C)SPECIAL RULE FOR CERTAIN GOV- 1ERNMENT CONTRACTS.Grossreceiptsderived2fromthemanufactureorproductionofany3propertydescribedinsubparagraph(A)(i)shall4betreatedasmeetingtherequirementsofsub- 5paragraph (A)(i) if 6(i)suchpropertyismanufacturedor7producedbythetaxpayerpursuanttoa8contractwiththeFederalGovernment,and9(ii)theFederalAcquisitionRegula- 10tionrequiresthattitleorriskoflosswith11respecttosuchpropertybetransferredto12theFederalGovernmentbeforethemanu- 13factureorproductionofsuchpropertyis14complete.15(D)TREATMENT OF ACTIVITIES IN PUER- 16TO RICO.Inthecaseofanytaxpayerwith17grossreceiptsforanytaxableyearfromsources18withintheCommonwealthofPuertoRico,ifall19ofsuchreceiptsaretaxableundersection1for20suchtaxableyear,thenthisparagraphshallbe21appliedbytreatingeachreferenceinsubpara- 22graph(A)totheUnitedStatesasincludingthe23Commonwealth of Puerto Rico.24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)30(E)TANGIBLE PERSONAL PROPERTY. 1Thetermtangiblepersonalpropertyshallnot2includecomputersoftwareoranypropertyde- 3scribedinparagraph(3)or(4)ofsection4168(f).5(F) RELATED PERSONS. 6(i)IN GENERAL.Thetermdomes- 7ticmanufacturinggrossreceiptsshallnot8includeanygrossreceiptsofthetaxpayer9derivedfrompropertyleased,licensed,or10rentedbythetaxpayerforusebyanyre- 11lated person.12(ii)RELATED PERSON.Forpur- 13posesofclause(i),apersonshallbetreat- 14ed as related to another person if such per- 15sonsaretreatedasasingleemployer16under subsection (a) or (b) of section 52 or17subsection(m)or(o)ofsection414,ex- 18ceptthatdeterminationsundersubsections19(a)and(b)ofsection52shallbemade20without regard to section 1563(b).21(5) CERTAIN INCOME NOT QUALIFIED. 22(A)NET EARNINGS FROM SELF EMPLOY- 23MENT.Domesticmanufacturinggrossreceipts24shallnotincludeanyamountwhichisproperly25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)31allocabletothetaxpayersnetearningsfrom1selfemployment(determinedafteranyreduc- 2tion provided under section 1402(m)).3(B)CERTAIN ACCOUNTING METHOD AD- 4JUSTMENTS.Domesticmanufacturinggross5receiptsshallnotincludeanyamountattrib- 6utable to 7(i)aqualifiedchangeinmethodof8accounting(asdefinedinsection93301(d)(2)oftheTaxReformActof102014), or11(ii)anyotherchangeinmethodof12accountingwhichisrequiredbythe13amendments made by such Act.14(6)APPLICATION OF SECTION TO PASS- 15THROUGH ENTITIES. 16(A)PARTNERSHIPS AND S CORPORA- 17TIONS.Exceptasprovidedinsubparagraph18(B),inthecaseofapartnershiporScorpora- 19tion,eachpartnerorshareholdershalltakeinto20accountsuchpersonsallocableshareofeach21itemdescribedinsubparagraph(A)or(B)of22paragraph(1)(determinedwithoutregardto23whethertheitemsdescribedinsuchsubpara- 24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)32graph(A)exceedtheitemsdescribedinsuch1subparagraph (B)).2(B)PUBLICLY TRADED PARTNERSHIPS. 3Inthecaseofapubliclytradedpartnershipde- 4scribedinsection7704(c),eachpartnershall5nottakeintoaccountanyallocableshareofany6item referred to in subparagraph (A).7(C)TRUSTS AND ESTATES.Inthecase8ofatrustorestate,theitemsreferredtoin9subparagraph(A)(asdeterminedtherein)shall10beapportionedbetweenthebeneficiariesand11thefiduciary(andamongthebeneficiaries)12under regulations prescribed by the Secretary.13(7)REGULATIONS.TheSecretaryshallpre- 14scribesuchregulationsorotherguidanceasmaybe15necessaryorappropriatetocarryoutthepurposes16ofthissection,includingregulationsorotherguid- 17ance 18(A)whichpreventmorethan1taxpayer19fromtakingintoaccountthesamequalifieddo- 20mestic manufacturing income, and21(B)whichrequireorrestrictthealloca- 22tionofitemsunderparagraph(6)andrequire23suchreportingforpurposesofcarryingout24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)33suchparagraphastheSecretarydeterminesap- 1propriate.2(8)PHASE-IN OF EXCLUSION.Inthecaseof3anytaxableyearbeginningbeforeJanuary1,2017,4thetermqualifieddomesticmanufacturingincome5shall be an amount equal to the product of the quali- 6fieddomesticmanufacturingincomedetermined7without regard to this paragraph, multiplied by 8(A)inthecaseofanytaxableyearbegin- 9ning in 2015, 33 percent, and10(B)inthecaseofanytaxableyearbegin- 11ning in 2016, 67 percent..12(c) APPLICATION OF SECTION 15. 13(1)IN GENERAL.Subsection(a)ofsection1514isamendedbystrikingthischapterandinserting15section 11.16(2) CONFORMING AMENDMENTS. 17(A)Section15isamendedbystrikingsub- 18sections(d)and(f)andbyredesignatingsub- 19section (e) as subsection (d).20(B)Section15(d),asredesignatedbysub- 21paragraph(A),isamendedbystrikingsection221 or 11(b) and inserting section 11(b).23(C)SubchapterAofchapter1isamend- 24ed 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)34(i)byredesignatingsection12assec- 1tion 13,2(ii)byredesignatingsection15(as3amendedbythissubsection)assection124andmovingsuchsectionfrompartIIIof5suchsubchaptertoaftersection11inpart6II of such subchapter,7(iii) by striking part III, and8(iv)byamendingthetableofsections9forpartIIofsuchsubchapterbyredesig- 10natingtheitemrelatingtosection12as11anitemrelatingtosection13andbyin- 12serting after the item relating to section 1113the following new item: 14Sec. 12. Effect of changes..(D)Section6013(c)isamendedbystrik- 15ingsections15,443,and7851(a)(1)(A)and16inserting sections 443 and 7851(a)(1)(A).17(d)EFFECTIVE DATE.Theamendmentsmadeby18thissectionshallapplytotaxableyearsbeginningafter19December 31, 2014.20SEC.1002.DEDUCTIONFORADJUSTEDNETCAPITALGAIN.21(a) IN GENERAL.Part VI of subchapter B of chap- 22ter1,asamendedbysection3105,isamendedbyinsert- 23ing after section 168 the following new section:24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)35SEC. 169. ADJUSTED NET CAPITAL GAIN.1(a)IN GENERAL.Ifforanytaxableyearatax- 2payer other than a corporation has an adjusted net capital3gain, 40 percent of the amount of the adjusted net capital4gainshallbeallowedasadeductionfromgrossincome.5(b)ADJUSTED NET CAPITAL GAIN.Forpurposes6ofthissection,thetermadjustednetcapitalgainmeans7the sum of 8(1)netcapitalgainreduced(butnotbelow9zero) by the net collectibles gain, plus10(2) qualified dividend income.11(c)NET CAPITAL GAIN REDUCED BY AMOUNTS12TAKEN INTO ACCOUNT AS INVESTMENT INCOME.For13purposesofthissection,thenetcapitalgainforanytax- 14ableyearshallbereduced(butnotbelowzero)bythe15amountwhichthetaxpayertakesintoaccountasinvest- 16ment income under section 163(d)(4)(B)(iii).17(d)NET COLLECTIBLES GAIN.Forpurposesof18this section 19(1)IN GENERAL.Thetermnetcollectibles20gain means the excess (if any) of 21(A) collectibles gain, over22(B) collectibles loss.23(2)COLLECTIBLES GAIN AND LOSS.The24termscollectiblesgainandcollectibleslossmean25gainorloss(respectively)fromthesaleorexchange26VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)36ofacollectible(asdefinedinsection408(m)without1regardtoparagraph(3)thereof)whichisacapital2assetheldformorethan1yearbutonlytotheex- 3tentsuchgainistakenintoaccountincomputing4grossincomeandsuchlossistakenintoaccountin5computing taxable income.6(3)PARTNERSHIPS,ETC.Forpurposesof7paragraph(2),anygainfromthesaleofaninterest8inapartnership,Scorporation,ortrustwhichisat- 9tributabletounrealizedappreciationinthevalueof10collectiblesshallbetreatedasgainfromthesaleor11exchangeofacollectible.Rulessimilartotherules12ofsection751shallapplyforpurposesofthepre- 13ceding sentence.14(e)QUALIFIED DIVIDEND INCOME.Forpurposes15of this section 16(1)IN GENERAL.Thetermqualifieddivi- 17dendincomemeansdividendsreceivedduringthe18taxable year from 19(A) domestic corporations, and20(B) qualified foreign corporations.21(2)CERTAIN DIVIDENDS EXCLUDED.Such22term shall not include 23(A)anydividendfromacorporation24whichforthetaxableyearofthecorporationin25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)37whichthedistributionismade,orthepreceding1taxableyear,isacorporationexemptfromtax2under section 501 or 521,3(B)anyamountallowedasadeduction4undersection591(relatingtodeductionfor5dividendspaidbymutualsavingsbanks,etc.),6and7(C)anydividenddescribedinsection8404(k).9(3)COORDINATION WITH SECTION 246(c). 10Suchtermshallnotincludeanydividendonany11share of stock 12(A)withrespecttowhichtheholdingpe- 13riodrequirementsofsection246(c)arenotmet14(determinedwithoutregardtoparagraph(5)of15section246(c)andbysubstitutinginsection16246(c)60daysfor45dayseachplaceitap- 17pearsandbysubstituting121-dayperiodfor1891-day period), or19(B)totheextentthatthetaxpayeris20underanobligation(whetherpursuanttoa21shortsaleorotherwise)tomakerelatedpay- 22mentswithrespecttopositionsinsubstantially23similar or related property.24(4) QUALIFIED FOREIGN CORPORATIONS. 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)38(A)IN GENERAL.Exceptasotherwise1providedinthissubparagraph,thetermquali- 2fiedforeigncorporationmeansanyforeigncor- 3poration if 4(i)suchcorporationisincorporated5in a possession of the United States, or6(ii)suchcorporationiseligibleasa7qualifiedresidentforallofthebenefits8providedunderacomprehensiveincome9taxtreatywiththeUnitedStateswhich10theSecretarydeterminesissatisfactoryfor11purposesofthisparagraphandwhichin- 12cludesanexchangeofinformationpro- 13gram.14(B)DIVIDENDS ON STOCK READILY15TRADABLE ON UNITED STATES SECURITIES16MARKET.Aforeigncorporationnototherwise17treatedasaqualifiedforeigncorporationunder18subparagraph(A)shallbesotreatedwithre- 19specttoanydividendpaidbysuchcorporation20ifthestockwithrespecttowhichsuchdividend21ispaidisreadilytradableonanestablishedse- 22curities market in the United States.23(C)EXCLUSION OF DIVIDENDS OF CER- 24TAIN FOREIGN CORPORATIONS.Theterm25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)39qualifiedforeigncorporationshallnotinclude1anyforeigncorporationwhichforthetaxable2yearofthecorporationinwhichthedividend3waspaid,ortheprecedingtaxableyear,isa4passiveforeigninvestmentcompany(asdefined5in section 1297).6(5)TREATMENT OF DIVIDENDS FROM REGU- 7LATED INVESTMENT COMPANIES AND REAL ESTATE8INVESTMENT TRUSTS.Adividendreceivedfroma9regulatedinvestmentcompanyorarealestatein- 10vestmenttrustshallbesubjecttothelimitations11prescribed in sections 854 and 857..12(b)DEDUCTION ALLOWED WHETHER OR NOT INDI- 13VIDUAL ITEMIZES DEDUCTIONS.Section62(a)is14amendedbyinsertingafterparagraph(7)thefollowing15new paragraph:16(8)ADJUSTED NET CAPITAL GAIN.Thede- 17duction allowed by section 169..18(c)EFFECTIVE DATE.Theamendmentsmadeby19thissectionshallapplytotaxableyearsbeginningafter20December 31, 2014.21VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)40SEC.1003.CONFORMINGAMENDMENTSRELATEDTOSIM- 1PLIFICATIONOFINDIVIDUALINCOMETAX2RATES. 3(a)AMENDMENTS RELATED TO MODIFICATION OF4INFLATION ADJUSTMENT. 5(1)Section25B(b)(3)(B)isamendedbystrik- 6ingsection1(f)(3)forthecalendaryearinwhich7thetaxableyearbegins,determinedbysubstituting8calendaryear2005forcalendaryear1992insub- 9paragraph(B)thereofandinsertingsection101(c)(2)(A)forthecalendaryearinwhichthetaxable11yearbegins,determinedbysubstitutingcalendar12year2005forcalendaryear2012inclause(ii)13thereof.14(2)Subclause(II)ofsection36B(b)(3)(A)(ii)is15amendedbystrikingconsumerpriceindexandin- 16serting C-CPI-U (as defined in section 1(c)).17(3)Section41(e)(5)(C)isamendedtoreadas18follows:19(C)COST-OF-LIVING ADJUSTMENT DE- 20FINED. 21(i)IN GENERAL.Thecost-of-living22adjustmentforanycalendaryearisthe23cost-of-livingadjustmentforsuchcalendar24yeardeterminedundersection1(c)(2)(A),25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)41bysubstitutingcalendaryear1987for1calendaryear2012inclause(ii)thereof.2(ii)SPECIAL RULE WHERE BASE PE- 3RIOD ENDS IN A CALENDAR YEAR OTHER4THAN 1983 OR 1984.Ifthebaseperiodof5anytaxpayerdoesnotendin1983or61984,clause(i)shallbeappliedbysub- 7stitutingthecalendaryearinwhichsuch8base period ends for 1987..9(4) Section 125(i)(2) is amended 10(A)bystrikingsection1(f)(3)forthecal- 11endaryearinwhichthetaxableyearbeginsby12substitutingcalendaryear2012forcalendar13year1992insubparagraph(B)thereofin14subparagraph(B)andinsertingsection151(c)(2)(A)forthecalendaryearinwhichthe16taxable year begins, and17(B)bystriking$50bothplacesitap- 18pearsinthelastsentenceandinserting19$100.20(5) Section 137(f) is amended 21(A)bystrikingsection1(f)(3)forthecal- 22endaryearinwhichthetaxableyearbegins,de- 23terminedbysubstitutingcalendaryear200124forcalendaryear1992insubparagraph(B)25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)42thereofinparagraph(2)andinsertingsec- 1tion1(c)(2)(A)forthecalendaryearinwhich2thetaxableyearbegins,determinedbysub- 3stitutingcalendaryear2001forcalendaryear42012 in clause (ii) thereof, and5(B) in the last sentence thereof 6(i)bystriking$10thefirstplaceit7appears and inserting $100, and8(ii)bystrikingnearestmultipleof9$10andinsertingnextlowestmultiple10of $100.11(6)Section162(o)(3)isamendedbyinserting12asineffectbeforeenactmentoftheTaxReform13Act of 2014 after section 1(f)(5).14(7)Section220(g)(2)isamendedbystriking15section1(f)(3)forthecalendaryearinwhichthe16taxableyearbeginsbysubstitutingcalendaryear171997forcalendaryear1992insubparagraph(B)18thereofandinsertingsection1(c)(2)(A)forthe19calendaryearinwhichthetaxableyearbegins,de- 20terminedbysubstitutingcalendaryear1997for21calendar year 2012 in clause (ii) thereof.22(8)Section223(g)(1)isamendedbystrikingall23thatfollowssubparagraph(A)andinsertingthefol- 24lowing:25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)43(B)thecost-of-livingadjustmentdeter- 1minedundersection1(c)(2)(A)forthecalendar2yearinwhichthetaxableyearbegins,deter- 3mined 4(i)bysubstitutingforcalendaryear52012 in clause (ii) thereof 6(I)exceptasprovidedinclause7(ii), calendar year 1997, and8(II)inthecaseofeachdollar9amountinsubsection(c)(2)(A),cal- 10endar year 2003, and11(ii)bysubstitutingMarch31for12August31inparagraphs(5)(B)and13(6)(B) of section 1(c).14TheSecretaryshallpublishthedollaramounts15asadjustedunderthissubsectionfortaxable16yearsbeginninginanycalendaryearnolater17thanJune1oftheprecedingcalendaryear..18(9)Section430(c)(7)(D)(vii)(II)isamendedby19strikingsection1(f)(3)forthecalendaryear,deter- 20minedbysubstitutingcalendaryear2009forcal- 21endaryear1992insubparagraph(B)thereofand22insertingsection1(c)(2)(A)forthecalendaryear,23determinedbysubstitutingcalendaryear2009for24calendar year 2012 in clause (ii) thereof.25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)44(10)Section512(d)(2)(B)isamendedbystrik- 1ingsection1(f)(3)forthecalendaryearinwhich2thetaxableyearbegins,bysubstitutingcalendar3year1994forcalendaryear1992insubparagraph4(B) thereofand inserting section 1(c)(2)(A) for the5calendaryearinwhichthetaxableyearbegins,de- 6terminedbysubstitutingcalendaryear1994for7calendar year 2012 in clause (ii) thereof.8(11)Section513(h)(2)(C)(ii)isamendedby9strikingsection1(f)(3)forthecalendaryearin10whichthetaxableyearbeginsbysubstitutingcal- 11endaryear1987forcalendaryear1992insub- 12paragraph(B)thereofandinsertingsection131(c)(2)(A)forthecalendaryearinwhichthetaxable14yearbegins,determinedbysubstitutingcalendar15year1987forcalendaryear2012inclause(ii)16thereof.17(12)Section877A(a)(3)(B)(i)(II)isamended18bystrikingsection1(f)(3)forthecalendaryearin19whichthetaxableyearbegins,bysubstitutingcal- 20endaryear2007forcalendaryear1992insub- 21paragraph(B)thereofandinsertingsection221(c)(2)(A)forthecalendaryearinwhichthetaxable23yearbegins,determinedbysubstitutingcalendar24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)45year2007forcalendaryear2012inclause(ii)1thereof.2(13)Section911(b)(2)(D)(ii)(II)isamendedby3strikingsection1(f)(3)forthecalendaryearin4whichthetaxableyearbegins,determinedbysub- 5stituting2004for1992insubparagraph(B)6thereofandinsertingsection1(c)(2)(A)forthe7calendaryearinwhichthetaxableyearbegins,de- 8terminedbysubstitutingcalendaryear2004for9calendar year 2012 in clause (ii) thereof.10(14)Section1274A(d)(2)isamendedtoread11as follows:12(2) INFLATION ADJUSTMENT. 13(A)IN GENERAL.Inthecaseofany14debtinstrumentarisingoutofasaleorex- 15changeduringanycalendaryearafter2014,16eachadjusteddollaramountshallbeincreased17by an amount equal to 18(i)suchadjusteddollaramount,19multiplied by20(ii)thecost-of-livingadjustmentde- 21terminedundersection1(c)(2)(A)forsuch22calendaryear,determinedbysubstituting23calendaryear2013forcalendaryear242012 in clause (ii) thereof.25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00045 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)46(B)ADJUSTED DOLLAR AMOUNTS.For1purposesofthisparagraph,thetermadjusted2dollaramountmeansthedollaramountsin3subsections(b)and(c),ineachcaseasineffect4for calendar year 2014.5(C) ROUNDING.Any increase under sub- 6paragraph(A)shallberoundedtothenearest7multiple of $100..8(15)Section2010(c)(3)(B)(ii)isamendedby9strikingsection1(f)(3)forsuchcalendaryearby10substitutingcalendaryear2010forcalendaryear111992insubparagraph(B)thereofandinserting12section1(c)(2)(A)forsuchcalendaryear,deter- 13minedbysubstitutingcalendaryear2010forcal- 14endar year 2012 in clause (ii) thereof.15(16)Section2032A(a)(3)(B)isamendedby16strikingsection1(f)(3)forsuchcalendaryearby17substitutingcalendaryear1997forcalendaryear181992insubparagraph(B)thereofandinserting19section1(c)(2)(A)forsuchcalendaryear,deter- 20minedbysubstitutingcalendaryear1997forcal- 21endar year 2012 in clause (ii) thereof.22(17)Section2503(b)(2)(B)isamendedby23strikingsection1(f)(3)forsuchcalendaryearby24substitutingcalendaryear1997forcalendaryear25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)471992insubparagraph(B)thereofandinserting1section1(c)(2)(A)forthecalendaryear,deter- 2minedbysubstitutingcalendaryear1997forcal- 3endar year 2012 in clause (ii) thereof.4(18) Section 4161(b)(2)(C)(i)(II) is amended by5strikingsection1(f)(3)forsuchcalendaryear,de- 6terminedbysubstituting2004for1992insub- 7paragraph(B)thereofandinsertingsection81(c)(2)(A)forsuchcalendaryear,determinedby9substitutingcalendaryear2004forcalendaryear102012 in clause (ii) thereof.11(19)Section4261(e)(4)(A)(ii)isamendedby12strikingsection1(f)(3)forsuchcalendaryearby13substitutingtheyearbeforethelastnonindexedyear14forcalendaryear1992insubparagraph(B)there- 15ofandinsertingsection1(c)(2)(A)forsuchcal- 16endaryear,determinedbysubstitutingtheyearbe- 17forethelastnonindexedyearforcalendaryear182012 in clause (ii) thereof.19(20) Section 4980I(b)(3)(C)(v)(II) is amended20(A)bystrikingsection1(f)(3)andin- 21serting section 1(c)(2)(A),22(B)bystrikingsubparagraph(B)and23inserting clause (ii), and24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00047 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)48(C)bystriking1992andinserting12012.2(21) Section 5000A(c)(3)(D)(ii) is amended 3(A)bystrikingsection1(f)(3)andin- 4serting section 1(c)(2)(A),5(B)bystrikingsubparagraph(B)and6inserting clause (ii), and7(C)bystriking1992andinserting82012.9(22)Section6039F(d)isamendedbystriking10section1(f)(3),exceptthatsubparagraph(B)11thereofandinsertingsection1(c)(2)(A),except12that clause (ii) thereof.13(23)Section6323(i)(4)(B)isamendedbystrik- 14ingsection1(f)(3)forthecalendaryear,deter- 15minedbysubstitutingcalendaryear1996forcal- 16endaryear1992insubparagraph(B)thereofand17insertingsection1(c)(2)(A)forthecalendaryear,18determinedbysubstitutingcalendaryear1996for19calendar year 2012 in clause (ii) thereof.20(24)Section6334(g)(1)(B)isamendedby21strikingsection1(f)(3)forsuchcalendaryear,by22substitutingcalendaryear1998forcalendaryear231992insubparagraph(B)thereofandinserting24section1(c)(2)(A)forsuchcalendaryear,deter- 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)49minedbysubstitutingcalendaryear1999forcal- 1endar year 2012 in clause (ii) thereof.2(25) Section 6721(f)(1) is amended 3(A)bystrikingsection1(f)(3)andin- 4serting section 1(c)(2)(A),5(B)bystrikingsubparagraph(B)and6inserting clause (ii), and7(C)bystriking1992andinserting82012.9(26) Section 6722(f)(1) is amended 10(A)bystrikingsection1(f)(3)andin- 11serting section 1(c)(2)(A),12(B)bystrikingsubparagraph(B)and13inserting clause (ii), and14(C)bystriking1992andinserting152012.16(27)Section7430(c)(1)isamendedbystriking17section1(f)(3)forsuchcalendaryear,bysub- 18stitutingcalendaryear1995forcalendaryear191992insubparagraph(B)thereofintheflushtext20attheendandinsertingsection1(c)(2)(A)forsuch21calendaryear,determinedbysubstitutingcalendar22year1995forcalendaryear2012inclause(ii)23thereof.24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)50(28)Section7872(g)(5)isamendedtoreadas1follows:2(5) INFLATION ADJUSTMENT. 3(A)IN GENERAL.Inthecaseofany4loanmadeduringanycalendaryearafter20145towhichparagraph(1)applies,theadjusted6dollaramountshallbeincreasedbyanamount7equal to 8(i)suchadjusteddollaramount,9multiplied by10(ii)thecost-of-livingadjustmentde- 11terminedundersection1(c)(2)(A)forsuch12calendaryear,determinedbysubstituting13calendaryear2013forcalendaryear142012 in clause (ii) thereof.15(B)ADJUSTED DOLLAR AMOUNT.For16purposesofthisparagraph,thetermadjusted17dollaramountmeansthedollaramountin18paragraph(2)asineffectforcalendaryear192014.20(C) ROUNDING.Any increase under sub- 21paragraph(A)shallberoundedtothenearest22multiple of $100..23(b)AMENDMENTS RELATED TO DEDUCTION FOR24ADJUSTED NET CAPITAL GAIN. 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)51(1)Section163(d)(4)(B)isamendedbystrik- 1ingsection1(h)(11)(B)andinsertingsection2169(e).3(2)Section172(d)(2)(B)isamendedbyinsert- 4ingthedeductionallowableundersection169and5before the exclusion.6(3)Section301(f)(4)isamendedbystriking7section 1(h)(11) and inserting section 169(e).8(4)Section306(a)(1)(D)isamendedbystrik- 9ingsection1(h)(11)andinsertingsection10169(e).11(5)Thelastsentenceofsection453A(c)(3)is12amendedbystrikingcapitalgainandallthatfol- 13lowsandinsertingcapitalgain,thededuction14under section 169 shall be taken into account..15(6)Sections531and541areeachamendedby16striking 20 percent and inserting 21 percent.17(7)Section584(c)isamendedbystrikingand18towhichsection1(h)(11)appliesinthelastsen- 19tenceandinsertingwhichisqualifieddividendin- 20come(asdefinedinsection169(e))inthehandsof21such common trust fund.22(8)Section641(c)(2)(C)(priortoredesignation23bytitleII)isamendedbyaddingattheendthefol- 24lowing new clause:25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00051 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)52(v)Thedeductionallowedbysection1169..2(9)Thefirstsentenceofsection642(c)(4)is3amendedbystrikingconsistsofandallthatfol- 4lowsandinsertingconsistsoflong-termcapital5gainorgaindescribedinsection1202(a),properad- 6justmentsshallbemadeforanydeductionallowable7tothetrustorestateundersection169andforany8exclusion allowable under section 1202..9(10)Thelastsentenceofsection643(a)(3)is10amendedtoreadasfollows:Thedeductionunder11section169andtheexclusionundersection120212shall not be taken into account..13(11)Section691(c)(4)isamendedbystriking141(h) and inserting 169.15(12)Section702(a)(5)isamendedbystriking16section 1(h)(11) and inserting section 169.17(13) Section 854 is amended 18(A)bystrikingsection1(h)(11)(relating19tomaximumrateoftaxondividends)insub- 20section(a)andinsertingsection169(relating21to adjusted net capital gain),22(B)bystrikingMAXIMUM RATE UNDER23SECTION 1(h)intheheadingofsubsection24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)53(b)(1)(B)andinsertingDETERMINATION OF1ADJUSTED NET CAPITAL GAIN, and2(C)bystrikingsection1(h)(11)(B)in3subsection(b)(4)andinsertingsection4169(e).5(14) Section 857(c)(2) is amended 6(A)bystrikingsection1(h)(11)(B)in7subparagraph(D)andinsertingsection8169(e), and9(B)bystrikingSECTION 1(h)(11)inthe10heading and inserting SECTION 169(e).11(15) Section 904(b) is amended 12(A)byamendingparagraph(2)toreadas13follows:14(2) CAPITAL GAINS.For purposes of this sec- 15tion,taxableincomefromsourcesoutsidetheUnited16Statesshallincludegainfromthesaleorexchange17ofcapitalassets(includinggainsotreatedunder18section1231)onlytotheextentofthelesserof 19(A)capitalgainnetincomefromsources20without the United States, or21(B) capital gain net income., and22(B) by striking paragraph (3).23(16)Section1260(a)isamendedbystriking24long-termcapitalgainthefirstplacesuchterm25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00053 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)54appearsandallthatfollowsandinsertinglong- 1termcapitalgain,suchgainshallbetreatedasordi- 2naryincometotheextentsuchgainexceedsthenet3underlying long-term capital gain..4(17)Section1411(c)(1)(B)isamendedbyin- 5serting(otherthansection169)afterthissub- 6title.7(18)Section4985(a)(1)isamendedbystriking8therateoftaxspecifiedinsection1(h)(1)(C)and9inserting 21 percent.10(19)Section7518(g)(6)(A)isamendedby11strikingallthatfollowsclause(i)andinsertingthe12following:13(ii)byincreasingthetaximposedby14chapter1bytheproductoftheamountof15such withdrawal, multiplied by 16(I)inthecaseofataxpayer17otherthanacorporation,60percent18ofthehighestrateoftaxspecifiedin19section 1, and20(II)inthecaseofacorporation,21thehighestrateoftaxspecifiedin22section 11..23(20)Section53511(f)oftitle46,UnitedStates24Code, is amended by 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)55(A)byamendingparagraph(1)(B)toread1as follows:2(B) increasing the tax imposed by chapter31ofsuchCodebytheproductoftheamount4of such withdrawal, multiplied by 5(i)inthecaseofataxpayerother6thanacorporation,thehighestrateoftax7specifiedinsection1(60percentofsuch8highestrateinthecaseofsomuchofsuch9withdrawalasismadefromthecapital10gain account), and11(ii)inthecaseofacorporation,the12highestrateoftaxspecifiedinsection1311., and14(B)bystrikingparagraph(2)andbyre- 15designatingparagraphs(3)and(4)aspara- 16graphs (2) and (3), respectively.17(21)ThetableofsectionsforpartVIofsub- 18chapterBofchapter1isamendedbyinsertingafter19theitemrelatingtosection168thefollowingnew20item: 21Sec. 169. Adjusted net capital gain..(c) OTHER CONFORMING AMENDMENTS. 22(1)Section25B(b)(2)isamendedbystriking23Inthecaseofandallthatfollowsthroughany24taxpayernotdescribedinparagraph(1)orsubpara- 25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)56graph(A),andinsertingInthecaseofanytax- 1payer not described in paragraph (1),.2(2)Section36B(b)(3)(B)(ii)(I)(aa)isamended3to read as follows:4(aa)whoisdescribedin5section1(b)(1)(B)andwhodoes6nothaveanydependentsforthe7taxable year,.8(3) Section 486B(b)(1) is amended 9(A)bystrikingmaximumrateineffect10and inserting highest rate specified, and11(B)bystrikingsection1(e)andinsert- 12ing section 1.13(4) Section 511(b)(1) is amended to read as fol- 14lows:15(1)IMPOSITION OF TAX.Thereisherebyim- 16posedforeachtaxableyearontheunrelatedbusi- 17nesstaxableincomeofeverytrustdescribedinpara- 18graph(2)ataxcomputedasprovidedinsection1.19Inmakingsuchcomputationforpurposesofthis20section,thetermstaxableincomeandmodifiedad- 21justedgrossincomeasusedinsection1shallboth22bereadasunrelatedbusinesstaxableincomeasde- 23fined in section 512..24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00056 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)57(5)Section641(a)isamendedbystrikingsec- 1tion1(e)shallapplytothetaxableincomeandin- 2serting section 1 shall apply to the income.3(6)Section641(c)(2)(A)isamendedtoreadas4follows:5(A)Thedollaramountineffectunder6section1(b)(2)(C)shallbetreatedasbeing7zero..8(7)Section646(b)isamendedtoreadasfol- 9lows:10(b)TAXATION OF INCOME OF TRUST.Exceptas11providedinsubsection(f)(1)(B)(ii),thereisherebyim- 12posedonthetaxableincomeofanelectingSettlement13Trustataxattheratespecifiedinsection1(a)(1).Such14taxshallbeinlieuoftheincometaxotherwiseimposed15by this chapter on such income..16(8)Section685(c)isamendedbystrikingSec- 17tion 1(e) and inserting Section 1.18(9)Section1398(c)isamendedbystriking19paragraphs(1)and(2),byredesignatingparagraph20(3)asparagraph(2),andbyinsertingbeforepara- 21graph(2)assoredesignatedthefollowingnewpara- 22graph:23(1)COMPUTATION AND PAYMENT OF TAX. 24Exceptasotherwiseprovidedinthissectionorpart25VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00057 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)58IofsubchapterA,thetaxableincomeandmodified1adjustedgrossincomeoftheestateshallbecom- 2putedinthesamemannerasforanindividual.The3taxshallbecomputedundersection1andshallbe4paid by the trustee..5(10)Section3402(p)(1)(B)isamendedby6strikinganypercentageapplicabletoanyofthe37lowestincomebracketsinthetableundersection81(c),andinserting10percent,25percent,359percent,.10(11)Section3402(q)(1)isamendedbystriking11thethirdlowestrateoftaxapplicableundersection121(c)andinsertingthehighestrateoftaxspecified13in section 1.14(12)Section3402(r)(3)isamendedbystriking15theamountoftaxwhichwouldbeimposedbysec- 16tion1(c)(determinedwithoutregardtoanyrateof17taxinexcessofthefourthlowestrateoftaxapplica- 18bleundersection1(c))onanamountoftaxablein- 19comeequaltoandinsertinganamountequalto20theproductofthehighestrateoftaxspecifiedin21section 1 multiplied by.22(13)Section3406(a)(1)isamendedbystriking23thefourthlowestrateoftaxapplicableundersec- 24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00058 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)59tion1(c)andinsertingthehighestrateoftax1specified in section 1.2(14)Section6103(e)(1)(A)(iii)isamendedby3strikingsection1(g)andinsertingsection1(d).4(d)WITHHOLDING FROM SUPPLEMENTAL WAGE5PAYMENTS. 6(1)IN GENERAL.Ifanemployerelectsunder7TreasuryRegulationsection31.3402(g)1todeter- 8minetheamounttobedeductedandwithheldfrom9anysupplementalwagepaymentbyusingaflatper- 10centage rate, the rate to be used in determining such11amount shall not be less than 35 percent.12(2)REPEAL OF SUPERCEDED PROVISION.The13AmericanJobsCreationActof2004isamendedby14striking section 904.15(e) EFFECTIVE DATE. 16(1)IN GENERAL.Exceptasotherwisepro- 17videdinthissubsection,theamendmentsmadeby18thissectionshallapplytotaxableyearsbeginning19after December 31, 2014.20(2)WITHHOLDING FROM SUPPLEMENTAL WAGE21PAYMENTS.Theprovisionsof,andamendments22madeby,subsection(d)shallapplytopayments23made after December 31, 2014.24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)60Subtitle BSimplification of Tax1Benefits for Families2SEC. 1101. STANDARD DEDUCTION.3(a)INCREASE IN STANDARD DEDUCTION.Sub- 4section(c)ofsection63isamendedtoreadasfollows:5(c)STANDARD DEDUCTION.Forpurposesofthis6subtitle 7(1)IN GENERAL.Exceptasotherwisepro- 8videdinthissubsection,thetermstandarddeduc- 9tion means 10(A)$22,000,inthecaseofajointreturn,11and12(B)one-halfoftheamountineffect13undersubparagraph(A)forthetaxableyear,in14any other case.15(2)PHASEOUT OF STANDARD DEDUCTION. 16Theamountofthestandarddeductiondetermined17underthissubsection(withoutregardtothispara- 18graphandaftertheapplicationofparagraph(4))19shallbereduced(butnotbelowzero)byanamount20equal to 20 percent of the excess (if any) of 21(A)thetaxpayersmodifiedadjusted22gross income (as defined in section 2(b)) for the23taxable year, over24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00060 Fmt 6652 Sfmt 6201 C:\DOCUME~1\HWCHRI~1\APPLIC~1\SOFTQUAD\XMETAL\5.5\GEN\C\CAMP_041.XML HFebruary 21, 2014 (3:23 p.m.)F:\M13\CAMP\CAMP_041.XMLf:\VHLC\022114\022114.091.xml (568655|8)61(B)(i)thejointreturnstandarddeduction1phaseoutthresholdforthetaxableyear,inthe2caseofataxpayerdescribedinparagraph3(1)(A), and4(ii)thenon-jointreturnstandarddeduc- 5tionphaseoutthresholdforthetaxableyear,in6any other case.7(3)STANDARD DEDUCTION PHASEOUT8THRESHOLDS. 9(A)JOINT RETURN STANDARD DEDUC- 10TION PHASEOUT THRESHOLD.Thetermjoint11returnstandarddeductionphaseoutthreshold12means, with respect to any taxable year 13(i)thedollaramountineffectunder14section1(e)(3)(A)forsuchtaxableyear,15plus16(ii) the product of 17(I)thedollaramountineffect18undersection1(b)(1)(A)forsuchtax- 19able year, multiplied by20(II) 3.21(B)NON-JOINT RETURN STANDARD DE- 22DUCTION PHASEOUT THRESHOLD.Theterm23non-jointreturnstandarddeductionphaseout24VerDate 0ct 09 200215:23 Feb 21, 2014 Jkt 000000 PO 00000 Frm 00061 Fmt 6652 Sfmt 6201